United States v. Fontenot

• Decision Date: 22 December 2011
• Docket Number: No. 10–31145.,10–31145.
• Parties: UNITED STATES of America, Plaintiff–Appellant, v. Heulette C. FONTENOT, Jr., Defendant–Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

665 F.3d 640

UNITED STATES of America, Plaintiff–Appellant,

v.Heulette C. FONTENOT, Jr., Defendant–Appellee.

No. 10–31145.

United States Court of Appeals, Fifth Circuit.

Dec. 22, 2011.

Mary Patricia Jones (argued), Helina S. Dayries, Catherine M. Maraist, Asst. U.S. Attys., Baton Rouge, LA, for Plaintiff–Appellant.

Lewis O. Unglesby (argued), Unglesby & Marionneaux, Michael Sean Walsh, Lee & Walsh, Baton Rouge, LA, Lance Covington Unglesby, Unglesby & Marionneaux, New Orleans, LA, for Defendant–Appellee.

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

Before JOLLY, HIGGINBOTHAM and SOUTHWICK, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

The district court dismissed the superseding indictment because it did not state a crime against Heulette C. Fontenot, Jr. for knowingly and willfully making false statements to a financial institution insured by the Federal Deposit Insurance Corporation (FDIC) and knowingly making false statements for the purpose of influencing the action of a bank insured by the FDIC. The United States appeals.

Fontenot made the allegedly false statements on loan applications to refinance his residence. By signing the loan applications, he affirmed all information he provided on the loan applications was “true and correct.” He failed to list, however, an illegal $100,000 campaign loan under “outstanding debts.” On this basis, the superseding indictment thus charged that Fontenot had knowingly made false statements. The district court concluded that Fontenot's “statements” were literally true because the illegal loan was an absolute nullity and consequently was not a debt that ever existed. We believe that the district court nailed it and we affirm.

I.

A.

Because the district court dismissed the superseding indictment¹ on the basis that it failed to state an offense against Fontenot, we provide it here, in its entirety:

1) Defendant Heulette C. Fontenot (“Fontenot”) was a resident of Livingston Parish, Louisiana, who was first elected to the Louisiana State Senate (“the Senate”) in November 1999.

2) On or about July 7, 1999, Fontenot solicited a $100,000 cash loan from Businessmen #1 and #2 in connection with Fontenot's campaign for the Senate. Fontenot asked for the money to be in cash and assured the businessmen that he would take other steps to conceal the cash loan since it would be a violation of Louisiana's campaign finance law.²

3) On or about July 8, 1999, Fontenot met Businessman # 1 at an office in Livingston Parish. The two men subsequently drove their vehicles down a secluded gravel road. Businessman #1 provided Fontenot with a large tote bag and a smaller bank bag containing a total of $100,000 in cash. Fontenot took the cash to his residence where he hid the cash under the insulation in the attic. Fontenot then took the two bags into his backyard and burned them in order to conceal evidence of the transaction.

4) On several occasions from in or about 2000 through on or about July 23, 2004, Fontenot discussed repaying the cash loan with Businessmen #1 and #2, but Fontenot never made any repayments on the loan and it remained outstanding in its entirety.

5) At all times relevant to this Indictment, Chase Manhattan Bank and Flagstar Bank were financial institutions, the deposits of which were insured by the Federal Deposit Insurance Corporation (“FDIC”).

Count 1

6) Paragraphs 1 through 5 of the Indictment are incorporated herein.

7) On or about October 20, 2001, in the Middle District of Louisiana, the defendant, Heulette C. Fontenot, in a matter within the jurisdiction of the executive branch of the Government of the United States, that is, the FDIC, did knowingly and willfully make materially false and fraudulent statements and representations to a financial institution insured by the FDIC, in that Fontenot signed a “Uniform Residential Loan Application” certifying that all his debts were listed thereon, when, as defendant well knew, the $100,000 cash loan was not listed.

The above is a violation of Title 18, United States Code, Sections 1001(a)(2) and 2.

Count 2

8) Paragraphs 1 through 5 of this Indictment are incorporated herein.

9) From on or about July 23, 2004, to on or about August 13, 2004, in the Middle District of Louisiana, defendant Heulette C. Fontenot knowingly made a false statement for the purpose of influencing the action of Flagstar Bank on a bank loan as described below.

10) On or about July 23, 2004, Fontenot signed a “Uniform Residential Loan Application” certifying that all his debts were listed thereon, when, as defendant well knew, the $100,000 cash loan was not listed. Defendant caused the application to be submitted to Flagstar Bank on or about August 3, 2004.

