Adjmi v. United States

• Citation: 346 F.2d 654
• Decision Date: 10 June 1965
• Docket Number: No. 21584.,21584.
• Parties: Leon ADJMI, J. & C. A. Corporation and Joseph Adjmi, Appellants, v. UNITED STATES of America, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

346 F.2d 654 (1965)

Leon ADJMI, J. & C. A. Corporation and Joseph Adjmi, Appellants, v. UNITED STATES of America, Appellee.

No. 21584.

United States Court of Appeals Fifth Circuit.

June 10, 1965.

COPYRIGHT MATERIAL OMITTED

Jacob Kossman, Philadelphia, Pa., for appellants.

Arnold D. Levine, Sp. Asst. U. S. Atty., Tampa, Fla., Edward F. Boardman, U. S. Atty., for appellee.

Before TUTTLE, Chief Judge, BELL, Circuit Judge, and DYER, District Judge.

DYER, District Judge:

The appellants were convicted under a four-count Indictment for violations of the mail fraud statute, Title 18, U.S.C. § 1341, and for conspiracy to violate said statute, Title 18 U.S.C. § 371.

Count One alleged that the appellants devised a scheme to defraud twelve named insurance companies by falsely stating the actual cash value of the property on hand in a shop operated by the appellant, J. & C. A. Corporation, on March 21, 1958, was $300,393.49, and, as a result of a fire on that date on the corporation's premises, suffered loss and damage in the amount of $193,989.10; and thereafter, deposited a resultant claim of loss in the mails on May 10, 1958, addressed to the General Adjustment Bureau.

Counts Two and Three repeated the same allegations in respect of a mailing to two different insurance companies on June 5, 1958.

Count Four charged the individual appellants with conspiracy, in violation of 18 U.S.C. § 371, alleging that they conspired together to devise a scheme to obtain money and property by means of the false pretenses set forth in the substantive counts and to violate 18 U.S.C. § 1341 by so doing.

Three specifications of error are urged.

First, it was error to refuse to charge the jury that, if the aggregate of the losses claimed and paid represented the fair value of the damage suffered, the fact that erroneous invoices reflected an inventory figure that was higher than the loss actually claimed was immaterial.

Second, the trial judge's preliminary statement to all of the jurors, that he would punish them if they disregarded his instructions not to read newspapers covering the trial, prevented a fair poll of the jury when prejudicial newspaper articles about the case actually appeared during the trial.

Finally, the court erred in denying the defendants' requests for specific instructions on credibility.

I

The appellant's theory was that if, not withstanding marked-up invoices, the total sums paid them by the insurance companies were no more than the aggregate of their losses, they had not committed a fraud. The defendants' requested instructions consistent with this theory were refused.

Whether the requested instructions should have been given is dependent upon whether there was any foundation in the evidence or basis in law that would support the theory of defense.

Following the fire, representatives of the insurance companies, together with a public adjuster representing the insured, prepared a verified inventory which was presented as the claim of loss and damage of the insured. The cost value of the merchandise was based upon invoices submitted by appellants except for certain items (1) which were stated to have been purchased for cash and (2) some which appellant, Leon Adjmi, refused to produce because he did not want to reveal the source of purchase that allowed him low prices. Based upon this inventory, the loss resulting from the fire was adjusted.

Of the total loss reflected in the verified inventory, including furniture, the sum of $266,403.72 represented stock, and the asserted loss to stock was $197,041.06. The amount paid resulting from the conferences and settlement negotiations of $193,898.10 was some $44,540.44 less than the asserted total loss of $238,438.54.

One invoice for $16,915.00 showing a sale to the Adjmis prior to the fire was prepared at the request of Leon Adjmi by the alleged seller after the fire. It was not entered on the seller's books; it included items that he did not carry, and the figures on some items amounted to ten times the cost to the J. & C. A. Corporation.

After the fire an accountant was requested to prepare for submission to the insurance companies a list of unpaid bills of the corporation. Included in these was the sum of $84,400.00 allegedly owed by the corporation to Leon Adjmi for merchandise purchased from him, but the corporate books did not reflect such an obligation, nor did the books of Leon Adjmi reflect this as an obligation due to him. For income tax purposes, this alleged sale was completely disregarded. The items purportedly making up this obligation to Leon Adjmi were included in the documents submitted to the insurance companies and were ultimately shown to be the same linens in regard to which Leon Adjmi refused to reveal the source, because he had purchased them at such a bargain.

