United States of America v.  Daniel I. Colton

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 99-4142 
DANIEL I. COLTON,
Defendant-Appellant. 
 UNITED STATES OF AMERICA,
Plaintiff-Appellant,
v. No. 99-4185 
DANIEL I. COLTON,
Defendant-Appellee. 
Appeals from the United States District Court
for the District of Maryland, at Baltimore.
Benson E. Legg, District Judge.
(CR-97-377-L)
Argued: April 3, 2000
Decided: November 3, 2000
Before LUTTIG and MOTZ, Circuit Judges, and
John C. GODBOLD, Senior Circuit Judge of the United States
Court of Appeals for the Eleventh Circuit, sitting by designation.
No. 99-4142 affirmed in part and remanded in part and No. 99-4185
affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge Luttig and Senior Judge Godbold joined.

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COUNSEL
ARGUED: Walter Estes Dellinger, III, O’MELVENY & MYERS,
L.L.P., Washington, D.C., for Appellant. Dale Preston Kelberman,
Assistant United States Attorney, Baltimore, Maryland, for Appellee.
ON BRIEF: Brian D. Boyle, Jonathan D. Hacker, O’MELVENY &
MYERS, L.L.P., Washington, D.C., for Appellant. Lynne A. Bat-
taglia, United States Attorney, Baltimore, Maryland, for Appellee.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
This appeal requires us to determine whether the federal bank fraud
statute criminalizes failures to disclose material information to a
financial institution only if those failures breach some independent
legal disclosure duty. Because the bank fraud statute proscribes any
"scheme or artifice to defraud," we hold that, even absent an indepen-
dent duty to disclose, misleading or deceitful conduct designed to
conceal material information from a financial institution violates the
statute.
The case at hand arises from loans obtained by appellant, Daniel
Colton, and his partner Dennis Laskin to finance certain commercial
real estate projects. Colton and Laskin formed a corporation, Colton
& Laskin, Inc. (owned by them in equal shares) which in turn created
partnerships and corporations that secured a series of substantial loans
from various financial institutions. At the time of the events critical
to this case, Colton and Laskin had been partners for over six years
and had together invested in numerous properties and had pursued
thirty to forty development projects. They had defaulted on the real
estate loans involved here by the time the challenged transactions
took place.
After the government launched an investigation of these transac-
tions, Laskin pled guilty to bank fraud and concealment of assets from
the Resolution Trust Corporation (RTC) and admitted his participa-
tion in the schemes outlined within. Colton maintained his innocence
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and went to trial. Following a three week trial, at which Laskin testi-
fied against Colton, a jury convicted Colton of one count of conspir-
acy to commit bank fraud in violation of 18 U.S.C. §§ 371 and 1334
(1994), based on his conduct with respect to the workout of a loan
with the RTC, and three counts of bank fraud in violation of 18
U.S.C. § 1344, based on his conduct with respect to a loan with Sec-
ond National Bank.
Colton’s primary argument on appeal is that because the govern-
ment offered no evidence that he made any affirmative misrepresenta-
tions or breached any fiduciary, statutory, or other independent legal
duty to disclose information, he cannot be held to have violated the
federal bank fraud statute. We do not agree with this cramped con-
struction of the bank fraud statute, which prohibits any knowing
"scheme or artifice . . . to defraud" a financial institution. 18 U.S.C.
§ 1344. We affirm Colton’s conspiracy conviction and one of his sub-
stantive bank fraud convictions because the government produced
ample evidence from which a reasonable jury could conclude that
Colton conspired to execute a scheme or artifice to defraud the RTC
and did execute a scheme or artifice to defraud Second National. We
must remand the case, however, so that the district court can vacate
two of the bank fraud convictions because they were multiplicious.
With respect to the Second National transaction, the government
cross appeals. The government maintains that it proved that in the
Second National transaction Colton individually derived more than
$1,000,000 and so his sentence should have been enhanced. Finding
no error in the district court’s refusal to enhance Colton’s sentence on
this ground, we affirm.
We set forth below the factual background of each transaction at
issue here, prior to discussing its legality.
I.
We first address Colton’s conviction for conspiracy to commit
bank fraud. See 18 U.S.C. §§ 371, 1344.
A.
This conviction rests on certain actions Colton took to defraud the
RTC in connection with the workout of a $3.1 million defaulted loan
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that he and Laskin had originally obtained from Trustbank. Although
the government did not charge Colton with any crime in connection
with a prior workout of a defaulted loan from Riggs Bank in the
amount of $7.725 million, it did offer evidence of the Riggs transac-
tion to demonstrate Colton’s "knowledge, intent and motive" with
respect to the $3.1 million RTC loan. Accordingly, we first briefly
outline the Riggs transaction.
1.
Colton and Laskin, along with other developers, obtained the Riggs
loan in 1988 to finance a joint venture near Annapolis, Maryland. All
of the partners involved in the venture personally guaranteed the loan.
In March 1991, the partners contracted to sell the property to Wal-
Mart for $10 million subject to certain conditions. However, a few
months later, some of the partners experienced financial difficulties
and the loan went into default.
Before the joint venture began experiencing difficulties, Laskin
formed an irrevocable trust for the benefit of his family in January
1991, naming his long-time accountant, Alex Brager, his long-time
lawyer, Ellis Koch, and Victor Rosenberg as trustees. Laskin used
$10 million of his personal assets to establish the trust, which was
originally titled the Dennis A. Laskin Irrevocable Trust. On August
26, 1991, after Colton and Laskin had defaulted on the Riggs loan
(and the RTC loan), Laskin arranged for papers to be filed with the
state to permit the trust to trade as the Alexander Family Trust (the
"Trust"), and he removed Ellis Koch as a trustee because Koch was
known to be closely associated with him.
Once the loan for the joint venture went into default, Riggs looked
to the personal guarantors, including Colton and Laskin, for payment
because Riggs believed that the property value was insufficient to
cover the loan in light of certain environmental and financial prob-
lems jeopardizing the Wal-Mart contract. At Colton’s recommenda-
tion, Laskin contacted Marvin Mandel, a former Governor of
Maryland, who was now practicing law in Annapolis, to represent the
Trust in negotiations with Riggs to purchase the note. Colton and
Laskin intentionally failed to provide Mandel with any "of the partic-
ulars" of the Trust, including a copy of the trust agreement or even
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the identities of the grantor or the beneficiaries of the Trust. Laskin
testified that "[t]he purpose in using Marvin Mandel was, first of all,
based upon his credibility as the former governor, and secondly, so
that Riggs would not be aware that the funds were coming from my
trust."
During the negotiations, Riggs sought, but did not receive, addi-
tional information about the Trust, including the identities of the
grantor and the beneficiaries. Laskin explained that he and Colton did
not want to reveal this information because if Riggs knew of Laskin’s
relationship to the Trust, the bank "would not sell the loan at a dis-
count" but rather would seek full payment. Riggs ultimately accepted
Colton and Laskin’s certifications that they did not have a direct or
indirect interest in the Trust, as well as Mrs. Laskin’s limited certifi-
cation that she had no "legal or beneficial interest in the Trust with
respect to" its acquisition of the note. Riggs then sold the $7.725 mil-
lion note to the Trust for approximately $5 million in November
1991. According to the government, Colton and Laskin used this
transaction as a blueprint for devising their plan to defraud the RTC
by the conduct outlined below, which forms the basis for the conspir-
acy count against Colton.
2.
The RTC loan had originally been made in January 1990 by Trust-
bank, a federally insured bank, to Colton and Laskin for the acquisi-
tion and development of property near Bowie, Maryland. The loan
totaled $3.1 million and was personally guaranteed by Colton, Laskin,
and their wives. In March 1991, Wal-Mart contracted with Colton and
Laskin to purchase part of this property as well, conditioned upon cer-
tain development requirements, including county-mandated road
improvements. Negotiations with commercial neighbors over such
improvements reached an impasse, however, and Colton and Laskin
defaulted on the loan with Trustbank in June 1991.
The RTC had placed Trustbank into conservatorship in January
1991. The RTC hired Gemini Asset Managers to work out and liqui-
date the bank’s assets, including Colton and Laskin’s $3.1 million
loan. Gemini sent a letter to Colton and Laskin on November 12,
1991, informing them that Gemini had taken over management and
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disposition of their loan. In assessing its options for recovering the
loan, Gemini evaluated the personal financial condition of Colton,
Laskin, and their wives, and concluded that recovery through the per-
sonal guarantees was not a viable option because substantial liabilities
outweighed the value of the guarantors’ assets.
