United States v. Kenrick

United States Court of Appeals
For the First Circuit

No. 98-1282

UNITED STATES,

Appellee,

v.

ALBERT KENRICK,

Defendant, Appellant.

No. 98-1283

UNITED STATES,

Appellee,

v.

DEREK OBER,

Defendant, Appellant.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Douglas P. Woodlock, U.S. District Judge]

Before

Torruella, Chief Judge,
Selya, Boudin, Stahl, Lynch and Lipez, Circuit Judges,
Coffin and Campbell, Senior Circuit Judges.
 Harry C. Mezer, with whom William A. Brown was on brief, for
appellant Albert Kenrick.
Terrence F. Sheehy for appellant Derek Ober.

Ellen R. Meltzer, U.S. Department of Justice, with whom
Donald K. Stern, U.S. Attorney, and Christopher L. Varner and
Clifford I. Rones, U.S. Department of Justice, were on brief and
Kirby A. Heller, U.S. Department of Justice, was on supplemental
brief, for appellee.

August 2, 2000

OPINION EN BANC
 LIPEZ, Circuit Judge. Albert Kenrick and Derek Ober

appeal from judgments of conviction entered after a jury trial

in the United States District Court for the District of

Massachusetts. The jury found Kenrick guilty of one count of

bank fraud and Ober guilty of four counts of bank fraud and one

count of perjury. They argue, for the first time on appeal,

that the district court erred in instructing the jury on the

intent required for a bank fraud conviction. Although the panel

that originally heard this case agreed with the defendants, it

held that there was no plain error warranting reversal. See

United States v. Kenrick, No. 98-1282, slip op. at 22, 33 (1st

Cir. Feb. 22, 2000) (withdrawn). A majority of the circuit

judges in active regular service ordered rehearing en banc and

requested supplemental briefs on the intent issue. We now hold

that, contrary to the defendants' argument and the earlier

holding of the panel, "intent to harm" is not an element of bank

fraud. We take this opportunity to clarify the nature of the

intent element required for a bank fraud conviction. We also

reject both defendants' challenges to the sufficiency of the

evidence, as well as sundry arguments raised by Ober. We

therefore affirm the convictions.

I. BACKGROUND

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 We recite the facts in the light most favorable to the

jury's verdict. See United States v. Escobar-de Jesus, 187 F.3d

148, 157 (1st Cir. 1999). In 1986, at the height of "New

England's late, lamented real estate boom," United States v.

Lilly, 983 F.2d 300, 302 (1st Cir. 1992), Derek Ober was the

president of the Wakefield Cooperative Bank ("WCB" or "the

bank") in Wakefield, Massachusetts. WCB is a state-chartered

bank that has been insured by the FDIC since January 1986.

Albert Kenrick, a real estate investor with substantial property

in eastern Massachusetts, who had done business with WCB in the

past, had an incentive to sell real estate in which he had large

gains before January 1, 1987, because of a pending increase in

capital gains taxes.

A. 222 Stackpole Street

Among Kenrick's properties was an eighteen-unit

apartment building at 222 Stackpole Street in Lowell,

Massachusetts. Kenrick discussed with Emily Flynn, a real

estate broker whom he had dated in the past, the possibility of

converting the building to condominiums and having Flynn sell

them for him. Possibly contemplating the tax advantages of a

sale before the end of 1986, however, Kenrick decided to sell

the apartment building. Flynn had recently made a large profit

on another condominium conversion, and she was interested in

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buying the Stackpole Street building with a partner. Although

she wanted to have the same partner that she had had on her

recent successful condo deal, Kenrick told her that Ober--whom

Flynn had never met before--was interested in buying the

property and that Kenrick preferred that Flynn and Ober purchase

it as partners. On October 5, 1986, Flynn cooked a spaghetti

dinner for Kenrick and Ober, and they negotiated a price for the

Stackpole Street property of $935,000.

Flynn asked Ober where they could get financing for the

purchase, and he answered, "Right here at this bank," i.e., WCB.

Ober instructed Flynn that the loan application should be made

in her name alone, even though they were equal partners, because

he was going through a divorce. When she expressed doubt that

she alone could qualify for such a large loan, he assured her

that she could, and he filled out the application for her. Ober

called John (Jay) Kimball, a lawyer who frequently represented

WCB in mortgage transactions, and asked him to handle the

paperwork for the Stackpole Street purchase. Kimball drafted

the Riverview Development Trust, with Flynn as the trustee and

only listed beneficiary, to hold title to the property. On

Ober's instructions, Kimball also told Kenrick's attorney, who

had drafted a purchase and sale agreement listing both Flynn and

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Ober as purchasers, that Flynn was to be listed as the only

buyer.

An application for a $900,000 mortgage on the Stackpole

Street property was filed with WCB. Pursuant to the standard

procedure for mortgage applications at WCB, the applications

went initially to Ober, who was both president and the bank's

sole loan officer. The applications were then reviewed by two

members of the Security Committee, a subcommittee of the Board

of Directors, who set a value for the property, typically by

visiting it themselves, without an outside appraisal. If

approved by the Security Committee, loans would come before the

Board of Directors at its monthly meeting for ratification.

There was an unwritten policy that Board members should abstain

from voting on loans in which they or their relatives had an

interest.

