United States v. Michael David Alston

confinement, attempt that no had been-made residence, and officers

to secure reasonably have aware of

acting should been Good, clearly mag- law of established judge holding the indi- erred

istrate enjoyed qualified immuni-

vidual defendants

ty- hold that the second search of the

We Fourth

Parkhurst residence violated the police reason-

Amendment and the officers

ably conduct should have known their Therefore, the court

was unlawful. district summary judgment entering

erred in police officers’

defendants the issue unnecessary

liability. holding This makes it scope us to reach the issue of whether the proper.

of the search was

IV. judgment

Accordingly, the of the district will be

court will be reversed. case court with

remanded the district directions plaintiff summary judgment for the

to enter liability, proceed

on the issue damages, if

trial to the amount of determine may

any, plaintiff have suffered. appellees. taxed against

Costs America, Appellee, STATES

UNITED ALSTON, Appellant.

Michael David 94-2195.

No. of Appeals, States Court

Third Circuit.

Argued Dec. 1995.1

Decided Feb. Rehearing April Petition for

Sur rendered, re- opinion being Panel was originally matter heard on June 1. This McKee, Roth, Hutchinson, Judge Judges constituted include before reargued. prior appeal Judge Hutchinson died Garth. Because PA, Trigiani (argued), Philadelphia, P. Joel Appellant. Stiles, Attorney, Michael R. United States Jr., Batty, Assistant Walter S. Attorney, Appeals, Joel D. Goldstein Chief Attorney, (argued), Assistant United States Office, Attorney’s Eastern Dis- PA, Pennsylvania, Philadelphia, trict of Appellee. ROTH, GARTH, McKEE and

Before: Judges. Circuit THE OPINION OF COURT GARTH, Judge: Circuit September defendant Michael On (“Alston”) David Alston was indicted on two charged conspira- him with counts. Count (i) cy under 371: (ii) Treasury require- structure to avoid the 5313(a), ments of 31 U.S.C. violation of anti-structuring provisions of 31 5324(a)(3) charged II 5322. Count structuring him with in violation of 31 U.S.C. 5324(a)(3), 5322(b); 103.11, 31 C.F.R. 2(b). 103.22; Following and 18 U.S.C. trial, non-jury Alston was convicted on both counts. convicted,

After Alston was opinion in Court rendered its - U.S.-, (1994), that, 126 L.Ed.2d 615 in which it held conviction, to obtain a order must that the defen “willfully” dant structured. “Willfulness” knowledge was defined as the defendant’s illegal. govern proven ment conceded that it had not (knowledge illegality) that Rat- mens rea II, Richard Alston and his in order to sustain Count defendant Kosa. required zlaf personal each left a check for count of brother $500 the substantive respective charged conspiracy payments. I that their portion toward down of Count va- therefore The district court structure. Septem- car became Alston’s available on conviction. portions those cated Alston’s 12, 1988. Alston remittals to ber made cash However, refused to set the district court $5,000 30, Imports September Motor on I conviction under Count aside Alston’s 1988, $2,500 4, 1988, $1,500 on October and defraud, § charged a 371 which 1988, 5, $9,000 on October for a total of require- reasoning that mens rea Ratzlaf’s $10,000 single A cash within that week. apply. ment did not payment triggered would have Motor Im- ports’s obligation to Form 8300 file an IRS pur- jurisdiction appeal have over this We $10,000.5 payments over for cash § will reverse suant to 28 U.S.C. 1291. We indictment, charging because the 5, 1988, paid cash for a On October Alston (Indictment 371, § clause of the “defraud” $9,000 money payable order to Motor Im- ¶ 7(a)), conspiracy to alleges no more than a Drew, ports from Therese the head bank by structuring, a teller at Stenton Avenue Branch of Meridian genre than far different Alston’s, personal a close Bank and friend of gov- by the conspiracies”2 relied on “Klein kept the conve- who also books for Alston’s addition, substan- ernment. we have such trial, that store. At Drew testified nience difficulty understanding how Alston tial currency about the re- she knew transaction of a can convicted be (“CTR”) filing requirements by port imposed of a guilty when he cannot be filing and had re- law discussed CTR structuring it- conspiracy to structure or 7,1988, quirements with Alston. On October self,3 reverse conviction. that we Alston’s $8,000 purchased Alston cash another

