UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
_______________________
No. 97-20515 _______________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
MAURICE H. DOKE; LARRY W. BASS,
Defendants-Appellants.
_________________________________________________________________
Appeals from the United States District Court for the Southern District of Texas _________________________________________________________________ March 25, 1999
Before JOLLY and JONES, Circuit Judges, and SIM LAKE,* District Judge.
EDITH H. JONES, Circuit Judge:
Maurice Doke and Larry Bass were convicted of conspiracy,
bank fraud, and two counts of making false statements to a bank,
all in connection with a $600,000 nominee loan on speculative real
estate. On appeal, they raise twelve issues, the most significant
of which are the sufficiency of the evidence, potential juror bias,
* District Judge of the Southern District of Texas, sitting by designation. and Doke’s competence to stand trial.1 We affirm the district
court’s judgment.
I. Facts
Doke was a real estate developer in Houston. Bass was
his attorney and had negotiated several of Doke’s real estate
transactions. In 1984, one of Doke’s entities sold a 200-acre
tract of undeveloped land in north Houston to General Homes
Corporation, retaining two options to buy back small parcels of it.
The first option, pertaining to 6.028 acres, was set to expire on
August 1, 1985.
On July 11, 1985, Bass notified General Homes that Doke
would exercise his option to buy the land. The purchase price
would be nearly $788,000. On July 19, Bass requested a $600,000
loan from Champions Point National Bank (“Champions”) to pay for
the land. Champions approved the loan on July 30, and the next
day, in a simultaneous closing, General Homes sold the land to a
Doke entity, which sold it to Bass for the same price. This
prosecution arose from that loan. The government argues -- and the
jury must have believed -- that Bass told Champions he was
borrowing the money to buy the land from Doke, without revealing
Doke’s continued involvement with the land or the loan.
1 We have reviewed each of the defendants’ other arguments and find no reversible errors.
2 It is undisputed that Doke gave to Bass the $200,000 Bass
used for the down payment. Every six months for the next two
years, Doke sent to Bass the money Bass used to make each payment
on the loan. By late 1987, however, the Houston real estate market
and the stock market had crashed. Doke was no longer able to pay
Bass for the loan payments. Just before the February 1988 payment
was due, Bass asked Champions to restructure his loan by extending
more credit and extending the repayment terms. In the letter
making this request, Bass made no mention of Doke. Champions
denied Bass’s request, and Bass did not make the February 1988 loan
payment. Later that year, Champions foreclosed on the property.
In 1990, Champions failed and was taken over by the FDIC. Shortly
thereafter, the property was sold for a loss.
When regulators took over the bank in 1990, they were
unable to find Bass’s credit file, in which they were especially
interested because the loan was made to an insider and had not been
repaid. At the time of the loan, Bass had been on the Champions
board of directors. Doke had also been an insider because he was
a significant shareholder.
The theory of the government’s case is that Doke and Bass
failed to disclose Doke’s involvement in the loan because Champions
could not have loaned the $600,000 directly to Doke without
violating civil regulations. Under the limits of the loan-to-one-
borrower rule, see 12 U.S.C. § 84, Champions could loan Doke only
3 about $40,000 more than he had already borrowed. It could,
however, lend over $300,000 to Bass. Thus, when Bass borrowed the
$600,000, Champions participated out $300,000 of the loan to Park
45 National Bank, a “sister bank” that had several directors in
common with Champions.
Doke and Bass were indicted in July 1995. A jury trial
was held in February and March 1997. They were found guilty on all
four counts: one count of conspiracy under 18 U.S.C. § 371, one
count of bank fraud under 18 U.S.C. § 1344, and two counts of
making false statements to a financial institution under 18 U.S.C.
§ 1014.
II. Sufficiency of Evidence
Doke and Bass argue that the evidence was insufficient to
support their convictions on any count. The evidence will be
sufficient to support the jury’s verdict if “a rational jury could
have found the essential elements of the crime beyond a reasonable
doubt.” United States v. Dupre, 117 F.3d 810, 818 (5th Cir. 1997),
cert. denied, 118 S. Ct. 857 (1998).
