Court Opinion

ID: 7379
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:27:35+00
Date Added: 2024-06-11T15:04:16.940283
License: Public Domain

UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT

                                No. 93-2877

                       UNITED STATES OF AMERICA,

                                                       Plaintiff-Appellee,

                                  VERSUS

            JOHN "JAY" F. BAKER, JR., JAMES A. GILBERT,
                  and TRENTON L. TORREGROSSA, JR.,

                                                   Defendants-Appellants.

            Appeal from the United States District Court
                 for the Southern District of Texas
                           (August 2, 1995)

Before REYNALDO G. GARZA, HIGGINBOTHAM, and PARKER, Circuit Judges.

ROBERT M. PARKER:

       Appellants John "Jay" F. Baker, Jr. (Baker), James A. Gilbert

(Gilbert) and Trenton L. Torregrossa, Jr. (Torregrossa) appeal

their convictions for bank fraud and related charges.           We reverse

in part and affirm in part.

                         I. PROCEEDINGS BELOW

       Baker, Gilbert and Torregrossa were indicted on charges of

bank   fraud   in   violation   of   18   U.S.C.   §   1344   (Count   Two),

misapplication of funds in violation of 18 U.S.C. § 657 (Counts

Three - Twelve), knowingly making false entries in the books and
reports of a savings and loan, and unlawfully participating in loan

proceeds in violation of 18 U.S.C. § 1006 (Counts Thirteen -

Sixteen), and conspiracy to violate these statutes in violation of

18 U.S.C. § 371 (Count One). The indictment concerned conduct that

began in December 1985, and continued through October 1987.   After

a two week trial the jury returned its verdict, finding Gilbert and

Baker guilty on all charges, and finding Torregrossa guilty on

Counts One, Two, Three, Four, Eight, Ten, Twelve, Fourteen, Fifteen

and Sixteen.

                               II. FACTS

     Cornerstone Savings Association (Cornerstone), a federally

insured savings and loan association in Houston, Texas, began

operations in November 1985.    Gilbert was chairman of the Board of

Directors and owned approximately 70% of Cornerstone's stock.    He

signed a net worth maintenance agreement that guaranteed that he

would make up any short fall in Cornerstone's net worth from his

personal funds.   He had been a builder and developer in the Houston

area in the early 1980's.   He was actively involved in the day to

day operation of Cornerstone, and virtually every major decision

required his approval.

     Baker was a former football coach, a licensed Texas real

estate broker, and original member of the Board of Directors of

Cornerstone.   He had met Gilbert in 1978 in connection with a real

estate transaction. Torregrossa, a certified public accountant and

licensed Texas real estate salesman introduced to Gilbert during

the process of recruiting the original directors of Cornerstone,

                                   2
served as a Cornerstone director from the beginning until April

1987. Torregrossa worked during this period as a real estate agent

on behalf of Jay Baker & Co., a real estate brokerage company owned

and operated by Baker.

     Robert Lightfoot (Lightfoot), a certified public accountant,

was the original president of Cornerstone, and also served on the

Board of Directors.      Lightfoot, along with Gilbert and Baker,

served on Cornerstone's loan committee during this time period as

well. He had no previous connection with the others, and was

selected after an interview process because of his extensive

experience in the savings and loan industry.     Lightfoot was not

indicted and testified at trial as one of two primary government

witnesses.

     In the late 1980's Houston was experiencing an economic slump

that depressed the residential real estate market. Gilbert devised

a plan for Cornerstone to purchase residential lots in partially

completed subdivisions below their appraised value and realize a

profit by providing financing for the initial lot purchase, the

subsequent construction of single family houses, and eventually the

sale of the completed homes to individuals and families.   To effect

this plan, Cornerstone formed the Monogram Group (Monogram), a

wholly owned subsidiary of Cornerstone to market the completed

houses.   Builders who wanted to purchase lots and participate in

the Cornerstone project joined Monogram.   Many of the builders who

joined Monogram had credit problems due at least in part to the

depressed Houston housing market, and would have had trouble

                                 3
finding financing from other sources.

