                  UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT



                           No. 00-20961



                     UNITED STATES OF AMERICA,

                                                 Plaintiff-Appellee,

                              versus

                 GARY R. MATTHEWS; JOHN T. LUNDY,

                                            Defendants-Appellants.

_________________________________________________________________

           Appeal from the United States District Court
                 for the Eastern District of Texas
                           (H-98-CR-491-2)
_________________________________________________________________
                          January 28, 2002
Before DUHÉ, WIENER, and BARKSDALE, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:1

     The primary issue in this bank fraud case is the sufficiency

of the evidence against Gary R. Matthews and John T. Lundy.    They

also base error on jury instructions and the admission of bank

policies and of testimony claimed subject to the marital privilege.

AFFIRMED.

                                I.

     Calumet Farm, in Lexington, Kentucky, was a very prominent

thoroughbred farm.   Its prize stallion was Alydar, one of the top

two or three stud stallions in the world during the late 1980s.

From 1980 until 1991, Calumet was operated by Lundy, as president,

1
     Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
and Matthews, as financial officer and counsel.                Lundy had “full

discretionary management powers”.

     By 1987, Calumet was having substantial cash flow problems and

difficulty keeping current its payments to its long-time lender,

Citizens Fidelity of Lexington, Kentucky.              Citizens Fidelity loan

officers determined Calumet was losing monthly almost $1 million,

as the thoroughbred industry was experiencing a downturn.                     When

Calumet    requested    a   loan   increase      to   $30   million   (from   $25

million), Citizens Fidelity declined because of the size of the

loan and Calumet’s inability to generate sufficient cash flow to

service it.

     Consequently, Matthews and Lundy turned to Frank Cihak, vice

chairman of First City National Bank in Houston, Texas.                (In this

case,   Cihak   was    an   unindicted       coconspirator   of   Matthews     and

Lundy.2)    In May 1988, Cihak brought Matthews to Houston to meet

with First City’s Energy Division to arrange financing for Calumet.

     Prior to the meeting, Cihak informed the loan officers:                   the

transaction was highly confidential; Cihak could vouch for the

borrower’s character; and normal due diligence was unnecessary.

During the meeting, Matthews:         listed Calumet’s needs; requested

the loan be made quickly; described that repayment would be made


2
     Because of other criminal activities while First City’s vice
chairman, Cihak was twice convicted of conspiracy, bank fraud, wire
fraud, misapplication of bank funds, making false statements to a
financial institution, making false entries in bank records, and
money laundering. See United States v. Cihak, 137 F.3d 252 (5th
Cir.), cert. denied, 525 U.S. 847, and cert. denied, 525 U.S. 888
(1998); United States v. Allen, 76 F.3d 1348 (5th Cir.), cert.
denied, 519 U.S. 838, and cert. denied, 519 U.S. 841 (1996).

                                         2
from Calumet’s cash flow – essentially, the seasonal sales of

horses and breeding rights; and provided financial statements and

appraisals of Calumet’s thoroughbreds, which were essentially the

loan collateral.

     Williams, the primary officer for the Calumet loan, testified

Matthews never disclosed Calumet’s cash flow problems or its

difficulty in making payments to Citizens Fidelity.             On the other

hand, Williams’ supervisor, Falk, admitted on cross-examination he

was told of such difficulty.

     Matthews told First City the appraisals he provided at the

meeting were prepared by Robert Fox of Associated Thoroughbred

Projects, S.I. (ATPSI); he advised that Fox was an independent

appraiser with no connection to Calumet.            Matthews did not inform

First City that Fox acted as an agent for, and earned most of his

income from commissions paid by, Calumet.           Citizens Fidelity loan

officers    testified    Fox’s     appraisals       were   “excessive”      and

“inflated”.

     The First City loan officers were directed by Cihak to make no

“real independent analysis” and basically to use the information

provided by Matthews and Lundy.          The officers were not to contact

Citizens Fidelity, or Calumet’s owners or creditors, and not to

obtain third party appraisals of the thoroughbreds.               Refraining

from contacting    the   current    lender    was    not   unusual,   but   the

totality of these restrictions was contrary to First City’s normal

practice.     Had it not been for Cihak, First City would not have

made the loan.


                                     3
      Approximately one week after the meeting with Matthews, First

City offered Calumet a three-year term loan of $15 million, with a

$20 million revolving line of credit (revolver).                          Quarterly,

Calumet was to pay $750,000 in principal, plus interest.                     The loan

was funded in August 1988.

      Almost    immediately,      Calumet          had   problems    servicing       it.

Calumet had to draw on the revolver to make the interest payments,

was   late     providing        financial          statements       and   compliance

certificates, was unable to pay down the revolver in October and

November as required under the agreement, and made the quarterly

principal payment by drawing on the revolver. The inability to pay

down the revolver was significant, because it meant Matthews knew

prior to the loan’s funding that Calumet was not following its

business plan submitted to First City and would be unable to

generate cash flow sufficient to cover the payments as agreed.

      In    November    1988,    Calumet       requested    an    increase      in   the

revolver to $50 million in order to pay insurance premiums on its

horses. First City agreed to an increase to $31 million to protect

its collateral.        Matthews made assurances to First City that this

was a one-time problem and Calumet would pay down the revolver by

selling horses.

      The    primary    loan    officer       at   First   City     testified    that,

regarding the loan, he became aware Cihak was “making credit

decisions ... without contacting any of the ... [loan] officers”.

Frequently, over the course of the loan, Cihak would negotiate

directly with Matthews and Lundy regarding credit decisions without


                                          4
any involvement by the loan officers and would overrule those

officers’ decisions or make decisions with which they disagreed.

