U.S. v. Austin

• Citation: 585 F.2d 1271
• Decision Date: 27 November 1978
• Docket Number: No. 76-4487,76-4487
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Lance C. AUSTIN, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1271

585 F.2d 1271

UNITED STATES of America, Plaintiff-Appellee, v. Lance C. AUSTIN, Defendant-Appellant.

No. 76-4487.

United States Court of Appeals Fifth Circuit.

Nov. 27, 1978.

Charles L. Sullivan, Clarksdale, Miss., for defendant-appellant.

H. M. Ray, U. S. Atty., Thomas W. Dawson, Alfred E. Moreton, III, Asst. U. S. Attys., Oxford, Miss., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Mississippi.

Before INGRAHAM, GEE and TJOFLAT, Circuit Judges.

TJOFLAT, Circuit Judge:

From June 1974 to October 1975, Lance C. Austin issued over $750,000 worth of bad checks drawn against his checking account with the Bank of Pontotoc, Mississippi (the Bank), a small-town bank with a capital structure of less than one million dollars. On October 20, 1975, Federal Deposit Insurance Corporation (FDIC) bank examiners discovered that his account was overdrawn in the amount of $499,941.42. The examiners found the Bank's capital to be so impaired that they required it to raise in excess of $200,000 in new capital or to merge with another bank in order to preserve its insured status with FDIC. The Bank chose the latter course.

On July 16, 1976, Austin and three officers of the Bank who had made it possible for Austin to maintain his account in an overdraft position were indicted for violating federal banking laws. In five counts, they were charged with aiding and abetting one another in misapplying FDIC-insured bank funds, 18 U.S.C. § 656 (1976), in making false entries in the Bank's books and reports, 18 U.S.C. § 1005 (1976), and in concealing material facts about the Bank's condition from FDIC. 18 U.S.C. § 1001 (1976). ¹ One of the officers, Sarah McDonald the head bookkeeper, pled guilty prior to trial and testified against the remaining defendants as a prosecution witness. Austin and Stanley Faulkner, the Bank's president, were found guilty by the jury on all counts; Jimmy Stegall, vice president and head cashier, was acquitted. Austin is the only defendant before us in this appeal.

Austin contends that his convictions should be set aside for want of sufficient evidence and that a judgment of acquittal should be entered on each count. Alternatively, Austin claims that he is entitled to a new trial because a statement by the prosecutor in closing argument to the jury amounted to an improper comment on his failure to take the witness stand. We are unpersuaded by Austin's contentions and affirm his convictions.

I

Whether the sufficiency of the evidence is questioned on motion for judgment of acquittal made at the close of the Government's case, at the close of all the evidence, or after the return of a guilty verdict, the test is the same: ² viewing the case in the light most favorable to the Government, could "a reasonably-minded jury . . . accept the relevant evidence as adequate and sufficient to support the conclusion of the defendant's guilt beyond a reasonable doubt." United States v. Warner, 441 F.2d 821, 825 (5th Cir.), Cert. denied, 404 U.S. 829, 92 S.Ct. 65, 30 L.Ed.2d 58 (1971); Accord United States v. Teal, 582 F.2d 343 (5th Cir. 1978); United States v. Prout, 526 F.2d 380, 384 (5th Cir.), Cert. denied, 429 U.S. 840, 97 S.Ct. 114, 50 L.Ed.2d 109 (1976). This test applies "whether the evidence is direct or circumstantial. (W)e must accept as established all reasonable inferences that tend to support the action of the jury, and any conflicts in the evidence must be resolved in favor of the jury verdict." United States v. Teal, 582 F.2d at 345 (quoting United States v. Warner, 441 F.2d at 825, 831).

At the outset we observe that Austin concedes that the Government's proof established that he issued the bad checks in question ³ and that entries were made in the Bank's records that prevented the FDIC examiners from discerning that his account was overdrawn. The shortcoming in the Government's case, he contends, lies in the absence of sufficient probative evidence to show that he intended that the Bank's funds be misapplied or that any false entries be made or other techniques be used for the purpose of hiding his overdrafts from the examiners. We are convinced that the evidence was more than adequate to demonstrate that Austin was a party to the misapplication of bank funds and that he participated in a cover up scheme with the requisite criminal intent. An examination of Austin's conduct alone, we think, makes this clear.

