U.S. v. Waldrip ( 1993 )

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 92-5568
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
BEVERLY A. WALDRIP,
Defendant-Appellant.
Appeal from the United States District Court
For the Western District of Texas
(January 14, 1993)
Before REAVLEY, SMITH and DeMOSS, Circuit Judges
DeMOSS, Circuit Judge:
By superseding indictment, Beverly A. Waldrip (Waldrip) was
indicted for executing a scheme to defraud Allied American Bank of
San Antonio and Texas Commerce Bank-San Antonio in violation of 18
U.S.C. § 1344 (counts 1 and 2), and for knowingly making a false
statement for the purpose of influencing the action of Texas
Commerce Bank in violation of 18 U.S.C. § 1014 (count 3).
A jury found Waldrip guilty on all three counts. The district
court sentenced Waldrip to two years of imprisonment on counts 1
and 2, to run concurrently, and to two years imprisonment on count
3, to run consecutively to the other sentence. The district court
suspended execution of the sentence on count three, and Waldrip was
placed on probation for five years after she serves the sentence
imposed on counts 1 and 2. The district court ordered Waldrip to
pay a special assessment of $150, pursuant to 18 U.S.C. § 3580 and
Waldrip was also ordered to pay restitution, $122,461.99 to First
Interstate Bank and $59,213 to Texas Commerce Bank. However,
Waldrip did not have the financial means to pay the total amount of
restitution, therefore, she was ordered to pay partial restitution,
$12,246.19 to First Interstate Bank and $5,921.30 to Texas Commerce
Bank. Waldrip appeals her conviction. After careful
consideration, we affirm the conviction.
I. Facts
In 1983 three different banks--Texas Commerce Bank (TCB),
Northside State Bank (NSB), and Allied American Bank (AAB) funded
a real estate development project in San Antonio, Texas, known as
the Retreat at Glen Heather (the Project). The Project involved
the financing and developing of condominiums and raw land. In late
1985, the borrowers took the Project into bankruptcy because the
loans were past due and the banks were in a position to foreclose.
Although the banks did not foreclose, they sought to refinance the
Project with new investors. To achieve that end, the banks sold
the Project (with financing) to First Center of Texas, an
investment group headed by Steve Morriss (Morriss). Morriss
intended to recruit purchasers of the 32 condominium units and
ultimately to develop the lots. The banks gave Morriss until
February 15, 1986 to recruit investors. Morriss brought in Waldrip
2
as an investor, who in turn, recruited Doyle Harrell as another
investor. In connection with the investment, a loan application
was submitted to the banks in the names of Doyle Harrell and his
wife Bernice Harrell. The banks required both Mr. and Mrs. Harrell
to sign the loan documents. The Harrell loan was approved with the
Harrells as co-borrowers.
In June 1986, one of the borrowers asked the banks to change
the payment date to a different day of the month. In complying
with the request, TCB sent a document to the Harrells for them to
sign agreeing to the date change. In response, Mrs. Harrell
contacted TCB and told them that she knew nothing about the loan
and had not signed the original loan documents. TCB later learned
that Waldrip had signed both Doyle and Bernice Harrells' names to
the loan documents.1
Waldrip was indicted for scheming to defraud AAB and TCB in
violation of 18 U.S.C. § 1344 (counts one and two), and for
knowingly making a false statement for the purpose of influencing
the action of TCB in violation of 18 U.S.C. § 1014 (count three).
At trial, Waldrip claimed that she signed the loan documents only
after Doyle Harrell assured her that he would provide her with a
power of attorney for both himself and his wife. When she learned
that the powers of attorney would not be forthcoming, Waldrip
claimed that she then made a "second set of documents" by whiting
out the signatures on the original documents and making a copy of
1
However, Waldrip is only charged with forging the signature
of Bernice Harrell.
3
those original documents. According to Waldrip, Doyle Harrell then
signed his name to the "second set of documents" and she marked out
the name of Bernice Harrell. Waldrip claimed that she set aside
the original documents on which she signed the Harrells' names, and
left the "second set of documents" to be picked up by a courier.
Waldrip contended that the courier picked up the wrong set of
documents.
II. Discussion
A. The Hill Letter
Waldrip filed a pre-trial motion to suppress evidence of a
separate transaction in which she signed Accountant Steve Hill's
name to a letter that was subsequently sent to investors. The
district court elected to carry the motion as a motion in limine.
