United States v. Moratalla

This opinion is subject to revision before publication
UNITED STATES COURT OF APPEALS
FOR THE ARMED FORCES
_______________
UNITED STATES
Appellee
v.
Virginia S. MORATALLA,
Boatswain’s Mate Second Class
United States Navy, Appellant
No. 21-0052
Crim. App. No. 201900073
Argued October 5, 2021—Decided December 6, 2021
Military Judges: Hayes C. Larsen and Warren A. Record
For Appellant: Captain Jasper W. Casey, USMC (argued);
Lieutenant Clifton E. Morgan III, JAGC, USN.
For Appellee: Lieutenant Commander Jeffrey S. Marden,
JAGC, USN (argued); Lieutenant Colonel Nicholas L. Gan-
non, USMC, Major Kerry E. Friedewald, USMC, and Brian
K. Keller, Esq. (on brief); Major Clayton L. Wiggins, USMC.
Chief Judge OHLSON delivered the opinion of the Court,
in which Judge SPARKS, Judge MAGGS, Judge HARDY,
and Senior Judge ERDMANN, joined.
_______________
Chief Judge OHLSON delivered the opinion of the Court.
A military judge sitting alone as a general court-martial
convicted Appellant, pursuant to her pleas, of a number of of-
fenses, including one specification of bank fraud in violation
of Article 134, Uniform Code of Military Justice (UCMJ), 10
U.S.C. § 934 (2018); United States v. Moratalla, No. NMCCA
201900073, 2020 CCA LEXIS 242, at *1–2, 2020 WL 4280688,
at *1 (N-M. Ct. Crim. App. July 27, 2020) (unpublished). The
military judge sentenced Appellant to a reduction to E-1, for-
feiture of $1,000 per month for sixty months, confinement for
sixty months, and a dishonorable discharge. The convening
authority approved the sentence as adjudged as to the reduc-
tion in grade, forfeitures, and discharge, and, pursuant to the
pretrial agreement, approved forty-eight months of confine-
ment with 163 days of credit. The United States Navy-Marine
Corps Court of Criminal Appeals (NMCCA) affirmed the find-
ings and sentence as approved by the convening authority.
United States v. Moratalla, No. 21-0052/NA
Opinion of the Court
Moratalla, 2020 CCA LEXIS 242, at *12, 2020 WL 4280688,
at *5.
We granted review of the following issue: “Whether the
Appellant’s guilty plea to bank fraud under 18 U.S.C. § 1344was improvident.” United States v. Moratalla, 81 M.J. 166,
166–67 (C.A.A.F. 2021) (order granting review).
We conclude that Appellant’s plea was provident. The mil-
itary judge established a sufficient basis for the plea, espe-
cially in light of the breadth of liability under the federal bank
fraud statute. And while Appellant’s responses to the military
judge’s inquiries arguably raised some question as to the prov-
idence of her plea, those responses—in the full context of the
colloquy—did not give rise to a substantial question. We
therefore hold that the military judge did not abuse his dis-
cretion in accepting Appellant’s guilty plea and we affirm the
decision of the NMCCA.
I. Background
Appellant engaged in “a variety of economic fraud
schemes involving financial institutions and individuals.”
Moratalla, 2020 CCA LEXIS 242, at *2, 2020 WL 4280688, at
*1. In regard to the specific charge at issue in this appeal,
Appellant pleaded guilty to an Article 134, UCMJ, specifica-
tion for having committed bank fraud under 18 U.S.C. § 1344.
Specifically, Appellant admitted that she did:
[K]nowingly execute or attempt to execute a scheme or ar-
tifice to defraud a financial institution, ABNB Federal
Credit Union, or to obtain moneys, funds, credits, and
assets owned by or under the custody and control of the
ABNB Federal Credit Union, by means of false or fraud-
ulent pretenses, representations, or promises . . . .
(Emphasis added.)
According to her stipulation of fact, Appellant sought
funds to invest in her personal “house flipping business.”1 In
1 Because a stipulation of fact is binding on the court-martial
and may not be contradicted by the parties, we accept as true all of
the facts, but not necessarily the legal conclusions, contained in the
parties’ stipulation. United States v. Simpson, 81 M.J. 33, 36 & n.3
(C.A.A.F. 2021); see Rule for Courts-Martial (R.C.M.) 811(e).
