U.S. v. Fearn

• Decision Date: 29 December 1978
• Docket Number: No. 78-1199,78-1199
• Citation: 589 F.2d 1316
• Parties: 3 Fed. R. Evid. Serv. 1329 UNITED STATES of America, Plaintiff-Appellee, v. Calvin FEARN, Jr., Defendant-Appellant. Seventh Circuit
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1316

589 F.2d 1316

3 Fed. R. Evid. Serv. 1329

UNITED STATES of America, Plaintiff-Appellee, v. Calvin FEARN, Jr., Defendant-Appellant.

No. 78-1199.

United States Court of Appeals,Seventh Circuit.

Argued Nov. 1, 1978.

Decided Dec. 29, 1978.

Edward Neville, East St. Louis, Ill., for defendant-appellant.

R. Michael Hursey, Asst. U. S. Atty., Belleville, Ill., for plaintiff-appellee.

Before CUMMINGS, SPRECHER and BAUER, Circuit Judges.

SPRECHER, Circuit Judge.

This appeal raises the questions of whether a conviction must rest upon firmer ground than the uncorroborated admission of the accused and whether in this case there is sufficient corroboration in the other evidence adduced at the trial to sustain the conviction.

The defendant was charged in Count I with making a false material statement for the purpose of obtaining a Small Business Administration loan by stating in an application that damage occurred to personal property located at 612 North 41st Street, Apartment 6, East St. Louis, Illinois, whereas no such damage occurred, in violation of 15 U.S.C. § 645(a). On the basis of the same facts, he was further charged with making a false statement of a material fact by executing a Disaster Loan Agreement (Count II) and a Completion Certificate for a Disaster Loan (Count III) in violation of 18 U.S.C. § 1001.

A jury found the defendant guilty of all three counts. He was sentenced to two years' imprisonment on Counts I and II, to run concurrently, and placed on probation for five years on Count III, to be consecutive to the term of imprisonment.

I

As the result of flooding in March and April of 1973, St. Clair County, Illinois, was declared a disaster area by presidential declaration. Persons who suffered flood-related damage were eligible for loans up to $10,000 for personal property damage or a total of up to $50,000 real and personal property damage. Up to $5,000 of each disaster loan was subject to being forgiven. Disaster loans were made through the Small Business Administration (SBA) and approximately 2300 flood-related disaster loans were made by the SBA in St. Clair County in 1973.

On April 28, 1973, the Mississippi River at St. Louis reached its highest level ever recorded, over 13 feet above flood stage. East St. Louis is in St. Clair County and is situated on the Mississippi River, across the river from St. Louis, Missouri. The river level had reached almost six feet above flood stage by April 22, 1973, which was Easter Sunday, making it an easily recollected day for most of the witnesses who appeared.

The defendant is the Director of Social Services for the East St. Louis Housing Authority. On the Saturday night preceding Easter Sunday in 1973, defendant's supervisor, who was the Director of the Housing Authority, called the defendant and advised him that as the result of a power failure and high rising water backing up from the sewers an emergency had developed at two housing developments the John Robinson Homes with 144 units and the John DeShields Homes with 300 units. The defendant was told to go to these two housing developments, which were about two miles from his own apartment at 612 North 41st Street, Apartment 6, East St. Louis, to assist the tenants, who were experiencing flooding of their apartments. The defendant was not able to return to his own apartment until the following Monday afternoon which was April 23, 1973.

The defendant testified that when he reached his own apartment, which as a bachelor he inhabited alone, he found water about 11/2 inches high on the floor. His rugs and carpets were soaked, his television set which was located on the floor was wet, and a distinct odor pervaded the apartment.

In accordance with the procedure established by the SBA for the processing of disaster loans, the defendant first went to an informational office in East St. Louis and was directed to an office on Ninth Street, where he filled out a card, verbally discussed his damages with an employee, and was given an application form. The written application for the disaster loan, including an inventory of personal property damage, was signed by the defendant on July 30, 1973 and received by the SBA on July 31. The defendant specified that the disaster occurred on April 22, 1973 and itemized personal property damaged with a total estimated amount of $5,755. When the application was filed, the defendant supplied to the SBA receipts showing the cost of replacement items.

