United States v. Behenna

Opinion

USCA1 Opinion

January 5, 1995
                                [NOT FOR PUBLICATION]
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

____________________

No. 94-1571 

                                    UNITED STATES,

                                      Appellee,

                                          v.

                                  THOMAS E. BEHENNA,

                                Defendant, Appellant.

____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. William G. Young, U.S. District Judge]
                                             ___________________

                                 ____________________

                                        Before

                                 Selya, Circuit Judge,
                                        _____________
                           Campbell, Senior Circuit Judge,
                                     ____________________
                              and Boudin, Circuit Judge.
                                          _____________

                                 ____________________

            Thomas E. Behenna on brief pro se.
            _________________
            Donald  K. Stern, United  States Attorney,  and Paul  G. Levenson,
            ________________                                _________________
        Assistant United States Attorney, on brief for appellee.

____________________

____________________



-2-



Per Curiam.   This is an  appeal from the  district
                      __________

            court's judgment  denying the  motion of appellant  Thomas E.

            Behenna to withdraw his guilty  plea.  Behenna pleaded guilty

            to a  three-count information charging him  with making false

            statements to Dime Savings Bank of New York ("Dime New York")

            in violation of 18 U.S.C.   1014.

                                     I.BACKGROUND
                                     _ __________

                      In  1987,  Charles McCormick,  a client  of Behenna

            (who is an attorney), told Behenna about a chance to purchase

            condominium  units at two condominium developments, Hawthorne

            Village  in North  Attleboro and  Queens Court  in Plainview,

            Massachusetts.   Behenna was informed that  these units could

            be  purchased  with  almost  no  money  down.    Further, the

            developer of Hawthorne Village, David Burns, told Behenna and

            other  purchasers that  Burns  would give  them a  10 percent

            second mortgage and a 10 percent "discount."

                      Arrangements  were made  to have  Dime New  York, a

            federally insured  bank, provide  the  financing through  its

            "Impact"  loan program.   Under  this program,  purchasers of

            residential  real  estate making  cash  down  payments of  20

            percent of the purchase price received loan approval prior to

            the  receipt  of  documents  verifying  financial  and  other

            information contained  in their loan applications.   Dime New

            York's wholly owned subsidiary,  Dime Real Estate Services of

            Massachusetts  ("Dime  Mass."),  processed  the  Impact  loan

-2-
                                         -2-



applications  in  Massachusetts;  Eric  Peach was  the  sales

            representative who handled the loans in question.

                      Behenna   and   the   other   purchasers   of   the

            condominiums were  informed that instead of  cash, they could

            use  the  10  percent  discount and  the  10  percent  second

            mortgage as  the down  payment.  Nonetheless,  Behenna's loan

            applications stated that cash down payments had been made and

            his purchase and sale ("P  & S") agreements also  erroneously

            reflected  the presence  of  20 percent  cash down  payments.

            According  to Behenna, Peach was  aware of the  true terms of

            the financing  and  told him  (Behenna)  that Dime  New  York

            approved of  this type  of financing.   In  addition, Behenna

            prepared  addenda to the P & S agreements which revealed that

            the second  mortgages and the  discounts were the  sources of

            the  down payments.    Behenna gave  the agreements  with the

            addenda to Peach.

                      After  the  loan  applications  were  approved, the

            closings took place at the office of Dime's closing attorney,

            Alan  Segal.    At  this  time,  Behenna  signed  Fannie  Mae

            affidavits and HUD-1 settlement statements indicating that he

            had made 20  percent cash  down payments.1   The HUD-1  forms

            stated that  there was  no secondary financing  in connection

            with  the purchases  and, in  the same  vein, the  Fannie Mae

                                
            ____________________

            1.  These forms required a loan applicant to attest  that the
            statements  contained in the forms were true and accurate and
            warned that making false statements was a crime.

                                         -3-
                                         -3-



affidavits failed  to disclose  the second mortgages  and the

            discounts.   Finally, Behenna  was aware, at  this time, that

            the addenda were no longer attached to the P & S agreements.

