Milam v. United States

• Decision Date: 14 October 1963
• Docket Number: No. 19398.,19398.
• Citation: 322 F.2d 104
• Parties: Alton T. MILAM, Burr F. Sprague and Robert B. Kimball, Appellants, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

322 F.2d 104 (1963)

Alton T. MILAM, Burr F. Sprague and Robert B. Kimball, Appellants, v. UNITED STATES of America, Appellee.

No. 19398.

United States Court of Appeals Fifth Circuit.

August 29, 1963.

Rehearing Denied October 14, 1963.

Alton T. Milam, R. P. Williams, Newell Edenfield, Atlanta, Ga., for appellants.

Robert C. Milam, Asst. U. S. Atty., Atlanta, Ga., Charles L. Goodson, U. S. Atty., Edgar L. Jenkins, Asst. U. S. Atty., for appellee.

Before TUTTLE, Chief Judge, BROWN, Circuit Judge, and JOHNSON, District Judge.

JOHN R. BROWN, Circuit Judge.

We are required by this appeal to determine if the indictment is sufficient, if the Judge should have granted a severance, if there was substantial evidence to support the jury's verdict, if the Appellants have been unduly prejudiced by the testimony of a Postal Inspector, if the Appellants have been prejudiced by the Judge's actions toward defense counsel, and if the Judge erred in allowing certain exhibits in evidence and in refusing to strike certain testimony.

The Appellants, along with several others, were indicted for violation of the mail fraud statute, 18 U.S.C.A. § 1341. Of the original participants involved in the scheme, one is deceased (Appenzeller, the Secretary of Metropolitan), one was not tried, and one was tried and received a directed verdict of acquittal. The remaining defendants (Appellants here), Sprague, Milam, and Kimball, were convicted and sentenced for having devised a scheme to defraud certain named victims through the use of the mails. It is from this conviction that each of the Appellants has perfected his appeal to this Court.

Briefly, we will set out the general nature of the scheme as adduced through four days of trial and some 750 pages of testimony. A more complete discussion of the facts will be undertaken in disposing of the various assignments of error. Metropolitan Investment Service Corporation with an office in Atlanta, Georgia, operated what is commonly known as the "advance fee" scheme. It mailed letters to businessmen who were to reply if they were interested in obtaining a loan. These prospective borrowers were then interviewed by one of the members of Metropolitan, usually Kimball. During this interview it would be pointed out that Metropolitan needed financial statements, references, and a certified or cashier's check to cover expenses of obtaining the loan. The Government's witnesses testified that Kimball almost invariably told them that the check would not be cashed until the loan was approved, at which time it would be applied to the first interest payment. They were told that in the event the loan was not approved, the check would be returned. The typical story was one of high-pressure salesmanship in which the victim found himself signing a contract, issuing the check, and never seeing either the loan or his check again.

The three Appellants in this Court were tried at the same time, and while represented below by separate counsel all are represented by the same lawyer here. Each presents substantially the same questions for our determination. As we have found from a careful reading of the record that it is necessary to reverse the conviction of Milam, we will dispose of his appeal first.

Milam is an attorney. In that capacity, he was approached by Kimball who wanted to charter a loan company. Milam consulted with Kimball and Sprague about the matter. Milam applied for a Georgia charter in the name of Metropolitan Service Corporation. This name was not available, so the charter was ultimately issued to Metropolitan Investment Service Corporation. Milam and two secretaries in his law office were the incorporators. Initially, Metropolitan was organized with Kimball as president, Sprague as executive vice-president and Milam as secretary. After the organizational period (about two weeks), Milam resigned as secretary. To this point, there is nothing unusual about the conduct of Milam. It is a common practice, known to all, that frequently the lawyer employed to secure a charter is also an incorporator and an officer for organizational purposes.¹ Milam testified that from that time on he was merely the attorney for Metropolitan on a retainer basis. In other words, the Government's case showed that Milam as counsel for Metropolitan expected to receive payments from it by way of retainer. It is undisputed that Milam's name nowhere appears on the material mailed to the victims, nor did he actually do any of the mailing. Of course, we recognize that it is not necessary that a defendant actually do any of the mailing so long as there is sufficient evidence to tie him to the fraudulent scheme which involves the use of the mails. Abbott v. United States, 5 Cir., 1956, 239 F.2d 310. This is where the Government failed to make out its case against Milam.

