United States v. Florence White Eagle ( 2013 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA , No. 11-30352
Plaintiff-Appellee,
D.C. No.
v. 4:11-cr-00032-
SEH-1
FLORENCE A. WHITE EAGLE,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the District of Montana
Sam E. Haddon, District Judge, Presiding
Argued and Submitted
November 6, 2012—Portland, Oregon
Filed July 5, 2013
Before: Kenneth F. Ripple*, M. Margaret McKeown,
and Jacqueline H. Nguyen, Circuit Judges.
Opinion by Judge McKeown
*
The Honorable Kenneth F. Ripple, Senior Circuit Judge for the U.S.
Court of Appeals for the Seventh Circuit, sitting by designation.
2 UNITED STATES V . WHITE EAGLE
SUMMARY**
Criminal Law
The panel affirmed in part and reversed in part a criminal
judgment in a case arising out of the involvement by the
Bureau of Indian Affairs Superintendent at the Fort Peck
Indian Reservation in a scheme to obtain money from a tribal
credit program.
Reversing convictions on counts charging conspiracy to
convert tribal credit program proceeds (18 U.S.C. § 371) and
theft and conversion from an Indian Tribal Organization (18
U.S.C. §§ 1163, 2), the panel held that the government’s
misapplication theory, predicated at best on an employer
directive and a civil regulation, cannot support a conviction;
and that the government’s embezzlement and conversion
theories also fail because the defendant never controlled or
had custody of the funds that she later borrowed.
Affirming a bribery conviction (18 U.S.C. § 201(b)(2)),
the panel held that a jury could easily infer a quid pro quo and
had ample evidence to conclude that the defendant’s actions
were “corrupt.”
Because the government did not show that the defendant
violated a specific duty to report credit program fraud, the
panel reversed her conviction of concealment of public
corruption (18 U.S.C. § 1001(a)(1)).
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V . WHITE EAGLE 3
The panel reversed a conviction for public acts affecting
a personal financial interest (18 U.S.C. § 208(a)(1)) because
the connection between the payment of a BIA Administrative
Officer’s fraudulent nominee loans and the defendant’s
alleged financial interest is remote and speculative.
The panel held that there was sufficient evidence to
support the defendant’s conviction of misprision of a felony
(18 U.S.C. § 4).
The panel rejected the defendant’s contention that her
convictions for public acts affecting a financial interest and
misprision of a felony would violate her Fifth Amendment
right to avoid self-incrimination because each charge relied
on her duty to report criminal activity that would have
exposed her to prosecution. The panel reasoned that the
connection between the defendant’s loan modification and the
BIA Administrative Officer’s use of nominee borrowers is
too remote to implicate the defendant’s Fifth Amendment
rights.
The panel held that the district court erred at sentencing
in its application of U.S.S.G. § 2C1.1(b)(2), when it appeared
to value the loan modification using standard “loss”
calculations instead of focusing on the “value of the benefit”
the defendant received. The panel explained that any
sentencing adjustment must be based on the value of the loan
modification as a bribe, and remanded for further
proceedings.
4 UNITED STATES V . WHITE EAGLE
COUNSEL
Steven T. Potts (argued), Great Falls, Montana, for
Defendant-Appellant.
Carl E. Rostad (argued), United States Attorney’s Office for
the District of Montana, Great Falls, Montana, J. Bishop
Grewell, United States Attorney’s Office for the District of
Montana, Billings, Montana, for Plaintiff-Appellee.
OPINION
McKEOWN, Circuit Judge:
Florence White Eagle appeals her conviction and sentence
on six counts arising out of her involvement in a scheme to
obtain money from a tribal credit program: (I) conspiracy to
convert tribal credit program proceeds in violation of
18 U.S.C. § 371; (II) theft and conversion from an Indian
Tribal Organization in violation of 18 U.S.C. §§ 1163, 2; (III)
bribery in violation of 18 U.S.C. § 201(b)(2); (IV)
concealment of public corruption in violation of 18 U.S.C.
§ 1001(a)(1); (V) public acts affecting a personal financial
interest in violation of 18 U.S.C. § 208(a); and (VI)
misprision of a felony in violation of 18 U.S.C. § 4. Without
a doubt, White Eagle turned a blind eye to fraud and
facilitated its cover up. The difficulty for the prosecution is
that, in the main, the crimes charged did not fit the facts. We
affirm White Eagle’s convictions on Counts III and VI
(bribery and misprision of a felony), but reverse the
convictions on Counts I, II, IV, and V, and remand for
resentencing.
UNITED STATES V . WHITE EAGLE 5
BACKGROUND
White Eagle was the Bureau of Indian Affairs (“BIA”)
Superintendent at the Fort Peck Indian Reservation. The BIA
is the federal government’s trustee for lands on Fort Peck in
northeastern Montana, which is home to the Assiniboine and
Sioux Tribes. Until early 2008, the BIA oversaw the Fort
Peck Credit Program (“Credit Program”), which provided a
supplemental source of credit to tribal members and was
intended to “rais[e] the economic status of members of the
Tribes to a point where they can look to the same sources of
financing as are looked to by other citizens.” One of White
Eagle’s duties was to sign loan documents for Credit Program
loans that pledged trust assets as collateral.
The Credit Program was staffed with four tribal
employees and two BIA employees—a loan specialist and a
loan assistant. The four tribal employees were supervised by
the two BIA employees, who, in turn, were supervised by
Toni Greybull, the BIA Administrative Officer. White Eagle
was Greybull’s immediate supervisor and the two women
worked together at Fort Peck for many years.
