United States v. Hord

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 91-6261
_____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
DOUGLAS JAMES HORD,
Defendant-Appellant.
____________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
_____________________________________________________
(October 22, 1993)
Before KING and BARKSDALE, Circuit Judges, and PARKER, District
Judge.1
BARKSDALE, Circuit Judge:
This appeal concerns, inter alia, multiplicious convictions
for bank fraud, and turns, once again, on the question of when a
"scheme" is "executed" for purposes of the bank fraud statute, 18
U.S.C. § 1344(a)(1). Douglas James Hord was convicted on 19
counts: nine for executing and attempting to execute a scheme to
defraud a federally insured bank, in violation of § 1344(a)(1); and
ten for making false statements to the bank, in violation of 18
U.S.C. § 1014. He was sentenced, inter alia, to 19 concurrent six-
1
Chief Judge of the Eastern District of Texas, sitting by
designation.
month terms of imprisonment. We AFFIRM IN PART and REVERSE and
VACATE IN PART.
I.
Hord's convictions arose from a series of bank transactions
involving bogus checks,2 in which he participated in 1988.3 The
transactions for which Hord was indicted began in April 1988.4
2
The parties variously refer to the checks as "fake", "forged",
"counterfeit", "phony" and "bogus". We will use the term "bogus".
3
In 1987, Hord, an attorney with a history of financial
problems, became friends with John David Williams, an employee of
the Federal Deposit Insurance Corporation. Although Hord did not
testify at trial, he gave his probation officer the following
account of the scheme he and Williams developed: Williams
suggested to Hord that he knew a way to make a lot of money without
being caught. Williams had bought blank stock checks and a
routing/transit coder (with which to imprint checks with routing
numbers) at an FDIC auction; these could be used to print bogus
checks. Williams told Hord that he knew in advance which banks
were scheduled to be closed by the FDIC. Hord would open an
account in a bank scheduled for closing, using the bogus checks the
two had printed, signed, and endorsed. Once the bank closed, Hord
would immediately withdraw the funds from the account; Williams's
job was to "pull" the returned checks once the FDIC became
involved, thus covering up the evidence of the transactions.
4
Pursuant to Fed. R. Evid. 404(b), the government also
presented evidence of other similar transactions, beginning early
in 1988. In late March 1988, Hord deposited 16 counterfeit checks,
each for $950, into his business account at MBank. The checks were
payable to Coleman Construction and were signed, "Martin Van
Clark". In fact, however, Hord had signed the checks, forging Van
Clark's name. Hord was given credit for these checks, and withdrew
the money (approximately $15,000). MBank later learned the checks
were bogus because, although they purportedly were drawn on the
account of Van Clark Construction at Texas Commerce Bank, they had
routing and account numbers from an account at U.S. Bank and Trust
in New York. Hord's parents made restitution to MBank for these
funds.
In April 1988, Hord opened a "trust account" at Cy-Fair Bank
in Houston, and deposited a bogus check, payable to the Winifred
Mae Hunter estate. Hord quickly withdrew $2,438.45, the full
amount of the check, from this account. Cy-Fair was closed by the
FDIC shortly thereafter.
- 2 -
Using a $300 check drawn on his account at First Interstate Bank,
Hord opened a checking account at National Bank of Texas (NBT) in
Houston on April 20, 1988. He explained to the account
representative that he was an attorney, and would be using the
account as a trust account to probate the estate of a Florida
client.
Between April 21 and 26, 1988, five deposits were made to the
account. Hord first deposited three bogus checks into the NBT
account. The checks, accompanied by a deposit slip and totalling
$9,634.96, were made payable to the estate of Winifred Mae Hunter.
Later, Hord deposited another bogus check for $4,138, again using
a deposit slip. Again, the check was payable to the Hunter estate.
Bank employees immediately suspected a problem with the checks;
they were poorly printed on poor-quality paper, and had incorrect
routing numbers. Bank management notified the FBI, and told the
employees to continue accepting the checks, but to refuse to clear
them or tell Hord that he was under suspicion.
A few days later, Hord deposited three more bogus checks,
totalling $68,549.70, with a deposit slip. Three additional bogus
checks were also deposited into the account that day, by Hord or
someone else: one check for $82,500 in the first transaction; two,
totalling $57,425, in the second.5
Hord tried to make three withdrawals from the NBT account. On
April 22, he deposited a check for $16,000, drawn on the NBT
5
Hord's fingerprint was on the deposit slip submitted with the
$82,500 check; the signatures on the checks that day were forged by
Hord.
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account, into his account at MBank. It was later returned unpaid.
And, on or about April 26, he tried first to withdraw $1,000; he
was told the funds had not yet cleared. Later, he requested $250
at the drive-in window. Again, the bank refused to allow him to
make a withdrawal.
