U.S. v. McGuire, s. 83-5350

• Decision Date: 09 November 1984
• Docket Number: 83-5351,Nos. 83-5350,s. 83-5350
• Citation: 744 F.2d 1197
• Parties: 16 Fed. R. Evid. Serv. 707 UNITED STATES of America, Plaintiff-Appellee, v. Leo Raymond McGUIRE, and David E. Lee, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1197

744 F.2d 1197

16 Fed. R. Evid. Serv. 707

UNITED STATES of America, Plaintiff-Appellee, v. Leo Raymond McGUIRE, and David E. Lee, Defendants-Appellants.

Nos. 83-5350, 83-5351.

United States Court of Appeals Sixth Circuit.

Argued July 6, 1984.

Decided Sept. 21, 1984.

Rehearing and Rehearing En Banc Denied Nov. 9, 1984.

Robert Houlihan, Jr., Lexington, Ky., Seymour Glanzer, John T. Kotelly, argued, Peter J. Kadzik, Dickstein, Shapiro & Morin, Lisa R. McGuire, Washington, D.C., for defendants-appellants in No. 83-5350.

James Shuffett, Shuffett, Mooney, McCoy, Campbell, Leathers & Newcomer, David Shattuck, argued, Lexington, Ky., for defendants-appellants in No. 83-5351.

Louis DeFalaise, U.S. Atty., Jane Graham, Robert E. Rawlins, argued, Asst. U.S. Attys., Lexington, Ky., for plaintiff-appellee.

Before KRUPANSKY and WELLFORD, Circuit Judges, WEICK, Senior Circuit Judge.

WELLFORD, Circuit Judge.

In April, 1979, the Kentucky Housing Corporation (KHC) instituted its "Loans to Lenders Program." The program was designed to make it easier for low income people to purchase housing. KHC made approximately $54 million available to financial institutions at a rate of 6 5/8% interest, and the financial institutions, in turn, were then to loan this money to low income borrowers at 8 1/8%, a very advantageous rate of interest. First National Bank of Grayson ^BG participated in the program. Defendant McGuire was president and chief executive officer of FNBG, and defendant Lee was mortgage loan officer.

The government's case was directed toward proving that FNBG was successful in obtaining these funds from KHC, but did not properly reloan them out to qualified borrowers. Instead, FNBG (in the prosecution's case, under the direction of McGuire and Lee) invested the funds at a much higher rate of return (yielding 12.6% return) maturing in more than 10 years. At the end of nine months, unloaned funds were to be returned to KHC. FNBG requested and was granted a three month extension. In the final few days of that extension, FNBG made approximately 80 loans which the government contends were bogus and made solely to avoid repayment of the funds to KHC. The government contends that these actions left FNBG with $2.65 million of KHC funds which were being inappropriately used, and that FNBG was in effect illegally profiting from the procedures instituted by defendants.

The indictment, which was returned by a federal grand jury, charged defendants with conspiracy to make false entries, making false entries, and devising a scheme to defraud the KHC. Defendants were convicted after a jury trial and have appealed.

I

Defendants first issue raised on appeal is whether the trial court was required to give a separate instruction on the issue of good faith. ¹ In the instructions actually given by the judge are set out in the margin. ² The judge clearly stressed the importance of willfullness, intent, specific intent, and lack of mistake. At least one circuit, however, would apparently find this instruction insufficient. In United States v. Goss, 650 F.2d 1336, 1345 (5th Cir.1981), the court held that

Charging the jury that a finding of specific intent to defraud is required for conviction, while it may generally constitute the negative instruction, i.e., that, if the defendants acted in good faith, they could not have had the specific intent to defraud required for conviction, does not direct the jury's attention to the defense of good faith with sufficient specificity to avoid reversible error.

(emphasis added).

The Fifth Circuit reaffirmed its Goss decision in United States v. Curry, 681 F.2d 406 (5th Cir.1982). The actual instructions given by the judge in that trial are not discussed. The court, however, reversed the conviction, finding:

Curry was entitled to a good faith jury instruction if there was any evidence at all to support the charge, "regardless of how weak, inconsistent or dubious the evidence of good faith may have been." United States v. Goss, 650 F.2d 1345.

681 F.2d at 416.

While the Fifth Circuit may have treated it somewhat differently, we view the issue as essentially a "theory of the case" question. In this circuit, we have held that it is error to fail to instruct on the defendant's theory of the case, however "[t]he trial judge [is] not required to adopt the language suggested by a defendant ...." United States v. Garner, 529 F.2d 962, 970 (6th Cir.), cert. denied, 429 U.S. 850, 97 S.Ct. 138, 50 L.Ed.2d 124 (1976); United States v. Giacalone, 574 F.2d 328 (6th Cir.), cert. denied, 439 U.S. 834, 99 S.Ct. 114, 58 L.Ed.2d 129 (1978). As the Eleventh Circuit recently held:

A criminal defendant has no right to select the particular wording of a proposed jury instruction. As long as the instruction actually given is a correct statement of the law, fairly presents the issues to the jury, and is substantially similar to the defendant's proposed instruction, the district court has great latitude in phrasing it.

