US v. Scanio

• Citation: 705 F. Supp. 768
• Decision Date: 22 September 1988
• Docket Number: No. CR-88-64T.,CR-88-64T.
• Parties: UNITED STATES of America, Plaintiff, v. Charles D. SCANIO, Defendant.
• Court: U.S. District Court — Western District of New York

705 F. Supp. 768

UNITED STATES of America, Plaintiff, v. Charles D. SCANIO, Defendant.

No. CR-88-64T.

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

September 22, 1988.

U.S. Dept. of Justice (Anthony M. Bruce, Sp. Atty., of counsel), Rochester, N.Y., for plaintiff.

Palmiere & Pellegrino, P.C. (Norman A. Palmiere, of counsel), Rochester, N.Y., for defendant.

DECISION and ORDER

TELESCA, Chief Judge.

By my Order dated April 17, 1988, I referred all pre-trial motions to Magistrate Kenneth R. Fisher to hear and determine pursuant to 28 U.S.C. § 636(b)(1)(A) or hear and report pursuant to 28 U.S.C. § 636(b)(1)(B). On August 17, 1988, Magistrate Fisher filed his Report and Recommendation in which he concluded that the defendant's motion to dismiss the indictment should be denied. On August 26, 1988, defendant filed written objections to the Magistrate's Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(C). Because I find that the defendant's objections are without merit, I affirm the Magistrate's Report and Recommendation in its intirety.

Defendant, Charles D. Scanio, was charged in a one count indictment with structuring and attempting to structure a currency transaction with a domestic financial institution for the purpose of evading the currency reporting requirements set forth in 31 U.S.C. § 5313(a) and 31 C.F.R. § 103.22(a), in violation of 31 U.S.C. §§ 5324 and 5322 and 18 U.S.C. § 2. Scanio moved to dismiss the indictment arguing that 31 U.S.C. § 5324 is void for vagueness in violation of the Fifth Amendment and that the statute violates his Fifth Amendment privilege against self-incrimination. In his exhaustive Report and Recommendation, Magistrate Fisher rejected both arguments.

Scanio objects to the Magistrate's conclusion that 31 U.S.C. § 5324(3) is not void for vagueness. The Supreme Court has held that in addressing a claim of vagueness, the court "should uphold the vagueness challenge only if the enactment is impermissibly vague and all of its applications." Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 495, 102 S.Ct. 1186, 1191, 71 L.Ed.2d 362 (1982). The Court also indicated that a criminal enactment that includes a scienter requirement may be less susceptible to a vagueness challenge because that intent requirement provides notice of proscribed conduct. Village of Hoffman Estates, supra, 455 U.S. at 499, 102 S.Ct. at 1193. The Magistrate correctly concluded that intent requirement in 31 U.S.C. § 5324(3) saves it from defendant's vagueness challenge.

CONCLUSION

I have thoroughly reviewed and considered all of defendant's objections to the Magistrate's Report and Recommendation and find them to be meritless. Each argument raised was carefully considered by the Magistrate and properly rejected by him.

WHEREFORE, the Magistrate's Report and Recommendation dated August 17, 1988, is hereby affirmed and adopted in its entirety. Defendant's motion to dismiss the indictment is denied for all of the reasons stated in the Magistrate's Report and Recommendation.

The case will proceed to trial on October 25, 1988 with jury selection at 10:00 A.M.

ALL OF THE ABOVE IS SO ORDERED.

REPORT AND RECOMMENDATION

KENNETH R. FISHER, United States Magistrate.

In this criminal action, the defendant is charged in a one count indictment with structuring a currency transaction in excess of $10,000 with Citibank, a domestic financial institution, for the purpose of evading the currency reporting requirements of 31 U.S.C. § 5313(a) and 31 C.F.R. § 103.22(a), in violation of 31 U.S.C. §§ 5324 and 5322 and 18 U.S.C. § 2. Defendant has moved pursuant to Fed.R. Crim.P. 12(b) for an order dismissing the indictment on the ground that the statute is, on its face, unconstitutionally vague, and on the further ground that the effect of 31 U.S.C. § 5324 is to force the defendant, under pain of prosecution under that section, to waive his Fifth Amendment privilege against self incrimination. Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968).

Defendant has submitted a memorandum in support of his motion which states that, on March 1, 1988, "defendant paid toward the balance of a loan he owed Citibank by paying $9,500.00 in cash" and then that defendant returned "on March 2, 1988, and paid $3,601.17 in cash on the balance of the loan." Defendant's Memorandum, at 1.

This motion has been referred to the Magistrate pursuant to 28 U.S.C. § 636(b)(1)(B) for a report and recommendation. The following constitutes a report and recommendation that the motion be denied.

