Source: https://law.justia.com/cases/federal/appellate-courts/F3/11/853/488504/
Timestamp: 2019-05-23 07:10:32
Document Index: 195798543

Matched Legal Cases: ['§ 1344', '§ 371', '§ 1006', 'art, 979', '§ 1344', '§ 1344']

United States of America, Plaintiff-appellee, v. John Lee Molinaro, Defendant-appellant.united States of America, Plaintiff-appellee, v. Donald P. Mangano, Sr., Defendant-appellant.united States of America, Plaintiff-appellee, v. Donald P. Mangano, Sr., Defendant-appellant, 11 F.3d 853 (9th Cir. 1993) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Ninth Circuit › 1993 › United States of America, Plaintiff-appellee, v. John Lee Molinaro, Defendant-appellant.united State...
United States of America, Plaintiff-appellee, v. John Lee Molinaro, Defendant-appellant.united States of America, Plaintiff-appellee, v. Donald P. Mangano, Sr., Defendant-appellant.united States of America, Plaintiff-appellee, v. Donald P. Mangano, Sr., Defendant-appellant, 11 F.3d 853 (9th Cir. 1993)
U.S. Court of Appeals for the Ninth Circuit - 11 F.3d 853 (9th Cir. 1993)
Submitted on the Briefs Dec. 7, 1992* in No. 90-50131. Argued and Submitted Dec. 7, 1992 in Nos. 90-50133 and 90-50375. Submission Vacated Dec. 16, 1992. Resubmitted April 26, 1993. Decided Nov. 17, 1993
John Molinaro and Donald Mangano appeal their convictions of bank fraud in violation of 18 U.S.C. § 1344 and conspiracy to defraud the United States in violation of 18 U.S.C. § 371. Molinaro also appeals his conviction of making false entries in the books and records of a savings and loan association in violation of 18 U.S.C. § 1006.1
Mangano argues that because he fully disclosed his participation in the transactions to Ramona's authorized representatives, the government failed to prove he defrauded Ramona. However, " [i]t is the financial institution itself--not its officers or agents--that is the victim of the fraud the statute proscribes." United States v. Saks, 964 F.2d 1514, 1518 (5th Cir. 1992) (rejecting defendants' claim that failure to disclose a third party would be the beneficiary of a loan was not bank fraud because the banks' financial officers were aware of the fact).
The form of the indictment as a whole and of the individual counts reflects the government's preferred view that each act in furtherance of the overall scheme to defraud the bank constituted a separate violation of Sec. 1344. The First and Fifth Circuits have rejected this view, holding that each "execution" of a scheme to defraud a financial institution, rather than each act in furtherance of such a scheme, constitutes a violation of Sec. 1344. See United States v. Lilly, 983 F.2d 300, 303 (1st Cir. 1992); United States v. Lemons, 941 F.2d 309, 318 (5th Cir. 1991).10 See also United States v. Barnhart, 979 F.2d 647 (8th Cir. 1992) (holding each execution of a scheme is a violation of Sec. 1344 without specifically rejecting each act in furtherance of a scheme as a violation). This interpretation is consistent with, if not required by, the words of Sec. 1344, which provide for the punishment of " [w]hoever knowingly executes, or attempts to execute, a scheme or artifice ... to defraud a financial institution."11
The government argues we are constrained by our decision in United States v. Poliak, 823 F.2d 371, 372 (9th Cir. 1987), to interpret the bank fraud statute as we interpreted the statute on which it was modeled--the mail fraud statute--which criminalizes each use of the mails in furtherance of a scheme to defraud.
