U.S. v. Chaney

• Decision Date: 19 June 1992
• Docket Number: No. 91-8206,91-8206
• Citation: 964 F.2d 437
• Parties: UNITED STATES of AMERICA, Plaintiff-Appellee, v. BARBARA CHANEY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

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964 F.2d 437 UNITED STATES of AMERICA, Plaintiff-Appellee,
v.
BARBARA CHANEY, Defendant-Appellant. No. 91-8206. United States Court of Appeals,
Fifth Circuit. June 19, 1992.
Rehearing Denied July 21, 1992.

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Bernard J. Panetta, II, Mary Stillinger, Caballero, Panetta & Ortega, El Paso, Tex., for defendant-appellant.

Debra P. Kanof, Asst. U.S. Atty., El Paso, Tex., Richard L. Durbin, Jr., Joan E.T. Stearns, Asst. U.S. Atty., Ronald F. Ederer, U.S. Atty., San Antonio, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Western District of Texas.

Before BROWN, GARWOOD, and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

This case involves "sham loans" allegedly made by Barbara R. Chaney during the years 1983-1985 in her capacity as president and chief executive officer of Western Bank in El Paso, Texas. Specifically, Chaney allegedly made loans to individuals with "related interests" that were actually made for the benefit of those individuals' businesses. Following trial, a jury found Chaney guilty of conspiracy to make false entries in Western Bank books with the intent to deceive examiners of the Texas Department of Banking (TDB) and the Federal Deposit Insurance Corporation (FDIC), a violation of 18 U.S.C. §§ 371, 1005 (Count One), and making false entries in Western Bank records in violation of 18 U.S.C. § 1005 (Count Six). The district court sentenced Chaney to concurrent five-year terms of imprisonment for each of these counts, suspended execution of the term of imprisonment for Count One, and ordered Chaney jointly and severally liable for restitution to the FDIC in the amount of $1,141,285. Chaney appeals, asserting that: (i) the district court erred in refusing her requested good faith instruction, (ii) Count One of the indictment is fundamentally defective because it fails to allege an object of the conspiracy charged, (iii) there is insufficient evidence of a conspiracy to commit an offense, and (iv) restitution is improper because the loss suffered was not the result of the offenses of conviction. Finding no error, we affirm.

I

The indictment alleges that Chaney conspired with businessmen Richard T. Cassidy, Chris A. Cummings, Lawrence M. Bower, and George Wallace to disguise both the purpose and relatedness of loans she made to these individuals--loans that violated both the legal lending limit established by the TDB and the policy instituted by Western Bank to comply with the TDB's regulations. ¹ This Western Bank lending policy--a written 26-page lending policy that explicitly warned against concentration of

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credit to related interests ²--was instituted in 1983 after bank examiners from the TDB adversely classified $847,000 of Western Bank's assets and urged the bank's management to "expedite its formulation and implementation of written loan policy guidelines as the substantial increase in severity of loan classification presents cause for concern." ³ A

During 1983-1985, Chaney authorized numerous loans in the names of Bower, Cassidy, Cummings, Wallace, CCG Investment ("CCG"), C.O.R., Incorporated ("COR"), and ResortAmerica Corporation ("RAC"). The record establishes that the interests of these individuals and entities clearly overlapped: (i) Cummings and Wallace were in business together in CCG, RAC, COR, and other entities; ⁴ (ii) Bower was associated with Cummings and Wallace from 1983-85 as a real estate broker, and, as of 1985, described himself as a "partner" with Cummings and Wallace in CCG, RAC, and other entities; ⁵ (iii) Cummings,

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Wallace, and Bower often borrowed money under their own names for the benefit of their businesses, and Chaney was aware that they did so; ⁶ and (iv) Cassidy was a shareholder in RAC until 1982. ⁷

In October 1983, Chaney and Bower negotiated the first of these loans--a $125,000 loan to CCG. Chaney knew that CCG was a partnership owned by Wallace and Cummings. ⁸ In June 1984, Chaney and Bower negotiated another loan for CCG in the amount of $50,000. The following month, Bower negotiated a third loan, this one for $200,000, which paid off the existing $125,000 and $50,000 notes and enhanced CCG's debt by $25,000. Although this $200,000 loan was made in CCG's name, according to Bower, the funds from the loan went to RAC and CCG "because the assets that the two entities owned were intermingled." ⁹

The upgrade of loans continued, and the overall amount of liability grew. Western Bank made three loans to the related borrowing entities on December 28, 1984: (i) a $550,000 loan was made to RAC; (ii) COR received a $600,000 loan, authorized by Chaney, which was used to pay off a $600,000 loan in CCG's name; and (iii) Wallace negotiated a $600,000 loan for working capital for a condominium project in Ruidoso, New Mexico (the Tierra Condominium) involving Cummings, Wallace, and Bower. All three notes were due on March 29, 1985. On that day, Bower made it clear that the borrowers were not ready to pay the outstanding principal, and the three loans were renewed until June 27, 1985.