money payable Imports from order to Motor Avenue Branch of Meridian the Stenton I. Bank. 1988, Alston, operator of an July On pattern A was followed for similar store, and his unprofitable convenience BMW, Henry purchase of Alston’s and Henry purchase arranged each brother 9, 1988, Henry both and December Michael BMW automobiles from West top-of-the-line delivery of new cars. Alston took their Imports approximately Motor for German 30, 1993, was Alston $70,000 September on each apiece.4 sales contract On $41,000 indict charged in two counts of a three count payment a down provided car that charged conspir Alston with purchase price of ment. Count paid toward the would (i) to defraud the delivery, acy under 18 U.S.C. 371: the date of the ear on or before (ii) Treasury purchase price remainder of the require reporting avoid was eo- financed. The salesman structure would be requires conspiracy” Revenue Code at note 5.Internal section "Klein is discussed 2. A "[a]ny person engaged trade or ... who in a infra. business, who, trade or in the course of such only argu- opinion, wc discuss Alston’s In this $10,000 business, in 1 receives more in cash than vacated, § 371 must be ment that his (or transactions)” 2 or transaction more related ground for merit in other wc find no Alston's as appeal, person identifying from whom file a return i.c., the district court abused received, of the cash the amount the cash received, admitting fail- evidence of Alston's discretion ure to file the transac- and the date and nature of tax returns 1987 and 1988. 60501(a), (b). Structuring 26 U.S.C. tion. ground originally also raised a third Alston had requirements evade erred in appeal: that the district court had 60501(f). prohibited. 26 U.S.C. enhancing two levels for his offense level However, justice. by letter filed obstruction February ground for structur- the statute of limitations Because Alston abandoned run, was not 60501 had Alston under section appeal. charged with such a violation. costs, factoring in all each vehicle cost 4. After $83,000. approximately Drew, 5313(a)6 in violation of from his conversations with ments of 31 U.S.C. anti-structuring provisions of 31 U.S.C. intentionally transac- he had structured his 5324(a)(3)7 II 5322.8 Count having tions filed with the to avoid CTR’s offense charged with the substantive Alston IRS. is, report structuring, that evasion of the trial, January after the but On 5313(a), ing requirements of 31 U.S.C. on Alston’s before the district court ruled anti-structuring provisions of violation of the motions, post-trial Court held 5322(b); 5324(a)(3), 31 C.F.R. structuring convic- that in order to obtain a 2(b).11 103.22;10 103.11,9 and 18 U.S.C. must tion non-jury trial November On defendant knew that itself was November held. On — States, illegal. v. United U.S. Ratzlaf all The district was convicted of counts. (1994). -, 126 L.Ed.2d 615 S.Ct. relying Alston’s conviction on court sustained law in effect at that time. the Third Circuit the verdict and Aston moved to set aside provided jurisprudence then that to ob Our sought entry judgment acquittal of of conviction, structuring government tain a under Rule 29 of the Federal Rules of Crimi- only prove defendant knew of need that the nal Procedure. The conceded obligation report the financial institution’s to proven knowledge illegality. that of it had not $10,000, financial of over It therefore conceded that Aston’s convic- structured his transac that the defendant tions for to struc- triggering such re in order to avoid tions § § ture 5322 could not under Shirk, ports. States v. See United stand. - denied, Cir.1992), cert. U.S. By April order filed the district -, 873, 127 L.Ed.2d S.Ct. post-trial granted court Aston’s motion to that Alston The district court concluded requirements respect reporting set aside the verdict with to the knew of the bank’s 5313(a), Congress (structuring). person § enacted U.S.C. Structure structures a [A] 6. In alone, acting provided person, if that or in which that financial institutions such as transaction with, of, conjunction per- obligated or on behalf other banks arc to file CTR’s for cash trans- sons, $10,000. attempts to conduct one or conducts or actions in excess of See 31 U.S.C. amount, 5313(a) currency, any (reporting requirement); § more transactions in 31 C.F.R. institutions, 103.22(a)(1)($10,000 floor). at one or more financial on one or § manner, days, any purpose more evading for reporting requirements under sec- 1986, Congress "antistructuring" enacted any part. tion 103.22 of this includes, "In manner” provides provision, which 31 U.S.C. that to, breaking but is not limited shall, person purpose evading no "for currency exceeding single down of a sum of 5313(a) requirements reporting ... of section $10,000 sums, including into smaller sums with or more structure ... transaction one $10,000, or below tion, or the conduct of a transac- 5324(a)(3). financial institutions.” 31 U.S.C. transactions, currency or scries of includ- $10,000. ing transactions at or below appeal, 8. At all times relevant to this l(gg). 31 C.F.R. 103.1 5322(a) penalties only provided criminal §of 5313 or 5324. Prior to "willful” violations 103.22(a)(1) provides Section of the C.F.R. 1994, § amendment in 5322 read as follows: its "[ejach financial other than a institution report or the Service shall file a casino Postal person willfully violating subchapter [31 A this withdrawal, a, deposit, exchange currency each seq.] regulation pre- et or U.S.C. transfer, payment by, through, other or or or subchapter (except scribed under this section such financial institution which involves a trans- regulation prescribed title 5315 of this or $10,000.” currency action in of more than 5315) be fined not more under section shall 103.22(a)(1). $250,000, C.F.R. imprisoned more then for not years, than five or both. 2(b), 5322(a). person 11. Under 18 U.S.C. who causes U.S.C. Section 5324 was subse- 31 quently directly performed by provide an act be done which if own amended in 1994 to against would be an offense the United penalty provision. himself The 1994 amendment did not States, punishable if he had committed the impose requirement. as See n. "willfulness” 2(b). In this act himself. 18 case. infra. charged Count II of the indictment Alston under 2(b) causing l(gg) with the bank to fail in its statuto- the C.F.R. defines "struc- 9. Section 103.1 ry duty CTR’s. turing” to file as follows: interpreted originally much We the term “will and so count substantive 5322(a) charged conspiracy knowledge had of Count I that ful” mean ¶ (Indictment 7(b)). The district structure reporting requirements bank’s judgment acquittal court entered a coupled the intent to evade re those refused, charges. The district court those Shirk, quirements. States v. however, un- Alston’s conviction to set aside (3d Cir.1992). However, 1390-92 charged I that portion of Count had der - States, -, U.S. Ratzlaf ¶ (Indictment 7(a)). defraud, conspiracy to (1994), 126- L.Ed.2d ground mens It did so on Ratzlaf7s term Court held “willful” con- requirement apply rea did 5322(a) required proof beyond §in knowl spiracies to defraud. edge of a bank’s duties and intent 29, 1994, Alston was sen- November On to evade them. for the first time year imprisonment of one tenced to a term of government prove required that the that the day to defraud the and one he defendant “knew the in which charged in Count — engaged was iinlawful.” indictment. added). -, (emphasis 114 S.Ct. at 663 Thus, appeal, all times relevant II. structuring of the few for was one crimes 5313 of title 31 of the United Section government prove knowl which the had 103.22(a)(1) Code, § and 31 C.F.R. States edge illegality. of See United States v. Zehr thereunder, promulgated provide that banks bach, 1252, Cir.1995), 47 F.3d cert. must file “financial institutions” and other - denied, -, 1699, 115 S.Ct. $10,000 or for cash transactions of CTR’s (1995).12 L.Ed.2d 562 1986, Congress In enacted 31 U.S.C. more. Anti-Drug part 5322 as of the 5324 and noted, As earlier the con provides Abuse Act of 1986. Section following trial that it had failed to ceded illegal for an individual to “struc- that it is illegal that Alston knew it was to avoid is, ture,” one or more cash to conduct CTR’s, agreed that Alston’s convictions at one or more financial institu- offense of for substantive tions, financial purposes evading the for should be vacated. to structure requirements under 31 institution’s However, government maintained that Structuring reduc- includes C.F.R. 103.22. structuring may pun nonetheless be Alston’s $10,000 exceeding into ing a sum of cash object conspiracy”13 as the of a “Klein ished Because, 1994, prior to sec- sums. smaller the “defraud” clause of 18 U.S.C. penalty contain a tion 5324 did not itself agreed court and de The district supplied penalty provision was provision, its charge against Alston for to vacate the clined 5322(a), provided “a which section un conspiracy to defraud willfully violating” section 5324 person §der subject penalties. criminal light amendment to of the 1994 Court decided

12. After the unlikely to the instant situation is observe that requirement Congress willfulness eliminated the again. occur amending convictions for penal- criminal 5324 to contain its own conspiracy" from the term "Klein comes 13. The penalty provision ty provision. The Klein, 247 of United States v. Second Circuit case require willfulness. docs not unlike (2d Cir.1957), and has become F.2d 908 generic Regu- Community Development Ricgle to frustrate term for 103-325, Act, latory Improvement IRS) Pub.L. No. government (particularly in its lawful Thus, (1994). following See, e.g. 108 Stat. 2253 gathering functions. information amendment, (5th Cir.1987) Montalvo, requirement the mens rea the 1994 v. 820 F.2d 686 (defendant govern- defraud clause of if the convicted under the conviction is met for a impede the IRS in the 371 for merely had establishes that the defendant ment by laun- and collection of revenue ascertainment causing financial institution to purpose of disguise dering money the true source in order to required report. not file a currency). of United States anti-structur prove “willful” violation of the III. is, statute, illegali knowledge of the general federal con Section States, ty structuring, v. United statute, as follows: spiracy provides - U.S.-, 126 L.Ed.2d conspire either to persons If two or more conspiracy to structure pre-1994 A any against the United commit offense showing of a absent a must also be dismissed States, or to defraud Thus, necessary to “it is “willful” violation. any matter or for any agency thereof knowledge illegality of struc establish more of such any and one or purpose, turing in order to convict a defendant object persons act to effect do financial transac conspiracy to structure [subject shall be conspiracy, each Kim, tions.” United States penalties], criminal (9th Cir.1995) (reversing conviction 371 refers to two 371. Section jury where the to structure (1) conspiracy to com- types conspiracies: had to find that the defendant not instructed by an- proscribed mit a offense substantive structuring). knowledge illegality of “ (2) (the clause”); and ‘offense’ other statute obviously that the It was for these reasons (the conspiracy to defraud the United States pre-1994 case district court the instant “ clause”). See United States ‘defraud’ charge of structur dismissed the substantive (3d Cir.1963). Vazquez, charge ing well as the of 371 requires clause reference While the “offense” to structure. code, the part of the criminal to another court dismissed all the district After not, simply does “defraud” clause conspiracy to de but (fraud) is contained the substantive offense convicted, fraud, which Alston was the statute itself. remaining us was whether issue then before It well settled to convict Alston, pre-1994 light in stan Ratzlaf’s conspiracy under the “offense” defendant of standard since dard of willfulness —a clause, prove whatever government must the (see )(cid:127) 12, supra amended footnote —could required for conviction of mens rea is level of conspiracy by of a convicted underlying offense. The Su the substantive il structuring proof knowledge without “in made clear that order to preme has Court Curran, 20 legality. In United States v. judgment of conviction on sustain a (3d Cir.1994), we answered that F.3d 560 a federal statute conspiracy [un to violate in the Federal question connection with 371], the “offense” clause of Gov der the Campaign Act. We held that Election degree of prove at least the ernment must applied to the substantive of standard necessary for the substantive criminal intent applied conspiracy also fense Feola, States v. offense itself.” United Here, question we answer that defraud. 1255, 1264, 671, 685-86, 95 S.Ct. U.S. principle and hold with Curran’s consistent (1975) (citing v. Anderson Unit L.Ed.2d 541 to defraud ing require that a conviction 211, 226, 94 S.Ct. ed U.S. by pre-1994 the United States (1974)).14 2263,41 L.Ed.2d 20 supported by proof that also be must illeg pre-1994 defendant knew to convict a struc In order defendant, government must turing al.15 however, stated, Vazquez, conspiracy, "[t]hc no more than: said Jackson once 14. As Justice "chameleon-like, special States] defraud the United [to coloration laUcr takes on offense, independent and a count of an many offenses on itself the substantive from each of may drawn under it need refer to no other Krulewitch v. United indictment which it States, be overlaid.” to which we 69 S.Ct. than 371”—a statement 336 U.S. statute text, supra, page in 718. L.Ed. 790 have referred Curran, therefore, cannot conflict with first, Vazquez Roth, Vazquez: statement is writing Judge in claims that wc dissent second, Curran, the two cases because each of dicta and have misread vastly subject (3d 1994). matters and reading with different charges deals that our Cir. She Hence, vastly principles. neither different lead to a conflict with United of Curran would (3d Cir.1963). any authority by Vazquez cited nor other Vazquez, 319 F.2d 381 previ F.3d at 571. “The comments we have in had asked his defendant Curran ously failings contributions of the instruc to make individual made about