Ober and another member of the Security Committee

visited Stackpole Street, valued the property at $1,125,000, and

recommended approval of the mortgage. The minutes of the Board

of Directors meeting of November 26, 1986, indicate that the

Board approved the Flynn loan. Three members of the Board,

however, testified that the loan was never presented to them for

a vote and that Ober never disclosed to them his interest in the

property. An FBI document analyst testified that the entry in

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the Board minutes listing the loan was typed at a different time

and with a different typewriter ball or wheel than the rest of

the page.

The transaction closed on December 24, 1986. WCB

provided a check for $900,000 and Flynn took title to the

property as trustee of the Riverview Development Trust. Flynn

herself provided the $50,000 down payment because Ober said he

could not pay his half due to his pending divorce. The property

was converted to condominiums, and seventeen of the eighteen

units sold quickly, allowing Flynn to pay off the WCB loan in

eight months. She shared the substantial profits equally with

Ober, after repaying herself her contribution of his portion of

the down payment. Ober assisted Flynn throughout the sales

process, and managed to sell several units to friends and

acquaintances, most of whom financed their purchases through WCB

mortgages.

The eighteenth unit was harder to sell. Title to that

unit was transferred to another trust prepared by Attorney

Kimball, the D & E Realty Trust. Ober told Kimball that he had

an interest in the unsold unit. Kimball therefore prepared two

statements of beneficial interest for the trust, one listing

Flynn as 100% beneficiary and the other listing Ober as 100%

beneficiary; according to Flynn, they were equal partners in D

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& E as in Riverview. Ober was present when the trust was

executed. He received half the net income from D & E and dealt

with a condominium owner whose unit was damaged by flooding in

the unit owned by D & E.

From the beginning of the transaction, Ober took steps

to conceal his interest in 222 Stackpole Street. He arranged

that Flynn should take title from Kenrick in her name only, as

trustee of the Riverview Development Trust, and that she should

be listed as the sole borrower on the $900,000 loan from WCB to

purchase the property. Ober had a motive to conceal his

interest because, as the jury was told, a loan of that nature to

a bank officer was forbidden by Massachusetts law. See Mass.

Gen. Laws ch. 170, § 19.1 When Flynn was deposed by the attorney

for the former Mrs. Ober, Ober instructed her to perjure herself

by stating that he had no interest in the Stackpole Street

property, and she did so. Before Flynn was questioned by the

FBI, Ober told her, "I'll never admit to anything." Ober also

denied his involvement in the Stackpole Street transaction at a

1991 WCB Board meeting.

1
The jury was also told that the Federal Reserve Board's
Regulation O required a bank officer to disclose his interest in
a loan to the bank's board of directors and to abstain from
voting on the loan. See 12 C.F.R. pt. 215.

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B. 8-10 Emerson Street

At around the same time that he sold the Stackpole

Street property, Kenrick sold a six-unit apartment building

located at 8-10 Emerson Street in Wakefield to Chung Lee and her

parents. The Lees were Korean immigrants who had formerly lived

in a different building owned by Kenrick. They had purchased a

two-family house on Willow Street in Melrose, Massachusetts, in

1983. Kenrick, who was dating Chung Lee, told her that he could

teach her how to make a million dollars by investing in real

estate. He suggested to her that she and her parents buy his

Emerson Street building for $325,000. He advised financing the

purchase with two loans from WCB: first, a $150,000 refinancing

of the mortgage on the Willow Street property, which would

provide money for the down payment, and then a $260,000 mortgage

on 8-10 Emerson Street.

Although Chung Lee filled out an application for the

Willow Street refinancing and filed it at WCB, it was not acted

upon immediately. The original application was marked "Hold" in

Ober's handwriting. After Kenrick met with Ober to negotiate

the Stackpole Street sale, however, the refinancing was

approved, with the commitment letter dated October 22, 1986.

Kenrick himself filled out the application for the Lees' Emerson

Street mortgage, and his appointment calendar indicated that he

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gave it to Ober personally on November 3, 1986. The Board of

Directors ratified the Willow Street loan on November 26 and the

Emerson Street loan on December 18. The sale of 8-10 Emerson

Street closed on December 18.

As alleged by the government, there was evidence of a

quid-pro-quo agreement between Kenrick and Ober that Kenrick

would sell 222 Stackpole Street to Flynn and Ober and, in

exchange, Ober would provide financing through the bank to allow

Kenrick to sell 8-10 Emerson Street to the Lees. Following his

spaghetti dinner meeting with Flynn and Ober on October 5, 1986,

where they negotiated the Stackpole Street deal, Kenrick made

a note that "I agreed at 935,000 to keep good rapport with Derek

and thought with his financing ability & Emily's condo sales

experience we could all be happy." In Kenrick's 1986

appointment calendar, otherwise filled with detailed notes for

most days of the year, the page for October 4-6 is missing.

Within three weeks of the October 5 meeting the loan to

refinance the Lee family's property on Willow Street in Melrose,

submitted to WCB in August and marked "Hold" in Ober's

handwriting, had been approved; within two more weeks, the

application for the $260,000 mortgage for the Lees to purchase

8-10 Emerson Street had been completed by Kenrick and delivered

by him to Ober.

