Opinion ID: 199023
Heading Depth: 1
Heading Rank: 3

Heading: sufficiency of the evidence

Text: 40 Both defendants challenge the sufficiency of the evidence underlying their convictions. In reviewing this challenge, we ask whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Blasini, 169 F.3d at 62.
41 Ober was convicted of bank fraud on Count 5 for his involvement in the 222 Stackpole Street transaction. Kenrick was acquitted on the same count. To convict a defendant of bank fraud, the government must prove that he (1) engaged in a scheme or artifice to defraud, or made false statements or misrepresentations to obtain money from; (2) a... financial institution; and (3) did so knowingly. Brandon, 17 F.3d at 424. The scheme must involve material falsehood, see Neder, 525 U.S. at 25, and the defendant must have acted with an intent to defraud the bank, see Brandon, 17 F.3d at 425, which, as we have explained, is an intent to deceive the bank in order to obtain from it money or other property. 42 Viewing the record in the light most favorable to the government, there was ample evidence to convict Ober of bank fraud in connection with the 222 Stackpole Street transaction. 10 The jury could have found that Ober was Flynn's partner in purchasing 222 Stackpole Street; 11 that he concealed his interest by, inter alia, causing Flynn to submit a loan application to WCB that falsely listed her as sole owner; that WCB made a $900,000 loan to finance the purchase without approval of the Board of Directors; and that someone falsified the Board minutes to make it appear that the Board had approved the loan. Considering Ober's interest in the transaction and his position as WCB president, the jury could infer that he caused the loan to be made and either altered the Board minutes himself or caused them to be altered. 43 The jury could further have concluded that Ober intended to deceive WCB in order to obtain the Stackpole Street loan. Furthermore, although not necessary for conviction, as we discuss below in connection with Count 4, the jury could have found--based on the size of the loan, the location of the property outside WCB's usual lending area, the speculative nature of the condominium conversion, Flynn's lack of history of business with WCB, and the fact that Ober's interest in the loan violated Massachusetts banking law--that WCB would not have made the loan if all the material facts had been revealed. A rational jury could have found Ober guilty beyond a reasonable doubt on Count 5. 12
44 Ober and Kenrick were both found guilty of bank fraud in connection with the 8-10 Emerson Street transaction. The government's allegation as to this transaction was essentially that it was a separate execution of the same scheme to defraud WCB charged in Count 5. 13 The government alleged that Kenrick and Ober entered into a secret agreement whereby Kenrick would sell 222 Stackpole Street to Ober and Flynn, giving Ober the opportunity to make a large profit by converting the property to condominiums and Kenrick the chance to avoid the impending increase in the capital gains tax; in exchange, Ober would make financing available through WCB to Chung Lee and her parents to buy 8-10 Emerson Street, allowing Kenrick the same large tax advantage on that sale. 45 The evidence, especially Chung Lee's testimony, 14 was sufficient to allow the jury to find that there was such a secret agreement. 15 Like the Stackpole Street mortgage, then, the Emerson Street mortgage was part of a scheme in which Ober deceptively took WCB's funds, and placed WCB at risk of loss, for his personal benefit. There were differences between the two executions of the scheme, of course. The benefit to Ober from Emerson Street was only indirect; he fraudulently obtained the money in the form of a loan to the Lees, not to himself, and he made no money from that transaction in isolation. The jury could have found, however, that he indirectly benefitted because the Emerson Street loan made possible the Stackpole Street purchase from which Ober garnered a substantial profit. The Emerson Street mortgage was approved by the WCB Board of Directors, but Ober never disclosed to them the existence of the secret quid-pro-quo agreement. Both loans benefitted Ober while exposing WCB to potential loss. No actual pecuniary loss resulted directly from the Stackpole Street loan, but the bank lost $119,645.84 when the Lees defaulted on the Emerson Street loan. 46 On appeal, Kenrick and Ober attempt to shift the focus from their nondisclosure of the secret agreement onto the financial status of the Lees. They argue that the Lees were creditworthy borrowers who would have been granted a loan in any event, and that this fact precludes conviction on Count 4. At least two circuits have held, however, that the creditworthiness of the borrower is no defense to bank fraud when there is concealment of an insider interest in the transaction. See United States v. Doke, 171 F.3d 240, 245-46 (5th Cir. 1999); United States v. Holley, 23 F.3d 902, 909 (5th Cir. 1994); United States v. Walker, 871 F.2d 1298, 1307 (6th Cir. 1989). 