Opposition Brief — Bruno v. United States

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No. 89-618 © / WOSEPH F. SP:

In the Supreme Court of the United States

OCTOBER TERM, 1989

JOHN J. BRUNO and JOHN W. MENDICINO,

PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

KENNETH W. STARR

Solicitor General

EDWARD S.G. DENNIS, JR.

Assistant Attorney General

KAREN SKRIVSETH

Attorney

Department of Justice

Washington, D.C. 20530

(202) 633-2217

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QUESTIONS PRESENTED

1. Whether the Currency and Foreign Transac-

tions Reporting Act, 31 U.S.C. 5311 et seg., and the

regulations promulgated thereunder, prohibit struc-

turing transactions in order to cause a financial in-

stitution to fail to file Currency Transaction Reports.

2. Whether the district court properly admitted

evidence seized during the execution of a search

warrant.

(I)

TABLE OF CONTENTS

Page

Opinions below .......................--..- araiiiiattahsnadaliasaiipscoeasaienacupsints 1

SE 1

co thE 2

la aasencnaatnnensnipesecieniansinnsbbsiinedonccnson 7

SEE 20

TABLE OF AUTHORITIES

Cases:

American Investors of Pittsburgh, Inc. v. United

States, cert. denied, No. 89-491 (Nov. 6, 1989) .. 3

Andresen V. Maryland, 427 U.S. 463 (1976) .......... 16,18

Florez v. United States, 108 S. Ct. 1014 (1988) .. 7

Giancola v. United States, 479 U.S. 1018 (1986)... J

Heyman V. United States, 479 U.S. 989 (1986)...... 7

Illinois v. Krull, 480 U.S. 340 (1987) .....................- 17

Impounded Case (Law Firm), In re, 840 F.2d 196

EE a 15

Lafaurie vy. United States, 108 S. Ct. 2015 (1988).. 7

Massachusetts v. Sheppard, 468 U.S. 981 (1984).. 16,17

Meros Vv. United States, No. 89-39 (Oct. 30, 1989) .. 7

Perlmutter v. United States, 108 S. Ct. 1110

Cee arin dhscarinesindiindeabieabmintiens 7

Search of 4801 Flyer Ave., In re, 879 F.2d 385

AT ee 15

United States v. Anzalone, 766 F.2d 676 (1st Cir.

a 9,12

United States v. Beusch, 596 F.2d 871 (9th Cir.

Me Se 19

United States v. Brien, 671 F.2d 299 (1st Cir.),

cert. denied, 446 U.S. 919 (1980) —....0002000... 15

United States v. Brown, 832 F.2d 991 (7th Cir.

1987), cert. denied, 108 S. Ct. 1084 (1988)........ 15

United States v. Buck, 818 F.2d 588 (2d Cir.),

cert. denied, 108 S. Ct. 167 (1987) ~..........00000.. 18

United States v. Catena, 500 F.2d 1319 (3d Cir.),

cert. denied, 419 U.S. 1047 (1974) ..........0000....... 14

(111)

Cases—Continued : Page

United States v. Cook, 745 F.2d 1311 (10th Cir.

1984), cert. denied, 469 U.S. 1220 (1985) .......... 8

United States v. Christine, 687 F.2d 749 (3d Cir.

a 15, 18, 19

United States v. Denemark, 779 F.2d 1559 (11th

Rs I» secicecdisccaacianicaseetiecsceteciass acetsetiencnpececs 10

United States v. Diaz, 841 F.2d 1 (1st Cir. 1988).. 18

United States v. Giles, 300 U.S. 41 (1987) ............ 13

United States v. Gimbel, 830 F.2d 621 (7th Cir.

IIIT) i xiss<soncepeasniidinaabigendieesamameiahanieeniastueegeonineentine 8

United States v. Gros, 824 F.2d 1487 (6th Cir.

a RN AEE ne in eh Ae AD ne 18

United States v. Hershenow, 680 F.2d 847 (1st

oY RA AR aE on ie aac ge ee RS et a 15

United States v. Heyman, 794 F.2d 788 (2d Cir.),

cert. denied, 479 U.S. 989 (1986) ........2.--.2000..... 8

United States v. Kail, 804 F.2d 441 (8th Cir.

| ap via RRR sen 9h Sa ied ahs 4 TNE Sle 15

United States v. Kepner, 843 F.2d 755 (3d Cir.

eh CSN ts SOLED SN SN te Sl 18

United States v. Lafaurie, 833 F.2d 1468 (11th

Cir. 1987), cert. denied, 108 S. Ct. 2015 (1988) .. 8

United States v. Larson, 796 F.2d 244 (8th Cir.

ee cana iadiaiainde imeeiatsinitasbiacses 8

United States v. Leon, 468 U.S. 896 (1984)........ 16, 17, 18

United States v. Lester, 363 F.2d 68 (6th Cir.

1966), cert. denied, 385 U.S. 1002 (1967) .......... 13, 14

United States v. Levine, 457 F.2d 1186 (10th Cir.

