UNITED STATES of America, Plaintiff-Appellee, v. Edward M. CONK, Defendant-Appellant.
Nos. 96-4530, 95-4556
United States Court of Appeals, Fourth Circuit
Argued Oct. 2, 1997. Decided Feb. 25, 1998.
Before WIDENER, NIEMEYER, and HAMILTON, Circuit Judges.
Affirmed by published opinion. Judge HAMILTON wrote the opinion. Judge WIDENER wrote a separate opinion concurring in part and dissenting in part. Judge NIEMEYER wrote a separate opinion concurring in part and dissenting in part. Judge HAMILTON also wrote a separate opinion, with respect to Part VI.
OPINION
HAMILTON, Circuit Judge:
Thomas Wilkinson, III (Wilkinson) and Edward Conk (Conk) (collectively the Defendants) appeal their convictions and sentences following a jury trial on conspiracy charges, money laundering charges, and various related fraud charges, including wire fraud and bank fraud, stemming from their operation of a company purportedly in the business of financing the accounts receivable of physicians. Conk was also convicted on one count of perjury.
With respect to their money laundering convictions, the Defendants seek reversal on two grounds: (1) the district court committed plain error under
I.
Because the Defendants challenge the sufficiency of the evidence on numerous counts for which they were convicted, we present the facts in the light most favorable to the
To fund this purported objective, the Defendants borrowed money from a Maryland company named Health Line, Inc. (HLI), a subsidiary of Blue Cross Blue Shield of Maryland. Based on representations by the Defendants that MPS was in the business of financing the accounts receivable of physicians, HLI granted MPS a five million dollar line of credit in November 1988. The written loan agreement between MPS and HLI specified that MPS could only use draws on the line of credit to make loans to physicians and that the loans had to be secured by security interests in the accounts receivable of those physicians.
The evidence at trial showed that at the time the Defendants secured the line of credit from HLI, the Defendants intended to use most of the money to fund several of their own separate non-medical businesses that were in poor financial health. The Defendants acted on their illicit intent, ultimately obtaining in excess of three million dollars from HLI through wire transfers by submitting dummy loan requests to HLI via facsimile. The dummy loan requests falsely showed that the funds requested would be secured by certain accounts receivable of particular physicians. These wire transfers and facsimile transmissions were the predicates for seven counts of wire fraud. See
In order to conceal their fraudulent scheme on MPS‘s accounting records, the Defendants gave their separate non-medical businesses bogus names that sounded like the names of actual medical practices. For example, the Defendants gave Day Dream Publishing Company (Day Dream Publishing) the name “American Surgical, Inc.” Conk was a substantial part owner of Day Dream Publishing, which was headquartered in California. For a second example, the Defendants gave Hawthorne Construction Excavators, Inc. the name “Health Emergency, Inc.” Hawthorne Construction Excavators, Inc. was a Virginia construction company owned by Wilkinson.
By December 1989, the Defendants had nearly exhausted the five million dollar line of credit, and, under the terms of the loan agreement, MPS needed to make substantial interest payments. Thus, in order to continue to promote their scheme to defraud, the Defendants caused their various separate businesses to transfer funds into MPS‘s bank account at Sovran Bank in Richmond, Virginia. MPS would then use the money to make interest payments to HLI. The transfers from the separate businesses to MPS‘s account at Sovran Bank were the predicates for six additional money laundering counts (the Concealment Counts). See
Conk was charged with one count of bank fraud premised on the following facts and circumstances. See
On March 27, 1989, the Bank of Montecito, a federally insured bank in the State of California, extended credit to Day Dream Publishing in the amount of 1.65 million dollars through a line of credit, evidenced by a note (the Note). The Note had an expiration date of May 1, 1989. The Note was secured by a blanket but revolving security interest in all of Day Dream Publishing‘s property, including purchase orders, accounts receivable, and
May 1, 1989 came and went without Day Dream Publishing satisfying the Note. The Bank of Montecito, however, did not call the loan in hopes of repayment in the near future. The Bank of Montecito continued to monitor the financial health of Day Dream Publishing by reviewing the financial reports submitted by Day Dream Publishing.
