U.S. v. Weidner

• Decision Date: 16 February 2006
• Docket Number: No. 04-3084.,No. 04-3118.,04-3084.,04-3118.
• Citation: 437 F.3d 1023
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Clinton Odell WEIDNER, II, and David C. Wittig, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1023

437 F.3d 1023

UNITED STATES of America, Plaintiff-Appellee, v. Clinton Odell WEIDNER, II, and David C. Wittig, Defendants-Appellants.

No. 04-3084.

No. 04-3118.

United States Court of Appeals, Tenth Circuit.

February 16, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Bruce W. Simon, Kansas City, MO, for Defendant-Appellant Clinton Odell Weidner, II.

Steven A. Reiss, Weil, Gotshal & Manges LLP, New York, N.Y. (Jeffrey D. Morris, Berkowitz, Stanton, Brandt, Williams & Shaw, Prairie Village, KS, and Gregory S. Coleman, Lisa R. Eskow, and Meredith B. Parenti, Weil, Gotshal & Manges LLP, Austin, TX, with him on the briefs), for Defendant-Appellant David C. Wittig.

Richard L. Hathaway, Senior Litigation Counsel, Topeka, KS (Eric F. Melgren, United States Attorney, with him on the brief), for the Plaintiff-Appellee.

Before HENRY, LUCERO, Circuit Judges, and BRACK, District Judge.^*

HENRY, Circuit Judge.

This federal criminal prosecution arises out of a $1.5 million loan from David C Wittig to Clinton Odell Weidner, II. In April 2001, when Mr. Wittig made the loan, Mr. Weidner was the president, chief executive officer, and general counsel of the Topeka, Kansas bank at which Mr. Wittig did business. The government alleged that Mr. Weidner and Mr. Wittig concealed the loan, and the jury agreed, convicting both men of one count of conspiracy to submit false entries to a federally insured bank and to launder money, in violation of 18 U.S.C. § 371; four counts of making a false bank entry, in violation of 18 U.S.C. § 1005; and one count of money laundering, in violation of 18 U.S.C. § 1957. The jury also convicted Mr. Weidner of a criminal forfeiture count involving the Arizona real estate in which he had invested the $1.5 million that he had borrowed from Mr. Wittig. The district court sentenced Mr. Wittig to concurrent terms of fifty-one months' imprisonment on each of the six counts, followed by a three-year term of supervised release, and ordered him to pay a $1 million fine. The court sentenced Mr. Weidner to concurrent terms of seventy-eight months' imprisonment, also followed by three years' supervised release.

In this appeal, Mr. Weidner and Mr. Wittig raise a variety of issues relating to the sufficiency of the evidence and the adequacy of the jury instructions. They also challenge their sentences, arguing that the district court erred in calculating the amount of loss and in basing their sentences on factual findings not made by the jury.

Although the government's case was largely circumstantial, we conclude that the evidence was sufficient and that the jury instructions were adequate. However, as to the defendants' sentencing challenges, we conclude that, in light of the ambiguity of the Guidelines, the district court did err in calculating the amount of the loss. Accordingly we affirm the defendants' convictions, vacate their sentences, and remand the cases for resentencing in accordance with this opinion and the principles set forth in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005).

I. BACKGROUND

In recounting the relevant facts, we view the record in the light most favorable to the government. See United States v. Radcliff, 331 F.3d 1153, 1157 (10th Cir. 2003).

A. The Loan Transactions

During 2001 and 2002, Mr. Weidner was the president, chief executive officer, and general counsel of Capital City Bank in Topeka, Kansas. Mr. Wittig was an established Capital City Bank customer with substantial assets: a March 2001 financial statement on file with the bank reported a net worth of $33.921 million. He was the chairman of the board, president, and chief executive officer of Western Resources, Inc., the largest electric utility in Kansas.

In 1998, Mr. Wittig borrowed $700,000 to purchase the Landon Mansion in Topeka, Kansas. Two years later, he opened a $1 million line of credit in order to renovate the mansion. By April 2001, Capital City Bank had increased Mr. Wittig's line of credit to $3.5 million.

In early 2001, Michael Earl, another Capital City Bank customer, approached Mr. Weidner about a real estate project in Scottsdale, Arizona that required a $1.5 million investment. Mr. Earl told Mr. Weidner that he was not capable of making this investment, but he asked Mr. Weidner if he knew of anyone who would be interested.

Mr. Weidner informed Mr. Wittig of the Arizona project and asked if he was interested. Mr. Wittig responded that he thought that the investment was a great opportunity but had other projects that he wanted to pursue instead. In particular, Mr. Wittig explained that he thought he could get a better return at less risk by investing in a new utility company called Westar.

