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 * Distric t 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.
-2- Before W OLLMAN 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 mad e false statements to a lending institution, see 18 U.S.C. § 1014 (1994) , misapplied bank funds, see id. § 656, engaged in a monetary transaction involvi ng property unlawfully derived from the misapplication of ban k fun ds, see id. § 1957, and made a false statement to an agency of th e United States, see id. § 1001. Appellant Saundr a Darrah, Robert's spouse, similarlychallenges her conviction for making a false statement to a n agency of the United States. See id.

I. BACKGROUND
Rober t Darrah was a Certified Public Accountan t ("CP A") whose company, Darrah & Company, serviced ta x returns an d managed investments in Council Bluffs, Iowa. During the 1980s and early 1990s, Robert became directly invo lved with a bank holding company called Missour i Valley Fin ancial Services ("MVFS"), which owned stock in several ba nks in and around Council Bluffs. In the mid1980s, MVF S received a bank stock loan from Norwest Bank ("Norwest") in Des Moines for the purpose of purchasin g stock in Peoples National Bank ("PNB") in Cou ncil Bluffs. The shareholders of MVFS, including Robert, personall y guaranteed the bank stock loan. At the time, Robert was the president of MVFS and consequently controlled th e overall operations of the holding company and the various banks it owned, including PNB. One of hi s responsibi lities was to make loan payments to Norwest on behalf of MVFS.-3-

In1987, Darrah & Company began preparing tax return s for D ianna Smith. When Smith retired in 1990, Rober t offered to help her invest her retirement funds whic h totaled just over $400,000. Smith stressed to Rober t tha t she desired to place the bulk of her funds in low

risk investments. After discussing various options , Smit h requested that Robert invest $300,000 in a n annuity, $ 100,000 in growth funds, and about $5,000 in a "holdin g company fund." To facilitate the process o f transferring the funds to the desired investm ents, Smith, upon Robert's request, signed several money transfe r forms in blank and wrote a check to PNB for the entir e amo unt of her retirement fund. Linda Hack, the IR A sup ervisor at PNB, opened an IRA in Smith's name

. Beca use Smith requested that Robert supply her wit h mini mal paperwork, Hack structured the account so tha t Robe rt, rather than Smith, received the statements an d correspondence regarding the account. Therefore, fro m the time she turned her money over to Darrah in 199 0 unti l early 1994, the only information Smith receive d pertained to her growth fund investments.

Howard Stoffa, a special agent with the crimina l investigation division of the Internal Revenue Servic e ("IRS"), t estified at trial concerning the results of an investigation of Robert and certain transaction s invo lving MVFS. Stoffa testified that Dianna Smit h deposit ed her check into her IRA on May 30, 1990. O n July 20, 1990, $300,000 was withdrawn from Smith' s accou nt. Stoffa did not trace the funds to an annuity , as Smith had authorized, but discovered that the $300,000
was use d to purchase a cashier's check payable to MVFS

. Also on Ju ly 20, Robert signed a check from an MVFS bank-4-

accoun t made payable to Norwest in the amount o f $255,579.28. Prior to Smith's check being de posited into the MV FS account, the balance in the account wa s $54,5 69.07. Stoffa stated that in his opinion, th e $300,000 from Smith's account was used to pay the loan at Norwest be cause prior to the deposit of those funds, the MVFS ac count did not have sufficient funds to make tha t pa yment. Smith testified that she did not authoriz e Robert to invest her funds in such a manner.-5-

In 19 94, Smith requested a meeting with Robert t o obtain documentation of her investments. Rob ert 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 b y Dale Ward, an MVFS director and Saundra Darra h's brother, indicating that MVFS owed the Dianna Smith IRA $300,000. Smith testified that she did not authorize such a n investment and that the initials indicating a uthorization must ha ve been forged. Ward testified that he prepare d the p romissory note between MVFS and Smith's IRA a t Robert's d irection. Smith, obviously upset that a large portio n 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 percen t interest.

