U.S. v. Bonallo

• Citation: 858 F.2d 1427
• Decision Date: 07 October 1988
• Docket Number: No. 87-3085,87-3085
• Parties: , 26 Fed. R. Evid. Serv. 1085 UNITED STATES of America, Plaintiff-Appellee, v. Daniel Bruce BONALLO, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1427

858 F.2d 1427

99 A.L.R.Fed. 869, 26 Fed. R. Evid. Serv. 1085

UNITED STATES of America, Plaintiff-Appellee, v. Daniel Bruce BONALLO, Defendant-Appellant.

No. 87-3085.

United States Court of Appeals Ninth Circuit.

Argued and Submitted May 2, 1988.

Decided Oct. 7, 1988.

Charles W. Carnese, Portland, Or., for defendant-appellant.

Lance A. Caldwell, Asst. U.S. Atty., Portland, Or., for plaintiff-appellee.

Appeal from the United States District Court for the District of Oregon.

Before WALLACE and REINHARDT, Circuit Judges, and HARDY, ^* District Judge.

REINHARDT, Circuit Judge:

Defendant/appellant Daniel Bonallo appeals his conviction on 12 counts of bank fraud under 18 U.S.C. Sec. 1344 (1984). The appeal requires us to determine whether a scheme to defraud a bank under that statute requires that the misrepresentation actually precede the bank's transfer of money or property to the perpetrator. We also consider the sufficiency of the indictment as well as the sufficiency of the evidence. Bonallo also contests the admissibility of certain evidence. We affirm his conviction on 11 of the 12 counts.

I. FACTS

Daniel Bonallo worked at American Data Services (American Data) beginning in 1979. American Data is a subsidiary of The Oregon Bank. ¹ American Data handles data processing for the Bank as well as for other banks. Bonallo worked in the Systems Development department, the function of which was to correct problems arising in the computer software. He was responsible for support of the Automatic Teller Machines (ATM) and Bank Card Management Systems.

Bank customers use an ATM machine to get cash, if the customer has an appropriately coded plastic card--i.e., a VISA, Mastercard or personal banking card--and a personal identification number (PIN). Once the customer punches in the correct PIN, the ATM allows the customer to withdraw up to $300 in $20 bills per day. Bonallo possessed a Mastercard, a personal banking card, and a PIN.

The ATM communicates the details of a transaction to a Tandem computer at American Data. The Tandem stores this information over a 24-hour cycle. At about 2:00 p.m. each Monday-Friday, this data is transferred to an IBM computer for further storage and report preparation. Thus, it was important that any manipulation of the transaction records be done soon after the transaction, so that the transaction would not be recorded in the IBM computer. The American Data building, which houses the Tandem, has a door security system which logs the entrances and exits of personnel during after hours periods.

During 1985, the Bank received a greater than average number of reports from customers claiming that their accounts reflected ATM withdrawals about which the customers knew nothing. After checking its security procedures, the Bank concluded that the problem was most likely a fraud committed by an American Data employee through manipulation of computer records. Since Bonallo was the most expert employee regarding the ATM system, suspicion focused upon him.

The Bank developed a list of 40 fraudulent transactions. It then limited its consideration of these transactions only to those that took place on a weekend or after hours, times when there would also be a record of entry and exit at the American Data building. Two of the 15 cash withdrawals which occurred during those times apparently involved customers of a different bank. This left 13 transactions which could be linked to weekend or after hours access to the American Data building, for which there would also be a record of entry and exit from the building. One of these transactions was later determined to have been erroneously questioned by the customer; this transaction, the basis of Count 8, was later dismissed on the government's motion. The remaining 12 transactions constitute the offenses of which Bonallo was convicted.

Regarding these transactions, the access logs to the American Data building indicated that Bonallo entered the building shortly after each fraudulent transaction occurred. Nearly all of the transactions occurred at ATM machines between Bonallo's house and the American Data building or at the machine just outside the door of the building. In the case of the latter transactions, the records showed that in each instance Bonallo left the building one minute prior to the withdrawal and re-entered the building two minutes after the funds were obtained. The Federal Bureau of Investigation made a videotape which showed an American Data employee leaving the building, walking to the ATM, withdrawing cash, and returning to the building. The sequence took approximate three minutes, the same time noted on the computer logs for Bonallo on the occasions of the fraudulent transactions.

