U.S. v. Molinaro

• Decision Date: 07 December 1992
• Docket Number: Nos. 90-50131,90-50133 and 90-50375,s. 90-50131
• Citation: 11 F.3d 853
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John Lee MOLINARO, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Donald P. MANGANO, Sr., Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Donald P. MANGANO, Sr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 853

11 F.3d 853

UNITED STATES of America, Plaintiff-Appellee, v. John Lee MOLINARO, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Donald P. MANGANO, Sr., Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Donald P. MANGANO, Sr., Defendant-Appellant.

Nos. 90-50131, 90-50133 and 90-50375.

United States Court of Appeals Ninth Circuit.

Submitted on the Briefs Dec. 7, 1992 ^* in No. 90-50131.

Argued and Submitted Dec. 7, 1992 in Nos. 90-50133 and 90-50375.

Submission Vacated Dec. 16, 1992.

Resubmitted April 26, 1993.

Decided Nov. 17, 1993.

John Lee Molinaro, pro se.

William J. Genego, Santa Monica, CA, for defendant-appellant Mangano.

Steven E. Zipperstein, U.S. Dept. of Justice, Washington, DC, for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California.

Before: BROWNING, SCHROEDER and FLETCHER, Circuit Judges.

JAMES R. BROWNING, Circuit Judge:

John Molinaro and Donald Mangano appeal their convictions of bank fraud in violation of 18 U.S.C. Sec. 1344 and conspiracy to defraud the United States in violation of 18 U.S.C. Sec. 371. Molinaro also appeals his conviction of making false entries in the books and records of a savings and loan association in violation of 18 U.S.C. Sec. 1006. ¹

I. Factual Background

The charges arose out of several transactions involving the Ramona Savings and Loan, a federally insured savings and loan owned by appellant Molinaro.

The government's principal claim is that appellants concealed Mangano's role as the purchaser of 173 units in Cherokee Village, a failing 180 unit condominium project, sold to Mangano by Ramona. The government claimed appellants concealed the fact that Mangano was the purchaser to avoid scrutiny of the transaction by the Federal Home Loan Bank Board, which was on the verge of taking over Ramona because of its precarious financial position resulting from Ramona's inability to sell the condominiums in which it had invested over $25,000,000. The federal regulators had expressed concern over Ramona's heavy concentration of assets in real estate development projects. The sale of the condominiums at a stated price of $29 million allowed Ramona to show a paper profit of $4,000,000 and temporarily appease the Board. ²

Mangano had been a fifty percent owner of Ramona until shortly before the sale. ³ The parties were understandably concerned that the Board would closely scrutinize the transaction and its impact on Ramona's financial condition if the Board were aware of the purchaser's identity.

To conceal Mangano's participation, the Cherokee Village units were sold to three Subchapter S corporations formed by three individuals, Dariano, DeCarlo and Calvello, to act as straw buyers. Mangano then purchased the corporations from the three individuals. All documents submitted to the bank were signed by Dariano, DeCarlo and Calvello as officers and directors of the three corporations. Initially, 136 of the Cherokee Village units were transferred to Mangano in this fashion. The remaining units were transferred to the corporations three months later. Although Mangano then owned all the stock of the "S" corporations, none of the documents submitted to the bank at the time of the second sale reflected that fact. DeCarlo, Dariano and Calvello had remained officers of the corporations, and Patricia Mangano, Mangano's daughter-in-law and a Ramona employee, signed their names to the documents.

In addition to concealing Mangano's role in the sale of the Cherokee Village units, the government alleged that appellants fraudulently caused Ramona to pay $287,000 in street improvement bond assessments due on five parcels of Palm Springs land. Mangano had transferred this land to the three "S" corporations to serve as collateral for the loans made to finance the first sale of condominiums and as a means to pay off the straw purchasers. Like the records submitted to the bank in connection with the sale, no documents relating to the payment of the bond assessments revealed Mangano's interest in the property.

The other bank fraud charges involve steps taken to facilitate regulatory approval of the sale of Molinaro's entire interest in Ramona to Donald Stump by concealing the fact that Stump owed Ramona $10 million, representing 100% financing by Ramona of the purchase of Rancho Cielo by Stump less than six months before he and Molinaro opened negotiations for Stump's purchase of Ramona. Around the time of the negotiations, Stump quitclaimed Rancho Cielo to Robert Rumney, Inc., a corporation owned by Mangano's friend, Robert Rumney. The government alleged that to pay Rumney for his participation, appellants fraudulently induced Ramona to extend the term of a prior $40,000 loan to Rumney for an additional three years and to pay Rumney $2,000 for "consulting services" he had not performed.

