Reversal on Some Issues in Bank Fraud Case
U.S. v. Flanders,--- F.3d ----, 2007 WL 1894419 (10th Cir. July 3, 2007)
Bank CEO challenged bank fraud, misapplication of loan, and false application convictions. Complex enough facts; read the case if you have a client charged under these statutes.
1. Insufficient evidence to show Defendant willfully misapplied bank funds under 18 U.S.C. § 656 for a car loan he approved for which the bad credit of the borrower was fully disclosed and Defendant's benefit from the loan was fully disclosed–no intent to defraud shown, and no intent to injure shown.
2. Evidence was slim but sufficient to show intent to defraud bank (§ 656) in real estate loan (though strong evidence of attempt to deceive the borrowers, evidence of intent to deceive the bank was weaker). Defendant caused bank to issue a loan in excess of the sale value of the real estate by inflating the sale price. Jury could infer that D’s last minute substitution of entities on the loan documents was meant to keep the bank in the dark as to whom was actually the borrower.
3. Sufficient evidence to prove violation of 18 U.S.C. § 1344(1). No loss to the bank need be shown regarding this real estate loan transaction. Evidence that D schemed to defraud Bank by concealing a rejected borrower’s continued involvement in the transaction was enough to support conviction.
4. Evidence sufficient for false entry conviction when Defendant directed typist to delete from board minutes the condition placed by the board for approval of loan.
5. Applying United States v. Gonzalez-Lopez, 126 S.Ct. 2557 (2006), the 10th finds no 6th Amendment violation of the right to counsel of choice by district court’s denial of continuance that would have permitted sole representation by Defendant's hired counsel. (Court had granted a number of continuances due to co-Defendant’s incompetency and for time to prepare. Once Defendant had bucks to pay for private counsel, court would not grant continuance to let that counsel get up to speed, but allowed hired and appointed counsel to co-represent Defendant).Places on Defendant a burden to show prejudice to defense, which was not shown.
6. District court erred in applying a 2 level enhancement for Defendant’s alleged violation of a memo of understanding (under a now-extinct guideline enhancement provision)–the MOU was not mandatory, only advisory, so violation of it did not support the enhancement. See opinion for treatment of challenges to more than minimal planning, abuse of position of trust, obstruction enhancements.
Bank CEO challenged bank fraud, misapplication of loan, and false application convictions. Complex enough facts; read the case if you have a client charged under these statutes.
1. Insufficient evidence to show Defendant willfully misapplied bank funds under 18 U.S.C. § 656 for a car loan he approved for which the bad credit of the borrower was fully disclosed and Defendant's benefit from the loan was fully disclosed–no intent to defraud shown, and no intent to injure shown.
2. Evidence was slim but sufficient to show intent to defraud bank (§ 656) in real estate loan (though strong evidence of attempt to deceive the borrowers, evidence of intent to deceive the bank was weaker). Defendant caused bank to issue a loan in excess of the sale value of the real estate by inflating the sale price. Jury could infer that D’s last minute substitution of entities on the loan documents was meant to keep the bank in the dark as to whom was actually the borrower.
3. Sufficient evidence to prove violation of 18 U.S.C. § 1344(1). No loss to the bank need be shown regarding this real estate loan transaction. Evidence that D schemed to defraud Bank by concealing a rejected borrower’s continued involvement in the transaction was enough to support conviction.
4. Evidence sufficient for false entry conviction when Defendant directed typist to delete from board minutes the condition placed by the board for approval of loan.
5. Applying United States v. Gonzalez-Lopez, 126 S.Ct. 2557 (2006), the 10th finds no 6th Amendment violation of the right to counsel of choice by district court’s denial of continuance that would have permitted sole representation by Defendant's hired counsel. (Court had granted a number of continuances due to co-Defendant’s incompetency and for time to prepare. Once Defendant had bucks to pay for private counsel, court would not grant continuance to let that counsel get up to speed, but allowed hired and appointed counsel to co-represent Defendant).Places on Defendant a burden to show prejudice to defense, which was not shown.
6. District court erred in applying a 2 level enhancement for Defendant’s alleged violation of a memo of understanding (under a now-extinct guideline enhancement provision)–the MOU was not mandatory, only advisory, so violation of it did not support the enhancement. See opinion for treatment of challenges to more than minimal planning, abuse of position of trust, obstruction enhancements.
posted by Anonymous at 9:44 AM
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