US v. Van Dyke, Cr. 92-CV-4009.
| Decision Date | 01 March 1993 |
| Docket Number | No. Cr. 92-CV-4009.,Cr. 92-CV-4009. |
| Citation | 820 F. Supp. 1160 |
| Parties | UNITED STATES of America, Plaintiff, v. John William VAN DYKE, Jr., Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
Lawrence F. Scalise, John R. Sandre, Des Moines, IA, for defendant.
Judith A. Whetstine, Asst. U.S. Atty., Cedar Rapids, IA, Peter J. Henning, Trial Atty., U.S. Dept. of Justice, Washington, DC, for plaintiff.
VAN GRAAFEILAND, Senior Circuit Judge, Court of Appeals for Second Circuit, Sitting by Designation.
On December 15, 1992, following a two-week trial, the jury convicted John William Van Dyke, Jr. (hereinafter "defendant") on four counts of making false statements for the purpose of influencing a federally insured bank, 18 U.S.C. § 1014, three counts of bank fraud, 18 U.S.C. § 1344, one count of making a false statement in a bank record with intent to defraud or deceive, 18 U.S.C. § 1005, and one count of mail fraud, 18 U.S.C. § 1341. Defendant now moves the court to enter a judgment of acquittal on some or all of the counts, or, in the alternative, to order a new trial with respect to all of the counts. Because the court finds no merit in either request, the motion is denied in its entirety.
The court has considered the evidence as it applies to each count and, viewing it in the light most favorable to the Government, is satisfied that the jurors, as rational fact-finders, could, as they did, find defendant guilty on all counts beyond a reasonable doubt. The court also has weighed the evidence for itself and is satisfied that in all respects the jury's verdict is supported by the great weight of the evidence. See United States v. Rodriguez, 812 F.2d 414, 416-17 (8th Cir.1987). Indeed, much of the Government's proof was documentary in form and was not, in fact could not, be disputed. Accordingly, a lengthy and detailed review of the testimony is not required.
When Congress passed the Financial Institutions Regulatory and Interest Rate Control Act of 1978, Pub.L. No. 95-630, 92 Stat. 3641, it was responding in part to complaints concerning improper insider transactions. "Problem banks and insider abuses", it said, H.R.Rep. No. 1383, 95th Cong., 2d Sess. 10, reprinted in 1978 U.S.C.C.A.N. 9273, 9282.
Between 1982 and 1987 defendant was President and Chairman of the Board of Toy National Bank, a small-to-medium sized bank located in Sioux City, Iowa. A family trust, of which defendant was trustee, was a substantial Bank shareholder. Defendant, through or with other family members, also had interests in other Iowa banks located in Holstein, Galva and Alta. Toy National Bank was not a healthy bank. A report of the Comptroller of the Currency, dated October 1, 1986, which followed a May 30, 1986 examination by a Federal Deposit Insurance Corporation Examiner, criticized defendant in part for this condition, citing his failure to comply with governing statutes regarding lending limits and disclosure of financial information. The Bank's directors were instructed to take action to ensure that apparent violations were corrected and that procedures and policies were put in place to ensure future compliance. The directors attempted to do so, adopting regulations and ethical standards which imposed lending limits on the Bank's executive officers and required full disclosure of their borrowings. Most of the offenses of which defendant subsequently was convicted arose out of his maneuvers to evade these rules and regulations. The jury could find, as it did, that the defendant acted knowingly and with wrongful intent. See United States v. Cordell, 912 F.2d 769, 775 (5th Cir.1990).
In February of 1986, defendant, as trustee of the family trust, borrowed $82,200 from Norwest Bank in Sioux City, Iowa, for the stated purpose of purchasing stock in Toy National Bank. The actual purpose of the loan was the payment of defendant's personal overdrafts at First Trust and Savings Bank of Galva, Iowa. (Count 1).
In September of 1986, defendant borrowed $18,000 from Norwest Bank for the stated purpose of paying property taxes, when the actual purpose was the payment of a personal loan at Holstein State Bank. (Count 2).
In October of 1986, defendant borrowed $20,000 from Norwest Bank for the stated purpose of purchasing stock in Toy National Bank, when the actual purpose was the making of a payment on a trust loan at the Holstein Bank. (Count 3).
In February of 1987, defendant borrowed $100,000 from Crawford County Trust and Savings Bank of Denison, Iowa, for the stated purpose of purchasing Toy stock, when the actual purpose was the payment of overdrafts on defendant's personal account at Norwest Bank. (Count 5).
