Williams v. United States Summary

PETITIONER:Williams
RESPONDENT:United States
LOCATION:North Haven Public School

DOCKET NO.: 80-2116
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 458 US 279 (1982)
ARGUED: Apr 20, 1982
DECIDED: Jun 29, 1982

ADVOCATES:
Nickolas P. Chilivis – on behalf of the Petitioner
Richard G. Wilkins – on behalf of the United States

Facts of the case

Question

Audio Transcription for Oral Argument – April 20, 1982 in Williams v. United States

Warren E. Burger:

We will hear arguments next in Williams against the United States.

Mr. Chilivis, I think you may proceed whenever you are ready.

Nickolas P. Chilivis:

Mr. Chief Justice and may it please the Court:

This case is here on writ of certiorari to the Fifth Circuit Court of Appeals.

The general questions presented are: whether the Congress, in passing Section 1014 of Title XVIII of the United States Code intended to proscribe the deposit of a bad check or 1014.

In this case there were three counts of an indictment and Mr. Williams, the Petitioner, was convicted on all three counts.

The first count was a misapplication count and really is only indirectly in issue in this case.

The other two counts both involved an allegation of the overvaluation of a security, that is a check, in order to influence the action of a federally… excuse me… insured bank on an advance or extension of credit.

All three counts were under 1014?

Nickolas P. Chilivis:

Two counts.

Two counts.

Nickolas P. Chilivis:

Yes, sir.

Now, in this case the Court has limited the consideration on certiorari to two counts, counts two and three.

But I think it’s significant that we consider what counts two and three were.

Count two was the overvaluation of 58,500 which was deposited, drawn on the Winn State Bank and deposited in the Pelican State Bank.

At a time when there were no funds to support it?

Nickolas P. Chilivis:

At a time when there were insufficient funds to support it, yes, sir.

And the Government–

That would have something to do with its value, wouldn’t it?

Nickolas P. Chilivis:

–Yes, sir.

It was a check that did not have funds to support it, yes, sir.

Now, that check did clear the bank in the normal course of things.

It was not dishonored; it was paid, and it never came back.

The other check was a $60,000 check drawn on the Pelican State Bank, which was deposited in the Winn State Bank, and that covered the first check.

That check too was paid by the bank and was not returned for insufficient funds, although at the time it was deposited there were not funds in the bank sufficient to cover it.

Now, the Pelican State Bank, which was where it all started, had the choice in that instance of bouncing the check or extending credit on the check, which resulted in an overdraft.

It chose to extend credit and have an overdraft.

Now, when this transaction started Williams had an overdraft at the Pelican State Bank.

Now, we ask the Court to bear in mind that this started off with an overdraft at the Pelican State Bank on May the 9th of something over $58,000.

The whole transaction ended on May the 11th, two days later, with an overdraft at the Pelican State Bank of something less than $60,000.

Nickolas P. Chilivis:

No check was dishonored.

No check was bounced.

And it was two separate checks.

Now, we mention that because we raised this issue in the Court of Appeals, that is the sufficiency of the indictment under Section 1014.

The Court of Appeals summarily dismissed that by saying that the argument was without merit, because the two transactions at the two banks constitute classical check kiting, and under Payne, which was a Fifth Circuit case, this check kiting falls within the scope of Section 1014.

Now, that’s significant because they used both counts of the indictment to create the concept of check kiting.

And as we know and as this Court has held, you cannot do that.

Each count must stand on its own and you cannot say that if both counts constitute an offense then one can be used in the other count unless it’s incorporated therein by reference.

In this case it wasn’t done.

Now, the argument in this case ought to be simple, then.

In its simplest terms, no crime was alleged in the indictment under counts two and three and no crime was proved within Section 1014.

However, the case has become complicated.

It’s become complicated because the Government contends that a check is a security, a security under Section 1014.

Now, I remind the Court of the language of Section 1014.

It says:

“Whoever makes a false statement or report, or whoever overvalues land, property or security for the purpose of influencing a federally insured bank to extend credit or make advances. “

and so on and so forth.

It uses the word “security”, not “a security”.

But in this case the Government claims that a check is a security and therefore this constituted the overvaluation of a security.

Counsel, I suppose that a check could be property in any event.

Nickolas P. Chilivis:

A check could be property, but not in the sense of this Code section.

A check could be property.

But this says

“land, property or other security. “

But the point is, I don’t think we have to look just at “security” in view of the broader term of “property”.

Nickolas P. Chilivis:

A check could be property.

Yes.

Nickolas P. Chilivis:

And the Government makes that argument.

But not in the context of that, and I’ll get further into that.

But it says “other security”, “other security”.

Nickolas P. Chilivis:

That’s correct.

So I mean, the only property it’s talking about is property that’s security.

Nickolas P. Chilivis:

That’s correct.

I don’t think it does say “other security”, does it?

Nickolas P. Chilivis:

It says “land, property or security”.

“Or security”, yes.

It doesn’t say “other”.

Stocks would clearly be covered, wouldn’t they, stocks or bonds?

Nickolas P. Chilivis:

Stocks or bonds would be covered if they are pledged as security.

But they’re talking about security in the sense of collateral, and this was not that.

You say whatever… you say that it should be read as meaning “other security”.

Nickolas P. Chilivis:

Yes, sir.

