                 United States Court of Appeals,

                          Fifth Circuit.

                           No. 93-3758.

FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity,
Plaintiff-Appellee,

                                v.

  FIDELITY & DEPOSIT COMPANY OF MARYLAND, Defendant-Appellant.

                          Feb. 27, 1995.

Appeal from the United    States       District   Court   for   the    Middle
District of Louisiana.

Before HIGGINBOTHAM, SMITH and PARKER, Circuit Judges.

     JERRY E. SMITH, Circuit Judge:

     Fidelity & Deposit Company of Maryland ("F & D") appeals a

judgment entered pursuant to a jury verdict in favor of the Federal

Deposit Insurance Corporation ("FDIC") 827 F.Supp. 385. We find no

reversible error and affirm.

                                I.

                                A.

     F & D was the fidelity bond insurer of the now defunct Capital

Bank and Trust Co. ("Capital" or "Bank") in Baton Rouge.              Capital

went bankrupt in October 1987 as a result of the fraudulent acts of

its chief lending officer, Allie Pogue.

     In late 1986, Capital suspected that Pogue was making loans in

exchange for bribes.     Richard Easterly, its president, became

suspicious of Pogue in August 1986.         Easterly called upon Susan

Rouprich, Capital's vice president and in-house attorney, and the

Bank's internal audit department under Paula Laird, to investigate.


                                   1
The   resulting   report   indicated    that   there   were   a   number   of

undisclosed business relationships between Pogue and some of the

loan customers.

      Soon after the report, Easterly, purportedly contemplating the

prompt notice-of-loss requirement in the Bank's fidelity bond,

prepared and filed a notice-of-loss letter with F & D.            In February

1987, Capital filed a proof of loss that detailed some of the loans

that Pogue had approved to persons from whom he had received

financial benefits.

                                   B.

      There are four main groups of loans at issue in this case that

involved improprieties by Pogue.

Jimmy Scott loans

      Jimmy Scott and his affiliates obtained millions of dollars in

loans from Capital, including the disputed Carrol Herring loan.

All of these loans were approved by Pogue and certainly resulted in

a major loss to Capital.     Jimmy Scott bribed Pogue into approving

the loans by buying him a duplex and giving him gifts.

      The Herring deal was a $375,000 loan that Pogue arranged from

Capital to Carrol Herring.      The loan proceeds were utilized in a

series of transactions, through attorney J. Glenn Dupree, to buy

property from Pogue and pay off Pogue's mortgage on the property.

Pogue and Dupree were indicted and pled guilty to giving and taking

a kickback on the Herring loan.

LAREEL loans

      Pogue and one of his customers, Wayne Bunch, became partners


                                   2
in several business ventures, including Aspen Partnership, which

owned   a   four-plex   in   Baton   Rouge.           The   partnership   owed   a

$136,101.61 mortgage on the property, with a balloon payment for

the balance due at the end of September 1986.               Because Bunch was in

financial trouble, Pogue developed a scheme to rehabilitate their

finances.

      The Aspen Partnership sold the four-plex to Thomas Keene, who

was   the   operative   of   Louisiana      Real      Estate   Equity,    Limited

("LAREEL").    Keene then syndicated the project to some investors.

Keene paid off the Aspen Partnership loan with a personal check,

using funds provided by LAREEL.        Pogue greatly benefited from this

sale.

      Following this transaction, the LAREEL loans occurred. LAREEL

agreed to "syndicate" other Bunch projects by offering the units to

"investors" who put no money down, but signed notes to Capital for

amounts far in excess of Bunch's liability on the units.                  LAREEL

and Keene pocketed the excess cash in the loans.                 Pogue obtained

the individual investor financing from Capital.

      Pogue recommended to the executive committee of Capital that

the series of loans be made to the LAREEL investors on the Bunch

projects, but never disclosed that he had recently benefited from

actions by LAREEL with respect to the four-plex.               LAREEL and Keene

greatly profited from the LAREEL loans.

      Pogue   knew   that    several       of   the     "investors"   were   not

credit-worthy. Even though several of the LAREEL loan applications

were rejected by one loan officer, Pogue ignored the recommendation


                                       3
and ordered that the loans be made.         Keene refused to testify at

the trial, asserting his Fifth Amendment privilege when questioned

about the loans.

