Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-15-01922/USCOURTS-ca7-15-01922-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 15-1922

CHRISTOPHER PAUL WHITE AND REFFCO II, L.P.,

Plaintiffs-Appellants,

v.

GEORGE KEELY, JOYCE MORRIS, TRICIA RAKE, TERRY SCOTT,

AND MICHAEL MAURER,

Defendants-Appellees.

____________________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:14-cv-00471-TWP-DML — Tanya Walton Pratt, Judge.

____________________

ARGUED JANUARY 6, 2016 — DECIDED FEBRUARY 29, 2016

____________________

Before POSNER and WILLIAMS, Circuit Judges, and 

PALLMEYER, District Judge.*

PALLMEYER, District Judge. Plaintiffs-appellants Christopher White and his company Reffco II, L.P. (collectively, 

 

*The Honorable Rebecca R. Pallmeyer of the United States District 

Court for the Northern District of Illinois, sitting by designation.

Case: 15-1922 Document: 27 Filed: 02/29/2016 Pages: 13
2 No. 15-1922

“White”)1 filed suit against several current and former officers of the National Bank of Indianapolis (“NBI Employees”) 

pursuant to the Federal Reserve Act, 12 U.S.C. § 503. That 

statute establishes civil liability for bank officers and directors who violate certain substantive provisions of the Federal 

Reserve Act and the False Entry Statute. White’s complaint

alleges that the NBI Employees violated the False Entry 

Statute, 18 U.S.C. § 1005, by falsifying official bank reports in 

order to cover up unauthorized transfers made from White’s 

business accounts at the National Bank of Indianapolis 

(“NBI”). White claims these § 1005 violations caused him to 

suffer harm and that the NBI Employees are liable to him 

pursuant to 12 U.S.C. § 503. The district court dismissed 

White’s complaint for failure to allege that he relied on the 

false statements, and White timely appeals that decision. The 

NBI Employees contend the appeal is frivolous and have 

asked for an award of sanctions pursuant to Federal Rule of 

Appellate Procedure 38. Because White has not pleaded that 

he was harmed as a consequence of the alleged § 1005 violations, we affirm the district court’s dismissal of White’s complaint. We further agree with defendants-appellees that 

White’s appeal is frivolous, and therefore grant their motion 

for sanctions.

I

At all relevant times, White was the sole shareholder and 

president of Reffco II, LLP. White was also a principal of 

HPT, LLC (“HPT”), a Nevada limited liability company, and 

 

1 White is the sole shareholder and president of Reffco. For simplicity sake, we refer to Appellants collectively as White.

Case: 15-1922 Document: 27 Filed: 02/29/2016 Pages: 13
No. 15-1922 3

a general partner and president of Premier Properties USA, 

Inc. (“Premier”), an Indiana corporation. White maintained 

accounts for all three companies at NBI, a member bank of 

the Federal Deposit Insurance Corporation (“FDIC”). Premier’s NBI account had the sole purpose of paying the company’s employee payroll; all of Premier’s other expenses were 

paid from Reffco’s account at NBI. 

In addition to the accounts at NBI, White maintained a 

checking account for HPT at J.P. Morgan Chase Bank 

(“Chase Bank”). On January 30, 2008, White signed a check 

from HPT’s account at Chase Bank payable to Premier in the 

amount of $500,000. Later that day, Premier endorsed the 

check to Reffco, and White deposited the check into Reffco’s 

account at NBI. NBI credited Reffco’s account for this 

amount. 

That same morning, ADP, the payroll provider for Premier, presented NBI with three automated clearinghouse 

(“ACH”) drafts—essentially, checks—totaling $182,897.59,

against Premier’s payroll account. ADP also sent a “reverse 

wire demand” to NBI, directing that NBI wire-transfer an 

additional $237,476.23 from Premier’s payroll account. At the 

time that ADP requested this money, Premier’s payroll account had a balance of just $259.39, far less than necessary to 

cover the ACH drafts or reverse wire demand. NBI employee Loaren Muehl accordingly transferred $425,000 to Premier’s payroll account from the Reffco account, which held 

more than $500,000 as a result of the HPT check deposited 

earlier that day. NBI then paid $420,373.82 to ADP by withdrawing money from the Premier account. 

