IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

___________________________________

No. 93-1182

___________________________________

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

JERRY D. HOLLEY and

MARVIN D. HAASS,

Defendants-Appellants.

____________________________________________________

Appeals from the United States District Court for the

Northern District of Texas

____________________________________________________

June 13, 1994

Before GOLDBERG, HIGGINBOTHAM, and EMILIO M. GARZA, Circuit

Judges.

GOLDBERG, Circuit Judge:

Jerry D. Holley and Marvin D. Haass appeal the ir criminal

convictions for various crimes committed in the course of the

failure of Peoples Savings and Loan Association ("Peoples"). The

appellants have raised numerous issues, including challenges to the

sufficiency of the evidence, the jury charge, some of the district

court's evidentiary and discovery rulings, and the amount of a

restitution order. Although we have considered all of the issues

advanced by Holley and Haass, we will not discuss some of the more

meritless points that have been raised. We affirm the appellants's

convictions, but vacate the district court's restitution order.1 Federal regulations require federally insured financial

institutions such as Peoples to maintain a certain minimum net

worth. If such an institution has too many troubled assets, such

as Peoples's REO, the institution's net worth can fall below the

required levels. The institution may then be required to acquire

additional investments of capital.

2 I. Background

Appellants Holley and Haass were the co-owners an d two of

the principal officers of Peoples, a state chartered, federally

insured financial institution in Llan o, Texas. In 1985, Peoples

was beset by financial difficulties. Specifically, the appellants

were growing increasingly concerned about the amount of Real Estate

Owned ("REO")--property to which Peoples had acquired title--that

appeared on Peoples's balance s heets. Peoples's REO, acquired

primarily through foreclosure, included two apartment buildings in

S an Angelo, Texas and another apartment building in San Anton io,

Texas. Because the market value of these apartments was declining,

the appellants wished to sell these properties as soon as possible.

More importantly, by selling the building s, the appellants would

avoid having to infuse capital into Peoples. 1 Thus, in mid-1985,

Haass and Lloyd Kitchen, an officer of Peoples, opened negotiations

with James McClain, a potential buyer of Peoples's REO.

Meanwhile, Holley and Eileen Marcus, a real estate broker,

entered into an arrangement to engage in real estate transactions

in and around Dallas, Texas. Under this arrangement, Marcus was to

find various properties that she and Holley could purchase and then

resell, and Holley was to obtain the necessary financing. In the

fall of 1985, Marcus raised with Holley the possibility of2 The owners of Arapaho Station at that time were involved in

litigation. The property was controlled by a court-appointed

receiver who was searching for a buyer for the shopping center.

3 purchasing the Arapaho Station Shopping Center ("Arapaho Station")

in Richardson, Texas. 2 Holley demonstrated an interest in Arapaho

S tation. Holley and Marcus intended to purchase Arapaho Station

and realize a quick profit by immediately reselling the property to

a buyer at a price above what they had paid. Such a transaction is

often called a "flip" of the property. On October 14, 1985, Marcus

signed a contract to purchase Arapaho Station for $5,500,000, but

this contract was never closed.

On November 27, 1985, Holley entered into a contract of his

own to purchase Arapaho Station for $5,500,000. This contract

called for a $100,000 letter of credit as earne st money. The

amount of earnest money required was later raised to $110,000.

Meanwhile, Dallas real estate agent Jerri Cook showed Arapaho

Station to Je rry Ezell, an employee of Jim McClain. Holley then

met with McClain to discuss a flip of Arapaho Station. McClain

became interested whe n he learned that the potential profit from

this transaction could be as high as $ 3 million.

The other major characters in this case were Cliff Brannon

and Don Jones. Brannon and Jones owned Security Savings

Association ("Security"), a state chartered, federally insured

financial institution in Plano, Texas. In 1983, Holley and Haass

entered into an arrangement with Brannon and Jones whereby Peoples

and Security would make personal loans to the owners of the other

institution without requiring any s ecurity or without inquiring4

into the adequacy of the collateral for the loans. The purpose of

this arrangement was to evade regulations that limit the amount of

loans that a savings and lo an can make to its owners. Several

million dollars in loans were extended through this arrangement.

In 1985, Security also experienced financial difficulties.

One drain on Security's financial condition was a piece of REO

called Executive Square. Security's ownership of Executive Square

created the same problems for Security that Peoples's ownership of

its REO created for Peoples. On December 11, 1985, Holley and

Haass met with Brannon and Jones to formulate an agreement through

which Peoples and Security could remove some of their REO from

their books. Also present at this meeting were Peoples's president

Joel Daniel, Lloyd Kitchen, Jim McClain, and Jerry Ezell. Under

this agreement, Peoples would sell its REO apartments to First

American Land & D evelopment, Inc. ("First American"), a company

wholly owned by McCla in, and extend to First American a loan for

the purchase price of those buildings. At the same time, Security

wo uld sell Executive Square to First American, also extending a

loan for the purchase price of that property. To recognize these

deals as the sale of Peoples's a nd Security's REO, applicable

regulations required First American to provide a 10% down payment

for each transaction. To satisfy this requirement, the appellants

and Brannon and Jones agreed that Peoples and Security would issue

a letter of credit to serve as the down payment for the sale of the

other institution's REO to First American. At this meeting, the5

participants also discussed Holle y's planned sale of Arapaho

Station to McClain.

