U.S. v. Morales

• Decision Date: 30 November 1992
• Citation: 978 F.2d 650
• Parties: UNITED STATES OF America, Plaintiff-Appellee, v. Bernice T. MORALES, Defendant-Appellant. 91-5066.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 650

978 F.2d 650

UNITED STATES OF America, Plaintiff-Appellee, v. Bernice T. MORALES, Defendant-Appellant.

91-5066.

United States Court of Appeals, Eleventh Circuit.

Nov. 30, 1992.

Patrick M. Hunt, Brenda G. Bryn, Asst. Federal Public Defender, Miami, Fla., for defendant-appellant.

Randy A. Hummel, Linda C. Hertz, Alice Ann Burns, Asst. U.S. Attys., Miami, Fla., for plaintiff-appellee.

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

Before FAY and EDMONDSON, Circuit Judges, and HILL, Senior Circuit Judge.

HILL, Senior Circuit Judge:

Bernice Morales was convicted of one count of violating 18 U.S.C. § 656, misapplication of bank funds by a bank employee, and now appeals, assigning as error the district court's refusal to give her proposed "theory of defense" jury instruction. We hold that the district court did not commit reversible error, and affirm.

I. Background

On October 4, 1989, Appellant, Bernice Morales, wrote four checks totalling $3,511.00 on her account at Citicorp Savings Bank and presented them for cashing by tellers at Southeast Bank, where she was then employed. Appellant admitted that by writing four checks instead of one for the $3,511.00, she evaded internal bank reporting requirements and bypassed the need for a supervisor to approve cashing the checks. At the time, Ms. Morales had about $400.00 in her Citicorp account. Appellant knew that she did not have sufficient funds in the bank to cover the checks when she wrote them. On October 10, 1989, these checks were returned to Southeast Bank for insufficient funds. A fraud investigator for Southeast Bank questioned the appellant about the checks on October 12, 1989, and during this interview Appellant stated that she had been expecting a loan from United Mortgage to cover the checks on October 4 when she wrote the checks. Ms. Morales was fired by Southeast Bank on October 12, 1989.

Ms. Morales testified at trial that she spoke with a mortgage broker at United Mortgage on October 4, 1989, prior to writing the four checks, about the possibility of obtaining a $3,000.00 loan. At that time, United Mortgage already held a second mortgage on Appellant's home. After a cursory review of the status of the second mortgage loan, the mortgage broker indicated that he did not foresee any difficulty with the loan, but he also stated that he would have to check the equity on the property. Some time after Appellant had cashed the four checks, the mortgage broker informed her that the value of the property had decreased enough to eliminate all of her equity and, accordingly, no loan would be made.

On August 28, 1990 a federal grand jury returned a one count indictment against Ms. Morales charging her with embezzling ¹, abstracting, purloining, or misapplying bank funds while a bank employee, in violation of 18 U.S.C. § 656. ² Appellant pled not guilty, and the case was tried on November 8, 1990. At the close of the evidence, the court conducted a charge conference at which defense counsel stated that the defense requested no jury instruction on a theory of defense because such instruction was not yet prepared. Defense counsel indicated his intention to present a theory of defense argument, based on the defendant's reasonable expectation of making deposits to cover the checks, during closing arguments. The next morning, prior to closing arguments, defense counsel requested that the court charge the jury with the following proposed instruction:

Although the government does not have to show permanent loss to the bank, it does have to show that the defendant acted with fraudulent intent. Such fraudulent intent does not exist where the defendant had a reasonable expectation that funds sufficient to cover a check written would be deposited by the time the check was presented to the payor for payment. Therefore, if you find that the defendant reasonably expected to deposit sufficient funds to cover her check(s) by the time they would be presented for payment, you may not find that she is guilty of the offense of check kiting, as charged. ³

The court denied the defendant's requested instruction, and the jury found Appellant guilty as charged. The district court subsequently sentenced Appellant to three years' probation, restitution of $3,088.00, ⁴ and a $50.00 special assessment.

On appeal, Ms. Morales asserts that the district court's refusal to give the requested "theory of defense" instruction was an abuse of the district court's discretion.