Greybull was a central participant in a fraudulent scheme
to advantage Credit Program employees. The setup was not
particularly complicated—Credit Program employees
obtained loans by filing applications in the names of
“nominee,” or stand-in, relatives and then splitting the
proceeds amongst themselves. To avoid the three-person
Credit Committee tasked with application review and
approval, Greybull approved many of the loans herself. This
scheme was extensive: an Office of the Inspector General
(“OIG”) audit revealed that of the approximately $1.6 million
loaned by the Credit Program, around $1.2 million went to
6 UNITED STATES V . WHITE EAGLE
Credit Program employees and their stand-in family
members.
Greybull died in March 2008, leaving behind a number of
unpaid loans in others’ names. In May 2008, Greybull’s
sister Linda Christiansen approached White Eagle with
documentation for nominee loans that Greybull had taken out
in Christiansen’s name as well as in the name of Arthur
Greybull, III (Toni Greybull’s son). Christiansen requested
that the loans be repaid out of Greybull’s life insurance.
Apparently worried that inquiries about the loans would lead
to an audit that potentially would expose the fraud, White
Eagle contacted Greybull’s husband Arthur Greybull Jr. and
falsely informed him that Toni Greybull (not the nominee
borrowers) had outstanding loans with the Credit Program.
Greybull’s husband then paid the loans with money from
Greybull’s life insurance.
Greybull was not the only beneficiary of the loan
program. White Eagle also obtained loans from the Credit
Program, though not through the use of nominee borrowers.
In 2002, she took out a short-term loan of $2,000, and in
February 2007 she obtained a long-term loan for $5,050.
White Eagle made payments as required under the terms of
the loans. The long-term loan was modified twice to allow
borrowing of additional funds: in January 2008 the loan was
increased by $15,000, and in June 2009 it was increased by
another $5,050. These modifications were approved by the
Credit Program’s Credit Committee, not Greybull. Although
the government does not allege the loans were fraudulently
procured, White Eagle’s long-term loan modification was
contrary to specific directives she had received. When the
BIA regional director discovered in late 2007 that White
Eagle had taken out loans, he told her to pay them off and
UNITED STATES V . WHITE EAGLE 7
discontinue participation in the Credit Program due to the
conflict of interest. The government argues that White
Eagle’s Credit Program loans also violated the prohibition on
holding financial interests that conflict with conscientious
performance of duty. See 5 C.F.R. § 2635.101(b)(2).
At trial, the government argued that Greybull arranged the
2008 loan modification as quid pro quo for White Eagle’s
assistance in dealing with possible discovery of the nominee
loan scheme triggered by Greybull’s mother Patricia Menz.
In September 2007, Menz visited the Credit Program offices
to pay off a loan she had personally taken out and discovered,
to her surprise, that other loans had been taken out in her
name and without her knowledge or consent. The Credit
Program employee who assisted Menz had obtained
fraudulent loans himself and knew that Greybull had obtained
fraudulent loans. He directed Menz to speak to Greybull for
answers to her questions. Instead, and without telling
Greybull or others involved in the scheme, Menz contacted
the OIG and reported the loan irregularities.
Menz did not complain to the BIA or the Credit Program,
and there was no official reason for White Eagle to address
her concerns. Nonetheless, in December 2007, White Eagle
sent Menz a letter on BIA letterhead falsely assuring her that
she owed nothing because the loans had been erroneously
listed in her name and had also been paid off. The day before
White Eagle sent the letter, she had applied for the $15,000
increase in her long-term loan. Although the loan was
approved by the Credit Committee, the government presented
evidence that Greybull fast-tracked its approval, even
prevailing upon Credit Program staff to release a hold on
White Eagle’s account. The government also argued that the
loan issued on unusually favorable terms. Under its theory,
8 UNITED STATES V . WHITE EAGLE
the fast-tracked and favorable loan modification was a payoff
for White Eagle’s assistance in the coverup.
The fraudulent scheme was uncovered during a 2009
audit conducted by the Fort Peck Tribes. The audit
determined that fraud had been taking place since at least the
early 1990s, with participation by six Credit Program
employees. The investigation also identified Christiansen and
Greybull III (the nominal recipients of the loans paid off by
Greybull’s life insurance) as participants.
White Eagle’s prosecution arose out of the audit. In
March 2011, the government charged White Eagle with six
counts stemming from her involvement in the fraudulent
scheme and the loan modifications. The jury found her guilty
on all counts. The district court imposed a sentence of 51
months on Counts I through V, and 36 months for Count VI,
to run concurrently. White Eagle appeals her convictions on
all counts, as well as the district court’s application of the
four-level sentencing enhancement based on the value of the
bribe.
ANALYSIS
I. CONVICTIONS
White Eagle preserved her claim of insufficient evidence
by moving for a judgment of acquittal at the close of
evidence. Fed. R. Crim. P. 29. We therefore review de novo
the sufficiency of the evidence supporting the conviction.
United States v. Tucker, 641 F.3d 1110, 1118 (9th Cir. 2011).
Evidence is sufficient to sustain a conviction if, when
construed in the light most favorable to the prosecution, “any
rational trier of fact could have found the essential elements
UNITED STATES V . WHITE EAGLE 9
of the crime beyond a reasonable doubt.” United States v.
