U.S. v. Vetter

• Decision Date: 01 February 1990
• Docket Number: No. 89-5317,89-5317
• Citation: 895 F.2d 456
• Parties: UNITED STATES of America, Appellee, v. Anton VETTER, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 456

895 F.2d 456

58 USLW 2490

UNITED STATES of America, Appellee, v. Anton VETTER, Appellant.

No. 89-5317.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 16, 1990.

Decided Feb. 1, 1990.

James P. Rausch, Bismarck, N.D., for appellant.

Lynn E. Crooks, Fargo, N.D., for appellee.

Before BOWMAN, WOLLMAN and BEAM, Circuit Judges.

PER CURIAM.

Anton Vetter appeals from his jury conviction and sentence on one count of making a false statement to an FBI agent in violation of 18 U.S.C. Sec. 1001 (1988) and one count of bank fraud in violation of 18 U.S.C. Sec. 1344 (1988). For reversal, Vetter challenges the sufficiency of the evidence and the admissibility of the testimony of a lay witness. Should the conviction be affirmed, he asks us to vacate the order to make restitution in the amount of $25,000 to the victim bank. We affirm the District Court. ¹

Trial testimony revealed that in 1978 Vetter obtained a loan of $120,000 from Central Dakota bank (the Bank) of Lehr, North Dakota, ² to start a beef cattle business. The Bank took a security interest in Vetter's initial purchase of 180 stock cows. The Bank annually renewed Vetter's promissory note and occasionally made additional advances for operating expenses. In 1984 the Bank took an additional security interest in other farm property to secure the debt.

Vetter and the Bank president met to discuss the note renewal in December 1985. The president failed to request a new financing statement, but he asked Vetter if the figures from the previous year were still accurate. Vetter answered by supplying estimated figures that substantially understated his debts. The Bank failed to verify Vetter's outstanding loan balances with other lenders.

The Bank notified Vetter in December 1986 that the renewed note was due. Vetter responded by letter that he could not repay the loan because all of his cattle had become diseased and died. Accompanying his letter was a photograph showing about a dozen cattle carcasses being placed in a pit. The Bank president visited Vetter's farm the following summer and Vetter again claimed all of his cattle had died of disease. He disclaimed ownership of the cattle then grazing on his land.

The Bank hired private investigators to locate its collateral. When interviewed, Vetter stated that 400 to 500 head of cattle had died in a three-month period. He claimed a local veterinarian had examined the cattle, diagnosed a rare brain disease, and indicated nothing could be done. The veterinarian told investigators, however, that he had been to the Vetter farm only to inspect a small number of cattle killed by lightning.

The FBI interviewed Vetter in August 1988 and January 1989. Vetter maintained his story that a mysterious disease killed his cattle, but he lengthened the period over which the cattle died from three months to three years. He abandoned his claim that he had consulted a veterinarian and lowered his estimate of loss. Vetter showed the FBI agent the pit where he allegedly placed the cattle carcasses and burned them, with the family's trash, until nothing remained but ash.

An FBI agent told the jury that two trenches were dug in the pit on Vetter's farm to search for evidence substantiating Vetter's claims, but only burned trash, tin cans, and half a dozen small bones were found. No large amounts of ash or other cattle remains could be located and, in fact, the area was only four feet deep. The FBI agent also testified that his investigation revealed that, during the period the cattle allegedly were dying, Vetter transacted a number of cattle sales at area livestock markets in the names of his children. The proceeds from the sales sometimes were deposited into and quickly withdrawn from multiple checking accounts at various banks, but more often they were never deposited.

Upon conviction, the District Court sentenced Vetter to five months imprisonment, three months at a halfway house, two months house probation, and three years of supervised release. The release is conditioned upon a good faith effort to make restitution to the Bank in the amount of $25,000. 18 U.S.C. Sec. 3663 (1988).

Vetter argues on appeal, as he did at the sentencing hearing, that the District Court could not impose restitution. In October 1987, the Bank sued Vetter on the note and received a judgment for the full amount of the outstanding loan, plus interest. The Bank repossessed and liquidated equipment and livestock located on the Vetter farm, but after applying the proceeds to Vetter's defaulted loan, there remained a deficiency of $117,000. Vetter filed a Chapter 7 bankruptcy petition in December 1987, prior to his indictment on criminal charges. In February 1988, the Bank attempted to protect the deficiency from discharge. The Vetter children threatened to sue the Bank for conversion, claiming that the Bank illegally seized and sold from the Vetter farm property owned by the children. The parties entered into a settlement agreement providing that the Bank would withdraw its claim for the balance of Vetter's debt and waive its right to sue the Vetter children for fraudulent conveyances, and the children would waive their right to sue the Bank in conversion. The bankruptcy court approved the agreement. Vetter argues that the restitution order has the effect of reinstating the debt that was discharged in bankruptcy and interferes with the private settlement contract negotiated by the parties.

Any debt "for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit [that] is not compensation for actual pecuniary loss" is excepted from discharge in a Chapter 7 bankruptcy proceeding. 11 U.S.C. Sec. 523(a)(7) (1988). The United States Supreme Court held that restitution ordered by a state court as part of a criminal sentence falls within section 523(a)(7) and is not subject to a discharge under Chapter 7 of the Bankruptcy Code. Kelly v. Robinson, 479 U.S. 36, 53, 107 S.Ct. 353, 363, 93 L.Ed.2d 216 (1986). The Supreme Court reasoned that restitution resulting from criminal proceedings enforces "the State's interests in rehabilitation and punishment, rather than the victim's desire for compensation," particularly since the victim has no control over an order of restitution. Id. at 52, 53, 107 S.Ct. at 362, 363.

One federal circuit extended the Kelly rationale to include federal restitution orders, even though the court recognized that Kelly "was partially influenced by federalism concerns." United States v. Caddell, 830 F.2d 36, 39 (5th Cir.1987) (restitution order did not illegally require debtor to divert funds from Chapter 11 estate); see also In re Wright, 87 B.R. 1011, 1015 n. 3 (Bankr.S.D.1988) (restitution ordered by federal district court not discharged in Chapter 7 proceeding); In re O'Connell, 80 B.R. 475, 476 (...