U.S. v. Mouton

• Decision Date: 06 May 1980
• Docket Number: No. 79-1391,79-1391
• Citation: 617 F.2d 1379
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Donald MOUTON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1379

617 F.2d 1379

UNITED STATES of America, Plaintiff-Appellee, v. Donald MOUTON, Defendant-Appellant.

No. 79-1391.

United States Court of Appeals Ninth Circuit.

May 6, 1980.

Daniel F. Cook, Asst. Federal Public Defender, San Francisco, Cal., for defendant-appellant.

Eb F. Luckel, Jr., Asst. U. S. Atty., San Francisco, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California

Before DUNIWAY and ANDERSON, Circuit Judges, and GRANT, ^*, District Judge.

GRANT, Senior District Judge:

This appeal involves a conviction for aiding and abetting in the misapplication of funds controlled by a bank, the deposits of which are insured by the Federal Deposit Insurance Corporation.

On December 12, 1978, a 20-count indictment was returned naming as defendants Shirley Ann Levias and the appellant, Donald Mouton. Levias was charged with 20 counts of willful misapplication of bank funds, in violation of 18 U.S.C. § 656, and Mouton was charged with 20 counts of knowingly and willfully aiding and abetting Levias in the misapplication of bank funds, in violation of 18 U.S.C. § 656 and 18 U.S.C. § 2, the aiding and abetting statute. Section 656 provides, in pertinent part:

Whoever, being an . . . employee of . . . any . . . insured bank . . . willfully misapplies any of the moneys . . . of such bank or any moneys . . . intrusted to the custody or care of such bank . . . shall be fined not more than $5,000 or imprisoned not more than five years, or both . . .

As used in this section, the term . . . 'insured bank' includes any bank . . . the deposits of which are insured by the Federal Deposit Insurance Corporation.

On February 8, 1979, Co-defendant Levias pleaded guilty to Count I of the indictment as part of a plea agreement whereby she agreed to testify against appellant. In return the United States agreed to dismiss the remaining counts and inform the sentencing judge of her cooperation.

Pre-trial motions were heard by Judge William H. Orrick, Jr.; however, shortly before trial, the case was reassigned to Judge Wollenberg. On April 23, 1973, trial commenced; three days later a guilty verdict was returned on all 20 counts. Appellant was sentenced and is currently serving a three-year sentence on Count I with concurrent three-year sentences on the remaining counts.

Crocker National Bank (the victim bank) has an unemployment compensation disability plan that provides benefits to bank employees who have become injured, disabled or hospitalized. The disability plan claims procedures operate by the branch bank sending a form to the personnel department and to the employee disability benefits department of Crocker National Bank. The disability benefits department would then send a claim form to the disabled employee to be filled out and returned. Once the claim form was returned, the employee's benefits would be computed and a benefit check prepared by a clerk of the employer, to be signed by a supervisor and mailed by the clerk. Co-defendant Shirley Levias was a clerk in the employee disability benefits department. Levias fraudulently prepared claim files for real bank employees, submitted the files and benefit checks to the supervisor, took the employee benefit checks and, according to Levias, gave them to the defendant to cash.

The prosecution additionally introduced a tape recording of two conversations between Levias and Mouton that occurred on May 23, 1978, prior to the December 12, 1978 indictment. The apparent purpose of the introduction of the tapes was to substantiate the assertion that Mouton sought to intimidate Levias and to coerce her not to testify as a government witness at trial. FBI Agent Duff testified that the tape was made by use of a recorder connected to the Levias telephone system. The agent further testified that he was responsible for recording the calls; that the entire conversation, except the initial salutation, was recorded; that only several words or phrases from the tape played to the jury were inaudible; and that, as a whole, it was an accurate and complete recording of the conversation. Defendant points out that there were gaps in the tapes and that he filed a pre-trial motion in limine as well as objecting at trial.

Defendant presents four questions on appeal:

I Whether the government must prove, as an element of a violation of 18 U.S.C. § 656, that the moneys misappropriated were actually insured by the Federal Deposit Insurance Corporation;

II Whether the trial court erred in admitting two recorded conversations;

III Whether the prosecutor made improper comments during final argument;

IV Whether the trial court erred in instructing the jury.

