U.S. v. French, s. 94-1933

• Decision Date: 23 January 1995
• Docket Number: 94-1952,Nos. 94-1933,s. 94-1933
• Citation: 46 F.3d 710
• Parties: UNITED STATES of America, Appellee, v. Norman Eugene FRENCH, also known as Jim French, Appellant. UNITED STATES of America, Appellant, v. Norman Eugene FRENCH, also known as Jim French, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 710

46 F.3d 710

UNITED STATES of America, Appellee, v. Norman Eugene FRENCH, also known as Jim French, Appellant.

UNITED STATES of America, Appellant, v. Norman Eugene FRENCH, also known as Jim French, Appellee.

Nos. 94-1933, 94-1952.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 12, 1994.

Decided Jan. 23, 1995.

Thomas W. Clayton, Sioux Falls, SD, argued, for appellant.

Thomas J. Wright, Asst. U.S. Atty., Sioux Falls, SD, argued, for appellee.

Before FAGG, Circuit Judge, ROSS, Senior Circuit Judge, and MAGILL, Circuit Judge.

MAGILL, Circuit Judge.

Norman Eugene French appeals his conviction and sentence for thirty-two counts of converting mortgaged property in violation of 18 U.S.C. Sec. 658. The government cross-appeals the sentence, arguing that the district court ¹ erred in giving French credit for a state term of imprisonment and that a state perjury conviction should have been included in French's criminal history calculation. We affirm.

I. BACKGROUND

French is a sixty-plus-year-old man who has spent the majority of his life farming in and around Beadle County, South Dakota. French was a successful farmer, and he branched out into a trucking business that also proved successful. He began receiving loans from the Farmers Home Administration (FmHA) in 1972, pledging certain cattle as security for the FmHA loan. ² At this time, Gerald Fossum was the FmHA's Beadle County Supervisor. The terms of FmHA loans contain significant restrictions on the borrower. For present purposes, the most significant of these restrictions requires French to report all sales of FmHA security to the FmHA and to obtain from the FmHA a release for any funds acquired from such sales that are to be spent (collectively, the "reporting requirement"). Fossum testified that he discussed the reporting requirement with French, and that French appeared to understand his obligations. Fossum denied telling French anything to the contrary. French reported cattle sales to the FmHA and complied with other FmHA requirements throughout Fossum's tenure as county supervisor.

Michael Madsen replaced Fossum as Beadle County Supervisor in 1983. In 1984, Madsen sent a "Beadle County Bulletin" to FmHA borrowers, including French, reminding the borrowers of the reporting requirement. The bulletin stated that "[a]ll checks received from sale of farm production must be brought to FmHA office before the money is spent."

In 1985, French's promissory notes were rewritten. At this time, French also executed four new promissory notes totalling $316,272.50, all secured by livestock. In 1986, a new security agreement was executed to secure the promissory notes that were renegotiated in 1985. As rewritten, this security agreement provided for an interest in:

All livestock (except livestock and poultry kept primarily for subsistence purposes) ... used for commercial purposes ... now owned or hereafter acquired by Debtor, together with all increases, replacements, substitutions, and additions thereto, including but not limited to ... 306 Calves, Breed Mixed, Color Mixed, Weight, average weight 1100#, one-year-old.

Tr. at 98-99. This security agreement (and all others previously executed) contained the following provision:

SECURED PARTY HAS INFORMED DEBTOR THAT DISPOSAL OF PROPERTY COVERED BY THIS SECURITY AGREEMENT WITHOUT THE CONSENT OF THE SECURED PARTY ... MAY CONSTITUTE A VIOLATION OF FEDERAL CRIMINAL LAW.

Tr. at 102. After French's loans were restructured, they were all cross-collateralized by a mortgage of French's real property and a mortgage of his livestock. ³ William Hupp, who succeeded Madsen as County Supervisor, testified that the reporting requirement was carefully explained to all borrowers, including French. Hupp also testified that he was aware of no instance in which French was told anything to the contrary.

After a dispute with the FmHA in 1986, French ceased cooperating with the agency. He refused to provide the required paperwork ⁴ to the FmHA and also stopped making payments on the loans. French reported his last cattle sale in April 1987.

In 1987, French became involved in bitter and protracted divorce proceedings. In 1991, the state court judge handling the divorce case ordered French to vacate his farm and to permit his wife to move onto it. French immediately filed for Chapter 12 bankruptcy, and in so doing regained possession of the farm. (This Chapter 12 filing was later converted to Chapter 7.) The divorce proceedings were finally resolved in 1992, but not before French had perjured himself. French was convicted of perjury in South Dakota state court. See State v. French, 509 N.W.2d 698 (S.D.1993). He was sentenced to five years imprisonment, and he served ten months (January 8 to November 8, 1993). French was then released from the penitentiary on parole.

