IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_________________________
CASE NO. 05-10236
_________________________
UNITED STATES OF AMERICA
Plaintiff-Appellee
v.
ROBERT ANTONY YYY
Defendant-Appellant.
________________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
________________________________
BRIEF OF DEFENDANT-APPELLANT
________________________________
F.
CLINTON BRODEN
Broden
& Mickelsen
2707
Hibernia
Dallas,
Texas 75204
214-720-9552
214-720-9594
(facsimile)
Attorney
for Appellant
Robert
Antony YYY
CERTIFICATE OF INTERESTED PERSONS
The
undersigned counsel of record certifies that the following listed persons have
an interest in the outcome of this case.
These representations are made in order that the Judges of this Court
may evaluate possible disqualifications or recusal.
The
Appellant, Robert Antony YYY, was
tried and sentenced before the Honorable John H. McBryde, United
States District Court Judge for the Northern District of Texas. The Honorable Charles Bleil, United States Magistrate Judge for the Western
District of Texas conducted preliminary proceedings in this case.
The
Appellant was originally represented below by Andrew Platt and was represented at trial by Danny Duane Burns and was represented at sentencing by David Finn and F. Clinton Broden of the law firm Broden & Mickelsen.
Appellant is represented on appeal by Mr. Broden.
The
Appellee, the United States of America, was represented below by David L.
Jarvis and is represented on appeal
by Nancy Larson, Assistant United
States Attorneys for the Northern District of Texas.
F.
Clinton Broden
STATEMENT REGARDING ORAL ARGUMENT
Oral
argument is requested.
TABLE OF CONTENTS
Page
CERTIFICATE OF INTERESTED PERSONS i
STATEMENT REGARDING ORAL ARGUMENT ii
TABLE OF CONTENTS iii
TABLE OF AUTHORITIES v
STATEMENT OF JURISDICTION 1
STATEMENT OF THE ISSUES 2
STATEMENT OF THE CASE 3
I.
Proceedings Below 3
II.
Statement of the Facts 3
SUMMARY OF THE ARGUMENT
7
ARGUMENT 9
I. THE
DISTRICT COURT ERRED IN REFUSING TO INSTRUCT THE JURY THAT MR. YYYÕS FALSE
STATEMENT TO SUMMIT BANK HAD TO BE FALSE AT THE TIME THE STATEMENT WAS MADE. 9
II. THE
DISTRICT COURT ERRED WHEN IT ALLOWED THE GOVERNMENT TO ARGUE IN ITS CLOSING
THAT MR. YYY COULD BE CONVICTED OF BANK FRAUD EVEN IF MR. YYY DID NOT HAVE THE
INTENT TO DECEIVE AT THE TIME HE MADE HIS REPRESENTATIONS TO SUMMIT BANK. 9
III. THE
EVIDENCE WAS INSUFFICIENT TO SUPPORT THE JURYÕS FINDING THAT MR. YYY INTENDED
TO DEFRAUD SUMMIT BANK AT THE TIME HE APPLIED FOR THE FUNDS IN QUESTION ON MAY
12, 2000. 14
CONCLUSION 17
CERTIFICATE OF SERVICE 18
TABLE OF AUTHORITIES
Page
Cases
Glasser v. United States, 315 U.S. 60 (1942) 14
In re Winship, 397 U.S. 358 (1970) 14
Jackson v. Virginia, 443 U.S. 307 (1979) 14
United States v. Begnaud, 783 F.2d 144 (8th Cir. 1986) 11
United States v. Brennan, 832 F. Supp. 435 (D. Mass. 1991), affÕd, 994
F.2d 918 (1st Cir. 1993) 11
United States v. Chendeka, 253 F.3d 815 (5th Cir. 2000) 14
United States v. Cihak, 137 F.3d 252 (5th Cir.), cert denied sub. nom.,
Bloch v. United States, 525 U.S. 847 (1998) 13
United States v. Fooladi, 746 F.2d 1027 (5th Cir. 1984), cert. denied,
470 U.S. 1006 (1985). 9
United States v. Fredette, 315 F.3d 1235 (10th Cir.), cert. denied,
538 U.S. 1045(2003) 10
United States v. McCarrick, 294 F.3d 1286 (11th Cir. 2002) 7, 11-13, 15-16
United States v. McClatchy, 249 F.3d 348 (5th Cir. 2001) 9
United States v. Milton, 8 F.3d 39 (D.C. Cir. 1993), cert. denied, 513 U.S.
