Court Opinion

ID: 9480046
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:36:17.370667+00
Date Added: 2024-06-11T17:47:26.980963
License: Public Domain

BOWMAN, Circuit Judge,
dissenting.
I concur in that portion of the Court’s opinion regarding the application of 18 *1535U.S.C. §§ 2314 and 2315 to wire transfers and in the discussion concerning the sufficiency of the evidence as to counts two through thirteen. Ante at 1528-1529, 1529. Because I disagree with the majority’s interpretation of the law concerning the admissibility of evidence of George Kroh’s guilty plea, I respectfully dissent from those parts of the opinion and from the result.
The Court here is reversing all thirteen of John Kroh’s criminal convictions because the District Court admitted evidence of George Kroh’s guilty plea at John’s trial. Despite the Court’s acknowledgment that there was sufficient evidence to convict John on twelve of the counts, ante at 1526, it finds the evidence of George’s guilty plea so prejudicial that all the convictions should be reversed. I believe the evidence in question was properly received. Moreover, I do not believe that John Kroh suffered any prejudice by reason of its admission, or that the evidence was insufficient on any of the counts. I therefore would affirm all of his convictions.
John Kroh’s defense counsel filed a pretrial motion in limine to suppress references to George Kroh’s plea agreement and convictions. At the hearing on this motion, the prosecutor told the district judge he intended to question George Kroh on direct examination about George’s plea agreement with the government and his convictions, but stated that the written plea agreement would not be offered as evidence. The district judge said he would not allow the written agreement into evidence, nor would he allow the prosecutor to read from it. The judge did indicate that he would permit questioning of George Kroh concerning his convictions and the plea agreement, and further questioning by the government if the defense opened the issue on cross-examination. Transcript Vol. I at 9-10.
It is important initially to set forth in full the only references during the trial to George Kroh’s guilty plea. Such elaboration in context will demonstrate that the plea was not presented in an inflammatory way and was not unduly emphasized, and will provide the basis for properly applying the law to the facts of this case.
During the government’s opening statement, the prosecutor told the jury:
George Kroh will testify, Jack’s brother. George Kroh will come in here and tell you first of all, he will tell you that he has pleaded guilty to several charges involving banks, that he has pleaded guilty in connection with a plea bargain with me; and he will lay that out for you.
Transcript Vol. II at 78.
The prosecutor’s statement did not mention that George Kroh was charged with or pleaded guilty to conspiracy with his brother or anyone else. There was no objection by the defense.
During the government’s direct examination of George Kroh, the government first established the witness’s identity and his relationship to John Kroh and to Kroh Brothers Development Company (KBDC). The following exchange then took place:
Q: (by the government): All right, sir. And now, Mr. Kroh, you are appearing today as a result of a plea agreement with the United States, correct?
A: (by George Kroh): Yes, sir.
Q: And can you tell the members of the jury when it was that that plea bargain arrangement was reached, if you can recall?
A: Last spring sometime.
Q: Okay. And just to summarize it, if I may for you, and correct me if any of this is incorrect, but just summarizing that, that has been reduced to a pleading, correct?
A: That is correct.
Q: The agreement between you and the United States is in essence as follows, is it not. Your part of the agreement is that you came into Federal Court and pled guilty to three felony counts of bank fraud, correct?
[Defense objected. Bench conference at which defense counsel explained that he wanted to be certain the government did not go into George’s agreement to tell the truth. If so, he would object. The prosecutor assured *1536the judge he intended to stay within the limits delineated at the hearing on the motion in limine. The proceedings returned to open court.]
Q: Just so that we are back on track here. Mr. Kroh, the agreement is essentially that you came into Federal Court here and pled guilty to three counts of false statements to banks; isn’t that essentially it?
A: Yes, sir.
Q: And one of those counts involved, I think, a conspiracy count, correct?
A: That is correct.
Q: And you did that and you also told the United States that you would cooperate with the Government in furtherance of its investigation in this matter, correct?
A: That’s correct.
Q: And that cooperation included testifying before a federal grand jury, correct?
A: Yes, sir.
Q: And also testifying here?
A: Yes, sir.
Q: Okay. Now, in exchange for that, the United States has told you, first of all, that whatever cooperation you lend to it, it would tell the sentencing judge at the time of sentencing, correct?
A: That is correct.
