United States v. Williams ( 1994 )

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 92-7778
United States of America,
Plaintiff-Appellee,
VERSUS
Lynn Williams,
Defendant-Appellant.
Appeal from the United States District Court
For the Southern District of Mississippi
( January 13, 1994 )
Before WISDOM, HIGGINBOTHAM, and JONES, Circuit Judges.
WISDOM, Circuit Judge:
The appellant/defendant, Lynn Williams, originally was
indicted on August 7, 1991, on charges of conspiracy to embezzle
funds belonging to a labor union pension plan under 18 U.S.C. § 371
and embezzlement of those pension funds under 18 U.S.C. § 664. A
series of superseding indictments additionally charged him with
making false statements to a federally insured bank under 18 U.S.C.
§ 1014. On September 10, 1992, the trial court denied the
defendant's motion to dismiss. In that motion, Williams alleged
prosecutorial misconduct, a lack of materiality of the alleged
1
false statements, and violations of his rights under the Speedy
Trial Act1.
Williams was charged along with several co-defendants, all of
whom pleaded guilty.2 He refused to do so, presumably because his
participation in the criminal enterprise consisted only of lending
his friends money and, on two fateful occasions, signing documents
that they presented to him. A jury nonetheless found Williams
guilty of one count of conspiracy and three counts under § 1014;
the jury found him not guilty on the two pension fund theft counts.
After denying Williams's motion for judgment of acquittal or for a
new trial, the district judge sentenced Williams to 21 months in
prison. Williams appeals from that conviction. We AFFIRM his
conviction for conspiracy but VACATE his convictions under § 1014.
I. Background
Although the charges against Williams are not particularly
complex, some background on the other defendants's relationships
and business ventures is helpful to understand their context.
Eugene Sykes, of Baton Rouge, Louisiana, owned and operated Morning
Treat Coffee Co. for two years until it filed for bankruptcy in
1985. In July of that year, Charles Sykes (Eugene's brother)
formed Southern Coffee Co. as a distinct successor to Morning
1
18 U.S.C. § 3151 et seq.
2
Prior to the second indictment, co-defendants Charles and
Eugene Sykes pleaded guilty. Prior to the third indictment, co-
defendants Andrew Cutler, Wilson Evans, and Robert Matthews
pleaded guilty, leaving Williams the sole remaining defendant.
2
Treat; Southern bought the remaining assets of Morning Treat.
Although Charles owned 100% of Southern Coffee, he made Eugene
president. Eugene spent his time handling the day-to-day affairs
of Southern Coffee while Charles continued his main vocation,
practicing law and representing labor unions along the Gulf Coast
in Mississippi.
In April 1986, Eugene sought additional funding for Southern
Coffee. He applied for a loan of two million dollars to the
Louisiana Imports and Exports Trust Authority (LIETA), an
organization designed to aid small businesses in Louisiana in
gaining access to the import and export markets. During this time,
Williams, an attorney in Baton Rouge, maintained an ongoing
personal and business relationship with Eugene. For example,
Williams accompanied Eugene when he went to New Orleans to address
the LIETA Board and, further, applied to a bank for a letter of
credit for Eugene to pledge as collateral. When that application
was rejected, Williams personally borrowed $50,000 and lent the
money to Eugene.
Always the entrepreneur, Eugene decided to get into the marble
cutting business. In particular, he started China Marble of
America, Inc., and sought to buy the Colombus Marble Works of
Colombus, Mississippi (with a quarry in Alabama) for $460,000.
Eugene told his brother Charles, the attorney, about his interest
in the marble venture and enlisted his help in securing funding.
Eugene knew that Charles was extremely influential with the unions
he represented and might have access to money in their pension
3
funds.
