United States Court of Appeals

FOR THE EIGHTH CIRCUIT

________________

No. 96-2923/3083

________________

United States of America, *

*

Plaintiff - Appellee, *

* On appeal from the United States

v. * District Court for the Southern

* District

of Iowa.

Robert J. Darrah, *

*

Defendant - Appellant. *

________________

Nos. 96-2924

________________

United States of America, *

*

Plaintiff - Appellee, *

* On appeal from the United States

v. * District Court for the Southern

* District of Iowa.

Saundra L. Darrah, *

*

Defendant - Appellant. *

________________

Submitted: January 15, 1997

Filed: July 14, 1997

________________
The HONORABLE ANN D. MONTGOMERY, United States District Judge 1

for the District of Minnesota, sitting by designation.

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Before WOLLMAN and FLOYD R. GIBSON, Circuit Judges, and MONTGOMERY,1

District Judge.

________________

FLOYD R. GIBSON, Circuit Judge.

Appellant Robert Darrah challenges a jury's finding that he made

false statements to a lending institution, see 18 U.S.C. § 1014 (1994),

misapplied bank funds, see id. § 656, engaged in a monetary transaction

involving property unlawfully derived from the misapplication of bank

funds, see id. § 1957, and made a false statement to an agency of the

United States, see id. § 1001. Appellant Saundra Darrah, Robert's spouse,

similarly challenges her conviction for making a false statement to an

agency of the United States. See id.

I. BACKGROUND

Robert Darrah was a Certified Public Accountant

("CPA") whose company, Darrah & Company, serviced tax

returns and managed investments in Council Bluffs, Iowa.

During the 1980s and early 1990s, Robert became directly

involved with a bank holding company called Missouri

Valley Financial Services ("MVFS"), which owned stock in

several banks in and around Council Bluffs. In the mid1980s, MVFS received a bank stock loan from Norwest Bank

("Norwest") in Des Moines for the purpose of purchasing

stock in Peoples National Bank ("PNB") in Council Bluffs.

The shareholders of MVFS, including Robert, personally

guaranteed the bank stock loan. At the time, Robert was

the president of MVFS and consequently controlled the

overall operations of the holding company and the various

banks it owned, including PNB. One of his

responsibilities was to make loan payments to Norwest on

behalf of MVFS. 
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In 1987, Darrah & Company began preparing tax returns

for Dianna Smith. When Smith retired in 1990, Robert

offered to help her invest her retirement funds which

totaled just over $400,000. Smith stressed to Robert

that she desired to place the bulk of her funds in lowrisk investments. After discussing various options,

Smith requested that Robert invest $300,000 in an

annuity, $100,000 in growth funds, and about $5,000 in a

"holding company fund." To facilitate the process of

transferring the funds to the desired investments, Smith,

upon Robert's request, signed several money transfer

forms in blank and wrote a check to PNB for the entire

amount of her retirement fund. Linda Hack, the IRA

supervisor at PNB, opened an IRA in Smith's name.

Because Smith requested that Robert supply her with

minimal paperwork, Hack structured the account so that

Robert, rather than Smith, received the statements and

correspondence regarding the account. Therefore, from

the time she turned her money over to Darrah in 1990

until early 1994, the only information Smith received

pertained to her growth fund investments. 

Howard Stoffa, a special agent with the criminal

investigation division of the Internal Revenue Service

("IRS"), testified at trial concerning the results of an

investigation of Robert and certain transactions

involving MVFS. Stoffa testified that Dianna Smith

deposited her check into her IRA on May 30, 1990. On

July 20, 1990, $300,000 was withdrawn from Smith's

account. Stoffa did not trace the funds to an annuity,

as Smith had authorized, but discovered that the $300,000

was used to purchase a cashier's check payable to MVFS.

