United States v. Nichols ( 2001 )

Filed: July 25, 2001
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 00-4751
(CR-99-87-BR)
United States of America,
Plaintiff - Appellant,
versus
Anthena Poisson Nichols, etc.,
Defendant - Appellee.
O R D E R
The court amends its opinion filed July 23, 2001, as follows:
On page 2, second full paragraph of text, line 4 -- “Mr. &
Mrs. Watson’s only role” is corrected to read “Mr. & Mrs. Watkins’
only role . . . .”
For the Court - By Direction
/s/ Patricia S. Connor
Clerk
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
v.
No. 00-4751
ATHENA POISSON NICHOLS, a/k/a Tina
P. Nelson,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of North Carolina, at Wilmington.
W. Earl Britt, Senior District Judge.
(CR-99-87-BR)
Argued: April 6, 2001
Decided: July 23, 2001
Before LUTTIG and GREGORY, Circuit Judges, and
Rebecca B. SMITH, United States District Judge for the
Eastern District of Virginia, sitting by designation.
_________________________________________________________________
Vacated and remanded by unpublished opinion. Judge Gregory wrote
the opinion, in which Judge Luttig and Judge Smith joined.
_________________________________________________________________
COUNSEL
ARGUED: J. Gaston B. Williams, Assistant United States Attorney,
Raleigh, North Carolina, for Appellant. Stephen Clayton Gordon,
Assistant Federal Public Defender, Raleigh, North Carolina, for
Appellee. ON BRIEF: Janice McKenzie Cole, United States Attor-
ney, Anne M. Hayes, Assistant United States Attorney, Raleigh,
North Carolina, for Appellant. Thomas P. McNamara, Federal Public
Defender, Raleigh, North Carolina, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
GREGORY, Circuit Judge:
The United States appeals a district court order granting the motion
for judgment of acquittal filed by Athena Poisson Nichols, a/k/a Tina
P. Nelson ("Nichols"), after a jury convicted Nichols of bank fraud
under 18 U.S.C. § 1344. Finding that a rational trier of fact could
have found the essential elements of the crime beyond a reasonable
doubt, we vacate and remand for further proceedings.
I.
In 1986, Nichols, her husband, and Mr. and Mrs. Thurston Watkins
III formed the Crossroads Partnership ("the Partnership") to construct
and lease the Crossroads Center in Wilmington, North Carolina.1 Mr.
1
and Mrs. Watkins' only role in the partnership was the acquisition of
land necessary for the Crossroads Center. As the Partnership's man-
aging partner, Nichols had sole responsibility for collecting debts, dis-
bursements, and day-to-day financial operations. Nichols was the sole
signator on the bank account held by the Partnership. Nichols' hus-
band oversaw construction.
The Partnership hired Raysand Building Corporation ("Raysand")
_________________________________________________________________
1 In accordance with the standard required for review of a motion for
judgment of acquittal, the evidence from trial is characterized in the light
most favorable to the Government. United States v. Wilson, 118 F.3d
228, 234 (4th Cir. 1997).
2
to build the Crossroads Center. Carolina Savings Bank ("Carolina
Savings") financed the Crossroads Center project through a $1.8 mil-
lion construction loan. Carolina Savings incrementally disbursed loan
proceeds, in conjunction with its inspection of completed work.
Between October 1998 and November 27, 1999, Carolina Savings
disbursed 19 checks written to the Partnership and Raysand as co-
payees. Carolina Savings' director of lending testified that the bank
typically required two endorsements on construction loan disburse-
ment checks to ensure that contractors were paid and that both con-
tractors and developers were aware of all disbursements made.
Nichols deposited the first 14 of these checks into the Partnership's
account at First Hanover Bank ("First Hanover") only after acquiring
Raysand's co-endorsement and writing a check to Raysand for out-
standing bills intended to be covered by the relevant Carolina Savings
disbursement. Nichols deposited the last five checks in the Partner-
ship's account at First Hanover without securing Raysand's co-
endorsement and without writing checks to Raysand for outstanding
bills. The five checks totaled $108,412.32.