Eventually Eugene gave Charles documents outlining a proposal
for the marble venture and proposing plans to build a Morning Treat
Coffee plant in Mississippi. The proposal sought interim funding
until a loan of one million dollars from LIETA could be
consummated. Charles passed the proposal to co-defendants Wilson
Evans and Robert Matthews, two trustees of the Gulfport Steamship
Company-International Longshoremen's Association Pension Fund
("Fund").3
Evans and Matthews may have been blinded by wishful naivete:
the proposal came when jobs were scarce. They doubtless saw the
marble cutting venture as the source of some much-needed local
employment opportunities. The reality, unfortunately, was quite
different. The proposal was but a means of misappropriating
pension money to secure loans for Eugene's various ventures. In
addition, LIETA would never have given money to a venture in
Mississippi (the organization was founded to aid small businesses
in Louisiana, as the "L" in LIETA indicated).4 Evans and Matthews
wrote Eugene a letter telling him that the Fund would pledge one
million dollars in certificates of deposit to secure the LIETA
loan. When no LIETA money was forthcoming, Eugene and Charles
applied to two banks in Mississippi, using the pension's
3
Williams also was a business associate of Evans and
Matthews.
4
All of that really was moot because the State of Louisiana
had yet to fill LIETA's coffers.
4
certificates of deposit as collateral.5 On the strength of the
pledged collateral, the banks approved the loans. Eugene used the
bank loans for the purchase of the marble equipment and for
operating expenses for his other ventures.
When his businesses failed, Eugene's loans went into default.
The banks exercised their rights over the certificates of deposit
against the Fund. The pension fund lost the money represented by
the certificates of deposit.
II. Facts Pertinent to the Section 1014 Charges Against Williams
In the course of arranging the bank loans, Charles prepared
three form resolutions, a standard component of a loan application.
Eugene then presented these forms to Williams who signed them. By
signing both of the loan applications and, accordingly, attesting
to the veracity of the information contained there, Williams
allegedly made two statements that formed the basis for his
convictions. First, the forms listed him as the treasurer,
secretary, and certifying officer of Southern Coffee. Second, the
resolutions stated that approval for the loans had been given at a
meeting of the board of directors of Southern Coffee.
The government contended that Williams had never been elected
to those positions or served in those capacities and, similarly,
that the board of directors had not formally approved the
resolution. The jury agreed and convicted Williams of making false
5
The banks involved are the People's Bank of Biloxi and
Merchant's Bank and Trust Company, Bay St. Louis.
5
statements to a federally insured bank.
III. Materiality Under Section 1014
It is illegal under 18 U.S.C. § 1014 to make a false, material
statement to a federally insured banking institution. To sustain
a conviction under this statute, the government must prove that:
(1) the defendant made a false statement to a financial
institution; (2) the defendant knew the statement was false when he
made it; (3) he made it for the purpose of influencing the
financial institution's action; and (4) the statement was false as
to a material fact.6
The defendant challenges that the statements were false, that
he knew they were false, and that they were material. He concedes
that the statements were made to influence the bank's decision on
Eugene and Charles's loan application.7 We need not address
whether the statements were false or whether Williams knew of their
falsity for we hold that the statements were not material. As a
result, the government failed to meet its burden and we must vacate
Williams's convictions under § 1014.
Statutes imposing criminal penalties for making false
statements long have required materiality as an essential element.8
6
United States v. Thompson, 811 F.2d 841, 844 (5th Cir.
1987).
7
Although Eugene and Charles applied to two banks for two
distinct loans, we discuss these applications in the singular
where the plural would require a cumbersome syntax.
8
Sir Edward Coke wrote in 1680 that perjury is a crime
committed by one who "sweareth absolutely, and falsely in a
6
Section 1014 is no exception: the government must prove that the
false statement matters.
Statutes like section 1014 and section 1001 (the statute that
makes it illegal to make a false statement to a government
department or agency) are "highly penal" and, thus, require that
the materiality element be taken seriously. In United States v.
Beer9, we emphasized that the severe penalties flowing from a
conviction for making a false statement require the government to
"make a reasonable showing of the potential effects of the
statement".10 In the present case, the government failed to do so.
Materiality is a legal determination made by the district
court and, accordingly, is subject to complete review by this
Court.11 A challenge to the district court's finding of materiality
is not a challenge to the sufficiency of the evidence even though
it is a product of a factual evidentiary showing.12 In other words,
our review seeks to determine whether the district court's finding
of materiality was erroneous as a matter of law.13
matter material to the issue." 3 E. Coke, Institutes 164 (6th
ed. 1680). Otherwise, as Blackstone stated, "if it only be in
some trifling collateral circumstance, to which no regard is
paid, it is not penal." 4 W. Blackstone, Commentaries *137.
9
518 F.2d 168 (5th Cir. 1975).
10
Id. at 172.
