*2 GOLDBERG, Bеfore JOLLY and BARKSDALE, Judges. Circuit JOLLY, E. GRADY Judge: Circuit Rudolph W. Larry Beuttenmuller and R. Gill appeal criminal arising convictions out of their involvement complex in a real estate sales involving the now-failed Shamrock Federal Savings gov- Bank. The ernment contends that these defendants con- spired with and aided and abetted bank offi- illegal cials “cash for trash” scheme to sell—and thus remove from the bank’s rec- ords—undesirable real estate owned (“REO”). Various other alleged offenses are been scheme, involved in the includ- a false in bank records. Shamrock year, would close which of the fiscal to re- end however, legally entitled Savings, Savings would September classified through a sale move on its balance sheet to create required pur- to search It was entitled REO. capital. against Conse- reserve substantial up to loan property, buy the willing to chaser looking for Savings began quently, Shamrock in a price purchase percent eighty *3 or- Tanglewood property in buyer for a arrange an ex- loan, and to non-recourse ac- of the REO the value to reduce der goal of accomplish its equity to of change procedure for the bank acceptable count —an from its books. removing REO banking requirements of long as follow so right to remove bank’s on the restriction met. regulations were arrangements plan and was that its REO ap- comply with un- Meanwhile, previously must the REO investors disposing of two we Larry Because regulations. Savings, Gill and laws with Shamrock plicable connected prove experiencing failed their government Billings, were and Richard conclude Billings and laws violated difficulties. Gill conduct own financial the defendants’ venture, joint States, convictions formed reverse their investors who we were Venture, to 150 Joint the Mansfield as counts. known on all develop approximately acres
manage and I Mansfield, Tex- land in agricultural of vacant (referred the “Mansfield to hereafter as as chairman, Lane, 1986, Jerry D. was en- property”). The of officer chief executive and president, trust, securing deeds of several cumbered savings stock Savings, a federal Shamrock mortgage and $2,220,000in relat- of excess by the Federal deposits insured with bank Billings personally were ed Gill and debt.2 Corporation Insurance Savings and Loan debt, portion of for a substantial hable savings and (“FSLIC”), realized generated no and, itself because rapidly deteri- portfolio was real estate loan’s required to Billings income, Gill and portfolio, its to stabilize In an effort orating. principal payments and interest make seventy-sev- on foreclosed Shamrock personal resources. lots, as known Austin, residential Texas en 1986, Bill- a loan and secured Gill During the summer Tanglewood property, or seventy percent seeking an investor lender than accounting ings were for more property’s Following the Mansfield capital.1 total reheve them Savings’ Shamrock Billings unsuccess- and property was Gill foreclosure, crushing debt. in- fifty owned,” potential fully more contacted “real estate for as accounted Eventually, Gill success. of Shamrock without “REO,” vestors on the balance sheet Franks, con- real estate large D. Jack contacted surprisingly, Savings. Not sultant, broker, speculator with ties and accounting prob- an caused of REO amount Franks, on be- institutions.3 Tangle- thrift numerous Savings. If lem for Shamrock began negotiations Billings, half of Gill REO at classified property remained wood trial, testified witnesses September 3.At foreclosure time 1. At industry “Mr. Fix-it” de- was known on the accrued interest Franks principal and $2,464,000. buyers. ability locate investors his loan totalled faulted charges guilty of unlawful pleaded Franks originally purchased a 150- Billings 2. Gill involving a finan- a transaction participation in as Mans- became known that later acre tract wholly to Shamrock unrelated institution cial thereafter, $1,875,000. Soon property for field agreement con- plea Savings. Pursuant $130,- adjoining acres purchased 5.7 they transaction, Franks unrelated with that nection provided adjoining 5.7-acre This 393. any concerning any testify at trial agreed to remaining 150 highway access to the valuable irrespec- been he had of which matter involved— thus, acres, value increasing the overall any particular his conduct of whether tive Additionally, tracts. combined govern- improper. The proper or matter zoning planning and meeting began with improper Franks has not accused commission, ultimately the engineers, city this case. conduct effort to rezone City Council ap- property’s rezoning, the Mаnsfield After praised note $4 See over million. value was infra Savings through Shamrock Jerry ty, Lane including all principal and interest in hopes persuading Shamrock Savings to due on its outstanding obligations, debt joint invest in the Mansfield venture. A which would repaid be to Shamrock meetings series of and conferences were held upon Land sale of property.6 during July August, involving Lane, (c) partial payment As for their equity in Franks, Gill, Billings. meetings These property, both Gill and and conferences resulted in following would receive each in transaction: cash closing.7 (a) Land, wholly owned sub- (d) Franks would receive a finder’s fee of sidiary of Savings, pay $50,000 in return for his services. This $753,290.634 in cash to the Mansfield paid fee was to closing at the 150 Joint forty-five Venture for per- *4 property Mansfield transaction out of (45%) equity cent joint interest in the $753,290.63 paid the by Shamrock Land. venture. The sole asset of joint the (e) closing After the transaction, Mansfield venture was the property, Mansfield Billings, Gill and through newly the cre- which, at transaction, the time of the ated Venture, Southmeadow Joint would appraised an value of approximately $4 buy the Tanglewood property, which had million.5 appraised an value of approximately (b) $2.9 part As of the consideration for the million, Savings Shamrock interest joint venture, Mansfield $2,725,000. Shamrock Land had a non-recourse obli-
