U.S. v. Knipp

• Decision Date: 03 June 1992
• Docket Number: Nos. 91-5312,91-5452,s. 91-5312
• Citation: 963 F.2d 839
• Parties: UNITED STATES of AMERICA, Plaintiff-Appellee, v. Barry L. KNIPP (91-5312), and Vernon L. Hamilton (91-5452), Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 839

963 F.2d 839

UNITED STATES of AMERICA, Plaintiff-Appellee, v. Barry L. KNIPP (91-5312), and Vernon L. Hamilton (91-5452),

Defendants-Appellants.

Nos. 91-5312, 91-5452.

United States Court of Appeals, Sixth Circuit.

Argued March 30, 1992.

Decided April 27, 1992.

Rehearing Denied June 3, 1992.

Louis DeFalaise, U.S. Atty., David A. Marye, Asst. U.S. Atty. (argued and briefed), Office of U.S. Atty., Lexington, Ky., for plaintiff-appellee.

Robert L. Templeton, Hermansdorfer & Templeton, Ashland, Ky. (argued and briefed), for defendant-appellant Vernon L. Hamilton.

Benjamin P. Hicks, Lexington, Ky. (argued and briefed), for defendant-appellant Barry L. Knipp.

Barry L. Knipp, pro se.

Before: MILBURN and SUHRHEINRICH, Circuit Judges, and TIMBERS, Senior Circuit Judge. ^*

MILBURN, Circuit Judge.

Defendants Barry L. Knipp and Vernon L. Hamilton appeal their jury convictions on one count of conspiracy (a) to defraud a federally insured financial institution and (b) to misapply the monies, funds, credits and securities of a federally insured financial institution in violation of 18 U.S.C. § 371, and six related counts of aiding and abetting each other in devising a scheme to defraud federally insured financial institutions in violation of 18 U.S.C. §§ 2 and 1344. On appeal, the issues are (1) whether Congress' extension of the statute of limitations from five years to ten years violates the Ex Post Facto Clause of the United States Constitution, (2) whether the district court abused its discretion in denying defendants' motions for mistrial based on the questioning of a prospective juror, (3) whether the district court erred in denying defendant Knipp's motion for a judgment of acquittal, and (4) whether the district court abused its discretion in denying defendant Knipp's motion for new trial. For the reasons that follow, we affirm.

I.

Defendant Barry L. Knipp was president of the People's Bank of Olive Hill, Kentucky ("PBOH"), and his co-defendant, Vernon L. Hamilton, was president of Hamilton Hardwood Lumber Company, Inc. ("HHLC"), a lumber business in Carter County, Kentucky. HHLC maintained a checking account at PBOH. Hamilton also maintained a checking account in the name of Hamilton Farms at the First National Bank of Grayson, Kentucky ("FNBG"). Both banks were insured by the FDIC.

In 1983 and early 1984, HHLC borrowed $1,200,000 from PBOH and also established a $750,000 ready reserve account that functioned as a demand loan to cover overdrafts up to $750,000. Defendant Knipp was the bank's account officer for all these loans. By November 1984, the ready reserve account established for HHLC had reached its $750,000 limit, but Hamilton continued to write checks on the account which drove it into an overdraft status. By March 1985, the HHLC account had been overdrafted to the extent of $552,153.06. Because PBOH was at its legal lending limits with HHLC, and in order to disguise the overdraft status of the account, a check kiting system was set up by defendant Hamilton to cycle checks between the HHLC account at PBOH and the Hamilton Farms account at FNBG.

According to various employees of PBOH, the kite was operated by the daily transfer of checks, drawn on uncollected funds, between the two banks. On instructions from defendant Knipp, employees of PBOH kept a daily watch on HHLC's checking account for overdrafts beyond the $750,000 ready reserve fund. When an overdraft check was presented, payment of it was delayed while a telephone call was placed to defendant Hamilton to advise him of the amount of the deposit he would be required to make to cover the overdraft. Hamilton would then deposit at PBOH one or more checks drawn on the Hamilton Farms account at FNBG. As the amount of the overdrafts spiraled upward, Hamilton was required to come to PBOH daily and deposit checks drawn on the Hamilton Farms account at FNBG to cover HHLC's overdrafts. He kept the Hamilton Farms account stocked with checks written on the HHLC account at PBOH.

The evidence shows that defendant Knipp knew about this situation and facilitated its continuance by instructing his employees to hold certain overdraft checks while they advised Hamilton of the amount of the deposit necessary to cover them. When Julia Sparks, a bank employee, raised her concerns about this procedure with Knipp, he told her that Hamilton was simply loaning money from one business to another. At Knipp's direction, Sparks kept track daily of all the checks and deposits passing through the HHLC account, and she prepared a weekly report of these transactions for Knipp. The reports showed that the daily deposits required of Hamilton grew larger and larger until they exceeded $200,000 a day.