Q: And it further told you that there would be a five-year cap or a lid on any sentence to be imposed in your case; isn’t that true?
A: That is correct.
Q: Now, does that fairly summarize what the agreement was between you and the United States?
A: Yes, it does.
Q: All right. Did you, in fact, plead guilty to those charges?
A: I did.
Q: Were you sentenced?
A: Yes, sir.
Q: Can you tell us what your initial sentence was?
A: Two three-year sentences, running concurrently.
Q: Okay. And that was imposed by Chief Judge Wright of this district?
A: That is correct.
Q: Was that sentence subsequently reduced?
A: Yes, sir.
Q: And can you tell us — did you actually go off and do time?
A: Yes, I did.
Q: Was it reduced to what, sir?
A: Sixty days.
Q: Was there anything else provided as a reduction of that sentence?
A: Five years probation.
Q: And any other caveats to that sentence?
A: Yes. A restitution to the two banks.
Q: Which banks are those, Mr. Kroh?
A: Norbank and Kansas National.
Q: You are also appearing today in relationship to an immunity agreement that the United States has gotten and you have been provided with, correct?
A: That is correct.
Q: And essentially that immunity agreement is that whatever you say we can’t turn around and use against you, right?
A: That’s correct.
Q: In other words, your Fifth Amendment right is no longer applicable in this case?
A: Yes, sir.
Transcript Vol. V at 780-84.
The conspiracy charge was mentioned specifically only once and, in fact, a plea of guilty to conspiracy with John Kroh was never mentioned in this exchange. The reference was quite obviously in the context of setting out the entire agreement, and was not emphasized.
George Kroh’s testimony was preceded by this limiting instruction, which also was read without material alteration as Instruction 22 at the close of all the evidence:
Ladies and gentlemen of the jury, before we begin the testimony of this witness, I have an additional instruction to read to you. You are going to hear evidence from the witness, George P. Kroh, who you will hear evidence that he has made *1537a plea agreement with the Government. You may give his testimony such weight as you think it deserves. Whether or not his testimony may have been influenced by the plea agreement is for you to determine.
The witness’ guilty plea cannot be considered by you as evidence of this defendant’s guilt. The witness’ guilty plea can be considered by you only for the purpose of determining how much, if at all, to rely upon the witness’ testimony.
Transcript Yol. V at 776-77; Yol. VII at 1269.
Finally, the government explored George Kroh’s guilty plea further on redirect examination. This was invited by the following testimony on cross-examination:
Q (by defense counsel): Is it also correct to say that you never agreed with Jack to make a false statement on a balance sheet?
A (by George Kroh): Do you mean like we sat down together and agreed?
Q: Right.
A: I would say that’s — we didn’t sit down and write something up, no.
Q: Nor did he come to you and say, “Jack [sic], I am going to file a false financial statement on your behalf”?
A: No.
Q: And you had no knowledge of him having done so until after the fact?
A: That’s correct.
Q: You and Jack never agreed to defraud any bank, did you?
A: Again, we didn’t sit down and draw up an agreement and sign some agreement that we were going out to defraud banks, no, sir.
Transcript Vol. V at 875-76.
On redirect, the prosecutor and witness had this exchange:
Q (by the government): Mr. Kroh, you were asked some questions about do you agree with your brother to submit false financial statements to banks. I understand that you responded you didn’t sit down and draw up an agreement with them. But isn’t it true, Mr. Kroh, that you came in here to Federal Court and pled guilty to that charge?
A (by George Kroh): Yes, sir.
[Defense counsel objected. Bench conference. Objection overruled.]
Q: Mr. Kroh, you came in here to Federal Court and appeared before Chief Judge Scott 0. Wright, correct?
A: That’s correct.
Q: And at that time you were placed under oath, correct?
A: Yes, sir.
Q: And at that time you tendered a guilty plea to conspiring with your brother over here to submit false statements to banks, right?
A: That’s correct.
Q: And—
[Objection renewed. Bench conference and motion for mistrial. Denied.]
Transcript Vol. V at 878-82.
That was the full extent of the discussion of George Kroh’s guilty plea on redirect examination. It never was mentioned again, either in closing argument or otherwise. There are no other references to George Kroh’s plea agreement or his convictions anywhere in the transcript of this six-day trial.
