U.S. v. O'Brien, s. 78-1970

Decision Date06 May 1980
Docket NumberNos. 78-1970,78-1972 and 78-1982,s. 78-1970
Citation618 F.2d 1234
Parties5 Fed. R. Evid. Serv. 1236 UNITED STATES of America, Plaintiff-Appellee, v. Morgan O'BRIEN, Donald Sheehy, and David Mizaur, Defendants-Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

John A. Meyer, Chicago, Ill., for Sheehy.

Kenneth L. Cunniff, Chicago, Ill., for Mizaur.

Jeffrey Steinback, Chicago, Ill., for O'Brien.

Thomas P. Sullivan, U. S. Atty., Gerald J. Rafferty, Asst. U. S. Atty., Chicago, Ill., for plaintiff-appellee.

Before SPRECHER and WOOD, Circuit Judges, and CAMPBELL, Senior District Judge. *

WILLIAM J. CAMPBELL, Senior District Judge.

Appellants were convicted of conspiring to commit fraud by wire communication, in violation of 18 U.S.C. § 371, and of actual wire fraud, in violation of 18 U.S.C. § 1343.

The indictment alleged that in June of 1974, appellants O'Brien, Mizaur, Sheehy, and others 1 conspired together to devise a scheme to defraud various poultry companies of their products. The indictment also charged appellants with use of wire communications in the planning and implementation of their scheme.

In June of 1974, Warren Tauber met with appellants O'Brien, Mizaur and Sheehy, along with Frank Turner and Burton Brown, for the purpose of devising a "scam" operation. Several suggestions were considered, and ultimately they devised a scheme whereby large quantities of poultry would be purchased on credit over a short period of time, and payment would never be made. At subsequent meetings that year the scheme was further refined. The evidence at trial showed that Mizaur and Sheehy suggested the use of the Porter Trading Co. to purchase the poultry. Porter Trading Co. had been established during the summer of 1974 by Mizaur and Sheehy. Mizaur and Sheehy already owned Beef's Finest, a purveyor of home freezer meats. Upon establishing the new company, they installed George Porter, an employee of Beef's Finest since April 1974, as president of Porter Trading Co. The Porter Trading Co. consisted of a one room office directly behind Mizaur's Beef's Finest store. A Porter Trading Co. telephone extension was installed in the Beef's Finest Shop, so that orders could be placed from the latter shop. Initially, Porter placed an order for pork products. Shortly thereafter, however, appellants arranged for Porter to hire one Hal Brenner, who was in fact Warren Tauber, to handle the ordering. Tauber, Turner and Mizaur would actually order the poultry products, posing as the fictitious Brenner. False credit references were prearranged by Mizaur and Sheehy at the Dubuque Packing Co., and by Morgan O'Brien at R. O'Brien & Sons, of which he was a part owner. In addition, Burton Brown rented an office and listed a phone in the name of American Finance and Factoring Co. to provide a further credit reference for Porter Trading Co.

Once the poultry suppliers verified the credit references, they would contact Porter Trading to indicate their willingness to do business. The call would be received by Sheehy on the Porter Trading Co. extension at Beef's Finest. Sheehy would in turn contact Tauber, or whoever was playing the role of Brenner that day, and he would place a large order for poultry on credit. The poultry was then delivered to a cold storage company where it was in turn sold to R. O'Brien & Sons or to legitimate purchasers. During the course of the scheme, nine companies made twenty-five shipments to Porter for a total of $318,746.20.

Warren Tauber ultimately agreed to cooperate with the Federal Bureau of Investigation. On June 8, 1976, Tauber telephoned both O'Brien and Mizaur and recorded those conversations. Tauber also contacted Sheehy by telephone on July 26, 1976. In those conversations appellants made incriminating statements regarding their involvement in the poultry scheme. There were also references made to invoking the Fifth Amendment before the Grand Jury, both by Tauber and by the persons to whom he spoke. At trial the Government sought introduction of those tapes, with the references to appellants' invoking the Fifth Amendment redacted. The tapes were admitted as admissions by the defendants, over objections.

