United States v. Mento ( 1993 )


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  • USCA1 Opinion









    January 13, 1993
    UNITED STATES COURT OF APPEALS
    FOR THE FIRST CIRCUIT

    _________________________
    No. 91-1363

    UNITED STATES OF AMERICA,
    Appellee,

    v.

    DANIEL F. AVERSA,
    Defendant, Appellant.

    _________________________

    No. 91-1364
    UNITED STATES OF AMERICA,
    Appellee,

    v.

    VINCENT MENTO,
    Defendant, Appellant.

    _________________________

    APPEALS FROM THE UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF NEW HAMPSHIRE

    [Hon. Martin F. Loughlin, Senior U.S. District Judge]
    __________________________

    _________________________

    No. 91-1574
    UNITED STATES OF AMERICA,
    Appellee,

    v.

    WILLIAM J. DONOVAN,
    Defendant, Appellant.

    _________________________

    APPEAL FROM THE UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF NEW HAMPSHIRE

    [Hon. Shane Devine, U.S. District Judge]
    ___________________

    _________________________
















    Before

    Breyer, Chief Judge,
    ___________

    Coffin and Bownes, Senior Circuit Judges,
    _____________________

    Torruella, Selya, Cyr and Boudin, Circuit Judges.
    ______________

    _________________________

    Robert V. Johnson II, for appellant Aversa.
    ____________________
    David A. Ross, with whom Eaton, Solms, McIninch & Phillips
    _____________ __________________________________
    was on brief, for appellant Mento.
    Jonathan R. Saxe, with whom Twomey & Sisti Law Offices was
    ________________ ___________________________
    on brief, for appellant Donovan.
    Peter E. Papps, First Assistant United States Attorney, with
    ______________
    whom Jeffrey R. Howard, United States Attorney, and Richard A.
    __________________ __________
    Friedman, Attorney, Department of Justice, were on brief, for the
    ________
    United States.

    _________________________



    _________________________

    OPINIONS EN BANC
    _________________________








































    SELYA, Circuit Judge. The government charged each of
    SELYA, Circuit Judge.
    ______________

    these appellants with criminal violations of the Bank Records and

    Foreign Transactions Act (BRFTA), Pub. L. No. 91-508, 84 Stat.

    1114 (1970) (codified as amended in various sections of 12

    U.S.C., 15 U.S.C., and 31 U.S.C.). Appellant Donovan was charged

    with, and convicted of, failure to file currency transaction

    reports (CTRs). See 31 U.S.C. 5313 (1988). Appellants Aversa
    ___

    and Mento were charged with, and convicted of, structuring bank

    deposits to avoid triggering currency transaction reporting

    requirements. See 31 U.S.C. 5324 (1988). In each case, the
    ___

    underlying legal requirement comprises part of Subchapter II of

    the BRFTA. Subchapter II's criminal penalty provision, 31 U.S.C.

    5322(a), proscribes only "willful" violations of the

    subchapter's provisions.

    A panel of this court initially heard Donovan's appeal

    and decided it adversely to him. We subsequently withdrew the

    panel opinion and granted rehearing en banc, consolidating the

    appeal with appeals involving Aversa and Mento, so that we might

    settle the meaning of the term "willful" as used in Subchapter

    II.1 The en banc court now affirms Donovan's conviction while

    vacating the other convictions and remanding those cases for

    further proceedings.



    ____________________

    1The government filed cross-appeals challenging the
    relatively mild sentences imposed on Mento and Aversa. In view
    of our disposition of the issue before the en banc court, the
    cross-appeals (Nos. 91-1615 and 91-1616) are moot. They will,
    therefore, be dismissed without prejudice.

    3














    I. BACKGROUND
    I. BACKGROUND

    These cases originated in different ways and traveled

    different paths to reach our doorstep. We sketch the background

    and then frame the common issue that all three appeals present.

    A. Donovan.
    A. Donovan.
    __________

    Donovan, the president and chief executive officer of

    Atlantic Trust Company, a Boston-based financial institution,

    moonlighted as a real estate developer. A friend, Dr. Edward

    Saba, gave Donovan substantial sums of cash to deposit at

    Atlantic Trust for eventual investment in a New Hampshire housing

    subdivision. Eschewing Atlantic Trust's standard protocol for

    routing deposits through tellers, Donovan personally deposited

    Saba's money in five chunks of $30,000, $92,000, $30,000,

    $55,000, and $30,000, respectively. Donovan made the deposits at

    various times between March 13, 1987 and April 21, 1987.

    Although Donovan was the bank's legal compliance officer a

    status which presumptively suggests his familiarity with banking

    laws he did not prepare CTRs for any of these deposits.

    Indeed, Donovan fended off his subordinates' concerns about the

    unorthodox way he was handling Saba's cash.

    At trial, Donovan admitted that he was aware of the law

    requiring him to file CTRs for cash deposits of $10,000 or more,

    but insisted that he mistakenly believed Saba's deposits came

    within one of the law's exemptions.2 The district court

    ____________________

    2"Deposits or withdrawals of currency from an existing
    account by an established depositor who . . . operates a retail
    type of business" are exempted from the reporting requirements

    4














    instructed the jury that it was the government's burden to prove

    Donovan "knowingly" and "willfully" failed to file CTRs. The

    court twice explained these elements (once during the main charge

    and once in answering an inquiry during jury deliberations):

    An act or a failure to act is knowingly
    done if it is done voluntarily and
    intentionally and not because of mistake or
    accident or other innocent reason. An act or
    a failure to act is done willfully if done
    voluntarily and intentionally and with the
    specific intent to do something the law
    forbids, that is to say with bad purpose,
    either to disobey or disregard the law.

    Despite Donovan's importuning, the district court refused to tell

    the jury that any mistake by Donovan, regardless of its nature,

    would necessitate acquittal. The jury found Donovan guilty.

    B. Aversa and Mento.
    B. Aversa and Mento.
    ___________________

    Aversa and Mento were partners in a real estate

    business. In January 1989, they sold a parcel of land, splitting

    the proceeds. At the time, Aversa's marriage was foundering. In

    order to conceal his share of the profits from his wife, Aversa

    asked Mento to deposit the receipts in Mento's personal bank

    account rather than in the partners' joint business account.

    Mento agreed. Aversa signed a statement acknowledging his

    responsibility for one-half of the funds to insulate Mento from

    potentially adverse tax consequences.

    Mento and Aversa knew that Mento's bank was legally

    required to file CTRs for all deposits of $10,000 or more.

    ____________________

    under 31 C.F.R. 103.22(b)(2)(i) (1987). Donovan does not
    contend that Saba was an exempt customer under this, or any
    other, section of the regulations.

    5














    Fearing that the resultant paper trail might obviate their

    efforts to hide the cash from Mrs. Aversa, the defendants made

    serial deposits and withdrawals in sums under $10,000. Although

    both men admitted that they knew about the CTR requirement, they

    claimed to be unaware that structuring bank transactions, even if

    designed to avoid causing the bank to file CTRs, was itself a

    crime.

    Following the return of indictments, the government

    moved in limine to prevent the introduction of evidence
    __ ______

    supporting the defendants' mistake-of-law theory. Judge Loughlin

    granted the motion. Aversa then pled guilty to structuring, but

    did so conditionally, see Fed. R. Crim. P. 11(a)(2), reserving
    ___

    his mistake-of-law defense for appeal. Mento opted for trial.

    At the trial, the district court, over timely objection,

    instructed the jury that mistake of law was not a defense to

    structuring. The jury found Mento guilty.

