Senior District Judge Karl S. Forester of the United States District Court for the Eastern District of Kentucky was recently asked to entertain a motion of Defendant to exclude the expert testimony of an IRS Special Agent in her trial for violation of the Bank Secrecy Act (“BSA”).
In January of this year, a federal grand jury returned a one count indictment against the IRS agent for violation of the BSA. The indictment stated that the defendant structured currency deposits totaling over $350,000 into a bank to evade the BSA reporting requirements. The United States notified the defense attorney that it was going to present the expert testimony of another IRS Special Agent. Specifically, the United States prosecutor stated that the IRS expert witness would testify regarding “the common schemes and methods utilized by individuals to structure currency transactions in an effort to avoid the reporting requirement of monetary transactions in excess of $10,000.” Shortly thereafter, a federal grand jury returned a superseding indictment against the defendant and her husband, charging them with multiple counts of structuring, conspiracy to commit structuring, and attempting to cause a financial institution to fail to file a currency transaction report. The next day, the defendant filed her motion to exclude the expert testimony of the IRS Agent.
The defendant argued that the Agent’s expert testimony should be excluded for several reasons. First, the defendant generally argued that he was not qualified under Rule 702 of the Federal Rules of Evidence. Rule 702 states:
A witness who is qualified to testify as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.
Judge Forester explained that a review of the expert witness’s qualifications revealed that he had over 18 years experience investigating financial crimes with the IRS–CID (Criminal Investigation Division). Further, the Agent held the position of Coordinator of the IRS–CID Financial Crimes Task Force for the Eastern District of Kentucky. This task force investigated alleged violations of Title 18 and Title 31, and encompassed alleged structuring violations. The IRS expert witness also participated in numerous conferences and received extensive training on the BSA, as well as in areas of accounting methods and common business practices used to maintain financial records. For these reasons, and others given by the United States, the judge held that the IRS financial expert was qualified by training and experience to testify as an expert witness in the field of currency structuring investigations.
Judge Forester also noted that the Agent’s expert testimony was relevant and would assist the trier of fact in understanding the evidence or in determining a fact in issue. As the United States prosecutor noted, courts have allowed expert testimony to explain the BSA, its obligations on financial institutions to file Currency Transaction Reports (“CTRs”), and structuring deposits in general. The judge cited United States v. Caro (11th Cir. 2012), in which the Eleventh Circuit Court of Appeals held that it was proper to admit expert testimony regarding the “content and purposes of BSA, and the CTR obligations of domestic financial institutions.” Moreover, Judge Forester stated, currency structuring and the many methods criminals employ to accomplish it are beyond the realm of general knowledge of the average juror. The IRS financial expert’s proposed expert testimony would assist the jury in understanding the complexities of this case. As a result, his proposed testimony was found to satisfy the requirements of Rule 702.
The defendant also argued that the proposed expert testimony would violate Rule 704(b) because the expert witness would testify as to her state of mind. Federal Rule of Evidence 704(b) prohibits an expert witness from “stat[ing] an opinion about whether the defendant did or did not have a mental state or condition that constitutes an element of the crime charged ….” Under that rule, Judge Forester ruled that the expert would not be allowed to offer his testimony as to whether the defendant “intended” to structure her transactions or evade the BSA’s reporting requirements. That determination is reserved for the trier of fact. Nonetheless, the notice of expert testimony provided to the expert witness did not indicate that he intends to opine on her state of mind. Accordingly, this argument by the expert to exclude could not be granted based on Federal Rule of Evidence 704(b).
The expert witness also contended that because there was “no underlying charge showing why one like the defendant would want to deny a financial institution from reporting deposits,” his opinion was “nothing more than his claimed knowledge of other instances when persons made multiple deposits of cash.” There was simply no requirement under the statute or in case law, Judge Forester instructed, that any underlying charges were a prerequisite for expert testimony in a structuring case. Although structuring may be the means by which other crimes may be accomplished, separate underlying criminal conduct was not a condition precedent to a structuring charge or for the admission of expert testimony.
The defendant also argued that the IRS expert witness should be excluded because he was involved in the investigation and “is likely to be a fact witness.” However, Judge Forester ruled that, based on Sixth Circuit authority, the court routinely allowed law enforcement officers to provide both fact and opinion testimony. Any potential confusion or prejudice, the judge said, could be prevented by a cautionary instruction informing the jury that it should consider both roles in determining what weight, if any, to afford that witness’s testimony.
The defendant finally claimed that the Agent’s testimony should be excluded based on Rule 403 was also found to be without merit. To qualify for exclusion under this rule, the judge said that the evidence needed to do more than “damage” a defendant’s case, “rather it refers to evidence which tends to suggest a decision on an improper basis.” Judge Forester explained that the Agent’s proposed expert testimony related to the BSA regulations and patterns of currency structuring—both of which were outside the general knowledge and understanding of the average juror, but which needed to be digested by the jurors to render a verdict. Moreover, his proposed expert testimony as to whether the defendant’s patterns of currency deposits were consistent with structuring was highly probative. The defendant failed to articulate how his testimony created an unfair prejudice. As a result, the IRS’s expert testimony was admissible under Rule 403. The defendant’s motion to exclude the expert testimony was denied.
U.S. v. Ventura, Slip Copy, 2013 WL 2182831 (E.D.Ky. May 20, 2013)
By: Kurt Mattson, J.D., LLM