U.S.A. Agne

• Decision Date: 08 March 2000
• Docket Number: No. 98-1974,98-1974
• Citation: 214 F.3d 47
• Parties: (1st Cir. 2000) UNITED STATES OF AMERICA, APPELLEE, V. WILLIAM G. AGNE, D/B/A PUMP SALES AND SERVICES, DEFENDANT, APPELLANT. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 47

214 F.3d 47 (1st Cir. 2000)

UNITED STATES OF AMERICA, APPELLEE,

V.

WILLIAM G. AGNE, D/B/A PUMP SALES AND SERVICES, DEFENDANT, APPELLANT.

No. 98-1974.

United States Court of Appeals, First Circuit.

Heard March 8, 2000.

Decided May 31, 2000.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO. Hon. Hector M. Laffitte, U.S. District Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Guillermo J. Ramos-Luina for appellant.

Desiree Laborde-Sanfiorenzo, Assistant U.S. Attorney, with whom Guillermo Gil, United States Attorney, Jorge E. Vega-Pacheco, Assistant U.S. Attorney, and Camille Velez-Rive, Assistant U.S. Attorney, were on brief for appellee.

Before Selya, Circuit Judge, Coffin, Senior Circuit Judge, and Lipez, Circuit Judge.

Coffin, Senior Circuit Judge.

Defendant William G. Agne seeks reversal of his criminal convictions for wire fraud, bank fraud, and making a false statement on a loan or credit application ("false statement"). Defendant's contentions are that the wire fraud charge was barred by a statute of limitations, that a letter of credit is not a document encompassed within the false statement statute, that there was insufficient evidence that he committed a scheme to defraud, and that the court made evidentiary and sentencing errors. Concluding as a matter of law that defendant's actions did not "affect" a financial institution, we vacate his conviction for wire fraud. We reject defendant's other contentions and affirm his convictions for bank fraud and false statement.

I. Facts

The jury would have been warranted in finding the following facts. In May 1991, R.G. Engineering, Inc. (R.G.), a Puerto Rico corporation, issued a purchase order for $438,750 to Pump Sales and Service, Inc., a New Jersey corporation of which defendant was president and owner, for a series of replacement parts for an industrial circulating water pump. Pump Sales supplied various parts to R.G., although the relationship between the parties deteriorated due to disputes about shipping, billing, and other matters. Defendant and Roberto Camino, president of R.G., ceased speaking to each other in the spring of 1992. Communication on behalf of Pump Sales was then conducted almost exclusively by Romie Ausman, an employee of Intesco, a Florida affiliate of Pump Sales owned by defendant.

In November 1991, R.G. advanced Pump Sales $75,000 to start the fabrication process for the final parts - two "impellers" and two "suction bells" - including drawings, patterns, casting, machining, and balancing. A March 1992 letter from Pump Sales represented that it had utilized the advance to take steps toward the manufacture of the parts. Although the drawings were made, the process apparently never advanced beyond that stage.

R.G. opened an irrevocable letter of credit in the amount of $109,411 in favor of Pump Sales at Banco Santander Puerto Rico in May 1992. An officer of Banco Santander testified that a letter of credit "is an instrument issued by a bank acting on its customer's instructions whereby the bank engages with a beneficiary, which usually is the seller in a transaction, to pay against certain documents which are stipulated in the letter of credit." The letter of credit was intended to facilitate payment for the impellers and suction bells and was to be drawn on by Pump Sales after it had initiated the delivery of those parts. The letter of credit authorized the bank to pay Pump Sales the full amount upon its presentation of a sight draft (essentially a demand for payment), a commercial invoice for "pump parts," a packing list, and the original trucker's bill of lading.

In mid-June 1992, defendant phoned Banco Santander several times to inform it that Pump Sales was sending documentation via courier that would allow it to collect the funds authorized by the letter of credit. On June 18, Pump Sales presented the bank with a sight draft endorsed by defendant, a commercial invoice representing that pump parts were shipped on that date, a packing list, and a bill of lading. The bill of lading contained a discrepancy, and the bank informed defendant that it would not issue the funds.

In a letter dated June 24, Pump Sales enclosed a corrected bill of lading.

After reviewing Pump Sales's documentation, the bank on June 26 transferred by wire $109,411 to Pump Sales's account at a New Jersey bank. On July 3, the bank debited R.G.'s corporate account $109,411. Camino, R.G.'s president, was surprised that the impellers and suction bells were ready so soon and as a result he visited his freight forwarder in New Jersey to determine what parts had been shipped. He discovered that four previously paid for shafts had been shipped, but not the suction bells or impellers. R.G. never received the impellers and suction bells.

