U.S. v. Wintermute

• Decision Date: 11 April 2006
• Docket Number: No. 04-4083.,No. 05-2433.,04-4083.,05-2433.
• Citation: 443 F.3d 993
• Parties: UNITED STATES of America, Appellee, v. Susan WINTERMUTE, Appellant. United States of America, Appellee, v. Clarence Stevens, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

443 F.3d 993

UNITED STATES of America, Appellee, v. Susan WINTERMUTE, Appellant.

United States of America, Appellee, v. Clarence Stevens, Appellant.

No. 04-4083.

No. 05-2433.

United States Court of Appeals, Eighth Circuit.

Submitted: November 17, 2005.

Filed: April 11, 2006.

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Peter W. Smith, argued, New York, NY (Helen D. Chaitman, New York, N.Y., on the brief), for appellant.

Jason Coatney, argued, Springfield, MO, for appellant Stevens.

Ellen R. Meltzer, argued, Dept. of Justice, Washington, D.C. (Jack B. Patrick and Tonya K. Kowitz of the Dept. of Justice, Washington, D.C., on the brief), for appellee.

Before ARNOLD, BEAM, and RILEY, Circuit Judges.

RILEY, Circuit Judge.

Susan Wintermute (Wintermute) appeals her convictions for conspiracy to defraud the United States in violation of 18 U.S.C. § 371 and making a false statement to the Office of the Comptroller of the Currency (OCC) in violation of 18 U.S.C. § 1001, arguing the district court erred by (1) excluding her expert witness's testimony, and (2) declining to hold an evidentiary hearing regarding her allegations of tainted jury deliberations. Wintermute's co-defendant, Clarence Stevens (Stevens), appeals his conviction for conspiracy to defraud the United States, arguing insufficient evidence supported his conviction. Stevens also appeals his sentence based on numerous grounds. We affirm Wintermute's and Stevens's convictions, but remand for resentencing of Stevens.

I. BACKGROUND

In 1994, in Springfield, Missouri, Wintermute and her now deceased ex-husband Damian Sinclair (Sinclair) co-founded a consumer finance company called Sinclair Financial Group (SFG). SFG raised capital by selling time certificates or fixed rate investments to private investors and small investment firms in Missouri, and used the generated funds to buy installment loan contracts, including less profitable manufactured housing loans. Wintermute served as general counsel and director. During the same time, Sinclair also formed Sinclair Management Services (SMS), which he wholly owned. SMS serviced the discount retail installment contracts SFG purchased. Wintermute served as an officer and director of SMS, and later became vice president. Wintermute and Sinclair were paid salaries by both SFG and SMS.

In July 1997, Sinclair hired Stevens, a certified public accountant, as Chief Financial Officer of SFG; one month later Stevens became its president. Sinclair later hired Scott Pope (Pope) as an attorney for SFG. Pope eventually became SFG's corporate secretary and general counsel.

Sinclair desired an institution to provide a consistent source of funds for SFG. He sought a bank and finance company that could work together. Realizing there would be conflicts of interest if he had a stake in both such a bank and his finance company, Sinclair sold SFG to Stevens. On July 13, 1999, Sinclair, Wintermute, and Stevens signed a Purchase and Sale Agreement (P & S Agreement). It declared Wintermute and Sinclair would sell SFG to Stevens for $9.5 million: $5 million in SFG cash and $4.5 million in consumer loan installment contracts from SFG. The sale closed on October 16, 1999, and a closing memorandum included changes to the P & S Agreement, showing a new purchase price of $14.5 million: $5 million cash from SFG, $3.7 million in manufactured home loans, forgiveness of an $800,000 mortgage debt of Sinclair and Wintermute, and a $5 million unsecured personal note from Stevens to Sinclair and Wintermute. The closing memorandum stated SMS was not being sold along with SFG and amounts owed to SFG by SMS were not affected by the sale. This included a $1.1 million loan from SFG to SMS, which in turn was loaned to Sinclair, Wintermute, and others, to finance collection efforts and to pay for the Sinclair Bank and Trust charter. Stevens changed the name of SFG to Stevens Financial Group (StFG); however, SFG and StFG were used interchangeably in the business. Pope served as general counsel, secretary, and a director of StFG.

In July 1999, Sinclair and Wintermute applied to purchase Texline State Bank. In the application, Sinclair and Wintermute listed their employment with SFG, but omitted any affiliation with SMS. Pope prepared the application under Sinclair's direction, and was told to omit reference to SMS because it was being shut down. Sinclair and Wintermute signed the application, but Sinclair eventually withdrew it.