NBT was insured by the FDIC, which closed NBT in May 1988.
Sometime after this, First Interstate Bank returned to NBT the $300
check Hord had used to open the NBT account, because there were
insufficient funds in Hord's First Interstate account. Hord
received notice of a "charge back" for $300, as well as a charge
back for a $8,100 check drawn on a Florida bank, and payable to
Winifred Mae Hunter, estate trustee. NBT also advised Hord by
letter that his account had been closed and his records subpoenaed
by the FBI.
Hord was indicted in July 1990 on nine counts of executing and
attempting to execute a scheme to defraud NBT, in violation of 18
U.S.C. § 1344(a)(1); and ten counts of making false statements to
NBT, in violation of 18 U.S.C. § 1014. A jury convicted him on all
19 counts. After the verdict, the government moved for a downward
departure in sentencing, based on Hord's assistance in the
investigation and possible prosecution of Williams. See U.S.S.G.
§ 5K1.1(a). The trial court overruled Hord's objections to the
presentence report, but agreed to depart downward in accordance
with the government's recommendation. The applicable guidelines
range for sentencing was a term of imprisonment of 18-24 months.
After the downward departure, Hord was sentenced to six months in
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prison on each of the 19 counts, running concurrently. He was also
ordered to pay $2,438.45 in restitution,6 and a special assessment
of $50 per count (totalling $950). Finally, Hord was sentenced to
a two-year term of supervised release following his imprisonment on
counts one-nine, to run concurrently with a one-year term of
supervised release for counts ten-19.
II.
Hord contends that the nine bank fraud charges under § 1344
were multiplicious, with the sentences imposed as a result
violating the double jeopardy clause of the Fifth Amendment; and
that his convictions on the ten false statement counts must be
reversed, and those counts dismissed, because the government failed
to allege or prove a violation of § 1014.7
A.
Count one of the indictment charged that Hord had executed the
scheme by opening a trust account at NBT; counts two-six, that he
had executed the scheme by making the five deposits, or causing
them to be made; and counts seven-nine, that he had attempted to
6
The amount that Hord withdrew from Cy-Fair Bank, see supra
note 4.
7
Hord also appeals the restitution order. Because he
volunteered to pay restitution, any error in imposition of the
restitution order was invited, and cannot be raised on appeal.
See, e.g., Howell v. Gould, Inc., 800 F.2d 482, 487 (5th Cir.
1986); Farrar v. Cain, 756 F.2d 1148, 1151 (5th Cir. 1985), aff'd,
___ U.S. ___, 113 S. Ct. 566 (1992). Further, we find no plain
error in the restitution order. See United States v. Gaudet, 966
F.2d 959, 964 (5th Cir. 1992) (where defendant made no objection in
district court, restitution order will be reviewed only "under the
weak plain error lens"), cert. denied, ___ U.S. ___, 113 S. Ct.
1294 (1993).
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execute the scheme by attempting to withdraw funds from the account
on three occasions (on or about April 22 and 25).
Hord contends that all nine counts relate to the same offense
-- a single scheme to defraud a single financial institution.
Before trial, he moved, as required, to consolidate all nine counts
on the ground that they were multiplicious; the district court
denied the motion. Because, as hereinafter discussed, we agree
that counts one and seven-nine were multiplicious, we reverse those
convictions and vacate the sentences imposed pursuant to them.8 We
8
We note that, as a rule, an appeal cannot be based on
multiplicity where sentences are to be served concurrently. See,
e.g., United States v. Galvan, 949 F.2d 777, 781 (5th Cir. 1991).
However, in cases such as Hord's, where a monetary assessment is
also involved, a multiplicity claim still is viable. Id.; see also
Ray v. United States, 481 U.S. 736 (1987) (per curiam).
Normally, for convictions on multiplicious counts, "the remedy
is to remand for resentencing, with the government dismissing the
count(s) that created the multiplicity." United States v. Moody,
923 F.2d 341, 347 (5th Cir.), cert. denied, ___ U.S. ___, 112 S.
Ct. 80 (1991), quoted in United States v. Lemons, 941 F.2d 309, 317
(5th Cir. 1991) (per curiam). Generally, on remand, the government
elects which count(s) to dismiss, and the court resentences the
defendant on the remaining count(s). United States v. Brechtel,
997 F.2d 1108, 1112 (5th Cir. 1993) (per curiam); United States v.
Heath, 970 F.2d 1397, 1402 (5th Cir. 1992), cert. denied, ___ U.S.
___, 113 S. Ct. 1643 (1993); United States v. Saks, 964 F.2d 1514,
1526 (5th Cir. 1992). Here, however, we hold that counts one and
seven-nine created the multiplicity. Therefore, there is no need
for the government to make an election.
