Opinion ID: 529953
Heading Depth: 2
Heading Rank: 3

Heading: The ERISA Record Charges

Text: 50 Counts IX, X, and XI charged Furst with making false statements in ERISA records for three different years in violation of 18 U.S.C. Sec. 1027. This section states: 51 Whoever, in any document required by the title I of the Employee Retirement Income Security Act of 1974 ... to be published, or kept as part of the records of any employee welfare benefit plan or employee pension benefit plan, or certified to the administrator of any such plan, makes any false statement or representation of fact, knowing it to be false, or knowingly conceals, covers up, or fails to disclose any fact the disclosure of which is required by such title or is necessary to verify, explain, clarify or check for accuracy and completeness any report required by such title to be certified [is guilty of a crime]. 52 On its face section 1027 requires proof that: (1) the defendant made a false statement; (2) the defendant made the statement knowing it to be false; and, (3) the false statement was in a document required by ERISA. See United States v. Martorano, 767 F.2d 63 (3d Cir.) (per curiam), cert. denied, 474 U.S. 949, 106 S.Ct. 348, 88 L.Ed.2d 296 (1985); see also United States v. S & Vee Cartage Co., Inc., 704 F.2d 914 (6th Cir.), cert. denied, 464 U.S. 935, 104 S.Ct. 343, 78 L.Ed.2d 310 (1983). 53 Without conceding that the statements in the ERISA documents were false, Furst contends that the government failed to meet its burden of proof on the element that Furst made the statements knowing them to be false. Thus, he asserts that the district court erred in failing to acquit him as a matter of law. Once again our standard of review is whether the record, when viewed in the light most favorable to the government, contains substantial evidence to support the jury's determination of guilt. See Glasser v. United States, 315 U.S. at 80, 62 S.Ct. at 469; United States v. Aguilar, 843 F.2d at 157. 54 The three counts refer to statements in the WOA annual reports in 1983, 1984, and 1985, as to the value and status of the FCCB/FFCM investments. In 1983 Furst reported that FCCB/FFCM owed a $180,000.00 receivable to WOA. In 1984 Furst represented that the receivable was held in the WOA Escrow Account and that it had earned interest and was then worth $220,617.67. In the 1985 WOA annual report Furst represented that WOA had received $240,000.00, representing the $220,617.67 held in escrow the year before together with interest on that sum. See brief for appellant at 6. While these statements were made by Furst and were undoubtedly false, for the government to have proven a violation of 18 U.S.C. Sec. 1027, it must have demonstrated that Furst knew the statements to be false. Cf. United States v. Santiago, 528 F.2d 1130, 1134 (2d Cir.) (decided under 18 U.S.C. Sec. 1027 prior to its amendment to its current form), cert. denied, 425 U.S. 972, 96 S.Ct. 2169, 48 L.Ed.2d 795 (1976). 55 The government lists three pieces of evidence which it introduced on the issue of Furst's knowledge that the ERISA statements were false. First, the government relied on Marston's testimony that Furst had admitted that he knew he was locked in with a $700,000.00 loss, a short time after he made the investments ... (in) either 1980 or 1981. Brief of appellee at 50; see appellee's app. at 686. Assuming this to be true, inasmuch as Furst had invested a total of $909,100.00, his admission to Marston does not undermine his statement that the investment had a remaining value of $180,000.00. 56 The second and third pieces of evidence relate to the FCCB/FFCM statements. It is important to note that Margarethe Aderhold, the bank employee who prepared the summaries of these statements, testified that the FCCB statements found in the bank's files did not extend past the fall of 1980, and that the bank had no statements from FFCM or FFCA. See appellant's app. at 294-301. Even as late as December, 1980, FCCB reported that the investment had a value of $236,025.52, when it transferred the investment to FFCM. Thus, on the basis of the documents actually found in the bank files, Furst would not have known that the investment was worth less than the $180,000.00 figure he represented. 57 In addition, the government relied on Ms. Aderhold's testimony that Furst's handwriting was on some of the early FCCB statements which were found in the bank files. Appellee's app. at 235. But, this cannot support an inference that Furst knew the $909,100.00 invested had fallen in value below $236,025.52. 58 Finally, the government relied on the testimony of Sharon Baxter, a bank employee, that she saw FCCB statements on Furst's desk [i]n the early eighties. Appellee's app. at 309-10. But inasmuch as Baxter was not asked to be any more specific in her response, it is possible that the period to which she referred was from 1979 through the fall of 1980, at which time the FCCB statements did not indicate that the investment was worth anything less than $236,025.52. 59 Baxter's testimony is the only evidence that even permits an inference that Furst knew the status of the FCCB/FFCM investment at any time after the fall of 1980. But standing alone it is simply too indefinite and vague to be regarded as evidence sufficiently substantial to support Furst's conviction for having misrepresented that the value of the FCCB/FFCM investments was $180,000.00 in the 1983 WOA annual report. Therefore, even though as a matter of conjecture it is difficult to believe that Furst, as an experienced trust officer, did not know the status of the FCCB/FFCM investments when the WOA 1983 report was prepared, we conclude that the district court erred in failing to acquit Furst of count IX, relating to that report, as a matter of law. 60 The convictions on the counts relating to the 1984 and 1985 annual reports, however, stand on a different basis, inasmuch as our review of the record satisfies us that the government produced additional evidence at trial that permitted the jury to infer that Furst had knowledge that the statements in those years were false. 61 In the documents accompanying Neidig's February 21, 1985, memorandum for use in WOA's 1984 annual report, 14 it was represented that the $220,617.67 remainder of the FCCB/FFCM investment was held in the WOA Escrow account. In fact, as NC Bank's own records reflect, the WOA Escrow Account did not have a positive balance at any time from its creation on February 14 or 15, 1985, until the September, 1985, Machine Vision trade. The jury could infer that Furst had knowledge of NC Bank's own records. Thus, the district court did not err in allowing count X to go to the jury. 62 Similarly, the district court did not err in not acquitting Furst of count XI, relating to WOA's 1985 annual report. It was clear from NC bank's own records that the $240,000.00 received by WOA was not the return of capital invested in FCCB/FFCM. The bank's records indicate that the $240,000.00 was generated in the September, 1985, Machine Vision trade. 63 Consequently, we will reverse Furst's conviction on count IX and remand for entry of a judgment of acquittal on that charge, but we conclude that the district court did not err in denying Furst's motion for acquittal on counts X and XI.