United States of America v.  Sarah H. Peterson

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 09-4166 
SARAH H. PETERSON,
Defendant-Appellant. 
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
T. S. Ellis, III, Senior District Judge.
(1:08-cr-00348-TSE-1)
Argued: March 24, 2010
Decided: June 17, 2010
Before SHEDD and AGEE, Circuit Judges, and
HAMILTON, Senior Circuit Judge.
Affirmed by published opinion. Senior Judge Hamilton wrote
the opinion, in which Judge Shedd and Judge Agee joined.
COUNSEL
ARGUED: Robert Michael Tyler, MCGUIREWOODS, LLP,
Richmond, Virginia, for Appellant. Gordon D. Kromberg,
OFFICE OF THE UNITED STATES ATTORNEY, Alexan-
dria, Virginia, for Appellee. ON BRIEF: E. Duncan Getchell,

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Jr., Erin M. Sine, MCGUIREWOODS, LLP, Richmond, Vir-
ginia, for Appellant. Neil H. MacBride, United States Attor-
ney, Alexandria, Virginia, for Appellee.
OPINION
HAMILTON, Senior Circuit Judge:
Section 2S1.3(b)(2) of the United States Sentencing Guide-
lines provides a two-level enhancement for certain monetary
transaction offenses if the defendant committed "the offense
as part of a pattern of unlawful activity involving more than
$100,000 in a 12-month period." U.S. Sentencing Guidelines
Manual (USSG) § 2S1.3(b)(2). The issue presented in this
appeal is whether the district court erred at sentencing when
it enhanced the offense level of the appellant, Sarah Hiram
Peterson (Peterson), under this Guidelines section after Peter-
son pleaded guilty to structuring transactions to evade finan-
cial reporting requirements, 31 U.S.C. § 5324(a)(3). Finding
no error, we affirm.
I
Peterson, an Iranian-American, married her second hus-
band, Donald Peterson (Donald), in October 1998. They sepa-
rated in June 2004 and ultimately divorced in August 2007.
As part of the divorce settlement, Peterson was to pay Donald
$500,000.00, of which $100,000.00 was to be paid from cash
Peterson had stored in a safe deposit box. The money in Peter-
son’s safe deposit box was proceeds derived from her opera-
tion of multiple chiropractic practices in Northern Virginia.
In an attempt to evade the currency reporting requirements
set forth in 31 U.S.C. § 5313(a),1 Peterson made eleven sepa-
1Under 31 U.S.C. § 5324(a), a person may not structure transactions
"for the purpose of evading the reporting requirements of [31 U.S.C. §]
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rate deposits of $9,500.00 or less into her Wachovia bank
account between August 8 and August 29, 2006. According
to Peterson, she structured the $101,200.00 in deposits on the
instructions of Donald, a stockbroker, who advised her to
avoid the burdensome paperwork and to avoid potentially
making United States law enforcement authorities suspicious
about an Iranian-American depositing such a large sum in a
bank account.
On October 2, 2008, the government filed a one-count
criminal information charging Peterson with structuring trans-
actions to evade reporting requirements, 31 U.S.C.
§ 5324(a)(3). On the same day, Peterson pleaded guilty to that
offense.
In preparation for sentencing, a presentence report was pre-
pared by a United States probation officer. The probation offi-
cer set Peterson’s base offense level at 6, USSG
§ 2S1.3(a)(2). The probation officer added eight levels pursu-
ant to USSG § 2B1.1(b)(1)(E), because the structured amount
was more than $70,000.00 but less than $120,000.00. Two
more levels were added pursuant to USSG § 2S1.3(b)(2),
because, according to the probation officer, Peterson’s offense
was committed as part of a pattern of unlawful activity
involving more than $100,000.00 in a twelve-month period.
Following a three level reduction for acceptance of responsi-
bility, USSG § 3E1.1(a) & (b), Peterson’s total offense level
was 13. Coupled with a criminal history category of II,2 the
probation officer set Peterson’s sentencing range at 15 to 21
months’ imprisonment.
5313(a)" or applicable regulations. By regulation, financial institutions
must report all currency transactions involving more than $10,000, subject
to certain exceptions which are not applicable here. See 31 C.F.R.
§ 103.22(b)(1).
2Peterson had prior convictions for food stamp fraud and for making a
false insurance claim.
