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United States v. Manlove

United States District Court, D. Montana, Missoula Division

January 5, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
GEORGE LESLIE MANLOVE, Defendant.

          ORDER

          Dana L. Christensen, Chief Judge.

         Before the Court are Defendant's following motions to dismiss: (1) Defendant's First Motion to Dismiss: Count 127 (Doc. 88); (2) Defendant's Second Motion to Dismiss: Counts 132-218 (Money Laundering) (Doc. 90); (3) Defendant's Third Motion to Dismiss: Counts 2-121 (Wire Fraud) (Doc. 92); (4) Defendant's Fourth Motion to Dismiss: The First Forfeiture Allegation (Wire Fraud) (Doc. 94); (5) Defendant's Fifth Motion to Dismiss: The Second Forfeiture Allegation (Money Laundering) (Doc. 96); (6) Defendant's Sixth Motion to Dismiss: Counts 122 and 123 (Bank Fraud) (Doc. 150). For the reasons given below, the Court denies all six motions.

         Procedural and Factual Background

         George Leslie Manlove ("Manlove") is the former CEO of Vann's, Inc. ("Vann's"), a Montana corporation that owned and operated retail electronics and appliance stores throughout the state before declaring bankruptcy in 2012. On December 21, 2015, the grand jury returned a 221-count indictment against Manlove, charging him with: a single conspiracy count (Count 1); 124 counts of wire fraud (Counts 2-125); 2 counts of bank fraud (Counts 126 and 127); 4 counts of false statements (Counts 128-131); 4 counts of bank fraud (Counts 132-135); and 86 counts of money laundering (Counts 136-221). (Doc. 1). The indictment also seeks forfeiture of the property and proceeds of the alleged wire fraud scheme, the property involved in the money laundering offenses, and the property and proceeds involved in the bank fraud offenses. Manlove was arraigned on January 12, 2016. The Government submitted a Superceding Indictment on January 21, 2016, and a Second Superceding Indictment on March 18, 2016. The Second Superceding Indictment (hereafter "Indictment") is at issue in Manlove's motions to dismiss and includes the following counts:

•Count 1: Conspiracy in violation of 18 U.S.C. § 1343, 18 U.S.C. § 1344, 18 U.S.C. § 1014, 18 U.S.C. § 152, 18 U.S.C. § 1956, 18 U.S.C. §1957 and 18 U.S.C. § 2;
•Counts 2-121: Wire Fraud in violation of 18 U.S.C. § 1343 and 18 U.S.C. §2;
•Counts 122 and 123: Bank Fraud in violation of 18 U.S.C. § 1344; and 18 U.S.C. §2;
•Counts 124-127: False Statements in violation of 18 U.S.C. § 1014andl8U.S.C. §2;
• Counts 128-131: Bankruptcy Fraud in violation of 18 U.S.C. § 152(4);
• Counts 132-218: Money Laundering in violation of 18 U.S.C. § 1957 and 18 U.S.C. §2;
• Counts 219-221: Tax Fraud in violation of 26 U.S.C. § 7206(1);
• First Forfeiture Allegation: the property and proceeds of the alleged wire fraud scheme;
• Second Forfeiture Allegation: the property involved in the money laundering offenses;
• Third Forfeiture Allegation: the property and proceeds involved in the bank fraud offenses.

         Manlove now moves the Court to dismiss various counts within the Indictment including: Count 127 (false statement to a federally insured bank); Counts 132-218 (money laundering); Counts 2-121 (wire fraud); the first forfeiture allegation (wire fraud); the second forfeiture allegation (money laundering); and Counts 122 and 123 (bank fraud). The Government opposes all six motions. Each motion will be addressed separately below.

         Legal Standard

         In ruling on a pretrial motion to dismiss an indictment for failure to state an offense, the court "is bound by the four corners of the indictment" and the court must accept the truth of the allegations in the indictment. U.S. v. Boren, 278 F.3d 911, 914 (9th Cir. 2002). Federal Rule of Criminal Procedure 7(c)(1) requires that an indictment be a "plain, concise and definite written statement of the essential facts constituting the offense charged." Fed. R. Crim. P. 7(c)(1). An indictment "should be read in its entirety, construed according to common sense, and interpreted to include facts which are necessarily implied." U.S. v King, 200 F.3d 1207, 1217 (9th Cir. 1999). "An indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs the defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense." United States v. Davis, 336 F.3d 920, 922 (9th Cir. 2003) (citing United States v. Bailey, 444 U.S. 394, 414 (1980)). "In cases where the indictment tracks the words of the statute charging the offense, the indictment will be held sufficient so long as the words unambiguously set forth all elements necessary to constitute the offense." Id. (citing United States v. Fitzgerald, 882 F.2d 397, 399 (9th Cir. 1989)) (internal quotations omitted). In addition, "a defendant may not properly challenge an indictment, sufficient on its face, on the ground that the allegations are not supported by adequate evidence." United States v. Jensen, 93 F.3d 667, 669 (9th Cir. 1996) (citations omitted).

