U.S.A. v. Everett, 00-4230

• Decision Date: 06 June 2001
• Docket Number: No. 00-4230,00-4230
• Citation: 270 F.3d 986
• Parties: (6th Cir. 2001) United States of America, Plaintiff-Appellee, v. Justine Theresa Everett, Defendant-Appellant. Submitted:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 986

270 F.3d 986 (6th Cir. 2001)

United States of America, Plaintiff-Appellee, v. Justine Theresa Everett, Defendant-Appellant.

No. 00-4230

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Submitted: June 6, 2001

Decided and Filed: October 12, 2001

Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 99-00363-Solomon Oliver, Jr., District Judge. [Copyrighted Material Omitted] Thomas E. Getz, ASSISTANT UNITED STATES ATTORNEY, Cleveland, Ohio, for Appellee.

COUNSEL On BRIEF: Gordon S. Friedman, FRIEDMAN & GILBERT, Cleveland, Ohio, for Appellant.

Before: BATCHELDER and MOORE, Circuit Judges; BERTELSMAN, District Judge. ^*

OPINION

BERTELSMAN, District Judge.

In this appeal, Justine Theresa Everett seeks a reversal of her conviction on one count of bank fraud and complicity.

PROCEDURAL AND FACTUAL BACKGROUND

The Appellant was a certified public accountant. From 1988 until 1992 Appellant worked for an accounting firm. While at the firm, she worked on the account for Mark Stein's Expert Auto Body, Inc. In May 1992 Appellant left the firm to establish her own practice. At Stein's request, Appellant continued to do accounting work for his business.

Co-defendant Kathy Mariani worked for the same accounting firm as Appellant. Appellant introduced Mariani to Stein. At about the same time Appellant left the firm, Stein hired Mariani to work for him as a bookkeeper. Mariani's duties included doing accounts receivable, accounts payable, and recording all the checks written into a check register. Mariani was a co-signer on Stein's business accounts, but she generally signed Stein's name to checks. Mariani testified that Appellant was never listed with the bank as an authorized signer on the account. On occasion, however, Stein and/or Mariani told Appellant she could sign Stein's name to specific checks. ¹

When Mariani quit her job at Stein's Auto Body, her replacement discovered discrepancies in the business records compared to the bank records. She obtained copies of the checks in question. One check, in the amount of $5,000, was made payable to the Appellant, but recorded in the check registry as a payment to a vendor. The other checks were connected to Mariani. After Stein reported the theft to the police, an FBI financial analyst reviewed Stein's bank records and bookkeeping records. He found negotiated checks totaling $96,648.47 that had been issued to the Appellant or made payable to cash and endorsed by Appellant. The agent testified that nearly all of the checks were issued out of proper sequence, falsely recorded in the check registers or not recorded at all, and many contained incorrect information in the memo section of the check.

As a result of the FBI's investigation, Appellant and Mariani were jointly charged in a two count indictment. Both counts charged bank fraud and complicity, although each count concerned a different bank. Prior to trial, Mariani pleaded guilty to bank fraud for her conduct in writing unauthorized checks to herself. Appellant proceeded to trial.

At trial, the government introduced four checks made payable to Appellant to which Appellant admitted to signing Stein's name. Appellant testified that these four checks were sent to her post-dated and without signature for her services. When she questioned Mariani about the unsigned checks, Appellant stated that Mariani told her she could sign Stein's name to the checks herself.

Mariani testified that she knew Appellant was writing unauthorized checks to herself because she saw her do it, and she also saw cancelled checks written to the Appellant, by the Appellant, that Mariani knew were unauthorized. Mariani testified that Appellant had asked her on many occasions to issue checks for services Mariani knew Appellant had not performed. After issuing an unauthorized check, either Mariani or Appellant would enter false information in the check register to conceal the illegitimacy of the checks. Mariani also explained that before she left her employment with Stein, she and Appellant packed up all the bank records and old checks so that Appellant could take them to Florida with her. Mariani testified that the purpose of moving the bank records and checks was to prevent detection of their scheme.

After presentation of the evidence, the trial court granted Appellant's motion to dismiss count two of the indictment because the checks in question in count two had been signed by Mariani, an authorized signatory. Thus, the bank would not be subject to a risk of loss even if the checks were written for an unauthorized purpose. The trial court sent count one to the jury. The jury returned a verdict of guilty, and Appellant was sentenced to fourteen months of incarceration. Appellant now appeals her conviction.

