United States v. Leal

              IN THE UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT


                         _____________________

                              No. 92-5673
                         _____________________



UNITED STATES OF AMERICA,

                                                   Plaintiff-Appellee,

                                versus

ALVARO R. LEAL and PEDRO SANCHEZ VARGAS,

                                                 Defendants-Appellants.

_________________________________________________________________

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

                           (August 16, 1994)

Before GARWOOD, JOLLY, and SMITH, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

     Leal and Vargas are minority businessmen who made a business

loan with the Small Business Administration ("SBA"); they appeal

their convictions for crimes alleged to have been committed in

respect to their loan.        In this connection, Leal and Vargas

borrowed over $14 million from the SBA for their oil refinery

business under a minority assistance program.           To obtain the

minority assistance, Leal stated that he was not using consultants

when, in fact, he was.    Under the loan agreement, the SBA advanced

money each month to finance the refinery's purchase of crude oil to

be refined by them.       The amount of each advance was based on
invoices the SBA received from them. The invoices were supposed to

reflect the amount of crude ordered and received by them for each

month.    In fact, based on incorrect invoices furnished by Leal and

Vargas, the SBA was advancing funds in excess of the agreed amount.

As Leal Petroleum sold the refined product--jet fuel--it was

obligated to forward the proceeds to the SBA.                  When cash flow

became tight, however, Leal and Vargas converted SBA funds by

diverting $1.4 million in proceeds, and they were charged with

paying part of these funds to themselves, individually, and for

their personal use.       At trial, Leal and Vargas were convicted of

making false statements and converting SBA funds to their own use.

On appeal, we have reviewed the record for sufficiency of the

evidence.       We affirm the convictions of Leal, affirm in part and

reverse    in    part   the   convictions     of   Vargas,    and   remand   for

resentencing of Vargas.

                                        I

      The Small Business Administration ("SBA") operates a program,

known as the "8(A) program," which is designed to assist socially

and   economically      disadvantaged       entrepreneurs    in   getting    into

mainstream American business by giving them the opportunity to sell

goods and services to the federal government.                 In order to be

involved in the 8(A) program, participants must be socially and

economically       disadvantaged;    own       fifty-one     percent   of    the

participating business; manage the business on a daily basis;

demonstrate a potential for success; and have a product or service




                                     -2-
that is purchased by the federal government.         If accepted into the

8(A) program, participants get the benefit of "noncompetitive

procurements from the federal government."

     Alvaro   Leal    and   Pedro   Vargas,   as   stockholders   of   Leal

Petroleum Company ("LPC"), participated in the SBA's 8(A) program,

contracting to supply jet aircraft fuel to the Defense Fuel Supply

Center ("DFSC").1     As part of this arrangement, the SBA and Leal

agreed to an "advance payment"2 contract, in which the SBA agreed

to provide fourteen million dollars in financing to assist in LPC's

performance under the DFSC jet fuel contract.3        As required by SBA

regulations, the total amount required to fund the purchase of

crude oil for the government's portion of the contract was set

aside.

     The advance payments were made through an account held jointly

by the SBA and LPC.    When LPC wanted to use the funds for crude oil

purchases, LPC would obtain preliminary invoices from its crude oil


     1
      In March 1986, the DFSC awarded a minority set-aside
contract to produce 42 million barrels of jet fuel to the SBA.
In turn, the SBA subcontracted that contract to LPC on March 27,
1987.
     2
      Advance payments are those made by the SBA to LPC prior to
LPC's purchase of crude oil for refinement.
     3
      Under the contract, the SBA would fund sixty-eight percent
of LPC's crude purchases. Sixty-eight percent corresponds to the
amount of each barrel of crude oil that would be converted into
jet fuel and then delivered to the DFSC. The remainder of the
crude produced other by-products that LPC sold in the private
market. The SBA would not fund LPC's operations that fell
outside the scope of the DFSC contract.




                                    -3-
supplier--Tesoro Crude Oil Corporation ("Tesoro")--for the amount

of crude to be shipped in the next month.          Based on the preliminary

invoices, LPC would prepare a "certification letter" for the SBA,

stating the amount needed for the next month's crude oil purchases.

When the SBA had approved the advance payment for the percentage

amount that the SBA would finance, the SBA and Leal would both sign

a check to transfer money from the joint bank account to a special

lock-box account controlled by Tesoro.4              In this way, Tesoro

insured that it would be paid for the next month's crude delivery.

