U.S. v. McCarrick, 01-15065.

• Decision Date: 18 June 2002
• Docket Number: No. 01-15065.,01-15065.
• Citation: 294 F.3d 1286
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Robert McCARRICK, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

294 F.3d 1286

UNITED STATES of America, Plaintiff-Appellee, v. Robert McCARRICK, Defendant-Appellant.

No. 01-15065.

United States Court of Appeals, Eleventh Circuit.

June 18, 2002.

COPYRIGHT MATERIAL OMITTED

A. Fitzgerald Hall, R. Fletcher Peacock, Fed. Pub. Def., Tampa, FL, for Defendant-Appellant.

Linda Julin McNamara, Tamra Phipps, Tampa, FL, for Plaintiff-Appellee.

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

Before DUBINA, BARKETT and KRAVITCH, Circuit Judges.

BARKETT, Circuit Judge:

Robert McCarrick appeals his convictions for one count of bank fraud, in violation of 18 U.S.C. § 1344, and one count of making a false statement to a government agency, in violation of 18 U.S.C. § 1001.¹ He argues that the government failed to prove the necessary element of specific intent to defraud for each of these crimes. We agree, and therefore reverse.

BACKGROUND

McCarrick owned and operated an automobile repair business called Fleet Maintenance Management ("Fleet"). On November 9, 1994, he applied to Liberty Bank ("Liberty") for a loan of approximately $49,000, to be guaranteed by the Small Business Administration ("SBA").² McCarrick told Liberty's loan officer William McGrath that the purpose of the loan was to expand his business into fleet maintenance repairs and auto body work. McCarrick stated on his loan application³ that he planned to use $35,000 of the loan to lease a new building for his business and to purchase five specific pieces of equipment: a spray paint booth, a frame machine, a tire machine, and two lifts.⁴ The remaining $14,000 was to be used as working capital. Along with his loan application, McCarrick submitted a sale-proposal and acceptance for the equipment he was going to purchase, which he had obtained from Terry McVittie, the owner of an auto equipment seller called T.M. Distributing.⁵ McCarrick also submitted a proposed lease for $2,400 per month that he had obtained for a garage.

Liberty and the SBA approved the $49,000 loan on November 29, 1994, issuing a loan authorization. At the closing, on December 23, McCarrick signed a security agreement for the loan, a note promising to repay it, and a "Settlement Sheet," upon which he certified that "there has been no adverse change in the financial condition, organization, operations, or fixed assets [of Fleet], since the application of this loan was filed." McGrath gave McCarrick a check for $14,000 working capital, and a separate check, made out jointly to McCarrick and T.M. Distributing for $24,712, which McCarrick immediately gave to McVittie to pay for the tire machine, the lifts, and the frame machine. One week later, on December 30, 1994, McCarrick received the remaining check for $12,679 to pay for the spray paint booth, which had been ordered but not yet delivered.

Upon receiving the check, McCarrick's girlfriend (who was working in Fleet's garage) endorsed the check for "T.M. Distributing Company," and signed Terry McVittie's name. McCarrick wrote "for deposit only" on the check, and deposited it into his business' bank account (i.e., Fleet's account).⁶ McCarrick testified that he deposited the check into Fleet's account because the spray paint booth had not yet arrived, and that he intended to use the money to pay for the booth as soon as it came.

Over the next month, McCarrick's business experienced serious financial difficulties, and he canceled the order with T.M. Distributing for the spray paint booth, using the $12,679 instead to keep his business afloat. McCarrick testified that he remembered cancelling the order during the third week of January 1995.⁷ McVittie testified that the cancellation was connected to the fact that McCarrick had difficulty obtaining the requisite permits for the installation of the booth. McCarrick's testimony was undisputed that he had standing orders for paint work awaiting the spray paint booth, and the loss of this business contributed significantly to his business' decline, causing his subsequent cancellation of the order for the spray paint booth. McCarrick made his loan payments in January and February, but missed his payment in March 1995, and made no payments on the loan thereafter, though he was able to keep his business afloat until July.

