Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-80-01955/USCOURTS-ca10-80-01955-0/pdf.json

Parties Involved:
Harrison P. Cronic
Appellant
United States of America
Appellee

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

UNITED STATES OF AMERICA, 

Plaintiff-Appellee, 

v. 

HARRISON P. CRONIC, 

Defendant-Appellant. 

80-1955 

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Appeal From The 

United States District Court 

For The Western District 

Of Oklahoma 

(D.C. No. CR-80-21-E) 

Steven B. Duke, New Haven, Connecticut (Harrison P. Cronic, 

Gainesville, Georgia, and David w. Duncan of Duncan and Chew, 

Durango, Colorado, on the briefs), for Defendant-Appellant. 

John E. Green, First Assistant United States Attorney (David L. 

Russell and Williams. Price, United States Attorneys, with him on 

the briefs), Oklahoma City, Oklahoma, for Plaintiff-Appellee. 

Before HOLLOWAY, Chief Judge, SETH and SEYMOUR, Circuit Judges. 

SETH, Circuit Judge. 

Appellate Case: 80-1955 Document: 010110018185 Date Filed: 02/22/1988 Page: 1 
This appeal comes to us after we remanded the case to the 

trial court. This was after the Supreme Court, at 466 U.S. 648, 

reve~sed the decision of this court reported at 675 F.2d 1126, and 

remanded the case. It was decided by the Court with the reversal 

in Strickland v. Washington, 466 U.S. 668. The case went to the 

Supreme Court only on the adequacy of representation issue. We 

have examined the record of the hearing on our remand of this case 

to the trial court. 

The trial court, after our remand but before the remand 

hearing, demonstrated a degree of hostility toward the defendant 

which prevented an impartial conclusion based on the remand 

hearing. 

The trial court after our remand made several statements on 

the record before the basic remand hearing which evidenced its 

hostility toward the defendant. For example, at a hearing 

relating to the reinstatement of defendant's bond held by the 

trial court, as directed by this court, the trial judge said in 

response to defendant's "Thank you": 

"Well, you're not welcome. I think you're a 

swindler and a cheat and you wouldn't see the 

light of day if I had any choice." 

Other statements which show this attitude of the trial judge 

appear in the record. It is difficult to see how an appearance of 

impartiality was maintained in these circumstances. 

The time element herein considered may be an aspect of the 

trial judge's hostility or may be a separate element. In any 

event, this court had remanded the case about two months before 

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Appellate Case: 80-1955 Document: 010110018185 Date Filed: 02/22/1988 Page: 2 
the date fixed by the trial court for the hearing on remand. The 

trial co~rt appointed the then new Federal Public Defender to 

represent defendant at the remand hearing and gave him nine days 

to prepare. The attorney moved for addition~l time, the 

Government did not object, but the motion was denied. This was 

similar to the time given defendant's attorney to prepare for the 

initial trial. The court gave the attorney eleven days but when 

the attorney protested the court gave him 25 days. The attorney 

for a co-defendant, who pled guilty, stated that the Government's 

''documentation" was "a foot and a half if not two feet high." The 

Government had the case for about five years and two accountants 

had worked on it. 

The hearing record on remand demonstrates that there was an 

obvious need to have an examination of the bank records on two 

basic issues, the exact amount of the overdrafts shown in the bank 

records, and the handling by the bank of a note and security put 

up by defendant near the outset of the dispute to secure payment 

of overdrafts if they existed or to constitute actual payment 

thereof. This payment or security was a note with a mortgage on a 

bottling plant. The bank took over the operation of the plant 

before payments on the note became due, and operated it for about 

two years. The mortgage was eventually foreclosed. 

The intent of the defendant and his good faith as to the 

overdrafts was a basic issue in the prosecution, but at trial it 

was completely ignored by defendant's counsel to the prejudice of 

defendant. The testimony of the Government witnesses described a 

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Appellate Case: 80-1955 Document: 010110018185 Date Filed: 02/22/1988 Page: 3 
meeting between at least one bank official and the defendant at a 

time when it was not known whether the balances between the 

Florida bank and the Norman bank demonstrated an overdraft in the 

account of Skyproof (defendant's corporation) in the Norman bank. 

