## Facts

- Beno Ghitis operated a Colombia-based currency-exchange business that bought U.S. dollars and provided Colombian pesos or instruments in return.
- Transactions typically involved U.S. dollar deposits into Ghitis’s U.S. bank account, verification of the deposit, and payment to the seller in Colombia.
- Ghitis hired Victor Eisenstein to run a Miami office that handled deposits and reporting related to the U.S. accounts.
- In early 1981, a Miami bank advised Eisenstein that currency transaction reports (CTRs) were required for transactions over $10,000; Eisenstein said he would consult Ghitis and later indicated he had done so.
- Neither defendant filed CTRs, despite extremely large dollar inflows to the accounts.
- The government charged the defendants with failing to report a $1 million transaction (late February 1981) and a $1.5 million transaction (March 1981), and with conspiracy tied to the reporting failures.
- At trial, the defense relied on good-faith advice of counsel, asserting the defendants consulted an attorney and were advised CTRs were not required.
- The court instructed the jury that acquittal was warranted if defendants (among other elements) made a full and accurate disclosure of all known material facts to counsel and relied in good faith on the advice.
- The court allowed the attorney to testify to his conclusion (that CTRs were not required based on what he was told) and allowed Ghitis to testify about discussions with counsel, but barred the attorney from describing what Ghitis told him about the business’s operations.
- The jury convicted both defendants.

## Issues

1. Whether the defendants were subject to CTR filing duties as a “domestic financial institution” under the reporting statute and regulations.
2. Whether excluding the attorney’s testimony about the facts disclosed to him improperly impaired the advice-of-counsel defense, and if so, whether the error was harmless.

## Decision

- The Eleventh Circuit reversed the convictions and remanded for further proceedings.
- The court stated the record contained ample evidence supporting the verdict and did not reverse based on a lack of proof that reporting duties applied.
- The court held it was error to bar counsel from testifying about the underlying factual disclosures made by Ghitis when the defendants presented an advice-of-counsel defense.
- The court rejected the government’s harmless-error argument, concluding the limitation substantially undermined the defendants’ only plausible defense.

## Legal Principles

- A defendant may negate criminal intent by showing (1) full disclosure of all material facts to counsel and (2) good-faith reliance on counsel’s advice.
- When a defendant places advice of counsel at issue, communications necessary to establish the defense become admissible to the extent required, and privilege is waived for that limited purpose.
- A court may not prevent the defense from presenting key evidence—particularly counsel’s account of the disclosures—where the jury is instructed that “full and accurate disclosure” is a required component of the defense.
- Excluding noncumulative defense evidence central to intent is prejudicial and not harmless when it deprives the jury of an independent source for evaluating full disclosure and good faith.

## Conclusion

The convictions for conspiracy and failure to file CTRs were reversed because the trial court’s evidentiary restriction prevented the defendants from adequately presenting an advice-of-counsel defense, and the error was not harmless given its direct effect on the central dispute over full disclosure and intent.


United States v. Eisenstein, 731 F.2d 1540 (11th Cir. 1984)