IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 00-20385
MAX GLEN MCCAULEY
MOHAMED CHENDEKA
Defendants-Appellants
VERSUS
UNITED STATES OF AMERICA
Plaintiff-Appellee
Appeal from the United States District Court
for the Southern District of Texas
June 7, 2001
Before POLITZ and BARKSDALE, Circuit Max Glen McCauley and Mohamed
Judges, and FALLON, District Judge.* Chendeka appeal their convictions for bank
fraud and conspiracy to commit bank fraud
FALLON, District Judge: arguing that the evidence produced at trial
was insufficient to support the jury verdict.
Chendeka additionally challenges the
*
District Judge of the Eastern sentencing enhancement for obstruction of
District of Louisiana, sitting by designation. justice imposed by the district court. We
1
affirm both convictions and Chendeka's company, he explained that it had been
sentence. operating for one year. Jones also made two
I. deposits of $100 and $400 with money
In April of 1999, Cornelius Fields and his provided by Chendeka, McCauley, and
sister Latrinda Fields conspired to divert Cornelius and Latrinda Fields.
funds from a Chase Bank account to a Jones provided the corporate documents
MetroBank account using an unauthorized and bank account information on D & M
electronic wire transfer. Latrinda, an Impex to Chendeka who copied the
employee in the accounting department of documents for McCauley.3 McCauley then
Western Atlas International, a division of the delivered the documentation to Cornelius
Baker Hughes company, agreed to prepare a Fields who in turn provided it to Latrinda
request for the treasury department of Baker Fields to initiate the wire transfer.
Hughes to wire funds from its Chase Bank On May 17, 1999, Latrinda Fields
account to the bank account of a false volunteered to facilitate wire transfers from
company. Cornelius was responsible for Baker Hughes' treasury department to Chase
obtaining the documentation necessary to Bank of Texas although she did not normally
establish a corporation and bank account handle such transfers. She faxed an invoice
able to receive the transfer. requesting that Baker Hughes transfer
Cornelius Fields contacted his former co- $150,000 for "lost equipment" from its
worker Max Glen McCauley to create the Chase Bank account to D & M Impex's
fraudulent bank account. McCauley solicited MetroBank account.4 The request listed
the assistance of Mohamed Chendeka to several serial numbers for the equipment and
execute the scheme. Chendeka introduced included authorizing signatures from other
McCauley to his co-worker Derick Jones employees.5 On the basis of the apparently
who had agreed to prepare the documents authorized request, the Baker Hughes
required to create a corporation and a bank treasury department finalized the wire
account.2 transfer and funds were transferred from its
Jones completed a "doing business as" Chase account to the D &M Impex account
(d/b/a) certificate of operation for a sole
proprietorship named "D & M Impex." He
then opened a bank account for D & M 3
Chendeka explained to Jones that
Impex at MetroBank on May 5, 1999. When his father would wire $150,000 into the
a bank employee questioned Jones about the account in one week to begin their business.
4
The wire transfer request
2
Chendeka and Jones had previously mistakenly listed "D & M Impex
discussed starting an import/export business. Construction" as the payee.
Chendeka explained to Jones that his father
5
would wire money from Africa to fund their Serial numbers for the equipment
venture if Jones prepared the documents matched numbers listed on a legitimate
required to start the company. Chendeka, invoice Fields had prepared earlier. The
however, refused to accompany Jones to requesting and authorizing signatures were
complete the paperwork or to be named on from employees who testified that they never
any of the documents. signed the document.
2
at MetroBank. had withdrawn the money and wanted to
With the transfer complete, Cornelius meet. Jones met Chendeka at a parking lot,
Fields, McCauley, Chendeka, and Jones gave him the money, and then FBI agents
organized to retrieve the money from the arrested both men. After his arrest,
MetroBank account. First, Chendeka and Chendeka agreed to contact Cornelius Fields
Jones went to a MetroBank location to and McCauley and arrange a meeting.
withdraw $25,000 for alleged business Chendeka met Cornelius Fields and
expenses. When Jones submitted a McCauley at McCauley's home where they
withdrawal slip, the teller inquired about the all were arrested.
