U.S. v. Hoglund, 97-6167

Decision Date18 May 1999
Docket NumberNo. 97-6167,97-6167
Citation178 F.3d 410
PartiesUNITED STATES of America, Plaintiff-Appellee, v. David L. HOGLUND, Defendant-Appellant.
CourtU.S. Court of Appeals — Sixth Circuit

Stephen B. Shankman (argued), Doris A. Randle-Holt (briefed), Office of the Federal Public Defender for the Western District of Tennessee, Memphis, Tennessee, for Defendant-Appellant.

Carroll L. Andre, III, Assistant U.S. Attorney (argued and briefed), Memphis, Tennessee, for Plaintiff-Appellee.

Before: JONES, RYAN, and BATCHELDER, Circuit Judges.

OPINION

RYAN, Circuit Judge.

David L. Hoglund appeals from his conviction and sentence for bank fraud, in violation of 18 U.S.C. § 1344. Hoglund is an attorney who settled his clients' cases without their permission, forged their signatures on the settlement checks, and deposited the money into his own account. As part of his sentence, Hoglund was ordered to pay $48,333.34 in restitution to his victims. His appeal raises two issues: whether the district court erred (1) when it failed to instruct the jury that the government must prove that Hoglund's conduct created a risk of loss for the bank; and (2) when it did not deduct from the restitution amount the one-third contingent attorney fee pursuant to Hoglund's contract with his clients. We hold that the district court committed no error, and therefore, we affirm the conviction and sentence.

I.

On April 9, 1997, a jury found Hoglund guilty of five counts of bank fraud. The general scheme underlying the five counts was as follows: Hoglund filed personal injury lawsuits on behalf of at least three different clients. In each case, Hoglund and the client executed a contingency fee agreement, whereby Hoglund would receive one-third of any money the client received, whether by settlement or verdict. Hoglund agreed with the defendant in each case to settle the claim without first asking for the client's permission. If his client asked him about the case, Hoglund would represent that the case was still pending. When Hoglund received a settlement check, which was payable to both Hoglund and the client, he forged his client's signature, and deposited the check into his own account at one of two banks, First Tennessee Bank or National Bank of Commerce.

The settlement amounts were as follows: $39,000 settlement for Thurman DeShazer; $4,000 for Edward Yarbrough; and three settlements for Marty Neese of, $3,500, $2,000, and $2,500. When Neese discovered the scam, she turned to the bank to recover her money, but she demanded only two-thirds of each settlement amount, apparently conceding to Hoglund the one-third contingency fee he would have received if the cases had been settled with Neese's permission.

At the close of Hoglund's trial, the court and the attorneys discussed the court's instructions to the jury. At one point, Hoglund requested an instruction that in order to convict, the jury must find that the bank in question must have been placed at a "risk of loss." However, out of the jurors' hearing, the court stated that with regard to the defendant's intent, it is "sufficient that the government establishes that the defendant intended to cause actual or potential loss of the financial institution." The court then stated: "I think that's the way the risk of loss appropriately fits into the case. Is there any objection to that?" Defense counsel replied, "None from the defense."

During the actual charge to the jury, the court stated that it is not necessary for the government to prove that anyone lost money. It said: "In this connection it is sufficient if the government establishes that the defendant intended to cause actual or potential loss to the financial institution." The defendant now claims this instruction was error. We address this issue below.

At the sentencing hearing, the defendant objected to having the full amount of the settlement checks included in the amount of restitution. He argued that the one-third contingency fee his clients agreed to pay him should be deducted from the amount he is required to pay. The district court disagreed, stating:

I don't think under these circumstances that one can subtract the one-third, and the reason is because whatever agreement Mr. Hoglund had with his client for him to receive a fee, surely didn't contemplate that he would receive that fee as a result of settling the case without their authorization. So I think we have to say that the fee agreement doesn't govern this issue because there hasn't been any compliance with the fee agreement on the part of Mr. Hoglund.

This appeal followed.

II.
A.

We must first decide whether the district court's jury instruction regarding the requisite intent to defraud was error. We review a jury instruction to determine "whether the charge, taken as a whole, fairly and adequately submits the issues and applicable law to the jury." United States v. Martin, 740 F.2d 1352, 1361 (6th Cir.1984). However, in this case, the defendant did not object to the jury instructions; therefore, we review the instructions for plain error. See United States v. Rogers, 118 F.3d 466, 471 (6th Cir.1997). We have discretion to act upon plain error when we find an error that affected the substantial rights of a party and conclude that a manifest miscarriage of justice would result if the error were not corrected. See id. at 471-72.

The three elements required for a conviction for bank fraud under section 1344(1) are: (1) that the defendant knowingly executed or attempted to execute a scheme to defraud a financial institution; (2) that the defendant did so with the intent to defraud; and (3) that the financial institution was insured by the FDIC. See, e.g., United States v. Brandon, 17 F.3d 409, 424-25 (1st Cir.1994).

The question here is whether the government must also prove that defendant exposed a bank to a risk of loss as part of the "scheme to defraud" element.

This is an issue of first impression for this court. The Second Circuit, in United States v. Jacobs, 117 F.3d 82 (2d Cir.1997), stated that "[o]ne element required for a conviction of bank fraud is actual loss or exposure to 'risk of loss.' " Id. at 91 (citations omitted). Similarly, the Fifth Circuit, in United States v. Lemons, 941 F.2d 309 (5th Cir.1991), stated that "the government had to prove only that at least one of the banks was at risk, not that an actual loss was incurred." Id. at 315-16. The inference from Lemons is that, while proof of an actual loss is not required, proof of a risk of loss is.

The Ninth Circuit, in United States v. Wolfswinkel, 44 F.3d 782 (9th Cir.1995), discussed the issue in more detail without deciding the point. There, the district court did instruct the jury, pursuant to the defendant's request, that the prosecution was required to show that the defendant's fraud scheme placed at least one bank at a risk of loss. See id. at 785. The government contended on appeal that risk of loss is not an essential element of the crime, but rather, is only one of...

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    ...'whether the charge, taken as a whole, fairly and adequately submits the issues and applicable law to the jury.'" United States v. Hoglund, 178 F.3d 410, 412 (6th Cir. 1999) (quoting United States v. Martin, 740 F.2d 1352, 1361 (6th Cir. 1984)). To obtain a conviction for bank fraud under 1......
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