United States v. Earl Largo

775 F.2d 1099, 1985 U.S. App. LEXIS 21849

• Court: Court of Appeals for the Tenth Circuit
• Decided: October 1, 1985
• Docket: 84-1696
• Status: Published

Opinions

PER CURIAM.

Defendant was convicted of one misdemeanor and one felony charge of violating 18 U.S.C. § 641 (1982) by converting to his own use money belonging to the United States. The convictions arise out of the defendant’s embezzlement of federal funds provided by the Bureau of Indian Affairs to an organization called the Shiprock Early Childhood Development Program (SECDP). Defendant was president of the Board of Trustees of SECDP and on several occasions wrote checks to himself from the SECDP account to pay his income taxes and other personal expenses.

Defendant makes three arguments on appeal. First he argues that the indictment should have been dismissed because he was prosecuted under 18 U.S.C. § 641 rather than under 25 U.S.C. § 450 (1982) when, in fact, he was accused of embezzling Indian Self-Determination and Education Assistance funds, an act which is made punishable by 25 U.S.C. § 450d. In effect, the defendant’s argument is that he was improperly indicted and tried under a general statute when a specific statute had been enacted by Congress contemplating a lesser penalty for the specific felony that defendant committed. This issue is controlled by this court’s recent decision in United States v. Afflerbach, 754 F.2d 866 (10th Cir.1985).¹ In Afflerbach the argument was raised that the defendants could not be convicted of the crime of interfering with federal officers when their actual conduct was to interfere with IRS agents, a crime specifically made punishable under another statute mandating a lesser penalty. The court rejected this argument and affirmed the appellants’ convictions under the general statute. Defendant’s argument that he was indicted under the wrong statute is likewise rejected.²

Defendant’s second argument is that the conviction is improper because the funds that he embezzled were not government funds at the time of the embezzlement. More background is necessary in order to understand the defendant’s labyrinthine argument. The federal grant monies for the start-up of SECDP were a few weeks late in arriving; therefore, SECDP borrowed money from a local bank in order to begin operations on schedule. Collateral for the loan was the federal grant monies that had already been approved. The loan monies were deposited in Account No. 183, from which the defendant later drew his unauthorized checks. When the grant funds were received by SECDP, they were deposited into Account No. 194 and then transferred, the same day, to Account No. 183, thus repaying the loan to the bank. Defendant did not receive the unauthorized payments for which he was convicted until after this transfer of funds. Thus, at the time the defendant received the unauthorized payments from Account No. 183, all of the money in that account was directly traceable to the United States grant.

Defendant also argued that federal funds deposited into a bank account become the bank’s property and therefore embezzlement of such funds cannot constitute a violation of the statutory prohibition against embezzlement of government funds. On appeal, he argues that the trial court erred in failing to instruct the jury on this theory of defense. The trial court did not err in refusing to instruct the jury on this theory, however, because a defendant is not entitled to instruction on a theory of defense that is not properly raised by the evidence or supported by the law. United States v. Redmond, 546 F.2d 1386 (10th Cir.1977), cert. denied, 435 U.S. 995, 98 S.Ct. 1645, 56 L.Ed.2d 83 (1978); Pacheco v. United States, 367 F.2d 878 (10th Cir.1966). It simply cannot be argued that federal grant money becomes nonfederal the minute it is deposited in the bank. The technical relationship between the bank and its depositors does not alter the fact that the money in the account that the defendant embezzled was money disbursed pursuant to a federal grant.

Defendant’s reliance on United States v. Collins, 464 F.2d 1163 (9th Cir.1972), is misplaced. In Collins, the defendant attempted to embezzle funds by forging a check. The Ninth Circuit held that, because under banking law when a bank pays on a forged endorsement it pays out of its own money rather than that of the depositor whose endorsement was forged, the defendant had not obtained the government’s property. In the present case, the checks were not forged. Thus, when the bank paid the checks, it paid, out of the federal funds deposited in the account on which the checks were drawn. The money obtained was federal grant money and the property of the United States.³ Defendant’s argument in this regard must fail. Defendant’s final argument is that the government had no loss because the checks that he wrote were disapproved by the government. The disapproval after the checks had already been paid meant simply that later disbursements of the funds to the program would be reduced to compensate. The fact that the federally funded program rather than the federal government itself would ultimately suffer the consequences of defendant’s defalcation does not lessen his culpability. Therefore, all of defendant’s arguments must fail and the conviction must be affirmed.

1 . In making his argument on this point, defendant refers to the equal protection and due process clauses of the Constitution. While it is not clear exactly how defendant’s constitutional arguments differ from his arguments concerning congressional intent, we find no constitutional violation in the application of section 641 to defendant’s conduct.

2 . While the majority’s final opinion does not directly address this issue, the dissent in that case makes clear that the issue was implicitly decided by the majority opinion.

3 . It should be noted that federal grant money does not lose its federal character simply because it is administered by a nonfederal agency such as SECDP. United States v. Johnson, 596 F.2d 842 (9th Cir.1979); United States v. Evans, 572 F.2d 455 (5th Cir.), cert. denied, 439 U.S. 870, 99 S.Ct. 200, 58 L.Ed.2d 182 (1978).