Opinion ID: 197937
Heading Depth: 2
Heading Rank: 2

Heading: The Challenge to Count III

Text: 29 As we have stated, Rowe contends that the district court erred in denying his Fed.R.Crim.P. 29 motion for a judgment of acquittal on Count III. Rowe's claims of error mirror those presented below: (1) because EDI was, in fact, paying the monthly rent on the Castle Road residence, Rowe was not obligated to list the payment as a current personal expenditure; and (2) because Schedule J uses the disjunctive in asking a chapter 7 petitioner to list Rent or home mortgage payment, he was within his rights to list either one or the other, but not both. Although he does not say so explicitly, Rowe's arguments on this point appear to derive from the rule that, in a false statement prosecution, an answer to a question is not fraudulent if there is an objectively reasonable interpretation of the question under which the answer is not even false. Cf. United States v. Bradstreet, 135 F.3d 46, 51-52 (1st Cir.) (endorsing, in a securities fraud case, the reasoning of United States v. Migliaccio, 34 F.3d 1517, 1522-25 (10th Cir.1994), to this effect), cert. denied, --- U.S. ----, 118 S.Ct. 1805, 140 L.Ed.2d 944 (1998). 30 The latter of Rowe's two arguments is not easily decided. Working against Rowe are the facts that Schedule J quite clearly seeks a snapshot view of a chapter 7 petitioner's current expenditures, and that when a chapter 7 petitioner lists on Schedule J only a rent payment (or a home mortgage payment) though he or she actually has both a monthly rent payment and a monthly home mortgage payment, the petitioner would appear to frustrate, in quite an obvious way, the primary purpose of the schedule. In view of this, and in the absence of any other line on Schedule J which clearly applies to payments of this sort, but see infra at 20 (noting the potential applicability of the line asking for Installment payments other than automobile payments), we think the line asking for a petitioner's Rent or home mortgage payment might reasonably be regarded as a shorthand version of the following imperative: List here your total monthly payment ascribable to all rent or mortgage obligations. So also do we see as potentially relevant the authority, in this circuit and elsewhere, for construing the conjunction or to mean and in a statute (even a penal statute) where the clear purpose of the statute requires such a construction. See United States v. Scivola, 766 F.2d 37, 45 (1st Cir.1985) (reading 18 U.S.C. § 1623(d) to preclude a perjury prosecution against a person who has recanted perjurious testimony only if the testimony has not substantially affected the proceeding in which it was given, and if it has not become manifest that [the] falsity [of the testimony] has been or will be exposed); see also, e.g., United States v. Fornaro, 894 F.2d 508, 510-11 (2d Cir.1990) (same); United States v. Moore, 613 F.2d 1029, 1039-45 (D.C.Cir.1979) (same); but see United States v. Smith, 35 F.3d 344, 346-47 (8th Cir.1994) (disagreeing with Fornaro and similar cases and giving effect to the plain language of the statute). 31 Yet there are considerations working in Rowe's favor as well. When a question asks for x or y in such a way as to suggest an assumption that only x or y pertains, to respond only x or only y when, contrary to the question's assumption, both x and y pertain would arguably not be false (though it might be misleading). To illustrate by means of an imperfect analogy, answering President to the question Was Gerald Ford President or Vice-President? might be misleading; but it would arguably not be criminal under a statute that penalizes only false statements (as 18 U.S.C. § 152 does). Also potentially relevant and weighing in on Rowe's side are the principles undergirding the rule of lenity, see, e.g., Dunn v. United States, 442 U.S. 100, 112, 99 S.Ct. 2190, 2197, 60 L.Ed.2d 743 (1979) (noting that the rule is rooted in fundamental principles of due process which mandate that no individual be forced to speculate, at peril of indictment, whether his conduct is prohibited), and that the government, to our surprise, has all but conceded that Rowe's argument would have force but for the following three facts: (1) the question asked for Rowe's home mortgage payment (emphasis supplied); (2) the Highland Avenue residence was not Rowe's home; and (3) in any event, Rowe offered no other evidence, either in the form of witnesses or documents[,] to support his testimony that the mortgage amount was $395 per month. Government's Brief at 38. 