U.S. v. Reaume

• Decision Date: 28 July 2003
• Docket Number: No. 02-1112.,02-1112.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Scott A. REAUME, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

338 F.3d 577

UNITED STATES of America, Plaintiff-Appellee, v. Scott A. REAUME, Defendant-Appellant.

No. 02-1112.

United States Court of Appeals, Sixth Circuit.

Argued June 20, 2003.

Decided and Filed July 28, 2003.

Petition for Rehearing Denied En Banc: September 30, 2003. Pursuant to Sixth Circuit Rule 206

COPYRIGHT MATERIAL OMITTED

ARGUED: Richard B. Ginsberg, Ann Arbor, Michigan, for Appellant.

Stephen L. Hiyama (argued and briefed), ASSISTANT UNITED STATES ATTORNEY, Detroit, Michigan, for Plaintiff-Appellee.

ON BRIEF: Richard B. Ginsberg (argued and briefed), Ann Arbor, Michigan, for Defendant-Appellant.

Before KENNEDY and COLE, Circuit Judges; WILLIAMS, Senior District Judge.^*

OPINION

R. GUY COLE, JR., Circuit Judge.

Defendant-Appellant Scott A. Reaume was convicted by a jury of committing bank fraud, in violation of 18 U.S.C. § 1344. Reaume admits to opening several checking accounts at a federally insured financial institution, making an initial deposit of a small sum, writing checks from these accounts for goods and services throughout the country with the knowledge that the accounts did not contain sufficient funds to cover the value of the checks, and returning the majority of the items purchased by check to branches of stores indifferent locations in exchange for cash.

After proceeding to trial on the theory that his scheme was not intended to defraud a federally insured financial institution, Reaume was found guilty by a jury. The final judgment of conviction and sentence was entered on January 3, 2002, and this timely appeal followed.

For the reasons that follow, we AFFIRM the judgment of the district court.

I.

On August 19, 1999, a federal grand jury returned a one-count indictment charging Reaume with bank fraud. The indictment alleged that Reaume knowingly executed a scheme to defraud Monroe Bank and Trust ("the Bank").

Reaume's jury trial began on August 14, 2001. At trial, testimony was presented that Reaume opened two checking accounts at the Bank using the aliases Steven D. McIlveen and Robert Sandor. Accounts also were opened at the Bank by Adam Rodriguez and Danny K. Drummond in their own names. Drummond opened an additional account under the alias of John S. Woods.

Reaume, Rodriguez, and Drummond used checks drawn from their accounts to purchase merchandise at various branches of national-chain retailers, and subsequently returned most of the merchandise for cash refunds at other branches of the stores. The Bank flagged the five accounts early on and refused to honor the checks for which there were insufficient funds("NSF checks"). The losses resulting from the passing of these NSF checks, therefore, fell on either the retailers themselves or the check-guarantee companies that insured the retailers.

On August 16, 2001, the jury returned a guilty verdict. On January 3, 2002, the district court determined that Reaume's guideline range was twenty-seven to thirty-three months, sentenced Reaume to thirty months of imprisonment and four years of supervised release, and ordered him to pay restitution in the amount of $95,649.26.

On appeal, Reaume raises four points of error. First, he argues that the evidence presented at trial was insufficient to maintain a conviction under the federal bank fraud statute because there was no evidence that he intended to defraud the bank itself, as opposed to the individual merchants or their respective insurance companies. Second, Reaume contends that the district court erred in refusing to award him a two-point reduction in offense level for acceptance of responsibility. Third, he asserts that the district court erred in overruling his objections at sentencing to the amount of money at issue in the fraud. Fourth, Reaume argues that the district court erred in ordering him to pay restitution in excess of $95,000 without considering his ability to pay.

II.

A. Sufficiency of the Evidence and Intent to Defraud

Reaume argues that there was insufficient evidence to find that he specifically intended to defraud the Bank, as opposed to the merchants or their insurers. He contends that an intent to defraud the payee of an NSF check does not provide a basis for a finding that there was an intent to subject the issuing bank to a loss. Accordingly, Reaume argues that the district court erred in denying his motion for a judgment of acquittal. The denial of a motion for a judgment of acquittal is reviewed de novo. United States v. Kone, 307 F.3d 430, 433 (6th Cir.2002).

