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U.S. v. Retos

June 08, 1994

UNITED STATES OF AMERICA
v.
GEORGE RETOS, JR., APPELLANT



On Appeal from the United States District Court for the Western District of Pennsylvania. (D.C. Crim. No. 92-00110-01).

Before: Greenberg and Garth, Circuit Judges and Robreno, District Judge*fn*

Author: Garth

Opinion OF THE COURT

GARTH, Circuit Judge :

Defendant George Retos ("Retos") was convicted on nine counts of an eleven-count indictment, including two counts of income tax evasion, in violation of 26 U.S.C. § 7201, and one count of currency structuring, in violation of 31 U.S.C. §§ 5324 (3) and 5322(a). On appeal, Retos contests a number of rulings made by the district court during trial. He also argues that the district court's jury instruction with respect to the structuring count was inconsistent with the Supreme Court's holding in Ratzlaf v. United States, ___ U.S. ___, 114 S. Ct. 655 (1994), a case decided while Retos' appeal was pending before us.

We have jurisdiction pursuant to 28 U.S.C. § 1291. Although the bulk of Retos' appeal is without merit, we conclude that, in the aftermath of Ratzlaf, the jury instruction given by the district court without objection constituted plain error, which we may review. We will vacate Retos' structuring conviction and will remand to the district court for retrial on the structuring count and for resentencing on Retos' remaining, valid convictions, which we will affirm.

I

George Retos was the managing partner of Retos, Held & Mascara, a Washington, Pennsylvania law firm. He also advised clients as a solo practitioner, separate from, and apparently concurrent to, his association with the law firm. On May 21, 1992, a federal grand jury returned an eleven-count indictment against Retos alleging numerous federal offenses arising out of his professional and personal financial activities, and the convergence of the two.

Counts 1 through 3 charged Retos with income tax evasion in violation of 26 U.S.C. § 7201.*fn1 The government alleged that Retos had understated his taxable income in 1985 ("Count 1"). A government audit of Retos' 1986 tax return revealed that he had understated his taxable income in 1986 by $218,714.96 ("Count 2"). Retos never filed an income tax return in 1987 ("Count 3").

Count 4 charged Retos with structuring a currency transaction in violation of 31 U.S.C. §§ 5324(3)*fn2 and 5322(a).*fn3 The government alleged that in connection with the purchase of an automobile dealership by a Retos client, Robert Bruno, Retos caused $15,000 to be paid over to the seller, Bud Spesak, in two separate checks, each made out to "Cash" in the sum of $7,500 (i.e., below the $10,000 currency transaction report threshold).

Count 5 charged Retos with scheming to defraud by use of wire communications, in violation of 18 U.S.C. § 1343. In 1987, Retos applied for a residential loan from a federally insured savings and loan institution using allegedly fraudulent income tax returns. In connection with his application, Retos wired $216,264.49 into his own personal bank account.

Count 6 charged Retos with making false statements in connection with a credit application, in violation of 18 U.S.C. § 1014. In 1988, Retos obtained a line of credit from a federally insured bank by providing the bank with false information concerning the status of his income tax liability and by using falsified copies of his never-filed 1987 tax return.

Counts 7 through 10 charged Retos with mail fraud, in violation of 18 U.S.C. § 1341. Retos had been retained by a client, Samir Gayed, to incorporate Gayed's investment company, Golden Falcon, Inc. Retos never did so. Rather, Retos falsely held himself out as the president of Golden Falcon and had Golden Falcon's interests transferred to him. The effect of this transfer was that Retos knowingly and fraudulently received, and caused to be received, through the United States mail, four revenue checks which rightly belonged to Golden Falcon.

Count 11 charged Retos with the interstate transportation of stolen property, in violation of 18 U.S.C. §§ 2314 and 2. Retos unlawfully transported a stolen limited partnership certificate from Midland, Texas to Washington, Pennsylvania.

