United States v. James Patterson ( 1998 )


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  •                       United States Court of Appeals
    FOR THE EIGHTH CIRCUIT
    ___________
    No. 98-1349
    ___________
    United States of America,                *
    *
    Plaintiff-Appellee,         * Appeal from the United States
    * District Court for the
    v.                                    * Western District of Arkansas.
    *
    James N. Patterson,                      *
    *
    Defendant-Appellant.        *
    *
    ___________
    Submitted: June 9, 1998
    Filed:    July 8, 1998
    ___________
    Before WOLLMAN and MURPHY, Circuit Judges, and KYLE1, District Judge.
    ___________
    MURPHY, Circuit Judge.
    James N. Patterson appeals his convictions and sentences for two counts of
    conspiracy (18 U.S.C. § 371), bank fraud (18 U.S.C. § 1344), bank embezzlement (18
    U.S.C. § 656), and two counts of false bank entry (18 U.S.C. § 1005). He was
    sentenced to two years imprisonment on each count, to run concurrently, and a $15,000
    fine. Patterson asserts there was insufficient evidence to sustain his convictions for
    1
    The Honorable Richard H. Kyle, United States District Judge for the District of
    Minnesota, sitting by designation.
    counts five and six (conspiracy and false bank entries), that he is entitled to a new trial
    on counts one through four (conspiracy, bank fraud, bank embezzlement, and false bank
    entries) because the jury’s consideration of those charges was tainted by evidence
    related to counts five and six, and that he is entitled to resentencing. We affirm.
    The background facts are stated in a light favorable to the verdict. See U.S. v.
    Smith, 
    104 F.3d 145
    , 147 (8th Cir.1997). James Patterson became the largest
    stockholder and president of the Citizens Bank of Lavaca, Arkansas in 1979. Patterson
    ran the day to day operations of Citizens Bank, and in 1989 he and five other bank
    officers created Executive DC (EDC), a business to sell debt collection policies to the
    bank’s clientele. The name of the bank was changed in 1992 to the River Valley Bank
    & Trust.
    There was evidence relating to movement of funds within the bank by Patterson
    and others. In December 1990, Patterson and Gary Carmack, the senior vice president
    of the bank and a partner in EDC, agreed that they would create false documents to
    move $14,000 from the bank’s data processing account to the EDC account. The money
    was deposited into the EDC account on December 5, without disclosure to anyone else
    on the bank board of directors. Later, Patterson, Carmack and Larry Owen, another
    bank officer and EDC partner, each withdrew $4,000 from the EDC account as a
    "personal bonus." The first four charges in Patterson's indictment arise from these acts.
    In 1992 there were unusual transactions related to a loan and the purchase of
    furniture. On May 8, Patterson and Owen took out a $30,000 loan from the bank, and
    Patterson put the funds into the bank’s bad debt reserve and falsely represented that the
    $30,000 credit was from a customer loan the bank had written off in 1989. Days after
    the loan transaction, Patterson and Carmack bought some used furniture for the bank for
    $3,500 and produced false documents and an invoice to indicate that the items had been
    purchased for $35,000 from a fictitious company. Patterson asked Carmack to
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    use the $35,000 invoice to create a $35,000 debit to the bank’s furniture and fixtures
    account. Then a $35,000 cashier’s check was made out to the fictitious furniture
    company, whose name resembled EDC. At the request of Patterson, Carmack deposited
    the cashier's check into the EDC account and then withdrew $30,027.86 from the
    account to pay off the $30,000 loan taken out by Patterson and Owen. The furniture was
    later sold for $35,000, and the proceeds from that sale were put back into the bank.
    These transactions involving the loan and the furniture are the basis for counts five and
    six charging conspiracy and false bank entry.
    Patterson and Owen were indicted on charges of bank fraud, bank embezzlement,
    and two counts of conspiracy and false bank entry. Prior to this indictment, Gary
    Carmack had pled guilty to bank embezzlement and tax fraud for his part in the bank
    transactions in December of 1990. Carmack agreed to cooperate, and charges against
    Owen were later dropped. Patterson went to trial and was convicted on all six counts.
    Patterson claims that he is entitled to an acquittal on counts five and six, which
    charge conspiracy and causing false bank entries. He says the government did not
    present evidence that he made the entries with the intent to deceive bank officers and
    examiners as required by 18 U.S.C. § 1005. The government counters that there is
    sufficient evidence to show that bank funds were improperly used to pay off Patterson's
    personal loan and that false documents were intentionally created to accomplish this.
    It argues that a jury could infer that the transactions had been done to deceive the bank
    board and bank examiners. It also points out that Patterson himself chose the overstated
    value ($35,000) to be used in the false documentation of the purchased furniture which
    was at the core of the false entry charge.
    Our review of Patterson’s argument for acquittal is quite narrow. See United
    States v. Smith, 
    104 F.3d 145
    , 147 (8th Cir.1997). "We will reverse a conviction for
    insufficient evidence and order the entry of a judgment of acquittal only if no
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    construction of the evidence exists to support the jury's verdict." United States v.
