Court Opinion

ID: 6790
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:21:20+00
Date Added: 2024-06-11T13:11:13.164942
License: Public Domain

UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT

                                No. 93-1676

UNITED STATES OF AMERICA,
                                                     Plaintiff-Appellee,

                                  versus

RAY DELL DEVOLL,
                                                     Defendant-Appellant.

           Appeal from the United States District Court
                for the Northern District of Texas

                        ( November 28, 1994 )

Before POLITZ, Chief Judge, GOLDBERG and DUHÉ, Circuit Judges.

POLITZ, Chief Judge:

     Ray Dell Devoll appeals his convictions by a jury of 15 counts

of a 17-count indictment, including conspiracy, bank fraud, false

statements to a federally insured financial institution, mail

fraud,   and   violation   of    Federal   Reserve    System   Orders   of

Prohibition.   Devoll contends that the counts charging violations

of 18 U.S.C. § 1014 were defective, that the jury instructions

misled the jury about the elements of that offense, and that the

evidence is insufficient to support the convictions for violations

of 12 U.S.C. § 1818(j) and 18 U.S.C. § 2.        We find no reversible

error and affirm.
                             Background

     The evidence reveals a modus operandi wherein Devoll would

approach a financial institution, pose as the representative of a

group of investors interested in purchasing the institution, and

enter into negotiations for same.    Devoll sought various benefits

from his charade including the attempt to purchase Interstate

Savings and Loan Association of Perryton, Texas with its own

assets.   Around May 1990 Devoll approached the management of

Interstate, entered into negotiations on behalf of investors, and

introduced one of his coconspirators as the CEO he planned to

install after the purchase of the institution.       The new CEO was

permitted full access to the organization's records; in the course

of this review he gathered information crucial to the conspirators'

scheme of transferring Interstate's funds to a phony correspondent

account which was in turn to be used to purchase the Interstate

stock.

     During the course of the negotiations Devoll also attempted to

purchase automobiles with drafts drawn on Interstate.         Although

Devoll had no Interstate account and had been told that he had to

open accounts and deposit money before Interstate could pay the

drafts, he nevertheless received immediate possession of three cars

through drafts drawn on Interstate.

     In October 1990 Devoll approached the Trinity National Bank of

Benbrook, Texas, representing a purported partnership interested in

purchasing a controlling interest and providing the bank with a

much-needed   capital   injection.    During   the   course   of   the

                                 2
negotiations       Devoll   sought   to       purchase        two   automobiles       and

instructed the automobile dealership to draft on Trinity.                           When

Devoll asked Trinity to approve the draft, an employee of the bank

informed Devoll that he would have to execute a loan application.

Devoll's promise that he would take care of the matter later was

accepted, however, based on the belief that Devoll was about to

become the owner of the bank.                 The draft was honored; Devoll

received possession of the vehicles.

     At about the same time, Devoll entered into a series of

negotiations with First Continental Bank of Grand Prairie, Texas,

claiming   that     he   represented      a   group      of    investors      who   were

interested    in    purchasing   the      bank.         The    president      of    First

Continental    testified      that   the       bank     received      three    totally

unauthorized drafts for three cars.             Devoll received possession of

at least one automobile in this manner.

     Devoll was indicted in April 1992 on 17 counts charging

conspiracy in violation of 18 U.S.C. § 371; four counts of bank

fraud in violation of 18 U.S.C. §§ 1344, 2; five counts of false

statements to FDIC banks in violation of 18 U.S.C. §§ 1014, 2; two

counts of mail fraud in violation of 18 U.S.C. §§ 1341, 2; and two

counts of illegal use of social security numbers.                      A jury found

Devoll guilty of all but the social security counts and he was

sentenced to 78 months imprisonment and three years of supervised

release.

     Devoll    appeals,       challenging         the     indictment       and       jury

instructions relative to the charges of bank fraud under 18 U.S.C.

                                       3
§ 1014, and the jury's finding that he violated Federal Reserve

System Orders of Prohibition.

                                 Analysis

      Devoll challenges the indictment on counts 3, 5, 7, 10, and

12, claiming a failure to state an offense under 18 U.S.C. § 1014,1

This issue may be raised for the first time on appeal even though

it was not raised at trial.2

      The essence of an indictment is to inform a defendant of the

charges.3     To survive a challenge, an indictment must fairly inform

a defendant of the charge and set the predicate for invocation of

the   double     jeopardy   clause   in   a   subsequent   proceeding,   if

necessary.4

      1
          18 U.S.C. § 1014 provides, in pertinent part:

      Whoever knowingly makes any false statement or report
      . . . for the purpose of influencing in any way the
      action of . . . any bank the deposits of which are
      insured by the Federal Deposit Insurance Corporation
      . . . upon any application, advance, discount, purchase,
      purchase agreement, repurchase agreement, commitment, or
      loan, or any change or extension of any of the same, by
      renewal, deferment of action or otherwise, or the
      acceptance, release, or substitution of security
      therefor, shall be fined not more than $1,000,000 or
      imprisoned not more than 30 years or both.