On January 3, 2000, DD & F Consulting Group (DD & F) filed an Application for Change in Control (Application) with the OCC on behalf of Sinclair and Wintermute to acquire Northwest National Bank (NNB). NNB had significant problems and was operating under a memorandum of understanding at the time. Sinclair and Stevens had met with Brenda McNeese (McNeese), senior corporate analyst with the OCC, in December 1999. Sinclair disclosed to McNeese the sale of SFG to Stevens and discussed his proposal to use NNB to buy loans in bulk from SFG and other entities. When McNeese asked Sinclair about his ownership interests, Sinclair named some farms, but not SMS. Stevens did not correct Sinclair.

The Application contained an Interagency Biographical and Financial Report (IBF Report) signed on December 8, 1999 by Sinclair and Wintermute, which Pope had completed, in part, based on the information included in the application to purchase Texline State Bank. Pope again was directed to omit reference to SMS and the $5 million personal note from Stevens to Sinclair and Wintermute, with the explanation there was no decision of how to dispose of the debt from SMS to SFG, and the note from Stevens would show conflicting ties to an entity Sinclair wanted to do business with after acquiring NNB.

Pope gave the Application to Wintermute to review and sign. Wintermute later signed the IBF Report in Pope's presence, certifying "the information contained in the biographical report and/or financial report has been carefully examined by me and is true, correct, and complete." The IBF Report omitted (1) Sinclair's and Wintermute's employment with SMS for the previous five years, (2) Sinclair's association as owner and director of SMS, (3) Wintermute's association as officer and director of SMS, (4) SMS owing StFG more than $5 million, and (5) Stevens's $5 million debt to Sinclair and Wintermute.

McNeese sent questions to Sinclair about the Application, including inquiries regarding the sale of SFG. On January 31, 2000, DD & F responded, stating the total consideration for the sale was $9.5 million in cash and $4.5 million in receivables that SFG serviced. Sinclair indicated the manufactured housing loans he and Wintermute owned would not be sold to the bank. The response letter revealed the existence and Sinclair's sole ownership of SMS, and explained SMS serviced and collected retail installment contracts and mortgage loans originated and purchased by SFG.

McNeese testified at trial that because Sinclair omitted required information on the IBF Report including employment with SMS and SMS notes receivable, she believed SMS had been sold to Stevens along with SFG, and StFG serviced the loans Sinclair received when he sold SFG. McNeese further testified the SFG-SMS relationship was significant because the bank was going to be doing business with SFG, and all transactions needed to be at arm's length with full disclosure, with no conflicts of interest. McNeese added even if there were to be no transactions between SMS and the bank, the information was still important to the OCC.

The OCC approved the Application on February 29, 2000, and Sinclair National Bank (SNB) began operating as a federally insured bank on March 7, 2000. Sinclair and Wintermute paid $2.75 million and injected $2 million in capital into SNB. SNB's administrative headquarters were in SFG's building in Springfield, Missouri. Sinclair was chairman, Wintermute was vice chairperson, and both were directors.

SNB immediately began purchasing sub-prime loans from SFG. On March 21, 2000, the board, including Wintermute and Sinclair, ratified the purchase of $2 million in automobile retail installment contracts from SFG, and authorized the future purchase, on a monthly basis, of $2 million in automobile retail contracts and $500,000 in manufactured home contracts. Three of the manufactured home contracts sold by SFG to SNB on April 3 had been sold to SFG by Wintermute just days earlier; four more loans sold to SNB by SFG similarly had been sold by Wintermute after the OCC approved the Application. SFG accountant Lonnie Pederson (Pederson) testified (and check requests corroborated) Stevens instructed him to pick loans worth $100,000 out of Wintermute's portfolio and sell them to SFG, then turn around and sell them to SNB. Wintermute never advised SNB's board her loans were being sold to SNB. Between March 2000 and March 2001, SFG sold SNB a total of $15,724,242 in loans; in mid-2000, $5 million in loans were sold back to SFG to avoid a lending limit violation.

On May 1, 2000, in response to the OCC's inquiries about Sinclair's relationship with SFG, Sinclair filed a statement of interest, declaring he was SMS's sole owner, which was a "non-operating shell." On May 5, 2000, the OCC received an audited financial statement of SFG as of December 31, 1999. In the financial statement, the actual $14.5 million sale price of SFG was revealed to the OCC for the first time. It also revealed that the leveraged buyout was financed by taking $5 million cash out of SFG and by Stevens executing a $5 million personal note to Sinclair and Wintermute, and that SMS owed SFB $5.3 million, including $4.8 million in advances.

The financial statement raised questions with the OCC about non-disclosed related interests on the Application. On May 18, 2000, the OCC asked Sinclair for further disclosure of the relationships among Sinclair, SNB, StFG, SMS, and other related entities. Sinclair responded...