ELIZABETH EHRLICH, PETITIONER V. UNITED STATES OF AMERICA No. 90-5728 In The Supreme Court Of The United States October Term, 1990 On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Fifth Circuit Brief For The United States In Opposition OPINIONS BELOW The opinion of the court of appeals (Pet. App. A1-A8) is reported at 902 F.2d 327. The order of the district court (Pet. App. B1) is unreported. JURISDICTION The judgment of the court of appeals was entered on May 18, 1990. A petition for rehearing was denied on June 14, 1990. The petition for a writ of certiorari was filed on September 12, 1990. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED Whether the evidence at trial was sufficient to sustain petitioner's convictions on six counts of embezzlement, in violation of 18 U.S.C. 656. STATEMENT Following a jury trial in the United States District Court for the Western District of Texas, petitioner was convicted on six counts of embezzlement from a federally insured bank, in violation of 18 U.S.C. 656. She was sentenced to 12 months' imprisonment, to be followed by three years' supervised release. Petitioner was also ordered to pay $3,660.72 in restitution. 1. Petitioner was employed as aclerk in the loan department of MedCentre Bank in San Antonio, Texas. In MedCentre's loan department, a teller received loan payments from customers and posted them to MedCentre's loan system account and its general ledger accounts. At the end of each day, the records for the day's transactions were to sent Electronic Data Systems, which processed the data into a computer-generated report summarizing the transations. Pet. App. 2; Gov't C.A. Br. 3-4. Petitioner was responsible for "loan balancing" in MedCentre's loan department. After Electronic Data Systems had processed the previous day's records, petitioner would verify that the loan system account totals balanced with the general ledger account totals. When clerical, data entry, or computer error caused a mistake, petitoner would transfer funds among the various accounts by filling out offsetting debit and credit slips to correct the balances of the affected accounts. Pet. App. 2; Gov't C.A. Br. 4. While she worked at the bank, petitioner maintained a checking account at MedCentre. In June of 1988, her account, which had previously been overdrawn for some time, showed a positive balance. In late July, MedCentre investigated the deposits made to petitioner's checking account during the preceding weeks. The investigation revealed six general ledger account debit slips in petitioner's handwriting that matched credit slips for six deposits to petitioner's checking account. Pet. App. 2; Gov't C.A. Br. 4-8. 2. The court of appeals affirmed. Pet. App. A1-A8. It rejected petitioner's contention that the evidence was insufficient to sustain her convictions for embezzlement because it failed to show that the funds she deposited into her checking account from MedCentre's general ledger accounts had been entrusted to her. The court explained that "(petitioner) had loan balancing responsibilities, and in giving her those responsibilities MedCentre entrusted her with control and constructive possession of funds in its general leger accounts." Id. at A4-A5. Noting that petitioner "routinely and lawfully moved funds between various MedCentre accounts through the use of debit and credit slips," the court observed that petitioner "converted funds to her account in the same manner." Id. at A5. The court emphasized: "Because of her position (petitioner) had lawful access to the funds, and the authority to move them from one account to another. She simply moved them from the general ledger account into her own account instead of into an account to which they properly should have been moved." Ibid. The court accordingly concluded that the evidence was sufficient to sustain petitioner's conviction for embezzlement because it "show(ed) that (she) did have lawful access to the funds and lawful control over their movement." Ibid. ARGUMENT The decision of the court of appeals is correct, and it does not conflict with any decision of this Court or the decision of any other court of appeals. Further review is therefore unwarranted. 1. It is well-settled that "'(e)mbezzlement is the fraudulent appropriation of property by a person to whom such property has been intrusted, or into whose hands it has lawfully come.'" Pet. App. A3 (quoting Moore v. United States, 160 U.S. 268, 269 (1895)); see also United States v. Bailey, 734 F.2d 296, 303 (7th Cir.), cert. denied, 469 U.S. 931 (1984). In this case, the court of appeals correctly held that the evidence was sufficient to show that the funds appropriated by petitioner had been entrusted to her. Because of her position, petitioner had control and authority over the transfer of funds among MedCentre's various accounts. As part of her loan balancing responsibilities, petitioner routinely and lawfully removed funds from one account by completing and submitting debit slips, and she returned those funds to other accounts by completing and submitting credit slips. Petitioner converted funds in the same manner. She completed and submitted general ledger debit slips to remove funds from accounts over which she had control. Instead of returning those funds to a MedCentre account by completing and submitting the appropriate credit slips, however, petitioner substituted her personal checking account deposit slip to redirect the funds for her own use. While her method was perhaps more sophisticated, petitioner's actions were equivalent to a teller's removing and pocketing bills from a cash drawer. 