Nevils, 598 F.3d 1158, 1161 (9th Cir. 2010) (en banc)
(quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979)
(emphasis in original)).
A. Counts I and II: Conspiracy, Theft and
Conversion of Indian Tribal Organization
Property
In Counts I and II, the government alleged that White
Eagle and Greybull conspired to embezzle or convert Credit
Program funds. According to the government, the object of
the conspiracy was White Eagle’s $15,000 loan modification.
We note that these charges are narrowly targeted, particularly
in comparison to the wide-ranging nominee borrower scheme.
Counts I and II focus on Menz’s discovery of the loans in her
name, White Eagle’s assistance in the attempted cover-up,
and White Eagle’s receipt of a loan modification—events
beginning in late 2007, long after Greybull’s nominee scheme
occurred was implemented.
The jury was properly instructed that conspiracy required
“an agreement between two or more persons” and “a plan to
commit at least one of the crimes alleged in the indictment as
an object of the conspiracy.” Ninth Circuit Model Criminal
Jury Instruction No. 8.20. The government argues that “[t]he
jury could infer an agreement” from Greybull’s loans and
White Eagle’s attempt to cover up the fraudulent activity.
However, it does not argue that Greybull’s loans, which
predated the alleged conspiracy, were its object. Instead,
under each of the misappropriation theories, White Eagle’s
loan modification is touted as the object of the conspiracy:
“obtaining monies that her supervisor had prohibited”
(misapplication) or using “her lawful authority over the funds
10 UNITED STATES V . WHITE EAGLE
to gain what was an otherwise unauthorized possession of the
funds” (embezzlement and conversion). Hence, we analyze
White Eagle’s loan modification, not Greybull’s fraudulent
nominee loans, as the basis for the convictions on Counts I
and II.
The government presented no evidence that White Eagle
defrauded the Credit Program or that the applications for her
long-term loan and subsequent modifications were inaccurate
or incomplete. See Carlos-Blaza v. Holder, 611 F.3d 583,
588 (9th Cir. 2010) (analyzing charge for misapplication of
bank funds and holding that “a conviction for
misapplication . . . necessarily involves intent to defraud”);
United States v. Dreitzler, 577 F.2d 539, 546 (9th Cir. 1978)
(to show misapplication, the government must prove that “the
bank’s funds were disbursed under a false record”). Unlike
core participants in the nominee borrower scheme, White
Eagle did not use nominee borrowers to surreptitiously gain
a personal benefit. Cf. id. at 545 (upholding misapplication
conviction where defendant “set up bogus loan transactions,
presented . . . forged documents to the bank, and received the
proceeds of the ‘loans’ which he used for his [insurance]
agency’s benefit”). The posture of White Eagle’s
participation forecloses a conviction under a traditional
misapplication theory involving fraud or misrepresentation of
some kind.
The government instead tethers its theory to two
restrictions affecting White Eagle’s participation in the Credit
Program. The first restriction is that White Eagle’s
supervisor in 2007 instructed her not to borrow from the
Credit Program; the second, 5 C.F.R. § 2635.101(b)(2),
prohibits holding financial interests that conflict with
conscientious performance of duty. However, neither
UNITED STATES V . WHITE EAGLE 11
violation of an employer’s instruction nor a civil rule by itself
supports a conviction for conversion, theft, or misapplication
of funds.
This conclusion follows from analogous cases involving
prosecutions for misapplication of bank funds under
18 U.S.C. § 656. In United States v. Wolf, 820 F.2d 1499,
1505 (9th Cir. 1987), the defendant submitted fraudulent loan
applications in the name of stand-in borrowers and
additionally failed to make disclosures required by Federal
Reserve Regulation O. Despite evidence that the loan
applications were fraudulent, we reversed the misapplication
conviction because of the “serious risk that the jury would
find Wolf guilty of criminal misapplication . . . because he
failed to comply with Regulation O,” a civil regulation. Id.;
see also United States v. Christo, 614 F.2d 486, 492 (5th Cir.
1980) (“A conviction, resulting from the government’s
attempt to bootstrap a series of checking account overdrafts,
a civil regulatory violation, into an equal amount of
misapplication felonies, cannot be allowed to stand.”).
“[U]nder the logic of Christo and Wolf, it is impermissible to
use the violation of a civil statute to ipso facto ‘supply a
crucial element’ of a criminal offense.” United States v.
Eriksen, 639 F.3d 1138, 1150 (9th Cir. 2011). The
government’s misapplication theory, predicated at best on an
employer directive and a civil regulation, cannot support a
conviction here.
The government’s embezzlement and conversion theories
also fail because White Eagle never controlled or had custody
of the funds that she later borrowed. Even though she signed
paperwork for loans involving the pledge of trust assets as
collateral, the Credit Committee (of which White Eagle was
not a member) approved loans before a check would issue.
12 UNITED STATES V . WHITE EAGLE
See id. at 1145 (explaining that “[e]mbezzlement is the
fraudulent appropriation of property by a person to whom
such property has been entrusted, or into whose hands it has
lawfully come”) (alteration in original; citation and internal
quotation marks omitted); United States v. Andreen, 628 F.2d
1236, 1241 (9th Cir. 1980) (“[C]onversion encompasses the
use of property, placed in one’s custody for a limited purpose,
in an unauthorized manner or to an unauthorized extent.”).