At trial, Waldrip elected to testify in her own behalf. The
government was allowed to use the Hill letter in cross-examining
Waldrip pursuant to Federal Rule of Evidence 608(b) as a matter
affecting her character for truthfulness.2
2
Specifically, Waldrip complains of the following exchange
that took place during cross-examination:
GOVERNMENT: . . . Your various signatures of Bernice
Harrell's name isn't the first time you've signed somebody's
name to a document without their permission, is it?
WALDRIP: To a document?
GOVERNMENT: That's right. To a document, a piece of paper.
WALDRIP: No. I've signed--yeah, I've signed people's names
to things before.
GOVERNMENT: In fact, approximately one year before the, one
year and a few months before the Glen Heather incident, you
had a partner in one of your companies, yours and your
4
husband's companies, by the name of Jim Cox, did you not?
WALDRIP: Yes.
GOVERNMENT: And he was an attorney, wasn't he?
WALDRIP: Yes.
GOVERNMENT: And he wanted to get out of the partnership,
didn't he?
WALDRIP: He wasn't actually in the partnership. He had a
right to exercise an option and he wanted to not do that so he
wanted to not be a part of the company.
GOVERNMENT: He wanted an accounting of partnership matters,
didn't he?
WALDRIP: Yes.
GOVERNMENT: He wanted a financial statement from you, didn't
he?
WALDRIP: He wanted an accounting of four months' worth of
activity. Yes.
GOVERNMENT: And you sent him a compiled financial statement
or an informal financial statement, didn't you?
WALDRIP: Yes.
GOVERNMENT: And it had a cover letter on it, didn't it?
WALDRIP: Yes.
GOVERNMENT: And it was signed by Steve Hill, CPA, was it not?
WALDRIP: Yes. It was.
GOVERNMENT: And in fact, Mr. Hill never signed it. You
signed it, didn't you?
WALDRIP: Yes. I did.
GOVERNMENT: And you signed it without Mr. Hill's permission,
didn't you?
WALDRIP: I read it to him first.
5
By testifying, Waldrip put her character for truthfulness in
issue. United States v. Williams, 822 F.2d 512, 516 (5th Cir.
1987). "Control over the conduct of a trial, including the scope
of permissible cross-examination, is squarely within the
discretionary powers of the district court, and its rulings will be
disturbed on review only if the district court abuses that
discretion." Id., citing United States v. Viera, 819 F.2d 498, 500
(5th Cir. 1987). The district court may under Rule 608(b)3
determine if evidence is probative of truthfulness, and under Rule
403 exclude even probative evidence if the prejudicial effect
outweighs the probative value. United States v. Farias-Farias, 925
F.2d 805, 809 (5th Cir. 1991).4
GOVERNMENT: Did you sign it without his permission?
WALDRIP: Yes.
3
Rule 608(b) provides that:
[s]pecific instances of the conduct of a witness, for the
purpose of attacking or supporting his credibility, other
than conviction of crime as provided in rule 609, may not
be proved by extrinsic evidence. They may, however, in
the discretion of the court, if probative or truthfulness
or untruthfulness, be inquired into on cross-examination
of the witness (1) concerning his character for
truthfulness or untruthfulness, . . .
4
Rule 403 provides:
[a]lthough relevant, evidence may be excluded if its
probative value is substantially outweighed by the danger
of unfair prejudice, confusion of the issues, or
misleading the jury, or by considerations of undue delay,
waste of time, or needless presentation of cumulative
evidence.
6
Waldrip contends that the district court abused its discretion
in admitting the letter because, even if a forgery, it is not
probative of her character for truthfulness. However, forgery has
been held to be probative evidence of a witnesses' character for
truthfulness. United States v. Leake, 642 F.2d 715 (4th Cir.