2. Contrary to petitioner's contention (Pet. 8-10), the court of appeals' decision does not conflict with its earlier decision in United States v. Sayklay, 542 F.2d 942 (5th Cir. 1976). In Sayklay, a bank bookkeeper obtained cash by encoding blank counter checks with other employees' account numbers and cashing the checks through a teller. The court of appeals reversed the bookkeeper's conviction for embezzlement because "the funds she stole were not entrusted to her in any capacity whatever for the use and benefit of the bank." 542 F.2d at 944. It explained that the bookkeeper's access to the other employees' account numbers, the check-encoding machine, and the blank counter checks did not establish that she was "entrusted with or came into lawful possession of the funds." Ibid. Rather, "the (bookkeeper's) position aided her in her crime, but it did not place her in lawful possession of others' funds that she converted to her own use." Ibid. In contrast to the bookkeeper in Sayklay, petitioner was entrusted in her capacity as the loan balancing clerk with the authority to transfer funds in MedCentre's general ledger accounts for the use and benefit of the bank. Thus, petitioner's "position gave her more than access to the tools necessary for conversion." Pet. App. A4. As the court of appeals explained, "Sayklay distinguished between unlawful access to funds, such as an employee using another employee's account number, and lawful access to funds, such as here where (petitioner) had the authority to move the funds." Id. at A5. Indeed, as the court of appeals in this case emphasized: "This is not a situation where (petitioner's) position as a bank employee did no more than allow her to take debit and credit slips out of supplies and use them improperly. She lawfully had the power to move funds from one account to another." Pet. App. A5. /1/ Nor, contrary to petitioner's contention (Pet. 10-11), does the decision of the court of appeals conflict with the decision in United States v. Holmes, 611 F.2d 329 (10th Cir. 1979). In Holmes, the defendant, a "proof operator" who had access to blank debit slips, opened an account in a fictitious name and transferred nearly $4,000 in bank funds into her account. 611 F.2d at 330. The court of appeals rejected the defendant's contention that the evidence failed to show that she had lawful possession of the funds that she appropriated and therefore was insufficient to establish a violation of 18 U.S.C. 656. The court noted that the defendant had been charged under Section 656 with embezzlement and with misapplication of bank funds, which does not require proof of lawful possession. Because the evidence was sufficient to establish that the defendant willfully misapplied the bank's funds, the court affirmed the conviction without deciding whether she had lawful possession of the funds. Id. at 331. /2/ There is likewise no merit to petitioner's contention (Pet. 11-13) that the court of appeals' decision conflicts with the decision in United States v. Whitlock, 663 F.2d 1094 (D.C. Cir. 1980). In Whitlock, the defendant removed $85,000 from the bank's vault. 663 F.2d at 1096. The court of appeals affirmed the defendant's conviction for embezzlement because "by virtue of (defendant's) position of trust as Assistant Cashier and Assistant Manager, and the special access she was given to the key and the combination, the funds in the vault were under her effective control." Id. at 1112 (MacKinnon, J., specially concurring). /3/ Whitlock is thus fully consistent with the court of appeals' decision in this case. CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. KENNETH W. STARR Solicitor General ROBERT S. MUELLER, III Assistant Attorney General JOSEPH C. WYDERKO Attorney DECEMBER 1990 /1/ To the extent there is any conflict between the Fifth Circuit's decisions in this case and Sayklay, it is merely an intra-circuit conflict that does not warrant review by this Court. See Wisniewski v. United States, 353 U.S. 901, 902 (1957). /2/ In any event, Holmes is distinguishable from this case because it appears that the defendant in Holmes was not entrusted with the bank's money, but was able to transfer bank funds only because she had access to tools (the blank debit slips) that allowed her to move money into her account. Petitioner, in contrast, moved bank funds between accounts as part of her job. /3/ Judge MacKinnon's specially concurring opinion in Whitlock constituted the opinion of the court on the embezzlement issue. 663 F.2d at 1095.