|Ratzlaf v. United States (92-1196), 510 U.S. 135 (1994). |
[ Blackmun ]
[ Ginsburg ]
SUPREME COURT OF THE UNITED STATES
WALDEMAR RATZLAF and LORETTA RATZLAF, PETITIONERS v. UNITED STATES
on writ of certiorari to the united states court of appeals for the ninth circuit
Ratzlaf, along with his wife and a casino employee, then proceeded to visit several banks in and around Stateline, Nevada, and South Lake Tahoe, California, purchasing separate cashier's checks, each in the amount of $9,500. At some banks the Ratzlafs attempted to buy two checks--one for each of them--and were told that a report would have to be filed; on those occasions they cancelled the transactions. Ratzlaf then returned to the casino and paid off $76,000 of his debt in cashier's checks. A few weeks later, Ratzlaf gave three persons cash to purchase additional cashier's checks in amounts
less than $10,000. The Ratzlafs themselves also bought five more such checks in the course of a week.
A jury found beyond a reasonable doubt that Ratzlaf knew of the financial institutions' duty to report cash transactions in excess of $10,000 and that he structured transactions for the specific purpose of evading the reporting requirements.
The Court today, however, concludes that these findings are insufficient for a conviction under 31 U.S.C. §§ 5322(a) and 5324(3), [n.2] because a defendant also must have known that the structuring in which he engaged was illegal. Because this conclusion lacks support in the text of the statute, conflicts in my view with basic principles governing the interpretation of criminal statutes, and is squarely undermined by the evidence of congressional intent, I dissent.
"The general rule that ignorance of the law or a mistake of law is no defense to criminal prosecution is deeply rooted in the American legal system." Cheek v. United States, 498 U.S. 192, 199 (1991). The Court has applied this common law rule "in numerous cases construing criminal statutes." Ibid., citing United States v. International Minerals & Chemical Corp., 402 U.S. 558 (1971); Hamling v. United States, 418 U.S. 87, 119-124 (1974); and Boyce Motor Lines, Inc. v. United States, 342 U.S. 337 (1952).
Thus, the term "willfully" in criminal law generally "refers to consciousness of the act but not to consciousness that the act is unlawful." Cheek, 498 U. S., at 209 (Scalia, J., concurring in judgment); see also Browder v. United States, 312 U.S. 335, 341 (1941); Potter v.United States, 155 U.S. 438, 446 (1894); American Surety Co. v. Sullivan, 7 F. 2d 605, 606 (CA2 1925) (L. Hand, J.) ("[T]he word `willful' . . . means no more than that the person charged with the duty knows what he is doing," not that "he must suppose that he is breaking the law"); American Law Institute, Model Penal Code § 2.02(8) (1985) ("A requirement that an offense be committed wilfully is satisfied if a person acts knowingly with respect to the material elements of the offense, unless a purpose to impose further requirements appears.
As the majority explains, 31 U.S.C. § 5322(a), originally enacted in 1970, imposes criminal penalties upon "person[s] willfully violating this subchapter." The subchapter (entitled "Records and Reports on Monetary Instruments Transactions") contains several different reporting requirements, including § 5313, which requires financial institutions to file reports for cash transactions over an amount prescribed by regulation; § 5314, which requires reports for transactions with foreign financial agencies; and § 5316, which requires reports for transportation of more than $10,000 into or out of the United States. In 1986, Congress added § 5324 to the subchapter to deter rampant evasion by customers of financial institutions' duty to report large cash transactions. See infra, at 14, and n. 13. The new section provides: "No person shall for the purpose of evading the reporting requirements of section 5313(a) . . . (3) structure . . . any transaction with one or more domestic financial institutions."
Unlike other provisions of the subchapter, the antistructuring provision identifies the purpose that is required for a § 5324 violation: "evading the reporting requirements." The offense of structuring, therefore, requires (1) knowledge of a financial institution's reporting requirements, and (2) the structuring of a transaction for the purpose of evading those requirements. These elements define a violation that is "willful" as that term is commonly interpreted. The majority's additional requirement that an actor have actual knowledge that structuring is prohibited strays from the statutory text, as well as from our precedents interpreting criminal statutes generally and "willfulness" in particular.