employees campaigns of certain candi- apply [to election tion on intent to the to the retrial, He reimbursed federal office. then dates for count as well.” Id. “On defraud] cash, circumventing thereby in intent to the them instruction on campaign permitted contributions applicable maximum track those to the sub count must under federal law. Follow- individual (quoting Id. stantive counts.” trial, charges Inc., on was convicted Pittsburgh, Curran v. American Investors of campaign denied, treasurers to sub- causing Cir.), election F.2d cert. reports to the Federal Election mit false 110 S.Ct. 107 L.Ed.2d 354 (the “FEC”), in violation 18 (1989)). Commission 2(b) 1001,16 and of logic our dic- Both decision Curran the United States to defraud holding here. The tate our statutes, § antistructuring Like the case has conceded that it has failed only We held punishes “willful” conduct. “willfully” un- prove that Alston structured “willfully” causing a violation of dis- Therefore, charge against der Ratzlaf. obligations under the Federal Cam- closure defraud, conspiracy to which was Alston for Act, “willfully” paign was no different than exclusively premised on Alston’s by to file a CTR causing the failure a bank activity, failure must be vacated for Curran, Secrecy Bank Act. under the (knowledge illegality) re- the mens rea Thus, applying at 568-69. by quired only underlying substan- brought under “willfulness” in cases defined structuring, but also tive offense 2(b) Election the Federal structuring. prosecution to require the context to law indictment, case, present In the treasur- knew of the prove “that defendant defraud, conspiracy to charging Alston with attempted obligations, that he ers’ exclusively allegations of his struc- relied obligations, and that he those to frustrate turing activity. reads rel- The indictment Curran, 20 was unlawful.” knew his conduct part: evant F.3d at 569. July 1988 to on or From on or about “willfulness” the Curran court’s Because in the Eastern December about it legally in that did deficient instruction Pennsylvania, defendants District of jury had to have charge the that Curran not actions, illegality knowledge of the of his ALSTON, and DAVID MICHAEL on the substan- convictions vacated Curran’s ROSA RICHARD 2(b) counts, 18 U.S.C. and tive unlawfully willfully con- knowingly, and did however, we va- significantly, § 1001. Most confederate, combine, agree to- and spire, “conspiracy to defraud” cated Curran’s co-conspirator, an unindicted gether with aspects critical of Cur- conviction jury: grand the unknown to and others proof lacking, including rea were ran’s mens and the the illegal. a. to We knew his actions to be that he defraud Treasury, agency the an Department of misstatement the district court’s held that of of impairing, obstruct- the “under- legal for “willfulness” the standard counts, governmental defeating its ing, and only but not the substantive mined lawful collecting reports and data The one as well. conspiracy [to defraud] the of function of $10,000; currency in excess agreement to transactions an of essence of Curran, and illegal.” act that is commit an conspiracy to commit that for the upon principle where fense but also trenches the dissent Congress identified offense. Supreme has Court or the particular conduct specifically and considered making false respect prohibits the of a to that specifically with 16. Section and has ruled conduct, material fact concealment of a ruled in statement or the Court has agency department jurisdiction ruling of a given within the be to the effect must 18 U.S.C. 1001. specific the United States. prescribed only of- of for the standard not structure, knowingly willfully underlying to legal b. definition of obli- aid, attempt, prohibition abet and cause the struc- gation/legal to make out a case of of, turing government financial transactions with a do- agreement purpose 5324(a)(3).”). mestic institution financial at 31 found U.S.C. As evading reporting requirements of of consequence, government offered the 5313(a), in violation of 31 U.S.C. body support same of at trial evidence to 5324(a)(3). charge against “conspira- Alston for both

“Structuring” breaking cy charge against entails the down to defraud” him currency large into “conspiracy amounts govern- to structure.” The $10,000 pre- smaller of less than amounts charged, attempted ment neither nor to liminary transacting trial, with a business engaged Alston attempt financial in an to avoid from, institution activity separate fraudulent or in addi- reporting requirements. to, CTR only what tion can be characterized as “structuring.” ¶ added). (emphasis Indictment 7 indictment, charging conspiracy Despite this concession and the defraud, only impaired asserts Alston trial, though proof only and even Treasury “in lawful United States its charges found in the indictment describe the governmental collecting function data structuring, government argues act of reports currency excess “conspiracy that Alston’s convic defraud” $10,000,” language that sounds structur- require proof tion did of the “willfulness” Indeed, ing. speaks the entire indictment required for a conviction. only activities and contains no government instead contends that Aston was allegations govern- that Alston defrauded the guilty participating in a so-called “Klein respect. in any ment other Because the conspiracy” “to defraud narrowly solely indictment is drawn to rest obstructing or impeding the IRS in func alleged structuring, on the facts of and be- Secrecy tions and duties under the Bank Act cause it is conceded that lacked the analyze, to collect and disseminate informa requisite guilty mental state be of struc- reports.” (Appellee’s tion contained in CTR turing, unspecified conviction Alston’s ll).17 establishing Brief Because a true grounds broader cannot See sustained. Klein “defraud” clause Murphy, United States v. generally require proof does not of knowl (9th Cir.1987) (where indictment edge illegality, contends narrowly drawn to state that defendants con- proof that its that Aston knew of the bank’s spired to the IRS in its collection filing requirements is a CTR sufficient show regard currency information with transac- ing of mens rea to sustain his conviction for tions, the could not be convicted of defendant conspiracy to defraud. money his to defraud based on laundering operations). cannot We discern difference between