As mentioned above, the government argues that Doke and
Bass concealed Doke’s involvement from Champions, and that the loan
exposed Champions to the risk of being in violation of banking
regulations. Doke and Bass contend that there was not enough
evidence to show that Bass failed to disclose Doke’s involvement to
the bank. In addition, however, they argue that, even assuming
4 non-disclosure of Doke’s involvement, this nominee loan could not
have defrauded the bank because the bank received exactly the risk
it bargained for: it knew Bass’s credit-worthiness, knew what the
money would be used for, and knew what collateral would secure the
loan.
In order to prove bank fraud under 18 U.S.C. § 1344, the
government must show that Doke and Bass
knowingly executed, or attempted to execute, a scheme to defraud a federally-chartered or - insured financial institution. A scheme to defraud includes any false or fraudulent pretenses or representations intending to deceive others in order to obtain something of value, such as money, from the institution to be deceived. The requisite intent to defraud is established if the defendant acted knowingly and with the specific intent to deceive, ordinarily for the purpose of causing some financial loss to another or bringing about some financial gain to himself.
United State v. Hanson, 161 F.3d 896, 900 (5th Cir. 1998). In this
case, the crux is whether Doke and Bass had the intent to deceive
and whether the financial gains and losses in the offing
demonstrated a scheme to defraud. These are questions of fact, and
“[a]ll credibility determinations and reasonable inferences are to
be resolved in favor of the verdict.” United States v. Willey, 57
F.3d 1374, 1380 (5th Cir. 1995).
Doke and Bass argue that Bass disclosed their partnership
to the bank when he applied for the loan. They contend that
several pieces of evidence, in addition to Bass’s own testimony at
5 the trial, show that Bass made this disclosure. The loan file
presented at trial was missing the documents that would prove the
disclosure. Other documents in the file showed Doke’s continued
involvement. The files on Bass at other banks show that Bass was
not concealing anything. Doke’s payments to Bass were routed
through Champions. Two bank officers testified they knew of Doke’s
involvement. Finally, Doke had sufficient credit available at
another bank to eliminate any motive to circumvent the lending
limits at Champions.
The government, on the other hand, presented testimony
from the president of the bank, Ron Karel, who was also Bass’s loan
officer. Karel strenuously maintained that Bass did not reveal
Doke’s continued involvement with the loan. Although he knew that
Doke was involved in the original sale of the land (selling it to
Bass), Karel maintained he did not know Doke would be paying off
Bass’s loan. The loan application (not filled out by Bass but
purportedly reflective of what he had told the bank) stated that
Bass would repay the loan out of his “[p]ersonal income and sale of
property.” Furthermore, Karel testified that at the board of
directors meeting where Bass’s loan was approved, Bass commented:
“This has got to be a good deal because, after all, I’m putting in
$200,000 of my own money toward the purchase price of this land.”
Several other directors testified about the approval of the loan.
Bobby Newman testified that he had seen no indication that Doke was
6 involved with the loan. Keith Franze testified that he did not
know of Doke’s involvement and would not have voted to approve the
loan if he had known. Robert Russ testified that he “never heard”
that Doke would be the one paying off the loan, but he admitted it
had happened so long before trial he could not be sure he would
remember if he had.
Aside from the documents in Bass’s file at Champions,
which were ambiguous because of their incomplete state, this was
largely a swearing contest between Bass’s and Karel’s versions of
events. Two bank officers testified that Karel knew of Doke’s
involvement with the loan. But Karel and the other directors who
denied knowledge of Doke’s involvement were subject to extensive
cross-examination by Bass’s able trial counsel. This court is not
inclined to interfere with the jury’s decision about witnesses’
credibility when that issue was so squarely set before it.
In addition, the documents produced by both sides would
not necessarily compel a reasonable juror to abandon a
determination that Karel’s story was more credible. Because Bass’s
file was missing when the FDIC took over Champions, the government
presented a file reconstructed from a copy that had been made
surreptitiously by an investigator several weeks before the
takeover. Doke and Bass demonstrated at trial that some key
documents were missing even from the reconstructed file. They
argue that the passage of time and the suspicious disappearance of
7 the file2 show that the file could not be trusted to reflect
accurately what Bass had told Champions. In addition, they point
out that the FDIC had lost Bass’s personal files about the
transaction after it took custody of them. Yet, the government
presented evidence that, as early as 1986, when payments were still
being made on the loan, Champions’ files did not reflect Doke’s
involvement in the loan.3
Only a few weeks after the loan was made, Bass disclosed
it to his personal bank, West Belt National Bank, characterizing
his liability on the loan as contingent upon Doke’s non-payment.4
Bass and Doke argue that Bass would not disclose this to his own
bank if he was simultaneously hiding it from Champions. The
government, however, presented evidence that Bass made the
statement at a time when he was attempting to get a sizable loan
from West Belt and needed to minimize his liabilities.
