U.S. v. Gunter, 88-1075

• Decision Date: 22 June 1989
• Docket Number: No. 88-1075,88-1075
• Citation: 876 F.2d 1113
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Bobbie Jean GUNTER and Virginia Thomas, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1113

876 F.2d 1113

UNITED STATES of America, Plaintiff-Appellee, v. Bobbie Jean GUNTER and Virginia Thomas, Defendants-Appellants.

No. 88-1075.

United States Court of Appeals, Fifth Circuit.

June 22, 1989.

William R. Gustavson, Dallas, Tex. (court appointed), for Gunter.

Curtis Harden and James and Jame M. Murphy, Dallas, Tex. (court appointed), for Virginia Thomas and Virginia Thomas, pro se.

Louis Fischer, Atty. Dept. of Justice, Marvin Collins, U.S. Atty., and Lynn Hastings, Asst. U.S. Atty., Dallas, Tex., for plaintiff-appellee.

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

Before GARWOOD, JONES and SMITH, Circuit Judges.

GARWOOD, Circuit Judge:

Defendants-appellants Bobbie Jean Gunter (Gunter) and Virginia Thomas (Thomas) were convicted in the district court of bank fraud in violation of 18 U.S.C. Sec. 1344, making false statements to a bank in violation of 18 U.S.C. Sec. 1014, and conspiracy to commit these offenses in violation of 18 U.S.C. Sec. 371. ¹ They assert on appeal that their convictions are not supported by sufficient evidence, that the district court improperly denied certain requested jury instructions, and that the court abused its discretion by striking the testimony of a defense witness who became unavailable for cross-examination after completing his direct testimony. We reject all of these challenges and affirm the convictions.

Facts and Proceedings Below

Appellants, who were principal employees of Robert Gunter's two automobile dealerships when they committed the acts for which they were convicted, were tried for conspiring to defraud several banks through an elaborate scheme involving check kiting and pledging car titles that the dealerships no longer owned. Robert Gunter was president of the two Dallas-based, specialty car dealerships--Best Motors Company, Inc. (wholesale) and Road Show, Inc. (retail) (the companies). Appellants Gunter--Robert Gunter's mother--and Thomas--his sister--handled the companies' banking on a daily basis. Gunter was the secretary of these companies and was employed as title clerk. Thomas was first employed as a salesperson, then as a file clerk, and finally as Gunter's assistant.

Robert Gunter and the companies held lines of credit at several banks, including Dallas-based Texas American Bank (TAB) and Central National Bank (CNB), and Oklahoma-based Security State Bank (SSB). Two of these lines of credit--$450,000 at TAB and $200,000 at CNB--were secured by certificates of deposit and by automobile titles that under the terms of the relevant loan agreements (known as floor plans) were to represent inventory owned by the companies. Under the floor plan, as cars were sold to the public or other dealerships, the titles would be redeemed from the banks with a resulting reduction in the amount credited to Robert Gunter's and the companies' checking accounts, and as cars came into the companies' inventories, their titles would be transferred to the banks for a corresponding immediate credit in the checking accounts up to the established floor plan ceilings noted above.

As part of appellants' scheme, they redeemed car titles from these banks by writing checks on uncollected funds they had been advanced from the other banks. In order to conceal this, they used three to six banks in a continuous cycle of depositing checks and loan proceeds and issuing more checks on uncollected funds. From June through August 1986, appellants and Robert Gunter generated over $60 million in checks in a revolving cycle through the banks. The trial evidence clearly shows that appellants spent these months in a frenzied effort to cover large deficits--by writing checks from one bank to another--caused by the advancement and use of uncollected funds in the several accounts. Gunter oversaw the companies' transactions with TAB, and Thomas handled those with CNB. The operation collapsed in August 1986 when one bank stopped extending the companies immediate credit on uncollected funds and this resulted in large overdrafts at several banks.

