United States v. Hykel

• Decision Date: 23 May 1972
• Docket Number: No. 71-2091.,71-2091.
• Citation: 461 F.2d 721
• Parties: UNITED STATES of America v. George J. HYKEL et al.
• Court: U.S. Court of Appeals — Third Circuit

461 F.2d 721 (1972)

UNITED STATES of America v. George J. HYKEL et al.

No. 71-2091.

United States Court of Appeals, Third Circuit.

Argued March 23, 1972.

Decided May 23, 1972.

F. Emmett Fitzpatrick, Jr., Fitzpatrick & Smith, Philadelphia, Pa., for appellant.

C. Oliver Burt, III, Asst. U. S. Atty., Louis C. Bechtle, U. S. Atty., Philadelphia, Pa., for appellee.

Before SEITZ, Chief Judge, and ADAMS and HUNTER, Circuit Judges.

OPINION OF THE COURT

HUNTER, Circuit Judge.

Appellant George J. Hykel was convicted for violating 18 U.S.C. § 1006, which forbids, inter alia, officers of federally-insured savings and loan associations from participating "directly or indirectly" in any loan by the savings and loan association, with intent to defraud.¹ It is argued on this appeal that the evidence was insufficient to support the conviction, and that certain of the District Court's evidentiary rulings require a new trial. We find these arguments without merit, and accordingly affirm.

I. SUFFICIENCY OF THE EVIDENCE

18 U.S.C. § 1006 provides, in relevant part:

"Whoever, being an officer . . . of . . . any institution the accounts of which are insured by the Federal Savings and Loan Insurance Corporation . . . with intent to defraud the United States or any agency thereof, or any corporation, institution, or association referred to in this section, participates or shares in or receives directly or indirectly any money, profit, property, or benefits through any transaction, loan, commission, contract, or any other act of any such corporation, institution, or association, shall be fined not more than $10,000 or imprisoned not more than five years, or both."

Thus three elements must be established to secure a conviction under that section: (1) the defendant must be shown to have the requisite connection with one of the institutions covered by the section; (2) there must be the required participation or sharing in the benefits of a transaction with the institution; and (3) there must be the required intent to defraud.

In determining whether the evidence produced at trial was sufficient to sustain the appellant's conviction, "we are required to review the evidence, together with all inferences reasonably and logically deducible therefrom, in the light most favorable to the government." United States v. Sams, 340 F.2d 1014, 1016 (3d Cir.), cert. denied, 380 U.S. 974, 85 S.Ct. 1336, 14 L.Ed.2d 270 (1965); accord, United States v. DeCavalcante, 440 F.2d 1264, 1273 (3d Cir. 1971); United States v. Hamilton, 457 F.2d 95 (3d Cir., 1972).

The appellant was admittedly the president of the Havertown Savings and Loan Association ("Havertown"), the deposits of which were insured by the Federal Savings and Loan Insurance Corporation, in June, 1965. At that time Thomas and Ella Lawson came to him to seek a mortgage loan for property that they wanted to purchase. A proper application was made by the Lawsons, and eventually the loan was made in the amount of $24,800.

During the course of the arrangements to buy the property, the appellant suggested to the Lawsons that the property would be well suited for construction of apartments. Accordingly, the appellant and the Lawsons entered into an agreement to develop the property. The contract was evidenced by a written agreement drawn by Thomas W. Maher, an attorney who also represented Havertown. The agreement was signed late in June, 1965, according to the Lawsons.²

Under the agreement, the Lawsons were to proceed with their purchase of the property, apply for a building permit, and execute and deliver all instruments necessary to carry out the agreement. The appellant was responsible for obtaining necessary financing for the project, and was to pay the engineering, architectural, and legal fees, as well as for the costs of obtaining the building permit and zoning changes. Only after these conditions had been fulfilled would the appellant have any interest in the property.

Pursuant to the agreement the Lawsons went ahead with their purchase of the property. A formal contract to purchase was signed on July 10, 1965, and settlement occurred on September 10, 1965. The appellant was present at the settlement, receiving at that time $800 as reimbursement for architect's fees and zoning costs paid by him, $19.75 as a broker's commission for placing the title insurance, and $190 for fire insurance. (N.T. 2-61 to -62).