11
United States v. Lueben, 838 F.2d 751, 753 (5th Cir.
1988).
12
See Id.
13
Id.
7
A false statement is material if it is shown to be capable of
influencing a decision of the institution to which it was made.14
Moreover, the statements must be analyzed in the particular context
in which they were made.15 In the context of the present matter,
our inquiry is limited to whether the statements at issue -- the
loan application forms listing Williams as secretary and treasurer
and attesting that the board of directors formally approved the
loan -- were capable of influencing the bank's decision to loan the
Sykes brothers money. We hold that these statements were not
capable of influencing the bank's decision one way or the other
and, as such, fail to meet the materiality requirement.
The United States urges that we adopt the broadest possible
definition of materiality, relying on the Lueben case for the
proposition: "[I]f these statements were immaterial, why were they
required by the lending institution in each of the transactions?"16
This dictum was intended as a rhetorical guidepost, not a bright
line rule. Otherwise, the law of materiality would change every
time that a bank printed up a new loan application form. We need
not resort to these short-hand approaches, however, for the
standard we are to apply is clear: If Williams's statements were
capable of influencing the bank's decision, they are material.
14
Id. at 754. The statement need not actually influence a
decision provided that it is capable of doing so. Reliance is
irrelevant. United States v. Puente, 982 F.2d 156, 159 (5th
Cir.), cert. denied, 113 S. Ct. 2934 (1993).
15
Weinstock v. United States, 231 F.2d 699, 702 (D.C. Cir.
1956).
16
Lueben, 838 F.2d at 755.
8
The government marshalled evidence showing that the banks
would not have made the loans if they had known that these
statements were false. In actuality, the bank officers merely
testified that they would not have approved the loans if they had
discovered that the applicant had lied. That does not make the
lies themselves material, however. This is a crucial distinction.
Aided by hindsight, the banks undoubtedly would not have made these
loans. Any bank would be understandably reluctant to lend money to
a corporation when its officers lie on the loan application. In
sum, the government's evidence demonstrates only that the banks
maintain a policy that warns against loaning money to entities
which do not tell the truth; it is no way probative of the
materiality of these particular statements.
Williams, in contrast, urges that we limit the parameters of
materiality by looking to the purpose of the loan application. He
argues that the fact that a board of directors meeting may not have
taken place or that Williams was not actually secretary or
treasurer did not matter to the bank in its evaluation of the loan
application. He asserts instead that the only material fact
elicited by the forms was that Charles, as sole director and
shareholder of Southern Coffee, had authorized his brother Eugene
to act for and bind the corporation when dealing with the banks.
Williams presented evidence that the purpose of a corporate
resolution in this context is to identify the person who has the
power to bind the corporation. As to these loans, that person was
primarily Eugene and, secondarily, Charles. Hence, Williams
9
argues, he was but an unnecessary (and immaterial) bystander.
We agree that an examination of the purpose of the loan forms
is appropriate when defining the boundaries of materiality. The
loan application includes standard forms used to verify the
identity of those persons legally authorized to sign corporate
checks and indorse instruments payable to the corporation.
Moreover, the forms identify the persons capable of borrowing money
from the bank in the corporations's name or of paying notes to the
bank. The Executive Vice-Presidents of both the People's Bank and
Merchant's Bank testified:
That the purpose of the Corporate Resolution was to
establish which persons had authority to legally bind
Southern Coffee Company and which persons had authority
to withdraw funds on behalf of Southern Coffee Company.17
The forms clearly identify those people as Eugene Sykes, the
president, and C.T. (Charles) Sykes, the agent. In the light of
this purpose, the fact that Williams was or was not secretary and
treasurer or the question of whether the board met is of no
consequence.
When we look to the purpose of the bank forms, we are asking
whether reliance on the false statements would have changed the
outcome. In the Beer case, for example, we held that the
defendant's failure to include a loan to which he was accommodated
on an FDIC form was immaterial.18 We explained that one way of
determining whether the statements were capable of influencing a
17
Williams offered this same testimony at trial.
18
Beer, 518 F.2d at 172.
