U.S. v. Wallace

• Decision Date: 19 June 1996
• Docket Number: D,No. 1578,1578
• Citation: 85 F.3d 1063
• Parties: UNITED STATES of America, Appellee, v. Jerome WALLACE, Defendant-Appellant. ocket 95-1703.
• Court: U.S. Court of Appeals — Second Circuit

Page 1063

85 F.3d 1063

UNITED STATES of America, Appellee, v. Jerome WALLACE, Defendant-Appellant.

No. 1578, Docket 95-1703.

United States Court of Appeals Second Circuit.

Argued June 3, 1996.

Decided June 19, 1996.

Celeste L. Koeleveld, Assistant U.S. Attorney, New York City (Mary Jo White, U.S. Attorney for the Southern District of New York, and Nancy Northup, Assistant U.S. Attorney, on the brief), for Appellee.

Lawrence K. Feitell, New York City, for Defendant-Appellant.

Before FEINBERG, JACOBS and CABRANES, Circuit Judges.

JACOBS, Circuit Judge:

Jerome Wallace raises three challenges to his conviction for conspiracy to commit bank fraud in violation of 18 U.S.C. § 371: (i) the FBI "manufactured" federal jurisdiction, in the sense that the only link between Wallace's crime and a federally-insured bank was supplied by the FBI; (ii) the evidence was insufficient to establish that Wallace conspired to defraud this particular bank; and (iii) Wallace could not have committed conspiracy to defraud this particular bank because the bank was never at risk of losing anything. We reject all three claims and therefore affirm.

I

In a Bronx apartment four years ago, Wallace showed Carl Corso several hundred stolen checks, most of which had been issued by the State of New Jersey Teachers' pension fund. Wallace asked Corso to help him cash ten of the checks by setting up a bank account with the use of false information, double endorsing the checks, depositing them, withdrawing the money after the checks cleared, and abandoning the account. Corso tried to do this, but the bank would not accept his fake I.D. He then asked two friends to deposit two checks apiece in their bank accounts. They did, and the scheme worked.

To cash the other six checks (in the amount of about $70,000), Corso enlisted Vinny Capri who, unfortunately for the schemers, was an FBI informant. After Vinny (falsely) told Corso and Wallace that he had deposited the checks, they demanded a deposit slip. The FBI provided Vinny with a phony deposit slip from a Citibank branch in downtown Manhattan (prepared with the cooperation of Citibank personnel), and Vinny gave it to Corso and Wallace. Wallace then instructed his "secretary" to call Citibank to confirm that the deposit had actually been made. After being put on hold several times by Citibank, the secretary aborted the call for fear that it was being traced.

After the time passed for the check to clear, Wallace demanded that Vinny withdraw the money. Vinny stalled. Wallace and his "associates" then stole Vinny's truck and threatened him in a number of phone calls taped by the FBI. The critical call came on August 24, 1992. In between threats to Vinny and his family, Wallace specifically pressed Vinny to withdraw the money from Citibank:

Transcript at 5

No, Vinnie, go back in the bank and get my money now.

Transcript at 7

[G]o back in the bank and get something now, Vinnie.

Transcript at 16

I would advise you and I'm telling you this now, to sit in front of that bank and make sure there's no more excuses. Do you understand that?

...

Hey, look, you don't play games with my money. Three weeks to cash a check? What are you, you out your mind? Three fucking weeks to cash a check, you think I wanta see you anymore? It takes five days, you played with my money three weeks. You could've pulled out a thousand dollars at a time, I would of had all my money by now.

During this conversation, Vinny told Wallace he would deliver the money at a cafe on the Upper East Side. Wallace sent Corso and another associate to pick up the payment. After the pick-up, Wallace and his coconspirators were arrested.

Wallace, his brother Bruce, and Dwayne Register were indicted for bank fraud, extortionate collection of credit, and conspiracy to commit both crimes. Register pleaded out. A jury acquitted Bruce Wallace on all charges. Jerome Wallace was convicted on the substantive extortion charge and both conspiracy charges, and was acquitted on the substantive bank fraud charge. The district court granted Wallace's motion for judgment notwithstanding the verdict on the two extortion charges, finding the evidence insufficient to prove that the extortion was used to collect an "extension of credit," as that term is defined by statute. On the conspiracy to commit bank fraud charge, the court held that the government's evidence and the jury instructions constructively amended the indictment. It therefore dismissed this charge without prejudice to any future indictment that might be returned on the same issue.

