Opinion ID: 70708
Heading Depth: 1
Heading Rank: 4

Heading: the bank fraud count

Text: 29 Much of the evidence previously discussed was not admissible on the bank fraud charge, although all counts were tried together despite the defendant's request for a severance. 30 In 1986, defendant entered into a plea agreement with the United States with respect to an indictment in the Southern District of Florida alleging criminal tax violations. As part of the arrangement, the government was barred from bringing future charges against defendant pertaining to his involvement with Omni's predecessor, A.T. Bliss & Company. 31 After the indictment in the present case was filed in the Middle District of Florida, defendant sought enforcement of the plea bargain from Judge Ryskamp, who had approved it in the Southern District of Florida. Judge Ryskamp granted the requested relief and issued an order reading: The United States is enjoined from presenting any evidence of Defendant Mueller's conduct, prior to November 7, 1986, with regard to [the bank fraud count] of the indictment pending against him in the Middle District of Florida. 32 The record in this case contains few details of the defendant's conduct after November 7, 1986 having any relevance to bank fraud. What evidence there is consists of references to the suit that Depository Trust filed against Omni and defendant in the Florida state court on October 15, 1986, asserting a claim for the liquidating dividend. Apparently, defendant was not represented by counsel in that case, but prepared and filed an answer on November 19, 1986 for himself as well as for Omni. 33 In the trial of the case now before us, an official of Depository Trust testified that on December 11, 1986, defendant failed to appear for a state court deposition scheduled to be held in Lakeland, Florida. Defendant, who lived in Fort Lauderdale, had objected to traveling to Lakeland, some distance from his home. The Depository Trust official further testified that on October 12, 1987, defendant filed an affidavit in the state court in which he gave his version of what had happened to the dividend checks in early 1986. 34 This witness also testified, without specificity, that defendant had failed to appear for depositions on other occasions. In addition, the witness discussed other events that occurred before November 7, 1986, which were admissible only as to the tax violation counts. The official also identified a number of documents that defendant had produced during the course of the civil suit. Finally, the witness described the garnishment proceeding on the defendant's bank account at the Meritor Bank, which yielded approximately $10,000. 35 In its brief, the government recognizes that to establish bank fraud in violation of 18 U.S.C. Sec. 1344, 1 the prosecution must establish that the defendant engaged in or attempted to engage in a scheme or artifice to defraud a financial institution, and that the defendant acted knowingly. It is not disputed that Depository Trust is a financial institution within the ambit of 18 U.S.C. Sec. 1344. 36 The government contends that there is sufficient evidence from which the jury could conclude defendant committed bank fraud. The bases of the government's position are that Depository Trust had a claim against defendant for $486,000; that the answer and affidavit defendant filed in the civil suit contained falsehoods; and that defendant delayed final resolution of the suit by obstructing discovery. In addition, we may also assume that after November 6, 1986, defendant had control of the funds at Barclays Bank and thus could have paid the debt owed Depository Trust, but did not. 37 At the conclusion of the government's evidence, defendant moved for acquittal on the bank fraud count. The trial judge denied the request stating: Well [Depository Trust's lawsuit] in itself, would not be enough, but a jury question is formed as to whether or not the dealings in November of '87 with regard to transferring funds to [Euro International] and Venture Funding and so forth, the jury can decide whether or not any of those funds were [Depository Trust] funds. 38 The trial judge was referring to a consolidation of a number of corporations through the exchange of stock and notes. The companies included Venture Funding, Ltd. into which R. Mueller & Sons had merged. All of the corporations received stock in a new entity, Euro International. Apparently, no cash was involved in these transactions, and significantly, on appeal the government does not argue that any of the $486,000 due Depository Trust was traced to these mergers. 39 As to the bank fraud count, therefore, the record establishes only that during the pendency of a civil suit in state court for the recovery of money due and owing, defendant delayed the ultimate entry of judgment by filing a false and misleading answer and affidavit, and slowed discovery. 