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United States v. Johnson

decided: November 12, 1986.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
JACK JOHNSON, DEFENDANT-APPELLANT



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 85 CR 136-1, Susan Getzendanner, Judge.

Author: Ripple

WOOD, COFFEY and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge. The appellant, Jack Johnson, appeals from his convictions for one count of making false statements to the bank in violation of 18 U.S.C. § 1014 and one count of interstate transportation of a fraudulently procured security in violation of 18 U.S.C. § 2314. For the reasons which follow, we affirm.

I

In early November 1980, the appellant contacted the Merchandise National Bank of Chicago (the Bank) and indicated that he would like to become one of the Bank's customers. Shortly thereafter, on November 6, 1980, the appellant met with Irmgard Kaak, an officer in the Bank's commercial lending division. The appellant represented to Ms. Kaak that he was the president of Southern Materials, Incorporated (Southern),*fn1 a coal mining operation. He told Ms. Kaak that he needed a $75,000 loan in order to purchase a new piece of mining equipment, a drill crawler, from Tri-State Drilling Company (Tri-State). As collateral for the loan, the appellant indicated his willingness to pledge a Krupp Bucket Wheel Excavator (the excavator)- a piece of mining equipment that Southern owned and that was allegedly valued at more than $500,000.*fn2 The appellant also indicated that he would like the Bank to extend him a $200,000 line of credit.

A few days after the appellant's visit, the Bank approved the $75,000 loan for Southern.*fn3 The term of the loan was set for ninety days; thus, the loan was scheduled for repayment on February 10, 1981. According to Ms. Kaak's testimony, the loan had such a brief maturity date because the appellant told her not only that he intended to resell the drill crawler but also that he already had a willing buyer. The potential purchaser was identified as an individual named D. Harrison Lane.

On November 12, 1980, shortly after the loan was approved, the Bank disbursed the proceeds of the loan by issuing Cashier's Check No. C 174589 payable to Tri-State. Tri-State was a partnership operated by Tomi Sue Goodwin and Jean Holiday, the appellant's sister.*fn4 Tri-State deposited the cashier's check in its account in Mulberry, Arkansas. Of the $75,000 deposited, $50,000 was withdrawn by check payable to cash and endorsed by Jean Holiday. Southern, which had just purchased the drill, received $20,000 of the proceeds via two wire transfers from Tri-State's account.*fn5

According to Ms. Kaak, the appellant later returned to the Bank on February 5, 1981-five days prior to the loan's due date-and said that he had sold the drill crawler to Lane for $100,000. The appellant wanted to open a new account for Southern and to deposit in that account the Lane check as well as three other checks totaling $75,000. The appellant instructed Ms. Kaak to wait until the four checks had cleared and then to debit the new account to repay the $75,000 loan. At that time, the appellant again inquired into the possibility of establishing a $200,000 line of credit.

Ms. Kaak testified that all four of the checks were returned to the Bank because they were drawn on accounts which had insufficient funds to cover them. Therefore, because there were no funds to repay the loan, the Bank explored the possibility of liquidating the pledged collateral. Accordingly, on June 22, 1981, Carl Chevedden, the Bank's assistant vice president in charge of collections, travelled to Marion, Illinois in an attempt to locate the excavator. When he found the excavator, it was disassembled and laying in a field. Mr. Chevedden decided not to take possession of the excavator because he believed that it was nothing more than scrap metal.

As a result of these events, the appellant was charged in a two-count indictment. Count I alleged a violation of 18 U.S.C. § 1014. It charged that, from November 1, 1980 through November 13, 1980, the appellant overvalued property and made false statements to the Bank in an effort to persuade the Bank to give Southern the $75,000 loan. The allegedly false statements were that:

1. Southern Materials, Inc. would use the proceeds of the loan to purchase a piece of equipment called a "drill crawler," drill tech model #44, from the Tri-State Drilling Company in Fort Smith, Arkansas for $75,000;

2. An individual named D. Harrison Lane was going to purchase the drill crawler from Southern Materials, Inc. within sixty to ninety days for $100,000;

3. The Krupp Standard Bucket Wheel Excavator, Type 100, Serial #1172 owned by Southern Materials, Inc. had a value of approximately $750,000.

R.1 at 1-2. Count II alleged a violation of 18 U.S.C. § 2314. It charged the appellant with the interstate transportation of a security (Cashier's Check No. C 174589) which the appellant knew to have been converted and taken by fraud. R.1 at 3.

The appellant was convicted on both counts. With respect to Count I, he was sentenced to two years imprisonment and fined $5,000. With respect to Count II, he was sentenced to five years probation with the condition that he perform 100 hours of community service for each year of probation; he was also fined $10,000. After unsuccessful post-trial motions, this appeal followed.

II

The appellant raises five issues for our review. First, he contends that Count II of the indictment was fatally defective in that it failed to inform him with sufficient particularity of the charged offense. Second, the appellant contends that the district court erred by admitting Ms. Kaak's testimony concerning the February 1981 bank transactions. The appellant urges that the February testimony was not relevant to Count I since that court charged offenses which were allegedly committed in November 1980. Third, the appellant contends that the district court erred by admitting non-expert witness testimony regarding the excavator's value. Fourth, the appellant argues that the government suggested unsupported and inadmissible testimony within the hearing of the jury. Finally, the appellant contends that the district court erred by allowing a non-expert witness to testify concerning the genuineness of D. Harrison Lane's signature.

A. Count II of the Indictment

The appellant first challenges the sufficiency of Count II of the indictment.*fn6 That count charges the appellant with the interstate transportation of a fraudulently procured security in violation of 28 U.S.C. § 2314.*fn7 The appellant argues that, although Count II is nominally directed at punishing him for transporting a security, its actual purpose is to punish him for the underlying fraud in the procurement of the security. Assuming this to be the case, the appellant argues that Count II of the indictment is defective because it does not state sufficient facts to support the claim of fraud. The appellant contends that, since he had no idea either how or when the alleged fraud occurred, he was not able to prepare adequately his defense.

The appellant did not object to the indictment's validity prior to trial. Rather, the appellant filed his motion to dismiss Count II after the trial had begun. Tr. Vol. II-A at ...


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