UNITED STATES v. WELLS ET AL.

• Decision Date: 26 February 1997
• Court: U.S. Supreme Court

OCTOBER TERM, 1996

Syllabus

UNITED STATES v. WELLS ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

No. 95-1228. Argued November 4, 1996-Decided February 26,1997

An indictment charged respondents with, inter alia, knowingly making false and "material" statements to a federally insured bank in violation of 18 U. S. C. § 1014. At the trial's end, the District Court instructed the jury, at the Government's behest, that withholding a "material fact" made a statement or representation false and that materiality of an allegedly false statement was for the judge, not the jury, to determine. The jury convicted respondents, the court treated their statements as material, and they appealed. This Court then decided, in United States v. Gaudin, 515 U. S. 506, that if materiality is an element of § 1001, it is a question for the jury. When the Eighth Circuit requested supplemental briefing on Gaudin's applicability in this case, respondents argued that materiality is an element of § 1014 on which they were entitled to a jury's determination; the Government argued, for the first time, that materiality is not an element under § 1014, so that no harm had been done when the trial judge dealt with the issue. The Eighth Circuit agreed with respondents, vacated their convictions and sentences, and remanded the case for a new trial.

Held:

1. Respondents' preliminary arguments do not block this Court from reaching the question on which the writ of certiorari was granted. Although the Government proposed jury instructions to the effect that materiality is an element of § 1014, Federal Rule of Criminal Procedure 30 and the doctrines of "law of the case" and "invited error" do not prevent the Government from taking the contrary position here. Although the indictment charged respondents with submitting material false statements, the "law of the case" doctrine does not prevent the Government from arguing here that materiality is not an element of § 1014. While the Government failed to argue in its initial briefs submitted to the Court of Appeals that materiality is not an element of § 1014, it did so in its supplemental filings, and thus the "invited error" doctrine could not prevent the Government from taking the opposite position here. Pp.487-489.

2. Materiality of falsehood is not an element of the crime of knowingly making a false statement to a federally insured bank under § 1014. Pp. 489-500.

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(a) The falsehood's materiality-i. e., its "natural tendency to influence, or capa[bility] of influencing, the decision of the ... body to which it was addressed," Kungys v. United States, 485 U. S. 759, 770would not be an element of § 1014 under the first criterion in the statutory interpretation hierarchy, a natural reading of the full text, see United States v. American Trucking Assns., Inc., 310 U. S. 534, 542543. The section's text-which criminalizes "knowingly mak[ing] any false statement or report ... for the purpose of influencing in any way the action" of a federally insured bank "upon any application, advance, ... commitment, or loan" -nowhere says that a material fact must be the subject of the false statement or so much as mentions materiality. To the contrary, its terms cover "any" false statement that meets the statute's other requirements, and the term "false statement" carries no general suggestion of influential significance, see, e. g., Kungys, supra, at 781. Nor have respondents come close to showing that at common law the term "false statement" acquired any implication of materiality that came with it into § 1014. See, e. g., Nationwide Mut. Ins. Co. v. Darden, 503 U. S. 318, 322. Finally, statutory history confirms the natural reading of § 1014. When Congress enacted § 1014, it consolidated into one section 3 prior provisions that had included an explicit materiality requirement, and 10 that did not, and Congress enacted other provisions that included express materiality requirements. The most likely inference is that Congress did not intend materiality to be an element of § 1014. United States v. Shabani, 513 U. S. 10, 13-14. In addition, Congress enacted § 1014 after Kay v. United States, 303 U. S. 1, which stands in the way of any assumption that Congress might have understood § 1014 to contain an implicit materiality requirement. Pp. 489-495.

(b) Respondents' arguments for affirmance-that Congress has ratified decisions holding materiality to be a § 1014 element by repeatedly amending the statute without rejecting those decisions; that the failure of the 1948 Reviser's Note to § 1014 to mention the section's omission of the materiality element contained in 3 of its 13 predecessor statutes means that Congress must have overlooked the issue; that materiality must be read into the statute to avoid the improbability that Congress intended to impose substantial criminal penalties on relatively trivial or innocent conduct; and that the rule of lenity must be applied here-are unavailing to change the straightforward reading of § 1014. Pp.495-499.