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At the sentencing on January 23, 2009, Peterson challenged
the USSG § 2S1.3(b)(2) enhancement, contending that the
enhancement did not apply because her structuring offense
did not involve "a pattern of unlawful activity," which is
defined as "at least two separate occasions of unlawful activ-
ity . . . , without regard to whether any such occasion occurred
during the course of the offense or resulted in a conviction for
the conduct that occurred on that occasion." USSG § 2S1.3,
comment. (n.3). According to Peterson, if the structured
money came from one source, here her safe deposit box, there
could be only one offense, see United States v. Davenport,
929 F.2d 1169, 1172 (7th Cir. 1991) (holding that the struc-
turing itself, and not each individual deposit, is the unit of
prosecution in a structuring offense), and thus no pattern of
unlawful activity, regardless of the number of deposits or the
amount ultimately deposited. The propriety of the USSG
§ 2S1.3(b)(2) enhancement was extremely germane, because
it not only affected whether Peterson’s sentencing range
would be enhanced pursuant to that section, but also because
it affected whether she was entitled to the safe harbor provi-
sion in USSG § 2S1.3(b)(3). Pursuant to the safe harbor pro-
vision, Peterson’s offense level would be reduced to level 6
if, among other things, the enhancement of USSG
§ 2S1.3(b)(2) did not apply.
The district court determined that Peterson’s offense was
committed as part of a pattern of unlawful activity involving
more than $100,000.00 in a twelve-month period; so USSG
§ 2S1.3(b)(2) applied, and, as a result, the safe harbor provi-
sion in USSG § 2S1.3(b)(3) did not apply. The district court
stated that the USSG § 2S1.3(b)(2) enhancement should not
turn on the number of different places the defendant had
stored her cash, reasoning such a result "bizarre and not
intended." (J.A. 110). Rather, according to the district court,
the pattern of unlawful activity could involve multiple depos-
its coming from the same source of funds, provided each such
deposit could be prosecuted as unlawful in its own right,
though not necessarily in separate counts. As a result, the dis-
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trict court determined Peterson’s offense level to be 13, and
her sentencing range to be 15 to 21 months’ imprisonment. At
that time, Peterson was sentenced to, among other things,
twelve months’ imprisonment.
On January 27, 2009, the district court entered an order
vacating the sentence imposed and ordered the parties to reap-
pear for sentencing on January 30, 2009, out of concern that
it did not properly apply the Supreme Court’s decision in
Kimbrough v. United States, 552 U.S. 85 (2007). At the Janu-
ary 30, 2009 sentencing, after consideration of the sentencing
range and the other factors set forth at 18 U.S.C. § 3553(a),
the district court sentenced Peterson to, inter alia, eight
months of community confinement with work release. Peter-
son appeals, challenging the district court’s application of the
USSG § 2S1.3(b)(2) enhancement.
II
For sentencing purposes, structuring offenses are covered
by USSG § 2S1.3. The base offense level for a structuring
offense is 6, plus the number of levels from the Theft Table
at USSG § 2B1.1. USSG § 2S1.3(a)(2). After the base offense
level is calculated, specific offense characteristics come into
play. Two levels are added if (1) the defendant knew or
believed that the structured funds were proceeds of unlawful
activity or were intended to promote such activity or (2) the
offense involved bulk cash smuggling. USSG § 2S1.3(b)(1).
Moreover, two levels are added if the defendant committed
the structuring offense "as part of a pattern of unlawful activ-
ity involving more than $100,000 in a 12-month period."
USSG § 2S1.3(b)(2). A pattern of unlawful activity is defined
as "at least two separate occasions of unlawful activity . . . ,
without regard to whether any such occasion occurred during
the course of the offense or resulted in a conviction for the
conduct that occurred on that occasion." USSG § 2S1.3, com-
ment. (n.3). Finally, an offense level is reduced to offense
level 6 under the safe harbor provision, provided: (1) subsec-
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tions (b)(1) and (b)(2) do not apply; (2) the defendant did not
act with reckless disregard of the source of the structured
funds; (3) the funds were the proceeds of lawful activity; and
(4) the funds were used for a lawful purpose. USSG
§ 2S1.3(b)(3).
Peterson argues that, because, per Davenport, she commit-
ted only one chargeable offense of structuring, her offense
was not part of a pattern of unlawful activity under USSG
§ 2S1.3(b)(2). More specifically, she argues that, when she
made the eleven deposits, she engaged in only one occasion
of unlawful activity, not multiple occasions of unlawful activ-
ity as required by USSG § 2S1.3(b)(2). This argument is
premised on the following language in Davenport, "[t]he stat-
ute does not forbid the making of deposits. It forbids the
structuring of a transaction." 929 F.2d at 1171. Consequently,
Peterson claims she was entitled to the safe harbor provision
in USSG § 2S1.3(b)(3), such that her total offense level
should have been 4 (offense level 6 minus a two-level reduc-
tion for acceptance of responsibility).
