U.S. v. Tucker

• Citation: 773 F.2d 136
• Decision Date: 06 September 1985
• Docket Number: Nos. 83-1438,83-1439 and 83-1444,s. 83-1438
• Parties: 19 Fed. R. Evid. Serv. 757 UNITED STATES of America, Plaintiff-Appellee, v. Robert L. TUCKER, Deborah Bell, and Michael Ball, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 136

773 F.2d 136

19 Fed. R. Evid. Serv. 757

UNITED STATES of America, Plaintiff-Appellee, v. Robert L. TUCKER, Deborah Bell, and Michael Ball Defendants-Appellants.

Nos. 83-1438, 83-1439 and 83-1444.

United States Court of Appeals Seventh Circuit.

Argued May 25, 1985.

Decided Sept. 6, 1985.

Rehearing and Rehearing En Banc Denied in No. 83-1439 Oct. 10, 1985.

Rehearing and Rehearing En Banc Denied in No. 83-1438 Dec. 5, 1985.

Daniel C. Murray, Asst. U.S. Atty., Chicago, Ill. (Dan K. Webb, U.S. Atty., Chicago, Ill.), for plaintiff-appellee.

Aviva Meridian Kaiser, Chicago, Kent College of Law, Matthias A. Lydon, John A. Dienner, III, Pierce, Lydon, Griffin & Montana, John C. Tucker, Jenner & Block, Chicago, Ill., for defendants-appellants.

Before POSNER and COFFEY, Circuit Judges, and CAMPBELL, Senior District Judge. ^*

POSNER, Circuit Judge.

Michael Ball, Deborah Bell, and Robert Tucker were tried together for wire fraud (see 18 U.S.C. Sec. 1343) and for submitting false statements to a federally insured bank (18 U.S.C. Sec. 1014); were convicted by a jury; and were sentenced to prison terms of 9 months (Ball), 15 months (Tucker), and 2 years (Bell), plus periods of probation and, in the case of Bell and Tucker, were also ordered to make restitution of $5 million, subject to certain conditions. All three defendants appeal, raising a variety of questions.

The scheme charged by the government worked as follows. Bell, a commodities broker in Chicago, with the aid of Ball, a freight forwarder in Miami, and Tucker, who was Bell's lawyer, made a contract to sell 6,000 tons of beans to Guatemala for $5 million. Bell did not have the beans, of course; she was a middleman; to get the beans she turned to Irving Pheterson, a commodities broker in Miami who had a supplier in the Far East. The contract with Guatemala was to be paid for by a letter of credit issued by a Guatemalan bank and confirmed by the Continental Illinois National Bank in Chicago. Under the terms of the letter of credit, the Continental Bank would pay Bell for the beans upon receipt of documents showing that they had been loaded on board ship in Hong Kong en route to Guatemala, and Bell would then reimburse Pheterson. So the beans would go from Hong Kong to Guatemala, while payment would go from the Continental Bank to Bell to Pheterson. The letter of credit made the Continental Bank in effect the payment agent of the Guatemalan buyer.

Documents showing that the beans had been loaded were presented to the bank, and the bank paid the letter of credit. But the documents had been forged; the beans had not been (and never were) shipped. Pheterson testified under a grant of immunity that the three defendants had forged the documents. There is no question the documents were forged; the question is by whom. The defendants argue that Pheterson was the real architect of the fraud and testified against them to save his own skin. The government's theory was different: that since the letter of credit had not been made transferable, the defendants could not assign it to someone as collateral for a loan that would enable them to buy the beans needed to fulfill the contract, see generally White & Summers, Handbook of the Law Under the Uniform Commercial Code 747-51 (2d ed. 1980), and had turned to forgery to get the money they needed to buy the beans.

The substantive issue in this appeal, an issue apparently of first impression, is whether a letter of credit is within the scope of 18 U.S.C. Sec. 1014, which punishes false statements made to influence a bank's action "upon any application, advance, discount, purchase, purchase agreement, repurchase agreement, commitment, or loan." The false statements in this case were made to induce the Continental Bank to deposit $5 million in the defendants' account. The transaction fits comfortably within the statutory terms "application," "advance," and "commitment." The bank was obligated to pay Bell upon presentation of the required documents. This was a commitment; and the forged documents were in support of an "application" designed to induce the bank to honor its "commitment" and "advance" funds to the applicants.

