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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 92-3342
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
RONALD C. BRECHTEL and
PHILLIP H. GATTUSO,
Defendants-Appellants.
Appeals from the United States District Court
for the Eastern District of Louisiana
( August 2, 1993 )
Before POLITZ, Chief Judge, KING and DUHи, Circuit Judges.
PER CURIAM:
Ronald Brechtel and Phillip Gattuso appeal their convictions
of unlawful participation in benefits from savings and loan
transactions, in violation of 18 U.S.C. її 2, 1006. Finding no
reversible error in either Brechtel's or Gattuso's convictions, we
affirm.
Background
Brechtel and Gattuso served as directors of Enterprise Federal

Savings & Loan (EFS&L). Brechtel also served as secretary of the
board and as a member of the loan committee. In addition to their
involvement with EFS&L, Brechtel and Gattuso had interests in the
Saulet and Ames Farm partnerships, two real estate development
concerns owning land in Jefferson Parish, Louisiana. Gattuso's
cousin Roy Gattuso managed those partnerships.
In 1984 and 1985, Gattuso executed documents by which Saulet
and Ames Farm granted options on parcels of land. Stavros Amitsis,
holder of the Saulet option, had exhausted his credit line and
could not secure financing at EFS&L to purchase this property.
Nikitas Pepis and Lynn Yao SQ two Amitsis associates SQ sought EFS&L
loans with which to purchase the Saulet and Ames Farm parcels.
Marilyn Ortalano, an EFS&L loan officer, informed the loan
committee that if the loans were approved, Amitsis ultimately would
receive the proceeds thereof. She also informed them that Robert
Evans, EFS&L's board chairman, wanted the Yao and Pepis loans
approved to keep Amitsis afloat. Brechtel urged the loan committee
to approve the transactions.
On December 18, 1984, the $420,000 Pepis loan received
committee approval. At a January 11, 1985 closing, Saulet sold its
parcels to G&N Enterprises, a company recently acquired from
Amitsis by Paul Baltas and Lloyd Broussard. G&N paid Saulet
$52,500 cash and executed a note for the balance of the $350,000
purchase price, securing the credit portion with a mortgage on the
property. Brechtel and Gattuso both signed the instrument
transferring the Saulet parcels to G&N. Later that day, as
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planned, Pepis took title to the parcels in a second closing and
assumed the note executed by G&N. EFS&L received a second mortgage
on the Saulet parcels as security for the Pepis loan. Six days
later, the full EFS&L board approved the Pepis loan. Loan
committee notes circulated at the board meeting reflected that the
Saulet property secured that loan. Although board minutes for the
January 17, 1985 meeting note the presence of Brechtel and Gattuso,
the minutes reflect no disclosure by either of them of their
interest in the Pepis transaction. Gattuso testified that he
informed Evans of his and Brechtel's interest and that both
abstained from the vote of approval.
In March 1985, the loan committee approved the $500,000 Yao
transaction. The record contains no minutes reflecting approval of
this loan by the full EFS&L board. On April 1, 1985, Yao took
title to the Ames Farm parcel, giving in return cash and a note
secured by the property. Brechtel and Gattuso attended that
closing and signed the act of sale. EFS&L received a second
mortgage on the Ames Farm property.
By 1986, Pepis and Yao were experiencing difficulty meeting
their obligations under the Saulet and Ames Farm notes. On April
22, 1986, to avoid a foreclosure EFS&L purchased the first mortgage
on the Saulet parcels. On April 29, 1986, Gattuso and Brechtel
were advised by letter from Roy Gattuso of Yao's delinquency on the
Ames Farm note and that Yao would seek to refinance his debt to the
partnership through EFS&L. Roy Gattuso also advised that if Yao
failed to obtain supplemental financing through EFS&L, foreclosure
- 3 -

proceedings would be initiated. On June 19, 1986, the EFS&L board
approved a $1.8 million loan permitting Yao to work out his
financial problems. Brechtel, but not Gattuso, attended the June
19 meeting. Brechtel testified that he disclosed his and Gattuso's
interest in the Yao loan and abstained from voting on it. The
minutes from the June 19 meeting and the testimony of two other
board members belie Brechtel's statement.
The grand jury indicted Brechtel and Gattuso on four counts of
unlawful participation in benefits from savings and loan
transactions, in violation of 18 U.S.C. її 2, 1006.1 Counts one
and two related to the initial loans by EFS&L to Pepis and Yao,
respectively; count three to EFS&L's buyout of the Pepis mortgage,
1As applicable here, 18 U.S.C. ї 1006 provides:
[w]hoever, being an officer, agent or employee of or
connected in any capacity with . . . any institution the
accounts of which are insured by the Federal Savings and
Loan Insurance Corporation[,] . . . with intent to
defraud the United States or . . . any corporation,
institution, or association referred to in this section,
participates or shares in or receives directly or
indirectly any money, profit, property, or benefits
through any transaction, loan, commission, contract, or
any other act of any such corporation, institution, or
association, shall be fined not more than $10,000 or
imprisoned not more than 5 years, or both.
The Crime Control Act of 1990, Pub. L. 101-647, ї 2595(a)(4)(B),
104 Stat. 4907 (1990) substituted "institution, other than an
insured bank (as defined in section 656), the accounts of which are
insured by the Federal Deposit Insurance Corporation" for
"institution the accounts of which are insured by the Federal
Savings and Loan Insurance Corporation" in ї 1006, reflecting
absorption by the former agency of the latter. Congress also has
amended the penalty provisions of ї 1006 to provide for a maximum
fine of $1,000,000 and a maximum prison term of 20 years.
Financial Institutions Reform, Recovery, and Enforcement Act of
1989, Pub.L. 101-73, ї 961(e), 103 Stat. 500 (1989).
- 4 -

