Babson v. United States

• Decision Date: 22 June 1964
• Docket Number: No. 18410.,18410.
• Citation: 330 F.2d 662
• Parties: Archie K. BABSON and Victor J. Trial, Appellants, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

330 F.2d 662 (1964)

Archie K. BABSON and Victor J. Trial, Appellants, v. UNITED STATES of America, Appellee.

No. 18410.

United States Court of Appeals Ninth Circuit.

April 8, 1964.

Rehearing Denied May 19, 1964.

Certiorari Denied June 22, 1964.

James W. Heyer, Denver, Colo., for appellant Babson.

James G. Follis, San Francisco, Cal., for appellant Trial.

Cecil F. Poole, U. S. Atty., Frederick J. Woelflen, and Jerrold Ladar, Asst. U. S. Attys., San Francisco, Cal., for appellee.

Before MERRILL, KOELSCH and BROWNING, Circuit Judges.

Certiorari Denied June 22, 1964. See 84 S.Ct. 1920.

KOELSCH, Circuit Judge.

Archie K. Babson and Victor J. Trial were indicted (with several others) for using the mails to defraud and for conspiracy to do so. 18 U.S.C. §§ 1341, 371. The indictment contained a total of 21 counts; the first charged the defendants with a conspiracy and the remaining 20 charged them jointly with the commission of as many substantive offenses. Four of the substantive counts were dismissed on the Government's motion. The jury found Babson guilty on all remaining counts and Trial guilty of the conspiracy and two of the substantive counts, but not guilty as to any of the others. Both defendants appealed.

The fraudulent acts and the conspiracy charged against these defendants were in pursuance of the business of the United Jet Training Schools, which purportedly was to train persons for positions of responsibility with makers of jet airplane engines and with airlines.¹ In substance, the fraudulent scheme alleged in the indictment consisted of a plan to sell, by means of false promises and representation, courses of study which the school offered covering the subjects of jet engine construction and maintenance.

On appeal both defendants commonly contend that the evidence is insufficient to sustain the verdicts. More particularly, they urge that there is no substantial proof (a) of any false representation, (b) of scienter, or (c) of a conspiracy. In addition, Trial, citing United States v. Corlin, 44 F.Supp. 940 (D.C.S.D.Cal. 1942), see also Kotteakos v. United States, 328 U.S. 750, 66 S.Ct. 1239, 90 L. Ed. 1557 (1946) and Isaacs v. United States, 301 F.2d 706, 713 (8th Cir. 1962), Cert. Den. 371 U.S. 818, 83 S.Ct. 32, 9 L. Ed.2d 58 argues that if the evidence failed to show the existence of a conspiracy, the judgment on the substantive counts must also be reversed because the indictment charged the defendants jointly, and not jointly and severally, with devising a single fraudulent scheme, and thus there is a fatal variance between the indictment and the proof.

However, a review of the record satisfies us that none of these contentions has merit. When the evidence is viewed in a light most favorable to the prosecution, and all conflicts in it are resolved against the defendants, the fact of their guilt as found by the jury becomes clearly evident. See United States v. Farago, 283 F.2d 772 (2d Cir. 1960); United States v. Mortimer, 118 F.2d 266 (2d Cir. 1941); Reistroffer v. United States, 258 F.2d 379, 395 (8th Cir. 1958); Galantas v. United States, 80 F.2d 15, 24 (8th Cir. 1935).

Babson started the school sometime in February, 1956, upon hearing of the need in the then fledgling jet aircraft industry for skilled mechanics and technicians. He had previously promoted a correspondence course in practical nursing and concluded that he could follow the same pattern in this new and lucrative field. He rented an office, hired one Porter to prepare a course for him, and immediately launched an intensive selling compaign, in which he took a dominant role. He wrote and caused to be distributed by mail, and otherwise, a vast number of pamphlets, post cards and circulars, that were used to advertise the school. Some of the statements appearing in this printed matter were that the school was recognized and its training course was approved by major airlines and makers of jet engines; that upon successfully completing one of the courses a student became a qualified jet specialist or expert technician, and could reasonably expect to secure a position paying an annual salary of from $8,000 to $15,000; and that many graduates had done so. But there was evidence that these representations were untrue. For example, a representative of United Air Lines, one of the world's major commercial carriers by air, testified that the school had no standing with his company and that a graduate of the school at best would be hired as an apprentice mechanic at a pay rate of $2.25 per hour; that United's training program for jet mechanics extended over a four-year period and included not only academic study but actual shop work on the engines, under the supervision of experts, and that five years of such training was required for a supervisory position. Another witness, speaking for the Allison Division of General Motors, a principal maker of jet engines, gave testimony to the same effect. Likewise, it appears that the Civil Aeronautics Administration of the Federal Government, whose function it is to certify schools for airplane mechanics, required as a minimum for such certification that the school offer a course of 300 hours' actual engine work, and 1200 hours of study, and that Babson had been so informed. In addition, there were no graduates of the school when the statements first appeared and several of those, who later completed a course, testified that their diplomas were no help to them when looking for a job.

Babson also recruited a crew of salesmen whose function it was to visit prospects and secure their applications for enrollment. He conducted sales meetings at which he lectured the salesmen on sales methods, and assembled in a "sales kit" a selected lot of printed literature, including many of his own writings.

The vigor of the sales program, the attractiveness of what was offered, and the manner in which it was offered, is attested by the fact that some 1400 courses were sold. However, since anyone was eligible to apply for enrollment, without regard to the necessity of any basic qualifications, solicitation was indiscriminate and, while Babson testified that the policy of the school was to carefully screen applicants, the practice was clearly otherwise and very few were rejected.² With few exceptions, anyone with a "down payment" was acceptable as a student, and even the amount of such payment was as variable as the prospect's purse, ranging from $5.00 to several hundred dollars.

Trial had been acquainted with Babson for some time before the latter started the school. He was hired as a salesman in August, 1956, and actively engaged in that work until April, 1957, when he left to set up a correspondence school of his own. During this nine-month period he interviewed numerous prospects and succeeded in selling nearly 125 of the courses; his buyers included a greens' keeper for a golf course, an apprentice bricklayer, a restaurant owner, and a sausage packer; and in the process of making the sales, he used this sales kit and repeated, with some variations and additions of his own, many of the statements regarding the school that we have paraphrased earlier in this opinion.

Babson was no doubt entitled to some latitude in extolling the merits of his school, but this did not permit him to make representations concerning the school that were untrue, or with a reckless indifference as to whether they were true or false. West v. United States, 68 F.2d 96, 98 (10th Cir. 1933); United States v. Murdock, 290 U.S. 389, 394-395, 54 S.Ct. 223, 78 L.Ed. 381 (1933). Yet, considering his position as founder and managing head of the school, it is apparent from the very nature of the representations that we have paraphrased that he did so.

The evidence relevant to Trial, although not as extensive or direct as that in the case against Babson, is likewise sufficient to support the finding of his guilt on the substantive counts. Trial, as has been mentioned earlier in this opinion, advised numerous prospective customers, including the two named in the substantive charges of which he was convicted, that the courses offered by the school were stepping-stones to well paid positions as supervisors of...