And security in th sense of collateral.

Yes.

Nickolas P. Chilivis:

Yes, sir.

And you think the legislative history helps you on that?

Nickolas P. Chilivis:

Oh, yes, sir.

Yes, sir.

Why do you think it would help you if it read “other security” rather than just “security”?

Nickolas P. Chilivis:

Well, I think that it’s security in the sense of collateral.

I think you may apply the doctrine of eiusdem generis and say that it relates back to the type of security that land or property is.

But I really say that it talks about security in the sense of collateral, not a security in the sense of a stock or a bond used for something other than collateral.

The Government’s position is–

You mean this wouldn’t… if you were going to a bank for a loan and they made you fill out a loan application and they wanted to know what your assets were, and you fill it out and you overvalued the property that you own by about ten times.

Nickolas P. Chilivis:

–Yes, sir.

And many times banks don’t take security on all of your property.

They just want to know how much property you got.

Nickolas P. Chilivis:

That’s correct, sir.

That would be a violation.

Well, then it doesn’t mean collateral.

Nickolas P. Chilivis:

No, sir, because there’re are two elements of it.

One of it says

“whoever shall knowingly makes a false report or statement. “

“a false statement or report”.

Yes.

Nickolas P. Chilivis:

Now, that’s what you’re talking about.

Yes, but it’s not just about collateral.

Nickolas P. Chilivis:

Well, but it’s about if you overvalued security in that sense, that’s correct, it’s not about collateral.

No, so that you wouldn’t… so that section isn’t limited to property that’s collateral.

It’s limited… it just says “property”, if overvaluing that property might influence a bank decision.

Nickolas P. Chilivis:

Well, that’s true.

That’s true.

Well, must not the statute be read by having the word “any” modify all the terms that follow, that is, “any land”, “any property”, or “any security”?

Nickolas P. Chilivis:

I think you could read it that way, sir.

Could you read it any other way?

Nickolas P. Chilivis:

I don’t know whether you could or not.

You could read it the way it’s written, I guess.

Well, is this check “any property”?

Nickolas P. Chilivis:

Well, it is property, yes, sir.

But it was not used… it says “for the purpose of extending”…

“of an extension of credit or an advance or a loan. “

It’s talking in terms of commercial and consumer credit.

It’s not talking about the presentation of a check to a bank for the purpose of having the bank collect it or whatever purpose the bank used it for.

What if the bank practice, though, is to immediately credit the account, which was true in this case?

If you can immediately draw on that credit and if it turns out that the check isn’t collected, the bank can sue you.

Nickolas P. Chilivis:

That’s correct.

Well, you certainly are extending… you certainly are getting credit from the bank if the bank gives you… lets you use that money without ever having collected the check.

Nickolas P. Chilivis:

But you have two things that occur.

One is the crediting your account is not an extension of credit.

That’s been held by one of the circuits, the Crown case which was recently decided.

Nickolas P. Chilivis:

It’s not an extension of credit.

But if you say that they draw on that, that that constitutes a commercial loan transaction, then that’s one thing.

But we submit, Your Honor, that it doesn’t, and in order to reach that result in this case it requires such convoluted reasoning that it does not give a person any warning that under this statute they are violating a criminal law.

And we say that… now, we didn’t raise the constitutional question of impermissible vagueness, but that’s what the principle is about.

Well, long before you get to a constitutional principle of impermissible vagueness, you get to some sort of a principle of leniency in statutory construction.

Nickolas P. Chilivis:

That’s correct, Your Honor.

And one of the… you ask about the legislative history.

Let me address that question by stating this.

This statute up until 1970 did not include any institution that could accept checks from private customers for deposit.

In 1970 the Congress merely passed a law adding certain federally insured banks and federal savings an loan institutions.

There was nothing that did anything but that.

That’s all they did.

Now, at the same time this Congress amended a bad check law in the District of Columbia.

That bad check law covers the conduct that the Government says ought to be covered here.

In that law they use the words

“check, draft or other instrument. “

used at a bank, or that sort of thing.

They made it clear what they were talking about.

Now, it seems to me that if Congress had intended to include a check or a draft under this statute, all they had to do was what they did when they amended the District of Columbia Act.

Well, why do you concede, then, that a check is property–

Nickolas P. Chilivis:

Well, a check–

–for purpose of the statute?

Nickolas P. Chilivis:

–A check is property, but not in the terms of the statute.

So you don’t concede a check is property?

Nickolas P. Chilivis:

Oh, no, sir.

I say a check is property.

A check can even be security, because if I tender to a bank several checks and say, hold this for a loan, when I get an extension, when I borrow money from the bank, it can be security.

But in the terms of this statute and this situation, it is not.

And the statute was never intended to include that.

If they did, why did they say “land, property or security”?

Nickolas P. Chilivis:

Why didn’t they say what they said in the same year, 1970, when they passed the last amendment to this Act, when they added banks and federal savings and Loan institutions?

Why didn’t they say “check” instead of “land, property or security”?

We think that’s part of the legislative intent.

In addition to that, we cite in our brief several situations where we quote from the House Banking and Currency Committee when they say it’s intended to cover a borrower.

We quote from the Senate Banking and Currency Committee, which talks about the 1970 amendment and says it simply adds institutions that are covered under the Act.