Also on July 20, Robert signed a check from an MVFS bank
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account made payable to Norwest in the amount of

$255,579.28. Prior to Smith's check being deposited into

the MVFS account, the balance in the account was

$54,569.07. Stoffa stated that in his opinion, the

$300,000 from Smith's account was used to pay the loan at

Norwest because prior to the deposit of those funds, the

MVFS account did not have sufficient funds to make that

payment. Smith testified that she did not authorize

Robert to invest her funds in such a manner.
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In 1994, Smith requested a meeting with Robert to

obtain documentation of her investments. Robert provided

her with a notebook which included, among other things,

a handwritten note authorizing $300,000 to be invested in

holding company funds and a promissory note signed by

Dale Ward, an MVFS director and Saundra Darrah's brother,

indicating that MVFS owed the Dianna Smith IRA $300,000.

Smith testified that she did not authorize such an

investment and that the initials indicating authorization

must have been forged. Ward testified that he prepared

the promissory note between MVFS and Smith's IRA at

Robert's direction. Smith, obviously upset that a large

portion of her retirement funds had been invested in a

manner inconsistent with her wishes, retained an attorney

and eventually recovered the $300,000, plus ten percent

interest.

The Federal Reserve Board ("FRB") is responsible for

regulating bank holding companies. The FRB had

determined that because MVFS was highly leveraged, it

would not be permitted to acquire additional debt. In

late 1990, the FRB began an inspection of MVFS to confirm

that it was operating in conformance with applicable

regulations. In March of 1992, Robert signed and

submitted an FR Y-6 Annual Report for MVFS to the FRB.

The FR Y-6 showed a $300,000 transaction which was

reported by Robert as a shareholder contribution from

himself, rather than as a loan to MVFS from Smith's IRA.

At trial, FRB Examiner Mary Beth Tystahl examined the

note obligating MVFS to repay Smith's IRA and determined

that it signified a loan from Smith's IRA to MVFS in the

amount of $300,000. Tystahl testified that the FR Y-6

provided by Robert was false because it did not
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accurately reflect the source of the $300,000 based on

the promissory note, and she also testified that the

source of funds was significant because it substantially

changed the level of MVFS's indebtedness. 

Robert and Saundra maintained a $45,000 credit line

at PNB. The bank kept a loan file containing relevant

information concerning the Darrahs' financial status.

The file contained a personal financial statement, along

with copies of the Darrahs' 1989, 1990, and 1991 tax

returns. Charles Schumacher, PNB's senior loan officer

from 
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January 1987 until October 1992, testified that it was

the normal business practice for banks to request copies

of potential loan customers' financial statements and tax

returns to assess their ability to repay loans.

Schumacher stated that he assumed customers would present

"accurate" copies of their tax returns. The 1989 return

Robert submitted to PNB, as well as two other banks,

reported an adjusted gross income of $236,393, while the

1989 return provided to the IRS reported an adjusted

gross income of $147,357. Similarly, Robert provided

Norwest Bank Nebraska, N.A. with a 1992 tax return which

reported an adjusted gross income of $62,312, while the

1992 return Robert submitted to the IRS listed his

adjusted gross income as $33,312. Pamela Reicks, a

revenue agent with the IRS, testified that during her

service with the IRS, she has never known anyone to file

a draft return without notifying the IRS of its draft

status.

Saundra Darrah owned one-half of a company called

Saun Gi, Incorporated ("Saun Gi"). She also owned one

hundred percent of a gas station and convenience store

called Darrah's Apco, which the Darrahs' financial

statement valued at $750,000. Internal Revenue Officer

James Daugherty testified that Saun Gi owed the IRS

approximately $84,000 in unpaid unemployment withholding

taxes. After Daugherty determined that Saundra was

responsible for the taxes, he requested a collection

information statement (IRS Form 433) from her to

determine her ability to repay the debt. On October 8,

1993, Saundra's attorney provided Daugherty with an IRS

Form 433 on Saundra's behalf. Saundra signed the form

immediately beneath the declaration that she would be
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subject to penalties for perjury if the statements in the

form were not true. The form required Saundra to list

any investments, stocks, or securities. On the line

requesting this information Saundra's form stated "none."

Thus, Saundra failed to report her interest in Darrah's

Apco. Daugherty testified that he relied on the

information in the form to devise a schedule for Saundra

to pay the $84,000 debt. Daugherty stated had he known

of Saundra's interest in Darrah's Apco, it would have

influenced his collection methods.
The HONORABLE CHARLES R. WOLLE, Chief United States District Judge 2

for the Southern District of Iowa.

