U.S. v. Allender

• Decision Date: 19 September 1995
• Docket Number: No. 94-3200,94-3200
• Citation: 62 F.3d 909
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Richard B. ALLENDER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 909

62 F.3d 909

64 USLW 2163

UNITED STATES of America, Plaintiff-Appellee, v. Richard B. ALLENDER, Defendant-Appellant.

No. 94-3200.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 23, 1995.

Decided Aug. 4, 1995.

Rehearing and Suggestion for

Rehearing En Banc Denied

Sept. 19, 1995.

James M. Warden, Asst. U.S. Atty. (argued), Indianapolis, IN, for U.S.

Carl L. Epstein (argued), Indianapolis, IN, for Richard B. Allender.

Before CUDAHY, COFFEY, and MANION, Circuit Judges.

MANION, Circuit Judge.

Richard Bert Allender was convicted by a jury of eight counts of bank fraud in violation of 18 U.S.C. Sec. 1344. He was sentenced to 51 months imprisonment on each count, to be served concurrently, followed by five years of supervised release. We affirm.

I. Background

First State Bank of Morgantown, Indiana is a federally insured financial institution. 18 U.S.C. Sec. 1344 makes it illegal to knowingly defraud or use false or fraudulent pretenses to obtain money from such a financial institution. Nevertheless, between September 1989 and July 1991, Allender obtained a series of nine loans from First State Bank using various false statements. Five of these loans were obtained by forging the signature of a longtime family friend and previous Morgantown resident, Ruth Howell. The first loan, in the amount of $15,000.00, was taken out on September 23, 1989. Allender forged Howell's name on a promissory note and again on the disbursement check payable solely to Howell. The second loan was disbursed on October 25, 1989 in the amount of $26,000.00. Allender again forged Howell's signature on this loan, but was also a co-signor. Part of the proceeds of this second loan were used to pay off the first loan. The next three loans, dated April 23, 1990 ($25,000.00), October 20, 1990 ($23,000.00) and April 18, 1991 ($19,000.00), were obtained in a fashion similar to the second loan--also without Howell's knowledge or consent--and were renewals of the second loan. After the last of these loans went into default, the bank charged off the balance.

On January 15, 1990, Allender used the name of Darren Whiteside to take out a loan of $24,000.00. Whiteside, a social acquaintance of Allender, had no business relationship with First State Bank. As with the Howell loans, this loan purported to bear the signatures of both Whiteside and Allender. Whiteside, however, testified that he had not authorized this loan. In addition, the collateral listed on the loan was not owned by either Whiteside or Allender. In fact, it did not exist. The bank charged off this loan too.

Finally, Allender secured three other loans by pledging collateral (heavy equipment) that did not exist. Two of these loans also purported to bear the signature of Allender's father, which Allender admitted to signing without his father's knowledge. Each of these loans went into default and were charged off by the bank.

After an FBI investigation uncovered these and other suspicious loan deals involving Allender and First State Bank, Allender was charged with violating 18 U.S.C. Sec. 1344. The superseding indictment originally contained ten counts, but was reduced to nine after the district court granted, in part, Allender's motion to dismiss certain counts as multiplicitous. Of these nine counts (contained in the amended superseding indictment), Allender was convicted of eight. He was acquitted of count five, involving the Darren Whiteside loan.

II. Analysis

On appeal, Allender asserts five errors: (1) that the district court erred in denying his motion to dismiss the subsequent Ruth Howell loans as multiplicitous, (2) that he received ineffective assistance of trial counsel, (3) that there was insufficient evidence to support his convictions, (4) that the district court erred in instructing the jury, and (5) that the district court erred in determining his sentence. We address each contention in order.

First, Allender claims that the amended superseding indictment in this case contained multiplicitous counts, specifically the five Ruth Howell loans. He alleges that it was error for the district court to deny his motion to dismiss, as multiplicitous, the last four of these loans.

Multiplicity is the charging of a single offense in separate counts of an indictment. United States v. Gonzalez, 933 F.2d 417, 424 (7th Cir.1991). This exposes a defendant to the threat of receiving multiple punishment for the same offense. Id. In order to determine whether a given indictment contains multiplicitous counts, we look to the applicable criminal statute to see what the allowable "unit" of prosecution is--the minimum amount of activity for which criminal liability attaches. United States v. Song, 934 F.2d 105, 108 (7th Cir.1991).

