Court Opinion

ID: 6184
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:14:00+00
Date Added: 2024-06-11T12:03:25.043339
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                        FOR THE FIFTH CIRCUIT

                        _____________________

                             No. 92-1541
                        _____________________

UNITED STATES OF AMERICA,

                                                  Plaintiff-Appellee,

                                versus

GEORGE F. DILLMAN and
WILLIAM C. HATFIELD,

                                                Defendants-Appellants.

_________________________________________________________________

         Appeal from the United States District Court for the
                      Northern District of Texas

_________________________________________________________________
                       (February 16, 1994)

Before SNEED*, REYNALDO G. GARZA, and JOLLY, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

     The appellants are former officers of a savings and loan

association.    They challenge their convictions for conspiracy,

bank fraud, money laundering, and other crimes arising from an

elaborate scheme to improve artificially the financial condition

of the savings and loan association that they managed and to

enrich themselves at the association's expense.      Because we find

no reversible error, we affirm the appellants' convictions.

     *
      Senior Circuit Judge of the United States Court of Appeals
for the Ninth Circuit sitting by designation.
                                   I

     George Dillman was the chairman and W. C. Hatfield was the

executive vice-chairman of Caprock Savings and Loan Association

("Caprock"), which had offices in Dallas and Lubbock, Texas.

Caprock experienced financial difficulties in late 1988.      Dillman

wanted to remedy these difficulties in part by having Caprock

participate in a business deal, the Southwest Plan, that promised

handsome profits.    To participate in the Southwest Plan, however,

Caprock would have to demonstrate a better financial position

than it actually had at that time.

     In November 1988, Dillman met with Mukesh Assomull, a self-

styled "facilitator" of problem-solving for savings and loan

associations, to explore methods of improving the appearance of

Caprock's balance sheet.    Assomull, who admitted his

participation in the scheme and testified for the government,

stated that he and Dillman discussed how they and the other

conspirators would use approximately $15 million of loans from

Caprock to produce approximately $5 million worth of capital for

the institution.    The scheme, as initially envisioned by the

parties, involved three stages: removal, laundering, and

disbursement of Caprock's money.       First, the conspirators would

remove money from Caprock through artificially large loans used

to fund fraudulent land deals.    Second, the conspirators would

launder the money through several bank accounts in order to

disguise the original source of the money--Caprock.      Third, the

                                 -2-
conspirators would disburse a portion of Caprock's own money to

be invested in Caprock as "capital" and keep a portion of the

money themselves.   This injection of Caprock's own money back

into the savings and loan would make Caprock's balance sheet

appear to reflect a superior financial position than actually

existed.

     Assomull testified that in later meetings in Dallas on

November 7, 1988, with Dillman, Hatfield, Louise Kopy, and other

persons not party to this appeal,1 Dillman outlined the above

general scheme to Hatfield who was agreeable.   The conspirators

discussed the use of shell corporations to buy land from third

parties at fair market value and sell it to related shell

corporations for notes reflecting artificially high values.

These notes would then be sold to Caprock for their artificially

high face values, thus removing the funds from Caprock.   Next,

the conspirators discussed the use of various domestic and

foreign bank accounts and entities through which they would

launder Caprock's money, thus disguising the true source of the

money.   It was at this point that Commercial Capital Ltd.

("Commercial Capital"), a shell corporation controlled by

Assomull, became important to the scheme.   According to Assomull,

     1
      Namely, Anthony Nims and Kevin Hird. The jury acquitted
Nims, who worked at Caprock's Lubbock office. Hird, Caprock's
chief lending officer, pled guilty to charges arising from the
fraudulent inflation of Caprock's net worth. Also, Robert
Savage, Caprock's chief financial officer, pled guilty to charges
arising from the fraudulent inflation of Caprock's net worth.

                                -3-
Dillman and Hatfield agreed to launder a portion of Caprock's

funds through Commercial Capital and then disburse those funds

through "loans" to the defendants in order to fund the purchase

of the stock of Caprock's parent corporation, Great West Banc

Shares, Inc. ("Great West"), thus injecting Caprock's own money

back into Caprock.

