U.S. v. Segal

• Decision Date: 26 July 1988
• Docket Number: No. 87-1238,87-1238
• Citation: 852 F.2d 1152
• Parties: 26 Fed. R. Evid. Serv. 808 UNITED STATES of America, Plaintiff-Appellee, v. Phillip L. SEGAL, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1152

852 F.2d 1152

26 Fed. R. Evid. Serv. 808

UNITED STATES of America, Plaintiff-Appellee, v. Phillip L. SEGAL, Defendant-Appellant.

No. 87-1238.

United States Court of Appeals Ninth Circuit.

Argued and Submitted June 14, 1988.

Decided July 26, 1988.

Robert F. Kane, San Francisco, Cal., for defendant-appellant.

Michael J. Yamaguchi, Asst. U.S. Atty., San Francisco, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before ALDISERT, ^* WALLACE, and BEEZER, Circuit Judges.

BEEZER, Circuit Judge:

Appellant Phillip Segal was convicted of aiding and abetting a failure to file currency transaction reports ("CTRs"), under 18 U.S.C. Sec. 2 and 31 U.S.C. Sec. 1058. Segal was also convicted of conspiracy to defraud the United States, under 18 U.S.C. Sec. 371.

Segal claims that the Government elicited evidence at trial of unrelated misconduct, that he is not liable as a mere bank "customer," and that the conspiracy conviction under 18 U.S.C. Sec. 371 cannot be punished as a felony, since the accompanying conviction was a misdemeanor.

We affirm.

I

In 1979, Segal ("appellant") became acquainted with Frank Vignand, assistant manager of a branch of San Francisco Federal Bank.

In early Autumn 1981, appellant and Vignand had several conversations relating to the bank's obligation to report currency transactions.

In November, 1981, appellant told Vignand that he was anticipating receipt of a large sum of cash. Appellant indicated that he wanted to deposit this cash at Vignand's bank without causing a CTR to be filed with the IRS.

On November 6, 1981, appellant informed Vignand that he had received the cash. The same day, appellant's son arrived at Vignand's bank with a briefcase. Appellant's son gave the briefcase to Vignand, stated it contained $88,000, and requested "bank checks." Vignand accepted the currency and transferred it to a vault custodian, Mr. Hill, to verify the amount ($88,200). The currency was in fifty and one-hundred dollar denominations, old, and bundled in rubber bands.

Vignand contacted appellant. Appellant requested that the money be exchanged for bank checks, each less than $10,000. Vignand complied. He provided fictitious names and prepared ten checks in amounts ranging from $7,900 to $9,500. He placed these checks in an envelope and delivered them to appellant's son. Vignand did not file a CTR with the IRS for this transaction. Mr. Hill reported these activities to the IRS, and testified to them at trial.

Appellant and Vignand again conversed about delivering large sums of cash without filing CTRs. Appellant informed Vignand that he was anticipating delivery of $200,000 in cash.

Appellant and Vignand thereafter devised a scheme. Segal maintained two savings accounts, each with balances of $100,000. Two checks, representing passbook loans totalling $180,000, were issued to appellant. The "loans" were secured by appellant's accounts. An additional $20,000 was withdrawn from a third account belonging to appellant. Vignand then converted the two checks and $20,000 cash into four checks, each for $50,000 payable to Pilgrim Commercial, Ltd. ("Pilgrim").

On November 17, 1981, Vignand delivered loan documents, promissory notes and these four checks to appellant. The following day, appellant gave Vignand a suitcase containing $200,000. Vignand opened a joint safe deposit box, in the names of appellant and himself. Vignand deposited the $200,000 in this box, and delivered a box key to appellant.

From November 18, 1981, to December 23, 1981, Vignand entered the safe deposit box repeatedly to withdraw cash, which he then applied against appellant's outstanding passbook loans.

Vignand did not file a CTR with the IRS for this $200,000 transaction. Appellant paid Vignand approximately $900 for assisting in the transaction.

Appellant was convicted of aiding and abetting the failure to file CTRs under 18 U.S.C. Sec. 2 and 31 U.S.C. Sec. 1058. He was convicted of conspiracy to defraud the United States under 18 U.S.C. Sec. 371.

While appellant was indicted on both transactions, he was only convicted of aiding and abetting the failure to file a CTR for the transaction totalling $200,000. Although aiding and abetting the failure to file a CTR on a $200,000 transaction was initially termed a felony, the parties stipulated that this conviction would be entered as a misdemeanor.

Vignand had pled guilty, under 31 U.S.C. Sec. 1059, to a currency reporting violation involving this $200,000 cash transaction. He had also pled guilty to embezzling $28,000 from appellant.

Appellant's conspiracy conviction, under 18 U.S.C. Sec. 371, resulted in a sentence of six months imprisonment, followed by three years probation. Appellant's currency reporting conviction, under 31 U.S.C. Sec. 1059, resulted in a sentence of three years probation and a fine of $3,000. The second sentence is to run concurrently with the first.

