U.S. v. Rodriguez-Alvarado

• Decision Date: 12 September 1991
• Docket Number: D,RODRIGUEZ-ALVARAD,No. 91-1102,91-1102
• Citation: 952 F.2d 586
• Parties: UNITED STATES, Appellee, v. Ismaelefendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 586

952 F.2d 586

UNITED STATES, Appellee, v. Ismael RODRIGUEZ-ALVARADO, Defendant, Appellant.

No. 91-1102.

United States Court of Appeals, First Circuit.

Heard Sept. 12, 1991.

Decided Dec. 27, 1991.

Jose Antonio Pagan Nieves, Old San Juan, P.R., by Appointment of the Court, for defendant, appellant.

Carlos A. Perez, Asst. U.S. Atty., with whom Daniel F. Lopez Romo, U.S. Atty., Hato Rey, P.R., was on brief, for appellee.

Before TORRUELLA, Circuit Judge, COFFIN and TIMBERS, ^* Senior Circuit Judges.

TIMBERS, Circuit Judge:

Ismael Rodriguez Alvarado appeals from a judgment entered on a jury verdict convicting him of bank fraud pursuant to 18 U.S.C. § 1344 (1988) and of aiding and abetting the misappropriation of bank funds pursuant to 18 U.S.C. § 656 (1988). He was sentenced to 7 years in prison.

His chief contention on appeal is that the government failed to prove the necessary element of intent. He also contends that the district court erred in reading the indictment to the jury only after the first witness had begun her testimony. He further contends that the district court erred in refusing to admit a letter from Banco de Ponce's insurance company which criticized the bank's issuance of a stop payment order on the manager's checks drawn to the order of Rodriguez. Finally, he contends that the district court erred in instructing the jury regarding check kiting and in refusing to charge the jury in accordance with his requests.

We affirm.

I.

We shall set forth only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal.

In 1983, Rodriguez began a lottery ticket brokerage business in Puerto Rico. The sale of lottery tickets is conducted by the government of Puerto Rico through its agency, the Loteria de Puerto Rico (Loteria). Under this system, lottery ticket agents purchase tickets in numbered lots in advance of the drawing. These advance purchases from the government agency often are required before individual agents have completed sales for upcoming drawings; as a result, it is commonplace for individual agents to have difficulty making their full purchases because of cash flow problems. Lottery ticket agents therefore rent their agencies to brokers. The lottery ticket brokers assist individual agents in purchasing their ticket allotments by making payments directly to the Loteria de Puerto Rico and by selling the tickets. The brokers give the owners of the agencies the earnings they would have made through the year and they retain a certain percentage as a commission. Both the Commonwealth of Puerto Rico and the Loteria have endorsed the business of the lottery ticket broker as a legitimate business which assists agents and results in higher profits to the government.

Rodriguez was the lottery ticket broker for some 200 agencies in Puerto Rico. In view of the large cash outlay involved, on at least one occasion Rodriguez took out a commercial loan to make the payment to the Loteria. When he became a broker, Rodriguez maintained a bank account at Banco Comercial de Mayaguez, a bank insured by the Federal Deposit Insurance Corporation. The account was in the name of his former magazine distributorship, Rodal Magazine Distributors. After the brokerage business began to thrive, Rodriguez obtained from his bank $10,000 in certificates of deposit (CD's). He gave them as collateral for a short term commercial loan. The proceeds from the loan were deposited in the Rodal account.

Most of the other lottery brokers and sellers regularly conducted their business through the Banco de Ponce which was insured by the Federal Savings Loan Insurance Corporation. Rodriguez opened a second account in the Chardon Street branch of Banco de Ponce. Since the Loteria would not accept personal checks as payment, Rodriguez drew a personal check on the Rodal account. This subsequently was authorized by Carmen Marrero, a Banco de Ponce manager, to be used to purchase a manager's check. Upon receiving a manager's check in exchange for his personal check, Rodriguez could purchase the lottery ticket allotments from the Loteria. At Marrero's suggestion Rodriguez discontinued drawing checks on the Rodal account. He began presenting checks drawn on his sister's account. She signed the checks in blank and let Rodriguez fill in the necessary dates and amounts. During all of these transactions, as Rodriguez points out, none of the checks was returned for insufficient funds. Rodriguez used his earnings from the brokerage business to purchase additional CD's in the amount of $400,000 from Banco de Mayaguez. These CD's were used as collateral for further short term loans and to guarantee personal checks for future lottery transactions.

