United States v. Diaz
| Docket Number | CRIMINAL ACTION 21-179 |
| Decision Date | 31 August 2023 |
| Parties | UNITED STATES OF AMERICA v. GLENN E. DIAZ |
| Court | U.S. District Court — Eastern District of Louisiana |
SECTION “H”
ORDER AND REASONS
Before the Court is Defendant Glenn Diaz's Motion for a Judgment of Acquittal and, Alternatively, New Trial (Doc. 195). Oral argument was held on July 19, 2023. For the following reasons, the Motion is DENIED.
In November 2022, Defendants Glenn Diaz, Peter Jenevein, and Mark Grelle were charged in a 31-count Superseding Indictment with conspiracy to commit bank fraud in violation of 18 U.S.C. §§ 1344(2) and 1349; conspiracy to commit money laundering in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i) and 1956(h); and bank fraud in violation of 18 U.S.C. § 1344(2).[1] After a seven-day jury trial, Defendant Diaz was found guilty on both counts of conspiracy and eight counts of bank fraud. The Court declared a mistrial as to the remaining 21 counts of bank fraud.[2] Defendant Diaz now moves for (1) acquittal on all counts, arguing that the Government failed to prove all of the elements of the charges, and alternatively, (2) a new trial on all charges in light of errors he argues were made by this Court during trial.
The evidence presented at trial revealed the following. Glenn Diaz was a customer of First NBC Bank (“FNBC” or “the Bank”), a federally insured financial institution, from approximately 2006 until its closure in 2017. Pete Jenevein was personal friend and employee of Diaz. Mark Grelle was also a friend of Diaz and owned St. Bernard Underground Services, a business that performed directional boring services.
Despite being asset-rich, Diaz claimed to be cash-poor, and managed many of his personal and business expenditures by overdrafting his FNBC checking account. By 2015, Diaz had overdrafted his account by almost one million dollars; these overdrafts were approved by FNBC president Ashton Ryan. Because Diaz's overdrafts were often checks issued to himself, which were then deposited into his Trustmark Bank account, FNBC had no visibility into the sources of the expenses. As a result, by June 2016, Ashton Ryan and Loan Officer Bill Bennet informed Diaz that, in order to monitor how Diaz was spending its funds, all checks were required to be supported by itemized expenses for a Florida warehouse Diaz's property that served as the Bank's collateral.[3] FNBC also required Diaz to issue all checks to the end recipient, and not to Diaz himself.[4]
Because Jenevein was responsible for managing Diaz's properties, including the Florida warehouse, through the rest of 2016, Jenevein emailed invoices and lists of expenses to Bennett, copying Diaz.[5] Based on these representations, the Bank permitted Diaz to overdraft his account, which Bennett explained was tantamount to an unsecured loan.[6] Loans were subsequently made by the Bank to cover the overdrafts “created by repairs to [Diaz's] warehouse in Lynn Haven, FL.”[7] At trial, the evidence revealed that Diaz did not actually spend the Bank's money on his Florida warehouse, as he represented. Rather, Diaz was able to obtain these funds through a scheme that involved submitting fabricated invoices and financial documents to the Bank with the help of Jenevein and Grelle.
The scheme essentially involved two parts. First, Jenevein and Grelle fabricated invoices that falsely represented that Grelle Underground Services LLC, a company owned by Grelle, performed services at Diaz's Florida warehouse. Jenevein then emailed the fake invoices to Bennet, copying Diaz. Based on these invoices, the Bank distributed the funds to Grelle, who ultimately funneled the money back to Diaz while keeping a portion for himself. These circular transactions occurred a total of 17 times and formed the basis for 17 counts of bank fraud, as well as conspiracy to commit bank fraud and conspiracy to commit money laundering.
The second part of the scheme also involved submitting false information to the Bank. Instead of circular transactions conducted with Grelle Underground Services, Jenevein sent the Bank fake invoices from other companies, payroll for purported Diaz employees, and bogus credit card itemizations. Based on these representations, the Bank distributed the funds. The costs reflected in these documents, however, were inflated, not incurred, or for other expenses unrelated to maintaining Diaz's Florida warehouse.