Between May 4, 1989 until at least October 31, 1989 -- approxi-
mately the same period of time that Nichols deposited the five checks
without Raysand's endorsement -- the Partnership did not pay Ray-
sand for any outstanding bills. Raysand sent the Partnership at least
three invoices reflecting both serious past due amounts and new
invoice amounts during this time period: a May 4, 1989 invoice not-
ing a "[d]ue previous invoice" amount of $129,200; a July 21, 1989
invoice noting "[d]ue OLD Invoices $146,150.00"; and an October
31, 1989 invoice noting "[d]ue previous invoice $155,900." Ray-
sand's owner testified that Nichols postponed and avoided meetings
with him once the Partnership's payments began to lag.
The loan agreement entered into by the Partnership and Carolina
Savings required Nichols, as managing partner, to notify Carolina
Savings whenever the Partnership received any notice of nonpayment.
Specifically, the loan agreement stated as follows:
Notice of Non-Payment: Borrower will immediately advise
Lender if Borrower receives any notice, written or oral,
from the general contractor or any subcontractor, laborer or
3
material supplier to the effect that such general contractor,
subcontractor laborer or material supplier has not been paid
for services, labor or materials furnished in connection with
the project[.]
J.A. 428. Nichols, though, did not notify Carolina Savings of Ray-
sand's past due bills.
Nichols' office manager, Vicki Mills, testified that she worked for
Nichols and her husband between December of 1986 and August
1989. Mills testified that she wrote most of the checks connected with
the Crossroads Center, but that Nichols also wrote some. Mills testi-
fied that Nichols made personal payments from the Crossroads Center
account at First Hanover, including payments for a truck, to a hair
dresser, and an interior designer.
On November 23, 1999, a grand jury indicted Nichols for bank
fraud under 18 U.S.C. § 1344. The indictment charged Nichols with
knowingly execut[ing] and devis[ing] and attempt[ing] to
execute and devise a scheme and artifice to defraud, and
obtain the monies, funds, and credits of Carolina Savings
Bank . . . by diverting money obtained through incremental
construction draws in a manner not provided for by the loan
agreement. Some draws being made on a 1.8 million dollar
construction loan were deposited without the proper
endorsement of the co-payee at a time in which the debts of
the defendant had not been satisfied as required under the
loan agreement.
Specifically, the indictment charged Nichols with executing the
scheme by "depositing a check for $31,940 into an account, under her
control, without the endorsement of the co-payee, Raysand Construc-
tion, and using the funds in a manner other than those required by the
loan agreement with Carolina Savings Bank."
On July 7, 2000, a jury convicted Nichols of bank fraud. Nichols
moved for judgment of acquittal, which the district court granted on
September 18, 2000. The district court explained that the evidence
4
presented at trial was insufficient to establish that Nichols misrepre-
sented or concealed a material fact. The court directed its inquiry at
evidence that Nichols deposited five checks without co-endorsements:
Defendant only endorsed on behalf of Crossroads, which
she had the authority to do. . . . The checks at issue were
clearly on their face made payable to Crossroads and Ray-
sand, yet First Hanover Bank accepted the checks for
deposit . . . . Likewise, . . . Carolina Savings Bank . . . did
not return the checks for lack of endorsement. Depositing a
check into a checking account and presenting it for payment,
without more, even if defendant was not entitled to the
funds, does not involve any representation. . . . Furthermore,
even if defendant made some representation, it was not false
or material. If any representation at all, she was merely rep-
resenting that she could obtain the funds on behalf of Cross-
roads, which of course was true.
United States v. Athena Poisson Nichols, No. 7:99-CR-87-1-BR,
Order (E.D. N.C. Sept. 18, 2000).
II.
