UNITED STATES OF AMERICA, No. 95-50094
Plaintiff-Appellant, D.C. No.
v. CR-94-00544-JD
HOSEP KRIKOR BAJAKAJIAN, aka: (JR)-1
JOE BAJAKAJIAN, OPINION
Defendant-Appellee.
Argued and Submitted
February 6, 1996--Pasadena, California
Filed May 20, 1996
Before: J. Clifford Wallace, Warren J. Ferguson, and
Thomas G. Nelson, Circuit Judges.
Opinion by Judge Ferguson;
Concurrence by Judge Wallace
_________________________________________________________________
SUMMARY
______________________________________________________________
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5978
________________________________________________________________
COUNSEL
Ronald L. Cheng, Assistant United States Attorney, Los
Angeles, California, for the plaintiff-appellant.
James E. Blatt, Encino, California, for the defendant-appellee.
_________________________________________________________________
OPINION
FERGUSON, Circuit Judge:
The United States appeals the decision of the district court
following the defendant's guilty plea to failure to report cur-
rency in violation of 31 U.S.C. S 5316(a)(1)(A).1 Specifically,
the United States appeals the district court's determination
that the defendant was required to forfeit only $15,000 of the
$357,144 at issue.2 We affirm the decision of the district
court.
_________________________________________________________________
1 31 U.S.C. S 5316(a) provides in pertinent part: a person or an agent or
bailee of the person shall file a report under subsection (b) of this section
when the person, agent, or bailee knowingly -
(1) transports, is about to transport, or has transported, mone-
tary instruments of more than $10,000 at one time-
(A) from a place in the United States to or through a place
outside the United States . . . .
2 In addition to appealing the district court's decision regarding the
amount of currency which Bajakajian should be required to forfeit, the
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I. Factual and Procedural Background
On June 9, 1994, Bajakajian was attempting to board an
Alitalia Airways flight leaving Los Angeles, destined for
Cyprus. While Bajakajian was waiting to board his flight,
U.S. Customs discovered approximately $140,000 concealed
in four pieces of Bajakajian's checked luggage and $90,000
concealed in a false bottom of one of his bags. After discover-
ing the hidden currency, a Customs inspector stopped the
defendant and his family at the airport and informed them that
they were required to report all money in both their personal
possession and baggage which exceeded $10,000, irrespective
of whether the money belonged to them. Bajakajian told the
Customs inspector that he had $8,000 with him and that his
wife had an additional $7,000. Bajakajian informed the
inspector that his family had no additional money to report.
Customs inspectors discovered a total of $357,144 in
United States currency in the carry-on baggage, checked-in
baggage, wallet, and purse of the defendant and his wife.
After being advised of his rights, Bajakajian admitted to Cus-
toms agents that he knowingly and wilfully failed to report the
currency which was discovered.
On July 8, 1994, a grand jury returned a three count indict-
ment against the defendant. Count One charged the defendant
with violation of 31 U.S.C. SS 5316(a)(1)(A) and 5322(a) for
transporting currency of more than $10,000 outside of the
United States without filing a report with the United States
Customs Service. Count Two charged the defendant with
making a false material statement to the United States Cus-
_________________________________________________________________
government has also appealed the district court's calculation of Bajakaji-
an's base offense level and the district court's failure to enhance Bajakaji-
an's sentence for obstruction of justice. However, this opinion only
addresses the government's appeal of the district court's forfeiture calcula-
tion. The remaining issues will be resolved in a separate disposition.
5980
toms Service in violation of 18 U.S.C. S 1001. Count Three
sought the forfeiture of the $357,144 discovered by Customs
under 18 U.S.C. S 982(a)(1).
On October 27, 1994, pursuant to a plea agreement, the
defendant entered a guilty plea as to Count One of the indict-
ment and waived a jury trial as to Count Three. The govern-
ment agreed to dismiss Count Two at the time of sentencing.
