US v. Amanuel Asefaw, No. 12-1633 (4th Cir. 2013)

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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-1633 UNITED STATES OF AMERICA, Plaintiff - Appellee, v. $134,750 U.S. Currency, Defendant Appellant, AMANUEL ASEFAW, Claimant - Appellant. Appeal from the United States District Court for the District of Maryland, at Greenbelt. Roger W. Titus, District Judge. (8:09cv-01513-RWT) Submitted: May 15, 2013 Decided: July 24, 2013 Before NIEMEYER, GREGORY and SHEDD, Circuit Judges. Affirmed by unpublished opinion. Judge Gregory wrote opinion, in which Judge Niemeyer and Judge Shedd joined. the S. Ricardo Narvaiz, LAW OFFICES OF S. RICARDO NARVAIZ, Silver Spring, Maryland, for Appellants. Rod J. Rosenstein, United States Attorney, Baltimore, Maryland; Christen A. Sproule, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Greenbelt, Maryland, for Appellee. Unpublished opinions are not binding precedent in this circuit. GREGORY, Circuit Judge: In this civil in rem action, claimant Amanuel Asefaw appeals the district court s order of forfeiture, entered after a jury trial, of the defendant funds, $134,750 in United States currency. The jury found that the funds were involved in or traceable to financial transactions structured for the purpose of evading a financial institution s reporting requirements, in violation of 31 U.S.C. § 5324 (2006). Asefaw argues that there was insufficient evidence to support the jury s verdict; that the district court committed error in various evidentiary rulings; and that the forfeiture is unconstitutionally excessive under the Eighth Amendment. Finding no reversible error, we affirm. I. Under the Currency and Foreign Transactions Reporting Act of 1970 ( Bank Secrecy Act ), and regulations promulgated by the Financial Crimes Enforcement Network, Department of the Treasury, financial institutions are required to file reports whenever they are involved in cash transactions of more than $10,000. 31 U.S.C. § 5313(a); 31 C.F.R. § 1010.311 (2012). 1 A report also must be filed for multiple transactions in a single 1 During the relevant time period, located at 31 C.F.R. § 103.22(b)(1) (2007). 2 this provision was business day that total more than $10,000, as long as the bank has knowledge that the transactions are by or on behalf of the 31 C.F.R. § 1010.313(b). 2 same person. It is a violation of federal law for any person to structure . . . any transaction with one purpose or of more evading § 5324(a)(3). domestic the financial reporting institutions requirements. for 31 the U.S.C. Any property involved in or traceable to illegal structuring is subject to criminal and civil forfeiture to the United States. Id. § 5317(c). On March 28, 2008, the United States seized, pursuant to a seizure warrant, $114,750 from an account Asefaw held with Citibank and $20,000 from an account he held with Chevy Chase Bank. The government later filed a verified complaint alleging that the defendant funds were traceable to structuring to avoid currency reporting requirements in violation of 31 U.S.C. § 5324(a)(3), and seeking civil forfeiture under § 5317(c) and 18 U.S.C. § 981. At trial, Asefaw filed a claim to the defendant funds. the government s evidence showed that between March 28 and April 4, 2007, in six business days, Asefaw made eighteen separate cash deposits totaling $142,950, visiting at least six different bank branches at three different banks and 2 This provision § 103.22(c)(2)(2007). was previously 3 located at 31 C.F.R. depositing large sums of cash, none exceeding $10,000, into at least seven different bank accounts. exactly $10,000. He made ten deposits of On multiple occasions, he made consecutive deposits within a short window of time. For example, on April 3, he visited three different banks and made three separate cash deposits ($10,000, minutes. Asefaw $6,000, later and used $10,000) a in of series less than checks thirty and wire transfers to move the deposited funds into two accounts with Citibank and Chevy Chase Bank. IRS Special Agent Mary Ann The government s expert witness, Veloso, testified that, in her opinion, this pattern of splitting large amounts of cash into multiple deposits of $10,000 or less on the same day or consecutive days is consistent with a pattern of structuring to avoid reporting requirements. In addition, the government called Jessica Cuevas, a Citibank employee, who testified that in August 2007 she called Asefaw and spoke to him about his currency transactions with Citibank. Cuevas wrote an email after the conversation, stating that Asefaw had admitted to depositing only $10,000 to avoid the need for a currency transaction report (CTR). The email read: I spoke with Mr. Asefaw today. The funds he deposited were from himself