U.S. v. Beer

• Citation: 518 F.2d 168
• Decision Date: 27 August 1975
• Docket Number: No. 74-3569,74-3569
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. William H. BEER, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 168

518 F.2d 168

UNITED STATES of America, Plaintiff-Appellee, v. William H. BEER, Defendant-Appellant.

No. 74-3569.

United States Court of Appeals, Fifth Circuit.

Aug. 27, 1975.

Robert V. Williams, James M. McEwen, Tampa, Fla., for defendant-appellant.

John L. Briggs, U. S. Atty., Jacksonville, Fla., Terrance Smiljanich, Asst. U. S. Atty., Tampa, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before BROWN, Chief Judge, and WISDOM and COLEMAN, Circuit Judges.

COLEMAN, Circuit Judge.

Defendant appeals a conviction under an indictment charging him with knowingly and wilfully making a false statement to the Federal Deposit Insurance Corporation (FDIC) in violation of 18 U.S.C., § 1001. ¹ The indictment alleges in substance that in completing an Officer's Questionnaire, FDIC Form 56-19, submitted to the Federal Deposit Insurance Corporation, Beer falsely answered "none" to Question 4, which read as follows:

"List all extensions of credit made since last examination for accommodation of others than those whose names appear on bank's records or on credit instruments in connection with such extensions."

The indictment charges that Beer did, in fact, know of such an extension of credit which had been made for his own accommodation subsequent to the last bank examination, and that his name did not appear on bank records in connection with the transaction. The defendant was convicted in a non-jury trial and sentenced to two years of unsupervised probation and fined $10,000.

On the essential element of materiality we find the government's case insufficient and that it was an improper and overly broad application of § 1001; therefore, we reverse.

I Facts of the Case

At the time of the charge in question, Beer was President of the Venice-Nokomis Bank and Trust Company located in Venice, Florida, a bank whose deposits were insured by the FDIC. Beer and one Robert Oakley jointly owned a small airplane in which Beer would frequently take Oakley, a nonpilot, to visit the latter's family in Gainesville, some distance away. Oakley testified that he wished to purchase a larger, faster plane for this purpose; so he and Beer bought a 1966 Beechcraft in February, 1970. The money for the plane was obtained by a $28,000 loan from the Venice-Nokomis Bank to Oakley, with Beer acting as the loan officer. Oakley was shown as the only obligor on the loan, and the collateral was indicated to be a "Trust Agreement". The only specification given to the term "Trust Agreement" as it applied to this particular loan was the word "Secured" which appeared on the bank's ledger card along with the penciled notation "1966 Airplane".

One week later, on February 26, 1970, Oakley took out a $360,540.90 loan, with appellant again acting as loan officer. In the blank space on the note where collateral was to be listed was the reference "See Attached List". According to the testimony of an Assistant-Cashier of the bank, no such list could be located. The ledger card on the loan merely listed "Bonds" as collateral. At trial Oakley stated that this was meant to include a stock trust agreement he had with a New York bank. The proceeds from the loan were used to engage in short-term municipal bond trading which was "done by the bank" and generated a profit of $29,200 over the next several months. This gain was then used to retire the original airplane loan.

On May 25, 1970, a routine bank examination of Venice-Nokomis was conducted by the FDIC. In the course of the examination, Beer, as President of the bank, was given an FDIC Officer's Questionnaire to complete as part of the examination report. The questionnaire sought to elicit information not otherwise contained in the records of the bank, and was completed by Beer in June, 1970.

Because of Beer's half-interest in and his beneficial use of the airplane, the District Judge found that appellant was "accommodated" by the $28,000 loan, and therefore, that defendant's response to Question 4, detailed above, was knowingly and materially false. The difficulty is that the only evidence of the materiality of Beer's answer to Question 4 was the general testimony of John W. Ray, a senior head bank examiner for the FDIC. He testified that the FDIC relies on the questionnaire to provide information not otherwise available in the bank records. Ray was never asked, however, about the potential effect of a false answer to Question 4 upon the functioning of the agency nor did he say what the FDIC might have done had the question been answered truthfully, other than to say that such a false statement would not authorize him to cancel the bank's federal deposit insurance.

To fully understand this case, it should not be ignored that the false statement was but a small facet of the government's original case. The initial indictment contained five counts including conspiracy with Oakley and one other defendant to misapply bank funds, misapplication of funds in connection with $360,540.90 loan to Oakley, and false bank entries. The charges against the two co-conspirators were dismissed on the government's motion, as were all counts against Beer except for the misapplication of funds and the false statement. He was then acquitted of the former and convicted of the latter. Thus all the specific substantive charges were either tossed out or found to be unmeritorious.