In this case, Allender was charged with violating the bank fraud statute, 18 U.S.C. Sec. 1344, which provides that:

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.

This and other circuits have consistently held that each "execution" of a scheme, rather than a mere "act in furtherance of such a scheme," constitutes a separate violation of Sec. 1344. United States v. Longfellow, 43 F.3d 318, 323 (7th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 2277, 132 L.Ed.2d 281 (1995) (and cases cited therein). "Thus, for each count of conviction, there must be an execution." United States v. Hammen, 977 F.2d 379, 383 (7th Cir.1992).

Allender argues that the four subsequent Ruth Howell loans at issue in this case were not separate executions but merely renewals of the first fraudulent loan taken out in her name. He claims that there was no new money taken out (although, we note, the second loan was in an amount significantly in excess of the first loan). Also, because each loan was obtained by forging the signature of the same person, Ruth Howell, Allender contends that each individual loan was merely a step toward executing his scheme--merely one of many efforts--to obtain a single sum of money from the bank.

Determining exactly what constitutes an "execution" of a scheme can be difficult and generally depends on the facts of each case. Longfellow, 43 F.3d at 323; United States v. Molinaro, 11 F.3d 853, 860 (9th Cir.1993), cert. denied, --- U.S. ----, 115 S.Ct. 668, 130 L.Ed.2d 602 (1994). While there is not a great deal of guidance on this issue, courts have consistently held that a separate execution must be chronologically and substantively independent and not dependent on another for its existence. Longfellow, 43 F.3d at 323; Molinaro, 11 F.3d at 860.

The question here of course is whether, based on the facts of this case, the four subsequent Ruth Howell loans are chronologically and substantively independent. According to this court's decision in Longfellow, there can be no doubt that they are. In Longfellow, this court considered whether the refinancing of a loan constituted a separate execution of a scheme under Sec. 1344. Longfellow, 43 F.3d at 324. Finding that it was, the panel considered it significant that the transaction in question created a new and independent risk for the lending institution. Id. The court recognized that no new cash passed to the defendant, but nevertheless held that he deprived the Credit Union in that case of an opportunity for reimbursement through foreclosure. Id. at 324-25; see also United States v. Hord, 6 F.3d 276, 282 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1551, 128 L.Ed.2d 200 (1994) (risk of loss, not just loss itself, supports conviction). Significantly, the court also observed that "[t]he fact that the two loans were related, or that the same Credit Union and Credit Union member was involved in both does not necessarily make them part of the same execution." Longfellow, at 325; see also Hord, 6 F.3d at 282 (same victim does not prove only one execution). And the court held that there was no indication that the subsequent loans were planned or contemplated together, a circumstance that may impact the chronological and substantive independence of these loans. Longfellow, 43 F.3d at 324.

Because the same factors are present here, the result in Longfellow drives the result in this case. The record clearly indicates that each loan put the bank at risk for the funds loaned--at least for another term of days. Allender's argument that no new tactics were used (e.g., that all of these loans purported to obligate Ruth Howell as borrower) or that he used the subsequent loans to pay off the previous loans, as explained, avails him nothing. There is also nothing in the record indicating that the subsequent loans were planned or contemplated together. And finally, we note that, despite Allender's insistence that no new funds were put at risk after the first Ruth Howell loan, the record indicates that the second loan in this series was clearly for an amount in excess of the $15,000.00 obtained by Allender in the first loan. This alone could defeat Allender's claim, at least with respect to the second loan. United States v. Brandon, 17 F.3d 409, 422 (1st Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 80, 130 L.Ed.2d 34, and cert. denied, --- U.S. ----, 115 S.Ct. 81, 130 L.Ed.2d 34 (1994) (each time an identifiable sum of money is obtained by a specific fraudulent transaction, there is likely to be a separate execution of a scheme to defraud). After reviewing the record, therefore, we are convinced that the four loans challenged in this case are separate executions for the purposes of Sec. 1344. The district court therefore did not err in denying that part of Allender's motion to dismiss, on grounds of...