The opinion of the court was delivered by: CEDARBAUM
Count Four of the indictment charges Bezmalinovic with bank fraud in violation of 18 U.S.C. § 1344 and § 2. Specifically, the indictment alleges that "in the Southern District of New York and elsewhere," Bezmalinovic "unlawfully, wilfully, and knowingly did execute and attempt to execute a scheme and artifice to defraud Manufacturers Hanover Trust Company, 100 Duffy Avenue Hicksville, New York ("MHT"), a financial institution, and to obtain moneys owned by and under the custody and control of MHT by means of false and fraudulent pretenses and representations." According to the indictment, this scheme involved obtaining a mortgage from MHT by means of a false mortgage application.
It is undisputed that Bezmalinovic did not commit any acts in furtherance of the scheme in the Southern District of New York. Bezmalinovic allegedly prepared the false application in the Eastern District of New York, submitted the application to MHT in the Eastern District of New York, received the proceeds in the form of checks drawn on an MHT mortgage closing account located in the Eastern District of New York and deposited those checks in his personal checking account in the Eastern District of New York. Shortly thereafter, Bezmalinovic allegedly transferred the money to the account of a company he owned, P.C. & J. Contracting Co., Inc. ("PC&J"). Both PC&J and PC&J's bank account were located in the Eastern District of New York.
According to the government, venue is proper in the Southern District of New York because of three contacts between Bezmalinovic's scheme and this district. First, shortly after Bezmalinovic deposited the checks representing the proceeds of the loan into his checking account at Chemical Bank in the Eastern District of New York, that branch sent the checks to Chemical's processing center in Manhattan. There, each check was credited to Bezmalinovic's account, subject to collection, and was forwarded to the New York Clearing House in Manhattan. Second, the checks were sent by the New York Clearing House to MHT's processing center in Manhattan. It was there that they were "collected," that is, debited from the MHT mortgage closing account. Third, both MHT and Chemical have their headquarters in Manhattan.
Questions of venue in criminal cases are of constitutional dimension. See United States v. Johnson, 323 U.S. 273, 89 L. Ed. 236, 65 S. Ct. 249 (1944); Travis v. United States, 364 U.S. 631, 5 L. Ed. 2d 340, 81 S. Ct. 358 (1961). The Sixth Amendment guarantees trial "by an impartial jury of the State and district wherein the crime shall have been committed . . . ." U.S. Const. amend. VI; United States v. Reed, 773 F.2d 477 (2d Cir. 1985) (discussing constitutional dimension of venue). If Congress does not explicitly indicate the location in which it considers a crime to occur, "the locus delicti must be determined from the nature of the crime alleged and the location of the act or acts constituting it." United States v. Anderson, 328 U.S. 699, 703, 90 L. Ed. 1529, 66 S. Ct. 1213 (1946). However, "where the acts constituting the crime and the nature of the crime charged implicate more than one location," venue may be constitutionally permissible in more than one district. United States v. Reed, 773 F.2d 477, 480 (2d Cir. 1985). In this case, the government argues that venue is proper in both the Eastern District of New York and the Southern District of New York.
The government also argues that 18 U.S.C. § 3237(a) applies because bank fraud is a "continuing offense" that can occur in more than one district over a period of time. The portion of § 3237(a) relied on by the government provides:
Except as otherwise expressly provided by enactment of Congress, any offense against the United States begun in one district and completed in another, or committed in more than one district, may be inquired of and prosecuted in any district in which such offense was begun, continued, or completed.
18 U.S.C. § 3237(a). As the Eighth Circuit held in United States v. Washington, 109 F.3d 459, 1997 WL 134578 at *7 (8th Cir. 1997), a "scheme to defraud" within the meaning of § 1344 "is, at least in most cases, a series of acts designed to obtain money or property fraudulently, not simply . . . one specific act . . . ." As such, a violation of § 1344 appears to be a continuing offense within the meaning of § 3237(a). See id. Defendant does not dispute the applicability of § 3237(a). Moreover, the Second Circuit has recently noted in a different context that bank fraud is a continuing offense. United States v. Duncan, 42 F.3d 97, 104 (2d Cir. 1994) ("Continuing offenses such as conspiracy and bank fraud do not run afoul of the Ex Post Facto Clause if the criminal offenses continue after the relevant statute becomes effective."). But the question remains whether in this particular case, the offense was "begun, continued, or completed" in the Southern District of New York.
Both the government and the defendant agree that the appropriate test to apply in determining whether venue is constitutionally permissible in this district is the "substantial contacts" test set forth by the Second Circuit in United States v. Reed, 773 F.2d 477 (2d Cir. 1985). The ultimate question of whether venue is proper in any particular case depends on the nature of the crime charged and the location of the acts that constitute the crime. In Reed, the court addressed the proper approach to considering that ultimate question. It stated that "there is no single defined policy or mechanical test to determine constitutional venue." Id. at 481. Instead, it held that the inquiry is "best described as a substantial contacts rule that takes into account a number of factors -- the site of the defendant's acts, the elements and nature of the crime, the locus of the effect of the criminal conduct, and the suitability of each district for accurate factfinding . . . ." Id.
In this case it is undisputed that the site of defendant's acts was the Eastern District of New York. The only acts alleged to have occurred in the Southern District of New York are the ministerial actions taken by MHT and Chemical Bank in the process of crediting defendant's account. It is not alleged that those acts were intended or foreseen by defendant. Thus, the first Reed factor does not support venue in this district. But the government urges that the other Reed factors, particularly the elements and ...