United States v. Morganfield

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
F I L E D
No. 05-51395 September 25, 2007

Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA

Plaintiff-Appellee
v.

ELLIS MORGANFIELD;
LEROY THOMAS

Defendants-Appellants

Appeals from the United States District Court
for the Western District of Texas

Before HIGGINBOTHAM, DAVIS, and BARKSDALE, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Ellis Morganfield and Leroy Thomas were each convicted on one count of
conspiracy to violate 18 U.S.C. § 514(a), and one count of aiding and abetting the
violation of 18 U.S.C. § 514(a) and 18 U.S.C. § 2. Morganfield was also convicted
on two counts of aiding and abetting bank fraud in violation of 18 U.S.C. § 1344
and 18 U.S.C. § 2. They appeal their convictions. We affirm in part, reverse in
part, vacate Morganfield’s sentence, and remand for resentencing.

I.
 No. 05-51395

Ellis Morganfield and Leroy Thomas were key participants in a simple but
effective check cashing scheme. The scheme essentially operated in four steps.
First, registering an entity with a local authority, they obtained a d/b/a
certificate for the business. There was no business, however, just a nonexistent
shell company. Second, the conspirators used the d/b/a certificates to open
commercial checking accounts in the names of the shell companies, making a
small initial deposit. The banks would assign account numbers and issue checks
in the names of the shell companies. The conspirators used the personal
identifications of other persons, which were bought or stolen, when opening the
checking accounts. Third, the conspirators would make the shell company
checks, styled as payroll checks, payable to fake payees using the names of
persons whose identifications they also had either bought or stolen. The checks
were signed with the name of a nonexistent person, often with a signature
stamp. The amounts the checks were drafted for would exceed the value of the
deposit used to open the checking account. Finally, the conspirators would cash
the checks at unsuspecting grocery and convenience stores.
II.
Morganfield and Thomas, along with Gordon Dunn, Alexis Morganfield,
Reggie President, Shalita Williams, Ebonie Toye, and Douglas Jones, were
indicted by a grand jury sitting in the Western District of Texas. Count one
charged Morganfield and Thomas with conspiracy to utter a fictitious
instrument in violation of 18 U.S.C. § 514(a)(2); count two charged them with
aiding and abetting the uttering of a fictitious instrument in violation of 18
U.S.C. § 514(a)(2) and 18 U.S.C. § 2. Counts five and six charged Morganfield
with aiding and abetting bank fraud in violation of 18 U.S.C. § 1344 and 18
U.S.C. § 2.

2
 No. 05-51395

Morganfield and Thomas were tried by jury in April 2004, and found guilty
on all counts. Numerous members of the conspiracy testified against
Morganfield and Thomas.
The district judge sentenced Morganfield to 60 months’ imprisonment on
count one and 145 months’ imprisonment on each of counts two, five, and six, to
run concurrently, and supervised release. Thomas received a sentence of 60
months’ imprisonment on count one and 100 months’ imprisonment on count
two, to run concurrently, and supervised release. Thomas’s sentence was
enhanced for using a minor, his then-minor girlfriend, in furtherance of the
scheme.
Morganfield and Thomas now appeal. They first contend that there was
insufficient evidence to find them guilty on counts one and two because a check,
even if it is worthless, is not, as a matter of law, a “false or fictitious
instrument.” We agree.1
Morganfield raises three challenges to his bank fraud convictions: the
government failed to prove the use of “false or fraudulent pretenses,
representations, or promises” to obtain funds; intent to defraud financial
institutions; and that any financial institution faced a risk of loss or civil
liability. He also alleges that statements in the prosecutor’s rebuttal argument
were improper and require reversal of his conviction and a new trial. We
disagree with all four contentions.
III.
Morganfield and Thomas argue that, as a matter of law, there was
insufficient evidence to sustain their convictions on counts one and two because
18 U.S.C. § 514(a)(2) applies, in the words of Morganfield’s brief, to the “passing

1
Morganfield and Thomas also challenge their convictions on counts one and two on other
grounds, and Thomas appeals the enhancement of his sentence for the use of a minor in furtherance
of a crime. Because we reverse the § 514 convictions on the statutory construction question, we need
not address those issues.

3
 No. 05-51395

of wholly nonexistent types of financial instruments, not the passing of worthless
checks.”2
Section 514(a)(2) provides that
[w]hoever, with intent to defraud, passes, utters, presents, offers,
brokers, issues, sells, or attempts or causes the same, or with like
intent possesses, within the United States, any false or fictitious
instrument, document, or other item appearing, representing,
purporting, or contriving through scheme or artifice, to be an actual
security or other financial instrument issued under the authority of
the United States, a foreign government, a State or other political
subdivision of the United States, or an organization, shall be guilty
of a class B felony.

