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United States v. Herz

filed*fn*: October 1, 1992.


Appeal from the United States District Court for the Eastern District of California. D.C. No. CR-90-00164-MLS. Milton L. Schwartz, District Judge, Presiding

Before: Wiggins, O'scannlain, and Fernandez, Circuit Judges


Paul C. Herz appeals his conviction for making false statements in a credit card application in violation of 18 U.S.C. § 1014. Herz claims that the district court erroneously admitted evidence that he used the credit cards beyond their stated limits and made no payments. Herz argues that the district court should have instructed the jury sua sponte on the limited purpose of this "bad act" evidence. Herz also alleges that the jury instructions incorrectly defined "knowingly." We affirm.


Herz applied for a Visa and a Mastercard from First Interstate Bank on January 18, 1986. Herz claimed in his application that he had been employed for two years as a vice-president of Time Energy of Northern California with a salary of $50,000 plus commissions. Herz also claimed that he was buying a house. In reality Herz had only been associated with Time Energy for approximately one year. He purportedly worked on commission but never actually earned any money because he procured no contracts. By mid-1985 Herz had already become disillusioned about Time Energy and his lack of success there. He owned no property nor was he purchasing any.

First Interstate issued Herz a Visa and a Mastercard, each with a $2,000 limit. Herz immediately incurred charges of $7,200--$3,200 more than the combined limits on both cards. Herz made no payments on the cards and the bank cancelled them within two months of issuance. The bank was unable to collect the money Herz owed.

Herz was indicted for a violation of 18 U.S.C. § 1014 and tried before a jury. He moved to exclude evidence that he had made charges on the credit cards and had made no payments. The district court denied this motion. Herz's attorney expressly declined to ask for a limiting instruction with respect to this evidence. The jury found Herz guilty as charged.


A. Evidence of Unpaid Credit Card Charges

Herz claims that evidence of his unpaid charges should have been excluded under Rule 404(b) of the Federal Rules of Evidence. We have held that "evidence should not be treated as 'other crimes' evidence when 'the evidence concerning the ['other'] act and the evidence concerning the crime charged are inextricably intertwined.'" United States v. Soliman, 813 F.2d 277, 279 (9th Cir. 1987) (quoting United States v. Aleman, 592 F.2d 881, 885 (5th Cir. 1979)). Herz's unpaid credit card charges appear to be inextricably entwined with his false statements to the bank as part of a single scheme to defraud. Hence evidence of these charges was not "bad act" evidence within the meaning of Rule 404(b). See United States v. Ramirez-Jiminez, No. 91-50211, slip op. 6901, 6911 (9th Cir. June 22, 1992) (defendant's false statements to arresting officers were not "bad act" evidence). As we said in Soliman, "'the policies underlying the rule are simply inapplicable when some offenses committed in a single criminal episode become 'other acts' because the defendant is indicted for less than all of his actions.'" 813 F.2d at 279 (quoting Aleman, 592 F.2d at 885).

If evidence of Herz's unpaid charges were within the scope of Rule 404(b), the evidence is admissible under that rule. "Evidence of other crimes or acts is admissible under Rule 404(b) except where it tends to prove only criminal Disposition.'" United States v. Ayers, 924 F.2d 1468, 1473 (9th Cir. 1991) (quoting United States v. Sangrey, 586 F.2d 1312, 1314 (9th Cir. 1978)). Evidence of the unpaid charges was material to Herz's knowledge and intent when he applied for the cards; Herz's attorney argued to the jury that Herz did not intend to make false statements and did not really know that the statements were false. There was sufficient evidence to prove the acts and they were close in time to the false application. Furthermore, Herz's fraudulent use of the credit cards closely resembles the crime he was charged with. See Ayers, 924 F.2d at 1473. Herz, who was earning no income from his job with Time Energy Corporation, made purchases and obtained cash advances totalling $7,200 as soon as his false application put the credit cards in his hand. Herz never paid these charges. It is apparent that this was a scheme to defraud made possible by Herz's violation of 18 U.S.C. § 1014.

B. Limiting Instruction

Herz's trial counsel explicitly decided not to offer an instruction on the limited purpose of the "bad act" evidence. Herz contends on appeal that the district court should have given such an instruction sua sponte. That claim has no merit. "It is well-settled that where no limiting instruction is requested concerning evidence of other criminal acts, the failure of the trial court to give such an instruction sua ...

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