The defendant had come voluntarily from Florida to Dallas to have 

the meeting with the bank official who was there on a trip to 

discuss the possible overdrafts. At this meeting the defendant 

stated that any overdrafts would be covered and that there were 

funds and adequate property to be so applied. The record shows 

that defendant later delivered a note and mortgage to the bank to 

cover overdrafts which had then been established only in 

approximate figures and which were substantial. Funds were also 

transferred to the Norman bank. A note and a mortgage on a 

bottling plant in Paris, Texas were so delivered to the bank to 

cover the overdrafts as the defendant had offered to do. From the 

record it appears that this was accepted for the overdrafts. In 

any event, as mentioned, the bank shortly thereafter, and before 

payments on the note became due, took possession of the plant and 

began operating it. It operated the plant for about two years 

apparently with no accounting to anyone. 

The trial court at the outset of the trial had explained to 

the jury pool that the nature of the case is a "check kiting 

scheme" which was the depositing of a check, ''a fraudulent check 

••• when really there is no money there ••.. " The case was 

tried throughout by the court and attorneys for both sides on the 

erroneous assumption that a check written on an account where 

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Appellate Case: 80-1955 Document: 010110018185 Date Filed: 02/22/1988 Page: 4 
there are insufficient funds to cover it is in itself a fraud 

under the federal mail fraud statute. 

We have long held that good faith is a complete defense to a 

mail fraud charge as have other circuits. United States v. 

Washita Construction Co., 789 F.2d 809 (10th Cir.); United States 

v. Westbo, 576 F.2d 285 (10th Cir.); United States v. Beitscher, 

467 F.2d 269 (10th Cir.). In Westbo, we stated: 

"Thus, a defendant is entitled to an 

instruction covering good faith in mail and 

wire fraud cases where the evidence supports 

it. Sparrow v. United States, 402 F.2d 826, 

828 (10th Cir. 1968)." 

576 F.2d at 288-89. The Supreme Court in a case charging the 

making of a false statement or report to a bank (18 U.S.C. § 1014) 

of course considered the particular statute in the context of what 

appeared to the court to be check kiting, but held as to the 

checks for insufficient funds that: "Each check did not, in 

terms, make any representation as to the state of petitioner's 

bank balance." Williams v. United States, 458 U.S. 279, 284-85. 

A reasonable application of the prevailing standards of 

performance for an attorney under Strickland, in view of the long 

and well-established law and a knowledge of the facts recited 

above, mandated the defense of good faith. An instruction on good 

faith should have been given on the basis of the testimony of the 

Government witnesses. This matter was in no way explained at the 

hearing on remand, and was a basic failure under Strickland by 

defendant's attorney at trial. It was also an indication of a 

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Appellate Case: 80-1955 Document: 010110018185 Date Filed: 02/22/1988 Page: 5 
failure by the trial court to monitor the actions of the 

completely inexperienced trial attorney appointed by the court. 

The defendant's trial attorney at the hearing on remand 

sought to explain that the defense he used was one seeking to 

"cloud the issues." This cannot be a satisfactory explanation 

under Strickland or any other authority for a selection of a 

"defense." The defense chosen also had elements of denial of 

defendant's responsibility for the writing of the corporate checks 

as his name did not appear on them. However, the defendant had 

advised the bank officers before trial that he was in charge of 

the corporation, that the absence of his signature made no 

difference, and that he would see that the overdrafts would be 

covered. 

An attorney's trial decisions must be based on a proper 

exercise of judgment based on an adequate knowledge of the facts 

and be on correct legal grounds. The bank officials at trial had 

testified that nothing had been paid on the overdraft. This was 

repeated several times and not challenged by defendant's attorney. 

This was not correct as the facts before the court at trial showed 

the acceptance of the bottling plant for the overdraft and the 

apparent recovery on foreclosure of some, if not all, of the 

overdraft. The failure to investigate this use of the security 

was an obvious departure by defendant's attorney from acceptable 

standards and the prejudice resulting was apparent. It should 

also be observed as a comment on the bank records that the bank 

officials at trial testified several times, without a challenge, 

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Appellate Case: 80-1955 Document: 010110018185 Date Filed: 02/22/1988 Page: 6 
that the bank had lost $500,000 in the transactions. At the 

hearing on remand they testified instead that the bank had written 

off about $135,000 on the bank's accounts. This may or may not 

have been a loss. The wide variation on the dollar figures 

testified to by the bank officials must cast some doubt on the 

accounting by the bank and the reality of its position. To permit 

the gross exaggerations at trial was a particular or specific 

error by counsel to defendant's prejudice. We must conclude that 

an inadequacy of representation was demonstrated under Strickland 

with prejudice to defendant. 

This case.must be remanded to the trial court with directions 

to order a new trial. 

IT IS SO ORDERED. 

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