919 (1994) 11
United States v. Phath, 144 F.3d 146 (1st Cir. 1998) 11
United States v. Shah, 44 F.3d 285 (5th Cir. 1995) 10-11
United States v. Thomas, 12 F.3d 1350 (5th Cir. 1994) . 14
Statutes
18 U.S.C. ¤ 1001 11
18 U.S.C. ¤ 1344 3, 11
28 U.S.C. ¤ 1291 1
Other
http://www.juryinstructions.ca8.uscourts.gov 11
STATEMENT OF JURISDICTION
The
jurisdiction of this Court is invoked pursuant to 28 U.S.C. ¤ 1291, as this is
an appeal from a final judgment entered by the United States District Court for
the Northern District of Texas.
STATEMENT OF THE ISSUES
I.
Whether a District Court errs in refusing to instruct a jury that, for
purposes of the bank fraud statute, any alleged false representations to a
financial institution had to be false at the time the representations were
made.
II.
Whether a District Court errs in allowing the government to argue that a
defendant can be convicted of bank fraud even if the defendant does not have
the intent to deceive the financial institution at the time he makes the
representations in question to the financial institution.
III.
Whether the evidence was sufficient to support the juryÕs verdict that
Robert YYY intended to defraud Summit Bank at the time he applied for the funds in question.
STATEMENT OF THE CASE
I.
Proceedings Below
Robert
Antony YYY was charged in a one count indictment with bank fraud, in violation
of 18 U.S.C. ¤ 1344. See Excerpts at 3.[1] Mr. YYY was found guilty by a jury on October 5, 2004. Id at 4.
He
was sentenced, on January 21, 2005, to six months imprisonment, five years
supervised release and a $100 special assessment and was ordered to pay
restitution in the amount of $390,000.
Id. at 5.
On
February 3, 2005, Mr. YYY filed a timely notice of appeal. Id. at 2.
II.
Statement of the Facts
The facts of the case are simple and largely
undisputed.
Progressive
Tractor Corporation (ÒProgressiveÓ) had a commercial instalment agreement
providing a line of credit with Summit Bank which allowed Progressive to borrow
money to purchase various equipment which it would then lease out or
resell. See Rec. Sup. I:80-81. Randall Mathews was the owner of Progressive and Robert YYY
did accounting work for Progressive.
Id. at Sup. I:97-98.
On
May 12, 2000 at 10:23 a.m., Robert YYY faxed a request to Summit Bank
indicating that Progressive wanted to purchase two articulated dump trucks from
American Midwest Equipment Company for $433,332.00 from ProgressiveÕs line of
credit. Summit Bank would fund
$390,000 of the purchase price. See Sup. I:83
and GovÕt Exhibits 2-3. Mr.
YYY also faxed to Summit Bank, at the same time, a Progressive check made
payable to American Midwest Equipment Company in the amount of $411,655 as
evidence of the intent to purchase the trucks once funding was received from
Summit as well as a security document giving Summit a security interest in the
two dump trucks (Serial No. 5365 and 5348). Id. at Sup.
I:84-85 and GovÕt Exhibits 4-5.
Once these documents were received by Summit Bank, it placed $390,000 in
ProgressiveÕs operating account at the bank. Id. at Sup.
I:85 and GovÕt Exhibit 7.
It
was later discovered by Summit Bank that the $411,000 check to American Midwest
Equipment Company never cleared ProgressiveÕs account. Id. at Sup. I:86.
Upon inquiry, Mr. YYY admitted that Progressive owed the State of Texas
back taxes that he was lead to believe by his boss, Randy Mathews, could be
paid from a large account receivable due Progressive from U.S. Stone. Nevertheless, when the U.S. Stone
account receivable was not received, Mr. YYY admitted that he used part of the
$390,000 Summit Bank funds to pay the back taxes. Id. at Sup.