Sees Ri PSOE elas PESO Denar tar ARMIN Pama MN 14

United States v. Luk, 859 F.2d 667 (9th Cir.

DES Ras sl A ree Re ee et eh oa A 18

United States v. Medlin, 842 F.2d 1194 ( 10th Cir.

pet PRM A RES ott Re tn tpi he > aN 19

United States v. Michaelian, 803 F.2d 1042 (9th

Ry __> eaerarniea Arr Oe ue CADRE PU 18

United States v. Puerto, 730 F.2d 627 (11th Cir. F

cert. denied, 469 U.S. 487 (1984) .......... 12 AiR 8

United States v. Reinis, 794 F.2d 506 (9th Cir.

A RRR Ri RRA SS ade A re lc oct eS cee Ee 8-9

Cases—Continued : Page

United States v. Richeson, 825 F.2d 17 (4th Cir.

DOI chasse detinnthazessiccicalcisinipeiasaianeaailiantias 8

United States v. Ruffin, 613 F.2d 408 (3d Cir.

DOTY icvciecinccisesiaiis iasesilinttanleieetinciteainleeniaateianament 14

United States v. Sans, 731 F.2d 1521 (11th Cir.

1984), cert. denied, 469 U.S. 1111 (1985) ~........ 13

United States v. Tamura, 694 F.2d 591 (9th Cir.

TID — is ctinsiciscstcsecssinnsccecsiciienitihschianrenmaiabatemmpectniibiptiainaies 18

United States v. Thompson, 603 F.2d 1200 (5th

Ce I ckeletiniecdsecctecinacieenmiainns 8

United States v. Tobon-Builes, 706 F.2d 1092

CRT CE: TD viscctttscerntcinatnanscictncpecntiiaceeniingies 8,12

United States v. Varbel, 780 F.2d 758 (9th Cir.

Dee vation NT ee ni Ae Bre ia Pa 9,12

United States v. Weinstein, 762 F.2d 1522 (11th

Cir. 1985), cert. denied, 475 U.S. 1110 (1986) .... 18

United States v. Wuagneux, 683 F.2d 1343 (1ith

Cir. 1982), cert. denied, 464 U.S. 814 (1983) ...... 18

Zytnick v. United States, cert. denied, No. 89-520

tS _, IGURORCAE NP emo emeneD Aes moet eee RCSSY Aye 3

Statutes, rule and regulation:

Anti-Drug Abuse Act of 1986, Pub. L. No. 99-570,

DO IE Setcvedictesserceikicecdnesecincamaalealiaaen 7-8

Morey Laundering Control Act of 1986, Pub.

L. No. 99-570, Subtit. H, § 1851, 100 Stat.

DET asecuiaietsctntbscscihiatirsaienmibtilaaenisaaaaiesnntiogs 7

§ 1354(a), 100 Stat. 3207-22 (31 U.S.C.

SNIUIED vcnsivsctshdinidutiscampinianntaieetlsiaeisinitadnaigaaietii 9

Currency and Foreign Transaction Reporting Act,

31 U.S.C. 53811 et seq.:

ee ee hos sieeictinsenscincmiand ipiotstasaaee neal 2, 3, 7, 8,9

ee ED tarseitecercenccinnciocnintiniicssassaiatobeninans 3

Be ees I NE sss eevsevitinestnninssssasanacadoesinniaade 2

BP Rite HIND Misc csivencevicnsetevevcntneceralstedacieennigaabetiend 9

16 Pe cits inten apenricinentbenennetconiceaaae 13

A IND setiiccbinnitacvinscpncninrsecceeetcasiendamintiamabanad 8, 13, 14

Be EE ecteepbepnietinxinhvintinkicsehpsseranennieieiannanaae 2, 13, 14

ee fm CRE. | Penenminne Onn e 3

OR, Tie CR hs GE GOP sccscerecmtncnneenniatinnnsantianionnns 5

Miscellaneous:

H.R. Rep. No. 746, 99th Cong., 2d Sess. (1986)....

S. 2683, 99th Cong., 2d Sess.

CRE witihliiesisavinivncin

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

Treasury Form 4789 (1980)

Page

11,12

3-4

Iu the Supreme Court of the United States

OCTOBER TERM, 1989

No. 89-618

JOHN J. BRUNO and JOHN W. MENDICINO,

PETITIONERS

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1-

59) is reported at 879 F.2d 1087. The memorandum

opinion and order of the district court (Pet. App.

60-70) is unreported.

JURISDICTION

The judgment of the court of appeals (Pet. App.

71-73) was entered on June 29, 1989. Petitions for

rehearing were denied on August 10, 1989 (Pet. App.

74-75). The petition for a writ of certiorari was filed

(1)

on October 10, 1989 (a Tuesday following a Monday

holiday). The jurisdiction of this Court is invoked

under 28 U.S.C. 1254(1).