10
bank's decision is to extrapolate from the facts and ask, "If the
bank had relied on the defendant's statements, would it have made
any difference?" Similarly, the Weinstock court held that
inaccurate information about the name of an organization on
particular dates was not material for, if relied on, it would not
have influenced any decision made by the agency to which it was
directed.19
From that point of view, the cases upon which the government
relies are distinguishable. This is not a case like Lueben, where
the defendant lied about his income to make his financial position
look more attractive to the bank.20 Nor is it like Puente, where
the defendant lied about his previous felony conviction in an
effort to whitewash his past.21 In those circumstances, it is clear
why a bank or federal institution, armed with the truth, would have
arrived at a different decision on a pending application.
Section 1014 was not designed to convict on a technicality.
More is required. Williams merely signed the resolutions based
upon the representations of Eugene and Charles. Williams's
signature reflected Charles's designation of a secretary and
treasurer, if only for the purposes of procuring the loan money.22
19
Weinstock, 231 F.2d at 702. This framework should not be
confused with our earlier statement that the legal determination
of materiality is made without concern for whether the bank
actually relied.
20
Lueben, 838 F.2d at 754.
21
Puente, 982 F.2d at 158-59.
22
In fact, this assertion forms the basis of Williams's
contention that the statements were not actually false. Williams
11
The banks wanted to know who was responsible for these loans.
Eugene and Charles were; Williams was not. We hold that Williams's
statements were not material and, accordingly, we vacate his
convictions under § 1014.23
IV. The Conspiracy Count
Williams was charged under 18 U.S.C. § 371 with conspiracy to
convert to one's own use securities of a pension fund. Although
the jury acquitted Williams of the substantive crime of embezzling
pension funds, it convicted him of conspiracy. Upon appeal, he
charges that the evidence was not sufficient to sustain that
verdict.
When a challenge is made to the sufficiency of the evidence
argues that as a sole shareholder and director, Charles could
have had the meetings "in his head"; i.e., all activity that
Charles took necessarily was the product of a "meeting" and
necessarily had the unanimous support of the board of directors
(of which Charles was the only member). As Williams argues, when
Charles turned in resolutions to the banks indicating that a
meeting had taken place and that Williams was the secretary and
treasurer, those assertions were -- by virtue of the fact that
Charles said so -- true. Similarly, Williams relies on Charles's
statement that he did not intend to submit false documents;
hence, as Williams argues, Charles must have believed that
Williams was the secretary and treasurer.
The problem, however, came when Charles testified, in no
uncertain terms, that no such meeting occurred and that Williams
never was the secretary or treasurer of Southern Coffee.
Although it may appear somewhat unfair for Charles now to say
that these assertions were untrue, his is the only viable
interpretation of what he meant and what actually occurred in a
company where he was the sole shareholder and the sole director.
23
As previously mentioned, in the light of our holding that
the statements at issue are not material, we need not determine
whether the statements were actually false or whether Williams
knew they were false.
12
supporting a criminal conviction, the appellate court views the
evidence in the light most favorable to the government, and with
all reasonable inferences and credibility choices drawn in support
of the jury's verdict.24 The question is whether a reasonable jury,
as the final arbiter of the weight of the evidence, could find that
the evidence establishes Williams's guilt beyond a reasonable
doubt.
To sustain a conviction for conspiracy, the government had to
prove that: (1) two or more persons agreed to commit a crime; (2)
the defendant knew of the agreement and voluntarily became a part
of it; and (3) at least one of the conspirators committed an act in
furtherance for the conspiracy.25 Williams contends that the
government failed to meet its burden with respect to the second
prong. He argues that the evidence is insufficient to show that he
possessed the requisite knowledge of the conspiracy and voluntarily
participated in it.
Although we will not conjecture as to what weight the jury
accorded any particular piece of evidence, some evidence stands out
for its probative worth. For example, the government demonstrated
that on at least two occasions discussions took place in Williams's
24
Glasser v. United States, 315 U.S. 60, 80, 86 L. Ed. 680
(1942); United States v. Kington, 875 F.2d 1091, 1100 (5th Cir.),
reh'g denied, 878 F.2d 815 (1989).
25
United States v. Frydenlund, 990 F.2d 822, 825 (5th Cir.),
cert. denied, 114 S. Ct. 337 (1993); United States v. Chaney, 964
F.2d 437, 449 (5th Cir. 1992). It is important to note that
Williams himself need not have committed an overt act in
furtherance of the conspiracy so long as one of his co-
conspirators did. Chaney, 964 F.2d at 449.
