Source: http://openjurist.org/458/us/279/williams-v-united-states
Timestamp: 2014-10-23 22:21:58
Document Index: 515708918

Matched Legal Cases: ['§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 3', '§ 3', '§ 3', '§ 3', '§ 10', '§ 1014', '§ 10', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 1014', '§ 616', '§ 596', '§ 1014', '§ 1014', '§ 5', '§ 1014']

458 US 279 Williams v. United States | OpenJurist
458 U.S. 279 - Williams v. United States	Home458 us 279 williams v. united states
458 US 279 Williams v. United States 458 U.S. 279
102 S.Ct. 3088
73 L.Ed.2d 767
William Archie WILLIAMS, Petitionerv.UNITED STATES.
No. 80-2116.
Argued April 20, 1982.
Decided June 29, 1982.
Title 18 U.S.C. § 1014 makes it a crime to "knowingly mak[e] any false statement or report," or "willfully overvalu[e] any land, property or security," for the purpose of influencing the action of described financial institutions (including federally insured banks) "upon any application, advance, . . . commitment, or loan." Petitioner engaged in a series of transactions seemingly amounting to a case of "check kiting" between his accounts in federally insured banks, first drawing a check far in excess of his account balance in one bank and depositing it in his account in the other, and then reversing the process between his accounts. Petitioner was convicted in Federal District Court of violating § 1014, and the Court of Appeals affirmed.
Held : Petitioner's conduct in depositing "bad checks" in federally insured banks is not proscribed by § 1014. Pp. 284-290.
(a) Petitioner's actions did not involve the making of a "false statement." Technically speaking, a check is not a factual assertion at all, and therefore cannot be characterized as "true" or "false." Similarly, petitioner's conduct cannot be regarded as "overvalu[ing]" property or a security. In a literal sense, the face amounts of the checks were their "values." To interpret § 1014 as meaning that a drawer of a check has made a "false" statement whenever he has insufficient funds in his account at the moment the check is presented would "sligh[t] the wording of the statute" United States v. Enmons, 410 U.S. 396, 399, 93 S.Ct. 1007, 1009, 35 L.Ed.2d 379, and would render a wide range of unremarkable conduct violative of federal law. When § 1014 was enacted, federal action was not necessary to interdict the deposit of bad checks, for fraudulent checking activities already were addressed in comprehensive fashion by state law. Pp. 284-287.
(b) The legislative history does not support the proposition that § 1014 was designed to have general application to the passing of worthless checks, and does not demand that the statute be read as applicable to anything other than representations made in connection with conventional loan or related transactions. A narrow interpretation of § 1014 is consistent with the usual approach of lenity in the construction of criminal statutes. Pp. 288-290.
639 F.2d 1311 (C.A.5 1981), reversed and remanded.
Nickolas P. Chilivis, Atlanta, Ga., for petitioner.
Richard G. Wilkins, Washington, D. C., for respondent, pro hac vice, by special leave of Court.
In this case we must decide whether the deposit of a "bad check" in a federally insured bank is proscribed by 18 U.S.C. § 1014.
* In 1975, petitioner William Archie Williams purchased a controlling interest in the Pelican State Bank in Pelican, La., and appointed himself president. The bank's deposits were insured by the Federal Deposit Insurance Corporation.
Among the services the bank provided its customers at the time of petitioner's purchase was access to a "dummy account," used to cover checks drawn by depositors who had insufficient funds in their individual accounts. Any such check was processed through the dummy account and paid from the bank's general assets. The check was then held until the customer covered it by a deposit to his own account, at which time the held check was posted to the customer's account and the dummy account was credited accordingly. As president of the bank, petitioner enjoyed virtually unlimited use of the dummy account, and by May 2, 1978, his personal overdrafts amounted to $58,055.44, approximately half the total then covered by the account.
On May 8, 1978, federal and state examiners arrived at the Pelican Bank to conduct an audit. That same day, petitioner embarked on a series of transactions that seemingly amounted to a case of "check kiting."1 He began by opening a checking account with a deposit of $4,649.97 at the federally insured Winn State Bank and Trust Company in Winnfield, La. The next day, petitioner drew a check on his new Winn account for $58,500—a sum far in excess of the amount actually on deposit at the Winn Bank—and deposited it in his Pelican account. Pelican credited his account with the face value of the check, at the same time deducting from petitioner's account the $58,055.44 total of his checks that previously had been cleared through the dummy account. At the close of business on May 9, then, petitioner had a balance of $452.89 at the Pelican Bank.
On May 10, petitioner wrote a $60,000 check on his Pelican account—again, a sum far in excess of the account balance—and deposited it in his Winn account. The Winn Bank immediately credited the $60,000 to petitioner's account there, and Pelican cleared the check through its dummy account when it was presented for payment on May 11. The Winn Bank routinely paid petitioner's May 9 check for $58,500 when it cleared on May 12.
