Petition for Writ of Certiorari — Fahmy v. United States
Supreme Court brief1988
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Suprania Court, U.S,
KRiLED
87-20 39 JUN 1) 1988
_ YOSEPH F. SPANIOL, JR,
7 fl ERK
No. &87-
IN THE
Supreme Court of the United States
October Term, 1987
GEORGE FAHMY,
Petitioner,
-against-
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
ROGER BENNET ADLER, P.C.
Attorney for Petitioner
225 Broadway
New York, New York 10007
(212) 406-0181
QUESTIONS PRESENTED
1. Was the evidence at trial involving the structuring of cash
deposits legally sufficient to establish Petitioner’s guilt of the
conspiracy to violate the currency reporting statute (31 U.S.C.
5313 et. seq.) and its regulations and to miscode brokerage house
records?
2. Dida juror’s medical difficulty provide just cause, within the
meaning and spirit of Rule 23(b) of the Federal Rules of Crimi-
nal Procedure, for the trial court’s summary discharge of the
juror, and directing the return of a verdict from an eleven member
jury?
3. Was the evidence at trial legally sufficient to establish that
Petitioner knowingly obstructed justice at a time when a Grand
Jury was probing the subject matter of certain disposed of Paine,
Webber documents?
4. Did the trial Court err in failing to instruct the jury upon its
need to find that Petitioner acted with specific intent in determin-
ing whether he obstructed justice as charged in Count 2 of the
indictment?
il
TABLE OF CONTENTS
QUESTIONS PRESENT EDD vs wissccceisicscscecascsssctiecersions
SABLE OP COTE ED coiccsciscccoisanaden
CADE GOP CIAL siicnicntiaosnunusueee
CAPES DONO stisisenstnsbcculea
AIMEE CUNO nsstsnvsintnniahatasianaalbameaeds ewes
STATUTORY AND CONSTITUTIONAL PROVI-
POG SOE VEAE ED iscsedicusiinarsmmncaasenen
REASON FOR GRANTING THE WRIT:
I.
I.
ITI.
IV.
The Evidence Was Legally Insufficient To Sustain
Petitioner’s Conviction For Conspiracy To Vio-
late The Currency Reporting Statute ....0...0........
The Trial Court Erred And Denied Petitioner A
Fair Trial By Discharging A Juror During Delib-
erations And Requiring The Rendition Of A Ver-
dict By An 11 Member Jury Over Strenuous De-
fense Objections In Violation Of The Require-
ments Of Rule 23(b) Of The Rules Of Criminal
PUOUIIIG: sscssisctcticisiasinebieieen ee eee
The Evidence At Trial Was Legally Insufficient
To Demonstrate The Existence Of A Grand Jury
Probing Currency Reporting Compliance At
Pat WIE | ooccnicnincsenningee ee eee
The Trial Court’s Omission Of Specific Intent
Language In Its Charge In Connection With
Count Two And The Court’s Instruction Con-
cerning The Records Subject To Miscoding Were
Erroneous And Lessened The Government’s Bur-
den Of Proof Denying Petitioner A Fair Trial ..
CONCLUSION ....csccneckinecanssenpeimeeieiaee aan an
Appendix
Memorandum and order of the United States Dis-
trict Court for the Southern District of New York.
dated September 29, 967 sssciiscccnccasuetssinlsstndancs
Order of Affirmance of the United States Court of
Appeals for the Second Circuit filed April 12.
1988, issued as Mandate May 10, 1988 20.0000...
PAGE
13
16
17
20
|4a
iil
TABLE OF CITATIONS
Cases:
Barnes v. Jones, 665 F.2d 427 [2nd Cir. 1981] .........
Bronston v. United States, 409 U.S. 352, 93 S.Ct. 595.
California Bankers v. Schultz, 416 U.S. 21, 58, 69-70 n.
Rs SO DEW TOE esctscccceceisccvssenssscocereonssnneate
Colauti v. Franklin, 439 U.S. 379, 99 S.Ct. 675 [1979].
Glasser v. United States, 315 U.S. 60, 80 [1942] ......
Lanzetta v. United States, 306 U.S. 451, 453 [1939].
Papachristou v. City of Jacksonville, 405 U.S. 156, 92
TOES TT eee
Pettibone v. United States, 148 U.S. 197, 13 S.Ct. 542
I Sa orale aci nein ehnleesuneseneninsnseuanessnasneeinsensensse
Satterwhite v. Texas,
SUITS Eilat caceusaisinignabehchinpctavsdvegsinessteusaasecsnsneesessenanennesens
Sinclair v. United States, 444 F.2d 399 [2nd Cir. 1971].
United States v. Anzalone, 766 F.2d 676 ( Ist Cir. 1985)
United States v. Ardito, 782 F.2d 358, 360 [2nd Cir.
ITT ETI TILT Al ds ctesmpiceapabniniseebsnsensentenianbencneeaieoiies
United States v. Capo, 791 F.2d 1054 [2nd Cir. 1986].
United States v. Carleo, 576 F.2d 846 [ 10th Cir. 1978].
United States v. Critzer, 498 F.2d 1160 [4th Cir. 1974].
United States v. Dahlstrom, 713 F.2d 1423 [9th Cir.
1983] cert. den. 466 U.S. 980 [1984] ..........
United States v. DiStefano, 555 F.2d 1094 [2nd Cir.
a
a shinsnichiveres
i coseanoensovissnsiiiaane
United States v. Goldberg, 587 F.2d 302 [S.D.N.Y.
5/21/84] rev'd 756 F.2d 949 [2nd Cir. 3/6/85] ...
PAGE
9
iv
PAGE
United States v. Gimbel, 830 F.2d 621 [7th Cir. 1987]. 9
United States v. Heyman, 794 F.2d 788 [2nd Cir.
1986], cert. den. 107 S.Ct. 585 (1987) ue 9
United States v. Lane, 474 U.S. 106 S.Ct. 725
RTSEEE cicscsoiisdisshactananeniicedeiadinnaeienetieselinaimieaiendinbadoeles 19
United States v. Larson, 796 F.2d 244 (8th Cir. 1986). 8
United States v. Lee, 667 F.Supp. 1410 [D. Col. 1987]. 12
United States v. Moon, 718 F.2d 1210 [2nd Cir. 1983]. 18
United States v. Nersesian, 824 F.2d 1294 [2nd Cir.
EET 0” sasakbichimmentebagnpeclebbinpacinssmiaataaadateoialagiaideialaicaieaass 9
United States v. Penagos, 823 F.2d 346 [9th Cir. 1987]. 11
United States v. Risk, 672 F.Supp. 346 [S.D. Ind.
1987] aff'd 843 F.2d 1059, 1062 [7th Cir. 1988 per
SUURIUES, Tele canisssabacranenpssatstansielieniieabulaineabeeiniesanlisidaammaviioans 12
United States v. Rosenbalit, 554 F.2d 36, 38 [2nd Cir.
SOP UE widen aeicialiaceccameavaidaa eakacaabeanacaneancaasnaaetidaantann 10
United States v. Ryan, 455 F.2d 728 [9th Cir. 1971]. 18
United States v. Sloan, 389 F.Supp. 526 [S.D.N.Y.
PUP IIIE ' “sistelascccoduaecsbachiaacislidensssisuasintamminihacaeeaaitaacGh aikuacienuein 13
United States v. Smith, 619 F.Supp. 1441 [W.D. Pa
RIE EIN eI AS BSN LOG ht RRR ee 14
United States v. Solow, 138 F.Supp. 812 [S.D.N.Y.
ns UT POMS Bad ccneetetsadomatssnepubviciokemnnauecsintons 16
United States v. Soto, 716 F.2d 989 [2nd Cir. 1983]. 11
United States v. Stratton, 779 F.2d 820 (2nd Cir. 1985) 15
United States v. Tana, 618 F.Supp. 1393 [S.D.N.Y.
PIPER A * sestasiscsenscodundecai nanbcecmahincasananeeimaiipmatbeaaiéiie 12
United States v. Vesich, 742 F.2d 451 [Sth Cir. 1984}. 16
United States v. Williams, 728 F.2d 1402 [11th Cir.
1984] rev'd other grds 103 S.Ct. 3308 o.. 18
United States +. Williams, 470 F.2d 1339 [8th Cir.
PIPE ~ ssvasinicnspidoinm tia saasnnsucenvassaimepainnanmicia nanan 17
Statutes Invalved
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DE CVG. SUD crccccccscccrcassseccsecsscsscsonensnasnsarscnsonsennsanes
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15 UGC. TBG cnrccsrcccrsscccrccssesscccnsscsssacsssrnssnscssasooscns a
Federal Rules of Criminal Procedure
2 |) pennencnnnrens coealbasdeniciassnlcaiidietihidan Th
Federal Regulations Cited
BD CTE FIDO) ccsscccnnsccrecssssantascssrocnsscscqnssssesenennnennen
BI CTR SEE TCAD cncccccssssnssinnscsnnnasininsinshtbencnassnmmenininie
FA CHR BBE ccceccccicscsensstsstevennncscsscesctsccensnonanssnatnins
PAGE
No. 87-
IN THE
Supreme Court of the United States
OCTOBER TERM, 1987
2:
GEORGE FAHMY,
Petitioner.
-against-
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
Petitioner George Fahmy respectfully prays that a Writ of
Certiorari be issued to review the order of the Court of Appeals
for the Second Circuit entered in this case on or about April | 2,
1988, which affirmed a judgment of the United States District
Court, Southern District of New York (Cannella, J.) entered on
December 4, 1987.
OPINIONS BELOW
A copy of the District Court's opinion denying Petitioner's
motion to dismiss the indictment is officially reported at 672
F.Supp. 716 [S.D.N.Y. 1987] and is reproduced as Appendix A.
A copy of the decision of the Court of Appeals filed on April | 2.
1988, is not officially reported, and is reproduced as Appendix B.