1981). In Leake, the court stated "Rule 608 authorizes inquiry
only into instances of misconduct that are clearly probative of
truthfulness or untruthfulness, such as perjury, fraud, swindling,
forgery, bribery, and embezzlement." Id. at 718-719 (emphasis
added). We hold that the district court did not abuse its
discretion when it allowed the government to cross-examine Waldrip
concerning the letter because such misconduct was probative of
Waldrip's character for truthfulness.5
Waldrip also argues that the probative value of the Hill
letter is substantially outweighed by its prejudicial effect and
is, therefore, inadmissible under Rule 403. She asserts that this
prior conduct was so similar to the transaction for which she was
charged that the jury could easily infer that she was a forger in
general. This court has stated in United States v. Beechum, 582
F.2d 898 (5th Cir. 1978), cert. denied, 440 U.S. 920 (1979):
5
In a related argument, Waldrip contends that the Hill letter
was not forged because the government failed to prove that she
intended to defraud someone. This argument misses the point. The
government is not required, and in fact, is not allowed under Rule
608(b), to prove with extrinsic evidence the criminal intent behind
the conduct. United States v. Cohen, 631 F. 2d 1223, 1226-27 (5th
Cir. 1980); United States v. Cole, 617 F.2d 151, 154 n. 3 (5th Cir.
1980).
7
It is true as well that the more closely the extrinsic
offense resembles the charged offense, the greater the
prejudice to the defendant. The likelihood that the jury
will convict the defendant because he is the kind of
person who commits this particular type of crime or
because he was not punished for the extrinsic offense
increases with the increasing likeness of the offenses.
Id. at 915 n. 20.
We agree with Waldrip that the conduct is very similar to the
conduct for which she was on trial. Here, however, even if the
prejudicial effect substantially outweighed the extrinsic act's
probative value, any error in admitting it was harmless, given the
overwhelming evidence of guilt.6
B. Bribery
Waldrip contends that the district court abused its discretion
in allowing the government during cross-examination to introduce
evidence that she had committed bank bribery. Waldrip similarly
contends that evidence of bank bribery is not admissible under Rule
608(b) for impeaching her character for truthfulness and under Rule
6
The other evidence against Waldrip is summarized as follows:
(1) Waldrip signed Bernice Harrell's name to Glen Heather
documents on three occasions after she testified that she was
aware that Bernice Harrell would not be participating in the
Glen Heather project;
(2) the government's handwriting expert testified that Waldrip
intentionally attempted to retrace and copy Mrs. Harrell's
signature;
(3) Waldrip used different color ink to sign the signatures of
Doyle and Bernice Harrell to the same document;
(4) Waldrip failed to sign the document in a way that would
indicate that she was signing under the authority of a power-
of-attorney;
(5) Doyle Harrell testified that he did not tell Waldrip that
he would be able to get a power-of-attorney for his wife
Bernice Harrell; and
(6) the notary whose signature appears on the loan documents
testified that she did not notarize those documents.
8
403 because its prejudicial effect substantially outweighs its
probative value. During the government's cross-examination,
Waldrip testified that she paid Doyle Harrell $5,000 for
introducing her to a banker and presenting a loan package to a bank
on her behalf. At that time, Harrell was on the board of directors
of the bank.
Specifically, Waldrip complains of the following exchange that
took place at trial:
GOVERNMENT: And Mrs. Waldrip, you know that that's bank
bribery? That's a federal crime?
WALDRIP: No. It isn't because any board director can present
a project and sponsor someone in there. They just are not
allowed to vote on the loan being approved, and Mr. Harrell
did not vote on my project in that board meeting.
Waldrip did not object to this line of questioning until the
government attempted to read the elements of bank bribery from the
United States Code. Waldrip's objection consisted of the following
exchange:
WALDRIP: May it please the court, your honor. I object to
this line of questioning of the witness. She's not a lawyer,
number one. The government is--if the government had a case
and thought that she had committed some crime--this alludes to
a period of time four years ago.
Waldrip did not timely and specifically object to the
introduction of the bribery evidence. Federal Rule of Evidence
103(a)(1) requires a "timely objection or motion to strike . . .
stating the specific ground of objection, if the specific ground is
not apparent from the context. . . . " A trial court judge must be
fully apprised of the grounds of an objection. United States v.
Jimenez Lopez, 873 F.2d 769, 773 (5th Cir. 1989). A loosely
9
formulated and imprecise objection will not preserve error. Id.We would stretch too far to find a specific objection here. The
objection was not made, and the issue is not before us on appeal,
therefore, this court should review admission of the evidence for
plain error. United States v. Martinez, 962 F.2d 1161, 1166 (5th
Cir. 1992).
