Reistroffer v. United States

• Decision Date: 11 September 1958
• Docket Number: No. 15652-15654.,15652-15654.
• Parties: Leo P. REISTROFFER, Appellant, v. UNITED STATES of America, Appellee. W. L. ROGERS, Appellant, v. UNITED STATES of America, Appellee. Marvin NORRIS, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

258 F.2d 379 (1958)

Leo P. REISTROFFER, Appellant, v. UNITED STATES of America, Appellee.

W. L. ROGERS, Appellant, v. UNITED STATES of America, Appellee.

Marvin NORRIS, Appellant, v. UNITED STATES of America, Appellee.

Nos. 15652-15654.

United States Court of Appeals Eighth Circuit.

July 29, 1958.

Rehearing Denied September 11, 1958.

COPYRIGHT MATERIAL OMITTED

Morris A. Shenker, St. Louis, Mo., for appellant Leo P. Reistroffer.

Sidney M. Glazer, Berkeley, Mo., for appellant W. L. Rogers (William E. Ginsburg, Boston, Mass., on the brief).

Mark M. Hennelly, St. Louis, Mo., for appellant Marvin Norris.

Theodore G. Gilinsky and Philip C. Lovrien, Asst. U. S. Attys., Sioux City, Iowa (F. E. Van Alstine, U. S. Atty., Sioux City, Iowa, on the brief), for appellee.

Before SANBORN, WOODROUGH, and VAN OOSTERHOUT, Circuit Judges.

WOODROUGH, Circuit Judge.

The appellants in these three separate appeals (submitted here on one record) were indicted together with four other persons for violations of the Mail Fraud Statute, Title 18 United States Code, Section 1341, were tried jointly and were found guilty by the jury. The sentences upon appellants Leo Peter Reistroffer and W. L. Rogers were for five years on each of the counts on which they were found guilty, to run concurrently, and appellant Marvin Norris was given one year to run the same way.

The basic charge of the indictment was: that commencing on or about the 25th day of October, 1948, and continuing to on or about the 22nd day of January, 1954, defendants devised a scheme and artifice to defraud and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises from some thirty-five named persons and from other residents of the United States and its territories and Canada, who could and would be induced by defendants, to purchase coinoperated vending machines and products to be sold and dispensed therefrom, for cash before delivery, and in each of the thirty-five counts of the indictment the mailing of a letter, done or caused to be done by defendants, on a certain date on and between February 2, 1952, and January 30, 1954, to one of the thirty-five named victims of the scheme for the purpose of executing the scheme, was alleged in the words of the statute.¹

The indictment was based on defendants' conduct of their business of selling, in large part through the use of the mail, coin operated vending machines and products to be vended therefrom in many cities under the names of National Advanced Vending Company from 1948 to April of 1952, and thereafter up to January 30, 1954, under the name of Continental Merchandising Corporation. They had an office at 410 Main Street, Dubuque, Iowa, (which they moved for a short period of time to Rockdale, a suburb of Dubuque and then returned to the Main Street address) and an organization of traveling salesmen working entirely on commission. They did not have a substantial inventory, nor machinery, nor capital investment, and under their method of operation they sold vending machines and obtained sums of money from a large number of persons in advance of delivering anything to them, except a contract upon a printed form, hereinafter described. They used considerably less than half the money obtained from purchasers to buy coin operated vending machines of a sort from Silver King Manufacturing Company of Aurora, Illinois. That Company shipped the machines to the purchasers who had ordered them. All of the purchasers called by the government as witnesses had failed in their attempts to make gainful use of the machines they received; they lost all or nearly all the money they paid out for them and they testified to pretenses, representations, and promises which induced them to purchase — which were charged in the indictment to have been false and fraudulent.