In August 1989, Day Dream Publishing landed a large purchase order from the Big B drug store chain to print calendars containing coupons. Unfortunately, Day Dream Publishing did not have sufficient funds to pay for the design and production of the order. Conk came to the rescue by borrowing an additional $316,000 for Day Dream Publishing from MPS, $116,000 of which went from MPS‘s account with Sovran Bank straight to the printer that Day Dream Publishing had hired to print the calendars. In early September 1989, the Bank of Montecito expressly extended the maturity date of the Note to January 3, 1990.
After receiving the calendars, Big B issued Day Dream Publishing a check, dated November 15, 1989, for $410,425.56 as payment for the calendars. Rather than depositing the check into Day Dream Publishing‘s account, Conk caused Day Dream Publishing‘s comptroller to endorse the check in favor of MPS as repayment on the loans from MPS. Conk did not obtain permission from the Bank of Montecito to divert the proceeds of the Big B account receivable to MPS or
Turning back to HLI‘s relationship with MPS, in December 1990, HLI hired an outside auditing firm to evaluate the integrity of its collateral. HLI took this step only after it tried for several months without success to obtain certain information from MPS regarding the condition of its collateral. The Defendants stonewalled the efforts of the auditing firm by refusing it access to MPS‘s books and records. HLI became suspicious and called the loan approximately six months later. When MPS failed to satisfy the outstanding amount of the loan, HLI filed a civil suit against MPS and the Defendants in the United States District Court for the Eastern District of Virginia. During a deposition in that case, Conk falsely denied knowledge that “American Surgical” was the fictitious name used in MPS‘s books for Day Dream Publishing. This statement was the subject of the count of perjury against Conk. HLI ultimately obtained a 5.3 million dollar judgment against MPS and the Defendants in July 1991.
On June 21, 1995, a federal grand jury in the United States District Court for the Eastern District of Virginia returned a twenty-four count indictment against the Defendants. Count 1 charged the Defendants with conspiracy to defraud the United States in violation of
A jury acquitted Wilkinson and Conk on Counts 10, 15, 22, and 23 and convicted them on the remaining counts. At sentencing, the Defendants sought downward departures in their sentences on the ground that the facts establishing their wire fraud convictions supplied the basis for their money laundering convictions. The district court refused to grant the Defendants downward departures, sentencing Wilkinson to 87 months’ imprisonment and Conk to 99 months’ imprisonment. The district court also ordered that the Defendants were joint and severally liable for $1,662,658 in restitution. The Defendants noted a timely appeal.
II.
The Defendants first challenge the sufficiency of the evidence to support their money laundering convictions under
A. The Promotion Counts.
Counts 12, 13, 14, 16 and 17 charged that the Defendants violated
With respect to counts 12-14 and 16-17, the indictment essentially alleged that the Defendants’ transfers of money fraudulently obtained from HLI through MPS to their non-medical businesses constituted financial transactions involving proceeds from a specified unlawful activity, namely wire fraud, conducted with the intent to promote the carrying on of wire fraud. The Defendants take issue with the sufficiency of the evidence with respect to the interstate commerce element and whether the Defendants conducted the transactions with the intent to promote wire fraud. We conclude the evidence is sufficient with respect to each of these elements and address each in turn.
The Defendants argue that evidence of a de minimis effect on interstate commerce is lacking, because the Promotion Counts only involved the intrastate transfers of funds. For example, Count 17 was premised on a check drawn on MPS‘s account at Signet Bank in Virginia in favor of Hawthorne Construction Excavators, Inc., a Virginia company. Although the Promotion Counts only involved the intrastate transfers of HLI line of credit funds, the record contains more than sufficient evidence to establish that those transfers had at least a de minimis effect on interstate commerce. Specifically, the evidence firmly established that the Defendants’ transfers affected interstate commerce by violating MPS‘s loan agreement with an out-of-state company, HLI.
Relying on United States v. Heaps, 39 F.3d 479 (4th Cir.1994), and United States v. Jackson, 935 F.2d 832 (7th Cir.1991), the
We believe there is sufficient evidence of promotion. The Defendants understood that the use of financial transactions from MPS to the non-medical businesses was an essential part of their scheme to misapply funds fraudulently obtained from HLI. Otherwise, HLI would have transferred funds directly to the non-medical businesses. To avoid this result, MPS engaged in these transactions with the nonmedical businesses to promote the overall scheme. Because the transfer of money from MPS to the non-medical businesses was integral to the success of the overall scheme, it is undeniable that these transactions were designed to promote the unlawful activity of wire fraud. That the transactions were part of the overall scheme to defraud or could form the basis of a wire fraud charge is of no consequence. Cf. United States v. Smith, 44 F.3d 1259, 1265 (4th Cir.1995).