The pattern of unlawful activity enhancement set forth in
USSG § 2S1.3(b)(2) applies in at least three situations, which
is not surprising since USSG § 2S1.3 applies to a variety of
monetary transaction offenses. First, it applies when the occa-
sions of unlawful activity involving more than $100,000.00
are separate from the structuring offense itself. Redefining the
Bank Secrecy Act: Currency Reporting and the Crime of
Structuring, 50 Santa Clara L. Rev. 407, 486 (2010). For
example, structuring is separate from income tax evasion
when the defendant structures a series of deposits to avoid
paying income taxes. Id. Second, the enhancement applies
when the defendant engages in what has been coined as "‘se-
rial structuring.’" Id. Serial structuring refers to a pattern of
structuring activity involving more than $100,000.00 in any
twelve-month period, and applies "even in the absence of
other criminal activity." Id. Typically, serial structuring
involves a series of related currency transaction report viola-
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tions. See, e.g., United States v. St. Michael’s Credit Union,
880 F.2d 579, 587 (1st Cir. 1989) (holding that, to establish
a pattern of unlawful activity in a case involving currency
transaction report violations, the government must prove that
the currency transaction report violations were both repeated
and related to one another). Finally, the pattern of unlawful
activity enhancement applies when the structuring offense
itself involves a pattern of unlawful activity. This situation is
akin to serial structuring, but typically involves a defendant
who structures a series of deposits totaling in excess of
$100,000.00 to avoid triggering the bank’s duty to report (per-
fect structuring) or in an attempt to defeat the bank’s responsi-
bility to report (imperfect structuring). This final situation
recognizes that some structuring offenses are part of a pattern
of unlawful activity, while others are not. For example, a
structurer who takes $9999.00 from a safe deposit box con-
taining $101,000.00 and is arrested on her first trip to the
bank to deposit the money has not, as the government
acknowledged at oral argument, engaged in a pattern of
unlawful activity under USSG § 2S1.3(b)(2), even though she
may have intended to make ten additional deposits. Similarly,
a structurer who has $101,000.00 in a bedroom closet, makes
the first deposit of $9999.00, and returns home only to find
the remainder of the money stolen has not engaged in a pat-
tern of unlawful activity under USSG § 2S1.3(b)(2). The
same cannot be said for the structurer who is able to make the
other eleven deposits before getting caught. Such a structurer
has committed a series of acts that constitute a pattern of
unlawful activity.
Such a construction of USSG § 2S1.3(b)(2) is consistent
with Application Note 3 to USSG § 2S1.3. In Application
Note 3, "pattern of unlawful activity" is defined as "at least
two separate occasions of unlawful activity involving a total
amount of more than $100,000 in a 12-month period, without
regard to whether any such occasion occurred during the
course of the offense or resulted in a conviction for the con-
duct that occurred on that occasion." USSG § 2S1.3, com-
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ment. (n.3). As a result, "unlawful activity" that did not occur
during the course of the offense of conviction may trigger the
enhancement, but, in addition, such unlawful activity that
occurs during the course of the offense of conviction may
trigger it as well. Thus, the "pattern of unlawful activity" can
consist solely of conduct that occurred during the course of
the offense, that is, the structured transactions that occurred
during the course of the structuring offense.
Our reading of USSG § 2S1.3(b)(2) is also consistent with
the overall framework of USSG § 2S1.3. Section § 2S1.3 sets
up a graduated punishment scheme that punishes a defendant
primarily on the amount of money involved in the monetary
transaction violation(s) and affords leniency for the defendant
who engages in isolated monetary transactions that do not
cross the $100,000.00 threshold. Generally, the larger the
amount of money involved in the monetary transaction viola-
tion(s), the higher the offense level. However, the safe harbor
provision essentially establishes a very narrow opening for a
defendant whose offense is either made up of an isolated
monetary transaction or several monetary transactions that do
not cross the $100,000.00 threshold. A defendant who
engages in multiple transactions and crosses the $100,000.00
threshold simply cannot enter that narrow opening.