since he s self-employed. He did mention he knew about the CTR and that s why he only deposited $10,000. I explained the importance of structuring deposits and filling out a CTR. He was very wary of the phone call and questioned the reasoning. He was also adamant about the fact that he 4 is a self-employed hard worker and is not doing anything illegal . [sic] He even made a reference to closing his accounts with us and moving his money somewhere else because of the phone call. The government also offered evidence that, in 2005, Asefaw owned a grocery store that he registered with the IRS as a money services business, a specialized type of business that conducts regulated financial Secrecy Act. transactions and is subject to the Bank During the same time period, he held an account at Manufacturers and Trade Trust Company ( M&T Bank ). The government offered evidence that between August and September 2005, at least four CTR s were filed by M&T Bank for currency withdrawals made by Asefaw. The government argued that Asefaw was present when the reports were completed because he had to provide his driver s license. At the close of the government s case, Asefaw, who was representing himself, moved the court for judgment as a matter of law. The court denied the motion. Asefaw then took the stand and testified that he had no idea about this law and that he never intended to make the banks fail in their reporting duties. take He testified that he had opened multiple accounts to advantage of favorable interest rates and promotions. During the time when he was making deposits and moving money around, he testified that he thought 5 it was a legitimate personal interest because nobody said anything to [him] or told him he was breaking a law. Following three days of trial, the jury returned a verdict for the government, finding by a preponderance of the evidence that the funds seized from Asefaw s accounts were involved in or traceable to transactions structured for the purpose of evading a financial institution s reporting requirements. no post-trial motions. Asefaw made The district court then entered a final order of forfeiture against the seized funds. Asefaw timely appealed. We have jurisdiction under 28 U.S.C. § 1291. II. Asefaw first argues that the government failed to prove by a preponderance of the evidence that he was aware of the reporting requirements and intentionally structured his deposits to evade them. However, Asefaw never filed a post-verdict motion renewing his motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b). As a result, we are foreclosed from considering his challenge to the sufficiency of the evidence. Inc., 546 U.S. See Unitherm Food Sys., Inc. v. Swift-Eckrich, 394, 400-01 (2006); Helping Hand, LLC Baltimore Cnty., MD, 515 F.3d 356, 369-70 (4th Cir. 2008). 6 v. III. We next address Asefaw s contention that the district court erred in allowing the government to present certain evidence. We review the district court s evidentiary rulings for abuse of discretion, Schultz v. Capital Int l Sec., Inc., 466 F.3d 298, 310 (4th Cir. 2006), keeping in mind that evidentiary errors which are harmless cannot be grounds for granting a new trial or setting aside a verdict, 28 U.S.C. § 2111; Fed. R. Civ. P. 61; Taylor v. Virginia Union Univ., 193 F.3d 219, 235 (4th Cir. 1999) (en banc) (abrogated on other grounds by Desert Palace, Inc. v. Costa, 539 U.S. 90, 98-99 (2003)). An error is harmless if we can say with fair assurance, after pondering all that happened without stripping the erroneous action from the whole, that the judgment was not substantially swayed by the error. Kotteakos v. United States, 328 U.S. 750, 765 (1946); see also Taylor, 193 F.3d at 235 (adopting the Kotteakos harmless error standard in civil cases). A. Asefaw first argues that the evidence of prior CTR s from M&T Bank and his registration of a money services business should have been excluded under Federal Rule of Evidence 403. Because Asefaw did not error review applies. raise this objection at trial, plain See In re Celotex Corp., 124 F.3d 619, 631 (4th Cir. 1997) (adopting in civil cases the plain error 7 standard articulated in United States v. Olano, 507 U.S. 725, 732 (1993)). Under that standard, we may exercise our discretion to correct an error not raised below only if: (1) there is an error; (2) the error is plain; (3) the error affects substantial rights; and (4) we determine, after examining the particulars of the case, that the error seriously affects the fairness, integrity proceedings. Rule relevant or public reputation of judicial Id. at 630-31 (citing Olano, 507 U.S. at 732). 