The HPT check for $500,000 was subsequently returned 

due to insufficient funds in HPT’s account at Chase Bank. 

Case: 15-1922 Document: 27 Filed: 02/29/2016 Pages: 13
4 No. 15-1922

Because NBI had already honored the HPT check and used it 

to pay ADP, the bounced check resulted in an overdraft of 

Premier’s payroll account in excess of $382,000. 

There is a bit more to the story than what appears in 

White’s complaint.2 First, unable to recover the $382,000 

from White, NBI closed all of his accounts and sued White in 

Indiana state court for check deception, check fraud, criminal mischief, and defrauding a financial institution. See In re

White, 444 B.R. 887, 891 (S.D. Ind. Bankr. 2010). After White 

failed to respond to NBI’s motion for summary judgment, on 

June 25, 2008, the state court granted summary judgment in 

favor of NBI. White, 444 B.R. at 891.

Around the same time that the state court entered its 

judgment, the state filed a criminal action against White, 

charging White with one count of fraud on a financial institution, one count of check fraud, and one count of theft. See

White v. State, No. 49A04-1203-PC-102, 2012 WL 6709644, at 

*4 (Ind. App. Ct. Dec. 26, 2012). On August 18, 2009, a jury 

convicted White of all three counts. At sentencing, the court 

“merged”3 the check fraud and theft counts into the fraud on 

a financial institution count, and sentenced White to one 

year of home detention and three years’ suspended probation. Id. The court also ordered White to pay restitution in 

the amount of $382,486 to NBI. Id.

 2 We may take judicial notice of public records, including public 

court documents, in ruling on a motion to dismiss under Rule 12(b)(6). 

See Olson v. Champaign County, Ill., 784 F.3d 1093, 1097 n.1 (7th Cir. 2015); 

Fox v. Am. Alt. Ins. Corp., 757 F.3d 680, 684 (7th Cir. 2014).

3 The trial court stated that it was merging the three convictions; 

but in fact, the court never entered judgment on the theft or check fraud 

verdicts. White, 2012 WL 6709644, at *4 n.3.

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No. 15-1922 5

White appealed his criminal conviction, asserting that: (1) 

there was insufficient evidence to support his conviction for 

fraud on a financial institution, and (2) he received ineffective assistance of counsel. Id. at *1. The Indiana Court of Appeals rejected those arguments, observing:

The evidence presented at trial established that 

White ordered the preparation of a check for 

$500,000 from the [HPT] Chase Bank account, 

which [he] ... knew had a balance of only 

$1,000.00 at the time of execution of the 

check. ... White was aware that if he did not 

have the money in his payroll account by 3:30 

p.m. that day, his employees would not be 

paid. Since White had insufficient funds in his 

accounts to authorize a transfer between accounts to make payroll, he instructed [his 

business comptroller] to prepare the check 

written on the Chase bank account. 

Morris, NBI’s vice-president, authorized the release of funds based upon the representation 

that a deposit would be made to NBI. White 

waited until the funds had been released to 

ADP for payroll through a wire transfer prior 

to informing [an NBI representative] that the 

check was not good and would be returned. 

Based upon this evidence, it is reasonable for a 

jury to have concluded that White acted in 

such a manner as to induce NBI to cover his 

payroll by ordering the preparation and deposit of a check he knew would not be honCase: 15-1922 Document: 27 Filed: 02/29/2016 Pages: 13
6 No. 15-1922

ored. ... [and] that White knowingly executed 

a scheme or artifice to defraud NBI.

Id. at *4–5.