The Federal Reserve Board ("FRB") is responsible for regu lating bank holding companies. The FRB ha d dete rmined that because MVFS was highly leveraged, i t would not be permitted to acquire additional debt. I n late 1990, the FRB began an inspection of MVF S to confirm that it was operating in conformance with applicabl e reg ulations. In March of 1992, Robert signed an d submitted an FR Y-6 Annual Report for MVFS to the FRB

. The FR Y-6 showed a $300,000 transaction which wa s repo rted by Robert as a shareholder contribution fro m himself, r ather than as a loan to MVFS from Smith's IRA. At tria l, FRB Examiner Mary Beth Tystahl examined th e note oblig ating MVFS to repay Smith's IRA and determined that it si gnified 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 no t-6-

accu ratelyreflect the source of the $300,000 based o n th e promissory note, and she also testified that th e source of funds was significant because it substantially changed the level of MVFS's indebtedness.

Robert and Saundra maintained a $45,000 credit lin e at PNB. The bank kept a loan file containing relevan t information concerning the Darrahs' financial status

. The file c ontained a personal financial statement, along with copies of the Darrahs' 1989, 1990, and 1991 ta x retu rns. Charles Schumacher, PNB's senior loan office r from-7-

Janu ary1987 until October 1992, testified that it wa s the normal business practice for banks to request copies of potential loan customers' financial statem ents and tax retu rns to assess their ability to repay loans

. Schumacher stated that he assumed customers w ould present "accurate" copies of their tax returns. The 1989 return Robe rt submitted to PNB, as well as two other banks , reported a n adjusted gross income of $236,393, while the 19 89 return provided to the IRS reported an adjuste d gros s income of $147,357. Similarly, Robert provide d Norwest Ba nk Nebraska, N.A. with a 1992 tax return which reported an adjusted gross income of $62,312, while th e 1992 return Robert submitted to the IRS listed hi s adjus ted gross income as $33,312. Pamela Reicks, a revenue agent with the IRS, testified that during he r service wi th the IRS, she has never known anyone to file
a dra ft return without notifying the IRS of its draf t status.

Saundra Darrah owned one-half of a company calle d Saun G i, Incorporated ("Saun Gi"). She also owned on e hund red percent of a gas station and convenience stor e ca lled Darrah's Apco, which the Darrahs' financia l stat ement valued at $750,000. Internal Revenue Office r James Daugherty testified that Saun Gi owed the IR S approximat ely $84,000 in unpaid unemployment withholding taxe s. After Daugherty determined that Saundra wa s resp onsible for the taxes, he requested a collectio n info rmation statement (IRS Form 433) from her t o deter mine her ability to repay the debt. On October 8 , 1993 , Saundra's attorney provided Daugherty with an IR S Form 4 33 on Saundra's behalf. Saundra signed the for m imme diatelybeneath the declaration that she would b e-8-

subject to penalties for perjury if the state ments in the formwere not true. The form required Saundra to lis t
an yinvestments, stocks, or securities. On the lin e requesting this information Saundra's form st ated "none." Thus, Saundra failed to report her interest in Darrah' s Apco. Daugherty testified that he relied on th e informatio n in the form to devise a schedule for Saundra to pa y the $84,000 debt. Daugherty stated had he know n of Saun dra's interest in Darrah's Apco, it would hav e influenced his collection methods.The HONORABLE CHARLES R. WOLLE, Chief United State s District Judge 2 for the Southern District of Iowa.
-9- Bas ed on the facts presented at trial, the jur y conv icted Robert of four counts of making fals e stat ements to financial institutions, see 18 U.S.C. § 1014, one count of misapplying bank funds, se e id. § 656, one count of engaging in a monetary transacti on involving prop ertyderived from the misapplication of bank funds , see id. § 1957, and one count of knowingly ma king a false stateme nt to the Federal Reserve Board, see id. § 1001

. The jury convicted Saundra of knowingly making a fals e statement to the IRS. See id. Robert and Saundra filed moti ons for judgment of acquittal which the distric t court denied. Both defendan ts appeal their convictions.

