15-2512-Cr ( 2016 )

15-2512-cr
United States v. Merz
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 29th day of June, two thousand sixteen.
PRESENT: JOSÉ A. CABRANES,
RAYMOND J. LOHIER, JR.,
SUSAN L. CARNEY,
Circuit Judges.
UNITED STATES OF AMERICA,
Appellee,
v. No. 15-2512-cr
PATRICIA MERZ,
Defendant-Appellant.
FOR THE UNITED STATES OF AMERICA: GREGORY L. WAPLES (Nikolas P. Kerest
& Paul J. Van de Graaf, on the brief),
Assistant United States Attorneys, for Eric
S. Miller, United States Attorney for the
District of Vermont, Burlington, VT.
FOR DEFENDANT-APPELLANT: BARCLAY T. JOHNSON, Research &
Writing Attorney, for Michael L.
Desautels, Federal Public Defender for
the District of Vermont, Burlington, VT.
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Appeal from the July 28, 2015 judgment of the United States District Court for the District
of Vermont (Christina C. Reiss, Chief Judge).
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the District Court is AFFIRMED in part,
insofar as Merz’s convictions on Counts One, Two, and Three are concerned; REVERSED in part,
insofar as Merz’s conviction on Count Four is concerned; and REMANDED for such further
proceedings as may be appropriate and consistent with this order, including resentencing.
Defendant-appellant Patricia Merz appeals from the District Court’s July 28, 2015 judgment
of conviction, which followed a jury’s return of a guilty verdict against her on counts of conspiring
to commit the crime of interstate transportation of stolen money, in violation of the National Stolen
Property Act (the “NSPA”), 18 U.S.C. § 2314, and 18 U.S.C. § 371 (Count One); transmitting in
interstate commerce stolen money, in violation of the NSPA and 18 U.S.C. § 2 (Count Two);
causing sums of money to be transmitted by wire in interstate commerce by means of materially
false and fraudulent pretenses, representations, and promises for the purpose of executing a scheme
or artifice to defraud, in violation of 18 U.S.C. §§ 1343 and 2 (Count Three); and uttering a forged
security with the intent to deceive another person and organization, in violation of 18 U.S.C.
§§ 513(a) and 2 (Count Four). We assume the parties’ familiarity with the underlying facts, the
procedural history of the case, and the issues on appeal.
Merz bases her appeal on two narrow grounds. First, she argues that her convictions on
Counts One, Two, and Three must be overturned because money cannot be “stolen” from a
Vermont probate estate for purposes of the NSPA. Second, she argues that her conviction on Count
Four must be overturned because a bank withdrawal slip is not a “security” for purposes of Section
513(a). We conclude that Merz’s first argument is meritless, but that her second argument is correct.
I. Counts One, Two, and Three
We begin with Merz’s first argument. According to Merz, a Vermont probate estate is
“simply a procedural vehicle by which [a decedent’s] affairs are settled,” and never “own[s] [the
decedent’s] property.” Def.’s Br. 22. Instead, “title to [the decedent’s] property vests immediately at
death in [her] heirs.” Id. at 23 (internal quotation marks omitted). As such, in order to prove that the
money in question was “stolen” for purposes of the NSPA, the Government was required to prove
that Merz or her brother Christopher McGuigan—the only heirs of their mother Annelise
McGuigan (“Annelise”)—stole it from themselves or each other, but the Government’s “only
theory on this point was that” they stole it from Annelise’s estate. Id. at 21.
The theory of liability under the NSPA on which the Government relied in charging Merz
provides that “[w]hoever transports, transmits, or transfers in interstate or foreign commerce
any . . . money, of the value of $5,000 or more, knowing the same to have been stolen, converted or
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taken by fraud . . . [s]hall be fined under this title or imprisoned not more than ten years, or both.”
