FILED
                                                            United States Court of Appeals
                                                                    Tenth Circuit
                    UNITED STATES COURT OF APPEALS
                                                                 September 3, 2009
                                 TENTH CIRCUIT                  Elisabeth A. Shumaker
                                                                    Clerk of Court


 UNITED STATES OF AMERICA,

               Plaintiff-Appellee,                       No. 08-6184
          v.                                             (W.D. Okla.)
 DANIEL J. BOWLING,                            (D.C. No. 5:07-CR-00196-C-1)

               Defendant-Appellant.


                           ORDER AND JUDGMENT *


Before TACHA, McWILLIAMS, and TYMKOVICH, Circuit Judges.



      Daniel J. Bowling was convicted of bank fraud stemming from his

Oklahoma cattle ranching operations. The charges arose after he obtained a

consolidated loan—secured by his cattle, property, and equipment—from Farmers

Exchange Bank (FEB). Less than six months later, both the money and the cattle

were gone.

      At trial, the government argued that Bowling’s conduct—such as his cattle

sales in the name of his mother and son, his failure to make any payments on his


      *
         This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
consolidated loan (or other indebtedness to FEB), and his failure to deposit the

proceeds from cattle sales with FEB—was evidence of his intent to defraud FEB.

Bowling, on the other hand, elicited testimony and admitted evidence that he

simply went about his cattle ranching business as he always had (including

dilatory loan payments) and therefore lacked any fraudulent intent.

      At the close of trial, Bowling requested a good faith instruction to the jury,

arguing that his good faith business practices, though perhaps a violation of the

express terms of the relevant loan agreements, demonstrated a lack of the

requisite mental state to commit bank fraud. The district court denied Bowling’s

request, and he was subsequently convicted by the jury.

      On appeal, Bowling argues the district court erred by failing to instruct the

jury on his proffered good faith defense. We agree. Having jurisdiction under 28

U.S.C. § 1291, we REVERSE Bowling’s § 1344(1) conviction and REMAND for

a new trial.

                                  I. Background

      Bowling’s Ranching Operations

      Daniel Bowling is a cattle rancher and farmer in Oklahoma. Since the mid-

1990’s, Farmers Exchange Bank and its predecessor, Service Exchange Bank,

have financed Bowling’s cattle ranching operations as well as his land, personal

vehicles, and ranching equipment.




                                         -2-
      According to Bowling, he would buy and sell cattle for two types of

commercial ranching activities on his farm land. One type, which he describes as

cow farming, involved purchasing adult cows and breeding them to produce

calves. The second, a “stocker” operation, consisted of purchasing smaller cattle,

increasing their weight, and then selling them.

      Bowling and FEB executed dozens of loan agreements over the past decade.

In exchange for a security interest in Bowling’s cattle, FEB loaned hundreds of

thousands of dollars to Bowling for use in his ranching operation—mostly to

purchase cattle. Each loan agreement contained similar provisions: Bowling was

required to provide invoices evidencing any cattle purchases, to obtain prior

written approval for any cattle sales, to remit any proceeds to the order of FEB

and himself as co-payees, and to make principal and interest payments as

necessary. Throughout the years, Bowling would make payments on his loans,

but rarely, if ever, obtained prior written approval from FEB for his sales.

Similarly, Bowling did not always provide FEB his cattle purchase invoices or

have the proceeds from his cattle sales written to the order of FEB as a co-payee.

In some instances, Bowling sold cattle in the name of his mother, Edna Bowling,

and his son, Brian Bowling. It appears as though FEB officers at least tacitly, if

not explicitly, approved of Bowling’s practices despite the loan agreements’

express terms to the contrary.




                                         -3-
       Between October 2003 and March 2005, Bowling obtained six loans from

FEB totaling $611,240. According to the loan documents, Bowling requested

these loans in order to purchase stocker cattle. Under the terms of these loans and

their associated security agreements, FEB obtained, among other things, a

perfected security interest in Bowling’s ranching operations including:

      All farm products, inventory, documents and accounts, all proceeds
      thereof, including but not limited to all cattle and their products and
      offspring, feed additives and any other farm products and inventory
      now owned or hereafter acquired and wherever located and all increases
      or substitutions thereof and all proceeds therefrom.