The Court reasons that the interpretation of the Court of Appeals for the Ninth Circuit, and that of nine other circuits, [n.3] renders § 5322(a)'s willfulness requirement superfluous. See ante, at 5-6. This argument ignores the generality of § 5322(a), which sets a single standard--willfulness--for the subchapter's various reporting provisions. Some of those provisions do not themselves define willful conduct, so the willfulness element cannot be deemed surplusage. Moreover, the fact that § 5322(a) requires willfulness for criminal liability to be imposed does not mean that each of the underlying offenses to which it applies must involve something less than willfulness. Thus, the fact that § 5324 does describe a "willful" offense, since it already requires "the purpose of evading the reporting requirements," provides nobasis for imposing an artificially heightened scienterrequirement.
The majority also contends that §5322(a)'s willfulness element, when applied to the subchapter's other provisions, has been read by the courts of appeals to require knowledge of and a purpose to disobey the law. See ante, at 6-8. In fact, the cases to which the majority refers stand for the more subtle proposition that a willful violation requires knowledge of the pertinent reporting requirements and a purpose to avoid compliance with them. [n.4] Consistent with and in light of thatconstruction, Congress' 1986 enactment prohibited structuring "for the purpose of evading the reporting requirements." The level of knowledge imposed by the term "willfully" as it applies to all the underlying offenses in the subchapter on reporting requirements is "knowledge of the reporting requirements." [n.5]
The Court next concludes that its interpretation of "willfully" is warranted because structuring is not inherently "nefarious." See ante, at 9-10. It is true that the Court, on occasion, has imposed a knowledge of illegality requirement upon criminal statutes to ensure that the defendant acted with a wrongful purpose. See, e. g., Liparota v. United States, 471 U.S. 419, 426 (1985). I cannot agree, however, that the imposition of such a requirement is necessary here. First, the conduct at issue--splitting up transactions involving tens of thousands of dollars in cash for the specific purpose of circumventing a bank's reporting duty--is hardly thesort of innocuous activity involved in cases such as Liparota, in which the defendant had been convicted of fraud for purchasing food stamps for less than their face value. Further, an individual convicted of structuring is, by definition, aware that cash transactions are regulated, and he cannot seriously argue that he lacked notice of the law's intrusion into the particular sphere of activity. Cf. Lambert v. California, 355 U.S. 225, 229 (1957). By requiring knowledge of a bank's reporting requirements as well as a "purpose of evading" those requirements, the antistructuring provision targets those who knowingly act to deprive the Government of information to which it is entitled. In my view, that is not so plainly innocent a purpose as to justify reading into the statute the additional element of knowledge of illegality. [n.6] In any event, Congress has determined that purposefully structuring transactions is not innocentconduct. [n.7]
In interpreting federal criminal tax statutes, this Court has defined the term "willfully" as requiring the "voluntary, intentional violation of a known legal duty." Cheek v. United States, 498 U. S., at 200, quoting United States v. Bishop, 412 U.S. 346, 360 (1973); see also United States v. Murdock, 290 U.S. 389, 394-396 (1933). Our rule in the tax area, however, is an "exception to the traditional rule," applied "largely due to the complexity of the tax laws." Cheek, 498 U. S., at 200; see also Browder v. United States, 312 U.S. 335, 341-342 (1941). The rule is inapplicable here, where, far from being complex, the provisions involved are perhaps among the simplest in the United States Code. [n.8]
Although I believe the statutory language is clear in light of our precedents, the legislative history confirms that Congress intended to require knowledge of (and a purpose to evade) the reporting requirements but not specific knowledge of the illegality of structuring. [n.9]
Before 1986, the reporting requirements included no provision explicitly prohibiting the structuring of transactions to evade the reporting requirements. The Government attempted to combat purposeful evasion of the reporting requirements through 18 U.S.C. § 1001 which applies to anyone who "knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact" within the jurisdiction of a federal agency, and 18 U.S.C. § 2(b), which applies to anyone who "willfully causes an act to be done which if directly performed by him or another would be an offense" under federal law. Some Courts of Appeals upheld application of those criminal statutes where a report would have been filed but for the defendant's purposeful structuring. See, e. g., United States v. Tobon Builes, 706 F. 2d 1092, 1096-1101 (CA11 1983); United States v. Heyman, 794 F. 2d 788, 790-793 (CA2), cert. denied, 479 U.S. 989 (1986). As the leading case explained, a defendant's willfulness was established if he "knew about the currency reporting requirements and . . . purposely sought to prevent the financial institutions from filing required reports . . . by structuring his transactions as multiple smaller transactions under $10,000." Tobon Builes, 706 F. 2d, at 1101.
