United States v. Christy

Decision Date15 February 2019
Docket NumberNo. 17-3122,17-3122
Citation916 F.3d 814
Parties UNITED STATES of America, Plaintiff - Appellee, v. Denise Sue CHRISTY, Defendant - Appellant.
CourtU.S. Court of Appeals — Tenth Circuit

Paige A. Nichols, Assistant Federal Public Defender (Melody Brannon, Federal Public Defender with her on the brief), Topeka, Kansas, for Defendant - Appellant.

Jared S. Maag, Assistant United States Attorney (Stephen R. McAllister, United States Attorney, and James A. Brown, Assistant United States Attorney with him on the brief), Topeka, Kansas, for Plaintiff - Appellee.

Before TYMKOVICH, Chief Judge, O’BRIEN, and MATHESON, Circuit Judges.

MATHESON, Circuit Judge.

Denise Sue Christy stole cash from the vault of the bank where she worked as a teller. She was charged, convicted, and sentenced for various federal crimes. She now appeals.

On May 21, 2014, CNB auditors conducted a surprise audit of the Burlington, Kansas Central National Bank ("CNB" or "Bank") vault. The vault was missing $764,000. When they began to suspect Ms. Christy, she forged documents to purport that she had sent the missing cash to the Federal Reserve Bank of Kansas City ("FRB"). A grand jury indicted her on one count of bank embezzlement, six counts of making false bank entries, six counts of failing to report income on her taxes, and 10 counts of money laundering. After a six-day trial, a jury found Ms. Christy guilty of all charges except four money laundering counts.

On appeal, Ms. Christy argues that (1) cumulative prosecutorial misconduct violated her due process rights, (2) the evidence was insufficient for her money laundering convictions, and (3) the jury instructions improperly omitted a "materiality" element for the false-bank-entry charges.1

Exercising jurisdiction under 18 U.S.C. § 3742(a) and 28 U.S.C. § 1291, we affirm the embezzlement, false bank entry, and failure to report income convictions. We reverse the money laundering convictions, vacate the sentence, and remand for resentencing.

I. BACKGROUND
A. Factual History
1. Burlington CNB’s Vault Management

In 2014, Elaine Gifford was the retail operations supervisor of Burlington CNB. She supervised bank teller Ms. Christy and vault teller Raylene Thorne, Ms. Christy’s sister-in-law.

Ms. Gifford, Ms. Christy, and Ms. Thorne all had access to the Bank’s vault. Ms. Gifford did not "keep much track of what was in the vault," ROA, Vol. III at 673, and Ms. Thorne often handed off her vault duties to Ms. Christy. Ms. Gifford relied on Ms. Christy to count the cash. When Ms. Gifford needed to record the amount of cash in the vault, she simply wrote down the numbers that Ms. Christy gave her.

Approximately every other week, CNB Burlington transferred money to the FRB. When the vault had too much cash,2 the Burlington branch sent cash, also known as "sold cash," to the FRB, which held the cash in an account for the branch. The FRB sent cash back to the Bank upon request. A company named Garda transported the cash to and from the FRB.

Burlington CNB tracked its cash transfers in various ways:

(1) The Bank created cash-out tickets that recorded when money came out of the vault, including transfers to the FRB and smaller transfers to teller stations within the Bank. These tickets contained an unalterable "proof strip" recording the date they were printed.
(2) The Bank entered the cash-out transactions into an electronic system called "Vertex," which produced a report that showed the amount of cash in the vault at any given time.
(3) When the Bank sent cash to the FRB, it created a debit ticket memorializing the transaction.
(4) For each sale to the FRB, the Bank created two currency deposit tickets that itemized the denominations it sold to the FRB. One ticket went to Garda and the other stayed with the Bank.
(5) When Garda employees picked up the cash, they used a handheld machine to print out a receipt that both a Burlington CNB employee and the Garda employee signed. The receipt contained a time/date stamp that recorded the precise second the receipt was printed.
(6) Lisa Nabus, a senior accountant at Junction City CNB, balanced Burlington CNB’s FRB ledger by comparing the Bank’s deposits to a daily statement from the FRB.
2. The May 21, 2014 Surprise Audit

Leading up to May 21, 2014, Ms. Nabus noticed the following discrepancies between CNB Burlington’s Vertex records and the FRB’s daily statements:

(1) December 17, 2013—Ms. Christy prepared a cash-out ticket representing that the branch had sold $401,000 to the FRB when in fact it had sold only $104,000.
(2) January 14, 2014—Ms. Christy prepared a cash-out ticket representing that the branch had sold $400,000 to the FRB when in fact it had never sold the money.
(3) February 25, 2014—Ms. Christy prepared a cash-out ticket representing that the branch had sold $562,000 to the FRB when in fact it had never sold the money.
(4) March 18, 2014—Ms. Christy prepared a cash-out ticket representing that the branch had sold $270,000, $225,000, and $225,000 when in fact it had never sold any of these amounts.
(5) April 22, 2014—Ms. Christy prepared a cash-out ticket representing that the branch had sold $401,000 to the FRB when in fact the branch had sold only $101,000.