Quadrant/Thompson loans

     In July 1984, Pogue and Bunch sold a four-plex to the Quadrant

Partnership, whose partners were Theodore Jones, an attorney, and

Robert   Killingsworth   and   Jimmy   C.   Thompson,   two    real   estate

promoters.   All were loan customers of Capital.        Quadrant assumed

a $135,291 mortgage owed by Pogue and Bunch on the four-plex and

was supposed to pay $20,000 in cash to Pogue, but only $6,666 in

fact was paid.   A note for the balance secured by a second mortgage

on the four-plex was pledged for the $13,334 balance.

     On the day the sale closed, Pogue approved a $12,000 loan by

Capital to Quadrant for the stated purpose of a down payment on the

purchase of a four-plex for syndication purposes.             A letter from

Quadrant to the attorney for the bank that held the first mortgage

on the property stated that the acquisition of the property was

done as an accommodation to Pogue.      The "accommodation" eventually

resulted in over $1,000,000 in loans to support syndications by

Quadrant and its related entities, resulting in significant losses.

Pogue never disclosed his personal dealings with Quadrant to

Capital.

Robert Harger loans

     In late September 1982, Pogue and Bunch sold a group of

fourplexes for $725,000 to Oakbourne Apartments Partnership, Ltd.,

a company owned by one of Pogue's Capital loan customers, Robert


                                   4
Harger and Associates.      Oakbourne assumed the $545,000 mortgage on

the property, though Pogue and Bunch remained personally liable on

the loan.    According to the sales agreement, $180,804 was to be

paid in cash, and the rest was to be paid by the assumption of the

mortgage. In reality, only $15,804 was paid in cash, and Oakbourne

issued a $165,000 note to Pogue and Bunch, secured by a second

mortgage on the property.

     Capital loaned the Harger company money, approved by Pogue,

while these dealings were ongoing.               Harger eventually ceased

payments on the $545,000 debt, and the lender began to pressure

Pogue and Bunch.     Harger, however, continued to pay Pogue on the

$165,000 note.      The loans, which Pogue approved from Capital to

Harger, allowed Harger more easily to pay Pogue the money it owed

him and to shelter him from liability on the first mortgage.

     Pogue resigned from Capital effective at the end of August

1986.   He   was    hired   as   the   president    of    Acadia     State   Bank

("Acadia") in Baton Rouge.       Acadia also made loans to Harger after

Pogue arrived.     Proceeds were used to catch up on the $545,000 loan

on which Pogue and Bunch were personally liable.

                                       C.

     Capital's     chairman,     Embree     Easterly,    and   its   president,

Richard Easterly, testified that if they had known of Pogue's

personal relationships with loan clients, they would not have

allowed him to handle loan decisions for those persons or entities.

Following Capital's filing of the proof of loss, F & D refused to

pay the Bank's claim under the fidelity bond.            As a result, Capital


                                       5
filed suit against F & D in April 1987.       The bond expired on

October 1, 1987;   the Bank failed at the end of October 1987.   The

FDIC took receivership of the Bank and stepped into its shoes for

purposes of the lawsuit.

     The trial lasted for three weeks in November 1992.   The jury

was given 27 separate verdict forms corresponding to 27 separate

loan transactions.   Verdicts were returned in favor of the FDIC on

17 of the loan transactions, totaling $5.313 million.   Because the

limit on the bond is $4 million, the district court entered final

judgment for $4 million plus interest.

                                II.

     The fidelity bond in this case covers "[l]oss resulting

directly from the dishonest or fraudulent acts of an employee

committed alone or in collusion with others ... with the manifest

intent to cause the Insured to sustain such loss."        The bond

applies "to loss discovered by the Insured during the bond period."

     After the evidence had been presented at trial, the jury was

presented with an interrogatory for each questionable loan.      Each

interrogatory contained four separate questions with respect to the

particular loan:

1. Did Allie Ray Pogue commit a dishonest or fraudulent act in
     connection with this loan?

2. Did a loss result directly from Allie Ray Pogue committing a
     dishonest or fraudulent act with the manifest intent to cause
     Capital Bank a loss and to obtain a financial benefit for
     himself or others?

3. Did discovery, as defined in the Bond, occur on this loan prior
     to October 1, 1987?

4. What is the amount of the loss on this loan resulting directly

                                 6
     from Allie Ray Pogue's dishonest or fraudulent acts?

     The FDIC had to prove four distinct elements for each loan.

First, each loss must have been discovered within the bond period.

The relevant section of the bond reads:

     This bond applies to loss discovered by the Insured during the
     bond period. Discovery occurs when the Insured becomes aware
     of facts which would cause a reasonable person to assume that
     a loss covered by the bond has been or will be incurred, even
     though the exact amount or details of loss may not then be
     known....

