Filed: Nov. 13, 1995
Latest Update: Mar. 02, 2020
Summary: UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _ No. 94-10849 _ UNITED STATES OF AMERICA, Plaintiff-Appellee, versus JOSEPH STEDMAN, and GARY A. GORDON, Defendants-Appellants. _ Appeal from the United States District Court for the Northern District of Texas November 13, 1995 _ Before REYNALDO G. GARZA, BARKSDALE, and EMILIO M. GARZA, Circuit Judges. RHESA HAWKINS BARKSDALE, Circuit Judge: The principal issue at hand is loan loss determination under the Sentencing Guidelines. Joseph Stedman
Summary: UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _ No. 94-10849 _ UNITED STATES OF AMERICA, Plaintiff-Appellee, versus JOSEPH STEDMAN, and GARY A. GORDON, Defendants-Appellants. _ Appeal from the United States District Court for the Northern District of Texas November 13, 1995 _ Before REYNALDO G. GARZA, BARKSDALE, and EMILIO M. GARZA, Circuit Judges. RHESA HAWKINS BARKSDALE, Circuit Judge: The principal issue at hand is loan loss determination under the Sentencing Guidelines. Joseph Stedman ..
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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 94-10849
_____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JOSEPH STEDMAN, and
GARY A. GORDON,
Defendants-Appellants.
____________________________________________________
Appeal from the United States District Court
for the Northern District of Texas
November 13, 1995
_____________________________________________________
Before REYNALDO G. GARZA, BARKSDALE, and EMILIO M. GARZA, Circuit
Judges.
RHESA HAWKINS BARKSDALE, Circuit Judge:
The principal issue at hand is loan loss determination under
the Sentencing Guidelines. Joseph Stedman and Gary A. Gordon
appeal their convictions and sentences for: conspiracy, in
violation of 18 U.S.C. § 371; misapplication of bank funds, in
violation of 18 U.S.C. § 656; and false entries in bank records, in
violation of 18 U.S.C. § 1005. In addition to the loan loss issue,
both contest the Government's peremptory challenges, and the
restitution orders. Stedman claims also insufficient evidence and
ineffective counsel. We AFFIRM.
I.
Stedman was Chief Executive Officer, and Gordon, President, of
the Lone Star National Bank in Dallas, Texas, whose accounts were
insured by the FDIC. The bank, which was heavily involved in real
estate loans, opened in August 1984, and, upon deteriorating
financially, closed in November 1990.
The Government introduced evidence that, during the bank's
decline, Stedman, among other improper actions, instructed
employees to remove from loan files documents that would have
reflected adversely on ailing loans; and that Gordon, subservient
to Stedman, was present when documents were removed and knew about
the scheme. It posited that, by transferring these materials to
secret ("contra") files, the defendants were able to make the loans
appear healthier to federal regulators.
As a result, Lone Star, inter alia, avoided unwelcome
decreases in its capital, because the regulators did not require it
to increase its loan loss reserves, which would have been the
likely result had they not been denied access to negative borrower
information. By this scheme, Lone Star's assets were fraudulently
made to look better than they were. Likewise, the Comptroller of
the Currency (OCC) and FDIC were impeded from performing regulatory
functions because, by concealing information that reflected
negatively on the loans, the defendants gave them a misleading
picture of the bank's financial health, and this prevented the OCC
and FDIC from taking remedial measures.
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The Government also introduced evidence that the defendants
misapplied bank funds by, during bank hours, requiring bank
employees to perform non-banking activities that personally
benefitted the defendants.
II.
At issue are whether: (1) the Government's peremptory
challenges were gender based; (2) the evidence was sufficient to
convict Stedman; (3) Stedman received ineffective assistance of
counsel; and (4) the use of the total loan loss amount for
determining sentence was erroneous; and, as a result, (5) the
restitution orders were erroneous.
A.
Stedman and Gordon contend that the district court allowed the
Government to use five of its six peremptory challenges in a manner
calculated to discriminate on the basis of gender. The Batson v.
Kentucky, 476 U.S. 79 (1986), proscription against race based
peremptory challenges was extended in J.E.B v. Alabama, __ U.S. __,
114 S. Ct. 1419 (1994) to gender based strikes.
Once a party has challenged the basis for a strike, the
striking party must articulate a nondiscriminatory reason for it.
