Court Opinion

ID: 4269751
Source: CourtListenerOpinion
Date Created: 2018-04-25 15:00:24.72781+00
Date Added: 2024-06-11T14:31:40.776927
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                                File Name: 18a0213n.06

                                         No. 17-5282

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT                                FILED
                                                                               Apr 25, 2018
UNITED STATES OF AMERICA,                              )                  DEBORAH S. HUNT, Clerk
                                                       )
        Plaintiff-Appellee,                            )
                                                       )      ON APPEAL FROM THE
v.                                                     )      UNITED STATES DISTRICT
                                                       )      COURT FOR THE EASTERN
JOHN GUZMAN,                                           )      DISTRICT OF KENTUCKY
                                                       )
        Defendant-Appellant.                           )                  OPINION
                                                       )
                                                       )

        BEFORE: CLAY, STRANCH, and LARSEN, Circuit Judges.

        JANE B. STRANCH, Circuit Judge. John Guzman was convicted by a jury of nine

counts of bank fraud, in violation of 18 U.S.C. § 1344. The district court imposed a sentence of

50 months of imprisonment for each count, to be served concurrently. Guzman challenges his

convictions, arguing that the district court erred in denying his motion for a judgment of

acquittal.   Because we find that Guzman’s convictions are supported by the evidence, we

AFFIRM.

                                 I.       BACKGROUND

        In 2006, Guzman owned and managed several Kentucky businesses, including a

houseboat rental business.     Guzman wished to purchase the Grider Hill Marina on Lake

Cumberland, which was priced at $15 to $17 million. Initially, Guzman approached American

Founders Bank (AFB) for a loan but he was denied financing because of large outstanding debts
No. 17-5282
United States v. Guzman

that he owed to AFB for his various business ventures. Guzman then approached Fifth Third

Bank, which agreed to finance the project provided that Guzman could supply a $5 million down

payment on the property. To secure this down payment, Guzman recruited five individuals—

Brent Ray, Eric Friedlander, William “Bill” Bigelow, Robert Dames, and Richard Markowitz—

to purchase shares in Guzman’s marina endeavor. Guzman informed these investors that to

finance the purchase of the marina, he would assist them in obtaining loans from AFB. Guzman

prepared loan applications on behalf of the investors, AFB approved the applications, and

Guzman secured a total of $2.1 million for the down payment on the marina. Unbeknownst to

Guzman’s investors, however, the loan applications submitted to AFB stated that the purpose of

each loan was to purchase a houseboat or materials to build a houseboat. In support of these loan

applications, Guzman furnished AFB with fake houseboat appraisals, insurance paperwork, and

boat surveys that he created using documentation from houseboats in his rental fleet. These loan

applications in no way indicated that the purpose of these loans was to secure financing for the

marina purchase. This scheme and the accompanying falsified loan documents for each of the

five investors were the basis for Counts One through Five of the indictment.

        The remaining four counts of the indictment were linked to Guzman’s other business

interests.   Guzman and his brother Glenn jointly managed Driftwood Floating Condos

(Driftwood). Glenn died suddenly in August 2006. Two months later, Guzman forged his

brother’s signature in order to cash in a certificate of deposit and pay down Driftwood’s line of

credit with AFB. Following that payment, AFB raised Driftwood’s line of credit, and Guzman

transferred corresponding funds to accounts utilized for financing his purchase of Grider Hill

Marina. Guzman’s transfer of the line of credit funds formed the factual basis for Count Six of

the indictment.

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No. 17-5282
United States v. Guzman

       Guzman also approached professional football player Kimo Von Oelhoffen, a partner in

another of Guzman’s businesses, about financing the marina. After Von Oelhoffen declined to

participate in the marina deal, Guzman represented himself as holding Von Oelfoffen’s power of

attorney and transferred $500,000 from Von Oelhoffen’s money market account to AFB to pay

down the line of credit on their joint business venture. When AFB consequently increased the

line of credit of his business with Van Oelhoffen, Guzman immediately transferred $500,000

from that business to accounts for the marina closing. This conduct constituted the basis for

Count Seven of the indictment.

