U.S. v. Chenaur
| Decision Date | 18 April 1977 |
| Docket Number | No. 76-2236,76-2236 |
| Citation | 552 F.2d 294 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Carl Clayton CHENAUR, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Hugh W. Stroh, argued, Bellevue, Wash., for defendant-appellant.
Jack Meyerson, Asst. U. S. Atty., argued, Seattle, Wash., for plaintiff-appellee.
Appeal from the United States District Court for the Western District of Washington.
Before KENNEDY and ANDERSON, Circuit Judges, and VAN PELT, District Judge. *
Carl Clayton Chenaur appeals his conviction by a jury on all counts of a 22 count superseding indictment relating to (a) aiding and abetting officers of an institution having federally insured accounts who had intent to defraud their own institution, the United States, or the Federal Savings and Loan Insurance Corporation (21 counts based on 18 U.S.C. § 1006 and 18 U.S.C. § 2) and (b) making a false statement to a government agency (one count based on 18 U.S.C. § 1001).
The essential facts leading up to his indictment are as follows:
Chenaur was a mortgage banker and president of First Western Mortgage Company and Bonded Escrows, Inc. Both companies make mortgage loans to individual homeowners. In the interests of clarity, a brief explanation of terminology and practice in the mortgage loan industry is in order. Mortgage companies generally finance consumer loans by borrowing money from institutions such as banks or insurance companies. The mortgage company usually sells the mortgages as soon as they obtain them instead of holding them for an extended period and tying up their own capital. Sometimes a mortgage broker is used to find a buyer for the mortgages. Frequent mortgage buyers are savings and loan associations, mutual savings banks, life insurance companies, pension funds, or other long term investors.
During the period covered by the indictment, Chenaur (as principal of First Western) sold approximately $1,800,000 worth of FHA and VA mortgage loans to Greenwood Savings and Loan Association. Initially, Greenwood gave First Western a letter of commitment dated June 23, 1971 to purchase $700,000 worth of loans from First Western. This letter was signed by Biff Connelly, the vice president of Greenwood. In exchange for the commitment, and at approximately the same time, Chenaur paid Greenwood a 1% precommitment fee ($7,000), which was standard in the industry. Chenaur testified he later had a verbal commitment from Marvel Morgan, the president of Greenwood, that Greenwood would purchase additional loans from Chenaur, which they did. On both the original $700,000 loan package and the subsequent loans sold to Greenwood, Chenaur paid an additional 1% fee to entities entitled Territorial Investors and Morco Enterprises, Inc. 1 Biff Connelly and Marvel Morgan were the only persons in those companies. 2 Connelly and Morgan, in addition to being vice president and president of Greenwood, were both members of the seven-man board of directors. This additional 1% fee provided the basis for the criminal charges against Chenaur. The government claimed that the fees to Territorial and Morco were kickback payments. Chenaur classified the payments as brokerage fees. At issue during the trial was whether Morgan and Connelly, as principals, had the requisite intent to defraud Greenwood and whether Chenaur knew of this intent and wilfully assisted them in the criminal venture. 3 The jury found the requisite intent and returned a guilty verdict against Chenaur. 4
On appeal, Chenaur raises the following issues:
1) Whether any institution protected by 18 U.S.C. § 1006 was defrauded where Greenwood received the going rate in precommitment fees and the institution was not adversely affected financially;
2) Whether there was sufficient evidence that both defendant and the principals had the requisite intent to defraud;
3) Whether defendant could be convicted of aiding and abetting when neither principal was charged with a federal crime;
4) Whether the indictment sufficiently informed defendant of the charges;
5) Whether the trial court erred in denying defendant's motion for continuing discovery and a bill of particulars;
6) Whether the defendant was prejudiced by the filing of a superseding indictment; and
7) Whether the trial court erred in not asking proposed voir dire questions.
In considering these issues we must keep in mind that the evidence is to be viewed in a light most favorable to the government. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942).
Defendant contends that Greenwood could not have been defrauded because they were not injured financially. It is his position that if anyone was defrauded it was the rest of the members of the board of directors who did not share in the brokerage fees which were legal. Chenaur contends that the board of directors is not a legally protected entity under 18 U.S.C. § 1006 and thus no basis exists for the criminal charges brought here. 5
The answer to these arguments lies in (1) whether the fees paid by Chenaur to Morco and Territorial were in fact legal brokerage fees and (2) the meaning of the term "defraud."
