U.S. v. Ryan, 87-1069

• Citation: 828 F.2d 1010
• Decision Date: 15 September 1987
• Docket Number: No. 87-1069,87-1069
• Parties: UNITED STATES of America v. RYAN, James, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 1010

828 F.2d 1010

UNITED STATES of America v. RYAN, James, Appellant.

No. 87-1069.

United States Court of Appeals,

Third Circuit.

Argued July 16, 1987.

Decided Sept. 15, 1987.

Ronald K. Noble (argued), Asst. U.S. Atty., Edward S.G. Dennis, Jr., U.S. Atty., Walter S. Batty, Jr., Asst. U.S. Atty., Chief of Appeals, Philadelphia, Pa., for appellee.

John Rogers Carroll (argued), Thomas Colas Carroll, Peter Cooley, Carroll & Carroll, Philadelphia, Pa., for appellant.

Before SLOVITER, STAPLETON and HUNTER, Circuit Judges.

OPINION OF THE COURT

JAMES HUNTER, III, Circuit Judge:

James Ryan appeals from his conviction for making false statements to a federally insured bank in violation of 18 U.S.C. Sec. 1014 (1982) ("Sec. 1014"). In this appeal we must consider 1) whether an arguably true answer to an ambiguous question on a loan application can form the basis of a conviction under Sec. 1014, 2) whether an ambiguous answer to an unambiguous question on a loan application can serve as the basis for a conviction under Sec. 1014, and 3) whether an incomplete answer to a question on a loan application can support a conviction under Sec. 1014. For reasons stated below, we will reverse the judgment of conviction and remand for a new trial.

I.

In February of 1982, James Ryan went to the Egg Harbor branch of the First National Bank of Toms River, New Jersey ("the bank") and spoke to the branch manager, Christine Anderson Auriemma. Ryan told Auriemma that he wanted to open a checking account. While gathering the information necessary to open an account, Auriemma asked Ryan to furnish his Social Security number. Ryan responded that he was not an American citizen and that he did not have a Social Security number. Auriemma informed Ryan that he could not open an account without a Social Security number. She suggested, however, that Ryan could have a friend open an account on Ryan's behalf and Ryan could take power of attorney on the account. Ryan took Auriemma's advice and had a friend, Gerald Connelly, open an account for him.

On or about February 25, 1982, James Ryan submitted a credit card application to the bank. The application required Ryan to supply various items of personal information such as his name, address, telephone number, Social Security number, date of birth, etc. However, Ryan failed to indicate his Social Security number on the application; instead, he drew a diagonal line through the space provided for that purpose.

Also on the application there is a space in which the applicant is to indicate his "PREVIOUS ADDRESS (last 5 years)." In this space, Ryan wrote "Amtsgasse # 2, Frankfurt West Germ," which, in fact, is the address that appears on Ryan's passport and his visa into the United States. He further indicated that this had been his address for a period of ten years.

A few lines further down on the application is a heading that instructs the applicant to "LIST ALL OUTSTANDING DEBTS including home mortgage." Under this heading there are four blank lines on which the applicant is expected to provide the names and addresses of his creditors, the original amount of each debt, the unpaid balance of each debt, and the monthly payments on each debt. On the first such line, Ryan stated that he has monthly mortgage and/or rental payments of one thousand dollars. He did not indicate, however, the identity of the mortgagee or the amount of the original mortgage or the Ryan mailed the application and an attached letter to Auriemma. The letter was written on Ryan's personal stationery, and the letterhead contained a Philadelphia address. On the application, however, Ryan stated that his address was in Egg Harbor. In fact, Ryan did maintain homes in both Egg Harbor and Philadelphia. In the letter, Ryan said that he would be willing to pledge a certificate of deposit as collateral for the credit card account. He also furnished a list of some of the credit cards that he already possessed, and he stated that Auriemma could call any of the listed credit card companies in order to verify his creditworthiness. Ultimately, however, the bank denied Ryan's request for a credit card.

unpaid balance of the debt. Ryan listed no other debts. In another section of the application, however, Ryan responded affirmatively to the question, "Does applicant owe other creditors?"