2
United States v. Moratalla, No. 21-0052/NA
Opinion of the Court
order to secure those funds, Appellant enlisted the help of a
coworker—BM2 Whiskey2—who agreed to apply for a loan at
ABNB Federal Credit Union. Their plan was for BM2 Whis-
key to falsely represent to ABNB that he would use the loan
proceeds to purchase Appellant’s vehicle. However, neither
BM2 Whiskey nor Appellant believed that BM2 Whiskey was
actually purchasing the vehicle. Rather, their intent was for
the funds obtained from ABNB to be treated as an investment
by BM2 Whiskey in Appellant’s business. Nevertheless, at the
time of the loan transaction, Appellant transferred the vehi-
cle’s title to BM2 Whiskey—a hallmark of a legal sale of a ve-
hicle from one individual to another. The transfer of the title
raised the specter that—despite her intentions—Appellant
did not commit bank fraud because she actually did sell her
vehicle to BM2 Whiskey consistent with the terms of the loan
agreement.
II. Applicable Legal Principles
Article 134, UCMJ, extends court-martial jurisdiction
over “noncapital crimes or offenses which violate [f]ederal
law.” Manual for Courts-Martial, United States pt. IV, para.
60.c.(1) (2016 ed.) (MCM); see 10 U.S.C. § 934 (2018). One
such federal offense is contained in the federal bank fraud
statute, which makes it a crime to:
[K]nowingly execute[], or attempt[] to execute, a scheme
or artifice—
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, credits, as-
sets, securities, or other property owned by, or under
the custody or control of, a financial institution, by
means of false or fraudulent pretenses, representa-
tions, or promises . . . .
18 U.S.C. § 1344 (2018).
Before accepting a guilty plea, a military judge must en-
sure that there is a factual basis for the accused’s plea. United
States v. Care, 18 C.M.A. 535, 541, 40 C.M.R. 247, 253 (1969);
R.C.M. 910(e). “[A] factual predicate [for a plea of guilty] is
2 For the sake of clarity, we adopt the pseudonym used by the
lower court.
3
United States v. Moratalla, No. 21-0052/NA
Opinion of the Court
sufficiently established if ‘the factual circumstances as re-
vealed by the accused himself objectively support that plea
. . . .’ ” United States v. Faircloth, 45 M.J. 172, 174 (C.A.A.F.
1996) (third alteration in original) (quoting United States v.
Davenport, 9 M.J. 364, 367 (C.M.A. 1980)). A military judge’s
failure to obtain an adequate factual basis for a guilty plea
constitutes an abuse of discretion. United States v. Inabinette,
66 M.J. 320, 322 (C.A.A.F. 2008). However, we afford military
judges significant deference on this point and we grant them
substantial leeway in conducting providence inquiries. See
United States v. Caldwell, 72 M.J. 137, 144 (C.A.A.F. 2013)
(noting that military judges are afforded significant deference
in obtaining a factual basis for a plea); United States v. Price,
76 M.J. 136, 139 (C.A.A.F. 2017) (noting that the range of per-
missible questioning in this context is “quite broad”). Never-
theless, “a military judge must elicit actual facts from an ac-
cused and not merely legal conclusions.” Price, 76 M.J. at 138
(emphasis added).
In determining whether a military judge abused his or her
discretion, we apply the “substantial basis” test. Specifically,
we ask “whether there is something in the record of trial, with
regard to the factual basis or the law, that would raise a
substantial question regarding the appellant’s guilty plea.”
Inabinette, 66 M.J. at 322. That is, despite the existence of an
otherwise adequate basis for a plea, “[i]f an accused ‘sets up
matter inconsistent with the plea’ at any time during the
proceeding, the military judge must either resolve the
apparent inconsistency or reject the plea.” United States v.
Garcia, 44 M.J. 496, 498 (C.A.A.F. 1996) (quoting Article
45(a), UCMJ, 10 U.S.C. § 845(a)). However, “a ‘mere
possibility’ of conflict” is not enough, United States v. Riddle,
67 M.J. 335, 338 (C.A.A.F. 2009) (quoting United States v.
Shaw, 64 M.J. 460, 462 (C.A.A.F. 2007)), and we “giv[e] broad
discretion to military judges in accepting [guilty] pleas . . .
because [we recognize that] facts are by definition
undeveloped in such cases.” Inabinette, 66 M.J. at 322. After
all, “this is a guilty plea, folks.” Faircloth, 45 M.J. at 174
(alteration in original removed) (internal quotation marks
omitted) (citation omitted).