Under Rule 29 of the Federal Rules of Criminal Procedure, a defendant may move for a “judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction.”[8] “[T]he relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.”[9] To this end, the court must “review the evidence and the reasonable inferences which flow therefrom in the light most favorable to the verdict.”[10] The court is “concerned only with whether the jury made a rational decision, not whether its verdict was correct on the issue of guilt or innocence.”[11]
Federal Rule of Criminal Procedure 33(a) states, “Upon the defendant's motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires.”[12] The Fifth Circuit has held [13] The movant bears the burden of demonstrating that a new trial is justified.[14]
Defendant Diaz moves for (1) a judgment of acquittal on all counts arguing that the Government failed to prove all of the elements of the charges, and alternatively, (2) a new trial on all charges in light of errors he argues were made by this Court during trial. The Court will address each request in turn.
Count 1 of the Superseding Indictment charged Defendants with conspiracy to commit bank fraud in violation of 18 U.S.C. §§ 1344(2) and 1349. Counts 3 through 31 charged Defendants with bank fraud in violation of 18 U.S.C. § 1344(2). As to bank fraud conspiracy, the Government was required to prove beyond a reasonable doubt that: (1) “the defendant and at least one other person agreed to commit the crime of [bank fraud]”; and (2) “the defendant knew the unlawful purpose of the agreement and joined in it willfully, that is, with the intent to further the unlawful purpose.”[15] To secure a conviction on bank fraud, the Government was required to prove beyond a reasonable doubt that: (1) “the defendant knowingly executed a scheme or artifice”; (2) “the scheme or artifice was executed to obtain money or other property from a financial institution”; (3) “the scheme or artifice was executed by means of false or fraudulent pretenses, representations, or promises”; and (4) “the false or fraudulent pretenses, representations, or promises were material.”[16]
The jury found Diaz guilty of conspiracy to commit bank fraud and eight counts of bank fraud, and its conviction is adequately supported by the record. At trial, the Government presented evidence that the Defendants acted in concert to submit fabricated invoices and credit card itemizations to FNBC to satisfy the Bank's demands for documentation of Diaz's expenditures. Based on these misrepresentations, the Bank authorized Diaz to write checks that overdrew his account. These checks were either deposited into Diaz's Trustmark account, or they were issued to Grelle, who deposited them into his Regions account before returning the checks to Diaz to be deposited in Diaz's Chase account. As shown at trial, the funds, totaling over $550,000, were not used for Diaz's Florida warehouse, as represented. Instead, these funds covered Diaz's personal expenditures and payments to Grelle and Jenevein. Based on these concerted actions among the Defendants, the jury rationally concluded that they committed bank fraud and conspired to commit bank fraud. Nevertheless, Diaz maintains that it was irrational for the jury to find that he made material misrepresentations to FNBC or knowingly committed bank fraud.
Diaz first argues that the Government failed to prove the fourth element of bank fraud-that any false representations were material. According to Diaz, FNBC banker Bill Bennett testified that he lacked the authority to approve or deny Diaz's loan requests and that this authority rested solely with former FNBC president Ashton Ryan, who did not testify at trial. Without Ryan's testimony, Diaz argues that the Government failed to prove whether FNBC relied on any of his representations. The Court disagrees. Diaz's argument misapprehends the standard of materiality. “In general, a false statement is material if it has a natural tendency to influence, or is capable of influencing, the decision of the decisionmaking body to which it was addressed.”[17] “This definition, in referring to natural tendencies and capabilities, establishes materiality in the bank fraud context as an objective quality, unconcerned with the subjective effect that a defendant's representations actually had upon the bank's decision.”[18] As a result, “there is no requirement that the misrepresentations must have actually influenced the decision-maker or that the decision-maker in fact relied on the misrepresentations.”[19] Thus, the Government was not required to prove that FNBC actually relied on Defendants' representations.
Even so, former FNBC...
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