     From November 1988 to August 1989, Caprock distributed

approximately $20 million in the form of loans that ultimately

resulted in approximately $5 million in capital being infused

into Great West and thus, Caprock.    In the removal stage of the

scheme, Dillman, Hatfield, and other conspirators removed

approximately $10 million (of the total $20 million) from Caprock

to fund two specific fraudulent land deals--the Maxtor deal and

the Santos deal.   In each of these deals, one shell corporation

purchased land from a third party at fair market value, sold the

land to another shell corporation for a note that reflected an

artificially inflated price, and then sold the note to Caprock at

its artificially high face value.2    Once they removed the money

     2
      Maxtor Properties, Inc. ("Maxtor") purchased forty acres of
land for $750,000 cash from an unrelated third party.
Simultaneously, Maxtor sold this tract of land in two pieces for
approximately $3,500,000 in notes to a shell corporation
controlled by the conspirators. Maxtor then sold the notes to
Caprock for face value in cash. In a similar transaction, Santos
Associates, Inc. ("Santos") purchased thirty acres of land for
$2,300,000 in cash from an unrelated third party. Santos
simultaneously sold the land in tracts for notes totalling
$6,700,000 to other business entities. Santos then sold the
notes at face value to Caprock for cash. Thus, after these
transactions, Caprock had paid out approximately $10,200,000 in

                                -4-
from Caprock, the conspirators launched the laundering stage of

the scheme in which various portions of the $10 million passed

through different accounts, including the Hoover-Eggleston III

Trust ("H-E III Trust") and the Broadline account in New York,

prior to ultimate disbursement. The conspirators placed a portion

of the funds removed from Caprock in Commercial Capital.

Finally, in the disbursement stage of the scheme, Commercial

Capital loaned the conspirators some of the funds originally

removed from Caprock in order to fund the purchase of Great West

stock.   Of the total $10 million, the conspirators disbursed

approximately $1.5 million from Commercial Capital as stock-

purchase loans, approximately $3.3 million to pay the actual

purchase price of the parcels of land bought from third parties

and the related closing costs, and approximately $5.4 million to

pay themselves for their personal benefit.    The Commercial

Capital loans constituted a significant step in the overarching

plan because it helped to create the appearance that the money

the conspirators would use to inject into Caprock was not

Caprock's own money but, instead, had come from an independent

and legitimate third-party lender.    In order to enhance this

appearance of legitimacy, Dillman and Hatfield executed "loan"

cash in exchange for notes secured by property with a fair market
value of only approximately $3,050,000.

                                -5-
documents with Commercial Capital in conjunction with obtaining

the stock purchase money.3

      The balance of the $20 million removed from Caprock passed

through the H-E III Trust and the Broadline account, and provided

the remaining approximate $3.5 million of capital, which was

injected into Great West and thus, Caprock.             The indictment,

however, did not mention the second $10 million of the overall

$20 million removed from Caprock.

      On August 1, 1989, regulatory authorities closed Caprock and

placed it in a conservatorship.          After an examination of

Caprock's financial records, federal authorities indicted

Dillman, Hatfield, and several other defendants not parties to

this appeal.

                                       II

      The defendants were indicted and pled not guilty to all

counts.     They were then tried and found guilty by a jury of: (1)

violating 18 U.S.C. § 371, conspiring to (a) misapply Caprock's

funds,    (b)   participate    improperly     in   a   transaction     involving

Caprock, (c) commit bank fraud, and (d) engage in money laundering;

(2)   violating    18   U.S.C.   §    1344,   committing       bank   fraud;    (3)

violating    18   U.S.C.   §   657,   misapplying      money    belonging      to a

      3
      The "loan" documents, however, only provided Commercial
Capital full recourse to Dillman's and Hatfield's personal assets
for a portion of the total amount loaned. Further, although
Hatfield made one interest payment on his loan, neither Dillman
nor Hatfield ever paid any of the principal on their loans.

                                       -6-
federally insured financial institution; (4) violating 18 U.S.C. §

1006, unlawful participation in a transaction involving a federally

insured financial institution; and (5) violating 18 U.S.C. § 1956

for money laundering.   Additionally, the jury found Dillman guilty

of violating 18 U.S.C. § 215--accepting a bribe in return for

exercising influence on a federally insured financial institution.

Dillman and Hatfield then brought this appeal.

                                III

     The appellants argue numerous grounds for reversal.   We have

carefully examined each ground asserted by the appellants, and find

no reversible error.

                                 A

     First, the appellants argue that the district court committed

error under Federal Rule of Criminal Procedure 15 in refusing to

order the deposition of Kevin Finch.4    Finch was the manager of

Commercial Capital from which Dillman and Hatfield obtained the

"loans" that they used to purchase the Great West stock and, thus,

inject capital into Caprock.    Dillman and Hatfield contend that

Finch's testimony will support the central claim of their defense--

that they did not know the money that they borrowed from Commercial

Capital to purchase Great West stock originally came from Caprock.

     4
      Dillman and Hatfield made several Rule 15 motions regarding
Finch. The district court denied two of these motions before the
trial and the last motion eight days into the trial. Thus, the
district court, when last ruling on the motion, had substantial
exposure to the facts in the case and to the significance of
Finch's potential testimony.