    C. The En Banc Issue.
    C. The En Banc Issue.
    ____________________

    Although these appellants breached different regulatory

    provisions of Subchapter II, each was convicted under the

    subchapter's criminal penalty provision, 31 U.S.C. 5322, and

    each raised a mistake-of-law defense. We convened the en banc

    court specifically to examine the efficacy of such defenses in

    the CTR and antistructuring contexts. At bottom, this task

    requires us to elucidate the state of mind that Congress required

    when it limited such violations to willful misconduct.

    II. DISCUSSION
    II. DISCUSSION


    6














    We begin with an analysis of the governing statute,

    exploring its interstices and explicating its meaning. We then

    proceed to tackle the knotty mens rea questions that confront us.
    ____ ___

    A. The Statutory Scheme.
    A. The Statutory Scheme.
    _______________________

    In 1970, concerned about the ease with which criminals,

    particularly drug traffickers, were able to exchange ill-gotten

    profits for "clean" money, Congress enacted the BRFTA. Among

    other things, Subchapter II delegated to the Secretary of the

    Treasury (the Secretary) the power to require banks and

    individuals to file CTRs with the Internal Revenue Service when

    cash changed hands.3 See, e.g., 31 U.S.C. 5313. The
    ___ ____

    Secretary did not exercise his delegated power in respect to

    individuals, but required banks to file CTRs when transactions

    involved $10,000 or more. See 31 C.F.R. 103.22(a)(1) (1989).
    ___

    Although Subchapter II's transaction report requirement

    expanded the armamentarium of federal law enforcement agents, it

    was too easily circumvented. Individuals who wished to avoid a

    paper trail for any reason could simply segment large sums of

    money into several transactions of less than $10,000. In an

    apparent effort to plug this loophole, Congress amended


    ____________________

    3Subchapter II has a number of other regulatory provisions,
    including reporting requirements for importing and exporting
    currency and for foreign currency transactions. See 31 U.S.C.
    ___
    5313-17. Congress did not require that an individual be guilty
    of some related infraction (say, drug trafficking) before he
    could run afoul of these currency regulations. Rather, Congress
    provided that individuals who violate the currency regulations
    while involved in some other criminal activity are eligible for
    harsher penalties than those who violate the currency regulations
    alone. Compare 31 U.S.C. 5322(a) with 31 U.S.C. 5322(b).
    _______ ____

    7














    Subchapter II in 1986. Pub. L. No. 99-570, 100 Stat. 3207

    (1986), codified at 31 U.S.C. 5324. The new antistructuring
    ________ __

    provision limited an individual's ability to dodge the CTR

    requirement.4 At the time, Congress considered, but decided not

    to alter, section 5322's criminal provisions. Thus, section

    5322, which criminalizes conduct undertaken by a "person

    willfully violating [subchapter II or a regulation promulgated

    under Subchapter II]," applies to the antistructuring section as

    well as to the balance of Subchapter II. Although appellants

    stand convicted of different offenses Donovan was found guilty

    ____________________

    4The amendment read in pertinent part:

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

    . . .

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

    31 U.S.C. 5324. The regulations implementing the statute
    explained that:

    a person structures a transaction if that person,
    acting alone, or in conjunction with, or on behalf of,
    other persons, conducts or attempts to conduct one or
    more transactions in currency, in any amount, at one or
    more financial institutions, on one or more days, in
    any manner, for the purpose of evading the reporting
    requirements . . . . "In any manner" includes, but is
    not limited to, the breaking down of a single sum of
    currency exceeding $10,000 into smaller sums, including
    sums at or below $10,000, or the conduct of a
    transaction, or series of currency transactions,
    including transactions at or below $10,000.

    31 C.F.R. 103.11(n) (1989).

    8














    of violating the CTR provision while the other two appellants

    were convicted of structuring infractions they all argue that

    section 5322's willfulness requirement means that, to be found

    guilty, they must have intentionally traversed a known legal

    duty. Consequently, they press a subjective standard of intent

    and asseverate that mistake of law necessarily constitutes a

    complete defense to the charges laid against them.

    The government takes a diametrically opposite view. It

    contends that, because Congress made no express provision to the

    contrary, ignorance of the law cannot serve as a defense to the

    instant charges. See generally United States v. Dotterweich, 320
    ___ _________ _____________ ___________

    U.S. 277, 284 (1943) (holding that consciousness of wrongdoing is

    not necessary for conviction). The government's position derives

    some support from an array of appellate cases which have

    disallowed mistake-of-law defenses in the transactional

    structuring milieu. See, e.g., United States v. Ratzlaf, 976
    ___ ____ _____________ _______

    F.2d 1280, 1283 (9th Cir. 1992); United States v. Caming, 968
    _____________ ______

    F.2d 232, 238-39 (2d Cir.), cert. denied, 113 S. Ct. 416 (1992);
    _____ ______

    United States v. Gibbons, 968 F.2d 639, 644 (8th Cir. 1992);
    ______________ _______

    United States v. Rogers, 962 F.2d 342, 344 (4th Cir. 1992);
    ______________ ______

    United States v. Brown, 954 F.2d 1563, 1568 (11th Cir.), cert.
    ______________ _____ _____

    denied, 113 S. Ct. 284 (1992); United States v. Dashney, 937 F.2d
    ______ _____________ _______

    532, 538 (10th Cir.), cert. denied, 112 S. Ct. 402 (1991); United
    _____ ______ ______

    States v. Scanio, 900 F.2d 485, 490 (2d Cir. 1990). For the
    ______ ______

    reasons discussed below, we think these cases read section 5322

    in an overly malleable manner.


    9














    B. Mens Rea: CTR Violations.
    B. Mens Rea: CTR Violations.
    ____________________________

    We start by analyzing the mens rea required with
    ____ ___

    respect to CTR violations. Under the criminal penalty provision,

    31 U.S.C. 5322, violations, to be culpable, must be "willful."

    The Court has long recognized that willful "is a word of many

    meanings, its construction often being influenced by its

    context." Spies v. United States, 317 U.S. 492, 497 (1943). See
    _____ _____________ ___

    generally Note, An Analysis of the Term "Willful" in Federal
    _________ ________________________________________________

    Criminal Statutes, 51 Notre Dame L. Rev. 786, 786-87 (1976).
    _________________

    Courts have coalesced around four definitions of

    willfulness. The first, which is most closely aligned with the

    government's theory here, simply equates "willful" with "knowing"

    (i.e., so long as the defendant is aware of his conduct and the
    ____

    nature of his circumstances, no more is necessary). See, e.g.,
    ___ ____

    United States v. McCalvin, 608 F.2d 1167, 1171 (8th Cir. 1979);
    _____________ ________

    see also American Law Institute, Model Penal Code 2.02(8)
    ___ ____ _________________

    (1985).5 The second definition of willfulness, which is most

    ____________________

    5An exchange between Judge Learned Hand and the reporter for
    the Model Penal Code, Professor Herbert Wechsler, indicates that
    the Code's principal architects thought that the term "willfully"
    added very little to statutory meaning:

    Judge Hand: [Willfully is] an awful word!
    Judge Hand
    It is one of the most troublesome words in a
    statute that I know. If I were to have the
    index purged, "wilful" would lead all the
    rest in spite of its being at the end of the
    alphabet.

    Professor Wechsler: I agree with you Judge
    Professor Wechsler
    Hand, and I promise you unequivocally that
    the word will never be used in the definition
    of any offense in the Code. But because it
    is such a dreadful word and so common in the

    10














    closely aligned with appellants' position, has its roots in tax-

    crime cases. This approach equates willfulness with the

    violation of a known legal duty. See, e.g., Cheek v. United
    ___ ____ _____ ______

    States, 111 S. Ct. 604, 610 (1991) (discussed infra Part II(D)).
    ______ _____

    To our knowledge, no court of appeals has applied either of these

    first two definitions across the board in connection with the

    entire array of Subchapter II violations.