nature of the business, requested McCauley and Chendeka were tried by a
identification, and told Jones that he would jury and each convicted of bank fraud and
need to speak with the manager before conspiracy to commit bank fraud. They
completing the withdrawal. The manager, moved for acquittal which the district court
suspicious of the lack of activity in the denied. McCauley was sentenced to thirty-
account, informed Jones that he could not three months imprisonment and three years
access the money unless he received supervised release, and Chendeka was
confirmation from the transferor that he was sentenced to twenty-four months
entitled to the funds.6 imprisonment and three years supervised
After failing to withdraw $25,000 from release.
this branch, Chendeka and Jones attempted Both defendants now appeal their
to collect $1,000 from another MetroBank convictions on the sufficiency of the
location. Bank employees indicated to evidence. Chendeka also argues that district
Jones, however, that their computers could court erred by increasing his sentence for
not complete the transaction. obstruction of justice. We first consider the
MetroBank, suspicious of these attempts challenges to the convictions.
to withdraw money, contacted Chase Bank II.
and the FBI about the wire transfer. FBI McCauley and Chendeka argue that the
agents told MetroBank not to release the evidence presented by the government was
funds to Jones. When Jones returned to insufficient to prove beyond a reasonable
MetroBank with new corporate documents doubt that they committed bank fraud and
for "D & M Impex Construction," he was conspiracy to commit bank fraud.
met by FBI agents, interviewed, and invited This Court reviews jury verdicts with
to cooperate in an investigation. great deference and evaluates "the evidence
At the request of the agents, Jones in the light most favorable to the verdict and
contacted Chendeka and explained that he 'afford[s] the government the benefit of all
reasonable inferences and credibility
choices.'" United States v. Odiodio, 99-
6
The manager of MetroBank also 11202, 2001 WL 242478, at *2 (5th Cir.
testified that she had received a cryptic Mar. 9, 2001) (quoting United States v.
telephone message on May 18, 1999 Gray, 96 F.3d 769, 772 (5th Cir. 1996)). A
requesting that funds be released to "D & M district court's denial of motions for
Construction" for shipping and construction judgment of acquittal is reviewed de novo.
costs. Chendeka later admitted to FBI United States v. De Leon, 170 F.3d 494, 496
agents that he had left the message.
3
(5th Cir. 1999). custody or control of a financial
When considering a challenge to the institution by means of false or
sufficiency of the evidence for a conviction, fraudulent pretenses, representations
the Court considers "whether, viewing the or promises.
evidence in the light most favorable to the Odiodio, 2001 WL 242478, at *2. A
government, a rational trier of fact could scheme to defraud includes using false
have found the essential elements of the pretenses or representations to obtain money
offense beyond a reasonable doubt." Id. from the institution to be deceived. See
"All reasonable inferences from the evidence United States v. Doke, 171 F.3d 240, 243
must be construed in favor of the jury (5th Cir. 1999). "The requisite intent to
verdict." United States v. Martinez, 975 defraud is established if the defendant acted
F.2d 159, 161 (5th Cir. 1992) (citing Glasser knowingly and with the specific intent to
v. United States, 315 U.S. 60, 80, 62 S.Ct. deceive, ordinarily for the purpose of causing
457, 469, 86 L.Ed. 680 (1942)). "An some financial loss to another or bringing
appellate court will not supplant the jury's about some financial gain to himself." Id.
determination of credibility with that of its The evidence clearly demonstrates that
own." Id. (citing United States v. Barron, McCauley and Chendeka executed or
707 F.2d 125, 127 (5th Cir. 1983)). attempted to execute a scheme or artifice to
Appellants question the government's defraud a financial institution. McCauley
proof of intent and of loss, both of which and Chendeka attempted to defraud Chase
must be proved beyond a reasonable doubt Bank and MetroBank, financial institutions
to support convictions for bank fraud and insured by the Federal Deposit Insurance
conspiracy to commit bank fraud. Corporation ("FDIC"), by aiding in the
A. creation of a fraudulent bank account for a
McCauley and Chendeka first argue that fictitious vendor company. They made false
the evidence does not prove that they representations to MetroBank to induce it to
knowingly participated in a scheme to release fraudulently transferred funds. All of
defraud Chase Bank or MetroBank. these actions were done in furtherance of a
McCauley explains that he did not make scheme demonstrated to defraud the banks in
misrepresentations to MetroBank to obtain violation of § 1344.
