JOHN JAIRO ARIAS, PETITIONER V. UNITED STATES OF AMERICA No. 90-5714 In The Supreme Court Of The United States October Term, 1990 On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Eleventh Circuit Brief For The United States In Opposition OPINION BELOW The opinion of the court of appeals (Pet. App. I) is reported at 904 F.2d 606. JURISDICTION The judgment of the court of appeals was entered on June 27, 1990. The petition for a writ of certiorari was filed on September 7, 1990. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED Whether petitioner, a bank customer violated the currency transaction reporting statute, 31 U.S.C. 5313, by casuing a bank to fail to file a currency transaction report on transactions of more than $10,000 on the same day. STATEMENT After a bench trial in the United States District Court for the Southern District of Florida, petitioner was convicted of causing a financial institution to fail to file a currency transaction report, in violation of 31 U.S.C. 5313 and 5322. He was sentenced to one year's imprisonment. The court of appeals affirmed per curiam. 1. On October 29, 1985, petitioner went to three branches of the Harbor Federal Savings and Loan and made cash transactions totaling $12, 750. At one branch of the bank, petitioner purchased a $6,000 cashier's check; at another branch of the bank petitioner purchased a $4,750 cashier's check; at a third branch, he purchased two $1,000 money orders. Gov't C.A. Br. 4. Petitioner did not inform any employees of the bank that these transactions amounted to more than $10,000, and the bank did not file a currency transaction report. Prior to trial, petitioner moved to dismiss the indictment for failure to charge an offense, but the district court denied this motion. Id. at 2. Petitioner was then tried and convicted. 2. On appeal, petitioner claimed that his conduct did not constitute an offense under the currency transaction reporting statute, 31 U.S.C. 5313. The court of appeals affirmed in a per curiam opinion, stating that the case was "controlled" by its prior decision in United States v. Meros, 866 F.2d 1304 (1989) (holding that a bank customer who causes a bank to fail to file a currency transaction report violates the statutory and regulatory provisions requiring the filing of a form for any cash transaction of more than $10,000. ARGUMENT Petitioner contends (Pet. 8-17) that the currency transaction reporting statute is not violated when a bank customer structures cash transactions to conceal the fact that he has engaged in transactions involving more than $10,000 with a single bank on a single day. Petitioner's claim, however, is of no continuing importance: since the time petitioner committed his offense, Congress has amended the currency transaction reporting statute to remove any doubt that it encompasses structured transactions of the sort involved here. Moreover even before that amendment, petitioner was properly held liable for his conduct. Accordingly, this Court's review is not warranted. 1. Under 31 U.S.C. 5313, the Secretary of the Treasury has the authority to promulgate regulations requiring participants in cash transactions with domestic financial institutions to file a report of the transaction. Pursuant to that authority, the Secretary has promulgated regulations requiring financial institutions to file currency transaction reports (CTRs) whenever a customer engages in a cash transaction of more than $10,000. See 31 C.F.R. 103.21-29. Although Section 5313 and its accompanying regulations impose a duty only on financial institutions to file CTRs, several courts -- including the Eleventh Circuit -- recognized that under 18 U.S.C. 2(b) a defendant may be held liable for causing a financial institution to violate its statutory duties. See, e.g., United States v. Heyman, 794 F.2d 788 (2d Cir. 1986), 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 v. Meros, 866 F.2d 1304 (11th Cir. 1989); United States v. Giancola, 783 F.2d 1549 (11th Cir.), cert. denied, 479 U.S. 1018 (1986); United States v. 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). Other courts took a contrary view, holding that because Section 5313 and the applicable regulations do not themselves impose on third parties a duty to file CTRs, 18 U.S.C. 2(b) cannot be read to impose criminal liability on persons who, by structuring their deposits, cause a financial institution to fail to file a CTR. See, e.g., United States v. Anzalone, 766 F.2d 676 (1st Cir. 1985); United States v. Varbel, 780 F.2d 758 (9th Cir. 1986); United States v. Larson, 796 F.2d 244 (8th Cir. 1986). In the Money Laundering Act of 1986, which formed Subtitle H of the Anti-Drug Abuse Act of 1986, Pub. L. No. 99-570 (Oct. 27, 1986), Congress overhauled the statutory scheme and resolved this conflict of authority. One of the express purposes of the new Act was to overrule the decisions in Anzalone and Varbel and to codify the position of the Eleventh Circuit, which was first expressed in Tobon-Builes. Section 1354 of the Act, entitled "Structuring Transactions to Evade Reporting Requirements Prohibited," creates a new section of Title 31 (Section 5324), which provides in pertinent part 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 material omission or misstatement of fact; or (3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions. By its terms, the statute imposes crimnal liability for causing a financial institution to fail to file a CTR as well as for structuring deposits, as petitioner did here, for the purpose of evading the reporting requirements of Section 5313. In addition, the legislative history specifically states that Congress intended to codify the Eleventh Circuit's position, under which petitioner was clearly liable. S. Rep. No. 433, 99th Cong., 2d Sess. 21-22(1986). Thus, Congress validated the court of appeals' position in this case, eliminating any need for this Court's review of the issue presented in this case. 2. In addition, the court of appeals' decision is correct under the law as it existed when petitioner commited his offense. As the Eleventh Circuit has explained in numerous decisions, see Meros, 866 F.2d at 1311 (collecting cases), although the duty to file CTRs is imposed only on financial institutions, a third party who causes the institution to violate that duty can be convicted 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 Section 2 states, the aiding and abetting statute removes all doubt that one who puts in motion or assists in the illegal enterprise but causes the commission of an indispensable element of the offense by an innocent agent or instrumentality, is guilty as a principal even though he intentionally refrained from the direct act constituting the complete offense. This construction of Section 2(b) applies here as well. Petitioner's structured deposits prevented Harbor Federal Savings and Loan from complying with its duty to file a CTR. The fact that petitioner himself did not commit the "direct act constituting the completed offense" cannot shield him from liability under Section 2(b). /1/ CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. KENNETH W. STARR Solicitor General ROBERT S. MUELLER, III Assistant Attorney General J. DOUGLAS WILSON Attorney NOVEMBER 1990 /1/ Petitioner contends (Pet. 9, 11) that because he engaged in three cash transactions with the bank on October 29, 1985, at different branches and with different tellers, the bank never came to "know" of its obligation to file a currency transaction report. That argument is contrary to fundamental principles of corporate liability, under which a corporation's "knowledge" is found in the sum of its parts. As one court of appeals recently explained in the context of a currency transaction reporting case, Corporations compartmentalize knowledge, subdividing the elements of specific duties and operations into smaller components. The aggregate of those components constitutes the corporation's knowledge of a particular operation. It is irrelevant whether employees administering one component of an operation know of the specific activities of employees administering another aspect of the operation(.) United States v. Bank of New England, 821 F.2d 844, 856 (1st Cir.), cert. denied, 484 U.S. 943 (1987); see also Ris & Co. v. United States, 262 F.2d 245, 250 (8th Cir. 1958); St. Johnsbury Trucking Co. v. United States, 220 F.2d 393 (1st Cir. 1955); Inland Freight Lines v. United States, 191 F.2d 313, 315 (10th Cir. 1951); United States v. T.I.M.E.-D.C., Inc., 381 F. Supp. 730 (W.D. Va. 1974). That principle directly applies here, despite petitioner's success in shielding from any individual bank employee the knowledge that he had engaged in cash transactions exceeding $10,000.