gation pay (f) all financing $753,290.63 future pay- Of the paid by Shamrock to ments of the Mansfield 150 Joint Ven- the Mansfield 150 Joint Venture for the arising ture out of the Mansfield proper- $555,000 Mansfield property, would be $753,290.63 4. payment, The cash which consti- present tion was based on the condition of the only part tuted of the total paid by consideration property, or whether it was based assump- on the Shamrock, provide was "backed into" to suffi- improvements tion additional be would complete cient cash to Tangle- the sale of the trial, At roughly made. Miller estimated that property wood necessary and cover expen- other improvements those possibly could cost between ditures associated with the sale. pay- This cash $1 $3 million. Because we must the view $555,000 provided ment twenty percent approximately an light evidence in the most prose- favorable to the (20%) payment down necessary cution, we will assume that property had a allow Shamrock to record a sale of appraised net $4 value of ap- million. These Tanglewood properly. remaining bal- praisals testimony and this only are the (a) applied ance was payments cash to Gill appearing anywhere in the record the dollar Billings and equity for their interests in the property value at the time the transac- ($50,000 property each); (b) Mansfield the find- question. Thus, tion in there nois evidence that ($50,000); (c) er's fee to expenses Franks in- would allow a beyond rational to conclude Billings curred Gill and in connection with reasonable doubt that the was worth ($34,509.63); (d) the transaction title insur- less $4 million. premiums ($13,781.00). ance 6. joint Under agreement terms venture 5. Gill first had the Mansfield proper- Gill, entered into Billings, thе North Star ty appraised in long March before Gill and (Franks), Group Land, upon Shamrock sale Billings came into Jerry contact with Lane and property, the Mansfield proceeds would Miller, Kelly Savings. Shamrock ap- a licensed pay first off indebtedness on praiser, appraisal stated in his that the property expenses associated with Any the sale. re- $7,123,000. was worth year, Sep- Later that maining proceeds would then first be distributed tember, Billings sought Gill and updated ap- compensate Shamrock Land to it for its initial praisal preparation September for the 30th $753,290.63 investment, any payments and for closing Miller, with Savings. Shamrock whose made on the Any remaining indebtedness. pro- professional competence questioned, was never ceeds would among then be divided joint reappraised property, again concluding that according ventures to the formula contained $7,123,000. with was worth There has been joint agreement. venture suggestion appeal at trial or on apprais- als length, professional are not an arms assess- property. $7,123,000 ment figure Although argues 7. one No improper it would be was the dollar valuation contained in unlawful for Gill and to receive appraisals, question there was some payment raised at partial equity their in Mansfield concerning trial $7 whether this million property. valua- real estate as a Savings as to Shamrock paid back property. Tanglewood (20%) on commission down twenty-percent and several other agreed tо this parties The balance property. Tanglewood signed the they settle- changes, and minor price would $2,725,000 purchase the settle- In addition to statements. $2,500,000 ment non-re- through a paid statements, executed parties also nor Gill neither for which course loan Tying concerning Bank agreement liability. letter personal Billings would have in- agreement, which This letter in- Act.8 included loan This non-recourse Billings from preclude $330,- tended approximately terest reserve Ty- Savings under suing Shamrock later payment to Act, Shamrock described Construction, a new- Homes (g) Shamrock the contem- 150 Joint Venture subsidiary of wholly owned ly organized prop- Tanglewood purchase of poraneous the resi- Land, market exchange trans- “single integrated as a erty Tangle- up make dential lots action.” prop- the sale property after wood though closing, Beuttenmul- Billings even completing erty to Gill After property inter- documents further forwarded settlement had no ler All instructions. escrow Title Southwest est *5 contain- a binder mainte- to Lane with the also He delivered associated expenses for by closing documents paid copies marketing be would nance and contained, This binder property. from the Mansfield Proceeds Homes. Shamrock documents, a closing other along with Tanglewood lots would any of the sale Beuttenmuller agreement. copy loan of the of the letter reduce balance used to closing containing the separate binder Savings. sent by Shamrock held Tanglewood of the the sale documents sales closing for the preparation included Tanglewood binder This property. negotia- completing after and $50,- reflecting the statement the settlement Lane Beut- parties, retained among the tions Billings, but to “brokerage commission” Greg- firm of law tenmuller, partner agree- of the letter copy contain not did Beuttenmuller, all prepare to ory, Self & transactions the two tying expressly transaction. for the necessary documentation placed closing binders Both together. closing so that structured Beuttenmuller they records Savings’ among Shamrock the in- purchase first would Land Shamrock of information source a primary served Venture. 150 Joint terest auditors, and examiners. personnel, bank of the transac- portion completing After Tanglewood/Mans- of the result a direct As complete the sale tion, then parties would complet- transaction, Shamrock oc- field would All property. Tanglewood in- an after-tax year reporting its fiscal ed September offices on cur at Beuttenmuller’s $163,000 profit $600,000. The of over Savings’ come day in Shamrock last Savings in connection by Shamrock reported year. fiscal Tanglewood with sale clear closing, became day of theOn through the Southmeadow Gill planned. originally go as all approximately accounted Venture Joint his finder’s increased closing, Franks At the (25%) in- of consolidated twenty-five percent $100,000, a move that $50,000 to fee year. for the come an additiоnal supply Shamrock required had under- obligations it to the Pursuant In an avoid closing. effort $50,000 at cash paid the closing, Land Shamrock at the taken bring additional for Shamrock the need expenses associated sug- interest table, Beuttenmuller closing cash also Homes $50,000 he Mansfield Billings receive gested that expenses maintenance the sales paid all interest equity his to receive slated trans- complete second willingness tomer’s statute Tying Act is federal 8. The Bank damages same institution. with the action civil to seek permits customers bank the cus- conditioned one transaction when Tanglewood associated with the property, two fraud, counts of bank two counts of though even was owned causing Gill made, entries to be and two Billings through the Southmeadow Joint counts of misapplication of funds. Gill and Venture. virtually While had in- Beuttenmuller pleaded both guilty. volvement with property, Lane, however, executed pleaded guilty to the one necessary documents as individual lots false entries count.9 were sold Shamrock Land to other third- Gill and Beuttenmuller were tried before a parties. jury. convicted Beuttenmuller Approximately years later, two on October conspiracy fraud, to commit bank and aiding 14,1988, the FSLIC declared Shamrock Sav- abetting a false in credit institution ings insolvent and closed the bank. At the reports. Although jury acquitted Gill of time Shamrock Savings was declared insol- conspiracy charge, convicted him vent, the investment the Mansfield 150 aiding and abetting bank aiding fraud and Joint Venturе among was included abetting misapplication of bank funds. Savings’ assets. At point, Shamrock The district court sentenced Beuttenmuller Land paid approximately $1.4 million prison two nine-month sentences, to run loan payments, general expenses, and mar- concurrently, $50,000 and a fine. Gill was keting expenses associated with the Mans- sentenced to sixteen imprisonment months field property. Shamrock Savings eventually and a fine. Both defendants appeal, foreclosed on Tanglewood property, and arguing that the evidence is insufficient to failed, the time the bank support their convictions.10 again classified REO. Ill