Appellant timely appeals. We have jurisdiction under 28 U.S.C. Sec. 1291.

II

Appellant argues that the government improperly elicited evidence of misconduct unrelated to the crimes for which appellant was charged.

We review denial of a motion for mistrial for abuse of discretion. United States v. Morris, 827 F.2d 1348, 1351 (9th Cir.1987), cert. denied, --- U.S. ----, 108 S.Ct. 726, 98 L.Ed.2d 675 (1988). Since there was no objection at trial to the introduction of evidence challenged on appeal, we may reverse only for plain error. United States v. Young, 470 U.S. 1, 14-16, 105 S.Ct. 1038, 1045-47, 84 L.Ed.2d 1 (1985); Morris, 827 F.2d at 1351.

Vignand testified, on direct and re-direct, that he purchased cocaine from appellant. While evidence of prior crimes is generally inadmissible under Fed.R.Evid. 404(b) and 403, see, e.g., United States v. Lewis, 787 F.2d 1318, 1321 (9th Cir.1986), the "invited error" doctrine entitles the government to pursue inquiry into a matter, if evidence thereon was first introduced by defendant. Burgess v. Premier Corp., 727 F.2d 826 (9th Cir.1984); United States v. Segall, 833 F.2d 144, 148 (9th Cir.1987).

Defense counsel's opening statement included several explicit references to appellant's use of cocaine. The government's opening statement included no reference to cocaine use or to cocaine purchases, by any party or witness.

From defendant's opening statement, the government could reasonably have anticipated further evidence of appellant's involvement with cocaine. On direct examination, the government stepped through the "open door" and inquired of witness Vignand:

Q: Mr. Vignand, what did you do with the [embezzled] money?

A: Most of it was--actually went back to Segal.

Q: How so?

A: Payment for cocaine.

Q: So you bought cocaine from Mr. Segal; is that correct?

A: That's correct. ¹

Appellant did not object to this line of questioning. On cross-examination, defense counsel questioned Vignand and appellant extensively on their narcotics activities including purchases and sales. On re-direct, the government followed-up defense counsel's cross-examination questions. Only at this time did defense counsel raise an objection. At the conclusion of all testimony, the court instructed the jury that "[t]his case is not about cocaine."

A ruling on the admissibility of evidence, absent a timely objection, will not result in a mistrial unless the alleged error " 'seriously affect[s] the fairness, integrity or public reputation of judicial proceedings' (citation omitted)." Young, 470 U.S. at 15, 105 S.Ct. at 1046.

In view of defense counsel's opening statement and his cross-examination questions, we conclude that no unfairness or adverse reflection on judicial integrity results from affirming denial of appellant's motion for mistrial.

III

Appellant argues that since he was a bank "customer", he is excused from reporting obligations incumbent upon the bank.

Generally, customers are under no obligation to report currency transactions. See generally United States v. Varbel, 780 F.2d 758 (9th Cir.1986); United States v. Reinis, 794 F.2d 506 (9th Cir.1986); United States v. Dela Espriella, 781 F.2d 1432 (9th Cir.1986).

In this case, appellant falls outside the ambit of the general rule. We have articulated an exception where the customer aids and abets or conspires with a senior bank officer who is liable under the reporting act; such a customer may be held liable as an aider and abettor or as a co-conspirator. See United States v. Hayes, 827 F.2d 469 (9th Cir.1987) (customer liable for failure to file CTRs on transactions exceeding $10,000 on showing of complicity with bank vice president).

Moreover, an "aider and abettor can be punished for conspiring with members of a particular group that is the subject of a criminal prohibition." Hayes, 827 F.2d at 473; see also United States v. Heyman, 794 F.2d 788, 792 (2d Cir.) (where financial institution required to file CTRs, a customer may be held criminally liable for willfully causing financial institution not to file CTRs), cert. denied, 479 U.S. 989, 107 S.Ct. 585, 93 L.Ed.2d 587 (1986); United States v. Thompson, 603 F.2d 1200, 1203 (5th Cir.1979) (individuals, including customers, may be liable for knowing failure to file CTRs).

Since appellant knowingly conspired with the culpable bank officer, Vignand, to avoid statutory reporting requirements, his convictions under 31 U.S.C. Sec. 1059 and 18 U.S.C. Sec. 371 are not invalid as a result of "customer" status.

IV

Appellant claims that his conspiracy conviction under 18 U.S.C. Sec. 371 cannot be punished as a felony, since the alleged underlying offense is a misdemeanor. We review the interpretation of a statute de novo. United States v. Varbel, 780 F.2d 758, 761 (9th Cir.1986).

Appellant was convicted under 18 U.S.C. Sec. 2 and 31 U.S.C. Secs. 1058, 1059(2) ² of willfully aiding and abetting the failure to file CTRs with the IRS on a $200,000 currency transaction. Appellant was also convicted...