       At the time he purchased Grider Hill Marina, Guzman also ran a company called Able To

Loan with his partner Larry Frakes. Able To Loan facilitated loans to investors seeking to build

houseboats and modular housing by having banks such as AFB underwrite these loans. Among

Able To Loan’s projects was a loan to investors to build an assisted living facility in West

Virginia, which would be built in multiple phases. In November 2006, prior to the purchase of

the marina, Able To Loan borrowed $643,400 from AFB and distributed it to the investors

building the assisted living facility. According to Frakes’s testimony, Guzman forged Frakes’s

signature as guarantor of the loan. That phase of construction was subsequently completed and

the investors paid back Able To Loan. Able To Loan, in turn, repaid the balance owed to AFB.

       In March 2007, AFB agreed to underwrite the second portion of Able To Loan’s loan to

the investors building the assisted living facility. Guzman again forged Frakes’s signature. In

this instance, however, Guzman diverted $651,897.34 to his Grider Hill Marina endeavor and

never repaid AFB the balance due for underwriting the second disbursement to the assisted living

investors. These two incidents are the basis for Counts Eight and Nine of the indictment.

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No. 17-5282
United States v. Guzman

        After a five-day jury trial, a jury convicted Guzman on all charges. Guzman moved for a

judgment of acquittal, which the district court denied. He filed a timely notice of appeal.

Guzman challenges his convictions on Counts One through Five and Counts Eight and Nine

only.

                            II.        STANDARD OF REVIEW

        “We review de novo a district court’s denial of a motion for a judgment of acquittal based

on the sufficiency of the evidence.” United States v. Callahan, 801 F.3d 606, 616 (6th Cir.

2015). Under this standard, the “relevant question is 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.” Jackson v. Virginia, 443 U.S. 307, 319

(1979). We draw all reasonable inferences in support of the jury’s verdict and may reverse a

judgment only if it is not supported by substantial and competent evidence, viewing the record as

a whole. United States v. Vichitvongsa, 819 F.3d 260, 270 (6th Cir. 2016), cert. denied, 137 S.

Ct. 79 (2016).    “[A] defendant claiming insufficiency of the evidence bears a very heavy

burden.” Callahan, 801 F.3d at 616 (quoting United States v. Jackson, 473 F.3d 660, 669 (6th

Cir. 2007)).

                                   III.        ANALYSIS

        At the outset, we clarify that Guzman was convicted under 18 U.S.C. § 1344(1), and not

under the provisions of § 1344(2). Section 1344(1) prohibits an individual from knowingly

executing or attempting to execute a scheme or artifice to defraud a financial institution.

Section 1344(2) prohibits any scheme “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(2).

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No. 17-5282
United States v. Guzman

The indictment states that all nine counts are for violations of Section 1344(1). The jury

instructions, likewise, confirm that the jury was instructed under the provisions of Section

1344(1).

       Guzman argues that there was insufficient evidence to convict him of bank fraud under

Section 1344(1). “The elements of bank fraud under 18 U.S.C. § 1344 are: (1) the defendant

knowingly executed or attempted to execute a scheme to defraud a financial institution; (2) the

defendant had an intent to defraud, and (3) the financial institution was insured by the FDIC.”

United States v. Kerley, 784 F.3d 327, 343 (6th Cir. 2015) (citations and internal quotation marks

omitted).    The fraud perpetrated by the defendant must involve the concealment or

misrepresentation of a material fact. Neder v. United States, 527 U.S. 1, 22–23 (1999). Because

a challenge to the district court’s denial of a motion for a judgment of acquittal is in essence a

challenge to the sufficiency of the evidence, Callahan, 801 F.3d at 616, we will review each of

Guzman’s convictions in turn to determine whether each was “supported by substantial and

competent evidence upon the record as a whole.” Vichitvongsa, 819 F.3d at 270 (quoting United

States v. Stewart, 729 F.3d 517, 526 (6th Cir. 2013)).