Nor does Greybull’s shepherding White Eagle’s loan
modification through the approval process and signing
paperwork constitute embezzlement. In contrast to
Greybull’s own nominee loans (which circumvented the
Credit Committee), White Eagle’s loan modification was
ultimately approved by the Credit Committee. Even in the
light most favorable to the government, the evidence
contradicts an embezzlement or conversion theory.
Because the alleged object of the conspiracy—the loan
modification—was not itself criminal, there can be no
conspiracy. See United States v. Montgomery, 384 F.3d
1050, 1062 (9th Cir.2004) (holding that a conspiracy requires
an agreement to engage in criminal conduct). The
government cannot bootstrap itself to a criminal conviction
simply because White Eagle disobeyed a supervisor’s order
or contravened a general civil conflict of interest statute. We
reverse White Eagle’s convictions on Counts I and II.
B. Count III: Bribery
The quid pro quo alleged here is simple. White Eagle, as
BIA Superintendent, helped Greybull cover up her fraudulent
scheme; in exchange Greybull helped her obtain a favorable
loan modification. The government was required to prove
that: (1) White Eagle “was a public official;” (2) she received
UNITED STATES V . WHITE EAGLE 13
“[some]thing of value . . . in return for . . . being induced to
do or omit to do an[] act in violation of [her] official duty;”
and (3) she acted “corruptly”—that is, with the “intent to be
influenced to perform an act” that violated her official duty.”
See 18 U.S.C. § 201(b)(2)(C); United States v. Leyva,
282 F.3d 623, 625-626 (9th Cir. 2002).
White Eagle does not challenge her status as a public
official. Instead, she argues that she received nothing of
value because Greybull’s assistance with the loan
modification was unnecessary and that she did not act
corruptly because her actions could not have affected the
OIG’s investigation. White Eagle also challenges the
sufficiency of the indictment, which alleges that agreement
and payment took place after she sent the letter to Menz.
The evidence is consistent with bribery, and surely
sufficient under Jackson v. Virginia. 443 U.S. at 319(evidence is sufficient if “any rational trier of fact could have
found the essential elements of the crime beyond a reasonable
doubt”) (emphasis in original). Upon hearing of Menz’s
concerns, White Eagle conducted almost no investigation into
whether Menz’s loans were actually paid, and did not report
the issue to her superior. Instead, on December 12, 2007, she
wrote a letter to Menz on BIA letterhead falsely assuring her
that the loans had been paid off and that they had only
erroneously been listed under Menz’s name. Only one day
earlier, White Eagle had applied for the $15,000 loan
modification. The modification appears to have issued on
irregular and favorable terms: it included improved
repayment provisions, and the documentation did not include
a pledge of trust assets as was normally required. Greybull,
whose signature appeared on the application, fast-tracked the
loan and prevailed upon the Credit Program to release a hold
14 UNITED STATES V . WHITE EAGLE
on White Eagle’s account that arose after a borrower for
whom White Eagle had co-signed defaulted on a loan.
A rational jury could easily infer a quid pro quo from
these facts, concluding that White Eagle wrote Menz a letter
to alleviate her concerns and turned a blind eye to the
nominee borrower scheme in exchange for Greybull’s later
assistance in securing a quick and favorable loan
modification. Although the loan modification might well
have issued without Greybull’s involvement, the jury was
entitled to find that her assistance was “something of value,”
particularly given the favorable terms.
White Eagle also argues that she took no corrupt actions
because her letter to Menz could not have affected the OIG’s
response to Menz’s complaint. In doing so, she misconstrues
the import of the letter—transmitting the letter was corrupt
regardless of its impact, as success is not an element of the
offense. Moreover, White Eagle failed to report the
obviously illegal nominee borrower scheme. See United
States v. Birdsall, 233 U.S. 223, 231 (1914) (adopting, for
bribery purposes, a broad definition of official acts and noting
that “[t]o constitute . . . official action, it was not necessary
that [the conduct] be prescribed by statute”); O’Campo v.
Hardisty, 262 F.2d 621, 624 (9th Cir. 1958) (same). The jury
had ample evidence to conclude that White Eagle’s actions
were “corrupt.”
White Eagle argues that “[a] person cannot be bribed for
a past act” and urges us to reject the indictment because it
states that White Eagle agreed to the scheme and accepted the
payment in January 2008, after she sent the letter to Menz.
But the indictment sets no dates in stone. While Count III
states that White Eagle agreed to the scheme and received the
UNITED STATES V . WHITE EAGLE 15
loan modification “on or around” January 2, 2008, the
evidence in the record is consistent with an agreement
between White Eagle and Greybull that predated the
December letter to Menz. Moreover, any challenge to the
sufficiency of Count III of the indictment is misplaced
regardless of any imprecision as to timing. The indictment
tracks the language of the bribery statute, contains the
elements of the offense, and specifies which of White Eagle’s
actions violated the law, thus allowing her to avoid another
prosecution on the same actions. See Hamling v. United
States, 418 U.S. 87, 117 (1974); United States v.
Milovanovic, 678 F.3d 713, 727 (9th Cir. 2012). We affirm
White Eagle’s conviction under Count III.
C. Count IV: Falsification, Concealment, or Covering
Up of a Material Fact
The district court properly instructed the jury that a
conviction under 18 U.S.C. § 1001(a)(1) requires that: (1) the
defendant had a duty to disclose material information, (2) the
defendant falsified, concealed, or covered up such a fact by
trick, scheme, or fraud, (3) the falsified, concealed, or
covered up fact was material, (4) the falsification and/or
concealment was knowing and willful, and (5) the material
fact was within the jurisdiction of the Executive Branch. See
United States v. Varbel, 780 F.2d 758, 762 (9th Cir. 1986)
(indictment alleging concealment in violation of 18 U.S.C.