The remaining charges involve false entries in Ramona's books and records in connection with Mangano's sale of all 173 Cherokee Village units back to Ramona. The indictment alleged the false entries were intended to make the transactions appear profitable and forestall the possible takeover of Ramona by the Board.

The Board began an audit of Ramona in June 1986. The federal regulators took over the bank the following September, after discovering that the various transactions involving Cherokee Village had caused Ramona's net worth to drop below zero. Appellants were charged in a thirty-three count indictment with bank fraud, conspiracy to defraud the United States and making false entries in Ramona's books and records.

After a four-month trial, Molinaro was convicted on all counts and Mangano was convicted on counts 1 through 31. ⁴ The district court sentenced Mangano to three consecutive five-year terms on the first three counts. The court suspended the imposition of sentence on the remaining counts and imposed five years probation. Molinaro received a similar sentence, except that the court imposed only a two-year term on the third count.

II. Bank Fraud

Appellants challenge their convictions on the bank fraud counts on three grounds: (1) the evidence was insufficient, (2) the proof at trial constituted an amendment to or variance from the indictment, and (3) the counts were multiplicitous.

A. Sufficiency of the Evidence ⁵

Mangano argues that because he fully disclosed his participation in the transactions to Ramona's authorized representatives, the government failed to prove he defrauded Ramona. However, "[i]t is the financial institution itself--not its officers or agents--that is the victim of the fraud the statute proscribes." United States v. Saks, 964 F.2d 1514, 1518 (5th Cir.1992) (rejecting defendants' claim that failure to disclose a third party would be the beneficiary of a loan was not bank fraud because the banks' financial officers were aware of the fact).

Mangano argues there is no evidence he directed Ramona's representatives to conceal information from Ramona. There was evidence, however, from which a rational juror could infer Mangano was responsible for the various deceptions undertaken to defraud. Mangano was the architect of the transactions, and personally structured them in such a way that documents submitted to Ramona did not reveal his role as purchaser. ⁶ Marks, Ramona's loan officer, testified he expressed concern to Mangano about DeCarlo's, Dariano's and Calvello's ability to repay the loans and Mangano told him it was none of his business. The prosecution presented strong circumstantial evidence that the individuals who caused Ramona to pay the bond assessments and Robert Rumney's "consulting fee" did so on Mangano's instructions. ⁷

Mangano argues the government offered no proof of his intent to defraud. The structure of the transactions alone suggests an intent to defraud. Moreover, Calvello testified Mangano told him it was necessary to conceal Mangano's participation in the sale because federal regulators would "frown" on the transaction. Mangano argues he had no motive to conceal his role in the sale because he no longer owned stock in Ramona and therefore Board approval was no longer required. However, Mangano sold his fifty percent interest in Ramona only a few months earlier, and clearly his purchase of one of Ramona's most substantial assets shortly thereafter would excite the Board's interest and invite closer scrutiny of Ramona's solvency. ⁸

B. Multiplicity

Appellants argue each of counts 1 through 30 purporting to charge a violation of the bank fraud statute charges a step in the same scheme to defraud and are therefore multiplicitous. ⁹

Under the heading "The Scheme," the indictment alleges that beginning in September, 1986, appellants and others "knowingly executed and attempted to execute a scheme to defraud Ramona, its officers, directors, depositors and investors, and to obtain money and property under the custody and control of Ramona by false and fraudulent pretenses and representations." The indictment continues, "the scheme involved a series of sham transactions in October, 1985 and January, 1986 whereby Molinaro and Mangano, without the knowledge or approval of Ramona's officers and directors, caused Ramona to extend loans in the total amount of approximately $29,360,000 to straw borrowers for the purpose of purchasing 173 Cherokee Village units, which were subsequently transferred to defendant Mangano. The scheme enabled defendant Mangano to secretly acquire Cherokee Village, and allowed defendant Molinaro to placate the Board by taking the Cherokee Village investment off Ramona's books." The scheme also "enabled appellants to make Ramona appear to be operating at a profit so that Ramona could be sold for $7,200,000, and defendants Molinaro and Mangano both could benefit from the proceeds of the sale."

The indictment then alleges the details of the scheme under the following headings: "OCTOBER, 1985 TRANSFERS" (describing the steps...