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Say It’s No Crime to Launder Money

January 11, 1986

SAN FRANCISCO (AP) _ Failing to report a series of deposits totaling more than $10,000 is not a crime, even if the bank customer’s purpose was to evade federal reporting requirements, a U.S. appeals court ruled Friday.

The 9th U.S. Circuit Court of Appeals, in its 3-0 ruling, reversed the convictions of four men.

Its ruling was similar to one by the 1st U.S. Circuit Court of Appeals that found no duty to report, but ran counter to two other federal appeals courts rulings which said depositors must inform banks of a series of deposits designed to exceed $10,000.

Treasury Department regulations designed to curtail the flow of illicit funds by organized crime and drug dealers require banks to report to the government all cash deposits above $10,000.

The 9th Circuit Court said two Phoenix lawyers, Duane Varbel and Roy Osborn, arranged with undercover federal agents posing as cocaine dealers in 1982 to launder cash that was purported to be the proceeds of drug sales.

The lawyers arranged to deposit a total of $50,000 from the agents in six different banks in Irvine, Calif., using fictitious names, the court said. Each of the deposits was for less than $10,000, and none was reported to the government.

Varbel and Osborn were convicted of fraud and of illegally concealing tax- related matters by not reporting the cash transfers. Also convicted were two men who made the Irvine bank deposits.

But the appeals court said the men committed no crimes because federal law does not require depositors to report the nature of their cash transactions to either the banks or the government.

″Even though money laundering furthers the goals of those who may be engaged in criminal activity, it is not our function to rewrite the law or the implementing currency reporting regulations,″ said the opinion by Judge Robert Beezer.

The 10th and 11th Circuit Courts of Appeals have reached the opposite conclusion in other cases.

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