Moreover, acceptance of Peterson’s argument leads to
absurd results. For example, under her reading of USSG
§ 2S1.3(b)(2), defendants essentially engaging in the same
conduct would receive dramatically different sentences. For
example, a defendant who has $101,000.00 in a safe deposit
box and, within a one-month month period, breaks it up into
eleven deposits under $10,000.00 is entitled to the safe harbor
provision and receives an offense level of 6. However, a
defendant who has $52,000.00 in cash on Day One and breaks
it up into six deposits under $10,000.00 over the first month
but then acquires another $49,000.00 on Day Five and breaks
that amount into five deposits under $10,000.00 during that
same month would not be entitled to the safe harbor provi-
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sion, but would be assigned an offense level of 14. In both
instances, the defendant structured the same amount of money
in the course of eleven transactions over roughly the same
period of time. Yet, according to Peterson, the second
instance would constitute a "pattern" subject to the enhance-
ment in USSG § 2S1.3(b)(2), but the first would not. We sim-
ply cannot embrace such reasoning.
The absurdity does not end there. Embracing Peterson’s
reading of USSG § 2S1.3(b)(2) also needlessly leads to the
divergent sentences for imperfect structuring offenses on the
one hand and perfect structuring offenses on the other. An
imperfect structurer violates § 5324(a)(1) when multiple
deposits are made in the same or different bank accounts at
the same bank on the same day such that the total of the
deposits aggregates to more than $10,000.00. Each day’s
deposits that exceed the $10,000.00 threshold constitute a sep-
arate violation of § 5324(a)(1) because the imperfect struc-
turer has attempted to cause the bank to fail to file the
necessary currency transaction report. Thus, under Peterson’s
reading of USSG § 2S1.3(b)(2), the imperfect structurer who
structures $101,000.00 through ten deposits over ten days
would receive an offense level of 14, but the perfect structurer
who structures $101,000.00 through eleven deposits on eleven
separate days would receive an offense level of 6 under the
safe harbor provision. Again, we simply cannot embrace such
anomalies.
At the end of the day, Peterson’s argument rests on the
statements in Davenport positing that a deposit simply is not
an unlawful act; therefore, according to Peterson, no deposit
can be viewed as an occasion of unlawful activity under
USSG § 2S1.3(b)(2). We are reluctant to take issue with the
decision in Davenport because the court there addressed the
appropriate unit of prosecution in a § 5324(a)(3) structuring
case; it did not address whether the defendant engaged in a
pattern of unlawful activity under USSG § 2S1.3(b)(2). There
are sound reasons supporting the principle that the govern-
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ment should refrain from bringing a separate structuring count
for each deposit, especially in cases involving numerous
deposits over an extended period of time. Cf. United States v.
Tran Trong Cuong, 18 F.3d 1132, 1142 (4th Cir. 1994)
(reversing convictions in prescription drug distribution case
where government obtained an indictment containing 136
counts, of which eighty counts were not supported by suffi-
cient evidence; court noted that "[s]uch tactics invite a jury to
find guilt by association or as a result of a pattern"). However,
for purposes of our discussion here, we are of the opinion that
each separate deposit is an unlawful act, as the government
could base a prosecution on any one or all of the deposits, see
31 C.F.R. § 103.11(gg) (defining structuring as one or a series
of transactions). In this regard, a structuring offense is akin to
conspiracy (or other unlawful schemes), where the unlawful
acts are charged as overt acts in the overall conspiracy. Put
simply, because Peterson made more than one unlawful
deposit and the total of her eleven deposits in a twelve-month
period exceeded $100,000.00, she committed her offense as
part of a pattern of unlawful activity under USSG
§ 2S1.3(b)(2).
III
Peterson raises two additional arguments which she con-
tends should be resolved in her favor. First, she contends that
USSG § 2S1.3(b)(2) only applies to willful violations of
§ 5324(a)(3). We reject this argument for the simple reason
that USSG § 2S1.3(b)(2) contains no willfulness component.
Second, Peterson contends the rule of lenity should apply in
this case. We reject this contention because we find no
ambiguity in USSG § 2S1.3(b)(2). See United States v.
Helem, 186 F.3d 449, 455 (4th Cir. 1999) ("The rule of lenity,
which requires the court to strictly construe criminal statutes,
does not apply in this case because the statute is not ambigu-
ous.").
In sum, the district court did not err when it determined that
Peterson’s structuring offense was committed as part of a pat-
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tern of unlawful activity involving more than $100,000.00 in
a twelve-month period, such that the USSG § 2S1.3(b)(2)
enhancement applied and, as a result, the safe harbor of USSG
§ 2S1.3(b)(3) did not apply.
AFFIRMED
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