U.S. v. Denemark
| Decision Date | 16 January 1986 |
| Docket Number | No. 85-3154,85-3154 |
| Parties | -745, 54 USLW 2397, 86-1 USTC P 9174 UNITED STATES of America, Plaintiff-Appellee, v. Douglas A. DENEMARK, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
William B. Plowman, Tampa, Fla., for defendant-appellant.
Karla Spaulding, Asst. U.S. Atty., Tampa, Fla., for plaintiff-appellee.
Appeal from the United States District Court for the Middle District of Florida.
Before HILL and HENDERSON, Circuit Judges, and TUTTLE, Senior Circuit Judge.
This is an appeal by Denemark from his conviction of having conducted 14 cash transactions with 14 different banks to prevent those banks from being required to file a Treasury Department Required Currency Transaction Report ("CTR") in violation of Title 18 U.S.C. Sec. 1001. This statute provides that:
Whoever, in any manner within the jurisdiction of any department or agency of the United States knowingly and wilfully falsifies, conceals or covers up by any trick, scheme or device a material fact, or makes any false, fictitious, or fraudulent statements or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both.
In June, 1983, defendant Denemark made an agreement to purchase a home in Tampa, Florida for $155,000. On the closing date for the sale of the house at the offices of Chelsea Title Company, the entire purchase price was to be paid to the sellers, Mr. and Mrs. Harry Lewis. Denemark arrived at the closing with a briefcase filled with cash and presented the currency to the Title Company to close the transaction. However, the company refused to accept the money and instructed Denemark that, instead, a certified check would be required to close the transaction. Denemark then left the closing and drove to a branch of the Barnett Bank to exchange the cash for a cashier's check. He was told there, however, that all currency transactions in excess of $10,000 were required to be reported by the bank to the Internal Revenue Service in a standard CTR form. No such form was required to be filed in transactions involving less than $10,000. The defendant then told the bank that he did not want to fill out or sign the required form and proceeded to leave the branch. He returned to the office of the Title Company, and in exchange for two piles of $9,900 in currency obtained two personal checks from two individuals present in the office. The checks were made out to Chelsea Title. These checks were then tendered to the Title Company as part of the purchase price.
Denemark then proceeded to a number of banks in the Tampa area and, apparently using several different names, purchased a number of cashier's checks for $9,900 cash each. Appellant then took these checks to the Title Company to tender them for final payment on the house.
On July 10, 1984, Denemark was interviewed by Laura Sherman, a Special Agent with the United States Customs Service. Sherman questioned Denemark regarding his sources of income and learned from him that he had not had a regular salary during the period 1980 to 1984; however, Denemark told the agent that he had received approximately $35,000 from his father, $7,000 in an insurance settlement and approximately $18,400 in sales commission as an aircraft broker. (It was never established at trial that any money was ever transferred from father to son.) The defendant further told Agent Sherman that he had purchased only three of the cashier's checks used to purchase the house and that each time he used the correct spelling of his name. He stated that an unidentified friend from the Cayman Islands purchased the remainder of the checks. Denemark then claimed that someone at the Title Company told him to purchase more than one check to avoid some unidentified paper work and denied any knowledge of currency transaction reports.
On November 8, 1984, a one count indictment was returned charging Denemark with using a "trick, scheme or device operating to conceal from and cover up from the Internal Revenue Service ... the existence, source, origin and transfer of approximately $154,232.50 by the purchase of approximately 14 cashier's checks and two personal checks in amounts less than $10,000 from approximately 14 different financial institutions and two individuals, using a variety of names including some false names, as the remitters of these checks, for the purpose of avoiding the financial institutions' filing of currency transaction reports as required by Title 31, United States Code, Section 5313," in violation of Title 18, United States Code, Section 1001. A bench trial was held on January 28, 1985 and after a consideration of the evidence, the district judge found the defendant guilty as charged. This appeal followed.
Whether it is a violation of Title 18, U.S.C., Sec. 1001, for an individual to structure cash transactions in amounts less than $10,000 with various banks so as to avoid the financial institution's reporting requirement of Title 31, U.S.C., Sec. 5313 before the effective date of the Tax Reform Act of 1984.
Appellant Denemark attacks the very basis of his district court conviction, claiming that his actions involving the currency transaction violated no law. He argues that in order to constitute a violation of Title 18, U.S.C. Sec. 1001, "the concealment and covering up of a material fact must be directed towards performance or failure to perform some act which is required by statute or regulation." The statute in question in this case, 31 U.S.C. Sec. 5313, requires a bank to report to the Treasury Department currency transactions only in excess of $10,000. Denemark claims that neither the statute itself or related Treasury Department regulation requires an individual to structure financial transactions with banking institutions so as to make it necessary for a bank to file a Currency Transaction Report. Likewise, there is no requirement by statute or regulation that would require an individual to disclose the existence, source, origin and transaction of currency between private individuals. Clearly a financial institution has no duty to create or initiate a Currency Transaction Report unless an individual engages in a transaction with the institution, in a single transaction, involving currency of more than $10,000. In this case, Denemark argues that since none of his transactions with any of the banks exceeded $10,000, there was no duty on the part of any of these banks to file the required Currency Transaction Report. Therefore, he claims he should not have been prosecuted for causing the financial institution to fail to perform an act (filing a Currency Transaction Report) which the financial institution had no legal obligation to perform.
Denemark next claims that the only way that he could have been found to have violated the law is if all of his cash transactions were to be considered together as one single exchange. He argues that Title 31, U.S.C., Sec. 5313, which requires the Currency Transaction Reports, does not include language which would combine a series of transactions. The statute provides that:
(a) When a domestic financial institution is involved in a transaction for the payment, receipt, or transfer of United States coin or currency (or other monetary instruments the Secretary of Treasury prescribes), in an amount, denomination, or amount and denomination, or under circumstances the Secretary prescribes by regulation, the institution and any other participant in the transaction the Secretary may prescribe, shall file a report on the transaction at the time and in the way the Secretary prescribes. A participant acting for another person shall make the report as agent or bailee of the person and identify the person for whom the transaction was being made.
Title 31, U.S.C., Sec. 5313. (Emphasis added.) Denemark argues that since the...
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