Kercheval v. United States

• Decision Date: 04 May 1926
• Docket Number: No. 7185.,7185.
• Citation: 12 F.2d 904
• Parties: KERCHEVAL v. UNITED STATES.
• Court: U.S. Court of Appeals — Eighth Circuit

12 F.2d 904 (1926)

KERCHEVAL v. UNITED STATES.^*

No. 7185.

Circuit Court of Appeals, Eighth Circuit.

May 4, 1926.

Paul Jones, of Texarkana, Ark. (Paul Jones, Jr., of Texarkana, Ark., on the brief), for plaintiff in error.

S. S. Langley, U. S. Atty., of Ft. Smith, Ark., and James D. Shaver, Sp. Asst. U. S. Atty., of Texarkana, Ark.

Before STONE, KENYON, and BOOTH, Circuit Judges.

KENYON, Circuit Judge.

Plaintiff in error was tried and convicted in the District Court of the United States for the Western District of Arkansas on five counts of an indictment charging him with violation of section 215 of the Penal Code (Comp. St. § 10385), viz. the devising of schemes to obtain money by false and fraudulent representations, and the use of the mails in carrying out said fraudulent schemes. The first count of the indictment sets forth particularly the plan and method. The others are based on different overt acts. Defendant was acquitted on the second count.

The plan or scheme in brief was as follows: Defendant promoted two oil stock companies known as the Poindexter Royalty Syndicate and the Smackover Jack Pot Syndicate; the latter being a trust estate formed to engage in the general oil business. The former had an authorized capitalization of $300,000, divided into 10,000 units, or mineral deed assignments, of the par value of $30 each. Defendant, under the name of "Dave" Kercheval, was sole trustee. The Smackover Jack Pot, the other corporation, had an authorized capital of $5,000,000, divided into 100,000 units or assignments of interest of the par value of $50 each. Defendant under the title of "Bob" Kercheval was sole trustee of this corporation. Defendant also organized a brokerage company known as the American Finance Corporation for the purpose of assisting in selling shares and mineral deeds of the other two enterprises. All of these concerns had their principal place of business at Camden, Ark., and were dominated and controlled by defendant. The assets of these companies consisted of some leases of oil royalties.

The representations charged in the indictment as made to induce the purchase of shares and mineral deeds were many, some of them being as follows: That defendant would declare a 50 per cent. cash dividend, which would be paid at a future date to all holders of shares or assignments of interest in the two syndicates; that Jack Pot was not in the class of fly-by-night concerns, but was an organization built on principle, which would carry forward and grow to larger successes year after year; that it was organized so as to take charge of the changing conditions in the oil industry; that the stockholders were not gambling on the outcome of the drilling of one well; that persons who bought Jack Pot shares would be in the big "whack-up" that would come within 90 days to 6 months; that defendant could buy production at a tremendous discount, and that he was therefore making a special offer of four $50 shares for $50, and eight $50 shares for $100; that Jack Pot was a fair, square proposition, and there was no reason why every investor would not reap a big harvest; that defendant needed hands to harvest the oil crop of dollars he was sure to make; "that the Smackover Jack Pot ante was $10;" "that the sky was the limit," and "there was no rake-off;" that the Capital Syndicate Company, of Denver, Colo., had underwritten the stock of defendant, and that the Capital Syndicate would offer for public subscription Jack Pot certificates at par, that is, $50 each; that said securities would be traded in throughout the United States and Canada; that the Smackover Jack Pot had made a deal whereby it had made a profit of $13,000 and would pay all its stockholders on April 10, 1923, a 50 per cent. dividend; that parties who were not lucky enough to be in on the per cent. "whack-up for April, 1923," could come in for the "`divey' which defendants expected to make in May"; that parties buying Poindexter Royalty mineral deeds would become the permanent owners, and were buying something worth every cent they were asked to pay for the same; that the "Jimmy" Cox well was less than one-half mile from the Poindexter holdings, was making considerable gas and oil, and would be one of the "gusher" type wells in the Smackover field; that Poindexter warranty royalty deeds were an exceptionally good investment.

