United States v. Eisenstein

Beno Ghitis (defendant) owned and operated a Colombia-based currency-transaction business. In a typical transaction, Ghitis would purchase United States dollars from a Colombian seller, the seller’s agent would arrange for dollars to be deposited in Ghitis’s United States bank account, Ghitis would verify the deposit, and Ghitis would provide pesos or checks to the seller. Ghitis hired Victor Eisenstein (defendant) to operate a Miami, Florida, branch of the business, which permitted Eisenstein to make and report the dollar deposits. In the first eight months of 1981, the exchange business received more than $240 million. In January 1981, the Miami bank advised Eisenstein that he was required to file currency-transaction reports (CTRs) with the federal government for all transactions exceeding $10,000. Eisenstein assured the bank that he discussed the need to file CTRs with Ghitis, but neither Ghitis nor Eisenstein filed CTRs. Ghitis and Eisenstein were indicted for failing to report two large transactions, for conspiring to violate the reporting laws, and for engaging in a pattern involving currency transactions exceeding $10,0000 over a 12-month period. At trial, Ghitis and Eisenstein pursued a defense-of-counsel defense. The district court properly instructed the jury that it should acquit Ghitis and Eisenstein if it found, among other things, that before acting, Ghitis and Eisenstein made a full and accurate disclosure of all known material facts about the case to their attorney. The district court permitted Ghitis and Eisenstein’s attorney to testify that, based on what Ghitis disclosed to him, the attorney did not believe that CTRs were required, and the court permitted Ghitis to testify about his discussions with the lawyer. However, the district court barred Ghitis and Eisenstein’s attorney from testifying about what Ghitis told the attorney about the currency-exchange business. The jury convicted Ghitis and Eisenstein. Ghitis and Eisenstein appealed, arguing that (1) they were not required to file CTRs because their business was not a domestic financial institution within the meaning of 31 U.S.C. § 1081 because it was based in Colombia and (2) the district court improperly undermined their advice-of-counsel defense by limiting their attorney’s testimony. The United States responded that although the district court erred in limiting Ghitis and Eisenstein’s attorney’s testimony, this error was harmless because the attorney’s testimony was cumulative and both sides argued regarding Ghitis made a full disclosure.