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United States v. Vinson

United States Court of Appeals, Fourth Circuit

March 24, 2017

UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
KEITH ARTHUR VINSON, Defendant-Appellant.

          Argued: October 28, 2016

         Appeal from the United States District Court for the Western District of North Carolina, at Asheville. Martin K. Reidinger, District Judge. (1:12-cr-00020-MR-DLH-5)

         ARGUED:

          John Clark Fischer, RANDOLPH AND FISCHER, Winston-Salem, North Carolina, for Appellant.

          Amy Elizabeth Ray, OFFICE OF THE UNITED STATES ATTORNEY, Asheville, North Carolina, for Appellee.

         ON BRIEF:

          Jill Westmoreland Rose, United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Charlotte, North Carolina, for Appellee.

          Before MOTZ, KING, and DUNCAN, Circuit Judges.

          KING, Circuit Judge:

         In October 2013, Keith Arthur Vinson was convicted in the Western District of North Carolina of various offenses arising from his leadership of schemes wherein fraud was systematically utilized to keep his real estate empire afloat. Vinson has appealed, contending primarily that the prosecution presented insufficient evidence of the crimes alleged. He also maintains that the trial court gave the jury an erroneous and prejudicial willful blindness instruction, and that his aggregate sentence of 216 months is substantively unreasonable. As explained below, we reject each of his contentions and affirm.

         I.

         A.

         From approximately 2010 and culminating in this prosecution, the FBI, the IRS, and the United States Attorney in western North Carolina conducted a protracted investigation into the fraudulent activities discussed herein. Prior to the initial indictment against Vinson, the government had already convicted several of his cohorts and obtained their cooperation. Those men included George "Buddy" Greenwood, David G. Smith, and Robert Craig Gourlay. For example, in February 2011, the grand jury in Asheville indicted Greenwood for misapplication of bank funds and money laundering. Greenwood pleaded guilty to those charges on June 16, 2011. In October 2011, the United States Attorney filed an information charging Smith with a conspiracy to commit various offenses and Gourlay with misapplication of bank funds and money laundering. Smith and Gourlay pleaded guilty on November 1, 2011, to the charges against them.

         Vinson was initially indicted by the grand jury in April 2012 on multiple federal charges, including conspiracy, bank and wire fraud, and money laundering. In addition to Vinson, that indictment charged Avery "Buck" Cashion III and his wife, Joan Cashion, plus Raymond M. Chapman and Thomas E. Durham, Jr. A superseding indictment, returned in early December 2012, lodged charges against Vinson, Buck Cashion, Chapman, Durham, and two additional defendants, George M. Gabler and Aaron Ollis.

         In January 2013, the charges in the initial indictment against Joan Cashion were dismissed. Soon thereafter, in February 2013, the United States Attorney filed an information charging Andrew Hager with conspiracy to commit offenses against the United States. Hager pleaded guilty to that charge on March 11, 2013. On September 18, 2013, Buck Cashion and Chapman pleaded guilty to the conspiracy charges in the superseding indictment. Less than a week later, on September 24, 2013, Gabler pleaded guilty to an information charging misprision of a felony. Durham and Ollis also pleaded guilty on that occasion, to conspiracy charges lodged in the superseding indictment. Pursuant to agreements with the United States Attorney, those defendants cooperated in the ongoing investigation and related prosecutions.

         On October 1, 2013 - fifteen months after the initial indictment and only a week after several of the defendants had pleaded guilty - the grand jury returned another superseding indictment, the operative indictment in this appeal (the "Indictment"). The Indictment named Vinson as the only defendant, but several of those who had pleaded guilty were identified as unindicted coconspirators. The Indictment alleged thirteen charges against Vinson, as follows:

• Count One - That Vinson conspired with Buck Cashion, Chapman, Ollis, Hager, and others to commit bank fraud, in contravention of 18 U.S.C. § 1349;
• Count Two - That Vinson conspired with Cashion, Chapman, Ollis, Hager, Greenwood, and others to commit offenses against and to defraud the United States, in violation of 18 U.S.C. § 371;
• Counts Three, Four, Five, Six, and Ten - That Vinson, on five occasions, aided and abetted the misapplication of bank funds, in violation of 18 U.S.C. §§ 656 and 2;
• Counts Seven and Eight - That Vinson committed and aided and abetted two wire fraud offenses affecting a bank, in violation of 18 U.S.C. §§ 1343 and 2;
• Count Nine - That Vinson conspired with Cashion, Chapman, Ollis, Hager, Durham, Gourlay, Smith, and others to commit offenses against and to defraud the United States, in contravention of 18 U.S.C. § 371;
• Count Eleven - That Vinson conspired with Cashion, Chapman, and others to commit money laundering, in contravention of 18 U.S.C. § 1956(h); and
• Counts Twelve and Thirteen - That Vinson committed and aided and abetted two money laundering offenses, in violation of 18 U.S.C. §§ 1957 and 2.

         Vinson was the only alleged conspirator who elected to go to trial. Vinson's jury trial on the Indictment began in Asheville on October 7, 2013, just a week after the Indictment was returned. Several of his cohorts testified for the prosecution, including Buck Cashion, Gourlay, and Hager. The prosecution called at least twenty-six witnesses -such as coconspirators, banking officials, and victims of the alleged criminal activities -and introduced hundreds of documents.

         B.

         The trial evidence emphasized Vinson's ongoing efforts to defraud various banks and others in seeking to salvage his floundering real estate empire, particularly the Seven Falls Golf and River Club in western North Carolina (the "Seven Falls development, " or "Seven Falls").[1] Vinson acted through various entities, including Seven Falls LLC, of which he was the principal. In his efforts, Vinson utilized a dizzying array of fraudulent activities, including those referred to herein as the Lot Loan Scheme, the Plastics Plant Scheme, the Check Fraud Scheme, the Burnett Straw Loan, the Worlund Straw Loan, the Zeiger Straw Loan, and the Queens Gap Scheme. Vinson's fraudulent activities contributed to the insolvency of two FDIC-insured banks in western North Carolina - the Bank of Asheville ("BOA") and Pisgah Community Bank ("PCB") - leading the FDIC to become the Receiver for each failed bank.

         1. Background

         Beginning in about 2006, Vinson implemented a plan to turn approximately 1, 600 acres of North Carolina property into the Seven Falls development. Seven Falls was to include luxury homes and condominiums near and around an Arnold Palmer championship golf course outside Hendersonville. In about August 2006, Vinson sought a $6 million land acquisition and development loan (an "A&D loan") for Seven Falls from the National Bank of South Carolina ("NBSC"). To consummate the A&D loan transaction with NBSC, Vinson needed $2 million in seed money, which he did not have on hand. Vinson thus sought assistance from his friend Buck Cashion, a real estate investor and private money lender. Vinson and Cashion had previously been involved together in other business deals, including two high-end housing developments located near Asheville. Vinson advised Cashion, "I'll make it very much worth your while if you'll borrow $2 million for me" for seed money on the NBSC A&D loan. See J.A. 967.[2] Cashion agreed to assist Vinson and promptly borrowed $2 million from BOA. In return for Cashion's help, Vinson promised to pay Cashion $4 million.

         In January 2007, Vinson obtained additional funds from NBSC for use in the Seven Falls development, increasing the A&D loan from $6 million to about $25 million. Vinson used $4 million of the A&D loan to purchase a dairy farm adjacent to Seven Falls that was to be used for an Arnold Palmer golf academy and another luxury housing development. By the summer of 2007, road construction had commenced at Seven Falls. Around that time, Vinson needed yet more money but ran up against NBSC's loan limit with respect to a single borrower - a restriction imposed under federal banking regulations that constrain how much a particular bank can lend to one borrower.[3] To raise additional funds for Seven Falls, Vinson asked Cashion to buy from Vinson the recently acquired dairy farm, which had been appraised at $6.8 million.

