United States v. Nelson
| Citation | 485 F. Supp. 941 |
| Decision Date | 28 February 1980 |
| Docket Number | No. G78-116 CR.,G78-116 CR. |
| Parties | UNITED STATES of America, Plaintiff, v. Earl E. NELSON, Defendant. |
| Court | U.S. District Court — Western District of Michigan |
James S. Brady, U. S. Atty., Grand Rapids, Mich., for plaintiff.
William Waterman, Pontiac, Mich., for defendant.
THE CASE
The defendant, Earl Nelson, was indicted by a federal grand jury for making materially false statements on a loan application to a federally insured bank in violation of 18 U.S.C. § 1014. Acting upon motion of the defendant, Chief Judge Noel P. Fox dismissed the indictment due to insufficiency of the evidence and because enforcement of 18 U.S.C. § 1014 was held to violate the defendant's privacy rights. The United States Attorney moved to have the indictment reinstated. The case was subsequently reassigned by Judge Fox, and the matter is currently before me. I grant the Government's motion.
On October 26, 1973, in the City of Lansing, Michigan, Earl E. Nelson, a former Michigan state senator, submitted a loan application to the Bank of Lansing, the deposits of which were insured by the Federal Deposit Insurance Corporation. As security for the loan, the application included a promissory note in the amount of $6,872.40, which was purportedly signed by both the defendant and his wife, Phyllis Nelson. Also included as security was a real estate mortgage on property jointly owned by the Nelsons which likewise appeared to contain both parties' signatures.
The indictment charges that Phyllis Nelson's signature was in fact fraudulent and was signed by an unknown third party. It further alleges that this forgery occurred at the defendant's direction. For this reason, Nelson was charged with making a materially false statement in a loan application to a bank insured by the F.D.I.C., the purpose of which was to influence the bank's approval of the loan, in violation of 18 U.S.C. § 1014, which reads in part:
"Whoever knowingly makes a false statement or report . . . for the purpose of influencing in any way the action of . . . any institution the accounts of which are insured by . . . the Federal Deposit Insurance Corporation . . upon any application . . . commitment, or loan . . . shall be fined not more than $5,000 or imprisoned not more than two years, or both."
At the time Nelson submitted the loan application, he and his wife had been separated for over six months and were living apart. Moreover, in June of 1976, subsequent to the loan application, Mrs. Nelson filed for and received a divorce. At no time, however, did the defendant inform his wife of the loan application or of her forged signature, even though the divorce decree awarded her the property which earlier had been offered as security.
On June 21, 1978, following the Nelsons' divorce, Phyllis Nelson testified before the grand jury concerning her knowledge of the October, 1973, loan application. When asked by the United States Attorney whether she had authorized her husband to sign on her behalf, she responded as follows:
The grand jury indicted the defendant on June 26, 1978.
Nelson subsequently alleged that the indictment was defective because the grand jury received testimony which purportedly violated the defendant's marital privilege. Specifically, he claimed that Phyllis Nelson's testimony concerning Nelson's authority to sign on her behalf revealed "confidential communications" arising out of the marital relationship. Because of this alleged violation of the defendant's rights, Nelson argued, the indictment should be dismissed.
In an opinion and order issued on June 29, 1979, Senior Judge Noel P. Fox, then Chief Judge of the U. S. District Court for the Western District of Michigan, granted defendant's motion and dismissed the indictment. In his opinion, Judge Fox determined that Phyllis Nelson was "evasive" in her answer to the prosecutor's question, "Did you authorize your husband to sign that on your behalf or authorize anybody else to sign?" Judge Fox concluded that because no evidence existed before the grand jury demonstrating a lack of authority on Nelson's part to sign on his wife's behalf, the grand jury was without probable cause to indict. Alternatively, the court decided that enforcement of 18 U.S.C. § 1014 would require investigation into the existence of spousal agency, determined to be an intimate and privileged aspect of the Nelsons' marriage. The court consequently held that where enforcement of what is essentially a commercial statute conflicts with a defendant's right to marital privacy, the resulting indictment has been unconstitutionally obtained.