Mr. Weidner then told Mr. Earl of his own interest in the Arizona project, and he reached an agreement with Mr. Earl requiring a $1.5 million investment in exchange for an interest in the real estate. Mr. Weidner did not have the $1.5 million he needed to make the investment. Moreover, as to its employees, Capital City Bank rules limited loans not involving a principal residence or children's educational expenses to $100,000. Accordingly, Mr. Weidner needed to look elsewhere for funds, and he approached Mr. Wittig about a loan.

In late April 2001, Mr. Weidner directed his administrative assistant, Christy Gurney, to prepare a loan proposal increasing Mr. Wittig's line of credit from $3.5 million to $5.0 million. The proposal characterized its purpose as a "[s]hort term increase of [Mr. Wittig's] operating line for investments & renovation costs," Wittig App. at 523, adding that "David is the President and CEO of Western Resources, Inc. He utilizes the Line of credit to purchase stock and make business investments. He is also using the line to complete the final renovation costs of the Landon mansion as well as their personal funds." Id. at 524. At trial, Ms. Gurney testified that Mr. Weidner provided her with the information that she included in the loan proposal. The owner of Capital City Bank, Frank Sabatini, approved the proposal on April 27, 2001. According to Ms. Gurney, Mr. Wittig did not review the written loan proposal before it was approved.

On April 30, 2001, however, Mr. Wittig and his wife did sign a "Change In Terms Agreement" related to the $1.5 million increase in the line of credit. A printed section of that document stated that the existing indebtedness was "the promissory note from borrower to lender dated 7/30/00" and that "this change in terms will serve to increase the line from the current availability of $3,500,000 to a line availability of $5,000,000." Id. at 528-29, 532. Mr. Wittig crossed out the $5 million figure and wrote "$6,000,000" instead. The change of terms agreement provided for interest at an initial annual rate of 5.39% and contained provisions regarding default, set off, and collateral. However, the agreement contained no further description of the purpose of the increase in the line of credit. The agreement also included a printed section stating that "[t]his written agreement is the final expression of the agreement between Lender and Borrower and may not be contradicted by evidence of any prior oral agreement or contemporaneous oral agreement between Lender and Borrower." Id. at 528. Finally, a section concerning "nonstandard terms" was left blank.

Mr. Wittig faxed the signed agreement to Ms. Gurney at Capital City Bank. On the same day, April 30, 2001, two transactions posted to Mr. Wittig's account at Capital City Bank: a $1.5 million deposit and a $1.5 million withdrawal. The $1.5 million was routed to Security Title in Phoenix, Arizona, the company handling the real estate transaction in which Mr. Weidner wanted to invest. Ms. Gurney testified at trial that she had not personally ordered the wire transfers and did not know who had done so. However, she added that Mr. Weidner had the authority and ability to make the wire transfers himself.

On the following day, Mr. Weidner and Mr. Wittig executed a promissory note that required Mr. Weidner to pay Mr. Wittig $1.5 million at 7 % interest—in one payment of the $1.5 million principal plus interest (due in a year), as well as quarterly interest payments beginning on August 1, 2001. The note was secured by the accounts, contract rights, and general intangibles of the Arizona real estate project. At trial, an FDIC official testified that this promissory note was not discovered in the regular examinations of the bank's records. In the following weeks, Mr. Wittig received two additional $500,000 increases in his line of credit at Capital City Bank—one on May 14, 2001, and another on June 7, 2001.

Mr. Weidner and Mr. Wittig both filed documents with the bank that failed to disclose the $1.5 million loan between them. First, on May 14, 2001, Mr. Weidner submitted his responses to an officer's questionnaire, part of a regular examination of the bank by the FDIC. One question asked Mr. Weidner to "[l]ist all extensions of credit made for the accommodation or direct benefit of anyone other than those whose names appear either on the note or on other related credit instruments." Wittig App. at 685. Mr. Weidner responded "none." Id. Second, on May 31, 2001, Mr. Weidner submitted an annual personal financial statement on a preprinted form containing a section listing notes, accounts, and bills and contracts payable. Mr. Weidner left that section blank. Finally, on January 8, 2002, Mr. Wittig and his wife submitted an annual financial statement required by the terms of their credit agreement with the bank. The Wittigs stated that they had $5.5 million in liabilities to Capital City Bank but did not list a $1.5 million loan to Mr. Weidner as an asset.

In late July 2001, soon before the first payment on the $1.5 million note from Mr. Wittig came due, Mr. Weidner requested a loan of $20,000 from the Capital City Bank. In the loan application, he stated that the purpose of the...