    Several courts, however, have taken a hybrid approach

    to the issue of willfulness in the purlieus of Subchapter II.

    This approach is marked by its protean quality. Depending on the

    language of each particular regulatory provision, the word

    "willfully" as used in section 5322 takes on a variety of

    meanings, allowing mistake of law as a defense to certain crimes

    and not to others. This viewpoint is best typified by Scanio and
    ______

    its progeny. See Scanio, 900 F.2d at 490 (permitting mistake-of-
    ___ ______

    law defense as to some currency-related crimes while prohibiting

    such a defense vis-a-vis other currency-related crimes); see also
    ___ ____

    cases collected supra at p. 9.
    _____

    We think that all three of these definitions create

    needless problems. The government's theory undervalues the

    statute's language by reading willfulness as if it were simply a





    ____________________

    regulatory statutes, it seemed to me useful
    to superimpose some norm of meaning on it.

    American Law Institute, Model Penal Code 2.20, at 249 n.47
    _________________
    (1985).

    11














    synonym for general intent.6 In contrast, appellants' theory,

    if applied across the board, would allow all mistakes of law, no

    matter how unreasonable, to serve as bucklers against

    prosecution, and, in the bargain, would vitiate the general

    principle that "deliberate ignorance and positive knowledge are

    equally culpable." United States v. Jewell, 532 F.2d 697, 700
    _____________ ______

    (9th Cir.), cert. denied, 426 U.S. 951 (1976). Last, while
    _____ ______

    Scanio and its progeny adopt a flexible definition of
    ______

    willfulness, they neither speak to the mens rea for CTR
    ____ ___

    violations nor answer the critical question of how differing

    definitions can attach to a single usage of an operative term in

    a single statutory section.

    For our part, we take yet a fourth tack a tack

    adumbrated by the course we set in United States v. Bank of New
    _____________ ____________

    England, 821 F.2d 844 (1st Cir.), cert. denied, 484 U.S. 943
    _______ _____ ______

    (1987). In that case, we plotted the intersection between

    section 5322's willfulness criterion and section 5313's CTR

    requirements. See id. at 854-59. Bank of New England had failed
    ___ ___

    to prepare CTRs when a customer repeatedly withdrew cash

    aggregating over $10,000 by means of multiple checks, each

    written for slightly under $10,000. The bank argued that it had

    not engaged in willful misconduct because it had not "violated a

    ____________________

    6It is a common rule of statutory interpretation that courts
    must give effect to legislative terms wherever possible. See
    ___
    Gade v. National Solid Wastes Management Ass'n, 112 S. Ct. 2374,
    ____ ______________________________________
    2384 (1992); United States v. Menasche, 348 U.S. 528, 538-39
    _____________ ________
    (1955). We cite this familiar tenet because there would have
    been no need for Congress to include the term "willfully" at all
    if the government's reading of section 5322 were accurate.

    12














    known legal duty." Id. at 856. We rejected the bank's plea
    ___

    because the evidence revealed that the bank's professed

    unawareness about whether the reporting requirements applied to

    the transactions was a product of the bank's deliberate

    blindness. See id. at 856, 857.
    ___ ___

    Our opinion in Bank of New England is not pathbreaking;
    ___________________

    it merely represents a particularized application of the rule

    defenestrating mistake-of-law defenses when the mistakes in

    question result from intentional or reckless disregard of a legal

    duty. See McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133,
    ___ __________ __________________

    135 n.13 (1988) (willfulness may be shown either by actual

    knowledge or by "reckless disregard for the matter of whether

    [defendant's] conduct was prohibited by the statute"); Trans
    _____

    World Airlines, Inc. v. Thurston, 469 U.S. 111, 126-28 (1985)
    _____________________ ________

    (similar); see also Bank of New England, 821 F.2d at 886 ("the
    ___ ____ ____________________

    Supreme Court has endorsed defining willfulness, in both civil

    and criminal contexts, as 'a disregard for the governing statute

    and an indifference to its requirements'") (quoting Trans World
    ___________

    Airlines, 469 U.S. at 127).
    ________

    We adhere today to the teachings of Bank of New England
    ___________________

    and build upon that foundation. We believe that, in respect to

    alleged violations of the BFTRA's CTR provisions, section 5322's

    willfulness criterion demands that the government prove either

    the violation of a known legal duty or the reckless disregard of

    the same. See Bank of New England, 821 F.2d at 866. We move
    ___ ___________________

    forward from that point, therefore, to consider a question not


    13














    present in Bank of New England: the significance of section 5322
    ___________________

    in the antistructuring context.

    C. Willful Structuring: One Word, One Meaning.
    C. Willful Structuring: One Word, One Meaning.
    ______________________________________________

    Section 5322 provides criminal sanctions for both CTR

    and structuring offenses. As we determine the mens rea
    ____ ___

    requirement for the latter group of crimes, it is axiomatic that

    the plain words and structure of the statute must be paramount.

    See, e.g., Pennsylvania Dep't of Pub. Welfare v. Davenport, 495
    ___ ____ __________________________________ _________

    U.S. 552, 557-58 (1990); Stowell v. Ives, 976 F.2d 65, 69 (1st
    _______ ____

    Cir. 1992). Ordinarily, "identical terms within an Act bear the

    same meaning." Estate of Cowart v. Nicklos Drilling Co., 112 S.
    ________________ ____________________

    Ct. 2589, 2596 (1992); accord Sullivan v. Stroop, 496 U.S. 478,
    ______ ________ ______

    484 (1990). In the case at hand, the Cowart presumption is
    ______

    particularly strong. We explain briefly.

    While courts have found on infrequent occasion that

    Congress intended a word to have different connotations when used

    in different provisions of the same Act, see, e.g., Greenwood
    ___ ____ _________

    Trust Co. v. Massachusetts, 971 F.2d 818, 830 n.10 (1st Cir.
    __________ _____________

    1992), petition for cert. filed, 61 U.S.L.W. 3382 (U.S. Nov. 4,
    ________ ___ _____ _____

    1992) (No. 92-794); New Eng. Tel. & Tel. Co. v. Public Utils.
    _________________________ ______________

    Comm'n, 742 F.2d 1, 8 (1st Cir. 1984), cert. denied, 476 U.S.
    ______ _____ ______

    1174 (1986), those instances almost always involve, at a bare

    minimum, multiple uses of a term or phrase within a panoramic

    statutory scheme. Here, however, we are not dealing with

    repetitions of a word at diverse points in a statute, but with a

    single word in a single statutory section. Ascribing various


    14














    meanings to a single iteration of a single word reading the

    word differently for each code section to which it applies

    would open Pandora's jar. If courts can render meaning so

    malleable, the usefulness of a single penalty provision for a

    group of related code sections will be eviscerated and, by

    extension, almost any code section that references a group of

    other code sections would become susceptible to individuated

    interpretation.

    Furthermore, if Congress wanted the purposive mens rea
    ____ ___

    in the antistructuring statute to stand alone, it had several

    simple options. It could, for example, have placed the

    antistructuring provision somewhere other than in Subchapter II,

    or amended the criminal sanctions provision to except structuring

    violations.7 It exercised none of the available options. Thus,

    absent powerful evidence to the contrary, we believe courts

    should presume that Congress intended the mens rea set by section
    ____ ___

    5322 to apply in equal measure to both CTR violations and

    structuring offenses.