Petitioner next attempted to balance his Pelican account by depositing a $65,000 check drawn on his account at yet another institution, the Sabine State Bank in Many, La. Unfortunately, the balance in petitioner's Sabine account at the time was only $1,204.81. The Sabine Bank therefore refused payment when Pelican presented the check on May 17. On May 23, petitioner settled his Pelican account by depositing at the Pelican Bank a $65,000 money order obtained with the proceeds from a real estate mortgage loan.
The bank examiners, meanwhile, had been following petitioner's activities with considerable interest. Their scrutiny ultimately led to petitioner's indictment, in the United States District Court for the Western District of Louisiana, on two counts of violating 18 U.S.C. § 1014.2 That provision makes it a crime to
"knowingly mak[e] any false statement or report, or willfully overvalu[e] any land, property or security, for the purpose of influencing in any way the action of [certain enumerated financial institutions, among them banks whose deposits are insured by the Federal Deposit Insurance Corporation], upon any application, advance, discount, purchase, purchase agreement, repurchase agreement, commitment, or loan. . . ."
The first of the counts under § 1014 was directed at the May 9, 1978, check drawn on the Winn Bank, and charged that petitioner "did knowingly and willfully overvalue . . . a security, that is a check . . . for the purpose of influencing the Pelican State Bank, . . . a bank the deposits of which are insured by the Federal Deposit Insurance Corporation, upon an advance of money and extension of credit." The other § 1014 count used virtually identical language to indict petitioner for depositing in his Winn account the May 10 check drawn on the Pelican Bank. App. 3-4.3
At petitioner's trial the court charged the jury that "[a] check is a security for purposes of Section 1014." The court then explained that "[t]he Government charges that Mr. Williams was involved in check-kiting—a scheme whereby false credit is obtained by the exchange and passing of worthless checks between two or more banks." Id., at 36. To convict petitioner, the court continued, the jury had to find as to each count that "the defendant . . . did knowingly and willfully make a false statement of a material fact," that the statement "influence[d] the decision of the [bank] officers or employees," and that "the defendant made the false statement with fraudulent intent to influence the [bank] to extend credit to the defendant." Id., at 37-38. "The crucial question in check-kiting," the court concluded, "is whether the defendant intended to write checks which he could not reasonably expect to cover and thereby defraud the bank, or whether he was genuinely involved in the process of depositing funds and then making legitimate withdrawals against them." Id., at 38. The jury convicted petitioner on both counts, and he was sentenced to six months' incarceration on the second § 1014 count. For the first § 1014 count he was placed on five years' probation, to begin upon his release from confinement. App. 39.4
Among other things, petitioner argued on appeal that the indictment did not state a violation of § 1014. The Court of Appeals rejected this contention, however, concluding that petitioner's actions "constitute classic incidents of check kiting." 639 F.2d 1311, 1319 (C.A.5 1981). In line with its earlier decision in United States v. Payne, 602 F.2d 1215 (C.A.5 1979), cert. denied, 445 U.S. 903, 100 S.Ct. 1079, 63 L.Ed.2d 319 (1980), the court found such action proscribed by the statute.
We granted certiorari, limited to Questions 3 and 4 presented by the petition, in order to resolve a conflict concerning the reach of § 1014.5 454 U.S. 1030, 102 S.Ct. 565, 70 L.Ed.2d 473 and 454 U.S. 1096, 102 S.Ct. 668, 70 L.Ed.2d 637 (1981).
To obtain a conviction under § 1014, the Government must establish two propositions: it must demonstrate (1) that the defendant made a "false statement or report," or "willfully overvalue[d] any land, property or security" and (2) that he did so "for the purpose of influencing in any way the action of [a described financial institution] upon any application, advance, . . . commitment, or loan." We conclude that petitioner's convictions under § 1014 cannot stand, because the Government has failed to meet the first of these burdens.
Although petitioner deposited several checks that were not supported by sufficient funds, that course of conduct did not involve the making of a "false statement," for a simple reason: technically speaking, a check is not a factual assertion at all, and therefore cannot be characterized as "true" or "false." Petitioner's bank checks served only to direct the drawee banks to pay the face amounts to the bearer, while committing petitioner to make good the obligations if the banks dishonored the drafts. Each check did not, in terms, make any representation as to the state of petitioner's bank balance. As defined in the Uniform Commercial Code, 2 U.L.A. 17 (1977), a check is simply "a draft drawn on a bank and payable on demand," § 3-104(2)(b), which "contain[s] an unconditional promise or order to pay a sum certain in money," § 3-104(1)(b). As such, "[t]he drawer engages that upon dishonor of the draft and any necessary notice of dishonor or protest he will pay the amount of the draft to the holder." § 3-413(2), 2 U.L.A. 424 (1977). The Code also makes clear, however, that "[a] check or other draft does not of itself operate as an assignment of any funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until he accepts it." § 3-409(1), 2 U.L.A. 408 (1977). Louisiana, the site of petitioner's unfortunate banking career, embraces verbatim each of these definitions. See La.Rev.Stat.Ann. §§ 10:3-104, 10:3-409, 10:3-413 (West Supp.1982).6
For similar reasons, we conclude that petitioner's actions cannot be regarded as "overvalu[ing]" property or security. Even assuming that petitioner's checks were property or security as defined by § 1014, the value legally placed upon them was the value of petitioner's obligation; as defined by Louisiana law, that is the only meaning actually attributable to a bank check. See La.Rev.St.Ann., §§ 10:3-409(1), 10:3-413(2) (West) (Supp.1981). In a literal sense, then, the face amounts of the checks were their "values."
