Unpublished Disposition, 865 F.2d 265 (9th Cir. 1983)

MEMORANDUM^** 

Marjorie Knox appeals from her conviction following a bench trial for aiding and abetting in the interstate transportation of money obtained by means of fraudulent pretenses and representations, in violation of 18 U.S.C. § 2314 and 18 U.S.C. § 2.

Knox contends that the evidence is insufficient to support her conviction. In reviewing the sufficiency of the evidence to support a conviction, we view the evidence in the light most favorable to the government. Jackson v. Virginia, 443 U.S. 307, 319, 99 S. Ct. 2781 (1979); United States v. Castillo, 844 F.2d 1379, 1391 (9th Cir. 1988). We must determine whether "any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson, 443 U.S. at 319 (emphasis in original). We apply the same test to both jury and bench trials. United States v. Arbo, 691 F.2d 862, 866 (9th Cir. 1982).

To sustain a conviction under 18 U.S.C. § 2314, the government must prove: (1) the interstate transportation of fraudulently obtained property with a value of $5,000 or more; and (2) knowledge by the defendant that the property was fraudulently obtained. United States v. Taylor, 802 F.2d 1108, 1112 (9th Cir. 1986), cert. denied, 479 U.S. 1094 (1987). To aid and abet a criminal offense, a defendant must be associated with a venture and have participated in it as something he or she wished to bring about. United States v. Smith, 832 F.2d 1167, 1170 (9th Cir. 1987).

BACKGROUND

The evidence showed that in 1983, James Fletcher, operating under the name of American Century Mortgage Corporation ("ACMC"), employed Joseph Cunningham and Earl Wagoner to solicit persons in the Los Angeles area to invest money in a program for the purchase of securities and properties that had a "distressed value." The investors were promised that they would receive a return on their investments of from 20 percent to 50 percent in a six-month period. The monies received from the investors were placed in an escrow account in Cunningham's name. The investors were also informed that their investments would be secured by stock held in Fletcher's account at Shearson/American Express ("Shearson"). The investors were shown a letter purportedly signed by a Shearson officer that confirmed the guarantee agreement. Cunningham raised $300,000 in this manner between March and June, 1983.

In June 1983, Cunningham and Wagoner conducted an investment seminar. Knox attended the seminar at Wagoner's invitation. Knox brought a friend, Dorothy Cummins, to the seminar. During the seminar, the prospective investors were told not to contact Shearson directly about the guarantee because the arrangement was "confidential." Nevertheless, Dorothy Cummins contacted Shearson to verify the investment guarantee. As a result of Cummins's contact, Shearson conducted an investigation. The investigation revealed that neither Fletcher nor his company, ACMC, had an account at Shearson. The signature on the investment guarantee letter was a forgery.

Upon completion of this inquiry, Shearson's lawyer contacted Knox and advised her that the use of Shearson's name was not authorized. She was informed that the letterhead had been stolen from Shearson's Red Bank, New Jersey office. Knox was also told that she should not be putting any of her own money into the transactions, and she should not be soliciting or be involved in soliciting other people's money for these transactions. On June 8, 1983, a letter was hand delivered to Knox confirming the telephone conversation. The letter sent to Knox reads as follows:

Thank you for taking time to discuss American Century Mortgage Company with me today. I confirm my statement that the use of Shearson/American Express, Inc.'s name in the attached investment and escrow agreements was totally unauthorized. Under no circumstances should you invest any of your own money in reliance upon any involvement of Shearson/American Express, Inc., nor should you in any way participate in the solicitation of investment monies pursuant to the attached agreements.

Cunningham and Wagoner were also contacted by Shearson's attorney and warned of the unauthorized and forged guarantee letter.

After receiving this information from Shearson, Cunningham stopped soliciting investors for Fletcher's program. At Wagoner's suggestion, Knox agreed to take over the Fletcher escrows until they were due to be paid off beginning in September, 1983. The Fletcher funds were placed in Escrow 1501 at the San Pedro branch of Western Mutual Escrow Corporation ("WMEC"). Knox had been manager of the San Pedro branch office since 1979. Knox had been an escrow officer for 20 years. She was the only escrow officer in WMEC's San Pedro branch. Her compensation was based upon the performance of her branch office.