II *6 A 19, On 1992, Gill, March Beuttenmuller, and Lane were alleged indicted for First, criminal Beuttenmuller contends that conduct related Tanglewood/Mansfield to the there was insufficient evidence to allow the real estate transaction. charged Gill was jury to convict conspiracy him for to defraud with one count conspiracy of to defraud the the United States violation of 18 U.S.C. States, United to federally defraud a § insured 371.11 The standard of review of a suffi institution, financial to make false ciency entries of the evidence relating claim to a the books of such institution to and misapply criminal whether, conviction is after viewing funds of the institution. He was further the evidence in light most favorable to charged with two fraud, counts of verdict, bank and any rational of trier fact could two misapplication counts of belong- of funds have found the essential elements of the Savings, to Shamrock aiding and beyond crime a reasonable doubt. United abetting bank fraud misapplication Kindig, v. of States 703, (5th 854 F.2d 706-07 funds. Beuttenmuller charged Cir.1988). was also A verdict must upheld if be there one of count conspiracy, and with one count is substantial evidence to support it. Id. of false in credit reports, institution 707. To 371, establish a § violation of aiding abetting entry. government Lane prove beyond must a reasonable charged 1) with one count conspiracy, doubt or people two more agreed to exchange In guilty plea for his to this and other pertinent 11.Section 371 part states in offenses, charged five-year Lane received a pris- persons two [i]f or conspire more to commit $100,000 on sentence and a agreed fine. He also any against States, offense the United toor testify at Gill and Beuttenmuller's trial as a States, defraud the any agency or government there- witness. any of in any manner or for purpose, and one 10. Beuttenmuller and presented Gill persons or more of both addi- do act to effect arguments. However, tional light object our conspiracy, each shall disposition sufficiency of the of the evidence is- fined not imprisoned more than not sue, unnecessary it is argu- to consider those years, more than five or both. ments. (1966). § 18 U.S.C. 371
979
2)
definition,
giving a
objective;
precise
are no cases
there
pursue an unlawful
join the
voluntarily agreed
con
understand the term from
case
we
this
defendant
3)
cases,
one or more
spiracy; and
and other
a “cash for trash” transac-
conspiracy performed an
members
tion is a transaction
which an institution
objectives of the
effectively gives
somebody—usually
overt act
further
cash
Tullos,
conspiracy.
v.
868
United States
applied
form of a loan—to be
as a
(5th
denied,
Cir.),
689,
cert.
U.S.
F.2d
purchase
down
on the
of the institu-
3171,
1112,
981 government’s theory provide has failed to Under the of government the cause object case, aiding of con- this the conviction for and sufficient evidence that abet illegal, misapplication ting we reverse Beuttenmul- of funds and defraud spiracy was conspiracy. ing conviction or ler’s bank rides falls whether Sham purchase rock’s of interest the Mans
B a sham. field Because we have already government held that failed to argues Gill that there is insufficient prove beyond a that reasonable doubt support one his convictions on evidence Mansfield/Tanglewood transaction was less aiding abetting18 bank fraud count of and transaction, in 1344,19 value-for-value Gill’s § two of 18 violation U.S.C. circum tent cannot inferred aiding abetting misapplication counts of Thus, surrounding the § stances transaction. funds in violation of 18 U.S.C. 65720—all of being underlying no there criminal venture trans relating underlying to the same counts here, involved we reverse Gill’s conviction on Specifically, Gill action discussed above.21 each count. prove government failed to contends that intent, and—given requisite that he had government held that failed
that we have
C
Tanglewood-Mansfield
prove that
Finally,
agree.
con
Beuttenmuller contends that
illegal—we
To
presented by
government
aiding
abetting,
of
the evidence
is
vict
defendant
support
his conviction for
government
prove
must
that
the defendant
insufficient
aid
abetting
making
of a
intentionally
with a criminal ven
associated
venture,
ture,
sought
of a financial institution.
participated in the
records
18
2(b)
(1969);
§
§
18
to make the venture succeed. U.S.C.
U.S.C.
his actions
Murray,
518,
v.
(Supp.1993).
prove
To
that Beuttenmuller
United States
988 F.2d
Parekh,
(5th
aiding
Cir.1993);
guilty
abetting
of
in violation of 18
United States
(5th
2(b),22
see
Cir.1991);
§
demon
also
18 U.S.C.
must
F.2d
1)
(1969).
beyond
§
strate
a reasonable doubt
U.S.C.
representations,
pretenses,
prom-
rezoning
property was
or
fraudulent
that occurred since
undisputed
against
[guilty
$2
of
sold
million. The
ises shall be
an offense
rezoning,
this record demonstrates that after
United States.]
appraised value
least
had an
of at
(Supp.1993).
§
18 U.S.C.
$4 million.
pertinent part
Given the dissent's attacks on
value of
20. Section 657 states in
point
property,
necessary
we feel it
out
[any
any
person]
capacity
connected in
appraised
had an
value
the Mansfield
savings
corporation
...
loan
or associ-
[a]
years
April
after
$4
three
million in
some
acting
or
under the laws
ation ... authorized
question.
true
the transaction in
It is
institution the
States
trial,
appraisal
part
at
but
record
are
the Federal
accounts which
insured
sentencing.
only
Neverthe-
introduced
Corporation
Savings and
...
Loan Insurance
less,
appraised at
property was
the fact that the
funds,
willfully misapplies any moneys,
[who]
years
declining real
$4
three
later in a
million
belonging
[or] credits ...
to such institution
evidence con-
estate market verifies
record
against
guilty
an offense
the United
[shall be
cerning the value of the Mansfield transaction.
conclusion,
States.]
it verifies our
based
We think that
evidence,
(Supp.1993).
§ 657
juror
18 U.S.C.
could
on the record
beyond
doubt
conclude
a reasonable
aiding
question
two
cash
trash
21. The
convicted
counts
transaction in
was a
*9
aiding
abetting
two counts of
transaction.
and
bank fraud and
abetting misapplication of funds. At sen-
and
supra
See
note 21.
abetting
aiding
tencing,
and
bank
one count
multiplicious.
as
fraud was dismissed
that
19. Section 1344 states
executes,
[wjhoever knowingly
attempts to
or
2(b)
§
“[w]hoever
that
execute,
22. Title 18 U.S.C.
states
...
to defraud
a scheme or artifice
if direct-
institution;
willfully
act to be done which
causes an
any of
financial
or ...
to obtain
funds,
ly performed by
or
would be an
him
another
proper-
moneys,
credits ... or other
States,
punishable
against
United
is
custody
offense
ty
by,
control
owned
or under the
or
of,
institution,
principal.”
aas
false or
a financial
means of
982
willfully
Beuttenmuller
Swaim,
associated himself
(5th
States
1530,
757 F.2d
1534
v.
venture,
with a criminal
willfully partici- Cir.1985),
and
denied,
cert.