I:87, 93-94, 106, 131, 132-33, 141.
Indeed, Mr. YYY wrote two checks to the Texas Comptroller dated May 12,
2000 and totalling $341,000 that cleared ProgressiveÕs bank account on May 26,
2000. Id. at Sup. I:91-92; Government Exhibits 6-7.[2]
Mr.
YYY testified that at the time he received the money from Summit Bank his intent was to pay for the trucks and that he
intended to use the U.S. Stone Money to pay the back taxes. Id. at Sup. I:130, 132-33, 138, 141. In fact, on cross-examination of Mr. YYY, the following
exchange took place:
Q. [By
Prosecutor] And at the moment at
10:22 in the morning when you faxed that [material to Summit Bank], your
testimony is that was a true statement and you fully intended to do that.
A. My intent was to use that money to purchase those
trucks.
Id. at
Sup. I:138.
Randy
Mathews testified at trial that, approximately 30 days after receiving the
Summit Bank funds, Mr. YYY sought funding for the two dump trucks (Serial No.
5365 and 5348) from another bank, Deutsche Bank, and that Progressive
ultimately purchased the dump trucks using that funding. Id. at Sup. I:100-01, 108.
In other words, Mr. Mathews claimed that the trucks were double
financed. Nevertheless Mr. YYY
testified that he never purchased the trucks in question through Deutsche
Bank. Id. at Sup. I:125-26. In fact, at sentencing, it was learned that Deutsche Bank
did not finance the trucks and
that the trucks in question were simply never purchased when the Summit Bank
money was used to pay the back taxes.
See Sup. III:60;
DefendantÕs Exhibit 3. It was also
learned that, after Mr. YYY left Progressive, Mathews sold Progressive
equipment out of inventory without repaying the banks that had security
interests in the equipment. Id. at Sup.
III:61-63.
SUMMARY OF THE ARGUMENT
The Eleventh CircuitÕs decision in United States v.
McCarrick, 294 F.3d 1286 (11th Cir.
2002) is directly on point.
In
this case, there was no evidence presented that Mr. YYY had the intent to
defraud at the time he made the representations in question to Summit
Bank. Indeed, it was undisputed
that, at the time he made the representations in question to Summit Bank, he
had every reason to believe that Progressive would receive a large payment owed
from U.S. Stone that would be used to pay the tax monies outstanding to the
State of Texas. It was only after
the U.S. Stone account receivable was not received and after the loan from Summit Bank had been received that Mr.
YYY admittedly used the Summit Bank money to pay the tax monies to the State of
Texas rather than follow through with the purchase of the dump trucks. In other words, both the District Court
and the government contributed to the jury believing that Mr. YYY could be
convicted of bank fraud even if he did not have the intent to defraud Summit
Bank at the time he made his representations to the bank.
The
District Court erred by refusing to instruct the jury that, for purposes of the
bank fraud statute, a representation is ÒfalseÓ if it is known to be untrue or
is made with reckless indifference as to its truth or falsity at the time
the representation is made. Likewise, this error was compounded
when the District Court allowed the government to argue in its closing:
ÒWhether you believe [Mr. YYY] intended to deceive Summit at 10:22 in the
morning on May 12 of 2000 or form[ed] the intent later that day or later that
month or through July...Ó he is guilty of bank fraud.
Moreover,
to the extent the jury understood that it must determine whether Mr. YYY had an
intent to defraud Summit Bank at the time he made his representations to the bank, the evidence was insufficient
as a matter of law to support a finding that Mr. YYY had the intent to defraud
at the requisite time.
ARGUMENT
I.
THE DISTRICT COURT ERRED IN REFUSING TO INSTRUCT THE JURY THAT MR. YYYÕS
FALSE STATEMENT TO SUMMIT BANK HAD TO BE FALSE AT THE TIME THE STATEMENT WAS
MADE.
II.
THE DISTRICT COURT ERRED WHEN IT ALLOWED THE GOVERNMENT TO ARGUE IN ITS
CLOSING THAT MR. YYY COULD BE CONVICTED OF BANK FRAUD EVEN IF MR. YYY DID NOT
HAVE THE INTENT TO DECEIVE AT THE TIME HE MADE HIS REPRESENTATIONS TO SUMMIT BANK.