Doke and Bass also argue that it was obvious to Champions
that Doke was involved in the loan because appraisals of the
2 Incidentally, the disappearance happened after Karel had left Champions. 3 An examiner for the Office of the Comptroller of the Currency reviewed the Bass loan in 1986. She testified that she would have included in her report any evidence that Doke had been involved with the loan had she found any in the files. Another OCC examiner testified that in 1987 he found the Bass loan was substandard, because of Bass’s questionable ability to repay, but saw no indication that it was a nominee loan. 4 Bass’s subsequent disclosures to West Belt characterized his liability on the Champions loan as direct.
8 property were directed to Doke’s attention. But these could be
easily explained by Doke’s role in the transaction as the
intermediary between General Homes and Bass. Later appraisals
could be attributed to Doke’s continued involvement in the general
development of the land around the property. Until July 1986, Doke
retained an option to purchase back the second parcel of land
involved in his original sale to General Homes. Thus, the letter
from a Doke entity in 1985 asking Champions to release its lien on
a sliver of the property securing the loan to accommodate a
realignment of planned streets could be explained by Doke’s
interest in the overall development. Neither the appraisals
directed to Doke nor the letter was sufficient to tell Champions
directly what Doke’s interest in the property, much less the loan,
was.
Doke and Bass argue that Doke’s payments to Bass revealed
no intent to deceive. Some of Doke’s payments to Bass were drawn
on Doke’s accounts at Champions, meaning Champions processed the
checks and theoretically could have seen notes on the checks
referencing the location of the property. Part of one payment was
made as a cashier’s check drawn on Champions, signed by Karel, and
payable to Bass. (The cashier’s check did not note the purpose of
the payment.) The jury could have inferred, however, that Doke and
Bass, through their experience and insider positions, knew that
Champions would not likely connect Bass’s loan payments (which were
9 always made from accounts at other banks) with the checks Champions
was clearing from Doke’s entities.
The situation with the original down payment was less
clear, since it recognizably came from a Doke entity (though it was
drawn on an account at an out-of-state bank). The check was
deposited into the title company’s account at Champions. Because
Champions credited the title company’s account before the check
cleared, a bank officer must have seen the check to authorize
credit against uncollected funds. This could give rise to the
inference that a bank officer knew that the down payment to the
title company involved with the loan came from a Doke entity. This
inference, however, would not necessarily require a reasonable
juror to conclude that Doke and Bass were not concealing Doke’s
involvement. See United States v. Bell, 678 F.2d 547, 549 (5th
Cir. 1982) (en banc) (“It is not necessary that the evidence
exclude every reasonable hypothesis of innocence or be wholly
inconsistent with every conclusion except that of guilt.”), aff’d
on other grounds, 462 U.S. 356 (1983).
Finally, Doke and Bass argue that Doke’s extensive credit
line at another bank eliminated any motive to connive at getting a
loan through Champions. This argument, however, can cut both ways.
As a large shareholder and a director, Doke and Bass each had an
interest in the success of Champions. Bass testified that he went
to Champions because he wanted to help bring it business. The jury
10 could have inferred that their motivation was not simply to obtain
credit for Doke, but to obtain it at Champions, where Doke could
not have borrowed even $40,000.
In sum, taken in the light most favorable to the verdict,
there was sufficient evidence for a reasonable juror to have found
beyond a reasonable doubt that Doke and Bass intended to deceive
Champions about Doke’s continued involvement with the loan.
Separate from the issue of how much they concealed from
the bank, Doke and Bass argue that the economic validity of the
transaction underlying the loan precluded it from being fraudulent.