825,
474 U.S.
106
pated
it,
if
something
as
81,
(1985).
he
that
S.Ct.
wished to
ently,
that each
“[t]he concealment ‘must simply have
element of the offense that
capacity
Beuttenmuller
impair
pervert
or
the func
accused of aiding
abetting
tioning
government
of a
commit-
agency.”
(quot
Id.
ted by
person.
some other
United
Lichenstein,
States v.
United States v.
610 F.2d
Parekh,
(5th
1272,
926
Cir.),
F.2d at
(holding
denied,
407
1278
cert.
447 U.S.
government
907,
2991,
prove that
100
must
“the
S.Ct.
(1980));
defendant
L.Ed.2d 856
venture,
Beer,
associated with
(5th
a criminal
v.
partici-
168,
United States
518 F.2d
Cir.1975).
pated
venture,
in the
sought by
While materiality
his ac-
rests upon a
tion
succeed.”);
evidentiary
to make the
factual
venture
showing by
see
prosecu
also
tion,
United
Murray,
States v.
the actual
988 F.2d
determination of materiality
at 522.
question
is a
court,
law for the
and as
ease,
In this
the “criminal venture”
such, it is reviewed de novo. United States
of which Beuttenmuller has been convicted is
Lichenstein,
v.
innocence or be wholly inconsistent with ev
spectfully dissent.
ery
except
guilt”.
conclusion
that of
United
Bell,
547,
(5th
States v.
678 F.2d
549
I.
Cir.
1982) (en banc),
other grounds,
on
aff'd
I principally part company
the major-
356,
2398,
U.S.
103 S.Ct.
985 [ejnsure enti- ... to promulgated “was lender” investor “an Billings’ search the sale profits on excess record do not ties one. desperate awas to estate”, a 20 25 requires that of real A. on be made payment down percent as a valid sale. qualify Tanglewood for con- to conviction like Beuttenmuller’s As for or defraud an offense commit spiracy to line, former chief Shamrock’s Along that 871, § U.S.C. States, of 18 in violation witnesses, testi- officer, of Gill’s one financial the trans- accurately that majority states per- the 20 to have had that Shamrock fied “ provide to into’ ‘backed was issue action at sale of a to show order payment down cent of sale complete the to cash sufficient Likewise, profit. a book thus REO and 976 n. Maj. Op. at property.” Tanglewood payment down a testified Lane so that words, it was structured In other year of fiscal by the end to be made pay- down percent 20 day, a of the еnd closings 1986, 30, the date (September having as shown ($555,000) could be ment transactions) accountants to allow on Tanglewood on made been Finally, REO. Tanglewood from remove to 20a point: critical *13 “[f|or the transaction: them to [Shamrock] awareness parties who him allowed buy into our partnership we had buy [to] demanded.4) what he If $50,- the additional And, [Tanglewood].” so far as Lane was 000 were deducted from the Mansfield side of concerned, he they [Billings didn’t “think transaction, from which Franks al- was Gill] made payment”, a down thought con- ready set to original receive the $50,000, and sistent with the notion Billings and Gill assuming equity payments were still dis- (or merely conduits laundry) planned bursed as Billings to ($50,- and Gill Indeed, Shamrock funds. Lane stated that each), 000 there would not have been enough the entire purpose of the transaction “was to cash to make requisite percent 20 down REO”, sell figures arrived at for payment. So, suggested Beuttenmuller the transaction were by driven the need to Billings get his money as a “commission” on secure the 20 percent payment down on Tan- the sale of Tanglewood property. In this glewood. words, In other the transaction manner, $50,000 paid was out of the bore relationship no prices, market which proceeds of the payment” “down made to is the also conclusion expert reached wit- Shamrock.5 ness Tennant. Gill testified that the total The majority emphasizes appraised amount he received for the Mansfield Joint value of the property Mansfield justifica- as $50,000 Venture was exрenses; less obvious- tion for exchange being “value-for-value”. ly, Gill $555,000 did not view the that moved fact, In majority states that “[t]he in a circle having as ever profit been his evidence concerning record the dollar Likewise, Mansfield sale. Billings stated value of the Mansfield property demon- that he understood that $50,- he getting was that, strates at the transaction, time of the 000 for the property. the property had an appraised value of at primary purpose of the transaction is least million.” Op. $4 Maj. (emphasis at 980 highlighted by the curious maneuvering re- original); see 5; also id. at n. n. garding Franks’ fee and where Billings’ so- But, 17. proof cast doubt on this state- “equity payment” called would come from. ment. minute, At the last majority notes, Franks insisted that his fee be increased The majority figure derives its from the $50,000 $100,000. (The record testimony does Kelly Miller, who did the Mans- why reveal Franks demand, was able to appraisal field Apparently, 1986. the ma- receive, percent a 100 increase in his jority has taken his appraisal slightly over — 3. property The Mansfield totally that, leveraged. at the Tanglewood/Mansfield time of the purchased original Gill had transaction, public was a matter of information acres in June approximately 1985 for $1.9 mil- he subject that was the of a investigation. federal lion. Approximately $1.5 pur- And, million of that although he specifically could not recall if price chase was financed through seller he had Tanglewood/Mans- mentioned this to the non-recourse note. (approxi- The remainder parties, field he did state "letting that he was mately $400,000) through was financed a bank anyone that I was in business with” know of the And, loan. when first interest investigation. federal early seller came due Billings and Gill obtained another bank loan for to cov- 5.Billings nothing did to facilitate the sale of the er it. had,never fact, property. he seen it, (if did not know any) how much income it was notes, majority As the Franks was known producing, nothing it, try did to sell and had Fix-It”; "Mr. pursuant he testified at trial to a brokerage no dition, agreement with Shamrock. In ad- plea agreement in pleaded which guilty he had played tilso virtually no role in charges of participation unlawful in a transac- attempting to sell or find an investor for the involving tion a financial Maj. Op. institution. He testified that he “basi- 3.n. In late early 1986 or cally just Franks dumped had said, it in lap [Gill's] pleaded also guilty to two counts of mail you fraud whatever negotiate can on our best interests and one count of wire fraud. Franks probably recalled I go along will with.” could? Q. It Sir? by one that amount reduced million—and $7 much how regarding estimates Miller’s knowing that with- way I have A. develop the fully needed investment a calculation. that kind running out appraisal). (an of his assumption added). (This value did appraised (Emphasis this, the From n. 5. Maj. Op. at See attached in debt million $2.2 not consider view “[bjecause we must states majority property.) favorable most light assume will decided, we prosecution, most again may of $4 value appraised a net more appraisal Miller’s reasonably, that n. 5. Maj. Op. 976 discussed, appraisal his million.” speculative. As fully devel- assumed *14 gener- demonstrates But, record subdivision, that a residential oped as assumption: majority’s ousness fully-developed for demand lawyer]: BY [Beuttenmuller’s compa- years out—would property —two take as it would you said Q. And subdivisions, residential of other that rable [$7,128,000]lev- that get it to 2,000,000 to 1986). (in assumed This i.e., “comparables” el? Miller As deal, say the least. great a nothing guess. property said, testified, a that’s the Mansfield I A. As curbs, had no It “hay field”. more than a guess. that’s understand Q. I And, as lines, lines. sewer or gutters, water We that no calculation / have A. for no earlier, real had Miller clear was made cost. engineering supplied, weren’t (or mar- develop cost would it idea what a million? take Q. Could addition, although (In ket) property.6 it sure jury, Miller I’m almost take that. before elicited expressly A. Could present to a appraisal that. almost his take reduce did value.)7 million between Q. Somewhere
