Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 79-CR-621 -- Thomas R. McMillen, Judge .
Before Swygert, Pell and Cudahy, Circuit Judges.
On February 12, 1980, defendant-appellant Robert D. Henderson was convicted by a jury on nine counts of making false statements to federally insured banks for the purpose of securing loans in violation of 18 U.S.C. § 1014 (1976).*fn1 The district court sentenced Henderson to a probationary term of 5 years and a $45,000 fine.
On appeal, defendant contends that the evidence was insufficient to sustain his conviction. He also raises various objections to the instructions given to the jury by the district court. We affirm.
In 1973, Henderson and a partner, Doctor Donald Ryan, acquired a Mercury automobile dealership (the "dealership") in Geneseo, Illinois. The dealership soon added a Lincoln automobile franchise, and became known as Geneseo Lincoln-Mercury. Henderson served as president of the dealership, and was responsible for its management and operation.
The dealership financed its new car inventory through a "floor plan" arrangement with the Farmers National Bank of Geneseo, Illinois (the "Farmers Bank").*fn2 Under this arrangement, Henderson or Ryan signed a personal note and a bill of sale and trust receipt in connection with each new automobile financed by the Farmers Bank.*fn3 According to the terms of a particular bill of sale and trust receipt, the dealership agreed to transfer nominal ownership of the new automobile to the Farmers Bank while physically retaining possession of the car as trustee for the bank. The legal effect of this arrangement is to create a security interest in the automobile in favor of the Farmers Bank. One of the provisions of the bill of sale and trust receipt gave Henderson the right to sell the entrusted automobile. In the event of such a sale, the bill of sale and trust receipt provided that Henderson was to "hand, as trust funds so received, the avails so soon as received to the entruster to apply against its loan to the trustee ...."
Henderson had also owned an automobile leasing company, Bob Henderson Contract Leasing (the "leasing company"), for some time prior to his acquisition of Geneseo Lincoln-Mercury. After 1973, the leasing company obtained at least some of its inventory from the dealership.
Henderson normally transferred the cars himself from the dealership to the leasing company. At times, he would make these transfers at night, leaving notes regarding the transfers on his sales manager's desk the following day. Although he now argues that the dealership "sold" the particular cars which are the subject of the indictment to the leasing company, Henderson usually would not pay for cars when they were transferred and did not pay for the particular cars which are the subject of the indictment at the time of transfer. Margaret R. Behnkendorf, one of Henderson's former employees, testified that, after the Farmers Bank requested payment on "notes that were very old," Henderson would send some money to her and instruct her to make payments to the Farmers Bank in a sequence (with respect to the outstanding notes) that bore no relationship to the sequence in which the cars were assertedly "sold" to the leasing company.
At times, Henderson, through his leasing company, would put up cars which had been transferred from his dealership to the leasing company as collateral for additional bank loans. It is this "repledging" of floor-planned automobiles that furnishes the subject matter of the instant case. The indictment alleges that Henderson falsely represented that no prior security interest existed in the cars he pledged as collateral for nine loans he obtained from the Deerbrook State Bank, the North Point State Bank and the Dempster Plaza Bank (collectively, the "local banks").
Each of the identical notes and accompanying security agreements Henderson signed to obtain these loans contained the following representation:
Debtor covenants, represents and agrees with Bank as follows: (a) That debtor is the sole owner of the collateral free from any lien, security interest, encumbrance or claim and will defend the collateral against the claims and demands of all persons....
Henderson did not inform the local banks that the cars he had pledged as collateral for their loans were also and at the same time subject to the prior lien then imposed by his trust agreement with Farmers Bank. Defendant also failed to notify the Farmers Bank that the automobiles in question had been repledged for value, and he did not apply the proceeds of the subsequent loans to satisfy the indebtedness to the Farmers Bank for the particular cars in question.
II. Sufficiency of the Evidence
The principal issue on this appeal is whether the evidence was sufficient to support defendant's conviction. Specifically, defendant argues that the government failed to prove beyond a reasonable doubt (1) that a prior security interest existed in the automobiles at the time the local bank loans were executed, (2) that the allegedly false statements were material, and (3) ...