UNITED STATES of America, Appellee, v. Theodore V. ANZALONE, Defendant, Appellant.
No. 84-1628
United States Court of Appeals, First Circuit.
Argued Feb. 5, 1985. July 1, 1985.
766 F.2d 676
Clearly the school has a substantial interest in gathering the full panoply of information available on a student in order to implement the child‘s Individualized Educational Plan (IEP) pursuant to its responsibilities under Chapter 766,
Given the clear import of the regulations, I have no doubt that once a paper is submitted by a TEAM participant and accepted into the evaluation process to help in the child‘s evaluation, whether read or not, it becomes part of the child‘s educational record. I would find this to be so regardless of whether the paper was previously a research paper, a journal entry or, as is normally the case, was prepared specifically for the evaluation.
If, under the facts of the case, Alinovi‘s giving of her paper to Generelli transformed it from a private paper into a professional work product, then the administrators of the special needs program would be deemed to be on notice of its contents whether or not they read it, and Alinovi would have lost her right of privacy in it. If the paper was not accepted into the evaluation process and was not, under Chapter 766, a submission that became part of the student‘s record, then I believe we should follow the well-established law that when a search is based upon consent and consent is withdrawn or revoked the searchers must abide by the limitations placed upon them by the consenting individual. See, e.g., Linn v. Civatero, 714 F.2d 1278, 1288 (5th Cir.1983); United States v. Ward, 776 F.2d 143 (9th Cir.1978); Mason v. Pulliam, 557 F.2d 426 (5th Cir.1977). See also LaFave, Search and Seizure § 8.1(c) (1978); Model Code of Pre-Arraignment Procedure §§ SS 240.3 (Official Draft 1975).
Since the district court did not address what I conceive of as is the central issue, I would remand for factual findings on it.
Nancy Gertner, Boston, Mass., with whom Harvey A. Silverglate, Judith H. Mizner, and Silverglate, Gertner, Baker & Fine, Boston, Mass., were on brief, for defendant, appellant.
Daniel I. Small, Asst. U.S. Atty., Boston, Mass., with whom William F. Weld, U.S. Atty., Boston, Mass., was on brief, for appellee.
Before TORRUELLA and ALDRICH, Circuit Judges, and PETTINE,* Senior District Judge.
Bailey Aldrich, Senior Circuit Judge, filed concurring opinion.
* Of the District of Rhode Island, sitting by designation.
In contrast to what is permitted under other legal systems,1 the Constitution of the United States mandates that, before any person is held responsible for violation of the criminal laws of this country, the conduct for which he is held accountable be prohibited with sufficient specificity to forewarn of the proscription of said conduct.
The Currency Transaction Reporting Act (“Reporting Act“),
On November 13, 1980 appellant purchased three checks from the Haymarket Cooperative Bank (“Bank“), all of which totaled more than $25,000 but none of which exceeded $10,000 individually. Thereafter, on separate dates commencing November 18, 1980 and ending December 1, 1980, appellant purchased nine additional checks totalling $75,000, again none of which individually exceeded $10,000. All the checks were payable to the same stоck brokerage firm to pay for bonds purchased to the account of the wife and mother of a public official. The Bank did not file any reports concerning any of those transactions.
The government, labelling these dealings a “structured” transaction, concluded they were part of the same event and thus came within the purview of the Reporting Act as involving transfers of currency in excess of $10,000 and $100,000, respectively. No charges were brought against the financial institution, however.
Instead, the government decided to test the limits of statutоry interpretation by charging appellant with a panoply of criminal violations. The government brought a five-count indictment, only two of which counts survived the two juries that heard the evidence.7 This appeal is thus concerned only with matters related to Counts III and V.
In Count III appellant was charged with violation of
Appellant challenged the application of these statutеs and regulations through appropriate motions before the district court. He claimed unconstitutional vagueness and lack of due notice to him that his actions were proscribed by these provisions. The court, citing United States v. Tobon-Builes, 706 F.2d 1092 (11th Cir.1983), United States v. Thompson, 603 F.2d 1200 (5th Cir.1979), and United States v. Konefal, 566 F.Supp. 698 (N.D.N.Y.1983), ruled in effect that “structured” transactions were considered a single transaction within the requirements of the Reporting Act and regulations. It concluded that the application of criminal sanctions to appellant for engaging in the conduct described in the indictment did not run contrary to the fair warning elements of the due process clause. These matters are now raised on appeal.
We are required to determine whether the Reporting Act and its regulations gave appellant sufficient advance warning that, if he engaged in “structured” transactions exceeding the established amounts, he was obligated to disclose this to the Bank so that it would report the transaction to the Secretary of the Treasury. Otherwise stated, we must determine whether appellant had fair warning that his actions and non-disclosure subjected him to criminal sanctions under
Irrespective of how we phrase this issue, the answer is in the negative.
