United States v. Orsinger, 22756.

• Decision Date: 03 June 1970
• Docket Number: No. 22756.,22756.
• Citation: 428 F.2d 1105
• Parties: UNITED STATES of America v. Victor J. ORSINGER, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

428 F.2d 1105 (1970)

UNITED STATES of America v. Victor J. ORSINGER, Appellant.

No. 22756.

United States Court of Appeals, District of Columbia Circuit.

Argued March 4, 1970.

Decided June 3, 1970.

Petition for Rehearing Denied July 1, 1970.

Messrs. F. Joseph Donohue and Theodore Kligman, Washington, D. C., for appellant.

Mr. Robert W. Ogren, Asst. U. S. Atty., with whom Messrs. Thomas A. Flannery, U. S. Atty., John A. Terry, Seymour Glanzer, Asst. U. S. Attys., William P. Sullivan and Miss JoAnne LeVeque, Attys., Securities and Exchange Commission, were on the brief, for appellee. Mr. Roger E. Zuckerman, Asst. U. S. Atty., also entered an appearance for appellee.

Before McGOWAN, LEVENTHAL and ROBB, Circuit Judges.

ROBB, Circuit Judge:

The appellant was indicted in fifteen counts. Counts one, two and three charged fraud by wire (18 U.S.C. § 1343), counts four and five, mail fraud (18 U.S.C. § 1341), count six, interstate transportation of a check taken by fraud (18 U.S.C. § 2314), and counts seven through fifteen, larceny after trust (22 D.C.Code § 2203). A jury acquitted the appellant on the first six counts but found him guilty on the nine counts charging larceny after trust, in that he fraudulently converted to his own use $1,150,000 entrusted to him by The American Province of the Sisters of the Divine Savior. He was sentenced to imprisonment for not less than three nor more than nine years on each count, the sentences to run concurrently.

I

All of the offenses charged in the indictment were alleged to have occurred in 1963. In that year, and for some years before, the appellant was a lawyer and real estate man with offices in the District of Columbia. The charges against him had their origin in certain transactions between him and The American Province of the Sisters of the Divine Savior. This organization, a non-profit corporation, was a religious order devoted to nursing, teaching and all forms of charitable work. The projects of the Order were financed by the salaries of the Sisters, by donations, and at times by borrowing of public funds.

The Sisters' public borrowing led to a meeting in May 1962 between the Provincial Superior of the Order, Mother Aquin Gilles, and the appellant. The meeting was arranged by representatives of the Superior Generalate, the Order's parent organization. As a result, the appellant, who was experienced in the financing of religious organizations and was well known to the Superior Generalate, arranged a refinancing of the debts of The American Province. The refinancing was accomplished through a public bond issue underwritten by Keenan & Clarey, a Minneapolis firm specializing in the underwriting of unsecured bonds of religious organizations. The appellant acted as attorney for the Sisters in this matter, but was not compensated for his services. Mother Aquin testified that on one occasion when she mentioned compensation the appellant "said he would not accept any fees", that he "wanted to do this for the Sisters and I never again asked him to remunerate him for his services."

Having arranged refinancing for the Sisters in the fall of 1962 the appellant continued as their legal counsel and financial advisor. They discussed with him a desire to replace or remodel a hospital in Wausau, Wisconsin and a nursing home at Portage which they maintained. This discussion led to a suggestion by the appellant that the necessary funds be obtained through a bond issue, to be arranged through Keenan & Clarey. Mother Aquin testified that on or about May 16, 1963 after many discussions

"* * * I met with Mr. Orsinger, and at that meeting the crystallized form of our proposals were put together and those proposals included taking out a bond issue in the amount of two and a half million dollars of public funds through Keenan and Clarey, and one million dollars of that amount of money would be put in a reserve fund to begin work on Wausau and Portage at such time as we were able to begin and one million and a half was to be entrusted to Victor J. Orsinger for the purpose of assembling a block of property in the Marquette University area on which the Sisters of the Divine Savior would build a house of studies for our young sisters.

* * * * * *

"The proposal was made that it $1,500,000 was to be entrusted to Mr. Orsinger through his attorney account and then through that into Parkwood out of which it would be disbursed for the purpose of assembling a block in the Marquette area.

* * * * * *

"* * * the Sisters of the Divine Savior had entrusted, I mean, were entrusting, one and a half million dollars to Victor J. Orsinger on his own word. It was to be paid into his attorney account and then through Parkwood, Incorporated, he would buy this block * * * but we were not giving it to Parkwood as Parkwood. We were giving it, we were entrusting it to Mr. Orsinger for this assembly of the block for us. * * *"

"Parkwood", referred to by Mother Aquin, was Parkwood, Incorporated, a real estate investment and holding company entirely owned by the appellant.

