U.S. v. Williams, 80-3064

• Citation: 639 F.2d 1311
• Decision Date: 19 March 1981
• Docket Number: No. 80-3064,80-3064
• Parties: 7 Fed. R. Evid. Serv. 1518 UNITED STATES of America, Plaintiff-Appellee, v. William Archie WILLIAMS, Defendant-Appellant. . Unit A
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1311

639 F.2d 1311

7 Fed. R. Evid. Serv. 1518

UNITED STATES of America, Plaintiff-Appellee, v. William Archie WILLIAMS, Defendant-Appellant.

No. 80-3064.

United States Court of Appeals, Fifth Circuit.

Unit A

March 19, 1981.

William M. Cady, Tom N. Thompson, Shreveport, La., James McPherson, New Orleans, La., Gary G. Grindler, Nickolas P. Chilivis, Randolph A. Rogers, Kenneth G. Menendez, Atlanta, Ga., for defendant-appellant.

Edward L. Shaheen, U. S. Atty., D. H. Perkins, Jr., Asst. U. S. Atty., Shreveport, La., for plaintiff-appellee.

Appeal from the United States District Court for the Western District of Louisiana.

Before AINSWORTH, Circuit Judge, KUNZIG, Judge, ^* and RANDALL, Circuit Judge.

KUNZIG, Judge:

William Archie Williams in 1979 was convicted in federal district court on one count of misapplication of bank funds and two counts of check kiting. He now appeals upon several grounds, principally evidentiary. It is our determination, however, that none of the grounds have merit.

I

In 1975, appellant William Archie Williams, an experienced businessman from rural Louisiana, purchased the majority interest in the Pelican State Bank, Pelican, Louisiana. He promptly appointed himself bank president. Pelican is a relatively small bank with only $3,000,000 in assets.

For a number of years prior to Williams' assumption of control, Pelican Bank had maintained a so-called "dummy account", an account used to charge items drawn on the bank by customers who had insufficient funds in their individual checking accounts to pay the items. A check would be paid from the bank's general pool of assets and held in the dummy account until the customer had deposited sufficient funds to cover the check. At this point, the check would be posted to the customer's account and the figure for accumulated checks in the dummy account correspondingly reduced. The dummy account statement contained a running balance of overdrafts which at all times equaled the total value of checks held in the dummy account. Also, upon each business day, the dummy account statement would be adjusted to indicate total "deposits" equal to total overdrafts covered as of the close of the previous business day. This was merely an accounting entry designed to reflect the bank's loss of use of the funds which had been applied to paying overdrafts. It seems that the bank charged no interest for providing this service.

It is unclear what, if any, limitations existed upon usage of the dummy account. Suffice it to say that Williams, as controlling shareholder and bank president, apparently enjoyed completely unhindered usage. We are here primarily concerned with the period from December 1977 to May 1978. Between December 20, 1977 and May 2, 1978, Williams drew many personal checks which were paid from the dummy account. By May 2, 1978, total overdrafts attributable to this activity had risen to $58,055.44. This was slightly in excess of 50% of the total overdrafts covered by the dummy account at that time. It is important to note that no other officer of the bank made use of the dummy account during Williams' presidency. Indeed, the bank's board of directors had requested that Williams eliminate the dummy account but he failed to take any action.

On May 8, 1978, state and federal bank examiners arrived at the bank to conduct an audit. They rather quickly discovered Williams' heavy drawings upon the dummy account, but did not immediately approach him. Instead, they began discreetly to monitor Williams' personal banking activity during the next few weeks.

On May 8, 1978 the same day as the commencement of the bank examination Williams opened a personal checking account at Winn State Bank, Winnfield, Louisiana, depositing $4,649.97. The deposit was posted to the account on May 9, 1978.

Also on May 9, 1978, Williams deposited in his personal checking account at Pelican Bank a check for $58,500 drawn upon his checking account at Winn Bank. This sum, of course, far exceeded Williams' actual balance in Winn Bank at the time. Pelican Bank thereupon credited Williams' checking account for the face amount of the deposited check. At the same time, Pelican Bank posted to Williams' checking account the group of checks which Williams had drawn from December 20, 1977 to May 2, 1978 and which had been cleared through the dummy account $58,055.44 worth. The overdraft balance in the dummy account fell correspondingly. At the start of business on May 9, 1978, Williams' checking account at Pelican Bank showed a balance of $8.33. At the close of business, this figure had risen to $452.89.

