## Facts

- Deak & Company of California, Inc. was a San Francisco foreign-currency exchange business; Willi Beusch was a vice-president and senior officer.
- Beusch connected Deak with two Philippine associates who sent large cash shipments to Deak in the United States for worldwide disbursement.
- From 1972 to 1976, approximately $11 million was transmitted and disbursed through Deak.
- None of the incoming foreign currency shipments exceeding the reporting threshold was reported to the Treasury as required by the Bank Secrecy Act reporting provisions then in force.
- Federal agents obtained and executed a search warrant for business records relevant to suspected reporting violations, relying in part on informant information in the supporting affidavit.
- A jury convicted Deak and Beusch on 377 misdemeanor counts for failing to file required reports.
- The district court dismissed a four-count felony indictment alleging a “pattern of illegal transactions,” reasoning that the same conduct could not support both the misdemeanor counts and the felony pattern counts.

## Issues

1. Whether the search warrant was unsupported by probable cause because the affidavit relied substantially on hearsay, and whether the search’s scope and execution violated the Fourth Amendment.
2. Whether the evidence was sufficient to prove “willful” violations of the reporting requirement by Beusch and Deak, and whether the jury instructions improperly imposed strict vicarious liability on the corporation.
3. Whether the government could pursue felony “pattern” charges under 31 U.S.C. § 1059 based on the same series of transactions supporting misdemeanor reporting violations under §§ 1101 and 1058.

## Decision

- The court affirmed the misdemeanor convictions of Deak and Beusch.
- The court held the warrant affidavit provided a substantial basis to credit hearsay and support probable cause, and the search did not amount to an unconstitutional general search.
- The court held the evidence permitted a finding that the reporting violations were willful, given the scale and repeated nature of nonreporting.
- The court held the corporate-liability instruction was not reversible error when read with the full charge requiring willfulness and limiting attribution to acts within the officer’s authority and for corporate benefit.
- The court reversed the dismissal of the felony indictment and remanded, holding § 1059 authorizes felony prosecution for a pattern of violations even when the same transactions also support misdemeanor counts.

## Legal Principles

- A warrant affidavit may rely on hearsay if the magistrate has a substantial basis to credit the hearsay and find probable cause.
- Searches for business records in complex financial investigations may be broad without becoming unconstitutional, so long as seizures remain tied to the warrant’s authorized scope and the suspected offenses.
- Under the Bank Secrecy Act reporting scheme, repeated failures to report large transactions can support a jury inference of willfulness rather than mere negligence.
- A corporation may be held criminally liable for reporting violations committed by a senior officer acting within the scope of authority and at least partly to benefit the corporation, provided the jury is instructed that willfulness must be found.
- The Bank Secrecy Act’s penalty structure permits separate felony punishment for engaging in a “pattern of illegal transactions” under § 1059, even when the same underlying acts also constitute misdemeanor reporting violations.

## Conclusion

The Ninth Circuit upheld convictions for numerous willful Bank Secrecy Act reporting violations, rejected Fourth Amendment challenges to a business-records search warrant supported in part by hearsay, and reinstated felony pattern charges by treating § 1059 as a legislatively authorized escalation for repeated violations rather than an impermissible second punishment.


United States v. Beusch, 596 F.2d 871 (9th Cir. 1979)