Court Opinion

ID: 2972926
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:55:58.92053+00
Date Added: 2024-06-11T13:15:32.540752
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 05a0871n.06
                           Filed: October 25, 2005

                                        Case No. 04-5844

                           UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT

 UNITED STATES OF AMERICA,                           )
                                                     )
        Plaintiff-Appellee,                          )
                                                     )       ON APPEAL FROM THE
                v.                                   )       UNITED STATES DISTRICT
                                                     )       COURT FOR THE EASTERN
 G. DALE MURRAY                                      )       DISTRICT OF KENTUCKY
                                                     )
        Defendant-Appellant.                         )
                                                     )
 _______________________________________             )
                                                     )
                                                     )

BEFORE: GUY, BATCHELDER, GILMAN, Circuit Judges.

       ALICE M. BATCHELDER, Circuit Judge. Dale Murray appeals his conviction and

sentence under 18 U.S.C. § 1344 for bank fraud and argues that the district court improperly

admitted testimony of his lavish lifestyle. Because ample evidence supports the jury’s verdict, and

because the testimony in question was relevant to the jury’s assessment of Murray’s motive and

intent, we affirm his conviction and sentence.

                                          Background

       Murray was ostensibly a business man. He formed a number of coal companies in Tennessee

and sold interests in those companies to investors. Using the money he received, Murray leased coal

properties. He never mined any coal but instead embarked on a journey of profligate spending that

ended in federal prison.
       At the outset of his enterprise, Murray befriended codefendant Timothy Weddington, who

showed interest in Murray’s alleged business expertise.         Weddington was the president of

Salyersville National Bank, and he extended an unsecured $100,000 loan to Murray despite

Murray’s questionable credit. In addition, the bank honored checks drawn by Murray on coal

company accounts containing insufficient funds. Soon, the bank’s board of directors became

concerned with Murray’s sizeable unsecured debt to the bank, and it ordered Weddington not to

extend additional credit to Murray.

       Murray, who needed a continuous supply of money to support his excessive spending, asked

Robert Graff, a coal company investor, to obtain a loan on Murray’s behalf. Weddington, who knew

that the money was intended for Murray rather than Graff, agreed to the arrangement. Graff signed

a note stating that he would use the loan proceeds to purchase stock, but he actually transferred the

funds to Murray. Some time later, Weddington made a second loan. Although the note showed

Robert Graff as the borrower, Murray forged Graff’s signature on the note with Weddington’s

knowledge. Graff was unaware of the second loan. Next, Weddington concealed an overdraft of

one of Murray’s accounts by obtaining a short-term loan from the First National Bank of Paintsville

and depositing the funds in Murray’s account. In spite of the board’s prohibition on lending funds

to Murray, Weddington assured the Paintsville bank that Salyersville National Bank would

guarantee the loan. Weddington and Murray also entered into an accommodation transaction with

Turner Consulting in which the bank loaned money to Turner for capital investment. For a fee,

Turner transferred the funds to Murray. All of the loan documents prepared by Murray and

Weddington for these loans provided false information regarding the intended use of the loan

proceeds, and none of the documents disclosed that funds would be channeled to Murray. Murray

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and Weddington were both indicted for bank fraud. Weddington pled guilty, and Murray was

convicted by a jury. The district court sentenced Murray to thirty-six months in prison.

                                              Analysis

I.     The jury’s verdict is supported by ample evidence.

       Murray argues that there was insufficient evidence to support the verdict in his case. We

review a district court’s refusal to grant a motion for judgment of acquittal de novo. United States

v. Kone, 307 F.3d 430, 433 (6th Cir. 2002). We may reverse the district court’s decision only if,

after viewing the facts in the light most favorable to the prosecution, we determine that no rational

jury could have found the defendant guilty beyond a reasonable doubt. Id.

       To be guilty of bank fraud, Murray must have knowingly executed, or attempted to execute,

a scheme or artifice to defraud a financial institution or to obtain any of the property under its

control by means of false or fraudulent pretenses, representations, or promises. 18 U.S.C. § 1344.

We have held that the bank fraud statute encompasses the following elements: (1) that the defendant

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

defendant did so with the intent to defraud; and (3) that the financial institution was insured by the

FDIC. United States v. Hoglund, 178 F.3d 410, 412-13 (6th Cir. 1999). The falsehood employed

by the defendant must be material. Neder v. United States, 527 U.S. 1, 25 (1999).

       Murray’s acts satisfy each of the elements described above. He knew that the Salyersville

National Bank’s board of directors had instructed Weddington not to make additional loans to him.

In spite of that knowledge, he and Weddington orchestrated loan transactions through third parties

and under false pretenses. Furthermore, their falsehoods were material. Had the Salyersville

National Bank’s board of directors known that the funds transferred to Graff and Turner were

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intended to be relinquished to Murray, it would not have permitted the loans. Because the evidence

demonstrates that Murray knowingly participated in a scheme to obtain funds from Salyersville

National Bank through material falsehood, we affirm the district court’s refusal to grant a motion

for judgment of acquittal.

II.    Testimony of Murray’s extravagant lifestyle went to his motive and intent.

       Murray argues that the district court erred by admitting evidence of Murray’s lavish lifestyle.

Testimony at trial revealed that Murray spent hundreds of thousands of dollars on travel, dining and

women. He carried large amounts of cash and frequented strip clubs. One witness even testified

that Murray sometimes bought cars for the dancers. Murray claims that the testimony should have

been excluded because: (1) it was not probative of a material issue other than character; (2) its

probative value was outweighed by its prejudicial effect; (3) the purposes for which the evidence

was offered were so general in scope as to be vague and unduly confusing to a jury; (4) the limiting

instruction was likewise too broad in scope; and (5) the introduction of such evidence was

unnecessary because the government not only had other methods of proof available but had, in fact,

introduced such proof. We find Murray’s arguments meritless.