         In    interpreting      these    clauses,       courts   have   held   that

"discovery of loss does not occur until the insured discovers facts

showing       that   dishonest     acts       occurred     and    appreciates    the

significance of those facts;              suspicion of loss is not enough."

FDIC v. Aetna Casualty & Sur. Co., 903 F.2d 1073, 1079 (6th

Cir.1990) (citing, inter alia, United States Fidelity & Guar. Co.

v. Empire State Bank, 448 F.2d 360, 364-66 (8th Cir.1971)).                      See

also California Union Ins. Co. v. American Diversified Sav. Bank,

948 F.2d 556, 564 (9th Cir.1991).

        The FDIC had to prove dishonest or fraudulent acts on Pogue's

part and causation between the loss and the fraudulent or dishonest

acts.     See    First   Nat'l    Bank     v.   Lustig,     961   F.2d   1162   (5th

Cir.1992).       The FDIC also had to show the amount of the loss

resulting from the fraud.

        F & D challenges a number of the jury's findings for certain

loans.    In order to obtain a reversal, F & D must show that no

reasonable juror could have found in favor of the FDIC even when

viewing all of the evidence in the light and with all reasonable

inferences most favorable to the FDIC.              Boeing Co. v. Shipman, 411

                                          7
F.2d 365, 374 (5th Cir.1969) (en banc).

                                     A.

        F & D asserts that the FDIC did not prove that the Bank

discovered the losses from the LAREEL and Herring loans within the

bond period.   F & D claims that the proof of loss, which Capital

filed, did not pinpoint these particular loans as losses.       The FDIC

counters that these losses were part of one huge "loss" that

resulted from all of Pogue's dishonest actions.          The FDIC argues

that,   even   if    the   Herring    and    LAREEL   transactions   were

later-discovered, they were part of the same "loss" that was

discovered during the bond period.

     Section Four of the bond plainly limits the coverage to "loss

discovered by the Insured during the bond period."         Section Three

states that the total liability is limited to loss resulting from

"all acts or omissions by any person (whether Employee or not) or

all acts or omissions in which such person is implicated."           Thus,

"loss" is a broad term that covers all losses from the acts of an

employee, but the "loss" must be discovered within the bond period.

     As a result, we conclude that Capital's proof of loss need not

have pinpointed every single loan loss.          We, however, decline to

adopt the FDIC's broad suggestion.          We are unwilling to create a

situation in which, as long as the FDIC can find some acts or

omissions within the bond period committed by the same actor, it

has unlimited time to investigate and add later losses caused by

unrelated actions.    We instead will look for loans that arose out

of the same pattern of conduct or scheme that was originally


                                     8
discovered. See, e.g., Howard, Weil, Labouisse, Friedrichs v. Ins.

Co. of N. Am., 557 F.2d 1055, 1059-60 (5th Cir.1977) (dishonesty

found in "totality of actions," loss sustained was "a single loss

albeit the product of more than one act" though part of "a single

ongoing episode"). We also note that under the broad language from

Section Four of the contract, to uphold the finding on this issue,

we must decide only that a jury could have concluded that a

reasonable person, within the bond period, given the information

available, would have "assum[ed] that a loss covered by the bond

had been incurred or [would] be incurred, even though the exact

amount or details of loss" were not known then.

     There was plainly enough evidence from which the jury properly

could have concluded that the LAREEL and Herring transactions were

discovered within the Bond period.   The proof of loss implicated

parties who were involved in the transactions that constituted the

LAREEL and Herring loans.     Scott, who received money from the

Herring loan, was a prominent part of the proof of loss;    Keene,

who was involved in the LAREEL transaction, was also mentioned in

conjunction with Bunch.

     Strictly speaking, the proof of loss did not mention every

single action by Pogue that had something to do with the LAREEL and

Herring transactions.   Nevertheless, because the FDIC did present

evidence that at least some of the acts and omissions related to

the LAREEL and Herring transactions were discovered during the

period, we will not disturb the jury verdict.

                                B.


                                 9
     F & D argues that the FDIC presented no evidence that Pogue

was involved in approving the Morning Glory/LAREEL loans.1             F & D

claims that no record evidence shows that Keene and Pogue knew each

other at the time of the Morning Glory loan.             Moreover, F & D

asserts that no one at the Bank testified that the Bank would not

have approved the Sable Chase and Bayou Fountain loans had it known

about the Aspen Partnership sale to Keene.       Finally, F & D contends

that the FDIC never proved that Pogue intended to cause losses on

the LAREEL loans.