The government, which concedes multiplicity, does not request
resentencing. Furthermore, Hord has served his six-months'
imprisonment, and is on supervised release. And, the district
judge apparently relied heavily on the government's recommendation
for downward departure in calculating Hord's sentence. Based on
the record, we think the district court would impose the same
sentence on remand. Therefore, we see no need to remand for
resentencing on the counts we affirm. Cf. United States v.
Johnson, 961 F.2d 1188, 1189 (5th Cir. 1992) (citing Williams v.
United States, ___ U.S. ___, 112 S. Ct. 1112, 1120-21 (1992))
(remand for resentencing under guidelines unnecessary if the
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affirm the convictions and sentences imposed pursuant to counts
two-six.
Following Hord's conviction, we have had occasion to review
the issue of multiplicity under the bank fraud statute. See, e.g.,
United States v. Lemons, 941 F.2d 309 (5th Cir. 1991) (per curiam).
An indictment that charges a single offense in more than one count
is multiplicious. Id. at 317. The primary danger created by such
an indictment is that the defendant may receive more than one
sentence for a single offense, in violation of the double jeopardy
clause. Id. (quoting United States v. Swaim, 757 F.2d 1530, 1537
(5th Cir.), cert. denied, 474 U.S. 825 (1985)). We review such
issues de novo. See, e.g., United States v. Brechtel, 997 F.2d
1108, 1112 (5th Cir. 1993) (per curiam).
The crux of any argument that convictions are multiplicious
is, of course, what constitutes the offense charged. "``Whether a
continuous transaction results in the commission of but a single
offense or separate offenses ... is determined by whether separate
and distinct prohibited acts, made punishable by law, have been
committed.'" Swaim, 757 F.2d at 1536 (quoting United States v.
Shaid, 730 F.2d 225, 231 (5th Cir.), cert. denied, 469 U.S. 844
(1984)), quoted in Lemons, 941 F.2d at 317. Therefore, our first
task is to review what constitutes the offense of bank fraud under
§ 1344.9
"district court would have imposed the same sentence").
9
Hord was charged and convicted under former § 1344(a)(1). At
the time, § 1344(a) provided:
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In Lemons, we noted that "the bank fraud statute imposes
punishment ... for each execution of the scheme" to defraud, rather
than for each act in execution of the scheme. 941 F.2d at 318
(emphasis added). Lemons involved a fraudulent scheme to, inter
alia, procure $212,000 from a single financial institution;
however, the defendant received the money in a series of
transactions occurring over the course of several months. Id. We
held that the incremental movement of the benefit to the defendant
was "only part of but one performance, one completion, one
execution of that scheme." Id. Similarly, in United States v.
(a) Whoever knowingly executes, or attempts to
execute, a scheme or artifice --
(1) to defraud a federally chartered or
insured financial institution; or
(2) to obtain any of the moneys, funds,
credits, assets, securities or other property
owned by or under the custody or control of a
federally chartered or insured financial
institution by means of false or fraudulent
pretenses, representations, or promises, shall
be fined not more than $10,000, or imprisoned
not more than five years, or both.
18 U.S.C. § 1344(a) (1988), amended by 18 U.S.C. § 1344 (Supp. I
1989).
Former § 1344(b) defined "federally chartered or insured
financial institution" as used in § 1344(a). Id. at § 1344(b). In
1989, § 1344 was amended by, inter alia, deleting former part (b).
Former part (a) simply became § 1344. 18 U.S.C. § 1344, as amended
by Pub. L. No. 101-73, Title IX, § 961(k), 103 Stat. 500 (1989).
"Financial institution" is now defined in 18 U.S.C. § 20. Pub. L.
No. 101-73, Title IX, § 962(e), 103 Stat. 523 (1989). The amended
§ 1344 also changes the penalties for a violation of the section to
a fine of not more than $1,000,000 or imprisonment for not more
than 20 years, or both. 18 U.S.C. § 1344 (Supp. 1993); see also
United States v. Medeles, 916 F.2d 195, 196-97 and 197 n.1
(discussing amendments to § 1344).
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Heath, 970 F.2d 1397, 1402 (5th Cir. 1992), cert. denied, ___ U.S.
___, 113 S. Ct. 1643 (1993), we found a single execution of a
scheme to defraud, although the scheme involved procuring two
separate loans from a single financial institution. A critical
factor in our holding in Heath that there had been but a single
execution of the scheme was the fact that the two loans were
integrally related; neither could have succeeded without the other.
Id.
In Hord's case, the scheme to defraud, as stated in the
indictment,
consisted essentially of a plan to deposit forged
and counterfeited checks in a trust account opened
in the name of ... HORD and to withdraw the money
credited to that account as a result of those
deposits.
