                                                                                                                           Opinions of the United
1998 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


11-27-1998

Rios v. Amer Airlines Inc
Precedential or Non-Precedential:

Docket 98-1668




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Recommended Citation
"Rios v. Amer Airlines Inc" (1998). 1998 Decisions. Paper 270.
http://digitalcommons.law.villanova.edu/thirdcircuit_1998/270


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Filed November 27, 1998

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 97-1668

UNITED STATES OF AMERICA,

v.

AKTHAM ABUHOURAN.
a/k/a "Tony Houran,"

Appellant.

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Criminal No. 95-00560-04)

Argued: October 7, 1998

Before: BECKER, Chief Judge, NYGAARD and
NOONAN,* Circuit Judges

(Filed November 27, 1998)

       JOSEPH P. GRIMES, ESQUIRE
        (ARGUED)
       Grimes, Grimes, Grimes & Grimes
       1230 Brace Road
       Cherry Hill, NJ 08034

       Counsel for Appellant



_________________________________________________________________

*John T. Noonan, Jr., Circuit Judge of the United States Court of
Appeals for the Ninth Circuit, sitting by designation.
       MICHAEL R. STILES, ESQUIRE
       United States Attorney
       WALTER S. BATTY, ESQUIRE
       Assistant United States Attorney
       Chief of Appeals
       ROBERT A. ZAUZMER, ESQUIRE
        (ARGUED)
       Assistant United States Attorney
       615 Chestnut Street, Suite 1250
       Philadelphia, PA 19106

       Counsel for Appellee

OPINION OF THE COURT

NOONAN, Circuit Judge:

Aktham Abuhouran appeals his conviction of crimes
connected to frauds committed against the Bank of
Brandywine Valley (BBV) of West Chester, Pennsylvania.
Abuhouran is a naturalized citizen of the United States; his
americanized name, which will be used in the remainder of
this opinion, is Tony Houran. Together with his brothers,
Steve and Adam, he was in the construction business and
with them owned Houran Construction Co. (HCC). The
business became the springboard for Steve to engage in
massive fraud upon BBV, As a consequence BBV's capital
was depleted to the point that the bank was placed in
federal receivership. Just before trial Steve pleaded guilty;
Adam stood trial with Tony and was convicted too. In this
appeal we consider only Tony's role in assisting Steve in his
machinations.

I. The Houran Trading Company (HTC) Loans. In July
1990 Steve Houran obtained a $350,000 line of credit at
BBV for HTC, representing that the loan proceeds would
finance HTC's international business in shoes and
providing fictitious financial statements and tax returns to
substantiate this fraudulent representation. HTC was little
more than a shell used to circumvent the limits on loans to
a single borrower. The fraud is undisputed. Tony's share in
it was an issue at trial.

                               2
The government contended that Tony's past work in
helping Steve get fraudulent loans from other banks,
together with the closeness of the brothers in business and
at home, showed that Tony must have been aware that
Steve was supplying BBV with the false assurance that
Tony would guarantee the loan and a false financial
statement showing Tony's net worth as $2,262,922.
Nonetheless, no one at BBV testified to dealing with Tony
on the line of credit, and the government conceded that the
note acknowledging the HTC loan carried Tony's forged
signature. The jury, or part of it, seems to have been in
doubt, for, during its deliberations, the jury asked the judge
if, to convict of aiding and abetting, the jury should
consider only July 1990 when the line of credit was applied
for or whether the jury could consider the time charged in
the indictment ranging from July 1990 to February 1992.
The judge replied that the jury could consider whether the
defendant knew of the crime at any time the scheme to
defraud was underway and its participants intended its
promotion.

