Opinion ID: 533625
Heading Depth: 1
Heading Rank: 2

Heading: issues

Text: 21 I. The three defendants contend that the district court improperly instructed the jury. We review their contentions for an abuse of discretion, considering the instructions as a whole and evaluating the adequacy of the entire charge in the context of the whole trial. United States v. Frazin, 780 F.2d 1461, 1468 (9th Cir.), cert. denied, 479 U.S. 844, 107 S.Ct. 158, 93 L.Ed.2d 98 (1986); United States v. Marabelles, 724 F.2d 1374, 1382 (9th Cir.1984). 22 1. The defendants say, first, that the court should have instructed the jury that the false statements they made had to be material to the decision or activities of Queen City Savings & Loan on a commitment or loan. The trial court denied this request and simply instructed the jury that the prosecution must show that on the dates charged, the defendants made, or caused to be made, a material false statement to Queen City Savings and Loan Association. 23 Going beyond what they requested of the trial court, the defendants argue that their requested instruction comported with the definition of materiality in Theron v. United States Marshal, 832 F.2d 492, 496-97 (9th Cir.1987), cert. denied, 486 U.S. 1059, 108 S.Ct. 2830, 100 L.Ed.2d 930 (1988). In Theron the court held that [a] statement concerns a material fact when the statement has the capacity to influence the lending institution. Id. But the actual instruction requested by the defendants here did not mention capacity to influence. The instruction requested was at most a variation of the instruction actually given. Another instruction, which was given, specified that, in order to convict, the jury must find that the defendants made the false statements with the specific intent to influence, in any way, the action of Queen City Savings and Loan Association on a loan or loan application. That instruction fully satisfied the requirement that the statements were meant to influence the decisions and activities of the Savings and Loan. The defendants were not entitled to more. 24 2. The defendants contend, secondly, that the trial court misinstructed the jury on count 14 by telling it that it could convict if it found that the defendant intended that the entry deceive a federally-insured financial institution or public official. The relevant statute specifies that it is a crime to make a false entry with intent to defraud any such institution ... or to deceive any officer, auditor, examiner, or agent of any such institution or of department or agency of the United States.... 18 U.S.C. § 1006. The statute is in the disjunctive. The crime is committed by an act accompanied by an intent to defraud the institution or by an act accompanied by an intent to deceive an officer of the institution or agency of the United States. The defendants' claim that the crime is committed only by intent to defraud is mistaken. The court correctly stated that an act with intent to deceive would constitute the crime. 25 The defendants are correct that the statute does not make it a crime to deceive a federally-insured institution. The instruction was mistaken by including the institution. There was, however, no objection to the instruction. The error was waived, unless manifest. It was not manifest. In the context of the entire charge the error was harmless. A misdescription of an element of the offense ... deprives the jury of its factfinding role. Carella v. California, --- U.S. ----, 109 S.Ct. 2419, 2423, 105 L.Ed.2d 218 (1989) (Scalia, J., concurring). But the error is harmless if no rational juror could have found the defendants guilty under the erroneous instruction and not also found them guilty under the correct instruction. Id. So here, the jury could not have found an intent to deceive the institution without finding an intent to deceive its officers. There was ample evidence that the defendants intended to deceive officers of the Savings and Loan itself; the mistake in instruction could not have contributed to the defendants' conviction. See United States v. Malone, 837 F.2d 670, 672-73 (5th Cir.1988). 26 3. Thirdly, the defendants claim that the trial court did not require the jury to agree on the facts necessary to support a verdict of conspiracy. However, instruction number 6 told the jury that it must find that one of the members of a conspiracy committed one of the overt acts charged with all of you in agreement on which of the overt acts was committed. The jury was also instructed that the conspiracy charged was alleged to have four objectives and that, in order to return a verdict of guilty, the jury must unanimously agree upon the same objective as having been proved beyond a reasonable doubt. There was no error. 