JURISDICTION
The jurisdiction of this Court is invoked under 28 U.S.C. 1254.
The petition for a writ of certiorari is filed within sixty (60) days
of the Court of Appeals affirmance of the judgment of conviction.
The mandate of the Court of Appeals was filed on May 10, 1988.
The order appealed from unanimously affirmed a judgment of the
2
United States District Court, Southern District of New York
(Cannella, J.) entered on December 4, 1987, convicting Peti-
tioner of conspiracy (18 U.S.C. 371) and obstructing justice (18
U.S.C. 1503) and sentencing him to serve a term of five years
probation and perform community service.
STATUTORY AND CONSTITUTIONAL PROVISIONS
INVOLVED
18 U.S.C. 371. Conspiracy to commit offense or defraud United
States
If two or more persons conspire either to commit any
offense against the United States, or to defraud the United
States, or any agency thereof in any manner or for any
purpose, and one or more of such persons do any act to
effect the object of the conspiracy, each shall be fined not
more than $10,000 or imprisoned not more than 5 years,
or both.
If, however, the offense, the commission of which is the
object of the conspiracy, is a misdemeanor only, the pun-
ishment for such conspiracy shall not exceed the maxi-
mum punishment provided for such misdemeanor.
18 U.S.C. 1503. Influencing or injuring officer or juror generally:
Whoever corruptly, or by threats or force, or by any
threatening letter or communication, endeavors to influ-
ence, intimidate, or impede any grand or petit juror, or
officer in or of any court of the United States, or officer
who may be serving at any examination or other proceed-
ing before any United States commissioner or other com-
mitting magistrate, in the discharge old generally to
ensure that Eder’s accounts were processed properly and
smoothlyn account of any verdict or indictment assented
to by him, or on account of his being or having been such
juror, or injures any such officer, commissioner or other
committing magistrate in is person or property on account
of the performance of his official duties, or corruptly or by
threats or force, or by any threatening letter or communi-
cation influences, obstructs or impedes. or endeavors to
influence, obstruct or impede, the due administration of
a |
3
justice, shall be fined not more than $5,000 or imprisoned
not more than five years, or both.
18 U.S.C. 2 states:
(a) “Whoever commits an offense against the United
States or aids, abets, counsels, commands, induces, or pro-
cures its commission, is punishable as a principal.
(b) Whoever willfully causes an act to be done which if
directly performed by him or another would be an offense
against the United States, is punishable as a principal.”
31 U.S.C. 5311 Declaration of purpose:
It is the purpose of this subchapter (except section 5315)
to require certain reports or records where they have a
high degree of usefulness in criminal tax, or regulatory
investigations or proceedings.
31 U.S.C. 5313 Reports on domestic coins and currency
transactions:
(a) When a domestic financial institution is involved in a
transaction for the payment, receipt, or transfer of United
States coins or currency (or other monetary instruments
the Secretary of the Treasury prescribes), in an amount,
denomination, or amount and donomination, or under cir-
cumstances the Secretary prescribes by regulation, the
institution and any other participant in the transaction the
Secretary may prescribe shall file a report on the transac-
tion at the time and in the way the Secretary prescribes.
A participant acting for another person shall make the
report as the agent or bailee of the person and identify the
person for whom the transaction is being made.
(b) The Secretary may designate a domestic financial
institution as an agent of the United States Government to
receive a report under this section. However, the Secre-
tary may designate a domestic financial institution that is
not insured, chartered, examined, or registered as a
domestic financial institution only if the institution con-
sents. The Secretary may suspend or revoke a designa-
tion for a violation of this subchapter or a regulation under
this subchapter (except a violation of section 5315 of this
i ase
4
title or a regulation prescribed under section 5513), sec-
tion 411 of the National Housing Act (12 U.S.C. 1730d),
or section 21 of the Federal Deposit Insurance Act (12
U.S.C. 1829b).
(c)(1) A person (except a domestic financial institution
designated under subsection (b) of this section) required
to file a report under this section shall file the report—
(A) with the institution involved in the transaction if
the institution was designated;
(B) in the way the Secretary prescribes when the
institution was not designated; or
(C) with the Secretary.
(2) The Secretary shall prescribe—
(A) the filing procedure for a domestic financial
institution designated under subsection (b) of this section;
and
(B) the way the institution shall submit reports filed
with it.
15 U.S.C. 78aq states:
(a)(1) Every national securities exchange, member
thereof, broker or dealer who transacts a business in secur-
ities through the medium of any such member, registered
securities association, registered securities information
processor, registered transfer agent, and registered clear-
ing agency and the Municipal Securities Rule-making
Board shall make and keep for prescribed periods such
records, furnish such copies thereof, and make and dis-
seminate such reports as the Commission, by rule,
prescribes as necessary or appropriate in the public inter-
est, for the protection of investors, or otherwise in further-
ance of the purposes of this chapter.
(2) Every registered clearing agency shall also make and
keep for prescribed periods such records, furnish such cop-
ies thereof, and make and disseminate such reports, as the
appropriate regulatory agency for such clearing agency,
by rule, prescribes as necessary or appropriate for the
safeguarding of securities and funds in the custody or
control of such clearing agency or for which it is
responsible.
ESTE
5
(3) Every registered transfer agent shall also make and
keep for prescribed periods such records, furnish such cop-
ies thereof, and make such reports as the appropriate regu-
latory agency for such transfer agent, by rule, prescribed
as necessary or appropriate in furtherance of the purposes
of section 78a-1 of this title.
Rule 23(b) of the Federal Rules of Criminal Procedure states:
“Juries shall be of 12 but at any time before verdict the
parties may stipulate in writing with the approval of the
Court that the jury shall consist of any number less than
12 or that a valid verdict may be returned by a jury of less
than 12 should the Court find it necessary to excuse one or
more jurors for any just cause after trial commences. Even
absent such stipulation, if the Court finds it necessary to
excuse a juror for just cause after the jury has retired to
consider its verdict, in the discretion of the Court a valid
verdict may be returned by the remaining 11 jurors.”
12 CFR 210.2(e) states:
(e) “Cash item” means:
(1) A check other than one classified as a noncash
item under this section;
(2) Any other item payable on demand and collecti-
ble at par that the Reserve Bank of the District in which
the item is payable is willing to accept as a cash item.
31 CFR 32!.1(a) states:
“Cash payment means payment in currency, by check, or
by credit to a checking, savings or share account.”
31 CFR 103.22 states:
(a)(1) Each financial institution other than a casino
shall file a report of each deposit, withdrawal, exchange of
currency or other payment or transfer, by, through, or to
such financial institution which involves a transaction in
currency of more than $10,000. Multiple currency trans-
actions shall be treated as a single transaction if the finan-
cial institution has knowledge that they are by or on behalf
of any person and result in either cash in or cash out
————
6
totalling more than $10,000 during any one business day.
Deposits made at night or over a weekend or holiday shall
be treated as if received on the next business day following
the deposit.
STATEMENT OF THE CASE
Gary Eder, a Senior Vice-President at the mid-town Manhat-
tan branch of Paine, Webber was a successful stock broker. In
1981, he earned $720,000; in 1982, he reached the one million
dollar mark, and topped off in 1986 earning $2,600,000. Appar-
ently one of the reasons for Eder’s success was his willingness to
structure cash deposits from his clients in such a way as to avoid
triggering the filing of a currency transaction report (CTR).
Although the indictment in the case at bar commenced June
14, 1982, it was stipulated that Petitioner did not become affli-
ated with Paine, Webber as the branch manager’ at Eder’s branch
until March 24, 1984.
The testimony at Petitioner’s jury trial, viewed in the light most
favorable to the Government revealed that Petitioner’s predeces-
sors, at the urging and direction of Gary Eder, who testified under
a cooperation agreement with the Government, revealed that
customer cash deposits were split up, and delayed to avoid trig-
gering the CTR requirement. In addition, Eder also engaged in
the practice of “miscoding” deposits. A deposit was miscoded
when cash was received, but in the records sent to the downtown
office, the customer’s payment was listed as a check. However,
the bank deposit slips accurately reflected the deposit into Paine,
Webber’s account as a “cash” deposit, and the records reflected
cash. Only the customer statement listed the-deposit as being in
“check” form.
The testimony at trial revealed that some 16 months after
becoming branch manager on perhaps two occasions in October,
1985, Eder gave Petitioner cash with directions to see that the
cash blotter reflected the payments as “checks”. In early 1985,
|. The position of branch manager involves overseeing the cashier's and
margin areas, and supervising the back office emplovees.
Eder discussed two customer accounts, the Angerman and Hir-
schenbaum accounts with Petitioner. Eder was told that Peti-
tioner was holding $200 so as not to exceed what he believed was
the operative $10,000 reporting requirement. A\ll of the afore-
mentioned customer accounts were introduced in evidence.
None reflected a breach of the CTR requirement. The only proof
of Petitioner’s conduct came from a Paine, Webber margin clerk
Carmine Natale who testified that in the Autumn of 1986, he
learned that one of Eder’s customers delivered in excess of
$10,000. Petitioner allegedly took the cash and gave Natale less
than $10,000 to be deposited. No records reflecting this alleged
occurrence were, however, introduced.
Eder’s testimony also reflected that there came a point when he
determined that it would be better if the branch’s daily cash
summaries for the period 1981-1983 were destroyed. Petitioner
assisted Eder in removing these files from the Paine, Webber
branch.
While it is true that there was a newspaper account of the entry
of a guilty plea of one of Eder’s garment district customer’s Irwin
Finer, the proof at trial failed to establish that there was an actual
Grand Jury in the Southern District of New York seeking the
documents which Eder and Petitioner disposed of. Rather, the
stipulation which was read to the jury stated that at the time this
conduct occurred, the Grand Jury subpoenas in question (Govt.’s
Exh. 220, 221 and 223) were issued, a duly empanelled Grand
Jury in the Southern District was conducting an inquiry into
alleged violations of United States law. There was no further
showing what that inquiry involved.