2,000,000? appraisal, speculative of this In the face devel- how it’s say depends I which A. would from other, evidence solid jury had being stage it’s at what finally oped property the Mansfield value it could —evi- in fa- rejects sold. majority apparently dence As appraisal. Miller’s reading of its vor of approx- only paid had noted, lawyer]: [DOJ BY about property imately million $2 much respect to how Miller, Keeping Q: Mr. the transaction. year before it it, testified develop you property that take maxim it would and true mind the tried easily it as willing pay Could a million. buyer take could what is wоrth $8,000,000? that the infer it, jury take could ap- significantly less was worth It sorry. I’m guess. having to A. I’m noted, Billings and Gill As value.8 praised take three. could testified own witnesses Beuttenmuller’s 7. One that my position disagrees with majority 6.The ap- may "involve deal a cash-for-trash that appraisal that jury decide could value very optimistic view ahas praisal that “Although there stating: speculative, ridiculously ap- thus, unsurprising land”; it is appraised val- concerning the question was some acreage development of full praisal assumed trial, was introduced no at ue possible future neglected to discount jury to reasonably conclude lead could present site to fully-developed from revenues invalid otherwise so flawed appraisal was opines that majority Although the value. Op. at Maj. altogether.” ignore jury could trial” that suggestion at "[tjhere been has what no clue Miller had As n. 17. discussed. “professional length, arm's not an appraisal was (from an develop the cost to it would Op. n. Maj. at 976 property”, assessment mar- standpoint, much less engineering at trial that suggestion very real awas there suggestions variously one); assented keting he exaggerated. greatly appraisal million, million, but $3 million, $2 $1 "rely jury cannot majority notes knowing” the 8. The way of "no he had concluded Op. n. Maj. as evidence.” on maxims development cost. were desperately “seeking an investor or bluntly, Put trial, did at $753,- lender to relieve them of the prop- figure “had no relationship whatever” to erty’s crushing Maj. debt.” Op. at 975. Ac- the value of the Mansfiеld property. tually, Billings and quite Gill were anxious to Considering that had sold a purchaser find a property; they had year earlier for about million, $2 and that put together marketing materials and con- about $2.2 million in debt it, was attached to tacted some people in the real estate and further considering that the real estate business an effort to sell But, Mansfield. market “gone in the toilet” since the $2 they “didn’t any buyers”; and, in as- million (and, sale as a consequence, Billings sessing the marketability Mansfield, Bill- and Gill could not purchaser), find a a rea- ings testified that it negligible, explain- sonable infer, quite could easily, that the ing that “the real estate market had definite- property was essentially worthless.10 ly gone in the They toilet.”9 were seeking sum, could well infer that the al- partner investor or only because of the leged “purchase” price of Mansfield was sus- parties absence interested an outright picious itself, setting even aside the am- purchase of Mansfield. ple, direct evidence that the “purchase” was In addition to the evidence discussed “backed into”. *15 above, expert witness Tennant testified that Nevertheless, it is towell remember that the transaction was circular and would not gave Billings and Gill relatively occur in the normal course of business. He little $550,000 more than on the condition stated that the transaction was not prod- the they that immediately give back as uct of a situation in which agreed “the upon a payment”. “down They simply had no prices ... would have come about through сhoice; get some relief from desper- their the market mechanisms....” asked, When ate relating condition Mansfield, they had he stated appraisals that the did not alter to take money from Shamrock’s left pocket, opinion. And, this gave he the jury informa- and return it to right.11 its tion suggesting genuine that a sale was the only means of actually ascertaining the value In addition to relying on speculative the (even of property if a jury this). must be told appraisal to justify conclusion, its the But, later, as is expert discussed an sug- witness original the 150 acre Mansfield tract "indicated gested to the property's a that value can be [rezoning] it could be Billings done.” ap- then truly only upon ascertained a sale. proached Gill with eye determining toward Thus, whether this so. was parties all the as- sumed property’s the Billings that, utility 9. development for also noted original the pur- since property when the million; sold $2 chase for around property, Mansfield “the real estate is a dubious claim that property’s the gone Later, had market value in- that, sour". he stated creased materially indeed, Gill doubled—as a desperately conse- purchaser searched — for a or in- quence (Even the rezoning. of vestor, the majority the "[r]eal estate market was the worst it notes erty that purchased been”, prop- the had and that “[t]here were no buy- other “develop” Maj. Op. it. at 975. If there ers out there." were to rezoning problems proposition un- —a supported by the record—then and Gill’s majority 10. The states thаt I "conveniently over- purchase would have been unlucky; worse than rezoning look[ the] that occurred the prop- since it would plain have stupid.) been Even if some erty was sold $2 for million. undisputed The nominal increase in value occurred as a conse- evidence in this record demonstrates that after quence rezoning, of way is there no knowing of rezoning, property appraised val- whether that increase offset the corresponding, ue of at least $4 Maj. Op. million.” at n. 17. intervening collapse (as of the real estate market majority appear makes it that there was a supra). discussed Accordingly, would not sudden in increase the property’s value on rezon- be irrational to conclude property that the was ing, but there is no evidence in record that worth $2 about million—without considering the rezoning anything was more than mere $2.2 attached million in debt. formality, and thus no original evidence that the purchase price did not already reflect Mansfield's they 11.At least get able "financing” value for exploitation. fact, commercial In to include a provi- non-recourse record contains parties evidence that sion; as- all, after things there are some that even sumed that the rezoning problem; would be no (or your straw laundiy) men should not have to indeed, the approached broker who Billings with do. support no Moreover, is evidence there appraisal million ato $4 refers majority real estate majority’s assertion although opines It 1989. in September “declining” between market at record part was-not appraisal this transaction) 1989. (the date property trial, the fact ... declining real estate aof only evidence years later three million