Williams v. United States, 458 U.S. 279, 102 S.Ct. 3088, 73 L.Ed.2d 767 (1982), on which the defendants rely, is inapposite. The Court held that check-kiting does not violate section 1014, because merely depositing a check that is not backed by funds is not a false statement. See id. at 284-85, 102 S.Ct. at 3091-92. The defendants in this case made explicit representations which were false in order to get Continental Bank to part with $5 million. Although we can find no cases under section 1014 involving letters of credit, our conclusion that a fraudulent representation made to induce the bank to pay the beneficiary violates the section is supported by analogy to several cases decided after Williams: United States v. Price, 763 F.2d 640, 643 (4th Cir.1985); United States v. Davis, 730 F.2d 669, 673 (11th Cir.1984); United States v. Shaid, 730 F.2d 225, 232 (5th Cir.1984); Prushinowski v. United States, 562 F.Supp. 151, 156-58 (S.D.N.Y.1983).

We next consider the sufficiency of the evidence to convict. Pheterson was, as the judge remarked, an unreliable witness, not only because he had an incentive to shift the responsibility for the fraud to the defendants but because his testimony contained contradictions and memory lapses, and, more seriously, because there is evidence that he is mentally impaired (more on this shortly). Nevertheless there is no serious question about the guilt of Bell and Ball, at least. Fingerprint and handwriting evidence, statements to third parties, testimony from bean suppliers, and the testimony of Tucker's secretary corroborate Pheterson's testimony against them.

Although there is more question about Tucker's guilt, we are persuaded that a reasonable jury could find sufficient corroboration of Pheterson's testimony to convict Tucker, even if the jury maintained as it should have done a healthy skepticism about Pheterson's honesty and recollection. Among the documents submitted to the bank on September 5, 1980, to get the letter of credit paid was one that certified that the beans were on board ship in Hong Kong. But shortly afterward Tucker got approval for a letter of credit to pay for beans to fulfill the contract. This shows that Tucker knew the document was false, albeit after the document had been submitted to the bank. Some of his secretary's testimony indicated that Tucker was present when questionable documents were being prepared (for example, a phony bill of lading for the beans purportedly shipped from Hong Kong), and she testified to statements made by him that were consistent with guilty knowledge. And Tucker wrote checks to himself for a total of $68,000 from an account in which the letter of credit had been deposited. These payments ostensibly were to repay a loan he had made to facilitate the transaction, but even so this suggests that his role was entrepreneurial, and not just that of a lawyer (his theory). Although apart from Pheterson's testimony the evidence fell far short of proving Tucker's participation in the fraud beyond a reasonable doubt--most of it being consistent with his playing just a lawyer's role--the significance of the other evidence is that it corroborates Pheterson's testimony. Ordinarily a jury can convict on the basis of a single eyewitness's testimony, but we may assume that where the witness was as unreliable as Pheterson there would have to be some corroboration. There was.

We turn now to the alleged procedural errors at the trial. The district judge refused to order a psychiatric examination of Pheterson or conduct a hearing on his competence to testify, and the defendants argue that this was error because Pheterson (they argue) obviously had serious mental problems. For reasons discussed in United States v. Gutman, 725 F.2d 417, 420 (7th Cir.1984), and unnecessary to repeat here, we hesitate to reverse a district judge's refusal to order that a witness submit to a psychiatric examination; and there was no abuse of discretion by the judge in this case. The defendants make much--too much--of the fact that in 1978, two years before the event in issue, Pheterson had brought a personal-injury suit, later dismissed, in which he claimed to have suffered brain damage as a result of being exposed to dry-ice fumes (i.e., carbon dioxide); of his subsequent statements that the carbon-dioxide poisoning had caused an impairment of his memory; and of a letter that Pheterson wrote to an assistant United States attorney in which he discussed the conflict between his "oversoul" and his "undersoul." In fact there is no indication that Pheterson had suffered significant...