     In January 1989, the Energy Division loan officers began to

learn of Calumet’s efforts to sell stallions to Japanese investors

and Cihak’s efforts, through a different First City division,

Capital Markets,    to   facilitate       the   sale.   That   February,   as

discussed   below   concerning    business         transactions   involving

Matthews, Lundy, and Cihak, Cihak approved a $2.5 million increase

in Calumet’s revolver.    That July, at a meeting at Calumet between

Matthews and Lundy and the loan officers, to discuss the troubled

status of the Calumet loan, the loan officers learned:            Cihak had

been to Calumet the previous weekend; Cihak had agreed to permit

Calumet to defer a payment due on 15 August; Matthews and Lundy

felt that, because of their relationship with Cihak, the loan

officers’ decisions were irrelevant; Cihak was actively involved in

Calumet’s deal to sell stallions to the Japanese investors; and

Cihak intended to keep the First City officers involved in that

Japanese transaction separate from those involved in the Calumet

loan.

     In September 1989, Matthews provided a “Report of Mares Bred

(1989)” to First City at its request; it listed mares bred with

Alydar at Calumet. But, the report (in columnar format listing the

name of the mare, location, dates, etc.) omitted the column listing

the name of the mare’s owner.             The same report from Calumet’s

business files contained this column and listed Cihak as the owner

of Lucinda Light.


                                      5
     Later that month, the loan officers attempted to amend the

Calumet   loan   by:   obtaining   additional   collateral;   requiring

specific future payments be made on the revolver; having the

borrowing base reduced; and requiring further compliance reporting.

In response, Matthews wrote Cihak discussing the proposals and

requesting changes to the proposed amendments.      The loan officers

were unaware of Matthews’ letter. Cihak agreed to Matthews’ terms,

informing the officers of the terms of the amendments — deferring

certain payments and delaying payments on the revolver until 1

January 1990.

     Shortly thereafter, Calumet failed to timely make the November

1989 principal payment.     Later in November, Lundy informed the

bank’s officers that, in order to make the required payment,

Calumet would borrow money from another lender.        At this point,

more than a year after the Calumet loan’s funding, Calumet had not

made a single payment from its cash flow, as initially promised.

     Not surprisingly, communication between the loan officers and

Matthews and Lundy “severely deteriorated” - Lundy never returned

telephone calls, and contact with Matthews was limited.         Calumet

finally made the November payment on 2 January 1990, but failed to

make the deferred revolver payments as agreed (following the

September 1989 negotiations).

     In January 1990, the Energy Division recommended to the loan

review committee downgrading the Calumet loan to “substandard”.3

3
     At First City, loans were classified as “performing”, “other
assets expressly mentioned”, “substandard”, and “doubtful”. A less
favorable classification resulted in more scrutiny by the loan

                                   6
But, at a February loan review committee meeting with the Energy

Division, Cihak made false statements concerning Calumet’s credit.4

The downgrade recommendation was not approved.   That March, Cihak

moved the Calumet loan to another First City division, which

reported directly to Cihak and was headed by “one of Cihak’s men”

from his prior Chicago bank.

     During these loan events, and as discussed below, Matthews,

Lundy, and Cihak had several business dealings beneficial (at

various times) to each of them.   Three of those transactions were:

Matthews arranged a transaction over New Year’s Eve weekend 1988

(just prior to Cihak’s approving the above-described $2.5 million

increase in February 1989 to Calumet’s revolver), which resulted in

an approximate $1 million business deduction for Cihak against his

1988 taxes; Lundy gifted certain breeding rights to Cihak, worth

$125,000 (also around the time of the $2.5 million revolver-

increase); and as a favor to Cihak, Lundy borrowed $5.2 million to

prevent a First City debtor from defaulting on a $140 million

letter of credit.

     In setting up the New Year’s Eve weekend 1988 (NYE ‘88)

transaction, Matthews in late 1988 told ECC, a company specializing

in financing thoroughbred transactions:    Cihak wanted to borrow

from ECC; Cihak did not need to provide financial statements to



review committee, and classifying a loan as substandard required
First City to increase its reserves to offset a potentially
uncollectible debt (because of FDIC regulations).
4
     It was considered very unusual for Cihak, as Vice Chairman, to
attend a loan review meeting.

                                  7
ECC, because Calumet would provide ECC the money to lend Cihak; and

ECC would not be required to repay those Calumet-provided funds if

Cihak defaulted on the ECC loan.                In orchestrating the NYE ‘88

transaction, Matthews gave written instructions to Cihak regarding

checks to write, deposits to make, and the use of overnight

couriers.

       On   30    December   1988,    Cihak        signed   a   note     to    ECC   for

$1,105,000, due 15 February 1989 at 12.5 percent interest.                           The

next   day,      31   December,    ECC’s    $1,105,000        check    to    Cihak   was

deposited in his account.             When ECC’s check was deposited in

Cihak’s     account,       ECC’s     bank      balance      was       only     $96,000.

Nevertheless, ECC’s $1,105,000 check was paid by ECC’s bank on 4

January 1989. That same day, two deposits totaling $1,105,000 were

made to ECC’s account, allowing ECC’s check to Cihak to clear.

Those deposits were a $460,000 check from Calumet and a $645,000

check from ATPSI (the company operated by the above referenced Fox,

the horse appraiser, and Alan Krutchkoff).                    Both checks had the

notation “loan”.

       Krutchkoff      testified:          ATPSI     relied     upon    Calumet      for

approximately 75 percent of its income; he did not recall the loan

but acknowledged signing the check; the check likely related to a

year-end tax deduction; and ATPSI’s bank balance was only $130,800

when the $645,000 check to ECC was written on 31 December 1988.