Wagoner continued to solicit new investors for Fletcher. The same promises were made to prospective investors. However, Dean Witter was substituted for Shearson and referred to as the guarantor of the investment fund.

Wagoner told Knox that he would pay her a referral fee if she brought in investors. As escrow officer, Knox was required to obtain signatures from Dean Witter officers in confirmation letters before releasing investor money to Fletcher. She did not contact Dean Witter. The representations that Dean Witter guaranteed the investments were false. Dean Witter had no account for Fletcher or his company.

Knox solicited several investors and paid herself a finder's fee from escrow, without disclosing this fact to the investors or WMEC. The checks for the finder's fees were made out in Knox's maiden name and deposited in a newly opened account under that name. In soliciting funds, Knox falsely represented that she had invested in Fletcher's program and received the promised payment.

Under the terms of his investment program, Fletcher had a duty to pay investors $550,000 as of September, 1983. Fletcher sent Knox 13 pre-signed checks drawn on an account at New Jersey National Bank. Knox filled in the amounts on the checks for a total of $1.3 million. The checks were deposited in WMEC's bank account. As each check was deposited, Knox gave immediate credit to Fletcher without waiting for the checks to clear, in violation of WMEC's office policy.

From this fund of $1.3 million, Knox paid $550,000 due to certain of the investors and sent the balance to bank accounts in Fletcher's name in New Jersey, Virginia, and Texas. In early October, the first of the 13 Fletcher checks was returned for insufficient funds. The account upon which it was drawn never contained more than $500.

On October 6, 1983, WMEC's bank mailed Knox a notice that a Fletcher check had been returned for insufficient funds. Notwithstanding this notice, Knox wrote herself a check in the amount of $5,300 from the Escrow 1501 account on October 10, 1983, a bank holiday. Knox entered her maiden name as the payee of the check. The check bore a notation that it was a repayment of a loan to Fletcher. Knox's bank records do not reflect a loan to Fletcher.

On Tuesday, October 11, 1983, Knox transferred $130,000 from funds furnished by recent investors to the Escrow 1501 account to cover the loss caused by the first Fletcher check returned for insufficient funds. The transfer of funds violated the escrow instructions and WMEC policy.

On October 12, 1983, WMEC's financial director called the company executive vice president to inform him that a second Fletcher check had been returned for insufficient funds. The total amount of the first two checks was $250,000. Armed with this information, WMEC Vice President Warren Vaughn made a surprise visit to Knox's office on October 13, 1983. He asked for an explanation of the handling of the 13 Fletcher checks. Knox told Vaughn that she had telephoned the bank and verified each check before giving Fletcher credit for $1.3 million. She also informed Vaughn that she expected Fletcher to send her funds to cover the overdraft of $250,000. She did not inform Vaughn that 11 checks, totaling approximately $1 million, were outstanding.

When he returned to his office, Vaughn wrote Knox a memorandum setting forth WMEC's escrow policy and directing her not to grant immediate credit on any future checks. This memorandum was sent to Knox by means of the WMEC overnight courier service. In the normal course of business, it would have been delivered the next morning.

During the afternoon of October 14, 1983, Grayson Fentriss and Joseph Cunningham met with Knox at her office. Fentriss was the president and sole officer of American Century Mortgage; however, Fletcher made every decision concerning the company. Fentriss had been directed by Fletcher to meet Knox and obtain a check from her for $50,000. Knox issued the check on the Escrow 1501 account. The check was made out and ready to deliver to Fentriss when he arrived. At Knox's direction, Fentriss took the check to a local bank and bought a cashier's check for $50,000. Upon his return to Virginia, Fentriss wired the money to Fletcher in Florida.

Meanwhile, Knox deposited a check for $50,000 drawn on Atlantic Guaranty, a Fletcher account in a Florida bank, into the Escrow 1501 account. This check was dated October 14, 1983, and bore the notation, "check for Grayson G. Fentriss." The maker of the check was a person named Rossi, who was working and living with Fletcher in Florida. This check was returned for insufficient funds.