They rely primarily on three cases discussing economic validity:
United States v. Beuttenmuller, 29 F.3d 973 (5th Cir. 1994),
overruled in part on other grounds by United States v. Gaudin, 515
U.S. 506 (1995); United States v. Schnitzer, 145 F.3d 721 (5th Cir.
1998); and United States v. Baker, 61 F.3d 317 (5th Cir. 1995).
We agree that the transaction in this case had economic
substance and was not a sham. We also agree that a nominee loan is
not illegal where there is no evidence that the transaction is
concealed from the bank, and where the loan documents “make the
relationship between the various transactions very clear.” United
States v. Grossman, 117 F.3d 255, 260-61 (5th Cir. 1997). See also
United States v. Willis, 997 F.2d 407, 410 n.2 (8th Cir. 1993).
This court has held, however, that fraudulent actions, such as
concealing the identity of a silent partner in violation of banking
11 regulations, contravene § 1344. See United States v. Henderson, 19
F.3d 917, 923 (5th Cir. 1994). Further, the creditworthiness of
the borrower is no defense against a § 1344 bank fraud conviction.
See United States v. Saks, 964 F.2d 1514, 1519 (5th Cir. 1992);
United States v. Parekh, 926 F.2d 402 (5th Cir. 1991).
The type of proof of fraud is what distinguishes the
cases upholding bank fraud convictions from Beuttenmuller, Baker,
and Schnitzer, which overturned such convictions. In the latter
cases, the government could not prove that the defendants knew and
concealed material information from the banks, so it attempted to
draw an inference of fraudulent intent by proving the transactions
were economic shams. This court disagreed with the government’s
characterization of the deals and necessarily found insufficient
proof of intent to defraud. In cases like Henderson, Saks, Parekh
-- and this one -- there was proof of intent to defraud
irrespective of the economic substance of the transactions. See
also United States v. Hanson, 161 F.3d 896, 900-01 (5th Cir. 1998).
Because Doke’s and Bass’s failure to disclose Doke’s involvement
with the loan put the bank in violation of banking regulations, and
a reasonable juror could have concluded beyond a reasonable doubt
that they did fail to disclose Doke’s involvement, the evidence was
sufficient to support their convictions for bank fraud.
Doke and Bass’s arguments about the false statement and
conspiracy counts are not clearly differentiated from their
12 arguments about bank fraud, with the exception of the second false
statement count. That count related to Bass’s February 1988 letter
asking for a restructuring of his loan. Doke and Bass argue that
the last proof of Doke’s involvement with the loan was his
September 1987 payment to Bass; when Bass subsequently requested
restructuring of the loan, he was acting only on his own behalf.
This defense contradicts the theory behind Bass’s own
testimony at trial, which was that his partnership with Doke was
disclosed all along. What happened to this alleged partnership in
early 1988? In fact, Bass testified at trial that he had “gone to
Mr. Doke” about the refinancing of the loan. The jury was entitled
to infer that Bass’s payments to Champions stopped when Doke’s
payments to him stopped, and that this occurred because they were
still both involved in repaying the loan. When Bass requested
essentially a new loan in 1988, he was again failing to disclose
his nominee status and Doke’s involvement behind the scenes.
Finally, because there was sufficient evidence to
conclude that Doke and Bass possessed the requisite intent to
defraud, it follows that there was sufficient evidence for the jury
to infer that they had the intent to conspire and agreed to engage
in the fraudulent transaction.
III. Juror Bias
Bass and Doke argue that the district court erred in not
excluding four veniremembers for cause and in not holding a hearing
13 on the impartiality of three jurors who were discovered after trial
to have possibly lied on their voir dire questionnaires.
Their first contention is meritless; the court did not
abuse its discretion in deciding that these jurors’ answers to
questions about possible bias revealed no inability to judge the
case fairly.
Appellants’ additional contention fares no better. One
juror responded “No” to the juror questionnaire question, “Have you
been charged criminally, other than a traffic ticket?” In fact, he
had been charged with misdemeanor assault in 1993, and convicted of
misdemeanor driving while intoxicated in 1982 and 1988. Bass
asserted that two other jurors had failed to disclose their prior
involvement in civil lawsuits wholly unrelated to the parties in
this case. The district court denied Bass’s motion for new trial
and belated motion for a hearing.
