### The Honorable Richard H. Battey, United S tates District Judge 1 

### for the District of South Dakota. The Honorable Marshall P. Young, United States Magistrat e 2 

### Judge for the District of South Dakota. ___________ No. 95-2240

___________ Steven C. Willis, *

Appellant, * * Appeal from the United States v. * District Court for the * District of South Dakota. United States of America, * * Appellee. *

___________ Submitted: March 15, 1996 Filed: July 1, 1996

___________ Before FAGG, JOHN R. GIBSON, and WOLLMAN, Circuit Judges.

___________ WOLLMAN, Circuit Judge.

Steve n C. Willis was tried for bank fraud, found guilty on al l counts , and sentenced to two concurrent terms of thirty-six months ' imp risonment and to thirty-six months' supervised release. He was als o ordered to pay restitution in the amount of $23,806.74. We affirmed his conviction on direct appeal. United States v. Willis , 997 F.2d 407 (8th Cir. 1993), cert. denied , 114 S. Ct. 704 (1994).

Therea fter, Willis brought this section 2255 motion, which th e di strict court referred to a magistrate judge. The magistrate judg e 1 2 recommended dismissing Willis's motion without an evidentiary hearing. Th e district court accepted that recommendation and entered an order denying the motion. Willis now appeals from that

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order, arguing by way of alternative relief that the order be reversed and the case remanded for an evidentiary hearing.

I.

Willis is a well-educated man. He holds degrees in law (J.D.) an d business (M.B.A.) and is a certified public accountant. The scheme that led to Willis's conviction began with his formation of a partnership calle d Rec Co, with Steve Et tles and Charles Hopp, for the purpose of purchasing a Sioux Falls bowling alley.
Willis's and Hopp's share of the purchase price was financed by First Federal Savings Bank (First Federal), where Ettles worked as a loa n officer. The deception began immediately upon the formation of th e partnership when, contrary to bank policy, Ettles failed to inform the ban k of his affiliation with Willis and Hopp before extending loans to them.

The deception escalated when the partnership began to experienc e financial difficulties and Ettles became reluctant to loan more of First Federal's money directly to the partnership. The three partners bega n recruiting friends and employees to borrow additional money for Rec Co's benefit. The partners then guided the borrowers through the application process, using Ettles' position at First Federal to ensure that th e applications would be successful. The nominee borrowers had no intention of personally repayin g the loans; they simply allowed the partners to use their names and financial information to obtain the loans. To conceal fro m Firs t Federal the true purpose of these loans, false information wa s provided on the loan application forms.

The nominee borrowers were assured that the true beneficiaries of the loa ns, Rec Co or the partners, would repay the loans. Some borrower s received kickbacks for their role in obtaining m oney for Rec Co. When the loans became due and the partners could not repay

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as promised, they secured new nominee loans to meet these obligations, thu s driving Rec Co deeper and deeper into debt. Finally, when several of the loans became past due and the nominee borrowers began to face repercussion s from the outstanding loans, the bank was alerted to the scheme.

Prior to Willis's indictment, Ettles pleaded guilty to three felony counts an d, pursuant to a plea agreement, agreed to testify for th e government. Hopp later pleaded guilty to one count of conspiracy to commi t bank fraud and agreed to testify against Willis.

II.

Wi llis alleges that he received ineffective assistance of counsel , arguing that trial co unsel failed to conduct an adequate investigation of Ettles' plea agreement and failed to effectively cross-examine Ettle s
concer ning that agreement. On direct appeal, Willis's trial counse l ackno wledged that he knew of Ettles' plea agreement, which on its fac e stated that it was the full agreement between the parties. He argued , however, that the government had violated Brady v. Maryland , 373 U.S. 83 (1963) , by failing to turn over Ettles' sentencing transcripts, whic h showed that the government had dropped eighteen counts against Ettles in excha nge for his plea and further cooperation with the government. W e rejected this claim, holding that the government had no duty to turn over documents that counsel could have discovered by investigating the district court file. See Willis , 997 F.2d at 412. Willi s now renews this claim on collateral attack as the basis for a finding of ineffective assistance of counsel.
To prevail on an ineffective assistance of counsel claim, Willi s must show that his attorney's performance was constitutionally deficient an d that hi s right to a fair trial was prejudiced by that deficien t performance. Strickland v.

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Washington , 466 U.S. 668, 687 (1984).

