105,800 Shares of Common Stock, 830 F. Supp. 1101, 1993 U.S. Dist LEXIS 11993, at *49 (N D Ill august 13, 1993) (Section 1344 requires proof of a specific intent to deceive).
Other circuits have also found the bank fraud statute to be a specific intent crime. The Fifth Circuit determined that the requisite intent to defraud is established if defendant acted knowingly and with the specific intent to deceive, ordinarily for the purpose of causing some financial loss to another or bringing about some financial gain to himself. United States v Saks, 964 F.2d 1514, 1518 (5th Cir 1992). The Fifth Circuit noted that Congress modeled Section 1344 on the mail and wire fraud statutes and that the courts should look to case law construing those statutes in determining the scope and proper interpretation of the bank fraud statute. Sak at 1520, citing H R Rep No 901, 98th Cong, 2nd Sess 2 (1984); S Rep No 225, 98th Cong, 1st Sess 377 (1983).
The mail and wire fraud statutes have been commonly construed to be specific intent crimes. See United States v Weidman, 572 F.2d 1199, 1202 (7th Cir 1978) (since in mail fraud case specific intent to defraud must be proved, government was entitled to introduce evidence of prior similar acts even though defendant had not disputed the issue by claiming he acted innocently or mistakenly).
In examining the legislative history of the bank fraud statute, the Second Circuit also observed that Congress modeled the statute on the mail and wire fraud statutes. United States v Stavroulakis, 952 F.2d 686 694 (2nd Cir 1992), citing H R Rep No 901, 98th Cong, 2d Sess at 4 (1984). In looking to precedent construing the mail and wire fraud statutes, the Second Circuit determined that a conviction under the "scheme to defraud" clause of the bank fraud statute requires the defendant to engage in or attempt to engage in a pattern or course of conduct designed to deceive a federally chartered or insured financial institution into releasing property, with the intent to victimize the institution by exposing it to actual or potential loss. Id at 694; See also United States v Ragosta, 970 F.2d 1085, 1089 (2nd Cir 1992).
Based on this precedent which establishes the bank fraud statute as a specific intent crime, the government appears to be entitled to introduce Rule 404(b) evidence probative of intent in its case-in-chief as long as it meets the four part test for admission of such evidence.
The threshold inquiry for admission of Rule 404(b) evidence is whether the evidence is probative of a material issue other than defendant's character. The government seeks to introduce the evidence of defendant's prior convictions to show his intent, knowledge and lack of mistake in committing the alleged crimes. The first requirement of the four part test is met. Defendant's prior convictions are directed toward establishing matters in issue other than defendant's propensity to commit bank fraud. The convictions for engaging in an organized scheme to defraud, bank theft and bank fraud are probative of defendant's alleged knowledge and intent to devise and execute the scheme to defraud Citibank. The evidence is also probative of defendant's alleged lack of mistake in engaging in a course of conduct designed to deceive the financial institution into releasing its money.
The prior convictions are sufficiently similar and close enough in time to be relevant to the crimes charged. The fact that defendant's prior schemes may have involved the use of aliases or stolen checks as opposed to worthless checks does not amount to a significant distinction.
The convictions are also sufficient to support a finding by the jury that defendant committed the similar acts. The convictions are proof of the reliability of the evidence.
Finally, the probative value of the evidence is not outweighed by its prejudicial effect. Defendant contends that admission of Rule 404(b) evidence improperly creates a risk that they jury will convict him because they believe he is a bad person, rather than because he is guilty of the crimes charged. " Whatever its legitimate probative value, when considering extrinsic act evidence the jury is also susceptible to the inference that, simply because the defendant committed other crimes or disreputable acts, he is by nature more likely to have committed the crime charged." United States v York, 933 F.2d 1343, 1349 (7th Cir 1991). While acknowledging that dual inferences may be drawn from admission of Rule 404(b) evidence, the Seventh Circuit has held that the dual nature of such evidence, standing alone, is insufficient to exclude it. York at 1352-53. Defendant must demonstrate that the illegitimate inference to be drawn from the Rule 404(b) evidence -- once a perpetrator of bank fraud, always a perpetrator of bank fraud -- substantially outweighs the legitimate inferences the evidence supports. This defendant has not done. When coupled with a limiting instruction, the court concludes the probative value of the evidence is not substantially outweighed by the danger of unfair prejudice. United States v Penson, 896 F.2d 1087, 1093 (7th Cir 1990); United States v Mazzanti, 888 F.2d 1165, 1172 (7th Cir 1989) (the danger of unfair prejudice is minimized by an instruction which restricts the jury's consideration of the evidence to the purpose for which it was offered).
ORDERED: Defendant's objections to the government's Rule 404(b) notice of intent are overruled.
George W. Lindberg
United State District Judge
Date: Oct 12, 1993