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United States v. Abair

United States Court of Appeals, Seventh Circuit

March 19, 2014

YULIA YUREVNA ABAIR, Defendant-Appellant

Argued December 9, 2013.

Appeal from the United States District Court for the Northern District of Indiana, South Bend Division. No. 3:12-cr-076 -- Jon E. DeGuilio, Judge.

For United States of America, Plaintiff - Appellee: Donald J. Schmid, Office of The United States Attorney, South Bend, IN.

For Yulia Yurevna Abair, Defendant - Appellant: Andrew P. LeGrand, Gibson Dunn & Crutcher Llp, Dallas, TX.

Before WILLIAMS, SYKES, and HAMILTON, Circuit Judges. SYKES, Circuit Judge, dissenting.


Page 261

Hamilton, Circuit Judge.

Two weeks before she was planning to close on the purchase of a new home in Indiana, appellant Yulia Abair learned that her bank in Russia would not wire the purchase price from her account. She managed to secure the money before the closing by withdrawing a few hundred dollars at a time from ATMs up to her maximum daily limit and depositing the cash at her bank in Indiana. She was charged with violating a federal criminal statute that prohibits structuring currency transactions in order to evade federal reporting requirements for transactions involving more than $10,000 in currency. 31 U.S.C. § 5324(a)(3). Abair was convicted in a jury trial. She also agreed to sell her new home and to forfeit the entire proceeds to the government. She argues on appeal that the trial court erroneously applied Federal Rule of Evidence 608(b) by allowing the prosecutor to cross-examine her at length about alleged false statements on a tax return and student financial aid applications. We find that the government lacked a good faith basis for believing that Abair lied on the tax and financial aid forms and therefore conclude that the district court erred by allowing the prosecutor to ask a series of accusatory and prejudicial questions about them under Rule 608(b). We cannot say that the error was harmless in a trial that hinged on Abair's credibility. We reverse Abair's conviction and remand for a new trial. Abair also challenges the forfeiture of the entire proceeds of her home sale as an unconstitutionally excessive fine. We offer some guidance on that issue in case it arises again after remand.

I. Factual Background

Abair emigrated to the United States from Russia in 2005 and married an American citizen. They lived together in Indiana, where Abair ran a massage therapy business and worked toward her nursing degree. During this time, Abair still owned her old apartment in Moscow. After being divorced, Abair sold the apartment in 2010 and deposited the proceeds in her account with Citibank Moscow. The next year, she signed a contract to buy a home for cash in South Bend, Indiana. That agreement set the closing for June 3, 2011.

Several weeks after signing the contract, Abair asked Citibank Moscow to transfer the purchase price from her account. The bank refused, apparently because her local bank account was in her married name and the Citibank Moscow account used her maiden name. The only way to reach her money in time for the closing was by withdrawing it bit by bit from Citibank ATMs in Indiana. Abair did so over a frenetic two weeks in which she repeatedly withdrew the maximum daily amount of cash (this ceiling was set in rubles but hovered around $6400). Over the same period, Abair made eight deposits at her local bank in amounts ranging from $6400 to $9800--all below the $10,000 limit at which the currency reporting requirements kick in. See 31 U.S.C. § 5313(a); 31 C.F.R. § 1010.311. The last of these deposits was on Tuesday, May 31. Because it immediately followed the Memorial Day weekend, her deposit was posted alongside one she had made on Saturday, pushing her " daily"

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deposit over the $10,000 reporting threshold set by regulation. See 31 C.F.R. § 1010.313. The teller asked for her identification and filled out the required currency transaction report. We presume it was this report that led the government to investigate Abair.

The U.S. Attorney's Office decided Abair was worth prosecuting, and she was indicted by a grand jury on eight counts--later correctly merged into one--of structuring financial transactions for purposes of evading the reporting requirements. Abair went to trial. Because the parties stipulated that her local bank was a domestic financial institution, the only two elements the government had to prove were that Abair knew of the reporting requirements and that she had structured her transactions for the purpose of evading those requirements.

During its case-in-chief, the government focused on Abair's pattern of withdrawals and deposits. It showed that on each day Abair went to the bank, she had more than $10,000 in her possession yet always deposited less than that amount. The government called two IRS agents who had interviewed Abair. They testified that during the interview, which was not recorded, Abair revealed her knowledge of the reporting rules. The agents also testified that Abair told them outright that she had wanted to avoid the reporting rules because " she thought the government would look at her as though she was part of an organization or something, is what she said."

