United States v. Lekacos, 2-302.

• Decision Date: 13 November 1945
• Docket Number: No. 2-302.,2-302.
• Citation: 151 F.2d 170
• Parties: UNITED STATES v. LEKACOS et al.
• Court: U.S. Court of Appeals — Second Circuit

151 F.2d 170 (1945)

UNITED STATES v. LEKACOS et al.

No. 2-302.

Circuit Court of Appeals, Second Circuit.

August 7, 1945.

Writ of Certiorari Granted November 13, 1945.

Henry G. Singer, of Brooklyn, N. Y., for Kotteakos and Lekacos.

Herbert Zelenko and Weinberger & Weinberger, all of New York City (Harry M. Weinberger, of New York City, of counsel), for appellant Nathan Regenbogen.

Vine H. Smith, Asst. U. S. Atty., and Miles F. McDonald, U. S. Atty., both of Brooklyn, N. Y., for the United States.

Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

Writ of Certiorari Granted November 13, 1945. See 66 S.Ct. 169.

L. HAND, Circuit Judge.

Lekacos, Kotteakos and Regenbogen appeal from a judgment of conviction for a conspiracy to make fraudulent applications for loans under the National Housing Act, contrary to §§ 1702, 1703, 1715 and 1731 of Title 12, U.S.C.A. They raise only two points: (1) A material variance between the indictment and the evidence, in that the indictment was for a single conspiracy, and the evidence proved eight or ten separate and independent conspiracies; (2) an error in the judge's charge when he instructed the jury that they could convict only in case they found that there had been a single conspiracy; which, if true, should have led him to dismiss the indictment. The evidence was such that the jury might have found the following facts. One, Simon Brown, who was indicted with the thirty-one others, among whom were the three appellants, was president of a building company in Brooklyn, for which in 1928 he obtained loans from a bank under the National Housing Act, to aid in the construction of twelve houses which his company was building. For reasons which are irrelevant to this prosecution, and which in any event do not very definitely appear, this experience suggested to him a profitable opening for acting as a broker for other borrowers, about one hundred and ten loans in all, whom he charged a commission. He personally submitted to the same bank all the applications which were in the names of the borrowers — in one or two the names were fictitious — and ordinarily he received the cheques which were made payable to the applicants. The applications proposed uses for the money which were among those prescribed by the National Housing Act, but the uses actually intended were quite different, and the applications were therefore fraudulent. Lekacos, hearing from Brown that he was for the moment no longer in the building business, but was securing loans for others, told Brown that he would like a loan "to open up a law office," and, when Brown asked him what use should be declared in the application, Lekacos told him to say that it was for redecorating and painting a house of Lekacos's mother. Brown prepared such an application and Lekacos got the money. Later Lekacos borrowed more money, this time upon a fraudulent application in the name of his brother. Kotteakos and Regenbogen — who were partners in the cigarette and pin-ball machine business — had no connection with either of Lekacos's loans. Lekacos introduced Kotteakos to Brown, and he, and later Regenbogen, obtained personal loans upon fraudulent applications. Thereafter the two acted as intermediaries between Brown and other applicants, who filed applications, to the frauds in which both were privy.

These were the facts on which the three appellants were found guilty; but the evidence was not confined to their dealings with Brown; it covered similarly fraudulent applications of many of the other accused, who, as we have said, may be divided into at least eight, and perhaps more, separate and independent groups, none of which had any connection with any other, though all dealt independently with Brown as their agent. Nothing said by Brown about any of the other groups concerned the three appellants; and in this we include not only the acts which he imputed to the others, but any declarations which he put in their mouths. The other important evidence of the prosecution — with the exception of some not very important testimony of two others of the accused who like Brown turned state's evidence — consisted of the testimony of workmen who were said to have done work on the buildings of some of the applicants and of investigators of the Federal Housing Authority, who had examined the uses to which the applicants had in fact put the borrowed money, which they found to have been different from those stated in the applications. Of this testimony that part which showed the discrepancy between the declared uses and the disposition of the money in the cases of other applicants than the three appellants, was wholly irrelevant to establish discrepancies which tended to prove the frauds in the appellants' applications.

All this evidence the judge admitted, because he believed that it was relevant to the proof of a single conspiracy although the accused objected, and demanded that only that evidence which was relevant to the applications of any one group should be admitted against that group. The judge quite naturally also carried over his understanding of the case into his charge. At the outset he told the jury that the "indictment charges but one conspiracy, and to convict each of the defendants of a conspiracy the Government would have to prove, and you would have to find, that each of the defendants was a member of that conspiracy. You cannot divide it up. It is one conspiracy, and the question is whether or not each of the defendants, or which of the defendants, are members of that conspiracy." Later on he said that the question was whether all the accused were "moved by a common purpose to get money by violating the law"; that, if so, those who entered the conspiracy at a later date were responsible for what had gone on before; and that the jury might consider the acts and declarations of any of the conspirators as evidence against all those who were in the conspiracy. He was plainly wrong in supposing that upon the evidence there could be a single conspiracy; and in the view which he took of the law, he should have dismissed the indictment. He was apparently misled by an erroneous understanding of the rule that, when anyone joins an existing conspiracy, he takes it over as it is, and becomes a party to it in its earlier phases, and that the declarations of other conspirators, even though made before he has entered, are competent against him. What he failed to remember was that to bring this rule into operation it is not enough that, when one joins with another in a criminal venture, he knows that his confederate is...