27 4. Jerry Smith and Kirchoff contend that the instruction on conspiracy was flawed because it failed to say that they could not be convicted of conspiracy to make a false entry on the books of the Savings and Loan unless they acted with intent to defraud the Savings and Loan. The contention is mistaken. The conspiracy instruction told the jury that it could not find a defendant guilty unless it found that he joined the conspiracy and did so knowing of the unlawful plan and intending to help carry it out. The instruction followed the Manual of Model Jury Instructions for the Ninth Circuit, § 5.01A (1985 ed.). The court later instructed the jury on the particular intent necessary to commit each of the substantive crimes. These instructions adequately advised the jury. The court was not required to give the instructions in the order preferred by the defendants. See United States v. Wellington, 754 F.2d 1457, 1463 (9th Cir.), cert. denied, 474 U.S. 1032, 106 S.Ct. 593, 88 L.Ed.2d 573 (1985). 28 5. Paul Smith also challenges the jury instruction on aiding and abetting which told the jury that the government must prove that the defendant knowingly helped another defendant commit the offense charged in the count; intended to do so; and acted before the crime was completed. The instruction went on to say that it was not enough for the government to show that the defendant did things that were helpful to the other defendant. The evidence must show beyond a reasonable doubt that the defendant under consideration acted with the knowledge and intention of helping the other person or persons named in the count to commit the offense charged. Paul Smith fastens on the sentence just quoted and argues that it is ambiguous because it could mean that the defendant was guilty if he merely had the intention of helping the other person, rather than sharing the intention that the principal had. Paul Smith buttresses his argument by noting that the jury acquitted him of the other offenses where there was no similar instruction. 29 The instruction challenged was actually proposed by Paul Smith and his codefendants. Were we to reach the merits, there is not cause for reversal. Error, if there was error, was invited. Review is barred. United States v. Benny, 786 F.2d 1410, 1416-17 (9th Cir.), cert. denied, 479 U.S. 1017, 107 S.Ct. 668, 93 L.Ed.2d 720 (1986). 30 As the challenged instruction is, with immaterial variation, the same as Ninth Circuit Model Jury Instruction 5.03, we add that, taken as a whole, the instruction is not ambiguous. It requires that the government prove that the defendant knowingly helped another defendant commit the crime and intended to do so. It is explicit that helping a defendant does not constitute the crime of aiding and abetting. The objection is without merit. 31 6. Jerry Smith objects to the instruction on wire fraud that, [t]o act with intent to defraud means to act knowingly and with the specific intent to cause some financial loss to another, or bring about some financial gain to one's self. He contends that McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987) holds that to prove mail fraud requires proof of an intent to deprive the victim of property or money, and that the wire fraud statute should be similarly construed. The challenged instruction cannot be isolated from the other instructions given. Immediately before this instruction the district court instructed the jury that the government must prove beyond a reasonable doubt that the defendants made up a plan or scheme to obtain money by false promises or statements. The charge was clearly adequate. 32 II. The defendants contend that the government proved count 14--making a false entry--with evidence of a violation of a civil requirement of Washington law as to the Borrower's Certification. Clearly, evidence of the violation of a civil banking statute may not be introduced to prove a criminal offense. United States v. Wolf, 820 F.2d 1499, 1505 (9th Cir.1987), cert. denied, 485 U.S. 960, 108 S.Ct. 1222, 99 L.Ed.2d 423 (1988). Just as clearly, such a civil statute may be introduced to show a defendant's motive. Id. at 1504-05. In this case the civil statute was introduced to show the motive for Paul D. Smith's false statement about his Can-Am obligations. The district court cautioned the jury that the civil banking regulations were offered only as background and as they might bear on the defendants' intent. The evidence was properly admitted. 33 III. The Smiths further argue that they were convicted of aiding and abetting under 18 U.S.C. § 2 but that the crime was legally impossible. Their argument is that the substantive offense was one under 18 U.S.C. § 1006 which could only be committed by an officer, agent, or employee of an institution whose accounts are insured by FSLIC. The person who made the false entry was Kirchoff. He was an officer of QCI, which was not insured by FSLIC, but he was also an agent and a director of the Savings and Loan. Hence he could have committed the crime, and the Smiths, although not themselves agents of the Savings and Loan, could have aided and abetted him. 34 The Smiths argue that there are two parts to 18 U.S.C. § 2 and that they were incorrectly charged under section 2(a). Section 2(a) declares that whoever commits an offense against the United States or aids or abets it is punishable as a principal. Section 2(b) declares, Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal. They argue that (a) applies to aiders and abettors who have the capacity to commit the crime while (b) applies to those who do not have the capacity but do cause another to commit the offense. 