Ninth Circuit Reverses Conviction based on False Entries: Tat
Tat's Actions and Conviction
Tat, a bank employee, was involved in an alleged money laundering scheme. Tan and Yip worked with Tat to launder money. A codefendant and an informant agreed to convert proceeds from drug sales into cashier’s checks. The codefendant and the informant got the money together while Tat allegedly worked with a bank customer to draw $25,500 from their bank account and state that the checks were to be made out to “Oscar Santana,” who in this situation was a fictious person. The codefendant and the informant would then give the money to Tat’s bank customer.
The deal went down; the money was counted, the cashier’s checks were signed and everyone went on their way. But then the bank customer asked Tat to reverse the transactions. The Bank’s custodian indicated that “although the logs contained in Exhibit 48 can show the account from which the cashier’s checks were drawn, those logs cannot show the source of any simultaneously received cash that the customer did not deposit.”
Later, Tan, Zhao and the Tat (the defendant in this appeal) obtained cashier’s checks in their own names. The records show that Zhao drew a $7500 check payable to “Oscar Santana” (who in this situation was a fake person). This is fraud:
“At trial, the government elicited testimony that Zhao went to the bank; deposited $7500 in cash; purchased a cashier’s check for $7500 with a check from her business account; and then gave that cashier’s check to Tan, who gave it to Yip. Zhao’s account lacked sufficient funds to cover the cashier’s check before her deposit of Yip’s money… The government also presented evidence that the check from Zhao’s business account, used to draw the cashier’s check, featured Defendant’s handwriting.”
The jury convicted Tat of two counts (Counts 2 and 3) of making a false entry in a bank’s records, 18 U.S.C. § 1005. Tat appealed, stating that the evidence that supported the conviction was insufficient.
The Law Concerning Making a False Entry in Bank Records
The court indicated that “the government must prove that
‘(1) [D]efendant made a false entry in bank records, caused it to be made, or aided and abetted its entry;
(2) [D]efendant knew the entry was false when it was made; and
(3) [D]efendant intended that the entry injure or deceive a bank or public official.’”
The Ninth Circuit agreed with the Fifth Circuit on the idea that when the bank entry was correctly made if there had been no later effort to extort that there was no truth problem with the bank records:
Because the bank’s record is “the very entry that should have been made had there been no later effort to extort,” that record is not “lacking in verity.” ... In other words, that an accurately recorded bank transaction has a nexus to unlawful activity does not, standing alone, make all entries related to that transaction “false” within the meaning of § 1005.
Other circuits have agreed:
“[A]n entry is not false merely because the underlying transaction is illegal,”...“questionable,” ...“manipulative,” ... or “fraudulent,”
Tat’s Two Counts
Count Three was Reversed for Insufficient Evidence
With these in mind, the court examined Tat’s case. First the court looked at count three, the court where the customer purchased and then returned three cashier’s checks in the amount of $25,500. The court noted that there was not a literal falsehood here:
“The government acknowledges that the record does not contain a literal falsehood.
Nor does Exhibit 48 contain an omission such that the bank’s “records would not indicate the true nature of the transaction…The only witness to testify on the matter stated that Defendant could not have disclosed the source of the customer’s unbanked cash on the log contained in Exhibit 48. “The form does not call for a narrative response, allow for comment, ... or ask for the source of a payment” to the customer… She could disclose only that the customer purchased and returned cashier’s checks…It also cannot be said that East West Bank would not have “a picture of [the bank’s] true condition,” without knowing that its customer had come into a large amount of cash that she opted not to deposit.”
Finally on this count, the court noted that this is exactly the entry that should have been made in this bank record:
“Indeed, Exhibit 48 is “the very entry that should have been made had there been no” prior effort to launder money…If Defendant’s customer purchased a cashier’s check and gave it to Yip in exchange for a used car, Exhibit 48 would look the same. Even if Defendant made the entries with an intent to deceive bank officials, that satisfies only one of § 1005’s three elements...An intent to deceive is the offense’s mens rea, not the entire offense...We thus reverse Defendant’s conviction on Count 3.”
This meant that the court reversed the count where Tat worked with the banking customer on the count with the money orders.
Count Two Was Affirmed: The Court Found that this Conviction was Sufficient
The other count was very different. As a reminder, “Zhao deposited $7500 (of the FBI’s money) and then drew a cashier’s check payable to “Oscar Santana” for that same amount.”
This was an improper action simply because of the fictitious person “Oscar Santana:”
A reasonable juror could find beyond a reasonable doubt that Defendant knew that Exhibit 47, the basis of Count 2, contained a false entry for the simple reason that it listed a fictitious payee. That fact is sufficient to sustain a conviction under the principles described above; the transaction itself is “false and fictitious” and “concocted for the very purpose of distorting [a] financial statement.”… Indeed, as the government argued to the jury, “on its face, [we] know why it’s false, because here it shows a cashier’s check in the amount of $7500 to Oscar Santana.”