United States of America, Plaintiff-appellee, v. Billy L. Eaddy, Defendant-appellant.united States of America, Plaintiff-appellee, v. David L. Gowdy, Defendant-appellant, 825 F.2d 408 (4th Cir. 1987)Annotate this Case
Bruce Alfred Byrholdt (Chapman, King & Byrholdt, on brief), Eugene Noel Zeigler, for appellants.
Vinton DeVane Lide, United States Attorney; Marvin Jennings Caughman, Assistant United States Attorney (Donen Davis, Third Year Law Student, Marcia A. Mason, Third Year Law Student, on brief), for appellee.
Before RUSSELL and HALL, Circuit Judges, and VAN GRAAFEILAND, Senior United States Circuit Judge for the Second Circuit, sitting by designation.
Billy L. Eaddy and David L. Gowdy appeal from their conviction by a jury of conspiring to defraud the United States in violation of 18 U.S.C. §§ 371 and 2, conversion of government funds in violation of 18 U.S.C. §§ 641 and 2, and making false statements of debt to a government agency in violation of 18 U.S.C. §§ 1001 and 2. In addition, Gowdy appeals his conviction of obstructing justice in violation of 18 U.S.C. §§ 1503 and 2. We affirm.
On December 18, 1980, Eaddy applied to the Farmers Home Administration ('FmHA') for an emergency loan totaling $327,420. Eaddy complied with FmHA's request for a statement of his debts and collateral. Each form was prepared by Eaddy and the various creditors, one of whom was Gowdy, who acted as Eaddy's accountant and crop insurance salesperson. According to the debt prepared, Eaddy owed his father $70,000, Heston Evans $14,000, and Gowdy $17,047.
Eaddy's loan was approved and a check for $327,420 was subsequently deposited in his trust account on March 16, 1981. Pursuant to FmHA's guidelines, the funds representing Eaddy's debts to his father, Evans, and Gowdy were immediately dispersed to Eaddy's alleged creditors and the remainder was left in the trust account under the supervision of the FmHA.
Soon thereafter, three checks were deposited in Eaddy's personal accounts. One check was from Eaddy's father and a second was from Evans. Both corresponded exactly with the sums they received from the FmHA loan. The third check was from Gowdy, written in an amount $1,829.72 less than he received from the FmHA loan. Eaddy spent the bulk of these funds on personal investments including a federal national mortgage discount note and a high interest treasury bill.
On December 7, 1981, Eaddy was confronted by the FmHA county supervisor and accused of falsifying documentation for his FmHA loan. Eaddy refused to respond to the accusation. Following an investigation, Eaddy and Gowdy were brought to trial and eventually sentenced to two years incarceration and five years probation.
On appeal, appellants contend that the district court committed reversible error by (1) submitting the obstruction of justice charge against Gowdy to the jury, (2) holding that the debt statement of Gowdy was material and (3) excluding FmHA regulations from the evidence and instructions proffered by Eaddy. Gowdy also attacks the sufficiency of the evidence supporting his conviction of converting government funds and conspiring to defraud a government agency. We find no merit in any of the appellants' contentions.
Gowdy contends that there was insufficient evidence against him to submit the obstruction of justice charge to the jury. Gowdy was charged with obstructing justice by supplying the grand jury investigating Eaddy with a copy of a ledger from Gowdy's solely-owned insurance agency which had been altered to overstate Eaddy's debts to the agency. The copy indicated that Eaddy owed $17,040 to the agency.
At trial, the copy was attacked as being a fraudulent effort by Gowdy to disguise wrongdoings. The evidence at trial revealed that (1) the copy presented to the grand jury was not the original ledger which has since been 'lost,' but was a hand written copy made by Eaddy's secretary, (2) the composite records kept by the insurance companies which supplied insurance policies to Gowdy's agency listed Eaddy's debt as $3,000 rather than $17,040, as claimed by Eaddy and Gowdy and (3) during Eaddy's divorce, which took place during the time in question, Eaddy failed to list on his balance sheet and Gowdy failed to recount during his testimony as Eaddy's accountant, any mention of this debt. We find no error in the district court's conclusion that this evidence was sufficient to send the obstruction of justice charge to the jury.
We also find no merit in appellants' contention that the district court erred in admitting the statement of debt submitted by Eaddy and Gowdy to the FmHA as material to the question of whether 18 U.S.C. § 1001 was violated.1 Section 1001 prohibits the intentional use of statements known to be false before a United States agency. Gowdy insists that Sec. 1001 was not violated because the FmHA did not rely upon the allegedly false statement of debt in granting the loan.
Even assuming that the government did not rely on the false statement, we find no error in the district court's decision to admit the statement of debt. This Court has stated that with regard to Sec. 1001 violations, ' [t]here is no requirement that the false statement influence or effect the decision making process of a department of the United States government.' Instead, they need only be the type that would have the 'natural tendency to influence' the government agency. United States v. Norris, 749 F.2d 1116 (4th Cir. 1984). Clearly, a disclosure which overstated the applicant's debt would be material in deciding whether to grant an emergency loan. Therefore, we see no error in the district court's decision to admit the debt statement into evidence.
We also reject Eaddy's claim that the district court erred in excluding from evidence and refusing to read to the jury two federal regulations Eaddy relied upon for his defense. Eaddy insists that a copy of 7 C.F.R. Sec. 1902.10(d) and 7 C.F.R. Sec. 1945.66(2) should have been admitted as evidence and read to the jury as part of the instructions. We conclude that if any error resulted from this omission, such error is harmless because the regulations would not have provided Eaddy with a defense.2
Finally, we reject as meritless Gowdy's contention that insufficient evidence supports his conviction of conspiring to defraud the government and aiding Eaddy in converting government funds to his own use. The following evidence was admitted at trial to prove Gowdy's involvement in the conspiracy and conversion: (1) Gowdy falsified the debt disclosure statement submitted to the FmHA, (2) Gowdy received $17,040 from the FmHA as Eaddy's creditor, when his testimony at Eaddy's divorce hearing and the records kept by the insurance company which supplied Gowdy's insurance agency did not indicate that the debt was owed, (3) Gowdy transferred all but $1,829.72 of the $17,040 to Eaddy, and (4) Gowdy falsified the copy of his insurance agency's ledger to disguise wrongdoings. We find that this evidence provides sufficient basis from which a jury could find Gowdy guilty of conspiring to defraud the FmHA and converting government funds.
For the foregoing reasons, the judgment of the district court is, accordingly, affirmed.
18 U.S.C. § 1001 states in pertinent part:
Statements or entries generally
Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years or both.
Section 7 C.F.R. Sec. 1902.10(d) permits proceeds from the FmHA supervised account to be used toward 'family living expenses.' This regulation provides no defense for Eaddy because the funds he claims to have used for such expenses were not derived from the FmHA supervised account, but rather, were part of those funds paid outright to his alleged creditors. Nor does Sec. 1945.66(2) provide any defense for Eaddy. That section permits proceeds from the loan to be used for the next year's production costs. Eaddy argues that the $14,000 payment to Evans was payment for the next two years' rent. Significantly, however, Sec. 1945.66(2) permits payments only toward the first year's production expenses