847 F.2d 313 (6th Cir. 1988), 87-1453, United States v. Horton

Docket Nº:87-1453.
Citation:847 F.2d 313
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Sheldon L. HORTON, Defendant-Appellant.
Case Date:May 25, 1988
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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847 F.2d 313 (6th Cir. 1988)

UNITED STATES of America, Plaintiff-Appellee,

v.

Sheldon L. HORTON, Defendant-Appellant.

No. 87-1453.

United States Court of Appeals, Sixth Circuit

May 25, 1988

Argued March 14, 1988.

Rehearings Denied Aug. 1, 1988.

Page 314

Harold Gurewitz (argued), Detroit, Mich., for defendant-appellant.

John R. Roth (argued), Asst. U.S. Atty., Detroit, Mich., for plaintiff-appellee.

Before MILBURN and BOGGS, Circuit Judges, and ALDRICH, District Judge. [*]

MILBURN, Circuit Judge.

Defendant-appellant Sheldon L. Horton appeals from his conviction on nine counts of mail fraud. For the reasons that follow, we affirm.

I.

Defendant Horton was convicted of mail fraud after he and codefendant Stephen Bandawat were jointly tried for their participation in a scheme to defraud Chrysler Corporation of some $479,000.00 during the course of production of door hinges for the Chrysler K-car. Although the defendants did not contest that the transactions actually occurred, both contended that they were not guilty of defrauding Chrysler Corporation. Only Horton's conviction is the subject of this appeal.

During the spring of 1980, Horton was employed as a purchasing agent for Ford Motor Company. At that time, he was informed that Ford anticipated a reduction

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in personnel, and that as a consequence, he could be laid off.

In August 1980, Horton received an offer of employment from Chrysler Motor Corporation. Horton began work as a purchasing agent manager for Chrysler on October 1, 1980. Before beginning his first day of work, Horton was required to complete a package of personnel forms, including Chrysler's standard conflict-of-interest policy statement.

In August 1980, Horton met Stephen Bandawat, the owner of Carsonville Metal Products. In addition to owning Carsonville, Bandawat controlled Southwest Sales and Engineering. Carsonville produced metal stampings and fabrications at its facilities in Carsonville and Port Sanilac, Michigan. At the time of the initial meeting between Horton and Bandawat, Horton informed Bandawat that he was employed by Ford Motor Company but anticipated leaving to become an independent manufacturer's representative. Bandawat advised Horton that his company was looking for more work which would involve utilization of Carsonville's 300-ton press. Horton replied that he thought he could find work for Carsonville, but Horton made it very clear that Bandawat would be required to pay a commission on sales. 1

In October 1980, after Horton began to work at Chrysler, he met with Bandawat at the Carsonville plant. At that time, Horton informed Bandawat that he believed there were some parts of the Chrysler K-car that Carsonville could produce. Approximately two weeks later, Bandawat and Horton met again to discuss the drilling of the K-car door hinges. At that meeting, Bandawat and Horton agreed that Bandawat would pay Horton a five per cent commission on sales in exchange for securing the business with Chrysler. John Carney, who was vice-president of finance at Carsonville, testified that there was no written contract between the parties, but only a handshake agreement. The "commission" payments were actually made from Carsonville Products to Shelmar Corporation, an entity set up by Horton for receipt of sales commissions.

In April 1981, Carsonville stopped making direct payments to Shelmar. At that time, the parties began to fear that Chrysler would discover the arrangement, and Horton advised Bandawat that he would feel better about the arrangement if he did not receive payments directly from Carsonville Metal Products. Accordingly, Bandawat and Richard Pagac, a CPA, formed a sales agreement between Carsonville Metal Products and Southwest Sales and began paying Shelmar from the Southwest Sales account. After John Carney began issuing checks drawn on the Southwest Sales account, he retroactively set up a note converting the payments that had already been made from Carsonville into a loan that was to be repaid by Shelmar Sales. Carney took this action at the direction of Stephen Bandawat, and the reason for this transaction was to avoid any documented payments to Shelmar from Carsonville.

