*

Honorable Stephen N. Limbaugh, Senior U.S. District Judge for the Eastern District of

Missouri, sitting by designation. 

United States Court of Appeals,

Eleventh Circuit.

No. 96-2417.

UNITED STATES of America, Plaintiff-Appellee,

v.

John CHRISTO, III, James W. Maulden, Defendants-Appellants.

Dec. 1, 1997.

Appeal from the United States District Court for the Northern District of Florida. (No. 95-05012-2-

CR-LAC), Lacey A. Collier, Judge.

Before EDMONDSON and DUBINA, Circuit Judges, and LIMBAUGH*

, Senior District Judge.

PER CURIAM:

Defendant-Appellants John Christo III ("Christo") and James W. Maulden ("Maulden")

appeal from jury convictions. Defendant Christo appeals his sentence for conspiracy, misapplication

of bank funds, and bank fraud. Defendant Maulden appeals his sentence for conspiracy,

misapplication of bank funds, bank fraud, and money laundering. We affirm in part, reverse in part,

and vacate and remand in part.

Background

Christo was the president of Bay Bank, and a member of its board of directors. Codefendant

Maulden was also a member of the board of directors of Bay Bank until 1989. Between 1986 and

1988, Maulden would occasionally write checks for which he had insufficient funds in his account

(collectively "NSF check(s)"). In accordance with bank policy, the NSF checks were recorded as

overdrafts; and Maulden paid interest on the amount of the check.
 1

The other codefendant was John Christo, Jr., the main owner of the bank and chairman of its

board of directors. John Christo III, codefendant in this case, was chiefly involved in the

scheme; and all references to "Christo" in this opinion refer to him. 

 2

Other issues raised on appeal by Defendants Christo and Maulden are without merit. These

issues include: jury instructions, failure to charge jury, sentence enhancement for abuse of trust,

sentence enhancement for false testimony, and numerous evidentiary issues. 

 3Money laundering occurs under section 1957 when one "knowingly engages or attempts to

engage in a monetary transaction in criminally derived property that is of a value greater than

$10,000 and is derived from specified unlawful activity...." 18 U.S.C. § 1957(a). 

 4The underlying offenses were bank fraud and misapplication of funds. 

In 1988, Maulden entered into a scheme with Christo and Christo's father1 so that when he

submitted an NSF check, the bank would call his accountants, who then would write checks on

Maulden's other accounts to cover the NSF check. Christo would personally intercede on a daily

basis to ensure the procedure was followed. Many of the checks written to cover the NSF checks

were drawn on accounts which also had insufficient funds. Because Maulden was not charged

interest on these NSF checks, he received interest-free, unrecorded loans, without the prior approval

of the board of directors.

Discussion2

I. Defendant Maulden

 Maulden claims insufficient evidence supported his conviction for money laundering under

18 U.S.C. § 19573

 because no proof was presented of an independent criminal transaction separate

from the underlying offenses.4

 He claims that, for a conviction to be sustained, the government must

show that a defendant took the added step of engaging in a prohibited monetary transaction with

proceeds that were "obtained" from a specific unlawful activity. The government basically contends

that every check kiting scheme involves conduct that is punishable under the money laundering

statutes.
 A claim of insufficient evidence to sustain a conviction is reviewed de novo. United States

v. Kramer, 73 F.3d 1067, 1070 (11th Cir.1996). "We, however, view the evidence in the light most

favorable to the government, with all reasonable inferences and credibility choices made in the

government's favor." United States v. Martinez, 83 F.3d 371, 374 (11th Cir.1996). We are required

to affirm a conviction if "any rational trier of fact could have found the essential elements of the

crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61

L.Ed.2d 560 (1979).

 Money laundering is an offense to be punished separately from an underlying criminal

offense. United States v. Edgmon, 952 F.2d 1206, 1213 (10th Cir.1991) (finding that Congress

intended money laundering and other specified unlawful activity to be distinct offenses punished

separately). The main issue in a money laundering charge, therefore, is determining when the

predicate crime becomes a "completed offense" after which money laundering can occur. United

States v. Kennedy, 64 F.3d 1465, 1477-78 (10th Cir.1995).

Counts V, VI, and VII of the indictment charged Maulden with violations of 18 U.S.C. §§

1957 and 2. Each count involved a separate withdrawal of funds to pay a check written to

SouthTrust Bank from one of Maulden's business accounts at Bay Bank. Each check was a $25,000

monthly payment on Maulden's outstanding loan at SouthTrust. The indictment alleged that each

withdrawal involved funds derived from misapplication of bank funds and bank fraud.