and count four to EFS&L's final loan to Yao. The district court
denied motions by both Brechtel and Gattuso to dismiss counts of
the indictment as multiplicitous. The jury acquitted Brechtel and
found Gattuso guilty on count one, found both defendants guilty on
counts two and four, and acquitted both defendants on count three.
Brechtel and Gattuso unsuccessfully moved for judgment of acquittal
and for new trial. The district court sentenced both defendants to
one year of halfway house confinement, payment of incarceration
costs and the statutory assessments, and restitution to the
Resolution Trust Corporation. Brechtel and Gattuso timely
appealed.
Analysis
On appeal, both defendants challenge the sufficiency of the
evidence and contend that the district court improperly permitted
testimony regarding their violation of civil banking regulations.
Brechtel further challenges the district court's refusal to:
(1) dismiss counts of the indictment as multiplicitous, (2) permit
his presentation of habit evidence, and (3) grant him a new trial.
He also maintains that the statute of limitations barred his
prosecution.
1. Multiplicity
Brechtel first faults the district court's denial of his
motion to dismiss portions of the indictment on multiplicity
grounds. An indictment is multiplicitous if it charges a single
offense in multiple counts,2 thus raising the potential for
2E.g., United States v. Lemons, 941 F.2d 309 (5th Cir. 1991).
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multiple punishment for the same offense, implicating the fifth
amendment double jeopardy clause.3 Legislative intent typically is
dispositive of the multiplicity inquiry. When considering an
indictment charging separate offenses arising from a series of
related acts, we must determine whether Congress intended separate
punishments.4 Where a defendant suffers convictions on
multiplicitous counts, we must remand so that the government may
dismiss improper charges and the trial court may resentence the
defendant.5 Like other determinations regarding double jeopardy,
we review district court rulings on multiplicity claims de novo.6
Brechtel suggests that the two loans to Yao constituted
individual steps in an overarching scheme to procure improper
benefit from EFS&L through sale of the Ames Farm parcel. By
charging the two Yao transactions as separate offenses, Brechtel
argues that the government improperly splintered a single offense.
He claims that in United States v. Lemons,7 we found that
multiplicity tainted an indictment under identical circumstances.
We are not persuaded.
3E.g., id. (citing United States v. Swaim, 757 F.2d 1530 (5th
Cir.), cert. denied, 474 U.S. 825 (1985)).
4See Missouri v. Hunter, 459 U.S. 359, 365-69 (1983) (where
multiple punishments imposed in single prosecution, the double
jeopardy inquiry is only whether legislature intended such multiple
punishment).
5United States v. Heath, 970 F.2d 1397 (5th Cir. 1992), cert.
denied, 113 S.Ct. 1643 (1993); Lemons.
6See United States v. Vasquez-Rodriguez, 978 F.2d 867 (5th
Cir. 1992).
7941 F.2d 309 (5th Cir. 1991).
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Lemons involved a bank-fraud prosecution under 18 U.S.C. ї
1344. The indictment charged Lemons with separate violations of ї
1344 for each of eight occasions on which he indirectly received or
caused the bank to disburse funds. We noted that, although Lemons
improperly received and caused disbursement of bank funds on
several occasions, his acts constituted a single execution of a
fraudulent scheme. We thus concluded, relying on the language of
ї 1344, that the indictment charged a single violation in multiple
counts.
Because of the differences between 18 U.S.C. ї 1006 and ї 1344
Lemons is not dispositive of the case at bar. Rather than
punishing "execut[ion] . . . of a scheme or artifice to defraud,"
18 U.S.C. ї 1006 punishes bank officials who "receive[] . . . any
money, profit, property, or benefits through any transaction, loan,
commission, contract, or any other act of . . . [the] institution."
This language suggests intent to punish receipt of improper benefit
from individual transactions, rather than from overarching schemes.
Brechtel violated ї 1006 each time he benefitted from an extension
of credit to Yao. The district court properly rejected his
contrary contention.
2. Limitations Period
Brechtel next asserts that the five-year limitations period of
18 U.S.C. ї 3282 bars his prosecution.8 He urges that the ex post
8Section 3282 provides "Except as otherwise expressly provided
by law, no person shall be prosecuted, tried, or punished for any
offense, not capital, unless the indictment is found or the
information is instituted within five years next after such offense
shall have been committed."
- 7 -

facto clause of Article I, ї 9, cl. 3 of the Constitution9
precludes application to him of the ten-year limitations period
provided for by 18 U.S.C. ї 3293.10 This argument misperceives the
law.
Recent Supreme Court teachings reject the proposition that
retroactive legislation violates the ex post facto clause11 merely
because it adversely affects the position of criminal defendants.
Rather, that clause prohibits only enactment of statutes which: (1)
punish as a crime an act previously committed which was innocent
when done; (2) make more burdensome the punishment for a crime,
after its commission; or (3) deprive one charged with a crime of
any defense available according to law at the time when the act was
committed.12 Only statutes withdrawing defenses related to the
definition of the crime, or to the matters which a defendant might
9That clause, regulating the authority of Congress, provides
"No Bill of Attainder or ex post facto Law shall be passed."
10Congress expressly indicated that ї 3293, adopted August 9,
1989, would apply to offenses committed before and for which the
limitations period had not run as of its enactment. Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L.
101-73, ї 961(l)(3), 103 Stat. 501 (1989).
11Collins v. Youngblood, 497 U.S. 37, 50 (1990).
12Id. at 41 (citing Beazell v. Ohio, 269 U.S. 167 (1925)).
Pre-Youngblood jurisprudence suggested that statutes retroactively
prejudicing "substantial rights" of criminal defendants also might
violate the ex post facto clause. See e.g., Miller v. Florida, 482
U.S. 423, 433 (1987); Weaver v. Graham, 450 U.S. 24, 29 n.12
(1981). However, Youngblood makes clear that "substantial rights"
language in earlier opinions does not expand the bases upon which
a criminal defendant may premise an ex post facto challenge.
Rather, only retroactive criminal statutes violating the principles
set forth in Beazell and Calder v. Bull, 3 U.S. (3 Dall.) 386
(1798), implicate "substantial rights" for the purpose of ex post
facto clause analysis. Youngblood, 497 U.S. at 46.
- 8 -

