In an unpublished per curiam decision in United States v. Conway, No. 20120708 (A. Ct. Crim. App. Nov. 21, 2014) (link to slip op.), a three judge panel of the Army CCA affirms the appellant’s pleas of guilty to larceny from a bank premised on his unauthorized use of another soldier’s debit card. In doing so, the CCA rejects the appellant’s argument “that the larcenies at issue were obtaining-type larcenies of retail goods of a merchant by false pretenses,” rather than larcenies of property from the bank. Slip op. at 3.

Notably absent is an assertion that the victim was the soldier whose debit card the appellant wrongfully used. This is notable because in October the Army CCA issued a published decision in which it found that the account holder is a proper victim because “one who purchases goods with a debit card obtains those goods in exchange for money which results in an immediate deduction from the cardholder’s account.” United States v. Endsley, 73 M.J. 909, 911 (A. Ct. Crim. App. Oct. 17, 2014). I labelled that decision as erroneous in a post titled: The Army CCA applies Cimball Sharpton to (erroneously) affirm larceny from a debit card holder. And I revisited the issue a few weeks ago while reviewing a recent article published by the Army Lawyer in a post titled: Military justice scholarship about larceny involving credit & debit cards.

In Conway, the CCA’s conclusion that the bank was the victim is based on the appellant’s admissions during the plea inquiry:

Appellant explicitly acknowledged TCF Bank had possession of the U.S. currency and that the U.S. currency also belonged to TCF Bank. Appellant further acknowledged that the U.S. currency came from TCF Bank when he made his unauthorized transactions. These factual admissions create a sufficient factual predicate to appellant’s guilty plea. Put more simply, the clear inference from appellant’s admissions is that TCF Bank suffered a financial loss, and thus was a proper victim in this case. Cf. United States v. Cimball Sharpton, 73 M.J. 299, 301 (C.A.A.F. 2014) (“We view this as a case where such an alternative charging theory should apply, given that it was neither the merchants nor U.S. Bank but the Air Force who suffered the financial loss resulting from [a]ppellant’s larceny.”); United States v. Endsley, __ M.J. ___, 2014 CCA LEXIS 786 (Army Ct. Crim. App. 17 Oct. 2014).

Slip op. at 3. The problem with this conclusion is that for a larceny in violation of Article 121, “there must be a taking, obtaining, or withholding of the property by the thief.” MCM, Pt. IV, ¶ 46.c.(1)(b). The appellant obtained products from the merchants where the debit card was used, he did not obtain money from the bank (and I wonder if the bank really suffered a loss; I think it more likely that the loss was suffered by the merchant or a payment processor). Moreover, the citation to Cimball Sharpton is inapt because Cimball Sharpton turned on the fact that the Air Force was obligated to pay for the unauthorized purchases (and CAAF noted that an Air Force instruction states that “The government must seek restitution from the employee for any losses as a result of their improper transaction.” 73 M.J. at 301, n. 2.). There’s no evidence of such an obligation for the bank to pay the merchants in Conway.

Just as I thought the CCA got it wrong in Endsley, I think the court again gets it wrong in Conway.

Read together, the Army CCA’s opinions in Conway and Endsley imply that there’s a wide range of possible victims in a larceny prosecution involving misuse of a debit card. I think CAAF explicitly rejected this possibility in its summary disposition in United States v. Gaskill, 73 M.J. 207 (C.A.A.F. Jan. 27, 2014):

On consideration of the petition for grant of review of the decision of the United States Army Court of Criminal Appeals, and in light of United States v. Lubasky, 68 M.J. 260 (C.A.A.F. 2010), we note that the proper victim in Specifications 2, 3, and 4 of Charge V was the merchant who provided the goods and services upon false pretenses, not the debit cardholder/Soldier.  However, the charge sheet, stipulation of fact, and providence inquiry focused on the three Soldiers as victims, and there was no discussion on the record of whether the merchants were victimized. See Lubasky, 68 M.J. at 263.  Accordingly, it is ordered that said petition is granted on the following issue:

WHETHER APPELLANT COMMITTED LARCENIES OF THE PROPERTY OF THREE SOLDIERS BY USING THEIR BANK CARDS WITHOUT AUTHORITY.

The decision of the United States Army Court of Criminal Appeals is reversed as to Specifications 2, 3, and 4 of Charge V, and the findings of guilty as to those specifications are set aside.

Gaskill was also an Army case. The Army CCA’s opinion is available here.

