United States v. Vavlitis

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 93-1229

UNITED STATES,

Appellee,

v.

STELIOS M. VAVLITIS,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Edward F. Harrington, U.S. District Judge]

Before

Breyer, Chief Judge,

Torruella, Circuit Judge,

and Bownes, Senior Circuit Judge.

Robert A. George on brief for appellant.

Jonathan L. Kotlier, Assistant United States Attorney, and A.

John Pappalardo, United States Attorney on brief for appellee.

November 19, 1993

BOWNES, Senior Circuit Judge. Defendant-appellant,
BOWNES, Senior Circuit Judge.

Stelios M. Vavlitis, was convicted of bank fraud, 18 U.S.C.

1344(1), for kiting checks and withdrawing money from

accounts bearing insufficient funds. We consider on appeal

whether the district court erred by dismissing midtrial the

superseding indictment on which Vavlitis had not been

arraigned, and by allowing the trial to continue on the

original indictment. We also must determine whether the jury

instruction on reasonable doubt was erroneous, and whether

there was sufficient proof of fraudulent intent. We affirm.

I.
I.

BACKGROUND
BACKGROUND

In January 1990, Vavlitis maintained seven checking

accounts, including six commercial accounts and one personal

account, at two federally-insured banks, Atlantic Bank and

Trust Company (Atlantic Bank) and Bank of New England. Four

of the accounts were with Atlantic Bank; Bank of New England

held the remainder. Vavlitis was an authorized signatory on

each of these accounts. Atlantic Bank's practice at all

relevant times was to credit Vavlitis's accounts with funds

equal to the face value of the checks he deposited, without a

delay to verify that these checks would be honored by the

banks on which they were drawn. This practice created a

"float," a period of one or more days that would pass before

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a deposited check credited to an account would be processed

and presented for payment from the account of the check

writer--Vavlitis.

From January 1990 until May 1990 when the banks

froze his accounts, Vavlitis used the float to buoy up the

balances in his accounts by exchanging checks drawn on

insufficient funds between Atlantic Bank and Bank of New

England. He withdrew money and wrote checks to third parties

against funds he did not actually have, despite his inflated

balances. The result was that when his four Atlantic Bank

accounts were frozen on May 14, 1990, there was a total

overdraft of $1,615,968.92. When Bank of New England,

suspecting check kiting, closed Vavlitis's three accounts in

May 1990, there was a combined positive balance of

$683,292.63.

On February 19, 1991, a grand jury returned an

indictment charging Vavlitis with one count of bank fraud.

The indictment alleged that between January and May 1990,

Vavlitis orchestrated a check kiting scheme by depositing

checks written on insufficient funds into the accounts he

controlled at Atlantic Bank and Bank of New England. The

charging paragraph of the indictment, paragraph seven,

alleged that this scheme allowed Vavlitis to obtain

"$1,615,968.00, more or less, owned by and under the custody

and control of Atlantic Bank and Bank of New England."

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Paragraph nine alleged that as a result of the check kiting

scheme, "Atlantic Bank suffered a loss of $1,615,968.00 more

or less, minus $638,315.00 in funds recouped from the Bank of

New England checking accounts maintained by defendant STELIOS

M. VAVLITIS, for a net ultimate loss of $932,653.00, more or

less." (Emphasis added.) Vavlitis was arraigned on this

indictment on March 5, 1991.

On March 12, 1991, the grand jury returned a

superseding indictment, identical in all respects to the

original indictment, except for paragraph nine. Paragraph

nine of the superseding indictment stated that as a result of

the check kiting scheme, "Atlantic Bank suffered a loss of

$1,615,968.00 more or less." The superseding indictment thus

alleged the total loss resulting from the scheme, but did not

describe the "net ultimate loss." Because of an oversight by

the prosecutor, Vavlitis was never arraigned on the

superseding indictment.

In her opening statement in Vavlitis's trial on

November 30, 1992, the prosecutor referred to the indictment

and stated that Vavlitis "left the banks with the $1.6

million loss." She did not use the term "superseding

indictment." Defense counsel moved for a mistrial claiming

that he had no notice of the superseding indictment,1 and

1. On September 6, 1991, more than one year before trial,
the government served defense counsel with its trial
memorandum, which stated: "Vavlitis is charged in the

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that his client had not been arraigned on it. The trial

court denied the motion, pending further inquiry, and allowed

the prosecution to call four witnesses from the two banks.

