IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 97-30689
Summary Calendar
_____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
RICHARD L. BOWES,
Defendant-Appellant.
_______________________________________________________
Appeal from the United States District Court for
the Western District of Louisiana
(97-CV-929)
_______________________________________________________
March 13, 1998
Before REAVLEY, JOLLY and HIGGINBOTHAM, Circuit Judges.
PER CURIAM:*
Richard Bowes appeals the denial of his 28 U.S.C. § 2255
motion to set aside his convictions on three counts of illegal
structuring of financial transactions. The district court denied
the motion but issued an certificate of appealability1 on the
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
1
See Fed. R. App. P. 22(b); United States v. Youngblood,
116 F.3d 1113 (5th Cir. 1997) (discussing applicability of Rule
22 to § 2255 cases).
issue of whether the Supreme Court’s decision in Ratzlaf v.
United States2 entitles Bowes to relief from these convictions.
We affirm.
BACKGROUND
Myron Palermo was approached in 1988 by undercover agents
posing as drug dealers who wished to launder large sums of money.
Palermo turned to Bowes, a former securities broker, for
assistance. Palermo testified against Bowes as part of a plea
bargain. Palermo and Bowes devised a fairly elaborate scheme to
funnel cash through a Louisiana crawfish business, transfer the
cash to a Canadian company and then disperse it back to the
supposed drug dealers. On several occasions Palermo and Bowes
received cash in excess of $10,000, and would then purchase
several cashier’s checks from different financial institutions in
amounts of less than $10,000, which were returned to undercover
agents.
The purchase and distribution of the cashier’s checks were
the basis of the three counts of illegal structuring on which
Bowes was convicted. Federal law requires banks to file with the
government cash transaction reports (CTR’s) of transactions
exceeding $10,000.3 Federal law prohibits the structuring of
transactions for the purpose of evading this reporting
2
510 U.S. 135 (1994).
3
31 U.S.C. § 5313; 31 C.F.R. § 103.22 (1997).
2
requirement.4 “A person willfully violating” this law is subject
to criminal penalties.5
The jury was instructed “that the government is not required
to prove that the defendant knew that structuring or the acts of
structuring were unlawful.” After Bowes was convicted, the
Supreme Court held that a criminal violation of the
antistructuring law requires proof by the government that the
defendant knew the structuring was illegal.6 Bowes sought
collateral review of his conviction based the incorrect jury
instruction as to the mens rea requirement for criminal
liability.
DISCUSSION
We have stressed that relief under § 2255 “is reserved for
transgressions of constitutional rights and for a narrow range of
injuries that would not have been raised on direct appeal and
would, if condoned, result in a complete miscarriage of
justice.”7 Even errors of constitutional magnitude may not be
raised for the first time on collateral review without a showing
4
31 U.S.C. § 5324.
5
Id. § 5322.
6
Ratzlaf, 510 U.S. at 137, 149. After Ratzlaf, Congress
amended § 5324 to impose criminal liability for structuring
without a willfulness requirement.
7
United States v. Payne, 99 F.3d 1273, 1281 (5th Cir.
1996) (quoting United States v. Vaughn, 955 F.2d 367, 368 (5th
Cir. 1992)).
3
of “cause” for the procedural default and “actual prejudice”
resulting from the error.8 The cause and actual prejudice
standard presents a “significantly higher hurdle” for the
claimant that the plain error standard we apply on direct
appeal.9
We accept that Bowes has met the cause requirement of the
cause and prejudice test. First, we have held that the
government waives this requirement by failing to assert it as a
procedural bar to collateral relief in the district court.10 We
agree with the district court that the government did not argue
below that Bowes’s claim fails because he did not raise it
earlier. Further, Bowes cannot be faulted to failing to object
at trial to the instruction. Bowes was convicted before Ratzlaf
was decided. At the time the instruction correctly stated the
law of this circuit.11 Bowes could not be expected to predict
the outcome in Ratzlaf. We also note that Ratzlaf was not
decided until after the time for Bowes to file a notice of appeal
8
United States v. Pierce, 959 F.2d 1297, 1301 (5th Cir.
1992).
9
Id.; United States v. Shaid, 937 F.2d 228, 232 (5th Cir.
1991) (en banc).
10
United States v. Drobny, 955 F.2d 990, 995 (5th Cir.
1992).
11
See United States v. Garza, 42 F.3d 251, 253 (5th Cir.
1994); United States v. Oreira, 29 F.3d 185, 188 (5th Cir. 1994).
4
had expired. Bowes did not bring a direct appeal of his
conviction.
Nevertheless, a “collateral challenge may not do service for
an appeal.”12 In United States v. Shaid,13 we analyzed whether
relief under § 2255 was warranted where, as here, the jury was
given an incorrect instruction on the mens rea requirement for
criminal liability. We held that the prisoner had not met the
cause requirement of the cause and prejudice test.14 We also
explained that “[a] mere possibility of prejudice will not
satisfy the actual prejudice prong of the cause and prejudice
test,” and that the defendant must instead “shoulder the burden
of showing, not merely that the errors at his trial created a
possibility of prejudice, but that they worked to his actual and
substantial disadvantage, infecting his entire trial with error
of constitutional dimensions.”15
We conclude that relief on collateral review was properly
denied. For several reasons we are persuaded that Bowes has
12
United States v. Frady, 456 U.S. 152, 165 (1982).
