II. Plaintiff's Summary Judgment Motion
Plaintiff seeks summary judgment for forfeiture of the $ 200,000 pursuant to 18 U.S.C. § 981 (a)(1)(A), for alleged violations of 31 U.S.C. §§ 5313(a) and 5324.
A. Probable Cause for Forfeiture
Claimants maintain that plaintiff has failed to show probable cause for forfeiture and thus the case should be dismissed. The government's basis for seeking forfeiture is that the defendant property was procured as a result of claimants obtaining cashier's checks from financial institutions with the intent to evade the reporting requirements. As claimants argue, it is the governments burden to show both the prohibited conduct and the requisite intent in determining probable cause. Then, once probable cause is shown, the burden shifts back to claimants to show that the factual predicates for forfeiture have not been met. United States v. 316 Units of Municipal Secur., 725 F. Supp. 172, 177-79 (S.D.N.Y. 1989).
However, plaintiff can succeed in establishing probable cause even though there may be a question of fact on the issue of intent which precludes summary judgment.
In forfeiture cases, probable cause means "a reasonable ground for a belief of guilt, supported by less than prima facie proof but more than mere suspicion." United States v. 15824 West 143rd Street, 736 F. Supp. 882, 884 (N.D. Ill. 1990) (citation omitted). Claimants argue that the affidavit of IRS agent Schwartz (which serves as the basis of the verified complaint) is not admissible evidence and not based at all on personal knowledge. Therefore, according to claimants, under 15824 West 143rd, plaintiff's have failed to establish probable cause. However, in order to find probable cause, the affidavit need not be admissible evidence and could even be based on hearsay.
See 15824 West 143rd, 736 F. Supp. at 885; see also United States v. Premises Known as 526 Liscum Drive, 866 F.2d 213, 217 n.3 (6th Cir. 1989).
The damaging portions of the affidavit (at least from a probable cause standpoint) are admitted to by the claimants. Namely, claimants admit that they bought a house (ans. P 8) with a $ 20,000 down payment and the balance with approximately 36 cashier's checks (ans. P 10). Claimants admit that the checks were for less than $ 10,000 each. Thus, they do not deny that the reporting requirements were avoided, but rather seek to explain why the checks were obtained in such a manner (ans. P 26). Thus, any infirmities in the papers of the plaintiff are cured by the undisputed facts. The circumstantial evidence and reasonable inferences from the undisputed facts show that there is a reasonable ground for a belief that claimants structured the transactions with the intent to evade the reporting requirements.
See 15824 West 143rd, 736 F. Supp. at 886. Therefore, the government has made a sufficient showing to establish probable cause.
The remaining issue to be decided is whether plaintiff has satisfactorily demonstrated a lack of a genuine issue of material fact as to the requisite intent under section 5324. For this purpose, we must analyze the meaning of "for the purpose of evading the reporting requirements" in section 5324.
Plaintiff admits that forfeiture is improper "unless claimants had the specific intent to avoid the filing of currency transaction reports." Pltf's reply at 3. Plaintiff maintains that the undisputed facts demonstrate that claimants were aware of the reporting requirements and acted to avoid them. Claimants deny this representation. Further, claimants argue that plaintiff has not demonstrated that claimants' violation was "willful," as, according to claimants, is required in this context. Finally, claimants raise as an affirmative defense that forfeiture of $ 200,000 in this situation would be a violation of the eighth amendment prohibition against excessive punishment.
Claimants argue initially that 31 U.S.C. § 5321(a)(4) prevents civil forfeiture here unless it has been demonstrated that they "willfully" violated section 5324. We note first that section 5324 does not contain a reference to willful behavior. In order to be convicted of a criminal anti-structuring violation under section 5322, however, a willful violation of section 5324 must be proved.
Section 5321(a)(4), governing civil penalties which may be assessed by the Secretary of the Treasury for violations of section 5324, does require a willful showing.
Section 5321(a)(4) was added in a 1986 amendment and applies to violations committed after the end of the three-month period beginning on October 27, 1986. See 31 U.S.C.A. § 5321 (stat. n. at 99-100 (Supp. 1992)). This section was added at the same time and with the same effective date as section 5324 which prohibits structuring transactions in order to evade the reporting requirements.
Claimants do not address the fact that a civil forfeiture under section 981 is a different thing from a civil penalty under section 5321, see United States v. Rogers, 962 F.2d 342, 344 (4th Cir. 1992), and they make no argument concerning why we should import the willful standard of civil monetary penalties into civil forfeitures. We also note that some courts have not found a willful standard in connection with civil forfeitures.