The Adjmis obtained from another seller an invoice for the alleged purchase of approximately $25,000.00 worth of merchandise (although the invoice was used merely as an order form) and later wrote the seller that they desired to keep the merchandise that had been shipped on this invoice. This merchandise was neither shipped nor paid for by the appellants, although this invoice was submitted by them to establish the cost of the items therein contained.

Other evidence tended to show costs on items in the invoices submitted to the insurance companies to be many times the actual cost of such merchandise.

Upon this state of the record, the appellants say that if the water in the original total was squeezed out in the course of the settlement process so that the smaller amount submitted to the companies through the mail and paid by them was equal to the actual loss, no one was defrauded.

The evidence does not support this assertion, but, more important, the argument stems from a false premise.

The figures submitted to show cost prices of merchandise (inflated in some instances 4 to 10 times) were not honest mistakes, nor is there any explanation of the fictitious invoices. Appellants, at least for the sake of argument, concede this but simply say no one was defrauded because the companies did not lose any money. This does not follow. To the contrary, the settlement figure was arrived at through assessing the amount of damage to the goods based upon the inventory submitted by the appellants, not through discounting the values submitted because of false invoices.

Smith v. United States, 230 F.2d 935, 6 Cir., 1956; United States v. Park Motors, 107 F.Supp. 168, D.C.E.D.Tenn., 1952, and United States v. Beaty Chevrolet Co., 116 F.Supp. 810, D.C.E.D.Tenn. 1953, relied upon by appellants are readily distinguishable. The defendants in Smith had been told by bank officials that it was proper to include in their application for FHA loans a purpose, other than what was actually so, for which the proceeds of the loans were to be applied. The Court held it was error not to instruct on this factor as negativing fraudulent intent. Nothing in this case remotely resembles this situation.

In Park Motors and Beaty Chevrolet, car dealers were involved who submitted bills to the government for automobiles sold to veterans. The bills correctly stated the amount due from the government, but falsely stated the price of the automobiles. In Park Motors, the dealer acted on the advice of a government official; in Beaty Chevrolet, there was an error of judgment by a company employee. These cases simply hold that no fraudulent intent was proved.

Assuming arguendo that the insurance companies did not lose any money, it is of no moment for, as we said in Kreuter v. United States, 218 F.2d 532, 5 Cir., 1955, Section 1341 may be violated regardless of whether the fraudulent scheme is successful. The elements of the offense are simply (1) a scheme to defraud and (2) use of the mails to effect this scheme. United States v. Shavin, 287 F.2d 647, 90 A.L. R.2d 888, 7 Cir. 1961. The fictitious invoices and inflated cost of items in the inventory were plainly sufficient to show a scheme and intent to defraud and the use of the mails was conceded.

A charge must be adjusted to the facts of a particular case, Sims v. Texas and New Orleans R. R. Co., 267 F.2d 37, 5 Cir., 1959. There was no factual basis for the charges requested by the appellants and their theory of defense had no basis in law; thus the failure to give them was not error.

II

The appellants were not unknown in Miami, Florida, previous indictments having been returned against them. Thus, upon the motion of the appellants for a change of venue from the United States District Court for the Southern District of Florida, Miami Division, the cause was transferred to Orlando, Florida, to insure a fair and impartial trial. Subsequently, the Middle District of Florida was created and, upon motion of the appellants, the indictment was transferred for trial to the Tampa Division of the Middle District of Florida.

During the course of the trial, the newspapers in Tampa, Florida, printed news accounts which contained inadmissible facts prejudicial to the appellants. They complain that, when this occurred, the Court not only made an inadequate inquiry of the jurors, but, because of the cautionary preliminary instruction to the effect that failure to observe the court's admonitions not to read newspaper accounts pertaining to the trial might subject the jurors to punishment by the court, the inquiry was effectively stifled.

To properly assess this specification of error, it is necessary to consider the breadth of the instructions given by the court so that the language appellants object to in the preliminary cautionary instructions and the asserted inadequacy of the inquiry during the trial may be considered in context.

At the outset, the court, after fully explaining to the jury the function of an Indictment, the presumption of innocence of appellants, and the burden of proof cast upon the government, said:

"* * * in this country we have freedom of

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