at appraised $4 movement to the market’s relates market verifies market estate declining real purchase million the $2 of between the value concerning evidence record . in issue.13 transaction think that We transaction. conclusion, based our it verifies accomplish majority fails What con- juror could evidence, record it no what reference is unprecedented doubt a reasonable beyond clude posi- its for support namely, sought, doubt a cash question majority, Shamrock According to tion. trash transaction. million $1.4 invested Land added).12 (emphasis n. 17 Op. Maj. at 1988. before October acquisition its after presented utilizing evidence Any investment Maj. Op. jury’s verdict “verify” reversal its jury to the value raised majority evidence, accom- for insufficient to even appraisal subtracted to be of which least things, not several plishes what out begin figure of review scope limited discarding our totally in- earlier, to such prior years three worth case of no aware I am jury verdict. debt Also, secured vestment. rec- outside has utilized Further- million, considered. must be $2.2 insufficiency of convictions to reverse ord value to the 1989 more, discount one must it, to puts majority or, as the ownership evidence— (to have value present it does Apparently, “vеrify” reversal. its million $4 worth will be 1986 that *16 in property appraisal majority that the trouble worth not to own is dollars in 1989 guilt-innocence the in tested rigorously the dollars; inflation of in 1986 million $4 cross- example, (where, for trial of the phase associated costs opportunity currency and might appraisal the regarding examination interest, ie., money, of time-value the with illus- occurred). also The reference told, considered). appraisal the All must be majority is uncomfortable the trates position. majority’s the support does mus- it has record the support from the with precisely comports Overall, transaction irrational; jury’s verdict to deem tered def- own witness’ Beuttenmuller’s one of majority’s telling indication more “giving deal: “cash-for-trash” inition of re- its than imagined be can uncertainty something that buy money to somebody some after years made appraisal an course Obvious- bad.”14 of real get rid you want to jury. not disclosed $1,300,- months 12 within conducted were which appraisal to Presumably, ''1989” 12. August appraisal 1988 was an majority refers 000). apparent- appraisal Although this $4 million. of Fix-It”, a more provided 14.Franks, “Mr. a.k.a. sentencing— trial ly never introduced—at following term in of explanation detailed at introduced affidavit an into was referred prosecutor: colloquy with turn, affidavit, to an referred in sentencing. That Mansfield, is industry what term concerning estate real Q. memorandum April of To be kinds these value. commonly $4 million used which “reiterated” 4escribe confusion, majority and avoid with the transactions? cоnsistent frequently figure as a used is $4 million term refer A. will also we cash-for-trash used then. appraisal. and was cash-for-trash? term explain you Q. Could it, cash-for-trash, understand as I book, term A. The one majority's page from the Taking 13. bank, loan, lender, savings and means sentencing testi- at witnesses defendants' of whatever, furnish company, insurance financing of any devaluation "there wasn't” fied acquisition or refinanc- for either September 1986 between provided that person's ing aof May Furthermore, prepared appraisal utilized all, were funds of those portion, if not sentencing, con- 1990, at admitted which REO or an problem loan acquisition of $2,180,000 for value a market tained that lender. the books on a sale value if (and its fair estimated ly, it permissible was not savings for the false statement is may made prove useful. give loan to cash to somebody to be used as a C Williams, States v. 12 F.3d f. down payment on the purchase of (5th its 452, REO. Cir.1994) (in assessing material And, the fact that other “value-for-value” ity of false statements under 18 U.S.C. might (whether transactions place have taken 1014, § “the statements must analyzed independent scheme, designed to com- particular context in they which were pensate the straw men for their complicity, made”) (footnote omitted). with citation Giv or done to cover-up the underlying transac- en Franks’ last-minute for demand an addi tion) no moment.15 A jury evaluating $50,000, tional and Shamrock’s desire to the evidence could conclude that the intent of avoid bringing “additional cash to the closing parties was, the exchange bottom, at table”, Maj. see Op. at Shamrock, as to allow Shamrock to remove REO fur- supra, discussed pay could not Billings from nishing its own cash for the down payment; the Mansfield side of the transaction and still something it could not do.16 have sufficient cash to requisite make the down payment Tanglewood, the raison From the trial, adduced d’etre the exchange. Thus, majority “Beuttenmul- simply draws different inferences ler suggested $50,- receive jury. But, did the we cannot substitute ... as a real estate our commission on the jurors’, inferences unless those Tanglewood property” paid to be inferences Sham That, irrational. I respect- rock sometime fully submit, after closing here; was not the case far from both Maj. transactions. Op. it. Now, at 977. equity payment be made out of Tanglewood transaction, and thus B. accounted for on its disbursement schedule. It was in this context that the entry As false Beuttenmuller’s conviction for aid- Billing’s equity payment as a abetting “commission” the making of a entry on the sale Tanglewood And, in the was made. records of a institution, financial entry this false violation 2(b), §§ U.S.C. schedule the evi- capacity had the mislead, dence was sufficient hence support the verdict. material, because majority disposes accurate of this claim because it *17 Tanglewood finds binder’s nothing disbursement materially schedule misleading about of payment the representation the an equity as payment Tanglewood the for the binder $50,000 Mansfield property that might the payment have to alerted bank Billings was a examiners to the “commission” for existence his of a efforts in tied selling transac Tan- glewood, tion —thus exposing rather than the agreed earlier “cash-for-trash” “eq- uity payment” deal. on the Mansfield Maj. Op. at Again, 982-83. I respectfully Without such a entry, truthful Tangle- disagree. wood binder contained no reference to the When deciding whether a false statement transaction; Mansfield it omits to refer to material, is inquiry into the context in which the other half of what allegedly was “single a Q. And in this transaction what was the differently, cash Put perhaps a jury could infer that a going to be? percent 45 stake $100,- in Mansfield was worth A. The portion cash would be a of the funds (the agreed 000 equity payments Billings and generated that were from corpora- the service Gill). But, this falls far accounting short of Jerry tion of savings Lane's and loan[’]s[] ac- $550,000 circle; that moved ain and a quisition of Gill property. portion A of that rationally could conclude that the was cash would be used acquisition to fund the of part exchange. value-for-value the REO. Q. What was the trash? A. Trash would be referred I to as also ample note Austin evidence existed to property [Tanglewood], prove that Beuttenmuller knew per- about the 20 (Emphasis added.) requirement, cent why understood the deal being "papered" him 15. A manner that find could might that there have been it was. some component value-for-value exchange.