The government concedes, and we agree, that opening the account
(count one) did not constitute an execution of the scheme, but was
instead only a necessary act in preparation of the scheme. We,
therefore, hold that count one is multiplicious.
The transactions for which Hord was indicted are five deposits
(counts two-six), and three attempts to withdraw part of those
deposits (counts seven-nine). As stated, counts seven-nine
(withdrawal attempts) are multiplicious. It is the deposits, not
Hord's withdrawal attempts, that constitute executions of the
scheme. The attempted withdrawals were integrally related to the
deposits, and could not have succeeded without them. See Heath,
970 F.2d 1397. Further, the deposits, without more, satisfy §
1344's prohibition against "execut[ing], or attempt[ing] to
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execute, a scheme or artifice" to defraud the bank. 18 U.S.C. §
1344. While the term "scheme to defraud" in § 1344 is not "capable
of precise definition", United States v. Goldblatt, 813 F.2d 619,
624 (3d Cir. 1987), cited in Lemons, 941 F.2d at 315, we have no
doubt that Hord's making deposits using bogus checks with forged
signatures and in the name of a fictitious payee, satisfies the
requirements of the statute.10 Accord, United States v. Schwartz,
899 F.2d 243, 248 (3d Cir.) (holding that "in making each deposit
[defendant] was executing his scheme to defraud" bank), cert.
denied, 498 U.S. 901 (1990). In sum, the counts concerning Hord's
attempts to withdraw funds are multiplicious to those involving his
deposits.
Admittedly, the argument that a bogus check scheme of the sort
in issue is not executed until a withdrawal is attempted has
considerable force. The withdrawal is the final step -- it is to
place the funds in the defendant's hands. And, Lemons is strong
support for the rule that the scheme must be completed or performed
in order for it to be executed. 941 F.2d at 318.
On the other hand, Lemons also counsels that "the question in
each case is what constitutes an ``execution of the scheme'". 941
F.2d at 317 n.5. On the facts in this case, the scheme was
executed with the deposit of each bogus check, because that was the
event that triggered possible instant credit being given to the
10
We have previously defined the term "scheme" to include using
"fraudulent pretenses or misrepresentations intended to deceive
others to obtain something of value, such as money, from the
institution to be deceived." See Lemons, 941 F.2d at 314.
- 10 -
account and therefore available to Hord. How, and when, Hord
decided to use that hoped-for credit -- either by direct withdrawal
of cash or by drawing a check against it -- was up to him.
The deposits best gauge the extent of the possible loss, for
it may well be, as in this case, that the withdrawals will be for
a lesser amount. Moreover, it was the deposits that put the bank
at risk. And, risk of loss, not just loss itself, supports
conviction. United States v. Barakett, 994 F.2d 1107, 1111 (5th
Cir. 1993), petition for cert. filed (U.S. Sept. 22, 1993) (No. 93-
6128); Lemons, 941 F.2d at 316 n.3. No matter that, in this case,
the bank quickly discovered the scheme and avoided loss. With each
deposit, it was put at risk. Even after the scheme was discovered
and the bank was taking affirmative action to protect itself,
credit could have still been given through mistake or oversight.
In this case, to equate withdrawal (or its attempt) with
execution is to allow the bank to have been placed at risk five
times, but for Hord to have only executed the scheme three times.
What if Hord had not even attempted a withdrawal; surely it cannot
be said that he had not put the bank at risk? If, in a case of
this sort, a withdrawal must be attempted, even though the fraud is
known, the danger of additional loss builds while awaiting the
withdrawal attempt and, therefore, the occasion to charge fraud.
Section 1344 does not require that.
As noted supra, and as stated in Lemons, the question in each
case brought under § 1344 "is what constitutes an ``execution of the
scheme'". 914 F.2d at 317 n.5. We cautioned there that we did
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"not hold that the execution of a scheme cannot result in the
imposition of multiple liability under § 1344". Id. at 318 n.6.
Hord asserts that he can be convicted for only one execution; at
most, for three (the withdrawal attempts). We do not agree that
the transactions constituted but a single execution of the scheme.
Instead, as stated, we conclude that each deposit constituted a
separate execution of it. Unlike the situations in Heath and
Lemons, the deposits were not integrally related to one another,
such that none could have succeeded without the others. Proof of
Hord's intent to defraud NBT with each fraudulent deposit does not
require proof of any of the other deposits. See United States v.
Farmigoni, 934 F.2d 63 (5th Cir. 1991), cert. denied, ___ U.S. ___,
112 S. Ct. 1160 (1992) (involving a single scheme, executed two
times, in which two banks were defrauded).
Nor does the fact that a single bank was the victim
necessarily prove a single execution of the scheme. See Schwartz,
899 F.2d at 248 (holding each deposit of worthless checks into
account at single bank to be separate execution of single scheme),
cert. denied, ___ U.S. ___, 111 S. Ct. 259 (1990); United States v.
