U.S. v. Swaim, 84-4583

Decision Date10 April 1985
Docket NumberNo. 84-4583,84-4583
Citation757 F.2d 1530
PartiesUNITED STATES of America, Plaintiff-Appellee, v. John R. SWAIM, Defendant-Appellant.
CourtU.S. Court of Appeals — Fifth Circuit

Battaglia, Ross, Hasting, Dicus & Andrews, Stephen J. Wein, Anthony S. Battaglia Petersburg, Fla., for defendant-appellant.

Glen H. Davidson, U.S. Atty., Thomas W. Dawson, Asst. U.S. Atty., Oxford, Miss., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Mississippi.

Before RUBIN, RANDALL, and HIGGINBOTHAM, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

The defendant was convicted by a jury of concealing and covering up the true purchase price of a building, $1,600,000, by a scheme in order to obtain a loan from a government insured institution, in violation of 18 U.S.C. Sec. 1001. The Government sought to prove that the purpose of the defendant's deception was to obtain a loan of $2,225,000, which included an amount in excess of the purchase price, and to convert the excess to his personal use. On appeal, the defendant contends that the evidence was insufficient to establish either his concealment of the actual purchase price or that the actual price, if concealed, was material to his receipt of the loan. He argues that the facts at worst establish that he submitted a false statement, not that he concealed a material matter, and that the indictment, which charged other offenses of which the jury acquitted him, was multiplicitous. Finding no merit in these contentions, we affirm the judgment of conviction.

I.

Construed most favorably to the government, as the contradictory testimony must now be, 1 the evidence might reasonably be understood to show the following. John Swaim, a real estate developer, lived in Florida and, in addition to his Florida interests, operated property in Virginia and New York. He met Dr. Joseph Villard, a Louisiana resident, who had contracted to purchase the stock of the North Mississippi Savings & Loan Association (the Association), but who lacked the funds to complete the purchase.

Swaim, Villard, and Malcolm Reese, President of the Association, agreed that three loans would be made from financial institutions controlled by Villard to companies controlled by Swaim. The proceeds of the loans were then to be returned to Villard to enable him to purchase the Association's stock by a deadline beyond which Villard would have been forced to pay a severe penalty. The loans were executed on April 12, 1982, and Villard purchased the Association's stock by the deadline. Both Reese and Villard pleaded guilty to one or more counts in the indictment, which charged them with fraud, false statements, and conspiracy to violate various statutes related to federally insured savings and loan institutions. The jury acquitted Swaim on these charges, which are mainly related to the loans made in April.

Swaim also planned to purchase a building located in Treasure Island, Florida, for $1,600,000. A regulation governing the Association, which is not further identified in the record, forbade it to lend an amount in excess of 80% of either the appraised value of the property or its purchase price, whichever was less. Swaim, Villard, and Reese met to discuss a loan from the Association to Swaim's corporation in the amount of $2,225,000, which was to be secured by the Treasure Island building. Villard instructed Reese to make the loan to Swaim. An escrow agent in Florida closed the loan after the Association wired the loan proceeds, minus the Association's fee, to Florida.

The escrow agent sent the Association the usual loan documents, including a copy of the contract for the purchase of the Treasure Island building, but no closing statement. The contract was signed by Swaim and stated that the true purchase price of the building was $1,600,000. This document was placed in the Association's file. Reese testified that he asked the escrow agent for a closing statement, but the agent told him that it had not prepared one. Reese then requested a closing statement from Swaim. Shortly thereafter, Swaim sent Reese an undated, unsigned closing statement showing the purchase price of the building to be $2,600,000. If the price of the Treasure Island building were $2,800,000, the Association would not violate the regulation, which was apparently concededly applicable, by making a loan of approximately $2,225,000. If, however, the purchase price were either $2,600,000 or $1,600,000, the regulation would have been violated by a loan of $2,225,000, although the lower the price the more egregious the violation. Swaim's secretary testified that she prepared this loan closing statement on his direct instructions and that all information contained in the document, including the false purchase price, was furnished by Swaim. Swaim admitted that he had furnished this statement, but claimed that he did so only on Reese's insistence.