Hernandez v. New York, 500 U.S. 352, 358 (1991). And, the court's
ruling on the motivation for the strike is a finding of fact
reviewed only for clear error. E.g., United States v. Bentley-
Smith,
2 F.3d 1368, 1372 (5th Cir. 1993).
The Government explained that its strikes were motivated by
the following: one person's ambivalence about the concept of aiding
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and abetting; another's lack of any strong conviction; another's
failure to stay for a conference about conflicts; another's
favorable reaction to a defense attorney; and another's inability
to concentrate on the case due to her concern about her young
child. The district court found that the Government had credibly
explained a nondiscriminatory purpose; it further found relevant
that four women were impaneled. There was no clear error.
B.
Stedman and Gordon testified. As for Stedman's sufficiency
challenge, and as is more than well-known, we must allow a
conviction to stand if, "after viewing the evidence in the light
most favorable to the prosecution, any rational trier of fact could
have found the essential elements of the crime beyond a reasonable
doubt." Jackson v. Virginia 443 U.S. 307 (1974).
Our review of the evidence more than satisfies us that the
Jackson standard has been met. The Government provided testimonial
evidence that, inter alia, Stedman required all decisions to go
through him; knew of, and directed, the creation and maintenance of
the "contra" files; and gave directions to employees on "ranch
days", which required them to be absent from their banking duties
in order to, among other duties, repair apartment buildings owned
by Stedman and Gordon.
C.
Stedman claims ineffective assistance of counsel because his
attorney failed to: (1) make an opening statement; (2) cross-
examine several of the Government's witnesses; and (3) object to an
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organizational chart. Of course, to prevail on this claim, he must
demonstrate both that his attorney's efforts fell below an
objective standard of reasonableness, and that a reasonable
probability exists that, but for the errors, the result of the
trial would have been different. Strickland v. Washington, 466
U.S. 668, 688 (1984).
For each of the three instances, the decision could be
motivated by reasonable tactical objectives. For example, as for
waiving the opening statement, Stedman's co-defendant made one, and
Stedman's attorney could have concluded that another would be
wastefully duplicative or unhelpful. But, in any event, for none
of the three instances does Stedman state why the trial would have
ended differently; his claim fails.
D.
Stedman and Gordon assert that the loss calculation used to
determine their sentences was error; that they should not have been
held accountable for the total losses that the bank suffered on the
loans, because their conduct in issue was only responsible for a
portion of that loss. We review loss calculations only for clear
error; on the other hand, interpretation of the Guidelines is a
question of law requiring plenary review. E.g., United States
v.Hill, __ F.3d __, 1995 WL 5879 (5th Cir. 1995). Even assuming
arguendo that the claimed error is instead one of interpretation,
we find no error.
Stedman and Gordon were sentenced in consideration of U.S.S.G.
§ 2F1.1 for offenses involving fraud or deceit; a precise
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determination of the loss amount is not required. U.S.S.G. §
2F1.1, comment, n.8. The Presentence Report (PSR) aggregated the
bank's losses for each of the loans in association with which
Stedman and Gordon hid information.1 The court sentenced using
that amount.
Stedman and Gordon urge us to hold that the sentencing loss
amount should be only that part of the loss for which their illegal
conduct was the cause.2 They maintain that a portion of the loss
was unavoidable, that the bank was financially troubled before they
concealed information. Accordingly, they conclude that the
sentencing court must determine the loss amount for which their
wrongful conduct was the sole cause, and use only that amount in
sentencing. As hereinafter discussed, we refuse to so interpret
the Guidelines.
The impracticability of the course urged by Stedman and Gordon
is perhaps best demonstrated by their inability to offer a
reasonable figure for the loss. The methodology suggested by
Gordon for calculating the portion of the loss for which they are
responsible fails to reflect adequately the substantial losses to
1
According to the PSR, the 66 loans totaled $8,117,626.88; the
bank's resulting losses, $5,659,713.71. The PSR stated that the
latter was the amount of loss.