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 In addition, the agreement between Ober and Kenrick was

testified to by Chung Lee. She testified that Kenrick told her,

in explaining why he sold 222 Stackpole Street to Flynn and

Ober, that "Mr. Ober can lend me the money because he's the Bank

President. So, you know, that will work out very well." When

asked what the relationship was between the Stackpole Street

deal and Kenrick's sale of other properties, including 8-10

Emerson Street, she answered first, "Well, because if Bert

[Kenrick] helps Derek Ober, Derek Ober can help Bert to sell

other properties." When asked again what Kenrick had said about

the relationship between the different deals, she answered:

Because Bert sold it to Derek, Stackpole
Street, that's why he can sell his Tuttle
Street commercial properties. And 8-10
Emerson Street, he can sell. And he can
also sell Methuen property at 175 Haverhill
Street, for I think, a million dollars or
$900,000. I cannot remember. But he can
sell that because Bert help Derek Ober to
make money. That way, you know, he can help
Bert later.

Chung Lee married Kenrick in October 1988 and was still

married to him at the time of trial in October 1997, although

divorce proceedings were then pending. She and her parents

continued to own the Emerson Street property, but had to obtain

an additional loan from WCB to cover cash flow problems.

Eventually, after the tenants were forced to move out when Chung

Lee (now Chung Kenrick) contaminated the building in attempting

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to remove lead paint, she defaulted on the mortgage and filed

for bankruptcy. The bank wrote off a loss of $119,645.84 on the

Emerson Street mortgage.

C. DGB Realty Trust

In September 1985, Ober formed the DGB Realty Trust

with WCB Treasurer Glenn Gates and William Upton, a retired

local police officer. DGB bought three condominium units in

Hudson, Massachusetts, and financed the purchases through

Greater Boston Bank. DGB lost money from the start, and its

checking account at WCB soon contained insufficient money to pay

the trust's bills. To cover the shortfall, Ober decided to

issue a demand loan from WCB to DGB for $15,000 on December 4,

1986. On December 11, 1987, the amount of the demand loan was

increased to $25,000. Although there was testimony that some

bank employees, and possibly some members of the Board of

Directors, knew of the interest of Ober and Gates in DGB, three

directors testified that Ober did not disclose the demand loan

to the Board. In January 1988, the DGB demand loan was paid off

with the proceeds of a new demand loan in the name of William

Upton. Although the new loan was in Upton's name alone, Ober

and Gates were still each responsible for one-third of the debt.

Ober and Upton paid off their shares, but Gates still owed money

on his at the time of trial.

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 The demand loans did not turn DGB into a profitable

venture, and on multiple occasions checks were written on DGB's

account at WCB although there were insufficient funds to cover

them. At that time WCB did not offer its customers overdraft

protection or lines of credit. If a check was presented for

payment with insufficient funds in the account, customers were

typically allowed to make it good by depositing funds on the

same day the check was presented; if they could not, the check

bounced. Apparently checks were sometimes held for longer

periods for bank employees or Board members. On Ober's

instructions, however, DGB checks were held for unprecedented

lengths of time, after the checks were paid and without

sufficient funds in DGB's account to cover them. Fourteen

checks, totaling over $36,000, were held for a total of 576

days; no checks bounced, and DGB payed no interest or fees. The

last of these was the largest: check number 182, in the amount

of $6,780.42, was presented for payment, and paid, on March 17,

1988, but there were insufficient funds in the DGB account to

cover it until January 6, 1989.

D. Ober Deposition

The WCB Board of Directors fired Ober and Gates amid

allegations of misconduct in 1991. In 1993, WCB brought an

action against North American Specialty Insurance Company to

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recover on a fidelity bond for losses to the bank allegedly

caused by the fraudulent conduct of Ober, Gates, and Attorney

Kimball. The suit was brought in Massachusetts Superior Court

and removed by the defendant to the United States District Court

for the District of Massachusetts. As a part of discovery in

that action, Ober, then living in Florida, was deposed under

oath on March 10 and 11, 1994. Ober was asked, "Now, Mr.

Kimball drew a realty trust entitled D, ampersand, E Realty

Trust, D & E Realty Trust. Are you familiar with that?" He

answered, "No." Ober was also asked, "Did you ever participate

in the making of a loan where you had an undisclosed interest?"

He again answered, "No."

E. Procedural History

A federal grand jury issued a twenty-two count

indictment against Kenrick and Ober on December 18, 1996. The

indictment charged Kenrick with conspiracy, 18 U.S.C. § 371,

bank bribery, 18 U.S.C. § 215(a), and three counts of bank

fraud, 18 U.S.C. § 1344. It charged Ober with conspiracy, bank

bribery, seventeen counts of bank fraud, and two counts of

perjury, 18 U.S.C. § 1623. The case was tried to a jury from

September 15 to October 27, 1997. The jury found Kenrick guilty

on one count of bank fraud and Ober guilty on four counts of

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bank fraud and one count of perjury. They were acquitted on all

other counts. This appeal followed.

II. JURY INSTRUCTIONS ON BANK FRAUD

Kenrick and Ober argue that the district court erred

by failing to instruct the jury that they could not be convicted

of bank fraud unless they intended to harm WCB.2 Because they

failed to raise this objection before the district court, we

review for plain error. See United States v. Robbio, 186 F.3d

37, 42 (1st Cir. 1999); Fed. R. Crim. P. 52(b).

The defendants were convicted of violating 18 U.S.C.