Laskin testified that "[b]ased upon the success of acquiring the note
with Riggs Bank at a discount, it was Mr. Colton’s suggestion that the
trust acquire the note from Trustbank at a discount as well." However,
"there would be one change"— "[b]ecause of the difficulties that were
encountered with the acquisition of the Riggs note with [Riggs’]
request for information . . ., it was decided to use another corporation
to acquire the note other than the trust." Accordingly, in January
1992, Laskin contacted Gemini to discuss the possibility of selling the
note to an unnamed interested investor. Once again, Colton and
Laskin, on behalf of the Alexander Family Trust, retained Mandel to
negotiate the sale of the note at a discount, and once again they did
not give Mandel any details about the Trust.
After obtaining its own appraisals, Gemini concluded that the value
of the property was only $900,000 and that the Wal-Mart sale was
unlikely to go forward in the absence of cooperation from the other
commercial neighbors with respect to the road improvements, and so
it deemed a sale of the note to a third party investor to be its best
option. The parties agreed that the price to be paid for Colton and
Laskin’s $3.1 million note would be $1.5 million. Once this purchase
price was settled, Laskin asked Stanley Jacobs, who had previously
performed legal work for Colton and Laskin, to act as the settlement
attorney for this transaction and to form a corporation to purchase the
note from the RTC. Jacobs said he had an existing shell corporation,
New Homes, Inc., and it was agreed that New Homes would buy the
note. Neither Colton nor Laskin told Jacobs the source of the financ-
ing or provided him with any details about the transaction.
According to Laskin, "[t]he RTC was not made aware of the fact
that the trust was funding the acquisition." Mandel, however, testified
that the RTC did know that "the Alexander Family Trust [was]
involved," and that, as in the Riggs deal, he provided the lender with
Victor Rosenberg’s name as trustee and contact person. Yet, Mandel
also testified that as the time of sale drew closer he informed the
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RTC, through Gemini, that New Homes would purchase the note and
provided Jacobs’ name as the contact person for New Homes. Unlike
Riggs, Gemini did not request additional information or seek express
certifications from Colton and Laskin, or their wives, as to any inter-
est they may have had in the entity purchasing the note.
However, the RTC did require Jacobs, as President of New Homes,
to sign a Loan Sale Agreement with the RTC, which includes a certi-
fication that the purchaser "ha[d] not . . . caused a loss in excess of
$50,000 to any insured depository institution." After $1.5 million was
wire transferred from the Trust to Jacobs’ bank account, Jacobs
signed the Loan Sale Agreement on behalf of New Homes and the
sale closed on June 30, 1992.
Through Colton’s efforts, the necessary road improvements and
other conditions of the Wal-Mart contract were satisfied, and on the
very same day that New Homes purchased the note, June 30, 1992,
Colton and Laskin sold the property to Wal-Mart for $3.59 million.
From those proceeds, Colton and Laskin paid New Homes $1.5 mil-
lion to cover the purchase price of their note from the RTC, plus inter-
est, a profit, and fees, which New Homes in turn paid to the Trust.
Colton and Laskin took a cut from the remainder of the Wal-Mart
proceeds and also paid other fees and employee bonuses.
Laskin explicitly acknowledged at trial that he had "an agreement
or understanding" with Colton "to conceal from the Resolution Trust
Corporation the use of [the] trust funds through New Homes, Inc. to
purchase the RTC note . . . ."
B.
The bank fraud statute provides in pertinent part:
Whoever knowingly executes, or attempts to execute, a
scheme or artifice—
1) to defraud a financial institution; or
2) to obtain any of the moneys, funds, credits,
assets, securities, or other property owned by,
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or under the custody or control of, a financial
institution, by means of false or fraudulent
pretenses, representations, or promises;
shall be fined not more than $1,000,000 or imprisoned not
more than 30 years, or both.
18 U.S.C. § 1344. The government concedes that Colton and Laskin
made no affirmative misrepresentations to the RTC with respect to the
disposition of their defaulted loan. We therefore assess Colton’s crim-
inal liability under § 1344(1). See, e.g., United States v. Celesia, 945
F.2d 756, 758 (4th Cir. 1991) ("[C]ourts have construed Section
1344’s provisions disjunctively, so that one may commit a bank fraud
under Section 1344(1) by defrauding a financial institution, without
making the false or fraudulent promises required by Section
1344(2)."); United States v. Goldsmith, 109 F.3d 714, 716 (11th Cir.
1997) (adopting same construction of § 1344).
According to Colton, because he had no fiduciary, statutory, or
other independent legal duty to disclose to the RTC any of the infor-
mation he and Laskin withheld, he cannot be guilty of "a scheme or
artifice to defraud" the RTC. Colton admits he did not volunteer cer-
tain information, but he characterizes his conduct as "a series of law-
ful acts intended to obtain a favorable result in an impersonal market
transaction." Brief of Appellant at 42. The government, on the other
hand, also recognizing that Colton and Laskin had no independent
legal duty to disclose, contends that, even so, the partners purpose-
fully concocted a scheme, executed through various affirmative acts,
to conceal material information with the intent to mislead the RTC,
and that such conduct constitutes "a scheme or artifice to defraud," in
violation of the bank fraud statute. 18 U.S.C. § 1344. We agree with
the government’s reading of the statute.
Section 1344 was intended to fill in "serious gaps . . . in Federal
jurisdiction" in order to ensure the effective prosecution of fraudulent
schemes targeted at financial institutions. S. Rep. No. 98-225, at 377
(1984), reprinted in 1984 U.S.C.C.A.N. 3182, 3517. It was "modeled
on the . . . wire [18 U.S.C. § 1343] and mail [18 U.S.C. § 1341] fraud
statutes," which, Congress noted, the courts had construed broadly. S.
Rep. No. 98-225, at 378, reprinted in 1984 U.S.C.C.A.N. at 3519.
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Indeed, more than one hundred years ago, the Supreme Court, con-
struing the mail fraud statute, rejected a narrow interpretation of the
phrase "any scheme or artifice to defraud" that would have confined
the statute’s reach to "such cases as, at common law, would come
within the definition of ‘false pretenses,’" such as cases involving an
actual misrepresentation of a material fact. Durland v. United States,
161 U.S. 306, 312 (1896). Rather, Durland held that the statute "in-
cludes everything designed to defraud by representations as to the
past or present, or suggestions and promises as to the future. The sig-
nificant fact is the intent and purpose." Id. at 313. Other Supreme
Court cases interpreting statutes that prohibit "fraud" or schemes "to
defraud" have similarly accorded those terms broad meaning. See
Haas v. Henkel, 216 U.S. 462, 479 (1910) (interpreting a predecessor
statute to 18 U.S.C. § 371); Hammerschmidt v. United States, 265
U.S. 182, 188 (1924) (same); see also McNally v. United States, 483
U.S. 350, 374 (1987) (Stevens, J., dissenting) ("The general language
in the mail fraud statute has repeatedly been construed to cover novel
species of fraud, and Congress has repeatedly amended the statute in
ways that support a broad interpretation of its basic thrust.").1
The Supreme Court has recently articulated an outer boundary for
the interpretation of the federal fraud statutes. See Neder v. United
States, 527 U.S. 1 (1999). In Neder, the Court rejected the govern-
ment’s argument that "Congress chose to unmoor the mail fraud stat-
ute from its common-law analogs" and thus did not intend for
materiality to be an element of the offense. Id. at 23-24. The Court
instead pointed out that because the mail, wire, and bank fraud stat-
utes do not define the phrase "scheme or artifice to defraud," courts
interpreting the statutes must infer that Congress implicitly incorpo-
rated the common-law meaning of the relevant terms. Id. at 20-22.
Most significantly for our purposes, the Neder Court clarified its ear-
1McNally held that a "scheme or artifice to defraud," as used in the
mail fraud statute, was "limited in scope to the protection of property
rights" and thus, the statute did not prohibit schemes to deprive people
of the intangible right to good government and honest services. 483 U.S.
at 360. In response to McNally, Congress enacted 18 U.S.C. § 1346
(1994), which states that "[f]or the purposes of this chapter, the term
‘scheme or artifice to defraud’ includes a scheme or artifice to deprive
another of the intangible right of honest services."