403 provides evidence if that its the district probative court value is may exclude substantially outweighed by a danger of . . . unfair prejudice, . . . [or] misleading the jury. Asefaw argues that the evidence of prior CTR s was unfairly prejudicial and misleading because all the evidence showed was that at some point he presented a driver s license during the cash transactions, not that he was actually present when the CTR s were completed. Similarly, he argues that the evidence of his money services business was prejudicial and misleading because the government failed to prove that every person who registers a money services business knows about the reporting requirements. At most, however, these arguments suggest that the probative value of this evidence was not strong, not that it was plainly prejudicial or misleading. But even evidence that has minimal probative value may be admitted under Rule 403 so long 8 as it is relevant and there is no danger of unfair prejudice or confusion. That is the case here. The evidence that Asefaw previously owned a money services business and had been involved in transactions that required a CTR tended to prove that he had prior exposure to currency transaction reporting requirements. Asefaw had the opportunity to rebut the evidence and point out its limitations at trial, and there was nothing prejudicial or misleading about it. Thus, the district court committed no abused its error by admitting it. B. Asefaw next argues that the district court discretion by allowing the testimony of Agent Veloso, Cuevas, and two other bank employees, Paul Schallmo and Courtney Smiley, because the identities to government failed him to prior to trial. timely He disclose contends their that their testimony should have been excluded under Federal Rule of Civil Procedure 37(c)(1). Under Rule 37(c)(1), a party who fails to provide information or identify a witness as required by Rule 26(a) is not allowed evidence at to use trial that information unless justified or is harmless. 26(a) are relevant here. the or failure witness was to supply substantially Two disclosure requirements in Rule First, [a]bsent a stipulation or a court order, each party must disclose to the other party the 9 identity of any witness the party may use to present expert testimony at least ninety days before trial. 26(a)(2). Fed. R. Civ. P. Second, unless the court orders otherwise, at least thirty days before trial, each party must provide to the other party and file a pretrial disclosure listing the name of each witness that will testify. Fed. R. Civ. P. 26(a)(3). Asefaw first contends that Agent Veloso s testimony should have been excluded because the government did not disclose her identity to him until forty-eight days before trial. The parties dispute whether Asefaw raised this objection at trial, and thus whether plain error review should apply. reach that issue, however, because we We need not conclude that the government s disclosure was timely under the district court s scheduling order. expert designations disclosed witness The its on intent February scheduling order set the deadline for as February 27, to designate Agent 22, 2012. 2012. The Veloso Because the government as an expert government s disclosure was timely under the court s order, it also satisfied Rule 26(a)(2). As a result, the district court did not err when it allowed Agent Veloso to testify. Asefaw next argues that the district court should have excluded the testimony of Cuevas, Schallmo, and Smiley because the government failed to disclose them as witnesses until the 10 trial began. 3 The government does not dispute that it failed to disclose its witnesses to Asefaw before trial as required by Rule 26(a)(2), but instead argues that the district court did not abuse its discretion by allowing the undisclosed witnesses to testify because the omission was harmless under Rule 37(c)(1). The whether district a court disclosure has broad violation is harmless under Rule 37(c)(1). discretion substantially to determine justified or S. States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d 592, 597 (4th Cir. 2003). We have said that this discretion should be guided by an analysis of five factors: (1) the surprise to the party against whom the evidence would be offered; (2) the ability of that party to cure the surprise; (3) the extent to which allowing the evidence would disrupt the trial; (4) the importance of the evidence; and (5) the nondisclosing party s explanation for its failure to disclose the evidence. The district Id. court overruled Asefaw s objection without discussing the Southern States factors, reasoning that Asefaw was not entitled to relief because he had never submitted an 3 In his opening brief, Asefaw also contends that the government failed to disclose the identity of another bank employee witness, Martha Wallis. However, at trial, Asefaw admitted that he knew before trial that she would testify. 