Other courts rejected imposition of criminal liability for structuring under §§ 1001 and 2(b), concluding either that the law did not impose a duty not to structure or that criminal liability was confined to limited forms of structuring. See, e. g., United States v. Varbel, 780 F. 2d 758, 760-763 (CA9 1986); United States v. Denemark, 779 F. 2d 1559, 1561-1564 (CA11 1986); United States v. Anzalone, 766 F. 2d 676, 679-683 (CA1 1985).
Congress enacted the antistructuring provision in 1986 "to fill a loophole in the Bank Secrecy Act caused by" the latter three decisions, which "refused to apply the sanctions of [the Act] to transactions `structured' to evade the act's $10,000 cash reporting requirement." S. Rep. No. 99-433, p. 7 (1986). As explained by the Report of the Senate Judiciary Committee:
"[The antistructuring provision] would codify Tobon Builes and like cases and would negate the effect of Anzalone, Varbel and Denemark. It would expressly subject to potential liability a person who causes or attempts to cause a financial institution to fail to file a required report or who causes a financial institution to file a required report that contains material omissions or misstatements of fact. In addition, the proposed amendment would create the offense of structuring a transaction to evade the reporting requirements, without regard to whether an individual transaction is, itself, reportable under the Bank Secrecy Act." Id., at 22.
See also H. R. Rep. No. 99-746, pp. 18-19, and n. 1 (1986). Congress' stated purpose to "codify Tobon Builes" reveals its intent to incorporate Tobon Builes' standard for a willful violation, which required knowledge of the reporting requirements and a purpose to evade them. Nothing in Tobon Builes suggests that knowledge of theillegality of one's conduct is required. [n.10]
The Senate Report proceeds to explain the intent required under the antistructuring provision:
"For example, a person who converts $18,000 in currency to cashier's checks by purchasing two $9,000 cashier's checks at two different banks or on two different days with the specific intent that the participating bank or banks not be required to file Currency Transaction Reports for those transactions, would be subject to potential civil and criminal liability. A person conducting the same transactions for any other reasons or a person splitting up an amount of currency that would not be reportable if the full amount were involved in a single transaction (for example, splitting $2,000 in currency into four transactions of $500 each), would not be subject to liability under the proposed amendment." S. Rep. No. 99-433, p. 22 (emphasis added).
The Committee's specification of the requisite intent as only the intent to prevent a bank from filing reports confirms that Congress did not contemplate a departure from the general rule that knowledge of illegality is not an essential element of a criminal offense.
A recent amendment to § 5324 further supports the interpretation of the court below. In 1992, Congress enacted the Annunzio Wylie Anti Money Laundering Act, creating a parallel antistructuring provision for the reporting requirements under 31 U.S.C. § 5316 which governs international monetary transportation. See Pub. L. 102-550, Tit. XV, § 1525(a), 106 Stat. 4064. [n.11] Like the provision at issue here, the new provision prohibitsstructuring "for the purpose of evading the reporting requirements" (in that case, the requirements of § 5316). At the time Congress amended the statute, every court of appeals to consider the issue had held that a willful violation of the antistructuring provision requires knowledge of the bank's reporting requirements and an intent to evade them; none had held that knowledge of the illegality of structuring was required. See n. 3, supra. The House Report accompanying an earlier bill containing the pertinent provision explained:
"Under the new provision, codified as subsection (b) of section 5324, it would be illegal to structure the importation or exportation of monetary instruments with the intent to evade the . . . reporting requirement. As is the case presently for structuring cases involving currency transaction reports, the government would have to prove that the defendant knew of the . . . reporting requirement, but would not have to prove that the defendant knew that structuring itself had been made illegal. United States v. Hoyland, 903 F. 2d 1288 (9th Cir. 1990)." H. R. Rep. No. 102-28, pt. 1, p. 45 (1991) (emphasis added). [n.12]
The 1992 amendment's replication of the original antistructuring provision's language strongly suggests that Congress intended to preserve the then uniform interpretation of the scienter requirement of § 5324. See Keene Corp. v. United States, ___ U. S. ___, ___ (1993). At the very least, then, today's decision poses a dilemma for any attempt to reconcile the two parallel antistructuring provisions now codified in § 5324: Courts must either ignore clear evidence of legislative intent as to the newly added antistructuring provision or interpret itsidentical language differently from the antistructuring provision at issue in this case.