Supp. App. at 5, 8, 11, 14, 17. As all the agreements between Bowling and FEB

before, these security agreements also required Bowling to (1) obtain prior

written permission from FEB to sell any of his cattle and (2) make any proceeds

from such cattle sales payable to the order of both FEB and himself. Bowling and

FEB, however, continued to operate informally under these agreements. Bowling

never obtained written permission for his cattle sales, and he usually did not have

the proceeds remitted to FEB as a co-payee.

      Despite this “business as usual,” by late 2005 the relationship between

Bowling and FEB began to deteriorate.

      September 2005 Loan Consolidation

      During 2005, although Bowling made several substantial payments on his

indebtedness to FEB, he also began to request loan advances to purchase more

cattle. Additionally, Bowling’s checking account with FEB had several

                                         -4-
substantial overdrafts. 1 Because of FEB’s concern over Bowling’s financial

situation, on September 27, 2005, FEB required Bowling to consolidate his

outstanding cattle loans and these overdrafts into one note totaling $904,134.10.

This note also included a line of credit for Bowling’s ranching operations.

      Concomitant with this new loan, FEB conducted a cattle inspection at

Bowling’s various locations. During this inspection, Bowling directed his FEB

loan officer and an FEB director to his various grazing lands in and around

Tonkawa, Oklahoma. The FEB loan officer counted the cattle, noted their brands,

and recorded their approximate weight and dollar-value. Bowling also stated he

had cattle at a Pratt, Kansas location. An FEB shareholder audited that location

sometime later. Based on these audits, FEB determined Bowling had a total of

759 steers.

      Bowling and FEB then executed a new agreement to secure the

consolidated loan. In addition to a perfected security interest in Bowling’s cattle

and farm products, the agreement granted FEB an interest in all of Bowling’s

accounts, inventory, and equipment. And, just like all the previous loans, this

agreement imposed the same conditions on Bowling with respect to his cattle

sales and proceeds.




      1
         Throughout the years, Bowling’s payment history was fairly inconsistent,
and his checking account at FEB often had insufficient funds and overdrafts.

                                        -5-
      In October 2005, within a month of executing the new loan, Bowling wrote

several checks on the new credit line, ostensibly for cattle purchases and supplies.

He did not, however, submit invoices evidencing any cattle purchases. Nor did

Bowling respond to requests by FEB to come to the bank and address several

other notes on his real estate that had matured and were up for renewal. Later, in

January 2006, FEB attempted to schedule another cattle inspection but was

unsuccessful, allegedly because of Bowling’s lack of cooperation.

      By February 2006, Bowling had not made any payments on the

consolidated loan, yet continued to draw upon his line of credit under the new

note. It also appears Bowling was past due on his home and real estate mortgages

with FEB at that time. As a result, FEB declared Bowling in default on all his

indebtedness, including the September 2005 consolidated loan, and sued in state

court to foreclose on Bowling’s property, cattle, and ranching operations.

      In July 2006, during the pendency of the state foreclosure action, FEB

deposed Bowling. FEB’s counsel asked Bowling where his cattle were being

kept; FEB had been unable to locate the cattle at any of the previous locations

Bowling had formerly permitted FEB to inspect. Bowling responded that the

cattle were either missing or stolen. Upon receiving this information, FEB

contacted Oklahoma Ranger Joe Rector to investigate the cattle’s disappearance.

      As part of his investigation, Rector obtained a warrant and conducted a

search of Bowling’s property and records. He also obtained records from local

                                         -6-
cattle barns. Rector discovered that, beginning in February 2005, Bowling had

sold much of his cattle at sale barns in Oklahoma and Kansas. Many of these

sales were made in the names of Bowling’s mother and son. The proceeds from

these sales were allegedly deposited in Bowling’s accounts at other banks (not

FEB), and were never remitted to FEB. Upon learning this information, FEB

contacted the Federal Bureau of Investigation (FBI) and filed a “Suspicious

Activity Report.”