Later, on December 20, 1985, Holley assigned his contract to

purchase Arapaho Station to City Group, Inc. ("City Group"), a

shell corporation owned by McClain, for ten dollars. Peoples then

issued the required $110,000 earnest money letter of credit to the

receiver of Arapaho Station. However, this letter of credit had

not been approved and was not supported by an obligation requiring

City Group to repay Peoples. That evening, Haass and McClain

negotiated an illicit "consulting fee" to be paid by McClain to

Holley. Testimony at trial revealed that, during this meeting,

Haass spoke to Holley on the tel ephone about the amount of this

"fee." Further, Haass revealed that Holley had agreed to assign

the fee to him in order to pay debts that Holley owed him. At the

conclusion of the meeting between Haass and McClain, McClain

presented Haass with a letter in which he (McClain) agreed to pay

H olley $662,000, purportedly for the assignment of the Arapaho

Station Contract, on the condition that the deal close by January

8, 1986.

The sale of Arapaho Station did not close on January 8, 1986

as required by the contract. On January 30, 1986, an attorney for

the receiver of Arapaho Station presented the $110,000 letter of

credit to Peoples for payment. When the attorney arrived at

Peoples's offices, Joel Daniel telephoned Haass and McClain. Haass

insisted that the letter of credit "couldn't be called [because] it

wasn't any good." McClain said that he would not reimburse Peoples3 McClain testified that the apartments and the shopping

center were "over-loaned" in comparison to their real value and

that the properties therefore provided no real collateral.

6 for the payment of the letter of credit. Peoples paid the letter

of credit and, the next day, set up a lo an on its books to City

Group to cover the outlay of funds. This supposed loan was not

supported by any promissory note or o ther specific document from

City Group or McClain.

In February of 1986, the receiver of Arapaho Station entered

into a contra ct to sell the shopping center to City Group for

$5,500,000. McClain abandoned his hope of realizing a quick profit

through a flip of Arapaho Station. Instead, the Arapaho Station

transaction and the transaction involving McClain's "purchase" of

Peoples's and Security's REO were arranged so that, in exchange for

the "purchase" of Peoples's REO apartments, McClain would receive

financing from Peoples for the purchase of Arapaho Station as well

as approximately $ 500,000 in cash. Moreover, Haass agreed that

McClain need not make any payments on the loans that his companies

received from Peoples.

These tran sactions, designed to remove REO from Peoples's

and Security's balance sheets , closed over a three-day period in

February of 1986. Peoples sold its three REO apartment buildings

to First Amer ican for $11,020,000, simultaneously loaning First

American the purchase price for these buildings. The down payment

for this purchase was a $1.6 million letter of credit issued by

Security and secured by a second deed of trust on the REO

apartments and on Arapaho Station. 3 Since the letter of credit4 McClain also testified that Executive Square was worth, at

most, 50% of the loan amount and that it provided no real

collateral for the letter of credit issued by Peoples.

7 down payment exceeded 10% of the purchase price, Peoples was

allowed to remove the apartments from its REO holdings listing. At

the same time, Security sold its REO property, Executive Square, to

Fir st American for $6.5 million. Security also simultaneously

loaned First American the purchase price of this building. The

down payment for the purchase of Executive Square was a $650,000

letter of credit issued by Peoples. Brannon testified that both

Holley and Haass agreed to Peoples's issuance of the $650,000

letter of credit to Security. This letter of credit was secured by

a second deed of trust on Executive Square. 4

During the Fe b ruary closing, City Group also purchased

Arapaho Station for $5.5 million and immediately resold it to First

American for the same amount. Peoples loaned First American

$6,650,000 for the purchase of Arapaho Station. McClain and his

companies receive d approximately $500,000 of the loan proceeds,

including a $220,000 "commission" paid to Santa Fe Real Estate

Development Corporation, a corporation controlled by McClain that

had no role in the transactio ns. Neither McClain nor any of his

companies contributed anything of value to the transactions.

Peoples's board of direct ors approved the issuance of the

$650,000 letter of credit to Security on February 20, 1986; the

board approved the loans to First American on March 20, 1986.

Holley and Haass were present at both meetings. McClain made no

payments on the loans that First American received fr om Peoples.8

On December 29, 1988, Peoples was placed into receivership by the

FSLIC. Texas Asset Trust eventually acquired the assets of Peoples

and sold the three apartment buildings and Arapaho Station at a

substantial loss. Having described these economic gyrations, we

are now prepared to examine how the law applies to these financial

somersaults.