Waldrip attempts to show that the court committed plain error
because bank bribery is not probative of her character for
truthfulness, citing United States v. Rosa, 891 F.2d 1063 (3rd Cir.
1989). In Rosa, the court stated that "bribery, however, is not
the kind of conduct which bears on truthfulness or untruthfulness.
Moreover, even if we regarded bribery as minimally probative of
those matters . . . we could not say that the trial judge abused
its discretion in limiting cross-examination with respect . . . to
bribery." On the other hand, in United States v. Hurst, 951 F.2d
1490, 1500-01 (6th Cir.), cert. denied, 112 S. Ct. 1952 (1992), the
court held that the trial court did not abuse its discretion in
concluding that the defendant's misconduct in attempting to bribe
a police officer was probative of truthfulness. The court went on
to state "[t]o the extent that . . . Rosa . . ., might be read to
suggest that bribery-related offenses are not probative of a
witness' truthfulness in all cases, we disagree."
Plain error is an error so obvious that failure to notice it
would seriously affect the fairness, integrity, or public
reputation of the judicial proceedings and results in a miscarriage
of justice. Martinez, 962 F.2d at 1166 n. 10. We agree with the
10
Fourth and Sixth Circuits that bribery is probative of
truthfulness. See, Hurst, 951 F.2d at 1500-01; Leake, 642 F.2d at
718-19. Waldrip has not shown how the admission of the bribery
evidence affected the fairness of the judicial proceedings or would
result in a miscarriage of justice. Thus, we do not find plain
error. Cf, Martinez, 962 F.2d at 1166 (holding that no plain error
occurred when district court allowed admission of extrinsic
evidence that defense witness was gang member to show bias).
3. Limiting Instruction
Waldrip contends that the district court erred by not giving
a limiting instruction to the jury informing them that the evidence
of the Hill letter and the bank bribery could be used only to
impeach Waldrip's character for truthfulness and could not be used
as evidence of Waldrip's guilt. Since Waldrip did not request a
limiting instruction, the question, therefore, is whether the
district court committed plain error in failing sua sponte to give
the instruction. See, United States v. Prati, 861 F.2d 82, 86 (5th
Cir. 1988); United States v. Barnes, 586 F.2d 1052, 1058 (5th Cir.
1978); United States v. Diaz, 585 F.2d 116, 117 (5th Cir. 1978).
Under the plain error standard, the defendant "must demonstrate
that the charge, considered as a whole, is so clearly erroneous as
to result in a likelihood of a grave miscarriage of justice."
Prati, 861 F.2d at 86, citing United States v. Varkonyi, 645 F.2d
453, 460 (5th Cir. 1981). Our inquiry on appeal is limited to
analyzing whether, "the need for the instruction is obvious and the
failure to give it so prejudicial as to affect substantial rights
11
of the accused." United States v. Garcia, 530 F.2d 650, 656 (5th
Cir. 1976). Waldrip contends that under Diaz the district court
committed plain error when it failed to give a limiting
instruction, especially when the extrinsic act evidence is very
similar to the crimes for which the defendant is charged. In Diaz,
this court held that the district court committed plain error in
failing to give a limiting instruction when a defendant was
questioned about a prior conviction for an offense similar to the
offense of which he was charged. 585 F.2d at 117; see also United
States v. Garner, 471 F.2d 212, 214-215 (5th Cir. 1972) (full
discussion of the controversy concerning impeachment through use of
defendant's prior convictions and dilemma defendant faces as to
whether to testify on his own behalf). As in Diaz, Waldrip
contends that the jury was free to consider the evidence of the
Hill letter and the bank bribery as actual evidence of her guilt,
not just as evidence of her character for truthfulness.
"Although the Diaz opinion found plain error in the trial
judge's failure sua sponte to instruct the jury as to the limited
use of evidence of other offenses, it did not establish a per se
rule. Just as in the case of impeachment evidence, our inquiry
will focus and depend on the particular facts of each case."
Barnes, 586 F.2d at 1058 n. 7. "Plain error appears only when the
impeaching testimony is extremely damaging, the need for the
instruction is obvious, and the failure to give it is so
prejudicial as to affect the substantial rights of the accused."
Id. at 1058.