DISCUSSION

Appellant makes seven arguments as to why her conviction should be reversed. We will discuss each issue in turn.

ISSUE 1: Appellant argues she was authorized to sign Stein's name, thus there was no bank fraud.

Appellant argues that Stein, owner of the auto body shop, authorized her to sign his name on the checks in question. She argues that the signing of another's name, when authorized by that person to do so, is not forgery and cannot be a violation of the Bank Fraud Statute, 18 U.S.C. §1344 (2000). ²

Three elements are required for a conviction for bank fraud under 18 U.S.C. § 1344: (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. United States v. Hoglund, 178 F.3d 410 (6th Cir. 1999). A conviction under § 1344 should be reversed only, if viewing the record as a whole, the judgment is not supported by substantial and competent evidence. United States v. Mann, 234 F.3d 1270, 2000 WL 1597824 (6th Cir. 2000)(unpublished), cert. denied 121 S. Ct. 1608 (2001).

Appellant argues that because she was authorized to sign Stein's name to checks, she cannot be guilty of bank fraud even if she was not entitled to the funds. Stein did not testify as to whether he consented to Appellant's signing of his name to the checks at issue. However, the police report was introduced which stated a complaint was made against Appellant and listed Stein as the owner of the business. The report also indicated that the loss was due to counterfeit/forged negotiable instruments and identified the specific checks by number.

The cases cited by the Appellant are distinguishable from the case at bar. In both United States v. Laljie, 184 F.3d 180 (2d Cir. 1999), and United States v. Rodriguez, 140 F.3d 163 (2d Cir. 1998), the checks found not to constitute bank fraud contained the authentic signatures of the persons listed as authorized signatories with the bank. Here, Appellant was not listed as an authorized signer with the bank and, in fact, she did not sign her own name but that of Stein. There was sufficient evidence, i.e., the police report and the testimony of Mariani, to indicate Appellant did not have authority to sign the checks at issue. The evidence on the issue was submitted to the jury, including the testimony of both the Appellant and Mariani. The evidence was sufficient for a rational juror to find Appellant signed the checks without authorization, and the first issue is without merit.

ISSUE 2:Appellant argues there was no evidence that she specifically intended to defraud a federally insured bank.

Appellant argues that the United States has failed to prove the specific intent required for a conviction under 18 U.S.C. §1344, namely, that the Appellant intended to defraud a federally insured bank, or at least put the bank at a risk of loss. Appellant acknowledges that there is evidence that she intended to defraud her client, but that the bank was at no risk of loss because she was authorized to sign her client's name to checks.

The Circuits are not in accord as to the intent required to violate §1344. ³ The Sixth Circuit precedents are also not entirely consistent. In United States v. Walker, 871 F.2d 1298, 1305 n. 6 (6th Cir. 1989), the court noted that "bank fraud requires only a fraudulent statement designed to influence a bank's action." However, in United States v. Hoglund, 178 F.3d 410, 413 (6th Cir. 1999), the court stated that "a defendant need not have exposed a bank to a risk of loss as an element of bank fraud," but an instruction stating "that the defendant must have intended to put a bank at a risk of loss, was sufficient to support a conviction for bank fraud." The court characterized risk of loss as "merely one way of establishing intent to defraud in bank fraud cases."

In United States v. Kropp, 132 F.3d 34, 1997 WL 735331 at * *2 (6th Cir. 1997), however, the court stated that it was not a defense that the defendant "may not have intended to cause the bank to lose any money; it is sufficient that he was shown to have intended to facilitate the transfer of bank funds" in pursuit of a fraudulent scheme. Kropp also held that "the government need not show that the victim bank suffered any loss from the crime." Id. at *3.

We believe that Kropp is correct and that to have the specific intent required for bank fraud the defendant need not have put the bank at risk of loss in the usual sense or intended to do so. It is sufficient if the defendant in the course of committing fraud on someone causes a federally insured bank to transfer funds under its possession and control. See 18 U.S.C. § 1344(2) (2000).

It has been stated that the purpose of § 1344 is to protect the federal government's interest as an insurer of financial institutions. ⁴ Thus, even if the Appellant did not intend to defraud the bank, causing a bank to transfer funds pursuant to a fraudulent scheme reduces the funds the bank has available for its loans and other activities and almost inevitably causes it some loss.

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