II. Proceedings Below

In eight counts of a nine count federal indictment, a grand

jury charged Holley and Haass with various offenses stemming from

t hese transactions. The first count charged the appellants with

conspiracy under 18 U.S.C. § 371, alleging that Holley and Haass

schemed to (1) corruptly demand and agree to receive something of

value in connection with Peoples's business in violation of the

federal bank bribery law, 18 U.S.C. § 215, (2) execute a scheme to

defraud Peoples in violation of 18 U.S.C. § 1344, and (3) misapply

Peoples's funds in violation of 18 U.S.C. § 657. Count Two charged

Holley and Haass with bank bribery, alleging that the app ellants

corruptly demanded and agreed to receive $662,000 from McClain in

connection with Peoples's business. Count Three accused Holley and

Haass of executing a scheme to commit bank fraud by agreeing with

the owners of Security--Brannon and Jones--to extend loans to one

another without inquiring into the collateral for the loans. This

scheme included t he agreement between the appellants and Brannon

a nd Jones to issue letters of credit for the benefit of each

other's financial institution for the down payment for the sale of

the other institutions's REO. Count Four charged Holley with the5 The jury acquitted Holley on the one count of fraudulent

issuance of bank obligations (Count Four) and the one count of

misapplication of bank funds (Count Eight) with which he was

charged.

9 fraudulent issuance of a bank obligation. Counts Five through

Eight alleged various acts of misapplication of Peoples's funds.

After a jury trial, Holley and Haass were each convicted on

the conspiracy count (Count One) and the bank fraud count (Count

Three). Haass was convicted of bank bribery (Count Two), and

Holley was convicted of aiding and abetting this offense. Haass

was also convicted on three counts of misapplication of bank funds

(Counts Six, Seven, and Eight) and of aiding and abetting the

misapplication of bank funds (Count Five). 5 The district court

sentenced both men to serve terms of imprisonment and ordered them

to pay almost $6 million, jointly and severally, to the Federal

Deposit Insurance Corporation ("FDIC") as restitution. We now turn

to the appellants's meanderings and contentions.

III. The Sufficiency of the Evidence

Holley challenges the sufficiency of the evidence to support

his convictions. As always, our assessment of the sufficiency of

the evidence is deferential to the jury's verdict. We will affirm

the jury's decision if, "view ing the evidence and the inferences

that may be drawn from it in the light most favorable to the

verdict, a rational jury could have found the essential elements of

the offenses beyond a reasonable doubt." U nited States v. PrunedaGonzalez

, 953 F.2d 190, 193 (5th Cir.), cert

. denied , 112 S. Ct.

2952 (1992); Jackson v. Virginia

, 443 U.S. 307, 319 (1979). "[I]t10

is not necessary that the evidence exclude every reasonable

hypothesis of innocence or be wholly inconsistent with every

conclusion except that of guilt, provided that a reasonable trier

of fact could find that the evidence establishes guilt beyond a

reasonable doubt." U nited States v. Stephens

, 964 F.2d 424, 427

(5th Cir. 1992).

Holley first contends that there is insufficient evidence to

support his conviction for aiding and abetting bank bribery. To

sustain a conviction for aiding and abetting in violation of 18

U.S.C. § 2, the Government must show beyond a reasonable doubt that

Holley associated with a criminal venture, participated in that

venture, and sought by his action to make that venture succeed.

United States v. Murray

, 988 F.2d 518, 522 (5th Cir. 1993); United

States v. Par ekh , 926 F.2d 402, 406 (5th Cir. 1991). Under this

formulation of th e Government's burden, to "associate" means to

"share[] in the criminal intent of the principal." M urray

, 988

F.2d at 522. To "participate" means to "engage[] in some

affirmative conduct designed to aid the venture." Id

.

The "criminal venture" that Holley was convicted of aiding

and abetting was Haass's bank bribery. Specifically, the jury

found Holley guilty of aiding and abetting Haass in his

solicitation of a $662,000 "consulting fee" from McClain. Holley

i nsists that the evidence failed to show that he knew of or

participated in the solicitation of the December 20, 1985 letter

from McClain promising to pay Holley a fee of $662,000. However,

McClai n testified at trial that Haass telephoned Holley and11

discussed with him the negotiations for and the amount of the

"fee." The jury was entitled to credit this testimony and conclude

that Holley thereby aided and abetted Haass's bank bribery. We

affirm Holley's conviction for aiding and abetting.

