Petition for Writ of Certiorari — Robinson v. United States

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98 %GBB NV | 24908

No.

OPFICE OF THE CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1998

MARK STAFFORD ROBINSON,

Petitioner;

UNITED STATES OF AMERICA,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

EUGENE G. IREDALE

Attorney for Petitioner

105 West"F" Street, 4th Floor

San Diego, CA. 92101

Telephone: (619) 233-1525

i

QUESTION PRESENTED FOR REVIEW

Whether "intent to defraud" the United States under 18

U.S.C. 545 requires proof of an intent to cause the government a

loss of money or property, or requires proof only of the knowing

submission of a false document.

loo

Ul

TABLE OF CONTENTS

Page

Question Presented for inn ETT ge re Rea, i

Fable of Contents ......., <2. Se il

Table of Cited PME 66 TR iv

sntrodnctiom: «oo. és. ..d:a qe, see eee ]

Opinion in the Court Below ............. 2

Statement of eens METER ERT TO eno 3

Statutes Involved ....... ..J...5 ee 3

Statement of the Case... ....1 50. ann 4

Reasons for Granting the Writ........0000 7

I. There Exists A Conflict Of Circuit Court

Authority. .....ssadaaa ee 7

II. The Decision In This Case Conflicts With The

Cohn Decision Of This Court On The Important

Issue Of The Construction In Federal Statutes Of

The Phrase “Intent To NE 3 a ea 13

III. The History And Enactment Of The Statute, Rules

Of Statutory Construction And The Existence Of

An Overall Statutory Scheme Support The

Granting Of The Petition ............0 15

D.

Conclusion ..

ill

Contents

The Statute And Its Predecessors........

The Manner In Which The Current Statute

I ro ce

Important Rules Of Statutory Construction

Require That “Intent To Defraud” Be Given

Its Separate And Independent Meaning In

Construing The Statute. ...............

1. Every Clause Should Be Given Meaning.

2. The Rule OfLenity ...............

Other Statutes Protect U.S. Customs From

False Information And Are Specifically

Designed To Do So. ..................

Section 545 Is Part Of A Statutory Scheme

With Increasing Penalties Depending Upon

The Intent Of The Violator.............

19

iv

TABLE OF CITED AUTHORITIES

Page

Cases:

Bailey v. United States, 516 U.S. 137 t;>) ae 20

Bates v. United States, 118 S. Ct. 285 bo) 23

Block v. Community Nutrition Institute, 467 U.S. 340

Lo A ree Sealy ae in ose en 23

Brogan v. United States, 118 S. Ct. 805 i.) eee 22

D. Ginsberg & Sons, Inc. v. Popkin, 285 U.S. 204 (1932)

SAL Le LEE Ee ree eee en Beary 19

Hammerschmidt v. United States, 265 U.S. 182 (1924)

ihe ess OU ENS Cas Begasee Seas Lane fate i, 2, 9, §3

Maislin Industries v. Primary Steel, 497 U.S. 116 (1990)

ee ee eee eee ee ey eee ee nr 23

McNally v. United States, 483 U.S. 350 SOME sa eck. 1, 2, 20

Rewis v. United States, 401 U.S. 808 (4 | epee ergs 20

Russello v. United States, 464 U.S. 16 4) | eee 23

United States v. Borello, 766 F.2d 46 (2nd Cir. 1985)

cee 660 Re CEE RES REET Oe wae 4, 8, 13

———

y

Cited Authorities

Page

United States v. Fausto, 484 U.S. 439 (1998) ....... 23

United States v. Kurfess, 426 F.2d 1017 (7 Cir.1970)

1 hee Dh eee Cee Ee eer tae ; ie Pe e

United States v. Kushner, 135 F.2d 668 (2nd Cir. 1943)

TE TET ETE ECR re ry te ety ap 19

United States v. Menon, 24 F.3d 550 (3 Cir. 1994)

(ee he SCRE AES Caubads Cee 2, 1,8, 13, 15, 24

United States v. Rose, 570 F.2d 1358 (9* Cir. 1978) .. 22

Welsh v. United States, 398 U.S. 333 4, | ere 23

Statutes:

REE A oe ; ) Sane ierer a amine peu ere ST fr 3) 4

RE Oe Peer re sere es kf 21, 23

BD WA FOR oo kannst ne esnasaseeg tamale eee

OO ULB GS oe ons cnnkash eee 24

SSID A. WO os 4s ka ss ous dhe eee ee passim

FOB OE oe tse ods cea hoe ee ree 1 ee

IS USL. I9G8 a vseeievacisneese eee 4

vi

Cited Authorities

Page

18 U.S.C. 1957 ....... be phap cue hae eeaen anaes 4

1S UB A. Bees 0 0csiddsncusdacne eee 3

Be UB. GROGED 0 kd6sccenws tka 3

ae UA. GHEES 0cesivccucucenee radanea eee 3

Criminal Code of the United States, 62 Stat. 683 (1948)

9000000664600 60005e ee pee eee 17

Penal Code of the United States, Section 35, 40 Stat. 1015

CESSES) oc ccccccacdwcene hau bone 14

Tantf Act of 1842, Chapter 270, Section 19, 5 Stat. 548,

FOS 0 cccecen ce ue melee be need een 16

Tanff Act of 1930, Chapter 497, Section 593, 46 Stat.

>) BI A ee 17

Other Authorities:

S. Rep. No. 1620, 80th Cong., 2d Sess. (1948), reprinted

ie 15 U.B.C.A, 498 oeccccetasdee eee 18

H.R. Rep. No. 304, 80th Cong., Ist Sess. (1947), reprinted

fe 16 U.SL.A, GOP ..icandke eo 18, 19

Hearing Before the House Committee on Revision of the

Laws ou H.R. 5450, 78th Cong., 2d Sess. (1944)

(statement of William W. Barron, Chief Reviser),

reprinted in 18 U.S.C.A. 449, 460 .............. 18

Cited Authorities

Hearing Before Subcommittee No. 1 of the House

Judiciary Committee on H.R. 1600 and H.R. 2055, 80th

Cong., Ist Sess. (1947) (Statements of Rep. Edward J.

Devitt; Rep. Eugene J. Keough; William W. Barron;

Charles J. Zinn, Counsel, Committee on Revisions of

the Laws), reprinted in U.S.C.A. 474, 477, 479, 482,

Ge EE evn ch nestor waibudecsedeebaseeeerare.

Hearing before Subcommittee No. 1 of the House Judiciary

Committee on H.R. 1600 and H.R. 2055, 80th Cong.,

Ist Sess. (1947) (statement of Charles J. Zinn),

Pe Cs UU owas cana ndaeebeneseeeieedeacs

APPENDIX

Appendix A — Opinion of the United States Court of

Appeals for the Ninth Circuit Filed June 4, 1998 ..

Appendix B — Memorandum of the United States Court

of Appeals for the Ninth Circuit Filed June 4, 1998

Appendix C — Order of the United States Court of

Appeals for the Ninth Circuit Dated August 31, 1998

Page

19

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19a

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1

INTRODUCTION

The term "intent to defraud" in federal criminal statutes has

been generally construed to mean an intent to deprive another of

money or property by fraudulent means. McNally v. United States,

483 U.S. 350, 359 (1987). When the term "defraud" appears in statutes

referring to defrauding the federal government, the precise meaning

of the term varies according to the language and purpose of the

particular statute. If the statute refers broadly to a proscription on

conspiring to defraud the United States "in any manner or for any

purpose", the term "defraud" can include the obstruction of a

governmental function as well as an intended deprivation of money or

property. Hammerschmidt v. United States, 265 U.S. 182, 185, 188

(1924). When the statute refers to a "claim" against the United States,

"defraud" is limited to the intended deprivation of a property right;

and, a misstatement to a government agency, without intended

monetary loss to the United States, does not fall within the ambit of

the statute’s proscription. United States v. Cohn, 270 US. 339, 343

(1926). The decision in this case conflicts with the Cohn decision on

an important issue of federal law, by assuming that with respect to the

government, an "intent to defraud" requires only an intent to obstruct

a government function. This Court’s cases make clear that the

meaning of "intent to defraud the United States" varies depending

upon the purpose, history and language of the particular statute.

Just as the term "defraud" under this Court’s jurisprudence has

been held to have varying meanings depending upon the particular

statute in which it appears, the phrase "intent to defraud" in a primary

Customs statute, 18 U.S.C. 545, has divided the circuit courts of

appeals as to its meaning. Three circuits, the Second, Seventh and

now the Ninth, have held that "intent to defraud" requires merely

proof of an intent to mislead or deceive U.S. Customs. Another

circuit, the Third, has held that "intent to defraud" requires proof of

an intent to cause a monetary loss to the United States.