After the Government rested Petitioner rested calling substan-
tive witnesses, and character witnesses. The Court charged the
jury on the applicable law, but refused to give a specific intent
charge with respect to the obstruction case as requested by Peti-
tioner’s trial counsel.
After the case went to the jury, during the course of its deliber-
ations, one of the jurors telephoned the courtroom clerk that due
to a high blood pressure condition he was unable to come to Court
that morning. Over the objection of both defense counsel, and
without waiting to ascertain when the juror could return, the
Court summarily discharged the juror and a verdict of guilty by
an 11 person jury was ultimately returned.
On December 4, 1987, Petitioner was sentenced to serve a term
of five years probation and perform community service.
REASON FOR GRANTING THE WRIT
I.
The Evidence Was Legally Insufficient To Sustain Petitioner’s
Conviction For Conspiracy To Violate The Currency Reporting
Statute.
31 U.S.C. 5313 and the related regulations enacted thereunder
(e.g. 31 CFR 103.22(a)) require financial institutions’ to report
currency transactions in excess of $10,000. As with any statu-
tory scheme, there are loopholes and methods which enterprising
individuals have devised to avoid triggering the financial report-
ing requirement. This case presents this Court with the opportu-
nity to determine whether the engagement in the structuring of
cash deposits, a practice not specifically proscribed by statute or
Second Circuit opinion when performed, provides a basis for the
use of the federal conspiracy statute to convict a salaried office
manager.
Thus in United States v. Anzalone, 766 F.2d 676, 680-683 (Ist
Cir. 1985) the purchase of multiple bank checks in order to
“structure” deposits into a stock brokerage concern in order to
pay for bonds purchased to the account of the wife and mother of
a public official. This structuring conduct, purposeful though it
clearly was, did not violate the law.
In United States v. Larson, 796 F.2d 244, 246 (8th Cir. 1986),
a unanimous Eight Circuit Court of Appeals reversed Appellant’s
condition based upon his engaging in structuring activities to
SY
2. The secretary cleariy could have drafted 31 CFR 103.22 to cover both the
financial institution and other participants in a subject transaction (see Califor-
nia Bankers v. Schultz, 416 U.S. 21, 58, 69-70 n. 29: 94. S.Ct.1494, 1516, 1521
[1974] ).
9
mask the cash nature of a $44,500 transaction. The Court held
that the reporting statute imposed no duty, and Larson breached
none, in structuring as he did.
Similarly, in United States v. Espriella, 781 F.2d 1432, 1435
[9th Cir. 1986] the Court, once again in the context or narcotics
generated moneys, reversed both substantive and “371” conspira-
cies where structuring to avoid the $10,000 threshold were
engaged in.
Finally, in United States v. Gimbel, 830 F.2d 621 [7th Cir.
1987] a unanimous Seventh Circuit reversed an attorney’s con-
viction predicated upon his structuring of certain large deposits
and withdrawals so that First Bank Milwaukee would fail to issue
a CTR in connection with these transactions.
There is, concededly a conflict amongst the Circuits in this
area. In United States v. Heyman, 794 F.2d 788 [2nd Cir.
1986], cert. den. 107 S.Ct. 585 (1987) the Second Circuit upheld
the conviction of a Merril-Lynch employee who both opened up,
and deposited less than $10,000 into these new accounts. Thus it
was, we submit both the artificial creation of new Merril-Lynch
accounts and his artificial depositing’ into these accounts that
created liability under 31 U.S.C. 5311 et. seq. for Heyman.
In United States v. Nersesian, 824 F.2d 1294, 1310-1315 [2nd
Cir. 1987] the Court of Appeals dealt for the first time with the
application of the general conspiracy statute (18 U.S.C. 371) to
the conduct of Appellant Muktabi who utilized moneys generated
by narcotics dealing to purchase money orders for deposit, and
thereby avoid triggering the issuance of aCTR. It is based upon
this use of the conspiracy statute that Petitioner was convicted
under Count 1.
in reviewing the sufficiency of the evidence we concede, as we
must, that the evidence must be reviewed in the light most
favorable to the Government (Glasser v. United States, 315 U.S.
60, 80 [1942]). Nonetheless, the evidence must show that Peti-
tioner knowingly joined the conspiracy. What is required is actual
3. [It was Heyman who received the funds directly from the clients. In the
case at bar Fahmy did not have client contact and only received the money by
virtue of Paine-Webber’s chain of command.
10
proof of anagreement. The proof at trial, we respectfully submit
demonstrates something far less.
It is unquestioned that Gary Eder was involved in structuring
transactions on behalf of his Paine, Webber customers from at
least June 14, 1982, until December, 1986. However, Petitioner
did not become “operations manager” at the Paine-Webber
branch in question until March, 1984. It took some 16 months
before he supposedly engaged in structuring type conduct in con-
nection with the Angerman and Hirschenbaum brokerage
accounts. We dispute that there was any competent or documen-
tary proof that Petitioner ever engaged in conduct which pre-
vented Paine- Webber, if it felt so inclined, to issuea CTR. Weso
contend because there was no proof that the apparent withholding
of $200 by Petitioner prevented a CTR from being properly
issued.
More specifically we note that the sole evidence on this score
relates to Eder’s sketchy recollection of a conversation with Peti-
tioner relating to deposits into the Angerman, Hirschenbaum
accounts and the remark that Fahmy was “holding” $200 on each
account to avoid triggering the CTR requirement.‘ A review of
these account records shows however that the setting aside, or
withholding of this sum did not prevent a CTR from being filed by
Paine, Webber.°
The mere fact that one engages in conduct which assists others
to violate the law does not support the conclusion that they
thereby become members of a charged conspiracy. Rather, there
must be proof that there was an agreement reached reflecting a
meeting of the minds (United States v. Rosenbaltt, 554 F.2d 36,
38 [2nd Cir. 1977]). Put another way, not all associational
conduct taken together is sufficient to implicate one as a co-
-—-—
conspirator (United States v. DiStefano, 555 F.2d 1094 [2nd
4. This must be viewed against the backdrop of the Government's conces-
sion that June, 1984, was the last time when Eder received more than $10.000 at
one time (316) and the inability of the cashier Carmine Natalie to point to
transactions reflecting a breach of the reporting requirements ( 754-755).
S. Fahmy’s remark was based upon his erroneous belief that a CTR was
required to be fled if $10.000 was received in a 7 dav period. In fact. the
$10,000 threshold is a daily requirement not weekly.
11
Cir. 1977]; United States v. Soto, 716 F.2d 989 [2nd Cir. 1983];
United States v. Penagos, 823 F.2d 346 [9th Cir. 1987] ).
The fact that a defendant may believe he has acted in a particu-
lar way is not proof that in the complex world of financial depos-
its, that he has done so. The fact that Petitioner erroneously
thought he had violated the law, when in truth, he had not,
militates against a finding of membership in a conspiratory—the
charged object of which is to prevent one’s employer from issuing
a CTR.
Finally, we question whether it can truly be said that Petitioner
was On notice that the structuring of transactions was unlawful.’
Had Petitioner been assigned to a Paine, Webber branch located
in the geographic confine of the First, Seventh or Ninth Circuits,
he would not be Petitioning this Court today by virtue of the
decisions referred to at the beginning of this point. Indeed, up
through at least as early as March, 1985, Judge Whitman
Knapp’s opinion in United States v. Goldberg, 587 F.2d 302
[S.D.N.Y. 5/21/84] rev'd 756 F.2d 949 [2nd Cir. 3/6/85]
upheld the practice of structuring at least in New York City.
Indeed it was not until the Summer of 1986, when Judge Kauf-
man’s opinion in United States v. Heyman, supra, was released
that the law in this Circuit prohibiting the practice of structuring
transactions’ was articulated.
Mindful that the criminal law may only penalize conduct
which Defendant’s have clear notice of, it cannot we respectfully
submit, be said that Petitioner could be said to be on notice of
what structuring practice the currency laws did not permit partic-
ularly where CFR requirements and not United States Code
provisions are implicated. To hold him accountable under such
clouded circumstances is contrary to accepted notions of fair
6. The practice of structuring cash transactions was not explicitly rendered
unlawful by the congress until the enactment of the Money Laundering Control
Act of 1986, P.L. 99-570.
7. Neither the statute nor CFR provision in question specifically mention
structuring as a prohibited practice.
12
notice® and reduces the enforcement of the criminal law to a trap
for the unwary (c.f. United States v. Critzer, 49 8 F.2d 1160,
1162 [4th Cir. 1974]; United States v. Dahlstrom, 713 F.2d
1423, 1426-1429 [9th Cir. 1983] cert. den. 466 U.S. 980 [1984];
United States v. Risk,’ 672 F.Supp. 346, 357 [S.D. Ind. 1987]
aff'd 843 F.2d 1059, 1062 [7th Cir. 1988 per Bauer, C.J.]; United
States v. Tana, 618 F.Supp. 1393, 1395 [S.D.N.Y. 1985]; United
States v. Lee, 667 F.Supp. 1410-1404 [D. Col. 1987]). We call
upon this Court to grant this petition to reconcile this clear
conflict between the Courts. It is, we respectfully submit,
unseemly to have one’s criminal exposure turn upon the happen-
stance of where he works or lives.
The second alleged improper record creation activity forming
the basis of the conspiracy charged related to the alleged miscod-
ing of Paine, Webber “blotter records” to record cash received as
checks. The fact of course was that the records which went down
to Paine, Webber’s central record center, coupled with the actual
and completely accurate bank deposit slips, and further subse-
quently supplemented by the monthly bank statements, were not
miscoded. Rather, the miscoding such as it existed was in actual-
ity a “financial placebo” which merely carried an inaccurate
description of a given deposit on the customer’s monthly state-
ment. The “hard copy” downtown, accurately reflected the
actual nature of payment received up at Eder’s branch.
