United States v. John Steffen
2012 U.S. App. LEXIS 16604
| 8th Cir. | 2012Background
- Steffen owned Pyramid Construction, Inc. and MB Lofts, LLC, which pledged tax credits as collateral for a bank loan.
- He sold collateral in December 2007 without giving the bank a draft of the sale agreement or prior approval.
- Proceeds from the sale were deposited in a non-Bank account, not the Bank’s designated deposit account.
- Bank later wired a loan draw, but MB Lofts defaulted after discovery of the collateral sale.
- Indictments: (i) first bank fraud indictment dismissed for lack of an express misrepresentation; (ii) second indictment charged bank, mail, and wire fraud based on a broader scheme.
- Court ultimately affirmed dismissal of the second indictment for failure to allege a scheme to defraud
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an affirmative misrepresentation is required to allege a scheme to defraud | Government contends no affirmative misrepresentation is needed | Steffen argues Ponec requires misrepresentation | No; scheme to defraud does not require an affirmative misrepresentation |
| Whether double-pledging can support a scheme to defraud | Government argues double-pledging shows scheme to defraud | Steffen argues not applicable here | Double-pledging not alleged here; fails to state a scheme to defraud |
| Whether acts of concealment or implied concealment can sustain a scheme to defraud | Government relies on concealment/omissions | Steffen contends absence of independent duty prevents concealment claim | Indictment fails to allege acts of concealment; mere nondisclosure insufficient |
| Whether omissions from an independent legal duty to disclose or implied misrepresentation can show a scheme to defraud | Government relies on independent duty or implied misrepresentation | Steffen argues no independent duty and no implied misrepresentation | No independent duty found; implied misrepresentation not shown; indictment insufficient |
Key Cases Cited
- Britton v. United States, 9 F.3d 708 (8th Cir. 1993) (scheme to defraud can exist without false representations)
- Colton v. United States, 231 F.3d 890 (4th Cir. 2000) (concealment can constitute fraud with independent duty; nondisclosure often insufficient)
- Sheahan v. United States, 31 F.3d 595 (8th Cir. 1994) (bank fraud may be proven without false representations; concealment distinguished from silence)
- Honarvar v. United States, 477 F.3d 999 (8th Cir. 2007) (distinguishes bank fraud from false statement offenses; supports independent-duty analysis)
- Neder v. United States, 527 U.S. 1 (U.S. 1999) (limits on fraud definitions consistent with common-law fraud concepts)
- Ponec v. United States, 163 F.3d 486 (8th Cir. 1998) (affirmative misrepresentation not always required for 1344(1); later decisions follow Britton</caseCaption>)