By LeAnn R. Ralph
MENOMONIE — An appeal filed by the former owner of LaPean Implement on a conviction for defrauding a New Auburn bank out of more than $100,000 has been denied by the District III Court of Appeals.
The decision to deny the appeal filed by former Colfax resident Greg LaPean was dated September 26, and LaPean was scheduled for a status hearing in Dunn County Circuit Court October 28.
At a court hearing last spring, the Honorable William C. Stewart Jr. delayed scheduling a restitution hearing until the appeal was finished.
LaPean initially was ordered by the court to pay $288,763.90 in restitution, with monthly payments beginning in April of 2012.
A jury convicted LaPean on September 23, 2011, of one felony count of transferring another’s personal property worth more than $100,000.
In a separate case, in which LaPean was charged with two felony counts of transferring another’s personal property at a value exceeding $10,000 but not more than $100,000, a Dunn County jury could not reach a verdict
LaPean was sentenced in February of 2012 to six months in jail, five years of probation, and 50 hours of community service for each year of probation.
In April of 2012, Judge Stewart ordered the jail sentence stayed pending the appeal.
LaPean asked the Court of Appeals for any one of three decisions: to reverse the conviction because there was a lack of evidence to support it; to reverse the conviction and grant a new trial because the Dunn County district attorney’s office did not try the “real” controversy; to grant a hearing based on LaPean’s allegations that his trial attorney was ineffective.
LaPean was the owner and operator of LaPean Implement in Menomonie.
The dealership faced financial difficulties in 2005 and 2006, and LaPean obtained multiple commercial loans from Security State Bank to finance the company.
Between March and May of 2005, LaPean obtained six loans to purchase farm equipment for resale, and each of the loans was secured by a specific piece of farm equipment.
The six smaller loans were consolidated into a new, longer-term loan in June of 2005.
LaPean stopped making payments to Security Bank after December of 2006, and the farm equipment used for collateral on the loans was liquidated after that.
While the farm equipment was being sold to cover LaPean’s loans, it was discovered that 18 pieces of equipment could not be accounted for.
The Dunn County district attorney’s office filed an amended complaint alleging that LaPean had sold or transferred the 18 pieces of equipment between June 5, 2007, and March 6, 2009, with an intent to defraud Security State Bank.
Lack of evidence
LaPean contended that the Dunn County district attorney’s office did not provide enough evidence that he transferred encumbered property with the intent to commit fraud.
LaPean argued that the evidence presented did not show that the farm equipment serving as collateral was still in the possession of LaPean Implement at the time the loans were consolidated in June of 2005, so LaPean could not have intended to commit fraud.
Karen Smith, president and senior lender at Security Bank in New Auburn testified, however, that the missing collateral “still existed.”
Smith testified that in December of 2006, when LaPean Implement stopped making regular payments to the bank, LaPean told her that the secured collateral “was being sent out … somebody was renting it or somebody was testing it.”
Smith also testified that she had seen some of the collateral at LaPean Implement.
LaPean testified that the secured equipment had been sold between February and May of 2005, although he was unable to recall who had purchased the equipment and could not produce any records verifying the purchases.
The Court of Appeals judges concluded that the jury could have reasonably inferred from the testimony that the equipment was in LaPean’s possession in June of 2005.
LaPean also argued that the district attorney’s office had failed to establish that he had transferred the missing collateral from June 5, 2007, to March 6, 2009.
The Courts of Appeals judges pointed out in their decision that the district attorney was not required by state law to establish specific dates.
LaPean’s next argument was that when he sold the secured equipment, he was not required to pay the proceeds on the sale of the collateral to Security Bank.
The June 2005 agreement with the bank required him to make 12 scheduled payments but it did not obligate him to pay the proceeds from selling the collateral, LaPean said.
The Court of Appeals decision points out that state law requires that when collateral is sold, the proceeds “attach” to a security interest in the collateral.
Smith testified at trial that when the collateral was sold, LaPean was “required to turn over the proceeds to pay off the loans.”
