U.S. v. Davis

• Decision Date: 12 June 1980
• Docket Number: No. 79-1566,79-1566
• Citation: 623 F.2d 188
• Parties: UNITED STATES of America, Appellee, v. Francis P. DAVIS, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 188

623 F.2d 188

UNITED STATES of America, Appellee, v. Francis P. DAVIS, Defendant, Appellant.

No. 79-1566.

United States Court of Appeals First Circuit.

Argued April 9, 1980.

Decided June 12, 1980.

John F. Cicilline, Providence, R. I., for defendant, appellant.

Stephen G. Milliken, Atty., U. S. Dept. of Justice, with whom Paul E. Murray, U. S. Atty., and Edwin J. Gale, Spec. Atty., U. S. Dept. of Justice, Providence, R. I., were on brief, for appellee.

Before, CAMPBELL and BOWNES, Circuit Judges, LOUGHLIN, ^* District Judge.

LOUGHLIN, District Judge.

In the present action, the defendant-appellant, Frank Davis, following a jury trial, was convicted of the crimes of conspiring to transfer and conceal property of a corporation in contemplation of the corporation's bankruptcy and to conceal corporate property from the corporation's receiver, trustee and creditors, in violation of 18 U.S.C. §§ 371 and 152. Appellant was also convicted of aiding and abetting the bankruptcy fraud, in violation of 18 U.S.C. §§ 152 and 2.

The evidence introduced at trial established that Eugene S. Roberts in concert with the appellant and several others engaged in a scheme to defeat the federal bankruptcy laws. The conspiracy, which existed from approximately February 15, 1977 until the return of the indictment on October 19, 1978, consisted of: 1. the purchase by Roberts, Inc. of substantial inventory on credit without intention of repayment; 2. its storage in the Depot Warehouse; 3. the clandestine removal and unreported sale of said inventory; 4. concealment of the alleged loss of the inventory by burning the Depot Warehouse and creating the appearance that its contents had been stolen and 5. the filing of a petition for bankruptcy and continuing efforts to defraud the creditors of the corporation.

Four issues are presented to this court on appeal: 1. whether evidence of the sworn testimony given by Roberts before the State Fire Marshal in February of 1978 about the Depot fire and the conversations between Roberts and Van Beaver and Roberts and John Adams during the first three months of 1978 was properly admitted into evidence; 2. whether the district court erred in refusing to order the Government to immunize the witness Parente; 3. whether testimony elicited from the witness Gallucci by counsel for co-defendant Van Beaver denied appellant a fair trial; and 4. whether the district court correctly denied appellant's motions for judgment of acquittal and for a new trial.

Turning to the first issue, the appellant contends that the evidence showed only efforts to conceal the conspiracy and not acts in furtherance of the main criminal objective of the conspiracy and as such was not admissible. The Government contends that the evidence proved the transfer and concealment of property of Roberts, Inc. and was properly admitted. The Government contends that a bankruptcy fraud conspiracy is an agreement to conceal property in contemplation of bankruptcy, and that acts and declarations of the co-conspirators during the pendency of the bankruptcy proceedings were admissible evidence of continuing conspiratorial efforts to conceal the assets of Roberts, Inc. in contemplation of bankruptcy.

A brief chronology of the scheme shows that Roberts testified that he planned the scheme with co-defendant, Van Beaver, at a meeting held early in the summer of 1977. In August of 1977, Roberts met with appellant and asked appellant to look for a remote warehouse to "be taken with the possibility of a fire in mind" in connection with "certain business plans". Subsequently, Roberts leased the Depot Warehouse and began to store the large inventory. Two weeks after the first meeting, appellant met with Roberts again. At that time Roberts told appellant "I'm going to take a dive and I've got to cover up my inventory losses." Appellant informed Roberts that he would charge $5,000.00 for burning the Depot Warehouse. Merchandise was stored at the Warehouse and secretly moved and sold from September through November of 1977. The Depot Warehouse was set on fire on November 29, 1977. On December 23, 1977 Roberts filed a petition for bankruptcy in United States District Court. In February of 1978, Roberts was called to the State Fire Marshal's Office to give sworn testimony about the Depot fire. During the first three months of 1978, Roberts had the conversations with John Adams about appellant. In February of 1978, Roberts met with a co-defendant, Van Beaver. The indictment was filed on October 9, 1978.