Three elements are required for a conviction of bank fraud pursuant to § 1344:(1) the defendant must have knowingly executed or attempted to execute a scheme to defraud a financial institution; (2) the defendant must have done so with the intent to defraud; and (3) the financial institution must have been insured by the Federal Deposit Insurance Corporation. United States v. Everett, 270 F.3d 986, 989 (6th Cir.2001).

This Court previously addressed the intent element of the bank fraud statute in United States v. Hoglund, 178 F.3d 410 (6th Cir.1999), and Everett. While neither of these cases are directly controlling, their explication here is critical because it is from these cases that we distill the principle which we apply to the present case.

In Hoglund, an attorney was convicted under § 1344 after settling his clients' cases without their permission, forging their signatures on the settlement check she received, and depositing the money into his own account. 178 F.3d at 411. In Hoglund, we addressed the issue of whether the Government must prove that the defendant exposed a bank to a risk of loss as part of the "scheme to defraud" element. Id. at 413. Hoglund resolved this question by holding that "risk of loss" is simply "one way of establishing intent to defraud in bank cases." Id. Thus, this Court found that a defendant need not have exposed a bank to a risk of loss as an element of bank fraud. Id. Instead, proof that the defendant "intended to put a bank at a risk of loss" was sufficient to maintain a bank fraud conviction. Id. Thus, Hoglund held that the bank fraud statute is violated, even when there is no actual risk of loss on the part of the bank, if the defendant's intent is to expose the bank to such a risk. While informative, Hoglund is not controlling in the present case. Here, in contrast to Hoglund, the defendant claims that, regardless of whether there was an actual risk of loss, there was no intent to expose the Bank to a risk of loss.

In Everett, the defendant, a certified public accountant, was found guilty of bank fraud by a jury. 270 F.3d at 989. On appeal, the defendant argued that the Government failed to prove the specific intent required by § 1344, namely, the intent to defraud a federally insured bank, or at least to put the bank at a risk of loss. Id. at 990. The defendant acknowledged that there was evidence that she intended to defraud her client, but argued that the manner in which she defrauded her client did not impose a risk of loss on the bank in question. Id. In affirming the conviction, we held that the specific intent required for bank fraud does not require putting the bank at a risk of a loss or intending to do so "in the usual sense." Id. at 991. "It is sufficient if the defendant in the course of committing fraud on someone causes a federally insured bank to transfer funds under its possession and control." Id. Everett, therefore, can be said to stand for the proposition that the bank fraud statute is violated, even if the intended victim of the fraudulent activity is an entity other than a federally insured financial institution, when the fraudulent activity causes the bank to transfer funds. Thus, the holding of Everett is also instructive but not squarely on point, as there was no evidence in the present case indicating that the Bank actually did transfer funds in connection with Reaume's fraudulent activities.

Unlike the defendant in Hoglund, Reaume contends that he harbored no intent to expose the financial institution to a risk of loss. Moreover, unlike the situation in Everett, Reaume contends, and the evidence substantiates, that the Bank never transferred any funds in connection with the fraudulent activity. Thus, it appears that Reaume's particular fact pattern does not fall neatly under the Hoglund or Everett rubric, which consider both the intended victim and actual loss.

We nevertheless affirm Reaume's conviction. The specific issue that Reaume appeals is the evidence of his intent to defraud the Bank itself. In Everett, this Court held that an intent to put the financial institution at a risk of loss is not required, and that the fact that thedefendant defrauded someone was sufficient, given that the fraud caused the bank to transfer funds. 270 F.3d at 991. In the present case, the Bank was clearly at a risk of loss. Evidence was presented at trial to demonstrate that, when the Bank receives an NSF check, it makes a decision to either honor the check anyway or to dishonor the check. If the check is dishonored, the Bank does not lose any money, but if the check is honored, and the account holder fails to pay back that debt to the Bank, the Bank suffers a loss. Therefore, it is clear that Reaume's fraudulent activity, regardless of the intended victim, could have caused the Bank to transfer funds. If in fact the Bank had transferred funds, then this case would clearly be governed by Everett, because an intent to defraud someone would have caused the Bank to transfer funds. The issue of Reaume's intent simply cannot logically turn on the course of action chosen by the Bank after receiving the NSF checks. Accordingly, it is a necessary extension of Everett to find the intent element of § 1344 satisfied in this case.

Everett contains language to support this outcome. In Everett, this Court stated that the Government is probably better advised to proceed under the wire or mail fraud statutes where the bank has "minimal...