U.S. v. Copus

• Decision Date: 23 April 1997
• Docket Number: No. 95-6034,95-6034
• Citation: 110 F.3d 1529
• Parties: 97 CJ C.A.R. 592 UNITED STATES of America, Plaintiff-Appellee, v. Virgil Allan COPUS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1529

110 F.3d 1529

97 CJ C.A.R. 592

UNITED STATES of America, Plaintiff-Appellee, v. Virgil Allan COPUS, Defendant-Appellant.

No. 95-6034.

United States Court of Appeals,Tenth Circuit.

April 23, 1997.

Joseph W. Strealy, of Schnetzler/Strealy, Oklahoma City, OK, for Defendant-Appellant.

Thomas M. Gannon, Attorney, Department of Justice, Washington, DC (Rozia McKinney-Foster, United States Attorney, and Jerome A. Holmes, Assistant United States Attorney, Oklahoma City, OK, with him on the brief), for Plaintiff-Appellee.

Before SEYMOUR, Chief Judge, ANDERSON and KELLY, Circuit Judges.

SEYMOUR, Chief Judge.

Virgil Allan Copus was convicted of making a false statement to a bank, in violation of 18 U.S.C. § 1014. The district court sentenced him to a term of twenty-four months imprisonment, followed by twenty-four months of supervised release, and ordered him to pay restitution. He appeals his conviction and sentence. We affirm the conviction, but we remand for resentencing.

I.

On April 8, 1987, Mr. Copus executed two notes to the Bank of Hydro (Hydro); one line of credit for $250,000 and one installment note for $50,000. Mr. Copus borrowed the money to finance his farming and ranching activities, and although ostensibly only the smaller loan was to refinance existing debt, most of these funds were immediately used to satisfy existing debt to Hydro and the Bank of Canute. The notes were secured by Mr. Copus' cattle, crops, farm, equipment, and minerals, and ninety percent of their value was guaranteed by the Federal Home Administration (FHA). The federal guarantee required that cattle inspections be performed quarterly, although Hydro officials admitted they performed these inspections only biannually. On several occasions, these inspections were performed by Hydro's vice-president in charge of its office in Eakly, Oklahoma, Randy Hutcherson.

On December 16, 1989, Dale Beerwinkle inspected Mr. Copus' cattle on behalf of Hydro, or at least he thought he did. All parties agree that Mr. Copus guided Mr. Beerwinkle to a herd of roughly 464 head of cattle, valued at $218,969, but the parties dispute how much of that herd belonged to Mr. Copus and what representations Mr. Copus made to Mr. Beerwinkle as to his ownership interest in this livestock. Nonetheless, the first-hand accounts of what transpired at the December 16 cattle inspection are fundamentally consistent.

According to Mr. Beerwinkle, he met Mr. Copus at the latter's house at 8:00 on that Saturday morning. The two drove to look at some exotic bulls, with Mr. Beerwinkle driving his pickup at Mr. Copus' direction. ¹ Mr. Copus provided a head count, which Mr. Beerwinkle roughly verified. Mr. Beerwinkle noticed an unusual brand on the bulls' left hip, and Mr. Copus explained that it has a holding brand and that he had a partner who acquired these bulls in other parts of the state. ² He said they would ship the bulls in, fatten them up on wheat pasture, and ship them to sale "to make extra profit." Rec., vol. III, at 457. Mr. Beerwinkle recorded estimates of the bulls' weights. Mr. Copus and Mr. Beerwinkle then drove to several more locations. At each site where Mr. Copus was grazing stock, he told Mr. Beerwinkle how many cattle were there, and Mr. Beerwinkle attempted to confirm the number and estimate their weight. In one case, Mr. Copus thought several head were missing, which Mr. Beerwinkle separately noted. Finally, they returned to Mr. Copus' house, where he had fifteen exotic heifers which Mr. Beerwinkle noted. As they talked, Mr. Copus mentioned he had cattle in another location "on the gain," meaning he was grazing cattle belonging to someone else who would pay him upon sale for any additional weight gain.

Mr. Beerwinkle testified that this was the first and only time Hydro had not given him any records prior to inspection describing the cattle he was to inspect, and he suggested that not having the records may have affected the accuracy of his count. See rec., vol. III, at 476-77. Mr. Beerwinkle testified that Mr. Copus did not say or do anything to indicate he did not own the cattle. On the other hand, Mr. Beerwinkle also testified that he did not believe Mr. Copus ever said he was taking him to see the cattle in which Hydro had an interest. Rather, he said, "That's what I assumed he was showing me." Rec., vol. III, at 472.