18 U.S.C. § 2314. “The meaning of the word ‘stolen’ as used in this statute [has been] relatively well-
established” for almost sixty years. See United States v. Long Cove Seafood, Inc., 582 F.2d 159, 163 (2d
Cir. 1978) (citing United States v. Turley, 352 U.S. 407 (1957)). In United States v. Turley, the Supreme
Court considered “whether the meaning of the word ‘stolen’ . . . is limited to a taking which
amounts to common-law larceny, or whether it includes an embezzlement or other felonious taking
with intent to deprive the owner of the rights and benefits of ownership.” 352 U.S. at 408.1 The
Court settled on the latter answer, favoring “the broader interpretation.” Id.
The Court’s holding that money is “stolen” for purposes of the NSPA if it is embezzled is
particularly significant here, because Vermont law provides that an “administrator who
embezzles . . . money . . . belonging to the estate of which he or she is . . . administrator . . . shall be
guilty of larceny and shall be imprisoned not more than 10 years or fined not more than $1,000.00,
or both.” Vt. Stat. Ann. tit. 13, § 2534 (2016); see Walker v. Hendee, 137 A. 334, 335 (Vt. 1927)
(describing a predecessor statute to Section 2534 as “making the . . . embezzlement of the funds of
an estate by an executor a felony”). Thus, under Vermont law, money may “belong[ ] to [a Vermont
probate] estate,” and an administrator may “embezzle[ ]” it therefrom. Accordingly, money may be
“stolen” from a Vermont probate estate for purposes of the NSPA. See United States v. Schultz, 333
F.3d 393, 399 (2d Cir. 2003) (“Goods that belong to a[n] . . . entity and are taken from that . . . entity
without its consent are ‘stolen’ in every sense of that word.”); id. at 403 (characterizing United States v.
Handler, 142 F.2d 351 (2d Cir. 1944), as holding “that embezzled property is ‘stolen’ within the
meaning of the NSPA”).2
The only remaining question, then, is whether the money at issue “belonged” to Annelise’s
estate at the time it was allegedly stolen. The very cases that Merz cites in support of her argument
establish that it did. For example, Merz quotes Lysak v. Grull, 812 A.2d 840 (Vt. 2002), for the
proposition that title to property “vests immediately at death in the heirs, subject only to liens and
legally enforceable debts of the estate.” Id. at 843. But just two sentences later, Lysak reads as
follows: “However, until such time as the estate is probated, and the debts of the estate are settled,
the heir cannot demand either title to or possession of the property.” Id.
1
In Turley, the Supreme Court construed the word “stolen” as used in the National Motor
Vehicle Theft Act (“NMVTA”), 18 U.S.C. § 2312, not the NSPA, but the case is nevertheless
“controlling here because the word ‘stolen’ is used in the same way in both” statutes. Long Cove
Seafood, 582 F.2d at 163.
2
In Schultz, we interpreted Section 2315 and not Section 2314 of the NSPA, but “[o]ur
precedent interpreting [Section 2315] is persuasive in considering [Section 2314], as the two sections
merely address different aspects of the same type of criminal behavior, namely dealing in stolen
property, and both are part of the same legislative scheme.” 333 F.3d at 402 n.3.
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Thus, whatever interest an estate has in a decedent’s money that renders the money
susceptible to embezzlement exists at least until the estate’s debts are settled. Here, it is undisputed
that the debts of Annelise’s estate were not settled when the money was allegedly stolen.
Accordingly, the money “belonged” to Annelise’s estate at that time. For these reasons, we find
Merz’s first argument unpersuasive, and affirm the District Court’s judgment with respect to Counts
One, Two, and Three.3
II. Count Four
We turn now to Merz’s second argument. As discussed above, Merz was charged in Count
Four with uttering a forged security with the intent to deceive another person and organization, in
violation of 18 U.S.C. §§ 513(a) and 2. Merz argues that “[t]he forgery charge was based on the fact
that [she] signed her brother’s signature on” TD Bank withdrawal slips, but “[b]ecause a withdrawal
slip is not a security [for purposes of Section 513(a)], [she] was entitled to a judgment of acquittal on
this count.” Def.’s Br. 35. We agree.
In pertinent part, Section 513(a) provides that “[w]hoever makes, utters or possesses a
forged security . . . of an organization, with intent to deceive another person . . . [or]
organization . . . shall be fined under this title or imprisoned for not more than ten years, or both.”