After a jury trial, appellants were convicted on six counts of bank fraud in violation of 18 U.S.C. Sec. 1344 (Counts 2 through 7); six counts of making false statements to a lending institution in violation of 18 U.S.C. Sec. 1014 (Counts 8 through 13); and one count of conspiring to commit those offenses in violation of 18 U.S.C. Sec. 371 (Count 1). Counts 2 through 13 are based on the presentment as collateral of individual certificates of title for cars that neither appellants nor the companies owned. These counts do not assert that the check kiting aspect of appellants' scheme constituted either a material false statement knowingly made for the purpose of influencing a federally insured bank in violation of section 1014, or a fraud against a bank in violation of section 1344(a)(2), though Count 1 does describe the check kiting as part of the conspiracy for which appellants were convicted. Thomas and Robert Gunter admitted at trial that they knew that under the terms of their floor plan loan agreements with TAB and CNB the companies were supposed to own the cars whose titles they pledged, but claimed that they did not realize that some of the titles they pledged were for cars they had already sold. On appeal, appellants make the further argument that under Texas law, when appellants presented them with car titles, the banks received senior liens on even the cars appellants had already sold. Thus, they argue that nothing about the transactions was false or constituted fraud. We reject these arguments in affirming the lower court's convictions.

Discussion

Sufficiency of the evidence

Appellants attack their convictions by arguing that there was insufficient evidence of their bank fraud, that the bank fraud statute does not reach their conduct, and that their submission of car titles did not violate 18 U.S.C. Sec. 1014 because this act did not constitute a statement, was not false, and was not done knowingly.

First, with respect to their convictions on the section 1344 bank fraud counts (2 through 7), ² appellants argue that the government presented insufficient evidence that the companies lacked funds at any given time to cover the checks appellants wrote. Their primary argument, however, is that they were wrongly convicted because a fraudulent scheme involving a series of kited checks does not constitute fraud by misrepresentation within the statute's meaning. Cf. Williams v. United States, 458 U.S. 279, 102 S.Ct. 3088, 3091, 73 L.Ed.2d 767 (1982) (holding that a check is not a statement for purposes of section 1014); United States v. Frankel, 721 F.2d 917 (3d Cir.1983) (ruling that a check is not a statement under the mail fraud statute, 18 U.S.C. Sec. 1341). From the indictment and jury charge, however, it is clear that Counts 2 through 7 rest not on a check kiting scheme, but rather on the practice of pledging automobile titles for cars the companies had already sold to third persons. It was unnecessary, then, for the government to prove that the companies lacked funds to honor any particular check that was part of the scheme.

Courts have distinguished car title cases from the Supreme Court's Williams holding pertaining to check kiting. See, e.g., United States v. Swearingen, 858 F.2d 1555, 1556-58 (11th Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 1540, 103 L.Ed.2d 844 (1989); United States v. Bonnette, 781 F.2d 357, 365 (4th Cir.1986). A check does not carry any express representation about the drawer's account balance, but the back of an automobile certificate of title lists the last transferor and is signed by the last transferee, thereby expressly representing the identity of the car's current owner. Cf. United States v. McClelland, 868 F.2d 704, 709 (5th Cir.1989) (holding that copies of forged sales tax returns presented to a bank to obtain a loan constituted a false representation satisfying 18 U.S.C. Sec. 1344). That appellants represented, or stated, that they or the companies owned the cars whose titles they pledged is also reflected by their practice of including the companies' power of attorney with each title delivered, implying that one of the companies was the last transferee and that the bank could therefore use the power of attorney to further transfer the title.

Appellants argue next that they did not violate section 1014 ³ because any representation or statement they may have made to the banks was not false. They base this contention on the assertion that under Texas law the banks had a priority security interest in the cars represented by the titles. ⁴ Thus, appellants contend that when they presented the car titles to the banks they represented only that the banks had a senior lien on the cars, ⁵ which allegedly was not a false statement. Appellants do not dispute that they pledged the titles to several cars that they had already sold to third parties, some of them several months before being pledged.

Although there is no evidence that appellants expressly confirmed the companies' ownership when they presented the car titles at the banks, we find sufficient evidence for a reasonable jury to conclude beyond a reasonable doubt that the parties--appellants and the banks--understood that appellants' presentation of the titles at the banks in connection with their floor plan arrangement constituted an assertion that the companies owned the cars represented by those titles. The loan documents detailing the companies' floor plan with CNB--one dated February 6, 1986, and signed by Robert Gunter, and the other dated August 7, 1986, and signed by both Robert Gunter and Thomas--stated that the companies would pledge titles for "inventory of new and used automobiles, trucks, tractors, and other motor vehicles, together with all motor vehicles parts, motors, engines, bodies, accessories, equipment and the like, including items used or which may be used as demonstrator's...