UNITED STATES COURT OF APPEALS For the Fifth Circuit

No. 92-7778

United States of America,

Plaintiff-Appellee,

VERSUS

Lynn Williams,

Defendant-Appellant.

Appeal from the United States District Court For the Southern District of Mississippi ( January 13, 1994 )

Before WISDOM, HIGGINBOTHAM, and JONES, Circuit Judges.

WISDOM, Circuit Judge:

The appellant/defendant, Lynn Williams, originally was

indicted on August 7, 1991, on charges of conspiracy to embezzle

funds belonging to a labor union pension plan under

and embezzlement of those pension funds under

. A

series of superseding indictments additionally charged him with

making false statements to a federally insured bank under

. On September 10, 1992, the trial court denied the

defendant's motion to dismiss. In that motion, Williams alleged

prosecutorial misconduct, a lack of materiality of the alleged

1 false statements, and violations of his rights under the Speedy

Trial Act1.

Williams was charged along with several co-defendants, all of

whom pleaded guilty.2 He refused to do so, presumably because his

participation in the criminal enterprise consisted only of lending

his friends money and, on two fateful occasions, signing documents

that they presented to him. A jury nonetheless found Williams

guilty of one count of conspiracy and three counts under § 1014;

the jury found him not guilty on the two pension fund theft counts.

After denying Williams's motion for judgment of acquittal or for a

new trial, the district judge sentenced Williams to 21 months in

prison. Williams appeals from that conviction. We AFFIRM his

conviction for conspiracy but VACATE his convictions under § 1014.

I. Background

Although the charges against Williams are not particularly

complex, some background on the other defendants's relationships

and business ventures is helpful to understand their context.

Eugene Sykes, of Baton Rouge, Louisiana, owned and operated Morning

Treat Coffee Co. for two years until it filed for bankruptcy in

1985. In July of that year, Charles Sykes (Eugene's brother)

formed Southern Coffee Co. as a distinct successor to Morning

1

et seq. 2 Prior to the second indictment, co-defendants Charles and Eugene Sykes pleaded guilty. Prior to the third indictment, co- defendants Andrew Cutler, Wilson Evans, and Robert Matthews pleaded guilty, leaving Williams the sole remaining defendant.

2 Treat; Southern bought the remaining assets of Morning Treat.

Although Charles owned 100% of Southern Coffee, he made Eugene

president. Eugene spent his time handling the day-to-day affairs

of Southern Coffee while Charles continued his main vocation,

practicing law and representing labor unions along the Gulf Coast

in Mississippi.

In April 1986, Eugene sought additional funding for Southern

Coffee. He applied for a loan of two million dollars to the

Louisiana Imports and Exports Trust Authority (LIETA), an

organization designed to aid small businesses in Louisiana in

gaining access to the import and export markets. During this time,

Williams, an attorney in Baton Rouge, maintained an ongoing

personal and business relationship with Eugene. For example,

Williams accompanied Eugene when he went to New Orleans to address

the LIETA Board and, further, applied to a bank for a letter of

credit for Eugene to pledge as collateral. When that application

was rejected, Williams personally borrowed $50,000 and lent the

money to Eugene.

Always the entrepreneur, Eugene decided to get into the marble

cutting business. In particular, he started China Marble of

America, Inc., and sought to buy the Colombus Marble Works of

Colombus, Mississippi (with a quarry in Alabama) for $460,000.

Eugene told his brother Charles, the attorney, about his interest

in the marble venture and enlisted his help in securing funding.

Eugene knew that Charles was extremely influential with the unions

he represented and might have access to money in their pension

3 funds.

