U.S. v. Wilson

• Decision Date: 18 September 1974
• Docket Number: No. 73-1723,73-1723
• Citation: 500 F.2d 715
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Travis Leon WILSON, Orrin Shaid, Jr., Louis Levin, Jerald Aaron White, JasonN. Winthrop and David Levi White, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 715

500 F.2d 715

UNITED STATES of America, Plaintiff-Appellee, v. Travis Leon WILSON, Orrin Shaid, Jr., Louis Levin, Jerald Aaron White, JasonN. Winthrop and David Levi White, Defendants-Appellants.

No. 73-1723.

United States Court of Appeals, Fifth Circuit.

Sept. 18, 1974, Rehearing Denied Nov. 18, 1974.

Tomas G. Pollard, Jr., Tyler, Tex., (Court-appointed), for Travis Leon wilson.

Thomas Roberson, Houston, Tex. (Court-appointed), for Jerald Aaron White.

T. D. Smith, William E. Heitkamp, Houston, Tex., for Orrin Shaid, Jr.

R. James George, Jr., Austin, Tex., for Louis Levin.

Herbert J. Coleman, Houston, Tex., for Jason N. Winthrop and David Levi White.

Roby Hadden, U.S. Atty., Tyler, Tex., Joseph C. Hawthorne, Asst. U.S. Atty., Beaumont, Tex., for the United States.

Before GOLDBERG, GODBOLD and MORGAN, Circuit Judges.

LEWIS R. MORGAN, Circuit Judge.

The appellants were indicted in May, 1972, in a 60 count indictment for various acts involving the purchase and operation of the Chireno State Bank of Chireno, Texas, and the First State Bank of Grandview, Texas. All defendants were tried together in a trial which covered a period of approximately four weeks. The indictment charged violations of 18 U.S.C. 2, 215, 371, 656, 1005 and 1014.

FACTS:

Orrin Shaid, Jr., in February of 1971, contacted Nathaniel Price, apparently for the purpose of getting Price to help him locate a bank that Shaid might purchase. Price contacted V. L. Evans, who subsequently located the Chireno State Bank, which was at that time for sale. Evans introduced Shaid to the owner of the Chireno State Bank, J. R. Lyon, Jr., and Lyon later designated John Hooper, an employee of his, to represent Lyon in negotiations for the sale of the Chireno Bank to Shaid. At approximately the same time, Travis Leon Wilson was selected to be president of and operate the Chireno State Bank if the Shaid plan worked out.

Because Shaid found that it would be impossible for him to purchase the Chireno bank himself, it was suggested that he obtain some additional backers. The evidence indicates Louis Levin, a financial consultant, was asked if any of his customers would be interested in investing in a small bank of this nature. Four of Levin's customers did apparently buy Chireno State Bank stock and signed notes for that purpose. The group that eventually purchased the bank consisted of Orrin Shaid, Jr., Orrin Shaid, Sr., Travis Leon Wilson, S. Nathaniel Price, Louis Levin, David Levi White, Jerald Aaron White, Charles St. Clair Scott, and George Littlefield. Loans from the Franklin Bank in Houston, Texas, the Northeast Bank, and the Orange Bank were used to purchase Chireno State Bank's stock, which stock was then put up as security for the loans.

Jerald White, David White, and George Littlefield stated during the investigation prior to the grand jury indictment that one of the reasons they signed a note for the purchase of Chireno State Bank stock was to secure a more readily available line of credit for loans and financing. In other words, it appeared to be a policy of Shaid, Jr. to promise readily available loans to people who would join him in the purchase of the Chireno Bank. The evidence at trial demonstrated that each of Levin's customers who had invested in the Chireno State Bank did subsequently obtain a large unsecured loan which was never repaid. Starting March 5, 1971, when Travis Leon Wilson began taking over management of the Chireno State Bank, numerous unsecured loans were made, against bank policy, to members of the control group mentioned above. Financial statements of various members of the control group were on file at the bank, but were found to be false. During the period following purchase of control of this bank, there was fast and furious financial manipulation of the funds of the bank by various members of the Shaid group. In April of 1971, Orrin Shaid, Jr. began negotiating to purchase the First State Bank of Grandview, Texas. In order to accomplish this, further financial manipulations were necessary. After the First State Bank of Grandview was acquired, Travis Leon Wilson, who had assumed its management, began granting unsecured loans to members of the group. These loans included $31,500 to S. Nathaniel Price and a $30,778.50 unsecured loan to Orrin Shaid, Jr. The total of these loans, $123,781.20, was used to write off the notes and interest at the Chireno State Bank which were owed by members of the Shaid group. As a result of this complex set of financial dealings and other irregularities, the directors of the First State Bank of Grandview removed Travis Leon Wilson as director and disapproved the unsecured loans mentioned above. On June 9, 1971, a demand was made for payment of the notes, and when no payment was forthcoming the notes were charged off by the bank examiners on June 12, 1971. On June 14, 1971, various unsecured notes in the names of the defendants on the books of the Chireno State Bank were charged off.

