holding 18 U.S.C. § 656, which prohibits embezzlement by a bank employee, is a divisible statute that covers embezzlement with either intent to injure or intent to defraud, even though the statute on its face does not distinguish between the two, because the caselaw applying the statute distinguishes the two in defining the elements of the crime
How later courts described this case
- holding 18 U.S.C. § 656, which prohibits embezzlement by a bank employee, is a divisible statute that covers embezzlement with either intent to injure or intent to defraud, even though the statute on its face does not distinguish between the two, because the caselaw applying the statute distinguishes the two in defining the elements of the crime
- declining to speculate that noncitizen pleaded guilty to offense that would render her removable because “alien defendants considering whether to enter into a plea agreement are acutely aware of the immigration consequences of their convictions” (quoting I.N.S. v. St. Cyr, 533 U.S. 289, 322 (2001))
- rejecting assertion that defendant’s guilty plea to indictment charging embezzlement with “intent to injure and defraud” admitted both states of mind where intent to do either was sufficient to sustain conviction
- stating that intent “may be shown either by intent to injure or intent to defraud”
Written by the judges who cited it.
The opinion
SCIRICA, Circuit Judge,
dissenting.
At her guilty plea to embezzlement (18 U.S.C § 656), Valansi’s counsel engaged in a clever bit of lawyering that was not picked up on by the government or the District Judge. As a consequence, the majority holds that although pleading guilty to embezzlement, Valansi never pled guilty to a crime involving fraud or deceit. Because I believe the majority mistakenly defines the crime of embezzlement under 18 U.S.C. § 656 , I respectfully dissent.
I.
Valansi embezzled in the aggregate more than $400,000 in cash and checks entrusted to First Union National Bank on six separate occasions spanning four months in 1997. 1 She pled guilty to six counts of embezzlement under 18 U.S.C. § 656 . 2 As a lawful permanent resident, Valansi is removable if her conviction qualifies as an aggravated felony under 8 U.S.C. § 1101 (a)(43)(M)(i). See 8 U.S.C. § 1227 (a)(2) (A) (iii).
The critical issue on appeal is whether a conviction for embezzlement under 18 U.S.C. § 656 constitutes an aggravated felony, defined in 8 U.S.C. § 1101 (a)(43)(M)(i) as “an offense that — involves fraud or deceit in which the loss to the victim or victims exceeds $10,000.” Because Valansi pled guilty to embezzling more than $10,000, the sole question is whether embezzlement is an offense that “involves fraud or deceit.” 3
18 U.S.C. § 656 provides, in part:
Whoever, being an officer, director, agent or employee of, or connected in any capacity with any ... national bank ... embezzles, abstracts, purloins or willfully misapplies any of the moneys, funds or credits of such bank ... shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both; but if the amount embezzled, abstracted, purloined or misapplied does not exceed $1,000, he shall be fined under this title or imprisoned not more than one year, or both.
The statute does not define “embezzle.” Therefore, we must resort to its settled meaning. In Morissette v. United States, 342 U.S. 246 , 72 S.Ct. 240 , 96 L.Ed. 288 (1952), the Supreme Court held:
[Wjhere Congress borrows terms of art in which are accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken and the meaning its use will convey to the *219 judicial mind unless otherwise instructed. In such ease, absence of contrary direction may be taken as satisfaction with widely accepted definitions, not as a departure from them.
Id. at 263 , 72 S.Ct. 240 ; see also Standard Oil Co. of N.J. v. United States, 221 U.S. 1, 59 , 31 S.Ct. 502 , 55 L.Ed. 619 (1911) (“[W]here words are employed in a statute which had at the time a well-known meaning at common law or in the law of this country, they are presumed to have been used in that sense unless the context compels to the contrary.”). 4
The term “embezzlement” has been defined consistently by the Supreme Court for more than 100 years. In 1887, the Supreme Court said embezzlement had a “settled technical meaning.” 5 United States v. Northway, 120 U.S. 327, 334 , 7 S.Ct. 580 , 30 L.Ed. 664 (1887). In 1895, the Supreme Court held “[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.” Moore v. United States, 160 U.S. 268, 269 , 16 S.Ct. 294 , 40 L.Ed. 422 (1895); see also United States v. Petti, 459 F.2d 294, 295 (3d Cir.1972). 6 In 1902, the Supreme Court declared “the word ‘embezzled’ itself implies fraudulent conduct on the part of the person receiving the money.... Indeed, it is impossible for a person to embezzle the money of another without committing a fraud upon him.” Grin v. Shine, 187 U.S. 181, 189 , 23 S.Ct. 98 , 47 L.Ed. 130 (1902).