In addition to the recorded conversation, the Government also elicited testimony regarding two prior similar acts of fraud involving appellants. The first prior similar act involved the removal of labels from inedible pork snouts to be replaced by labels indicating the more costly edible pork snouts. This was done at R. O'Brien & Sons by Tauber and Turner, acting with the approval of Morgan O'Brien. These acts occurred during the summer of 1972. The second prior similar act admitted into evidence involved a scheme to defraud Dubuque Packing Co. The principal perpetrator of this scheme was Tauber. He arranged, through John Sullivan, the general manager of the Chicago office of Dubuque Packing, to purchase meat products at a price significantly below market value. Sullivan would prepare false invoices reflecting a lesser purchase at its appropriate price and a substantially larger amount of meat products would actually be delivered to Tauber's meat company in Chicago. Once Tauber had sold the meat products to others, such as Sheehy at Porter Trading Co. and R. O'Brien & Sons, Tauber would pay Sullivan a kickback for his participation. This scheme was ongoing at the time that Tauber, Sheehy, Mizaur and O'Brien were meeting to set up the poultry scheme. During those meetings Tauber described the ongoing arrangement with Sullivan and inquired of O'Brien regarding Sullivan's reliability. Tauber also asked Sheehy's advice on which meat products would be easiest to dispose of quickly. Sheehy also agreed to purchase some of the meat products from Tauber through the Porter Trading Co. Mizaur also participated in these discussions.

The District Judge considered the question of the admissibility of the edited taped conversations and of the alleged prior similar acts at length. Extensive argument addressing these issues was heard prior to the selection of the jury. The District Judge concluded that the taped conversations once the references to the defendants' possible invocation of the Fifth Amendment were removed constituted admissions by the respective defendants and were admissible. With regard to the prior similar acts, the Court concluded that they were admissible under Federal Rule of Evidence 404(b) for the purpose of establishing intent, absence of mistake or accident and the relationship between the defendants.

The appellants claim that the admission of this evidence constituted reversible error. In addition, appellants attack the convictions on the grounds that the prosecutor made prejudicial statements in closing rebuttal; that evidence relating to plea related discussions was improperly admitted, and that appellants were denied their Sixth Amendment right to confrontation due to the government's use of leading questions.

Appellants' claims of prejudicial comment during the government's closing rebuttal can be summarized as follows. First, appellant O'Brien claims that government counsel improperly attributed damaging admissions to his counsel with respect to false credit references. Second, O'Brien claims he was severely prejudiced by the government attorney's remark that O'Brien's counsel was "playing fast and loose with the facts," and that the Court's subsequent curative remarks and instructions were inadequate. Third, appellants contend the government improperly commented upon their telephone records in evidence. And fourth, O'Brien claims that the prosecutor made improper reference to his failure to testify. These matters, and the Court's handling of them, are discussed more fully in Section III, infra.

Appellants' argument with respect to plea negotiations is based on the admission of a recorded conversation between Tauber and Sheehy relating to the possibility of "cutting a deal" with the FBI. Tauber asked Sheehy if he thought a deal was possible, and Sheehy responded that he doubted it, but that the FBI Agent had stated, "I'm not promising you anything, but if you want to talk, . . . maybe I can help you." The Government contends that the entire conversation between Tauber and Sheehy simply indicated that Sheehy was indecisive as to how to approach the investigation, and further, that because the statements were not made to an agent of the Government they do not constitute plea negotiations.

Finally, appellants contend that the District Court permitted excessive use of leading questions of a key witness so as to constitute a denial of their Sixth Amendment right to confrontation. The Government admits to the use of leading questions during direct examination of Warren Tauber, but argues that the District Judge has discretion under Rule 611(c) of the Federal Rules of Evidence to permit the use of leading questions in some instances, that the Court exercised that discretion in the present case, and that the Court did not abuse its discretion.

We affirm the decision of the District Judge as to each of the points raised by appellants.

I. THE PRIOR SIMILAR ACTS

Evidence of prior similar crimes or acts are admissible if such acts have a "substantial relevance" to an issue other than a general criminal character and a propensity to commit criminal acts. United States v. McPartlin, 595 F.2d 1321 (7th Cir. 1979). Here, the government offered the prior similar schemes to negate the defense of absence of criminal intent. The testimony of Tauber in which the prior schemes were recounted would, indeed, tend to show that at the time the defendants ordered meat products from various purveyors their intent was to defraud them rather than engage in legitimate business transactions.

Appellants' attack on the admission of this testimony is three-pronged. They claim: (1) that the prior acts were not...

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