On December 20, 1994, a bench trial was held for Count
Three. The district court found that the entire $357,144 dis-
covered by Customs agents was subject to criminal forfeiture
pursuant to 18 U.S.C. S 982(a)(1). However, at sentencing,
the district court ordered the defendant to forfeit only $15,000
of the $357,144. The district court concluded that forfeiture of
more than $15,000 would be disproportionate to Bajakajian's
culpability, and therefore unconstitutional under the Exces-
sive Fines Clause of the Eighth Amendment. In calculating
the amount of forfeiture, the district court recognized that all
of the money at issue had come from a lawful source, and was
to be used for a lawful purpose.
II. Discussion
A district court's interpretation of federal forfeiture law is
reviewed de novo. United States v. 1980 Lear Jet, 38 F.3d
398, 400 (9th Cir. 1994).
The government alleges on appeal that the district court
erred in requiring forfeiture of only $15,000 because the
entire $357,144 at issue should have been forfeited. In the
alternative, the government requests forfeiture of $170,000,
the amount of currency which Bajakajian asked a friend to lie
about to Customs agents.
The forfeiture statute relevant to this litigation, 18 U.S.C.
S 982(a)(1), provides in pertinent part: "The court, in impos-
ing sentence on a person convicted of an offense in violation
of section 5313(a), 5316 or 5324 of title 31 . . . , shall order
5981
that the person forfeit to the United States any property, real
or personal, involved in such offense, or any property trace-
able to such property."
[1] Therefore, pursuant to 18 U.S.C.S 982(a)(1), the entire
$357,144 at issue in the present case is potentially forfeitable.
However, a forfeiture is unconstitutional unless it survives
scrutiny under the Excessive Fines Clause of the Eighth
Amendment. "The Excessive Fines Clause limits the Govern-
ment's power to extract payments, whether in cash or in kind,
`as punishment for some offense.'" Austin v. United States,
509 U.S. 602, 113 S. Ct. 2801, 2805 (1993) (citation omitted).
See also Alexander v. United States, 509 U. S. 544, 113 S. Ct.
2766, 2775-76 (1993) (holding that criminal forfeiture is a
form of monetary punishment subject to the Eight Amend-
ment's Excessive Fines Clause); United States v. Sarbello,
985 F.2d 716, 717-18 (3d Cir. 1993) (holding that a court may
reduce an otherwise mandatory 100% statutory criminal for-
feiture on the basis of the Excessive Fines Clause of the
Eighth Amendment). Therefore, forfeiture in the present case
must be subjected to analysis under the Excessive Fines
Clause.
The Supreme Court, in Austin, declined to enumerate the
factors to be considered in determining whether a forfeiture
violates the Excessive Fines Clause. Austin, 113 S. Ct. at
2812. We recently addressed this issue and established a two-
pronged test for determining whether a forfeiture is unconsti-
tutionally excessive under the Eighth Amendment. United
States v. Real Property Located in El Dorado County, 59 F.3d
974, 982 (9th Cir. 1995).
[2] Pursuant to this court's Excessive Fines Clause test, a
forfeiture is constitutional if: (1) the property forfeited is an
"instrumentality" of the crime committed; and (2) the value of
the property is proportional to the culpability of the owner.3
_________________________________________________________________
3 The district court bypassed the instrumentality prong of the two part El
Dorado Excessive Fines test and examined only the proportionality of
for-
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Id. at 982. Therefore, Bajakajian cannot be ordered to forfeit
any currency unless forfeiture in the present case would sat-
isfy both the instrumentality and proportionality prongs of our
recently established Excessive Fines Clause test.
Application of the instrumentality prong of the Excessive
Fines test to a 31 U.S.C. S 5316 violation was recently dis-
cussed by this court in United States v. $69,292 in United
States Currency, 62 F.3d 1161 (9th Cir. 1995). The court
questioned whether the currency involved in a S 5316 viola-
tion could ever be considered the instrumentality of the crime
of failure to report. The court explained that it was not per-
suaded "that currency lawfully acquired and possessed has
that necessarily close relationship to the crime simply because
it has not been reported. The crime is the withholding of
information, 31 U.S.C. S 5316, not the possession or the
transportation of the money." Id. at 1167. The court further
explained that the money at issue in a S 5316 violation is not
contraband, and the money is presumed under the statutory
scheme to be lawfully acquired and possessed. The statute
does not impose a limit on the amount of U.S. currency which
may be exported to foreign jurisdictions. Persons leaving the
United States are free, as they have always been, to take with
them such amounts of cash as they so choose. Id.