STATEMENT

Following a jury trial in the United States District

Court for the Western District of Pennsylvania, peti-

tioners were each convicted on one count of conspir-

ing to defraud the United States and to make mate-

rial false statements in a government matter, in vio-

lation of 18 U.S.C. 371 (Count 1); on 46 counts of

failing to file and causing American Investors of

Pittsburgh, Inc. (AIP) to fail to file Currency

Transaction Reports (CTRs), in violation of 31

U.S.C. 5813 and 5322(b) (Counts 2-47); and on 47

counts of causing the Pittsburgh National Bank

(PNB) to fail to file CTRs, in violation of 31 U.S.C.

5313 and 5322(b) (Counts 48-94). Petitioner Men-

dicino was sentenced to a two-year term of imprison-

ment on the conspiracy count and to a $10,000 fine on

Count 2. Petitioner Bruno was sentenced to a two-

year term of imprisonment on the conspiracy count

and to a $25,000 fine on Count 2. Both were sentenced

to concurrent three-month terms of imprisonment. on

the 92 remaining counts, to be served concurrently

with the sentence imposed on the conspiracy count.

See Pet. 5-6.

l.a. At the time of the offenses, co-defendant

American Investors of Pittsburgh, Inc. (AIP) was

a broker and dealer of securities, registered with the

Securities and Exchange Commission. Petitioner

Bruno was AIP’s President, while petitioner Mendi-

cino was the company’s Executive Vice President. *

1Co-defendants Charles Krzywicki, AIP’s Secretary-

Treasurer, and Alan Zytnick, an AIP customer, were also

The evidence at trial showed that between 1979

and 1983 petitioners and their co-defendants engaged

in a conspiracy to fail to file and to cause a financial

institution to fail to file CTRs for numerous currency

transactions in excess of $10,000.? During this period,

convicted. Along with AIP, both Krzywicki and Zytnick filed

petitions for a writ of certiorari. This Court denied certiorari

in those cases. See American Investors of Pittsburgh, Inc.

v. United States, cert. denied, No. 89-491 (Nov. 6, 1989);

Zytnick v. United States, cert. denied, No. 89-520 (Nov. 6,

1989). :

2 Under federal law, a financial institution is required to

file a CTR whenever a customer engages in a currency trans-

action in excess of $10,000. 31 U.S.C. 5313; 31 C.F-.R.

103.22(a) (1982).

Section 5313(a) of Title 31, U.S.C., provides in relevant

part:

When a domestic financial institution is involved in a

transaction for payment, receipt, or transfer of United

States coins or currency * * * in an amount, denomina-

tion, or amount and denomination, or under circum-

stances the Secretary prescribes by regulation, the in-

stitution and any other participant in the transaction the

Secretary may prescribe shall file a report on the trans-

action at the time and in the way the Secretary pre-

scribes.

Section 103.22(a) of Title 31 of the Code of Federal Regu-

lations provides:

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. Such reports shall be made on forms pre-

scribed by the Secretary and all information called for

in the forms shall be furnished.

Each Currency Transaction Report form contained the

following provision (Treasury Form 4789 (1980)):

* * * Multiple transactions by or for any person which

in any one day total more than $10,000 should be treated

AIP repeatedly received more than $10,000 in cur-

rency at a time from its customers, including co-

defendant Zytnick, but it never filed a CTR. AIP

devised various recordkeeping devices to disguise

those cash receipts, such as using dead or inactive

accounts. Petitioners assisted that operation by al-

tering AIP’s records and customers’ monthly state-

ments, so that cash transactions of more than $10,000

were inaccurately portrayed as a series of transac-

tions in amounts of less than $10,000 a day. Pet.

App. 9-10, 55-59.

AIP maintained two accounts at a branch of the

Pittsburgh National Bank (PNB) in which the com-

pany deposited its cash receipts. After it learned

in September 1980 that the bank would have to file

CTRs on currency transactions of more than $10,000

AIP began structuring its deposits so that no single

deposit exceeded $10,000. The company accomplished

that by making multiple deposits of less than $10,000

—but aggregating to more than $10,000 on a single

day—into one or both of its accounts. Pet. App. 10-

11, 49-55.

In September 1982, a new PNB branch manager

advised AIP that the bank would have to file CTRs

when AIP’s cash transactions at the bank in a single

day aggregated to more than $10,000. When Men-

dicino asked the bank manager how filing could be

avoided, the manager told him tha. AIP should have

been filing CTRs itself. On at least one occasion

thereafter, AIP conducted business at two branches

of the bank, rather than transacting its business at

a single branch, as it had before. Pet. App. 11-12.

as a single transaction, if the financial institution is

aware of them.

b. On May 13, 1983, a United States magistrate

issued a search warrant for AIP’s offices. Pet. App.

12. The warrant identified 19 categories of records

to be searched for and seized, together with a final

category authorizing the search and seizure of

“{o]ther documents and items which are fruits, in-

strumentalities, and/or evidence of violations of

Title 31, United States Code, Sections 5313 and Title

18, United States Code, Section 2 and 371.” Pet.