For her part, Abair did not dispute that she was aware of the $10,000 limit by the time she spoke with the agents. But she said she learned about it only after making the deposits, when she asked a friend why she had been asked to show identification at the bank. Abair's version was that the agents asked her why she thought the requirements existed, and she " said probably of organization or something--something like this." (Abair had arrived in the United States speaking very little English, and she testified to continuing difficulties with complex or technical conversations.) She said her deposit amounts were based on how much cash she had on hand at the time and how much would fit in her purse.

In cross-examining Abair, the prosecutor sought to ask about her 2008 joint income tax return and the Free Application for Federal Student Aid (" FAFSA" ) forms she filed while attending nursing school. Her attorney objected on relevance grounds. In a sidebar conference, the prosecutor said he believed Abair misrepresented her business expenses on the tax return and lied on her student aid applications about her business income and her assets. He intended to ask about the filings to attack Abair's truthfulness under Federal Rule of Evidence 608(b), which allows cross-examination about specific instances of a witness's conduct if they are probative of character for truthfulness, but prohibits extrinsic evidence to prove such instances. Abair's attorney maintained his objection, arguing that the documents had no bearing on truthfulness. Abair's ex-husband had testified that he was the one who filled out the disputed expense information on their joint tax return, and the online FAFSA allowed Abair to skip questions about assets. The judge ruled that the filings were probative of Abair's truthfulness under Rule 608(b) and that the probative value of the evidence was not substantially outweighed by the danger of prejudice. See Fed.R.Evid. 403. The judge said the prosecutor was free to question Abair " in a very limited manner on these subjects," provided the questioning stopped at the point she denied lying on the forms.

Page 263

Ask he did, though, repeatedly, and without stopping at the denials: " Isn't it true that you helped make prior statements--false statements--in submissions that related to financial matters; both on your tax returns and on your financial aid applications, you made false statements?" Abair denied this, but the questioning continued. Didn't the FAFSA form ask her to state her assets? No, not exactly. Didn't she recall being asked about her assets? No, the computer let her skip that part.

The questioning continued in the same vein. Wasn't it true she also lied about her income on the FAFSA forms? Didn't she lie on her taxes about her business's losses? Didn't she say expenses were double her gross receipts? Was she unaware that she gave her husband false numbers when he did their taxes? Abair denied having lied. She said she played almost no role in preparing her family's tax returns and never signed them. Her attorney raised multiple objections. But although the trial court reined in the questioning somewhat, the prosecutor had achieved what he set out to do.

The jury found Abair guilty on all counts. The court merged the eight counts into one, sentenced Abair to two years of probation, and ordered her to sell her new home and forfeit to the government all the proceeds of the sale, which amounted to $67,060.

II. Analysis

Abair argues that the district court abused its discretion in allowing the questions about her financial filings and claims the forfeiture was unconstitutionally excessive. Before dealing with those issues, though, we address briefly her argument that the original eight-count indictment was multiplicitous on the theory that her eight deposits together could support only one count of structuring. We have suggested as much before, United States v. Davenport, 929 F.2d 1169, 1171-72 (7th Cir. 1991), but the district judge corrected any problem on this score by merging the counts at sentencing. The judge did not do so earlier because defense counsel waited until mid-trial to challenge the indictment under Federal Rule of Criminal Procedure 29 rather than doing so in a Rule 12 pre-trial motion. The delayed merger had no effect on Abair's sentence, and nothing suggests the number of counts contributed to the jury's verdict. The jury was instructed to consider the counts separately, and a rational jury could have found Abair guilty of each one based on the IRS agents' testimony and the record of Abair's transactions if it did not believe her testimony. We turn now to the principal issue on appeal.

A. Cross-Examination Under Rule 608(b)

Federal Rule of Evidence 608(b) limits the use of specific examples of a witness's prior conduct to support or undermine the witness's credibility. The rule bars extrinsic evidence of prior conduct but gives trial judges discretion to allow counsel to ask about it on cross-examination. Because " the possibilities of abuse are substantial," however, the conduct must be sufficiently relevant to truthfulness before it can be the subject of cross-examination. Fed.R.Evid. 608(b) Advisory Committee Note for 1972. What questions are allowed remains subject to " the overriding protection of Rule 403," which requires that their " probative value not be outweighed by danger of unfair prejudice, confusion of issues, or misleading the jury ... ." Id.; see also Unite ...

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