     The evidence indicates that Pogue and Bunch, who was a Capital

loan client, were business partners in more than one venture in

early 1986 when the LAREEL loans began.         Evidence indicates that

Pogue and Bunch sold a piece of property to the LAREEL operative,

Keene, in February 1986.    Keene paid off Pogue's personal debt on

a loan to the Aspen Partnership, which was Pogue and Bunch's

venture.

         The LAREEL loans for the Sable Chase and Bayou Fountain

projects    were   transactions   in    which   LAREEL   agreed   to    find

"investors" for Bunch projects.         The investors, who put no money

down, received loans from Capital.        Pogue allowed Capital to make

the loans with the knowledge that the "investors" were largely

uncreditworthy, that the income from the projects would not support


     1
      The LAREEL loans were subdivided into three parts related
to three developments: Morning Glory, Sable Chase, and Bayou
Fountain. There were actually 66 different loans made on the
three projects, but the parties agreed that they would be tried
as three transactions, because each of the 66 was identical with
respect to its respective project.

                                   10
the large loan payments, and that the Bank probably would suffer a

loss as a result.      Moreover, Keene and LAREEL made substantial

commission income from the loan activity.

     Pogue used his position to pressure the loan officers working

under him into approving LAREEL loans that they had previously

rejected.    Pogue concealed his relationships with lending clients,

such as Bunch, from Capital's president and chairman, and they

would not have allowed him to approve loans if they had known.         The

FDIC showed that Pogue was a sophisticated loan officer.          The jury

might have inferred that he would not have approved the LAREEL

loans to the risky investors had he not had a personal stake in the

outcome.

         F & D is correct, however, that the FDIC failed to show any

connection between Pogue and Keene with respect to the Morning

Glory transaction. The sale of the four-plex that occurred between

the Aspen Partnership and Keene was initiated in January 1986 and

closed in February.        The Capital loans for the Morning Glory

condominiums    occurred   in   January   1986,   before   the   four-plex

transaction.    By contrast, the loans for the Sable Chase and Bayou

Fountain projects occurred after the four-plex sale.

     Moreover, the FDIC produced a memorandum from Pogue to the

executive committee of the Bank recommending approval of the Sable

Chase and Bayou Fountain loans.2     The memorandum occurred in March


     2
      The FDIC's mini-closing statement claimed that Pogue's
memorandum recommended the Sable Chase, Morning Glory, and Bayou
Fountain deals to the executive committee, but this is not
supported by the document.

                                    11
1986, after the four-plex deal and the Morning Glory loans.         The

memorandum to the executive committee recommending the approval of

the Morning Glory loans was from Mark Byouk and not from Pogue.

Testimony plainly indicated that proceeds from the Sable Chase deal

went directly to Keene, but evidence does not indicate that Keene

received proceeds from the Morning Glory deal.

       Finally, Karl Daggett testified that he was ordered by Pogue

to approve investors for the LAREEL projects after he had rejected

many of the applications.       Daggett's testimony, however, also

indicated that he was instructed to approve the loans by Pogue

sometime    after   the   disbursement   of   Morning   Glory    funds.

Accordingly, we modify the judgment with respect to the Morning

Glory loans but affirm with respect to the other two LAREEL

projects.

                                  C.

        With respect to the Scott, Harger, and Quadrant/Thompson

loans, F & D claims that the causation standard that we approved in

First Nat'l Bank v. Lustig, 961 F.2d 1162 (5th Cir.1992), was not

met.   Lustig requires that the FDIC show that a loan would not have

been made "but for" the fraudulent conduct of the employee.       Id. at

1167-68.    Moreover, F & D claims that the FDIC never showed a

dishonest act with respect to these other loans;         rather, they

assert that only a pattern of dishonesty was shown.

       As with the LAREEL loans, the FDIC presented evidence of

dishonest acts with respect to all of the loan groups.            Scott

admitted to bribing Pogue to influence him to make loans.       This was


                                  12
a charge to which Pogue had pled guilty.      The FDIC introduced the

letter in which Quadrant indicated that it purchased a four-plex as

an accommodation to Pogue.    Harger testified as to the purchase of

four-plexes from Pogue and Bunch that Pogue did not disclose.

     As indicated above, the FDIC presented testimony from Bank

officers that the loans would not have been made if they had been

aware of Pogue's personal relationships with the various clients.