12
When the particular facts of this case are examined, we find
that unlike Diaz, the trial court did not commit plain error. In
view of the other evidence against Waldrip, the evidence of her
previous acts of forgery and bank bribery was not extremely
damaging. The government clearly established all the elements of
the charged offenses. In addition, the need for a limiting
instruction was not obvious. Counsel may refrain from requesting
an instruction in order not to emphasize potentially damaging
evidence, and for other strategic reasons. Barnes, 586 F.2d at
1059. Finally, although we cannot fairly say that the evidence of
prior conduct was not damaging, it was not so damaging as to
require us to reverse on the basis of plain error.
Although the district court should have cautioned the jury to
consider the extrinsic act evidence only as it related to Waldrip's
character for truthfulness, it did warn the jury
The defendant is not on trial for any act, conduct or
offense not alleged in the superseding indictment.
Record Vol. 11 at 23. We are therefore unable to conclude that the
district court's jury instructions were so deficient that they
significantly prejudiced Waldrip's rights. While it is a better
practice for the court to give a limiting instruction at the time
the prejudicial evidence is introduced, no reversible error exists
here when the court gives a cautionary instruction in its general
charge. See, United States v. Prati, 861 F.2d 82, 86 (5th Cir.
1988).
13
4. Exclusion of Loss Evidence
Waldrip contends that the district court erred in refusing to
allow her to introduce evidence that she and other investors in the
Project sued the bank, and as a result of that suit, received a
favorable settlement. At trial, the government introduced evidence
that the banks had sustained losses as a result of Waldrip's
actions. TCB claimed a $59,200 loss and FIB claimed a loss of over
$80,000. Additionally, the banks claimed losses for costs incurred
in clearing title to the property as a result of Waldrip's actions.
Loss need not be proven to convict a defendant for bank fraud
or making a false statement to a bank and evidence that there was
no loss is not a defense to either of those crimes. See United
States v. Lemons, 941 F.2d 309, 315-16 (5th Cir. 1991), United
States v. Trexler, 474 F.2d 369, 372 (5th Cir.), cert. denied, 412
U.S. 929 (1973). At trial, after the government introduced
evidence that the banks had sustained losses, Waldrip sought to
introduce evidence that she and other investors sued the banks in
civil court and received a favorable settlement. The district
court, however, refused to allow Waldrip to present such evidence.
Waldrip contends that the district court erred in excluding
the evidence for three reasons. First, Waldrip contends that the
evidence directly refutes the government's assertions that Waldrip
was responsible for loss in this case. Waldrip contends that this
evidence shows that even without her conduct, the banks would have
lost the same amount on the Harrell lots. While this is not a
defense to the action, Waldrip contends that it is admissible to
14
refute the false impression created by the government that Waldrip
caused a loss. Second, Waldrip contends that the evidence impugns
the credibility of the bank officials, who told the jurors that
Waldrip was the cause of loss to the banks. Third, Waldrip
contends that it corroborates her explanation that she believed she
had not done anything inappropriate.
The district court was correct in refusing to admit evidence
of the settlement because the evidence was not relevant to the
offenses charged. The trial judge has broad discretion in ruling
on questions of relevancy. Hamling v. United States, 418 U.S. 87,
124-25, 94 S. Ct. 2887, 41 L. Ed. 2d 590 (1974). Federal Rule of
Evidence 401 states that relevant evidence is "evidence having any
tendency to make the existence of any fact that is of consequence
to the determination of the action more or less probable than it
would be without the evidence." Implicit in that definition are
two distinct requirements: (1) the evidence must tend to prove the
matter sought to be proved; and (2) the matter sought to be proved
must be one that is of consequence to the determination of the
action. United States v. Hall, 653 F.2d 1002, 1005 (5th Cir.
1981). Moreover, the matter sought to be proved must be part of
the hypothesis governing the case. In a criminal case, the
governing hypothesis consists of the elements of the offense
charged and the relevant defenses (if any) raised to defeat
criminal liability. Id. The evidence regarding the settlement
agreement reached between the bank and the investors is relevant
only to the issue of loss and the amount of loss. Because loss
15
need not be proven to convict a defendant for bank fraud or making
a false statement to a bank, the district court correctly
determined that the evidence was not relevant. Moreover, the
settlement agreement is not relevant to Waldrip's good faith
defense that she believed that she had the authority to sign the
loan documents.
AFFIRMED
c:br:opin:92-5568:es 16