After the first day of trial, the court found that

Vavlitis had not been arraigned on the superseding

indictment. The court granted the prosecution's motion to

dismiss the superseding indictment and allowed the trial to

continue on the original indictment. Defense counsel's

renewed motion for mistrial and motion for dismissal were

denied. The trial court subsequently denied a motion for

judgment of acquittal, and the jury found Vavlitis guilty of

bank fraud.

II.
II.

A. Dismissal of Indictment, Double Jeopardy, Variance, and
A. Dismissal of Indictment, Double Jeopardy, Variance, and

Constructive Amendment
Constructive Amendment

Vavlitis argues that the midtrial dismissal of the

superseding indictment prevented any further prosecution on

the original indictment, and that the continuation of the

trial on the original indictment violated the Double Jeopardy

Clause. We disagree.

It is clear that the grand jury's return of a

superseding indictment does not void the original indictment.

See United States v. Friedman, 649 F.2d 199, 202 (3d Cir.

1981); United States v. Holm, 550 F.2d 568, 569 (9th Cir.),

Superseding Indictment with one count of bank fraud . . . ."

(Emphasis added.)

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cert. denied, 434 U.S. 856 (1977). A defendant may use the

Double Jeopardy Clause to prevent reprosecution following an

acquittal or conviction on a superseding indictment, but may

not rely on the notion that a superseding indictment

instantaneously nullifies the original indictment. See

United States v. Bowen, 946 F.2d 734, 736 (10th Cir. 1991)

(finding "no authority which supports . . . that a

superseding indictment zaps an earlier indictment to the end

that the earlier indictment somehow vanishes into thin air").

Both indictments in this case remained valid until the

district court granted the government's motion to dismiss the

superseding indictment.

Vavlitis also contends that the midtrial dismissal

of the superseding indictment prevented further prosecution

for the same offense charged in the original indictment. The

aspect of the Double Jeopardy Clause at issue in Vavlitis's

assertion is the protection against reprosecution following a

favorable termination of proceedings midtrial. The

"historical" underpinning of the double jeopardy prohibition

is that

"the State with all its resources and
power should not be allowed to make
repeated attempts to convict an
individual for an alleged offense,
thereby subjecting him to embarrassment,
expense and ordeal and compelling him to
live in a continuing state of anxiety and
insecurity, as well as enhancing the
possibility that even though innocent he
may be found guilty."

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United States v. Scott, 437 U.S. 82, 87 (1978) (quoting Green

v. United States, 355 U.S. 184, 187-88 (1957)). One purpose

of the prohibition on reprosecution following a midtrial

ruling that ends the case is to protect the "valued right of

a defendant to have his [or her] trial completed" by a

particular tribunal. Id. at 92; United States v. Govro, 833

F.2d 135, 137 (9th Cir. 1987); United States ex rel. Young v.

Lane, 768 F.2d 834, 838 (7th Cir.), cert. denied, 474 U.S.

951 (1985).

Given these principles, we find no merit in

Vavlitis's double jeopardy argument. First, Vavlitis fails

to show a second attachment of jeopardy. Jeopardy attached

when the jury was impanelled for the bank fraud prosecution.

See Crist v. Bretz, 437 U.S. 28, 37-38 (1978). There was no

impanelment of a second jury and no second verdict, thus no

relinquishment of the valued right to a particular tribunal,

no enhancement of the risk of an erroneous verdict, and none

of the expense or the ordeal of a subsequent prosecution.

Even if we assume that the further prosecution of

Vavlitis on the original indictment following the dismissal

of the superseding indictment constituted a reattachment of

jeopardy, we would not find a double jeopardy violation. The

district court dismissed the superseding indictment without

resolving any factual issue in favor of the accused.

Although the trial could have proceeded on the superseding

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indictment, see United States v. Boruff, 909 F.2d 111, 118

(5th Cir. 1990), cert. denied, 111 S. Ct. 1620 (1991); see

also Garland v. Washington, 232 U.S. 642, 644-46 (1914)

(affirming conviction despite lack of arraignment because

accused, who had notice of charges and adequate opportunity

to prepare defense, was not deprived of any substantial

right), the court dismissed the superseding indictment so

that Vavlitis would be tried on the indictment on which he

had been arraigned. We note that if the trial court had

dismissed the case, as Vavlitis requested, the government

could have appealed such a ruling without violating the

Double Jeopardy Clause. See Scott, 437 U.S. at 98-99

(holding that defendant who obtained dismissal of proceedings

on grounds unrelated to factual guilt or innocence suffers no

injury under Double Jeopardy Clause if government appeals).

A fortiori, the continuation of the prosecution before the

same fact-finder did not violate the double jeopardy

prohibition.

