United States v. Phath

Opinion

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit


No. 97-2213



                          UNITED STATES,



                            Appellee,



                                v.



                          SAVOTH PHATH,



                      Defendant, Appellant.


APPEAL FROM THE UNITED STATES DISTRICT COURT



                 FOR THE DISTRICT OF RHODE ISLAND



             [Hon. Mary M. Lisi, U.S. District Judge]


Before



                     Torruella, Chief Judge,

                     Stahl, Circuit Judge,

                   and Lynch, Circuit Judge.


Thomas G. Briody for appellant.

     Margaret E. Curran, Assistant United States Attorney, with

whom Kenneth P. Madden, Assistant United States Attorney, and

Sheldon Whitehouse, United States Attorney, were on brief, for

appellee.


May 20, 1998


STAHL, Circuit Judge.  Following a one-day trial

defendant-appellant Savoth Phath was convicted of bank fraud.  See18 U.S.C.  1344.  He appeals his conviction on three grounds:

erroneous admission of opinion evidence, erroneous jury

instructions, and an improper sentence adjustment for more than

minimal planning.  We affirm the conviction but vacate the sentence

and remand for re-sentencing.

                                I.

          On June 5, 1996, Savoth Phath deposited two counterfeit

checks into his savings account at a branch of Fleet Bank in

Providence, Rhode Island.  Bank surveillance cameras recorded the

transaction.  One check for $4,340.75, payable to Mao Mich, was

drawn on the Fleet bank account of The Worcester Company; the other

check for $1,150, payable to Thai Sey, was drawn on the Fleet Bank

account of Main Street Textiles.  The next day, Phath withdrew

$5,000 from the same savings account.

          On March 7, 1997, after being arrested by Secret Service

agents, Phath waived his privileges under Miranda v. Arizona, 384

U.S. 436 (1966), and related the following facts to the agents. 

Phath explained that a stranger had approached him at the Foxwoods

Casino in Connecticut, and asked him if he had a bank account.

After Phath answered yes, the stranger offered him an unspecified

amount of money to cash some checks.  When Phath agreed, the

stranger gave him six checks, and then asked if Phath knew anyone

else who would cash checks.  Phath again said yes.  He subsequently

deposited the two checks described above in his own account, gave

two to someone he knew as "Samman," and two to someone he did not

know.  The day after he deposited the checks, Phath withdrew $5,000

from his account, collected money from the other two individuals,

and gave the total sum to the stranger who, in turn, paid Phath

$500.

                               II.

A.  Admission of Evidence

          Phath asserts that the district court abused its

discretion by admitting a Secret Service case agent's expert

opinion testimony because the testimony lacked foundation.  The

agent testified that he knew of cases in which other defendants had

deposited counterfeit checks into their bank accounts.  In Phath's

view, this testimony undermined the main theory of his defense:

that his use of his own bank account to cash the checks was

evidence that he did not know that the checks were counterfeit.  We

disagree.

          During the prosecutor's redirect examination of the

agent, the district court sustained objections to the following two

questions:  1) "And when you first learned that [the checks were

deposited into an account that was in the Defendant's name] during

the course of the investigation, did that strike you in any way?";

2) "When you first learned that during the course of the

investigation, did you have any thoughts on that at all?"  The

court then overruled an objection to the next question, "When you

first learned it during the course of the investigation, did you

find that unusual at all?"  After the agent responded that he "had

seen that done before in other cases," the court denied Phath's

motion to strike the testimony.

          We reject Phath's claim that the district court

improperly admitted expert opinion evidence under Fed. R. Evid.

702.  First, we doubt whether the third question even asked for an

opinion.  Instead, we interpret the question as calling for a fact

response.  Unlike the first two questions, the third question asked

the agent whether he found the deposits unusual, implying that the

answer should be based on the agent's experience, not his opinion. 

In fact, the agent's response   "I had seen that done before in

other cases"   confirms that the agent understood that the

prosecutor was questioning the agent's experience.

          Even assuming that Phath correctly characterizes the

evidence as inadmissible expert opinion evidence, we are confident

that the error is harmless.  See Molloy v. Blanchard, 115 F.3d 86,

93 (1st Cir. 1997) (holding that the standard for harmless error is

whether the error swayed judgment); see also Kotteakos v. United

States, 328 U.S. 750, 765 (1946).  The evidence against Phath was

strong.  At most, the agent's statement conveyed that other people

have deposited counterfeit checks into their own accounts, a fact

that does not dissipate the force of Phath's defense that he did

not know the checks were counterfeit.