Interpreting the bank fraud statute as punishing each execution of a fraudulent scheme rather than each act in furtherance of such a scheme is consistent with the Congressional intent to give the statute "the same broad scope as the mail fraud statute." United States v. Bonallo, 858 F.2d 1427, 1432 (9th Cir. 1988).12 This interpretation has no effect on the range of fraudulent activity within the statute's reach. See Lilly, 983 F.2d at 304. It affects only the number of offenses to which such activity may give rise.13
In determining whether the district court correctly explained the law, "we may look beyond the instructions themselves and examine the indictment and the entire trial in context." United States v. Dischner, 974 F.2d 1502, 1520 (9th Cir. 1992) (citation and internal quotation marks omitted). Viewing the entire charge in the context of the whole trial, the jury could not have been confused as to the victim of the fraud. See id. (affirming a mail fraud instruction that the jury must find the "defendant acted with the intention of obtaining money or property by means of false statements" even though the court did not add "from or to the alleged victim" where, " [g]iven the way the case was charged and tried, the jury could not have been confused as to the victim of the fraud."). As alleged in the indictment and argued to the jury, the bank fraud scheme involved the submission by appellants to Ramona of loan applications and other documents that fraudulently concealed the identity of the true purchaser of Cherokee Village. Appellants did not dispute the fact that the documents alleged to be false were submitted to Ramona. Accordingly, if the jurors found those documents contained fraudulent omissions and misrepresentations there could be no confusion that those misrepresentations were made to Ramona.20
The court's instruction accurately stated the law. "While an honest, good-faith belief in the truth of the misrepresentations may negate intent to defraud, a good-faith belief that the victim will be repaid and will sustain no loss is no defense at all." United States v. Benny, 786 F.2d 1410, 1417 (9th Cir. 1986).
Appellants argue the fraud charged in this case is like that involved in a check-kiting scheme where a good faith belief in repayment is a defense. As the court said in Benny, " [i]f the defendant reasonably believed he or she could cover [the check], there was no intentional misrepresentation and hence no crime." Id. This is plainly not such a case. Appellants' belief in the economic viability of the transactions would not make their concealment of Mangano's role in those transactions unintentional. In any event, as noted in Benny, " [n]o court has extended the repayment defense beyond check-kiting cases." Id.
Federal Rule of Criminal Procedure 24(c) provides that " [a]n alternate juror who does not replace a regular juror shall be discharged after the jury retires to consider its verdict." Over the government's objection, appellants' attorneys asked that the alternate jurors be permitted to remain in the jury room during deliberations. The district judge granted the request and instructed the alternate jurors to remain in the jury room but not to participate in the deliberations or indicate their views. Appellants argue that in the absence of personal consent by the defendants themselves, the presence of alternates requires reversal per se.
The Supreme Court's decision in United States v. Olano, --- U.S. ----, 113 S. Ct. 1770, 123 L. Ed. 2d 508 (1993), controls this case. The attorneys in Olano, like counsel here, consented to the presence of the alternate juror and the juror was instructed not to participate in deliberations, but the defendants did not personally consent to the procedure. The Supreme Court assumed without deciding that Rule 24(c) is nonwaivable, but held the defendants were not entitled to relief absent a showing they were prejudiced by the alternate's presence during deliberations. Id. --- U.S. at ----, 113 S. Ct. at 1779-81. Appellants, too, have failed to demonstrate prejudice from the alternates' presence.
The judgment is AFFIRMED, except that the sentences are vacated and the case is REMANDED for resentencing. Since the government's proof at trial was sufficient on each of the counts, although some of the counts charging a scheme to defraud under 18 U.S.C. § 1344 are multiplicitous, and also on each of the executions of the scheme, a sentence can be imposed on each count but must run concurrently with every other sentence on a count that is part of the same execution. As we have said, counts 1-15 relate to a distinct execution of the scheme, count 16 is a distinct execution of the scheme, counts 17-28 constitute a distinct execution of the scheme, and counts 29-30 charge a distinct execution of the scheme. Counts 31, 32, and 33 charge offenses other than executions of the scheme to defraud under Sec. 1344. We vacate the sentences on these counts as well because they may have been influenced by the judge's interpretation of the unit of the offense under Sec. 1344.
