Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 87-CR-135 -- Milton I. Shadur, Judge
Before WOOD, JR., CUDAHY, and MANION, Circuit Judges.
Per Curiam. This appeal arises for the second time the issue of whether the government is collaterally estopped from prosecuting William Patterson on charges of wire fraud and misapplication of bank funds. In a previous appeal, we held that the government's second indictment of Patterson did not violate the Double Jeopardy Clause. We remanded the case, however, on the issue of collateral estoppel because the district court decided that question without examining the transcript from the first trial which was held in a district court in Oklahoma. See United States v. Patterson, 782 F.2d 68 (7th Cir. 1986). Accordingly, the district court reviewed the transcript of the Oklahoma trial, and the judge concluded that the government was not collaterally estopped from litigating any of the counts contained in the second indictment. Patterson appeals, and we affirm.
William Patterson was vice president in charge of approving energy loans at Penn Square Bank (PSB) in Oklahoma. In July 1982, the federal government declared PSB insolvent. Grand juries were convened in Oklahoma City, Chicago, Seattle, and other cities to investigate PSB's operations and its relationships with correspondent banks in those cites. These correspondent banks (or "upstream banks") generally participate in loan agreements with smaller banks such as PSB ("downstream banks"). The upstream bank proportionately shares or purchases part of a loan made to customers of the downstream bank. This practice assists the smaller banks to loan customers amounts in excess of their legal lending limits.
On July 17, 1984, a federal grand jury in the Western District of Oklahoma indicated Patterson. The twenty-five count indictment alleged criminal conduct involving a number of transactions, the majority of which charged Patterson, as PSB's officer in charge of energy loans, with willfully misappropriating the funds of PSB and several of its customers. For example, Count I of the Oklahoma indictment alleged a scheme to defraud, in violation of 18 U.S.C. § 1343 (wire fraud). In an introductory paragraph, the indictment listed several correspondent banks that participated in loan agreements, including Chase Manhattan Bank, Northern Trust Company, Seattle First National Bank, Michigan National Bank, and Continental Illinois National Bank. This court and others in the indictment state that Patterson caused PSB customers to apply for and receive loans from PSB under false pretenses and that he used the proceeds to repay overdue loan payments to customers previously approved for loans.
Other counts in the Oklahoma indictment charged that Patterson, without proper authorization, wrote checks drawn on customers' accounts to pay overdue loans of other PSB customers in violation of 18 U.S.C. § 656 (theft and embezzlement or misapplication of funds by bank officer). Another count explicitly charged Patterson with scheming to defraud the Michigan National Bank, one of the upstream banks listed in the introductory paragraphs. The Oklahoma indictment did not, however, specifically charge Patterson with scheming to defraud any of the other upstream banks, including Continental Illinois. The Oklahoma indictment finally alleged that Patterson made false entries in PSB's books to conceal his fraudulent activities, in violation of 18 U.S.C. § 1005 (fraudulent bank entries, reports, and transactions). In September 1984, after a three week trial, the jury acquitted Patterson on all of these charges.
The day the Oklahoma jury acquitted Patterson, a grand jury in the Northern District of Illinois indicted him on sixteen criminal charges.*fn1 The district court eventually dismissed four counts because the statute of limitations had expired. The remaining counts charge Patterson and two other defendants, John Lytle, the vice president of Continental Bank's Mid-Continent Division, and Jere Sturgis, a customer of PSB, with a scheme to defraud Continental of its funds in violation of 18 U.S.C. § 1343 and theft in violation of 18 U.S.C. § 656.
According to the Illinois indictment, Lytle would approve Continental Bank loans to PSB customers without assessing their creditworthiness or securing the proper collateral.*fn2 PSB would then receive the one percent finder's fee which is normally charged by a smaller bank for arranging a loan. The indictment further alleges that in exchange for Lytle's extending the loans to PSB customers, Patterson lent more than $500,000 to Lytle at "favorable interest rates."
The Illinois indictment also alleges that Patterson arranged and personally guaranteed a $565,000 loan for Lytle at the Community Bank of Oklahoma to pay off Lytle's indebtedness to PSB. According to the government, in order to conceal Lytle's loan from the Community Bank, Jere Sturgis repurchased Lytle's share of an investment in a drilling exploration company at a grossly inflated price and Lytle used the proceeds to pay off his loan from the Community Bank. Sturgis funded his repurchase of Lytle's investment through another loan from PSB.
Patterson moved to dismiss the Illinois indictment on the grounds of either double jeopardy or collateral estoppel. n.3 [footnote omitted] the district court denied Patterson's motion, and he appealed. We decided that the Illinois indictment did not violate the Double Jeopardy Clause. Applying the test the Supreme Court developed in Blockburger v. United States, 284 U.S. 299, 304, 76 L. Ed. 306, 52 S. Ct. 180 (1932), this court decided that the offenses charged by the Illinois indictment required proving facts that the offenses charged in the Oklahoma indictment did not.
The thrust of the statutory offenses contained in the Oklahoma indictment is that Patterson engaged in a scheme to defraud the PSB and its customers of their funds in order that he might conceal his alleged careless and suspect lending activities. On the other hand, the Illinois indictment charges that Patterson, along with Lytle and Sturgis, devised a scheme to defraud Continental Bank of Illinois of its funds. Since the indictments on their face charge two separate and distinct crimes of schemes to defraud with each requiring a different quantum of proof independent of the other, the Illinois indictment satisfies the Blockburger double jeopardy test and thus the Illinois indictment does not violate the double jeopardy clause.
782 F.2d at 73. We remanded the case, however, for the district court to examine Patterson's allegations of collateral estoppel because the judge had ruled on this issue before the complete record of the Oklahoma trial was available. Id. at 74.
On remand, the district judge inspected the entire Oklahoma trial record, with particular emphasis on the opening statement, the closing argument, the jury instructions, and the indictment. The judge noted that the instructions and arguments stressed that the government needed to prove that Patterson intended to defraud PSB, and the the jury, in all likelihood, accepted Patterson's theory that it would be illogical for him to intend to injure PSB because he would have been injuring himself as a major shareholder. The district court found that the references to the upstream banks at trial were background information or for the purpose of showing injury to PSB. The judge denied the motion to dismiss on collateral estoppel grounds, concluding that the Oklahoma ...