Shortly after the organizational period, Metropolitan moved out of Milam's office into offices of its own located in a separate building. Milam used some of the extra space in Metropolitan's new offices to store several old files and some furniture. This, and the fact that Metropolitan was an admitted client, account for Milam's presence from time to time in the offices of Metropolitan. In response to inquiry by Milam, one of his prior, part-time secretaries got in touch with Metropolitan. Milam did not hire her or pay her salary. Milam advised Kimball and Sprague as to the forms of the contract they used at Metropolitan. These contracts were ordinary and legal on their face — it was the method they used which created the fraud. Milam accompanied Kimball to New York on several occasions in an effort to secure from reputable business sources loans for Metropolitan's prospective customers. It is nowhere shown that Milam knew of, or engaged in, the underhanded practices of Metropolitan. Of course Milam helped organize Metropolitan and subsequently acted as its attorney. This was the extent of the Government's proof against him.

There are only two pieces of evidence which suggest any connection which Milam might have other than in legal work. One concerns the testimony of a victim who had issued his "advance fee" check, but received no loan. On the day the victim, seeking out Kimball, went to Metropolitan's offices to complain, no one was there. Milam showed up with a key to the office. According to Milam's testimony, he had gone to Metropolitan's office to get an old file he kept stored there and had found the victim. They entered Metropolitan's office. The victim showed Milam the cancelled check which had been endorsed by Kimball and deposited to the account of Metropolitan. The victim testified that Milam seemed very upset on learning that the money had not been received. The two of them spent almost the whole afternoon without success trying to run down and reach Kimball to find out why the advance fee check had been cashed before the loan was actually consummated.

The only other evidence was that two of the "advance fee" checks were deposited to an account held in the joint name of Milam and a client² who was then out of the country. Milam said this was an ordinary attorney's trust account in which he deposited clients' money and checks made payable jointly to Milam and some client. It is without contradiction that Milam had nothing to do with the endorsement and deposit of one of the checks. It was deposited to this joint account at a time when he was out of town. The endorsement on this check was made by Appenzeller, then the secretary of Metropolitan, who died prior to the trial. The other check was endorsed and deposited by Milam to this account. It was undisputed that he was on retainer for Metropolitan, and this was the method used by Metropolitan as payment on his retainer.

There is nothing save Milam's activities as a lawyer to connect him to this enterprise. The Government, of course, had the burden of proving beyond a reasonable doubt that these activities, admittedly within the compass of those a lawyer legitimately could do, were done for some illegal purpose. He did legal work. For legal work he was entitled to get compensation. The receipt of money from Metropolitan was therefore not itself enough to turn the performance of legal work, drafting contracts, application forms, etc. into proof of participation in the fraudulent scheme. It took something more. Milam had nothing to do with the solicitation sales pitches, the representations or misrepresentations to potential customers. One check is not shown to have been deposited or its proceeds used by, or with his knowledge. As to the other check received as retainer, there was nothing to show that the loan for which the check was an advance fee had not been consummated. Except for the limited contact with one victim, there is no indication that he knew of the practice to cash the advance fees prior to making the loan. The circumstances of that incident on the Government's proof are not such as to permit the inference that what he then learned, he had known all along. What it shows without dispute is just the opposite.

The long and short of it is that we think the Government's proof relating to Milam is insufficient to support the conviction, and the trial Court should have granted Milam's motion for judgment of acquittal. F.R.Crim.P. 29(a). This want of evidence showing a crime also requires reversal as plain error, F.R. Crim.P. 52(b), despite the failure to renew the motion at the close of all the evidence. See Riggs v. United States, 5 Cir., 1960, 280 F.2d 949; and the 1963 proposed Amendments to F.R.Crim.P. 29(b).

As to the remaining Appellants, Kimball and Sprague, there can be no real question as to the sufficiency of the evidence to support the verdict. Although Sprague had very few personal contacts with the victims, he is so interwoven with the organization that the actions of anyone concerned therewith must be imputed to him. His name appeared in the letters sent to prospective...