328 U.S. 750 (1946), 457, Kotteakos v. United States

Docket Nº:No. 457
Citation:328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557
Party Name:Kotteakos v. United States
Case Date:June 10, 1946
Court:United States Supreme Court
 
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Page 750

328 U.S. 750 (1946)

66 S.Ct. 1239, 90 L.Ed. 1557

Kotteakos

v.

United States

No. 457

United States Supreme Court

June 10, 1946

Argued February 28, 1946

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

1. Petitioner and 31 others were indicted under § 37 of the Criminal Code for a single general conspiracy to violate the National Housing Act by inducing lending institutions to make loans which would be offered to the Federal Housing Administration for insurance on the basis of false and fraudulent information. Nineteen defendants were brought to trial, and the cases of 13 were submitted to the jury. The evidence proved eight or more different conspiracies by separate groups of defendants which had no connection with each other except that all utilized one Brown as a broker to handle fraudulent applications. Evidence of dealings between Brown and defendants other than petitioner was admitted against petitioner, and the judge instructed the jury, inter alia, that only one conspiracy was charged, and that the acts and declarations of one conspirator bound all. Petitioner and six other defendants were convicted.

Held: The rights of petitioner were substantially prejudiced, within the meaning of § 269 of the Judicial Code, and the judgment is reversed. Berger v. United States, 295 U.S. 78, distinguished. Pp. 756, 777.

2. In applying the "harmless error" rule of § 269, it is not the appellate court's function to determine guilt or innocence, nor to speculate upon probable reconviction and decide according to how the speculation comes out. P. 763.

3. The question is not whether the jury's verdict was right, regardless of the error, but what effect the error had or reasonably may have had upon the jury's decision. P. 764.

4. If one cannot say with fair assurance, after pondering all that happened without stripping the erroneous action from the whole, that the judgment was not substantially swayed by the error, it is impossible to conclude that substantial rights were not affected. P. 765.

5. Where the jury could not possibly have found, upon the evidence, that there was only one conspiracy, it was erroneous to charge that

It is one conspiracy, and the question is whether or not each

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of the defendants, or which of the defendants, are members of that conspiracy.

Pp. 767, 768.

6. Where the instructions obviously confused the common purpose of a single enterprise with the purposes of numerous separate adventures of like character, it could not be assumed that the jurors were so well informed upon the law that they disregarded the permission expressly given to ignore that vital difference. P. 769.

7. In view of a charge in this case that the statements and overt acts of any defendant found to be a conspirator could be considered in evidence against all defendants found to be members of the conspiracy, it could not be concluded that the jury considered and was influenced by nothing except the evidence showing that each defendant shared in the fraudulent phases of the particular conspiracy in which he participated. Pp. 770, 771.

8. Neither Congress, when it enacted § 269, nor this Court, when it decided the Berger case, intended to authorize the Government to string together for common trial eight or more separate and distinct conspiracies, related in kind though they may be, when the only nexus among them lies in the fact that one man participated in all. P. 773.

9. The dangers of transference of guilt from one to another across the line separating conspiracies, subconsciously or otherwise, are so great that no one can say prejudice to substantial right has not taken place. Section 269 was not intended to go so far. P. 774.

10. Each defendant in this case had a "substantial right" within the meaning of § 269 not to be tried en masse for a conglomeration of distinct and separate offenses committed by others. P. 775.

151 F.2d 170, reversed.

Petitioners were convicted under § 37 of the Criminal Code of conspiracy to violate the National Housing Act. The Circuit Court of Appeals affirmed. 151 F.2d 170. This Court granted certiorari. 326 U.S. 711. Reversed, p. 777.

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RUTLEDGE, J., lead opinion

MR. JUSTICE RUTLEDGE delivered the opinion of the Court.

The only question is whether petitioners have suffered substantial prejudice from being convicted of a single general conspiracy by evidence which the Government admits proved not one conspiracy but some eight or more different ones of the same sort executed through a common key figure, Simon Brown. Petitioners were convicted under the general conspiracy section of the Criminal Code, 18 U.S.C. § 88, of conspiring to violate the provisions of the National Housing Act, 12 U.S.C. §§ 1702, 1703, 1715, 1731. The judgments were affirmed by the Circuit Court of Appeals. 151 F.2d 170. We granted certiorari because of the importance of the question for the administration of criminal justice in the federal courts. 326 U.S. 711.

