United States District Court, N.D. Indiana, Hammond Division
OPINION AND ORDER
P. SIMON, UNITED STATES DISTRICT COURTCHIEF JUDGE.
Weichman, former owner of an accounting firm bearing his
name, has been charged in a 36-count indictment with bank
fraud, concealment of assets related to his bankruptcy,
conspiracy to conceal assets, money laundering, wire fraud,
and filing false tax returns. (DE 48.) Among other crimes,
the indictment alleges that Weichman devised a scheme to
withdraw and borrow millions from Centier Bank in the names
of two clients of his accounting firm (designated “Dr.
A” and “Dr. B”) without their knowledge or
authorization. He moves to dismiss Counts 1-8, 10(a), and 27
for bank fraud, concealment of assets, and money laundering
under Federal Rule of Criminal Procedure 12(b)(3)(B), on
grounds that they are insufficiently alleged. The motion has
been set for oral argument with respect to Counts 10(a) and
27, and this opinion sets out the reasons Weichman's
motion is denied with respect to Counts 1-8.
Rule 7(c)(1), “an indictment need not say much to be
deemed sufficient- it must: (1) state all the elements of the
crime charged; (2) adequately apprise the defendants of the
nature of the charges so that they may prepare a defense; and
(3) allow the defendant to plead the judgment as a bar to any
future prosecutions.” United States v. Moore,
563 F.3d 583, 585 (7th Cir. 2009) (internal quotation marks
and citation omitted). Weichman does not allege that the
indictment fails to apprise him of the nature of the charges
against him or that he would not be able to plead the
judgment as a bar against future prosecution, so the only
question is whether the indictment sufficiently sets out the
elements of the crimes charged. To make this determination, I
must review the indictment “as a whole” and give
it a “practical, rather than a hypertechnical,
reading[.]” Id. In doing so the allegations in
the indictment are taken as true. Id. at 586.
are two ways to commit the crime of federal bank fraud, one
under 18 U.S.C. § 1344(1) and another under 18 U.S.C.
§ 1344(2). Weichman is charged with violating both
provisions, and he challenges the sufficiency of the
indictment with respect to both subsections. I'll start
with his challenge to subsection 1344(2) before moving to his
challenge to subsection 1344(1).
Fraud Under 18 U.SC. § 1344(2)
fraud under section 1344(2) has two elements: (1) that the
defendant knowingly executed a scheme “to obtain any of
the moneys . . . owned by, or under the custody or control
of, a financial institution” and (2) that he did
so“by means” of a materially false or fraudulent
pretense, representation, or promises. See Loughrin v.
United States, 134 S.Ct. 2384, 2389 (2014). Weichman
argues that Counts 1-8 do not allege that he used a false or
fraudulent pretense, statement, or promise because he was
authorized to access his clients' accounts and lines of
credit and did not forge or alter any document to obtain
money from the bank. (DE 124 at 3-5.)
disagree. Counts 1-4 and 8 allege that Weichman
“without Dr. A's knowledge or consent, used a stamp
that bore Dr. A's signature to complete  checks written
to Dr. B“ and that he “caused employees . . . to
call in transfers of tens of thousands of dollars from Dr.
A's account[.]” (DE 48 at 6.) It's clear from
the indictment that each of these transactions relied on an
implicit misrepresentation that Weichman was authorized to
make that transaction. See United States v.
Falcone, 934 F.2d 1528, 1542 (11th Cir. 1991)
(“[U]nauthorized uses of the signature stamp were false
representations, akin to forgeries.”) (internal
quotation marks and citation omitted), vacated, 939
F.2d 1455 (11th Cir. 1991), reinstated on reh'g,
960 F.2d 988 (11th Cir. 1992); United States v.
Morgenstern, 933 F.2d 1108, 1113 (2d Cir. 1991)
(“By mixing negotiation of legitimate checks with
unauthorized deposits of fraudulently procured checks,
Morgenstern sought to convey the misleading impression that
he was acting within the scope of his legitimate
authority[.]”); United States v. Briggs, 965
F.2d 10, 12 (5th Cir. 1992) (“Briggs falsely held
herself out to have authority, which she in fact did not
have. This conduct constitutes a false pretense within the
meaning of the statute.”).