     The indictment as to these counts charged that the defendant
did "knowingly make and cause to be made a false statement of
material fact to [financial institution] . . . for the purpose of
influencing the actions of [said institution]."
          2
       United States v. Varkonyi, 645 F.2d 453 (5th Cir. 1981);
Fed.R.Crim.P. 12(b)(2) & (f).
      3
          United States v. Gordon, 780 F.2d 1165 (5th Cir. 1986).
      4
     Id.; United States v. Stanley, 765 F.2d 1224 (5th Cir. 1985);
United States v. Webb, 747 F.2d 278 (5th Cir. 1984), cert. denied,
469 U.S. 1226 (1985).

                                      4
       The elements comprising a violation of 18 U.S.C. § 1014 are

that the defendant made a false statement or report for the purpose

of influencing in any way the action of a financial institution

"upon any application, advance, . . . commitment, or loan."5

Devoll maintains that his indictment failed to state an offense

under    section   1014     because     it   did   not   charge   the   statutory

requirement     that   he    acted    for    the   purpose   of   influencing    a

financial institution's lending activities.              The government argues

that the indictment sufficiently informed Devoll about the elements

of a section 1014 violation, resting this argument in part on its

contention that section 1014 does not require proof that a false

statement was made for the purpose of influencing a financial

institution in connection with its lending activities.                  We decline

the government's invitation to so interpret the statute.

       We hold today that section 1014 relates only to lending

activities by financial institutions.              We review the challenge to

the sufficiency of the indictment in light of that holding and

conclude that the indictment passes muster.              It cannot be gainsaid

that    the   indictment    did   not    specifically      charge    Devoll   with

fraudulent     acts    which   were     intended    to   influence      the   named

financial institutions in their lending activities.                 Obviously the

indictment could have been drawn more artfully and could have

          5
Will. v. United States, 458 U.S. 279, 284 (1982)
(superseded by statute placing check kiting within the scope of
federal bank fraud). See also, United States v. Hord, 6 F.3d 276,
283 (5th Cir. 1993), cert. denied, 114 S. Ct. 1551 (1994) (quoting
United States v. Bowman, 783 F.2d 1192 (5th Cir. 1986)); United
States v. Simmons, 503 F.2d 831 (5th Cir. 1974).

                                         5
included charges that Devoll's conduct was intended to influence

the institutions in their lending activities. Such an articulation

would have been preferable but it is not constitutionally required.

     Each challenged count specifically refers to section 1014

which details the elements required for its violation.                    In the

setting of this case, that reference, coupled with the language of

the indictment, satisfies minimal constitutional requirements.6 As

we have noted:

     Recognizing that an indictment must allege each and every
     element of an offense to pass constitutional muster, the
     law does not compel a ritual of words. The validity of
     an indictment is governed by practical, not technical
     considerations.   Accordingly, the appropriate test in
     this instance is not whether the indictment might have
     been drafted with more clarity, but whether it conforms
     to minimal constitutional standards.7

     Devoll next challenges the adequacy of the jury instructions,

specifically, that the court failed to instruct the jury that to

return    a   verdict   of   guilty   it   had   to   find   that   the    false

representations were made to influence the institutions' lending

activities.8

     The standard of review applied to jury instructions asks

     6
        Gordon; Varkonyi.
     7
        Id. at 455-56 (internal citations omitted).
    8
     The district judge instructed the jury about the elements of
18 U.S.C. § 1014 as follows:

          First:    That [designated bank] was federally
     insured;
          Second: That the defendant made or caused a false
     statement to be made at [designated bank]; and
          Third: That the defendant did so for the purpose of
     influencing some action to be taken by [designated bank].