Bandawat testified that, at the early stages of this arrangement, he always made his payments to Shelmar in a timely manner. However, during the early months of 1981, Carsonville experienced cash flow difficulties and the payments were not always made in a timely manner. During this time, Horton threatened to cut off Carsonville's work unless he received timely payment. Bandawat further testified that he believed Horton would cut him off, that he had made a substantial retooling investment in order to perform the Chrysler work, and that he was afraid of the consequences that would have resulted if the work had been withdrawn at that time.

Roger Kansier, a former vice-president of manufacturing for Carsonville, testified that in early 1981 Bandawat instructed him to short-ship the Chrysler door hinges by ten per cent because Carsonville was not making enough money on the Chrysler job. The short-shipments began during the

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same time period in which Horton began to exert pressure on Carsonville.

Bandawat characterized this relationship as one involving extraordinary economic duress. He testified that, in the beginning, he had no reason to believe that it was inappropriate to pay Horton a commission on sales. He further testified that he continued to make the payments because he feared losing the Chrysler business.

Horton painted a very different picture of the business relationship he established with Carsonville. He did not attempt to justify the amount of money, some $250,000.00, that he made during the course of this two-year relationship. However, it was his position that he did not know about the short-shipments to Chrysler, and that he had no reason to believe that Chrysler was economically damaged by his relationship with Bandawat. Kansier testified that, to his knowledge, Horton was not actually aware of the short-shipments. An auditor for Chrysler indicated that the cost of the short-shipments to Chrysler was approximately $479,467.00.

The proof presented at the trial was that Horton forged other such relationships with manufacturers who supplied products to Ford Motor Company while he was employed by Ford. On direct examination, Horton testified that he entered into a representation agreement with Gagnier Fiber products, which provided for a five per cent commission on the total cost of all invoices shipped by Gagnier to Ford. At that time, Horton was still employed as a buyer at Ford Motor Company. This testimony was consistent with Horton's testimony that he attempted to become a manufacturer's representative, and it was presented in an attempt to negate the intent element of mail fraud.

In order to rebut this testimony, the government called John Sokol, the owner of Gagnier. Sokol testified that he paid Horton a five per cent kickback, half of which was kicked back to Sokol personally. On redirect, Sokol testified that he paid Horton not because he needed a manufacturer's representative, but because he would not get any business from Ford if he refused.

In May 1983, the FBI began to investigate the relationship between Carsonville and Horton. On November 13, 1986, Bandawat and Horton were jointly charged in a ten-count indictment. Each count contained a separate violation of 18 U.S.C. Sec. 1341, which prohibits use of the mails for the purpose of effectuating any scheme or artifice to defraud. Count I was dismissed on the government's motion before trial, and a jury trial on the remaining counts began on January 26, 1987. On February 13, 1987, Horton was convicted on all the remaining counts. On April 20, 1987, Horton was sentenced to two years imprisonment for each count, to be served concurrently.

This timely appeal follows. The issues presented for review by the court are:

(1) whether the district court committed reversible error in denying Horton's motion for a severance;

(2) whether the trial court committed reversible error in denying Horton's motions for a judgment of acquittal and mistrial on the ground that the proof at trial substantially varied from the charges in the indictment;

(3) whether the district court erred in refusing to grant his motion for a judgment of acquittal because the evidence failed to establish that Horton engaged in conduct proscribed by the mail fraud statute;

(4) whether the trial court committed reversible error by failing to completely instruct the jury on the concept of aiding and abetting;

(5) whether the district court committed reversible error by using the term "conspiracy" in its charge;

(6) whether the trial court committed reversible error by failing to accurately define the term "scheme or artifice to defraud";

(7) whether the trial court committed reversible error by making inadequate findings under this court's decision in United States v. Enright;

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(8) whether the district court committed reversible error in allowing Stephen Bandawat to testify as to statements made to him by Sheldon Horton; and

(9) whether the district court committed reversible error in allowing John Sokol to testify in rebuttal regarding his association with Sheldon Horton.

II.

A.

Initially, Horton contends that the district court abused its discretion in refusing to grant his motion for a severance pursuant to Rule 14, Federal Rules of Criminal Procedure. He argues that because his defense was "fundamentally antagonistic" to Bandawat's, their joint trial constituted a deprivation of due process.

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