Opinion ID: 6446
Heading Depth: 1
Heading Rank: 4

Heading: Jury Charge Issues

Text: 20
21 The third count of the Government's indictment charged the appellants with violating the federal bank fraud statute, 18 U.S.C. Sec. 1344. This statute criminalizes the execution or the attempted execution of a scheme or artifice-- 22 (1) to defraud a financial institution; or 23 (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises. 24 In its instructions to the jury on this count, the district court defined a scheme to defraud to be any scheme to deprive another of money, property, or of the intangible right to honest services by means of false or fraudulent pretenses, representations, or promises. (emphasis supplied). Noting that the phrase intangible right to honest services does not appear in the bank fraud statute, both appellants contend that the district court's use of this phrase in the jury charge allowed convictions for conduct not within the scope of the law. The appellants claim that this error ipso facto requires reversal of both their bank fraud and conspiracy convictions. We do not agree. 25 The appellants's argument is rooted in McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). In that case, the Supreme Court held that the federal mail fraud statute, 18 U.S.C. Sec. 1341, 6 did not apply to schemes to deprive citizens of their intangible right to honest government services, but was instead limited to the protection of money and property rights. In 1988, Congress legislatively overruled McNally by enacting 18 U.S.C. Sec. 1346 and defining a scheme to defraud to include a scheme to deprive another of the intangible right of honest services. However, this statute does not--indeed, cannot--apply retroactively. United States v. Loney, 959 F.2d 1332, 1335 n. 6 (5th Cir.1992). The appellants contend that the Supreme Court's reading of the mail fraud statute applies to the bank fraud statute. The appellants thus reason that a scheme that took place before the enactment of Sec. 1346 and that only deprived a financial institution of the intangible right to honest services is not covered by the bank fraud statute. The appellants therefore claim that since the offenses with which they were charged occurred before the enactment of Sec. 1346, the reference to intangible rights in the trial court's instructions was erroneous and requires reversal of their bank fraud convictions. 26 At first glance, it appears as though our first task is to decide whether the Supreme Court's interpretation of the mail fraud statute in McNally applies to the bank fraud statute. However, in Saks we held that, even assuming that McNally 's interpretation of the mail fraud statute applies to the bank fraud statute, the inclusion of the intangible rights language in a court's jury charge on a bank fraud count is harmless beyond a reasonable doubt in cases in which the  ' bottom line of the scheme or artifice [charged] had the inevitable result of effecting monetary or property losses.'  Saks, 964 F.2d at 1521 (quoting United States v. Asher, 854 F.2d 1483, 1494 (3d Cir.1988), cert. denied, 488 U.S. 1029, 109 S.Ct. 836, 102 L.Ed.2d 969 (1989)). As we observed in Saks, this formulation of the approach to such cases is a specific application of the general principle that  '[a]n erroneous instruction on an element of the offense can be harmless beyond a reasonable doubt, if, given the factual circumstances of the case, the jury could not have found the defendant guilty without making the proper factual finding as to that element.'  Id. (quoting United States v. Doherty, 867 F.2d 47, 58 (1st Cir.), cert. denied, 492 U.S. 918, 109 S.Ct. 3243, 106 L.Ed.2d 590 (1989)). 27 Thus, if the inevitable result of Holley and Haass's scheme was to defraud Peoples of money or property interests, then we will find the alleged error in the jury charge to be harmless beyond a reasonable doubt and affirm the appellants's convictions for bank fraud. We are persuaded that, as in Saks, the jury could not have found that the scheme proved at trial deprived Peoples of the intangible right to honest services without there being implicit in that finding a finding that the scheme defrauded the institution of money or property interests. The appellants were engaged in a scheme to defraud Peoples by causing that institution to make loans to Brannon and Jones without inquiring into the collateral for the loans. This scheme had the inevitable, inescapable, and unavoidable result of exposing Peoples to at least a risk of loss. Such conduct is sufficient to support a conviction under Sec. 1344. See, e.g., Barakett, 994 F.2d at 1111 & n. 15. Therefore, the jury could not have concluded that the appellants intended to defraud Peoples of its intangible right to honest services without also finding that Holley and Haass knowingly exposed the institution to a risk of financial loss. Though the appellants may have deprived Peoples of its right to honest services, any such deprivation was incidental to the appellants's scheme to fraudulently extend loans to Brannon and Jones. The conclusion we reached in Saks is equally applicable here: The jury's guilty verdict on the bank fraud count reflects a reasoned judgment that [the defendants] participated in the scheme with full knowledge not only that [they] were acting dishonestly, but also that the scheme had financial consequences. Saks, 964 F.2d at 1522 (emphasis in original). 28 The appellants contend that Saks is distinguishable because the defendants in that case failed to object to the jury charge and therefore could only argue that the trial court's inclusion of the intangible right language was plain error. The appellants observe that, since they objected to the district court's jury charge, we are not limited to such a deferential standard of review. However, we do not believe that this distinction is meaningful in this case. Although there may have been an error in the jury charge, Saks and the cases upon which it relied convince us that any error inherent in the inclusion of the intangible rights language in the jury charge is harmless beyond a reasonable doubt. Id. at 1521; Doherty, 867 F.2d at 57-58. 29 We cannot end our discussion of this issue without making one final observation. At oral argument, the Government conceded that it believed that the inclusion of the intangible rights language in the jury charge was erroneous. Although we have found any such error to be harmless in this case, we cannot disguise our dismay that the Government would knowingly propose a jury instruction that it thought to be wrong. The Government has a special duty to follow the law. 30
