Ader v. United States

Decision Date22 July 1922
Docket Number2937.,2935
Citation284 F. 13
CourtU.S. Court of Appeals — Seventh Circuit

Rehearing Denied October 14, 1922.

Jacob G. Grossberg, of Chicago, Ill., and Wallace Streeter, of Washington, D.C. (Jas. Hamilton Lewis and Edward Maher, both of Chicago, Ill., of counsel), for plaintiffs in error.

Chas F. Clyne, U.S. Atty., and Edwin L. Weisl, Asst. U.S. Atty all of Chicago, Ill., for the United States.

Edward J. Ader, Abraham J. Messing, and Goldie A. Skolnik, with others, were convicted under an indictment charging conspiracy to violate section 215 under section 37 of the Criminal Code (Comp. St. Sec. 10201), and also violation of section 215 (section 10385), and bring error.

The indictment of 15 counts was returned against plaintiffs in error and five others, namely, Eli Pfaelzer, Edward H. Troost, Benjamin E. Turner, Louis A. Davis, and John M. Kantor. Defendants Pfaelzer and Davis pleaded guilty. As to the others demurrers were overruled, motions to quash denied, and a long trial ensued, all being found guilty on all counts. Motions for a new trial and in arrest being denied, judgments were entered and the defendants sentenced. Ader was sentenced to imprisonment for five years on each of the counts 1 to 13, inclusive, of the indictment such sentence to run concurrently, and for two years on each of counts 14 and 15, said sentence to run concurrently; sentence on counts 14 and 15 to begin to run at the expiration of the sentence on counts 1 to 14, and that he forfeit and pay to the United States a fine in the sum of $10,000. Miss Skolnik was sentenced to imprisonment in the county jail of Cook county, Ill., for six months, and that she forfeit and pay a fine of $1,000. Plaintiffs in error, Ader, Messing, and Skolnik, each prosecuted a writ of error, but by stipulation transcript, briefs, and arguments were presented and heard together. After submission of the cause here plaintiff in error Messing died, and, that event being suggested on the record, all proceedings in the cause with reference to him were ordered abated.