    We recognize, of course, that notwithstanding these

    problems, several other courts have scuttled the Cowart
    ______

    presumption and read the word "willfully" in section 5322

    differently as it applies to breaches of different currency

    regulations. Compare, e.g., Brown, 954 F.2d at 1568 (ruling that
    _______ ____ _____


    ____________________

    7In fact, Congress chose precisely this course for the
    provision requiring reports on foreign currency transactions, 31
    U.S.C. 5315, leaving only civil penalties available for
    enforcement of that provision. See 31 U.S.C. 5322(a)-(b).
    ___

    15














    knowledge of the antistructuring law was not required to ground a

    structuring conviction) and Scanio, 900 F.2d at 490 (same) with,
    ___ ______ ____

    e.g., United States v. Eisenstein, 731 F.2d 1540, 1543 (11th Cir.
    ____ _____________ __________

    1984) (upholding mistake-of-law defense for currency import and

    export violations) and United States v. Dichne, 612 F.2d 632, 636
    ___ _____________ ______

    (2d Cir. 1979) (similar), cert. denied, 445 U.S. 928 (1980). See
    _____ ______ ___

    also Dashney, 937 F.2d at 539-40 (declaring mistake of law to be
    ____ _______

    a defense in respect to violations of currency import and export

    regulations but not in respect to structuring offenses). To

    warrant redefining "willfully" from crime to crime within the

    same statute, these courts generally attempt to distinguish

    antistructuring regulations from, say, currency importing

    regulations, on the basis of the "reasonable probability that

    knowledge [of the law] might be obtained" more easily in the

    former situation than in the latter. Scanio, 900 F.2d at 490
    ______

    (citation omitted).

    We must respectfully disagree with these courts. The

    distinction that they draw simply does not justify the

    transmogrification of the word "willfully" into a statutory

    chameleon. We are, moreover, particularly chary about adopting

    so pleochroic an approach in light of the more consistent, less

    complicated alternative offered in Bank of New England, 821 F.2d
    ___________________

    at 856. That alternative, which derives great vitality from the

    Supreme Court's language, see McLaughlin, 486 U.S. at 133; Trans
    ___ __________ _____

    World Airlines, 469 U.S. at 126, provides a fair, workable,
    _______________

    mistake-of-law defense to those accused of currency-related


    16














    crimes and at the same time ensures that defendants who know of

    the law's requirements in a general sense, but recklessly or

    intentionally fail to investigate the legality of structuring or

    other proscribed activity, will be found guilty.

    We hold, therefore, that the plain language of section

    5322 governs; that the unitary willfulness standard of section

    5322 should be given an identical meaning with respect to

    structuring and CTR violations;8 and that, therefore, an

    ____________________

    8Because this issue is susceptible to resolution in terms of
    the plain meaning and structure of the statute, we need not probe
    the legislative history. See United States v. Charles George
    ___ _____________ ______________
    Trucking Co., 823 F.2d 685, 688 (1st Cir. 1987) (one should
    _____________
    "resort to the legislative history and other aids of statutory
    construction only when the literal words of the statute create
    ambiguity or lead to an unreasonable interpretation") (citation
    and internal quotation marks omitted); accord Barnhill v.
    ______ ________
    Johnson, 112 S. Ct. 1386, 1391 (1992); Stowell, 976 F.2d at 69.
    _______ _______
    We note in passing, however, that while the legislative history
    with regard to section 5322 and the antistructuring amendments in
    no way contradicts our analysis of how the word "willfully"
    should be construed, this is yet another case where the
    legislative history of a statute "is more conflicting than the
    text is ambiguous." Wong Yang Sung v. McGrath, 339 U.S. 33, 49
    ______________ _______
    (1950).

    The report issued by the House of Representatives in
    conjunction with the bill which included the criminal sanctions
    section now codified as 31 U.S.C. 5322 merely recapitulated the
    Act's criminal provisions. And, although the House and Senate
    issued seventeen reports dealing with a salmagundi of proposed
    bills, features of which were amalgamated into the Anti-Drug
    Abuse Act of 1986 (the bill which contained the antistructuring
    provision now codified as 31 U.S.C. 5324), there was no House
    or Senate report accompanying the Act. See 1986 U.S.C.C.A.N.
    ___
    5393 (noting the absence of a report but listing related
    reports). To be sure, the House considered and rejected
    several alterations to section 5322 that would have changed the
    term "willfully" to "knowingly." See, e.g., H.R.Rep. No. 855,
    ___ ____
    99th Cong., 2d Sess. 7, 27 (1986). The Senate likewise
    considered legislation designed to make section 5322 read
    "knowingly" instead of "willfully." See S. 2683, 99th Cong., 2d
    ___
    Sess. (1986). The purpose of this proposed change was to
    eliminate the possibility of antistructuring liability premised

    17














    unintentional, non-reckless mistake of law is a complete defense

    to a structuring charge.

    D. Willfulness in the Tax Code.
    D. Willfulness in the Tax Code.
    ______________________________

    In an effort to read the word "willfully" in a more

    charitable manner, all three appellants urge that the Court's

    recent decision in United States v. Cheek, 111 S. Ct. 604 (1991),
    _____________ _____

    signifies that federal courts should apply a purely subjective

    standard to virtually all white-collar crimes that require a mens
    ____

    rea of willfulness as an element of the offense. Such a standard
    ___

    differs from the standard we endorse today because it would allow

    mistakes born of intentional or reckless ignorance to insulate

    defendants from criminal liability. Donovan's case illustrates

    the practical effect of this suggestion: had the trial judge

    defined willfulness exclusively in terms of a subjective intent

    to disobey the law, the jury might have exonerated the defendant

    on the basis of a genuine, albeit reckless, misunderstanding

    about the law's requirements.

    We do not think that Cheek can carry the cargo that
    _____





    ____________________

    upon "reckless disregard" of the law. See S. Rep. No. 99-433,
    ___
    99th Cong., 2d Sess. 1, 8 (1986). The amendment failed.

    We see no point in reciting additional book and verse.
    The most serviceable conclusion that can be woven from the
    language in the sundry reports attached to ultimately
    unsuccessful legislation is that, during the extended drafting
    and redrafting of various bills respecting currency transactions,
    Congress, or at least some of its members, reconsidered the mens
    ____
    rea of section 5322, assessed its relationship with the proposed
    ___
    antistructuring provision, and elected not to act.

    18














    appellants load upon it.9 Cheek was a criminal tax case. The
    _____

    Court noted that the term "willfully," as used in criminal tax

    statutes, had long been interpreted "as carving out an exception

    to the traditional rule" that ignorance of the law affords no

    defense to a criminal prosecution. Id. at 609. Nowhere in
    ___

    Cheek, or in the Court's earlier opinions involving criminal
    _____

    prosecutions under the tax laws, see, e.g., United States v.
    ___ ____ ______________

    Pomponio, 429 U.S. 10 (1976) (per curiam); United States v.
    ________ ______________

    Bishop, 412 U.S. 346 (1973); United States v. Murdock, 290 U.S.
    ______ _____________ _______

    389 (1933), is there any indication that courts should use a

    purely subjective standard in evaluating state-of-mind defenses

    under other federal statutes. Rather, the Cheek Court repeatedly
    _____

    qualified its discussion of the point by referring to the special

    context criminal tax prosecutions from whence the discussion

    proceeded. See, e.g., Cheek, 111 S. Ct. at 609, 610. The
    ___ ____ _____

    Court's earlier opinions stressed the same point. See, e.g.,
    ___ ____

    Pomponio, 429 U.S. at 12 & n.3; Bishop, 412 U.S. at 360-61. This
    ________ ______

    repeated qualification makes clear that the Court has crafted a

    narrow exception, limited to tax cases, in which subjective

    mistake of law can constitute an absolute defense.

