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Warne v. United States

United States District Court, N.D. Indiana, Hammond Division

December 18, 2018




         In this section 2255 petition, Mark Warne challenges his bank fraud conviction claiming he received ineffective assistance of counsel. After the Government responded to his initial arguments, Warne obtained counsel who filed a reply memorandum contending an enhancement was not factually supported, and his defense counsel erred by not recommending placement in a residential drug and alcohol program. None of Warne's arguments have merit.


          Warne was a bank president who stole millions of dollars from his employer. This earned him a ten count indictment for bank fraud in violation of 18 U.S.C. § 1344 and identity theft in violation of 18 U.S.C. § 1028(a)(7). [DE 1.] Warne pleaded guilty to the bank fraud alleged in Count 1, and in exchange for his plea, the Government agreed to dismiss the other counts. [DE 39 at 11-12.]

         As part of his plea agreement, Warne agreed that he:

caused Community State Bank to make loans based upon false and fraudulent applications. I submitted loans in the names of Individuals A, B, C, and D in the amounts set out in the Indictment. I did not provide Individuals A, B, C, and D with the funds from these loans and Individual[s] A, B, C, and D were unaware of these loans. I used the proceeds of these loans for my own personal purposes. As President of Community State Bank, I prepared one set of minutes of the Board of Directors meetings that omitted any reference to the loans made to Individuals A, B, C, and D. I prepared the minutes in this way to avoid having the Board of Directors look into the fraudulent loans. I falsified a second set of minutes of the meetings of the Board of Directors and included references to the loans made to Individuals A, B, C and D in these minutes. I provided and caused to be provided this second set of false minutes to auditors with the Federal Deposit Insurance Corporation (“FDIC”). I did so to mislead FDIC auditors into believing these loans were reviewed by the Community State Bank Board of Directors. I did this all between September of 2010 and September of 2015 in the Newton County, which is in the Northern District of Indiana. At all times relevant to the Indictment, Community State Bank was insured by the FDIC.

[DE 9 at 8-9.]

         The plea agreement also set forth the agreement between the Government and Warne that his base offense level was 7, and that the offense “substantially jeopardized the safety and soundness of a financial institution, thereby increasing [the] offense level by 4 points, pursuant to United States Sentencing Guideline, Section 2B1.1(b)(16)(B).” [DE 9 at 5.] During the change of plea hearing, I questioned Warne about this, and he agreed that he substantially jeopardized the soundness or safety of a financial institution and that he was subjected to an increase in the offense level because of that. [DE 39 at 10.] Warne also acknowledged in his owns words that the approximately $3.5 million he made in fraudulent loans “had a tremendous impact” on the bank as it was a small state bank. [Id. at 24.] Additionally, the plea agreement contained an express waiver of Warne's right to file a section 2255 motion:

I understand that the law gives a convicted person the right to appeal the conviction and the sentence imposed. I also understand that no one can predict the precise sentence that will be imposed, and that the Court has jurisdiction and authority to impose any sentence within the statutory maximum set for my offenses as set forth in this plea agreement. With this understanding and in consideration of the government's entry into this plea agreement, I expressly waive my right to appeal or to contest my conviction and all components of my sentence or the manner in which my conviction or my sentence was determined or imposed, to any Court on any ground other than a claim of ineffective assistance of counsel, including any appeal under Title 18, United States Code, Section 3742 or any post-conviction proceeding, including but not limited to, a proceeding under Title 28, United States Code, Section 2255.

[DE 9 at 6.]

         During the change of plea hearing, I asked Warne about this waiver of appeal, and he agreed that he understood the concept and approved of it knowingly and voluntarily. [DE 39 at 13-15.] Warne further testified during the hearing, that he was fully satisfied with the advice and the representation of counsel that he received. [DE 39 at 4.] I accepted the plea of guilty. [DE 13.]

         Prior to the sentencing, the Government filed a memorandum which argued for a lower loss amount than that called for in the Presentence Investigation Report. [DE 24.] The PSR established that Warne obtained slightly over $6, 000, 000 in fraudulent loans over a period of 5 years. [DE 24 at 2.] Defense counsel agreed with the Government's favorable position, which calculated a lower loss as the amount of fraudulent loans minus the amount of money that Warne paid the bank for those loans. [DE 24.] I applied the lower loss amount at sentencing, which was between $1, 500, 000 and $3, 500, 000. [DE 31 at 5.]

         At the sentencing hearing, defense counsel presented the testimony of six witnesses and argued the sentence should be mitigated due to Warne's community involvement, dedication to family, and lack of criminal history. [DE 31 at 14-23.] The Government presented aggravating facts, including testimony from the current bank president, who explained that the bank was crucial to the lives of many in the community (Brook, Indiana only had a population of 1, 000 people), and how Warne's actions “had a severe impact [on] the safety and soundness” of the bank. [Id. at 9.] Many of the shareholders of the bank were retired farmers, teachers, and business owners, and the losses suffered by the bank due to the fraud led to a reduction in the book value of the stock of a little over 17 percent. [Id. at 10.]

         Ultimately, I sentenced Warne to seventy-eight months imprisonment. [DE 26.] I also ordered supervised release in the amount of 2 years. Id. I then dismissed the remaining counts and issued a final judgment on ...

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