U.S. v. Yoakam, s. 96-3207

• Decision Date: 27 June 1997
• Docket Number: 96-3292,Nos. 96-3207,s. 96-3207
• Parties: 97 CJ C.A.R. 1084 UNITED STATES of America, Plaintiff-Appellee, v. Terry G. YOAKAM, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1346

116 F.3d 1346

97 CJ C.A.R. 1084

UNITED STATES of America, Plaintiff-Appellee, v. Terry G. YOAKAM, Defendant-Appellant.

Nos. 96-3207, 96-3292.

United States Court of Appeals, Tenth Circuit.

June 27, 1997.

Robert V. Eye (Pedro L. Irigonegaray and Melissa A. Kelly, with him on the brief), Irigonegaray & Associates, Topeka, KS, for Defendant-Appellant.

Leon J. Patton, Assistant United States Attorney (Jackie N. Williams, United States Attorney, with him on the brief), Office of the United States Attorney, Kansas City, KS, for Plaintiff-Appellee.

Before SEYMOUR, Chief Judge, LOGAN and KELLY, Circuit Judges.

PAUL KELLY, Jr., Circuit Judge.

More than two years after a fire destroyed Tholen's Supply Company, Terry Yoakam, a shareholder and the operator of the business, was indicted on eight counts of arson, mail fraud, and wire fraud, in violation of 18 U.S.C. §§ 844(h)(1), 1341, and 1343. Mr. Yoakam was tried before a jury and convicted on all counts. After the jury returned its verdict, Mr. Yoakam filed a motion for acquittal, which the district court denied. Mr. Yoakam now appeals his conviction on three grounds, including that the district court abused its discretion in not granting a new trial based on a claim of patently incredible evidence. We exercise jurisdiction under 28 U.S.C. § 1291, and reverse. Given our resolution, we need not address Mr. Yoakam's other two grounds for appeal.

Background

Mr. Yoakam and his wife owned twenty-five percent of Tholen Supply Company (Tholen's) in Leavenworth, Kansas. The remainder of the business was owned by three other couples, including Mr. Yoakam's in-laws. The shareholders had purchased the business in 1982 with the understanding that, at some undetermined point in the future, Mr. and Mrs. Yoakam might buy out the others and become sole owners of Tholen's.

In 1990, Mr. Yoakam began what became protracted negotiations to buy out the other shareholders. Mr. Yoakam's in-laws agreed to give their shares to Mr. and Mrs. Yoakam in return for life insurance policies paid for by Tholen's. The Yoakams agreed to purchase the remainder of the company from the other shareholders for $400,000. The Yoakams had completed the necessary paperwork for a Small Business Administration loan in the amount of $450,000, and were to attend a meeting of the shareholders on the night of September 22, 1992, to finalize the terms of the agreement. That very evening, however, Tholen's burned to the ground.

On that evening, Mr. Yoakam, three employees, and one customer were in the building until approximately 5:03 p.m. Two minutes later, Mr. Yoakam left, the last person known to have been in the building before the fire was reported. Approximately seven minutes later, someone from a nearby office saw smoke at Tholen's and called 911. Firefighters arrived within a few minutes, but by then--approximately fifteen minutes after everyone left--the building was totally engulfed in flames. The firefighters determined that the building could not be saved, and merely contained the fire from the outside to prevent it from spreading to nearby buildings.

On March 10, 1995, Mr. Yoakam was indicted on eight counts of arson, wire fraud, and mail fraud. Counts 1 and 2 charged Mr. Yoakam with setting fire to Tholen's for the purposes of committing mail fraud. Counts 3, 4, 5 and 6 charged Mr. Yoakam with using the mail to fraudulently obtain insurance proceeds resulting from the fire. Counts 7 and 8 charged Mr. Yoakam with using interstate wire communications (i.e., a fax machine) to fraudulently obtain insurance proceeds resulting from the fire.

The government's theory at trial was that Mr. Yoakam set the fire in order to avoid entering an unfavorable business transaction--the acquisition of full ownership of Tholen's. The government sought to prove that the fire was the result of arson, and that Mr. Yoakam had the opportunity to set the fire because he was the last person to leave. The government also presented evidence showing that Tholen's was having financial difficulties, and that Mr. Yoakam had agreed to pay $400,000 to acquire half of the business, which was not worth $800,000, but only $474,665.

The government called three fire experts, one of whom was the investigator for Tholen's insurance company. All three experts opined that the fire was caused by arson. The investigators testified that they saw evidence of a liquid accelerant poured in two different places. The investigators also based their arson finding on the fact that an unburned trail of computer paper was spread around the office area of the building, presumably to accelerate the blaze.

The government also called a government financial auditor who testified that Tholen's was under financial stress. He based this conclusion upon his review of Tholen's financial records, and presented some financial data at trial. For example, the auditor calculated Tholen's net worth of $474,665 from the most current financial statements. The auditor also testified that Tholen's gross sales declined from $2.4 million in 1984 to $1.2 million in 1990, and that the company had averaged only $7,200 in net profit from 1986 to 1992. He further testified that assets shrunk from $1.3 million in 1984 to $804,000 in 1991, and that in the accounting year before the fire, monthly sales were down twenty-five percent from the previous year.

The government's auditor also testified regarding Tholen's liquidity problems. It had been late on its bank loan payments eight times before the fire, and overdue payroll tax deposits in 1992 resulted in $2,000 in late fees. The auditor also testified that Tholen's checking account was overdrawn 43 times from September 1991 to August 1992, resulting in $900 in overdraft charges.

In response to the government's evidence, Mr. Yoakam testified on his own behalf and denied having set Tholen's on fire. He also called Patrick McGinley, a fire expert, who opined at trial that the fire was of accidental origin. Mr. McGinley's theory was that the fire had smoldered in the ceiling for days before finally erupting shortly after everyone left the building on September 22. In his opinion, the fire originated near an air conditioning unit in the ceiling as the result of a power outage a few days earlier. Mr. McGinley's theory was supported by two witnesses who smelled smoke and burning tar outside Tholen's earlier in the day, and by testimony of the firefighters on the scene, who saw the fire at the ceiling level. Mr. McGinley further countered the government fire experts by asserting that the computer paper could have been blown from the top of file cabinets to its resting place by the circular patterns sprayed from fire hoses.

Mr. Yoakam denied the government's contention that he had obligated himself to pay an inflated price to acquire complete ownership of Tholen's. He testified that, even on the evening of the scheduled meeting to finalize the terms of the sale, he was under no obligation to complete the acquisition; this testimony was corroborated by one of the other shareholders. Mr. Yoakam agreed that Tholen's financial statements showed that assets exceeded liabilities by only $474,665, but explained that he disagreed with the government auditor's dire assessment of Tholen's financial condition.

Mr. Yoakam acknowledged that Tholen's faced liquidity problems, and that he had taken some steps to improve the company's liquidity by laying off three employees--including Mrs. Yoakam--and cutting his own salary from $42,720 to $33,000 in 1990. He and the other shareholders testified that Tholen's financial difficulties were tied to the Leavenworth economy, which had been depressed, and that they anticipated a rebound in the economy and subsequent increases in sales. Mr. Yoakam also elicited testimony from government witnesses that, despite late payments and a negative cash balance in late 1991 and 1992, Tholen's always covered its payroll and other liabilities, and had reduced its debt from...