991 1530, 1534 Swaim, F.2d 757 v. States ex- Bank exchange transaction”. integrated States citing United Cir.) (5th (quoting Tangle- examined have would aminers Cir.1976) (5th 187, 196 Markham, 537 F.2d corporate Shamrock binder; former a wood 739, 50 1041, 97 S.Ct. denied, 429 U.S. to what cert. testified director secretary and discussing (both 18 (1977)) 752 L.Ed.2d might they discover: denied, U.S. 1001), § cert. in U.S.C. there are hints what tell us you Q. Can (1985). To be L.Ed.2d loan this S.Ct. time same that at the binder simply “must material, statement false a affiliate a Shamrock place took and sale pervert impair capacity have to Mr. $730,000 payment amade agency.” government functioning of a Cf. Billings? Mr. (footnote inter Swaim, F.2d nois there contents the table From A. 1001). discussing § omitted; quotations nal indication. Tanglewood uity payment” Mansfield been related reasonably payment tendency majority’s own existence ernment majority perhaps, characterizing the disputes the commission ly affect would had been cy”, or [something] different Q. And with are A. testify helping jury could alerted From Tanglewood majority neither can have present as a must that some opines property, labeled it. conceal tell you conclude binder influence a tied on the affiliate? function this file “commission” underlying probed the false down In this reasonably find prove. reckoning, other respect *18 that $50,000 to equity transaction. us what instead another sale payment aof equity nothing. if the witness —was regulator sense, ... entry Maj. a bank denies bank payment facts. governmental that reflected might indications further this payment”. ... as a Op. at 982. Billings on “would came on examiner — that, examiner payment And, by the same “a might have Rather, all the have jury could brokerage falsity of regulator required function or from adverse- an sale docu- there had a agen- “eq- gov- done Maj. nor or, ... would lators. capacity wood former lators. director there If the binder, would —at “$50,000 to Rich arouse fered former er for he hypothetical obscure altered Surely, problem A. trash gave the if that fact, Beuttenmuller’s binder additional not have Texas, have Are As deputy Moreover, as the makes a cash-for-trash transaction a tied discussed, with it. examiner’s entry you the least —have impair a truthful characterization been false would who offered, [*] aas following savings clear, nothing in the saying that prosecutor: property”, participated transaction, problem statement was called examined corporate government Under alert “commission”, admitted at Shamrock [*] by Beuttenmuller entry were suspicions. deal, he would Tanglewood supporting testimony when an examiner cross-examination, own testimony hypothetically loan [*] equity by such i.e., secretary issue characterizing witnesses tendency to state Tanglewood bank commission- designed to a cash-for- Mansfield. made, [*] Savings? payment had the Tangle- this. binder that he regu- regu- entry i.e., was Hi Mr. of- A 982-83. Op. at Yes, sir. Q. regu- a bank is correct majority situa- into factor I’m to That A. entry did testify that did not lator tion? func- agency’s governmental affect gotten he’s Yes, And that sir. Q. need “misrepresentation course, a Of tion. the cash-for- consideration govern- the actions influenced not have Follow that? deal. trash agents agency, and No. A. deceived.” been actually need Q. Okay. The commission that is in Q. long So as it’s disclosed? hypothetical [Beuttenmuller’s] you A. long So as it’s disclosed. opined on payment part pay- of his — Q. And it’s not disclosed then what? ment for doing the cash-for-trash deal. A. I understand probably against it’s Follow that? law. (Witness head.) A. nods course, Of did the not, disbursement Q. And payment doesn’t say any- face, on its disclose that Billings princi- was a thing about the other says It deal. it’s a pal in Tanglewood deal, but completely just commission like any other commis- failed to disclose the transaction for which sion paid to a broker. It’s not disclosed. payment really being made: Does change your opinion, sir? Mansfield transaction. very This transaction you’re A. If telling me that the commis- illustrates what this witness agreed was “cor- sion was not really commission, I then rect”, that, namely, general as a proposition guess we would go have to back and look in the savings and industry, loan “failure of at what it really for. played pretty disclosure important role in Q. gives you But it problem, doesn’t it? the inability of the examiners to find those A. It does. long transactions until they after had deterio- rated”. (Emphasis added.) Also, although it Likewise, should be obvious, another one Beuttenmuller’s wit- nesses, witnesses, Beuttenmuller’s own a former member of former the Texas fi- deputy savings and commission, commissioner, nance loan which de- responsible scribed awhat bank overseeing thrifts, examiner would emphasized do if he impor- discovered a
tance of full cash-for-trash might in closing disclosure deal —as documents. have happened if the cross-examination, he, On too, expressed con- were disclosed important cern about the false entry: binder: Q. given So hypothetical [Beut- Q. you But if take the provided description tenmuller] you, cash- what effect you for-trash that gave us, if does—what your effect that’s fully answer does the disclosed to following they’re examiners change in not going to facts have? That the allow that stand, sale to money paid they? are [Billings] is not a brokerage Well, commission A. if because he’s never sale has place seen the taken they may object [Ra]ther money they it if perceive is payment it in that situation, for another yes. transaction having nothing to do other than the fact Q. that —that the down And independent auditors aren’t is brought over? going Does that any profit to allow reported that’s change your opinion? either, stand are they? A. I’m sorry. saying You’re that— A. Probably not. Q. Let me question. shorten the apolo- I The majority suggests that the gize. Does the fact that the —that that was made —the paid “commission” to a
brokerage commission reported, that’s “purchaser” “equally atypical”. Maj. —was disclosed, that’s is money paid to him for Op. at 983. The relevance of this suggestion doing something else having nothing to do is not apparent; it does not seem that an *19 with the property. Does change your that “atypical” false can obviate the materi- opinion? al effect of the false entry as measured A. Not necessarily, if it pаrt was against what should have occurred —a truth- transaction. A commission may be one entry. of ful Moreover, Billings was not shown many factors built into the structure of a purchaser as a Tanglewood property; deal, when the broker is a principal in purchaser the the was the “Southmeadow Joint transaction. Venture”.17 In light the of entry’s the false Perhaps 17. the majority supposes diligent that a bank examiner could discern from other docu- Therefore, af- I would did. that verdicts capable influence, or be tendency to “natural majority the Because convictions. the firm influencing, a affecting or of dis- respectfully otherwise, I must concludes (quot at Swaim, F.2d function”, see 196), false sent. the at Markham, F.2d ing course, false this Of material. entry was of illumination further entry provides transaction; if the to parties of intent of value”, instead “value was exchange why par “eash-for-trash”, wonders one calling attention to risk hesitant so were ties Tangle- in the transaction the Mansfield to binder.
