U.S. v. Young

• Decision Date: 31 December 1991
• Docket Number: No. 91-3147,91-3147
• Citation: 952 F.2d 1252
• Parties: , 34 Fed. R. Evid. Serv. 1258 UNITED STATES of America, Plaintiff-Appellee, v. Reva YOUNG, a/k/a Reva L. Mabary, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1252

952 F.2d 1252

60 USLW 2495, 34 Fed. R. Evid. Serv. 1258

UNITED STATES of America, Plaintiff-Appellee, v. Reva YOUNG, a/k/a Reva L. Mabary, Defendant-Appellant.

No. 91-3147.

United States Court of Appeals, Tenth Circuit.

Dec. 31, 1991.

Tanya J. Treadway (Lee Thompson, U.S. Atty., with her on the brief), Asst. U.S. Atty., Kansas City, Kan., for plaintiff-appellee.

Michael L. Harris (Charles D. Anderson, Federal Public Defender, with him on the brief), Asst. Federal Public Defender, Kansas City, Kan., for defendant-appellant.

Before HOLLOWAY, MOORE and BRORBY, Circuit Judges.

BRORBY, Circuit Judge.

Reva Young appeals her conviction for bank fraud for opening an unauthorized checking account in her employer's name and drawing checks thereon which she used for personal expenses.

In November 1988, Ms. Young began working part-time for Dr. Henry Habib in his medical office. Her duties included making appointments, billing, opening the mail, answering the telephone and assisting with female patients. When the doctor began solo practice, Ms. Young became a full-time employee receiving an annual salary of approximately $18,000 a year. Since 1970, Dr. Habib maintained a corporate checking account at Citizens-Jackson County Bank for which he was the only authorized signer. The doctor was paid primarily by insurance checks made payable to the corporation, which arrived in the mail. As part of her office duties, Ms. Young was responsible for depositing those checks in the corporate account. Ms. Young, without authorization, attempted to gain signatory authority for this account but was refused by bank personnel.

In January 1989, Ms. Young opened an account in the name of Dr. Habib at the Douglass Bank in Kansas City, Kansas. She made the initial deposit with insurance checks made payable to him. Ms. Young's neighbor, a bank officer, introduced her to the new accounts representative. The representative gave Ms. Young paperwork for Dr. Habib to sign authorizing the account but the papers were never returned to the bank. Because the bank did not have a signature card for Dr. Habib it initially refused payment on checks drawn on the account. Subsequently, Ms. Young sent a handwritten letter authorizing payment and represented she was an authorized signer on the account. During the life of the account, Ms. Young deposited approximately $25,000 of Dr. Habib's money in the account and wrote checks for personal expenses totalling over $24,000. Ms. Young, and only Ms. Young, signed all the checks written on the account.

In early August 1989, Ms. Young failed to show up for work for several days because she was in jail for a probation violation stemming from an attempted felony theft conviction which she did not disclose to Dr. Habib. Because of her unexplained absence, Dr. Habib fired Ms. Young.

Soon thereafter, Dr. Habib received an insufficient funds notice in the mail. Perplexed, he sent his wife to Citizens-Jackson County Bank to check it out. A bank officer discovered the Douglass Bank checking account and reported this to Dr. Habib. This was the first Dr. Habib knew of the bank or the checking account in his name. The bank released the balance of the account to the doctor. Dr. Habib instituted suit against the bank and this was settled out of court by the bank paying Dr. Habib $19,000.

Ms. Young was charged with executing a scheme to defraud a financial institution in violation of 18 U.S.C. § 1344 and interstate transportation of stolen property in violation of 18 U.S.C. § 2314. At trial, a jury found Ms. Young guilty of both crimes.

At trial Ms. Young attempted to present evidence of Dr. Habib's bias against her. Specifically, Ms. Young alleged she was fired, not because of unexcused absence, but because she confronted the doctor about possible medical malpractice exposure. The government had filed a motion in limine to exclude any reference to medical malpractice which the trial court granted. Ms. Young also sought to introduce evidence concerning the civil litigation between the doctor and Douglass Bank regarding the alleged unauthorized account. Ms. Young claims the doctor had incentive to claim he knew nothing about the account because the bank reimbursed him for the loss. Ms. Young claimed Dr. Habib authorized the account in return for sexual favors. Although the government moved in limine to exclude evidence about the settlement as it related to the bank's negligence, it did not contest this evidence could be used to show bias or prejudice. The trial court reserved judgment on the matter. During the course of the trial Ms. Young did not attempt to elicit information regarding the settlement.