     Baker and Torregrossa negotiated the original lot purchases --

Baker naming "Amstar Investments, Inc." as the buyer; Torregrossa

naming "Torregrossa, Trustee" as the buyer. After each transaction

was approved by the Cornerstone Board of Directors, the contract

was assigned by the named buyer to Cornerstone.            Next, Cornerstone

entered into contracts with one of the approximately fifty Monogram

builders to buy the lots.          At closing, the builder typically

received one lot deeded directly to him from the seller for no

additional consideration for each two lots purchased.             The builder

then borrowed money from Fallbrook National Bank, secured by the

lots received from the seller, and paid these loan proceeds to

Cornerstone as down payment.       The builder borrowed the remaining

80% of the sales price from Cornerstone, secured by the lots deeded

from the seller to Cornerstone to the builder.             The proceeds from

the 80% loans never left Cornerstone, as Cornerstone was both the

seller and the mortgage holder.              These transactions involved

approximately   1,224.5   lots.        Of   these,   249   lots   were   deeded

directly from the sellers to the homebuilders, 930 lots were sold

to homebuilders through Cornerstone's 80% financing plan, and the

remaining   lots   were   sold    to   builders      and   financed   100%   by

Cornerstone, or were held in Cornerstone's real estate inventory.

     Cornerstone purchased the lots for approximately $13 million

and booked a profit by reselling them to the homebuilders for

approximately $20 million.         The contracts provided for a real

estate commission of 3% - 6% to be paid to Jay Baker & Company,

                                       4
which amounts were customary in the real estate industry, and were

paid through the title company at the time of closing.                                  Baker,

Torregrossa     and    others          associated      with    Jay       Baker    &    Company

performed the work normally performed by a real estate agent, and

received compensation in the form of commissions.                         The commissions

were    transferred        to       Amstar,   another       company      owned    by    Baker.

Torregrossa ultimately received over $300,000 in commissions from

Amstar for his role in the transactions.                       Baker, through Amstar,

received approximately $500,000.                    Gilbert held an office in Amstar

and received approximately $842,000 in what he termed "officer

fees" for evaluating the various groups of lots for Amstar, in

addition to the compensation he received from Cornerstone for

performing similar functions.                 The government characterized these

payments as "commissions," but Gilbert and Lightfoot both testified

that Gilbert received no commissions from Amstar.                         The real estate

commissions paid by Cornerstone were disclosed to Cornerstone's

Board of Directors and to the regulators.

       In   December       1986,       the    FHLB    conducted      a    field       visit   at

Cornerstone and raised concerns about the commissions paid to

Baker, because they gave the appearance of a conflict of interest

in     violation      of        §    571.7     of     the     insurance      regulations.

Cornerstone's Board of Directors responded, defending its policies

and actions and pointing out that Torregrossa as well as Baker had

received     commissions.              Further,      Gilbert    met      with     Baker       and

Torregrossa and the three decided that both Gilbert and Torregrossa

would give up their positions as directors to avoid any question

                                               5
about their compliance with the regulations.

      In the summer of 1987, Karen Armitige (Armitige), an examiner

of   the   Federal    Home   Loan    Bank     Board   (FHLBB),    conducted    an

examination at Cornerstone.          While going through the transaction

files for the lot purchases, she found that some files contained

two sets of earnest money contracts and title policy commitments.

One set listed a larger number of lots than the other set without

a corresponding difference in the total purchase price for the

properties.    She and her assistants also found that the builders

were making substantial down payments and establishing interest

reserves. This fact raised questions because the builders' overall

financial condition seemed weak and their bank balances did not

appear sufficient to cover the down payments and interest reserves.

Armitige asked one of Cornerstone's secretaries where the down

payment funds had come from, and was given photocopies of the

Fallbrook National Bank cashier's checks.             She then took the files

and the photocopies of the checks to Lightfoot, and asked for his

help in understanding the transactions documented in the files. He

told her he did not know, but would check with Gilbert and get back

to her.    Lightfoot told her the next day that Gilbert had taken the

files to organize them.         When Gilbert returned them to Armitige,

only the documents reflecting the smaller number of lots were left

in   the   files,    because,   as   Lightfoot      explained    to   her,   those

documents    accurately      reflected       the   number   of   lots   actually

purchased by Cornerstone.

      Armitige testified that while doing research for a personal

                                         6
project in the real estate deed records at Harris County Courthouse

during the same time frame she ran across transactions deeding lots

directly from the sellers to the Monogram builders. Again she went

to Lightfoot and asked him to explain the transactions.                 He

explained the program to Armitige in full. Armitige testified that

once she understood the transactions, she was concerned that

Cornerstone was "giving away institution assets."