Kanable, the person who assumed Bonallo's duties after he was fired, testified that he found a "fraud program" in Bonallo's Tandem computer program library. He also stated that the program was designed to provide access to ATM computer files, and to alter transaction records, although he conceded that it could, conceivably, have been put to a legitimate use.

During the time of the fraudulent transactions, Bonallo made numerous deposits of cash to a savings account, frequently in $20 bills, the denomination that the ATMs dispensed.

Bonallo denies making the withdrawals, claims that he never ran, nor was even aware of, the fraud program and asserts that he was framed by the real culprit, who is otherwise unidentified.

Bonallo was charged with 13 counts of violating 18 U.S.C. Sec. 1344 (1984), the statute that prohibits bank fraud. He waived trial by jury. Following a bench trial, and the government's dismissal of Count 8, the district court found him guilty on the remaining 12 counts. Bonallo timely appeals.

II. THE SUFFICIENCY OF THE INDICTMENT

Bonallo asserts that the indictment is insufficient because it charges a violation of section 1344(a)(2), and the facts alleged do not set forth a violation of that subsection. ² While he may be correct that the facts alleged do not describe a scheme to obtain bank funds by means of false pretenses under 1344(a)(2), Bonallo errs when he states that the indictment charges a violation of that subsection. Indeed, the facts alleged in the indictment clearly make out a charge of bank fraud under subsection 1344(a)(1). ³ Bonallo does not even address that charge.

Presumably, Bonallo errs because there is a reference to false pretenses in the prefatory language of the portion of the indictment describing the scheme. Also, the indictment expressly identifies a violation of 18 U.S.C. Sec. 1344, but does not specify whether the charge is based on subsection 1344(a)(1) and/or 1344(a)(2).

When construing the meaning of an indictment, the description of the alleged conduct is far more critical than the indictment's prefatory language or its citation of a particular provision of a statute. Indeed, in some circumstances, a conviction can be sustained on the basis of a statute not expressly charged in the indictment. See, e.g., United States v. Hutcheson, 312 U.S. 219, 229, 61 S.Ct. 463, 464, 85 L.Ed. 788 (1941); Williams v. United States, 168 U.S. 382, 389, 18 S.Ct. 92, 94, 42 L.Ed. 509 (1897).

An indictment is sufficient if it "first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense." Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 2907, 41 L.Ed.2d 590 (1974) (citations omitted). According to Fed.R.Crim.P. 7(c)(1), "[t]he indictment ... shall be a concise and definite written statement of the essential facts constituting the offense charged." See also United States v. Buckley, 689 F.2d 893, 897 (9th Cir.1982). However, error in the citation or its omission shall not be grounds for dismissal of the indictment or reversal of the conviction if the error "did not mislead the defendant to his prejudice." Fed.R.Crim.P. 7(c)(3). We review the sufficiency of an indictment de novo. United States v. Buckley, 689 F.2d at 897.

Rather than false pretenses, the indictment charges subsection (a)(1) fraud. It details facts and circumstances that constitute a scheme to defraud a federally chartered bank. See discussion Part III.A. infra. Because the indictment sets forth the elements of a subsection 1344(a)(1) violation, and because it expressly charges a violation of section 1344, we conclude that it fairly informed Bonallo of the charge against which he was required to defend. See Hamling v. United States, 418 U.S. at 117, 94 S.Ct. at 2907. The indictment also enables him to plead double jeopardy in bar of future prosecutions for this same offense. Id. Accordingly, the indictment is sufficient.

We observe, however, that the indictment's reference to false pretenses and its failure to specify subsection 1344(a)(1) could well have created at least some degree of initial confusion; "false pretenses" is simply not involved in this case. Indictments should be drawn with greater care. The government should make every effort to avoid using erroneous or misleading prefatory language and should in all cases specify the particular provision or subsection on which the charge is based. By doing so it will ensure that the defendant receives fair warning of the charge against which he or she must defend and will at the same time avoid unnecessary risks to itself on appeal. While the indictment here fell short of the desired standard, it was, nevertheless, sufficient to fairly inform Bonallo of the charge against him.

In any event, even if the inclusion of the prefatory language regarding false pretenses and the omission of a reference to the particular subsection constituted error, we would not reverse, because the "error" did not mislead Bonallo to his prejudice under Fed.R.Crim.P. 7(c)(3). As already indicated, the indictment sets...