The Bank, Aggravated Identity Theft and "Using" Identities

After a jury convicted him of “two counts of making false statements to a bank, in violation of 18 U.S. Code § 1014 (Counts One and Four), and two counts of aggravated identity theft, in violation of 18 U.S. Code § 1028A (Counts Two and Three)”, David Miller appealed.  U.S. v. Miller, 2013 WL 5812046 (U.S. Court of Appeals for the 6th Circuit 2013).  

 The judge who had the case sentenced Miller to “forty-five months imprisonment” plus “two years of supervised release” and also “ordered him to forfeit $337,500.”  U.S. v. Miller, supra. This post examines the argument Miller made as to why his convictions for aggravated identity theft should be reversed.  U.S. v. Miller, supra.

According to the opinion, the prosecution arose because Miller and

his pastor William Wellons wanted to buy a parcel of real estate from a farmer as an investment property. Wellons negotiated with the farmer and agreed to purchase the land for a little over $790,000. The purchase was set to close on May 30, 2007.

Miller formed Fellowship Investors, LLC (`Fellowship’) to purchase the land and recruited investors to purchase investment units in the company. Miller calculated that Fellowship needed $900,000 in funding to cover the purchase price, costs related to acquiring the land, and expenses associated with Fellowship's management. Eight investment units valued at $112,500 each were established to raise the needed funds. Miller and Wellons did not purchase an investment unit. 

They . . . acquired an ownership interest in Fellowship through their service to the company: Miller obtained a 19.5% interest because he was Fellowship's manager and Wellons obtained a 4.5% interest because he was Fellowship's secretary. Ultimately, Miller secured $675,000 in investments before the closing date.

Because Miller had not raised $900,000 before the closing, he approached First Bank to obtain a loan. Miller represented to Joe Stocker of First Bank that the David E. Miller Development Company, Inc. (`DEMCO’) . . . needed a $337,500 loan to purchase a piece of real property. Miller told Stocker he wanted to purchase the property with cash, but had run out of time to secure investors prior to closing and planned to pay off the loan within six months with investor funds. First Bank agreed to loan $337,500 to DEMCO, with the property that Fellowship was going to acquire pledged as collateral.

Because DEMCO pledged Fellowship's property as collateral, First Bank required a written resolution from the members of Fellowship showing that they had authorized DEMCO to take such action. On May 24, 2007, First Bank sent a letter to the closing attorneys requesting that such a resolution be prepared before closing. 

The closing attorneys prepared a resolution, but it omitted a clause whereby the members of Fellowship specifically authorized DEMCO to pledge Fellowship property as collateral. First Bank supplied the necessary language, and the closing attorneys updated the resolution.

U.S. v. Miller, supra.  The opinion also explains that on May 25, 2007, the closing

attorneys sent the updated resolution to First Bank, Wellons, and Miller's assistant for review. Wellons noticed it was still incomplete because it did not list all members of Fellowship. He contacted Miller for the member list. . . . After Miller supplied Wellons with the names of all Fellowship members, Wellons handwrote those names on the updated resolution, signed it as Fellowship's secretary, and faxed it to the closing attorneys.

The Fellowship resolution contained two false statements: (1) that all Fellowship members were present at a meeting, and (2) that at this nonexistent meeting, they unanimously voted to allow the property to be pledged as collateral for a $337,500 loan to DEMCO. When Wellons signed the resolution, he did not know these statements were false because he thought Miller had spoken to all members of Fellowship about the DEMCO loan and they all agreed to allow DEMCO to pledge Fellowship property as collateral. 

In truth, Fellowship's members, other than Miller and Wellons, believed the property was being purchased free and clear of any encumbrances and they did not agree, nor would they have agreed if asked, to the property being pledged as collateral.

U.S. v. Miller, supra.  Finally, the opinion explains that a “few months later,” First Bank

conducted a review of the loan file and discovered that it did not contain a copy of the Fellowship resolution signed by both Wellons and Miller. First Bank eventually obtained from the closing attorneys a copy of the resolution, which had a heading indicating that it had been faxed from DEMCO on July 23, 2007. Miller does not deny that his signature is on that resolution or that First Bank required this resolution to close the loan. 

U.S. v. Miller, supra.  In July of 2009, Miller told “Fellowship's member investors for the first time that he had taken out a $337,500 loan to pay for his investment in Fellowship and that Fellowship's property secured this `personal loan.’” U.S. v. Miller, supra. 

On appeal, Miller argued that his convictions on Counts Two and Three for

aggravated identity theft must be reversed because, as a matter of law, he did not `use’ another person's name as alleged in those counts. The government's prosecution theory was that Miller `used’ the names of Fellowship members R. Mark Foster (`Individual A’ in Count Two) and Michael Lipson (`Individual B’ in Count Three) by including their names in the Fellowship resolution which falsely stated they were present at a meeting of all Fellowship members in which they voted to allow Miller, as Fellowship's managing member, to pledge Fellowship property for the DEMCO loan.

Miller asserts that 18 U.S.C. § 1028A does not criminalize this conduct because he only lied about what Foster and Lipson did, but he did not `use’ their names or identities. The government responds that the crux of these offenses is not that Miller claimed Foster and Lipson did something they in fact did not do, but rather that Miller `used’ their names to fraudulently obtain a loan from First Bank by misrepresenting that he had the authority to act on behalf of those individuals.

U.S. v. Miller, supra. 

The Court of Appeals began its analysis of this issue by explaining that whether a

criminal statute applies to the proven conduct of the defendant is an issue of statutory interpretation that we review de novo. U.S. v. Lumbard, 706 F.3d 716 (U.S. Court of Appeals for the 6th Circuit 2013). . . . 18 U.S. Code § 1028A provides: `Whoever, during and in relation to any felony violation enumerated in subsection (c), knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of 2 years.’ 18 U.S. Code § 1028A(a)(1).