Shortly after entry of the state court civil judgment 

against White on June 25, 2008, White filed for bankruptcy 

protection. NBI initiated an adversary proceeding in bankruptcy court, seeking a declaration that the state court civil 

judgment constituted a “nondischargeable obligation” under 

§§ 523(a)(2)(A) and 523(a)(6) of the Bankruptcy Code. White, 

444 B.R. at 890. The bankruptcy court granted summary 

judgment in favor of NBI, holding that White was estopped 

from re-litigating whether he committed fraud against NBI, 

and on November 9, 2011, entered judgment in favor of NBI 

and against White in the amount of $378,486.17.4 Id.; White, 

2011 WL 5509406, at *8.

Thus, in three legal proceedings, courts have found that 

White committed fraud. Undeterred by these determinations, White filed this civil complaint on March 26, 2014 

against defendants-appellees, alleging violations of 18 U.S.C. 

§ 1005 and 12 U.S.C. § 503. The complaint alleges that on 

January 30, 2008, NBI transferred $425,000 from the Reffco 

account to Premier’s payroll account, without first obtaining 

authorization from Reffco or White. White claims that because he did not consent to these transfers, they were unauthorized transfers in violation of § 903 of the Electronic Fund 

 4 The bankruptcy court determined that White was entitled to receive a $4000 refund to Reffco’s account, which NBI had not properly 

credited him. The court then reduced NBI’s $382,486 in actual damages 

by this amount. In re White, No. 09-10289-AJM-7, 2011 WL 5509406, at *8 

(Bankr. S.D. Ind. Nov. 9, 2011).

Case: 15-1922 Document: 27 Filed: 02/29/2016 Pages: 13
No. 15-1922 7

Transfer Act. White further alleges that NBI unilaterally decided to pay the $425,000 to ADP from Premier’s payroll account, without consulting White or Premier, before it had 

knowledge that a $500,000 check would be coming from 

HPT, leaving Premier’s payroll account with a negative balance.5 White alleges that NBI official reports relating to these 

January 30, 2008 transfers omit material information about 

the timing of NBI’s decision to pay ADP and the decision to 

transfer the $425,000 from the Reffco account to Premier’s 

payroll account, and “give the appearance that it was White 

who ordered the transfer of the funds,” when it was in fact 

NBI’s unilateral decision to do so. These allegedly false reports, moreover, “were done with the intent to deceive other 

officers of NBI as well as any other person who might be reviewing the records of NBI, ... because to admit that NBI 

had unilaterally made an unauthorized transfer of funds 

from one legal entity to another would be a clear violation of 

the law,” White alleges. 

According to White, these false reports were then provided to the state prosecutor, who, after receiving them, 

“prosecuted White for check fraud and other crimes,” including “a check kiting scheme.” As a consequence of NBI’s 

false reports, White alleges, he “sustained damages in an as 

yet undetermined amount.”

 

5 We ordinarily presume the truth of well-pleaded factual 

allegations, and White’s appeal fails even if we do so. We note, however, 

that this allegation is inconsistent with the findings of the state court and 

bankruptcy court, both of which found that NBI had authorized 

payment to ADP in reliance on White’s representations that a deposit 

would be made to cover the payment. See White, 2012 WL 6709644, at *4; 

White, 2011 WL 5509406, at *2.

Case: 15-1922 Document: 27 Filed: 02/29/2016 Pages: 13
8 No. 15-1922

The NBI Employees moved to dismiss White’s complaint, 

arguing that White failed to allege any facts that: (1) he detrimentally relied on NBI’s allegedly false reports, or (2) the 

allegedly false reports proximately caused White’s damages. 

The district court found that White did adequately allege 

proximate causation, but agreed with defendants that White 

failed to plead detrimental reliance. The court then granted 

the motion to dismiss, relying on Brown Leasing Co. v. Cosmopolitan Bancorp, Inc., 42 F.3d 1112, 1116 (7th Cir. 1994), where 

we held that a plaintiff must show detrimental reliance in 

order to establish a violation of the Federal Reserve Act, 12 

U.S.C. § 503, and the False Entry Statute, 18 U.S.C. § 1005. 