Moreover, as before, Pogue's high position and sophistication could

have given rise to inferences that he would not have made several

of the loans if he had been honest.     The jury might also have given

weight to the testimony of Pogue's subordinates that he cajoled

them into favoring certain borrowers.       There was plainly enough

evidence presented to meet the causation requirement.

         A general pattern of dishonesty, rather than a dishonest act

for each loan, is sufficient in this circuit.         See Fidelity &

Deposit Co. v. USAFORM Hail Pool, Inc., 523 F.2d 744, 757 (5th

Cir.1975), cert. denied, 425 U.S. 950, 96 S.Ct. 1725, 48 L.Ed.2d

194 (1976).      "There does not have to be a finding of fraud or

dishonesty with respect to every disbursement."      Id.   Thus, as to

each group of loans, the jury was entitled to find that Pogue was

motivated by separate instances of bribery to make multiple loans.

                                 III.

     F & D argues that the February 1987 proof of loss did not

adequately satisfy the requirements of section 5(b) of the bond.3

     3
      Section 5(b) reads: "Within 6 months after such discovery
the Insured shall furnish to the underwriter proof of loss duly
sworn to with full particulars."

                                  13
The main substance of F & D's claim is the same as the earlier

argument that we rejected, i.e., that the proof of loss did not

contain       specific       losses    that     were       later     added   by        the   FDIC.

Furthermore, the purely factual issues of the adequacy and timing

of the proof of loss were raised only after the trial.                                       F & D

claims that the issue was raised in its FED.R.CIV.P. 50 motion and

that it is an essential element of the bond claim.

        There was not a specific ruling on the adequacy and timing of

the proof of loss.             F & D did not ask for an instruction to the

jury on this issue.            In fact, it does not appear that F & D even

argued       this    theory    at     trial.         As    a    result,    we     reject      this

assertion.

                                               IV.

         F & D claims that the jury's answers were inconsistent and

that,        when     inconsistent        answers              are   given        to     special

interrogatories, the court must grant a new trial.                              Specifically,

F   &    D    questions        the     finding       of        liability     on    the       first

Quadrant/Thompson loan and not the other one and inconsistent

answers on the Scott and Robert Harger loans.

        Jury verdicts are supposed to be reconciled, if possible, to

validate a verdict when answers appear to conflict.                                     White v.

Grinfas,       809    F.2d    1157,     1161    (5th       Cir.1987).           "The     test   of

consistency is whether the answers may fairly be said to represent

a   logical         and   probable     decision           on   the   relevant      issues       as

submitted."          Central Progressive Bank v. Fireman's Fund Ins. Co.,

658 F.2d 377, 382 (5th Cir. Unit A Oct. 1981) (citation and


                                               14
internal quotation marks omitted).         There is nothing necessarily

inconsistent about the verdicts in this case, as the FDIC had to

prove each one of four elements with respect to each loan.            The

proof certainly overlapped, as has been explained, but not on every

loan.

     The twenty-seven special interrogatories essentially were

separate jury verdicts.    The apparent "inconsistency" in this case

was not the type of inconsistency that is present where a jury

returns conflicting answers on necessarily related jury questions.

See, e.g., Royal Netherlands S.S. Co. v. Strachan Shipping Co., 362

F.2d 691 (5th Cir.1966), cert. denied, 385 U.S. 1004, 87 S.Ct. 708,

17 L.Ed.2d 543 (1967).    As a result, a new trial would be improper.

                                   V.

     F & D argues that the court improperly instructed the jury

that it could draw an inference from an invocation of the Fifth

Amendment privilege against self-incrimination by a non-party.          F

& D claims that the FDIC never established corroborating evidence

linking Pogue to the loan claims before allowing the jury to draw

inferences.

     There    were   several   witnesses    who   purportedly   had   had

relationships with Pogue and who invoked the Fifth Amendment at

trial.   Much of F & D's argument with respect to the lack of

corroborating evidence relates to the argument that the FDIC failed

to prove a dishonest act as to each of the loans claimed.        We have

rejected this argument, supra.     Moreover, the court instructed the

jury not to find liability based solely upon an adverse inference


                                   15
from a witness's invocation of the Fifth Amendment.

       F & D's main argument is that the court improperly allowed

the invocation of the Fifth Amendment, by a non-party or non-agent

of a party, to be the basis of an inference against a party.                   In

general, the decision as to whether to admit a person's invocation

of the Fifth Amendment into evidence is committed to the discretion

of the district court.        Farace v. Indep. Fire Ins. Co., 699 F.2d

204, 210 (5th Cir.1983).            The admissibility of a non-party's

exercise of the Fifth Amendment against a party, however, is a

legal question that we must review de novo.               Nevertheless, if such

evidence is not inadmissible as a matter of law, the district

court's specific determination of relevance and its evaluation of

a potential FED.R.EVID. 403 problem are reviewed for abuse of

discretion.