Poliak, 823 F.2d 371, 372 (9th Cir. 1987) (holding writing of ten
separate checks in check-kiting scheme to be ten separate
executions of scheme to defraud three banks), cert. denied, 485
U.S. 1029 (1988), cited with approval in Lemons, 941 F.2d at 317 &
n.5. As noted, a single scheme, if executed more than once, may
support multiple convictions. Lemons, 941 F.2d at 317. We hold
that each deposit constituted a separate execution of a single
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scheme to defraud NBT; and, therefore, we affirm Hord's convictions
and sentences on counts two-six of the indictment.11
B.
"To sustain a conviction under 18 U.S.C. § 1014, the
Government must demonstrate that (1) the defendant made a ``false
statement or report,' and (2) the defendant did so ``for the purpose
of influencing in any way the action of [a described financial
institution] ... upon any application, advance, ... commitment or
loan.... '" United States v. Bowman, 783 F.2d 1192, 1197 (5th Cir.
1986).12 For counts ten-19, Hord asserts that the government failed
11
As stated, we find Hord's behavior at NBT to have been
multiple executions of a single scheme. Hord used a single trust
account, representing that it was for the purpose of handling the
estate of a Florida client. In accordance with that
representation, each of the separate deposits contained similar
bogus checks payable to the same fictitious payee.
We note, however, that similar behavior, engaged in on
separate occasions, may sometimes constitute several separate
schemes to defraud a financial institution. See Barakett, 994 F.2d
1107. There, our court held that the defendant had engaged in four
separate schemes, pursuant to which he defrauded two banks.
Crucial to that holding was the fact that the defendant in Barakett
could
identify no linkage between the conduct charged in
counts one and two [i.e., to defraud the first
bank], or between that of counts three and four
[i.e., to defraud the second bank] other than
victim and modus operandi. Because counts one
through four involved separate fraudulent schemes,
separate sentencing present[ed] no multiplicity
problem.
Id. at 1111.
12
18 U.S.C. § 1014 makes it a crime to
knowingly make[] any false statement ... for the
purpose of influencing in any way the action of ...
any institution the accounts of which are insured
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to either charge or prove an offense under § 1014, contending that
it failed to either allege in the indictment or prove at trial that
he made a false statement, or that he did so for the purpose of
influencing the bank in a lending activity. Hord maintains, first,
that checks are not "false statements" for § 1014 purposes; and
second, that he made no representation for the purpose of obtaining
an advance, loan, or similar commitment from the bank. We
disagree. We address these contentions initially as they concern
the indictment, and then as they concern the proof.
1.
Hord contends that the government did not sufficiently allege
in the indictment that he made any "false statement" under the
terms of § 1014. He also contends that the government failed to
allege in the indictment that he had acted with the purpose of
influencing the bank's action with respect to one of the
transactions specified in § 1014. The indictment stated, in counts
ten through 19, that Hord
did knowingly make a false statement ... for the
purpose of influencing the action of the National
Bank of Texas, the deposits of which were then
insured by the [FDIC] ... in that [Hord] submitted
forged and counterfeited checks ..., in order to
induce the bank to credit his account
accordingly[.]
(Emphasis added.)
Before trial, Hord moved unsuccessfully to dismiss the
indictment for failing to allege a violation of law. Because Hord
by the ... Federal Deposit Insurance Corporation,
... upon any ... advance, ... commitment, or
loan....
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objected in district court to the sufficiency of the indictment, we
review the indictment de novo, to determine whether it alleges
sufficiently the elements of the offense charged. United States v.
Aguilar, 967 F.2d 111, 112 (5th Cir. 1992) (citing United States v.
Shelton, 937 F.2d 140, 142 (5th Cir.), cert. denied, ___ U.S. ___,
112 S. Ct. 607 (1991)).
The indictment expressly charges that Hord made a "false
statement" by "submit[ting] forged and counterfeited checks". At
least as to this element of § 1014, then, the indictment was
sufficient. Accordingly, we proceed to the contention that the
indictment does not sufficiently allege that Hord made those false
statements with the intent to induce the bank to make an advance,
commitment, or loan.
Section 1014 does not include in its list of prohibited
actions the act of inducing a bank to "credit an account".