Sometime in December 1984, Knipp asked Charles Marshall, then a partner in an accounting firm which did tax work for PBOH, to attend a meeting with Knipp and Hamilton. At this meeting, and in front of Marshall, Hamilton assured Knipp that he was not kiting checks and that there were sufficient funds in the FNBG account to cover the deposits he made at PBOH. Nothing was done to stop HHLC's continuing overdrafts and the daily deposits required to cover them.

Also in December 1984, Knipp telephoned Paul McGuire, chairman of the board of Bank Josephine in Prestonburg, Kentucky, and asked McGuire to make a loan to Hamilton in the sum of $176,750. It was McGuire's understanding that PBOH could not extend this loan to Hamilton because PBOH was at its lending limits as to Hamilton. Bank Josephine made the loan, and the proceeds were deposited into the Hamilton Farms account at FNBG.

Matters began coming to a head in February 1985 when FNBG installed a new computer system that could track floats on items being deposited in that bank. The Hamilton Farms account immediately appeared on that new report with a large uncollected balance in excess of $200,000. In investigating the Hamilton Farms account, FNBG's controller determined that 3, 4, or 5 checks, all for different amounts, and totaling between $230,000 and $250,000, were being written and deposited back and forth between the Hamilton Farms account at FNBG and the HHLC account at PBOH on a daily basis. The same number of checks in the same amounts were being deposited each day.

Based on this investigation, FNBG returned four checks drawn on the Hamilton Farms account at FNBG and deposited in the HHLC account at PBOH for collection. Defendant Knipp immediately requested a meeting with FNBG officials to discuss the returned checks, and on February 28, 1985, a meeting was held at which FNBG officials explained their concern over Hamilton's use of uncollected funds. Knipp assured FNBG that the activity between the two accounts would stop. It did not stop, however, but continued for several weeks until, in April 1985, FNBG returned fourteen checks totaling $907,476 to PBOH as drawn on uncollected funds. FNBG then closed the Hamilton Farms account.

II.

A.

Both defendants argue that the district court should have granted their motions to dismiss this case because it was brought in violation of the Ex Post Facto provisions of Article I, Section 9, of the United States Constitution. ¹ The date of the last offense mentioned in the indictment is April 30, 1985, and the statute of limitations in effect on that date was the five-year limitations period established by 18 U.S.C. § 3282. On August 9, 1989, before the five-year statute of limitations ran as to this case, Congress enacted 18 U.S.C. § 3293, which extended the limitations period applicable to the offense as charged from five years to ten years. Defendants were indicted on July 24, 1990. Therefore, the old five-year statute of limitations had run, but the new ten-year statute had not. Defendants now raise constitutional questions which, as questions of law, this court reviews de novo. Loudermill v. Cleveland Bd. of Educ., 844 F.2d 304, 308 (6th Cir.), cert. denied, 488 U.S. 941, 109 S.Ct. 363, 102 L.Ed.2d 353 and 488 U.S. 946, 109 S.Ct. 377, 102 L.Ed.2d 365 (1988).

Each defendant relies on the Supreme Court's summary of the meaning of the Ex Post Facto Clause in Beazell v. Ohio, 269 U.S. 167, 169-70, 46 S.Ct. 68, 68-69, 70 L.Ed. 216 (1925):

It is settled, by decisions of this Court so well known that their citation may be dispensed with, that any statute which punishes as a crime an act previously committed, which was innocent when done; which makes more burdensome the punishment for a crime, after its commission, or which deprives one charged with crime of any defense available according to law at the time when the act was committed, is prohibited as Ex Post Facto.

(Emphasis added). This language was recently quoted with approval by the Court in Collins v. Youngblood, 497 U.S. 37, 110 S.Ct. 2715, 2719, 111 L.Ed.2d 30 (1990), and defendants seek to employ that part of it emphasized above to argue that the extension of the limitations period to ten years deprived them of the opportunity to plead the previous five-year limitations period as a bar to their prosecutions.

Pleading an expired limitations period is certainly a defense in the general sense that it is a defensive measure. More particularly, however, it is a matter in bar of prosecution and as such is distinguishable from a "pure" defense, which defeats one or more of the elements of the crime. This distinction was noted and strongly reinforced by the Court in Youngblood when the Court, after an extended analysis, decided to overrule Kring v. Missouri, 107 U.S. 221, 2 S.Ct. 443, 27 L.Ed. 506 (1883), because in Kring it had erred in confusing procedural defenses with defenses to the elements of the crime. Focusing on the meaning of the word "defense" as used in the quotation from Beazell and applying it to Kring, the Court said:

But the use of the word "defense" carries a meaning quite different from that which appears in the quoted language from Beazell, where the term was linked to the prohibition on...