U.S. v. Pribble

• Citation: 127 F.3d 583
• Decision Date: 06 November 1997
• Docket Number: No. 96-2584,96-2584
• Parties: 47 Fed. R. Evid. Serv. 1327 UNITED STATES of America, Plaintiff-Appellee, v. Jack PRIBBLE, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 583

127 F.3d 583

47 Fed. R. Evid. Serv. 1327

UNITED STATES of America, Plaintiff-Appellee, v. Jack PRIBBLE, Defendant-Appellant.

No. 96-2584.

United States Court of Appeals Seventh Circuit.

Argued May 15, 1997.

Decided Oct. 6, 1997.

Rehearing and Suggestion for Rehearing En Banc Denied Nov. 6, 1997.

Hilary W. Frooman (argued), Office of the United States Attorney, Urbana Division, Urbana, IL, for Plaintiff-Appellee.

Nathan Z. Dershowitz (argued), Victoria B. Eiger, Dershowitz & Eiger, New York City, Warren E. White, Columbia, TN, for Defendant-Appellant.

Before CUDAHY, MANION, and ROVNER, Circuit Judges.

MANION, Circuit Judge.

Jack Pribble was associated with the First National Bank of Georgetown ("FNBG"), Illinois since 1965, and became its president in the early 1970's. In 1982, bank regulators from the Office of the Comptroller of Currency ("OCC") investigated FNBG regarding loans involving Pribble. The regulators had traced the proceeds of loans "involving" Pribble and found that he had applied the money for purposes other than those for which the funds had been borrowed. The regulators criticized Pribble because he had personally used and benefitted from these loan proceeds. They told the bank's board of directors and Pribble that he should have disclosed that the loans were for his benefit, as well as revealed that he was involved in business with the individuals for whom the loans were secured. The regulators made it clear to Pribble (and the bank's board) that his actions had violated the banking laws.

In 1986, a bank holding company, First Prairie Bank, took over FNBG; Pribble, who owned 54% of the stock, became president and chief executive officer of First Prairie. In March 1990, the OCC and the Federal Reserve Bank in Chicago began another regulatory examination of FNBG. The bank examiners concluded again that Pribble had made false statements to FNBG concerning loans, misapplied funds obtained from FNBG loans, and failed to report his interest in the loans. This time a grand jury indicted him. The government charged that Pribble provided inaccurate information to secure the loans and that he improperly used the proceeds for his benefit and that of businesses he owned, all in violation of federal banking regulations. A jury convicted Pribble of bank fraud, misapplication of bank funds, and making false statements to financial institutions. Pribble seeks reversal of these convictions, or at least a new trial, contending that the jury was misinstructed, the evidence was insufficient to convict him, and that relevant evidence was mistakenly excluded from trial. We affirm.

I.

The government's evidence against Pribble involved a series of loan transactions from 1988 through mid-1990. Also at issue are statements of Pribble's related business interests, and his financial statements on file with FNBG as its majority shareholder. One of the grounds on which Pribble seeks a reversal is the sufficiency of the evidence to convict him. For purposes of that argument, we review the trial record in the light most favorable to the prosecution. See United States v. Meadows, 91 F.3d 851, 854-55 (7th Cir.1996).

$20,000 Slade Loan

In September 1988, FNBG made a $20,000 unsecured loan to Robert Slade. The stated purpose of the loan was as a business expense. According to FNBG's president, Frank Cornwell (who is Pribble's first cousin), Pribble asked FNBG vice president Jack Morrison to prepare a $20,000 note to Slade. Pribble said that he planned to meet with Slade and if Slade's financial statement was in order, Pribble would have Slade sign the note. Pribble then left the bank with the unsigned note. Several days later, Pribble returned to FNBG with the signed note and a financial statement for Slade. Pribble falsely stated that the loan had been approved (by the bank through Morrison) and directed Cornwell to prepare a $20,000 money order payable to Slade. Pribble then left the bank with the money order.

The terms of the note required payment of principal and interest on the date the note matured in March 1989. According to Cornwell, Pribble also handled an extension on the note. When the loan was not paid on its due date, Pribble told Cornwell that "there was a Robert Slade Jr. and Sr. and he must have talked with the wrong one." In May 1989, the extension agreement (to September 1989) appeared at FNBG and contained Slade's signature. Included with the extension was a check for payment of the outstanding interest signed by Richard Schendel (Pribble's co-defendant in this case in the district court). Cornwell became suspicious and contacted Palmer American National Bank. He learned that the loan proceeds had been deposited into a bank account of Schendel's.