But if you go to a bank and present a check drawn on another bank and ask for cash and the bank gives you cash without having collected the check, and you know very well that the check isn’t any good, d you think you’ve got a loan from the bank?

Nickolas P. Chilivis:

No, sir.

What have you got?

Nickolas P. Chilivis:

Well, what I’ve got is a normal–

Do you think you’d end up owing the bank some money?

Nickolas P. Chilivis:

–Oh, yes, sir.

Yes, sir, I would.

But that happens–

Have you been extended credit?

Nickolas P. Chilivis:

–Well, not under the terms of this statute.

Let me explain it this way, because I don’t want to dodge the question.

Under Louisiana law, when you present a check to a bank for deposit you engage that you will, upon notice of dishonor, make that check good.

That’s what you engage.

Like if you give me the cash or give me the credit, you can treat this check as a note, and I promise to pay.

Nickolas P. Chilivis:

It’s in the form of a note, yes, sir.

It’s in the form of a note.

And what you do, you engage that, and that’s the only representation you make, unless you orally or in writing make some other representation.

I promise to pay for this, pay you back for this extension of money or credit?

Nickolas P. Chilivis:

That’s right.

You are getting it on an uncollected check.

You promise to pay only if the check is dishonored and the bank protests and gives you notice of dishonor.

Well, is this really any different if you go to the bank and say, please loan me $500, and they say, fine, sign this check, sign this note, and you sign the note?

Nickolas P. Chilivis:

Yes, sir, because in that instance it is a commercial transaction where you are borrowing money.

In the other instance you are merely depositing a check and they are giving you immediate credit, which is a unilateral decision on the bank.

It should be even worse, because it’s interest-free.

Nickolas P. Chilivis:

Well, there’s no evidence in this case it was interest-free.

This was an overdraft.

Let me put this hypothetical to you.

Suppose a man that has a good standing with a particular bank, good standing in the community, so he’s trusted–

Nickolas P. Chilivis:

Yes, sir.

–He goes to the bank and hands them a $50,000 check on a nonexistent bank, and the signature is forged.

Would he have violated this statute?

Nickolas P. Chilivis:

If he gives them a check on a nonexistent bank where the signature is–

Forged signature, but it’s payable to him, and the bank, because it trusts him, simply says, yes, here’s your $50,000.

Has he violated this statute?

Nickolas P. Chilivis:

–No, sir, I don’t believe he has.

You don’t think so?

Nickolas P. Chilivis:

Not this statute, no, sir.

Whether he has violated all 50 states’ bad check laws, which is another thing that’s involved in the history and rule of lenity, and that is that all 50 states in 1970 had bad check laws that covered that conduct and this has historically and traditionally been the subject of state regulation.

And if Congress had intended to make such broad inroads and intrusions into state law, then certainly it should have said something to let people know that that’s what it was doing.

May I ask you a question.

I wonder if the statute requires that credit be extended pursuant to a false application.

In other words, supposing you went into a bank and said, I want to open a checking account and I’m going to file an application, and you make a lot of false statements on where your other accounts are.

Nickolas P. Chilivis:

No, sir.

No, sir, it does not require that.

The statutory language is awfully broad.

Nickolas P. Chilivis:

It is broad, and it says

“to influence the extension of credit or advance. “

or forebearance and that sort of thing.

But it does not have to actually influence as long as it was intended to influence.

Well, if such an application were merely intended to influence the bank, A, to open the account, and B, to put you on their list of good customers, so the next time you come in they’ll treat you well, wouldn’t that violate the statute?

Nickolas P. Chilivis:

No, sir, because they’re talking about extensions of credit, advances, loans, commitments, that sort of thing.

It says it’s a false statement and so forth, upon any application, comma, advance, comma, discount, comma, purchase, purchase agreement, repurchase agreement, commitment or loan.

Now, they’r making a commitment to you that they’ll deal with you a a depositor.

Or any change or extension or any of the same–

It’s awfully broad language.

But you jus think it does require that–

Nickolas P. Chilivis:

Your reasoning is good up to the point where the interpretation of the word “commitment” is used to commit to open a bank account.

–Well, I can understand that’s the central thrust of the statute.

Nickolas P. Chilivis:

It’s an agreement to make a loan or to extend credit in a commercial, consumer type setting.

This one-sentence statute, two pages long; it’s difficult to parse down.

Nickolas P. Chilivis:

I know it is.

But in going to that section, that part of it that my Brother Stevens just referred to, what’s “deferment of action or otherwise”?

That’s the broadest possible, isn’t it?

“Or otherwise”; it seems to embrace almost anything.

Nickolas P. Chilivis:

Well, the… I don’t know what “or otherwise” means.

The only time it has been interpreted was in the Pinto case, and in that case what they did there… I believe it was the Pinto case… where the man had gotten an erroneous credit of $193,000 when it was supposed to be $193.

And after it was all found out that he had gotten the erroneous credit, he lied to the bank.

He told an intentional falsehood in order to get them to defer action or otherwise.

And they used it in the sense of defining deferring action.

And I don’t know what it means other than that.

But it certainly cannot cover a bad check.

But when you put a check into a bank, do you not, in the words of the statute, influence the bank to extend you the credit that goes with that?

