U.S. v. Edgmon, s. 91-6077

• Decision Date: 20 December 1991
• Docket Number: 91-6078,Nos. 91-6077,s. 91-6077
• Citation: 952 F.2d 1206
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Gary A. EDGMON and Jimmy W. Edgmon, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1206

952 F.2d 1206

60 USLW 2463

UNITED STATES of America, Plaintiff-Appellee, v. Gary A. EDGMON and Jimmy W. Edgmon, Defendants-Appellants.

Nos. 91-6077, 91-6078.

United States Court of Appeals, Tenth Circuit.

Dec. 20, 1991.

John F. Arens, Arens & Alexander, Fayetteville, Ark. (Marjorie M. Kesl and Lee H. Linzay, Jr., also of Arens & Alexander, and Mack Martin, Oklahoma City, Okl., with him on the brief), for defendants-appellants.

Vicki Zemp Behenna, Asst. U.S. Atty., Oklahoma City, Okl. (Timothy D. Leonard U.S. Atty., with her on the brief), for plaintiff-appellee.

Before BALDOCK and EBEL, Circuit Judges, and ANDERSON, Senior District Judge. ^*

ALDON J. ANDERSON, Senior District Judge.

On December 10, 1990, a jury convicted appellants/co-defendants Gary A. Edgmon ("Edgmon") and Jimmy W. Edgmon ("Edgmon, Sr.") each of four counts of conversion of Farmers' Home Administration collateral in violation of 18 U.S.C. § 658 and one count of conspiracy to convert in violation of 18 U.S.C. § 371. Appellant Edgmon, Sr., was also found guilty of one count of money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i). Appellants now challenge their convictions arguing that 1) the evidence presented was insufficient to support a finding of intent to defraud; 2) the verdict was contrary to the great weight of the evidence; 3) appellants' due process rights were violated; 4) the prosecution failed to present substantial exculpatory evidence to the grand jury; and 5) the money laundering charge violated the Double Jeopardy Clause.

I.

Appellants are both farmers in Oklahoma as well as father and son. In October of 1987, Edgmon obtained a loan from the Farmers Home Administration (FmHA) for $200,000. Edgmon granted FmHA a security interest in his cattle and other items to secure the loan. Edgmon made payments on the loan that amounted to $12,800 paid on the principal amount. In August of 1988, Edgmon applied for a new loan of $12,800 which would return him to the $200,000 maximum credit limit. FmHA approved the new loan to Edgmon in October of 1988. Edgmon and FmHA then entered a new loan agreement and Edgmon received the additional funds from FmHA. See App. at 137-143(d).

During May, June, and July of 1989, Edgmon sold a substantial number of his cattle that served as security for his FmHA loans. Edgmon sold the cattle through his father, Edgmon, Sr., in four separate transactions. The cattle were sold in Edgmon, Sr.'s name and the purchasers paid for the cattle by issuing checks payable to Edgmon, Sr. Neither FmHA's nor Edgmon's name appeared on the cattle sales in any form. See, e.g., Supp.App. at 41-42 (May 2nd sale).

Sometime before June 24, 1989, Edgmon met with FmHA to apply for a new loan and to update his Farm and Home Plan form kept by FmHA. Edgmon represented to FmHA that he had a total of 450 head of cattle. App. at 181. This number was incorrect in that it failed to account for the cattle already sold by Edgmon in the name of his father, Edgmon, Sr. As a result of Edgmon's request for a new loan, FmHA scheduled with Edgmon a collateral inspection of his farm for August 8, 1989. Edgmon failed to appear for the inspection. FmHA rescheduled the inspection for August 11, 1989. On August 11, 1989, Edgmon appeared at the FmHA office and informed an FmHA representative that he had sold his cattle securing his previous FmHA loans. Trans. Vol. I at 56. On August 11, 1991, FmHA sent a letter to Edgmon demanding restitution of the proceeds of the sale of the collateral, approximately $140,000, and warning that if he failed to resolve the problem, FmHA would refer the claim for criminal prosecution. App. at 182(a). The problem was not resolved and FmHA referred the matter to the United States Attorney's Office. After a trial, a jury returned criminal convictions against Edgmon and Edgmon, Sr., for selling chattel securing FmHA loans without authorization and conspiring to convert the chattel. The jury also convicted Edgmon, Sr., of money laundering. Both challenge their convictions.

II.

A. Motion For Judgment Of Acquittal.

Appellants both assert that the trial court erred in denying their motions for judgment of acquittal based on insufficiency of the evidence presented. On appellate review of a denial of "a motion for acquittal under Fed.R.Crim.P. 29(a), the issue is whether, taken in the light most favorable to the government, there is substantial evidence from which a reasonable jury might properly find the defendant guilty beyond a reasonable doubt." United States v. Johnson, 911 F.2d 1394, 1399 (10th Cir.1990) (citation omitted). Defendants argue that substantial evidence does not exist to support their convictions for conversion and conspiracy to convert. Defendant Edgmon, Sr., also alleges that his conviction for money laundering is not supported by substantial evidence.