     Lightfoot's    testimony     generally    agreed   with     Armitige's

recitation of the transactions, but assigned a different motive to

the players.   Lightfoot testified that Gilbert planned to increase

the value of Cornerstone as quickly as possible and then sell his

interest in it.    In Lightfoot's view, the problem with the plan was

not that the builders received a windfall, but that Cornerstone

inflated its own value by booking an instant profit from the sale

of the lots at almost double their purchase price to high risk

borrowers.   In short, Lightfoot was critical not of the underlying

transaction, but of the accounting procedures used in recording

them.

     Under Regulatory Accounting Principles (RAP), Cornerstone

could have financed 100% of the lot loans and booked a profit at

the inception of the loan.        Under Generally Accepted Accounting

Principles (GAAP), Cornerstone could not book a profit on a loan

until it was paid in full unless the borrower made a 20% down

payment.   The down payment requirement allowed less risky loans to

show as present profits, and riskier loans to show as potential

future   profit.     The   down   payments    from   Fallbrook   decreased

                                    7
Cornerstone's risks, because the institution held 20% cash, and 80%

real estate, instead of 100% real estate in a volatile market.   The

20% down payments from the builders reduced Cornerstone's risk and

allowed Cornerstone's books to reflect the highest possible value

for a potential sale of the institution.    Gilbert and the other

directors of Cornerstone wished to satisfy the examiners that

Cornerstone's risks were acceptable for federal insurance purposes,

and the down payments were one element in their compliance with the

regulations requirements.

     Lightfoot testified that Gilbert said that he did not want the

examiners to know that the down payments came from Fallbrook,

because several of Cornerstone's directors also owned stock in

Fallbrook.   However, it was undisputed that Lightfoot and other

Cornerstone employees disclosed this information to the examiners,

and Fallbrook's involvement was clear from Cornerstone's records.

     The central question in this appeal is whether Appellants'

compensation, the real estate program itself and the accounting

decisions made by the defendants were crimes, or whether they were

merely an aggressive and complex marketing program designed to reap

a legal profit in a risky market.

                 III. SUFFICIENCY OF THE EVIDENCE

     a. Standard of review.

     All three defendants challenge the sufficiency of the evidence

to support their convictions.   We must decide whether a rational

jury could find that the evidence established guilt beyond a

reasonable doubt on each count of conviction. United States v.

                                8
Frydenlund, 990 F.2d 822, 824 (5th Cir. 1993).            Every reasonable

hypothesis of innocence need not be excluded by the evidence. Id.

We view all reasonable inferences and credibility choices in the

light most favorable to the jury's verdict. Id.

      Sufficiency of the evidence in this case is not so much a

question of credibility determinations, which are constitutionally

entrusted to the jury and entitled to great deference, see Jackson

v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560

(1979), as a mixture of fact and law: whether the actions and

choices of defendants surrounding this real estate venture were

proscribed by criminal statutes.

      b. Bank fraud and misapplication.

      Appellants were charged in Count Two of the indictment with

Bank Fraud in violation of 18 U.S.C. § 1344 and in Counts Three

through Twelve with Misapplication of Funds in violation of 18

U.S.C. § 657. Count Two charged Appellants with executing a scheme

to defraud Cornerstone by "causing Cornerstone Savings to purchase

1224.5 residential lots and giving away 249 of the residential lots

without compensation to Cornerstone Savings."            Similarly, each of

the   misapplication      counts   charged    Appellants     with    causing

Cornerstone to pay for lots in a specific subdivision, which lots

"were given to various builders without compensation to Cornerstone

Savings."    Accordingly, all eleven of these counts require proof

that Cornerstone purchased and then disposed of the lots deeded

directly    from   the   developers/sellers   to   the    builders   without

compensation.      Appellants ask us to reverse their convictions

                                     9
because proof at trial established that the lots passed to the

builders only in combination with transactions where the builders

purchased other lots at substantial profit to Cornerstone.                    They

dispute the Government's contention that Cornerstone's assets were

given away, because the overall effect of the transactions was a

substantial profit to Cornerstone.               We agree.