35 We have recently explained that under (a) the government must prove that someone committed the crime and that another person aided and abetted without performing the criminal act himself; the second person is made a coprincipal with the person who takes the final step and violates a criminal statute. United States v. Causey, 835 F.2d 1289, 1291-92 (9th Cir.1987). In contrast, under (b) the government does not need to prove that someone other than the defendant committed the substantive crime but merely that the aider and abettor caused the act to be performed, even though the person who did the wrongful act violated no criminal statute because of the lack of criminal intent or capacity. Id. With these distinctions in mind, it is clear that the Smiths' argument fails. The government proved that Kirchoff had committed the crime and that the Smiths, having aided him to do so, became co-principals under 18 U.S.C. § 2(a). 36 IV. Smith and Kirchoff contend that there was an improper and prejudicial joinder in count I of a conspiracy to defraud the United States and a conspiracy to commit the substantive offenses and that therefore count I was both unconstitutionally duplicative and vague. The statute provides, If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, ... each shall be fined ... or imprisoned ... or both. 18 U.S.C. § 371. 37 The defendants' contention has a certain force. It is a violation of the rules to join two offenses in the same count. Fed.R.Crim.P. 8(a). In legal parlance, such an indictment is duplicitous. 38 In the course of holding that there was a variance between the indictment and the proof of a conspiracy, the Fifth Circuit has applied this rule to the conspiracy statute and has stated, Count I must have charged a conspiracy either to 'commit any offense' or to 'defraud the United States'; it cannot have charged both. United States v. Haga, 821 F.2d 1036, 1043 (5th Cir.1987) (emphasis in original). Accordingly, proof of conspiracy to defraud the United States was held to constitute a fatal variance when the indictment had charged the defendant with conspiracy to commit offenses against the United States. Id. 39 Similarly, in determining whether a defendant had been subjected to double jeopardy, the Tenth Circuit has held that a charge of conspiracy to commit mail fraud was a charge of a crime different from the crime of conspiracy to defraud the United States. United States v. Thompson, 814 F.2d 1472 (10th Cir.1987). The court proceeded to follow the rule stated by Justice Sutherland in Blockburger v. United States, 284 U.S. 299, 304, 52 S.Ct. 180, 182, 76 L.Ed. 306 (1931): The applicable rule is that where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only one, is whether each provision requires proof of a fact which the other does not. Pointing out the proof of conspiracy to commit mail fraud requires proof of a fact which conspiracy to defraud the United States does not, the Tenth Circuit held that the defendant had not even raised a colorable claim of double jeopardy when he had been once charged with conspiracy to commit mail fraud and later charged with conspiracy to defraud the United States. The crimes were distinct. Thompson, 814 F.2d at 1477. 40 If Haga and Thompson are right, it looks as though the defendants in our case have been charged with two different crimes in Count I and that therefore Count I is bad for duplicity. 41 We, however, reject any implication of Haga and Thompson that section 371 creates two distinct conspiracy offenses. Although there is no helpful legislative history, the two clauses should be interpreted to establish alternate means of commission, not separate offenses. 42 Legislative history does not help the government. The conspiracy statute goes back to An Act to amend existing laws relating to Internal Revenue and for other Purposes, Ch. 169, § 30, 14 Stat. 484 (1867). There is not a single word of explanation as to the purpose of the statute in the entire body of hearings and reports. See Goldstein, Conspiracy to Defraud the United States, 68 Yale L.J. 405, 418 (1959). At first blush it would seem that the conspiracy statute had been directed only at conspiracy to defraud the United States of its revenue. However, this obvious purpose was rejected by the Supreme Court, which noted that it was not unusual for Congress to combine incongruous legislation in the same bill. United States v. Hirsch, 100 U.S. 33, 35-36, 25 L.Ed. 539 (1879). The Court interpreted the statute as making criminal every form of conspiracy against the United States, and every form of conspiracy to defraud them. Id. at 35. With this authoritative interpretation as a gloss, the statute was effectively cut off from its original context and turned into a law making an agreement to commit any crime against the United States, or to defraud them, the crime punishable under the statute. 