U.S. v. Kramer

• Decision Date: 20 August 1974
• Docket Number: No. 73-1925,73-1925
• Citation: 500 F.2d 1185
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Earl L. KRAMER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1185

500 F.2d 1185

UNITED STATES of America, Plaintiff-Appellee, v. Earl L. KRAMER, Defendant-Appellant.

No. 73-1925.

United States Court of Appeals, Tenth Circuit.

Aug. 20, 1974.

James W. Heyer, Lakewood, Colo., for defendant-appellant.

John W. Madden, III, Sp. Asst. U.S. Atty. (James L. Treece, U.S. Atty., Denver, Colo., on the brief), for plaintiff-appellee.

Before HILL, HOLLOWAY and MOORE, ^* Circuit Judges.

HILL, Circuit Judge.

Earl Kramer was convicted by a jury in the United States District Court for the District of Colorado, of aiding, abetting, inducing and procuring the making of a false financial statement submitted to a federally insured bank to influence the action of the bank in granting a loan, in violation of 18 U.S.C. 1014 ¹ and 2. ² On appeal, we reverse.

The pertinent facts may be summarized as follows. ³ Kramer was president of, and a majority stockholder in, the First National Bank of Fleming, Colorado (bank). ⁴ In February, 1971, the Regional Administrator of National Banks discussed with Kramer the possibility of increasing the bank's capital structure. Application for such an increase was subsequently made and tentative approval was given. The application lapsed, however, and while it was being renewed Kramer began solicithing bank stock purchasers.

One such prospective investor was Robert Fuller, one of the bank's customers. Fuller operated a tax/accounting business and hay hauling service in nearby Sterling, Colorado. Kramer thought it would be beneficial to the bank if Fuller was a stockholder, as Fuller would then be in a position to refer his 800 clients to the bank for business.

Kramer visited Fuller's office on August 23, 1971, and asked if Fuller, or his clients, would be interested in purchasing bank stock. Fuller replied that he would like to, but that he lacked the necessary finances. It was decided that Fuller would borrow the money from the bank, and he filled out the necessary papers for a $10,000 unsecured loan. Although he had a current financial statement on file with the bank, ⁵ he made another one which listed his total assets as being $62,300 and his net worth as being $48,100.

Kramer returned to the bank and gave the loan papers and financial statement to an employee to complete and process. At Kramer's direction the loan proceeds were placed in the bank's stock escrow account, pending final approval of the increase in capitalization. The bank's board of directors met on August 26, 1971, and discussed several loans. One of the directors asked Kramer if Fuller's financial statement warranted his loan. Kramer said that it did, and the loan was formally approved.

The bank's increase in capitalization was approved on December 17, 1971. Funds in the bank's stock escrow account were then transferred to its capital account and stock was issued. Fuller received a stock certificate for 333 shares of the bank's stock.

Kramer was indicted on July 12, 1973, and convicted on August 22 of that year, receiving a fifteen month prison sentence. He now contends, inter alia, that the evidence introduced at trial was insufficient to sustain his conviction under 18 U.S.C. 1014 and 2. In deciding this issue we must view the evidence presented in the light most favorable to the government to ascertain if there is sufficient substantial proof, direct and circumstantial, together with reasonable inferences to be drawn therefrom, from which a jury might find a defendant guilty beyond a reasonable doubt. United States v. Twilligear, 460 F.2d 79 (10th Cir. 1972).

The government has the burden of proving, beyond a reasonable doubt, that (1) Kramer made, abetted, aided, induced or procured another person in making a false statement submitted to a bank; (2) that he did so for the purpose of influencing the bank's action in approving a loan; (3) that the statement was false as to a material fact; (4) that Kramer did so knowingly; and (5) that the bank's deposits were insured by the Federal Deposit Insurance Corporation (FDIC). See 18 U.S.C. 1014 and 2; United States v. Goberman, 329 F.Supp. 903 (M.D.Pa.1971), 1971), aff'd, 458 F.2d 226 (3rd Cir. 1972).

It is conceded that the bank's deposits are FDIC insured. Nor is there any serious dispute concerning the falsity of the August 23, 1971, financial statement which listed Fuller's total assets as $63,300 and his net worth as $48,100. The government's evidence established that Fuller had been in very poor financial shape from 1968 to 1971, that he had defaulted on a $20,000 loan from the Small Business Administration (SBA), and that there were three unsatisfied or partially unsatisfied judgments against him. Neither the SBA loan nor the judgments were disclosed as liabilities on the financial statement in question. Moreover, a financial statement Fuller filed with the bank on December 10, 1970, indicated his net worth was less than $2,000 and a financial statement filed with the SBA in 1972 showed he had a minus net worth.

Nevertheless, our review of the record convinces us...