U.S. v. Wilcox, 89-50315

• Decision Date: 20 November 1990
• Docket Number: No. 89-50315,89-50315
• Citation: 919 F.2d 109
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Richard D. WILCOX, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 109

919 F.2d 109

UNITED STATES of America, Plaintiff-Appellee, v. Richard D. WILCOX, Defendant-Appellant.

No. 89-50315.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 10, 1990.

Decided Nov. 20, 1990.

Stephen A. Munkelt, Nevada City, Cal., for defendant-appellant.

Jon C. Cederberg, Asst. U.S. Atty., Los Angeles, Cal., for plaintiff-appellee.

Before REINHARDT and LEAVY, Circuit Judges, and KING ^*, District Judge.

LEAVY, Circuit Judge:

OVERVIEW

Defendant Richard D. Wilcox (Wilcox) was convicted of conspiracy to make false statements to a federally insured savings and loan in violation of 18 U.S.C. Sec. 371 (1988) and of three counts of making false statements to a federally insured savings and loan in violation of 18 U.S.C. Sec. 1014 (1988). Wilcox contends the district court erred by denying his motion to present a "good faith" defense to the charges of making the false statements, and by refusing his proposed jury instructions.

We affirm.

FACTS

In 1982, Wilcox, an attorney, and three other individuals, Robert Scharer (Scharer), a general contractor, David Perry, M.D., and John Hensley, a real estate broker, formed a company called Sierra Gold, Inc. to develop recreational property adjacent to Scotts Flat Lake in Nevada County, California. The project was known as Harmony Cove.

Harmony Cove was financed by a $3.8 million loan from Camino Real Savings and Loan Association (Camino Real S & L) of San Fernando, California. Camino Real S & L was insured by the Federal Savings and Loan Insurance Corporation. The loan was secured by the 93-acre parcel of land that comprised Harmony Cove.

To ensure the loan proceeds would be used only to develop Harmony Cove, Camino Real S & L did not advance the entire loan to Wilcox and Scharer. Instead, a voucher system was used whereby Wilcox or Scharer had to execute preprinted vouchers warranting that certain work was actually performed to receive reimbursement from the savings and loan. Each voucher stated:

The undersigned represents and warrants that this disbursement represents direct payment for labor and/or materials and/or reimbursement for bills previously paid to persons furnishing labor and/or materials hereto for use in or related to construction on [the Harmony Cove project].

Some vouchers Wilcox and Scharer submitted to Camino Real S & L contained copies of checks or invoices purporting to prove that they had expended money on Harmony Cove. A representative of Camino Real S & L testified that he believed that the work identified in the vouchers had actually been done at Harmony Cove and that therefore, he had authorized payments from the loan in the amounts requested. However, the evidence at trial established that the work was either not done at all or was connected to entirely separate projects, and that Wilcox and Scharer made false statements to Camino Real S & L in connection with their requests for reimbursement on the Harmony Cove project.

False statements to a federally insured savings and loan are a violation of 18 U.S.C. Sec. 1014, which states in relevant part:

Whoever knowingly makes any false statement ... for the purpose of influencing in any way the action of ... any institution ... insured by the Federal Savings and Loan Insurance Corporation ... upon any ... loan, ... shall be fined not more than $5,000 or imprisoned not more than two years, or both.

DISCUSSION

Exclusion of The Good Faith Defense

Wilcox states: "[t]he sole issue presented on this appeal is the exclusion of evidence, instructions, and argument on good faith as a defense to the charges."

Wilcox argued in his trial memorandum that he was entitled to a defense of good faith because the vouchers, even if false, were submitted according to the instructions of the savings and loan, and therefore, he could not have had the requisite intent to act illegally or improperly. Wilcox also wanted to show his state of mind; that is, that he had no intent to defraud. At the beginning of the trial, however, the government moved in limine to prevent the defendants from introducing evidence that anyone at Camino Real S & L had represented to the defendants that it was appropriate to make false statements in connection with the Harmony Cove loan. The district court granted the motion. It did so on the basis of our holding in United States v. Kennedy, 564 F.2d 1329, 1340-41 (9th Cir.1977), cert. denied, 435 U.S. 944, 98 S.Ct. 1526, 55 L.Ed.2d 541 (1978), where we stated:

[T]his appellant was charged ... with making a false statement ... to a federally-insured bank as interdicted by 18 U.S.C. Sec. 1014. The gravity of this offense is the making of false statements calculated to influence the action of the bank. [The defendant] posits that since the bank officer to whom the statement was tendered had determined in advance to authorize the loan, his false statement could not be said to have influenced the action of the bank. However, [sic] intriguing this argument may be, it has been and must be rejected as being a non sequitur. The phrase "for the purpose of influencing" is intended to define the quality of the requisite intent, not to immunize a defendant from criminal liability merely because the bank officer was a party to the scheme. The United States Supreme Court, while speaking in the context of a different statute, forty years' [sic] ago rejected the argument that proof that the lending agency was actually influenced was an essential ingredient of conviction for making a false statement with intent to influence.

From the language of 18 U.S.C. Sec. 1014 and the teaching of the cases, we hold that the essence of the offense in the making of the false statement with the intent to influence the lender is not dependent on the accomplishment of that purpose. It is a crime of subjective intent requiring neither reliance by the bank officers nor an actual defrauding.

(Citations omitted.)

The availability of the good faith defense to a particular charge is a question of law reviewed de novo. See United States v. Scott, 789 F.2d 795, 797 (9th Cir.1986) (denial of good faith defense to crime of selling government property).

Wilcox argues that Kennedy is not controlling on the issue of the intent that must be demonstrated to violate 18 U.S.C. Sec. 1014:

At no time in his discussions with bank officials did Appellant Wilcox indicate a desire to obtain illegitimate or improper proceeds, or a desire to use proceeds of the loan for improper or illegitimate purposes. At no time during the discussions did any bank officer suggest that their advice on how to handle loan documentation was an invitation to illegal or improper conduct. At no time did the bank officials indicate that Mr. Wilcox's desires amounted to illegal or illegitimate use of loan proceeds.

Based on these circumstances, when appellant submitted the vouchers involved in ... the indictment, he relied entirely on the bank officials' advice on the proper means of submitting documentation. Although he knew some of the documentation submitted was false, he also knew that the bank officials were advised of the true circumstances ....

In other words, appellant acted entirely in good faith reliance on the specific advice and authorization of bank officials when preparing the vouchers.... He did not intend for any false statement to influence the bank. The issue presented here is not whether bank officials' knowledge of falsity affects appellant's criminal liability, but whether appellant's good faith reliance on the advice of bank officials is a defense to the specific intent requirement of 18 U.S.C. Sec. 1014.

(Emphasis added.)

The issue is whether a defendant who knowingly falsifies a statement to a bank, yet claims it was done in good faith reliance on instructions from a bank, is entitled to a good faith defense.

Kennedy comes close to deciding the issue. However, because the argument was different, Kennedy did not decide precisely what intent must be shown when a person admits to knowingly making false statements in reliance on bank officials' advice. ¹ Nevertheless, the principle of Kennedy holds true in this case: the only intent that needs to...