Nickolas P. Chilivis:

No, sir, I don’t think so, for two reasons: Number one is, when you put the check in the bank you are not making a statement other than what the law says you’re making, and that is that you will pay the check in the event it is dishonored and you have notice of dishonor.

All right, that’s number one.

Number two, it is not security for anything.

It is not security for anything.

Now, admittedly under Louisiana law they have a lien on an uncollected item until such time as they send it out for purposes other than collection or until such time as it’s collected.

But again, if you have to take the Uniform Commercial Code or if you have to take the Louisiana Revised Statutes and compare them and then say that because they have a lien at some time for some period on uncollected items, then that fits into security or the influencing of a loan in this case, then that’s too convoluted to come under a statute which talks about land, property or security for the extension of credit.

And that’s one of the points we’re making.

Let me go back and see if I understand your answer to my question.

A man goes to the bank with a $50,000 check.

It’s no good.

Because of his standing, they either give him cash or let him cash a check on his personal account for anywhere up to that amount.

Has not his conduct influenced the bank to do something very important here?

Nickolas P. Chilivis:

It’s influenced them to issue money on an uncollected item.

It has done something.

You say that’s not a violation of the statute?

Nickolas P. Chilivis:

No, sir, it’s not a violation.

It’s a violation of a state statute, and if they can prove intent to defraud it may even come under other statutes.

Of course, you’d have to use the wire or the mails to do that.

But this statute is sort of a strict liability statute.

You don’t have to prove that they intended to defraud, and the Government takes the position that the mere giving of a check that at the time it’s presented to the bank does not have sufficient funds to cover it if he’s given immediate credit on it constitutes a violation.

I submit to Your Honors–

And if he knows that it won’t be… that’s it’s an overdraft.

Nickolas P. Chilivis:

–No, sir.

No, sir.

Well, surely the “willfully”–

Nickolas P. Chilivis:

No, sir.

He says “knowingly”, knowing that at the time it’s presented for deposit that there aren’t sufficient funds to cover it.

Now, that doesn’t mean that he doesn’t have a reasonable expectation to cover it when it’s presented, and I was just about to say that I submit that everybody has done that, deposited a check in the bank and covered it the next day at the receiving bank, the drawee bank.

But that’s what is contended to be a crime, and you don’t even have to prove, under the Government’s contention, that there was an intent to defraud, because this statute does not embrace the intent to defraud.

Now, the deposit, in response to Mr. Chief Justice’s question, if you take that just a little bit further and you make that a certified check that is known to be false, then I think you could have a violation of this statute.

Now, the reason for that is this.

If I–

What’s the difference, except the one is more impressive than the other?

–What’s the difference?

Nickolas P. Chilivis:

–No, sir.

The difference is what the legal representation is.

As I said before, when you have a check uncertified the legal representation under Louisiana law is that you will honor it on notice of dishonor.

Okay.

Now, if it’s a check drawn on a bank and it’s certified, then the representation is that the bank has the funds already on hand to cover that check and that it will be honored.

If you–

And that the money had been set aside.

Nickolas P. Chilivis:

–Has been set aside, and that’s the representation you make by the mere presentation of the check.

Nickolas P. Chilivis:

And if you know that to be false, then you have made a false representation.

Well, you made a false representation… I realize that a certified check may be different in that respect.

But I thought you said that a check was not either land, property or security, and therefore I don’t see why that element of the offense would be proved any more by a certified check than by a personal check.

Nickolas P. Chilivis:

Well, I don’t think it is property, land or security.

Well, why do you concede that a certified check might violate the statute?

Nickolas P. Chilivis:

Well, it depends.

If you got immediate credit, it might violate the other portion of the statute, Your Honors, the false statement for the purpose of influencing the extension of credit.

But the false statement has to be with respect to any land, property or security, doesn’t it?

Nickolas P. Chilivis:

No, sir.

No, sir, it does not.

Well, you have to willfully overvalue land, property or security.

Nickolas P. Chilivis:

No, sir.

There are two separate elements.

A false statement or report has to do with one element to influence.

The other is the overvaluation of land, property and security.

Now that’s one of the problems here.

Oh, I see.

Nickolas P. Chilivis:

You see?

One of the problems here is they didn’t charge this man with the first element, that is making a false statement or report.

They charged him with the second element and they tried to fit it in by calling it a security.

And that’s the point I was trying to make.

The second element… this is in the disjunctive, isn’t it?

Those are two separate offenses, isn’t it?

Nickolas P. Chilivis:

Yes, sir.

That’s two separate offenses.

Well, I thought you… perhaps I misunderstood you.

I thought you were saying the offense had to show two elements, a false statement and willful–

Nickolas P. Chilivis:

No, sir.

I was making the opposite point.

The distinguishing factor is that one of them is a false statement, and the security has nothing to do with that.

Nickolas P. Chilivis:

I can make a false statement just by telling you I’m a millionaire.

–I see your point.

Nickolas P. Chilivis:

It would be a false statement.

What were you charged, what were you charged… what was your client charged with?

Was he charge under one subsection or under one clause?

Nickolas P. Chilivis:

He was charged with overvaluing

“a security, that is a check. “

But they underpin that and try to fit it into the false statement section by saying that’s based on the fact that he misrepresented or caused to be misrepresented the value of the check because he… because he represented it to be in the face amount of the check.