Finally, it cannot be ignored that the majority's interpretation of § 5324 as a practical matter largely nullifies the effect of that provision. In codifying the currency transaction reporting requirements in 1970, "Congress recognized the importance of reports of large and unusual currency transactions in ferreting out criminal activity." California Bankers Assn. v. Shultz, 416 U.S. 21, 38 (1974). Congress enacted the antistructuring law to close what it perceived as a major loophole in the federal reporting scheme due to easy circumvention. [n.13] Because requiring proof of actual knowledge of illegality will make prosecution for structuring difficult or impossible in most cases, [n.14] the Court's decision reopens the loophole that Congress tried to close.
The petitioner in this case was informed by casino officials that a transaction involving more than $10,000 in cash must be reported, was informed by the various banks he visited that banks are required to report cash transactions in excess of $10,000, and then purchased $76,000 in cashier's checks, each for less than $10,000 and each from a different bank. Petitioner Ratzlaf, obviously not a person of limited intelligence, was anything but uncomprehending as he travelled from bank to bank converting his bag of cash to cashier's checks in $9,500 bundles. I am convinced that his actions constituted a "willful" violation of the antistructuring provision embodied in 31 U.S.C. § 5324. As a result of today's decision, Waldemar Ratzlaf--to use anold phrase--will be "laughing all the way to the bank."
The majority's interpretation of the antistructuring provision is at odds with the statutory text, the intent of Congress, and the fundamental principle that knowledge of illegality is not required for a criminal act. Now Congress must try again to fill a hole it rightly felt it had filled before. I dissent.
1 For convenience, I follow the majority, see ante, at 2-3, n. 2, and refer only to Waldemar Ratzlaf in this opinion.
2 As does the majority, I refer to the codification in effect at the time the Court of Appeals decided this case. See ante, at 4, n. 5.
3 See United States v. Scanio, 900 F. 2d 485, 489-492 (CA2 1990); United States v. Shirk, 981 F. 2d 1382, 1389-1392 (CA3 1992); United States v. Rogers, 962 F. 2d 342, 343-345 (CA4 1992); United States v. Beaumont, 972 F. 2d 91, 93-95 (CA5 1992); United States v. Baydoun, 984 F. 2d 175, 180 (CA6 1993); United States v. Jackson, 983 F. 2d 757, 767 (CA7 1993); United States v. Gibbons, 968 F. 2d 639, 643-645 (CA8 1992); United States v. Dashney, 937 F. 2d 532, 537-540 (CA10), cert. denied, ___ U. S. ___ (1991); United States v. Brown, 954 F. 2d 1563, 1567-1569 (CA11), cert. denied, ___ U. S. ___ (1992).
The only Court of Appeals to adopt a contrary interpretation is the First Circuit, and even that court allows "reckless disregard" of one's legal duty to support a conviction for structuring. See United States v. Aversa, 984 F. 2d 493, 502 (1993) (en banc).
