USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 93-1229
UNITED STATES,
Appellee,
v.
STELIOS M. VAVLITIS,
Defendant, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
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Before
Breyer, Chief Judge,
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Torruella, Circuit Judge,
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and Bownes, Senior Circuit Judge.
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Robert A. George on brief for appellant.
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Jonathan L. Kotlier, Assistant United States Attorney, and A.
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John Pappalardo, United States Attorney on brief for appellee.
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November 19, 1993
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BOWNES, Senior Circuit Judge. Defendant-appellant,
BOWNES, Senior Circuit Judge.
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Stelios M. Vavlitis, was convicted of bank fraud, 18 U.S.C.
1344(1), for kiting checks and withdrawing money from
accounts bearing insufficient funds. We consider on appeal
whether the district court erred by dismissing midtrial the
superseding indictment on which Vavlitis had not been
arraigned, and by allowing the trial to continue on the
original indictment. We also must determine whether the jury
instruction on reasonable doubt was erroneous, and whether
there was sufficient proof of fraudulent intent. We affirm.
I.
I.
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BACKGROUND
BACKGROUND
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In January 1990, Vavlitis maintained seven checking
accounts, including six commercial accounts and one personal
account, at two federally-insured banks, Atlantic Bank and
Trust Company (Atlantic Bank) and Bank of New England. Four
of the accounts were with Atlantic Bank; Bank of New England
held the remainder. Vavlitis was an authorized signatory on
each of these accounts. Atlantic Bank's practice at all
relevant times was to credit Vavlitis's accounts with funds
equal to the face value of the checks he deposited, without a
delay to verify that these checks would be honored by the
banks on which they were drawn. This practice created a
"float," a period of one or more days that would pass before
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a deposited check credited to an account would be processed
and presented for payment from the account of the check
writer--Vavlitis.
From January 1990 until May 1990 when the banks
froze his accounts, Vavlitis used the float to buoy up the
balances in his accounts by exchanging checks drawn on
insufficient funds between Atlantic Bank and Bank of New
England. He withdrew money and wrote checks to third parties
against funds he did not actually have, despite his inflated
balances. The result was that when his four Atlantic Bank
accounts were frozen on May 14, 1990, there was a total
overdraft of $1,615,968.92. When Bank of New England,
suspecting check kiting, closed Vavlitis's three accounts in
May 1990, there was a combined positive balance of
$683,292.63.
On February 19, 1991, a grand jury returned an
indictment charging Vavlitis with one count of bank fraud.
The indictment alleged that between January and May 1990,
Vavlitis orchestrated a check kiting scheme by depositing
checks written on insufficient funds into the accounts he
controlled at Atlantic Bank and Bank of New England. The
charging paragraph of the indictment, paragraph seven,
alleged that this scheme allowed Vavlitis to obtain
"$1,615,968.00, more or less, owned by and under the custody
and control of Atlantic Bank and Bank of New England."
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Paragraph nine alleged that as a result of the check kiting
scheme, "Atlantic Bank suffered a loss of $1,615,968.00 more
or less, minus $638,315.00 in funds recouped from the Bank of
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New England checking accounts maintained by defendant STELIOS
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M. VAVLITIS, for a net ultimate loss of $932,653.00, more or
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less." (Emphasis added.) Vavlitis was arraigned on this
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indictment on March 5, 1991.
On March 12, 1991, the grand jury returned a
superseding indictment, identical in all respects to the
original indictment, except for paragraph nine. Paragraph
nine of the superseding indictment stated that as a result of
the check kiting scheme, "Atlantic Bank suffered a loss of
$1,615,968.00 more or less." The superseding indictment thus
alleged the total loss resulting from the scheme, but did not
describe the "net ultimate loss." Because of an oversight by
the prosecutor, Vavlitis was never arraigned on the
superseding indictment.
In her opening statement in Vavlitis's trial on
November 30, 1992, the prosecutor referred to the indictment
and stated that Vavlitis "left the banks with the $1.6
million loss." She did not use the term "superseding
indictment." Defense counsel moved for a mistrial claiming
that he had no notice of the superseding indictment,1 and
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1. On September 6, 1991, more than one year before trial,
the government served defense counsel with its trial
memorandum, which stated: "Vavlitis is charged in the
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that his client had not been arraigned on it. The trial
court denied the motion, pending further inquiry, and allowed
the prosecution to call four witnesses from the two banks.