After leaving Mr. Copus' house, Mr. Beerwinkle talked to Mr. Hutcherson because he was concerned about assessing the value of the bulls with the holding brands and the exotic breeds. Mr. Hutcherson told him to do the best he could. Within the week, Mr. Beerwinkle prepared a written report for Hydro in which he estimated the value of Mr. Copus' cattle at $218,969, although he later testified that he made errors in his calculations. Mr. Copus did not see the report at that time, and was not apprised of its contents until much later.

Mr. Copus' version of these events accords substantially with Mr. Beerwinkle's. He testified he showed Mr. Beerwinkle bulls that he "had a partner on," rec., vol. IV, at 619, and other cattle that he owned. ³ As he sold cattle throughout the winter and the spring he deposited all proceeds with Hydro, although he did not necessarily direct that these moneys be used to repay his loans.

Before the line of credit loan matured in April 1990, Mr. Copus and Mr. Hutcherson completed a short-term extension. Such extensions are common with agricultural loans, due to uncertainties of weather, prices, and harvest times. In this case Mr. Copus sought to fatten his cattle more before selling them. On April 8, Mr. Copus signed a financial statement prepared by Mr. Hutcherson which stated that Mr. Copus had 500 cattle worth $270,000, although testimony from Mr. Copus and a bank employee established that Mr. Hutcherson completed the statement and Mr. Copus signed it without reading it. On June 7, Mr. Copus deposited about $62,000 with Hydro and applied to extend the loan again. On June 18, Mr. Copus told Mr. Hutcherson that he had only 43 head of cattle, valued approximately at $30,000.

Bank officials and law enforcement agents testified that during their investigations Mr. Copus confessed he had lied at the December 16 cattle inspection. For example, Lary L. Damron, an FBI agent, testified Mr. Copus "said that he had lied to the bank examiner, that he had represented these cattle as being his cattle in connection with the collateral on the note, and that all of the cattle were not his." Rec., vol. III, at 482. Mr. Copus denied having made such statements and conceded only that he had told the bank he would repay the loan and then could not. Indeed, following liquidation of Mr. Copus' assets, both Hydro and FHA were left with considerable losses. Because Mr. Copus had bought and sold cattle throughout the winter and spring, investigators were unable to determine how many head of cattle Mr. Copus had owned at various times before his June 18 conversation with Mr. Hutcherson.

Mr. Copus was indicted on two counts of making false statements to a bank. The first count charged that he misrepresented his ownership of cattle during the December 16 cattle inspection, while the second count charged that he similarly made misrepresentations in completing the April 8 financial statement. The jury convicted Mr. Copus on the first count. He appealed, maintaining that insufficient evidence supported the jury's verdict. He also contested the district court's application of the sentencing guidelines, and its decision to order restitution.

II

In this case, Mr. Copus was charged with violating 18 U.S.C. § 1014, which provides, in relevant part: "Whoever knowingly makes a false statement ... for the purpose of influencing ... any institution ... upon any application ... or loan, or any change or extension of any of the same, or the acceptance, release, or substitution of security therefor, shall be fined ... or imprisoned...." Applying clear precedent in this circuit, the district court instructed the jury without objection that the false statement was material as a matter of law. See United States v. Evans, 42 F.3d 586, 592 (10th Cir.1994).

We abated this appeal pending our en banc determination in United States v. Wiles, 102 F.3d 1043 (10th Cir.1996) (en banc), in which we considered the effect of United States v. Gaudin, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995), on several bank fraud statutes similar to section 1014. In Gaudin, the Court held that questions of materiality are not purely legal and must be submitted to the jury. The Court did not address whether materiality was an element of the crime because the government had conceded that it was. Id. We held in Wiles that Gaudin must be applied retroactively. See Wiles, 102 F.3d at 1055. Notwithstanding the defendant's failure in Wiles to object to the district court's conclusion that materiality was a question of law for the court, we held that a failure to instruct the jury on an element of the crime is per se reversible "[b]ecause the ... jur[y] ... did not render a verdict, formal or otherwise ... on the element of materiality." Id. at 1060.

Mr. Copus never asserted that the alleged false statement in this case, if made, was not material. Nevertheless, in light of our holding in Wiles, we issued an order and judgment reversing Mr. Copus' conviction because the issue of materiality was not sent to the jury, and remanding for further proceedings. In so doing, we relied on circuit authority holding materiality to be an element of the crime under 18 U.S.C. § 1014. See United States v. Grissom, 44 F.3d 1507, 1510 (10th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 1720, 131 L.Ed.2d 579 (1995). We also noted, however, that the Supreme Court had granted certiorari in United States v. Wells, 63 F.3d 745 (8th Cir.1995), cert. granted, --- U.S. ----, 116 S.Ct. 1540, 134 L.Ed.2d 645 (1996), to determine whether materiality is in fact an element of the crime under ...