U.S. v. Lane
| Decision Date | 24 March 2003 |
| Docket Number | No. 01-4084.,01-4084. |
| Citation | 323 F.3d 568 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Vincent LANE, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Robert W. Kent, Jr. (Argued), Office of the United States Attorney, Criminal Division, Chicago, IL, for Plaintiff-Appellee.
Anton R. Valukas (Argued), Jenner & Block, Chicago, IL, for Defendant-Appellant.
Before RIPPLE, MANION, and ROVNER, Circuit Judges.
Vincent Lane was charged with one count of bank fraud in violation of 18 U.S.C. § 1344 and eight counts of making false statements to a bank in violation of 18 U.S.C. § 1014. The district court dismissed the charge of bank fraud on the government's motion and subsequently a jury found Lane guilty on five counts of making false statements to a bank. The jury was unable to reach a verdict on the remaining three counts, which were then dismissed. Lane was sentenced to 30 months in prison. Lane now appeals the conviction as well as his sentence. He claims that the district court erred in admitting evidence of his outstanding debts and prohibiting him from introducing evidence of his lack of intent to defraud the banks in question. He also claims that the district court erred in determining the loss suffered by the victims of his fraud in calculating his sentence under the sentencing guidelines. For the reasons stated herein, we affirm.
Vincent Lane is a real estate developer who participated in several ventures during the 1980s and 1990s in both Illinois and in Texas. From 1988 through 1995 he was also the chairman of the Chicago Housing Authority (CHA). Lane's conviction is based on fraudulent statements concerning his financial stability made to bank officials at American National Bank ("ANB") and the South Shore Bank ("South Shore"). The fraudulent statements to ANB were made in 1993 in connection with the refinancing of loans that were initially made for the acquisition and construction of the Continental Plaza Shopping Center in Chicago, Illinois. The fraudulent statements to South Shore were made in connection with the refinancing of three loans in 1994. In both cases, Lane failed to disclose to the banks an outstanding debt of $2.4 million that was owed to the National Investment Reality Trust ("NIRT") due to a failed real estate venture in Texas—the Casita Bonita venture.
Lane participated in the Casita Bonita real estate venture through LSM Venture Associates ("LSM"), a general partnership comprised of Lane, Frank Swain and Bettye Mitchell Vance. LSM was the general partner of an apartment complex in Texas called the Casa Bonita Apartments, which was also owned by Casa Bonita Apartments, Limited and Casa Bonita Investors, Limited ("Casa Bonita entities"). In 1982, the Casa Bonita entities borrowed a large sum of money from NIRT. Lane signed a $1 million note on behalf of the Casa Bonita entities, and he and his partners also personally guaranteed the note. When the note became due in 1988, the Casa Bonita entities defaulted and failed to pay the money due on the note. In September 1991, the lender, NIRT, gave written notice of demand to LSM to cure the default and pay the amount due. LSM did not cure the default, and on January 24, 1992, NIRT sued LSM in state court in Texas seeking $1,500,000 in unpaid principal and $300,000 in interest. Lane was personally served civil process in April 1992.
In 1993, NIRT moved for summary judgment against LSM in the Texas lawsuit. On February 25, 1994, the Texas state court entered judgment against LSM in the amount of approximately $2,400,000 which represented $1,500,000 in unpaid principal and $900,000 in unpaid interest. Lane and NIRT were in negotiations to resolve this debt and, as part of those talks, Lane proposed that all cash flow from Lane's interest in an office park in Springfield, Illinois known as Springfield Office Partnership ("SOP") would go to NIRT. SOP had a value of approximately $500,000. These negotiations eventually fell through and in July 1994, NIRT registered this judgment in Illinois.
Lane first became involved with the Continental Plaza Shopping Center property in the mid-1980s when the property was purchased by Continental Commercial Partners ("Continental Partners") from Loyola University of Chicago ("Loyola"). Continental Partners was a limited partnership with general partners Full Life Inc., a corporation controlled by the Lake Regional Conference of Seventh Day Adventists ("Seventh Day Adventists"), and LSM Venture Associates. LSM and the Seventh Day Adventists each owned 49.5% of Continental Partners, while Lane, in his individual capacity, owned a 1% limited partnership. Lane handled all of the issues relating to the financing of Continental Plaza on behalf of Continental Partners.
