U.S. v. Heath

UNITED STATES COURT OF APPEALS
for the Fifth Circuit
_____________________________________
No. 91-1112
_____________________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
SIMON EDWARD HEATH and PAUL SAU-KI CHENG,
Defendants-Appellants.
______________________________________________________
Appeals from the United States District Court
for the Northern District of Texas
______________________________________________________
(August 20, 1992)
Before HIGGINBOTHAM and DUHÉ, Circuit Judges and HUNTER,
District Judge.1
DUHÉ, Circuit Judge:
Defendants-Appellants Simon Heath and Paul Cheng were
convicted of numerous counts of bank fraud, wire fraud,
misapplication of funds, false entries, and interstate
transportation of funds obtained by fraud. They seek reversal of
their convictions. Because we find two counts of the indictment
multiplicitous, we remand in part. The remaining convictions are
affirmed.
BACKGROUND
Cheng and Heath were founding partners of Pacific Realty
Corporation (PRC), a large national real estate development
1
Senior District Judge of the Western District of Louisiana,
sitting by designation.
company. In 1984, PRC and Cheng and Heath, individually,
acquired Guaranty Federal Savings & Loan, a Dallas savings and
loan then in receivership. The purchase agreement contained a
forbearance clause exempting Guaranty from banking regulations
that prohibit loans to insiders. Thus, Guaranty was authorized
to loan money to PRC and its clients.
Soon after acquiring Guaranty, PRC bought forty-two acres of
land in Florida for development. Problems occurred, however,
when the local government imposed a sewer moratorium. At the
same time, the company with which PRC had planned to develop the
land withdrew from the deal. Cheng and Heath then tried to sell
the land, but were unsuccessful.
In December 1985, Cheng and Heath made a deal with Don
Farris, of the Don Companies, an Arizona real estate development
company. Farris, a major borrower at Guaranty, was to buy almost
thirty acres of the Florida property for $10 million with money
loaned to him by Guaranty. The loan would be non-recourse and
collateralized solely by the Florida property. Farris would then
establish a $2 million reserve account to pay interest on the
loan, funded with proceeds from the sale to PRC of property he
owned in Arizona. PRC agreed to buy the Arizona property with
$3.3 million loaned to it by Guaranty and secured solely by the
property.
The $10 million loan from Guaranty to Farris required a
loan-to-property value ratio of ninety percent. For the deal to
be successful, therefore, the Florida property had to be
2
appraised at $11 million, more than twice the value quoted to
Cheng and Heath during their earlier unsuccessful attempts to
sell the property. In an effort to obtain such a favorable
appraisal, Heath, in the presence of Cheng and another PRC
employee, directed Ben Romero, an officer of PRC, to secure an
appraisal on an "as built basis" by informing the appraisers that
twin highrise apartment towers would be built on the land. At
the time, Cheng and Heath had no intention of actually building
the highrises. Based on this misrepresentation, Romero obtained
a preliminary opinion letter from Marshall & Stevens, a Chicago
appraisal firm, appraising the full 42.40 acres at $11.2 million.
Marshall & Stevens was not aware that its preliminary letter was
going to be used to close the Guaranty/Farris loans, and the
letter was technically deficient for such purposes. Using this
letter, however, PRC and Farris closed the deal on January 17,
1986. On January 18, at Cheng and Heath's request, Marshall &
Stevens sent PRC a corrected back dated letter, addressed to
Guaranty and appraising only the thirty acres of property sold to
Farris.
Although it corrected its original letter, Marshall &
Stevens did not immediately provide Guaranty with the necessary
full narrative appraisal because it was unable to verify its
initial $11.2 million estimate. In light of the zoning laws and
sewer moratorium, one Marshall & Stevens's appraiser suggested
that the Florida property was worth less than half of the $11.2
million evaluation. In the meantime, in March 1986, the Federal
3
Home Loan Bank (FHLB) discovered that the loan had been made
without the required full narrative appraisal.