This court, in $69,292, also rejected the argument that the
currency in a S 5316 violation satisfies the instrumentality
requirement based upon the notion that the currency's exis-
tence was a precondition to the reporting requirement of 31
U.S.C. S 5316.
Simply put the existence of the currency as a precon-
dition does not make it an instrumentality. For exam-
_________________________________________________________________
feiture in the present case. This is probably due to the fact that the Ninth
Circuit's decision in El Dorado was handed down subsequent to the dis-
trict court's decision.
5983
ple, we would not characterize lawfully earned
income an instrumentality forfeitable as such simply
because a taxpayer wilfully failed to report that
income on his tax return in violation of the tax code.
The government would have us stretch the fiction of
an "instrumentality" to the breaking point.
Id. at 1167-68 (citation omitted). See also Austin v. United
States, 113 S. Ct. 2801, 2811 (1993) (rejecting expansive def-
initions as to what qualifies as the instrumentality of a particu-
lar crime).
The government argues that the majority opinion in
$69,292 conflicts with the Supreme Court's decision in One
Lot Emerald Cut Stones v. United States, 409 U.S. 232
(1972). There, the Court upheld the forfeiture of imported
goods pursuant to 19 U.S.C. S 1497,4 where the defendant
failed to declare one lot of emerald cut stones and a ring upon
his entry into the United States. Id. at 233.
[3] However, $69,292 and One Lot Emerald Cut Stones are
not in conflict. One Lot Emerald Cut Stones involved the
smuggling of contraband. When a defendant is convicted for
failure to report currency pursuant to 31 U.S.C.S 5316, the
crime is not the illegal possession, transportation, or smug-
gling of dutiable items. Rather, the crime is merely the failure
to provide information. Money in lawful possession, as it was
here, is not contraband. Moreover, the currency at issue in a
S 5316 violation is not contraband, is presumed to be lawfully
_________________________________________________________________
4 19 U.S.C. S 1497 has since been amended, but at the time of One Lot
Emerald Cut Stones, it provided:
Any article not included in the declaration and entry as made,
and, before examination of the baggage was begun, not men-
tioned in writing by such person, if written declaration and entry
was required, or orally if written declaration and entry was not
required, shall be subject to forfeiture and such person shall be
liable to a penalty equal to the value of such article.
5984
possessed and is not subject to duty. It is not illegal to take
currency out of the country. The key difference is that a viola-
tion of S 5316 merely deprives the government of informa-
tion, whereas the smuggling of goods across the border
deprives the government of revenue. $69,292, 62 F.3d at
1167. Therefore, there is a much tighter instrumentality con-
nection between property sought to be forfeited and the crime
when the crime committed is the failure to pay a duty.5
[4] We hereby adopt the logic of the court in $69,292.6 For-
feiture of currency is unconstitutional when the crime to
which the forfeiture is tied is a mere failure to report pursuant
to 31 U.S.C. S 5316. In such situations, there simply is not an
instrumentality relationship between the currency and the
crime to satisfy the instrumentality prong of the Excessive
Fines test.7
_________________________________________________________________
5 Such a distinction is not new. See Austin v. United States, 113 S. Ct.
2801, 2811-12 (1993) (The Supreme Court distinguished cases involving
drug forfeitures from cases involving customs violations.).
6 The government alleges that the reasoning of the majority in $69,292
with respect to the Excessive Fines Clause and 31 U.S.C. S 5316 is dicta
because the district court might not have needed to address this issue on
remand. However, this portion of $69,292 is not dicta. "[D]irection to the
district on how to proceed continues to be binding precedent, even if char-
acterized as an alternative holding." Operating Eng'rs Pension Trust v.
Charles Minor Equip. Rental, Inc., 766 F.2d 1301, 1304 (9th Cir.)
(explaining that it was not dicta for the Ninth Circuit in Sapper v. Lenco
Blade, Inc., 704 F.2d 1069 (9th Cir. 1983) to direct the district court on
how to resolve an issue on remand which might only arise, depending
upon the resolution of another issue), modified, 778 F.2d 538 (9th Cir.
