United States v. Behenna

January 5, 1995
[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 94-1571

UNITED STATES,

Appellee,

v.

THOMAS E. BEHENNA,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

Before

Selya, Circuit Judge,

Campbell, Senior Circuit Judge,

and Boudin, Circuit Judge.

Thomas E. Behenna on brief pro se.

Donald K. Stern, United States Attorney, and Paul G. Levenson,

Assistant United States Attorney, on brief for appellee.

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Per Curiam. This is an appeal from the district

court's judgment denying the motion of appellant Thomas E.

Behenna to withdraw his guilty plea. Behenna pleaded guilty

to a three-count information charging him with making false

statements to Dime Savings Bank of New York ("Dime New York")

in violation of 18 U.S.C. 1014.

I.BACKGROUND

In 1987, Charles McCormick, a client of Behenna

(who is an attorney), told Behenna about a chance to purchase

condominium units at two condominium developments, Hawthorne

Village in North Attleboro and Queens Court in Plainview,

Massachusetts. Behenna was informed that these units could

be purchased with almost no money down. Further, the

developer of Hawthorne Village, David Burns, told Behenna and

other purchasers that Burns would give them a 10 percent

second mortgage and a 10 percent "discount."

Arrangements were made to have Dime New York, a

federally insured bank, provide the financing through its

"Impact" loan program. Under this program, purchasers of

residential real estate making cash down payments of 20

percent of the purchase price received loan approval prior to

the receipt of documents verifying financial and other

information contained in their loan applications. Dime New

York's wholly owned subsidiary, Dime Real Estate Services of

Massachusetts ("Dime Mass."), processed the Impact loan

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applications in Massachusetts; Eric Peach was the sales

representative who handled the loans in question.

Behenna and the other purchasers of the

condominiums were informed that instead of cash, they could

use the 10 percent discount and the 10 percent second

mortgage as the down payment. Nonetheless, Behenna's loan

applications stated that cash down payments had been made and

his purchase and sale ("P & S") agreements also erroneously

reflected the presence of 20 percent cash down payments.

According to Behenna, Peach was aware of the true terms of

the financing and told him (Behenna) that Dime New York

approved of this type of financing. In addition, Behenna

prepared addenda to the P & S agreements which revealed that

the second mortgages and the discounts were the sources of

the down payments. Behenna gave the agreements with the

addenda to Peach.

After the loan applications were approved, the

closings took place at the office of Dime's closing attorney,

Alan Segal. At this time, Behenna signed Fannie Mae

affidavits and HUD-1 settlement statements indicating that he

had made 20 percent cash down payments.1 The HUD-1 forms

stated that there was no secondary financing in connection

with the purchases and, in the same vein, the Fannie Mae

1. These forms required a loan applicant to attest that the
statements contained in the forms were true and accurate and
warned that making false statements was a crime.

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affidavits failed to disclose the second mortgages and the

discounts. Finally, Behenna was aware, at this time, that

the addenda were no longer attached to the P & S agreements.

Eventually, the Federal Bureau of Investigation

conducted an investigation into Dime New York's allegations

of fraud in connection with these loans. At this time,

Behenna met with government personnel. According to Behenna,

he was told that Dime New York had never authorized a no

money down loan program, that it was unaware of the second

mortgages and that it did not have in its files the addenda

to Behenna's P & S agreements. After Behenna learned that he

was about to be indicted on charges of bank fraud, conspiracy

and making false statements to a federally insured bank, he

decided to plead guilty. In return for his cooperation with

the government, the government agreed to limit the charges to

the making of false statements. During these discussions and

in the subsequent district court proceedings, Behenna was

represented by counsel.

At his change of plea hearing, Behenna stated that

he knew when he signed the Fannie Mae affidavits and the HUD-

1 settlement statements that they contained false

information. Pursuant to the plea agreement and prior to

sentencing, Behenna testified as a witness for the

prosecution in the trial of Segal, Dime's closing attorney,

and Robert Kline, an attorney for the developer of the

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condominiums at Hawthorne Village. At the end of trial, the

court granted Segal's and Kline's motions for directed

verdicts. One and a half months later, Behenna filed the

motion to withdraw his guilty plea.

