United States v. Martin Gjerde ( 1997 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
_____________
No. 96-2033
_____________
United States of America, *
*
Plaintiff - Appellee, * Appeal from the United States
* District Court for the
v. * District of Minnesota.
*
Martin Ole Gjerde, *
*
Defendant - Appellant. *
_____________
Submitted: November 20, 1996
Filed: April 7, 1997
_____________
Before FAGG, WOLLMAN, and HANSEN, Circuit Judges.
_____________
HANSEN, Circuit Judge.
Martin O. Gjerde appeals his conviction for conspiring to defraud an
agency of the United States in violation of 18 U.S.C. § 371 (1994). He
argues that the evidence was insufficient to support his conviction, that
the district court1 erred in admitting hearsay evidence at his trial, and
that the district court erred in determining his sentence. We affirm.
1
The Honorable David S. Doty, United States District Judge for
the District of Minnesota.
I.
The charges in this case arose from a conspiracy to defraud the
United States Department of Housing and Urban Development (HUD) in order
to obtain HUD funds. The United States Congress annually appropriates tax
dollars to HUD for the Community Development Block Grant Program, which
includes the Small Cities Grant Program. HUD releases the Small Cities
Grant Program funds to the states, which in turn make the funds available
to communities to establish new economic development. The Minnesota
Department of Trade and Economic Development (MDTED) is the Minnesota
agency in charge of disbursing these HUD funds, in accordance with HUD
rules and regulations.
Clarkfield Drying, Inc. (CDI) was a Minnesota corporation established
by two brothers, Clark Field and Richard Field, to operate a whey drying
plant located in Clarkfield, Minnesota. The Field brothers sought
financing for the purchase of equipment and for other operational costs for
the new plant. On behalf of CDI, the brothers approached the City of
Clarkfield to apply for a $282,000 loan through the HUD Small Cities Grant
Program. In their application for the HUD funds, the Field brothers stated
that to be successful, CDI would require, among other things, an additional
$292,000 of private financing. When the city applied to MDTED for the
purpose of loaning the funds to CDI, MDTED responded that before it would
release the HUD funds, it would need proof through a loan commitment letter
that CDI had obtained the private financing. In addition, under the
funding agreement between the city and CDI, CDI would have to prove that
the money from the private financing had been spent on CDI equipment and
that the City of Clarkfield would be in the first security position on the
CDI equipment.
2
The Field brothers proceeded to seek private financing for CDI.
After unsuccessfully pursuing other avenues of obtaining the money,2 the
Field brothers sought a $292,000 loan from the Bonanza Valley State Bank
(the bank) in Brooten, Minnesota. Richard Field approached Martin Gjerde,
the president of the bank who had a long-standing relationship with Field,
for a loan. Gjerde refused to loan the funds to CDI, however, because the
City of Clarkfield was out of the bank's service area (90 miles away), CDI
was a new company, and Gjerde had no experience with Clark Field, who was
to run the operation.
Clark and Richard Field then proceeded to create a corporation named
Minnewaska Capital Investment, Inc. (Minnewaska), in Glenwood, Minnesota,
a city within the bank's service area. Minnewaska was a holding and
leasing company for CDI, with Richard Field named as president and Clark
Field named as treasurer. The Fields then approached Gjerde for a $292,000
bank loan to Minnewaska, to provide private financing for CDI. Gjerde
approved the loan, without requiring the Fields to fill out a loan
application or to submit any evidence of Minnewaska's financial status.
The transactions between Gjerde (on behalf of the bank) and the
Fields (on behalf of CDI and Minnewaska) took place on August 21, 1989, and
proceeded as follows. First, the bank loaned
2
At one point, Clark and Richard Field obtained a false letter
of credit from Rudell Oppegard, the president of Twin Valley State
Bank in Twin Valley, Minnesota, conditionally committing the bank
to a $292,000 loan. As a result of their conspiracy to obtain HUD
money through fraudulent means, Oppegard and the Field brothers
were convicted of conspiring to defraud the government in violation
of 18 U.S.C. § 371. See United States v. Clark Beach Field, No.
96-1588 (8th Cir. Apr. __, 1997); United States v. Richard William
Field, No. 96-1589 (8th Cir. Apr. __, 1997).