2
Stedman maintains cryptically that the calculations in the PSR
were "factually incorrect". Without further explanation, he refers
only to his objections to the PSR. The nature of this argument is
unclear from both his brief and the Addendum to the PSR, which
reflects his objections but explains nothing about a contention of
factual errors rendering the PSR unreliable. In any event, we do
not address issues not explained in a brief. See FED. R. APP. P.
28(6) (requiring appellants' briefs to contain contentions and
reasons therefor).
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which the bank was exposed.3 Realistically, no one can assess such
a thing precisely; and we refuse to ask sentencing courts to
undertake such Herculean tasks or to afford the benefit of the
doubt to bank officers who engage in wrongful conduct. As the
district court aptly noted, the "wrongdoer is not entitled to
complain that [the losses] cannot be measured with the exactness
and precision that would be possible in the case which he alone is
responsible for making or otherwise".
Moreover, our holding is consistent with the analogous
situation in which the face amount of a fraudulently presented
instrument was considered the loss, even though the presenter drew
only a portion of the funds. United States v. Wimbish, 980 F.2d
312 (5th Cir. 1992). There, the defendant was found guilty of
perpetrating a scheme by which he deposited fraudulent checks, and
then withdrew only a portion of the face amount.
Id. at 313. We
held the defendant accountable for the entire loss to which the
bank was exposed (the face amount), rather than for only the amount
actually lost (the amount withdrawn).
Id. at 316.
This situation is similar; Stedman and Gordon exposed the bank
to the possibility of loss for the entire loan amount when they
chose to impede regulators from considering information that could
have led them to intercede to protect the bank. Attributing the
entire amount of loss to Stedman and Gordon is no more unfair than
3
Gordon's assertion that $113,355 represents the loss for which
the defendants should be charged does not explain how the amount
relates to their activity. Gordon fails to demonstrate how his
calculation is more reflective of the responsibility of the
defendants.
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attributing the face amount of the fraudulent checks to the
defendant in Wimbish. The fact that Stedman and Gordon's crimes
were more sophisticated does not compel us to treat them more
leniently.
In addition, deterrence would be undermined by the approach
advanced by Stedman and Gordon because, by complicating the
transaction underlying their criminal conduct, defrauders could
manipulate to their advantage the losses for which they might be
charged. In short, we refuse to interpret the Guidelines to allow
parties who choose to commit complex or complicated bank crimes to
receive a windfall simply because of the very complexity of those
crimes.
We note also that this type of bank fraud is more likely to
occur with respect to unhealthy loans or during financially hard
times. By requiring sentencing courts to ferret out the discrete
amount attributable solely to the fraud of those who commit similar
crimes, we would provide wrongdoers an ideal instrument -- a
troubled loan -- for their fraud. Were we to hold that a troubled
real estate market provides a safe haven for bank officers to
fraudulently tamper with loan records, we would produce the noxious
result that markets unfriendly to real estate ventures would be
friendly to bank crimes.
In sum, the Guidelines are adequately flexible to allow the
sentencing court to hold these defendants responsible for the
entire loss associated with these loans.
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E.
Because we find no error in the application of the Guidelines,
we reject as well Stedman and Gordon's claims that their
restitution orders were erroneous. Further, we reject Stedman's
contention that the district court disregarded his ability to pay
the amount of restitution ordered. The latter claim ignores the
fact that the court adopted the PSR, which stated the following
about Stedman's ability to pay restitution:
Based on the information provided, [Stedman]
does not appear to have the ability to pay a
fine or restitution immediately, if such an
obligation is imposed by the Court. However,
he does have marketable skills and abilities
that could generate income to allow
installment payments on such obligation.
(Emphasis added.)
Moreover, Stedman made no objection to the adoption of the PSR
at his sentencing hearing. Therefore, we review only for plain
error. United States v. Calverly, 37 F.3d 160, 162-64 (5th Cir.
1994) (en banc) (if appellant shows clear or obvious error that
affects his substantial rights, appellate court has discretion to
correct errors that seriously affect the fairness, integrity, or
public reputation of judicial proceedings) cert. denied, __ U.S.
__,
115 S. Ct. 1266 (1995). Because Stedman's ability to pay was
considered, we cannot say that the restitution decision constitutes
the type of clear or obvious error required under our plain error
standard.
Id. at 162.
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III.
For the foregoing reasons, the judgments are
AFFIRMED.
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