plead as justification or excuse fall within the latter group.13
Plainly, extension of the limitations period neither criminalizes
previously innocent conduct nor enhances the punishment for an
existing crime. Further, while ї 3293 deprives Brechtel of the
five-year limitations period in effect when the questioned
transactions occurred, it did not deprive him of a defense within
the meaning of the ex post facto clause.14 This contention lacks
merit.
3. Habit Evidence
At trial, Brechtel sought to present testimony by his stock
broker James Mangum. Through Mangum's testimony, Brechtel sought
to establish that, as a matter of habit, he took an entirely
passive role in his real estate and stock investments, permitting
advisors to act on his behalf without inquiry into the substance of
the transactions they proposed.15 Mangum's testimony, Brechtel
13Youngblood, 497 U.S. at 49-50.
14Our colleagues in other circuits have reached similar
conclusions with regard to the retroactive application of ї 3293.
United States v. Taliaferro, 979 F.2d 1399 (10th Cir. 1992); United
States v. Knipp, 963 F.2d 839 (6th Cir. 1992); United States v.
Madia, 955 F.2d 538 (8th Cir. 1992); see also United States ex rel.
Massarella v. Elrod, 682 F.2d 688 (7th Cir. 1982) (retroactive
extension of unexpired limitations period does not violate ex post
facto clause), cert. denied, 460 U.S. 1037 (1983); United States v.
Richardson, 512 F.2d 105 (3d Cir. 1975) (same) (dictum); Clements
v. United States, 266 F.2d 397 (9th Cir.) (same), cert. denied, 359
U.S. 985 (1959); Falter v. United States, 23 F.2d 420 (2d Cir.)
(same) (L. Hand, J.), cert. denied, 277 U.S. 590 (1928). Of
course, the instant case requires no decision concerning the
propriety of legislation reviving criminal liability after lapse of
the previously applicable limitations period.
15Brechtel concedes that Mangum did not advise him with regard
to real estate investment. Brechtel sought to present Mangum's
testimony as a substitute for that of real estate advisor Sam
- 9 -

asserts, would have tended to negate the mental state required for
conviction under ї 1006 by demonstrating ignorance regarding his
interests in the Ames Farm and Saulet parcels. The district court
excluded Mangum's testimony under Fed. R. Evid. 403, finding any
probative value it might have had substantially outweighed by its
likely tendency to confuse jurors.16
Relying on our opinion in United States v. Riley,17 Brechtel
argues that the district court erred in refusing to permit Mangum's
testimony. The defendant in Riley, indicted for misapplication of
bank funds under 18 U.S.C. ї 656, sought to introduce evidence that
the institution routinely engaged in transactions similar to those
underlying the charges against him. Because the trial court's
exclusion of that evidence effectively prevented Riley from
presenting his defense SQ that he believed the transactions proper
and hence lacked fraudulent intent SQ we reversed the conviction.
Brechtel contends that Riley mandates reversal in the instant case.
We do not agree.
Mangum's proffered testimony did not involve Brechtel's
business relationship with real estate advisor Sam Gattuso.
Further, it involved Brechtel's standard operating procedure for
stock transactions, which involve substantially less formality than
the real estate transactions here at issue. Thus, Mangum's
Gattuso, who died prior to trial.
16The district court, in the alternative, excluded Mangum's
testimony as irrelevant because it related to stock rather than
real estate transactions.
17550 F.2d 233 (5th Cir. 1977).
- 10 -

proffered testimony had at best tenuous relevance18 and, even if
relevant, would have had far less probative force than the evidence
at issue in Riley. The chain of analogies required to ground
relevance of this evidence might well have rendered it confusing to
the jury. Well-settled rubrics consign rulings on admissibility of
evidence to sound trial court discretion,19 and require particular
appellate court deference to rulings under Fed. R. Evid. 403 based
on the risk of jury confusion.20 While the discretion which
district courts enjoy does not extend to the exclusion of crucial
relevant evidence establishing a valid defense,21 the questionable
relevance, low probative value and potential for jury confusion
presented by Mangum's testimony distinguish this case from Riley
and persuade that its exclusion did not amount to an abuse of
discretion.22
4. Evidence of Regulatory Violations
18See United States v. Qaoud, 777 F.2d 1105 (6th Cir. 1985)
(evidence regarding defendant judge's "general pattern" of refusing
assistance to influence peddlers irrelevant and properly excluded
in RICO prosecution where not crucial to defense), cert. denied,
475 U.S. 1098 (1976).
19E.g., United States v. Jimenez Lopez, 873 F.2d 769 (5th Cir.
1989).
20United States v. Allibhai, 939 F.2d 244 (5th Cir. 1991)
(citing United States v. Edelman, 873 F.2d 791 (5th Cir. 1989)),
cert. denied, 112 S.Ct. 967 (1992). We note that Riley did not
involve exclusion of defense evidence on this basis.
21Riley.
22Compare United States v. Kelly, 888 F.2d 732 (11th Cir. 1989)
(in prosecution of attorney for drug offenses involving client,
error to exclude evidence SQ highly relevant to mental state SQ of
defendant's understanding of his professional ethical obligations).
- 11 -

Both Brechtel and Gattuso claim that the district court erred
in permitting testimony by Ronald Hall, an examiner with the Office
of Thrift Supervision. Over defense objection, Hall testified that
regulations require directors to disclose any interest they may
have in transactions under consideration by the bank and abstain
from deliberations concerning such transactions, and prohibit loans
in which bank officials have an interest unless made directly to
the official in question.23 They argue that this testimony
improperly suggested criminal liability flowing from a civil
violation, and further improperly suggested the criminal intent
required to convict them under ї 1006. Mindful that an abuse of
discretion standard governs our review of evidentiary rulings,24 we
find this argument lacks adequate persuasive force.
In United States v. Christo,25 relied upon by Brechtel and
Gattuso, we reviewed a prosecution for misapplication of bank funds
in which the government presented evidence of civil banking
regulations which limited the amount of credit which the bank could
extend to the defendant. Finding this evidence irrelevant to the
issue of criminal liability, we held that in view of prosecution
arguments and "the whole tenor of the trial," jury instructions
permitting a conviction based upon the civil violation constituted
23Hall also testified that EFS&L board minutes and mandatory
disclosures to banking authorities did not reveal the interests of
Brechtel and Gattuso in the Pepis and Yao transactions.
24Jimenez Lopez.
25614 F.2d 486 (5th Cir. 1980).
- 12 -