      Citing United States v. Saks, 964 F.2d 1514 (5th Cir. 1992),

the Government contends that the evidence supports the convictions

because Appellants had a specific intent to deceive, for the

purpose of causing some financial loss to another or bringing about

some financial gain to themselves. See id., at 1518.                     In Saks we

affirmed a conviction under § 1344 based on evidence that the

defendants,     who    were    loan     customers     of   the   banks   involved,

defrauded federal regulators by concealing the involvement of

another party in the loan transaction, as well as defrauding the

banks of their money.         The bank officers were not only aware of the

scheme,   but   devised       it   in   order    to   satisfy    the   regulators'

insistence on their need for capital infusion, then convinced the

defendant/loan customers to go along.              The defendants claimed that

there was insufficient evidence of a scheme to defraud the banks,

because the bank officers knew about the plan, and the intent was

to deceive the regulators. We rejected that argument, holding that

the financial institution itself -- not its officers -- was the

victim of the fraudulent scheme and that the officers' collusion in

the   crime   did     not   excuse      the    defendants'   fraudulent     act   of

executing loan papers that concealed the true parties to the

                                          10
transaction.

     The Government attempts to bring this case under the purview

of the Saks holding by offering examples of evidence that they

contend proved that Appellants were not forthright in every aspect

of their dealings.      First, they argue that the jury could have

inferred from confusion in the testimony of director Clint Hackney

that the Board of Directors was not fully cognizant that Appellants

were profiting from the commissions paid on the loan proceeds.              It

is beyond dispute that the directors were aware of the customary 6%

real estate commissions paid in the lot transactions. Further, the

conflict of interest policy that allowed such payments to the real

estate company owned by Baker was adopted by the board.                   The

regulators knew about these payments at least as early as the

December 1986 field visit, and there was no evidence that the

payments   were   concealed    before     or   after   that   visit.     Clint

Hackney's ostensible confusion on the witness stand does not

establish that Cornerstone's directors were unaware of the real

estate commissions in the context of this record.                Second, the

Government     points   to   the   payments     from    Amstar   to    Gilbert

denominated "officer fees."        This evidence establishes a possible

conflict of interest between Gilbert's goal of immediate personal

gain and his goal of achieving profit for Cornerstone which,

because he owned 70% of Cornerstone's stock, is perhaps accurately

called long term personal gain.           It is also evidence of another

crime, discussed below.       However, such evidence cannot substitute

for evidence that Cornerstone was not compensated for its interest

                                     11
in the 249 lots.       Third, they point to testimony that Gilbert told

Cornerstone personnel to conceal any reference to Fallbrook's

involvement with the Monogram sales transactions.               This evidence,

likewise,       does   not    inform    the   question    of   whether   or   not

Cornerstone was adequately compensated.

       Saks involved an executed loan document that everyone agreed

failed to name the true parties to the loan, and the focus was on

the intent of the parties to that document.              The Government asks us

to apply the Saks analysis regarding the Appellants' fraudulent

intent to this case, which misses the necessary focus of our

inquiry: Was the real estate scheme itself unlawful?                     We must

answer that the evidence in this record would not allow a rational

juror to find beyond a reasonable doubt that Appellants violated §

1344   or   §    657   by    giving    away   lots   without   compensation    to

Cornerstone.

       c. False entries

       To secure a conviction under 18 U.S.C. § 1006, the government

must prove that (1) the defendant made a false entry in any book,

report, or statement; (2) with intent to injure or defraud that

bank or to deceive an officer of the bank or the regulators.                  See

United States v. Cordell, 912 F.2d 769, 773 (5th Cir. 1990).                  The

manifest purpose of this provision is to ensure that an inspection

of a bank's books will yield an accurate picture of the bank's

condition.      Thus, an omission of material information qualifies as

a false entry.         Id. at 773.       To be material, the omission must

have the capacity to impair or pervert the functioning of a

                                         12
government agency.        United States v. Beuttenmuller, 29 F.3d 973,

982 (5th Cir. 1994).

      Counts Thirteen through Fifteen of the indictment allege that

Gilbert, Baker and Torregrossa made false entries in Cornerstone's

books "by failing to disclose the total number of lots that

Cornerstone Savings purchased and paid for from [various sellers]."

The Government contends that the evidence shows that the Appellants

deliberately omitted the total number of lots purchased in order to

deceive   the    examiners    with    respect      to   Cornerstone's    actual

financial health.     The Government also argues that Cornerstone's

records did not reflect the direct deeding of the lots to the

builders, which in turn impacted the examiners review of the

appropriate accounting entries as to those transactions.