After the first day of trial, the court found that
Vavlitis had not been arraigned on the superseding
indictment. The court granted the prosecution's motion to
dismiss the superseding indictment and allowed the trial to
continue on the original indictment. Defense counsel's
renewed motion for mistrial and motion for dismissal were
denied. The trial court subsequently denied a motion for
judgment of acquittal, and the jury found Vavlitis guilty of
bank fraud.
II.
II.
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A. Dismissal of Indictment, Double Jeopardy, Variance, and
A. Dismissal of Indictment, Double Jeopardy, Variance, and
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Constructive Amendment
Constructive Amendment
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Vavlitis argues that the midtrial dismissal of the
superseding indictment prevented any further prosecution on
the original indictment, and that the continuation of the
trial on the original indictment violated the Double Jeopardy
Clause. We disagree.
It is clear that the grand jury's return of a
superseding indictment does not void the original indictment.
See United States v. Friedman, 649 F.2d 199, 202 (3d Cir.
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1981); United States v. Holm, 550 F.2d 568, 569 (9th Cir.),
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Superseding Indictment with one count of bank fraud . . . ."
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(Emphasis added.)
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cert. denied, 434 U.S. 856 (1977). A defendant may use the
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Double Jeopardy Clause to prevent reprosecution following an
acquittal or conviction on a superseding indictment, but may
not rely on the notion that a superseding indictment
instantaneously nullifies the original indictment. See
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United States v. Bowen, 946 F.2d 734, 736 (10th Cir. 1991)
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(finding "no authority which supports . . . that a
superseding indictment zaps an earlier indictment to the end
that the earlier indictment somehow vanishes into thin air").
Both indictments in this case remained valid until the
district court granted the government's motion to dismiss the
superseding indictment.
Vavlitis also contends that the midtrial dismissal
of the superseding indictment prevented further prosecution
for the same offense charged in the original indictment. The
aspect of the Double Jeopardy Clause at issue in Vavlitis's
assertion is the protection against reprosecution following a
favorable termination of proceedings midtrial. The
"historical" underpinning of the double jeopardy prohibition
is that
"the State with all its resources and
power should not be allowed to make
repeated attempts to convict an
individual for an alleged offense,
thereby subjecting him to embarrassment,
expense and ordeal and compelling him to
live in a continuing state of anxiety and
insecurity, as well as enhancing the
possibility that even though innocent he
may be found guilty."
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United States v. Scott, 437 U.S. 82, 87 (1978) (quoting Green
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v. United States, 355 U.S. 184, 187-88 (1957)). One purpose
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of the prohibition on reprosecution following a midtrial
ruling that ends the case is to protect the "valued right of
a defendant to have his [or her] trial completed" by a
particular tribunal. Id. at 92; United States v. Govro, 833
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F.2d 135, 137 (9th Cir. 1987); United States ex rel. Young v.
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Lane, 768 F.2d 834, 838 (7th Cir.), cert. denied, 474 U.S.
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951 (1985).
Given these principles, we find no merit in
Vavlitis's double jeopardy argument. First, Vavlitis fails
to show a second attachment of jeopardy. Jeopardy attached
when the jury was impanelled for the bank fraud prosecution.
See Crist v. Bretz, 437 U.S. 28, 37-38 (1978). There was no
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impanelment of a second jury and no second verdict, thus no
relinquishment of the valued right to a particular tribunal,
no enhancement of the risk of an erroneous verdict, and none
of the expense or the ordeal of a subsequent prosecution.
Even if we assume that the further prosecution of
Vavlitis on the original indictment following the dismissal
of the superseding indictment constituted a reattachment of
jeopardy, we would not find a double jeopardy violation. The
district court dismissed the superseding indictment without
resolving any factual issue in favor of the accused.
Although the trial could have proceeded on the superseding
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indictment, see United States v. Boruff, 909 F.2d 111, 118
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(5th Cir. 1990), cert. denied, 111 S. Ct. 1620 (1991); see
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also Garland v. Washington, 232 U.S. 642, 644-46 (1914)
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(affirming conviction despite lack of arraignment because
accused, who had notice of charges and adequate opportunity
to prepare defense, was not deprived of any substantial
right), the court dismissed the superseding indictment so
that Vavlitis would be tried on the indictment on which he
had been arraigned. We note that if the trial court had
dismissed the case, as Vavlitis requested, the government
could have appealed such a ruling without violating the
Double Jeopardy Clause. See Scott, 437 U.S. at 98-99
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(holding that defendant who obtained dismissal of proceedings
on grounds unrelated to factual guilt or innocence suffers no
injury under Double Jeopardy Clause if government appeals).
A fortiori, the continuation of the prosecution before the
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same fact-finder did not violate the double jeopardy
prohibition.