plain error.26 Later cases have understood Christo as being
principally concerned with bootstrapping of civil violations into
criminal liability, and have permitted use of civil violation
evidence in criminal prosecutions for more limited purposes.27
Further, we and our colleagues in other circuits have recognized
the value of limiting instructions in attenuating any improper
effect of such evidence when used for a permissible purpose.28
The case at bar differs substantially from Christo. Testimony
regarding civil regulations constituted only a minor portion of
Hall's testimony. To the extent that he mentioned disclosure
requirements, they permissibly assisted the jury in understanding
the significance of EFS&L's board minutes and management
disclosures to thrift authorities. Hall's statement concerning the
prohibition on interested director transactions properly tended to
demonstrate the defendants' motive for nondisclosure.29 The
26Id. at 492.
27See United States v. Cordell, 912 F.2d 769, 777 (5th Cir.
1990) (evidence of civil regulation admissible to demonstrate
bank's responsibility for allegedly misapplied funds); United
States v. McElroy, 910 F.2d 1016, 1023-24 (2d Cir. 1990) (evidence
of regulations limiting lending for purchase of stock on margin
admissible in criminal prosecution to explain basis for bank
lending policies); United States v. Smith, 891 F.2d 703, 710 (9th
Cir. 1989) (evidence of civil regulation admissible to show motive
for false statements), cert. denied, 498 U.S. 811 (1990); United
States v. Stefan, 784 F.2d 1093, 1098 (11th Cir.) (evidence of
civil regulation admissible to demonstrate motive for and assist
jury in understanding series of "straw man" transactions), cert.
denied, 479 U.S. 855, 479 U.S. 1009 (1986).
28Cordell; McElroy; Smith; Stefan.
29We note that Brechtel and Gattuso admitted their interest in
the Saulet and Ames Farm parcels and hence in the Pepis and Yao
transactions, resting their defenses solely on absence of criminal
- 13 -

government did not argue that any civil regulatory violation by
Brechtel and Gattuso could alone give rise to criminal liability,
and the district court admonished the jury that "[a] violation of
banking regulations in and of itself does not amount to criminal
conduct under federal law. The government must prove the elements
of the offense beyond a reasonable doubt." We cannot conclude that
Hall's testimony regarding civil regulations "impermissibly
infect[ed] the very purpose for which the trial was being
conducted."30 The district court did not abuse its discretion in
permitting Hall's testimony.
5. Sufficiency of the Evidence
Both Brechtel and Gattuso challenge the sufficiency of the
evidence supporting their convictions.31 In order to convict a
defendant of improper participation in bank transactions under ї
1006, the government must demonstrate: (1) the defendant's
connection with a protected institution; (2) direct or indirect
receipt of some benefit from a bank transaction; and (3) intent to
intent. Thus, Hall's testimony that Brechtel and Gattuso had
interests in the Pepis and Yao transactions sufficient to trigger
a duty of disclosure under civil regulations did not prejudice the
defendants.
30Christo, 614 F.2d at 492.
31Brechtel purports to challenge the district court's denial
of his motions for judgment of acquittal under Fed. R. Crim. P.
29(a) as well as raise a sufficiency claim. By presenting defense
evidence, Brechtel waived any objection to the district court's
denial of his Rule 29(a) motion at the close of the government's
case-in-chief. E.g., United States v. Elam, 678 F.2d 1234 (5th
Cir. 1982). Thus, Brechtel's challenge to the denial of his latter
Rule 29(a) motion simply restates the sufficiency claim.
- 14 -

defraud.32 Brechtel and Gattuso claim only that the government
adduced insufficient evidence of their criminal intent.
We have long recognized the ї 1006 insider participation
provision as a typical conflict of interests prohibition.33 Thus,
a fiduciary who benefits or causes loss to the bank by knowingly
subordinating the institution's interests to his own in a
transaction for which he has responsibility acts with the "intent
to defraud" required by ї 1006.34 As direct evidence of mental
state is seldom available, the government may demonstrate that
element of a ї 1006 violation by circumstantial evidence.35 An
32United States v. Griffin, 579 F.2d 1104 (8th Cir.) (citing
United States v. Hykel, 461 F.2d 721 (3d Cir. 1972)), cert. denied,
439 U.S. 981 (1978). With respect to the "intent to defraud"
element of section 1006, the defendants' jury was charged that:
To act with "intent to defraud" means to act knowingly
with the specific intent to deceive or cheat for the
purpose of causing some financial loss to another or to
bring some financial gain to oneself. In this
connection, the government does not need to prove that
the United States, Enterprise Federal or anyone was
actually defrauded. Similarly, the Government is not
required to show whether or not Enterprise Federal
suffered any loss as a result of the defendants' alleged
actions. The term "to deceive or cheat" recognizes and
includes the principle wherein one connected with a bank
acts ostensibly solely for the interest of the bank while
he, without complete disclosure, has a pecuniary interest
which might subvert his undivided loyalty.
33United States v. Kehoe, 573 F.2d 335 (5th Cir.), vacated on
other grounds, 579 F.2d 971 (5th Cir. 1978), cert. denied, 440 U.S.
909 (1979); Beaudine v. United States, 368 F.2d 417, 420 (5th Cir.
1966), cert. denied, 397 U.S. 987 (1970).
34See Beaudine, 368 F.2d at 420.
35Cf. United States v. Staller, 616 F.2d 1284 (5th Cir.)
(government
may
prove
"guilty
knowledge"
required
for
counterfeiting conviction by circumstantial evidence), cert.
denied, 449 U.S. 869 (1980).
- 15 -