That instruction is challenged on appeal as an
amendment of the indictment. The indictment did indeed
list as acts performed by Tony only acts in July 1990
relating to the application for credit. What Tony had done
in February 1992, which inferentially the jury had in mind,
was to lie in a deposition in a civil suit brought by BBV to
recover the proceeds of the loan. In this deposition Tony
stated that HTC was a bona fide international trading
company and implied that he had signed the note which
purported to carry his signature. The government argues
that his ready participation in this tale in 1992 shows that
he had knowledge of the fraud in 1990. If that inference is
a good deal less than certain, the government has a
fallback position: that Tony's lies in 1992 were meant to
keep the fraud from being discovered and were a part of the
continuing scheme to defraud. This contention is
convincing. The indictment did charge a scheme to defraud,
not a single act of fraud. The indictment did say that the
scheme lasted until February 1992. The indictment did not
have to list every single act by which the scheme was
carried out. The indictment did specify that it was only
enumerating "in part" the actions taken to effectuate the

                               3
scheme. The government argued to the jury that the lies in
the deposition were part of the scheme. The defendant had
the opportunity to rebut this contention. Tony Houran was
properly convicted of aiding and abetting bank fraud in
violation of 18 U.S.C. S 1344 and S 2.

II. The Loans To The HCC Subsidiaries. A s econd scheme
to defraud, beginning in April 1991 and running through
February 1992, involved the creation of five subsidiaries of
the construction company, HCC. The subsidiaries had no
purpose but to borrow from BBV. Tony Houran guaranteed
a loan of $90,000 from BBV to Diversified Carpentry, Inc.,
one of these new creations, and he guaranteed a loan of
$90,000 from BBV to Masonry Construction Company, a
second subsidiary. The misrepresentation of hisfinances
that accompanied the guarantees is not disputed on appeal.
Bank fraud is established.

III. The Webster Avenue Loans. In June 199 1 Steve
Houran lined up thirteen straw borrowers, chiefly
employees of HCC or relatives, and persuaded them to
apply for loans to buy parcels of land and build houses on
them on Webster Avenue, Jersey City. The total amount of
the loans was $2,420,000. A new entity, Webster Avenue
Corporation, opened an account at BBV, and, as the
apparent seller of the lots and builder of the houses,
became the recipient of these funds. From this account
between July 22 and August 15, 1991 Steve Houran
transferred over $1,600,000 to Petra Construction Co.,
which deposited the checks at First Fidelity Bank, Union
City, New Jersey. From this account, between August 5 and
September 25, 1991, Tony Houran drew eight checks
totaling $790,000 payable to HCC and one check of
$100,000, dated August 5, 1991, payable to the trust
account of Raymond E. Murphy, the Hourans' lawyer. The
scheme to defraud is alleged to have run from June 1991
to the date of the indictment, October 3, 1995.

Tony Houran's role in the fraud is summarized by the
government in its response to the defendant's Rule 29
motion and in its brief on appeal as "the movement of
money." The government points to the checks drawn in
August and September 1991 which helped hide the trail
and diverted the money from the nominal borrowers to HCC

                                4
and to the personal needs of the Hourans. The government
adds that it proved that Tony Houran was aware of the
fraudulent nature of the Webster Avenue loans since he
was present at the HCC office when the nominal borrowers
signed the loan papers, and he was made aware of the
infusion of money into the Petra account. Sufficient
evidence was presented for the jury to find that he
knowingly abetted the fraud on BBV.

IV. The Bad Checks Scam. Between October 23 and
October 25, 1991, Steve Houran deposited at BBV four
worthless checks, totaling about $2.4 million, from Kassem
Alaouie into the account of Houran Trading Company.
HTC's account, which had held around $3,000, swelled
mightily. But Steve Houran was aware that he must act fast
to benefit from the deposits, for Alaouie had only $1,200 in
the account on which the checks were written. Between
October 23 and October 29, 1991, Steve Houran wrote ten
checks totaling $2,527,812.15 on the HTC account, causing
an overdraft of over $100,000, and transferred the money
into accounts controlled by the Hourans in banks in New
Jersey.