I

The statute at issue in this case was passed as part of The Comprehensive Anti-Drug Abuse Act of 1986, Public Law 99-570, 100 Stat. 3207 (October 27, 1986), and is part of Title I of subtitle H of such Act, entitled the "Money Laundering Control Act of 1986." Made effective to transactions "completed after the end of the three month period beginning" October 27, 1986 (Act Oct. 27, 1986, PL 99-570, Title I, Subtitle H, § 1364(a), 100 Stat. 3207-34), this provision reads as follows:

Section 5324. Structuring transactions to evade reporting requirement prohibited.

No person shall for the purpose of evading the reporting requirements of § 5313(a) with respect to such transaction—

(1) cause or attempt to cause a domestic financial institution to fail to file a report required under § 5313(a);

(2) cause or attempt to cause a domestic financial institution to file a report required under § 5313(a) that contains a material omission or misstatement of fact; or

(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.

The court is unaware of any reported decision in which the provisions of § 5324 have been explicated. Cf., United States v. Mastronardo, 849 F.2d 799, 802 n. 8 (3d Cir.1988) ("Congress has since acted to clarify the status of `structuring'"); United States v. Herron, 825 F.2d 50, 55-56 (5th Cir.1987). However, the legislative history provides ample background material. The Senate report to accompany the Money Laundering Crimes Act of 1986 provides the best description of this new legislation.

This section imposes civil and criminal penalties on a person who causes or attempts to cause a financial institution not to file a required report or to file an incorrect report or to structure (or attempt or assist in structuring) a transaction to evade the reporting requirements of this title. Under present law, money launderers are successfully prosecuted in some judicial circuits for causing financial institutions not to file reports on multiple currency transactions totaling more than $10,000 or causing financial institutions to file incorrect reports. In such cases, the actual money launderers are charged with violations of 18 U.S.C. 2 (aiding and abetting or causing another to commit an offense) and section 1001 (concealing from the Government a material fact by a trick, scheme, or device). For example, in United States v. Tobon-Builes, 706 F.2d 1092 (11th Cir.1983), the Eleventh Circuit Court of Appeals upheld a conviction under 18 U.S.C. 1001 where the defendants had engaged in a money laundering scheme in which they had structured a series of currency transactions, each one less than $10,000 but totaling more than $10,000, to evade the reporting requirements. See also United States v. Massa, 740 F.2d 629, 645 (8th Cir.1984), cert. denied sub nom Skinner v. United States, 471 U.S. 1115, 105 S.Ct. 2357 86 L.Ed.2d 258 (1985); United States v. Sanchez Vazquez, 585 F.Supp. 990, 993 (N.D.Ga.1984); United States v. Konefal, 566 F.Supp. 698 (N.D. N.Y.1983) (prosecution for structuring upheld under title 31). In contrast, the First Circuit Court of Appeals, in United States v. Anzalone, 766 F.2d 676 (1st Cir.1985), the Eleventh Circuit Court of Appeals in United States v. Denemark, 779 F.2d 1559 (11th Cir.1986), and the Ninth Circuit Court of Appeals in United States v. Varbel, 780 F.2d 758 (9th Cir. 1986) have held that structuring currency transactions to avoid the reporting requirements did not violate 18 U.S.C. section 1001.

This section ... would codify Tobon-Builes and like cases and would negate the effect of Anzalone, Varbel and Denemark. It would expressly subject to potential liability a person who causes or attempts to cause a financial institution to fail to file a required report that contains material omissions or misstatements of fact. In addition, the proposed amendment would create the offense of structuring a transaction to evade the reporting requirements, without regard to whether an individual transaction is, itself, reportable under the Bank Secrecy Act. For example, a person who converts $18,000 in currency to cashier's checks by purchasing two $9,000 cashier's checks at two different banks or on two different days with the specific intent that the participating bank or banks not be required to file Currency Transaction Reports for those transactions, would be subject to potential civil and criminal liability. A person conducting the same transactions for any other reasons or person splitting up an amount of currency that would not be reportable if the full amount were involved in a single transaction (for example, splitting $2,000 in currency into four transactions of $500 each), would not be subject to liability under the proposed amendment.

S.Rep. No. 99-483, 99th Cong.2d Sess. at 21-22 (1986). As Senator Alfonse D'Amato, the original sponsor of this legislation, stated in hearings before the Senate Committee on Banking, Housing, and Urban Affairs,

This section ... closes the loophole in present law used by launderers of money and other criminal profits. Because today's Bank Secrecy Act only requires that deposits of more than $10,000 be reported on IRS currency transaction reports CTR's money launderers often make multiple deposits of under $10,000 each, within very brief periods

...