United States v. Laurance Freed
921 F.3d 716
7th Cir.2019Background
- Laurance Freed, CEO of Joseph Freed & Associates, managed UGV which held two TIF notes (redevelopment $4.3M; project $2.4M) issued by the City of Chicago; UGV had to certify it was not in default to receive TIF payments.
- In 2002 Freed pledged the $2.4M project note as collateral to Cole Taylor Bank; later UGV double-pledged that same project note as collateral to obtain access to a $105M bank consortium line of credit (the “big line”).
- By 2008–2009 Freed’s entities were in default on loans and UGV had unpaid taxes; Freed made presentations to a bank consortium and signed a loan modification with Bank of America that represented certain properties and the project note were available collateral, omitting or concealing defaults and encumbrances.
- Freed executed withdrawals from Streets of Woodfield in breach of a loan covenant requiring minimum reserves for taxes and deposits, and he submitted annual affidavits to the City certifying UGV was not in default to continue receiving TIF payments.
- A jury convicted Freed of bank fraud (18 U.S.C. § 1344), mail and wire fraud (18 U.S.C. §§ 1341, 1343), and making false statements to a financial institution (18 U.S.C. § 1014). Freed appealed, challenging jury instructions and the sufficiency of evidence for several counts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of aiding-and-abetting and “willfully causing” jury instructions | Pattern instructions correctly stated law; no plain error | Freed: instructions omitted requirement that an underlying crime occurred and misstated mens rea (used “knowingly” instead of “willfully”) | No plain error; instructions, read with the district court’s detailed element instructions, did not prejudice defendant and government’s theory alleged Freed was the principal actor |
| Sufficiency of evidence that lies to City defrauded banks (Counts 6–7: § 1344) | Government: Freed’s false city affidavits concealed defaults and prevented banks from discovering encumbrances on TIF notes | Freed: his lies helped banks by keeping TIF payments flowing; no intent to defraud banks | Affirmed: a reasonable juror could find Freed’s concealment was intended to and did prevent banks from discovering defaults, supporting bank fraud convictions |
| Sufficiency of evidence for false statements to banks during presentations (Counts 10–11: § 1014) | Government: slides represented TIF note was available collateral though it was double-pledged and diminished in value | Freed: statements were technically true or not actionable | Affirmed: jurors reasonably found the presentations implied availability of collateral and were materially false or misleading |
| Whether promises in loan agreements can be false statements of present intent (Counts 14,16: § 1014) | Government: Freed signed covenants while lacking present intent to comply (false present intent) | Freed: covenant promises are nonactionable future conduct | Affirmed: a promise made without present intent can be a false statement; evidence (failures to notify Bank of America; immediate withdrawals despite covenant) supported inference Freed lacked present intent to comply |
Key Cases Cited
- United States v. Pust, 798 F.3d 597 (7th Cir. 2015) (discusses waiver vs. forfeiture of jury-instruction objections)
- United States v. Natale, 719 F.3d 719 (7th Cir. 2013) (examines when failure to object preserves instructional error for review)
- Rosemond v. United States, 572 U.S. 65 (2014) (aiding-and-abetting mens rea requires affirmative act with intent to facilitate offense)
- Shaw v. United States, 137 S. Ct. 462 (2016) (elements of bank fraud under § 1344)
- Williams v. United States, 458 U.S. 279 (1982) (scope of false statement statutes; distinguishes nonfactual instruments)
- United States v. Shah, 44 F.3d 285 (5th Cir. 1995) (false promise can be an actionable false statement when made without present intent to perform)
- United States v. Marr, 760 F.3d 733 (7th Cir. 2014) (pattern jury instructions presumed correct)