§ 1344, which 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

2This argument was raised more clearly before the panel by
Kenrick than by Ober, but Ober has joined in it in his
supplemental brief before the en banc court. To the extent that
Ober also makes a separate argument that the court erred by not
requiring proof that the bank in fact lost money as a result of
his conduct, he is clearly incorrect: section 1344 by its terms
punishes not merely successful frauds, but any execution or
attempted execution of a scheme to defraud a bank. See Neder v.
United States, 527 U.S. 1, 24-25 (1999) (noting that common-law
element of damages "plainly ha[s] no place in the federal fraud
statutes"); United States v. Blasini-Lluberas, 169 F.3d 57, 65
(1st Cir. 1999) ("The government need not prove actual loss as
a result of the scheme . . . .").

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 false or fraudulent pretenses,
representations, or promises;
shall be [subject to a specified maximum
fine and term of imprisonment].3

The defendants object to a portion of the district court's

instruction defining a "scheme to defraud":

A scheme to defraud is ordinarily
accompanied by a desire or a purpose to
bring about some gain or benefit to one's
self [sic] or some other person or by a
desire or purpose to cause some loss to some
other person. Here, there is not alleged--
effectively, there hasn't been any evidence
offered--that there was an intent to cause a
loss to some other person. Here, we're
dealing with allegations that there was to
be some benefit to Mr. Ober, to Mr. Kenrick,
or to people that Mr. Kenrick was concerned
about.

The court also separately defined "intent to defraud": "To act

with intent to defraud means to act wilfully with a specific

intent to deceive or cheat or for the purpose of either causing

some financial gain to another or one's self [sic]."

The panel that first considered this case agreed with

the defendants that intent to defraud necessarily includes an

"intent to harm" the bank, and that the district court erred by

omitting this requirement from its jury instructions. The panel

further held that there was no plain error. After further

3 For the sake of convenience we will refer to this current
version of § 1344, although the defendants were convicted under
a previous version that was different in some ways not relevant
here.

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consideration of the intent issue, the en banc court, including

the panel members, arrives at a different conclusion about the

meaning of intent to defraud. We now hold, for the reasons set

forth below, that the intent necessary for a bank fraud

conviction is an intent to deceive the bank in order to obtain

from it money or other property.

The panel addressed the intent question in the terms

that the defendants posed it--whether evidence of an intent to

deceive a bank and to enrich oneself or another person would

support a bank fraud conviction without evidence of an intent to

harm the bank. The panel's answer that proof of intent to harm

was required was based on precedents from other circuits and an

interpretation of the opinion of the Supreme Court in McNally v.

United States, 483 U.S. 350 (1987), a case in which the Supreme

Court held that the mail fraud statute does not reach "honest

services" fraud.4 By its terms, however, McNally does not

require proof of "intent to harm" as an element of bank fraud,

and there are no Supreme Court precedents that define the intent

necessary for a bank fraud conviction. There is also no

4In 1988 Congress overturned the holding of McNally by
enacting 18 U.S.C. § 1346, which defines "'scheme or artifice to
defraud' [to] include[] a scheme or artifice to deprive another
of the intangible right of honest services." Section 1346 is
inapplicable here because the allegedly fraudulent acts in this
case took place before its effective date.

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consensus among the circuits on the issue. Moreover, the

"intent to harm" formulation of the panel contained an ambiguity

that could not be dispelled easily.5

In arriving at our formulation of the intent necessary

for a bank fraud conviction, we begin with the language of the

bank fraud statute. Because neither the indictment nor the jury

instructions specified the subsection of § 1344 under which

Kenrick and Ober were charged, we must examine both subsections.

Section 1344(2) specifies an intent requirement. It prescribes

a punishment for "whoever knowingly executes, or attempts to

execute, a scheme or artifice . . . to obtain any of the monies,

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

5In common usage, "intent to harm" may well be understood to
mean a motive to cause the bank an ultimate financial loss. Of
course, a court could explain to a jury that intent to harm had
nothing to do with a motive to hurt a bank, and could explain
further that the panel's broad definition of "intent to harm"
included depriving a bank of the right to control its assets by
depriving it of the information needed to make discretionary
economic decisions. Nevertheless, a juror who failed to grasp
the subtlety of the explanation might easily believe that a
defendant could not be convicted of bank fraud unless his desire
was to injure the bank rather than to enrich himself, and
thereby mistakenly acquit a defendant who clearly had an intent
to harm in the broad sense defined by the panel, i.e.,
frustrating the bank's right to control the disposition of its
assets.

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promises."6 This language boils down to a prohibition on schemes

to obtain money or other property from a bank by specified means

of deception. The particular means of deception chosen are not

essential to the intent element, which can therefore be defined

as an intent to deceive a bank in order to obtain from it money

or other property. Nothing in the language of § 1344(2)

indicates that "intent to harm" is required.

The statutory text does not fully dispose of the intent

question, however, because the specific language of § 1344(2)

cannot dictate the intent element of the general "to defraud"

language of § 1344(1). On the face of the statute, § 1344(2)

provides an alternative to, not a definition of, a "scheme or

artifice to defraud" in violation of § 1344(1). Nothing in the

text of the statute requires that the intent element of §

1344(1) be defined in the same way as the intent element of §

1344(2) or, for that matter, that they be defined differently.

Moreover, the Supreme Court said recently in Neder v. United

States, 527 U.S. 1, 20 (1999), that "none of the fraud statutes

defines the phrase 'scheme or artifice to defraud.'" Yet Neder

6
As the Supreme Court explained in McNally, this language
and the nearly identical language in the mail and wire fraud
statutes, 18 U.S.C. §§ 1341, 1343, dates to a 1909 amendment to
the mail fraud statute. The prohibition of a "scheme or
artifice to defraud" dates to the original 1872 enactment of the
mail fraud statutes. See McNally, 483 U.S. at 356-59.