11 interrogatory asking the government to identify persons having knowledge of facts pertinent to the case. reasoning. file and We disavow this Rule 26(a)(3) imposes an affirmative obligation to disclose to the other party, at least thirty days before trial unless the court orders otherwise, the names of the witnesses who will be presented. That obligation exists whether or not the other party has requested a witness list. government s 26(a)(3). failure Rather to than disclose its overruling witnesses Asefaw s Thus, the violated objection Rule to the undisclosed witnesses outright, the district court should have proceeded to analyze whether the government s omission substantially justified or harmless under Rule 37(c)(1). not reach that question ourselves. was We do Instead, assuming arguendo that the testimony from undisclosed witnesses should have been excluded, we conclude that any error committed by the district court in allowing them to testify did not affect Asefaw s substantial rights. First, the testimony of Smiley and Schallmo was largely cumulative and therefore government s case. added little to nothing to the Neither witness had any personal knowledge of Asefaw s transactions, and their testimony was limited to introducing and authenticating bank records that documented some of them. These same transactions were also described by Agent Veloso in her testimony, and Asefaw did not dispute any of them. 12 Thus, there is no reason to believe that the jury s verdict would have been any different if the testimony of Smiley and Schallmo had been excluded. Of course, the evidence presented by Cuevas was not merely cumulative; her email provided the only direct evidence that Asefaw admitted intent to evade the reporting requirements. Nevertheless, the powerful nature of the circumstantial evidence in this case demonstrates that any error in allowing Cuevas to testify was harmless. Over six business days, Asefaw deposited more than $100,000 in at least eighteen separate cash deposits, repeatedly taking large sums of cash and splitting them up into sums of $10,000 or less, often within a short period of time. He made ten deposits of exactly $10,000, and not once did his deposits exceed the $10,000 threshold that triggers reporting requirements. Asefaw never explained why, if he was unaware of the reporting requirements, he structured his deposits in this way. This gaping hole in his testimony reinforced the already powerful nature of the requiring the reporting requirements. circumstantial conclusion that his Cuevas s evidence, purpose was testimony, in practically to evade the essence, was icing on the cake. In sum, even excluding the testimony of Cuevas, Schallmo, and Smiley, finding by there a was ample preponderance evidence of 13 the to support evidence the that jury s Asefaw intentionally structured requirements. allowing his deposits to evade the reporting As a result, we can fairly say that any error in the undisclosed witnesses testimony did not substantially sway the jury s verdict, and thus, that any Rule 37(c)(1) error committed by the district court was harmless. IV. We turn now to Asefaw s last argument, that the forfeiture of the seized funds is unconstitutionally excessive under the Eighth Amendment. Because Asefaw failed to raise this objection at any point during the proceedings below, we may only disturb the judgment below if the requirements of plain error review are satisfied. party See Olano, 507 U.S. at 732. challenging the The burden is on the constitutionality demonstrate excessiveness. of the forfeiture to United States v. Ahmad, 213 F.3d 805, 816 (4th Cir. 2000). The Eighth Amendment provides that [e]xcessive bail shall not be cruel and unusual punishments inflicted. U.S. Const. amend. VIII. A punitive violates Clause required, nor forfeiture of the excessive of property Eighth fines Amendment imposed, if the nor Excessive it disproportional to the gravity of the offense. is Fines grossly United States v. Bajakajian, 524 U.S. 321, 334 (1998); see also United States v. Ahmad, 213 F.3d at 815 (recognizing 14 that Bajakajian s grossly disproportional whether any analysis punitive applies forfeiture--civil when or determining criminal--is excessive ). In Bajakajian, the Supreme Court considered the following factors to determine whether unconstitutionally excessive: the forfeiture was the nature and extent of illegal activity and whether the defendant fit into the class of persons for whom the statute was principally designed; the maximum penalties that a court could have imposed for the offense; and the harm caused by the offense. 