17 CFR 240.17a-3 by definition defines “cash” as consisting of
both “currency” and “checks”. The mere fact that Paine, Web-
ber as a matter of internal business policy may have instituted a
procedure to have a blotter notation made differentiating between
currency and check deposits, which concededly was breached in
8. See eg.. Lanzetta v. Umted States, 306 US. 451, 453 [1939]:
Papachristou v. City of Jacksonville, 4 08 U.S. 156, 92 S.Ct. 339 ; Colauti v
Franklin, 439 U.S. 379, 99 8.Ct. 6075 [1979]).
9. District Judge Barker's cpimion dealing specifically with the impact of
conflicting case law is, we respectfully submit, particulariy pertinent to Peti-
nooner’s case. [f judges of the Court of Appeals and District Court disagree over
shat methods may or may not trigger a CTR what type of real guidance does
this provide for George Fahmy from Bergen Beach :n Brooklyn to guide his
.
“AReaner
wes Uke
13
the case at bar, does not support a violation of the record-keeping
act.
Our research does not reveal a criminal case from this Court
dealing with what type of specificity must be achieved in order to
conform statutorily (c.f. United States v. Sloan,’° 389 F.Supp.
526 [S.D.N.Y. 1976] ). Under these circumstances to bottom a
conspiracy charge upon a claim of “miscoding”, in the face of
proof that the coding practices in the cashier’s cage were in
conformity with 17 CFR 240.17a-3 and hence were literally true
(Bronston v. United States, 409 U.S. 352, 93 S.Ct. 595) is
improper, and unacceptable.
Ata time when the volume of customer transactions is high, the
securities industry requires specific guidance from this Court in
order to ascertain the demarcation point between careless record
keeping and criminal exposure, and the specific type of brokerage
house records which fall within the ambit of criminal prosecution.
II.
The Trial Court Erred And Denied Petitioner A Fair Trial By
Discharging A Juror During Deliberations And Requiring The
Rendition Of A Verdict By An 11 Member Jury Over Strenuous
Defense Objections In Violation Of The Requirements Of Rule
23(b) Of The Rules Of Criminal Procedure.
Petitioner’s trial was not a long one. The testimony went in
over the course of six days. It was, against this backdrop, and the
requirements of Rule 23(b) of the Federal Rules of Criminal
Procedure that Judge Cannella’s decision to discharge a juror,
during the course of deliberation, must be reviewed.
10. In Sloan a record keeping conviction was sustained where records were
not kept because they were false. In this case there is no contention that the
total of receivables at the Paine, Webber cashier's cage was overstated or mis-
totaled. Rather the manner of internal apportionment is the crux of the Gov-
ernment’s miscoding claim.
14
As the notes of the Advisory Committee on Rules which
drafted Rule 23(b) noted at the time the Rule was adopted, that
the Rule:
“(A]ddresses a situation which does not occur with great
frequency but which, when it does occur, may present a
most difficult issue concerning the fair and efficient admin-
istration of justice. This situation is that in which, after
the jury has retired to consider its verdict and any alter-
nate jurors have been discharged one of the jurors is seri-
ously incapacitated or otLerwise found to be unable to
continue service on the jury. The problem is acute when
the trial has been a lengthy one and con-sequently ihe
remedy of mistrial would necessitate a second expenditure
of substantial prosecution, defense and court resources.”
Mindful that proceeding to a verdict in a federal felony case
with a jury of less than 12 persons is at variance with common
law, the use of Rule 23(b) for non-consentual |! person juries
was clearly not intended to be effectuated lightly. Indeed, the
experience of the misi prius courts bears this posture, and the
preference for |2 person juries out.
In United States v. Gambino, 598 F Supp. 646, 658 [D.N_J.
1984], Judge Lacey was confronted with a multi-defendant nar-
cotics case which encompassed some six weeks of trial testimony.
At the time the juror Mr. Ojada was disqualified,”’ the jury had
deliberated for some 20 hours. All of the attorneys except one
agreed under these circumstances to accept an 11 jury verdict.
The Defendant most directly affected did not want the court to
declare a mistrial. Under such circumstances, the District Court
understandabiy found the existance of factors sufficient to apply
Rule 23(b) even in the absence of consent from all parties.
In Umted States v. Smith, 619 F.Supp. 1441, 1451 [W_D. Pa.
i988] the applicability of Rule 23(b) arose in the context of a
three month trial involving a 16 count indictment charging public
corruption (mail fraud, travel act) in Allegheny County, Penn-
svivamia. The jury was already on the morning of the fourth day
-
x a e . ‘ .
ine uror “as removed ‘or 2 reason Other than 32 heaith prodiem or
"CAs
15
of its deliberations when a sitting juror suffered very serious
injuries as a result of an automobile accident which rendered
participation in jury deliberations impossible, not merely for a
matter of a few days, but rather several months. Under these
circumstances, Judge Muir, we submit, followed the spirit of Rule
23(b) and directed the jury to continue to deliberate to verdict.
Concededly, when the Court of Appeals had occasion in United
States v. Stratton, 779 F.2d 820, 830 (2nd Cir. 1985) cert. den.
106 S.Ct. 2285 [1986] to apply the Rule, it chose not to reverse
the conviction where an 11 person jury rendered the verdict. As
with any appeal dealing with the application of Rule 23(b) the
varied nature of problems which trial judges must cope impacts
upon whether it can be said that discretion has been abused. It
must, we submit, be fairly noted that the trial judge was con-
fronted by a 4% day hiatus, during deliberation following a
lengthy trial prompted by a juror’s unavailability due to religious
observances.
We do not contend that a trial judge is powerless to utilize Rule
23(b) where unequivocal” unavailability for a period of 4% days.
However, in the case at bar the Court never, we submit, ascer-
tained whether the juror’s health problem was permanent or tem-
porary—nor if temporary when the juror could be expected to
resume participation in the verdict rendering process.
Were the record on this subject capable of supporting a judicial
choice between temporary delay or judicially declared mistrial
versus a re-trial of a relative short case, this Court might well be
inclined to accept Judge Cannella’s determination. However,
the record is all too clear that he failed to both properly ascertain,
and balance the nature and permanence of the delay occasioned
versus the length of trial. The Court simply. and we submit
impetuously, permitted extra-judicial concerns to distort the neu-
tral application of the Rule 23(b) balancing test.
Under such circumstances we believe discretion was abused, a
valuable juror was expelled, and Petitioner had a verdict entered
by a body 1/12 of its expected size. Unless this Court believes
5S
12. Due to the length of the religious high holiday
16
that “convenience” and “expedition” constitute “good cause”, the
writ should be granted to permit this Court to provide guidance
for the application of Rule 23(b).
The Evidence At Trial Was Legally Insufficient To Demonstrate
The Existence Of A Grand Jury Probing Currency Reporting
Compliance At Paine Webber.
Petitioner was charged in Count 2 of the indictment with
obstructing justice in violation of 18 U.S.C. 1503 in connection
with his role is assisting Gary Eder remove Paine, Webber daily
cash summary folders. Where, as here, the contention is that the
destruction of documents was calculated to deprive the Grand
Jury of evidence, the Government must still establish that a par-
ticular Grand Jury was actually impanelled and inquiring into
matters about which the documents in question directly related
( United States v. Solow, 138 F.Supp. 812, 816 [S.D.N.Y. 1956,
per Weinfeld, J.]) as a pre-requisite to conviction.
This follows since the mere act of disposing of the files in
question, putting aside questions of ethics and morality, does not
vwlate section 1803. Rather two kev factual elements must be
competently established
1. the existence of a pending judicial or Grand Jury
investigation,
>. Defendant's knowledge of the existence of the judicial pro-
ceeding or Grand Jury investigation:”
3. intentional engagement in conduct reasonabiy calculated
to deprive the Court or Grand Jury of testimony or physical
. ‘sae
os a a
See e.g. l uted Siutes v. Capo. “9!
- eee
.
17
At the point in time when the Government rested its case there
was, we respectfully submit clearly insufficient evidence in the
trial record to establish a prima facie violation of Section 1503.
There was no proof that Petitioner knew that the documents he
assisted Eder in removing from the premises were called for by
Grand Jury subpoena and were to be disposed of (see United
States v. Williams, 470 F.2d 1339, 1341-42 [8th Cir. 1973] ).
The fact that the files which Gary Eder disposed of would, with
the benefit of hindsight have assisted a Grand Jury investigation
is not, we respectfully submit, dispositive. Rather, there must be
proof that Petitioner assisted Gary Eder with the mens rea called
for in Section 1503 knowing that a Grand Jury panel was actually
probing matters related to these files.
Because we submit that there was no such evidence in the trial
record, we submit, that the judgment appealed from must be
modified by dismissing Count 2. At the very least, this Court
should grant the Writ of Certiorari to definitively speak to the
modicum of proof necessary to establish a violation of Section
1503.
IV.
The Trial Court’s Omission Of Specific Intent Language In Its
Charge In Connection With Count Two And The Court’s Instruc-
tion Concerning The Records Subject To Miscoding Were Errone-
ous And Lessened The Government’s Burden Of Proof Denying
Petitioner A Fair Trial.
Prior to summation a “charge conference” was held to review
the request to charge of the respective parties. Petitioner's trial
counsel stressed the importance of instructing the jury upon the
Government's obligation to competently establish that Fahmy
acted with the specific intent to obstruct the due administration of
18
justice (T: 1061-1068; A-343-350). This request was memorial-
ized in Defendant’s request to charge #37."
During the course of its charge, Judge Cannella did instruct the
jury on the need to find specific intent, but when it came time to
instruct with regard to the intent requirement, the Court charged
the jury that it need only find corrupt intent. There is, we
respectfully submit a distinction between what a iay jury may
view and find to be corrupt, and conduct which is engaged in with
specific intent to obstruct the due administration of justice.
