53 F.4th 543
10th Cir.2022Background:
- Troy A. Gregory, a senior UNB loan officer, arranged a $15.2 million participation construction loan (the "Bluejay" loan) for Bluejay Properties; BBOK served as correspondent and solicited ~26 participant banks.
- The Offering Package and participation agreements represented (inter alia) that borrowers were financially strong, the development land would be "free and clear" at closing, and $1.705 million in UNB CDs existed as pledged collateral (dated April 11, 2008).
- In fact the two CDs did not exist on April 11 and the land was encumbered; the April 28 closing and first draw (~$2.4M) funded the CDs (in part) and cleared liens largely by using loan proceeds and complex/ sham transactions (including a fabricated lumber invoice).
- Gregory signed security agreements and documents dated April 11 asserting the CDs and collateral existed; participant banks signed based on the Offering and representations from UNB/BBOK.
- A jury convicted Gregory of four counts of bank fraud (18 U.S.C. § 1344) and two counts of making false bank entries (18 U.S.C. § 1005); he was acquitted on conspiracy and sentenced to 60 months.
- On appeal Gregory challenged (1) sufficiency of the evidence for his convictions and (2) denial of a new trial based on alleged prosecutorial misconduct in a dramatized closing hypothetical; the Tenth Circuit affirmed.
Issues:
| Issue | Government's Argument | Gregory's Argument | Held |
|---|---|---|---|
| Sufficiency of evidence for bank fraud (§ 1344) | Gregory knowingly misrepresented borrowers' financial strength, the land's free-and-clear status, and existence of CDs; participant banks relied on those representations | Material facts were corrected by closing/funding; participant banks or BBOK understood timing; evidence was only technical | Affirmed — viewing evidence in government’s favor, a reasonable jury could find Gregory knowingly executed a scheme to defraud the banks |
| Sufficiency of evidence for false bank entries (§ 1005) | Gregory created dated security agreements, CD certificates and collateral receipts falsely representing deposits as of April 11 to deceive banks | Documents were not false "entries" in UNB’s formal accounting books and later entries cured any falsity | Affirmed — §1005 covers false entries in bank records/but not limited to formal ledgers; false dated documents plus intent to deceive supported convictions |
| Materiality of misrepresentations (CDs, land, borrower strength) | The misstatements were material to bankers' "three Cs" (character, capacity, collateral); participant witnesses testified they would not have participated had they known the truth | Any deficiencies were disclosed to BBOK or were timing/technical matters that would not have changed participants' decisions | Affirmed — bankers’ testimony and documentary/timing evidence supported materiality and reasonable inferences of intentional nondisclosure |
| Prosecutorial misconduct—closing-argument hypothetical/new trial | Prosecutor’s dramatized, hypothetical boardroom speech was a permissible rhetorical device rooted in evidence and reasonable inference to show materiality | The dramatization presented facts not in evidence and was misleading; required new trial | Affirmed — the hypothetical was a legitimate argument, prefaced as hypothetical, supported by inferences from the record and did not render trial fundamentally unfair |
Key Cases Cited
- Scull v. United States, 321 F.3d 1270 (10th Cir. 2003) (standard for reviewing sufficiency of evidence)
- Flanders v. United States, 491 F.3d 1197 (10th Cir. 2007) (elements of § 1344 bank-fraud claim require misrepresentation or concealment of material fact)
- Iverson v. United States, 818 F.3d 1015 (10th Cir. 2016) (conviction stands if evidence supports either prong of § 1344)
- Rackley v. United States, 986 F.2d 1357 (10th Cir. 1993) (elements for § 1344(2) claim)
- Loughrin v. United States, 573 U.S. 351 (2014) (distinguishing intent requirements under offense statutes)
- Gallant v. United States, 537 F.3d 1202 (10th Cir. 2008) (elements of § 1005 false-entry offense)
- Darby v. United States, 289 U.S. 224 (1933) (historical purpose of § 1005 to ensure truthful bank records)
- Phillips v. United States, 406 F.2d 599 (10th Cir. 1969) (false book entry with intent to deceive sufficient despite later corrective entries)
- Whittenburg v. Werner Enters., 561 F.3d 1122 (10th Cir. 2009) (limits on closing-argument hypotheticals where unsupported by evidence)
- Abela v. Martin, 380 F.3d 915 (6th Cir. 2004) (permissibility of prefaced hypothetical conversation in closing argument)
- United States v. Young, 955 F.2d 99 (1st Cir. 1992) (prosecutor’s latitude to draw inferences in closing)
- United States v. Hammers, 942 F.3d 1001 (10th Cir. 2019) (prosecutorial latitude in argument; review of reasonable inferences)