The opinion of the court was delivered by: CURTIN
The United States brought this civil action pursuant to 31 U.S.C. §§ 5316(a) and 5317(b) seeking the forfeiture of the captioned currency because the claimant, Benedetto Romano, failed to file a Currency and Monetary Instrument Report ("CMIR") in violation of 31 U.S.C. § 5311, et seq., when he crossed the Peace Bridge heading from Buffalo, New York, to Fort Erie, Ontario, Canada, on November 17, 1983, carrying $ 359,500. This case originally went to trial on May 10, 1985. On September 29, 1986, this court denied the government's petition for forfeiture, finding that actual knowledge of the currency reporting requirements is required for a civil forfeiture, and that there was insufficient evidence to support a finding that Romano had any such knowledge. United States v. $ 359,500 in U.S. Currency, 645 F. Supp. 638 (W.D.N.Y. 1986). On September 8, 1987, the Second Circuit held that although actual knowledge of the reporting requirements is not required for civil forfeiture, under the Fifth Amendment's due process clause, a claimant must have had constructive knowledge of the requirements. United States v. $ 359,500 in U.S. Currency, 828 F.2d 930 (2d Cir. 1987). The Second Circuit remanded the case for a determination of whether Romano had constructive knowledge.
Following the remand, the government noticed Romano for a deposition to be held on February 3, 1988 (Item 39, at 1-2). A few days before the scheduled deposition, both counsel for Romano and the government learned for the first time that Romano was the subject of a grand jury inquiry in the Eastern District of New York for income tax evasion for the tax years 1981, 1982, and 1983 (Id. at 2). At the deposition, Romano invoked his Fifth Amendment privilege against self-incrimination on areas of inquiry concerning the source of the defendant currency, how and when he had generated the money, where he had kept the money, the financial operations of his pizza business, the purpose of his trip to Canada, and his reasons for exporting the money (Item 41). These areas of inquiry related directly to the question of whether Romano should have known that he had to report the amount of currency he was transporting when he attempted to leave the country on November 17, 1983.
The government moved for a stay until the conclusion of multiple criminal and civil actions then pending against Romano in the Eastern District of New York (Item 38). On February 17, 1989, the court granted the stay, finding that the questions posed by the government at Romano's deposition were relevant under Fed. R. Civ. P. 26(b)(1) (Item 49). The court directed the parties to finish the deposition once the civil and criminal matters in the Eastern District were completed, at which time the potential Fifth Amendment hazard to Romano would have abated.
The criminal case initially resulted in a conviction of Romano, but was later reversed on appeal. United States v. Romano, 938 F.2d 1569 (2d Cir. 1991). The Second Circuit held that "Romano could not have been guilty of evading taxes on November 17, 1983, when he crossed the Peace Bridge, because his tax year was still open and he had yet to owe anything to the IRS." Id. at 1573.
On April 8, 1996, the government informed the court by letter that three of the four civil tax cases against Romano had been resolved in the government's favor on summary judgment, and that it looked as if the government would prevail on its pending summary judgment motion in the fourth case (Item 52). The government explained that once the resolution of these cases had become imminent, an inter-agency dispute between the IRS and Customs had erupted. The agencies disagreed over which would retain the $ 359,500 in the event that the government won the instant forfeiture case. The IRS claimed that it should retain all of the funds, while Customs asserted that it was entitled to the full amount since it had seized the money in the first place. Customs explained that the IRS would be able to levy against the $ 359,500 in the event that the government lost in the present action. At the close of the criminal and civil tax cases in the Eastern District, Romano was found liable for over $ 1.5 million (Item 60, at 2).
In December 1996, the government submitted a formal offer of settlement to Romano in the instant case, explaining that because of his outstanding tax liabilities, he would not recover any of the seized money regardless of the outcome of the case (Item 53). The government explained that if it prevailed in this forfeiture action, Customs would retain the seized money; and if it lost, the IRS would be able to levy against the funds to collect Romano's outstanding tax liabilities. The government offered to resolve this action by agreeing to forfeit only 50 percent of the $ 359,500, and to allocate the remaining 50 percent to the IRS in partial satisfaction of Romano's tax liabilities. Romano was primarily concerned with getting credit for his outstanding liabilities with the IRS. He wanted to be sure that any money that the government forfeited in this action be credited towards his tax liabilities (Item 69, at 5). Although the parties engaged in several settlement conferences following this offer, they were unable to reach an agreement.
On May 27, 1997, this court held a bench trial on the question of whether Romano had constructive notice of the currency reporting requirements. The parties filed their post-trial memoranda by early September 1997. The court withheld from issuing a decision in this case once it learned that the Supreme Court had granted certiorari in a criminal case out of the Ninth Circuit raising some similar issues. United States v. Bajakajian, 84 F.3d 334 (9th Cir. 1996), cert. granted, U.S. , 117 S. Ct. 1841 (1997).
On June 22, 1998, the Supreme Court announced its decision in United States v. Bajakajian, U.S. , 141 L. Ed. 2d 314, 118 S. Ct. 2028 (1998). On July 9, 1998, this court directed the parties to submit briefs explaining whether and how Bajakajian affects the instant case (Item 74). The parties have filed their briefs on that question, and the court is now ready to issue its findings of fact and conclusions of law.
On November 17, 1983, Romano crossed the Peace Bridge in Buffalo, New York, heading towards Fort Erie, Ontario, Canada. When he reached Canadian Customs, he was referred to the secondary inspection station. At the secondary station, Romano spoke with a Canadian Customs officer and voluntarily opened his trunk at the officer's request. The officer found two bags containing several thousand dollars in the trunk. When asked whether he had declared the money before exporting it from the United States, Romano admitted that he had not. The Canadian Customs officer did not permit Romano to enter Canada. He telephoned U.S. Customs on the other side of the bridge informing them of the situation, and ordered Romano to return to the United States.
Upon returning to the American side, a U.S. Customs officer questioned Romano about the currency. Romano initially claimed to have $ 30,000 to $ 35,000; however, after further questioning he admitted to possessing over $ 300,000. Romano was then sent to the secondary inspection area, where he completed Form 4790, Report of International Transportation of Currency or Monetary Instruments. He also filed a baggage declaration form, Form 6059-B, printed in Italian, in which he admitted that he was carrying more than $ 5,000.
When a records check revealed that Romano had not filed a Form 4790 before leaving the United States earlier that day, Customs officials seized the money.
In 1983, there were no signs or other notices on either side of the bridge to inform travelers of the currency reporting requirements. The only notices available on the American side of the bridge appeared in the administrative office. An ordinary traveler who was not aware of the currency reporting requirements would have had no reason to enter the administrative office before crossing the border into Canada. Also, in 1983, as now, a traveler leaving the United States on the Peace Bridge has no contact with any U.S. Customs or Immigration officials. He only pays a toll on the United States side, then drives over the bridge and meets with Canadian Customs officers on the Canadian side. At this point, a traveler is asked questions about his or her citizenship and if ...