U.S. v. Falcone, 89-5718

• Citation: 934 F.2d 1528
• Decision Date: 11 July 1991
• Docket Number: No. 89-5718,89-5718
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Robert S. FALCONE, Sandra S. Falcone, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1528

934 F.2d 1528

UNITED STATES of America, Plaintiff-Appellee, v. Robert S. FALCONE, Sandra S. Falcone, Defendants-Appellants.

No. 89-5718.

United States Court of Appeals,

Eleventh Circuit.

July 11, 1991.

G.H. Terando, Poplar Bluff, Mo., for R. Falcone.

Kenneth M. Swartz, Asst. Federal Public Defender, Miami, Fla., for S. Falcone.

Dawn Bowen, Linda C. Hertz, Asst. U.S. Attys., Miami, Fla. for U.S.

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

Before POWELL ^*, Associate Justice, TJOFLAT, Chief Judge, and KRAVITCH, Circuit Judge.

PER CURIAM:

Robert S. and Sandra S. Falcone were convicted on one count of conspiring to commit an offense against the United States, under 18 U.S.C. Sec. 371 (1988), by violating 18 U.S.C. Secs. 1344(a)(2) and 2113 (1988), and on several counts of violating 18 U.S.C. Secs. 1344(a)(2) and 2113. On appeal, the Falcones contend, inter alia, that because they did not direct their conspiracy at the United States or one of its agencies, it was not a conspiracy to commit an offense against the United States under 18 U.S.C. Sec. 371. Given this circuit's interpretation of Tanner v. United States, 483 U.S. 107, 107 S.Ct. 2739, 97 L.Ed.2d 90 (1987), in United States v. Hope, 861 F.2d 1574 (11th Cir.1988) (Hope I ), and United States v. Hope, 901 F.2d 1013 (11th Cir.1990) (per curiam), application for stay of mandate and cert. denied, --- U.S. ----, 111 S.Ct. 713, 112 L.Ed.2d 702 (1991) (Hope II ), we agree. Accordingly, we reverse the Falcones' convictions under 18 U.S.C. Sec. 371; we affirm, however, their convictions under 18 U.S.C. Secs. 1344(a)(2) and 2113.

I.

Beginning in 1983, Robert and Sandra Falcone owned and operated a retail insurance agency, the Insurance Connection, in Hollywood, Florida. The Insurance Connection sold high-risk automobile insurance directly to the public. In 1984, the Falcones decided to enter the wholesale insurance business by opening a general insurance agency that would deal with retail insurance agents rather than the public. A general agency, however, cannot sell policies unless an insurance company agrees to underwrite them; in essence, a general agency acts as a regional branch office for an insurance company.

As the first step towards opening a general agency, the Falcones formed a Florida corporation, Ocean General Agency, Inc. (OGA), in mid-1984, and began to search for an insurance company that would contract with OGA to underwrite high-risk automobile insurance policies. They asked a family friend and business associate, Med James, who was already involved in the wholesale insurance business, to help them find an underwriter. In response, James contacted Thomas O'Connell, with whom he had done business in the past; O'Connell, with Robert Walker, owned an insurance company based in Texas, American Excel Insurance Co. (American Excel), which specialized in high-risk auto insurance.

By early 1985, the Falcones had agreed with O'Connell and Walker that American Excel would give OGA a contract to issue American Excel's policies. OGA issued stock, in equal shares, to Sandra Falcone, James, O'Connell, and Walker. The shareholders agreed that OGA would be a subchapter S corporation. ¹ OGA's articles of incorporation stated that its shareholders, rather than a board of directors, would manage OGA. ² Minutes entered in the corporate record book that purport to memorialize an organizational meeting of the shareholders on January 15, 1985, however, describe the election of a five-member board of directors: the four shareholders plus Wayne Dent, an American Excel employee.

OGA's shareholder/directors, according to these minutes, also appointed officers to manage OGA's day-to-day business: Edwin Rillo, a business associate of the Falcones who was also involved in the retail insurance business in south Florida, was, initially, OGA's president and treasurer, Wellington "Duke" Peay, an insurance broker, was vice president, and Sandra Falcone was secretary. Robert Falcone owned no OGA stock and held no formal position with the company, but some testimony at trial indicated that he had an undefined management role in which he oversaw OGA's operations, supervised its bank deposits, and engaged in long-range planning.