§ 1001 failed where there was no duty to disclose); see also
United States v. Moore, 446 F.3d 671, 677 (7th Cir. 2006).
White Eagle challenges the legal sufficiency of her duty to
report Greybull’s fraud and claims that she did report the
fraud to Darryl LaCounte, the BIA Deputy Regional Director.
16 UNITED STATES V . WHITE EAGLE
White Eagle’s claim that she reported the fraudulent
scheme does not withstand scrutiny. She argues only that she
told LaCounte that Greybull’s husband had paid the balance
of a loan for one of Greybull’s relatives. This hardly counts
as an actual “report” alerting LaCounte to the fraudulent
activity. LaCounte’s testimony also contradicts White
Eagle’s claim that she reported the fraud. He recalled
discussing Greybull’s husband’s payment with White Eagle,
but did not remember hearing about Greybull’s fraud.
LaCounte also testified that he would have reacted to any
report regarding fraudulently obtained loans—but he did not
investigate or take any actions. The jury was entitled to reject
White Eagle’s account and credit LaCounte’s testimony. We
cannot overturn its credibility determinations. See United
States v. Yossunthorn, 167 F.3d 1267, 1270 (9th Cir. 1999)
(noting that a jury’s credibility finding cannot be reviewed on
appeal). We therefore focus our analysis on whether White
Eagle’s failure to report Greybull’s fraud can support a
conviction for concealment under 18 U.S.C. § 1001(a)(1).
White Eagle, like all government employees, had a duty
to “disclose waste, fraud, abuse, and corruption to appropriate
authorities,” codified in the Code of Federal Regulations as
a “[b]asic obligation of public service.” See 5 C.F.R.
§ 2635.101(b)(11). It is not disputed that White Eagle
violated this fundamental rule. However, she is not charged
with breaching the public trust or failing to perform her duties
as a public servant or government employee. Instead, she is
charged with fraudulent concealment, a narrower offense
under the umbrella of “Fraud and False Statements.”
18 U.S.C. ch. 47. Because failing to report fraud in violation
of generally applicable ethical principles is not equivalent to
UNITED STATES V . WHITE EAGLE 17
a “false statement,” the facts do not support a conviction
under § 1001(a)(1).1
As other circuits have recognized, a conviction under
§ 1001(a)(1) is proper where a statute or government
regulation requires the defendant to disclose specific
information to a particular person or entity. See United States
v. Tobon-Builes, 706 F.2d 1092, 1096 (11th Cir. 1983). So,
for example, when a defendant submits a report that omits
particular information that by law must appear in the report,
a conviction for concealment is proper. See United States v.
Muntain, 610 F.2d 964, 971–72 (D.C. Cir. 1979). The same
holds true when a defendant responds to specific questions on
a particular topic. See United States v. Stewart, 433 F.3d 273,
318 (2d Cir. 2006) (holding that SEC investigator’s specific
questions regarding another individual’s stock trades created
a duty to disclose information about those trades).
In these situations, the defendant’s silence is akin to an
affirmative misrepresentation, and therefore logically falls
within the scope of § 1001’s prohibition on false and
fraudulent statements. See United States v. Mubayyid,
658 F.3d 35, 70-71 (1st Cir. 2011) (“[B]y filing the false
Form 990s, which he signed under penalty of perjury,
Mubayyid did not passively fail to disclose material facts; he
engaged in an affirmative act of concealment. . . . His
conduct is therefore sufficient grounds for a conviction under
§ 1001(a)(1).”) (citation omitted). Similarly, if a financial
institution fails to report particular transactions as required by
law, its silence is effectively a statement that no such
transactions took place. Cf. United States v. Puerto, 730 F.2d
1W hite Eagle’s failure to report Greybull’s felony was charged in Count
VI (misprision of a felony) and was not a part of this Count.
18 UNITED STATES V . WHITE EAGLE
627, 633 (11th Cir. 1984) (holding that a defendant is guilty
of concealment of a material fact when he causes either an
inaccurate currency transaction report or no currency
transaction report to be sent to the Internal Revenue Service).
We can identify no analogous “silent statement” by White
Eagle. It is true that White Eagle concealed Greybull’s loans
by writing a false letter to Menz claiming that the loans had
been paid off and by inducing Greybull’s husband to pay the
loan balances with life insurance proceeds. However, neither
act involved an affirmative false or misleading statement to
the government. The government argues that White Eagle
further concealed the fraud by informing LaCounte that
Greybull’s nominee loans had been paid off, but not telling
him that they had been fraudulently obtained in the first
place. But that incomplete report—while misleading—did
not contravene a specific reporting duty. White Eagle’s
partial disclosure made no representation, explicit or implicit,
as to the existence of fraud in the Credit Program. Her acts
may be improper and unethical, but they are not sufficient for
a concealment conviction under § 1001(a)(1).