2

II. DISCUSSION

A. Robert Darrah

1. Instructional errors

Robert appears to raise two instructional issues o n appe al. First, Robert asserts that the district cour t committed error when it "fail[ed] to specificall y instru ct the jury that materiality is one of th e essential elements" of 18 U.S.C. § 1014. Rob ert's Br. at 18. Ho wever, this argument is precluded by the Suprem e Cour t's recent decision that materiality is not a n essential element of § 1014. See United Stat es v. Wells , 117 S. Ct. 921, 929 (1997).-10-

Robert also seemingly claims error in the distric t court's failure to amend Instruction 19, whic h 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 cour t agreed, upon the Government's request, to amend the instruction to inquire whether Robert was either an officer or a directorUnder the plain error standard, reversal is warranted if "(1) th e court committed 3 an error; (2) the error is clear under current law; and (3) the error affec ts the defendant's substanti al rights." Robinson , 110 F.3d at 1324 (quotation, alteration, and citatio n omitted).
-11- of PNB. The district court failed to make the agreed upon amendment, and Robert cl aims error in that failure. Because Robert did not raise thi s issue prior to his appeal, we review for plain error. See United States
v. Ro binson , 110 F.3d 1320, 1324 (8th Cir. 1997). We note tha t 3 Instruction 18 includes the language of § 656 which states that a person "connected in any cap acity" with the institution, including an officer or a director, can be fo und guilty of misapplication of funds. See Robert's App

. at 34. Therefore, after viewing the instructions as a whole, w e conclude that the district court adequately inst ructed the jury on the law of § 656.

2. Sufficiency of the evidence

Robert ch allenges the sufficiency of the evidence presented on each of the counts for which he was convicted. When considering the sufficienc y 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

. 199 7). We must give the Government "the benefit of all reasonabl e inferences that might be drawn from the evidence," United States v. Darden , 70 F.3d 1507, 1517 (8th Cir. 1995) (quotation an d citation omitted), cert. denied , 1 16 S. Ct. 1449 (1996), and "[w]e will reverse a conviction fo r 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. Afte r considering the evidence in this light, we conclude that th e 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; P NB 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, o r willfully overvalues any land, property or security, for the purpose o f infl uencing in any way the action of . . . any institution the accounts o f which are insured by the Federal Deposit Insurance Corporation , . . . upon any application, advance, discount, purchase, purchase agreement , repurcha se agreement, commitment, or loan, or any change or extension
o f any of the same, by renewal, deferment of action or otherwise, or the acceptance, release, or substitutio n 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).
-12- In counts two, three, four, and five, the Government charged Robert with making false statemen ts in violation of 18 U.S.C. § 1014. For each 4 5 of the banks in quest ion, 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 fig ures as the returns Robert filed with the IRS. For example, the 1989 return Robert submitted to thre e of the banks reported his adjusted gross income as $263,393, while the 198 9 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 merel y established that the bank returns differed from those submitted to the IRS