App. 77-78.

In support of the warrant, Special Agent C. Robert

Tate of the Internal Revenue Service, Criminal In-

vestigative Division, filed an extensive affidavit. Pet.

App. 79-103. In the affidavit, Agent Tate stated that

he had received information from a confidential

source that AIP was laundering substantial amounts

of money obtained from narcotics trafficking without

filing CTRs; that he had confirmed from IRS records

that AIP was not filing CTRs; and that records of

AIP’s accounts at PNB showed that in 1981 and

1982 AIP had deposited a total of approximately $2.4

million in currency in individual amounts of $10,000

or less, even though the amounts deposited per visit

exceeded $10,000 on approximately 79 occasions. /d.

at 82-83. The affidavit also stated that AIP’s cur-

rency activities were continuing. Jd. at 90-93.

Pursuant to the warrant, 37 government agents

conducted a ten-hour search of AIP’s offices. During

the search, an AIP employee informed the agents

that AIP stored documents in a separate area. After

obtaining consent from petitioners and from Krzy-

wicki, the agents searched that area as well. Pet.

App. 40.

Before the indictment was returned, petitioners

filed a motion pursuant to Fed. R. Crim. P. 41(e) for

return of the seized property. Following an evi-

dentiary hearing, the district court granted the mo-

tion in part and denied it in part. Pet. App. 60-70.

The court found that Agent Tate’s affidavit estab-

lished probable cause to believe that currency trans-

action violations had occurred. It concluded, how-

ever, that 13 of the categories of items to be searched

exceeded the scope of the probable cause established

by the affidavit. Jd. at 62-64. Nevertheless, the court

found that the agents had relied on the warrant in

good faith, and it accordingly held that the seized

evidence need not be returned or suppressed on over-

breadth grounds. Id. at 64. The district court also

held that the warrant was sufficiently particular, not-

withstanding the general category contained at the

end of the warrant. Jd. at 65. Finally, the district

court found that, although the execution of the search

exceeded the scope of the warrant to the extent of

some 46,000 documents, this was not the result of “a

flagrant disregard for the terms of the warrant[],”

but rather was the product of “misjudgment, care-

lessness and haste.” Pet. App. 67-68. Accordingly,

the court ordered that only the identified 46,000 docu-

ments be returned to petitioners and suppressed for

purposes of trial. Jd. at 68.

2. The court of appeals affirmed. Pet. App. 1-59.

The court held that although petitioners, as bank cus-

tomers, could not be held liable for substantive viola-

tions of the Currency and Foreign Transactions Re-

porting Act, they were properly convicted, pursuant

to 18 U.S.C. 2(b), for causing PNB to fail to file

CTRs. Pet. App. 14-31. The court also held that

the district court did not err in admitting the evi-

dence seized from AIP’s offices. Jd. at 39-48. It

stated that “[t]he affidavit clearly supported the fact

that a broad range of documents would be entailed

in sorting out the details of this sophisticated

scheme,” and the court concluded that “[g]iven the

complex nature of a money-laundering enterprise,” it

could not say “that the categories overdescribed the

extent of the evidence sought to be seized.” /d. at 44.

The court also held that the warrant was sufficiently

particular (id. at 45-46), that the agents had acted

in good faith (id. at 46-47), and that there had been

no deliberate disregard of the warrant’s restrictions

(id. at 47-48).

ARGUMENT

1. Petitioners contend (Pet. 10-21) that this

Court should review the government’s theory that it

is illegal to structure currency transactions so as to

avoid the currency reporting requirements. The same

claim has been before the Court in several recent

cases, and in each case the Court has denied certio-

rari. See Meros vy. United States, No. 89-39 (Oct. 30,

1989); Lafaurie v. United States, 108 S. Ct. 2015

(1988); Perlmutter v. United States, 108 S. Ct. 1110

(1988); Florez v. United States, 108 S. Ct. 1014

(1988); Giancola v. United States, 479 U.S. 1018

(1986); Heyman v. United States, 479 U.S. 989

(1986). In our briefs in opposition in those cases,

we noted that there has been some division among

the circuits on this and related issues arising from

prosecutions under Section 5313.* Congress, however,

has recently enacted the Money Laundering. Control

Act of 1986, Pub. L. No. 99-570, 100 Stat. 3207-18,

which is included as Subtitle H of the Anti-Drug

* We have furnished counsel with a copy of our brief in

opposition in the Meros case, in which we restated the argu-

ments that we had previously made in the LaFaurie, Perl-

mutter, Florez, Giancola, and Heyman cases.

Abuse Act of 1986, Pub. L. No. 99-570, § 1351, 100

Stat. 3207. The Money Laundering Control Act was

expressly designed to overrule the cases that conflict

with the result reached by the court of appeals here.

