Spitzer and “structuring”

by Walter Olson on March 11, 2008

A helpful reader sends along the following information about the offense of “structuring”, which federal investigators are reportedly looking at closely in connection with the Spitzer affair:

If Spitzer structured cash transactions to evade reporting requirements, he may be guilty of a felony. 31 U.S.C. 5324 prohibits certain actions by any person who acts with the purpose of evading the reporting requirements of Section 5313 (Currency Transaction Reports). The definition of structuring for purposes of currency transaction reporting is found at 31 C.F.R. 103.11(gg). The elements of the structuring regulations are:

A person acting alone, in conjunction with others, or on behalf of others,
Conducts or attempts to conduct,

One or more transactions in currency,

In any amount,

At one or more financial institutions,

On one or more days,

For the purpose of evading the reporting requirements of 31 C.F.R. 103.22 (requiring CTRs).

The definition is specifically written to include those transactions which occur beyond a single business day and transactions which are conducted through more than one financial institution, but only if the purpose of the transaction(s) is to evade the reporting requirements.

The reader adds: “The IRS Manual on the BSA structuring provisions is here.”

More: Kerr @ Volokh, WLS @ Patterico, Daniel Gross @ Slate , Mark Steyn (“Almost every white-collar federal offense – wire fraud, mail fraud – boils down to ‘paying for the train ticket'”), American Lawyer, ABC News, as well as my new piece @ NRO.

Yet more, from Eric Turkewitz: “It seems likely that an amount in excess of $10,000 must be at issue if this is what was being investigated, which means more of a mess than Eliot already has. And to tickle the bank to act, it may be a sum well in excess of that amount, because I wouldn’t think an investigation would be opened if they simply saw two transactions of, say, $6,000 each a few days apart. There could be substantially more at play here.”

{ 5 comments }

1 Clueby4 03.11.08 at 7:27 pm

Love how this gets “enhanced” press coverage but the current administration’s laundry list of alleged crimes gets nothing.

2 Ted 03.11.08 at 11:40 pm

Two $6000 wire transactions done at the same time to a single recipient would be enough to trigger a mandatory Suspicious Activity Report by a bank. It’s entirely possible that Spitzer was unaware of SARs: these are arcane federal regulations he had nothing to do with as AG, and if he were aware of the obviousness of the structuring, he’d surely know that the SAR would attract much more scrutiny than the CTR he was evading.

3 Walter Olson 03.11.08 at 11:59 pm

I don’t think it’s plausible that Spitzer could have been unaware of Suspicious Activity Reports and their role in law enforcement. Per Wednesday’s NYT, “When he was New York State’s attorney general, Mr. Spitzer himself used the reports to make his cases.”

4 Eric 03.13.08 at 2:59 am

I sort of agree with Ted. As a former bank employee, we would be required to file an SAR if there were multiple deposits to an account for more than $10K from one particular entity to another entity within a “illogical timeframe” involving cash. If we saw anything whatsoever that was suspicious, we would have to report it.
One of the pieces of information given through the media here in Albany is that the monies were transfered to a dummy corporation first. It was not a direct payment from Spitzer to the Emperor’s Club. That has been made apparent. Also, if the money he spent was sent thru a wire transfer from the dummy business to Emperor’s, then a CTR (nor a SAR realistically) is not required by the bank for the dummy business (nor his own I would assume. would you question Donald Trump everytine he made a large transfer of funds?). Many companies do multi-million dollar deals with others. For bookkeeping references, they may request to submit 10 or more transfers to indicate what each payment is for. One company may submit a $1.2M transfer for the sale of a property, another $600K for the building, and $150K for other values associated. Over the course of one business day, you may see three seperate transfers for $1.95M. If you submitted a SAR everytime this happened, the IRS would be caught up in a backlog of data. Spitzer is/was the governor. He made other purchases you and I make everyday. My belief is that there is some other evidence out there implicating him. But it is too early to tell right now what the government has on the situation. We obviously do not know all the facts, other than what the media is telling us.

5 T. Bartlett 07.12.08 at 1:17 pm

Avoiding use of credit cards can easily be construed as structuring because a paper trail was not left. There is no minimum limit to any transaction. Any government prosecuter can obtain a conviction at will on anyone who has used cash to pay for an item, no matter how small.

Credit card issuers are notoriously fraudulant with fees and charges. Some people avoid their use.

The purchase of a cold drink at a McDonalds with cash is structuring and it is punishable by five years in prison.

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