       F & D argues that inferences from the invocation of the Fifth

Amendment are not allowed when a non-party asserts the privilege.

We find no support for such a proposition.                 The Fifth Amendment

"does not forbid adverse inferences against parties to civil

actions when they refuse to testify in response to probative

evidence offered against them."              Baxter v. Palmigiano, 425 U.S.

308,   318,   96    S.Ct.   1551,   1558,     47   L.Ed.2d     810   (1976).   We

acknowledge that no party has refused to testify in this civil

action,   but      "[a]   non-party's   silence      in    a   civil   proceeding

implicates Fifth Amendment concerns to an even lesser degree." RAD

Servs., Inc. v. Aetna Casualty & Sur. Co., 808 F.2d 271, 275 (3d

Cir.1986) (citing Rosebud Sioux Tribe v. A & P Steel, Inc., 733


                                        16
F.2d 509, 521 (8th Cir.), cert. denied, 469 U.S. 1072, 105 S.Ct.

565, 83 L.Ed.2d 506 (1984)).

        Because there is no constitutional bar to the admission of

this evidence, it is admissible if it is relevant and not otherwise

prohibited by the rules.            FED.R.EVID. 402.           Certainly, evidence of

this nature is generally relevant.                   In this case, a jury could

determine that a witness who colluded with Pogue took the Fifth

Amendment to avoid disclosing that collusion. District courts must

evaluate       each   witness       separately       when       making       a    relevance

determination;        F    &   D    fails,       however,      to    identify         specific

instances in this case where a witness's invocation of the Fifth

Amendment was irrelevant.

       Under    FED.R.EVID.     403,      evidence      will    be    excluded         if   its

probative value is substantially outweighed by the danger of unfair

prejudice.      F & D has not identified how specific invocations of

the Fifth Amendment prejudiced it in this case.                      Rather, it argues

that   the     admission   of      this    type    of   evidence       is,       in    effect,

prejudicial as a matter of law.

       F & D argues that it is improper to allow a non-party's

invocation of the Fifth Amendment to be used against a party when

that non-party is neither an agent nor an employee, officer,

director or voting member of the party.                     The concern is that a

non-party who stands in no special relationship to the party at the

time of trial may purposefully invoke the privilege solely to

discredit the party.           The classic example would be a disgruntled

former employee who invokes the privilege to hurt his former


                                            17
employer.4

     Other circuits have held that the fact that the witness no

longer serves the party in an "official capacity" does not present

a bar to requiring the witness to assert the privilege in front of

the jury.    See Cerro Gordo Charity v. Fireman's Fund Am. Life Ins.

Co., 819 F.2d 1471, 1481 (8th Cir.1987);      RAD Servs., Inc., 808

F.2d at 274-79;     Brink's Inc. v. City of New York, 717 F.2d 700,

707-10 (2d Cir.1983).     In each of those cases, the witness was a

former employee of a company that was a party to the litigation.

     While the court in Cerro Gordo Charity, 819 F.2d at 1481,

found that the ex-employee still retained some loyalty to the

party, thereby negating any danger of invocation of the privilege

solely for the purpose of harming the employer, the RAD Servs.

court found that the "absence of an opportunity to cross-examine

the invoker and the lack of proof regarding his continued loyalty

to the employer ... cannot per se exclude from the jury the

witness's refusal to testify."     RAD Servs., 808 F.2d at 276.

     4
      See ROBERT HEIDT, The Conjurer's Circle—The Fifth Amendment
Privilege in Civil Cases, 91 YALE L.J. 1062, 1119-20 n. 214
(1982):

             The fact of present employment serves primarily to
             reduce the chance that the employee will falsely claim
             to have engaged in criminal conduct for which the
             defendant employer is liable. Any factors suggesting
             that a former employee retains some loyalty to his
             former employer—such as the fact that the employer is
             paying for his attorney—would serve the same purpose.

     See also Note, Adverse Inferences Based on Non-Party
     Invocations: The Real Magic Trick in Fifth Amendment Civil
     Cases, 60 NOTRE DAME L.REV. 370, 386-87 (1985) (arguing that
     adverse inferences should not be drawn against employer when
     ex-employee invokes privilege).

