Foster v. United States

• Decision Date: 05 April 1910
• Docket Number: 1,997.
• Parties: FOSTER et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Sixth Circuit

178 F. 165

FOSTER et al. v. UNITED STATES.

No. 1,997.

United States Court of Appeals, Sixth Circuit.

April 5, 1910

[Copyrighted Material Omitted] [Copyrighted Material Omitted] [Copyrighted Material Omitted]

The defendants were jointly indicted under section 5480 of the Revised Statutes of the United States (U.S. Comp. St. 1901, p. 3696), which provides that 'if any person having devised or intending to devise any scheme or artifice to defraud * * * to be effected by either opening or intending to open correspondence or communication with any person * * * by means of the post office establishment of the United States * * * shall, in and for executing such scheme or artifice, or attempting so to do, place or cause to be placed, any letter, packet, writing * * * in any post office * * * of the United States, to be sent or delivered by the said post office establishment * * * shall, upon conviction, be punishable,' etc. The indictment contained three counts. In the first count the alleged scheme to defraud was set out with considerable particularity. In substance the count charges that the defendants intended to and did do business at Cincinnati, Ohio, in the name of the O'Dell Brokerage Company, a corporation, and in the name of Foster & Co.; that they intended to defraud persons specifically named in the indictment, and others unnamed, who were desirous of buying and selling stocks and provisions on margins, by soliciting and securing such persons as customers, through advertisements, circulars, and letters; also by representing that Foster & Co. were engaged in doing business as brokers and dealers in stocks and provisions for present and future delivery; also by sending and causing to be sent by mail to the persons intended to be defrauded a so-called 'Review and Forecast,' intended to give information and advice to prospective purchasers of stocks, grain, etc. It is also alleged that defendants intended to represent and did represent, by the use of said 'Review and Forecast,' that Foster & Co. were lawfully, honestly, and in good faith doing business in buying and selling stocks and provisions, and that they would purchase and sell on margins, for present or future delivery, stocks and provisions, according to the quotations of the New York Stock Exchange and the Chicago Board of Trade; further, that defendants intended to send by mail to their customers a so-called 'Daily Statement,' which was intended to and did show the state of the pretended trades with the persons intended to be defrauded; that for the purpose of securing customers defendants intended to represent, by the 'Daily Statement' and otherwise, that Foster & Co. solicited and received orders to buy and sell stocks and provisions upon margins for present or future delivery, and that defendants were to charge and collect a pretended carrying charge on grain and a commission for buying and selling stocks, but that defendants in fact intended to falsely and fraudulently appropriate to their own use the money and collateral sent to them for use as margins on such pretended sales, without rendering anything of service or of value in return; that the defendants intended to and did represent in the daily statement mentioned that they had made and would make purchases and sales of stocks, grain, etc., in the various exchanges named in accordance with the actual market quotations on such exchanges at the time of receiving orders therefor, but that as a matter of fact they intended to and did report to the persons so intended to be defrauded false and fictitious quotations and prices on such stock, grain, etc., and intended to and did convert to their own use the difference between the actual market prices of the stocks, grain, etc., as quoted on the exchanges and received by them and the fictitious and fraudulent quotations and prices which they intended to and did represent and according to which fraudulent quotations and prices the so-called trades were closed and settled, sending the same by mail to the persons intended to be defrauded. The scheme was alleged to be false and fraudulent in these particulars: That defendants were not lawfully and in good faith doing a brokerage business for present and future delivery; that they did not receive, execute, and carry out, nor intend so to do, orders for the purchase and sale of stocks, grain, etc., on margins for present or future delivery according to the quotations of said exchanges; that defendants received orders to buy and sell such stocks, grain, etc., on margins with no intention of making actual delivery of the property, and made no actual margin trades, but made the trades for themselves, and instead of in good faith collecting for the persons to be defrauded the commissions for the purchase and sale of stocks, grain, etc., intended to obtain possession of such charges, commissions, and other moneys, and convert the same to their own use, without rendering anything of service or value therefor. In the second and third counts the alleged scheme to defraud was not set out, each of those counts merely alleging that the defendants 'in and for executing the scheme and artifice to defraud set out in the first count of this indictment, which statement is hereby made a part of this second count of this indictment, and in attempting so to do, did unlawfully and knowingly place and cause to be placed in a post office of the United States, to wit, the post office at Cincinnati, Hamilton county, Ohio, to be sent and delivered by the post office establishment of the United States, to the addressee thereof, a certain letter, writing, and packet' particularly described.

