United States v. Lundstrom

880 F.3d 423 (8th Cir. 2018)

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Nature of the Case

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Facts

TierOne, a commercial bank, and financial institution was required by federal banking laws and regulations to disclose its financial condition to the Office of Thrift Supervision (OTS), which also conducted onsite examinations at least annually and requested written responses to other periodic inquiries. D became TierOne's president in 1994 and its CEO around 2000. After becoming a public company, TierOne was also required to disclose its financial condition to the Securities Exchange Commission (SEC) by filing, among other documents, annual and quarterly reports that included financial statements audited by an outside accounting firm. D was required to certify that the reports filed with the SEC did not contain any material misstatements or omissions of fact. D engaged in a risky expansion of loan activity. As the real estate markets in some of TierOne's new lending territories began to deteriorate in or around 2007, real estate prices began to decline, and things turned ugly fast. TierOne's portfolio of foreclosed properties grew from $18.7 million in October 2008 to $63.7 million in October 2009, forcing the bank to assume responsibility for taxes, maintenance, utilities, and general upkeep on the foreclosed properties. TierOne was also required to take 'write-downs' or losses on its financial statements if the value of its loan collateral or foreclosed properties declined. D was eventually convicted of fraudulently concealing the loan losses. D appealed contending that the reports prepared by government agencies cannot be admitted as business records under Rule 803(6), given that the public records exception to the rule against hearsay-Rule 803(8)(A)(iii)-excludes 'factual findings from a legally authorized' investigation when a report containing such findings is offered against a criminal defendant.