      Indictment on Bank Fraud & Trial

      On August 7, 2007, based upon the FBI’s independent investigation into

Bowling’s business dealings since the beginning of 2005, Bowling was indicted

on one count of bank fraud, a violation of 18 U.S.C. § 1344(1). The indictment

alleged Bowling had—since February 2005—“knowingly executed and attempted

to execute a scheme and artifice to defraud Farmers Exchange Bank in a material

manner.” App., Vol. I at 15. Specifically, the government contended Bowling, as

part of his scheme, “sold the cattle he had pledged to FEB in names of other

people,” and then “used the proceeds for his own personal benefit rather than

applying the proceeds to his indebtedness at FEB.” 

Bowling attempted to raise two defenses. First, he argued FEB had

waived its security interest in his cattle as well as in any proceeds as a matter of

commercial law. FEB loan officers testified on cross-examination that Bowling

had never been required to obtain written permission from FEB prior to any sales

                                          -7-
of his collateralized cattle despite the security agreements’ express terms

otherwise. Similarly, FEB officers testified that Bowling did not always have

proceeds from these sales made payable to FEB as a co-payee. Bowling also

admitted evidence that he had routinely made cattle sales in other’s names.

      Bowling argued FEB, by not enforcing the specific terms of its security

agreements, had waived its interest in his cattle and proceeds through its course

of conduct over the previous decade. He asserted that this defense was supported

by the Uniform Commercial Code (UCC) as adopted by Oklahoma. According to

Bowling, if FEB waived its interest in his cattle and the associated proceeds, he

could not have engaged in a scheme to defraud FEB by selling his cattle. He

requested the district court submit jury instructions on this theory. The district

court, determining the Oklahoma UCC precluded a waiver based on a course of

conduct, denied Bowling’s request.

      Second, Bowling requested a jury instruction on a good faith defense. He

argued the evidence and testimony introduced at trial established that he had

simply been operating his cattle ranching business in the same way he always

had—he had never obtained prior written permission from FEB, he had previously

made sales in other people’s names, and rarely had proceeds from those cattle

sales issued in FEB’s name. He contended this evidence suggested he did not

have any intent to defraud FEB. The district court refused to instruct the jury on




                                          -8-
this theory as well, concluding “there is no evidence that the jury could apply this

instruction to and it should not be given.” 2 App., Vol. IV at 1287.

      On November 28, 2007, a jury found Bowling guilty of bank fraud. The

district court subsequently sentenced Bowling to 8 months’ imprisonment,

ordered a forfeiture of $876,747.95, and imposed $833,747.95 in restitution.

                                    II. Analysis

      On appeal, Bowling raises numerous challenges to his conviction and

sentence. Bowling contends the district court erred by: (1) denying his motion for

a judgment of acquittal based on FEB’s alleged waiver of its security interest in

his cattle and proceeds; (2) excluding some of his proffered evidence of FEB’s

waiver; (3) refusing to instruct the jury on his theories of waiver and estoppel; (4)

refusing to instruct the jury on his good faith theory; (5) denying his motion to

suppress evidence based on his challenge to Ranger Rector’s jurisdiction to obtain

a warrant and search his property; and (6) awarding both restitution and forfeiture

as remedies. Bowling also argues the accumulation of errors by the district court

warrants a reversal.

      We find the district court committed reversible error by failing to submit

Bowling’s requested good faith instruction to the jury. In discussing this issue


      2
         In denying Bowling’s motion for a new trial, the district court elaborated
further, concluding Bowling’s prior ranching operations were simply uncharged
(criminal) conduct, and did not go to whether Bowling’s conduct in 2005, as
alleged in the indictment, was in good faith.

                                         -9-
below, we address Bowling’s other contentions only as necessary to explain our

rationale.

      A. Bank Fraud Charges

      Bowling was charged and convicted of bank fraud in violation of 18 U.S.C.

