- in United States
In this episode of "The Trial Lawyer's Handbook" podcast series, litigation attorney Dan Small unpacks the prosecution of Ted Anzalone, a top aide to former Boston Mayor Kevin White, through two alleged money laundering schemes: a "birthday gift" check-planting operation that sowed jury confusion and led to acquittal and a clearer $100,000 cash structuring scheme using sub‑$10,000 cashier's checks to evade bank reporting. Despite a compelling trial win on the structuring count, the U.S. Court of Appeals for the First Circuit reversed, holding that "the law is the law" and Congress hadn't yet criminalized that type of financial activity. Mr. Small reflects on the limits of prosecutorial creativity, a memorable bench rebuke and how the case ultimately spurred lawmakers to close the loophole – too late for Anzalone, whose conviction was vacated, but paving the way for successful prosecutions thereafter.
This podcast episode was adapted from Mr. Small's book Lessons Learned from a Life on Trial: Landmark Cases from a Veteran Litigator and What They Can Teach Trial Lawyers.
Podcast Transcript
Dan Small: The money laundering charges we've been discussing in prior episodes against Ted Anzalone, the right-hand man of Boston Mayor Kevin White, were in two parts. The first was the birthday party. Anzalone helped organize a birthday party for Mayor White's wife. But the state ethics commission discovered that among other "presents" were large numbers of checks for $1,000 each from city employees. The commission referred the matter to us in the U.S. Attorney's Office, and we started a grand jury investigation. One by one, we brought the gift-givers before the grand jury, and slowly, under the "pains and penalties of perjury," the truth started to came out.
Most of the $1,000 gift-givers had never actually met the mayor's wife, or at least not personally. They were city employees who didn't make a great deal of money and weren't wealthy. When pressed, they admitted that they [had] never given a gift anywhere close to $1,000 to anyone — spouses, children, family, no one. Then we looked at their checking accounts — generally normal accounts without a big balance, without a lot of activity. In most every case, there was a $1,000 cash deposit the day before they wrote their check for the same amount to the mayor's wife.
Faced with this, the bad cover stories started to crumble and the truth emerged in the ruins. Anzalone, far above any of them in the city's power structure, had come to them and given each of them $1,000 cash, and told them to write a check to the mayor's wife. They did what they were told. He did this over and over again. In this way, Anzalone was able to launder thousands of dollars, making what we believe was illegal cash look like presents to the mayor's wife.
Because the money laundering charges had been severed from the extortion charges (check out the previous episode if you need a refresher), we couldn't tell the whole story, which would have included the extortion payments where we believed the money came from. So, the defense didn't deny the scheme for the birthday party. Instead, they claimed they weren't hiding the money from the banks or the government, they were just hiding it from the nosy media. It's kind of a crazy theory, but they were helped by the lack of extortion evidence and the fact that the cash amounts were "only" $1,000 each — not close to the $10,000 reporting level. It was enough to confuse the jury, and Anzalone was acquitted on this charge.
The second scheme was clearer. Banks are required to file a report with the government — a Currency Transaction Report, or CTR — for any cash transaction more than $10,000. Anzalone took $100,000 cash — which we believed was the proceeds of extortion — went to a local bank, and over about two weeks bought 12 cashier's checks (including three in one day), all under the $10,000 CTR limit. He then put the 12 checks back together again and opened an account at a local investment company in the name of the mayor's mother.
Clearly it was a scheme to structure a transaction to evade the reporting requirement and keep the cash hidden. There was no other explanation. Unfortunately, the law at the time posed two obstacles.
First, when the Currency Transaction Reporting Act was passed, Congress extended its coverage to financial institutions and any other participant in the transaction. However, as the First Circuit put it, "for reasons known only to the Treasury Department, the regulation enacted by the Secretary of Treasury limited the reporting requirement to the financial institution only." Thus, Anzalone had no personal obligation to file a CTR.
Second, Congress apparently did not anticipate that people would simply structure transactions to avoid the $10,000 CTR requirement. As a result, it did not include any provision specifically outlawing structuring. There was a gap in the law wide enough to drive a Brink's truck full of cash straight through.
We were undaunted. Surely this kind of evasion couldn't be legal. Surely the law could not be that only the stupidest or laziest criminals, who didn't think to structure their transactions, would have to report illegal cash. There's always more than one way to skin a cat. We indicted Anzalone using more general laws: a scheme to conceal, aiding and abetting, and more. Other courts had called this a "sensible, substance-over-form approach." The U.S. District Court agreed, rejected the defense's motion to dismiss and we went to trial.
At trial, there was really no factual defense. The scheme was clear. Defense counsel pushed the legal argument, and we pushed back. In my closing argument, I said: "So, the scheme becomes moving large amounts of cash through banks to make it appear legitimate. If this is all right, then the reporting requirement is meaningless. If you can simply create 12 phony transactions out of one large sum of cash, what's left of the law?"
And it worked. Anzalone was convicted of this scheme. And the defense appealed.
Unfortunately, the First Circuit Court of Appeals didn't agree with us. For them, the law was the law. I've argued before judges around the country, but I will never forget that argument. I stepped up to the podium, started to organize my notes and before I could even begin, Judge Torruella leaned forward from the bench and sternly proclaimed, "Mr. Small, this is not Russia, we don't convict people of things that aren't crimes!" Well, it was all downhill from there.
Whether prohibiting structuring was a "sensible approach" didn't concern the Court of Appeals. If Congress wanted to prohibit structuring, it could do so and had to do it specifically. The Court of Appeals would not allow us to interpret the law this way. Anzalone's conviction was reversed.
Two years later, Congress passed a law finally specifically prohibiting structuring a transaction to avoid the CTR requirement. If you look in the Congressional Record, 54 FR 28416-01, you will see a reference to United States v. Anzalone, our case, as part of the problem Congress was trying to fix. I'm proud to say that there have been many successful structuring prosecutions since then. Anzalone should have been one of them, but the change in the law was too late to help us. Anzalone was a free man.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