3
$292,000 to Minnewaska. The loan papers were signed by Gjerde, Clark
Field, and Richard Field. Next, Minnewaska immediately transferred the
$292,000 to CDI. Within a minute of this transfer of funds, CDI paid
$173,000 (59% of the loan) back to Minnewaska, which then repaid that
amount to the bank. The remaining $119,000 of the bank loan was left in
CDI's checking account, but the money was never available for use by CDI.
Gjerde put a hold on the Minnewaska and CDI checking accounts, preventing
the Fields from accessing the proceeds of the bank loan. He noted this in
a comment in the loan file, stating:
This loan is being granted and security looked at only on the
basis that the proceeds of this loan never leave[] accounts
that have been set up at Bonanza Valley State Bank and security
that is offered for them. Holds have been put on each of [the]
checking accounts . . . .
(Appellee's App. at 10.) In accordance with Gjerde's comment on the loan,
the bank returned and refused to honor several checks written on the CDI
bank account, despite its healthy account balance.3
On September 28, 1989, Kevin Stroup, an attorney representing the
City of Clarkfield, telephoned Gjerde to inquire about the bank loan.
Stroup told Gjerde that, to obtain the HUD Small Cities Grant Program
funds, the Fields were required to secure $292,000 of private financing and
to show that the proceeds of the financing
3
Over a year later, an Assistant County Attorney filed an
insufficient-funds check charge against Clark Field based on a
check that had bounced in September 1989. Gjerde provided a letter
on Field's behalf, explaining that the account was used as security
on the bank loan and that the check had been returned for
insufficient funds because a hold had been placed on the account.
As a result of Gjerde's representations, the charge against Clark
Field was dropped.
4
had been used to purchase CDI equipment. Gjerde informed Stroup that the
bank had lent $292,000 to Minnewaska, and Stroup requested documentation
of the loan.
Gjerde sent the loan documents to Stroup, showing that the bank had
lent $292,000 to Minnewaska, which in turn was transferring the funds to
CDI. Gjerde also represented to Stroup on several occasions that
approximately $170,000 of the bank loan had been spent on equipment as
agreed upon under the funding agreement between the city and CDI. Gjerde
never informed Stroup at any time that the $173,000 had in fact been repaid
to the bank or that holds had been placed on the CDI and Minnewaska
checking accounts to ensure that the remaining $119,000 did not leave the
bank.
On November 8, 1989, Gjerde negotiated with Stroup to maintain the
bank's first security position on the cash in the Minnewaska and CDI bank
accounts until the funds had been fully spent on equipment. Under Gjerde's
proposal, the city would have a first security interest once CDI had used
the money to purchase equipment for the whey drying plant. The city agreed
to this plan because the contract between the city and CDI required that
the HUD funds be spent on equipment. On November 29, 1989, Gjerde
confirmed to Stroup that CDI had spent all the proceeds of the bank loan
on equipment and the CDI account had a zero balance.
Stroup sent the bank loan documents to a senior loan officer at
MDTED, Nancy Johnson, and told her of Gjerde's assurance that the proceeds
of the bank loan had been spent on equipment. The Fields also sent
documents to Johnson, representing that the money had been spent on
equipment. Based on this information, Johnson authorized the release of
funds from the HUD Small Cities Grant Program to the city. On December 13,
1989, the city loaned
5
$282,000 to CDI, $232,000 of which was transferred to the CDI checking
account at the Bonanza Valley State Bank.
The Fields repaid the balance of the bank loan within three months
of the execution of the loan. A $115,000 check was made payable from the
CDI account to the bank on November 9, 1989, one day following the consent
agreement between the bank and the city concerning the priority of their
security interest. The final payment, including $3,571.40 in purported
interest, was made on December 13, 1989, after the HUD funds had been
deposited in the CDI account.
CDI eventually defaulted on the HUD loan. Stroup's law firm then
hired an investigator to identify the whereabouts of the HUD funds. When
the investigator spoke with Gjerde about the bank loan, Gjerde described
it as a "paper transaction."