The new law deprives the statutory issue presented

in the petition of any continuing significance. Ac-

cordingly, petitioners’ claim does not warrant fur-

ther review by this Court.

a. Under Section 5313 and its accompanying reg-

ulations, only financial institutions have a duty to

file CTRs in connection with cash transactions. Sev-

eral courts of appeals have nevertheless recognized

that under 18 U.S.C. 2(b) a defendant may still be

held criminally liable for causing a financial] institu-

tion to violate its statutory duties. United States v.

Lafaurie, 833 F.2d 1468, 1470-1471 (11th Cir.

1987), cert. denied, 108 S. Ct. 2015 (1988); United

States v. Richeson, 825 F.2d 17 (4th Cir. 1987);

United States v. Heyman, 794 F.2d 788 (2d Cir.),

cert. denied, 479 U.S. 989 (1986); United States v.

Cook, 745 F.2d 1311 (10th Cir. 1984), cert. denied,

469 U.S. 1220 (1985); United States vy. Puerto, 730

F.2d 627 (11th Cir.), cert. denied, 469 U.S. 847

(1984); United States v. Tobon-Builes, 706 F.2d

1092 (11th Cir. 1983). See also United Stotes vy.

Thompson, 603 F.2d 1200 (5th Cir. 1979). Other

courts have taken a contrary view, holding that be-

cause 31 U.S.C. 5313 and the applicable regulations

do not impose on third parties a duty to file CTRs,

Section 2(b) cannot be read to impose criminal li-

ability on third parties who, by structuring their

transactions, cause a financial institution to fail to

file a CTR. See, e.¢., United States vy. Gimbel, 830

F.2d 621, 624-625 (7th Cir. 1987); United States vy.

Larson, 796 F.2d 244 (8th Cir. 1986); United States

v. Reinis, 794 F.2d 506, 508 (9th Cir. 1986); United

States v. Varbel, 780 F.2d 758 (9th Cir. 1986);

United States v. Anzalone, 766 F.2d 676 (1st Cir.

1985).

Whatever the merit of the latter decisions in con-

struing Section 5313, Congress has totally revised the

law in this area by enacting the Money Laundering

Control Act of 1986. The explicit purpose of the new

Act was to overrule the decisions in Anzalone and

Varbel and to codify the decision in Tobon-Builes,

on which the court relied in the present case. Section

1354(a) of the Act, entitled “Structuring Transac-

tions to Evade Reporting Requirements Prohibited,”

creates a new section of Title 31 (Section 5324),

which provides as follows:

No person shall for the purpose of evading the

reporting requirements of Section 5313(a) with

respect to such transaction—

(1) cause or attempt to cause a domestic

financial institution to fail to file a report

required under section 5313(a) ;

(2) cause or attempt to cause a domestic

financial institution to file a report required

under section 5313(a) that contains a ma-

terial omission or misstatement of fact; or

(3) structure or assist in structuring, or

attempt to structure or assist in structur-

ing, any transaction with one or more

domestic financial institutions.

By its terms, the statute imposes criminal liability

for causing a financial institution to fail to file a

CTR, as well as for structuring deposits, as petition-

ers did here, for the purpose of evading the reporting

requirements of Section 5313. In formalizing these

statutory obligations, Congress made clear that its

purpose was to overrule the First and Ninth Circuit

decisions in United States v. Anzalone, supra, and

United States v. Varbel, supra, and the Eleventh Cir-

cuit decision in United States v. Denemark, 779 F.2d

1559 (1986). The Senate Committee on the Judi-

ciary, reporting favorably on an identical provision

in S. 2683, 99th Cong., 2d Sess. (1986), an earlier

version of the money laundering bill, stated (S. Rep.

No. 433, 99th Cong., 2d Sess. 21-22 (1986) ):

Under present law, money launderers are suc-

cessfully prosecuted in some judicial circuits for

causing financial institutions not to file reports

on multiple currency transactions totaling more

than $10,000 or causing financial institutions to

file incorrect reports. In such cases, the actual

money launderers are charged with violations of

18 U.S.C. 2 (aiding and abetting or causing an-

other to commit an offense) and section 1001

(concealing from the Government a material fact

by a trick, scheme, or device). For example, in

United States v. Tobon-Builes, 706 F.2d 1092

(11th Cir. 1983), the Eleventh Circuit Court of

Appeals upheld a conviction under 18 U.S.C.

1001 where the defendants had engaged in a

money laundering scheme in which they had

structured a series of currency transactions, each

one less than $10,000 but totalling more than

$10,000, to evade the reporting requirements.

* * * In contrast, the First Circuit Court of Ap-

peals, in United States v. Anzalone, 766 F.2d

676 (1st Cir. 1985), the Eleventh Circuit Court

of Appeals in United States v. Denemark, 779

F.2d 1559 (11th Cir. 1986), and the Ninth Cir-

cuit Court of Appeals in United States v. Varbel,

780 F.2d 758 (9th Cir. 1986) have held that

structuring currency transactions to avoid the

reporting requirements did not violate 18 U.S.C.

section 1001.

