983 F.2d 300 (1st Cir. 1992), 91-2192, United States v. Lilly

Docket Nº:91-2192.
Citation:983 F.2d 300
Party Name:UNITED STATES of America, Appellee, v. William W. LILLY, Defendant, Appellant.
Case Date:December 04, 1992
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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983 F.2d 300 (1st Cir. 1992)

UNITED STATES of America, Appellee,


William W. LILLY, Defendant, Appellant.

No. 91-2192.

United States Court of Appeals, First Circuit

December 4, 1992

Heard Nov. 3, 1992.

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Morris M. Goldings with whom Richard S. Jacobs and Mahoney, Hawkes & Goldings, Boston, MA, were on brief, for defendant, appellant.

Richard E. Welch, III, Asst. U.S. Atty., with whom A. John Pappalardo, U.S. Atty., and Stephen A. Higginson, Asst. U.S. Atty., Boston, MA, were on brief, for the U.S.

Before SELYA, CYR and BOUDIN, Circuit Judges.

SELYA, Circuit Judge.

In this appeal defendant-appellant William W. Lilly attacks his conviction on twenty-six counts of bank fraud. Lilly ranges his forces along three fronts. His first--and most substantial--assault raises a question of novel impression in this circuit concerning the bank fraud statute, 18 U.S.C. § 1344 (1990). 1 Lilly asseverates

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that the statute, as construed by the government and the court below, resulted in a thirty-count indictment for what amounted to only two crimes, and that the avalanche of multiplicitous charges prejudiced his defense. His remaining forays feature allegations of prosecutorial misconduct. For the reasons set forth below, we affirm the judgment on only two of the counts of conviction.


The Bank Fraud Statute

We set the stage for appellant's multiplicity challenge and thereafter analyze his contentions.



Appellant, a developer, rode the tide of New England's late, lamented real estate boom. In the mid-1980s, he sought to acquire an apartment complex for condominium conversion. First Mutual Bank for Savings (First Mutual) provisionally agreed to provide purchase-money financing subject to certain conditions. In an effort to meet these conditions, appellant began pre-selling condominium units. His approach was unorthodox: he pre-sold the units on a "no money down" basis, utilizing purchase-and-sale agreements which overstated each unit's purchase price and reported (falsely) that each buyer had made a down payment equalling around ten percent of the price. To flesh out this web of lies, appellant instructed the purchasers to sign loan applications which reflected the inflated sale prices and stated that the down payments came from the purchasers' "personal funds." The pro forma closing documents contained similar prevarications. After having dressed the transactions in this costumery, appellant gave the purchasers first mortgages for the "balance" of the purchase price from a trust that he controlled. Appellant then assigned the sales agreements, mortgages, and closing documents to First Mutual as security for a $7,000,000 loan with which he acquired the apartment complex.

This fraud was the basis of twenty-nine counts in the indictment--one count for each of twenty-nine mortgages so assigned. A few months later, appellant sold his interest in the property, including the mortgages and false documentation, to Royal Palm Savings Association (Royal Palm) for roughly $9,000,000. This sale formed the basis for the indictment's final count (count 30). All the counts were premised on the bank fraud statute.



The Double Jeopardy Clause mandates that no person shall be "subject for the same offence to be twice put in jeopardy of life or limb." U.S. Const. amend. V. An indictment countervails this principle when it charges a defendant in more than one count with committing a single offense. See United States v. Serino, 835 F.2d 924, 930 (1st Cir.1987). Thus, the pivotal determinant in considering claims of multiplicity frequently centers on whether Congress intended the acts charged to constitute a single crime or plural offenses. See id.

The bank fraud statute, as it applied to Lilly's case, made it a crime for a person knowingly to

execute[ ], or attempt[ ] to execute, a scheme or artifice--

(1) to defraud a financial institution; or

(2) to obtain any of the moneys ... [of] a financial institution, by means of false or fraudulent pretenses, representations, or promises.

18 U.S.C. § 1344 (1990). Appellant contends that, because the first twenty-nine counts of the indictment all relate to a single scheme--obtaining the purchase-money loan from First Mutual--they involve one and the same crime. 2 He emphasizes

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the plain language of section 1344, contending that the term "scheme" normally implies the existence of multiple acts directed toward a unitary end, and that the point is driven home in this setting by the statutory reference to executing the scheme "by means of false or fraudulent pretenses, representations, or promises." Thus, he argues, if a defendant has an overall plan in mind, he can be charged for carrying out that plan--but he cannot be charged independently for each separate step that he takes in bringing the plan to fruition.