The district court's refusal to grant a requested jury
instruction is reviewed for abuse of discretion. See United States v.
McClatchy, 249 F.3d 348, 356 (5th
Cir. 2001). Nevertheless, reversible error occurs when the charge, Òexamined in
the full context of trial including the final arguments of counselÓ has
thwarted defendant's presentation of his defense. United States v. Fooladi, 746 F.2d 1027, 1030-31 (5th Cir. 1984), cert.
denied, 470 U.S. 1006 (1985).
Here,
the government alleged that Mr. YYY committed bank fraud by making a false
representation to Summit Bank when he applied for the funds to buy the trucks
in question. The jury was
instructed that:
A representation is ÒfalseÓ if it is known to be
untrue or is made with reckless indifference as to its truth or falsity.
Rec. at I:85.
Nevertheless, Mr. YYY objected and requested that Òat the time the
representation is madeÓ be added to the end of that sentence of the
instructions. Id. at I:42, Sup. I:159, 182-83. Indeed, throughout trial, Mr. YYY
admitted that he misused the Summit Bank funds but argued that he did not
commit bank fraud because, at the time he made his representations to the bank,
he intended to use the funds to purchase the trucks in question. The District Court refused his
request. Id. at Sup. I:159, 182-83.
The
District CourtÕs failure to properly instruct the jury was compounded when the
government argued at closing:
ÒWhether you believe [Mr. YYY] intended to deceive Summit at 10:22 in
the morning on May 12 of 2000 or form[ed] the intent later that day or later
that month or through July...Ó he is guilty of bank fraud. Id. at Sup. I:169. Although
Mr. YYY objected to this argument by the government, the District Court simply
responded by stating: ÒIÕm going to give the jury the instructions on the law,
and theyÕll be guided by the legal instructions I give them.Ó
This
Court has made clear that, in regard to false statements, Ò[t]he relevant facts
must be false when the statement is made, not before or after that time.Ó United
States v. Shah, 44 F.3d 285, 294 n.16
(5th Cir. 1995) (ÒThe [district] court went on [when instructing the jury], ÔA
statement is false if it was untrue when made and then known to be untrue by
the person making it.Õ This instruction represents a correct and adequate
statement of the law.Ó).[3]
Although
Shah dealt with a conviction under
18 U.S.C. ¤ 1001 rather than 18 U.S.C. ¤ 1344, other courts have dealt with
this issue in the context of 18 U.S.C. ¤ 1344. For example, in United States v. Brennan, 832 F. Supp. 435, 440 (D. Mass. 1991), affÕd, 994 F.2d 918 (1st Cir. 1993), the Court held that, in
order to sustain a conviction under 18 U.S.C. ¤ 1344, the government was
required to prove that the alleged false statement was known by the defendant
to be false Òwhen made.Ó
Similarly, in Phath, the
First Circuit, following a bank fraud conviction, defined "'false
statements and misrepresentationsÓ as Òany statement or assertion which
concerns a material fact and which, at the time it was made, was either known to be untrue or was made with
reckless indifference to its truth or falsity.Ó Phath, 144 F.3d
at 148 (emphasis added). Likewise,
the Eighth Circuit Pattern Jury Instruction in cases in which a defendant is
charged with violating 18 U.S.C. ¤ 1344 recommends that the jury be charged
that a representation is false if it is Òuntrue when made.Ó See http://www.juryinstructions.ca8.uscourts.gov
at pg. 274.
Directly
on point is the Eleventh CircuitÕs recent decision in United States v.
McCarrick, 294 F.3d 1286 (11th Cir.
2002). There, the defendant
McCarrick was charged with a violation of 18 U.S.C. ¤ 1344. Id. at 1288. He had
obtained a bank loan, inter alia,
to purchase certain equipment for his automobile repair business. Id. He had submitted a
sale-proposal and acceptance for equipment he was to purchase from Terry
McVittie to the bank and the bank gave him a check made payable to both he and
McVittie which he (McCarrick) deposited into his account. Id. at 1288-89. Shortly
thereafter, McCarrickÕs business Òexperienced serious financial difficulties,
and he canceled the order with [McVittie]Ó and used the money to Òkeep his
business afloat.Ó Id.