Moreover, government government’s has conceded the “defraud” scenario and the theory against “structuring” for fraud Alston scenario of which Aston against nothing acquitted. conspiracies States is more Both involve struc- structuring. Supp.Mem., prior than turing See Gov’t the 1994 amendment (“[T"]he 30, Therefore, 2 given June at for our 1995 basis 5324. indictment and 13, (3d Cir.1979). previously explained, supra 17. As 717 n. at Several have sus courts conspiracy" the term from Klein "Klein is derived tained convictions when evidence suf Klein, accompanying pur v. Cir. ficed an "intent and 1957), denied, 365, 924, pose impeding obstructing cert. 355 U.S. 78 S.Ct. in the the IRS (1958). performance A Klein com L.Ed.2d 354 collection and the of its revenue "(1) 1184, (4th prised Vogt, three elements: the existence of duties.” U.S. v. Cir.1990), 910 F.2d denied, (2) 1083, agreement, conspir an overt act of the rt. 498 U.S. 111 S.Ct. one ce objec [agreement's] ators in tives, of the 112 L.Ed.2d See furtherance United States Montalvo, (3) (5th Cir.1987); conspir part an intent on of the v. 820 F.2d (11th agree, Browning, v. ators to as well as to defraud the United United States 723 F.2d 1544 1984). Shoup, States.” United States 608 F.2d Cir. trial, spe If the “offense” clause of we conclude to obtain proofs at cifically covers an act or offense and the the “defraud” or under either a conviction charges only that indictment act or offense clause of “offense” committed, having proofs and the at as been prove that Alston knew that his struc- had to offense, trial reveal no more than such acts of illegal. turing activities were See guilty a defendant not under the “offense” Although we do not foreclose the supra. alternatively clause cannot be convicted un convicting a defendant under possibility of der the broad “defraud” clause of 371. charges based on 371’s “defraud” clause pre-1994 acts of addition to or different discussed, just structuring, we have IV. indictment, 7(a), paragraph present charged no Because the indictment here straight-out charged no more or less than more than a to defraud the Unit- conspiracy. by structuring proofs at ed States upheld Notably, cases that have convic trial established no more than a conspiracy to defraud under by structuring, tions for to defraud the United States charges in the all involved additional have will Alston’s conviction. reverse produced evidence indictment and additional trial, required for a beyond that

at over and ROTH, Judge, dissenting: Circuit structuring. For in pre-1994 conviction for Appellant appeals Michael David Alston Jackson, stance, in United States to defraud the his conviction - (7th denied, Cir.1994), cert. Department United States and (1995), -, 1316, 131 L.Ed.2d 197 115 S.Ct. Treasury in violation of 18 U.S.C. affirmed the defendants’ Circuit Seventh engaged The district court found conspiracy to defraud under convictions for to “im in a Klein with the intent reversing antistructuring despite their govern the lawful pair, obstruct and defeat convictions. collecting reports ment function of data and currency by arranging his transactions” indictment, Jackson, however, the to avoid the re bank transactions count, “never charging the 371 “defraud” 5313(a) and 31 quirements of 31 U.S.C. or the rele- violation mentions 103.22(a)(1). v. Al C.F.R. antistructuring Id. at 870. vant statutes.” ston, No. 93-445-1 at 1994 WL Crim. Furthermore, extensive Jackson involved 6, 1994); Appellant’s App. (Apr. activity beyond structuring “other evidence” that the evidence is suffi Because I believe conspiracy to defraud the demonstrating a support a conviction for violation cient to including record id. affirm the I would district wage no that the defendants had evidence Therefore, I court. dissent. income, yet spent had other id. $300,000 exotic purchase homes and over believes that because Id. at 869. automobiles. conspiracy to defraud the Unit- conviction for exclusively “premised on Alston’s ed States is case, Because, charge present in the activity,” government must “conspiracy to defraud” against Alston for mens rea for a convic- the same demonstrate conspira- than a nothing more necessary as is tion under 18 U.S.C. structure, con- cy we will reverse Alston’s § 5322. a conviction under 31 U.S.C. conviction was not based on viction where his disagree. Majority Op. at 719. I structured, “willfully” as proof had that he a requires that defendant either Con- Section 5322 required Where under Ratzlaf. Supreme “willfully” commit a violation. The spoken on gress Supreme Court has or the re- interpreted this “willfulness” required to Court has required of mens rea level who mean that a defendant gov- quirement structuring, a conviction for obtain also intentionally unlawful acts must commits may that mandate not subvert ernment unlawful. that his actions were have known and “offense” clauses juggling the “defraud” — States, U.S.-,-, v. United § one for the other. of 371 so as to substitute Ratzlaf 722 reporting evading the

-, 655, purpose ture for the 126 L.Ed.2d 615 114 S.Ct. 5313(a).1 contrast, Al- (1994). 371, requirements § of 31 U.S.C. imposes no Section ston, 1, 93-445-1 at 1994 WL Crim. No. requirement, we and such “willfulness” Indictment, 116046; 31; App. Appellant’s at we stated in not create one. As Unit- should ¶ 7(a) (b); II App. § at 12a. Count conspiracy to Count I at Vazquez, a 371 ed States — charged “structuring” a financial offense, Alston with and a “is itself a substantive 31 U.S.C. transaction in violation of under need of an indictment drawn it count Alston, 5324(a)(3). at Crim. No. 93-^45-1 than 371.” 319 to no other statute refer 31; (3d Cir.1963). 116046; 1, Appellant’s App. at 381, Thus is no WL F.2d there ¶ 2; Indictment, App. at at 17a. II apply the re- Count logical reason to willfulness 5322 when quirement contained to struc structuring The and statutory charge encompasses the entire prosecuted pursuant to 31 charges ture were against Alston. provided defen which that U.S.C. government, having “willfully failed to violat dants must be convicted one requisite mens rea for conviction under At the time ing” laws.2 the anti statute, trial, has obtained a interpret 31 U.S.C. and indictment Alston’s requirement under another more stat- conviction mens rea ed “willfulness” ute, requires 18 U.S.C. 371. Section a had to have 5322 mean that defendant showing intentionally only require a that Alston com- legal reporting “knowledge of the showing he mitted unlawful acts —not the bank prevent intent to ments and the required his unlawful. The fact furnishing knew actions to be information.” Shirk, charges premised two are on the 1391- F.2d vacated, (3d (footnote legal Cir.1992) omitted), signifi- factual is of no scenario same nothing U.S.-, cance in this case. There unusual L.Ed.2d 114 S.Ct. - - States, (1994) improper government’s alternative (citing Ratzlaf v. facts, long -, of the same so as characterization 126 L.Ed.2d U.S. indictment, (1994)). alleged in the theories are have to both did not Indictment, I they Count at prove as were here. that he was that the defendant knew ¶ ¶ 7(a) (b); 2; 12a; II, App. Id. Count transac violating law his — App. at 17a. tions. trial, After the conclusion Alston’s bench decided Court Ratzlafv. - -, 655, 126 114 S.Ct. originally convicted on two States. interpreted the I L.Ed.2d 615 of a three count indictment. Count

counts “willfully” appeared it then subparts conspir- word charged Alston in two require govern- 5322 to acy States and the U.S.C. to defraud the United only intend- Treasury in violation of 18 ment show not defendant Department of the report obligation ed to circumvent bank’s to struc- 371 and with U.S.C. structure, knowingly willfully part: pertinent b. I reads in 1. Count aid, attempt, of, abet and cause the July on or 7. From on or about 1988 to with a domestic financial transactions in the December Eastern District about purpose of evad- institution financial Pennsylvania, defendants requirements ALSTON, MICHAELDAVID 5313(a), in violation of 31 ROSA RICHARD 5324(a)(3). unlawfully knowingly, willfully and con- did 7;¶ Indictment, App. Count I at 12a. confederate, combine, agree togeth- spire, co-conspirator, with an and oth- er unindictcd add a since amended to 5324 has been Section grand jury: prosecution ers unknown to the penalty provision so that criminal brought directly the United States and a. that statute can now be Treasury, agency Department States v. to 5322. without reference See Cir.1995) Zehrbach, obstructing, by impairing, 1262 n. 7 the United (citing Riegle Community Development and governmental defeating lawful func- Act, reports Regulatory Improvement 325, 411, Pub.L. No. 103- collecting data and of curren- tion of (1994)). 10,000.... Stat. 2253 cy $ 108 in excess of