43 What is determinative here is not legislative history but precedent in the cases where duplicity has been the issue presented to the court. The Second Circuit, in an opinion written by Justice Sutherland affirming the conviction of an United States Circuit Judge for conspiracy to defraud the United States and to commit the substantive offense of violation of a criminal statute, held that the count charging the conspiracy was not duplicitous. United States v. Manton, 107 F.2d 834, 839 (2d Cir.1938), cert. denied 309 U.S. 664, 60 S.Ct. 590, 84 L.Ed. 1012 (1940). As the author of Blockburger, Justice Sutherland must have been aware that a Blockburger analysis would have led to a different result. The District of Columbia Circuit followed Manton in rejecting a contention that the conspiracy statute itself describes two offenses; the court affirmed the conviction of a United States Congressman who had been charged in a single count with conspiracy to defraud the United States and to commit specified substantive offenses. May v. United States, 175 F.2d 994, 1002 (D.C.Cir.), cert. denied, 338 U.S. 830, 70 S.Ct. 58, 94 L.Ed. 505 (1949). More recently Manton has been followed in affirming the conviction of a United States Senator charged in a single count with conspiracy to defraud the United States and to commit substantive offenses of bribery, receipt of unlawful gratuities, and violation of the conflict-of-interest statute. United States v. Williams, 705 F.2d 603, 623-24 (2d Cir.), cert. denied 464 U.S. 1007, 104 S.Ct. 524, 78 L.Ed.2d 708 (1983). 44 The rule, indeed, has been enunciated by Chief Justice Stone for a unanimous Supreme Court: The allegation in a single count of a conspiracy to commit several crimes is not duplicitous, for 'The conspiracy is the crime, and that is one, however diverse its objects.'  Braverman v. United States, 317 U.S. 49, 54, 63 S.Ct. 99, 102, 87 L.Ed. 23 (1942) (quoting Frohwerk v. United States, 249 U.S. 204, 210, 39 S.Ct. 249, 252, 63 L.Ed. 561 (1919)). Braverman echoes the magisterial statement of Justice Holmes for a unanimous Supreme Court: Countenance we believe has been given by some courts to the notion that a single count in an indictment for conspiring to commit two offences is bad for duplicity. This Court has given it none. Frohwerk, 249 U.S. at 209, 39 S.Ct. at 252. Here the defendants were charged with a conspiracy under separate clauses of the same statute, not two separate statutes. It would be strange to infer that Congress intended to punish twice a conspiracy that violates both clauses. Where a single criminal statute prohibits alternative acts, courts should not infer the legislature's intent to impose multiple punishment. See Prince v. United States, 352 U.S. 322, 329, 77 S.Ct. 403, 407, 1 L.Ed.2d 370 (1957). The clause defraud the United States merely expands the scope of the offense by including another object of a conspiracy that might not otherwise be covered by the clause any offense. The Braverman rule applies even when one of the diverse objects of the conspiracy includes conduct prohibited by the defraud clause of Section 371. In other words, where conspiracy is the charge, the established rule is that a charge of conspiracy to commit more than one offense may be included in a single count without violating the general rule against duplicity. So here, the defendants were properly charged with a single continuing agreement to defraud the United States and to commit the substantive offenses. 45 V. Jerry Smith contends that the evidence was insufficient to sustain his convictions. On the contrary, there was sufficient evidence that Jerry Smith carried out a scheme to promise the Savings and Loan high loan fees, high interest, and profit-sharing on loans for land development; that Jerry Smith diverted a portion of these loans to his own benefit; that he made or caused to be made false statements to obtain them; that Kirchoff was his co-conspirator operating from within; that Jerry's brother Paul was used by the master conspirator to achieve his end; and that Jerry Smith profited from his fraud by at least $2 million. 46 McNally's narrow definition of defraud does not extend to the conspiracy charge. A conspiracy to defraud the United States under 18 U.S.C. § 371 does not require an agreement to defraud the government of money or property. The statute prohibits any willful impairment of a legitimate function of government, whether or not the improper acts or objective are criminal under another statute. United States v. Tuohey, 867 F.2d 534, 537 (9th Cir.1989). The conspirators here conspired both to impair the functions of the Bank Board and to commit specific substantive offenses. 47 The major challenge to the sufficiency of the evidence made by Jerry Smith is in the guise of an argument on the jury instruction on materiality. In arguing that the jury was not properly instructed on materiality--an argument we have already found unpersuasive--he, in effect, argues that he did not have an intent to defraud because the Savings and Loan was already aware of the true facts. Thus, for example, he argues that the Savings and Loan knew that the actual purchase price of the security for the loan to PDS was $1,953,000 rather than $3,906,000. Again, for example, he argues that the value of the real estate in the Hidden Valley joint venture was known by the Savings and Loan to be lower than the $5,832,000 value placed on it by mutual agreement. 