That Defendant’s request #37 was a correct request is beyond
cavil (see United States v. Moon, 718 F.2d 1210, 1236 [2nd Cir.
1983]; Pettibone v. United States, 148 U.S. 197, 13 S.Ct. 542
[1893]). Violations of Sec. 1503 require proof of a specific
intent to obstruct justice (United. States v. Ryan, 455 F.2d 728,
734-35 [9th Cir. 1971]; United States v. Carleo, 576 F.2d 846,
849 [10th Cir. 1978]). Nor can it be gainsaid that counsel
called to Judge Cannella’s attention his failure to so charge at the
appropriate point following the completion of the rendition of the
Court’s charge (A-300). .
Mindful that a defendant has an absolute to have the trial court
instruct the jury upon its theory of defense Barnes v. Jones, 665
F.2d 427, 435 [2nd Cir. 1981]; United States v. Williams, 728
F.2d 1402, 1404 [llth Cir. 1984] rev’d other grds 103 S.Ct.
3308. We submit that the trial court’s omission of a vital intent
requirement cannot be brushed off as mere harmless error (e.g.,
14. Request +37 states:
Specific Intent—The crime of obstruction of justice is a serious crime
which requires proof of specific intent before the defendant can be con-
victed. Specific intent, as the term implies, means more than the general
intent to commit the act. To establish specific intent the government
must prove that the defendant knowingly did an act which the law
forbids, purposefully intending to violate the law. Such intent may be
determined from all the facts and circumstances surrounding the case.
An act is “knowingly done”, if done voluntarily and intentionally, and not
because of mistake or accident or other innocent reason.
E. Devitt and C. Blackmar, Federal Jury Practice and Instructions, Sec.
14.03.
19
United States v. Lane, 474 U.S. 438, 106 S.Ct. 725 [1986];
Satterwhite v. Texas, US. [No. 86-6284] ).
In addition, the Court was obliged to instruct the jury on the
nature and duty of the brokerage house records which were the
subject of the miscoding charge alleged as an object of the con-
spiracy charged in Count I. In this regard the jury was told:
“[{I] instruct you it does not matter whether or not Paine,
Webber was required to distinguish in its records between
cash payments by customers and check — by
customers.
As long as Paine, Webber’s practice was to distinguish
between cash payments and check payments, it is illegal
for someone to cause Paine, Webber to record that infor-
mation inaccurately, to so-call miscode it.” (1047; A-
329).
. This instruction essentially parrotted Government request to
charge #8.
Under this charge a jury could find that an accused violated a
federal penal statute for preparing or causing the preparation of a
document or mere internal record peculiar to a particular broker-
age house (c.f. Sinclair v. United States, 444 F.2d 399 [2nd Cir.
1971]). - We respectively submit that there is more than some-
thing contrary to accepted notions of law to permit a violation of a
record keeping section (e.g. 15 U.S.C. 78q without specifying
what type of records must be kept and maintained under the
penalty of perjury.
Only the Congress has the power, we respectfully submit, to
enact penal statutes. Under the Court’s charge to this jury a
conviction was allowed to be returned in connection with a type of
record neither required to be kept nor which many institutions
may notin fact keep. Accordingly, the consequence is that under
Judge Cannella’s charge it was in actuality Paine, Webber which
has written the statute, to permit a conviction under such circum-
stances is, we submit, erroneous and a violation of Petitioner’s due
process rights. At the very least this Court should grant the Writ
of Certiorari to explore the due process consideration of an elastic
20
intermediate appellate holding which in effect allows brokerage
houses, and not the duly elected Congress of the United States to
write the federal black letter criminal law. Such an implicit
delegation of power raises serious constitutional concerns and, we
respectfully submit, requires review by this Court.
CONCLUSION
The Petition For A W-it Of Certiorari Should Be Granted.
Dated: New York, New York
June 10, 1988
Respectfully submitted,
ROGER BENNET ALDER, P.C.
Attorney for Petitioner
225 Broadway
New York, New York 10007
(212) 406-0181
la
APPENDIX A
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
_
United States of America
—against—
JOSEPH P. TOTA AND
GEORGE B. FAHMY,
Defendants.
MEMORANDUM AND ORDER
§§ 87 Cr. 273
CANNELLA, D.J.:
Defendants’ motion to dismiss the indictment is denied. Fed.
R. Crim. P. 12(b).
BACKGROUND
On April 2, 1987, Joseph P. Tota and George B. Fahmy, former
employees of the brokerage firm of Paine, Webber, Jackson &
Curtis (“Paine, Webber”), were named in a two-count indict-
ment alleging conspiracy to defraud the United States and
obstruction of justice. These charges stemmed from defendants’
activities as branch manager and operations manager, respec-
tively, of Paine, Webber branch office in midtown Manhattan.
Superceding indictments were returned on May 12 and July 7.
Tota began working as branch manager in June 1982. Fahmy
began working as operations manager at the same branch office in
March 1984. Gary Eder was a broker in the branch office and is
named in the indictment as a conspirator, along with Tota and
Fahmy. On March 19, 1987, Eder pled guilty before Judge
Edmund L. Palmieri to one count of conspiring to defraud the
United States, in violation of 18 U.S.C. § 371, and to one count of
willfully causing Paine, Webber to fail to make and maintain
2a
certain financial records, in violation of 15 U.S.C. § 78q(a).
United States v. Eder, 87 Cr. 196 (ELP).
The indictment describes a scheme whereby Eder received
lump-sum cash payments from Paine, Webber customers, in
amounts up to $72,000, for deposit into their accounts. Eder
then broke down the payments into sums of less than $10,000 for
(1; deposit into a customer’s account on different days; (2)
deposit on the same day into different accounts controlled by the
same customer; and (3) purchase of bank checks in an amount
less than $10,000 for deposit, along with cash into a customer’s
account. As discussed more fully below, the indictment alleges
that Eder, Tota and Fahmy conspired to “structure” these trans-
actions in order to circumvent federal statutes and regulations
requiring financial institutions to file reports of currency transac-.
tions, involving more than $10,000. Tota and Fahmy are also
charged with conspiring with Eder to aid and abet violations of
the reporting statutes by Paine, Webber.
DISCUSSION
A. The Indictment and Defendants’ Motion to Dismiss
Count one of the indictment alleges a conspiracy to defraud the
United States, in violation of 18 U.S.C. § 371. The conspiracy
allegedly had five objects: (1) to defraud the United States by
impeding, impairing, obstructing and defeating the Government’s
efforts to collect data on currency transactions, Indictment { 5;
(2) to cause Paine, Webber to fail to file reports of currency and
other payments and transfers through and to such financial insti-
tution, involving a transaction in currency of more than $10,000,
as part of a pattern of transactions involving more than $100,000
in a 12-month period, in violation of 31 U.S.C. § 5313(a) and
regulations promulgated thereunder, 31 C.F.R. § 103.22, id. 1 6;
(3) to cause Paine, Webber to fail to file reports of deposits of
currency and other payments and transfers through and to such
financial institution, involving a transaction in currency of more
than $10,000, also in violation of 31 U.S.C. §5313(a) and 31
C.F.R. § 103.22, id. 17; (4) to cause Paine, Webber to fail to
3a
make and keep certain records of financial transactions, in viola-
tion of 15 U.S.C. § 78q(a) and 17 C.F.R. §§ 240.17a-3, 240.17a-
4 and 240.17a-8, id. 18; and (5) to obstruct justice by destroying
certain records during a grand jury investigation, in violation of
18 U.S.C. §1503, id. 19. Count two of the indictment charges
obstruction of justice in violation of 18 U.S.C. § 1503 and 18
U.S.C. § 2.'
Tota moves to dismiss the entire indictment, claiming that (1)
the conspiracy count does not charge a crime under 31 U.S.C.
§ 5313, or in the alternative, that § 5313 is unconstitutional as
applied to defendants; (2) the securities record-keeping object of
the conspiracy count must be dismissed because Paine, Webber
was not required to keep the information allegedly falsified; and
(3) the obstruction of justice object of the conspiracy count and
the substantive obstruction of justice charge in count two are
legally insufficient. Fahmy joins in the motion, except with
respect to the obstruction of justice allegations in both counts.
B. The Currency Transaction Reporting Requirements
The Currency and Foreign Transactions Reporting Act, 31
U.S.C. §§ 5311-5322 [“the Act”], requires domestic financial
institutions to make and maintain “certain reports or records
[which] have a high degree of usefulness in criminal tax, or
regulatory investigations or proceedings.” /d. §5311. Section
5313(a) of the Act provides: «
When a domestic financial institution is involved in a
transaction for the payment, receipt, or transfer of United
States coins or currency ... in an amount, denomination,
or ... under any circumstances the Secretary prescribes
by regulation, the institution and any other participant in
1. 18 U.S.C. § 2 provides:
(a) Whoever commits an offense against the United States or aids,
abets, counsels, commands, induces or procures its commission, is punisha-
ble as a principal.
(b) Whoever willfully causes an act to be done which if directly per-
formed by him or another would be an offense against the United States, is
punishable as a principal.
4a
the transactions the Secretary may prescribe shall file a
report on the transaction at the time and in the way the
Secretary prescribes.
31 U.S.C. § 5313(a). Criminal penalties for wiliful violations of
the statute and regulations promulgated thereunder are set forth
in 31 U.S.C. § 5322.
Pursuant to the above grant of authority, the Treasury Depart-
ment issued the following regulation:
Each financial institution shall file a report of each
deposit, withdrawal, exchange of currency or other pay-
ment or transfer, by, through, or to such financial institu-
tion, which involves a transaction in currency of more than
$10,000.