White v. Keely, No. 1:14-cv-00471, 2014 WL 5822862, at *2–3 

(S.D. Ind. Nov. 7, 2014). White appeals the district court’s decision, asserting that Brown Leasing was wrongly decided 

and should be overruled.

II

This court reviews a district court’s Rule 12(b)(6) dismissal de novo. Charleston v. Bd. of Trustees of Univ. of Ill. at Chicago, 741 F.3d 769, 772 (7th Cir. 2013). In doing so, we ordinarily accept all well-pleaded factual allegations in the plaintiff’s complaint as true and draw all reasonable inferences in 

the plaintiff’s favor. Gustafson v. Adkins, 803 F.3d 883, 888 (7th 

Cir. 2015). To survive a motion to dismiss, a complaint need 

not contain “‘detailed factual allegations,’” but it must provide “more than an unadorned the-defendant-unlawfullyharmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 

129 S. Ct. 1937 (2009) (quoting Bell. Atl. Corp. v. Twombly, 550 

U.S. 544, 555, 127 S. Ct. 1955 (2007)). It also “must contain 

sufficient factual matter, accepted as true, to state a claim to 

relief that is plausible on its face.” Id.

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No. 15-1922 9

Section 1005 of the False Entry Statute makes it illegal for 

bank officers and directors to make false reports with the intent to deceive the bank or its regulators. 18 U.S.C. § 1005. 

Section 503 of the Federal Reserve Act, meanwhile, creates a 

private cause of action for any person who has “sustained 

[damages] in consequence” of a violation of Section 1005. 12 

U.S.C. § 503. White takes issue with our holding, in Brown 

Leasing, that in order for a private plaintiff to have “sustained [damages] in consequence” of a § 1005 violation, he or 

she must have detrimentally relied on the false reports in 

question. 42 F.3d at 1116. We need not address this challenge 

to Brown Leasing, however. White concedes that he must allege harm resulting from NBI’s false statements, and we conclude that he cannot do so.

The complaint does allege that White and Reffco have 

sustained damages as a consequence of false reports, but 

that is a legal conclusion about proximate cause, and thus 

insufficient to state a claim. See McReynolds v. Merrill Lynch & 

Co., 694 F.3d 873, 885 (7th Cir. 2012). The district court construed White’s complaint as alleging that NBI’s false bank 

reports caused White “to be prosecuted for a check-kiting 

scheme and resulted in the withdrawal of money from one 

account to another without his authorization or knowledge.” 

White, 2014 WL 5833862, at *2. White does not allege, however, that the transfer of money from his accounts without his 

authorization was caused by the NBI Employees’ false bank 

reports. Indeed, White could not make this allegation because the allegedly false bank reports were not created until 

after the money transfers took place. To the extent White alleges that these transfers caused him harm, this is irrelevant 

to White’s § 503/1005 claim; even if the allegedly unauthorCase: 15-1922 Document: 27 Filed: 02/29/2016 Pages: 13
10 No. 15-1922

ized transfers violated the law (as White claims they did), 

they did not violate § 1005.

There is even less merit in White’s assertion that the NBI 

Employees’ violation of § 1005 caused him to be prosecuted 

for check fraud. Rather, as the complaint suggests, and other 

documents in the record reveal, White was prosecuted for 

check fraud and for engaging in a check-kiting scheme because he wrote a $500,000 check from a bank account that he 

knew had insufficient funds, resulting in an overdraft of his 

accounts at NBI. Any allegation that bank officers’ false 

statements caused him to be prosecuted is not facially plausible. The prosecutor charged White with depositing a bad 

check and then refusing to pay the resulting overdraft. Such 

a charge did not rest on NBI’s allegedly false statements that 

White authorized the transfer of the money to ADP. Indeed,

at oral argument, White conceded that the allegedly false reports did not prompt his prosecution for check fraud; he was 

subject to prosecution for knowingly presenting the bad 

check to NBI. 

