REVISED, MARCH 29, 2001
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-11202
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
BONIFACE SULEMAN ODIODIO,
also known as Boniface Odiodio Suleman;
VICTOR AMEACHI UZOH,
also known as Victor Uzoh,
Defendants-Appellants.
Appeal from the United States District Court
For the Northern District of Texas
March 9, 2001
Before KING, Chief Judge, and HIGGINBOTHAM and DUHÉ, Circuit
Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
A jury convicted Boniface Odiodio and Victor Uzoh of bank
fraud, wire fraud, and money laundering. They challenge the
sufficiency of the evidence to sustain their convictions. We are
persuaded that the government failed to show that FDIC-insured
banks were put at risk of loss by the defendants’ conduct, and we
reverse the convictions for bank fraud. We find no merit in the
appellants’ other contentions on appeal and affirm those
convictions as well as the enhancement of defendant Odiodio’s
sentence for perjury at trial.
I
This case is centered around a misappropriation of a check
written by KN Energy to Shell Western for just under one million
dollars. The check was stolen from the mail, and altered to be
payable to a Robert Allen Burr.
Someone by mail opened an account at Charles Schwab & Co. in
the name of Robert Allen Burr, using his identifying information,
including social security number and date of birth. The stolen
check was deposited into the account. There was no evidence of who
opened the account or made the deposit. Robert Allen Burr
testified at trial that he had never seen the check nor any of the
bank accounts involved. The government offered no proof of who
stole the check, altered and deposited it.
Money was then transferred by wire from the Schwab account
into an account at the Arlington, Texas branch of Bank One, held by
Shyamal Mukherjee, and into an account at the Arlington, Texas
branch of Wells Fargo, held by Odiodio. Uzoh and Odiodio then
began to move money out of the country from these two accounts.
There were two wire transfer orders from Bank One, both filled
out either by Mukherjee at Uzoh’s behest or by Uzoh himself and
then signed by Mukherjee. They describe the wire transfers as
being “for land rover” and “trip money.” Mukherjee does not appear
2
to have been part of the conspiracy. Rather, the evidence
suggested that he was partially duped and partially coerced by Uzoh
into allowing his account to be used. Mukherjee needed money to
register his business with the Airline Reporting Corporation. Uzoh
agreed to supply the money, and procured the information about
Mukherjee’s account ostensibly to facilitate the transfer of money
for Mukherjee’s use. Once Mukherjee noticed the amount of money
that was being moved through his account, Uzoh made veiled threats
against Mukherjee’s family to prevent Mukherjee from interfering.
The Wells Fargo account was in the name of World Capital Trust
Ltd., and was controlled by Odiodio. The application to open it
states the company’s annual sales as $128,271.50. Bank officials
testified that the account never showed any evidence of annual
sales near that amount. There was evidence of five wire transfer
orders from Wells Fargo, filled out by Odiodio. None of the order
forms contain any express representations.
Eventually, Schwab discovered that the opening check was
stolen, and began the process of freezing accounts. Odiodio and
Uzoh were arrested and charged with bank fraud, wire fraud, and
money laundering. A jury found both guilty on all counts. This
appeal followed.
II
We review jury verdicts with great deference. We evaluate the
evidence in the light most favorable to the verdict and “afford the
3
government the benefit of all reasonable inferences and credibility
choices.”1 The evidence “is sufficient if a rational trier of fact
could have found the essential elements of the offense beyond a
reasonable doubt based upon the evidence presented at trial.”2
We begin by considering the sufficiency of the evidence
supporting the charge of bank fraud. The elements of bank fraud,
under 18 U.S.C. § 1344, are that the defendant knowingly executed
or attempted to execute a scheme or artifice 1) to defraud a
financial institution or 2) to obtain any property owned by, or
under the custody or control of a financial institution by means of
false or fraudulent pretenses, representations or promises.3 The
government must also show that the defendant “placed the financial
institution at risk of civil liability,”4 and that the bank was
FDIC insured.5
1
United States v. Gray, 96 F.3d 769, 772 (5th Cir. 1996).
2
Id.
3
United States v. Dadi, 235 F.3d 945, 950 (5th Cir. 2000).
4
United States v. Sprick, 233 F.3d 845, 852 (5th Cir. 2000)
(“Under our precedent, for the prosecution to prove that the
offense of bank fraud has been committed, it must show not only
that the money or assets in the custody or control of a financial
institution were obtained by means of fraud but also that doing so
placed the financial institution at risk of civil liability.”);
United States v. Briggs, 965 F.2d 10, 12-13 (5th Cir. 1992).
5
See United States v. Scott, 159 F.3d 916, 921 (5th Cir.
1998) (“Proof of FDIC insurance is an essential element of the
crime of bank fraud, as well as essential to establish federal
jurisdiction.”).
