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Parties Involved:
Federal Deposit Insurance Corporation
Amicus Curiae
United States of America
Appellant
Gary R. Walker
Appellee

Document Text:

PUBLISH 

UNITED STATES COURT OF 

TENTH CIRCUIT 

UNITED STATES OF AMERICA, 

Plaintiff-Appellant, 

vs. 

GARY R. WALKER, 

Defendant-Appellee. . . 

F 1 Leo~J{p~~b United s'f:~h circuit 

OCT 1 7 1991 

APPEALS R 

ROBERT L. HOECKE " 

Clerk 

No. 91-3069 

Appeal from the United States District Court 

for the District of Kansas 

(D.C. No. 90-10088-01) 

Lanny D. Welch, Assistant United States Attorney (Lee Thompson, 

United States Attorney, with him on the brief), Wichita, Kansas, 

for Appellant. 

Jerry L. Griffith, of Griffith & Griffith, Derby, Kansas, for 

Appellee. 

Ann S. DuRoss, Assistant General Counsel; Howard S. Feinstein, 

Assistant General Counsel; Joan E. Smiley, Senior Counsel; Robert 

D. McGillicuddy, Deputy Senior Counsel, and John T. Mahshie, 

Attorney (on the brief), Washington, D.C., for Federal Deposit 

Insurance Corporation, Amicus Curiae. 

Before ANDERSON and TACHA, Circuit Judges, and CHRISTENSEN, 

District Judge.* 

CHRISTENSEN, District Judge. 

This is a direct appeal by the United States which challenges 

the district court's pretrial dismissal of an information charging 

* A. Sherman Christensen, Senior Judge, United States District 

Court for the District of Utah, sitting by designation. 

Appellate Case: 91-3069 Document: 01019291044 Date Filed: 10/17/1991 Page: 1 
the appellee, Gary R. Walker, with violations of 18 u.s.c. § 212. 1 

Exercising jurisdiction pursuant to 18 u.s.c. § 3731, we 

reverse. 

Both counts of the information2 upon motion of the defendant 

were dismissed by the district court on the ground that the 

information failed to charge a violation of section 212 -- "Gary 

1 

2 

Section 212 in pertinent part reads: 

Whoever, being an officer, director or employee of 

a financial institution which is a member of the Federal 

Reserve System, or the deposits of which are insured by 

the Federal Deposit Insurance Corporation • • . makes or 

grants any loan or gratuity, to any examiner or 

assistant examiner who examines or has authority to 

examine such bank, • . • shall be fined not more than 

$5,000 or imprisoned not more than one year, or both; 

and may be fined a further sum equal to the money so 

loaned or gratuity given. 

INFORMATION 

The United States Attorney charges: 

COUNT I 

On or about October 4, 1986; in the District of 

Kansas, GARY R. WALKER, defendant herein being an 

officer or employee, that is, President of the Sylvia 

State Bank, Sylvia, Kansas, a bank the deposits of which 

were insured by the Federal Deposit Insurance 

Corporation, knowingly made or granted a loan to Frank 

Waitt, a bank examiner for the State of Kansas who 

examined or had the authority to examine the Sylvia 

State Bank, in that he obtained a loan in the amount of 

$10,000.00 for Frank Waitt from F. J. Farmer, a customer 

of the Sylvia State Bank, in violation of 18 u.s.c. 212. 

COUNT II 

On or about November 5, 1987, in the District of 

Kansas, GARY R. WALKER, defendant herein, being an 

officer or employee, that is, President of the Sylvia 

State Bank, Sylvia, Kansas, a bank the deposits of which 

were insured by the Federal Deposit Insurance 

Corporation, knowingly made or granted a loan to Rebecca 

H. Emery, a bank examiner for the State of Kansas who 

examined or had the authority to examine the Sylvia 

State Bank, in that he obtained a loan in the amount of 

$7,000.00 for Rebecca H. Emery from F. J. Farmer, a 

customer of the Sylvia State Bank, in violation of 18 

u.s.c. 212. 

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R. Walker did not 'make or grant any loan' within the meaning of 

18 u.s.c. § 212." United States v. Walker, 755 F.Supp. 972, 977 

(D. Kan. 1991). 

THE BASIC ISSUE, RULES OF CONSTRUCTION, AND STANDARD OF REVIEW 

Thus, the question of the sufficiency of the information as 

against the motion to dismiss on the ground of failure to state an 

offense as authorized by Fed. R. Cr. P. 12 is directly before us. 