      Armitige testified that she found two sets of documents in

some of Cornerstone's files, one set reflecting the larger number

of lots, and another set for the same transaction showing the

smaller number of lots.       She raised questions with Lightfoot about

which was the accurate information.             After that discussion, the

documents reflecting the larger number of lots were removed from

the   files,    because   they   in   fact   did    not   accurately    reflect

Cornerstone's real estate holdings.          Cornerstone did not receive

any interest in Fallbrook lots, other than the cash down payment

which was recorded in its books.           Cornerstone's files originally

showed both numbers, and after Armitige's inquiry showed the

smaller, accurate number.        In order to prove its theory of false

entry violation, the government would have had to prove that

                                      13
Cornerstone held some undisclosed interest in the disputed lots.

Armitige   testified   that   she   understood   at    the   close   of   her

examination exactly what had occurred. If Cornerstone had recorded

only the larger number of lots, and omitted the smaller number that

were actually transferred to the institution as the government

advocates, they risked a false entry charge.           The most complete

record was one that reflected both the originally negotiated deal

and the subsequently consummated deal -- the very method being

utilized by Cornerstone when Armitige arrived that the government

demonized as "two sets of books."        The second set of documents,

removed from the file after Armitige's inquiry, was less accurate

than the ones that remained, so that if Cornerstone was required to

choose, as the Government contends, its choice did not amount to

criminal false entry.

     The evidence revealed that Gilbert at one point directed

Cornerstone personnel to conceal any reference to Fallbrook's

involvement with the Monogram sales transaction.             However, this

directive was allegedly motivated by his fear that Fallbrook's

involvement was questionable due to Cornerstone directors owning

Fallbrook stock.   It will not support a conviction for failing to

disclose the total number of lots purchased and paid for by

Cornerstone,   particularly    in   light   of   the   testimony     by   the

Government's witness establishing that documents reflecting both

the total number, and the smaller number of lots were found in the

files.

     d. Illegal participation in profits

                                    14
     Count Sixteen charged that Appellants, with intent to defraud

Cornerstone,      the        United     States       and   the    FHLBB,   knowingly

participated, shared and received money, profit and benefits of

Cornerstone in that "each received a portion of the commissions

paid on the purchase and sale of 1224.5 lots by Cornerstone," in

violation of 18 U.S.C. § 1006.             There was no dispute at trial that

Baker     and    Torregrossa          received       commissions    from      the   lot

transactions.      The record is sufficient to support the conclusion

that Gilbert received compensation from Amstar for his role in the

lot transaction, although Gilbert testified that that compensation

was not a commission but a fee for officer services.

     The central question on this Count is whether the commissions

Cornerstone paid on the lot sales were illegal.                     They were fully

disclosed within the customary range paid for real estate sales

commissions and were paid pursuant to the contracts at the time of

closing.    The government takes the position that Cornerstone could

have hired defendants or some other real estate professionals, paid

them a salary and required that they do the real estate work

necessary for the transactions without a commission.                          If such

individuals were available for a salary of $50,000 each, as the

Government contends, Cornerstone could have saved over $1 million

in commissions.          However, it is not illegal for real estate

professionals to work on a commission basis rather than for a

salary,    nor    is    it    illegal     for    a    savings    and   loan    to   use

commissioned      agents       instead     of    salaried        employees.         Most

importantly, it is far from certain, based on this record, that a

                                           15
person who was willing to work for a $50,000 salary in Houston in

the 1980's would have the knowledge and skill necessary to find

1224.5 developed residential lots in Northwest Houston, negotiate

the fire sale prices Cornerstone received in the deals, and put

together the sales and marketing package executed by Appellants.

We   therefore         conclude   that   the   Government's   speculation     that

Cornerstone could have purchased the lots without paying real

estate commissions does not amount to sufficient evidence that the

Appellants participated in Cornerstone's profits.

      A more difficult question is presented by the money paid by

Amstar to Gilbert.           The evidence supports a finding that Gilbert

received compensation from Amstar for his role in selecting and

negotiating the deals on the Cornerstone lots, which the government

relies     on     to     establish   Gilbert's     illegal    participation    in

Cornerstone's profits.            Gilbert points out that Amstar charged

Cornerstone a reasonable, customary and legal 3 - 6% commission;

the record reveals no evidence that the commissions were outside

the normal rate for real estate transfers, were in fact not paid on

the closing of such transfers, or were in any other way irregular.