   A. Counts One through Five: Falsifying Investors’ Loan Applications

       Counts One through Five alleged a scheme under which Guzman recruited investors for

his marina purchase and made loan applications to AFB, falsely claiming that the investors were

seeking financing to purchase or construct houseboats. The Government presented extensive

evidence documenting Guzman’s scheme to defraud AFB. Jim Tate, who served as Senior Loan

Officer at AFB during the times at issue, testified that he and Guzman devised a plan whereby

Guzman would secure the down payment he needed to close the marina deal with Fifth Third

Bank by executing several smaller loans with AFB. Tate testified that Guzman submitted loan

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No. 17-5282
United States v. Guzman

documents purporting to be for houseboat purchases but which were intended to secure financing

for Guzman’s Grider Hill Marina purchase. Tate explained that Guzman would submit false

appraisal and insurance documents and that in some cases, Tate witnessed Guzman forging the

signature of unwitting loan recipients.

       Each of the unwitting investors testified at trial. All five identified loan documents that

they had not authorized, were forged, or that referred to nonexistent collateral.       The five

investors’ testimony demonstrated that Guzman recruited them to purchase shares in the marina

and directed them to AFB for financing.

       The Government also called John Davis, the former Chief Credit Officer at AFB, who

identified loan agreements corresponding to AFB-issued loans to each of the five investors.

Davis testified that at the time the loans were issued, AFB understood that the purpose of these

loans was to secure financing for the purchase of a mobile home or houseboats. Davis testified

that had the bank known the information contained in the loan applications was false, it would

have materially impacted AFB’s lending decisions. Davis also testified that AFB was unaware

that Tate was engaged in fraud, that he did not possess legal authority to bind the bank to these

fraudulent transactions, and that AFB had not authorized the acceptance of fraudulent

documents.    Davis also testified that AFB was insured by the Federal Deposit Insurance

Corporation (FDIC) throughout its existence and the Government introduced exhibits

demonstrating that AFB was FDIC insured.

       Examining this evidence in the light most favorable to the prosecution, we conclude that

there was sufficient evidence to find all of the elements of bank fraud. See United States v.

Winkle, 477 F.3d 407, 413 (6th Cir. 2007). Tate’s testimony established that he and Guzman

“knowingly executed . . . a scheme to defraud” AFB. Kerley, 784 F.3d at 343. The testimony of

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No. 17-5282
United States v. Guzman

the individual investors demonstrated that Guzman intentionally designed this scheme to falsify

the existence of collateral and to obscure the purpose for which the funds would be used.

Davis’s testimony established that the documents underlying each of the loans for the individual

investors misrepresented material facts that were crucial to the bank’s evaluation of the loans.

See Neder, 527 U.S. at 22–23. Finally, Davis’s testimony also established that AFB was a

FDIC-insured institution. See Kerley, 784 F.3d at 343.

       Guzman repeatedly contends that the Government failed to demonstrate that he intended

to defraud any of the investors. Guzman misapprehends the bank fraud statute, which requires

only that Guzman intended to defraud a bank, in this case, AFB. See 18 U.S.C. § 1344(1).

       Guzman also argues that the Government “failed to show that Guzman place [sic] AFB at

a risk of lost [sic].” This argument also misses the mark. “[W]e definitively held that ‘to have

the specific intent required for bank fraud the defendant need not have put the bank at risk of loss

in the usual sense or intended to do so.’” United States v. Warshak, 631 F.3d 266, 313 (6th Cir.

2010) (quoting United States v. Everett, 270 F.3d 986, 991 (6th Cir. 2001)). As the Supreme

Court made clear, the federal bank fraud statute “demands neither a showing of ultimate

financial loss nor a showing of intent to cause financial loss.” Shaw v. United States, 137 S. Ct.
462, 467 (2016). In short, the Government offered more than sufficient evidence of Guzman’s

guilt with respect to Counts One through Five to support the jury’s verdict.