Eventually Eugene gave Charles documents outlining a proposal

for the marble venture and proposing plans to build a Morning Treat

Coffee plant in Mississippi. The proposal sought interim funding

until a loan of one million dollars from LIETA could be

consummated. Charles passed the proposal to co-defendants Wilson

Evans and Robert Matthews, two trustees of the Gulfport Steamship

Company-International Longshoremen's Association Pension Fund

("Fund").3

Evans and Matthews may have been blinded by wishful naivete:

the proposal came when jobs were scarce. They doubtless saw the

marble cutting venture as the source of some much-needed local

employment opportunities. The reality, unfortunately, was quite

different. The proposal was but a means of misappropriating

pension money to secure loans for Eugene's various ventures. In

addition, LIETA would never have given money to a venture in

Mississippi (the organization was founded to aid small businesses

in Louisiana, as the "L" in LIETA indicated).4 Evans and Matthews

wrote Eugene a letter telling him that the Fund would pledge one

million dollars in certificates of deposit to secure the LIETA

loan. When no LIETA money was forthcoming, Eugene and Charles

applied to two banks in Mississippi, using the pension's

3 Williams also was a business associate of Evans and Matthews. 4 All of that really was moot because the State of Louisiana had yet to fill LIETA's coffers.

4 certificates of deposit as collateral.5 On the strength of the

pledged collateral, the banks approved the loans. Eugene used the

bank loans for the purchase of the marble equipment and for

operating expenses for his other ventures.

When his businesses failed, Eugene's loans went into default.

The banks exercised their rights over the certificates of deposit

against the Fund. The pension fund lost the money represented by

the certificates of deposit.

II. Facts Pertinent to the Section 1014 Charges Against Williams

In the course of arranging the bank loans, Charles prepared

three form resolutions, a standard component of a loan application.

Eugene then presented these forms to Williams who signed them. By

signing both of the loan applications and, accordingly, attesting

to the veracity of the information contained there, Williams

allegedly made two statements that formed the basis for his

convictions. First, the forms listed him as the treasurer,

secretary, and certifying officer of Southern Coffee. Second, the

resolutions stated that approval for the loans had been given at a

meeting of the board of directors of Southern Coffee.

The government contended that Williams had never been elected

to those positions or served in those capacities and, similarly,

that the board of directors had not formally approved the

resolution. The jury agreed and convicted Williams of making false

5 The banks involved are the People's Bank of Biloxi and Merchant's Bank and Trust Company, Bay St. Louis.

5 statements to a federally insured bank.

III. Materiality Under Section 1014

It is illegal under

to make a false, material

statement to a federally insured banking institution. To sustain

a conviction under this statute, the government must prove that:

(1) the defendant made a false statement to a financial

institution; (2) the defendant knew the statement was false when he

made it; (3) he made it for the purpose of influencing the

financial institution's action; and (4) the statement was false as

to a material fact.6

The defendant challenges that the statements were false, that

he knew they were false, and that they were material. He concedes

that the statements were made to influence the bank's decision on

Eugene and Charles's loan application.7 We need not address

whether the statements were false or whether Williams knew of their

falsity for we hold that the statements were not material. As a

result, the government failed to meet its burden and we must vacate

Williams's convictions under § 1014.

Statutes imposing criminal penalties for making false

statements long have required materiality as an essential element.8

6 United States v. Thompson,

(5th Cir. 1987). 7 Although Eugene and Charles applied to two banks for two distinct loans, we discuss these applications in the singular where the plural would require a cumbersome syntax. 8 Sir Edward Coke wrote in 1680 that perjury is a crime committed by one who "sweareth absolutely, and falsely in a

6 Section 1014 is no exception: the government must prove that the

false statement matters.

Statutes like section 1014 and section 1001 (the statute that

makes it illegal to make a false statement to a government

department or agency) are "highly penal" and, thus, require that

the materiality element be taken seriously. In United States v.

Beer9, we emphasized that the severe penalties flowing from a

conviction for making a false statement require the government to

"make a reasonable showing of the potential effects of the

statement".10 In the present case, the government failed to do so.

