U.S. v. Hairston

• Decision Date: 24 November 1989
• Docket Number: No. 88-8478,88-8478
• Citation: 888 F.2d 1349
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Donald A. HAIRSTON, Sr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1349

888 F.2d 1349

UNITED STATES of America, Plaintiff-Appellee, v. Donald A. HAIRSTON, Sr., Defendant-Appellant.

No. 88-8478.

United States Court of Appeals Eleventh Circuit.

Nov. 24, 1989.

Alan J. Baverman, Gary G. Grindler, Chilivis & Grindler, Atlanta, Ga., for defendant-appellant.

Gerrilyn G. Brill, Asst. U.S. Atty., Atlanta, Ga., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before VANCE and ANDERSON, Circuit Judges, and ATKINS ^*, District Judge.

ANDERSON, Circuit Judge:

Donald A. Hairston, Sr. was indicted for misapplication of bank funds (Counts 1-4 and 6-13) in violation of 18 U.S.C. Sec. 656, and for making a false statement to a bank with respect to a loan (Count 5) in violation of 18 U.S.C. Sec. 1014. After trial, the jury returned a verdict of guilty on all counts. Hairston brings this appeal challenging his conviction and contesting the district court's order that he pay restitution as part of his sentence. We affirm the conviction ¹ and the order of restitution.

I. BACKGROUND

In March 1984 the defendant, Donald A. Hairston, Sr., who was then president of the federally insured Newton County Bank ("the Bank") assisted John Jolly in obtaining a land development loan from the Bank in the amount of $120,000. The purpose of the loan was to fund a residential subdivision development known as Old Salem Estates. Although the property was purchased in the name of John Jolly, Donald Hairston was, in reality, the developer of the project. Jolly was a "straw man," whose name was lent to the project because Hairston had loans at the Bank in an amount close to the maximum the bank could lend to any one customer. Contrary to proper procedure, Hairston presented and voted to approve the $120,000 Jolly loan without first disclosing to the board of directors his financial interest in the loan.

With the proceeds of the loan, Hairston, in Jolly's name, purchased a forty acre tract of land from Atlanta Suburbia Estates. Jolly gave the Bank a security deed on the property, and he executed a second security deed, subordinate to the Bank's, to Atlanta Suburbia Estates. The $120,000 note and deed to secure debt from John Jolly to the Bank provided that each time a lot was sold, $5,000 of the proceeds was to be used to reduce the amount of the loan. The lot release amount was later raised to $8,000. Six of the lots in the subdivision were sold, and pursuant to the lot release provision, five checks for $5,000 each and one check for $8,000 drawn on the accounts of the closing attorneys were issued to the Bank to be applied against the loan. However, rather than reducing the amount of the loan, Hairston applied these checks to the amounts available to be drawn on the John Jolly loan, and ultimately these funds were deposited into the John Jolly checking account, which Hairston controlled. The John Jolly loan was never reduced. This alleged misapplication formed the basis of Counts 8 through 13 of the indictment.

Counts 2, 3, 4 and 7 alleged misapplications concerning loans that Hairston extended to two contractors he hired, David Williams and Robert Upton, ² to perform sewer and waterline installation at the subdivision and to pave the street there. When the work was completed, they separately approached Hairston for payment. They were told either that Jolly did not yet have the money to pay them or that Hairston had not had the opportunity to speak with John Jolly about the bills. Each contractor later approached Hairston again and explained that he needed the money to pay for supplies and labor. Hairston told them that the money still was not available, but if they needed to be paid, he would loan them the money from the Bank and Jolly would pay back the loans through sales of subdivision lots.

Williams and Upton agreed and signed promissory notes. Williams signed one or more notes totaling $33,000. Upton signed an initial note for $10,000, and a subsequent note for $7,000. Neither Williams nor Upton ever filled out loan applications or provided the Bank with financial information, and neither loan was disclosed to the Bank's board of directors as an insider loan. When the Williams and Upton loans went into default, the Bank demanded payment from the two contractors. ³ Williams paid the Bank $10,000 in settlement of the loan, and the Bank wrote off the balance of $19,686. With respect to the Upton loan, Upton paid $7,000 to the Bank ($3,000 of which came from Hairston), and the Bank wrote off $9,064.