“The trial court has broad discretion in determining what evidence can be admitted, and its decision will be overturned on appeal only if there was an abuse of discretion.” Rothgeb v. United States, 789 F.2d 647, 650 (8th Cir.1986). The discretion accorded lower courts in determining admissibility of evidence “is particularly broad in a conspiracy trial.” United States v. Davis, 882 F.2d 1334, 1343 (8th Cir.1989), petition for cert. filed, No. 89-1043 (U.S. Dec. 23, 1989). The District Court stayed well within its discretion in allowing the government to question George Kroh on direct and redirect examination about his plea agreement and convictions.
In the Eighth Circuit, the law is clear that “a confederate’s guilty plea is admissible, even on the Government’s direct examination of the witness, as evidence of the witness’ credibility, or of his acknowledgment of participation in the offense.” *1538United States v. Hutchings, 751 F.2d 230, 237 (8th Cir.1984) (emphasis added) (witness testified on direct examination about his plea of guilty to aiding and abetting defendant in crime with which defendant was charged), cert. denied, 474 U.S. 829, 106 S.Ct. 92, 88 L.Ed.2d 75 (1985). The witness’s plea or evidence thereof, however, “cannot be used as substantive evidence of the defendant’s guilt,” and the jury should be so instructed. Id.; see also United States v. Drews, 877 F.2d 10, 12 (8th Cir.1989) (no abuse of discretion in receiving witness-coconspirators’ written plea agreements into evidence when jurors were instructed that pleas were not evidence of substantive guilt of defendant but only went to credibility of witnesses, and government did not indicate “it had independently verified the witnesses’ testimony”); United States v. Braidlow, 806 F.2d 781, 783 (8th Cir.1986) (no error in admitting evidence of guilty pleas of confederates on direct examination when the evidence was not used as substantive evidence of defendant’s guilt, cautionary instructions were given, and evidence was not emphasized).
The evidence of George Kroh’s guilty plea brought out on direct examination clearly was admissible under the law of this Circuit. The written plea agreement was not offered in evidence, nor was any part of the text read to the jury. The government focused only on the fact of the guilty plea and the quid pro quo involved in George’s agreement with the government. The prosecutor did not even mention that the conspiracy to which George Kroh pleaded guilty was a conspiracy with John Kroh and, in any event, the District Court instructed the jury twice that evidence of George’s plea was not to be interpreted as evidence of John’s guilt, but was to be used only in determining the weight to be given to George’s testimony. The charges to which George pleaded guilty played only a small part in his direct examination and certainly were not emphasized by the government. Neither the guilty plea nor the agreement was mentioned in the prosecutor’s closing argument; the government relied on neither for its proof of John’s participation in a conspiracy. The District Court plainly did not abuse its discretion in allowing this direct testimony.1
There remains the question whether the guilty plea was emphasized to John Kroh’s prejudice on the government’s redirect examination of George Kroh. It is clear from the record that on redirect the government properly used George Kroh’s guilty plea for impeachment purposes. On cross-examination, the defense asked George if he had agreed with John to defraud banks. George’s denial, though equivocal, opened the door for the government to impeach that testimony. “The trial court does not abuse its discretion by allowing the use of evidence on redirect examination to clarify an issue that was opened up by the defense on cross-examination — even when this evidence would otherwise be inadmissible.” Braidlow, 806 F.2d at 783. On cross-examination, George Kroh testified “no agreement,” but his guilty plea was to the contrary. The guilty plea already had been mentioned in another context, was clearly probative of the credibility of George’s testimony denying that he had agreed with John to defraud banks, and was not unfairly prejudicial. It is also a reiterated “acknowledgment of participation in the offense,” which participation George was attempting to deny. Hutchings, 751 F.2d at 237. In these circumstances, it was proper for the government to ask George Kroh on redirect examination whether he had pleaded guilty to conspiracy with his brother to submit false statements to banks. Defense counsel opened up this line of questioning and the government was entitled to pursue it to show that George had been less than candid in his answers on cross-examination.