13
presence outlining the conspiracy to use the pension fund
certificates as collateral for the loans. The pension fund
certificates were identified specifically as Longshoreman Pension
Fund CD's. In addition, the government properly introduced
circumstantial evidence of guilt, including the defendant's
presence at discussions and associations with the co-conspirators.26
The government cast doubt on Williams's contention that he
never knew that the pension fund CD's were pledged as collateral
for the loans. Williams maintained close business relationships
with his co-defendants. He knew that Southern Coffee was in some
financial trouble, for he had lent Eugene Sykes large sums of money
to keep the company afloat. Williams knew that Eugene needed
$435,000 to procure the marble cutting business (the purchase price
of $460,000 less the $25,000 that Williams had lent him).
Accordingly, Williams knew that Eugene would be going to
Mississippi banks for that money. Similarly, the certificates were
used to secure loans well in excess of the $460,000 that Williams
knew was needed for the marble cutting venture. In fact, the loan
from People's Bank alone amounted to $600,000, leaving an
unexplained surplus.
Williams is a trained attorney and no stranger to the world of
business. A reasonable jury could have concluded that Williams
26
United States v. Magee, 821 F.2d 234, 239 (5th Cir. 1987).
Note, however, that mere presence alone does not establish
knowledge or participation. United States v. Espinoza-Seanez,
862 F.2d 526, 537 (5th Cir. 1988), reh'g denied, 867 F.2d 1428
(1989).
14
understood the intent of his friends and, more, knew that Eugene
had appropriated the pension funds's CD's to finance his various
ventures.
Although Williams's false statements on the bank forms were
not material, he was by no means an innocent bystander in the
overall criminal scheme. While his co-defendants plotted the
enterprise, Williams helped them achieve their aims. Williams did
introduce some exculpatory testimony, but the jury apparently
elected to accord it little credibility.27 While no one piece of
evidence may be patently sufficient, in the aggregate the quantum
of evidence introduced was enough to allow a jury to reach a guilty
verdict.28 We affirm his conspiracy conviction.
V. The Speedy Trial Act
The Speedy Trial Act ("the Act")29 requires that a federal
criminal defendant be tried within seventy days of his indictment
or appearance in front of a judicial officer, whichever comes
later.30 If the defendant is not brought to trial within this
statutory period, the indictment must be dismissed.31 Williams
charges that the district court erred in denying his motion to
27
See United States v. Barksdale-Contreras, 972 F.2d 111,
114 (5th Cir. 1992), cert. denied, 113 S. Ct. 1060 (1993) (the
jury is the final arbiter of credibility).
28
See Id.
29
18 U.S.C. § 3161, et seq.
30
Id. § 3161(c)(1).
31
Id. § 3162(a)(2).
15
dismiss which he based, in part, on an allegation that the court
violated the Act's provisions.32
We will not belabor the Speedy Trial Act issue in the light of
the detailed opinion entered by the district judge. The Act
provides for a number of "exclusions" in which time that passes is
not charged against the 70-day clock.33 The district court added
up the excludable time and concluded that fewer than 70 days had
expired. We agree with that conclusion.
Williams first charges that the district judge improperly
tolled the clock by granting continuances after two of the
superseding indictments.34 He also complains that the district
judge granted continuances without articulating his reasons for
doing so as mandated by § 3161(h)(8) of the Act. That section
permits a judge to toll the clock if, in that judge's estimation,
"the ends of justice served by taking such action outweigh the best
interest of the public and the defendant in a speedy trial."35 The
Act reflects, in part, a belief that the boundaries of fairness
32
The burden is, at all times, on the defendant to prove
that such dismissal is appropriate. 18 U.S.C. § 3162(a)(2).
33
Id. § 3161(h).
34
When a superseding indictment is filed prior to the
dismissal of the first indictment, as happened three times in the
present matter, the original 70-day clock remains the appropriate
measure. Id. § 3161(h)(6). The defendant devotes much space to
this simple proposition which does not appear to be in dispute.
Moreover, because the superseding indictments retained some of
the original charges, motions pending on the original charges
tolled the running of the clock for new charges in the
superseding indictment.
35
Id. § 3161(h)(8)(A).