To provide Marshall & Stevens with a factual basis for the
$11.2 million figure, Romero made to them specific false
representations about the development potential of the Florida
property, including assurances that sewer and treatment
facilities were available, that the density of the purported twin
towers was permissible under current zoning, and that it was
physically possible to build the highrises on the land. Based on
these misrepresentations, Marshall & Stevens completed the full
narrative appraisal for $11.2 million.
For their participation in the scheme, the Government
brought a seventeen count indictment against Cheng and Heath.
Count one alleged conspiracy, counts two and three alleged bank
fraud based on the loans for $10 million and $3 million procured
from Guaranty. Counts four through seven alleged wire fraud,
misapplication of funds, and false entries. The final ten counts
were for interstate transportation of funds obtained by fraud,
based on Cheng and Heath's use of funds obtained through the
Florida deal to purchase stock from a New York broker.
ANALYSIS
Together, the Defendants attack their convictions on many
grounds. Initially, they charge that the indictment was
multiplicitous with regard to the two bank fraud charges stemming
from a single transaction. Next they attack the sufficiency of
the evidence on all counts, asserting that the evidence did not
4
support the finding of fraud necessary to each count. They also
claim that their convictions for interstate transportation of
fraudulently obtained funds fail because the Government did not
prove that each individual transfer involved proceeds of a
fraudulent transaction. Finally, they cite numerous trial
errors, including prosecutorial misconduct, mistakes in the
district court's evidentiary rulings, and flaws in the district
court's instructions to the jury.
I. Indictment Multiplicity
"'Multiplicity' is charging a single offense in more than
one count of an indictment." United States v. Lemons, 941 F.2d
309, 317 (5th Cir. 1991). The Defendants argue that Counts 2 and
3 of their indictments, which charged them with bank fraud under
18 U.S.C. § 1344, are multiplicitous in that each of the counts
seeks to punish them for participation in the same scheme against
Guaranty. The Government counters that each transaction, the
$3.3 million Phoenix loan and the $10 million Florida loan, must
be viewed as subjecting Guaranty to separate risks of loss,
giving rise to multiple liability under the statute.
In Lemons, we stated that "the bank fraud statute imposes
punishment only for each execution of the scheme." Id. at 318.
Thus, unlike the mail or wire fraud statues, the bank fraud
statute does not allow punishment for each act in execution of a
scheme or artifice to defraud. Id. Although we so interpreted
the bank fraud statute, we expressly declined to hold that "the
execution of a scheme cannot result in the imposition of multiple
5
liability . . . . Id. n.6. Our note specifically referred to
United States v. Farmigoni, 934 F.2d 63 (5th Cir. 1991), cert.
denied, 112 S. Ct. 1160 (1992). Farmigoni, in contrast to this
case and Lemons, involved a scheme to defraud two different
banks, giving rise to prosecution in each of the banks' home
states. Although both indictments in Farmigoni arose from the
same scheme, "neither require[d] proof of intent to defraud the
other unnamed financial institution." Id. at 66. The instant
scheme involves intent to defraud only one bank, Guaranty, albeit
by procuring two loans. The two loans, however, were integrally
related; one could not have succeeded without the other. Indeed,
the sale of the Phoenix property was conceived for the sole
purpose of facilitating the Florida sale.
Although a two-loan scheme may subject an institution to
greater risk than a scheme involving only one transaction, it is
the execution of the scheme itself that subjects a defendant to
criminal liability, not, as we stated in Lemmons, the execution
of each step or transaction in furtherance of the scheme.
Because the Defendants' indictments sought to punish them for
execution of the multiple steps involved in the scheme, the
counts are multiplicitous. Therefore, we remand the case with
the instruction to the Government to choose the count it wishes
to leave in effect. The district court then should vacate the
convictions on the remaining count and resentence Heath and
Cheng. See United States v. Saks, 964 F.2d 1514, 1526 (5th Cir.
1992); United States v. Moody, 923 F.2d 341, 347-48 (5th Cir.),
6
cert. denied, 112 S. Ct. 80 (1991).
II. Sufficiency of the Evidence
Convictions must be affirmed if the evidence, viewed in the
light most favorable to the verdict, with all reasonable
inferences and credibility choices made in support of it, is such
that any rational trier of fact could have found the essential
elements of the crime beyond a reasonable doubt. Jackson v.
