U.S. v. Stephens

• Decision Date: 27 December 1985
• Docket Number: No. 85-4214,85-4214
• Citation: 779 F.2d 232
• Parties: 19 Fed. R. Evid. Serv. 1541 UNITED STATES of America, Plaintiff-Appellee, v. Columbus Schalah STEPHENS, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 232

779 F.2d 232

19 Fed. R. Evid. Serv. 1541

UNITED STATES of America, Plaintiff-Appellee, v. Columbus Schalah STEPHENS, Jr., Defendant-Appellant.

No. 85-4214.

United States Court of Appeals, Fifth Circuit.

Dec. 27, 1985.

Grady F. Tollison, Jr., Oxford, Miss., for defendant-appellant.

Glen H. Davidson, U.S. Atty., Alfred E. Moreton, III, Asst. U.S. Atty., Oxford, Miss., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Mississippi.

Before RUBIN, RANDALL and WILLIAMS, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge.

Columbus Schalah Stephens, Jr. appeals his conviction on one count of falsifying information on a Farmers' Home Administration (FmHA) loan application, 18 U.S.C. Sec. 1014, and five counts of mail fraud, 18 U.S.C. Sec. 1341. He contends on appeal: (1) the evidence is insufficient to sustain his conviction, (2) testimony was erroneously excluded, (3) the jury charge was incorrect, (4) government summary exhibits were erroneously admitted into evidence, and (5) the government varied its proof and argument from the bill of particulars. We reject the defendant's arguments and affirm his convictions.

I. FACTS

Columbus Schalah Stephens, Jr. is one of two shareholders in CMW Land Company, Inc., a 5,051 acre cattle farm in Choctaw, Montgomery, and Webster Counties in Mississippi. Stephens and Eph Wiygul purchased CMW from Staple Cotton Discount Corporation in December of 1973 for $300,000 in cash, assumption of debt to SCDC, and assumption of a first mortgage to Equitable of Iowa. Stephens handled the finances of CMW, and Wiygul supervised the actual farming operation. CMW lost money and Stephens applied for an "EM" Farmers' Home Administration (FmHA) loan in 1976 primarily for the purpose of refinancing the Staple Cotton indebtedness. ¹ A loan for $2,141,000 was approved. $1,381,700 of the loan proceeds was paid to Staple Cotton in exchange for Staple Cotton releasing its second mortgage lien against CMW's assets. ²

CMW continued to lose money and FmHA approved additional loans in 1977, 1978, and 1979. The 1979 loan is the subject of the indictment. As one of CMW's principal shareholders, Stephens submitted his application to FmHA together with CMW's application. The Stephens and CMW applications both stated that the purpose of the loan was to "provide for operating requirements and debt service of CMW Land Company." FmHA's application form is a one page document printed on both sides. The back side is a financial statement and it is headed in one-eighth inch high capital letters: "FINANCIAL STATEMENT AS OF DATE OF APPLICATION". Stephens' application was dated May 22, 1979. Stephens attached a one page financial statement dated December 31, 1978, to his application. He stated on his application that he owed no judgments yet there was a $7,608 judgment outstanding against him. His application also omitted mention of a $100,000 debt to the Barnett Bank and a $320,000 debt in relation to the "Chambless property." Both of these loans were taken out after December 31, 1978, and prior to May 22, 1979. On the basis of the applications of Stephens and CMW, FmHA approved a $2,960,920 loan.

CMW maintained two accounts in Mississippi, a general account and an operating account. Stephens maintained another account in Florida in the name of CMW Land Company. The address for this account was the same as his residence in Orlando, Florida. Neither Mr. Herrod, the FmHA agent with whom Stephens dealt, nor Mrs. Olmy, CMW's secretary and bookkeeper, had any knowledge of this CMW Florida account. Virtually all of the FmHA loan funds were deposited to either the CMW Mississippi accounts or the CMW Florida account. The evidence shows that Stephens paid $1,122,786.29 out of the CMW Florida account to himself, his creditors, his corporations, his relatives, and others. ³ None of these debt payments or fund disbursements were authorized by FmHA. None of the debts repaid with these funds were listed with CMW's application as debts for which CMW was seeking funds for "debt services." None of the debts repaid with these funds were listed in the Farm and Home Plan (FHP) ⁴ debt repayment schedule as debts which were to be repaid from the loan funds, nor were any of these disbursements listed in the FHP operating expenses schedule as expenses which were to paid with loan funds. None of these disbursements were reported in monthly cash flow reports as projected expenses, nor were they reported as actual expenses after they were paid. In short, none of these disbursements were ever discussed with or reported to FmHA orally or otherwise.