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lier holding in Durland, explaining that "[a]lthough Durland held that
the mail fraud statute reaches conduct that would not have constituted
‘false pretenses’ at common law, it did not hold, as the Government
argues, that the statute encompasses more than common-law fraud."
Id. at 24.
Accordingly, in interpreting the bank fraud statute, we look to the
common-law understanding of fraud. At common law, fraud has not
been limited to those situations "where there is an affirmative misrep-
resentation or the violation of some independently-prescribed legal
duty," as Colton contends. Reply Brief at 15. Rather, even in the
absence of a fiduciary, statutory, or other independent legal duty to
disclose material information, common-law fraud includes acts taken
to conceal, create a false impression, mislead, or otherwise deceive in
order to "prevent[ ] the other [party] from acquiring material informa-
tion." Restatement (Second) of Torts § 550 (1977); see also W. Page
Keeton et al., Prosser and Keeton on Torts § 106 (5th ed. 1984)
("Any words or acts which create a false impression covering up the
truth, or which remove an opportunity that might otherwise have led
to the discovery of a material fact . . . are classed as misrepresenta-
tion, no less than a verbal assurance that the fact is not true.").
Thus, fraudulent concealment—without any misrepresentation or
duty to disclose—can constitute common-law fraud. This does not
mean, however, that simple nondisclosure similarly constitutes a basis
for fraud. Rather, the common law clearly distinguishes between con-
cealment and nondisclosure. The former is characterized by deceptive
acts or contrivances intended to hide information, mislead, avoid sus-
picion, or prevent further inquiry into a material matter. The latter is
characterized by mere silence. Although silence as to a material fact
(nondisclosure), without an independent disclosure duty, usually does
not give rise to an action for fraud, suppression of the truth with the
intent to deceive (concealment) does. See, e.g., Stewart v. Wyoming
Cattle Ranche Co., 128 U.S. 383, 388 (1888).
The Supreme Court in Stewart carefully explained why conceal-
ment is "equivalent to a false representation" and so appropriately
forms the basis for a common law fraud action: "the concealment or
suppression is in effect a representation that what is disclosed is the
whole truth. The gist of the action is fraudulently producing a false
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impression upon the mind of the other party; and if this result is
accomplished, it is unimportant whether the means of accomplishing
it are words or acts of the defendant, or his concealment or suppres-
sion of material facts not equally within the knowledge or reach of the
plaintiff." 128 U.S. at 388; see also Udell v. Atherton, 158 Eng. Rep.
437 (Ex. 1861); Schneider v. Heath, 3 Campb. 506 (1813); 37 C.J.S.
Fraud § 18 (1997) (distinguishing between silence and concealment);
37 Am. Jur. 2d Fraud and Deceit § 145 (1968) (same). Thus, the
common-law principle that, in the absence of an independent disclo-
sure duty, "nondisclosure is not fraudulent, presupposes mere silence,
and is not applicable where, by words or conduct, a false representa-
tion is intimated or any deceit practiced." Id. at § 174 (and the many
cases cited therein); see also Stuart M. Speiser et al., 9 The American
Law of Torts § 32:73 (1992).
Indeed, we have expressly held that the distinction between simple
nondisclosure and concealment "is in accord with traditional princi-
ples of common law fraud." Fox v. Kane-Miller Corp., 542 F.2d 915,
919 (4th Cir. 1976). In Fox, we upheld the district court’s reliance on
the following explanation of this principle by Maryland’s highest
court:
Concealment and non-disclosure are closely related and in
any given situation usually overlap. . . . "When [either is]
done without intent to mislead and without misrepresenta-
tion, it has no effect except where there is a duty of disclo-
sure. . . ." To create a cause of action, concealment must
have been intentional and effective—the hiding of a material
fact with the attained object of creating or continuing a false
impression as to that fact. The affirmative suppression of the
truth must have been with intent to deceive.
Fegeas v. Sherrill, 147 A.2d 223, 225 (Md. 1958) (quoting Restate-
ment of Restitution § 8 cmt. b (1937) and citing Restatement of Torts
§ 550 (1938)). Given this "close[ ] relat[ionship]" between nondisclo-
sure and concealment, numerous decisions expressly distinguish
between passive concealment—mere nondisclosure or silence—and
active concealment, which involves the requisite intent to mislead by
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creating a false impression or representation, and which is sufficient
to constitute fraud even without a duty to speak.2
In short, at common law, no fiduciary relationship, no statute, no
other independent legal duty to disclose is necessary to make active
concealment actionable fraud—simple "good faith" imposes an obli-
gation not to purposefully conceal material facts with intent to
2See, e.g., Hitachi Credit Am. Corp. v. Signet Bank, 166 F.3d 614, 629
(4th Cir. 1999) (interpreting Virginia law); Mudd v. Lanier, 24 So.2d
550, 562-63 (Ala. 1945); Farm Bureau Policy Holders & Members v.
Farm Bureau Mut. Ins. Co., 984 S.W.2d 6, 14-15 (Ark. 1998); Younan
v. Equifax Inc., 169 Cal. Rptr. 478, 487 (Ct. App. 1980); Franklin v.
Brown, 159 So.2d 893, 898 (Fla. App. 1964); H.E.P. Dev. Group, Inc.
v. Nelson, 606 A.2d 774, 775 (Me. 1992); Scharf v. Tiegerman, 561
N.Y.S.2d 271, 272 (App. Div. 1990) (quoting Haberman v. Greenspan,
368 N.Y.S.2d 717, 720-21 (Sup. Ct. 1975)); Crabbe v. Freeman, 160
N.E.2d 583, 585-86 (Ohio 1959); Paul v. Kelley, 599 P.2d 1236, 1238-
39 (Or. Ct. App. 1979); Kase v. French, 325 N.W.2d 678, 683-84 (S.D.
1982).
Other courts do not explicitly distinguish between active and passive
concealment, and refer generally to fraudulent concealment as a syn-
onym for nondisclosure requiring an independent duty of disclosure to be
actionable. See, e.g., Lone Star Indus. v. Compania Naviera Perez Com-
panc (In re New York Trap Rock Corp.), 42 F.3d 747, 754 (2d Cir.
1994); Emmett v. Eastern Dispensary & Cas. Hosp., 396 F.2d 931, 937-
38 n.33 (D.C. Cir. 1967); City of Rome v. Glanton, 958 F. Supp. 1026,
1038 (E.D. Pa. 1997); Altmayer v. City of Daphne, 613 So.2d 366, 369
(Ala. 1993); Mallon Oil Co. v. Bowen/Edwards Assocs., 965 P.2d 105,
111 (Colo. 1998); Allen v. Layton, 235 A.2d 261, 264 (Del. Super. Ct.
1967); Albany Urology Clinic, P.C. v. Cleveland, 528 S.E.2d 777, 780
(Ga. 2000); DeVoe Chevrolet-Cadillac, Inc. v. Cartwright, 526 N.E.2d
1237, 1240 (Ind. Ct. App. 1988); Parker v. Columbia Bank, 604 A.2d
521, 531 (Md. Ct. Spec. App. 1992); Dow Chem. Co. v. Mahlum, 970
P.2d 98, 110-11 (Nev. 1998). Although the nomenclature used in these
latter cases is not as clear as it might be, the cases still offer Colton no
support because they do not suggest, let alone hold, that "active conceal-
ment," i.e., with the requisite intent and misleading impression, is not
actionable in the absence of an independent disclosure duty.
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deceive. Strong v. Repide, 213 U.S. 419, 430 (1909); Tyler v. Savage,
143 U.S. 79, 98 (1892); Stewart, 128 U.S. at 388.3
Federal courts have properly recognized and applied this common-
law understanding of fraud in construing the federal fraud statutes. In
fact, in United States v. Coyle, 943 F.2d 424 (4th Cir. 1991), we
rejected an argument, virtually identical to Colton’s, that nondisclo-
sure absent an independent disclosure duty can never constitute fraud.
Coyle was convicted of mail fraud for selling cable television equip-
ment that enabled interception of transmissions without payment to
(or authorization of) cable companies, in violation of the Communica-
tions Act. Because Coyle made no misrepresentations or false prom-
ises to the cable companies, and because he had no fiduciary duty to
the companies or statutory disclosure duty under the Communications
Act, he maintained that he could not be convicted of mail fraud. He
contended, as Colton does, that to prove a fraudulent scheme the gov-
ernment had to establish "one of the following . . . ‘(1) affirmative
misrepresentations of existing fact, (2) false promises as to the future,
(3) the failure of a fiduciary to make disclosure, and (4) the failure
to make disclosure under an independent statutory duty.’" Id. at 426.