Virginia, 443 U.S. 307, 319 (1979); United States v. Kim, 884
F.2d 189, 192 (5th Cir. 1989). In making this determination, we
need not exclude every reasonable hypothesis of innocence.
United States v. Henry, 849 F.2d 1534, 1536 (5th Cir. 1988).
Juries are free to use their common sense and apply common
knowledge, observation, and experience gained in the ordinary
affairs of life when giving effect to the inferences that may
reasonably be drawn from the evidence. United States v. Cruz-
Valdez, 773 F.2d 1541, 1546-47 (11th Cir. 1985) (en banc), cert.
denied, 475 U.S. 1049 (1986).
A. Fraud
Each of the fraud-based charges relies on the twin highrise
apartment tower statement used in the Marshall & Stevens
appraisal. The Defendants contend that the statement was not a
material misrepresentation and, therefore, could not support
their convictions. They suggest that representations that should
have no effect on the party to whom they are made, no matter how
intentional, cannot be material. In other words, because
Marshall & Stevens had a professional duty to independently
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investigate the highest and best use of the Florida land, the
owners' plans for development could not influence the appraisal,
and, therefore, are immaterial to the appraisal.
The Government responds that despite the appraisers' ethical
duty, the twin tower statement was made with the intent to
influence the appraisal and did, in fact, do just that. Implicit
in the highrise description, the Government argues, is a
representation of density per acre. This particular physical
plan, the Government explains, was the only one that could
sustain the density supporting the valuation, as well as zoning
requirements, such as parking and green spaces.
A statement is material if it "has a natural tendency to
influence, or was capable of influencing the decision of" the
lending institution. Kungys v. United States, 485 U.S. 759, 770
(1988); Theron v. United States Marshal, 832 F.2d 492, 496-97
(9th Cir. 1987), cert. denied, 486 U.S. 1059 (1988). The
highrise misrepresentation was necessary to the $11.2 million
appraisal which, in turn, was necessary to PRC's procuring the
loan from Guaranty. We conclude, therefore, that the statement
was material to Guaranty's decision. Proof that Romero made the
misrepresentations at Heath and Cheng's bequest, therefore, was
sufficient to support their fraud-based convictions.
B. Individual Transfers
The Defendants argue that their convictions for interstate
transportation of funds obtained by fraud should be reversed
because the Government failed to prove beyond a reasonable doubt
8
that any individual transfer involved the proceeds of the illegal
deal. The proceeds of the fraudulent transaction were commingled
with over $700,000 of untainted money. Because none of the
transfers named in the indictment exceeded $700,000, the
Defendants contend, none necessarily involved funds obtained by
fraud. In the aggregate, the transfers listed in the indictment
well exceeded $700,000.
In United States v. Poole, 557 F.2d 531 (5th Cir. 1977), we
reversed a defendant's conviction for interstate transportation
of funds obtained by fraud because his account contained enough
untainted funds to pay the check in question without using the
funds obtained fraudulently. Id. at 535-36. We noted
specifically, however, that we were not confronted with the issue
present here, that is, the situation in which there are
insufficient untainted funds to cover all the checks in question.
Id. at 536 n.8.
In United States v. Levy, 579 F.2d 1332 (5th Cir. 1978),
cert. denied, 440 U.S. 920 (1979), we addressed that question,
affirming the defendant's conviction although he had mingled
legitimately obtained funds with those obtained by fraud. Levy
differs from the instant case, however, in that each check
written exceeded the amount of clean funds. Id. at 1334, 1337.
The Defendants, focussing on each transfer in isolation,
insist that Poole, not Levy, applies because there were clean
funds sufficient to cover each transfer. To view each
transaction in isolation, however, would defeat the purposes of
9
the statute, allowing sophisticated criminals "to spirit stolen
funds from one state to another," Levy, 579 F.2d at 1337, so long
as each check written did not exceed the amount of legitimate
funds on hand in the bank account. "[A] criminal statute should
be fairly construed in accordance with the legislative purpose
behind its enactment." Levy, 579 F.2d at 1337 (citing United
States v. Turley, 352 U.S. 407 (1957)). We thus decline to
extend Poole to the case at hand.
