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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

UNITED STATES OF AMERICA,

v.

DAN HEINE and DIANA YATES,

Defendants.

Case No. 3:15-cr-238-SI

OPINION AND ORDER ON 

SENTENCING

Billy J. Williams, United States Attorney, and Claire M. Fay, Michelle Holman Kerin, and Quinn 

P. Harrington, Assistant United States Attorneys, UNITED STATES ATTORNEY’S OFFICE FOR THE 

DISTRICT OF OREGON, 1000 SW Third Avenue, Suite 600, Portland, OR 97204. Of Attorneys for 

the United States of America.

Jeffrey Alberts and Mark Weiner, PRYOR CASHMAN, LLP, 7 Times Square, New York, NY 

10036; Caroline Harris Crowne, TONKON TORP, LLP, 1600 Pioneer Tower, 888 SW Fifth 

Avenue, Portland, OR 97204. Of Attorneys for Defendant Dan Heine.

Janet Lee Hoffman, Andrew T. Weiner, Katherine Feuer, and Douglas J. Stamm, JANET 

HOFFMAN & ASSOCIATES, LLC, 1000 SW Broadway, Suite 1500, Portland OR 97205; Matthew 

J. Kalmanson, HART WAGNER, LLP, 1000 SW Broadway, Suite 2000, Portland, OR 97205. Of 

Attorneys for Defendant Diana Yates.

Michael H. Simon, District Judge.

Imposing a sentence on a fellow human being is one of the most difficult acts that a judge 

is required to perform. The judge’s decision likely will affect not only the criminal defendant, 

but also his or her family and the victims of the crime and their families. A sentence also may 

affect the future safety, security, and sense of well-being of the community. In addition, a
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sentence should deter future criminal conduct, not only by the defendant being sentenced but 

also by others. In white collar cases dealing with economic crimes involving financial 

institutions, a sentence also may affect the confidence the public holds in those institutions as 

well as the government’s ability effectively to regulate and supervise those institutions. Many 

complex factual and legal issues must be considered and balanced to find a just and appropriate 

sentence.

Because we live under the rule of law, judges must make decisions under objective, 

common, and discernable legal principles. The discretion possessed by a judge at sentencing 

tests the limits of this principle. Sentencing is constrained by both substantive bounds (such as 

statutory minimum or maximum terms) and procedural bounds (such as mandated methodology 

and explanatory requirements). Nevertheless, even within these bounds, there is often more than 

one lawful solution, which provides both the legal basis for the court’s discretion and the tension 

between this discretion and the rule of law. In recognition of this tension, it is incumbent upon a 

judge to explain the bases for a criminal sentence. Others may agree or disagree with the 

sentence imposed, but a judge should leave no doubt about the factors that he or she has 

considered or the reasons for imposing a particular sentence.

BACKGROUND

In 2004, Defendant Dan Heine (“Heine”) founded The Bank of Oswego (the “Bank”) and 

became its President and Chief Executive Officer. He also served as a member of the Bank’s 

Board of Directors (“Board”). Defendant Diana Yates (“Yates”) was the Executive Vice 

President (“EVP”) and Chief Financial Officer (“CFO”) of the Bank. In addition to serving in 

these positions, Yates was the Secretary of the Board. Yates resigned from the Bank on 

March 22, 2012. Heine left the Bank in September 2014. On June 24, 2015, a federal grand jury 

indicted Heine and Yates for conduct related to their time with the Bank; the indictment was 
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unsealed two days later. As alleged in the superseding indictment, Heine and Yates were charged 

with one count of conspiring to commit bank fraud, in violation of 18 U.S.C. § 1349, and 18 

counts of making false bank entries, in violation of 18 U.S.C. §§ 2 and 1005. In essence, Heine 

and Yates were charged with concealing the true financial condition of the bank to the Board and 

regulators by falsely reporting that the Bank had title to a property obtained in a “straw buyer”

transaction, falsely reporting that delinquent loans were paid, and falsely reporting the sale of 

bank-owned property received in foreclosure.

Until August 2016, the Bank was a financial institution engaged in the business of 

personal and commercial banking and lending, headquartered in Lake Oswego, Oregon. The 

Bank was insured and supervised by the Federal Deposit Insurance Corporation (“FDIC”). On 

August 12, 2016, the Bank sold its loans and other assets to HomeStreet Bank (“HomeStreet”). 

The Bank continues to exist as a corporate entity, but has relinquished its banking charter and 

now operates as Oswego Resolution.

