United States v. Nkansah

• Decision Date: 08 November 2012
• Docket Number: Docket No. 10–2441–cr.
• Citation: 699 F.3d 743
• Parties: UNITED STATES of America, Appellee, v. Felix NKANSAH, Defendant–Appellant, Kwame Gyanbaah, David Dosoo, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

699 F.3d 743

UNITED STATES of America, Appellee,

v. Felix NKANSAH, Defendant–Appellant,Kwame Gyanbaah, David Dosoo, Defendants.

Docket No. 10–2441–cr.

United States Court of Appeals, Second Circuit.

Argued: Oct. 14, 2011.

Decided: Nov. 8, 2012.

Ross M. Bagley (Robert W. Ray, on the brief), Pryor Cashman LLP, New York, NY, for Defendant–Appellant.

Telemachus P. Kasulis, Assistant United States Attorney (Nicholas J. Lewin & Jesse M. Furman, Assistant United States Attorneys, on the brief), for Preet Bharara, United States Attorney for the Southern District of New York, New York, NY, for Appellee.

Before: WINTER, LYNCH, and CARNEY, Circuit Judges.

Judge LYNCH concurs in a separate opinion.

WINTER, Circuit Judge:

Felix Nkansah appeals from his conviction after a jury trial before Judge Rakoff for: (i) conspiracy to file false claims with the Internal Revenue Service (“IRS”) in violation of 18 U.S.C. § 286 (“Count One”); (ii) filing false claims with the IRS in violation of 18 U.S.C. § 287 (“Count Two”); (iii) bank fraud in violation of 18 U.S.C. § 1344 (“Count Three”); (iv) aggravated identity-theft related to the bank fraud charged in Count Three in violation of 18 U.S.C. § 1028A(a)(1), (c)(5) (“Count Four”); and (v) identity-theft in violation of 18 U.S.C. § 1028(a)(7), (b)(1) (“Count Five”).

We hold that there was insufficient evidence for appellant's conviction on Count Three and that his conviction on Counts Three and Four must, therefore, be vacated. We find appellant's other arguments to be without merit but do not address his claim regarding the substantive reasonableness of his sentence.

BACKGROUND

Viewing the evidence in the light most favorable to the government, see United States v. Chavez, 549 F.3d 119, 124 (2d Cir.2008), appellant was part of a group that, beginning in early 2005 through August 2008, stole names, dates of birth, and social security numbers from foster care, hospital, and childcare databases. This information was used to file thousands of fraudulent tax returns in the victims' names with fictitious income figures, resulting in tax refunds either sent as a check to the address of a group member or electronically deposited into a bank account controlled by a group member. The group, expecting about half the refunds to be approved by the IRS, filed for $2.2 million in fraudulent refunds and ultimately obtained $536,167. When a refund was received in the form of a check made out to an identity-theft victim, a group member would forge the payee's signature along with an endorsement over to the group member. The particular group member would deposit the check into a controlled bank account and would soon thereafter withdraw the money.

Appellant was linked to deposits at Commerce Bank, HSBC, and Bank of America. A search of his home and car revealed stolen identity information, tax refund correspondence to identity-theft victims sent to appellant's address, and a computer with a partially-completed tax refund made out in an identity-theft victim's name. Other evidence linked nearly 70 fraudulent tax returns to an IP address registered to appellant. On the same day, one of appellant's bank accounts received two federal tax refunds of several thousand dollars each. Evidence linked appellant to checks made out to identity-theft victims and endorsed over to a “William K. Arthur.” These checks were deposited into a Bank of America account that appellant controlled under that name.

Appellant was arrested on September 9, 2008 and ultimately charged with the five counts described above. Count Five of the indictment for identity-theft did not include a reference to interstate commerce, an element of the crime for which he was convicted. While on bail prior to trial, appellant fled to Canada where he was later apprehended and returned to the United States. After an aborted plea deal, he was found guilty by a jury on January 29, 2010, on all five counts. He was sentenced principally to 51 months' imprisonment on each of Counts One through Three and Five to run concurrently and 24 months' imprisonment on Count Four to run consecutively to the other counts.

At trial, the government sought to show that the banks in which deposits were made by the group were at a risk of loss. Special Agent Peck of the Secret Service testified:

When the bank transmits the funds to be collected and it comes back as not accurate or a counterfeit check or a fraudulent check, they no longer will get those funds back and they, most of the time, have already given out the funds to a payee or someone else. It is withdrawn.