Materiality is a legal determination made by the district

court and, accordingly, is subject to complete review by this

Court.11 A challenge to the district court's finding of materiality

is not a challenge to the sufficiency of the evidence even though

it is a product of a factual evidentiary showing.12 In other words,

our review seeks to determine whether the district court's finding

of materiality was erroneous as a matter of law.13

matter material to the issue." 3 E. Coke, Institutes 164 (6th ed. 1680). Otherwise, as Blackstone stated, "if it only be in some trifling collateral circumstance, to which no regard is paid, it is not penal." 4 W. Blackstone, Commentaries *137. 9

(5th Cir. 1975). 10

. 11 United States v. Lueben,

(5th Cir. 1988). 12 See

13

7 A false statement is material if it is shown to be capable of

influencing a decision of the institution to which it was made.14

Moreover, the statements must be analyzed in the particular context

in which they were made.15 In the context of the present matter,

our inquiry is limited to whether the statements at issue -- the

loan application forms listing Williams as secretary and treasurer

and attesting that the board of directors formally approved the

loan -- were capable of influencing the bank's decision to loan the

Sykes brothers money. We hold that these statements were not

capable of influencing the bank's decision one way or the other

and, as such, fail to meet the materiality requirement.

The United States urges that we adopt the broadest possible

definition of materiality, relying on the Lueben case for the

proposition: "[I]f these statements were immaterial, why were they

required by the lending institution in each of the transactions?"16

This dictum was intended as a rhetorical guidepost, not a bright

line rule. Otherwise, the law of materiality would change every

time that a bank printed up a new loan application form. We need

not resort to these short-hand approaches, however, for the

standard we are to apply is clear: If Williams's statements were

capable of influencing the bank's decision, they are material.

14

. The statement need not actually influence a decision provided that it is capable of doing so. Reliance is irrelevant. United States v. Puente,

(5th Cir.), cert. denied,

(1993). 15 Weinstock v. United States,

(D.C. Cir. 1956). 16 Lueben,

.

8 The government marshalled evidence showing that the banks

would not have made the loans if they had known that these

statements were false. In actuality, the bank officers merely

testified that they would not have approved the loans if they had

discovered that the applicant had lied. That does not make the

lies themselves material, however. This is a crucial distinction.

Aided by hindsight, the banks undoubtedly would not have made these

loans. Any bank would be understandably reluctant to lend money to

a corporation when its officers lie on the loan application. In

sum, the government's evidence demonstrates only that the banks

maintain a policy that warns against loaning money to entities

which do not tell the truth; it is no way probative of the

materiality of these particular statements.

Williams, in contrast, urges that we limit the parameters of

materiality by looking to the purpose of the loan application. He

argues that the fact that a board of directors meeting may not have

taken place or that Williams was not actually secretary or

treasurer did not matter to the bank in its evaluation of the loan

application. He asserts instead that the only material fact

elicited by the forms was that Charles, as sole director and

shareholder of Southern Coffee, had authorized his brother Eugene

to act for and bind the corporation when dealing with the banks.

Williams presented evidence that the purpose of a corporate

resolution in this context is to identify the person who has the

power to bind the corporation. As to these loans, that person was

primarily Eugene and, secondarily, Charles. Hence, Williams

9 argues, he was but an unnecessary (and immaterial) bystander.

We agree that an examination of the purpose of the loan forms

is appropriate when defining the boundaries of materiality. The

loan application includes standard forms used to verify the

identity of those persons legally authorized to sign corporate

checks and indorse instruments payable to the corporation.

Moreover, the forms identify the persons capable of borrowing money

from the bank in the corporations's name or of paying notes to the

bank. The Executive Vice-Presidents of both the People's Bank and

Merchant's Bank testified:

That the purpose of the Corporate Resolution was to establish which persons had authority to legally bind Southern Coffee Company and which persons had authority to withdraw funds on behalf of Southern Coffee Company.17

The forms clearly identify those people as Eugene Sykes, the

president, and C.T. (Charles) Sykes, the agent. In the light of

this purpose, the fact that Williams was or was not secretary and

treasurer or the question of whether the board met is of no

consequence.

When we look to the purpose of the bank forms, we are asking

whether reliance on the false statements would have changed the

outcome. In the Beer case, for example, we held that the

defendant's failure to include a loan to which he was accommodated

on an FDIC form was immaterial.18 We explained that one way of

determining whether the statements were capable of influencing a

17 Williams offered this same testimony at trial. 18 Beer,

.