1 32 Although we ultimately do not rule on the merits of Rowe's second argument because we agree with his first, see infra at 20-22, we believe it important to note our dissatisfaction with the government's substantive response to the second argument. We are quite perplexed at the government's insistence that Rowe's failure to introduce evidence corroborating his testimony as to his monthly mortgage payment constitutes sufficient proof (in conjunction with the evidence of the apparently minimal inexactitude of the $395 figure, see supra note 1) for the jury to have found beyond a reasonable doubt that Rowe's $395 answer fraudulently misrepresented his actual monthly mortgage payment on the Highland Avenue property. To the extent that the government can be seen to have proceeded under an alternative theory that, even if Rowe was not obliged to list the rental payment on the Castle Road property, his response to Schedule J's request for his Rent or home mortgage payment was fraudulent because $395 was not his actual monthly mortgage payment, but see Indictment at pp 19-22 (failing even to hint at such an alternative theory), the government bore the burden of proving the falsity of Rowe's answer beyond a reasonable doubt, see Bradstreet, 135 F.3d at 52. And the absence of evidence corroborating Rowe's oral testimony (even when taken with the other evidence on this point, see supra note 1) is quite plainly insufficient to ground such a finding. 33 We also are troubled by the government's argument that Schedule J requests only a home mortgage payment and that the mortgage payment Rowe listed did not pertain to his home--i.e., to the place where [Rowe] live[d]. Government's Brief at 39. In expressing some doubt about the persuasiveness of Rowe's second argument, we already have observed that failing to list the sum total of all rent and mortgage payments on Schedule J's Rent or home mortgage payment line would seem to counteract the purposes of the schedule. See supra at 20-21. We acknowledge that there is room for debate on this point; one might plausibly argue that a mortgage payment pertaining to a property which does not constitute petitioner's residence is more appropriately listed in the space provided on Schedule J for Installment payments other than automobile payments. But the government has not argued that mortgage payments pertaining to non-residential properties should be recorded elsewhere on Schedule J. Instead, it has merely asserted, without limitation, that a chapter 7 petitioner who, acting within the spirit (if not the letter) of Schedule J, includes such a mortgage payment on the Rent or home mortgage payment line concomitantly provides an answer to the question in the bankruptcy form [that is] not true. Government's Brief at 39. In our view, this argument fails to see the forest for the trees. 34 In any event, the fraud alleged in Count III, and the government's overriding theory as to Count III, has not been Rowe's listing of his mortgage payment; it has been Rowe's failure to list the monthly rental payment for the Castle Road property EDI was making on his behalf. And on this point, the government really has no answer to Rowe's argument that, precisely because EDI was making the payment (a fact which the government not only concedes, but in fact charged in the indictment, see Indictment at p 21), Rowe's failure to list it as a current personal monthly expenditure was not bankruptcy fraud. The government may well be correct in asserting that Rowe filled out Schedule J as he did because he wished to keep his relationship with EDI a secret. So too may it be correct in contending that Rowe's listing of the Highland Avenue mortgage payment was disingenuous, as evidenced by both Rowe's failure to list the mortgagee of the Highland Avenue property as a creditor elsewhere on his schedules and the strong likelihood that EDI funds also were used to make the mortgage payments. But that does not make the failure to list the rental payment a crime, as the indictment charged. Schedule J is directed at ascertaining the CURRENT EXPENDITURES OF INDIVIDUAL DEBTOR(S). And in our view, an objectively reasonable interpretation of that which constitutes a current expenditure of an individual debtor excludes expenditures of non-debtor assets by a third party to benefit a debtor (even expenditures for which repayment would eventually be sought, as apparently was the case here). See Bradstreet, 135 F.3d at 51-52; cf. 5 Collier on Bankruptcy p 547.03 (15th ed. 1997) (When a third person makes a loan to a debtor specifically to enable that debtor to satisfy the claim of a designated creditor, the proceeds never become part of the debtor's assets.... The rule is the same regardless of whether the proceeds of the loan are transferred directly by the lender to the creditor or are paid to the debtor with the understanding that they will be paid to the creditor in satisfaction of his claim....); Brown v. First Nat'l Bank, 748 F.2d 490, 491-92 (8th Cir.1984) (similar). 2 Thus, the district court erred in denying Rowe's Fed.R.Crim.P. 29 motion for a judgment of acquittal on Count III.