U.S. v. Rodriguez

• Decision Date: 24 March 1998
• Docket Number: Docket No. 96-1670
• Citation: 140 F.3d 163
• Parties: UNITED STATES of America, Appellee, v. Jennifer RODRIGUEZ, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

Page 163

140 F.3d 163

UNITED STATES of America, Appellee, v. Jennifer RODRIGUEZ, Defendant-Appellant.

Docket No. 96-1670.

United States Court of Appeals, Second Circuit.

Argued Sept. 26, 1997.

Decided March 24, 1998.

Susan B. Marhoffer, White Plains, NY, for Appellant.

Evan T. Barr, Assistant United States Attorney, Southern District of New York, New York City (Mary Jo White, United States Attorney, John M. McEnany, Assistant United States Attorney, Southern District of New York, New York City, of counsel), for Appellee.

Before: MESKILL and CALABRESI, Circuit Judges, and KOELTL, District Judge. ^*

MESKILL, Circuit Judge:

Appeal from an October 25, 1996 judgment of conviction entered in the United States District Court for the Southern District of New York, Baer, J., after a three day jury trial, finding appellant guilty of bank fraud in violation of 18 U.S.C. §§ 1344 and 2.

Reversed and remanded.

This appeal presents the question whether a conviction can be sustained under the federal bank fraud statute, 18 U.S.C. § 1344, where a defendant deposits fraudulently procured checks into multiple accounts at a federally insured financial institution and that institution takes those checks as a holder in

due course. We conclude that under these circumstances, with no other facts evincing an intent to victimize the financial institution, a jury could not have found that the defendant intended to victimize the institution by exposing it to an actual or potential loss. Accordingly, it was error to convict under the federal bank fraud statute. Further, because the evidence presented at trial also was insufficient to establish that the defendant engaged in a deceptive course of conduct, an essential element of the crime of federal bank fraud, we vacate the judgment of conviction and remand with instructions to dismiss the indictment.

BACKGROUND

The record reveals the following undisputed facts. In early 1994, appellant Jennifer Rodriguez (Rodriguez) was a mother of seven who earned approximately $400 per week as a babysitter and home health care aide. With some of her children still residing in her native country of Trinidad, Rodriguez sought to bring them to New York and to purchase a home. But with income of only $400 per week, her wish would not soon become a reality.

A close friend, Marva Elcock (Elcock), offered Rodriguez a quick solution. As a senior accounts payable clerk at Thomas Publishing Company ("Thomas Publishing" or "Company"), Elcock devised a scheme to divert thousands of dollars from the Company's coffers to Rodriguez and to herself. The scheme commenced in January 1994 when Elcock installed Rodriguez as a Company vendor in the Company's computer data base and began entering phony vendor invoices into the Company's accounts payable system. ¹ With each invoice, the Company generated a check payable to Rodriguez bearing the authorized signature of a Company assistant treasurer, Richard Teahan. Once a check was complete, Elcock arranged to deliver the check personally to Rodriguez in Brooklyn, or Rodriguez would send her 14 year old son Darryl to the Company's reception area for collection. Each check authorized Rodriguez to draw a specified amount from the Company's account at Chemical Bank, a federally insured financial institution.

As Rodriguez and Elcock discussed, Rodriguez did not open a new bank account to facilitate the scheme but instead deposited the checks into her two existing savings accounts at Chemical Bank. Rodriguez decided to use her existing accounts at Chemical Bank because "she knew someone there." On the application forms for those accounts, Rodriguez listed Elcock as her employer. In all, Rodriguez negotiated approximately $65,015 worth of unauthorized checks drawn on the Company's account at Chemical Bank.

Rodriguez accessed the money through numerous automatic teller machine withdrawals and through personal checks. In furtherance of her desire to purchase a home, she retained a real estate attorney, applied for a $150,000 mortgage, and used $10,000 of the funds as a down payment on a house in Queens. Rodriguez also used some of the money to cover Elcock's mortgage arrears of $10,000 and to buy a $7,000 car for Elcock's brother, Garth Roberts. Further, Rodriguez periodically provided Elcock with small sums of cash on demand, approximately $5,000 in total.

The scheme unraveled in June 1994 when Richard Teahan conducted an internal company audit and became suspicious of the previously unknown Jennifer Rodriguez vendor account. Thereafter, the Company arranged for Postal Inspector Frederick Fairchild to investigate the account and soon Fairchild identified the scheme and Elcock as the person behind the phony invoices. Elcock was arrested and entered into a cooperation agreement with the government, which agreement required her to provide information regarding Rodriguez and to testify against her at trial.