Which of course it–

Nickolas P. Chilivis:

It was honored.

The funds weren’t there, but the bank paid it.

It didn’t come back and it wasn’t bounced.

But the lower court put the two counts together and said, this is check kiting and since Payne holds that check kiting comes under 1014 then that’s what we’ve got here.

And that’s a jurisdictional question.

–Your point… can I just follow up?

Your point is that if their theory is right any time you deposit a check drawn on an account that doesn’t have enough funds in it that you have then violated the statute, because you’ve then overvalued a security–

Nickolas P. Chilivis:

That’s correct.

–under their view?

Nickolas P. Chilivis:

That’s what this charged.

That’s all it charged.

You’ve got to combine the counts to make it charge anything else.

And I say it’s a very dangerous precedent.

People do that every day.

Now, the state check laws cover that if it is an intent to defraud, and that’s a horse of a different color.

I’m saving some time for rebuttal, may it please the Court.

Warren E. Burger:

Mr. Wilkins.

Richard G. Wilkins:

Mr. Chief Justice and may it please the Court:

This case presents a straightforward question of statutory construction.

That question is whether Petitioner’s deceptive check-writing conduct falls within the reach of the federal statute that specifically prescribes the making of intentional misrepresentations for the purpose of influencing the credit decisions of a federally insured bank.

Mr. Wilkins, before you get into that, is he not correct that the indictment is confined to the willfully overvaluing portion of the alternatives–

Richard G. Wilkins:

No, Your Honor.

–so that the intentional false statement is not quoted in the indictment?

Richard G. Wilkins:

Counts two and three of the indictment charge Petitioner with knowingly an willfully overvaluing a security.

Correct.

Richard G. Wilkins:

It also contains representation that he presented the checks and caused to be represented to said bank that said check was of a value equal to the face amount of the check, when in truth and fact this Defendant then well know that there were no sufficient funds.

What are you reading from?

Richard G. Wilkins:

That’s from page 3 of the Joint Appendix.

So the indictment clearly contains factual statements underlying an allegation of false statement.

Furthermore, Petitioner’s contention at this state of the litigation that the indictment does not charge him with a false statement was not raised either before the trial court or the Fifth Circuit.

It is here being raised for the first time with this Court and is reviewable only under the plain error doctrine.

We… the Government contends that viewing the statute or reading the indictment, the clear language of the indictment meets the sufficiency requirement set forth by this Court.

What if as a matter of a law a check were not security within the meaning of this statute?

It may have been property, but you didn’t say overvaluing property.

You said a security.

Suppose as a matter of law a check was not a security.

And suppose count two was the only count in the indictment.

Richard G. Wilkins:

Exactly.

Even if you prove he made a false statement, could you convict him under count two?

Richard G. Wilkins:

Exactly.

The jury in this case, Your Honor, was instructed that a check is a security within the meaning of Section 1014 as a matter of law The only question put to the jury under the instructions of the trial court was whether or not that check or that security was overvalued.

And as even Petitioner concedes in his reply brief, the question of overvaluation and false statement in the context of this case are the same.

The check is–

But if the check were not a security within the meaning of the statute you would have to reverse, is that it?

Richard G. Wilkins:

–No–

Because the jury… because the trial court misunderstood what a security was.

Richard G. Wilkins:

–No.

If… if a check is not a security–

It’s just property, rather than a security.

Richard G. Wilkins:

–If it’s just property, for example; the only question that was put to the jury was, is this a false statement, is it an overvaluation.

The jury concluded that the check was a false statement, which is a sufficient ground for conviction under the statute.

Richard G. Wilkins:

So if this Court disagrees as a matter of law that a check is not a security–

But you charged that it was a security and that it was overvalued.

Richard G. Wilkins:

–Exactly.

But even assuming that as a matter of law, as a legal theory, it’s not a security, the only factual conclusion reached at the trial below was that it was overvalued.

That’s because the judge took away from the jury the question of whether it was a security or not, by charging them, under Justice White’s hypothesis erroneously, that the check was a security.

Richard G. Wilkins:

But even if that is erroneous, the fact still remains that Petitioner was properly convicted–

Of what?

Richard G. Wilkins:

–under the theory that it is a false statement.

Of what?

Richard G. Wilkins:

Of making a false statement.

About what?

Richard G. Wilkins:

The false statement is that he would have had money, that the checks were represented by funds and would have been paid in the normal course of collection, when in fact such was not the case.

That’s not what the indictment alleged the falsity of.

The falsity is that,

“when in truth in fact, as the Defendant well know, there were no sufficient funds in the other bank. “

Richard G. Wilkins:

Exactly.

That’s all that’s required.

Richard G. Wilkins:

Exactly.

So that all that… in order to make out the offense under your theory, as I understand it, is you make a deposit with a check that you know does not have enough funds in the drawee bank at the time of the deposit.

Richard G. Wilkins:

For the purpose of influencing a bank upon a loan, advance or commitment, exactly.

Well, for the purpose of getting a better bank account that you can draw against.

That’s all you allege here.

In count two all you really do is allege that the balance in the account was therefore debited, I guess it would be, and they could therefore draw more.

You don’t allege an actual drawing against that in count two.

You can’t rely on count three.

Or you don’t even say it was for the purpose of anything.