11) On or about August 10, 2004, Fontenot signed another “Uniform Residential Loan Application” certifying that all his debts were listed thereon, when, as defendant well knew, the $100,000 cash loan was not listed. Defendant caused the application to be submitted to Flagstar Bank on or about August 13, 2004.

The above is a violation of Title 18, United States Code, Sections 1014 and 2.

We turn now to the documents signed by Fontenot. Under the section heading on the Uniform Residential Loan Application entitled, “Liabilities and Pledged Assets,” applicants are directed to “[l]ist the creditor's name, address and account number for all outstanding debts, including automobile loans, revolving charge accounts, real estate loans, alimony, child support, stock pledges, etc. Use continuation sheet, if necessary. Indicate by (*) those liabilities which will be satisfied upon sale.”

Thus, from the superseding indictment and the language on the loan application, we garner the following facts: the “loan”³ from the two businessmen to Fontenot was illegal under Louisiana's campaign finance law; there was no agreement between the parties for Fontenot to repay the money he received at the time he received the money; Fontenot was required to list all “debts” on his loan applications.

B.

Fontenot's trial was scheduled to begin on October 25, 2010. He filed several pre-trial motions, including several motions to dismiss the indictment or individual counts of the indictment. On the morning of jury selection, Fontenot made an oral motion to dismiss the superseding indictment, arguing that, because the illegal campaign loan was a legal nullity under Louisiana law, he did not knowingly make false statements by omitting the campaign loan from his loan applications. Fontenot contended that, based on the explicit allegations made in the superseding indictment and on Louisiana law, there was no debt in existence at the time he signed and certified the loan applications because the undisclosed campaign loan had an illegal cause under Louisiana law—that is, the circumvention of Louisiana's campaign finance law.

The Government opposed the motion in writing on October 26. The district court heard arguments from counsel the same day. After arguments concluded, the court dismissed the superseding indictment in an oral ruling on the basis that Fontenot made no false statements on the loan applications. The district court reasoned that, because the superseding indictment states that the undisclosed $100,000 cash loan violated Louisiana campaign finance law, then the contract between Fontenot and the two businessmen had an illegal cause; consequently, it was an absolute nullity and deemed never to have existed. Because the loan is deemed never to have existed, the district court held that Fontenot did not knowingly make false statements on the loan applications by omitting the campaign loan as an outstanding debt. Simply put, the district court determined that there was no debt for Fontenot to report. On October 28, 2010, the district court filed similar written reasons and entered an order of dismissal. The Government timely appealed, invoking our jurisdiction under 18 U.S.C. § 3731 and 28 U.S.C. § 1291.

II.

A.

“The propriety of granting a motion to dismiss an indictment ... by pretrial motion is by-and-large contingent upon whether the infirmity in the prosecution is essentially one of law or involves determinations of fact.... If a question of law is involved, then consideration of the motion is generally proper.” United States v. Flores, 404 F.3d 320, 324 (5th Cir.2005) (internal quotation marks and citations omitted). We review the sufficiency of an indictment de novo. United States v. Crow, 164 F.3d 229, 234 (5th Cir.1999) (citing United States v. Cluck, 143 F.3d 174, 178 (5th Cir.1998)). “In reviewing a challenge to an indictment alleging that it fails to state an offense, the court is required to take the allegations of the indictment as true and to determine whether an offense has been stated.” Id. (citing United States v. Hogue, 132 F.3d 1087, 1089 (5th Cir.1998)).

B.

Count One of the superseding indictment charged Fontenot with violating 18 U.S.C. § 1001(a)(2).⁴ To state an offense under this section, the Government must properly allege: “(1) a statement, (2) falsity, (3) materiality, (4) specific intent, and (5) agency jurisdiction.” United States v. Elashyi, 554 F.3d 480, 497 (5th Cir.2008) (internal quotation marks omitted). Count Two of the superseding indictment charged Fontenot with violating 18 U.S.C. § 1014.⁵ To state an offense under 18 U.S.C. § 1014, the Government must adequately allege that “(1) the defendant knowingly and willfully made a false statement to the bank, (2) the defendant knew that the statement was false when he made it, (3) the defendant made the false statement for the purpose of influencing the bank to extend credit, and (4) the bank to which the false statement was made was federally insured.” United States v. Sandlin, 589 F.3d 749, 753 (5th Cir.2009). Both offenses thus require that Fontenot made a false statement. The district court found the false statement element insufficiently alleged in the superseding indictment as a matter of...