According to the minutes dated January 15, the board adopted a corporate resolution authorizing OGA to open bank accounts at the Orange State Bank (Orange State) and stating that two signatures, Robert Falcone's and either Ed Rillo's or Duke Peay's, would be required for OGA banking transactions on that account. ³ The witnesses at trial agreed that the January 15 minutes are inaccurate in some respects; the witnesses presented conflicting testimony on how many organizational meetings occurred, who attended them, what took place, and when OGA issued its stock. ⁴

In early and mid-1985, OGA opened several bank accounts at Orange State. When OGA opened the accounts, it filed at the bank corporate resolutions providing that two signatures were required for all transactions: Robert Falcone's and either Ed Rillo's or Duke Peay's. Bank statements were to be mailed to OGA's office. Rillo resigned from OGA in May 1985, and Peay was appointed president of the company; ⁵ later resolutions filed at Orange State listed the two required signors as Robert Falcone and Duke Peay, but the original resolution in the corporate minute book was never altered.

After James and O'Connell became uneasy, in mid-1985, about whether OGA should keep all of its funds at Orange State, OGA opened other accounts and purchased certificates of deposit at Commerce Bank, North Carolina National Bank (NCNB), and Barnett Bank. For each of these accounts, it filed corporate resolutions at these banks requiring two signatures for all transactions; it also requested that statements be mailed to OGA's office. Peay (who was president of OGA by that time) testified that he was aware of each of these accounts, but no formal corporate resolution, adopted by the board or the shareholders and then entered in the corporate minute book, authorized them.

OGA deposited a large amount of money in its accounts at Orange State and elsewhere. OGA held most of these funds as a fiduciary for either American Excel (to pay American Excel for the policies OGA had issued) or individual policy holders (to reimburse them for overpaid premiums). Approximately 12.5% of these funds, ⁶ however, were OGA's commission for the policies it had sold; this amount, less the overhead and expenses of the company, ⁷ was profit. ⁸

In mid-1985, the Falcones began the activities that led to criminal charges against them. On August 7, 1985, they opened an OGA account at Commerce Bank without informing Peay. They filed a corporate resolution with this account that stated that Robert Falcone was the owner and chairman of the board of OGA and that only one signature, either Robert Falcone's, Sandra Falcone's, or Duke Peay's, was needed for transactions on the account. ⁹ The resolution directed the bank to send statements for the account to OGA; it listed, however, the Insurance Connection's address. O'Connell and James both testified that they never, as shareholders or board members, approved the use of one signature for OGA's banking transactions.

The Falcones made two $50,000 deposits to this account. First, they deposited a check drawn on one of OGA's accounts at Orange State, signed by Robert Falcone and stamped with the facsimile signature of Duke Peay. Peay testified that he did not authorize the use of his signature stamp for this check. ¹⁰ Second, after a $50,000 certificate of deposit that OGA had purchased at Commerce Bank matured, the Falcones asked bank officials to deposit the proceeds in the new account. On August 8, Robert Falcone withdrew $8,500 from this account, using a withdrawal slip bearing only his signature.

On August 15, 1985, the Falcones opened an account at Orange State in the name of Payco Premium Finance Company, Inc. (Payco), an inactive corporation they owned. Transactions on this account required only one signature, either Robert's or Sandra's.

By this time, O'Connell and Walker had grown dissatisfied with OGA and told James that they wanted to end their involvement with the company. James agreed to consider purchasing O'Connell's and Walker's interests in OGA; he testified that he discussed this with the Falcones. On September 18, 1985, American Excel notified OGA that it was terminating the underwriting contract; after the contract was cancelled, OGA would not be able to issue American Excel's policies. Peay and the Falcones responded that American Excel had not complied with the contract, which required that American Excel notify OGA ninety days before it cancelled. American Excel then notified OGA that it was terminating the contract effective December 31, 1985.

On September 19, 1985, the Falcones opened another OGA account at Barnett Bank; they filed a corporate resolution at the bank stating that Robert Falcone was the owner and director of OGA and that only one signature, either Robert's or Sandra's, was required for transactions on the account. ¹¹ They directed the bank to hold statements for the account, rather than mailing them. ¹² Peay testified that he was unaware of this account.

By October 9, 1985, the Falcones had made eight deposits of OGA's money, for a total of $750,000, to this Barnett Bank account. Seven of these deposits were checks drawn on OGA's Orange State accounts. Four of the seven Orange State checks were signed by Robert Falcone and bore a facsimile stamp of Duke Peay's signature; Peay testified that he had not authorized these uses of the stamp. Robert Falcone and Peay both signed three of the Orange State checks. Peay testified, however, that he did not know that Robert Falcone intended to deposit the checks in the Barnett Bank account. Instead, he signed the checks with the understanding that one would be...