Mathews v. United States
| Decision Date | 04 October 1926 |
| Docket Number | No. 6724.,6724. |
| Citation | 15 F.2d 139 |
| Parties | MATHEWS v. UNITED STATES. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Edward P. Smith, of Omaha, Neb. (William A. Schall, Francis S. Howell, and Frank E. Sheehan, all of Omaha, Neb., on the brief), for plaintiff in error.
James C. Kinsler, U. S. Atty., of Omaha, Neb. (Sylvester R. Rush, Sp. Asst. Atty. Gen., on the brief), for the United States.
Before VAN VALKENBURGH and BOOTH, Circuit Judges, and PHILLIPS, District Judge.
Plaintiff in error and others were tried and convicted under an indictment charging violation of sections 215 and 37 of the Criminal Code (Comp. St. §§ 10201, 10385). The indictment contained 11 counts. Each of the first 10 charged a scheme to defraud and a separate use of the United States mail for the purpose of executing the scheme. The eleventh count charged a conspiracy to commit the substantive offenses charged in the first 10 counts, and the doing of certain acts to effect the object of the conspiracy. Plaintiff in error was convicted on all counts but the first. He brings this writ of error to the judgment entered, alleging as grounds for reversal: (1) Error in overruling the motion on his behalf for a directed verdict, based on an alleged fatal variance between the charge in the indictment and the proof; (2) error in giving certain instructions by the court to the jury, which, it is claimed, amounted in legal effect to an amendment of the indictment.
For a clearer understanding of these alleged errors, it is necessary to set out excerpts from the indictment and from the charge of the court to the jury. The indictment contained the following:
"That Willard V. Mathews and others, naming them * * * did devise a scheme and artifice to defraud, and for obtaining money and property, by means of false and fraudulent pretenses, representations and promises, from a certain class of persons, * * * that is to say, those persons who, by the means hereinafter described, should be induced by the defendants to purchase and pay for the stock, bonds, certificates, and other securities * * * issued or thereafter to be issued by the corporations and banks hereinafter named, * * * and those persons who, by said means, should be induced to loan * * * or invest money * * * to or with the said corporations and banks * * * upon and by means of certain pretenses, representations, and promises hereinafter set forth, to be made by the defendants to said persons; * * * that Willard V. Mathews and others, naming them were stockholders, officers, employees, and agents, exercising the complete control * * * of the following named corporations and banks, * * * to wit, the Guaranty Securities Company of Omaha, Neb. and others, naming them; * * * and the said scheme and artifice so devised by the defendants * * * was that the said defendants, in the control, management, and direction of the aforesaid corporation and banks, should together with the defendants naming them promote, organize, and incorporate * * * a certain other corporation, to be known as the Colonial Timber & Coal Corporation, with headquarters at Charleston, W. Va., the control and management whereof should be acquired and exercised by the defendants; that said Colonial Corporation * * * should hold itself out as the owner in fee simple of 700,000 acres of coal and timber lands in West Virginia and other States (italics ours), and should issue bonds in the amount of $2,000,000 purporting to be secured by first mortgage upon 147,000 acres of said land; that the defendants should cause the said bond issue ostensibly to be underwritten and guaranteed by the said Guaranty Securities Companies; * * * that the defendants should cause large amounts of said bonds, and of the stock of the said Colonial Corporation, to be sold and transferred to the corporations and banks hereinbefore mentioned, and, through said banks and corporations as selling agents, should cause other large amounts of said bonds to be sold to the general public, the proceeds of which sales to the said banks and corporations and to the general public should be appropriated to the use, benefit, and gain of the defendants and of the said Colonial Corporation; that the defendants, without paying any money or giving any other valuable consideration therefor, should cause large amounts of said stock and bonds to be allotted and transferred to themselves, thereby enabling the defendants to sell and otherwise dispose of said stock and bonds for their own gain and profit; that in order to obtain additional money and property, to be appropriated to the use, gain, and profit of the defendants in the operations aforesaid, the defendants should cause the corporations and banks hereinbefore mentioned to issue and sell to the general public large amounts of stock, bonds, certificates, and other securities and evidences of indebtedness, and to solicit and obtain large sums of money in deposits and loans from the public generally; that the false and fraudulent pretenses, representations, and promises, so to be made by the defendants as aforesaid, in pursuance of the said scheme and artifice, and which were by the defendants intended to be understood, believed, and relied upon by the persons so to be defrauded as aforesaid, were as follows, to wit:
* * * * *
"That said banks and corporations, and those in the management and control thereof, were not promoters or speculators, but were mortgage and bond bankers, loaning their own funds direct to mortgagors upon improved income-producing real estate; * * * that the bonds issued by the said Guaranty Securities Companies and purporting to be first mortgage bonds were directly and amply secured by deposits with a bonded trustee, or real estate first mortgages upon improved, income-producing farm lands in eastern Nebraska and western Iowa, and by other first mortgages upon improved, income-producing real estate; * * * That each of said banks and corporations had earned, was earning, and would continue to earn large net profits, and that each said bank and corporation possessed a large surplus set aside from net earnings; * * * that each of said banks was a sound financial institution, and had been, was being, and would be conducted according to sound banking principles; * * * that the bonds of the said Colonial Timber & Coal Corporation, in the sum of $2,000,000, were secured by a first mortgage lien upon 140,000 acres of coal and timber land in the state of West Virginia, of which the defendants were the owners in fee simple (italics ours); * * * that in addition to said 140,000 acres, directly secured by said bond issue, the defendants were the owners in fee simple of 560,000 acres more of such coal and timber land in said state of West Virginia, which was and would be additional security for the said bond issue (italics ours); that the total assets of the said Colonial Timber & Coal Corporation were of the value, conservatively estimated, of two and one-half times its capital stock and surplus, which said capital stock and surplus amounted to $20,000,000 — which said pretenses, representations, and promises, as the defendants, when so devising said scheme and artifice and at the time of committing the several offenses in this indictment hereinafter mentioned, well knew, were and would be false and fraudulent pretenses, representations, and promises in the particulars following, to wit:
* * * * *
"That the said Guaranty Securities Companies, and those in the management and control thereof, were not, and would not be, engaged in the legitimate business usually transacted by mortgage and bond bankers loaning their own funds direct to mortgagors upon improved, income-producing real estate, but in truth and in fact were, and would be, promoters and speculators, engaged for the most part in illegitimate, irregular, and speculative transactions, entirely inconsistent with and foreign to the customary business of mortgage and bond bankers, as the defendants then and there well knew; that the bonds and certificates issued by the said Guaranty Securities Companies, and purporting to be first mortgage bonds and certificates, were not, and would not be, secured by first mortgages upon improved, income-producing farm lands or other real estate in eastern Nebraska and western Iowa, or elsewhere, but in truth and in fact the first mortgages held by the said companies which were, or could be, security for the payment of said bonds, were inconsiderable as compared with the total amount of the bonds and certificates so issued, and wholly insufficient as security therefor, and such mortgages as were ostensibly deposited in trust as security for said bonds and certificates were, and would be, misappropriated, dissipated, and diverted to other uses, and the said bonds and certificates were, and would be, wholly devoid of safety, as the defendants then and there well knew; * * * that said banks and corporations had neither of them earned, nor would they earn, any net profits, nor did they, or would they, either of them, possess a surplus set aside from net earnings, but in truth and in fact there were and would be no earnings from which a surplus could be set aside, and no earnings sufficient to pay interest upon the bonds and certificates issued by said corporations and banks, respectively, or from which dividends had been, or could be, legitimately paid upon the stock of said corporation and banks, and any such dividend that had been or should be, paid upon said stock was, and would be, paid from capital, as the defendants then and there well knew; * * * that the said Colonial Timber & Coal Corporation was not, nor would it be, the owner in fee simple of 700,000 acres of coal and timber land in the state of West Virginia or elsewhere, nor were or would its bonds in the sum of $2,000,000, or in any other amount, be secured by deed of trust of 147,000 acres or any quantity of such land to which...
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