
USCA1 Opinion

	




          December 9, 1993                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-1122                              UNITED STATES OF AMERICA,                                      Appellee,                                          v.                                  STEPHEN C. JONES,                                Defendant, Appellant.                                 ____________________                                     ERRATA SHEET            Please make the following  correction in the opinion in the  above        case released on December 3, 1993:        Page, line 2:    "entences" should be corrected to read                        "sentences"                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-1122                              UNITED STATES OF AMERICA,                                      Appellee,                                          v.                                  STEPHEN C. JONES,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                       [Hon. Gene Carter, U.S. District Judge]                                          ___________________                                 ____________________                                        Before                           Selya and Stahl, Circuit Judges,                                            ______________                             and Fuste,* District Judge.                                         ______________                                 ____________________            Morris M.  Goldings  with  whom  Richard S.  Jacobs  and  Mahoney,            ___________________              __________________       ________        Hawkes & Goldings were on brief for appellant.        _________________            Margaret  D.  McGaughey,  Assistant United  States  Attorney, with            _______________________        whom Jay P. McCloskey, United  States Attorney, and Raymond C. Hurley,             ________________                               _________________        Assistant United States Attorney, were on brief for appellee.                                 ____________________                                   December 3, 1993                                 ____________________        _____________________        *Of the District of Puerto Rico, sitting by designation.                    FUSTE,  District Judge.     Defendant  Stephen C. Jones                    FUSTE,  District Judge.                               _______________          was  convicted of  conspiracy to  defraud  two federally  insured          banks and to  transport forged securities in  interstate commerce          in  violation  of 18  U.S.C.    2314  (Count  1), bank  fraud  in          violation  of 18  U.S.C.    1344  (Counts II  and  III), and  the          interstate transportation of  forged securities in  contravention          of 18 U.S.C.    2314 (Counts IV and  V).  Jones argues  on appeal          that (1) a UCC-3  release of collateral form is  not a "security"          as defined by  pertinent statute and his conviction  on Counts IV          and V should,  therefore, be reversed; (2) the  judge incorrectly          gave a  willful blindness  instruction as  to Jones'  intent; (3)          there was insufficient evidence to support the verdicts; (4)  the          court erroneously denied a motion to sever Jones' trial from that          of his  codefendant, and (5)  the sentence was overly  severe and          was incorrectly based on Jones' occupation as an attorney.                    We conclude that a UCC-3 release of  collateral form is          not a  security as  provided for in  the applicable  statute, the          willful blindness instruction was correctly given, and the denial          of  the motion for  severance was not  an error.   We reverse the          conviction  on  Counts IV  and  V  and the  consecutive  ten-year          sentence imposed for the transportation of forged securities.  We          find  that  there  was  sufficient  evidence  to  support  Jones'                                         -2-                                          2          conviction on Counts  I, II, and III and  therefore the five-year          concurrent sentences imposed on those counts shall stand.                                          I.                                          I.                                      Background                                      Background                                      __________                    Viewing the evidence in the light most favorable to the          government,  see United States v. Rivera-Santiago, 872 F.2d 1073,                       ___ ________________________________          1078-79  (1st  Cir.),  cert.  denied, 492  U.S.  910  (1989), the                                 _____________          following facts  were established  at trial.    During the  early          1970s, defendant Stephen C. Jones, together with his father Allan          and  Jones' codefendant, Robert  Welch, formed a  holding company          called  Iyanough  Management,  which over  the  years  acquired a          number of hotels, motels, and  other property.  In 1985, Iyanough          Management  entered  into  a partnership  known  as  Armory Hotel          Associates  with a group of contractors  and developers in Maine.          The  purpose of  the partnership  was  to convert  an old  armory          building in Portland, Maine, into  the Portland Regency Inn.  The          renovations were  financed through a  loan from Patriot  Bank for          $8.2 million, which was secured by a mortgage of the building and          a  security  interest  covering   the  furniture,  fixtures,  and          equipment of the hotel.  