account information. Chendeka maintains Appellants also contend that the mere act
that his attempts to withdraw money from of instructing a bank to transfer funds is not
MetroBank were not material a misrepresentation constituting bank fraud
misrepresentations. under § 1344(2). In United States v. Briggs,
In order to establish the elements of bank this Court held that an employee who falsely
fraud under 18 U.S.C. § 1344, the represents having the authority to transfer
government must prove beyond a reasonable funds does so under false pretenses in
doubt violation of the statute. See 965 F.2d 10 (5th
that the defendant[s] knowingly Cir. 1992). In the present case, McCauley
executed or attempted to execute a and Chendeka participated in a scheme in
scheme or artifice 1) to defraud a which Latrinda Fields misrepresented her
financial institution or 2) to obtain authority to falsify a wire transfer.
any property owned by, or under the Appellants contributed to this conspiracy
4
by creating a bank account on behalf of a the bank was insured by the Federal Deposit
fictitious company and by attempting to Insurance Corporation. See Odiodio, 2001
retrieve the funds. The evidence WL 242478, at *2 (internal citations
demonstrated that they knowingly omitted). It is not necessary, however, for
misrepresented information to MetroBank to the government to prove that banks actually
influence it to release funds transferred by suffered civil liability or financial loss in
Chase Bank. See United States v. Foster, order to obtain bank fraud convictions. See
229 F.3d 1196, 1197 (5th Cir. 2000). United States v. Waldrip, 981 F.2d 799, 806
Therefore, we find the evidence sufficient to (5th Cir. 1993) (explaining that "loss need not
support the jury's finding that McCauley and be proven to convict a defendant for bank
Chendeka knowingly participated in a fraud or making a false statement to a bank"
scheme to defraud financial institutions.7 and evidence that there was no loss is not a
B. defense to either crime); Briggs, 965 F.2d at
McCauley and Chendeka secondly argue 12. Cf. United States v. Sprick, 233 F.3d
that neither Chase Bank nor MetroBank 845, 853 (5th Cir. 2000) (expressing no
were exposed to civil liability or risk of loss opinion on bank's civil liability when
from the scheme. They explain that the acts government failed to offer evidence of
of Latrinda Fields put the funds of her liability when a financial advisor misused
employer, Western Atlas, at risk rather than client's funds).
the funds of either bank. Because these We dismissed the risk of loss argument
financial institutions never faced civil liability made by appellants in United States v.
nor suffered financial losses, appellants Briggs when we considered a similar scheme
contend that they cannot be found guilty of in which an employee diverted millions of
bank fraud. dollars from a corporate account to a
In order to prove bank fraud, the personal bank account using unauthorized
government must demonstrate that the wire transfers. See 965 F.2d at 11. Briggs,
defendants placed the financial institution at like McCauley and Chendeka, claimed never
risk of civil liability or financial loss and that to have made any overt misrepresentations
or false statements to any financial
institution. See id. Yet, Briggs acted
7
The evidence also supports the similarly to Latrinda Fields in this case by
conspiracy convictions against appellants. failing to disclose her lack of authority to
To establish a conspiracy, the government make the unauthorized transfer. See id.
need prove “(1) an agreement between two We found in Briggs that such a scheme
or more persons (2) to commit a crime, and clearly put financial institutions at risk even
(3) an overt act committed by one of the though the record may not indicate that they
conspirators in furtherance of the were actually threatened with civil liability.
agreement.” United States v. Bruton, 126 See id. at 13. McCauley and Chendeka
F.3d 666, 670 (5th Cir. 1997). The scheme participated in a factually similar conspiracy,
outlined above and engaged in by appellants and, clearly placed Chase Bank and
satisfies the elements of a conspiracy under MetroBank at a risk of loss. See id.