4
Charles Schwab was not insured by the FDIC, but both Bank One
and Wells Fargo were insured. We turn to the issue of risk of
loss.6
We are persuaded that under Texas law, Bank One and Wells
Fargo were not at risk. It is clear under Texas law that there the
banks had no legal liability. We have no occasion to assess “risk”
in the light of legal uncertainty regarding liability. In Bradford
Trust Company v. Texas American Bank-Houston,7 two imposters sent
a forged wire transfer order to the Bradford Trust Company,
ordering it to liquidate certain assets in an account and wire
$800,000 to Texas American Bank, in payment for a set of rare coins
and gold bullion. Bradford Trust did so, without following
internal procedures designed to detect fraud. The customer whose
assets were sold later discovered the fraud and reported it to
Bradford Trust. Bradford Trust reinstated the customer’s account
and sought refund from Texas American. Texas American refused and
Bradford Trust sued. The district court applied comparative
6
See Sprick, 233 F.3d at 853 (“We express no opinion on
whether the bank would have civil liability in these circumstances;
it is sufficient that the government provided no basis at trial or
on appeal for concluding that the bank could have such liability.
It follows under our jurisprudence that Sprick could not be guilty
of bank fraud under 18 U.S.C. § 1344.”).
7
790 F.2d 407 (5th Cir. 1986).
5
negligence principles and split the loss evenly between the two
banks.8
We reversed, holding first that comparative negligence
principles do not apply in such commercial cases.9 We then looked
to Texas banking law and the Texas UCC. Those laws place primary
responsibility on the drawee bank for detecting forged signatures,
because the drawee bank is in the best position to detect the
fraud. Subsequent holders have no opportunity to detect fraud and
therefore do not share responsibility. We also cited two wire
transfer cases in Texas before the adoption of the UCC which
followed the same reasoning. We finally observed that in
commercial transactions, the law strongly favors finality. Thus,
subsequent takers of an instrument or transfer should be free from
claims that the person from whom they took possessed the instrument
fraudulently.10 Under the authority of Bradford Trust,11 Charles
8
Id. at 408.
9
Id. at 409; see also United States v. Hibernia Nat’l Bank,
841 F.2d 592, 596 (5th Cir. 1988).
10
Bradford Trust, 790 F.2d at 409-11.
11
Bradford Trust, or the reasons supporting it, would control
any case brought against Bank One or Wells Fargo. The wire
transfers were received at the Arlington, Texas branches of those
banks. Section 4-102(b) of the UCC provides that “[t]he liability
of a bank for action or non-action with respect to an item handled
by it for purposes of presentment, payment, or collection is
governed by the law of the place where the bank is located. In the
case of action or non-action by or at a branch or separate office
of a bank, its liability is governed by the law of the place where
the branch or separate office is located.” U.C.C. § 4-102(b)
(2000). The transfers were received by the Arlington, Texas
6
Schwab, as the entity that initially received the altered
instrument, bore the full risk of loss in this case. Charles
Schwab had the greater opportunity to detect and prevent this
fraud. It opened an account and accepted a check of nearly a
million dollars by telephone. Bank One and Wells Fargo, having
never handled the altered instrument, had none.
Texas law assigns the full risk of loss to the bank that dealt
with the forger or his work. All the cases cited by the government
fit this pattern.12 Where, as here, the FDIC insured banks never
handled the fraudulent instrument, they had no risk of loss. The
branches of Bank One and Wells Fargo. Section 4-102 would
therefore mandate the application of Texas law. Texas, where one
would expect a suit against Texas banks to be brought, has adopted
this provision of the Uniform Commercial Code. See Tex. Bus. &
Com. Code Ann. § 4.102(b) (2000). Moreover, even if Schwab were
able to secure jurisdiction over Bank One or Wells Fargo and bring
suit in Schwab’s home state of California, California has also
adopted section 4-102. See Cal. Com. Code § 4102 (2000).
12
Although the issue of FDIC insurance was not raised on
appeal and is therefore not explicitly discussed in the cases cited
by the government, the banks involved are invariably FDIC members.
None of the cases cited by the government involved fraud
perpetrated upon a non-FDIC institution which then transfers funds
to an FDIC bank. See United States v. Hill, 197 F3d 436 (10th Cir.
1999) (forged check deposited at Norwest bank, which is FDIC
insured); United States v. Barakett, 994 F.2d 1107 (5th Cir. 1993)
(criminal induced victims to deposit forged checks drawn on Allied
American Bank and Bank One, both of which are FDIC insured); United
States v. Wimbish, 980 F.2d 312 (5th Cir. 1992) (stolen checks from
one FDIC insured bank forged and deposited into another FDIC
insured bank, with cash back requested), abrogated on other grounds
by Stinson v. United States, 508 U.S. 36 (1993); United States v.
