U.S. v. Haddock, No. 91-3075

• Court: U.S. Court of Appeals — Tenth Circuit
• Writing for the Court: Before ANDERSON and TACHA, Circuit Judges, and CHRISTENSEN; TACHA
• Citation: 956 F.2d 1534
• Parties: 35 Fed. R. Evid. Serv. 37 UNITED STATES of America, Plaintiff-Appellee, v. Kenneth Eugene HADDOCK, Defendant-Appellant.
• Docket Number: No. 91-3075
• Decision Date: 14 February 1992

Page 1534

956 F.2d 1534 35 Fed. R. Evid. Serv. 37 UNITED STATES of America, Plaintiff-Appellee,
v.
Kenneth Eugene HADDOCK, Defendant-Appellant. No. 91-3075. United States Court of Appeals,
Tenth Circuit. Feb. 14, 1992.
Limited Rehearing Granted
May 15, 1992.

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Samuel Rosenthal, of Curtis Mallet-Prevost, Colt & Mosle, Washington, D.C., for defendant-appellant.

Kurt J. Shernuk (Lee Thompson, U.S. Atty., was with him on the brief), Asst. U.S. Atty., for plaintiff-appellee.

Before ANDERSON and TACHA, Circuit Judges, and CHRISTENSEN, District Judge. ^*

TACHA, Circuit Judge.

Defendant-appellant Kenneth E. Haddock appeals a jury verdict convicting him on two counts of misapplication of bank funds in violation of 18 U.S.C. § 656, six counts of bank fraud in violation of 18 U.S.C. § 1344, one count of false statement to a federally insured bank under 18 U.S.C. § 1014, and one count of making false statements to the Federal Deposit Insurance Corporation (FDIC) under 18 U.S.C. § 1007. Haddock raises the following issues on appeal: (1) whether the conviction on Count 10 of the indictment was insufficient to state an offense and consequently violated the Ex Post Facto Clause; (2) whether the district court erred in denying appellant's motion for new trial filed more than seven days after return of the verdict; (3) whether appellant was denied effective assistance of counsel in violation of the Sixth Amendment; (4) whether the district court abused its discretion in excluding certain documents from evidence; (5) whether evidence was sufficient to support the convictions on Counts 1, 2, 3, 5 and 9; (6) whether the district court erred in failing to give a good faith instruction on Counts 1, 2, 8, and 10; (7) whether there existed a fatal variance between allegations in the indictment and evidence presented at trial; and (8) whether the district court erred in computing the amount of "loss" caused by Haddock as defined by the Sentencing Guidelines. We exercise jurisdiction under 28 U.S.C. § 1291, and we affirm in part, reverse in part and remand for resentencing and for a new trial on two counts.

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BACKGROUND

This case revolves around the defendant, Kenneth E. Haddock, and his involvement with two banks--the Bank of White City and the Bank of Herington--and with another entity, First Finance, Inc. Both banks were owned by Herington Bancshares, a bank holding company of which Haddock owned fifty-five percent of the stock. During the period at issue in this case, Haddock was chairman of the board and chief executive officer of both banks. He also served as president of both banks until July, 1987. Haddock established First Finance, Inc. in 1986 for the purpose of acquiring loans from the FDIC and other lending institutions. He was president and sole shareholder of First Finance. The charges in this case involve several separate transactions.

Acquisition of First National Bank of Herington

On April 1, 1987, Haddock arranged with the FDIC for the Bank of Herington to purchase the failed First National Bank of Herington. As part of the arrangement, Haddock agreed that on April 3 Herington Bancshares would "inject" $960,892 in the Bank of Herington so that the Bank of Herington would meet the FDIC's minimum capitalization requirements necessary to absorb a bank the size of the First National Bank of Herington. On April 3, Haddock and the secretary of Herington Bancshares jointly executed a Herington Bancshares check to the Bank of Herington in the amount of $960,892. However, the Herington Bancshares account on which the check was written was funded with only $611,000--almost $350,000 less than the amount of the check. ¹ Not until April 15 did Haddock deposit enough additional funds in the Herington Bancshares account to cover the $960,892 check. Despite the lack of funds in the Herington Bancshares account, the check was never returned for insufficient funds. At trial, the government argued that Haddock's actions permitted Herington Bancshares to have interest-free use of approximately $350,000 for the period between April 3 and April 15. The jury returned a verdict of guilty (Count 1) for misapplication of the Bank of Herington's funds in violation of 18 U.S.C. § 656.