                                      6
whether "the court's charge, as a whole, is a correct statement of

the   law         and   whether   it   clearly   instructs   jurors   as   to   the

principles of law applicable to the factual issues confronting

them."9          Reversible error exists when "the jury charge, as a whole,

misled the jury as to the elements of the offense."10

       The record reflects no timely objection to the jury charge and

our review, therefore, is limited to a consideration of plain

error.11         We may reverse for plain error only if we find that the

error is plain and that it "seriously affect[s] the fairness,

integrity, or public reputation of judicial proceedings."12

       Our initial inquiry is whether there actually is error and, if

found, whether it can be considered plain.               As our en banc court

has recently announced, an error is plain when it is obvious,

clear, or readily apparent,13 or "so conspicuous that 'the trial

judge and prosecutor were derelict in countenancing [it], even

absent the defendant's timely assistance in detecting [it]."14

       In response to this challenge the government again contends

      9
     United States v. Pace, 10 F.3d 1106, 1120-21 (5th Cir. 1993),
cert. denied, 114 S. Ct. 2180 (1994) (quoting United States v.
Stacey, 896 F.2d 75, 77 (5th Cir. 1990)).
      10
     Id. at 1121 (quoting United States v. Kington, 875 F.2d 1091,
1098 (5th Cir. 1989).
       11
            United States v. Gammage, 790 F.2d 431 (5th Cir. 1986).
      12
      United States v. Calverley, ______ F.3d ______, No. 92-1175,
slip op. 475, 478 (5th Cir. Oct. 20, 1994) (en banc) (quoting
United States v. Atkinson, 297 U.S. 157, 160 (1936)).
       13
            Id. at 479.
            14
        Id. (quoting United States v. Frady, 456 U.S. 152, 163
(1982)).

                                            7
that section 1014 does not require proof that a false statement was

for   the   purpose   of   influencing   a   financial   institution     in

connection with its lending activities. The government argues that

we have adopted a broad formulation of section 1014 requiring only

proof that a defendant's false statements were for the purpose of

influencing an institution's actions in any way.

      We reject that interpretation and conclude, as previously

noted, that section 1014 applies only to actions involving lending

transactions.     We do so for several reasons.     First and foremost,

the   statutory   language   sufficiently    specifies   that   the   false

representation or fraud must be made for a purpose connected with

the various lending activities or practices of the financial

institution.      The legislative history of section 1014 provides

further support for this view.     With the codification of Title 18

in 1948, 13 statutes that criminalized misrepresentation in loan

requests to various credit dispensing agencies of the United States

were collated in section 1014.15 As one court thereafter concluded,

"the main purpose of the statute and its predecessors has always

been to protect lending institutions whose activities are important

      15
       Act of June 25, 1948, ch. 645, § 1, 62 Stat. 752 (codified
as amended in scattered sections of 18 U.S.C.). See United States
v. Payne, 602 F.2d 1215 (5th Cir. 1979), cert. denied, 445 U.S. 903
(1980); United States v. Pavlick, 507 F. Supp. 359 (M.D.Pa. 1980).

     According to the revisor's notes, the enumeration of
"application, advance, discount, purchase, purchase agreement,
repurchase agreement, commitment, or loan" did not appear in the
predecessor sections, but represents a composite of terms and
transactions mentioned therein.

                                    8
to federal policy."16         Various committee reports that were produced

when Congress considered amendments to the statute also reveal

views of the statute as properly concerned with "false statements

in loan and credit applications,"17 "false statements in connection

with loans or other similar transactions,"18 or "fraud in credit

transactions."19 With this background we are not persuaded that the

statute imposes liability whenever a defendant's false statement

was    intended       to   interfere   with       any      activity      of    a    financial

institution; such a broad interpretation of section 1014 presumably

would encompass fraud or false representations having nothing to do

with     financial     transactions,     such         as    fraud   in    an       employment

contract or, for example, in a contract to provide goods or

services for custodial care, premises repair, or renovation.

       In     light   of    this   ruling,       it   is    manifest      that      the   jury

instruction was lacking; indeed, compared with today's holding it

necessarily must be considered erroneous.                       But that is not the

essential issue.           What we must determine is whether the charge as

given constituted plain error as recently defined in Calverley. We

perforce conclude that it was not plain error.

       We have held that section 1014 proscribes fraudulent conduct

       16
            Pavlick, 507 F.Supp. at 363.
       17
      Id. (quoting 1970 U.S.C.C.A.N. (91 Stat.) 4166, 4187 (Report
of House Banking & Currency Committee recommending that state and
federally chartered credit unions be included under section 1014)).
       18
      Id. (quoting 1970 U.S.C.C.A.N. (91 Stat.) 5582, 5617 (Report
of House Banking & Currency Committee on Housing and Urban
Development Act of 1970)).
       19
            Id. at 364.

                                             9
which impacts lending activity.20               In other cases we appear to have

viewed the statutory requirement more broadly, referring to fraud

which intended to influence "any activity" of the institutions.21

The latter cases, however, all involved attempts to interfere with

conventional        loan   transactions.          In   light    of   this    apparent

ambivalence in our precedents, at least introducing a measure of

ambiguity in this area, it cannot be said that the error was plain.

