State v. LaRoche
| Decision Date | 10 September 1996 |
| Docket Number | No. 93-259-CA,93-259-CA |
| Citation | 683 A.2d 989 |
| Parties | STATE v. David LaROCHE. |
| Court | Rhode Island Supreme Court |
The defendant, David LaRoche (LaRoche), appeals from his judgment of conviction on two counts of obtaining money by false pretenses 1 and three counts of conspiracy to obtain money by false pretenses. 2 He had been charged by indictment with having defrauded two Rhode Island credit unions by using other parties as frontmen to take out loans in their names from the credit union institutions from which LaRoche had previously borrowed funds and had all but exhausted his personal borrowing limits. The indictment conspiracy counts were based on LaRoche's agreements with the various other parties, some of whom were credit union employees, to secure the loans without apprising the lending institutions' loan committees that their credit union lending limits were being surreptitiously circumvented and that it was LaRoche who lurked in the background as the actual beneficiary of the loans. On July 6, 1993, a Washington County jury convicted LaRoche on five of the counts with which he was charged, 3 two being the false pretenses counts and the other three being the conspiracy counts. The trial justice sentenced LaRoche to concurrent five-year terms of incarceration at the Adult Correctional Institutions on counts 1 and 5, the false pretenses counts, and imposed fines of $5,000 on each of those counts. On counts 2, 6, and 7, the defendant was sentenced to consecutive five-year terms of incarceration, those being the conspiracy counts. The conspiracy count sentences were suspended, and LaRoche was placed on probation for a period of five years, to run consecutive to the sentences imposed on counts 1 and 5. In addition, on counts 2, 6, and 7, fines of $5,000 were imposed on each. LaRoche was also ordered to make restitution for the moneys acquired by him by virtue of the false pretenses.
In this appeal, LaRoche claims that the trial justice erred in several respects, including, (1) his denial of the defendant's motion for judgment of acquittal; (2) his refusal to give certain instructions to the jury; (3) his denial of the defendant's motion to sever the counts against him and hold separate trials; (4) his refusal to pass the case because of the prosecutor's closing argument; and (5) his rulings regarding the state's proposed lending institutions expert. We will take up, in order, each of LaRoche's contentions of error after summary dissertation of the pertinent facts of the case. Additional facts will be added as they become germane to our opinion.
The machinations and motivations of defendant LaRoche that comprise the subject matter of the charges lodged against him in this case have been characterized by appellate counsel with such disparate spins that the most eloquent and successful of political campaign election year strategists would be both awed and envious. Depending upon which appellate brief is read, the state's or LaRoche's, the defendant emerges garbed in the cloak of a conniving, financially over-extended businessman who illegally and fraudulently deceived lending institutions into parting with their money--or--as simply a savvy entrepreneur who ingeniously and legally wended his way around credit union lending limit rules and regulations with a little help from his credit union and non-credit union friends. 4
The indictment charged LaRoche with alleged criminal false pretense and conspiracy activities that took place between June and December 1988. The state contended that LaRoche fell prey during that period, like so many others, to the devastating financial upheavals created by the October 1987 stock market crash. The state asserted that LaRoche, upon finding his real estate holdings difficult to sell, cleverly embarked upon a tour de force to generate income to pay off his stock market losses by deciding to sell some of his assets and to borrow against others. In the seven counts on which LaRoche was tried, the state alleged that he committed, or conspired to commit, acts of larceny against the Davisville Credit Union (Davisville) and the Rhode Island Central Credit Union (RICCU) in order to obtain his needed funds. The state charged that LaRoche had sought to obtain loans from those institutions by means of false pretenses, in each instance utilizing an individual other than himself to actually and formally apply for the loan. The artful token loan applicants were referred to by the state as "straw borrowers." The indictment against LaRoche, when examined, reveals it to involve four separate transactions or schemes perpetrated by him. The state asserted that LaRoche framed each of those four transactions so as to give the impression to the financial institution concerned that the straw borrower was seeking a loan for himself in order to facilitate the straw borrower's purchase of property. The modus operandi for each of the four transactions appears from the state's evidence to have been of a similar nature. We will briefly discuss each of those transactions.