. The refore, Robert postulates that the only method for the Government t o prov e the falsity of his statements was to establish that he someho w asserted to the banks that the returns he provided to them were identical to those he submittedto the IRS. Robert concludes that because he never made such an assertion, the Government did not establish that he made fals e 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 sta tements. In light of the Supreme Court's decision in Wells , 117 S. Ct. at 929 , such proof was not necessary. Section 656 provides: 7
Whoev er, being an officer, director, agent or employee of, o r connected in any capacity with any Federal Reserve bank, member bank, depository institution holding company, [or] nati onal bank . . . embezzles, abstrac ts, purloins or willfully misapplies any of the moneys, funds o r cre dits of such bank . . . shall be fined not more than $1,000,000 o r imprisoned not more than 30 years, or both . . . . 18 U.S.C. § 656 (1994).
-13- We conclude that the differences between the bank returns and t he IRS return s 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 unde r penalties of perjury. Therefore, a reasonable jury could hav e concluded that because the bank returns substantially differed from the IR S returns, the bank ret urns were false. True, a reasonable jury also could have inferred that because the IRS returns diffe red 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 sufficienc y of t he evidence standard, we must reverse the conviction "only if n o constr uction 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 wa s insuf ficient to sustain his conviction under 18 U.S.C. § 656. Rober t 7 contends that the Gov ernment did not present any evidence that he "was in anyway connected to the transfer of the $300,000." Robert's Br. at 21. He further argues that even if he was connected to theRobert wa s convicted under 18 U.S.C. § 1957 for engaging in a monetary 8 transactioninvolving property derived from the willful misapplication of bank funds. Robert 's sole argument on appeal concerning this conviction is that because th e evidence did not establish that he willfully misapplied bank funds under § 656, he could notha ve engaged in a transaction involving those funds under § 1957. Because w e ha ve concluded that the evidence was sufficient to sustain Robert's conviction unde r § 656, Robert's § 1957 argument likewise fails.
-14- transfer of funds, his involvement was not in his capacity as a director of PNB. We first note that this Circuit has not explicitly determine d whether § 656 requires "evidence that 'bank funds were misapplied by virtu e of the fact the defendant was connected in some capacity with a bank which enable[d] him to gainaccess 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 suffic ient to establish Robert's connectio n to the misapplication of bank funds in his capacity as a director of PNB.

Smi th specifically requested that Robert invest $300,000 of he r 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 Hac k testified that Dale Ward requested the transfer of funds, Ward stated that he knew nothing of th e illegal nature of the transaction, and he prepared the promissory note b etween 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 ju ry to conclude that Robert
was able t o coordinate the transaction between the Smith IRA and MVF S through his position as a director. 8Section 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 fal se, fictitious or fraudulent statements or representations, or makes o r uses any false writing or document knowing the same to contai n 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).
-15- Finally, Robert argues that the evid ence was insufficient to support his conviction for making a false statement under 18 U.S.C. § 1001. W e 9 dis agree. The FRB had determined that MVFS would not be permitted t o under take any additional indebtedness because it was already highl y leveraged. The FRB monitored MVFS's financial s tability 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 shareholde r contribut ion to MVFS. The report did not indicate that MVFS had becom e indebted to the Dianna Smith IRA in the amount of $300,000. Rober t contends that he did not submit a false report by failing to list th e $300,000 as a loan fr om Smith to MVFS because the loan was not authorized by Smith or by the MV FS board of directors, and therefore, the Government faile d to present evidence that MVFS had a binding obligation to repa y 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 suff icient to allow the jury to conclude Robert falsely reported th e $30 0,000 loan as a shareholder contribution on the FR Y-6 when it wa s actually a loan to MVFS.-16- B. Saundra Darrah

Saundra Darrah argues that the evidence presented at trial was no t 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 an d Saundra Darrah reported that Saundra owned one h undred percent of Darrah's Apco which was valuedat $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 atto rney completed the Form 433 on her behalf. However, just as a taxpayer cannot avoid liability for submitting a false tax return by havin g another complete it for her, see United States v. Walker , 896 F.2d 295, 29 9 n.9 ( 8th Cir. 1990), she likewise cannot escape fault for submitting a false Form 433 by dis playing 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 financia l statement to Norwest Bank reporting her interest in Darrah's Apco jus t three weeks after submitting the Form 433 to the IRS. She was the sol e owner of the business. Certainly, the evidence was sufficient for the jur y to conclude that Saun dra knew of her interest in Darrah's Apco and should have reported it on her Form 433.

Saundra also contends that her convi ction resulted in a violation of her Fifth Amendment right to due process because her guilty verdict wa s inconsistent with her husband's acquittal on the same charge. Thi s argume nt is without merit because "[i]t is well established tha t consistenc yof a jury's verdicts is not necessary." United States v

. Finch , 16 F.3d 228, 2 30 (8th Cir. 1994); accord Hamling v. United States , 418 U.S. 87, 101 (1974).-17-

III. CONCLUSION

For th e reasons discussed above, we affirm the decision of th e district court.

A true copy.

Attest:

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