The crude oil purchase being then complete, LPC was to receive the

crude and then refine it into jet fuel for delivery to the DFSC.

All payments received from the DFSC for jet fuel deliveries were

deposited back in the joint account,5 and LPC agreed to "liquidate"

all such proceeds into a cashiers check for payment to the SBA.

     After this advance payment system was in operation, however,

LPC began experiencing cash shortages because of dropping oil

prices.     When confronted with this problem by LPC's comptroller,

Leal stated that he had a "method" of diverting money from crude

oil purchases       to   fund   operations.   At    trial,   the   government

contended    that    the    "method"    consisted    of   LPC's    submitting


     4
      As previously noted, the SBA was to pay on sixty-eight
percent of each barrel purchased in order that the SBA would not
fund LPC's nongovernment business.
     5
      The SBA filed a Form UCC-1 to perfect its security interest
in the money in the joint account and the proceeds received into
the account from the DFSC.




                                       -4-
certification letters to the SBA--based on preliminary invoices to

LPC from Tesoro--and then LPC's refusing to accept delivery of some

of the crude oil when Tesoro, in accord with the preliminary

invoice, shipped it to LPC.         Thus, the SBA, funding monies to LPC

on the basis of the invoices, would have funded more fuel oil than

was actually accepted and paid for by LPC.            In the next month, LPC

was then able to use these excess SBA funds for operations and

crude purchases outside of the DFSC contract, in violation of the

advance payment contract.

     Cash flow degenerated further in March 1987 after the SBA

stated that it would not renew the advance payment loan for another

year.     At that point, the DFSC paid approximately $1.4 million to

LPC for previous delivery of jet fuel, which sum was deposited into

the joint account.          Under the contract, Leal was supposed to

purchase with these funds a cashier's check payable to the SBA.

Instead, Leal deposited the $1.4 million into LPC's operating

account. Most of this $1.4 million, in the absence of the previous

advance payment arrangement with the SBA,            went to pay for the next

month's crude. Leal and Vargas, however, took part of this money--

$300,000     and   $55,000,    respectively--for       their   personal    use.

Because LPC had used the $1.4 million for operating expenses, it

could not make a scheduled payment to the SBA.           When LPC defaulted,

the SBA investigated and criminal charges followed.

     In     addition   to     the   charges   that    resulted   from     LPC's

misappropriation of SBA funds, Leal was also charged with making




                                      -5-
false statements to the government about LPC's use of consultants

and about a contingent liability for future royalties to be paid

the undisclosed consultants.       The facts that are relevant to those

charges are as follows:      As a condition to the advance payment

contract, LPC agreed not to employ consultants while advance

payments   were     outstanding    and     to   disclose   any    contingent

liabilities.      Leal, however, had previously used consultants to

obtain the DFSC contract and had agreed to pay them a fixed fee and

royalty payments for every barrel of jet fuel.               Leal did not

disclose a contingent liability for future royalties to be paid the

undisclosed consultants. In fact, Leal set up a shell corporation,

San Antonio Fuels ("SAF Oil") in order to pay a consultant--through

SAF   Oil--without    alerting    the    auditors   that   LPC    was   paying

consultants.

                                     II

      On April 15, 1992, the grand jury indicted Leal and Vargas.

Leal and Vargas were charged with conspiring to defraud the SBA in

violation of 18 U.S.C. § 371 and conversion of SBA funds for

personal use in violation of 15 U.S.C. § 645(c).             Additionally,

Leal and Vargas were charged with several counts of making false

statements to the government in violation of 18 U.S.C. § 371.

      The jury rendered the following verdicts:

COUNT                  DESCRIPTION                             VERDICT
                                                            Leal    Vargas

  1        § 371-Conspiracy to Defraud the SBA                   Not Guilty




                                     -6-
2   § 645(c)-Conversion of SBA Funds   Guilty




                         -7-
COUNT                  DESCRIPTION                           VERDICT
                                                          Leal    Vargas

  3       § 1001-False Statement--9/5/86                    Not Guilty
          Letter re: $2.7 million in costs

  4       § 1001-False Statement--9/24/86                   Not Guilty
          Letter re: $1.1 million in costs

  5       § 1001-False Statement--10/16/86                    Guilty
          Letter re: $1.4 million in costs

  6       § 1001-False Statement--12/5/86                     Guilty
          Letter re: $2.9 million in costs

  7       § 1001-False Statement--1/12/87                         Guilty
               Letter re: $2.3 million in costs

  8       § 1001-False Statement--7/30/86                Guilty        N/A
          Letter re: consultants' employment

  9       § 1001-False Statement--7/31/86                Guilty        N/A
          Contract re: contingent liability

      The district court sentenced Leal to a total of seven years

imprisonment, five years of probation and over $4 million in

restitution.    The district court sentenced Vargas to four years

imprisonment,   five   years   of   probation   and   approximately   $4.9

million in restitution.