The City of Clarkfield also hired a CPA to trace the HUD funds loaned
to CDI. The CPA concluded that the $292,000 purported loan from the bank
"did not provide any capital on a long term basis to the business, as the
money was advanced and returned well in advance of the time it should have
been returned either to investors or to the bank." (Trial Tr. III at 39.)
The CPA testified that the sequence of the transactions was not necessarily
uncommon, but the loan was not valid to fulfill CDI's obligation to obtain
the private financing in order to qualify for the HUD funds. She described
the purported loan as "a bogus transaction with no actual capitalization
to the corporation." (Id.)
On September 21, 1994, Gjerde was charged in a Second Superseding
Indictment on one count of conspiracy to defraud the United States in
violation of 18 U.S.C. § 371 and four counts of
6
mail fraud in violation of 18 U.S.C. §§ 2 and 1341.4 The case proceeded
to trial. Stroup, the attorney who had represented the City of Clarkfield,
testified that he would not have approved the loan to CDI if he had seen
the loan comment sheet prepared by Gjerde stating that the bank loan was
being made on the condition that the money never leave the bank. Likewise,
Johnson, the senior loan officer at MDTED assigned to the CDI loan,
testified that she would not have approved the release of the HUD money to
the city if she had seen the loan comment sheet.
A jury found Gjerde guilty of conspiring to defraud the United States
in violation of 18 U.S.C. § 371, but not guilty on the mail fraud charges
under 18 U.S.C. §§ 2 and 1341. The district court entered a judgment,
sentencing Gjerde to thirty-three months of imprisonment, two years of
supervised release, and restitution in the amount of $5,000. Gjerde
appeals, arguing that the evidence was insufficient to support his
conviction, the district court erred in admitting hearsay evidence, and the
district court erred in sentencing him.
4
The Field brothers were also charged in the same superseding
indictment with violations of the mail fraud and conspiracy
statutes arising out of this conspiracy. In addition, they were
charged with similar counts arising out of a separate conspiracy to
obtain HUD funds through fraudulent activities with Oppegard, see
supra n.2. The Fields were found guilty on the latter charges and
then entered into a plea agreement with the United States with
regard to the charges arising out of their conspiracy with Gjerde.
Under the agreement, the government dropped the mail fraud charges,
but the Field brothers pled guilty to the conspiracy charge.
7
II.
A. Sufficiency of the Evidence
Gjerde first contends that the evidence is insufficient to prove he
was guilty of participating in any conspiracy. We consider the evidence
in the light most favorable to the guilty verdict, giving the government
the benefit of all reasonable inferences that might be drawn from the
evidence. United States v. Koskela, 86 F.3d 122, 126 (8th Cir. 1996). We
will overturn a jury verdict only when no reasonable jury could have found
the defendant guilty beyond a reasonable doubt. United States v. Reeves,
83 F.3d 203, 205-06 (8th Cir. 1996).
To find Gjerde guilty of conspiring to defraud the United States in
violation of 18 U.S.C. § 371,5 the jury had to conclude that a conspiracy
existed in this case and that Gjerde was a participant in the conspiracy.
A conspiracy exists when at least two people knowingly participate in an
agreement to defraud the United States or a United States agency and at
least one of the parties performs an overt act in furtherance of the
conspiracy. 18 U.S.C. § 371; United States v. Campbell, 848 F.2d 846, 851
(8th Cir. 1988). Circumstantial evidence, including the alleged
conspirators' conduct and any attending circumstances, may prove the
existence of an agreement, particularly evidence indicating
5
Title 18 U.S.C. § 371 states:
If two or more persons conspire either to commit
any offense against the United States, or to
defraud the United States, or any agency thereof in
any manner or for any purpose, and one or more of
such persons do any act to effect the object of
theconspiracy, each shall be fined under this title
or imprisoned not more than five years, or
both. . . .
8
that the parties "acted in concert to achieve a common goal." Hamling v.
United States, 418 U.S. 87, 124 (1974); Campbell, 848 F.2d at 851. Once
the conspiracy is established, the government need only offer slight
evidence connecting a particular defendant to the conspiracy. United
States v. Jenkins, 78 F.3d 1283, 1287 (8th Cir. 1996).