31 C.F.R. § 103.22(a) (1984).
Treasury regulations define a “transaction in currency” to be a
“transaction involving the physical transfer of currency from one
person to another.” Jd. § 103.11. The report called for in the
regulations is known as a “Form 4789, Currency Transaction
Report” [“CTR”]. It is well established that only financial insti-
tutions are required to file CTRs for transactions involving more
than $10,000. See California Bankers Ass’n v. Shultz, 416 U.S.
21, 58 (1974).
C. Defendants’ Challenge to the Reporting Requirements
Defendants challenge the legal sufficiency of the CTR-related
objects of the conspiracy count on two grounds. First, they argue
that they may not be charged with conspiring to cause Paine,
Webber to fail to file CTRs because Paine, Webber was under no
duty to file CTRs for the type of “structured” transactions alleged
in the indictment. Second, defendants argue that even if Paine,
Webber was required to file CTRs for the transactions, the report-
ing statutes are unconstitutional as applied because they did not
give fair notice that structuring transactions in the manner
alleged was unlawful.
Sa
1. Structured Transactions Under the Act
Defendants first argue that the CTR-related objects in the
indictment’s conspiracy count are legally insufficient because 31
U.S.C. § 5313 does not specifically prohibit the type of “struc-
tured” transactions alleged to have taken place. Defendants con-
tend that Paine, Webber was never under any legal obligations to
file CTRs because no “deposit” to a Paine, Webber customer’s
account ever exceeded $10,000 in a single day. See Memoran-
dum of Law In Support of Defendant’s Motion to Dismiss the
Indictment at 11-16, 87 Cr. 273 (JMC) (S.D.N.Y. June 19,
1987) [“Defendant’s Memorandum”]. The thrust of their argu-
ment is that structuring transactions, so that the total deposit to a
customer’s account in a single day is less than $10,000, is not
prohibited by the Act.
In support of this argument, defendants rely upon a series of
decisions in the First, Eighth and Nine Circuits in which convic-
tions of bank customers for violating 31 U.S.C. § 5313, were
reversed. See, e.g., United States v. Larson, 796 F.2d 244, 246
(8th Cir. 1986); United States v. Dela Espriella, 781 F.2d 1432,
1435 (9th Cir. 1986); United States v. Varbel, 780 F.2d 758, 760-
63 (9th Cir. 1986); United States v. Anzalone, 766 F.2d 676,
680-83 (1st Cir. 1985); see also United States v. Gimbel, No. 86-
1808, slip op. at 8 (7th Cir. Aug. 6, 1987). Defendants acknowl-
edge, however, that several other circuits have upheld the applica-
tion of § 5313 to individuals, if they willfully structured their
transactions so as to cause the financial institution to fail to file
the appropriate CTR. See, e.g., United States v. Giancola, 783
F.2d 1549, 1551-52 (11th Cir.), rehg. denied, 797 F.2d 982 (en
banc), cert. denied, denied, 107 S. Ct. 669 (1986); United States
v. Cook, 745 F.2d 1311, 1315 (10th Cir. 1984), cert. denied, 105
S. Ct. 1205 (1985) United States v. Puerto, 730 F.2d 627, 632-33
(llth Cir. 1984), cert. denied, 105 S. Ct. 162 (1985); United
States v. Tobon-Builes, 706 F.2d 1092, 1098-99 (11th Cir. 1983)
(customer); United States v. Thompson, 603 F.2d 1200, 1203-04
(5th Cir. 1979); United States v. Shearson, Lehman Bros., Inc.,
650 F. Supp. 490, 493-98 (E.D. Pa. 1986) (customers of banks
6a
and employees of brokerage firm); United States v. Richter, 610
F. Supp. 480, 487-90 (D.C. Ill. 1985), afd sub nom. United
States v. Konstantinov, 793 F.2d 1296 (7th Cir.), cert. denied,
107 S. Ct. 191 (1986) (customers); United States v. Konefal,
566 F. Supp. 698, 701-02 (N.D.N.Y. 1983) (customers).
In the Second Circuit, an individual, although under no legal
duty himself to file a CTR, nevertheless can be held criminally
liable for willfully causing a financial institution to fail to file a
currency report which it has a legal duty to file. See United
States v. Heyman, 794 F.2d 788 (2d Cir. 1986), cert. denied, 107
S. Ct. 585 (1987); see also United States v. Nersesian, No. 86-
1211, slip op. at 4092 (2d Cir. June 29, 1987).
Heyman involved a Merrill Lynch employee who received
lump-sums of cash from his customers in amounts exceeding
$10,000. He then structured the transactions by opening several
different accounts and making deposits of less than $10,000 into
each of them. In upholding Heyman’s conviction under 31
U.S.C. § 5313 and 18 U.S.C. § 2(b), for willfully causing Merrill
Lynch to fail to file the appropriate CTRs, the court stated that
“({hjad Merrill Lynch, a financial institution, structured the
transactions as Heyman did, it would have violated federal law.”
794 F.2d at 791.
This Court finds Heyman, rather than the cases cited by
defendants, dispositive. First, the Amzalone line of cases are
inapposite to the facts in this case. Essentially, these cases hold
that because bank customers are under no obligation to disclose
the nature of their own structured transactions, they may not be
prosecuted for causing a financial institution to fail to file the
appropriate CTRs. See, e.g., Anzalone, 766 F.2d at 682; Larson,
796 F.2d at 246. The Second Circuit in Heyman, however, has
specifically rejected this approach, stating that through the appli-
cation of 18 U.S.C. § 2, “any individual, including a customer,
may be held criminally liable for willfully causing a financial
institution to fail to file [required] CTRs.” 794 F.2d at 792; see
Nersesian, slip op. at 4095 (“Under 18 U.S.C. § 2(b), a bank
Ta
customer has a duty not to willfully cause a bank to violate [31
U.S.C. § 5313.”].
Furthermore the facts in Heyman are closely analogous to
those in the instant case. Heyman was not a customer, but an
employee of Merrill Lynch when he received cash sums from
Merrill Lynch customers in amounts exceeding $10,000. He
then structured each transaction by breaking up the payment and
making separate deposits during the Course of a single day, or by
opening new accounts and later transferring the funds into a pre-
existing account. In the instant case, the indictment alleges that
Eder received lump-sum cash amounts from Paine, Webber cus-
tomers in amounts ranging from $25,100 to $72.00. See Indict-
ment TT 10(a), 11(1), 11(4), 11(7). Eder then broke down the
lump-sum amount into smaller amounts of less than $10,000 and
either made deposits into the same account over the course of
several days, or made deposits on a single day into different
accounts controlled by the same person. Contrary to defendants’
assertions, see Defendants’ Memorandum at 24, the latter type of
structured transaction would appear to fall within the scope of
§ 5313. Heyman specifically stated that a financial institution
“would [be] required to file a CTR for cumulative deposits in a
single day.” 794 F.2d at 792. Thus, if a customer gives an
employee of a financial institution a lump-sum of cash exceeding
$10,000 in a single day, for deposit into several pre-existing
accounts all under the customer’s control, Heyman would appear
to indicate that the CTR filing requirement is triggered. See id.
Once again, the focus is on the initial exchange of funds between
a customer and the financial institution’s representative.
Defendants stress the fact that the structured transactions in
Heyman resulted in total, single day deposits which exceeded
$10,000. While it is true that several of the transactions in
Heyman were structured, and the smaller amounts deposited, in a
single day, it is far from clear that the structured transactions
alleged in the indictment are outside the scope of § 5313. As
stated above, in the Court's view, Heyman focused on the initial
exchange of funds between the Merrill Lynch customer and Hey-
man involving more than $10,000. Because the funds were des-
tined to be deposited in the customer’s Merrill Lynch account, the
CTR filing requirement was triggered. But for Heyman’s struc-
turing of the transaction for the purpose of evading the filing
requirement, Merrill Lynch would have filed the appropriate
CTR. Accordingly, Heyman caused Merrill Lynch to fail to file
the CTRs and was, therefore, subject to the criminal penalties
found in 31 U.S.C. § 5322.
The indictment here alleges that, on at least three occasions,
Eder received lump-sums of cash from a Paine, Webber customer
in excess of $10,000. These sums were then broken down and
deposited into the same account, or into different accounts con-
trolled by the same customer. Tota used part of the cash sums to
purchase bank checks which were deposited, along with the
remaining cash, into the customer’s account. Using Heymanasa
guide, the Court sees little difficulty in classifying the “physical
transfer of currency,” 31 C.F.R. § 103.11 (defining “transaction
in currency,”), from a Paine, Webber customer to Eder, on a
single occasion and in an amount exceeding $10,000, as a
“deposit, ... of currency or other payment or transfer, by,
through, or to [Paine, Webber], which involve[d] a transaction
in currency of more than $10,000.” 31 C.F.R. § 103.22(a).
Defendants also argue that a financial institution's duty to file a
CTR only arises when an actual “deposit” or credit is posted to a
customer’s account. See Defendant’s Memorandum at 25-30.
This argument is without merit. 31 C.F.R. § 103.22(a) requires
2. Defendants’ argument that only single day structured transactions can
form the basis for prosecution under § 5313 is further undermined by one of the
transactions which formed the basis for Heyman's prosecution. On one day,
Heyman received $19,000 from Henry and Carolyn Cohen. He then deposited
$9,500 into a pre-existing joint account and created a new account in the name
of Henry Cohen, into which he deposited the remaining $9.500. No CTR was
filed by Merrill Lynch. On the following day, Heyman transferred the $9,500
from Henry Cohen's account into the joint account, the “net effect being a
deposit of $19,000 into the joint Cohen account.” 794 F.2d at 790.3. Obvi-
ously, the court in Heyman considered this to be a single transaction represent-
ing the transfer of $19,000 from the Cohens into their joint account, despite the
structuring by Heyman that obviated the filing by Merrill Lynch of a CTR.