Each of the 13 Fletcher checks, totaling $1.3 million, was returned for insufficient funds. Fletcher sent replacement checks drawn on Florida and Pennsylvania banks. These checks were also returned for insufficient funds. WMEC went out of business as a result of the losses suffered from Knox's handling of the Fletcher investor accounts.

DISCUSSION

Knox argues that the evidence summarized above is insufficient to show that she was aware of the nature of the $50,000 check drawn on the Atlantic Guaranty Company in Florida when she issued the WMEC check to Fentriss. Knox contends that the fact that she was aware that Fletcher had issued checks in the amount of $1.3 million without sufficient funds in his account does not prove that she knew that there were insufficient funds to cover the check drawn on Atlantic Guaranty's account in a Florida bank. We disagree.

The government was not required to prove by direct evidence that Knox had knowledge of the status of the Florida account. Under section 2314, the government must prove that the defendant knowingly committed fraud. See United States v. Rush, 749 F.2d 1369, 1373 (9th Cir. 1984) (government must prove that defendant transported goods knowing them to have been stolen). However, the government need not offer direct evidence that the defendant had actual knowledge that the money was obtained by fraud. Id. Knowledge may be inferred by the trier of fact from circumstantial evidence. Id.

We believe that a rational trier of fact could properly infer from the following facts that Knox knowingly aided and abetted Fletcher in defrauding WMEC.

1. Knox had been an escrow officer for nearly 20 years. She had been an escrow officer with WMEC for four years. She had been instructed that WMEC policy required verification of checks from out-of-state banks to determine if there were sufficient funds in the account prior to paying out on a check.

2. Knox was aware that Fletcher's representations concerning Shearson were false and that the letterhead had been stolen. Nevertheless, she took over the escrows, after Cunningham ceased his solicitation of new investors, and arranged for the disbursement of money to the original investors.

3. Knox solicited investors and paid herself a finder's fee from funds deposited in escrow without disclosing that fact to either WMEC or the investors. She made out the finder's fee checks to herself using her maiden name. She denied using her maiden name on checks drawn on the escrow account, however, when the FBI questioned her about the practice.

4. Knox knew that, under the terms of the solicitation agreement, she was required to obtain the signatures of Dean Witter officers on confirmation letters prior to releasing investor money to Fletcher. The trier of fact could logically infer that she did not attempt to contact Dean Witter because she believed that Dean Witter had not guaranteed the investors' funds.

5. Knox knew on October 13 that checks signed by Fletcher totaling more than $250,000 had been returned because of insufficient funds. When Vice-President Vaughn informed Knox that there were no funds in Fletcher's accounts to cover the checks, she fraudulently assured him that the amount would be covered. Knox failed to inform Vaughn when she met with him that she was aware that an additional $900,000 in Fletcher checks was still outstanding.

6. Notwithstanding the fact that she was aware that checks issued by Fletcher had been returned because there were insufficient funds in his bank account, Knox wrote herself a check on the Escrow 1501 account for $5,300 on a bank holiday.

7. Knox was aware on October 14, 1983, the date she issued a check for $50,000 on the Fletcher investment fund escrow, that she was not allowed to give immediate credit on checks involving Fletcher without proper notification that funds were available.

8. When confronted with the fact that all of the checks had been returned for insufficient funds, Knox told WMEC officials that she had verified the validity of all 13 checks by a series of calls on unknown pay telephones to an unrecalled bank officer. She claimed to have used the pay telephones because the office telephone system was inoperable. However, this claim was flatly disproved by the office secretary and the telephone company.

The foregoing evidence is sufficient to support an inference that Knox knew that issuing the $50,000 check would perpetrate a fraud on WMEC because she was aware that Fletcher had no funds in his personal bank account to cover a check in that amount. Furthermore, a rational trier of fact could infer from Knox's knowledge that Fletcher had made fraudulent representations to his investors and had negotiated over a million dollars in worthless checks, that he was engaged in the interstate transportation of money obtained through fraud. The record shows that Knox personally profited from her relationship with Fletcher. She disguised finder's fee payments to herself from investors' funds in the escrow accounts and wrote a check to herself for repayment of an alleged loan. Because we are persuaded that the evidence is sufficient to convince a rational trier of fact beyond a reasonable doubt that Knox aided and abetted Fletcher in a violation of section 2314, the judgment is AFFIRMED.