Trial commenced on November 30, 1992. Retos immediately objected to a number of statements made by the prosecutor in his opening statement, and moved for a mistrial. The district court denied Retos' motion. On December 18, 1992, a jury found Retos guilty on nine of the eleven counts charged, including two of the three tax evasion counts and the one structuring count.*fn4 Thereafter, on May 4, 1993, the district court denied Retos' post-trial motion for judgment of acquittal.

On June 29, 1993, Retos was sentenced to concurrent terms of 27 months imprisonment on Counts 2, 3, and 6 through 11. He was sentenced to a consecutive term of three months imprisonment on Count 4, the structuring count. Retos also was fined $30,000 and ordered to pay restitution in the amount of $42,886.88 and a $450 special assessment. This appeal followed.

II

Retos challenges a number of pronouncements made by the prosecutor during his opening statement which, Retos claims, prejudiced the jury against him. In particular, Retos objects to the prosecutor's reference to (1) drug use, (2) Retos' frequent cash withdrawals of sums under $10,000, and (3) Retos' "crooked" law practice.

We review a district court's denial of a motion for mistrial arising out of alleged prosecutorial misconduct for abuse of discretion. United States v. Gambino, 926 F.2d 1355, 1365 (3d Cir. 1991); United States v. Tyler, 878 F.2d 753, 756 (3d Cir. 1989). We will vacate a defendant's conviction if "the prosecutor's remarks, taken in the context of the trial as a whole, were sufficiently prejudicial to have deprived [the defendant of his] right to a fair trial." United States v. DiPasquale, 740 F.2d 1282, 1297 (3d Cir. 1984). Even if a prosecutor does make an offending statement, the district court can neutralize any prejudicial effect by carefully instructing the jury "to treat the arguments of counsel as devoid of evidentiary content." United States v. Somers, 496 F.2d 723, 738 (3d Cir. 1974). Accord United States v. Leftwich, 461 F.2d 586, 590 (3d Cir. 1972) (finding no prejudice where trial Judge carefully instructed jurors that arguments of counsel were not evidence).

A.

Here, the reference by Assistant United States Attorney Garrett to drug-dealing was for the sole purpose of illustrating to the jury the meaning of "structuring."*fn5 The portion of the prosecutor's opening statement, challenged by Retos, was as follows:

One of the charges you heard mentioned of in this case involves a currency transaction. The particular violation is that Mr. Retos did what is known as he structured a currency transaction. A currency transaction that is affected by this particular offense is a transaction for currency in excess of $10,000.

Now, within the past couple of decades, I guess it has been determined by the United States Congress that there is a substantial risk that persons engaged in criminal activity will utilize currency. The reason for that is simple.

When currency exchanges hands between two individuals, there is no record made. If you think about it, when you write a check, the check goes through your bank account. The bank has to keep a record of that check because the bank has to keep your account straight. They don't want to be crediting your $10,000 against somebody else's account.

So that the bank keeps a record. So whenever you use a check or some written instrument in connection with the financial transaction, there is a record. But if you simply use currency, there is not any record. So in order to fill that gap, in 1971, I think it was, the United States Congress passed a law that provided that whenever a bank engages in a transaction with a customer involving more than $10,000 in cash, the bank must file a report.

So, in other words, if I go to my bank because I am a drug dealer or because I am a tax cheat, and I want to create a transaction that does not have any record to it, and I get my $15,000 in currency, there is going to be a record because the bank has to file a report saying Garret [i.e., the prosecutor] got 15 grand.

So it does not necessarily say what I did with the 15 grand, but it says I had it. So there is at least that much of a record.

Now, when Congress passed the law, as I say, it required the bank to file a report and if the bank engaged in a transaction for more than $10,000, and did not file a report, the bank itself and bank employee who engaged in the transaction could be prosecuted for violating the law.

In more recent years, I guess it has probably been about within the last ten years or so, the Congress also passed a law that provided that, if an individual designs or structures a transaction in such a way as to prevent the bank from filing a currency transaction report, then that individual is violating the law. In other words, Garret does not go to the bank once and get $15,000, Garret goes to the bank twice -- see, I am a smart guy. I get $7500 one time and $7500 ...


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