B

During the spring of 1985, a bank examination appeared imminent. Although the legal lending limit for related borrowers at Western Bank was $665,000, ¹⁰ the three related loans and interest owed to Western Bank by Cummings, Wallace, and Bower--all of which were due to expire on June 27, 1985--totalled approximately $1,750,000. When Bower approached Chaney about renewing the loans at their expiration in June 1985, Chaney agreed but decided that the loans had to be "restructured"--that is, Chaney wanted the loans to be under the names of individuals.

Bower agreed to restructure and assumed one of the loans; Cummings took another, and Wallace was already on the third. According to Bower's testimony, Chaney said Cummings would not be acceptable and suggested that Cassidy's name be used on the renewal of the $550,000 RAC note. When Bower approached Cassidy, he agreed to allow his name to be used and did not ask for any of the loan

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proceeds. ¹¹ This loan was renewed, RAC's name was replaced with Cassidy's, and the loan amount was increased from $550,000 to $645,000. ¹² Chaney also renewed the $600,000 COR loan, changing the borrower to Bower and extending the loan amount to $650,000, ¹³ as well as the Wallace loan, which was increased from $600,000 to $648,000. ¹⁴

In November 1985, Chaney authorized another $440,000 loan to Bower. This loan was made when Bower told Chaney that he had a $187,000 loan due at another bank which he was unable to repay. Chaney chose to loan Bower $440,000 so that he could use $224,000 of the loan for a down payment on other real estate. ¹⁵ Nevertheless, the loan presentation, initialed by Chaney, states that the loan's purpose was to "payoff Montwood National Bank"; there is no indication in the loan presentation or in the spread sheets that the loan would be used for investment in other real estate. When this loan was renewed in 1986, the bank's work sheet and Bower's renewal request stated that the original purpose of the loan had been investment in real estate, and the "related debt" section of the spread sheet was blank.

C

Western Bank was examined by the TDB and the FDIC in June 1986, and the Chaney-Bower

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negotiated loans caught the examiners' attention. ¹⁶ In September 1990, Chaney, Cummings, Bower, and Wallace were indicted for misapplication of Western Bank funds and making false entries in the bank's books. ¹⁷ Cummings, Bower, and Wallace were also charged with offenses related to the submission of false financial statements to Western Bank in violation of 18 U.S.C. § 1014. Chaney's co-defendants pled guilty to submitting false financial statements, and Chaney went to trial.

The district court granted Chaney's pre-verdict motion for judgment of acquittal as to the conspiracy to misapply funds count (part of Count One) and the substantive misapplication of funds counts (Counts Three and Five). However, the jury found Chaney guilty as to the false entry conspiracy charge (a portion of Count One) and as to the substantive false entry charge concerning a Western Bank Officer's Questionnaire (Count Six), ¹⁸ but acquitted her on the remaining counts (Counts Two and Four). ¹⁹ Chaney moved for judgment of acquittal notwithstanding the verdict as to Count One, and that motion was denied. Chaney appeals.

II

Chaney raises the following contentions:

(a) the district court erred in refusing her requested instruction that good faith

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belief in the truth of her statements is a complete defense to the charge of making a false entry in Western Bank's books;

(b) Count One of the indictment is fundamentally defective because it fails to allege an object of the conspiracy charged;

(c) the district court erred in refusing to grant Chaney's motion for judgment of acquittal as to Count One on the grounds that there is insufficient evidence of a conspiracy to commit an offense; and

(d) the district court erred in imposing restitution because the loss suffered was not the result of the offenses of conviction.

A

Chaney contends that her conviction on Count Six--the substantive false entry charge concerning her response to a question on the Officer's Questionnaire--should be reversed because the district court refused to give her proposed good faith instruction. ²⁰ We disagree.

We afford the district court substantial latitude in formulating its instructions, and we review a district court's refusal to include a defendant's proposed jury instruction for abuse of discretion. See United States v. Sellers, 926 F.2d 410, 414 (5th Cir.1991); United States v. Rochester, 898 F.2d 971, 978 (5th Cir.1990). In applying this abuse-of-discretion standard, we read the district court's instruction as a whole to determine whether that instruction fairly and accurately reflects the law and covers the issues presented in the case. See United States v. Daniel, 957 F.2d 162...