U.S. v. Jacoby

• Decision Date: 25 March 1992
• Docket Number: No. 89-6210,89-6210
• Parties: 35 Fed. R. Evid. Serv. 224 UNITED STATES of America, Plaintiff-Appellee, v. Robert C. JACOBY and Thomas Skubal, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1527

955 F.2d 1527

35 Fed. R. Evid. Serv. 224

UNITED STATES of America, Plaintiff-Appellee, v. Robert C. JACOBY and Thomas Skubal, Defendants-Appellants.

No. 89-6210.

United States Court of Appeals, Eleventh Circuit.

March 25, 1992.

Marcia Silvers, Miami, Fla., for Robert C. Jacoby.

Benedict P. Kuehne, Sonnett, Sale & Kuehne, P.A., Miami, Fla., for Thomas Skubal.

Dexter W. Lehtinen, U.S. Atty., Miami, Fla., Lothar Genge, Linda Collins Hertz, Alice Ann Burns, Asst. U.S. Attys., Ft. Lauderdale, Fla., for U.S.

Appeals from the United States District Court for the Southern District of Florida.

Before COX, Circuit Judge, DYER and FRIEDMAN ^*, Senior Circuit Judges.

FRIEDMAN, Senior Circuit Judge:

This criminal prosecution arose from the mid-eighties financial debacle of the Sunrise Savings and Loan Association (Sunrise) in South Florida. A jury convicted two former Sunrise officials of several financial crimes involving Sunrise. They challenge their convictions on various grounds: that evidence was improperly admitted and excluded, that prosecutorial misconduct denied them a fair trial, that one of the defendants improperly was denied a severance of his trial, that the evidence was insufficient to support the conviction of one defendant, and that the instructions on one of the crimes charged were erroneous. We reject all of these contentions, and affirm both convictions.

I

In 1987, a federal grand jury indicted three former Sunrise officers, including the appellants, and two of Sunrise's largest borrowers, William Frederick and Thomas Moye. (The third indicted officer, William Frame, suffered a heart attack during trial; his case was severed and will be retried.) Jacoby was Sunrise's president and chairman of its board of directors; Skubal was vice-president of Sunrise Mortgage Corporation, a wholly-owned subsidiary of Sunrise.

The indictment charged that from January 1983 to July 1985, Jacoby and Skubal engaged in a series of closely related acts calculated to conceal the dubious financial condition of Frederick and Moye from Sunrise's board of directors, from federal and state banking regulators, and from the public. The jury convicted Jacoby of one count of conspiring to misapply bank funds, in violation of 18 U.S.C. § 657 (Supp. I 1989); seven counts of misapplying funds, in violation of that section; five counts of making false statements in documents relating to loan transactions, in violation of 18 U.S.C. § 1014 (Supp. I 1989); and two counts of making false entries in loan delinquency reports, in violation of 18 The district court sentenced Jacoby to five and a half years imprisonment and Skubal to three years imprisonment, followed by four years probation for each of them.

                U.S.C. § 1006 (Supp. I 1989).   It convicted Skubal of one count of conspiring to misapply funds, in violation of 18 U.S.C. § 657, and four substantive counts of misapplying funds under that section
                

The evidence at trial implicated Jacoby and Skubal in an elaborate series of criminal transactions involving Sunrise management's efforts to conceal Frederick and Moye's true, and dire, financial condition, and its serious effect upon Sunrise. A summary of that evidence, viewed most favorably to the government, Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942), follows.

A. Background. Sunrise commenced operations in 1980; the Federal Savings and Loan Insurance Corporation (FSLIC) insured its deposits. Jacoby was Sunrise's president from the beginning, and became chairman of its board of directors in 1983. Skubal joined Sunrise in November 1983, and became vice-president of Sunrise Mortgage Corporation shortly thereafter. In that position, Skubal was responsible for determining whether loans complied with federal regulations, and for construction disbursements.

Frederick and Moye were co-owners of Commercial Center Development Corporation, a real estate company involved in the development of strip shopping centers, and formed subsidiary "shell" corporations for planned centers. They entered into a banking relationship with Sunrise in 1982; by mid-1984 Sunrise had loaned Frederick, Moye, and their companies more than $150 million, and Sunrise was their exclusive lender.

The Boca Raton, Florida branch of the Philadelphia law firm of Blank, Rome, Comisky and McCauley (Blank, Rome), was involved substantially in Sunrise's formation, organization and day-to-day operations until Sunrise was declared insolvent in 1985 and the government took it over.