A further cash infusion into the project          was obtained from the  Berkshire Saving Bank in the form  of a $2          million irrevocable line of credit, which was secured by a second          mortgage on  the building and  a second security interest  in the                                         -3-                                          3          furniture,  fixtures, and equipment  of the hotel.   As a part of          the original mortgage agreement with  the two banks, Armory Hotel          Associates signed a  UCC-1 form with each  bank.  This form  is a          financing statement which certifies that a party holds a security          interest in  particular property.   The UCC-1  is filed  with the          Secretary of  State's office  so that any  later parties  will be          aware that there  is an encumbrance  upon the property.   Each of          the  mortgage  agreements   with  the  banks  provided   that  no          additional  encumbrances upon  the collateral could  be incurred,          and  in the  event that  any  part of  the security  was  sold or          transferred, the entire mortgage debt would be due and payable on          demand.  As one of  the partners in the Armory Hotel  Associates,          Jones signed the notarized mortgage security agreements with both          banks.                    Beginning  in  1987,   Iyanough  Management  began   to          experience financial difficulties.  As a measure to generate cash          flow,  a sale  and lease  back  of the  furniture, fixtures,  and          equipment  of the  Portland Regency  Inn  was negotiated  through          broker David  Mudie.   Mudie was originally  led to  believe that          Iyanough Management owned the Portland Regency and its furniture,          fixtures and equipment.   Through a search with  the Secretary of          State's  Office, Mudie  found out  that  Armory Hotel  Associates          actually owned  the hotel and  its contents,  and discovered  the                                         -4-                                          4          lien on the fixtures, furniture  and equipment.  As a result,  in          order  to complete  the sale  and lease  back, Kansallis  Finance          Ltd.,  the group  financing  the  transaction,  required  that  a          release of  the security  interests of  Berkshire County  Savings          Bank and  Patriot Bank be  perfected through the filing  of UCC-3          forms.   A UCC-3  is a document  which can  be used to  release a          security interest in certain property which has been memorialized          in a UCC-1.1   Welch induced employees of  Iyanough Management to          forge the signatures of the loan officers of the two banks on the          release forms.   The two forged documents, purporting  to release          the  interest of the two banks, were  filed with the Secretary of          State's office in Maine in  August 1987.  Welch also directed  an          employee to forge the  signature of one of the  Maine partners of          the Armory  Hotel Associates on  various other forms  required by          Kansallis.                    One  of Kansallis' prerequisites for the closing was an          opinion letter from  counsel for Armory Hotel  Associates opining          that Kansallis was  receiving a  first security  interest in  the          collateral consisting of the  furniture, fixtures, and equipment.          Two drafts of  the opinion letter were  sent to Jones at  his law          firm by the attorney for Kansallis.  The final opinion letter was                                        ____________________               1A UCC-3  can also be  used to  continue, assign or  amend a          security interest.  When we discuss the document in this case, we          are referring to its use as a release of a security interest.                                         -5-                                          5          returned  to Kansallis' counsel  on the letterhead  of Jones' law          firm,  and  was signed  by  John  Aufiero, counsel  for  Iyanough          Management.   Aufiero testified  at trial that  he was  given the          form by Jones to sign.  David Mudie testified that he  spoke with          Jones  several  times  about the  transaction  and  the documents          necessary to complete  the arrangement.  When the transaction was          completed,   the  sum  of   $1,288,533  was  wired   to  Iyanough          Management's  account.  Approximately $290,000 of the proceeds of          the loan were  eventually transferred into  an account in  Jones'          name.                    FBI Agent  James Osterrieder interviewed Jones  as part          of  his  investigation  of  the  forged  documents.    During the          interview, Jones stated  that initially it was his  idea to carry          out  the sale  and lease  back  of the  furniture, fixtures,  and          equipment, in order to generate cash.  Jones stated  that he knew          that the  banks had  a lien  on the equipment,  but thought  that          there was a clause in the  closing document which would allow for          the sale and lease  back.  Jones also told the  agent that he and          Welch  had discussed  the need  for a  UCC-3 release  of interest          before the sale and lease back could proceed, but that Welch said          that he would take  care of the problem.  Jones  admitted that he          had seen  a draft  of the  opinion letter  which was required  by          Kansallis to consummate the sale and lease back deal, and that he                                         -6-                                          6          arranged to have Aufiero sign the letter because Jones was out of          town at the time.                    