We do not agree that the plain language of the statute settles the matter in the manner appellant suggests. That a criminal may plot on a large scale, envisioning a series of discrete acts as part of a grand plan, does not mean that various aspects of his felonious conduct cannot be separately charged under the bank fraud statute. The statute, after all, does not criminalize schemes or scheming per se; it criminalizes the execution (or attempted execution) of schemes. Phrased another way, the statutory terminology focuses on the fraudulent acts actually committed, or attempted, along with the effects of those acts, 3 rather than upon the distinctively different question of how a defrauder visualizes his plot.

Because a defendant's mindset is not, in and of itself, determinative of whether his acts can legally be said to constitute an execution of a single scheme as opposed to multiple executions of one or more schemes, the real question in this appeal is whether a jury could plausibly find that the actions described in the first twenty-nine counts of the indictment, objectively viewed, constituted separate executions of the First Mutual scheme. Although the question is not free from doubt, we believe that it must be answered in the negative. Since the twenty-nine counts all relate to a single execution of a unitary scheme, they are multiplicitous.

Count 30 aside, twenty-five other counts remain in the case. 4 All of them relate to the defrauding of a single bank in connection with a single loan. The loan was designed to fund the purchase of a single apartment complex. By and large, the misrepresentations in the closing documents pertained to a single aspect of the transaction: whether the purchasers of individual units had made down payments. 5 In other words, appellant assigned to a single bank a single package of documents that consistently misstated a single material fact in order to obtain a single loan, the proceeds of which funded a single real estate purchase. We believe these facts are more comfortably categorized as a single execution of a scheme rather than as twenty-some-odd separate executions of a scheme. 6

The government resists this assessment of the facts by arguing that the language of the bank fraud statute parallels the language of the mail and wire fraud statutes, 18 U.S.C. §§ 1341, 1343 (1990), and, therefore, should be construed in pari passu. 7 We disagree. Although the language in these three statutes is similar, and although

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the legislative history suggests that Congress modeled the bank fraud statute on the other two statutes, see S.Rep. No. 225, 98th Cong., 2d Sess. 378, reprinted in 1984 U.S.Code Cong. & Admin. News 3182, 3519, these two facts do not tip the balance.

In the first place, the language in the three statutes, albeit similar, is not identical. For example, the mail fraud statute proposes to punish "[w]hoever, having devised or intending to devise any scheme or artifice to defraud ... for the purpose of executing such scheme or artifice or attempting to do so, places in any post office ... any matter or thing whatever." 18 U.S.C. § 1341. In contrast, the bank fraud statute proposes to punish "[w]hoever knowingly executes ... a scheme or artifice ... to defraud." 18 U.S.C. § 1344. Thus, the mail fraud statute criminalizes certain specifically enumerated actions when taken in furtherance of a scheme, while the bank fraud statute criminalizes only the execution of the scheme itself. 8 Nor do we think that this difference is unimportant; there will be cases, as here, in which the distinction is critical. Although Lilly's acts were unquestionably in furtherance of his scheme, we fail to discern how those acts constituted multiple executions of the scheme.

In the second place, the solace that the government derives from the legislative history is more apparent than real. The legislative history indicates that Congress modeled the bank fraud statute on the mail and wire fraud statutes because those statutes "have been construed by the courts to reach a wide range of fraudulent activity." S.Rep. No. 225, supra, 1984 U.S.C.C.A.N. at 3519. The interpretation which we give to the statute today does not constrict the range of fraudulent activity falling within the statute's reach.

In addition to relying upon parallelism and legislative history, the government also touts the precedential value of certain cases decided under the bank fraud statute. However, these are "check kiting" cases that find each utterance of a bad check to constitute an execution of a scheme to defraud. See, e.g., United States v. Schwartz, 899 F.2d 243, 248 (3d Cir.), cert. denied, 498 U.S. 901, 111 S.Ct. 259, 112 L.Ed.2d 217 (1990); United States v. Poliak, 823 F.2d 371, 372 (9th Cir.1987), cert. denied, 485 U.S. 1029, 108 S.Ct. 1586, 99 L.Ed.2d 901 (1988). We have no quarrel with these decisions--but, they differ...

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