We review the sufficiency of the evidence "in the light most favorable to the prosecution" to determine whether "any rational trier of fact could have found the essential elements of the crime charged beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319, 99 S. Ct. 2781, 2789, 61 L. Ed. 2d 560 (1979) (emphasis omitted)
Mangano also argues that the transactions were not so one-sided as to be fraudulent. However, proof that a transaction is one-sided, or even that the victim sustained a loss, is not a requirement under Sec. 1344. See United States v. Bonallo, 858 F.2d 1427, 1433 n. 7 (9th Cir. 1988)
The government argues Mangano failed to preserve the claim of multiplicity for review because he challenged only the first and not the second superseding indictment on this ground. Appellants filed and fully briefed a motion to dismiss the first superseding indictment on grounds of multiplicity. The government's second superseding indictment included two additional bank fraud counts but did not otherwise change the indictment in any substantial way. Indeed, the district judge acknowledged the two indictments were substantially similar in his order denying the motion to dismiss, filed three months after the return of the second superseding indictment. Under the circumstances, a renewed motion to dismiss was unnecessary. See Wood v. Alaska, 957 F.2d 1544, 1548 (9th Cir. 1992)
See also United States v. Harris, 805 F. Supp. 166, 173-74 (S.D.N.Y. 1992); United States v. Mancuso, 799 F. Supp. 567, 570 (E.D.N.C. 1992)
Comprehensive Crime Control Act of 1984, Pub. L. No. 98-473, Sec. 1108, 98 Stat. 2147 (1984) (current version in 18 U.S.C. § 1344).
Even if we could agree with the government that the intent of Congress to give the statute a broad scope provides some support for the position that each step in furtherance of a bank fraud scheme is a separate indictable offense, at best this view of the legislative history renders the language of the statute ambiguous. Faced with a statute susceptible of two reasonable interpretations, the rule of lenity requires that we choose the harsher interpretation "only when Congress has spoken in clear and definite language." McNally v. United States, 483 U.S. 350, 359-60, 107 S. Ct. 2875, 2881, 97 L. Ed. 2d 292 (1987)
We have sought to avoid such a result in determining whether a criminal statute permits multiple-count indictments. See United States v. Jewell, 827 F.2d 586, 588 (9th Cir. 1987) ("If every minor action that Jewell took in relation to the contract could be considered a separate 'matter' under [18 U.S.C. § ] 208(a), his participation in the contract could be multiplied into endless criminal counts.")
These two transactions are similar to the separate extensions of a loan agreement found to be separate executions of a scheme to defraud in Harris. See 805 F. Supp. at 174-75. The defendants in Harris were charged with misrepresenting the net worth of their corporation in obtaining a loan and six separate extensions of that loan. The court found the loan and each extension constituted a line of credit for a limited period. Each request for an extension was a new occasion for the bank to consider extending the limited period. The defendants were faced with a new obligation to be truthful regarding their corporation's net worth each time they sought an extension. Id. at 175. Mangano appears to argue that because the transactions had a single purpose--the acquisition of Cherokee Village--they must be a single execution of a scheme to defraud. However, as the analysis in Harris demonstrates, two transactions may have a common purpose but constitute separate executions of a scheme where each involves a new and independent obligation to be truthful
A constructive amendment occurs when the proof at trial supports a crime other than the crime charged in the indictment. United States v. Pisello, 877 F.2d 762, 765 (9th Cir. 1989). A variance occurs when "the charging terms of the indictment are left unaltered, but the evidence offered at trial proves facts materially different from those alleged in the indictment." United States v. Von Stoll, 726 F.2d 584, 586 (9th Cir. 1984) (quoting United States v. Cusmano, 659 F.2d 714, 718 (6th Cir. 1981))
The jury was instructed correctly with respect to subsection (1), which makes punishable the execution of a scheme to defraud a bank and does not require proof of a misrepresentation. See United States v. Ragosta, 970 F.2d 1085, 1089 (2d Cir. 1992). The jury was instructed the scheme must be to defraud Ramona