Each defendant separately moved to quash the indictment. The motion was granted as to the first count, for the reason that the count failed, in the opinion of the court, to charge that the letter therein named was deposited for the purpose of executing the alleged fraudulent scheme and device. The motions to quash as to the second and third counts were overruled, and the case proceeded to trial. At the conclusion of the government's case the defendants moved for the direction of an acquittal, upon the ground that the evidence failed to support the charge made in the indictment. The motion was overruled, the defendants offered no testimony, and the case was submitted to the jury. The defendants were convicted, sentences imposed, and motions for new trial denied.

Miller Outcalt, for plaintiffs in error.

E. P. Moulinier, for the United States.

Before SEVERENS, WARRINGTON, and KNAPPEN, Circuit Judges.

KNAPPEN Circuit Judge (after stating the fact as above).

The proposition which first claims attention is that the second and third counts should have been squashed as fatally defective. The specific criticism is that the language, 'in and for executing the scheme and artifice to defraud set out in the first count (of the indictment), which statement is hereby made a part of this second count of this indictment,' is insufficient to incorporate into the subsequent counts the allegation that the defendants actually devised the scheme to defraud set out in the first count; the argument being that the word 'statement' relates only to the description of the scheme with the first count alleges was devised by the defendants, and does not embrace the allegation contained in the first count, that defendants actually devised that scheme. In our opinion, the criticism is without substantial merit. It is true that the elements of the offense which must be charged in an indictment under the section in question and established in the proof are (1) that the defendants devised a scheme or artifice to defraud; (2) that they intended to effect this scheme through the use of the post office establishment of the United States; and (3) that in carrying out such scheme the defendants either deposited a letter or packet in the post office, or took or received one therefrom. Stokes v. United States, 157 U.S. 187, 15 Sup.Ct. 617, 39 L.Ed. 667; Horman v. United States, 116 F. 350, 53 C.C.A. 5 70.

And the rule is fundamental that no essential element of the crime intended to be charged can be omitted without destroying the whole pleading. United States v. Hess, 124 U.S. 483, 8 Sup.Ct. 571, 31 L.Ed. 516.

It is not, however, urged, and could not be successfully contended that it is necessary to set out in full in each count of the indictment matter contained in a previous count. One count in an indictment may properly refer to matter in a previous count, so as to avoid unnecessary repetition; and if a previous count be defective, or is rejected, that circumstance will not vitiate the remaining counts, if the reference be sufficiently full to incorporate the matter going before with that in the count in which the reference is made. Crain v. United States, 162 U.S. 625, 16 Sup.Ct. 952, 40 L.Ed. 1097; Blitz v. United States, 153 U.S. 308, 14 Sup.Ct. 924, 38 L.Ed. 725. We think the definition of the word 'statement' contended for by defendants is too narrow. The only scheme to defraud set out in the first count of the indictment is a scheme entered into by the defendants; and that portion of the first count which defendants' counsel seem to regard as the 'statement' expressly alleges in its opening paragraph, and repeatedly thereafter, that the defendants intended to do the alleged fraudulent acts constituting the scheme in question. Moreover, one cannot be indicted under the statute in question for using the mails in furtherance of a scheme to defraud not devised or participated in by him. In view of these considerations, the defendants could not have failed to understand, from the reference contained in the second and third counts, that they were charged with having devised the...