Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-03312/USCOURTS-ca10-89-03312-0/pdf.json

Parties Involved:
Stephen C. Carman
Appellant
United States of America
Appellee

Document Text:

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UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

FILED 

United States Court of Appeals 

Tenth Circuit 

SEP 2 0 1990 

&OBERT L. HOECKER 

Clerk 

UNITED STATES OF AMERICA, 

Plaintiff-Appellee, 

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No. 89-3312 

v. 

STEPHEN C. CARMAN, 

Defendant-Appellant. 

(D. C. No. 88-10096-01) 

( D. Kan.) 

ORDER AND JUDGMENT* 

Before MOORE, SETH and ANDERSON, Circuit Judges. 

Defendant-appellant Stephen C. Carman was convicted, after a 

jury trial, on five counts of willful misapplication of bank funds 

in violation of 18 u.s.c. § 656. Defendant moved before trial to 

dismiss the indictment on the ground that essential elements of 

the offense were not alleged. This motion was denied. On appeal 

the defendant urges that the indictment was deficient because it 

did not allege an intent to injure or defraud. No other point is 

advanced. 

Defendant was an officer of Farmers State Bank in Selden, 

Kansas. Bank deposits were insured by the Federal Deposit 

*This order and judgment has no precedential value and shall not 

be cited, or used by any court within the Tenth Circuit, except 

for purposes of establishing the doctrines of the law of the case, 

res judicata, or collateral estoppel. 10th Cir. R. 36.3. 

Appellate Case: 89-3312 Document: 010110042236 Date Filed: 09/20/1990 Page: 1 
' 

Insurance Corporation. Defendant's indictment stems from five 

separate nominee loans he allegedly authorized in 1984. Count III 

of defendant's indictment reads, in pertinent part: 

"On or about January 6, 1984, in the 

District of Kansas, 

STEPHEN C. CARMAN, 

being an officer and employee of the Farmers 

State Bank of Selden, Kansas, a bank the 

deposits of which are insured by the Federal 

Deposit Insurance Corporation, did willfully 

misapply moneys of the bank, ... by 

authorizing the making of a loan by the bank 

to Mike Peterson ... knowing the proceeds of 

the loan were not for the benefit of Mike 

Peterson, but that Mike Peterson would give, 

turn over and make available the proceeds of 

the loan to Gary Withers, all in violation of 

18 u.s.c. 656." 

The remaining counts allege similar nominee loan transactions and 

substantially track the language of Count III. How the 

misapplication of funds is accomplished is described. In each 

instance the names are stated, as are the dates and amounts of the 

loans and the fact that the bank's deposits were insured. The 

details of each loan are thus fully described. In each the 

willful misapplication is charged. The misapplication of funds is 

the crime. The nominee loans were made to circumvent the loan 

limits placed on the bank and applicable to the person who was 

ultimately to receive the loan proceeds. 

Defendant contends that the trial court erred in denying his 

motion to dismiss the indictment on the ground that it failed to 

state an offense. His only point as to the indictment is that it 

is defective because it failed to allege the words "with an intent 

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Appellate Case: 89-3312 Document: 010110042236 Date Filed: 09/20/1990 Page: 2 
to injure or defraud" which he asserts is a required mental 

element under 18 u.s.c. § 656 although not therein stated. There 

is no assertion that he was in any way misled as to the nature of 

the offense or impaired in his defense. Had he needed further 

details, a motion for a bill of particulars was, of course, 

available to him. 

We find no merit in defendant's argument. Fed. R. Crim. P. 

7(c)(l) requires that an indictment "be a plain, concise and 

definite written statement of the essential facts constituting the 

offense charged." An indictment is sufficient under Rule 7 if it 

(1) contains the elements of the offense intended to be charged, 

(2) sufficiently apprises the accused of what he must be prepared 

to defend against, and (3) enables the accused to plead a judgment 

under the indictment as a bar to any subsequent prosecution for 

the same offense. Russell v. United States, 369 U.S. 749, 763-64; 

United States v. Staggs, 881 F.2d 1527, 1530 (10th Cir.); 

United States v. Rivera, 837 F.2d 906, 916-19 (10th Cir.); 

United States v. Kilpatrick, 821 F.2d 1456, 1461 (10th Cir.), 

aff'd sub nom., Bank of Nova Scotia v. United States, 487 U.S. 

250. 

We have held that an indictment is generally sufficient if it 

sets forth the offense in the words of the statute so long as the 

statute adequately states the elements of the offense. 

United States v. Salazar, 720 F.2d 1482 (10th Cir.), cert. denied, 

469 U.S. 1110. 18 U.S.C. § 656 provides in relevant part: 

"Whoever, being an officer ... or 

connected in any ... (federally] insured 

bank ... willfully misapplies any of the 

moneys, funds or credits of such bank ... 

