U.S. v. Thomas

• Decision Date: 31 December 2002
• Docket Number: No. 01-4283.,01-4283.
• Citation: 315 F.3d 190
• Parties: UNITED STATES of America v. Lisa THOMAS, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

315 F.3d 190

UNITED STATES of America v. Lisa THOMAS, Appellant.

No. 01-4283.

United States Court of Appeals, Third Circuit.

December 31, 2002.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Anita D. Eve (Argued), Office of United States Attorney, Philadelphia, for Appellee.

Mark S. Greenberg (Argued), Stephen R. LaCheen & Associates, Philadelphia, for Appellant.

Before BECKER, Chief Judge, ROTH and ROSENN, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

The major issue in this appeal is a troublesome question concerning the correct construction of the federal bank fraud statute. We are called upon to construe the breadth of a statute on which the Courts of Appeals are divided, and on which our own court has not spoken definitively. A grand jury in the United States District Court for the Eastern District of Pennsylvania returned a three-count indictment charging the defendant, Lisa Thomas, with two counts of bank fraud in violation of 18 U.S.C. § 1344 and one count of fraudulently inducing a person to travel in interstate commerce in violation of 18 U.S.C. § 2314. The District Court granted the Government's motion to dismiss Count III, one of the two bank fraud counts. A jury found the defendant guilty on the remaining two counts. The defendant's motion for judgment of acquittal was denied. The District Court sentenced the defendant to two concurrent thirty-three month sentences, supervised release, and restitution in the sum of $133,300.

Prior to sentence, the defendant objected to the imposition of a two-level upward adjustment for abuse of trust pursuant to U.S.S.G. § 3B1.3 and requested a two-level downward adjustment for acceptance of responsibility pursuant to U.S.S.G. § 3E1.1. The District Court denied both requests. The defendant timely appealed her convictions of bank and travel fraud and related sentencing issues. We reverse the conviction as to bank fraud and affirm the conviction as to travel fraud, and remand for resentencing.

I.

The primary issue on appeal is whether there was sufficient evidence to sustain Thomas's conviction of bank fraud in violation of 18 U.S.C. § 1344. Anne Weygandt, then aged 88, employed Thomas as a home health care aide in and around 1998. Weygandt believed herself to be in fair health during that period, although she had suffered a small stroke in 1997. Around that time, Weygandt frequently made loans to her nephew and also authorized others, including Thomas, to complete checks which she had pre-signed, by filling in the amount and name of the payee. These checks were used for various purposes, including the payment of bills. Thomas also received and sorted Weygandt's mail. From November 1997 to July 1998, Thomas induced Weygandt to sign numerous checks for the pretextual purpose of transferring money among Weygandt's several bank accounts or for the purchase of groceries. Instead, Thomas cashed the checks, made out either to Thomas or to cash, at Weygandt's banks, and pocketed all or most of the proceeds. She withdrew approximately $124,300 from Weygandt's Mellon Bank accounts and $9,400 from her Citizen's Bank account.

Weygandt was physically present at the bank with Thomas when the withdrawals occurred, and she herself endorsed those checks made out to cash. After Thomas originally sought to cash Weygandt's checks by herself, one of the tellers insisted that Weygandt be present before the bank would honor the checks. Despite Weygandt's presence, the transactions still aroused the suspicion of bank tellers, who asked Thomas the purpose of the withdrawals. Either Thomas or Weygandt would always respond that the money was for travel, or for transfers among Weygandt's accounts, or for shopping. A teller showed Weygandt her account balance on at least one occasion, to be sure she grasped the magnitude of her withdrawals. Notwithstanding, Weygandt had no idea of the amounts being withdrawn, or their true purpose. Weygandt physically received the money from the teller some of the time, and on other occasions, Thomas received the money. However, Weygandt repeatedly expressed her authorization of the withdrawals when the tellers inquired, and never repudiated the transactions. Despite suspicions over the validity of the withdrawals, given their frequency and the amount of cash being issued, bank staff never communicated with police or their internal fraud investigators.