§ 1344(1). Under this provision:

      Whoever knowingly executes, or attempts to execute, a scheme or
      artifice—

             (1) to defraud a financial institution; . . .

      shall be fined not more than $1,000,000 or imprisoned not more than 30
      years, or both.

§ 1344(1).

      In order to obtain a conviction under § 1344(1), the government must prove

that: “(1) the defendant knowingly executed or attempted to execute a scheme or

artifice to defraud a financial institution; (2) the defendant had the intent to

defraud a financial institution; and (3) the bank involved was federally insured.” 3

United States v. Gallant, 

, 1223 (10th Cir. 2008) (quoting United

States v. Flanders, 

, 1212 (10th Cir. 2007)), cert. denied, 

(2009).

       A “‘scheme or artifice to defraud’ simply requires a design, plan, or

ingenious contrivance or device to defraud.” 

Further,


      3
        Neither party takes issue with the third element of bank fraud under
§ 1344(1). FEB is a federally insured bank.

                                          -10-
“the intent necessary for a bank fraud conviction is an intent to deceive the bank

in order to obtain from it money or other property.” 

States v.

Kenrick, 

, 26–27 (1st Cir. 2000) (en banc)). We have noted that

“Section 1344 was intended to reach a wide range of fraudulent activity that

undermines the integrity of the federal banking system, and courts have liberally

construed the statute.” 

internal quotation marks omitted).

      B. Good Faith Instruction

      Bowling contends he was entitled to have a separate good faith instruction

submitted to the jury. As Bowling frames the issue: “If FEB permitted [him] to

stray from the security agreement all of the time, how was [he] supposed to know

that what he was doing was wrong”? Aplt. Br. at 37. He maintains because he

“had been conducting his ranching operation with FEB exactly the same way for

the past ten years,” the jury should have been specifically instructed on the

possibility that his actions were in good faith. 

argues that

by refusing to instruct the jury on good faith—separate from any instruction on

the intent element of bank fraud—the district court committed reversible error.

We agree.

      We review a district court’s refusal to submit a defendant’s theory-of-

defense instruction de novo. United States v. Williams, 

, 1195




                                        -11-
(10th Cir. 2005). 4 A theory-of-defense instruction is usually “‘required only if,

without the instruction, the district court’s instructions were erroneous or

inadequate.’” 

States v. Alcorn, 

, 767 (10th Cir.

2003)).

      In fraud cases, however, we treat a defendant’s request for a good faith

instruction with some differences. A “defendant is entitled to a good faith

instruction when he has interposed the defense of good faith, has requested the

instruction, and when there is sufficient evidence to support it.” United States v.

Overholt, 

, 1247 (10th Cir. 2002) (emphasis added) (quoting United

States v. Janusz, 

, 1322 (10th Cir. 1998)). When a defendant meets

these requirements, the trial court must separately instruct the jury on good faith.

United States v. Hopkins, 

, 718 (10th Cir. 1984). “In this circuit, we

have held that general instructions on willfulness and intent are insufficient to


      4
          In Williams, we stated that:

             We review the instructions de novo to determine whether, as a
      whole, they adequately apprised the jury of the issues and the governing
      law. . . . It is true that we review a district court’s refusal to submit a
      requested instruction to the jury for abuse of discretion. However, the
      ultimate standard of review is de novo—to determine . . . whether the
      instructions as a whole adequately apprised the jury of the issues and
      the governing law. “Discretion” comes into play in that the district
      judge has substantial discretion wording the instructions, as long as
      they adequately present the law and the 

n.7 (quoting United States v. Wolny, 

, 765
(10th Cir. 1998)).

                                         -12-
fully and clearly convey a defendant’s good faith defense to the jury . . . .” United

States v. Haddock, 

, 1547 (10th Cir. 1992) (en banc), modified in

part on reh’g on other grounds by, 

(10th Cir. 1992), abrogated on

other grounds by, United States v. Wells, 

(1997); see United States

v. Platte, 

, 1184 (10th Cir. 2005) (reaffirming our holding in

Haddock, and noting that while such a good-faith instruction may be redundant

with the fraud offense’s intent element, our circuit requires a separate good faith

instruction). A district court’s “failure to give an adequate good faith instruction

is reversible error provided the evidence is sufficient such that a reasonable jury

could believe the defendant’s good faith defense.” 

