Levey v. United States, 8316.

• Decision Date: 07 December 1937
• Docket Number: No. 8316.,8316.
• Parties: LEVEY et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

92 F.2d 688 (1937)

LEVEY et al. v. UNITED STATES.

No. 8316.

Circuit Court of Appeals, Ninth Circuit.

October 29, 1937.

Rehearing Denied December 7, 1937.

COPYRIGHT MATERIAL OMITTED

H. Sylvester Garvin and Anthony Savage, both of Seattle, Wash., for appellant Levey.

Leslie H. Dills, of Seattle, Wash., for appellant Davis.

J. Charles Dennis, U. S. Atty., and Gerald Shucklin, Asst. U. S. Atty., both of Seattle, Wash.

Before GARRECHT, MATHEWS, and HANEY, Circuit Judges.

HANEY, Circuit Judge.

Appellants were convicted under an indictment charging use of the mails to defraud and a conspiracy, and have appealed.

The statute alleged to be violated is 18 U.S.C.A. § 338, which provides in part: "Whoever, having devised * * * any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange * * * for unlawful use any * * * security * * * of any State * * * municipality * * * corporation * * * shall, for the purpose of executing such scheme or artifice * * * knowingly cause to be delivered by mail according to the direction thereon * * * any such letter * * * circular, pamphlet, or advertisement, shall be fined."

The indictment named seventeen defendants. It charged a scheme with several parts.

It was alleged that a part of the scheme was to organize Guardian Securities Corporation, a Washington corporation, as a stock brokerage concern; that defendants would then solicit business, obtain subscription orders for various stocks and securities for investors, who would deliver money or property to obtain such stocks and securities; that defendants would represent that such stocks and securities would be held available for delivery to the investors upon completion of payment therefor. It was charged, however, that in fact, defendants' purpose was to appropriate the money and securities delivered to the investors to their own use and benefit, without execution of the orders given by the investors.

Another part of the scheme alleged was that defendants would obtain subscriptions for stocks from investors on the so-called collateral plan; that defendants would represent that marketable securities delivered to defendants by the investors would be held as collateral for loans to carry such subscriptions. Defendants' purpose, however, as alleged, was to immediately sell the collateral and appropriate the proceeds to their own use.

Another part of the plan set forth in the indictment was for defendants to obtain an option to purchase stock in Dixie Comstock Gold Mining Company, a corporation, at 12½ cents a share, and to sell said stock to investors at 25 cents a share, increasing the price to 40 cents a share by representing that there was a rising market therefor. It was charged that in fact there was no rising legitimate market and that there was no alleged syndicate formed to purchase back from the investors such mining stock at 50 cents a share as represented.

There were eleven counts in the indictment, each of the first ten containing a communication mailed within the last six months of 1934. The eleventh count charged a conspiracy to violate 18 U.S.C. A. § 338. Appellant Levey (also known as Laney) was found guilty on all counts except the seventh. Appellant Davis was found guilty only on the eleventh, or conspiracy count. Both appealed, but at the argument the appeal of Davis was, on his motion, dismissed.

Appellant challenges the sufficiency of the evidence, contending that the scheme was not proven. There was evidence that Guardian Securities Corporation had an office containing a battery of telephones; that salesmen would contact the investors by means of telephone calls, after which personal calls were made on the investor. Appellant, Harris, and Rude organized the corporation, and appellant was the guiding spirit. There was evidence that a number of investors were in fact defrauded in the manner charged in the indictment. The investors delivered money or property and received nothing in return. The communications specified in the indictment were sent through the mails. This evidence, if believed by the jury, is amply sufficient to sustain their verdict of guilty against appellant.

Appellant contends that the evidence shows that the receiver of Guardian Securities Corporation had sufficient assets to liquidate all liabilities; that the failure of the investors to complete payment was the basic reason for failure of the company to deliver the stock; and that at most appellant Levey was guilty only of negligence in the manner and methods in which the business was conducted. While the jury might have so concluded, it did not do so, but found against all these contentions on evidence which at most was conflicting only. In those circumstances no error appears.

It is also contended that the evidence is insufficient to sustain conviction on the conspiracy count. This contention may be briefly disposed of. Levey worked with others and defrauded investors. The jury could properly infer that Levy and the others had agreed to do so. In fact it would do violence to the evidence to infer the contrary.

In this connection appellant complains of the following instruction given to the jury: "Any party coming into a conspiracy or scheme to defraud at any stage of the proceedings with knowledge that an illegal scheme or conspiracy is in operation, becomes under the law, a party to and responsible for all acts done by any of the other parties either before or afterwards in furtherance of the common design. One who joins such a scheme or conspiracy adopts for himself and makes him responsible for all that preceded as well as what is done during his personal participation."

We hold that the instruction was not erroneous. Robinson v. United States (C. C.A.9) 33 F.(2d) 238, 240; Marino et al. v. United States (C.C.A.9) 91 F.(2d) 691.

Appellant objected to the introduction in evidence of the books and records of Guardian Securities Corporation, and contends that such records are inadmissible because none of the defendants had dominion or control over them. Witness Beckman testified: "* * * I worked as a bookkeeper, accountant and had charge of the books and records of the Guardian Securities Company Corporation. During my term of employment the officers of the company, namely Laney, Harris and Rude referred to the books * * * In my work I received orders from Laney, Harris and Rude * * *"

The court carefully charged the jury: "* * * Before any entry in such books can be considered by you in determining the guilt of any defendant, it must first be proven to you beyond all reasonable doubt that such defendant made or caused to be made that particular entry, or that it was made with his knowledge and under his supervision. Unless you so find, no entry in the books of account can be considered by you in any manner as proving or tending to prove the guilt of any defendant."

Under these circumstances, there was no error in the admission of such books and records. See Wilkes v. United States (C. C.A.9) 80 F.(2d) 285, 290.

Appellant also objected to the introduction in evidence of the records of Wilson-Fairbanks Company and Hachez & Company, and contends that they were inadmissible because they were records of third persons over which none of the defendants had any control. These records were not introduced to show admissions of appella...