Later cases have articulated that the act of embezzlement violates a relationship of trust and confidence. “In embezzlement, breach of fiduciary duty is an inherent element of the crime.” United States v. Maurello, 76 F.3d 1304,1310 (3d Cir.1996); see also United States v. Sayklay, 542 F.2d 942, 944 (5th Cir.1976) (“The essence of embezzlement lies in breach of a fiduciary relationship deriving from the entrustment of money.”). In order to be convicted of embezzlement, the accused must be entrusted with another’s money or property or have lawful possession by virtue of some office, employment, or position of trust before converting it. 7 The Court of Appeals for the First Circuit notes:
The notion of “fraudulent conversion,” at the heart of embezzlement, may sound *220 obscure, but, in fact, it is not. It essentially refers to, say, a bank teller, trustee, or guardian using money entrusted to him by another person for his own purposes or benefit and in a way that he knows the “entruster” did not intend or authorize.
United States v. Young, 955 F.2d 99, 102 (1st Cir.1992).
II.
Valansi pled guilty to “knowingly and willfully” embezzling bank deposits. Despite the settled definition of “embezzlement,” the majority declines to apply that definition to Valansi’s conduct and guilty plea. Nor does it address her position of trust as an employee, 8 or the breach of her fiduciary duties to the bank. As a result, I believe the majority misinterprets the elements of embezzlement under 18 U.S.C. § 656 .
A.
As a bank teller for First Union National Bank, Valansi was in a fiduciary relationship.
The essence of a fiduciary relationship is that the fiduciary agrees to act as his principal’s alter ego.... Hence the principal is not armed with the usual wariness that one has in dealing with strangers; he trusts the fiduciary to deal with him as frankly as he would deal with himself — he has bought candor.
United States v. Dial, 757 F.2d 163, 168 (7th Cir.1985).
On six separate occasions spanning four months, Valansi appropriated checks and cash entrusted to her for deposit. Under any definition, this breach of her fiduciary duties involved fraud and deceit. 9 By pleading guilty to “knowingly” embezzling the deposits “intrusted to her care,” Valan-si demonstrated the requisite intent for “fraudulent conversion.” 10 These actions were paradigmatic examples of embezzlement. As the Court of Appeals for the First Circuit said:
An embezzler, like a thief or a swindler, may commit the crime in any of a myriad of different ways. But, in each in-
*221 stance, the embezzler will have acted for his own purposes and contrary to authorization. He will have “fraudulently converted” property entrusted to him by another, (citations omitted).
Young, 955 F.2d at 103 .
A crime involving fraud or deceit qualifies as an aggravated felony. 11 Independent of the fraud analysis, Valansi’s conduct also constituted a crime involving deceit. 12 We have stated that “[f]raud and embezzlement necessarily involve securing possession of another’s property by deception.... ” Gov’t of the V.I. v. Moolenaar, 133 F.3d 246, 250 (3d Cir.1998).
As a result, a conviction for embezzlement under 18 U.S.C. § 656 constitutes an offense involving fraud and deceit and qualifies as an aggravated felony under 8 U.S.C. § 1101 (a)(43)(M)(i). See Moore v. Ashcroft, 251 F.3d 919, 923 (11th Cir.2001) (holding “[t]he ‘intent to injure or defraud’ element of the offense is established by proof that the defendant knowingly participated in a deceptive or fraudulent transaction”) (citations omitted).
B.
The “dilemma” the majority wrestles with, whether Valansi embezzled more than $400,000 with the “intent to defraud” or the “intent to injure,” is unnecessary to the resolution of this appeal. Knowledge satisfies the required mental state under § 656. 13 Valansi pled guilty to “knowingly and willfully” embezzling deposits “intrusted to her custody and care.” (A-90, 104-110). Because “embezzlement” means to convert by fraud and deception, it makes no difference whether Valansi pled guilty to embezzlement with the “intent to in *222 jure” or the “intent to defraud.” 14 Embezzlement with the “intent to injure” still constitutes an offense that involves fraud and deceit. Based on her guilty plea, Va-lansi fraudulently converted $400,000 with the intent to injure the bank and committed an aggravated felony.