                                -7-
To this end, Dillman and Hatfield contend that Finch would testify

that he had represented to them that the money Commercial Capital

loaned them came from independent sources with no relation to

Caprock.

     The appellants argue that reversal is required because, just

as in United States v. Farfan-Carreon, 935 F.2d 678, 680 (5th Cir.

1991),   there   were   "exceptional    circumstances"   compelling   the

district court to order Finch's deposition: (1) the anticipated

witness was outside the subpoena power of the district court; and

(2) the witness was threatened with prosecution if he entered the

United States.      Finch, who at the time was living in London,

England, apparently had no intention of coming to this country

because he was the subject of an investigation being conducted by

United States' authorities.     Further, the appellants argue that--

even though not a required element--Finch's deposition would have

been material to the determination of whether the appellants

believed the stock-purchase loans to come from independent sources

instead of Caprock.

     Rule 15(a) provides in pertinent part:

     Whenever due to exceptional circumstances of the case it
     is in the interest of justice that the testimony of a
     prospective witness of a party be taken and preserved for
     use at trial, the court may upon motion of such party and
     notice to the parties order that testimony of such
     witness be taken by deposition . . . .

(Emphases added).

                                  -8-
The word "may" signifies that the district court retains broad

discretion in granting a Rule 15(a) motion and that the court

should review these motions on a case-by-case basis, examining

whether the particular characteristics of each case constitute

"exceptional circumstances." United States v. Bello, 532 F.2d 422,

423 (5th Cir. 1976). The words "exceptional circumstances" bespeak

that only in extraordinary cases will depositions be compelled. We

have held, however, that circumstances such as those confronting us

in this case--Finch is an unservable deponent who is unlikely to

return to the United States--can be extraordinary. Farfan-Carreon,
935 F.2d at 680.

     Although, as we indicated in dicta in Farfan-Carreon, 935
F.2d at 680, the textual words of Rule 15 do not expressly require

"materiality," it is emphatically clear to us that the words "in

the interest of justice" call for the deposition to offer evidence

that is material.      United States v. Drogoul, 1 F.3d 1546, 1552

(11th   Cir.   1993)   (requiring      materiality);   United    States   v.

Ontiveros-Lucero,      621 F. Supp. 1037,   1038   (W.D.    Tex.   1985)

(requiring materiality), aff'd, 790 F.2d 891 (5th Cir. 1986).

Indeed, in Farfan-Carreon, 935 F.2d at 680, we stated that the

deposition was material. In this case, Finch's potential testimony

could have been material as to the execution of the loan documents

and his subsequent dealings with Dillman and Hatfield regarding the

Commercial Capital loans.

                                    -9-
     Even assuming materiality, however, we find that any error

committed by the district court to be harmless.         Unlike the

potential deponent's critical involvement with the defendant in

FarFan-Carreon, 935 F.2d at 679, there was no evidence in this case

that Finch attended the key meetings at Caprock in which Dillman

and Hatfield discussed and agreed to the illegal scheme, including

the purchase of Great west stock with Caprock's own funds.5   Thus,

even assuming the greatest benefit to the defendants from Finch's

testimony, that testimony still could not have exculpated Dillman

or Hatfield from their agreement to inflate unlawfully Caprock's

net worth with its own money.      Further, Finch could not have

testified regarding the defendants' culpability in the actual

removal of money from Caprock through the fraudulent land deals or

the laundering of money through accounts that did not involve

Commercial Capital.   Finch's testimony, therefore, could only have

focused on the acts of the defendants after they agreed to the

illegal scheme--subsequent representations regarding the legitimacy

of the loans, preparation of the loan documents, and the loan

closing meetings where he may have been present.   Even as it might

relate to this part of the scheme, however, Finch's testimony would

be cumulative in the light of Hatfield's own testimony regarding

     5
      Dillman's brief indicates that Assomull admitted that Finch
was present at a crucial time when the transaction was closed.
The transcripts reveal, however, that Finch arrived in Dallas
more than ten days after the key November 7 meetings at Caprock
and possibly attended only the subsequent closing meetings that
took place at the law offices of Caprock's counsel.

                               -10-
these documents and events, the testimony of Caprock's attorney,

Nims, who was present at the meetings in which the Commercial

Capital loans were closed and who was acquitted, the documentary

evidence of the loans, and the vigorous cross-examination of

Assomull by Dillman's and Hatfield's respective counsel.            In view

of the substantial documentary and testimonial evidence presented

regarding all phases of the overarching scheme and the limited

scope and cumulative nature of Finch's potential testimony, we hold

that this case is not the rare one in which denial of a Rule 15

motion warrants reversal.6      See Bello, 532 F.2d at 423 (refusing to

reverse on Rule 15 grounds when the weight of evidence of guilt was

such that potential testimony would not have had a "significant

impact");    United States v. Hernandez-Escarsega, 886 F.2d 1560,

1570 (9th Cir. 1989) (refusing to reverse denial of Rule 15 motion

due, in part, to cumulative nature of potential evidence), cert.

denied, 497 U.S. 1003, 110 S. Ct. 3237, 111 L. Ed. 2d 748 (1990).