18 U.S.C. § 513(a). Section 513(c)(3) defines “security” for purposes of Section 513(a) as follows:
(A) a note, stock certificate, treasury stock certificate, bond, treasury bond,
debenture, certificate of deposit, interest coupon, bill, check, draft, warrant, debit
instrument as defined in section 916(c) of the Electronic Fund Transfer Act, money
order, traveler’s check, letter of credit, warehouse receipt, negotiable bill of lading,
evidence of indebtedness, certificate of interest in or participation in any profit-
sharing agreement, collateral-trust certificate, pre-reorganization certificate of
subscription, transferable share, investment contract, voting trust certificate, or
certificate of interest in tangible or intangible property;
(B) an instrument evidencing ownership of goods, wares, or merchandise;
(C) any other written instrument commonly known as a security;
(D) a certificate of interest in, certificate of participation in, certificate for, receipt
for, or warrant or option or other right to subscribe to or purchase, any of the
foregoing; or
(E) a blank form of any of the foregoing . . . .
3
“[G]iven the clarity of the state law” on this subject, Morenz v. Wilson-Coker, 415 F.3d 230, 237
n.6 (2d Cir. 2005), we decline Merz’s request that we certify to the Vermont Supreme Court the
question her first argument presents.
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18 U.S.C. 513(c)(3).
The Government argues that “[c]ommon sense principles of interpretation, statutory text,
case law, and evidence at trial support the conclusion that withdrawal slips are securities under
section 513.” Government Br. 41. To the contrary, basic principles of statutory interpretation
support the conclusion that they are not.
Specifically, “the well-known canon of expressio unius est exclusio alterius—‘the express mention
of one excludes the other,’” In re Lehman Bros., Inc., 791 F.3d 277, 288 (2d Cir. 2015)—guides our
inquiry. Section 513(c)(3)(A) names no fewer than 26 instruments that qualify as securities.
“Noticeably absent from this list,” Doe v. Bin Laden, 663 F.3d 64, 70 (2d Cir. 2011), however, is a
withdrawal slip. The Government has not offered any reason why this “item unmentioned would
[not] normally be associated with [the] items listed,” Barnhart v. Peabody Coal Co., 537 U.S. 149, 169
n.12 (2003), nor can we think of any. Accordingly, we assume that Congress intended to exclude it.
Of course, the fact that Congress did not name a withdrawal slip in Section 513(c)(3)(A)
does not end our analysis, as Section 513(c)(3) contains other “catch-all” categories, including
subsections (B) (“an instrument evidencing ownership of goods, wares, or merchandise”) and (C)
(“any other written instrument commonly known as a security”). But the Government does not
argue that a withdrawal slip falls within either, seemingly for good reason. Cf. United States v.
Aleynikov, 676 F.3d 71, 78 (2d Cir. 2012) (“Money . . . is specifically enumerated in [18 U.S.C.] § 2314
as a thing apart and distinct from ‘goods,’ ‘wares,’ or ‘merchandise.’”).
Instead, the Government argues that the withdrawal slips are “securities” because, “[f]rom
Merz’s perspective, [they] were a clear substitute for, and functionally equivalent to[,] checks,” which
are explicitly mentioned in Section 513(c)(3)(A). Government’s Br. 45. This supposed functional
equivalence is based on the fact that checks, like withdrawal slips, “represent tools for bank
customers to withdraw money from their accounts.” Id. As the District Court put it, “[t]here would
be scant logic in a statutory interpretation of ‘security’ that prohibited a forgery in conjunction with
an actual check, but permitted it if the forgery only pertained to something used as a check.” United States
v. Merz, No. 5:14-CR-32-1 (CCR), 2015 WL 2452454, at *14 (D. Vt. May 21, 2015) (emphases in
original). Thus, Section 513(a)’s “legislative purpose is furthered by treating the withdrawal slips as
‘securities’ because they constituted a demand for money that was used for illegal purposes.” Id.