Even if a guilty plea is later determined to be improvident,
a reviewing court may grant relief only if it finds that the
4
United States v. Moratalla, No. 21-0052/NA
Opinion of the Court
military judge’s error in accepting the plea “materially
prejudice[d] the substantial rights of the accused.” Article
45(c), UCMJ.
III. Discussion
Appellant argues before this Court that her plea was im-
provident. She first notes her statement during the provi-
dence inquiry that she transferred the title of her vehicle to
BM2 Whiskey at around the same time as the bank loan and
gave BM2 Whiskey possession of the vehicle soon thereafter.
She then argues that these facts created a material incon-
sistency with her plea of guilty to the bank fraud specification
because her actions were entirely consistent with a bona fide
car sale. Appellant concludes by arguing that, under these cir-
cumstances, the military judge erred by failing to either re-
solve the conflict or reject the plea.3
We note that during the providence inquiry, the military
judge correctly explained to Appellant the elements of bank
fraud and then took care to give Appellant the opportunity to
explain how her conduct matched those elements. As noted
above, the pertinent charge expressly averred that Appellant
did “knowingly execute or attempt to execute a scheme or ar-
tifice to defraud a financial institution.” (Emphasis added.)
Further, in accordance with the language of the charge, the
military judge specifically asked Appellant whether she “exe-
cute[d] or attempt[ed]” such a scheme, and she admitted that
she did. (Emphasis added.) Indeed, over the course of the col-
loquy, the military judge asked Appellant more than fifty
questions regarding this specific offense. For example, the
military judge asked Appellant, “[W]hy did you have [BM2
Whiskey] take a loan on the car instead of taking a loan on
the car yourself?” Appellant explained that she “wasn’t qual-
ified for the loan.” The military judge also asked why Appel-
lant chose this specific scheme. Appellant explained that a
loan of the type she chose to seek has “a lower interest rate
. . . and it’s easier for a person to [get a] loan [if they have] . . .
3 During the colloquy, Appellant stated that “the title and reg-
istration w[ere] transferred to [BM2 Whiskey].” A similar state-
ment is present in the stipulation: “The registration and title are in
[BM2 Whiskey]’s name.”
5
United States v. Moratalla, No. 21-0052/NA
Opinion of the Court
collateral.” Summing up what Appellant had told him, the
military judge asked:
MJ: So you and [BM2 Whiskey] agreed that he
would lie to ABNB Credit Union and tell them he
was buying the car?
ACC: Yes, Your Honor.
MJ: And in return, they would give him a better loan
than he might have gotten had the true facts been
known?
ACC: Yes, Your Honor.
MJ: And by telling ABNB Credit Union he was pur-
chasing the car, they would know that if he were to
default, they could go to his place of residence and
repossess the car?
ACC: Yes, Your Honor.
....
MJ: And you knew that their collateral would not be
located where they thought it was located?
ACC: Yes, Your Honor.
....
[MJ:] So the scheme with [BM2 Whiskey], did you
specifically intend to defraud ABNB Federal Credit
Union?
ACC: Yes, Your Honor.
MJ: In other words, you knew that your actions
would lead them to take actions they would not take
otherwise, right?
ACC: Yes, Your Honor.
MJ: And in addition to specifically intending to de-
fraud ABNB . . . you engaged in a scheme that led
them . . . to be presented with material false repre-
sentations, right?
ACC: Yes, Your Honor.
In assessing “the ‘full context’ of the plea inquiry,” United
States v. Goodman, 70 M.J. 396, 399 (C.A.A.F. 2011) (quoting
United States v. Smauley, 42 M.J. 449, 452 (C.A.A.F. 1995)),
it is clear that Appellant’s actions satisfied the elements of
the bank fraud statute. We highlight the fact that the statute
“punishes not [only] ‘completed frauds,’ but . . . [also] fraudu-
lent ‘scheme[s],’ ” Loughrin v. United States, 573 U.S. 351, 364
6
United States v. Moratalla, No. 21-0052/NA
Opinion of the Court
(2014) (alteration in original) (emphasis added) (quoting
Neder v. United States, 527 U. S. 1, 25 (1999)), including at-
tempted fraudulent schemes.
In light of Appellant’s conduct and the breadth of this stat-
ute, we conclude that Appellant’s actions constituted—at a
minimum—an attempt to execute a scheme to defraud ABNB.
