Opinion ID: 720571
Heading Depth: 2
Heading Rank: 1

Heading: sufficiency of the evidence

Text: 7 Among Aubin's numerous arguments on appeal, he challenges the sufficiency of the evidence supporting his convictions. In challenging the sufficiency of the evidence, a defendant faces an imposing standard of review. United States v. Parekh, 926 F.2d 402, 405 (5th Cir.1991). A court reviewing the sufficiency of the evidence must determine whether, viewing the evidence and the inferences that may be drawn from it in the light most favorable to the verdict, a rational jury could have found the essential elements of the offenses beyond a reasonable doubt. United States v. Charroux, 3 F.3d 827, 831 (5th Cir.1993) (quoting United States v. Pruneda-Gonzalez, 953 F.2d 190, 193 (5th Cir.), cert. denied, 504 U.S. 978, 112 S.Ct. 2952, 119 L.Ed.2d 575 (1992)). 8 In the present case, the district court deferred ruling on Aubin's motion for judgment of acquittal until after the jury returned its verdict. Because the defendant was entitled to a ruling on his motion prior to presenting his defense, this Court will only consider the evidence presented in the Government's case-in-chief in assessing the sufficiency of the evidence. United States v. Casilla, 20 F.3d 600, 606 (5th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 240, 130 L.Ed.2d 163 (1994); United States v. Rhodes, 631 F.2d 43, 44-45 (5th Cir.1980). Although it was error for the district court to defer ruling on Aubin's motion, such an error is harmless where, as here, the evidence presented during the government's case-in-chief is sufficient to support the verdict. Rhodes, 631 F.2d at 45. 9
10 On this charge, under 18 U.S.C. § 371, the Government bore the burden of proving beyond a reasonable doubt that Aubin agreed with at least one other conspirator to defraud the United States by obstructing the tax collecting function of the IRS, and one overt act in furtherance of the conspiracy. United States v. Chesson, 933 F.2d 298, 306 (5th Cir.), cert. denied, 502 U.S. 981, 112 S.Ct. 583, 116 L.Ed.2d 608 (1991). Because Aubin claimed that the statute of limitations barred this prosecution, the Government was also required to show that an overt act was committed within the six years preceding the date of the indictment. 11 For the evidence to sustain the conviction, it is not necessary that the evidence show an express or formal agreement; evidence of a tacit understanding is sufficient. Iannelli v. United States, 420 U.S. 770, 777 n. 10, 95 S.Ct. 1284, 1289 n. 10, 43 L.Ed.2d 616 (1975); United States v. Hopkins, 916 F.2d 207, 212 (5th Cir.1990). Louis Reese testified that one of the purposes of structuring the transaction as a land flip through Haft, Inc., was to impede the IRS from collecting taxes by making the deals so complicated that ... it was impossible to tell who owed taxes, what taxes might be owed and what the amount was. Reese also testified that he thought it was a part of the plan from the beginning that Haft would disappear. James Hague testified that filing tax returns for Haft would have been inconsistent with the secrecy necessary for the arrangement to succeed. Both Reese and Hague provided ample testimony regarding Aubin's central role in the transaction. This evidence is more than sufficient to allow a reasonable jury to find at least a tacit understanding that the parties would conceal Haft's profit from the IRS. 12 The government also presented sufficient evidence of an overt act in furtherance of the conspiracy within the statute of limitations period. The statute of limitations under the tax code for a conspiracy to defraud the United States in violation of 18 U.S.C. § 371 is six years. 26 U.S.C. § 6531(1). The grand jury returned the indictment in this case on February 24, 1993. Therefore, to sustain the conviction, there must be evidence of an overt act after February 23, 1987. 13 The evidence showed that the profit from the LBJ land flip was transferred to Slew Farms, a Cayman corporation set up by Hague, Reese, and Aubin. Hague, Reese, and Aubin, in turn, set up Cayman corporations to own their respective shares in Slew Farms. The corporation set up to hold Aubin's share was Sigma Group. The evidence also showed that Slew Farms owned a Kentucky corporation, Warrenton Farms, that was formed to own the horse farm. Aubin was the sole shareholder of Warrenton Farms. 14 On August 26, 1988, after federal regulators had made a criminal referral relating to the LBJ transaction, and after foreclosure had been ordered on the horse farm, Aubin caused Warrenton Farms to file for bankruptcy. The bankruptcy petition listed the IRS as a creditor having a priority in an unknown amount. However, the bankruptcy petition also falsely reported that Sigma Group had a secured claim against the property of Warrenton Farms in the amount of $15,614,691. Warrenton Farms supposedly incurred this debt on October 23, 1984, the date the profit from the LBJ land flip was wired to Kentucky and the purchase of the horse farm was closed. The government presented evidence that this loan was a fiction, and that the supporting documentation had been backdated well after the fact to create the appearance of a loan. The government also presented evidence that Aubin directed that the loan documentation be created. Thus, the bankruptcy petition indicated that a fictional loan, rather than the unreported profit from the LBJ land flip, was the source of the horse farm purchase money. From this evidence, a reasonable jury could conclude that the bankruptcy petition was designed to conceal from the IRS the transfer of Haft's unreported profit to Warrenton Farms, and therefore constituted an overt act in furtherance of the conspiracy to defraud the United States.