The indictment charges that all of these representations were false and fraudulent, were known by the defendant to be such, and were made with the purpose and intent to induce persons to pay him large sums of money for shares or mineral deed interests of the said companies and syndicates, and that in truth and fact large numbers of people did make purchases thereof. The indictment sets forth in the various counts letters and advertisements which were sent through the mails. Most of them contain glowing descriptions as to the future of the two oil companies, statements as to dividends paid, and the alluring prospects of securing something for nothing. The crop of gullible subjects resulted in a fruitful harvest to defendant.

On each of the five counts of the indictment upon which defendant was convicted he was sentenced to imprisonment for three years in the penitentiary and to pay a fine of $300, the terms of imprisonment to run concurrently. The case is here on writ of error.

We are presented with 76 assignments of error. Some are clearly insufficient under the rules of this court. Some present no substantial questions. Fifteen are not argued; hence abandoned. Lee Tung v. United States (C. C. A.) 7 F.(2d) 111. We attempt to group the various assignments, as there is no necessity for taking them up seriatim.

Assignment No. 1 relates to alleged error of the court in overruling defendant's motion in arrest of judgment. This motion was an attack upon the indictment for a number of reasons (some of which had been raised upon demurrer), viz. that it did not state facts sufficient to constitute a public offense against the United States; that the allegations thereof did not state the scheme, artifice, or device to defraud with sufficient certainty to inform defendant of the offense with which he was charged. This court has considered similar indictments in a number of cases in the last few years, some of which arose out of the same oil fields, and this indictment is substantially similar to the indictments in those cases so recently decided by this court. In fact, this case bears a very marked resemblance to them. Every question raised here as to the indictment has been passed on adversely by the court in these cases. Marr v. United States (C. C. A.) 8 F.(2d) 231; Morris v. United States (C. C. A.) 7 F.(2d) 785; Chew v. United States (C. C. A.) 9 F.(2d) 348; Davis v. United States (C. C. A.) 9 F.(2d) 826. See, also, as to sufficiency of the indictment, Rimmerman et al. v. United States, 186 F. 307, 310, 108 C. C. A. 385; May et al. v. United States, 199 F. 53, 61, 117 C. C. A. 431; Gould et al. v. United States, 209 F. 730, 734, 126 C. C. A. 454; Mounday et al. v. United States, 225 F. 965, 140 C. C. A. 93; Goldberg v. United States (C. C. A.) 277 F. 211.

Assignments of error 5 to 17, inclusive, and 44 and 45 challenge the admission of evidence. Except assignment 17 they relate to telegrams, advertisements, letters, and circulars sent to various people to persuade them to buy shares or deeds of interest in the so-called syndicates. The objection made by defendant to them is that they are evidence tending to show that defendant schemed to make other and different representations, pretenses, or promises than those set forth in the indictment. Of course, there must be proof of some overt act set out in a count to warrant conviction thereon, but proof of other similar acts, for the commission of which defendant could not be convicted under the indictment, are nevertheless admissible as bearing on the question of fraudulent intent, which is a material allegation of the indictment. We are satisfied the evidence objected to and pointed out in these various assignments, though not set forth in the indictment, was admissible on the question of intent, and as showing the character of the scheme in which defendant was engaged. In urging objection thereto it seems to us there is a failure to recognize the distinction we have pointed out. See Samuels v. United States, 232 F. 536, 146 C. C. A. 494, Ann. Cas. 1917A, 711; Linn v. United States, 234 F. 543, 148 C. C. A. 309; McKnight v. United States, 252 F. 687, 164 C. C. A. 527; Hallowell et al. v. United States, 253 F. 865, 165 C. C. A. 345; Davis v. United States (C. C. A.) 9 F.(2d) 826.

Assignment 17 relates to the plea of guilty entered by defendant in open court. It was a formal plea, and the court in its instructions to the jury was careful to guard the same telling them:

"The plea of guilty is introduced as evidence by the government. You are to take that into consideration; that is, you will take it into consideration upon a certain condition. If you find that Mr. Kercheval made that plea of guilty, and that no promise was held out to him for the purpose of getting him to make that plea, or if you find that he was notified before he made the plea that nothing that was ever said to him with reference to it theretofore would be met, then it is evidence for you to consider in connection with the other evidence in the case. If you find out, however, that he was included, and you are to take all the facts and circumstances into consideration — you are to take Mr. Kercheval's intelligence into consideration in connection with whether or not he...