    Such a conclusion coheres with our long-held

    ____________________

    9Our dissenting brother suggests that it is unnecessary for
    us to discuss the range of Cheek. See post at 33. We disagree.
    _____ ___ ____
    If the Cheek rationale extended beyond the boundaries of the tax
    _____
    code, as appellants claim it does, the result we reach today
    would be altered, at least as to appellant Aversa. Moreover, it
    is essential to any careful understanding of section 5322's
    willfulness standard that we consider, and account for, the
    Court's explication of a parallel problem arising under the tax
    code.

    19














    understanding of the tax-crime exception. In United States v.
    _____________

    Aitken, 755 F.2d 188 (1st Cir. 1985), we acknowledged the
    ______

    uniqueness of the tax statutes' mens rea requirements. See id.
    ____ ___ ___ ___

    at 193 ("That internal revenue reporting and filing requirements

    are an enclave apart is recognized."). We read Cheek as
    _____

    confirming and fortifying the stance that we took in Aitken.
    ______

    Moreover, and finally, the rationales supporting a

    subjective mistake-of-law defense in tax-crime cases do not apply

    to laws and regulations of the kind at issue here. As the Second

    Circuit noted, "[o]ne of the most esoteric areas of the law is

    that of federal taxation. It is replete with 'full-grown

    intricacies,' and it is rare that a 'simple, direct statement of

    the law can be made without caveat.'" United States v. Regan,
    _____________ _____

    937 F.2d 823, 827 (citation omitted), modified, 946 F.2d 188 (2d
    ________

    Cir. 1991), cert. denied, 112 St. Ct. 2273 (1992). The federal
    _____ ______

    tax code is not only enormous, detailed, and technical, but also

    interrelated and highly nuanced. Simply reading the words of the

    tax code does not always reveal the line between legal and

    illegal conduct. And for over sixty years, the Supreme Court has

    held that Congress does not intend to punish those who, in good

    faith, stray past that line.

    For these reasons, we join the courts of appeals that

    have found the Cheek doctrine inapplicable to criminal
    _____

    prosecutions under the currency reporting laws.10 See, e.g.,
    ___ ____

    ____________________

    10Attempts to expand Cheek's horizons have been regularly
    _____
    rejected in most other contexts as well. See, e.g., United
    ___ ____ ______
    States v. Hollis, 971 F.2d 1441, 1451 (10th Cir. 1992) (rejecting
    ______ ______

    20














    United States v. Beaumont, 972 F.2d 91, 94-95 (5th Cir. 1992);
    ______________ ________

    Brown, 954 F.2d at 1569 n.2; Caming, 968 F.2d at 241; Dashney,
    _____ ______ _______

    937 F.2d at 539-40. The currency statutes are comparatively few

    in number, target a much narrower range of conduct, and under the

    current regulations affect a considerably smaller constituency.

    The regulatory scheme, overall, is not intricate or even

    especially subtle. We think these distinctions are dispositive.

    Accordingly, we reaffirm Aitken and continue to hold that the
    ______

    Cheek exception is restricted to tax crimes. In a prosecution
    _____

    brought under Subchapter II, as we have explained, the criminal

    intent required for conviction is either the violation of a known

    legal duty or reckless disregard of the law. Consequently,

    appellants' requests for the application of a wholly subjective

    standard were properly denied by Judges Loughlin and Devine.

    III. APPLYING THE LAW
    III. APPLYING THE LAW

    All that remains is for us to apply the fruits of our

    analysis to each appellant's situation.

    A. Donovan.
    A. Donovan.
    ___________

    In Donovan's case, the trial judge instructed the jury

    that Donovan's actions were willful if he had the "bad purpose to

    ____________________

    extension of Cheek to loan fraud context); United States v. Gay,
    _____ _____________ ___
    967 F.2d 322, 327 (9th Cir.) (same; mail fraud case), cert.
    _____
    denied, 113 S. Ct. 359 (1992); United States v. Chaney, 964 F.2d
    ______ _____________ ______
    437, 446 n.25 (5th Cir. 1992) (same; bank fraud case); United
    ______
    States v. Dockray, 943 F.2d 152, 156 (1st Cir. 1991) (same; mail
    ______ _______
    and wire fraud prosecution). A few courts, however, particularly
    those faced with cases involving the willful destruction of
    government property, have applied a Cheek-like standard. See,
    _____ ___
    e.g., United States v. Mills, 835 F.2d 1262, 1265 (8th Cir.
    ____ ______________ _____
    1987); United States v. Moylan, 417 F.2d 1002, 1004 (4th Cir.
    _____________ ______
    1969), cert. denied, 397 U.S. 910 (1970).
    _____ ______

    21














    disobey or to disregard the law." While Judge Devine did not

    give the exact instruction which Donovan requested, the

    instruction he gave was almost identical to the instruction which

    we approved for CTR violations in Bank of New England, 821 F.2d
    ____________________

    at 855. Moreover, Donovan's requested instruction focused on bad

    motive and the Cheek Court made clear that a showing of bad
    _____

    motive is more restrictive than necessary, even under the tax-

    crime standard. See Cheek, 111 S. Ct. at 610; see also Pomponio,
    ___ _____ ___ ____ ________

    429 U.S. at 13. Finally, the judge allowed the parties to

    introduce evidence pertaining to Donovan's state of mind

    regarding the law and the facts.

    The trial court which, in instructing the jury, had

    no obligation to parrot the precise language favored by either

    side gave a charge that, viewed in its entirety, adequately

    explained the legal issues, including every legitimate theory

    upon which Donovan's defense could rest. No more was exigible.

    See United States v. McGill, 953 F.2d 10, 13 (1st Cir. 1992);
    ___ ______________ ______

    United States v. Nivica, 887 F.2d 1110, 1124 (1st Cir. 1989),
    _____________ ______

    cert. denied, 494 U.S. 1005 (1990). This is especially true
    _____ ______

    where, as here, the defendant's subjective mistake-of-law

    proposal went well beyond what the law requires in its insistence

    upon proof of evil motive. See, e.g., United States v. David,
    ___ ____ _____________ _____

    940 F.2d 722, 738 (1st Cir. 1991) (holding that the district

    court may appropriately refuse to give a proposed jury

    instruction "which is incorrect, misleading, or incomplete in

    some material respect"), cert. denied, 112 S. Ct. 605, 908, 1298,
    _____ ______


    22














    2301 (1992).

    B. Aversa and Mento.
    B. Aversa and Mento.
    ____________________

    We find the remaining appeals to be cut from different

    cloth. Because of restrictive rulings made below, neither Aversa

    nor Mento ever had a chance to present a mistake-of-law defense.

    Both of them were precluded by the government's successful motion

    in limine from offering any evidence as to their ignorance of the
    __ ______

    antistructuring law. Additionally, in Mento's case the district

    judge charged the jury that mistake of law was no defense,

    declaring: "It is not necessary that the United States prove

    that the defendant knew that the structuring of his currency

    transactions was unlawful."

    Since neither of these defendants were afforded an

    opportunity to develop the record, and since both of them claim

    not to have known that what they did was illegal, we cannot say

    what a fully amplified record might show regarding Aversa's and

    Mento's familiarity with, or actual knowledge of, the

    antistructuring law.11 Similarly, we cannot say how the proof

    might shape up in respect to reckless disregard or deliberate

    blindness. It follows inexorably that, on this scumbled record,

    Aversa's and Mento's convictions cannot stand.

    IV. CONCLUSION
    IV. CONCLUSION

    We need go no further. In the context of the

    antistructuring and CTR provisions of Subchapter II, we find that

    ____________________

    11We do know, however, that in the plea agreement the
    government stipulated that it had no evidence of actual knowledge
    on Aversa's part.