                                     B

     Next, the appellants argue that the district court committed

reversible   error   by   not   requiring   the   government   to   provide

appellants with the grand jury transcript of Ms. Kopy regarding her

recollection of the meetings at which the conspirators agreed to

     6
      2 CHARLES ALLEN WRIGHT, FEDERAL PRACTICE AND PROCEDURE § 243, p. 17
(1982) ("On appeal from a judgment of conviction defendant is
entitled to review of an order on a Rule motion, but it will be
rare that he will be able to persuade the appellate court that
the trial court committed reversible error in denying defendant's
motion to take a deposition . . .") (emphasis added).

                                   -11-
the illegal scheme to inflate Caprock's net worth with its own

money.    See Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10
L. Ed. 2d 215      (1963).       The    appellants     contend      that    Ms.   Kopy's

testimony would have supported their claim that they had a solid

basis    for    believing   that      the   Commercial       Capital     loans   were

legitimate instead of being disguised disbursements of Caprock's

own funds.      They claim that the transcript of Ms. Kopy's testimony

would have refuted Assomull's testimony regarding the incriminating

meetings.       When   asked   about      Ms.    Kopy's   grand    jury    testimony

regarding the meeting that Assomull and Hatfield attended, the

government read from the transcript to the court that Ms. Kopy

stated that she "didn't remember" and "[did not] recall that

happening."      The district court then denied the appellants' Brady

request for the transcript.

     We will overturn this verdict based on this alleged discovery

violation only if the appellants show that granting the Brady

request would have produced a reasonable "probability sufficient to

undermine      the   confidence      in   the    outcome."     United      States   v.

Ellender, 947 F.2d 748, 756 (5th Cir. 1991).                 Although exculpatory

and impeachment evidence fall within the purview of Brady, neutral

evidence does not.         United States v. Johnson, 872 F.2d 612, 619

(5th Cir. 1989).       See United States v. Rhodes, 569 F.2d 384, 388

(5th Cir.), cert. denied, 439 U.S. 844, 99 S. Ct. 138, 58 L. Ed. 2d
143 (1978) (holding prosecutor had no Brady duty to disclose that

a certain witness could not positively identify the defendant).

                                          -12-
Ms. Kopy's statement--to the effect that she did not remember the

meeting--is neutral, not exculpatory or impeaching in nature.

Therefore, we hold that the evidence was not Brady material.               In

any event, the district court's refusal to grant the Brady request

certainly    does   not   undermine       our   confidence   in   the   jury's

verdicts.7

                                      C

     Next, the appellants argue that the district court committed

reversible error by denying their motion to exclude evidence--which

they claim is extrinsic--regarding the removal of the second $10

million, which was used to fund the balance of the $5 million of

capital that the conspirators originally planned to inject back

into Caprock.   The first $10 million generated from the Maxtor and

Santos land deals had only resulted in approximately $1.5 million

     7
      Similarly, we hold that neither the district court's
failure to examine the transcripts in camera nor its refusal to
grant a second continuance to locate Ms. Kopy require reversal.
First, the district court's refusal to grant in camera review of
Ms. Kopy's statement that she could not recall an event does not
require reversal because, even if the statement were Brady
evidence, it would not be material but, instead, is simply
inconclusive. See United States v. Gaston, 608 F.2d 607, 612
(5th Cir. 1979); United States v. Dinitz, 538 F.2d 1214, 1224
(5th Cir. 1976), cert. denied, 429 U.S. 1104, 97 S. Ct. 1133, 51
L. Ed. 2d 556 (1977). Second, the district court's refusal to
grant a second continuance to locate Ms. Kopy does not require
reversal because Dillman and Hatfield did not show that Ms. Kopy
was "available and willing to testify." United States v. Shaw,
920 F.2d 1225, 1230 (5th Cir.), cert. denied, ___ U.S. ___, 111
S. Ct. 2038. 114 L. Ed. 2d 122 (1991). United States v. Botello,
991 F.2d 189, 193 (5th Cir. 1993) (citations omitted), cert.
denied, ___ U.S. ___, ___ S.Ct. ___, ___ L.Ed.2d ___ 62 U.S.L.W.
3471 (U.S. Jan. 18, 1994) (No. 93-5835). Indeed, the record here
shows plainly that Ms. Kopy was unwilling to testify.