723 currency specified transactions but the defendant United under other stat- that his efforts to circumvent those knew utes. other to defraud the United -, requirements were unlawful. Id. at States. The latter itself -, 657, light 114 S.Ct. offense, substantive and a count an post-trial Alston filed motions to set indictment drawn under it need refer court, aside his convictions. district no other statute than S71. government’s acquiescence, with the vacated added) (emphasis 319 (citing F.2d 384 structuring charge in II Count and the States, 67, 60, Glasser v. United 315 62 U.S. charge in to structure Count I 457, 463, (1942)); S.Ct. 86 L.Ed. 680 see also acquitted Alston of these crimes. Jackson, 866, United States v. 33 F.3d 870 Despite Ratzlaf, the district court affirmed (7th Cir.1994) (citing States v. Cald for Alston’s conviction well, (9th 1056, Cir.1993); 989 F.2d 1059 Treasury Depart United States 1297, Bucey, United States v. 876 F.2d 1312 ment in violation of 18 U.S.C. 371. The (7th Cir.1989), denied, 1004, cert. 493 U.S. co-conspirator court held that Alston was “a 565, (1989); 110 107 L.Ed.2d S.Ct. 560 Unit prevent in a scheme to the United States (2d 76, Rosengarten, ed 857 F.2d 78 receiving information to which it is Cir.1988), denied, 1011, ” cert. 488 U.S. entitled when bank files CTR.... Al 799, 790, (1989)); S.Ct. 102 L.Ed.2d ston, 14, Crim. No. 93-445-1 1994 WL Cir.1990), (4th 1184, Vogt, States v. 910 F.2d 116046; Appellant’s at 44. App. The court denied, 1083, rt. 498 U.S. 111 S.Ct. ce distinguished “on the basis that its 955, 112L.Ed.2d 1043 analysis of the willfulness element centers on ‘willfully’ of the term in the antistrue- the use ‘any conspiracy “reaches Section 371 for 5322(b) §§ turing statute found at 31 U.S.C. purpose impairing, obstructing or de 5324(a)(3).” Id3 Because 371 does feating any department the lawful function of element, analogous willfulness ” contain States, of Government.’ Dennis v. United require proof that the court did not 1840, 1844, 384 U.S. 86 S.Ct. actions were unlawful. knew his (1966)(citations omitted). L.Ed.2d 973 Klein analysis clearly cor- The district court’s conspiracies, example, may prosecuted charged rect. At the time Alston was under the “defraud” clause of 371. See convicted, portion pro- the relevant 466, Tarnopol, United States v. 561 F.2d vided as follows:' (3d Cir.1977) (acquitting 474-75 defendants persons conspire If two or more either to of Klein because there was no any against commit offense jury finding impede of intent “to basis States, States, or to defraud the United or Internal and obstruct the functions of the any any any agency thereof matter for Service”); Klein, Revenue United States purpose, persons more of such and one or denied, Cir.1957), 247 F.2d 908 cert. object do act to effect the (1958), L.Ed.2d 354 S.Ct. conspiracy, each be fined not more shall nom., and cert. sub Haas v. United denied $10,000 imprisoned not more than than or States, 365, 2 L.Ed.2d 355 U.S. 78 S.Ct. years, or five both. nom., (1958), Alprin and cert. denied sub In United States v. 18 U.S.C. v. United 355 U.S. explained

Vazquez, (1958); that this con- L.Ed.2d 354 see also United States v. spiracy (8th Derezinski, statute Cir. 1991); One, v. Farm & Home Sav types conspiracies: condemns two (8th Assoc., against ings Cir. commit offenses substantive notes, subchaptcr (except section 31 U.S.C. 5322 im- scribed under this 3. As the penalties only posed regulation prescribed viola- criminal for "willful" 5315 of this title or 5315) §§ tions of 5313 or 5324 at all times relevant more shall be fined not section appeal. this Prior to its amendment $250,000, imprisoned for not more than read follows: years, or both. than five willfully violating subchaptcr person [31 A 5322(a). seq.\ regulation pre- 5311 et or a 724 nom., $6,500 a credit