John Kroh argues, and the Court’s opinion here agrees, that, because there is no other evidence of his participation in a conspiracy with George, the jury must have disregarded the District Court’s limiting in*1539structions and used George’s guilty plea as evidence of John’s guilt. A review of the transcript demonstrates, however, that there is substantial evidence of John Kroh’s participation in a conspiracy with George Kroh to defraud banks. The Court’s opinion seems determined to view the evidence in the light most favorable to John Kroh, despite the jury verdict finding him guilty as charged. In taking this unusual approach, the Court violates the well-established rule that, in our review of a criminal conviction, the evidence must be viewed in the light most favorable to sustaining the jury verdict, giving the government the benefit of all reasonable inferences that may be drawn. United States v. Marin-Cifuentes, 866 F.2d 988, 992 (8th Cir.1989).
The trial record contains abundant evidence showing a conspiracy involving George and John. While much of it is circumstantial, “[t]he independent evidence showing a conspiracy may be direct or totally circumstantial.” United States v. Jankowski, 713 F.2d 394, 396 (8th Cir.1983), cert. denied, 464 U.S. 1051, 104 S.Ct. 732, 79 L.Ed.2d 192 (1984).
The former personal secretaries of John and George Kroh, and George Kroh himself, all testified that the liability figures on the brothers’ personal financial statements were supplied by John Kroh. Evidence from several witnesses demonstrates that those liabilities were significantly understated. The individual false financial statements were signed by John and George Kroh and sent to the defrauded banks to obtain personal loans.
In May 1986, John Kroh represented to Southwest Bank of Omaha that he wanted a total of half a million dollars in personal loans for himself and his brother for a “personal investment” with a New York investment firm. Southwest, upon reviewing the false personal financial statements, approved the loans and, after John and George Kroh signed promissory notes, wired the funds to the brothers’ personal accounts. John and George promptly signed personal checks transferring the money into a KBDC account.
In October 1986, on John’s representation that the funds were to be used for personal investments in the Hall Farms project, the Krohs applied for a combined one million dollars in personal loans from Norbank of North Kansas City. After receiving and reviewing the false personal financial statements signed by John and George Kroh, the bank approved the loans. Norbank also required personal guaranties of the brothers’ wives, but the signatures furnished to the bank upon which it relied were in fact those of the brothers’ secretaries.2 After signing the promissory *1540notes, John and George Kroh received and deposited in their personal accounts the money orders for the loans and immediately signed checks for the loan amounts made payable to KBDC, which by now, it was clear to all on the inside, was having very serious cash flow problems.
Finally, again upon the representation that the funds were for personal investment in Hall Farms, the brothers acquired personal loans totalling $800,000 from Firs-tate Savings & Loan of Orlando in November 1986 and immediately transferred the proceeds into the sinking ship that KBDC had become.
It is obvious from the evidence that John Kroh, in a desperate scheme to keep KBDC afloat, was knowingly defrauding banks and was using George Kroh in carrying out the fraudulent scheme. As for the conspiracy, that is, George Kroh’s knowing involvement in the scheme, his own testimony is particularly damning.
On direct examination:
Q (by the government): When did it become apparent to you that Kroh Brothers Development Company was in financial trouble in 1986?
A (by George Kroh): In August. That was the first time.
Q: Why is that? Why did it hit you in August?
A: There were some problems paying the bills.
j-< ‡ * #
[Discussing George Kroh’s personal financial statement that was sent to Norbank.]
Q: In October of 1986, can you tell me whether or not the $3.3 million accurately reflected the total liabilities that you had?
A: I don’t believe it did.
Q: Can you tell me back then what you thought your liabilities were?
A: I thought they were about $5 million.
* ‡ *
Q: Okay. And in connection with this financial statement that went to the Firstate Savings & Loan, can you tell me whether or not back in November of 1986, $3.3 million accurately reflected your bank liabilities?
A: No, it did not.
Q: Why do you say that, sir?
A: Well, I had more than that borrowed.
Q: Do you remember at that time how much you thought that you had owed to banks?
A: I thought it was around five, five and a half million.
Transcript Vol. V at 800, 822-23, 828.
On cross-examination:
Q (by defense counsel): Do you believe that the — that if this, say the American Express and the institutional deals that you had working, if they had gone through, do you think that it would have made a difference in the ultimate outcome relative to Kroh Brothers?
A (by George Kroh): It might have slowed it down a little bit, but I don’t think it would have made an ultimate decision of whether the company would have gone down or not.
Q: Do you think that that ultimately would have taken place in any event?
A: I am afraid so.
*1541Q: All right. There was some kind of an inherent defect in the operation; is that what you are saying?
