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United States v. Giordano

decided: December 21, 1973.

UNITED STATES OF AMERICA, APPELLEE,
v.
SALVATORE GIORDANO, APPELLANT



Appeal from a judgment of the United States District Court for the Eastern District of New York (Dooling, J.), entered on August 17, 1973, which convicted appellant, after a jury trial, of violations of 18 U.S.C. §§ 656 and 1004.

Waterman and Feinberg, Circuit Judges, and Gurfein,*fn* District Judge.

Author: Gurfein

GURFEIN, D.J.:

Salvatore Giordano appeals from a judgment of the United States District Court of the Eastern District of New York (Dooling, J.), entered on August 17, 1973, which convicted appellant, after a jury trial, of violations of 18 U.S.C. §§ 656 and 1004.

The defendant, with his two brothers, was tried by a jury on a superseding indictment which, at trial, consisted of two counts, the first count of conspiracy having been dismissed. Count two charged the defendants with causing employees of the Bankers Trust Company ("Bankers Trust") to abstract and willfully misapply moneys, funds and credits of Bankers Trust in excess of $100, in violation of 18 U.S.C. § 656.*fn1 The third count charged the defendants with causing an employee of Bankers Trust falsely to certify four checks, totalling $400,000, in violation of 18 U.S.C. § 1004.*fn2 Salvatore Giordano was convicted on both counts. His brothers were acquitted, and Judge Dooling sentenced him to a prison term of one year and a day on each count, the sentences to run concurrently. Appellant contends that there was an insufficiency of evidence under either count, and that the Judge erred in the charge to the jury. We affirm.

Salvatore and Anthony Giordano, before the time specified in the indictment (January 1, 1967 to April 4, 1969), had opened regular checking accounts at Bankers Trust (Van Wyck branch) and National Bank of North America ("North America") (Baisley Park branch). There were two accounts at Bankers Trust, one in the name of "Baywood Stables" and the other in the name of Salvatore Giordano. The checking account of concern in the instant case at North America was in the name of "Bay Auto Sales." Salvatore and Anthony Giordano were the authorized signatories on these accounts.

The deposits in each account were composed of withdrawals (checks drawn) from the other (accounts) at the other bank. That is, the deposits at Bankers Trust were made fairly equally into the Baywood Stables and Salvatore Giordano accounts and were composed of checks drawn on the Bay Auto Sales account at North America. The deposits into the Bay Auto Sales account were made up of checks drawn essentially equally on the Baywood Stables and Salvatore Giordano accounts. Occasionally, checks drawn on the various accounts were presented for cash over the counter.

Between January 1, 1967 and April 4, 1969, the above deposits and withdrawals were made on a daily basis by the brothers. The deposits in the two accounts at Bankers Trust and in the account at North America were substantially all uncollected checks drawn on the other bank. The process was one of "kiting checks." "Kiting" occurs when accounts are maintained in different banks and checks are drawn on one account and deposited in the other when neither account has any substantial funds in it to pay the checks drawn on it. Since it takes several days to collect a check, each of the accounts will show substantial credits of uncollected checks, and those credits will continue so long as checks continue to be drawn every day in each bank and deposited in the other bank. If some checks are drawn to cash or to legitimate third parties, the checks that flow between the two banks have to be increased to maintain the "kiting" equilibrium.

Robert Kamsler and Martin Shaughnessy, respectively manager and assistant manager at the Van Wyck branch of Bankers Trust, the named co-conspirators in this indictment, testified on behalf of the Government. Both these individuals realized in early 1967 that a check "kite" was being worked with the two accounts at Bankers Trust and the Bay Auto Sales account at North America. Nonetheless, both, upon discovering this, let the situation continue. They observed the withdrawals and deposits snowballing from approximately $100,000 daily in 1967 to over $400,000 daily in early 1969. In addition, they were aware that the daily balances in the accounts remained fairly constant and relatively low in relation to the amount of activity. This indicated to them that a kiting situation was in existence. Further, Mr. Kamsler, the bank manager, was familiar with the business of the Giordanos and knew that the business did not "warrant" the amount of money involved in the activity of the accounts.*fn3

Mr. Shaughnessy, the assistant manager, permitted the checks presented by the Giordanos to be "treated as cash" and, in fact, authorized such treatment by initialling the checks presented. Appellant had requested that the checks be treated in this manner. Kamsler knew that Shaughnessy was giving such authorization to the Giordanos and did not act to stop it. While several other accounts at the branch had checks given "immediate credit" no other accounts had checks deposited treated as "cash." The deposits were actually listed on the deposit slips under the column "cash" rather than the column for "checks", for reasons that will appear.

Shaughnessy at no time authorized a loan to any of the Giordanos and never told them the bank was lending them money. Nor did Kamsler ever authorize a loan, except for one installment loan to each of the Giordanos in 1966 in the amount of $3500.

Not all the checks drawn on the accounts in question were deposited in one bank or the other. A number of checks over this period of time (January 1967-April 1969) were made out to cash, to the Giordanos, to employees of the Giordanos and to various individuals supplying the needs of the Giordanos' business. The total amount of money claimed by the banks as owed to them is more than $880,000.

On March 28, 1969, the deposit slips for all cash deposits made at Bankers Trust that day were, for some unknown reason, not picked up and sent to the bank's central accounting division as was the ...


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