Holmes v. United States, 11766.

• Decision Date: 07 April 1943
• Docket Number: No. 11766.,11766.
• Citation: 134 F.2d 125
• Parties: HOLMES v. UNITED STATES.
• Court: U.S. Court of Appeals — Eighth Circuit

134 F.2d 125 (1943)

HOLMES v. UNITED STATES.

No. 11766.

Circuit Court of Appeals, Eighth Circuit.

March 4, 1943.

Rehearing Denied April 7, 1943.

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COPYRIGHT MATERIAL OMITTED

Leo S. Holmes, pro se, for appellant.

Emmet L. Murphy, Asst. U. S. Atty., of Omaha, Neb. (Joseph T. Votava, U. S. Atty., of Omaha, Neb., and Irvin Goldstein, Atty., Department of Justice of Washington, D. C., on the brief), for appellee.

Before GARDNER, JOHNSEN, and RIDDICK, Circuit Judges.

GARDNER, Circuit Judge.

Appellant, Leo S. Holmes, was indicted with George W. Hauser and J. W. McCormack in an indictment containing 19 counts. Count I charged them with the violation of the Securities Act of May 27, 1933, Section 77q (a) 1, Title 15 U.S.C.A., while counts 2 to 18, inclusive, charged violations of Section 338 of Title 18 U.S.C.A. by the use of the United States mails in execution of a scheme to defraud. Count 19 charged a conspiracy under Section 88, Title 18 U.S.C.A. Count 2 was dismissed during the trial and appellant was found guilty under all the remaining counts and sentenced to imprisonment. Holmes prosecuted an appeal to this court based upon the primary record and we affirmed. Holmes v. United States, 8 Cir., 115 F.2d 528. On appeal to the Supreme Court the cause was remanded with instructions to enter an order affording reasonable opportunity for the preparation, presentation, settling and filing of a bill of exceptions and for the redetermination of the case if a bill of exceptions were filed. Such a bill has been prepared and filed, and the cause has been briefed and orally argued. Hauser and McCormack, subsequent to the empaneling of the jury, but before the opening statements of counsel, entered pleas of nolo contendere and were not tried with appellant. Appellant will now be referred to as defendant. He alone stood trial and is, therefore, the only appellant.

The same scheme to defraud is common to all counts. Count I charges a violation of the Securities Act of 1933. It alleges that the defendants in Omaha, Nebraska, engaged in the sale of securities and notes of First Mortgage Acceptance Corporation denominated "participating certificates", and in doing so devised and employed a scheme and artifice to defraud specifically named persons, and in furtherance of the fraudulent scheme made use of the United States mails. The scheme to defraud is set out and described in the indictment in great detail. It charged defendants with the devising of a scheme and artifice to defraud through many ways by misrepresentation of material facts with reference to the "participating certificates" and the securities of the First Mortgage Acceptance Corporation. Such fraudulent misrepresentations included representations: (1) that the securities were a safe and sound investment; (2) that the First Mortgage Acceptance Corporation had $3.00 or more in assets for every $1.00 invested in its securities; (3) that it derived a profit from the purchase of mortgages with the proceeds of the sale of securities; (4) that the corporation was in good financial condition; (5) that First Mortgage Acceptance Corporation had always paid the interest provided for by the terms of its securities and the prospective purchasers would receive interest as provided by the terms of the securities; (6) that the securities issued by First Mortgage Acceptance Corporation were secured by first mortgages on real estate purchased with the proceeds of the sale of securities.

That said representations were false and as a matter of fact the corporation was insolvent and had never earned a profit; that it derived no profit from any source but continually suffered a loss; that it never had any earnings with which to pay interest; that the corporation was insolvent and had used funds invested to redeem some securities; that only a small portion of the funds invested were used to purchase first mortgages on real estate or any other property. The indictment charges the use of the mails in furtherance of the scheme to defraud; it specifically charges that the defendant caused the United States mails to be used by inserting an advertisement in a newspaper which would be and was sent through the mails to various stated persons. Counts 3 to 18, inclusive, charge mail fraud violations. They are identical in form except that the mail matter deposited in the mail is not the same and is specifically described. Count 19 charges a conspiracy to violate the Securities Act and the mail fraud statute in effecting a scheme to defraud and also embodies the scheme by reference to the first count. Seventeen overt acts are charged.