Furthermore, the facts here are materially distinguishable from the facts in Heaps and Jackson, the two cases relied upon by the Defendants. In Heaps, the promotion counts were based on payments for drugs to a drug dealer, who then placed the money in a box in his apartment. Heaps, 39 F.3d at 485. We held that the receipt of the proceeds of the drug deal could not also serve as the predicate of a promotion count. See id. at 485-86. Otherwise “virtually every sale of drugs would be an automatic money laundering violation as soon as money changed hands.” Id. at 485. Thus, in Heaps, we required that the money laundering transaction be separate and distinct from the underlying offense generating the money. In the present case, the promotion counts satisfy this requirement. They were predicated, not on the transfers into MPS‘s account, but rather on the transfers from MPS‘s account to their non-medical businesses, thus misap-
Jackson is inapposite as well. In Jackson, the Seventh Circuit held that proof of the defendant drug dealer‘s purchase of a cellular telephone, making rental payments, and making out checks to cash with funds he obtained from the sale of drugs could not be viewed as promoting his drug dealing for purposes of
B. Concealment Counts.
Counts 18, 19, 20 and 21 charged that the Defendants violated
With respect to the first or interstate commerce element, the record establishes that after each repayment, the Defendants faxed a “Loan Status Report” from MPS in Virginia to HLI in Maryland that reported the receipt of the repaid funds, but failed to disclose any source of the repaid funds. By failing to disclose the true source of these funds, each Loan Status Report gave HLI the false impression that the funds originated from legitimate medical businesses as required by the written loan agreement between MPS and HLI. Accordingly, we are more than satisfied that the repayments had at least a de minimis effect on interstate commerce.
With respect to the second element, the Defendants’ convictions on Counts 18 through 21 will stand as long as the jury, viewing the evidence in the light most favorable to the government, could infer that the transfers into MPS‘s account “involved” wire fraud proceeds for purposes of
Viewing the evidence in the light most favorable to the government, we conclude that substantial evidence supports that the repayments represented, in part, the proceeds of the Defendants’ wire fraud. The uncontradicted evidence at trial showed that each repayment derived from a commingled account, and that the amount of the repayment was less than the amount originally transferred as part of the Defendants’ wire fraud. Therefore, the jury was entitled to presume that the repayments constituted the proceeds of the Defendants’ wire fraud. Cf. Moore, 27 F.3d at 976-77.
With respect to the fourth element—that the Defendants knew the transactions were designed, in whole or part, to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of the unlawful activity, see
The Defendants’ argument takes an overly narrow view of the term “transaction” as found in
For these reasons, we reject the Defendants’ challenge to the sufficiency of the government‘s proof with respect to the first, second and fourth elements on the Concealment Counts. In sum, we reject the Defendants’ challenge to the sufficiency of the evidence supporting their money laundering convictions.
III.
The Defendants next seek reversal of their money laundering convictions, Counts 12-14 and 16-21, under
Under the plain error analysis clarified by the Supreme Court in Olano, an appellate court has the discretion to correct a forfeited error under
We have no trouble in concluding that the first two prongs of the Olano test are satisfied here. “Proof of some effect on interstate commerce is essential to show” a violation of
Unless we conclude that the jury necessarily made the required finding despite the failure to instruct, see, e.g., Forbes, 64 F.3d at 935, then we must conclude that the failure to instruct affected Conk‘s substantial rights, see United States v. David, 83 F.3d 638, 647 (4th Cir.1996) (“[T]he failure to instruct on an element of the crime, where the jury never made the constitutionally required findings, is within that ‘special category’ of forfeited errors, and satisfies Olano‘s third prong.“).2 The record before us gives no indication that despite the district court‘s failure to instruct, the jury necessarily found
We cannot conclude, however, that the fourth prong of Olano is satisfied because, after examining the particulars of this case, we cannot say that the forfeited error “seriously affect[s] the fairness, integrity, or public reputation of judicial proceedings.” See Olano, 507 U.S. at 732, 113 S.Ct. at 1776 (alteration in original) (internal quotation marks omitted). Recently, in Johnson, U.S. at —, 117 S.Ct. at 1544, the Supreme Court concluded that Olano‘s fourth prong was not met under nearly identical circumstances. In Johnson, the district court erroneously failed to submit the issue of materiality to the jury in a perjury prosecution under
Here, as previously stated, the record contains overwhelming evidence of an effect on interstate commerce with respect to the Promotion Counts and the Concealment Counts. With respect to the Promotion Counts, the evidence firmly established that the Defendants’ transfers had at least a de minimis effect on interstate commerce by violating MPS‘s loan agreement with an out-of-state company, HLI. With respect to the Concealment Counts, the record firmly establishes that the transfers had a de minimis effect on interstate commerce by precipitating the faxing of Loan Status Reports from MPS in
IV.
