U.S. v. Hammen, 91-3900

• Decision Date: 13 October 1992
• Docket Number: No. 91-3900,91-3900
• Citation: 977 F.2d 379
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Robert HAMMEN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 379

977 F.2d 379

UNITED STATES of America, Plaintiff-Appellee, v. Robert HAMMEN, Defendant-Appellant.

No. 91-3900.

United States Court of Appeals Seventh Circuit.

Argued May 20, 1992.

Decided Oct. 13, 1992.

Steven M. Biskupic, Asst. U.S. Atty., Milwaukee, Wis., argued, for plaintiff-appellee.

William H. Theis, Chicago, Ill., argued, for defendant-appellant.

Before BAUER, Chief Judge, POSNER, Circuit Judge, and GIBSON, Senior Circuit Judge. ¹

FLOYD R. GIBSON, Senior Circuit Judge.

Robert Hammen appeals his conviction for executing a scheme to defraud the University National Bank in violation of 18 U.S.C. § 1344 (1988). We affirm.

I. BACKGROUND

Hammen was hired by the bank's president, Philip Hudson, in 1982 or 1983 and served as the bank's loan officer and vice-president. Although the president and one other person were authorized to initiate and process loans, most loans were initiated and processed by Hammen.

As the bank's vice-president, Hammen had authority to approve unsecured loans up to $25,000 and secured loans up to $50,000. Unsecured loans between $25,000 and $50,000 and secured loans between $50,000 and $100,000 had to be approved by the president. Loans for amounts higher than the president's limits had to be approved by the bank's loan committee.

Prior to the time Hammen became a loan officer at the bank, University National had problems obtaining repayment on some loans made to Victor Detoro. The problems became so bad that Hudson barred Detoro from conducting any business at the bank. The bank's problems with Detoro and Hudson's solution to those problems were known to Hammen.

Some time in 1987, Detoro desired to purchase a bar in Milwaukee. The contract for sale required Detoro to make a $25,000 down payment before the October 5 closing date, but he lacked the funds to make this payment. Detoro approached Robert Schafer and asked him to apply for a $65,000 loan at University National and allow him (Detoro) to have $45,000 of the proceeds.

Schafer was in the business of purchasing homes, rehabilitating them, and selling them for a profit. In the first part of 1987 he encountered financial problems, which included his inability to pay utilities and other bills and culminated in the foreclosure of all his property. Schafer was not a stranger to either Hammen or Detoro; Detoro had previously introduced Schafer to Hammen, and on that occasion Schafer had taken out a $25,000 signature loan.

Schafer, still in need of money, agreed to Detoro's plan. The loan documents were prepared by Hammen before Schafer ever went to the bank. Hammen also prepared a memorandum about the loan that indicated Schafer intended to use the loan proceeds to purchase additional property. The memo did not state that most of the money was going to be paid to Detoro. Once the loan was approved, $23,000 was disbursed directly to the seller of the bar Detoro desired to purchase, $12,000 was disbursed directly to companies owned by Detoro, and $30,000 was disbursed to Schafer. All the disbursements were signed and approved by Hammen.

In December 1987, Schafer needed some money and approached Hammen. The two discussed the fact that the loan committee would have to approve the loan if Schafer's total loan balance, which was then $90,000, exceeded $100,000. Therefore, to insure he would evade the review committee's scrutiny, Schafer requested an $8,000 loan. ² Hammen prepared a loan commitment memorandum for this loan that indicated Schafer had an account at University National with an average balance of just over $6,000; in reality, Schafer's account was overdrawn at the time Hammen prepared the memo.

In 1988, Schafer was still encountering financial difficulty, but had an interest in purchasing a particular piece of property. As the closing date on this property approached, Schafer found he did not have the necessary funds to complete the transaction. To raise the needed money, Schafer first persuaded his father to borrow $99,000 from University National. He then persuaded Ramona Dulde and Tammy Maddente to borrow $20,000 and $25,000, respectively. Dulde and Maddente both signed their checks over to Zil, Inc., a corporation formed by Schafer. Hammen authorized these actions by signing the backs of the checks. Despite his knowledge that Schafer had effectively obtained these funds, Hammen did not indicate in any memoranda that these loan proceeds were all going to Schafer, and that repayment of the loans would depend upon Schafer's success.