III.
Valansi pled guilty to “knowingly and willingly” embezzling more than $400,000 “intrusted to her care.” As a result, she committed a crime involving fraud and deceit; a crime which constitutes an aggravated felony under 8 U.S.C. § 1101 (a)(43)(M)(i). For the foregoing reasons, I would affirm the judgment of the BIA.
Therefore, I respectfully dissent.
.Valansi’s indictment was based on the following criminal conduct: On April 30, 1997, Valansi embezzled $5,084.99 in cash and checks; on May 27, 1997, Valansi embezzled $11,287.86 in cash and checks; on June 7, 1997, Valansi embezzled $3,904.22 in cash and checks; on June 16, 1997, Valansi embezzled $8,239.05 in cash and checks; on August 4, 1997, Valansi embezzled $14,003.34 in cash and checks; on August 12, 1997, Valansi embezzled $370,674.69 in cash and checks entrusted to the care of First Union National Bank.
. Valansi was charged with six counts of embezzlement in the indictment. Each count charged her with “knowingly and wilfully” embezzling deposits “intrusted to her custody and care.” Valansi pled guilty to each count.
. I agree with the majority that "the use of the word 'involves' expands the scope of § 1101(a)(43)(M)(i) to include offenses that have, at least as one element, fraud or deceit” and that the provision does not require "that the elements of the offense involving 'fraud or deceit’ be coextensive with the crime of fraud.” Supra at 209.
. Similarly, "where Congress uses a common law term in a federal criminal statute, absent a new instruction defining it, Congress is presumed to adopt the term’s widely accepted common law meaning.” United States v. Cicco, 10 F.3d 980, 984 (3d Cir.1993) (citing Morissette, 342 U.S. at 263 , 72 S.Ct. 240 ); United States v. Nedley, 255 F.2d 350, 357 (3d Cir.1958).
. "By the late 18th century, courts were less willing to expand common-law definitions. Thus, when a bank clerk retained money given to him by a customer rather than depositing it in the bank, he was not guilty of larceny, for the bank had not been in possession of the money. Statutory crimes such as embezzlement and obtaining property by false pretenses ... were created to fill this gap.” Bell v. United States, 462 U.S. 356, 359 , 103 S.Ct. 2398 , 76 L.Ed.2d 638 (1983) (citations omitted). See 2 W. LaFave & A. Scott, Substan-five Criminal Law § 8.6 at 369 (1986) (”[E]m-bezzlement ... [was a] crime created by the legislature for the specific purpose of plugging loopholes left by the narrowness of the crime of larceny.”).
. See Black’s Law Dictionary 522 (6th ed. 1990) (Embezzlement is defined as "the fraudulent appropriation of property by one lawfully entrusted with its possession.”); 2 W. LaFave & A. Scott, Substantive Criminal Law S 8.6 at 368 (1986) (Embezzlement is defined as: "(1) the fraudulent. (2) conversion of (3) the property (4) of another (5) by one who is already in lawful possession of it.”).
. "The crime of embezzlement builds on the concept of conversion, but adds two further elements. First the embezzled property must have been in the lawful .possession of the defendant at the time of its appropriation. Second, embezzlement requires knowledge *220 that the appropriation is contrary to the wishes of the owner of the property.” United States v. Stockton, 788 F.2d 210, 216-17 (4th Cir.1986) (citations omitted).
. "Fraud inherently involves some exploitation of trust.” United States v. Iannone, 184 F.3d 214, 231 (3d. Cir.1999) (Becker, C.J., concurring) (citing United States v. Koehn, 74 F.3d 199, 201 (10th Cir.1996) ("In every successful fraud the defendant will have created confidence and trust in the victim....”); United States v. Mullens, 65 F.3d 1560, 1567 (11th Cir.1995) ("[T]here is a component of misplaced trust inherent in the concept of fraud....”); United States v. Hathcoat, 30 F.3d 913, 915 (7th Cir.1994) ("By its definition, embezzlement requires a finding of a breach of trust.”)).
. "Fraud in the common law sense of deceit is committed by deliberately misleading another by words, by acts, or, in some instances — notably where there is a fiduciary relationship, which creates a duty to disclose all material facts — by silence.” Dial, 757 F.2d 163 .