                                  -13-
of capital for Caprock, thus, leaving an approximate shortfall of

$3.5 million below original goal of inflating Caprock's net worth

by approximately $5 million.8     The government submitted voluminous

documentary evidence of the money laundering activities of Assomull

and certain unindicted individuals and a chart showing the money

flowing out of Caprock through the H-E III Trust, through the

Broadline account, and finally into Great West, Caprock's parent.9

      We review this evidentiary ruling under an abuse of discretion

standard.   United States v. Jackson, 978 F.2d 903, 912-13 (5th Cir.

1992), cert. denied, ___ U.S. ___, 113 S. Ct. 3055, 125 L. Ed. 2d 739

(1993).   The admission into evidence of facts that do not concern

the defendants, that are not inextricably intertwined with the

overall criminal episode is reversible error if the admission

prejudices the defendants. United States v. Williams, 900 F.2d 823

(5th Cir. 1990); United States v. Torres, 685 F.2d 921, 924 (5th

Cir. 1982).     Here, however, our review of the record shows that the

path of the second $10 million was inextricably intertwined with

the   overall    criminal   scheme,    and   especially   the   use   of   the

      8
      The funds not used to inflate Caprock's capital were used
to pay for the purchase of the land from independent third
parties, to pay for closing costs, and to enrich the various
conspirators.
      9
      The record is unclear as to whether the second $10 million
also passed through Commercial Capital or through a different
entity, Pacific Capital. Nonetheless, the original source and
ultimate destination of the funds and their undeniable path
through the Broadline account show that the second $10 million
was an important part of the overall scheme to inflate Caprock's
net worth with $5 million of its own money.

                                      -14-
Broadline account as the main laundering vehicle for the funds

removed from Caprock.     The second $10 million came from Caprock

while Dillman served as the institution's chairman and Hatfield

served as its executive vice-chairman, just as with the first $10

million.     The money passed through the H-E III Trust and the

Broadline account as did portions of the first $10 million.            And,

most importantly, this money provided the balance of the $5 million

that Dillman, Hatfield, and Assomull originally schemed to inject

into Caprock.   Thus, we hold that the district court did not err in

allowing the jury to see the entire scheme and its results.

                                   D

     Next, the appellants argue that the district court committed

reversible error by denying their motion for a specific unanimity

instruction   regarding   the   particular   criminal   purpose   of   the

conspiracy    and,   instead,   giving   only   a   general   unanimity

instruction with respect to all the charges.10      Specifically, each

     10
      The district court instructed the jury with respect to the
conspiracy count as follows:

     For you to find a defendant guilty of conspiracy, you
     must be convinced that the government has proved each
     of the following beyond a reasonable doubt:

     First: That two or more persons made an agreement to
     commit at least one of the following crimes: bank
     fraud, misapplication of funds, unlawful participation,
     or money laundering . . .

     Second: That the defendant under consideration knew of
     the unlawful purpose of the agreement and joined in it
     willfully, that is, with the intent to further the
     unlawful purpose; and

                                  -15-
appellant contends on appeal that notwithstanding the general

unanimity instruction given by the district court, there is the

possibility that while all twelve jurors could agree that the

defendant under consideration conspired to violate a statute, some

of the twelve jurors could have believed that he only conspired to

violate one particular statute, e.g., 18 U.S.C. § 1344, bank fraud,

while others of the twelve jurors could have believed that he only

conspired to violate another particular statute, e.g., 18 U.S.C. §

1956, money laundering.       Thus, there could have been a less than

unanimous agreement among all twelve jurors as to which of the four

substantive statutes the defendant under consideration conspired to

violate.      See   United States v. Holley, 942 F.2d 916, 925-29 (5th

Cir. 1991), cert. denied, ___ U.S. ___, 114 S. Ct. 77, 126 L. Ed. 2d
45   (1993)     (reversing   for   lack    of   unanimity   instruction   on

nonconspiracy count with several potential alternative violative

acts).

      Third: That one of the conspirators during the
      existence of the conspiracy knowingly committed at
      least one of the overt acts described in the indictment
      . . . .

      (Emphasis added).

With respect to all the charges, the district court instructed
the jury:

      To return a verdict, it is necessary that each juror
      agree thereto. In other words, your verdict must be
      unanimous.