10 bank's decision is to extrapolate from the facts and ask, "If the

bank had relied on the defendant's statements, would it have made

any difference?" Similarly, the Weinstock court held that

inaccurate information about the name of an organization on

particular dates was not material for, if relied on, it would not

have influenced any decision made by the agency to which it was

directed.19

From that point of view, the cases upon which the government

relies are distinguishable. This is not a case like Lueben, where

the defendant lied about his income to make his financial position

look more attractive to the bank.20 Nor is it like Puente, where

the defendant lied about his previous felony conviction in an

effort to whitewash his past.21 In those circumstances, it is clear

why a bank or federal institution, armed with the truth, would have

arrived at a different decision on a pending application.

Section 1014 was not designed to convict on a technicality.

More is required. Williams merely signed the resolutions based

upon the representations of Eugene and Charles. Williams's

signature reflected Charles's designation of a secretary and

treasurer, if only for the purposes of procuring the loan money.22

19 Weinstock,

. This framework should not be confused with our earlier statement that the legal determination of materiality is made without concern for whether the bank actually relied. 20 Lueben,

. 21 Puente,

. 22 In fact, this assertion forms the basis of Williams's contention that the statements were not actually false. Williams

11 The banks wanted to know who was responsible for these loans.

Eugene and Charles were; Williams was not. We hold that Williams's

statements were not material and, accordingly, we vacate his

convictions under § 1014.23

IV. The Conspiracy Count

Williams was charged under

with conspiracy to

convert to one's own use securities of a pension fund. Although

the jury acquitted Williams of the substantive crime of embezzling

pension funds, it convicted him of conspiracy. Upon appeal, he

charges that the evidence was not sufficient to sustain that

verdict.

When a challenge is made to the sufficiency of the evidence

argues that as a sole shareholder and director, Charles could have had the meetings "in his head"; i.e., all activity that Charles took necessarily was the product of a "meeting" and necessarily had the unanimous support of the board of directors (of which Charles was the only member). As Williams argues, when Charles turned in resolutions to the banks indicating that a meeting had taken place and that Williams was the secretary and treasurer, those assertions were -- by virtue of the fact that Charles said so -- true. Similarly, Williams relies on Charles's statement that he did not intend to submit false documents; hence, as Williams argues, Charles must have believed that Williams was the secretary and treasurer. The problem, however, came when Charles testified, in no uncertain terms, that no such meeting occurred and that Williams never was the secretary or treasurer of Southern Coffee. Although it may appear somewhat unfair for Charles now to say that these assertions were untrue, his is the only viable interpretation of what he meant and what actually occurred in a company where he was the sole shareholder and the sole director. 23 As previously mentioned, in the light of our holding that the statements at issue are not material, we need not determine whether the statements were actually false or whether Williams knew they were false.

12 supporting a criminal conviction, the appellate court views the

evidence in the light most favorable to the government, and with

all reasonable inferences and credibility choices drawn in support

of the jury's verdict.24 The question is whether a reasonable jury,

as the final arbiter of the weight of the evidence, could find that

the evidence establishes Williams's guilt beyond a reasonable

doubt.

To sustain a conviction for conspiracy, the government had to

prove that: (1) two or more persons agreed to commit a crime; (2)

the defendant knew of the agreement and voluntarily became a part

of it; and (3) at least one of the conspirators committed an act in

furtherance for the conspiracy.25 Williams contends that the

government failed to meet its burden with respect to the second

prong. He argues that the evidence is insufficient to show that he

possessed the requisite knowledge of the conspiracy and voluntarily

participated in it.

Although we will not conjecture as to what weight the jury

accorded any particular piece of evidence, some evidence stands out

for its probative worth. For example, the government demonstrated

that on at least two occasions discussions took place in Williams's

24 Glasser v. United States,

,

(1942); United States v. Kington,

(5th Cir.), reh'g denied,

(1989). 25 United States v. Frydenlund,

(5th Cir.), cert. denied,

(1993); United States v. Chaney,

(5th Cir. 1992). It is important to note that Williams himself need not have committed an overt act in furtherance of the conspiracy so long as one of his co- conspirators did. Chaney,

.