The Government established that Heath and Cheng deposited
$6,053,204.93 of loan proceeds into an account containing
$454,518.49 of untainted funds. In that account, the Defendants
placed an additional $332,162.50 of clean funds, and the bank
contributed interest totalling $12,600.56. Thus, the Government
proved that between January 21, 1986 and February 25, 1986, the
account held $6,053,204.93 tainted funds and $799,281.55 clean
funds (counting all of the interest paid as clean). By February
4, the date of the first transfer cited in the indictment, the
Defendants had reduced the account balance to $3,988,519. From
this amount, they transferred a total of $2,155,508 to a New York
broker. Even assuming that none of the clean funds were removed
before February 4, it is obvious that the $799,281.55 could not
have covered all of the transfers to New York. At least
$1,356,126.45 in tainted funds was transferred to New York. It
defies logic to require that the Government trace these tainted
funds through each transfer. Such proof is impossible because
money is fungible. United States v. Banco Cafetero Panama, 797
10
F.2d 1154, 1158 (2d Cir. 1986). The impossibility of such proof,
however, does not render the convictions invalid. We are
satisfied that, having proved beyond a reasonable doubt that the
aggregate taken from the account exceeded the amount of clean
funds available, the Government met its burden.
Moreover, we are unpersuaded by Defendant Cheng's
contentions that the Government failed to prove that he had
knowledge of the transfers. Viewed in the light most favorable
to the verdict, the evidence established that Cheng oversaw the
financial affairs of PRC and was aware of the stock purchases.
In this light, the evidence permits the inference that he
understood how those purchases would be paid for.
III. Trial Errors
A. Prosecutorial Misconduct
During the trial, the Government questioned several
witnesses about the use of the Florida property following the
sale to Farris. The Defendants contend that these questions
exceeded the limits imposed by the district court on testimony
regarding the status of the land after the closing. The
Government notes, however, that the district court limited
testimony regarding only the value of the Florida property, not
all subjects having to do with it. It argues that its questions
were relevant to show the control exercised over the property by
the Defendants and their continued efforts to develop and sell
the property to prove that the sale to Farris was a sham
warehousing transaction.
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The trial court specifically restricted testimony regarding
the value of the property to a six month period surrounding
closing. The court, however, declined to adopt a similar rule
for evidence of development, deciding instead to rule on such
evidence on a case-by-case basis. Nonetheless, the court
requested that the Government not ask open-ended questions of the
witnesses on that subject. After careful review of the
Government's questions, we find no violation of the guidelines
set by the district court.
The Defendants next argue that the prosecutors tainted the
trial by deliberately eliciting inflammatory hearsay statements
from Scott Smith, Vice President and Senior Loan Officer of
Guaranty during redirect examination by the Government. During
Smith's cross-examination, the Defendants inquired whether the
Florida loan had aroused Smith's attention in any way. On
redirect, the Government pursued this line of questioning, asking
whether Smith had reported the loan to any of his senior
officers. Smith testified, "I told Mr. Thompson that there was
some concern being voiced about the loan, that it may be a sham
loan to get money into Pacific Realty." Defense counsel
immediately objected, and the court retired the jury. When the
jurors returned, they were instructed to ignore the last of
Smith's statements because it was hearsay.
We disagree with the district court's description of the
statements. Hearsay "is a statement, other than one made by the
declarant while testifying at trial or hearing, offered to prove
12
the truth of the matter asserted." Fed. R. Evid. 801(c).
Smith's statement was not offered to show that the loan was a
sham, but to reveal whether the loan had aroused his suspicions
and whether Smith had notified any other bank officer about it.
It was not hearsay, and its introduction, therefore, did not
constitute reversible error. Finally, the Defendants
complain that several statements made by the prosecutor in
closing argument were wholly frivolous and prejudicial.