In December 1988, Schafer approached Tim Laughlin and told him he needed some extra money to pay for taxes, ³ and asked Laughlin to take out a loan for him. Pursuant to this request, Laughlin signed a blank financial statement and a blank business note. Schafer filled out the financial statement with figures and information he knew to be false. The memorandum prepared by Hammen also falsely reflected that Laughlin was the "sole owner of K & L Heating." Hammen then approved a loan to Laughlin for $25,000 without ever seeing or conversing with Laughlin, and authorized the disbursement of the proceeds directly to Schafer's company. ⁴

Also in December, Schafer was attempting to convince Dulde to become his partner in another investment property. The amount of money involved in the deal concerned Dulde, and she refused to become involved. However, even without an application from Dulde, Hammen processed and obtained approval for a $275,000 loan in Dulde's name. Dulde, upon learning that a loan in her name was being processed, called Hammen and told him she wanted no part of the loan.

Thereafter, Schafer attempted to obtain loans for Zil, Inc. In conjunction with these efforts, he submitted a personal financial statement that overstated his assets and omitted several liabilities. Schafer eventually secured loans totalling almost $600,000, all of which were processed by Hammen. Throughout these dealings (beginning with the Detoro transaction), Hammen was aware of Schafer's prior financial difficulties because he regularly spoke to Schafer about his financial status. However, Hammen never informed the loan committee or the bank president of Schafer's prior financial difficulties.

Hammen was indicted on one count of aiding and abetting a scheme to defraud University National, to which he pleaded not guilty. Schafer was indicted on one count of bank fraud and, pursuant to his plea agreement, testified against Hammen. Hammen was found guilty and sentenced to fifteen months imprisonment and ordered to pay nearly $280,000 in restitution. Hammen appeals.

II. DISCUSSION

A. Duplicity in the Indictment

Hammen first contends the indictment was duplicitous; that is, it charged more than one offense within a single count. Hammen waived this argument by failing to raise it prior to trial, United States v. Petitjean, 883 F.2d 1341, 1344 (7th Cir.1989), therefore we review only for plain error. United States v. Masat, 896 F.2d 88, 91 & n. 1 (5th Cir.1990) (citing Fed.R.Crim.P. 52(b)).

18 U.S.C. § 1344 provides as follows:

Whoever knowingly executes, or attempts to execute, a scheme or artifice--

(1) to defraud a financial institution; or

(2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;

shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

Hammen's challenge focuses on the number of times the scheme in this case was executed. The indictment charged that Schafer "and others knowingly executed and attempted to execute a scheme to defraud and obtain money by means of false and fraudulent pretenses from University National Bank." The indictment proceeded to describe, in general terms, the actions Schafer and Hammen had taken to further and aid the scheme, and specifically alleged that the scheme was executed when a "falsified Individual Financial Statement for Tim Laughlin" was submitted to the bank. Hammen's challenge to the indictment is, essentially, that the indictment's language is really "an allegation that there were multiple executions of the scheme." Appellant's Brief at 14.

Congress modeled this statute, 18 U.S.C. § 1344, on the mail and wire fraud statutes, 18 U.S.C. §§ 1341, 1343, and intended that it be construed broadly. United States v. Solomonson, 908 F.2d 358, 364 (8th Cir.1990). In effectuating Congress' desire for a broad construction, one court has reasoned that since "[u]nder the mail fraud statute each mailing in furtherance of the scheme constitutes a separate violation," and "[e]ach use of the wires under the wire fraud statute is a separate offense," each check written in a check kiting operation constitutes a separate execution, and hence a separate offense, under § 1344. United States v. Poliak, 823 F.2d 371, 372 (9th Cir.1987), cert. denied, 485 U.S. 1029, 108 S.Ct. 1586, 99 L.Ed.2d 901 (1988). Similarly, the Third Circuit has held that each check deposited in a scheme similar to check kiting ⁵ constitutes a separate offense. United States v. Schwartz, 899 F.2d 243, 248 (3d Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 259, 112 L.Ed.2d 217 (1990). Thus, for each count of conviction, there must be an execution. ⁶

However, the law does not require the converse: each execution need not give rise to a charge in the indictment. The indictment in this case sets forth the existence of a scheme and alleges the scheme was executed on at least one occasion. The allegations tending to demonstrate the existence of the scheme do appear to be allegations that, if worded and structured differently, might constitute additional executions. This is hardly surprising; the actions that tend to prove the existence of the scheme will often be the actions actually taken to execute the scheme. Nonetheless, we believe the government has carefully crafted the indictment to...