Two checks (one for $210,000 and another for $435,000), both

written by Cihak, were deposited into ATPSI’s account on 4 January

1989, permitting ATPSI’s check to ECC to clear.                              The checks


                                           8
contained notations referring to an Alydar breeding season and the

lease of a mare, the earlier referenced Lucinda Light.

     On 2 March 1989, ATPSI was paid $300,000, leaving a “balance

due” (after subtracting interest on the “loan”) of more than

$353,000 against the $645,000 check from ATPSI to ECC.5                   The same

day, ATPSI sent $225,000 to Maricopa Ranch (Matthews was a director

and the registered agent; Lundy was the representative listed on

several financing statements).

     An FBI financial analyst, who examined the bank records

involving the NYE ‘88 transaction, testified as follows.                        The

proceeds of the $1,105,000 check to Cihak funded itself, because it

“was the first in a series of [check] transactions ... based on

artificially    inflated     bank   account      balances   ...    supported     by

worthless checks”. Cihak had $65,000 in his account on 30 December

1988, but that day wrote four checks totaling $1,305,000 - two

payable to     Calumet   ($210,000    and     $450,000)     and    two    to   ATPSI

($210,000 and $435,000).       ATPSI wrote the $645,000 check to ECC on

31 December, based on Cihak’s checks artificially inflating its

account; along with ATPSI’s check, Calumet’s check to ECC permitted

ECC’s   $1,105,000   check    to    Cihak   to    clear.     The    FBI    analyst

testified:     “Were it not for either one of those deposits, [the



5
     The source of the $300,000 paid to ATPSI is unclear. ATPSI
received a wire transfer of $300,000 in March 1989. Krutchkoff
wrote Lundy that August inquiring about Cihak and the Lucinda Light
lease; both the letter and the transaction statement accompanying
the letter attribute the $300,000 wire transfer as payments on the
$645,000 “loan” from ATPSI to ECC. Krutchkoff’s letter to Lundy
was found during a search of the home of an associate of Cihak.

                                       9
$1,105,000] check would have bounced, and then the other checks

would have bounced as well”.

     As   a   result   of   the   NYE    ‘88   transaction,   Cihak   took   a

$1,305,000 business deduction on his 1988 tax return.            Cihak also

used some of the “funds” from the ECC $1,105,000 check to lease a

mare, Stick to Beauty, to be bred with Alydar.          The resulting foal

was sold for $750,000 in October 1990, with Lundy acting as Cihak’s

agent for the sale.     The funds were distributed:       $671,688 to ECC;

$34,365 to an insurance agency; and $43,746 to Cihak.          Of the funds

it received, ECC wired $531,862 to Calumet in December 1990, and

Calumet wired $512,833 of those funds to repay a $650,000 loan made

to Cihak by Lee Casty, a Chicago associate of Cihak.            Earlier, on

1 September 1990, Cihak had received $650,000 from Casty and had

wired $150,000 to Lundy and $500,000 to Calumet; Calumet used the

money to make a First City loan payment while Lundy used the money

to make an interest payment on the $5.2 million First City loan

(Lundy’s favor to Cihak, described below).

     The second of three of the above referenced transactions

involving Cihak, Matthews, and Lundy began in early 1989, when

Calumet, in an agreement signed by Lundy and Cihak, provided Cihak

with Secreto’s 1989 breeding season. The purchase price was “$1.00

(one dollar and other good and valuable consideration)”.                John

Ward, who in 1991 replaced Lundy as Calumet’s president, testified

that, in the equine business, such language equates with a gift.6

6
     According to Ward, Secreto was “one of the highest priced
horses ever purchased”.    A breeding season lasts four to five
months and gives exclusive breeding rights during that time.

                                        10
In January 1989, the Secreto season was valued at approximately

$125,000.

     The third referenced transaction began in early 1990, when

Lundy   borrowed   $5.2   million   from   First   City’s   Dallas   bank

purportedly for stock in a Spanish resort and artwork.         In fact,

the funds went directly to another bank to pay debts of another

First City customer, the Coca family.7        The loan closed and was

funded prior to First City’s receiving all the paperwork.       The loan

was issued in the name of John T. Lundy and Lucille Lundy, his

wife, but Mrs. Lundy never signed the loan agreement.       Lundy signed

her name, claiming she gave him written authority to do so.           At

trial, as discussed in part II.E., Lundy’s former wife (they

divorced in 1993) testified she did not recall giving Lundy that

authority; however, she testified earlier to the grand jury she did

not authorize anyone to sign her name to the loan agreement.          At

trial, she testified she had not lied to the grand jury.

     When First City attempted in 1991 to collect on the $5.2

million loan, Lundy responded:      the loan was “an accommodation to

the bank”; “the bank used [him] to funnel money to the Coca

family”; and First City had represented to him that the Coca family

would pay the loan, the value of the collateral exceeded the loan,




7
     Cihak caused First City to execute a $120 million letter of
credit to that bank on behalf of the Cocas. In early 1990, the
Cocas needed $5.2 million to avoid default on debt owed to the
other bank; if the Cocas defaulted, First City would lose $140
million. Cihak arranged for Lundy to borrow the $5.2 million and
pressured Lundy to go through with the loan.

                                    11
the collateral could be easily liquidated in the event of default,

and First City would refinance Lundy’s farm and equine loans.

     Prior to this collection effort, Lundy attempted to use the

accommodation to cause First City to extend more credit to Calumet.

In the summer of 1990, Cihak arranged for Robert Richley, First

City’s president, to meet with Matthews and Lundy to discuss

Calumet’s request for more credit. Richley opposed extending more.

