Estep v. United States

• Citation: 223 F.2d 19
• Decision Date: 15 July 1955
• Docket Number: No. 15048.,15048.
• Parties: William ESTEP, Appellant, v. UNITED STATES of America, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

223 F.2d 19 (1955)

William ESTEP, Appellant, v. UNITED STATES of America, Appellee.

No. 15048.

United States Court of Appeals Fifth Circuit.

June 8, 1955.

Rehearing Denied July 15, 1955.

Howard Dailey, Lester L. May, Maury Hughes, Dallas, Tex., for appellant.

Heard L. Floore, U. S. Atty., Ft. Worth, Tex., Wm. H. Timbers, Gen. Counsel, U. S. Sec. and Exch. Comm., Washington, D. C., for appellee.

Before HUTCHESON, Chief Judge, and TUTTLE and JONES, Circuit Judges.

HUTCHESON, Chief Judge.

Tried and convicted on nine counts of a ten count indictment, charging in four of them violations of the Mail Fraud Statute, 18 U.S.C., § 1341, and, in five, of the Securities Act, as amended, 15 U.S.C.A. §§ 77e(a) (1) and (2) and 77q (a), and sentenced to imprisonment for five years and to pay a fine of $2000, defendant has appealed.

Putting forward four specifications of error,¹ appellant is here insisting that the judgment of conviction may not stand. For the reasons hereafter set forth as to each, we are of the clear opinion that none of the specifications are meritorious and that the judgment must be affirmed.

While the record is lengthy, not because of the multitude of issues but because of the number of witnesses offered in support of them, the case, in its essence, is quite a simple one. The scheme to defraud, alleged in the indictment and testified to at the trial by witnesses for the government, related to the sale of the capital stock of Atomotor Manufacturing Company, Inc., which was represented as being about to market a fuelless, self energizing motor. A number of representations, alleged to have been made to induce persons to purchase stock subscriptions, were testified to by a number of witnesses who had purchased the stock, and there was abundant evidence to take to the jury the question of whether the representations were false and whether the scheme was one to defraud.

Among the matters testified to were: that qualified engineers had told defendant that the motor could not possibly work; that a patent attorney, whom he had consulted about the patentability of the claim for the motor, had told him that the claim for it was in effect a claim of perpetual motion, and that no patent could be obtained thereon; that defendant had oversold the authorized capital stock of the corporation; and that he had used for his own personal use some of the money obtained from the sale of stock, though he had stated that all of the money from the sale of the stock would be used to finance the motor. It was also proved that appellant had used the mails as alleged in the indictment.

The defendant did not testify, nor did he offer any evidence in rebuttal of testimony, that he had been told that the motor could not possibly work and that it was unpatentable, that it was in effect a scheme for perpetual motion, which schemes everyone knew were impossible. There was further evidence, not disputed by any testimony offered by him, that his claims to knowledge of, or expertness in, the field of atomic energy were completely without foundation.

When appellant's claims of error are considered against this background and the controlling rule of law, that where a sentence on many counts does not exceed the sentence which could be properly imposed on one of them as to which there was no error, the sentence will not be disturbed, even though there might be error in connection with one or more counts, it is plain that the attack upon the judgment is insubstantial.

It is quite clear that the first ground of error, of the use in evidence of the books of the corporation, is without substance. The books and records were not the property of defendant, nor were they kept by him or in his possession. Further, no search or seizure was involved in obtaining them. On the contrary, they were voluntarily delivered to the government by the person then in possession of them. Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771; Burdeau v. McDowell, 256 U.S. 465, 41 S.Ct. 574, 65 L.Ed. 1048. Cf. Fleming v. Montgomery Ward & Co., 7 Cir., 114 F.2d 384, cited by appellant.

Under his second ground of error, the denial of his motion for acquittal, defendant does not, indeed could not, claim that there was no testimony sufficient to take to the jury whether or not he had devised a scheme to defraud. The grounds of the motion were: that the evidence fails to show the use of the mails in furtherance of the alleged scheme to defraud charged in the mail fraud counts; and that, as to counts 6 to 10, charging violation of the Securities and Exchange Commission Act, the evidence shows that all of the securities were sold in Texas, and none outside thereof.

The short and simple answer to these claims as to the mail fraud counts is that they are wholly without foundation in law and in fact, for, as we have shown above, the record contains ample evidence to support a verdict finding that there was a scheme to defraud, and that the indictment letters were mailed in connection with the furtherance of the plan to promote the enterprise by selling stock in it.

As to the charges under the Securities Act, there is uncontradicted evidence that sales were made to at least one or more persons residing outside of the state. Besides, under 15 U.S.C.A. § 77e(a) (1) and (2), the use of the mails in connection with the sale of a non-registered security is in violation of law, and there is no claim that the security was registered.

Finally, if it be conceded that the motion to instruct was good as to counts 6 to 10, as pointed out above this would not require a reversal of the judgment because the sentence imposed was no more than could...