Next, Conk seeks reversal of his perjury conviction for making a false declaration during a civil deposition, Count 24, on the ground that the district court‘s instructions on this count constituted plain error under
A. The District Court‘s Instructions Regarding Perjury.
To convict Conk of perjury under
The fifth prong requires that the declaration at issue be made in a proceeding before or ancillary to a court of the United States. We note that this prong is satisfied upon sufficient evidence that the defendant made the false statement during a deposition in a federal civil case. See United States v. McAfee, 8 F.3d 1010, 1013-14 (5th Cir.1993) (holding that a deposition in a federal civil case is an ancillary proceeding within the meaning of
With the requirements of a
Whoever—
(1) having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, decla-
ration, deposition, or certificate by him subscribed, is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true;... is guilty of perjury....
Specifically, the district court instructed the jury that in order to convict Conk of perjury as alleged in Count 24, it must be convinced that the government has proven each of the following beyond a reasonable doubt:
First, that the defendant testified under oath in a proceeding for which a law of United States authorizes the administration of an oath. Second, the oath was administered by a qualified person. Third, the defendant knowingly made the false material statement detailed in the indictment. And fourth, that the defendant acted willfully and contrary to the oath that had been given.
(J.A. 253). The district court then instructed the jury as follows:
Now, [t]he Court is required by law to decide under the essential element one, whether or not the proceeding which the defendant testified was one during which an oath may be administered, and under the essential element two whether the oath was given by someone qualified to administer oath. In this case there is no issue as to those two elements.
With respect to the first element, the defendant took an oath to testify truthfully, the evidence shows, and there appears to be no dispute that the defendant appeared for purposes of a deposition in the civil case before this division of United States District Court in a case entitled Health Line, Inc[.] versus Medical Payment Services, Inc[.], MedPay. Thomas A. Wilkinson [and] Edward M. Conk ... took an oath to testify truthfully. The Court will determine the second element, that is, the materiality as a matter of law.
(J.A. 253-54). The district court then instructed the jury on the particulars of the elements of falsity and acting knowingly. Finally, the district court concluded its perjury instructions by instructing the following:
The false or fraudulent statement made must be related to a material fact. A material fact is one which would reasonably be expected to be of concern to a reasonable and prudent person in relying upon the representations or statement in making the decision.
This means that if you find a particular statement of fact to have been false, you must determine whether that statement was one that had a natural tendency to influence or was capable of influencing the examiner from pursuing his investigation, the resolution of an issue in dispute, any decisions of the court, or the outcome of the law suit.
(J.A. 256-57).
B. Were the instructions erroneous?
Having surveyed the district court‘s perjury instructions, we now turn to consider whether the errors in the instructions alleged by Conk warrant reversal of his perjury conviction pursuant to
1. The Substitute Instruction.
We have no trouble in concluding that the district court erroneously instructed the jury with respect to Count 24 to the extent that the district court substituted the elements of the crime of “Perjury generally,”
Again, unless we conclude that the jury necessarily made the required finding despite the failure to instruct, see, e.g., Forbes, 64 F.3d at 935, then we must conclude that the failure to instruct affected Conk‘s substantial rights, see David, 83 F.3d at 647. The record before us gives no indication that, despite the district court‘s failure to instruct, the jury necessarily found that Conk made the allegedly false statement at issue in a proceeding before or ancillary to any court or grand jury of the United States. No other instruction encompassed the missing instruction. Moreover, any chance at inquiring whether the jury necessarily found that Conk made the allegedly false statement in a proceeding ancillary to any court or grand jury of the United States by finding that he made the allegedly false statement in a proceeding for which a law of the United States authorizes the administration of an oath is foreclosed by the district court‘s conclusive instruction on the latter issue. Accordingly, Olano‘s third prong is satisfied. See David, 83 F.3d at 647.