15 Aubin contends that there is no evidence that he intended to defraud Western Savings and Loan in violation of 18 U.S.C. § 1344. However, the very structure of the transaction would allow a reasonable inference of an intent to defraud. The evidence clearly indicates that the parties deliberately structured the transaction so that the loan documents would not reveal that Aubin or Reese were involved in the deal. The transaction was also designed to hide the fact that proceeds from the loan to Hague Enterprises were to be used to purchase the horse farm. Despite this evidence, Aubin contends that given Jarrett Woods' involvement in the transaction, and the full disclosure made to him, full disclosure was, in effect, made to Western. 16 In essence, Aubin argues that Woods' knowledge, as owner of Western Savings and Loan, should be imputed to Western, and that given the full disclosure to Woods there could be no finding of an intent to defraud Western. This argument is without merit. In United States v. Saks, 964 F.2d 1514 (5th Cir.1992), where the appellants had colluded with savings and loan officers who were co-chairmen of the bank's board of directors and owned a controlling interest in the bank, this Court held that [i]t is the financial institution itself--not its officers--that is the victim of the fraud the statute proscribes. 964 F.2d at 1518. After Saks, it is clear that bank officers, such as Woods, with authority to bind their banks to others can nevertheless defraud the institutions they serve. Id. It is also clear that bank customers, like Aubin, who collude with bank officers to defraud banks may also be held criminally accountable either as principals or aiders and abettors. Id. at 1518-19. 17 Aubin attempts to distinguish Saks on the basis of Woods' individual control over Western. However, the record indicates that Woods did not have unbridled discretion to make loans; the Western loan committee could veto his decisions, and he was concerned that the loan to Hague Enterprises would not be approved if the committee were aware of the facts. In fact, Woods knew that he could not tell the members of the loan committee the truth about the transaction because they would not want to do anything that might incur regulatory scrutiny. Thus, with respect to loan approval, Woods and Western were separate entities. 18 Aubin also relies on FDIC v. Ernst & Young, 967 F.2d 166 (5th Cir.1992). In Ernst & Young, the FDIC, suing as Western's assignee, brought a negligence action against an accounting firm that had audited Western. Judgment was granted in favor of the accounting firm. In holding that Western had not relied on the audit, this Court held that Woods' knowledge of Western's actual financial condition was imputable to Western. However, this Court limited its holding narrowly to the facts of this case under Texas law--i.e. the FDIC, as assignee of a corporation with a dominating sole owner, sues an auditor for negligently performing an audit upon which neither the owner nor the corporation relied. 967 F.2d at 172. Ernst & Young is inapposite because it was an action for negligence under state law rather than a prosecution under a federal criminal statute, and because the FDIC merely stood in Western's shoes for purposes of its claim against the accounting firm. In any event, the rule of Texas law on which this Court relied in Ernst & Young--that an agent's knowledge is imputed to his principal--does not protect those who collude with an agent to defraud the principal. Crisp v. Southwest Bancshares Leasing Co., 586 S.W.2d 610, 615 (Tex.Civ.App.--Amarillo 1979, writ ref'd n.r.e.). Thus, Aubin's arguments on this point are unavailing.
19 Aubin contends that there is no sufficient evidence that he had the specific intent to defraud the victims named in the wire fraud count of the indictment. The indictment alleged that Aubin devised the scheme in question to defraud Western, the IRS, the Federal Home Loan Bank Board (FHLBB), and the Federal Savings and Loan Insurance Corporation (FSLIC). As we have already determined, there was sufficient evidence to allow the jury to conclude that Aubin and his co-conspirators intended to defraud Western and the IRS. Both Reese and Woods testified that their scheme would also defraud the FHLBB and the FSLIC. The evidence clearly indicates that the parties knew they had to conceal the true nature of the transaction from federal regulators if the scheme was to succeed. Federal regulators had already issued a cease and desist order to at least one other savings and loan that had provided financing for Aubin's business ventures. Therefore, there is sufficient evidence to allow a reasonable juror to conclude that Aubin had the intent to defraud each of the victims alleged in the indictment.