Holley next argues that there is insufficient evidence to

support his conviction for bank fraud. Again, we disagree. There

was ample evidence that Holley was involved in the agreement to

extend loans and letters of credit from Peoples to Brannon and

Jones without inquiring into the collateral for these loans. This

arrangement exposed Peoples to at least a risk of loss. Exposing

a financial institution to a risk of loss is sufficient to support

a bank fraud conviction. U nited States v. Barakett

, 994 F.2d 1107,

1111 (5th Cir. 1993) ("We have recognized that knowing execution of

schemes causing risk of loss--rather than actual loss--to the

institution, can be sufficient to support [a] conviction" under §

1344), cert

. denied

, 114 S. Ct. 701 (1994); United States v. Saks

,

964 F.2d 1514, 1519 (5th Cir. 1992) (same); United States v.

Lemons

, 941 F.2d 309, 316 & n.3 (5th Ci r. 1991) (same). Thus,

Holley's conduct is sufficient to suppo rt a conviction for bank

fraud. Holley asserts that since Brannon and Jones had significant

personal resources, "no one would expect a loss to Peoples from

such loans." This assertion does not aid Holley. We recently

reiterated that "the credit worthiness of a borrower will not

insulate a bank officer from charges of bank fraud." U nited States

v. Henderson

, 19 F.3d 917 , 924 (5th Cir. 1994) (citing S aks

, 964

F.2d at 1519). Holley also maintains that he was not involved in12

the bank fraud because he had resigned as chairman of Peoples

before the February 1986 transactions closed. However, the

evidence showed, and the jury was entitled to find, that Holley was

aware of and participated in the transactions that defrauded

Peoples. Holley participated in the December 11, 1985 meeting at

which the exchange of letters of credit between Peoples and

Security to provide for the down payments for First American's

purchase of Peoples's and Security's REO was planned, and evidence

showed that Holley agreed to this arrangement. Moreover, although

Holley resigned as chairman of Peoples in December of 1985, he was

elected vice-chairman of Peoples in Ja nuary of 1986 and

parti cipated in board meetings at which Peoples's loans to First

American for the purchase of Peoples's REO and Arapaho Station were

approved. Holley's resignation did not eliminate his participation

either before or after December of 1985. The jury was entitled to

conclude that Holley was guilty of bank fraud. We therefore affirm

Holley's bank fraud conviction.

Finally, Holley claims that the evidence is insufficient to

sustain his conspiracy conviction. This attack is in part based on

his earlier contentions that the evidence was insufficient to

support his bank fraud and aiding and abetting bank bribery

convictions. We rejected Holley's challenges to these convictions.

Thus, to the extent that Ho lley's challenge to his conspiracy

convi ction is based on his attacks on his bank fraud and bank

bribery convictions, it must necessarily fail. Moreover, our13

review of the record convinces us that there was sufficient

evidence to convict Holley of the conspiracy charged.

IV. Jury Charge Issues

A. The Reference to Intangible Rights in the Bank Fraud Charge

The third count of the Government's indictment charged the

appellants with violating the federal bank fraud statute, 18 U.S.C.

§ 1344. This statute criminalizes the execution or the attempted

execution of "a scheme or artifice--

(1) to defraud a financial institution; or

(2) to obtain any of the mo neys, funds, credits, assets,

securities, or other property owned by, or under the custody

or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises."

In its instructions to the jury on this count, the district court

defined a "scheme to defraud" to be "any scheme to deprive another

of money, property, or of the intangible right to honest services

by means of false or fraudulent pretenses, repres entations, or

promises." (emphasis supplied). Noting that the phrase "intangible

right to honest services" does not appear in the bank fraud

statute, both appellants contend that the district court's use of

this phrase in the jury charge allowed convictions for conduct not

within the scope of the law. The appellants claim that this error

ipso facto requires reversal of both their bank fraud and

conspiracy convictions. We do not agree.

The appellants's argument is root ed in M cNally v. United

States

, 483 U.S. 350 (1987). In that case, the Supreme Court held6 Employing language that closely resembles the bank fraud

statute, the federal mail fraud statute prohibits the use of the

mails to execute "any scheme or artifice to defraud, or for

obtaining money or property by means of false or fraudulent

pretenses, representations, or promises . . . ." 18 U.S.C. §

1341.

14 tha t the federal mail fraud statute, 18 U.S.C. § 1341, 6 did not

apply to schemes to deprive citizens of their intangible right to

honest government ser vices, but was instead limited to the

protection of money and property rights. In 1988, Congress

legislati vely overruled M cNally by enacting 18 U.S.C. § 1346 and

defining a scheme to defraud to include a scheme "to deprive

another of the intangible right of honest services." However, this

statute does not--indeed, cannot--apply retroactively. U nited

States v. Loney , 959 F.2d 1332, 1335 n.6 (5th Cir. 1992). The

appellants contend th at the Supreme Court's reading of the mail

fraud statute applies to the bank fraud statute. The appellants

thus reason that a scheme that took place before the enactment of

§ 1346 and that only deprived a financial institution of the

intangible right to honest services is not covered by the bank

fraud statute. The appellants therefore claim that since the

offenses with which they were charged occurred before the enactment

of § 1346, the reference to intangible rights in the trial court's

instructions was erroneous and requires reversal of their bank

fraud convictions.