wood OF OF GOVERNORS BOARD c. SYSTEM, RESERVE FEDERAL Plaintiff-Appellee, convictions of Gill’s majority’s reversal The Mans- finding that its predicated v. a lawful was transaction field/Tanglewood Daniel CORP. FINANCIAL DLG discussed, As 981. Op. Maj. transaction. Garza, Defendants- De La S. affirm I would Accordingly, disagree. I Appellants. well.18 convictions Gill’s CORPORATION FINANCIAL DLG II. Garza, LaDe S. Daniel Plaintiffs-Appellants, modern, high is a at issue scheme The in which game, a shell of variation stakes speed. blinding with about moved were funds OF SYSTEM RESERVE FEDERAL before brought were participants When Governors, STATES, of Board UNITED later, years justice several оf bar Dallas Bank Reserve Federal witnesses, receive to observe there Corporation, Insurance Deposit Federal hear charge, the court’s evidence Defendants-Appellees. a verdict. reach arguments, closing 94-10078. 93-2944, 94-20013 Nos. there; weren’t. we short, jury was stan- correct, deferential apply the must We Appeals, Court States the suffi- challenge of review dard Circuit. Fifth doing In so the evidence. ciency of —examin- favorable most 1994. light Aug. in a evidence all construing include government, evidence from inferences reasonable ra- that a conclude verdicts —I favor reached properly jury could tional REO from some purchase appraisal and from Billings was closing binder merits A proceeds.” part of the Savings with Southmeadow; possi- Vernon would this partner testimony (and letter excuse infer However, would conjecture could such ble. Gill, REO) made, trying to sell nor Vernon statement Mansfield, was outright the regarding provide conjecture situation desperate his as a two transactions another man between a straw tie-in offering to serve . Shamrock, entry in the rid distribution seeking, like truthful savings loan course, was, would. Moreover, binder Gill REO. itself the transaction figures involved aware Gill suggest that ample evidence There necessary provide into” "backed an aware- participated jury had Shamrock. things, down Among other purpose. its illicit ness knowingly to infer enough evidence estate Ramsey, real Ricky *20 authorized “cash-for-trash" office, in Shamrock's participated to write he shared with whom broker Billings and broker, stating that scheme. another letter a discount willing sell [Mansfield] Gill "are notes majority (cid:127) testified witnesses one Beuttenmuller’s “necessary payment down percent allow independent auditors a sale Savings to record allow Shamrock reported as to be transaction “cash-for-trash” 4n. at 976 Id. property.” Tanglewood they if books and loan’s savings aon profit added). (emphasis transac- nature of the true aware were would be Shamrock it was. While Indeed tion. REO producing non-income to remove free rational for a sufficient evidence is financing, through sale its books entire that the jury to find “sold” deemed not be could send its could so that structured payment. down percent 20 REO absent through “lightly laundered” out to cash prepare obligated were Savings and loans Gill, Sham- then returned ... on the reports statements “financial on the payment down requisite as the rock accounting princi- accepted generally basis transac- REO.2 Given 12 C.F.R. See regulators. federal ples” for $555,000could into”, so that was “backed tion Tennant, a And, (1986). Kirk § 568.23-3 subsidiary wholly-owned Shamrock’s leave Methodist accounting at Southern lecturer guise of under to Shamrock return principles University, testified venture, a joint by the new payment” “down actually REO was whether would determine reasonably find that also jury could testified he specifically, More sold. men”, funnelling Sham- “straw were and Gill State- Board Accounting Standards Financial on its payment into down cash own rock’s (which аs characterized he No. 66 REO. own ap- principle accounting accepted generally findings. support these of facts A number loans) Ac- controlled. savings and plicable im- grant of to a (pursuant Billings testified statement, which Tennant, cording to necessary cover the as the loan much of schemes with similar not unfamiliar are 2. Courts real purchase of the payment down as down savings loan funds to use effect, officers], tactic, Best, By [the estate. See, 939 F.2d v. States e.g., United on REO. — denied, institution's] real estate selling [the banc), 1991) (en cert. (7th Cir. creditworthy typically 1243, -, 117 L.Ed.2d borrower—who S.Ct. U.S. cites, to be so—for officers] see Best, majority [the and known (1992). which one such described down. cash the court Maj. Op. at omitted). (citation the same Much Id. at 426 scheme: funnelling here, only rather happened thing practices that vio- other to several In addition subject to different money a "loan” out via savings loan indus- the norms lated collateral, an “investment" so via did require officers] would try, institution’s [the See also in Mansfield. its subsidiaries one of institu- [the purchase REO from borrowers Best, 1180-81 913 F.2d States United (7th a condition subsidiaries and its tion] "lightly laun- Cir.1990) phrase (employing officers] doing, [the obtaining In so a loan. (7th rehearing, F.2d dered”), vacated deterio- institution's] disguise [the attempted to banc). (en Cir.1991) apply as They would rating status. financial munity by government) that he and fee; course, finder’s jury might well had no in buying interest Tanglewood; in- have drawn a reasonable inference concern- deed, they had no financial resources whatso- ing Franks’ awareness of the fundamental ever.3 Billings quid pro quo described of purpose of the well transaction —as