13 presence outlining the conspiracy to use the pension fund

certificates as collateral for the loans. The pension fund

certificates were identified specifically as Longshoreman Pension

Fund CD's. In addition, the government properly introduced

circumstantial evidence of guilt, including the defendant's

presence at discussions and associations with the co-conspirators.26

The government cast doubt on Williams's contention that he

never knew that the pension fund CD's were pledged as collateral

for the loans. Williams maintained close business relationships

with his co-defendants. He knew that Southern Coffee was in some

financial trouble, for he had lent Eugene Sykes large sums of money

to keep the company afloat. Williams knew that Eugene needed

$435,000 to procure the marble cutting business (the purchase price

of $460,000 less the $25,000 that Williams had lent him).

Accordingly, Williams knew that Eugene would be going to

Mississippi banks for that money. Similarly, the certificates were

used to secure loans well in excess of the $460,000 that Williams

knew was needed for the marble cutting venture. In fact, the loan

from People's Bank alone amounted to $600,000, leaving an

unexplained surplus.

Williams is a trained attorney and no stranger to the world of

business. A reasonable jury could have concluded that Williams

26 United States v. Magee,

(5th Cir. 1987). Note, however, that mere presence alone does not establish knowledge or participation. United States v. Espinoza-Seanez,

(5th Cir. 1988), reh'g denied,

(1989).

14 understood the intent of his friends and, more, knew that Eugene

had appropriated the pension funds's CD's to finance his various

ventures.

Although Williams's false statements on the bank forms were

not material, he was by no means an innocent bystander in the

overall criminal scheme. While his co-defendants plotted the

enterprise, Williams helped them achieve their aims. Williams did

introduce some exculpatory testimony, but the jury apparently

elected to accord it little credibility.27 While no one piece of

evidence may be patently sufficient, in the aggregate the quantum

of evidence introduced was enough to allow a jury to reach a guilty

verdict.28 We affirm his conspiracy conviction.

V. The Speedy Trial Act

The Speedy Trial Act ("the Act")29 requires that a federal

criminal defendant be tried within seventy days of his indictment

or appearance in front of a judicial officer, whichever comes

later.30 If the defendant is not brought to trial within this

statutory period, the indictment must be dismissed.31 Williams

charges that the district court erred in denying his motion to

27 See United States v. Barksdale-Contreras,

(5th Cir. 1992), cert. denied,

(1993) (the jury is the final arbiter of credibility). 28 See Id. 29

, et seq. 30

§ 3161(c)(1). 31 Id. § 3162(a)(2).

15 dismiss which he based, in part, on an allegation that the court

violated the Act's provisions.32

We will not belabor the Speedy Trial Act issue in the light of

the detailed opinion entered by the district judge. The Act

provides for a number of "exclusions" in which time that passes is

not charged against the 70-day clock.33 The district court added

up the excludable time and concluded that fewer than 70 days had

expired. We agree with that conclusion.

Williams first charges that the district judge improperly

tolled the clock by granting continuances after two of the

superseding indictments.34 He also complains that the district

judge granted continuances without articulating his reasons for

doing so as mandated by § 3161(h)(8) of the Act. That section

permits a judge to toll the clock if, in that judge's estimation,

"the ends of justice served by taking such action outweigh the best

interest of the public and the defendant in a speedy trial."35 The

Act reflects, in part, a belief that the boundaries of fairness

32 The burden is, at all times, on the defendant to prove that such dismissal is appropriate.

(a)(2). 33

§ 3161(h). 34 When a superseding indictment is filed prior to the dismissal of the first indictment, as happened three times in the present matter, the original 70-day clock remains the appropriate measure. Id. § 3161(h)(6). The defendant devotes much space to this simple proposition which does not appear to be in dispute. Moreover, because the superseding indictments retained some of the original charges, motions pending on the original charges tolled the running of the clock for new charges in the superseding indictment. 35 Id. § 3161(h)(8)(A).