A: No, I think it was too late. You asked if these would happen — if a closing or two in December or November of ’86 would have helped out. I am saying I think it was too late at that point.
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Q: Would it be correct to say, Mr. Kroh, that you never knowingly signed a false financial statement?
A: I would say that’s — well, up until the very end. I’d say up through — after Commerce Bank there might have been a question.
Q: There was a question?
A: After Commerce Bank I did.
Transcript Yol. V at 845-46, 874-75 (emphasis added).
After the Commerce Bank check-kiting debacle3 — the day after, in the case of Norbank — George and John Kroh each signed false financial statements omitting, among other liabilities, the personal guaranties for seven million dollars they just had given to Commerce, and used those false statements to procure loans (that they knowingly misrepresented as being for their personal use) from two of the banks in question. While defense counsel attempted to cure this damaging testimony, it is, in fact, an admission of guilt that the jury could have credited.
Although it may be true that George was not involved in the negotiations for the loans or the preparation of the personal financial statements, he signed the financial statements knowing them to be false, signed promissory notes for personal loans, and then signed checks transferring the proceeds of the loans to KBDC, knowing full well that KBDC had lost its ability to borrow and that it was headed for financial disaster. “Secrecy and concealment are essential features of successful conspiracy .... Hence the law rightly gives room for allowing the conviction of those discovered upon showing sufficiently the essential nature of the plan and their connections with it, without requiring evidence of knowledge of all its details or of the participation of others.” Blumenthal v. United States, 332 U.S. 539, 557, 68 S.Ct. 248, 256, 92 L.Ed. 154 (1947).
It simply cannot be said that there is no evidence of a George-John conspiracy, as the majority alleges.4 As the Court acknowledges in its opinion, “[Ojnly slight evidence is required to connect a person to a conspiracy.” Ante at 1531. Here there is substantial circumstantial evidence of a conspiracy between the brothers sufficient to convict John Kroh of the conspiracy charge. Considering the strength of the government’s case, there is simply no reason to speculate, as the Court does, that the jury must have disregarded the District Court’s repeated instructions not to consid*1542er George’s guilty plea as evidence of John’s guilt.
The Court concludes that the references to George Kroh’s guilty plea “tainted the entire trial” because of the damage they did to John Kroh’s credibility, which credibility was crucial to his defense on all counts. Ante at 1532. Having carefully reviewed the record, however, I am convinced that the government’s fleeting (and proper) references to George’s guilty plea could have had little impact on the jury’s assessment of John’s credibility. It is apparent from the trial transcript that John Kroh himself did the most serious damage to his credibility. Throughout cross-examination, he sparred with the prosecutor, displaying hostility and a determination never to give a straight answer, constantly “splitting hairs,” as the prosecutor put it at one point. He continually manifested memory lapses. He was vague, evasive, and equivocal, and frequently declared that he was having difficulty understanding the government’s straightforward and simple questions. The general impression that remains after reading the transcript is of a witness attempting to sabotage the search for the truth, rather than of an innocent victim trying to clear his name. All this would have been especially vivid in the minds of the jurors, since John testified on the last day of the trial, and the jury began its deliberations that same day. It therefore is not difficult to understand why the jury rejected his attempts to convince them that he acted without fraudulent intent.
The trial record is replete with evidence that severely tested what the Court calls “the credible and strong defenses presented by Kroh.”5 Ante at 1533. In any event, “[t]he credibility of the evidence is for the jury to determine,” United States v. Lee, 743 F.2d 1240, 1251 (8th Cir.1984) (conspiracy conviction affirmed despite defendant’s testimony that his alleged conspi-rational actions were innocent of any illegal purpose), and the jury obviously did not believe John Kroh. I cannot agree that the three fleeting and entirely proper references in a six-day trial to George Kroh’s guilty plea, presented for the purpose of assisting the jury in its evaluation of George’s testimony and not of John’s, prejudiced John’s right to a fair trial. Our Court’s deference to what it perceives to be the “credibility” of this white-collar defendant, and its discounting of the jury’s ability to follow the trial court’s instructions, to weigh the credibility of the witnesses, and to evaluate John’s asserted defenses, is unjustified, improper, and regrettable.
I would affirm the convictions on all counts.

. In the event the defense intended the continuing objection it made following the hearing on the motion in limine to cover the reference to the plea bargain in the government's opening statement, the same reasoning applies and there is no error in the opening statement.