Young, 952 F.2d 1252 (10th Cir. 1991) (unauthorized account in
employer’s name opened at FDIC insured bank, stolen checks then
deposited in unauthorized account).
7
banks parted with no money of their own, and are not liable to
replace any money lost by Charles Schwab.13
The evidence was insufficient to sustain Uzoh and Odiodio’s
convictions on the charge of bank fraud, and the judgment of
conviction upon counts 2, 4, 5, and 7 is REVERSED.
III
The elements of wire fraud, under 18 U.S.C. § 1343, are 1) a
scheme to defraud and 2) the use of, or causing the use of, wire
communications in furtherance of that scheme.14
Uzoh argues that if the government cannot prove he stole the
altered check, the government cannot convict him of wire fraud.
This argument is without merit. Proof of theft is not an element
of wire fraud.15 The government proved, and Uzoh does not contest,
that Uzoh caused wire communications to be used to transfer money
13
Because we find that no FDIC bank was put at risk, we need
not address the question of whether or not Uzoh and Odiodio made
any misrepresentations to a financial institution. As we held in
Briggs, the mere act of ordering a wire transfer does not in and of
itself constitute a representation. 965 F.2d at 12. Moreover, the
specific wire order forms at issue in this case did not contain
preprinted representations to which the issuer subscribed. Odiodio
may have made a misrepresentation to Wells Fargo in his application
to open an account, however, when he stated the annual income of
World Capital Trust.
14
See United States v. Izydore, 167 F.3d 213, 219 (5th Cir.
1999).
15
Cf. United States v. Hamilton, 694 F.2d 398, 400 (5th Cir.
1982) (sustaining defendant’s conviction for wire fraud, because
“the record is replete with evidence of fraud,” even though
defendant was acquitted on the charge of theft).
8
for his benefit. Therefore, all that remained was for the
government to prove a “scheme to defraud” furthered by the wire
transfers.
Ample circumstantial evidence supports the inference that Uzoh
wired money as part of a scheme to defraud. First, Uzoh arranged
to have money wired from an account falsely opened in the name of
Robert Allen Burr to an account held by Shyamal Mukherjee; he then
arranged to have Mukherjee wire the money oversees to accounts
controlled by Uzoh. Not only did these events associate Uzoh with
the theft and alteration of the KN Energy check, even if they did
not prove that he himself stole and altered it, but they also look
conspicuously like an attempt to hide the proceeds of an illegal
transaction. Second, Uzoh made these arrangements in part by
threatening the safety of Mukherjee’s family. Third, Uzoh had no
legitimate employment or business sufficient to explain his access
to this volume of money. This circumstantial evidence, taken in
the light most favorable to the verdict, could support a jury’s
determination that the wire transfers were part of a scheme to
defraud.16
Odiodio argues that since he did not commit bank fraud, he
could not have committed wire fraud. This is meritless. Bank
fraud is not an element of wire fraud.
16
See United States v. Ismoila, 100 F.3d 380, 389 (5th Cir.
1996) (“[U]nlawful intent to defraud may be proven by
circumstantial evidence.”).
9
Ample circumstantial evidence also supports an inference that
Odiodio wired money as part of a scheme to defraud. Odiodio also
received money from the Schwab account, and then promptly wired the
money out of the country. This ties Odiodio to the theft of the
check with every signal of an attempt to launder money. Odiodio
also made inconsistent and implausible statements to explain the
source of the funds. Odiodio once claimed that he was sending the
money to repay Ginaton Holdings for an overpayment; yet he also
threatened to sue Wells Fargo bank for the same money, claiming it
was due to him under a contract. Odiodio had no legitimate
employment or business sufficient to explain his access to this
large sum of money. This circumstantial evidence, again taken in
the light most favorable to the verdict, supports the jury’s
verdict.17
IV
The elements of money laundering, under 18 U.S.C. § 1956, are
that “the defendant 1) conducted or attempted to conduct a
financial transaction, 2) which the defendant knew involved the
proceeds of unlawful activity, 3) with the intent . . . to conceal
or disguise the nature, location, source, ownership, or control of
the proceeds of unlawful activity.”18 The government proved, and
17
See Ismoila, 100 F.3d at 389.
18
United States v. Garza, 42 F.3d 251, 253 (5th Cir.
1994)(internal quotation marks omitted).
10
neither defendant contests, that both defendants conducted a
financial transaction.