At first glance, it appears as though our first task is to

decide whether the Supreme Court's interpretation of the mail fraud

statute in McNally applies to the bank fraud statute. However, in15

Saks we held that, even assuming that McNally 's interpretation of

the mail fraud statute applies to the bank fraud statute, the

inclusion of the intangible rights langu age in a court's jury

charge on a bank fraud count is harmless beyond a reasonable doubt

in cases in which the "`" bottom line" of the scheme or artifice

[charged] had the inevitable result of effecting mone tary or

property losses.'" Saks , 964 F.2d at 1521 (quoting United States

v. Asher

, 854 F.2d 1483, 1494 (3d Cir. 1988), c ert

. denied

, 488

U.S. 1029 (1989)). As we observed in S aks

, this formulation of the

approach to such cases is a specific application of the general

principle that "`[a]n erroneous i nstruction on an element of the

offense can be harmless beyond a reasonable doubt, if, given the

factual circumstances of the case, the jury could not have found

the defendant guilty without making the proper factual finding as

to that element.'" I d

. (quoting United States v. Doherty

, 867 F.2d

47, 58 (1st Cir.), cert

. denied , 492 U.S. 918 (1989)).

Thus, if the inevitable result of Holley and Haass's scheme

was to defraud Peoples of money or property interests, then we will

find the alleged error in the jury charge to be harmless beyond a

reasonable doubt and affirm the appellants's convictions for bank

fraud. We are persuaded that, as in S aks

, the jury could not have

found that the scheme proved at trial deprived Peoples of the

intangible right to honest services without there being implicit in

that finding a finding that the scheme defrauded the institution of

money or property interests. The appellants were engaged in a

scheme to defraud Peoples by causing that institution to make loans16

to Brannon and Jones without inquiring into the collateral for the

loans . This scheme had the inevitable, inescapable, and

unavoidable result of exposing Peoples to at least a risk of loss.

Such conduct is sufficient to support a conviction under § 1344.

See

, e.g.

, Barakett

, 994 F.2d at 1111 & n.15. Therefore, the jury

could not have concluded that the appellants intended to defraud

Peoples of its intangible right to h onest services without also

finding that Holley and Haass knowingly exposed the institution to

a risk of financial loss. Though the appellants may have deprived

Peoples of its right to honest services, any such deprivation was

incidental to the appellants's scheme to fraudulently extend loans

to Brannon and Jones. The conclusion we reached in S aks is equally

applicable here: "The jury's guilty verdict on the bank fraud

count reflects a reasoned jud gment that [the defendants]

participated in the scheme with full knowledge not only that [they]

were acting dishonestly, but also that the scheme had financial

consequences." Saks , 964 F.2d at 1522 (emphasis in original).

The appellants contend that Saks is distinguishable because

the defendants in that case failed to object to the jury charge and

therefore could only argue that the trial court's inclusion of the

intangible right language was plain error. The appellants observe

that, since they objected to the district court's jury charge, we

are not limited to such a deferential standard of review. However,

we do not believe that this distinction is meaningful in this case.

Although there may have been an error in the jury charge, Saks and

the cases upon which it relied convince us that any error inherent17

in the inclusion of the intangible rights language in the jury

charge is harmless beyond a reasonable doubt. I d

. at 1521;

Doherty , 867 F.2d at 57-58.

We cannot end our dis cussion of this issue without making

one final observation. At oral argument, the Government conceded

that it believed that the inclusion of the intangible rights

language in the jury charge was erroneous. Although we have found

any such error to be harmless in this case, we cannot disguise our

dismay that the Government would knowingly propose a jury

instruction that it thought to be wrong. The Government has a

special duty to follow the law.

B. Cautionary Instruction on Evidence of Co-Conspirators's Guilt

In his opening statement, the prosecutor mentioned that some

of the witnesses who would testify for the Government had pleaded

guilty to offenses related to those with which the appellants were

charged. After Holley's attorney objected, the district court

correctly instructed the jury that any evidence of another person's

guilt was not to be considered as evidence of the appellants's

guilt. Later, the Government elicited testimony from several

witnesses that those witnesses had entered into plea agreements and

guilty pleas as a result of their involvement with the appellants

in the transactions that were at issue in this case. The district

court again instructed the members of the jury that they were not

to consider evidence of an accomplice's guilt as evidence of a

defendant's guilt. Specifically, the trial judge stated that the

fact that some witnesses "have pled guilty or may be guilty is not18

to influence your decision as to whether or not these two

individuals before you [i.e., the appellants] are guilty. That's

why you are hearing all the facts and you base that decision on all

the facts you will hear now and between the end of the lawsuit

[sic]. And so I want to remind you to keep that in mind."

During the charge conference, the appellants requested that

an instruction similar to the ones previously given be included in

the court's final charge to the jury. The district court rejected

this request. Both appellants contend that the refusal to include

in the final jury charge an instruction that the jury was not to

consider evidence of an accomplice's guilty plea as proof of the

appellants's guilt is reversible error.

We have repeatedly held that, a lthough evidence of an

accomplice's guilty plea can be prejudicial, the admission of such

evidence may allowed if it serves a legitimate purpose and is

coupled with a cautionary jury instruction. U nited States v.