One of the checks on the HTC account, written by Steve
on October 25, 1991, was to Tony in the amount of
$55,000. Tony deposited it in his account at First Fidelity
Bank in New Jersey. On October 31, 1991 he opened a new
checking account at Citizens First Bank in New Jersey and
wrote a check for $25,000 on the First Fidelity account. He
deposited this check in the new checking account at
Citizens First.

On October 28, 1991 Steve Houran also wrote a check on
the HTC account at BBV for $150,000 payable to Izdehar
Houran, Tony's wife. Tony helped his wife open a new
account at National Community Bank in New Jersey, in
which this check was deposited. On October 31, 1991
Izdehar withdrew the entire amount with a check payable
to Tony, which he deposited at a newly-opened savings
account at Citizens First. By December 16, 1991 Tony had
transferred $125,000 from the savings account to his
checking account at Citizens First. On December 16 Tony
wrote a certified check on this account made out to himself
for $150,000, which he deposited at the HCC account at

                               5
First Fidelity. The government convincingly contends that
this movement of money was in aid of Steve Houran's fraud
on BBV in depositing Alaouie's bad checks and immediately
drawing on the HTC account before their worthlessness had
been determined.

In addition, Tony Houran assisted the fraud in two other
ways. When BBV discovered that the Alaouie checks had
not cleared, it sought return of the money and, pending
restitution, collateral to secure the return. The Houran
brothers furnished real estate purporting to have equity in
it; in none of the property, including that pledged by Tony,
did the Hourans have equity. Tony's second assistance to
the fraud was his support of Steve's story of how he had
happened to receive the Alaouie checks. According to Steve,
he had sold a collection of goods consisting of army boots,
blankets, canned tuna, corned beef, sardines, shoes, and
sweaters for $3,625,000 to a buyer in Lebanon, who paid
the first installment of $2,400,000 by checks to Kassem
Alaouie as the broker in the sale; Steve said he had
accompanied Alaouie to the bank when the Lebanese
checks were deposited and had been assured that they
were good; it was a surprise to him when they did not clear,
leaving the Alaouie checks to HTC worthless. This tale was
of whole cloth, a figment of Steve's imagination. Tony,
however, attempted to corroborate it by his deposition on
January 5, 1992 testifying that the international deal had
taken place and that he had seen Alaouie in Steve's office
negotiating the sale. The indictment charged that the fraud,
began in October 1991, had continued through February
1992, so that the deposition occurred as the attempt to
keep the fraud alive was in progress.

As participant in hiding the money taken, as fraudulent
provider of collateral, and as perjurious deponent, Tony
Houran abetted his brother's swindle of BBV.

V. Conspiracy to Make False Statements To BBV and To
Commit Perjury. Tony Houran was also indicted for
conspiring with his brothers to deceive BBV as to the
collateral offered and to lie under oath in his deposition
given in BBV's collection action. The lies were, as already
noted, part of his aid to Steve Houran in the bad check
caper. Tony was properly convicted of violation of 18 U.S.C.

                               6
S 371, an offense distinct from the individual actions he
committed.

VI. Money Laundering. Tony Houran was indi cted for,
and convicted of, money laundering by his withdrawal of
$100,000 from the Petra Construction Co. account on
August 5, 1991 by a check payable to the trust account of
his lawyer Raymond Murphy, who in turn used the money
to pay the mortgage on the Hourans' residence. The
reshuffle of a portion of the funds obtained by Steve
Houran through the Webster Avenue bank fraud
constituted money laundering, that is, the concealment of
the bank fraud as well as furtherance of the fraud by
concealment.

