U.S. v. Farm & Home Sav. Ass'n, 90-2223

Citation932 F.2d 1256
Decision Date13 May 1991
Docket NumberNo. 90-2223,90-2223
PartiesUNITED STATES of America, Appellant, v. FARM & HOME SAVINGS ASSOCIATION, Thomas A. Williams, Ronald Meyer, Appellees, Ronald Whitaker, Fred Wilmot and Leon Miller a/k/a Lee Miller, Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Steven A. Muchnick, St. Louis, Mo., for appellant.

Ronald E. Jenkins and Barry Short, St. Louis, Mo., for appellees.

Before LAY, Chief Judge, and MAGILL and LOKEN, Circuit Judges.

LOKEN, Circuit Judge.

The United States appeals from the district court's dismissal of most of counts I, III, and IV of a multi-count indictment charging appellees and others with violations of the reporting requirements of the Bank Secrecy Act of 1970 (the "Act") and its implementing regulations, 31 U.S.C. Sec. 5313(a) and 31 C.F.R. Part 103. In dismissing these portions of the indictment, the district court distinguished our prior decision in United States v. Polychron, 841 F.2d 833 (8th Cir.), cert. denied, 488 U.S. 851, 109 S.Ct. 135, 102 L.Ed.2d 107 (1988). We conclude that the conduct charged in the indictment, if proved, would violate the Act as construed in Polychron. Accordingly, we reverse.

The indictment alleges that defendants Thomas A. Williams, Ronald Meyer, and Ronald Whitaker each purchased money orders totaling more than $10,000 from three branches of defendant Farm & Home Savings Association in Dallas on September 26, 1984; and that Meyer and defendant Leon Miller each purchased money orders totaling more than $10,000 from three St. Louis branches of Farm & Home on November 28, 1984. The Dallas purchases were made with the "knowledge, acquiescence and consent" of defendant Fred Wilmot, then a Senior Vice President of Farm & Home in Dallas, and the St. Louis purchases were made with the "knowledge, acquiescence and counsel" of James Besher, then a Senior Vice President of Farm & Home in St. Louis, who was not named as a defendant. Pursuant to an alleged conspiracy among all the defendants, Farm & Home did not file Currency Transaction Reports ("CTRs") with respect to any of these purchases, as allegedly required by the Act.

After defendants Farm & Home and Whitaker pleaded guilty to certain of the charges and the district court dismissed Count II of the indictment, relating to the Dallas purchases, for lack of venue, the remaining defendants--bank customers Williams, Meyer and Miller and bank officer Wilmot--moved to dismiss Counts I, III and IV. 1 Count I charges these defendants, the appellees before this court, with conspiracy to violate the Act in violation of 18 U.S.C. Sec. 371. Count III charges appellees with knowingly and willfully causing Farm & Home to fail to file CTRs in connection with the St. Louis money order purchases, in violation of 31 U.S.C. Secs. 5313 & 5322 and 18 U.S.C. Sec. 2. Count IV charges appellees with knowingly and willfully concealing the material facts that would have been disclosed to the Internal Revenue Service had CTRs been filed in connection with the St. Louis purchases, in violation of 18 U.S.C. Secs. 1001 & 2.

The district court dismissed all charges against appellee Wilmot, the Texas bank officer, because the indictment failed to allege that he had engaged in the deliberate structuring of the St. Louis transactions to avoid the CTR reporting requirement. The district court also dismissed the charge that appellees Meyer, Williams and Miller violated Sec. 1001 on the ground that these bank customers had no duty to disclose their structured transactions to Farm & Home under this court's decision in United States v. Larson, 796 F.2d 244 (8th Cir.1986). However, the district court held that the indictment properly charges the customer appellees with aiding and abetting, and conspiring to aid and abet, the nonfiling of CTRs in violation of the Act because it is alleged that Farm & Home was aware of their structuring of the St. Louis purchases.

I.

A fundamental threshold issue in this case is whether, under the Act and regulations in effect in 1984, the facts alleged in the indictment imposed a duty on Farm & Home to file one or more CTRs reflecting the St. Louis money order purchases. The indictment alleges that the customer defendants purchased multiple money orders totaling more than $10,000, but less than $10,000 each, from three branches of Farm & Home on the day in question. In 1984, the regulations 2 required Farm & Home to file a CTR in connection with "each ... transfer ... which involves a transaction in currency of more than $10,000," 31 C.F.R. Sec. 103.22(a). The instructions to Treasury Department Form 4789, the CTR report, advised financial institutions that, "Multiple transactions by or for any person which in any one day total more than $10,000 should be treated as a single transaction, if the financial institution is aware of them." However, the statute and regulations were not amended to expressly cover such "multiple transactions" until after the 1984 events here in question occurred. Therefore, appellees argue, Farm & Home had no duty to file CTRs in connection with the St. Louis purchases and appellees cannot be charged with any crimes in connection with those purchases under this court's decision in Larson.

