907 F.3d 863
5th Cir.2018Background
- Perez-Ceballos, a Mexican national, opened a Chase Bank savings account in Houston in June 2013 after moving to the U.S.; no false statements were alleged in opening that Chase account.
- Prior to arriving in the U.S., she and her husband held a PEP-designated securities account at HSBC, later moved to UBS; after her husband’s political ouster, UBS required her to move assets elsewhere.
- She consulted Paul Arnold (Chase Investment) and falsely represented her residence and PEP status to obtain a Sun Life Financial brokerage/trust account; Sun Life and Chase Investment are not FDIC-insured.
- In October 2013 she liquidated the UBS account, deposited about $1.9 million into her Chase Bank savings account, and directed Chase to wire the funds to Sun Life; the funds did not return. In May 2017 she attempted to withdraw from Sun Life and again misrepresented her residence.
- Indicted on money laundering and conspiracy to commit bank fraud (18 U.S.C. § 1344). Jury acquitted on money laundering but convicted on bank fraud as to J.P. Morgan Chase Bank; Perez-Ceballos moved for acquittal arguing lack of FDIC-insured victim and insufficient evidence.
- The Fifth Circuit held there was federal jurisdiction (Chase is FDIC-insured) but reversed the bank fraud conviction for insufficient evidence that she defrauded or exposed Chase to risk of loss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal jurisdiction existed because the victim bank was FDIC-insured | Government: indictment and verdict identify Chase (FDIC-insured) as victim, so jurisdiction exists | Perez-Ceballos: government failed to prove Chase was the victim of fraud, so no federal jurisdiction | Court: Jurisdiction exists because Chase (an FDIC-insured bank) was the named and convicted victim; jurisdictional challenge was to the merits, not to jurisdiction |
| Whether evidence showed false statements or misrepresentations to Chase | Government: misrepresentations to intermediaries and the act of wiring funds exposed Chase to risk of loss | Perez-Ceballos: no evidence she made false statements to Chase; false statements were to Chase Investment or Sun Life only | Held: No evidence Chase was persuaded by any false statement; trial lacked Chase witnesses; inference was speculative; insufficient evidence |
| Whether Perez-Ceballos intended to obtain money from or expose Chase to risk of loss | Government: obtaining the Sun Life account by fraud and routing funds through Chase created risk of loss to Chase | Perez-Ceballos: funds were her own and she had authority; risk-of-loss theory depended on money-laundering predicate (which jury rejected) | Held: Government failed to prove intent to obtain money from Chase or risk of loss to Chase; testimony about industry risk was too generalized and tied to other institutions |
| Whether the act of instructing the bank to wire funds can constitute a misrepresentation | Government: wiring the $1.9M supported fraud against Chase | Perez-Ceballos: mere instruction to transfer funds is not a factual representation | Held: Cites Briggs — instructing a bank to transfer funds is not itself a misrepresentation; insufficient to support § 1344(1) conviction |
Key Cases Cited
- Loughrin v. United States, 134 S. Ct. 2384 (2014) (§ 1344(1) requires intent to defraud a financial institution)
- Barakett v. United States, 994 F.2d 1107 (5th Cir. 1993) (§ 1344(1) covers schemes causing risk of loss to institution)
- Church v. United States, 888 F.2d 20 (5th Cir. 1989) (essence of fraud is persuading victim to believe what is not so)
- Davis v. United States, 735 F.3d 194 (5th Cir. 2013) (proof of FDIC insurance is essential to § 1344 jurisdiction review)
- Schultz v. United States, 17 F.3d 723 (5th Cir. 1994) (FDIC-insured status is essential element and jurisdictional requirement)
- McCauley v. United States, 253 F.3d 815 (5th Cir. 2001) (risk-of-loss need not be substantial but must be proven sufficiently)
- Briggs v. United States, 939 F.2d 222 (5th Cir. 1991) (instructing a bank to transfer funds is not a factual representation)