No, just that was the illegal purpose, that you knew the other bank was short of the funds.

Richard G. Wilkins:

Count two of the indictment clearly states that it was for the purpose of obtaining an advance of money.

The facts of this case demonstrate that each check was presented for the bank to obtain that advance, and Petitioner did use them to obtain that.

But the purpose of obtaining the advance would have been achieved whether he ever in fact drew against the account, wouldn’t it?

He’s in a position where the balance has gone up, and therefore there are funds he can draw against.

Isn’t that all you have to prove?

Do you think you had to prove that there was a drawing, a withdrawal, following the deposit?

Richard G. Wilkins:

No.

All we have to prove is that the check was deposited for the purpose of influencing the bank upon–

It’s future course of conduct.

Richard G. Wilkins:

–Exactly.

Yes, but the falsity was what, an implied representation that there were funds to cover it–

Richard G. Wilkins:

Yes.

–when in fact he knew that there were not?

Richard G. Wilkins:

Exactly.

Petitioner contends that a check can’t be a false–

That then would be, I gather, a conviction resting only on

“whoever knowingly makes any false statement or report. “

Richard G. Wilkins:

–Exactly.

And you never get to overvaluing.

Richard G. Wilkins:

Right.

It is unnecessary to get to the overvaluation of security to sustain Petitioner’s conviction.

Petitioner contends that a check cannot be a false statement because it is simply a promise to pay a sum certain upon presentment and notice of dishonor.

Well, but if your theory is right, why isn’t any deposit of an insufficient funds check within the statute?

Richard G. Wilkins:

Because, Your Honor, this statute only reaches the deposit or making of knowingly false statements for the purpose of influencing a bank upon a loan, advance or commitment.

This construing Section 1014 to reach this conduct does not sweep up all bad check prosecutions throughout the United States.

Bad check… state bad check laws will continue to apply to bad checks that are given to the neighborhood grocer.

But as I listened to your exchange with Justice Stevens, it sounded like that was exactly what you were saying, and that any time somebody deposits a check knowing that there are insufficient funds to cover it this section has been violated.

Richard G. Wilkins:

If that check is deposited for the purpose of obtaining–

Well, if it’s deposited in a federally insured bank.

Richard G. Wilkins:

–Exactly.

In a federally insured bank.

That’s… knowing that there aren’t funds to cover it.

Richard G. Wilkins:

Exactly.

But it has to be a deposit… do we have many no-federally insured banks any more?

Richard G. Wilkins:

I am not aware.

I know that there are many state–

This was an addition to the statute, wasn’t it?

Richard G. Wilkins:

–Excuse me?

Wasn’t this an addition to the statute, the federally insured bank provision?

Richard G. Wilkins:

Yes.

The federally insured banks were added to the statute in 1970.

Doesn’t it take in almost all of the banks in the United States?

Richard G. Wilkins:

No, there are numerous state-chartered institutions that are not–

Well, lots of state-chartered institutions are federally insured.

Richard G. Wilkins:

–Exactly.

Many of them are.

Petitioner contends that a check–

Well, at least, if I may get through Justice O’Connor’s question, this surely means that all you have to do is deposit a check in a federally insured bank knowing that there are insufficient funds to cover it and you’ve violated this statute.

Richard G. Wilkins:

–Knowing that there are insufficient funds to pay the check in the course of collection, if you intend to influence that bank to extend you credit.

Now, for example, in the circumstances of the Crown case–

I deposit it and they credit it to my account, or I cash it.

In either instance, the requirement for the purpose of extending credit is satisfied, isn’t it?

Richard G. Wilkins:

–No.

Take the example of the Crown case the Petitioner brought… mentioned this morning.

In that case the defendants presented checks to a bank that were drawn on a fictitious bank.

They were merely deposited in someone’s account, there was a credit entry.

No one was allowed to withdraw any funds against that check.

There was no advance of credit.

And the court said there’s no violation of 1014 here because, although there’s a false statement, there was no advance of credit.

All there was was a bookkeeping entry.

Well, some banks have that as a practice.

They don’t… this check that you’ve deposited is just not subject to being drawn on until we collect it.

Richard G. Wilkins:

Exactly.

Richard G. Wilkins:

But in the facts of this case Petitioner deposited a check on May 9th, it was immediately credited to his account and to wipe out approximately $58,000 in overcharges.

Did he know when he deposited it that he would have immediate credit?

Richard G. Wilkins:

The jury found on the facts of this case… the jury was instructed the Petitioner could not be convicted unless Defendant intended to write checks which he could not reasonably expect to cover and therefore defraud the bank.

And on the evidence presented or the evidence before the jury in this case demonstrated that Petitioner certainly was aware that the bank–

At least you would say, then, that any time that somebody knows it’s the custom of the bank to give you immediate credit and you deposit a check that you know has insufficient funds behind it, but that you know you’ll get immediate credit that’s useable, that then this statute is violated?

Richard G. Wilkins:

–Yes.

I’m not sure I understand.

Does it depend on what the Defendant intends or does it depend upon what the bank does in its accounting practices, or both?

Richard G. Wilkins:

it depends… Your Honor, it would be a factual question.

It depends on what the Defendant intends.