    23














    a willful action is one committed in violation of a known legal

    duty or in consequence of a defendant's reckless disregard of

    such a duty. In Donovan's case, the introduction of evidence was

    not unduly restricted and the district court's charge to the jury

    was adequate to comport with the proper standard. Thus, his

    appeal fails.12 Because neither Aversa nor Mento had a chance to

    present evidence on a mistake-of-law theory, and because the

    trial court's jury instruction in Mento's case was harmfully

    erroneous, their convictions must be vacated and their cases

    remanded for further proceedings. By the terms of Fed. R. Crim.

    P. 11(a)(2), Aversa may, if he so elects, withdraw his guilty

    plea in the court below. See United States v. Lyons, 898 F.2d
    ___ _____________ _____

    210, 214 n.5 (1st Cir.), cert. denied, 111 S. Ct. 295 (1990).
    _____ ______



    In Appeal No. 91-1574, the judgment of conviction is
    In Appeal No. 91-1574, the judgment of conviction is
    _______________________________________________________

    affirmed.
    affirmed.
    ________

    In Appeals Nos. 91-1363 and 91-1364, the judgments of
    In Appeals Nos. 91-1363 and 91-1364, the judgments of
    _______________________________________________________

    conviction are vacated and the cases remanded for further
    conviction are vacated and the cases remanded for further
    _________________________________________________________________

    proceedings not inconsistent herewith.
    proceedings not inconsistent herewith.
    _____________________________________





    Concurring Opinion follows

    Dissent follows Concurring Opinion



    ____________________

    12Donovan's remaining ground of appeal was convincingly
    dispatched in the prior panel opinion. Hence, we reinstate that
    opinion in redacted form, expressly adopting Part IV thereof.

    24

















    BREYER, Chief Judge (concurring). I believe that
    ___________

    criminal prosecutions for "currency law" violations, of the

    sort at issue here, very much resemble criminal prosecutions

    for tax law violations. Compare 26 U.S.C. 6050I, 7203
    _______

    with 31 U.S.C. 5322, 5324. Both sets of laws are
    ____

    technical; and both sets of laws sometimes criminalize

    conduct that would not strike an ordinary citizen as immoral

    or likely unlawful. Thus, both sets of laws may lead to the

    unfair result of criminally prosecuting individuals who

    subjectively and honestly believe they have not acted

    criminally. United States v. Cheek, 111 S. Ct. 604 (1991),
    _____________ _____

    sets forth a legal standard that, by requiring proof that

    the defendant was subjectively aware of the duty at issue,

    would avoid such unfair results. Were I writing on a blank

    slate, the similarity of the two sets of criminal laws might

    well lead me to conclude that the same standards should

    apply in both sets of cases. Other circuits, however, have

    distinguished "currency reporting" cases from Cheek. See en
    _____ ___

    banc opinion, supra at p. 20. Moreover, Supreme Court
    _____

    opinions have strongly suggested that criminal tax cases

    constitute a separate enclave in the law. See en banc
    ___

    opinion, supra at pp. 18-19.
    _____




    25
    25




















    In addition, the court today announces a standard

    that does not threaten to allow conviction of a defendant

    with an innocent state of mind. Under the court's standard,

    the government must prove that the defendant either

    subjectively knew of his legal duty, or that he was

    "reckless" in respect to the existence of that duty. Cf.
    ___

    McLaughlin v. Richland Shoe Co., 486 U.S. at 135 n.13 (even
    __________ _________________

    objectively unreasonable failure to determine correct legal

    obligation is not "willful," as long as such failure falls

    short of recklessness). One can imagine how a person

    frequently in contact with these laws, such as a financial

    officer or drug-fund courier, could be found to have been

    "reckless" in failing to learn relevant legal data.

    However, it is difficult to see how one could convict an

    ordinary citizen on this basis, i.e., in the absence of
    ____

    actual, subjective knowledge of the legal duty, for

    "recklessness" involves the conscious disregard of a

    substantial risk. See Model Penal Code 2.02(2)(c)(1985);
    ___

    cf. United States v. Murdock, 290 U.S. 389, 395 (1933)
    ___ ______________ _______

    (conduct is "willful" in the context of a criminal statute

    if it is "marked by careless disregard [for] whether or not

    one has the right to act").




    26
    26




















    I therefore conclude that the court's announced

    standard is sufficiently close to the purely subjective

    standard set forth in Cheek that it will avoid using the
    _____

    criminal law, in this technical area, to punish those with

    an innocent state of mind, those who did not know they were

    violating the law and who reasonably failed to investigate

    the issue. I therefore join the court's opinion.







    Dissent follows


























    27
    27

















    TORRUELLA, Circuit Judge (Dissenting). Although I
    _____________

    agree with much of what is stated by the majority, and even more

    with Chief Judge Breyer's concurrence, I write separately because

    I believe neither opinion goes far enough. In my view the

    prosecution of these cases is defective on two grounds: (1) As

    clearly reflected in the legislative history of these statutes,

    appellants are improper targets of money laundering accusations,

    and (2) even if the charges are within statutory scope, the

    standard of scienter in Cheek v. United States, 498 U.S. 192
    _____ _____________

    (1991), is applicable to them.

    I. ACTIVITY TARGETED BY THE BANK
    I. ACTIVITY TARGETED BY THE BANK
    _________________________________
    SECRECY ACT, AS AMENDED BY THE
    SECRECY ACT, AS AMENDED BY THE
    _________________________________
    MONEY LAUNDERING CONTROL ACT
    MONEY LAUNDERING CONTROL ACT
    ____________________________

    I need not repeat the facts as stated by the majority.

    I will only emphasize that appellants are neither the recipients

    of illegal drug funds or engaged in laundering money proceeds

    from criminal ventures, nor are they income tax evaders. In

    fact, particularly in the case of appellants Aversa and Mento,

    they did nothing prior to the alleged "structuring" actions that

    even approximates the commission of a criminal offense. I focus

    on the Bank Secrecy Act and its more recent amendment, the Money

    Laundering Control Act, to determine whether appellants' actions

    are within the purview of the conduct that Congress intended to

    criminalize by this legislation.








    -28-
    28














    The Bank Secrecy Act, enacted in 1970, was part of the

    Bank Records and Foreign Transaction Act.13 The unequivocal

    concern of this complex legislation was to prohibit the use of

    foreign banks to "launder" the proceeds of illegal activity or

    evade federal income taxes.14 It became apparent, however,

    that these enactments had little impact on large-scale money

    laundering related to illegal drug transactions, and that illicit

    funds were flowing in ever-increasing amounts into financial

    institutions in the United States.15 As a result, Congress

    enacted the Anti-Drug Abuse Act of 1986,16 Title I, subtitle H

    of which was the Money Laundering Control Act of 1986. This

    subtitle included an anti-structuring provision.17

    One thing clearly emerges from the legislative history

    of this statute: Congress wished to attack money laundering

    associated with organized crime or related criminal activity,

    particularly the illicit drug trade. See S. Rep. No. 433, 99th
    ___

    Cong., 2d Sess. (1986) (accompanying S. 2683). A casual review

    of the Senate Report accompanying this Act reveals that the term

    "money laundering," or its equivalent, is used more than 100

    ____________________

    13 Pub. L. No. 91-508, 84 Stat. 1114 (1970) (codified as amended
    in scattered sections of 12 U.S.C., 15 U.S.C. and 31 U.S.C.).

    14 S. Rep. No. 433, 99th Cong., 2d Sess. 2-3 (1986).

    15 See The President's Commission on Organized Crime, Interim
    ___
    Report to the President and the Attorney General, The Cash
    _________
    Connection: Organized Crime, Financial Institutions, and Money
    _________________________________________________________________
    Laundering (1984); S. Rep. No. 433 (1986).
    __________

    16 Pub. L. No. 99-570, 100 Stat. 3207.

    17 31 U.S.C.A. 5324 (West Supp. 1992).