Under FSLIC regulations, Sunrise's total loans to any one borrower could not exceed approximately $50 million at any given time. Sunrise circumvented these regulations by treating Frederick and Moye as separate entities, and by advancing loans to nominee third parties, including employees and relatives of Frederick and Moye, for the benefit of Frederick and Moye.

In early 1984, when interest reserves on millions of dollars in loans Sunrise made in 1982 and 1983 became depleted, representatives of the FSLIC and the Florida Comptroller's Office met with Sunrise's board of directors regarding problems with Sunrise's loan practices, including loans made to Frederick and Moye. At the meeting, the Sunrise board executed a supervisory agreement designed to assure Sunrise's adherence to prudent and safe banking practices in making loans. One provision of the agreement required that, as a prerequisite to approval, all future loans greater than $500,000 include specific supporting documentation demonstrating compliance with underwriting and credit requirements.

B. Misapplication of Construction Funds. In April 1984, Frederick and Moye purchased at a Christie's auction in New York City several expensive jewelry items, including a twenty-six carat diamond ring for $1,375,000. Moye paid for these items with a worthless personal check for approximately $1,829,000. Shortly thereafter, Frederick met with Sunrise officers in Jacoby's office to find a way to pay for the ring. Jacoby and Skubal agreed to consider whether construction funds could be disbursed to Frederick.

After the meeting, Frederick signed and Skubal approved two construction draw requests for $700,000 and $600,000, on two previously approved construction loans for Frederick and Moye's shopping center projects. Neither of these loans authorized disbursement of funds to pay for a diamond. Frederick testified that Jacoby expressly approved the use of these construction funds to pay for Moye's ring to get them out of their "dilemma."

C. Concealment of Overdrafts. In late 1983, a Sunrise branch manager discovered that Frederick's personal account became overdrawn by $100,000 within a few days. When the manager spoke to Sunrise's corporate office about the overdraft, she was informed that headquarters "would take care of it." Following this incident, the branch manager received her instructions regarding Frederick's accounts from Sunrise's corporate office, primarily from Skubal. The daily overdraft reports she received no longer included Frederick's overdrafts, although all other account overdrafts were shown.

The bank's normal practice where accounts were substantially overdrawn for more than one week, was to close the account and turn it over to Sunrise's attorneys for collection.

By June 30, 1984, Frederick's personal checking account was overdrawn by $2,895,851.92. Frederick's and Moye's accounts, collectively, were overdrawn by $4,132,564.

Throughout 1984, Skubal or Frame approved overdrafts on Frederick's accounts almost daily. During this period, Frederick and his companies gave Sunrise twenty-six worthless overdraft checks, totaling $923,980, for interest payments on Frederick's Sunrise loans, a practice designed to make the loans appear current and to remove them from Sunrise's monthly loan delinquency reports. The millions of dollars in overdrafts were the equivalent of unsecured loans from Sunrise to Frederick and Moye.

Neither Jacoby nor Skubal had authority to approve the overdrafts. Only Sunrise's board of directors could do so, and the board never was informed of the overdrafts. These overdrafts were never reported to the state and federal regulators who reviewed Sunrise's operations.

By June 1984, the Frederick and Moye overdrafts, and the concealment of them from regulators and the Sunrise board, was so serious that Jacoby told Frederick that if Frederick did not find a way to cover the overdrafts, Jacoby "would probably lose his job." At the same time, Frederick's financial position worsened to the point that he was unable to make interest payments on approximately $150 million in Sunrise loans. In the Spring of 1984, Frame demanded that Frederick give Sunrise interest checks drawn on other banks for the interest payments, regardless of whether these checks were "good."

When Frederick brought in these worthless personal checks drawn on other banks, he met with Jacoby, Frame, and Special Loans Manager Lonnie Merrill. Frame, and then Jacoby, ordered Merrill to "post," or deposit, the checks. For several months thereafter, Frederick brought in worthless personal checks at the end of each month. Sunrise processed the checks at the end of each month, and its computer-generated loan delinquency reports therefore showed Frederick and Moye's loans as current.

Between May and July of 1984, Frederick brought Merrill and Frame more than $1.6 million in worthless checks, drawn mostly on out-of-state banks. These checks were posted as interest payments on Frederick and Moye's Sunrise loans. As a result, Merrill was able to prepare delinquency reports for Sunrise's board of directors in June, July, and August that omitted millions of dollars of Frederick and Moye's delinquent loans.

D. Loan Manipulations to Remove Overdrafts from Sunrise's Books. In late Summer 1984, Sunrise's auditors discovered the $4,132,564 in overdrafts on Frederick and Moye's personal accounts, and informed...