U.S. v. Rogers

• Decision Date: 14 March 1994
• Docket Number: No. 93-5002,93-5002
• Citation: 18 F.3d 265
• Parties: 94-1 USTC P 50,125 UNITED STATES of America, Plaintiff-Appellee, v. Rodney ROGERS, a/k/a Koseem C. Sanders, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 265

18 F.3d 265

94-1 USTC P 50,125

UNITED STATES of America, Plaintiff-Appellee, v. Rodney ROGERS, a/k/a Koseem C. Sanders, Defendant-Appellant.

No. 93-5002.

United States Court of Appeals, Fourth Circuit.

Argued Oct. 27, 1993.

Decided March 14, 1994.

ARGUED: John Warren Hart, Beaton & Hart, P.C., Virginia Beach, Virginia, for Appellant. Mark Anthony Exley, Assistant United States Attorney, Norfolk, Virginia, for Appellee. ON BRIEF: Kenneth E. Melson, United States Attorney, Norfolk, Virginia, for Appellee.

Before WIDENER and WILKINS, Circuit Judges, and SPROUSE, Senior Circuit Judge.

OPINION

WIDENER, Circuit Judge:

Defendant Rodney Rogers, a/k/a Koseem C. Sanders, appeals his convictions of one count of conspiracy, 18 U.S.C. Sec. 371, to evade and violate the reporting and return requirements of 26 U.S.C. Sec. 6050I, 31 U.S.C. Sec. 5313(a), and 31 U.S.C. Sec. 5324; two substantive counts of evading and violating the return requirements of a trader business, in violation of 26 U.S.C. Sec. 6050I; and one substantive count of evading and violating the reporting requirements of a domestic financial institution, in violation of 31 U.S.C. Sec. 5324. We are of opinion that the recent Supreme Court case of Ratzlaf v. United States, --- U.S. ----, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994) requires the vacation of Rogers's convictions and remand for a new trial.

In light of our conclusion, only a brief statement of the facts is necessary to an understanding of this case. In approximately a one year period from mid-1988 to mid-1989, the defendant Rodney Rogers purchased three BMWs and a Mercedes Benz, each costing in excess of $10,000, which he paid for with a series of payments of cash or cashier's checks, each in an amount under $10,000.00. In July of 1989, Rogers opened a retail clothing store called Ultimate Fashions, which opened a business account at Crestar Bank. Ultimate Fashions's banking records showed that large amounts of cash but never more than $10,000 in any one day, were deposited into its Crestar account. Rogers provided $17,650 in cash or cashier's check to Ultimate Fashions's account in seven installments of $4,000 or less between June 18, 1989 and July 14, 1989.

Rogers continued to put cash into Ultimate Fashion's cash register that did not represent sales from the store. Rogers and his girl friend Patrice Gruber, who managed the store and incorporated it as the ostensible sole owner, falsified the cash register sales receipt tapes to cover the cash being channeled from Rogers into the store and then into its bank account. Rogers bought the inventory for Ultimate Fashions from Emporio Antony's in New York. Ultimate Fashions received a total of $156,070 in inventory from Emporio Antony's; however, only $17,500 of this total was paid by check from Ultimate Fashions's bank account. Rogers sent another $36,500 to Emporio Antony's in eleven Western Union transfers from June 5, 1989 to April 25, 1990. Miss Gruber's testimony confirmed that Rogers was the sole owner of the store and tended to show both her own and Rogers's knowledge of currency reporting and return requirements.

Count One of the indictment alleged that Rogers conspired, pursuant to 18 U.S.C. Sec. 371, for the purpose of evading the currency reporting and return requirements of both 26 U.S.C. Sec. 6050I, ¹ and 31 U.S.C. Sec. 5313(a), in violation of 26 U.S.C. Sec. 6050I(f) and 31 U.S.C. Sec. 5324. ² The overt acts charged involved the purchase of the BMW and Mercedes Benz automobiles, Ultimate Fashions, and payment to an Ohio attorney.

As for the substantive counts of structuring transactions, Rogers's transfer of funds to Emporio Antony's, including Western Union transfers, form the basis of Count Two, structuring transactions with Emporio Antony's and causing or attempting to cause Emporio Antony's to fail to file a currency transaction return in violation of 26 U.S.C. Sec. 6050I. His cash contributions to Ultimate Fashions are the basis of Count Three, structuring transactions with Ultimate Fashions and causing or attempting to cause Ultimate Fashions to fail to file such a return in violation of 26 U.S.C. Sec. 6050I. Rogers's structuring of Ultimate Fashions's cash deposits into Crestar Bank are the essence of Count Four, structuring transactions with Crestar Bank and causing or attempting to cause Crestar Bank to fail to file a report in violation of 31 U.S.C. Sec. 5324.