Thereafter Landon Courts, Inc., was formed. By deed dated April 28, 1967, and recorded March 12, 1968, the Lawsons conveyed the property to the corporation. Stock certificates of the corporation, dated May 15, 1967, were introduced. Of the three hundred shares outstanding, 147 were issued to Mr. Lawson, 147 were issued in the name of Thomas W. Maher, and six were issued in the name of John G. Siegle. Evidence in form of admissions by the appellant was introduced to show that the shares held by Maher and Siegle were held by them for the appellant. (N.T. 2-3 to -4, 2-47 to -48, 2-87).

The building permit was approved on February 28, 1968, and thereafter construction began. A few days before that date, however, the Lawsons' mortgage loan from Havertown had been repaid in full.³

The appellant's argument, briefly stated, is that since he had no legal interest in the property until after the mortgage loan had been repaid, he did not "participate" or "share" in the mortgage loan within the proscription of 18 U.S.C. § 1006. We cannot accept this contention.

We agree with the court in Beaudine v. United States, 368 F.2d 417 (5th Cir. 1966), that this part of 18 U.S.C. § 1006:

"is intended to do much more than forbid unsophisticated embezzlement, larceny or theft. And that part of the statute with which we are concerned is a typical conflict of interests prohibition. As such it is a congressional recognition of the principle so well grounded in morality and equity that the servant cannot serve two masters and that when this is done without complete disclosure, the law considers that the master-principal\'s interests either will, or are apt to, suffer." 368 F.2d at 420.

Even if we accept the facts alleged by the appellant,⁴ we are left with the fact that Havertown made a mortgage loan to appellant's partners or coventurers to enable them to purchase property upon which the venture depended. That the appellant thereby "participated" or "shared" in the benefits of the loan is too obvious to warrant further elaboration.

Appellant also contends that the evidence is not sufficient to show the necessary intent to defraud. We likewise find this contention to be without merit.

The fact that Havertown and the United States may have suffered no loss through the transaction does not preclude a finding of intent to defraud. United States v. Weaver, 360 F.2d 903 (7th Cir.), cert. denied, 385 U.S. 825, 87 S.Ct. 57, 17 L.Ed.2d 61 (1966); Beaudine v. United States, supra. In the latter case the court stated:

"The fraud commences with the deceit—ostensibly acting solely for the interest of the principal while all the while the faithless servant knows he, too, has a pecuniary interest which will or might subvert his undivided loyalty. When there is the purpose to deceive, it matters not whether the objective is to obtain an advantage or to cause the principal to suffer a loss. Either in effect completed the fraudulent purpose." 368 F.2d at 420.

There was ample evidence here that the appellant did not disclose to Havertown's Board of Directors his interest in the mortgage loan to the Lawsons, and in fact took steps to conceal that interest.

Minutes of a special meeting of Havertown's Board of Directors that supposedly took place on September 8, 1965,⁵ were introduced. Those minutes contained a full disclosure of the appellant's agreement with the Lawsons. Stephen M. Bennett, a retired Pennsylvania bank examiner, testified that in his examination of the Havertown Board of Directors' minutes in May 1966, he found no minutes for any meeting of the Board on September 8, 1965. (N.T. 3-38). Earl Williams, a questioned-document examiner for the FBI, testified that after an extensive examination of the minutes of the special meeting he had concluded that those minutes were typed on different paper and had been stored in a different manner from the rest of the minutes. (N.T. 3-49 to -61). From this testimony the jury might have found that there had been no such special meeting on September 8, 1965, and that the minutes had been drafted at some later date and inserted into the other minutes.

Evidence was also introduced to show that the appellant had attempted to conceal the date of his agreement with the Lawsons. As noted earlier, both Mr. and Mrs. Lawson testified that the agreement was signed in late June, 1965, and on their copy the blank spaces for a date were not filled in. On the appellant's copies, however, the date September 10, 1965, had been inserted. That date, which was the date of settlement on the property, was two days after the date of the purported special meeting. Roman H. Ortals, an examiner for the Federal Home Loan Bank Board, testified that during his examination of Havertown in April and May 1969, he had seen a carbon copy of the agreement which was undated. (N.T. 3-92). Ortals produced a photographic copy of the agreement, which had been given to him at the time, which was undated. (G-53). Ortals also stated that he had asked the appellant about the absence of a date, and was told that "it would be difficult to establish the date of contract by the absence of the date." (N.T. 3-100).

The jury might also have found that the appellant had attempted to conceal his interest in Landon Courts, Inc., by having his stock certificates issued in the names of Thomas W. Maher and John G. Siegle.

This evidence provided an ample basis for a jury finding that the appellant had participated or shared in the benefits of the loan, with intent to defraud.

II. EVIDENTIARY RULINGS

Appellant...