U.S. v. Clark, s. 783
| Citation | 765 F.2d 297 |
| Decision Date | 10 June 1985 |
| Docket Number | Nos. 783,784,D,s. 783 |
| Parties | UNITED STATES of America, Appellee, v. Barry D.W. CLARK, and Andrew Thomas Cook, Defendants-Appellants. ockets 84-1113, 84-1127. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Herbert L. Greenman, Buffalo, N.Y. (Palmer, Greenman & Hurley, Buffalo, N.Y., of counsel), for defendant-appellant Cook.
Robert M. Murphy, Buffalo, N.Y., for defendant-appellant Clark.
Rodney Personias, Asst. U.S. Atty., Buffalo, N.Y. (Salvatore R. Martoche, U.S. Atty., W.D.N.Y., Carol E. Heckman, Asst. U.S. Atty., Buffalo, N.Y., of counsel), for appellee.
Before MANSFIELD and PIERCE, Circuit Judges, and BARTELS, Senior District Judge. *
Barry D.W. Clark and Andrew T. Cook appeal from judgments of the Western District of New York, John T. Elfvin, Judge, convicting them after a four-week jury trial of aiding and abetting a bank officer's misapplication of federally-insured bank funds in violation of 18 U.S.C. Secs. 656 and 2, 1 and of interstate transportation of fraudulently-taken and converted checks of a federally-insured bank in violation of 18 U.S.C. Sec. 2314 2 and 2. In addition, Clark appeals from a judgment convicting him after the same trial of conspiracy to commit the foregoing offenses, 18 U.S.C. Sec. 371, and Cook appeals from a conviction for aiding and abetting the entry of false statements in bank records, 18 U.S.C. Secs. 1005, 3 and 2. Appellants' principal claims of error are that the trial judge erroneously instructed the jury as to elements of the crime of willful misapplication of bank funds and that the evidence was insufficient to support their convictions of that crime. We affirm.
The bank officer involved was Charles F. Edmunds, Assistant Vice-President and Manager of the Lockport, N.Y., branch of the Manufacturers & Traders Trust Co. (M & T), a bank insured by the Federal Deposit Insurance Corporation. Edmunds was authorized by that bank to lend without any superior's prior approval up to $75,000 of the bank's funds to any individual borrower. The $75,000 limit applied to the aggregate of loans made to any related or affiliated group of borrowers, such as a corporation, partnership, or other business entity and persons controlling or holding an office in it.
Beginning in the summer of 1979 and continuing well into 1980, Edmunds, with the knowledge and participation of Clark and Cook, was induced by them to violate these limits by lending them without supervisory approval bank funds in excess of $75,000 for use by them or their affiliated businesses. The businesses were (1) National Lease Company, in which Clark was one of two general partners, (2) Cook, Clark & Co. (CCC), an accounting firm in which Clark and Cook were at one time In some instances, in order to continue lending money to the defendants, who had exceeded their lending limits, the loans were made to affiliated businesses whose ties to one or the other defendant though known to Edmunds were not revealed in bank records. In other instances, loans were made to Clark and Cook at points when each had less than $75,000 in loans outstanding individually, even though each was ineligible because of loans outstanding to affiliated companies. In still other instances, loans were ostensibly made to friends of Clark and Cook (e.g., Kathy Logan, a secretary employed by National Lease; Jacqueline H. Cuillo, a former secretary for CCC; Andes Contracting, Inc., a dormant company formed by Cook's father, Hubert Cook) with the monies actually going to Clark, Cook or their affiliated businesses, all ineligible at the time of the loans. In none of the latter instances did the nominal borrowers at any time have the financial resources needed to repay the loans.
partners but which no longer included Cook, (3) Summit Metals, a corporation owned and controlled by Clark, and (4) Rutter, Cook, Rutter (RCR), a company in which Cook was one of three partners. Clark and possibly Cook invested some of the loan proceeds in Monex International, Ltd., a non-affiliated company.
