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United States v. Hutcher

decided: May 5, 1980.

UNITED STATES OF AMERICA, APPELLEE,
v.
EDDIE HUTCHER AND STEPHEN MYDANICK, DEFENDANTS-APPELLANTS



Appeals from judgments of the United States District Court for the Southern District of New York, Charles Brieant, J ., convicting Eddie Hutcher and Stephen Mydanick of conspiracy to defraud the United States in violation of 18 U.S.C. § o71 and of making false statements to the Small Business Administration in violation of 18 U.S.C. § 201(b), and convicting Hutcher alone of bribing a Small Business Administration loan officer in violation of 18 U.S.C. § 201(b). Affirmed.

Before Lumbard, Mulligan and Oakes, Circuit Judges.

Author: Lumbard

Eddie Hutcher and Stephan Mydanick appeal from judgments of conviction for conspiring to defraud the United States in violation of 18 U.S.C. § 371, for making false statements to the Small Business Administration (SBA) in violation of 18 U.S.C. § 1001, and, as to Hutcher only, for bribing an SBA loan officer in violation of 18 U.S.C. § 201(b). The judgments were entered in the Southern District of New York by Judge Brieant on November 9, 1979 and July 24, 1979, respectively, following separate jury trials. Hutcher claims that the prosecution improperly cross-examined a defense witness, improperly referred to that cross-examination in its rebuttal summation, and failed to fulfill its obligations under Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10 L. Ed. 2d 215 (1963), and the Jencks Act, 18 U.S.C. § 3500. Mydanick claims that the district court erred in charging the jury and in relying upon materially incorrect information in sentencing. We affirm both judgments.

I.

Neither Hutcher nor Mydanick questions the sufficiency of the evidence supporting his conviction. We therefore rehearse that evidence synoptically.

Hutcher was a principal of Astor Metal Products, a Brooklyn-based company which in 1973 was seeking an SBA-guaranteed loan.*fn1 Mydanick, his law partner Frank Crisona, John Ebbecke, an acquaintance of Mydanick and a former banker, and David Koch, a lawyer with some influence at the Vanguard National Bank on Long Island, all agreed to assure to Astor Metal through fraud and bribery a bank loan, an SBA loan-guarantee, and necessary interim loans. In return, Hutcher agreed to pay them a fee of $35,000, which equalled 10% of the amount of Astor Metal's loan. Thereafter, Hutcher, Mydanick, Crisona, and Ebbecke, in preparing Astor Metal's loan-guarantee application, inflated the company's financial statements, reported only $2,800 of the $35,000 "finders' fee" to be paid,*fn2 failed to report, of course, the intended bribes, and falsely reported Astor Metal's intended use of the loan. Mydanick signed the application as the attorney of record, and Ebbecke submitted it to the SBA.

To the finders' chagrin, the SBA rejected Astor Metal's application. They recommended to Hutcher that he personally talk to the SBA loan-officer in charge of applications from Long Island banks, Kenneth Senhouse. Hutcher did, and offered Senhouse $10,000 to approve Astor Metal's application, which was then re-submitted. Senhouse approved it. At a lunch attended by Hutcher, Senhouse, and Crisona, Hutcher paid Senhouse $5,000 and promised to pay the rest of the bribe upon the loan's closing.

Astor Metal received the $350,000 loan in March 1974. It used the money to satisfy its debt upon another loan not, as stated in the loan-guarantee application, to acquire and repair machinery and it never repaid Vanguard National Bank, which then demanded and received payment from the SBA. Astor Metal entered bankruptcy proceedings in 1976. Because all of Astor Metal's assets were covered by pre-existing liens when it liquidated in 1978, the SBA never recovered any of the $337,628 it paid to Vanguard pursuant to the guarantee. Moreover, Mydanick, Crisona, Ebbecke, and Koch never received their $35,000 fee, for Hutcher, stating that they had not earned it, refused to pay them.

In 1978, Crisona agreed to cooperate with the government in prosecuting this fraud and bribery. Crisona tape-recorded conversations with Mydanick and Hutcher during which each admitted his role in the conspiracy. Crisona also, along with Ebbecke, testified for the prosecution at Hutcher's and Mydanick's trials.

II.

Hutcher claims that the prosecution acted improperly in cross-examining a witness and in failing to make available certain evidence. Mydanick claims that the district court erred in charging the jury and in sentencing. We will recite seriatim the facts material to our discussion of each claim.

A.

Hutcher's first claim is that the prosecution improperly cross-examined Senhouse by asking him whether, in connection with investigations unrelated to Hutcher's trial, he had been questioned by the FBI or before a federal grand jury about his alleged receipt of bribes and that the prosecution improperly referred to that cross-examination in its rebuttal summation.

Prior to the prosecution's cross-examination of Senhouse, the defense pointed out in its opening statement to the jury that Senhouse still worked at the SBA and had never been indicted despite the prosecution's assertion that he accepted Hutcher's bribe. Also, in its direct examination of Senhouse, the defense elicited that neither the FBI nor the United States Attorney's Office had ever asked Senhouse whether he received a bribe from Hutcher, and that Senhouse had not been asked to ...


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