B.  Jury Instructions

          Phath asserts that the district court erroneously

instructed the jury and, in doing so, prejudiced his defense.  The

district court instructed the jury that the government was required

to prove beyond a reasonable doubt:

         One, that the Defendant engaged in a scheme or

         artifice to defraud a financial institution or

         that he made false statements or misrepre-

         sentations to obtain the money or other property

         from a financial institution by false pretenses;

         two, that the financial institution was then

         federally insured; and three, that the Defendant

         acted knowingly.



         The court further instructed the jury that the phrase

"'false statements and misrepresentations' means any statement or

assertion which concerns a material fact and which, at the time it

was made, was either known to be untrue or was made with reckless

indifference to its truth or falsity."

         Phath objects to the definition because he believes it was

similar to a "willful blindness" instruction yet was unaccompanied

by a warning that a defendant cannot be convicted based on

negligence.  Phath further argues that a warning instruction was

critical because he, reasonably, did not know that the checks were

counterfeit.  The court's instruction, he contends, likely led the

jury to confuse reckless indifference with mere negligence.  We

reject this argument.

         "We review allegedly erroneous jury instructions de novoto determine [whether] the instructions, taken as a whole, show a

tendency to confuse or mislead the jury with respect to the

applicable principles of law."  United States v. Fulmer, 108 F.3d

1486, 1494 (1st Cir. 1997) (citing Tatro v. Kervin, 41 F.3d 9, 14

(1st Cir. 1994)).  

         Assuming, arguendo, that the court's definition of "false

statements and misrepresentations" was a misstatement of law, the

instructions, in their entirety, nonetheless accurately reflected

the elements of 18 U.S.C.  1344.  The challenged instructions were

a small part of the court's instructions regarding intent.  In

addition to the definition cited above, the court stated "False

statements and misrepresentations include not only actual lies, but

half-truths as well.  [They] also include . . . any false pretense,

promise or knowing concealment of facts which are material . . . ." 

         Further, the district court defined the third element,

knowing conduct, instructing:

         The Government must prove beyond a reasonable

         doubt . . . that the Defendant acted knowingly

         and with specific intent to defraud.  An act is

         done knowingly if it is done voluntarily and

         intentionally and not because of ignorance,

         mistake or accident.  To act with intent to

         defraud means to act knowingly and with the

         intention or the purpose to deceive or cheat. 

         An intent to defraud is accompanied ordinarily

         by a desire or a purpose to bring about some

         gain or benefit to oneself or some other person

         or by a desire or a purpose to cause some loss

         to some purpose.  Thus, the Government must

         prove that the Defendant knew that scheme to

         defraud a financial institution existed and that

         he willfully participated in that scheme.



         Considering the court's entire definition of "false

statements and misrepresentations" and its careful exposition of

the intent element, we find that even if the challenged sentences

were erroneous, they were not prejudicial.

C.  More than Minimal Planning 

         Phath also challenges the two-level increase imposed

pursuant to  U.S.S.G.  2F1.1(b)(2) for more than minimal planning. 

The district court's judgment that an offense involves more than

minimal planning is a factual finding that we overturn only if it

is clearly erroneous.  See United States v. Rust, 976 F.2d 55, 57

(1st Cir. 1992).  After reviewing the transcript of the sentence

hearing, we conclude that the court's decision was clearly

erroneous.

         The Sentencing Guidelines Commentary describes "more than

minimal planning" as:

         more planning than is typical for commission of

         the offense in a simple form.  "More than

         minimal planning" also exists if significant

         affirmative steps were taken to conceal the

         offense . . . .  "More than minimal planning" is

         deemed present in any case involving repeated

         acts over a period of time, unless it is clear

         that each instance was purely opportune. 

         U.S.S.G.  1B1.1, Application Note 1(f).



         In finding more than minimal planning, the district court

looked at the "totality of the circumstances and the scheme

itself."  According to the court,



         The defendant readily agrees to participate

         himself and, indeed, recruits two others, by his

         own admission.  So not only does he go to the

         bank twice, he recruits two others.  He takes

         the check from Gino[, the stranger,] to hand off

         to the two others and then collects the proceeds

         for Gino, again, by his own admission, from

         those two that he recruited.  Taking all of that

         into account, this is not an offense in its

         simplest terms.  It has several layers of

         intricacy which are designed to conceal the

         offense itself.

     

     The government urges us to uphold the sentence enhancement

because Phath's acts were not purely opportune.  However, we do

not need to decide whether Phath's acts were purely opportune

because Phath's acts were not "repeated acts over a period of

time," as described in the first clause of the guideline section

relied upon by the government.  There is no argument that Phath

took "significant affirmative steps . . . to conceal the offense,"

which would also trigger the guideline.