'” U.S.C. 545 forbids, inter alia, knowingly and willfully, and

with intent to defraud the United States, passing or attempting to pass

2

through the customhouse, any false, forged or fraudulent invoice or

other document. This case directly raises the issue of whether "intent

to defraud the United States" under this statute requires the

prosecution to prove an intent to deprive the United States of revenue,

or whether it may be satisfied upon a simple showing that the

defendant knowingly filed a false invoice or document.

In United States v. Menon, 24 F.3d 550 (3 Cir. 1994), the

Court of Appeals for the Third Circuit held that intent to deprive the

government of revenue is required for a conviction of §545. The

Menon court reasoned that because of the history and language of the

statute, and in light of this Court’s decisions in McNally, Cohn and

Hammerschmidt, the government is required to prove that the

defendant acted with the intent to deprive the government of money

or property. In this case, the Court of Appeals for the Ninth Circutt,

citing decisions from the Seventh Circuit in United States v. Kurfess,

426 F.2d 1017 (7 Cir.1970 ), and the Second Circuit in United States

v. Borello, 766 F.2d 46 (2™ Cir. 1985), held that the prosecution is not

required to prove an intent to defraud the government of revenue.

The Ninth Circuit held that the statute may be satisfied by proof of

the knowing submission of a false invoice with the intent to deceive

the government. The Ninth Circuit decision ignores the history of the

statute and its enactment, important rules of statutory construction

and the existence of other related statutes in the statutory scheme

regulating the submission of Customs documents. In light of the

conflict between this decision and that of the Third Circuit Court of

Appeals on the same issue involving this important Customs statute,

Petitioner respectfully requests the Court to grant this petition for a

writ of certiorari.

OPINION IN THE COURT BELOW

The opinion of the Court of Appeals affirming the conviction

of petitioner is officially reported at 147 F.3d 851. A copy of the

opinion is attached as Appendix A. A copy of the unpublished

memorandum resolving the balance of the appeal is attached as

Appendix B.

3

STATEMENT OF JURISDICTION

On June 4, 1998, the Court of Appeals entered judgment

affirming the conviction of petitioner in this case. On August 31,

1998, the Court of Appeals filed an order denying the petition for

rehearing and rejecting the suggestion for rehearing en banc. This

order is attached as Appendix C. The district court had jurisdiction

under 18 U.S.C. 3231. The Court of Appeals exercised jurisdiction

under 28 U.S.C. 1294(1). This Court's jurisdiction to review the

judgment of the Court of Appeals is conferred by 28 U.S.C. 1254(1).

STATUTES INVOLVED

18 U.S.C. 542 provides in relevant part:

Entry of goods by means of false statements. Whoever

enters or introduces or attempts to enter or introduce

into the commerce of the United States any imported

merchandise by means of any fraudulent or false

invoice, declaration, affidavit, letter, paper, or by

means of any false statement, written or verbal, or by

means of any false or fraudulent practice or appliance,

or makes any false statement in any declaration

without reasonable cause to believe the truth of such

statement, or procures the making of such false

statement as to any matter material thereto without

reasonable cause to believe the truth of such statement,

whether or not the United States shall or may be

deprived of any lawful duties ..... shall be fined for each

offense under this title or imprisoned for not more

than two years or both.

4

18 U.S.C. 545 provides in relevant part:

"Whoever knowingly and willfully, with intent

to defraud the United States .... makes out or passes, or

attempts to make out or pass, through the

customhouse any false, forged, or fraudulent invoice or

other document or paper .... shall be fined not more

than $10,000 or imprisoned not more than five years,

or both.

STATEMENT OF THE CASE

Petitioner Mark Robinson was charged in an indictment filed

on June 20, 1995. [ECR 1-32.]' Count One alleged a conspiracy in

violation of 18 U.S.C. 371. [ECR 1-16.] Counts Two, Three and

Four of the indictment charged that on three separate dates in 1990,

Mr. Robinson and co-defendants Pecqueraux and Hirou "made out

and passed, and attempted to make out and pass through the

customhouse, false, forged and fraudulent invoices and other

documents and papers” with intent to defraud the United States, in

violation of 18 U.S.C. 545. [ECR 16-17.] These charges were made in

connection with the importation of IBM computer "processor" cards.

[ECR 16-17.] Other counts in the indictment related to counts Two,

Three and Four. Counts Five, Six and Seven charged that IBM

computer processor cards which had been brought into the United

States with fraudulent invoices were received within the United States.

[ECR 18-19.] Counts Eight through Forty alleged money laundering

in violation of 18 U.S.C. §§ 1956 and 1957.7 [ECR 19-24.] All the

money laundering counts had as their predicates the violations of 18

U.S.C. 545 which were charged in Counts Two through Four. Thus,

1 ECR refers to the Excerpt of Clerk’s record filed with the Court of Appeals.

> Other counts in the indictment charged unrelated matters as to which the defendant

did not appeal or as to which he was acquitted.

5

if petitioner were not guilty of the predicate § 545 offenses, he could

not validly have been convicted of the money laundering counts.

Mark Robinson and Bradley Hirou were co-owners of Fusion

International Trading, Incorporated. ("Fusion") [RT 8-66. Mr.

Robinson was the president and majority owner. In 1990, Hirou

contacted Stephan Pecqueraux, the majority owner of High Tech

Trading ("HTT") a company located in Paris, France. [RT 2-157.]

HTT bought and sold used IBM AS400 processor and feature cards.

[RT 2-155.] The charges in the case were based on three transactions

in which Fusion purchased processor cards from HTT. Defendant

Mark Robinson testified at trial that during conversations he had with

Pecqueraux, Pecqueraux said that he wanted to avoid payment of

French value-added taxes on the sale of imported computer cards to

Fusion. [RT 9-102.] These taxes were about 50 percent of the total

value. [RT 2-178.]

Pecqueraux, with petitioner Robinson’s participation, arranged

to import the cards through another company, CSC. [RT 2-164-166.]

The documentation would reflect a sale of the cards from HTT to

CSC and a later sale from CSC to Fusion. [RT 2-178.] The invoices

for the cards imported reflected a price that was far lower than the

actual contract price. [RT 2-178.] They showed transactions between

HTT and CSC. The real transactions, however, were between HTT

and Fusion.

Pecqueraux testified that the transactions involving the

invoices were done for him to avoid payment of tax in France, and for

Mr. Robinson to avoid the payment of U.S. Customs duties. [RT 2-

3 RT refers to the reporter's transcript of the district court proceedings. The first digit

refers to the volume number of the transcript; the following numbers are page references.

6

164.]' In his defense, Mr. Robinson testified that he understood the

purpose of the understated invoices to be to aid Pecqueraux in

avoiding the French tax; he had agreed to conduct the transactions

with Pecqueraux in this way to get the cards. [RT 9-102.] With respect

to his own part, however, Mr. Robinson believed that there was no

United States duty owed on any of the computer cards. [RT 8-112.]

He gained this understanding from discussions with U.S. Customs

office in San Ysidro, California, with the U.S. Department of

Commerce and with a Customs specialist. [RT 8-112.] Mr. Robinson

also consulted the Uniform Harmonized Tariff Schedule which he had

obtained from U.S. Customs in San Ysidro, California. [RT 8-120.]

The Uniform Harmonized Tariff Schedule provides that units such as

the ones in this case, which are suitable for physical incorporation into

an automatic data processing machine or units thereof, are duty-free.

(RT 8-123.] Mr. Robinson understood from this document that no

duty was owing on the computer parts in this case. [RT 8-123.] Mr.

Robinson testified that the reason for the transactions was to insure

that Pecqueraux could be paid offshore without payment of

Pecqueraux’s part of French taxes, but that there was no design to

evade U.S. Customs duty because the computer parts were duty-free

and legally admissible into the United States. [RT 9-103, 118, 120.]

The prosecution presented no rebuttal evidence to attempt to

refute Mr. Robinson’s testimony that the processor boards were duty-

free. Nor was there ever any claim by the government that the

computer boards were not properly permitted to be imported into the

United States. The defense theory was that petitioner Robinson had

indeed participated in the filing of false invoices which were ultimately

submitted to Customs, but that he did so without any intent to avoid

the payment of U.S. Customs duties, or to secure the entry into the

country of forbidden items.

4 Pecqueraux testified as a prosecution witness and received a sentence of probation. For

a conviction of conduct substantially the same as Pecqueraux’s, petitioner Robinson was

sentenced to 121 months in custody.