On February 14, 1985, a federal grand jury in the Eastern District of Pennsylvania handed down a two count indictment charging that, in connection with the credit card application, Ryan committed mail fraud in violation of 18 U.S.C. Sec. 1341 (1982) and made false statements to a federally insured bank in violation of 18 U.S.C. Sec. 1014 (1982). Count one, the mail fraud count, averred that Ryan devised a scheme to defraud the bank by means of false representations, both oral and written. Count one further alleged that in furtherance of the scheme, Ryan caused the credit card application to be sent to the bank via the United States mails and that the credit card application contained three false statements:

(1) "[it] stated that he (Ryan) had no Social Security number, when in fact he has had Social security number 506-20-8048 since March 9, 1942;"

(2) "[it] stated that his previous address for a ten year period had been in Frankfurt, West Germany, when in fact he had resided at various locations in the United States for at least four years prior to making this application;"

(3) and "[it] stated that he had no debts other than a mortgage, when in fact he owed approximately $1,700,000 to the State Street Bank and Trust Co. in Boston, Massachusetts and approximately $200,000 to other creditors."

Indictment at 1-2. Count two, the false statements count, averred that the three above mentioned statements also constituted a violation of 18 U.S.C. Sec. 1014 (1982). While count one alleged that Ryan made both oral and written misrepresentations, count two was based solely on the three written statements in the credit card application.

The case was tried before a jury and the Honorable James T. Giles. The jury returned a verdict of not guilty on count one but found Ryan guilty on count two. A judgment of conviction and sentence was entered, and this appeal followed. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291 (1982).

II.

In order to obtain a conviction under Sec. 1014, the government must establish the following: (1) that the defendant made a "false statement or report or willfully overvalue[d] any land property or security," (2) that he did so "for the purpose of influencing in any way the action of [a federally insured bank or other enumerated financial institution] upon any application, advance, ... commitment or loan," and (3) that the false statement was material, i.e., that it had the capacity to influence such bank or financial institution. ¹ United Ryan's primary argument on appeal is that, under Bronston v. United States, 409 U.S. 352, 93 S.Ct. 595, 34 L.Ed.2d 568 (1973), none of the three statements enumerated in the indictment may be considered "false statements" for purposes of Sec. 1014. Bronston is a case which arose under the federal perjury statute, 18 U.S.C. Sec. 1621 (1982). The defendant's perjury conviction was based on the following answers given by him as a witness in a bankruptcy proceeding:

States v. Goberman, 458 F.2d 226, 229 (3d Cir.1972). The parties have stipulated that the First National Bank of Toms River is a financial institution that falls within the coverage of Sec. 1014.

Q. Do you have any bank accounts in Swiss banks, Mr. Bronston?

A. No, sir.

Q. Have you ever?

A. The company had an account there for about six months, in Zurich.

Q. Have you any nominees who have bank accounts in Swiss Banks?

A. No, sir.

Q. Have you ever?

A. No, sir.

Bronston, 409 U.S. at 354, 93 S.Ct. at 598. In fact, Bronston had possessed a personal Swiss bank account for several years. Thus, his answer that "the company had an account" was unresponsive and misleading--though literally true. Reversing Bronston's conviction, the Supreme Court held that the perjury statute does not cover testimony which is literally true but unresponsive even if the witness had the intent to mislead. The Court reasoned that the adversary system, not the perjury statute, is the safeguard against such errant testimony: "we perceive no reason why Congress would intend the drastic sanction of a perjury prosecution to cure a testimonial mishap that could readily have been reached with a single additional question by counsel alert--as every counsel ought to be--to the incongruity of petitioner's unresponsive answer.... If a witness evades, it is the lawyer's responsibility to recognize the evasion and to bring the witness back to the mark, to flush out the whole truth with the tools of adversary examination." Id. at 358-59, 93 S.Ct. at 599-600.

In United States v. Tonelli, 577 F.2d 194 (3d Cir.1978), we held that the Bronston rule applies not only to perjury prosecutions under 18 U.S.C. Sec. 1621 but also to prosecutions under 18 U.S.C. Sec. 1623 (1982), which prohibits the making of false declarations before a grand jury or court. Ryan urges us to go further and to hold that the Bronston rule also applies to cases arising under Sec. 1014. We note that the Bronston rule assumes the availability of an alert legal adversary who can bring the evasive witness "back to the mark." While this may be a valid assumption in the context of a Sec. 1621 or a Sec. 1623 prosecution, the same cannot be said of cases under Sec. 1014, in which the putatively false statement is generally made in the informal context of a bank loan application. Thus, it is at least questionable whether Bronston should apply to Sec. 1014 prosecutions. But see United States v. Attick, 649 F.2d 61, 63 (1st Cir.) (suggesting that the "literal truth defense is available in Sec. 1014 prosecutions), cert. denied, 454 U.S. 861, 102 S.Ct. 318, 70 L.Ed.2d 160 (1981). However, we need not...