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United States v. Gunderson

June 6, 1995

UNITED STATES OF AMERICA,

PLAINTIFF-APPELLEE,

v.

RAYMOND A. GUNDERSON,

DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Western District of Wisconsin.

No. 93 CR 123--Barbara B. Crabb, Chief Judge.

Before POSNER, Chief Judge, and CUMMINGS and KANNE, Circuit Judges.

KANNE, Circuit Judge.

ARGUED FEBRUARY 21, 1995

DECIDED JUNE 6, 1995

Raymond Gunderson (Gunderson), the secretary-treasurer of Gunderson Truck and Auto World (GTAW), appeals his sentence imposed pursuant to a guilty plea to one count of bankruptcy fraud, a violation of 18 U.S.C. sec. 152. *fn1 We affirm his sentence.

Background

In May 1990, Bank One-Milwaukee and GTAW entered into a $7,000,000 "floor plan" agreement--a financing agreement--whereby Bank One would finance most of GTAW's car and small truck inventory. Under the floor plan, which both Gunderson and his brother Arthur (the president of GTAW) signed, GTAW pledged all of its inventory as collateral and agreed not to subject that inventory to other liens. GTAW did not live up to its side of the floor plan agreement; it used some of its inventory as collateral with another bank, First Bank La Crosse.

For reasons not directly relevant to this case, in January 1991, the FBI began investigating the financial practices of GTAW. Soon it discovered the double financing and informed Bank One and First Bank. Each bank conducted an audit of GTAW. Subsequently, Bank One placed onsite a representative to monitor Bank One's collateral, and First Bank stopped financing GTAW altogether. Gunderson admitted that the double financing was necessitated by financial problems.

On March 26, 1991, GTAW filed a voluntary bankruptcy petition under Chapter 11. GTAW, as debtor in possession, and Bank One, as the primary secured creditor, executed a cash collateral agreement (Agreement) on April 15. Gunderson signed the Agreement as secretary-treasurer of GTAW and personally as guarantor.

The parties stipulated in the Agreement that GTAW owed Bank One over $7,000,000 from the floor plan agreement and from a shortfall on funds received from the sale of vehicles that GTAW had pledged as collateral to Bank One but for which GTAW had not turned over the proceeds from the sale. Under the Agreement, Bank One was granted a first priority security interest in all post-petition assets, excluding properly perfected purchase money security interests and real estate. Post-petition assets included all "vehicle inventory" and the proceeds from all "vehicle sales."

In order to allow GTAW to continue to operate, while also recognizing Bank One's interest in monitoring GTAW's business practices, the parties agreed that GTAW would deposit all proceeds from the sale of vehicles into its accounts at United Bank in Osseo, Wisconsin. GTAW was prohibited from using any proceeds from vehicle sales without the permission of Bank One, but was allowed, without Bank One's permission, to use the proceeds from its service and repair work for operating expenses in the ordinary course of business.

The Agreement was modified and finally approved by the bankruptcy court on October 8, 1991 and entered as its order. A little over a month later, it was apparent that GTAW could not work out of its financial woes, and on November 27, 1991, the bankruptcy court ordered that at 5:00 p.m. on December 20, 1991, all assets of GTAW were to be turned over for liquidation to Bank One.

To facilitate the described Agreement provision which allowed GTAW to use the proceeds from its service and repair work, but not the proceeds from vehicle sales, GTAW opened two accounts at United Bank: one was referred to as the "Inventory Account" ...


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