1991), with a advance from Meyer v. Unit cash cert. sub denied States, 860, 179, negotiable 116 All of instruments card. these S.Ct. ed (1991), to German and credited and denied sub were delivered West L.Ed.2d 141 cert. 860, nom., purchase of the 502 U.S. toward Alston’s BMW.4 Wilmot v. United (1991); 179, L.Ed.2d 141 Unit of trans- Alston conducted three these four Cambara, 144, 145-47 ed States v. Drew, through teller actions Terese bank (1st Cir.1990). Drew, who head at Meridian Bank. became 1987, de in conspiracies conspiracies are to teller at Meridian described Klein obstructing or friend” Alston. by “very fraud the as close of herself re- impeding reporting Internal knew the CTR Revenue Service Drew about by quirements imposed or in lawful func law. The district the collection of taxes collect, Drew analyze, to and dis concluded that discussed tions duties court time requirements contained in CTRs. with Alston some seminate information CTR Derezinski, 1010; at Farm & Home led to indictment. 945 F.2d the events that before Cambara, Assoc., 1260; Savings F.2d at Drew’s statement that The court discounted A Alston F.2d at 145-47. Klein did not believe that knew she “(1) “it requirements appeared of elements: the existence to consists three CTR (2) agreement, protect an one of her part attempt of an overt act of to the defen- conspirators [agree asking speculate in furtherance of the and it her as dant (3) Alston, objectives, and an intent on of mind.” ment’s] the defendant’s state 5, as n. part conspirators agree, of as well No. at 10 1994 WL Crim. 93-445-1 116046; Appellant’s App. at 40. to defraud the United States.” United 950, Shoup, Cir. Furthermore, parties stipulated 1979). Knowledge illegality not an ele failed income tax Alston to file returns conspiracy. of a ment Klein As years Based the calendar 1988. concedes, the “defraud” a conviction under evidence, upon the district conclud- court requires a lesser clause of 18 U.S.C. arranged his be- ed that Alston transactions un showing of intent than does a conviction name to the cause “he did not want his called Majority Op. at 720 der 31 Internal attention Revenue Service (“establishing a true Klein financially capable mak- who someone generally does re the ‘defraud’ clause ing large payments cash but nevertheless knowledge quire proof illegality_”). tax Id. at had failed to file income returns.” 116046; Appellant’s App. of a WL The district court convicted Alston upon transac- Klein based several The district its under- court summarized Alston tions conducted or on behalf of standing of facts as follows: these 1988. On between October 5 October presented evidence The circumstantial purchased from Meridian October Alston trial that the overt were done shows acts $9,000 money payable Bank a order to West willfully failing the bank resulted Imports to toward German Motor be used oc- file CTRs because transactions purchase a new BMW. On October days separate separate and at curred co-conspirator pur- had Rosa Alston $10,000 than banks amounts less $6,000 National Bank a chase Provident purpose preventing done with the were payable to German. cashiers check West being CTRs from filed. day, Alston following October 116046; $8,000 Appellant’s App. money an order Id. at WL purchased with cash Thus court found all three from Meridian at 44. the district payable to West German necessary day, for conviction of Klein purchased Bank. elements That same (1) money Bank for under 18 U.S.C. 371: order Meridian second $10,000. brought nego- presumably paid No criminal indictment was 4. Alston West German applica- triggering failure to file forms because the in order avoid tiable instruments year duty of limitations for this of- file Form 8300 ble three statute West German’s an IRS already excess had run. of cash fense a scries (2) Rosa, difficulty in understanding Alston and “substantial how agreement between agree- conspiracy of that Alston can of a acts” in furtherance be convicted “overt (3) ment, an intent to defraud the United by structuring and when he cannot be which it was guilty conspiracy of the CTRs to entitled of a to structure or of 5313(a) and 31 C.F.R. under 31 U.S.C. structuring Majority Op. itself....” at 715 103.22(a)(1). (footnote omitted). majority lays The never the facts of and the a this case elements of requisite possessed the mens rea conspiracy Klein side side to determine for a 371 conviction because these overt satisfy whether the facts the elements neces- purpose prevent acts were done “with the sary for conviction under 18 U.S.C. 371.5 being filed.” No other mens CTRs Instead, majority emphasizes the similar- necessary for conviction. As the ma rea ity supporting between the factual scenario “[sjeveral acknowledges, jority itself courts conspiracy and to structure when the have sustained Klein convictions charges supporting and the factual scenario prove accompanying an evidence sufficed to conspiracy to defraud consid- impeding purpose ‘intent and and ob —a I eration that believe is irrelevant. structing the IRS the collection revenue ” Majori performance of its duties.’ and the majority opinion proceeds along two Vogt, ty Op. (citing at 718 United States v. First, closely reasoning. linked lines of Montalvo, 1203; 910 F.2d majority perceived deficiency in identifies a (5th Cir.1987); 820 F.2d According majority, the indictment. to the (11th Browning, Cir. adequately allege the indictment does not a 1984)). conspiracy independently Klein of the struc- it inapposite discusses Ratzlaf turing conspiracy charges. to structure rea different statute with different mens 714-715; Majority Op. at See see also Id. requirement. Supreme Court stressed Second, majority argues that Al- itself that it did not discard “the Ratzlaf conspiracy ston cannot be convicted of law principle .ignorance venerable upon defraud the States based charge.” generally is no defense to a criminal support factual used to same scenario — U.S.-,-, 114 S.Ct. unsuccessful The Court 126 L.Ed.2d 714-715, charges. Majority Op. at structure exception in one simply made an instance 719, 720-721. I will address these conten- Congress. pursuant specific to a decree from tions in turn. re- Id. Because there is no “willfulness” apply, quirement in does not The Indictment required and the is not that his actions were ille- that Alston knew clearly I of the indictment indicates Count majority graft an gal. The should not addi- government’s intention to seek a convic- § 371 requirement mens rea onto tional § 371. The tion of Alston under 18 U.S.C. warranted neither the words of when it is mirrors relevant language in the indictment precedent. nor Court statute statutory judicial pronouncements on conspiracies. The indict- 371 and Klein II alleges pertinent part that Alston ment majority came to To understand how the conspired and Rosa requirement impose additional mens rea case, a. to defraud the United States it is on a Treasury, agency Department majority’s general helpful to examine the States, by impairing, obstruct- majority re- approach to the issue. The governmental ing, defeating its lawful conviction for verses Alston’s collecting reports of data and it has function defraud the United States because alleged in the govern- conspiracy” than the one fererit When the does address conspiracy theory, in a Op. it does so Majority ment’s at 715. Klein indictment. manner, dismissing perfunctory it "a dif- far $10,- currency sepa- under 18 that is excess crime rate from the 000.... 7(a) charges. Paragraph clearly structure ¶ Indictment, 7(a); App. at 12a. Count alleges gov- a Klein to thwart the “con- penalizes individuals who Section purpose collecting lawful ernment’s infor- States, spire ... to defraud the United or mation from CTRs.6 § any agency thereof....” majority argues The that In Dennis v. United the Murphy supports argument concerning statutory language, on Court elaborated this insufficiency the of the indictment. Alston only noting 371 covers not fraud but Majority at in Op. 720. The indictment Mur- any conspiracy “impairing, for the of purpose narrowly phy drawn state defen- obstructing, defeating function or the lawful conspired dants to defraud the IRS in its any department government....” of of (citations regard collection of information with to cur- at omit- 86 S.Ct. at 1844 rency ted). 7(a) transactions. 809 F.2d 1431-32 language The of paragraph of the (9th Cir.1987). Specifically, the 371 con- closely language indictment tracks the of spiracy charge “solely to defraud rested and It Dennis. therefore clear that alleged the in [defen- falsehoods the CTR government charge the intended to Alston found, however, dant] filed.” Id. The court obstructing with a law- violation of that defendant in fact an accurate had filed governmental ful functions. Therefore, at the CTR. Id. 1429-32. conspiracy, may prose- A Klein which be charge in alleged was mani- the indictment a conspiracy cuted under “to inter- festly unsupported by the evidence. govern- with or of [the fere obstruct one ” although The government argued that the governmental ment’s] lawful functions.... Klein, support CTR alone could not a conviction on F.2d at 916. of lawful Obstruction charge, government exactly the court the should neverthe functions is what 7(a) a charge in less entertain of de alleged paragraph the indict- of Alston upon allegations fraud based of mon impairing broader ment. Alston was accused of and ey laundering. obstructing government Id. at 1432. The government’s lawful function argued “collecting currency was a thread in a reports of CTR data of ” larger $10,000.... designed of web thwart transactions in excess performance in the IRS of its duties. in “framed make a indictment Klein was The court refused obstructing to consider these broader charge impeding allegations Treasury “[t]be d[id] in indictment Department the collection ” Likewise, premised not a allege to defraud income taxes.... Id. at 916. upon laundering oper in the defendants’ entire indictment case a this was framed to make narrowly ations. It is far general charge impeding obstructing more drawn.... Therefore, Treasury the indictment before us not Department in the does collection Derezinski, 1010; properly allege conspiracy a to defraud.” Id. CTRs. See at F.2d Assoc., (citing Espriella, United States v. Dela Savings Farm at & Home (9th 1432, 1435 Cir.1986)). 1260; Cambara, 902 F.2d at 145-47. clearly The district court indict- This distinguishable understood the case is allege Murphy. conspiracy, Murphy, government ment to a Klein and Alston In at- disputed charges tempted not and legal has the indictment to switch the factual basis majority argues only “AT&íre-conspiracy 6. The that "the entire indictment and that the activities” 7(a) only language paragraph speaks in indictment activities and contains “sounds onspiracy.” allegations govern- in Klein-c no that Alston defrauded the respect." Majority Op. at 720. ment other The "Overt section Acts” indictment majority's alleges activities characterization a series activities Alston Rosa. Indictment, ¶¶ begs 1-14; "structuring in the App. indictment as activities” Overt Acts 13a- engaged question. majority's Whether "struc- repeated 16a. The characterization of turing" legal question, "structuring ignores activities is factual these activities as activities” 7(a), just paragraph proffers matter. We assume a Count which could different result alter- easily by insisting alleges that the indictment native characterization of the facts. ¶ 7(a); currency theory App. from defendants’ Count I at of its case 12a. Section 371 “structuring” does not refer to or charge encompass- transactions to a broader “by structuring.” Congress to defraud in- money defendants’ launder- ing the whole of nothing cluded 371 to indicate that the operations, though even this broader requirements for a 5322 convic- alleged in the indictment. was not grafted tion should prosecution onto a case, however, government has not to defraud the United attempted allega- to switch either its factual statutory States. Without aid of close inter- legal tions or its theories. The indictment pretation legislative history, clearly alleged unilaterally amends 371 to add the words I, 7(a), paragraph upon based Count “by structuring” thereby all allows alleged the indictment. The “Overt Acts” requirements slip for a conviction alleged has Klein con- same § they belong.7 into a 371 where not case do spiracy upon to based the same facts gravamen majority’s argument The throughout proceedings. gov- the Where the something improper seems there is attempted Murphy ernment to switch fac- basing § about the case for a 371 violation on midstream, legal tual scenarios and theories “structuring” the same so-called behavior for merely government in this the case seeks government which the failed to obtain a con- affirmation of the to defraud that See, § e.g., Majority Op. viction under 5322. alleged Murphy it the district court. majority at 719. The observes that there is completely inapposite. government’s no between difference “the ‘de- ‘structuring’ fraud’ scenario scenario Necessary Mens Rea for Conviction acquitted.” Majority of which Alston was major majority’s The second contention is Op. government, at 720. Neither the nor the court, §a argued that Alston cannot be convicted of 371 nor have ever district there a difference conspiracy to defraud the un- between the factual United States supporting charge. scenarios each There possesses requisite he the mens rea for less simply charges, brought are two alternative conviction of or statutes,. pursuant to two different based Ratzlqf. majority structure as set out in The upon factual the same scenario. Because 18 charge against states that “the Alston for require- 371 has a lower mens rea defraud, premised which was 5322, ment than 31 U.S.C. Alston’s behav- exclusively structuring activity, on Alston’s 371, culpable though ior is even he for failure to the must be vacated lacked the mens rea be convicted under (knowledge required illegality) mens rea § 5322. only by underlying not substantive of- long recognized It has been “that when an structuring, conspira- fense of but also statute, act violates more than one criminal Majority cy by structuring.” Op. to defraud may prosecute the Government under either at 719. long against so as it does not discriminate majority The refers to the crime of which any v. class of defendants.” United States “conspiracy Alston was convicted as to de- Batchelder, 114, 123-24, 442 99 S.Ct. U.S. by structuring” fraud at least four times 2198, 2203-04, It 60 L.Ed.2d 755 715, 718, 719, opinion. Majority Op. at government does not matter that the decides of what I 721. This formulation is indicative invoke a statute when more in the ma- believe to be a fundamental flaw specific is available. United criminal statute jority’s conception supra of this case. See Curran, v. 20 F.3d 565-66 States note 6. The crime for which Alston was Cir.1994) Woodward, (citing United States v. convicted, course, actually is a 371 con- 611, 612, 469 105 S.Ct. 83 spiracy (1985) to defraud United States. curiam)); (per L.Ed.2d 518 alleges Co., 43, 46, indictment v. Beacon Brass 344 U.S. (1952); separate paragraph in a that does not include L.Ed. 61 73 S.Ct. 97 (10th Parsons, Indictment, structuring. v. 967 F.2d any reference to noted, in the U.S.Code. already reference to other statute wc have the “defraud” clause As Vazquez, independent requiring 319 F.2d at 384. of 371 is an offense no reasoning Cir.1992); v. count. The court’s Hopkins, 916 on United States (5th Cir.1990); quite v. F.2d United States clear: (D.C.Cir.1985); Hansen, 772 F.2d 940 first Rat- [Defendant’s] contention —that (8th Gordon, F.2d States v. requires reversal of 371 convic- zlaf tion —is Carter, Cir.1977); United States government misplaced (5th Cir.1976)); did have to demonstrate that the de- (8th Derezinski, Cir. antistructuring laws. fendants violated the 1991). concerning meaning holding s Ratzlaf “willfully violating” in the Thus, antistructur- pursued could have therefore, laws, bearing has no in this case under the “defraud” conviction alone, convictions; ever con- clause of 18 U.S.C. 371 without defendants’ specific the more of- bringing language. tains no such conspiracy to struc- fenses of or Jackson, added). (emphasis F.3d at 871 referencing ture without ever majority’s attempts distinguish case, no there would be First, Jackson miss mark. question characterizing the facts as “struc- argues significant that that it is the Jackson turing” imposing or of mens rea count, indictment, charging simply on a ease. would examine We “never mentions violation compare them the ele- facts antistructuring the relevant Ma- statutes.” necessary ments mens rea for conviction and Jackson, jority Op. (quoting at 721 F.3d at of a violation to determine whether 870). in An examination of this sentence guilty conspiracy Alston is a Klein to it context shows that does not deserve Part supra defraud the United See States. prominence majority gives that it: essentially I. I that this is the case submit government argues that a con- [T]he If we now have before us. Alston’s actions spiracy to defraud the United States is an requirements con- satisfied the for a independent violation that not be need spiracy to defraud the United it based on the violation of another substan- acquitted matter was should not that he government points tive The out statute. independent, charges multiple- in narrower a that count one the indictment in this count can indictment. Unless case, charge, which sets forth the explain precisely a which element of structuring never a or mentions violation conspiracy to the United is defraud antistructuring relevant statutes. lacking, we should affirm the district court. charges conspiracy “to de- Count one opinion The in Circuit’s Seventh States”; fraud the it not al- does indistinguishable from States v. Jackson is lege conspiracy “to commit offense (7th Cir.1994). this case. 33 against the United States.” Jackson, originally were convict- defendants Jackson, The court Jackson structure, structuring, conspiracy ed of merely emphasizing that the conspiracy and to defraud the United alleged independent conspiracy to defraud Al- charges exact same of which States —the dependent that count and that count is originally ston convicted. Id. at 867. upon point the other counts —a Pursuant to the court reversed emphasized supports have and con- to structure independent count. conviction on victions, but affirmed the nothing The court meant more this state- at 868. defraud. Id. ment, no general and it set out rule. majority argues that distin- The Jackson is majority’s quotation selected guishable because it “involved additional distinguish language fails to Jackson also charges evi- the indictment additional language in the indictment from the Jackson trial, produced beyond dence over 7(a) Paragraph in the Alston indictment. required pre-1994 struc- conviction indictment, like Count I in Jack- the Alston Majority Contrary turing.” Op. at 721. son, assertion, however, “never mentions a violation majority’s the Jack- antistructuring charges or the relevant statutes.” court never said that additional son necessary though were for a conviction Even evidence existed, upon the same facts argued, is based statutes Derezinski “it is no structuring charges, it is framed as an inde- longer appropriate for the Government to 7(a). allegation paragraph pendent Thus prosecute conspiracies gov- to commit acts any perceived upon “distinction” based this erned general those statutes under the language entirely illusory. is defraud Eighth clause.” Id. The Circuit firmly rejected argument: majority’s second “distinction” is majority argues equally arguments attempt futile. The that it is [Defendant’s] to draw significant that away Jackson involved other “ex- our attention from the true issue beyond structuring activity evidence” tensive this case. His claim that the Government to demonstrate the to defraud. really charging him conspiring evidence, examples As of such extensive [specific violate substantive statutes] majority cites the fact that defendants had simply not true. The Government has wage they spent no or income over steadfastly persisted proving that [the $300,000 purchase homes and exotic auto- participated conspir- defendant] a Klein Majority Op. at 721. mobiles. acy to defraud the -United States. While it court, however,

