United States of America v. Vivian Tat AKA Vivian Lnu

San Francisco, CA - Criminal defense lawyer represented defendant with one count of making a false entry in bank records charge.

This appeal stems from a sting operation to uncover

money laundering near Los Angeles. In 2014, the

government indicted Ruimin Zhao; Raymond Tan, who is

Zhao's husband; and Defendant for conspiring to launder

$25,500 in 2009. Four years later, the government added

two counts that accused Defendant Tat of making false

entries in the bank's records.

The scheme went this way: Jimmy Yip, the

government's informant and a former racketeer, persuaded

Tan to convert proceeds from Yip's purported drug sales into

cashier's checks. Yip's money actually came from the

Federal Bureau of Investigation ("FBI”). In exchange, Yip

would pay Tan $4500. Tan said that he was the man for the

job because his wife knew an insider at a local bank:

Defendant. Tan and Yip agreed that the checks would be

made out to a fictitious "Oscar Santana.”

Defendant, meanwhile, knew that one of her customers

sought a way to withdraw a large amount of cash without

showing the withdrawal on her account. (The customer

1 We affirm Defendant's and her codefendant's convictions for

conspiring to launder money in a concurrently filed memorandum

disposition.

UNITED STATES V. TAT 5

wanted to shield it in her divorce proceedings.) Defendant

proposed a trade: if the customer drew $25,500 in three

cashier's checks from her account, Defendant knew

someone who would pay off-the-books cash for them. The

customer agreed.

Yip, wearing a secret camera, met the coconspirators in

one of the bank's conference rooms on December 14, 2009.

Yip's money was counted, the cashier's checks were signed,

and all sides went on their way. But Defendant's customer

thought something felt off—why did she have to make the

checks out to an Oscar Santana? She asked Defendant to

reverse the transactions.

The bank's logs, presented as Exhibit 48 at trial,

document both the checks' purchase and their return. The

logs record that, on December 14, the customer purchased

three cashier's checks worth a combined $25,500 and then

reversed those transactions. At trial, the government elicited

testimony that (1) Yip gave the customer $25,500; (2) the

customer drew $25,500 in cashier's checks from her

account; (3) Defendant gave those cashier's checks to Yip;

and (4) Defendant reversed the transactions at the customer's

request.

Timothy Truong, the bank's custodian of records,

testified that, although the logs contained in Exhibit 48 can

show the account from which the cashier's checks were

drawn, those logs cannot show the source of any

simultaneously received cash that the customer did not

deposit. In other words, Truong testified that those logs

could not disclose Yip's involvement.

After the original checks were returned, Tan and Zhao,

working with Defendant, obtained replacement cashier's

checks in their own names. One of those replacement checks

6 UNITED STATES V. TAT

was documented in the bank's logs, which the government

introduced as Exhibit 47 at trial. That log shows that, on

December 14, Zhao drew a $7500 cashier's check payable

to "Oscar Santana” from the account of her facial and

massage business. At trial, the government elicited

testimony that Zhao went to the bank; deposited $7500 in

cash; purchased a cashier's check for $7500 with a check

from her business account; and then gave that cashier's

check to Tan, who gave it to Yip. Zhao's account lacked

sufficient funds to cover the cashier's check before her

deposit of Yip's money.

Truong testified that the logs shown in Exhibit 47 do not

allow the bank's employees to list the source of a purchaser's

funds. In other words, Truong testified that the logs can

show that a customer paid for the cashier's check in cash,

but they cannot show that cash's source. The government

also presented evidence that the check from Zhao's business

account, used to draw the cashier's check, featured

Defendant's handwriting.

Tan pleaded guilty to conspiring to launder money.

Defendant and Zhao went to trial. The jury convicted them

both of conspiring to launder money, 18 U.S.C. § 1956(h),

and it convicted Defendant of two counts (Counts 2 and 3)

of making a false entry in a bank's records, 18 U.S.C.

§ 1005.

DISCUSSION

Defendant argues that insufficient evidence supports her

false-entry convictions. We "must consider the evidence

presented at trial in the light most favorable to the

prosecution.” United States v. Nevils, 598 F.3d 1158, 1164

(9th Cir. 2010) (en banc). We then "must determine whether

this evidence, so viewed, is adequate to allow 'any rational

UNITED STATES V. TAT 7

trier of fact [to find] the essential elements of the crime

beyond a reasonable doubt.'” Id. (alteration in original)

(emphasis omitted) (quoting Jackson v. Virginia, 443 U.S.

307, 319 (1979)). If the evidence fails at that second step,

we must reverse. Id. at 1165.

Our analysis of a criminal statute begins with its text.

United States v. Price, 980 F.3d 1211, 1218 (9th Cir. 2019).