It should be noted that on June 4, 1971, a demand was made of Shaid, Jr., Shaid, Sr., Littlefield, Levin, Scott, Jerald White, David White, Price, and Wilson for payment of the notes they had placed in the Franklin Bank of Houston, Texas, to finance the purchase of the Chireno State Bank. Upon failure of payment, the notes were charged off. The Board of Directors of the Chireno State Bank and the state and federal bank examiners then met on June 12, 1971, for the purpose of getting the Board to sign a closure statement closing down the Chireno State Bank. The statement provided that the bank was to be closed by 9:00 A.M., June 14, 1971 unless $275,000 in cash could be put back in the bank to recapitalize it. Two hundred thousand dollars was raised by a group of 19 Chireno townspeople not associated with these financial dealings and was deposited in the bank. For that reason, the bank remained open and continued to do business as usual and is still doing business.

As a result of these complex and rapid fire financial maneuvers an investigation was instituted by federal and state authorities. In May of 1971, the 60 count indictment was returned against various defendants, including appellants. The appellants each received individual consideration by this court.

ORRIN SHAID, JR.

Orrin Shaid, Jr. first argues that 18 U.S.C. 656, which forbids the embezzlement, abstraction or willful misapplication of bank funds by one connected in any capacity with the federally insured bank is unconstitutional because of vagueness. We find there to be no basis to this argument.

Appellant argues that the statute is unconstitutionally vague because the term 'willfully misapplied' contained in 18 U.S.C. 656 has no commonly accepted technical meaning. It appears, however, that courts have defined this term as covering actions which are not covered by the technical terms 'embezzlement' or 'abstraction.' Courts have held that the acts which are obviously improper and amount to the unjustified use of bank funds and which amount to more than mere bad judgment or maladministration constitute 'willfulness.' United States v. Heinze, 161 F. 425 (2 Cir. 1908), United States v. Fortunato, 402 F.2d 79 (2 Cir. 1968), cert. den. 394 U.S. 933, 89 S.Ct. 1205, 22 L.Ed.2d 463 (1969), Mulloney v. United States, 79 F.2d 566 (1 Cir. 1935), cert. den. 296 U.S. 658, 56 S.Ct. 383, 80 L.Ed. 468 (1935). In fact, courts have generally held that the gist of the offense of willful misapplication is the conversion of funds of a federally insured bank by one connected in some capacity with the bank either to his own use or to the use of a third person, with the intent to injure or defraud the bank. United States v. Steinman, 172 F. 913 (3 Cir. 1909), United States v. Morse, 161 F. 429 (2 Cir. 1908), aff'd. 174 F. 539 (2 Cir. 1909), cert. den. 215 U.S. 605, 30 S.Ct. 406, 54 L.Ed. 346 (1909). Furthermore, recent cases have held that reckless disregard of the interest of a bank is, for the purpose of 'willful misapplication,' the equivalent of intent to injure or defraud. Logsdon v. United States, 253 F.2d 12 (6 Cir. 1958), Giragosian v. United States, 349 F.2d 166 (1 Cir. 1965), vacated and remanded on other grounds. It should be remembered above all else that this statute was enacted to preserve the FDIC from loss and to preserve and protect the assets of banks having a federal relationship. Garrett v. United States, 396 F.2d 489 (5 Cir. 1968), cert. den. 393 U.S. 952, 89 S.Ct. 374, 21 L.Ed.2d 364, reh. den. 393 U.S. 1046, 89 S.Ct. 615, 21 L.Ed.2d 599 (1968).

Shaid, Jr. also contends that the failure of the trial court to grant his motion for severance deprived him of his Sixth Amendment right to confront adverse witnesses. Prior to the commencement of the evidence, Shaid, Jr. filed a motion for severance on the grounds that (1) the defendants were improperly joined because the offenses charged were not the same or of similar character and were not based upon the same act or transaction; and (2) in the event that separate trials were held the appellant would be able to call as witnesses many of the other defendants in the trial and such witnesses would be able to freely testify about events within their knowledge in aid of Shaid, Jr.'s defense. A thorough perusal of the record by this court, however, has convinced us that no evidence was presented in support of this motion and the lower court's overruling of the motion was entirely proper.

To acquire severance in order to obtain codefendants' testimony it must be shown that the testimony would be exculpatory. The movant must also make a clear showing of what the co-defendants would testify to. The court is not required to sever where the possibility of the co-defendants testifying is merely colorable and there is no showing that there is anything more than a gleam of possibility in the defendant's eye. Byrd v. Wainwright, 428 F.2d. 1017 (5 Cir. 1970). Here, no such showing was made.

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