As I wrote in my post analyzing Endsley, a debit card is a credential (that is, a form of identification). When the appellants in Endsley and Conway wrongfully presented another person’s debit card to merchants, they committed obtaining type larcenies from those merchants by false pretenses. The banks were, at most, the victims of a theft of debit services by false pretenses (chargeable as a violation of Article 134. See MCM, Pt. IV, ¶ 78). The account holders were victims only for sentencing purposes. See also Article 6b, UCMJ.

At least, that’s my view. I’ll be watching to see if CAAF agrees.

11 Responses to “A new larceny decision from the Army CCA”

  1. stewie says:

    I don’t think CAAF is going to agree with your “credential” theory as I’ve never seen that anywhere before.  However, I suspect they will agree with prior rulings they’ve given, and they’ll simply point to the MCM and say, look, despite any possible common sense or reasonable arguments, the President said it’s this way, and that’s the way it is.

  2. Zachary D Spilman says:

    I don’t know that I’d call it a theory. But it’s indisputable that a debit card is a credential.

  3. stewie says:

    It’s a means to transfer money from one person to another.

  4. Tami (a/k/a Princess Leia) says:

    I don’t see a disconnect between Conway and Endsley.  They are both guilty plea cases, and the basis for challenging findings based on a guilty plea on appeal is different than challenging findings based on a contested case.  Conway admitted to taking money from the bank; Endsley admitted to taking money from another Soldier.  The fact that the Government could have charged alternative theories in both cases is irrelevant.  In both cases, an appropriate victim was named. 
     
    There is NOTHING in the MCM to say that the victim in a debit card transaction MUST ALWAYS be the merchant or the bank, or that the offense CAN ONLY be obtaining by false pretense, as opposed to a wrongful taking from the bank, OR a wrongful taking from the bank account holder.  The wrongful use of another’s debit card (or debit card information) to buy stuff CAN BE obtaining by false pretenses, but it CAN ALSO BE a wrongful taking from the bank OR from the bank account holder, because the transaction results in an immediate deduction from the bank account that the bank is holding, because the account holder has deposited in/her money in that account.
     
    Use of a “debit” card v. a “credit” card is a distinction with a difference, even when that debit card is used as a credit card.  If someone uses my CREDIT card to obtain a pizza, then I am not a victim because I didn’t own the money at the time of the theft.  But if someone uses my DEBIT card to obtain a pizza, then I AM a victim of theft because I AM AN OWNER of the money at the time of the theft.  If my DEBIT card is used as a DEBIT card, then MY MONEY is deducted from my account immediately.  If my debit card is used as a CREDIT card, then MY MONEY will STILL get deducted from my account, it will just take a bit longer.  But it would be the same as if someone had forged a check–it may take several days, but once that check clears, MY MONEY will be deducted from my account.
     
    Zachary, I don’t disagree that a debit card is a “credential.”  It just doesn’t matter to me because it’s the ownership of the money that’s at issue.  But, I don’t see how these cases involve “theft of services” when it’s not “services from the bank” at issue–these cases involve the transfer of money, tangible property, from the victim’s account to a thief, a merchant, or even another bank.
     
    I think CAAF got Gaskill wrong.  It’s impossible to reconcile Gaskill with Lubasky, unless there’s some underlying defect in Gaskill that didn’t make it into ACCA’s opinion.  Will definitely be interesting to see what CAAF does.

  5. Zachary D Spilman says:

    I’m not going to belabor this point – because we’ve been down this road before – but the fact that the transaction results in a deduction from the account holder’s balance at the bank is not sufficient to make the account holder the victim of a common-law larceny. See United States v. Antonelli, 35 M.J. 122, 124-126 (C.M.A.1992) (discussing cases and concluding that “the fundamental role of a court of military review or of this Court in a case such as this is to determine whether an accused’s conduct as charged and proved could have been punished under any of the three predicate crimes encompassed by Article 121”).

    A larceny from a merchant by the false pretense of pretending to be a third person (accomplished by the presentation of the third person’s credentials), that ultimately results in financial harm to the third person, is not a larceny from the third person. Lubasky, Cimball Sharpton, and Gaskill are all consistent on this point. 

