U.S. v. Tucker

• Decision Date: 23 April 1998
• Docket Number: No. 96-3231,96-3231
• Citation: 137 F.3d 1016
• Parties: 48 Fed. R. Evid. Serv. 1145 UNITED STATES of America, Appellee, v. Jim Guy TUCKER, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1016

137 F.3d 1016

48 Fed. R. Evid. Serv. 1145

UNITED STATES of America, Appellee, v. Jim Guy TUCKER, Appellant.

No. 96-3231.

United States Court of Appeals Eighth Circuit.

Submitted April 17, 1997.

Decided Feb. 23, 1998.

Rehearing and Suggestion for Rehearing En Banc Denied April

23, 1998. ^*

George B. Collins, Chicago, IL, argued (William H. Sutton, Clifford W. Plunkett, Darrell F. Brown and James Lessmeister, on the brief), for Appellant.

Kenneth W. Starr, Little Rock, AR, argued (Leroy Morgan Jahn, W. Ray Jahn, Rod J. Rosenstein and Eric H. Jaso, on the brief), for Appellee.

Before McMILLIAN, JOHN R. GIBSON, and BEAM, Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

Jim Guy Tucker, the Governor of Arkansas until his conviction in this case, appeals from his conviction for conspiracy and mail fraud. Tucker was indicted in a twenty-one count indictment, together with James and Susan McDougal, the former controlling persons of Madison Guaranty Savings and Loan, a thrift institution that failed. The first count of the indictment charged an overarching conspiracy to misuse the funds of Madison and of Capital Management Services, a small business investment company headed by alleged co-conspirator and key government witness David Hale. Tucker was indicted on the conspiracy charge and ten substantive counts based on individual transactions. At the close of the government's case, the district court dismissed Counts 8-11. ¹ The remainder of the case was submitted to the jury, which acquitted Tucker of Counts 2-4 and 20-21 ² and convicted him of Count 1, conspiracy, 18 U.S.C § 371 (1994), and Count 12, mail fraud in connection with a loan from Capital Management Services to Castle Sewer and Water Corp. 18 U.S.C. § 1341 (1994).

On appeal, Tucker contends the convictions should be reversed because after trial it was discovered that a juror was married to a former state prisoner to whom Tucker, as governor, had denied clemency. Tucker also attempted to establish that the juror and her husband had engaged in discussions about the case during the trial. Tucker further objected to the empaneling of a juror who gave answers to a written jury questionnaire that were inconsistent with a defendant's right to remain silent and the presumption of innocence. Tucker contends that there was insufficient evidence to convict him of mail fraud and conspiracy. He also raises several points of evidentiary and instructional error. We conclude that Tucker has not demonstrated error on any ground except for the limitations the district court imposed on the hearing concerning alleged misconduct of one juror. We remand for a fuller hearing on the issues pertaining to the one juror.

The government's case involved the several mutually dependent business transactions of Jim Guy Tucker, Susan and James McDougal, and David Hale, as described in the testimony of David Hale. Hale was a municipal judge in Little Rock, where the McDougals operated Madison Guaranty and where Tucker practiced law. All were active in state politics in one capacity or another and all had multifarious business interests.

Hale described a meeting between Tucker, James McDougal, and himself in the fall of 1985. The three went out to a new development called Castle Grande, which McDougal had developed, to view thirty-four acres of property McDougal had just sold Tucker. In fact, McDougal had made Tucker buy the property as a prerequisite to Madison loaning Tucker money he needed to pay off another debt. After viewing the thirty-four acres, the three went to Tucker's house and sat around the kitchen table, visiting. James McDougal asked Hale about the lending limit of Capital Management Services, Hale's small business investment company. Hale told McDougal that the lending limit was $150,000.

The lending limit was a function of the amount of capital Hale had available to invest in Capital Management Services. The owner of a small business investment company would invest a certain amount, and the Small Business Administration would then provide three times the amount of that capital for the company to lend to small businesses. The company could only lend a particular borrower an amount equal to thirty percent of the company's capital. Since Hale had $500,000 capital in the company at that point, his lending limit to a particular borrower was therefore $150,000.