Money laundering must be a crime distinct from the
crime by which the money is obtained. United States v.
Conley, 37 F.3d 970, 980 (3rd Cir. 1994). The money
laundering statute is not simply the addition of a further
penalty to a criminal deed; it is a prohibition of processing
the fruits of a crime or of a completed phase of an ongoing
offense. Id. at 979. The check to Murphy was the same
check referred to in the charge of abetting Steve Houran in
the bank fraud involved in the Webster Avenue loans. It
could be objected that the act charged as money laundering
was not distinct from one of the acts charged as aiding and
abetting bank fraud. This objection was not raised at trial;
the error, if any, was therefore forfeited, and we review it
under the criteria governing our exercise of review under
Fed. R. Crim. P. 52(b). A majority of the court is of the
opinion that it is sufficient under Conley that a distinct
phase of the bank fraud have been completed before the act
of money laundering was committed. The majority views the
bank fraud which Steve Houran committed and of which
the check Tony Houran wrote constituted proceeds, as
having already been completed at the time Tony Houran
wrote the check. Judge Noonan does not agree with this
approach. In the light of the division of the court he does
believe that the error, if any, does not meet the criteria set
for the recognition of plain error by United States v. Olano,
507 U.S. 725, 730 (1993).

VII. Conspiracy to Commit Money Laundering And To
Transport Money Taken By Fraud In Interstate Commerce.

                               7
The indictment charged Tony Houran with conspiracy to
commit money laundering and to transport in interstate
commerce the money fraudulently obtained from BBV by
Steve Houran's bad check scam. The conspiracy, however,
is a distinct offense from acts by which Tony Houran was
proved guilty of abetting the scam. The intentional
coordination of Tony's banking moves with Steve's
objectives is beyond dispute.

VIII. The Enhancement For Obstruction Of Justice. Tony
Houran was released on bail to home confinement with an
electronic monitor pending sentencing on August 20, 1997.
On August 14, 1997 he cut the monitoring bracelet and
made his way to Kennedy Airport where he was
apprehended at the ticket counter of Royal Jordanian
Airlines with $10,800 in cash attempting to buy a ticket to
Jordan. The district court in determining his sentence
added two points for obstruction of justice.

On appeal Houran argues that he was not "in custody,"
so that the example of flight from custody given in
Application Note 3 to U.S.S.G. S 3C1.1 does not apply. He
argues that his conduct was closer to that governed by
Application Note 4, "less serious conduct," such as
providing a false name at arrest.

Assuming but not deciding that Houran was not in
custody, we find his bold breaking of the bracelet and
brazen trip to Kennedy to be a very serious obstruction of
justice. His acts were calculated to prevent the culmination
of his criminal trial, the judicial imposition of sentence. A
more severe obstruction of justice can scarcely be imagined.
That his efforts were, at the last minute, foiled neither
extenuates them nor renders the enhancement less
appropriate.

IX. Minor Issues. Houran objects that the jury
foreperson, Susan Moran, disclosed after the trial that she
knew the wife of Stephen Bennett, a government witness;
the son of the United States Attorney; and the fiancee of the
indicted president of BBV. In a post-trial hearing held after
these disclosures Moran testified that she did not recognize
Bennett's name at voir dire and had never met him; she
realized during the trial that his wife had done counseling

                               8
for her business partner. She did not herself know the
United States Attorney and had met his son only once
when the son came with a group of teenagers to her house.
She discovered after the trial that the fiancee of the bank
president was a woman she had met years earlier as her
son's camp counselor. In no way had these incidental
acquaintanceships affected her impartiality. The district
court did not err in finding no impropriety in any respect.

Houran also argues that the government did not
establish that BBV was federally insured. To the contrary,
Bennett testified that the deposits were insured by the
Federal Deposit Insurance Corporation. Christine
Scarpedos, an official of the FDIC, testified to the same
effect. A juror would reasonably have understood these
witnesses to refer to the years in which the deposits were
affected by the charged conduct. The argument that a
critical element of the government's case was missing is a
tardy afterthought, raised for the first time in the Rule 29
motion and defeated by the cited testimony.

For the foregoing reasons, we will affirm the judgment of
the district court.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

                               9
