United States v. Gimbel

• Decision Date: 12 March 1985
• Docket Number: No. 84-CR-10.,84-CR-10.
• Citation: 632 F. Supp. 713
• Parties: UNITED STATES of America, Plaintiff, v. Stanley P. GIMBEL, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

632 F. Supp. 713

UNITED STATES of America, Plaintiff, v. Stanley P. GIMBEL, Defendant.

No. 84-CR-10.

United States District Court, E.D. Wisconsin.

August 23, 1984.

On Motion For Reconsideration And Clarification March 12, 1985.

G. Roger Markley, Sp. Asst. U.S. Atty., Chicago, Ill., for plaintiff.

William M. Coffey, Coffey Coffey & Geraghty, Milwaukee, Wis., for defendant.

DECISION AND ORDER

CURRAN, District Judge.

I. Background and Procedure

On January 17, 1984, the grand jury returned a sixteen-count indictment against the defendant, Stanley P. Gimbel, charging him with multiple criminal violations of 18 U.S.C. §§ 2¹ & 1001² and 31 U.S.C. § 5313³ & 5322.⁴ Count One of the indictment states that Gimbel, an attorney who represents clients in criminal and tax matters, knowingly, willfully and intentionally falsified, concealed and covered up by a scheme and device material facts which are within the jurisdiction of an agency or department of the United States Government, namely the Internal Revenue Service. (See Appendix A) The remaining counts charge specific instances of violations which occurred between April, 1982 and May, 1983. (See Appendix B)

In common parlance, the government is accusing Gimbel of devising and carrying out a money laundering scheme for certain of his clients, some of whom were engaged in criminal activities. Under this scheme Gimbel or someone acting on his direction would either withdraw or deposit currency⁵ totalling over $10,000.00 in a single day through the trust account which Gimbel's law firm maintained at a Milwaukee bank. A financial institution⁶ such as a bank⁷ is required to file a currency transaction report (CTR) with the Internal Revenue Service for all currency transactions exceeding $10,000.00. Since 1981, banks have been asked to aggregate multiple transactions made by one person in the course of a single day if they are aware of them. The indictment alleges that Gimbel attempted to evade these reporting requirements by breaking up the transactions into amounts of less than $10,000.00 and making multiple deposits or withdrawals in a single day; by naming only himself or his law firm's trust account as the party for whom the transactions were being made; and by advising others to use false names when opening bank accounts and endorsing checks. The indictment implies that the motive for this scheme was to conceal the origin of currency garnered from criminal activity and to evade paying income taxes. Gimbel is also said to have counseled these clients to underreport their income for tax purposes.

On April 30, 1984 the magistrate issued a Recommendation and Order which upheld the Indictment except that portion of Count I, ¶ 5(e) which refers to the underreporting of income. This clause was struck as prejudicial and irrelevant surplusage. The defendant then filed an Objection to and Appeal from Magistrate's Recommendation and Order of April 30, 1984, on the following grounds:

1) the indictment contains misstatements of the law;

2) Count I fails to allege an offense and is insufficient;

3) Count I is unconstitutionally vague;

4) Count I is duplicitous;

5) the charge in Count I under 18 U.S.C. §§ 2 & 1001 is unconstitutional;

6) Count I impermissibly merges with Counts II through XVI;

7) Counts II through XVI fail to allege an offense;

8) Counts II and XVI are unconstitutionally vague;

9) Sections 5313 and 5322 of Title 31 of the United States Code are unconstitutional on their face and/or as applied.

The government appeals from that part of the Magistrate's Recommendation and Order which strikes as prejudicial and irrelevant surplusage that part of Count I, ¶ 5(e) of the Indictment which alleges that the defendant counseled individuals "to report income to the Internal Revenue Service in an amount different than actually received by those persons as an alternative to such evasion and falsity." The government contends that this clause is "highly relevant" toward showing the purpose of the scheme it claims the defendant devised. See Government's Objection to and Appeal from Magistrate's Recommendation and Order of April 30, 1984 at 2.

II. The Defendant's Objections

The defendant's motions all challenge the sufficiency of the Indictment. Those challenging the constitutionality of the law allegedly violated and those which say that the Indictment fails to state the elements of a crime go to the validity of this court's jurisdiction. "A federal court has jurisdiction to try criminal cases only when the information or indictment alleges a violation of a valid federal law; and it is ultimately the court's responsibility to ensure that jurisdiction exists." United States v. Saade, 652 F.2d 1126, 1134 (1st Cir.1981). The motions to dismiss based on duplicity, multiplicity, surplusage, impermissible merger and vagueness of the charges go to the form of setting forth these charges in the Indictment.