After asking Hale about his lending limit, James McDougal then turned to Tucker and said, "We're going to have to get some more money into David's SBIC [small business investment company]." McDougal said, "I'm going to need some funds, and Jim Guy is going to need some funds, and we're going to have to clean up--clean up some members of the political family...." The three decided that Hale should sell some property to generate the capital needed to increase Capital Management's lending limit to $300,000, so it could make loans for the benefit of Tucker and McDougal. They settled on a piece of property used for a restaurant known as Etta's Place. The three discussed whether the Etta's Place property would appraise out at a high enough value to generate a profit of $500,000, but McDougal said to let him worry about that. They agreed Hale should sell this property to a straw man to generate a profit of $500,000. Madison would loan the purchase money to the straw man. Hale would then invest the money in Capital Management Services. For every dollar Hale invested in Capital Management, the Small Business Administration would make available three dollars for Capital Management to loan to other businesses. In this way, the friends could leverage a dollar lent by Madison to the straw man into four dollars of available money.

In order to get an appraisal to support the Etta's Place deal, Hale's colleague, William Watt, hired Robert Palmer to appraise the property. Upon first looking at the property, Palmer reported to Watt that it would only be worth $300-400,000. Watt told him that the appraisal was for David Hale, who was "doing a favor" for James McDougal, and that Hale needed an appraisal of $750,000. Watt told Palmer to "do whatever you have to do." Palmer issued an appraisal valuing the property at $755,000, though he testified that he knew it was not an accurate appraisal. Hale found a buyer, Dean Paul, to serve as straw man in the Etta's Place transaction.

During the time that the Etta's Place transaction was being worked out, Tucker told Hale that Madison owned the sewer and water system at Castle Grande, and that Madison needed to divest itself of this property before an upcoming federal regulatory examination, because Madison was not supposed to own a utility. Tucker was to set up a corporation to buy the sewer and water system. To finance the sale, the corporation would borrow the down payment from Capital Management and the rest of the purchase price from Madison.

Tucker incorporated Castle Sewer and Water Corp., naming two of his employees, Dwight Harlan and Lorita King, as president and secretary. Tucker owned two-thirds of the stock and the other third was owned by R.D. Randolph, a McDougal associate. Tucker then submitted a loan application to Capital Management asking for a loan of $150,000, or $300,000 if possible. In the loan application, Tucker stated that the loan proceeds would be used "for initial operating capital and maintenance and painting of the [water] storage tank." Hale stated that at the time he received the application, he knew that this statement in the application was false, because the real purpose of the loan would be to make the down payment on the water and sewer facilities. With the loan application, Tucker submitted a proposed, or pro forma, balance sheet showing what Castle Sewer and Water's financial condition would be if it received the proposed $300,000 loan. The pro forma balance sheet showed as assets both the water and sewer facility, valued at $1.5 million, and the $300,000 in proceeds from the loan. In fact, in order to obtain the sewer and water facility, the corporation would have to use the $300,000 as a down payment, and so would never have both the facility and the $300,000 cash at the same time. Therefore, Tucker's pro forma balance sheet overstated the corporation's assets by $300,000 and hid the fact that the loan from Capital Management was to be used as a down payment on the facility.

Capital Management made the loan to Castle Sewer and Water in the amount of $150,000. The loan closed the same day as the straw man's purchase of Etta's Place. Tucker received the check, personally endorsed it and deposited it in a Castle Sewer and Water bank account.

Tucker did not undertake any personal obligation in connection with the purchase. The co-owner of Castle Sewer and Water Corp., R.D. Randolph, signed a personal guaranty of the corporate debt to Madison, although he testified at trial that he did not realize he had done so at the time. Tucker later gave his stock to Randolph, who actually ran the utility for some time. Randolph made some interest payments on the loan from Capital Management, but eventually the corporation defaulted on the debt. Randolph discharged the guaranty through personal bankruptcy.

After the Castle Sewer loan was made, Hale filled out and mailed to the Small Business Administration a Form 1031, which was required by the administration for every loan. The Form 1031 required a statement of the purpose of the loan. Hale filled in the purpose: "working capital."

Hale testified that Tucker was angry when he discovered that Susan McDougal had drawn a real estate commission on Madison's sale of the sewer and water facility to Castle Sewer and Water Corp. and that James McDougal had received a sizable bonus because of the sale. Hale testified that Tucker complained to him that the McDougals' "commissions could get us all put in jail." Later, Hale said Tucker called him from the governor's mansion, upset by newspaper articles...