At the time Austin opened his account with the Bank in 1974 he was engaged in business for himself, operating as a land-clearing contractor and as an interstate trucker. He utilized one checking account for his business needs. It was in the name of "L. C. Austin, Dozier Account, Sarepta, Miss." and was the account on which all of the bad checks were written. No sooner had the account been opened than Austin began to write worthless checks. The checks were numerous and often in substantial amounts, at times in excess of $5,000. It was a rare occasion when the balance in the account was sufficient to cover a check. Nevertheless, the Bank's bookkeeper, Sarah McDonald, was under standing instructions to honor Austin's checks. She was told by the president of the Bank, Stanley Faulkner, to pay the checks and to hold them as "cash items." Under the Bank's normal procedure, she had the authority to allow an overdraft of an insubstantial amount, but upon paying the customer's check she would have been required to send him an overdraft notice immediately so that a deposit to cover the check could be made. In Austin's case, however, her instructions were to honor the check despite the amount and to ignore the overdraft notice procedure. She was simply to advise Faulkner of the overdrafts as they appeared.

This practice continued unabated except on those occasions when it was suspected that the FDIC examiners might arrive to inspect the Bank. Though the examiners came only intermittently and always unannounced, Faulkner and Jimmy Stegall, the vice president and cashier, seemed to be able to anticipate most of their visits. Whenever they sensed a visit, steps would be taken to ensure that the overdrawn condition of Austin's account and the accumulation of bad checks as cash items would not be discovered. Various methods were adopted to effect the cover up; each resulted in the establishment of deposit entries in Austin's account sufficient in amount to offset the worthless checks he had drawn. Consequently, when the examiners inspected his account they were led to believe that sufficient funds had been on deposit to pay his checks.

The first FDIC examination of concern to the defendants came in July 1974. By that time, Austin had overdrawn his account by $50,000. Checks totalling that amount had been presented to the Bank and paid. As she had been instructed, Sarah McDonald had honored the checks, without debiting Austin's account (which lacked funds to pay them), and had held the checks as "cash items," ⁴ that is, as assets awaiting conversion to cash. Under normal banking practice, it was improper to treat Austin's worthless checks as cash items. Shortly before the examiners arrived the following procedure was employed to eliminate these cash items: Austin drew a $50,000 worthless check on his account with Mechanics Savings Bank of Water Valley, Mississippi; Faulkner gave the check to Sarah McDonald with instructions to deposit it in Austin's account; and McDonald, after making the deposit, removed the bad checks from cash items and purportedly converted them to cash by charging them against the proceeds of Austin's $50,000 deposit.

Another FDIC examination was anticipated in December 1974. In preparation for the examination, which actually did not take place until the following January, these steps were taken to dispose of an accumulation of $156,000.69 worth of bad checks being carried as cash items: Faulkner, without authority and in violation of Bank policy, ⁵ made two $110,000 loans, one to Austin's wife and one to Austin's minor son, and deposited the proceeds of the loans in Austin's account; Sarah McDonald then eliminated the bad checks being held as cash items by charging them against Austin's account.

An FDIC examination was again anticipated in June 1975. This time $161,000 in bad checks were removed from cash items by paying them off with the proceeds of four notes totalling $161,520 that Faulkner deposited in Austin's account. The notes were obtained in this way: Faulkner gave Austin four of the Bank's form notes; Austin later returned to the Bank and presented Faulkner with the notes fully made out. Each note was made payable to the Bank and completed with a fictitious borrower's signature.

On September 30, 1975, the Bank was required to submit to FDIC a consolidated report of the Bank's condition. ⁶ Faulkner and Stegall signed the report and under the heading "Cash and Due From Banks" falsely included the sum of $363,356.40, which represented the worthless checks Austin had written and the Bank had paid and was holding as cash items. The falsification of this report was alleged, in Count 2 of the indictment, to be a violation of 18 U.S.C. § 1005 (1976).

On Monday, October 20, 1975, the FDIC examiners once more appeared. This time the defendants were caught off guard; $499,941.42 worth of Austin's bad checks, 735 in number, were being held as cash items and were reflected in the Bank's daily cash journal balance for the previous business day, October 18. When the examiners left the Bank on the evening of October 20, Faulkner and Austin handled the bad checks in the following manner: Faulkner obtained $100,000 of the Bank's funds by making a false note, payable to the Bank, in the name of one of the Bank's customers ⁷ and deposited those funds in Austin's account. Four hundred thousand dollars was added to the account balance with the deposit of two $200,000 checks, both worthless, that Austin drew on accounts he...