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Based on the facts presented at trial, the jury

convicted Robert of four counts of making false

statements to financial institutions, see 18 U.S.C. §

1014, one count of misapplying bank funds, see id. § 656,

one count of engaging in a monetary transaction involving

property derived from the misapplication of bank funds,

see id. § 1957, and one count of knowingly making a false

statement to the Federal Reserve Board, see id. § 1001.

The jury convicted Saundra of knowingly making a false

statement to the IRS. See id. Robert and Saundra filed

motions for judgment of acquittal which the district

court denied. Both defendants appeal their convictions. 2

II. DISCUSSION

A. Robert Darrah

1. Instructional errors

Robert appears to raise two instructional issues on

appeal. First, Robert asserts that the district court

committed error when it "fail[ed] to specifically

instruct the jury that materiality is one of the

essential elements" of 18 U.S.C. § 1014. Robert's Br. at

18. However, this argument is precluded by the Supreme

Court's recent decision that materiality is not an

essential element of § 1014. See United States v. Wells,

117 S. Ct. 921, 929 (1997). 
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Robert also seemingly claims error in the district

court's failure to amend Instruction 19, which listed the

elements of 18 U.S.C. § 656. Instruction 19 required the

jury to determine whether Robert "was an officer of [PNB]."

Robert's App. at 35. At the instruction conference, the district court

agreed, upon the Government's request, to amend the instruction to inquire

whether Robert was either an officer or a director 
Under the plain error standard, reversal is warranted if "(1) the court committed 3

an error; (2) the error is clear under current law; and (3) the error affects the defendant's

substantial rights." Robinson, 110 F.3d at 1324 (quotation, alteration, and citation

omitted).

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of PNB. The district court failed to make the agreed upon amendment, and

Robert claims error in that failure. Because Robert did not raise this

issue prior to his appeal, we review for plain error. See United States

v. Robinson, 110 F.3d 1320, 1324 (8th Cir. 1997). We note that

3

Instruction 18 includes the language of § 656 which states that a person

"connected in any capacity" with the institution, including an officer or

a director, can be found guilty of misapplication of funds. See Robert's

App. at 34. Therefore, after viewing the instructions as a whole, we

conclude that the district court adequately instructed the jury on the law

of § 656.

2. Sufficiency of the evidence

Robert challenges the sufficiency of the evidence presented on each

of the counts for which he was convicted. When considering the sufficiency

of the evidence, we consider the evidence in the light most favorable to

the guilty verdict. See United States v. Wade, 111 F.3d 602, 604 (8th Cir.

1997). We must give the Government "the benefit of all reasonable

inferences that might be drawn from the evidence," United States v. Darden,

70 F.3d 1507, 1517 (8th Cir. 1995) (quotation and citation omitted), cert.

denied, 116 S. Ct. 1449 (1996), and "[w]e will reverse a conviction for

insufficient evidence and order the entry of a judgment of acquittal only

if no construction of the evidence exists to support the jury's verdict,"

id. After considering the evidence in this light, we conclude that the

Government presented sufficient evidence to support Robert's convictions.
The indictment charged Robert with making false statements to the following 4

banks: PNB in Council Bluffs; PNB in Avoca, Iowa; State Bank and Trust in Council

Bluffs; and Norwest Bank Nebraska, N.A. (collectively, the "banks").

Section 1014 provides: 5

Whoever knowingly makes any false statement or report, or

willfully overvalues any land, property or security, for the purpose of

influencing in any way the action of . . . any institution the accounts of

which are insured by the Federal Deposit Insurance Corporation, . . . upon

any application, advance, discount, purchase, purchase agreement,

repurchase agreement, commitment, or loan, or any change or extension

of any of the same, by renewal, deferment of action or otherwise, or the

acceptance, release, or substitution of security therefor, shall be fined not

more than $1,000,000 or imprisoned not more than 30 years, or both.