I NEXUS WITH THE FDIC

Defendant filed a pretrial motion in limine regarding the scope of 18 U.S.C. § 656, contending that a violation of Section 656 occurs only when the moneys allegedly taken are federally insured funds, not simply because moneys were taken from a federally insured bank. The motion was denied after a hearing and defendant now renews his contention, asserting that the moneys involved in the case at bar were not proven to be federally insured, while admitting that the victim bank was insured by the FDIC. To support his contention, defendant cites two predecessor statutes ¹ upon which 18 U.S.C. § 656 was based 12 U.S.C. § 592 (1940) ² and 12 U.S.C. § 597 (1940) ³. Defendant argues that the legislative history of Section 656 reflects an intent to simplify and clarify the earlier statutes without changing the existing law. The government's position is that it is irrelevant whether the specific moneys are insured.

It is clear from the cases that have interpreted both 18 U.S.C. § 656 and its predecessor statutes, that defendant's contention is incorrect.

In Garrett v. United States, 396 F.2d 489 (5th Cir. 1968), cert. denied 393 U.S. 952, 89 S.Ct. 374, 21 L.Ed.2d 364, the Fifth Circuit affirmed a conviction under Section 656, holding that, "The purpose of the statute is to preserve and protect the assets of banks having a federal relationship such as national banks, banks with federally insured deposits, Federal Reserve banks, and Federal Reserve Member banks." 396 F.2d at 491. (Emphasis added.)

In affirming another misapplication conviction, the court in United States v. Wilson, 500 F.2d 715 (5th Cir. 1974), cert. denied 420 U.S. 977, 95 S.Ct. 1403, 43 L.Ed.2d 658 stated, "It should be remembered above all else that this statute was enacted to preserve the FDIC from loss and to preserve and protect the assets of banks having a federal relationship (citing Garrett, supra )." 500 F.2d at 720. (Emphasis added.) A similar statement has been made by the Eighth Circuit in United States v. Barket, 530 F.2d 181, 186-187 (8th Cir. 1975), cert. denied, 429 U.S. 917, 97 S.Ct. 308, 50 L.Ed.2d 282.

Even accepting defendant's characterization of the legislative history of Section 656, the simple answer to defendant's argument is that the court below has not expansively construed Section 656 but, rather, has applied a reasonable construction a construction that was adopted by the Seventh Circuit back in 1940. In United States v. Harter, 116 F.2d 51 (7th Cir. 1940), the court affirmed a conviction under 12 U.S.C. § 592 (1940) (a predecessor to Section 656, see nt. 2, supra ) and resolved a contention similar to that in the case at bar:

At the outset it is necessary to consider the general contention of defendant that he cannot be guilty of a violation of the act unless the false entries, misapplications and embezzlement charged in the indictment affect moneys, funds or credits of a depositor which are insured by the Federal Deposit Insurance Corporation. The defendant states the foregoing contention as follows: 'The Federal Government and therefore the District Court of the United States has jurisdiction only over the acts of an officer of a state bank by reason of the fact that the same is a member of, and insured by, the Federal Deposit Insurance Corporation, and then only to the extent that the money, funds and credits of the bank insured by the Federal Deposit Insurance Corporation are affected in any manner.'

The language of the act expresses no such limitation as that urged by defendant. The act applies to any officer, director, agent or employee of any insured bank who makes 'any false entry in any book, report, or statement' of an insured bank with the intent to injure or defraud such insured bank or to deceive any of the designated persons. The provisions also specifically embrace any official, director, agent or employee of any insured bank who embezzles, abstracts, or willfully misapplies any of the moneys, funds, or credits of such insured bank. There is no exception in the case of one who commits any one of the forbidden acts even though such act does not affect money, funds or credits which are insured by the Federal Deposit Insurance Corporation. The obvious congressional intent is to safeguard the integrity of insured banks, and thus indirectly protect the interests of the Federal Deposit Insurance Corporation, by discouraging dishonest acts of those who carry on the business of the bank. This is a reasonable regulation since acts of dishonesty and fraud committed by officers and employees of the bank must adversely affect the integrity of the bank and indirectly affect the risk of the Federal Deposit Insurance Corporation.

116 F.2d at 53, 54. The sound analysis of the Harter court is equally applicable today and, therefore, we hold that as long as the misapplied moneys are assets of an insured bank, it is irrelevant whether they are specifically insured.

II ADMISSION OF RECORDED CONVERSATIONS

Defendant argues that the prosecution did not lay a proper foundation for the introduction of the two contested recordings. It is asserted that seven foundation requirements, established in United States v. McKeever, 169 F.Supp. 426 (S.D.N.Y.1958), rev'd on other...