7

Mr. Robinson requested that the district court charge the jury

in accordance with the rule as set forth in United States v. Menon, 24

F.3d 550 (3" Cir. 1994). He requested the trial court to define "intent

to defraud" as an intent to deprive the United States of money or

property; and to instruct that in order to convict, the jury must find

that he intended to deprive the United States of revenue. [ECR 64, 66;

RT 11-12, 13.) Petitioner proposed a second instruction that if

defendant honestly believed that no customs duty was owed on the

goods, he was not guilty because he did not have the intent to defraud

the United States of revenue as required by § 545. [ECR 65; RT 1 1-12,

13.] The trial court refused these requested instructions. It instructed

the jury that intent to defraud means an intent "to deceive or to cheat,"

[ECR 177] and that in order for the government to prove the charges

as set forth in Counts Two, Three and Four, it was required to prove

only that the defendant knowingly and willfully made out or passed

a materially false, forged, or fraudulent invoice or other document in

connection with the importation of IBM computer cards with the

intent to defraud (i.e. to "deceive or to cheat ") the United States. [ECR

161.) This instruction permitted a conviction of the charged §545

violations upon proof of the knowing submission of the false invoices,

in the absence of a jury finding of intent to deprive the government of

revenue, money or property of any kind.

REASONS FOR GRANTING THE WRIT

I.

THERE EXISTS A CONFLICT OF

CIRCUIT COURT AUTHORITY

This Court should grant certiorari to resolve the split of circuit

court authority and to clarify that 18 U.S.C. 545 requires that the

prosecution to prove an intent to deprive the government of revenue.

In this case, the Ninth Circuit Court of Appeals adopted the rule as set

forth in the holdings of two other circuit court decisions. In United

Stated v. Kufess, 426 F.2d 1017 (7 Cir. 1970), the Seventh Circuit held

8

that the government need not prove that the items introduced in the

United States were subject to duty in order to prove a violation of the

statute. In United States v. Borello, 766 F.2d 46 (2nd Cir. 1985), the

Second Circuit held that the current version of § 545 does not require

a showing that the defendant had an intent to defraud the revenue of

the United States. By contrast, the Third Circuit, in United States v.

Menon, 24 F.3d 550 (3 Cir. 1994), in a comprehensive and well-

reasoned decision, held that the term "intent to defraud" in § 545

means an intent to deprive the government of revenue. Thus, the

prosecution must prove an intent to defraud the government of

revenue in order to convict.

In an opinion by Judge Becker, the Third Circuit set forth its

reasoning:.

While the meaning of “defraud the United States”

generally extends beyond defrauding the government

of revenue, the history of § 545 demonstrates that

Congress did not intend such a broad reading here.

We first note that until recently, the Supreme Court

generally interpreted "defraud" to extend to actions

preventing the government from carrying out its

lawful functions even when the government did not

lose any revenue. This interpretation took root in

Hammerschmidt v. United States which analyzed the

statutory predecessor of 18 U.S.C. §371, a statute

making it illegal to "conspire to ... defraud the United

States in any manner or for any purpose." See 265

U.S. 182, 185, 44 S. Ct. 511, 68, L.Ed. 968 (1924)

(interpreting Comp. St. §10201). In Hammerschmidt,

the Supreme Court concluded that

[t]o conspire to defraud the United States

means primarily to cheat the Government out

of property or money, but it also means to

interfere with or obstruct one of its lawful

governmental functions by deceit, craft or

———————e

9

trickery, or at least by means that are

dishonest. It is not necessary that the

Government shall be subjected to property or

pecuniary loss by the fraud, but only that its

legitimate official action and purpose shall be

defeated by musrepresentation, chicane, or the

overreaching of those charged with carrying

out the governmental intention.

Id. at 188, 44 S.Ct. at 512.

Recently, however, the Supreme Court has

significantly narrowed the category of statutes in

which the meaning of "defraud" extends beyond a

deprivation of property rights. In McNally v. United

States, 483 U.S. 350, 359, 107 S.Ct. 2875, 2881, 97

L.Ed.2d 292 (1987), the Court interpreted the mail

fraud statute, which made it illegal "to defraud" or to

"obtain" [] money by means of false or fraudulent

pretenses," to require a finding that the defendant

intended to deprive others of property or money. 18

U.S.C.§ 1341. In so doing, the Court rejected "a long

line of court of appeals decisions that had interpreted

that statute as proscribing schemes by government

officials to defraud citizens of their intangible rights to

honest and impartial government." United States v.

Asher, 854 F.2d 1483, 1488 (3d Cir. 1988) (emphasis in

original). In justifying its decision, the Court quoted

Hammerschmidt, 265 U.S. at 188, 44 S.Ct. at 512, for

the proposition that, "the words to defraud

‘commonly refer to wronging one in his property

rights by dishonest methods or schemes.”” McNally,

483 U.S. at 359, 107 S.Ct. At 2881. The Court

concluded that this common understanding combined

with the rule of lenity meant that the mail fraud statute

10

required an intent to deprive someone of money or

property. See Id.

The Court distinguished the actual ruling of

Hammerschmiadt on the basis that the mail fraud statute

aimed to prevent fraud against any member of the

public, while the statute discussed in Hammerschmidt

aimed to protect the United States against fraud. A

statute that has for its " ‘object the protection and

welfare of the government alone’ aims to prevent

fraud in a broader sense than deprivation of property

rights, but a statute aiming to prevent fraud against

members of the public is likely using fraud in its usual,

narrower sense. Jd. at 358, 107 S.Ct. At 2881 n. 8

(quoting Curley v. United States, 130 F.1, 7 (1"

Cir.1904)).

Another case distinguishing Hammerschmidts

United States v. Cohn, 270 US. 339, 343, 46S. Ct. 251,

252, 70 L.Ed. 616 (1926). There the Supreme Court

was faced with interpreting the meaning of Section 35

of the Penal Code, 40 Stat. 1015 (1918), which

provided that action "for the purpose of obtaining or

aiding to obtain the payment or approval of any ‘claim

upon or against the United States ... for the purpose

and with the intent of cheating and swindling or

defrauding the Government of the United States’ ...

shall be punishable." The Court construed Section 35

as requiring the defendant to cheat the government out

of property or money. The Court distinguished

Hammerschmidt on the grounds that the term defraud

within Section 35 "is used in connection within the

words ‘cheating or swindling,’ indicating that it is to be

construed in the manner in which those words are

ordinarily used, as relating to the fraudulent causing of

11

pecuniary or property loss." Jd. at 346-47, 46 S.Ct. at

253.

The message we derive from this potpourri of

Supreme Court cases is twofold. First, the meaning of

"defraud" must be interpreted in the context of the

particular statute that uses the term. In each case in

which the Court has evaluated the meaning of

"defraud," it has determined the intent of Congress

based on the purpose of the particular statute and on

the surrounding statutory language. Second, an intent

to defraud generally requires an intent to deprive

someone of property or money but does not generally

require such an intent in the context of statutes

making it illegal to defraud "the United States." It

seems appropriate therefore to construe Section 545 as

prohibiting acts that prevent the United States from

carrying out its statutory duties unless there is

countervailing evidence on the meaning of the statute.

Here, strong countervailing evidence exists.

Menon points out that § 1593 of title 19 (U.S.C. 1940

ed.), the predecessor statute to 18 U.S.C. § 545,

required that the defendant intended "to defraud the

revenues of the United States" (emphasis added).

Although Congress left out the language "the

revenues" when it recodified the Federal Criminal

Code in 1948, Menon contends that Congress made it

clear that it did not not intend to make any substantive

change in the statute by making this deletion. Thus,

he concludes that the concept "defraud the revenues”

is still a part of the statute.

As support for his view that Congress intended

no substantive change, Menon cites the House Report

which states that, "[rJevision [of the Criminal Code], as

eee ee

12

distinguished from codification, mean{s}] the

substitution of plain language for awkward terms,

reconciliation of conflicting laws, omission of

superseded sections and consolidation of simular

provisions.” H.R.Rep No. 304, 80" Cong., 1* Sess.

(1947), reprinted in 18 U.S.C. A. 439, 440. The House

Report does not indicate that substantive changes were

included as part of the revision. See Jd The House

Report concludes that, "(t]he reviser’s notes are keyed

to sections of this bill and explain in detail every

change made in text,” id. at 448, and W.W. Barron,

chief reviser of the code, testified to the House

Committee on Revision of the Laws that "/ejvery

substantive change, no matter how minor, is fully

explained [in the reviser’s notes}." Jd. at 460 (emphasis

added). Because the reviser’s notes for §545 say only

that "[cJhanges were made in phraseology,” H. R. Rep.

No. 304, 80% Cong., 1* Sess. at A46, and do not specify

that any substantive changes were intended, Menon

concludes that the current statute, like its predecessor,

requires that the defendant have intended to deprive

the United States of revenues to which it was entitled.

[2] We agree. Although we might ordinarily discount

legislative history, we are unwilling to do so where

that history consists of committee reports and

statements by the chief reviser and where the statutory

change we are interpreting occurred in the context of

codification of the entire criminal code. In that

context, Congress was unlikely to have been able to

carefully consider every change made to prior statutes.

We think it was reasonable for Congress to rely on

representations made to it by the chief reviser, among

others, that all substantive changes were explicitly set

forth in the revisers’ notes and for Congress to indicate

that it intended no other substantive changes. Absent

a compelling need, we should not read as substantive a

4 on eta le ah tn

13

change initiated by the revisers and probably not

considered by Congress.