13
937 F.2d 228 (5th Cir. 1991) (en banc).
14
Id. at 236.
15
Id. (quoting Frady, 456 U.S. at 170. See also Brecht v.
Abrahamson, 507 U.S. 619, 637 (1993) (holding that the standard
for determining whether habeas relief must be granted in the case
of a trial error is whether the error “‘had substantial and
injurious effect or influence in determining the jury’s
verdict.’”) (quoting Kotteakos v. United States, 328 U.S. 750,
776 (1946)).
5
shown nothing more than the possibility of prejudice from the
erroneous instruction. First, while the instruction “that the
government is not required to prove that the defendant knew that
structuring or the acts of structuring were unlawful” is
incorrect after Ratzlaf, the government did not argue in opening
and closing statements that it did not have to prove that Bowes
knew the structuring was illegal. “When reviewing challenges to
jury instructions, we take into account the court’s charge as a
whole and the surrounding context of the trial, including
arguments made to the jury.”16
Second, in addition to the structuring convictions he now
challenges, Bowes was convicted on a separate count of failing to
file a CTR himself, in violation of 31 U.S.C. §§ 5313 and 5322.
The jury was instructed that to find Bowes guilty on this count
(Count IV), it had to find that Bowes was himself a financial
institution as defined by relevant federal law, that he “had
knowledge of the currency transaction reporting requirements,”
that “the failure to file the CTR at the time required was
knowing and willful,” and that “the failure to file was part of a
pattern of illegal activity involving transactions of more than
$100,000.” As to the structuring counts, the jury was instructed
that it must find that “that the structure or attempted
16
United States v. Flores, 63 F.3d 1342, 1374 (5th Cir.
1995).
6
structuring of the currency transaction(s) was part of a pattern
of illegal activity involving transactions of more than $100,000
during a 12-month period.”17 Hence the jury necessarily found
that Bowes was aware that as to one of the related transactions
his own conduct violated federal law, and that all the
transactions were part of a pattern of illegal activity. “[W]e
have implied that to prove knowledge of the law under § 5322(a),
evidence of structuring itself should be combined with evidence
of a defendant’s background or evidence of his awareness of the
general illegality of his transactions.”18
Third, the effect of the erroneous instruction was mitigated
by other instructions that the structuring must be knowing and
willful, and that “‘[w]illful’ requires proof of the defendant’s
knowledge of the reporting requirements and specific intent to
commit the crime, that is to say, his actions were voluntary,
intentional, and in violation of a known legal duty.” While the
latter instruction is not crystal clear, it suggests that the
defendant must know that his conduct is illegal. The Seventh
Circuit has held that an instruction stating that “[a]n act is
done willfully if done voluntarily and intentionally with the
17
This instruction was given because the government sought
an enhanced penalty under 31 U.S.C. § 5322(b), which provides for
enhanced punishment where the violation occurs “as part of a
pattern of any illegal activity of more than $100,000 in a 12-
month period . . . .”
18
United States v. Rodriguez, 132 F.3d 208, 213 (5th Cir.
1997).
7
purpose of avoiding a known legal duty” comports “exactly with
the Ratzlaf requirement that for a valid conviction a defendant
must know of his duty to report a cash transaction and ‘of his
duty not to avoid triggering such a report.’”19
Finally, we cannot say that the evidence of guilt was so
lacking that Bowes is entitled to relief on collateral review.
Although Bowes worked in the securities industry for eleven years
as a broker, at three major brokerage houses, he denied that he
was ever involved in currency transaction reporting and denied
knowing that “you couldn’t structure transactions by making
deposits of less than ten thousand dollars.” He also points out
that his employment as a broker ended long before Congress made
structuring illegal. We have stated, in direct appeals, that
“[t]o support the inference that the defendant knew structuring
was a crime, the government must prove ‘something more’ than the
fact that a defendant structured his transaction to avoid the
filing of a CTR,”20 and that evidence of intentional structuring
“is not necessarily equivalent to an intent to do something
illegal.”21
19
United States v. Goulding, 26 F.3d 656, 669 (7th Cir.
1994) (quoting Ratzlaf, 510 U.S. at 147).
20
United States v. Pipkin, 114 F.3d 528, 532 (5th Cir.
1997).
21
Oreira, 29 F.3d at 188.
8
However, the government’s case went beyond mere proof of
structuring. Palermo told Bowes that the money to be laundered
was narcotics money. He testified that Bowes was not bothered at
all that the money was derived from drug dealings. He also
testified that given the source of the money “we didn’t want to
leave a paper trail.” Bowes told Palermo he was giving Palermo
cashier’s checks because “they were not traceable.” Bowes helped
devise a fairly sophisticated scheme to launder the money through
Louisiana and Canadian companies. Palermo was aware that a
deposit of over $10,000 generated a CTR and discussed this fact
with Bowes. On one tape played for the jury Bowes stated that he
did not want to report to the “Feds.” On another recording he
stated that he was “in the business of creating shelters.” The
evidence against Bowes was such that we cannot say that denying
collateral relief would amount to “a complete miscarriage of
justice,”22 or that the proof of guilt was so lacking that the
erroneous instruction “infect[ed] his entire trial with error of
constitutional dimensions.”23
AFFIRMED.
22
Payne, 99 F.3d at 1281.
23
Shaid, 937 F.2d at 236.
9