18 U.S.C. § 1014 (1994).

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In counts two, three, four, and five, the Government charged Robert

with making false statements in violation of 18 U.S.C. § 1014. For each 4 5

of the banks in question, Robert submitted a tax return as part of a loan

approval process. At trial, the Government established that the returns

submitted to the banks did not bear the same figures as the returns Robert

filed with the IRS. For example, the 1989 return Robert submitted to three

of the banks reported his adjusted gross income as $263,393, while the 1989

return Robert submitted to the IRS reported his adjusted gross income as

$147,357. Robert claims the Government failed to prove that the returns

he provided to the banks were false; rather, the evidence merely

established that the bank returns differed from those submitted to the IRS.

Therefore, Robert postulates that the only method for the Government to

prove the falsity of his statements was to establish that he somehow

asserted to the banks that the returns he provided to them were identical

to those he submitted to the IRS. Robert concludes that because he never

made such an assertion, the Government did not establish that he made false

statements. We do not agree with Robert's portrayal of the Government's

case. 
Robert similarly argues that the Government failed to prove the materiality of 6

his statements. In light of the Supreme Court's decision in Wells, 117 S. Ct. at 929,

such proof was not necessary.

Section 656 provides: 7

Whoever, being an officer, director, agent or employee of, or

connected in any capacity with any Federal Reserve bank, member bank,

depository institution holding company, [or] national bank . . . embezzles,

abstracts, purloins or willfully misapplies any of the moneys, funds or

credits of such bank . . . shall be fined not more than $1,000,000 or

imprisoned not more than 30 years, or both . . . .

18 U.S.C. § 656 (1994).

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We conclude that the differences between the bank returns and the IRS

returns were sufficient to establish that Robert made false statements.

Indeed, the disparity between the returns established that both could not

be true statements. Additionally, the IRS returns were signed by Robert

under penalties of perjury. Therefore, a reasonable jury could have

concluded that because the bank returns substantially differed from the IRS

returns, the bank returns were false. True, a reasonable jury also could

have inferred that because the IRS returns differed from the bank returns,

the IRS returns were false, but that is not likely because the defendant

was to submit true copies of his returns to the IRS. Under the sufficiency

of the evidence standard, we must reverse the conviction "only if no

construction of the evidence exists to support the jury's verdict."

Darden, 70 F.3d at 1517. Because a reasonable jury could have concluded 6

that Robert Darrah submitted false returns to the banks, reversal is not

warranted.

Robert also contends that the evidence presented at trial was

insufficient to sustain his conviction under 18 U.S.C. § 656. Robert

7

contends that the Government did not present any evidence that he "was in

any way connected to the transfer of the $300,000." Robert's Br. at 21.

He further argues that even if he was connected to the 
Robert was convicted under 18 U.S.C. § 1957 for engaging in a monetary

8

transaction involving property derived from the willful misapplication of bank funds.

Robert's sole argument on appeal concerning this conviction is that because the

evidence did not establish that he willfully misapplied bank funds under § 656, he could

not have engaged in a transaction involving those funds under § 1957. Because we

have concluded that the evidence was sufficient to sustain Robert's conviction under

§ 656, Robert's § 1957 argument likewise fails.

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transfer of funds, his involvement was not in his capacity as a director

of PNB. We first note that this Circuit has not explicitly determined

whether § 656 requires "evidence that 'bank funds were misapplied by virtue

of the fact the defendant was connected in some capacity with a bank which

enable[d] him to gain access to bank funds.'" United States v. Marx, 991

F.2d 1369, 1372 (8th Cir.) (quoting United States v. Dreitzler, 577 F.2d

539, 547 (9th Cir. 1978), cert. denied, 440 U.S. 921 (1979)), cert. denied,

510 U.S. 1018 (1993). We need not decide this issue in the present case

because we conclude that the evidence was sufficient to establish Robert's

connection to the misapplication of bank funds in his capacity as a

director of PNB.

Smith specifically requested that Robert invest $300,000 of her

retirement funds in an annuity and only $5,000 in a bank holding company

such as MVFS. Nonetheless, within months of Smith's opening an IRA at PNB,

$300,000 was transferred from her account to MVFS. While Linda Hack

testified that Dale Ward requested the transfer of funds, Ward stated that

he knew nothing of the illegal nature of the transaction, and he prepared

the promissory note between the Smith IRA and MVFS at Robert's direction.