We first address Willis's claim that counsel was ineffective fo r failing to adequately cross-examine Ettles. Counsel's cross-examination, which spa ns forty-two pages of the record, provided the jury with a detailed picture of where Ettles' loyalties lay. Counsel began by inducin g Ettles to admit that he had refused to speak with an investigator sent by Willis's counsel befo re trial because he did not want to give the defense "any a mmunition." He further questioned Ettles regarding his ple a agreement, eliciting an admission from Ettles that his guilty plea involve d charges unrelated to his partnership with Willis. Willis's attack o n counsel's cross-examination in substance boils down to counsel's failure to follow up his questions concerning the plea agreement with the question , "Isn't it true that if you do not testify as the government wishes, yo u might be subject to p rosecution for claims that have been dropped?" Even if an affirmative ans wer to this question would have been certain, and it is not a foregone conclusion that it would have been, counsel's failure to ask it is not the type of error, if indeed it was error at all, that the Sixth Amendment functions to correct. In hindsight, there are a few, if any, cross-examinations that could not be improv ed upon. If that were the standard of constitutional effectiveness, few would be the counsel whose perfor mance would past muster. Accordingly, we conclude that tria l counsel's cross-examination did not fall short of effective assistance.
Turning to the failure-to-investigate claim, on direct appeal w e characterized counsel's actions as a "fail[ure] to exercise diligence in investig ating the file." Willis , 997 F.2d at 413. We need not decid e whethe r this failure rose to the level of constitutionally deficien t perf ormance, because we find, as we will discuss below, that even i f counsel's performance was deficient, Willis was not prejudiced by it. See Schneider v. Delo , No. 95-2969, slip op. at 3 (May 30, 1996).

### -5- To establish prejudice, Willis must show that counsel's allege d
errors were "so serious as to deprive defendant of a fair trial, a trial whose result is reliable." Strickland , 466 U.S. at 687.

Willis attempts to characterize the trial as a simple credibilit y conte st between himself and Ettles--Ettles claiming that Willis ha d knowledge of the fraud, and Willis claiming that he did not. Willis argue s that despite counsel's exhaustive cross-examination of Ettles, furthe r impeachment of Ettles would likely have tilted the credibility balance in Willis's favor by alerting the jury to the possibility that the droppe d charge s could have been revived had Ettles not cooperated sufficiently

. Although Willis's intent to defraud was a key issue at trial, his clai m that this issue turne d entirely on his and Ettles' testimony is belied by the record, which contains other evidence of Willis's knowledge of an d participation in the fraud.

Fo r example, Ettles' testimony that Willis had knowingly falsifie d loan documents was supported by Becky Hewitt, on e of the nominee borrowers and an employee of Willis's drycleaning business. Hewitt testified that Willis brought the loan application to her to sign and paid her $250 for her role as nominee b orrower. The loan application submitted to the bank contained false information, which Hewitt denied providing, including fals e entri es regarding her income, savings, the value of her house, and th e purpose of the loan. A handwriting expert identified some of false entrie s as being in Willis's handwriting.
Moreover, additional evidence suppor ts Ettles' testimony that Willis knew of the fraudulent nature of the irrevocable letters of credit tha t
were p repared by Ettles without the bank's knowledge and thereafte r provided to several of the nominee borrowers to induce them to borrow mone y for Rec Co. These le tters stated that the bank guaranteed payment of the loans in the event that the

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beneficiary (Rec Co) failed to pay. Typically, the bank would provide suc h letters only when the loan beneficiary had a line of credit at the bank. Willis clearly knew that Rec Co had no such credit line with First Federal , as th e company's credit deficiency was the sole reason for the nomine e loans. Willis's claim that he did not understan d the nature of letters of credit sufficiently t o know that these were not legitimate is belied both by Willis's extensive education and by codefendant Hopp's testimony that Willis h ad admitted to him concern over a letter of credit that he ha d written to support one of the nominee loans.

Although Willis argues that his case is the mirror image of Reutter
v. Solem , 888 F.2d 578 (8th Cir. 1989), we think that there are significan t differences between the two cases. Unlike Reutter , in which the state's case "depended almost entirely on Trygstad's testimony," 888 F.2d at 581, the government's case against Willis did not rest almost entirely upo n Ettle s' testimony. True, Ettles was an important witness for th e gover nment--indeed, probably the principal witness--but, as pointed ou t above, there was other evidence tending to establish Willis's guilt

. Moreov er, and most significantly, Ettles had pleaded guilty, had bee n sentenced, and was serving time in the penitentiary at the time of Willis' s trial. There were no more charges to be dropped and no further concession s to be m ade by the government in return for his testimony. In contrast , unbeknownst to Reutter's counsel, witness Trygstad in Reutter was slated to appear at a commutation hearing soon after Reutter's trial, a hearing that was of utmost im portance to Trygstad and from which he stood to reap a specific, substanti al benefit depending upon the state's recommendation to the parole board, a recommendation that could only have been influenced by the nature of Tryg stad's testimony at Reutter's trial. Thus, Willis's case is not Reutter redux.