We refused to adopt this rule, explaining that "[t]he mail fraud statute
is not as restrictive as Coyle contends." Id. at 427. In fact, we
expressly held that because Coyle’s conduct, proscribed by the Com-
munications Act, constituted a scheme or artifice to defraud cable
companies of their property interest in cable programming revenues,
it was "immaterial that [the Communications Act] ha[d] no require-
ment for disclosure." Id. at 427.
3Some courts have refined this "good faith" concept by accounting for
the fluid nature of the bargaining relationship and holding that a duty to
disclose may arise from the circumstances surrounding nondisclosure,
such as when a defendant engages in some conduct, beyond mere
silence, that rises to the level of active concealment. See, e.g., United
States v. Benny, 786 F.2d 1410, 1418 (9th Cir. 1986); Bethka v. Jensen,
672 N.Y.S.2d 494, 495 (App. Div. 1998); cf. Meade v. Cedarapids, Inc.,
164 F.3d 1218, 1222 (9th Cir. 1999) ("[O]ne who makes a representation
that is misleading because it is in the nature of a ‘half-truth’ assumes the
obligation to make a full and fair disclosure of the whole truth." (quoting
Gregory v. Novak, 855 P.2d 1142, 1144 (Or. Ct. App. 1993)).
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Our sister circuits have similarly recognized that although the exis-
tence of an independent disclosure duty "is relevant and an ingredi-
ent" in some fraud prosecutions, such a duty is "not an essential in all
such cases." United States v. Allen, 554 F.2d 398, 410 (10th Cir.
1977); see also United States v. Keplinger, 776 F.2d 678, 697-98 (7th
Cir. 1985) ("It requires no extended discussion of authority to demon-
strate that omissions or concealment of material information . . . can
constitute fraud cognizable under the mail fraud statute, without proof
of a duty to disclose the information pursuant to a specific statute or
regulation [or arising from a fiduciary relationship]."); see also
United States v. Townley, 665 F.2d 579, 585 (5th Cir. 1982)
("[S]tatements need not be false or fraudulent on their face, and the
accused need not misrepresent any fact, since all that is necessary is
that the scheme be reasonably calculated to deceive. . . .").
Of course, the "fraud statutes do not cover all behavior which
strays from the ideal," United States v. Brown, 79 F.3d 1550, 1562
(11th Cir. 1996), and "[n]ot all conduct that strikes a court as sharp
dealing or unethical conduct is a ‘scheme or artifice to defraud.’"
Reynolds v. East Dyer Dev. Co., 882 F.2d 1249, 1252 (7th Cir. 1989).
However, "active or elaborate steps to conceal" information can con-
stitute such a scheme. Id. at 1253; see also Keplinger, 776 F.2d at
697-98 ("Obviously, we do not imply that all or even most instances
of non-disclosure of information that someone might find relevant
come within the purview of the mail fraud statute; nevertheless, under
some circumstances concealment of material information is fraudu-
lent."). Concealment often is accompanied by an affirmative misrep-
resentation or a violation of an independent statutory or fiduciary
disclosure duty, but neither is "essential" for actionable fraud. Allen,
554 F.2d at 410. What is essential is proof of a "scheme or artifice
to defraud," which can be shown by deceptive acts or contrivances
intended to hide information, mislead, avoid suspicion, or avert fur-
ther inquiry into a material matter.
Applying this common-law understanding of fraudulent conceal-
ment, we agree with the government that Colton and Laskin’s course
of conduct reveals a scheme or artifice to defraud the RTC by actively
seeking ways to hide, mask, or divert attention away from the fact that
Laskin was the grantor of the Alexander Family Trust, to foster the
false impression that the RTC was dealing with an independent third
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party investor, and otherwise to mislead the RTC in negotiating the
sale of Colton and Laskin’s note at a substantial discount. Here, as in
United States v. Aubin, 87 F.3d 141, 146 (5th Cir. 1996), the "very
structure of the transaction would allow a reasonable inference of an
intent to defraud."
Aubin involved facts substantially similar to those in the present
case. Aubin used a land flip to obtain financing from a savings and
loan to purchase a $22 million horse farm. Aubin owned a controlling
interest not only in the "flipped" property but also in the entity that
sought the loan to buy the horse farm; he concealed his relationship
with both of these businesses from the lender. The Fifth Circuit had
no difficulty in affirming the bank and wire fraud convictions, finding
that "[t]he evidence clearly indicate[d] that the parties knew they had
to conceal the true nature of the transaction from federal regulators if
the scheme was to succeed." Id. at 147.
Similarly, in the case at hand, a jury reasonably could infer that
Colton and Laskin knew, based on the earlier transaction with Riggs
Bank, that the RTC would be reluctant to sell the note for less than
fifty percent of its value if it knew of Laskin’s relationship to the
Trust, and that Colton and Laskin thus had engaged in an elaborate
scheme to conceal that information. We reject Colton’s argument that
the government should have been required to prove that he had an
independent legal duty to disclose the information he concealed, for
the same reason that the Fifth Circuit rejected Aubin’s identical argu-
ment:
[T]he government’s case was not based on a mere failure to
disclose; instead, it was based on affirmative concealment
intended to defraud. The government produced evidence of
actions designed purposely to conceal the details of the
transaction and Aubin’s involvement. . . .
Id. at 148.
Contrary to Colton’s contentions, United States v. Chiarella, 445
U.S. 222 (1980), suggests no other rule. In Chiarella, a printer, who
had access to confidential documents concerning corporate takeover
bids, was convicted of securities fraud in violation of Section 10(b)
15 UNITED STATES v. COLTON

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of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b), for
purchasing stock in the target companies without disclosing the mate-
rial, nonpublic information. The Supreme Court reversed, distinguish-
ing the printer from a corporate insider whose fiduciary relationship
with the corporation’s stockholders gives rise to a duty to disclose.
Colton heavily relies on Chiarella; that reliance is misplaced.
First, critical to the Chiarella holding was the fact that it involved
charges of securities fraud. Given Congress’s comprehensive and
detailed regulation of the field of securities law, the Court was under-
standably reluctant to construe the securities fraud statute broadly:
Congress’ careful action in [the operation of securities mar-
kets] . . . contrasts, and is in some tension, with the broad
rule of liability we are asked to adopt in this case. . . . We
hold that a duty to disclose under § 10(b) does not arise
from the mere possession of nonpublic market information.
The contrary result is without support in the legislative his-
tory of § 10(b) and would be inconsistent with the careful
plan that Congress has enacted for regulation of the securi-
ties markets.
445 U.S. at 233-35; see also United States v. O’Hagan, 521 U.S. 642,
659 (1997) (holding that misappropriation theory is a basis for finding
criminal liability under § 10(b) in light of "the inhibiting impact on
market participation of trading on misappropriated information, and
the congressional purposes underlying § 10(b)"). The case at hand, of
course, involves not the securities fraud statute but the bank fraud
statute, which, as explained above, Congress intended to be construed
broadly. See S. Rep. No. 98-225, at 378, reprinted in 1984
U.S.C.C.A.N. at 3519.
Perhaps even more importantly, the underlying assertedly criminal
activity involved in Chiarella is far removed from that at issue here.
Chiarella involved mere silence, or nondisclosure, 445 U.S. at 232-
33, and in that context, the Court unexceptionally noted that "[a]t
common law, . . . one who fails to disclose material information prior
to the consummation of a transaction commits fraud only when he is
under a duty to do so." Id. at 227-28. It does not appear that any alle-
gation of active concealment was lodged against Chiarella. The
16 UNITED STATES v. COLTON

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instant case, on the other hand, involves not just concealment with
intent to defraud by producing false impressions, but a conspiracy to
perpetuate an elaborate and deceitful scheme reaping the conspirators
approximately $1.6 million.
Chiarella "addresses the obligations of one who seeks to benefit
personally from nonpublic corporate information. It does not apply to
those . . . who seek to benefit personally from an illegal, self-created
scheme." United States v. Russo, 74 F.3d 1383, 1391-92 (2d Cir.
