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U.S. v. Shirk

filed: December 3, 1992; As Amended February 16, 1993.

UNITED STATES OF AMERICA APPELLANT IN NO. 92-7174
v.
RONALD P. SHIRK APPELLANT IN NO. 92-7123



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA. (Crim. No. 90-294)

Before: Greenberg, Cowen and Weis, Circuit Judges

Author: Cowen

Opinion OF THE COURT

COWEN, Circuit Judge.

On August 14, 1991, a jury convicted defendant Ronald P. Shirk on two counts of willfully structuring currency transactions in violation of 31 U.S.C. §§ 5324(3) (1988) and 5322(b) (1988). Departing downward from the Sentencing Guidelines range, the district court sentenced Shirk to nine months imprisonment. He appeals, asserting that we should vacate his conviction because: (1) the Government's proof was insufficient; (2) the indictment was defective; (3) the jury instructions were erroneous; and (4) the district court admitted improper expert testimony from a Government witness. In the alternative, Shirk asks us to remand with instructions for calculating a further reduced sentence under the Guidelines. The Government cross-appeals, asserting that we should remand for resentencing within the range prescribed by the Guidelines.

We will affirm Shirk's conviction and deny his request for a remand with instructions for a reduced sentence. We will grant the Government's request for a remand with instructions for resentencing within the applicable guideline range.

I.

In 1968, while Shirk was a full-time police officer, he and his wife Bonnie began operating a gun dealership from their home in Lebanon, Pennsylvania. Shirk's dealership, Ron Shirks Shooter Supplies, has since evolved into one of the nation's largest wholesale firearm distributorships.

On February 14, 1990, Internal Revenue Service agents acting on a tip executed a search warrant at Shirk's business premises. resulting in the seizure of business records from 1984 to 1987. During the search, one of the agents asked Shirk if he kept any currency on the premises. He responded that one to two million dollars was stored in a safe in the basement. After obtaining additional search warrants, the agents seized $1,481,100 in $100 bills, 700 $20 gold pieces, and 3,748 silver dollars from the basement safe. Also seized from a safe located on the main floor was $149,900 in $100 bills, $80,680 in smaller denomination bills, and several hundred gold coins. Shirk informed one of the agents that the $80,680 in smaller bills was working capital for the business. Shirk stated that he was going to put this money in the bank, but that he intended to deposit it in amounts under $10,000 so that no currency transaction reports ("CTRs") would be filed with the IRS. Shirk asked the agent if that were illegal.

Following an investigation, a federal grand jury returned an eleven count indictment on October 30, 1990. The indictment charged Shirk with income tax violations (counts 1-8), structuring currency transactions for the purpose of evading reporting requirements (counts 9-10), and criminal forfeiture (count 11).

At trial, the government presented bank records as evidence in support of the structuring charges. The records showed that from January 1, 1987 to March 5, 1989, Shirk made forty-four deposits at Lebanon Valley National Bank in currency amounts over $10,000. During this period, Shirk had an exemption from the bank allowing him to deposit up to $20,000 without having a CTR filed. During the week of March 13, 1989, the bank informed Shirk that his exemption had been revoked. From that time until the IRS agents executed their search warrant on February 14, 1990, Shirk made approximately 88 currency deposits.*fn1 None of these deposits exceeded $10,000.

Records introduced at trial also showed that on February 6, 1990, Shirk made a sale to a customer for which he received $30,000 in cash. There was no corresponding $30,000 deposit into Shirks business account. However, currency deposits of $9,000, $7,000, $9,300, and $7,000 were made on February 7, 8, 12, and 13, 1990 respectively.

Finally, the evidence established that three money orders were purchased on September 6, 8, and 13, 1989 in the amounts of $9,500, $9,800, and $9,500, respectively. These money orders were signed "Ron Shirk and Bonnie Shirk" and were presented together by Shirk on or about September 26, 1989 to purchase property at a real estate closing.

Gerald MacReady, an IRS agent, testified for the government as an expert in financial investigations and money laundering. He explained to the jury the nature of a CTR and the types of information regarding currency transactions that a bank is required to disclose. MacReady also explained the term, structuring. He opined that the currency deposits made by Shirk after the bank revoked his CTR filing exemption were structured. He also offered his opinion that the three money order purchases in September 1989 were structured.

Timothy Sandoe, a vice-president at Lebanon Valley National Bank, also testified for the Government. He stated that when he became Shirks account officer, Shirk usually made only one very large deposit per week, either on Sunday night or on Monday morning. Sandoe recalled recommending that Shirk make more frequent deposits so he could earn more interest, and so the bank could avoid having to process a single huge deposit on Monday mornings. Sandoe testified that Shirk eventually agreed to make more than one weekly deposit. At trial, Shirk sought to establish that he began making more frequent deposits in amounts of less than $10,000 on the basis of Sandoe's recommendations, and not for the purpose of evading federal reporting requirements.

On August 14, 1991, the jury convicted Shirk on the two structuring counts. Shirk was acquitted on the eight tax counts. The forfeiture verdict on count eleven was sealed pending formalization of settlement Discussions between the parties. This led to a stipulation for settlement, and on March 13, 1992 the court dismissed count eleven. The district court entered a final order of forfeiture on March 17, 1992.