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provides clear guidance on how to discern the elements of the

scheme to defraud proscribed in § 1344(1).

The Neder Court addressed the question of whether

materiality is an element of a scheme to defraud under the mail,

wire, and bank fraud statutes. Because the statutes do not

define the elements of a scheme to defraud, the Court followed

the "well-established rule of construction" that "Congress

intends to incorporate the well-settled meaning of the common-

law terms it uses." Id. at 21, 23. The use of the word

"defraud" raises a "presumption that Congress intended to

incorporate the common-law meaning of the term 'fraud' in the

mail fraud, wire fraud, and bank fraud statutes." Id. at 23

n.7. Since the statutory text does not rebut the presumption

that Congress intended to incorporate the common-law materiality

element, the Court held that "materiality of falsehood is an

element of the federal mail fraud, wire fraud, and bank fraud

statutes." Id. at 25.

Neder thus requires that we look to the common-law

meaning of fraud in examining the intent element of a "scheme or

artifice to defraud" in violation of § 1344(1). The intent

element of common-law civil fraud is well established.

According to the Restatement, which the Neder Court relied on

for its definition of materiality, see 527 U.S. at 22 n.5

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(quoting Restatement (Second) of Torts § 538 (1976)), "One who

fraudulently makes a misrepresentation . . . for the purpose of

inducing another to act or to refrain from action in reliance

upon it, is subject to liability to the other in deceit . . . ."

Restatement (Second) of Torts § 525 (1976); see also W. Page

Keeton et al., Prosser & Keeton on the Law of Torts, § 105, at

728 (5th ed. 1984) ("[a]n intention to induce the plaintiff to

act or refrain from action in reliance upon the

misrepresentation" is an element of tort of deceit). Commentary

roughly contemporary with the Congress that enacted the mail

fraud statute in 1872 gives a similar definition of the intent

element. "It is said that a man is liable to an action for

deceit if he makes a false representation to another, knowing it

to be false, but intending that the other should believe and act

upon it . . . ." Oliver Wendell Holmes, Jr., The Common Law 132

(1881); see also 2 Charles G. Addison, A Treatise on the Law of

Torts § 1174, at 398 (H.G. Wood ed., 1881) ("[I]f a falsehood be

knowingly told, with an intention that another person should

believe it to be true, and act upon it, . . . the party telling

the falsehood is responsible in damages in an action for deceit

. . . .").

Common-law fraud thus requires an intent to induce

action by the plaintiff in reliance on the defendant's

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misrepresentation. Commentators of the nineteenth and twentieth

centuries agree that common-law fraud has no additional "intent

to harm" requirement. See Prosser, supra, § 107, at 741 (it is

"well settled" that "intent to accomplish an ultimate purpose,

as to benefit the speaker, or to cause harm to the one

addressed," is "of no importance" except to punitive damages);

2 Addison, supra, § 1174, at 404 ("[I]t is not necessary to

prove that the false representation was made from a corrupt

motive of gain to the defendant, or a wicked motive of injury to

the plaintiff . . . .").

The common-law element of intent to induce action by

the plaintiff in reliance on the defendant's misrepresentation

translates directly into the criminal bank fraud context, where

a guilty defendant intends to induce the bank to act--i.e., to

part with money or other property--in reliance on his deceit or

misrepresentation.7 Referring to an intent to induce reliance

is potentially confusing to a jury, however, because it may

erroneously suggest that actual reliance by the bank is also an

element of the crime, as it is an element of common-law civil

fraud. The Supreme Court has said that the common-law elements

7
The government proposes a similar formulation, stating in
its supplemental brief that "a person cannot commit [bank fraud]
without at least intending that his fraudulent scheme cause the
bank to part with money or other property."

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of justifiable reliance and damages "plainly have no place in

the federal fraud statutes." Neder, 527 U.S. at 25. This

potential for confusion is avoided by speaking simply of an

intent to deceive the bank in order to obtain from it money or

other property. We see no substantive difference between an

intent to induce a bank to part with money in reliance on deceit

or misrepresentation and an intent to deceive a bank in order to

obtain from it money or other property.

The latter formulation is consistent with the text of

§ 1344(2). It is also similar to language we have used in

several cases. We have said, quoting an oft-cited Third Circuit

case, that a bank fraud scheme must be "intended to deceive

others in order to obtain something of value, such as money,

from the institution to be deceived." United States v. Brandon,

17 F.3d 409, 424 (1st Cir. 1994) (quoting United States v.

Goldblatt, 813 F.2d 619, 624 (3d Cir. 1987));8 accord United

States v. Colon-Munoz, 192 F.3d 210, 221 (1st Cir. 1999); United

States v. Blasini-Lluberas, 169 F.3d 57, 65 (1st Cir. 1999).

8 Several other circuits have also quoted with approval the
same language from Goldblatt, or its similar statement, 813 F.2d
at 624, that "[t]he bank fraud statute condemns schemes designed
to deceive in order to obtain something of value." See, e.g.,
United States v. Dobbs, 63 F.3d 391, 395 (5th Cir. 1995); United
States v. Britton, 9 F.3d 708, 709 (8th Cir. 1993); United
States v. Hammen, 977 F.2d 379, 383 (7th Cir. 1992); United
States v. Cloud, 872 F.2d 846, 850 (9th Cir. 1989).