While Matthews was explaining Calumet’s situation to Richley, Lundy

interrupted Matthews and said:      “Look, we need     help here.    And we

helped you in Dallas and we expect to get helped here”.             Richley

responded he had no idea what Lundy was talking about and ended the

meeting.

     Other evidence of side dealings between Cihak, Matthews, and

Lundy included Cihak’s indebtedness to Calumet.         A September 1989

memo from Matthews to Lundy discussing Calumet’s cash flow problems

suggested that Calumet not pressure Cihak on his debt to Calumet

and either allow him to defer payment as long as he could help

Calumet or offer partial debt forgiveness as “compensation or [a]

commission” for extending further credit on First City’s loan.

Further, in early 1991, Lundy attempted to collect on a debt

relating to the July 1984 purchase of a lifetime breeding right in

Alydar     (Cihak   owned   25   percent   of   this   right).      As   an

accommodation, Lundy had not required payment during 1989 and 1990.

     In May 1990, during a review of Calumet’s compliance with

First City’s loan agreement, Calumet’s accountants discovered a

Calumet “loan” of $460,000 to ECC (the 4 January 1989 check


                                    12
supporting, in part, the NYE ‘88 transaction) and reported it to

First City.   Matthews immediately wrote First City:     “The loan to

[ECC] was a tax financing transaction to enable an individual to

lease a mare at the end of 1988.       Thus, Calumet did not actually

lend the money to [ECC] but used [ECC] as a vehicle to add

substance to the transaction”.    (Emphasis added.)

     Neither Richley (First City’s president), Falk (the earlier-

referenced Energy Division group manager who supervised the Calumet

loan), nor any loan officer in that division knew Cihak was the

unidentified “individual” involved in the transaction.      Had First

City known that Cihak received either a substantial amount of

money, or the Secreto season, or any other thing of value from

Matthews or Lundy, Cihak might have been, among other things,

terminated by First City.        There was no prohibition on bank

customers doing business with their bankers, but bank policy

precluded Cihak from doing any business with Calumet because he was

involved in the approval of Calumet credit decisions.

     Because of an internal investigation begun during late summer

1990 into Cihak-related transactions at First City, Cihak obtained

an affidavit from Lundy in January 1991 explaining:        he had no

business dealings with Cihak prior to 1988; the NYE ‘88 transaction

involved “standard horse lease arrangements”; Cihak was given “no

special consideration” in the deal; the leases “were not special

arrangements”; and he sold a half interest in Hail Secreto to Cihak

in the spring of 1990.




                                  13
     By mid-1990, Calumet’s debt at First City was approximately

$40 million, and Calumet asked for another $15 million.   Instead,

in October 1990, First City restructured the account into a term

loan of $42 million, with the first payment of $15 million due

February 1991.     Calumet was unable to make the November 1990

interest payment but made the $15 million payment because of

insurance proceeds from a horse’s death.    Meanwhile, the internal

investigation at First City resulted in Cihak’s forced resignation

in October 1990.

     In the spring of 1991, Matthews and Lundy were dismissed by

Calumet.   Lundy’s replacement, Ward, testified:   as of Matthews’

and Lundy’s dismissals, Calumet was almost $60 million in debt,

with First City being the largest creditor (more than $28 million);

and Lundy received millions that should have gone to Calumet.

Calumet declared bankruptcy in July 1991.

     When Lundy was arrested in 1999, a handwritten letter found in

his briefcase recited, inter alia, his recollection of a 1997

interview with FBI Agents.   The letter: revealed Lundy lied to the

Agents about his wife’s signature on their 1990 and 1991 tax

returns; requested the letter’s recipient to obtain “a paper” (an

affidavit) from Lundy’s ex-wife stating either her signature was on

the $5.2 million loan agreement or Lundy had power of attorney to

sign her name; expressed Lundy’s hope her statement would end the

investigation or “prove [the $5.2 million loan] was an arm’s length

deal”; directed the recipient to call Lundy’s ex-wife to assure her

she would not get in trouble for signing an affidavit, an affidavit


                                 14
would save him, and it would keep her out of trouble.            The letter

further detailed Lundy’s 1991 affidavit to First City, prepared for

Cihak, (describing it as “close to right”) and discussed other

business deals with Cihak, including a mining deal in Illinois.

     Following a jury trial in early 2000, Matthews and Lundy were

convicted of bank fraud, in violation of 18 U.S.C. §§ 1344 & 1366;

bank bribery, in violation of 18 U.S.C. § 215; making false

statements to a financial institution, in violation of 18 U.S.C. §

1014; and conspiracy to commit bank fraud and bribery and to make

false statements to a financial institution, in violation of 18

U.S.C. § 371. Matthews and Lundy’s October 2000 sentences imposed,

inter alia, 21 and 54 months imprisonment, respectively, and

approximately $20 million restitution by each of them.

                                  II.

     Matthews   and   Lundy   claim    insufficient   evidence    for   each

conviction and contest the jury instruction on false statements.

In addition, Matthews asserts the court erred by not instructing on

the defense of good faith and by admitting evidence of Cihak’s

banking policies violations; Lundy, that it erred by admitting his

ex-wife’s testimony concerning marital communications.

                                      A.

     “[A] defendant seeking reversal on the basis of insufficient

evidence swims upstream”. United States v. Mulderig, 120 F.3d 534,

546 (5th Cir. 1997), cert. denied, 523 U.S. 1071 (1998).            Neither

Matthews nor Lundy testified.              Nor, other than through cross




                                      15
examination, did they present evidence in their defense.         Of

course, the burden of proof rests with the Government.

     Evidence is sufficient to convict if, when viewed in the light

most favorable to the verdict, “a rational jury could have found

the essential elements of the crime beyond a reasonable doubt”.

