U.S. v. Doke

• Decision Date: 25 March 1999
• Docket Number: No. 97-20515,97-20515
• Citation: 171 F.3d 240
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Maurice H. DOKE; Larry W. Bass, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 240

171 F.3d 240

UNITED STATES of America, Plaintiff-Appellee, v. Maurice H. DOKE; Larry W. Bass, Defendants-Appellants.

No. 97-20515.

United States Court of Appeals, Fifth Circuit.

March 25, 1999.

Rehearing Denied April 23, 1999.

James L. Powers, Paula Camille Offenhauser, Asst. U.S. Attys., Houston, TX, for Plaintiff-Appellee.

Roland E. Dahlin, II, Federal Public Defender, Margaret Christina Ling, Renata Ann Gowie, Asst. Federal Public Defender, George D. Murphy, Jr., Houston, TX, for Doke.

Anthony Wayne Nims, Houston, TX, for Bass.

Appeals from the United States District Court for the Southern District of Texas.

Before JOLLY and JONES, Circuit Judges, and SIM LAKE, ^* District Judge.

EDITH H. JONES, Circuit Judge:

Maurice Doke and Larry Bass were convicted of conspiracy, bank fraud, and two counts of making false statements to a bank, all in connection with a $600,000 nominee loan on speculative real estate. On appeal, they raise twelve issues, the most significant of which are the sufficiency of the evidence, potential juror bias, and Doke's competence to stand trial. ¹ We affirm the district court's judgment.

I. Facts

Doke was a real estate developer in Houston. Bass was his attorney and had negotiated several of Doke's real estate transactions. In 1984, one of Doke's entities sold a 200-acre tract of undeveloped land in north Houston to General Homes Corporation, retaining two options to buy back small parcels of it. The first option, pertaining to 6.028 acres, was set to expire on August 1, 1985.

On July 11, 1985, Bass notified General Homes that Doke would exercise his option to buy the land. The purchase price would be nearly $788,000. On July 19, Bass requested a $600,000 loan from Champions Point National Bank ("Champions") to pay for the land. Champions approved the loan on July 30, and the next day, in a simultaneous closing, General Homes sold the land to a Doke entity, which sold it to Bass for the same price. This prosecution arose from that loan. The government argues--and the jury must have believed--that Bass told Champions he was borrowing the money to buy the land from Doke, without revealing Doke's continued involvement with the land or the loan.

It is undisputed that Doke gave to Bass the $200,000 Bass used for the down payment. Every six months for the next two years, Doke sent to Bass the money Bass used to make each payment on the loan. By late 1987, however, the Houston real estate market and the stock market had crashed. Doke was no longer able to pay Bass for the loan payments. Just before the February 1988 payment was due, Bass asked Champions to restructure his loan by extending more credit and extending the repayment terms. In the letter making this request, Bass made no mention of Doke. Champions denied Bass's request, and Bass did not make the February 1988 loan payment. Later that year, Champions foreclosed on the property. In 1990, Champions failed and was taken over by the FDIC. Shortly thereafter, the property was sold for a loss.

When regulators took over the bank in 1990, they were unable to find Bass's credit file, in which they were especially interested because the loan was made to an insider and had not been repaid. At the time of the loan, Bass had been on the Champions board of directors. Doke had also been an insider because he was a significant shareholder.

The theory of the government's case is that Doke and Bass failed to disclose Doke's involvement in the loan because Champions could not have loaned the $600,000 directly to Doke without violating civil regulations. Under the limits of the loan-to-one-borrower rule, see 12 U.S.C. § 84, Champions could loan Doke only about $40,000 more than he had already borrowed. It could, however, lend over $300,000 to Bass. Thus, when Bass borrowed the $600,000, Champions participated out $300,000 of the loan to Park 45 National Bank, a "sister bank" that had several directors in common with Champions.

Doke and Bass were indicted in July 1995. A jury trial was held in February and March 1997. They were found guilty on all four counts: one count of conspiracy under 18 U.S.C. § 371, one count of bank fraud under 18 U.S.C. § 1344, and two counts of making false statements to a financial institution under 18 U.S.C. § 1014.

II. Sufficiency of Evidence

Doke and Bass argue that the evidence was insufficient to support their convictions on any count. The evidence will be sufficient to support the jury's verdict if "a rational jury could have found the essential elements of the crime beyond a reasonable doubt." United States v. Dupre, 117 F.3d 810, 818 (5th Cir.1997), cert. denied, --- U.S. ----, 118 S.Ct. 857, 139 L.Ed.2d 756 (1998).