Beginning October 10, 2017, and ending November 28, 2017, a federal jury in Portland, 

Oregon heard testimony from 43 witnesses, received 584 exhibits admitted in evidence, and 

deliberated for four days. The 12-person jury then returned a unanimous verdict, finding both 

Heine and Yates guilty on the same 13 out of 19 charges. The jury found both Defendants guilty 

on one count of conspiracy to commit bank fraud and 12 counts of making false bank entries. 

The jury also found both Defendants not guilty on six counts of making false bank entries.

STANDARDS

A. Sentencing Considerations and Methodology

Congress has directed that a federal court shall impose a sentence that is “sufficient, but 

not greater than necessary” to achieve the purposes of sentencing. As explained by Congress, a 

just and appropriate sentence should reflect the seriousness of the offense, promote respect for 
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the law, provide just punishment for the offense, afford adequate deterrence to criminal conduct, 

protect the public from further crimes of the defendant, and provide the defendant with needed 

educational or vocational training, medical care, or other correctional treatment in the most 

effective manner. 18 U.S.C. § 3553(a)(2). In determining the particular sentence to be imposed, 

the court shall consider the nature and circumstances of the offense and the history and 

characteristics of the defendant. 18 U.S.C. § 3553(a)(1). The court must also consider the 

advisory sentencing guidelines established by the United States Sentencing Commission 

(“USSC”) as well as all relevant policy statements issued by the USSC. 18 U.S.C. § 3553(a)(4)-

(5). Further, the court must attempt “to avoid unwarranted sentence disparities among defendants 

with similar records who have been found guilty of similar conduct.” 18 U.S.C. § 3553(a)(6).

White collar crime is peculiarly amenable to general deterrence. That is because white 

collar criminals, oftentimes, premeditate their crimes and engage in a cost-benefit analysis. See, 

e.g., United States v. Martin, 455 F.3d 1227, 1240 (11th Cir. 2006) (“Because economic and 

fraud based crimes are more rational, cool, and calculated than sudden crimes of passion or 

opportunity, these crimes are prime candidates for general deterrence. Defendants in white collar 

crimes often calculate the financial gain and risk of loss, and white collar crime therefore can be 

affected and reduced with serious punishment.”). Indeed, the congressional drafters of § 3553(a) 

recognized the distinction between white collar criminals and other criminals when it comes to 

deterrence:

The second purpose of sentencing is to deter others from 

committing the offense. This is particularly important in the area of 

white collar crime. Major white collar criminals often are 

sentenced to small fines and little or no imprisonment. 

Unfortunately, this creates the impression that certain offenses are 

punishable only by a small fine that can be written off as the cost 

of doing business.
PAGE 5 – OPINION AND ORDER

S. Rep. No. 98-225, at 76 (1983), as reprinted in 1984 U.S.C.C.A.N. 3182, 3259. White collar 

criminals may weigh the benefits of creating and maintaining a fraudulent enterprise, including 

the financial, professional, and social benefits that come with their crimes. Against these 

benefits, they may weigh the costs, including the likelihood of getting caught, being charged, and 

being convicted, as well as the degree of punishment they will face. These are all factors to be 

considered in sentencing the white collar criminal.

Determining a proper sentence begins with a properly calculated advisory sentencing 

guideline range. Gall v. United States, 552 U.S. 38, 39 (2007); United States v. Carty, 520 

F.3d 984, 991 (9th Cir. 2008). The United States Sentencing Guidelines (“USSG”) serve as the 

initial benchmark in every sentencing proceeding, Gall, 552 U.S. at 39, and “reflect a rough 

approximation of sentences that might achieve § 3553(a)’s objectives.” United States v. Rita, 551 

U.S. 338, 350 (2007). The sentencing table in the guidelines presents a defendant’s adjusted 

offense level in the vertical axis and a defendant’s criminal history category in the horizontal 

axis. Both the offense level and the criminal history category must be correctly calculated, and 

their intersection yields the advisory sentencing guideline range. After correctly calculating the 

advisory sentencing guideline range, the court then considers that range and all of the other 

sentencing factors identified in 18 U.S.C. § 3553(a) before arriving at a final sentence.

