Peck v. U.S.

• Decision Date: 28 December 1995
• Docket Number: D,No. 1021,1021
• Citation: 73 F.3d 1220
• Parties: Michael PECK, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee. ocket 94-2444.
• Court: U.S. Court of Appeals — Second Circuit

Page 1220

73 F.3d 1220

Michael PECK, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.

No. 1021, Docket 94-2444.

United States Court of Appeals, Second Circuit.

Argued March 8, 1995.

Decided Dec. 28, 1995.

Jeremiah Donovan, Old Saybrook, Connecticut, for Petitioner-Appellant.

Andrew P. Gaillard, Assistant United States Attorney for the District of Connecticut, Bridgeport, Connecticut (Christopher F. Droney, United States Attorney, New Haven, Connecticut, of counsel), for Respondent-Appellee.

Before: MAHONEY, WALKER, and CALABRESI, Circuit Judges.

MAHONEY, Circuit Judge:

Petitioner-appellant Michael Peck appeals from a judgment entered June 2, 1994 in the United States District Court for the District of Connecticut, Alan H. Nevas, Judge, that granted in part and denied in part Peck's petition for a writ of habeas corpus pursuant to 28 U.S.C. Sec. 2255. ¹ Peck had been convicted, following a jury trial, of two counts of structuring cash transactions to evade bank reporting requirements in violation of 31 U.S.C. Secs. 5324(3), 5313(a), and 5322(a). ² In his petition, he contends that the conviction should be vacated because, in light of the Supreme Court's decision in Ratzlaf v. United States, --- U.S. ----, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994), decided after his judgment of conviction was entered, the jury was erroneously instructed with respect to the scienter required for conviction.

Peck did not pursue a direct appeal. Nonetheless, because he has demonstrated cause for his failure to take a direct appeal and actual prejudice resulting from the jury instruction, we reverse the judgment of the district court and vacate Peck's structuring convictions.

Background

At all relevant times, Peck was an attorney practicing in Hartford, Connecticut. In July 1991, a grand jury indicted Peck on three counts of tax evasion for the years 1984 though 1986 and one count of wilful failure to file a tax return in 1987. The indictment charged that Peck had evaded more than $225,000 in taxes.

Peck was arraigned on these charges on August 1, 1991, and thereafter released on bond. Between then and the time of his trial on the tax charges in July 1992, which resulted in his conviction on all counts and a sentence of eighteen months imprisonment, Peck engaged in a series of transactions that formed the basis of the structuring convictions to which this petition pertains. Specifically, between November 7, 1991 and November 27, 1991, Peck made twelve separate cash deposits each in the amount of $7,500 and two cash deposits each in the amount of $5,000 into an account maintained by his father at the Society for Savings. He made three of the deposits on November 7, each at a separate branch. He also attempted to make a fourth deposit on that day at yet another branch, but declined to do so when he was informed that the bank would have to file a Currency Transaction Report ("CTR"). ³ (The Society filed CTRs with respect to the second and third deposits in any event.) He made the remaining deposits at branches of the institution on separate days throughout the month.

In addition, on March 27, 1992, Peck opened a new checking account at the Northeast Savings Bank, where he had never banked previously, by depositing a $50,000 check from a former law associate. On March 30, Peck withdrew $6,500 by cashing a "starter check," one of the initial series of checks that he received when opening the account. On March 31, he withdrew by starter check $6,000, on April 1, $6,000, and on April 2, $6,500. The bank filed CTRs concerning these withdrawals.

On April 3, Peck attempted to withdraw an additional $6,000 from his Northeast Savings account; withdrew $7,000 from an account that he maintained at the Bank of Boston by writing a counter check; and sought to withdraw $6,000, but withdrew $2,000, from an account he maintained at the Society for Savings (separate from his father's account). On April 6, he attempted to withdraw $5,000 from the Bank of Boston account, but declined to do so when informed that a CTR would be filed due to his April 3 withdrawal. Instead, he withdrew $5,000 from his Society for Savings account.

