United States v. Devoll ( 1994 )

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