    Now I’ll acknowledge that there’s some CCA precedent that supports your premise that the ultimate consequence of deduction in the account holder’s balance (even if temporary) is adequate to constitute a larceny from the account holder. See, e.g., United States v. Lundgren, 59 M.J. 597, 599 (M-M. Ct. Crim. App. 2003) (“By the actions of the appellant, money was immediately transferred out of the victim’s account.”). But that precedent isn’t well-founded or consistent. Cf. United States v. Holley, 42 M.J. 779, 781 (N-M. Ct. Crim. App. 1995) (“[I]t is clear that before a person subject to the UCMJ can be found guilty of larceny in violation of Article 121, it must be shown that he or she engaged in a wrongful taking, obtaining or withholding of tangible property from the possession of the owner.” (emphasis in original)). And Gaskill makes the point clear.

    Further, the Army CCA acknowledged your premise when it expressed its “difficulty reconciling Gaskill with Lubasky or Cimball Sharpton” under facts involving misuse of a debit card in Endsley. 73 M.J. at 911. But that difficulty evaporates once we acknowledge that your premise is wrong. The simple fact that a larceny from a merchant results in harm to a third party, without more (such as an agency relationship), does not amount to Article 121 larceny from the third party.

  6. Tami (a/k/a Princess Leia) says:

    Then perhaps a re-reading of the definitions of “possession,” “owner,” and “any other person” are in order.  “Possession” includes the care, custody, management, and control–“these are among the definitions of possession.”
     
    Also take a look at the definition of “possession” for Article 112a.  “Possession means to exercise control of something.  Possession may be direct physical custody like holding an item in one’s hand, or it may be constructive, as in the  case of a person who hides an item in a locker or car to which that person may return to retrieve it.  Possession inherently includes the power or authority to preclude control by others.  It is possible, however, for more than one person to possess an item simultaneously, as when several people share control of an item.”
     
    Going back to Article 121, “owner” refers to the person who, at the time of the taking, obtaining, or withholding, had the superior right to possession of the property.  “Any other person” means any person who has possession or a greater right to possession than the accused.
     
    By keeping my money in a bank, I do NOT lose “possession” of my money simply because it’s in the physical possession of the bank.  I still manage and control my money, whether it’s online banking, bill pay, ATM, writing a check, or just plain old-fashioned physically going to the bank and withdrawing or depositing cash.  I say who gets my money, how much they get, and who doesn’t get my money.  I control access.  If someone takes my money from my account, and I didn’t authorize it, then that person stole from ME, as well as from the bank.  Government gets the choice of how to charge it.
     
    Obtaining by false pretenses requires more than just the false pretense; it also requires an intent to steal.  If someone uses my credit card to pay for a pizza, thinking that the bank won’t pay for unauthorized charges, or will reverse the charge, then yes, that is obtaining from the merchant by false pretenses.  If that person thinks the bank will pay anyway, then it’s a larceny from the bank that issued the credit card, but not a larceny from the merchant.
     
    But if someone uses my debit card to buy a pizza, and does in fact pay for it, then there is no intent to steal from the merchant, and therefore no larceny from the merchant.  However, there IS a larceny from me, and there is also a larceny from the bank.  Government gets the choice of how to charge it.
     
    I also note in the discussion of “taking, obtaining, or withholding,” it includes “had the funds of another transferred to the accused’s bank account, the accused is guilty of larceny if the other elements of the offense have been proved.”  Acknowledging that the account holder CAN in fact be an “owner” of such funds, and therefore, a correct “victim” of the larceny.  And last time I checked, money IS “tangible” property.
     
    My premise is correct, and based off current case law as well as the plain language of Article 121.  If you’re going to rely on decades-old case law to support your premise, then that case law should be applicable to the facts of the cases currently at issue.  Holley had nothing to do with credit or debit card transactions; Holley copied some telephone calling card numbers and used them to make phone calls.  He was charged with, and pled guilty to, the theft of those numbers.  The NMCCA rightfully held that the calling card numbers themselves, were “intangible” property (as opposed to taking the actual cards, which would have been “tangible” property), and therefore Holley could not be guilty of larceny under Article 121.  Conway and Endsley didn’t plead guilty to stealing debit card numbers–they pled guilty to stealing money.  As far as Antonelli goes, Antonelli engaged in BAQ fraud by falsely claiming he supported his dependent child.  The CMA overturned AFCCA’s decision to disapprove the larceny conviction, holding that it was possible to wrongfully withhold the extra BAQ allowances, since Antonelli wasn’t entitled to the extra $$ to begin with.
     