40 As this Court explained in United States v. Falcone, 934 F.2d 1528, 1539 (11th Cir.1991), section 1344 covers two distinct types of bank fraud: subsection (a)(1) outlaws schemes to defraud federally insured financial institutions and subsection (a)(2) prohibits schemes to obtain funds from such institutions by means of false or fraudulent pretenses, representations, or promises. Because defendant did not obtain funds from Depository Trust, only subsection (a)(1), banning schemes to defraud, is pertinent to this case. 41 The courts have traditionally been wary of defining fraud for fear of creating opportunities for, or encouraging the creation of, dishonest schemes that lie outside the definition. Consequently, case law on fraud is highly fact-bound and broad statements must be read in context. 42 The government has cited two cases in support of its position, but we do not find them persuasive. For example, in United States v. Goldblatt, 813 F.2d 619, 624 (3d Cir.1987), the court of appeals explained that fraud is measured by determining whether the scheme demonstrated a departure from fundamental honesty, moral uprightness, or fair play and candid dealings in the general life of the community. In that case, the defendant, claiming money from a bank, was convicted of covering up the relevant fact that the withdrawal of his funds had been made by his son. 43 In United States v. Solomonson, 908 F.2d 358, 363 (8th Cir.1990), the Court observed: [A]ctions that have the effect of delaying a complaint, making apprehension less likely, or giving a false sense of security to the victim can be considered part of a scheme to defraud. That case is of little help here because Depository Trust, the victim, was aware that it had been denied funds due it and had filed suit to recover them. 44 The parties have not provided us with authorities analogous to the facts presented here. However, several district court cases have held that the mail fraud statute does not extend to false statements by attorneys in the context of pending litigation. McMurtry v. Brasfield, 654 F.Supp. 1222, 1225 (E.D.Va.1987) (letters and affidavit mailed in custody dispute not mail fraud); See also Paul S. Mullin & Assocs., Inc. v. Bassett, 632 F.Supp. 532, 540 (D.Del.1986) (suggestion that attorney's actions could be mail fraud was absurd); Spiegel v. Continental Ill. Nat. Bank, 609 F.Supp. 1083, 1089 (N.D.Ill.1985), aff'd 790 F.2d 638 (7th Cir.1986) (correspondence concerning issue in pending litigation not mail fraud). These courts indicated that the appropriate remedy was notification of disciplinary authorities, or application for sanctions in the civil litigation. Because the bank fraud statute is modeled on the wire and mail fraud statutes, see H.R.Rep. No. 1030, 98th Cong., 2d Sess. 377, reprinted in 1984 U.S.C.C.A.N. 3182, 3519, a similar standard should apply here. 45 It is highly unlikely that Congress intended the bank fraud statute to cover the situation before us. First, Depository Trust had no greater rights to the liquidating dividends than any other shareholder. It would be incongruous to extend the weapon of criminal penalties to Depository Trust when others in the same situation were not granted such rights. 46 If the government believed that the defendant's conduct in the civil suit merited criminal prosecution, the perjury statute would have been available. Unlike the crime of perjury, which extends to all litigants, applying the bank fraud statute here, as the government would have us do, would benefit only a limited class of litigants. We find nothing in the language of the bank fraud statute to create such sweeping protection for banks in the context of civil suits. 47 Nor do we find any indication that Congress intended to create such a basic interference with established norms in civil litigation as is urged here. Permitting the government to prevail on its theory would mean that a bank suing on a note could threaten the obligor with criminal sanctions if he delayed payment, although a similar suit by a non-financial institution would have no such ramifications. The state court has ample means to enforce discovery procedures and invoke appropriate sanctions against offending parties--even when, as here, the litigant proceeded pro se. Damages for undue delay and obstruction of litigation, after all, may be imposed in civil proceedings. 48 We are persuaded that there was insufficient evidence on which a jury could find a violation of the bank fraud statute in this case, and accordingly, we direct the entry of judgment of acquittal on count two. See Burks v. United States, 437 U.S. 1, 16-18, 98 S.Ct. 2141, 2149-51, 57 L.Ed.2d 1 (1978) (double jeopardy bars retrial after appellate court determines evidence at trial was insufficient); United States v. Baptista-Rodriguez, 17 F.3d 1354, 1369 (11th Cir.1994); United States v. Khoury, 901 F.2d 948, 961 (11th Cir.1990).