Mother Aquin testified further that in their meeting in May 1963 the appellant advised the Sisters to acquire an entire block rather than the one-third of a block needed for their project, so that "the part not used by the Sisters would not be used then for any purpose incompatible with a house of studies in this area". The appellant estimated that it would take about two years to assemble the entire block, and according to Mother Aquin he represented that "the Sisters at the end of the two-year period would receive one-third of the block back from Mr. Orsinger, and the $1,500,000 that we had entrusted to him for the purchase of the property", the one-third to be free and clear of all mortgages and encumbrances. The appellant wrote out a summary of his proposal, which included the statement with respect to the disposition of the funds he was to receive: "$1,500,000 to Victor J. Orsinger for purchase of Marquette Univ. area block, to be secured by mortgage on land purchased. 10% interest for year, i. e., $300,000 for 2 years deposited in escrow in beginning." About a week later, around May 22, 1963, the appellant telephoned Mother Aquin and "suggested that the bond issue be raised to $3,000,000 and that the extra $500,000 would be a temporary loan for a (sic) generalate in Rome, and, that would be repaid for us from a bond issue that the generalate would take out later". The appellant's suggestion was adopted, and the amount of the bond issue was increased to $3,000,000.

Early in June the appellant went to Milwaukee to discuss the proposed bond issue and purchase of land. At this time he asked Mother Aquin "if we would give him a $50,000 advance payment so that he could begin the assembly of the block near Marquette". On June 12, 1963 Mother Aquin sent the appellant her organization's check for $50,000 with a covering letter describing it as "the check of $50,000 as advance payment of money needed for the project in the Marquette area". The check was payable to the order of Victor J. Orsinger, Attorney, and was endorsed by him and deposited in the account of Parkwood, Incorporated. By letter dated June 14, 1963 he acknowledged "receipt of the $50,000 advance payment sent by you today as part of the $1,500,000 required for the Marquette area project." On the same day, June 14, 1963, Orsinger wrote to Mother Olympia, Superior General of the Sisters of the Divine Savior in Rome. Referring to the arrangements for a $3,000,000 loan and the disposition of the funds raised he said:

"$1,500,000 will go to Orsinger for purchase of land for the Juniorate near Marquette University. Orsinger will pay the entire cost of this bond issue for two years, namely $150,000 a year. The details of our memorandum of May 16, 1963 have not been changed except to raise the amount from $2,500,000 to $3,000.000.

* * * * * *

"Simply stated, (cf. Memorandum, May 16, 1962), the Sisters will receive the land they need for the Juniorate in Block No. 2, free and clear, at no cost, plus their $1,500,000 back at the end of two years and I would retain the rest of the land in the block."

Noting that $500,000 of the borrowed funds would go to Rome, he added

"You should receive your $500,000 some time around August 1, 1963. Since I am paying the interest costs on this $500,000 also, do you think this $500,000 would take the place of the principal I am supposed to send you in 1963. (Cf. My Memorandum of January 16, 1963.)"

It appeared that the appellant was heavily indebted to the organization in Rome and that substantial payments on his loan were due in 1963.

On June 27, 1963 the Sisters and Orsinger executed a "Memorandum of Agreement" prepared by Orsinger. Mother Aquin signed for the Sisters, and Orsinger signed as "Victor J. Orsinger, Attorney" and "Victor J. Orsinger, President" of Parkwood, Incorporated. The agreement recited that the Sisters "have decided to borrow three million dollars", that "Orsinger, as special legal counsel to the Sisters for this purpose, has assisted the Sisters in arranging this borrowing", that "Parkwood is a real estate corporation, all of whose common stock is owned by Orsinger", and that the agreement was intended to be a "convenient memorandum of the purposes and dispositions of the borrowed funds". The agreement provided for the disbursement of the "$3,000,000 borrowed by the Sisters" at 5% interest, as follows:

"(a) $1,500,000 to Victor J. Orsinger, Attorney, for the purposes described herein;

"(b) $500,000 to the General Council, Sisters of the Divine Savior, Rome, as a temporary loan to be repaid out of 1964 borrowings of the General Council or from other sources;

"(c) $1,000,000 to the Sisters as a reserve fund, which may be reinvested by the Sisters, pending commencement of new building projects in Milwaukee, Wausau, and Portage."

For his part, Orsinger agreed to exert his best efforts and skills "to purchase in his own name or...