United States v. Biggerstaff

• Decision Date: 01 August 1967
• Docket Number: No. 11086.,11086.
• Citation: 383 F.2d 675
• Parties: UNITED STATES of America, Appellee, v. James Neal BIGGERSTAFF, Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

383 F.2d 675 (1967)

UNITED STATES of America, Appellee, v. James Neal BIGGERSTAFF, Appellant.

No. 11086.

United States Court of Appeals Fourth Circuit.

Argued April 3, 1967.

Decided August 1, 1967.

Edmund I. Adams, Winston-Salem, N. C., and George E. Doughton, Jr., Durham, N. C., for appellant.

William H. Murdock, U. S. Atty., (H. Marshall Simpson, Asst. U. S. Atty., on the brief) for appellee.

Before SOBELOFF and BRYAN, Circuit Judges, and BUTZNER, District Judge.

SOBELOFF, Circuit Judge:

James Neal Biggerstaff appeals from his conviction by a jury for having knowingly made false entries on the books of a federally insured bank of which he was an officer, with intent to injure and defraud the bank, in violation of 18 U.S.C. § 1005.¹

The evidence discloses that from July to December, 1963, Biggerstaff, the Assistant Vice-President in charge of installment loans of the Northwestern Bank of Burlington, North Carolina, was engaged in financing the purchase of a number of used cars sold by "AB&A" and its successor, Southern Automobile Sales of Burlington, businesses run primarily by Melvin Armstrong. Four similar transactions underlie the four counts of the indictment on which Biggerstaff stands convicted.²

The pattern followed in each instance was to cause the purchaser to sign a sheaf of papers, including an installment sales contract and, in addition, a blank, unsecured, personal note. Each purchaser testified that he was not aware that he was executing the additional, unsecured note, that he never received the proceeds from it, and that he thought the installment contract represented the entire purchase price of the automobile.³ The blank notes in the four cases under examination were subsequently completed by Biggerstaff as to amount and due date, and it is the entry of these notes on the books of the bank that the jury found constituted the false entries charged.

While Armstrong at one point testified that he explained to each purchaser that the note represented a loan to cover a down payment on the car, at another point in the trial he admitted having told prospective purchasers that no down payment was required. Three of the four purchasers confirmed that one of the inducements which led them to Armstrong was his representation that no down payment would be required. Significantly, the amount of the notes was not deducted from the installment contract price, as a down payment would be ordinarily.

The proceeds of the notes were not precisely traced at trial, but Armstrong testified that he gave Biggerstaff a portion of the "profit" on all cars sold by him. It is a reasonable conclusion from Armstrong's testimony that he split the proceeds of the four unsecured notes with Biggerstaff. There was evidence that the bank issued checks payable to Southern Automobile Sales and to Melvin Armstrong in amounts up to and including the full discounted value of these notes, and that in each instance they were not entered on the books of the bank until several days after the entry of the installment contract notes.

The nature of the relationship between Armstrong and Biggerstaff was further elucidated by Armstrong. He testified that it was Biggerstaff who induced him to come to Burlington and enter the used car business, and that the business was initially conducted under the "AB&A" label, the "B" representing Biggerstaff and the second "A" Armstrong's brother Wesley. The operation continued for several months and was then succeeded by Southern Sales, under Armstrong's sole proprietorship. Armstrong also testified that not only did the defendant finance his inventory and sales through the bank, but that he supplied Armstrong with vehicles repossessed by the bank, or which Biggerstaff obtained from other sources. A most revealing feature of their relationship is that in every case the automobile purchaser received at least 100% financing, that is, the bank was lending the purchaser the entire agreed price of the automobile. The unsecured so-called "down payment" notes were in addition to the 100% loans that financed the purchase — a measure of generosity truly without precedent in banking practice, as Armstrong himself testified.

By December, 1963, the bank's suspicions were aroused. On December 17, Biggerstaff, accompanied by several bank officers, went to a Burlington motel to discuss his activities in connection with the transactions between the bank and the used car lot. The upshot was the following statement signed by Biggerstaff:

"To whom it may concern: I, James N. Biggerstaff, do hereby make the following statement of my own free will and accord. I have received money from Melvin Armstrong, Wesley Armstrong, in the course of the automobile business. The amount of money I received is not actually known by me at this time * * *. I have not falsified any records of the bank, and the records are true as far as I know. * * *. I have accepted paper I realized was substandard. I have torn up credit reports, I don\'t know the number pertaining to loans, whether it would be approved or not. I have concealed the condition of my department from the board of directors and also the home office. I have approved loans that were not properly secured or collateralized from Melvin and Wesley Armstrong. I have sold cars and accepted the profit on the automobile sales."

I

We are of the opinion that there was sufficient evidence from which the jury could fairly and reasonably find Biggerstaff guilty of knowingly making the four false entries of which he stands convicted. His statement to the bank officers,⁴ together with the evidence of his relationship with Melvin Armstrong, warranted the jury in finding, as it must have found, that Biggerstaff knew that the automobile purchasers were unaware that they were signing blank, personal notes in addition to the installment contracts and the 100% loans made on them.

Biggerstaff's first defense is that if he "faithfully recorded the transactions as they actually occurred," even if they were fraudulent, no violation of the statute is made out. While sound in the abstract, this proposition is wholly inapplicable to the facts of the case.

True, where an officer misapplies bank funds, as where he honors the checks of an insolvent, the entry of the transaction on the books as an extension of credit is not a false entry. Coffin v. United States, 156 U.S. 432, 15 S.Ct. 394, 39 L.Ed. 481 (1895); see also Cooper v. United States, 13 F.2d 16 (4th Cir. 1926) (note of financially irresponsible maker carried as debt due). However, we have here no genuine, though unauthorized, transaction; it is, as the jury found, a case of wholly sham transactions. Biggerstaff did not faithfully record actual transactions, but knowingly entered as assets on the books of the bank notes which the makers were not aware they were...