(c) Since respondents' further arguments-that because the instruction taking materiality from the jury probably left the impression that respondents' statements as alleged were material, the instructions influenced the jury in passing on the falsity and purpose elements; and that because the indictment alleged materiality, any ruling that materiality need not be shown in this case would impermissibly "amend" the

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indictment contrary to the Fifth Amendment-were neither raised in respondents' briefs before, nor passed on by, the Eighth Circuit, it is left to that court on remand to take up the propriety of raising them now and to address them if warranted. Pp. 499-500.

63 F. 3d 745, vacated and remanded.

SOUTER, J., delivered the opinion of the Court, in which REHNQUIST, C. J., and O'CONNOR, SCALIA, KENNEDY, THOMAS, GINSBURG, and BREYER, JJ., joined. STEVENS, J., filed a dissenting opinion, post, p. 500.

Deputy Solicitor General Dreeben argued the cause for the United States. With him on the briefs were Solicitor General Days, Acting Solicitor General Dellinger, Acting Assistant Attorney General Keeney, Paul A. Engelmayer, and William C. Brown.

James R. Wyrsch argued the cause for respondents. With him on the brief was Ronald D. Lee. *

JUSTICE SOUTER delivered the opinion of the Court.

The principal issue before us is whether materiality of falsehood is an element of the crime of knowingly making a false statement to a federally insured bank, 18 U. S. C. § 1014. We hold that it is not.

I

In 1993, the Government charged respondents, Jerry Wells and Kenneth Steele, with violating and conspiring to violate the cited statute as officers and part owners of Copy tech Systems, Inc., a lessor of office copiers for a monthly fee covering not only use of the equipment but any service that might be required. To raise cash, Copytech sold its interest in the income stream from these contracts to banks.

In Count I of the indictment, the Government charged respondents with conspiring to violate § 1014 by concealing from several banks the true contractual terms.1 Re-

* Bruce S. Rogow and Beverly A. Pohl filed a brief for the National Association of Criminal Defense Lawyers as amicus curiae urging affirmance. 1 Title 18 U. S. C. § 371 makes it a crime to "conspire ... to commit any offense against the United States."

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spondents supposedly conspired to provide the banks with versions of lease contracts purporting to indicate that Copy tech's customers were responsible for servicing the equipment when, in fact, secret side agreements placed that responsibility on Copy tech at no further cost to the lessees. See App. 24-25; 63 F. 3d 745, 748 (CA8 1995). The Government alleged that respondents concealed the service obligations in order to avoid tying up needed cash in reserve accounts, which the banks might have required Copytech to maintain if they had known of the company's servicing obligations. Ibid.

In Count II, respondents were charged with violating § 1014 by giving a bank forgeries of respondents' wives' signatures on personal guaranties designed to enable the bank to pursue the wives' assets if Copytech defaulted on any liability to the bank. See App. 21, 30-31; 63 F. 3d, at 748.2 Each count of the indictment charged respondents with submitting one or more statements that were both false and "material." App. 24, 25, 29, 30-31.

At the end of the trial, the District Court instructed the jury, at the Government's behest, that withholding a "material fact" made a statement or representation false, id., at 41, 42, and defined a material fact as one "that would be important to a reasonable person in deciding whether to engage or not to engage in a particular transaction," id., at 42. Although there was no controversy over the law as stated in these instructions, the Government argued that materiality was for the judge to determine, while respondents said it was an issue for the jury. 63 F. 3d, at 749, nn. 3 and 4. Following Eighth Circuit precedent then prevailing, the District Court agreed with the Government and told the jury that "[t]he materiality of the statement ... alleged to be false ... is not a matter with which you are concerned and

2 The Government also charged respondents with three other counts of violating § 1014. The District Court dismissed one count prior to trial and granted judgment of acquittal on the other two. 63 F. 3d, at 748; Brief for Respondents 2; Brief for United States 3, n. 1.

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should not be considered by you in determining the guilt or innocence of the defendant[s]," App. 43. The jury convicted respondents on both counts, the court treated the statements as material, and respondents appealed.

While the appeal was pending, we decided United States v. Gaudin, 515 U. S. 506 (1995), in which the parties agreed that materiality was an element of 18 U. S. C. § 1001, but disputed whether materiality was a question for the judge or jury, 515 U. S., at 509....