US v. LBS Bank-New York, Inc.

• Decision Date: 25 July 1990
• Docket Number: Crim. A. No. 88-00516-05.
• Parties: UNITED STATES of America v. LBS BANK—NEW YORK, INC.
• Court: U.S. District Court — Eastern District of Pennsylvania

757 F. Supp. 496

UNITED STATES of America v. LBS BANK—NEW YORK, INC.

Crim. A. No. 88-00516-05.

United States District Court, E.D. Pennsylvania.

July 25, 1990.

COPYRIGHT MATERIAL OMITTED

Thomas J. Reuter and Paul A. Sarmousakis, Asst. U.S. Attys., Philadelphia, Pa., for plaintiff.

Vincent Fuller and Kathleen Beggs, Washington, D.C., for defendant.

OPINION AND ORDER

DuBOIS, District Judge.

After a twelve week trial, defendant LBS Bank — New York, Inc., ("LBS" or "the Bank") was convicted by a jury of one count of conspiracy to defraud the United States¹ under 18 U.S.C. § 371.² Presently before the Court are the Bank's Motion for Judgment of Acquittal (sometimes referred to as "Motion for JA") and Motion for New Trial (sometimes referred to as "Motion for NT"). For the reasons stated in the opinion below, the Bank's Motions will be denied.

I. Motion for Judgment of Acquittal

A. Due Process Claim

Defendant LBS argues that the Court must grant a judgment of acquittal because its conviction "rests substantially entirely sic on evidence tainted by unfair and unreliable investigative techniques that violated the Due Process Clause of the Fifth Amendment." (Motion for JA at 2). More specifically, LBS argues that when the government is in control of an undercover operation, due process requires the investigators to attempt to minimize any ambiguities in the evidence which is used to form the basis of the conviction. LBS contends that it was denied due process because the investigating agents never "apprised LBS of the illegality of their activity," (Motion for JA at 15), or "gave the bankers the chance to state flatly that they had never agreed to do anything illegal." (Motion for JA at 7).

Courts have recognized that "perhaps at some point deliberate governmental efforts to render ambiguous events over which agents can exercise considerable control would transgress due process limits of fundamental fairness." United States v. Myers, 692 F.2d 823, 843 (2nd Cir.1982), cert. denied, 461 U.S. 961, 103 S.Ct. 2438, 77 L.Ed.2d 1322 (1983). However, the instances where government investigative techniques are so outrageous that they violate the Due Process Clause are rare.³ The Third Circuit and other appellate courts "exercise extreme caution in finding due process violations in undercover settings," United States v. Gambino, 788 F.2d 938, 945 n. 2 (3rd Cir.1986), cert. denied, 479 U.S. 825, 107 S.Ct. 98, 93 L.Ed.2d 49 (1986), and "`exercise scrupulous restraint before ... denouncing law enforcement conduct as constitutionally unacceptable.'" Id., quoting United States v. Jannotti, 673 F.2d 578, 607 (3rd Cir.1982) (en banc), cert. denied, 457 U.S. 1106, 102 S.Ct. 2906, 73 L.Ed.2d 1315 (1982).

Applying the foregoing authority to the facts of this case, the Court finds that any ambiguities which remained after the agent concluded his investigation of LBS do not reach the "demonstrable level of outrageousness," Jannotti, 673 F.2d at 610, necessary to compel a judgment of acquittal.

Furthermore, a defendant must demonstrate that a government agent acted deliberately in allowing the evidence concerning its guilt to remain ambiguous in order to succeed in a due process claim, see Myers, 692 F.2d at 843, and LBS has failed to make this showing. Nothing in the record supports the conclusion that the agent investigating LBS did anything but his best in conducting his undercover investigation of the Bank. The agent testified at trial that in dealing with the Bank he attempted to phrase his questions carefully and made every effort to be clear. (Trial Trans. 8/4/89 at 147-48). LBS argues to the contrary that the agent's deliberate efforts to keep ambiguous the evidence concerning the Bank's knowledge of, and intent to effectuate, the illegal purpose or purposes of the conspiracy become apparent when one compares the agent's investigative style with that of another agent's in the case. (Motion for JA at 11-16). The fact that one agent's style differs from that of another, however, is hardly proof that ambiguities which remained in the case were intentional.