[3] Ata minimum, we think that the legislative

history makes the meaning of "defraud the United

States" in § 545 ambiguous given that, as we have seen,

the meaning of defraud varies from statute to statute.

As the Court did in McNally, we rely on the rule of

lenity to hold that because the meaning of defraud is

ambiguous in the context of § 545, that section requires

an intent to cause a deprivation of property or money.

Menon, 24 F.3d at 555-557.

The comprehensive, well-reasoned analysis of Menon contrasts

with the conclusory holdings in Kurfess, Borello and the instant case.

Petitioner requests that this Court resolve the split in circuit court

authority on this issue.

Il.

THE DECISION IN THIS CASE CONFLICTS

WITH THE COHN DECISION OF THIS COURT

ON THE IMPORTANT ISSUE OF THE

CONSTRUCTION IN FEDERAL STATUTES

OF THE PHRASE "INTENT TO DEFRAUD"

This Court’s decision in United States v. Cohn, 270 U.S. 339

(1926) construed the statutory language "with the intent of cheating

and swindling or defrauding the government of the United States, or

any department thereof." (emphasis added) The facts of Cohn are

remarkably akin to those in this case. Cohn submitted false

information in connection with the entry of duty-free admissible

goods, without an intent to deprive the government of revenue. Cohn

had procured customs house brokers to make entry of Phillipine cigars

by making false and fraudulent statements to the brokers, and through

14

thern as his innocent agents, to the collector of customs. He induced

the customs collector to deliver possession of the cigars, which the

collector would have refused had he known that Cohn had not

properly paid for them. Since the cigars were admissible into the

United States and were free of duty, this Court held that Cohn’s

fraudulent actions were not proscribed by the statute, § 35 of the Penal

Code, since Cohn did not intend to defraud the government of money

or property, and had made no claim against the government. This

Court, dealing with a statute similar in language to the one in this case,

and discussing an importation of duty free goods by a fraudulent

representation, held:

"Neither is the wrongful obtaining of possession

of such non-dutiable merchandise a “defrauding”

of the Government within the meaning of the

statute. It is contended by the United States that,

by analogy to the decision in Haas v. Henkel, 216

US. 462, 479, and Hammerschmidt v. United

States, 265 U.S. 182, 188, and other cases

involving the construction of § 37 of the Penal

Code relating to conspiracies to defraud the

United States, the word "defrauding" in the

present statute should be construed as being used

not merely in its primary sense of cheating the

Government out of property or money, but also

in the secondary sense of interfering with or

obstructing one of its lawful governmental

functions by deceitful and fraudulent means.

The language of the two statutes is, however, so

essentially different as to destroy the weight of

the supposed analogy. Section 37, by its specific

terms, extends broadly to every conspiracy "to

defraud the United States in any manner and for

any purpose,” with no words of limitation

whatsoever, and no limitation that can be

implied from the context. Section 35, on the

to

other hand, has no words extending the meaning

of the word "defrauding" beyond its usual and

primary sense.

Cohn, 270 USS. at 346-47.

Cohn makes it clear that the term "defraud," even with respect

to a statute that forbids defrauding the government, is a term whose

definition depends upon the purpose and language of the statute. The

statute in this case, 18 U.S.C. 545, by its text and history relates to

government revenue, and is closer to the statute in Cohn which

requires intent to deprive the government of money or property, than

that of Hammerschmidt, which would forbid any obstruction of a

governmental function by deceit.

The decision of the Ninth Circuit in this case conflicts with the

careful delineation in Cohn between statutes protecting the

government in its property rights and statutes protecting the

government in its governmental functions. By its decision in this case

the Ninth Circuit, in effect, construes "intent to defraud" to require

only intent to obstruct government functions. Such a blanket rule

ignores this Court’s careful delineation in its jurisprudence in which

the meaning depends upon the language and function of the particular

statute forbidding "intent to defraud" the government.

Il.

THE HISTORY AND ENACTMENT OF

THE STATUTE, RULES OF STATUTORY

CONSTRUCTION AND THE

EXISTENCE OF AN OVERALL

STATUTORY SCHEME SUPPORT THE

GRANTING OF THE PETITION

The Ninth Circuit view of the meaning of "intent to defraud"

in this statute is wrong. The Third Circuit Menon decision embodies

16

the better reasoned result. This is so because of: (1), the history of the

statute and its predecessor; (2), the manner in which the current

statutory language came about; (3), important rules of statutory

construction; (4), the existence of other Customs statutes which serve

to penalize deceitful conduct without the necessity of distorting the

meaning of § 545 in order to punish such conduct; and (5), the

existence of a statutory scheme of which §545 is a part, which provides

for different penalties depending upon whether or not the offender

intended to deprive the government of revenue.

A. The Statute And Its Predecessors.

The predecessor versions of § 545 showed that the statute was

designed and historically acted to protect the revenues of the

government. Section 19 of the Tariff Act of 1842 provided in relevant

part as follows:

"And be it further enacted that if any person shall

knowingly and willfully, with intent to defraud the

revenues of the United States, smuggle and

clandestinely introduce into the United States any

goods, wares, or merchandise, subject to duty by law,

and which should have been invoiced, without paying

or accounting for the duty, or shall make out, or pass,

or attempt to pass, through the Customhouse any

false, forged, or fraudulent invoice, every such person,

his, her or their aiders and abettors shall be deemed

guilty of a misdemeanor, and on conviction thereof

shall be fined in any sum not exceeding $5,000 or

imprisoned for any term of time not exceeding two

years, or both, at the discretion of the court. Tariff

Act of 1842, Chapter 270, Section 19, 5 Stat. 548, 565.

(emphasis added)

:

17

Section 593 of the Tariff Act of 1930 provided in relevant part

as follows:

Smuggling and clandestine importation (a) Fraud on

the Revenue-If any person knowingly and willfully,

with intent to defraud the revenues of the United

States, smuggles, or clandestinely introduces into the

United States any merchandise which should have

been invoiced, or makes out or passes or attempts to

pass, through the Customhouse any false, forged, or

fraudulent invoice, or other document or paper, every

such person, his, her, or their aiders and abettors, shall

be deemed guilty of a misdemeanor, and on conviction

thereof shall be fined in any sum not exceeding $5,000

or imprisoned for any term of time not exceeding two

years, or both, at the discretion of the court. Tariff Act

of 1930, Chapter 497, Section 593, 46 Stat 590, 751.

(emphasis added)

Thus the statute involved here historically was designed to

protect a property interest of the government its right to revenues

from duties on imported goods.

Seen in the context of Title 18, 545 is plainly aimed at

preventing and punishing actions aimed at evading the collection of

customs duties. Section 545 looks to the duty of the United States

Customs Service as a revenue collecting arm of the federal

government.

B. The Manner In Which The Current Statute Came

About.

In 1948, Congress recodified the Criminal Code of the United

States in Title 18 of the United States Code. 62 Stat. 683. It was at this

point that the reference to "the revenues" was dropped from the

"intent to defraud" clause of § 545. The manner of this change

ee

18

demonstrates that there was never any intent to change or modify the

historical requirement of intent to defraud the government of revenue

as an essential element of the crime. Congress's primary purpose in

passing this bill was to make the law easier to find and to use by

enacting the United States Code into positive law and gathering all

criminal statutes in one title. See S.Rep.No. 1620. 80th Cong., 2d Sess.

(1948), re-printed in 18 U.S.C.A. 438; H.R. Rep. No. 304, 80th Cong.,

ist Sess. (1947), reprinted in 18 U.S.C.A. 439. Congress's other

purposes in revising Title 18 were the "substitution of plain language

for awkward terms, reconciliation of conflicting laws, omission of

superseded sections, and consolidation of similar provisions." House

Report 304 18 U.S.C.A. at 440. To accomplish this task, the House

Committee on Revision of the Laws employed a staff of experts to

prepare the revised version of Title 18. /d. at 441. Significantly, the

revisers considered "[a]pplicable constructions of the courts." /d. at

439. This staff of revisers prepared a detailed set of notes, attached as

an appendix to House Report 304, explaining every change in the text

of the provisions of Title 18. Jd. at 448. These notes are the definitive

authority for all changes made in the law by this enactment. Senate

Report 1620, 18 U.S.C.A. 438.

No substantive changes in the law were intended by the

revision bill. House hearings on the bill are replete with statements

that the bill was not intended to make any substantive changes in the

law. See Hearing Before the House Committee on Revision of the

Laws on H.R. 5450, 78th Cong., 2d Sess. (1944) (statement of William

W. Barron, Chief Reviser), reprinted in 18 U.S.C.A. 449, 460; Hearing

Before Subcommittee No. 1 of the House Judiciary Committee on

H.R. 1600 and H.R. 2055, 80th Cong., Ist Sess. (1947) (Statements of

Rep. Edward J. Devitt; Rep. Eugene J. Keough; William W. Barron;

Charles J. Zinn, Counsel, Committee on Revisions of the Laws),

reprinted in 18 U.S.C.A. 474, 477, 479, 482, 498, 515. Both the Chief

Reviser, William Barron, and the Chairman of the Committee on

Revision of the Laws, Rep. Eugene Keough, testified that the revision

avoided substantive changes. Jd.