(citation omitted); see 

.

      Nevertheless, to justify the good faith instruction, “the defendant’s

evidence must have the capacity to rebut all evidence of false and misleading

conduct, all failures to disclose that which should have been disclosed and all

matters that deceive and were intended to deceive another.” United States v.

Chavis, 

, 1209 (10th Cir. 2006) (quotation omitted). “A benign

explanation of only some of the acts is insufficient”; the defendant must

“completely rebut evidence that he or she intended to defraud.” 

                                         -13-
      C. Bowling Was Entitled to a Good Faith Instruction

      While we do not pass on the ultimate plausibility of Bowling’s contentions

of good faith, evidence and testimony presented at trial had the capacity to rebut

the government’s allegations against Bowling. A reasonable jury could have

believed Bowling was acting without the requisite intent to commit fraud. For

this reason, Bowling was entitled to a good faith instruction.

      In rebutting Bowling’s theory of defense, the government focuses on two

pieces of evidence. First, Bowling made cattle sales from February 2005 through

October 2005 in other people’s names, usually in the name of his mother and son.

The government contends these surreptitious sales suggest Bowling was trying to

disguise FEB’s interest in his cattle. The Oklahoma and Kansas sales barns

would have been alerted to FEB’s security interest if those sales were in

Bowling’s name.

      Second, the government contends Bowling’s failure to use proceeds from

these cattle sales to pay down his debt to FEB, as well as his depositing the

proceeds in non-FEB bank accounts, deprived FEB of its interest in both the

collateralized cattle as well as the associated proceeds. From September 2005,

when Bowling’s debt was consolidated, until February 2006, when FEB initiated

its foreclosure action in state court, Bowling made no payments to FEB on his

outstanding loans.




                                        -14-
      The government’s theory of the case rests on the inference that this

behavior evinced not only Bowling’s fraudulent scheme, but his intent to defraud

FEB as well. In essence, the government’s case posits: Why would Bowling have

sold cattle in other people’s names and deposited the proceeds elsewhere if not to

defraud FEB of its ability to recoup on its loan? This is an attractive theory. But

Bowling, in contrast, advanced evidence at trial that supplies a benign or non-

culpable explanation to each of the inferences underpinning the government’s

case against him.

      While the government’s evidence of Bowling’s cattle sales in the name of

his mother and son, on its face, permits an inference of willful or intentional

fraud, it does not necessarily follow that such sales were actually intended to

defraud FEB—the crime with which Bowling was charged. Bowling elicited

substantial testimony from both FEB’s chief executive officer and the local

branch president that he had frequently made sales in the names of his relatives,

at least since 1999. These sales—which FEB had known about for years—may

not have necessarily been staged to avoid Bowling’s obligation to submit the

proceeds to FEB. FEB’s branch president even admitted that over $300,000

worth of checks made payable to Bowling’s mother had been deposited with FEB

and applied to Bowling’s indebtedness over the course of their relationship. One

plausible conclusion is that, by making these straw sales, Bowling was attempting

to avoid some other legal consequences such as taxes, fees, or regulatory

                                         -15-
requirements. While this may still be evidence of wrongful or fraudulent conduct,

it is not necessarily bank fraud directed at FEB.

      To rebut the government’s theory that Bowling’s failure to pay his loans

demonstrated an intent to defraud, Bowling offered evidence that his payment

history during his ten-year-long relationship with FEB was anything but

consistent. His loan payments were sporadic. Sometimes he paid down notes

before they were due; other times his payments were months late. FEB officers

testified that over the course of their lending relationship, Bowling had paid off

thirty-five of forty-one total loans, and paid approximately $250,000 in interest

and about $2 million in total on his debt to FEB. During 2005, but before the

consolidation, Bowling even repaid almost $700,000 of principal and interest on

several FEB notes.