We start with the proposition, correlative to the one with which we commenced this opinion, that criminal laws are to be strictly construed. United States v. Enmons, 410 U.S. 396, 411, 93 S.Ct. 1007, 1015, 35 L.Ed.2d 379 (1973) (Hobbs Act); United States v. Campos-Serrano, 404 U.S. 293, 297, 92 S.Ct. 471, 474, 30 L.Ed.2d 457 (1971) (Immigration and Naturalization Act); United States v. Bass, 404 U.S. 336, 347, 92 S.Ct. 515, 522, 30 L.Ed.2d 488 (1971) (Omnibus Crime Control and Safe Streets Act); United States v. Boston & Me. R.R., 380 U.S. 157, 160, 85 S.Ct. 868, 870, 13 L.Ed.2d 728 (1965) (Clayton Act). In the later case, which arose from this circuit, the Court cited Chief Justice Marshall who said:
The rule that penal laws are to be construed strictly, is, perhaps, not much less old than construction itself. It is founded on the tenderness of the law for the rights of individuals; and on the plain principal that the power of punishment is vested in the lеgislative, not in the judicial department.10
More on point, the Court in Boston & Me. R.R. went on to say that “[t]he fact that a particular activity may be within the same general classification and policy of those covered does not necessarily bring it within the ambit of the criminal prohibition.” Id. at 160. See also supra note 1 (discussing “crimes by analogy“).
The Court in United States v. Bass, supra, indicated the rationale of this rule, which, as stated, dovetails with the prior notice requirements of the fifth amendment:
This principal is founded on two policies that have long been part of our tradition. First, “a fair warning should be given to the world in language that the common world will understand, of what the law intends to dо if a certain line is passed. To make the warning fair, so far as possible the line should be clear.” Second, because of the seriousness of criminal penalties, and because criminal punishment usually represents the moral condemnation of the community, legislatures and not courts should define crimi-
United States v. Bass, 404 U.S. 336, 348, 92 S.Ct. 515, 522, 30 L.Ed.2d 488 (1971) (citations and footnotes omitted).
The present ambiguity regarding coverage of the Reporting Act and its regulations has been created by the government itself. To begin with, the statute,
We next come to the “structured” transaction issue. We can find nothing on the face of either the Reporting Act, or its regulations, or in their legislative history, to support the proposition that a “structured” transaction by a customer constitutes an illegal evasion of any reporting duty of that customer.11
We need not go far to sustain this contention. The government itself has admitted to so much, though concededly through a branch other than the Justice Department. We refer to a report to Congress by the Comptroller General of the United States entitled, “Bank Secrecy Act Reporting Requirements Have Not Yet Met Expectations, Suggesting Need for Amendment,” GED-81-80, dated July 23, 1981.12 The report discussed the deficiencies in the regulation on this issue, noting that “The regulations were silent on the propriety of a customer‘s conducting multiple transactions to avoid reporting.” Id. at 23. Under the heading “Failure to prohibit splitting transactions allowed to circumvent reporting requirement,” id. at 24, the report indicates:
Similarly, although the regulation required reporting for eaсh single transaction above $10,000, they did not specifically prohibit dividing a large transaction into several smaller transactions to circumvent the reporting requirement....
Even though Treasury was aware of the flaws in the regulations in 1975, it did not publish, for comment, a proposal for needed revisions until September 1979; and Treasury did not implement revised regulations until July 7, 1980. Furthermore, despite the Secretary of the Treasury‘s commitment to a congressional committee in 1977 to revise the regulations, this was not dоne.
According to the report, although the July 1980 revisions to the regulations resolved some of the deficiencies, “the propriety of multiple transactions still has not been addressed in the regulations.” Id. at 26.
Although this court, like all other institutions of the United States, is supportive of the law enforcement goals of the government and society, we cannot engage in unprincipled interpretation of the law, lest we foment lawlessness instead of compliance. Kolender v. Lawson, 461 U.S. 352, 361, 103 S.Ct. 1855, 1860, 75 L.Ed.2d 903 (1983). This is particularly so when the confusion and uncertainty in this law has been caused by the government itself, and when the solution to that situation, namely eliminating any perceived loop holes, lies completely within the government‘s control. If the government wishes to impose a duty on customers, or “other participants in the transaction,” to report “structured” transactions, let it require so in plain language. It should not attempt to impose such a duty by implication, expecting that the courts will stretch statutory construction past the breaking point to accommodate the government‘s interpretation.13
We are required to conclude that the Reporting Act and its regulations, as they presently read, imposed no duty on appellant to inform the Bank of the “structured” nature of the transactions here in question. The application of criminal sanctions to appellant for engaging in the activities heretofore described violates the fair warning requirements of the due process clause of the fifth amendment. The charges under Count V should have been dismissed.
