Opinion ID: 549775
Heading Depth: 3
Heading Rank: 3

Heading: Misapplication of the Funds of an Institution Having

Text: Accounts Insured by the FSLIC 31 Counts 4 through 25 of the indictment charged the defendants with violations of 18 U.S.C. Sec. 657, which prohibits the knowing or willfull misapplication of funds of an institution having accounts insured by the FSLIC. Defendants Robert and Morten Hopkins were both convicted on all 22 counts. 32 To establish an offense under Sec. 657, the Government must prove that 1) the defendant was an officer, agent or employee of, or connected in some way with, a savings and loan association whose accounts were insured by FSLIC, 2) that he willfully misapplied funds of the association, and 3) that he acted with intent to injure or defraud the association. United States v. Stovall, 825 F.2d 817, 823 (5th Cir.1987). The Hopkins contend, without force, that the evidence was insufficient to prove that their misapplication of funds was willfull or that they intended to injure or defraud the savings and loan. 33 Under Sec. 657, one way that the Government may prove willfull misapplication of funds is by showing that a person has deliberately converted bank funds to his own use or to the use of a third person, or that the person has used the funds in violation of the law. Hernandez v. United States, 608 F.2d 1361, 1364 (10th Cir.1979). See also United States v. Bruun, 809 F.2d 397, 408 (7th Cir.1987) (interpreting a parallel provision in 18 U.S.C. Sec. 656). Here the jury could well have concluded from the evidence before it that the Hopkins knew that savings and loans could not make political contributions, and therefore devised and pursued a scheme under which institutional funds would indirectly be routed to political action committees of their choosing. The Hopkins thus deliberately converted bank funds to the use of third persons and did so in violation of the law. 34 The evidence was also sufficient to show that the Hopkins acted with intent to injure or defraud their savings and loan. Such intent is proven by showing a knowing, voluntary act by the defendant, the natural tendency of which may have been to injure the bank even though such may not have been his motive. United States v. Southers, 583 F.2d 1302, 1305 (5th Cir.1978). See also Bruun, 809 F.2d at 408; United States v. Farrell, 609 F.2d 816, 820 (5th Cir.1980). The jury could reasonably have concluded that the Hopkins' activities had a natural tendency to injure their institution in at least two respects. First, the misapplication of funds reduced the amount of money available for lawful investment. Second, if federal bank examiners had learned of the illegal contributions, the FHLBB could have imposed various monetary sanctions on the savings and loan, including restricting the institution's financial activities. Accordingly, the Government adequately proved that the Hopkins willfully misapplied the funds of the savings and loan they controlled and did so with intent to injure that institution. 35