Tuesday, August 22, 2006

No Mens Rea for State Violations in 18 USC 1960

US v. Talebnejad: The Talebnejads (father, mother, and son) were all charged with conducting an unlicensed money transmitting business, and conspiring to do so, under 18 USC 1960(b)(1)(A). That section makes it a crime to operate a money transmitting business that affects interstate commerce, that is unlicensed under state law when state law requires a license and state law punishes the lack of a license as a misdemeanor or felony. The Talebnejads ran two money transmitting business in Maryland without the required state licenses. It is a crime to do so in Maryland "knowingly and willfully." The district court dismissed the indictment, holding that 1960(b)(1)(A) requires that the Government prove that the Talebnejad's acted knowingly and willfully, but that the indictment did not make that allegation.

The Government appealed and the Fourth Circuit reversed. The court held that 2001 amendments to section 1960 removed proof of mens rea for the state offenses from the elements of the offense. In concluding, the court held that proof of mens rea applied only to the "factual elements" of the offense, not the "legal elements" of the offense. In addition, the court concluded that a change to the relevant Maryland statutes during the course of the Talebnejad's charged offenses did not render the indictment deficient. In a partial dissent, Judge Gregory argued that the 2001 amendments to section 1960 removed only the scienter requirement for a purely federal offense (violating federal registration regulations), not offenses based on state regulation requirements.

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