United States v. Yates, No. 18-30183 (9th Cir. 2021)Annotate this Case
Heine and Yates, bank executives, were convicted of conspiracy to commit bank fraud (18 U.S.C. 1349) and 12 counts of making a false bank entry (18 U.S.C. 1005). The government told the jury that the two conspired to deprive the bank of accurate financial information in its records, the defendants’ salaries, and the use of bank funds.
The Ninth Circuit vacated. There is no cognizable property interest in the ethereal right to accurate information. Distinguishing between a scheme to obtain a new or higher salary and a scheme to deceive an employer while continuing to draw an existing salary, the court held that the salary-maintenance theory was also legally insufficient. Even assuming the bank-funds theory was valid, the government’s reliance on those theories was not harmless. The court instructed the jury that it could find the defendants guilty of making false entries as co-conspirators, so the court also vacated the false-entry convictions. The court noted that insufficient evidence supported certain false entry convictions.
Court Description: Criminal Law. The panel vacated convictions and remanded for further proceedings in a case in which a jury found Dan Heine and Diana Yates, who were executives at the Bank of Oswego, guilty of one count of conspiracy to commit bank fraud (18 U.S.C. § 1349) and 12 counts of making a false bank entry (18 U.S.C. § 1005). The government told the jury that Heine and Yates conspired to deprive the bank of three property interests: (1) accurate financial information in the bank’s books and records, (2) the defendants’ salaries and bonuses, and (3) the use of bank funds. Explaining that there is no cognizable property interest in the ethereal right to accurate information, the panel held that the accurate-information theory—which was the cornerstone of the government’s case and which the government conceded on appeal is invalid—is legally insufficient. Emphasizing the distinction between a scheme whose object is to obtain a new or higher salary and a scheme whose object is to deceive an employer while continuing to UNITED STATES V. YATES 3 draw an existing salary, the panel held that the salary- maintenance theory was also legally insufficient. The panel held that even assuming the bank-funds theory was presented to the jury and was valid, the government’s reliance on the accurate-information and salary-maintenance theories was not harmless in this case in which the jury returned a general verdict. The panel therefore vacated both defendants’ convictions on the conspiracy count. The panel held that because the conspiracy count is invalid, the defendants’ convictions on the false-entry counts must be vacated as well, given that the district court instructed the jury that it could find the defendants guilty of making false entries as co-conspirators. The panel wrote that it would be inappropriate to consider harmless error sua sponte in this case, and that there is no basis for remanding to give the government an opportunity for a do-over after it made the strategic choice not to address all of the defendants’ arguments in its appellate brief. Heine and Yates argued that insufficient evidence supports their false-entry convictions on counts 7–9, 13, and 15, which charged that Heine and Yates omitted certain loans from the past-due loan balance on the Bank’s quarterly FDIC call reports after arranging for third parties to make delinquent payments. The panel considered the sufficiency of the evidence on those counts because a finding of insufficient evidence would bar retrial. The panel reviewed the convictions on counts 7–9 de novo, Yates’s convictions on counts 13 and 15 de novo, and Heine’s convictions on counts 13 and 15 for plain error. The panel concluded that insufficient evidence supports the convictions on counts 7–9 because the underlying loan 4 UNITED STATES V. YATES payments made by another bank customer were not themselves fictitious, so the entry at issue was not false. The panel similarly concluded that insufficient evidence supports a finding of falsity on count 15, where a bank employee made the required payment using his own money. The panel held that the error was plain and affected Heine’s substantial rights. The panel held that the convictions on Count 13, which involved a loan to Chris Dudley, a former NBA player and Oregon gubernatorial candidate, are supported by sufficient evidence. To prevent his loan from being delinquent, Yates directed that a payment be made from Dudley’s political campaign account without Dudley’s knowledge and without his permission. The panel wrote that the payment was not what it was represented to be—an irrevocable commitment by the payor to depart with funds and allow the bank to keep the money in payment of an outstanding loan. Given that the transaction was performed on the final business day of the quarter, and Dudley’s testimony that a right of setoff did not apply to the campaign account, the jury could have found that the transaction was concocted for the very purpose of distorting a financial statement, unauthorized, and subject to being reversed. Dissenting, Judge Bress would have affirmed the convictions in full. He wrote that the majority contradicts governing precedents and improperly vacates convictions that were premised on a valid legal theory, backed by overwhelming proof of wrongdoing. He wrote that with no challenge to any jury instructions and no serious challenge to the admission of any evidence, this court exceeded its role by setting aside defendants’ lawful conspiracy convictions. As to the false bank entry convictions, he wrote that in UNITED STATES V. YATES 5 holding that no rational jury could convict defendants of making false bank entries where the defendants were using bank money to cure “past due” loans, thereby masking the risk associated with the bank’s loan practices, the majority departs from precedent while unduly limiting Congress’s prohibition on false bank entries.