Court Opinion

ID: 9479775
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:28:52.186323+00
Date Added: 2024-06-11T17:47:16.561688
License: Public Domain

MERRITT, Chief Judge,
dissenting.
I do not believe that the government has shown that the defendants in this direct criminal appeal had a sufficient intent to defraud the bank, an essential element of the crime of misapplication of bank funds under 18 U.S.C. § 656. Overdrafts alone obviously do not establish sufficient grounds for convicting a customer of defrauding his bank. United States v. Christo, 614 F.2d 486, 493 (not “even one case upholding a conviction ... involving unconcealed checking account overdrafting”), reh’g denied, 618 F.2d 1390 (5th Cir.1980). Unlike the case of Logsdon v. United States, 253 F.2d 12 (6th Cir.1958), the case relied upon by the Court, the government here did not prove that either customer got bank employees to hide the overdrafts from bank officers or examiners for the purpose of defrauding the bank. Mrs. Courtney, the bank officer who “held the checks,” testified that Hughes had no knowledge of the bank’s procedure or any knowledge of how she handled the overdrafts other than the fact that she did not insist on immediate payment. The same is true of the case against defendant Thompson. There is no proof that the defendants did not intend to pay the overdrafts or that they intended in some way to defraud the bank by concealing the overdrafts or that they had knowledge of any “false entries” made by officers of the bank.
Both defendants were customers of the First National Bank in Louisa, Kentucky, a small mountain village near the West Virginia border. The bank had a history of allowing customers to make interest-free loans by overdrafting their accounts. The bank officers allowed this policy to continue either through incompetence or Christian charity.
Our Court’s disposition of this case establishes a dangerous precedent, an invitation to banks and government enforcement officers to prosecute or threaten to prosecute bank customers in federal court for the failure to pay overdrafts that bank officers themselves encouraged. In such cases, there is no falsehood or lie relied upon by the officers of the bank. The bank officers simply had a policy of covering overdrafts by some customers.
Further, there is no showing here that depositors were defrauded. When shareholders of a bank employ directors and bank officers who have a policy of selectively not collecting overdrafts, customers of the bank who benefit from the policy should not be sent to jail as scapegoats for the misadventures of the bank’s management. This prosecution is another case in which the government has gone beyond the verge and unduly extended § 656. See Judge Friendly’s opinion in United States v. Docherty, 468 F.2d 989, 993 (2nd Cir.1972), for a similar case in which the court reversed the conviction of a customer concluding that it was a case of “maladministration of the affairs of the bank, rather than criminal misapplication of its funds” participated in by the customer. Accordingly, I respectfully dissent.