Robert Welch pled  guilty to bank fraud  and interstate          transportation  of forged securities,  and proceeded to  trial on          the  conspiracy  charge.    At  trial,  Welch  testified that  he          completed the  arrangement for  the sale  and lease back  without          telling Jones  the  details of  the transaction,  and that  Jones          never questioned  Welch about the  deal.  Both  defendants argued          that  Welch,  working alone,  caused  the UCC-3  documents  to be          forged  by Iyanough  Management  employees  and  filed  with  the          Secretary of  State.   Welch was found  guilty of  conspiracy and          Jones was found guilty on all counts.                                         II.                                         II.                                      Discussion                                      Discussion                                      __________          A.  Release of Collateral as a Security Interest          A.  Release of Collateral as a Security Interest              ____________________________________________                    Jones first argues that a UCC-3 is not a "security" for          the purposes of  18 U.S.C.   2314.  18 U.S.C.    2311 defines the          term "security"  as used in    2314.2  The district  court found,                                        ____________________               2Section 2311 provides:                     "[S]ecurities"  includes   any  note,   stock                    certificate, bond,  debenture, check,  draft,                    warrant, traveler's check,  letter of credit,                    warehouse receipt, negotiable bill of lading,                    evidence  of  indebtedness,   certificate  of                    interest  or  participation  in  any  profit-                    sharing      agreement,      collateral-trust                                         -7-                                          7          and  the government  argues,  that  a UCC-3  is  analogous to  an          "instrument  or   document  or   writing . . .  transferring   or          assigning any right, title or interest  in or to goods, wares and          merchandise."   We  disagree and  hold  that a  UCC-3 release  of          collateral  is not  a "security"  for  the purpose  of 18  U.S.C.           2314.                     Statutory interpretation  is  a question  of  law  and,          therefore,  is subject  to  de  novo review.    United States  v.                                                          _________________          Taylor, 802  F.2d 1108, 1112  (9th Cir. 1986), cert.  denied, 479          ______                                         _____________          U.S.  1094 (1987).   It has been  found that Congress  intended a          broad definition  of securities in  the context of  outlawing the          transportation of falsely made or forged securities in interstate          commerce.   United States  v. Speidel, 562  F.2d 1129,  1131 (8th                      _________________________          Cir. 1977),  cert. denied, 435 U.S.  915 (1978).  An  analysis of                       ____________                                        ____________________                    certificate,  preorganization certificate  or                    subscription, transferable  share, investment                    contract, voting-trust certificate;  valid or                    blank  motor  vehicle title;  certificate  of                    interest in property, tangible or intangible;                    instrument or document  or writing evidencing                    ownership of  goods, wares,  and merchandise,                    or  transferring  or   assigning  any  right,                    title, or interest in or to goods, wares, and                    merchandise;  or in  general, any  instrument                    commonly  known  as   a  "security",  or  any                    certificate of interest  or participation in,                    temporary or interim certificate for, receipt                    for,  warrant, or  right  to subscribe  to or                    purchase any of the  foregoing or any forged,                    counterfeited, or spurious  representation of                    any of the foregoing.                                         -8-                                          8          the   cases  applying   the   definition  of   "security"   under          section 2314,  however, does  not result  in a  clear picture  of          exactly what is  encompassed in this broad definition,  or how to          proceed in determining  whether novel instruments should  also be          included.                      The  district  court  relied  upon Speidel,  supra,  in                                                       _______   _____          support of  its finding that a UCC-3 is  a security.  In Speidel,                                                                   _______          the Eighth Circuit held that a quitclaim deed is a security.  The          court found that  although a quitclaim  deed is  not the type  of          item  normally considered  as a  security  by the  commercial and          financial  community, such an instrument is an express conveyance          of  whatever interest and  title the  grantor has  in a  piece of          property.  Although it warrants no specific interest in property,          it does transfer some interest in  property.  Such a deed may  be          used  to  convey  interests  in  land, to  clear  title  to  land          encumbered  by  liens  or  to  transmit full  title  to  land  by          conveying the grantor's entire interest  to any grantee.  