1996) (distinguishing between market manipulation and insider trad-
ing, and rejecting defendants’ argument "that they had no duty to dis-
close their deceit to the market"). Colton and Laskin, in contrast to
Chiarella, did "seek to benefit personally" from "an illegal, self-
created scheme" to defraud the RTC. Their purpose to conceal,
deceive, and mislead was built into the business arrangement they
devised and executed. Even one of the cases upon which Colton relies
recognizes that in these circumstances, wholly "apart from a fiduciary
duty, . . . ‘a misleading omission[ ] is actionable as fraud’" because
"‘it is intended to induce a false belief and resulting action to the
advantage of the misleader and the disadvantage of the misled.’"
United States v. Cochran, 109 F.3d 660, 665 (10th Cir. 1997) (quot-
ing Emery v. American Gen. Fin., Inc., 71 F.3d 1343, 1348 (7th Cir.
1995)).
Colton’s reliance on the RTC’s failure to request additional details
about the Trust or New Homes is as misplaced as his reliance on
Chiarella. The susceptibility of the victim of the fraud, in this case
a financial institution, is irrelevant to the analysis: "If a scheme to
defraud has been or is intended to be devised, it makes no difference
whether the persons the schemers intended to defraud are gullible or
skeptical, dull or bright. These are criminal statutes, not tort con-
cepts." United States v. Brien, 617 F.2d 299, 311 (1st Cir. 1980);4 see
also Neder, 527 U.S. at 24-25 (holding that "reliance" and "damages"
4Moreover, as the legislative history of the bank fraud statute indicates,
Congress chose to extend special protection to financial institutions:
[T]he scope of present Federal statutes is not sufficient to assure
effective prosecution of the range of fraudulent crimes com-
monly committed today against federally controlled or insured
financial institutions. The legislative proposal . . . would meet
the need for a statutory basis for asserting Federal jurisdiction
over such offenses and would thereby better assure the integrity
of the Federal banking system.
S. Rep. No. 98-225, at 379, reprinted in 1984 U.S.C.C.A.N. at 3519.
17 UNITED STATES v. COLTON

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are not necessary elements of an offense under the federal fraud stat-
utes); United States v. Stewart, 872 F.2d 957, 960 (10th Cir. 1989)
(same); Speiser et al., supra, § 32.73 ("[T]he rule that fraud cannot be
predicated on a failure to disclose facts where . . . the truth may be
ascertained by the exercise of reasonable diligence does not justify a
resort to active deceit or fraud.").
We also find unpersuasive Colton’s contention that rejecting his
position would be to construe "the federal fraud statutes . . . as prohib-
iting conduct that is nowhere specified or defined in the law." Reply
Brief at 15. Our holding today imposes no "unspecified affirmative
duties of disclosure," Brief of Appellant at 26, nor prohibits "unde-
fined activities," Chiarella, 445 U.S. at 235 n.20, that would raise
questions about fair notice for criminal defendants. Rather, our hold-
ing recognizes and adheres to the congressional intent and established
precedent that the language of the bank fraud statute be broadly con-
strued so as to reach anyone engaged in a scheme or artifice to
defraud, including a scheme to actively conceal material information
through deceptive conduct, with the intent to mislead and suppress the
truth, even in the absence of an independent legal duty to disclose
such information.5
The government presented ample evidence for a reasonable jury to
find Colton guilty of conspiring to engage in a scheme or artifice to
defraud the RTC. The jury could have found that Colton and Laskin,
as equal partners, conferred on and agreed to all important decisions
regarding their joint real estate investments. When the real estate
loans guaranteed by Colton and Laskin began to go sour, Laskin
funded an irrevocable family trust, in part to create a vehicle to pre-
serve the partners’ interests in their investments. In the next few
months, as financial difficulties worsened, Laskin arranged for the
Trust to operate under a new name and removed his long-time lawyer
as trustee so as to dissociate himself with the Trust. In so doing, he
and Colton were able to free themselves of their guarantor responsi-
bilities to their lenders by having the Trust purchase their notes at a
5It is important to bear in mind that the government must also prove
a defendant’s intent to defraud and the materiality of the information
concealed, i.e., what a reasonable financial institution would want to
know in negotiating a particular transaction. See infra n.6.
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cut rate without the knowledge of any of the lenders. After Colton and
Laskin arranged to have the Trust, represented by former Governor
Mandel, purchase their Riggs note at a substantial discount, Colton
suggested that they again use Trust funds and again enlist Mandel to
act as an intermediary to purchase their RTC note. A jury could rea-
sonably infer that Colton and Laskin hired Mandel to represent the
Trust in order to create the false impression that the Trust was an
independent third party investor (or at least deflect any suspicion that
it was not).
The jury could further have found that, based on the previous trans-
action with Riggs, Colton and Laskin knew that the RTC might seek
additional information about the Trust, including the identities of its
grantor and beneficiaries, before agreeing to sell their note. Accord-
ingly, they provided Mandel with little information about the Trust.
Moreover, to avoid questions as to the Trust and its source of funds,
Colton and Laskin obtained the services of yet another attorney, Stan-
ley Jacobs, and requested that he form a corporation to buy the note.
After Jacobs agreed to use a shell corporation, New Homes, Inc., for
the transaction, Colton and Laskin purposefully did not provide
Jacobs with any details about the transaction or about the source of
the financing for the purchase of the note. Although Mandel testified
that the RTC knew that the Trust "was involved in the sale," the jury
could have concluded based on Laskin’s testimony and other evi-
dence, that the RTC did not know that the Trust funded the purchase
and that Colton and Laskin used New Homes to conceal Laskin’s
relationship with the Trust and to suggest falsely to the RTC that it
was dealing with an independent third party purchaser. The jury could
have found that Colton and Laskin attempted to prevent further
inquiry into a matter that they knew the RTC would deem material
in its decision to sell the loan and to avoid a potential express misrep-
resentation in signing the Loan Sale Agreement.6
6We recognize that Laskin (and Colton) did not have legal control over
the Trust’s assets, that Mandel gave the RTC names of persons to contact
for more information about the Trust and about New Homes, and that the
RTC did not seek additional information. Moreover, the government did
not elicit testimony conclusive as to whether the RTC would have sold
the note to New Homes for $1.5 million if it had known that the Trust
for which Laskin was the grantor funded the purchase. But these consid-
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In sum, to prove conspiracy to commit bank fraud, the government
need not demonstrate that defendants who successfully and intention-
ally engaged in a fraudulent scheme to actively conceal material facts
from a financial institution had an independent duty to disclose such
facts. Rather, evidence of such a scheme in and of itself suffices. In
this case the government clearly offered sufficient evidence that Col-
ton and Laskin conspired in a scheme or artifice to suppress material
facts and to foster a misleading or false impression regarding the
Alexander Family Trust in order to defraud a financial institution and
obtain for themselves a $1.6 million windfall. Therefore, we affirm
Colton’s conspiracy conviction.7
II.
Having affirmed Colton’s conviction for conspiracy to commit
bank fraud, we now turn to his convictions for the substantive crime
of bank fraud, all of which are based on a different transaction.
A.
In 1989, another Colton and Laskin entity, Marlborough C.L., Inc.,
obtained a $20 million loan from Second National FSB to acquire and
develop 135 acres located near a planned metro station in Prince
George’s County, Maryland (the Riverside property). Marlborough
secured this loan with a promissory note, which was to mature in May
1992, and a security agreement and deed of trust on the property; Col-
ton and Laskin personally guaranteed the note. The loan agreement
included a "partial release" clause to ensure that Second National
would receive a percentage of the net proceeds for each commercial
erations relate either to reliance and damages—which are not required
elements for an offense under § 1344—or to intent and materiality, issues
on which the jury was properly instructed, and which Colton does not
challenge on appeal.
7For the same reasons, we reject Colton’s additional argument that the
district court erred in refusing to instruct the jury that absent "an affirma-
tive misrepresentation, the federal offense of bank fraud requires proof
of the violation of some independent legal duty." Brief of Appellant at
47.
20 UNITED STATES v. COLTON

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parcel of the Riverside property sold as payment toward the balance
of the loan:
Lender agrees to grant such partial releases [of a portion of
the Riverside property] upon payment of 85% of the net pro-
ceeds of sale of the parcel of the Property to be released, or
upon payment of such amount as is computed by multiply-
ing 115% of 80% of the value associated with the parcel
being released, whichever amount is greater.