However, acting to induce a bank to "credit an account" can, under
certain circumstances, be equivalent to acting to induce it to make
an advance, commitment, or loan. We realize, of course, that a
depositor ordinarily stands in the position of a creditor of the
bank, rather than the other way around. See, e.g., In Re Texas
Mortgage Servs. Corp., 761 F.2d 1068, 1075 n.11 (5th Cir. 1985);
Uniform Commercial Code § 4-201, cmt. 4. As Hord asserts, this
ordinarily would mean that inducing the bank to "credit" Hord's
account would not constitute inducing it to make an advance, loan,
or commitment, because the bank would merely be making available to
its creditor, Hord, his "own" deposited funds. Usually, this does
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not occur until after the deposited check has cleared. See Uniform
Commercial Code § 4-215(e) (stating when funds become available for
withdrawal as of right); Federal Reserve Regulation CC:
Availability of Funds and Collection of Checks, 12 C.F.R. § 229
(1992). In fact, this was NBT's policy. But, under the language
of both § 1014 and the indictment, in issue is Hord's intent to
induce NBT to advance funds to him without waiting for the checks
to clear, not NBT's policy against doing so.
In situations where the bank gives a customer access to funds
without waiting for deposited checks to clear, it is making an
advance on the security of the checks it holds for collection. See
Uniform Commercial Code § 4-210(3), cmt. 1 ("A collecting agent may
properly make advances on the security of paper held for
collection, and acquires at common law a possessory lien for these
advances." (emphasis added)). In this situation, we think, the
language "in order to induce the bank to credit [Hord's] account"
is sufficiently equivalent to stating that Hord acted "in order to
induce the bank to make an advance, loan, or commitment". See
Price, 763 F.2d at 643 & n.4 (depositing false credit card sales
receipts constituted attempt to "obtain cash from the bank to which
[defendants] were clearly not entitled"). Therefore, we hold that
the indictment was sufficient to charge an offense under both
elements of § 1014.
More importantly, although Williams v. United States, 458 U.S.
279 (1982), discussed infra, holds that presenting checks drawn
against insufficient funds is not a "false statement" for § 1014
- 16 -
purposes, it does not address what constitutes "influencing in any
way the action of ... any bank ... upon any ... advance ... or loan
...." 18 U.S.C. § 1014. Our court held long ago in United States
v. Payne, 602 F.2d 1215, 1218-19 (5th Cir. 1979), cert. denied, 445
U.S. 903 (1980), that "[t]he essence of check kiting is the
obtaining of credit in the nature of an advance or loan, however it
may be characterized"; that it "was a device for fraudulently
obtaining credit sufficiently in the nature of an advance or loan
to come within the scope of 18 U.S.C. § 1014." The Supreme Court's
holding in Williams does not displace this aspect of proof
necessary for the latter part of the statute. See Williams, 458
U.S. at 300-01 (Marshall, J. dissenting) ("The banks that extended
funds on the basis of Williams' worthless, and not yet collected,
checks made an ``advance,' a ``loan,' and a ``commitment' within the
ordinary meaning of these terms.") The above language from Payne
is still good law.
2.
Hord also contends that the government failed to prove the
substantive elements of § 1014 (whether he made any "false
statement", and if so, whether it was to induce the bank to engage
in a specified action). This contention is essentially a
sufficiency of the evidence claim. We will affirm a conviction if
the evidence, viewed in the light most favorable to the verdict and
with all reasonable inferences and credibility choices made in
support of it, is such that any rational trier of fact could have
found the elements of the crime beyond a reasonable doubt. Heath,
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970 F.2d at 1402 (citing Jackson v. Virginia, 443 U.S. 307 (1979),
and United States v. Kim, 884 F.2d 189, 192 (5th Cir. 1989)).
a.
In support of his contention on the "false statements" issue,
Hord relies principally on Williams, 458 U.S. 279, for the
proposition that checks are not false statements. We find his
reliance misplaced, however. In Williams, the defendant engaged in
a check-kiting scheme, knowing that his accounts did not contain
sufficient funds to cover the checks. Id. In reversing his
conviction under § 1014, the Court held that a check drawn on
insufficient funds is not "a ``false statement,' for a simple
reason: technically speaking, a check is not a factual assertion at
all, and therefore cannot be characterized as ``true' or ``false.'"
Id. at 284.
This was so, the Court stated, because a check drawn on
insufficient funds does not, "in [its] terms, make any
representation as to the state of [the drawer's] bank balance."
Id. at 284-85. The Court also noted that "``false statement' is not
a term that, in common usage, is often applied to characterize ``bad
checks.'" Id. at 286. Finally, the Court also reasoned that to
hold that a "bad check" (i.e., a check drawn on insufficient funds)
is a "false statement" under § 1014 would "make a surprisingly
broad range of unremarkable conduct a violation of federal law."
Id.13
13
Williams' narrow construction of § 1014 prompted Congress to
enact § 1344, discussed supra, because Williams and other cases
"``underscored the fact that serious gaps now exist in Federal
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The obvious and basic difference between the checks in
Williams and those here is that the checks in issue were bogus
rather than drawn against insufficient funds.14 We think this
difference crucial, however, and precisely what makes Hord's
behavior culpable under § 1014. We cannot agree with Hord's
conclusion that, like checks drawn on insufficient funds, bogus
checks such as the ones he deposited at NBT are not "false
statements" under Williams and its progeny. Instead, we find this
situation more similar to that presented in United States v.