The D.C. Circuit’s treatment of an analogous issue in
United States v. Safavian, 528 F.3d 957 (D.C. Cir. 2008), is
instructive. The court overturned a conviction under
§ 1001(a)(1) that, like here, arose out of an alleged violation
of 5 C.F.R. § 2635.101(b)(11). Id. at 959. The defendant, a
GSA employee, sought ethical advice about participating in
golf trip sponsored by Jack Abramoff, but did not disclose
Abramoff’s business before the GSA in his request for the
ethics opinion. Id. at 960. The government argued that the
defendant’s omission of this relevant detail breached his duty
to disclose under the regulation and other ethical principles.
Id. at 964. The court acknowledged the ethics rules required
UNITED STATES V . WHITE EAGLE 19
disclosure relating to corruption, but found that the
relationship between those requirements and the duty to
report under § 1001(a)(1) was “tenuous at best.” Id. It noted
that there was “no indication of the particular facts or
information” that should be disclosed, and that the regulation
contained no indication that it applied to the defendant’s
conduct. Id. at 965. It reversed the conviction under
§ 1001(a)(1) because there was no duty to disclose. Id.
The same reasoning applies here. Although the regulation
discusses reporting “fraud” and “corruption,” 5 C.F.R.
§ 2635.101(b)(11), it does not provide specifics on what kind
of information should be reported or to whom. Nor does it
discuss criminal liability for failure to abide by its provisions.
See Safavian, 528 F.3d at 964 (Under the Fifth Amendment,
“the defendant must have ‘fair notice . . . of what conduct is
forbidden. . . . [T]his “fair warning” requirement prohibits
application of a criminal statute to a defendant unless it was
reasonably clear at the time of the alleged action that
defendant[‘s] actions were criminal.’”) (first three alterations
in original) (citation omitted). Nothing in § 1001(a)(1) or the
regulation indicates that a failure to report could effectively
be read as a statement that no fraud was taking place.
Because the government did not show that White Eagle
violated a specific duty to report Credit Program fraud, we
reverse her conviction as to Count IV.
20 UNITED STATES V . WHITE EAGLE
D. Count V: Public Acts Affecting a Personal
Financial Interest
White Eagle was also indicted under 18 U.S.C. § 208(a),
the basic criminal conflict of interest statute,2 based on her
alleged concealment of Greybull’s fraudulent scheme.
According to the government, the concealment furthered
White Eagle’s own interests because she wanted the loan
program to continue so that she could obtain additional future
loans and ensure that she kept her job; both would be in
jeopardy if the scheme was discovered. Those interests are
too remote from White Eagle’s acts to sustain a conviction.
Section 208(a) regulates a limited set of “particular
matters,” generally arising out of discrete matters with a
direct impact on the government employee’s finances. See 5
C.F.R. § 2640.103(a)(1) (listing examples that involve the
award and maintenance of government contracts, specific
hiring decisions, and use of a particular business’s services).
Illustrative cases under § 208(a) underscore the link between
the conflict and a real, rather than speculative, interest in a
particular matter. See, e.g., United States v. Selby, 557 F.3d
2Section 208(a) provides that
[W ]hoever, being an officer or employee of the
executive branch . . . participates personally and
substantially as a Government officer or employee . . .
in a judicial or other proceeding, application, request
for a ruling or other determination, contract, claim,
controversy, charge, accusation, arrest, or other
particular matter in which, to his knowledge, he . . . has
a financial interest . . . [s]hall be subject to the penalties
set forth in section 216 of this title.
18 U.S.C. § 208(a).
UNITED STATES V . WHITE EAGLE 21
968, 975 (9th Cir. 2009) (per curiam) (employee whose
husband earned commission from a software sale to the
government had sufficient financial interest to sustain
conviction under § 208(a) where she had actively lobbied for
increased use of her husband’s software); United States v.
Jewell, 827 F.2d 586, 587 (9th Cir. 1987) (financial interest
requirement of § 208(a) was met where the government
employee signed invoices authorizing payment to his own
company); United States v. Smith, 267 F.3d 1154, 1156–57
(D.C. Cir. 2001) (referral of patients to specific mental health
clinic to which defendant had loaned money was sufficient
under § 208(a)).
The government argued that the “particular matter”
underlying this Count was White Eagle’s request that
Greybull’s husband pay off Greybull’s nominee loans with
the proceeds of Greybull’s life insurance. While an employee
need not personally stand on either side of an underlying
transaction, the link between the employee’s interest and the
public act must be direct and predictable. See United States
v. Lund, 853 F.2d 242, 243 (4th Cir. 1988) (applying statute
to federal employee’s involvement in hiring decision
involving a relative). There was no such clear link here.
The connection between the payment of Greybull’s
fraudulent nominee loans and White Eagle’s alleged financial
interest is remote and speculative. While White Eagle’s acts
directly concealed Greybull’s fraud, her own interests were
further downstream. To find an effect on White Eagle’s
continued employment and/or her future ability to obtain
Credit Program loans, we must assume that discovery of
Greybull’s fraud would have led to a wide-scale
investigation, and one of two outcomes: (1) a change in
policy preventing loans to BIA employees that would not
22 UNITED STATES V . WHITE EAGLE
affect White Eagle unless and until she desired additional
loans; or (2) the conclusion that White Eagle was at fault to
a degree justifying her termination. This chain of events
requires hypothesis heaped on hypothesis and is not the
“close causal link” between the request to pay and the effect
on the claimed financial interests. Selby, 557 F.3d at 975.