LBS also contends that even if the Due Process Clause is not implicated, the government's unfair investigative methods require that the government bear the unfavorable inferences from the ambiguous evidence which it created, and that a judgment of acquittal is compelled once these inferences are made unavailable. (Motion for JA at 16-18). LBS points to no cases in which a court, because of ambiguities in the evidence, has used its supervisory powers to deprive the government of favorable inferences to be drawn from such evidence. Instead, LBS cites in support of its argument cases involving deliberate government misconduct or grossly negligent conduct, neither of which occurred in the case at bar. See e.g., United States v. Sanchez, 603 F.2d 381 (2nd Cir.1979) (government must bear unfavorable inferences from photo spreads "deliberately not retained"); Government of the Virgin Islands v. Testamark, 570 F.2d 1162, 1166 (3rd Cir.1978) (noting "gross negligence" in destruction of evidence by government might justify new trial or exclusion of government evidence as to that issue if limiting instruction would be ineffective). This Court will not extend this line of cases to situations such as the case at bar where there is no deliberate government misconduct or grossly negligent conduct.

B. Sufficiency of the Evidence

LBS also asserts that a judgment of acquittal is mandated because there is insufficient evidence to sustain its conviction for conspiracy to defraud the United States through the filing of false and fraudulent Currency Transaction Reports ("CTR's")⁴ and/or the failure to file Reports of Apparent Crimes.⁵ In ruling upon a post-trial motion for a judgment of acquittal based upon alleged insufficiency of the evidence, the Court

must view the evidence in the light most favorable to the verdict, and must presume that the jury has properly carried out its functions of evaluating credibility of witnesses, finding the facts, and drawing justifiable inferences. A verdict will be overruled only if no reasonable juror could accept the evidence as sufficient to support the conclusion of the defendant's guilt beyond a reasonable doubt.

Unites States v. Coleman, 811 F.2d 804, 807 (3rd Cir.1987), cert. denied, 490 U.S. 1070, 109 S.Ct 2074, 104 L.Ed.2d 638 (1989), quoting United States v. Campbell, 702 F.2d 262, 264 (D.C.Cir.1983) (citations omitted).⁶

The fact that evidence presented at trial is circumstantial, as opposed to direct, does not make it less probative. United States v. Bycer, 593 F.2d 549, 551 (3rd Cir.1979). The government can rely entirely upon circumstantial evidence to prove the elements of conspiracy. See e.g., Coleman, 811 F.2d at 807. A jury can infer from a defendant's acts what he has agreed to do, and, therefore, a criminal conspiracy can be inferred from the performance of acts that further its purpose. See Hamling v. United States, 418 U.S. 87, 124, 94 S.Ct. 2887, 2911, 41 L.Ed.2d 590 (1974). See also United States v. Georga, 210 F.2d 45, 48 (3rd Cir.1954) ("The common plan can be and must often be established by what people do rather than by what they say").

In its Motion, LBS argues that it is entitled to a judgment of acquittal due to insufficient evidence for two reasons. First, LBS asserts that there is not enough evidence to establish that a single agent⁷ of LBS had the specific intent to defraud the government as is required for conviction under 18 U.S.C. § 371. It argues that Vinko Mir, the Bank's Chairman, was the only agent of LBS as to whom the government presented any evidence of specific criminal intent which could have been imputed to the Bank, and that the government cannot rely on this evidence to sustain LBS's conviction because the jury, in acquitting Vinko Mir, found that Mir did not possess the requisite intent. Second, LBS contends that a judgment of acquittal must be granted because there is no evidence establishing with whom LBS allegedly conspired. It argues that no agent of LBS other than Vinko Mir had any appreciable contact with the Bank's alleged co-conspirators and that due to Mir's acquittal, the conviction of the Bank must be overturned because there is no evidence of the identity of any person with whom any other agent of the Bank conspired.

(1) Evidence of Specific Intent of Agents of LBS

a. Vinko Mir—Specific Intent.

In determining whether the jury verdict is supported by sufficient evidence, the Court must determine whether the verdict can be sustained upon evidence of Vinko Mir's specific intent or whether this evidence necessarily must be disregarded due to Mir's acquittal. LBS asserts that evidence of Mir's intent cannot be used to sustain the verdict against the Bank because the guilt of a corporate defendant cannot be predicated upon the acts of an agent acquitted by the jury of the same charge.

The Bank's position, however, runs contrary to rulings of the vast majority of the Courts of Appeals.⁸ More importantly, it is contrary to rulings of the Supreme Court in several recent cases. In those cases, the Supreme Court ruled that acquittal does not necessarily indicate that the jury found insufficient evidence on that count; it simply could be a product of juror lenity. The Court has instructed, therefore, that an acquittal should not mandate a reversal of a finding of guilt on another count which is dependant on the same factual findings. See United States v. Powell, 469 U.S. 57, 62-67, 105 S.Ct. 471, 475-78, 83 L.Ed.2d 461 (1984); Standefer v. United States, 447 U.S. 10, 22-24, 100 S.Ct. 1999, 2007-08, 64 L.Ed.2d 689 (1980).⁹ Under this rationale, there is no reason why a court, in attempting to determine whether a conviction of a corporate defendant is supported by sufficient evidence, should not look to all of the evidence presented at trial, including that which concerns the acts of corporate...