Vavlitis's next argument is that the indictments

contained materially different allegations, so that a

variance of proof and an improper amendment of the charges

resulted from the midtrial substitution, and that this

unfairly prejudiced the defense. We note that defense

counsel failed to specifically raise these issues below.

Assuming these issues were preserved, we find no error.

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In the first place, there was no material variance

of proof. A variance occurs when the proof differs from the

allegations in the indictment. United States v. Fisher, 3

F.3d 456, 462 (1st Cir. 1993). A variance is material and

reversible only if it has affected the defendant's

"'substantial rights'": to be informed of the charges; and

to prevent a second prosecution for the same offense. Id. at

463 (quoting United States v. Tormos-Vega, 959 F.2d 1103,

1115 (1st Cir.), cert. denied, 113 S. Ct. 191-92 (1992)). The

charging paragraphs of the superseding and original

indictments in this case alleged that the check kiting scheme

enabled Vavlitis to obtain "$1,615,968.00 more or less, owned

by and under the custody and control of Atlantic Bank and

Bank of New England." The original indictment, on which

Vavlitis was arraigned and convicted, alleged a "net ultimate

loss" of $932,653.00. The evidence showed a pattern of

deposits and withdrawals between Vavlitis's accounts in the

two banks, so that on the day his accounts were frozen, a

total overdraft of $1,615,968.92 existed in his Atlantic Bank

accounts, while Bank of New England registered a positive

balance of $683,292.63. The proof comported with the

charges.

Vavlitis's argument that the charges were

improperly amended is also unavailing. An amendment occurs

when the charging terms of the indictment are altered after

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the grand jury has last passed upon them. United States v.

Dunn, 758 F.2d 30, 35 (1st Cir. 1985). Midtrial amendments

are deemed prejudicial per se for the following reasons: to

preserve the right of the person accused of an infamous crime

to have a grand jury vote on an indictment, to prevent

reprosecution for the same offense, and to protect the right

of the accused to be informed of the charges. See United

States v. Kelly, 722 F.2d 873, 876 (1st Cir. 1983), cert.

denied, 465 U.S. 1070 (1984). Although the trial court's

substitution of an indictment alleging a "net ultimate loss"

for an indictment alleging the total loss suffered by one of

the banks literally altered one of the allegations, it did

not constitute an amendment of the grand jury's charges.

Both indictments accurately reflected the grand jury's

charges. There is ample evidence to support the district

court's finding that Vavlitis was "well informed" of the

charges in the indictment on which he was arraigned and

ultimately convicted.

Furthermore, the record does not support Vavlitis's

argument that the midtrial exchange of indictments unfairly

prejudiced his defense. Vavlitis had been arraigned on the

indictment on which he was convicted and had an opportunity

to prepare a defense based on it. Only paragraph nine of the

superseding indictment differed from the original indictment,

and only insofar as the superseding indictment did not

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describe the "net ultimate loss" resulting from the scheme.

On the only day of the trial when the superseding indictment

was effective, defense counsel said in his opening statement

that the banks had recouped money. He also cross-examined

witnesses to elicit that Bank of New England actually held

funds in Vavlitis's accounts in May 1990. At no time during

the trial did the jury hear that a superseding indictment

existed. The prosecutor's opening statement that Vavlitis

"left the banks with the $1.6 million loss" was just as

consistent with the evidence and with the charging paragraph

of the original indictment, as it was with the superseding

indictment.

There is thus no support for Vavlitis's arguments

claiming a double jeopardy violation, a variance of proof,

and a prejudicial amendment of the charges. We hold that the

district court did not err in dismissing the superseding

indictment in this case, and in allowing the trial to proceed

on the original indictment, following defense counsel's

objection that his client had not been arraigned on the

superseding indictment.

B. Reasonable Doubt Instruction
B. Reasonable Doubt Instruction

Vavlitis's next argument is that the trial court

provided an erroneous jury instruction defining reasonable

doubt. The jury instruction on reasonable doubt stated:

It is not required that the
government prove guilt beyond all

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possible doubt, the test is one of
reasonable doubt. A reasonable doubt is
a doubt based upon reason and common
sense. It does not mean that the
government has an obligation to prove the
charge in this count to an absolute or
mathematical certainty. Proof beyond a
reasonable doubt does not mean proof to
the degree of certainty that you have
that the sun will rise tomorrow or if you
add five and five you will get ten. It

does not mean the doubt in the mind of a

juror who is looking for a doubt or

looking for an excuse to acquit,

reasonable doubt means the doubt in the
mind of a reasonable juror who is seeking
the truth. It is a doubt based on reason
and common sense.
The test is, are you satisfied that,
acting as reasonable persons and applying
your reasoning to the evidence before
you, you arrive at a conclusion that the
offense as charged has been committed by
the defendant, and are you so satisfied
of that fact as to leave no other
reasonable conclusion possible.
Reasonable doubt may arise because there
is simply not enough evidence or because
you do not accept the evidence that was
offered. It may be that the evidence is
susceptible to one of two
interpretations, one favoring guilt, one
favoring nonguilt. If that is the case,
the defendant is entitled to the benefit
of the interpretation that favors not
guilty. The jury will remember that a
defendant is never to be convicted on
mere suspicion or conjecture. The burden
is always upon the prosecution to prove
guilt beyond a reasonable doubt. This
burden never shifts to a defendant, for
the law never imposes upon a defendant in
a criminal case the burden or duty of
calling any witnesses or producing any
evidence.

(Emphasis added.)

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Vavlitis avers that the instruction that reasonable

doubt is not "the doubt in the mind of a juror who is looking

for a doubt or looking for an excuse to acquit" may have

reduced the government's burden of proof. According to

Vavlitis's brief, the instruction "almost urges the jurors to

look askance at any juror" viewing the government's case with

skepticism, and it may have enabled some jurors to "brow

beat" any others who were inclined to acquit.

Vavlitis did not make a specific objection at trial

to this aspect of the reasonable doubt instruction.

Consequently, we review the instruction only for plain error.

See United States v. Colon-Pagan, 1 F.3d 80, 81 (1st Cir.

1993); United States v. Campbell, 874 F.2d 838, 841 (1st Cir.

1989). We find no such error.

Considering the propriety of a single instruction

on appeal, we evaluate the challenged instruction in the

context of the overall charge. See United States v.

DeVincent, 632 F.2d 147, 152 (1st Cir.), cert. denied, 449

U.S. 986 (1980). We keep in mind that "[t]hat which,

standing alone, may fall short of perfection may nonetheless

be tolerable in the context of a charge which adequately

instructs the jury on the standard it is to apply." Id.

Although cluttered with unnecessary language, the

reasonable doubt instruction in this case neither undermined

the government's burden of proof, nor caused jurors inclined

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to acquit to be "brow beat[en]." The trial court

specifically instructed the jurors "to consult with one

another and to deliberate with a view to reaching an

agreement, if you can do so without violating individual

judgment," but never to surrender an "honest conviction . . .

solely because of the opinion of your fellow jurors."

Instead, the challenged instruction addresses the state of

mind of the jurors. It exhorts the jurors to view the

evidence rationally, not to look for an excuse to acquit,

because such a mindset would not produce a reasonable doubt,

but to view the evidence with the intent to seek the truth.

"Instructions which thus urge that the jury's decision should

be the product of a rational thought process, while perhaps

'unwisely emphatic,' have been upheld in the overwhelming

majority of cases. We cannot say that the present

formulation constitutes reversible error." Id. at 153

(citations omitted); see also Watkins v. Ponte, 987 F.2d 27,

32 (1st Cir. 1993) (upholding a similar jury instruction).

Vavlitis also argues on appeal an issue that he

raised at trial, that the reasonable doubt charge is flawed

because it did not define reasonable doubt as that which

would cause a juror to "hesitate to act on the most important

of affairs." "This Court has emphasized that reasonable

doubt does not require a specific definition." United States

v. O'Brien, 972 F.2d 12, 16 (1st Cir. 1992). In fact, we

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have criticized the use of "hesitate to act" instructions,

and we have held that the failure to include such an

instruction is not reversible error. See id. at 15-16.

Because we recognize that we must "tolerate a

reasonable range of expression" unless we impose pattern jury

instructions, Watkins, 987 F.2d at 32 (quotation omitted), we

hold that the trial court's instruction defining reasonable

doubt was not erroneous. We note, however, that this

instruction contains language that is unnecessary, could

confuse the jury, and provides fertile grounds for

objections. Reasonable doubt is a fundamental concept that

does not easily lend itself to refinement or definition. See

United States v. Olmstead, 832 F.2d 642, 645 (1st Cir. 1987),

cert. denied, 486 U.S. 1009 (1988).

C. Evidence of Fraudulent Intent
C. Evidence of Fraudulent Intent

The final issue on appeal is whether the district

court erred in denying Vavlitis's motion for judgment of

acquittal at the conclusion of the government's case. The

motion for judgment of acquittal alleged that there was

insufficient evidence of fraudulent intent to support a

verdict of guilty.