The government charged McCarrick with one count of bank fraud and one count of making false statements to the government, and the jury found McCarrick guilty on both counts. McCarrick was sentenced to concurrent terms of one year and one day, plus three years of supervised release, and was ordered to pay restitution to the SBA in the full amount of the loan. McCarrick argues on appeal that the evidence adduced by the government was not sufficient to show, beyond a reasonable doubt, that he acted with specific intent to defraud the government at the time he signed the loan documents, as was required in order to convict him under 18 U.S.C. §§ 1001 and 1344. We review McCarrick's sufficiency of the evidence claim de novo, United States v. Giordano, 261 F.3d 1134, 1139 (11th Cir.2001), resolving all reasonable inferences and credibility evaluations in favor of the jury's verdict, United States v. Starke, 62 F.3d 1374, 1380 (11th Cir.1995). While we recognize that McCarrick shoulders a heavy burden in challenging the sufficiency of evidence supporting his convictions, we must nevertheless be satisfied that, after drawing all permissible inferences in favor of government, the jury was rationally able to find that every element of the charged crimes was established by the government beyond a reasonable doubt. See id.

DISCUSSION

McCarrick was charged with, and convicted of, violating 18 U.S.C. § 1344 and 18 U.S.C. § 1001. 18 U.S.C. § 1344, entitled "Bank Fraud," provides:

Whoever knowingly executes, or attempts to execute, a scheme or artifice —

(1) to defraud a financial institution; or

(2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;

shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

Id. Thus, to convict under § 1344(1), the government must prove (1) that the defendant intentionally participated in a scheme or artifice to defraud another of money or property; and (2) that the intended victim of the scheme or artifice was a federally-insured financial institution. See United States v. Goldsmith, 109 F.3d 714, 715 (11th Cir.1997). To convict under § 1344(2), the government must prove (1) that a scheme existed to obtain moneys, funds, or credit in the custody of a federally-insured bank by fraud; (2) that the defendant participated in the scheme by means of material false pretenses, representations or promises; and (3) that the defendant acted knowingly. See Goldsmith, 109 F.3d at 715; United States v. Falcone, 934 F.2d 1528, 1539-40 (11th Cir. 1991), modified in part, 960 F.2d 988 (11th Cir.1992); United States v. Swearingen, 858 F.2d 1555, 1556 (11th Cir.1988).

18 U.S.C. § 1001, entitled "Statements or Entries Generally," provides in relevant part:

(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully —

(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;

(2) makes any materially false, fictitious, or fraudulent statement or representation; or

(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;

shall be fined under this title or imprisoned not more than 5 years, or both. * * *

Id. Thus, in order to convict under § 1001, the government is required to prove (1) that the defendant made a false statement; (2) that the statement was material; (3) that the defendant acted with specific intent to mislead; and (4) that the matter was within the purview of a federal government agency. See United States v. Puente, 982 F.2d 156, 158 (5th Cir.1993).

The government's sole allegation of fraud in this case is that, at the time McCarrick signed the loan documents, he had no intention of buying the spray paint booth, as he represented. Specifically, Count One charged that McCarrick committed bank fraud by falsely promising, on his loan application, that he planned to buy a spray paint booth, in order to defraud the government of $12,679. Count Two charged McCarrick with making a false statement to the SBA by acknowledging, on his "Settlement Statement," that he planned to use the loan proceeds in accordance with the terms of the loan authorization, even though he knew he was not going to buy the spray paint booth. Thus, McCarrick's convictions under both § 1344 and § 1001 depend on whether the jury could infer, from the evidence adduced at trial, that McCarrick did not intend to buy the spray paint booth at the time he signed the loan documents.

No evidence was presented of events occurring prior to McCarrick's signing of the loan documents that related to his alleged intent to defraud. The evidence at trial consisted entirely of events that occurred subsequent to the signing of the loan documents. The government concedes that any criminal intent McCarrick formed after signing the loan documents cannot support his convictions on the crimes charged in the indictment, which require that McCarrick have acted with intent to defraud the SBA at the time of the signing of the loan documents. As the government notes, however, evidence of McCarrick's subsequent conduct may be considered if it supports a reasonable inference as to McCarrick's prior intent. Thus, the question in this case is whether the jury could properly infer from McCarrick's conduct subsequent to signing the loan documents — which was the only evidence in this...