After the note became delinquent in September 1989, Cornwell contacted Slade. Initially, Slade denied signing the note. According to Slade, Schendel approached him and asked him to co-sign a loan from FNBG for funds to start a tanning and toning salon in Chicago. Schendel said he had reached his borrowing limit and offered Slade $2,000 if he would co-sign a note. Schendel said he would pay the note off in 90 days, and Slade was given an unsigned $20,000 note from FNBG. Slade admitted that he eventually signed the note. Slade also gave Schendel a financial statement he had recently prepared for Schendel to submit to FNBG. The next thing Slade heard about the loan was when FNBG sent him a letter in May 1989 that the note was overdue. When that happened Pribble approached Slade and told him that if he did not renew the note, Schendel might go to jail. Pribble told Slade that Schendel had some money coming in soon and that if Slade signed the renewal everything would be okay. Slade refused.

Later, when Slade reviewed copies of the note and renewal, he found that the signature on the original note was his, but that the signature on the renewal was not. Slade never saw the money order in the amount of $20,000 payable to him, and indicated that the endorsement was a forgery. By January 1990, the loan had not been paid and was put into collection.

Montgomery Loan with $10,000 Downpayment

In January 1988, Pribble met with Robert Montgomery at Schendel's residence. There Pribble pitched to Montgomery a business proposition: Montgomery would become the monetary backing for a tanning and toning salon in Champaign, Illinois. Pribble had a purchase order already filled out, a description of the equipment, layout of a floor plan, and a prospectus on the possibility of making money. Pribble had the financing forms with him which indicated that the business needed $109,000, including a $10,000 downpayment. When Montgomery told Pribble he did not have that amount of cash for a downpayment, Pribble responded that he should not worry, that the money could be secured through FNBG. According to Schendel's girlfriend, who was present at the meeting, Pribble repeatedly referred to FNBG as his "little gold mine in Georgetown," although she does not recall whether he made that specific statement at that meeting.

FNBG made the loan to Montgomery. The loan documents indicated that Montgomery had made a $10,000 downpayment. At his counsel's advice, Montgomery eventually stopped paying on the loan when he discovered fraud was involved. FNBG's records indicate that the bank lost $86,928.73 on the loan.

Pribble's $7,000 Loan

The OCC examination also revealed that in March 1990, Pribble borrowed $7,000 from FNBG in an unsecured note. The note stated that the funds were to be used to purchase a pickup truck and to pay for vacation expenses. The OCC traced the note's proceeds and found that Pribble used them for monthly loan payments at other financial institutions and to pay insurance and utility bills. The remainder was taken out in cash. Bank management could not confirm that Pribble went on vacation or ever purchased a pickup truck.

The examination also revealed that Pribble had not disclosed all of his liabilities on a financial statement he submitted to FNBG in association with this note. The financial statement failed to include three other loans totaling approximately $64,000. Also, Pribble was required to maintain a statement with FNBG listing his related business interests. In that statement, Pribble failed to tell the bank of his ownership interest in Omnishape 2000, a tanning and toning salon in Peoria.

Financial Statement to Renew $59,000 Palmer Loan

In July 1990, Pribble submitted to Palmer American National Bank a financial statement for the purpose of renewing a $59,000 note. He included several false statements, including an inflated salary. He also failed to list a $12,875 retail installment contract and a property lease for his tanning and toning business. The statement also falsely listed the use of the proceeds from the March 1990 $7,000 unsecured loan.

$6,000 Mahan Loan

In November 1988, FNBG made a $6,000 loan to Jerry Mahan, former manager of the Peoria Omnishape 2000 in which Pribble held an interest. The note matured in March 1989 and was extended to October 1989. The loan proceeds were deposited into a bank account of Omnishape 2000 over which Pribble and Mahan exercised authority. The loan was secured by a car Mahan owned. As of the OCC examination, the loan was five months overdue.

FNBG vice president Morrison told the OCC that Pribble had sent Mahan to FNBG and told Morrison to loan Mahan $6,000 for an exercise business in Peoria. The loan file contained an incomplete credit application and did not include Mahan's financial statement. A November 1988 credit report showed that Mahan had a poor credit history, and FNBG did not perform a credit analysis before extending the loan. In October 1989, Mahan wrote FNBG informing the bank of Pribble's interest in Omnishape 2000 and that the $6,000 was used for that business. Mahan suggested that FNBG take the collateral in satisfaction of the debt. Two years later, FNBG sold the car for $2,500.

...