         In connection with the dairy farm transaction, Cashion used an entity called Zeus Investments, LLC ("Zeus") - which he owned with Chapman and Gabler - to borrow $4 million from NBSC and consummate purchase of the farm.[4] Cashion and Zeus had no intention of retaining the farm, however, and Cashion agreed with Vinson that Zeus would simply hold it for thirty days. At that point, Cashion was anticipating the $4 million payment that Vinson had promised in return for Cashion's assistance in obtaining the $2 million in seed money on the NBSC A&D loan. The promised $4 million payment from Vinson, however, was never made.[5]

         In June 2007, Vinson conducted a Founder's Day promotion of Seven Falls at the Biltmore Estate near Asheville. At that lavish event - which included an appearance by Arnold Palmer himself - approximately 500 guests enjoyed alcohol under a "huge festive tent" and witnessed the ribbon cutting for Palmer's "fabulous golf academy." See J.A. 1071. The attendees also received discounts and special benefits for their purchases of Seven Falls lots, including 100% financing of lot purchases through NBSC. After the event, Vinson hosted a Kenny G concert in Asheville. Although the funds Vinson raised at the Founder's Day event were to go toward repayment of the A&D loan from NBSC, "[f]or some reason that money didn't get taken out." Id. at 999. Indeed, NBSC was never repaid for the A&D loan.

         By spring 2008, the lot sales at Seven Falls had dwindled due to winter weather and the worsening economy. Vinson was thus unable to pay his employees and contractors, and all work soon ceased on the Seven Falls infrastructure. In April 2008, Vinson approached Cashion and asked for help paying "some lien people." See J.A. 1007. By fall 2008, one of Vinson's employees was "pretty much on the phone eight hours a day with vendors trying to explain why their checks bounced, " as well as dealing with vendors who demanded payment. Id. at 332.

         2. The Lot Loan Scheme

         In 2008, in order to satisfy financial obligations related to Seven Falls and continue with its development, Vinson and his cohorts sought to raise large sums of money by fraudulently obtaining additional loans on approximately twenty-five Seven Falls lots (the "Lot Loan Scheme"). That scheme, which underlies the bank fraud conspiracy offense charged in Count One of the Indictment, stemmed from Buck Cashion's failed attempt to obtain a $2.5 million A&D loan from PCB.[6] PCB was a fairly new bank in Asheville, and Buck and Joan Cashion had invested in it. Buck Cashion and Chapman approached Gourlay, PCB's Chief Credit Officer, and Durham, PCB's President, seeking the $2.5 million A&D loan for Vinson. Gourlay explained that PCB could not make a single loan for such a large sum, but suggested instead a scheme that would utilize a series of fraudulent lot loans and thereby obtain $2.5 million to fund the Seven Falls development. Cashion and Chapman relayed the proposed scheme to Vinson.

         As Cashion explained at trial, he informed Vinson that "we're going to have to circumvent the way the bank is doing it" and asked "do you want to do that?" See J.A. 1016. According to Cashion, Vinson promptly "said yes." Id. Cashion explained that he had "to have [Vinson's] approval for the lot program because it's his lots and it's his lot program." Id.

         After Gourlay provided the corrupt idea, Vinson, Cashion, Chapman, and others structured and carried out the Lot Loan Scheme. Pursuant thereto, Vinson entered into sales contracts with straw borrowers, who obtained loans from PCB and other banks to purchase undeveloped Seven Falls lots, with the loan proceeds going to Vinson and his creditors. Vinson hired Hager to find lenders that would make the loans. Among the straw borrowers were Cashion, Chapman, Gabler, and Hager himself, plus Kostas Rantzos and Nicholas Dimitris.[7]

         The straw borrowers represented themselves to the lenders as bona fide purchasers. Nevertheless, under side agreements between Vinson and the straw borrowers, Vinson was allowed to continue marketing the Seven Falls lots to other buyers and to repurchase the lots at any time. Meanwhile, the straw borrowers understood that Vinson would repurchase the lots within two years if no other buyers emerged. Vinson also agreed to make the straw borrowers' loan payments for two years, as well as to pay kickbacks directly to the straw borrowers by way of monthly payments in sums equal to 1% to 2% of their loan balances.