Specifically, the Defendants point to several instances when the
prosecutor allegedly vouched for a Government witness. They also
refer to the prosecutor's remarks about the Defendants' failure
to explain the twin tower concept. And, last, the Defendants
allege that the prosecutor implied that they should be punished
for violations of civil regulations as well as criminal statutes.
We find none of these arguments persuasive.
The Government's remarks about Mr. Kuhn's testimony merely
pointed out that the Defendants' attacks on his credibility were
unsuccessful. The statements do not rise to the level of
vouching, most often described by this Court as "explicit
personal assurances of the witnesses veracity." United States v.
Binker, 795 F.2d 1218, 1224 (5th Cir. 1986), cert. denied, 479
U.S. 1085 (1987). The Government's references in rebuttal to the
Defendants' failure to explain the twin tower concept similarly
identified holes in the Defendants' defense theory, in this
instance, by pinpointing a weakness in their evidence. Finally,
a review of the record does not reveal an attempt by the
13
prosecutor to imply that violations of civil regulations should
lead the jury to punish the Defendants. Rather, the prosecutor's
unspecific reference to "rules and regulation" was made as part
of an expansive illustration of the Defendants' general
disrespect for the law.
B. Evidentiary Rulings
1. Kuhn Testimony
The trial court limited the testimony of one of the
Defendants' allegedly key witnesses, Michael Kuhn, a real estate
lawyer, who would have testified about the use of non-recourse
loans to execute real estate deals. The trial court limited the
testimony because Kuhn would be "testifying to his own experience
and impressions," leaving the Government no means to question his
accuracy. The court further stated that Kuhn's testimony on the
subject was impermissible because "there [were] no partial
studies, no statistics from which would give rise to any reliable
inferences. No testing the accuracy of the witness's opinion."
Rule 702 of the Federal Rules of Evidence permits one
"qualified as an expert by knowledge, skill, experience,
training, or education" to testify when his "specialized
knowledge will assist the trier of fact to understand the
evidence or to determine a fact issue." Fed. R. Evid. 702. As a
general rule, "questions relating to the bases and sources of an
expert's opinion affect the weight to be assigned that opinion
rather than the admissibility and should be left for the jury's
consideration." Viterbo v. Dow Chem. Co., 826 F.2d 420, 422 (5th
14
Cir. 1987). We find that in light of these rules, the limitation
of Kuhn's testimony was in error. Kuhn had specialized knowledge
and experience in the field of real estate closings, which were
beyond the knowledge and skills of the jurors. The absence of
scientific data supporting his opinions went to the weight the
jury should have accorded them. The error, however, was
harmless.
Information about non-recourse loans was available from
other witnesses. The limitation of Mr. Kuhn's testimony,
therefore, did not so hamper the Defendants' ability to present
their defense as to mandate reversal of their convictions.
2. Romero Rehabilitation
The Defendants wished to examine Michael Carnes, the lawyer
representing Ben Romero, a key participant in the appraisal
scheme. The Defendants proffered Carnes in an attempt to
rehabilitate Romero's credibility, which the Government had
attacked by introducing prior inconsistent statements made by
Romero before the grand jury following his plea agreement with
the Government. Carnes was to testify about the tactics used by
the Government allegedly to coerce Romero into pleading guilty.
The district court, however, correctly excluded Carnes's
testimony because it was not probative of Romero's
inconsistencies or impeachment.
Rule 613(b) of the Federal Rules of Evidence requires that a
witness be "afforded an opportunity to explain or deny"
inconsistent statements proven by extrinsic evidence. It does
15
not mandate the examination of corroborating witnesses. To the
contrary, it is within the trial court's broad discretion to set
reasonable limits on rehabilitative testimony to prevent the
trial from meandering off into collateral matters. Beck v.
United States, 317 F.2d 865, 870 (5th Cir. 1963), cert. denied,
376 U.S. 972 (1964).
C. Instructions
1. Allen Charges
After the jury deliberated for seven days, it informed the
court that it was deadlocked. The court then read the jury an
Allen charge2, but, over counsel's objections, omitted from the
charge language that the court believed coercive. In particular,
the district court omitted language encouraging the "majority"
and "minority" to reconsider their positions. It also failed to
repeat that the jury should not convict unless convinced of the
Defendants guilt beyond a reasonable doubt. The first omission,
the Defendants argue, had a coercive effect on the jury. The
second eliminated an essential reminder about the Government's
burden of proof.