Terms in § 514(a) are defined by reference to 18 U.S.C. § 513(c).3 Section
513(c)(3)(A) defines a “security” as including a check. Neither § 514 nor § 513(c)
define what constitutes a “false or fictitious instrument, document, or other
item.”
As the Ninth Circuit noted, § 514 “is a relatively new statute; under it,
prosecution appears to be infrequent.”4 As such, there is not a wealth of case law
interpreting it. The legislative history is helpful in interpreting its scope.
According to then-Senator Alfonse D’Amato’s floor statement introducing the
legislation:
This legislation combats the use of factitious [sic] financial
instruments to defraud individual investors, banks, pension funds,
and charities. These fictitious instruments have been called many
names, including prime bank notes, prime bank derivatives, prime
bank guarantees, Japanese yen bonds, Indonesian promissory notes,
U.S. Treasury warrants, and U.S. dollar notes.

...

2
Appellant-Morganfield’s Brief at 10.

3
18 U.S.C. § 514(b).

4
United States v. Howick, 263 F.3d 1056, 1066 (9th Cir. 2001), cert. denied, 535 U.S. 946 (2002).

4
 No. 05-51395

Because these fictitious instruments are not counterfeits of any
existing negotiable instrument, Federal prosecutors have
determined that the manufacture, possession, or utterance of these
instruments does not violate the counterfeit or bank fraud
provisions contained in chapters 25 and 65 of title 18 of the United
States Code. The perpetrators of these frauds can be prosecuted
under existing Federal law only if they used the mails or wires, or
violated the bank fraud statute.

Mr. President, we have worked closely with the Treasury
Department and various U.S. Attorneys’ Offices to prepare the
Financial Instruments Anti-Fraud Act of 1995. This bill makes it a
violation of Federal law to possess, pass, utter, publish, or sell, with
intent to defraud, any items purporting to be negotiable instruments
of the U.S. Government, a foreign government, a State entity, or a
private entity. It closes a loophole in Federal counterfeiting law.5

The Ninth Circuit’s decision in United States v. Howick offers the most
thorough analysis of the section’s scope. In Howick, the defendant was convicted
of, among other things, possessing with intent to defraud $100,000,000 and
$500,000,000 Federal Reserve notes in violation of § 514(a). The Federal
Reserve had never printed notes in those denominations. After quoting the
section’s legislative history, the court explained that “[a] ‘counterfeit’ obligation
is a bogus document contrived to appear similar to an existing financial
instrument; a ‘fictitious’ obligation is a bogus document contrived to appear to
be a financial instrument, where there is in fact no such genuine instrument,
and where the fact of the genuine instrument’s nonexistence is presumably
unknown by, and not revealed to, the intended recipient of the document.”6 In
other words, according to the court, “‘false or fictitious instrument’ in section 514
[refers] to nonexistent instruments, whereas the phrase ‘falsely made, forged,
counterfeited, or altered obligation’ in section 472 refers to doctored up versions

5
141 Cong. Rec. S 9533-34.

6
Howick, 263 F.3d at 1067.

5
 No. 05-51395

of obligations that truly exist.”7 Other courts have similarly interpreted §
514(a).8
The government argues that the dichotomy between existent and
nonexistent securities is too formalistic. Instead, the government urges that “the
proper inquiry is whether through ‘scheme or artifice’ the defendants have
sought to create a false or fictitious obligation, not whether they used an
ostensibly genuine piece of paper.”9
In support of its argument, the government first points to the section’s
title, “Fictitious obligations.” This argument is not helpful on two accounts.
First, the section heading is itself question begging. The American Heritage
Dictionary defines “obligation” as including both “[a] legal agreement stipulating
a specified payment or action” and “the document containing the terms of such
an agreement.” While the former supports the government’s position, the latter
supports the construction of the statute urged by Morganfield and Thomas. “For
interpretative purposes, [titles] are of use only when they shed light on some
ambiguous word or phrase.”10 Second, and more important, “headings and titles
are not meant to take the place of the detailed provisions of the text.”11 The text
of § 514(a), while not an exemplar of precise drafting, supports the Ninth

7
Id.

8
See, e.g., United States v. Anderson, 353 F.3d 490, 500 (6th Cir. 2003), cert. denied, 541 U.S.
1068 (2004) (quoting approvingly from Howick the distinction between “counterfeit” and “fictitious
obligations”); United States v. Getzschman, 81 Fed. Appx. 619, 622 (8th Cir. 2003) (unpublished per
curiam opinion) (“This court previously has noted that the legislative history of § 514(a) indicates the
statute covers wholly nonexistent types of financial instruments.”); United States v. Summa, No. 02-CR-
101(GEL), 2003 WL 21488093 (S.D.N.Y. June 25, 2003) (“The conduct prohibited [under § 514(a)] is the
uttering of instruments that purport to be genuine obligations of (in this instance) the United States,
but which are not. . . . [T]he statute is quite clear that it covers ‘false and fictitious’ instruments that
masquerade as ‘actual securit[ies]’ . . . .”).