B. Relevant Conduct

The USSG directs the court to consider all “relevant conduct” when evaluating the nature 

and circumstances of the offense to determine the correct offense level. USSG § 1B1.3. The 

USSG defines “relevant conduct,” in part, as follows:

Relevant Conduct (Factors that Determine the Guideline Range)

(a) CHAPTERS TWO (OFFENSE CONDUCT) AND THREE 

(ADJUSTMENTS). Unless otherwise specified, (i) the base offense 

level where the guideline specifies more than one base offense 
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level, (ii) specific offense characteristics and (iii) cross references 

in Chapter Two, and (iv) adjustments in Chapter Three, shall be 

determined on the basis of the following:

(1) (A) all acts and omissions committed, aided, 

abetted, counseled, commanded, induced, procured, or 

willfully caused by the defendant; and 

(B) in the case of a jointly undertaken criminal 

activity (a criminal plan, scheme, endeavor, or enterprise 

undertaken by the defendant in concert with others, 

whether or not charged as a conspiracy), all acts and 

omissions of others that were—

(i) within the scope of the jointly 

undertaken criminal activity,

(ii) in furtherance of that criminal 

activity, and

(iii) reasonably foreseeable in connection 

with that criminal activity;

that occurred during the commission of the offense of 

conviction, in preparation for that offense, or in the course 

of attempting to avoid detection or responsibility for that 

offense;

(2) solely with respect to offenses of a character for 

which §3D1.2(d) would require grouping of multiple 

counts, all acts and omissions described in subdivisions 

(1)(A) and (1)(B) above that were part of the same course 

of conduct or common scheme or plan as the offense of 

conviction;

(3) all harm that resulted from the acts and omissions 

specified in subsections (a)(1) and (a)(2) above, and all 

harm that was the object of such acts and omissions; and

(4) any other information specified in the applicable 

guideline.

USSG § 1B1.3(a). In addition, the USSC explains: “Conduct that is not formally charged or is 

not an element of the offense of conviction may enter into the determination of the applicable 

guideline sentencing range.” USSG §1B1.3, cmt, background.
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C. Standard of Proof

“District courts generally use the preponderance of the evidence standard of proof when 

finding facts at sentencing, such as the amount of loss caused by a fraud. The higher ‘clear and 

convincing’ standard may apply, however, when a sentencing factor has an extremely

disproportionate effect on the sentence relative to the offense of conviction.” United States v. 

Hymas, 780 F.3d 1285, 1289 (9th Cir. 2015) (emphasis added) (citations and quotation marks 

omitted). Because the advisory sentencing guideline adjustment for loss, which is discussed 

below, has the potential to exert a substantial upward influence on the ultimate advisory 

guideline range, the Court will apply a “clear and convincing” standard for that specific factor. 

The Court will apply the “preponderance of the evidence” standard for all remaining factors.

D. Evidence that May Be Considered

Federal law provides:

No limitation shall be placed on the information concerning the 

background, character, and conduct of a person convicted of an 

offense which a court of the United States may receive and 

consider for the purpose of imposing an appropriate sentence.

18 U.S.C. § 3661. As explained by the United States Supreme Court, “18 U.S.C. § 3661 . . . 

codifies the longstanding principle that sentencing courts have broad discretion to consider 

various kinds of information.” United States v. Watts, 519 U.S. 148, 151 (1997). Thus, at 

sentencing, the Court may draw its own conclusions from all of the evidence presented at trial, as 

well as from all other sources.

The Federal Rules of Evidence do not apply in a sentencing proceeding. Fed. R. 

Evid. 1101(d)(3) (“These rules—except for those on privilege—do not apply to . . . sentencing”). 

Unlike the strict evidentiary restrictions applicable at trial, the only evidentiary requirement at 

sentencing is that the sentence be based on information that has “sufficient indicia of reliability 
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to support its probable accuracy.” USSG § 6A1.3; see also United States v. Berry, 258 F.3d 971, 

976 (9th Cir. 2001) (holding that for sentencing purposes, hearsay testimony need only “be 

accompanied by some minimal indicia of reliability”) (quotation marks omitted)).

DISCUSSION

A. Calculation of Advisory Sentencing Guideline Range

1. Adjusted Offense Level

a. Base Offense Level; USSG § 2B1.1(a)(1)—Level 7

Based upon the offenses of conviction, the Base Offense Level is 7. USSG § 2B1.1(a)(1).

This applies to both Heine and Yates.

b. Loss Enhancement; USSG § 2B1.1(b)(1)—Increase by 14 Levels for Heine 

and by 12 Levels for Yates

i. General principles of loss under the USSG

Under the guidelines, a defendant’s offense level shall be increased based on the amount 

of the economic loss caused by relevant conduct. USSG § 2B1.1(b)(1). Application Note 3 offers

the following guidance. It states, in relevant part:

Loss Under Subsection (b)(1).—This application note applies to 

the determination of loss under subsection (b)(1).

(A) General Rule.—Subject to the exclusions in subdivision 

(D), loss is the greater of actual loss or intended loss.

(i) Actual Loss.—“Actual loss” means the reasonably 

foreseeable pecuniary harm that resulted from the offense.