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shall be fined not more than $5,000 or 

imprisoned not more than five years, or 

both . . . . " 

The statutory elements of 18 u.s.c. § 656 are (1) the willful 

(2) misapplication (3) of money, funds or credits (4) of a 

federally-protected bank. United States v. Harenberg, 732 F.2d 

1507, 1511 (10th Cir.). 

In this case, defendant's indictment fully tracks the 

statutory elements specifically charging him with the "willful 

misapplication" of bank moneys as set forth under§ 656. 

Additionally, as indicated, the date and amount of each nominee 

loan, the named parties and how the misapplication was done are 

described. It is correct, as defendant contends, that proof of 

intent to injure or defraud is necessary to establish the criminal 

intent to support a conviction, and this was done. See Hernandez 

v. United States, 608 F.2d 1361 (10th Cir.). However, the absence 

of such language does not render the indictment deficient where, 

as here, defendant was charged with the statutory mental element 

of "willful misapplication." This is a statement of intent--

willfully misapply--the funds. See United States v. Previti, 644 

F.2d 318, 319 (4th Cir.) (an indictment under§ 656 which fails to 

allege "intent to defraud" is sufficient where it alleges a 

"willful misapplication"); United States v. Young, 618 F.2d 1281 

(8th Cir.). We conclude that this indictment sufficiently charges 

the essential elements so as to apprise defendant of the nature of 

the charges against him to allow him to prepare and defend his 

case. 

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Defendant also asserts that the trial court erred in allowing 

the government to introduce evidence that in 1983 and 1984, he 

directed the preparation of fictitious minutes of board meetings 

which never occurred. The trial court found that this evidence 

was admissible under Fed. R. Evid. 404(b) solely to show 

defendant's intent to commit the crime charged. 

The trial court's determination to admit evidence of other 

crimes under 404(b) will not be reversed by this court absent an 

abuse of discretion. United States v. Record, 873 F.2d 1363, 1373 

(10th Cir.). Fed. R. Evid. 404(b) provides: 

"Evidence of other crimes, wrongs, or 

acts is not admissible to prove the character 

of a person in order to show that he acted in 

conformity therewith. It may, however, be 

admissible for other purposes, such as proof 

of motive, opportunity, intent, preparation, 

plan, knowledge, identity, or absence of 

mistake or accident." 

In United States v. Suntar Roofing Inc., 897 F.2d 469, 479 (10th 

Cir.), we stated: 

"A defendant is protected from unfair 

prejudice if the evidence is relevant and 

offered for a proper purpose, if the probative 

value is not substantially outweighed by its 

potential for unfair prejudice, and if the 

court, upon request, instructs the jury to 

consider the evidence only for the proper 

purpose for which it was admitted." 

See Huddleston v. United States, 485 U.S. 681, 691. 

Defendant's primary contention is that the evidence was not 

offered for a relevant purpose because evidence of fictitious 

board meetings has no tendency to establish the requisite criminal 

intent for the nominee loans in question. He does not contest 

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that the minutes were false; rather, he urges that there was no 

evidence that these minutes were prepared by him or at his 

direction during 1984, the year the nominee loans for which he was 

charged were made. Additionally, defendant argues there was no 

evidence to support the assertion that the preparation of false 

minutes was part of any plan or indicative of specific criminal 

intent. 

After reviewing the record, we hold that the trial court's 

decision to admit the fictitious minutes was for and relevant to a 

proper purpose under 404(b). It is true, as defendant contends, 

that the relevance requirement under 404(b) cannot be met by 

introducing evidence of prior bad acts of the defendant's other 

associates. United States v. Cardall, 885 F.2d 656 (10th Cir.). 

However, this is not the case here. The record refutes 

defendant's contention that there was no evidence establishing 

that the false minutes were prepared by him or at his direction in 

1984. Mrs. Hickert, a bank employee, testified that she prepared, 

at defendant's direction, false minutes of board meetings which 

allegedly occurred in 1983 and 1984. Rec. Vol. II at 72. There 

was testimony from both an FBI agent and a FDIC bank examiner that 

defendant admitted preparing the false board minutes. Id. at 172, 

185. 

Further, we believe that the trial court properly determined 

that the evidence of fictitious board minutes was "extremely" 

probative of defendant's intent to commit the crime charged. To 

convict the defendant it was necessary for the jury to find that 

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he acted with an intent to deceive or injure the bank by making 

nominee loans which exceeded the bank's lending limits. The 

government argued that such evidence was relevant to show how the 

defendant's conduct, in preparing fictitious minutes without the 

knowledge of the board of directors, sought to make the loans in 

question difficult to detect. We have little doubt that if this 

evidence was part of a plan to mislead bank examiners or directors 

it would be highly probative of defendant's unlawful intent. 

Finally, the trial court gave the jury proper precautionary 

instructions and reminded them of the limited purpose for which 

the evidence could be used. 

The judgment of the trial court is AFFIRMED. 

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Entered for the Court 

Oliver Seth 

Circuit Judge 

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