U.S. v. Kramer, 74-1108
| Decision Date | 02 October 1975 |
| Docket Number | No. 74-1108,74-1108 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Earl L. KRAMER, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Tenth Circuit |
John W. Madden, III, Sp. Asst. U. S. Atty., Denver, Colo. (James L. Treece, U. S. Atty., on the brief), for plaintiff-appellee.
Lawrence M. Henry, Denver, Colo., for defendant-appellant.
Before MURRAH, SETH and BARRETT, Circuit Judges.
Upon a trial to a jury appellant Kramer was convicted and sentenced on a charge of conspiracy (18 U.S.C. § 371) to violate 18 U.S.C. § 1001 1 by knowingly making or causing to be made false, fictitious and fraudulent representations in an application to the Small Business Administration for the guaranty of a bank loan to the Simeone Brothers Potato Company, Inc. As we read the rambling and prolix indictment, it alleges the making of false representations in the application as to material facts, to wit, (1) the financial condition of the Potato Company and (2) the intended purposes of the loan. It charges that these false representations caused the SBA to consider more favorably the guaranty of 90% Of a $180,000 loan to the Potato Company by the First National Bank of Fleming, Colorado, of which Kramer was president; that, as part of the conspiracy, Kramer would receive $15,000 of the loan proceeds; and that his personal interest in these proceeds would be concealed from the SBA. Twenty-two overt acts are alleged in furtherance of the conspiracy between Kramer and two unindicted coconspirators, company owner Anthony Simeone and SBA loan officer Jack L. Biggs. 2
The court's instructions were not brought forward on this record, and we shall proceed on the premise that they correctly stated the law of the case. Suffice it to say, for our purposes, that it was incumbent upon the government to prove to the satisfaction of the jury beyond a reasonable doubt that Kramer, Simeone, and Biggs formed an agreement, however clandestine or informal, to violate 18 U.S.C. § 1001 by the making of false representations in an application to the SBA concerning a material fact i. e., either (1) the financial condition of the Potato Company or (2) the intended purposes of the loan; 3 and that someone committed an overt act in furtherance of this object. Kramer argues that the evidence was insufficient as a matter of law to support the finding of his guilt, especially in view of the erroneous admission of hearsay evidence.
We are mindful that the government's case has survived motions to dismiss and for directed verdict for the insufficiency of the evidence by the rulings of an able and experienced trial judge. In this posture, we should not disturb the verdict unless convinced that the evidence, considered in its most favorable light, is wholly insufficient to take the case to the jury. See United States v. Kramer, 500 F.2d 1185 (10th Cir. 1974).
This brings us to an analysis of the facts of record. In essential outline, the proof was to the effect that the Simeone brothers owned a number of closely knit incorporated businesses, one of which was a wholesale potato company. Apparently, the Simeones interchanged assets and liabilities between these corporate businesses as best suited their personal and business convenience.
Faced with a financial crisis in early 1970, the Simeones turned to their long-time friend and banker, Kramer. On several occasions, Kramer and the Simeones discussed the financial condition of the Company. Kramer indicated that he knew someone at the SBA and might be able to arrange an SBA loan guaranty. At some time during the discussions and negotiations Kramer told Simeone that the loan might "cost something." As a result of these discussions, Anthony Simeone and Walter Meisel, the Company's long-time accountant, traveled to Kramer's home with pertinent Company records in August, 1970. There, the three of them discussed the Company's financial affairs and roughed out an application for an SBA guaranty on a $180,000 loan to be made by Kramer's bank. In the course of this three hour conference, they discussed certain assets and liabilities on the Company books which were not directly related to the wholesale potato operation. Kramer suggested that if these assets and liabilities were shown on the application, the Potato Company would not have a "good chance to get the loan" and that they should "come out." Meisel, who assumed the responsibility for preparing the application, then pencilled an abbreviated notation of the assets and liabilities that were to come out.
In the office preparation of the application and under 9(c), entitled "Surplus Analysis or Net Worth Reconciliation," in the column for "Withdrawals," Meisel entered the words "Net Assets" and the amount of $57,287 in parenthesis (apparently indicating deduction from total net worth). On trial, he explained in some detail that this sum of $57,287 was arrived at by deducting the liabilities "left off" from the assets "left off," as shown on the business records of the Potato Company. These were the items which were discussed at the conference and which Kramer had suggested should come out. A list of these items was received in evidence. It showed assets of $182,299 and liabilities of $125,012, leaving a net of $57,287. Among the listed assets was a $115,200 "investment" in a dog track and a $9,600 "investment" in Kramer's bank. The assets and liabilities left off the application submitted August 24, 1970, were also left off the supplement submitted December 14, 1970.
Meisel testified that the $57,287 was intended to be a reconciliation of the assets and liabilities shown on the application with the assets and liabilities shown on the Potato Company records. He was careful, however, to say that he did not undertake to give an audited opinion or to verify the value or authenticity of the listed items.
There was some proof to the effect that the $115,200 dog track item was worthless and that the $9,600 "investment" in Kramer's bank was in fact a Simeone debt to the bank rather than an asset. The government suggests that if the true value of these assets had been used, the application would have shown a withdrawal of net liabilities rather than one of net assets; that the effect of the withdrawal was to exclude from the application actual liabilities by balancing them against fictitious assets.
While the application was pending, Kramer highly recommended the Potato Company's application to the processing SBA officer. There was testimony that the application was considered "marginal" and that if there had been any change in the listed assets and liabilities, it would probably have been declined. 4 After approval of the loan and authorization of disbursement on December 23, 1970, the loan funds were disbursed by Kramer's bank to the Potato Company account in two installments $125,000 on December 23 and $55,000 on December 28.
Meanwhile, on December 22, a $15,000 check was drawn on the Potato Company payable to Dant Slack, a potato dealer in Monte Vista, Colorado, and a creditor of the Simeones. After receiving this check in Monte Vista from Simone, Slack cashed it on December 24, and the check cleared the Potato Company account when the only funds available in the account were the SBA loan proceeds. On December 28, Slack purchased a $15,000 cashier's check and on the same date sent it by airplane to Simeone in Denver. Simeone and Kramer went to the airport, picked up the check, and Simeone cashed it the same day, receiving $15,000 in $100 bills, all of which Simeone gave to Kramer. On December 29, Kramer deposited $7,000 in currency in his personal savings account at a Sterling, Colorado, bank; and on December 30, he purchased a $7,000 participation in the unguaranteed 10% Of the SBA loan in a cash transaction using all $100 bills. Cross examination developed the fact that Simeone had been a participator with Kramer in the unguaranteed portion of two other loans; that Simeone had "given Mr. Kramer a lot of money over the years and that he (Kramer) put it where he thought best"; and that he expected a return of the money from Kramer.
From all the evidence, Kramer argues that the government failed to make a case. He maintains that his only participation in the preparation of the application was to discuss certain unrelated items (assets and liabilities) and to recommend that they be left out of the application; that this recommendation had the purpose and effect of causing the application to speak the truth and was in...
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