United States v. Gaines, 690 F.2d 849, 856-57 (11th Cir.1982) (regarding an instruction on willfulness).

While the trial judge should have given an instruction on the defendants' "good faith" theory of the case, see Garner, supra; Giacalone, supra, a review of the instruction actually given, persuades us that this error on the part of the trial court was harmless beyond a reasonable doubt. The issue of good faith was clearly placed before the jury, even if those precise words were not used. "There is nothing so important about the words 'good faith' that their underlying meaning cannot otherwise be conveyed." New England Enterprises, Inc. v. United States, 400 F.2d 58, 71 (1st Cir.1968), cert. denied, 393 U.S. 1036, 89 S.Ct. 654, 21 L.Ed.2d 581 (1969). The instructions with regard to specific intent adequately informed the jury of the defendants' theory of the case, and properly placed the burden of proof of intent on the government.

Accordingly, we find that the failure of the trial judge to instruct the jury on the defendants' theory was harmless error.

II

Defendants next argue that the trial court's usage of an "and/or" instruction in connection with 18 U.S.C. Sec. 1005 sanctioned a non-unanimous verdict.

18 U.S.C. Sec. 1005 provides in pertinent part:

Whoever makes any false entry in any book, report, or statement of such bank with intent to injure or defraud ... any ... body politic ...., or to deceive ... the Comptroller of the Currency, ... or any agent or examiner appointed to examine the affairs of such bank ... [violates the statute].

The indictment in this case, however, replaced the word "or" with the word "and." In its instructions to the jury, the trial court attempted to explain that the statute requires only an intent to injure or defraud any body politic or to deceive the Comptroller of the Currency in the following manner:

In the indictment, the word "and" is synonymous with the word "or." That is to say that if the United States proved to your satisfaction beyond a reasonable doubt any of the acts connected by the word "and," it has proven satisfactorily its case on that particular element.

The defendants claim that such a charge could have led the jury to convict defendants without having reached a unanimus decision. Specifically, six of the jurors might have found that defendants took their actions with intent to defraud or deceive the Comptroller, while the other six may have found an attempt to defraud or deceive a different victim (KHC). See United States v. Gipson, 553 F.2d 453, 458 n. 8 (5th Cir.1977).

It should be noted, however, that the trial court, in addition to making two general instructions on the unanimity requirement, also instructed the jury that, with regard to Section 1005:

There are two essential elements which must be proved beyond a reasonable doubt in order to establish the offense proscribed by this law:

First: That a defendant knowingly made a false entry concerning a material fact in a book or record or statement of a national bank, insured bank or member of the Federal Reserve System, to-wit, a false and non-bona fide loan file, as charged;

Second: That a defendant made such entry willfully, with knowledge of its falsity and with the intent of defrauding or deceiving the person/persons or entities named in the indictment.

Thus it is clear that the jury must have unanimously agreed that the defendants knowingly made false entries. The only possible lack of unanimity could stem from a disagreement as to which entity or entities a particular defendant was intending to deceive.

Defendants rely on United States v. Gipson, supra, which held that the jury must unanimously agree on "the actus reus element of the offense", because the prohibited acts involved in that case were conceptually distinct. 553 F.2d at 458. Specifically, the acts of receipt, concealment and storage are conceptually distinct from the acts of bartering, selling and disposing. Id. Conversely, KHC and the Comptroller, as alternate victims, do not fall into "two conceptual groupings." Several courts have refused to apply the Gipson rationale when the potentially devisive theories of liability are not "conceptually distinct." See, e.g., Lampkins v. Gagnon, 710 F.2d 374 (7th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 729, 79 L.Ed.2d 189 (1984); United States v. Sutherland, 656 F.2d 1181, 1202 (5th Cir.1981), cert. denied, 455 U.S. 991, 102 S.Ct. 1617, 71 L.Ed.2d 852 (1982); United States v. Freeman, 619 F.2d 1112, 1118-19 (5th Cir.1980), cert. denied, 450 U.S. 910, 101 S.Ct. 1348, 67 L.Ed.2d 334 (1981).

Finally, in United States v. Zeidman, 540 F.2d 314 (7th Cir.1976), the court instructed the jury "that they must not return a guilty verdict unless they all agreed that the defendant had devised a scheme to defraud at least the creditor or the debtor." 540 F.2d 317. The defendants made the same argument set forth by the defendants in the instant case. The court...