United States v. Fontenot
2011 U.S. App. LEXIS 25550
| 5th Cir. | 2011Background
- Fontenot was charged with making false statements to an FDIC-insured bank (Count 2) and to an FDIC-insured financial institution (Count 1); the alleged falsity rested on omitting a $100,000 cash loan used to finance his Louisiana Senate campaign.
- The loan to Fontenot was illegal under Louisiana campaign finance law; it was not repayable and was allegedly kept off loan applications.
- The district court dismissed the superseding indictment, holding the loan was an absolute nullity, thus no debt existed to report.
- The district court reasoned the loan’s illegality meant the contract had no lawful cause and was absolutely null, so Fontenot could not have knowingly made false statements.
- The government appealed the dismissal; the Fifth Circuit reviews indictment sufficiency de novo and the core issue is whether the loan constituted a debt Fontenot was obligated to list.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the indictment properly states an offense under 18 U.S.C. §1001(a)(2) and §1014. | Fontenot’s omissions about a $100,000 loan create a false statement. | There was no enforceable debt because the loan was an absolute nullity under Louisiana law. | Yes; but the loan, as an absolute nullity, cannot be a debt for reporting purposes. |
| Whether the loan constituted a ‘debt’ Fontenot was required to list on the application. | The undisclosed loan was a debt under the application’s terms. | Because the loan had no enforceable existence, it could not be a debt. | Debt did not exist under Louisiana law due to absolute nullity; no false statement. |
| What governs the definition of ‘debt’ in this context and the role of Louisiana law. | Federal statutes should define ‘debt’ for reporting purposes. | Louisiana law governs whether the obligation is enforceable. | Louisiana law governs; if the obligation is absolutely null, no debt exists. |
| Scope of review and sufficiency standard for the indictment. | Indictment should state an offense; allegations presumed true on review. | Indictment failed to plead a false statement. | Indictment sufficient to state an offense under the statutes given the Louisiana-nullity analysis. |
| Whether the district court properly treated the contract as absolutely null. | Nullity defeats the existence of a debt. | No, the contract could be distinguished from a mere nullity. | Under Louisiana law, the contract is absolutely null and deemed never to have existed. |
Key Cases Cited
- Elashyi, 554 F.3d 480 (5th Cir. 2008) (elements for §1001 offense; falsity and materiality matter)
- Sandlin, 589 F.3d 749 (5th Cir. 2009) (elements for §1014 offense; knowing false statement to a federally insured bank)
- Wynne v. New Orleans Clerks & Checkers Union, Local 1497, Int'l Longshoremen's Ass'n, 550 So.2d 1352 (La. Ct. App. 4th Cir. 1989) (public policy against circumvention of state law; absolute nullity on unlawful cause)
- Green v. Capital Insurance Co., 623 So.2d 136 (La. Ct. App. 1st Cir. 1993) (concurrence on a note defense; absolute nullity when underlying obligation circumvents law)