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Criminal Resource Manual

824. Participation

The third criminal act in 18 U.S.C. § 1006 is not mentioned in 18 U.S.C. § 1005. This is the participation to any extent in the proceeds or benefits from any loan or transaction with the institution. The statute is intended to do much more than forbid unsophisticated embezzlement, larceny or theft; it is a typical conflict of interest prohibition. See Beaudine v. United States, 368 F.2d 417 (5th Cir. 1966), appeal after remand, 414 F.2d 397 (1967), reh'g denied, 418 F.2d 500 (1969), cert. denied, 397 U.S. 987 (1970); FIF Manual at 172-73.

This particular crime, with respect to national banks and banks insured by the Federal Deposit Insurance Corporation, is partially covered by the bribery statute, 18 U.S.C. § 215. There can be no doubt that the Congress intended by this statute to remove from the path of officials the temptation to enrich themselves at the expense of the borrowers or the bank, and also to prevent improvident loans. In United States v. Garrett, 396 F.2d 489 (5th Cir.), cert. denied, 393 U.S. 952 (1968), the defendants received a fee for causing a bank that they owned to purchase certain mortgages. Participation is analogous to misapplication cases involving loans made for the benefit of the officer.

Intent to defraud is needed to convict under this section. Loss to the institution need not be shown, only that the defendant acted with intent to deceive or cheat, to cause financial loss to another or to bring about financial gain to himself/herself. See Beaudine, 368 F.2d at 420. United States v. Weaver, 360 F.2d 903 (7th Cir.), cert. denied, 385 U.S. 825 (1966).

[cited in USAM 9-40.000]