Falcone, 934 F.2d 1528 (11th Cir.) (per curiam), reh'g granted &
opinion vacated, 939 F.2d 1455 (11th Cir. 1991), opinion reinstated
on reh'g, 960 F.2d 988 (11th Cir.) (en banc), cert. denied, ___
U.S. ___, 113 S. Ct. 292 (1992). In a case involving the
presentation of checks bearing a signature stamp made without
authorization, the Eleventh Circuit held that Williams did not
apply.15 The court found, rather, that the unauthorized use of the
jurisdiction over frauds against banks and other credit
institutions....'" S. Rep. No. 98-225, 98th Cong., 2d Sess. 377,
reprinted in 1984 U.S. Code Cong. & Admin. News 3182, 3517, quoted
in United States v. Bonnett, 877 F.2d 1450, 1454 (10th Cir. 1989).
14
We agree with Hord that the use of deposit slips does not
alone provide a way to distinguish his case from Williams. As Hord
points out, the defendant in Williams presumably also used a
deposit slip to deposit his insufficient funds checks; but, like
the Williams Court, we are concerned with the checks, not with
their deposit slips. See Williams, 458 U.S. at 281.
15
Although the defendants also had been charged with violations
of § 1014, we note that the appeal in Falcone was taken from a
conviction under former § 1344(a)(2) (for text, see supra note 9),
for making false representations to a federally-insured bank.
Falcone, 934 F.2d at 1539. The court in Falcone, however, defined
"false representations" under § 1344 by referring to Williams and
its discussion of "false statements" under § 1014. Id.
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signature stamp constituted an affirmatively false representation
that the signatures so made were authorized; and that such use was
tantamount to forgery. Id. at 1542.
The Eleventh Circuit held, and we agree, that "Williams does
not govern a situation in which some information on the check, such
as a false signature, or a fictitious bank, is itself a false
statement...." Id. at 1541 (internal citations omitted) (citing
Bonnett, 877 F.2d at 1454 ("massive" scheme to defraud not covered
by Williams, despite use of insufficient-funds checks); United
States v. Worthington, 822 F.2d 315, 319 (2d Cir.) (fictitious
drawee bank a false statement, false representation that bank
actually existed), cert. denied, 484 U.S. 944 (1987); United States
v. Price, 763 F.2d 640 (4th Cir. 1985) (false names, amounts,
account numbers, and signatures on credit card slips presented for
deposit were false statements); Prushinowski v. United States, 562
F. Supp. 151, 156-58 (S.D.N.Y.) (drafts with unauthorized,
illegible or fictitious drawer signatures were false statements),
aff'd mem., 742 F.2d 1436 (2d Cir. 1983)).
As Falcone and the above listed cases cited by it indicate, we
are not alone among the federal circuits in applying Williams
narrowly, to "the simple presentation of a check drawn on an
account with insufficient funds, without other evidence that the
defendant made some false representation to the bank...." Falcone,
954 F.2d at 1540. See also United States v. Haddock, 956 F.2d
1534, 1543 (10th Cir.) (altered entries in checkbook in advance of
audit were "false statements"), cert. denied, ___ U.S. ___, 113 S.
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Ct. 88 (1992); United States v. Swearingen, 858 F.2d 1555 (11th
Cir. 1988) (per curiam), cert. denied, 489 U.S. 1083 (1989) (sight
drafts representing fictitious sales of automobiles used to obtain
credit held violative of § 1014); United States v. Rafsky, 803 F.2d
105, 107 (3d Cir. 1986) (scheme to defraud based on numerous
insufficient funds checks held violative of § 1344), cert. denied,
480 U.S. 931 (1987); United States v. Glanton, 707 F.2d 1238 (11th
Cir. 1983) (signing false name to signature card and counter check,
and in endorsement, held to violate § 1014). As the court in Price
noted, "there is nothing in Williams that equates the passing of
checks drawn on accounts with insufficient funds with fraudulently
making or altering a document", as Hord did. 763 F.2d at 643 &
n.3.
This reading accords with the policy behind Williams as well.