Vavlitis's next argument is that the indictments
contained materially different allegations, so that a
variance of proof and an improper amendment of the charges
resulted from the midtrial substitution, and that this
unfairly prejudiced the defense. We note that defense
counsel failed to specifically raise these issues below.
Assuming these issues were preserved, we find no error.
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In the first place, there was no material variance
of proof. A variance occurs when the proof differs from the
allegations in the indictment. United States v. Fisher, 3
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F.3d 456, 462 (1st Cir. 1993). A variance is material and
reversible only if it has affected the defendant's
"'substantial rights'": to be informed of the charges; and
to prevent a second prosecution for the same offense. Id. at
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463 (quoting United States v. Tormos-Vega, 959 F.2d 1103,
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1115 (1st Cir.), cert. denied, 113 S. Ct. 191-92 (1992)). The
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charging paragraphs of the superseding and original
indictments in this case alleged that the check kiting scheme
enabled Vavlitis to obtain "$1,615,968.00 more or less, owned
by and under the custody and control of Atlantic Bank and
Bank of New England." The original indictment, on which
Vavlitis was arraigned and convicted, alleged a "net ultimate
loss" of $932,653.00. The evidence showed a pattern of
deposits and withdrawals between Vavlitis's accounts in the
two banks, so that on the day his accounts were frozen, a
total overdraft of $1,615,968.92 existed in his Atlantic Bank
accounts, while Bank of New England registered a positive
balance of $683,292.63. The proof comported with the
charges.
Vavlitis's argument that the charges were
improperly amended is also unavailing. An amendment occurs
when the charging terms of the indictment are altered after
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the grand jury has last passed upon them. United States v.
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Dunn, 758 F.2d 30, 35 (1st Cir. 1985). Midtrial amendments
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are deemed prejudicial per se for the following reasons: to
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preserve the right of the person accused of an infamous crime
to have a grand jury vote on an indictment, to prevent
reprosecution for the same offense, and to protect the right
of the accused to be informed of the charges. See United
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States v. Kelly, 722 F.2d 873, 876 (1st Cir. 1983), cert.
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denied, 465 U.S. 1070 (1984). Although the trial court's
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substitution of an indictment alleging a "net ultimate loss"
for an indictment alleging the total loss suffered by one of
the banks literally altered one of the allegations, it did
not constitute an amendment of the grand jury's charges.
Both indictments accurately reflected the grand jury's
charges. There is ample evidence to support the district
court's finding that Vavlitis was "well informed" of the
charges in the indictment on which he was arraigned and
ultimately convicted.
Furthermore, the record does not support Vavlitis's
argument that the midtrial exchange of indictments unfairly
prejudiced his defense. Vavlitis had been arraigned on the
indictment on which he was convicted and had an opportunity
to prepare a defense based on it. Only paragraph nine of the
superseding indictment differed from the original indictment,
and only insofar as the superseding indictment did not
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describe the "net ultimate loss" resulting from the scheme.
On the only day of the trial when the superseding indictment
was effective, defense counsel said in his opening statement
that the banks had recouped money. He also cross-examined
witnesses to elicit that Bank of New England actually held
funds in Vavlitis's accounts in May 1990. At no time during
the trial did the jury hear that a superseding indictment
existed. The prosecutor's opening statement that Vavlitis
"left the banks with the $1.6 million loss" was just as
consistent with the evidence and with the charging paragraph
of the original indictment, as it was with the superseding
indictment.
There is thus no support for Vavlitis's arguments
claiming a double jeopardy violation, a variance of proof,
and a prejudicial amendment of the charges. We hold that the
district court did not err in dismissing the superseding
indictment in this case, and in allowing the trial to proceed
on the original indictment, following defense counsel's
objection that his client had not been arraigned on the
superseding indictment.
B. Reasonable Doubt Instruction
B. Reasonable Doubt Instruction
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Vavlitis's next argument is that the trial court
provided an erroneous jury instruction defining reasonable
doubt. The jury instruction on reasonable doubt stated:
It is not required that the
government prove guilt beyond all
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possible doubt, the test is one of
reasonable doubt. A reasonable doubt is
a doubt based upon reason and common
sense. It does not mean that the
government has an obligation to prove the
charge in this count to an absolute or
mathematical certainty. Proof beyond a
reasonable doubt does not mean proof to
the degree of certainty that you have
that the sun will rise tomorrow or if you
add five and five you will get ten. It
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does not mean the doubt in the mind of a
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juror who is looking for a doubt or
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looking for an excuse to acquit,
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reasonable doubt means the doubt in the
mind of a reasonable juror who is seeking
the truth. It is a doubt based on reason
and common sense.
