U.S. v. Sans

• Decision Date: 11 May 1984
• Docket Number: No. 82-3106,82-3106
• Citation: 731 F.2d 1521
• Parties: 84-1 USTC P 9484, 15 Fed. R. Evid. Serv. 1010 UNITED STATES of America, Plaintiff-Appellee, v. Fred W. SANS, Frank A. Weaner, Raymond O. McDonald, Jr., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1521

731 F.2d 1521

84-1 USTC P 9484, 15 Fed. R. Evid. Serv. 1010

UNITED STATES of America, Plaintiff-Appellee, v. Fred W. SANS, Frank A. Weaner, Raymond O. McDonald, Jr. Defendants-Appellants.

No. 82-3106.

United States Court of Appeals Eleventh Circuit.

May 11, 1984.

Michael C. Addison, Tampa, Fla., for Sans.

Anthony S. Battaglia, Stephen J. Wein, St. Petersburg, Fla., for Weaner & McDonald.

Lynn Hamilton Cole, Asst. U.S. Atty., Tampa, Fla., Sidney M. Glazer, Atty., Appellate Sect., Criminal Div., Dept. of Justice, Washington, D.C., for plaintiff-appellee.

Appeals from the United States District Court for the Middle District of Florida.

Before TJOFLAT and FAY, Circuit Judges, and WISDOM ^*, Senior Circuit Judge.

TJOFLAT, Circuit Judge:

This case involves the attempts of Leon Cohen and his associates to "launder" illegally obtained money through the Palm State Bank, Palm Harbor, Florida, and to avoid federal income tax liability. Leon Cohen, his bookkeeper Fred Sans, the Palm State Bank, and two of the bank's officers, Frank Weaner and Ray McDonald, were charged in four counts with conspiracy to defraud the government, failure to file currency transaction reports (CTR's) (two counts), and falsifying facts in a matter under the jurisdiction of the Internal Revenue Service (IRS). ¹ Leon Cohen's case was severed because he was ill, and the remaining indictees went to trial before a jury. At the close of the government's case, the court acquitted all four defendants of the fourth count. The jury found Sans guilty of the conspiracy count only; it found Weaner, McDonald, and the Palm State Bank guilty only of the two counts of failure to file the CTR's. Sans, Weaner and McDonald appeal, presenting several claims of error. We affirm.

I.

The conduct for which appellants were indicted took place in 1976 and 1977. At that time, Leon Cohen, an Atlanta, Georgia, resident, owed the IRS over $600,000, and it had filed substantial tax liens against him. Appellant Sans was Cohen's bookkeeper and accountant. Between late 1976 and mid-1977, Cohen obtained over $900,000, much of it in small bills ($5's, $10's and $20's), through various schemes to defraud Leslie Atkinson, a convicted drug dealer then serving a federal sentence in the Atlanta penitentiary. ²

In November 1976, Cohen, through his attorney Stanley Galkin and associate John Tipton, offered to sell Atkinson six kilograms of heroin for $300,000. ³ Atkinson's representatives and Cohen's representatives were to exchange the drugs and money; however, Cohen arranged a simulated arrest at the exchange point, inducing Atkinson's associates to flee without the drugs or the money. Tipton and Sans counted the money over a period of two days at Cohen's house. Tipton and Jerome Kaplan, a business associate of Cohen's, exchanged some of the money at Atlanta banks; Cohen had instructed them not to exchange more than $5,000 at any one bank, and not to attract attention.

In January 1977, Sans and Cohen showed Charles Michael, another of Cohen's associates, what Cohen boasted was "a million dollars" in low denomination bills, and Cohen gave him $25,000 of that money to exchange for $100 bills at several North Carolina banks. Sans and Tipton were present when Michael returned the clean money. Also in January, Cohen showed Milton Chalmers, a commercial loan officer in a St. Petersburg, Florida, bank, a briefcase full of money and sought to exchange it for one hundred dollar bills. Chalmers, declining to make the exchange, explained the federal reporting requirements; ⁴ Cohen commented that he could circumvent the requirements by exchanging the money at the Palm State Bank because his associates controlled the bank.

On January 20, 1977, one day after the Palm State Bank received a large shipment of $100 and $50 bills from the Federal Reserve, Cohen came to the bank. Appellant McDonald, as the vice president with whom Cohen was dealing, brought Cohen to then head teller Rosemary Gardner and instructed her that Cohen had a large number of small bills that should be exchanged for large ones. $20,000 to $25,000 was exchanged on that occasion. McDonald told Gardner that no CTR was necessary, implying to her that such reports did not apply to exchanges of bills for other bills.

In early February 1977, appellant Weaner, in the presence of McDonald and Cohen, instructed his secretary Loraine Ingham to take a large stack of cash to Rosemary Gardner to be exchanged, and to open a safety deposit box for Cohen, but without his name appearing on the bank's records. They set up the account in Tipton's name.