47 Moreover, the defendants' argument misses the point in an important way. They mistake the character of the falsehood required for conviction by arguing, in effect, that it must have actually induced the bank to make a loan that would not otherwise have been made. On the contrary, to be criminally fraudulent a defendant's deceptive course of conduct must be material, see Neder, 527 U.S. at 25, and it must be directed at obtaining money or other property from the bank, but there is no requirement that it actually cause the bank to change its behavior, see id. at 24-25 (The common-law requirements of 'justifiable reliance' and 'damages[]'... plainly have no place in the federal fraud statutes.). A falsehood can be material 16 even if it did not in fact induce the bank to alter its conduct, although if such alteration did occur it is obviously probative of materiality. A misrepresentation about a borrower's creditworthiness can certainly be a material falsehood that supports a bank fraud conviction, but a different falsehood is also sufficient if it is material. 48 There was evidence that Kenrick and Ober had a secret quid-pro-quo agreement that gave Ober an indirect financial interest in the Emerson Street loan, and that Kenrick applied for the loan on the Lees' behalf and Ober approved it and presented it to the Board of Directors for ratification while concealing the material fact of that agreement. On the basis of that evidence, a rational jury could have found them both guilty beyond a reasonable doubt on Count 4. 17
49 Ober was found guilty of two counts of bank fraud in connection with loans to the DGB Realty Trust, which Ober owned with Glenn Gates and William Upton. Count 18 concerned WCB's $15,000 demand loan to DGB, which was increased to $25,000 in December 1987, was never disclosed to or ratified by the Board of Directors, and was succeeded by a loan in the name of Upton that had not been paid off at the time of trial. Count 20 concerned Ober's practice of having DGB checks paid, even though there were insufficient funds in the DGB checking account, and held for long periods until there was enough money in the account to cover them--thus essentially providing Ober and his partners with undisclosed interest-free loans. The indictment alleged, and the evidence showed, that one check in the amount of $6,780.42 was thus held for over nine months. The evidence was sufficient to find Ober guilty on both counts. Ober concealed from the Board the plainly material fact that he was putting bank assets in his own pocket by means of undisclosed loans that put the bank at significant risk of loss and that were eventually repaid either incompletely or without interest. In short, the evidence on these counts, like the evidence on Counts 4 and 5, suggested that Ober treated WCB as his personal piggy bank, the assets of which he felt free to dispose of by loans to himself, his associates, or their designees. On that basis a rational jury could have found Ober guilty of bank fraud as we have defined it above.
50 Ober was convicted of perjury for denying, under oath, that he was familiar with the D & E Realty Trust and that he had ever participated in making a loan in which he had an undisclosed interest. As recounted above, there was evidence that Ober was present when the D & E Realty Trust was executed, owned a half interest in it, and received half of its net income. There was also evidence that he participated in making undisclosed loans to the Riverview Development Trust and the DGB Realty Trust while having an interest in each trust. On the basis of that evidence, the jury could have concluded that both of Ober's statements--which he stipulated were material--were false and that he made them willfully. See United States v. Cardales, 168 F.3d 548, 558 (1st Cir.), cert. denied, 120 S. Ct. 101 (1999) (elements of perjury are falsity, materiality, and willfulness). Although Ober now argues that the question whether he was familiar with the D & E Realty Trust was ambiguous, there was sufficient evidence to prove that his denial was false on any reasonable interpretation of the question.