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United States v. Ali

March 7, 2008


The opinion of the court was delivered by: VITALIANO, D.J.


Defendants Hamad Ali, Mohsen Hudyih, Abdul Jalil, Isadore Userowitz, Harold Weisberg and Hamood Zokari near a long-awaited trial date on charges of operating an unlicensed money transmitting business, conspiracy to operate such a business, evading the monetary instrument exportation reporting requirements and conspiracy to evade those requirements. In limine, the government opposed defense motions to exclude and moved affirmatively for permission to offer in evidence certain checks determined by the Court to be outside the bounds of the reporting requirements. The government's argument for admissibility on these counts rests on its claimed ability to offer proof at trial that the defendants sought to conceal these checks from United States Customs because they erroneously believed them to be subject to the reporting requirements, thus rendering their conduct probative of the conspiracy to evade the reporting requirements.

The Court granted the defense motions and denied the government's on the record in open court during two pretrial conferences. The Court, however, informed the parties that this Memorandum Opinion, supplementing and explaining the ruling, would follow.


With the jury selected, the trial is scheduled to open on March 10, 2008. Defendants are each charged in four counts of (a) operating an unlicensed money transmitting business in violation of 18 U.S.C. § 1960(a), (b) conspiracy to operate such a business, (c) evasion of monetary instrument reporting requirements in violation of 31 U.S.C. § 5316 and § 5324 and (d) conspiracy to evade those requirements.

Under the exportation reporting requirements, a person knowingly transmitting more than $10,000 in defined monetary instruments is required to file a report. 31 U.S.C. § 5316. Monetary instruments, as defined by the applicable regulations, include cash currency, traveler's checks and "negotiable instruments," further defined as

All negotiable instruments (including personal checks, business checks, official bank checks, cashier's checks, third-party checks, promissory notes (as that term is defined in the Uniform Commercial Code), and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee (for the purposes of § 103.23), or otherwise in such form that title thereto passes upon delivery [.]

31 C.F.R. § 103.11(u)(1)(iii). The Court ruled that several categories of checks the government had assembled as proof fell outside this defined universe, and thus their transport would not have constituted the crime. The government has argued, at oral argument and in three subsequent letter briefs, and continues to maintain, that the excluded checks should nevertheless be admissible to prove the alleged conspiracy to evade the monetary reporting requirements. To this end, the government proffers that, at trial, it would deploy intercepted phone conversations and post-arrests statements of the defendants in support of the factual premise that "the defendants and their co-conspirators were convinced that all of the checks they were transporting were instruments subject to the reporting requirements." Gov't Ltr. of Feb. 26, 2008 at 4. The government argues that the defendants would thus still be guilty of conspiring to evade the monetary requirements even if none of the reporting requirements applied to the checks actually exported.*fn1 The government seeks to offer these checks in addition to evidence of currency and instruments of the kind subject to the reporting requirements.


The conspiracy charges, of course, are brought pursuant to 18 U.S.C. § 371. Under that section, it is illegal for two or more persons to conspire to "commit any offense against the United States" or "to defraud the United States, or any agency thereof in any manner or for any purpose." Id. The present invocations of § 371 fit the former category, with the conspiracy charges linked to the substantive offenses of evading the monetary reporting requirements and operating an unlicensed money transmitting business.

Conspiracy is a crime separate and apart from the substantive offense that is the object of the conspiracy. United States v. Feola, 420 U.S. 671, 95 S.Ct. 1255 (1975). However, by the statutory definition of conspiracy provided in § 371, a conspirator must have conspired to commit an actual "offense against the United States." As the Second Circuit articulated in one of the very cases upon which the government relies, "[j]urisdiction is established by proof that the accused planned to commit a substantive offense which, if attainable, would have violated a federal statute, and that at least one overt act has been committed in furtherance of the conspiracy." United States v. Giordano, 693 F.2d 245, 249 (2d Cir. 1982) (emphasis added). The Giordano court went on to explain that the key to a valid conspiracy charge is "whether facts exist 'tying the proscribed conduct to the area of federal concern delineated by the statute.'" Id., citing Feola, 420 U.S. at 695.

The reporting of instruments beyond those enumerated in the statute clearly lies beyond the realm of federal concern delineated by that statute. As a result, because the checks under scrutiny in the in limine motions were not subject to the reporting requirements, there is no violation in not reporting their report. Stated differently, since the conduct allegedly underlying the conspiracy was not a crime, no § 371 conspiracy to commit that conduct can exist either.

The government, nevertheless, insists that defendants' misimpression that those instruments were subject to the reporting requirement provides a basis for conspiracy liability as to those instruments. In support of this proposition, the government refers to a number of cases in which conspiracy indictments or convictions were upheld where the underlying conduct was, in fact, unattainable. See, e.g., Giordano, 693 F.2d at 249-50 (defendants plotted to destroy by explosives a fictitious piano store); United States v. LaBudda, 882 F.2d 244 (7th Cir. 1989) (upholding conviction for conspiring to sell stolen U.S. savings bonds where bonds were not, in fact, stolen).

The government, however, misses a crucial distinction between two very different obstacles to the successful commission of a crime: (1) the factual impossibility of achieving the offending conduct and (2) the actual legality of the conduct. Simply put, in Giordano and LaBudda, defendants undertook to commit acts that were clearly illegal under federal statutes. Their failure to commit an offense was due to a misapprehension by the conspirators as to facts that made it impossible for them to commit the crime. Such a misperception by a defendant of the contours of physical or otherwise factual possibility does not render that defendant any less culpable of plotting the underlying, illegal intended conduct. What distinguishes this ...

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