U.S. v. Neder

• Decision Date: 19 March 1998
• Docket Number: No. 92-2929,92-2929
• Citation: 136 F.3d 1459
• Parties: -1367, 67 USLW 3479, 98-1 USTC P 50,302, 11 Fla. L. Weekly Fed. C 1139 UNITED STATES of America, Plaintiff-Appellee, v. Ellis E. NEDER, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1459

136 F.3d 1459

81 A.F.T.R.2d 98-1367, 67 USLW 3479,

98-1 USTC P 50,302,

11 Fla. L. Weekly Fed. C 1139

UNITED STATES of America, Plaintiff-Appellee, v. Ellis E. NEDER, Jr., Defendant-Appellant.

No. 92-2929.

United States Court of Appeals, Eleventh Circuit.

March 19, 1998.

Noel G. Lawrence, Jacksonville, FL, for Defendant-Appellant.

Stephen Kunz, Charles Truncale, Jacksonville, FL, Tamra Phipps, Asst. U.S. Atty., Tampa, FL, for Plaintiff-Appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before TJOFLAT and HULL, Circuit Judges, and KRAVITCH, Senior Circuit Judge.

HULL, Circuit Judge:

Appellant Ellis E. Neder, Jr. appeals his convictions on various false statement, fraud, conspiracy, and racketeering offenses. Neder contends that the district court erred in failing to submit the issue of materiality to the jury with respect to his fraud and false statement offenses. ¹ After review, we affirm.

I. FACTS

A. Neder's Fraudulent Activities

Between 1984 and 1988, Neder engaged in fraudulent activities related to land acquisition, land development, and construction projects. Through his schemes, Neder fraudulently obtained over $30 million in loans from various lending institutions. Neder deposited approximately $7 million in profits on these transactions into his personal account. Testimony at trial revealed that none of the loans would have been approved had the lending institutions been aware of the true nature of the transactions. Neder later defaulted on these loans.

Neder also failed to report income of $1,372,360 in 1985 and $4,355,766 in 1986. Neder does not contest that he did not report this money as income or profits from one of his schemes. Instead, Neder testified that he was advised that he was not required to report this money as income.

B. The Court's Jury Charge

Neder was indicted for mail fraud, wire fraud, bank fraud, tax fraud, and making illegal false statements. The indictment contained materiality as an element of many of these offenses. Neder and the government submitted proposed jury instructions relating to the elements of the charged offenses. The district court's final jury charge included "materiality" as an element of the fraud and false statement offenses. However, the district court instructed the jury that if it found beyond a reasonable doubt that the alleged statements, representations, or promises were false, it need not consider whether they were material because materiality was not an issue for the jury to decide. The court entered its own findings regarding materiality outside the presence of the jury. Neder timely objected to the court's findings and its failure to submit the issue of materiality to the jury.

II. DISCUSSION

We examine (a) whether materiality is an element of the false statement, wire fraud, mail fraud, bank fraud, and tax fraud offenses; ² and (b) whether the district court committed reversible error in not submitting the materiality issues to the jury.

A. False Statements: 18 U.S.C. § 1014

Two recent Supreme Court decisions begin our analysis. In United States v. Gaudin, 515 U.S. 506, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995), the Supreme Court assumed materiality to be an element under 18 U.S.C. § 1001, which proscribes certain false statements, and held that the issue of materiality under § 1001 is for the jury, not the judge, to decide. The district judge in Gaudin erroneously failed to submit the materiality issue to the jury. Id. at 523, 115 S.Ct. at 2320. We have since referred to this type of error as a Gaudin error. See, e.g., United States v. Fern, 117 F.3d 1298, 1307 (11th Cir.1997).

Two years later in United States v. Wells, 519 U.S. 482, 117 S.Ct. 921, 137 L.Ed.2d 107 (1997), the Supreme Court held that materiality is not an element of the false statement offense in 18 U.S.C. § 1014. Thus, the Court concluded that the district court had not erred in not submitting the question of materiality to the jury. Synthesizing Gaudin and Wells, if materiality is not an element, failing to submit the issue to the jury is not error; but if materiality is an element, a court errs in failing to submit the issue to the jury.

In deciding in Wells that materiality is not an element under § 1014, the Supreme Court focused on the language of § 1014, which states Whoever knowingly makes any false statement or report ... for the purpose of influencing in any way the action of ... any institution the accounts of which are insured by the Federal Deposit Insurance Corporation ... shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both....