    The citation to Lundgren is interesting, and I appreciate the acknowledgment of support for my premise.  I’m humored that the NMCCA made a dig on ACCA for disapproving a conviction of larceny in Sanchez, related to incurring ATM surcharges, and I’m glad the NMCCA used some common sense in making the following observation:

    None of the three cases relied upon by the Army Court in Sanchez involved a scenario where a thief stole money, and none of the cases compel us to render larceny guilty pleas improvident merely because they include the ATM surcharges extracted from the victim’s bank account. The common touchstone in each of the three scenarios was that no “money, personal property, or article of value of any kind,” was taken, obtained or withheld. MCM, Part IV, P 46a(1). That is not the case with respect to an ATM surcharge. By the actions of the appellant, money was immediately transferred out of the victim’s account. The victim did not lose a service or a debt owed to him; the appellant took his money. The loss was tangible, and the effect produced by inserting the ATM card and punching the terminal keys was as tangible as if the appellant reached his fingers into the victim’s pocket and lifted out his money. The victim’s money including the ATM fee followed the inexorable course set for it by the appellant’s keypunches.
    Likewise, the fact that the appellant did not have the intent to keep the $ 2.25 for himself does not compel a contrary result. Larceny under Article 121 is committed when the thief has the intent to appropriate for his own use or the use of “any person other than the owner.” Id. This is consistent with the common law wherein “the word “taking” in the definition of larceny has reference to the taking of possession, but it is not necessary for the thief to take possession himself; he may commit larceny by causing possession to be taken by another. R. Perkins and R. Boyce, Criminal Law [10] 303 (3d ed. 1982). Viewing the evidence in the light most favorable to the Government, Hubbard, 28 M.J. at 209 (Cox, J., concurring), we are convinced that when the appellant directed the ATM to move cash from the victim’s account his intent was to appropriate some of the money for his own use and some of the money (the ATM surcharge) for use by a person other than the victim. Therefore we conclude that the providence inquiry established each and every element of larceny. We find that the military judge correctly included the ATM surcharges in determining the value of each larceny specification and that the pleas were not improvident.

    ‘Nuf said.
     

  7. Zachary D Spilman says:

    By keeping my money in a bank, I do NOT lose “possession” of my money simply because it’s in the physical possession of the bank.

    So what are the serial numbers on the bills?

    The thief who misuses a debit card to obtain pizza doesn’t care how (or even if) the pizza is paid for, he just wants the pizza, and he perpetrates a fraud to get it. That’s a classic (and easy to understand) larceny by false pretenses.

    More importantly, as I discussed in this comment to my post analyzing Endsley, the financial institution’s reversal of the consequences of that fraud on the third-party account holder is required by federal law.

    You’re conflating a bank account in our modern financial system with a box of gold coins. The two are dramatically different.

  8. stewie says:

    And one could argue that you are somewhat slavishly devoted to a common law approach to something the common law couldn’t have possibly addressed.  Again, CAAF will likely agree with you for the reason I stated above though (President limited theories), not necessarily because it’s the only way to go.

  9. Zachary D Spilman says:

    It’s not because of limitations imposed by the President. It’s because that’s the statute.

    As explained in Antonelli (quoted in my comment above), Article 121 “consolidates what had been known as common-law larceny (that is, larceny by trespass on either the actual or the constructive possession of the owner), embezzlement, and obtaining by false pretenses – no more and no less.” 35 M.J. at 124 (emphasis added).

  10. stewie says:

    Pretty sure the language that talks about “usually” is the President’s language.  Also pretty sure that there are exceptions, as you admit, as CAAF admits, which means this isn’t simply a binary situation.  It’s a “usually” situation.  I’m also fairly confident that if the President wanted to, he could expand the definition of victim, and it would be just fine.  I’d also argue, as Tami has, that I have “constructive possession” of the money in my bank account.  I may not have actual possession obviously, because it’s an intangible asset, and the common law wasn’t set up to deal with intangible things like electrons in a bank account.  The problem I think is that owner, possession, et al are being narrowly defined for no real reason.  I think though that the President’s language is what narrowly defines things, and he has the power to do that if he wants, so we are where we are.

  11. RKincaid3 (RK3PO) says:

    Zack is correct.  This is about torturing something to achieve the desired effect–to hell with plain language, the rules statutory construction, the common-law (unless appropriately modified by subsequent statute), etc..  Each successive sliver whittles away the rule to a nullity.
     
    This is how the “rule of law” dies the death of 1000 papercuts as each person adjudicating it carves out teeny-tiney slivers of exceptions to the “rules” to justify the desired, “necessary” results.
     
    Such actions are societally and legally undisciplined and are to be condemned, not justified or celebrated via stare decisis or any other mechanism.