31 In his opening statement, the prosecutor mentioned that some of the witnesses who would testify for the Government had pleaded guilty to offenses related to those with which the appellants were charged. After Holley's attorney objected, the district court correctly instructed the jury that any evidence of another person's guilt was not to be considered as evidence of the appellants's guilt. Later, the Government elicited testimony from several witnesses that those witnesses had entered into plea agreements and guilty pleas as a result of their involvement with the appellants in the transactions that were at issue in this case. The district court again instructed the members of the jury that they were not to consider evidence of an accomplice's guilt as evidence of a defendant's guilt. Specifically, the trial judge stated that the fact that some witnesses have pled guilty or may be guilty is not to influence your decision as to whether or not these two individuals before you [i.e., the appellants] are guilty. That's why you are hearing all the facts and you base that decision on all the facts you will hear now and between the end of the lawsuit [sic]. And so I want to remind you to keep that in mind. 32 During the charge conference, the appellants requested that an instruction similar to the ones previously given be included in the court's final charge to the jury. The district court rejected this request. Both appellants contend that the refusal to include in the final jury charge an instruction that the jury was not to consider evidence of an accomplice's guilty plea as proof of the appellants's guilt is reversible error. 33 We have repeatedly held that, although evidence of an accomplice's guilty plea can be prejudicial, the admission of such evidence may allowed if it serves a legitimate purpose and is coupled with a cautionary jury instruction. United States v. Coleman, 997 F.2d 1101, 1104-05 (5th Cir.1993), cert. denied, --- U.S. ---- & ----, 114 S.Ct. 735 & 893, 126 L.Ed.2d 698 & 127 L.Ed.2d 86 (1994); United States v. Valley, 928 F.2d 130, 133 (5th Cir.1991). These conditions have been met in this case. The appellants concede that the Government had a legitimate reason for eliciting evidence of the witnesses's guilty pleas. Holley's and Haass's objection, therefore, is that the district court insufficiently instructed the jury to not use this testimony as evidence of the appellants's guilt. However, the district judge gave an appropriate cautionary instruction after the Government's opening statement and during the Government's case-in-chief. 34 The appellants's argument is thus reduced to the contention that the district court erred when it refused to include a similar instruction in the final jury charge. We disagree. The trial court sufficiently cautioned the jury when the testimony of the guilty pleas was elicited. Moreover, the appellants did not attempt to deny that violations of the law occurred. The theory of the defense for both appellants was that the witnesses who pleaded guilty were the only ones who committed any crimes. The danger that the jury would that infer the appellants were guilty because others had pleaded guilty to similar charges was diminished by the appellants's own defense. Under these circumstances, the district court's refusal to include a similar instruction in the final jury charge does not require reversal of the appellant's convictions. 35 While it is plainly the better practice to caution the jury both when evidence of an accomplice's guilty plea is introduced and at the close of evidence, repetition is not a requirement of a definite cautionary instruction. Under the facts of this case, the district court did not abuse its discretion by giving an appropriate instruction during the opening statements and when the guilty plea evidence was introduced. We hesitate to reverse a conviction for the absence of something in the final jury charge that was adequately taken care of earlier in the trial. Cf. United States v. Rewald, 889 F.2d 836, 865 (9th Cir.1989) (finding no abuse of discretion when the district court gave a cautionary instruction concerning a co-defendant's guilty plea during the final jury instructions rather than when the testimony was elicited at trial), cert. denied, 498 U.S. 819, 111 S.Ct. 64, 112 L.Ed.2d 39 (1990).
36 Holley contends that the jury charge constructively amended Count Two of the indictment, the bank bribery count, and allowed him to be convicted for conduct not charged in the indictment. First, Holley claims that since the jury charge instructed the jury to convict him if he demanded something of value in excess of $100, the jury could have convicted him for Haass's solicitation of an improper consulting fee on a previous occasion two years earlier, rather than the $662,000 solicitation that was charged in the indictment. Second, Holley contends that the jury charge allowed the jury to convict him of aiding and abetting someone other than Haass in committing bank bribery, although the indictment only alleged that Holley aided and abetted Haass's bank bribery. Finally, Holley claims that the charge allowed the jury to convict him of soliciting the $662,000 payment for someone other than himself or Haass, even though the indictment alleged that the appellants solicited this payment for themselves. We find no merit to these contentions. 37 A constructive amendment occurs when the jury is permitted to convict the defendant upon a factual basis that effectively modifies an essential element of the offense charged. United States v. Doucet, 994 F.2d 169, 172 (5th Cir.1993); United States v. Baytank, Inc., 934 F.2d 599, 606 (5th Cir.1991). If we find that the indictment has been constructively amended, we must reverse the conviction. Doucet, 994 F.2d at 172. Here, however, there has been no constructive amendment of the indictment. All of Holley's contentions must fail because the district court instructed the jury that it was to consider only the crime that was charged in the indictment. Moreover, the indictment was read to the jury at the beginning of the trial, and the jury was given a copy of the indictment for use during the deliberations. As to Holley's contention that he could have been convicted for the earlier solicitation of an improper consulting fee, the district court explained to the members of jury that, although evidence of other acts (such as the earlier consulting fee solicitation) had been admitted into evidence at trial, the jury was to consider such evidence only as it bore on the appellants's intent or motive. Furthermore, the Government's closing argument mentioned only the solicitation of the $662,000 payment from McClain. We see no reason to assume that the jurors disregarded the court's charge and based their verdict on conduct that was not charged in the indictment. Accord United States v. Stone, 960 F.2d 426, 432 (5th Cir.1992).