Furthermore, Robert, a director of PNB and MVFS, wrote the check from MVFS

to Norwest, thus utilizing the funds from Smith's IRA. The Government's

evidence was sufficient to allow a reasonable jury to conclude that Robert

was able to coordinate the transaction between the Smith IRA and MVFS

through his position as a director.8
Section 1001 provides: 9

Whoever, in any matter within the jurisdiction of any department

or agency of the United States knowingly and willfully falsifies, conceals

or covers up by any trick, scheme, or device a material fact, or makes any

false, fictitious or fraudulent statements or representations, or makes or

uses any false writing or document knowing the same to contain any false,

fictitious or fraudulent statement or entry, shall be fined under this title or

imprisoned not more than five years, or both.

18 U.S.C. § 1001 (1994).

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Finally, Robert argues that the evidence was insufficient to support

his conviction for making a false statement under 18 U.S.C. § 1001. We

9

disagree. The FRB had determined that MVFS would not be permitted to

undertake any additional indebtedness because it was already highly

leveraged. The FRB monitored MVFS's financial stability through annual FR

Y-6 reports which listed the company's various debts and other financial

occurrences. In 1992, Robert submitted the FR Y-6 to the FRB on behalf of

MVFS. The report indicated that Robert had made a $300,000 shareholder

contribution to MVFS. The report did not indicate that MVFS had become

indebted to the Dianna Smith IRA in the amount of $300,000. Robert

contends that he did not submit a false report by failing to list the

$300,000 as a loan from Smith to MVFS because the loan was not authorized

by Smith or by the MVFS board of directors, and therefore, the Government

failed to present evidence that MVFS had a binding obligation to repay

Smith. We disagree. The note was not, as Robert claims, between himself

and the Smith IRA. Rather, the promissory note evidenced an obligation on

the part of MVFS to pay the Dianna Smith IRA $300,000. The evidence was

sufficient to allow the jury to conclude Robert falsely reported the

$300,000 loan as a shareholder contribution on the FR Y-6 when it was

actually a loan to MVFS.
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B. Saundra Darrah

Saundra Darrah argues that the evidence presented at trial was not

sufficient to support her conviction under 18 U.S.C. § 1001. On October

8, 1993, Saundra submitted a signed IRS Form 433 to the IRS in order for

the IRS to assess her ability to pay $84,000 in past due withholding taxes.

On the line requesting securities interests, the form stated "none."

However, a financial statement submitted to Norwest Bank by Robert and

Saundra Darrah reported that Saundra owned one hundred percent of Darrah's

Apco which was valued at $750,000. The financial statement was signed by

Saundra on October 31, 1993. Though Saundra admits signing the Form 433,

she argues that the Government failed to establish that she made a false

statement because it did not prove that she had knowledge of the contents

of the form. Her argument is largely based on the fact that her husband

and attorney completed the Form 433 on her behalf. However, just as a

taxpayer cannot avoid liability for submitting a false tax return by having

another complete it for her, see United States v. Walker, 896 F.2d 295, 299

n.9 (8th Cir. 1990), she likewise cannot escape fault for submitting a

false Form 433 by displaying a reckless disregard for the contents of the

document, see United States v. Puente, 982 F.2d 156, 159 (5th Cir.), cert.

denied, 508 U.S. 962 (1993). Saundra submitted a signed financial

statement to Norwest Bank reporting her interest in Darrah's Apco just

three weeks after submitting the Form 433 to the IRS. She was the sole

owner of the business. Certainly, the evidence was sufficient for the jury

to conclude that Saundra knew of her interest in Darrah's Apco and should

have reported it on her Form 433.

Saundra also contends that her conviction resulted in a violation of

her Fifth Amendment right to due process because her guilty verdict was

inconsistent with her husband's acquittal on the same charge. This

argument is without merit because "[i]t is well established that

consistency of a jury's verdicts is not necessary." United States v.

Finch, 16 F.3d 228, 230 (8th Cir. 1994); accord Hamling v. United States,

418 U.S. 87, 101 (1974).
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III. CONCLUSION

For the reasons discussed above, we affirm the decision of the

district court.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.