Opinion ID: 625938
Heading Depth: 4
Heading Rank: 2

Heading: Count 2 – The Lake Ozark Transaction

Text: In contrast with the majority of the charges, Count 2 alleged bank fraud by Miller, Vanatta, and Irvin in connection with their purchase, rather than sale, of a home. The home, located on Lake Ozark in central Missouri, was purchased with the intention that repairs and improvements would be made to the property, and it would then be sold for profit (hereafter the “Lake Ozark Transaction”). Miller and Irvin obtained the funds needed to purchase this property by cosigning on a mortgage loan issued by First National Bank of Camdenton, Missouri, with whom Miller had previously dealt successfully on several occasions. Because Irvin was a cosigner on the loan, First National Bank required her to submit certain financial information. Irvin provided the bank with what appeared to be official tax returns and a financial statement prepared by an accounting firm, but testimony at trial indicated these materials were fraudulent. First National Bank ultimately approved Miller’s and Irvin’s application for a $650,000 loan. In Count 2, the government charged that this transaction constituted bank fraud in violation of 18 U.S.C. § 1344. Although Miller was acquitted, Irvin was found guilty of Count 2. Bank fraud is defined as the knowing execution, or attempted execution, of “a scheme or artifice (1) to defraud a financial institution; or (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises.” 18 U.S.C. § 1344. The government elected to prosecute Count 2 solely under the second prong of § 1344, which we have clarified requires a -19- showing that the defendant’s false or fraudulent pretenses were “material.” United States v. Akers, 215 F.3d 1089, 1101 (10th Cir. 2000). Irvin’s sufficiency-of-the-evidence challenge focuses on this requirement, and she contends nothing in the record supports the jury’s finding that her representations to First National Bank were material. Instead, Irvin argues, the testimony of First National Bank loan officer Tom Niedergerke established without contradiction that Irvin’s representations played no role in the bank’s decision to issue the loan whatsoever, and therefore could not have been material. The record is, in fact, clear that the fraudulent financial information Irvin submitted to First National Bank had no impact on the ultimate issuance of the loan. As Mr. Niedergerke explained, his repeated successful dealings with Miller provided the sole basis of decision to recommend issuance of the mortgage loan to First National’s loan committee. Consequently, Irvin’s credit information was not even included in Niedergerke’s presentation to the loan committee, in which he explicitly stated that “[n]o financial emphasis [had been] placed on Hallie Irvin” in forming his recommendation. None of this, however, forecloses the jury from rationally concluding that Irvin’s representations were material. “In general, a false statement is material if it has a natural tendency to influence, or is capable of influencing, the decision of the decisionmaking body to which it was addressed.” Neder v. United States, 527 U.S. 1, 16 (1999) (quotation and alteration omitted); see also Akers, 215 F.3d at 1102 (citing United States v. Rodriguez, 140 F.3d 163, 168 (2d Cir. 1998), for the proposition that a material misrepresentation is one -20- “capable of influencing a bank’s actions”). This definition, in referring to natural tendencies and capabilities, establishes materiality in the bank fraud context as an objective quality, unconcerned with the subjective effect that a defendant’s representations actually had upon the bank’s decision. Defining materiality in this way accords with the thrust of § 1344, which criminalizes the defendant’s “scheme or artifice,” rather than the completed fraud. Neder, 527 U.S. at 24, 25 (“By prohibiting the ‘scheme to defraud,’ rather than the completed fraud, the [subjective] elements of reliance and damage would clearly be inconsistent with the statutes Congress enacted.”). It is therefore irrelevant whether Mr. Niedergerke or the First National Bank loan committee were in fact influenced by Irvin’s fraudulent representations. The pertinent inquiry is instead whether Irvin’s representations had the capability to so influence their decisions. By convicting Irvin of Count 2, the jury answered this question in the affirmative, and its finding is adequately supported by the record. Mr. Niedergerke’s requirement that Irvin submit her financial information as part of the loan application process, for example, indicates the information was at least potentially relevant to the bank’s decision, and Vanatta and Irvin’s decision to falsify the requested information indicates they believed it to be so. Furthermore, Mr. Niedergerke testified it would have been relevant to the bank’s decision to know that Irvin had submitted fraudulent tax returns. Because these facts, combined with testimony presented throughout the trial describing the significance of a loan applicant’s financial information, could lead a rational trier of facts to conclude Irvin’s representations to First National Bank were material, Irvin’s conviction on Count -21- 2 is affirmed.