United States v. Paul Kramer, 768 F.3d 766

Background

Paul Kramer operated Kramer Mortgage Company, Iowa Closing and Escrow, and LDF Development; Kramer Mortgage had a revolving credit agreement with U.S. Bank used to fund construction loans, with mortgages assigned to U.S. Bank as collateral.
Kramer Mortgage collected borrower payoffs but delayed or failed to forward them to U.S. Bank, double-pledged collateral to other lenders, and diverted funds (including from escrow/trust accounts) to personal use and to cover shortfalls.
LDF used straw or non-occupant buyers (e.g., Flickinger) and submitted loan applications with misrepresentations; Kramer closed some loans at Iowa Closing and directed notarization of false documents.
U.S. Bank discovered irregularities, took the account into Special Assets, sued Kramer Mortgage and obtained a judgment; post-judgment sales and losses exceeded $2 million.
Kramer and co-defendants were indicted for conspiracy, bank fraud, and wire fraud; Kramer was convicted at trial. He appealed raising four principal challenges: severance, exclusion of civil-case evidence (good-faith defense), improper closing argument, and restitution calculation.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Severance of trials	Kramer: joint trial prejudiced him; co-defendant and government "double-teamed," antagonistic defenses caused prejudice	Govt & court: antagonistic defenses common; no substantial risk jury would convict based solely on conflict	Denied — no abuse of discretion; defendant failed to show clear prejudice (presumption against severance)
Exclusion of civil-case evidence (good-faith)	Kramer: evidence from U.S. Bank civil suit (nature of credit, lack of fraud allegation, ongoing negotiations) was vital to show good-faith belief he need not remit payoffs	Govt & court: most probative facts were already in evidence; proffered evidence was potentially confusing and cumulative under Rule 403	Denied — exclusion within discretion; any error harmless because jury heard contract, testimony, and cross-examination reflecting ambiguity and negotiations
Prosecutor's closing remark (“Robbing Peter to pay Paul”)	Kramer: phrase insinuated violence and was prejudicial (also his first name is Paul) warranting mistrial	Govt & court: phrase is common idiom, nonviolent in context; explanation and curative action occurred after objection	Denied — no clear abuse; remark not prejudicial in context
Restitution/loss calculation	Kramer: district court relied on a government chart including properties not listed in indictment; insufficient specific link between those properties and his fraud	Govt & court: restitution may include losses caused by the overall fraudulent scheme; evidence at trial showed the scheme encompassed the properties	Denied — restitution calculation not an abuse of discretion; losses tied to the scheme justified amount ordered

Key Cases Cited

Delpit v. United States, 94 F.3d 1134 (8th Cir. 1996) (antagonistic co-defendant defenses require severance only when conflict would cause jury to infer guilt of both)
Zafiro v. United States, 506 U.S. 534 (1993) (relevant co-defendant testimony is not prejudicial merely because witness is a co-defendant)
Radtke v. United States, 415 F.3d 826 (8th Cir. 2005) (post-discovery exculpatory acts have minimal probative value for state of mind at time of alleged crime)
Beaman v. United States, 361 F.3d 1061 (8th Cir. 2004) (district court has broad discretion to control closing arguments)
United States v. Engelmann, 720 F.3d 1005 (8th Cir. 2013) (method for calculating restitution in real estate fraud — subtract sale proceeds from amount victim was entitled to collect)
United States v. Spencer, 700 F.3d 317 (8th Cir. 2012) (restitution may include losses directly caused by a scheme even if specific properties were not alleged in the indictment)
United States v. DeRosier, 501 F.3d 888 (8th Cir. 2007) (restitution may be ordered for conduct that is part of a broad scheme to defraud)