    -29-
    29














    times, and that it refers to organized crime and criminal

    activity on no less than 53 occasions. Id. The House Report
    ___

    displays a similar preoccupation. See H.R. Rep. No. 746, 99th
    ___

    Cong., 2d Sess. (1986) (accompanying H.R. 5176). The first major

    heading of this report is "Drug Trafficking and Money

    Laundering." Id. at p. 16. The report refers to "money
    ___

    laundering" approximately 73 times, and to organized crime and

    illegal drug trafficking 53 times.

    Given the congressional preoccupation with money

    laundering it is surprising that neither the term "money

    laundering," nor the new crime created by the Money Laundering

    Control Act, "structuring," are defined by the statute.

    Nevertheless, the House Report states the following:

    Money Laundering Defined. - The
    _____________________________
    President's Commission on Organized Crime
    has defined money laundering as the
    "process by which one conceals the
    existence, illegal source, or illegal
    application of income, and then disguises
    that income to make it appear
    legitimate." In other words, laundering
    involves the hiding of the paper trail
    that connects income or money with a
    person in order for such person to evade
    __________________________________
    the payment of taxes, avoid prosecution,
    _________________________________________
    or obviate any forfeiture of his illegal
    _________________________________________
    drug income or assets. . . .
    _____________________

    Id. at 16 (emphasis supplied).
    ___

    I derive additional guidance from the Senate Report

    that discusses what later became 18 U.S.C. 1956(a)(1), which is

    entitled Laundering of Monetary Instruments. See S. Rep. No. 433
    __________________________________ ___

    at 9. The report calls section 1956 "the basic money laundering



    -30-
    30














    offense." Id. That section, which in effect defines
    ___

    "laundering," provides:


















































    -31-
    31














    Whoever knowing that the property
    _________________________________________
    involved in a financial transaction
    _________________________________________
    represents the proceeds of some form of
    _________________________________________
    unlawful activity, conducts or attempts
    __________________
    to conduct such a financial transaction
    which in fact involves the proceeds of
    specified unlawful activity--(B) knowing
    that the transaction is designed in whole
    or in part -- (i) to conceal or disguise
    the nature, the location, the source, the
    ownership, or the control of the proceeds
    of specified unlawful activity; or (ii)
    to avoid a transaction reporting
    requirement under State or Federal law .
    . . . [will be liable for conviction
    under this section].

    18 U.S.C. 1956(a)(1) (emphasis supplied).

    On the other hand, "structuring" is only defined by

    regulation. 31 C.F.R. 103.53, entitled "Structured

    Transactions," provides that:

    No person shall for the purpose of
    evading the reporting requirement of
    103.22 with respect to such transaction:

    . . .

    (c) Structure (as that term is defined
    in 103.11(n) of this part) or assist in
    structuring, or attempt to structure or
    assist in structuring, any transaction
    with one or more domestic financial
    institutions.

    31 C.F.R. 103.53.

    Regulation 31 C.F.R. 103.11(n) (1989) defines

    "structure" or "structuring" as:

    (n) Structure (structuring). For
    ________________________
    purposes of section 103.53, a person
    structures a transaction if that person,
    acting alone, or in conjunction with, or
    on behalf of, other persons, conducts or
    attempts to conduct one or more
    transactions in currency, in any amount,
    at one or more financial institutions, on

    -32-
    32














    one or more days, in any manner, for the
    purpose of evading the reporting
    requirements under section 103.22 of this
    Part. "In any manner" includes, but is
    not limited to, the breaking down of a
    single sum of currency exceeding $10,000
    into smaller sums, including sums at or
    below $10,000, or the conduct of a
    transaction, or series of currency
    transactions, including transactions at
    or below $10,000. The transaction or
    transactions need not exceed the $10,000
    reporting threshold at any single
    financial institution on any single day
    in order to constitute structuring within
    the meaning of this definition.

    31 C.F.R. 103.11(n) (1989); see also S. Rep. No. 433 at 22, 25
    ________

    ("structuring" is "breaking up of what is really one financial

    transaction into several smaller ones to evade reporting

    requirements").

    During the hearings preceding enactment of this

    legislation concern was expressed that this maze of interwoven

    regulations and statutes, although aimed at crippling organized

    crime, "could lead to prosecution of people who were not in any

    way involved in money laundering." See S. Rep. No. 433 at 12;
    ___

    see also John K. Villa, A Critical View of Bank Secrecy Act
    _________ ______________________________________

    Enforcement and the Money Laundering Statute, 37 Cath. U.L. Rev.
    ____________________________________________

    489 (1988). The present appeals are living proof of that

    prophecy. Appellants are being prosecuted for violation of the

    money laundering statutes notwithstanding that they are not in

    any way involved in such activities.

    The situation presented by these charges is not unlike

    that in McNally v. United States, 483 U.S. 350 (1987), in which
    _______ _____________

    the Supreme Court reversed a unanimous litany of circuit court

    -33-
    33














    decisions18 condoning the extension of the federal mail fraud

    statute19 beyond the scope of Congress' intended coverage. In

    charging appellants under the money laundering statutes the

    government similarly overlooked that "[i]n considering the scope

    of [a] statute it is essential to remember Congress' purpose in

    enacting it." Id. at 365 (Stevens, J., dissenting).
    ___

    In prosecuting appellants under the Bank Secrecy Act as

    amended by the Money Laundering Control Act, the government has

    transgressed Congress' purpose in the enactment of these

    statutes, which was to detect and punish "financial

    transaction[s] represent[ing] the proceeds of some form of

    unlawful activity," 18 U.S.C. 1956(a)(1). We should not stand

    idly while this overreaching transforms common citizens into

    criminals.

    II. THE CHEEK STANDARD
    II. THE CHEEK STANDARD
    __________________

    While it could have been possible to leave Cheek v.
    _____

    United States, 498 U.S. 192, 111 S. Ct. 604 (1991), out of this
    _____________

    appeal altogether, the majority opinion seeks to restrict its

    present and future use by preemptive action. I believe it would

    be more appropriate to consider one case at a time. Furthermore,

    lest there be any doubt, I certainly am not of the view that the

    Cheek standard should apply in blanket fashion "to virtually all
    _____

    white collar crimes that require a mens rea of willfulness as an
    ____ ___


    ____________________

    18 Including some from this circuit. See, e.g., United States
    ___ ____ ______________
    v. Silvano, 812 F.2d 754 (1st Cir. 1987).
    _______

    19 18 U.S.C. 1341.

    -34-
    34














    element of the offense." Ante at 18. In my view each
    ____

    legislative scheme must be separately pondered to determine

    whether Cheek applies. But I cannot agree that because Cheek was
    _____ _____

    an income tax case that the principle espoused therein regarding

    mens rea is necessarily limited to such tax cases. I can find
    ____ ___

    nothing in Cheek to justify such a conclusion or limitation.
    _____

    Logic and fundamental fairness dictate that some traditional

    legal maxims, up to now blindly accepted, make little sense in

    the context of some of today's complex regulatory environments.

    Ultimately Cheek stands for the proposition that at some point a
    _____

    legal fiction may so depart from reality as to be untenable as a

    basis for criminal responsibility.