                                     III

      On appeal, Leal and Vargas argue (1) that the evidence was

insufficient to support each of their convictions for conversion of

SBA funds to personal use; (2) that the evidence was insufficient

to support each of their convictions for making false statements;

and (3) that the district court erred in limiting each defense

attorney to 22 minutes for closing argument.            Finding that the

evidence was sufficient to support all of the jury's convictions




                                     -8-
against Leal, we affirm Leal's convictions and sentence.      Further,

we affirm the district court's conviction of Vargas for conversion

of funds, but we find insufficient evidence to support the false

statement convictions of Vargas.       We therefore reverse and vacate

the convictions of Vargas on counts five, six, and seven, and we

remand this case to the district court for resentencing.      Finally,

we hold that the district court committed no error with respect to

closing argument.

                                   A

     The appellant's first challenge to the sufficiency of the

evidence concerns their convictions under 15 U.S.C. § 645 for

conversion of SBA funds to personal use.       Section 645(c) imposes

criminal sanctions on "[w]hoever, with intent to defraud, knowingly

conceals, removes, disposes of, or converts to his own use or to

that of another, any property mortgaged or pledged to, or held by,

the [SBA] . . . ."   15 U.S.C. § 645.      In reviewing challenges to

sufficiency of the evidence, this court views the evidence in the

light most favorable to the jury verdict and affirms if a rational

trier of fact could have found that the government proved all

essential elements of the crime beyond a reasonable doubt.      United

States v. Ruiz, 987 F.2d 243, 249 (5th Cir.), cert. denied, 114

S.Ct. 163; 126 L.Ed.2d 123 (1993).      All credibility determinations

and reasonable inferences are to be resolved in favor of the jury's

verdict.   See id.




                               -9-
     By the terms of the agreement between the SBA and LPC, all

money that LPC received from DFSC for jet fuel sales was deposited

directly into the joint account held by the SBA and LPC.   Leal was

then required by the terms of the agreement--terms about which

there is no dispute or misunderstanding alleged--to use one hundred

percent of these sales proceeds to repay the SBA loan.   The method

established to accomplish this repayment required Leal to purchase

a cashier's check and thereby to deliver the proceeds to the SBA.

On the occasion in question, however, Leal instead withdrew $1.4

million from the joint account and deposited these monies into

LPC's operating account.    On the same day that the money was

deposited into the operating account, Leal withdrew $300,000 and

Vargas withdrew $55,000 for their personal use. These are the acts

that formed the basis for their conviction under 15 U.S.C. § 645

for conversion of SBA funds to personal use.

                               (1)

     In arguing whether these acts amounted to conversion, both

parties have focused their discussion on whether the SBA had a

properly perfected security interest and/or a valid lien in the jet

fuel proceeds that were deposited in the joint account.    We need

not determine, however, whether the SBA had a perfected security

interest in these monies in order to uphold a conviction under 15

U.S.C. § 645 as it relates in this case to Leal and Vargas.

Section 645 requires only that the property be "pledged" to the

SBA, and there is no indication that "pledged" must be given a




                               -10-
meaning restricted to its most narrow and legalistic definition on

the basis of state law.

     Although we are not faced with deciding the absolute minimum

criterion of what formalities are required to constitute pledged

property under 15 U.S.C. 645, we hold in this case that, as between

the defendants and the SBA, jet fuel sales proceeds were "pledged"

to the SBA sufficient to satisfy the crime Congress intended to

reach under this statute. Pursuant to the loan agreement, Leal and

Vargas agreed to segregate these funds by placing them into a

designated account. They agreed that SBA had an ownership claim to

one hundred percent of these proceeds.   And they agreed that the

purpose of these funds was solely to repay their indebtedness to

the SBA.   Clearly these funds were pledged to the SBA by the

unequivocal and binding promises in the loan agreement.

