United States v. Alper, 257.

• Decision Date: 20 June 1946
• Docket Number: No. 257.,257.
• Parties: UNITED STATES v. ALPER.
• Court: U.S. Court of Appeals — Second Circuit

156 F.2d 222 (1946)

UNITED STATES v. ALPER.

No. 257.

Circuit Court of Appeals, Second Circuit.

June 20, 1946.

Louis Kaye, of New York City (Abraham J. Gellinoff, of New York City, of counsel), for appellant.

John F. X. McGohey, U. S. Atty., of New York City (Harold J. McAuley, Asst. U. S. Atty., of New York City, of counsel), for appellee.

Before L. HAND, SWAN and FRANK, Circuit Judges.

SWAN, Circuit Judge.

Upon a jury trial the appellant was convicted under an indictment based on section 29, sub. b(1) of the Bankruptcy Act, 11 U.S.C.A. § 52, sub. b(1), which makes it a criminal offense for any person to have "knowingly and fraudulently (1) concealed from the receiver, custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or from creditors in any proceeding under this title, any property belonging to the estate of a bankrupt." The indictment alleged that an involuntary petition in bankruptcy was filed against Sol Chernow on October 22, 1940, he was adjudicated bankrupt on November 7, 1940, a trustee of his estate was elected on December 12, 1940 and thereafter qualified as such, and that from October 22, 1940 up to the date of filing the indictment (November 9, 1944) the defendant "did unlawfully, wilfully, knowingly and fraudulently conceal from the said trustee" 140 cases of distilled spirits having a value of approximately $2800 and belonging to the estate in bankruptcy of said Chernow. The appeal questions the sufficiency of the evidence, the adequacy of the charge to the jury, and the propriety of several rulings on evidence.

The appellant's first contention is based on the claim that the evidence was insufficient to establish the crime charged and consequently the court erred in denying a motion for a directed verdict of acquittal. This contention is not supportable. The bankrupt, who had pleaded guilty to a similar charge, was a witness for the prosecution. He testified that he purchased from one Huggins a bar and grill known as "The Red Arrow" and to finance the transaction borrowed $1,000 from the appellant, agreeing to repay it, with $250 interest, by a series of $25 checks payable weekly, and turning over as security a certificate for 50 shares of stock in a corporation which owned a bar in Manhattan. In April 1940 the appellant also acquired from Huggins $250 of notes made by the bankrupt, whose total indebtedness to the appellant thus became $1,500. After paying some of the checks Chernow became in default and in August 1940 told the appellant that he could not pay. Thereupon the appellant suggested that Chernow go into bankruptcy "and take plenty of liquor. I will take it away from you. Whatever will be the difference, I will pay it to you." At that time according to Chernow's testimony his debt to the appellant was $860 or more. During September and early October Chernow purchased on credit 228 cases of liquor of a value of about $20 a case. After its delivery at "The Red Arrow" he proceeded to secrete it. He testified that he delivered to the appellant or his nominees a total of 140 cases and that on October 10th the appellant returned the stock certificate he had held as security for the debt. Having so disposed of the liquor Chernow made an assignment for the benefit of creditors, which was followed by the involuntary petition of October 22, 1940 and the adjudication of November 7th. In his schedules the bankrupt did not list the appellant as a creditor; nor did the appellant file any claim. This was not due to lack of knowledge of the bankruptcy; in a conversation with agent Colby of the Federal Bureau of Investigation in 1943, the appellant stated that Chernow was still indebted to him and that he had refrained from filing a claim in the bankruptcy because he believed Chernow would pay him in the future after getting back into business.

The appellant's argument as to insufficiency of the evidence rests chiefly on the point that the prosecution failed to prove that he knew that a trustee had been appointed; hence he could not be guilty of knowingly concealing from the trustee assets of the estate. Particular reliance is placed on United States v. Yasser, 3 Cir., 114 F.2d 558, 560, where the court said: "It must, therefore, appear that the defendant had actual knowledge of the existence of a receiver or trustee in bankruptcy or that he wilfully closed his eyes to facts which made the existence of such an officer obvious." In the case at bar not only did the accused know of the bankruptcy, but himself suggested it, telling Chernow that after he (Alper) had been satisfied out of the liquor the bankrupt was to purchase, he would turn back the rest. This clearly justified the inference that he expected the bankrupt to keep it from his trustee, if one should be appointed, and in any event from his creditors. See United States v. Weinbren, 2 Cir., 121 F.2d 826, 828. The secretive way in which the purchased liquor was placed about in various caches was unanswerable proof that it was to be kept from the bankrupt estate. The bankrupt was plainly guilty of a fraudulent concealment and the evidence, if believed, was ample to sustain the defendant's conviction as a principal for aiding and abetting the bankrupt, 18 U.S.C.A. § 550, with respect to such part of the 140 cases as were not required to pay the debt to Alper, had the case been submitted to the jury on that theory.

The appellant's complaint as to the charge is well taken. On the bankrupt's own story part of the liquor turned over to the appellant was to pay the bankrupt's debt. To this extent the transfer was a preference, not a concealment of assets. See Levinson v. United States, 6 Cir., 47 F.2d 451. The court was requested to charge on this subject but refused to do so. The fifth request read as follows: "If the defendant received property in payment of a debt due from the bankrupt, it may have been a preference but not a concealment within the scope of the present indictment."

This was an accurate statement of the law and it, or some equivalent charge, should have been given to the jury. It is true that 140 cases of liquor at $20 a case amounted to much more than the bankrupt owed the appellant, but the jury might not have believed the liquor worth $2800. While it seems unlikely that they would have found that the accused took only enough to satisfy the debt, we cannot say that the failure to enlighten the jury as to the difference between preference and concealment was harmless error. Cf. Bollenbach v. United States, 66 S.Ct. 402. Particularly is this true because the court began its charge with the statement that the Government contended that Alper caused Chernow to turn over to him 140 cases of liquor in payment...