He also testified that Commerce Bank suffered financial losses “for not just Mr. Nkansah himself but the combined total in the case” as a result of the scheme. However, when pressed about specific losses suffered by banks as a result of appellant's specific use of accounts, Agent Peck could not confirm that such losses occurred. He also testified that while he thought that such banks bore the loss from accepting for deposit fraudulently obtained Treasury checks, he was “unsure” if that theory was correct.

During jury deliberations, the government inadvertently provided the jury with documents that had not been introduced into evidence. In particular, a standard form proffer agreement was included. Upon being notified of this by the government, the district court sent the courtroom deputy into the jury room, which had already been vacated for the evening, to retrieve the exhibit. It was still in the manila folder in which it had been originally housed. The folder was still inside the Redweld in which it had been given to the jury. Because of the circumstances surrounding the exhibit's location, the court concluded that it was likely that the jury had not seen the proffer agreement. The court further found that, even if the jury had seen the proffer, it contained nothing in evidence and, in any event, nothing material to any issue not already established in the case—usually from Nkansah's own testimony. Other documents mistakenly given to the jury were found to be similarly duplicative of evidence already before the jury.

DISCUSSION

We address each of appellant's challenges in turn.

a) Bank Fraud Conviction

We turn first to the sufficiency of the evidence regarding appellant's bank fraud conviction.

We note the familiar standard that sufficiency challenges are reviewed de novo, United States v. Leslie, 103 F.3d 1093, 1100 (2d Cir.1997), but a defendant challenging the sufficiency of the evidence bears a “heavy burden,” United States v. Gaskin, 364 F.3d 438, 459 (2d Cir.2004) (internal quotation marks omitted). Appellant's claim, however, turns largely upon the legal definition of the defendant's state of mind that must be proven for purposes of a bank fraud conviction.

The federal bank fraud statute, 18 U.S.C. § 1344, provides:

Whoever knowingly executes, or attempts to execute, a scheme or artifice—

(1) to defraud a financial institution; or

(2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;

shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

Appellant knowingly used deception with regard to the bank accounts he controlled: (i) he opened them in the names of other people as well as the fictional William K. Arthur; and (ii) he deposited in the accounts checks fraudulently obtained from the United States Treasury causing the bank to seek reimbursement from the Treasury. Appellant argues, however, that the government was required to prove that he intended to victimize the banks as opposed to the Treasury. He claims that there was no evidence of such an intent or even that the banks had actually lost money. In essence, he argues that the banks were no more victims of his deceptions than a bank in which someone opens an account under a false identity to conceal funds from a spouse or business partner.

Appellant is correct that the bank fraud statute is not an open-ended, catch-all statute encompassing every fraud involving a transaction with a financial institution. Rather, it is a specific intent crime requiring proof of an intent to victimize a bank by fraud. See United States v. Rubin, 37 F.3d 49, 54 (2d Cir.1994). “[A] federally insured or chartered bank must be the actual or intended victim of the scheme.” United States v. Stavroulakis, 952 F.2d 686, 694 (1992); see also United States v. Blackmon, 839 F.2d 900, 906 (2d Cir.1988) (“Where the victim is not a bank and the fraud does not threaten the financial integrity of a federally controlled or insured bank, there seems no basis in the legislative history for finding coverage under section 1344(a)(2).”); S.Rep. No. 98–225, at 377 (1983), reprinted in 1984 U.S.C.C.A.N. 3182, 3517(bank fraud Statute designed to “assure a basis for federal prosecution of those who victimize these banks through fraudulent schemes.”) Therefore, convictions for bank fraud are limited to situations where “the defendant (1) engaged in a course of conduct designed to deceive a federally chartered or insured financial institution into releasing property; and (2) possessed an intent to victimize the institution by exposing it to actual or potential loss.” United States v. Barrett, 178 F.3d 643, 647–48 (2d Cir.1999).

Our concurring colleague takes serious issue with the need to prove intent to harm a financial institution, albeit he concedes that this element is well-established in our caselaw. We note only that the government has argued none of the points he makes and begins its discussion of this issue with the following statement: “The bank fraud statute was enacted to ‘protect[ ] the financial integrity of [federally guaranteed financial] institutions, and ... assure a basis for Federal prosecution of those who victimize these banks through fraudulent...