         The side agreements in the Lot Loan Scheme included attractive "seller concessions" for the straw borrowers, constituting 25% of the sales price of a given Seven Falls lot. The straw borrower then obtained a loan equal to 75% of the sales price, provided no funds for a down payment at the property closing, and nevertheless received credit for a 25% down payment. The loan committee of the lender bank was thereby misled into concluding that the loan-to-value (the "LTV") ratio on the lot loan transaction was 25:75, the minimum acceptable ratio without special approval.[8] The seller concessions were intentionally omitted from several appraisal documents and HUD-1 settlement statements.[9]

         The Lot Loan Scheme involved "shopping" the loans to various lenders without disclosing that the borrowers were obtaining additional loans elsewhere. The closings were timed in quick succession so that the borrowers could obtain loans at different banks without the lenders learning of the other transactions. The borrowers thereby concealed substantial new liabilities that the lenders would have taken into account in assessing the borrowers' ability to repay the loans. Emails from Hager to Vinson confirm that Vinson was fully informed when his various accomplices moved loan applications from bank to bank and substituted the names of borrowers to suit their purposes. The schemers also withheld information from the lenders that would have caused the loans to be aggregated with other Seven Falls lot loans in applying the lenders' loans-to-one-borrower limits.

         Between April and July 2008, Vinson and his cohorts closed the loans that were part and parcel of the Lot Loan Scheme, including loans from PCB, BOA, Old Town Bank, Community Bank of Rowan, Southern Community Bank and Trust, and Branch Banking and Trust. At trial, Old Town Bank officials explained that they would not have approved any loans on Seven Falls lots had they been aware of the seller concessions, Vinson's various commitments to pay loan costs, and other undisclosed promises made by Vinson, such as repurchases of the lots within two years.

         Although PCB's Gourlay understood that the lot loans made by PCB as part of the Lot Loan Scheme were a proxy for the $2.5 million A&D loan that PCB had to deny, the PCB loan committee was unaware of the actual purpose of the lot loans and the complete terms of the transactions. For example, Kerry Friedman, a member of PCB's board of directors and its loan committee, confirmed that the board "had no idea that there were relationships . . . with [Vinson] in connection with the loans [they] were approving." See J.A. 1715-19.

         The former loan officer who handled BOA's lot loans, Samuel "Eric" Morris, was disturbed to find that initial straw borrowers did not bring their 25% down payments on the lot purchases to the loan closings, because he knew that the BOA loan committee had predicated its loan approvals on their promises to do so. Morris relayed his concerns to Greenwood, the President of BOA, who instructed Morris to nevertheless close the loans. In July 2008, Morris handled additional straw borrower loans for Seven Falls lots. Despite having been assured that those borrowers would be paying their 25% down payments, Morris learned that the seller concessions had again been granted. As a result, Morris advised the borrowers that BOA would not close the lot loans. Greenwood, however, overruled Morris and instructed him to close them. Although the BOA loan committee approved the Seven Falls lot loans, the committee members were never made aware of the fact that the loans were made to straw borrowers for Vinson's benefit.[10]

         To maximize the available loan proceeds, Vinson and his cohorts hired real estate appraisers - often conspirator Ollis - who provided inflated appraisals of the Seven Falls lots. The false appraisals usually compared other Seven Falls lots, which also had exaggerated values, to justify their valuations. Additionally, the appraisals mischaracterized Seven Falls' level of completed construction, concealed the seller concessions, and failed to disclose the fact that the Lot Loan Scheme transactions were not being made at arms-length. Oftentimes, the inflated appraisals conflicted with lower values reflected elsewhere, such as on deeds and in property tax records. In an email to Vinson on February 19, 2009, Ollis warned that the failure to properly document the higher, inflated land values "creates a problem as far as any records are concerned." See J.A. 6830. Vinson replied, "Good advice." Id.

         Vinson personally attended many of the closings in the Lot Loan Scheme, and, pursuant thereto, raised about $10 million for his use on the Seven Falls development. As Cashion testified:

Everybody worked for [Vinson, ] not necessarily directly or indirectly, but everybody came to him . . . . So everything we were doing to get money had to go through him on a daily basis and it did. . . . [O]n every single transaction, I called and talked to [Vinson] about it.

See J.A. 1203.

         3. The ...


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