Of course, the Defendant’s knowledge of a bank’s accounting practices would certainly be material in determining whether–

Well, doesn’t every defendant who deposits an insufficient funds check intend that he receive credit for it?

Richard G. Wilkins:

–No, Your Honor.

If there are facts showing that he intended to receive credit.

In this case, on May 8th federal and state bank examiners arrived to commence an audit.

There was a $58,000 overcharge in his account.

Mr. Williams, the Petitioner, was certainly and justifiably concerned to eradicate this overdraft status, and he deposited the check to, and he did in fact achieve–

Can’t the trier of fact reasonably infer from any deposit slip that the depositor intends to get credit?

Richard G. Wilkins:

–No, Your Honor, I think that it would… that the intention to influence a bank on an extension of credit would have to be a determination that would be made in light of all of the facts and evidence that was presented in an individual case.

But can you conceive of anyone in their right mind giving a bank a check that’s not sufficient funds to cover it and simply planning to wait and let the check go through the clearinghouse and be returned NSF?

Richard G. Wilkins:

No.

That certainly isn’t the intent of any rational person.

Richard G. Wilkins:

No.

So isn’t Justice O’Connor right when she says that anyone who presents an NSF check must be planning to get credit on it?

Richard G. Wilkins:

In some circumstances I can see that that would be the case.

Well, what if a bank has a practice of not permitting withdrawals until the check has been collected.

Even though this was not known to the depositor and the depositor deposited it knowing that there were insufficient funds at the time, would he be guilty in that context?

Richard G. Wilkins:

No… he deposited the check intending to obtain an extension–

He did, but unknown to him at the time the bank’s practice was it would not permit any withdrawals against the check until it had been collected.

Richard G. Wilkins:

–That defendant I presume would have violated the statute because he would have presented a false statement with the intent to influence a bank upon an–

Even though it was impossible that he–

Richard G. Wilkins:

–Even though it was impossible.

The statute is geared to protect federally insured banks against false statements that are designed to influence them.

Whether or not they’re actually influenced is irrelevant.

–Then it seems to me, as my colleagues down here have said, that this covers every bad check case.

Richard G. Wilkins:

No, Your Honor, it doesn’t.

As long as you know that you haven’t got insufficient… that you do not have sufficient funds.

Richard G. Wilkins:

No, because it only–

Well, the guy’s a fool otherwise.

He must be.

He knows that the check is no good and he goes to the bank and presents it.

Why is he presenting it if he knows he’s not going to get the money until the bank finds out that there’s no money?

Richard G. Wilkins:

–This only extends to false statements that are made to federally insured banks for this purpose.

The vast majority of insufficient funds checks cases do not involve statements that are made to federally insured banks.

They involve statements that are made to grocers or–

All right, all right.

But then you say it would cover all cases presented to a federally–

Richard G. Wilkins:

–To a federally insured bank, yes, Your Honor.

A check… the alternative ground for liability under Section 1014, as we have mentioned, is that a check constitutes overvalued land, property or security.

A check clearly qualifies as overvalued security within the meaning of Section 1014, because the term 18 of the United States Code includes any item that stands for some other thing of value.

–Okay.

Now, you say that it’s been generally defined that way throughout the United States… Title 18 of the United States Code.

Do you mean that definition covers the word 1014?

Richard G. Wilkins:

It is generally applicable, or that definition may be used to ascertain Congress’ probable intent in using the word “security” in this statute.

What section do you rely on?

Richard G. Wilkins:

For example, 8 U.S.C. 2311, the National Stolen Property Act, and the general–

Well, that just defines it for purposes of that Act, doesn’t it?

Richard G. Wilkins:

–Exactly.

It’s for purposes of that Act.

Well then why do you say it’s applicable to this Act?

Richard G. Wilkins:

It’s not directly applicable, Your Honor.

It’s only applicable to show that as the term has been defined in other contexts, general criminal law contexts, it has been defined to include any item that stands for–

Well, I would think the inference is quite the contrary, that if Congress has taken occasion to define it broadly and said for purposes of some other Act, the fact that it has not taken occasion to define it broadly here may cut against you.

Richard G. Wilkins:

–The broad term of the statute nevertheless, we contend, should be used consistently as the term 18 of the United States Code.

Of course, this is just an alternative argument.

Richard G. Wilkins:

Exactly.

It’s just an alternative argument and this Court need not agree that a check is a security to affirm Petitioner’s conviction.

Petitioner spends considerable effort detailing in his brief the legislative history of Section 1014, but he has been unable to demonstrate a clearly expressed legislative intent to exclude his conduct from the reach of the statute.

Petitioner at argues from sparse legislative history–

Well, do you feel it’s the burden on a criminal defendant to show that he’s not covered by the statute, or that it’s the burden of the Government to show that he is covered by it?

Richard G. Wilkins:

–It is the burden of the Government, of course, Your Honor, to show that he is covered.

But there would be a presumption, I assume, the burden… in the face of clear statutory language… this Court has often stated that where you have clear language, in the absence of a clearly expressed legislative intent to the contrary, the statute will be given its clear plain meaning.

The fact that there is no express mention of Petitioner’s conduct in the legislative debates of Section 1014 is of course irrelevant.

As this Court stated in Barr v. United States,

“If Congress has made a choice of language that fairly brings a given situation within a statute, it is unimportant that a particular application might not have been contemplated by the legislators. “

The federalism concerns noted by Petitioner in his brief and in argument do not loom large in this case.