The charges under Count III, alleging violations of
We are not unaware of a line of cases deciding otherwise and relied upon by the district court and the government on appeal. In United States v. Thompson, 603 F.2d 1200 (5th Cir.1979), the chairman of the board оf a bank, in order to finance a drug operation, divided a $45,000 cash transaction to his accomplice into five separate $9,000 bundles to avoid filing a report under the Reporting Act. The Court of Appeals sustained his conviction under said statute in the face of a vagueness challenge. It would appear that Thompson‘s position with the bank, and the teller‘s reliance on his authority in not filing the report, partially explain the case‘s outcome. Certainly Thompson owed the bank a fiduciary and legal duty to disclose the nature of this transaction, a situation which is not duplicated in the present case.
Nonetheless, we still find troubling the court‘s ruling that a “structured” transaction is illegal evasion of the Reporting Act, and not avoidance. This view, which has elsewhere been labeled the “sensible, substance-over-form approach,”14 has been followed by several other courts. See United States v. Cook, supra; United States v. Tobon-Builes, supra; United States v. Puerto, 730 F.2d 627 (11th Cir.), cert. denied, 469 U.S. 847, 105 S.Ct. 162, 83 L.Ed.2d 98 (1984); United States v. Sánchez-Vázquez, 585 F.Supp. 990 (N.D.Ga.1984); United States v. Konefal, 566 F.Supp. 698 (N.D.N.Y.1983). We can only say that, as applied to the present situation, we disagree for the reasons stated herein.15 Between a “sensible” and a constitutional approach there should be no doubt as to which avenue we must choose. See Tennessee Valley Authority v. Hill, supra, 437 U.S. at 195, 98 S.Ct. at 2302.
The appellant‘s conviction is reversed and the indictment dismissed.
BAILEY ALDRICH, Senior Circuit Judge, concurring.
It is difficult to disagree with the court‘s strong opinion, and I have only one reservation. It is certainly true that defendant, as to whom no reporting rule or regulation whatever is directed, faces jail while the bank, which, in my opinion, post, was in clear violation, faces nothing, and true that the government has gone to the “limits of statutory interpretation” at defendant‘s expense. I must also agree that this differentiation in prosecution is not our affair. However, I wish to comment further upon the factual, as well as the statutory, limits to which the government would have the court go.
If, for the moment, we forget November 13—the government, until recently, forgot the significance of it altogether—on vari-
“So the scheme becomes moving large amounts of cash through banks to make it appear legitimate.... In late 1980, the Bear Stearns money, $100,000.... [I]f this is all right, then the reporting requirement is meaningless. If you can simply create 12 phony transactions out of one larger sum of cash and avoid the currency reporting requirement, what‘s left of the law? ... That is not the law. The law is that structuring is not okay.... With the $100,000, the first scheme, the web is obvious.”
Aрparently government counsel‘s so stating the law to the jury was with the court‘s approval; it did not correct or change it.
There is nothing in the statute or regulations specifically requiring a customer to make reports, or to handle his money in any particular fashion; the only reporting duty is on the bank. I find it singular to think that the government should be able to impose duties by indirection, or to say that the customer must conduct himself so as to create such a duty, unless, possibly, in very special circumstances. C.f. United States v. Thompson, 603 F.2d 1200 (5th Cir.1979). “If you purchase a $8,500 check on Monday and anоther on Tuesday, it is jail for you for not buying them both on Monday if your intent was that the bank should not have to report.” That may be an “obvious web” to the government. It is anything but to me.
November 13, however, was different. On that one day defendant acquired three $8,500 checks from the Haymarket Bank; one from its East Boston branch and two from different tellers in its Hanover Street branch. Even without knowing of the reporting form requirement (I do not agree with the court that the Secretary was unauthorized to issue instructions on the form, though I do agree that defendant was not on notice thеreof) a customer knowing, as defendant did, that the bank had a $10,000 reporting obligation, might reasonably think that splitting $17,000 between two tellers, if not $25,000 between two branches, was finagling, with the improper hope that the bank would fail to notice its duty. It is a different matter to attempt to conceal (
The government, however, having improperly obtained a conviction on a more appealing (had it been correct) $100,000, “twelve phony checks” basis, one trial seems enough, and, as a minority judge, I am content not to pursue whether defendant‘s single November 13th conduct was punishable.