The test for the sufficiency of an indictment is whether "it states the elements of the offense intended to be charged with particularity sufficient to apprise the accused of what he must be prepared to meet, and to enable the accused to plead a judgment under the indictment as a bar to any subsequent prosecution for the same offense." Russell v. United States, 369 U.S. 749, 763-64, 82 S.Ct. 1038, 1046-47, 8 L.Ed.2d 240 (1962); United States v. Garcia-Geronimo, 663 F.2d 738, 743 (7th Cir. 1981); United States v. London, 550 F.2d 206, 210 (5th Cir.1977); United States v. Logwood, 360 F.2d 905, 907 (7th Cir.1966); United States v. Raineri, 521 F.Supp. 16, 22 (W.D.Wis.1980). The court may properly decide all questions of law raised by the defendant as grounds for dismissing the indictment. United States v. Jones, 542 F.2d 661, 664-65 (6th Cir.1976); United States v. Higgins, 511 F.Supp. 453, 454 (W.D.Ky.1981).

Because the court must have jurisdiction before this case can proceed, the threshold issue in this appeal from the Magistrate's Recommendation and Order is whether the laws and regulations the defendant is charged with violating are constitutional and, if so, whether the Indictment sufficiently alleges the necessary elements of the crimes charged. See United States v. Conlon, 481 F.Supp. 654, 660 (D.D.C.1979), aff'd in part rev'd. in part, 628 F.2d 150 (D.C.Cir.1980), appeal after remand, 661 F.2d 235 (1981), cert. denied, 454 U.S. 1149, 102 S.Ct. 1015, 71 L.Ed.2d 304 (1982). Although the defendant mounts a due process challenge to the statutes he is charged with violating, the rule of strict necessity would have this court attempt to resolve this motion to dismiss by evaluating the sufficiency of the Indictment rather than by declaring any of the laws in question to be unconstitutional. See Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 341, 56 S.Ct. 466, 480, 80 L.Ed. 688 (1936) (Brandeis, J., concurring).

The defendant argues that sections 5313 and 5322 of Title 31 of the United States Code are unconstitutional on their face and/or as applied because they "do not afford a person of reasonable intelligence notice of what they prohibit or require." Defendant's Objection to and Appeal from Magistrate's Recommendation and Order of April 30, 1984 at 23. Following this line of reasoning, the defendant concludes that 18 U.S.C. §§ 2 & 1001, as applied, are also unconstitutionally vague. "If the financial institution has no legal obligation to file such a CTR it cannot be a crime for an individual `to cause' the financial institution to fail to file the CTR." Id. at 22.

The government responds that the carrying out of the scheme allegedly devised by the defendant contradicts his claim that he had no notice or idea that his actions were prohibited. See Government's Response to Defendant's Memorandum Brief at 7. The government also contends that other courts have already found the law in question to be constitutional. See, e.g., California Bankers Association v. Shultz, 416 U.S. 21, 94 S.Ct. 1494, 39 L.Ed.2d 812 (1974); United States v. Dichne, 612 F.2d 632 (2d Cir.1979), cert. denied, 445 U.S. 928, 100 S.Ct. 1314, 63 L.Ed.2d 760 (1980); United States v. Fitzgibbon, 576 F.2d 279 (10th Cir.), cert. denied, 439 U.S. 910, 99 S.Ct. 279, 58 L.Ed.2d 256 (1978). In addition, courts have recognized similar offenses under Title 31 of the United States Code. See, e.g., United States v. Tobon-Builes, 706 F.2d 1092 (11th Cir.1983); United States v. Dickinson, 706 F.2d 88 (2d Cir. 1983); United States v. Kattan-Kassin, 696 F.2d 893 (11th Cir.1983); United States v. Dichne, 612 F.2d 632 (2d Cir.1979), cert. denied, 445 U.S. 928, 100 S.Ct. 1314, 63 L.Ed.2d 760 (1980); United States v. Thompson, 603 F.2d 1200 (5th Cir.1979); United States v. Beusch, 596 F.2d 871 (9th Cir.1979); United States v. Fitzgibbon, 576 F.2d 279 (10th Cir.), cert. denied, 439 U.S. 910, 99 S.Ct. 279, 58 L.Ed.2d 256 (1978).

Reviewing the charges in the Indictment, it appears that the defendant could not be charged with a crime under only one of the statutes cited. The charging sections depend on interlocking two or more federal laws. The cornerstone of the charges, however, is section 5313 of Title 31 of the United States Code. Under that section a financial institution must file a CTR when a person's⁸ currency deposit or withdrawal exceeds $10,000 in a single day. If the CTR contains false statements or if material facts are concealed so that no CTR is filed, the person responsible can be charged with filing a false statement under 18 U.S.C. § 1001. Even though a person does not have a direct legal duty to file a CTR, he can be charged as a principal if he causes another not to carry out that duty. 18 U.S.C. § 2. Thus, if section 5313 is not applicable, the defendant cannot be charged under that section, nor under the penalty enhancement section, 31 U.S.C. § 5322, nor under 18 U.S.C. §§ 2 & 1001. Consequently, this court must first rule on the constitutionality of section 5313 in the context of this...