9
Appellee-Government’s Brief at 23.

10
Brotherhood of R.R. Trainmen v. Baltimore & O. R. Co., 331 U.S. 519, 529 (1947).

11
Id. at 528.

6
 No. 05-51395

Circuit’s, and other courts’, view that the statute’s concern is nonexistent
instruments.
Most basically stated, the statute prohibits the use of “false or fictitious
instruments, documents, or other items” that appear, represent, or purport to be
“actual securities.” The statute thus contemplates two universes of instruments:
“false or fictitious” ones and “actual securities.” “False” and “fictitious” have
overlapping definitions. According to the American Heritage Dictionary, false
and fictitious both can mean not real or imaginary.12 Both words can also mean
deceptive.13 While the broader definition of deceptive lends some support to the
government’s argument, the choice of the word “actual” to modify security
counsels otherwise. “Actual” means “existing in fact or reality.” The use of
“actual” thus focuses the inquiry on the character of the security–i.e., does this
type of security exist. The statute, then, prohibits the use of a not real or
imaginary type of instrument that purports to be an existing type of security.
The legislative history supports this construction. Senator D’Amato’s floor
statement explains that “fictitious instruments are not counterfeits of any
existing negotiable instrument”; he lists as an example of such instruments “do-
it-yourself kits that provide the materials and instructions . . . to produce phony
money order [sic] and securities.”14
The government cites a number of cases in support of a broader
construction; however, none of those cases are on point as each involves
situations where a fake instrument was used, the defendant had pleaded guilty

12
False: “[c]ontrary to fact or truth”; “[n]ot real or natural; artificial.” Fictitious: “[o]f,
pertaining to, or characterized by fiction; imaginary.”

13
False: “[d]eliberately untrue”; “[i]ntentionally deceptive.” Fictitious: “[a]dopted or assumed
in order to deceive”; “[n]ot genuinely believed or felt; sham.”

14
141 Cong. Rec. S 9533-34 (emphasis added).

7
 No. 05-51395

and was not challenging the scope of § 514(a), or some combination thereof.15
Moreover, the government’s discussion of the case law fails to discuss the portion
of Howick that draws the distinction between nonexistent and existent
instruments.
The government’s final argument is textual, but meritless. Section 514(b)
incorporates definitions from § 513(c). Section 513(c) defines “forged” as “a
document that purports to be genuine but is not because it has been falsely
altered, completed, signed, or enhanced, or contains a false addition thereto or
insertion therein, or is a combination of part of two or more genuine securities.”
The government asserts that the definition of “forged” in § 513(c) describes
precisely what occurred in the scheme here, and thus pulls this scheme into §
514(a). The definition of “forged” does appear to describe what happened in the
scheme here; however, § 514(a) nowhere mentions the word “forged,” and §
514(b) specifically limits the definitions it incorporates to “any term used in this
section.”
The actions of Morganfield, Thomas, and their co-conspirators are plainly
illegal; however, as the government’s final argument regarding the definition of
“forged” in § 513(c) suggests, the government charged Morganfield and Thomas
under the wrong section. The checks in this case were, on their face, genuine.

15
In United States v. Waalee, 133 Fed. Appx. 819 (3d Cir. 2005) (unpublished opinion), the
defendant apparently made the $25 million “certified tender of payment” for which he was prosecuted;
the court noted that the defendant “admitted on cross-examination that he took steps to produce a
quality instrument.” Id. at 823. In United States v. Granik, 386 F.3d 404 (2d Cir. 2004), the defendant
pleaded guilty and the Second Circuit did not address the scope of § 514(a); the opinion only describes
the instrument as a “counterfeited bank check.” In United States v. Riley, 335 F.3d 919 (9th Cir. 2003),
the defendant again pleaded guilty, and the only issue on appeal was the defendant’s sentence. While
the government makes much of the fact that the defendant in Riley stole genuine personal checks and
cashed them, the defendant had also used those stolen checks as templates to create fake checks.
Finally, in United States v. Mims, 13 Fed. Appx. 880 (10th Cir. 2001) (unpublished opinion), the
defendant pleaded guilty, and the only issue on appeal was his sentence. And, the facts described by
the Tenth Circuit indicate that the defendant in Mims had made at least some of the checks himself:
“Police also discovered two laptop computers in the vehicle containing digital images of counterfeit
checks. Police later discovered additional check counterfeiting equipment-namely, a word processor,
a check program, and blank check stock . . . .” Id. at 881.

8
 No. 05-51395

The checks were actual negotiable instruments that were issued by legitimate
banks where actual checking accounts existed. Morganfield’s and Thomas’s
subsequent actions may well have created “forged” or “counterfeit” obligations,
but their actions did not turn otherwise “real” checks into a “nonexistent” type
of security. This is not to say that a scheme that involves wholly fake “checks”
necessarily falls outside § 514(a); we conclude only that, where the underlying
instruments are facially genuine checks, § 514(a) is not applicable.
Accordingly, we reverse Morganfield’s and Thomas’s convictions on counts
one and two.
IV.
Morganfield next challenges his bank fraud convictions under 18 U.S.C.
§ 1344 and 18 U.S.C. § 2. We are concerned only with § 1344(2), as the district
court only instructed the jury on it.16 Section 1344(2) provides:
Whoever knowingly executes, or attempts to execute, a scheme or
artifice 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 false or fraudulent
pretenses, representations, or promises shall be fined not more than
$1,000,000 or imprisoned not more than 30 years, or both.