In order to secure the original financing for the purchase and development of the Continental Plaza property, Continental Partners obtained loans from several lenders, secured by mortgages on the property as well as personal guarantees from a combination of Lane, the Seventh Day Adventists and Loyola. The first lien on the property was held by Lloyds Bank International, Limited, whose agent in the United States was Daiwa Bank, Limited (collectively "Daiwa"). The second lien on the property was held by the City of Chicago, who lent Continental Partners $4,000,000 in federal and state money. Drovers Bank of Chicago, which later became Cole Taylor Bank (hereinafter "Cole Taylor") also lent money in connection with the property.
Continental Plaza Shopping Center opened for business in 1988 but quickly began to experience financial trouble. In order for Continental Plaza to be financially viable, it was necessary that the anchor tenant space be leased. At first a grocery store owned by Lane, named "Shopper's Lane," occupied more than 40% of the center and acted as the anchor tenant. But in late 1992 "Shopper's Lane" closed, and the anchor space became vacant. Eventually, Continental Partners defaulted on its loan obligations on Continental Plaza.
In 1992 litigation began concerning Continental Partners's debt obligations with respect to Continental Plaza. At that time Continental Partners owed approximately $3,500,000 to Daiwa Bank, secured by the first lien on the property as well as the personal guarantees signed by Lane and the Seventh Day Adventists. The City of Chicago held a junior mortgage on the property which was reduced to $1,750,000 as of December 31, 1991. Continental Partners also owed $2,300,000 to Cole Taylor Bank, secured by guarantees from Lane and the Seventh Day Adventists. Loyola had also independently guaranteed $1,916,000 of the debt to Cole Taylor. Daiwa was the first creditor to file suit in 1992 seeking to foreclose on Continental Plaza. A judgment of foreclosure was entered, and in May 1993, a sheriff's sale was ordered. Both Lane and the Seventh Day Adventists stood to be personally liable if the sale of Continental Plaza resulted in a shortfall on the debt owed. Cole Taylor also filed suit in 1992, seeking to enforce the personal guarantees made by Continental Partners in connection with the financing of Continental Plaza. As a result, in June 1992, Cole Taylor obtained a $2.2 million judgment against Lane. Also during this time, unbeknownst to Lane, Loyola agreed to pay Cole Taylor $1,700,000 on Loyola's $1,916,000 guarantee to Cole Taylor. In return, Cole Taylor agreed to return to Loyola 90% of any money that Cole Taylor collected on the loan from other sources.
In early 1993, Lane proposed a refinancing plan for Continental Plaza that would have purportedly resulted in the revitalization of Continental Plaza and the dismissal of the Daiwa and Cole Taylor lawsuits. Lane's refinancing plan included the following elements: (1) the Seventh Day Adventists would contribute $2,500,000, in return for their release from all liabilities on their personal loan guarantees, and their interest in Continental Partners would be converted to a limited partnership; (2) Daiwa would receive $2,500,000 as full payment on the debt Continental Partners owed Daiwa, and dismiss its lawsuit; (3) ANB would issue a new loan for $1,900,000, which would be secured by a first mortgage on Continental Plaza, and further secured by an agreement from Loyola to purchase the loan if it went into default; and (4) Cole Taylor would receive $1,600,000 as partial payment on Continental Partners's debt to Cole Taylor, take as security a second mortgage subordinate to ANB's lien, and dismiss its lawsuit.
A necessary requirement for this refinancing was a viable anchor tenant for Continental Plaza. In May 1993, Lane produced to ANB a copy of a lease for the anchor tenant space at Continental Plaza, which was dated May 7, 1993. Lane's proposed tenant was a grocery store called "Your Supermarket, Inc." The signatory for Your Supermarket was Franklin Searcy, who signed on behalf of Leonard Muhammad. Your Supermarket, Inc. agreed to lease the anchor space for five years at a rate of $120,000 per year. The lease indicated that the landlord was ANB as trustee.
In early August 1993, Lane on behalf of Continental Partners, and ANB signed a commitment letter for the $1,900,000 refinancing loan. The commitment letter outlined the following conditions that had to be met before ANB would issue the loan: (1) Loyola had to sign the loan purchase agreement; (2) Continental Partners had to tender a fully executed version of the May 7, 1993 lease with Your Supermarket; (3) Continental Partners had to tender an Estoppel Certificate signed by Your Supermarket, certifying that the May 7, 1993 lease was in effect; (4) Continental Partners had to tender financial statements for Your Supermarket, or alternatively, obtain...
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