In early April 1985, Marrero, the Banco de Ponce manager, stated that she was "becoming ill in [her] nerves and heart", because she realized that she was authorizing payment of checks in excess of her bank's established limits. Under bank policy, when a client presented a check drawn against another bank, the client was required to deposit it in his account. The manager, without obtaining approval from her immediate supervisor, could authorize payment of checks for amounts up to $15,000 without collateral and up to $25,000 with collateral. These limits applied on a daily basis to each individual client. If a client wanted authorization for payment of a check drawn on another bank and if he owned CD's to guarantee the transaction, the bank manager again was authorized to certify payment of checks up to the established amounts. The CD's then would be retained in the Banco de Ponce vault, to be removed only in the presence of two bank officers. On April 11, 1985, at Marrero's request, Rodriguez signed an affidavit stating that he had adequate property to cover the amounts of checks subsequently to be authorized by Marrero to be paid.

On April 24, 1985, Zenaida Vazquez, an employee of Banco de Ponce, was introduced to Rodriguez by Marrero. At that meeting, Marrero instructed Vazquez to authorize checks for Rodriguez drawn against other banks because he was a "good customer". Thereafter, however, Vazquez refused to give the necessary authorizations, claiming that such authorizations were contrary to explicit bank policy.

After her refusal to authorize payment of the checks presented by Rodriguez, Vazquez telephoned her supervisor to inform him that some transactions were being authorized by Marrero even though they exceeded the bank's policy limits. Marrero was questioned by bank officers. She claimed that she was authorizing payment of checks over the bank's policy limits since Rodriguez had certified by affidavit that he had more than $400,000 in CD's which he maintained as collateral. Further inquiry disclosed that the CD's were not being held in the vault at the Chardon Street branch; but that they had been used as collateral for another outstanding commercial loan.

Bank officers responded by placing stop payment orders on the manager's checks. Banco de Ponce claimed losses exceeding $1 million. Apparently, this loss resulted when Rodriguez's personal checks, having been substituted by manager's checks, were returned for insufficient funds. A bank investigation disclosed that during the month of April 1985, 336 checks from the accounts of Ponce Federal Bank and Banco Comercial de Mayaguez were presented; during that period, 299 manager's checks and 962 money orders were issued to Rodriguez. A total of $12.5 million in checks were presented that month.

Rodriguez subsequently signed a repayment agreement, secured by a mortgage note, pursuant to which he agreed to repay approximately $1,186,000, together with 12% interest. He reduced the amount owed to $638,987.25, but was unable to make any further payments.

Rodriguez was indicted on March 14, 1990 for bank fraud in violation of 18 U.S.C. § 1344, and for aiding and abetting the misappropriation of bank funds in violation of 18 U.S.C. § 656. He was convicted on all counts and was sentenced as stated above. He claims errors as set forth above in the second paragraph of this opinion.

II.

(A)

Rodriguez's chief claim of error is that the evidence was insufficient to prove the element of intent, a requisite of conviction under § 1344 and § 656.

"In reviewing the sufficiency of the evidence, we must consider the evidence 'in the light most favorable to the government, drawing all legitimate inferences and resolving all credibility determinations in favor of the verdict.' " United States v. Valencia-Lucena, 925 F.2d 506, 512 (1st Cir.1990) (quoting United States v. Benavente Gomez, 921 F.2d 378, 380 (1st Cir.1990), which in turn quoted (United States v. Angiulo, 897 F.2d 1169, 1197 (1st Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 130, 112 L.Ed.2d 98 (1990))). The evidence need not exclude every reasonable hypothesis of innocence. United States v. Rivera Rodriguez, 808 F.2d 886, 890 (1st Cir.1986). In reviewing the sufficiency of the evidence in support of the verdict, we do not assess the credibility of the witnesses. Valencia-Lucena, supra, 925 F.2d at 512.

The mere existence of a check kiting scheme does not as a matter of law imply the intent required for a bank fraud conviction pursuant to § 1344; specific intent must be proven. United States v. Rhodes, 886 F.2d 375, 381 (D.C.Cir.1989); see also United States v. Faulhaber, 929 F.2d 16 (1st Cir.1991); United States v. Bales, 813 F.2d 1289 (4th Cir.1987). We recognize that "[w]illfulness can rarely be proven by direct evidence, since it is a state of mind, it is usually established by drawing reasonable inferences from the available facts." United States v. Bank of New England, N.A., 821 F.2d 844 (1st Cir.1987), cert. denied, 484 U.S. 943, 108 S.Ct. 328, 98 L.Ed.2d 356 (1987).

(B)

We turn first to the evidence that Rodriguez had the knowledge and intent necessary to defraud the bank in violation of § 1344.

Rodriguez pledged as...