Subsection (c) includes making a false statement to a bank among the enumerated offenses, § 1028A(c)(4), and `means of identification’ is a defined term that includes a person's name, § 1028(d)(7). Substituting the facts of this case into the statute's variables, Miller committed aggravated identity theft if he knowingly used Foster's and Lipson's names, without lawful authority, when he made the false statement to First Bank that they had authorized him to pledge Fellowship property as collateral for DEMCO's loan.

U.S. v. Miller, supra. 

As noted above, the parties involved in this case “dispute[d] only whether Miller `used’ Lipson's and Foster's names under the statute.”  U.S. v. Miller, supra.  The Court of Appeals explained that because

`uses’ is an undefined term, we `construe it in accord with its ordinary or natural meaning.’ Smith v. U.S., 508 U.S. 223 (1993). This ‘”everyday meaning”’ reveals itself in `phraseology that strikes the ear as “both reasonable and normal[.]’” Watson v. U.S., 552U.S. 74 (2007) (quoting Smith v. U.S. supra). Defined in isolation from its statutory context, the dictionary meaning of the word `use’ is ‘”[t]o convert to one's service,” “to employ,” “to avail oneself of,” and “to carry out a purpose or action by means of.”’ ”Baileyv. U.S., 516 U.S. 137 (1995) (quoting Smith v. U.S. supra).

The Supreme Court has noted the `interpretational difficulties’ that the word `use’ poses because of its frequent inclusion in statutory text and the numerous “different meanings attributable to it.’ Bailey v. U.S., supra. That is why `[w]e consider not only the bare meaning of the word but also its placement and purpose in the statutory scheme. [T]he meaning of statutory language, plain or not, depends on context.’  Bailey v. U.S., supra.

U.S. v. Miller, supra. 

The Court of Appeals then explained that it was confronted with two “equally reasonable interpretations” of the term “use”:

On one hand, relying upon dictionary definitions, the government argues that Miller `used’ Foster's and Lipson's names within the ordinary meaning of that verb in that he employed their names to his benefit, converted their names to his service, and intentionally availed himself of their names in order to falsely manufacture authority to encumber Fellowship property for DEMCO's benefit. See Bailey v. U.S. supra.  

This reasonable interpretation flows from the plain language of the statute, which arguably criminalizes the generic `use’ of another person's name when making a false statement to a bank. The government fully embraced this broad interpretation at oral argument, conceding that if there is any false statement about authority, which necessarily involves the `use’ of someone's name, made in connection with a predicate offense under § 1028A(c), the government can always charge aggravated identity theft in addition to the underlying offense.

On the other hand, relying on statutory purpose, context, and an unpublished opinion from a district court in this circuit, Miller argues that one `uses’ a person's name under the `aggravated identity theft’ statute only if one either passes himself off as that person or acts on behalf of that person. See U.S. v. Wilcox, 2010 WL 55964 (U.S. District Court for the Western District of Michigan 2010). 

Miller acknowledges that although he may have lied about what Foster and Lipson did, he maintains that this conduct does not constitute `use’ of their names because he did not steal or possess their identities, impersonate them or pass himself off as one of them, act on their behalf, or obtain anything of value in one of their names. In other words, he did not `use’ Foster's and Lipson's names within the meaning of § 1028A by merely lying about what they did.

U.S. v. Miller, supra (emphasis in the original).

The Court of Appeals noted that, when confronted with the need to interpret a term used in a criminal statute, it usually relies on the legislative history of the statute at issue and/or on other cases interpreting the statute, but neither was useful here.  U.S. v. Miller, supra.  It examined the relevant legislative history but found it offered “no conclusive guidance” and also found that no other court had addressed this issue, i.e., it was an issue of first impression . U.S. v. Miller, supra. 

The court concluded, therefore, that the appropriate solution was to apply the rule of lenity, which

`requires ambiguous criminal laws to be interpreted in favor of the defendants subjected to them.’ U.S. v. Beals, 698 F.3d 248 (U.S. Court of Appeals for the 6<sup>th</sup> Circuit 2012). . . . `When there are two rational readings of a criminal statute, one harsher than the other, the rule of lenity tells us that we are to choose the harsher only when Congress has spoken in clear and definite language.’ U.S. v. Brock, 501 F.3d 762 (U.S. Court of Appeals for the 6th Circuit 2007). . . . 

Nothing inherent in the term `uses,’ its placement in the text of § 1028A, or the statute's legislative history clearly and definitely indicates that the term, as applied to the names of persons, is broad enough to reach the mere act of saying that the persons did something they in fact did not do. 

The ambiguity arising from the attempted application of § 1028A to the facts of this case fits squarely within the rule of lenity, and we resolve the uncertainty in Miller's favor. See U.S. v. Ford, 560 F.3d 420, 425 (U.S. Court of Appeals for the 6th Circuit 2009) (`When ambiguity clouds the meaning of a criminal statute, the tie must go to the defendant’).  

U.S. v. Miller, supra. 

The court therefore held that

as a matter of law, Miller did not `use’ a means of identification within the meaning of § 1028A by signing a document in his own name which falsely stated that Foster and Lipson gave him authority, as Fellowship's managing member, to act on behalf of Fellowship and pledge its property for the DEMCO loan.

Accordingly, we reverse Miller's convictions on Counts Two and Three.

U.S. v. Miller, supra.  The Court of Appeals also, for other reasons, reversed Miller's conviction on Count Four, affirmed his conviction on Count One, vacated his sentence and remanded the case to the district court for “further proceedings consistent with this opinion.”  U.S. v. Miller, supra.