The test is, are you satisfied that,
acting as reasonable persons and applying
your reasoning to the evidence before
you, you arrive at a conclusion that the
offense as charged has been committed by
the defendant, and are you so satisfied
of that fact as to leave no other
reasonable conclusion possible.
Reasonable doubt may arise because there
is simply not enough evidence or because
you do not accept the evidence that was
offered. It may be that the evidence is
susceptible to one of two
interpretations, one favoring guilt, one
favoring nonguilt. If that is the case,
the defendant is entitled to the benefit
of the interpretation that favors not
guilty. The jury will remember that a
defendant is never to be convicted on
mere suspicion or conjecture. The burden
is always upon the prosecution to prove
guilt beyond a reasonable doubt. This
burden never shifts to a defendant, for
the law never imposes upon a defendant in
a criminal case the burden or duty of
calling any witnesses or producing any
evidence.
(Emphasis added.)
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Vavlitis avers that the instruction that reasonable
doubt is not "the doubt in the mind of a juror who is looking
for a doubt or looking for an excuse to acquit" may have
reduced the government's burden of proof. According to
Vavlitis's brief, the instruction "almost urges the jurors to
look askance at any juror" viewing the government's case with
skepticism, and it may have enabled some jurors to "brow
beat" any others who were inclined to acquit.
Vavlitis did not make a specific objection at trial
to this aspect of the reasonable doubt instruction.
Consequently, we review the instruction only for plain error.
See United States v. Colon-Pagan, 1 F.3d 80, 81 (1st Cir.
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1993); United States v. Campbell, 874 F.2d 838, 841 (1st Cir.
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1989). We find no such error.
Considering the propriety of a single instruction
on appeal, we evaluate the challenged instruction in the
context of the overall charge. See United States v.
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DeVincent, 632 F.2d 147, 152 (1st Cir.), cert. denied, 449
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U.S. 986 (1980). We keep in mind that "[t]hat which,
standing alone, may fall short of perfection may nonetheless
be tolerable in the context of a charge which adequately
instructs the jury on the standard it is to apply." Id.
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Although cluttered with unnecessary language, the
reasonable doubt instruction in this case neither undermined
the government's burden of proof, nor caused jurors inclined
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to acquit to be "brow beat[en]." The trial court
specifically instructed the jurors "to consult with one
another and to deliberate with a view to reaching an
agreement, if you can do so without violating individual
judgment," but never to surrender an "honest conviction . . .
solely because of the opinion of your fellow jurors."
Instead, the challenged instruction addresses the state of
mind of the jurors. It exhorts the jurors to view the
evidence rationally, not to look for an excuse to acquit,
because such a mindset would not produce a reasonable doubt,
but to view the evidence with the intent to seek the truth.
"Instructions which thus urge that the jury's decision should
be the product of a rational thought process, while perhaps
'unwisely emphatic,' have been upheld in the overwhelming
majority of cases. We cannot say that the present
formulation constitutes reversible error." Id. at 153
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(citations omitted); see also Watkins v. Ponte, 987 F.2d 27,
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32 (1st Cir. 1993) (upholding a similar jury instruction).
Vavlitis also argues on appeal an issue that he
raised at trial, that the reasonable doubt charge is flawed
because it did not define reasonable doubt as that which
would cause a juror to "hesitate to act on the most important
of affairs." "This Court has emphasized that reasonable
doubt does not require a specific definition." United States
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v. O'Brien, 972 F.2d 12, 16 (1st Cir. 1992). In fact, we
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have criticized the use of "hesitate to act" instructions,
and we have held that the failure to include such an
instruction is not reversible error. See id. at 15-16.
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Because we recognize that we must "tolerate a
reasonable range of expression" unless we impose pattern jury
instructions, Watkins, 987 F.2d at 32 (quotation omitted), we
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hold that the trial court's instruction defining reasonable
doubt was not erroneous. We note, however, that this
instruction contains language that is unnecessary, could
confuse the jury, and provides fertile grounds for
objections. Reasonable doubt is a fundamental concept that
does not easily lend itself to refinement or definition. See
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United States v. Olmstead, 832 F.2d 642, 645 (1st Cir. 1987),
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cert. denied, 486 U.S. 1009 (1988).
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C. Evidence of Fraudulent Intent
C. Evidence of Fraudulent Intent
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The final issue on appeal is whether the district
court erred in denying Vavlitis's motion for judgment of
acquittal at the conclusion of the government's case. The
motion for judgment of acquittal alleged that there was
insufficient evidence of fraudulent intent to support a
verdict of guilty.