In response, Merz describes a number of potentially significant differences between checks
and withdrawal slips. See Def.’s Br. 43–46. Even putting aside these possible bases of distinction,
however, the point remains that a withdrawal slip is simply not listed in Section 513(c)(3)(A), nor has
the Government argued that it is encompassed by Sections 513(c)(3)’s other subsections.
“Courts are not authorized to rewrite a statute because they might deem its effects
susceptible of improvement.” Badaracco v. C.I.R., 464 U.S. 386, 398 (1984). Rather, our “role . . . is to
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apply the statute as it is written—even if we think some other approach might accord with good
policy.” Burrage v. United States, 134 S. Ct. 881, 892 (2014) (alterations and internal quotation marks
omitted). When Congress defined the term “security” in Section 513(c)(3), “it employed specific
language.” C.I.R. v. Canfield’s Estate, 306 F.2d 1, 7 (2d Cir. 1962). That specific language does not
include a subsection (F) extending that definition to any instrument “constitut[ing] a demand for
money that was used for illegal purposes,” Merz, 2015 WL 2452454, at *14, and we will not graft
such a subsection onto the statute merely because the Government believes that withdrawal slips are
analogous in some arguably meaningful way to instruments actually enumerated therein. We
therefore reverse the District Court’s judgment with respect to Count Four and remand the cause
for such further proceedings as may be necessary and appropriate in view of this order, including
resentencing.4
Lest this order be misunderstood, we do not hold that a withdrawal slip is not a “security”
for purposes of Section 513(a) as a matter of law. For example, we do not foreclose the possibility
that, in a given prosecution, the Government could prove that a withdrawal slip is encompassed by
one of Section 513(c)(3)’s “catch-all” categories. See 18 U.S.C. § 513(c)(3)(B)–(E). We hold only that
the Government has failed to prove that a withdrawal slip is so encompassed here. Cf. United States v.
Rogers, 9 F.3d 1025, 1033 (2d Cir. 1995) (“[P]rovided there was sufficient evidence in the case . . . ,
[the defendant] was entitled to have the judge instruct the jury on what a security is and to let the
jury decide whether the items at issue were securities.”).
III. Prejudicial Spillover
Lastly, we reject Merz’s argument that, because we are reversing the District Court’s
judgment with respect to Count Four, our “rules regarding prejudicial spillover . . . require a retrial”
on the other counts. Def.’s Br. 48. “In analyzing a claim of prejudicial spillover, we consider (1)
whether the evidence introduced in support of the vacated count was of such an inflammatory
nature that it would have tended to incite or arouse the jury into convicting the defendant on the
remaining counts, (2) whether the dismissed count and the remaining counts were similar, and (3)
whether the government’s evidence on the remaining counts was weak or strong.” United States v.
Jones, 482 F.3d 60, 78 (2d Cir. 2006) (internal quotation marks omitted). While the second of these
factors cuts in favor of Merz, the first and third cut sharply against her. She admits that “there is
4
We note that the principal case on which the Government relies in arguing that a withdrawal
slip is a security is United States v. Dos Reis, 113 F.3d 1230 (2d Cir. 1997) (summary order). See
Government’s Br. 42, 46–47. The Government’s reliance on Dos Reis is not only misplaced—its very
citation to the case is prohibited by this Court’s Local Rule 32.1.1, which provides that summary
orders issued prior to January 1, 2007 may be cited only “in a subsequent stage of a case in which
the summary order has been entered, in a related case, or in any case for purposes of estoppel or res
judicata; or . . . when a party cites the summary order as subsequent history for another opinion that
it appropriately cites.” 2d Cir. R. 32.1.1 (citation of summary orders).
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little about the case that could be described as inflammatory,” Def.’s Br. 49, and on review of the
entire record before us, we conclude that the Government’s evidence on Counts One, Two, and
Three was strong.
CONCLUSION
We have considered all of Merz’s other arguments on appeal and found them to be without
merit. Accordingly, the July 28, 2015 judgment of the District Court is AFFIRMED in part, insofar
as Merz’s convictions on Counts One, Two, and Three are concerned; REVERSED in part, insofar
as Merz’s conviction on Count Four is concerned; and REMANDED for such further proceedings
as may be appropriate and consistent with this order, including resentencing.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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