Morganfield raises three separate sufficiency of the evidence arguments: the
government failed to prove that he obtained funds “by means of false or
fraudulent pretenses, representations, or promises,” that he had the intent to
defraud financial institutions, and that any financial institution faced a risk of
loss or civil liability.
Generally, when reviewing the sufficiency of the evidence, we “view the
evidence in the light most favorable to the verdict and determine whether a

16
See United States v. Medeles, 916 F.2d 195, 197-98 (5th Cir. 1990) (explaining that where
the indictment did not specify under which clause of § 1344 defendant was charged with, and jury was
only instructed as to one clause, the court would only consider the clause the jury was instructed on).
The indictment contained language from §§ 1344 (1) and (2), but the jury instructions were limited to
§ 1344(2) and the government did not object.

9
 No. 05-51395

rational jury could have found the elements of the offense beyond a reasonable
doubt.”17 However, where a defendant has failed to properly preserve his
objections, our review is limited to plain error.18 Under the plain error standard,
we reverse a conviction “only to avoid a manifest miscarriage of justice. ‘Such
a miscarriage would exist only if the record is devoid of evidence pointing to
guilt, or . . . because the evidence on a key element of the offense was so tenuous
that a conviction would be shocking.’”19
The parties disagree over whether proper motions for judgment of
acquittal were made at the close of the government’s case and at the close of all
of the evidence.20 We need not pause at this dispute. Even if all required
objections were made, the evidence is sufficient to sustain Morganfield’s
convictions.

A.

The nub of Morganfield’s first claim is that the presentation of a check
that draws on an account which the defendant knows to contain insufficient
funds is not a “false or fraudulent pretense, representation, or promise” under
§ 1344(2). Morganfield relies on the Supreme Court’s decision in Williams v.
United States,21 and this court’s decision in United States v. Medeles;22 however,
his reliance on these cases is misplaced.

17
United States v. Gutierrez-Farias, 294 F.3d 657, 660 (5th Cir. 2002), cert. denied, 537 U.S.
1114 (2003).

18
United States v. Parker, 133 F.3d 322, 328 (5th Cir. 1998), cert. denied, 523 U.S. 1142 (1998).

19
Id. (quoting United States v. Pierre, 958 F.2d 1304, 1310 (5th Cir. 1992) (en banc)) (citation
omitted).

20
See Fed. R. Crim. P. 29.

21
458 U.S. 279 (1982).

22
916 F.2d 195 (5th Cir. 1990).

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 No. 05-51395

In Williams, the Court considered a conviction under 18 U.S.C. § 1014,
which prohibits the use of “any false statement or report . . . for the purpose of
influencing in any way the action” of an enumerated financial institution,
including federally insured banks. The defendant had engaged in a check-kiting
scheme, whereby he had deposited several checks in various bank accounts
knowing that the checking accounts had insufficient funds to cover the checks.23
The government argued that presentation of a check with knowledge that the
checking account had insufficient funds constituted a “false statement or
report.”24 The Court, however, rejected this broad reading of the statute,
explaining that,

[a]lthough [the defendant] deposited several checks that were not
supported by sufficient funds, that course of conduct did not involve
the making of a “false statement,” for a simple reason: technically
speaking, a check is not a factual assertion at all, and therefore
cannot be characterized as “true” or “false.”25

That is, “[e]ach check did not, in terms, make any representation as to the state
of [defendant’s] bank balance.”26 The Court went on to explain that “‘false
statement’ is not a term that, in common usage, is often applied to characterize
‘bad checks.’”27 The trial evidence being limited to depositing the bad checks, the
Court reversed the defendant’s conviction.

23
Williams, 458 U.S. at 280-82, 281 n.1.

24
See id. at 286-87 (“If the drawer has insufficient funds in his account at the moment the check
is presented, the Government continues, he effectively has made a “false statement” to the recipient.”).

25
Id. at 284.

26
Id. at 284-85.

27
Id. at 286.

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 No. 05-51395

Similarly, in Medeles, this court considered whether a check-kiting scheme
could be prosecuted under former 18 U.S.C. § 1344(a)(2).28 Medeles deposited a
series of checks at various banks knowing that there were insufficient funds to
cover the checks.29 The appeal turned on whether depositing checks with the
knowledge of insufficient funds constituted a “false or fraudulent pretenses, [or]
representations,”30 as “there was no evidence or allegation that [the defendant]
made any [other] representation or pretense.”31 Following Williams, this court
concluded that depositing of bad checks–even a series of bad checks–is not a
representation: “If the deposit of a check is not an assertion about the balance
in the account, then it seems to us that known insufficiency in the account when
the check is deposited cannot of itself constitute the deposit a false or fraudulent
pretense or representation.”32 Accordingly, this court reversed the defendant’s
conviction.

Had the scheme in the present case simply involved the presentation of
checks for payment drawn on accounts with insufficient funds, the holdings in
Williams and Medeles might have purchase. The scheme, however, was not so
simple; rather, it was built on a series of misrepresentations before a bad check
was ever presented for payment.