48 The apparent thrust of the argument is that the Savings and Loan knew the true facts and, in its eagerness to make the loan, was indifferent to the inaccuracies in the statements presented to it as to the assets of its borrowers or the value of the security they offered. This line of argument, however, is foreclosed by United States v. Kennedy, 564 F.2d 1329, 1340-41 (9th Cir.1977), cert. denied, 435 U.S. 944, 98 S.Ct. 1526, 55 L.Ed.2d 541 (1978), construing the same statute at issue here. It is not necessary to prove that the deceived agency was actually influenced. The one who is seeking to deceive by means of a false statement may not claim that his statements were not influential or the information not important. Kay v. United States, 303 U.S. 1, 6, 58 S.Ct. 468, 471, 82 L.Ed. 607 (1938). 49 Conceding that Kay and Kennedy block this line of attack, Jerry Smith argues that he could not have had the intent to deceive when he knew that the Savings and Loan was aware of the true facts. But this is an argument for the jury. His intent to deceive was before that body. The jury by its verdict found that he possessed the requisite intent. 50 The evidence supported the verdict. To the extent that Kirchoff was the agent of the Savings and Loan who knew the true facts, his knowledge does not show that the co-conspirators, Smith and Kirchoff himself, did not intend to deceive the Savings and Loan. See United States v. Kennedy, 64 F.2d at 1340. In the case of the loan to Can-Am the board of directors of the Savings and Loan obviously believed that there was a million dollar loan on Can-Am's books because they asked for its subordination. A reasonable jury could have drawn the conclusion that Jerry Smith intended to deceive the directors. In the case of the loan to PDS the false certification was necessary to comply with governmental regulations. A reasonable jury could have inferred that Smith intended to deceive the officers of the institution, which could only lend if the certification was filed. In the case of the Hidden Valley joint venture, Jerry Smith told Henry Block, at this time the owner of the Savings and Loan, that the hard cost of the land was $5,832,000. As Block was seeking to know the actual net cost of the property to Ramcon, Smith clearly meant to deceive him and his institution. 51 VI. Kirchoff also objects to the sufficiency of the evidence against him. He failed to move to dismiss the charges against him at the close of his case or at the close of all the evidence and so effectively waived objection to the sufficiency of the evidence. United States v. Comerford, 857 F.2d 1323, 1324 (9th Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 812, 102 L.Ed.2d 802 (1989). We will, however, review the evidence to prevent a manifest miscarriage of justice and for plain error. Id. 52 Kirchoff's principal point is that he received no money from the conspiracy. He did, however, have a substantial motive to be a conspirator: he believed that Jerry Smith was the owner of the Savings and Loan and he profited from Smith's patronage in getting to be made head of QCI and in receiving a salary higher than that of Hess. His actual participation in the conspiracy is shown by the many acts already recited under Facts; by his keeping Jerry Smith's name out of the files when it would have been a tip-off to regulators; by his concealing loan documents from other personnel at the Savings and Loan; by his failing to check disbursements; and by his use of improper appraisals of real estate which Jerry Smith had arranged. 53 VII. Paul Smith, like Kirchoff, objects to the sufficiency of the evidence against him after having waived the objection by his failure to object at the proper time at trial, and again we review for manifest injustice or plain error. Paul undoubtedly put too much trust in his brother and his brother's lawyer. But he signed the false documents Jerry put in front of him knowing that they would be used to get PDS a loan of $3,890,000 from the Savings and Loan. The evidence was sufficient to make him an aider and abettor of the bank officer who filed the false certifications. The mildness of his sentence corresponds to the minor role he had. 54 VIII. Kirchoff objects to the trial court's rulings as to references to the government's case for civil fraud brought against the two Smiths, Block and Roper, a suit in which Kirchoff was charged only with negligence. Kirchoff argues that the limitation of cross-examination on the civil case denied him his Sixth Amendment right to confront the witnesses against him. However, the district court did allow the defendants to impeach government witnesses by asking them about their role as defendants in a civil case in order to show a possible bias in their testimony. The district court is not shown to have abused its discretion in its limitations on cross examination. 55 IX. Jerry Smith finally challenges his sentence of five years on the conspiracy count. He argues that a substantive violation of 18 U.S.C. § 1014 carries only a term of imprisonment for two years. However, a substantive offense is different from conspiracy to commit the offense. Congress may rightly consider conspiracy more dangerous than the substantive offense itself. Clune v. United States, 159 U.S. 590, 594-95, 16 S.Ct. 125, 126-27, 40 L.Ed. 269 (1895). A sentence on the conspiracy count may be longer than that provided for the substantive offense. 56 AFFIRMED.