Subsequent to the government's motion for reconsideration, the case was reassigned by Judge Fox. Because the matter is currently before me, and for the reasons that follow, I have decided to reinstate the indictment.
The court first addresses the question of whether or not the grand jury had before it enough evidence on which to indict.
In its previous opinion, this court determined that Phyllis Nelson, by answering, "I knew nothing of it", was evasive when she responded to the prosecutor's question concerning her husband's authority to sign in her place. For this reason, the court concluded that the grand jury was without sufficient evidence to indict because "Nelson may very well have presumed implicit authority to deal with the property of his wife, and their joint property, as required by any given set of circumstances."
I cannot agree, however, that this reply was in fact evasive. In the context of the interrogation, Mrs. Nelson's answer very simply expresses her lack of knowledge about the loan application and her failure to authorize her husband to act as her proxy. Had she answered, "I don't remember" or "I can't say", the situation might have been different. Here, however, when asked, "Did you authorize your husband to sign that (the loan application) on your behalf or authorize anybody else to sign?" she replied: "I knew nothing of it." This answer, in my judgment, is as clear and unambiguous as though she had simply replied: "No". I therefore conclude that sufficient evidence was received by the grand jury for it to decide that the allegedly fraudulent signature was unauthorized.
The court must be especially cautious in second guessing the quality of evidence before the grand jury. While reviewing the grand jury's finding of probable cause is well within the equity powers of a federal court, I am satisfied that such powers should be sparingly employed. Otherwise, as Justice Black warned, in Costello v. United States, 350 U.S. 359, 363, 76 S.Ct. 406, 409, 100 L.Ed. 397 (1956):
Even assuming that no competent evidence was presented to the grand jury relating to the question of Mrs. Nelson's authorization to sign, for several reasons I cannot agree that sufficient grounds exist for dismissing the indictment.
First, although Nelson may have presumed that he had authority to negotiate his wife's property, a factual question concerning the defendant's knowledge and intent, lack of authority to sign is a defense to be raised at trial, and is not an element of § 1014 which the government is obliged to prove. See, United States v. Carr, 582 F.2d 242 (2nd Cir. 1978), where a defendant's conviction for forging the name of another person on a loan application was upheld over the defendant's objection that lack of authorization was an element of a § 1014 crime. To the contrary, the court noted at p. 245:
As set out by the court in United States v. Kernodle, 367 F.Supp. 844 (M.D.N. C.1973), aff'd 506 F.2d 1398 (4th Cir. 1974), the essential elements of 18 U.S.C. § 1014 are: (1) the making of a false statement or report on any application . . . commitment, or loan; (2) knowing that such statement is false; and (3) for the purpose of influencing in any way the action of any bank the deposits of which are insured by the Federal Deposit Insurance Corporation.
The indictment at hand sufficiently alleges these elements. Therefore, failure by the government to establish before the grand jury Nelson's lack of authority to sign on behalf of his wife should not bar the government from trying the defendant as charged.
Moreover, even if the government was obliged to show that the defendant lacked authority to sign on behalf of his wife, I conclude that in this particular case, absence of any competent evidence relating to this issue would not compel dismissal of the indictment.
The question of spousal agency is one to be determined by state law. See, De Sylva v. Ballentine, 351 U.S. 570, 580, 76 S.Ct. 974, 980...
To continue reading
Request your trial
-
Rop v. Fed. Hous. Fin. Agency
... ... THOMPSON, in her official capacity as Director of the Federal Housing Finance Agency; UNITED STATES DEPARTMENT OF THE TREASURY, Defendants-Appellees. No. 20-2071 United States Court of ... ...
-
Louisiana State Bar Ass'n v. Dutel
...the purpose of influencing in any way action of the bank the deposits of which are insured by the Federal Savings and Loan Insurance Corp. U.S. v. Nelson, 485 F.Supp. 941 (W.D.Mich.1980). The intent to defraud or to profit personally is irrelevent to the crime of making a false statement to......