                                  18
      Similarly, we refuse to adopt a rule that would categorically

bar a party from calling, as a witness, a non-party who had no

special relationship to the party, for the purpose of having that

witness exercise his Fifth Amendment right.               As the Third Circuit

indicated:

      First, a witness truly bent on incriminating [a party] would
      likely offer damaging testimony directly, instead of hoping
      for an adverse inference from a Fifth Amendment invocation.
      Second, the trial judge could test the propriety of an
      invocation to ensure against irrelevant claims of privilege.
      Third, counsel may argue to the jury concerning the weight
      which it should afford the invocation and any inferences
      therefrom.

Id.   Thus, district courts will have to evaluate these situations

on a case-by-case basis.

      In this case, any danger that the jury might have found that

Pogue had committed dishonest acts merely from his association with

witnesses    who     invoked     the   Fifth     Amendment,    thereby   unduly

prejudicing F & D, was avoided by the instruction that the jury was

not   to    find     liability       absent    evidence     corroborating      the

relationships between the invoking witnesses and Pogue.

      There is no question that the evidence is relevant.                    F & D

fails to make a competent argument as to why it was unfairly

prejudiced by the admission of the evidence.                In fact, it is the

invoking party who is generally thought to be the one unfairly

prejudiced in these situations. See HEIDT, supra, at 1124. In this

case, accordingly, there was no abuse of discretion.

       F & D also argues that the district court erred by not

cautioning the jury that the Fifth Amendment may be invoked by an

innocent    party.      F   &    D   correctly    asserts     that   model    jury

                                        19
instructions do contain such a provision.   When challenging a jury

instruction, a party must demonstrate that the charge as a whole

creates "substantial and ineradicable doubt whether the jury has

been properly guided in its deliberations."       FDIC v. Mijalis, 15

F.3d 1314, 1318 (5th Cir.1994) (citation and internal quotation

marks omitted).     Moreover, we will not reverse if we believe,

"based upon the entire record, that the challenged instruction

could not have affected the outcome of the case."      Id.

     F & D has not met the Mijalis standard, given the jury

instruction as a whole and the quantum of evidence produced by the

FDIC.    The charge given in this case is substantially similar to

the instruction that the Third Circuit approved in RAD Servs. and,

even if erroneous, was harmless error.5

     5
        The district court in RAD Servs. used the following:

                 During the trial you also heard evidence by past
            or present employees of the plaintiff refusing to
            answer certain questions on the grounds that it may
            tend to incriminate them. A witness has a
            constitutional right to decline to answer on the
            grounds that it may tend to incriminate him. You may,
            but you need not, infer by such refusal that the
            answers would have been adverse to the plaintiff's
            interests.

     RAD Servs., 808 F.2d at 277.

            In this case, the court instructed:

                 A witness has a constitutional right to decline to
            answer on the grounds that it might tend to incriminate
            him. When a witness takes the Fifth Amendment, you may
            draw an inference for or against a party in this case.
            However, before you may draw such an inference, you
            must follow the following analysis:

                 First, you must find by a preponderance of the
            evidence that Mr. Allie Pogue, who was an employee of

                                 20
                                VI.

      F & D contends that the district court erred by admitting

evidence that the first loan that Pogue made as president of Acadia

was to a Harger company and that the funds were used to catch up on

payments of the $545,000 loan on which Pogue and Bunch were

personally liable.   The court admitted the evidence as res gestae

of the acts at issue in the case and, in the alternative, as

FED.R.EVID. 404(b) "other acts" evidence showing evidence of intent,

plan, knowledge, and absence of mistake.



          the bank, committed a dishonest or fraudulent act
          within the meaning of the bond. You must make this
          finding for each of the loans you are considering.

                If you satisfy step one, before you can draw an
          inference, you must also find by a preponderance of the
          evidence that the witness, who took the Fifth
          Amendment, acted in collusion with Mr. Pogue to commit
          a dishonest or fraudulent act within the meaning of the
          bond.

               If you find by a preponderance of the evidence
          that the witness acted with Mr. Pogue in committing a
          dishonest or fraudulent act within the meaning of the
          bond, then you may draw, but you are not required to
          draw, an inference which is either favorable or adverse
          to either party because of the fact that the witness
          took the Fifth Amendment and refused to answer one or
          more questions.