28
Even though Congress amended § 1344 in 1989, this court has previously noted that cases
considering former § 1344 are “equally relevant to the statute as it exists today.” United States v.
Briggs, 939 F.2d 222, 225 n. 6 (5th Cir. 1991), cert. denied, 506 U.S. 1067 (1993).

29
Medeles, 916 F.2d at 196-97.

30
Id. at 198.

31
Id. at 197.

32
Id. at 200; see also Briggs, 939 F.2d at 226 (concluding that the “bare act of instructing a bank
to transfer funds is not a factual representation; thus, it cannot be a misrepresentation, a false
representation, or any kind of representation”).

12
 No. 05-51395

For example, Douglas Jones testified that Morganfield directed him to
obtain d/b/a certificates for nonexistent business entities, or shell corporations,
because the banks would not open checking accounts without the certificates.
Jones also testified that Morganfield provided him with identification to open
bank accounts. In opening the checking accounts, at least two separate false or
fraudulent representations were made to the banks: that the businesses existed,
which they did not, and that the person opening the account was someone else.33
Bank representatives testified that a d/b/a certificate was necessary to open a
checking account, as was valid personal identification. The misrepresentations
by Morganfield and his co-conspirators, then, directly influenced the banks’
decisions to open checking accounts in the names of the shell companies.34

As this court and others have recognized, Williams and its progeny do not
immunize every scheme that involves the use of insufficient-funds checks or an
equivalent from federal prosecution.35 A reasonable juror could conclude that
Morganfield aided and abetted in the making of “false or fraudulent pretenses,
representations, or promises” separate from the simple presentation of bad
checks.

33
Additionally, in preparing the checks, Morganfield and his co-conspirators made the checks
payable to fake payees whose names appeared on bought or stolen identifications; typed the checks with
the intent of making them look more legitimate; and, as Jones testified, he and Morganfield went to a
printing company and had a signature stamp made in the name of “David Cobb” for the purpose of
signing checks.

34
See United States v. Campbell, 64 F.3d 967, 975 (5th Cir. 1995) (“Under § 1344(2), the
defendant must make a material misrepresentation to the bank, which is defined as one having ‘the
natural tendency to influence, or was capable of influencing, the decision of the lending institution.”
(quoting United States v. Heath, 970 F.2d 1397, 1403 (5th Cir. 1992))).

35
See, e.g., United States v. Hord, 6 F.3d 276, 285-86 (5th Cir. 1993), cert. denied, 511 U.S. 1036
(1994) (citing cases and explaining that “we are not alone among the federal circuits in applying
Williams narrowly, to ‘the simple presentation of a check drawn on an account with insufficient funds,
without other evidence that the defendant made some false representation to the bank’” (quoting United
States v. Falcone, 934 F.2d 1528, 1540 (11th Cir. 1991))); United States v. Bonnett, 877 F.2d 1450, 1455
(10th Cir. 1989) (“Williams clearly distinguishes between the use of a series of worthless checks to prove
‘schemes to defraud’ and the use of one of more worthless checks as ‘false statements.’”).

13
 No. 05-51395

B.

Morganfield next argues that the government failed to prove that he had
specific intent to defraud a financial institution. In particular, Morganfield
asserts that the banks “were nothing more than incidental players in the check
funds scheme”;36 rather, the true targets of the scheme were the grocery and
convenience stores where the checks were cashed. And, according to
Morganfield, there was no evidence proving that the use of nonexistent business
names and false identifications to open checking accounts was done with the
intent to defraud the banks, and that the accounts here were, at least
temporarily, active accounts that could be drawn on.

This court previously explained that, under § 1344, “[t]he requisite intent
to defraud is established if the defendant acted knowingly and with the specific
intent to deceive, ordinarily for the purpose of causing some financial loss to
another or bringing about some financial gain to himself.”37

Morganfield relies solely upon the Fourth Circuit’s decision in United
States v. Orr.38 In Orr, Eugene Elkins used false identification to open a
checking account under the name “Eugene Rogers.”39 Elkins and Orr
subsequently negotiated checks for merchandise in excess of the value of the
checking account.40 Orr was convicted of bank fraud under § 1344.41 The Fourth
Circuit reversed the conviction:

36
Appellant-Morganfield’s Brief at 33.

37
United States v. McCauley, 253 F.3d 815, 819 (5th Cir. 2001) (quoting United States v. Doke,
171 F.3d 240, 243 (5th Cir. 1999)).

38
932 F.2d 330 (4th Cir. 1991).

39
Id. at 331.

40
Id.

41
Id.

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 No. 05-51395

No evidence has been produced to show that the use of the name
“Rogers” as opposed to “Elkins” was done with intent to defraud the
bank. The initial deposit was $1,000 in cash. The account was,
albeit for a short time, an active account, traded upon in proper
fashion until its funds ran out. Whether the account was in the
name of Rogers, or Elkins, was not of significance to the giving of
checks payable to certain payees and the return of such checks for
reasons of insufficient funds.42
In sum, the court reasoned that Congress had not intended to create a national
bad check law under § 1344.

