U.S. v. Massa, s. 83-1756

• Decision Date: 06 August 1984
• Docket Number: Nos. 83-1756,83-1803,s. 83-1756
• Citation: 740 F.2d 629
• Parties: 16 Fed. R. Evid. Serv. 339 UNITED STATES of America, Appellee, v. James MASSA, Appellant. UNITED STATES of America, Appellee, v. Duane SKINNER, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 629

740 F.2d 629

16 Fed. R. Evid. Serv. 339

UNITED STATES of America, Appellee, v. James MASSA, Appellant.

UNITED STATES of America, Appellee, v. Duane SKINNER, Appellant.

Nos. 83-1756, 83-1803.

United States Court of Appeals Eighth Circuit.

Submitted March 12, 1984.

Decided Aug. 6, 1984.

F. Lee Bailey, Kenneth J. Fishman, Daniel Patrick Leonard, Boston, Mass., for appellant, James Massa.

Byron Fox, Kansas City, Mo., for appellant Duane Skinner.

Thomas E. Dittmeier, U.S. Atty., Terry I. Adelman, Asst. U.S. Atty., Ronald P. Kane, Sp. Asst. U.S. Atty., St. Louis, Mo., for appellee.

Before HEANEY, Circuit Judge, and FLOYD R. GIBSON and HENLEY, Senior Circuit Judges.

HEANEY, Circuit Judge.

James Massa and Duane Skinner appeal their criminal convictions on a forty-three count indictment arising out of the massive swindle of the Stix & Company brokerage firm (Stix). The indictment charged Massa and Skinner with participation in a scheme masterminded by unindicted coconspirator Thomas Brimberry to loot the Stix firm. Brimberry, a one-time margin clerk for Stix, devised a plan for creating false internal records at Stix which allowed funds to be withdrawn from various accounts on the basis of nonexistent collateral. Count one of the indictment charged Massa, Skinner and others with conspiracy. Counts Two through Forty-three charged substantive violations including mail fraud, wire fraud, employment of manipulative and deceptive devices and contrivances in the purchase of Stix stock, causing Stix to keep false records, interstate transportation of false securities, and causing information to be kept from the Internal Revenue Service (IRS). After a fourteen-day trial, the jury convicted both defendants of all counts against them.

On appeal, both defendants challenge the sufficiency of the evidence and the admission of coconspirator hearsay statements. Both defendants also contend that a prejudicial variance existed between the single conspiracy alleged in the indictment and the multiple conspiracies they say were proved at trial. In addition, Skinner argues that the district court should have granted him a severance and that he was deprived of his right to a speedy trial under 18 U.S.C. Sec. 3161(c) (1982). For the reasons detailed below, we affirm Massa's conviction on all counts. We also affirm Skinner's conviction on all but three counts of transporting forged securities in interstate commerce in violation of 18 U.S.C. Sec. 2314 (1982).

I. BACKGROUND

The scheme to loot Stix and spend the money without being detected by the IRS and other governmental agencies was complex, involving some acts in and of themselves not illegal except that they were financed with misappropriated funds. At the center of the scheme was Brimberry and his manipulation of the margin accounts at Stix. As a margin clerk at Stix, Brimberry was responsible for properly maintaining the margin accounts and making sure that they were backed by adequate collateral. In about 1976, he began to make false entries into ten margin accounts, showing the receipt of nonexistent fully paid securities into the accounts. The ten accounts included five controlled by Brimberry, in various straw names; two accounts in the name of Jerry Maeras, an associate of Brimberry's; two accounts in Massa's name; and one account in the name of Arthur Miller, Jr., Brimberry's brother-in-law. The false entries allowed the purported owners of the accounts to withdraw huge sums of money from Stix. Over the life of the scheme, over $16 million was embezzled from Stix in this manner. Massa received approximately $2.5 million of this sum.

The participants in the scheme used various means to avoid detection and maximize their chances for continued success. An ongoing threat was that Stix auditors or government regulatory authorities would count the securities in the vault and realize that the numbers in the company's accounting records were inflated. To avoid this problem, Janice Brimberry, Thomas Brimberry's wife, and others purchased blank stock certificates from a firm in Chicago and had the names of real securities printed on them. Maeras forged the names of the presidents and secretaries of these firms on the certificates and Thomas Brimberry placed these fraudulent certificates in the vault at Stix.