I.

In Ratzlaf v. United States, --- U.S. ----, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994), the Court held that 31 U.S.C. Sec. 5322(a), that fixes punishment for persons willfully violating 31 U.S.C. Sec. 5324, required the government to prove, and the district court to so instruct, that the defendant "knew the structuring he undertook was unlawful" and reversed the conviction because of the erroneous instructions given. Ratzlaf, --- U.S. at ----, ----, 114 S.Ct. at 658, 663-64. In Ratzlaf, the district court had instructed the jury that "the Government had to prove defendant's knowledge of the banks' reporting obligation, but did not have to prove defendant knew the structuring was unlawful." Ratzlaf, --- U.S. at ----, 114 S.Ct. at 658. More specifically, the instructions given in Ratzlaf were that the "government does not have to prove that the defendants knew that structuring was unlawful" and that "it is not a defense that the defendants did not know that 'structuring' itself is [illegal] ...," United States v. Ratzlaf, 976 F.2d 1280, 1282 (9th Cir.1992), rev'd, --- U.S. ----, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994).

The instructions given by the district court in the trial of the case at hand were substantially in compliance with the then existing law in this circuit regarding the mens rea requirement of 31 U.S.C. Sec. 5324 and Sec. 5322(a). See United States v. T.J. Rogers, Jr., 962 F.2d 342, 344 (4th Cir.1992). ³ In Rodney Rogers's trial, our case, the district court instructed the jury on willfulness as follows:

Willful means no more than the Defendant charged with the duty knows what he is doing. It does not mean, in addition, he must suppose he is breaking the law.

The Government need not show that the Defendant had the specific intent to violate the law regarding the structuring of currency transactions or causing a report not to be filed or filed with a material misstatement of fact.

The district court's instructions thus reject knowledge of illegality of structuring as an element of the offense and, therefore, are erroneous under Ratzlaf. ⁴

II.

The defendant did not object at trial to the instructions given by the district court or raise the issue on appeal. Therefore, we review for plain error under Fed.R.Crim.P. 52(b) as set forth in United States v. Olano, --- U.S. ----, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993). According to Olano, plain error review requires 1) error; 2) plain under current law; 3) that affects substantial rights, i.e. is prejudicial to the defendant; and 4) which seriously affects the fairness, integrity or public reputation of judicial proceedings.

Applying Ratzlaf as the law at the time of our decision, United States v. Schooner Peggy, 1 Cranch 103, 2 L.Ed. 49 (1801), the failure to instruct on the defendant's knowledge of the illegality of his own conduct is an erroneous omission of an essential element of the offense charged, and thus meets the first two tests of Olano. We are of opinion that this failure to give an instruction on a required element of the crime is an error that affects substantial rights and one that seriously affects the fairness, integrity or public reputation of judicial proceedings, as required by Olano, since due process requires "proof beyond a reasonable doubt of every fact necessary to constitute the crime with which he is charged." In re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 1072-73, 25 L.Ed.2d 368 (1970). We have no doubt that the failure to instruct on an essential element of the crime prejudiced the defendant here, because the jury could not have been expected to make a finding beyond a reasonable doubt as to Rogers's knowledge of the illegality of his structuring, in the face of an instruction to the contrary. The Third Circuit has recently decided that the omission of an essential element of an offense is plain error under Olano, United States v. Xavier, 2 F.3d 1281, 1287 (3rd Cir.1993) (reversing conviction of aiding and abetting pursuant to 18 U.S.C. Sec. 922, providing a firearm to a convicted felon, because no jury instruction given regarding the element of defendant's knowledge of the convicted felon status of the recipient of the gun, even though evidence presented from which the defendant's knowledge of the convicted felon's status could be inferred). In conclusion, we are of opinion that the failure of the district court to properly instruct the jury as to the willfulness element of the offense, as defined in Ratzlaf, is plain error under Olano which requires vacation of Rogers's convictions.

Rogers raised three basic issues on appeal: the district court committed reversible error in admitting four tape recordings into evidence; the district court erred in enhancing Rogers's base offense level by four points under U.S.S.G. Sec. 2S1.3(b)(1) for his knowledge that the funds were criminally derived, and four more points under U.S.S.G. Sec. 3B1.1(a) because he was a leader of a criminal activity that involved five or more participants or was otherwise extensive; and the evidence was insufficient to support the verdict.

We are of opinion there was no error in admitting the tapes into evidence. The question with respect to sentencing is premature, and we express no opinion on that question. While we ordinarily would decide the question of the sufficiency of the evidence, Burks v. United States, 437 U.S. 1, 18, 98 S.Ct. 2141, 2150-51, 57 L.Ed.2d 1 (1978), to do such the sufficiency should be considered under a substantially proper instruction as to the merits, which was not...