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United States v. Heine

United States District Court, D. Oregon

August 7, 2018

UNITED STATES OF AMERICA,
v.
DAN HEINE and DIANA YATES, Defendants.

          Billy J. Williams, United States Attorney, and Claire M. Fay, Michelle Holman Kerin, and Quinn P. Harrington, Assistant United States Attorneys, United States Attorney's Office for the District of Oregon, 1000 SW Third Avenue, Suite 600, Portland, OR 97204. Of Attorneys for the United States of America.

          Jeffrey Alberts and Mark Weiner, Pryor Cashman, LLP, 7 Times Square, New York, NY 10036; Caroline Harris Crowne, Tonkon Torp, LLP, 1600 Pioneer Tower, 888 SW Fifth Avenue, Portland, OR 97204. Of Attorneys for Defendant Dan Heine.

          Janet Lee Hoffman, Andrew T. Weiner, Katherine Feuer, and Douglas J. Stamm, Janet Hoffman & Associates, LLC, 1000 SW Broadway, Suite 1500, Portland OR 97205; Matthew J. Kalmanson, Hart Wagner, LLP, 1000 SW Broadway, Suite 2000, Portland, OR 97205. Of Attorneys for Defendant Diana Yates.

          OPINION AND ORDER ON DEFENDANTS' MOTIONS FOR RELEASE PENDING APPEAL

          MICHAEL H. SIMON UNITED STATES DISTRICT JUDGE.

         Between October 10, 2017, and November 28, 2017, a federal jury in Portland, Oregon heard testimony from 43 witnesses, received 584 exhibits admitted in evidence, and deliberated for four days. The 12-person jury then returned unanimous verdicts, finding both Defendant Dan Heine and Defendant Diana Yates guilty on the same 13 out of 19 charges. The jury found both Defendants guilty on one count of conspiracy to commit bank fraud and 12 counts of making false bank entries. The jury also found both Defendants not guilty on six counts of making false bank entries. On June 4, 2018, the Court denied Defendants' motions for judgment of acquittal or new trial. ECF 1059 (Opinion and Order on Post-Trial Motions). On June 14, 2018, the Court sentenced Defendant Heine to 24 months imprisonment on each count of conviction, to be served concurrently, plus three years of supervised release; the Court sentenced Defendant Yates to 18 months imprisonment on each count of conviction, to be served concurrently, plus three years of supervised release. ECF 1068 (Opinion and Order on Sentencing). Now pending before the Court are Defendant Heine's Motion for Bail Pending Appeal (ECF 1069) and Defendant Yates's Motion for Release Pending Appeal (ECF 1070). For the reasons explained below, both motions are denied, and Defendants are ordered to report on October 9, 2018, to the institutions designated by the Federal Bureau of Prisons to begin serving their respective sentences.

         BACKGROUND

         In 2004, Defendant Dan Heine (“Heine”) founded The Bank of Oswego (the “Bank”) and became its President and Chief Executive Officer. He also served as a member of the Bank's Board of Directors (“Board”). Defendant Diana Yates (“Yates”) was the Executive Vice President and Chief Financial Officer of the Bank. Yates also was the Secretary of the Board. Yates resigned from the Bank on March 22, 2012. Heine left the Bank in September 2014. On June 24, 2015, a federal grand jury indicted Heine and Yates for conduct related to their time with the Bank. As alleged in the later-issued superseding indictment, Heine and Yates were charged with one count of conspiring to commit bank fraud, in violation of 18 U.S.C. § 1349, and 18 counts of making false bank entries, in violation of 18 U.S.C. §§ 2 and 1005. As found by the jury, Heine and Yates concealed and misrepresented the true financial condition of the Bank in order to deceive the Bank's Board and regulators, including the Federal Deposit Insurance Corporation (“FDIC”). Among other things, Heine and Yates falsely reported to the Board and the FDIC that: (1) the Bank had title to certain real property obtained by the Bank using a “straw buyer” transaction without disclosing the true nature of that transaction; (2) certain delinquent loans had been paid and should no longer be considered as delinquent or at risk; and (3) certain bank-owned real property received in foreclosure had been sold without disclosing all material terms.

         Until August 2016, the Bank was a financial institution engaged in the business of personal and commercial banking and lending, headquartered in Lake Oswego, Oregon. The Bank was insured and supervised by the FDIC. On August 12, 2016, the Bank sold its loans and other assets to HomeStreet Bank (“HomeStreet”). The Bank continues to exist as a corporate entity, but has relinquished its banking charter and now operates as Oswego Resolution.

         STANDARDS

         As a general matter, a person who has been convicted of a federal offense is to be incarcerated unless a court makes certain findings. See 18 U.S.C. § 3143(b) (2016); United States v. Garcia, 340 F.3d 1013, 1015 (9th Cir. 2003). In United States v. Handy, 761 F.2d 1279, 1283 (9th Cir. 1985), the Ninth Circuit held that under the Bail Reform Act of 1984, “a court must find the following to grant bail pending appeal”:

(1) that the defendant is not likely to flee or pose a danger to the safety of any other person in the community if released;
(2) that the appeal is not for purpose of delay;
(3) that the appeal raises a substantial question of law or fact; and
(4) that if the substantial question is determined favorably to defendant on appeal, that decision is likely to result in reversal or an order for a new trial of all counts on which imprisonment has been imposed.[1]

Handy, 761 F.2d at 1283 (citations omitted). The burden is on a defendant to demonstrate eligibility for bail pending appeal. Id. Based on the plain text of the statute, the defendant must show the first Handy factor by “clear and convincing evidence.” 18 U.S.C. § 3143(b)(1)(A). Because the statute does not expressly require a “clear and convincing” standard for the remaining three Handy factors, 18 U.S.C. § 3143(b)(1)(B), a defendant must show those factors only by a preponderance of the evidence.

         Finally, for purposes of the Bail Reform statute, a “substantial question” is one that is “fairly debatable” or “fairly doubtful.” This is a standard that is more demanding than merely “not frivolous.” As the Ninth Circuit explained in Handy:

We conclude that a “substantial question” is one that is “fairly debatable, ” . . . or “fairly doubtful, ” . . . . In short, a “substantial question” is one of more substance than would be necessary to a finding that it was not frivolous.

Handy, 761 F.2d at 1283 (citations and quotations marks omitted).[2]

         DISCUSSION

         A. First Handy Factor: Risk of Flight or Danger

         The Government agrees “that the defendants do not represent a flight risk or danger to the community.” ECF 1071 at 3. The Court concludes that the first Handy factored is satisfied.

         B. Second Handy Factor: Purpose of Delay

         In her motion, Defendant Yates expressly provides a specific argument that her appeal is not for purposes of delay. ECF 1070 at 9. Defendant Heine does not explicitly make this assertion, but arguably does so impliedly. More significantly, the Government does not argue that either Defendant fails to meet the ...


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