As mentioned above, the government argues that Doke and Bass concealed Doke's involvement from Champions, and that the loan exposed Champions to the risk of being in violation of banking regulations. Doke and Bass contend that there was not enough evidence to show that Bass failed to disclose Doke's involvement to the bank. In addition, however, they argue that, even assuming non-disclosure of Doke's involvement, this nominee loan could not have defrauded the bank because the bank received exactly the risk it bargained for: it knew Bass's credit-worthiness, knew what the money would be used for, and knew what collateral would secure the loan.

In order to prove bank fraud under 18 U.S.C. § 1344, the government must show that Doke and Bass

knowingly executed, or attempted to execute, a scheme to defraud a federally-chartered or -insured financial institution. A scheme to defraud includes any false or fraudulent pretenses or representations intending to deceive others in order to obtain something of value, such as money, from the institution to be deceived. The requisite intent to defraud is established if the defendant acted knowingly and with the specific intent to deceive, ordinarily for the purpose of causing some financial loss to another or bringing about some financial gain to himself.

United State v. Hanson, 161 F.3d 896, 900 (5th Cir.1998). In this case, the crux is whether Doke and Bass had the intent to deceive and whether the financial gains and losses in the offing demonstrated a scheme to defraud. These are questions of fact, and "[a]ll credibility determinations and reasonable inferences are to be resolved in favor of the verdict." United States v. Willey, 57 F.3d 1374, 1380 (5th Cir.1995).

Doke and Bass argue that Bass disclosed their partnership to the bank when he applied for the loan. They contend that several pieces of evidence, in addition to Bass's own testimony at the trial, show that Bass made this disclosure. The loan file presented at trial was missing the documents that would prove the disclosure. Other documents in the file showed Doke's continued involvement. The files on Bass at other banks show that Bass was not concealing anything. Doke's payments to Bass were routed through Champions. Two bank officers testified they knew of Doke's involvement. Finally, Doke had sufficient credit available at another bank to eliminate any motive to circumvent the lending limits at Champions.

The government, on the other hand, presented testimony from the president of the bank, Ron Karel, who was also Bass's loan officer. Karel strenuously maintained that Bass did not reveal Doke's continued involvement with the loan. Although he knew that Doke was involved in the original sale of the land (selling it to Bass), Karel maintained he did not know Doke would be paying off Bass's loan. The loan application (not filled out by Bass but purportedly reflective of what he had told the bank) stated that Bass would repay the loan out of his "[p]ersonal income and sale of property." Furthermore, Karel testified that at the board of directors meeting where Bass's loan was approved, Bass commented: "This has got to be a good deal because, after all, I'm putting in $200,000 of my own money toward the purchase price of this land." Several other directors testified about the approval of the loan. Bobby Newman testified that he had seen no indication that Doke was involved with the loan. Keith Franze testified that he did not know of Doke's involvement and would not have voted to approve the loan if he had known. Robert Russ testified that he "never heard" that Doke would be the one paying off the loan, but he admitted it had happened so long before trial he could not be sure he would remember if he had.

Aside from the documents in Bass's file at Champions, which were ambiguous because of their incomplete state, this was largely a swearing contest between Bass's and Karel's versions of events. Two bank officers testified that Karel knew of Doke's involvement with the loan. But Karel and the other directors who denied knowledge of Doke's involvement were subject to extensive cross-examination by Bass's able trial counsel. This court is not inclined to interfere with the jury's decision about witnesses' credibility when that issue was so squarely set before it.

In addition, the documents produced by both sides would not necessarily compel a reasonable juror to abandon a determination that Karel's story was more credible. Because Bass's file was missing when the FDIC took over Champions, the government presented a file reconstructed from a copy that had been made surreptitiously by an investigator several weeks before the takeover. Doke and Bass demonstrated at trial that some key documents were missing even from the reconstructed file. They argue that the passage of time and the suspicious disappearance of the file ² show that the file could not be trusted to reflect accurately what Bass had told Champions. In addition, they point out that the FDIC had lost Bass's personal files about the transaction after it took custody of them. Yet, the government presented evidence that, as early as 1986, when payments were still being made on the loan, Champions' files did not reflect...