Unable to mount a satisfactory challenge to the Government's proof of the above facts, defendant challenges the court's charge to the jury on the pertinent law. The court instructed the jury that in order to convict defendant of violating section 1014, the Government had to prove that defendant made a materially false statement or report to a bank knowing that it was false, and that he made the false statement or report with the intent to influence the bank's action upon his loan application. The court then instructed the jury as follows:
In each of the four counts, an allegedly false statement was made having to do with the purpose of the loan or the loan renewal, that is, the reason for borrowing the money. I charge you that this was material information and, as such, it is governed by the provisions of section 1014. In other words, a misstatement concerning the purpose for which money is borrowed from a bank is a misstatement of a material fact.
While conceding that materiality was an issue for the court, defense counsel contend that the court misstated the law on materiality. Counsel misunderstand the law. Case after case, in the Eighth Circuit as elsewhere, hold that the stated purpose of a loan is a material fact. As Judge Posner, writing for the Seventh Circuit in United States v. Shively, 715 F.2d 260, 264 (1983), cert. denied, 465 U.S. 1007, 104 S.Ct. 1001, 79 L.Ed.2d 233 (1984), bluntly put it:
There is no question that by signing a promissory note which contained a statement that he knew was false (that the purpose of the loan was "business expense and marketing operation") Pardee was making a false statement within the meaning of the statute.
See also United States v. Segal, 649 F.2d 599, 601 (8th Cir.1981); United States v. Griffin, 579 F.2d 1104, 1109 (8th Cir.), cert. denied, 439 U.S. 981, 99 S.Ct. 569, 58 L.Ed.2d 652 (1978); Brilliant v. United States, 297 F.2d 385, 389 (8th Cir.), cert. denied, 369 U.S. 871, 82 S.Ct. 1140, 8 L.Ed.2d 275 (1962); United States v. Hockridge, 573 F.2d 752, 755 n. 10 (2d Cir.), cert. denied, 439 U.S. 821, 99 S.Ct. 85, 86, 58 L.Ed.2d 112 (1978); United States v. Cleary, 565 F.2d 43, 46 (2d Cir.1977), cert. denied, 435 U.S. 915, 98 S.Ct. 1469, 55 L.Ed.2d 506 (1978).
Defense counsel contend that unless defendant's misstatement of purpose actually influenced the lending institutions, the misstatement could not be material. Needless to say, counsel submitted no authority to support this contention. The question is not whether defendant's misstatements actually influenced the banks; it is whether the misstatements had the capability or tendency to influence them. See United States v. Copple, 827 F.2d 1182, 1187 (8th Cir.1987), cert. denied, 484 U.S. 1073, 108 S.Ct. 1046, 98 L.Ed.2d 1009 (1988); United States v. Whitaker, 848 F.2d 914, 916 (8th Cir.1988).1
The jury's verdicts on Counts 1, 2, 3 and 5 were based on correct instructions as to the law and were fully supported by the evidence.
The court began its instructions concerning Counts 4, 6, 7, 8 and 9 with the following general statement:
Now let us turn to the remaining counts in the indictment which, as I have just told you, are substantially different from Counts 1, 2, 3 and 5. That difference lies in the fact that while Counts 1, 2, 3 and 5 involve only the intent to influence, the remaining counts involve intentions to deceive or defraud. This creates the issue of whether the defendant acted in good faith in performing the acts charged against him in Counts 4, 6, 7, 8 and 9. Good faith is a complete defense to the charges contained in these counts if it is inconsistent with those charges.
The court then instructed the jury on the subject of good faith and the Government's burden of proving its absence. Following this, the court turned to the individual counts.
THE CHECK KITING COUNT, 18 U.S.C. § 1344(a)(1)
The Government offered unassailable documentary evidence to establish that defendant engaged in a procedure commonly known as "check kiting." The following checks, all drawn against insufficient funds, were involved:
Date Drawn on Defendant's Amount Deposited in Defendant's
Account at Account at
February 6, 1987 Toy National Bank $ 50,000 Norwest Bank
February 9, 1987 Norwest Bank 51,000 Toy National Bank
February 12, 1987 Toy National Bank 181,000 Norwest Bank
February 13, 1987 Norwest Bank 190,000 Toy National Bank
February 17, 1987 Toy National Bank 110,000 Norwest Bank
The court did not instruct the jury that check kiting per se is a federal offense. It charged instead that, before the jurors could find the defendant guilty of bank fraud as charged in Count 4 of the indictment, they must find that, in doing the kiting, defendant was executing or attempting to execute a scheme or artifice to defraud one or both of the banks. The court then discussed the essential elements of a scheme to defraud,...
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