524 U.S. at 337 39. There, an international traveler was convicted of failing to report that he was transporting more than $10,000 out of the United States in violation of 31 U.S.C. § 5316(a)(1)(A). Id. at 325. Court full concluded that the forfeiture of the $357,144 The he attempted to transport would violate the Excessive Fines Clause. Id. at 338. single Noting that the defendant s only offense was a reporting violation, the Court reasoned that the defendant did not fit within the class of persons, such as money launderers, drug traffickers, or statute was principally designed. the maximum sentence that could tax evaders, Id. at 337-38. have been for whom the In addition, imposed under the United States Sentencing Guidelines was six months, while the maximum fine was $5,000. Id. at 338. These penalties confirmed a minimal level of culpability, ill-suited for the punitive 15 forfeiture of more than three-hundred thousand dollars. 338-39. Id. at Finally, the Court concluded that the harm caused by the reporting violation was minimal because the government was the only harmed party and the offense affected the government in a relatively information. violation minor way Id. at 39. with the by depriving the government of Thus, comparing the single reporting forfeiture of $357,144 sought by the government, the Court concluded that the forfeiture would be grossly disproportional to the gravity of the offense. Id. at 339. In the years since Bajakajian was decided, we have applied the same factors when evaluating whether a challenged forfeiture is unconstitutionally excessive. In United States v. Ahmad, the claimant, who operated a money exchange business, was criminally prosecuted for his involvement in a complex operation involving transfers of currency to individuals in Pakistan and importation of surgical equipment from abroad. 213 F.3d at 807. Over a series of years, the claimant, in an effort to avoid reporting requirements, from other § 5324. traceable repeatedly individuals Id. to structured for transfer deposits of abroad, in cash received violation of We concluded that the civil forfeiture of $85,000 his structuring offenses was disproportional to the gravity of those offenses. 16 not grossly 213 F.3d at 817. 4 Although the maximum authorized penalties mirrored those in Bajakajian, the claimant s conduct . . . was not a single, isolated untruth affecting only the government, but rather a series of sophisticated commercial transactions over a period of years that were related to a customs fraud scheme. addition, the government financial claimant s of structuring important not institution s information, ability to only but In deprived the also comply jeopardized the funds of other persons. Id. with affected the law a and Id. at 817. Similarly, in United States v. Jalaram, Inc., we held that the criminal forfeiture of $385,390 in proceeds from a prostitution ring was not grossly disproportional to the gravity of the Although offense. the 599 government F.3d 347, had not 351, 356 identified (4th any Cir. 2010). victims who suffered harm from the offense, the criminal activity spanned several months, generating hundreds of thousands of dollars in illicit revenues, and was connected with other offenses such as tax evasion. Id. at 356. Further, the maximum fine for the offense was $350,000, indicating that Congress considered the crime at issue far more serious than the reporting offense in 4 We also held that the forfeiture of an additional $101,587.43 was not grossly disproportional to the gravity of the defendant s customs fraud offenses. United States v. Ahmad, 213 F.3d 805, 819 (4th Cir. 2000). 17 Bajakajian. Id. This legislative judgment, we noted, raises a significantly higher hurdle to show[ing] that the requested forfeiture is grossly disproportional to the gravity of [the] offense. Id. An application of the Bajakajian factors to this case leads us to conclude that the forfeiture of the seized funds is not grossly disproportional violations. the gravity of the structuring At the outset, we note that judgments about the appropriate instance to punishment to the for an offense legislature. belong Bajakajian, in 524 the U.S. first at 336 (citations omitted); see also Solem v. Helm, 463 U.S. 277, 290 (1983) (instructing reviewing courts to grant substantial deference to the broad authority that legislatures necessarily possess in determining the types and limits of punishments for crimes ). Thus, [t]here is a strong presumption of constitutionality where the value of a forfeiture falls within the fine range prescribed by Congress or the Guidelines. United States v. Malewicka, 664 F.3d 1099, 1106 (7th Cir. 2011) (citation omitted). Congress authorized a maximum criminal fine of $500,000 in aggravated cases where a structuring offense involves more than $100,000 in a twelve-month period. See 18 U.S.C. § 3571(b)(3); 31 U.S.C. § 5324(d)(2); United States v. $79,650.00 Seized from Bank of Am., 650 F.3d 381, 387 (4th Cir. 2011). 