The Federal Government has a paramount and indeed a very important, a very strong interest in maintaining the viability and the assets of federally insured institutions.

The conclusion that Section 1014 extends to the presentation of all knowingly worthless checks that are presented for the purpose of influencing a credit decision of a federally insured bank–

Not knowingly worthless, knowingly overvalued.

Richard G. Wilkins:

–Knowingly overvalued.

It could be ten cents over, I suppose, and still… I mean, if the amount in the other account is only a couple of dollars below the amount of the check, you’d still have a violation.

Richard G. Wilkins:

If it is–

It doesn’t have to be worthless–

Richard G. Wilkins:

–Well, if it is done knowingly.

–Right.

You have to know what your balance is.

Richard G. Wilkins:

Exactly.

You have to know, Your Honor, that the check will not be paid in the due course of collection.

Plus in the instructions in this case, the court specifically instructed the jury here that petitioner had to be engaged in conduct where he well knew that the checks would never be paid and he engaged in this solely for the purpose of obtaining time and credit.

The rule of lenity so often invoked by Petitioner applies only where there is a grievous ambiguity in the language or structure of the Act, that is entirely lacking on the facts of this case.

Richard G. Wilkins:

And the numerous hyper-technical objections to his indictment and the instructions of the trial court, as I’ve already mentioned, were raised for the first time before this Court and do not rise to the level of plain error requiring reversal of his conviction.

Petitioner’s final argument is that his conviction must be reversed because a check kiting conviction requires the prosecution to prove an intent to defraud.

The short answer to this contention is that the Petitioner was not indicted for check kiting.

He was indicted for making an intentional false statement or willfully overvaluing a security for the purpose of influencing a federally insured bank upon a loan, advance or commitment.

Each count of his indictment clearly sets forth those facts, clearly sets forth those allegations, and is sufficient to sustain a statutory violation.

The term “check kiting” as used throughout this… the Government’s brief and by Petitioner is simply descriptive of Petitioner’s conduct.

The question here is not whether this conduct requires some specific intent to defraud in order to be culpable, but rather whether Petitioner’s conduct that can be described as check kiting falls within the reach of a federal statute that prohibits intentional misrepresentations for the purpose of influencing the credit decisions of a federally insured bank.

As stated in Petition’s reply brief, the overall question is whether the allegations of counts two and three are subject to prosecution under Section 1014, regardless of how they are labeled.

No matter how one labels the conduct of Petitioner, it clearly comes within the reach of Section 1014 and states a violation of that statute.

Petitioner’s conviction should be affirmed.

Warren E. Burger:

Do you have anything further?

Nickolas P. Chilivis:

Yes, sir.

Mr. Chief Justice and may it please the Court:

If I can make just two quick points.

One of them has to do with what this indictment is all about.

They say we didn’t raise the issue of false statement until we got up here.

The statute is couched in the alternative.

It says either a false statement or overvaluing security.

Now, they didn’t… if you look at the indictment, it says that he overvalued security in that he presented the check and represented it was of a value in its face amount.

They did not make a specific charge of making a false statement.

They used that to underpin the charge of overvaluing a security.

You’re saying you didn’t know you were facing a charge of a false statement?

Nickolas P. Chilivis:

No, sir, this is the first time we realized this, when we got cert. to this Court.

We used it as an argument because it underpins the overvaluing of a security.

And let me mention one other thing.

This case was tried on check kiting.

That’s the unfortunate thing about this case and that’s why if this Court determines that in this case the court was in error and it should be reversed, it should reverse count one, too.

The judge charged the jury that the Defendant was being charged with check kiting.

The two witnesses… the FBI agent testified it was check kiting, and a back examiner testified it was check kiting.

Well, there is no statute anywhere, is there, that describes it in terms of check kiting?

Nickolas P. Chilivis:

That’s correct.

We don’t have statutes drafted that way.

Nickolas P. Chilivis:

That’s correct.

And I really don’t know what check kiting is.

Black’s gives three definitions and Words and Phrases gives two other that are broader.

And let me tell you just one other minute about it.

Opposing counsel has stated that this wasn’t check kiting.

In the Joint Appendix, we show the Government charges that Mr. Williams was involved in check kiting, and that’s a direct quote.

Let me give one other example about what Justice O’Connor mentioned.

Let’s assume that a person has two banks that they operate out of, that on the way to bank A to deposit a check they stop at bank B and deposit a check on bank A.

They have the check in their pocket to deposit in bank A.

They then go to bank A and deposit that check, but until they deposited that bank A did not have sufficient funds to cover the check at bank B.

That is a violation under this indictment as charged in this case of the law, and that’s all it takes… no intent to defraud, as long as that bank credits their account with that check instead of waiting for collection.

Or even if they don’t.

Nickolas P. Chilivis:

Even if they don’t do it.

That’s a… now, opposing counsel said it was a bank’s decision to use overdrafts to wipe out that, and that’s true, it was the bank’s decision.

My time’s up.

I wanted to make one other point.

Warren E. Burger:

Thank you, gentlemen.

Nickolas P. Chilivis:

Thank you, Your Honors.

Warren E. Burger:

This case is submitted.