Gjerde claims the evidence was insufficient to establish beyond a
reasonable doubt that he knew of the conspiracy or of the conspiracy's
general purpose and scope. We disagree. Gjerde knew that the Field
brothers needed to obtain $292,000 in matching funds in order to qualify
for the HUD money. He also knew the $292,000 bank "loan" to CDI through
Minnewaska was merely a paper transaction. Yet, when the city attorney
discussed the matching-fund requirement with Gjerde, Gjerde represented
that the bank had provided the requisite private financing and did not
explain that CDI had in fact received no capitalization from the loan.
Besides Gjerde's knowledge and misrepresentation about the bank loan
itself, Gjerde knew the Fields were required to use the bank proceeds to
purchase equipment for CDI. In furtherance of the conspiracy, Gjerde
falsely represented that the entire proceeds of the bank loan had been
spent on equipment, when in fact they had never left the bank. He also
fostered the city's misunderstanding of the nature of the bank loan by
negotiating with the city regarding the priority of the security interests,
all the while knowing that the bank-loan transaction had provided no
capitalization to CDI and there would be no expenditure of the bank-loan
proceeds on equipment. It is but a small inferential step from the record
evidence to conclude that Gjerde knew the city attorney would rely on the
bank-loan documentation and Gjerde's representations, as well as the
documentation from the Field brothers, to induce the senior loan officer
at MDTED to release the
9
HUD funds to the city. Given the overwhelming evidence in this record, we
believe a reasonable jury could have concluded beyond a reasonable doubt
that Gjerde knew of the conspiracy's purpose and scope, and that he
willingly and knowingly played a key role as a participant in it.
Gjerde argues that, although he did not explicitly tell the city
attorney he had frozen the CDI and Minnewaska checking accounts, he
nonetheless put the city attorney on notice of this by sending the attorney
the bank-loan documents. Included among the documents was an assignment
signed by both Clark and Richard Field, which stated: "I understand that
I may not withdraw any money from my account without your permission until
my debts have been paid." (Trial Tr. III at 141.) Gjerde maintains that
this assignment revealed the nature of the bank loan. We cannot agree that
the Field brothers' agreement to obtain bank authorization for expenditures
put the city attorney on notice that Gjerde had absolutely frozen the CDI
and Minnewaska checking accounts. When reading the assignment, the city
attorney could easily have assumed that the bank would approve expenditures
for CDI equipment, in accordance with the HUD funding agreement. This
assumption would be quite reasonable given that Gjerde had indicated his
understanding of the expenditure requirement. Thus, the documentation of
the assignment did not notify the city attorney of the holds on the
accounts.
Gjerde next argues on two grounds that the evidence was insufficient
to support the verdict because the conspiracy was not one to defraud the
United States or any agency thereof. First, he contends that the money
fraudulently borrowed by the Field brothers was money belonging to the
city, not to HUD. Thus, Gjerde argues, the object of the conspiracy was
to defraud the City of Clarkfield, not the federal government. Second,
Gjerde claims that because no
10
federal statute required the city to impose its matching loan requirement,
the conspiracy could not have been to defraud the federal government.
Section 371 prohibits two distinct types of conspiracies: (1)
conspiracies "to commit any offense against the United States," and (2)
conspiracies "to defraud the United States or any agency thereof." 18
U.S.C. § 371; United States v. Wicker, 80 F.3d 263, 267 (8th Cir. 1996).
In the instant case, Gjerde was charged with the second type of
6
conspiracy. To support a conviction of conspiracy on this charge, the
government had to prove that the United States or one of its agencies was
the target of the alleged conspiracy. Tanner v. United States, 483 U.S.
107, 130 (1987). A conspiracy targeted at the United States or one of its
agencies may be achieved by using third parties to effect the conspiracy,
because section 371 does not limit the method by which the conspirators may
plan to defraud the United States. Id. at 129.
Based on the evidence at trial, a reasonable jury could have
concluded that the target of the conspiracy was HUD, as represented by
MDTED, the state agency that administered the HUD Small City Grant Program
funds. Although, as Gjerde emphasizes in his briefs,
6
The Second Superseding Indictment charged Gjerde with
knowingly and willfully conspir[ing with Clark and
Richard Field] . . . to defraud the United States of
America of funds belonging to the United States of
America's Department of Housing and Urban Development,
with the object of the conspiracy being to obtain those
funds in the form of an approximately $282,000 loan from
the HUD Small Cities Grant Program . . . .