(ii) Intended Loss.—“Intended loss” (I) means the 

pecuniary harm that the defendant purposely sought to 

inflict; and (II) includes intended pecuniary harm that 

would have been impossible or unlikely to occur (e.g., as in 

a government sting operation, or an insurance fraud in 

which the claim exceeded the insured value).

(iii) Pecuniary Harm.—“Pecuniary harm” means harm 

that is monetary or that otherwise is readily measurable in 

money. Accordingly, pecuniary harm does not include 
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emotional distress, harm to reputation, or other noneconomic harm.

(iv) Reasonably Foreseeable Pecuniary Harm.—For 

purposes of this guideline, “reasonably foreseeable 

pecuniary harm” means pecuniary harm that the defendant 

knew or, under the circumstances, reasonably should have 

known, was a potential result of the offense.

* * *

(B) Gain.—The court shall use the gain that resulted from the 

offense as an alternative measure of loss only if there is a loss but 

it reasonably cannot be determined.

(C) Estimation of Loss.—The court need only make a 

reasonable estimate of the loss. The sentencing judge is in a unique 

position to assess the evidence and estimate the loss based upon 

that evidence. For this reason, the court’s loss determination is 

entitled to appropriate deference. See 18 U.S.C. § 3742(e) and (f).

The estimate of the loss shall be based on available information, 

taking into account, as appropriate and practicable under the 

circumstances, factors such as the following:

(i) The fair market value of the property unlawfully 

taken, copied, or destroyed; or, if the fair market value is 

impracticable to determine or inadequately measures the harm, the 

cost to the victim of replacing that property.

* * *

(v) The reduction that resulted from the offense in the 

value of equity securities or other corporate assets.

* * *

(E) Credits Against Loss.—Loss shall be reduced by the 

following:

(i) The money returned, and the fair market value of 

the property returned and the services rendered, by the defendant 

or other persons acting jointly with the defendant, to the victim 

before the offense was detected. . . .

USSG § 2B1.1, cmt. n. 3.
PAGE 10 – OPINION AND ORDER

ii. Whether there is reasonably foreseeable pecuniary harm

As discussed in Application Note 3, “actual loss” means the reasonably foreseeable 

pecuniary harm that resulted from the offense. “Reasonably foreseeable pecuniary harm” means 

pecuniary harm that a defendant knew or, under the circumstances, reasonably should have 

known, was a potential result of the offense. For two independent reasons, the Court finds there 

was reasonably foreseeable pecuniary harm.

First, Defendants misrepresented to and concealed from the Board and the FDIC the 

Bank’s financial weaknesses, which undermined the Board’s and the FDIC’s ability fully to 

assess material risks and tailor managerial and supervisory responses to undisclosed emerging 

problems. But for the upturn in the national and local economy, many of the problem loans that 

were hidden from the FDIC and the Board might have gone into default. In fact, notwithstanding 

the improvement of the economic climate, one of the problem loans in the offenses of conviction 

(the Duffy loan) actually did result in a loss to the Bank of more than $200,000. Second, after 

Defendants’ misrepresentations and other fraudulent activity became publicly known, the Bank 

essentially collapsed, causing Bank’s shareholders to lose their investments and the Bank’s 

employees to lose their jobs. The Bank’s collapse resulted, at least in part, from the charges 

against its CEO and EVP/CFO (the Bank’s two highest officers) becoming publicly known.

Since shortly after the beginning of our nation, the American banking system has served 

as the foundation of our economy. Our economy requires honest bankers. When the public loses 

confidence in its bankers, the economy is placed in jeopardy. Further, a bank’s ability to survive 

depends upon its reputation for integrity, honesty, and accuracy. Thus, after the public learned 

about Heine and Yates’s fraudulent activities, the Bank was unable to continue active operations 

as a bank. The Bank ceased operating and sold its remaining assets to HomeStreet, resulting in 

the Bank’s employees losing their jobs and the Bank’s shareholders losing most, if not all, of 
PAGE 11 – OPINION AND ORDER

their investments. As victims of Heine and Yates’s crimes, the Bank, its employees, and its 

investors all suffered economic loss.

iii. Whether the loss can be reasonably determined

The government and Defendants have spent considerable time and effort disputing 

whether the economic losses in this case can be reasonably determined. Because a guideline 

enhancement based on economic loss would substantially increase the offense level, the Court 

applies a “clear and convincing” standard for this factor, and the government has the burden to 

show the amount of loss.

