U.S. v. McCord, 93-8548

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Citation33 F.3d 1434
Docket NumberNo. 93-8548,93-8548
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Michael McCORD and O.B. Haley, Sr., Defendants-Appellants.
Decision Date26 September 1994

Dan Guthrie, Dallas, TX, for Michael McCord.

Adrienne Urrutia, Asst. Federal Public Defender, Philip J. Lynch, Dan Newsome, Asst. Federal Public Defender, San Antonio, TX, for O.B. Haley, Sr. Diane D. Kirstein, Richard L. Durbin, Jr., Asst. U.S. Atty's, James H. DeAtley, Acting U.S. Atty, San Antonio, TX, for U.S.

Appeal from the United States District Court for the Western District of Texas.

Before POLITZ, Chief Judge, and DUHE and BARKSDALE, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

This appeal principally concerns the convictions of Michael McCord and O.B. Haley, in connection with their roles as trustees in funding a bank employee stock ownership plan, for conspiracy to violate 18 U.S.C. Sec. 1954 (proscribing improper payments to persons, such as trustees, who influence such plans), to include whether they satisfied Sec. 1954's "bona fide compensation" exception to criminal liability. McCord also contests his five other bank-related convictions and challenges his sentence on several grounds. We REVERSE McCord's money laundering conviction and REMAND his case for resentencing; otherwise, we AFFIRM.

I.

In April 1993, as a result of their activities at the American Bank of Commerce (ABC) in Del Rio, Texas, McCord and Haley were convicted for conspiring to violate Sec. 1954, by agreeing that Haley, through his corporation, would give McCord shares of ABC stock because of McCord's actions and decisions as a trustee of the ABC employee stock ownership plan (ESOP), in violation of 18 U.S.C. Sec. 371 (count one). Each was acquitted of a substantive violation of Sec. 1954 (counts two and three).

As for the several other related charges against McCord (to include one against his wife), he was acquitted of soliciting kickbacks, in violation of 18 U.S.C. Sec. 215(a)(2) (count seven, which charged that he demanded a $5,000 finder's fee from two ABC customers to secure a buyer for their property); but he was convicted for filing a false tax return by failing to report the gain from sales of the stock received from Haley's corporation, in violation of 26 U.S.C. Sec. 7206(1) (count four). 1 Furthermore, as a result of having ABC pay for the installation of a new air conditioner at his home and the installation of his used unit at a house owned by ABC, McCord was convicted for making, or causing to be made, false entries on bank records, in violation of 18 U.S.C. Secs. 2 and 1005 (count five), and misapplication of bank funds, in violation of 18 U.S.C. Secs. 2 and 656 (count six). Concerning a loan made by ABC to his brother-in-law, McCord was convicted both for unlawfully receiving part of the proceeds, in violation of 18 U.S.C. Sec. 1005 (count eight), and for money laundering for the deposit of the proceeds he received, in violation of 18 U.S.C. Sec. 1957 (count nine).

Haley was sentenced, inter alia, to five months imprisonment, with a recommendation that it be served at a halfway house. McCord was sentenced, inter alia, to 36 months imprisonment on the tax count and 37 months on each of the other five counts of conviction, all to be served concurrently, and ordered, inter alia, to pay $2,950 restitution (amount of the air conditioner invoice), and to forfeit $17,000 (proceeds received from the loan to his brother-in-law).

II.

Haley challenges the denials of his motions for severance and to dismiss the indictment, the jury charge, and the sufficiency of the evidence to support his conviction. McCord contests the jury instructions, sufficiency of the evidence, the money laundering conviction (on constitutional grounds), and his sentence (on four bases).

The bulk of the numerous contentions concern the sufficiency of the evidence. The following analysis of the evidence, and the proper inferences that can be drawn from it, required in order to review the sufficiency challenges, amply demonstrates, once again, why our standard of review for such challenges is so narrow. For numerous, and most obvious reasons, we do not sit to retry the charges against Haley and McCord; that is the function of the jury.

A.