Peck was then arrested and charged in a two-count indictment with structuring cash transactions in violation of 31 U.S.C. Secs. 5324(3), 5313(a), and 5322(a), and 31 C.F.R. Secs. 103.22 and 103.53; the two counts relate to the November transactions and the March--April transactions, respectively. ⁴

At Peck's trial, the government introduced evidence of the foregoing, and to establish that Peck was aware of the institutions' cash reporting requirements. In the latter regard, evidence demonstrated that cash deposits that Peck had made for himself or his clients had resulted in the filing of numerous CTRs over several years. Moreover, one bank teller recalled explaining the CTR requirement to Peck when Peck engaged in a cash transaction in excess of $10,000 in 1990.

Peck testified in his defense that he believed that the bank reporting requirements applied to transactions of less than $10,000, and therefore thought that the banks were filing CTRs for the transactions supporting his indictment. At the conclusion of Peck's direct examination, the following exchange occurred:

Q. ... Did you ever intend to structure your banking transactions in order to evade the requirements of these currency transaction reports?

A. No, I had no idea that there was ever such a thing as structuring, absolutely no awareness that there was a, such a criminal charge in my life.

Peck denied engaging in these transactions for the purpose of hiding assets from the Internal Revenue Service, although he admitted that he transferred his interest in his house to his wife and encumbered it with large mortgages to his father and sister in 1991. He claimed that these actions related principally to a civil lawsuit pending against him, although he admitted that he was motivated in part by his tax difficulties.

Peck also sought to explain the reasons for the cash transactions. With respect to the $100,000 deposited to his father's account at the Society for Savings in November 1991, Peck claimed that he was repaying a loan that his father had made to him when he was unable to pay money owed to a law firm that was entitled to share a fee. However, as he conceded, there were no records of this loan, and his father had written a check to him for $100,000 dated November 12, 1991 and posted as paid on November 19, 1991--after more than half of Peck's cash had been deposited at the Society for Savings in purported repayment of the $100,000. Peck claimed that he did not need to deposit the check until the money he owed was due, and that he began repaying the debt at his earliest convenience.

Peck also explained that the three cash transactions that he made on November 7 were coincidental to his other errands; each time, he went home to pick up cash and would deposit the cash at a branch near wherever he had to be for other reasons. He claimed that he declined to make the fourth transaction on that day after being told that a CTR would be filed because he was in too much of a hurry. This was also the explanation for his refusal to engage in another transaction after being informed that a CTR would have to be filed.

With respect to the March and April 1992 transactions, Peck testified that he opened the new account at Northeast Savings Bank, the bank on which the $50,000 check that he deposited was drawn, because the payor's account had insufficient funds to cover the $50,000 check on that day, and Peck believed that it would facilitate matters to deposit the check at the same bank. He explained that he withdrew the money in increments to save time, since withdrawing larger amounts would require the tellers to obtain authorization from their supervisors.

In addition, Peck testified that he found cash transactions in large denominations more convenient than utilizing checks, and that for years he had paid most of his expenses, including salaries, alimony, tuition, and his mortgage, in cash, partly due to a distrust of banks. He also testified that, having been robbed in the past, he carried no more than $7,500 in cash for reasons of safety.

Peck also explained the circumstances of his conviction for income tax evasion, and conceded that on both a loan application and a (bogus, never filed) tax return that he had provided to a bank, he had depicted his income as enormously higher than he had reported it on the tax returns that he actually filed with the Internal Revenue Service. Finally, Peck testified that he had not practiced banking law, handled a federal case, or provided advice regarding federal taxation.

Over Peck's objection, the district court charged the jury with respect to intent and willfulness as follows:

In order to prove that the defendant had the intent to evade the reporting requirements, the government must prove beyond a reasonable doubt that the defendant knew of the existence of those reporting requirements[,] [s]ince a person cannot have a specific intent to evade a requirement which he knows nothing about[.] [T]hus in order to find the defendant guilty you must find that the government has proved beyond a reasonable doubt, first, that the defendant knew of the reporting requirements of Section 5313(a), and second, that he acted for the specific purpose of evading those reporting requirements.

....

The word willfully has been used so let me try and define that for you. An act or a failure to act is willfully done if done voluntarily and intentionally and with the specific intent to do something that the law forbids or with a specific intent to fail to do something that the law requires to be done. That is to say, with bad purpose, either to disobey or to disregard the law.

With respect to the offenses charged in this case, the requirement that the defendant acted with a bad purpose is satisfied by proof...