The district court’s decisions are reviewed for abuse of
discretion. See United States v. Wilson, 116 F.3d 1066, 1087 (5th
Cir. 1997), rev’d as to another defendant on other grounds, United
States v. Brown, 161 F.3d 256 (5th Cir. 1998) (en banc).
To obtain a new trial for juror bias, this circuit
requires a party to meet the test of the plurality opinion in
McDonough Power Equipment, Inc. v. Greenwood, 464 U.S. 548, 556,
104 S. Ct. 845, 850 (1984): “a party must first demonstrate that a
juror failed to answer honestly a material question on voir dire,
14 and then further show that a correct response would have provided
a valid basis for a challenge for cause.” See Wilson, 116 F.3d at
1086. Without more, these jurors’ failures to disclose the
information asserted by appellants does not raise a material
question concerning actual or implied bias that would necessitate
a removal for cause. Cf. United States v. Scott, 854 F.2d 697, 700
(5th Cir. 1988). Because the jurors’ omissions of immaterial
information would not have come close to furnishing grounds for
their removal, the court did not abuse its discretion by denying a
hearing. Cf. United States v. Boney, 977 F.2d 624, 634 (D.C. Cir.
1992) (allegation that juror was a felon, statutorily disqualified
from jury service, and that he concealed his status during voir
dire, required remand for hearing).
IV. Doke’s Competence to Stand Trial
Doke argues that the district court erred when it found
he was competent to stand trial. This court will not reverse the
district court’s determination unless it is “clearly arbitrary or
unwarranted” -- a species of clear error review -- but this mixed
question of fact and law requires us to “re-analyze the facts and
take a hard look at the trial judge’s ultimate conclusion.” United
States v. Birdsell, 775 F.2d 645, 648 (5th Cir. 1985) (internal
quotation omitted). A defendant is incompetent if he suffers from
“a mental disease or defect rendering him ... unable to understand
15 the nature and consequences of the proceedings against him or to
assist properly in his defense.” 18 U.S.C. § 4241(d).
The district court held a competency hearing in March
1996. The government presented a psychological evaluation from Dr.
Jerome Brown, a clinical psychologist who had interviewed and
administered tests to Doke on two occasions the prior month. Doke
presented two expert witnesses: neuropsychologist Dr. Larry
Pollock, who had evaluated Doke in January 1993 and twice since
November 1995, and Dr. Ronnie Pollard, a psychologist who had
regular contact with Doke as an intern at the hospital where Doke
was hospitalized for three months in 1992. Doke also presented two
lay witnesses: his daughter and a friend of his who had been
appointed his medical guardian when he was released from the
hospital.
Doke does not press any inability to “understand the
nature and consequences of the proceedings against him.” Indeed,
Dr. Pollock said that Doke had “a fairly good understanding of what
the charges are”; and Dr. Brown reported that Doke told him his
attorney had told him he could receive “from one and a half to five
years” if found guilty.
Instead, Doke claims that he was unable to assist
properly in his defense because of memory lapses about the period
of the loan transactions. At the competency hearing, Doke argued
that these memory lapses were the effect of a failed suicide
16 attempt by drug overdose and carbon monoxide poisoning that left
him unconscious for several days and hospitalized for three months
in 1992.5 Dr. Pollock testified that Doke had a significant memory
impairment that made it “very difficult for him to retrieve” stored
memories. Although he was not surprised to hear that Doke was able
to discuss many elements of the case after being shown old
documents related to it, Dr. Pollock said that it would be
impossible to tell whether the details in Doke’s descriptions were
the result of genuine cuing or jogging of his memory, or the result
of confabulation, where a patient attempts, unconsciously or not,
to fill in memory gaps with plausible scenarios and later perceives
those reconstructed memories as true ones. Doke’s daughter and
medical guardian gave anecdotal examples of the deterioration they
had seen in Doke’s mental abilities, including difficulties he had
recounting some aspects of his personal history and his various
problems as a taxi driver.6 In summation at the competency
hearing, Doke’s counsel explained that Doke was unable to assist in
his defense because “he draws an absolute blank” on what agreements
he made with Bass about the loans in 1985 and 1986. He also argued
that this compromised Doke’s ability to testify at trial, where his
5 There were also some indications of a series of minor strokes preceding the suicide attempt, but the suicide attempt was described as the major factor in Doke’s memory loss. 6 Doke was unable to learn how to use the computer to receive radio dispatches in his taxicab, he had gotten in several accidents (though some were because of lack of sleep), and he sometimes got lost, even attempting to use a map.