On August 25, 1994, postal inspectors arrested Rodriguez and charged her with mail fraud in violation of 18 U.S.C. § 1341. Immediately following her arrest, Rodriguez voluntarily gave a statement. In her statement, Rodriguez admitted to accepting On August 22, 1995, the government filed an indictment charging Rodriguez with a single count of bank fraud in violation of 18 U.S.C. §§ 1344 and 2. The indictment alleged that from January 1994 to May 1994, Rodriguez engaged in a scheme to negotiate approximately $65,015 worth of unauthorized checks drawn on the account of Thomas Publishing Company, maintained at Chemical Bank in New York City.

Thomas Publishing checks from Elcock for deposit into her bank account. The checks were never mailed but were personally delivered either by Elcock or by Rodriguez's son Darryl. Further, Rodriguez stated that Elcock had approached her and asked her to accept the checks because, as Rodriguez suspected, "Elcock's husband was a user of narcotics" and, accordingly, "Elcock might have wanted the money removed from [him]." Rodriguez also stated that she returned all of the money to Elcock, except for $6,000 that Elcock owed her. In the statement, Rodriguez did not admit to having any knowledge of the scheme to defraud. Yet in apparent disregard for the contents of this statement, Postal Inspector Fairchild had acknowledged during the grand jury proceeding that Rodriguez had confirmed during the post arrest interview that she had received the Thomas Publishing checks knowing they were unauthorized.

Trial commenced on April 29, 1996. During the trial, Rodriguez denied knowledge of the scheme and testified that her involvement with the checks began innocently when Elcock offered to lend her money to purchase a house--money that Elcock claimed the Company owed Elcock. However, because Elcock's husband was a drug addict, she did not feel safe putting the money into her own account. Accordingly, she asked to have the checks made payable to Rodriguez for deposit into Rodriguez's account. Further, Rodriguez explained to the jury that in June or July of 1993 she loaned Elcock $6,000 from her personal savings and considered the checks to be repayment for that debt, and on cross-examination admitted that at the time she opened the accounts at Chemical Bank, she falsely indicated on the account applications that Elcock was her employer.

On May 1, 1996 the trial ended and the jury returned a verdict of guilty. On May 16, 1996, Rodriguez filed a motion to dismiss the indictment and for a new trial on grounds that Postal Inspector Fairchild had submitted incorrect or perjured testimony to the grand jury in connection with Rodriguez's post-arrest statement concerning her knowledge of the scheme. The court denied that motion, concluding that, even if it had the authority to dismiss the indictment, dismissal would be inappropriate. On October 9, 1996, Judge Baer sentenced Rodriguez to a term of three months incarceration at a community treatment center, to be followed by two years of supervised release, restitution in the amount of $35,000, and a mandatory $50 special assessment. Rodriguez is currently released on bail pending the disposition of this appeal.

DISCUSSION

Rodriguez challenges her conviction, arguing that while she may have committed fraud against Thomas Publishing, the evidence adduced at trial is insufficient to establish the crime of federal bank fraud. Specifically, Rodriguez asserts that because she neither made fraudulent representations to Chemical Bank nor subjected it to an actual or potential loss, both of which are necessary elements of defrauding a bank, the indictment and the conviction were in error. Alternatively, Rodriguez avers that even if there is sufficient evidence to sustain the conviction, this Court nevertheless should invoke its supervisory powers and order the judgment vacated because Postal Inspector Fairchild provided "powerfully incriminating misinformation" to the grand jury.

The government responds that in accordance with our decisions in United States v. Stavroulakis, 952 F.2d 686 (2d Cir.), cert. denied, 504 U.S. 926, 112 S.Ct. 1982, 118 L.Ed.2d 580 (1992), and United States v. Morgenstern, 933 F.2d 1108 (2d Cir.1991), cert. denied, 502 U.S. 1101, 112 S.Ct. 1188, 117 L.Ed.2d 430 (1992), a defendant may be convicted of federal bank fraud even when the bank is not the immediate victim of a [evidence] that Rodriguez knew the checks had been issued against the account of Thomas Publishing Company without its authorization. Rodriguez endorsed these checks and presented them for payment at Chemical Bank, misrepresenting herself to be lawfully entitled to the funds. Rodriguez decided to deposit the checks at her own Chemical Bank branch because ... she knew someone there. Moreover, every account Rodriguez had opened at Chemical Bank falsely listed as her employer Marva Elcock, who could have deflected any telephone inquiry the bank may have wanted to make about the checks.

scheme to defraud. All that is...