Court Opinion

ID: 9458842
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:02:59.983868+00
Date Added: 2024-06-11T17:35:54.673321
License: Public Domain

LUMBARD, Circuit Judge
(dissenting) :
I do not think that the government has gone “beyond the verge” in this prosecution. Nor do I think it relevant to our decision, as does the majority, that Doeherty received no personal benefit from the loans and may be able fully to repay them. A conviction as a con*996spirator or as an aider and abettor only requires that the defendant knew of the illegal activity and sought to forward it; he need have no other personal stake in the outcome. See United States v. McKnight, 253 F.2d 817, 819 (2d Cir. 1958). That the defendant is a 35-year old lawyer and himself derived no money from the scheme is relevant on matters of sentence and executive clemency; these facts in no way absolve him from guilt.
Docherty was convicted on one count of an indictment charging him with conspiring with Edward Evans to violate 18 U.S.C. §§ 656 and 1005 and on four substantive counts charging him with aiding and abetting Evans in violating § 656. Section 1005 prohibits making “any false entry in any [bank] book, report or statement.” The majority reasons that since Docherty made no representation about the ultimate purpose of the loans, no false statement was made to the bank. This is a far too wooden reading of the statute. There is simply no doubt that the entries made here (based as they were on the incomplete loan application) conveyed an entirely false impression of the transaction. In fact, the loans were to Docherty in name only. Evans was to be the primary obligor and Docherty was acting solely as his agent. If the bank had been fully informed about the ultimate destination of the proceeds, it would have refused to make the loans as violative of both internal bank policy and state law. See New York Banking Law § 103, subd. 8. Without Docherty’s misrepresentations the scheme would have failed.
The majority attempts to distinguish this case from Hargreaves v. United States, 75 F.2d 68 (9th Cir. 1935). Hargreaves also involved a bank officer arranging a loan of bank funds to a third party who had no genuine economic interest in the transaction and who was to transfer the loan proceeds to the bank officer. The defendant argued that no false entries were made because the notes “were correct as shown by the books of the bank.” Hargreaves v. United States, supra at 72. Nonetheless, the court concluded that the officer was guilty of making false entries because he misrepresented the “true nature of the transaction.” Hargreaves v. United States, supra at 72. Although the majority refers to the notes in Hargreaves as shams, they are no more nor less so than the notes given by Docherty. Both makers obtained the loans under their own names and were fully liable for the amounts due, regardless of intention or ability to pay.
To be convicted under section 656 Docherty must have known that Evans was effecting a conversion of bank funds. Despite intimations to the contrary in the majority opinion, it seems clear that Docherty’s knowledge that Evans was misusing bank funds for his own ends would be sufficient knowledge of conversion to satisfy the statute. See Morissette v. United States, 342 U.S. 246, 271-272, 72 S.Ct. 240, 96 L.Ed. 288 (1952).
A conviction for willful misapplication also requires an intent “to injure or defraud” the bank or “to deceive” a bank officer or agent appointed to examine the affairs of the bank. See 12 U.S.C. §§ 592, 597 (1945). Here Docherty had an intent to deceive. He deliberately misled bank officials into thinking that the loan was for his use when, in fact, the proceeds were going to Evans in violation of state law and bank policy. In addition, the intent to injure is also made out on these facts, since it clearly appears that Docherty willingly engaged in a scheme to enable Evans to use bank funds knowing full well that such loans were prohibited.
The majority uses a test which combines the foreseeability of loss with the degree of defendant’s iniquity to determine whether there was sufficient evidence of criminal intent. By the majority’s reasoning no violation of § 656 would occur when a bank officer decided to borrow bank money under an assumed name to finance stock speculations and other ventures, if he had every intention *997at the time to repay the bank from a relatively secure source of future funds (like a declared but not yet payable dividend from a large corporation) — even if he later was unable to pay. Such a result would be unacceptable. As we held in United States v. Fortunato, 402 F.2d 79, 81 (2d Cir. 1968), “misapplication occurs when an officer of a bank knowingly lends money to a fictitious borrower or causes a loan to be made to his own benefit.” Docherty deliberately, and with full knowledge of the illegality of what Evans was doing, made it possible for Evans to secure the funds. He has been found guilty upon sufficient evidence under a charge to the jury which correctly and fairly spelled out the elements of the crime charged.
The conviction should be affirmed.