U.S. v. White, s. 88-1925

• Decision Date: 08 November 1989
• Docket Number: Nos. 88-1925,88-1926,s. 88-1925
• Citation: 879 F.2d 1509
• Parties: Bankr. L. Rep. P 73,034 UNITED STATES of America, Plaintiff-Appellee, v. Judith E. WHITE and Richard L. White, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1509

879 F.2d 1509

Bankr. L. Rep. P 73,034

UNITED STATES of America, Plaintiff-Appellee, v. Judith E. WHITE and Richard L. White, Defendants-Appellants.

Nos. 88-1925, 88-1926.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 9, 1988.

Decided July 18, 1989.

Rehearing and Rehearing En Banc Denied Oct. 13, 1989.

Rehearing Denied Nov. 8, 1989.

Linda L. Pence, Indianapolis, Ind., for defendants-appellants.

Royal B. Martin, Jr., Silets & Martin, Ltd., Chicago, Ill., Linda S. Chapman, Amarillo, Tex., for plaintiff-appellee.

Before BAUER, Chief Judge, POSNER, Circuit Judge, and WILL, Senior District Judge. ^*

POSNER, Circuit Judge.

Richard White and his wife Judith were convicted of bankruptcy fraud in violation of 18 U.S.C. Sec. 152. Mr. White was fined $25,000 and given a short prison sentence, which the judge suspended; both Whites were ordered to provide community service for several months.

Richard White ("White") was a principal of a corporation named White Petroleum, which owned gas stations in Indiana and Ohio. Mrs. White, a nurse, was not directly involved in her husband's business activities. In 1983 White Petroleum declared bankruptcy, pulling the Whites down with it because they had made personal guarantees of several million dollars to the corporation's creditors. White retained the Indianapolis law firm of Bamberger & Feibleman, which had represented the corporation in its bankruptcy proceeding, to represent him and his wife in their personal bankruptcies. A partner in Bamberger & Feibleman who worked on both the corporate and the personal bankruptcies, Mark Center, met with White in March 1984. At that meeting, according to White, a decision was made to list on the Whites' asset statement a $10,000 loan that White had made to Twin Flags Trucking Company as a capital contribution having no present value rather than as a receivable, and in addition Center opined that certain life insurance policies owned by White were exempt property. Mrs. White was not present at this or any other meetings at which bankruptcy was discussed.

The personal bankruptcy petition was filed in December 1984, and in May of the following year the Whites were discharged from bankruptcy because the trustee concluded that there were no assets available for unsecured creditors. Two years later Mark Center was convicted of bankruptcy fraud in an unrelated matter and shortly afterward the government solicited him to help it obtain information on still another matter. Unable to assist the government with that matter Center volunteered that he had information that fraud had been committed in the Whites' bankruptcy. The government was interested and Center agreed to assist. To that end (though apparently not at the government's direction), he went to the offices of Bamberger & Feibleman, with which he was no longer affiliated, and copied a number of documents from the Whites' file. These he gave, through his counsel, to the government. Center later testified before the grand jury that was considering whether to indict the Whites, but he did not testify at their trial.

The charge against the Whites was that in their petition for bankruptcy they had willfully listed a phony third mortgage on their house and had willfully concealed several assets, including three life insurance policies, the $10,000 loan, and some stock in a local bank. The district judge denied the Whites' request to examine the documents that the government had obtained from Mark Center, after the government assured the judge that it had not sought to place any of those documents in evidence and in addition submitted an affidavit stating that it had not received any privileged documents from Center. The government did not show the judge any of the documents it had received from Center.

The Whites argue first of all that there is no proof they read the bankruptcy petition before signing it. It is of course true that many people sign documents--even solemn documents reciting that the signer signed with knowledge of the contents and under penalty of perjury (and the Whites' bankruptcy petition contained such a recital, right above their signatures)--without reading them. This is a fact of life for a jury to consider in determining how likely it is that a defendant who signed a document knew what was in it. The cases rather confusingly say on the one hand that "proof of a signature alone ... is insufficient by itself to make knowledge of the contents ... attributable to the signor," and on the other hand that "the signature ... is prima facie evidence that the signor knows the contents." United States v. Harper, 458 F.2d 891, 894-95 (7th Cir.1971); see also United States v. Bass, 425 F.2d 161 (7th Cir.1970); United States v. Tolkow, 532 F.2d 853, 857 (2d Cir.1976). This makes it sound as if a jury both may not infer knowledge from the signature alone and may. But the confusion is semantic rather than substantive. There always is more evidence than the signature--evidence at the very least of the nature and length of the document--and the issue should be whether the total circumstances, including but not limited to the bare fact of the defendant's signature, warrant a confident inference that the defendant knew what he was signing, see, e.g., United States v. Bessesen, 445 F.2d 463, 471 (7th Cir.1971), or, what has the same legal significance, deliberately refused to acquaint himself with the contents, fearing what he would discover if he did, see, e.g., United States v. Josefik, 753 F.2d 585, 589 (7th Cir.1985).