                                    -16-
     The appellants' argument fails because it is based on a

fundamental misunderstanding of the crux of a conspiracy charge

under 18 U.S.C. § 371: The defendant's voluntary agreement with

another or others to commit an offense against or to defraud the

United States. It does not matter that a single conspiracy was

comprised      of   several   objects    to    which   the    defendant   did    not

specifically agree to accomplish, if those acts were reasonably

foreseeable.        See United States v. All Star Indus., 962 F.2d 465,

478 (5th Cir.), cert. denied, ___ U.S. ___, 113 S. Ct. 377, 121
L. Ed. 2d 288 (1992).       Once the defendant had joined the agreement,

the acts of the other conspirators became his acts irrespective of

whether he physically participated in those particular acts or

expressly      agreed    to   the    various       specific    objectives       that

constituted the respective stages of the overarching conspiracy.

See id.    When twelve jurors believe beyond a reasonable doubt that

the defendant under consideration agreed to achieve an ultimate

criminal purpose against the United States, all jurors need not

agree     on   which    particular      offenses    that     defendant    intended

personally to commit as long as there is but one conspiracy that

encompasses the particular offenses charged.

     The evidence here showed one overarching conspiracy that

embodied a scheme encompassing several illegal acts to inflate

Caprock's net worth with its own money.                    See United States v.

Ellender, 947 F.2d 748, 759 (5th Cir. 1991) (stating that similar

time frame, locations, co-conspirators, offenses, and overt acts

                                        -17-
indicate one conspiracy).         There is no question but that this

object was in violation of the law of the United States--the

inflation of Caprock's net worth with its own fraudulently obtained

money.     18 U.S.C. § 1956 (1988 & Supp. IV 1992) (knowing use of

proceeds from unlawful activity in a financial transaction--here,

the inflation of Caprock's net worth with its own fraudulently

removed    and   laundered     money).       The   jury   was   instructed,

effectively, that it must find with respect to each defendant that

he   joined   this   illegal   conspiracy.     This   instruction   was   in

accordance with the law.       See Braverman v. United States, 317 U.S.
49, 54, 63 S. Ct. 99, 102, 87 L. Ed. 23 (1942); United States v.

Lyons, 703 F.2d 815, 821 (5th Cir. 1983); United States v. Elam,

678 F.2d 1234, 1250 (5th Cir. 1982); United States v. Murray, 618
F.2d 892, 898 (2d Cir. 1980); United States v. Bolts, 558 F.2d 316,

326 n.4 (5th Cir. 1977), cert. denied, 439 U.S. 898, 99 S. Ct. 262,

58 L. Ed. 2d 246 (1978).11

                                     E

      11
      Hatfield tangentially argues that the jury should also
have been instructed that it must unanimously agree on which
overt act, or acts, he committed in furtherance of the
conspiracy. Hatfield admitted that he purchased stock from Great
West even though he denied having knowledge that the stock
purchase money came from Caprock. Given his agreement to the
overall conspiracy, the stock purchase was a sufficient overt act
to warrant a conviction by the jury. See United States v.
Khamis, 674 F.2d 390, 393 (5th Cir. 1982) (stating that "overt
act" need not be illegal itself in order to be sufficient to
sustain conspiracy conviction). Because Hatfield admitted to
this and other overt acts, we find any error with respect to the
overt act requirement harmless beyond a reasonable doubt. See
Holley, 942 F.2d at 929.

                                   -18-
     Next,   Dillman   argues   that   the   district   court   erred   in

instructing the jury on the requisite mental state for bank fraud,

18 U.S.C. § 1344, and for unlawful participation, 18 U.S.C. § 1006,

respectively.   We find both of these contentions without merit.

     With respect to the bank fraud count, the district court

instructed the jury as follows:

          A statement or representation is "false"               or
     "fraudulent" within the meaning of this statute when        it
     pertains to a material fact; it is known to be untrue       or
     is made with reckless indifference to its truth             or
     falsity; and is made or caused to be made with intent       to
     defraud.

Dillman contends this instruction did not require the jury to find

that the defendants acted with specific intent as required by

United States   v. Saks, 964 F.2d 1514, 1518 (5th Cir. 1992).

     We review this instruction to determine whether the district

court's charge, as a whole, is a correct statement of the law and

whether it clearly instructs jurors as to the principles of law

applicable to the factual issues confronting them.        United States

v. Stacey, 896 F.2d 75, 77 (5th Cir. 1990).        In United States v.

Gunter, 876 F.2d 1113, 1120 (5th Cir.), cert. denied, 493 U.S. 871,

110 S. Ct. 198, 107 L. Ed. 2d 152 (1989), we approved the same jury

instruction with respect to 18 U.S.C. § 1344 that the district

court used in this case.    Similarly, in this case, the "reckless

indifference" language in the instruction defined the degree of the

defendant's knowledge of falsity of the statement--not the motive

or mental state of the defendant in making and using the statement.

                                 -19-
The "intent to defraud" language defined the mens rea.                This

instruction was a correct statement of the law.