Williams, as the Court intended, has the salutary effect of
ensuring that a "broad range of unremarkable conduct", i.e., the
relatively commonplace drawing of checks against insufficient
funds, is not "a violation of federal law". Williams, 458 U.S. at
286. Needless to say, Hord's conduct "does not strike us as
similarly unremarkable." Worthington, 822 F.2d at 318-19. As the
Second Circuit has noted, "[i]nsufficient funding may have a
perfectly innocent explanation". Id. On the other hand, we cannot
conceive of any innocent explanation for presenting bogus checks,
not issued by the banks named as drawee, with forged signatures and
incorrect routing numbers, and payable to a client whose existence
is doubtful at best. We hold that Hord's use of forged signatures,
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false drawee bank and payee information, and inaccurate routing and
account information on the checks he deposited, constituted "false
statements" under § 1014, and is not saved by Williams' limitation
of that term.
b.
Because the checks in issue contained false statements, we
next examine Hord's contention concerning the final element of §
1014 -- whether the government presented sufficient evidence that
Hord made these false statements with the purpose of influencing
the action of the bank "upon any application, advance, ...
commitment, or loan." 18 U.S.C. § 1014.
Hord maintains that the government failed to prove that he
acted with the intent to influence the bank to lend its funds or
the funds of its depositors. To the contrary, the government
presented Rule 404(b) evidence that Hord previously had succeeded
in just such a scheme at other area banks, see supra note 4.16 At
both MBank and Cy-Fair, Hord had successfully withdrawn funds
against checks that he had deposited, before the collection process
had been completed.
16
Rule 404(b) provides that
Evidence of other crimes, wrongs, or acts is not
admissible to prove the character of a person in
order to show action in conformity therewith. It
may, however, be admissible for other purposes,
such as proof of motive, opportunity, intent,
preparation, plan, knowledge, identity, or absence
of mistake or accident.
Fed. R. Evid. 404(b).
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Hord next asserts that the fact that NBT did not credit his
account is evidence that he did not intend to influence the bank.
Again, we fail to see the connection between Hord's intent (the
crucial factor under the statute), and NBT's action. Obviously,
just because NBT did not credit Hord's account does not mean that
Hord did not intend for it to do so.17 Furthermore, the bank's
action in response to Hord's attempt to defraud it is irrelevant.
It is undisputed that a § 1014 offense is "``a crime of subjective
intent that requires neither reliance by the lending institution
nor an actual defrauding for its commission.'" Bowman, 783 F.2d at
1199 (quoting United States v. Davis, 752 F.2d 963, 969 (5th Cir.
1985)); United States v. Huntress, 956 F.2d 1309, 1317-18 (5th Cir.
1992), cert. denied, ___ U.S. ___, 113 S. Ct. 2330 (1993); Shaid,
730 F.2d at 232.18 A rational trier of fact could have found that
17
In fact, we cannot see what else Hord could have intended. By
making deposits of the bogus checks, he surely intended that the
bank credit his account in the face amounts of the checks. His
withdrawal attempts reflect this. And, he must have intended that
NBT make the credit before the checks cleared through the
collection process, i.e., that NBT make him an advance. Once the
bank put the checks into the collection system, discovery of the
faked routing numbers, etc. was inevitable; and Hord surely would
not have been allowed to withdraw funds after the checks were
returned to NBT unpaid.
18
Hord's reliance on United States v. Krown, 675 F.2d 46 (2d
Cir.), cert. denied, 459 U.S. 839 (1982), is misplaced. In Krown,
the Second Circuit held that the mere deposit of fraudulent
instruments, followed by a "bookkeeping entry showing the checks
credited" to the account of a third party, did not violate § 1014.
Id. at 51. We are presented with different facts here.
In Krown, the defendant "paid" for purchases from his supplier
with certified checks drawn on a fictitious offshore bank. The
defendant's intent was only "to have the bank accept the certified
checks for deposit and carry out collection procedures". Id. As
noted, the fictitious bank on which the checks was drawn was
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Hord was attempting to influence NBT to advance him funds against
the security of the checks he had deposited, before the checks
cleared.
Because we conclude that the checks deposited in Hord's
account at NBT were false statements, and that Hord's intent was
that NBT credit his account pursuant to them, thus making an
advance, we affirm his convictions and sentences on counts ten-19
of the indictment.
III.
For the foregoing reasons, the convictions and sentences are
AFFIRMED as to counts two-six and ten-19, and REVERSED and VACATED
as to counts one and seven-nine.
AFFIRMED in Part, REVERSED and VACATED in Part
offshore; after the checks failed to clear through the normal
collection process, and pursuant to the defendant's instruction,
the collecting bank attempted to collect on the checks by mailing
them directly to the bogus bank in the West Indies. Id. at 49.
The purpose of this scheme was not to induce the bank to make an
advance, loan, commitment, etc., but to give the defendant more
time to buy goods on credit from the payee of the checks. Id. at
50. Indeed, rather than attempting to induce the collecting bank
to credit the payee's account, the defendant himself deposited a
legitimate certified check in the payee's account, in order to make
it appear that one of the bogus checks had been honored. Id. at
49.
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