U.S. v. Kattan-Kassin

• Decision Date: 24 January 1983
• Docket Number: KATTAN-KASSIN,No. 82-5175,82-5175
• Citation: 696 F.2d 893
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Isaac, a/k/a Jaime Garcia, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 893

696 F.2d 893

UNITED STATES of America, Plaintiff-Appellant, v. Isaac KATTAN-KASSIN, a/k/a Jaime Garcia, et al., Defendants-Appellees.

No. 82-5175.

United States Court of Appeals, Eleventh Circuit.

Jan. 24, 1983.

Mervyn Hamburg, Washington, D.C., for plaintiff-appellant.

John F. Evans, Coral Gables, Fla., Theodore Klein, Thomas G. Murray, Miami, Fla., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before RONEY and JOHNSON, Circuit Judges, and DYER, Senior Circuit Judge.

JOHNSON, Circuit Judge:

In this appeal we are asked to interpret Section 1059(2) of the Bank Secrecy Act, 31 U.S.C.A. Secs. 1051-62, 1081-83, 1101-05, 1121-22, 1141-43. The district court held that the government could bring only one felony charge under Section 1059(2). The government appeals the dismissal of other counts. We reverse.

According to the indictment filed against the four appellees, Andres Rodriguez and Francisco Navarro were the sole shareholders of the Popular Bank and Trust Co., Ltd., a Cayman Islands corporation with an office in Miami. Rodriguez also owned the Northside Bank of Miami and Navarro served as its vice-president. Appellee Francisco Bastida, though not an officer or owner of either bank, "issued orders [in his supervisory role] to employees" of both banks. Appellee Isaac Kattan-Kassin, a Colombian national, had accounts at Popular and Northside; his account at Northside was under the alias Jaime Garcia. The indictment charged a conspiracy occurring between May and September 1978, when more than seven million dollars was "laundered" through the two banks. Approximately $2.2 million in transactions was not reported as required by 31 U.S.C.A. Sec. 1081 and 31 C.F.R. Sec. 103.22, ¹ and, for approximately $4.8 million, false currency transaction reports were filed in violation of 18 U.S.C.A. Sec. 1001 (prohibiting the filing of false statements). The process allegedly occurred when certain customers who had accounts at both banks, including Kattan-Kassin, deposited funds at Popular that were then transferred to Popular's account at Northside. Northside transferred the funds into the customer's account at its bank. Counts III-XIV, at issue here, charged that Rodriguez, Navarro, and Bastida failed to file currency transaction reports on various dates between July 18, 1978, and September 11, 1978. Alleging that each failure to report was "part of a pattern of illegal activity involving transactions exceeding $100,000 in a twelve-month period," each of these counts charged a felony violation under 31 U.S.C.A. Sec. 1059.

Navarro and Bastida each filed a motion to dismiss, asserting as one of the grounds that Counts III-XIV were multiplicious. ² The motions were referred to a magistrate who denied them but conditioned her denial by recommending that the government be required to choose only one of Counts III-XIV to prosecute. After a hearing, the district court entered an order that adopted the magistrate's recommendation.

I. The Plain Meaning of Section 1059(2)

Section 1059 of 31 U.S.C.A., entitled "Additional criminal penalty in certain cases," provides:

Whoever willfully violates any provision of this chapter where the violation is--

(1) committed in furtherance of the commission of any other violation of Federal law, or

(2) committed as part of a pattern of illegal activity involving transactions exceeding $100,000 in any twelve-month period,

shall be fined not more than $500,000 or imprisoned not more than five years, or both.

These enhanced penalties apply only to the situations described in Section 1059. Section 1058 provides for misdemeanor penalties of $1,000, or imprisonment of one year, or both for any violation of the Bank Secrecy Act. The issue presented in this appeal is whether each violation that is "part of a pattern of illegal activity" under subsection 2 may be separately prosecuted as a felony under Section 1059, or whether a pattern of violations within a twelve-month period constitutes only a single felony offense.