Coleman

, 997 F.2d 1101, 1104-05 (5th Cir. 1993), cert

. denied

, 114

S. Ct. 735 & 893 (1994); United States v. Valley

, 928 F.2d 130, 133

(5th Cir. 1991). These conditions have been met in this case. The

appellants concede that the Government had a legitimate reason for

eliciting evidence of the witnesses's guilty pleas. Holley's and

Haass's objection, therefore, is that the dis trict court

insufficiently instructed the jury to not use this testimony as

evidence of the appellants's guilt. However, the district judge

gave an appropriate cautionary instruction after the Government's

opening statement and during the Government's case-in-chief.19 The appellants's argument is thus reduced to the contention

that the district court erred when it refused to include a similar

instruction in the final ju ry charge. We disagree. The trial

court sufficiently cautioned the jury when the test imony of the

guilty pleas was elicited. Moreover, the appellants did not

attempt to deny that violations of the law occurred. The theory of

the defense for both appellants was that the witnesses who pleaded

guilty wer e the only ones who committed any crimes. The danger

that the jury would that infer the appellants were guilty because

others had pleaded guilty to similar charges was diminished by the

appellants's own defense. Under these circumstances, the district

court's refusal to include a similar instruction in the final jury

charge does not require reversal of the appellant's convictions.

While it is plainly the better practice to caution the jury

both when evidence of an accomplice's guilty plea is introduced and

at the close of evidence, repetition is not a requirement of a

definite cautionary instruction. Under the facts of this case, the

district court did not abuse its discretion by giving an

appropriate instruction during the opening statements and when the

guilty plea evidence was introduced. We hesitate to reverse a

conviction for the absence of something in the final jury charge

that was adequately taken care of earlier in the trial. C f

. United

States v. Rewald , 889 F.2d 836, 865 (9th Cir. 1989) (finding no

abuse of discretion when the district court gave a cautionary

instruction concerning a co-defendant's guilty plea during the20

final jury instructions rather than when the testimony was elicited

at trial), cert

. denied , 498 U.S. 819 (1990).

C. Constructive Amendment of the Indictment

Holley contends that the jury charge constructively amended

Count Two of the indictment, the bank bribery count, and allowed

him to be convicted for conduct not charged in the indictment.

First, Holley claims that since the jury charge instructed the jury

to convict him if he "demanded something of value in excess of

$100", the jury could have convicted him for Haass's solicitation

of an improper consulting fee on a previous occasion two years

earlier, rather than the $662,000 solicitation that was charged in

the indictment. Second, Holley contends that the jury charge

allowed the jury to convict him of aiding and abetting someone

other than Haass in committing bank bribery, although the

indictment only alleged that Holley aided and abetted Haass's bank

bribery. Finally, Holley claims that the charge allowed the jury

to convict him of soliciting the $662,000 payment for someone other

than himself or Haass, even though the indictment alleged that the

appellants solicited this payment for themselves. We find no merit

to these contentions.

A constructive amendment "occurs when the jury is permitted

to convict the defendant upon a factual basis that effectively

modifies an essential element of the offense charged." U nited

States v. Doucet

, 994 F.2d 169, 172 (5th Cir. 1993); United States

v. Baytank, Inc.

, 934 F.2 d 599, 606 (5th Cir. 1991). If we find

that the indi ctment has been constructively amended, we must21

reverse the conviction. Doucet , 994 F.2d at 172. Here, however,

there has been no constructive amendment of the indictment. All of

Holley's contentions must fail beca use the district court

instructed the jury that it was to consider only the crime that was

charged in the indictment. Moreover, the indictment was read to

the jury at the beginning of the trial, and t he jury was given a

copy of the indictment for use durin g the deliberations. As to

Holley's contention that he could have been convicte d for the

earlier solicitation of a n improper consulting fee, the district

court explained to the members of jury that, although evidence of

other acts (such as the earlier c onsulting fee solicitation) had

been admitted into evidence at trial, the jury was to consider such

evidence only as it bore on the appellants's intent or motive.

Furthermore, the Government's closing argument mentioned only the

solicitation of the $662,000 payment from McClain. We see no

reason to assume that the jurors disregarded the court's charge and

based their verdict on conduct that was not charged in the

indictment. A ccord United States v. Stone

, 960 F.2d 426, 432 (5th

Cir. 1992).

V. Impeachment Evidence

Holley next argues that the district cour t erroneously

admitted several pieces of impeachment evidence. Only two of

Holley's contentions merit discussion. First, Holley complains

that the district court erroneously allowed the introduction of

testimony that the appellants were reported to have received a

consulting fee two years prior to the offenses alleged in the22

indictment. Second, Holley complains of the admission of evidence

that the FDIC had to cover th e losses that Peoples suffered. We

employ a heightened abuse of discretion standard to review the

district court's decision to admit this evidence. U nited States v.

Anderson

, 933 F.2d 1261, 1268 (5th Cir. 1991). We find no abuse of

discretion.

The testimony that the appellants were reported to have

received a consulting fee two years prior to the offenses alleged

in the indictment was properly admitted to impeach Haass's direct

t estimony and as evidence of the appellants's motive and inte nt.