As relevant here, § 1005 criminalizes:

mak[ing] any false entry in any book, report,

or statement of such bank, company, branch,

agency, or organization with intent to injure

or defraud such bank, company, branch,

agency, or organization, or any other

company, body politic or corporate, or any

individual person, or to deceive any officer of

such bank, company, branch, agency, or

organization, or the Comptroller of the

Currency, or the Federal Deposit Insurance

Corporation, or any agent or examiner

appointed to examine the affairs of such

bank, company, branch, agency, or

organization, or the Board of Governors of

the Federal Reserve System[.]

§ 1005 (emphases added). Thus, the government must prove

that "(1) [D]efendant made a false entry in bank records,

caused it to be made, or aided and abetted its entry;

(2) [D]efendant knew the entry was false when it was made;

and (3) [D]efendant intended that the entry injure or deceive

a bank or public official.” United States v. Wolf, 820 F.2d

1499, 1504 (9th Cir. 1987). The parties dispute only whether

the government proved falsity.

8 UNITED STATES V. TAT

The Supreme Court held, more than a century ago, that

"the making of a false entry is a concrete offense, which is

not committed where the transaction entered actually took

place, and is entered exactly as it occurred.” Coffin v. United

States, 156 U.S. 432, 463 (1895). But courts have expanded

the reach of § 1005 (and its predecessor, 12 U.S.C. § 592)

beyond literal falsity; "material omissions are false

statements for the purposes of” the statute. United States v.

Ely, 142 F.3d 1113, 1119 (9th Cir. 1997); see United States

v. Darby, 289 U.S. 224, 226 (1933) (holding that § 592's

"aim was to give assurance that upon an inspection of a bank,

public officers and others would discover in its books of

account a picture of its true condition”).

In the context of fraudulent loans, such an omission

might include "focus[ing] on whether the transaction is real

and substantial as opposed to merely formal.” United States

v. Krepps, 605 F.2d 101, 109 (3d Cir. 1979). That reasoning

makes sense with respect to loans—where the concern is that

hiding information from officials prevents them from

assessing a bank's exposure. See id. (holding that "those

who are charged by law with the examination of these

records have a significant interest in obtaining a full picture

of the bank's actual condition”). For example, we held that

a bank executive caused a false entry under § 592 when he

directed an uncompensated straw man to obtain a loan—

disbursed as a cashier's check—because that straw man

(1) was unqualified for the loan; (2) had no plans to repay

the loan; and (3) immediately gave the cashier's check to the

defendant. Hargreaves v. United States, 75 F.2d 68, 70–71

(9th Cir. 1935). Because the transaction was "fictitious,” the

bank's "records would not indicate the true nature of the

transaction” and, thus, contained a false entry. Id. at 72.

Likewise, § 1005 criminalizes the omission of one's true

purpose in seeking a loan. Wolf, 820 F.2d at 1503–04.

UNITED STATES V. TAT 9

But we agree with the Fifth Circuit that the same

reasoning does not necessarily apply to banks' accurate

records of customers' withdrawals. In United States v.

Manderson, 511 F.2d 179 (5th Cir. 1975), the defendant was

an employee of a mortgage company who sought to extort a

contractor before releasing the payment for a home's repairs.

Id. at 180. The contractor, knowing extortion when he saw

it, contacted the mortgage company's bank, which in turn

contacted the FBI. Id. The FBI provided the contractor with

marked bills, which the contractor then paid to the

defendant. Id. The defendant released the funds for the

repairs to the contractor and documented that transaction in

the mortgage company's checkbook. Id.

The Fifth Circuit held that the defendant's checkbook

entry was not a false entry under § 1005. Id.

The checkbook stub correctly reflected the

date, the payees, for what the check was

issued, its application to the escrow account,

the account number, and the amount. There

was no false entry unless it can be said that

appellant's attempt to enrich himself at the

expense of [the contractor] and [the

homeowner] rendered it such. There was no

attempt to defraud [the mortgage company]

or the Bank and neither was defrauded.

Appellant correctly reflected the transaction

in the books of the Bank.

Id. Because the bank's record is "the very entry that should

have been made had there been no later effort to extort,” that

record is not "lacking in verity.” Id. at 181. In other words,

that an accurately recorded bank transaction has a nexus to

unlawful activity does not, standing alone, make all entries

10 UNITED STATES V. TAT

related to that transaction "false” within the meaning of

§ 1005. Other courts have held the same. "[A]n entry is not

false merely because the underlying transaction is illegal,”

United States v. Gleason, 616 F.2d 2, 29 (2d Cir. 1979);

"questionable,” United States v. Hardin, 841 F.2d 694, 699

(6th Cir. 1988); "manipulative,” id.; or "fraudulent,” United

States v. Erickson, 601 F.2d 296, 302 (7th Cir. 1979). We

agree with our sister circuits' analysis on that point. We

turn, then, to applying those principles to Defendant's

convictions for making false entries in violation of § 1005.