The first and second counts in the indictment alleged that in August 1988 LaRoche obtained, and conspired to obtain, $1.6 million from Davisville by false pretenses. Those counts concerned what was referred to by the parties in this appeal as "the Sherwood property" transaction. The state charged that LaRoche in early 1988 owed one of his business associates, David Brodsky (Brodsky), more than one million dollars. In an attempt to satisfy at least part of that debt, LaRoche offered to sell Brodsky the Sherwood property, which was located in Portsmouth, Rhode Island, at a price well below its market value so that Brodsky could in turn resell the property at a profit. Brodsky did purchase this property, after obtaining a $1.4 million loan from Davisville. Brodsky encountered problems in reselling the Sherwood property, and LaRoche eventually offered to repurchase the real estate from him.
LaRoche, however, could not personally borrow the necessary $1.4 million from Davisville in order to repurchase the Sherwood property because the credit union had established monetary limits above which it could not lend to any one individual. This figure, referred to as a "lending limit," was later explained during the trial by an expert witness testifying for the state. 5 The expert testified that a lending institution calculated its lending limit by first discerning its net worth and then deciding upon a percentage of that net worth that it would then permit a single individual to borrow. In the case of Davisville, the board of directors had decided that it would permit a single borrower to take out a loan of up to 20 percent of the institution's net worth. 6 At the time LaRoche sought money to repurchase the Sherwood property, the lending limit at Davisville was about $1.9 million, and LaRoche's outstanding loans with the credit union amounted to about $1.6 million, which, of course, meant that LaRoche could not personally apply for a loan of $1.4 million to repurchase the Sherwood property from Brodsky. As a result, the state alleged, LaRoche then decided to utilize a "straw borrower" in order to obtain the desired loan, and he offered a friend, P. Alan Ryan (Ryan), $50,000 if he would take out a loan from Davisville for the amount needed to repurchase the Sherwood property. LaRoche discussed that proposed loan with the branch manager at Davisville, Helen Arkwright (Arkwright), and Davisville vice president Wilfred McPeak (McPeak), who both agreed to LaRoche's plan and to permit LaRoche to use Ryan as the named loan applicant. Arkwright and McPeak at that time were loan committee members and recommended the loan's approval to the rest of the loan committee. However, no members of the credit union's board of directors, or any other members of the loan committee were ever apprised of the true nature of the method by which the loan transaction was structured. Consequently, Ryan, whose salary at the time was under $40,000, was able to take out a $1.4 million loan from Davisville.
The third and fourth counts in the indictment charged LaRoche with obtaining, and conspiring to obtain, $238,000 from Davisville in August 1988 by false pretenses. The state alleged that LaRoche in that instance had requested another friend, Bernard Roy Dutra (Dutra), a real estate broker, to apply for the loan with Davisville in order for LaRoche to secure a condominium in Newport as a residence for his paramour. This was referred to as the "Newport condominium" transaction. We need not discuss that transaction any further at this point because the jury acquitted LaRoche on the two counts based on the loan taken for that condominium purchase, but we shall make reference to them later when pertinent in addressing the defendant's severance issue upon which he alleges error by the trial justice.
The indictment's fifth and sixth counts charged LaRoche with obtaining, and conspiring to obtain, $800,000 from Davisville in June 1988 by false pretenses. Those counts alleged that LaRoche had earlier requested Dutra to apply for a loan from Davisville in his own name, and then Dutra ostensibly would use the loan proceeds to purchase from LaRoche "Tower Hill," a piece of property that LaRoche owned in North Kingstown, Rhode Island. The state alleged that the Tower Hill loan transaction was also conducted with the knowledge of certain Davisville officials, those being Arkwright, McPeak, and Davisville president Edward Washburn. However, as was the case involving the Sherwood property deal, no members of Davisville's board of directors or any other members of the credit union's loan committee were ever informed of the true nature of the Tower Hill transaction. Dutra, as the straw...
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