Behenna's main argument was that his false

statements were not material because the Segal-Kline trial

evidence showed that the bank management connived in the

scheme. The district court invited briefs on the standard of

materiality under the statute. Ultimately, the district

court said that materiality should be evaluated on an

objective basis and the court denied the motion to withdraw

the plea. This appeal followed.

II.THE LAW

A. Fed. R. Crim. P. 32(d) Standards

Before sentencing, a defendant may move to withdraw

his or her guilty plea upon a showing of a "fair and just

reason." Fed. R. Crim. P. 32(d); see United States v.

Parrilla-Tirado, 22 F.3d 368, 371 (1st Cir. 1994); United

States v. Kobrosky, 711 F.2d 449, 454 (1st Cir. 1983).

Although the standard in this situation is a liberal one,

"[a] defendant possesses no absolute right to withdraw a

guilty plea. . . ." Kobrosky, 711 F.2d at 454; United States

v. Ramos, 810 F.2d 308, 311 (1st Cir. 1987). "[T]his court

will not set aside the district court's findings unless a

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defendant unequivocally shows an abuse of discretion."

Ramos, 810 F.2d at 311. The factors we consider include:

(1) the plausibility of the
reasons prompting the requested
change of plea; (2) the timing
of the defendant's motion; (3)
the existence or nonexistence
of an assertion of innocence;
and (4) whether, when viewed in
light of emergent
circumstances, the defendant's
plea appropriately may be
characterized as involuntary,
in derogation of the
requirements imposed by Fed. R.
Crim. P. 11, or otherwise
legally suspect. . . .

Parrilla-Tirado, 22 F.3d at 371 (footnote and citations

omitted).

B. Section 1014

Section 1014 prohibits persons from "knowingly

make[ing] any 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 . . . or

loan . . . ." To convict a defendant under 1014, the

government must prove that

(i) the defendant made or
caused to be made a false
statement or report to a bank
upon an application, commitment
or loan, and that the false
statement concerned a material
fact; (ii) that the defendant
acted knowingly; (iii) that the
false statement or report was
made for the purpose of

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influencing in any way the
bank's action on the loan; and
(iv) that the false statement
or report was made to a bank
whose deposits were then
[federally] insured. . . .

United States v. Concemi, 957 F.2d 942, 951 (1st Cir.

1992).2 "A statement concerns a material fact when it has

the `capacity to influence' the lending institution." United

States v. Braverman, 522 F.2d 218, 223 (7th Cir.) (citation

omitted), cert. denied, 423 U.S. 985 (1975). See United

States v. Haddock, 956 F.2d 1534, 1550 (10th Cir.) (an

omission in a personal financial statement is material if it

"had the capacity to influence the bank's decision"), cert.

denied, 113 S. Ct. 88 (1992).

Further, materiality "is not merely directed to

false statements which are actually used in the decision to

make a loan." United States v. Goberman, 458 F.2d 226, 229

(3d Cir. 1972) (emphasis added). That is, the government is

not required to show that the lending institution actually

relied on the defendant's statements in making its decision

2. We reject, out of hand, Behenna's argument that his
statements were not made to a federally insured bank. In
United States v. Brandon, 17 F.3d 409 (1st Cir.), cert.

denied, 115 S. Ct. 80, 81 (1994), we held, in the context of

bank fraud, that the government "does not have to show the
alleged scheme was directed solely toward a particular

institution; it is sufficient to show that defendant
knowingly executed a fraudulent scheme that exposed a
federally insured bank to a risk of loss." Here, there is no
dispute that the loans in question were assigned to Dime New
York.

