United States v. $359,500 in United States Currency, Civ-84-661C.

• Decision Date: 29 September 1986
• Docket Number: No. Civ-84-661C.,Civ-84-661C.
• Citation: 645 F. Supp. 638
• Parties: UNITED STATES of America, Plaintiff, v. $359,500 IN UNITED STATES CURRENCY, Defendant.
• Court: U.S. District Court — Western District of New York

645 F. Supp. 638

UNITED STATES of America, Plaintiff, v. $359,500 IN UNITED STATES CURRENCY, Defendant.

No. Civ-84-661C.

United States District Court, W.D. New York.

September 29, 1986.

Roger P. Williams, U.S. Atty. (Frank J. Clark, III, Asst. U.S. Atty., of counsel), Buffalo, N.Y., for plaintiff.

Murray Appleman, New York City, for claimant Benedetto Romano.

CURTIN, Chief Judge.

The United States seeks the forfeiture of $359,500 in United States currency pursuant to 31 U.S.C. §§ 5316(a) and 5317(b). Claimant Benedetto Romano opposes this forfeiture.

A non-jury trial was held May 10, 1985. Post-trial briefs were filed, and summations were heard in July. After taking the case under advisement, I found a need for further briefing and ordered the parties to address certain issues (Order of November 19, 1985). The briefs were filed in December. Due to the large number of cases on my docket, I was unable to review counsel's most recent submission for some time. Now, after careful consideration of the issues presented by this case, I find that forfeiture is not proper under the circumstances and direct that the defendant currency be returned to claimant. Below are my findings of fact and conclusions of law.

On November 17, 1983, Benedetto Romano crossed the Peace Bridge, heading from Buffalo, New York, to Ontario, Canada. When he crossed to the Canadian side of the bridge, he spoke with a Canadian Customs official at the primary inspection area. For reasons which were never established at trial, Mr. Romano was referred to the secondary inspection station (Tr., p. 10).

At the secondary station, Mr. Romano spoke with another Canadian Customs official, Bruce Mehlenbacher. Mr. Mehlenbacher could not recall the substance of the conversation (Tr., p. 11), but remembered that Mr. Romano had planned to stay in Canada for just a few days. Mr. Romano opened his trunk at Inspector Mehlenbacher's request. There were some bags containing several thousand dollars in the trunk. Mehlenbacher asked whether Romano had declared the money before exporting it from the United States; Mr. Romano replied that he had not (Tr., pp. 11-12).

Although there are no Canadian regulations governing the importation of money, Mehlenbacher was suspicious of the unusually large sum Mr. Romano was carrying. He did not permit Mr. Romano to enter Canada and, after alerting United States Customs, ordered him to return to the United States (Tr., pp. 12-13, 17).

Once he had crossed back over the bridge and returned to the American side, Mr. Romano was questioned by Immigration Officer Samuel J. Tiranno. Mr. Tiranno testified that Romano admitted to having some currency, eventually stating that he had more than $300,000 (Tr., p. 28). Mr. Romano was sent to the secondary inspection area, where he completed Form 4790, Report of International Transportation of Currency or Monetary Instruments (Exhibit 1). He also filed a baggage declaration form, Customs Form 6059-B, which was printed in Italian (Exhibit 2). In response to the question of whether he was carrying more than $5,000, Mr. Romano checked "Yes." A records check revealed that Mr. Romano had not completed any forms, including the required Form 4790, when he had crossed the bridge earlier that day (Tr., p. 54). Since Mr. Romano failed to file these forms before he crossed the bridge, the money was confiscated.

Officer Tiranno also testified about the arrangement at the Peace Bridge. As a person approaches the Peace Bridge from Buffalo, he must pass through a toll booth and pay a fee for crossing the bridge. Only after he has crossed the bridge and entered the Canadian Customs compound does the traveler encounter any customs officials. He is then, for the first time, questioned about his citizenship and any items he may wish to declare (Tr., pp. 35-37).

The parties stipulated that there are no signs or other notice on either side of the bridge to inform travelers of the currency reporting requirements (Tr., p. 5). The only notices available on the American side of the bridge appear in the administrative office. An ordinary traveler, who was not made aware of the currency reporting requirements, would have no reason to enter the administrative office (Tr., p. 49). There was no evidence adduced at trial to indicate that Mr. Romano had any knowledge of the reporting requirements, and I find that he had no such knowledge.