In reviewing a denial of a motion for judgment of
acquittal, we consider the evidence in a light congenial to
the government. United States v. Victoria Peguero, 920 F.2d
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77, 86 (1st Cir. 1990), cert. denied, 111 S. Ct. 2053 (1991).
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The evidence is sufficient if "any reasonable juror . . .
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could have found the essential elements of the crime beyond a
reasonable doubt." United States v. Rodriguez Cortes, 949
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F.2d 532, 543 (1st Cir. 1991) (emphasis in the original)
(quotation omitted). "The government need not disprove every
reasonable hypothesis of innocence if the record as a whole
supports a verdict of guilt beyond a reasonable doubt." Id.
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Satisfaction of the mens rea element of the bank
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fraud statute requires proof that the defendant acted
knowingly and with intent to defraud. See 18 U.S.C.
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1344(1); United States v. Rodriguez-Alvarado, 952 F.2d 586,
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589 (1st Cir. 1991). To act with "intent to defraud" means
to act "with the specific intent to deceive or cheat for the
purpose of either causing some financial loss to another, or
bringing about some financial gain to oneself." United
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States v. Cloud, 872 F.2d 846, 852 n.6 (9th Cir.), cert.
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denied, 110 S. Ct. 561 (1989). Fraudulent intent may be
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established by circumstantial evidence and by reasonable
inferences from facts and situations. United States v.
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Celesia, 945 F.2d 756, 759 (4th Cir. 1991); see also
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Rodriguez-Alvarado, 952 F.2d at 589.
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The record in this case contains evidence
generating a reasonable inference of knowledge and fraudulent
intent. The evidence that Vavlitis was a business person who
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had borrowed more than a million dollars from the banks
indicates that he was generally knowledgeable about financial
matters and banking. Vavlitis set up the commercial accounts
described in the indictment ostensibly to serve separate
business interests; presumably, transactions between accounts
should not have been frequent. In a two month period within
the time frame alleged in the indictment, March through April
1990, Vavlitis deposited over 450 checks from one of the
seven accounts into another of the seven accounts. This
means that on average, Vavlitis deposited ten checks per
banking day, drawn from one of the seven accounts into
another of these accounts, resulting in the movement of
approximately $69 million. According to a witness from Bank
of New England, two of these accounts related to land
holdings for which one would expect to see very little
account activity. Because Vavlitis wrote checks to third
parties while he was making deposits, the deficit between the
amount of funds he actually had and the amount of funds
credited upon each deposit increased each day. Day after day
in this two month period, there were insufficient funds in
these accounts to cover the checks Vavlitis wrote,
notwithstanding the existence of any other accounts or
secured loans Vavlitis may have maintained at the banks.
Virtually all deposits (99.8%) into these seven accounts were
from one of the other seven accounts, rather than from third
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party sources. A reasonable juror could infer that no
legitimate business practice accounted for this pattern.
An expert witness, FBI Special Agent Daniel Dubree,
described a prototypical check kiting scheme to the jury,
analyzed the activity in the seven accounts, and opined that
Vavlitis's frenetic deposits and withdrawals constituted
check kiting. He explained that the Bank of New England
accounts served as intermediary accounts to create a float
period for checks circulating in and out of the Atlantic Bank
accounts. For this reason, the check kiting scheme
persisted, even though Bank of New England, suspecting check
kiting, notified Vavlitis in late January 1990 that it would
no longer honor checks written against uncollected funds;
Atlantic Bank continued to credit his accounts on the date
checks were deposited until the accounts were frozen and the
overdrafts exceeded $1.6 million. Dubree testified that
Vavlitis's transactions followed a pattern of transfers from
one account into another specified account, that this
appeared to be no accident, and that it would have made it
easier for Vavlitis to track how much he needed to deposit to
cover checks he had already written.
We acknowledge that "[t]he mere existence of a
check kiting scheme does not as a matter of law imply" the
specific intent necessary for a bank fraud conviction.
Rodriguez-Alvarado, 952 F.2d at 589. But considering
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Vavlitis's business experience, the notice he received from
Bank of New England, the size of the Atlantic Bank loss, the
intricacy and sophistication of the scheme, and the absence
of a legitimate purpose for the transactions, a reasonable
juror could conclude that Vavlitis acted with the requisite
knowledge and specific intent to use the float period to
inflate his account balances and to defraud the banks. We
hold that the trial court properly denied Vavlitis's motion
for judgment of acquittal. Therefore, Vavlitis's
conviction is,
Affirmed.
Affirmed.
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