II Origin and Scope of § 1001

The origin and history of the false statement statute are thoroughly detailed in United States v. Bramblett, 348 U.S. 503, 75 S.Ct. 504, 99 L.Ed. 594 (1955); United States v. Gilliland, 312 U.S. 86, 61 S.Ct. 518, 85 L.Ed. 598 (1941); and particularly in United States v. Stark, 131 F.Supp. 190 (D.Md., 1955). Enacted over a century ago in the "wake of a spate of frauds upon the Government", the statute was clearly directed at false pecuniary claims against the United States. It remained in that form until 1934 when the Department of the Interior was experiencing great difficulty in regulating "hot oil" shipments. In order to provide a penal sanction for deliberately supplying false information to regulatory departments, the words "cheating and swindling" were deleted, and the statute was broadened to its present form to include "any matter within the jurisdiction of any department or agency of the United States", manifesting "the congressional intent to protect the authorized functions of governmental departments and agencies from the perversion which might result from the deceptive practices described".

The statute is necessarily couched in very broad terms. Congress could not hope to foresee the multitude and variety of deceptive practices which ingenious individuals might perpetrate upon an increasingly complex governmental machinery, a complexity that renders vital the truthful reporting of material data. When dealing with such a pervasive, all-encompassing statute, however, the courts must be extremely careful to insure that reasonable limits are observed. This is merely a restatement of the canon of construction that criminal statutes are to be strictly construed. Smith v. United States, 360 U.S. 1, 79 S.Ct. 991, 3 L.Ed.2d 1041 (1959); United States v. Strauss, 5 Cir., 1960, 285 F.2d 953. In order to exclude "trivial" falsehoods from the purview of the statute, the courts have read a requirement of materiality into its second clause, the test being whether a statement "has a natural tendency to influence, or was capable of influencing, the decision of the tribunal in making a determination required to be made". Materiality is therefore a matter of law. United States v. Krause, 5 Cir., 1975, 507 F.2d 113, 118; Rolland v. United States, 5 Cir., 1953, 200 F.2d 678, cert. denied 345 U.S. 964, 73 S.Ct. 950, 97 L.Ed. 1383 (1953); United States v. Jones, 8 Cir., 1972, 464 F.2d 1118, 1121-22; Brethauer v. United States, 8 Cir., 1964, 333 F.2d 302, 306; Blake v. United States, 8 Cir., 1963, 323 F.2d 245, 246; Gonzales v. United States, 10 Cir., 1960, 286 F.2d 118, 122. See United States v. Lambert, 5 Cir., 1974, 501 F.2d 943, 946.

The judiciary has also found it necessary to narrow the parameters of the statute through the "exculpatory no" doctrine. Numerous cases have found that essentially negative answers to questions propounded by investigating government officers are not statements within the meaning of § 1001 in the absence of some affirmative, aggressive, or overt falsehood on the defendant's part. Paternostro v. United States, 5 Cir., 1962, 311 F.2d 298, 309 (negative answer given to Special Agents of the Internal Revenue Service); United States v. Bedore, 9 Cir., 1972, 455 F.2d 1109, 1110-11 (denial of identity to FBI agent); United States v. Philippe, 173 F.Supp. 582 (S.D.N.Y., 1959); United States v. Davey, 155 F.Supp. 175 (S.D.N.Y., 1957); United States v. Stark, 131 F.Supp. 190 (D.Md., 1955); United States v. Levin, 133 F.Supp. 88 (D.Colo., 1953). See United States v. Lambert, supra. Contra United States v. Ratner, 9 Cir., 1972, 464 F.2d 101 (negative answers to Internal Revenue Agents); United States v. McCue, 2 Cir., 1962, 301 F.2d 452, cert. denied, 370 U.S. 939, 82 S.Ct. 1586, 8 L.Ed.2d 808 (1962) (negative statements to Internal Revenue agents); Frasier v. United States, 1 Cir., 1959, 267 F.2d 62 (denial of communist affiliation on a loyalty certificate).

In its detailed analysis of the applicable cases, this Circuit found the reasoning of Stark, Levin, Davey, and Philippe persuasive in its Paternostro decision. Therein the Court quoted the District Court opinions at length concerning the severity of § 1001's sanctions as opposed to those for perjury, the potential for self-incrimination raised, and the generality of the statute's terms. These cases are indicative of the concern of the courts when grappling with broad language which punishes a knowingly false statement that has the "capacity" to deceive rather than an affirmative...