We now must consider whether the forfeited error “seriously affect[s] the fairness, integrity, or public reputation of judicial proceedings.” See Olano, 507 U.S. at 732, 113 S.Ct. at 1776 (alteration in original) (internal quotation marks omitted). We conclude that it does not, because overwhelming evidence establishes that Conk made the declaration at issue during a proceeding ancillary to a court of the United States, specifically a civil deposition; such evidence stands uncontradicted in the record; Conk did not dispute this element below and does not do so on appeal; and finally, Conk fails to set forth a plausible argument that he did not make the declaration at issue during a proceeding ancillary to a court of the United States. Under these circumstances, the fourth prong of Olano is not satisfied, see Johnson, U.S. at —, 117 S.Ct. at 1550, and thus, we will not reverse Conk‘s perjury conviction on this basis.
2. Conclusive Instruction Regarding Whether Conk Made The Alleged False Statement Under Oath.
We have no trouble in concluding that the district court‘s conclusive instruction that the false declaration at issue in Count 24 was made under oath satisfies the first three prongs of Olano. There is no doubt that an essential element of a
Again, however, we cannot conclude that the error “seriously affect[s] the fairness, integrity, or public reputation of judicial proceedings.” See Olano, 507 U.S. at 732, 113 S.Ct. at 1776 (alteration in original) (internal quotation marks omitted). First, the evidence on this issue is overwhelming in that Conk admitted at trial that he testified under oath at the civil deposition on July 10, 1991 as alleged in Count 24. Second, he does not argue the invalidity of this admission on appeal. Third and finally, we fail to conceive of a plausible argument that Conk did not make the declaration at issue under oath. Under these circumstances, we cannot say that Olano‘s fourth prong is satisfied. Accordingly, we will not reverse Conk‘s conviction on Count 24 on the basis of the district court‘s conclusive instruction that the alleged false declaration was made under oath. See Johnson, U.S. at —, 117 S.Ct. at 1550.
Conk also complains that the district court committed plain error by removing the element of materiality from the jury. He points to the district court‘s instruction during final instructions that “[t]he Court will determine the second element, that is materiality, as a matter of law.” (J.A. 254). The government argues that this instruction does not constitute error because the district court subsequently instructed the jury that it had to make a finding on the issue of materiality and gave the jury the standard to apply in deciding the issue.
Again, we have no trouble in concluding that the conclusive instruction at issue satisfies the first three prongs of Olano. The law is settled that in a
Yet again, we are left to consider whether the last prong of Olano is met, and again, we conclude that it is not. On this record, there is simply no basis for concluding that the error “seriously affect[s] the fairness, integrity or public reputation of judicial proceed-
We note that our conclusion is in accord with three of our sister circuits that have considered the satisfaction of Olano‘s fourth prong post-Johnson under essentially the same circumstances. See United States v. West Indies Transp., Inc., 127 F.3d 299, 306 (3d Cir.1997), cert. denied, 522 U.S. 1052, 118 S.Ct. 700, 139 L.Ed.2d 644 (1997); United States v. Sassanelli, 118 F.3d 495, 499-500 (6th Cir.1997); United States v. Knoll, 116 F.3d 994, 1001 (2d Cir.1997). For example, the Third Circuit refused to correct an erroneous conclusive instruction on the element of materiality in a prosecution under
In conclusion, while the district court erred with respect to portions of its perjury instructions, none of its errors warrant reversal of Conk‘s perjury conviction under
V.
The Defendants next contend that their conspiracy and wire fraud convictions should be reversed on the ground that the district court abused its discretion in admitting, over their objections, two portions of a chart summarizing HLI‘s loss as a result of their fraudulent activities. See United States v. Ellis, 121 F.3d 908, 926 (4th Cir.1997) (a district court‘s decision to admit evidence over an objection is reviewed for abuse of discretion).
