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United States v. Doke - 171 F.3d 240 (5th Cir. 1999)

Rule:

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.

Facts:

Defendant attorney Larry Bass, for the benefit of defendant real estate developer, Maurice Doke, secured a loan from a bank for the purchase of real property. Defendant attorney Bass was on the board of directors of the bank, and defendant developer Doke was a shareholder. The government filed this action against defendants Bass and Doke, arguing that defendants failed to disclose defendant real estate developer's involvement and that the bank could not have loaned the amount that it did to defendant developer without violating civil regulations. Defendants were convicted of bank fraud under 18 U.S.C.S. § 1344 and of making false statements to a financial institution under 18 U.S.C.S. § 1014. Defendants challenged the conviction, asserting that the evidence was insufficient to support their convictions on any count.

Issue:

Was there sufficient evidence to support defendants’ convictions of bank fraud under 18 U.S.C.S. § 1344 and of making false statements to a financial institution under 18 U.S.C.S. § 1014?

Answer:

Yes.

Conclusion:

The Court of Appeals for the Fifth Circuit affirmed the convictions. The court found that there was enough evidence to support a finding that defendant developer's involvement was not disclosed. The court also held that concealment of the identity of a silent partner contravened § 1344, even though the loan itself had economic validity and was not a sham. However, the non-disclosure still amounted to fraud because the loan put the bank in violation of banking regulations.

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