Even though a reasonable estimate of the loss caused by a defendant is sufficient, the 

Court concludes in this case that the government has not satisfied its burden. Several factors 

appear to have contributed to the downfall of the Bank. There appears to have been 

mismanagement at the Bank even before the onset of criminal activities. In fact, that 

mismanagement and the resulting problems faced by the Bank, along with the pressures of the 

severe economic downturn of 2007-2008, appear to have at least in part motivated Heine and 

Yates’s criminal activities. They sought rapidly to grow the Bank’s portfolio of loans in order to 

improve the economic performance and profitability of the Bank and, perhaps, make the Bank a 

more attractive candidate for a potential takeover. (The Court notes that the bulk of both Heine 

and Yates’s personal assets was their stock in the Bank.) The rapid growth in the Bank’s loan 

portfolio, however, resulted in non-performing loans or other loan-related problems that made 

the Bank’s operations more risky and less attractive. The FDIC took notice and placed the Bank 

under a Memorandum of Understanding, among other regulatory activities.

Heine and Yates did not deceive others in order to put money directly into their own 

pockets. The fraud in this case was not a Ponzi scheme, or even a scheme that resulted in direct 

and immediate financial benefit to Defendants. Instead, Heine and Yates deceived the Board and 
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the FDIC to hide the Bank’s problems. This deception allowed Heine and Yates to keep their 

jobs and avoid more drastic regulatory sanctions by the FDIC.

Nevertheless, the crimes of convictions, even all “relevant conduct” taken together, were 

not the sole causes of the Bank’s ultimate losses. Thus, for purposes of determining a guidelines 

loss calculation, it is necessary to determine the amount of loss caused by and attributed to 

Defendants’ crimes. A reasonable estimate will do, but there must be an appropriate estimation 

of the loss caused by Defendants versus the loss caused by other, non-criminal factors. 

Economic tools are available to perform this analysis, and they could have been used. For 

example, an event study or regression analysis might have quantified the loss to the Bank caused 

by Defendants’ relevant conduct, as opposed other factors, but such an analysis was not 

performed (or at least none was presented to the Court). It is also possible that such a study 

might not have been fruitful. In any event, from the evidence presented, the amount of the loss 

caused by the relevant conduct of Defendants cannot be reasonably determined under a clear and 

convincing standard.

iv. Gain that resulted from the offense

If there is loss (which there is in this case) but it cannot be reasonably determined, the 

Court may proceed to consider the gain to a defendant. The Ninth Circuit has upheld the use of a 

defendant’s salary to measure gain when the district court concludes that a defendant would not 

have received the salary “but for” the unlawful conduct. United States v. Shabudin, 701 F. App’x 

599, 601 (9th Cir. 2017).1The continued salary and benefits enjoyed by Heine and Yates were

their gains from their crimes. They kept their jobs and avoided the FDIC’s regulatory sanction of 

 

1

The application notes provide for a credit against loss for “the fair market value of . . . 

the services rendered.” It is unclear, however, whether that provision applies to a calculation of 

“gain.” Gain is used when loss cannot be reasonably determined, which is not the situation in 

most cases that apply a credit against a loss.
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bank takeover or officer removal or prohibition. Based on the evidence presented at trial, Heine’s 

total salary and benefits paid by the Bank from 2010 through 2013 was approximately $1.2 

million, and Yates’s salary and benefits paid by the Bank from 2010 through 2012 was 

approximately $459,000. The Court does not find it necessary or appropriate to exclude from 

Defendants’ gains their salaries attributable to the lawful services that they performed for the 

Bank. Their crimes of conviction were intertwined with their lawful activities at the Bank.

The Court finds by clear and convincing evidence that Defendant Heine’s gain from his 

relevant conduct was more than $550,000 but not more than $1,500,000. Accordingly, the 

offense level of Defendant Heine will be increased by 14 levels. The Court also finds by clear 

and convincing evidence that Defendant Yates’s gain from her relevant conduct was more than 

$250,000 but not more than $550,000. Accordingly, the offense level of Defendant Yates will be 

increased by 12 levels.

c. Sophisticated Means; USSG § 2B1.1(b)(10)(C)—Increase by 2 Levels

Under the guidelines, a defendant’s offense level shall be increased by 2 levels if the 

offense “involved sophisticated means and the defendant intentionally engaged in or caused the 

conduct constituting sophisticated means.” USSG § 2B1.1(b)(10)(C). As explained in 

Application Note 9(B), “‘sophisticated means’ means especially complex or especially intricate 

offense conduct pertaining to the execution or concealment of an offense.” USSG § 2B1.1, cmt. 

n. 9(B). In United States v. Tanke, 743 F.3d 1296, 1307 (9th Cir. 2014), the Ninth Circuit 

affirmed the imposition of the sophisticated means enhancement where the defendant “created at 

least six false invoices and falsified carbon copies of checks . . . on at least ten occasions to 

conceal the payments.” Id. (citation omitted). The court held that this evidence “as a whole w[as] 

sufficiently sophisticated to support the district court’s decision.” Id.
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The scheme to defraud perpetrated by Heine and Yates involved more than simply 

entering false numbers on Bank Call Reports provided to the FDIC and the Bank’s Board. 

