U.S. v. Hintzman, 85-5404

• Decision Date: 09 December 1986
• Docket Number: No. 85-5404,85-5404
• Parties: UNITED STATES of America, Appellee, v. Randall O. HINTZMAN, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 840

806 F.2d 840

UNITED STATES of America, Appellee, v. Randall O. HINTZMAN, Appellant.

No. 85-5404.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 15, 1986.

Decided Dec. 9, 1986.

David C. Thompson, Fargo, N.D., for appellant.

Rodney S. Webb, U.S. Atty., Fargo, N.D., for appellee.

Before LAY, Chief Judge, BOWMAN, Circuit Judge, and TIMBERS, ^* Senior Circuit Judge.

BOWMAN, Circuit Judge.

In May 1985 a federal grand jury indicted Randall Hintzman for fraudulent conversion of property in which the Secretary of Agriculture held a security interest arising out of farm financing provided to Hintzman by the Farmers Home Administration (FmHA). After a jury trial in August 1985, Hintzman was found guilty and was convicted of a violation of 18 U.S.C. Sec. 658. He appeals that conviction. We affirm.

I.

In 1976, Hintzman purchased a 280-acre cattle and dairy farm in North Dakota. The down payment, representing 65% of the approximate $120,000 purchase price, was financed by a loan from FmHA. In subsequent years through 1982, FmHA also provided financing to cover operating expenses of the farm. As collateral for both the purchase money loan and the additional operating financing, Hintzman gave FmHA a security interest in, inter alia, all milk produced on his farm and in the proceeds from the sale of the milk. Both Hintzman and his wife Susan Hintzman signed these security agreements, which provided that the borrowers were not to sell or dispose of the collateral without the prior written consent of FmHA.

In March 1980, Randall Hintzman and FmHA entered into an "Assignment of Proceeds From the Sale of Dairy Products and Release of Security Interest" Agreement (the Release Agreement). The Release Agreement provided that, upon the sale by Hintzman of dairy products produced on his farm, 65% of the proceeds would be forwarded to FmHA for repayment of the outstanding debt while 35% would be released from FmHA's security interest and returned to Hintzman to meet the operating expenses of the farm. In February 1981, Hintzman directed the purchaser of his milk to divide the proceeds of milk purchased from the farm into two separate accounts. For each purchase, the purchaser was to issue one check made payable to Randall Hintzman and one payable to Susan Hintzman.

From that time until October 1984, the purchaser made separate payments to the Hintzmans on each purchase of milk. For payments made to Randall Hintzman, the 65% deduction due FmHA under the Release Agreement continued to be made. Through an oversight, however, the purchaser failed to deduct the assigned percentage from payments made to Susan Hintzman, even though such payments were subject to the same security interest and the deduction should have been made. Trial testimony indicated further that the percentage of proceeds paid to Susan Hintzman increased over the next several years, while the percentage paid to Randall Hintzman correspondingly decreased. As a result, over a period of roughly three and one-half years the purchaser paid approximately $120,000 to Mrs. Hintzman without deducting $77,849.02 due FmHA under the Release Agreement. FmHA discovered the payments to Mrs. Hintzman in approximately July 1984. Believing that Randall Hintzman intentionally had defrauded the government of proceeds due under the security agreements and the Release Agreement, FmHA referred the case to the United States Attorney for prosecution.

In presenting the case for an indictment to the grand jury, the government called only one witness, a Special Agent of the Department of Agriculture who had investigated the case. On the testimony of the Special Agent, some of which was hearsay, the grand jury returned a two-count indictment against Hintzman. The first count charged him with fraudulent conversion of livestock pledged as security for FmHA financing. The second count involved a similar charge with respect to Hintzman's conversion of proceeds from the sale of secured milk. At the subsequent jury trial, Hintzman was acquitted on the first count, but convicted on the second. For reversal, Hintzman raises several issues, and we deal with each of them in turn.

II.

A.