     With respect to the unlawful participation count, the district

court instructed the jury that it must find that the defendants

acted with "intent to defraud."    The district court instructed the

jury that to act with intent to defraud is "to act knowingly and

voluntarily" and then referred the jury to the following definition

of "intent to defraud" that was contained in another count:

     [T]o act . . . with the specific intent to deceive,
     ordinarily for the purpose of causing some financial loss
     to another or bringing about some financial gain to one's
     self. It also means to act knowingly and with specific
     intent to deceive such that the natural tendency of the
     act causes injury to a financial institution, even though
     such act may not have been the defendant's motive.

(Emphases added).

Dillman contends that district court confused the jury by including

the term "willfully" in its instructions for other specific intent

counts but failing to include the term "willfully" in the unlawful

participation charge. In United States v. Rochester, 898 F.2d 971,

979 (5th Cir. 1990), we upheld a jury instruction regarding section

1006 that used cross-references instead of defining the requisite

mens rea in each count separately because the instructions taken as

a whole properly stated the specific intent requirement of section

1006.    Similarly,   we   find   that   the   exclusion   of   the   term

"willfully" did not detract from the accuracy of the instruction or

confuse the jury because the clear language of the instructions,

taken as a whole, properly stated the applicable law: Section 1006

                                  -20-
requires specific intent.      Id.       Thus, the specific section 1006

instruction serves as no basis for reversal.

                                     F

     Finally, Hatfield argues that the district court committed

reversible error in denying his motion for severance.         In support

of his motion for a separate trial, Hatfield submitted Dillman's

affidavit, stating that if a separate trial were held, Dillman

would testify at Hatfield's trial to the effect that Hatfield had

no involvement in the illegal transactions.12           Dillman further

averred that he would testify that Hatfield was not present at any

meeting where the illegitimacy of the Commercial Capital loans--by

which Caprock's own money was transferred effectively to Hatfield

and used to purchase the Great West stock--was mentioned and that

he always represented to Hatfield that the transactions at issue

were legitimate. Hatfield cites Abbott v. Wainwright, 616 F.2d 889

(5th Cir. 1980), in support of his contention that we should

reverse for denial of severance because: (1) his central defense

     12
          Fed. R. Crim. P. 14 provides in pertinent part:

     If it appears that a defendant or the government is
     prejudiced by a joinder of offenses or of defendants in
     an indictment or information or by such joinder for
     trial together, the court may order an election or
     separate trial of counts, grant a severance of
     defendants or provide whatever other relief justice
     requires.

                                  -21-
was that he did not know the transactions were illegal; (2) the

only direct evidence of such knowledge was Assomull's testimony

that Hatfield attended meetings where the illegal portion of the

scheme were discussed and that Dillman had told Hatfield of the

illegality of the scheme; and (3) the denial of his motion for

severance deprived him of the only testimony, besides his own, that

could have exculpated him.

     To make out a prima facie case for severance to the district

court, Hatfield must demonstrate a bona fide need for Dillman's

testimony, and that Dillman would in fact testify at Hatfield's

separate trial.   United States v. Rocha, 916 F.2d 219, 232 (5th

Cir. 1990), cert. denied, ___ U.S. ___, 111 S. Ct. 2057, 114 L. Ed. 2d
462 (1991).   We review the district court's denial of a motion for

severance only for abuse of discretion.    Rocha, 916 F.2d at 227.

To demonstrate an abuse of discretion on a severance motion,

Hatfield must bear the heavy burden of showing that he suffered

"specific and compelling prejudice" against which the district

court did not protect him and, as a result, his trial was unfair.

Id.; United States v. Salomon, 609 F.2d 1172, 1175 (5th Cir. 1980).

In making this determination, we consider, inter alia, the extent

of the prejudice caused by the denial of the motion to sever and

the impact of severance on judicial administration and economy.

United States v. Daly, 756 F.2d 1076, 1080 (5th Cir.), cert.

denied, 474 U.S. 1022, 106 S. Ct. 575, 88 L. Ed. 2d 558 (1985).

                                -22-
     First, Hatfield's evidence that he had a bona fide need of

severance to obtain Dillman's testimony and that Dillman would in

fact testify at his trial is not persuasive.          Prior to the joint

trial, Dillman stated only that he "may not" testify at a joint

trial; it would depend, he said, "on testimony and evidence brought

forth at that trial."   Thus, the need for severance was not obvious

prior to trial because there was the admitted possibility that

Dillman might testify at a joint trial.       Further, Dillman was not

positive that he would testify for Hatfield even if a separate

trial was granted: Dillman asserted that his willingness to testify

at Hatfield's separate trial was conditioned on the facts and legal

advice that he had prior to trial and, thus, could change after

separate trials had begun.   See Daly, 756 F.2d at 1080.          Thus, that

Dillman would testify as Hatfield's separate trial was by no means

certain.

