U.S. v. Howard

• Decision Date: 26 July 1994
• Docket Number: No. 93-2658,93-2658
• Citation: 30 F.3d 871
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Jerome HOWARD, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 871

30 F.3d 871

UNITED STATES of America, Plaintiff-Appellee, v. Jerome HOWARD, Defendant-Appellant.

No. 93-2658.

United States Court of Appeals Seventh Circuit.

Argued April 1, 1994.

Decided July 26, 1994.

Robert Lee Garrison (argued), Office of the U.S. Atty., Crim. Div., Fairview Heights, IL, for U.S.

Andrea L. Smith (argued), Office of the Federal Public Defender, East St. Louis, IL, for defendant-appellant.

Before BAUER, FLAUM, and KANNE, Circuit Judges.

KANNE, Circuit Judge.

Jerome Howard was the owner of a small ice cream/sandwich shop known as Mr. Penguin's Malt Shop located in East St. Louis, Illinois. After a flood damaged the malt shop in 1986, Howard applied for a disaster assistance loan from the United States Small Business Administration ("SBA"). The SBA loaned Howard a total of $12,500. Howard pledged the assets of the malt shop--the building housing the malt shop and its contents--as security for the loan. Howard further agreed to maintain hazard insurance on the building and its contents and to name the SBA as loss payee of the policy. ¹

Howard contacted insurance broker Ralph Thomas who arranged for Howard to purchase, inter alia, fire insurance from the Scottsdale Insurance Company. That policy provided $20,000 insurance coverage for the building itself and $10,000 insurance coverage for the building's contents. The insurance policy named Beverly Bush ² and the SBA as loss payees. That policy was effective from June 11, 1987 through June 11, 1988. Howard subsequently allowed the policy to lapse, but purchased a new fire insurance policy from the Monticello Insurance Company in 1989. He increased the amount of insurance coverage for the contents of the building to $20,000. The amount of insurance coverage for the building itself remained at $20,000. Bush and the SBA were named as loss payees for the building itself. However, Howard instructed Thomas to drop the SBA as loss payee for the contents portion of the policy. In June 1990, the building containing Mr. Penguin's Malt Shop and its contents were destroyed by fire. Howard thereafter submitted a fire damage claim to Monticello.

In October 1990, Thomas received two checks from Monticello as payment for the fire damage claim. The first check was made payable to Howard, d/b/a Mr. Penguin Malt Shop, and Golub & Associates ³ in the amount of $19,500. ⁴ This check was for fire loss to the contents of the building. Thomas forwarded this check to Golub & Associates. Ace Hart, an employee of Golub & Associates, accompanied Howard to the Motor Coach Employee's Credit Union, endorsed the check, and received payment of $3,900 for Golub's services. Howard then deposited the $19,500 check into his personal credit union account.

The second check was made payable to Howard, d/b/a Mr. Penguin Malt Shop, Beverly Bush, the SBA, and Golub & Associates. This check covered fire loss to the building itself. Thomas also forwarded this check to Golub & Associates. Hart endorsed the second check and gave it to Howard. Pearson Bush, Beverly Bush's attorney, subsequently contacted Howard and asked Howard to forward the check to him so that Ms. Bush would be certain to receive enough insurance proceeds to cover the $15,000 Howard still owed her on the purchase price of the building. Pearson Bush received the check from Howard approximately thirty days before it became stale. ⁵ Bush then entered into negotiations with the SBA concerning the amount of insurance proceeds the SBA expected to receive. The SBA agreed to accept $200, with Ms. Bush receiving the remaining balance of $19,300. By the time this agreement was reached, however, the check had become stale and Pearson Bush returned it to Monticello.

Thereafter, Monticello issued a replacement check and again sent it to Thomas. Howard picked up the check from Thomas's office and signed a receipt acknowledging that he had received the check. The check was made payable to the same parties as before. Howard subsequently deposited $18,000 of the check into his personal savings account at Boatmen's National Bank of Belleville and received $1,500 in cash. The check was endorsed by Howard on behalf of Mr. Penguin Malt Shop, Beverly Bush, Sue Thomas on behalf of the SBA, and A.R. Hart on behalf of Golub & Associates. The check also contained stamped endorsements of the SBA and Golub & Associates. All of the endorsements, except Howard's, were forged.