After a          quitclaim deed is conveyed, the grantee holds the entire interest          which the grantor had owned.                    We are unable  to agree with the district  court that a          UCC-3 is analogous to a quitclaim deed.  Unlike a quitclaim deed,          the  UCC-3 at issue  in this case  is not effective  by itself to          transfer or assign a title, right or interest  in or to property.                                         -9-                                          9          At most,  one could  argue that the  UCC-3 transfers  an interest          from the secured party back to  the owner of the property.   This          is a much  more constrained purpose than the potential  uses of a          quitclaim deed, and only permits a transfer of a limited interest          to one  particular party, the original owner.  The sole result of          the filing  of a UCC-3 is  that the owner  of the property  has a          title free of  encumbrances and can proceed to  transfer the lien          free  property to  another party.   In  this case, the  UCC-3 was          merely one step in the process of transferring an interest in the          fixtures,  furniture, and  equipment to  a  third party,  and was          insufficient on its own to convey title to the items listed.                      Furthermore,  a   UCC-3  does  not  contain   the  same          qualities as other  documents which have been  deemed securities.          In determining whether an instrument is a security,  other courts          have  examined factors such as  whether the document evidences an          obligation  for the payment  of money or  represents a particular          interest in  goods or  property and  has  inherent value,  United                                                                     ______          States v.  Canton, 470 F.2d 861, 863  (2d Cir. 1972); whether the          _________________          instrument has intrinsic  value and is recognized and  treated as          having intrinsic value  in the regular channels  of commerce, and          whether the document could be  sold, United States v. Wexler, 621                                               _______________________          F.2d 1218,  1224 (2d  Cir.), cert. denied,  449 U.S.  841 (1980);                                       ____________          whether the  item could be  used as collateral and  represents an                                         -10-                                          10          acknowledgment of a debt owed  or a contractual obligation to pay          in the future, United  States v. Austin, 462 F.2d  724, 736 (10th                         ________________________          Cir.),  cert. denied,  409  U.S.  1048  (1972); and  whether  the                  ____________          document purports to be valuable and is sufficient to establish a          given right, relationship or property interest.  United States v.                                                           ________________          Johnson, 700 F.2d 163, 175 (5th Cir. 1983).                _______                    The effect of the forged UCC-3 release here was only to          terminate the security  interest which the two banks  held in the          fixtures, furniture, and  equipment of the Portland  Regency Inn.          By  itself, a  document of  release  has no  value, and  does not          represent a tangible or intangible valuable property right.  Such          a form  could not  be sold or  used as  collateral.  It  does not          represent  an acknowledgment  of  a debt  owed  or a  contractual          obligation to pay in the future.   The form was valuable only  to          the Armory Hotel Associates and not to  any third party.  A UCC-3          serves  merely to  terminate and  not to  transfer or  assign any          property interest.                      In addition, we recognize  that when, as in  this case,          there is ambiguity  in a criminal statute, such  ambiguity should          be  construed  in favor  of  the  defendant.   United  States  v.                                                         __________________          Borowski, 977 F.2d  27 (1st Cir. 1992).   Because we hold  that a          ________          UCC-3 is not a security as defined for the purposes of  18 U.S.C.            2314,   Jones'   conviction  on   two   counts  of   interstate                                         -11-                                          11          transportation of forged securities pursuant to this section must          be reversed.          B.  Willful Blindness Instruction          B.  Willful Blindness Instruction              _____________________________                    Next,   Jones  objects   to  the   "willful  blindness"          instruction given to the jury, arguing that there was no evidence          that he was  aware that  a crime  was likely in  progress and  no          evidence that he facilitated it.  A willful blindness instruction          is  appropriate when  (1) defendant  claims a lack  of knowledge;          (2) the facts suggest a conscious course of deliberate ignorance,          and   (3)  the  instructions,   taken  as  a   whole,  cannot  be          misunderstood by a juror as  mandating an inference of knowledge.          United States  v. St. Michael's  Credit Union, 880 F.2d  579, 584          _____________________________________________          (1st Cir. 1989).    Here, the first  element is obviously present          since Jones claims  that he was ignorant of any  wrongdoing.  The          second requirement may  be established from the  evidence adduced          at  trial.   Jones, as one  of the partners,  signed the original          mortgage  agreements  with  Patriot  Bank  and  Berkshire  County          Savings   Bank.    