_— EEE ae Eee

eee eee

19

One purpose of the bill was to eliminate awkward

phraseology and archaic language. Such minor changes in language

were made repeatedly throughout the criminal code. In the rare

instances where substantive changes in law were intended, these

changes were explained in the official revisers' notes. See Hearing

before Subcommittee No. 1 of the House Judiciary Committee on

H.R. 1600 and H.R. 2055, 80th Cong., 1st Sess. (1947) (statement of

Charles J. Zinn), 18 U.S.C.A. 515. Mr. Zinn, counsel to the

Committee on Revision of the Laws, noted at a committee hearing

that "a mere change of wording will not effect a change in meaning

unless a clear intent to change the meaning is evidenced . . . . It is

clearly indicated in each of those revisers' notes whether any change

was intended...." Jd. The revisers' notes for § 545 do not reflect

that any substantive change was intended in § 545 by the deletion of

the words "the revenues of" from the phrase "with intent to defraud

the revenues of the United States." House Report 304 at A46. The

notes say only that "[c]hanges were made in phraseology." /d. It is

clear that the revisers intended only to correct the awkward

construction of § 545. See United States v. Kushner, 135 F.2d 668, at

671 (2™ Cir. 1943), (calling the "intent to defraud the revenues" clause

"a hardly grammatical expression"). Congress evidenced no intent to

change the substantive law of § 545 when it altered the language of the

“intent to defraud" provision. Indeed, the clear import of the statute’s

history is that Congress intended to leave the meaning of § 545 exactly

as it had been previously interpreted.

i Important Rules Of Statutory Construction Require

That "Intent To Defraud" Be Given Its Separate And

Independent Meaning In Construing The Statute.

‘ Every clause should be given meaning.

When interpreting statutes, courts should follow the cardinal

rule that effect shall be given to every clause and part of a statute. D.

Ginsberg & Sons, Inc. v. Popkin, 285 U.S. 204, 208 (1932). This Court

has spoken of the presumption that each term in a criminal statute

20

carries meaning. Bailey v. United States, 516 U.S. 137 (1995). In this

case, if the term "intent to defraud" is intended to mean merely "intent

to deceive" the government, as the trial court instructed the jury, it

adds nothing to the other language in § 545 which forbids knowingly

making out or passing, or attempting to pass through the

customshouse any false, forged or fraudulent invoice. If one knowingly

atternpts to pass a false, forged or fraudulent invoice, by definition one

has acted to defraud (i.e. "to deceive") the government within the

meaning of the trial court’s instructions. If the government's

proposed reading of the statute is correct therefore, the term "intent to

defraud" is surplusage, because the knowing submission of false

documents is inherently deceptive. Thus, in order to give meaning to

each clause and part of the statute, one must read "intent to defraud"

as requiring something more than merely deceiving the government

by the knowing submission of a false invoice. That something more,

as indicated by the history and text of the statute, is the intent to

deprive the government of its revenues.

2. The Rule of Lenity

To prevent governmental overreaching, criminal statutes are

to be construed narrowly, McNally, 483 U.S. at 359-60. As the Court

held in McNally, when there are two rational readings of a criminal

statute, one harsher than the other, the court is to choose the harsher

"only when Congress has spoken in clear and definitive language.” /d.;

Rewis v. United States, 401 U.S. 808, 812, (1971). Ambiguity

concerning the ambit of criminal statutes should be resolved in favor

of lenity. In determining whether "intent to defraud" should be

construed broadly as a generalized “intent to deceive" or more

narrowly as a specific intent to deprive the government of revenue,

the Court should use the narrower and more specific reading of the

statute.

21

D. Other Statutes Protect U.S. Customs From False

Information And Are Specifically Designed To Do So.

A review of related laws make it quite clear that Petitioner’s

proposed construction of the statute will neither harm the

government's ability to protect itself from false information, nor

deprive the government of the ability to prosecute any false statement

in a customs declaration, whether or not it has an effect on the

revenue.

18 U.S.C. 542, in relevant part, provides as follows:

Entry of goods by means of false statements. Whoever

enters or introduces or attempts to enter or introduce

into the commerce of the Uuited States any imported

merchandise by means of any fraudulent or false

invoice, declaration, affidavit, letter, paper, or by

means of any false statement, written or verbal, or by

means of any false or fraudulent practice or appliance,

or makes any false statement in any declaration

without reasonable cause to believe the truth of such

statement, or procures the making of such false

statement as to any matter material thereto without

reasonable cause to believe the truth of such statement,

whether or not the United States shall or may _be

deprived of any lawful duties. . . shall be fined for each

offense under this title or imprisoned for not more

than two years or both. (emphasis added)

Section 542 penalizes the submission of false invoices or

documents without respect to revenue loss.

The government can also prosecute the submission of false

invoices without proof of an intent to deprive the government of

revenue under 18 U.S.C. 1001, which forbids the making of "any false,

fictitious or any fraudulent statement «:; representation", or the

22

making or use of "any false writing or document knowing the same to

contain any false, fictitious or any fraudulent sta:ement or entry." In

Brogan v. United States, 118 S.Ct. 805 (1998), this Court gave full scope

to the language of § 1001, overruling cases which had established an

"exculpatory no" exception to the broad language of the statute. See

United States v. Rose, 570 F.2d 1358 (9 Cir. 1978) regarding the use of

§ 1001 to prosecute false statements in connection with the attempted

importation of merchandise. There exists a myriad of other penal

statutes which the government can employ to prosecute false

statements and invoices, regardless of any intent to deprive the

eovernment of revenue, in both titles 18 and 19 of the United States

Code.

E. Section 545 Is Part Of A Statutory Scheme With

Increasing Penalties Depending Upon The Intent Of The

Violator.

There is a graduated escalation of penalties from that of the

two year maximum in § 542 which does not require an intent to

defraud the government of revenue, to the greater penalty of five years

for the violation of 18 U.S..C. 545, which does contain such an

additional requirement. This is a rational increase of penalties in

accordance with a greater and more serious mens rea. Congress

rationally imposed an inc. easing scheme of punishments in its passage

of a related set of statutes, one of which has elements which would

penalize any submission of a false statement to Customs regardless of

the effect on revenue, and the other of which would penalize in a

harsher fashion a submission of false documents with the intent to

deprive the government of revenue. The existence of §542, which

penalizes the submission of false documents without regard to

whether the government may be deprived of duties, indicates that the

Congress contemplated a clear and rational structure of statutes, with

escalating penalties dependent upon the intent of the violator.

The Ninth Circuit rule in this case ignores the overall

statutory structure, and penalizes false statements made without intent

ee ll——

23

to defraud the government of revenue with a five year penalty instead

of the two year maximum otherwise applicable and explicitly provided

for in § 542. When the statutory scheme is apparent and rational, a

court’s construction of the statute should take into account the overall

design of these related statutes in construing the meaning of any one

section or statute. See e.g. Block v. Community Nutrition Institute 467

U.S. 340, 351 (1984); United States v, Fausto 484 US. 439, 452 (1998):

Welsh v. United States 398 U.S. 333, 365-366 (1970); Maislin Industries

v. Primary Steel 497 U.S. 116, 131 (1990). The Ninth Circuit’s

construction of § 545, permitting punishment for a false submission

whether or not there is an intent to deprive the government of

revenue, results in § 545 being merely duplicative of § 542, which

permits punishment "whether or not the United States shall or may be

deprived of any lawful duties." The construction of § 545 in this case

does violence to the reasonable and calibrated congressional plan to

punish more severely what Petitioner urges is the greater mens rea of

§ 545, the intent to deprive the government of revenue.

Sections 542 and 545 were codified in their present order on

June 25, 1948. Section 542 makes illegal the introduction of

merchandise by means, inter alia, of any fraudulent or false invoice,

declaration, affidavit, letter, paper or statement regarding any material

matter, "whether or not the United States shall or may be deprived of

any lawful duties." Section 545 penalizes the submission of "false,

forged or fraudulent invoices" with intent to defraud the United States.

The difference in language and penalty is not merely fortuitous.

Section 542 prohibits false submissions regardless of loss of duty; § 545

penalizes the same conduct with a higher penalty, but only if there is

proven an “intent to defraud" the United States, i.e. to deprive it of

revenue. "Where Congress includes particular language in one section

of a statute but omits it in another section of the same Act, it is

generally presumed that Congress acts intentionally and purposely in

the disparate inclusion or exclusion." Bates v. Unii..! States 118 S. Ct.