Hintzman first argues that the District Court erred in denying his motion to dismiss the indictment. Hintzman charges that he was the target of unconstitutionally arbitrary and selective prosecution. Our decisions in United States v. Holmes, 794 F.2d 345 (8th Cir.1986), and United States v. Catlett, 584 F.2d 864 (8th Cir.1978), set forth the two elements required to establish a prima facie case of selective prosecution. The defendant must demonstrate that (1) "he has been singled out for prosecution while others similarly situated have not been prosecuted" for similar conduct, Catlett, 584 F.2d at 866, and (2) "the government's action in thus singling him out was based on an impermissible motive such as race, religion, or the exercise by defendant of constitutional rights." Holmes, 794 F.2d at 347. The defendant's burden is a heavy one, and because we afford broad discretion to prosecuting authorities, we require "a showing of 'intentional and purposeful discrimination.' " United States v. Eklund, 733 F.2d 1287, 1290 (8th Cir.1984) (quoting Catlett, 584 F.2d at 866), cert. denied, 471 U.S. 1003, 105 S.Ct. 1864, 85 L.Ed.2d 158 (1985). Absent this prima facie showing, the prosecution will be presumed to have been undertaken in good faith. United States v. Ojala, 544 F.2d 940, 943 (8th Cir.1976).

Hintzman admits that other similarly situated individuals have been prosecuted for similar conduct, but he argues that these prosecutions are merely evidence of selective prosecution of an "institutional" nature. Even if the prosecution of others similarly situated might somehow be viewed as not being fatal to a defendant's proof of the first prong of Catlett, it is under no circumstances an adequate basis for meeting that test. Hintzman has not presented any evidence that he or anyone else has been singled out for prosecution while others similarly situated have not been prosecuted. Similarly, Hintzman has failed to present any evidence of an impermissible motive for his prosecution. Rather, to establish both of the required elements of his selective prosecution claim, he relies exclusively on a footnote in a civil case involving FmHA foreclosure proceedings.

In Coleman v. Block, 580 F.Supp. 194 (D.N.D.1984), ¹ the court considered the FmHA's practice of automatically refusing a borrower's application for a loan deferral if the case had been referred for prosecution. The court stated that "[t]he evidence showed that FmHA field officers exercise untrammeled discretion in determining whether or not to present a claimed conversion for criminal prosecution." Id. at 209 n. 54. The court then concluded that because the decision to refer for prosecution was wholly discretionary, an application for deferral should not be refused solely because the borrower's case had been referred for prosecution. Id. Hintzman argues that because the same FmHA field officers involved in Coleman recommended his case for prosecution, the finding in Coleman is effective in this criminal case as a determination that the referral was selective and arbitrary.

We find no merit in this argument. Even if a finding of "untrammeled discretion" in a civil case were binding against the government in this criminal case--a question we need not decide--we still could not accept that finding as evidence of selective or arbitrary prosecution. To say that a decision is purely discretionary is not to say either that the decision involves discrimination or that the nature of any such discrimination is arbitrary or impermissible. A finding that FmHA field officers exercise untrammeled discretion merely indicates that decisions to refer for prosecution are solely within their power and are essentially unreviewable. The finding says nothing about arbitrary or discriminatory selection of individual defendants. We conclude that Hintzman has failed to establish either of the elements required by Catlett and Holmes, and that the District Court was correct in refusing to dismiss the indictment on the ground of selective prosecution.

B.

Hintzman's second claim is that the grand jury that indicted him was misled by the prosecutor and the government witness. He suggests that because the sole witness was a government agent with an alleged career interest in the prosecution, and because the evidence in part consisted of hearsay testimony which allegedly was presented as if it were firsthand knowledge, the grand jury was misled by the government.

As Hintzman concedes, the Constitution does not prohibit the use of hearsay testimony in grand jury proceedings, United States v. Bednar, 728 F.2d 1043, 1049 (8th Cir.), cert. denied, 469 U.S. 827, 105 S.Ct. 110, 83 L.Ed.2d 54 (1984), and even an indictment based exclusively on hearsay may be valid. Costello v. United States, 350 U.S. 359, 363, 76 S.Ct. 406, 408, 100 L.Ed. 397 (1956). Hintzman apparently contends that the nature and quality of the hearsay evidence, rather than its mere existence, misled the grand jury. He also asserts that the prosecutor failed adequately to inform the jury of its right to subpoena witnesses for firsthand evidence, thereby misleading it as to the value of the hearsay evidence before it. These unsupported allegations are insufficient. As the District Court recognized, grand jury proceedings are afforded a strong presumption of regularity, and a defendant seeking to overcome that presumption faces a heavy burden. United States v. Boykin, 679 F.2d 1240, 1246 (8th Cir.1982). Hintzman failed to meet that burden in this case. The District Court explicitly found that there was no evidence in the record to indicate that the grand jury was misled, and we see no error in that finding. Moreover, a petit jury found Hintzman guilty beyond a reasonable doubt. Except in cases involving...