By  signing  these  agreements,  he  displayed          knowledge  of the encumbrances placed on the fixtures, furniture,          and equipment of  the Portland Regency Inn.   He also would  have          known that the  agreements provided that Armory  Hotel Associates          could  not incur any  additional encumbrances on  the collateral,          and that the  mortgage would become due and payable if any of the                                         -12-                                          12          collateral  was sold or transferred.  There was evidence produced          at trial that Jones  and Welch discussed the need  to obtain cash          for  Iyanough Management, and  the possibility of  obtaining such          cash through a deal with Mudie involving a sale of the furniture,          fixtures, and equipment  of the Portland Regency Inn.   There was          evidence that  Mudie  discussed  the deal  with  Jones  and  that          Rodr guez,  the lawyer  for Kansallis,  sent  documents to  Jones          regarding the deal,  including drafts of the opinion  letter.  In          its  final form,  this opinion  letter  represented, among  other          things,  that the  firm was  acting as  counsel for  Armory Hotel          Associates  and that  there  were no  other  encumbrances on  the          furniture, fixtures,  and equipment  so that  Kansallis' security          interest was perfected.  Furthermore, John Aufiero testified that          Jones brought him the opinion  letter on the letterhead of Jones'          law firm, and requested that Aufiero sign the document.                     Testimony by the  FBI agent established  that initially          it  was Jones'  idea to arrange  the sale  and lease back  of the          furniture, fixtures, and equipment.  Jones told the agent that he          was  aware of  the banks'  liens on  the equipment but  felt that          there was some  way out of them.  According to Jones, Welch later          told Jones that  Welch did not think that  the bank would release          the collateral, but  that Welch would take  care of it.   The day          after the money came through  from Mudie and Kansallis, there was                                         -13-                                          13          evidence   that  Jones   personally  received   checks  totalling          approximately $290,000.                     This evidence, taken in the light most favorable to the          government, is sufficient for a  jury to conclude that Jones knew          about  the deal  with Kansallis and  Mudie, and knew  that such a          deal would not  be able to  go forward without  a release of  the          prior security interests held by  the two banks in the furniture,          fixtures, and equipment of  the Portland Regency Inn.   Moreover,          there is sufficient  evidence from which  a jury could  conclude,          that Jones knew  both (1) that the banks  would not release their          interests unless their mortgages were  paid in full, and (2) that          the opinion letter  was an alternative  means of representing  to          Kansallis that the property was no longer encumbered by any prior          liens.   Even if, as  Welch testified,  Jones was unaware  of the          actual steps taken by Welch  to release the security interest, we          find that the  facts established at trial suggest  that this lack          of  knowledge  could have  been  due  to  a conscious  course  of          deliberate ignorance on the part of Jones.                        The  jury  instruction  given was  not  likely  to give          jurors  the  impression  that  they were  compelled  to  make  an          inference  of  knowledge  on  the  part  of  Jones.    The  judge          instructed the jury                     [t]hat  in   considering  whether   defendant                    Stephen   Jones   knowingly   committed   any                                         -14-                                          14                    offense, you  may infer but  are not required                    to  infer,  knowledge  on  his  part  from  a                    combination of suspicion  and indifference to                    the  truth  if you  find beyond  a reasonable                    doubt that to have existed on his part. [sic]                    If you find  that he had a  strong suspicious                    [sic] that things were  not what they seemed,                    or that someone  had withheld some  important                    facts, yet that he shut his eyes for  fear of                    what he would learn, you may conclude that he                    acted  knowingly . . . . With  regard to  any                    such  inference you  must  reason with  care.                    You may not draw this inference  or knowledge                    from negligence  or mistake.  I  instruct you                    that  negligence, even  gross negligence,  is                    not  a proper basis  to support a  finding of                    wilfulness,  or  to  support   a  finding  of                    knowledge, nor is error or mistake . . .  I'm                    not suggesting one  way or the other  how you                    should find with  respect to this matter.   I                    am  not suggesting  that  you  make any  such                    finding,  or that if you do, what the finding                    should be.  I'm simply telling you . . . that                    you may infer  knowledge if you  find willful                    blindness to a fact to have occurred.          This  instruction clearly did not mandate  a finding of knowledge          on the part of the jury.                    