At Hairston's sentencing hearing, the government recommended that Hairston be ordered, under the Victim and Witness Protection Act ("VWPA"), 18 U.S.C. Secs. 3579, 3580, ⁴ to make restitution to the Bank, David Williams, and Robert Upton for their losses. The district court ordered Hairston to make restitution in the amount of $67,750 within one year of his release from confinement. The order included payment of $25,000 to the Bank for its loss on the Jolly loan; $10,000 to David Williams and $19,686 to the Bank for its loss on the loan made to Williams; and $4,000 to Robert Upton and $9,000 to the Bank for its loss on the Upton loan. Hairston timely appealed from the judgment, challenging the validity and fairness of the order of restitution.

II. THE RESTITUTION ISSUES

Hairston argues that the trial court's restitution order was improper under the VWPA ⁵ for the following reasons: (1) the court failed to make specific findings of fact as to the amount and cause of the Bank's loss before ordering restitution; (2) the government failed to prove by a preponderance of the evidence the amount of the Bank's loss or that the loss was caused by the defendant's actions; (3) Williams and Upton were not "victims" within the meaning of the VWPA and therefore were not entitled to restitution; and (4) the settlement of the state court civil proceeding against Hairston precluded an order of restitution. We will address each of these issues in turn.

A. Necessity of Making Findings of Fact

Hairston contends that because the district court failed to make specific findings of fact identifying the bases for its restitution order, the order must be reversed. We disagree.

Section 3580(a) of the VWPA requires the district court to consider certain factors in determining whether to order restitution, including the amount of loss sustained by any victim, the financial resources of the defendant, the financial needs and earning ability of the defendant, and other appropriate factors. 18 U.S.C. Sec. 3580(a). If the parties dispute the proper amount or type of restitution, the court must resolve the dispute by a preponderance of the evidence. Id. at Sec. 3580(d). The VWPA does not explicitly require the court to assign reasons for its determination unless the court does not order restitution or orders only partial restitution. Id. at Sec. 3579(a)(2).

The circuits disagree as to whether district courts should be required to make specific findings of fact with respect to the Sec. 3580(a) factors in those cases in which full restitution is ordered. Some circuits, in order to facilitate meaningful appellate review, have invoked their supervisory powers to require such fact finding. See United States v. Bruchey, 810 F.2d 456, 458 (4th Cir.1987); United States v. Hill, 798 F.2d 402, 406-07 (10th Cir.1986); United States v. Palma, 760 F.2d 475, 480 (3d Cir.1985). The Ninth Circuit, on the other hand, interprets the VWPA to itself require the trial court to make findings of fact whenever the defendant disputes the amount or type of restitution ordered. United States v. Cannizzaro, 871 F.2d 809, 810 n. 2 (9th Cir.1989) (interpreting 18 U.S.C. Sec. 3664(d)).

Other circuits, however, have held that the statute itself does not require trial courts to make specific findings of fact before ordering restitution and have declined to use their supervisory powers to order courts to make such findings. See United States v. Purther, 823 F.2d 965, 969-70 (6th Cir.1987) (holding that under Sec. 3664(d), when the defendant offers no evidence with respect to factors he claims are disputed, the court is not required to delay its decision by making findings of fact); United States v. Atkinson, 788 F.2d 900, 903 (2d Cir.1986) (holding that the VWPA does not require fact finding). The Fifth Circuit has adopted still another course by holding that although the VWPA does not require a trial court to make findings of fact, the court should do so if the record otherwise does not provide an adequate basis for appellate review. United States v. Patterson, 837 F.2d 182, 183-84 (5th Cir.1988).

We agree with the courts that have declined to adopt a rigid rule requiring district courts to make findings of fact whenever they impose an order of restitution under the VWPA. The plain language of Secs. 3579(a) and 3580(d) required only that the district court "consider" the listed factors and resolve disputes by a preponderance of the evidence. There was no requirement that specific findings be made on each factor. Moreover, we agree with the Second Circuit that such fact finding might unnecessarily encumber sentencing proceedings. See Atkinson, 788 F.2d at 902. Realizing, however, that this court must be able to perform a proper review of the district court's determination, we adopt the "middle course" taken by the Fifth Circuit in Patterson:

The decision to assign reasons is committed to the sound discretion of the district court, guided by this singular inquiry--absent an assignment of its reasons, does the record contain sufficient data for the appellate court to perform its mandated review? If the record provides an adequate basis for that review, the court need not assign specific reasons for its decision to order full restitution. If the record is insufficient, reasons must be assigned.

Patterson, 837 F.2d at 183-84. We believe this standard provides the appropriate amount of flexibility to ...