1. Conversion and Conspiracy to Convert.

The jury convicted defendants of four counts each of conversion in violation of 18 U.S.C. § 658. Section 658 provides in pertinent part:

Whoever, with intent to defraud, knowingly conceals, removes, disposes of, or converts to his own use or to that of another, any property mortgaged or pledged to, or held by, ... the Secretary of Agriculture acting through the Farmers' Home Administration, ... shall be fined ... or imprisoned ... or both.

18 U.S.C. § 658. See United States v. Garth, 773 F.2d 1469, 1476 (5th Cir.1985), cert. denied, 476 U.S. 1140, 106 S.Ct. 2246, 90 L.Ed.2d 693 (1986). Defendants argue that the element of intent to defraud was not supported by substantial evidence. Specifically, defendants argue that the evidence demonstrated that Edgmon believed he had the authority to sell the cattle and, therefore, neither defendant had an intent to defraud. Defendants argue this failure of proof on the conversion charge also invalidates their convictions for conspiracy to convert.

After reviewing the record on appeal, we find that substantial evidence exists from which a reasonable jury could conclude that Edgmon acted with intent to defraud. The nature of the sales themselves support the jury findings. The sales of the FmHA collateral were made by Edgmon's father, Edgmon, Sr. The sales were made in the name of Edgmon, Sr., and the payment checks were payable to Edgmon, Sr., alone. The sales were structured in this manner even though the cattle sold were owned by Edgmon and not by Edgmon, Sr.

Further, at trial, defendant Edgmon testified that he knew that any check for the sale of FmHA collateral had to be issued in his name and FmHA's name. Supp.App. at 141. Edgmon testified he had made sales in the past and so knew that FmHA's name had to be on the check but, nonetheless, sold his cattle under his father's name and received payment in his father's name. See id. Thus, Edgmon's own testimony is sufficient to support a reasonable inference that, at the very least, Edgmon knew the form of the cattle sales was improper yet proceeded with them anyway.

Additionally, on June 23, 1989, Edgmon met with an FmHA representative to fill out an FmHA loan related form for an additional FmHA loan. On that day, Edgmon represented that he had 450 head of cattle to use as collateral for a new loan. App. at 181. Edgmon made no mention that he had already sold some of the cattle he had used for collateral for his previous FmHA loans. To process Edgmon's new loan application, FmHA had to conduct a collateral inspection. Such an inspection was scheduled for August 8, 1989. Trans. Vol. I, at 52-54. Edgmon met with the FmHA representative but canceled the inspection and failed to inform FmHA that he had already sold much of the cattle he was offering as collateral. Id. Just before the second scheduled collateral inspection, Edgmon finally informed FmHA that he did not have the cattle he had claimed could serve as collateral because he had sold many of them. Id. at 56. From these facts, a reasonable jury could infer that Edgmon was attempting to conceal the ongoing sales of collateral from FmHA and actively misrepresenting the amount of cattle he had available to serve as collateral and further infer such actions indicated an intent to defraud. This, when taken with Edgmon's testimony that he knew the form of the cattle sales was improper, constitutes substantial evidence from which a reasonable jury could find that Edgmon acted with intent to deceive.

2. Money Laundering.

Defendant Edgmon, Sr., challenges the district court's refusal to enter a judgment of acquittal on the count of money laundering in violation of 18 U.S.C. § 1956 based on insufficiency of the evidence. One of the elements the government must prove beyond a reasonable doubt to convict under § 1956 money laundering is that the accused acted with intent to conceal or disguise the nature or source of proceeds of an illegal activity such as conversion of FmHA collateral. 18 U.S.C. § 1956(a)(1)(B)(i). Defendant Edgmon, Sr., argues that the jury finding that he acted with intent to conceal the source of the funds is not supported by substantial evidence.

In asserting his position, Edgmon, Sr., relies on the case of United States v. Sanders, 929 F.2d 1466, 1470-73 (10th Cir.1991). The Sanders case involved the proceeds of drug transactions. The drug dealers purchased automobiles with the proceeds of those drug transactions and were later convicted of money laundering based on the automobile purchases. In the Sanders opinion we interpreted § 1956. We held that merely spending the proceeds of illegal activities does not violate the money laundering statute. Id. at 1472. We noted that,

the purpose of the money laundering statute is to reach commercial transactions intended (at least in part) to disguise the relationship of the item purchased with the person providing the proceeds and that the proceeds used to make the purchase were obtained from illegal activities.

Id. In holding that the defendants in Sanders did not violate § 1956, we...