There was ample evidence that none of the normal brokerage services were supplied by Morgan and Connelly. Connelly testified he would not characterize the fees he received as broker's fees. Both Connelly and Morgan stated they performed no services for the fees, and even Chenaur testified he did not think Morco or Territorial were providing any particular service, and that:
(I)f I didn't write the checks to Territorial and Morco, they (Greenwood) wouldn't buy my loans.
T. II, p. 349, 1. 18-19.
Even if Greenwood suffered no economic loss through the dealings with Chenaur, 6 it does not mean there was no intent on the part of the principals to defraud the institution. The trial court correctly recognized this in its Instruction No. 11 to the jury. 7 As the Fifth Circuit has stated in Beaudine v. United States, 368 F.2d 417, 420 (5th Cir. 1966):
The fraud commences with the deceit ostensibly acting solely for the interest of the principal while all the while the faithless servant knows he, too, has a pecuniary interest which will or might subvert his undivided loyalty. When there is the purpose to deceive, it matters not whether the objective is to obtain an advantage or to cause the principal to suffer a loss. Either in effect completed the fraudulent purpose.
The evidence was uncontradicted that the board of directors (who can hardly be separated from the corporate identity of Greenwood) did not know of this 1% fee to Territorial Investors and Morco Enterprises, Inc. which Connelly and Morgan were receiving. Connelly testified that the fees they received were not disclosed to the board because the fees were contrary to state and federal regulations and they would have been fired. Morgan also testified the 1% fees were not disclosed to the board. Additionally, both Morgan and Connelly testified that Chenaur knew these 1% side payments had not been disclosed to the board. There was sufficient evidence for the jury to find Morgan and Connelly intentionally deceived Greenwood in order to further their own financial gain.
We find there was sufficient evidence to show an institution protected by 18 U.S.C. § 1006 was defrauded.
Chenaur's second and third issues deal with his conviction as an aider and abettor. He contends that where neither Morgan nor Connelly had the requisite intent to defraud he cannot be guilty as an aider and abettor. Additionally he contends that, where Morgan or Connelly were prosecuted only by state officials for state related offenses of falsifying corporate records and embezzlement, there was no showing of guilt on the § 1006 charge and the jury confused the state and federal charges.
We have already found there was sufficient evidence of Morgan and Connelly's intent to defraud. There is no merit to the argument that a defendant cannot be guilty of aiding and abetting where the principals were never prosecuted under the federal statute and were given immunity in return for testifying. We clearly stated in Feldstein v. United States, 429 F.2d 1092, 1095 (9th Cir.), cert. denied, 400 U.S. 920, 91 S.Ct. 174, 27 L.Ed.2d 159 (1970), that not only was it unnecessary for the principal to be convicted, but that he need not even be identified. See also United States v. Martinez, 479 F.2d 824, 829 (1st Cir. 1973). The record shows that there was little emphasis on the state convictions of Morgan and Connelly; the jury was clearly informed that they had never been prosecuted on the federal charge. The court's instructions on the first twenty-one counts as a whole related to the federal charge and there is little reason to believe the jury did not make up their own minds about the guilt of the principals on that charge without relying on the state convictions.
Regarding defendant's own intent, we believe that there was sufficient evidence that he wilfully assisted the principals in the criminal venture. As already noted, he testified at one point that unless he paid Territorial and Morco, Greenwood would not buy his loans. Before he had issued all of the 21 checks involved here, he learned the address he was sending them to was that of Connelly's home. He knew Morco and Territorial were not providing real brokerage services. Morgan and Connelly were the only two people Chenaur knew to be involved in the two companies, and he knew the two were directing benefiting. He testified before the grand jury that he thought Connelly and Morgan wanted to "get some extra money, that the savings and loan wasn't paying them enough money to live on. . . ." T. II at 180. This is
sufficient to show Chenaur willingly and knowingly aided in
the scheme. III. THE SUFFICIENCY OF THE INDICTMENT
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