UNITED STATES v. STOKES

WISDOM, Circuit Judge:

Joel C. Stokes appeals from his conviction for embezzlement and willful misapplication of bank funds in violation of 18 U.S.C. § 656, and for making false entries in bank records for the purpose of deceit in violation of 18 U.S. C. § 1005. We affirm.

Stokes was indicted in four separate indictments charging 11 counts of violations of 18 U.S.C. § 6561 and 18 U.S.C. § 1005.2 The indictments alleged that Stokes, as vice president and trust officer of Citizens Trust Company of Atlanta, Georgia, had embezzled and willfully misapplied bank funds and made false entries in bank statements and records for the purpose of deceiving bank officers and bank examiners. In several of the alleged transactions, Stokes made and approved loans to fictitious persons, such as "Ruth J. Carr," and "Rudolph Edwards," and used the proceeds to purchase real estate. On other occasions, Stokes took bank funds, converted them into cashier's checks, and exchanged the checks for bank stock from L. D. Milton, the president and chief executive officer of Citizens Trust. Stokes also caused the bank's operating accounts to be debited and the proceeds deposited in Stokes' personal checking account to cover overdrafts incurred as a result of his political campaign for city alderman.

For most of his life, Stokes had been a protege of the bank's president, L. D. Milton. Mr. Milton served as the bank's president for fifty years. At trial Stokes admitted participating in the alleged transactions but contended that they had been performed at Milton's direction. Stokes testified that the real estate was acquired on behalf of the bank and that fictitious names were used to obtain the loans and purchase the real estate because the bank, according to regulatory agencies, was already over-invested in real estate and Milton wanted to conceal these further acquisitions. Stokes contended that the other transactions were "loans" of bank funds to Milton and that Stokes was holding the stock as collateral for the bank. He also explained that the transfers of bank funds to reduce the overdrafts in his personal checking account were made at Milton's suggestion. To support his contention that all the transactions were authorized by Milton, Stokes sought to introduce evidence of twenty-two other transactions, unrelated to those in the indictments, that were intended to show that Milton dominated the bank and often approved bank operations that violated banking regulations or were otherwise irregular. On the government's motion to quash the evidence, the trial court restricted the evidence to the transactions mentioned in the indictments. Stokes was later convicted on 8 of the 11 counts — two counts of embezzling, five of misapplication of bank funds, and two of making false entries — and sentenced to three years. Stokes appealed.

I

Stokes' first contention is that the trial court erred in denying his offer of proof. He argues that since intent to injure the bank is an essential element of an offense under 18 U.S.C. § 656, evidence of other "irregular" transactions is relevant to show that the transactions in the indictments were authorized and consented to by the bank. Stokes relies mainly on United States v. Klock, 2 Cir. 1954, 210 F.2d 217, in which the defendant was charged with willful misapplication of bank funds by causing the bank to pay checks drawn by a depositor on insufficient funds. The Second Circuit held that it was error for the trial court to exclude evidence, consisting in part of financial statements of the bank's dealings with other companies, which tended to show that there was a bank policy of treating overdrafts as loans. The court noted that the existence of a bank policy of making loans in this manner would bear on the issue of the defendant's intent to defraud the bank. The court stated:

210 F.2d at 221.

The Klock case is not this case. In Klock, the evidence sought to be introduced related to transactions similar to those with which the defendant was charged. Evidence of a bank policy or practice of treating overdrafts as loans would have been relevant to show that the defendant's actions in causing the bank to pay checks drawn on insufficient funds were authorized and consented to by the bank. In the present case, the evidence sought to be introduced did not relate to any specific bank policy or practice. Rather, it consisted of transactions wholly unrelated to those with which the defendant was charged. The existence of irregularities in other unrelated and dissimilar bank operations was irrelevant to the issue whether the specific transactions alleged in the indictments were authorized. Such evidence could have only provided the basis for further indictments, not exculpated the defendant. Furthermore, Stokes did not even contend that he acted according to any regular bank policy or practice but contended merely that Milton authorized the transactions mentioned in the indictments. Stokes testified extensively on this issue. Milton was unable to attend the trial because of ill health.3 Both parties deposed him, but his deposition was not offered in evidence. Stokes failed to show that he was prevented from introducing any evidence relevant to the issues in the case. We therefore conclude that the trial court did not abuse its discretion in rejecting Stokes' offer of proof.

In addition, we note that authorization would not constitute a defense as to the alleged violations of 18 U.S.C. § 1005. Section 1005 provides that it is unlawful to make a false entry in any bank record with intent to deceive any bank officer or bank examiner. Thus, authorization or consent by a bank officer would not be a defense to the charge of making a false entry to deceive a bank examiner. United States v. Klock, 2 Cir. 1954, 210 F.2d 215.

II

Stokes' second contention is that the trial court erred in charging the jury with regard to circumstantial evidence. The trial court advised the jury that intent was an essential element of the crimes charged, that it is often very difficult to prove intent by direct evidence, and that intent may therefore be inferred from circumstantial evidence. Stokes argues that when the government relies on circumstantial evidence to prove intent, the defendant is entitled to an instruction that the circumstantial evidence must be such as to exclude every reasonable hypothesis other than that of guilt. We disagree. Some courts have indeed advocated the instruction suggested by the defendant. But as the Supreme Court held in Holland v. United States, 1954, 348 U.S. 121, 140, 75 S.Ct. 127, 99 L.Ed. 150, the better rule is that when the jury is properly instructed on the standards for reasonable doubt, such an additional instruction on circumstantial evidence is confusing and incorrect. In the present case, the trial court propertly instructed the jury on reasonable doubt. Thus, there was no need for an additional instruction on circumstantial evidence. O'Neal v. United States, 5 Cir. 1969, 411 F.2d 131, cert. denied 396 U.S. 827, 90 S.Ct. 72, 24 L.Ed.2d 77; Piassick v. United States, 5 Cir. 1958, 253 F.2d 658; Gregory v. United States, 5 Cir. 1958, 253 F.2d 104; Bryant v. United States, 5 Cir. 1958, 252 F.2d 746.

The instruction suggested by the appellant has been applied in this Circuit only as the standard by which the trial court considers a motion for judgment of acquittal and the standard by which the appellate court reviews the denial of such a motion. O'Neal v. United States, supra; Sykes v. United States, 5 Cir. 1967, 373 F.2d 607, cert. denied 386 U.S. 977, 87 S.Ct. 1172, 18 L.Ed.2d 138; Cuthbert v. United States, 5 Cir. 1960, 278 F.2d 220; Vick v. United States, 5 Cir. 1954, 216 F.2d 228.4

We conclude, therefore, that the decision of the district court must be affirmed.

Affirmed.