This Court reviews de novo a district court's grant of a motion for
judgment of acquittal, viewing the evidence in the light most favor-
able to the Government. United States v. Wilson, 118 F.3d at 234. If
"substantial evidence" exists to support the jury's verdict, the judg-
ment of acquittal must be vacated and the jury's verdict reinstated.
See Glasser v. United States, 315 U.S. 60, 80(1942).
III.
Section 1344 of Title 18 provides in pertinent part that "[w]hoever
knowingly executes, or attempts to execute, a scheme or artifice --
(1) to defraud a financial institution; . . . shall be fined not more than
$1,000,000 or imprisoned for not more than 30 years, or both." To
obtain a guilty verdict, the Government was required to show that
Nichols attempted to defraud Carolina Savings through a misrepre-
sentation or concealment. United States v. Colton, 231 F.3d 890, 907
5
(4th Cir. 2000) ("The gist of the action is fraudulently producing a
false impression upon the mind of the other party, and if this result
is accomplished, it is unimportant whether the means of accomplish-
ing it are words or acts of the defendant, or his concealment or sup-
pression of material facts not equally within the knowledge or reach
of the plaintiff"). If a concealment, the Government was required to
present evidence establishing that Nichols took "``active or elaborate
steps to conceal' information" from Carolina Savings. Id. at 901(quoting Reynolds v. East Dyer Dev. Co., 882 F.2d 1249, 1253 (7th
Cir. 1989)).
We explained in Colton that, to establish concealment, the Govern-
ment was required to do more than establish a mere nondisclosure.22
Rather,
the common law clearly distinguishes between concealment
and nondisclosure. The former is characterized by deceptive
acts or contrivances intended to hide information, mislead,
avoid suspicion, or prevent further inquiry into a material
matter. The latter is characterized by mere silence. Although
silence as to a material fact (nondisclosure), without an
independent disclosure duty, usually does not give rise to an
action for fraud, suppression of the truth with the intent to
deceive (concealment) does.
Id. at 899. The alleged concealment "must have been intentional and
effective -- the hiding of a material fact with the attained object of
creating or continuing a false impression as to that fact." Id. (citing
Fox v. Kane-Miller Corp., 542 F.2d 915, 918 (4th Cir. 1976)).
The Government met its burden. Not only did Nichols deposit two-
party checks without proper endorsements, but she, at the same time,
failed to notify Carolina Savings of the past due bills the Partnership
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2 We note that the district court granted the motion for judgment of
acquittal before we issued our opinion in United States v. Colton, 231
F.3d 890 (4th Cir. 2000), in which we clarified that 18 U.S.C. § 1344 is
to be read broadly. The district court did not have the benefit of this
court's decision in Colton, and the standard enunciated therein, when it
first decided the motion for judgment of acquittal in this case.
6
had received from Raysand. Under the terms of the loan agreement
between the Partnership and Carolina Savings, Nichols had an affir-
mative duty to provide this information to Carolina Savings. The
Government introduced sufficient evidence to allow the jury to infer
that Nichols concealed this information from Carolina Savings so as
not to arouse any inquiry into the checks she improperly deposited
without Raysand's endorsement. In addition, the Government intro-
duced sufficient evidence to allow the jury to infer that Nichols
avoided contact with Raysand so as to prevent Raysand from learning
that Carolina Savings issued five checks that Nichols deposited with-
out Raysand's endorsement. Such conduct constitutes"deceptive
act[s] or contrivances intended to hide information, mislead, avoid
suspicion, or prevent further inquiry into a material matter." See Col-
ton, 231 F.3d at 901. Accordingly, viewing the evidence in the light
most favorable to the Government, we conclude that substantial evi-
dence exists to support the jury's verdict. Thus, the district court erred
by granting Nichols' motion for judgment of acquittal.
IV.
For the foregoing reasons, the judgment of the district court is
vacated and the jury's verdict is reinstated. We remand the case for
further proceedings regarding sentencing.
VACATED AND REMANDED
7