The Fourth Circuit has, however, interpreted Orr narrowly. In United
States v. Brandon43–where the defendant stole blank checks, forged the
signatures, and used the checks to purchase items from merchants–the court
explained that “[w]e view Orr as establishing merely that a routine bad check
case does not come within the scope of § 1344 where the defendant passes to a
merchant a check from an account for which the defendant is an authorized
signatory and the drawee bank refuses to honor the check for lack of sufficient
funds.”44

The Fourth Circuit, along with other circuits, have rejected the argument
that there can be no intent to defraud a bank when the principle victim or target
is a third party merchant and not a bank.45 We agree that the bank does not

42
Id. at 332.

43
298 F.3d 307 (4th Cir. 2002).

44
Id. at 313; see also United States v. Cavin, 39 F.3d 1299, 1308 (5th Cir. 1994) (“[T]he evidence
reflects that [the defendant] did nothing more than write a bad check to accommodate a prospective
client. That does not constitute bank fraud.”).

45
See, e.g., Brandon, 298 F.3d at 313 (“We conclude that the fact that the indictment does not
charge that Brandon presented the forged checks directly to the banks does not make the indictment
infirm. . . . An inherent part of this scheme was that the forged checks would eventually be presented
to the drawee banks, exposing the banks to a risk of loss.”); United States v. Crisci, 273 F.3d 235, 240
(2d Cir. 2001) (“A rational jury could find that [the defendant] intended to harm a bank when he cashed
seventeen fraudulent checks with forged endorsements, even though defendant physically presented
the forged checks to [a merchant] and not a bank. The jury could infer that inherent in [the

15
 No. 05-51395

have to be the central target of the alleged scheme for there to be bank fraud
liability.46 Rather, in such cases where “the drawer has simply overdrawn the
account, the government must present ‘other facts evincing an intent to victimize
the financial institution’ to sustain a bank fraud charge under § 1344.”47

The scheme here was, again, not a simple insufficient check funds scheme.
Morganfield and his co-conspirators obtained d/b/a certificates in the names of
nonexistent business entities precisely because they knew that the banks would
not open checking accounts without the certificates. They also used false
personal identifications in opening the checking accounts so as to not be
personally connected to the checking accounts. Moreover, once they had the
checks, they signed the checks in the names of nonexistent persons, often using
a signature stamp to make the checks look more legitimate; they knew that the
checking accounts had insufficient funds to cover the checks, and they did not
deposit funds in the account to cover the difference; they bought and stole
identifications and made the checks payable to the persons listed on those
identifications. From this course of conduct the jury could rationally infer the
requisite intent to defraud.48

defendant’s] transaction with [the merchant] was the risk that the forged checks would be presented
to a bank for payment.”); United States v. Barrett, 178 F.3d 643, 648 (2d Cir. 1999) (“The bank need
not be the immediate victim of the fraudulent scheme.”).

46
See United States v. Barakett, 994 F.2d 1107, 1111 (5th Cir. 1993), cert. denied, 510 U.S. 1049
(1994) (“While section 1344(1) prohibits only crimes directed at financial institutions, we have not held
that the statute punishes only schemes directed solely at institutional victims.”).

47
Brandon, 298 F.3d at 313 (quoting United States v. Laljie, 184 F.3d 180, 190 (2d Cir. 1999)).

48
See Brandon, 298 F.3d at 313 (“However, the presentation of a forged or altered instrument
is evidence, in and of itself, of an intent to defraud a bank.”); United States v. Moede, 48 F.3d 238, 241-
42 (7th Cir. 1995) (“Circumstantial evidence to defraud includes such conduct as knowingly depositing
a forged check, knowingly depositing an NSF check, knowingly writing checks on an inadequate
account balance, violating bank rules, and providing falsified information on loan documents.”); United
States v. Saks, 964 F.2d 1514 (5th Cir. 1992), reh’g denied, 974 F.2d 1337 (5th Cir. 1992) (concluding
there was an intent to defraud where the defendants “falsely represent[ed] on loan documents who the
true recipients of the [] loans were and for what purposes the funds would be used”); United States v.
Church, 888 F.2d 20, 23-24 (5th Cir. 1989)(sustaining attempted bank fraud conviction based on course

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C.

Finally, Morganfield argues that the government failed to prove that any
bank was at risk of civil liability or financial loss. Morganfield argues that, not
only was there no evidence of risk of loss or civil liability, but that the
“government’s witness on risk of loss, Brenda King, indicated that the banks are
not at a risk of financial loss, or civil liability, when checks with insufficient
funds are presented to the bank by the businesses which cashed them.”49

Bank fraud under § 1344 requires that the government “demonstrate that
the defendants placed the financial institution at risk of civil liability or financial
loss . . . . It is not necessary, however, for the government to prove that banks
actually suffered civil liability or financial loss in order to obtain bank fraud
convictions.”50 Additionally, “the government need not prove a substantial
likelihood of risk of loss to support the convictions.”51

Morganfield’s argument relies upon the assumption that a bank will
simply not honor a check where the checking account has insufficient funds, and
therefore faces no risk of loss. However, testimony at trial contradicts this line
of argument. The following exchange occurred during Morganfield’s cross-
examination of Brenda King:

Q: . . . You talked about civil liability in a case, all right? If a person
opens an account, puts money in the account and writes a check on
the account, the bank has to honor the check, isn’t that true? If
there’s money in the account?

of conduct beyond simply “furnishing insufficient funds drafts to the Bank”).