Access and road improvement problems frustrated effective com-
mercial development of the property. To alieviate these problems,
Colton and Laskin pursued a number of options prior to defaulting on
the loan, including negotiations with the University of Maryland.
These negotiations involved the sale of a parcel of the Riverside prop-
erty to the American Center for Physics (ACP), as well as land
exchange proposals that centered on a university-owned, 19-acre tract
(the University tract) adjacent to the Riverside property that Colton
and Laskin, through Marlborough, had previously contracted to pur-
chase. The negotiations first led to a Land Exchange Agreement, exe-
cuted on May 21, 1991, in which Colton and Laskin agreed, on behalf
of Marlborough, to swap 10 acres of developed Riverside property for
14.2 undeveloped acres of the University tract. In that Agreement,
both parties represented that they would have "full and clear title to
the land deeded" at the time the deeds were to be granted.
At some point during the next year, Prince George’s County con-
tacted Marlborough, as contract purchaser of a portion of the Univer-
sity tract, to express the County’s interest in acquiring 6.4 acres of
that tract in order to construct a replacement parking lot for an indus-
trial facility. Marlborough, the County, and the University negotiated
the following three-way land swap. Colton and Laskin’s Marlborough
corporation would transfer to the University 13.2 acres of the River-
side property, which the University intended to develop for housing.
The University would transfer to Marlborough an 8.8-acre portion of
the University tract, which provided better road access to the River-
side property. The University and Marlborough (as contract pur-
chaser) would then transfer to the County approximately 6.4 acres of
the University tract; and the County would pay Marlborough $2.1
21 UNITED STATES v. COLTON

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million to give up its rights to that parcel, conditioned upon Marlbor-
ough’s agreement to complete certain road improvements.
By June 1992, the Riverside loan was in default; Marlborough (and
Colton and Laskin, as guarantors) owed Second National more than
$21.75 million in principal and unpaid interest. As the ACP deal
reached fruition, Colton and Laskin’s attorney, Ellis Koch, prepared
the various deeds related to the land swap arrangement. In Colton and
Laskin’s discussions with Second National, they presented not only
the ACP deal but also the land exchange proposal with the University;
they represented the latter to the bank as a swap of 13.2 acres of Riv-
erside property in exchange for 8.8 acres of University property. Col-
ton and Laskin never told Second National about the anticipated $2.1
million payment to Marlborough from the County in exchange for the
6.4-acre parcel of University property, even though Marlborough
acquired the 6.4 acres only by giving up property in which the bank
had a security interest. After conducting its own independent apprais-
als and concluding that the exchange proposed by Colton and Laskin
increased the value of its overall collateral in the Riverside property
—primarily because it provided essential northern access—Second
National agreed to accept the 8.8-acre parcel of University property
as substitute collateral for the 13.2 acres of Riverside property.
On June 29, 1992, Second National executed a Modification and
Forbearance Agreement with Marlborough, Colton, and Laskin that
acknowledged the default status of the loan. The Agreement noticed
Second National’s obligation to grant a partial release of the Riverside
property to be sold to the ACP and specified the use of the settlement
proceeds from the ACP deal. The Agreement also provided:
[T]he Bank will cause the release from the lien of the Deed
of Trust of that land which is to be contemporaneously
exchanged with the University of Maryland in exchange for
the land received from the University of Maryland adjacent
to the College Park Metro site. . . . Saving and excepting
that portion of the lands granted to Prince George’s County
and/or any other public agency for roads and public
improvements. Said partial release shall be contemporane-
ous with the inclusion of the newly acquired land as part of
22 UNITED STATES v. COLTON

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the property encumbered by the Deed of Trust, free and
clear of any other liens . . . .
Four months later, on October 28, 1992, the University deeded 8.8
acres to Marlborough, and Second National executed a Deed of Trust
Modification Agreement and a Partial Deed of Release of the 13.2
acres of Riverside property in exchange for the 8.8 acres acquired
from the University to be encumbered by the Deed of Trust.
A week earlier, on October 19, 1992, Marlborough had entered into
an Agreement with Prince George’s County that included, among
other obligations, the County’s $2.1 million payment to Marlborough
for its rights to the 6.4-acre parcel of the University property. On
October 28, 1992, the University, and Marlborough as contract pur-
chaser, deeded this 6.4-acre parcel to the County to complete the
transaction.
B.
The government contends that Colton and Laskin committed bank
fraud by engaging in a scheme to defraud Second National "of the full
value of its security interest in the land that it released from its deed
of trust" by fraudulently concealing the $2.1 million payment Colton
and Laskin received from the County. Brief of Appellee at 19. Colton
maintains that he made no affirmative misrepresentations to Second
National and had no duty to disclose any of the details surrounding
the transfer of property to the County.8 He contends that Second
8Laskin testified that the alleged scheme included "telling" Second
National that a portion of the University tract was to be "dedicated" to
the County. But another government witness, a Second National loan
officer, testified that no affirmative misrepresentation or misleading
statements were made to the bank. Colton asserts that after this testimony
the government conceded in the trial court that he made no affirmative
misrepresentations with respect to the Second National transaction.
Although we are not directed to any record support for this asserted con-
cession, for purposes of this discussion, we assume the government did
so concede. We note that although the record contains correspondence
regarding the need to dedicate land to the County for public roadway
development, the land referred to in those documents is located within
the 135-acre Riverside tract and does not relate to any portion of the Uni-
versity tract. The "saving and excepting" clause of the Modification and
Forbearance Agreement quoted in text above likely refers to these grants
within the Riverside tract.
23 UNITED STATES v. COLTON

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National "agreed to substitute security on its loan agreement because
the proposed substitution was a very good deal for the bank," and the
fact that Second National was prevented "from playing a bargaining
chip in these negotiations" does not constitute bank fraud. Brief of
Appellant at 46.
Thus, once again Colton’s principal claim is that absent evidence
of affirmative misrepresentations or a disclosure duty, he cannot be
found to have "knowingly execute[d], or attempt[ed] to execute, a
scheme or artifice . . . to defraud a financial institution," in violation
of 18 U.S.C. § 1344. For the reasons set forth above, we reject this
argument. The government need not offer evidence of misrepresenta-
tions or a disclosure duty to prove a violation of § 1344. Rather, a
scheme to deceive a financial institution can be proven by evidence
of active concealment of material information from the financial insti-
tution. The government certainly offered such evidence with respect
to the Second National transaction. A jury could reasonably find that
Colton and Laskin obtained a $20 million loan from Second National
to purchase the Riverside property and secured that loan by a deed of
trust in which they agreed to provide Second National a percentage
of the "net proceeds" realized from the sale of each parcel of the Riv-
erside property. A jury could further find that after Colton and Laskin
had defaulted on the $20 million loan, they arranged a land swap of
13.2 acres of the Riverside property for part of the University tract,
and concealed from Second National the fact that a portion of the
acreage received in that swap would be deeded to the County in
exchange for the payment of $2.1 million to Colton and Laskin. A
jury could thus conclude that Colton and Laskin knowingly executed
a scheme to defraud Second National by actively concealing from the
bank the extent of the "net proceeds," namely the $2.1 million pay-
ment.
We recognize that to prove bank fraud, another essential element
of the crime must be satisfied: such a scheme or artifice must be one
designed to deprive a financial institution of a property interest. See
McNally, 483 U.S. at 358 (quoting Hammerschmidt, 265 U.S. at 188,
to hold that "the words ‘to defraud’ [in the mail fraud statute] com-
monly refer ‘to wronging one in his property rights by dishonest
methods or schemes’"); see also Carpenter v. United States, 484 U.S.
19, 25 (1987) (clarifying that "McNally did not limit the scope of [the
24 UNITED STATES v. COLTON

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mail fraud statute] to tangible as distinguished from intangible prop-
erty rights").9 Colton contends that Second National "did not have any
financial interest in the University of Maryland property," and
explains that "the property ceded to the County was not Riverside
property in which Second National bank had any legal interest; it
belonged exclusively to the University of Maryland, which trans-
ferred it directly to the County." Brief of Appellant at 44 & n.17.