The Jackson never indicat- may be true that the Government could necessary ed that these additional facts were charged have also [the under defendant] for a conviction 371. The court under specific offense clause of section it structuring activity forth in detail the “set[s] is well settled that when conduct violates of the defendants —as well as other evi- statute, more than one criminal the Gov- dence—that demonstrates a may ernment which choose statute it will 371.” apply, [citing Batchelder ]. The Govern- Jackson, 33 F.3d at 868. It does not mention ment was within its discretion it when or even allude to this “other evidence” when prosecute decided to [the defendant] under however, explains reasoning, it it defraud clause of section 371. implies that never such “other evidence” is Id. It make no to the should difference for a Id. at essential conviction. 870-71. § prosecution gov- this case that the majority only explain why The not fails to ernment failed to obtain convictions under other evidence of a to defraud the the substantive statutes. conviction; necessary is for a United States importantly, Eighth Most the Circuit de- ignores it the existence of additional evidence challenge nied Derezinski’s to the district Alston, in this case. There was evidence that jury charge regarding court’s intent. Derez- Jackson, like the defendants in failed to file argued inski that the tax because criminal Alston, Compare tax income returns. Crim. defining specific required statute the offense 116046; Appel- 93-445-1 at 1994 WL No. (as showing a of “willfulness” defined Jackson, App. lant’s at 40 with 33 F.3d at States), government v. the Cheek majority guidance 869. The offers no as to demonstrating should bear the burden of the much how “other evidence” is sufficient to pursuing level of same willfulness when support Surely §a 371 conviction. failure conviction under the “defraud” clause of an to file income taxes is indication that § (citing at v. 371. Id. Cheek United defendants had a motive to defraud the Unit- 498 U.S. large ed States of information about cash (1991)). Eighth L.Ed.2d 617 The Circuit purchases appear in that would otherwise majority flatly rejected Again, the finds a “distinc- this contention: “Cheek does CTRs. significant tion” when there is no difference apply not to this case because the Govern- the between factual scenarios. prosecuted ment Derezinski under statute, statute, not a criminal tax Derezinski, very v. a case United States express is not an bar,8 supports at also the similar to the case ‘willfulness’ Likewise, element section 371.” reasoning. court’s Derezinski was district of apply does not to this case. The prosecuted under the “defraud” clause of prosecution pursuant § not at issue is to though pros- § might even he have been express § is not an ele- specific 5322. “Willfulness” ecuted under the more “offense” specific 945 F.2d at 1010. Since ment of 371. clause. case, require- circumventing reporting the financial

