United States v. Gregory.
No. 20-3232. 11/14/2022. D.Kan. Judge Hartz. Conspiracy to Commit Bank Fraud—Bank Fraud—Making False Bank Entries—Motion for Judgment of Acquittal—Sufficiency of the Evidence—Motion for New Trial—Prosecutorial Misconduct.
November 14, 2022
Gregory was a senior vice president of University National Bank (UNB) in Kansas. While serving in this capacity, he arranged for a $15.2 million loan by a number of banks (the banks) to fund an apartment development by established UNB clients. To secure the banks’ participation in the loan, Gregory represented that (1) the borrowers were financially strong, (2) the apartment complex land would be “free and clear” of debt by the time of the loan, and (3) the borrowers had two certificates of deposit (CDs) at UNB to be pledged as collateral. As a result, Gregory was charged with one count of conspiracy to commit bank fraud, four counts of bank fraud in violation of 18 USC § 1344, and two counts of making false bank entries in violation of 18 USC § 1005. A jury found Gregory guilty on all counts except conspiracy, on which it could not reach a unanimous verdict.
On appeal, Gregory argued that the district court erroneously denied his motion for a judgment of acquittal. The federal bank-fraud statute prohibits the execution or attempted execution of a scheme or artifice (1) to defraud a financial institution; or (2) to obtain the moneys, funds, or other property owned by, or under the custody or control of, a financial institution, through false or fraudulent pretenses, representations, or promises. Here, as to the bank fraud counts, sufficient evidence showed that, to induce the banks to fund the apartment development, Gregory knowingly made material misrepresentations that (1) the borrowers were financially strong, (2) the apartment complex land had no debt at the time of the loan, and (3) the borrowers had $1.705 million in two CDs at UNB to be pledged as collateral. As to the crime of making false bank entries, the government had to prove that Gregory (1) made, caused to be made, or aided and abetted in entering a false entry in bank records; (2) knew the entry was false when it was made; and (3) intended that the entry injure or deceive a bank or public official. Here, there was sufficient evidence that Gregory created security agreements pledging nonexistent CDs at UNB as collateral for a loan. Further, a reasonable jury could conclude that Gregory knew that the banks would not have participated had they known that the borrowers lacked the requisite funds on deposit at UNB, and that he created phony documents to prevent the participant banks from knowing the truth. Accordingly, the district court did not err in denying the motion for judgment of acquittal.
Gregory also argued that the district court improperly denied his motion for new trial based on prosecutorial misconduct during closing argument. Gregory contended that the prosecutor engaged in a dramatization that was grossly misleading because it was based on facts not in evidence. Here, in arguing that the victim banks would not have participated in the loan had they known the truth, the prosecutor enacted a fictitious presentation to the banks by Gregory during which Gregory discussed information not previously disclosed to them. In doing so, the prosecution was asking the jury to visualize the counterfactual situation that it would have to consider anyway. The prosecutor properly used a dramatic device to persuade the jury of an essential element of the offense and did not go beyond reasonable inferences from the evidence at trial. Therefore, the district court did not err in denying defendant’s motion.
The judgment was affirmed.