United States v. Dupre, 117 F.3d 810, 818 (5th Cir. 1997), cert.

denied, 522 U.S. 1078 (1998).        It is unnecessary to disprove

alternative theories because the jury’s verdict can be supported by

“reasonable constructions of the evidence”.       United States v.

Peterson, 244 F.3d 385, 389 (5th Cir.), cert. denied, 122 S. Ct.

142 (2001). Restated, all reasonable inferences are drawn in favor

of the verdict.   E.g., United States v. Soape, 169 F.3d 257, 264

(5th Cir.), cert. denied, 527 U.S. 1011 (1999).

                                1.

     To prove a conspiracy violative of 18 U.S.C. § 371, the

Government must show: an agreement between at least two persons to

commit a crime; the defendant knowingly joined the conspiracy; and

at least one overt act by a conspirator in furtherance of the

conspiracy.   Cihak, 137 F.3d at 259-60.    The jury may infer from

circumstantial evidence the existence of a conspiracy.   See United

States v. Burton, 126 F.3d 666, 670 (5th Cir. 1997).   And, once the

Government produces evidence of a conspiracy, only slight evidence

is needed to connect a defendant to it.    United States v. Jensen,

41 F.3d 946, 954-55 (5th Cir. 1994), cert. denied, 514 U.S. 1101

(1995).   If found to be a member of a conspiracy, a defendant is

liable for all substantive offenses committed in furtherance of it,


                                16
even if he is unaware of those specific offenses.       United States v.

Phillips, 219 F.3d 404, 417 (5th Cir. 2000); Jensen, 41 F.3d at

955.

       The Government notes the following evidence in support of the

conspiracy convictions.       Cihak interfered with the loan officers’

attempts to secure payment on the Calumet loan by circumventing

them and dealing directly with Matthews and Lundy.        Following the

downgrade recommendation for the loan, Cihak’s false statements to

the loan review committee and Cihak’s eventual transfer of the loan

to another division, controlled by Cihak’s associate, are acts in

furtherance of the conspiracy.        In exchange, Cihak was provided

benefits:     when Matthews structured the NYE ‘88 transaction to

provide Cihak with a $1,105,000 tax deduction while concealing

Matthews, Lundy, and Calumet as the source of the funds; when Cihak

was gifted the Secreto breeding season; and when Lundy obtained the

$5.2 million loan as a favor to Cihak.

       Because Cihak approved a $2.5 million increase in the Calumet

loan shortly after the Secreto gift and the NYE ‘88 transaction,

the Government contends the jury could infer the existence of the

conspiracy.     Also,   the    Government   contends   evidence   of   the

conspiracy is found in Matthews’ September 1989 memo to Lundy

suggesting Lundy bribe Cihak by deferring his debt to Calumet in

exchange for favorable treatment on the Calumet loan.

       Defendants state the conspiracy charge is based on the acts

charged in the bank fraud, bank bribery, and false statements

counts, in addition to two other acts:        the $5.2 million loan to


                                    17
Lundy and the Secreto season gift.          Their contentions concerning

the substantive charges are discussed below.           As to the other two

acts, Defendants assert:        the evidence did not establish First

City’s knowledge or understanding as to the $5.2 million loan or

the validity of Mrs. Lundy’s signature and there is no evidence

that Lundy or Matthews attempted to hide the loan from First City;

and evidence concerning the Secreto season did not establish it

was, in fact, a gift, as opposed to part of other transactions

between Calumet and Cihak.

      There was sufficient evidence for the conspiracy convictions,

as further shown below.       Viewing the earlier described evidence,

and drawing all reasonable inferences in the light most favorable

to   the   verdict,   a   rational   jury   could   have   found,   beyond   a

reasonable doubt, the elements for a conspiracy involving Matthews,

Lundy, and Cihak to commit bank bribery and fraud, and to make

false statements to a financial institution.

                                      2.

      To establish bank fraud violative of 18 U.S.C. § 1344, the

Government must prove Matthews and Lundy knowingly executed, or

attempted to execute, a scheme to defraud a federally-chartered or

federally-insured financial institution.            United States v. Doke,

171 F.3d 240, 243 (5th Cir.), cert. denied, 528 U.S. 907 (1999).

The requisite intent is established by proving the defendant acted

with the specific intent to deceive to bring about financial gain

to himself.    United States v. Saks, 964 F.2d 1514, 1519 (5th Cir.

1992).     The scheme to defraud may include false representations


                                      18
intended to deceive the institution in order to obtain money from

it.   See United States v. Hanson, 161 F.3d 896, 900 (5th Cir. 1998)

(quoting Saks, 964 F.2d at 1518). Any false representation must be

“material” — capable of influencing the institution’s decision-

making process.     See Neder v. United States, 527 U.S. 1, 25 (1999);

United States v. Moser, 123 F.3d 813, 826 n.11 (5th Cir.), cert.

denied, 522 U.S. 1020, and cert. denied, 522 U.S. 1035 (1997), and

cert. denied, 522 U.S. 1092 (1998).

