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Decisions in Criminal Matters and Issue re Cramdown of a Secured Creditor's Claim

By FindLaw Staff | Last updated on

The Sixth Cirucit decided two criminal matters and a bankruptcy case involving the issue of whether portion of creditor's secured claim attributable to the payoff of negative equity qualifies for protection from cramdown.

In US v. Algee, No. 08-3196, the court faced a former postal employee's challenge to this conviction for making false oral and written statements in an investigation of irregularities with the amount of money and stamps in vending machines.  In affirming the conviction, the court rejected defendant's contention that there was insufficient evidence to support the conviction for making false statements and also rejected his evidentiary claims that admission of evidence regarding the circumstances of the "integrity test" was an abuse of discretion.  Lastly, although the court concluded that the district court violated Rule 30(b) when it provided jury instructions to the defense only seconds before prosecution's closing argument, the court held that defendant did not suffer prejudice sufficient to warrant a retrial.

In Miller v. Brunsman, No. 09-3151, the court dealt with defendant's request for habeas relief for his aggravated murder and robbery convictions.  In denying the petition, the court held that the evidence offered by the defendant in support of his claim that a third party committed the offenses failed to show sufficient nexus between that third party and the murder victim.  Furthermore, the state court's exclusion of this evidence was not an unreasonable application of clearly established federal law. 

In In Re: Westfall, No. 08-4530, the court addressed the issue of whether the protection from "cramdown" offered by the hanging paragraph of 11 U.S.C. section 1325(a) applies to the portion of a creditor's secured claim attributable to the payoff of negative equity in a trade-in-vehicle.  In answering that it does, the court reversed the decision of the district court in holding that the negative equity financing constitutes a purchase money obligation under the UCC and the associated security interest satisfies the UCC's definition of a purchase money security interest. 

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