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Furthermore, this formulation plainly comports with McNally's

requirement that a scheme to defraud be directed at "wronging

one in his property rights by dishonest methods or schemes."

483 U.S. at 358. We hold, therefore, that the intent element of

bank fraud under either subsection is an intent to deceive the

bank in order to obtain from it money or other property. 9

"Intent to harm" is not required.

Applying our holding to the jury charge in this case,

we conclude that the instructions read as a whole, see United

States v. Robbio, 186 F.3d 37, 42 (1st Cir. 1999), adequately

conveyed the essence of the intent element. The district court

told the jurors that "[t]he term 'defraud' means to deprive

another of something of value by means of deception or

cheating." Given that instruction and the facts of this case,

we are confident that the jury could not have found Kenrick and

Ober guilty of bank fraud without finding that they intended to

deceive WCB in order to obtain money from it. There was no

plain error in the court's jury instructions.

We do not mean to imply, however, that the court's

instruction or the pattern bank fraud instruction on which it

was apparently based, see 1st Cir. Pattern Crim. Jury Instr.

9Of course, this element is not applicable in a case where
the alleged fraud is the deprivation of the bank's honest
services under 18 U.S.C. § 1346.

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4.14, is perfect. Although it may "ordinarily accompan[y]" a

scheme to defraud a bank, an ultimate "purpose of either causing

some financial loss to another or bringing about some financial

gain to oneself," id., is not the essence of fraudulent intent.

What counts is whether the defendant intended to deceive the

bank in order to obtain from it money or other property,

regardless of the ultimate purpose.

III. SUFFICIENCY OF THE EVIDENCE

Both defendants challenge the sufficiency of the

evidence underlying their convictions. In reviewing this

challenge, we ask "whether, after viewing the evidence in the

light most favorable to the prosecution, any rational trier of

fact could have found the essential elements of the crime beyond

a reasonable doubt." Blasini, 169 F.3d at 62.

A. Count 5 (Bank Fraud)

Ober was convicted of bank fraud on Count 5 for his

involvement in the 222 Stackpole Street transaction. Kenrick

was acquitted on the same count. To convict a defendant of

bank fraud, the government must prove that he "(1) engaged in a

scheme or artifice to defraud, or made false statements or

misrepresentations to obtain money from; (2) a . . . financial

institution; and (3) did so knowingly." Brandon, 17 F.3d at

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424. The scheme must involve material falsehood, see Neder, 525

U.S. at 25, and the defendant must have acted with an intent to

defraud the bank, see Brandon, 17 F.3d at 425, which, as we have

explained, is an intent to deceive the bank in order to obtain

from it money or other property.

Viewing the record in the light most favorable to the

government, there was ample evidence to convict Ober of bank

fraud in connection with the 222 Stackpole Street transaction.10

The jury could have found that Ober was Flynn's partner in

purchasing 222 Stackpole Street;11 that he concealed his interest

by, inter alia, causing Flynn to submit a loan application to

WCB that falsely listed her as sole owner; that WCB made a

$900,000 loan to finance the purchase without approval of the

Board of Directors; and that someone falsified the Board minutes

10
In the midst of his argument that the evidence on Count 5
was insufficient, Ober contends that the district court erred in
admitting allegedly unreliable WCB documents. To the limited
extent that his evidentiary arguments are developed enough to
permit review, it is clear from our review of the record that
the district court did not abuse its discretion in admitting the
challenged evidence. See United States v. Mitchell, 85 F.3d
800, 812 n.11 (1st Cir. 1996).
11
Ober argues that if he had an interest in the Stackpole
Street property it was unenforceable under the statute of
frauds. Even if he is correct, his significant financial
interest in the transaction was still a material fact that he
had a duty to disclose; its unenforceability does not preclude
his conviction. See United States v. Henderson, 19 F.3d 917,
922-23 (5th Cir. 1994).

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to make it appear that the Board had approved the loan.

Considering Ober's interest in the transaction and his position

as WCB president, the jury could infer that he caused the loan

to be made and either altered the Board minutes himself or

caused them to be altered.

The jury could further have concluded that Ober

intended to deceive WCB in order to obtain the Stackpole Street

loan. Furthermore, although not necessary for conviction, as we

discuss below in connection with Count 4, the jury could have

found--based on the size of the loan, the location of the

property outside WCB's usual lending area, the speculative

nature of the condominium conversion, Flynn's lack of history of

business with WCB, and the fact that Ober's interest in the loan

violated Massachusetts banking law--that WCB would not have made

the loan if all the material facts had been revealed. A

rational jury could have found Ober guilty beyond a reasonable

doubt on Count 5.12

12
We note that Ober's fraud was hardly novel. We have
upheld the bank fraud convictions of bank insiders for making
loans in which they had undisclosed interests. See United
States v. Mangone, 105 F.3d 29, 31 (1st Cir. 1997) (credit union
president); United States v. Smith, 46 F.3d 1223, 1226 (1st
Cir. 1995) (credit union founder and general counsel). Other
circuits have done the same. See, e.g., United States v.
Hanson, 161 F.3d 896, 898 (5th Cir. 1998) (bank branch
president); United States v. Harvard, 103 F.3d 412, 421 (5th
Cir. 1997) (bank director); United States v. Henderson, 19 F.3d
917, 922-23 (5th Cir. 1994) (bank owner/board chairman); United