Finally, in response to Dr. Habib's response on cross-examination that he had never previously accused an employee of embezzlement, Ms. Young attempted to introduce testimony of a former employee to rebut Dr. Habib's claim. Ms. Young sought to use this evidence to show honesty or dishonesty under Fed.R.Evid. 608(b) and as a prior civil wrong to show plan or intent under Fed.R.Evid. 404(b). The court found this to be a collateral matter and ruled it inadmissible.

Ms. Young appeals and asserts as error: (1) the facts do not support bank fraud because use of the bank was only incidental to the fraud; (2) the court erred by denying cross-examination of Dr. Habib on matters regarding bias or prejudice; and (3) the court erred by precluding introduction of testimony of a prior employee that Dr. Habib accused her of embezzlement.

I. BANK FRAUD

A jury found Ms. Young guilty of bank fraud in violation of 18 U.S.C. § 1344(a)(1) (1989) which provides that "[w]hoever knowingly executes ... a scheme or artifice to defraud a federally chartered or insured financial institution" shall be guilty of a crime. ¹ Ms. Young stole insurance checks payable to her employer and deposited them in the unauthorized account she opened in her employer's name at Douglass Bank. She subsequently sent the bank a letter claiming to be a signatory on the account and the bank, relying upon this letter, cashed over $24,000 worth of checks drawn by Ms. Young and used by her for her personal expenses.

Ms. Young claims that "18 U.S.C. § 1344(1) does not cover these situations in which a financial institution is incidentally, or peripherally involved" and challenges the sufficiency of the evidence to establish a bank fraud violation. Ms. Young asserts the bank in this case was not the target, the object or an indispensable part of the scheme and therefore she did not defraud the bank so as to violate § 1344(1). Thus, the issue Ms. Young presents is whether her conduct of depositing stolen checks into an unauthorized account, representing to the bank she was a signatory on the account and then signing checks for her personal expenses is cognizable under the bank fraud statute. See United States v. Cronic, 900 F.2d 1511, 1512 (10th Cir.1990) (although appeal is "couched in terms of sufficiency of the evidence" Appellant's basic argument is that his conduct is not criminalized under the section of federal statute with which he is charged).

The government argues Ms. Young's conduct victimized the bank through deceit therefore bringing it within the purview of the bank fraud statute. The government identifies two separate acts of deceit directed toward the bank: Ms. Young's implied misrepresentation that she had authority to open a checking account in Dr. Habib's name and Ms. Young's express misrepresentation to the bank through her handwritten letter that she had authority to sign checks on the account. The government claims her acts deceived not only her employer but the bank as well. The government contends the theft from her employer could not have occurred without these acts of deceit directed toward the bank as Ms. Young had no access to the corporate account. Therefore, the government argues, the Douglass bank was an indispensable part of her scheme to defraud. Finally, the government contends §§ 1344(1) and 1344(2) ² of the bank fraud statute overlap and evidence used to establish a subsection 2 violation can establish a subsection 1 violation as well.

We review the question of whether defendant's conduct is prohibited by a federal statute under a non-deferential de novo standard. United States v. Bonnett, 877 F.2d 1450, 1454 (10th Cir.1989). Our review of the record finds the government's arguments to be more persuasive and we uphold Ms. Young's conviction under § 1344(1).

Congress enacted the current bank fraud statute (18 U.S.C. § 1344) in 1984 in response to various Supreme Court decisions ³ which narrowed the application of the then existing bank fraud statute. Bonnett, 877 F.2d at 1454. The bank fraud statute was modeled after the mail and wire fraud statutes (18 U.S.C. §§ 1341, 1344) which courts have construed very broadly. Bonnett, 877 F.2d at 1454. The bank fraud statute contains virtually the same language as the mail and wire fraud statutes. Likewise, courts have construed the bank fraud statute liberally. See id., 877 F.2d at 1450. Accord United States v. Matousek, 894 F.2d 1012, 1014 (8th Cir.), cert. denied, 494 U.S. 1090, 110 S.Ct. 1832, 108 L.Ed.2d 961 (1990); United States v. Gunter, 876 F.2d 1113 (5th Cir.) cert. denied, 493 U.S. 871, 110 S.Ct. 198, 107 L.Ed.2d 152 (1989); United States v. Bonallo, 858 F.2d 1427, 1432-33 (9th Cir.1988).

The bank fraud statute sets forth two prohibited offenses. Bonnett, 877 F.2d at 1453. Each of the two offenses share common elements and thus their proof overlap. United States v. Medeles, 916 F.2d 195, 198 (5th Cir.1990). For example, each offense requires the criminal act be directed against a federally chartered or insured financial institution, and each requires a knowing execution of a scheme or artifice. Id. " '[S]cheme' and 'artifice' are defined to include ... fraudulent pretenses or misrepresentations intended to deceive others to obtain something of value, such as money,...