Defendant seeks reversal on substantially the following grounds: (1) the court erred in overruling his demurrer to the indictment; (2) he was deprived of the full number of peremptory challenges to which he was entitled; (3) he was prejudiced because his co-defendants were permitted to plead nolo contendere in the presence of the jury; (4) the evidence is insufficient to sustain the verdict of guilty; (5) that through the instrumentality of the conspiracy count he was twice convicted of the same offense; (6) that the court erred in rejecting testimony as to his intent; (7) that his business being intrastate was confined to Nebraska and the Securities Act of 1933 does not apply; (8) the court erred in its instructions to the jury; (9) that the sentence imposed is invalid because excessive.

So far as counts 3 to 18 are concerned, it may be said that they are in conventional form. The scheme as alleged in the indictment was to sell First Mortgage Acceptance Corporation securities as a safe and sound investment when in fact they were not. An indictment is sufficient if the defendant is able to ascertain from the charge what he is called upon to answer, to prepare his defense, and if necessary to plead the judgment on such charge as a bar to a second prosecution for the same offense. Bogy v. United States, 6 Cir., 96 F.2d 734; Hass v. United States, 8 Cir., 93 F.2d 427. The test is whether it contains every element of the offense intended to be charged and sufficiently apprises defendant of what he must be prepared to meet, and not whether the indictment might possibly be made more definite and certain. United States v. Shreveport Grain & Elevator Co., 287 U.S. 77, 53 S.Ct. 42, 77 L.Ed. 175; Hagner v. United States, 285 U.S. 427, 52 S.Ct. 417, 76 L.Ed. 861. In the instant case it was not essential to allege the violation of a particular statute as the offense charged is to be determined and classified by the allegations of the indictment. Hammer v. United States, 271 U.S. 620, 46 S.Ct. 603, 70 L.Ed. 1118. In each count of the indictment the falsity of the scheme is charged. This necessitated proof of the fraudulent character of the scheme and the falsity of the representations and a denial of the bona fide character of the scheme. Grossman v. United States, 7 Cir., 282 F. 790. An inspection of the indictment discloses that it contains a detailed description of the scheme to defraud, names the persons to be defrauded specifically and by class, and the means devised and used to that end. Each count sets forth facts constituting the scheme to defraud and charges the use of the mails for the purpose of promoting it. So far as the mail fraud counts are concerned, the gist of the offense was not the devising of a scheme to defraud but the use of the United States mails in furtherance of such scheme. Cochran v. United States, 8 Cir., 41 F.2d 193; Busch v. United States, 8 Cir., 52 F.2d 79; Hartzell v. United States, 8 Cir., 72 F. 2d 569. The scheme set forth is sufficient to advise the defendant with the particulars thereof and this is sufficient. United States v. Momsen, 7 Cir., 115 F.2d 635. We think the court did not err in overruling defendant's demurrer.

Defendant claims error because only 10 peremptory challenges were allowed to the three defendants. It is first to be observed that no objection was made to the procedure. The court was not called upon to make any ruling with reference to the procedure and the record is silent as to how the defendants allocated the 10 challenges among themselves. At the trial this defendant was represented by able counsel, three in number, but they interposed no objections and made no requests of the court for a ruling and the matter is for the first time raised in this court. Having failed to secure a ruling on the matter in the trial court, defendant cannot here be heard to complain. Aside from this, however, the procedure followed was that provided by the statute. Section 424, Title 28 U.S.C.A. provides that where several defendants are jointly indicted and tried they are deemed a single party for the purpose of all peremptory challenges. This statute was upheld by the Supreme Court in Schaefer v. United States, 251 U.S. 466, 40 S.Ct. 259, 64 L.Ed. 360. Nothing in the Constitution requires Congress to grant peremptory challenges to the accused and we have held that courts are not limited to any particular method of exercising peremptory challenges which Congress has granted defendant. Philbrook v. United States, 8 Cir., 117 F.2d 632. See, also, Wood v. United States, 299 U.S. 123, 57 S.Ct. 177, 81 L.Ed. 78; Stilson v. United States, 250 U.S. 583, 40 S.Ct. 28, 63 L.Ed. 1154.

After the jury had been selected and sworn defendants McCormack and Hauser entered pleas of nolo contendere in the presence of the jury and the Judge explained the effect of these pleas. Defendant contends that this procedure was prejudicial to him. Here again, though represented by counsel, no objection was made to the procedure and the court was not called upon to make any ruling. Certainly when no objection is interposed it cannot be said to be prejudicial error to permit a co-defendant to enter a plea of nolo contendere in the presence of the jury, especially when the court explains the effect of such plea. Kelling v. United...