Koolish v. United States, 17462.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Citation340 F.2d 513
Docket NumberNo. 17462.,17462.
PartiesAbraham L. KOOLISH, David F. Koolish and John B. Carnell, Appellants, v. UNITED STATES of America, Appellee.
Decision Date25 February 1965


Albert E. Jenner of Raymond, Mayer, Jenner & Block, Chicago, Ill., made argument for appellants and filed brief with Prentice H. Marshall and Robert E. Pfaff of Raymond, Mayer, Jenner & Block, Chicago, Ill.

Miles W. Lord, U. S. Atty., Minneapolis, Minn., made argument for appellee and filed brief with Hartley Nordin, Asst. U. S. Atty., Minneapolis, Minn.

Before VOGEL, VAN OOSTERHOUT and MEHAFFY, Circuit Judges.

VOGEL, Circuit Judge.

The appellants herein, Abraham L. Koolish, David F. Koolish and John B. Carnell, together with Marvin L. Kline, Fred Fadell, Philip G. Rettig and J. George Zimmerman, were indicted by a grand jury, charged in fifteen counts with mail fraud, 18 U.S.C.A. § 1341,1 and a single count of conspiracy to commit mail fraud, 18 U.S.C.A. § 371.2 During the trial Philip G. Rettig was severed from the case due to illness. He is still under indictment and his trial is pending. All other defendants were found guilty by a jury of the conspiracy count and of various mail fraud counts, with the exception of Fred Fadell, who during the trial pleaded guilty to one count of mail fraud. Abraham L. Koolish and David F. Koolish were sentenced to five years' imprisonment on Counts 2, 4, 9 and 16 (the conspiracy count), and five years' imprisonment on Counts 1, 13, 14 and 15, the second sentence to be served consecutively to and not concurrently with the first sentence. Each was also fined $17,000 and ordered to pay the costs of prosecution, which totalled $7,479.76. They were found not guilty on Counts 3, 5, 11 and 12. Carnell was sentenced to a term of five years' imprisonment as a general sentence on Counts 1, 2, 4, 9, 12, 13, 14, 15 and 16, he having been found not guilty on Counts 3, 5 and 11. Kline was sentenced to serve five years' imprisonment on Counts 1, 2, 3, 4 and 9 and five years' imprisonment to be served consecutively thereto on Counts 12, 13, 14, 15 and 16. Kline was found not guilty on Counts 5 and 11. Zimmerman, who was found guilty on Counts 9 and 16 only, was sentenced to a term of imprisonment for five years but execution thereof was suspended and he was placed on probation for a period of five years. On the one count to which he pleaded guilty, Fadell was sentenced to a term of imprisonment for a period of one year and one day. Service of his sentence was stayed for 30 days, during which period he moved for further stay of commitment for two years to enable him to put his personal and business affairs in order or in the alternative to suspend execution of the sentence and place him on probation. Disposition of that motion has been continued for a period of 18 months.

Abraham L. Koolish, David F. Koolish, John B. Carnell and Marvin L. Kline appealed from the judgments of conviction. On July 27, 1964, Kline withdrew his appeal. The appellants herein, therefore, are only the two Koolishes and Carnell.


Appellants, with their co-defendants, were charged with conspiracy and with using the mails in furtherance of a scheme to defraud and obtain money and property by means of false representations from the Sister Elizabeth Kenny Foundation, its contributors and prospective contributors. The conspiracy charged was alleged to have existed over a period from January 1, 1949, to January 30, 1962, the date on which the indictment was returned. The named defendants may be described as follows:

Marvin L. Kline, former mayor of Minneapolis, Minnesota, was, during the times involved, the Executive Director of the Sister Elizabeth Kenny Foundation.

Fred Fadell, of Minneapolis, Minnesota, was the owner and operator of Fred Fadell and Associates, a public relations and advertising agency which was retained by the Kenny Foundation to perform public relations and promotional services, officing with the Foundation, rent free, and being paid by the Foundation first on a semi-monthly and later on a monthly basis.

Abraham L. Koolish, of Chicago, Illinois, was financially interested in Empire Industries, Inc., Empire Associates, New Century Corporation and LeMarge Mailing Service Company, all of which conducted direct mail solicitations for contributions for the Kenny Foundation.

David F. Koolish, also of Chicago, Illinois, is the son of Abraham L. Koolish and together with his father was financially interested in the business entities which conducted the Kenny Foundation campaigns.