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to approve a loan. Id. See Haddock, 956 F.2d at 1550

(actual reliance need not be shown to meet materiality

requirement); United States v. Wilcox, 919 F.2d 109, 112 (9th

Cir. 1990) ("no actual influencing need be demonstrated");

United States v. Norberg, 612 F.2d 1, 4 (1st Cir. 1979)

("[i]t is not the result of the transaction upon which the

statute focuses, but the purpose"). As the court in Goberman

put it:

Requiring proof of reliance on
the statement by the lending
institution would wreak havoc
with enforcement of the
provision. A successful
prosecution for the violation
would depend on the wholly
fortuitous factor of actual

reliance and not at all upon

the intent of the guilty party.
The obvious result would be
that not all statements which
could potentially harm the
United States would be subject
to prosecution, undermining the
legitimate purpose Congress
sought to achieve.

Goberman, 458 F.2d at 229.

III. DISCUSSION

Behenna's primary argument is that he is innocent

of violating 1014. Specifically, he claims that the

evidence at the trial of Segal and Kline and reports of

statements given to the FBI by various employees of Dime

Mass. establish that the bank, in fact, had authorized the

"no money down" payment loan program. He also asserts that

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this evidence shows that he had made full disclosure to the

bank of the true terms of his financing arrangements.

Behenna argues that he should be allowed to withdraw his

guilty plea because the government misrepresented the true

facts to him prior to his decision to plead guilty.

In a case strikingly similar to this one, the Court

of Appeals for the Fifth Circuit rejected a defendant's

argument that his false statements did not have the capacity

to influence the lending institution because the entire

institution was aware of defendant's scheme. United States

v. Johnson, 585 F.2d 119, 124 (5th Cir. 1978). The court,

assuming the truth of defendant's assertion concerning the

extent of the lending institution's knowledge, held that

"[t]he focus of the offense is on the defendant's intent

rather than on the victim." Id. The court went on:

The phrase "for the purpose of
influencing in any way" defines

the intent required to
accompany a false statement and
defines it broadly. It draws
under its purview not only a
defendant who intends to
defraud an unwitting insured
institution but also a
defendant who intends to
cooperate with the institution
in a scheme requiring him, with
the institution's knowledge, to
make false statements for the
furtherance of the scheme. The
savings and loan's awareness of
the fraud is not relevant, for
its existence is not
inconsistent with the intent to
influence which a violator of

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1014 must possess. Thus, this
collection of facts labeled
"complicity" is not a defense
to a charged violation of 18
U.S.C. 1014.

Id. See also United States v. Bush, 599 F.2d 72, 75 (5th

Cir. 1979) ("[T]he words `for the purpose of influencing'

define the quality of the required intent, they do not

immunize a party in duplicity with a bank officer."); United

States v. Kennedy, 564 F.2d 1329, 1340 (9th Cir. 1977)

(defendant was not immunized from criminal liability "merely

because the bank officer was a party to the scheme"), cert.

denied, 435 U.S. 944 (1978); United States v. Niro, 338 F.2d

439, 440 (2d Cir. 1964) (the court described as a "non

sequitur" the argument that defendant's false statements

could not have influenced the lender because the president of

the lending institution had suggested the scheme). Cf.

Concemi, 957 F.2d at 944-45 (one of the defendants was a loan

originator for the bank); Norberg, 612 F.2d at 2 (defendant

was the attorney for and a director of the bank); United

States v. Sheehy, 541 F.2d 123, 124 (1st Cir. 1976)

(defendant was a member of the bank's executive committee

which was responsible for approving loans).

In deciding whether to allow a defendant to

withdraw a guilty plea, a court ordinarily will "not decide

the merits of a proffered defense by resolving factual issues

that are more properly decided at trial." United States v.

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Allard, 926 F.2d 1237, 1242 (1st Cir. 1991). "However, when

the defendant's factual allegations, even if true, fail to

establish a cognizable defense, they do not provide a reason

for permitting withdrawal of a plea." Id. See also Ramos,

810 F.2d at 312 (Rule 32 motion may be denied if a

defendant'sfactualcontentionsdonot createarecognizeddefense).