4 The dominant formulation of the standard for a willful violation of the related provisions demands "proof of the defendant's knowledge of the reporting requirement and his specific intent to commit the crime." United States v. Granda, 565 F. 2d 922, 926 (CA5 1978); see also United States v. Bank of New England, N. A., 821 F. 2d 844, 854 (CA1) ("willful" violation of §5313 requires "knowledge of the reporting requirements and [defendant's] specific intent to commit the crime"), cert. denied, 484 U.S. 943 (1987); United States v. Eisenstein, 731 F. 2d 1540, 1543 (CA11 1984) (same); United States v. Dichne, 612 F. 2d 632, 636 (CA2 1979) (same standard under predecessor to §5316), cert. denied, 445 U.S. 928 (1980); United States v. Schnaiderman, 568 F. 2d 1208, 1211 (CA5 1978) (same). The term "specific intent" does not, as the majority appears to assume, import the notion of knowledge of illegality. Rather, that term generally corresponds to the concept of "purpose," see United States v. Bailey, 444 U.S. 394, 405 (1980), and it does not add to the requisite knowledge, which is specified in the first prong of the standard. The majority correctly notes that courts in a few instances have referred to a willful violation of the reporting provisions as involving violation of a "known legal duty." Those courts, however, either applied the standard from Cheek, 498 U. S., at 200, despite this Court's restriction of that standard's application to the tax context, see United States v. Sturman, 951 F. 2d 1466, 1476 (CA6 1991), or were referring simply to the reporting requirements as the "law" that one must know and actually applied the dominant standard from Granda, see Bank of New England, 821 F. 2d, at 854; United States v. Warren, 612 F. 2d 887, 890 (CA5 1980). This understanding is supported by Granda's statement that "the proper instruction would include some discussion of the defendant's ignorance of the law since the defendant's alleged ignorance of thereporting requirements goes to the heart of his or her denial of the specific intent necessary to commit the crime." 565 F. 2d, at 926 (emphasis added).
5 "Knowledge of the reporting requirements" is easily confused with "knowledge of illegality" because, in the context of the other reporting provisions--§ 5313, § 5314, and § 5316--the entity that can "willfully violate" each provision is also the entity charged with the reporting duty; as a result, a violation with "knowledge of the reporting requirements" necessarily entails the entity's knowledge of the illegality of its conduct (that is, its failure to file a required report). In contrast, § 5324 prohibits a customer from purposefully evading a bank's reporting requirements, so knowledge of the reporting requirements does not collapse into actual knowledge that the customer's own conduct is prohibited. Under the cases interpreting the statute as well as fundamental principles of criminal law, it is one's knowledge of the reporting requirements, not "knowledge of the illegality of one's conduct," that makes a violation "willful." Moreover, as explained below, Congress in 1992 rejected the majority's construction when it enacted a parallel antistructuringprovision for attempts to evade § 5316's reporting requirements. See infra, at 12-14.
6 The question is not whether structuring is "so obviously `evil' or inherently `bad' that the `willfulness' requirement is satisfied irrespective of the defendant's knowledge of the illegality of structuring." Ante, at 11. The general rule is that "willfulness" does not require knowledge of illegality; the inquiry under exceptional cases such as Liparota is whether the statute criminalizes "a broad range of apparently innocent conduct," 471 U. S., at 426, such that it requires no element ofwrongfulness.
The majority expresses concern about the potential application of the antistructuring law to a business operator who deposits cash twice each week to reduce the risk of an IRS audit. See ante, at 10. First, it is not at all clear that the statute would apply in this situation. If a person has legitimate business reasons for conducting frequent cash transactions, or if the transactions genuinely can be characterized as separate, rather than artificially structured, then the person is not engaged in "structuring" for the purpose of "evasion." See United States v. Brown, 954 F. 2d, at 1571; S. Rep. No. 99-433, p. 22 (1986). Even if application of § 5324 were theoretically possible in this extreme situation, the example would not establish prohibition of a "broad range of apparently innocent conduct" as in Liparota, 471 U. S., at 426, and it would not justify reading into the statute a knowledge of illegality requirement.
7 "[The antistructuring provision] requires proof beyond a reasonable doubt that the purpose of the `structured' aspect of a currency exchange was to evade the reporting requirements of the Bank Secrecy Act. It is this requirement which shields innocent conduct from prosecution." Hearing on S. 571 and S. 2306 before the Senate Committee on Banking, Housing, and Urban Affairs, 99th Cong., 2d Sess., 136-137 (1986) (response of Deputy Asst. Atty. Gen. Knapp & Asst. U. S. Atty. Sun to written question of Sen. D'Amato).
