United States v. White Eagle

A "misapplication theory" by the government, predicated at best on an employer directive and a civil regulation, cannot support a conviction for conspiracy; and a defendant must have controlled or had custody of the funds that she later borrowed in order to meet the standard for embezzlement and conversion.

White Eagle was a Bureau of Indian Affairs Superintendent and oversaw the Fort Peck Credit Program (“Credit Program”). While employed, White Eagle's subordinate, Greybull, fraudulently obtained loans by using nominee, or stand-in, borrowers. White Eagle never reported Greybull because Greybull later allowed for a favorable loan modification towards a loan White Eagle had with the Credit Program. The Ninth Circuit held found insufficient evidence to support Count I, related to conspiracy on the loan modification. Count II, embezzlement and conversion related to the defendant’s loan was reversed because both require the defendant to have had control of the property, which was not satisfied here. Count III for bribery was affirmed because through White Eagle's and Greybull’s acts, the panel believed a juror could infer that something of value was obtained (the loan modification) and White Eagle acted in a corrupt manner by failing to report Greybull’s actions. Count IV for falsification under 18 U.S.C.S. §1001(a)(1) was reversed because an affirmative misrepresentation must be made to the government, which White Eagle's failure to report did not satisfy. Count V for public acts affecting personal financial interest, was reversed because the requirement of a clear link between the defendant’s interest and the public act was also not satisfied. Count VI for misprision of felony was affirmed because White Eagle failed to report Greybull’s fraudulent conduct. White Eagle's argument that a conviction of the actor is necessary for one to be found guilty of the misprision of the actor’s felony was rejected. Only the completion of the offense is necessary. White Eagle's Fifth Amendment argument was also rejected. Finally, the panel ruled that the district court erred in sentencing. When applying U.S.S.G. §2B1.1, if there is no “loss,” then the court shall use a “value of the benefit” standard in calculating proper sentencing.