285, 290 (1997) (citing Russello v. United States, 464 US. 16, 23 (1983))

The only coherent construction with § 542 in conjunction of § 545 is

24

to read § 545 as Menon reads it: to require proof of intent to defraud

the government of revenue.

CONCLUSION

The construction of § 545 in this case by the Court of Appeals

ignores Congress’ rational and calibrated statutory scheme, ignores the

history and language of the statute, suggests too broadly that every

statute forbidding "defrauding" the government can be satisfied merely

by an intent to thwart a government function, and makes the

requirement of proof of an intent to defraud superfluous. This Court

should resolve the split of circuit court authority on this issue, and

construe the statute to require proof of an intent to deprive the

government of revenue.

For the reasons set forth above, Petitioner respectfully requests

that this Court grant his Petition for Writ of Certiorari to review the

decision of the Ninth Circuit Court of Appeals.

Respectfully submitted,

EUGENE G. IREDALE

Attorney for Petitioner

105 West"F" Street, 4th Floor

San Diego, CA. 92101

Telephone: 619) 233-1525

APPENDIX

la

APPENDIX A

OPINION OF THE UNITED

STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Filed June 4, 1998

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, )

Plaintiff-A ppellee, ) No. 96-50573

)

v. ) D.C. No

) CR-95-00827-JNK

MARK STRAFFORD ROBINSON )

Defendant-Appellant. ) OPINION

)

Appeal from the United States District Court

for the Southern District of California

Judith N. Keep, Chief Judge, Presiding

Argued and Submitted

October 7, 1997—Pasadena, California

Filed June 4, 1998

Before: Harry Pregerson, Dorothy W. Nelson, and Michael Daly

Hawkins, Circuit Judges.

Opinion by Judge Hawkins

2a

SUMMARY

Criminal Law and Procedure/Criminal Acts

The court of appeals affirmed a judgment of conviction.

The court held that the "intent to defraud" element of the federal

statute prohibiting the submission of false customs invoices requires

the prosecution to prove an intent to deceive or cheat government,

not an intent to deprive the government of revenue.

As part of ascheme to smuggle costly computer components

into the United States, appellant Mark Robinson and his

confederates used false invoices, a Swiss bank account, a shell

corporation, and wire transfers to avoid the payment of taxes and

customs duties.

Robinson was charged with conspiracy, smuggling, money

laundering, engaging in monetary transactions with funds derived

from unlawful activity, and mail fraud. Three counts of the

indictment alleged violations of 18 U.S.C. § 545, which prohibits

the submission of false, forged, or fraudulent invoices.

The district court rejected Robinson’s proffered jury

instruction that § 545's "intent to defraud" element required the

government to prove that Robinson intended to deprive the

government of revenue. Instead, the court instucted the jury that

the prosecution had to prove an intent to deceive or cheat.

Robinson was convicted and appealed, challenging the jury

instruction.

[1] The jury instruction that “intent to defraud" means an

intent to deceive or cheat was correct. [2] The meaning of "defraud

the United States" generally extends beyond defrauding the

government of revenue. Section 545 has as its primary object the

3a

protection of governmental interests, and accordingly protects

interests extending beyond mere Property rights. The intent to

defraud element of the statute should be construed as meaning

intent to avoid and defeat the United States customs laws, rather

that intent to deprive the United States of revenue.

[3] The district court did not err in refusing to instruct the

jury that the government was required under § 545 to prove intent

to deprive the government of revenue.

COUNSEL

Fugene G. Iredale, San Diego, California, for the defendant-

appellant.

William Q. Hayes and Timothy D. Coughlin, Assistant United

States Attorneys, San Diego, California, for the plaintiff-appellee.

OPINION

HAWKINS, Circuit Judge:

Mark Robinson appeals his Jury conviction and sentence for

conspiracy, smuggling goods into the United States, laundering of

monetary instruments, engaging in monetary transactions in

property derived from specified unlawful activity, and mail fraud

in violation of 18 U.S.C. §§ 371, 545, 1956, 1957 and 1341.

Robinson’s conviction arose out of the international sale and

transfer of IBM processor boards. We affirm.

FACTS AND PRIOR PROCEEDINGS

Mark Robinson ("Robinson ") and Bradley Hirou ("Hirou")

were co-owners of Fusion International Trading, Inc. ("Fusion").

——————

4a

Robinson was president, majority owner, and had final

decisionmaking authority on all Fusion financial matters.

In 1990, Hirou contacted Stephen Pecqueraux

("Pecqueraux"), the majority owner of High Tech Trading

("HTT"), a company located in Paris, France that bought and sold

used IBM AS-400 processor and feature cards.

After Hirou determined that Fusion would be able to sell

HTT’s IBM processor cards, Robinson and Pecqueraux agreed that

Fusion would purchase three processor cards from HTT. In June

1990, Robinson traveled to Paris where he obtained the three

processor cards from Pecqueraux, put them in his suitcase and

brought them to San Diego, California without declaring them to

United States Customs.

That same month, Fusion bought fourteen additional cards

from HTT for approximately $500,000. Robinson again traveled

to Paris to obtain the cards from Pecqueraux. Robinson and

Pecqueraux hid the fourteen cards in the back of a computer,

thereby avoiding the payment of French taxes by Pecqueraux and

the payment of United States customs by Robinson.

Robinson and Pecqueraux agreed that Robinson would pay

Pecqueraux via a Swiss bank account so that both could avoid

paying taxes to their respective countries, and so that Robinson

could avoid paying customs duties on the value of the cards. They

traveled to Zurich, Switzerland and each set up a foreign

corporation to be used in the creation of false invoices.

The next month, Pecqueraux contacted the president of

CSC Computer Sales and Leasing, Inc. ("CSC"), a New York

1 Processor cards determine the processing capability of computers and feature

cards perform routine computer functions. Processor cards for AS-400 computers

sold for $19,000 to $229,000.

5a

business, and arranged to export the cards from France to the

United States by using CSC’s import license. CSC acted as the

importer of record for the parts sold by HTT to Fusion and also

acted as an intermediary by purporting to buy the cards from HTT

and then sell them to Fusion, when in fact HTT sold the cards

directly to Fusion. HTT sent invoices to CSC understating the

value of the computer cards, thereby avoiding duties assessed by

United States Customs. No duty was ever charged on any Fusion

import on which CSC acted as the importer of record. Moreover,

the fourteen IBM cards hidden in the back of a computer were not

listed on any invoice presented to the United States Customs.

The fourteen cards were sold by Fusion to Sun Data, an

Atlanta, Georgia company, for approximately $623,000. Fusion

wired payment for the cards to Pecqueraux’s Swiss bank account

after receiving payment from Sun Data.

Next, Fusion purchased 43 cards from Pecqueraux for

$1,360,000. The invoice between Fusion and CSC listed the sale

price at $10,000, and the invoice between HTT and CSC listed the

sale price at $9,000. The cards were ultimately sold to Sun Data for

$1.6 million. After receiving this payment, Fusion wired its

payment for the cards to Pecqueraux’s Swiss bank account.

A few months later, Pecqueraux sold 554 additional IBM

cards to Fusion; the purchase price was $1.8 million. HTT again

created a false invoice for CSC that purported that the 554 cards

had been sold to CSC for $27,000. CSC created an invoice

representing that CSC sold the cards to Arondol (Robinson and

Hirou’s foreign company, based in Ireland) for $30,500. Arondol

was used to make it appear that money sent to Arondol was for

expenses, when in fact the money was transferred to Robinson’s

and Hirou’s account. In this way, Robinson and Hirou evaded

taxes. Robinson and Hirou sold 423 additional cards to Sun Data

for $2.1 million. They then wire transferred $2.3 million to their

6a

Swiss bank account.

During this time, Robinson and Hirou bought Pecqueraux

a Porsche automobile ($72,356) and a home in Rancho Sante Fe,

California ($1.3 million) as payment for computer cards. Soon

thereafter, the market for AS-400 cards began to decline.

Robinson appeals from his judgment in the district court

after his conviction for violating 18 U.S.C. § 371 (conspiracy); 18

U.S.C. § 545 (smuggling goods into the United States); 18 U.S.C.

§ 1956(a)(2)(B)(i) (laundering of monetary instruments); 18 U.S.C.

1957 (engaging in monetary transactions of property derived fror:

specific unlawful activity); and 18 U.S.C. § 1341 (mail fraud).

Robinson argues that the district cov't erred in refusing to

instruct the jury that the "intent to defraud" element of 18 U.S.C.

§ 545 requires the governmext to prove an intent to deprive the

government of revenue.’

ANALYSIS

We review a district court’s denial of a defendant’s proposed

jury instruction on a question of law de novo. See United States v.

Duran, 59 F.3d 938, 941 (9% Cir. 1995).