In view of our earlier imprecision, we cannot hold that the trial

court's       now-identified     error    was     "obvious,    clear,   or   readily

apparent . . . [or] so conspicuous that the trial judge and

prosecutor were derelict in countenancing [it], even absent the

defendant's timely assistance."22

     Even if we had concluded that the error was plain Devoll would

have secured no surcease for it would have then been his burden to

demonstrate that the error affected his substantial rights.                       "[I]n

most cases the affecting of substantial rights requires that the

error        be   prejudicial;   it      must    affect   the    outcome     of     the

proceeding."23       In the present case, Devoll could not have met this

burden considering the ample evidence that he intended to and did

     20
          Hord (quoting Bowman); Simmons.
        21
       See United States v. McDow, 27 F.3d 132 (5th Cir. 1994);
United States v. Williams, 12 F.3d 452 (5th Cir. 1994); United
States v. Trice, 823 F.2d 80 (5th Cir. 1987); United States v.
Thompson, 811 F.2d 841 (5th Cir. 1987); United States v. Davis, 752
F.2d 963 (5th Cir. 1985).
        22
       Calverley, _____ F.3d at _____, slip op. at 479 (internal
citations omitted).
        23
       Id. (quoting United States v. Olano, 113 S. Ct. 1770, 1778
(1993)).

                                           10
influence the named institutions in the administration of their

lending activities.          He did that in spades.

     Devoll finally contends that the evidence was insufficient to

support     his    conviction     on       counts   13,   14,   and    15,     charging

violations        of    18   U.S.C.    §    1818(j)24     and   12    U.S.C.    §   2.25

Specifically, Devoll argues that the government did not produce any

testimony to prove the third element of section 1818(j), that he

did not receive the written approval of an appropriate federal

financial institution's regulatory agency prior to participating in

the insured financial institution's affairs.

     Devoll moved for a judgment of acquittal at the close of the

    24
      12 U.S.C. § 1818(j) penalizes individuals who participate in
the affairs of an FDIC insured financial institution while subject
to an order prohibiting such participation.       According to the
charge to the jury, to prove Devoll's guilt under this statute, the
government was required to prove beyond a reasonable doubt:

     First:            That the defendant knowingly participated in
                       the conduct of the affairs of any insured
                       financial institution or engaged in any
                       activity specifically prohibited by an order;

     Second:           That the defendant was subject to an order
                       which prohibits such participation; and

     Third:            That the defendant did not receive the written
                       approval of an appropriate federal financial
                       institution's regulatory agency prior to
                       participating in the conduct of the affairs of
                       any insured financial institution.
     25
          18 U.S.C. § 2 provides that:

     (a) Whoever commits an offense against the United States
     or aids, abets, counsels, commands, induces or procures
     its commission, is punishable as a principal.

     (b) Whoever willfully causes an act to be done which if
     directly performed by him or another would be an offense
     against the United States, is punishable as a principal.

                                            11
government's case-in-chief, but did not renew that objection at

conclusion          of   the   case.        We    may   consider        only   whether   his

conviction resulted in a manifest miscarriage of justice.26                               "A

miscarriage of justice exists if the record is devoid of evidence

pointing to guilt or if the evidence on a key element of the

offense is so tenuous that a conviction would be shocking."27

     The record contains undisputed evidence that in December 1984

the Federal Reserve System's Board of Governors placed Devoll under

orders         to   cease   and    desist    and      orders       of   prohibition.     The

certification page attached to prosecution exhibits was signed by

the associate secretary of the board, and stated that "A review of

the official records of the Board has found no document that would

modify,         suspend,    or    rescind    any      of     the    attached   documents."

Further, an employee of the Federal Reserve System testified that

while the orders of prohibition were in effect Devoll could not

become involved in the affairs of a federally approved financial

institution, and that the orders of prohibition were still in

effect.         Concluding that this evidence was sufficient to support a

determination that Devoll did not receive written approval of the

appropriate regulatory agency prior to participating in affairs of

insured         financial         institutions,         we     are      convinced      beyond

peradventure that there was no miscarriage of justice herein.

          26
        United States v. Thomas, 12 F.3d 1350 (5th Cir.), cert.
denied, 114 S. Ct. 1861 and 114 S. Ct. 2119 (1994); United States v.
Vaquero, 997 F.2d 78 (5th Cir.), cert. denied, 114 S. Ct. 614
(1993).
     27
          Vaquero, 997 F.2d at 82.

                                                 12
The convictions are AFFIRMED.

                          13