Money could not be withdrawn from the margin accounts unless Stix showed the required "net capital" invested in the firm. Using embezzled money, Massa helped Brimberry set up subordinated loans to Stix which were counted as net capital by the regulator authorities and allowed the conspirators to withdraw more money from the company. The first of these loans was ostensibly obtained from a person named A.E. Shaw. Shaw was the maiden name of the wife of Maeras. She never used that name except in connection with this loan transaction. Massa drew up the loan agreement for $150,000 and told Maeras to sign the agreement with the name A.E. Shaw. Massa then had his secretary notarize the agreement. Massa acted as the intermediary between "A.E. Shaw" and Stix. He transferred the money to Stix and had Stix send the interest checks to him. He would then pass the checks on to Maeras with Brimberry's permission, or to Skinner, Brimberry's runner. Brimberry told Stix that Shaw was a wealthy widow who was related to the president of Southern Illinois University and owned an island in the Caribbean. Massa confirmed this story to a Stix officer, saying Shaw was a "well-to-do lady." In fact, Maeras's wife had no money, as Massa knew, and the money came through Brimberry from Stix.

In approximately 1978, Massa arranged another subordinated loan from what purported to be the "Helen Kamadulski Trust." Helen Kamadulski is the maiden name of Brimberry's mother-in-law. She never used that name and neither knew of, nor received any income from, the trust. According to documents prepared and forwarded to Stix by Massa, he was the trustee and the settlor was a "January Management Company." The trust agreement showed Massa's personal legal secretary as the secretary of the settlor corporation. She at first refused to sign the trust agreement because she knew the January Management Company did not exist. Massa eventually convinced her to sign. In total, the Helen Kamadulski trust loaned Stix $300,000, all of it embezzled from the ten margin accounts at Stix. Massa deposited the interest from the loan, approximately $101,000, in his personal checking account and converted it to his own use.

In order for the scheme to grow to the dimensions that it eventually did, it was necessary for members of the scheme to gain control of the Stix firm. During 1979, Massa purchased controlling interest in Stix using approximately $1 million Brimberry embezzled from the ten padded margin accounts. The money came out of Stix through a series of complicated financial transactions and was sent to Massa in cashier's checks in the names of A.E. Shaw and J.A. Miller. Massa then wrote checks payable to Stix for the stock. Massa claimed at trial that he thought the money came from Brimberry personally; but at the time he purchased the stock, Massa represented to the members and officers of Stix that he was using his own money.

After buying controlling interest in the firm, Massa removed the chief financial officer and another person from the board of directors and added Brimberry. He further promoted Brimberry to senior vice president in complete charge of the operations section of the firm--the section that oversaw the major accounts and the flow of cash from the firm. Massa instructed everyone at Stix, including its president, that Brimberry's directives were to be followed. He told the president of the firm that anyone who disagreed with Brimberry and tried to go over his head took the chance of being fired. After Massa took control of the firm, the amount of money he was withdrawing from his margin accounts increased substantially. In 1981, when independent auditors questioned evidence of serious cash shortages at Stix, Massa told Brimberry to "fire the auditors." He also caused the board to adopt a resolution granting him consulting fees which totaled over $75,000.

From about 1978 to 1981, participants in the scheme began to exhibit a more lavish lifestyle. Brimberry, Massa, Skinner and others took frequent trips to Las Vegas together, sometimes as often as twice a month. They also traveled on more than one occasion to Hawaii, Disney World, the Bahamas, and Monte Carlo. Brimberry was building a very expensive home in Granite City, Illinois. He became concerned that the IRS might notice his relatively sudden show of wealth and inquire about his source of income. He therefore set up a loan for himself from Massa for $250,000. This money too came from the funds embezzled from Stix. Massa wrote Brimberry a check for the amount.

Another facet of the overall scheme to loot Stix and spend the money undetected was the creation of corporations fronted by Skinner for Brimberry. The largest of these was Miller Excavating, Inc. Massa incorporated this company and was an officer, director and shareholder. Arthur Miller, Jr., and Maeras were also officers and Skinner acted as president from 1978 until approximately 1981. More than $1.3 million of Stix money went to fund the operations and purchase of heavy equipment for the company. In 1980 and 1981, the name of the corporation was changed first to Bernate, Inc., and then to MZA, Inc. Brimberry continued to fund the corporation with Stix money and Skinner continued to act as president. Skinner also fronted two other corporations for Brimberry: Century III and Astro Travel. These corporations were also funded with approximately $395,000 in money embezzled from Stix. Massa was the attorney for, and officer and stockholder in, all of these corporations.

In addition to fronting corporations for Brimberry, Skinner did the odd jobs necessary to facilitate the scheme. On...