       Rule 404(b) of the Federal Rules of Evidence provides:

               Evidence of other crimes, wrongs, or acts is not admissible to prove
               the character of a person in order to show action in conformity
               therewith. It may, however, be admissible for other purposes, such
               as proof of motive, opportunity, intent, preparation, plan, knowledge,
               identity, or absence of mistake or accident . . . .

       In United States v. Merriweather, we held that the government must identify a specific

purpose for which character evidence is offered. 78 F.3d 1070, 1076-77 (6th Cir. 1996). The

purpose must be material and at issue in the case. Id. In addition, Rule 403 of the Federal Rules of

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Evidence requires that the probative value of the evidence be substantially outweighed by the danger

of unfair prejudice in order to exclude the evidence. Id. If the evidence passes muster under

Merriweather and Rule 403, the district court must clearly instruct the jury as to the specific purpose

for which the evidence is offered. Id.

        We review the district court’s decision to admit evidence of “other crimes, wrongs, or acts”

under Rule 404(b) using a tripartite standard. First, we review for clear error the district court’s

factual determination that the acts really occurred. Merriweather, 78 F.3d at 1074. In this case,

Murray’s profligate spending is uncontroverted. Second, we review de novo the district court’s

determination that the evidence was admissible for a legitimate purpose. Id. We agree with the

district court that Murray’s insatiable appetite for spending is relevant to his motive for defrauding

the bank. Finally, we review for abuse of discretion the district court’s decision that the probative

value of the evidence was not substantially outweighed by its prejudicial effect. Id. When weighing

probative value against prejudice, we take “a maximal view of the probative effect of the evidence

and a minimal view of its unfairly prejudicial effect . . . .” United States v. Sassanelli, 118 F.3d 495,

498 (6th Cir. 1997).

        In United States v. Jackson-Randolph, which dealt with fraud, embezzlement and money

laundering, we applied a three-part test to determine whether the probative value of lavish lifestyle

evidence outweighed unfair prejudice. 282 F.3d 369 (6th Cir. 2002). We concluded that such

evidence is admissible when (1) there is credible evidence, direct or circumstantial, of the illegal

activity; (2) the money spent was not available to the defendant from a legitimate source; and (3)

the accumulation of great wealth or extravagant spending related to the period of the alleged illegal

activity. Id. at 378. All three factors are satisfied in this case. The record contains ample evidence

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that Murray committed bank fraud and that he had no other source of income. In addition, his

extravagant spending and his criminal activities occurred during the same period of time.

Furthermore, the district court properly instructed the jury to limit its consideration of the testimony.

The district court’s decision to admit evidence of Murray’s lifestyle for the purpose of showing

motive and intent was not an abuse of discretion.

III.    Testimony on matters of common knowledge is not opinion testimony.

        Murray argues that the testimony of an FBI agent about the definitions of “straw loan” and

“check kiting” was impermissible under Rules 701 and 702 of the Federal Rules of Evidence.

        Rule 701 of the Federal Rules of Evidence states:

                If the witness is not testifying as an expert, the witness’ testimony in
                the form of opinions or inferences is limited to those opinions or
                inferences which are (a) rationally based on the perception of the
                witness, (b) helpful to a clear understanding of the witness’ testimony
                or the determination of a fact in issue, and (c) not based on scientific,
                technical or other specialized knowledge within the scope of Rule
                702.

        The agent’s testimony clearly satisfies the first and second factors of Rule 701. The agent

gained knowledge of the terms “straw loan” and “check kiting” in the course of his work, and his

explanations were “helpful to a clear understanding of the witness’ testimony . . . .” FED. R. EVID.

701. The relevant question, then, is whether the agent’s testimony was based on scientific, technical

or other specialized knowledge within the scope of Rule 702. Since “straw loan” and “check kiting”

are both terms used in common parlance, we find that their use is not specialized for purposes of

Rule 701. Furthermore, any error that may have resulted from the district court’s admission of the

agent’s definitions was harmless. The agent testified extensively to the details of Murray’s

fraudulent transactions, and his testimony was largely uncontroverted. The evidence that Murray

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defrauded the Salyersville National Bank was overwhelming. As a result, Murray could not have

been prejudiced by the definitions of “straw loan” and “check kiting” offered by the agent.

IV.       The district court’s sentence does not violate Murray’s Sixth Amendment rights.

          Murray’s final argument is that his case should be remanded for resentencing under United

States v. Booker, 125 S. Ct. 738 (2005), because the district court relied on facts not proven to a jury

when formulating his sentence. Murray’s argument fails. The district court in this case did not treat

the United States Sentencing Guidelines as mandatory but instead imposed one sentence as though

the Guidelines were mandatory and a second sentence as though they were not. “[W]hen a district

court imposes alternative, identical sentences, one under a regime in which Guideline enhancements

are not mandatory, the harmlessness of any Booker error is established.” United States v.

Christopher, 415 F.3d 590, 593 (6th Cir. 2005). We therefore review Murray’s sentence for

reasonableness. Id. at 594. A sentence is reasonable if the court considered the factors enumerated

in 18 U.S.C. § 3553. Id. In this case, the district court explicitly stated that it had considered the

relevant factors. The court also requested Murray’s counsel to articulate additional considerations,

if any. We hold that thirty-six months’ imprisonment was a reasonable punishment for Murray’s

crimes.

                                             Conclusion

          For the foregoing reasons we affirm both the conviction and sentence.

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