(Clerk's R. at 129.)
11
the HUD money was granted to the state, see 42 U.S.C. § 5303,7 that grant
was subject to substantial federal regulation, see id. §§ 5304-5321; 24
C.F.R. 570.420 - .432 (1997). Consequently, the funds did not lose their
federal character, and MDTED was simply a state agency charged with
administering the federal program. Cf. United States v. Long, 996 F.2d
731, 732 (5th Cir. 1993) (explaining that question of whether funds lose
their federal character for purposes of 18 U.S.C. § 641 (conversion of
federal funds) is measured by the control and the supervision the federal
government exercises); United States v. Foulks, 905 F.2d 928, 930 (6th Cir.
1990) (holding, in the context of a prosecution under 42 U.S.C. § 641, that
"[w]here the government retains power over grant funds, those funds retain
their federal character even though deposited into accounts of non-federal
agencies"); United States v. Johnson, 596 F.2d 842, 845-46 (9th Cir. 1979)
(holding that HUD funds disbursed to the San Francisco Redevelopment Agency
were property of the federal government). Thus, MDTED was acting as an
agent of HUD, and any conspiracy to defraud MDTED with regard to the HUD
Small Cities Grant Program funds was in effect a conspiracy against HUD
itself. Gjerde and the Fields used the city to perpetrate their fraud
against HUD, but this does not alter the conclusion that the object of
their conspiracy was to defraud HUD in order to obtain the federal funds.
Tanner, 483 U.S. at 129. Further, it is of no consequence that the HUD
money eventually passed through the city's hands before making its way to
CDI; the important fact is that the federal government was the target of
the
7
This section states:
The Secretary is authorized to make grants to States,
units of general local government and Indian tribes to
carry out activities in accordance with the provisions of
this chapter. . . .
12
conspiracy between the Fields and Gjerde. See Tanner, 483 U.S. at 130.
We also reject Gjerde's argument based on the fact that the
government's case fails because the conspiracy did not violate a federal
statute or regulation. That the state (not the federal government)
instituted the matching-funds requirement is immaterial to our inquiry,
because Gjerde was charged with conspiracy to defraud the United States,
not conspiracy to commit an offense against the United States. See 18
U.S.C. § 371. While allegations of a conspiracy to commit an offense
against the United States would require proof of an agreement to violate
a federal statute or regulation, allegations under the other conspiracy
clause, that is, a conspiracy to defraud the United States, do not engender
that same requirement. Compare Tanner, 483 U.S. at 128-130 (discussing the
intent requirement for a "conspiracy to defraud the United States") with
Wicker, 80 F.3d 267 (discussing the intent requirement for a "conspiracy
to commit any offense against the United States").
For these reasons, we conclude that the evidence the government
submitted to the jury was sufficient to prove beyond a reasonable doubt
that Gjerde knowingly participated in a conspiracy to defraud an agency of
the United States.
B. Admission of Coconspirator's Statement
Gjerde contends the district court committed reversible error in
admitting testimony concerning a statement Richard Field made to an FBI
agent in 1993. "We review the evidentiary rulings of a district court only
for abuses of discretion, and will reverse only when an improper
evidentiary ruling affects the substantial rights of the defendant or when
we believe that the error has had more
13
than a slight influence on the verdict." United States v. Ballew, 40 F.3d
936, 941 (8th Cir. 1994) (citations omitted), cert. denied, 115 S. Ct. 1813
(1995); see also Fed. R. Crim. P. 52(a) (harmless error standard).
The record reveals the following testimony at the trial:
PROSECUTOR: Now, during the course of your investigation of this
case, did you also interview Richard Field?
FBI AGENT: Yes, I did.
PROSECUTOR: And when was that?
FBI AGENT: That interview took place at Mister Field's place of
business on July 22nd, 1993.
PROSECUTOR: And did Mister Field tell you anything about why
Minnewaska Capital Investment Corporation was set up?