inference of intent to defraud arises where a responsible bank
insider acts to procure a transaction which he knows will benefit
him, without disclosing his interest therein.36
Well-settled law governs our sufficiency inquiry. We must
view the evidence, giving due regard to the trier's credibility
calls, and draw all reasonable inferences which favor the verdict.37
If the evidence so viewed would permit a rational jury to find all
elements of the crime beyond a reasonable doubt, we must affirm the
conviction.38 The evidence need not exclude all hypotheses of
innocence.39 Applying these standards, we find the evidence
sufficient to support the convictions in this case.
a. Brechtel
Special Agent David Lyons of the F.B.I. testified that
Brechtel acknowledged an expectation that Yao would use proceeds of
both EFS&L loans for purchase of the Ames Farm parcel. The jury
properly could discredit Brechtel's denial on the witness stand
that he ever had such an understanding. Marilyn Ortalano's
testimony permitted a jury conclusion that Brechtel knowingly
failed to disclose his interest in the initial Yao transaction and
36See United States v. Kimmel, 777 F.2d 290 (5th Cir. 1985)
(approving jury instruction permitting inference that defendant
intended natural and probable consequences of knowing act), cert.
denied, 476 U.S. 1104 (1986); Hykel (evidence that defendant failed
to disclose and actively concealed interest in mortgage agreement
supported finding of intent to defraud under ї 1006).
37Glasser v. United States, 315 U.S. 60 (1942).
38Jackson v. Virginia, 443 U.S. 307 (1979).
39E.g., Heath.
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acted to procure its approval by the loan committee. Such evidence
adequately supports Brechtel's conviction on count two.
With regard to count four, Roy Gattuso's April 29 letter and
Brechtel's claim that he abstained from voting on the Yao workout
loan reflect Brechtel's knowledge of his interest in that
transaction on June 19, the date it obtained board approval.
Discrediting Brechtel's contrary testimony, the jury reasonably
could have inferred from the absence of contrary mention in the
June 19, 1986 board minutes that Brechtel failed to disclose his
interest in the latter Yao transaction and participated in its
consideration. Brechtel's conviction on count four finds ample
support in the record.
b. Gattuso
EFS&L minutes and Gattuso's own testimony indicate his
presence at the meeting during which the board ratified the initial
Pepis loan. Gattuso's insistence on the witness stand that he
informed Bob Evans of his interest in that transaction and that he
and Brechtel left the January 17 meeting during its consideration
permitted the jury to conclude that Gattuso knew at that time of
his interest in the initial Pepis loan. Discrediting Gattuso's
contrary assertion, the jury could infer from absence of any
mention in the minutes regarding Gattuso's departure from the
meeting, abstention from voting on the Pepis transaction, or
disclosure of an interest in that transaction, that he did none of
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those things.40 Sufficient evidence supports Gattuso's conviction
on count one.41
Although a closer case than count one, we likewise believe
that constitutionally sufficient evidence supports Gattuso's
conviction on the second count of the indictment. The key issue
here is whether there was sufficient evidence of Gattuso's intent
to defraud EFS&L regarding the first of the two loans made by EFS&L
to Yao on March 19, 1985. As discussed above, Yao paid over the
proceeds from that loan to the partnership in which Gattuso and
Brechtel possessed an interest.
At trial, the government's theory regarding Gattuso's guilt on
the second count was that he attended the March 19, 1985 board
meeting and even voted to approve the first Yao loan, while both
knowing of his indirect pecuniary interest in the loan and without
40Teresa Lomonaco, EFS&L's executive secretary, testified that
board members from time to time left meetings, and that she would
only record those absences in the minutes if requested to do so.
Gattuso urges that this testimony precludes any inference from
silence in the minutes regarding his participation in board
consideration of the initial Pepis loan. We disagree. The jury
was free to discredit Lomonaco's testimony and, in any event, her
statements at worst weaken the inference regarding Gattuso's
participation in the board meeting to which silence in the minutes
gives rise. Notably, minutes from other meetings reflect non-
participation by directors in consideration of loans due to
conflict of interest. This argument fails to persuade.
41Gattuso insists that his signature on documents relating to
the Saulet sale adequately disclosed his interest in the Pepis
transaction, and negated any hypothesis of criminal intent. We are
not persuaded. The record indicates that, when the full board of
directors considered loans for ratification, it did not ordinarily
have access to documentation underlying them. Absent disclosure by
Gattuso, the board could have no knowledge of his interest in the
Saulet transaction. Thus, Gattuso's knowing failure to disclose
his interest at the board meeting amply supports a finding of
criminal intent.
- 18 -

disclosing that interest to the board. We agree with the
government that a section 1006 violation is clearly established
when a member of a federally insured financial institution's board
fails to disclose a direct or indirect pecuniary interest in a loan
being approved by the board.42 The only question regarding
Gattuso's conviction on count two is whether there was sufficient
evidence from which a rational jury could find beyond a reasonable
doubt that Gattuse both knew about the first Yao loan before it was
finalized and failed adequately to disclose his interest in the
loan to responsible persons at EFS&L.
Because there is little question that no disclosure occurred
by Gattuso or Brechtel regarding the partnership's interest in the
first Yao loan, our chief inquiry is whether the evidence at trial,
which was wholly circumstantial, would permit a rational jury to
find beyond a reasonable doubt that Gattuso knew that EFS&L was
making a loan to Yao. At the outset, we observe that three larger
circumstances militate in favor of such a finding: first, a jury
could rationally conclude that a sophisticated real estate broker
such as Gattuso -- who had been in the real estate business for
over three decades -- would not likely have been in the dark about
important business transactions directly affecting a partnership in
which he had a significant interest. This is particularly true in
view of the substantial evidence that Gattuso himself, on behalf of
42
We see no need in the instant case to define the degree
of indirect benefit required to make out a section 1006 violation
since unquestionably the indirect benefit inuring to Gattuso from
Yao's payment of the loan proceeds to the partnership was clearly
substantial enough.
- 19 -