Haass testified that he had never improperly profited from any

financial transactions involving Peoples. He also stated Peoples

was placed under the supervision of the Federal Home Loan Bank

Board ("FHLBB") in 1984 because of a loan that Peoples had made in

Florida. Federal Rule of Evidence 611(b) allows cross-examination

on both the subject matter of the direct examination and matters

affecting the credibility of the witness. On cross-examination,

Haass admitted that he and Holley had, in fact, personally profited

from a financia l transaction involving Peoples by accepting an

improper consulting fee in connection with a loan previously made

b y Peoples. Haass also admitted that this fee was one of the

reasons that the FHLBB placed Peoples under s upervision in 1984.

The Government's elicitation of this admission was thus allowed by

Federal Rule of Evidence 611(b) because it was within the scope of

Haass's direct examination and because it affected Haass's

credibility. Moreover, the fact that Haass admitted that he was7 No less an authority than Judge Learned Hand observed that

a similar tactic employed by a federal prosecutor was plainly

improper. In United States v. Lotsch , 102 F.2d 35 (2d Cir.),

cert

. denied , 307 U.S. 622 (1939), the defendant, an officer of a

national bank, was convicted of illegally receiving commissions

from borrowers from his bank. Judge Hand wrote that it was

inappropriate for a prosecutor to comment in his closing argument

that, since the Government guaranteed the bank deposits in that

case, the money that was lent to the borrowers came out of the

23 involved in past wrongdoing does not affect Holley. The district

c ourt directed the jury to consider the evidence against each

appellant separately and in dependently. The fact that Haass's

admission was also evidence of a prior bad act by Holley does not

affect our conclusion tha t this testimony was admissible. This

testimony was admissible under Federal Rule of Evidence 404(b) to

show Holley's motive or intent with respect to the crimes with

which he was charged. The district court instructed the members of

the jury that they could consider evidence of such extraneous acts

by the appellants only as it bore on their motive or intent.

The admission of evidence that the FDIC had to cover the

losses that Peoples suffered does not entitle Holley to a reversal

of his conviction. Haass testified that he could not have

committed the crimes with which he was charged because his own

money was invested in Peoples and therefore at risk if the

financial institution fai led. Given Haass's assertion, we are

sympathetic with the Government's contention that it was entitled

to rebut Haass's claim and as k him whether he returned the money

that he owed Peoples and whether Peoples's losses would be covered

by the FDIC. However, even if we assume that the Government's line

of questioning in this case was improper, 7 our review of the recordjurors's pockets. Nevertheless, under the facts of that case,

Judge Hand did not find that that incident required reversal of

the defendant's conviction. Id . at 37. See also United States

v. Smyth , 556 F.2d 1179 (5th Cir.) (finding improper, but not

reversible error, an appeal to the personal prejudices of jurors

as taxpayers in case involving conspiracy to defraud the

Government), cert

. denied , 434 U.S. 862 (1977).

24 convinces us that the effect of these questions does not compel

reversal of the convictions. We do not allow every perceivable

transgression to justify re versal of a defendant's conviction.

Instead, we must make individual judgments and, after reading the

record, determine whether the Government's question had a

"`substantial impact' on the jury's verdict." U nited States v. ElZoubi , 993 F.2d 442, 446 (5th Cir. 1993). We do not believe that

the government's questions had such an impact. Holley's alleged

evidentiary errors do not entitle him to a reversal of his

convictions.

VI. Production of Interview Notes

Holley maintains that t he Government should have produced

FBI reports that outlined the content of the Government's

interviews with the witnesses who entered into plea bargains.

Holley claims that these reports reveal the crimes with which the

Government's witnesses could have been charged and that this

information could have been used to impeach the credibility of

these witnesses. Holley does not allege that these interview notes

qualify as "statements" under the Jencks Act, 18 U.S.C. § 3500.

Instead, he merely argues that the no tes contained material that

Brady v. Maryland

, 373 U.S. 83 (1963), Giglio v. Unites States

, 45025

U.S. 150 (1972), and their progeny require to be produced to

criminal defendants.

Brady an d G iglio hold that the Constitution forbids the

Government from suppressing evidence favorable to the accused or

useful to the defense for impeachment of witnesses who testify

against the accused. U nited States v. Williams

, 998 F.2d 258, 269

& n.25 (5th Cir. 1993), cert

. den ied , 114 S. Ct. 940 (1994).

However, a prosecutor's suppression of such evidence requires

reversal of a defendant's conviction only if "there is a reasonable

probability that, had the evidence been disclosed to the defense,

the result of the proceeding would have been different. A

`reasonable probability' is a probability sufficient to undermine

confidence in the outcome." U nited States v. Bagley

, 473 U.S. 667,

682 (1985). Here, the district court examined the relevant FBI

reports and found that they did not contain discoverable material.

