U.S. v. Scanio, 172

• Decision Date: 16 March 1990
• Docket Number: D,No. 172,172
• Citation: 900 F.2d 485
• Parties: UNITED STATES of America, Appellee, v. Charles D. SCANIO, Defendant-Appellant. ocket 89-1153.
• Court: U.S. Court of Appeals — Second Circuit

Page 485

900 F.2d 485

58 USLW 2603

UNITED STATES of America, Appellee, v. Charles D. SCANIO, Defendant-Appellant.

No. 172, Docket 89-1153.

United States Court of Appeals Second Circuit.

Argued Sept. 27, 1989.

Decided March 16, 1990.

Richard L. Baumgarten, Buffalo, N.Y., for defendant-appellant.

William J. Knapp, Sp. Atty., U.S. Dept. of Justice, (Dennis C. Vacco, U.S. Atty. for the W.D. of New York, Buffalo, N.Y., of counsel), for appellee.

Before OAKES, Chief Judge, PIERCE and RUBIN, ^* Circuit Judges.

PIERCE, Senior Circuit Judge:

Charles Scanio appeals from a judgment of conviction, after a jury trial, entered in the Western District of New York, Telesca, Chief Judge, of one count of structuring a currency transaction in violation of 31 U.S.C. Secs. 5324(3) and 5322(a). ¹

Scanio asserts several grounds for reversal but principally contends that, in order to impose criminal liability for structuring a currency transaction, the government was required to show that he was actually aware that structuring is illegal. Scanio claims his conviction must be reversed due to the absence of evidence that he knew that his conduct was unlawful.

FACTS

On March 1, 1988, Scanio entered the Brighton branch of Citibank in Rochester, New York, and asked a teller, Tamara Hamilton, the amount owed by him on his line of credit. Hamilton informed him that the balance due was $13,101.17. Hamilton testified that Scanio then wrote this amount on a deposit slip and handed the slip to her together with $13,101.17 in cash.

While the teller was counting the money, she recalled that, under federal law, the bank would be required to file a Currency Transaction Report ("CTR"). According to the teller, when she requested identification, Scanio asked whether this was "for the government form that ha[s] to be filed for over ten thousand dollars?" Upon being informed that it was, Scanio sought to lower the payment to $10,000; when the teller indicated that she thought that even this amount would trigger the filing requirement, Scanio decided to pay only $9,500 of the amount he owed. At trial, Hamilton testified as follows:

Q [by Mr. Knapp, for the government] When he asked you if the information you needed was for the government form, what did you tell him?

A I told him it was.

Q Did he say anything about the government form at that point?

A Yes. He said that he didn't want it to be filed; that he'd lower the amount to ten thousand so it wouldn't have to be filed.

* * *

Q And what did you say at that point?

A That we could--I mean, if that's what he wanted to do, that's what we would do.

Q Did you indicate to him that if he lowered it simply to ten thousand dollars that you understood that you might still have to file a Currency Transaction Report?

A Yes. Because I was still confused as to the limit....

* * *

Q All right. The [other] tellers thought that ten thousand--a ten thousand dollar deposit would require a form, and Mr Scanio indicated that he believed a ten thousand dollar deposit would not require a form?

A Right.

Q How did this discussion get resolved?

A Mr. Scanio then in turn just said, "Well, we'll lower it to ninety-five hundred, and then there wouldn't be any confusion as to whether or not ten or above would trigger the filing of the CTR."

The teller changed the deposit slip to indicate a $9,500 deposit and returned the rest of the cash to Scanio. Scanio then indicated his intention to go to another Citibank branch to pay the remaining amount owed, but after further discussion ensued as to whether such a payment would be aggregated with the $9,500 deposit and thus trigger the CTR requirement, he abandoned this idea. See 31 C.F.R. Sec. 103.22(a)(1) (1989) (banks required to aggregate multiple currency transactions in single business day). Scanio testified as follows:

* * * So I asked her if I had gone to another bank, Citibank branch, if I made the payment, would it be all right. You know, it'd still be a separate transaction from that transaction.

Q [by Mr. Palmiere, defense counsel] Would it be all right in terms of--

A Of not making out one of these forms.

Q You didn't want a form made out?

A No, I did not. I didn't want to make the form out.

Q So you asked whether or not you could go to a branch and whether or not that separate branch transaction on the same day would be considered a separate transaction for purposes of this form?

A Correct.

* * *

Q And what did she say?

A She huddled with the other [tellers], and she said, "Well, as far as"--they seemed like they didn't know really, really know, but they said that they more or less probably would make out one of these reports.

So I says, "Okay. I'll just come--you know, I'll come tomorrow."

* * * * * *

Q So you told her ... that you would come back tomorrow--

A Right.

Q --to pay it off I assume?

A Yes.