* Counts 2, 3, and 4 of the indictment charged Robinson with

violating 18 U.S.C. § 545, which prohibits, inter alia, the

submission of false, forged or fraudulent invoices.’

2 We address the remainder of Robinson’s arguments in a Memorandum

disposition filed simultaneously with this opinion.

3. The statute punishes:

Whoever knowingly and willfully, with intent to defraud the United

7a

This offense requires the government to prove that

Robinson acted knowingly and willfully with "intent to defraud the

United States." The jury was instructed that "intent to defraud"

meant an "intent to deceive or cheat."

[1] The jury instruction that "intent to defraud" means an

intent to deceive or cheat is correct under this court’s holding in

United states v. Boggus, 411 F.2d 110 (9" Cir. 1969). In Bogeus, this

court states that the "intent to defraud" element of 18 U.S.C. § 545

means an "intent to avoid and defeat the United States Customs

laws." Jd. at 113.

Robinson relies on United States v. Menon, 24 F.3d 550 GQ"

Cir. 1994), which held that "intent to defraud" means an intent to

deprive the government of revenue. The Menon court reasoned that

because a predecessor statute required that the defendant intended

to deprive the government of revenues, and because Congress "did

not intend to make any substantive change in the statute by"

deleting the reference to revenue, the current statute must also

require that the defendant have intended to deprive the government

of revenue:

At minimum, we think that the legislative history

makes the meaning of "defraud the United States" in

§545 ambiguous given that . . . the meaning of

defraud varies from stature to statute. As the

[Supreme] Court did in McNally [v. United States,

483 U.S. 350 (1987)], we rely on the rule of lenity to

hold that because the meaning of defraud is

States, smuggles, or clandestinely introduces or attempts to smuggle or

clandestinely introduce into the United States any merchandise which

should have been invoiced, or makes out Or passes, or attempts to pass,

through the customhouse any false, forged, or fraudulent invoice, or other

document or paper. . .

8a

ambiguous in the context of §545, that section

requires an intent to cause a deprivation of money

or property.

Id. at 557.

[2] Menon acknowledged, however, that "the meaning of

‘defraud the United States’ generally extends beyond defrauding the

government of revenue." /d. at 555. The Supreme Court has stated

that a statute that has as its " ‘object the protection and welfare of

the government alone’ " aims to protect governmental interests

extending beyond property rights, whereas a statute that prevents

fraud against the public aims to protect property interests.

McNally, 483 U.S. at 359 n.8 (quoting Curley v. United States, 130

F. 1,7 (1* Cir. 1904)). The statute at issue, 18 U.S.C. § 545, has as

its primary object the protection of governmental interests and

accordingly protects governmental interests extending beyond mere

property rights. Thus, the intent to defraud element of that statute

should be construed as meaning intent to avoid and defeat the

United States Customs laws, as construed in Boggus, rather than the

narrower construction "intent to deprive the United States of

revenue.”

Our decision is in accord with holdings of two of our sister

circuits. As the Seventh Circuit explained in United States v.

Kurfess, 426 F.2d 1017 (7 Cir. 1970):

[T]he 1954 amendment to 18 U.S.C. § 545, which

deleted the word "revenue" from "intent to defraud

the revenue of the United States" indicated that the

primary Congressional purpose behind the Act was

not to raise revenue but to supervise and regulate the

inflow of imported goods. [Thus,] in light of the

Act’s purpose [, it is] no longer necessary to show

that the item or items introduced clandestinely into

9a

the United States were subject to duty in order to

prove a violation of the Act.

Id. at 1019; see United States v. Borello, 766 F.2d 46, 51 (2° Cir.

1985) (rejecting the argument that § 545 should be given the same

meaning as earlier versions of the statute, "which required a

showing the defendant had the ‘intent to defraud the revenue of the

United States’); United States v. McKee, 220 F.2d 266, 269 (2 Cir.

1955) ("[L]oss of revenue need no longer be proven by the

"\

government.").

We agree with the Second and Seventh Circuits’ conclusion

that the deletion of "revenue" in 18 U.S.C. § 545 necessitates

reading the statute differently than earlier versions, and that

"intent to defraud" in 18 U.S.C. § 545 does not mean "intent to

deprive the government of revenue." We therefore reiterate our

conclusion in Boggus that “intent to defraud" in § 545 means an

"intent to avoid or defeat the United States Customs laws."

[3] We conclude that, the district court did not err in

refusing to instruct the jury that the government was required to

prove intent to deprive the government of revenue under 18 oS. oF

§ 545.

AFFIRMED.

10a

APPENDIX B

MEMORANDUM OF THE UNITED

STATE COURT OF APPEALS

FOR THE NINTH CIRCUIT

Filed June 4, 1998

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee, No. 96-50573

CR-95-00827-JNK

MARK STRAFFORD ROBINSON

Defendant-Appellant.

)

)

)

v. D.C. No

)

) MEMORANDUM”

)

Appeal from the United States District Court

for the Southern District of California

Judith N. Keep, Chief Judge, Presiding

Argued and Submitted

October 7, 1997—Pasadena, California

Before: PREGERSON, D.W. NELSON, and HAWKINS,

Circuit Judges.

* This disposition is not appropriate for publication and may not be cited to or by the

courts of this circuit except as provided by 9 Cir. R. 363.

lla

Mark Robinson appeals his jury conviction and sentence for

conspiracy, smuggling goods into the United States, laundering of

monetary instruments, engaging in monetary transactions in

property derived from specified unlawful activity, and mail fraud

in violation of 18 U.S.C. §§ 371, 545, [ ], 1341, 1956, and i957.

Robinson’s conviction arose out of the international sale and

transfer of IBM processor boards. We affirm.’

I.

Robinson argues that the district court erred in failing to

grant a motion of judgment of acquittal on counts 2, 3, and 4

because the government failed to prove that false statements

included on invoices sent to United States Customs were material.’

1 We address the remainder of Robinson’s arguments in an opinion filed simultaneously —____

with this disposition.

2 Robinson makes a series of additional arguments that merit little discussion.

First, he maintains that the district court erred by refusing to give the requested jury

unanimity instruction with respect to counts 8-16. He claims that the evidence and the

prosecution’s argument created confusion as to what the monetary laundering transactions

were designed to conceal and disguise, and that a unanimous jury instruction is required

where there is a genuine possibility of juror confusion. Yet Robinson offers no specific

argument as to the manner in which "the government's theory shifted throughout both

the course of the trial and its own closing argument,” nor does he assert a specific

argument regarding how this might have led to jury confusion. Therefore, the district

court did not err by refusing to give the requested unanimity instruction.

Robinson also argues that the evidence the government used to support “smuggling” in

counts 8-40 was not evidence of smuggling, as the government contends, but rather, of

false documentation. He appears to argue that the proper word usage in counts 8-40

would have been “violation of § 545" rather than smuggling. The district court was

correct in its reasoning that 18 U.S.C. § 545's title - - "Smuggling Goods into the United

States” - - supports the conclusion that the usage of the term “smuggling” in counts 8-40

was generic, and can describe any offense in section 545, including false invoicing.

Finally, Robinson argues that he was improperly sentenced on his money laundering

counts because the court should have looked to the amount of customs duties that the

government alleged was evaded in determining the sentencing range. Robinson offers no

legal basis for his assertion that although he was sentenced under the money laundering

statutes, 18 U.S.C. §§ 1956 and 1957, the court should look to the amount of customs

duties evaded rather than the amount of money laundered. We have previously stated that

the district court should look to the value of the funds laundered when determining the

12a

We review a district court’s failure to grant a motion of

judgment of acquittal under the same standard applied to a

challenge of sufficiency of the evidence, see United States v.

Mullins, 992 F.2d 1472, 1479 (9 Cir. 1993); there is sufficient

evidence to support a conviction if, reviewing the evidence in the

light most favorable to the government, any rational trier of fact

could have found the essential elements of the crime beyond a

reasonable doubt, see United States v. Bishop, 959 F.2d 820, 829 (9

Cir. 1992).

The jury was instructed that in order to convict Robinson of

violating 18 U.S.C. § 545, they were in part required to find that

the defendant "did make out or pass or attempt to make out or pass

a materially false, forged, or fraudulent invoice." They were

instructed that a statement was material "if it could have influenced

[United States Customs’] decisions or actions." °

We conclude that a reasonable trier of fact could have found,

beyond a reasonable doubt, that the false statements were material.

Proof of actual reliance is not required, only that the false statement

could have influenced the customhouse’s actions. See United States

v. Facchini, 832 F.2d 1159, 1162 (9" Cir. 1987) (emphasis added).

The government introduced evidence that duty would be owing on

the computer cards that were falsely invoiced and that because they

were falsely invoiced, less duty was paid than was owed. A

reasonable factfinder could conclude that the false statements were

material because they could have led United States Customs to

charge less duty than would otherwise have been assessed.

sentencing range. See United States v. Golb, 69 F.3d 1417, 1431 (9" Cir. 1995). Thus,

Robinson was properly sentenced.