What Colton fails to acknowledge is that the "property ceded to the
County" had been swapped for the Riverside property, in which the
bank did have a security interest. Indisputably, the 6.4 acres of Uni-
versity property eventually conveyed to the County was a part of the
University tract that was swapped for the 13.2-acre parcel of River-
side property. Compare Gov. Ex. 92, Exhibit B (description of prop-
erty) with Exhibit A to Gov. Exs. 106-07, 110-111 (description of
properties) (Four deeds transferring land from University to effectuate
the land exchange agreement). See Tr. Trans. at 1071 (Oct. 21, 1998)
(testimony of Susan Beth Dubin, Esq., counsel for University of
Maryland in the land swap) (stating that the 6.4-acre parcel conveyed
to the County was "part of the University’s property that we were
exchanging for the Riverside property"); id. at 1072-78 (discussing
the land exchange agreement). Because the University’s 6.4-acre tract
was in fact conveyed in exchange for the Riverside property (albeit
the conveyance was to the County, not to Marlborough), the bank was
entitled by operation of the Loan Agreement to a percentage of the
"proceeds" from the $2.1 million sale of those 6.4 acres.10
9As mentioned in Part I, Congress expanded the scope of the federal
fraud statutes in response to McNally in order to protect against the
deprivation not only of property rights but of "the intangible right of hon-
est services" as well, see 18 U.S.C. § 1346, a right not implicated in the
instant case.
10Colton notes that a Second National loan officer testified at trial that
"[t]he release provision was really designed for a true cash sale . . . . It
wasn’t made with the intent of a land swap." This may be so, but the par-
ties clearly treated the release provision as applying to land swaps as is
demonstrated not only by trial testimony, but also by the Modification
and Forbearance Agreement. Furthermore, not even Colton contends that
"proceeds" are confined to cash proceeds, perhaps because the Supreme
Court long ago rejected such a theory. See Phelps v. Harris, 101 U.S.
25 UNITED STATES v. COLTON

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True, Second National’s property interest in the "proceeds" from its
secured property was not as direct as the RTC’s interest in its $3.1
million loan. But, like the term "defraud," the scope of property inter-
ests protected by the bank fraud statute is defined broadly. See, e.g.,
United States v. Mancuso, 42 F.3d 836, 845 (4th Cir. 1994) (citing
McNally, 483 U.S. at 356). The first clause of the statute "allows con-
viction for a defrauding of any property interest." Id. (finding a prop-
erty interest in an assignment of rights giving a financial institution
a security interest in the proceeds of certain contracts). Moreover, the
"scheme to defraud" clause of the bank fraud statute requires only that
a financial institution be exposed to "an actual or potential risk of
loss." United States v. Wilkinson, 137 F.3d 214, 232 (4th Cir. 1998)
(citing United States v. Jacobs, 117 F.3d 82, 93 (2d Cir. 1997)). Col-
ton and Laskin’s scheme to defraud and actively conceal material
information from Second National certainly caused the bank a "risk
of loss" of a genuine "property interest."
III.
Colton maintains that even if we should conclude, as we have, that
the government produced sufficient evidence to support his conspir-
acy and substantive bank fraud convictions, the latter should nonethe-
less be reversed and remanded for a new trial. He contends that the
four bank fraud counts, Counts II through V, charge separate acts in
370, 380 (1879) (holding land received from disposition of real estate
falls within the definition of proceeds noting "[p]roceeds are not neces-
sarily money"). We recognize that after full and proper disclosure the
bank might have agreed that Colton and Laskin’s willingness to release
their contractual rights and complete certain road improvements on the
6.4 acres conveyed to the County merited some extra compensation to
them. But Colton does not suggest, and nothing in the record indicates,
that Second National agreed that $2.1 million was appropriate extra com-
pensation for Colton and Laskin or that the bank was willing to forego
any claim to these "proceeds" from the Riverside property. The fact that
Second National concluded that receipt of the 8.8-acre tract of University
property in exchange for the 13.2 acres of Riverside property would con-
stitute in Colton’s words a "very good deal," certainly does not constitute
such evidence; it only demonstrates that the bank underestimated the
value of the 13.2-acre Riverside tract.
26 UNITED STATES v. COLTON

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furtherance of a single overall scheme— defrauding Second National
by arranging the land swap without disclosing the $2.1 million pay-
ment. In other words, Colton maintains that the substantive bank
fraud counts are multiplicious and argues that this multiplicity
requires reversal of all four counts.
Multiplicity involves "charging a single offense in more than one
count in an indictment." Mancuso, 42 F.3d at 847 n.11 (internal quo-
tation marks omitted). The multiplicity doctrine finds its roots in the
Fifth Amendment’s Due Process Clause, which "assure[es] that the
court does not exceed its legislative authorization by imposing multi-
ple punishments for the same offense." Brown v. Ohio, 432 U.S. 161,
165 (1977). Building on this principle, Colton maintains that "simul-
taneous trial" on the assertedly multiplicious "Counts II-V violated"
his "due process and double jeopardy rights" and so requires reversal
of those counts and remand for a new trial. Brief of Appellant at 49.
Section 1341 authorizes prosecution for each execution of a
scheme to defraud a financial institution, not each act in furtherance
of such a scheme. See, e.g., United States v. Longfellow, 43 F.3d 318,
322-25 (7th Cir. 1994); United States v. Molinaro, 11 F.3d 853, 859-
60 (9th Cir. 1993); United States v. Lilly, 983 F.2d 300, 303-04 (1st
Cir. 1992); see also United States v. Lemons, 941 F.2d 309, 318 (5th
Cir. 1991). A single scheme can, however, "be executed a number of
times." Longfellow, 43 F.3d at 323 (citing United States v. Hord, 6
F.3d 276, 282 (5th Cir. 1993); United States v. Hammen, 977 F.2d
379, 382-83 (7th Cir. 1992); Lemons, 941 F.2d at 318.) Here, the gov-
ernment charged Colton with four acts in furtherance of the same
scheme, namely the scheme to defraud Second National outlined
above. Count II charged that Colton executed the scheme by entering
into the agreement with the County whereby it paid him and Laskin
$2.1 million for "approximately six acres of land"; Count III charged
that Colton executed this scheme by representing to the bank that a
parcel of property would be conveyed to the County without compen-
sation; Count IV charged that Colton executed the scheme by causing
the relevant deeds to be recorded; and Count V charged that Colton
executed the scheme by causing the bank to "execute a Modification
and Forbearance Agreement in which Second National released its
lien on certain property."
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Before beginning our multiplicity analysis, we note that although
Colton maintains that all four of these counts are multiplicious, only
two—Counts III and V—are actually at issue. The jury acquitted Col-
ton on Count IV. In addition, Colton moved to dismiss Counts III
through V as multiplicious, but failed to move to dismiss Count II.
Failure to object to a count on grounds of multiplicity prior to trial
generally waives that objection. See Fed. R. Crim. P. 12(f). Relief
from the waiver of an objection is appropriate only if the moving
party demonstrates cause for the failure to object and actual prejudice
resulting from the defect. See Wainwright v. Sykes, 433 U.S. 72, 84
(1977). Colton has failed to make such a showing here and thus has
waived a multiplicity claim with regard to Count II.
Turning then to the question of whether Counts III and V are multi-
plicious, we must determine whether each count charges a separate
execution of a scheme to defraud or instead simply alleges an act in
furtherance of the scheme. This can present a daunting task. Some
principles, however, guide our analysis.
When an act is "chronologically and substantively independent"
from the other acts charged as the scheme, it constitutes an execution.
United States v. Harris, 79 F.3d 223, 232 (2d Cir. 1996); United
States v. Wall, 37 F.3d 1443, 1447 (10th Cir. 1994); Molinaro, 11
F.3d at 860; United States v. Allender, 62 F.3d 909, 912 (7th Cir.
1995) ("[C]ourts have consistently held that a separate execution must
be chronologically and substantively independent."). For this reason,
courts have found each in a series of "separate diversions of funds,"
Mancuso, 42 F.3d at 847, separate loans, Allender, 62 F.3d at 913,
and separate extensions of a loan agreement, Harris, 79 F.3d at 232,
to be a separate execution of a bank fraud scheme properly chargeable
in a separate count of the indictment, even though each was a part of
a single scheme to defraud a single financial institution.
In contrast, evidence that acts are "planned or contemplated
together" may indicate that they are dependent on one another and
cannot be separately charged. Allender, 62 F.3d at 913; see Longfel-
low, 43 F.3d at 325. Thus, a series of transactions to procure $212,000
from a financial institution was held to be "part of but one perfor-
mance, one completion," and, therefore, "one execution," thereby
making separate counts multiplicious. Lemons, 941 F.2d at 318. Simi-
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larly, although a scheme to defraud involved two loans, it was held
only to have resulted in a single execution because the two loans
"were integrally related; one could not have succeeded without the
other"; hence, the indictment charging procurement of each loan as a
separate execution was found to be multiplicious. United States v.