In Larson, we held that a bank customer who purchased ten cashier's checks at four bank branches on the same day, for the purpose of avoiding the filing of CTRs, was not liable for concealing material facts from the government in violation of 18 U.S.C. Sec. 1001, or of aiding and abetting a violation of the Act in violation of 18 U.S.C. Sec. 2, because the banks were unaware of the structured transactions and thus had no duty to file CTRs. 796 F.2d at 247. Although other circuits have held to the contrary, see, e.g., United States v. Cure, 804 F.2d 625, 629 (11th Cir.1986), we have consistently adhered to our decision in Larson.

Subsequent to Larson, we considered whether the Act's reporting requirements in effect in 1984 would be violated if a bank officer affirmatively structured a currency transaction, either on his own behalf or on behalf of a bank customer, in order to avoid causing the bank to file a CTR. In United States v. Polychron, supra, we held that a bank officer who "structures an otherwise reportable transaction into multiple transactions in a single day that do not individually exceed $10,000" may be criminally liable for causing the bank to fail to file a CTR. 841 F.2d at 837. In Pilla v. United States, 861 F.2d 1078 (8th Cir.1988), we upheld the conviction of a bank advisory board member who, with the assistance of a bank officer, structured cash transactions in excess of $10,000 with the bank on behalf of a purported drug dealer, without the filing of CTRs. Following Polychron, we held that Pilla's relationship with the bank gave him a duty to report the transactions; moreover, unlike the bank in Larson, the bank was aware of the duty to report because a bank officer was Pilla's co-conspirator. Id. at 1081.

In this case, the indictment alleges that appellees Meyer and Miller agreed with Besher, the Farm & Home officer in St. Louis, to cause Farm & Home to fail to file CTRs, and that Miller and Meyer purchased money orders in amounts in excess of $10,000 per person per day without the filing of CTRs "with the knowledge, acquiescence and counsel" of Besher. The district court held that the bank had no duty under Polychron to file CTRs in this situation because the bank customers, Miller and Meyer, rather than the bank officer, Besher, actually "structured" the transaction. We disagree. Where the indictment alleges this level of knowledge and participation by a responsible bank employee, we think it immaterial to the bank's duty to report that the money order purchases were physically handled by the customers at various bank branches. These allegations if proved 3 would establish that the bank knew that one or more transactions in excess of $10,000 per day were being structured in an attempt to evade Farm & Home's reporting requirements under the Act. This is sufficient to impose a duty on the bank to file CTRs under Polychron, which in this regard is consistent with the cases from nearly every circuit that has considered the question. See United States v. Bank of New England, 821 F.2d 844, 850-51 (1st Cir.), cert. denied, 484 U.S. 943, 108 S.Ct. 328, 98 L.Ed.2d 356 (1987); United States v. Heyman, 794 F.2d 788, 792 (2d Cir.), cert. denied, 479 U.S. 989, 107 S.Ct. 585, 93 L.Ed.2d 587 (1986); United States v. American Investors, 879 F.2d 1087, 1098-1099 (3d Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 368, 107 L.Ed.2d 354 (1989); United States v. Thompson, 603 F.2d 1200, 1203-04 (5th Cir.1979); United States v. Hayes, 827 F.2d 469, 472 (9th Cir.1987); United States v. Cook, 745 F.2d 1311, 1315-16 (10th Cir.1984), cert. denied, 469 U.S. 1220, 105 S.Ct. 1205, 84 L.Ed.2d 347 (1985); United States v. Cure, 804 F.2d 625, 627-28 (11th Cir.1986). Contra, United States v. Risk, 672 F.Supp. 346, 357-58 (S.D.Ind.1987), aff'd, 843 F.2d 1059, 1061-62 (7th Cir.1988). Appellees' principal argument on appeal is, in effect, that we should reject this nearly uniform line of authority and overrule Polychron. We decline to do so.

II.

With this threshold issue resolved, we now turn to the specific crimes charged in Counts I, III and IV of the indictment.

Count I--The Conspiracy

Count I alleges that appellees and their co-defendants willfully and knowingly conspired (i) to defraud the United States by obstructing the governmental function of collecting data through CTRs; (ii) to cause Farm & Home to fail to file CTRs; and (iii) to conceal material facts in a matter within the jurisdiction of the Treasury Department. To state a conspiracy violation under 18 U.S.C. Sec. 371, the government must allege "(1) an agreement to commit an illegal act; (2) an unlawful objective; and (3) an act done in furtherance of the conspiracy...

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