Weichman identified any real support for his claim that a
false statement under subsection 1344(2) requires the forgery
or alteration of a document. His motion cites four cases in
which a bank fraud conviction was overturned, at least in
part, because there was no forgery or alteration of the
check. (See DE 124 at 5 (citing United States v.
Davis, 989 F.2d 244 (7th Cir. 1993); United States
v. Rodriguez, 140 F.3d 163 (2d Cir. 1998); United
States v. Laljie, 184 F.3d 180 (2d Cir. 1999);
United States v. Thomas, 315 F.3d 190 (3d Cir.
2002)).) But those cases looked at whether the
evidence was sufficient to sustain a conviction, not
whether the indictment was sufficient.
importantly, the courts in those four cases were looking for
a forgery or alteration in order to determine whether the
defendant had intent “to victimize the
institution by exposing it to actual or potential
loss.” See Laljie, 184 F.3d at 189 (citations
omitted); see also Davis, 989 F.3d at 246-47;
Rodriguez, 140 F.3d at 167-68, Thomas, 315
F.3d at 201. The thinking went that, if there was no forgery
or alteration, the bank was a holder in due course and was
never at risk-and the defendant therefore lacked the
requisite intent. Such an exercise is no longer necessary
after the U.S. Supreme Court's decision in
Loughrin. There, the Court held that subsection
1344(2) does not require the government to prove intent to
defraud a financial institution. Loughrin, 134 S.Ct.
at 2389. The Court reasoned that the statutory language
already requires “some real connection to a federally
insured bank” and “appears calculated to avoid
entangling courts in technical issues of banking
law[.]” Id. at 2389-90, 2395, n. 9.
result, it no longer matters whether a defendant charged with
bank fraud under subsection 1344(2) intended to defraud the
bank or whether that intent can be shown by evidence that the
bank was put at risk. The government is only required to
allege (and prove) that the defendant knowingly executed a
scheme to obtain money owned, held, or controlled by a
federally insured bank and that he did so “by
means” of a materially false or fraudulent pretense,
representation, or promise. Id. at 2389. Counts 1-4
and 8 are more than sufficient in this regard.
5-7 also satisfy Rule 7(c)(1). Those counts allege that
Weichman falsely represented that Dr. B needed a credit line
for “personally investing in the stock market” on
June 13, 2006 in order to open a line of credit in Dr.
B's name, that Weichman falsely represented on June 20,
2007 that Dr. B needed to renew that credit line for
“personal investment[, ]” and that Weichman
falsely claimed on July 26, 2007 that Dr. B needed to
increase the credit line for “personal investments,
including funding the move of a business[.]” (DE 48 at
4-5.) Weichman argues in his reply that, while these
misrepresentations may have been the means by which he
opened, renewed, and increased a line of credit in his
client's name, they “did not induce the bank to
part with any money” because the bank didn't
actually part with any money until Weichman subsequently made
withdrawals. (DE 136 at 5-6).
outset, I note that Weichman waived this argument by making
it for the first time in his reply brief. See River v.
Comm'l Life Ins. Co., 160 F.3d 1164, 1173 (7th Cir.
1998); see also Med. Assur. Co. v. Miller, No.
4:08-cv-29, 2010 WL 2710607, at *3 (N.D. Ind. July 7, 2010)
(collecting cases). Even if he had raised it earlier-and even
if he is correct that the false statements he made to the
bank in 2006 and 2007 to induce the bank to open, renew, and
increase the credit line did not themselves induce the bank
to shell out money-Weichman's draws on the credit line
were successful only because of the implied misrepresentation
that he was authorized by Dr. B to conduct those
transactions. These implicit misrepresentations-like the
false pretenses under which Weichman allegedly withdrew cash
from his clients' accounts in the other counts -were the
“mechanism naturally inducing [the] bank . . . to part
with its money” and are sufficient at this point in the
litigation. See Loughrin, 134 S.Ct. at 2393.
these reasons, the indictment's allegations of bank fraud
under 18 U.SC. ...