Among other things, Heine and Yates enlisted a “straw buyer” (Danny Williams) fraudulently to 

purchase for the Bank the foreclosed A Avenue Property from the Federal National Mortgage 

Association (commonly known as “Fannie Mae”). They also misrepresented financial 

information to the Bank’s outside auditor, the Moss Adams accounting firm, in order to conceal 

the Bank’s improper accounting of the Coleman loan. The Court finds that the offenses involved 

sophisticated means and that Defendants intentionally engaged in or caused the conduct 

constituting sophisticated means. Accordingly, the offense levels of both Defendants will be 

increased by 2 levels.

d. Substantially Jeopardizing Safety and Soundness of a Financial 

Institution; USSG § 2B1.1(b)(16)(B)(i)—Increase by 4 Levels

Under the guidelines, a defendant’s offense level shall be increased by 4 levels if the 

offense “substantially jeopardized the safety and soundness of a financial institution.” USSG 

§ 2B1.1(b)(16)(B)(i). As explained in Application Note 13(A), some of the non-exhaustive

factors that the court should consider in determining whether, as a result of the offense, the safety 

and soundness of a financial institution was substantially jeopardized, include whether the 

financial institution became insolvent or was so depleted of its assets as to be forced to merge 

with another institution in order to continue active operations. USSG § 2B1.1, cmt. n. 13(A).

In this case, the Bank did not become “insolvent” as a direct and immediate result of the 

offense. Similarly, the offense did not so directly and immediately deplete the Bank of its assets 

that it was forced to merge with another institution in order to continue active operations.

Indeed, as discussed above, the Bank did not continue its active operations. Instead, as a result of 

the offense, the Bank was forced to become inactive and sell its assets to HomeStreet. As the 
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Application Notes make clear, these factors are part of a non-exhaustive list. See United States v. 

Zech, 553 F.3d 663, 667 (11th Cir. 2009).

The FDIC’s Victim Impact Statement, signed by Senior Bank Examiner Martin 

Muenchau, along with Mr. Muenchau’s testimony at the sentencing hearing explain that 

“Congress established the FDIC to maintain stability and public confidence in the nation’s 

financial system, but the crimes perpetrated by Mr. Heine and Ms. Yates undermine this goal.” 

Mr. Muenchau added that Defendants’ “false entries misdirected FDIC examiners, such as 

myself, away from significant weakness at the Bank.” As explained by Mr. Muenchau, 

“Mr. Heine’s and Ms. Yates’[s] misconduct substantially jeopardized the safety and soundness of 

the Bank of Oswego.” Among other things, “[b]oth Mr. Heine and Ms. Yates took active steps to 

conceal the Bank of Oswego’s true financial condition from the FDIC.” Mr. Muenchau adds that 

Defendants “each signed and submitted answers to FDIC questionnaires attesting broadly that 

there were no financial irregularities at the Bank,” they “oversaw submission of Call Reports, 

which contained materially false information,” and they “concealed the Bank’s financial 

weaknesses when meeting with FDIC examiners and investigators onsite at the Bank.” 

Mr. Muenchau then states: “These actions undermined the FDIC’s ability to fully assess material 

risks and to tailor supervisory responses to undisclosed emerging problems.” Based on these 

facts, Mr. Muenchau concludes:

Mr. Heine’s and Ms. Yates’s crimes put the safety and soundness 

of the Bank of Oswego into substantial jeopardy. The FDIC 

regards management as perhaps the most critical component in 

assessing a bank’s health. In this case, Mr. Heine’s and 

Ms. Yates’s collective actions and dishonesty resulted in 

regulatory downgrades to the Bank of Oswego’s CAMELS rating, 

ultimately placing the Bank in the category for the highest 

probability for failure.
PAGE 16 – OPINION AND ORDER

Based on Mr. Muenchau’s written statement and testimony, the Court finds that the 

offense substantially jeopardized the safety and soundness of the Bank, a financial institution. 