We review Allen charges for compliance with two
requirements: "'(1) the semantic deviation from approved Allen
charges cannot be so prejudicial as to require reversal, and (2)
the circumstances surrounding the giving of an approved Allen
charge must not be coercive.'" United States v. Lindell, 881
2
"Allen" refers to Allen v. United States, 164 U.S. 492 (1896).
The term describes supplemental instructions urging jurors to
forego their differences and reach a unanimous verdict.
16
F.2d 1313, 1321 (5th Cir. 1989) (quoting United States v. Bottom,
638 F.2d 781, 787 (5th Cir. Unit B Mar. 1981)), cert. denied, 493
U.S. 1087 and 496 U.S. 926 (1990). The district court is given
broad discretion to determine whether an Allen charge might
coerce a jury. United States v. Reeves, 892 F.2d 1223, 1229 (5th
Cir. 1990).
In light of the complexity of the case, the sophistication
of the bank fraud scheme, and the length of the indictment, the
court did not err in giving the jury an Allen charge rather than
declaring a mistrial. See Lindell, 881 F.2d at 1321. Although
the court deviated from the Fifth Circuit's suggested Allen
charge, the modification was not so significant as to coerce the
jury to reach its verdict. Although the court did not address
the jurors in terms of majority and minority, it did properly
instruct all of them to reconsider their opinions, but not to
"surrender a conscientiously held conviction merely to reach a
verdict." The Defendants' contention that the jury's continued
deliberation is proof of the coercive effect of the instruction
does not convince us otherwise. We note, in fact, that the
jury's verdict was a discriminating one -- after further
deliberation, the jury remained deadlocked on two counts and
acquitted the Defendants of several others.
Nor do we find omission of the reasonable doubt language to
be reversible error. The jury was reminded at least thirty-fives
times in the court's final jury charges that the Government had
to prove the elements of the crimes beyond a reasonable doubt.
17
It also was informed of this burden of proof during jury
selection and closing arguments. Additionally, the court
provided the jurors with a written copy of the final charges
during deliberations. In light of these constant reminders of
the Government's burden, we conclude that the omission of the
reasonable doubt language from the Allen charge does not require
the reversal of the Defendants' convictions.
2. Literal Truth
The Defendants claim that they were entitled to a charge
instructing the jury that if the appraisal represented the
literal truth, they could not be found guilty of making false
entries for the purposes of 18 U.S.C. § 1006. The underlying
foundation of the Defendants' argument, however, misconstrues the
law. "The prohibition of false entries by [section 1006] is in
broad and comprehensive terms." United States v. Meyer, 266 F.2d
747, 754 (5th Cir.), cert. denied, 361 U.S. 875 (1959). Mr.
Justice Cardozo, in describing 12 U.S.C. § 592, a forerunner of
the modern bank fraud statutes, defined false entries to include
"any entry on the books of the [institution] which is
intentionally made to represent what is not true or does not
exist, with the intent to deceive [the institution's] officers or
to defraud the association." United States v. Darby, 289 U.S.
224, 226 (1933) (quoting Agnew v. United States, 165 U.S. 36, 52
(1897)).
The appraisal entered by Cheng and Heath on the Guaranty
books was prepared by professional appraisers and revealed the
18
false assumptions on which it is based, but its purpose was to
represent to Guaranty that the Florida property was worth $11.2
million because highrise apartment towers would be built on it.
That representation is not true; the plan to build the highrise
towers did not exist at the time the appraisal was entered. The
entry of the appraisal based on knowingly false assumptions with
the intent to defraud Guaranty falls well within the terms of
section 1006. The court, therefore, did not err in rejecting the
"literal truth" instruction proffered by the defense.
