U.S. v. McDonald
| Decision Date | 04 May 1978 |
| Docket Number | Nos. 77-2605,77-2702,77-2677 and 77-2721,s. 77-2605 |
| Citation | 576 F.2d 1350 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Henry James McDONALD, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Marcus T. BAUMANN, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Allan J. BESBRIS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Hayes G. STEWART, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Jeffrey R. Feller, O. J. Wilkinson, Jr. of Wilkinson & Quarelli, Phoenix, Ariz., Richard A. Johnson, Payson, Ariz., for defendants-appellants.
Dale Danneman, Asst. U. S. Atty., Phoenix, Ariz., for plaintiff-appellee.
Appeal from the United States District Court for the District of Arizona.
Before WRIGHT and CHOY, Circuit Judges, and POOLE, District Judge. *
An Arizona land fraud scheme which operated from 1967 to 1974 resulted in the conviction of these appellants on counts of mail fraud (18 U.S.C. §§ 1341-42), interstate transportation of fraudulently obtained property (18 U.S.C. § 2314), and aiding and abetting (18 U.S.C. § 2). After considering the assignments of error presented by each appellant, we conclude that the convictions should be affirmed as to all except McDonald. His conviction is reversed.
Jacob Hood formed Western Land Sales (Western) in 1966 to sell Arizona real estate. It sold subdivision lots on contracts, title remaining in trust until a release price was paid. 1 In 1969 Western contracted with Banker's Finance and Holding Company (Banker's) to market the contracts held by Western. Banker's discounted contracts to investors, collected from the buyers of lots, and issued checks for each lot's release from trust. Periodic payments received by Banker's were forwarded to the contract assignee-investors.
Western later signed several subdivision trust agreements requiring payments to be made to the trusts irrespective of lot sales. As a result, its need for ready cash grew. It engaged McDonald Investment Company (MIC) as a second agent for marketing land sale contracts to investors for a commission.
MIC's owner, appellant McDonald, asked for safeguards to insure the soundness of the contracts. Western was to guarantee the contract assignments, 2 place other contracts in escrow to cover defaults, and arrange for an independent agency to collect contract installments and forward them to investors. Credit checks on lot buyers were made at McDonald's request. Western supplied him with its financial statement and recorded the contracts brokered through MIC with the contract assignees shown as first mortgagees.
In the course of this business, Western's receipts from sales of legitimate contracts proved insufficient to cover operating expenses. Western and its agents then wrote spurious contracts of sale to persons who never intended to make payments on them. 3 These "fenceposted" contracts were then sold to investors through Banker's or MIC or pledged as security for loans to Western or Hood. In a few instances the signatures to the contracts were outright forgeries.
At the same time Western continued to contract with legitimate buyers and those contracts were marketed through the same agents. At Western's office Hood kept secret separate files on the fraudulent contracts.
To conceal the fraud Western and Hood supported the forged and fenceposted contracts by making periodic payments on them. These were sent to Banker's, which collected payments on the contracts it had sold, or to Central Service Bureau (CSB), which was employed by Western to collect payments on other assigned contracts. Banker's and CSB forwarded these receipts to the assignees.
Western's financial success depended on continuing brisk sales of contracts because those receipts were the source of periodic payments on bogus contracts. Whenever Western was making payments either because of default by the original obligor or because the contract was a fraudulent one, the assignee was not notified.
CSB kept computer records on all contracts it serviced and indicated in code the contracts on which Western was making the payments. The genuineness of contracts was not readily ascertainable by others, however, and because investors generally received regular payments, their suspicions were not aroused until the operation collapsed.
In 1971 the Securities and Exchange Commission investigated Western which agreed to stop interstate sales of unregistered land sale contracts. Western moved quickly to avoid SEC regulation, however, by selling contracts for sales of lots with cabins and by selling corporate promissory notes secured by first mortgages on lots with cabins. 4 To further the scheme, Hood falsified appraisals to show the existence of cabins where none were built. In truth, of a total of 800 lots, only 12 had cabins. Many lots were assigned twice and some were never released from trust.
In August 1973, Western defaulted on its obligations. Few note holders were able to obtain their lots and those who could found no cabins on them. Many contract assignees discovered that they were holding worthless paper.
On January 12, 1977, a federal grand jury indicted 16 defendants with 54 violations of federal law. Several pleaded guilty, including Jacob Hood, who became a prosecution witness. Others proceeded to trial in two groups. The appellants here were jointly tried and convicted on several counts. Crowell, a co-defendant, was found not guilty.
Each assignment of error is discussed separately.
Appellant Besbris first asserts that the trial court erred in denying his motion for change of venue due to prejudicial pretrial publicity. 5 He also contends that the limited voir dire by the district judge was inadequate in light of the publicity.