In the case of Mr. White, the circumstances enable the necessary inference of knowledge or reckless indifference to be drawn. He met with bankruptcy counsel to prepare both the corporate and the personal bankruptcy petitions. He knew he would have to meet with his creditors, to be examined under oath regarding the truth of the petition. See 11 U.S.C. Secs. 341, 343. He was an experienced businessman who handled all the financial affairs of his household. It was not a case of a single oversight. There was sufficient evidence to establish beyond a reasonable doubt that White was aware of the contents of the petition.

But there was insufficient evidence with regard to Mrs. White, and she must therefore be acquitted. There is no evidence that she was involved in her husband's business affairs, knew anything about them, or took any interest in them. One of the government's own witnesses testified that Mrs. White had signed documents (a mortgage and a personal guarantee) without, so far as this witness was aware, reading them. She attended none of the meetings at which her husband discussed the bankruptcy petition with the lawyers. It is true that one of the assets concealed was an insurance policy on her own life, but this suggests only that if she had read the petition she might have noticed an omission. It is true, too, that her signature appears not once but several times, on different documents attached to the petition--but not on the pages listing the petitioners' assets. There is no evidence beyond the inference that can be drawn from her signatures that she did read the petition and accompanying schedules. In the circumstances--having regard for the nature of the bankruptcy-petition form, the circumstances in which she had previously signed documents involving her husband's business, and the nature of her own occupation--the inference cannot be drawn with the confidence required in a criminal case.

That leaves us with a number of other issues raised by Mr. White, but only two have sufficient merit to require discussion. The first is whether the indictment was "duplicitous" in combining a number of fraudulent omissions from the bankruptcy petition in a single count. The argument that it was is that the jury may not have been unanimous with regard to any specific omissions--it is possible, for example, that three jurors may have been utterly convinced about one of the omissions, two others about another, the other seven about a third. That is a danger, but on the other side is the danger that if every omission is a separate count, a single fraudulent scheme could give rise to a staggering number of separate convictions. The statutory offense is bankruptcy fraud, and the grand jury is not obliged in our view to place every piece of the fraud in a separate count. No more is the petit jury required to agree on every detail, provided they are unanimous in believing beyond a reasonable doubt that the defendant committed the fraud. Cf. United States v. Markowski, 772 F.2d 358, 364 (7th Cir.1985); United States v. Balistrieri, 779 F.2d 1191, 1224 (7th Cir.1985).

The few cases on point support our conclusion, treating the fraudulent nondisclosure of several items of property in the petition for bankruptcy as a "single continuous concealment" constituting a single offense. Tugendhaft v. United States, 263 Fed. 562, 563 (5th Cir.1920); cf. United States v. Berardi, 675 F.2d 894, 898 (7th Cir.1982). "Surely, if an accused should conceal a dining room set, a china set, or one thousand silver dollars belonging to the estate of the bankrupt, his offense of failure to reveal or disclose would not be multiplied by the number of separate items concealed." Edward v. United States, 265 F.2d 302, 306 (9th Cir.1959). And would the dining room set be a single item, or the number of separate pieces of furniture in the set? "[T]he duty to disclose ... is a single duty to reveal all." United States v. Moss, 562 F.2d 155, 160 (2d Cir.1977). The fact that here a single form was involved supports this conclusion. Cf. United States v. Hawkins, 794 F.2d 589 (11th Cir.1986). Although we can find no cases on the point, we have no doubt that plural fraudulent omissions in a single federal income tax return are one offense rather than as many offenses as there are omissions; and we know that tax evasion committed over several years can be charged as a single...