LaPean argued next that since there was no evidence about the circumstances under which he had sold the collateral, there was no evidence he intended to defraud the bank.
Smith testified that after LaPean stopped making payments to the bank, she had called him weekly and “many times was told that the equipment was being sent out … somebody was renting it, somebody was testing it out.”
In 2009, Smith testified, a customer came to the bank to borrow money from Security to purchase two tractors from LaPean Implement that were secured by the bank and that were unaccounted for later on.
Since LaPean owed Security Bank for the tractors, Security issued a cashier’s check to the customer made out to LaPean Implement and to Security Bank, Smith said.
The bank customer brought the check back to Security because LaPean would not accept the check and said he wanted cash instead, Smith testified.
In June of 2007, an auction was held to dispose of the LaPean Implement property.
Some of the collateral was missing, and LaPean said the collateral was being used by someone, was being rented by someone or was being stored off-site, Smith testified.
LaPean testified that he could not recall when and to whom he had sold the collateral, and he could not produce any records of those sales.
LaPean also testified that he kept paper records of all the implement dealership’s sales, but he could not find any records pertaining to the collateral.
In addition, LaPean testified that he kept computer records of all sale transactions, although later on, the computer hard drive was found to be missing.
The Court of Appeals judges concluded that because of LaPean’s inability to produce any business records, a jury could reasonably find that LaPean’s disposal of the collateral occurred under deceitful circumstances, and that LaPean transferred equipment with the intent to defraud Security Bank.
LaPean also argued that the jury should have been instructed about his specific rights and responsibilities for the June 2005 agreement with Security Bank.
LaPean asked the Court of Appeals judges to use their discretionary power to reverse the conviction and order a new trial because the failure to instruct the jury about his rights and obligations for the bank loan resulted in the “real controversy” not being tried.
According to the appeals court decision, the only issue in dispute was whether LaPean intended to defraud the bank.
LaPean’s defense was that he could use the proceeds from selling the collateral to pay other business expenses and was not required to use the money to pay the bank.
The Court of Appeals judges indicated in their decision that LaPean had not persuaded them that a failure to provide instructions to the jury emphasizing his defense theory was an indication of the “real” issue not being tried and a reason for ordering a new trial.
LaPean’s final argument was that his lawyer provided ineffective representation.
According to the Court of Appeals decision, LaPean argued that his lawyer had failed to provide a special jury instruction explaining LaPean’s rights and obligations under the June 2005 agreement with the bank.
An instruction about his rights and obligations would have helped the jury to determine whether he had intended to defraud Security Bank, LaPean argued.
The Court of Appeals judges wrote: “We conclude that, without more than his broad assertions that a special jury instruction was necessary, LaPean has not set forth sufficient facts showing that counsel’s performance was deficient.”
LaPean also claims that the district attorney failed to prove under which circumstances the missing collateral was transferred and that his attorney should have filed a motion for a directed verdict.
A “directed verdict” is an order from the judge to the jury to find the defendant “not guilty.”
If his attorney had filed a motion for a directed verdict, the circuit court (Judge Stewart) would have granted it, LaPean argued.
The Court of Appeals judges concluded that the evidence was sufficient to establish the circumstances under which LaPean had transferred the collateral and that LaPean did not provide sufficient facts to show that his lawyer’s representation was deficient.
LaPean’s wife, Amy LaPean, was charged with one Class E felony count of transferring personal property with a value exceeding $100,000.
Judge Stewart accepted a deferred prosecution agreement in March of 2012 and ordered Amy LaPean to perform 40 hours of community service.
Prior to Judge Stewart’s acceptance of the deferred prosecution agreement, Amy LaPean was scheduled for a jury trial in Dunn County Circuit Court.
If she successfully completes the two years of the agreement, the case will be dismissed.
A hearing for Greg LaPean is scheduled in Dunn County Circuit Court November 6.
A restitution hearing is scheduled for November 21.