Sufficiency of an indictment or information depends upon whether 

it contains the elements of the offense sought to be charged, 

\ 

apprises the defendant of the charges he must meet and affords 

protection against the risk of double jeopardy in the event of 

conviction. Russell v. United States, 369 U.S. 749, 763-64 

(1962); United States of America v. Daily, 921 F.2d 994, 998 (lOth 

Cir. 1990) (cert. pending). In these determinations statutes are 

to be construed strictly, United States v. Boston and Maine R.R., 

380 U.S. 157 (1965), but the rule of strict construction does not 

require that they be given the narrowest meaning their wording 

will allow. United States v. Cardenas, 864 F.2d 1528, 1535 (lOth 

Cir. 1989), citing United States v. Raynor, 302 u.s. 540, 552 

(1938). 

Of course an information must encompass possible proof that 

may be offered to sustain the charge. Ordinarily the details of 

such proof are left for trial if the sufficiency of the pleading 

is sustained. In the present case we are not left to speculate 

upon what the proof might be. At a hearing on the motion to 

dismiss, the Government indicated that it was prepared to prove at 

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trial the state of facts hereinafter set out, and Walker agreed 

for purposes of his motion that the Government's statement was 

accurate. Walker, 755 F. Supp. at 974, n.2. Essentially these 

same facts are set out in appellant's brief on appeal, eliciting a 

response in appellee's brief at page 2 that "[f]or purposes of the 

argument and motion to dismiss, I believe the statement of facts 

as set forth by the United States Government should be taken as 

true." 3 After this is said, it still must be kept in mind that we 

are called upon to determine only the sufficiency of the 

information to charge an offense and the subsumed problem of 

statutory construction, not necessarily the sufficiency of the 

evidence, per se. While in light of the points and arguments 

before us both present essentially the same question of law, we do 

not assume to pass upon the facts submitted to us here for any 

other purpose. 

We review statutory interpretations de novo, as we do the 

sufficiency of an information grounded on a statute. See United 

States v. Brian N., 900 F.2d 218, 220 (lOth Cir. 1990); United 

States v. Dahms, 938 F.2d 131, 133 (9th Cir. 1991). 

STATEMENT OF FACTS 

Gary R. Walker was president of the Sylvia State Bank in 

Sylvia, Kansas, from 1974 until approximately September 8, 1988, 

3 Appellee observed, however, that the Government's recitation 

"takes a great deal of liberty with the facts as they have been 

set forth in the pleadings and statements of the parties and 

argument in that in both instances Walker agreed to see if Farmer 

would loan them the money. He did not agree to obtain money for 

them." We do not deem this qualification of controlling 

significance. 

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when the bank was declared insolvent and the Federal Deposit 

Insurance Corporation was appointed as receiver. Frederick James 

Farmer, Jr., was a customer of the Sylvia State Bank prior to 1986 

and continued doing business with the Sylvia State Bank until 

September 8, 1988. 

Frank R. Waitt was an examiner for the State of Kansas 

Department of Banking and was the individual in charge of the 

Wichita field office which included the Sylvia State Bank as a 

bank situated within the territory covered by the field office. 

Frank Waitt was authorized to examine and, in fact, served as the 

examiner-in-charge of the Sylvia State Bank's last two 

examinations on October 15, 1985, and April 14, 1987. 

Prior to October 4, 1986, Frank Waitt contacted Gary Walker 

and inquired of him if he knew where he could borrow some money. 

At the time of the solicitation, Walker considered Waitt to be a 

good friend, and knew that he was a state bank examiner who had 

previously examined the Sylvia State Bank. Thereafter, Walker 

contacted F. J. Farmer and arranged for Farmer to lend money to 

Frank Waitt. Although he never met Frank Waitt nor was aware of 

his occupation, Farmer agreed to loan money to him. 

On or about October 4, 1986, Waitt met Gary Walker at the 

Sylvia State Bank and executed an unsecured note to Farmer in the 

principal amount of $10,000 with interest at thirteen percent 

payable at the rate of $400 monthly. The loan was funded from 

Farmer's deposit account. Loan documents similar to those 

prepared for every loan at the Sylvia State Bank were created and 

remained at the Sylvia State Bank. The bank served as escrow 

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agent for the payments and the bank received a $.50 payment 

handling fee. Prior to receiving the loan, Waitt provided Gary 

Walker with a personal financial statement dated September 28, 

1986, in which he clearly revealed that he was a senior examiner 

for the state banking department with thirty-six years of 

experience. In addition to never meeting Frank Waitt, Farmer 

indicated he never saw any of the loan documents or the financial 

statement prepared by Frank Waitt. 

Frank Waitt served as the state's examiner-in-charge of the 

April 14, 1987, examination of the Sylvia State Bank. The 

examination commenced on April 15, 1987, and concluded on April 

22, 1987. Waitt assigned a uniform bank rating of 2-2-2-3-1/2. 