         Discussion

         I. Count 127: False Statement to a Federally Insured Bank

         Manlove moves to dismiss Count 127 of the Indictment asserting that the factual allegations in the Indictment fail to accurately set forth all the elements of the offense. Manlove contends that Indictment fails to allege a critical element of 18 U.S.C. § 1014: that Manlove's allegedly false statement was made to influence in any way the actions of First Interstate Bank ("FIB") upon an application, purchase agreement, or any extension thereof. The Government opposes this motion and argues that the Indictment sufficiently alleges the elements of 18 U.S.C. § 1014 with respect to the false statement made by Manlove. The Court agrees.

         With respect to Count 127, the Indictment alleges:

COUNTS 124-127
FALSE STATEMENTS
109. Paragraphs 1 through 108 are incorporated by reference as if set forth in full.
110. Beginning on or about April 24, 2007, and continuing until on or about March 2, 2011, in Missoula, in the District of Montana, and elsewhere, the defendants, GEORGE LESLIE MANLOVE and PAUL LYN NISBET, did make false statements knowing the same to be false, for the purpose of influencing in any way the actions of First Interstate Bank and Treasure State Bank, both federally insured lending institutions, as follows:
. . .
COUNT 127
114. On or about March 2, 2011, NISBET and MANLOVE provided First Interstate Bank a chart that falsely represented that valid lease agreements existed between JPEG, LLC, and Vann's for the Outlet Store and Painted Sky, LLC and Vann's for the Helena Store.
All in violation of 18 U.S.C. § 1014 and 18 U.S.C. § 2.

         Pursuant to Federal Rule of Criminal Procedure 12(b), Manlove admitted for the purposes of the motion that the Indictment sufficiently alleges false statements were made; however, he argued that the Indictment was insufficient as a matter of law because it failed to allege that his false statements were intended to influence a loan or other extension of credit.

         Under 18 U.S.C. § 1014 ("Loan and credit applications generally; renewals and discounts; crop insurance"), it is a crime for an individual to:

1. Knowingly make a false statement or report;
2. For the purpose of influencing in any way the action of an institution the accounts of which are federally insured;
3. Upon any application, purchase agreement, or extension of any of the same.

18 U.S.C. § 1014; Boren, 278 F.3d at 914.[1] Manlove's argument regarding Count 127 specifically relates to the third element. Manlove asserts that the Indictment fails to make allegation that Manlove's allegedly false statements were made "upon any application, advance, discount, purchase, purchase agreement, repurchase agreement, commitment, loan, or insurance agreement or application for insurance or a guarantee, or any change or extension of any of the same, by renewal, deferment of action or otherwise, or the acceptance, release, or substitution of security therefor." 18 U.S.C. § 1014. Manlove asserts that the Indictment fails to allege that Paul Nisbet's March 2, 2011, chart which he sent to FIB, was part of an application, purchase agreement, or an extension of the same. (Doc. 182 at 3.)

         In Boren, the Ninth Circuit found that "[t]he statute's reach is not limited to false statements made with regard to loans, but extends to any application, commitment or other specified transaction." 278F.3dat914. The court determined that the word "any" within the third element of the statute is unambiguous and broad, and that it is not limited to lending transactions. Id. at 915. Manlove agrees with the Government's assertion that 18 U.S.C. §1014 is "unambiguous and broad" and includes transactions other than bank loans. (Doc. 182 at 8.) Therefore, the question here is whether the Indictment sufficiently alleges that Manlove's false statement was made to influence FIB as it relates to an "application, " a "commitment, " or "an extension of any of the same." Id. at 916.

         The Government contends that paragraphs 39, 50, 97, 109, 110, 112, and 114 of the Indictment allege sufficient facts to indict Manlove as to the third element of Count 127. First, Count 127 itself adequately states the third element of the offense charged and is sufficient under Rule 7 of the Federal Rules of Criminal Procedure. Paragraph 110 states that "GEORGE LESLIE MANLOVE and PAUL LYN NISBET, did make false statements knowing the same to be false, for the purpose of influencing in any way the actions of First Interstate Bank and Treasure State Bank, both federally insured lending institutions." Paragraph 114 goes on to allege that the false representation as to the conduct occurring on or about March 2, 2011, was Manlove and Nisbet's false representation that a "valid lease agreement existed between JPEG, LLC, and Vann's for the Outlet Store and Painted Sky, LLC and Vann's ...


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