Any proposed link is fraught with contingencies, particularly
because Greybull’s underlying fraud was part of a
longstanding scheme that long predated claimed complicity
by White Eagle. See 5 C.F.R. § 2640.103(a)(3)(i) (“A
particular matter will not have a direct effect on a financial
interest, however, if the chain of causation is attenuated or is
contingent upon the occurrence of events that are
speculative.”). Accordingly, White Eagle’s financial interest
in this matter was insufficient under 18 U.S.C. § 208(a). We
reverse her conviction on Count V.
E. Count VI: Misprision of a Felony
Misprision of a felony in violation of 18 U.S.C. § 4requires the government to establish: (1) the commission and
completion of a felony by a third party, (2) the defendant’s
knowledge of the felony, (3) the defendant’s failure to notify
the authorities, and (4) that the defendant took an affirmative
step to conceal the crime. United States v. Ciambrone,
750 F.2d 1416, 1417 (9th Cir. 1985).
The crime here was Greybull’s fraudulent use of nominee
borrowers. There was evidence, however, that White Eagle
knew of the fraud: Christiansen told White Eagle that the
loans in her name and Greybull’s son’s name actually
belonged to Greybull, and that the loans needed to be paid out
of Greybull’s life insurance policy. White Eagle never
notified relevant authorities of Greybull’s use of nominee
UNITED STATES V . WHITE EAGLE 23
borrowers, and concealed Greybull’s fraud by arranging for
Greybull’s husband to pay off the long-term loans with life
insurance proceeds to head off any investigation into the
matter.
As with the bribery charge, White Eagle argues that there
was no concealment and claims that she reported the crime by
notifying Darryl LaCounte, the relevant BIA official, that
Greybull’s husband had paid the balance of a loan for one of
Greybull’s relatives. This report was insufficient because the
law requires the reporting of the “commission of a felony,”
not just related acts. See 18 U.S.C. § 4 (“Whoever, having
knowledge of . . . a felony . . . does not as soon as possible
make known the same” may be subject to penalties.)
(emphasis added). LaCounte also testified to the contrary,
and the jury was entitled to reject White Eagle’s story to the
extent that it conflicted with LaCounte’s. See Yossunthorn,
167 F.3d at 1270 (a jury’s credibility finding cannot be
reviewed on appeal).
White Eagle additionally claims that she took no
affirmative step to conceal the crime because the payment of
Christiansen and Greybull III’s loans did not make it any
harder for the government to uncover Greybull’s fraud.
However, the jury heard testimony from the tribe’s chief
financial officer that her audit focused primarily on loan
payments, not their origination. Because this evidence
showed that paid off loans were less likely to be investigated,
the jury could conclude that payment of the loans made the
discovery of the fraud less likely and, therefore, that White
Eagle took an affirmative step to conceal the felony.
White Eagle finally argues that her conviction cannot
stand because there was no underlying prosecution relating to
24 UNITED STATES V . WHITE EAGLE
the long-term loans that Greybull’s husband paid and that she
allegedly concealed. We have never required evidence of a
prosecution or conviction for the third party’s offense as a
prerequisite for a misprision conviction—only the completion
of the offense. See Ciambrone, 750 F.2d at 1417 (listing
commission and completion of a felony, but not conviction,
as elements of the offense); United States v. King, 402 F.2d
694, 695 (9th Cir. 1968) (holding, without discussing
prosecution or conviction of the principals, that sufficient
evidence supported the jury’s finding that the principals
committed a felony). Any other conclusion could bar
prosecution in cases like this, where the third party dies or for
other reasons is not charged and/or convicted before the
defendant is tried. Reversal of Count VI on these grounds is
not warranted, and we affirm White Eagle’s conviction on
Count VI.
F. White Eagle’s Fifth Amendment Defense
White Eagle also argues that convictions for Counts V
(public acts affecting a financial interest) and VI (misprision
of a felony) would violate her Fifth Amendment right to
avoid self-incrimination because each charge relied on her
duty to report criminal activity that would have exposed her
to prosecution. However, these convictions were based on
White Eagle’s failure to report Greybull’s crimes, not her
own alleged criminal activity. The connection between
White Eagle’s loan modification and Greybull’s use of
nominee borrowers is too remote to implicate White Eagle’s
Fifth Amendment rights.
White Eagle cites to persuasive authority that a misprision
conviction cannot stand where the defendant’s duty to report
would have furnished evidence against the defendant.
UNITED STATES V . WHITE EAGLE 25
Notably, these cases arise where the defendants’ criminal
activity arose out of the same transactions that constituted the
felonies they were obligated to report. See King, 402 F.2d at
697 (defendant who was present at meetings of conspirators
before and after bank robbery, received some proceeds from
it, and helped participants leave town could not be prosecuted
for failure to report robbery); United States v. Kuh, 541 F.2d
672, 677 (7th Cir. 1976) (prosecution for misprision violated
Fifth Amendment because the defendant’s duty to report
armored car robbery would have revealed his receipt and
possession of money stolen in that same crime). In contrast,
White Eagle’s liability for her allegedly criminal
activity—receipt of the loan modification—was not directly
connected to the criminal activity she failed to report,
Greybull’s use of nominee borrowers.
White Eagle’s invocation of the Fifth Amendment is
insufficient because her disclosure of Greybull’s scheme
would not have provided a strong enough “link in the chain
of evidence needed to prosecute” her for her own misdeeds.