The indictment named thirty-two defendants, including the petitioners.1 The gist of the conspiracy, as alleged, was that the defendants had sought to induce various financial institutions to grant credit, [66 S.Ct. 1242] with the intent that the loans or advances would then be offered to the Federal Housing Administration for insurance upon applications containing false and fraudulent information.2

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Of the thirty-two persons named in the indictment, nineteen were brought to trial3 and the names of thirteen were submitted to the jury.4 Two were acquitted, the jury disagreed as to four, and the remaining seven, including petitioners, were found guilty.

The Government's evidence may be summarized briefly, for the petitioners have not contended that it was insufficient, if considered apart from the alleged errors relating to the proof and the instructions at the trial.

Simon Brown, who pleaded guilty, was the common and key figure in all of the transactions proven. He was president of the Brownie Lumber Company. Having had experience in obtaining loans under the National Housing Act, he undertook to act as broker in placing for others loans for modernization and renovation, charging a five per cent commission for his services. Brown knew when he obtained the loans that the proceeds were not to be used for the purposes stated in the applications.

In May, 1939, petitioner Lekacos told Brown that he wished to secure a loan in order to finance opening a law office, to say the least, a hardly auspicious professional launching. Brown made out the application, as directed by Lekacos, to state that the purpose of the loan was to modernize a house belonging to the estate of Lekacos' father. Lekacos obtained the money. Later in the same year, Lekacos secured another loan through Brown, the application being in the names of his brother and sister-in-law.

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Lekacos also received part of the proceeds of a loan for which one Gerakeris, a defendant who pleaded guilty, had applied.

In June, 1939, Lekacos sent Brown an application for a loan signed by petitioner Kotteakos. It contained false statements.5 Brown placed the loan, and Kotteakos thereafter sent Brown applications on behalf of other persons. Two were made out in the names of fictitious persons. The proceeds were received by Kotteakos and petitioner Regenbogen, his partner in the cigarette and pinball machine business. Regenbogen, together with Kotteakos, had indorsed one of the applications. Kotteakos also sent to Brown an application for a loan in Regenbogen's name. This was for modernization of property not owned by Regenbogen. The latter, however, repaid the money in about three months after he received it.

The evidence against the other defendants whose cases were submitted to the jury [66 S.Ct. 1243] was similar in character. They too had transacted business with Brown relating to National Housing Act loans. But no connection was shown between them and petitioners, other than that Brown had been the instrument in each instance for obtaining the loans. In many cases, the other defendants did not have any relationship with one another, other than Brown's connection with each transaction. As the Circuit Court of Appeals said, there were

at least eight, and perhaps more, separate and independent groups, none of which had any connection with any other, though all

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dealt independently with Brown as their agent.

151 F.2d at 172. As the Government puts it, the pattern was "that of separate spokes meeting at a common center," though we may add without the rim of the wheel to enclose the spokes.

The proof therefore admittedly made out a case not of a single conspiracy, but of several, notwithstanding only one was charged in the indictment. Cf. United States v. Falcone, 311 U.S. 205; United States v. Peoni, 100 F.2d 401; Tinsley v. United States, 43 F.2d 890, 892, 893. The Court of Appeals aptly drew analogy in the comment,

Thieves who dispose of their loot to a single receiver -- a single "fence" -- do not by that fact alone become confederates; they may, but it takes more than knowledge that he is a "fence" to make them such.

151 F.2d at 173. It stated that the trial judge

was plainly wrong in supposing that upon the evidence there could be a single conspiracy; and in the view he took of the law, he should have dismissed the indictment.

151 F.2d at 172. Nevertheless the appellate court held the error not prejudicial, saying, among other things, that "especially since guilt was so manifest, it was `proper' to join the conspiracies," and "to reverse the conviction would be a miscarriage of justice."6 This is indeed the

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Government's entire position. It does not now contend that there was no variance in proof from the single conspiracy charged in the indictment. Admitting that separate and distinct conspiracies were shown, it urges that the variance...

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