8. Like the defendant this Derezinski Derezinski, prosecuted a financial institution. under the defraud clause of 371 for ments of F.2d at 1009-10. consisted, alia, a Klein inter of make that [the] Commission certain majority Cur- offers The argument gotten to them.” Id. support its information would have authority to ran as added). intent, regard Majority Op. at 718 concerning (emphasis rea. mens Curran, erroneously judge 20 F.3d 560 trial failed to instruct (citing United States (3d Cir.1994)). majority’s reading jury it find that the defendant The must upon dependent unlawful. Id. would make that his conduct was Curran knew necessary for a convic- rea on level of mens We therefore overturned the district court majority’s (1) anal- erroneously tion 5322. Thus the grounds: charge under two directly ysis with duty directly conflicts placed Curran on the 2(b) Vazquez’s (2) the “defraud” statement defendant instruction independent charge that clause of 371 is willfulness did not communicate part no other need be based on proper rea. mens analysis It conflicts with U.S.Code. also majority’s begins The discussion of Curran I do in Derezinski Jackson. ap- the definition of “willfulness” it with intended Curran not believe 2(b). Majority Op. §§ pears in 1001 and change radically our Vazquez or to overrule re- 719. Because there no “willfulness” §of 371. reading clause quirement part this Curran majority’s that the inter- also do not believe applicable opinion directly not case. comports pretation holding with of Curran’s I, supra. The See discussion Part reading case. of that close then the section of Curran addresses prosecuted in Curran was The defendant opinion dealing with “defraud” clause to make causing campaign treasurers majority quotes hold- Curran as false to the Federal Election statements that the district court’s misstatement (FEC). The could Commission defendant for “willfulness” “under- legal standard directly prosecuted counts, only but mined not the substantive concealing facts and material as well. The defraud] one [to however, be- making representations, false agreement is an essence treasurers, campaign rather cause it was illegal.” Op. Majority an act commit that is defendant, prepared the false than the who 571). Curran, (citing 20 F.3d at reports submitted them to the Commis- reading of A careful Curran demonstrates Curran, govern- sion. interpretation majority’s that the of this dic- 2(b) in con- ment therefore used plainly paragraph tum is incorrect. The junction defendant majority quotes full: the reads in which to file causing campaign treasurers false earlier, As stated the misstatement 2(b), reports. like 31 U.S.C. Section applicable legal law to defendant’s the the requires part “willfulness” on the the de- duty facts to disclose to the Commission a conviction. Re- fendant in order to sustain This plain amounted error. misstate- 2(b) interpreted § lying “will- on only not the substantive ment undermined 2(b) §§ brought in under fulness” cases counts, conspiracy but the one well. as law context to 1001 in the election federal conspiracy agreement an The essence of is prove the must prosecution mean that illegal. jury If commit an act that is knew the “defendant treasurers’ considering as unlawful the is misled into attempted obligations, that to frustrate he is omission of an act the defendant his obligations, and that he kneiv con- those finding (emphasis duty perform, no then Id. duct at 569 ivas unlawful.” added). conspiracy based on such conduct cannot conspiracy It count stand. follows the alleged in that de- The indictment Curran therefore be vacated. must caused treasurers of various cam- fendant (citations omitted). Curran, 20 at 571 F.3d reports make incorrect paign committees to context, in it Nevertheless, Reading these is clear sentences the trial to the FEC. Id. mis- that we refer not to district court’s jury judge erroneously charged the that “as for legal standard “willful- law, statement legal ... had a a matter of defendant contends, ness,” majority but duty question the facts in to disclose duty to re- of the defendant’s agency question, Election misstatement Federal Curran, port portion sary to the FEC. This for conviction under 18 U.S.C. 371. opinion, duty like most discusses language The Curran simply too slender a campaign defendant relative to that of the support reed to the weight majority that the treasurers, requirement mens rea for wishes it to bear. a 371 to defraud. reasons, For the above I conclude that majority’s argument that Curran Alston satisfies all necessary of the elements dependent makes defraud clause of 371 for conviction of a Klein to de- necessary on the intent for an- conviction of fraud the United States under 18 U.S.C. offense, therefore, hinges entirely other on § Nothing inor the structur- paragraph one paragraph of dictum. That ing changes fact, statutes themselves this says pertinent part that: majority barely addresses it. previously The comments we have made respectfully therefore dissent. failings about of the instruction on ROTH, GARTH, Before: McKEE and apply intent to the count as Judges. Circuit Investors, well. As noted in American conspir- ‘[i]n F.2d order to SUR PETITION FOR REHEARING

acy, agree- must show ment to commit an unlawful act combined April underlying with intent to commit the of- petition panel for rehearing filed retrial, fense.’ On the instructions on in- appellee in the having above-entitled case tent as to the count must track judges been submitted to the participat- who applicable those to the substantive counts. court, ed in the judge decision of this and no Id. who having concurred the decision asked general Curran’s restatement of the rule rehearing, petition for rehearing nothing change does denied. If outcome this case. insists Judge grant panel rehearing Roth would reading depen dictum to make panel for the reasons stated in her dissent. upon § dent Curran conflicts with Vazquez’s holding count drawn under

the defraud clause “need refer to no other Vazquez, than

statute 371.” 319 F.2d at

384; Jackson, 870; see also 33 F.3d at Derez inski, conflict, case of a GENERALI, ASSICURAZIONI I believe that our decision is controlled S.P.A., Appellee, Vazquez. Moreover, quote from American In- PUBLIC SERVICE MUTUAL INSUR- vestors, upon which the Curran dictum re- PSM; ANCE COMPANY Market- a/k/a/ lies, was taken from a discussion of Group, Ltd., formerly Industries conspiracy, specific without reference to the Delivery, known Service Furniture Vazquez. “defraud” clause of 371 or to Inc.; Inc.; Bloomingdale’s Wig- Willie hand, Vazquez, explicitly on the other stated gins, Public Mutual Service Insurance rule for “defraud” clause of Company, PSM, Appellants. 384; 319 F.2d at see Glasser v. United a/k/a 457, 463, No. 95-1479. (1942); L.Ed. 680 a rule followed Appeals, United States Court of See, court other courts similar' cases. Third Circuit. (3d Cir.1990); e.g., Vogt, 910 F.2d 1184 Jack- (7th son, Cir.1994); Derezinski, 33 F.3d 866 Argued Dec. (8th Cir.1991). 945 F.2d 1006 Three sen- Decided March entirely tences of dictum in a case almost legal concerned with another issue should not precedent

serve subvert our as well as

Congress’ expression of the mens rea neces-

Case Details

Case Name: United States v. Michael David Alston

Court Name: Court of Appeals for the Third Circuit

Date Published: Apr 29, 1996

Citation: 77 F.3d 713

Docket Number: 94-2195

Court Abbreviation: 3rd Cir.