 A bank fraud offense is not complete until there is an "execution" of the scheme to defraud.

United States v. Lemons, 941 F.2d 309, 318 (5th Cir.1991); see also United States v. Sirang, 70 F.3d

588, 595-96 (11th Cir.1995). The execution is completed by the movement of money, funds, or

other assets from the financial institution. United States v. Mancuso, 42 F.3d 836, 847 (4th

Cir.1994); see also United States v. Lilly, 983 F.2d 300, 304-05 (1st Cir.1992). Likewise,
misapplication of funds occurs when the defendant deprives the bank of its right to have custody of

its funds. See United States v. Cauble, 706 F.2d 1322, 1354 (5th Cir.1983); see also United States

v. Morales, 978 F.2d 650, 655 (11th Cir.1992) ("[M]isapplication of bank funds was complete when

the checks were cashed.").

The government's proof of each count involved a similar series of transactions: (1) proof of

withdrawal of $25,000 from Bay Bank for Maulden's monthly note payment to SouthTrust Bank;

and (2) proof that each check was paid by Bay Bank on the basis of credit extended on uncollected

funds through several of Maulden's Bay Bank accounts for a period of one to three days until good

funds arrived from Maulden's main operating account in Mississippi.

Viewing the evidence in the light most favorable to the government, we conclude that these

facts are insufficient to establish that Maulden engaged in a monetary transaction that was separate

from and in addition to the underlying criminal activity. The check kite did not deprive the bank

of anything, nor did Maulden unlawfully obtain something from the bank, until Bay Bank disgorged

its funds by the payment of the check to SouthTrust Bank. Thus, the withdrawal of funds charged

as money laundering was one and the same as the underlying criminal activity of bank fraud and

misapplication of bank funds. We do not accept that money laundering is inherent in bank fraud or

misapplication of funds. We do not understand Congress to have been so subtle when it enacted the

money laundering statute.

The government relies on three cases: United States v. Savage, 67 F.3d 1435 (9th Cir.1995);

United States v. Estacio, 64 F.3d 477 (9th Cir.1995); and United States v. Johnson, 971 F.2d 562

(10th Cir.1992). Each case supports our decision that the underlying criminal activity must be

complete before money laundering can occur. In Savage, the defendant wired money (proceeds of

wire and mail fraud—prior and separate criminal activities) from one bank account to another. 67
 5

Because Maulden made each of the three pertinent checks good by depositing additional

funds with Bay Bank, the real proceeds to Maulden in these three instances probably were the

savings of not paying interest on loans for the two or three days when there was a float because

of the checks. The government, however, did not undertake to show what this savings in interest

was or if and how it was used by Maulden. 

F.3d at 1441-42. The Johnson court held that a transfer of funds from investors to the defendant's

account did not violate money laundering statutes because there was no separate transaction

involving "criminally derived property" until the defendant had possession of the funds. 971 F.2d

at 569-70.

Estacio is about an elaborate check kiting scheme involving two unwitting banks. And it is,

therefore, materially different from the case before us. When a check was written on insufficient

funds in bank X and then deposited in bank Y creating a transfer of funds or credits into bank Y on

which Estacio could then write checks, Estacio could be said to have obtained something of value

by fraud from bank X. And when he, then, drew upon the credit in bank Y, we suppose he could

have been guilty of money laundering.

In our case, the victim bank, that is, Bay Bank, lost nothing through fraud until it paid the

check written on its account to SouthTrust. And the funds paid by Bay Bank to SouthTrust were

not used again by Defendants (which would be the step necessary to constitute money laundering).

Furthermore, this loss of funds by payment to SouthTrust was a necessary element to complete the

bank fraud and misapplication of bank funds crimes. More specifically, the crimes of bank fraud

and misapplication of bank funds were, until then, incomplete and had generated no proceeds5

 to be

laundered.

For these reasons we reverse Maulden's conviction for money laundering (Counts V, VI, and

VII) and remand for resentencing.

II. Defendant Christo
Christo argues that resentencing is required because the lower court erred in sentencing him

under the money laundering guideline. For the reasons already discussed, we conclude that

insufficient evidence exists to support a finding that money laundering was the object of the

conspiracy. Resentencing of Christo is required.

Except as discussed above, we affirm the convictions of Christo and Maulden.

AFFIRMED in part, REVERSED as to Counts I, V, VI, and VII, VACATED and

REMANDED for resentencing consistent with this opinion.