18 U.S.C § 371 because it included overt The government need only prove a risk
acts by more than one person to transfer and of loss to support McCauley's and
procure fraudulent funds.
5
Chendeka's convictions for bank fraud and Chendeka separately argues that the trial
conspiracy to commit bank fraud. See id. at court erred at sentencing by granting the
12-13. We also note that the government government’s request for a two point
need not prove a substantial likelihood of increase for obstruction of justice based on
risk of loss to support the convictions. See his alleged perjury at trial.8 Chendeka
United States v. Barakett, 994 F.2d 1107, explains that he was not aware of the
1111 (5th Cir. 1993) (holding that deposits of conspiracy and believed that McCauley
forged checks exposed banks to risk of loss requested bank account information from
even though they recovered the funds); him to procure a loan for legitimate business
United States v. Saks, 964 F.2d 1514, 1519 purposes.
(5th Cir. 1992) (holding that fraudulent loan The standard of review for findings of
transaction exposed financial institutions to fact in applying sentencing guidelines is
risk of loss even though loan was secured); "clearly erroneous." See United States v.
United States v. Lemons, 941 F.2d 309, 316 Greer, 158 F.3d 228, 233 (5th Cir. 1998).
(5th Cir. 1991) (finding risk of loss to bank The district court sentenced Chendeka to
from forged endorsed check even though twenty-four months imprisonment followed
bank suffered no harm); United States v. by three years supervised release. Finding
Church, 888 F.2d 20, 23-24 (5th Cir. 1989) that Chendeka made pretrial statements that
(affirming bank fraud conviction for significantly contradicted his trial testimony,
fraudulent overdrafts although "plan was no the district court sustained the government's
more likely to succeed than a request that the objection to the presentence investigation
Bank exchange monopoly money for its face report and accepted a two point
value in U.S. currency"). Cf. Odiodio, 2001 enhancement for perjury pursuant to United
WL 242478, at *2 (finding no risk of loss States Sentencing Guideline § 3C1.1.9 We
when financial company rather than bank
handled fraudulent instrument).
8
The government satisfied its burden in McCauley does not appeal his
this case by presenting evidence at trial that sentence.
Chase Bank lost its ability to earn interest on
9
$150,000 because the funds were transferred Chendeka's knowledge of the
to MetroBank for more than one day. scheme is indicated by his pretrial
Furthermore, Chase Bank and MetroBank statements. During a tape recorded
were certainly exposed to a risk of loss conversation between Chendeka, Jones, and
because McCauley and Chendeka aided in Cornelius Fields, Chendeka stated, "Max
the attempt to withdraw the fraudulently asked me to get the account set up and I set
transferred funds. Because we find the it up." Govt.'s Ex. 25A at 6. In addition,
evidence presented at trial sufficient to Chendeka admitted to FBI agents after his
support the jury's verdict, we affirm arrest that McCauley had asked him to
McCauley's and Chendeka's convictions for provide an account into which $150,000
bank fraud and conspiracy to commit bank could be deposited, that McCauley would
fraud. pay him $10,000 once the deposit had been
made, and that Chendeka knew that the wire
III. scheme was illegal. See Tr. Vol.7 at 131-33,
136-37.
6
find that on the basis of Chendeka's
statements before and at trial, the district
court did not commit clear error in sustaining
the government's objection for obstruction of
justice against Chendeka.10 Therefore, we
affirm Chendeka's sentence.
IV.
For the foregoing reasons, we affirm
McCauley's and Chendeka's convictions for
bank fraud and conspiracy to commit bank
fraud as well as Chendeka's sentence.
AFFIRM.
In contrast to his statements before
trial, Chendeka testified at trial that his
understanding and involvement in the
conspiracy was limited to an attempt to
obtain a $15,000 loan from McCauley to
start his business venture with Jones. He
also testified that he believed that McCauley
deposited large amounts of money into the
account to hide them from his wife. See id.
Vol. 8 at 79, 142-43.
10
We note, as did the district court,
that Chendeka's sentence of twenty-four
months imprisonment is within the
appropriate Guideline range regardless of
whether the two point enhancement is
applied to his sentencing recommendation.
See Sent. Tr. at 5.
7