Subsection (h) would codify Tobon-Builes and

like cases and would negate the effect of

Anzalone, Varbel and Denemurk. It would ex-

pressly subject to potential liability a person who

causes or attempts to cause a financial institu-

tion to fail to file a required report or who causes

a financial institution to file a required report

that contains material omissions or misstate-

ments of fact. In addition, the proposed amend-

ment would create the offense of structuring a

transaction to evade the reporting requirements,

without regard to whether an individual trans-

action is, itself, reportable under the Bank

Secrecy Act.

The House intended precisely the same results

when it formulated a virtually identical version of

the money laundering provisions. The Committee on

Banking, Finance and Urban Affairs stated (H.R.

Rep. No. 746, 99th Cong., 2d Sess. 18-19 (1986) ):

In some judicial circuits, money launderers have

been successfully prosecuted for causing finan-

cial institutions not to file reports on such mul-

tiple currency transactions. In such cases, de-

fendants are charged with violations of 18 U.S.C.

2 (aiding and abetting or causing another to

commit an offense) and Section 1001 (concealing

from the government a material fact by a trick,

scheme, or device ).'*!

In contrast, other cases have held that the Act

and its regulations impose no duty on the cus-

* For this proposition, the House Report cited the Eleventh

Circuit’s decision in Tobon-Builes (H.R. Rep. No. 746, supra,

at 18n.1).

tomer to inform the financial institution of the

structured nature of the transactions, that the

reporting duties are placed solely upon the finan-

cial institution, and therefore, only a financial

institution can directly violate the reporting re-

quirements.'*! c

The Committee believes that Section 2 of H.R.

5176 would resolve the legal issues raised by the

various circuit courts by expressly subjecting to

potential liability a person who causes or at-

tempts to cause a financial institution to fail to

file a required report or who causes a financial

institution to file a required report that contains

material omissions or misstatements of fact. In

addition, it would create the offense of structur-

ing a transaction to evade the reporting require-

ments, without regard for whether an individual

transaction is, itself, reportable under the Bank

Secrecy Act.

In light of this new legislation, there is no reason

to expect that the previous conflict among the circuits

will persist. Accordingly, review by this Court is

unwarranted.

b. In any event, the court of appeals’ decision is

correct under the law as it existed prior to the en-

actment of the Money Laundering Control Act of

1986.

The court below adopted the rationale of the Elev-

enth Circuit in Tobon-Builes (Pet. App. 18). In

Tobon-Builes, the court held that although the duty

to file CTRs is imposed only on financial institutions,

a third party who causes the institution to violate its

duties by structuring transactions may be convicted

5 For this proposition, the House Report cited, inter alia,

Anzalone and Varbel (H.R. Rep. No. 746, supra, at 19 n.2).

under 18 U.S.C. 2(b).° That holding comports with

the broad language of Section 2(b), which extends

liability to anyone who “causes an act to be done

which if directly performed by him or another would

be an offense against the United States.” As the

reviser’s note to 18 U.S.C. 2 states, the aiding and

abetting statute

removes all doubt that one who puts in motion

or assists in the illegal enterprise or causes the

commission of an indispensable element of the

offense by an innocent agent or instrumentality,

is guilty as a principal even though he inten-

tionally refrained from the direct act constitut-

ing the completed offense.’

® Correspondingly, third parties who, like petitioners, con-

spire to cause a bank to violate its reporting obligations may

be convicted under 18 U.S.C. 371. See United States v. Sans,

731 F.2d 1521, 1530-1532 (11th Cir. 1984), cert. denied, 469

U.S. 1111 (1985) ; United States v. Lester, 363 F.2d 68, 73-74

(6th Cir. 1966), cert. denied, 385 U.S. 1002 (1967).

7 The reviser’s note also indicates that Section 2 was in-

tended to embrace this Court’s decision in United States v.

Giles, 300 U.S. 41, 43 (1937). There, the Court upheld the

conviction of a bank teller under a statute that prohibited

bank employees from “mak[ing] any false entry in any book

* * * of [a] Federal reserve bank or member bank.” The de-

fendant was convicted of having caused a bookkeeper for the

bank to make false deposit entries in the bank’s ledger, by

wrongfully withholding from circulation certain deposit slips

prepared for particular bank customers. Although the de-

fendant had not himself made the false entries, and although

the “innocent bookkeeper was the teller’s * * * unconscious

agent,” the Court held that “the statute [was] broad enough

to include deliberate action from which a false entry by an

innocent intermediary necessarily follows” (300 U.S. at 48-

49). So, too, for Section 2(b): it applies even where the

defendant, by his actions, causes an innocent intermediary

Those principles apply here as well. Although the

use of structured deposits may prevent various banks

from learning of their duty to file CTRs, a bank cus-

tomer’s success in that endeavor cannot shield him

from liability under Section 2(b). Similarly, by

agreeing to cause such structured deposits, petition-

ers were lawfully convicted of conspiracy, in viola-

tion of 18 U.S.C. 371.°

2. Petitioners renew their claims that all the rec-

ords seized from AIP’s offices should have been sup-

pressed because the warrant was overbroad and be-

cause the agents conducted an unconstitutional gen-

eral search in flagrant disregard of the warrant. Pet.

