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United States v. Cook

United States District Court, D. Delaware

May 14, 2019

UNITED STATES OF AMERICA
v.
WILLIAM COOK, Defendant.

          Whitney C. Cloud, Lesley F. Wolf, Assistant United States Attorneys, Wilmington, Delaware Counsel for United States of America

          Thomas E. Carluccio, Plymouth Meeting, Pennsylvania; Frank G. Fina, Plymouth Meeting, Pennsylvania Counsel for Defendant

          MEMORANDUM OPINION

          COLM F. CONNOLLY UNITED STATES DISTRICT JUDGE

         In this criminal case, a jury found Defendant William Cook guilty of one count of bank fraud, four counts of making false statements to a bank, and one count of money laundering. At the close of the evidence, Cook moved for judgment of acquittal on all six counts. I denied the motion. At issue before me today is Cook's renewed motion for judgment of acquittal (D.I. 118).

         I. BACKGROUND

         A. The Superseding Indictment

         Cook was charged by superseding indictment with one count of bank fraud under 18 U.S.C. § 1344(1), four counts of making false statements to a bank under 18 U.S.C. § 1014, and one count of money laundering under 18 U.S.C. § 1957. D.I. 36. The charges arose out of a line of credit extended by Artisans' Bank to Cook's food broker business, AJJ Distributing, LLC, between 2008 and 2013. The line of credit was secured in part by accounts receivable owed to AJJ. Under the terms of the line of credit, the amount of money Cook could borrow from Artisans' Bank depended on the value of "eligible items," which the line of credit agreement defined as "accounts receivable and inventory aged less than 90 days." Id. at ¶ 11. On a weekly basis and when he sought withdrawals from the line of credit, Cook was contractually obligated to submit to Artisans' Bank borrowing base certificates ("BBCs") that listed AJJ's "eligible items." Id. at ¶¶ 13, 14.

         The false statement counts in the superseding indictment were based on allegations that Cook provided Artisans' Bank on four occasions with BBCs that listed certain accounts receivable that in fact were no longer owed to Cook. See Id. at ¶¶ 46, 48, 50, 52 (alleging that Cook "provided [Artisans'] Bank with a BBC listing [million-dollar sums] in accounts receivable, which falsely inflated monies owed to AJJ").

         The bank fraud count was similarly based in part on the allegation that Cook submitted to Artisans' Bank "false and fraudulent" BBCs that "included as 'eligible items' accounts receivable that were no longer owed to AJJ." Id. at ¶ 33. The bank fraud count alleged specifically that Cook submitted BBCs that "included dozens of accounts receivable" from AJJ's primary customer, White Rose Food, that "were no longer owing to AJJ." Id. at ¶ 30. Further, in describing the scheme to defraud on which the bank fraud charge was based, the superseding indictment alleged that "[b]y listing non-'eligible items' on the BBCs," Cook "falsely and fraudulently inflated AJJ's accounts receivable, which: a) induced [Artisans'] Bank to disburse money under the Line of Credit to AJJ; b) influenced [Artisans'] Bank's decisions in connection with extensions and conversions of the Line of Credit; c) deterred [Artisans'] Bank from requiring larger payments on the Line of Credit; and []d) delayed the Line of Credit's termination." Id. ¶ 34.

         The money laundering count alleged that Cook transferred by check money that he derived through bank fraud. Id. at ¶ 54.

         B. The Trial

         At trial, the government called 10 witnesses and introduced over 100 exhibits. The government's evidence demonstrated that Artisans' Bank required Cook to provide BBCs that listed AJJ's eligible accounts receivable on a weekly basis, that the bulk of the accounts receivable listed on the BBCs that Cook submitted involved White Rose, and that the BBCs included accounts receivable from White Rose that had already been satisfied.

         Many of the exhibits were AJJ documents introduced through and summarized by the government's case agent, Postal Inspector Samuel Bracken. Bracken explained to the jury how three sets of documents-the weekly BBCs, AJJ's "netting sheets," and checking account statements from two banks showing payments between AJJ and White Rose-established that Cook had submitted BBCs that included accounts receivable from White Rose that had already been satisfied. See, e.g., Tr. at 161:23-163:5 (Jan. 25, 2019); GX 100(a)-(k) (BBCs); GX 200(a)-(k) ("netting sheets"); GX 400(a)-(k) (checking account statements). Bracken also presented at trial summary charts that demonstrated that AJJ listed millions of dollars of accounts receivable incorrectly on 11 separate dates between 2009 and 2013. See, e.g., Tr. at 126:21-127:8 (Jan. 25, 2019); GX 300(a)-(k).

         Cook's accountant also testified for the government about how Cook used a different accounting system for White Rose than for the rest of AJJ's accounts. See Tr. at 37:9-25 (Jan. 25, 2019). Other documents showed that Cook had correctly reported his eligible accounts receivable on BBCs submitted to ...


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