Jones  objects that  the court  failed  to utilize  the          instructions on  willful blindness  which the defendant  offered,          arguing that his wording  "more properly put such  instruction in          the  proper  context  for  the  jury."   The  failure  to  give a          requested  jury  instruction  is reversible  error  only  if "the          requested   instruction   is  substantially   correct,   was  not          substantially covered in the charge actually given, and covers an          important point  in  the trial  so that  the failure  to give  it                                         -15-                                          15          seriously impaired  the defendant's  ability to  present a  given          defense."   United States v.  Nason, No. 92-2303,  slip op. at 11                      _______________________          (1st Cir. July 9, 1993) (citing United States v. Newton, 891 F.2d                                          _______________________          944,  949 (1st  Cir. 1989)).   Jones'  argument fails  under this          test.    Although  his  requested  instruction  is  substantially          correct, Jones fails to point out in what manner his instructions          were superior to those given, and a comparison of the two sets of          instructions shows no material difference in what was conveyed to          the jury.  There is no suggestion that an important point was not          conveyed by  the given  instructions.  We  find no  error in  the          judge's declining to adopt Jones' suggested instructions.           C.  Sufficiency of the Evidence          C.  Sufficiency of the Evidence              ___________________________                    Jones  argues that there  was insufficient  evidence to          sustain  his conviction.  In  order to successfully challenge the          sufficiency of the evidence on appeal, a defendant must show that          no  reasonable   jury  could  have  found  him  guilty  beyond  a          reasonable doubt.  United States v. Innamorati, 996 F.2d 456, 469                             ___________________________          (1st  Cir. 1993).   On appeal, we  must view the  evidence in the          light  most favorable to  the government, "drawing  all plausible          inferences  in   its   favor  and   resolving   all   credibility          determinations in line  with the jury's verdict."   United States                                                              _____________          v. David, 940 F.2d 722, 730 (1st Cir.), cert. denied,     U.S.             ________                                ____________  ___      __                                         -16-                                          16          (1991).  We will examine the conspiracy and bank fraud charges in          turn.               1.  Conspiracy Charge               1.  Conspiracy Charge                   _________________                    Conviction  of  conspiracy   requires  proof  that  the          defendant  entered into  an  agreement with  another to  commit a          crime; the agreement need not be express but may be implicit in a          working  relationship.    Innamorati,  996  F.2d  at  470.    The                                    __________          government must prove two kinds of  intent:  intent to agree  and          intent to commit the crime.  However,  "[t]he government need not          prove  that  a   co-conspirator  knew  all  of  the   details  or          participated  in all  of the  objectives  of the  plan."   United                                                                     ______          States v. G mez-Pab n,  911 F.2d 847, 853 (1st  Cir. 1990), cert.          _____________________                                       _____          denied, 498 U.S. 1074 (1991) (citations omitted).          ______                    In order to convict Jones of conspiracy to  commit bank          fraud,3 the prosecution must show  that Jones and Welch agreed to          defraud  Patriot Bank and  Berkshire County Savings  Bank.  Jones          argues that the fraud perpetrated upon the banks was completed on          July 23, 1987,  when the forged  UCC-3 forms were filed  with the          Maine Secretary  of  State, and  that  the only  direct  evidence          connecting  Jones  to  any fraudulent  activity  was  the opinion                                        ____________________               3Our  disposition of this appeal renders moot any discussion          of  the part  of the  charge for  conspiracy to  transport forged          securities in interstate commerce.  For that reason, we limit the          analysis  to the  sufficiency  of the  charge  for conspiracy  to          commit bank fraud.                                         -17-                                          17          letter dated August  10, 1987.  This claim,  however, ignores the          evidence that  Jones knew about  the possibility of the  sale and          lease back  arrangement, and  discussed  with Welch  the need  to          obtain releases  from the two  banks.  From this,  the jury could          have inferred  that even if  Jones did not have  actual knowledge          that Welch was forging the UCC-3 forms,  he knew that there was a          need to obtain  a release from the  banks, he was aware  that the          bank would not  allow such a release unless the mortgage was paid          in full, and he  knew that somehow Welch was going  to "take care          of it."  Based on this evidence, a reasonable jury could conclude          that even if there was  no express agreement, Jones sat passively          by  and let his  partner proceed  with the  sale and  lease back,          knowing that the  transaction could not be  completed legally and          would effect a fraud on the new lender.                 