               If you find that the witness was not acting with
          Mr. Pogue in connection with a transaction, then you
          may not draw an inference. Even if you do find that
          Mr. Pogue was acting dishonestly or fraudulently within
          the meaning of the bond and you find that the witness
          was acting with Mr. Pogue in connection with a
          transaction, you cannot base your verdict solely on
          that adverse inference. In other words, an adverse
          inference may not be the sole basis upon which you
          might impose liability. You have to have other
          corroborating evidence, whether documents or witnesses'
          testimony, upon which you might impose liability.

                                21
     The rule 404(b) ruling was not an abuse of discretion, and the

evidence was properly admitted. Strictly speaking, the doctrine of

"res gestae " (as traditionally understood) and rule 404(b) cannot

be alternative justifications.    The old doctrine of "res gestae "

has been supplanted by FED.R.EVID. 803. Before the Federal Rules of

Evidence were promulgated, res gestae was understood to encompass

four distinct hearsay exceptions:      "(1) declarations of present

bodily condition;   (2) declarations of present mental state and

emotion;   (3) excited utterances;     [and] (4) declarations of the

present sense impression."    Wabisky v. D.C. Transit Sys., 309 F.2d

317, 318 (D.C.Cir.1962).     FED.R.EVID. 803 now explicitly accounts

for these exceptions.

     In a normal situation, prior bad acts would have to pass rule

404(b) muster and, if a hearsay problem was raised, would have to

meet any hearsay objections.    In this case, the court did not use

the term "res gestae " to mean an exception to the hearsay rule.

F & D acknowledges, and there is no question, that the evidence at

issue was not of the type that would raise a hearsay problem.

Instead, the court used the term "res gestae " to represent its

feeling that the evidence at issue actually dealt with acts that

were directly at issue in the case.6    In other words, the district

court held that Pogue's Acadia activity was a continuation of his

Capital activity.

     6
      The Court's usage is more akin to the traditional
non-hearsay use of res gestae, which covered conversations that
accompanied a financial transaction and tended to define and
"elucidate the nature of the transaction." Bank of Metropolis v.
Kennedy, 84 U.S. (17 Wall.) 19, 24, 21 L.Ed. 554 (1873).

                                  22
      We need not evaluate the propriety of this holding, as we find

that the court did not abuse its discretion in admitting the

evidence under rule 404(b).        Moreover, F & D fails to show that it

had a substantial right affected by the admission of the evidence.

See   United    States   v.   Jimenez    Lopez,     873   F.2d   769,   771   (5th

Cir.1989).

                                    VII.

        F & D argues that this is a fraud case and, therefore, that

the actions must be proved by clear and convincing evidence.                  The

FDIC counters that, while Pogue's dishonesty may have risen to the

level of fraud, the action between the FDIC and F & D is for breach

of contract.     The Eighth Circuit has characterized cases like this

one as breach of contract actions and not fraud.                  See First Am.

State   Bank    v.   Continental   Ins.      Co.,   897   F.2d   319,   323   (8th

Cir.1990).     We agree with the FDIC on this issue.             The suit is on

the fidelity bond contract, which the FDIC alleges that F & D has

breached.      No proof of fraud is technically required, especially

against F & D.

                                    VIII.

        F & D argues that the court's award of pre- and post-judgment

interest was erroneous.         The parties agreed that Louisiana law

would govern this issue.

      F & D contends that the court erroneously awarded interest

from April 29, 1987, the date that Capital filed suit, when most of

the losses had not yet been demanded.           F & D claims that the proof

of loss, on file at that time, did not contain the LAREEL and


                                        23
Herring losses, as earlier noted.

     The district court held that under Louisiana law, pre-judgment

interest begins    to   accrue   from    the   date   of    judicial   demand,

regardless of whether the damages are unliquidated, disputed, or

not ascertainable until judgment.        See Cotton Bros. Baking Co. v.

Industrial Risk Insurers, 941 F.2d 380, 391-92 (5th Cir.1991),

cert. denied, --- U.S. ----, 112 S.Ct. 2276, 119 L.Ed.2d 202

(1992).

     F & D urges that there was no default on the contract with

respect to the LAREEL and Herring losses at the time of the

original judicial demand.    This argument is related to the earlier

claim that these losses had not been specifically discovered and

mentioned in the original proof of loss.                   Because there was

evidence that this wrongdoing had been timely discovered by the

Bank, the court's award was correct.

                                   IX.

     In summary, our reasoning on the Morning Glory loan reduces

the original losses awarded by $1,203,674.24 from $5,313,004.17 to

$4,109,329.93.    Because this amount is still above the $4 million

limit on the fidelity bond, the judgment of the district court is

AFFIRMED.




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