Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 86-124-CR--S. Hugh Dillin, Judge.
Walter J. Cummings, Richard D. Cudahy and Michael S. Kanne, Circuit Judges.
MICHAEL S. KANNE, Circuit Judge.
Mark A. Center is an attorney in Indianapolis, Indiana. Mr. Center's practice focused largely on bankruptcy and commercial law. The indictment in this cause arose from Mr. Center's activities in a Chapter XI bankruptcy proceeding. He was charged in a four count indictment. Count one charged him with fraudulently concealing an asset of a debtor from creditors (18 U.S.C. §§ 152 and 2). Count two and count three charged Mr. Center with fraudulently falsifying and making false entries in a document affecting or relating to the affairs of a debtor (18 U.S.C. §§ 152 and 2). In count four he was charged with executing and attempting to execute a scheme to defraud a federally insured financial institution (18 U.S.C. §§ 1344 and 2). The case was tried to the court and District Judge S. Hugh Dillin dismissed count one, found Center guilty of counts two and three and acquitted him on count four. Judge Dillin gave Mr. Center concurrent sentences of a year and a day on each of counts two and three. All but four months were then suspended with the balance to be served on probation.
Mr. Center now appeals his conviction. We affirm the district court.
Foxcliff South, Inc. was developing a real estate project called "Foxcliff South" in Morgan County, Indiana. John Fewell owned 75% of the stock in Foxcliff South, Inc. ("Foxcliff"). Summit City Utilities, Inc. ("Summit") supplied water and sewer services to the Foxcliff South development. John Fewell owned all of the stock in Summit.
Foxcliff ran into financial and legal difficulties and consequently filed a petition under Chapter XI of the bankruptcy code on March 9, 1984.*fn1 Mark Center was the attorney for Foxcliff in that petition.
Merchants National Bank and Trust Company of Indianapolis ("Merchants") is insured by the Federal Deposit and Insurance Corporation. Merchants had purchased a large number of land sale contracts from the sale of lots in the Foxcliff South development. Merchants also made a loan to Foxcliff for $10,000.00 that was secured by a bulldozer. When Foxcliff filed its bankruptcy petition, Merchants sought to take over and complete the Foxcliff South development in order to protect its other interests which exceeded the secured $10,000.00 debt. As purchaser of these land sales contracts, Merchants faced potential liability from lawsuits by lot purchasers for failure to complete the Foxcliff South development. This potential liability was estimated to be as high as $5,500,000.00.
Summit owed Foxcliff approximately $130,000.00.*fn2 Foxcliff owed John Fewell approximately $226,000.00. Summit had assets sufficient to satisfy its debt to Foxcliff. Summit was not a party in bankruptcy.
Section 521(1) of the bankruptcy code requires a debtor to "file a schedule of assets and liabilities." Mark Center did not list the debt owed by Summit on the schedule of assets he prepared for Foxcliff. However, at that same time, Center did file a schedule of liabilities which included the debt that Foxcliff owed to Fewell.
Apparently, at the time the petition was filed, Mr. Center was not aware of the debt owed by Summit to Foxcliff. However, sometime around June 10, 1985, he did learn of this omitted asset, but took no action to apprise the bankruptcy court of this newly discovered debt owed to Foxcliff. Mr. Center then saw to it that documents were executed and book entries made which caused John Fewell to assign the debt owed by Foxcliff to Summit as paid in capital. The hoped for result was a set-off. Because of the assignment, Summit had become a creditor of Foxcliff and Summit could avoid paying Foxcliff since Foxcliff now owed Summit an amount greater than Summit owed Foxcliff. The relevant documents were executed and then backdated to December 31, 1984.*fn3 Liabilities on Summit's books as of December 31, 1984, were to be reported to the Indiana Public Service Commission as part of Summit's annual filing. It appears that Mr. Center feared that this filing would alert Merchants to this asset's existence.
On appeal, Mr. Center offers three arguments for reversing his conviction. First, he claims that the entries he caused to be made in the Foxcliff and Summit books were not false or fraudulent since these entries record a transaction that did actually occur. Second, when the records were changed, Foxcliff was not a debtor in bankruptcy within the meaning of 18 U.S.C. § 152 and thus his actions did not affect or relate to the affairs of a debtor. Third, Mr. Center argues that the evidence used to support his conviction on count two was insufficient. Specifically, he claims that the testimony of Betty Lasiter, an accountant, was conclusory ...