the partnership, signed the documents closing the sale of the Ames
property to Yao contemporaneously with the finalization of the
first loan to Yao.43
Second, we observe that there was substantial evidence that
Gattuso's co-defendant and business partner, Brechtel, and
Gattuso's cousin and attorney for the partnership, Roy Gattuso,
were both well aware that Yao was in the process of obtaining
financing from EFS&L for the purpose of purchasing the Ames Farm
property in early 1985.44 Although the fact that one's close
business associates were privy to information highly relevant to a
joint business concern does not by itself support a finding that
the information was passed on to the other partner, certainly it is
probative and, when combined with other evidence, would permit an
inference that communication occurred.45
43
The closing of the sale, which was financed by the EFS&L
loan, occurred on April 1, 1985. There is substantial evidence in
the record that EFS&L's executive committee -- of which Brechtel,
but not Gattuso, was a member -- approved the first loan on
March 7, 1985. As discussed infra, there was also evidence offered
at trial that the bank's board approved of the loan later that
month, on March 19. Finally, as discussed infra, at trial the
government conclusively proved that the first Yao loan -- which was
in the form of a line of credit -- was formally opened on April 1,
1985, the same date as the closing of the sale of the Ames
property. On that same day, Yao also executed a promissory note
and collateral mortgage note.
44
In early 1985, Yao exercised an option contract to
purchase the Ames Farm property from the partnership.
45
That inference would be strengthened by the fact that Roy
Gattuso was Phillip Gattuso's cousin, although mere consanguinity
is not sufficient by itself to conclude that one relative
necessarily informed the other relative of pertinent information.
Cf. United States v. Thompson, No. 92-1037, unpub. op., p. 9, n.14
(5th Cir. March 24, 1993) ("In the instant case, the government
asks that we infer from the loan of the car and allowing his
- 20 -

Third, we observe that the timing of Yao's exercise of the
option on the Ames property and Yao's obtaining the loan, which
occurred in early 1985, were roughly contemporaneous with Gattuso's
involvement in the Pepis loan scheme.46 Although the two real
estate transactions were distinct, the government presented
substantial evidence that Nikitas Pepis and Lynn Yao were each
affiliated with Stavros Amitsis.47 A jury could rationally infer
that Pepis and Yao acted in conjunction. That is, in view of the
overlapping timing between the Pepis and Yao transactions and
corresponding loans and the debtors' common link to Amitsis, a
rational jury could believe that the Yao loan and the Pepis loan
were part of a common plan or scheme to defraud EFS&L. Cf.
Fed.R.Evid. 404(b). Accordingly, a rational jury could infer that
Gattuso's guilty knowledge regarding the Pepis loan extended to the
Yao loan.
Yet such larger circumstantial factors, by themselves, would
not permit a rational jury to find Gattuso's guilt beyond a
reasonable doubt. Thus, an examination of the government's other
evidence is in order. Of particular importance is Government
Exhibit 20, a two-page document entitled "Executive Committee
Meeting of March 7, 1985, Loans for Ratification," which lists a
brother access to his house that Kenneth Thompson knew that his
brother planned to rob a bank. We decline the invitation.").
46
We previously held that there was sufficient evidence to
support Gattuso's conviction under section 1006 for that count of
the indictment.
47
Gattuso testified that he knew Yao was affilitated with
Amitsis.
- 21 -

dozen or so loans to be later ratified by the board of directors.
Among them is a $500,000 line of credit to Lynn Yao. Although a
notation on the document states, "SECURED BY VARIOUS PROPERTIES" --
and thus makes no specific mention of the Ames Property -- the
closing of the sale of the Ames Property occurred less than two
weeks later, on April 1, 1985. We believe that, assuming Gattuso
saw this document, a rational jury could believe that Gattuso knew
that the notation about Yao must have concerned a loan for the sale
of the Ames Property.
At issue, however, is whether that document was seen by
Gattuso at the March 19, 1985 board meeting. Admittedly, the two
pages of typed minutes from the meeting make no reference to the
ratification of the executive committee's loans (including Yao's)
on March 7, 1985. Moreover, Gattuso denied knowing that Yao was
seeking financing for the purchase of the Ames Property until after
the loan was finalized. Two pieces of evidence belie his claim.
First, it is clear that Gattuso attended the board meetings in
early 1985, including the March 1985 meeting, and there is no
indication that he made disclosure of his interest in the Yao loan
or even abstained from voting in any ratification of
committee-approved loans. Second, on the top of page two of the
document entitled "Loans for Ratification" -- which included the
Yao loan -- appears the date "March 19, 1985." This is evidence,
albeit not conclusive evidence, from which a rational jury could
infer that the board of directors did indeed ratify the executive
committee loans (including Yao's) at the March 19, 1985 board
- 22 -

meeting. Furthermore, in Gattuso's own trial testimony, he stated
that he believed that in the spring of 1985 the board of directors
was required to ratify all committee-approved loans.
We additionally observe that the $500,000 loan to Yao in the
spring of 1985 was in the form of a line of credit. The promissory
note and collateral mortgage note executed by Yao in favor of EFS&L
were signed on April 1, 1985. According to the express terms of
the collateral mortgage note, "Lender has this date agreed to make
a loan . . . to Borrower up to the amount of Five Hundred Thousand
and No/l00 ($500,000) DOLLARS . . . ." Thus, Yao's actual line of
credit was formally opened on April 1, 1985. Notably, the date
that the Ames Property sale closed was also April 1, 1985. It is
undisputed that Phillip Gattuso attended the closing; indeed, his
signature appears on the documentation memorializing the closing.
Because Gattuso signed documentation at the closing, a jury could
rationally infer that he knew that the sale of the property was
being financed by EFS&L.48 Thus, even if Gattuso did not vote to
ratify the line of credit at the March 19, 1985 board meeting and
only discovered the loan afterwards, a rational jury could infer
that Gattuso would have discovered that Enterprise was financing
the loan on April 1, 1985. Thus, even as late as that date,
Gattuso still could have informed the bank of his conflict and
prevented the consummation of the transaction involving EFS&L
48
It is common knowledge that participants at a real estate
closing -- in particular, the seller -- typically would not be
ignorant of the buyer's source of financing. A rational jury could
thus disbelieve Gattuso's claim that he was unaware of the source
of Yao's financing when Gattuso attended the April 1 closing.
- 23 -