The foregoing description of bank checks is concededly a technical one, and the Government therefore argues with some force that a drawer is generally understood to represent that he "currently has funds on deposit sufficient to cover the face value of the check." Brief for United States 19. See United States v. Payne, 602 F.2d, at 1218. If the drawer has insufficient funds in his account at the moment the check is presented, the Government continues, he effectively has made a "false statement" to the recipient. While this broader reading of § 1014 is plausible, we are not persuaded that it is the preferable or intended one. It "slights the wording of the statute," United States v. Enmons, 410 U.S. 396, 399, 93 S.Ct. 1007, 1009, 35 L.Ed.2d 379 (1973), for, as we have noted, a check is literally not a "statement" at all. In any event, whatever the general understanding of a check's function, "false statement" is not a term that, in common usage, is often applied to characterize "bad checks." And, when interpreting a criminal statute that does not explicitly reach the conduct in question, we are reluctant to base an expansive reading on inferences drawn from subjective and variable "understandings."7
Equally as important, the Government's interpretation of § 1014 would make a surprisingly broad range of unremarkable conduct a violation of federal law. While the Court of Appeals addressed itself only to check kiting, its ruling has wider implications: it means that any check, knowingly supported by insufficient funds, deposited in a federally insured bank could give rise to criminal liability, whether or not the drawer had an intent to defraud. Under the Court of Appeals' approach, the violation of § 1014 is not the scheme to pass a number of bad checks; it is the presentation of one false statement—that is, one check that at the moment of deposit is not supported by sufficient funds—to a federally insured bank. The United States acknowledged as much at oral argument. Tr. of Oral Arg. 40. Indeed, each individual count of the indictment in this case stated only that petitioner knowingly had deposited a single check that was supported by insufficient funds, not that he had engaged in an extended scheme to obtain credit fraudulently.8
Yet, if Congress really set out to enact a national bad check law in § 1014, it did so with a peculiar choice of language and in an unusually backhanded manner. Federal action was not necessary to interdict the deposit of bad checks, for, as Congress surely knew, fraudulent checking activities already were addressed in comprehensive fashion by state law. See Comment, Insufficient Funds Checks in the Criminal Area: Elements, Issues, and Proposals, 38 Mo.L.Rev. 432 (1973). Absent support in the legislative history for the proposition that § 1014 was "designed to have general application to the passing of worthless checks," United States v. Krown, 675 F.2d 46, 50 (C.A.2 1982), we are not prepared to hold petitioner's conduct proscribed by that particular statute.9
In the 1948 codification of Title 18 of the United States Code, 62 Stat. 683, § 1014 reduced 13 existing statutes, which criminalized fraudulent practices directed at a variety of financial and credit institutions, to a single section. See 18 U.S.C. § 1014, Historical and Revision Notes. Of the originally enumerated institutions,10 only two—the Reconstruction Finance Corporation, see 15 U.S.C. § 616(a) (1946 ed.), and the Federal Reserve Banks, see 12 U.S.C. § 596 (1946 ed.)—performed duties other than the making of farm and home loans, and neither of those two organizations accepted checks for deposit from private customers. See United States v. Sabatino, 485 F.2d 540, 548 (C.A.2 1973), cert. denied, 415 U.S. 948, 94 S.Ct. 1469, 39 L.Ed.2d 563 (1974); United States v. Edwards, 455 F.Supp. 1354, 1357 (M.D.Pa.1978). It is evident, then, that bad checks were not among the "false statements" or "overvalued property" originally addressed by the statute. While Congress has added and subtracted certain institutions to and from the list covered by § 1014 over the intervening years, no changes have been made in the type of transactions proscribed by the provision.
The legislative history does not demand a broader reading of the statute. The amendments adding institutions to § 1014's list attracted little attention in Congress and were dealt with summarily; at no point was it suggested that the statute should be applicable to anything other than representations made in connection with conventional loan or related transactions. In 1964, for example, when Congress, by Pub.L.88-353, § 5, 78 Stat. 269, added Federal Credit Unions to the statutory list, § 1014 was described as barring "false statements or willful overvaluations in connection with applications, loans, and the like." S.Rep.No.1078, 88th Cong., 2d Sess., 1 (1964), U.S.Code Cong. & Admin.News 1964, pp. 2519, 2520. Thus, the Senate Committee on Banking and Currency declared that