Based on the caselaw, it is plain that Behenna's

claim of innocence must fail. Simply, the assertion that

Dime New York acquiesced in the use of secondary financing

and had full knowledge that borrowers often did not make cash

down payments in connection with the Impact loan program does

not provide a defense to the charge of making false

statements under 1014. See Johnson, 585 F.2d at 124. The

relevant determination for criminal liability is not

dependent on whether the lender relied, or even participated

in, the fraud; rather, the offense is based on the

defendant's "intent to influence an action, and nothing

more." Wilcox, 919 F.2d at 112.

Further, it is clear, notwithstanding Behenna's

claim to the contrary, that he possessed the requisite

intent. In Wilcox, defendant submitted to a savings and loan

association phony vouchers stating that work on a real estate

development had been completed. These vouchers were

necessary to obtain the loan proceeds. Defendant asserted

that the false vouchers were submitted according to

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instructions from the lender, that the officials of the

association never indicated that their advice concerning the

vouchers would lead to illegal conduct, that he had not

intended to mislead the association and that although he knew

that the information in the vouchers was false, the

association was aware of the true circumstances.

The court held:

Here, the submission of the
false vouchers was designed to
influence the disbursement of
funds by the savings and loan.
The filing of the documents was
a prerequisite to the financial
institution's payments of the
defendant's claims. In fact,
under the procedures adopted by
[the association], the payments
could not have been made unless
the defendant made the false
representations at issue. That
defendant may have been
encouraged in this scheme, or
even joined in it, by one or
more bank officials affords him
no defense at all.

Id.

As in Wilcox, the evidence shows that Dime New York

would not have made an Impact loan in the absence of a 20

percent deposit made up of the borrower's own funds. Thus,

Behenna's false statements concerning the down payments were

necessary prerequisites to obtaining the proceeds of the

loans and the statements were made precisely for the purpose

of influencing Dime New York in making its decisions

regarding the loans.

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Finally, one of the most significant factors in

deciding whether a defendant has met his or her burden of

establishing a "fair and just reason" for withdrawing a

guilty plea is whether the plea is knowing and voluntary.

Allard, 926 F.2d at 1243; Kobrosky, 711 F.2d at 455. In the

change of plea hearing, the district court judge explained to

Behenna what rights he was giving up by pleading guilty and

what the maximum penalties were; he next ascertained that

Behenna had discussed these matters with his attorney. The

government laid out the evidence it would present at trial.

Asked why he was pleading guilty, Behenna responded that the

HUD-1 statements and the Fannie Mae affidavits contained

false statements and that he knew this when he signed them.

Nothing in the record of the change of plea hearing

indicates that Behenna "was anything other than an

intelligent defendant who fully understood what he was doing

and was competent voluntarily to enter [a] guilty plea." See

Kobrosky, 711 F.2d at 455; Ramos, 810 F.2d at 314 (district

court's compliance with Fed. R. Crim. P. 11 "weighs heavily"

against a defendant). In this situation, "[w]e will not

permit a defendant to turn his back on his own

representations to the court merely because it would suit his

convenience to do so." United States v. Pellerito, 878 F.2d

1535, 1539 (1st Cir. 1989). The plea having been given

knowingly and voluntarily, we cannot say that the district

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court judge abused his discretion by denying Behenna's motion

to withdraw his guilty plea.

Given our conclusions, we reject Behenna's claim

that there was no factual basis for his guilty plea. See

United States v. Webb, 433 F.2d 400, 403 (1st Cir. 1970)

(where court questioned defendant about the elements of the

crime and had the prosecution present the evidence it had

gathered, there existed a factual basis for the plea), cert.

denied, 401 U.S. 958 (1971). We also find no merit in

Behenna's assertion that the government withheld exculpatory

evidence in violation of Brady v. Maryland, 373 U.S. 83

(1963). Plainly, the information in the FBI reports was not

exculpatory.

The judgment of the district court is affirmed.

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