49
Appellant-Morganfield’s Brief at 35.

50
McCauley, 253 F.3d at 820.

51
Id. Indeed, in United States v. Church, this court upheld an attempted bank fraud conviction
where the defendant’s “plan was no more likely to succeed than a request that the Bank exchange
monopoly money for its face value in U.S. currency.” 888 F.2d at 24.

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A: If the funds are available, yes, sir.
Q: All right. If there is no money in the account, then it’s the option
of the bank to either cover the check, depending on the customer,
right? Charge him a fee for honoring that check, right? And they
assume that the customer will put money back into the account,
isn’t that true, to cover that check?
A: Correct.
Q: All right. Or they do what’s called an NSF, non-sufficient fund,
and the check is returned. The bank is not out any money, isn’t that
true?
A: Other than possible fees, yes.
Q: Well, possible fees? Well, the bank is really not out any money
that was drawn against the bank on the check, correct?
A: That’s correct.

King’s testimony thus describes two separate scenarios when the bank receives
a check drawn on an account with insufficient funds. The bank may pay the
check despite the insufficient funds on the assumption that the customer will
later make a deposit to cover the difference. Or, the bank may refuse to pay the
check, in which case it faces no loss aside from NSF fees.

King’s testimony undercuts the assumption Morganfield makes that a
bank will simply not pay a check when the account has insufficient funds. A
rational jury could infer that an inherent consequence of the check cashing
scheme was that the bad checks would be presented to the bank by the
merchants who accepted the checks. And, according to King’s testimony, the

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bank might honor the check even when an account had insufficient funds.52
That possibility creates a sufficient risk of loss to the financial institution.53

V.

Morganfield asserts that statements made by the prosecutor during
rebuttal argument amounted to prosecutorial misconduct and require that his
convictions be reversed. We disagree.

This court applies a two-step analysis when reviewing claims of
prosecutorial misconduct.54 The court must first decide whether the prosecutor
made an improper remark.55 The court evaluates the remark in light of the

52
Morganfield argues that United States v. Odiodio, 244 F.3d 398 (5th Cir. 2001), cert. denied,
536 U.S. 914 (2002), where the defendants deposited a stolen check in a brokerage account and then
transferred the funds to two different banks in Texas, forecloses a finding that the banks here faced any
risk of loss. Morganfield reads Odiodio as standing for the proposition that the entity that initially
deals with a forged or altered instrument bears the full risk of any loss under Texas law. First, Odiodio
is not so categorical: “Where, as here, the FDIC insured banks never handled the fraudulent
instrument, they had no risk of loss. The banks parted with no money of their own, and are not liable
to replace any money lost [by the brokerage house].” Id. at 402 (emphasis added). King’s testimony,
therefore, indicates that this case is factually different. Second, Odiodio’s description of Texas law is
not exhaustive. It does not, for instance, consider protections for holders in due course, see Halliburton
Energy Services, Inc. v. Fleet National Bank, 334 F. Supp. 2d 930, 937 n. 16 (S.D. Tex. 2004) (noting
this), the final payment rule, see Texas Stadium Corp. v. Savings of America, 933 S.W.2d 616, 619 (Tex.
App.–Dallas 1996) (discussing final payment rule), or the circumstances when presenting a forged
instrument may not violate presentment warranties, see Aetna Life & Casualty Co. V. Hampton State
Bank, 497 S.W.2d 80 (Tex. Civ. App.–Dallas 1973) (discussing presentment warranties and forgeries).

53
See Church, 888 F.2d at 24 (upholding a conviction for attempted bank fraud where the
defendant attempted to execute bank drafts and “there was no way that the Bank would simply hand
over its money, inasmuch as [the defendant] had neither an account nor funds on deposit from which
he claimed to draw”); see also United States v. Antonelli, No. 98-3434, 2000 WL 1205993, at *2 (7th Cir.
Aug. 21, 2000) (unpublished opinion) (“[K]nowingly cashing bad checks can demonstrate an intent to
defraud a bank because this behavior exposes the bank to a significant risk of financial loss.”); United
States v. Ahmed, No. 97-1312, 1998 WL 29861 (2d Cir. Jan. 27, 1998) (unpublished opinion) (finding
a sufficient risk of loss under § 1344(1) conviction where there was testimony “that it was possible that
the checks would have been paid even if improperly endorsed or written on a closed account”).