16
affect not only the maximum time that a criminal defendant may be
held without trial, but a minimum time prior to which it would be
unfair to bring him to trial.36
The question presented, then, is whether these continuances
were within the "ends of justice" and, further, whether the judge's
failure to articulate reasons for the continuances constitutes
reversible error. The court's reasons undoubtedly were those
outlined by the government in its motion: the plea negotiations
with the defendant had failed and the government had new evidence
to submit in conjunction with a superseding indictment. The plea
negotiations favored both sides; we cannot say upon review that
justice was not served by granting a continuance after those
negotiations broke down. We uphold the court's determination that
the clock was properly tolled in these circumstances.
As for the judge's failure to articulate the bases for the
continuances, we look to the two-fold purpose of the articulation
requirement: It ensures first, that the trial court will carefully
consider all relevant factors and, second, that a clear record will
exist for appeal.37 Although § 3161(h)(8)(A) requires an "ends of
justice analysis" reflected in the record for every continuance
granted, we explained in United States v. Eakes38 that reversal is
36
Id. § 3161(c)(2).
37
United States v. Rush, 738 F.2d 497, 507 (1st Cir. 1984),
cert. denied, 470 U.S. 1004 (1985). Although the reasons for an
"ends of justice" continuance must be articulated, they need not
be articulated at the time the continuance is granted. Id.
38
783 F.2d 499 (5th Cir.), cert. denied, 477 U.S. 906
(1986).
17
not in order when the reasons for a continuance are patent.
We decline to apply a hypertechnical construction to the
language of the Act in this case where the judge clearly
granted the continuance for the benefit of and at the
indirect request of the defendant who complains of that
grant.39
In the case at hand, the district court's reasons for granting the
continuance are clear and justified. Accordingly, we will not
reverse because the court failed to articulate its reasons.
Although we uphold the district court's determination, we encourage
any court confronting this issue to err on the side of caution and
explain for the record how the continuance serves the ends of
justice.
Williams next complains that the district court erred when it
determined that the defendant had motions outstanding after March
4, 1992. The Act excludes from calculation the period that runs
from the time when pretrial motions start pending until the court
resolves them.40 A motion under advisement is excludable up to
thirty days.41 If the court has several motions on which it must
rule, however, this time period can be reasonably extended.42
Similarly, the time between the filing of a motion and the hearing
on that motion is to be excluded, even if the time lapse was not
39
Id. at 504.
40
18 U.S.C. § 3161(h)(1)(f).
41
Id. § 3161(h)(1)(J).
42
United States v. Tibboel, 753 F.2d 608, 612 (7th Cir.
1984).
18
reasonable.43
Specifically, Williams argues that the period running from
March 4, 1992, to July 28, 1992 (146 days in all) should be counted
against the clock. The former date, he argues, marks the last day
on which he still had a motion pending (his motion for severance,
which ultimately was denied). The latter date marks the next time
he filed a motion, once again tolling the clock. The district
court, however, specifically rejected this argument. The court
stated, unlike the characterization Williams would give, that
Williams still had a number of pretrial motions pending and
undecided at the time the motion for severance was denied.44 We
will not disturb the district court's explicit conclusion that
those motions remained unresolved beyond the disposition of the
defendant's motion to sever, in the absence of some indication to
the contrary.
Although the superseding indictments and multiple defendants
in this case complicate a Speedy Trial Act analysis, we hold that
the district court's conclusion was correct; fewer than 70 non-
excludable days ticked off the Speedy Trial clock.
43
Henderson v. United States, 476 U.S. 321, 329-30, 90
L. Ed. 2d 299, 308 (1986).
44
By the district court's calculations, March 4 really had
no significance, for, although the central motion to sever had
been resolved, the other outstanding motions continued to toll
the clock. See United States v. McCusker, 936 F.2d 781, 783 (5th
Cir. 1991). The origins of the dispute are clear: the judge who
oversaw Williams's motion to sever gave conflicting indications
regarding the finality of his judgment on all outstanding
motions.
19
VI. Conclusion
For the foregoing reasons, we AFFIRM Williams's conviction for
conspiracy under 18 U.S.C. § 371; we VACATE his convictions 18
U.S.C. § 1014; and we REMAND this matter to the district court for
re-sentencing in the light of this result.
20