      Modeled after the mail and wire fraud statutes, 18 U.S.C. §§

1341 and 1343, the bank fraud statute is interpreted in the light

of the precedent interpreting those statutes.            Saks, 964 F.2d at

1520-21. A “representation may be false when it constitutes a half

truth or effectively conceals a material fact, provided it is made

with the intent to defraud”.          Moser, 123 F.3d at 826; see also

Blachly v. United States, 380 F.2d 665, 673-74 (5th Cir. 1967)

(“[A]   scheme     may    be   fraudulent   even   though   no    affirmative

misrepresentation of fact be made.          The deceitful concealment of

material   facts    may    also   constitute   actual   fraud”.   (citations

omitted; emphasis added)).8

8
     Most circuits agree false representations or statements
include concealment of material facts. See, e.g., United States v.
Colton, 231 F.3d 890, 901 (4th Cir. 2000) (“deceptive acts or
contrivances intended to hide information, mislead, avoid
suspicion, or avert further inquiry into a material matter”
sufficient proof for scheme to defraud); United States v. Molinaro,
11 F.3d 853, 861 (9th Cir. 1993), cert. denied, 513 U.S. 1059
(1994) (concealment of nature of a financial transaction part of
scheme to defraud); United States v. Goodman, 984 F.2d 235, 240
(8th Cir. 1993) (scheme to defraud shown by “nondisclosure
manifesting an intent to defraud”); United States v. Olatunji, 872
F.2d 1161, 1167 (3d Cir. 1989) (false representations include
“deceitful statements of half truths or the concealment of material

                                      19
       Of course, fraud claims must be based on misrepresentations of

material fact, not opinion.         See Presidio Enters., Inc. v. Warner

Bros. Distrib. Corp., 784 F.2d 674, 678-79 (5th Cir. 1986) (civil

suit alleging common law fraud).               Matthews contends that, even if

the Calumet business plan was false, it does not constitute fraud

because it was merely an expression of opinion. Defendants contend

First City was informed of Calumet’s cash flow problems, and

Matthews asserts the loan officers’ testimony reflects they felt

Matthews believed what he told First City during the pre-loan

period and they could not conclude he intentionally misled them.

       Defendants maintain that, absent a duty to disclose, a fraud

conviction cannot be based on the failure to disclose information.

See    Chiarella     v.   United   States,       445   U.S.   222,   235   (1980).

Defendants contend there is no duty to disclose a customer’s

dealings with his banker; rather, the burden of disclosure is on

the banker. Further, they assert the omission of the owners’ names

on    the   Report   of   Mares    Bred    was     consistent   with   Calumet’s

confidentiality policy for its customers.

       The Government counters that:            the bank, mail, and wire fraud

statutes do not require that there be a duty to disclose; the

scheme to defraud is a “departure from fundamental honesty, moral

uprightness, or fair play and candid dealings in the general life


facts”) (quoting United States v. Allen, 554 F.2d 398, 410 (10th
Cir.), cert. denied, 434 U.S. 836 (1977)); United States v. Walker,
871 F.2d 1298, 1308 (6th Cir. 1989) (statement containing half
truths or concealing material fact is false); United States v.
Sawyer, 799 F.2d 1494, 1502 (11th Cir. 1986), cert. denied, 479
U.S. 1069 (1987) (scheme to defraud includes false representations
or concealing material facts).

                                          20
of the community”.     United States v. Goldblatt, 813 F.2d 619, 624

(3d Cir. 1987); see also United States v. Curry, 681 F.2d 406, 410

(5th Cir. 1982).      The Government also cites two cases from other

circuits which reaffirm the principle that the bank, mail, and wire

fraud statutes do not require a duty to disclose imposed by statute

or regulation.     See Colton, 231 F.3d at 904; United States v.

Morris, 80 F.3d 1151, 1161 (7th Cir.), cert. denied, 519 U.S. 868

(1996).

     As with the conspiracy charge, the evidence is more than

sufficient   for   bank   fraud.      For   example,    the   request    for

“confidentiality”, the representations during the pre-loan period

that Fox was an independent horse appraiser, Matthews’ promises to

sell horses during negotiations over the extension of more credit

to Calumet, and Matthews’ concealment of Calumet’s dealings with

Cihak are sufficient evidence for a rational juror to find, beyond

a reasonable doubt, concealment of material facts constituting

misrepresentations intending to deceive First City for the purpose

of obtaining money for Calumet.       See Dupre, 117 F.3d at 819-20.

                                    3.

     A    defendant    makes   a   false    statement   to    a    financial

institution, violative of 18 U.S.C. § 1014, if he made a false

statement to influence in any way the actions of a financial

institution with regard to its lending activities.                See United

States v. Blocker, 104 F.3d 720, 733 (5th Cir. 1997).         Section 1014

applies to any false statement made to a financial institution

involving credit, not just statements made prior to and at the time


                                    21
of funding.    United States v. Kindig, 854 F.2d 703, 706 (5th Cir.

1988). Unlike the bank fraud statute, the false statement need not

be material; § 1014 proscribes a falsehood that influences, in any

way, the bank’s actions.       See United States v. Wells, 519 U.S. 482

(1997).

     The Government contends:         the intentional concealment of

Matthews’ arrangement of the $1,105,000 tax deduction for Cihak

(NYE ‘88 transaction), including advising that an “individual”,

rather than Cihak, received $460,000 from Calumet in connection

with the NYE ‘88 transaction, was a false statement intending to

influence the bank’s lending activity; Cihak was instrumental in

approving the Calumet loan and overruling the decisions of the loan

officers; and concealing the benefits Matthews and Lundy provided

Cihak   was   essential   to   the   continuation   of   their   favorable

treatment because the bank might have fired Cihak had it known of

the benefits he received from Calumet, Matthews, and Lundy.

     Matthews and Lundy contend:          the omission was either not

intentional or not intended to deceive First City; the bank policy

required reporting by the banker, not the customer, of preferential

treatment; and not only was there no evidence that Matthews or

Lundy knew of this policy, but also there was no evidence that the

NYE ‘88 transaction constituted preferential treatment.           Further,

Matthews’ response (using the term “individual”, instead of naming

Cihak) to First City’s inquiry about the Calument $460,000 loan

concerning the NYE ‘88 transaction        was in a form commonly used by

CPAs, and as a lawyer, Matthews had a duty of confidentiality and


                                     22
loyalty to Cihak as his client.       Finally, because the transaction

was recorded (by equine industry standards), there was no evidence

Matthews or Lundy attempted to hide the transaction.