                      Eventually,  the  Federal  Bureau of  Investigation

            conducted an investigation into  Dime New York's  allegations

            of  fraud  in connection  with these  loans.   At  this time,

            Behenna met with government personnel.  According to Behenna,

            he was  told that  Dime New  York had  never authorized a  no

            money  down loan program, that  it was unaware  of the second

            mortgages and that it  did not have in its  files the addenda

            to Behenna's P & S agreements.  After Behenna learned that he

            was about to be indicted on charges of bank fraud, conspiracy

            and making  false statements to a federally  insured bank, he

            decided  to plead guilty.  In return for his cooperation with

            the government, the government agreed to limit the charges to

            the making of false statements.  During these discussions and

            in  the subsequent  district  court proceedings,  Behenna was

            represented by counsel.

                      At his change of  plea hearing, Behenna stated that

            he knew when he signed the Fannie Mae affidavits and the HUD-

            1   settlement   statements   that   they   contained   false

            information.   Pursuant  to the plea  agreement and  prior to

            sentencing,  Behenna   testified   as  a   witness  for   the

            prosecution in  the trial of Segal,  Dime's closing attorney,

            and Robert  Kline,  an  attorney for  the  developer  of  the

-4-
                                         -4-



condominiums  at Hawthorne Village.  At the end of trial, the

            court  granted  Segal's  and  Kline's  motions  for  directed

            verdicts.      One and a half months later, Behenna filed the

            motion to withdraw his guilty plea.

                      Behenna's   main  argument   was  that   his  false

            statements were  not material  because the  Segal-Kline trial

            evidence  showed that  the  bank management  connived in  the

            scheme.  The district court invited briefs on the standard of

            materiality under  the  statute.   Ultimately,  the  district

            court  said  that  materiality  should  be  evaluated  on  an

            objective basis and  the court denied the motion  to withdraw

            the plea.  This appeal followed.

                                      II.THE LAW
                                      __ _______

                      A.  Fed. R. Crim. P. 32(d) Standards
                          ________________________________

                      Before sentencing, a defendant may move to withdraw

            his or her  guilty plea upon  a showing of  a "fair and  just

            reason."   Fed.  R.  Crim. P.  32(d);  see United  States  v.
                                                   ___ ______________

            Parrilla-Tirado,  22 F.3d  368, 371  (1st Cir.  1994); United
            _______________                                        ______

            States  v.  Kobrosky,  711 F.2d  449,  454  (1st Cir.  1983).
            ______      ________

            Although the  standard in  this situation is  a liberal  one,

            "[a]  defendant possesses  no  absolute right  to withdraw  a

            guilty plea. . . ."  Kobrosky, 711 F.2d at 454; United States
                                 ________                   _____________

            v.  Ramos, 810 F.2d 308, 311  (1st Cir. 1987).  "[T]his court
                _____

            will not  set aside the  district court's  findings unless  a

-5-
                                         -5-



defendant   unequivocally  shows  an  abuse  of  discretion."

            Ramos, 810 F.2d at 311.  The factors we consider include:
            _____

                           (1)  the  plausibility  of  the
                           reasons prompting the requested
                           change of plea; (2)  the timing
                           of the  defendant's motion; (3)
                           the  existence or  nonexistence
                           of  an assertion  of innocence;
                           and (4) whether, when viewed in
                           light        of        emergent
                           circumstances,  the defendant's
                           plea   appropriately   may   be
                           characterized  as  involuntary,
                           in     derogation     of    the
                           requirements imposed by Fed. R.
                           Crim.   P.  11,   or  otherwise
                           legally suspect. . . .

            Parrilla-Tirado, 22  F.3d  at  371  (footnote  and  citations
            _______________

            omitted).

                      B.  Section 1014
                          ____________

                      Section  1014  prohibits  persons  from  "knowingly

            make[ing] any false statement or report . . . for the purpose

            of influencing in any way the action of . . . any institution

            the accounts  of  which are  insured by  the Federal  Deposit

            Insurance  Corporation . .  . upon any  application . .  . or

            loan . .  . ."   To  convict a  defendant under    1014,  the

            government must prove that 

                           (i)   the  defendant   made  or
                           caused  to  be  made   a  false
                           statement or report  to a  bank
                           upon an application, commitment
                           or  loan,  and  that the  false
                           statement concerned a  material
                           fact;  (ii) that  the defendant
                           acted knowingly; (iii) that the
                           false  statement or  report was
                           made   for   the   purpose   of

-6-
                                         -6-



influencing  in   any  way  the
                           bank's action on the  loan; and
                           (iv)  that the  false statement
                           or  report was  made to  a bank
                           whose   deposits    were   then
                           [federally] insured. . . .