We con clude, therefore, that the alleged deficiencies in tria l counsel's performance do not undermine our confidence in the jury's

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verdict.

III.

Willis ar gues that instruction #11 violated his due process rights, that c ounsel's failure to object to this instruction amounted t o ineffe ctive assistance, and that counsel was ineffective for failing t o offer an instruction on good faith.

Because Willis failed to challenge the contested portion o f instruction #11 both at trial and on direct appeal, he cannot obtain relie f
on his due process claim unless he shows cause and prejudice for hi s procedural default. See Ried v. United States , 976 F.2d 446, 448 (8th Cir

. 1992). As cause, Willis offers his counsel's alleged ineffectiv e assistance.
Jury instruction #11 reads, in relevant part:

Int ent to defraud a bank exists whenever the defendant act s knowing ly and the result of his or her conduct would be t o defraud the bank, regard less of motive. Reckless disregard of the interests of the bank is equivalent of intent to defraud.

A majority of circuits that have addressed the question whethe r reckl ess disregard of the interests of the bank is sufficient to prov e intent to defraud hav e answered in the affirmative. See United States v. Crab tree , 979 F.2d 1261, 1269 (7th Cir. 1992) (holding that reckles s disregard of bank's i nterests is equivalent to intent to defraud under 18 U. S.C. § 656, the parallel bank fraud statute applicable to ban k employees), cert. denied , 114 S. Ct. 216 (1993); United States v. Hoffman , 918 F.2d 44, 46 (6th Cir. 1990) (per curiam) (sa me); United States v. Cyr , 712 F.2d 729, 732 (1st Cir. 1983) (same); United States v. Krepps , 605 F.2 d 101, 104 (3rd Cir. 1979) (same); United States v. Larson , 581 F.2d 664, 66 7 (7th Cir. 1978) (same). But see United

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States v. Adamson , 700 F.2d 953, 965 (5th Cir.) (en banc), cert. denied , 464 U.S. 883 (1983). Moreover, the minority position articulated by the Fifth Circuit merely holds that the intent to defraud should not be equate d with reckless disregard. Rather, the jury should be instructed that it ma y infer the intent to defraud from a reckless disregard of the bank' s interests. See Adamson , 700 F.2d at 965. As the Adamson dissent points out, such a distinction is mere semantics, and the chance that it wil l influence the outcome of the trial is "so tenuou s as to be more meaningful in the classroom than the courtroom." Id. at 969.

In United States v. Beran , 546 F.2d 1316 (8th Cir. 1976), cert
. denied , 430 U.S. 916 (1977), a case involving a violation of 18 U.S.C

. § 656, we said:

Cri minal intent may be inferred from all the facts an d circu mstances of the case. It "exists if a person act s knowingly and if the nat ural result of his conduct would be to injure or defraud the bank even though this may not have been his motive."

Id. at 1321 (citations omitted) (quoting United States v. Schmidt , 471 F.2 d 385, 386 (3rd Cir. 1972)).

The Sixth Amendment right to counsel functions to ensure tha t defendants receive a fair trial, not a perfect one. It does not require counsel to argue for an instruction that is supported by only a minority of circu its and which, in effect, appears to make only a semanti c diff erence. Counsel was not ineffective for failing to challenge a n instruction that find s support in our holding in Beran , as well as in the dec isions of the majority of the circuits that have ruled upon th e question.

Willis contends that his trial counsel was ineffective for failin g to proffer an instruction on good faith. It is true that good fait h constitutes a complete defense to a charge of fraudulent

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intent and that a def endant is entitled to a good faith instruction where
one has been requested and finds support in the evidence. See Unite d States v. Casperson , 773 F.2d 216, 222-23 (8th Cir. 1985). We find , however, t hat the instructions in the present case, which set out th e elements of bank fraud and stated that a specific intent to defraud wa s required, were adequate to convey to the jury th at if it found that Willis acted in good faith it could not find him guilty of bank fraud. Moreover, Willis's counsel asserted this good faith defense repeatedly in his closin g argume nt, arguing that Willis did not knowingly participate in Ettles ' deception of the bank and thus did not have the requisite intent t o defraud. Accordingly, counsel's failure to prof fer a specific instruction
on good f aith did not fall outside the wide range of professionall y competent assistance. See Strickland , 466 U.S. at 689.

IV.

We hol d that the district court did not err in denying the sectio n 2255 motion. Likewis e, we hold that the district court did not abuse its discretion in denying the motion without an evidentiary hearing. See , e.g. , P ayne v. United States , 78 F.3d 343, 347 (8th Cir. 1996)

. Accordingly, we deny Willis's alternative prayer that the case be remanded to the district court for an evidentiary hearing.

The district court's order is affirmed.

A true copy.

Attest:

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