22-26. The court of appeals’ ruling to the contrary

presents no issue of general importance and thus does

not warrant review by this Court.

a. The warrant in this case was not unconstitu-

tionally overbroad. It is well settled that where the

unwittingly to violate the law. Accord United States v.

Ruffin, 613 F.2d 408, 412-413 (3d Cir. 1979) ; United States

v. Catena, 500 F.2d 1319, 1322-1323 (2d Cir.), cert. denied,

419 U.S. 1047 (1974) ; United States v. Levine, 457 F.2d 1186,

1188-1189 (10th Cir. 1972); United States v. Lester, supra.

® Because petitioners were lawfully convicted for causing

PNB to fail to file CTRs, their challenge (Pet. 20-21) to the

jury instructions on the conspiracy count is meritless. In any

event, petitioners were convicted on substantive counts cor-

responding to overt acts falling within both objects charged

in the conspiracy count; it follows that the jury necessarily

convicted petitioners on both of the charged objects. Finally,

petitioners’ claim (Pet. 21) that the allegedly erroneous con-

victions on the conspiracy count could have spilled over to

the otherwise unchallenged AIP counts (counts 2-47) is friv-

olous. Counts 2-47 related solely to AIP’s own failure to file

CTRs; those counts had nothing to do with causing PNB to

fail to file CTRs.

underlying affidavit establishes sufficiently broad

probable cause, the warrant may authorize a com-

parably broad search and seizure. See United States

v. Hershenow, 680 F.2d 847, 851 (1st Cir. 1982)

(“[t]he particularity and probable cause require-

ments of the Fourth Amendment are * * * closely

related”); see also In re Impounded Case (Law

Firm), 840 F.2d 196, 200 (3d Cir. 1988); United

States v. Christine, 687 F.2d 749, 758 (3d Cir. 1982).

Courts have accordingly approved property descrip-

tions in search warrants that were as broad in scope

as the probable cause demonstration in the support-

ing affidavit. In addition, since the scope of some

forms of criminal activity, such as broad money

laundering schemes, can be detected only by piecing

together myriad financial documents, and since offi-

cers often do not know in advance what documents

they may find, the courts have applied the particular-

ity requirement with sufficient flexibility to allow the

seizure of generically described documents.’

As the court below found, Pet. App. 44, the war-

rant affidavit “clearly supported the fact that a broad

range of documents would be entailed in sorting out

the details of this sophisticated scheme.” Agent

Tate’s affidavit (id. at 79-103) detailed a pervasive

money laundering scheme, and it showed that the

® See, e.g., In re Search of 4801 Fyler Ave., 879 F.2d 385

(8th Cir. 1989) (any “correspondence, records, files, work

orders, logs, or other documents” relating to hazardous

wastes); United States v. Brown, 832 F.2d 991 (7th Cir.

1987) (generically described business records relating to

fraudulent insurance claims), cert. denied, 108 S. Ct. 1084

(1988) ; United States v. Kail, 804 F.2d 441 (8th Cir. 1986)

(warrant for almost all the defendant’s business records) ;

United States v. Brien, 617 F.2d 299, 306 (1st Cir.) (same),

cert. denied, 446 U.S. 919 (1980).

scheme would be reflected in a wide array of records.

In light of that showing, the court of appeals was

plainly correct in concluding (id. at 45) that “[iJt

is not unreasonable that a large bulk of American

Investors’ business dealings may have been influenced

by the scheme.” As the court put it, “[gjiven the

complex nature of a money-laundering enterprise,”

it cannot be said that the search warrant “over-

described the extent of the evidence sought to be

seized” (id. at 44).

Nor, as petitioners contend (Pet. 23), does the

final, general reference in the warrant to the CTR

and conspiracy statutes render the warrant over-

broad. That general provision follows a list of 19

specific categories of documents to be seized. As this

Court has noted, a general reference in a search war-

rant_must be construed in light of prior specific cate-

gories. See Andresen v. Maryland, 427 U.S. 463,

479-482 (1976). Under that standard, the search

warrant in this case was sufficiently particular.”

b. Even if the warrant in this case was over-

broad, the agents acted in good faith in obtaining it,

and the evidence seized was therefore properly held

admissible under this Court’s decisions in United

States v. Leon, 468 U.S. 896 (1984), and Massachu-

setts v. Sheppard, 468 U.S. 981 (1984). In Leon,

this Court held that the exclusionary rule “cannot be

expected and should not apply, to deter objectively

reasonable law enforcement activity.” 468 U.S. at

919. The court reasoned that, if an officer has ob-

10 Because the warrant in this case did not authorize a

search simply “with reference to a broad federal statute”

(Pet. 23)—but instead delineated 19 precise categories of

records—petitioners’ reliance on the decisions cited at page

23 of the petition is misplaced.

tained a warrant, the deterrent value of the exclu-

sionary rule is vitiated by the fact that the officer

cannot be expected to question the magistrate’s

probable-cause determination or his judgment that

the form of the search warrant is technically suffi-

cient. Jd. at 921.

