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United States of America v. Marvin Peugh

March 28, 2012

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
MARVIN PEUGH, DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Northern District of Illinois, Western Division. No. 08 CR 50014-1--Frederick J. Kapala, Judge.

The opinion of the court was delivered by: Rovner, Circuit Judge.

ARGUED SEPTEMBER 20, 2011

Before ROVNER, WOOD and WILLIAMS, Circuit Judges.

Marvin Peugh was convicted after a jury trial of five counts of bank fraud, sentenced to 70 months' imprisonment, and ordered to pay nearly two million dollars in restitution. He challenges his conviction and sentence on the following grounds: that his indictment was multiplicitous; that the prosecution did not present sufficient evidence to prove his guilt beyond a reasonable doubt; that his sentence violated the ex post facto clause; that the district court miscalcu- lated the loss and restitution amounts; that an enhance- ment for obstruction of justice should not have been imposed; and that the disparity between his sentence and his co-defendant's was improper. We affirm.

I.

In 1996 Peugh and his first cousin, Steven Hollewell, formed two companies to do business with the farmers of Illinois: the Grainery, Inc., which bought, stored, and sold grain, and Agri-Tech, Inc., which provided custom farming services to landowners and tenants. When the Grainery began to experience cash-flow problems in 1999, the cousins obtained bank loans from the State Bank of Davis (later known simply as the State Bank) by falsely representing that valuable contracts existed for future grain deliveries from Agri-Tech to the Grainery. They also inflated the balances of bank accounts under their control by writing a series of bad checks between ac- counts. As a result of these activities, Peugh and Hollewell were charged with two bank-fraud schemes-- loan fraud and check kiting--in violation of 18 U.S.C. § 1344.

The indictment alleged that from January 1999 to August 2000 Peugh and Hollewell executed both schemes multiple times. Counts 1-3 charged the two men with defrauding State Bank of more than $2.5 million by sup- porting loan applications with materially fraudulent and misleading information, specifically, financial reports describing the sham grain-delivery contracts between Agri- Tech and the Grainery. According to the indictment, Peugh and Hollewell applied for the first loan in January 1999 ($2,000,000), the second in February 2000 ($200,000), and the third in June 2000 ($350,000). Counts 4-9 of the indictment charged Peugh and Hollewell with five instances of check kiting by writing a series of bad checks between business and personal accounts. This scheme allowed the cousins to overdraw an account at Savanna Bank by $471,000.

Peugh pleaded not guilty to all charges. Hollewell pleaded guilty to one count of check kiting and agreed to testify against Peugh in exchange for the other counts being dropped.

At trial Hollewell testified that the grain-delivery contracts between Agri-Tech and the Grainery were a sham from the start: he and Peugh had never intended for Agri-Tech to deliver grain to the Grainery and Agri- Tech had no means to fulfill the contracts. Hollewell's admissions were supported by the testimony of Bernard Reese, who was Agri-Tech's secretary and a member of its board of directors. Reese explained that Agri-Tech did not own any grain, that the board had never ap- proved the buying or selling of grain, and that he had never seen the grain-delivery contracts before the criminal investigation of Peugh and Hollewell began. A representative from State Bank then testified that approval of the Grainery loans depended on the ex- istence of the Agri-Tech grain-delivery contracts, which composed nearly half of the Grainery's assets in contracts.

The jury also heard testimony about the check-kiting scheme. An FBI expert on check kites described his analysis of Peugh and Hollewell's bank records and testified that the cousins had engaged in a check kite from April to August of 2000. Hollewell's father, Harlan Hollewell ("Harlan"), testified that his son and Peugh came to him in August 2000 after officials from Savanna Bank confronted them with an overdraft of approxi- mately $471,000. According to Harlan, Peugh and Hollewell implored him to cover this deficit--they told him that the bank was demanding immediate payment and that they could face jail time if he did not supply the money--and he complied.

Peugh testified in his own defense. As to the grain- delivery contracts between Agri-Tech and the Grainery, he conceded that Agri-Tech had no grain to sell, but he insisted that the contracts were nonetheless made in good faith. Agri-Tech customers were to supply the grain, he claimed, though he admitted that no Agri-Tech customer had actually agreed to supply grain. Regarding the check kite, Peugh maintained that he had not intended to defraud Savanna Bank; the bank was never in danger of loss, he said, because Harlan had previously promised to cover any overdrafts. (Harlan testified to the contrary.) Peugh could not explain, how- ever, why he and Hollewell risked the check kite if Harlan was willing to supply the funds they needed. The jury found Peugh guilty of the charges in counts 3, 4, 5, 8, and 9 and acquitted him of the rest.

At sentencing Peugh raised a number of objections to the presentence report. He first argued that sentencing him under the 2009 guidelines (then in effect) rather than under the 1999 guidelines (in effect at the time he committed his offenses) would violate the ex post facto clause because it would result in a significantly higher sentencing range. The court rejected this argument based on United States v. Demaree, 459 F.3d 791, 795 (7th Cir. 2006), in which we held that using the guidelines in effect at the time of sentencing rather than the time of the offense does not violate the ex post facto clause because the guidelines are merely advisory.

Peugh also challenged the presentence report's loss- amount calculation, contending that the loss amount should have been reduced by the interest he paid on the loans. The court, however, agreed with the govern- ment that the interest payments were irrelevant because they did not reduce the loans' outstanding principal balance. Peugh similarly argued that the money Harlan paid to cover the bank overdraft should be sub- tracted from the loss amount, but the court explained that Harlan made this payment after the bank had detected the loss, and only money paid to a victim before detection of an offense can be deducted.

Peugh next objected to the presentence report's restitu- tion calculation, arguing that he should not have to pay restitution for the loans described in counts 1 and 2 because he was acquitted on those counts. But the court concluded that the Mandatory Victim Restitution Act required restitution to be made for all three loans because a preponderance of the evidence showed all ...


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