2.  Bank Fraud Charges               2.  Bank Fraud Charges                   __________________                    In order to convict Jones of bank fraud under 18 U.S.C.            1344(1), the  jury had to  find beyond a reasonable  doubt that          Jones "engaged  in or attempted to engage  in a pattern or course          of conduct designed  to deceive a federally chartered  or insured          financial institution into releasing property, with the intent to          victimize the  institution by exposing it to  actual or potential          loss."  United States  v. Ragosta, 970 F.2d 1085, 1089 (2d Cir.),                  _________________________          cert.  denied,       U.S.       (1992) (quoting  United States v.          _____________  ____       ____                   ________________                                         -18-                                          18          Stavroulakis, 952 F.2d 686, 694 (2d Cir. 1992)).   The element of          ____________          intent can  be established  through  circumstantial evidence  and          inferences drawn from evidence presented at trial.  Id. at 1090.                                                              ___                    The  same evidence which serves to sustain a conviction          for conspiracy to commit bank fraud will suffice to affirm Jones'          conviction  for  bank  fraud under  a  willful  blindness theory.          Jones knew that a sale and lease back of the furniture, fixtures,          and equipment was being planned.  He knew that Kansallis required          a release of  the banks' interest and  that such a release  would          not  be granted unless  the mortgage was  paid off.   Even if, as          Welch testified, Jones never found out about the forgery and just          trusted  Welch  to  work  out  a deal  which  would  provide  the          desperately needed  cash, a  rational jury  could have  concluded          that  Jones deliberately  shut  his eyes  to what  was occurring.          "The  purpose  of the  willful  blindness  theory  is  to  impose          criminal liability on  people who, recognizing the  likelihood of          wrongdoing,  nonetheless   consciously  refuse   to  take   basic          investigatory steps."  United  States v. Rothrock, 806  F.2d 318,                                 __________________________          323  (1st  Cir. 1986).    The  evidence  presented at  trial  was          sufficient for a conviction on the counts of bank fraud.          D.  Motion to Sever          D.  Motion to Sever              _______________                                         -19-                                          19                    Jones moved  for severance  of his trial  from that  of          codefendant Welch under Fed.  R. Crim. P. 14.4   The court denied          his motion, holding that Jones failed to persuasively demonstrate          that  he would  incur  prejudice at  trial  as  a result  of  the          joinder.   Jones appeals the denial, arguing that he was a victim          of the prejudicial spillover of evidence against his codefendant,          who  had already pled  guilty to the  substantive counts charged.          In addition, Jones  suggests that the jury may have held him to a          higher standard than Welch since Jones was an attorney.  Finally,          Jones argues that the joinder improperly placed him in a position          where, in order to exercise his Fifth Amendment privilege against          self-incrimination,  he  was  forced to  accept  an  adverse jury          inference.                      The grant or  denial of a motion for  severance is left          to  the discretion of the trial  court and will only be disturbed          for an  abuse of that discretion.   United States  v. Porter, 764                                              ________________________          F.2d 1, 12 (1st Cir. 1985).  For reasons of judicial economy, co-                                        ____________________               4Fed. R. Crim. P. 14 provides in part:                     If  it  appears  that  a   defendant  or  the                    government  is  prejudiced  by a  joinder  of                    offenses or of defendants in an indictment or                    information or  by  such  joinder  for  trial                    together, the court may order an election  or                    separate trials of counts,  grant a severance                    of  defendants  or   provide  whatever  other                    relief justice requires.                                         -20-                                          20          conspirators are generally tried together absent a strong showing          of prejudice.  United States v. Perkins, 926 F.2d 1271, 1280 (1st                         ________________________          Cir. 1991).   In order  to obtain  a severance, a  defendant must          show  that substantial prejudice,  amounting to a  miscarriage of          justice,  would result  from a  joint  trial.   United States  v.                                                          _________________          Sabatino, 943 F.2d  94, 96 (1st Cir.  1991).     Mere speculative          ________          allegations as to possible prejudice from joinder  do not sustain          the burden of  showing an abuse of discretion in denying a motion          for severance.                      Jones  failed to  show that  the  presence of  Welch at          trial was so  prejudicial as to warrant severance.   