16 affect not only the maximum time that a criminal defendant may be

held without trial, but a minimum time prior to which it would be

unfair to bring him to trial.36

The question presented, then, is whether these continuances

were within the "ends of justice" and, further, whether the judge's

failure to articulate reasons for the continuances constitutes

reversible error. The court's reasons undoubtedly were those

outlined by the government in its motion: the plea negotiations

with the defendant had failed and the government had new evidence

to submit in conjunction with a superseding indictment. The plea

negotiations favored both sides; we cannot say upon review that

justice was not served by granting a continuance after those

negotiations broke down. We uphold the court's determination that

the clock was properly tolled in these circumstances.

As for the judge's failure to articulate the bases for the

continuances, we look to the two-fold purpose of the articulation

requirement: It ensures first, that the trial court will carefully

consider all relevant factors and, second, that a clear record will

exist for appeal.37 Although § 3161(h)(8)(A) requires an "ends of

justice analysis" reflected in the record for every continuance

granted, we explained in United States v. Eakes38 that reversal is

36 Id. § 3161(c)(2). 37 United States v. Rush,

(1st Cir. 1984), cert. denied,

(1985). Although the reasons for an "ends of justice" continuance must be articulated, they need not be articulated at the time the continuance is granted. Id. 38

(5th Cir.), cert. denied,

(1986).

17 not in order when the reasons for a continuance are patent.

We decline to apply a hypertechnical construction to the language of the Act in this case where the judge clearly granted the continuance for the benefit of and at the indirect request of the defendant who complains of that grant.39

In the case at hand, the district court's reasons for granting the

continuance are clear and justified. Accordingly, we will not

reverse because the court failed to articulate its reasons.

Although we uphold the district court's determination, we encourage

any court confronting this issue to err on the side of caution and

explain for the record how the continuance serves the ends of

justice.

Williams next complains that the district court erred when it

determined that the defendant had motions outstanding after March

4, 1992. The Act excludes from calculation the period that runs

from the time when pretrial motions start pending until the court

resolves them.40 A motion under advisement is excludable up to

thirty days.41 If the court has several motions on which it must

rule, however, this time period can be reasonably extended.42

Similarly, the time between the filing of a motion and the hearing

on that motion is to be excluded, even if the time lapse was not

39 Id. at 504. 40

(h)(1)(f). 41

§ 3161(h)(1)(J). 42 United States v. Tibboel,

(7th Cir. 1984).

18 reasonable.43

Specifically, Williams argues that the period running from

March 4, 1992, to July 28, 1992 (146 days in all) should be counted

against the clock. The former date, he argues, marks the last day

on which he still had a motion pending (his motion for severance,

which ultimately was denied). The latter date marks the next time

he filed a motion, once again tolling the clock. The district

court, however, specifically rejected this argument. The court

stated, unlike the characterization Williams would give, that

Williams still had a number of pretrial motions pending and

undecided at the time the motion for severance was denied.44 We

will not disturb the district court's explicit conclusion that

those motions remained unresolved beyond the disposition of the

defendant's motion to sever, in the absence of some indication to

the contrary.

Although the superseding indictments and multiple defendants

in this case complicate a Speedy Trial Act analysis, we hold that

the district court's conclusion was correct; fewer than 70 non-

excludable days ticked off the Speedy Trial clock.

43 Henderson v. United States,

,

(1986). 44 By the district court's calculations, March 4 really had no significance, for, although the central motion to sever had been resolved, the other outstanding motions continued to toll the clock. See United States v. McCusker,

(5th Cir. 1991). The origins of the dispute are clear: the judge who oversaw Williams's motion to sever gave conflicting indications regarding the finality of his judgment on all outstanding motions.

19 VI. Conclusion

For the foregoing reasons, we AFFIRM Williams's conviction for

conspiracy under

; we VACATE his convictions

; and we REMAND this matter to the district court for

re-sentencing in the light of this result.

20