1985).
7 The government argues that United States v. One 1985 Mercedes-Benz,
14 F.3d 465 (9th Cir. 1994) provides support for forfeiture in the present
case. In One 1985 Mercedes-Benz, the court held that vehicles used to
export currency in violation of 31 U.S.C. S 5316 are subject to forfeiture
under 18 U.S.C. S 982. However, One 1985 Mercedes-Benz does not pro-
vide support for forfeiture in the present case for two reasons. First, a car
used to transport money is clearly the instrumentality of a S 5316 violation
because the car itself is used to export and conceal the currency. Second,
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[5] Therefore, the district court erred in ordering Bajakajian
to forfeit $15,000. Forfeiture of any amount would be uncon-
stitutionally excessive under the El Dorado Excessive Fines
Clause test. However, Bajakajian failed to file a cross-appeal
requesting a modification of the district court's order that he
forfeit $15,000. If an appellee seeks a modification of the dis-
trict court's judgment, he must file a cross-appeal requesting
the modification. Unless an appellee files a cross-appeal, "the
appellee may not attack the [district court's] decree with a
view either to enlarging his own rights thereunder or of less-
ening the rights of his adversary, whether what he seeks is to
correct an error or to supplement the decree with respect to a
matter not dealt with below." United States v. One 1964 MG,
584 F.2d 889, 890 (9th Cir. 1978) (quoting United States v.
American Ry. Express Co., 265 U.S. 425, 435 (1924)).
[6] Although pursuant to the Excessive Fines Clause
Bajakajian cannot be ordered to forfeit any of the unreported
currency, he is nonetheless forced to accept the decision of
the district court. Bajakajian failed to file a cross-appeal, and
therefore, this court lacks jurisdiction to set aside the district
court's forfeiture order of $15,000.
III. Conclusion
The decision of the district court is AFFIRMED.
_________________________________________________________________
WALLACE, Circuit Judge, concurring:
The majority takes our dicta in United States v. $69,292.00
in U.S. Currency, 62 F.3d 1161 (9th Cir. 1995) ($69,292), to
_________________________________________________________________
One 1985 Mercedes-Benz was decided prior to both El Dorado, which
established the two-pronged Excessive Fines test, and $69,292, which
applied the El Dorado test for the first time to a S 5316 violation. There-
fore, the facts of One 1985 Mercedes-Benz are not analogous to the facts
of the present case, and its logic is questionable due to the recent decisions
handed down by this court in El Dorado and $69,292.
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an illogical extreme. In so doing, the majority strikes down a
portion of 18 U.S.C. S 982(a)(1), thereby unduly limiting the
government's forfeiture powers. I agree only with the majori-
ty's ultimate decision to affirm the $15,000 forfeiture.
Because I would do so for entirely different reasons, I concur
in result only.
We are not bound by the dicta in $69,292. In $69,292, we
explained the analysis used to determine whether a forfeiture
violates the Eighth Amendment. $69,292, 62 F.3d at 1166-67,
citing United States v. Real Property Located in El Dorado
County, 59 F.3d 974 (9th Cir. 1995) (El Dorado). To satisfy
the Eighth Amendment's prohibition against excessive fines,
forfeited property must be instrumental to the crime and pro-
portional in value to the culpability of the owner. El Dorado,
59 F.3d at 982. In $69,292, the district court did not analyze
the forfeiture in terms of our intervening decision in El
Dorado. Thus, we remanded to enable the district court to
make appropriate findings. $69,292, 62 F.3d at 1168.
The majority would read $69,292 as holding that currency
involved in a section 5316 violation is never an instrumental-
ity of the crime. Majority at 8 & n.6. The majority's reading
of $69,292 renders all forfeitures of currency in such circum-
stances unconstitutional under our test in El Dorado. But if in
$69,292 we had held that all forfeitures of currency involved
in reporting violations necessarily fail El Dorado, we would
not have written that, "[w]e make no assessment as to whether
the forfeiture meets the El Dorado test." $69,292, 62 F.3d at
1168. As Judge Rymer accurately wrote in dissent, $69,292's
instrumentality discussion is dicta. Id. at 1168 (Rymer, J., dis-
senting).