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B. Count 4 (Bank Fraud)

Ober and Kenrick were both found guilty of bank fraud

in connection with the 8-10 Emerson Street transaction. The

government's allegation as to this transaction was essentially

that it was a separate execution of the same scheme to defraud

WCB charged in Count 5. 13 The government alleged that Kenrick

and Ober entered into a secret agreement whereby Kenrick would

sell 222 Stackpole Street to Ober and Flynn, giving Ober the

opportunity to make a large profit by converting the property to

condominiums and Kenrick the chance to avoid the impending

increase in the capital gains tax; in exchange, Ober would make

financing available through WCB to Chung Lee and her parents to

buy 8-10 Emerson Street, allowing Kenrick the same large tax

advantage on that sale.

States v. Rackley, 986 F.2d 1357, 1361 (10th Cir. 1993) (bank
president); United States v. Walker, 871 F.2d 1298, 1307 (6th
Cir. 1989) (bank president).
13
"Under the bank fraud statute, 18 U.S.C. § 1344, each
execution of a scheme to defraud constitutes a separate
indictable offense." Brandon, 17 F.3d at 422.

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 The evidence, especially Chung Lee's testimony,14 was

sufficient to allow the jury to find that there was such a

secret agreement.15 Like the Stackpole Street mortgage, then,

the Emerson Street mortgage was part of a scheme in which Ober

deceptively took WCB's funds, and placed WCB at risk of loss,

for his personal benefit. There were differences between the

two executions of the scheme, of course. The benefit to Ober

from Emerson Street was only indirect; he fraudulently obtained

the money in the form of a loan to the Lees, not to himself, and

he made no money from that transaction in isolation. The jury

could have found, however, that he indirectly benefitted because

the Emerson Street loan made possible the Stackpole Street

purchase from which Ober garnered a substantial profit. The

14Kenrick argues on appeal that the jury could not
rationally find the alleged agreement between him and Ober
because Chung Lee's testimony was not credible. This argument
is unavailing because "[c]redibility assessments are properly
left to the jury." United States v. Woodward, 149 F.3d 46, 60
(1st Cir. 1998).
15A finding that this quid-pro-quo agreement existed is
necessary to sustain the convictions on Count 4 because, the
government's arguments to the contrary on appeal
notwithstanding, its existence is the one material fact that the
defendants allegedly concealed from WCB with respect to the
Emerson Street transaction. The jury's verdict on Count 4 may
therefore be logically inconsistent with its verdict on Counts
1, 2, and 3, finding both defendants not guilty of conspiracy
and bank bribery. Inconsistency of this sort, however, does not
affect our analysis of the sufficiency of the evidence on the
counts for which the defendants were convicted. See United
States v. Powell, 469 U.S. 57, 67-69 (1984).

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Emerson Street mortgage was approved by the WCB Board of

Directors, but Ober never disclosed to them the existence of the

secret quid-pro-quo agreement. Both loans benefitted Ober while

exposing WCB to potential loss. No actual pecuniary loss

resulted directly from the Stackpole Street loan, but the bank

lost $119,645.84 when the Lees defaulted on the Emerson Street

loan.

On appeal, Kenrick and Ober attempt to shift the focus

from their nondisclosure of the secret agreement onto the

financial status of the Lees. They argue that the Lees were

creditworthy borrowers who would have been granted a loan in any

event, and that this fact precludes conviction on Count 4. At

least two circuits have held, however, that the creditworthiness

of the borrower is no defense to bank fraud when there is

concealment of an insider interest in the transaction. See

United States v. Doke, 171 F.3d 240, 245-46 (5th Cir. 1999);

United States v. Holley, 23 F.3d 902, 909 (5th Cir. 1994);

United States v. Walker, 871 F.2d 1298, 1307 (6th Cir. 1989).

Moreover, the defendants' argument misses the point in

an important way. They mistake the character of the falsehood

required for conviction by arguing, in effect, that it must have

actually induced the bank to make a loan that would not

otherwise have been made. On the contrary, to be criminally

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fraudulent a defendant's deceptive course of conduct must be

material, see Neder, 527 U.S. at 25, and it must be directed at

obtaining money or other property from the bank, but there is no

requirement that it actually cause the bank to change its

behavior, see id. at 24-25 ("The common-law requirements of

'justifiable reliance' and 'damages[]' . . . plainly have no

place in the federal fraud statutes."). A falsehood can be

material16 even if it did not in fact induce the bank to alter

its conduct, although if such alteration did occur it is

obviously probative of materiality. A misrepresentation about

a borrower's creditworthiness can certainly be a material

falsehood that supports a bank fraud conviction, but a different

falsehood is also sufficient if it is material.

16According to the Supreme Court,

[A] matter is material if:

"(a) a reasonable man would attach importance to its
existence or nonexistence in determining his choice of
action in the transaction in question; or

"(b) the maker of the representation knows or has
reason to know that its recipient regards or is likely
to regard the matter as important in determining his
choice of action, although a reasonable man would not
so regard it."

Neder, 527 U.S. at 22 n.5 (quoting Restatement (Second) of Torts
§ 538 (1976)).