    Cunningham, 
    83 F.3d 218
    , 222 (8th Cir.1996). The trial record contains evidence that
    Patterson intended to defraud bank officials or examiners with the purposeful entry of
    false information. It is uncontested that Patterson intentionally caused false entries in the
    bank books. From this fact, the jury could have reasonably inferred that Patterson
    intended to defraud bank executives and examiners by causing the false entries. Intent
    may be based wholly on circumstantial evidence. See 
    Smith, 104 F.3d at 147
    . It is for
    the jury to infer intent from all the facts and circumstances. See United States v. Krepps,
    
    605 F.2d 101
    , 104 (3rd. Cir.1979). The jury was entitled to credit Carmack's testimony
    that steps were taken to cover up and disguise the transactions, even though he also
    claimed that they were not trying to deceive. Carmack testified that he and Patterson
    formulated false documents to "legitimize the whole deal" with the understanding that
    the more records they could show, the fewer questions they would encounter. The
    requisite intent could be inferred, and Patterson's claim of insufficient evidence must
    fail.
    Patterson contends that he cannot be found guilty because he did not personally
    profit from the false bank entries or the underlying transactions. As this court has
    pointed out, "(t)he fact that appellant did not personally profit from his criminal conduct
    is not a legal excuse for his action." United States v. Dougherty, 
    763 F.2d 970
    , 972 (8th.
    Cir.1985). And contrary to Patterson's assertions, § 1005 does not require that the
    defendant's actions cause actual injury to the bank. See 
    Krepps, 605 F.2d at 109
    .
    Patterson is also incorrect in his assertion that the false entries must be communicated
    to the bank examiners or officers, for there is no such requirement under § 1005.
    Patterson argues that his conviction on the first four counts should be reversed and
    the charges retried because of the prejudicial impact of evidence relating to counts five
    and six. This argument need not be discussed because the record supports the
    convictions on those counts and the related evidence was properly heard by the jury.
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    Patterson also disputes some of the court’s sentencing findings. The district court
    found that the amount of the loss to the bank was in excess of $40,000, resulting in a five
    level increase to the base offense level. See U.S.S.G.§ 2F1.1. It arrived at that figure by
    combining its findings of loss on counts one through four ($14,000) and on counts five
    and six ($30,027.86). The court also indicated that if the total amount of the loss were
    under $40,000, Patterson's conduct would warrant an upward departure to the same
    sentencing level. The court also found that Patterson's offenses involved more than
    minimal planning and enhanced his sentence by two levels.
    The application of the guidelines is reviewed de novo, see United States v.
    Collins, 
    104 F.3d 143
    , 144 (8th Cir.1997), but the court’s factual determinations are
    reviewed only for clear error. See United States v. Dierling, 
    131 F.3d 722
    , 736 (8th
    Cir.1997). To value the loss the district court used the commentary in Part F of the
    Guidelines Manual which pertains to offenses involving fraud and deceit. See U.S.S.G.
    § 2F1.1, comment. (n.7). This application note says the amount of loss "is the value of
    money, property, or services unlawfully taken.” 
    Id. The court
    did not err in using this
    method of valuation. The district court found that the bank funds used to pay off
    Patterson's personal debt, $30,027.86, were unlawfully taken because he had no legal
    claim to them for his private use. When this amount is added to the undisputed $14,000
    loss on counts one through four, the total amount unlawfully taken exceeds $40,000.
    Because the district court did not clearly err in its findings of loss, there is no need to
    discuss whether Patterson's sentence could have properly been increased by an upward
    departure.
    Patterson also disputes the finding that his convictions involved more than minimal
    planning, and argues there is no evidence that his offenses took more planning than is
    “typical for commission of the offense in a simple form.” See U.S.S.G. § 2F1.1,
    comment. (n.2); U.S.S.G. § 1B1.1, comment. (n.1(f)). More than minimal planning can
    also be found "if significant affirmative steps were taken to conceal the offense.”
    U.S.S.G. § 1B1.1, comment. (n.1(f)). The commentary lists examples such as “creating
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    purchase orders to, and invoices from, a dummy corporation for merchandise that was
    never delivered" or "several instances of taking money, each accompanied by false
    entries.” 
    Id. These examples
    are very close to what occurred in this case. The numerous
    false documents created in transactions in which Patterson was involved were
    "significant affirmative steps" to hide the offense. Patterson mistakenly argues that
    “repetition” is required to show more than minimal planning, citing United States v.
    Wilson, 
    955 F.2d 547
    (8th Cir.1992), but that case only states that repetition may
    indicate more than minimal planning, not that it is required. See 
    id. at 550.
    Moreover,
    the district court found that there was repeated use here of forged and falsified
    documents related to computer software, loan, and furniture scams. Its finding is not
    clearly erroneous.
    There was sufficient evidence with which to convict Patterson on counts five and
    six and he has not shown entitlement to a new trial on counts one through four or to
    resentencing. Accordingly, the judgment is affirmed.
    A true copy.
    ATTEST:
    CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT
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