9a
a financial institution to file a CTR whenever “a deposit, with-
drawal, exchange of currency or other payment or transfer, by,
through, or to such financial institution, which involves a transac-
tion in currency of more than $10,000” is made (emphasis
added). Defendants ignore the underscored language and focus
exclusively on the term “deposit.” Although in a strict banking
sense, a “deposit” to a customer’s account may not be technically
complete until that account is actually credited, when a customer
of a financial institution delivers to an officer of that institution a
sum in excess of $10,000 for deposit into an account under his
control, a “payment or transfer, by, through, or to such financial
institution” has occurred. See United States v. Bank of New
England, N.A., 640 F. Supp. 36, 39 (D. Mass. 1986) (“No
amount of bankerly vocabulary, however, can conjure away the
regulations’ explicit equation of ‘transaction in,’ and ‘physical
transfer of,’ currency.”). Any other interpretation would enable
an employee of a financial institution to flout the CTR filing
requirements with impunity by acting as a “structuring” interme-
diary between a customer seeking to avoid detection of large cash
deposits and the financial institution itself, the latter of which is
under the legal duty to report such deposits.
2. Constitutionality
Defendants’ second argument regarding the CTR objects in the
conspiracy count is that, even assuming that Paine, Webber was
under a duty to file CTRs for the transactions alleged in the
indictment, the statutes and regulations are unconstitutional
because they fail to give adequate notice of the criminality of
structuring the transactions in the manner alleged. This same
argument was raised and rejected in Heyman, which stated that
“the requirement .. . that a defendant’s acts be ‘willfull’ provides
adequate protection for individuals who might unwillingly stum-
ble into a violation of federal law.” 794 F.2d at 792 (citing
Village of Hoffman Estates v. The Flipside, Hoffman Estates,
Inc., 455 U.S. 489, 499 (1982); Boyce Motor Lines v. United
States, 342 U.S. 337, 342 (1952) ); see United States v. $359,000
10a
in United States Currency, No. 86-6237, slip op. at 5097-98 (2d
Cir. Sept. 8, 1987); United States v. Granda, 565 F.2d 922, 926
(Sth Cir. 1978) (The term “willful [in § 5313] require[s] proof
of the defendant’s knowledge and specific intent to commit the
crime.”); United States v. Shearson Lehman Bros., Inc., 650
F Supp. at 1202-03; United States v. Richter, 610 F. Supp. at
490.’
Moreover, “to be held under the broad sweep of the fraud
prong of § 371, [a defendant] need not have agreed to commit, or
have actually committed, a specific substantive offense. They
merely must have agreed to interfere with or to obstruct one of
the government’s lawful functions.” Nersesian, slip op. at 4097
(citing United States v. Southland Corp., 760 F.2d 1366, 1382
(2d Cir. 1985), cert. denied, 106 S. Ct. 88 (1986).
C. Record Keeping Provisions of the Securities Laws.
Defendants are also charged with conspiring to violate § 17(a)
of the Securities Exchange Act, 15 U.S.C. § 78q(a), by causing
Paine, Webber to (1) create false records, which reflected depos-
its of cash as deposits of checks; (2) cause Paine, Webber to fail
to file CTRs as required; and (3) cause Paine, Webber to fail to
preserve certain records of financial transactions required to be
maintained for a period of time by members of a national securi-
ties exchange. Defendants contend that, although the “essence”
of this charge is that certain cash deposits were deliberately mis-
coded as check deposits, such conduct is not prohibited by
§ 17(a) of the Exchange Act. Defendants further contend that
3. Defendants also argue that the charge of conspiring to defraud the United
States by causing Paine, Webber to violate the CTR laws can only be maintained
if Paine, Webber was under a duty to file CTRs which went unfulfilled. In light
of the Court's ruling above, this argument is without significance. Of course, it
is a fundamental maxim of conspiracy law that an individual may be charged in
a conspiracy to violate federal law even if the substantive offense which was the
object of the conspiracy was not committed. See Pinkerton v. United States,
328 U.S.640, 643 (1946) (“It has been long and consistently recognized by the
Court that the commission of the substantive offense and a conspiracy to commit
it are separate and distinct offenses.”).
as seen in iia ail im
lla
if such conduct does violate § [7(a), then the statute and regula-
tions promulgated thereunder are unconstitutional as applied to
them.
Section 17(a) of the Exchange Act mandates that institutions
like Paine, Webber “shall make and keep for a prescribed period
such records ... as the Commission, by rule, prescribes as neces-
sary or appropriate.” 15 U.S.C. § 78q(a). Section 32 of the
Exchange Act provides criminal penalties for “[a]ny person who
willfully violates any provision of this title .. ., or any rule there-
under.” 15 U.S.C. § 78ff.
Pursuant to this authority, the SEC promulgated regulations,
which read in relevant part:
(a) Every member of a national securities exchange who
transacts a business in securities directly with others than
members of a national securities exchange... small make
and keep current the following books and records relating
to his business:
(1) Blotters (or other records of original entry) con-
| taining an itemized daily record of ... all receipts and
disbursements of cash and all other debits and credits.
17 C.F.R. § 240.17a-3(a)(1). Inaddition, 17 C.F.R. § 240.17a-
8 requires that financial institutions subject to the Currency and
Foreign transactions Reporting Act “shall comply with the
reporting, record-keeping and record retention requirements of
Part 10> of Title 31 of the Code of Federal Regulations.”
Records required under § 24.17a-3 are required to be kept for
“not less than 6 years,” id. § 240.17a-4(a), and records required
under § 240.17a-8 must be kept for “not less than 3 years.” Jd.
§ 240-17a-4(b)(1).
Defendants attempt to blur the meaning of the above provisions
by arguing that the term “cash” in 17 C.F.R. § 240.17a includes
within its meaning both currency and check deposits. See
Defendants’ Memorandum at 38-40. Under this interpretation,
the regulations do not require firms like Paine, Webber to create
separate records for cash, as opposed to check, deposits. Thus,
defendants argue, because Paine, Webber was not required to
12a
maintain separate listings for cash and check items, any alleged
“miscoding” of cash deposits as check deposits was irrelevant and
could not constitute a violation of the regulations. Jd. at 39.
The Court agrees with the Government that this issue appears
to be controlled by Sinclair v. United States, 444 F.2d 399 (2d
Cir. 1971). In that case, the Second Circuit affirmed an SEC
decision barring a clerk from the securities industry for violating
§ 17(a) of the Exchange Act. The court held that, “even assum-
ing no legal obligation to furnish the names [of particular brokers
who executed trades on required forms], there was an obligation,
upon voluntarily supplying that information, to be truthful.” /d.
at 401. Thus, defendants’ argument that Paine, Webber could
misrepresent information about the nature and type of customer
deposits without violating §17(a) is unpersuasive. Further-
more, it is of no import that Sinclair was a civilcase. At trial, the
Government will be required to prove not merely that § 17(a)
was violated by Paine, Webber, but also that the defendants
“willfully” caused the firm to violate the statute and regulations
thereunder. See Heyman, 794 F.2d at 792.
E. Obstruction of Justice Charges
Defendant Tota’s last argument relates to the obstruction of
justice object in the conspiracy count and the substantive obstruc-
tion of justice charge underlying count two of the indictment.
Defendant Fahmy does not join Tota’s motion to dismiss in this
regard. Section 1503 of Title 18 provides for criminal penalties
against anyone who attempts to impede or interfere with the work
of a grand jury, or who “endeavors to influence, obstruct, or
impede, the due administration of justice.” 18 U.S.C. § 1503.
Tota is also charged as an aider and abettor under 18 U.S.C.
§ 2(b).
The indictment provides sufficient detail of the efforts allegedly
made by Fahmy and Tota to cover the trail of the various transac-
tions forming the basis for the indictment. These efforts included
the destruction of cash summary folders, the miscoding of cus-
tomer cash deposits as check deposits and the instructing of
l3a
Paine, Webber cashiers to hold back cash from a customer’s
account. Indictment 17 10(c), (e), (f) (g), 11(10)-11(17).
To survive a motion to dismiss, “an indictment need do little
more than to track the language of the statute charged and state
the time and place (in approximate terms) of the alleged crime.”
United States v. Tramunti, 513 F.2d 1087, 1113 (2d Cir.), cert.
denied, 423 U.S. 832 (1975); see United States v. Bagaric, 706
F.2d 42, 61 (2d Cir.), cert. denied, 464 U.S. 840 (1983) (“An
indictment need only track the language of the statute.”). Gen-
erally, an indictment will be upheld if it “(1) contains the ele-
ments of the offense charged; (2) fairly informs the defendant of
the charge against which he must defend; and (3) enables him to
plead an acquittal or conviction in bar of future prosecution for
the same offense.” United States v. Bank of New England, N.A.,
640 F.Supp. at 39; see Hamling v. United States, 418 U.S. 87,
117 (1974); United States v. Sedlak, 720 F.2d 715, 719 (1st Cir.
1983), cert. denied, 465 U.S. 1037 (1984).
In the Court’s view, the obstruction of justice object in count
one and the substantive obstruction of justice charge in count two
satisfy the above requirements. The means and overt act sections
of the conspiracy count provide ample description of the particu-
lar allegations underlying the charges of obstruction of justice.
In addition, count two adequately tracks the language of 18
U.S.C. § 1503. Accordingly, Tota’s motion to dismiss the
obstruction of justice allegations in the indictment is denied.
CONCLUSION
Defendants’ motion to dismiss the indictment is denied. Fed.
R. Crim. P. 12(b).
SO ORDERED.
JOHN M. CANNELLA
UNITED STATES DISTRICT JUDGE
Dated: New York, New York
September 29, 1987,
Lda
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Ata stated Term of the United States Court of Appeals for the
Second Circuit, held at the United States Courthouse in the City
of New York, on the 12th day of April, one thousand nine hun-
dred and eighty-eight.
Present: HONORABLE ELLSWORTH A. VAN GRAAFEILAND,
HONORABLE JON O. NEWMAN,
HONORABLE ROGER J. MINER,
Circuit Judges.