     Furthermore, Leal and Vargas knew that this money was pledged

to the SBA, that they had no legal or other claim to these funds,

and, to the extent that they exercised possessory control over

these funds, they knew that the loan agreement permitted only one

disposition of the funds: deliver them to the SBA.   In short, these

funds were contractually pledged to the SBA in a manner sufficient

to support a conviction under 15 U.S.C. § 645.     See United States

v. Bellman, 741 F.2d 1116, 1118 (8th Cir. 1984).

                               (2)

     Second, Vargas argues that because he was acquitted on the

conspiracy charge, there is not enough evidence to show that he




                               -11-
participated with Leal in converting the SBA funds.                     On the

contrary, the evidence shows that Vargas was a CPA, owned a

substantial    minority   interest      in   LPC,   and    was    substantially

involved in the day-to-day operations of the refinery.               Vargas had

expertise in the financial matters of LPC.           Further, Vargas argued

vehemently with Leal in an effort to keep Leal from depositing the

pledged funds into LPC's operating account, which showed that both

men knew the funds had to be paid over to the SBA.                Yet, when the

sales proceeds were deposited into LPC's operating account, Vargas

did not quit his job or otherwise disassociate himself from the

act.    Instead, he withdrew $55,000 from the operating account for

his personal use--on the very day that the pledged funds were

deposited into the operating account.

                                     (3)

       Vargas also argues that he did not convert SBA funds for

personal use, but rather that he merely took a $55,000 loan from

the    refinery's   operating   cash.        He   argues   that    because   the

operating account had more than $138,000 in funds from sources

other than the SBA--Leal Petroleum's private market business--

Vargas's $55,000 loan simply did not involve the SBA's funds.

       We conclude, however, that the evidence was sufficient for the

jury to infer that Vargas did convert the SBA's funds for personal

use.     Vargas withdrew the $55,000 immediately after the $1.4

million of SBA funds were deposited into LPC's operating account.

The jury could easily infer that Vargas's withdrawal came from the




                                   -12-
$1.4 million of SBA funds, which comprised approximately 96.5% of

the operating account balance, instead of the $138,033 of non-SBA

funds, which comprised approximately 3.5% of the operating account

balance.   With the company strapped for cash and with notice that

the advance payment loan would not be renewed, the jury could

easily infer that Leal and Vargas were trying to line their pockets

with funds they knew were pledged to the SBA before LPC became

insolvent.

                                (4)

     In sum, with respect to the conversion count, the evidence is

clearly sufficient to support the conclusion that jet fuel sales

proceeds had been pledged, under the loan agreement, to the SBA.

The evidence further supports the jury's finding that when Leal

deposited such proceeds in LPC's operating account, and that when

Leal and Vargas withdrew part of that money from LPC's operating

account, they knowingly converted SBA money to their "own use or to

that of another."   15 U.S.C. § 645.   Thus, we affirm the section

645 convictions of Leal and Vargas.




                               -13-
                                 B

      The appellants second challenge to the sufficiency of the

evidence concerns their convictions under 18 U.S.C. § 1001 for

making false statements.   Section 1001 imposes criminal penalties

on:

      Whoever, in any matter within the jurisdiction of any
      department or agency of the United States knowingly and
      willfully falsifies, conceals or covers up by any trick,
      scheme, or device a material fact, or makes any false,
      fictitious or fraudulent statements or representations,
      or makes or uses any false writing or document knowing
      the same to contain any false, fictitious or fraudulent
      statement or entry . . . .

18 U.S.C. § 1001 (emphasis added).      The elements of a § 1001

offense are: (1) a statement, (2) falsity, (3) materiality, (4)

specific intent, and (5) agency jurisdiction.      United States v.

Baker, 626 F.2d 512, 514 (5th Cir. 1980).    Again, with respect to

sufficiency of the evidence challenges, this court views the

evidence in the light most favorable to the jury verdict and

affirms if a rational trier of fact could have found that the

government proved all essential elements of the crime beyond a

reasonable doubt.   Ruiz, 987 F.2d at 249.

                                (1)

      First, Leal argues that the evidence was insufficient to prove

that the SBA was an "agency of the United States."   The evidence on

this point, however, was not insufficient.     Alexander, the SBA's

assistant regional administrator, testified as follows:

      Question: "SBA is a government agency, right?"




                                -14-
     Alexander: "That is correct."

     Second, Leal argues that the evidence did not establish that

he made any "false statements."         With respect to the alleged false

statements     in   counts   five,    six,    and   seven--the   certification

letters based on the preliminary invoices and each signed by

Leal--Leal asserts that he did not knowingly make false statements

because his applications for advance payments were based on good

faith estimates at the time they were made.             See United States v.