            United  States v.  Concemi,  957  F.2d  942,  951  (1st  Cir.
            ______________     _______

            1992).2   "A statement concerns  a material fact  when it has

            the `capacity to influence' the lending institution."  United
                                                                   ______

            States v. Braverman,  522 F.2d 218, 223  (7th Cir.) (citation
            ______    _________

            omitted), cert.  denied, 423  U.S.  985 (1975).   See  United
                      _____________                           ___  ______

            States  v.  Haddock, 956  F.2d  1534,  1550 (10th  Cir.)  (an
            ______      _______

            omission in a personal financial statement is material  if it

            "had the  capacity to influence the  bank's decision"), cert.
                                                                    _____

            denied, 113 S. Ct. 88 (1992).
            ______

                      Further,  materiality "is  not  merely directed  to

            false statements which are  actually used in the  decision to
                                        _____________

            make a loan."   United States v. Goberman, 458  F.2d 226, 229
                            _____________    ________

            (3d  Cir. 1972) (emphasis added).  That is, the government is

            not required  to show  that the lending  institution actually

            relied on  the defendant's statements in  making its decision

                                
            ____________________

            2.  We  reject,  out of  hand,  Behenna's  argument that  his
            statements were not  made to  a federally insured  bank.   In
            United  States  v. Brandon,  17  F.3d 409  (1st  Cir.), cert.
            ______________     _______                              _____
            denied, 115 S. Ct. 80, 81  (1994), we held, in the context of
            ______
            bank  fraud, that the government  "does not have  to show the
            alleged  scheme  was  directed  solely  toward  a  particular
                                            ______
            institution;  it  is   sufficient  to  show  that   defendant
            knowingly  executed   a  fraudulent  scheme  that  exposed  a
            federally insured bank to a risk of loss."  Here, there is no
            dispute  that the loans in question were assigned to Dime New
            York.

-7-
                                         -7-



to approve  a loan.    Id.   See Haddock,  956  F.2d at  1550
                                   ___   ___ _______

            (actual  reliance  need  not  be shown  to  meet  materiality

            requirement); United States v. Wilcox, 919 F.2d 109, 112 (9th
                          _____________    ______

            Cir.  1990) ("no  actual influencing need  be demonstrated");

            United  States  v. Norberg,  612 F.2d  1,  4 (1st  Cir. 1979)
            ______________     _______

            ("[i]t  is not the result  of the transaction  upon which the

            statute focuses, but the purpose").  As the court in Goberman
                                                                 ________

            put it:

                           Requiring proof  of reliance on
                           the  statement  by the  lending
                           institution  would  wreak havoc
                           with    enforcement   of    the
                           provision.       A   successful
                           prosecution  for  the violation
                           would  depend   on  the  wholly
                           fortuitous  factor   of  actual
                                                    ______
                           reliance  and  not at  all upon
                           ________
                           the intent of the guilty party.
                           The  obvious  result  would  be
                           that  not all  statements which
                           could   potentially  harm   the
                           United States  would be subject
                           to prosecution, undermining the
                           legitimate   purpose   Congress
                           sought to achieve.

            Goberman, 458 F.2d at 229.
            ________

                                   III. DISCUSSION 
                                   ____ __________

                      Behenna's primary  argument is that he  is innocent

            of  violating    1014.    Specifically,  he claims  that  the

            evidence  at  the trial  of Segal  and  Kline and  reports of

            statements  given to  the FBI  by various  employees of  Dime

            Mass. establish  that the bank,  in fact, had  authorized the

            "no money down" payment  loan program.  He also  asserts that

-8-
                                         -8-



this evidence shows that  he had made full disclosure  to the

            bank  of  the  true  terms  of  his  financing  arrangements.

            Behenna  argues that  he should  be allowed  to withdraw  his

            guilty  plea because  the government misrepresented  the true

            facts to him prior to his decision to plead guilty.