Though he did not specifically so allege, White appears 

to suggest that NBI’s false reports caused him harm because 

they “ultimately led to [his] criminal conviction.” This claim 

does not constitute a collateral attack on his criminal conviction, White insists, because “the accuracy of the [bank reports] was not necessarily decided” as part of that conviction, and his conviction could rest on presentation of a bad 

check to NBI alone. The inconsistency is obvious: if White 

could have been convicted of check fraud regardless of NBI’s 

alleged false reports, those reports did not cause the conviction. Putting that contradiction aside, White cannot challenge the validity of his conviction by bringing a civil claim 

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No. 15-1922 11

under § 503/1005. Hill v. Murphy, 785 F.3d 242, 248 (7th Cir. 

2015) (citing Heck v. Humphrey, 512 U.S. 477, 114 S. Ct. 2364 

(1994)) (when “a judgment in favor of the plaintiff [in a civil 

suit] would necessarily imply the invalidity of his conviction 

or sentence,” then “the complaint must be dismissed”).

In short, White cannot establish that he suffered harm as 

a result of the alleged false statements of bank officers. Evidently recognizing the futility of his theory that he can claim 

those statements were the cause of his prosecution, White 

belatedly suggested another theory of harm. At oral argument, he asserted for the first time that the bank’s false reports have prevented him from being able to continue his 

business as a real estate developer. “But arguments made for 

the first time at oral argument are waived,” Szczensy v. Ashcroft, 358 F.3d 464, 465 (7th Cir. 2004), and because White 

made no mention of this harm in his complaint, we need not 

consider it in determining whether White adequately pleaded proximate cause. Nor do we find it facially plausible that 

NBI’s false reports are responsible for stifling the employment opportunities of a person found guilty of fraud on a 

financial institution. We also note that, during oral argument, White was unable to provide the court with any information regarding the employment opportunities purportedly lost as a consequence of NBI’s false reports. White suggested that this information could be obtained through discovery, but in light of the fact that the allegedly false reports 

were created several years ago, we are confident that White 

already has information about the alleged results of the NBI 

Employees’ conduct. 

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12 No. 15-1922

III

Rule 38 of the Federal Rules of Appellate Procedure allows us to “award just damages or single or double costs” 

upon determination that an appeal is frivolous. An appeal is 

frivolous “when the result is obvious or when the appellant’s 

argument is wholly without merit.” McCoy v. Iberdrola Renewables, Inc., 769 F.3d 535, 536–37 (7th Cir. 2014). Sanctions 

are also warranted under Rule 38 “when a litigant or attorney presents appellate arguments with no reasonable expectations of success for the purposes of delay, harassment, or 

sheer obstinacy.” In re Nora, 778 F.3d 662, 665 (7th Cir. 2015).

Based on our review of the complaint and the legal history of this case, which has embroiled NBI in costly litigation 

with White for seven years, we find that White’s appeal is 

frivolous and sanctionable under Rule 38. As explained 

above, White has utterly failed to allege that the NBI Employees’ violation of § 1005 caused him to suffer harm. Even 

when pressed by this court, White could not put forward 

any cognizable theory of proximate cause, other than a potential loss of employment opportunities—a claim never 

mentioned before oral argument and for which White could 

offer no factual support. Although White asserts that he is 

not making an improper collateral attack on his criminal 

conviction, this appears to be precisely what White attempts 

to do with this lawsuit, in order to absolve himself of his 

misconduct and place the blame on innocent parties. This is 

not only frivolous, but in bad faith. Accordingly, we grant 

defendants-appellees’ Rule 38 motion. Defendants-appellees 

may submit, within 28 days of the issuance of this opinion, 

an affidavit and supporting papers specifying their damages 

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No. 15-1922 13

from this frivolous appeal. White may file a response no later than 28 days of the defendants-appellees’ submission.

AFFIRMED; SANCTIONS ORDERED.

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