Besbris argues that extensive Arizona press coverage of land fraud schemes at the time of trial created a reasonable likelihood that he could not receive a fair trial in the District of Arizona. 6 He claims that the trial judge "perfunctorily" denied his change of venue motion when the circumstances required that it be granted under Fed.R.Crim.P. 21(a). 7
The publicity of which Besbris complains, however, consisted primarily of news stories of Arizona's fraud-ridden real estate business. Besbris was mentioned by name but once, several months before trial, when he was indicted. Articles dealt with land frauds generally and did not focus on these defendants. In this respect, Besbris' appeal differs significantly from those in which prejudicial publicity has been found to have impaired a defendant's right to a fair trial. E. g., Sheppard v. Maxwell, 384 U.S. 333, 86 S.Ct. 1507, 16 L.Ed.2d 600 (1966); Silverthorne v. United States, 400 F.2d 627 (9th Cir. 1968).
Rule 21(a) requires a change of venue when there is in the district "so great a prejudice against the defendant that he cannot obtain a fair and impartial trial . . . ." We do not agree with appellant that general press coverage of Arizona land fraud created such prejudice against him. When a Rule 21(a) motion is made "the ultimate question is whether it is possible to select a fair and impartial jury, and the proper occasion for such a determination is upon the voir dire examination." 8A Moore's Federal Practice P 21.10(3), at 21-10 (1977) (quoting Blumenfeld v. United States, 284 F.2d 46, 50 (8th Cir. 1960), cert. denied, 365 U.S. 812, 81 S.Ct. 693, 5 L.Ed.2d 692 (1961)). See Silverthorne v. United States, 400 F.2d at 639-40. See generally ABA Standards Relating to Fair Trial and Free Press § 3.2, 119-124 (Approved Draft 1968).
The trial judge has "a large discretion" in gauging the effects of allegedly prejudicial publicity and in taking measures to insure a fair trial. United States v. Polizzi, 500 F.2d 856, 879 (9th Cir. 1974), cert. denied,419 U.S. 1120, 95 S.Ct. 802, 42 L.Ed.2d 820 (1975); Silverthorne v. United States, 400 F.2d at 637-38. Besbris has not demonstrated that denial of his motion for change of venue was an abuse of discretion.
He further contends, however, that the trial judge's voir dire was inadequate because jurors were not questioned individually and because the questions proffered by defense counsel were not asked. In analyzing this claim we begin with the proposition that
(u)nless a trial judge clearly has erred in his estimation of the action needed to uncover and prevent prejudice from pretrial publicity, an appellate court should not intervene and impose its estimate.
The court closest to the situation can best evaluate the proper way to walk the difficult line between a vigorous voir dire to determine any possible bias and avoidance of creating bias by specific questions which add 'fuel to the flames' in suggesting the presence of controversial issues.
United States v. Polizzi, 500 F.2d at 880 (citations omitted).
Relying on Silverthorne, Besbris asserts that a voir dire examination that calls only for the jurors' subjective assessment of their own impartiality is inadequate and that general questions addressed to the entire panel do not adequately protect a defendant. The assertion is correct as far as it goes. But we recently explained that, although rigorous voir dire of prospective jurors is required when pretrial publicity is great,
(i)n cases of less publicity, . . . these procedures are not required. Several general questions addressed to the entire panel of jurors, followed by individual questions of jurors who respond affirmatively to the initial inquiries, may be sufficient if it becomes clear that few jurors have any knowledge of the case.
United States v. Giese, 569 F.2d 527 (9th Cir. 1978) (emphasis added) (citations omitted).
In this case the court considered the request for individual voir dire but concluded that, although there had been considerable publicity about land...
To continue reading
Request your trial
-
Church of Scientology of California v. Comm'r of Internal Revenue
...v. Cavallaro, 553 F.2d 300, 305 (2d Cir. 1977). See also United States v. King, 587 F.2d 956, 962 (9th Cir. 1978); United States v. McDonald, 576 F.2d 1350 (9th Cir. 1978). The burglaries, the thefts, the coverup, the falsification of records, all represent actions taken on petitioner's par......
-
U.S. v. Gering
...and the district court's limiting instruction was an adequate direction to the jury to disregard the hearsay. See United States v. McDonald, 576 F.2d 1350, 1356 n. 8 (9th Cir.), cert. denied, 439 U.S. 830, 99 S.Ct. 105, 58 L.Ed.2d 124 (1978); United States v. Kennedy, 564 F.2d 1329, 1334 (9......
-
U.S. v. Conforte
...partiality is as dangerous as the fact of it. Potashnick v. Port City Construction Co., 609 F.2d 1101 (5th Cir. 1980); United States v. McDonald, 576 F.2d 1350 (9th Cir.), cert. denied, 439 U.S. 830, 99 S.Ct. 105, 58 L.Ed.2d 123 (1978); Note, Disqualification of Judges and Justices in the F......
-
U.S. v. Andreen
...of the case. The moving party has the burden of proving clear, manifest, or undue prejudice from a joint trial. United States v. McDonald, 576 F.2d 1350, 1355 (9th Cir.), cert. denied, 439 U.S. 927, 99 S.Ct. 312, 58 L.Ed.2d 320 (1978). Andreen's allegations of prejudice pertain to problems ......