          Phath's crime was simple and short-lived.  That Phath went

to the bank two times to complete the simple acts of depositing

checks and withdrawing funds does not strike us as a complication

of the basic crime.  Allowing a day to lapse between deposit and

withdrawal allows the bank adequate time to credit the account.  In

total, Phath began and completed the crime within forty-eight

hours, a relatively short period of time.  

          The only plausible reason for the enhancement was Phath's

recruitment of two others to negotiate four of the six counterfeit

checks.  Taking Phath's story at face value, which we do because

there is no contradictory evidence, the stranger asked Phath to

recruit the others when he recruited Phath.  Phath complied with

the stranger's request as part of the same criminal act during the

same short time period.  Guided by the sentencing guidelines and

circuit case law, we do not interpret Phath's acts to involve morethan minimal planning.

          The application notes to the sentencing guidelines provide

an illustration of minimal planning and more than minimal planning

in the case of embezzlement.  "[A] single taking accomplished by a

false book entry would constitute only minimal planning.  On the

other hand, creating purchase orders to, and invoices from, a dummy

corporation for merchandise that was never delivered would

constitute more than minimal planning, as would several instances

of taking money, each accompanied by false entries."  Id.  Phath's

acts were more similar to the simple false book entry than to the

enhanced crime as they would have been had he created the

counterfeit checks or made repeated agreements with the stranger. 

          In addition, Phath's crime is not comparable to those for

which we have previously upheld sentence enhancements for more than

minimal planning.  See United States v. Boots, 80 F.3d 580, 595

(1st Cir. 1996) (finding no clear error in light of fact that

defendants had engaged in multiple acts over a several month

period); United States v. Santiago-Gonzalez, 66 F.3d 3, 7 (1st Cir.

1995) (finding no clear error where defendant had made seven

separate "false entries" for the purpose of defrauding an insurance

company over several months); United States v. Beauchamp, 986 F.2d

1, 5 (1st Cir. 1993) (finding no clear error where defendant had

engaged in an extensive cover-up plan which included lying to

investigators and recruiting others to lie to them); Rust, 976 F.2d

at 57 (1st Cir. 1992) (finding no clear error where defendant had

submitted 23 intricately altered vouchers over four years). 

Compared to the crimes outlined in these cases, Phath's crime was

short-term and simple.

          Similarly, other circuits have applied the enhancement

only to crimes involving repeated acts over a period of time.  See,

e.g., United States v. Mau, 45 F.3d 212, 214 (7th Cir. 1995)

(finding no clear error where defendant had kited a huge volume of

checks over seven months); United States v. Brach, 942 F.2d 141,

145 (2d Cir. 1991) (finding no clear error given defendant's

several-month scheme that involved securing a large monetary

advance from the defrauded party); United States v. Lennick, 917

F.2d 974, 978-80 (7th Cir. 1990) (holding that the enhancement is

usually applied "to factual scenarios involving clear examples of

repeated complex criminal activity," and that a false statement to

a federal agent and other cover-up activity were sufficient for

enhancement); United States v. Bakhtiari, 913 F.2d 1053, 1063 (2d

Cir. 1990) (finding no clear error where defendant, impersonating

a State Department employee, had numerous contacts with broker),

cert. denied, 499 U.S. 924 (1991).

          Although our research uncovered no case in which we

overturned a sentence enhancement for more than minimal planning,

other circuits have overturned such enhancements for more or

equivalent planning than that engaged in by Phath.  See United

States v. Maciaga, 965 F.2d 404 (7th Cir. 1992) (overturning

sentence enhancement of a security guard who stole money on two

occasions after deactivating bank alarm).  Indeed, Phath's crime

seems comparable to the crimes in two cases in which appeals courts

overturned the enhancement.  United States v. Cropper, 42 F.3d 755

(2d Cir. 1994) (holding that the enhancement was not warranted

where defendant drove up to warehouse in taxicab that was too small

to carry stolen boxes, delaying defendant in commission of crime);

United States v. Bean, 18 F.3d 1367 (7th Cir. 1994) (overturning

the enhancement where defendant had engaged in one cycle of check

kiting and then attempted to obtain loan to pay bank).

          Almost all crimes involve some degree of planning.  We do

not find the amount of planning here sufficient to justify the

enhancement for more than minimal planning.

          We therefore affirm Phath's conviction and remand for re-

sentencing consistent with this opinion.