Beaudine v. United States

• Decision Date: 17 November 1966
• Docket Number: No. 22802.,22802.
• Citation: 368 F.2d 417
• Parties: Raymond Alfred BEAUDINE, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

368 F.2d 417 (1966)

Raymond Alfred BEAUDINE, Appellant, v. UNITED STATES of America, Appellee.

No. 22802.

United States Court of Appeals Fifth Circuit.

November 17, 1966.

Frank Ragano, Raymond E. LaPorte, Tampa, Fla., for appellant.

Edward Boardman, U. S. Atty., Robert B. McGowan, Asst. U. S. Atty., Tampa, Fla., for appellee.

Before BROWN, GEWIN and GOLDBERG, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

The Appellant, Beaudine, an officer of Clearwater Federal Savings and Loan Association, was convicted for taking kickbacks from a contractor performing work for borrowers under Title I, Home Improvement Loan, in violation of 18 U.S.C.A. § 1006. Beside the attack upon the sufficiency of the evidence which we find unavailing once the standard of "defrauding" is fixed, his complaint is directed primarily to the undue restriction of cross examination of the contractor, an admitted ex-convict, and one who had participated in like ventures before. We conclude that standing alone none of the instances of restrictive cross examination would call for reversal. But when considered together and in the light of other restrictive evidentiary rulings, we are left with such uncertainty that we cannot pass them off as harmless error. We therefore reverse and remand for new trial.

The story may be quickly told. Beaudine shortly after coming with Clearwater¹ was promoted to Assistant Vice President and put in charge of Title I, Home Improvement Loans. Under the regulations, 24 C.F.R. § 201.6f, the lending association was afforded wide latitude in relying on the application for loan executed by the prospective borrower. Beaudine, however, establishing standards for Clearwater required a credit inquiry and report from the local Credit Bureau. Occasionally the Credit Bureau report would reflect outstanding debts of the applicant, frequently small in amount but old in age, such as doctors, hospital bills, etc., which would adversely affect the current credit rating of such person. Under the arrangement with Mulvey, the contractor, Beaudine would advise Mulvey of such situations. Mulvey was to advance the funds through the Credit Bureau acting as a collecting agency to pay off such adverse items. Mulvey would then "sell" the loan applicant on giving the improvement contract to his company. For this Mulvey agreed to split the contracting profits on each of such jobs on a 50/50 basis with Beaudine. In the period of three to six months there were approximately 70 such contracts which netted approximately $12,000 to $16,000 to Beaudine. All of the payments by Mulvey or his representatives to Beaudine were in cash and delivered furtively in a clandestine manner.

It rounds out this brief picture to state that the Government did not prove, nor even undertake to prove, that Clearwater suffered any loss or likely would suffer a loss from any of the Beaudine-Mulvey transactions. Indeed, to the contrary, the evidence showed that Beaudine had rejected not less than 90 credit applications presumably because of intrinsic deficiencies so these never got into the Beaudine-Mulvey profit-sharing arrangement.

The statute, an amalgam by the 1948 Code revisers of 11 or more similar acts respecting a like number of executive departments or governmental agencies, makes it an offense for an officer, agent, or employee of any savings and loan association to participate or share in or receive directly or indirectly any money, profit, property or benefits through any transaction, loan, commission, contract, or any other act of such association if done "with intent to defraud the United States or any agency thereof." 18 U.S. C.A. § 1006.² See United States v. Meyer, 5 Cir., 1959, 266 F.2d 747, 755, cert. denied, Kennedy v. United States, 361 U.S. 875, 80 S.Ct. 138, 4 L.Ed.2d 113.

If loss to the Association (or the Government) is required or for that matter the purpose to bring about a loss to the Association (or the Government), then this record is inadequate to make out an offense and the motion for a judgment of acquittal ought to have been granted. We agree, however, with the Government that the statute, awkwardly expressed as perhaps it is, is to be given no such narrow reading. Indeed, that it is a composite to cover many agencies and many activities is paralleled by the breadth of the specific actions prohibited which reveal clearly a congressional purpose to keep that part of the market place in which the Federal Government plays such a significant role free from fraud, deception, and corruption. Thus it prohibits actions by officers and employees which, "with intent to defraud," will "deceive any officer, auditor, examiner or agent," and forbids the making of "any false entry in any book, report or statement * * *" or without proper authorization the drawing of "any order or bill of exchange" or the issuance of "* * * any note, debenture, bond or other obligation * * *." 18 U.S.C.A. § 1006.