18 U.S.C. § 1014. The Supreme Court emphasized that the text of § 1014 does not mention materiality:

Nowhere does [§ 1014] further say that a material fact must be the subject of the false statement or so much as mention materiality. To the contrary, its terms cover "any" false statement that meets the other requirements in the statute, and the term "false statement" carries no general suggestion of influential significance....

Wells, 519 U.S. at ----, 117 S.Ct. at 927.

The Supreme Court also acknowledged the presumption that "Congress incorporates the common-law meaning of the terms it uses if those 'terms have accumulated settled meaning under ... the common law.' " Id. (quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322, 112 S.Ct. 1344, 1348, 117 L.Ed.2d 581 (1992)). However, the Supreme Court concluded that the respondents had failed to make any showing that the term "false statement" acquired any implication of materiality at common law. Id.

Finally, the Supreme Court determined that the legislative history of § 1014 supported its natural reading. Id. at ----, 117 S.Ct. at 928. Of particular significance was the fact that "[w]hen Congress originally enacted § 1014 as part of its recodification of the federal criminal code in 1948, it explicitly included materiality in other provisions involving false representations." Id. Moreover, "of the 13 provisions brought together by § 1014, 10 had previously contained no express materiality provision and received none in the recodification, while 3 of the 13 had contained express materiality requirements and lost them in the course of consolidation." Id. The Court concluded that "[t]he most likely inference in these circumstances is that Congress deliberately dropped the term 'materiality' without intending materiality to be an element of § 1014." Id.

In this case, Neder's § 1014 conviction is controlled by Wells's holding that materiality is not an element under § 1014. Therefore, the district court did not commit a Gaudin error in failing to submit the issue of materiality to the jury because materiality is not an element of a § 1014 offense. ³

B. Mail Fraud And Wire Fraud: 18 U.S.C. §§ 1341 And 1343

We now turn to whether materiality is an element under §§ 1341 and 1343. As an initial matter, we examine the pre-Wells decisions of this court regarding the elements of §§ 1341 (mail fraud) and 1343 (wire fraud). Our decisions list the elements of these offenses without listing materiality as one of the elements. See United States v. Pitt, 717 F.2d 1334, 1339-40 (11th Cir.1983) (listing elements of wire fraud without including materiality); United States v. Scott, 701 F.2d 1340, 1343 (11th Cir.1983) (listing elements of mail fraud without including materiality). However, no cases directly hold that materiality is not an element under §§ 1341 and 1343.

Therefore, in determining whether materiality is an element under §§ 1341 and 1343, we begin with the Supreme Court's admonition to examine the statutes' language. Section 1341 proscribes the act or acts of using the mails to execute "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises...." 18 U.S.C. § 1341; see also United States v. Ethridge, 948 F.2d 1215, 1216 (11th Cir.1991). The text of § 1343 is substantially similar to § 1341 and states as follows:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined or imprisoned ... or both.

18 U.S.C. § 1343.

Sections 1341 and 1343 are similar to § 1014 in several respects. Foremost, §§ 1341 and 1343 do not contain the word "material." Further, § 1341 was enacted as part of the recodification of the federal criminal code in 1948, and § 1343 was patterned after § 1341. Based on these factors considered in Wells, we conclude that materiality is not an element of fraud offenses in §§ 1341 and 1343. ⁴ As discussed below, we reach the same conclusion regarding § 1344.

C. Bank Fraud: 18 U.S.C. § 1344

In United States v. Goldsmith, 109 F.3d 714 (11th Cir.1997), this court lists materiality as an element under § 1344. Id. at 715. However, Goldsmith and the cases on which it relies do not directly address whether materiality is an element under § 1344. ⁵ For example, after listing materiality as an element under one part of § 1344, the Goldsmith panel did not mention the word "material" in the remainder of its opinion because materiality was not in issue. Although decided after Wells, Goldsmith does not re-examine the issue of materiality in light of Wells. Instead, Goldsmith follows this court's pre-Wells decisions which also have not been re-examined in light of Wells.

In addition, in its discussion of the relevant issues, the Goldsmith panel acknowledged that § 1344 has two parts, namely § 1344(a)(1) and (a)(2), ⁶ and that if an indictment charged a defendant under both parts, the trial court could submit the case to the jury so...