We recognize that in situations such as this, much deference should

be paid to the trial judge who observed the hours and days of

te stimony. After reviewing the record and considering Holley's

speculation that the FBI reports could have been useful in the

cross-examination of several witnesses, we find nothing which leads

us to conclude that the district court's conclusion is clearly

erroneous. S ee United S tates v. Mora , 994 F.2d 1129, 1139 (5th

Cir.), cert

. denied , 114 S. Ct. 417 (1993).

VII. The Restitution Award

In its judgment, the district court ordered the appellants

to pay the FDIC $ 5,990,330.21 in restitution under the Victim26

Witness Protection Act ("VWPA"), 18 U.S.C. §§ 3663-3664. This

restitution order was based solely on the loss that resulted from

the loan that Peoples extended to First American to finance the

purchase of Arapah o Station. The appellants contend that the

district court's calculation of the loss caused by the Arapaho

Station loan was improper. We agree.

First American defaulted on the Arapaho Station loan shortly

after Peoples entered into that transaction. Indeed, no payments

were ever made on that loan. Peoples foreclosed on Arapaho Station

in April of 1987 and acquired the property at the trustee's sale

shortly thereafter. Texas Trust, the entity that later acquired

Peoples's assets, finally sold the property in January of 1993. A

witness testified that the loss caused by the Arapaho Station loan

totalled $5 ,990,330.21. However, this calculation of the loss

included the decline in value that Arapaho Station suffered between

the time that Peoples purchased the property at auction in 1987 and

the time that Texas Trust sold it in 1993. The appellants contend

that the district court impro perly included the decline in value

that occurred after Peoples recovered title to Arapaho Station in

the amount of restitution ordered. The appellants claim that any

such loss stemmed from a decision by the new owners to retain

posse ssion of the building. We review such a challenge to the

legality of a restitution order de novo

. U nited States v. Chaney

,

964 F.2d 437, 451-52 (5th Cir. 1992).

Under the VWPA, the victim of a federal criminal offense can

recover the losses sustained "as a result of the offense." 1827

U.S.C. § 3664(a). In cases that involve damage to or loss or

destruction of property, a court may order return of the property.

18 U.S.C. § 3663(b)(1)(A). If return of the property is in any way

inadequate, a court may order the def endant to pay "the value of

the property on the date of the

. . . loss

. . . less the value (as

of the date the property is returned) of any part of the property

that is returned." 18 U.S.C. § 3663(b)(1)(B)(i). In the present

case, we must decide when the property that was lost was returned.

The appellants contend that the property was returned when Peoples

p urchased Arapaho Station at the trustee's sale. The appellants

thus maintain that they should re ceive a credit for the value of

Arapaho Station as of the date t itle to the shopping center was

transferred to Peoples. The Government claims that the "property"

that was lost was Peoples's capital and that the return of Arapaho

Station to Peoples represents only the return of the collateral for

the actual property involved in this case--the funds that Peoples

delivered to First American. The government insists that the

pr operty involved in this case was not returned until Peoples's

successor, Texas Trust, sold Arapaho Station for cash and regained

a portion of the funds that First American had fraudulently

obtained from Peoples.

The parties's contentions present interesting questions that

stem in part from the fungible character of the property involved

in this case. However, we believe that an opinion recently

delivered by a panel of this Court properly dictates the result

that we must reach. In U nited States v. Reese

, 998 F.2d 1275 (5th28

Cir. 1993), we explained that "it would appear that the `property'

as to which [the savings and loan] might have suffered `damage to

o r loss or destruction of' could only be loan proceeds funded in

cash at the original closing of [the improperly extended] loan."

Id

. at 1283. However, we also explained that when the real

property that secures such a loan is deeded back to the financial

institution, "the value of such p roperty should constitute a

partial return of the `cash loan proceeds.'" Id . at 1284.

In United States v. Smith

, 944 F.2d 618 (9th Cir. 1991),

cert

. denied

, 112 S. Ct. 1515 (1992), the Ninth Circuit confronted

a situation directly analogous to the one we confronted in Reese

and reached the same conclusion. In S mith

, a defendant who had

been convicted of bank fraud was ordered to pay restitution to the

FSLIC for the losses caused by fraudulently obtained loans. The

Smith court held that the defendant "should receive credit against

the restitution amount for the value of the collateral property as

of the date title to the property was transferred" to the FSLIC's

successor. I d

. at 625. The court reasoned that, as of that date,

"the new owner had the power to dispose of the property and receive

compensation." I d

. The S mith court concluded that the value of

the returned property "should therefore be measure d by what the

financial institution would have received in a sale as of that

date. Any reduction in value after [the defendant] lost title to

the property stems from a decision by the new owners to hold on to

the property." Id

.29 Since the district court failed to account for the fact that

the property that was lost was returned when Peoples purchased

Arapaho Station in 1987, Reese requires us to vacate the

restitution order and remand this case for recalcul ation of the

amount of restitution.

VIII. Conclusion

T he appellants's convictions are AFFIRMED. The order of

restitution is VACATED. This case is remanded for further

proceedings consonant with this opinion.