17 frequent but truthful claims not to remember things would make him
appear evasive.
On behalf of the government, Dr. Brown concluded in his
evaluation that Doke had “some variability in his memory
functioning,” but “his overall ability to utilize his memory
functions is still adequate and consistent with what might be
expected from someone at his intellectual level.” (All sides
agreed that Doke was of above-average intelligence.) Dr. Brown
said Doke had no difficulties in communicating, and he could
understand questions and provide useful answers. Doke’s deficits
were very specific, leaving most of his mental functions reasonably
intact and making it possible “to some extent” to “circumvent[]”
the deficits. As for the events related to the loan, Dr. Brown
concluded that while Doke “has trouble remembering many details of
the actions and transactions,” “he also remembers a great deal, is
aware of his intentions and plans concerning this business at that
time, and can even be reminded and sometimes remember details if he
is provided with helpful information.”
At the conclusion of the competency hearing, the district
court concluded that Doke was competent to stand trial. Although
he had obviously suffered some diminution of his abilities, his
considerable intelligence before that meant he was not much worse
off than many average defendants. This was especially true given
that Doke was fifty-seven years old and being asked to remember the
18 details of transactions from ten years earlier. The district court
also noted that Doke had been able to defend himself successfully
against some of the suits arising from his traffic accidents.
This court has previously held that amnesia by itself
does not render a defendant incompetent; rather, the “circumstances
of each individual case” must be considered. See United States v.
Swanson, 572 F.2d 523, 526 (5th Cir. 1978). Several factors
considered in Swanson apply here. Doke was not precluded from
taking the stand on matters within his memory by “some other
pathological or psychological condition.” Id. Doke would not
benefit from a continuance because his long-term memory was not
improving. Id. Information in documents held by the prosecution
could help fill in some of the gaps in Doke’s memory. Id. at 527.
Furthermore, it is possible that restoration of Doke’s memory would
not “materially aid his defense.” Id.
In the context of this case, it is particularly
noteworthy that someone with no mental defects very likely would
have had reduced memory of ten-year-old financial transactions.
It is not dispositive that more defense experts examined
Doke more often than did Dr. Brown7 -- or that Dr. Pollock
7 Doke’s contention that Dr. Brown’s report was entitled to less weight because it was not delivered from the witness stand is false. Dr. Brown was available in the court room, and no defense attorney chose to cross-examine him. See United States v. Birdsell, 775 F.2d 645, 651 (5th Cir. 1985) (duty to cross-examine and point out weaknesses in expert testimony is counsel’s).
19 specialized in neuropsychology. Sometimes this court has found
such reasons to support believing one side’s experts. Yet those
cases involved greater disparities in evaluation, where an all-or-
nothing choice had to be made between experts.8 Here, Dr. Pollard
and Dr. Brown each acknowledged the general consistency of their
evaluations. The difference in their conclusions is based on
different perceptions of whether the defendant’s memory of the
alleged crime is crucial to legal competence.
After a hard look at the facts, this court does not
believe the district court’s finding of competence was “clearly
arbitrary and unwarranted.”
V. Conclusion
There was sufficient evidence to support the guilty
verdicts on each count. There was insufficient evidence of juror
bias to require a new trial or a hearing. Doke was competent to
stand trial. Appellants’ other arguments lack merit. As a result,
the judgment and sentences of the district court are AFFIRMED.
8 In United States v. Dockins, 986 F.2d 888 (5th Cir. 1993), the defense expert concluded after two evaluations that the defendant had an I.Q. of 49 and bona fide memory loss. The governments experts concluded after fourteen interviews that the defendant’s I.Q. was around 80 and he was faking memory loss. Similarly, in Birdsell, the defense and government experts disagreed about whether the defendant was faking his mental condition. See 775 F.2d at 649-50.