Friedman v. United States

• Decision Date: 30 June 1965
• Docket Number: 17690.,17681,No. 17673-17676,17689,17673-17676
• Citation: 347 F.2d 697
• Parties: Stanley FRIEDMAN, Appellant, v. UNITED STATES of America, Appellee. Francis LOWERY, Jr., a/k/a Fred Lowry, Appellant, v. UNITED STATES of America, Appellee. Ralph O'GRADY, Appellant, v. UNITED STATES of America, Appellee. Wayne A. SCHMIDT, Appellant, v. UNITED STATES of America, Appellee. Robert SCHAFER, Appellant, v. UNITED STATES of America, Appellee. Arvin MUESCHKE (a/k/a Arvin Mueske), Appellant, v. UNITED STATES of America, Appellee. Kay PETERSON, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

347 F.2d 697 (1965)

Stanley FRIEDMAN, Appellant, v. UNITED STATES of America, Appellee.

Francis LOWERY, Jr., a/k/a Fred Lowry, Appellant, v. UNITED STATES of America, Appellee.

Ralph O'GRADY, Appellant, v. UNITED STATES of America, Appellee.

Wayne A. SCHMIDT, Appellant, v. UNITED STATES of America, Appellee.

Robert SCHAFER, Appellant, v. UNITED STATES of America, Appellee.

Arvin MUESCHKE (a/k/a Arvin Mueske), Appellant, v. UNITED STATES of America, Appellee.

Kay PETERSON, Appellant, v. UNITED STATES of America, Appellee.

Nos. 17673-17676, 17681, 17689, 17690.

United States Court of Appeals Eighth Circuit.

June 30, 1965.

Morton N. Wekstein, Yonkers, N. Y., made argument for appellant, Stanley Friedman and filed typewritten brief.

Maclay R. Hyde, Minneapolis, Minn., made argument for appellant, Francis M. Lowery, Jr., a/k/a Fred Lowry, and others, and filed typewritten brief.

Franklin Petri, Jr., Minneapolis, Minn., made argument for appellant, Ralph O'Grady, and filed typewritten brief.

Frank E. Proctor, Minneapolis, Minn., made argument for appellant, Wayne A. Schmidt, and filed typewritten brief.

John F. Eisberg, Minneapolis, Minn., made argument for Robert Schafer, and filed typewritten brief.

Donald K. Smith, Minneapolis, Minn., made argument for Arvin Mueschke and Kay Peterson, and filed typewritten brief.

Patrick J. Foley, Asst. U. S. Atty., Minneapolis, Minn., made argument for appellee and filed printed brief, with Miles W. Lord, U. S. Atty., Minneapolis, Minn.

Before VOGEL and BLACKMUN, Circuit Judges, and REGISTER, District Judge.

VOGEL, Circuit Judge.

By grand jury indictment, eleven persons were charged in twelve counts with having violated 18 U.S.C.A. § 2¹ and 18 U.S.C.A. § 1341 proscribing mail fraud.² Defendants named were Gil Anthony, Evan Eppert, Stanley Friedman, Henry Klug, Fred Lowery, Arvin Mueschke, Ralph O'Grady, Kay Peterson, Robert Schafer, Wayne Schmidt and Jerome Tremont. During a seven weeks' trial in the United States District Court for the District of Minnesota eight of the defendants were found guilty by jury verdict of various counts of mail fraud; one defendant, Gil Anthony, was acquitted by the jury; the trial judge directed the acquittal of Jerome Tremont; and the government moved for and obtained a dismissal as to Henry Klug. Of the eight convicted, Evan Eppert did not appeal. Accordingly, this proceeding is concerned with the appeals of Kay Peterson, Stanley Friedman, Fred Lowery (or Lowry), Arvin Mueschke, Ralph O'Grady, Robert Schafer and Wayne Schmidt.

THE INDICTMENT

The indictment charges that during the period from on or about January 1, 1957, and continuously thereafter to on or about May 20, 1962, the defendants "* * * devised and intended to devise a scheme and artifice to defraud, and to obtain money and property by means of false and fraudulent promises, pretenses, and representations from students and prospective students of the dance studios operated by and for Defendants, which said students and prospective students include the following: naming them". Each count of the indictment charged separate use of the mails in furtherance of the overall scheme to defraud.