3 Although this circuit has never defined “material” in the context of 18 U.S.C. § 545,

the district court's definition is in accord with the definition of material in the context of

other statutes. For the purposes of this disposition only, because neither party contests

the definition of material in the jury instructions, we will accept this definition.

l3a

Il.

Robinson argues that the trial court erred in not granting a

judgment of acquittal on counts 5, 6 and 7 because the indictment

was insufficient inasmuch as it alleged that the processor boards

were imported “contrary to law" and did not identify the specific

law that had been violated.

Counts 5, 6 and 7 of the indictment did not specify the

statute violated by the importation. The counts referred to

merchandise that had been imported and brought into the United

States contrary to law "in that such merchandise had not been

properly presented for inspection, entered and declared." We

reiterated in United States v. Normandeau, 800 F.2d 953 (9% Cir.

1986), that "the phrase ‘contrary to law’ in section 545 is not

complete in itself. It is necessary to look elsewhere to see when

importation or bringing in of merchandise is ‘contrary to law’." Id.

at 958 (citing Olais-Castro v. United States, 416 F.2d 1155, 1158 (o*

Cir. 1969)). We also held that an indictment must "be read in its

entirety" to ascertain whether an indictment states "the elements of

the offense charged with sufficient clarity to apprise a defendant of

the charge against him, primarily so that he can defend himself

against the charge and plead double jeopardy in appropriate cases.”

Normandeau, 800 F.2d at 958.

In Normandeau, while the count at issue did not specify the

law violated, another count did. Thus, we concluded, the

indictment sufficiently informed [the accused] of the nature of the

section 545 charges against him so that no prejudice to him could

have ensued." Id.

"The key question in these inquiries is whether an error or

omission in an indictment worked to the prejudice of the accused.

If it did not, a conviction will not be reversed merely because a

minor or technical deficiency in the indictment is later discovered."

Id.

l4a

While the government here failed to cite a specific statute, the

failure did not prejudice Robinson because the indictment did

specify that Robinson’s acts were contrary to law "in that such

merchandise had not been properly presented for inspection,

entered and declared." Thus, Robinson was adequately informed

of the charges against him such that no prejudice occurred.

Il.

Robinson argues that the district court erred in failing to

grant a motion of judgment of acquittal as to counts 8-40, the

money laundering counts,’ because there cannot be monetary

"proceeds" from an 18 U.S.C. § 545 violation unless there was duty

owing on the goods or the imported merchandise was contraband.

Title 18 U.S.C. § 545 refers, however, to smuggled

merchandise without regard to whether the merchandise may be

legally imported into the United States or whether there is duty

owing. Title 18 U.S.C. §§ 1956 and 1957 describe the statutes that

may serve as a specified unlawful activity, and they expressly allow

money laundering violations and offenses involving criminally

derived property transactions to be grounded in section 545

offenses. Therefore, the district court’s failure to grant the

defendant’s motion to acquit was proper.

IV.

Robinson’s argument that the district court erred in

excluding his evidence regarding "the scope of involvement of IBM

in the investigation, inducement of witnesses, and prosecution of

the case" also fails. He argues that if he had been allowed to

examine government witnesses property, he would have been able

to demonstrate their bias as a result of the influence of IBM.

4 Title 18 U.S.C. §§ 1956 and 1957 prohibit the laundering of money constituting the

proceeds of any specified unlawful activity.

lSa

We review exclusions of evidence and limitations of

examinations of witnesses for an abuse of discretion. See United

States v. Colbert, 116 F.3d 395, 396 (9% Cir. 1997) (limitations of

examinations); United States v. Rewald, 889 F.2d 836, 852 (9" Cir.

1990) (exclusions of evidence). "The trial court does not abuse its

discretion as long as the jury receives sufficient information to

appraise the biases and motivations of the witnesses." United States

v. Manning, 56 F.3d 1188, 1197 (9% Cir. 1995).

The district court was within its discretion in excluding

evidence purporting to establish that IBM was controlling the

government's case; this finding was supported by Robinson’s lack

of proof. As for the argument that Robinson should have been

allowed to expose the biases of certain witnesses, the district court

was within its discretion in limiting their examination, for "the jury

receive[d] sufficient information to appraise the biases and

motivations of the witnesses." Id. at 1197.

V.

Finally, Robinson argues that venue was not proper in

Southern California for the act of passing false invoice through the

customshouse in New York. Thus, he argues, the trial court erred

in failing to instruct the jury on venue and in failing to grant a

judgment of acquittal on counts 2, 3 and 4 for lack of venue.

Counts 2, 3 and 4 charged Robinson with making out and

passing, and attempting to make out and pass through the

customshouse false invoices in violation of 18 U.S.C. § 545°

5 Jury Instruction 27 instructed that in order for Robinson to be found guilty of counts

2-4:

[T]he government must prove each of the following elements beyond

a reasonable doubt:

First: the defendant knowingly and willfully,

with intent to defraud the United States;

16a

The relevant portion of Section 545 states:

Whoever knowingly and willfully, with intent to

defraud the United States, smuggles or clandestinely

introduces or attempts to smuggle or clandestinely

introduce into the United States any merchandise

which should have been invoiced, or makes out or

passes, or attempts to pass, through the

customshouse any false, forged, or fraudulent

invoice, or other document or paper . . . Shall be

fined .. . or imprisoned not more than five years . .

In United States v. Corona, 34 F.3d 876, 879 (1994), we

concluded that to determine for venue purposes where a crime

occurred, "we examine the key verbs in the statute defining the

criminal offense to find the scope of relevant conduct." In United

States v. Angotti, 105 F.3d 539, 544 (9" Cir. 1997), we cautioned

that we have never stated "that verbs must be considered to the

exclusion of all other factors. Other circuits have rejected the view

that verbs are the sole consideration in determining venue."

Whether or not we utilize the "key verb" test, we reach the

conclusion that venue was proper in the Southern District of

California, for Robinson committed the act of passing false invoices

partially in that district.

The crime of passing false invoice was committed in more

than one district and thus can be considered a continuous offense.

Under 18 U.S.C. § 3237(a), venue is proper where a crime is begun,

Second: did make out or pass or attempt to make

Out or pass a materially false, forged or fraudulent

invoice or other document in connection with the

importation of IBM computer cards into the

United States.

Ee

17a

continued, or completed:

Except as otherwise expressly provided by

enactment of Congress, any offense against the

United States begun in one district and completed in

another, or committed in more than one district,

may be inquired of and prosecuted in any district in

which such offense was begun, continued, or

completed. . ..

In Angotti, we determined in the context of another statute’

that "the crime of making a false statement is a continuing offense."

105 F.3d at 542. Similarly, making, passing, or attempting to pass

a false invoice under 18 U.S.C. § 545 is acontinuous crime that can

be prosecuted in any district in which the crime is begun,

continued, or completed.

We conclude that the district court could have found

sufficient evidence to establish venue under 18 U.S.C. § 545.

Pecqueraux and Robinson devised an arrangement whereby CSC

Computer Sales & Leasing, Inc. ("CSC") would purport to be the

buyer of the imported cards, and would in turn "sell" these cards to

Robinson’s company in San Diego. In fact, the buy-sell transaction

was between Pecqueraux’s company and Robinson’s company;

CSC merely acted as an intermediate party. In doing so, CSC

relied on the sales amount of the cards that were provided by

Pecqueraux and by Robinson. Robinson signed several "sales

agreements" in San Diego that misrepresented the price of the cards;

these documents were faxed from San Diego to CSC in New York.

CSC used the information provided to it by Pecqueraux and

Robinson in making out the false invoices that were submitted to

United States Customs. Thus, the system of false invoicing was

6 That statute is 18 U.S.C. § 1014, which punishes the making of false statements

for the purpose of influencing the action of a federally insured institution.

18a

partially carried out in San Diego, as Robinson signed false

documents there as part of the false invoicing scheme and also

orchestrated the passing of the invoices from San Diego.

Therefore, the failure to grant a motion for a judgment of

acquittal was proper, and the district court’s failure to instruct the

jury On venue was not error.

AFFIRMED.

19a

APPENDIX C

ORDER OF THE UNITED

STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Dated August 31, 1998

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, °

Plainuff-Appellee, No. 96-50573

D.C. No

CR-95-00827-INK

MARK STRAFFORD ROBINSON _)

Defendant-Appellant.

(Southern California

IN Fil

Before: PREGERSON, D.W. NELSON

The panel as constituted above has voted to deny th

hearing and to reject the suggestion for rehearing en |

en Danc

The full court has been advised of the suggestion for 1

ic and no judge of the court has called for a vo

a > 2c

I CG. Hu J ipp ] Rae te

ine penton for reheanng ts den

I

|

inc 1s rejected