USA v. Hicks, 99-10352

• Citation: 217 F.3d 1038,2000 WL 744077
• Decision Date: 02 May 2000
• Docket Number: No. 99-10352,99-10352
• Parties: (9th Cir. 2000) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. MARK KEVIN HICKS, Defendant-Appellant
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1038

217 F.3d 1038 (9th Cir. 2000)

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. MARK KEVIN HICKS, Defendant-Appellant.

No. 99-10352

U.S. Court of Appeals for the Ninth Circuit

Argued and Submitted May 2, 2000--San Francisco, California

Filed June 12, 2000

As Amended on Denial of Rehearing July 31, 2000

[Copyrighted Material Omitted]

Doron Weinberg and Nina Wilder, Weinberg & Wilder, San Francisco, California, for the defendant-appellant.

John Hemann, Assistant United States Attorney, San Francisco, California, for the plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California; Vaughn R. Walker, District Judge, Presiding. D.C. No. CR-98-00077-VRW

Before: Harlington Wood, Jr.,¹ Andrew J. Kleinfeld, and Susan P. Graber, Circuit Judges.

GRABER, Circuit Judge:

Defendant Mark Kevin Hicks was convicted by a jury of making false statements to a federally insured financial institution, in violation of 18 U.S.C. S 1014. On appeal, he contends that the evidence was insufficient to support his convictions, that the jury instructions were inadequate, that the district court erred in admitting certain evidence, and that the district court misapplied the Sentencing Guidelines. We affirm the judgment of conviction, but vacate the sentence and remand for further proceedings.

FACTS

We recount the relevant facts in the manner most favorable to the jury's verdict. Between 1988 and 1990, Defendant applied for nine loans from Glendale Federal Savings Bank (Glendale Federal).² Each loan was to fund Defendant's purchase of a particular piece of real property. Because he was self-employed, Defendant was required to submit copies of his last two federal income tax returns in support of each loan application. A bank officer explained at trial that "by a tax return, we mean a complete set of 1040's that have been filed with the IRS [Internal Revenue Service]."

Concerned that his 1987 and 1989 tax returns reflected insufficient income to ensure approval of his various loan applications, Defendant asked his professional tax preparer to create different "tax returns" for those two years. The tax preparer took blank 1040 forms, filled in the total adjusted gross income amounts desired by Defendant for each of the two years, and then worked backward from those amounts to create real-looking tax forms for submission to Glendale Federal. Defendant, his wife, and the tax preparer each signed the completed forms, and the preparer stamped each form "Taxpayer's Copy." We refer to those documents as the "Glendale returns" to distinguish them from Defendant's actual tax returns that had been filed with the IRS.

Defendant submitted one of the two Glendale returns in connection with each of his loan applications, and the loans all were approved. Eventually, Defendant defaulted on all nine loans. After default, Glendale Federal foreclosed on the various loans. The foreclosure sales, conducted by a third party engaged by Glendale for that purpose, did not generate enough funds to repay fully the various loans at issue. Consequently, Glendale Federal lost hundreds of thousands of dollars on its loans to Defendant.

Based on his submission of the Glendale returns to Glendale Federal, Defendant was indicted on nine counts of making false statements to a federally insured financial institution, in violation of 18 U.S.C. S 1014. After being convicted by a jury, he was sentenced to 33 months of incarceration and ordered to pay restitution. He timely appeals his conviction and sentence.

DISCUSSION

A. Sufficiency of the Evidence

Defendant first contends that the government failed to present evidence sufficient to prove that he made false statements to Glendale Federal. He also contends that the government failed to present evidence sufficient to prove that Glendale Federal was federally insured at the relevant times. We may reverse a jury's verdict due to insufficiency of the evidence only if, viewing the evidence presented at trial in the light most favorable to the prosecution, no rational juror could have found the essential elements of the crime beyond a reasonable doubt. See Jackson v. Virginia, 443 U.S. 307 (1979).

1. False Statements

At trial, Defendant conceded that the income figures contained in the Glendale returns were different than the income figures contained in his IRS-filed tax returns, but he attempted to prove that the figures in the Glendale returns reflected his "true" income. In other words, Defendant contended that, although he may have lied to the IRS, he did not lie to the bank and, therefore, could not be convicted of making false statements to a financial institution.