The chart, known as Exhibit MF-4, listed two major categories of HLI loan activity, pre-discovery activity and post-discovery activity, and listed HLI‘s total loss resulting from Defendants’ criminal actions at $3,668,550. Under post-discovery activity, the chart listed amounts attributable to: (1) “Post Default Interest (Prime + 4%)“; (2) “Collections from Doctors“; (3) “Collections from Wilkinson“; and (4) “Collections from Conk.” (J.A. 483).
The Defendants only take issue with the portions of the chart that listed the amount of “Post Default Interest” at $740,335 and “Collections from Doctors” at $1,917,698. According to the Defendants, these amounts should have been excluded, because the government did not offer underlying documentary evidence to support them. See
We need not decide whether the district court erred in admitting the portions of the chart containing the amounts at issue, because assuming arguendo that it did, our review of the record reveals that any error was harmless. See
VI.
Conk next challenges the sufficiency of the evidence to support his conviction for bank fraud under
VII.
We next turn to the Defendants’ challenge to the district court‘s refusal to grant them downward departures in their sentences from the applicable guideline ranges under the United States Sentencing Guidelines. We lack authority to review such a refusal when it rests upon a determination that a departure is not warranted. See United States v. Bayerle, 898 F.2d 28, 30-31 (4th Cir.1990). However, we may review the decision of a district court not to depart when that determination is grounded upon a belief that it lacks the legal authority to depart. See id. at 31.
Our review of the record reveals that the district court‘s decision not to depart downward in the Defendants’ sentences rested on its determination that a downward departure was not warranted with respect to either defendant. Accordingly, appellate review is precluded.5
VIII.
In conclusion, we affirm all of the Defendants’ respective convictions and their respective sentences.
AFFIRMED.
WIDENER, Circuit Judge, concurring and dissenting:
I.
The defendants argue that they are entitled to a new trial on the conspiracy count (Count I) and wire fraud count (Count V) of the indictment.
While I concur in Parts II, III and IV of the opinion of the majority, and in the result obtained in Part VI thereof, as to Part V of the opinion I respectfully dissent. I would grant a new trial on the conspiracy and wire fraud counts.
Part V of the opinion mentions the questioned exhibit, MF-4, which lists two major categories of loan activity and the “total loss resulting [to Health Line] from Defendants’ criminal actions at $3,668,550.” Maj. p. 229. Of the said sum of $3,668,550, post-default interest of $740,335 and collections from doctors of $1,917,698 were not supported by underlying evidence. This is acknowledged. Thus, the amount of the loss was overstated by the government by $2,658,033, or 72%, hardly an error of little consequence. Despite that, we hold such an error to be “harmless,” maj. p. 229, and the defendants were “not prejudiced,” maj. p. 229, stating that the “figure only served to minimize HLI‘s loss.” Maj. pp. 229-30.
In my opinion, errors of such magnitude are not harmless and should not be belittled as not prejudicial. Far from merely serving to minimize HLI‘s loss, the figures show that the government overstated by 72% the fig-
Exhibit MF-4 was the centerpiece of the prosecution of this case; its gross inaccuracy should require a new trial.
II.
I have concurred in Part VI of the opinion only because the check in the amount of $410,425.56 was delivered to Med Pay a creditor which was owned by the defendants.
Under
Except in the very unusual circumstances of this case, I think the evidence would have probably been insufficient to support the verdict because, other than the self-dealing, there was no apparent risk of loss, the loan having been timely paid pursuant to an extension granted by the bank.
III.
I express no opinion on Part VII of the panel opinion. I think that such large parts of the convictions should be set aside that the defendants should be resentenced on all counts following a new trial.
NIEMEYER, Circuit Judge, concurring in part and dissenting in part:
I concur in the opinion of the majority except for part VI. On that part, I dissent.