Race,    632   F.2d   1114   (4th    Cir.     1980).    The   amount   of   each

certification letter was computed by calculating the amount of

crude oil necessary to refine enough jet fuel to fill the DFSC's

order for the next month.           Thus, he argues that the estimates he

furnished to the SBA were reasonable when made.                  Further, Leal

points out that when LPC actually processed less crude oil than

ordered, it adjusted its next month's order of crude.

     Viewing the evidence in the light most favorable to the jury

verdict, however, we find that a rational trier of fact could have

found beyond a reasonable doubt that Leal was guilty under counts

five through seven, which relate to the certification letters.

Leal signed and submitted numerous monthly "preliminary invoices"

that listed higher amounts of crude than the refinery actually

received--LPC refused crude deliveries without informing the SBA

over 100 times in a three- to six-month period.6                 Further, Leal

     6
      Although the jury acquitted Leal and Vargas of the first
two false statement-certification letter charges, it apparently




                                       -15-
told Perrin, a consultant and LPC's comptroller, not to worry about

a shortage of operating cash because he had a "method" of diverting

money for crude oil to cover operating costs.           This "method" was

the intentional overinflation of the preliminary invoices and the

intentional failure to make adjustments or to inform the SBA when

the represented amount of crude was not purchased.             This inflation

resulted in over $3 million in excess payments from the SBA to LPC,

which   were   then   used   for   purposes   not   included    in   the   loan

agreement.     The jury verdicts of Leal's guilt of these false

statement counts are supported by the evidence.

                                     (2)

     With respect to Vargas, however, we find that the evidence was

not sufficient to support his convictions under § 1001.                Counts

five, six, and seven of the indictment, setting out specific dates,

charged that

     On or about October 16, 1986, [December 5, 1986, and
     January 12, 1987] . . . Pedro Sanchez Vargas, knowingly
     and willfully made or caused to be made . . . false and
     fraudulent statement[s] and representation[s] as to a
     material fact . . . in that [Vargas] submitted and caused
     to be submitted to the S.B.A. [three specific letters]
     certifying that [certain amounts were] a cost incurred in
     performance of the S.B.A. contract for the purchase of
     crude oil from Tesoro Crude when in truth and in fact, as
     [Vargas] well knew, [those] amount[s were] significantly
     overstated, all in violation of Title 18, United States
     Code, Section 1001.

(Emphasis added). The evidence showed that Vargas did not sign any

of the certification letters (the advance payment requests) that


refused to excuse the repeated pattern of overestimation.




                                     -16-
were submitted to the SBA by LPC.     Further, the evidence did not

establish that Vargas was involved in the preparation of the

letters listed in the indictment or in the delivery of such letters

on the specific dates listed in the indictment.     Accordingly, we

hold that the government failed to prove beyond a reasonable doubt

that Vargas committed the crimes with which he was charged in

counts five, six, and seven of the indictment,7 and we reverse the

contrary judgment of the district court.

                                (3)

     Third, with respect to count eight, which dealt with the

hiring of consultants, Leal argues again that he did not knowingly

make any false statements.   The indictment charged that Leal made

a false statement in a letter to the SBA when he stated that

"[c]onsultants will not be employed without prior approval of the

SBA." (Emphasis added). Leal argues that this statement was true,

because at the time he signed the letter, the consulting fees had

already vested.   Further, in a prior letter, Leal stated that


     7
      The record will support a finding that Vargas caused to be
made various false statements over the course of the SBA contract
in that the evidence showed that Vargas did deliver advance
payment requests packets to the SBA on several occasions. These
occasions, however, are unspecified in the record by date or
other detail.   Further, the evidence will support a finding that
Vargas "concealed" "material fact[s]" from the SBA by not
revealing to the SBA that they were continually overfunding LPC's
crude purchases. The indictment, however, charged Vargas not
with concealment or generally with making false statements over a
period of time, but with making specific false statements
designated by specific dates in specific letters. As we have
noted, there is no evidence in the record that connects Vargas to
the false statements alleged in the indictment.