Following conviction, the probation officer filed a presentence report recommending that Shirk's base offense level under the Sentencing Guidelines be decreased by two levels for acceptance of responsibility. After the report was issued, however, the government located $360,900 in $100 bills in a safety deposit box in the name of Bonnie Shirk. According to the probation officer, Shirk claimed that the money located in the deposit box had been joint personal assets until transferred to Bonnie Shirk in November 1990. Additional investigation led the government to yet another safety deposit box in the name of Bonnie Shirk containing $256,000 in $100 bills. The probation officer then filed a memorandum with the district court recommending that Shirk not receive a downward adjustment for acceptance of responsibility. The memorandum reasoned that Shirk had provided misleading information regarding the transfer of assets to his wife in a financial affidavit.*fn2 The memorandum recommended no upward adjustment for obstruction of Justice, however, on the grounds that Shirks falsehoods were not material. App. at 555.

On March 3, 1992, at sentencing, the district court calculated Shirks base offense level at thirteen pursuant to Guidelines § 2S1.3(a)(1)(A). Finding that Shirk had structured funds totalling in excess of $600,000, the district court figured in a four-level increase pursuant to Guidelines §§ 2S1.3(b)(2) and 2S1.1(b)(2)(E). The court accepted the probation officer's recommendation that Shirk not receive either a downward adjustment for acceptance of responsibility or an upward adjustment for obstruction of Justice. Although the final offense level of seventeen called for a prison sentence of 24-30 months, the district court, relying on Guidelines § 5K2.0,*fn3 departed from the recommended range and sentenced Shirk to nine months imprisonment. The district court reasoned that Shirk's case was "atypical" mainly because he was acquitted of criminal tax charges and was subject to a substantial financial forfeiture. App. at 240.

Shirk mounts several challenges to his conviction on appeal. He claims that the proof at trial was insufficient to convict him and that the Government's indictment was defective for lack of specificity. He also maintains that the district court's jury instructions were inadequate and that its admission of IRS agent MacReady's expert testimony was plain error. With respect to his sentence, he contends that, because his offense was only technical, the district court misinterpreted the Sentencing Guidelines by applying base offense level thirteen, rather than base level five. He also contends that the district court enhanced his offense level to seventeen based on an unsubstantiated factual finding that he structured funds in excess of $600,000.

On cross-appeal, the Government claims that the district court erred in departing downward from the applicable guideline range. The Government also asserts that the Guidelines require a further enhancement of Shirk's offense level for obstruction of Justice.

II.

We first address Shirk's claim that the Government's proof is insufficient. The standard of review for a claim of insufficient proof is whether substantial evidence supports the jury's verdict. United States v. Sturm, 671 F.2d 749, 751 (3d Cir.) (per curiam), cert. denied, 459 U.S. 842, 103 S. Ct. 95, 74 L. Ed. 2d 86 (1982). In deciding this issue, we consider the evidence and all reasonable inferences in the light most favorable to the government. Id.

Title 31 U.S.C. § 5313(a) and applicable federal regulations require banks to file a CTR whenever more than $10,000 is deposited, withdrawn, exchanged, paid, or transferred, unless the transaction is exempted in accordance with the regulations. 31 U.S.C. § 5313(a) (1988); 31 C.F.R. § 103.22 (1992). Shirk was convicted of violating 31 U.S.C. § 5324(3), which provides: "No person shall for the purpose of evading the reporting requirements of section 5313(a) . . . structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions." Willful violations of section 5324(3) are made criminally punishable by 31 U.S.C. § 5322(a), (b).

Shirk contends that the inadequacy of the proof against him stems from the Government's mistaken interpretation of what constitutes a structured "transaction" under the anti-structuring statute. Shirk asserts that the Government failed to understand that structuring a "transaction" under 31 U.S.C. § 5324(3) means artificially breaking down an identifiable pool of funds, or cash hoard, of more than $10,000 into smaller component amounts. As a result, says Shirk, the Government failed to prove that the deposits charged in count nine were artificially broken down pieces of a pre-existing pool of funds equalling more than $10,000. According to Shirk, this failure of proof requires reversal of his conviction.

Neither the statute nor the regulations require the Government to prove the existence of a cash hoard in excess of $10,000 to obtain a conviction. In defining the term, "structure," the regulations provide that "a person structures a transaction if that person . . . conducts or attempts to conduct one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading the reporting requirements." 31 C.F.R. § 103.11(p) (1992) (emphasis added).

"In any manner" includes, but is not limited to, the breaking down of a single sum of currency exceeding $10,000 into smaller sums, including sums at or below $10,000, or the conduct of a transaction, or series of currency transactions, including transactions at or below $10,000. The transaction or transactions need not exceed the $10,000 reporting threshold at any single financial institution on any single day in order to constitute structuring within the meaning of this definition.

Id. (emphasis added).

As the regulations make clear, the conduct proscribed "is not limited to" the breaking down of an identifiable cash hoard of greater than $10,000. Rather, the law prohibits currency transactions made "In any amount . . . in any manner, for the purpose of evading the reporting requirements." Id. Thus, to convict Shirk, the government had to prove only that Shirk willfully made deposits of $10,000 or less for the purpose of evading the federal reporting requirements. It did not ...


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