UNITED STATES OF AMERICA,
Appellee,
ws
GEORGE B. FAHMY,
Defendant-Appellant.
ORDER
George B. Fahmy appeals from a judgment of the District
Court for the Southern District of New York (John M. Cannella,
Judge), entered after a jury trial, convicting him of one count of
conspiracy to defraud the United States, 18 U.S.C. § 371 (1982),
and one count of obstructing justice, 18 U.S.C. § 1503 (1982).
The conspiracy was alleged to have several illicit objectives
including (1) causing Fahmy’s employer, Paine Webber, I[nc., not
to file currency transaction reports on deposits of currency involv-
ing transactions of more than $10,000, in violation of 31 U.S.C.
§§ 5313(a) and 5322 (1982 & Supp. III 1985) and 31 C.F.R.
§ 103.22 (1987), and (2) causing Paine Webber to fail to make
and keep accurate records of its cash receipts, in violation of 15
U.S.C. §§ 78q(a) and 78ff (1982 & Supp. III 1985) and 17
C.F.R. §§ 240.17a-3 and 240.17a-8 (1987). The obstruction of
justice count charged that Fahmy had participated in the destruc-
tion of Paine Webber records that he knew to be the subject of an
15a
ongoing grand jury investigation. On appeal, Fahmy raises
numerous challenges to the sufficiency of the evidence, jury
instructions, and the conduct of the trial. We conclude that each
of these contentions lacks merit.
1. Conspiracy Count. Fahmy was properly convicted of
conspiring to cause Paine Webber to fail to file currency transac-
tion reports. It is true that the regulations promulgated pursuant
to 31 U.S.C. §5313(a) impose reporting obligations only on
certain financial institutions and not on individual employees or
customers. See United States v. Nersesian, 824 F.2d 1294, 1310
(2d Cir.), cert. denied, 108 S. Ct. 357 (1987). Nevertheless, it
is the settled law in this Circuit that by virtue of 18 U.S.C. § 2(b)
(1982), which provides that one who willfully causes another to
commit a crime, is punishable as a principal, the willful structur-
ing of cash transactions by the employees or customers of a
financial institution in order to avoid the filing of cash transaction
reports constitutes a violation of 31 U.S.C. §5313. United
States v. Heyman, 794 F. 2d 788, 791 (2d Cir.), cert. denied, 107
S. Ct. 585 (1986); United States v. Nersesian, supra, 824 F.2d at
1311. Moreover, an agreement to cause the financial institution to
fail to file such reports may be punished as a conspiracy to
defraud the United States. See United States v. Nersesian,
supra, 824 F.2d at 1310-13. With respect to Fahmy’s claim that
the statute gives inadequate notice that employees are covered,
this Court has said that “the requirement of [18 U.S.C. §]2(b)
that a defendant’s acts be ‘willfull’ provides adequate protection
for individuals who might unwittingly stumble into a violation of
federal law.” United States v. Heyman, supra, 794 F.2d at 792.
Fahmy was also properly convicted of conspiring to cause Paine
Webber to fail to keep accurate records of its daily cash receipts.
Fahmy argues that no violation could have been caused by his
miscoding of cash receipts as check receipts because the applica-
ble statute and regulations do not require brokers to differentiate
between cash and checks. Whether or not the obligation to keep
records as to “all receipts and disbursements of cash and all other
l6a
debits and credits,” 17 C.F.R. § 240.17a-3, mandates differentia-
tion between cash and checks, the false representation of cash
receipts as check receipts violates the Securities Exchange Act.
See Sinclair v. SEC, 444 F.2d 399. 401 (2d Cir. 1971) (“even
assuming no legal obligation to furnish the names [of brokers]
there was an obligation, upon voluntarily supplying that informa-
tion, to be truthful”); United States v. Sloan, 389 F. Supp. 526,
528 (S.D.N.Y. 1975) (“The requirement that certain books and
records be made clearly mandates that those records be made
accurately and correctly”). Additionally, the trial court’s jury
charge in this regard properly stated that falsification of the cash
records was illegal regardless of whether differentiation between
cash and checks was required.
The evidence was sufficient to show an agreement to violate the
reporting statutes listed in the indictment. There was testimony
that Fahmy advised Gary Eder, a co-conspirator, that Fahmy was
aware of Eder’s practice of hiding customer cash deposits in
excess of $10,000, and that Fahmy would endeavor to help Eder.
Fahmy then instructed Paine Webber cashiers to tell Fahmy any-
time one of Eder’s clients wished to deposit cash in excess of
$10,000. On at least one occasion, Fahmy informed Eder that he
had received cash deposits which he believed triggered the report-
ing requirements but that he had withheld some of the money in
order to avoid filing the required currency transaction report.
With respect to the falsification of daily cash receipt records,
Eder fully informed Fahmy of Eder’s practice of listing large cash
receipts as checks. Thereafter, Fahmy regularly instructed
Paine Webber cashiers to miscode the customer receipt records
and engaged with Eder in several concerted attempts to cover up
the miscoding when it came to the attention of Paine Webber
supervisors. This evidence was more than adequate to allow the
jury to infer that a conspiracy had occurred. See United States v.
Young, 745 F.2d 733, 762 (2d Cir. 1984), cert. denied, 470 U.S.
1084 (1985).
2. Obstruction of Justice. The evidence was sufficient to
establish Fahmy’s participation in a conspiracy to violate 15
17a
U.S.C. § 1503. Violation of that section requires “that there was
a pending judicial proceeding, such as a grand jury proceeding,
and that the defendant knew of and sought to influence, impede,
or obstruct the judicial proceeding.” United States v. Capo, 791
F.2d 1054, 1070 (2d Cir. 1986) (citations omitted), overruled in
part on other grounds, 817 F.2d 947 (2d Cir. 1987) (in banc).
The evidence showed that in 1984 a grand jury investigation was
initiated regarding several individuals who had been depositing
large amounts of cash at Paine Webber. Fahmy became aware of
this investigation by virtue of subpoenas that were served on
Paine Webber requesting documents related to these accounts.
Additionally, Fahmy was informed by an officer of Irving Trust
Co. that it too had received a subpoena regarding large cash
transactions at Paine Webber. In October 1985 Fahmy read,
discussed, and circulated to his colleagues a newspaper account of
the guilty plea of one of the individuals who had been depositing
cash at Paine Webber. The article quoted the United States
Attorney as saying that the investigation was continuing. During
this period, Fahmy told Eder that he was concerned that the
investigation was starting to “heat up.” Thereafter, in late 1985
or early 1986, Fahmy and Eder agreed to destroy certain mis-
coded cash receipt reports, and for this purpose they removed a
shopping cart filled with the documents from Paine Webber's
offices. Clearly, a jury could infer from the foregoing evidence
that the co-conspirators agreed to destroy evidence with knowl-
edge that the evidence was pertinent to an ongoing investigation.
Judge Cannella’s jury charge regarding obstruction of justice
properly instructed the jury on the element of intent. See United
States v. Moon, 718 F.2d 1210, 1236 (2d Cir. 1983), cert.
denied, 466 U.S. 971 (1984). The charge indicated that convic-
tion required “the improper motive or purpose of obstructing the
due administration of justice.” Moreover, the jurors were
instructed that the statutory requirement of “corrupt” intent
could be found from “knowledge or notice that [defendant’s]
corrupt actions will obstruct justice which was then actually being
administered.” This language tracks virtually verbatim this
18a
Court’s discussion of 15 U.S.C. § 1503 in United States v. Buf-
falano, 727 F.2d 50, 54 (2d Cir. 1984). Because the instruction,
taken as a whole, clearly informed the jury of the need to find an
intentional obstruction of justice, the failure to use the precise
words “specific intent” in the charge was not error. Cf. United
States v. Gregg, 612 F.2d 43, 50 (2d Cir. 1979).
3. Conduct of Trial. Judge Cannella properly permitted the
Government to reopen its case in order to prove that a grand jury
had actually been impanelled at the time Paine Webber received
the document subpoenas and when Fahmy committed his acts of
obstruction. Under Fed. R. Evid. 611(a), the district court is
vested with discretion to reopen the Government’s case, even after
the defense has rested. United States v. Kanovsky, 618 F.2d 229,
231 (2d Cir. 1980). In the present case, Judge Cannella merely
allowed the Government to reopen its case shortly after the Gov-
ernment had rested and before the defense case had begun. The
additional evidence was relevant Fahmy was not surprised, and
Fahmy had a fair opportunity during the defense’s case to meet
the Government’s additional proof. The Court’s permission to
reopen was within its discretion. See United States v. Kanovsky,
supra, 618 F.2d at 231; United States v. Blankenship, 775 F.2d
735, 741 (6th Cir. 1985).
Judge Cannella’s decision to excuse a sick juror after delibera-
tions had begun and to proceed with an 1l-member jury was
proper. Fed. R. Crim. P. 23(b) expressly permits the court to
excuse a juror “for just cause” and provides that a valid verdict
may be returned by the remaining 11 jurors. Here, Judge Can-
nella acted well within his discretion because it was unclear
whether the ill juror would ever be able to return. The defen-
dant’s proposed five-day adjournment would have risked dulling
the remaining jurors’ recollections of the trial, particulariy since
there had already been a three-day delay between the summa-
tions and the charge. See United States v. Stratton, 779 F.2d
820, 830-35 (2d Cir. 1985), cert. denied, 476 U.S. 1162 (1986).
19a
The judgement of the District Court is affirmed.
N.B. This Summary Order will
not be published in the Federal
Reporter and Should not be
cited or otherwise relied upon in
unrelated cases before this or
any other court.
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ERO EEE EEE EEE HERE EEE HEE EEE EHH EE EEE HEED
POU ee UU UCU U USSU USCS UCSC UCC eee eee eee eee
Circuit Judges.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.