Scanio did, in fact, return to the Brighton branch the next day and did pay the remainder due on his line of credit. At the completion of this payment, Scanio commented to Teller Hamilton that, since the transaction had been consummated over a two day period, no CTR would be required. Hamilton agreed and, in fact, Citibank did not file a CTR for either the March 1 or the March 2 payment. Thereafter, Scanio was arrested and charged with having structured a currency transaction for the purpose of evading the requirement that the bank file a CTR. For the reasons which follow, we affirm the judgment of conviction.

DISCUSSION

I.

Under the Bank Secrecy Act of 1970 (the "Act"), and the regulations promulgated thereunder, financial institutions, including banks, are obligated to report currency transactions in excess of $10,000 to the government. See 31 U.S.C. Sec. 5313(a) (1982); 31 C.F.R. Sec. 103.22(a)(1) (1989). Since individuals engaging in sizeable cash transactions often are involved in criminal activity, reports filed pursuant to this requirement assist the government in its efforts to investigate and combat a wide range of criminal conduct. See Rusch, Hue and Cry in the Counting-House: Some Observations on the Bank Secrecy Act, 37 Cath.U.L.Rev. 465, 469-73 (1988); see also H.R.Rep. No. 975, 91st Cong., 2d Sess., reprinted in 1970 U.S.Code Cong. & Admin.News 4394, 4396 ("Criminals deal in money--cash or its equivalent. The deposit and withdrawal of large amounts of currency or its equivalent ... under unusual circumstances may betray a criminal activity."). The government's attempts to collect this information have, however, been frustrated by persons who "structure" their currency transactions--i.e., engage in multiple transactions each involving slightly under $10,000 as to avoid triggering the financial institutions' filing obligations.

While the Act itself left open the possibility that any "participant" in a currency transaction could be required to file a CTR, the regulations adopted by the Treasury Department under the Act do not apply to bank customers. However, prior to legislation specifically relating to structured transactions, enacted in 1986 and effective in January 1987, persons engaging in such transactions were prosecuted either for willfully causing a financial institution to fail to file a CTR, see 18 U.S.C. Sec. 2(b), for knowingly and willfully concealing a material fact from the government, 18 U.S.C. Sec. 1001, or for conspiracy, 18 U.S.C. Sec. 371. These prosecutions led to a split among the various Circuit Courts of Appeals. Several courts rejected attempts to impose criminal liability either because they concluded that the Act did not provide customers with fair warning that structuring was unlawful or because they believed that there could be no accessory liability since the financial institution was not obligated to aggregate separate currency transactions into one reportable transaction. See, e.g., United States v. Anzalone, 766 F.2d 676, 679-83 (1st Cir.1985); United States v. Larson, 796 F.2d 244, 246-47 (8th Cir.1986); United States v. Varbel, 780 F.2d 758, 762 (9th Cir.1986); United States v. Denemark, 779 F.2d 1559, 1563 (11th Cir.1986); see also United States v. Mastronardo, 849 F.2d 799, 804-05 (3d Cir.1988) (applying law in effect prior to January 1987); United States v. Gimbel, 830 F.2d 621, 624-26 (7th Cir.1987) (same).

By contrast, this court and several others affirmed structuring convictions, at least in cases where the defendant engaged in multiple currency transactions totalling more than $10,000 at a single bank in a single day. See, e.g., United States v. Heyman, 794 F.2d 788, 790-93 (2d Cir.), cert. denied, 479 U.S. 989, 107 S.Ct. 585, 93 L.Ed.2d 587 (1986); United States v. Thompson, 603 F.2d 1200, 1202-04 (5th Cir.1979); United States v. Tobon-Builes, 706 F.2d 1092, 1096-1101 (11th Cir.1983); see also United States v. Nersesian, 824 F.2d 1294, 1309-15 (2d Cir.) (applying law in effect prior to January 1987), cert. denied, 484 U.S. 957, 958, 108 S.Ct. 355, 357, 98 L.Ed.2d 380, 382 (1987), 484 U.S. 1061, 108 S.Ct. 1018, 98 L.Ed.2d 983 (1988); United States v. American Investors of Pittsburgh, Inc., 879 F.2d 1087, 1094-1100 (3d Cir.) (same), cert. denied, --- U.S. ----, 110 S.Ct. 368, 107 L.Ed.2d 354 (1989), --- U.S. ----, 110 S.Ct. 721, 107 L.Ed.2d 741 (1990); United States v. Richeson, 825 F.2d 17, 19-20 (4th Cir.1987) (same).

In 1986, confronted with conflicting case law regarding prosecutions for structuring transactions, Congress unequivocally sought to enhance the arsenal of prosecutors in their battle against drug traffickers and money launderers by "codify[ing] Tobon-Builes and like cases and ... negat[ing] the effect of Azalone, Varbel and Denemark." S.Rep. No. 433, 99th Cong., 2d Sess. 22 (1986) [hereinafter Senate Report ]; see also H.R.Rep. No. 746, 99th Cong., 2d Sess. 18-20 (1986) [hereinafter House Report ]. Thus, as part of the Anti-Drug Abuse Act of 1986, Congress enacted 31 U.S.C. Sec. 5324 which provides that:

No person shall for the purpose of evading the reporting requirements of ...