MEMORANDUM DECISION AND ORDER DENYING MOTION TO STRIKE OR DISMISS COUNTS 46-54

DAVID NUFFER, District Judge.

Defendant Ryan Riddle moves to strike or dismiss counts 46-541 of the third superseding indictment.2 Defendants Bryce Payne,3 Scott Leavitt,4 and Jeremy Johnson5 joined in the Motion.

The United States filed a response,6 and Defendant Riddle filed a reply.7

Defendants Riddle, Payne, Leavitt and Johnson (Defendants) move to dismiss Counts 46-54, charging violations 18 U.S.C. § 1005, on the grounds that they are not bank insiders and that 18 U.S.C. § 1005 applies only to "`an officer, director, agent or employee of any Federal Reserve bank, member bank, depository institution holding company, national bank, insured bank.'"8 For the reasons discussed below, the motion is DENIED.

DISCUSSION

Defendants are charged under 18 U.S.C. § 1005, which reads:

In counts 46-5410 of the Third Superseding Indictment, the grand jury charged Defendants with violating paragraph four of 18 U.S.C. § 1005. The Third Superseding Indictment reads:

Defendants rely on the reasoning of United States v. Rubin/Chambers, Dunhill Insurance Services (Rubin),12 to argue that counts 46-53 should be dismissed because U.S.C. § 1005 applies only to bank insiders. Finding that the first paragraph of the statute specifically stated it applied to bank insiders, Rubin analyzed earlier court decisions and found paragraphs two and three also applied to bank insiders.13 These earlier decisions reviewed the statutory history, and concluded that the first three paragraphs of Section 1005 originated from 12 U.S.C. §§ 592, 597 (1940). "The substantive conduct proscribed by all three paragraphs was contained originally in a single paragraph that began with language limiting the provision expressly to `[a]ny officer, director, agent, or employee of any Federal Reserve bank, or of any member bank.'"14 Later, during the 1948 revision of the criminal code, "Congress divided the single paragraph into three separate paragraphs, after which the limiting language appeared in Paragraph One only."15 Rubin adopted the analysis of Edwards and Barel in concluding that "`it is clear that all three of the pre-1948 revision statute's prohibitions, currently set forth in separate paragraphs in 18 U.S.C. § 1005, applied only to officer[s], director[s], agent[s], or employee[s] of protected banks.'"16

Rubin also recognized that the legislative history of paragraph four in Section 1005 was vastly different from the first three paragraphs because it was not part of the original statute codified into the criminal code in 1948. Congress added paragraph four to Section 1005 as part of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)17 in response to the savings and loan crisis in the 1980s.18 Even though Barel was decided after paragraph four was added to the statute, Rubin acknowledged that it could not rely on the holding in Barel to determine the scope of paragraph four because the earlier case "did not specifically address the independent origin of Paragraph Four, nor did the sufficiency of the indictment in Barel depend upon the scope of the new paragraph."19

In United States v. Van Brocklin,20 the Eighth Circuit was the first court to directly address the scope of paragraph four. The Van Brocklin court determined that because of paragraph four's independent origins under FIRREA, "[t]he legislative history of the other provisions of § 1005 upon which Edwards and Barel relied is simply not applicable to paragraph four."21 The Eighth Circuit observed that "FIRREA's legislative history notes the addition of paragraph four, but in no way indicates that liability under that provision is limited to bank insiders."22 The Van Brocklin court held:

Despite this clear holding after a direct analysis of paragraph four, the Rubin court declined to follow Van Brocklin and found the broad interpretation of paragraph four unjustified.24 Instead Rubin determined that "even if Paragraph Four has legislative origins different from those of the paragraphs that precede it, that does not mean that Paragraph Four should be construed entirely without reference to the remainder of the statute in which it resides."25 Rubin found that importing the bank insider restriction into paragraphs two and three of Section 1005, as Barel and Edwards had done, was "persuasive and based on a sound application of traditional principles of statutory construction."26 Consistently, Rubin applied the bank insider restriction to paragraph four, and held "that the scope of Paragraph Four should be limited to officers, directors, agents or employees of the specified banks."27

Defendants urge that Rubin should be applied in this case to dismiss the counts against them charged under paragraph four of Section 1005 because they are not bank insiders. Defendants' reliance on Rubin ignores the analysis in United States v. Wells Fargo Bank, N.A.,28 a more recent opinion issued by a judge in the same district as Rubin, but disagreeing with Rubin. Defendants also side-step29 the decision in United States v. Christensen, a case in this district which determined that paragraph four of Section 1005 is not limited to bank insiders.30

Wells Fargo is the most recent decision to analyze the application of paragraph four in Section 1005. Wells Fargo recognized that the few courts that have addressed the issue of whether liability under paragraph four of Section 1005 is limited to bank insiders were divided on the issue.31 Wells Fargo found that paragraph four in Section 1005 was not limited to bank insiders by the plain language of the statute.32 And Congress had not limited the term "whoever" to bank insiders when adding paragraph four to Section 1005, as part of FIRREA, as it did in elsewhere in FIRREA.33 Wells Fargo concluded that there was "no basis to deviate from the plain language of paragraph four"34 and found that it was not limited to bank insiders, but instead applied to any person or entity.

The reasoning of Wells Fargo, Van Brocklin, and Christensen is compelling. Based on the vastly different legislative history of paragraph four, and its addition to Section 1005 under FIRREA almost fifty years after the first three paragraphs, there is no reason to import the bank insiders restriction into paragraph four. The plain language of paragraph four of the statute does not contain any language limiting its application to bank insiders. Accordingly, any individual or entity "with intent to defraud the United States . . . or a financial institution . . . participates or shares in or receives (directly or indirectly) any money, profit, property, or benefits through any transaction, loan, commission, contract, or any other act of any such financial institution"35 may be prosecuted under paragraph four of Section 1005. The charges brought under that paragraph against defendants in this case will not be dismissed.

ORDER

IT IS HEREBY ORDERED that the Motion to Strike or Dismiss Counts 46-54 is DENIED.