. One basic source says "the mental state required for embezzlement generally appears in the statutes in the form of the adverb 'fraudulently' modifying the verb 'converts.' (If the statute should instead punish one who 'embezzles,' it would not signify anything different, for 'embezzles' means 'fraudulently converts.’)” 2 W. LaFave & A. Scott, Substantive Criminal Law § 8.6 at 379 (1986). Another source defines "fraudulent conversion” as "[receiving into possession money or properly of another and fraudulently withholding, converting, or applying the same to or for one’s own use and benefit, or to [the] use and benefit of any person other than the one to whom the money or property belongs.” Black’s Law Dictionary 662 (6th ed.1990).
. Valansi's counsel ignores the fact that offenses that "involve deceit” qualify as aggravated felonies.
. "Deceit” is defined as the "act or process of deceiving (as by falsification, concealment, or cheating),” which is in turn defined as "to be false, to betray ... to deprive especially by fraud or stealth.” Webster’s Third New International Dictionary of the English Language Unabridged 584 (3d ed.1993).
. The Third Circuit cases the majority cites (all of which involve the "willful misapplication of funds” under § 656 rather than embezzlement) favor the government's position. "It is well settled that 'intent to injure or defraud a bank exists if a person acts knowingly and if the natural result of his conduct would be to injure or defraud the bank even though this may not have been his motive.’ ” United States v. Krepps, 605 F.2d 101, 104 (3d Cir. 1979) (quoting United States v. Schmidt, 471 F.2d 385, 386 (3d Cir.1972)); see also United States v. Schoenhut, 576 F.2d 1010, 1024 (3d Cir.1978) ("Intent to injure or defraud a bank exists whenever the defendant acts knowingly and the result of his conduct would be to injure or defraud the bank, regardless of his motive.”). Furthermore, "reckless disregard of the interests of the bank is equivalent to intent to injure or defraud.” Krepps, 605 F.2d at 104 ; Schoenhut, 576 F.2d at 1024 . By pleading guilty to "knowingly and wilfully” embezzling the money, which showed a reckless disregard of the interests of the bank and had the natural result of injuring and defrauding the bank (to defraud "means 'to cause injury or loss to (a person) by deceit’ or 'to take or withhold .... by calculated misstatement ... or other deception.’ ” Supra at 216), Valansi was guilfy of embezzling $400,000.00 with the intent to injure and defraud the bank.
In discussing the mens rea requirement under § 656, we stated in Schoenhut ,
Section 656 penalizes willful misapplication, but that term must be placed in context with the other acts prohibited by the section. It proscribes actions of one who "embezzles, abstracts,” and "purloins.” When this is read together with willful misapplication, it is evident that the mens rea for the crime is not fulfilled by mere indiscretion or even foolhardiness on the part of the bank officer. His conduct must amount to reckless disregard of the bank's interest or outright abstraction of funds.
576 F.2d at 1024 .
. The majority’s citation to United States v. Angelos, 763 F.2d 859 (7th Cir.1985) is inapposite. That case involved the willful misapplication of funds rather than embezzlement. In Angelos , a bank president arranged a loan, without the approval of the bank's board of directors, to a business in which he owned 80 percent of stock. Convicted under 18 U.S.C. § 656 for willful misapplication of funds, Angelos argued on appeal that because he intended to repay the loan his conduct did not violate § 656.
The court held Angelos' argument was irrelevant not only because one can injure a bank "by taking its money even if you intend to return it,” but because Angelos breached his fiduciary duty to the bank and as a result intended to defraud it. Id. at 861.
By lending the bank's money in effect to himself in violation of accepted banking procedures, Angelos breached his fiduciary obligation to the bank, and it is irrelevant whether he thought, and thought correctly, that the bank would not be hurt. Intent to defraud — which means, to take financial advantage of a confidential relationship ... is all that is required to make out a violation of section 656; intent to injure the bank need not be shown.
Id. at 861-862 (citations omitted).
Even under the Angelos analysis, Valansi intended to defraud First Union as she breached her fiduciary obligation to the bank and took financial advantage of her position of trust and confidence. The majority does not discuss Valansi's breach of her fiduciary duties nor does it define "embezzlement” or apply it to these circumstances.
Because "embezzlement,” unlike "willful misapplication of funds,” has a precise definition ("the fraudulent appropriation of property ....") it is irrelevant whether Valansi fraudulently appropriated the deposits with the intent to injure or the intent to defraud the bank. Either way, she committed an offense involving "fraud.”