The government appealed. We affirmed the district court's ruling on the extortion charges, but reversed on the conspiracy to commit bank fraud charge, holding that the indictment had not been constructively amended or varied. United States v. Wallace, 59 F.3d 333, 338, 340 (2d Cir.1995). The jury's guilty verdict on the bank fraud conspiracy charge was thus reinstated, and the case returned to the district court. After sentencing, Wallace took this appeal, challenging the merits of his conviction on the three grounds listed above. ¹

II

A. "Manufactured" federal jurisdiction

Wallace's offense constitutes conspiracy to violate the federal bank fraud statute only because the offense involved Citibank, which is a federally insured bank. See 18 U.S.C. §§ 20, 1344. Citibank became involved only because the FBI gave Vinny phony Citibank deposit slips, so that he could satisfy Wallace's demand for proof that the deposit had been made. Wallace contends that this constitutes "manufactured" federal jurisdiction and that, under United States v. Archer, 486 F.2d 670 (2d Cir.1973), the indictment must therefore be dismissed.

In Archer, federal agents set up an elaborate sting operation to nab corrupt judges and prosecutors in Queens County. The agents arranged for undercover informants to commit several "crimes" and then kept watch as the prosecution process unfolded. During the course of the operation, the informants lied to local law enforcement officials, prosecutors, grand juries, and judges. To ensure that the corrupt acts committed by the targets of the investigation would constitute violations of the Travel Act, 18 U.S.C. § 1952, the informants placed interstate calls to the targets to discuss the scheme, and prompted the targets to make interstate calls by giving them out-of-state numbers at which the informants could supposedly be reached. Ultimately, a district attorney and local defense lawyer, among others, were indicted for violating the Travel Act. Id. at 672-74.

This Court held that the interstate phone calls were insufficient to satisfy the "use of a facility in interstate commerce" element under the Travel Act, because "the federal officers themselves supplied the interstate element" and had "[m]anufactured federal jurisdiction." Id. at 682. On petition for rehearing, the court clarified its opinion, explaining that "there is no indication that the defendants agreed either to make or to cause to be made any interstate or foreign telephone calls." Id. at 684-85.

Courts that have construed Archer have taken pains to limit its applicability, see United States v. Keats, 937 F.2d 58, 64-65 (2d Cir.) (interstate calls by federal agents can satisfy jurisdictional element as long as it was "reasonably foreseeable" to defendants that the calls would take place), cert. denied, 502 U.S. 950, 112 S.Ct. 399, 116 L.Ed.2d 348 (1991), and to explain that "manufactured jurisdiction" as an independent doctrine is a dubious concept. See, e.g., United States v. LaPorta, 46 F.3d 152, 160 (2d Cir.1994); United States v. Podolsky, 798 F.2d 177, 180-81 (7th Cir.1986) (Posner, J.). These cases make clear that the "manufactured jurisdiction" concept is properly understood not as an independent defense, but as a subset of three possible defense theories: (i) the defendant was entrapped into committing a federal crime, since he was not predisposed to commit the crime in the way necessary for the crime to qualify as a federal offense, see Podolsky, 798 F.2d at 181; (ii) the defendant's due process rights were violated because the government's actions in inducing the defendant to commit the federal crime were outrageous, see LaPorta, 46 F.3d at 160; or (iii) an element of the federal statute has not been proved, so federal courts have no jurisdiction over the crime, see United States v. Clark, 62 F.3d 110, 112 (5th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 734, 133 L.Ed.2d 684 (1996); Podolsky, 798 F.2d at 181. The first theory does not apply, since Wallace did not make an entrapment defense, and could not have made such a defense in any case since he was obviously predisposed to defraud banks. The second category is inapplicable as well: unlike the government's conduct in Archer, which arguably could have supported a due process claim of outrageousness, the FBI committed no crimes here, acted with Citibank's cooperation, and lied to no one (except the conspirators).

Thus, Wallace's manufactured jurisdiction claim is assertable, if at all, only in aid of the third (jurisdictional) theory of defense, the one closest to the Archer scenario and holding. Courts have refused to follow Archer when there is any link between the federal element and a voluntary, affirmative act of the defendant. Thus, when confronted with situations in which (i) the FBI introduces a federal element into a non-federal crime and (ii) the defendant then takes voluntary actions that implicate the federal element, this Court has consistently held that federal jurisdiction has not been improperly "manufactured" and that the statutory elements have been met, despite the surface similarity to Archer. See LaPorta, 46 F.3d at 154, 160 (FBI informant asked defendant, suspected of being an arsonist, if he would set fire to the informant's "daughter's car," which was actually a government-owned car; conviction for destroying government property by fire upheld and...