Between 1986 and 1991, FmHA agents repeatedly contacted French in an attempt to obtain his cooperation. French remained uncooperative, although he permitted the FmHA to conduct site inspections. As a result of inconsistencies discovered during a 1988 inspection, the FmHA began to suspect that French was engaging in unreported cattle sales. During a 1989 inspection, French was confronted with the inconsistencies. French became uneasy and refused to sign an FmHA Form 1962-1 disclosing the sales unless the FmHA agreed to allow him to use the proceeds from the sales for operating expenses rather than for loan repayment.

Between 1988 and 1991, French engaged in thirty-two different transactions involving a total of 542 head of cattle worth approximately $335,272.08. French admitted that these transactions involved cattle upon which the FmHA claimed a mortgage. However, French never reported any of these sales nor obtained permission from the FmHA to use the proceeds, and he repeatedly requested that the FmHA's name be omitted from checks issued for the cattle sales. These thirty-two transactions provide the basis for the thirty-two counts of conversion of mortgaged property of which French was convicted. French was also convicted of perjury and bankruptcy fraud stemming from false statements made during the bankruptcy proceedings. French does not appeal the perjury and fraud convictions. French was sentenced in federal court on March 28, 1994. He owed $507,423.83 on the loans at the time of sentencing.

II. DISCUSSION

French makes four arguments on appeal. First, he argues that the government is estopped from prosecuting him because FmHA employees are guilty of "affirmative misconduct" upon which he relied. Second, French argues that the evidence of "intent to defraud" produced by the government was insufficient to support the conviction. Third, French argues that the district court clearly erred in its calculation of the amount of loss for purposes of U.S.S.G. Sec. 2B1.1. Finally, French claims that the district court abused its discretion in awarding $50,000 restitution (subject to offset following French's Chapter 7 liquidation) to the FmHA.

The government cross-appealed, arguing (1) that the district court erred when it gave French credit for the time served in connection with French's state perjury conviction; and (2) that French's state perjury conviction should have been used in the calculation of his criminal history. We address these arguments seriatim.

A. Is the government estopped from prosecuting French?

French makes two estoppel arguments, ⁵ both of which may be quickly disposed of. We have not decided whether equitable estoppel is available against the government in a civil case. McDermott v. United States, 760 F.2d 879, 882 (8th Cir.1985). We note that in a civil case, "the public's interest [i]s far less than its interest ... in enforcement of the criminal law." United States v. Garth, 773 F.2d 1469, 1475 (5th Cir.1985), cert. denied, 476 U.S. 1140, 106 S.Ct. 2246, 90 L.Ed.2d 693 (1986). ⁶ However, even assuming that estoppel is available in a criminal case such as this, French's estoppel defense fails.

First, French asserts that he was told by one or more FmHA representatives that he did not need to report cattle sales so long as his "base herd" remained intact. The short answer to this argument is that there was conflicting evidence as to whether any such statements were made. This is a classic credibility contest, and credibility determinations are for the jury. United States v. Turk, 21 F.3d 309, 312 (8th Cir.1994). The jury chose to believe three FmHA county supervisors and the numerous documents that confirmed their testimony over the uncorroborated testimony of a convicted perjurer who was accused of making seven more untrue statements under oath. Moreover, even were the jury to believe that Fossum represented to French that reports were unnecessary, numerous subsequent discussions and French's own conduct indicate that French should have known that the FmHA later considered reporting necessary. In addition, the subsequent changes in personnel, in the note and in the security agreement make any pre-1983 representation by Fossum largely irrelevant.

Second, French argues that the FmHA's conduct during its inspections led him to believe that he had not impaired the FmHA's collateral (the base herd), and thus was not required to report the sales. The FmHA's silence, if construed as tacit approval of French's conduct, does not rise to the level of "affirmative misconduct." Cf. Garth, 773 F.2d at 1474-75 (FmHA "customary practice" of lax enforcement did not give rise to estoppel). Estoppel is therefore unavailable against the prosecution. McDermott, 760 F.2d at 882 (estoppel against the government requires affirmative misconduct).

B. Did the government provide sufficient evidence of intent to defraud?

In evaluating a challenge to the sufficiency of the evidence, our role is very limited. We review the evidence only to determine whether a rational trier of fact could find all the elements of the crime beyond a reasonable...