Defendant was charged with bank fraud in violation of 18 U.S.C. §§ 1344, making a materially false statement or report for the purpose of influencing the action of a federally insured institution in violation of 18 U.S.C. §§ 1014, and wire fraud in violation of 18 U.S.C. §§ 1343. He was convicted by a jury on all three counts.

II. Whether the Charge of Wire Fraud was Time-Barred

Defendant committed the actions that led to his convictions between March 1991 and June 1992. The government indicted him for wire fraud in January 1998. Defendant contends that the charge was time-barred.

The statute of limitations in 18 U.S.C. §§ 3282 requires that wire fraud charges be brought within five years of the offense. Section 3282 is modified, however, by 18 U.S.C. §§ 3293(2), which establishes a ten year statute of limitations when the "offense affects a financial institution." Defendant argues that the bank suffered no loss and was not affected by his actions, and that therefore the five year statute of limitations applied and the indictment was tardy. The district court summarily presumed that the bank experienced a risk of loss and that was sufficient to support the charge. We review this issue of law, one of first impression in this circuit, de novo. See United States v. Rivera, 131 F.3d 222, 224 (lst Cir. 1997) (interpretation of statute is purely legal question reviewed de novo).

Our first reference point is the statutory language. See Greebel v. FTP Software, Inc., 194 F.3d 185, 192 (lst Cir. 1999); see also Rivera, 131 F.3d at 224 ("When the 'plain meaning' is clear on its face, 'the sole function of the courts is to enforce it according to its terms.'" (citation omitted)). No definition of "affect" is found in the statute. Its dictionary definition is "to act on; produce an effect or change in." The Random House Dictionary of the English Language 33 (2d ed. 1983). Its synonyms are listed as "influence, sway; modify, alter," id., lending support to defendant's position that there must be some negative consequence to the financial institution to invoke the extended statute of limitations.

The little precedent that exists leans in the same direction. The two courts that have had occasion to interpret section 3293(2) considered situations in which the financial institution was a parent to the defrauded entity and thus was closely financially linked to it. In United States v. Pelullo, 964 F.2d 193 (3d Cir. 1992), the Third Circuit rejected the argument that the parent financial institution of a wholly owned subsidiary could not be affected when the fraud was directed at the subsidiary, noting that Congress intended to extend the statute to wire fraud that did not necessarily target a financial institution but nonetheless affected it. See id. at 214-16. In United States v. Bouyea, 152 F.3d 192 (2d Cir. 1998), the Second Circuit, confronting a situation where a wholly owned subsidiary suffered a loss of $150,000 after borrowing money from its parent financial institution to finance its transaction with the defendant, held that the evidence was sufficient to allow the jury to find that the defendant's actions affected a financial institution. See id. at 195.

In both cases, the financial institution presumably suffered a loss or at the very least was exposed to a high risk of loss as a result of defendant's commission of fraud resulting in a loss to its subordinate entity. The court in Pelullo recognized that there was, however, a limit to the statute's reach, noting that the effect on the bank would be too attenuated to invoke the statute in certain circumstances, for example, "if the fraud was directed against a customer of the depository institution which was then prejudiced in its dealings with the institution." Pelullo, 964 F.2d at 216. We agree that at minimum there needs to be some impact on the financial institution to support a conviction.

We conclude that this is a case in which the consequence to the bank, if any, is too remote to sustain the conviction. Even assuming, without deciding, that being exposed to a risk of loss is sufficient to "affect" a bank, within the ordinary meaning of that term, we cannot agree with the district court that this defendant created such a risk.

In Banco Santander's standard application and agreement for an irrevocable letter of credit, R.G. promised to pay the bank on demand for each draft drawn under the credit by Pump Sales. Camino agreed that pursuant to the bank's typical procedure, "the letter of credit was set up [such] that R.G. Engineering, Inc., was going to be debited from R.G. Engineering's account in Banco Santander immediately upon payment of the letter of credit." In fact, R.G.'s corporate account at Banco Santander was debited the full amount of the letter of credit shortly after the payment was made to Pump Sales. ¹ The bank officer testified that R.G. usually maintained ample funds to cover its needs and that there were sufficient funds in R.G.'s commercial account at the time that the letter of credit was drawn for the bank to debit R.G.'s account.

Further, R.G. pledged as security for the letter of...