                               -17-
"effective the date of the advance payment, LPC will obtain prior

SBA    approval    from      the   District   Office       for   all    consultant

agreements."      He contends that the most reasonable construction of

the "consultant" language was that LPC would obtain prior approval

for future employment of consultants. He argues, thus, that he did

not make a "false statement" as a matter of law.                     See Race, 632

F.2d at 1120.          Finally, Leal argues that his statements were

literally true because he only employed consultant Besinaiz to

obtain the DFSC contract, which was obtained months prior to Leal's

letter   of     intent.      Thus,   although      the    payments     to   Besinaiz

continued after Leal's statement, Besinaiz's services ended prior

to the statement.

       The evidence is clear, however, that Leal intended to mislead

the SBA by assuring them that he would not employ consultants.

Leal    signed    several     agreements--the       Participation       Agreement,

Solicitation, and Contract--that required him to disclose the

payment of consulting fees.          It was made clear to Leal that the SBA

wanted to make sure that the minority assistance was assisting

minority business only.            Yet, he used consultants to obtain the

DFSC contract, and he continued to pay them royalties, from the

DFSC contract, after the SBA papers were signed.                 And instead of

disclosing the payment of consulting fees as he was required to do,

he    assured    the   SBA    that    he   would    not    employ      consultants.

Furthermore, Leal set up a shell corporation in order to pay a

consultant in a manner that the auditors could not discover. Thus,




                                       -18-
the jury is supported in finding that Leal made a false and

fraudulent representation by assuring the SBA that he would not

employ any consultants while at the same time remaining silent

about the consultant he was continuing to pay.   See United States

v. Mattox, 689 F.2d 531, 533 (5th Cir. 1982) ("Silence may be

falsity when it misleads, particularly if there is a duty to

speak.").

                                (4)

     Finally, with respect to count nine, Leal argues that he did

not make a false statement when he said that he had "disclosed all

contingent liabilities" because he was not required to disclose the

consulting fees as a "contingent" liability.   He contends that in

July 1986, when the DFSC contract was executed, the fees became a

fixed liability.   The liability, however, for the royalty payments

to the consultants was contingent in the sense that it was only

triggered when the jet fuel was actually delivered.      See AICPA

Technical Practice Aid, Update No. 93.03 (1991) (stating that

royalties for to-be-mined coal are contingent liabilities); see

also Black's Law Dictionary 321 (A contingent liability is a

liability that "is not now fixed and absolute, but which will

become so in case of the occurrence of some future and uncertain

event.") Because the payment of royalties based on to-be-delivered

jet fuel constitutes a contingent liability as a matter of law, and

in the light of the relevant evidence as a whole, the jury was

clearly supported in finding that Leal meant to convey a falsity




                                -19-
when    he    asserted    that       he    had   "disclosed      all   contingent

liabilities."      In sum, we find that the evidence is sufficient to

support Leal's convictions under counts eight and nine of the

indictment, and we affirm the district court in that respect.

                                           C

       The appellants last argue that they are at least entitled to

a new trial because the district court erred in limiting each

defense attorney to 22 minutes for closing argument.                   We review a

district court's determination of how much time to provide to

defense counsel for closing argument for an abuse of discretion.

United States v. Bernes, 602 F.2d 716, 722 (5th Cir. 1979).

       We    conclude   that   the    district     court   did   not    abuse   its

discretion in limiting the total closing argument time for both

defendants to 45 minutes.             The district judge listened to both

sides before deciding how much time to allot.               The district court

decided, based on all the facts and circumstances, that 45 minutes

total was sufficient.          As the government points out, the defense

was basically that there was a lack of intent, which did not

require an elaborate presentation.               Thus, we cannot say that the

district court's decision was unreasonable.                   Further, neither

defense counsel requested more time at the termination of their

closing argument.       See Bernes, 602 F.2d at 722 (refusing to reverse

for allotting too little time for closing argument, and noting that

defense counsel did not request more time at the end of his closing




                                          -20-
argument).   Thus, we hold that the district court committed no

reversible error in this respect.

                                IV

     In conclusion, we hold that the evidence is sufficient to

uphold the conviction for conversion against both Leal and Vargas.

The evidence further supports all false statement counts against

Leal.   The evidence is insufficient, however, to support Vargas's

convictions for making false statements.   We therefore REVERSE and

VACATE the convictions of Vargas on counts five, six, and seven,

and we REMAND this case to the district court for resentencing.

And, finally, we have held that the district court did not abuse

its discretion in limiting the defendants' closing argument time.

Accordingly, the judgment of the district court is

                AFFIRMED in part and REVERSED and VACATED in part,
                 and REMANDED for resentencing of Vargas.




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