      We conclude that the record supports a finding that Gilbert's

income from Amstar was illegal participation in Cornerstone's

profits.        The jury may well have found that Gilbert performed no

service for Amstar other than his work performed on behalf of

Cornerstone, but received the payments as a kickback rather than

fees for services rendered as an officer.                Likewise, a rational

juror could have concluded that Baker aided and abetted Gilbert in

                                          16
this scheme, as the money flowed through a company wholly owned by

Baker, and could not have been paid to Gilbert without Baker's

complicity.    On the other hand, there is no support in the record

for any theory of Torregrossa's guilt on Count Sixteen.                    His

commissions    were   legally    earned,   and   the   Government    did   not

implicate him in Amstar's payments to Gilbert.

     e. Conspiracy

     Count One of the indictment charged Appellants with conspiracy

to commit the various crimes charged in the remainder of the

indictment.     In order to convict Appellants of conspiracy, the

Government must prove that (1) two or more people agreed to pursue

an unlawful objective; (2) the individual defendant voluntarily

agreed to join the conspiracy; and (3) one or more of the members

of the conspiracy performed an overt act to further the objectives

of the conspiracy.     United States v. Beuttenmuller, 29 F.3d 973,

978-79 (5th Cir. 1994).     The record is sufficient to sustain the

conspiracy    convictions   of   Gilbert   and   Baker,   based     on   their

agreement and overt acts relating to the illegal participation in

profits alleged in Count Sixteen.

     However, the record does not support Torregrossa's conspiracy

conviction. Where the government fails to prove that the object of

the conspiracy was unlawful, the conviction for conspiracy must be

reversed.     Id. at 981.   Under Beuttenmuller, we must examine the

underlying transaction and determine whether there was sufficient

evidence to allow a jury to conclude beyond a reasonable doubt that

the alleged object of the conspiracy was illegal.          That case, like

                                     17
the one before us, concerned a risky and complex real estate

transaction involving the transfer of residential real estate lots

in the depressed 1980's Texas economy, undertaken by a federally

insured savings and loan association that ultimately failed.                   This

Court, after examining the component parts of the real estate

transfer, determined that the defendants had benefited themselves

financially, taken risks and lost money, but had not violated any

law   in   the   process,      and   therefore    reversed    their     conspiracy

convictions      for    insufficiency      of     evidence.      We    find    that

Beuttenmuller's analysis controls the question posed by this case.

      The examiner's characterization that Cornerstone gave its

assets to builders without compensation indicates her lack of

understanding of the structure of the transaction.                    The buy-two-

get-one-free packaging of the lot transactions was economically

advantageous      to     the    sellers,     to    Cornerstone    and     to    the

buyer/builders.        Such packaging is not against the law, nor is it

fraudulent.        Its    innovative,        nontraditional    application       to

residential real estate lots is likewise not illegal or fraudulent.

The evidence established that Cornerstone's residential real estate

program was building and selling homes in Houston in an economic

climate that had suffocated many less aggressive approaches.

      Government regulators have an important role in enforcing

statutes and regulations that protect investors and insurers.

However, they exceeded that role in this case by forcing personal

fears about the wisdom of new ventures and risk taking on business

people who acted within the confines of the laws and regulations.

                                        18
Gilbert, who the Government alleged benefitted more than the other

players, in fact risked the most and lost the most.                  In hindsight,

it is impossible to say whether that loss was inevitable or was

simply the by-product of overzealous regulators.                       Because the

Government failed to prove that Torregrossa agreed to any unlawful

objective, his conspiracy conviction must be reversed.

      f. Conclusion

      Based on the foregoing, we conclude that there was sufficient

evidence to support Gilbert's and Baker's convictions under Counts

One and Sixteen.         There is insufficient evidence to support the

other convictions, which we therefore reverse.

                         IV. Statute of Limitations

      Appellants argue that the retroactive effect of 18 U.S.C. §

3293, which Congress enacted in 1989 to provide a new ten year

statute of limitations on certain financial institution offenses,

violates     the    Ex    Post    Facto    Clause    of     the     United   States

Constitution.       This issue was settled against Appellants in United

States v.     Brechtel,     997    F.2d   1108   (5th      Cir.),   cert.    denied,

___U.S.___, 114 S.Ct. 605 (1993).

                           V. Reversal and Remand

      All    of    Torregrossa's    convictions      are     REVERSED.       All    of

Gilbert's and Baker's convictions are REVERSED, with the exception

of   the    convictions    under    Counts     One   and    Sixteen,     which     are

AFFIRMED.     We find no merit in the other grounds of error raised by

Gilbert and Baker as they specifically relate to the affirmance of

the convictions on Counts One and Sixteen.                    The sentences are

                                          19
VACATED and the case is REMANDED so that the district court can

resentence Gilbert and Baker.

                                20