A Tenth Circuit panel on Tuesday tossed out an Oklahoma man’s 87-month prison sentence after he was found guilty of scamming a small-town bank out of nearly $10 million in loans, saying while the conviction will stand, the sentence goes too far.
Roy Lynn Wesberry faced 87 months in prison after an Oklahoma court found him guilty of bank fraud charges committed against the First National Bank of Davis that eventually shuttered after Wesberry didn’t pay back the loans. He appealed the decision and the sentence, which also included $3 million in restitution.
But the Tenth Circuit panel said that while Wesberry’s conviction won’t be overturned, the case should be remanded for re-sentencing. In a 14-page opinion, the panel agreed with Wesberry that his prison sentence was wrongly calculated on the basis of nominee loans, or bridge loans, that did not play a role in the bank’s failure.
“The government has not shown that these nominee loans substantially jeopardized the safety and soundness of First National, which failed from the excessive loans it made to Mr. Wesberry rather than the scheme to conceal these loans,” the panel’s opinion said.
The order upholds a conviction of four counts of bank fraud and one count of conspiracy to committee bank fraud, but vacates the sentence and remands for re-sentencing.
Wesberry was accused of owing First National Bank of Davis an estimated $9.6 million, a sum that caused the small-town bank to close down because it had reserves of under $1 million, according to a court history.
Wesberry was accused of working with the bank’s president W.A. “Dub” Moore, who pled guilty in 2014 and received 24 months in prison, to scam the bank, and of using nominee loans to avoid legal lending limits and cover up for his prior debts.
In August, Wesberry was found of guilty of conspiracy to commit bank fraud and four counts of bank fraud. He was ordered to spend 87 months in prison and pay more than $3.2 million in restitution.
Wesberry appealed the decision, arguing that the government didn’t bring enough prove the nominee loans were illegal and that the court erred by raising the sentencing guideline levels based on the conclusion that the four nominee loans jeopardized the safety of the bank.
The government argued that the guidelines were proper because the total of the nominee loans, including three others the court found to be relevant conduct, topped $5 million, which substantially jeopardized the bank.
In its decision to uphold the conviction, the panel said a reasonable trier of fact could’ve found Wesberry guilty beyond a reasonable doubt, as the government could prove Wesberry attempted to execute a scheme to conceal his debt through the use of nominee loans.
But when it came to the sentence, the district court erred in calculating the guideline range, the panel said. At sentencing, the district court found that Wesberry’s offense jeopardized the safety and soundness of the bank, which requires a four-level offense enhancement.
But the panel agreed with Wesberry’s argument that these enhancements wrongly took into account four nominee loans made during the scheme that did not cause the bank to fail.
“The government fails to show that the nominee loans, rather than prior loans to Mr. Wesberry and his companies, jeopardized the safety and soundness of First National,” the panel wrote. “Accordingly, the sentencing enhancement was not supported by the evidence.”
U.S. Circuit Judges Robert E. Bacharach, Mary Beth Briscoe and Carolyn B. McHugh sat for the panel.
The U.S. Attorney’s Office declined to comment.
Attorneys for Wesberry did not immediately respond to requests for comment.
Wesberry is represented by Warren Gotcher of Gotcher and Beaver.
The United States is represented by Linda A. Epperley and Melody Noble Nelson of the U.S. Department of Justice and Thomas M. Wright of Wright Stout & Wilburn.
The case is the United States of America v. Roy Lynn Wesberry, case number 15-7051, in the U.S. Court of Appeals for the Tenth Circuit.