GJERDE'S ATTORNEY: I object, Your Honor. His conversation with
Mister Field is hearsay in this trial.
COURT: Overruled, under Bell or [Bourjaily]. Go ahead.
FBI AGENT: Yes -- I believe your question was how Mister Field
described Minnewaska Capital Investment?
PROSECUTOR: That is right. What did he tell you about why it was
set up and how it was set up?
FBI AGENT: We had an extended conversation with regard to Minnewaska
Capital Investments. And the final statement made by Mister Richard
Field to me was that Minnewaska Capital Investment was nothing more
than a straw company set up to act as a facilitator for the loan from
Bonanza Valley State Bank to Clarkfield Drying, Incorporated.
PROSECUTOR: I have no further questions at this time.
(Trial Tr. III at 133-34.)
14
The district court admitted the FBI agent's testimony about Richard
Field's description of Minnewaska under Federal Rule of Evidence
801(d)(2)(E), which states that a coconspirator's statement in the course
of and in furtherance of the conspiracy is not hearsay evidence. See
Bourjaily v. United States, 483 U.S. 171, 173 (1987); United States v.
Bell, 573 F.2d 1040, 1044 (8th Cir. 1978) (setting forth the procedure for
conditionally admitting conspirator statements). Gjerde argues that
Richard Field's statement, made more than three and a half years after the
Fields obtained the HUD funds, does not fall within the terms Rule
801(d)(2)(E), because it was not made in the course of or in furtherance
of the conspiracy. Gjerde further argues that the admission of the
testimony was prejudicial because it indicates Gjerde's participation in
an overt act in furtherance of the conspiracy.
The government counters that the admission of Richard Field's
statement was not error. The government contends, on the basis of United
States v. Askew, 958 F.2d 806, 812 (8th Cir. 1992), that Gjerde bears the
burden of proving the conspiracy had actually ended at the time of Field's
statement and that Gjerde failed to meet this burden. The government also
argues that, if the statement was erroneously admitted, the admission was
harmless error. See Fed. R. Crim. P. 52(a).
A declarant's out-of-court statement is admissible under Rule
801(d)(2)(E) if the government proves by the preponderance of the evidence
that (1) a conspiracy existed, (2) the declarant was the defendant's
coconspirator, and (3) the statement was made during the course of and in
furtherance of the conspiracy. United States v. Darden, 70 F.3d 1507, 1529
(8th Cir. 1995), cert. denied, 116 S. Ct. 1149 (1996) and Hopkins v. United
States, 116 S. Ct. 2567 (1996). In the instant case, we have already
concluded that the
15
government established beyond a reasonable doubt the existence of a
conspiracy involving both Richard Field and Gjerde as coconspirators.
Thus, the only remaining issue is whether Richard Field's statement was
made in the course of and in furtherance of the conspiracy.
As a preliminary matter, we note that the government, not Gjerde,
bears the burden of establishing that the statement was made "in the course
of" the conspiracy, that is, that the conspiracy had not ended before
Richard Field made his statement to the FBI agent in 1993. Darden, 70 F.3d
at 1529; Bell, 573 F.2d at 1044. Our discussion in Askew, 958 F.2d at 812,
on which the government relies for a contrary allocation of the burdens,
relates to a sentencing issue, not the admissibility of evidence at trial
under Rule 801(d)(2)(E).
Setting aside for a moment the question of whether Richard Field's
statement was made "in the course of" the conspiracy, we first look at
whether the record shows that Richard Field's statement was made "in
furtherance of" the conspiracy. We interpret the "in furtherance of"
requirement broadly, finding statements to be in furtherance of the
conspiracy if the overall effect of the conversation is to facilitate the
conspiracy. United States v. Edwards, 994 F.2d 417, 422 (8th Cir. 1993),
cert. denied, 510 U.S. 1048 (1994). "[C]onspirator statements made to a
known police agent are admissible under Rule 801(d)(2)(E) only if intended
to allow the conspiracy to continue, for example, by misleading law
enforcers." United States v. Alonzo, 991 F.2d 1422, 1426 (8th Cir. 1993).