18 In such cases, the maximum fine limitations of the Guidelines do not apply to temper this legislative judgment. See U.S.S.G § 5E1.2(a)(4); $79,650.00 Seized from Bank of Am., 650 F.3d at 387-88. Asefaw s structuring activities, which involved Thus, more than $100,000 in less than twelve months, could have subjected him to a criminal fine of up to $500,000, far in excess of the amount forfeited. range That the forfeiture amount falls within the fine authorized by constitutionality. Congress As a raises result, a presumption Asefaw must clear of a significantly higher hurdle to show that the . . . forfeiture is grossly disproportional to Jalaram, 599 F.3d at 356. the gravity of [his] offense. He has not done so. First, Asefaw fails to demonstrate that he falls outside the class of persons principally designed. for whom the structuring statute was Congress enacted the Bank Secrecy Act, in large part, out of concern that inadequate records maintained by financial institutions seriously impair[ed] the ability of the Federal Government regulatory to provisions enforce of the laws myriad which criminal, Congress had tax, and enacted. California Bankers Ass n v. Shultz, 416 U.S. 21, 27 (1974). By forcing financial institutions to [file CTRs], Congress hoped to maximize the information criminal investigators. available to federal regulatory and United States v. St. Michael s Credit Union, 880 F.2d 579, 582 (1st Cir. 1989). 19 The overall goal of the statute obtained was to and untaxed institutions. the monies laundering in of illegally legitimate financial Id. (citing Schultz, 416 U.S. at 26-30). Through interfered interdict his with structured the deposits, reporting Asefaw obligations repeatedly of financial institutions in just the way § 5324 was intended to prohibit. By furtively introducing large amounts of unreported cash into the financial system, Asefaw frustrated a primary objective of the Bank Secrecy Act--to ensure the maintenance of bank records necessary to the investigation and prosecution of criminal, tax, and regulatory offenses. Moreover, while Asefaw was not charged with money laundering or tax evasion, his structuring violations could have facilitated such conduct in just the way the statute was designed Indeed, we to do frustrate. not have the Malewicka, benefit, as 664 F.3d the at Court 1106. did in Bajakajian, of a finding by the trier of fact that his funds were not connected to any other crime. 524 U.S. at 326. Thus, it is not apparent that Asefaw falls outside the class of persons for Malewicka, whom 664 the F.3d statute at is 1105-06 principally (finding that designed. defendant See not charged with other wrongdoing nevertheless fit within the class of persons designed for because whom her the structuring structuring 20 statute activities was principally frustrated the statute s purpose and could have facilitated [money laundering or tax evasion] ). Second, Asefaw as could noted have above, faced the is maximum $500,000, criminal far in fine excess that of the miniscule $5,000 maximum fine authorized in Bajakajian. This distinction this confirms that the structuring activities in case involve a higher level of culpability than the isolated reporting violation at issue in Bajakajian. See Jalaram, 599 F.3d at 356 (concluding that the defendant s crimes were more serious than in Bajakajian, in part, based on the disparity between the maximum fines authorized). Finally, unlike in Bajakajian, we cannot say that the harm caused by Asefaw s illegal structuring was relatively minor. Bajakajian, 524 U.S. at 339. Asefaw s conduct not only deprived the government of information, it also affected the financial institutions involved in his transactions, interfering with their reporting duties. repeatedly See Ahmad, 213 F.3d at 817 (finding that the harm caused was not minimal, in part, because the defendant s structuring activities implicated an intermediary actor, the First Virginia Bank, and affected its legal duty to report certain transactions ). repeated interference with the legal duties Given Asefaw s of multiple financial institutions, the harm caused by his conduct is more substantial than in Bajakajian. 21 In sum, after weighing the nature of Asefaw s structuring violations, the maximum fine that could have been imposed, the harm caused to the financial institutions, and the deference we owe to the judgment of Congress concerning the appropriate penalty, we conclude that the forfeiture amount is not grossly disproportional to the gravity of Asefaw s illegal activity. We therefore do not find the forfeiture amount unconstitutionally excessive. V. For the reasons explained above, the judgment is affirmed. AFFIRMED 22

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