The good faith exception may apply even if a search

warrant is overbroad or fails to describe-the things

to be seized with sufficient particularity. The Court’s

decision in Massachusetts v. Sheppard, supra, makes

that clear. In Sheppard, the trial judge suppressed

evidence seized during the execution of a search war-

rant that incorrectly identified the items to be seized

as evidence of a narcotics transaction, rather than a

murder. Relying on Leon, this Court reversed, em-

phasizing that the officers had demonstrated their

good faith by submitting an affidavit to a judge and

thereafter relying on the judge’s determination that

the warrant he issued was sufficiently particularized.

468 U.S. at 989-991. See also Illinois v. Krull, 480

U.S. 340 (1987) (applying Leon to a state law, later

held invalid, that authorized a warrantless search,

even though the statute could have been more nar-

rowly drawn).

The same considerations that prompted this Court

to apply the good faith exception in Leon, Sheppard,

and Krull are also present here. The court of appeals

determined, correctly in our view, that the warrant

was not overbroad; the district court, although find-

ing the warrant overbroad in some respects, nonethe-

less found that the case was close and the question

difficult (see Pet. App. 64). The requirement that

a warrant contain a particularized description of the

property to be searched includes “a practical margin

of flexibility” depending on the facts in each case.

ee ee a

United States v. Wuagneux, 683 F.2d 1343, 1349

(11th Cir. 1982) (collecting cases), cert. denied, 464

U.S. 814 (1983). That is especially true in cases

“involving complex financial transactions.” [bid.”

In short, the warrant, if deficient at all, was not so

“facially deficient” that the executing officers could

not have reasonably presumed that it was valid. See

United States v. Luk, 859 F.2d 667, 677-678 (9th

Cir, 1988); United States v. Kepner, 843 F.2d 755,

763-764 (3d Cir. 1988); United States v. Diaz, 841

F.2d 1, 6 (1st Cir. 1988); United States v. Gros, 824

F.2d 1487 (6th Cir. 1987); United States v. Buck,

813 F.2d 588, 592-593 (2d Cir.), cert. denied, 108

S. Ct. 167 (1987); United States v. Michaelian, 803

F.2d 1042, 1046-1047 (9th Cir. 1986); United States

v. Weinstein, 762 F.2d 1522, 1531 (11th Cir. 1985),

cert. denied, 475 U.S. 1110 (1986).

Contrary to petitioners’ contention (Pet. 26), the

fact that the officers may have seized some records

that were beyond the scope of the warrant does not

make the good faith exception in Leon unavailable.

Instead, the question whether all the evidence must

be suppressed depends upon whether the officers acted

in flagrant disregard of the warrant. See United

States v. Tamura, 694 F.2d 591, 597 (9th Cir. 1982) ;

United States v. Christine, supra. Affirming the find-

ings of the trial court (Pet. App. 67-68), the court

of appeals correctly held (id. at 48) that there was

no such flagrant disregard in this case. To execute

11 As this Court has recognized with respect to the particu-

larity requirement, “the complexity of an illegal scheme may

not be used as a shield to avoid detection when the State has

demenstrated probable cause to believe that * * * evidence

of [a] crime is in the suspect’s possession.” Andresen V.

Maryland, 427 U.S. at 480-481 n.10.

the warrant in this case, the agents were required

to search all of AIP’s records in order to identify the

items to be seized. In making the actual seizure,

moreover, the agents could reasonably select not only

the specific records identified in the warrant, but also

ledgers and file folders that contained the specified

records—even if not all of the information in the

ledgers or folders was covered by the warrant.

United States v. Christine, 687 F.2d at 760; see also

United States v. Beusch, 596 F.2d 871 (9th Cir.

1979). And the agents exercised considerable re-

straint in undertaking the authorized seizure—em-

ploying 37 agents, over a 10-hour period, and obtain-

ing consent to search a storage area not expressly

covered by the warrant.’* The courts below were

therefore plainly correct in refusing to order the

suppression of all of the seized evidence on the

ground that the agents may have seized certain rec-

ords not within the ambit of the warrant.”

‘4 By contrast, it required petitioners’ expert some 400

hours of examining the seized records to conclude that 46,000

documents were not properly seized under the warrant. Gov't

C.A. Br. 61.

‘8 By contrast, the search in United States v. Medlin, 842

F.2d 1194, 1197 (10th Cir. 1988),‘on which petitioners rely

(Pet. 24, 26), far exceeded the scope of the warrant, and thus

the court in that case held that the scope of the search under-

mined the particularity of the warrant.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.