      Similarly, Bowling’s evidence also rebutted the government’s claim that, as

proof of his fraudulent intent, he was funneling his proceeds into other bank

accounts to avoid his FEB debt. Like apparently all his finances, Bowling’s cattle

operations were inconsistent. Proceeds from cattle sales did not always support

his purchasing needs. He often used money he did not have readily available to

buy cattle and supplies; his checking account was frequently overdrawn. And,

just because Bowling had several other bank accounts where he deposited his

proceeds, it does not necessarily follow that he was defrauding FEB. In fact, FEB

officers admitted at trial that Bowling had previously deposited proceeds from his

                                         -16-
cattle sales at other banks, occasionally writing checks from those banks to pay

down his FEB debt. All of this exemplified Bowling’s standard business practice.

      Next, the government points to Bowling’s failure to make any payment on

the September 2005 consolidated loan as further evidence of Bowling’s intent to

defraud FEB. But Bowling’s lack of payments for less than six months—in light

of his previous history of sporadic payments—does not exclusively imply

fraudulent intent. A plausible alternative inference which could be drawn is that

Bowling hit a run of bad luck with his finances and chose to address other

obligations, but without any intent to mislead or defraud FEB. Either way, there

was evidence before the jury that pointed to both the government’s and Bowling’s

competing interpretations. A reasonable jury could have concluded that Bowling

was not really attempting to defraud FEB, and only acted in good faith based on

his past dealings with FEB.

      We emphasize that the FEB loan officers’ approval of Bowling’s conduct

did not constitute a waiver or relieve Bowling of liability for bank fraud. See

(“It is the financial institution itself—not its directors

or agents—that is the victim of the fraud the statute proscribes.” (quotation

omitted)); United States v. Winkle, 

, 414 n.3 (6th Cir. 2007) (“[T]he

victim of a bank fraud is the bank, not the CEO of the bank, and approval of a




                                         -17-
bank officer does not relieve a defendant of liability for bank fraud.”). 5 Clearly,

if Bowling hatched a scheme to defraud FEB and intended to defraud the bank,

the FEB officers’ complicity with or ignorance of this conduct would be

irrelevant to Bowling’s criminal liability.

      Rather, the parties’ course of conduct here is relevant to whether Bowling

had the requisite intent to commit bank fraud. See United States v. Hamaker, 

, 1326 (11th Cir. 2006) (recognizing that while bank officer’s conduct

does not relieve a defendant of liability for bank fraud, it can support the

defendant’s contention he “lacked the required mens rea to be found guilty of

fraud”). Bowling submitted evidence at trial that he merely went about his

business as he usually did: he did not obtain prior written approval from FEB for

his cattle sales, he did not always have the proceeds remitted to FEB (or even

himself) as a co-payee, and he did not always deposit the entirety of the proceeds

in his FEB accounts to pay down his loans.

      Here, Bowling interposed a good faith defense, properly requested the

instruction, and managed to admit sufficient evidence to support his good faith

theory. However implausible, this theory was Bowling’s only leg to stand on at


      5
         For similar reasons, Bowling’s UCC arguments are unavailing. While the
FEB loan officers’ course of conduct—failing to enforce specific provisions of
the loan agreements—may have constituted a waiver under commercial law, it is
not relevant to whether Bowling is liable for criminal bank fraud. Rather, as we
note below, this course of conduct is only relevant to whether Bowling had the
requisite state of mind to sustain a § 1344(1) conviction.

                                         -18-
trial and implicates whether his conduct really was part of some artifice or

scheme he had contrived to intentionally defraud FEB. A reasonable jury could

have agreed with Bowling. And, it is on this basis that Bowling was entitled to a

good faith instruction.

                                  III. Conclusion

      For the foregoing reasons, we REVERSE the § 1344(1) conviction and

REMAND for a new trial.

                                       Entered for the Court


                                       Timothy M. Tymkovich
                                       Circuit Judge




                                        -19-