    In Cheek, the Supreme Court examined the meaning of
    _____

    "willfully" as used in the income tax statutes. Defendant Cheek,

    a commercial airline pilot, refused to file income tax returns

    after 1979. As a result, Cheek was indicted and charged with

    willfully violating 26 U.S.C. 7203 & 7201.20

    At trial, Cheek presented as his defense that "he

    sincerely believed that the tax laws were being

    unconstitutionally enforced and that his actions during 1980-1986

    period were lawful." Cheek, 498 U.S. at ___, 111 S. Ct. at 607.
    _____

    During deliberations, the jury was divided on whether Cheek

    honestly and reasonably believed that he was not required to pay


    ____________________

    20 Section 7201 criminalizes the "willful[] attempt[] in any
    manner to evade or defeat any tax imposed by this title or the
    payment thereof." 26 U.S.C. 7201. Section 7203 criminalizes
    the willful failure to file a return as required under Title 26.

    -35-
    35














    income taxes. However, the district court instructed the jury

    "that a good-faith misunderstanding of the law or a good faith

    belief that one is not violating the law, if it is to negate

    willfulness, must be objectively reasonable." 498 U.S. at ___,

    111 S. Ct. at 608. With this instruction in hand, the jury found

    Cheek guilty on all counts. Cheek appealed on the ground that

    this instruction was erroneous. The Seventh Circuit affirmed.

    The Supreme Court, relying on its prior criminal tax

    precedents interpreting the word "willfully," reversed Cheek's

    conviction. It held that no matter how unreasonable a judge

    might deem Cheek's beliefs, the jury must have the opportunity to

    hear them and make the final determination as to whether he had a

    good faith misunderstanding of the law or a good faith belief

    that he was not violating the law, thus negating the element of

    willfulness. 498 U.S. at ___, 111 S. Ct. at 610.21

    Cheek establishes that the government must prove in a
    _____

    criminal tax case a "willful" violation, which requires proof

    that a defendant voluntarily and intentionally violated a known

    legal duty. 498 U.S. at ___, 111 S. Ct. at 611. More in point

    with the present appeals, however, the Court stressed that

    [t]he proliferation of statutes and
    regulations has sometimes made it
    difficult for the average citizen to know
    and comprehend the extent of the duties

    ____________________

    21 The Court therefore held that the district court erred when
    it instructed the jury that Cheek's "asserted beliefs that wages
    are not income and that he was not a taxpayer within the meaning
    of the Internal Revenue Code should not be considered by the jury
    in determining whether Cheek has acted willfully." 498 U.S. at
    ___, 111 S. Ct. at 613.

    -36-
    36














    and obligations imposed by the tax laws.
    Congress has accordingly softened the
    impact of the common-law presumption by
    making specific intent to violate the law
    an element of certain federal criminal
    tax offenses.

    498 U.S. at ___, 111 S. Ct. at 609. The Court could well have

    been talking about the arcane money laundering regulatory scheme

    presented by these appeals.

    It is pointed out that the application of Cheek to the
    _____

    anti-structuring statute was rejected by the Tenth Circuit in

    United States v. Dashney, 937 F.2d 532 (10th Cir.), cert. denied,
    _____________ _______ ____________

    60 U.S.L.W. 3343 (1991), and that other courts have followed

    Dashney's analysis. See United States v. Brown, 954 F.2d 1563
    _______ ___ ______________ _____

    (11th Cir. 1992); United States v. Rogers, No. 91-5106, slip op.
    _____________ ______

    (4th Cir. Apr. 24, 1992).

    In Dashney, the court concluded that the anti-
    _______

    structuring act did not require, as an element of the offense,

    proof of a specific intent to violate the act because, the

    provisions of the anti-structuring act are "straightforward" when

    compared to the criminal tax statutes at issue in Cheek.
    _____

    Dashney, 937 F.2d at 540. After spending a considerable amount
    _______

    of time studying these statutes and regulations, as well as their

    legislative history, I must confess to a different view.

    The conclusion that engaging in a currency transaction

    is more "straightforward" than filing an income tax return is at

    best, unconvincing. The legal duty at issue here -- the

    illegality of structuring a transaction in order to prevent a

    bank from filing a currency transaction report -- does not even

    -37-
    37














    approximate the general knowledge of the duty of taxpayers to

    file an income tax return.22 The statutes criminalizing the

    conduct of failing to file an income tax return have been around

    for more than 70 years whereas the anti-structuring act did not

    clearly criminalize the conduct of structuring transactions until

    1986, when Congress enacted 31 U.S.C. 5324 and 5522.23 If

    nothing else emerges from a study of this byzantine labyrinth of

    legislation and regulation, it is that an unsuspecting common

    citizen can easily fall prey to this uncommon area of the law.

    Apparently, with this in mind the Treasury Department proposed,

    but failed to adopt, regulations aimed at publicizing the

    criminal offense underlying 5324. See 54 Fed. Reg. 20,398
    ___

    ____________________

    22 In Cheek, Justice Blackmun, with whom Justice Marshall joined
    _____
    in dissent, stated that:

    [I]t is incomprehensible to me how, in
    this day, more than 70 years after the
    institution of our present federal income
    tax system . . . any taxpayer of
    competent mentality can assert as his
    defense to charges of statutory
    willfulness the proposition that the wage
    he receives for his labor is not income
    . . . .

    498 U.S. at ___, 111 S. Ct. at 615.

    23 In fact, until the enactment of the Money Laundering Act, a
    conflict among the circuits existed as to whether it was a crime
    to structure deposits for the purpose of preventing the bank from
    reporting. Compare United States v. Larson, 796 F.2d 244, 246-47
    _______ _____________ ______
    (8th Cir. 1986); United States v. Varbel, 780 F.2d 758, 760-63
    _____________ ______
    (9th Cir. 1986); United States v. Denemark, 779 F.2d 1559, 1561-
    _____________ ________
    64 (11th Cir. 1986); United States v. Anzalone, 766 F.2d 676,
    ______________ ________
    679-83 (1st Cir. 1985) with United States v. Heyman, 794 F.2d
    ____ _____________ ______
    788, 790-93 (2d Cir.), cert. denied, 479 U.S. 989 (1986); United
    ____________ ______
    States v. Cook, 745 F.2d 1311, 1314-16 (10th Cir. 1984), cert.
    ______ ____ _____
    denied, 469 U.S. 1220 (1985); United States v. Tobon-Builes, 706
    ______ _____________ ____________
    F.2d 1092, 1096-1101 (11th Cir. 1983).

    -38-
    38














    (1989). It is obvious that our Anzalone opinion had little
    ________

    effect on bureaucratic thinking. See Anzalone, 766 F.2d at 681-
    ___ ________

    82.

    I recognize, as has the majority, that not all

    appellants are in the same legal position on this last issue. In

    my opinion, in case No. 91-1574, appellant Donovan received

    substantially the jury charge that he was entitled to under

    Cheek. Appellants Aversa and Mento in cases Nos. 91-1363 and 91-
    _____

    1364 did not. The problem is, nevertheless, that in my view none

    of the appellants should have been charged because, as previously

    explained, the government overstretched its anti-moneylaundering

    net. Consequently, I must dissent.






























    -39-
    39







Document Info

Docket Number: 91-1363

Filed Date: 1/13/1993

Precedential Status: Precedential

Modified Date: 9/21/2015

Authorities (50)

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Christine Stowell, Etc. v. H. Rollin Ives, Etc. , 976 F.2d 65 ( 1992 )

United States v. Bank of New England, N.A. , 821 F.2d 844 ( 1987 )

United States v. David A. Dashney , 937 F.2d 532 ( 1991 )

United States v. Charles George Trucking Co., Charles ... , 823 F.2d 685 ( 1987 )

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United States v. Douglas A. Denemark , 779 F.2d 1559 ( 1986 )

United States v. Victor Eisenstein, Beno Ghitis , 731 F.2d 1540 ( 1984 )

United States v. Oscar De J. Tobon-Builes , 706 F.2d 1092 ( 1983 )

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