Uzoh argues that without proving that he knew who stole the KN
Energy check, the government cannot prove that he knew the money he
dealt with was the proceeds of unlawful activity or that he
intended to conceal its unlawful nature. There was ample evidence,
however, to prove that Uzoh knew these funds were not legitimate,
even if he did not know the name of the original thief. Uzoh’s
decision to move the funds through Mukherjee’s account and then
oversees, plus the threats he made to keep Mukherjee from asking
questions, plus the absence of any plausible explanation for Uzoh’s
access to this large sum of money all support an inference that he
knew the money was stolen.
Odiodio argues that without convicting him of bank fraud, the
government cannot show he knew the funds were unlawful and intended
to conceal its unlawful nature. Bank fraud, however, is not an
element of money laundering. Again, the circumstantial evidence
amply allowed the jury to infer that Odiodio knew this money was
stolen and attempted to move it out of the country in a modern
electronic flight for the border.
Viewing the evidence in the light most favorable to the
verdict, we cannot say that a rational jury could not have inferred
scienter.
V
11
We turn finally to Odiodio’s challenge to his sentence
enhancement for obstruction of justice. The district court,
applying section 3C1.1 of the Sentencing Guidelines, imposed a two-
level increase in Odiodio’s sentencing level, on the grounds that
Odiodio obstructed justice by perjuring himself. We review this
fact finding for clear error.19 The district court followed the
Supreme Court’s guidance and “review[ed] the evidence and make
independent findings necessary to establish a willful impediment to
obstruction of justice,” and further addressed “each element of the
alleged perjury in a separate and clear finding.”20 Specifically,
the district court listed fourteen instances of perjury by Odiodio:
1. He wired $100,000 to Ginaton Holdings and $60,000 to
Westminster Bank because Victor Uzoh told him a client
wanted a refund of $100,000 sent to the Bank of Cyprus;
2. Uzoh told him the $100,000 was to go to the Bank of
Cyprus because they made an error;
3. The information in defendant’s exhibit 34 helped him
to make the wire transfers Uzoh told him about;
4. Nothing clicked in his mind that maybe this was
illegal or some sort of scam;
5. He did not know he was sending out stolen money;
6. He did not know the money he was dealing with was the
proceeds of a crime;
19
See United States v. Storm, 36 F.3d 1289, 1295 (5th Cir.
1994).
20
United States v. Dunnigan, 507 U.S. 87, 95 (1993).
12
7. It did not dawn on him that anything was amiss until
April 22;
8. After his accounts were frozen, it still did not
occur to him that the money might be the proceeds of a
crime;
9. He did not devise a scheme to defraud financial
institutions;
10. He did not know the $100,000 he wired was stolen
money;
11. At the time he heard about Ginaton and Westminster
Bank, he thought he was embarking upon a legitimate
business endeavor;
12. He did not intend to defraud a bank;
13. In his mind, he was not dividing the spoils of
stolen property with Uzoh;
14. When he sent the money to London, he was not trying
to launder money.
Odiodio argues that his statements denied mens rea, and to
penalize him for making those statements denies him the right to
deny his guilt. The right to testify, however, does not include a
right to lie.21 We have, at least twice, upheld sentence
enhancements for defendants who denied possessing a culpable mental
state,22 and we have no difficulty doing so again today.
21
See id. at 96.
22
See, e.g., United States v. Morris, 131 F.3d 1136, 1140 (5th
Cir. 1997) (upholding enhancement when defendant testified that he
“did not deliberately swerve his vehicle,” based on testimony by
numerous witnesses that his action had to have been deliberate)
(emphasis added); United States v. Vaquero, 997 F.2d 78, 87-88 (5th
Cir. 1993) (upholding enhancement when defendant testified “that he
never intended to deal drugs,” where ample witness testimony proved
to the contrary).
13
Odiodio also argues that the trial court could not know his
mental state, and therefore could not know he lied. The risk of
“incorrect findings of perjury by district courts,” however, is
“inherent in a system which insists on the value of testimony under
oath.”23 We find no error.
VI
We REVERSE Uzoh and Odiodio’s convictions in Counts 2, 4, 5,
and 7 on the charges of bank fraud. We AFFIRM Uzoh and Odiodio’s
convictions on the charges of wire fraud and money laundering and
the district court’s decision to enhance Odiodio’s sentence for
obstruction of justice. We REMAND to the district court for
resentencing without counts 2, 4, 5, and 7.
ENDRECORD
23
Dunnigan, 507 U.S. at 97.
14
KING, Chief Judge, specially concurring:
I concur in the judgment and in all of Judge Higginbotham’s
fine opinion with the exception of Part II, which deals with the
insufficiency of the evidence to sustain the convictions of Uzoh
and Odiodio for bank fraud. I agree that the evidence is
insufficient to sustain those convictions, but rather than ruling
that, as a matter of law, the banks could not be at risk, I would
simply say that under the evidence in this case, there was no basis
on which the jury could have found that the banks were at risk.
15