On August 19, 1973, Walter McIntosh visited the defendant at Apartment 6, 612 North 41st Street, for the purpose of verifying defendant's claim in accordance with established SBA procedure. Mr. McIntosh was then a community college teacher who had formerly worked as a loan verifier for SBA in the summer of 1972 on California earthquake damages, and because he had a good record on those claims, was reemployed during the summer of 1973 for the Illinois flood damage claims.

McIntosh testified that most of the East St. Louis claims were for personal property in the form of clothing, that since the flooding occurred in April and the damage claims were verified in August, most of the damaged clothing and other personal property had been discarded by the owners because it carried disease, and that the claimants were told to dispose of water-damaged personal property because of the danger of disease.

The defendant's written inventory of claimed personal property damage included a television set, a stereo set and records, carpets, a vacuum sweeper, two "commodes" or cabinets which the defendant had at each end of his sofa, and clothing which had been stored in cardboard boxes. On the inventory form, the loan verifier had written "Discussed guidelines of program and cost total differences with applicant" and "Applicant's estimate relatively high." The verifier had then eliminated entirely several of the claimed items, reduced the cost of all remaining items, and concluded with a "verifier's estimate" of "p.p. 1600" or personal property damages of $1600. McIntosh testified that 15 to 20 of the claims he examined that summer were turned down completely because he found no damages at all. He also testified that if he saw waterlines, he would ordinarily take pictures of them with his Polaroid camera. The defendant testified that he showed McIntosh a white substance around the two commodes and stereo, whereupon McIntosh took several Polaroid pictures. The SBA file of defendant's disaster loan contained only one Polaroid picture and that was of the outside of Apartment 6.

A loan specialist for SBA testified that the loss verifier's report "is a very determining factor in whether the loan is approved or not and if so, for what amount." Defendant's loan was approved on September 24, 1973. On September 27, the defendant signed the Disaster Loan Agreement in the amount of $1600. On the same date, a check was issued to him for that amount.

The loan specialist also testified that the defendant would not have known when the loan was made that it was cancellable or subject to being forgiven or, if so, when it would be cancelled or forgiven. If the terms of the loan agreement were not fulfilled, the recipient of the loan would be required to pay back one-and-one-half times the amount of the loan. In this case the loan agreement provided that if the loaned sum of $1600 was not used as directed by the SBA, the defendant would be required to repay $2400. The defendant testified that at the time he made his application he did not know that the loan would be forgiven, and it was not actually forgiven until about a year later. However, the loan agreement had the words "Total Cancellation" on it directly under the caption "Disaster Loan Agreement."

On September 4, 1974, the defendant signed the Completion Certificate for Disaster Loan certifying that the funds were used by the defendant as authorized by the SBA. Presumably at that time the $1600 proceeds were forgiven as a loan.

II

The crucial issue in the trial occurred during the testimony of James Trione, who said he was in the liquor, real estate, bookkeeping, income tax and investments business. He testified that in 1972 he became the contract purchaser of a 19-unit brick garden apartment complex located at 612 to 624 North 41st Street in East St. Louis, constituting him as the defendant's landlord. He testified that in September or October 1973, he and the defendant were alone in the defendant's living room, when the following took place:

Q. And could you tell the jury what Mr. Fearn said to you at that time about any flood loan?

A. As best as I remember, word for word, he told me that he would pay me the back rent that he owed me which at that time was only a couple hundred dollars. It wasn't very much; three hundred at most. He would pay me the back rent that he owed me when he got his loan and then he changed it from loan to grant, from the Federal government for flood damage and I asked him at that time if it was for some rental property that he had and he said, no, it was for damage to this apartment, at which time I looked around the apartment and looked to see if I could see any damage and he said, well, there was no damage. And I said, well, how can you get the money then? And he said, well, everybody is. Everybody's getting it. And he said he would pay me when this loan came in, or this grant came in.

Q. Did he say how much he was going to get?

A. He told me he was going to get $5,000.00.

Q. Did he say he had applied for a loan?

A. Yes, he did.

Trione testified that he told Maurice Hurst, a special agent for the Federal Bureau of Investigation, about the defendant's admission when Hurst had interviewed him several times prior to the trial. The defendant moved for a mistrial on the ground that a pre-trial discovery order had required the government to furnish the defendant with "written or recorded statements or confessions made by the defendant." The prosecutor...