Accordingly, the offense levels of both Defendants will be increased by 4 levels.

e. Role in Offense; USSG § 3B1.1(a)—Increase by 2 Levels

Under the guidelines, a defendant’s offense level may be increased depending on that

defendant’s role in the offense and the number of participants in the criminal activity. USSG 

§ 3B1.1. If a defendant was an “organizer” or “leader” of a criminal activity that involved five or 

more participants, the offense level shall be increased by 4 levels. USSG § 3B1.1(a). If the 

defendant was a “manager” or “supervisor” (but not an organizer or leader) and the criminal 

activity involved five or more participants, the offense level shall be increased by 3 levels. USSG 

§ 3B1.1(b). If the defendant was an organizer, leader, manager, or supervisor in any criminal 

activity other than as described above, the offense level shall be increased by 2 levels. USSG 

§ 3B1.1(c). As explained in Application Note 1, “[a] ‘participant’ is a person who is criminally 

responsible for the commission of the offense, but need not have been convicted.” USSG 

§ 3B1.1, cmt. n. 1.

Based on the evidence presented at trial, the criminal activity involved at least 

Defendants Heine and Yates, Geoffrey Walsh, and Danny Williams. The government contends 

that the criminal activity also involved Geoffrey Walsh’s administrative assistant at the Bank, 

Julie Frank. Defendants dispute this conclusion, arguing that Ms. Frank only admitted at trial to 

participating in Bank-related illicit conduct with Walsh. At trial, Ms. Frank testified:

Q. Were there times when Mr. Walsh asked you to help him 

do things that you knew his bosses would not approve of?

A. Yes.

Q. Including things that violated bank procedures?
PAGE 17 – OPINION AND ORDER

A. Yes.

The evidence at trial appears to show that Ms. Frank did some things that she knew at the 

time were wrong and she did them at the direction of both Walsh and Yates. Ms. Frank testified 

that she knowingly facilitated some transactions designed to conceal the true financial condition 

of the Bank, including paying some delinquent loans to make them appear current. She also 

testified that she was glad that she was not required to keep secrets anymore, that she felt better 

not working for Walsh, Yates, and Heine, and that during her employment with the Bank, she 

was asked to do things that she now regrets doing.

“[M]ere unknowing facilitators of crimes will not be considered criminally responsible 

participants” for purposes of an offense level adjustment under USSG § 3B1.1(c). United States 

v. Cyphers, 130 F.3d 1361, 1363 (9th Cir. 1997). If, however, a person is a “knowing 

participant” in the fraudulent practices, then that person can be considered to be a criminally 

responsible participant for purposes of this adjustment. Id. Whether Ms. Frank was a criminally

responsible participant in the relevant conduct for purposes of this guideline adjustment is a close 

call. The Court declines to make that finding.

The Court, however, does find that both Heine and Yates qualify as an organizer, leader, 

manager, or supervisor in the relevant criminal activity, even if there were only four participants. 

Neither Walsh nor Williams would have done what they did in the offenses of conviction had 

they not had the approval of Heine and Yates. Accordingly, the offense levels of both 

Defendants will be increased by 2 levels. USSG § 3B1.1(c).

f. Abuse of Position of Trust; USSG § 3B1.3—Increase by 2 Levels

Under the guidelines, a defendant’s offense level shall be increased by 2 levels if that 

defendant has abused a position of public or private trust. USSG § 3B1.3. As explained in 

Application Note 1, a position of public or private trust is “characterized by professional or 
PAGE 18 – OPINION AND ORDER

managerial discretion (i.e., substantial discretionary judgment that is ordinarily given 

considerable deference). Persons holding such positions ordinarily are subject to significantly 

less supervision than employees whose responsibilities are primarily non-discretionary in 

nature.” USSG § 3B1.3, cmt. n. 1. The Court finds that both Heine and Yates abused their 

positions of trust at the Bank. Accordingly, an increase of 2 levels for abuse of a position of trust 

is appropriate for both Heine and Yates.

g. Obstruction of Justice; USSG § 3C1.1—No Increase Applied

Under the guidelines, the offense level shall be increased by 2 levels if: “(1) the 

defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration 

of justice with respect to the investigation . . . of the instant offense of conviction, and (2) the 

obstructive conduct related to (A) the defendant’s offense of conviction and any relevant 

conduct; or (B) a closely related offense.” USSG § 3C1.1. As explained in Application Note 1,

“[o]bstructive conduct that occurred prior to the start of the investigation of the instant offense of 

conviction may be covered by this guideline if the conduct was purposefully calculated, and 

likely, to thwart the investigation or prosecution of the offense of conviction.” USSG § 3C1.1, 

cmt. n. 1. One example of the type of conduct to which this adjustment applies is 

“committing . . . perjury, including during the course of a civil proceeding if such perjury 

pertains to conduct that forms the basis of the offense of conviction. USSG § 3C1.1, 

cmt. n. 4(B).

