31 U.S.C. 5324, Americans, attorneys, banks, Boston, crime, CTR, FBI, Federal government, forfeiture, Harvey Silverglate, money, selective prosecution, Structuring, The Smurfs!, Three Felonies a Day, U.S. Attorney
Boston attorney Harvey Sliverglate wrote an insightful book called Three Felonies A Day, http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/1594035229, about how the average “law-abiding” American commits three “serious” offenses every day without realizing it. His point is one I have seen firsthand – the feds have thousands of laws, which criminalize everything imaginable, from which to choose to selectively prosecute anyone they want. They can always decline, but when they do target a citizen, that person is instantly in a world of pain.
Here’s an example of such a federal criminal law you didn’t know about and probably have committed. After law school, passing the bar exam, and practicing criminal law for years, I had never heard of it until one particular case (maybe I’m dumb…). The mere existence of the law and it’s application potential I find staggering.
I had a client charged with another crime who received a wrist-slap as punishment (more excellent lawyering, folks! [my deal to have his case completely dismissed fell through due to administrative technicalities]). The FBI had previously seized numerous items of his property including about $25,000 in cash from his house. The do that frequently and usually the items (especially money) are “forfeited” to the government. However, while this particular case proceeded through the system, they slowly returned almost all items to my client’s wife. Immediately after the final hearing an agent approached me about returning the cash! I was a little dumbfounded. They gave the money back that very day. I have still never seen or heard of this happening again.
Anyway, the client’s wife and I went to the local FBI office to retrieve the money. It was still in large bill form, exactly as removed from the house. Whatever I may say about them, the FBI is extremely efficient and organized. While the money was being counted out in our presence I told the wife she should immediately deposit it into her bank account for safety. Then I recalled that cash transactions in excess of $10,000 are automatically flagged by banks and refered to the FBI for investigation. As you know, all cash amounts over $10K are the result solely of criminal activity…
So, to help her avoid the hassle, I suggested she break the deposit into 3 installments. The agent in charge stopped counting, looked up, and said, “That’s Structuring.” I looked at him like a deer observing an approaching 18-wheeler and asked, “Huh?” He then explained how it was illegal to split cash deposits so as to evade the reporting process. He then kindly noted that if she deposited all the money (he thought it a good idea too) the report would come to him and he would have the system pre-flagged to ignore and dismiss the report. I know and trust this particular agent as an outstanding man of integrity so I had no problem trusting him. Things worked out fine.
As I was leaving he said he would have our friend at the U.S. Attorney’s office provide me information on the crime. By the time my friend called, I had already researched the law – 31 U.S.C. 5324. He directed me to a website which provided a pamphlet warning against the practice and giving examples of innocent enough transactions which are, in fact, illegal. He asked me to spread this information to all attorneys I know and all of my friends. Thus, I relay his story to you. By the way, the banking industry refers to this practice as “smurfing,” in honor of those little blue critters from the 80s…
(The Smurfs weapon of choice. Google Images.)
You can view the pamphlet here, http://www.fincen.gov/whatsnew/pdf/CTRPamphlet.pdf. They have one geared toward gambling winnings too, http://www.fincen.gov/whatsnew/pdf/CTR-CPamphlet.pdf.
Here are two examples of smurfing violations, taken from the first pamphlet:
“2. Jane needs $18,000 in cash to pay for supplies for her wood-carving business. Jane cashes a $9,000 personal check at a financial institution on a Monday, then cashes another $9,000 personal check at the financial institution the following day. Jane cashed the checks separately and structured the transactions in an attempt to evade the CTR reporting requirement.” CTR Pamphlet, www.fincen.gov.
“3. A married couple, John and Jane, sell a vehicle for $15,000 in cash. To evade the CTR reporting requirement, John and Jane structure their transactions using different accounts. John deposits $8,000 of that money into his and Jane’s joint account in the morning. Later that day, Jane deposits $1,500 into the joint account, and then $5,500 into her sister’s account, which is later transferred to John and Jane’s joint account.” CTR Pamphlet, www.fincen.gov.
Jane and John are hardened criminals who could be sentenced from one to five years in federal prison. Don’t be like Jane and John!
I can envision situations in which an attorney or am accountant, for example, might “structure” a client’s funds like this. While the attorney and his client might have innocent intentions, their acts would be criminal. I’m still trying to get this all straight in my head.
We know that keeping cash on hand is illegal as the cash can be stolen (“forfeited”) due to alleged involvement in criminal activity. All cash comes from crime! We also know depositing the money whole with a bank will be reported as a possible indication of crime. Depositing the money in batches is a crime.
I now take my friend’s friendly advice; I advise everyone that everything is illegal. Good luck out there!