John B. Carnell, of Chicago, Illinois, was an employee of the Koolish companies who handled the Kenny Foundation account.

Philip G. Rettig, of Chicago, Illinois, was president of New Century Corporation during a portion of the indictment period.

J. George Zimmerman, of Minneapolis, Minnesota, was a Certified Public Accountant who was engaged by the Kenny Foundation to perform independent audits of its books and render financial statements.

The Sister Elizabeth Kenny Foundation (variously referred to herein as "Kenny" and "Foundation") was organized in 1943. Its purpose was the treatment and rehabilitation of youngsters stricken with infantile paralysis. The Foundation had various sources of income, including the patients themselves, March of Dimes Campaign, door-to-door solicitations, gifts, bequests, grants and mail solicitations. In 1949, the Foundation turned to the two Koolishes and Carnell to assist it in raising money through direct mail solicitation. During the period from 1951 through 1960 the Koolishes, their associates and organizations, raised something more than $22,000,000 from contributors. Of that, $9,000,000 or approximately 40% of each contributor dollar reached the Foundation. The mail campaigns produced only about 25% of the Foundation's income for the period 1952 to 1959.


The indictment alleged that the defendants devised a single all-inclusive scheme to obtain money by false pretenses from the Kenny Foundation and its contributors. With minor changes, the government accepts and we adopt the appellants' summary of the scheme as it was alleged in the detailed indictment. It consisted of ten material parts:

1. Kenny's Executive Director Kline and its public relations counsel Fadell awarded mail solicitation contracts to the Koolish companies (Empire Associates, Empire Industries, Inc., and New Century Corporation) without obtaining competitive bids and at rates which provided "large profits" to the Koolish companies.

2. All of the defendants (except Zimmerman) caused the fall (as opposed to spring) mailing contracts between Kenny and the Koolish companies to contain provisions for refunds by the Koolish companies in the event that the mailing costs were less than the price agreed to in the contracts. However, this provision of the fall contracts was not fulfilled. Instead only "token refunds" were made and accepted because Kline and Fadell did not require audits to be made of the books of the Koolish companies to determine the amounts of the refunds due.

3. During the period 1952-1955 defendants A. L. Koolish, David F. Koolish, John B. Carnell and Philip G. Rettig "diverted" more than $350,000 of the proceeds realized from the mailing contracts to Kline and Fadell and concealed these facts from Kenny's directors, contributing agencies, licensing departments of states and cities, and the Kenny donors. The Koolish companies paid money to Fadell which Fadell thereafter divided with Kline. The payments to Fadell were recorded on the books of the Koolish companies as operating costs or costs of preparing Kenny's mailings.

4. Defendant A. L. Koolish purchased New Century Corporation (which participated in the Kenny mailing program) and he and his son, defendant David F. Koolish, concealed the ownership of it from Kenny, its donors and the public by appointing "dummy" directors and nominal stockholders. The two Koolishes designated Carnell and Rettig as officers of New Century and represented (a) that Carnell owned New Century and (b) that New Century was not associated with either the other Koolish companies or the two Koolishes themselves.

5. The Koolishes, Carnell and Rettig caused New Century to make gifts and to provide entertainment for Kline, Fadell and various other officers and directors of Kenny and charged the costs on New Century's books as costs of preparing mailings.

6. Kline, Fadell and Carnell arranged for Carnell to be paid $400 per month by Kenny as an administrative consultant from May 1, 1957, until March 1, 1960.

7. Kline and Fadell established a committee called the Special Events Committee which they dominated and controlled and together with Zimmerman falsely represented that this committee conducted the direct mail campaigns of Kenny.

8. Kline, Fadell and Zimmerman withheld audit statements of the Special Events Committee from Kenny directors, licensing departments of states and cities, Better Business Bureaus, contributing agencies and Kenny donors. Zimmerman prepared Kenny's consolidated audit reports which falsely stated the costs of the direct mail campaigns by reporting only a fractional part of the actual costs as "Costs of Fund Campaigns" and allocating the balance to "Costs of Therapist Training Operations; Medical Education and Training Programs; Public Education and Information Services; Promotion and Development of Additional Treatment Facilities; Grants for Medical Research; Publicity and Public Relations Operations, Provided Through National Headquarters".

9. Defendants Carnell and Rettig in the name of New Century Corporation contracted with Kline to do mailing and list maintenance for the Foundation and then caused these services to be performed by the LeMarge Mailing Service Company.

10. All of the defendants (except...

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