Cf. King, 402 F.2d at 697 (Fifth Amendment protections
apply where the “individual has reasonable cause to fear he
might . . . be convicted” because of the information he
reveals.). It is true, as White Eagle argues, that the disclosure
of Greybull’s fraud might have led to an audit that might have
exposed other frauds, which might in turn have implicated
White Eagle. However, as the government points out,
Menz’s complaint had already triggered an OIG investigation,
but no extensive audit, so discovery was by no means assured
even if White Eagle had reported Greybull’s activity.
Because the connection between disclosure and prosecution
was tenuous and speculative, no Fifth Amendment violation
arises out of White Eagle’s convictions on Counts V and VI.
26 UNITED STATES V . WHITE EAGLE
II. SENTENCING
We review de novo the district court’s interpretation of
the Sentencing Guidelines, its application of the Guidelines
to the facts for abuse of discretion, and its factual findings for
clear error. United States v. Loew, 593 F.3d 1136, 1139 (9th
Cir. 2010).
The district court correctly set White Eagle’s base offense
level at 14, as she was a public official within the meaning of
the law. See U.S. Sentencing Guidelines Manual
(“U.S.S.G.”) § 2C1.1(a)(1) (Nov. 2012); 18 U.S.C.
§ 201(a)(1). However, the district court appears to have erred
in the next step: adjusting the sentence based on “the value of
the payment, the benefit received or to be received in return
for the payment, the value of anything obtained or to be
obtained . . . , or the loss to the government from the offense,
whichever is greatest.” U.S.S.G. § 2C1.1(b)(2). The district
court appropriately looked to the loan modification, but
simply recited the Guidelines language before concluding that
“the value is the $15,000 loan” and making adjustments to
that figure based on White Eagle’s payments. While the
district court’s cryptic statement gives little insight into its
methodology, it appears that it valued the loan modification
using standard “loss” calculations instead of focusing on the
“value of the benefit” White Eagle received as the Guidelines
require.
Given our reversal of the conversion and misapplication
conviction, there is no $15,000 “loss” to the government that
could be used as the basis for the sentencing adjustment. Nor
is there any evidence that White Eagle’s loan modification
was fraudulently obtained such that its entire amount could be
considered a loss under § 2B1.1, which governs loss
UNITED STATES V . WHITE EAGLE 27
calculations for financial crimes based in fraud and other
forms of theft. See U.S.S.G. § 2B1.1, introductory cmt.
(noting that § 2B1.1 addresses “basic forms of property
offenses [like] theft, embezzlement, fraud, forgery,
counterfeiting”). Any sentencing adjustment must therefore
be based on the value of the loan modification as a bribe.
Section 2C1.1, which governs valuation, does not
contemplate using § 2B1.1 to determine the “value of the
benefit received or to be received” in a bribery conviction.
U.S.S.G. § 2C1.1, cmt. n.3 (stating that “‘[l]oss,’ for purposes
of [§ 2C1.1(b)(2)], shall be determined in accordance with”
§ 2B1.1, but separately discussing the value of the benefit or
payment) (emphasis added). Where, as here, there is no loss,
or the loss is not the largest of the listed values, § 2B1.1
becomes relevant only after the value of the benefit or
payment is otherwise determined. See U.S.S.G.
§ 2C1.1(b)(2) (“If the value of the payment [or] the
benefit . . . exceeded $5,000, increase by the number of levels
from the table in § 2B1.1.”). The district court therefore erred
to the extent it relied on § 2B1.1’s methodology for valuation
purposes.
The district court also erred in equating the value of the
loan modification to a cash payment of the same size. “The
value of a transaction is often quite different than the face
amount of that transaction.” United States v. Fitzhugh,
78 F.3d 1326, 1331 (8th Cir. 1996). The Fitzhugh court
looked to § 2C1.1 for guidance in a commercial bribery
matter governed by § 2B4.1 and concluded that “[w]hen a
loan is obtained by bribes, it is likely to be at favorable terms,
in which case its value will typically be the difference
between the actual cost of the loan, and the cost of the same
loan at fair market terms and conditions.” Id. This
28 UNITED STATES V . WHITE EAGLE
conclusion follows from § 2C1.1’s mandate to focus on the
net value of “‘the benefit received or to be received.’”
U.S.S.G. § 2C1.1, cmt. n.3 (noting that where a contract is
awarded in exchange for a bribe, the “benefit” from the
contract is the profit made thereon, not the entire payment
due under the contract).
The Eighth Circuit’s Fitzhugh decision is instructive here
because White Eagle was not bribed with a loan she was not
expected to repay. Instead, she received an expedited loan
that appears to have issued on better terms than standard
Credit Program loans. It is unclear, however, whether White
Eagle would have received the loan at all absent Greybull’s
intervention. Both of those issues can factor in to the
ultimate valuation of the net benefit conferred on White Eagle
by the loan modification. We are not in a position to dictate
the precise valuation methodology on appeal. Instead,
because the district court rested its valuation decision on the
face value of the loan and did not link its calculations to the
“value of the benefit [White Eagle] received,” we remand for
further proceedings consistent with this opinion. U.S.S.G.
§ 2C1.1, cmt. n.3; see also Fitzhugh, 78 F.3d at 1331 (finding
that “the scanty evidence of record regarding the [favorable]
loan . . . suggests that its value, properly calculated, would be
far less than its face amount” and remanding for a correct
determination of its value).
CONCLUSION
White Eagle’s convictions on Counts I, II, IV, and V are
REVERSED. Her convictions on Counts III and VI are
AFFIRMED. The matter is REMANDED to the district
court for further sentencing proceedings consistent with this
opinion.