The government sought to prove at trial that Defendant made two sorts of false statements to Glendale Federal. First, the government contended that, by presenting the Glendale returns in response to the bank's request for copies of two of his federal income tax returns, Defendant implicitly, and falsely, stated that the Glendale returns were copies of the actual 1040 forms that Defendant had filed with the IRS. Second, the government suggested that, in each of the nine loan applications at issue, Defendant falsely stated the amount of income that he derived from either rental payments or interest. The evidence presented at trial was sufficient to support the jury's verdict under both theories.

(a) The Glendale returns were not copies of Defendant's actually filed IRS tax returns.

The Glendale returns were IRS 1040s, signed by Defendant and his wife, and had been completed by a professional tax preparer and stamped "Taxpayer's Copy." The jury reasonably could have concluded that, by submitting those carefully prepared documents in response to the bank's request for Defendant's last two tax returns, Defendant falsely stated that the documents were copies of the tax forms that he had filed with the IRS.

Defendant does not dispute that the jury reasonably could have made such a finding. Instead, he contends that, as a matter of law, that finding is insufficient to support his convictions for violating S 1014.³ He relies on Williams v. United States, 458 U.S. 279 (1982), and United States v. Waechter, 771 F.2d 974 (6th Cir. 1985). Both cases are distinguishable.

In Williams, the Supreme Court considered whether knowingly depositing a check that is drawn on insufficient funds amounts to the making of a false statement for purposes of S 1014. The government argued in Williams that a depositor "is generally understood to represent" that she has sufficient funds on hand to cover every check that she writes, but the Court disagreed:

[A] check is literally not a "statement " at all. . . . [W]hatever the general understanding of a check's function, "false statement" is not a term that, in com mon usage, is often applied to characterize "bad checks." And, when interpreting a criminal statute that does not explicitly reach the conduct in ques tion, we are reluctant to base an expansive reading on inferences drawn from subjective and variable "understandings."

Williams, 458 U.S. at 285-86. Critical to the Court's holding was its conclusion, based on a lengthy analysis of the legislative history of S 1014, that "it would require statutory language much more explicit than that before us here to lead to the conclusion that Congress intended to put the Federal Government in the business of policing the deposit of bad checks." Id. at 290 (internal quotation marks omitted).

The distinctions between Williams and this case are fundamental. As noted above, the Supreme Court held in Williams that the defendant's act of depositing a check contained no implied representation concerning the state of the depositor's bank balance. Here, there is no similar implied representation. By providing the Glendale returns at the time and in the manner that he did, Defendant directly (albeit through assertive conduct) stated that the documents were copies of his federal income tax returns for the two relevant years. That statement was false: The documents were not copies of anything, let alone copies of Defendant's federal income tax returns for the two years preceding his Glendale Federal loan applications. Instead, they were newly completed 1040 forms designed to look like copies of Defendant's federal income tax returns⁴.

Accordingly, the complex arguments considered by the Court in Williams simply do not bear on the much more straightforward facts of this case. This case would be analogous to Williams if Defendant had submitted genuine copies of his actual income tax returns, and the government's prosecution were based on a theory that those returns contained an implied representation that Defendant had paid the taxes showed as owing (when he had not paid).

Moreover, a finding that Defendant falsely represented that the Glendale returns were the same returns that he had filed with the IRS need not be based on a subjective or generalized understanding of either loan applications or tax forms. Rather, the finding easily can be based on the particular course of conduct engaged in by Defendant, including his submission of the Glendale returns in response to the bank's request for copies of his last two tax returns and the tax preparer's use of a "Taxpayer's Copy" stamp.

Finally, the Supreme Court in Williams considered a prosecution theory that "would [have made] a surprisingly broad range of unremarkable conduct a violation of federal law." Williams, 458 U.S. at 286. In those circumstances, the Court concluded that the conduct at issue -passing bad checks -had nothing to do with the evils that Congress sought to prohibit when it enacted S 1014. By contrast, we deal here with "remarkable" conduct, and there is no risk that our holding will federally criminalize a vast array of everyday transactions. In fact, the very legislative history considered by the Court in Williams makes clear that Defendant's acts are exactly the...