“To be guilty of an attempt . . . the defendant [must] (1) [have]
had the intent” to commit the substantive offense, “and (2)
[have taken] a substantial step toward” its completion. United
States v. Winckelmann, 70 M.J. 403, 407 (C.A.A.F. 2011).4 In
the instant case, Appellant’s stipulation of fact and her state-
ments during the plea colloquy established that: Appellant
4 In United States v. Schell, we held that, “because [the military
judge] failed to instruct [the appellant] that he had to take a sub-
stantial step . . . in order to plead guilty to an attempt under Article
134, UCMJ,” the appellant’s plea was improvident. 72 M.J. 339, 346
(C.A.A.F. 2013). That case is distinguishable, however, because
here the substantive bank fraud statute incorporates attempt as an
avenue of liability. See 18 U.S.C. § 1344 (2018). Because the mili-
tary judge correctly referenced attempt as a mode of liability when
explaining the offense to Appellant, and because Appellant stated
facts amounting to an attempt, Appellant’s plea was provident.
We note, however, that Appellant did not expressly use the term
“attempt” in the portion of the stipulation of fact that addressed
Charge V, Specification 2. Appellant’s stipulation for this specifica-
tion expressly admitted only that she “knowingly executed a
scheme to defraud ABNB.” Nevertheless, the specification included
as a mode of liability an “attempt to execute a scheme or artifice to
defraud,” and on more than one occasion during the plea inquiry,
the military judge explained that Appellant could be guilty on the
basis either that she “knowingly executed or attempted to execute
a scheme to defraud a financial institution.” (Emphasis added.) Ap-
pellant was therefore sufficiently informed of the fact that the of-
fense to which she was pleading guilty included attempt as an ave-
nue of liability. Thus, although Appellant was not charged with an
attempt under Article 80, UCMJ, 10 U.S.C. § 880 (2018), her plea
was provident on an attempt theory of liability because her plea
expressly adopted the “attempt” language contained within the
bank fraud statute itself.
7
United States v. Moratalla, No. 21-0052/NA
Opinion of the Court
concocted a “plan, pattern or course of action” designed to de-
fraud5 by obtaining an auto loan from ABNB predicated on
statements which Appellant believed to be false; Appellant
had the specific intent to defraud the credit union; and Appel-
lant took a substantial step in furtherance of the scheme to
defraud when she met with BM2 Whiskey at ABNB federal
credit union to apply for the loan.
In sum, contrary to Appellant’s argument, it is irrelevant
to the disposition of this case whether or not Appellant actu-
ally sold her vehicle to BM2 Whiskey when she transferred
the title to him. At the time this transaction occurred, Appel-
lant subjectively believed that her actions would not effect a
car sale and intended that ABNB would rely to its detriment
on representations she believed to be false. Such actions
clearly amount to an “attempt[] to execute[] a scheme . . . to
defraud.” 18 U.S.C. § 1344 (2018). We therefore conclude
there is nothing in the record that raises “a substantial ques-
tion regarding the appellant’s guilty plea.” Inabinette, 66 M.J.
at 322.6
IV. Decision
We hold that the military judge did not abuse his discre-
tion by accepting Appellant’s guilty plea because the facts
elicited provided a sufficient basis for the plea to the offense
5 Black’s Law Dictionary similarly defines “scheme” as “[a] sys-
temic plan” or “[a]n artful plot or plan.” Black’s Law Dictionary
1612 (11th ed. 2019).
6 Just as an appellant’s “belief in the truth of the misrepresen-
tations may negate intent to defraud,” United States v. Molinaro,
11 F.3d 853, 863 (9th Cir. 1993) (quoting United States v. Benny,
786 F.2d 1410, 1417 (9th Cir. 1986)), an appellant’s belief in the
falsity of his or her statements tends to establish the intent to de-
fraud. See Benny, 786 F. 2d at 1417 (noting that an accused’s ad-
mission “that he falsified information submitted to . . . loan officers”
meant that he “was not entitled to an intent to repay defense in [a]
mail fraud instruction” because intentional misrepresentations are
inconsistent with the notion that the accused had a lawful intent);
Podany v. Robertson Stephens, Inc., 318 F. Supp. 2d 146, 154
(S.D.N.Y. 2004) (“[S]ubjective intent to commit fraud is a wholly
separate inquiry from whether the statement is objectively true.”).
8
United States v. Moratalla, No. 21-0052/NA
Opinion of the Court
as charged. Therefore, the decision of the United States Navy-
Marine Corps Court of Criminal Appeals is affirmed.
9