Counts 1 to 13, inclusive, of the indictment each charged a violation by all defendants of section 215 of the Criminal Code, while counts 14 and 15 charged a conspiracy under section 37 of said Code to violate said section 215. All counts succeeding No. 1 by reference incorporated a part or parts of the latter count, which, in brief, charged that the defendants at Chicago on and before February 1, 1918, devised a scheme for obtaining money and property from a certain class of persons by means of false and fraudulent pretenses and representations. The class of persons were described as those whom the defendants should 'by means hereinafter described' induce to give, send, and pay their money and property to the defendants under the name of Consumers' Packing Company, then and at all times mentioned a corporation under the management and control of the defendants, for subscribing for and purchasing shares of stock in said corporation. The means described were charged to be representations and pretenses which were to be made in the name of the corporation to the persons above referred to by the defendants, either directly or through agents of the corporation, by means of oral and written statements, printed advertisements, prospectuses, etc., to the effect that the corporation was engaged in good faith in the business, commonly called the packing business, of purchasing live animals in stockyards markets where the same are sold, slaughtering such animals, and selling the meat resulting from such slaughter; that said business of said corporation had been was, and would be a successful and paying business; that said persons would be greatly benefited financially by subscribing for and purchasing said shares of said stock, in that large dividends would be paid to them, and the value of the stock would be greatly enhanced over the price at which defendants were selling; that large dividends had in fact been paid by said corporation which had theretofore acquired a packing business, to wit, the business of Eli Pfaelzer & Sons, who for 30 years had been doing a successful packing business in the Union Stockyards at Chicago aforesaid, it being the intent of the defendants by said means to cause said persons to understand and believe that the said corporation had been, was, and would continue to be engaged in a bona fide and successful packing business, and that the exchanging of their money and property for shares of said stock in said corporation would for that reason be a paying and profitable investment. The indictment further charged that, when devising the scheme, defendants well knew that said pretenses and representations were not and would not be true, but were and would be false and fraudulent, in that the corporation had not been, was not, and would not be engaged in good faith in the packing business, and that persons giving, sending, and paying their money and property to the defendants would not be benefited, financially or otherwise, by subscribing for or purchasing shares of stock, either by the payment of dividends thereon or by the enhancement of the value of the stock, and in that no dividends whatever had been paid upon the shares of stock out of its earnings or otherwise than out of the money and property received from the persons whom the scheme was designed to injure in exchange for the shares of stock, and that the corporation had not acquired any packing business at all from Eli Pfaelzer & Sons, and further charged that at all the times and at the place mentioned the defendants well knew and would well know that the Consumers' Packing Company had not been, was not, and would not be engaged in good faith in a packing business owned or acquired by it or in any successful or paying business whatever, except the business carried on by the defendants in the name of the corporation of disposing of stock in the corporation as above indicated, which was and would be a losing and unprofitable investment for such subscribers. The first count further charged that, having devised the scheme and artifice, and for the purpose of executing the same, the defendants placed and caused to be placed in the post office at Chicago for delivery by mail a letter addressed and to be carried by mail to one Fred Frazier, who is alleged to be one of the persons of the class of persons referred to in the indictment. Counts 2 to 13, both inclusive, contain appropriate references to the scheme and artifice for obtaining money and property by means of false and fraudulent pretenses and representations described in the first count, and each count charged the mailing of a letter in execution of such scheme. All except counts 5, 6, 7, and 9 charged the person to whom the letter mailed was addressed to be one of the class of persons whom it was intended by the scheme to injure as alleged in the first count. This allegation is omitted in the four counts last enumerated, each of which discloses that the letters were not intended for such a person, the letter set out in count No. 5 being to a Mr. Fomund, then acting as stock sales manager for the Consumers' Packing Company in New York City, urging him to greater efforts in stock salesmanship. The letters set out in counts 6 and 7 were both addressed and charged to have been mailed to Mr. Emerson, secretary of state of the state of Illinois, and related to the continuance of the packing company's license to sell its stock under the Illinois Blue Sky Law, so called while the letter set out in the ninth count was addressed to Mr. Terry at Viola, Ill., soliciting him to become a local representative and stock salesman of the packing company in his community.

The fourteenth count charged a conspiracy on the part of all of the defendants to commit the several offenses charged in the first 13 counts of the indictment 'by the means and in the manner set forth in the first count'; the overt acts charged being the several acts of placing in the post office the letters mentioned in the preceding 13 counts. The fifteenth count charged the defendants, with having conspired among themselves and divers other persons to the grand jurors unknown to offend against section 215 of the Criminal Code, and that the defendants so conspired in devising a scheme and artifice for obtaining money and property by means of false and fraudulent pretenses and representations described in the first count of the indictment, and that the defendants among themselves and with other persons conspired, for the purpose of executing such scheme and artifice, to place, and caused to be placed, various letters, writings, circulars, and pamphlets in the post office at Chicago. For overt acts this count presents the mailing of the letters and other writings mentioned in the first 13 counts of the indictment, and also several additional letters not mentioned in previous counts of the indictment, as well as acts of some of the defendants in presenting resolutions to meetings of the board of directors of the packing company, the signatures to minutes of various meetings wherein dividends were authorized to be paid, the signing by the defendant Pfaelzer of minutes of a directors' meeting, authorizing a credit to Pfaelzer of some $45,000 for labor, energy, effort, and skill expected to be furnished and exercised by Pfaelzer on behalf of the corporation, the ordering of printing by other defendants, the insertion of advertisements in newspapers, there being some 10 overt acts alleged in addition to those severally set out in the first 13 counts of the indictment.

The facts developed by the testimony are too numerous and complex to warrant an attempt to outline them in...

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