I do not believe that diverting the proceeds of a check made payable to Day Dream Publishing in which the Bank of Montecito had a general security interest, defrauded the bank when the bank did not know of the existence of the check and did not act either in extending or maintaining credit in reliance on Day Dream Publishing‘s receiving the check. The defendants could just as well have cashed the Big B check and deposited its proceeds into a Day Dream Publishing account and then written a check in the same amount to themselves. The bank is not defrauded by the day-to-day checking activities
HAMILTON, Circuit Judge, writing separately with respect to Part VI:
Conk‘s conviction for bank fraud must be sustained if there is substantial evidence to support it when the evidence and reasonable inferences from it are viewed in the light most favorable to the government. See Glasser, 315 U.S. at 80, 62 S.Ct. at 469-70; Burgos, 94 F.3d at 862. As previously stated, “in the context of a criminal action, substantial evidence is evidence that a reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant‘s guilt beyond a reasonable doubt.” Burgos, 94 F.3d at 862.
Title
Whoever knowingly executes, or attempts to execute, a scheme or artifice—
(1) to defraud a financial institution; or
(2) to obtain any of the monies, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises; shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
On or about the 18th day of November, 1989, in Richmond, Virginia, in the Eastern District of Virginia and in Montecito, California, in the Central District of California, the defendant EDWARD M. CONK knowingly and willfully executed and attempted to execute a scheme and artifice to defraud the Bank of Montecito, and to obtain money and funds under the custody and control of the Bank of Montecito by means of false and fraudulent pretenses, representa-
(J.A. 57). The district court similarly charged the jury under both subsections. Where the indictment and instructions to the jury charged both subsections of
In order to convict Conk of bank fraud pursuant to
Conk contends that his bank fraud conviction cannot be sustained under either subsection, because there is insufficient evidence to support a finding that he knowingly caused the Big B check to be endorsed in favor of MPS. In addition, with respect to the first subsection, he contends that his bank fraud conviction cannot be sustained, because the scheme did not attempt to deprive the Bank of Montecito of any property interest, and the Bank of Montecito was not put at any potential risk of loss as a result of the Big B check being endorsed in favor of MPS. With respect to the second subsection, he contends that his bank fraud conviction cannot be sustained, because the Big B check was not in the custody or control of the Bank of Montecito nor was a false or fraudulent pretense, representation, or promise involved.
After reviewing the sufficiency of the evidence with respect to
I now turn to consider whether Conk‘s causing the Big B check to be endorsed in favor of MPS, without the Bank of Montecito‘s knowledge, defrauded the Bank of Montecito of any property interest as is required to sustain a bank fraud conviction under
It is well settled that the scope of a bank‘s property interests to be protected under the bank fraud statute “is to be construed fairly widely.” Id. In keeping with this well-settled rule, in Mancuso, we held that a debtor‘s assignment of its rights to the proceeds of job contracts to a bank in exchange for the advancement of funds “f[e]ll within the universe of property that will support” a bank fraud conviction under
Turning to the risk of loss issue, I note that the government‘s theory at trial on this issue was that Conk‘s causing the Big B check to be endorsed in favor of MPS alienated a significant portion of the Bank of Montecito‘s collateral, thus creating a potential risk that the collateral would not be available to satisfy the Note if necessary. Conk argues that the Bank of Montecito was never put at a risk of loss by endorsement of the Big B check in favor of MPS, because the Note was over collateralized and Mr. Tobes shared half of the risk of loss on the Note. In support, Conk points to an unaudited financial statement of Day Dream Publishing, dated September 30, 1989 showing six million dollars in current assets and eight million dollars in total assets.
I accept the government‘s theory. The government did not need to prove that Conk‘s causing the Big B check to be endorsed in favor of MPS created an actual risk of loss for the Bank of Montecito. See Jacobs, 117 F.3d at 93; Sapp, 53 F.3d at 1102. Rather, the government only needed to prove that Conk put the Bank of Montecito at a potential risk of loss. See id. After reviewing the evidence, I conclude the government met its burden. Specifically, the evidence established that the absence of the proceeds of the Big B account receivable from the assets of Day Dream Publishing meant a financial loss to the Bank of Montecito if Day Dream Publishing defaulted on the Note and the other collateral available at the time of default was insufficient to satisfy the Note. The fact that the Note may have been overcollateralized at the time of the Big B endorsement and that the Bank of Montecito shared fifty percent of its ownership in the Note with Mr. Tobes did not change this fact. Thus, by definition, Conk‘s actions with respect to the Big B check put the Bank of Montecito at a potential risk of loss. For these reasons, I vote to affirm Conk‘s bank fraud conviction as supported by sufficient evidence.