United States v. Weimert

819 F.3d 351 (7th Cir. 2016)


Anchor BanCorp Wisconsin, Inc. (Bank) was in financial trouble. D was both a vice president of Bank and the president of IDI, a subsidiary of Bank. As IDI president, D identified investment opportunities and managed development projects. It was decided that IDI must sell assets and transfer the cash to the parent holding company to help with a loan payment. IDI had a 50% ownership in property and D tried to sell that property to the other 50% owner. As part of the deal, D suggested he could buy 5% and then 45% could be sold to the other 50% owner. To force the deal D talked to another shill investor with a caveat that the shill investor wanted D to stay in the deal. The shill investor made an outline of an offer. D had both sides of a deal wanting him to stay in it. The other 50% partner fell for the scam and made an offer on IDI’s share; it offered only $8 million. Although it was offering a lower purchase price, the 50% partner would also release IDI from its potential $15 million liability to Bank of America. D presented offers to the board and recommended a sale to current partner. D also told the board that his participation in the deal was necessary. The directors found this proposal unusual, to say the least. In light of the conflict of interest that everyone recognized, the board excused D from the meeting while it discussed the conflict issue with outside counsel. It was finally agreed that in exchange for the four and seven-eighths percent ownership interest, D would contribute $100,000 to his partnership with the 50% partner. The sale closed. The Securities and Exchange Commission investigated Bank and decided to indict D for mail and wire fraud. A federal grand jury indicted D on six counts of wire fraud. The indictment alleged a scheme to defraud IDI through materially false and fraudulent pretenses to obtain the ownership interest.