Opinion ID: 414470
Heading Depth: 2
Heading Rank: 4

Heading: Previous Fifth Circuit Cases.

Text: 39 The Welliver Court cited two former Fifth Circuit decisions, United States v. Wilson, 500 F.2d 715 (5th Cir.1974), cert. denied sub nom., White v. United States, 420 U.S. 977, 95 S.Ct. 1403, 43 L.Ed.2d 658 (1975), and United States v. Reynolds, 573 F.2d 242 (5th Cir.1978), to support its holding that recklessness is sufficient to satisfy the intent requirement of Sec. 656. See United States v. Welliver, 601 F.2d at 210. Both of the cited cases contain the following language: [R]eckless disregard of the interest of a bank is, for the purpose of 'willful misapplication,' the equivalent of intent to injure or defraud. Although the evolution of the rule is thus understandable, we now believe that a careful examination of the issues and authorities discussed in Wilson and Reynolds reveals that we erred when we held in Welliver that a jury is properly charged that recklessness is the equivalent of intent to injure or defraud. 40 In United States v. Wilson, supra, the appellant sought to overturn his conviction on the ground that the term willfully misapplied in Sec. 656 was unconstitutionally vague. The court rejected this argument, noting that courts had adequately defined the term to cover actions which, while not covered by the technical terms 'embezzlement' or 'abstraction'  are obviously improper and amount to the unjustified use of bank funds and which amount to more than mere bad judgment or maladministration. Id. at 720. The court then made the statement on which Welliver relied: Recent cases have held that reckless disregard of the interest of a bank is, for the purpose of 'willful misapplication,' the equivalent of intent to injure or defraud. Id. Clearly, that statement was dictum. More importantly, the cases cited for that proposition were Logsdon v. United States, 253 F.2d 12 (6th Cir.1958), and Giragosian v. United States, 349 F.2d 166 (1st Cir.1965), neither of which held that recklessness was the equivalent of willfulness or intent to defraud. Rather, both cases properly state that reckless disregard can justify an inference of intent. 41 In United States v. Reynolds, supra, the second case cited in Welliver, the appellant challenged his conviction on the ground that there was insufficient evidence of intent and willfulness under Sec. 656. In rejecting the appellant's argument, the court first quoted the statement from United States v. Wilson, supra, regarding recklessness being the equivalent of intent to defraud. However, the court went on to state: Such was the conduct of defendant Reynolds described above, and the jury was entitled to infer intent from these facts. Id. at 245 (emphasis added). Like numerous other cases involving the sufficiency of the evidence, Reynolds contains what we now regard as loose language regarding recklessness; we believe that the case is best read as holding merely that reckless disregard justifies an inference of intent to defraud. 42 Although the evolution of the rule in the Wilson-Reynolds-Welliver line of cases represents an understandable translation of recklessness as a proper basis for inferring intent to recklessness as the equivalent of intent, we now view that translation as error. Numerous other Fifth Circuit decisions suggest, albeit without holding, that knowledge is the required mens rea for a Sec. 656 conviction. 16 See, e.g., United States v. Farrell, 609 F.2d 816, 820 (5th Cir.1980) (reaffirming the rule that the intent to injure or defraud the bank 'is proven by showing a knowing, voluntary act by the defendant' ); United States v. Southers, 583 F.2d 1302, 1305 (5th Cir.1978) (stating that [t]his Circuit has adopted the rule that the requisite intent is proven by showing a knowing, voluntary act by the defendant); United States v. Tidwell, 559 F.2d 262, 266 (5th Cir.1977) (required intent for Sec. 656 violation exists if a person acts knowingly), cert. denied, 435 U.S. 942, 98 S.Ct. 1520, 55 L.Ed.2d 538 (1978); United States v. Killian, 541 F.2d 1156, 1160 (5th Cir.1976) (noting that the term 'willful' means only that the actor knows and intends what he is doing). Further, as noted above, the Fifth Circuit required the government to prove purpose or knowledge in order to convict a defendant of misapplication of bank funds under the predecessor to Sec. 656. See Pearce v. United States, 192 F. 561, 562 (5th Cir.1912) (where the charge is willful misapplication of bank funds, the only intent necessary to be proved was that the [defendant] did the acts complained of purposely or designedly).