At the time the money was seized from Mr. Romano, 31 U.S.C. § 5316(a) provided:

Except as provided in subsection (c) of this section, a person or an agent or bailee of the person shall file a report under subsection (b) of this section when the person, agent, or bailee knowingly—

(1) transports or has transported monetary instruments of more than $5,000 at one time—

(A) from a place in the United States outside the United States; or

(B) to a place in the United States from or through a place outside the United States; or

(2) receives monetary instruments of more than $5,000 at one time transported into the United States from or through a place outside the United States.¹

Among those courts which have considered the issue, there is a split as to whether the word "knowingly" in section 5316 applies solely to a person's knowledge that he is carrying in excess of $5,000 (now $10,000) over the border, or whether it also includes knowledge of the reporting requirement. Claimant raised this issue before trial in the context of a motion for summary judgment. I denied the motion in a brief order, relying upon a case from the Southern District of Florida. United States v. $4,255,625.39, 528 F.Supp. 969 (S.D.Fla.1981).

Several months after my decision denying summary judgment, the Eleventh Circuit addressed this issue and concluded that knowledge of the reporting requirement is an element in a civil forfeiture proceeding under sections 5316 and 5317.²United States v. One Lot of $24,900 in U.S. Currency, 770 F.2d 1530 (11th Cir. 1985). The question remains undecided in this circuit. United States v. $26,660 in U.S. Currency, 777 F.2d 111, 112 (2d Cir. 1985). I find the analysis of the United States Court of Appeals for the Eleventh Circuit to be persuasive, and, after reconsideration, in light of that decision, hold that knowledge of the reporting requirement is necessary in a civil forfeiture proceeding under sections 5316 and 5317.

In concluding that knowledge is a requirement in a civil forfeiture proceeding, the Eleventh Circuit Court of Appeals relied in part upon the legislative history. United States v. $24,900, supra. The court noted that sections 5316 and 5317 are part of the Currency and Foreign Transactions Reporting Act of 1970 the Act.

The purpose of the Act is to require reports of foreign transactions where such reports would be helpful in investigations of criminal, tax, and regulatory violations. 770 F.2d at 1534. Another purpose, unrelated to criminal investigations, is to gather statistics necessary for the formulation of monetary and economic policy. House Committee on Banking and Currency, H.R.Rep. No. 975, 91st Cong., 2d Sess., reprinted in 1970 U.S. Code Cong. & Ad. News 4404-4405 House Report.

The goal of Congress in passing the Act was to obtain currency reports, not to prevent the exportation of United States currency. As emphasized in the House Report at 4398:

The Bill imposes no legal limitation on the export of U.S. currency .... Those leaving the United States have always been free to take with them such amounts of cash or other forms of money as they choose.

The Act was not intended to limit in any way the free flow of currency in international commerce. United States v. $24,900, 770 F.2d at 1535.

In view of the legislative history, it would make little sense to interpret "knowingly" as not applying to the reporting requirement:

Thus, the purpose of the Act—obtaining reports—could only be achieved if travelers were made aware of the reporting requirements. If one is unaware of the reporting requirement, one cannot be expected to comply, notwithstanding the possibility of a subsequent forfeiture, or any other sanction. To interpret "knowingly" as used in the reporting requirements as not requiring knowledge of the reporting requirements would in effect mean that travelers need not be made aware of the reporting requirements .... We find that such an interpretation of "knowingly" would fly in the face of Congress' goal of obtaining currency reports.

* * * * * *

A signal would be sent that United States law may well be filled with boobytraps that spring without warning to grab the currency of unsuspecting travelers.

Id. at 1535.

Additionally, the language of the forfeiture section lends support to the Eleventh Circuit's conclusions. Section 5317(b) (now c) states that a monetary instrument may be seized and forfeited to the United States (1) when a report is not filed or (2) when the report contains a material omission or misstatement. In the latter case, the individual presumably would have had knowledge of the reporting requirement.

The government points to cases in which the innocence of the owner of the property does not affect the validity of a forfeiture. In United States v. $6,700 615 F.2d 1 (1st Cir.1980), the administrator of an estate embezzled money from the estate. The administrator brought $6,700 of the estate's money into the United States without filling out the required forms, and the money was seized. The estate claimed the $6,700. The First Circuit Court of Appeals permitted the forfeiture, holding that forfeiture is not dependent on the wrongdoing of the owner of the monetary instruments. Id. at 3 (see also United States v. $20,757.83, 769 F.2d 479 (8th Cir.1985) and, generally, Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 94 S.Ct. 2080, 40 L.Ed.2d 452 (1974)).

However, the facts in those cases are distinguishable from the case at bar, in which the knowledge of the individual who transported the money over the...