II. Discussion

A district court's refusal to give a requested instruction in its charge to the jury is reviewed under an abuse of discretion standard. United States v. West, 898 F.2d 1493 (11th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 685, 112 L.Ed.2d 676 (1991); United States v. Bailey, 830 F.2d 156 (11th Cir.1987). The district court's refusal to give the requested instruction is reversible error only if (1) the instruction is substantially correct, (2) the instruction was not addressed in the charge actually given, and (3) the failure to give the requested instruction seriously impaired the defendant's ability to present an effective defense. United States v. Moorman, 944 F.2d 801 (11th Cir.1991) cert. denied Bowers v. United States, --- U.S. ----, 112 S.Ct. 1766, 118 L.Ed.2d 427 (1992); United States v. Camejo, 929 F.2d 610 (11th Cir.), cert. denied Setien v. United States, --- U.S. ----, 112 S.Ct. 228, 116 L.Ed.2d 185 (1991). Thus, if the requested instruction is not substantially correct, the district court does not abuse its discretion by failing to charge the jury with the erroneous instruction. See United States v. Corona, 849 F.2d 562 (11th Cir.1988), cert. denied, 489 U.S. 1084, 109 S.Ct. 1542, 103 L.Ed.2d 846 (1989) (district court properly denied defendant's requested charges where requested instructions had no legal foundation and were adequately covered by charges actually given). A requested "theory of defense" instruction is not substantially correct unless it has both legal support and some basis in the evidence. United States v. Hedges, 912 F.2d 1397, 1405 (11th Cir.1990). For the reasons set forth below, Appellant's requested instruction was an incorrect statement of the law, and, therefore, we affirm the judgment of the district court.

To establish the offense of misapplication of bank funds pursuant to 18 U.S.C. § 656, the Government must prove the following four elements: (1) that the accused was an officer, director, agent or employee of a bank; (2) that the bank was in some way connected with a national or federally insured bank; (3) that the accused willfully misapplied the monies or funds of the bank; and (4) that the accused acted with intent to injure or defraud the bank. United States v. Farrell, 609 F.2d 816, 818 (5th Cir.1980). ⁵ The "intent to injure or defraud the bank" element is established by proof that the defendant knowingly participated in a deceptive or fraudulent transaction. United States v. Blanco, 920 F.2d 844, 845 (11th Cir.1991); United States v. Adamson, 700 F.2d 953, 965 (11th Cir.) (en banc), cert. denied, 464 U.S. 833, 104 S.Ct. 116, 78 L.Ed.2d 116 (1983).

The essence of Appellant's argument is that the requested instruction properly clarified the intent element of the misapplication charge for the jury. Relying principally on United States v. Foshee, 569 F.2d 401 (5th Cir.), modified, 578 F.2d 629 (5th Cir.1978), and appeal after remand, 606 F.2d 111 (1979), cert. denied, 444 U.S. 1082, 100 S.Ct. 1036, 62 L.Ed.2d 766 (1980), Appellant contends that when the alleged criminal conduct is in the nature of check kiting, the requisite fraudulent intent for misapplication of bank funds can be negated by showing that the defendant had a reasonable expectation of making deposits to cover the checks by the time the checks were presented for payment to the payor bank. Appellant claims that the criminal conduct in this case was in the nature of check kiting ⁶ even though charged as misapplication of bank funds, and, accordingly, Appellant argues the district court erred by refusing to charge the jury that a reasonable expectation of making covering deposits is a valid defense in this case.

In Foshee, the court considered a similar argument of lack of intent to defraud in a check kiting case charged under 18 U.S.C. § 1341. ⁷ The Foshees maintained several commercial bank accounts in connection with their operation of a 2,200 acre farm, a farm supply company, a milling company, and various other agricultural enterprises. They were indicted for making a series of deposits and withdrawals knowing that there were not sufficient funds in the drawee banks to cover the checks. The Foshees claimed they lacked intent to defraud because they did not know that the checks and deposits they were making were invalid. Essentially, the defendants argued that they had a reasonable expectation that their deposits would cover the checks they wrote at the time of presentment to the payor bank. Recognizing the validity of this defense, the court noted that "the general rule is that fraudulent intent is negated by proof one had a reasonable expectation that deposits would cover the check at the time it was presented for payment." Foshee, 569 F.2d at 403 n. 2; See also Foshee, 578 F.2d at 633 (under the test of reasonable expectation of deposits sufficient to pay the checks when presented, the Foshees, conceivably, could have never paid the checks, yet have been acquitted if the jury believed they had a reasonable expectation of payment when the checks were written). Appellant asserts that the reasonable expectation defense should be allowed to negate intent to defraud in this check kiting case charged under § 656.

In United States v. Southers, 583 F.2d 1302 (5th Cir.1978), the court refused to allow a similar defense in a misapplication of bank funds case. There, the defendant, a bank officer, issued and signed, as authorized officer, six...