After careful consideration, we conclude Richard Field did not make
the statement regarding Minnewaska in furtherance of the conspiracy. The
statement could not have been made in furtherance
16
of the conspirators' core criminal objective of obtaining the HUD funds,
because Richard Field made the statement three and a half years after the
Fields actually obtained the money. As to whether Richard Field was trying
to conceal the conspiracy, we must consider the statement in isolation,
because there is no elaboration in the record on the overall effect of the
conversation between Field and the FBI agent. Considering it so, we
conclude Richard Field did not make the statement in an effort to conceal
the conspiracy, for it was an admission about why the Fields created
Minnewaska and it supports the government's case of conspiracy to defraud
the United States. Thus, regardless of whether the statement was made in
the course of the conspiracy, we conclude that it was not made in
furtherance of the conspiracy and therefore was not admissible under
Federal Rule of Evidence 801(d)(2)(E).
Nonetheless, the hearsay evidence was admissible under Federal Rule
of Evidence 804(b)(3) as a statement against interest. Under Rule
804(b)(3), a statement against penal interest is not excluded as hearsay
if "(1) the declarant is unavailable as a witness, (2) the statement . .
. so far tend[s] to subject the declarant to criminal liability that a
reasonable person in the declarant's position would not have made the
statement unless he or she believed it to be true, and (3) corroborating
circumstances clearly indicate the trustworthiness of the statement."
United States v. Mendoza, 85 F.3d 1347, 1351 (8th Cir. 1996). At the time
of Gjerde's trial, Richard Field was not available as a witness. He had
pled guilty to the conspiracy and had asserted his Fifth Amendment right
against self-incrimination pending his appeal. See United States v. Duchi,
944 F.2d 391, 394 (8th Cir. 1991). Richard Field's statement that
Minnewaska had been created as a straw company to facilitate the bank loan
was against his penal interest at the time he made it, because there was
an investigation under
17
way and the statement gave credence to the government's suspicion that the
Field brothers had manipulated the situation to make it appear as if CDI
had secured private financing from the bank, when in fact the bank "loan"
provided absolutely no capital to CDI. Finally, the statement was
corroborated by Gjerde's own statement that the loan to Minnewaska passing
through to CDI was merely a paper transaction. Thus, the evidence was
admissible under Rule 804(b)(3).
Even if the evidence had been inadmissible, the error would have been
harmless in this case, because the other overwhelming evidence was more
than sufficient to prove Gjerde's participation in the conspiracy beyond
a reasonable doubt. The record reveals many acts in furtherance of the
conspiracy, including Gjerde's own misrepresentations to the city attorney.
Furthermore, given Gjerde's own description of the loan as a paper
transaction, Richard Field's statement did not really add anything to the
nonhearsay evidence in the record. Thus, we conclude that any evidentiary
error regarding the statement would not have affected Gjerde's substantial
rights. Fed. R. Crim. P. 52(a); Ballew, 40 F.3d at 941.
Gjerde also maintains that the prosecutor's reference in his closing
argument to Richard Field's statement constituted prosecutorial misconduct.
There was no prosecutorial misconduct here, because the evidence was
admissible and the prosecutor was therefore free to refer to it in closing
arguments. See United States v. Goodlow, 105 F.3d 1203, 1207 (8th Cir.
1997) (standard for examining claims of improper prosecutorial comments).
18
C. Sentencing Issues
Finally, Gjerde raises several challenges to the district court's
calculation of his sentence under the United States Sentencing Guidelines.
First, Gjerde argues the district court improperly enhanced his sentence
for obstruction of justice on the basis that Gjerde perjured himself at
trial. A two-level increase is appropriate "[i]f the defendant willfully
obstructed or impeded, or attempted to obstruct or impede, the
administration of justice during the investigation, prosecution, or
sentencing or the instant offense." United States Sentencing Commission,
Guidelines Manual, § 3C.1.1 (Nov. 1995). It is well established that
perjury at trial amounts to an obstruction of justice. United States v.