Weygandt's nephew became apprehensive of Thomas's conduct and communicated with the police. A State Police investigator confronted Thomas, and she later admitted in a written statement that Weygandt requested her assistance in writing her checks to pay bills, because Weygandt could not fully write them out herself. Thomas went on to state that, because she needed money to fund her drug addiction, she convinced Weygandt to sign checks for her on the pretense of transferring money among her bank accounts, Weygandt having asked her to transfer money for legitimate purposes in the past, and thus being unlikely to become suspicious.

At trial, defense counsel argued essentially that the facts here do not constitute a federal crime of bank fraud. It was not seriously contested that Thomas had acted wrongfully. However, the defense contended that the federal bank fraud statute required that the defendant intend to cause the bank a loss and that the defendant make a material misrepresentation to the bank. Here, the defense argued, the banks were not exposed to a loss as a result of honoring Weygandt's checks, because the checks were properly made payable to Thomas or to cash, and Weygandt had vouched for their legitimacy. Thus, only Weygandt suffered losses and the banks were not subject to any losses or potential liability for honoring the checks. Furthermore, Thomas contended that there was no material misrepresentation because Thomas had not affirmatively deceived the bank, but had merely presented the checks and passively accepted the proceeds.

At trial, Thomas also objected to the admission of a handwritten summary by a State Police investigator listing all the checks cashed by Thomas and the monies converted. At the end of the 6-page list, itemizing each individual check, appeared the statement: "Total Value of Fraud from Mellon Checking $118,550.00." Thomas asserted that the word "Fraud" should have been redacted. She also argued that the District Court's curative instruction, informing the jury that fraud was a conclusion for it to make, not the witness, was insufficient to overcome the resulting prejudice.

II.

We have jurisdiction pursuant to 28 U.S.C. § 1291 over a judgment of conviction and sentence. Our review of a district court's interpretation of the scope and coverage of the bank fraud statute is plenary. United States v. Schwartz, 899 F.2d 243, 243 n. 1 (3d Cir.1990).

The federal bank fraud statute briefly provides:

Whoever knowingly executes, or attempts to execute, a scheme or artifice —

(1) to defraud a financial institution; or

(2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;

shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

18 U.S.C. § 1344.

The meaning of the first line of the statute is not disputed. "The terms `scheme' and `artifice' are defined to include any plan, pattern or cause of action, including false and fraudulent pretenses and misrepresentations, intended to deceive others in order to obtain something of value, such as money, from the institution to be deceived." United States v. Goldblatt, 813 F.2d 619, 624 (3d Cir.1987). As to subsections (1) and (2), the Government maintains:

Both subsections prohibit schemes or artifices fraudulently to obtain money or property owned by or held in the custody of a financial institution. The difference is that, under subsection (1), the fraud victim must be a bank, whereas under subsection (2), the victim need not be a bank as long as property under the custody and control of a bank is obtained through false and fraudulent pretenses or representations.

Government's brief at 27. The Government also notes that the indictment charged Thomas with both prongs of the statute which permitted Thomas to be convicted if the Government proved the elements of either subsection. It contends that our decision in United States v. Monostra, 125 F.3d 183 (3d Cir.1997), holds that the requisite criminal intent "may be met by the government showing that the defendant engaged in conduct with a financial institution which resulted in the improper release of money deposited with the institution," or by showing that the bank was exposed to a loss of its own property. Government's brief at 29, 30-31.

As Thomas admits in her confession, her crime involved a pattern of activity intended to deceive others, including acquiring Weygandt's trust, making deceptive misrepresentations to her, and some to the bank. The deceptions were employed systematically by Thomas and constituted a manifest departure from fundamental honesty. The issue before us, however, is not whether there was a scheme or artifice afoot; rather, we must address whether that scheme defrauded or attempted to defraud a financial institution in violation of the statute.

Subsection (1) requires that the scheme or artifice must be intended "to defraud a financial institution." We have held that a "scheme to defraud" is measured "by determining whether the scheme demonstrated a departure from fundamental honesty, moral uprightness, or fair play and candid dealings in the general life of the community." Goldblatt, 813 F.2d at 624. The statute's use of the term thus means that the defendant, through the exercise of a scheme that departs from fundamental honesty, must thereby intend to defraud the bank.

Subsection (2), however, facially requires...