On May 10, 1978, Williams deposited in his checking account at Winn Bank a check for $60,000 drawn on his personal checking account at Pelican Bank. Again, this sum far exceeded Williams' true balance in the drawee bank. Winn Bank thereupon credited Williams' checking account for the face amount of the deposited check. At the start of business on May 10, 1978, Williams' checking account at Winn Bank showed a balance of $4,649.97. At the close of business, the balance had increased to $64,647.12 (a debit of $2.85 also having been recorded that day). As a result, Winn Bank routinely paid Williams' $58,500 check of May 9, given to Pelican Bank on that date, when it cleared for payment on May 12, 1978.

On May 11, 1978, there was presented for payment at Pelican Bank the $60,000 check which Williams had deposited in Winn Bank the day before. Because of insufficient funds in Williams' account, Pelican cleared the check through the dummy account. The overdraft balance in the dummy account rose correspondingly.

On May 16, 1978, Williams deposited in his checking account at Pelican Bank a check for $65,000 drawn upon his combined personal and business checking account at Sabine State Bank, Many, Louisiana. Williams' actual balance in Sabine Bank was only $1,204.81 at the time. Pelican Bank thereupon credited Williams' checking account for the face amount of the deposited check. At the same time, Pelican Bank posted to Williams' checking account the $60,000 check which Williams had deposited in Winn Bank on May 10, 1978 and which had been cleared through the dummy account on May 11, 1978. The overdraft balance in the dummy account fell correspondingly. At the start of business on May 16, 1978, Williams' checking account at Pelican Bank showed a balance of $102.89. At the close of business, the balance had risen to $5,102.89.

Because of insufficient funds in Williams' checking account, Sabine Bank refused to make payment on the $65,000 check when it was presented for payment on May 17, 1978. Pelican Bank charged Williams' account accordingly on May 23, 1978. Williams neutralized the charge-back by depositing a $65,000 money order in his Pelican account the same day. Williams had purchased the money order from Sabine Bank with the proceeds of a real estate mortgage loan which he obtained from Sabine on May 18, 1978. Negotiations for the loan had presumably commenced some time earlier but it is not possible to determine from the record precisely when.

As a result of this intricate banking activity, Williams was able to obtain for his personal account at Pelican Bank interest-free credit of $58,500 from May 9, 1978 to May 12, 1978 and $65,000 worth from May 16, 1978 to May 23, 1978. Further, he was able to obtain interest-free credit of $60,000 at Winn Bank from May 10, 1978 to May 11, 1978. He was able to do so upon the basis of checks whose face amount uniformly exceeded the amount of funds backing them in his personal account at the drawee bank upon the date when given.

During their audit, lasting approximately two weeks, the bank examiners followed these activities closely. Eventually, they voiced numerous criticisms which culminated in a special meeting on May 26, 1978 in Shreveport between the Pelican board and state and federal banking officials. The state banking commissioner presided. He expressed his concern over the matters which had been brought to his attention and requested that Williams resign as president. Williams did so at once.

The United States Attorney in Shreveport brought into the case via a criminal referral from FDIC also was alarmed by Williams' conduct and obtained a one-count indictment on September 21, 1979. A superseding three-count indictment was obtained on October 19, 1979.

Count I charged that, "Beginning on ... December 20, 1977 and continuing ... to May 9, 1978 ... William Archie Williams, being an officer ... of ... Pelican State Bank ... a bank the deposits of which are insured by (FDIC) ... with intent to injure and defraud said insured bank, did willfully and knowingly misapply ... monies and funds ... of said bank, in the amount of $58,055.44 ... by converting to his personal use said sum, all in violation of (18 U.S.C. § 656 (1976))...." ¹ This, of course, referred to Williams' sizable overdrafts during the period in question.

Count II charged that, "On ... May 9, 1978 ... William Archie Williams, did knowingly and willfully overvalue ... a security, that is a check dated May 9, 1978, drawn on the account of W. A. Williams ... at the Winn State Bank ... in the amount of $58,500.00 ... for the purpose of influencing the Pelican State Bank ... a bank the deposits of which are insured by (FDIC) ... upon an advance of money and extension of credit in that the Defendant presented said check for deposit at Pelican State Bank ... and represented ... to said bank that said check was of a value equal to the face amount of the check, when in truth and fact, as the Defendant then well knew, there were no sufficient funds in the account of W. A. Williams at the Winn State Bank ... to cover said check, all in violation of (18 U.S.C. § 1014 (1976))...." ²

Count III charged under the same statute and for the same type of offense as in Count II, but applied to Williams' May 10, 1978 transaction at the Winn Bank.

The cause came on for trial in federal...