Welch argued          at  trial that  there was  no  conspiracy between  Jones and  him          because Welch  operated on his  own to perpetrate the  fraud upon          the  banks  and  the  transportation  of  the  forged  documents.          Several times on the stand Welch emphasized that he  was the only          one responsible for the criminal  acts.  Such evidence could only          be helpful  to Jones' claim that  he had no knowledge  of Welch's          activity.                      Jones'  claim of a spillover effect is also unavailing.          The  danger which  is to be  prevented is  that the jury  will be          unable to separate  the evidence against different  defendants or          that evidence which is admissible against only one defendant will          be used by the jury  against a co-conspirator.  See Perkins,  926                                                          ___ _______                                         -21-                                          21          F.2d at 1281.  Usually,  however, any prejudice caused by joinder          is  best  dealt  with  through   instructing  the  jury  to  give          individual consideration  to each  defendant.   United States  v.                                                          _________________          Bruner,  657 F.2d  1278  (D.C. Cir.  1981).   Here,  there is  no          ______          evidence, and  Jones has  not identified any,  that the  jury was          unable  to evaluate separately and  fairly the guilt or innocence          of each  defendant.  The judge instructed  the jury that a guilty          plea by Welch could not  be considered as evidence against Jones,          and  also  noted that  each  defendant should  be  given separate          consideration.  He informed the  jury that any evidence which was          admitted solely  against one  defendant could  not be  considered          against the other defendant.                      Jones  argues that  the jury  may  have held  him to  a          higher standard of conduct than  Welch because he is an attorney.          However,  Jones presents no  evidence that his  occupation caused          the  jury to view  him more harshly.   In any  event, Jones could          have requested a special jury instruction that attorneys are held          to the same standard  of conduct as others, and failed  to do so.          See  United States  v. Picciandra,  788 F.2d  39, 46  (1st Cir.),          ___  ____________________________          cert. denied, 479 U.S. 847 (1986).          ____________                    Finally,  Jones claims that  the joinder, combined with          the willful blindness instruction, forced  him to risk an adverse          inference  on  the part  of  the  jury  by exercising  his  Fifth                                         -22-                                          22          Amendment privilege not  to testify.  In Porter,  we rejected the                                                   ______          argument  that  the  antagonistic defense  of  a  codefendant was          grounds  for  severance  of  trial  because  it  would  force the          defendant to  testify in violation  of the Fifth Amendment.   764          F.2d  at 14.   The  need for  severance  to protect  Jones' Fifth          Amendment rights was even more minimal, since Welch's defense was          completely in line  with Jones' claim of innocence.   The joinder          had no impact on Jones' Fifth  Amendment rights and there was  no          abuse of discretion in the trial court's refusal of the motion to          sever.          E.  Severity of Sentence          E.  Severity of Sentence              ____________________                    Jones  objects  to  the   length  of  the  fifteen-year          sentence by the trial court.  He argues that a five-year sentence          would be appropriate  for a first time offender  such as himself.          Because  we   reverse  Jones'  conviction   for  the   interstate          transportation of forged  securities, his sentence is  reduced to          five years  for conspiracy  to commit bank  fraud and  five years          each for two counts of bank fraud, to be served concurrently.  We          see no  reason  to  alter  Judge  Carter's  assessment  and  pre-          guideline sentencing  on Counts I,  II, and III.   Therefore, the          sentence on  the remaining  counts will stand  as crafted  by the          trial judge.  See United  States v. Jim nez-Rivera, 842 F.2d 545,                        ___ ________________________________          548 (1st Cir.), cert. denied., 487 U.S. 1223 (1988).                          ____________                                         -23-                                          23                                         III.                                         III.                                      Conclusion                                      Conclusion                                      __________                    Because we  hold that a  UCC-3 is not a  "security" for          the purpose of  18 U.S.C.   2314, Jones' conviction  on Counts IV          and  V for the interstate transportation  of forged securities is          reversed.  Sufficient  evidence was adduced  at trial to  convict          reversed          ________          Jones of conspiracy and bank fraud on Counts I, II, and  III, and          the  trial court  did not  abuse  its discretion  by denying  the          motion to sever Jones'  trial from that of his codefendant.   For          these reasons, Jones'  convictions for conspiracy and  bank fraud          are affirmed.                affirmed              ________                                         -24-                                          24