54
United States v. Insaulgarat, 378 F.3d 456, 461 (5th Cir. 2004), cert. denied, 543 U.S. 1013
(2004).

55
Id.

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context in which it is made.56 If an improper remark was in fact made, the court
must determine whether the remark “prejudiced the defendant’s substantive
rights.”57 In making that determination, the court considers “(1) the magnitude
of the statement’s prejudice, (2) the effect of any cautionary instructions given,
and (3) the strength of the evidence of the defendant’s guilt.”58 “The
determinative question is whether the prosecutor’s remark casts serious doubt
on the correctness of the jury’s verdict.”59

The district court allowed Morganfield personally to address the jury
during closing arguments. During the course of his remarks, Morganfield held
up a photograph of a child and stated that “my life is in your hands and stuff, I
just wanted to let you know if you have children, that’s my daughter. She ain’t
but five years old. She’s missing her daddy. And this is a plea from my heart to
get you in tune . . . .” Later in his remarks Morganfield added, “Well, that’s what
I’d like for today to happen, that the light shine in to each and every one of your
hearts and realize that this might be your five-year-old kid that you need to get
home to.” Finally, Morganfield said, “Anyway, my child is waiting on me. God
bless you. I hope you make the right decision.”

The prosecution did not object during Morganfield’s remarks, but
requested a bench conference after Morganfield’s attorney finished his closing
remarks. During the bench conference, the prosecutor alleged that
Morganfield’s comments regarding his child were “factually untrue or
inconsistent with the prior statement that he had made.” The prosecutor based

56
Id.

57
Id. (quoting United States v. Munoz, 150 F.3d 104, 415 (5th Cir. 1998)).

58
United States v. Tomblin, 46 F.3d 1369, 1389 (5th Cir. 1995).

59
Insaulgarat, 378 F.3d at 461 (quoting United States v. Iredia, 866 F.2d 114, 117 (5th Cir.
1989)).

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his claim on a pretrial report, which had not been introduced into evidence, that
stated that “defendant noted he has never been married nor has he fathered
children to his knowledge.” The prosecutor requested the opportunity to correct
the misstatement. Morganfield’s counsel objected, but the judge overruled the
objection. Morganfield’s counsel also objected to the court’s offer to give a
curative instruction.

During rebuttal, the prosecutor stated, “And when you consider him,
consider his closing summation to you, because I will suggest to you, ladies and
gentlemen, that the photographs of the children that he held before you were
props.” Morganfield and his counsel both objected, but the court overruled the
objections. The prosecutor then began to read from the pretrial report.
Morganfield’s counsel again objected, but the court overruled the objection
explaining that Morganfield raised the issue in his remarks. The judge advised
the jury that “neither document is in evidence, the photograph is not in evidence,
no report is in evidence. But, more importantly, remember what I told you that
closing arguments by the lawyers or those who make argument is not evidence.”
The prosecutor then read the passage from the report.

Assuming arguendo that the prosecutor’s remarks were improper, it casts
no doubt on the verdict. Beginning with the first factor, the magnitude of the
statement’s prejudice, the factual dispute over whether or not Morganfield had
children is ancillary to the issues in the case; his status as a father does not
relate to any operative facts, nor does it relate to any of the elements of the
charged crime. Any prejudicial effect the prosecutor’s comment had related to
Morganfield’s credibility. While this factor is potentially troubling, especially
because Morganfield elected to testify, the strength of the evidence of
Morganfield’s guilt–the third factor–is substantial. The conspiracy involved
numerous individuals, many of whom testified as to Morganfield’s central role

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in the conspiracy. And, there was extensive documentary evidence of the check
cashing scheme.

Finally, the district court advised the jury before closing arguments began
that closing arguments were not evidence, and the judge specifically reiterated
the advisement in reference to Morganfield’s statements regarding the purported
child and the prosecutor’s rebuttal argument.60 “We presume that the jury
follows the instructions of the trial court unless there is an ‘overwhelming
probability that the jury will be unable to follow the instruction and there is a
strong probability that the effect is devastating.’”61

We are also mindful that “deference is due to the district court’s
determination of whether [the challenged] arguments are prejudicial and
inflammatory.”62 Morganfield entered multiple objections to the prosecutor’s
remarks, both during the bench conference and during the prosecutor’s actual
rebuttal. The trial court overruled each objection.

Considering the strength of the evidence of Morganfield’s guilt and the
district judge’s instructions, the prosecutor’s comments, even if improper, do not
cast substantial doubt on the jury’s verdict.63

VI.

60
See, e.g., United States v. Lankford, 196 F.3d 563, 574 (5th Cir. 1999), cert. denied, 529 U.S.
1119 (2000) (“[T]he cautionary instructions given to the jury were sufficient to negate any prejudicial
effects the statements may have had.”); United States v. Shackelford, 709 F.2d 911, 913-14 (5th Cir.
1983), cert. denied, 464 U.S. 899 (1983) (noting that “prompt and strong instructions to the jury” can
avoid reversible error).

61
Tomblin, 46 F.3d at 1390 (quoting United States v. Barksdale-Contreras, 972 F.2d 111, 116
(5th Cir. 1992)).

62
United States v. Williams, 822 F.2d 512, 518 (5th Cir. 1987), reh’g denied, 808 F.2d 772 (5th
Cir. 1987).

63
See id. (concluding that the weight of the evidence and trial judge’s instructions “dissipated
the potential prejudice of the prosecutor’s statements”).

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Accordingly, we AFFIRM in part, REVERSE in part, VACATE
Morganfield’s sentence, and REMAND for resentencing.

23