A. Count 3

Count 3 is premised on the bank's log shown in Exhibit

48. That log states that Defendant's customer purchased and

then returned three cashier's checks for a sum of $25,500.

The government acknowledges that the record does not

contain a literal falsehood.

Nor does Exhibit 48 contain an omission such that the

bank's "records would not indicate the true nature of the

transaction.” Hargreaves, 75 F.2d at 72. The government

argues that our decision in Hargreaves controls here. We

disagree. Although Hargreaves mentions a "cashier's

check,” it really is a case about a fraudulent loan; the bank

was duped into lending money to an unworthy borrower. Id.

at 70. As we recently held in another case concerning the

scope of § 1005, the entry in Hargreaves implicated our

often-expressed concern that banks need to know borrowers'

true identities. United States v. Yates, No. 18-30183, 2021

WL 4699251, at *11 (9th Cir. October 8, 2021) (citing

Hargreaves, 75 F.2d at 70, 72). Count 3 causes no such

concern.

The only witness to testify on the matter stated that

Defendant could not have disclosed the source of the

UNITED STATES V. TAT 11

customer's unbanked cash on the log contained in Exhibit

48. "The form does not call for a narrative response, allow

for comment, . . . or ask for the source of a payment” to the

customer. Id. at *12. She could disclose only that the

customer purchased and returned cashier's checks. The

government points to no document related to the cashier's

checks in question that Defendant completed falsely or that

she should have completed but did not. Cf. United States v.

Cordell, 912 F.2d 769, 773–74 (5th Cir. 1990) (holding that

a bank manager violated § 1005 when he declined to file a

required overdraft notice so that he could conceal from his

supervisors a violation of federal lending limits); United

States v. McAnally, 666 F.2d 1116, 1118 (7th Cir. 1981)

(holding that the bank's employee violated § 1005 by failing

to record a loan even if "there was no false entry in a literal

sense”).

It also cannot be said that East West Bank would not

have "a picture of [the bank's] true condition,” Darby,

289 U.S. at 226, without knowing that its customer had come

into a large amount of cash that she opted not to deposit.

Cashier's checks—unlike loans—cannot be issued until the

bank receives funds. The bank would know that a real

customer drew a real cashier's check from the undisputed

balance of her real account. How one chooses to "dispose of

the fund[s] so obtained should, in the absence of

misrepresentation on h[er] part, be of no interest to the bank,

and certainly not to the criminal law.” Krepps, 605 F.2d

at 106.

Indeed, Exhibit 48 is "the very entry that should have

been made had there been no” prior effort to launder money.

Manderson, 511 F.2d at 181. If Defendant's customer

purchased a cashier's check and gave it to Yip in exchange

for a used car, Exhibit 48 would look the same. Even if

12 UNITED STATES V. TAT

Defendant made the entries with an intent to deceive bank

officials, that satisfies only one of §1005's three elements.

Wolf, 820 F.2d at 1504. An intent to deceive is the offense's

mens rea, not the entire offense. It is no answer that the

cashier's check was related to a money laundering scheme;

§ 1956—not § 1005—outlaws money laundering. Accurate

records reflecting a customer's purchase of a cashier's check

from her bank account are not false entries under § 1005

solely because that check has a nexus to money laundering.

We thus reverse Defendant's conviction on Count 3.

B. Count 2

Count 2 is premised on the bank's log shown in Exhibit

47. The log shows that, on December 14, Zhao deposited

$7500 (of the FBI's money) and then drew a cashier's check

payable to "Oscar Santana” for that same amount. A

reasonable juror could find beyond a reasonable doubt that

Defendant knew that Exhibit 47, the basis of Count 2,

contained a false entry for the simple reason that it listed a

fictitious payee. That fact is sufficient to sustain a

conviction under the principles described above; the

transaction itself is "false and fictitious” and "concocted for

the very purpose of distorting [a] financial statement.”

Yates, 2021 WL 4699251, at *11 (alteration in original)

(quoting Gleason, 616 F.2d at 29). Indeed, as the

government argued to the jury, "on its face, [we] know why

it's false, because here it shows a cashier's check in the

amount of $7500 to Oscar Santana.” And § 1005

criminalizes the making of "any” false entry with the

requisite mens rea. The jury was not required to accept

Defendant's argument that she did not know that the name

was fictitious.

Unlike in Manderson, the log does not "correctly

reflect[] . . . the payee[] . . . [or] for what the check was

UNITED STATES V. TAT 13

issued.” 511 F.2d at 180. And unlike the log in Exhibit 48,

the log in Exhibit 47 gave Defendant the opportunity to

disclose that information. Thus, there is no "absence of

misrepresentation,” and the log very much is of "interest to

the bank, and . . . the criminal law.” Krepps, 605 F.2d

at 106. We thus affirm Defendant's conviction on Count 2

We REVERSE Defendant’s conviction on Count 3;

AFFIRM her conviction on Count 2; and REMAND for

resentencing