It was charged that in furtherance of the scheme the appellants operated two studios, one in Minneapolis and one in St. Paul, Minnesota, under the names "National Dance Studios" and "Dale Dance Studios". The indictment charged that the scheme to defraud included sales meetings at which the appellants talked to and advised dance instructors on the use of coercion, duress and undue influence, and how their forces could be exerted on students; on the means of selling contracts of great expense to students; and on the means of receiving large amounts of money without having the intention to abide by the terms of the contracts for dancing lessons; means of inducing students to visit the studios included telephone messages and mailed invitations. It was charged that after a student had visited a studio and agreed to a short contract, new inducements were made to get the student to execute other and additional contracts for large sums of money without the intention to complete and fulfill such contracts. Fake contests were represented as being bona fide and essential for a continuation of dancing lessons. The fact was, however, that their function was to create a feeling of fear and anxiety on the part of the student who, upon hearing that she had passed the test, was relieved and comforted and in the proper frame of mind to execute another contract for an even larger sum of money. The approval test was one means of exerting coercion, duress and undue influence. It was charged that the appellants utilized a number of false promises to induce students to purchase contracts. These false promises included, among others, the promises that the student could learn dancing and increase her skill in dancing; the student could acquire a specific degree of agility in a specified number of lessons; the student's progress would be objectively approved by a board; the student would receive one or more free trips to such places as Chicago, New York and San Francisco or Honolulu, Hawaii, Kingston, Jamaica, and Las Vegas, Nevada, for executing contracts; a student could complete long-term five-year, ten-year, life-time or other courses; the student had acquired the requisite ability in dancing to join an exclusive club; that by executing and completing a contract the student would become an exhibition dancer for television programs; and that the student would receive private lessons for the contracts.

It was claimed that the appellants' fraudulent intent was demonstrated by (a) the approval test; (b) the sales devices used in connection with the test and the sales pitches; (c) the repeated attempt to escalate the student's contractual obligations; and (d) the phasing out of students from private lessons to group or club lessons, contrary to promises made when obtaining contracts.

VERDICTS AND SENTENCES

Jury verdicts and sentences imposed on those convicted were as follows:

Kay Peterson was acquitted on counts 1 and 8; convicted on counts 2, 3, 4, 5, 6, 7, 10, 11 and 12. She was sentenced to pay a fine of $1,000; a term of 18 months' imprisonment was suspended and she was placed on probation for three years.

Stanley Friedman was acquitted on counts 1 and 8, and convicted on counts, 2, 4, 5, 6, 7, 10, 11 and 12. He was sentenced to two years' imprisonment.

Fred Lowery was acquitted on counts 1 and 8, and convicted on counts 2, 4, 5, 6, 7 and 10. He was ordered to serve three years on probation.

Arvin Mueschke was acquitted on counts 1 and 8, and convicted on counts 2, 3, 4, 5, 6, 7, 10, 11 and 12. He received a sentence of one year and one day's imprisonment which was suspended and he was placed on probation for a period of two years.

Ralph O'Grady was acquitted on count 1, and convicted on counts 4 and 5. He received a sentence of 18 months' imprisonment, to serve five months and then to be placed on probation for a period of three years.

Robert Schafer was acquitted on counts 1 and 8, and convicted on counts 4, 5, 6, 7 and 10. He received a sentence of 18 months' imprisonment suspended, and placed on probation for three years.

Wayne Schmidt was acquitted on counts 1 and 8, and convicted on counts 2, 4, 5, 6, 7 and 10. He received a sentence of 18 months' imprisonment suspended and was placed on probation for a period of three years.

Evan Eppert, who did not appeal, was acquitted on count 8 and convicted on counts 2, 4, 5, 6, 7, 10 and 11. He was sentenced to 18 months' imprisonment which was suspended and he was placed on probation for a period of three years.

Gil Anthony was acquitted on all counts submitted to the jury as to him; namely, counts 2, 6, 7, 8 and 10.

While we are presented herein with separate appeals from the seven appellants, they were, nevertheless, prosecuted together under one indictment, tried at the same time before one jury, and they will be treated here in this single opinion, separate reference being made to the individual appellants as that may become feasible or necessary.

MOTION TO DISMISS OR FOR SUPPRESSION OF EVIDENCE AND RETURN OF SEIZED PROPERTY.

On November 14, 1963, before trial, Jerome Tremont, Stanley Friedman and Kay Peterson moved to dismiss the indictment or in the alternative to suppress certain evidence and order its return to the movants upon the ground that the evidentiary material was unlawfully seized without a warrant and in contravention of the rights guaranteed by the Fourth Amendment to the Constitution of the United States.

The records of which suppression was sought (under 18 U.S.C.A. Rule 41(e)) had been located on the fourth floor of premises described as 55 South 8th Street, Minneapolis, Minnesota, which premises were under lease (by assignment) to National Dance Studios, Inc., of which Stanley Friedman and Kay Peterson were the sole stockholders. It was contended that National Dance Studios, Inc., was the owner of certain of the records so seized and the bailee of the remaining records seized, which were owned by Dance Studios of St. Paul, Inc. (of which Stanley Friedman was the principal stockholder) and Dance Studios of Minneapolis, Inc. (of which defendant Jerome Tremont was the principal stockholder and officer). The material seized allegedly consisted of records made up from and during the operation of the dance studios, agreements between the parties, letters, account books cash receipt books, phonograph records and tape recordings regarding sales procedures, newspaper advertisements, photo albums, stationery, etc., all belonging to or connected with the three corporations named supra and used in connection with the operation of dance studios in Minneapolis and St. Paul.

The District Court, with meticulous care, conducted a two-day hearing on the motion to suppress, at the conclusion of which it found that the premises and the...