Thomas, 93 F.2d 479, 489 (8th Cir. 1996). "A witness commits perjury if
he gives false testimony concerning a material matter with the wilful
intent to provide false testimony, rather than as a result of confusion,
mistake, or faulty memory." Id. (internal quotations omitted). "The
district court must review the evidence and make [an] independent finding,
by a preponderance of the evidence, of perjury in order to impose a
sentence enhancement for obstruction of justice." Id. In conducting this
review, the court must evaluate the defendant's testimony in the light most
favorable to him. United States v. Scott, 91 F.3d 1058, 1063 (8th Cir.
1996). Because a decision to apply an enhancement for obstruction of
justice rests on the district court's factual findings, we review that
decision for clear error. Thomas, 93 F.3d at 488-89.
The district court's decision in this case was not clearly erroneous.
Examining the testimony in the light most favorable to Gjerde, the district
court found that Gjerde testified falsely in an attempt to affect the
outcome of his case. For example, contrary to a memorandum written by
Gjerde indicating that the bank's loan was merely a paper transaction and
that he never
19
intended to disburse the funds to the Fields, Gjerde testified at trial
that the bank's loan to the Fields was legitimate. Also in direct conflict
with the evidence, Gjerde also testified that he did not withhold
information from the city's attorney and that the bank intended to disburse
the loan to the Fields. Considering these statements, and others, we agree
with the district court that enhancement under § 3C1.1 is appropriate, and
we find no clear error. Thomas, 93 F.3d at 489; see also United States v.
Dunnigan, 507 U.S. 87, 95-96 (1993) (finding an enhancement for obstruction
of justice amply supported where the defendant failed to give truthful
answers on material matters in an attempt to affect the outcome of the
case).
Gjerde also challenges the enhancements of his sentence based upon
his role in the offense. The district court applied a two-level
enhancement for more than minimal planning, USSG § 2F1.1(b)(2), and a two-
level enhancement for abuse of a position of trust, USSG § 3B1.3. Gjerde
argues not only that the enhancements were improper, but also that he
deserved a reduction because of his minor role in the offense. See USSG
§ 3B1.2(b). We review the district court's factual determination of a
participant's role in the offense for clear error. United States v.
Maxwell, 25 F.3d 1389, 1399 (8th Cir.), cert. denied, 115 S. Ct. 610
(1994).
The district court's decision to apply a two-level enhancement under
section 2F1.1(b)(2) of the Guidelines for more than minimal planning was
not clearly erroneous. "`More than minimal planning' is deemed present in
any case involving repeated acts over a period of time, unless it is clear
that each instance was purely opportune." Id. § 1B1.1(f). Gjerde approved
of the bank "loan" to Minnewaska; he put a hold on the Minnewaska and CDI
accounts; and he represented that CDI had obtained financing from the bank
for
20
the purpose of purchasing equipment and, later, that equipment had been
purchased. These acts and others were thoughtful and complex, and extended
over a period of several months. The district court did not clearly err
in applying the enhancement for more than minimal planning.
Likewise, the denial of Gjerde's motion for a reduction for being a
minor participant was not clear error. Gjerde bears the burden of proving
that he is entitled to a reduction for being a minor participant. United
States v. Thompson, 60 F.3d 514, 517 (8th Cir. 1995). He cannot meet that
burden simply by proving that he is less culpable than his coconspirators
when the evidence indicates that he was "deeply involved" in the criminal
acts. Id. at 517-18. This record demonstrates that Gjerde was a key
player in the conspiracy, for without him, the Fields could not have
represented that they had obtained the matching private financing required
to obtain the HUD funds. Although he may have been less culpable in some
sense than the Field brothers, on this record, Gjerde simply cannot show
he was merely a minor participant.
Finally, the district court did not clearly err in finding that
Gjerde abused a position of trust in committing this crime. Gjerde was
entrusted by the bank's board of directors to conduct the bank affairs in
a forthright manner and to assure compliance with bank policies and federal
regulations. His position allowed him to structure the loan to CDI through
Minnewaska with little or no scrutiny. A situation like this is exactly
what the Sentencing Commission had in mind for the enhancement for abuse
of a position of trust. See USSG § 3B1.3, comment. (n.1) (giving as an
example "a bank executive's fraudulent loan scheme"). The enhancement for
Gjerde's abuse of his position of trust was proper.
21
III.
For the reasons stated above, we affirm the judgment of the district
court.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
22