                      In a case strikingly similar to this one, the Court

            of  Appeals  for the  Fifth  Circuit  rejected a  defendant's

            argument that his false statements did not  have the capacity

            to  influence  the  lending  institution  because the  entire
                                                                   ______

            institution was  aware of defendant's scheme.   United States
                                                            _____________

            v. Johnson,  585 F.2d 119, 124  (5th Cir. 1978).   The court,
               _______

            assuming the  truth of  defendant's assertion concerning  the

            extent  of the  lending  institution's  knowledge, held  that

            "[t]he  focus of  the offense  is on  the defendant's  intent

            rather than on the victim."  Id.  The court went on:
                                         ___

                           The phrase "for the  purpose of
                           influencing in any way" defines
                                       __________
                           the    intent    required    to
                           accompany a false statement and
                           defines it broadly.   It  draws
                           under  its  purview not  only a
                           defendant   who   intends    to
                           defraud  an  unwitting  insured
                           institution    but    also    a
                           defendant   who   intends    to
                           cooperate with  the institution
                           in a scheme requiring him, with
                           the institution's knowledge, to
                           make  false statements  for the
                           furtherance of the scheme.  The
                           savings and loan's awareness of
                           the fraud is not  relevant, for
                           its     existence    is     not
                           inconsistent with the intent to
                           influence which a violator of  

-9-
                                         -9-



1014 must possess.   Thus, this
                           collection  of   facts  labeled
                           "complicity"  is not  a defense
                           to  a  charged violation  of 18
                           U.S.C.   1014.

            Id.  See  also United States  v. Bush, 599  F.2d 72, 75  (5th
            ___  ___  ____ _____________     ____

            Cir.  1979) ("[T]he  words `for  the purpose  of influencing'

            define the  quality  of  the  required intent,  they  do  not

            immunize a party  in duplicity with a bank officer."); United
                                                                   ______

            States  v.  Kennedy,  564  F.2d 1329,  1340  (9th  Cir. 1977)
            ______      _______

            (defendant was not immunized from criminal  liability "merely

            because the bank officer  was a party to the  scheme"), cert.
                                                                    _____

            denied,  435 U.S. 944 (1978); United States v. Niro, 338 F.2d
            ______                        _____________    ____

            439,  440 (2d  Cir.  1964) (the  court  described as  a  "non
                                                                      ___

            sequitur"  the argument  that  defendant's  false  statements
            ________

            could not have influenced the lender because the president of

            the  lending  institution had  suggested  the  scheme).   Cf.
                                                                      ___

            Concemi, 957 F.2d at 944-45 (one of the defendants was a loan
            _______

            originator for the bank); Norberg,  612 F.2d at 2  (defendant
                                      _______

            was  the attorney  for and  a director  of the  bank); United
                                                                   ______

            States  v.  Sheehy,  541  F.2d  123,   124  (1st  Cir.  1976)
            ______      ______

            (defendant  was a  member of  the bank's  executive committee

            which was responsible for approving loans).

                      In  deciding  whether  to  allow   a  defendant  to

            withdraw a guilty  plea, a court ordinarily  will "not decide

            the merits of a proffered defense by resolving factual issues

            that are more properly  decided at trial."  United  States v.
                                                        ______________

-10-
                                         -10-



Allard,  926 F.2d 1237, 1242 (1st Cir. 1991).  "However, when
            ______

            the defendant's  factual allegations,  even if true,  fail to

            establish a cognizable defense, they  do not provide a reason

            for permitting  withdrawal of a plea."   Id.  See also Ramos,
                                                     ___  ___ ____ _____

            810  F.2d  at  312  (Rule  32  motion  may  be  denied  if  a

            defendant'sfactualcontentionsdonot createarecognizeddefense).

                      Based on  the caselaw,  it is plain  that Behenna's

            claim  of innocence must  fail.   Simply, the  assertion that

            Dime New  York acquiesced in  the use of  secondary financing

            and had full knowledge that borrowers often did not make cash

            down payments in connection with the Impact loan program does

            not  provide  a  defense  to   the  charge  of  making  false

            statements under   1014.  See Johnson, 585 F.2d at  124.  The
                                      ___ _______

            relevant   determination  for   criminal  liability   is  not

            dependent on whether the  lender relied, or even participated

            in,   the  fraud;  rather,  the   offense  is  based  on  the

            defendant's  "intent  to  influence  an  action,  and nothing

            more."  Wilcox, 919 F.2d at 112.
                    ______

                      Further,  it  is  clear, notwithstanding  Behenna's

            claim  to  the  contrary,  that he  possessed  the  requisite

            intent.  In Wilcox, defendant submitted to a savings and loan
                        ______

            association phony vouchers stating that work on a real estate

            development   had  been  completed.     These  vouchers  were

            necessary to  obtain the  loan proceeds.   Defendant asserted

            that   the  false   vouchers  were  submitted   according  to

-11-
                                         -11-



instructions  from  the lender,  that  the  officials of  the

            association never indicated that their advice  concerning the

            vouchers  would lead  to  illegal conduct,  that  he had  not

            intended to mislead the association and that although he knew

            that  the   information  in  the  vouchers   was  false,  the

            association was aware of the true circumstances. 