It is the jury's "unique role" to judge the credibility and evaluate the demeanor of witnesses and to decide how much weight should be given to their testimony. E.g., United States v. Higdon, 832 F.2d 312, 315 (5th Cir.1987), cert. denied, 484 U.S. 1075, 108 S.Ct. 1051, 98 L.Ed.2d 1013 (1988). Our resulting narrow standard of review for sufficiency of the evidence challenges "gives full play to the responsibility of the trier of fact fairly to resolve conflicts in the testimony, to weigh the evidence, and to draw reasonable inferences from basic facts to ultimate facts". Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979)

Accordingly, McCord and Haley's sufficiency of the evidence challenges fail if a rational trier of fact could have found that the Government proved the essential elements of the crime charged beyond a reasonable doubt. United States v. Webster, 960 F.2d 1301, 1307-08 (5th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 355, 121 L.Ed.2d 269 (1992). Toward that end, "[w]e must view the evidence in the light most favorable to the verdict, accepting all credibility choices and reasonable inferences made by the jury". United States v. Gardea Carrasco, 830 F.2d 41, 43 (5th Cir.1987) (footnote omitted). Moreover, "[i]t is not necessary that the evidence exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt.... A jury is free to choose among reasonable constructions of the evidence". United States v. Bell, 678 F.2d 547, 549 (5th Cir.1982), aff'd, 462 U.S. 356, 103 S.Ct. 2398, 76 L.Ed.2d 638 (1983). Finally, "our review remains the same whether the evidence is direct or circumstantial". United States v. Cardenas, 9 F.3d 1139, 1156 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 2150, 128 L.Ed.2d 876 (1994).

For a conspiracy in violation of 18 U.S.C. Sec. 371, the Government must prove "that the defendant entered into an agreement with at least one other person to commit a crime against the United States and that any one of these conspirators committed an overt act in furtherance of that agreement". United States v. Chaney, 964 F.2d 437, 449 (5th Cir.1992) (emphasis in original). "The government must also prove that the defendant knew of the conspiracy and voluntarily became part of it". Id. Haley and McCord were charged with conspiring to violate Sec. 1954, which provides in pertinent part:

Whoever being--

(1) [a] ... trustee ... of any employee ... benefit plan; or

(2) an officer ... of an employer ... whose employees are covered by such plan; or

....

(4) a person who, or an officer ... of an organization which provides benefit plan services to such plan

receives or agrees to receive or solicits any fee, kickback, commission, gift, loan, money, or thing of value because of or with intent to be influenced with respect to, any of his actions, decisions, or other duties relating to any question or matter concerning such plan or any person who directly or indirectly gives or offers, or promises to give or offer, any fee, kickback, commission, gift, loan, money, or thing of value prohibited by this section, shall be fined not more than $10,000 or imprisoned not more than three years, or both: Provided, That this section shall not prohibit the payment to or acceptance by any person of bona fide salary, compensation, or other payments made for ... services actually performed in the regular course of his duties as such ... officer, trustee, ... or employee of such plan, employer, ... or organization providing benefit plan services to such plan.

18 U.S.C. Sec. 1954 (emphasis in original).

Haley and McCord contend that the Government failed to prove, as required by Sec. 1954, that stock was transferred by Haley to McCord "because of" McCord's actions or decisions as an ESOP trustee; and that the section's bona fide compensation exception is applicable. 2 The facts underlying the charged conspiracy are as follows. (Haley did not testify; McCord did.)

During the early 1980s, McCord and Haley worked together at Red Bird Bank in Dallas. In 1985, several ABC directors asked Haley to invest in ABC, which had been operating under a cease and desist order since 1984. Haley did so, was elected chairman of ABC's board, and brought in McCord as executive vice president. McCord became president in April 1986; and that December, ABC raised $362,761 through a public stock offering. 3 By 1987, it had become profitable.

In June 1987, Red Bird Bank loaned $78,040 to the corporation owned by Haley, Leisure Valley, Inc. The loan was secured by 80,000 shares of ABC stock and personally guaranteed not only by Haley, but also by McCord. 4 That December, the loan was renewed for a year, with the amount increased to $162,040. It was secured by 175,000 ABC shares and again personally guaranteed by Haley and McCord.

In late 1987 or early 1988, after McCord attended a seminar at which Banking Consultants of America (BCA) made a presentation about employee stock ownership plans (ESOPs), 5 he and Haley decided to establish one at ABC; and McCord retained BCA in July 1988 to do so. 6 BCA advised ABC that the ESOP could not pay more than fair market value for stock; and as it recommended, ABC retained an independent appraiser. An appraisal was necessary because there was no active market for ABC stock. The stock was appraised at $2.35 per share as of July 1, 1988.

Prior to September 20, 1988, Haley owned 170,000 shares of ABC stock; his corporation, Leisure Valley, 174,000; and McCord, 105,000. 7 On September 20, Leisure Valley transferred 70,194 shares to McCord--34,477 by one certificate and 35,717 by...

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