McCarrick argued on appeal that the evidence was insufficient to convict
him of bank fraud. Id.
The
Eleventh Circuit noted that Ò[t]he government's sole allegation of fraud in
[the] case [was] that, at the time McCarrick signed the loan documents, he had
no intention of buying the spray paint booth, as he represented.Ó Id. at 1290. On the other
hand, McCarrick argued, as did Mr. YYY in the instant case, that the evidence
showed that everything on the documents he signed with the bank was truthful
because, at the time he signed the documents, he intended to purchase the
equipment at issue. Id. at 1291.
ÒAny wrongdoing he may have committed, McCarrick contend[ed], occurred
subsequent to the signing of the loan documents, and [was] insufficient to
support the jury's inference that he intended to defraud the SBA at the
requisite time.Ó Id (emphasis added). The
Eleventh Circuit, when presented with almost the exact fact scenario as the
instant case, agreed:
No evidence was presented of events occurring prior to
McCarrick's signing of the loan documents that related to his alleged intent to
defraud. The evidence at trial consisted entirely of events that occurred
subsequent to the signing of the loan documents. The government concedes
that any criminal intent McCarrick formed after signing the loan documents
cannot support his convictions on the crimes charged in the indictment, which
require that McCarrick have acted with intent to defraud the SBA at the time of
the signing of the loan documents.
Id.
(emphasis added). In the instant
case, however, the government argued exactly contrary to what it conceded in McCarrick.[4]
In
short, the government essentially argued the jury to that anytime a person uses
bank funds inconsistent with their original purpose, a person has committed
bank fraud regardless of when the
intent to engage in the inconsistent use takes place. This is not the law and the District Court refused to make
that clear to the jury. Thus the
governmentÕs closing argument was error and the District CourtÕs error in
refusing to sustain Mr. YYYÕs objection to that argument was then compounded
when it denied Mr. YYYÕs requested jury instruction on the issue. Independently or cumulatively, these
errors require that Mr. YYY be granted a new trial.
III.
THE EVIDENCE WAS INSUFFICIENT TO SUPPORT THE JURYÕS FINDING THAT MR. YYY
INTENDED TO DEFRAUD SUMMIT BANK AT THE TIME HE APPLIED FOR THE FUNDS IN
QUESTION ON MAY 12, 2000.
The
Due Process Clause of the Fifth Amendment to the United States Constitution
requires the government to prove beyond a reasonable doubt every element of a
crime with which a person is charged.
See In re Winship, 397 U.S.
358, 365 (1970). In ruling on a
sufficiency of the evidence challenge, a court must examine trial evidence in
the light most favorable to the government with all reasonable inferences and
credibility choices made in favor of the verdict. Glasser v. United States, 315 U.S. 60 (1942). Evidence is sufficient if a rational trier of fact could
have found the essential elements of the offense beyond a reasonable doubt
based upon the evidence presented at trial. Jackson v. Virginia, 443 U.S. 307, 319 (1979).[5]
It
is well understood that the Òintent to defraudÓ is an element of bank
fraud. See,e.g., United States
v. Chendeka, 253 F.3d 815, 819 (5th
Cir. 2000). As discussed above,
the intent to defraud must exist at the time the representations are made. Here there was insufficient evidence to
support this determination to the extent the jury understood that it must make
this determination.
Indeed,
as also discussed above, the United States Court of Appeals for the Eleventh
Circuit faced almost the same fact scenario in McCarrick except that evidence of an intent to defraud at the
time the bank funds were obtained were stronger in that case. at 1290. There, McCarrick testified that, at the time he signed the
loan documents, he intended to purchase the equipment at issue. McCarrick, 294 F.3d at 1291. Nevertheless, there was evidence introduced by the
government at trial to support its contention that McCarrick did not intend to
buy the equipment at the time he signed the loan documents. First, McCarrick's business bounced
approximately twenty checks after the loan was authorized, but before the
proceeds were disbursed at the closing.
