U.S. v. Pless

• Decision Date: 26 June 1996
• Docket Number: No. 94-3169,94-3169
• Citation: 79 F.3d 1217
• Parties: , 44 Fed. R. Evid. Serv. 259 UNITED STATES of America, Appellee, v. David A. PLESS, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1217

79 F.3d 1217

316 U.S.App.D.C. 417, 44 Fed. R. Evid. Serv. 259

UNITED STATES of America, Appellee, v. David A. PLESS, Appellant.

No. 94-3169.

United States Court of Appeals, District of Columbia Circuit.

Argued March 4, 1996.

Decided April 2, 1996.

Rehearing and Suggestion for Rehearing In Banc Denied June

26, 1996. ^*

Appeal from the United States District Court for the District of Columbia (93cr0361).

Sandra G. Roland, Assistant Federal Public Defender, argued the cause for appellant, with whom A.J. Kramer, Federal Public Defender, Washington, DC, was on the briefs.

E. Vaughn Dunnigan, Assistant United States Attorney, argued the cause for appellee, with whom Eric H. Holder, Jr., United States Attorney, John R. Fisher, Roy W. McLeese, III, and Harry R. Benner, Assistant United States Attorneys, Washington, DC, were on the brief.

Before: EDWARDS, Chief Judge, SILBERMAN and GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge:

Appellant David Pless challenges his conviction for bank fraud on grounds that the court constructively amended the indictment in its jury instructions, the court's instruction on his defense of good faith belief was inadequate, and the court improperly admitted under Federal Rule of Evidence 404(b) evidence of the defendant's failure to pay corporate and personal federal taxes. We affirm.

I.

Pless owned and managed Allied Atlantic, a sign manufacturing business. The corporation had bank accounts at both First American Bank of Maryland and the National Bank of Washington. The latter bank also had made a loan to the corporation of $110,000. Almost immediately after opening the two accounts and receiving the loan, Pless began experiencing difficulties that were aggravated by the acquisition of a second company, for which he was unable to secure an expected second loan from National. He began to overdraw the company accounts in both banks and, in order to hide the overdrafts, he cross-deposited checks in the two banks. This is a classic check kite. The check kiter depends on the time lag between the point his account is credited at the depositing bank and the point at which the check "clears" the account upon which it is drawn. In the interim--during the float, as it is called--the check kiter appears to have, and may use, more funds than he actually has.

When National first noticed Pless was overdrawn, a bank officer agreed to convert the overdrawn amount, $135,000, into a new loan. However, not only did Pless fail to repay this "loan" within the 31 days agreed upon, but the overdrafts continued. While National frequently contacted Pless over the following six to nine months about repaying the $135,000, it did not put holds on his deposits or stop payment on his checks. Between June 1989 and March 1990, Pless transferred approximately $47 million from First American to National and approximately $48 million from National to First American. He spent almost four hours a day driving to multiple bank branches to make deposits in order to maintain positive account balances. First American eventually realized that the account might be in trouble, and after talking to Pless, refused to honor any more checks, while still accepting deposits. This caused funds to gravitate to First American, which ultimately lost no money, while the National account ended up overdrawn by more than one million dollars.

Pless was indicted under 18 U.S.C. § 1344(1) (1994), which penalizes anyone who "knowingly executes, or attempts to execute, a scheme or artifice--(1) to defraud a financial institution...." Under the heading "Counts One Through Three," the indictment described in twelve paragraphs the scheme to defraud First American and National and the series of transactions involving the two banks. In paragraph thirteen, the indictment charged three executions of the scheme through deposits of First American checks at National. The indictment did not charge as an execution any withdrawals from or deposits to First American, which gives rise to the major dispute in this case. The government did produce evidence at trial, without objection, that appellant intended to defraud both banks. But appellant asserted that since the unit of prosecution for the crime is the execution of the scheme, rather than the scheme itself, and only the deposits at National were set forth in the execution portion of the indictment, the government could not submit the issue of intent to defraud First American to the jury. On the same "one bank" theory, he claimed that his defense--that he had a good faith belief that his overdrafts at National would be treated as a loan--if accepted, would be a complete defense to the charge.

The government, in order to rebut that defense, introduced evidence over objection that appellant had failed during the perpetration of the scheme to pay corporate, employee withholding, and personal federal taxes. The court, also over a defense objection, instructed the jury--and submitted a special verdict form to the same effect--that it could find appellant guilty if he had intended to defraud either or both banks. ¹ The court rejected appellant's request that the jury be instructed that if it found he held a good faith belief that National had consented to his actions, it "must" acquit, because that would not be a complete defense to the charges. The jury found the defendant had intended to defraud both banks and convicted him on all three counts.

II.

Appellant's primary argument before us is that the indictment was constructively amended when the court instructed the jury that it could find Pless guilty if he intended to defraud either or both banks. Relying on a substantial body of precedent that holds the prosecution to a very strict reading of an indictment, see, e.g., Stirone v. United States, 361 U.S. 212, 217-19, 80 S.Ct. 270, 273-74, 4 L.Ed.2d 252 (1960) (amendment of an indictment violates the Fifth Amendment's Grand Jury Clause and is per se reversible error); United States v. Floresca, 38 F.3d 706, 711 (4th Cir.1994) (en banc) (same), appellant contends that only his intent vel non to defraud National can be relevant in this case since the counts charged were the three deposits at National. Appellant seeks to bolster his claim by asserting that only deposits would qualify as "executions" and that the government could not have included First American deposits because the District of Columbia district court would not be the appropriate venue for charges arising out of those deposits.

We very much doubt the validity of either of appellant's background assumptions. A check kite is like a game of musical chairs; the last bank to discover the fraudulent scheme will likely be stuck with the loss. But since the identity of the unlucky bank cannot be known during the kite, a withdrawal from one account seems as much an act of execution of the scheme as a deposit in another account. Nor is it apparent to us that venue in the district court could not have included acts of execution in Maryland. See 18 U.S.C. § 3237(a) (1994) (a multi-jurisdiction offense may be "prosecuted in any district in which such offense was begun, continued,...