3. Good Faith Defense
After lengthy discussions about the Defendants' request for
an instruction explaining their good faith defense, the court
instructed the jury that "one who acts with honest intent is not
chargeable with intent to defraud." The Defendants contend that
the word "chargeable" as used in the instruction eliminated their
entire defense, in effect telling the jury that the Defendants
could not have acted in good faith because they in fact had been
"charged" with the offenses.
The Government notes that despite the debate in the trial
court surrounding this instruction, the Defendants did not raise
this point of error. A party may not state one ground when
objecting to an instruction and attempt to rely on a different
ground for the objection on appeal. 9 Charles A. Wright and
Arthur Miller, § 2554 at 647; Palmer v. Hoffman, 318 U.S. 109,
119 (1943). Our review of this claim, therefore, is limited to
plain error.
19
Although subject to the interpretation now suggested by the
Defendants, it is not obvious to us that the word "chargeable" in
the present context would so confuse the jurors. Inartful as the
court's choice of words may have been, it does not rise to the
level of plain error.
4. Expansion of the Indictment
The Defendants next object that the court's instructions
regarding false entry and misapplication of funds permitted the
jury to find them guilty for acts not charged in the indictment.
First, they argue that because the indictment referred to the
Defendants as officers, directors, and shareholders only, the
court erred when it instructed the jury that the Defendants were
responsible for their actions as "officer[s], agent[s], or
employee[s] of or connected in any capacity with" the
institution. The Defendants objected to the instruction in the
district court, but they did not do so on the ground that the
instruction expanded the indictment. Thus, we review for plain
error only.
The trial court's instruction does not amount to plain
error. The court first read the indictment, referring to the
Defendants as officers, directors, and shareholders of Guaranty.
It then read the applicable statutes to the jury, both of which
apply to "officer[s], agent[s], or employee[s] of or connected in
any capacity with" the institution. 18 U.S.C. §§ 657 & 1006.
Then the court listed the elements of the offenses, repeating, as
the first element of each, the requirement that the Defendants be
20
"officer[s], agent[s] or employee[s]."
To the extent that the instructions mandated this finding,
they were unnecessary because the parties had stipulated that the
Defendants were directors of Guaranty. Though superfluous, the
instructions did not expand the indictment to allow the jury to
convict the Defendants for actions taken in a capacity other than
officer or director.
The Defendants next contest the court's charge regarding
materiality. They argue that by instructing the jury that entry
of the appraisal was material, rather than that the false
highrise statement was material, it permitted the jury to convict
them based on any false statement contained in the appraisal,
whether made by them or not. The Defendants properly objected on
these grounds in the district court.
We review a jury instruction to determine whether "'the
court's charge, as a whole, is a correct statement of the law and
whether it clearly instructs jurors as to the principles of law
applicable to the factual issues confronting them.'" United States
v. Stacey, 896 F.2d 75, 77 (5th Cir. 1990) (quoting United States
v. August, 835 F.2d 76, 77 (5th Cir. 1987)). "A trial judge is
given substantial latitude in tailoring the instructions so long as
they fairly and adequately cover the issues presented." United
States v. Pool, 660 F.2d 547, 558 (5th Cir. Unit B Nov. 1981).
The court's instruction on false entries properly advised the
jury of the charges pending against the Defendants and the elements
of those crimes. The potential for confusion arising from the
21
court's reference to materiality does not negate this finding. The
court specifically instructed that the indictment charged only the
highrise statement to Defendants. S.R. 33, p. 55. We are
satisfied, therefore, that as a whole, the instruction fairly and
adequately informed the jury of the pertinent issues.
5. Clean Funds
The Defendants finally claim that they were entitled to a
charge that if there were untainted funds in their account
sufficient to cover each of the alleged interstate transfers, then
the jury should find the Defendants not guilty of interstate
transfer of funds obtained by fraud. As the discussion above
explains, supra II. B., this requested instruction does not
accurately reflect the law.
CONCLUSION
Because counts 2 and 3 of the Defendants' indictments are
multiplicitous, we REMAND the case for dismissal of one count and
resentencing. The remaining convictions are AFFIRMED.
REMANDED WITH INSTRUCTIONS and AFFIRMED IN PART.
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