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U.S. v. LEE

October 4, 2004.


The opinion of the court was delivered by: HARRY LEINENWEBER, District Judge


On February 12, 2004, Defendants Andre Lee and Theodore Lee (the "Defendants") were convicted of one count of conspiracy to knowingly pass, possess or utter counterfeit checks of a private organization, in violation of 18 U.S.C. §§ 513(a) and 371. The Defendants were also each convicted of multiple counts of knowingly passing, possessing or uttering counterfeit checks of a private organization. The Defendants now each move for acquittal, or for a new trial in the alternative. For the following reasons, Defendants' motions are DENIED.


  In evaluating a motion for judgment of acquittal, the Seventh Circuit has repeatedly stated the standard of review under FED. R. CIV. P. 29(c) is the following: "Whether at the time of the motion there was relevant evidence from which the jury could reasonably find the defendant guilty beyond a reasonable doubt, viewing the evidence in the light most favorable to the government." See, e.g., United States v. Hagan, 913 F.2d 1278, 1281 (7th Cir. 1990). Relief under Rule 29(c) is appropriate where the relevant evidence is insufficient to prove all of the elements of the charged offense. See United States v. Beck, 615 F.2d 441, 448 (7th Cir. 1980). "Put another way, a jury verdict may be overturned only `where the record contains no evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt.'" United States v. Boyd, 1992 WL 70321 *1 (N.D. Ill. 1992) (quoting United States v. Bruun, 809 F.2d 397, 408 (7th Cir. 1987)).

  In evaluating a motion for a new trial, FED. R. CIV. P. 33 provides that "the court on motion of a defendant may grant a new trial to that defendant if required in the interest of justice." However, a court may not reweigh the evidence and set aside the verdict simply because it believes some other result would be more reasonable. See United States v. Reed, 875 F.2d 107, 113 (7th Cir. 1989). Before a new trial can be granted, the evidence must preponderate heavily against the verdict such that it would be a miscarriage of justice to let the verdict stand Id.


  18 U.S.C. § 513(a) prohibits an individual from making, uttering or possessing a counterfeit security "of a State or political subdivision therefor or of an organization, with intent to deceive another person, organization or government." Therefore, to meet the statutory requirements, the Government must show two things: 1) the counterfeit security is "of" a state, political subdivision, or organization; and (2) the counterfeiter intends to use the security to deceive "another" person, organization or government. 18 U.S.C. § 513(c) defines "organization" under the statute to mean "a legal entity . . . which operates in or the activities of which affect interstate or foreign commerce." In short, the plain statutory language requires that two separate organizations are involved: the organization counterfeited, and the organization deceived.

  Here, both Defendants challenge their convictions under the theory that the Government failed to prove the required statutory nexus to interstate commerce because it failed to establish that the purported issuers of the falsified checks were real companies. Defendants contend that since the Government failed to prove that these companies even existed, the Government certainly did not establish that these possibly fictitious companies qualified as "a legal entity . . . which operates in or the activities of which affect interstate commerce."

  For support, Defendants cite United States v. Barone, 71 F.3d 1442, (9th Cir. 1994), a case in which the Ninth Circuit reversed the conviction of a man who counterfeited the checks of defunct shell companies. In Barone, the Ninth Circuit reasoned that since the at-issue shell companies did not qualify as "organizations" because their "only effect on interstate commerce results from the passage of its forged securities to a victim which operates in interstate commerce." Id. at 1445.

  The Government responds by contending that it did, in fact, sufficiently prove the existence of the at-issue companies as real entities operating in interstate commerce. At trial, Robert Johnson testified as to the existence of the companies. Johnson testified that when Andre Lee recruited him into the check counterfeiting scheme, he told him that he got the checks from "one of their friends that worked at a big company, maybe like ComEd — not ComEd, but I said that for an example — and they don't miss like, you know, eight or nine hundred dollars out, you know." (Trial Transcript, p. 38). When questioned on cross-examination regarding one entity, Johnson also testified that he "did check on my own to see if" Prestige Electrical Maintenance ("PEM") really existed, and concluded that it did, albeit "not at that location" listed on the check. Id. p. 47. Johnson then testified that he researched PEM using a "telephone book" and "411." Id. When defense counsel followed up on Johnson's answer by asking which phone book he located PEM in, Johnson replied that it was an internet yellow pages. Id.

  The Government also presents alternative grounds for upholding Defendants' convictions. The Government notes that a check constitutes a security "of" both the account holder and the bank on which is drawn. See United States v. Wade, 266 F.3d 574 (6th Cir. 2001). Therefore, the Government correctly argues that if it established that both the payee and victim bank were real entities which affect interstate commerce, it met its statutory burden. To establish the bank-bank link, the Government provided the testimony of Gladys Blancas ("Blancas"), the Bank Protection Coordinator for St. Paul Federal Savings Bank ("St. Paul"), a bank which was victimized by Defendants' scheme. Blancas testified that St. Paul bank was FDIC insured. (Trial Transcript, p. 2). She also testified as to "the regular business process by which the payroll checks passed by the defendants were determined to be counterfeit." (Gov. Res. Br., p. 6). This process, according to the Government's rendition of Blancas' testimony, was as follows:
[T]he checks were cashed by the St. Paul Federal Savings Bank; the checks were stamped with the teller number and branch identification, the checks were then forwarded to the payee banks, through the Federal Reserve Board, and, finally, the checks were returned with stamps or other markings from the payee banks indicating that the checks were counterfeit.
Id. at 6-7.

  The Court initially notes that Blancas did not directly testify that the checks were forwarded to the payee banks "through the Federal Reserve Board." Blancas did testify, however, that the banks returned the checks unpaid, and that she contacted them to find out why. Blancas' only testimony as to the Federal Reserve System came when she confirmed that her bank was insured by the FDIC. Nevertheless, the Court agrees that Blancas' testimony, and the accompanying checks which were submitted as exhibits, suffice to establish that these banks were real entities: they evidently stamped the counterfeited checks "refer to maker," and were successfully contacted by Blancas.

  The Government also contends that it provided evidence regarding the interstate commerce requirement, arguing:
[A]s the government argued and the jury found, the testimony of Gladys Blancas — as well as the counterfeit checks themselves, bearing the stamps of the payee banks — established that the payee banks were involved in the regular business practice of accepting checks drawn on accounts named thereon. Those checks, if counterfeit or drawn on accounts with insufficient funds, were sent back to St. Paul Federal Savings Bank, the victim bank insured by the FDIC. Thus, not only did the payee banks operate in interstate commerce themselves, their activities concerning the instant offense conduct affected interstate commerce by affecting St. Paul Federal Savings, an institution insured by the FDIC, to its detriment.
(Gov. Am. Resp. at 8-9). The Government also notes that Defendants stipulated that the counterfeit checks at issue were either not authorized by the payors corporations, or that the checks named fictional payor corporations and accounts. (Gov. Am. Res. At 10).
  The Government cites United States v. Spinello, 265 F.3d 150 (3rd Cir. 2001), as further support of that the banks operated in interstate commerce. While analyzing the federal statute criminalizing bank robbery, the Third Circuit in Spinello noted that, "FDIC-insured banks are fundamental to the conduct of interstate commerce," id. at 158, and further stated:
Congress itself recognized the connection between interstate commerce and the federally-insured status of banks when it concluded that interstate commerce would be facilitated by a system of federal insurance for the deposits of banks . . .
Id. at 157 ...

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