                      The court held: 

                           Here,  the  submission  of  the
                           false vouchers  was designed to
                           influence  the disbursement  of
                           funds by the savings  and loan.
                           The filing of the documents was
                           a prerequisite to the financial
                           institution's  payments of  the
                           defendant's  claims.   In fact,
                           under the procedures adopted by
                           [the association], the payments
                           could not have been made unless
                           the  defendant  made the  false
                           representations at issue.  That
                           defendant    may    have   been
                           encouraged  in this  scheme, or
                           even  joined in  it, by  one or
                           more bank officials affords him
                           no defense at all.

            Id.
            ___

                      As in Wilcox, the evidence shows that Dime New York
                            ______

            would not  have made an  Impact loan in  the absence of  a 20

            percent deposit made up  of the borrower's own funds.   Thus,

            Behenna's  false statements concerning the down payments were

            necessary  prerequisites  to  obtaining the  proceeds  of the

            loans and the statements were made  precisely for the purpose

            of  influencing  Dime  New   York  in  making  its  decisions

            regarding the loans.

-12-
                                         -12-



Finally,  one  of the  most significant  factors in

            deciding whether a  defendant has  met his or  her burden  of

            establishing  a  "fair and  just  reason"  for withdrawing  a

            guilty  plea is  whether the plea  is knowing  and voluntary.

            Allard, 926  F.2d at 1243; Kobrosky, 711 F.2d at 455.  In the
            ______                     ________

            change of plea hearing, the district court judge explained to

            Behenna what rights he  was giving up by pleading  guilty and

            what  the maximum  penalties were;  he next  ascertained that

            Behenna had discussed these  matters with his attorney.   The

            government laid out the  evidence it would present  at trial.

            Asked  why he was pleading guilty, Behenna responded that the

            HUD-1  statements  and  the Fannie  Mae  affidavits contained

            false statements and that he knew this when he signed them.

                      Nothing in the record of the change of plea hearing

            indicates   that   Behenna  "was   anything  other   than  an

            intelligent defendant who fully  understood what he was doing

            and was competent voluntarily to enter [a] guilty plea."  See
                                                                      ___

            Kobrosky, 711 F.2d at  455; Ramos, 810 F.2d at  314 (district
            ________                    _____

            court's compliance with Fed. R. Crim.  P. 11 "weighs heavily"

            against  a defendant).   In  this  situation, "[w]e  will not

            permit   a  defendant   to   turn  his   back   on  his   own

            representations to the court merely because it would suit his

            convenience  to do so."  United States v. Pellerito, 878 F.2d
                                     _____________    _________

            1535,  1539  (1st Cir.  1989).   The  plea having  been given

            knowingly and  voluntarily, we  cannot say that  the district

-13-
                                         -13-



court judge abused his discretion by denying Behenna's motion

            to withdraw his guilty plea.

                      Given  our conclusions,  we reject  Behenna's claim

            that there was  no factual basis  for his guilty  plea.   See
                                                                      ___

            United  States v.  Webb, 433  F.2d 400,  403 (1st  Cir. 1970)
            ______________     ____

            (where court  questioned defendant about the  elements of the

            crime and  had the  prosecution present  the evidence it  had

            gathered, there existed a factual basis for  the plea), cert.
                                                                    _____

            denied, 401  U.S.  958 (1971).    We also  find no  merit  in
            ______

            Behenna's  assertion that the government withheld exculpatory

            evidence in  violation  of Brady  v.  Maryland, 373  U.S.  83
                                       _____      ________

            (1963).   Plainly, the information in the FBI reports was not

            exculpatory.

                      The judgment of the district court is affirmed.   
                                                            ________

-14-
                                         -14-