In reviewing a denial of a motion for judgment of

acquittal, we consider the evidence in a light congenial to

the government. United States v. Victoria Peguero, 920 F.2d

77, 86 (1st Cir. 1990), cert. denied, 111 S. Ct. 2053 (1991).

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The evidence is sufficient if "any reasonable juror . . .

could have found the essential elements of the crime beyond a

reasonable doubt." United States v. Rodriguez Cortes, 949

F.2d 532, 543 (1st Cir. 1991) (emphasis in the original)

(quotation omitted). "The government need not disprove every

reasonable hypothesis of innocence if the record as a whole

supports a verdict of guilt beyond a reasonable doubt." Id.

Satisfaction of the mens rea element of the bank

fraud statute requires proof that the defendant acted

knowingly and with intent to defraud. See 18 U.S.C.

1344(1); United States v. Rodriguez-Alvarado, 952 F.2d 586,

589 (1st Cir. 1991). To act with "intent to defraud" means

to act "with the specific intent to deceive or cheat for the

purpose of either causing some financial loss to another, or

bringing about some financial gain to oneself." United

States v. Cloud, 872 F.2d 846, 852 n.6 (9th Cir.), cert.

denied, 110 S. Ct. 561 (1989). Fraudulent intent may be

established by circumstantial evidence and by reasonable

inferences from facts and situations. United States v.

Celesia, 945 F.2d 756, 759 (4th Cir. 1991); see also

Rodriguez-Alvarado, 952 F.2d at 589.

The record in this case contains evidence

generating a reasonable inference of knowledge and fraudulent

intent. The evidence that Vavlitis was a business person who

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had borrowed more than a million dollars from the banks

indicates that he was generally knowledgeable about financial

matters and banking. Vavlitis set up the commercial accounts

described in the indictment ostensibly to serve separate

business interests; presumably, transactions between accounts

should not have been frequent. In a two month period within

the time frame alleged in the indictment, March through April

1990, Vavlitis deposited over 450 checks from one of the

seven accounts into another of the seven accounts. This

means that on average, Vavlitis deposited ten checks per

banking day, drawn from one of the seven accounts into

another of these accounts, resulting in the movement of

approximately $69 million. According to a witness from Bank

of New England, two of these accounts related to land

holdings for which one would expect to see very little

account activity. Because Vavlitis wrote checks to third

parties while he was making deposits, the deficit between the

amount of funds he actually had and the amount of funds

credited upon each deposit increased each day. Day after day

in this two month period, there were insufficient funds in

these accounts to cover the checks Vavlitis wrote,

notwithstanding the existence of any other accounts or

secured loans Vavlitis may have maintained at the banks.

Virtually all deposits (99.8%) into these seven accounts were

from one of the other seven accounts, rather than from third

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party sources. A reasonable juror could infer that no

legitimate business practice accounted for this pattern.

An expert witness, FBI Special Agent Daniel Dubree,

described a prototypical check kiting scheme to the jury,

analyzed the activity in the seven accounts, and opined that

Vavlitis's frenetic deposits and withdrawals constituted

check kiting. He explained that the Bank of New England

accounts served as intermediary accounts to create a float

period for checks circulating in and out of the Atlantic Bank

accounts. For this reason, the check kiting scheme

persisted, even though Bank of New England, suspecting check

kiting, notified Vavlitis in late January 1990 that it would

no longer honor checks written against uncollected funds;

Atlantic Bank continued to credit his accounts on the date

checks were deposited until the accounts were frozen and the

overdrafts exceeded $1.6 million. Dubree testified that

Vavlitis's transactions followed a pattern of transfers from

one account into another specified account, that this

appeared to be no accident, and that it would have made it

easier for Vavlitis to track how much he needed to deposit to

cover checks he had already written.

We acknowledge that "[t]he mere existence of a

check kiting scheme does not as a matter of law imply" the

specific intent necessary for a bank fraud conviction.

Rodriguez-Alvarado, 952 F.2d at 589. But considering

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Vavlitis's business experience, the notice he received from

Bank of New England, the size of the Atlantic Bank loss, the

intricacy and sophistication of the scheme, and the absence

of a legitimate purpose for the transactions, a reasonable

juror could conclude that Vavlitis acted with the requisite

knowledge and specific intent to use the float period to

inflate his account balances and to defraud the banks. We

hold that the trial court properly denied Vavlitis's motion

for judgment of acquittal. Therefore, Vavlitis's

conviction is,

Affirmed.
Affirmed.

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