The government contends that Heine lied in his deposition under oath before the FDIC, 

including on matters involving his knowledge and involvement with the crimes for which he was 

convicted. Many of Heine’s answers, however, were in the form of expressing his lack of 

recollection. The government also contends that Yates lied in her deposition taken in the civil 

lawsuit brought by the Bank against Geoffrey Walsh. The government asserts that Yates lied 
PAGE 19 – OPINION AND ORDER

when asked questions about the A Avenue Property and the handling of the Coleman loan, 

among other topics. As with Heine, many of Yates’s responses indicate that she did not recall 

certain events or matters. The Court concludes that the government has not shown that either 

Heine or Yates willfully obstructed justice or committed perjury.

h. Summary

Based on the Court’s findings and conclusions described above, Defendants Heine and 

Yates have the following adjusted offense levels:

Heine Yates

Base Offense Level 7 7

Loss Enhancement 14 12

Sophisticated Means 2 2

Jeopardizing Financial Institution 4 4

Role Adjustment 2 2

Abuse of Position of Trust 2 2

Total: 31 29

2. Advisory Sentencing Guideline Range

Both Defendants have a Criminal History Category of I. Based on the adjusted offense 

levels stated above, Defendant Heine has an advisory sentencing guideline range of 108-135 

months, and Defendant Yates has an advisory sentencing guideline range of 87-108 months. The 

Court also notes that if no offense level enhancement for loss (or gain) were applied, then each 

Defendant would have an adjusted offense level of 17. In that circumstance, each Defendant 

would have an advisory sentencing guideline range of 24-30 months.

B. Consideration of Sentencing Factors under Section 3553(a)

1. Defendant Heine

Defendant Dan Heine is 71 years old and has no prior criminal conviction. As discussed 

previously, Heine did not directly line his pockets as a result of his crimes of conviction in 

making misrepresentations to the Bank’s Board of Directors and to the Bank’s regulators, 
PAGE 20 – OPINION AND ORDER

including the FDIC. Instead, his actions appear primarily intended to hide the Bank’s financial 

problems, keep his job, and improve the Bank’s financial attractiveness to potential future 

investors or acquirers. The bulk of Heine’s assets was his stock in the Bank, which is now gone. 

He is virtually broke. Many people submitted letters to the Court, attesting to Heine’s otherwise 

good character and describing his many charitable and selfless activities over many years. 

Although a prison sentence is appropriate based on the seriousness of the offense and the need to 

deter others from committing these types of crimes, 24 months in federal prison (from which 

there is no early release for parole) is a sufficient but not greater than necessary sentence for 

Defendant Heine to achieve the purposes of sentencing.

2. Defendant Yates

Defendant Diana Yates is 56 years old and has no prior criminal conviction. As discussed 

previously, Yates did not directly line her pockets as a result of her crimes of conviction in 

making misrepresentations to the Bank’s Board of Directors and to the Bank’s regulators, 

including the FDIC. Instead, her actions appear primarily intended to hide the Bank’s financial 

problems, keep her job, and improve the Bank’s financial attractiveness to potential future 

investors or acquirers. The bulk of Yates’s assets was her stock in the Bank, which is now gone. 

She is virtually broke. In addition, Yates’s husband is disabled and cannot work. Other personal 

medical and family issues relating to Yates were disclosed to the Court and have been considered

in determining an appropriate sentence. Although a prison sentence is appropriate based on the 

seriousness of the offense and the need to deter others from committing these types of crimes, 18 

months in federal prison (from which there is no early release for parole) is a sufficient but not 

greater than necessary sentence for Defendant Yates to achieve the purposes of sentencing.
PAGE 21 – OPINION AND ORDER

CONCLUSION

As to Counts 1, 3, 7-9, 11-13, and 15-19, Defendant Dan Heine is committed to the 

Bureau of Prisons for confinement for a period of 24 months on each count, with the sentences in 

all counts to be served concurrently with each other. As to Counts 1, 3, 7-9, 11-13, and 15-19, 

Defendant Diana Yates is committed to the Bureau of Prisons for confinement for a period of 18

months on each count, with the sentences in all counts to be served concurrently with each other.

The Court also imposes a period of three years of supervised release and a statutorily-mandated 

fee assessment in the amount of $1,300 ($100 per count of conviction) for each Defendant. The 

Court further notes that the Court would still impose these sentences even if the guideline 

adjustment for loss was not included in Defendants’ sentencing guideline calculations.

IT IS SO ORDERED.

DATED this 14th day of June, 2018.

/s/ Michael H. Simon

Michael H. Simon

United States District Judge