      The evidence relating to the § 1014 charge is described

earlier.    As with the evidence for bank fraud, there is sufficient

evidence for a rational juror to find, beyond a reasonable doubt,

that, in violation of 18 U.S.C. § 1014, Matthews and Lundy made

false statements to First City with the intent to influence it.

                                     4.

      Bank bribery, violative of 18 U.S.C. § 215, consists of

corruptly giving or promising something of value to, among others,

an officer or employee of a federally-insured financial institution

“with intent to influence or reward” him regarding bank business.

18 U.S.C. § 215(a).       The Government contends:    the $1,105,000 tax

benefit provided to Cihak (NYE ‘88 transaction) was a reward for

his involvement in increasing the Calumet loan, especially because

Cihak approved a $2.5 million increase shortly thereafter; and an

explicit promise was not required, because the jury could infer

Cihak accepted the benefit “knowing ... it was payment related to

his using his influence ... as specific opportunities arose”.

United States v. Coyne, 4 F.3d 100, 111 (2d Cir. 1993), cert.

denied, 510 U.S. 1095 (1994). Defendants respond that the evidence

did   not   reflect   a   corrupt   intent,   but   rather   the   NYE   ‘88

transaction was a legitimate business transaction financed in a tax

advantageous way and handled by a third-party attorney that was not

concealed.


                                     23
      The evidence was far more than sufficient for a rational juror

to find bank bribery beyond a reasonable doubt.                        Based on the

strong causal connection between the NYE ‘88 transaction and

Cihak’s increase in Calumet’s loan and the gift of the Secreto

season, a     rational       juror    could    find   that    Matthews     and    Lundy

provided Cihak with benefits with the intent of rewarding him for

favorable treatment on the Calumet loan.

                                          B.

      Defendants contest the jury instruction defining the 18 U.S.C.

§   1014    crime    of   making      a   false   statement      to    a     financial

institution.       Jury instructions are reviewed only for an abuse of

discretion.        E.g., United States v. Pankhurst, 118 F.3d 345, 350

(5th Cir.), cert. denied, 522 U.S. 1030 (1997).                        At issue is

“whether the court's charge, as a whole, is a correct statement of

the   law    and    whether    it    clearly    instructs     jurors       as    to   the

principles of law applicable to the factual issues confronting

them”.      United States v. McKinney, 53 F.3d 664, 676 (5th Cir.),

cert. denied, 516 U.S. 901, and cert. denied, 516 U.S. 903, and

cert. denied, 516 U.S. 970 (1995) (quoting United States v. Stacey,

896 F.2d 75, 77 (5th Cir. 1990)).              The instruction read in part:

             A person makes         a false statement under this
             statute if he           fails to disclose material
             information to         a federally insured bank in
             connection with        a loan transaction.

      Matthews and Lundy contend:              the court erred by failing to

include language they claim is required by Dupre, 117 F.3d at 819,

and United States v. Trice, 823 F.2d 80, 86 (5th Cir. 1987)

(“section     1014    [may    be    violated    by]   the    failure    to      disclose

                                          24
material information needed to avoid deception in connection with

a loan transaction” (emphasis added)); and such omitted language

requires   the   jury   to   find   an      affirmative   statement    rendered

deceptive by concurrent omissions or an omission when there is a

duty to speak.    Along this line, Defendants also base error on the

instructions failing to state that, as discussed supra, concerning

bank fraud, intentional omissions without a duty to disclose did

not constitute a false statement.

     The Government first correctly observes that neither Defendant

objected to the omission of the phrase “needed to avoid deception”

nor suggested its inclusion.        Second, the Government responds that

intentional omissions of material facts can constitute a violation

of § 1014.

     Matthews    and    Lundy   each     made   general   objections    to   the

instruction, claiming intentional omissions without a duty to

disclose did not constitute a false statement.               Indeed, Lundy’s

counsel even stated that the exact phrase now urged as correct did

not make a “good jury instruction[]”.              Consequently, any issue

relating to the omission of the “needed to avoid deception” phrase

is reviewed only for plain error.             E.g., United States v. Heath,

970 F.2d 1397, 1407 (5th Cir. 1992), cert. denied, 507 U.S. 1004

(1993); cf. United States v. Polasek, 162 F.3d 878, 883 (5th Cir.

1998).

     Plain error occurs where a “clear” or “obvious” error affects

substantial rights. See United States v. Olano, 507 U.S. 725, 732-

35 (1993); United States v. Calverley, 37 F.3d 160, 162-64 (5th


                                       25
Cir. 1994), cert. denied, 513 U.S. 1196 (1995).            Even then, we have

discretion whether to correct the error and, generally, will not do

so unless it “seriously affect[s] the fairness, integrity or public

reputation of judicial proceedings”.            Olano, 507 U.S. at 736

(internal quotation marks omitted).

       Although   both   Dupre   and   Trice   use   the    “need   to   avoid

deception” language, it is not “clear” or “obvious” that the

language was required in the instruction.        In any event, the § 1014

instruction required finding Defendants intentionally failed to

disclose material information to a federally insured bank regarding

a loan transaction for the purpose of influencing its lending

activities, which is more than the statute requires. See 18 U.S.C.

§ 1014.    There was no error, plain or otherwise.

       With respect to Defendants’ remaining contentions concerning

the § 1014 instruction, and as discussed above, an intentional

omission of material fact can constitute a false statement if made

for the purpose of influencing a federally-insured bank’s lending

activities. Doke, 171 F.3d at 246 (intentional failure to disclose

defendant’s status as nominee in loan transaction); Dupre, 117 F.3d

at 819; United States v. Waldron, 53 F.3d 680, 682 n.4 (5th Cir.