     Second, Hatfield fails to show "compelling prejudice."                 We

reach this conclusion because of the lack of candor reflected in

Dillman's affidavit and because of the availability of other

exculpating   evidence.      In   Abbott, 616 F.2d    at    890,    the

codefendant's exculpatory affidavit was entitled to significant

weight in showing prejudice to Abbott because the codefendant

acknowledged his own criminal conduct while exonerating Abbott.

See Tifford v. Wainwright, 588 F.2d 954, 957 (5th Cir. 1979).               In

the instant   case,   Dillman's   affidavit    was   in     no   sense    self-

incriminatory; it was in fact self-serving in that it states that

                                  -23-
Assomull told Dillman that Commercial Capital was a legitimate

entity with ample supply of cash from independent sources to loan

to Caprock's officers in order to fund their purchases of Great

West stock.     See Daly, 756 F.2d 1076, 1080 (stating that self-

serving nature of affidavit weighed against the defendant's claim

of compelling prejudice due to lack of severance).            Furthermore,

Dillman's affidavit does not reflect the only exculpatory evidence

available to Hatfield.        Hatfield's counsel extensively cross-

examined    Assomull   and   examined   other    evidence   regarding   the

incriminating meetings, and Hatfield testified fully on his own

behalf     regarding   his   involvement   in     the   transactions    that

constituted the conspiracy at trial.13          Moreover, even if the jury

accepted that Dillman never explained the illegal portions of the

scheme to Hatfield, the evidence of Hatfield's integral involvement

in Caprock's management and, specifically, his approval of the

fraudulent Maxtor and Santos loans, his partially nonrecourse

borrowings from Commercial Capital, and his purchase of Great West

stock was sufficient in and of itself to support conviction.             See

United States v. Coveney, 995 F.2d 578, 594 (5th Cir. 1993)

     13
      The government suggests that Hatfield could have called
Kevin Hird, Caprock's chief lending officer who was involved in
the key meetings, as a witness. We find Hatfield's statement
that he was unable to locate Hird and serve him with a subpoena
unpersuasive. Hird had pled guilty to crimes arising out of the
scheme to inflate Caprock's net worth with its own money and was
either incarcerated or on probation at the time of the trial.
Hatfield did not explain why he could not have located Hird
through law enforcement or corrections authorities and obtained
pertinent testimony from him.

                                   -24-
(stating that conspiracy does not require proof of a specific

agreement when such agreement can be inferred from the concert of

action of the conspirators); United States v. Warner, 441 F.2d 821,

830   (5th   Cir.)   (stating    that   a   conspiratorial      agreement   is

generally not susceptible to direct proof and, instead, must be

proven by competent circumstantial evidence including the acts of

the conspirators themselves), cert. denied, 404 U.S. 829, 92 S. Ct.
65, 30 L. Ed. 2d 58 (1971).       In the light of this evidence, we cannot

say that Hatfield has established compelling prejudice by being

denied the uncertain opportunity to proffer Dillman's possible

testimony that Dillman never personally told Hatfield that the

scheme involved Caprock's own money and was thus illegal.

      In short, Hatfield has not borne his heavy burden of proving

the need for a separate trial and the compelling prejudice caused

by the lack of Dillman's potential testimony.              Further, we note

that the     district   court   instructed    the   jury   to   consider    the

evidence against each defendant separately.14         See United States v.

      14
      With respect to the requirement to consider the evidence
against each defendant separately, the district court instructed
the jury as follows:

           A separate crime is charged against one or more of
      the defendants in each count of the indictment. Each
      count, and the evidence pertaining to it, should be
      considered separately. Also, the case of each
      defendant should be considered separately and
      individually. The fact that you may find one or more
      of the defendants guilty or not guilty of any of the
      crimes charged should not control your verdict as to
      any other crime or any other defendant. You must give
      separate consideration to the evidence as to each

                                    -25-
Thomas, No. 91-8583, slip op. 2510, 2526 [___ F.3d ___, ___] (5th

Cir. Jan. 25, 1994) (affirming denial of motion to sever where

district    court   gave   cautionary   instruction   to   consider    each

defendant    individually).     Finally,   the   voluminous   record    and

extensive transcripts indicate that judicial economy was served by

a joint trial.      See Daly, 756 F.2d at 1080.       Thus, the district

court did not abuse its discretion in denying Hatfield's motion for

severance.

                                   IV

     For the reasons stated above, the appellants' convictions are

                                                      A F F I R M E D.

     defendant.

We note that the jury apparently followed this instruction in
acquitting other defendants.

                                  -26-