The issue is one of first impression. The only other court to address Section 1059(2) did not reach this precise question. In United States v. Beusch, 596 F.2d 871 (9th Cir.1979), the Ninth Circuit reversed the district court's dismissal of a felony indictment that charged four violations of Section 1059(2) based on 377 misdemeanors. The government charged four felony violations since the actions occurred over a period of four years and the illegal transfers exceeded $100,000 in each year. The Ninth Circuit held that the felony indictment was improperly dismissed because "a series of misdemeanor violations of the act may ... call forth the increased penalties of subsection (2)." 596 F.2d at 878. The court remanded so that the district court could determine the "factual question of whether the acts which led to the misdemeanor convictions constituted a pattern of illegal activity within the meaning of Sec. 1059(2)." Id. at 879 (emphasis in original). Because the government had charged only four felony violations, the court was not asked to reach the question of whether each violation could constitute a felony.

In interpreting Section 1059(2), we look first to the language of the statute itself. Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 314, 62 L.Ed.2d 199 (1979); Fitzpatrick v. Internal Revenue Service, 665 F.2d 327 (11th Cir.1982). The plain meaning of the statute must control unless the language is ambiguous or leads to absurd results, in which case a court may consult the legislative history and discern the true intent of Congress. Jones v. Metropolitan Area Rapid Transit Authority, 681 F.2d 1376, 1379 (11th Cir.1982). We reject appellees' contention that the language of Section 1059(2) is so vague and ambiguous that its plain meaning can be ignored. The language of the statute supports the government's position that each violation can be prosecuted as a felony so long as there are two or more acts constituting a "pattern of illegal activity involving transactions exceeding $100,000 in any twelve-month period." The dispositive question is whether Section 1059 focuses on punishing a pattern or each individual violation. By its use of the singular "violation" in the first sentence of the section and the phrase "part of" in subsection (2), the statute makes clear that each violation can be separately prosecuted. If Congress had intended to aggregate all violations in one twelve-month period into a single felony, there would be no reason to use the phrase "part of." It is a basic principle of statutory construction that statutes should not be construed in a way that renders certain provisions superfluous or insignificant. Woodfork v. Marine Cooks and Stewards Union, 642 F.2d 966, 970-71 (5th Cir.1981).

The one problem with the plain meaning of the provision is that any time a pattern consisting of two or more actions involving transactions exceeding $100,000 is established, the government can indict under Section 1059(2) for two or more felonies. Thus, because the government could charge more than one felony, the maximum penalty of $500,000, five years imprisonment, or both could theoretically never be the actual maximum for an individual defendant. However, given Congress' expressed intent in the legislative history to mete out stiff penalties through Section 1059(2), we cannot say that this is a justification to permit only a single felony indictment. It only shows that the statute could have been better drafted to explicitly indicate that the maximum penalty applies to each violation. This lack of clarity does not rise to the level of an absurd result that would require us to ignore the plain meaning rule. On the contrary, the absurd result occurs if the reading advocated by appellees is adopted: after committing two violations involving more than $100,000 a violator would be immune from prosecution under Section 1059(2) for the remainder of the twelve-month period, subject only to the minor misdemeanor penalties of Section 1058.

Appellees contend that the plain meaning of the statute does not control because the section is vague and ambiguous. Curiously, their argument hinges on the fact that the singular "violation" is not determinative; they point out that even if it were plural, the statute's meaning would be the same due to the phrase "part of." This observation is accurate, but undercuts rather than supports their argument. Instead of making the statute ambiguous, the phrase "part of" reinforces and emphasizes the singular "violation."

The district court did not examine the language of the statute or even the legislative history in its opinion, although legislative history is the most commonly used extrinsic aid in interpreting a statute. Instead, it observed that there was a dearth of case law interpreting Section 1059 and so turned to cases analyzing the Racketeer Influenced and Corrupt Organizations Act ["RICO"], 18 U.S.C.A. Secs. 1961-68. Although the plain meaning of the statute convinces us that Section 1059(2) can be used for more than one felony per year, we will discuss both the legislative history and the RICO statute.

II. Legislative History

An examination of the legislative history and the purposes for which the Bank Secrecy Act was passed affirms the plain meaning of the statute. The first provision of the Act states that its purpose is to require reports and records that "have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings." 31 U.S.C.A. Sec. 1051. Its legislative history states that the domestic reporting requirements were enacted because law enforcement agencies found that the growth of financial institutions had been paralleled by an increase in criminal activity associated with them. H.R. No. 975, 91st Cong., 2d Sess., reprinted in 1970 U.S.Code Cong. & Ad.News, 4394, 4395-97 [hereinafter "House Report"]. See ...