The statute is intended to do much more than forbid unsophisticated embezzlement, larceny or theft. And that part of the statute with which we are concerned is a typical conflict of interests prohibition. As such it is a congressional recognition of the principle so well grounded in morality and equity that the servant cannot serve two masters and that when this is done without complete disclosure, the law considers that the master-principal's interests either will, or are apt to, suffer.³ Approached in this light, the charge given by the trial Court, adapted from Judge Mathes' Manual of Jury Instructions, seems quite in order.⁴

The fraud commences with the deceit — ostensibly acting solely for the interest of the principal while all the while the faithless servant knows he, too, has a pecuniary interest which will or might subvert his undivided loyalty. When there is the purpose to deceive, it matters not whether the objective is to obtain an advantage or to cause the principal to suffer a loss. Either in effect completed the fraudulent purpose. See also Baiocchi v. United States, 5 Cir., 1964, 333 F.2d 32, 35-36; United States v. Corbett, 1909, 215 U.S. 233, 244-245, 30 S.Ct. 81, 54 L.Ed. 173; cf. United States v. Spector, 7 Cir., 1963, 326 F.2d 345, 349; United States v. Meyer, 5 Cir., 1959, 266 F.2d 747, 754-755; Gevinson v. United States, 5 Cir., 1966, 358 F.2d 761.

Here, of course, once Mulvey's story was credited, Beaudine (a) practiced deceit and (b) stood to, and did, gain extensively. Under that standard, the evidence was therefore sufficient to sustain conviction. But the whole case, both from the standpoint of its legal sufficiency and from the probative persuasiveness for jury resolution, rested on Mulvey. He was a confessed three or four-time convicted felon. His credibility both from the standpoint of moral trustworthiness and recollection was therefore of critical, decisive importance. But at least twice, under objections made by Government counsel so frequently throughout the whole record as to almost defy the orderly development of any particular fact or thread, the trial Court severely restricted cross examination. After Mulvey had earlier testified in cross examination that he had been convicted "three or four times" for felonies, the last of which was "for fraud against the FHA" in 1960 in that very Court, Government counsel again objected to further inquiry on a ground which turns out to have been a misapprehension of the law.⁵ The Court agreed.⁶ Again, at the very close of cross examination, counsel's efforts to find out what crimes Mulvey had been convicted of, when and where, were similarly rebuffed by Government counsel's objections sustained by the Court.⁷

We have no doubt that to cut off inquiry in this fashion was erroneous. The one attacking credibility was entitled, at least in the first instance, to establish the number of convictions, the nature of each of the crimes charged, the date and time of conviction. Refusal to allow this minimum information to be developed could not be sustained by the accepted and salutary principle which prohibits the attacker going into the details of the crimes.⁸ Moreover, the subject of inquiry being relevant, the purpose of the proposed questioning was something more than merely to establish the fact that he had some prior felony convictions. Here it took the form of a classic inquiry designed to test memory which, in many, many details, was hazy at best. Added to that is the fact that the law does not limit inquiry to whether there was a "felony" conviction. The nature of the crime is a relevant fact for the reason, if no other, that it is rightfully assumed that some types of crimes have a more immediate direct bearing than others on the element of veracity.⁹ Of course proof of this vital fact can hardly be made if the inquiry is cut off when the witness admits three or four felony convictions.

Beaudine complains also of restrictive cross examination into the incident of Mulvey's request of Beaudine's counsel that he be paid $500 and following the failure to do so, Mulvey's refusal to give a statement. Apparently at the time of an earlier trial of Beaudine on other charges a couple of years before, Mulvey had been transferred from the Federal Penitentiary to the Tampa City Jail to be available as a witness. About this time Mulvey along with Beaudine had been indicted on May 10, 1963, under the instant indictment for the Clearwater kickbacks. According to Mulvey, he arranged through his counsel to have an associate of Beaudine's counsel (Gonzalez) see him (Mulvey) in the jail.¹⁰ According to Mulvey, he asked if Beaudine would pay his attorney's fees. In a few days associate counsel Gonzalez asked Mulvey where the money was to be sent. In the meantime Mulvey's counsel successfully urged a plea of double jeopardy to the present indictment after which he was returned to the Atlanta Penitentiary. Subsequently, as Mulvey puts it, "When I got out," presumably from the Penitentiary, he...