The examination report prepared by Waitt reflected only modest 

classifications and there were no violations of law, rules or 

regulations or concentrations of credit scheduled. The official 

officer's questionnaire signed by Gary Walker on April 16, 1987, 

reflected an answer of "none" to the question "list all extensions 

of credit held by a bank which are direct or indirect liabilities 

of any bank examiner or assistant examiner who examines or has 

authority to examine this bank." As stated previously, the Sylvia 

State Bank was declared insolvent some seventeen months later in 

September of 1988. 

Prior to November 5, 1987, Rebecca Emery arrived at the 

Sylvia State Bank and discussed her need for a loan with Gary 

Walker. Just as he did in the case of Frank Waitt, Walker agreed 

to obtain money for Rebecca Emery. He once again contacted F. J. 

Farmer and Farmer agreed to loan Emery $7,000. At the time of the 

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solicitation, Karen Walker, Walker's wife and an employee of the 

Sylvia State Bank, considered Emery to be a good friend and she 

and Gary Walker were aware that Rebecca Emery was a state bank 

examiner who had previously participated in an examination of the 

Sylvia State Bank. Tr. Vol. I at 6. 

Once again, Farmer did not meet Emery nor was he made aware 

of her occupation. Emery executed an unsecured promissory note 

dated November 5, 1987, in the amount of $7,000 with interest at 

thirteen percent. Payments were scheduled at $235 per month with 

a final maturity of November 5, 1990. Funding for the loan came 

from Farmer's deposit account at the Sylvia State Bank. 

Incidental therewith, an unsigned loan application form was 

completed which clearly showed that Emery was a state bank 

examiner and her supervisor was Frank Waitt. As Walker had done 

with the loan to Frank Waitt, all loan documentation was kept at 

the Sylvia State Bank and the bank served as the escrow agent for 

the payments and received a $1 per payment handling fee. In 

addition to not meeting Rebecca Emery, Farmer never saw any of the 

documents in relation to this loan. 

THE MEANING OF THE STATUTE IN CONSIDERATION OF ITS WORDING 

AND IN LIGHT OF ITS PURPOSE 

It is our opinion that the meaning of the statute does not 

preclude, but on the contrary literally encompasses, the pleaded 

and agreed state of facts as sufficient, and especially is this so 

in light of the obvious purpose of the statute. 

The primary elements comprising an offense under the statute 

are: 

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( 1) The FDIC has insured the deposits of the bank. 

(2) The defendant was an officer, director or employee of 

the bank. 

(3) He made or granted a loan to an examiner or assistant 

examiner who examines or has authority to examine such bank. 

Defendant does not question that these elements are present 

in this case, except for the "making or granting" of the loans by 

the bank officer. 

Literal Meaning of Controlling Terms. 

Among the numerous meanings of "make" are "to cause to exist, 

occur, or appear"; "to cause to be or become"; "to put in a 

certain state or condition." Webster's New International 

Dictionary, Third Edition (Unabridged) (1976). Or, as the Random 

House College Dictionary, Revised Edition (1980), says "to bring 

into existence by shaping or changing material, combining parts, 

etc.: to make a dress; to make a chair; to make a work of art"; 

"produce; cause to exist; bring about: to make trouble; to make 

war"; "to cause to be or become; render: to make someone happy"; 

"to put in the proper condition or state, as for use; fix; 

prepare: to make a meal"; or "to bring into a certain form: to 

make bricks out of clay." On the other hand, the meaning of 

"grant," among others is to "agree, assent"; or "give, bestow, 

confer." Webster's New International Dictionary, Third Edition 

(Unabridged) (1976). In United States v. Giles, 300 u.s. at 48, 

the Supreme Court observed that the word "make" has many meanings, 

among them "[t]o cause to exist, appear or occur." 

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In determining the scope and meaning of a statute, we first 

look at its language. "[Words] should be given their fair meaning 

in accord with the evident intent of Congress." Id. at 48-49. 

See also u.s. v. Brian N., 900 F.2d at 220. 

In describing the offense charged, the statute significantly 

omits any reference to the source of the loan; there is no 

requirement that it be made by a bank, much less by the particular 

bank of which the defendant is an officer. Hence, the fact that a 

loan is made by the officer to a bank examiner from another bank 

or a private individual on the face of the statute does not seem 

inconsistent with criminal liability on the part of the bank 

officer who "makes" the loan. Had Congress chosen to use in 

context only the word "grant," the result could have been 

different. But it added the word "make" with its much broader 

meaning, as it rationally should have done to fully serve the 

purpose of the statute. Nor would its purpose be served by so 

narrowly framing or construing the statute as to invite 

frustration or circumvention by an officer's making of a loan as a 

favor to a bank examiner through the officer's friend or business 

associate under circumstances disclosed here. 

The Purpose of the Statute. 