Nevertheless, we believe it makes little sense to have a willful requirement for imposing a civil penalty and not require at least the same degree of intent for the more severe penalty of forfeiture.
This conclusion fits easily with the statute because, though it does not use the word "willful," section 5324 does have a specific intent requirement. We find that the intent element of section 5324 requires the same showing as that required under 5321(a)(4).
Courts have disagreed on the meaning of the willful standard in various contexts. Claimants cite Cheek v. United States, 111 S. Ct. 604 (1991), as support for the proposition that a willful violation of the anti-structuring laws requires a showing that claimants had knowledge of the laws. Cheek was a criminal tax case in which the Supreme Court found that Congress' use of the word "willfully" in the criminal tax context required the government to prove that the defendant committed a "voluntary, intentional violation of a known legal duty." Cheek, 111 S. Ct. at 609-10. The Cheek decision relied on Congress' intent in using the statutory term "willfully" in the criminal tax context to create an exception to the traditional rule that ignorance of the law is no excuse. Id. at 609. At least one court has sought to apply the Cheek version of "willfully" in the criminal anti-structuring context. See United States v. Aversa, 762 F. Supp. 441 (D.N.H. 1991) (specific intent to violate the law required).
Other courts have refused to apply the Cheek rationale to anti-structuring violations. See Rogers, 962 F.2d at 344 ("proof of a willful violation of § 5324(3), as set forth in § 5322(a)," does not require "the additional showing that a party knew that the structuring of the transactions was illegal."); United States v. Brown, 954 F.2d 1563, 1569 n.2 (11th Cir. 1992); United States v. Dashney, 937 F.2d 532, 540 (10th Cir.), cert. denied 116 L. Ed. 2d 351, 112 S. Ct. 402 (1991). The Dashney court reasoned that the necessity for requiring knowledge of the law under certain statutes using "willfully" comes from the desire to prevent innocent people from violating a statute due to what is typically innocent behavior. Dashney, 937 F.2d at 539. With this purpose in mind, there is no reason to require knowledge for a violation of section 5324 because it already contains a scienter requirement; therefore, no "innocent" person could be caught by section 5324. Id. at 539.
The Dashney standard for willful behavior for criminal anti-structuring violations is, for all practical purposes, the same as the scienter requirement in cases of civil forfeiture where the willful standard is not explicitly applied. See United States v. Wollman, 945 F.2d 79, 81 (4th Cir. 1991) ("the only scienter requirement for a violation of § 5324(3) is that the violating party 'had knowledge of the reporting requirements and acted to avoid them.'"); 316 Units, 725 F. Supp. at 179 ("government need only prove that claimants had knowledge of the reporting requirements and acted to avoid them.").
In any event, we need not decide whether the appropriate standard requires knowledge of the anti-structuring provisions or just knowledge of the reporting requirements. Under either standard, we must deny plaintiff's motion for summary judgment. Claimants have established enough uncertainty as to the element of intent to make summary judgment improper. Id. at 179.
Claimants maintain that some banks had policies against issuing cashier's checks above certain amounts to non-customers and that other banks preferred not performing transactions in excess of $ 10,000 because of the "paperwork" involved. The best plaintiff can do is to argue that " claimants acknowledge in P 26 of their answer that the purpose of structuring the transaction through 36 separate cashier's checks was to avoid the 'paperwork,' i.e. the currency transaction reports that are required for a cash transaction of $ 10,000." Pltf's reply at 3. We cannot grant summary judgment on an unsubstantiated characterization of the claimants' purported knowledge.
Resolving all doubts in favor of claimants, as we must, we assume that some banks had the policies and aversion to paperwork that claimants suggest. Plaintiff does nothing to rebut claimants' version of what they knew of the reporting requirements, except claim that claimants' story is highly unlikely. "While there is probable cause that claimants knew of the federal reporting requirements, the evidence needed to overcome the government's showing is not so 'one-sided that one party must prevail as a matter of law.'" 316 Units, 725 F. Supp. at 179-80, quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Therefore, we deny plaintiff's motion for summary judgment.
For the above reasons, we deny claimants' motion to transfer venue and we deny plaintiff's motion for summary judgment.
JAMES B. MORAN,
Chief Judge, U.S. District Court
October 8, 1992.