Heath, 970 F.2d 1397, 1402 (5th Cir. 1992).
In the case at hand, it is clear that acts charged in the indictment
as separate executions of the Second National scheme were indeed
"planned or contemplated" together. Allender, 62 F.3d at 913. Each
part of this scheme was carefully crafted and performed in a particular
sequence in order to divert a single payment to Colton and Laskin.
Each of the charged "executions" was in fact part of but "one perfor-
mance, one completion, one execution." Lemons, 941 F.2d at 318.
Unquestionably, all of the charged "executions" were "integrally
related." Heath, 970 F.2d at 1402. Indeed, without Colton and
Laskin’s agreement to transfer the 6.4-acre tract to the County for
$2.1 million (Count II), neither the act charged as an execution in
Count III (misrepresentation that the parcel would be conveyed to the
County without compensation) nor that charged as an execution in
Count V (causing the bank to execute the release) would have vio-
lated § 1344. Accordingly, we believe it clear that Counts III and V
are, as Colton maintains, multiplicious.
This does not mean, however, that the multiplicious indictment
placed Colton in double jeopardy, thereby requiring a new trial on the
Second National transaction. Assuming that Colton’s pretrial motion
to dismiss Counts III-V on multiplicity grounds preserved his appel-
late, multiplicity-based double jeopardy argument, cf. United States v.
Jarvis, 7 F.3d 404, 409 (4th Cir. 1993), the argument is nonetheless
meritless. First, the principal danger created by multiplicity is that a
defendant will receive multiple punishments for a single offense. See
1A Charles Alan Wright, Federal Practice and Procedure § 145, at 87,
(3d ed. 1999). That has not occurred here. Pursuant to the Sentencing
Guidelines, Colton was given concurrent sentences for the three Sec-
ond National counts of which he was convicted. See U.S.S.G.
§ 5G1.1(c). The only "additional punishment" he received was two
additional special assessments, which we can easily remedy by
remanding this case to the district court with instructions to vacate the
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convictions on Counts III and V and resentence accordingly. See Ball
v. United States, 470 U.S. 856, 864-65 (1985).
Colton concedes that this is the usual remedy but nonetheless main-
tains that he was possibly prejudiced because the jury was given "four
distinct chances to vote for conviction on what should have been a
single offense." Brief of Appellant at 58; cf. United States v. Dunford,
148 F.3d 385, 390 n.1 (4th Cir. 1998). We perceive no prejudice
because exactly the same evidence was offered to prove all four
counts. Thus, the jury would have learned of the same evidence even
if only a single charge had been brought. See United States v. Clark,
184 F.2d 858, 872 (D.C. Cir. 1999). Indeed, Count II sets forth the
scheme to defraud Second National in twenty-two separate para-
graphs, all of which were re-alleged by reference in Counts III, IV,
and V; the counts differed only in what part of the scheme was
charged as an execution.11
Accordingly, we affirm Colton’s conviction under Count II and
remand his convictions under Counts III and IV with instructions to
vacate them and resentence accordingly.
IV.
Finally, we address the government’s cross-appeal with respect to
the Second National transaction. The government maintains that the
district court erred in refusing to enhance Colton’s sentence by four
levels pursuant to U.S.S.G. § 2F1.1(b)(6)(B) (now renumbered as
U.S.S.G. § 2F1.1(b)(7)(B)), which provides for an enhancement if
"the defendant derived more than $1,000,000 in gross receipts from
the offense." When considering a district court’s application of the
Sentencing Guidelines, we review factual findings for clear error and
legal interpretations de novo. See United States v. Blake, 81 F.3d 498,
503 (4th Cir. 1996).
11Nor, contrary to Colton’s suggestion, does the fact that the multiple
counts here allege violations under the same, rather than different, stat-
utes require a different result. See, e.g., United States v. Langford, 946
F.2d 798 (11th Cir. 1991).
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The record indicates, and the parties acknowledge, that Prince
George’s County made out a check payable to "Marlboro [sic] Colton
Laskin" in the amount of $2,052,000, which was then deposited into
Marlborough’s corporate account. From these funds, Colton and
Laskin each received $300,000 individually; the remainder was used
to satisfy corporate obligations of Marlborough and Colton and
Laskin’s other business ventures. Because only $300,000 was "kicked
out" to Colton, and because the rest of the proceeds went to Laskin
or Marlborough, an "independent entity," the district judge found that
Colton did not "derive more than $1,000,000 in gross receipts." As a
result, the district court refused to apply the enhancement.
The government asserts that this constituted clear error, because
Colton owned fifty percent of Marlborough and, thus, "indirectly"
received half of the more than $2,000,000 from the fraud. An applica-
tion note to the guideline explains that: "‘Gross receipts from the
offense’ includes all property, real or personal or, tangible or intangi-
ble, which is obtained directly or indirectly as a result of such
offense." U.S.S.G. § 2F1.1, comment. (n.18) (emphasis added). The
government relies on several cases interpreting the guideline and
application note in which a defendant received the enhancement even
though the proceeds of a bank fraud went directly to corporate entities
and not to the individual defendants. See, e.g., United States v. Stolee,
172 F.3d 630, 631 (8th Cir. 1999); United States v. Bennett, 161 F.3d
171, 193 (3d Cir. 1998); United States v. Kohli, 110 F.3d 1475, 1477-
78 (9th Cir. 1997); United States v. Maack, 59 F. Supp. 2d 448, 450
(E.D. Pa. 1999).
The government’s reliance on these decisions, however, is unavail-
ing. Unlike the instant case, each of the above decisions involved a
defendant that had a controlling stake in—if not complete ownership
of—the companies receiving the illegally obtained funds. See, e.g.,
Stolee, 172 F.3d at 631 (affirming enhancement because, as the sole
owner and president of the company, the defendant "arranged for the
funds to be deposited into an account he controlled, and he directed
how the funds were used" and therefore "indirectly benefitted from
the illegally derived funds"); Bennett, 161 F.3d at 193 (affirming
enhancement because defendant "possessed a 100 percent interest" in
the company); Kohli, 110 F.3d at 1477-78 (finding proceeds in excess
of $1,000,000 were distributed directly to the defendant or to an entity
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controlled by him); Maack, 59 F. Supp. 2d at 450 (applying enhance-
ment because "[a]s there are no other participants, no one besides
[defendant] can be attributed with the money," and defendant was
president of the company in which he owned a controlling seventy-
five percent interest). Thus, those defendants controlled how, and for
whom, the money was used. Such control, the courts found, allowed
the defendants to indirectly benefit from the illegal proceeds.
In contrast, Colton owned only a fifty percent—i.e., non-
controlling—interest in Marlborough. Colton’s fifty percent stake in
Marlborough did not give him "control" of, or rights to, fifty percent
of the proceeds from the Prince George’s County transaction.12 A con-
trary reading would conflict with black-letter corporate law. See 1
Fletcher Cyclopedia of Private Corporations § 31 (rev. ed.
1995)("The property of the corporation is its property, and not that of
the shareholders . . . . [W]hich do not carry the capital property or any
profits until they have been declared and vested as dividends.")
(emphasis added). Colton could not unilaterally use the funds for his
individual purposes, and nothing in the record indicates that he indi-
vidually benefitted by more than the $300,000 "kicked out" to him.
The government failed to demonstrate that Colton "derived more
than $1,000,000 in gross receipts from the offense." Accordingly, we
affirm the district court’s refusal to apply the § 2F1.1(b)(6)(B)
enhancement.
V.
To summarize, with respect to Colton’s appeal, we affirm his con-
victions under Counts I and II; we remand the case so that the district
court can vacate his convictions under Counts III and V and
12Even if Colton ordinarily shared fifty percent of Marlborough’s
"profits," the record does not indicate that more than $2,000,000 of the
Prince George’s payment constituted "profits." Indeed, the record shows
that most of that money was used to pay corporate obligations, and thus
were not profits in any sense of the word.
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resentence. With respect to the government’s cross-appeal, we affirm
the district court’s refusal to enhance under § 2F1.1(b)(6)(B).
No. 99-4142 - AFFIRMED IN PART AND REMANDED IN PART
No. 99-4185 - AFFIRMED
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