Part of the proceeds of the loan, $1,600,000, was used to purchase the Treasure Island building. At the closing of the sale and loan, Swaim instructed the closing agent to disburse the net excess over the purchase price, some $612,000, to a mortgage company, presumably to satisfy a loan on the property. Swaim then forged the mortgage company's endorsement on the check and converted the funds.

In a Federal Home Loan Bank Board examination of the Association, the examiner discovered Swaim's false loan closing statement and the sale contract and brought the discrepancy between the purchase price in each to Reese's attention. Reese testified that he telephoned Swaim and questioned him about the price and that Swaim admitted that he had purposely concealed the true purchase price because, if the true purchase price had been known, he feared the Association would not have made the loan. The examiner later requested and received from the escrow agent a copy of the actual closing statement. Even this statement, however, did not reveal that Swaim was to have been the ultimate recipient of the $612,000 loaned in excess of the purchase price. While there was other testimony that contradicted Reese's, his credibility was clearly a jury question.

II.

Under 18 U.S.C. Sec. 1001, it is a crime, in any matter within the jurisdiction of any department or agency of the United States, to conceal or cover up a material fact by any trick, scheme, or device. 2 The elements of an offense under the concealment portion of the statute are: (1) knowingly and willfully; (2) concealing and covering up by trick, scheme, or device; (3) a material fact; (4) in any matter within the jurisdiction of a department or agency of the United States. 3

Swaim does not contend that his actions were not knowing or willful, or that the alleged material matter was not within the jurisdiction of an agency of the United States. Swaim's use of the false loan closing statement to document and justify the $2,225,000 loan amount, his causing the "true" closing statement to carry a camouflaged disbursement hiding his conversion of the $612,000 overage to his own use, and his admission to Reese that he had willfully concealed the true purchase price from the Association in order to get a loan larger than the purchase price were sufficient to allow the jury to conclude that he had concealed and covered up the true purchase price by trick, scheme, and device. Swaim's protestation to the contrary is but an attempt to reargue the facts, selecting only those favorable to his position. Such an argument may be appropriate for the jury. It lacks savor on appeal, for we may reverse the conviction only if "a reasonably minded jury must necessarily have entertained a reasonable doubt of the defendant's guilt." 4 The evidence adduced on the concealment issue is sufficient to avoid reversal under this standard.

Swaim also contends that the false closing statement was not material because the loan was not made in reliance on that statement and because a copy of the purchase contract, which stated the correct purchase price of the Treasure Island building, was in the file with the false closing statement. This argument, however, is contrary to our previous construction of the statute:

The charge of materiality requires only that the fraud in question have a natural tendency to influence, or be capable of affecting or influencing, a government function. The alleged concealment or misrepresentation need not have influenced the actions of the government agency, and the government agents need not have actually been deceived. 5

The Government does not have to show actual reliance on false statements or documentation. 6 "A statement may be material even if it is ignored or never read by the agency receiving the misstatement." 7 The concealment "must simply have the capacity to impair or pervert the functioning of a government agency." 8 The effect on the federal agency need not be direct, however, for "the ultimate authority to see that the federal funds are properly spent" provides "the necessary link between deception of the non-federal agency and effect on the federal agency." 9

In this circuit, "[m]ateriality rests upon a factual showing by the prosecution.... The determination is, however, a question of law for the court, ... and therefore subject to complete review, unrestricted by the 'clearly erroneous' standard." 10 Although the charge submitted to the jury on count eleven did not instruct the jury that the purchase price of the building was a material fact and left that inference to the jury, 11 Swaim does not contend this was an error, but argues only that the testimony produced by the prosecution at trial is insufficient to support a finding by any fact-finder that the purchase price was a material fact. After reviewing the record, we find that the prosecution produced sufficient testimony to support the conclusion that the purchase price was a material fact.

In its presentation of its case in chief, the...

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