Not only is this $69,292 discussion clearly dicta, but there
are two additional interrelated problems -- one with the
majority's interpretation of the dicta in $69,292 and one with
the $69,292 dicta itself.
5987
First, the majority misreads our remarks in $69,292. We
asserted there that we were not "persuaded that currency
lawfully acquired and possessed has the necessarily close
relationship to the crime simply because it has not been
reported." Id. at 1167 (emphasis added). Our remarks were
focused on the source of the defendants' funds, and we sug-
gested that legally obtained funds might not be instrumental.
See id. (explaining that "the reporting requirement applies to
all currency, whether it is lawfully gained or not," and sug-
gesting that we should analyze forfeiture based in part on the
source of the funds). If on remand the district court in $69,292
had found that the defendants acquired the funds illegally,
nothing in $69,292 would have precluded forfeiture.
The majority, purporting to "adopt the logic of the court in
$69,292," maj. op. at 9, overlooks $69,292's underlying ratio-
nale. The majority holds that "[f]orfeiture of currency is
unconstitutional when the crime to which the forfeiture is tied
is a mere failure to report pursuant to 31 U.S.C.S 5316." Id.
Thus, even if a district court finds that money was illegally
acquired, the majority does not allow forfeiture. Or, even if a
defendant's failure to report is combined with another viola-
tion of United States law (and the other law does not indepen-
dently allow forfeiture), the majority would still not allow
forfeiture. Nothing in $69,292's dicta supports this result.
Second, it is precisely $69,292's focus on lawfully acquired
funds that makes $69,292's instrumentality dicta problematic.
$69,292 suggests that instrumentality should turn, at least in
part, on the source of the funds. However, I interpret the
instrumentality inquiry as being completely divorced from the
source of the funds. After all, why is currency any more
instrumental when the currency is legally obtained as opposed
to when it is illegally obtained? See United States v.
$145,139.00, 18 F.3d 73, 75 (2d Cir.) (Currency was "an
instrument of the crime [of failure to report]. It was the
`means' by which the crime was committed. . . . Indeed, it
was the very sine qua non of the crime."), cert. denied, 115
5988
S. Ct. 71 (1994); Austin v. United States, 113 S. Ct. 2801,
2815 (1993) (Scalia, J., concurring) (explaining the instru-
mentality inquiry as being whether "property has been
`tainted' by unlawful use . . . . [in other words,] whether the
confiscated property has a close enough relationship to the
offense" (emphasis omitted)), quoted in El Dorado, 59 F.3d
at 982. In this case, the crime was Bajakajian's failure to
report $357,144 that he had secretly stashed. I cannot agree
with the majority that there is an insufficient nexus between
the acquired currency and the offense -- without the cur-
rency, there can be no offense.
Of course, the source of the acquired funds does have a
place in our Eighth Amendment inquiry under El Dorado.
However, the inquiry into the source of the funds is part of the
proportionality analysis, not the instrumentality inquiry. El
Dorado, 59 F.3d at 985-86 (explicitly requiring district court
to consider, as part of proportionality determination, the
"culpability of the owner"); see also id. at 983 (adopting "the
proportionality test as a check on the instrumentality
approach" because of the instrumentality prong's "potentially
harsh results, when applied alone"). If, as the district court
held, Bajakajian's funds were lawfully obtained from friends
and family and were not to be illegally used, then these facts
might warrant a reduced forfeiture to avoid an excessive fine.
I therefore disagree with the majority's conclusion that the
currency was not instrumental as a matter of law. I would
hold that the district court properly found that the entire
amount of currency was potentially forfeitable. The currency
was instrumental. As to proportionality, I would review for
clear error the district court's factual findings underpinning its
decision to forfeit only $15,000. See United States v. Alcaraz-
Garcia, 79 F.3d 769, 772 (9th Cir. 1996) (findings of fact
underlying forfeiture reviewed for clear error). The district
court found that the funds were lawfully acquired and were to
be lawfully used. The district court next found that forfeiture
of only $15,000 was proportional to Bajakajian's culpability.
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I do not believe that the district court's findings were clearly
erroneous; therefore, I would affirm the $15,000 forfeiture.
5990