Second, McCarrick canceled his order for the equipment only four weeks
after McVittie (the equipment seller) ordered it from the manufacturer, even
though McVittie told him it would probably take four-to-six weeks to
deliver. Third, McCarrick's
girlfriend signed McVittie's name on the loan check which McCarrick then
deposited into his business account.
Id. at 1291. Ultimately, the Eleventh Circuit
concluded that the evidence was
Òinsufficient to support the jury's inference that he intended to
defraud the [financial institution] at the requisite timeÓ and reversed the defendantÕs bank fraud
conviction. Id (emphasis added). It also noted that Ò[e]ven if we assume that, in depositing
the check into [his] business account, McCarrick wrongfully intended to use the
money for general business expenses until the spray paint booth arrived-and
then to pay for the booth from the commingled funds when it did arrive-it
simply does not follow that he did not intend to purchase the spray paint booth
at the time he signed the loan documents.Ó Id. at 1291-92.
Here,
of course, evidence of an intent to defraud at the time the representations
were made to Summit is even weaker than the evidence at issue in McCarrick. In the
instant case, it was undisputed that, at the time the representations were made
to Summit Bank, Progressive had every reason to believe it would receive a
large payment from U.S. Stone that would be used to pay the tax monies
owed. In contrast, in McCarrick, there was no evidence introduced as to how, at the
time the defendant made his representations to the financial institution and
received the loan proceeds, he had intended to pay the operating expenses which
were ultimately paid by the loan proceeds in order to Òkeep his business
afloat.Ó Id. at 1289.
In
sum, the evidence of an intent to defraud Òat the requisite timeÓ is even
weaker in this case than the evidence in McCarrick. The
evidence is simply insufficient to support the verdict in this case.
CONCLUSION
For
the foregoing reasons, Mr. YYYÕs conviction should be reversed or, in the
alternative, the case should be remanded for a retrial.
Respectfully
submitted,
________________________________
F. CLINTON BRODEN
Broden & Mickelsen
2707 Hibernia
Dallas, Texas 75204
214-720-9552
214-720-9594 (facsimile)
Attorney
for Appellant
Robert Antony YYY
CERTIFICATE OF SERVICE
I,
F. Clinton Broden, certify that on July 20, 2005, I caused two paper copies and
one electronic copy of the foregoing Brief of Defendant-Appellant to be mailed
by United States mail, postage prepaid, to Nancy Larson, Assistant United States Attorney, 801
Cherry Street, Suite 1700, Fort Worth, Texas 76102-6897
____________________________
F.
Clinton Broden
[1]Citations to the Record (ÒRec.Ó) are to volume
number:page number. Citations to
the Record Excerpts (ÒExcerptsÓ) are to Tab number.
[2]A Summit Bank official testified at trial that Summit
Bank would not have lent Progressive $390,000 to pay back taxes. SeeRec. at Sup. I: 92-93.
[3]Indeed, there are a myriad of cases, requiring that,
for a violation of the wire, mail or bank fraud statutes, the government is
required to show that, at the time
a defendant allegedly made false statements or representations he knew that
they were false. See,
e.g.,United States v. Fredette, 315
F.3d 1235, 1242 (10th Cir.), cert.
denied, 538 U.S. 1045(2003); United
States v. Phath, 144 F.3d 146, 148 (1st Cir. 1998); United States v. Milton, 8 F.3d 39, 46 (D.C. Cir. 1993), cert. denied, 513 U.S. 919 (1994); United States v. Begnaud, 783 F.2d 144, 146 (8th Cir. 1986).
[4]Mr. YYY also notes that, in United States v.
Cihak, 137 F.3d 252, 262 (5th
Cir.), cert denied sub.
nom., Bloch v. United States, 525 U.S. 847 (1998), this Court confirmed that
the offense of bank fraud is complete Òonce the funds leave the control of the
bank.Ó Given this holding in Cihak,
it is difficult to square the governmentÕs closing argument in this case that,
although the funds left Summit on May 12, 2000, the bank fraud could have taken
place Òlater that month or through
July...Ó
[5]Mr. YYY is entitled to the Òrational jurorÓ standard
of review because his trial counsel filed a post trial motion for a new trial
and judgement of acquittal. See
United States v. Thomas, 12 F.3d
1350 (5th Cir. 1994).