On May 17, 1984, a Federal Grand Jury in the Northern District of Mississippi indicted Stephens on the one count of filing a false financial statement to obtain a FmHA loan and the five counts of using the mails to defraud the FmHA. The trial lasted eight days. Stephens was convicted on all counts after jury deliberation of approximately one hour. Stephens was sentenced to concurrent three year terms of imprisonment on Counts 2-6, and a concurrent sentence of one year imprisonment on Count 1. Stephens appeals.

II. INSUFFICIENCY OF THE EVIDENCE

A. Mail Fraud

Stephens argues that the evidence is insufficient to sustain his conviction on five counts of mail fraud in violation of 18 U.S.C. Sec. 1341 (1982). ⁵ Sec. 1341 requires a scheme to defraud and the use of the mails for the purpose of executing this scheme. United States v. Curry, 681 F.2d 406, 410 (5th Cir.1982). The government must prove that the defendant had the specific intent to commit the fraud. United States v. Goss, 650 F.2d 1336, 1341 (5th Cir.1981). Stephens challenges the sufficiency of the proof of his specific intent to defraud FmHA.

In evaluating the sufficiency of the evidence supporting a conviction, we must interpret the evidence in the light most favorable to the government. We must resolve all conflicts in the evidence in favor of the government, and we must give the government the benefit of every inference which might reasonably be made from the evidence when it is construed favorably to the government. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942). "It is not necessary that the evidence exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt, provided a reasonable trier of fact could find that the evidence establishes guilt beyond a reasonable doubt." United States v. Bell, 678 F.2d 547, 549 (5th Cir.1982) (en banc), aff'd, 462 U.S. 356, 103 S.Ct. 2398, 77 L.Ed.2d 638 (1983).

Stephens argues his failure to follow the Farm and Home Plan (FHP) did not raise an inference of intent to defraud because departing from the FHP was the standard operating procedure between CMW and FmHA. The record reveals that Stephens not only failed to comply with the 1978 FHP but that the FmHA local agent did not recommend approval of CMW's 1979 loan because of this non-compliance. A course of dealing is not established from this one instance, however, particularly in light of the fact that the FmHA agent apparently did not condone this departure.

Next, Stephens contends there was no evidence of conversion, and he offered explanations for the three largest items to which loan funds were diverted. These were his personal account, the Chambless purchase, and payments to Connecticut General. Stephens argues that the money transferred to his personal account was actually spent on CMW, but he presented no proof to support this claim. He argues the Chambless purchase was authorized as a capital expenditure. But this argument was totally negated by four facts established in the evidence: First, FmHA had already refused to make any further loans for capital expenditures. Second, the stated purpose of the 1979 loan did not include capital expenditures. Third, Stephens had not requested capital expenditures on the 1979 loan application. Fourth, no capital expenditures were authorized on the FHP.

The payment to Connecticut General for S & W's debt was proper, Stephens argues, because the payment kept the land that secured the note from being made the subject of a successful foreclosure, and the land eventually was sold to satisfy a debt CMW owed to Staple Cotton. The government effectively disputed this claim on several grounds, including the ground that CMW did not owe the debt to Staple Cotton at that time. Stephens' theory is attenuated on its face, and a reasonable juror could well have rejected it.

Finally, Stephens contends that the jury could not have found fraudulent intent because he did not conceal the Florida account transactions, and he cooperated with the government investigation. The fact that Stephens did not cover up his trail of conversion certainly does not conclusively establish a lack of intent. The jury properly could reject Stephens' cooperation argument. An embezzler or other felon is not relieved of his or her crime by cooperating after an investigation of the illicit activity begins. Further, Stephens' cooperation was limited at best. He did furnish selected records and authorize the government to examine CMW's Mississippi bank accounts. Grand Jury subpoenas, however, were necessary to obtain other records. Some records were never made available to the government. Even at trial the government had not had access to the cash disbursement journal upon which the defendant's accountant and expert witness, Mr. Lenahan, based his testimony.

In sum, in support of his claims, Stephens urges factual theories that the jury was free to disbelieve. Our role is not to reevaluate the evidence de novo. United States v. Villarreal, 769 F.2d 1044, 1045 (5th Cir.), cert. denied, --- U.S. ----, 106 S.Ct. 272, 88 L.Ed.2d 233 (1985). Whether there is intent to defraud is a jury question. Shale v. United States, 388 F.2d 616, 618 (5th Cir.), cert. denied, 393 U.S. 984, 89 S.Ct. 456, 21...