1995) (rejecting literal truth defense because concealed fact

effected the loan transaction), vacated on other grounds, 516 U.S.

928 (1995).

       The instruction, as a whole, is a correct statement of the

law.    Consequently, the court did not abuse its discretion in its

§ 1014 false statements instruction.


                                       26
                                          C.

     Matthews also contends the district court erred in failing to

instruct on the defensive theory of good faith.                     Again, we review

for abuse of discretion.        Not giving a requested instruction is an

abuse   of    discretion      if:         the     requested        instruction     was

substantially correct; it was not substantially covered in the

charge given; and the refusal impaired the defendant’s right to a

fair trial.   E.g., United States v. Webster, 162 F.3d 308 (5th Cir.

1998), cert. denied, 528 U.S. 829 (1999).

     Matthews asserts: good faith is a complete defense to charged

intent to defraud; the court’s instruction on “knowingly” did not

substantially       cover   what    was        requested      in   his   good    faith

instruction; and a defendant is entitled to an instruction on as

many defensive theories as are raised by the evidence.                             The

Government responds:        a good faith instruction is not required if

the jury is instructed properly on the elements of an offense,

including    the    requisite   mental         state;   the    given     instructions

“fairly and adequately” covered the good faith issue, United States

v. Daniels, 247 F.3d 598, 601 (5th Cir.), cert. denied, 122 S. Ct.

288 (2001); and throughout the trial, Matthews presented the good

faith defense to the jury.

     There    was     no    abuse   of     discretion.             The   instructions

substantially covered the requested instruction by defining and/or

explaining the following terms:                 “knowingly” (conspiracy, bank

fraud, false statements), “willfully” (conspiracy), “corruptly”

(bank bribery), and “material” and “purpose of influencing” (false


                                          27
statements).   Further, Matthews was fully able to present his

defense to the jury during his cross-examination of First City’s

loan officers and his closing argument.        See United States v.

Chaney, 964 F.2d 437, 445-46 (5th Cir. 1992) (citing United States

v. Rochester, 898 F.2d 971, 978 (5th Cir. 1990)) (no abuse of

discretion when jury instructed as to the terms “knowingly” and

“intent to defraud” and defendant able to argue good faith before

jury).

                                 D.

     Matthews bases error on the admission of Cihak’s banking

policy violations.   We review for abuse of discretion.       United

States v. Harvard, 103 F.3d 412, 422 (5th Cir.), cert. denied, 522

U.S. 824 (1997); see FED. R. EVID. 103.

     Matthews states correctly that violation of a civil regulation

cannot be used to establish criminal conduct.    See United States v.

Christo, 614 F.2d 486 (5th Cir. 1980).    On the other hand, he fails

to address the fact that evidence of such violations is admissible

to show motive or intent.   Harvard, 103 F.3d at 422; United States

v. Parks, 68 F.3d 860, 866-67 (5th Cir. 1995), cert. denied, 516

U.S. 1098, and cert. denied, 516 U.S. 1133, and cert. denied, 516

U.S. 1151 (1996).

     The court did not abuse its discretion by admitting evidence

of Cihak’s banking policy violations.       The evidence concerning

First City’s policies prohibiting its officers from entering into

certain business relationships with borrowers was offered to show

Matthews’ and Lundy’s motive for concealing from First City their


                                 28
various deals with, and benefits to, Cihak. Furthermore, the court

gave a cautionary instruction regarding bank policies to prevent

“bootstrapping” policy violations into a conviction. United States

v. Cordell, 912 F.2d 769, 777 (5th Cir. 1990).

                                       E.

      Lundy challenges the district court’s allowing testimony by

his   former   wife,      Lucille   Drinkwater,      about    her   confidential

communications with him.            Again, the admission of evidence is

reviewed for abuse of discretion.

      There are two distinct aspects of the marital privilege:                 one

spouse cannot be compelled to testify against the other; and a

spouse cannot testify about confidential communications made during

the marriage.       United States v. Ramiriz, 145 F.3d 345, 355 (5th

Cir. 1998).    The first aspect ends on termination of the marriage.

United States v. Crockett, 534 F.2d 589, 604 n.17 (5th Cir. 1976).

Lundy   and    Drinkwater     divorced      in    1993,   long     before    trial.

Therefore,     he   can   only   contest     testimony     about    confidential

communications.

      The privilege “extends only to utterances, and not to acts”.

Pereira v. United States, 347 U.S. 1, 6 (1954).                      Drinkwater’s

testimony regarding whether she signed the $5.2 million loan did

not involve any confidential communication, so any objection by

Lundy as to that testimony is meritless.

      In   addition,      Drinkwater   was       questioned   about    her   prior

inconsistent grand jury testimony concerning statements by Lundy.

The court properly noted such testimony was introduced to impeach


                                       29
Drinkwater rather than as substantive evidence. There was no abuse

of discretion in admitting prior grand jury testimony for that

purpose.    See FED R. EVID. 801(d)(1); see also, e.g., Howard v.

Gonzales, 658 F.2d 352, 356 (5th Cir. Unit A 1981).

                                 III.

     The evidence was more than sufficient for a rational juror to

find, beyond a reasonable doubt, that Defendants were guilty of

conspiracy, bank fraud and bribery, and making false statements to

a bank.    Regarding the challenged jury instructions, the court did

not err in giving the one on false statements and in refusing the

one on good faith.     Finally, it did not abuse its discretion in

admitting evidence concerning banking policy violations and claimed

marital communications.    Therefore, the judgment is

                                                        AFFIRMED.




                                  30
