## Facts

- Mahmoud Reza Banki, an Iranian-born naturalized U.S. citizen living in New York, received about $3.4 million from family members in Iran between 2006 and 2009.
- The funds were transferred through an informal value-transfer system and deposited into Banki’s U.S. bank account.
- Banki used most of the funds to purchase a Manhattan apartment.
- The government prosecuted the transfers under the Iranian Transactions Regulations (ITR), administered by the Treasury Department’s Office of Foreign Assets Control (OFAC).
- Banki’s defense was that the transfers were lawful, noncommercial personal/family remittances (including funds associated with a family divorce settlement) and were sent through informal channels because ordinary transfers from Iran were not feasible.
- A federal grand jury charged Banki with: (1) conspiracy to violate the ITR and to operate an unlicensed money-transmitting business; (2) substantive ITR violations; (3) operating an unlicensed money-transmitting business; and (4) two counts of making materially false statements in response to government subpoenas.
- A jury convicted Banki on all counts, and the district court entered judgment and imposed sentence.

## Issues

1. Whether the jury instructions on the ITR charges erroneously failed to present the family-remittances exception in a way that allowed the jury to acquit if it found the transfers were exempt personal remittances.
2. Whether the jury instructions on operating an unlicensed money-transmitting business improperly allowed conviction based on conduct consistent with being a recipient/customer rather than an operator.
3. Whether the government constructively amended the indictment on the false-statement counts.
4. Whether the prosecutor’s rebuttal summation required reversal on due process or substantial-prejudice grounds.
5. Whether resentencing was required after partial reversal.

## Decision

- The court affirmed Banki’s convictions on the two false-statement counts.
- The court vacated the convictions tied to the ITR and the unlicensed money-transmitting-business theory (including related conspiracy aspects) because the jury instructions contained prejudicial legal error.
- The court rejected Banki’s claim that the indictment was constructively amended on the false-statement counts.
- The court held that any improper remarks in rebuttal did not so infect the trial as to deny due process or substantially prejudice Banki as to the false-statement convictions.
- The court remanded for further proceedings, including resentencing on the remaining counts.

## Legal Principles

- When a regulation-based criminal charge turns on a potentially dispositive exemption, the defendant is entitled to a jury instruction that accurately explains the exemption and permits acquittal if the jury finds the exemption applies.
- Instructional error is reversible when it misstates governing law or fails to present a legally supported defense theory central to the case, and the error is prejudicial.
- The federal unlicensed money-transmitting statute targets operating a money-transmitting business; instructions may not collapse the distinction between an operator and a customer/recipient in a way that expands criminal liability beyond the statutory standard.
- A constructive amendment occurs only if the proof or instructions modify an essential element so the defendant may have been convicted of an offense different from the one charged; where the trial stays within the charged statements, there is no constructive amendment.
- Claims of prosecutorial misconduct in summation require showing unfairness amounting to a denial of due process or substantial prejudice, assessed in context including curative instructions and the strength of the evidence.

## Conclusion

The Second Circuit set aside Banki’s sanctions- and money-transmission-related convictions because the jury was not properly instructed on the family-remittances exception and the operator-versus-customer line, but it left intact his convictions for making false statements and sent the case back for resentencing on the remaining counts.


United States v. Banki, 685 F.3d 99 (2d Cir. 2012)