Source: https://www.pbwt.com/second-circuit-blog/defining-the-terms-what-constitutes-a-%E2%80%9Cfederally-insured-financial-institution%E2%80%9D-under-18-u-s-c-%C2%A7-1344-or-a-%E2%80%9Cbank%E2%80%9D-under-18-u-s-c-%C2%A7-1014/
Timestamp: 2020-01-18 01:28:13
Document Index: 706912975

Matched Legal Cases: ['§ 1344', '§ 1344', '§ 1344', '§ 1344', '§ 1344', '§ 1014']

Categories: Statutory Interpretation, Trials and Evidentiary Rulings, White Collar Crime
Bouchard is a reminder that the evidence against a defendant must squarely conform to the statutory definition of the conduct that Congress has chosen to penalize. It also reflects the legislative shift that followed the mortgage crisis; as the Court noted, in 2009 Congress amended the statutory definitions at issue here specifically to include mortgage lenders such as BNC. Yet, as the Court stated, “[t]iming is everything: the conduct for which Bouchard was convicted occurred prior to 2009,” so the revised definitions did not apply to this prosecution, and defrauding BNC did not fall within the parameters of the relevant statutes. As seen below, the amendment to the statute was treated by the panel as a signal that this conduct was not criminal prior to the amendment.
After a jury convicted him in the United States District Court for the Northern District of New York (Mordue, J.), Bouchard moved for judgment of acquittal or, in the alternative, for a new trial under Rule 33 of the Federal Rules of Civil Procedure. He argued that the Government had presented insufficient evidence that BNC was a federally insured financial institution and, separately, that he would have been acquitted of all charges had one of his alleged co-conspirators, Kevin O’Connell, not submitted perjured testimony.
BNC was not a “Financial Institution” under 18 U.S.C. § 1344(1)
Section 1344(1) criminalizes schemes to defraud, or schemes to obtain the money of, a “financial institution.” As noted, prior to 2009 the definition of “financial institution” included insured depository institutions of the FDIC but not mortgage lenders.
Citing Loughrin v. United States, 134 S. Ct. 2384 (2014), the Second Circuit explained that § 1344(1) requires a defendant to intend to defraud a financial institution. Yet here, the Court continued, there was no evidence that Bouchard specifically intended to defraud the financially insured Lehman Brothers, or that he even knew of Lehman Brothers’ role in the transactions with BNC. The Government argued that Bouchard nonetheless had “intent to defraud” a financial institution because he targeted BNC, which directly affected Lehman Brothers as Lehman Brothers funded BNC’s loans and was liable for its losses. The Court rejected this argument, which was based on the First Circuit’s decision in United States v. Brandon, 17 F.3d 409 (1st Cir. 1994), a decision that conflicted with Second Circuit precedent holding that “§ 1344(1) requires the Government to show that a defendant intended to defraud the financial institution itself . . . a defendant cannot be convicted of violating § 1344(1) merely because he intends to defraud an entity, like BNC, that is not in fact covered by the statute.”
The Court Rejects the Government’s “Loose” Statutory Interpretation of 18 U.S.C. § 1344(2)
Bouchard next challenged his conspiracy conviction under § 1014, which charged him with submitting false forms to three different institutions. Fremont was the only institution involved that was proven to be federally insured. Because he was acquitted on the substantive count involving Fremont, Bouchard argued the jury wrongly convicted him on a different overt act involving one or both of the two other victimized institutions that were not federally insured.
The Court rejected this argument. “Without a special verdict form demonstrating that the jury convicted on a theory not supported by sufficient evidence, we can easily reconcile the jury’s verdict to acquit on the substantive count involving Fremont with its finding that an overt act involving Fremont occurred as part of the conspiracy.” For example, the different verdicts might “simply reflect the fact that the Fremont closing was attended by one of Bouchard’s paralegals rather than Bouchard, and the jury may reasonably have declined to find Bouchard guilty of the substantive count and simultaneously determined that his co-conspirator (the paralegal) committed the overt act charged in the conspiracy count.” The Court thus affirmed Bouchard’s conspiracy conviction.