funds.49
In sum, although admittedly a close case, we conclude that a
rational jury could find beyond a reasonable doubt, in view of the
totality of circumstantial evidence, that Gattuso, with the intent
to defraud, knowingly "share[d] in or receive[d] directly or
indirectly . . . money . . . through" EFS&L. 18 U.S.C. ї 1006.
With respect to count four, we also believe that a rational
jury could find beyond a reasonable doubt that Gattuso intended to
defraud EFS&L in violation of 18 U.S.C. ї 1006. Admittedly, there
is no evidence that Gattuso was present at the June 19, 1986 board
meeting where Yao's second loan was approved.50 There is, however,
direct evidence that would permit a rational jury to conclude
beyond a reasonable doubt that Phillip Gattuso did know, as early
as April of 1986, that Yao was seeking supplementeal financing from
EFS&L in order to stave off the partnership from foreclosing on the
49
Among the government's evidence at trial was an EFS&L
cashier's check made out to Vezina and Associates -- Roy Gattuso's
law firm -- in the amount of $96,000.00. The check, which was
dated April 1, 1985, was part of the down payment for the sale of
the Ames Property. In turn, the Vezina law firm made out separate
checks to Brechtel (and his wife) and Estate of Sam Gattuso (of
which Phillip Gattuso was the executor) in the amount of $5,955.60
and $8,933.40, respectively. The back of the check to Vezina and
Associates bears Neil Vezina's stamped endorsement and is dated
April 2, 1985. The back of the check to Gattuso is endorsed
"Estate of Sam Gattuso" and is dated April 12, 1985.
50
As we discussed supra, the government's evidence offered
at trial would permit a rational jury to find beyond a reasonable
doubt that Brechtel was present at the board meeting where the
second Yao loan was approved and voted for it without disclosing
his interest. Although Brechtel testified that he did indeed
disclose his and Gattuso's interest in the second Yao loan at the
June 19 board meeting, other evidence contradicts his bare
assertion.
- 24 -

Ames Property.51 In particular, the government offered a copy of
a letter written by Roy Gattuso to his cousin Phillip in April 1986
explicitly stating that Yao would be attempting to work out
additional financing from EFS&L in order to preclude a foreclosure
by the partnership. The government adequately established that
Phillip Gattuso did not disclose his interest in the second Yao
loan following receipt of that letter.52 The government also
offered undisputed evidence that Phillip Gattuso received a check
that was directly traceable to the ultimate loan proceeds from the
second Yao loan. Thus, the loan proceeds from the second Yao loan
did not merely benefit the partnership in which Phillip Gattuso
possessed an interest, but benefitted Gattuso directly.
We hold that the government need not offer evidence that a
board member such as Gattuso actually voted or otherwise engaged in
affirmative conduct, in his capacity as a responsible bank
official, to secure a loan in which he possessed a pecuniary
interest. Rather, mere knowledge that such a loan is being
obtained coupled with a failure to disclose his interest
establishes a violation of 18 U.S.C. ї 1006. A board member of a
financial institution such as Gattuso is a classic fiduciary who
51
When the Ames Property was sold on April 1, 1985, the
partnership assumed a first mortgage on the property and EFS&L
assumed a second mortgage on the property, which was inferior to
the first mortgage.
52
There is a document in the record that shows that
apparently some official or officials in EFS&L knew that a portion
of Yao's second loan was going to Gattuso. However, that document
is dated August 12, 1986 -- well after the board approved the
second loan.
- 25 -

owes the institution an affirmative duty to disclose all
potentially substantial conflicts of interest. He cannot escape
that duty simply by not attending the board meeting at which a
transaction implicating those conflicts is approved while
thereafter pocketing the proceeds.53
6. New Trial Motion
In his final assignment of error, Brechtel essentially
reiterates his previous points, asserting that at minimum they
required the district court to grant his motion for new trial. The
trial court's superior vantage point on the weight and effect of
evidence provides the basis for our review of its new trial rulings
only for abuse of discretion.54 As Brechtel's other assignments of
error lack merit, we cannot conclude that the district court abused
its discretion in denying his motion for new trial. This claim
also lacks merit.
Conclusion
For the foregoing reasons, the convictions are AFFIRMED.
53
Although the jury instructions in the instant case and
some section 1006 cases speak of an "act with the intent to
defraud" by a defendant, see, e.g., Beaudine, 368 F.2d at 420, we
do not believe that a defendant must literally engage in a specific
action aimed at defrauding a federally-insured institution in order
to violate section 1006. Rather, we believe that by intentionally
failing to disclose a known conflict of interest, a fiduciary such
as a board member "acts" to defraud by continuing on in his
fiduciary capacity and, at the same time, failing to apprise
responsible officials in his institution of the conflict.
54E.g., United States v. Baytank (Houston), Inc., 934 F.2d 599
(5th Cir. 1991); United States v. Arroyo, 805 F.2d 589, 599 (5th
Cir. 1986).
- 26 -

POLITZ, Chief Judge, Concurring in Part and Dissenting in Part:
I agree with most of the majority opinion. There is
sufficient evidence to support Brechtel's convictions on counts two
and four and Gattuso's conviction on count one. I concur in the
affirmance of the convictions on these counts. I find the evidence
in support of Gattuso's convictions on counts two and four to be
woefully inadequate. I must dissent from the majority's holding to
the contrary.
It is not the function of an appellate court to fill in the
gaps and voids in the evidence and to rule on the basis of evidence
which could have or might have been offered. We are to review
solely on the basis of what in fact was offered in evidence at
trial.
In order to sustain a conviction the evidence need not
eliminate all hypotheses of innocence. Our precedents, however,
make equally clear that mere consistency with a theory of guilt
will not suffice. Rather, where the evidence viewed most favorably
to the government provides equal or near equal support to
inferences of guilt and innocence, a rational jury necessarily must
entertain a reasonable doubt.55
The majority initially reasons that, in view of Government
Exhibit 20 and Gattuso's testimony regarding EFS&L loan approval
55Clark v. Procunier, 755 F.2d 394 (5th Cir. 1985).