The obvious purpose of the statute is to proscribe the 

granting of favors by a bank officer through loans to a bank 

examiner which could impair the independence or integrity of bank 

examinations. These could be influenced just as well by a loan 

arranged for him through another bank, financial institution, or 

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individual with whom the officer could achieve the result sought 

by the bank examiner a loan of money with the aid of the bank 

officer -- as through a loan from the officer's own bank. 

With the intent of Congress evident from the face of the 

statute, a construction which would allow a bank officer to 

circumvent that intent simply by making and channeling the loan 

through another entity is untenable. United States v. Bristol, 

473 F.2d 439, 442 (5th Cir. 1973). 

Congress, in passing Section 213 and its companion 

section 212 (which prohibits bank officers from making a 

section 213 loan), intended to proscribe certain 

financial transactions which could lead to a bank 

examiner carrying out his duties with less than total, 

unbiased objectivity. With the intent of Congress 

evident from the face of the statute, a construction 

which would allow a bank officer to circumvent that 

intent simply by channeling a loan through a controlled 

shell corporation is untenable. 

Bristol, 473 F.2d at 442. 

The lower court in discussing the intent of Congress when 

enacting 18 u.s.c. §§ 212 and 213 had said: 

. Congress has enacted a banking statute which 

contains stringent regulations enforced by both civil 

and criminal sanctions. The ultimate purpose of the 

criminal provisions is to protect innocent depositors by 

deterring bank officials from engaging in willful 

mismanagement and for engaging in culpable personal 

transactions to the detriment of the solvency and well 

being of the bank. One area of regulation which 

provides for criminal penalties is that precluding bank 

officers from offering a loan or gratuity to a bank 

examiner as well as the correlative transaction, the 

acceptance of a loan or gratuity by a bank examiner to 

make favorable reports on the financial conditions of a 

bank. 

United States v.·Bristol, 343 F. Supp. 1262, 1263 (S.D. Tex. 

1972). 

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Bristol Should be Followed. 

We find Bristol persuasively in point. While that case 

involved the prosecution of a bank examiner under a companion 

section, 4 the reasoning and principles discussed there are on the 

mark here 

The defendant in Bristol was a bank examiner who had accepted 

a loan held to be in violation of 18 u.s.c. § 213. His primary 

defense was that the indictment was fatally defective because the 

loan, although perhaps arranged by a bank officer, was not "made" 

or "granted" by him or his bank, but instead was made by a 

legitimate non-banking corporation. Affirming the jury verdict 

and judgment of conviction in the district court, the Fifth 

Circuit recognized that penal statutes are to be strictly 

construed but are not required to be "strained or distorted in 

order to exclude conduct clearly intended to be within [their] 

scope," citing Ryan v. United States,·278 F.2d 836, 838 (9th Cir. 

1960) . 

Here, as in Bristol, the bank official channeled funds to 

examiners through another entity in making the proscribed loans. 

That entity, as aptly characterized by the amicus curiae, instead 

of being a shell corporation, "was a pliant bank customer, who 

allowed Walker to use the funds in his deposit account for the 

4 18 u.s.c. § 213 makes it a crime for a bank examiner to 

accept a loan or gratuity from any bank examined by him or any 

person connected therewith. 

In U.S. v. Waitt, 761 F.Supp. 108 (D. Kan. 1991), one of the 

bank examiners involved in the present case was prosecuted under 

§ 213, and the district judge dismissed the information on the 

same theory he followed in the present case. 

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loans, without ever having met the examiners, without ever having 

seen the examiners' financial statements before loaning them money 

and without ever receiving a copy of the loan documents." Br. of 

amicus curiae at 8. 

The district court in the present case recognized that 

Bristol could be generally viewed as supportive of the 

Government's position, but held that the facts of that case were 

distinguishable from the case at bar: 

In Bristol, the loan was channeled through a 

controlled shell corporation. Stripped of its corporate 

facade, the loan was made or granted by a bank officer; 

the money was controlled by the bank officer. If the 

facts of the case at bar were similar, the court might 

be persuaded to pierce through the corporate shell and 

to find a violation of the statute [citation omitted]. 

755 F. Supp. at 977. The district court concluded that the facts 

of this case are significantly different. "While it is true that 

Walker arranged the loans, he did not 'make or grant' the loans." 

Id. We do not agree. 

CONCLUSION 

Because of the breadth of the decisive words chosen by 

Congress and incorporated in the information the meaning of which 

literally encompasses the defendant's undisputed conduct, the 

absence of any requirement in the statute that the bank itself 

grant or make the loan, and the purpose of the statute to 

proscribe such threats to the independence of bank examiners 

perceivable here, we conclude that the information sufficiently 

charged, and the recited facts demonstrate, the granting and 

making by the defendant of a loan to a bank examiner in violation 

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of 18 U.S.C. § 212. We therefore reverse the order and judgment 

appealed from and remand the case to the district court for 

further proceedings consistent with this opinion. 

REVERSED AND REMANDED. 

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