Cohen v. State, 37972

• Decision Date: 15 January 1960
• Docket Number: No. 2,No. 37972,37972,2
• Citation: 101 Ga.App. 23,112 S.E.2d 672
• Parties: COHEN v. STATE
• Court: Georgia Court of Appeals

Page 672

112 S.E.2d 672

101 Ga.App. 23

COHEN v. STATE.

No. 37972.

Court of Appeals of Georgia, Division No. 2.

Jan. 15, 1960.

Syllabus by the Court

Where, as here, the evidence shows all the elements of cheating and swindling, a verdict and judgment of conviction will not be reversed by this court on the general grounds. And, where the charge of the court is correctly based on evidence adduced at the trial, this court will not reverse the trial court on contentions that the court's charge was erroneous in certain respects.

The defendant was convicted of cheating and swindling. When the trial was in process, before pleading to the indictment, the accused filed a demurrer and a motion to quash the indictment. The court overruled the demurrer and the motion to quash, to which exception was then made and assignment of error is made to this court. A motion for a new trial was filed on the general grounds and later amended to include four special grounds. The court denied the amended motion, and that judgment is before this court for review also.

The evidence shows substantially as follows: John M. Olden testified for the State that he worked for the United States Securities and Exchange Commission; that in this capacity he had occasion to investigate a company known as the Continental Underwriters, Inc.; that the books and records of the company were turned over to the witness by the Sheriff of Forsyth County; that the books reflected that the company was not in good financial shape although stock in the corporation continued to be sold and issued; that the books and records do not reveal that the Continental Underwriters, Inc., was engaged in any sort of business for gain or profit other than selling the stock, and showed no source of income; that the books did not show any evidence of any stock certificates even having been issued to any named individual; that dividends had been declared on the stock; that at the time the July 1st dividend was declared there was no cash on hand and the individuals in the corporation concerned, the defendant and a Mr. Smith, put up the cash with which to pay the dividend; that money to pay the October 1st dividend was received from one Thrailkill; that during the entire time they were in business the Continental Underwriters, Inc. operated at a deficit.

On cross examination it appears that the defendant and Smith operated as a subsidiary of Continental; that from time to time O'Brien, a fictitious, not a real person, Cohen, and Smith, put some money into Continental Underwriters, Inc., but that Continental always operated in the red; that the company was deterred from selling the stock under the Investment Company Act of 1940; that Continental was not registered with the Federal Government and that was not necessary.

The evidence further shows that Joseph Declet, an employee of Southern States Security, sold stock in Continental Underwriters, Inc.; that he was paid a salary; that a Mr. Sherwood was president of Southern States Security; that the witness offered a Mr. Orr stock in Continental Underwriters, Inc., for $21 per share and that Mr. Orr bought 100 shares of stock; that Mr. Orr paid for the stock by checks and that witness took the checks to Mr. Gordon. The witness further testified that he told a purchaser that the greater Georgia stock was a fine stock; that when he was interviewed for the job as salesman for Southern States Securities, he was interviewed by Leon Cohen; Mr. Cohen paid his salary, gave him instructions as to the performance of his duties, told him how to represent the value of the stock to the public and furnished him with a sales kit as well as a copy of an audit which stated that the profits of the company amounted to $80,000; that later Mr. Cohen took the financial statement away from the witness and said, 'Joe, if anybody asks you about this paper, you have not seen it'; that Mr. Cohen instructed witness to take certain checks to Bob Gordon at Cumming, Georgia, and that he did carry Mr. Orr's check to Mr. Gordon; that witness represented to Mr. Orr that the stock was worth $21 per share, as per Mr. Cohen's instructions.

John M. Olden testified that he was an accountant employed by the United States Securities and Exchange Commission ; that he had investigated Continental Underwriters, Inc.; that he had a financial statement of the company's condition as of June 30, four days after Mr. Orr purchased the stock in the company, and at the time the company declared the dividend they had no cash on hand with which to pay it, but that the money was put in by individuals.

Clarence Orr, the party named in the indictment as having suffered loss, testified that salesman Declet approached him and as a result he purchased 100 shares of stock in Continental Underwriters, Inc., for which he gave two checks, one check on the Bank of Cumming for $1,100 and the other check on the First National Bank of Gainesville for $1,000; that the salesman represented the stock to be worth $21 per share and represented that the corporation had earned $80,000; that the salesman showed the witness a financial statement that the company had earned $80,000, whereas they had operated in the red for the entire time; that within five days he received a dividend check from the defendant Cohen, president of Continental Underwriters, Inc. The evidence shows that this was not money earned but that it was put in by Cohen and others.

William Hall, John Bruner, Atlanta, for plaintiff in error.

Sam P. Burtz, Solicitor. Gen., Canton, Jess H. Watson, Cumming, for defendant in error.

GARDNER, Presiding Judge.

1. We will first discuss and pass on the ruling of the trial judge on the demurrers and the motion to quash the indictment. This indictment was drawn under Code § 26-7410. Counsel for the defendant contends that the defendant should have been indicted under Code (Ann.) § 97-112 instead of Code § 26-7410. Under Code (Ann.) § 97-113 which is part of Title 97 regarding securities it is not essential that criminal proceedings be instituted, but that section gives the Commissioner the right to issue an order to prohibit salesmen from continuing the sale of questionable securities and also gives the Commissioner the right to apply for an injunction to restrain such acts and further gives the commission the right to turn over any evidence to the solicitor general who may institute the necessary criminal proceedings. In regard to Code § 26-7410, counsel for the defendant contends that that Code section has been held to be too indefinite and uncertain to define a criminal offense or to be the basis of a criminal prosecution. In support of this contention counsel cites Poole v. State, 47 Ga.App. 303, 170 S.E. 309. That case concerns operating a motor vehicle and does not concern cheating and swindling. For that reason that case has absolutely no application to the case at bar. Howard v. State, 151 Ga. 845, 108 S.E. 513 also was a case involving the Motor Vehicle Act and is not applicable to the case at bar. Manley v. State, 166 Ga. 563, 144 S.E. 170, concerns an indictment drawn under the penal statute in regard to state banking practices. That case is not applicable to the case at bar. In Curtis v. State, 99 Ga.App. 732, 109 S.E.2d 868, the indictment there being drawn under Code (Ann.) § 97-112, Judge Townsend, speaking for the court in discussing Code § 26-7410, differentiated between the last two mentioned code sections. There it was stated that under Code § 26-7410, it must be shown that the defendant has been defrauded as a result of a scheme and device to defraud. It is clear that the evidence in the instant case shows that the victim Orr was defrauded of the sum of $2,100. Judges Townsend and Carlisle make the following comments on this point: While Curtis v. State, supra, points out that Code (Ann.) § 97-112 makes it a penal offense to do certain acts which would operate as a fraud regardless of whether a fraud was in fact successfully perpetrated or not, that case further points out that the section, like Code § 26-7410, also makes penal certain acts which did when committed...