practices, a rational jury could conclude that the full EFS&L board
considered and approved the Yao transaction at its March 19, 1985
meeting. Government Exhibit 20 consists of two pages detailing
approval of loans by the bank executive committee. Its first page
indicates that the executive committee considered those
transactions on March 7, 1985. At the top of its second page,
which contains the reference to the initial Yao transaction,
Government Exhibit 20 bears the notation "March 19, 1985, Cont."
Further, during cross-examination, Gattuso testified to his belief
that, in early 1985, loans generally required approval from both
the full board and the executive committee.56 Certainly, if the
EFS&L board approved the initial Yao transaction at that time SQ
concededly in Gattuso's presence SQ a jury could infer the mental
state required by ї 1006. I cannot, however, agree that the
evidence relied upon so heavily by the majority would permit a
rational jury to reach that conclusion beyond a reasonable doubt.
The record is silent about the discrepancy in dates between
56I note that Gattuso expressed reservation about that
statement. The record reflects the following exchange:
Q.
The board of directors had not stopped ratifying the
actions of the executive committee at this time, had it?
A.
To my knowledge, no, I guess. I don't have that
information in front of me to know that.
Q.
The loans which the executive committee approves, that
still would go over to the board for approval; isn't that
right?
A.
I would think so.
Trial Transcript, at 491 (emphasis added).
- 28 -

the first and second pages of Exhibit 20 or the significance of the
"March 19, Cont." notation. At best, that exhibit permits an
inference as to the date on which the executive committee approved
the initial Yao transaction. It does not purport to indicate when
or if the full board acted on the transactions detailed. Although
Gattuso testified that transactions generally required approval by
the full board as well as the executive committee, the government
produced no evidence tying the initial Yao loan to any particular
meeting. Documentary evidence suggests that the EFS&L board never
considered this transaction: although copies of minutes filed in
evidence reflect approval of executive committee actions on many
occasions, the record is devoid of any evidence indicating approval
of actions taken by the executive committee on March 7 or March 19.
In any event, Gattuso's testimony, corroborated by board minutes,
indicates that with near uniformity, the board gave its assent to
loans about two weeks after executive committee action.57
Considering the record as a whole, Gattuso's bare and equivocal
statement that the board "generally" approved loan transactions
after executive committee action, even supplemented by Exhibit 20,
simply does not amount to proof beyond a reasonable doubt that the
board considered the Yao transaction on March 19, 1985 in Gattuso's
presence.
Alternatively, the majority suggests that even if Gattuso did
not vote to approve the initial Yao loan on March 19, the jury
57Such a delay would place approval of the initial Yao loan at
the April 1985 board meeting. The minutes of that meeting reflect
that Gattuso was not in attendance.
- 29 -

could have inferred his knowledge that EFS&L financed the Ames Farm
purchase from his presence at the April 1 closing. The majority
opines that if Gattuso learned of EFS&L's interest in the loan on
April 1, his failure to stop the transaction and inform the bank of
his interest gives rise to an inference of intent to defraud under
ї 1006. I simply cannot accept this proposition.
Lynn Yao produced a cashier's check SQ not a bank check SQ at
closing. Further, Roy Gattuso SQ not Phillip Gattuso SQ managed the
Ames Farm partnership. The government produced no evidence that
Roy Gattuso ever informed Phillip Gattuso regarding Yao's
financing, or even that he generally provided such information to
his cousin regarding real estate sales.58 Further, Phillip Gattuso
had an extremely attenuated interest in the Yao transaction: his
father's estate owned ten percent of the parcel sold. In view of
these facts, I do not believe that a jury could infer, from
Gattuso's mere presence at the Ames Farm closing, that he knew
EFS&L had provided funds to Lynn Yao for the purchase. Even if I
agreed with the majority's proposition, I could not agree that
Gattuso's knowledge at the closing would support criminal liability
under ї 1006. It is not contested that when Yao arrived at the
Ames Farm closing EFS&L had completed the transaction, at least to
the extent of $96,000, without a suggestion of the exercise of
influence or even passive approval by Gattuso. The insider
58See United States v. Thompson, No. 92-1037, slip op. at 9
n.14 (5th Cir. March 24, 1993) (mere fact that defendant lent car
to his brother did not permit inference that he knew of criminal
purpose for which car would be used).
- 30 -

participation provisions of ї 1006 seek to protect financial
institutions from influence by fiduciaries with divided loyalties.59
Acceptance by an insider of benefit from a bank transaction where
the insider learns of the transaction only after its completion
cannot give rise to that concern. I would hold that a jury could
not infer the intent to defraud required by ї 1006 merely from such
facts.
As to Count 4, the majority reasons that receipt of Roy
Gattuso's April 29, 1986 letter placed Phillip Gattuso on notice of
his interest in the latter Yao transaction. It then holds that,
given such knowledge, the jury could infer intent to defraud from
Gattuso's failure to make disclosure, notwithstanding his absence
from the meeting at which the board approved that loan and the
absence of any evidence indicating his active pursuit of its
approval. The April 29 letter, in relevant part, stated "Mr. Yao
is seeking financial arrangements with Enterprise Federal for
payment of the above captioned debt. If Enterprise fails to extend
credit to Mr. Yao, I will commence foreclosure proceedings
immediately." Receipt of this letter does not establish Gattuso's
knowledge that Yao actually followed through on his expressed
intention, or that his application met with sufficient lower-
echelon approval at EFS&L to bring a proposed transaction before
the board for approval. I am persuaded that a rational jury could
not find, beyond a reasonable doubt, on the basis of the April 29
59See United States v. Munna, 871 F.2d 515 (5th Cir. 1989);
Beaudine v. United States, 368 F.2d 417 (5th Cir. 1966).
- 31 -

letter alone, that Gattuso knew the EFS&L board was considering the
Yao workout loan. The jury perforce could not find, therefore,
that Gattuso's failure to disclose gave rise to an inference of
criminal intent.60
For these reasons, I concur in part and dissent in part.
60I would not today determine whether failure by a responsible
insider to disclose a known interest in a transaction under
consideration could give rise to an inference of intent to defraud
in the absence of affirmative acts to procure it.
- 32 -