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 There was evidence that Kenrick and Ober had a secret

quid-pro-quo agreement that gave Ober an indirect financial

interest in the Emerson Street loan, and that Kenrick applied

for the loan on the Lees' behalf and Ober approved it and

presented it to the Board of Directors for ratification while

concealing the material fact of that agreement. On the basis of

that evidence, a rational jury could have found them both guilty

beyond a reasonable doubt on Count 4.17

C. Counts 18 and 20 (Bank Fraud)

Ober was found guilty of two counts of bank fraud in

connection with loans to the DGB Realty Trust, which Ober owned

with Glenn Gates and William Upton. Count 18 concerned WCB's

$15,000 demand loan to DGB, which was increased to $25,000 in

December 1987, was never disclosed to or ratified by the Board

of Directors, and was succeeded by a loan in the name of Upton

that had not been paid off at the time of trial. Count 20

17The jury might have thought that Kenrick stood in a
somewhat different position from Ober. Because he owed no
fiduciary duty to WCB and had no power to cause it to make the
loan, it could perhaps be argued that he did not himself execute
the scheme to defraud. The bank fraud charge against Kenrick,
however, was alternatively premised on an aiding and abetting
theory. See 18 U.S.C. § 2. Even if Kenrick did not execute the
scheme, there was sufficient evidence that he "associated
himself with the venture, participated in it as something he
wished to bring about, and sought by his actions to make it
succeed," United States v. Colon-Munoz, 192 F.3d 210, 223 (1st
Cir. 1999), to find him guilty of aiding and abetting Ober's
fraud.

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concerned Ober's practice of having DGB checks paid, even though

there were insufficient funds in the DGB checking account, and

held for long periods until there was enough money in the

account to cover them--thus essentially providing Ober and his

partners with undisclosed interest-free loans. The indictment

alleged, and the evidence showed, that one check in the amount

of $6,780.42 was thus held for over nine months. The evidence

was sufficient to find Ober guilty on both counts. Ober

concealed from the Board the plainly material fact that he was

putting bank assets in his own pocket by means of undisclosed

loans that put the bank at significant risk of loss and that

were eventually repaid either incompletely or without interest.

In short, the evidence on these counts, like the evidence on

Counts 4 and 5, suggested that Ober treated WCB as his personal

piggy bank, the assets of which he felt free to dispose of by

loans to himself, his associates, or their designees. On that

basis a rational jury could have found Ober guilty of bank fraud

as we have defined it above.

D. Count 22 (Perjury)

Ober was convicted of perjury for denying, under oath,

that he was familiar with the D & E Realty Trust and that he had

ever participated in making a loan in which he had an

undisclosed interest. As recounted above, there was evidence

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that Ober was present when the D & E Realty Trust was executed,

owned a half interest in it, and received half of its net

income. There was also evidence that he participated in making

undisclosed loans to the Riverview Development Trust and the DGB

Realty Trust while having an interest in each trust. On the

basis of that evidence, the jury could have concluded that both

of Ober's statements--which he stipulated were material--were

false and that he made them willfully. See United States v.

Cardales, 168 F.3d 548, 558 (1st Cir.), cert. denied, 120 S. Ct.

101 (1999) (elements of perjury are "falsity, materiality, and

willfulness"). Although Ober now argues that the question

whether he was "familiar with" the D & E Realty Trust was

ambiguous, there was sufficient evidence to prove that his

denial was false on any reasonable interpretation of the

question.

IV. OBER'S DUE PROCESS CLAIMS

Ober raises two additional arguments, neither of which

merits extended discussion. He contends first that he was

denied due process as a result of the government's alleged delay

in seeking an indictment on the bank fraud charges for

approximately three years after its investigation was completed.

To succeed on such a claim, a defendant must demonstrate "that

the preindictment delay caused him actual, substantial prejudice

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[and] that the prosecution orchestrated the delay to gain a

tactical advantage over him." United States v. Stokes, 124 F.3d

39, 47 (1st Cir. 1997) (citing United States v. Marion, 404 U.S.

307, 324 (1971)). Ober can show neither; instead, he offers

only "mere speculation and bare allegations," which are clearly

insufficient to make out a due process violation. United States

v. McCoy, 977 F.2d 706, 711 (1st Cir. 1992).

Ober also argues that the district court violated his

due process rights by preventing him from recross-examining an

expert witness, appraiser Calvin Hastings, called by Kenrick to

testify to the value of 222 Stackpole Street. The court barred

Kenrick from conducting a redirect examination of Hastings as a

sanction for Kenrick's failure--which was not discovered until

the government's cross-examination--to disclose Hastings's

report to the government. The court permitted Ober's attorney,

who had already cross-examined Hastings, to begin recross, with

instructions that it be limited to the scope of the government's

cross-examination. When Ober's attorney began by asking

Hastings whether he had expected he would be cross-examined on

the report, the court interrupted him, stopped the examination,

and excused the witness. Ober neither objected nor made an

offer of proof.

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 The district court has "extensive discretion" in

controlling recross-examination. United States v. Sorrentino,

726 F.2d 876, 885 (1st Cir. 1984). Here the court stopped the

recross because it concluded that Ober's attorney did not intend

to re-examine Hastings on matters within the scope of the

government's cross, but instead to conduct, in effect, the

redirect that Kenrick's counsel could not. This is exactly the

sort of judgment call that we should not second-guess.

Considering that Ober had already had an opportunity to cross-

examine Hastings, the court's limitation of his recross-

examination was not an abuse of its extensive discretion, let

alone a due process violation.

Affirmed.

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