In oral argument counsel for the appellant argued the appellant was not aware of the details of the plan, did not agree to further the bankruptcy scheme, and at no time had the specific intent to violate the bankruptcy law. Appellant argues that he was not a participant in the conspiracy, rather that his agreement was to set the fire and had nothing to do with the bankruptcy. As the trial record indicates, the testimony of Roberts shows that the appellant had knowledge of the bankruptcy scheme. Indeed, appellant's counsel conceded at trial that Robert's testimony established that "at some point he said to Davis 'you know I'm going to go into a bankruptcy, I'm going to defraud some people' ". The appellant Davis was co-conspirator in the conspiracy to defeat the federal bankruptcy laws. As the Eighth Circuit previously stated:

Once there is satisfactory proof that a conspiracy has been formed, the question of a particular defendant's connection with it may be merely a matter of whether the stick fits so naturally into position in the fagot as to convince that it is part of it. It is therefore possible for the circumstances on an individual defendant's participation in an established conspiracy to become substantial from their weight in position and context, though in abstraction they may seem only slight. Cf. Galatas v. United States, 8 Cir., 80 F.2d 15, 24; Marx v. United States, 8 Cir., 86 F.2d 245, 250. And, of course, a defendant can join a conspiracy at any time and may be found to have done so when, with knowledge of its existence, he has undertaken to further its design. Thomas v. United States, 8 Cir., 156 F. 897, 912, 84 C.C.A. 477, 17 L.R.A.,N.S. 720; Allen v. United States, 7 Cir., 4 F.2d 688, 691; Parnell v. United States, 10 Cir., 64 F.2d 324, 327.

Phelps v. United States, 160 F.2d 858, 867-868 (8th Cir. 1947).

As a co-conspirator, the declarations and acts of the various members of the conspiracy made during the conspiracy in furtherance of the conspiracy become admissible against Davis. Pinkerton v. United States, 328 U.S. 640, 646-647, 66 S.Ct. 1180, 1183-84, 90 L.Ed. 1489 (1946); United States v. U. S. Gypsum Co., 333 U.S. 364, 393, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948). Conversely, acts and declarations by a co-conspirator not made in furtherance of the conspiracy during the conspiracy are not admissible against each co-conspirator. The question we are presented with in this case, then is whether the evidence was of acts and declarations made during and in furtherance of the conspiracy or was of acts and declarations made to conceal the conspiracy. The United States Supreme Court has clearly stated that:

This prerequisite to admissibility, that hearsay statements by some conspirators to be admissible against others must be made in furtherance of the conspiracy charged, has been scrupulously observed by federal courts. The Government now asks us to expand this narrow exception to the hearsay rule and hold admissible a declaration, not made in furtherance of the alleged criminal transportation conspiracy charged, but made in furtherance of an alleged implied but uncharged conspiracy aimed at preventing detection and punishment. . . . We are not persuaded to adopt the Government's implicit conspiracy theory which in all criminal conspiracy cases would create automatically a further breach of the general rule against the admission of hearsay evidence.

Krulewitch v. United States, 336 U.S. 440, 443-444, 69 S.Ct. 716, 718, 93 L.Ed. 790 (1949). See also Lutwak v. United States, 344 U.S. 604, 616, 73 S.Ct. 481, 488, 97 L.Ed. 593 (1953).

While Krulewitch and Lutwak clearly state that after the central criminal purposes of a conspiracy have been attained, a subsidiary conspiracy to conceal may not be implied from circumstantial evidence showing merely that the conspiracy was kept a secret and that the conspirators took care to cover up their crime in order to escape detection and punishment, the Court in Grunewald v. United States, 353 U.S. 391, 402, 77 S.Ct. 963, 972, 1 L.Ed.2d 931 (1957), makes a crucial distinction:

By no means does this mean that acts of concealment can never have significance in furthering a criminal conspiracy. But a vital distinction must be made between acts of concealment done in furtherance of the main criminal objectives of the conspiracy, and acts of concealment done after the central objectives have been attained, for the purpose only of covering up after the crime. Supra, 405, 77 S.Ct. 974.

The court finds that the acts and declarations of Roberts introduced by the evidence in question were done in furtherance of the main criminal objectives of the conspiracy and as such were admissible against the appellant, Davis. Forman v. U. S., 361 U.S. 416, 80 S.Ct. 481, 4 L.Ed.2d 412 (1960); U. S. v. Del Vallee, 587 F.2d 699, 704 (5th Cir. 1979); U. S. v. Portner, 462 F.2d 678 (2nd Cir. 1972), cert. denied, 409 U.S. 983, 93 S.Ct. 319, 34 L.Ed.2d 246 (1972). The court is in agreement with the district court judge that: "the conspiracy doesn't go out when the fire went out. It continues."

The second issue before the court on appeal is whether the district court erred in refusing to order the Government to immunize the witness, Parente. Anthony Parente was subpoenaed by the Government as a witness. He subsequently refused to answer all material questions on the grounds of self-incrimination. Parente was the...