The following is a schedule of the principal loans, which shows the identity of the person or entity officially represented to the bank as the borrower, the person who signed the papers for the official recipient, the actual recipient of the funds, and the amount:
Officially Named Real
Borrower Date Signatory Recipient Amount
----------------------------------------------------------------
National Lease Co. 6/22/79 LeVenthal Clark & $72,000
Leventhal
CCC 7/11/79 Clark Clark $71,000
Kathy Logan 9/10/79 Logan National $25,000
Lease Co
Kathy Logan 10/2/79 Logan National $70,000
Lease Co.'s
Debts
Clark 11/16/79 Clark CCC loan $75,000
Clark 11/23/79 Clark CCC, Clark & $95,000
Logan loan
Summit Metals 1/31/80 H. Cook as Clark's $75,000
President debts &
investments
Cook 1/31/80 Cook Cook & $72,000
Summit
Metals
RCR 3/11/80 Rutter RCR, $36,000
Edmunds
Cook
Andes Contracting 3/24/80 H. Cook RCR, Cook's $38,000
investments (in two
loans)
Jacqueline Cuillo 3/28/80 Cuillo Clark & $48,000
other loans
The first two of the above loans, $72,000 to National Lease and $71,000 to CCC, were made to provide funds for a failing company, Thermal Metals, in which Clark was an The evidence was conclusive that Edmunds, Clark, and Cook knew at the time they borrowed funds that the loans were in excess of Edmunds' lending authority and would not have been approved by the bank if the real recipients of the funds and the affiliations of the borrowers had been revealed to Edmunds' supervisors. Indeed, at one point, when Edmunds resisted making further loans to Clark, Cook, or their affiliates, Clark induced Edmunds to make additional loans by threatening to reveal to bank superiors certain other improper loans Edmunds had made.
officer and which was ineligible, because of outstanding loans by the bank to it, for a loan approved only by Edmunds. To facilitate the fraud upon Edmunds' supervisors, Thermal's business was continued under a new name, Caribe Metals, with a new list of officers.
Following discovery of the frauds, Edmunds, pursuant to a plea agreement with the government that required him to testify if called, pleaded guilty in January 1982 to one count of an information charging him with conspiracy to misapply the M & T bank's funds, two substantive counts charging misapplication of the bank's funds and one count charging him with filing of a false personal income tax return. On February 16, 1982 a 12-count indictment against Clark and Cook was filed, charging them, inter alia, with conspiring with Edmunds to misapply the M & T bank's funds by using them to make a $75,000 loan to Clark and Cook, which exceeded Edmunds' lending authority, in the name of Summit Metals Holding Company.
Count II charged both defendants with aiding and abetting Edmunds in the misapplication of the bank's funds by making the unauthorized loan to Summit Metals Holding Company.
Counts III-V and X-XII charged Clark with various offenses arising out of Edmunds' misapplication of the bank's funds in connection with loans to Summit Metals, to Kathy Logan, and to Jacqueline Cuillo. These included aiding and abetting the misapplication, 18 U.S.C. Secs. 656 and 2, unlawful interstate transportation of the resulting checks issued by M & T, 18 U.S.C. Secs. 2314 and 2, and making false statements to the bank to induce it to make the loans, 18 U.S.C. Secs. 1014 and 2.
Cook was charged in three counts (II, VI, VIII) with aiding and abetting the misapplication of the bank's funds, 18 U.S.C. Secs. 656 and 2, in one count (VII) with aiding and abetting the making of a false statement in bank records, 18 U.S.C. Secs. 1005 and 2, and in another count (IX) with unlawful transportation of a fraudulently obtained bank check, 18 U.S.C. Sec. 2314.
Before submitting the case to the jury Judge Elfvin dismissed the conspiracy count (I) as to Cook and the charge of making false statements (XI) as to Clark. The jury found the defendants guilty of all other charges against them. Although post-trial motions were argued by the defendants to the court on March 28, 1983, Judge Elfvin, with no explanation, kept them under submission for almost one year with the result that Clark was not sentenced until March 19, 1984, and Cook on April 2, 1984. See Styers v. Smith, 659 F.2d 293, 296 n. 3 (2d Cir.1981); Miller v. Erie Lackawanna Railway Co., 645 F.2d 140, 142, 144 (2d Cir.1981). This appeal followed.
Title 18 U.S.C. Sec. 656 provides that an officer of a federally-insured bank who "embezzles, abstracts, purloins or willfully misapplies any of the money, funds or credits" of the bank is guilty of a crime. The issue before us is whether the word "misapplies," which was not defined by Congress, embraces the conduct of Edmunds, Assistant Vice President and regional manager of the Lockport branch of the M & T Bank, in violating the bank's rule limiting him, without a superior's prior approval, from lending more than $75,000 to any single borrower or in the...
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