Although Ms. Christy adjusted the Vertex record to correct the discrepancies,3 Ms. Nabus grew concerned about the errors and reported her concerns to Vicky Farres, a CNB auditor.

In response, Ms. Farres conducted a surprise audit of Burlington CNB on May 21, 2014. According to the Bank’s Vertex report, the vault should have contained $883,320 in cash on that day. But the audit revealed that the vault held $119,320—$764,000 short.

Ms. Farres reported that Ms. Christy was exceedingly nervous and behaved unusually during the audit. When Ms. Farres started the audit, Ms. Christy delayed the counting process multiple times. Ms. Farres needed to prompt her to begin counting. During the counting, Ms. Farres noticed that Ms. Christy did not replace straps on the stacks of hundred-dollar bills after counting them. Ms. Christy also put the stacks outside Ms. Farres’s sight where she could re-count the same stack. At one point, Ms. Christy claimed that $100,000 fell into a crack between the wall and a cabinet. When Ms. Farres and her colleagues examined the crack with a flashlight and a yardstick, they found only dust.

Ms. Farres asked Ms. Christy what had happened to the missing cash. Ms. Christy at first paused and then responded that she had sold it to the FRB. Ms. Farres then asked for the Garda receipts documenting the transactions. Ms. Christy answered that Garda never provided them to her.

The next day, however, Ms. Christy sent Garda receipts to Ms. Gifford for $90,000, $100,000, and $670,000. Ms. Christy stated she had found the receipts in a drawer. Only the $90,000 receipt was reflected in the FRB’s records. It was also the only original receipt located during the audit and the ensuing investigation. The other two were copies. Separate from the receipt, the $90,000 cash-out ticket had a "proof strip" showing the sale was made on May 20, 2014, and the $90,000 transaction was recorded on the Vertex report. The Garda receipt for $90,000 bore a legible bag number, which Garda used to track the precise delivery bag that carried the cash.

The documentation of the purported $100,000 and $670,000 sales to the FRB differed from the $90,000 sale. First, in contrast to the $90,000 original receipt, the Bank never found original receipts for the $100,000 and $670,000 transfers. Second, the date stamps for all three receipts matched exactly, showing that the same machine printed all three receipts at the exact same second—May 20, 2014, at 13:35:08. Adam Lewis, the Garda employee who picked up and delivered the money, testified that printing three receipts with precisely the same date stamp would be "completely impossible." ROA, Vol. III at 926. Third, when a transparency of the $90,000 receipt was placed over the copy of the $100,000 receipt, the signatures matched exactly.4 Fourth, the bag numbers on the two copied receipts were illegible, and surveillance footage showed Mr. Lewis leaving the branch on May 20, 2014, with only one bag. Finally, although the date stamp on the Garda receipts for the purported $100,000 and $670,000 sales was May 20, 2014, the Bank’s cash-out tickets bore a "proof strip" showing that the tickets were created on May 21, 2014, the day of the audit. Id. at 592, 835-36.

3. The Government Investigation

The FBI and IRS coordinated the investigation. Two agents from an FBI task force questioned Ms. Christy about the missing money. During the interview, the agents asked Ms. Christy if she would be willing to take a polygraph. Ms. Christy responded that she wanted to think about it. Neither Ms. Christy nor the FBI raised the issue of the polygraph again. Throughout the interview, Ms. Christy denied any wrongdoing.

IRS Special Agent Joseph Schmidt examined Ms. Christy’s bank accounts and those of several of her family members. He reviewed Ms. Christy’s tax returns (filed jointly with her husband, Chris Christy) from 2008 to 2014. Agent Schmidt found a significant disparity between the bank accounts and the tax returns. The Christys’ reported income was about $30,000 to $64,000 per year. Their expenditures, which included cash payments on the Christys’ home loans, amounted to $400,000 that was unaccounted for in tax filings. Based on these calculations, Agent Schmidt concluded the Christys had failed to report income on their tax returns.

B. Procedural History

A grand jury indicted Ms. Christy, charging her with one count of bank embezzlement, in violation of 18 U.S.C. § 656 (Count 1); six counts of false bank entries, in violation of 18 U.S.C. § 1005 (Counts 2-7); six counts of declaring false tax returns, in violation of 26 U.S.C. 7206(1) (Counts 8-13); and ten counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(A)(ii) (Counts 14-23). Ms. Christy did not testify during her six-day trial. The jury...

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