On March 10, 1977, Galkin and Cohen, accompanied by Chalmers, ⁵ exchanged about $50,000 at the Palm State Bank. Teller Gary Watson, who exchanged the money, asked Rosemary Gardner if a CTR needed to be filed. Gardner took a CTR form to Weaner's office and returned with it five minutes later. ⁶ No form was filed.

In March and April 1977, Cohen weaseled more money out of Atkinson. Galkin, at Cohen's direction, convinced Atkinson that he had high official connections who, for a $1 million fee, could arrange Atkinson's release from prison. After receiving a $100,000 prepayment from one of Atkinson's associates, Cohen, impersonating then Associate Attorney General Michael Egan, visited Atkinson at the prison. When Cohen returned, Sans and Tipton counted the $100,000. In April, Cohen forged a note to Atkinson's brother and used it to get $300,000 of Atkinson's money. Also in April, Cohen sent Sans to the Grand Cayman Islands where, by trick, Sans and Cohen arranged a wire transfer of $260,000 from an account Atkinson had there through a Canadian bank to a checking account in Sans' name at the Palm State Bank. Weaner's initials were on the card establishing the account.

On May 10, 1977, Palm State Bank received another Federal Reserve shipment of $50,000 in large bills. Cohen then exchanged about $40,000 in $5's, $10's and $20's for large bills. McDonald waited with Cohen at the teller window while then head teller Gary Watson made the exchange. Watson retained the small bills in his teller drawer. Watson again asked Rosemary Gardner about filing a CTR; no report was filed, however.

Cohen, Sans, Weaner, McDonald and Palm State Bank were indicted for: (count one) conspiracy to (a) defraud the United States by obstructing the IRS in its efforts to collect information and reports of currency transactions larger than $10,000, (b) falsify and conceal material facts within IRS jurisdiction in violation of 18 U.S.C. 1001, (c) willfully fail to file and cause the failure to file CTR's in connection with currency exchanges totaling in excess of $100,000 at Palm State Bank, and (d) defraud the United States by impeding collection of Cohen's income taxes; (count two) willful failure to file a CTR in connection with the March 10, 1977, money exchange; (count three) willful failure to file a CTR in connection with the May 10, 1977, money exchange; and (count four) concealing facts within IRS jurisdiction in violation of 18 U.S.C. 1001.

At trial, the government presented Galkin, Tipton, Chalmers, Watson, Rosemary Gardner and teller Shirley Scoggins, among others, as witnesses. They testified to the above transactions. The defendants denied any wrongdoing on their part. Sans' denial, presented through his attorney's argument to the jury, was that he did not know Cohen was violating the law and did not know about the money exchanges. Weaner testified that no exchange had taken place to his knowledge, and even if one had he would not have thought a CTR was required because he thought Cohen fell into a "known customer" exemption to the reporting requirements. The exemption, at 31 CFR Sec. 103.22(b)(3) (1972), provided that a bank would not need to "report transactions with an established customer maintaining a deposit relationship with the bank, in amounts which the bank may reasonably conclude do not exceed amounts commensurate with the customary conduct of the business ... of the customer concerned." McDonald testified that he recalled one cash exchange; Cohen had told him a real estate seller he was dealing with needed cash in large bills for certain property Cohen was trying to purchase, and McDonald had allowed him to exchange some small bills for large bills. No other exchanges had taken place, and, for the purpose of that one exchange, he had considered Cohen a "known customer" and so had not filed the CTR.

The defendants sought to buttress their denials of wrong-doing with the testimony of the president of the Palm State Bank, Phyllis Jones, and a banking expert, Gerald Stogniew; their testimony raised an inference that the currency exchange of May 10, 1977, handled by Gary Watson, could not have taken place. Jones said the bank's guidelines on the amount of cash the head teller could have in his drawer at any one time was $25,000 to $30,000, substantially less than the amount Cohen gave Watson on May 10; under the guidelines, Watson would have been required to deposit the excess in the bank's vault. Stogniew opined that the records of the bank's vault showed no deposit on May 10 of the number of small denomination bills Watson said he received from Cohen on that date, the inference being, as the defendants argued to the jury, that Watson had not conducted the exchange. As we have indicated, the jury found the bank officers and the bank guilty of having willfully failed to file the CTR's; it found Sans guilty of conspiracy.

On appeal, Weaner, McDonald and Sans raise three kinds of error. The first would require us to enter one or more judgments of acquittal; the second would require us to grant one or more of the appellants a new trial, and the third would require us to grant a resentencing. In the first category are two claims by Weaner and McDonald: (1) that the rules requiring CTR's to be filed were unconstitutional as they resulted from an overbroad congressional delegation,...