The trial of the case continued over twenty-five days of elapsed time and some ninety witnesses were examined and approximately 1400 documentary exhibits were introduced. The jury had the office records of National Advanced Vending Company and Continental Merchandising Corporation before it and was informed of the position of defendants in the companies and their functions as well as their interests in the proceeds of the business; the forms and uses of their advertisements; their manuals of instructions supplied to salesmen and used by them; their brochures furnished to salesmen containing testimonial descriptions and photographs of vending machines and men at work on them; and statistical matter. The sales talks of salesmen with the purchasers were testified to at length; the purchasers described their attempts and failures to make gainful use of the machines; a postal inspector gave an account of an extensive interview in December of 1952, with defendant Reistroffer and correspondence concerning the course the business had taken and was then in contemplation; and a great volume of correspondence between the home office and the complaining purchasers was introduced.

None of the appellants testified in their own behalf but the evidence afforded the jury a complete picture of the course of conduct which the defendants followed in making their sales. Having in mind the jury's finding of guilty, we outline from the evidence, considered favorably to the government, the controlling facts substantially supported by the evidence, as follows:

From 1948 to January 1952, defendants' sales included candy, nut, gum-ball, and sanitary napkin vending machines and thereafter the sales were largely confined to coffee vending machines, although sales of other types of vending machines, including machines for vending chlorophyll or Breath Master pellets, were also made. In making the sales, an advertisement like the following would first be published in a city's newspaper:

"Hot Coffee Vendors — Manager Wanted — Man or Woman, to service route of new automatic coffee vendors, put in a coin and out comes a hot, steaming cup of coffee, every cup made individually will turn out a fresh cup every 3 seconds, no selling or soliciting, factory distributor will secure locations and make necessary location arrangements in this area and surrounding territory. Ideal off-hour set up to start. $200 to $400 per week possible part time, full time more. Secured $1785.00 to $5950.00 required now. Please do not waste our time unless you have the necessary capital and positive that you want to go into the coffee vending business, not next month — not next week — Now, as we are definitely going to establish some reliable party in this area immediately. If you can follow instructions and supervision of a large national concern with a Dun and Bradstreet rating, references from Banks, Chamber of Commerce, etc., you should become financially independent within a very short time. Write fully about yourself giving age, phone number, write Box A-256 c/o Journal Tribune."²

The salesmen would be assigned about a week after the publication to operate in a hotel or motel room in the city where the advertisement was published and they would immediately get in touch with persons who answered the advertisement. They followed certain prescribed steps indicated by the sales manuals with which they were provided; the first step being to "qualify" the prospect, which meant that after being assured that he could pay cash they falsely pretended to be concerned and made inquiries of him about whether he had qualifications required by the companies for "their" machine operators. Then pursuant to a common plan of sales talk the salesman induced the sale and obtained the cash, either the entire selling price or a large part thereof with an agreement for the balance to be paid C.O.D. On making a sale the salesman receiving the money always obtained the signature of the purchaser on a printed form of order for machines or products to be vended therefrom or both, appearing to be drawn upon the salesman who was referred to by name and as Independent Authorized Distributor for National Advanced Vending Company and later Continental Merchandising Corporation. The order recited that it was complete in itself and contained all the terms of the sale and provided that the merchandise was sold under a warranty of the manufacturer which would "make delivery as soon as it is possible to do so and that the delivery date will be contingent on the availability of labor and suitable material; that this order shall stand valid the Manufacturer to procure labor and suitable materials, but in no case shall such time exceed three months later six months from the date hereof" and that the purchaser was not relying on any representations, promises or warranties not contained in the order.

The coffee machines appear to have cost defendants about $275.00. They sold them at various prices around $590.00 to $690.00 apiece, transportation charges being paid by the purchaser. Immediately upon closing with the prospect the salesmen reduced the proceeds to cash money and left town for other parts. They always sent the money to the home office and received a 30 or 40 per cent commission, but the purchasers were never able to contact them and neither saw nor heard from them again. National Advanced Vending Company and Continental Merchandising Corporation ordered the vending machines from Silver King Manufacturing Company of Aurora, Illinois, only after they had received the money from the purchasers and that company experimented and ultimately produced and shipped to the purchaser the number of machines ordered by him or her. The defendants caused the shipments of a number of machines to be made out of machines they received back for a nominal consideration from disappointed purchasers who could not use them.

The newspaper advertisement attracted persons, as it was designed to do, who were entirely ignorant and uninformed about the business of selling by vending machine. It conveyed to such persons...