. In its opinion the Court says, “Significantly, George Kroh’s secretary testified [that the practice of her signing George Kroh's wife’s name to personal guaranties] was directed by Mond-schein or other company personnel and that George Kroh was never involved.” Ante at 1528. That is not how I read the secretary’s testimony:
Q (by the government): Now, Ms. Bosch, did you have any involvement in the securing of a personal loan by Mr. George Kroh at the Norbank of North Kansas City in October of 1986?
A (by Michelle Bosch, George Kroh’s former personal secretary): Yes, I did.
Q: And can you tell me how it was that that first came about, what happened?
A: The only thing that I can remember about the loan is that I signed Carolyn Kroh’s name on the guaranty.
Q: Do you remember how that event occurred or was it — is it not clear at this time?
A: Well, I didn't pay a lot of attention to the loans because it just didn’t — it wasn’t something that I needed to be concerned about. There were other people in the company that took care of that. If her name was required, I had been asked to sign it over the years. I cannot tell you if someone specifically asked me to sign it on that particular occasion or if I simply signed it because I had done so previously.
Q: Just as an — I understand it would be difficult to remember what happened in October 1986, but as a general practice, would you sign her name frequently, infrequently, what?
A: Frequently.
Q: And from whom would you generally receive those directions as to whether or not to sign?
A: George Kroh.
******
Q (by defense counsel): You identified, I believe, the Norbank guaranty which I won't put on the board, but you did identify that as your signature?
A (by Michelle Bosch): Yes.
Q: Do you have a specific recollection of whether or not Mr. George Kroh, on that *1540particular signature, the Norbank documents, directed you to sign that particular document?
A: No, I don’t have a specific recollection.
Q: Do you have a specific recollection of ever signing Carolyn Kroh’s name without authority from Mr. George Kroh or at his direction?
A: As I stated earlier, when I initially started signing her name, it was always at George Kroh's direct request. As time went on, the longer I worked with him, the pattern had been established and I knew that he expected me to do this so I did it when it was needed to be done and he was not available to — if they needed the signature, and if he was not standing there to tell me to do this, I would do it because I had been authorized previously to do it and the pattern had been established.
Q: So on the — so basically on Norbank, you either signed it at his direction or because of the pattern that had been established; would that be fair to say?
A: Exactly.
Transcript Vol. IV at 521-22, 533-34.

. For a review of the evidence regarding this incident, see ante at 1527.

. The Court mischaracterizes the evidence and impliedly misstates the law when it says, "In fact, the evidence demonstrates the scheme could have operated entirely without George’s participation, since loans were obtained in some cases by simply signing George’s name to the relevant documents.” Ante at 1531. The evidence was that only one, not "some,” of the three financial statements sent to the subject banks was signed by John for George, and none of the promissory notes. It is by no means clear that all of the banks involved would have acquiesced in John’s signing for George on the loan documents, and still have made the loans. Had George refused to sign or questioned the accuracy of the documents, no more than half and perhaps none of the funds could have been swindled from the banks. As to the law, the statute is clear: “If two or more persons conspire ... and one or more of such persons do any act to effect the object of the conspiracy,” they commit a criminal offense. 18 U.S.C. § 371 (1988). The unlawful object of the conspiracy need not even be completed, and only one of the coconspirators must do an act in furtherance of the scheme. The act shown need not be an act critical to the success of the plan. While a defendant’s indispensability to the perpetration of a completed crime surely would be evidence of his participation in the crime and in a conspiracy with a fellow actor to complete the crime, an absence of indispensability does not prove innocence. Thus, evidence that George’s participation was not essential to the bank fraud, if in fact there were such evidence, would not establish George’s nonparticipation in the conspiracy.

. I find the "credible and strong" characterization highly questionable. To me it is far from credible that a well-educated and experienced business person, one of the principals of a substantial business enterprise, would rely totally upon underlings in his company to prepare his personal financial statements, and then either never review the statements for accuracy or be so unaware of his own finances that he did not recognize multi-million dollar errors— including the omission of multi-million dollar liabilities that he only recently had assumed. Equally implausible is that such a businessman would obtain funds for his floundering company by misrepresenting to the lending banks that the monies were for personal use, yet do so without intending to deceive the banks.