31 F.2d 229 (2nd Cir. 1929), 167, United States v. Austin-Bagley Corporation

Docket Nº:167.
Citation:31 F.2d 229
Case Date:March 11, 1929
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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31 F.2d 229 (2nd Cir. 1929)




No. 167.

United States Court of Appeals, Second Circuit.

March 11, 1929

Louis Marshall, of New York City, for appellant Fingerhood.

Lewis Landes, of New York City, for other appellants.

Richard H. Templeton, U.S. Atty., of Buffalo, N.Y. (Harold E. Orr, Asst. U.S. Atty., of Buffalo, N.Y., of counsel), for the United States.

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The indictment alleged that the defendants had conspired to violate the act, 'in that they would * * * sell * * * alcohol for beverage purposes ' which was 'fit for use for beverages purposes and specially denatured alcohol, * * * contrary to and otherwise than as authorized by the National Prohibition Act. * * * For a better understanding of the character and scope of said * * * conspiracy * * * reference is hereby made to the following specifications of things which * * * some of the defendants were to do * * * in * * * carrying out the said * * * conspiracy. ' Fingerhood, one of the defendants, was to become associated as general sales manager with the Waterloo Company, a distillery authorized to make and denature alcohol. He was to take general supervision of it under permits to sell completely denatured alcohol, but to sell and ship specially denatured alcohol under false billings to persons who had no permits to buy. He was to report this to the authorities as completely denatured alcohol, and to ship it as such, but to arrange with the Standard Solvents Company, another corporation, to make false records that it had received corresponding amounts of completely denatured alcohol, which they were to pretend to sell. There was, however, no express allegation that the purchasers were to use the specially denatured alcohol for beverage purposes. The other defendants were to play prearranged parts in this plan not necessary to state in detail.

The evidence was such as allowed the jury to find the following facts: W. H. Long &

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Co., a corporation at Portchester, N.Y., had a permit to denature 50,000 gallons of alcohol a month. Of its 1,000 shares of stock, 559 were owned by Boris Fingerhood, the defendant Fingerhood's brother, and 101 by Bauer, another defendant, its president, and Fingerhood 'exercised general supervision' over its affairs because of his brother's interest. In 1924 the Treasury had ruled that, if a distillery owned a denaturing plant, the latter might withdraw unlimited amounts of alcohol from the former, and Fingerhood said that 'there was something in there that was for him.'

The Waterloo Distilling Company operated a distillery in Seneca county, some 50 miles west of Syracuse, N.Y., and was owned by a number of Italians. In March, 1925, being in need of funds, Fingerhood lent them $10,000, for some undisclosed reason, and in the same month sold them all the stock of the Long Company, so that they should have an appurtenant denaturing plant in New York, though they already had one at Waterloo. The necessary funds, $50,000, were provided by Fingerhood's wife, who took a note of the company with the shares as security. The Long Company apparently played no part in the subsequent conspiracy, and was important only as showing how the defendants became connected with the enterprise at Waterloo. In the following May, Fingerhood organized the Austin-Bagley Company, with 750 shares, of which he originally held 250, and his attorney, one Harper, who had advised him in the transaction, 150. Before the following March, Fingerhood had acquired 650 of the shares, and Labate, one of the owners of the Waterloo Company, held the remaining 100; whether there were subsequent changes in ownership does not appear.

Shortly after its organization the Waterloo shareholders sold all their shares to the Austin-Bagley Company, except for some trivial holdings to qualify directors, and received in exchange $145,000 of its bonds. The Waterloo Company was then in straits, and its only substantial asset was its permit to make alcohol and run a denaturing plant. The investment of the shareholders had been the same as the face of the bonds.

The events relied on by the prosecution to show the execution of the conspiracy did not begin for over a year, or until October, 1926. By that time Harper, Fingerhood's lawyer, had been made prohibition administrator for the district comprising the Waterloo distillery, to which he assigned one Hoyt Chamberlain, a prohibition agent, whom Harper's predecessor, Roberts, had just suspended in the preceding August. On October 10th Harper transferred one Takel, who had for long been an official gauger at the Waterloo denaturing plant, to the distillery, and put another official, Jackson, in his place, who had been a minor agent of the Collector at the distillery. On October 4, 1926, Bauer became president of the Waterloo Company; Labate was its other director and its secretary and treasurer.

Bauer had already procured quarters in Syracuse for a corporation organized in the preceding August, called the Standard Solvents & Chemical Corporation, of which a defendant Joseph Beck was put in charge, who with another defendant, Ralph Beck, had been a laborer with the Long Company. Ralph Beck organized another corporation in June, 1926, which did business also in Syracuse, ostensibly buying from the Standard Company. The defendant Lagier, who had been a truckman in New York, came to take charge of the trucking for the Waterloo Company and procured quarters for his drivers. He had charge of three Mack trucks which the Long Company had formerly used and these were housed in the Waterloo garage.

For the three months of October, November, and December, 1926, the official reports of the Waterloo Company showed the shipment of 3,894 drums of completely denatured alcohol to the Standard Company, 649 in October, 1,654 in November, and 1,591 in December. The Standard Company recorded on its books up to November 23d the receipt of 2,061 drums from the Waterloo Company (as against 2,151 reported by that company), and that of these it had in turn sold 1,219 to R. Beck & Co. There were then found at its warehouse 740 drums, which did in fact contain completely denatured alcohol. Ralph Beck reported that he had sold the 1,219 drums to customer's of whom after some hesitation he produced a list. There were all separately called to the stand, and each denied that he had bought any alcohol of Beck.

Between October 11 and October 15, 300 drums of what purported to be completely denatured alcohol were shipped as machinery, scrap, or rags, from Seneca Falls, through the connivance of the local agent, whom the shipper corrupted. This agent, one Felter, swore that Fingerhood was the person who shipped some of these, but the identification was weak and seriously impaired. Felter also swore that Bauer had been present on one occasion. Some of these cars were seized

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and found to contain specially denatured alcohol. Similar falsely billed alcohol was also shipped for Cayuga and Geneva, and a large number of drums from Syracuse. In some cases the trucks delivering these were identified by their numbers as being the Mack trucks of the Waterloo Company; several of the cars were seized and found to contain specially denatured alcohol. The shipper's signature on a number of the bills of lading was identified as Lagier's, and in at least one case as Bauer's. The records of the Waterloo Company showed corresponding shipments of completely denatured alcohol upon the dates when the drums were shipped from these various stations. The drums found were of a make of which the Waterloo Company bought about 8,000 during 1926. Apparently, though the evidence as to this is not wholly clear, the maker...

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