8 The majority offers examples of tax "avoidance" as further evidence of the apparent "innocence" of structuring transactions to evade the reporting requirements. See ante, at 11. These examples are inapposite because Congress specifically has prohibited the structuring of transactions to evade the reporting requirements. Indeed, its use of the word "evading" in § 5324 reveals that Congress deemed the intent to circumvent those requirements a "bad purpose." Moreover, the analogy to the tax field is flawed. Tax law involves a unique scheme consisting of myriad categories and thresholds, applied in yearly segments, designed to generate appropriate levels of taxation while also influencing behavior in various ways. Innocent "avoidance" is an established part of this scheme, and it does not operate to undermine the purposes of the tax law. In sharp contrast, evasion of the currency transaction reporting requirements completely deprives the Government of the information that those requirements are designed to obtain, and thus wholly undermines the purpose of the statute.
9 Because the statutory language unambiguously imposes no requirement of knowledge of the illegality of structuring, I would not apply the rule of lenity. Moreover, I am not persuaded that that rule should be applied to defeat a congressional purpose that is as clear as that evidenced here. See Liparota, 471 U. S., at 427; United States v. Bramblett, 348 U.S. 503, 509-510 (1955).
10 Contrary to the majority's suggestion, ante, at 12-13, n. 17, Congress did sanction Tobon Builes' scienter standard. In that case, which Congress intended to "codify," the Eleventh Circuit clearly addressed the level of knowledge required for a willful violation. See 706 F. 2d, at 1101. Moreover, Congress was aware of the standard that the court had adopted, explicitly characterizing Tobon Builes as imposing criminal liability upon individuals who structure transactions "to evade the reporting requirements." S. Rep. No. 99-433, p. 21.
The majority misreads the Senate Report as stating that §5324 creates the structuring offense " `[i]n addition' to codifying Tobon Builes." Ante, at 13, n. 17. The phrase "in addition" plainly refers to the previous sentence in the Report, which states that §5324 "would expressly subject to potential liability a person who causes or attempts to cause a financial institution to fail to file a required report or who causes a financial institution to file a required report that contains material omissions or misstatements of fact." S. Rep. No. 99-433, p. 22. The "codification" of Tobon Builes encompasses both sentences, and thus all three subsections of the original §5324. In any event, there is no doubt that the Report's reference to "codifying Tobon Builes" is a reference to the creation of the antistructuring offense, particularly given that Tobon Builes ex pressly imposed criminal liability for "structuring" transactions.706 F. 2d, at 1101.
Even more direct evidence of Congress's intent to incorporate the Tobon Builes scienter standard is found in the response to a question from Senator D'Amato, the Senate sponsor of the antistructuring provision. He asked Deputy Assistant Attorney General Knapp and Assistant United States Attorney Sun: "Assuming that [the antistructuring] provision had been on the books, could you have demonstrated a willful violation in the Anzalone, Varbel and Denemark cases?" The written response stated: "Assuming that the terms of [the antistructuring provision] were in effect at the time of the conduct described in Anzalone, Varbel, and Denemark, the result would, or should have been markedly different. Statements from defendants in those cases indicated that the structuring conductwas purposely undertaken to evade the reporting requirements of Title 31. As this is expressly what is prohibited under [the antistructuring provision], a willful violation . . . would have been demonstrated." Hearing on S. 571 and S. 2306 before the SenateCommittee on Banking, Housing, and Urban Affairs, 99th Cong., 2d Sess., 141-142 (1986).
11 The new law moved the antistructuring provision at issue here into a new subsection (a) of § 5324 and created subsection (b) for the new antistructuring provision.
12 The Court of Appeals for the Ninth Circuit relied on Hoyland in affirming the conviction in this case.
13 See, e. g., S. Rep. No. 99-433, pp. 2-3, 7.
14 See Welling, Smurfs, Money Laundering, and the Federal Criminal Law: The Crime of Structuring Transactions, 41 Fla. L. Rev. 287, 320 (1989).