Acquisition of the Easton Loan Package

During April of 1987, Haddock, on behalf of First Finance, arranged with the FDIC to purchase loans from the failed Easton State Bank. In conjunction with this purchase, he arranged for the Bank of White City to purchase the Easton loans from First Finance. ² In turn, the Bank of White City gave Haddock a $250,000 cashier's check as a "downpayment on exclusive purchase rights" for the Easton loan package. Haddock did not apply the $250,000 check toward the purchase of the Easton loans. The government presented evidence that Haddock instead used approximately $200,000 to fund his personal portion of the capital injection into the Bank of Herington, related to the bank's purchase of the failed First National Bank of Herington. He used the remainder to fund the purchase of a personal residence. Haddock later repaid the $250,000 to the Bank of White City. ³ The jury returned a guilty

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verdict on Count 3, which charged Haddock with executing a scheme to defraud the bank in violation of 18 U.S.C. § 1344.

On May 4, 1987, Kaw Valley State Bank loaned First Finance $711,000. The government presented evidence that Haddock represented to the bank in a signed affidavit that the loan proceeds would be used to purchase the Easton loan package. The bank requested this affidavit because First Finance pledged the Easton loans as collateral against the $711,000 loan, and the bank desired to have a purchase money security interest in the loans. In addition, Haddock showed Kaw Valley representatives a copy of a $866,344.44 check that First Finance purportedly had tendered to the FDIC to purchase the Easton loans. Officers from Kaw Valley State Bank testified that they understood that First Finance would use the loan proceeds to partially fund payment of the $866,344.44 check. In fact, the evidence at trial indicated that the check was never presented to the FDIC. The check stub in First Finance's checkbook indicated that the check was void; the original was never located. Despite Haddock's representations to Kaw Valley State Bank, $250,000 of the loan proceeds were used to refund the Bank of White City's downpayment for rights to purchase the Easton loan package. First Finance advanced another $55,000 to Haddock. First Finance did use $403,408.66 of the loan proceeds to make the first of two payments for the Easton loans to the FDIC on May 1, 1987. First Finance issued a $473,068.88 check to the FDIC on June 19, 1987 to fund the remainder of the purchase. ⁴ The jury returned a guilty verdict on Count 4, which charged Haddock with executing a scheme to defraud Kaw Valley State Bank under 18 U.S.C. § 1344.

After refunding the Bank of White City's $250,000 downpayment, First Finance (represented by Haddock) entered into a new agreement with the Bank of White City on June 24, 1987, whereby the Bank of White City gave First Finance $350,000 as a "downpayment" for exclusive rights to purchase the Easton loans. However, trial evidence indicated that Haddock had already received these loans from the FDIC and had pledged them to Kaw Valley State Bank as collateral for the $711,000 loan that is the subject of Count 4. Haddock and First Finance then used this $350,000 to fund a portion of the second installment to the FDIC for purchase of the Easton loan package. Count 5 charged Haddock with executing a scheme to commit fraud on the Bank of White City in violation of 18 U.S.C. § 1344; the jury returned a guilty verdict on this count.

When Haddock, on behalf of First Finance, applied for the $711,000 loan from Kaw Valley State Bank, he gave the bank a copy of his personal financial statement. At trial, the government presented evidence that the financial statement did not list a $10,000 debt owed by Haddock to First Finance and did not disclose that First Finance had extended a $350,000 open line of credit to Haddock. When Haddock gave the financial statement to Kaw Valley's president, he had not yet drawn on the line of credit. However, he received $303,947.05 from First Finance on this line of credit two days after the date of the financial statement. Count 2 charged Haddock with making a false statement to Kaw Valley State Bank in violation of 18 U.S.C. § 1014. The jury returned a guilty verdict.

Acquisition of the Nortonville Loan Package

In October of 1987, First Finance entered an agreement to purchase the "Nortonville Loan Package," consisting of twenty-nine loans, from the FDIC. In conjunction with this purchase, the Bank of White City gave Haddock a $273,500 check--payable to the FDIC--to be used to purchase the Nortonville loan package. At trial, counsel for Haddock argued that the Bank of White City did not know how many of the loans it would receive and that Haddock and the bank's president were to decide later which

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loans the bank would purchase. To the contrary, the government presented evidence that the Bank of White City and Haddock understood that the bank was to receive all of the Nortonville loans. The Bank of White City received only twelve of the twenty-nine Nortonville loans. ⁵ Haddock pledged the remaining loans as collateral for a $94,000 loan to First Finance from Kaw Valley State Bank. Count 6 charged Haddock with executing a scheme to defraud the Bank of White City in violation of 18 U.S.C. § 1344. The jury returned a guilty verdict on this count.

The government also presented evidence that Kaw Valley State Bank made the $94,000 loan to First Finance on October 30, 1987 based on Haddock's representation that the bank would have a security interest in the entire Nortonville loan package. Haddock gave Kaw Valley State Bank a copy of a First Finance check for $200,000,...