Howard was charged in a two count indictment with bank fraud and conversion of government property in violation of 18 U.S.C. Sec. 1344 and 18 U.S.C. Sec. 641, respectively. The government alleged that Howard forged the endorsements on the replacement check and deposited it into his own account in violation of the bank fraud statute (Count One). The government also alleged that Howard illegally converted government property by dropping the SBA as loss payee from the insurance policy and depositing the insurance proceeds representing the building's contents into his personal credit union account (Count Two). The jury found Howard guilty on both counts. The district court sentenced him to ten months imprisonment on each count, his sentences to run concurrently. The court further sentenced Howard to three years supervised release following his discharge from prison and ordered him to pay a special assessment of $100 and restitution in the amount of $19,500 to the SBA. Howard now appeals.

Discussion

COUNT I

Howard initially argues that there was insufficient evidence to convict him of bank fraud. ⁶ Specifically, he contends that the government failed to prove beyond a reasonable doubt that he acted with specific intent to defraud, a necessary element of the crime of bank fraud. See United States v. Sims, 895 F.2d 326, 328 (7th Cir.1990) (recognizing that intent to defraud is an essential element of bank fraud).

Howard has an uphill battle. We will uphold a challenge to the sufficiency of the evidence if, " 'after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.' " Id. at 329 (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979) (emphasis in original)).

Howard notes that there was no direct evidence presented at trial establishing that he deposited the check "knowing and believing that the signatures and stamps on it were forged." However, "[b]ecause direct evidence of a defendant's fraudulent intent is typically not available, specific intent to defraud may be established by circumstantial evidence...." United States v. LeDonne, 21 F.3d 1418, 1426 (7th Cir.1994). Here, the prosecution presented ample circumstantial evidence from which the jury could have reasonably inferred that Howard presented the check to the bank knowing that the endorsements were forged.

The government presented uncontroverted evidence that Howard picked up the replacement check from Thomas's office, signed for it, and deposited $18,000 of it into his personal savings account at Boatmen's National Bank of Belleville.

A total of fifteen witnesses testified in the government's case in chief. Their testimony revealed the following: Daino Jerome of the SBA's Inspector General's Office interviewed Howard and asked him how he had obtained the forged SBA endorsement. According to Jerome, Howard indicated that he had talked to Sue Thomas of the SBA's St. Louis district office and she told him to send the check to her and that she would "take care" of all the endorsements except Howard's. Howard indicated that he got the check back from Ms. Thomas with all the necessary endorsements except his own.

Kim Rogers, an SBA employee, stated that no Sue Thomas has ever worked for the SBA's St. Louis office. SBA employee Darryl Westbrook also said that no Sue Thomas worked for the SBA's St. Louis office. Moreover, the SBA does not use an endorsement stamp like the one used to endorse the replacement check.

Pearson Bush, Beverly Bush's attorney, contacted Howard shortly after he learned that Monticello had issued the replacement check. According to Pearson Bush, Howard told him that he had sent the check to the SBA's Denver, Colorado office. Raymond Baca of the SBA's Denver office said, however, that his office never received the check.

The signature of Ace Hart, Vice President of Golub & Associates, had been forged and the stamped Golub & Associates endorsement was also a forgery. Beverly Bush never endorsed the check and her purported signature was also a fake.

Handwriting expert William Storer testified that the signatures of Beverly Bush and Ace Hart were forgeries. Storer could not, however, determine whether Howard had committed those forgeries.

Given the uncontroverted evidence that Howard picked up the replacement check, deposited it into his own personal savings account, and told conflicting stories as to how he acquired the forged endorsements, a rational jury could have found beyond a reasonable doubt that Howard deposited the check knowing that the endorsements were forged. We therefore affirm Howard's conviction for bank fraud.

COUNT II

Next, Howard challenges his conviction for converting government property in violation of 18 U.S.C. Sec. 641. The prosecution proved at trial that Howard failed to name the SBA as loss payee for the contents portion of the fire insurance policy as required under the terms of his loan agreement with the SBA. The prosecution also proved that Howard deposited the insurance check representing the fire damage to the building's contents into his own personal savings account. Howard argues, however, that his conviction should be reversed because neither the insurance check or its proceeds are "a thing of value of the United States."

Under 18 U.S.C. Sec. 641, "[w]hoever embezzles, steals, purloins, or knowingly converts to his own use or the use of another, or without authority, sells, ......