   B. Counts Eight and Nine: Able To Loan Frauds

       Counts Eight and Nine related to Guzman’s operation of Able To Loan and that

business’s venture to convert manufactured homes into an assisted living facility in West

Virginia. Able To Loan secured a $643,400 loan from AFB and used that loan to finance

Housing Innovations, which was the company contracted to construct the Midland Meadows

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No. 17-5282
United States v. Guzman

assisted living facility in West Virginia. Midland Meadows had already secured a commercial

mortgage from Chase Bank, which it used to pay Housing Innovation once the project was

completed. At the conclusion of the first phase of construction, Chase Bank paid Housing

Innovations the balance due for its work, and Housing Innovations ultimately repaid the balance

of the $643,400 loan with AFB. Able To Loan secured the initial loan, however, through the

personal guarantee of Larry Frakes. Frakes testified that he never signed the personal guarantee

on this loan and that he did not understand he was personally liable for the loan. Furthermore,

Davis of AFB testified that Frakes’s signature was in Guzman’s handwriting.          Davis also

testified that the authenticity of a personal guarantee on a loan was material to AFB’s lending

decision regardless of whether AFB ultimately recouped the balance of the loan.

       In March 2007, AFB agreed to underwrite the second part of Able To Loan’s loan to

complete the Midland Meadows assisted living facility, this time for approximately $652,000.

Davis once again testified that the loan documents included a personal guarantee purportedly

signed by Larry Frakes, but which Davis believed was actually signed by Guzman. Davis also

testified that, as it pertained to the transactions in Count Nine, the authenticity of a personal

guarantee was material to AFB’s decision to lend to Able To Loan. Frakes testified that he never

signed the personal guarantee and did not recognize the signature on the document as his own.

       In this instance, the evidence also demonstrated that Guzman diverted $500,000 to his

Grider Hill Marina purchase.     Patrick Collins, an investigator for the FDIC, reviewed the

transactions involved in Count Nine and determined that instead of AFB sending the funds to

Able to Loan, in this case the loan went directly from AFB to Housing Innovations. Collins

testified that on the same day the loan was received by Housing Innovations, a $500,000 check

was written and deposited to Guzman’s account for the marina project at Fifth Third Bank.

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No. 17-5282
United States v. Guzman

When Housing Innovations completed construction on the Midland Meadows project, Chase

Bank again distributed funds pursuant to its lending agreements with the West Virginia entities

and paid Housing Innovations for the construction services. Although Housing Innovations

received funds designated to repay the loan, AFB was never paid back.

       When presented with a challenge to the sufficiency of the evidence, “[o]ur task is to

determine ‘whether, after viewing the evidence in the light most favorable to the prosecution,

and after giving the government the benefit of all inferences that could reasonably be drawn from

the testimony, any rational trier of fact could find the elements of the crime beyond a reasonable

doubt.’” United States v. Ross, 502 F.3d 521, 529 (6th Cir. 2007) (quoting United States v. M/G

Transp. Servs., Inc., 173 F.3d 584, 588–89 (6th Cir. 1999) (citing Jackson, 443 U.S. at 319)).

The Government demonstrated the existence of a scheme to defraud AFB through the testimony

of Davis and Frakes.        Their testimony regarding Guzman’s forgeries was sufficient to

demonstrate that Guzman had the intent to defraud AFB. See United States v. Moede, 48 F.3d
238, 242 (7th Cir. 1995) (holding that forged signatures create evidence of intent to defraud,

sufficient to sustain convictions for bank fraud); see also United States v. Hoglund, 178 F.3d 410

(6th Cir. 1999) (affirming a conviction for bank fraud involving forgeries). Davis again testified

that the forged personal guarantee was material to the lending decision and demonstrated that

Guzman knowingly misrepresented the true nature of this transaction to AFB. See Neder,
527 U.S. at 22–23. These acts were sufficient to sustain a conviction for bank fraud under the

statute. When considered in conjunction with the testimony demonstrating that Guzman diverted

the loan proceeds to his Grider Hill Marina account, the evidence of Guzman’s guilt is more than

sufficient to support the jury’s verdict.

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No. 17-5282
United States v. Guzman

                               IV.        CONCLUSION

       For the reasons stated above, we AFFIRM the district court’s denial of Guzman’s motion

for a judgment of acquittal.

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