US v. Gregg, 98-2347.

• Decision Date: 02 July 1999
• Docket Number: No. 98-2347.,98-2347.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Thomas V. GREGG, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

179 F.3d 1312

UNITED STATES of America, Plaintiff-Appellee, v. Thomas V. GREGG, Defendant-Appellant.

No. 98-2347.

United States Court of Appeals, Eleventh Circuit.

July 2, 1999.

Anthony Martinez, Asst. Fed. Pub. Defender, Tampa, FL, James T. Skuthan, Asst. Fed. Pub. Defender, Orlando, FL, for Defendant-Appellant.

Tamra Phipps, David Rhodes, Asst. U.S. Attys., Tampa, FL, for Plaintiff-Appellee.

Before HULL and MARCUS, Circuit Judges, and RONEY, Senior Circuit Judge.

RONEY, Senior Circuit Judge:

Thomas Vance Gregg appeals his conviction and 41-month sentence for bank fraud (18 U.S.C. § 1344); theft of bank funds, (18 U.S.C. § 2113(b)); and money laundering, (18 U.S.C. § 1957). He argues insufficiency of the evidence on (1) the bank fraud conviction and (2) the money laundering conviction; and two sentencing issues: (3) improper enhancement for obstructing justice, and (4) failure to consider his ability to pay in ordering restitution. We affirm on all issues.

The case involved a fire insurance claim settlement check in which Gregg and other parties had an interest and which Gregg converted to his own use. Gregg was the president and sole shareholder of TEY Productions, Inc. ("TEY"). TEY purchased rental property from Mr. and Mrs. Walter J. Germack. The Germacks retained a mortgage interest in the property through a wrap-around mortgage. First Union National Bank held the first mortgage on the property, and DJC Properties held a third mortgage as collateral on an unrelated loan. The Germacks filed a foreclosure suit against TEY and Gregg. While foreclosure proceedings were pending, the property caught fire and sustained considerable damage. TEY's insurance carrier sent a casualty-loss check to Gregg in the amount of $261,000.00 in settlement of TEY's claim made payable to TEY, First Union, the Germacks, DJC Properties, and Tutwiler & Associates, the public adjuster that negotiated the claim on behalf of Gregg. Gregg caused the settlement check to be deposited in TEY's SunTrust Bank account, with only the endorsements of TEY, First Union, and Tutwiler. Gregg withdrew funds for his own use from the insurance proceeds deposited in the account. The bank suffered a $208,000.00 loss, the amount it had to pay to the Germacks and DJC Properties who had not endorsed the check but who had an interest in the funds from the settlement check. Gregg was charged with bank fraud, theft of bank funds, and money laundering.

1. Sufficiency of Evidence on Bank Fraud Conviction

Gregg argues that the government failed to prove that the false representation he made to the bank was "material." A person commits the crime of bank fraud who "knowingly executes, or attempts to execute, a scheme ... to defraud a financial institution ... by means of false or fraudulent pretenses, representations or promises." 18 U.S.C. § 1344.

There is no doubt in the law now that the false representation in a bank fraud case has to be "material." The trial court instructed the jury that the government had to prove that Gregg made a "material" misrepresentation. After the trial in this case, we had held to the contrary in United States v. Neder, 136 F.3d 1459 (11th Cir.1998). After this appeal was argued before us, however, the Supreme Court reversed our decision in Neder and held that "materiality of falsehood is an element of the ... bank fraud statute." United States v. Neder, (June 10, 1999). Since the jury was properly instructed, the only issue before us is whether there is sufficient evidence to support the jury verdict on this fact.

The evidence, viewed in the light most favorable to the government, shows that the bank manager told Gregg he would need the endorsement of and signature guarantees for every payee before the settlement check could be deposited. Nevertheless, Gregg presented the settlement check without all the requisite endorsements at the bank's drive-through window while the manager was out of the office, and told the teller that the bank manager had approved its deposit. According to the bank manager's testimony, he inspected the check later that day and mistakenly assumed that all endorsements were on the check. Gregg argues that his statement to the teller that the bank manager had approved the check was not material because the teller did not rely on Gregg's false assurances to deposit the check, but that in fact the check was finally deposited to his account only after actual approval by the manager.

Gregg's argument fails for two reasons: First, reliance is not necessary to make the false statement material. "In general, a false statement is material if it has `a natural tendency to influence, or is capable of influencing, the decision of the decision making body to which it was addressed.'" Neder, (quoting United States v. Gaudin, 515 U.S. 506, 509, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995)). In other words, the statement need not have exerted actual influence, so long as it was intended to do so and had the capacity do so. See, e.g. United States v. Lopez, 728 F.2d 1359, 1362 (11th Cir.)(discussing whether false statement material under 18 U.S.C. § 1001), cert denied, 469 U.S. 828, 105 S.Ct. 112, 83 L.Ed.2d 56 (1984).

Second, the evidence would indicate the bank manager at least partially relied on Gregg's representation. The manager testified that he thought the check had all the endorsements, as he had instructed Gregg and as was implicit in Gregg's representation that the manager had approved the deposit, and that he never intended to approve the deposit with two endorsements missing. Because of the number of endorsements on the back of the check and the bank guaranty of endorsements on it, there was some difficulty in discerning exactly which endorsements were there and which were not. The evidence is sufficient to support Gregg's bank fraud conviction.

2. Sufficiency of Evidence on Money Laundering Conviction

Gregg was convicted on two counts of money laundering based on the withdrawal from his bank account of the proceeds from the insurance check. Money laundering occurs when one "knowingly engages or attempts to engage in a monetary transaction in criminally derived property." 18 U.S.C. § 1957. The withdrawal of money from a bank account is a "monetary transaction." 18 U.S.C. § 1957(f)(1). The government had to prove, however, that before that withdrawal, the proceeds in that account were "obtained from a criminal offense." 18 U.S.C. § 1957(f)(2). Thus, the bank fraud offense had to be a completed criminal offense when the proceeds went into Gregg's account.

Gregg argues on this appeal that the bank fraud offense was not completed when the proceeds were deposited in his account, but only after withdrawal. Since this withdrawal was an element of the money laundering offense, he argues, the counts merged and there were not separate bank fraud and money laundering crimes committed.

Although there appear to be no cases in this circuit directly on point, we have no trouble in deciding that the bank fraud was a completed crime when Gregg fraudulently obtained the deposit of the proceeds of the check into his account, with the intent at that time to eventually withdraw money from that account for his own use.

There appears to be sparse authority on the point. Although we held in United States v. Christo, 129 F.3d 578, 579 (11th Cir.1997) that "money laundering is an offense to be punished separately from an underlying criminal offense," that case involved a single check-kiting scheme. There, the bank-fraud charge and the money-laundering charges were predicated on the same transaction, writing checks on accounts with insufficient funds and causing the bank to pay those checks through the check-kiting scheme.

Here Gregg was in the same position as if he had robbed the bank and placed the proceeds of the robbery into his own account with the intent to use the money for his own purposes. The crime was completed at that point, without any actual withdrawal of the money. As the 4th Circuit in a sentencing issue case held in United States v. Williams, 81 F.3d 1321, 1328 (4th Cir.1996):

Under 18 U.S.C. § 1344, and as he was specifically charged, Williams had completed the offense of bank fraud as soon as he fraudulently obtained credit from Wachovia in the form of a balance in a bank account. See e.g., United

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