Ross v. United States, 10897.

Decision Date14 February 1950
Docket NumberNo. 10897.,10897.
Citation180 F.2d 160
PartiesROSS et al. v. UNITED STATES.
CourtU.S. Court of Appeals — Sixth Circuit

COPYRIGHT MATERIAL OMITTED

Robert N. Gorman, Cincinnati, Ohio, Joseph Keenan, Washington, D. C., Harry A. Abrams, Cincinnati, Ohio, on the brief, for appellants.

Frank J. Richter, Cincinnati, Ohio, Ray J. O'Donnell, Cincinnati, Ohio, on the brief, for appellee.

Before HICKS, Chief Judge, MARTIN and MILLER, Circuit Judges.

MARTIN, Circuit Judge.

The three appellants were convicted by a jury on several counts of a joint indictment charging violation of section 1731(a) of Title 12,1 United States Code, and also upon a count drawn under section 88 of Title 18,2 United States Code, charging conspiracy to violate section 1731(a) of Title 12. Each defendant was fined $12,500 and sentenced to an aggregate four years in prison. The sentences imposed were within the limits of the statutes.

Section 1731(a) of Title 12, United States Code, provides: "Whoever, for the purpose of obtaining any loan or advance of credit from any person, partnership, association, or corporation with the intent that such loan or advance of credit shall be offered to or accepted by the Federal Housing Administration for insurance, or for the purpose of obtaining any extension or renewal of any loan, advance of credit, or mortgage insured by the said Administration, or the acceptance, release, or substitution of any security on such a loan, advance of credit, or for the purpose of influencing in any way the action of said Administration under this chapter makes, passes, utters, or publishes, or causes to be made, passed, uttered, or published any statement, knowing the same to be false, or alters, forges, or counterfeits, or causes or procures to be altered, forged, or counterfeited, any instrument, paper, or document, or utters, publishes, or passes as true, or causes to be uttered, published, or passed as true, any instrument, paper, or document, knowing it to have been altered, forged, or counterfeited, or willfully over-values any security, asset, or income, shall be punished by a fine of not more than $3,000 or by imprisonment for not more than two years, or both."

We shall not indulge in any extensive factual narrative. The government adduced abundant substantial evidence to support the verdict of the jury on all counts upon which the respective defendants were found guilty. Each of the three defendants testified in his own behalf in contradiction of material adverse testimony. A general description of the method of business operation employed by them would seem to suffice.

Irving Ross, who for several years had been active, first in canvassing prospects and later in making sales, for suppliers of siding for residential houses, went to Portsmouth, Ohio, in April, 1946, and joined in a partnership enterprise with Phil Cohen in the selling of imitation brick siding for residences. Phil Cohen at times used the alias "Phillips" and is the same person whose conviction at Dayton, Ohio, for violation of the same statute here involved, was affirmed by this court on November 30, 1949. See Phil S. Cohen, alias P. H. Phillips, and Leo Escovitch, alias Leo Esco, v. United States of America, 6 Cir., 178 F.2d 588, 591. The partnership in Portsmouth was dissolved when Cohen left for Dayton, Ohio. According to Irving Ross, the manager of the Universal C. I. T. Corporation at Portsmouth told him: "If you sever your connection with Cohen, we'll continue to take your paper."

Shortly after Cohen left Portsmouth, appellants Martin Ross and Milton Gecker showed up there and entered into the siding business with Irving Ross, the three men calling themselves the "Portsmouth Construction Company". Both Martin Ross and Milton Gecker had previously been canvassers and salesmen in the siding business elsewhere. Martin was the brother of Irving Ross.

Appellants made arrangements with the Portsmouth branch manager of the C. I. T. Corporation to finance their business by acquiring at discount their customers' notes, endorsed by Portsmouth Construction Company "without recourse". Appellants secured and used printed forms of "FHA Title I Credit Application" blanks, addressed to Universal C. I. T. Credit Corporation, printed forms of "FHA Title I Borrower's Completion Certificate", and also printed forms of promissory notes "negotiable and payable at the office of Universal C. I. T. Credit Corporation, New York, Chicago, or San Francisco, with exchange."

Armed with these documents, appellants proceeded to consummate their scheme, which from the testimony of government witnesses was obviously fraudulent. One or two of them would approach a poor and ignorant person and induce him to permit appellants to place siding on his modest home by representing that the Portsmouth Construction Company desired to advertise by placing its siding on model homes; and that the siding would cost the customer nothing, inasmuch as he would receive $25 commission for every job which was sold by appellants in consequence of people seeing the favored customer's home with the appellants' siding on it. For example, William Delebar and the McManaways were told that appellants desired to use their homes for demonstration purposes over a period of three years.

Each person approached was told that he must keep secret the fact that he had made the arrangements which would give him the siding free of cost. The government's proof showed that by various misrepresentations, such as the statement that signed forms were needed to keep required records, the appellants induced persons who agreed to have siding put on their homes to sign blank FHA Title I Credit Applications, and blank promissory notes. Subsequently, the application forms were filled in with false information making the homeowner's financial status appear much more favorable than it actually was. The blank notes were filled in with amounts payable, varying from thirty-seven to seventy per cent of the purchase price of the respective homes.

After the Universal C. I. T. Credit Corporation had received the credit information on the FHA application form and had checked it with the local Merchants Credit Bureau, it would discount the note and then assign it to the Commercial Investment Trust, Inc., of New York, which had a contract of insurance for property improvement loans with the Federal Housing Administration. All notes for property improvement, including those involved here, which were discounted by the Portsmouth branch of the Universal C. I. T. Credit Corporation were insured by the Federal Housing Administration.

In late October or early November, 1946, when C. I. T. began to call upon the favored customers to pay the first maturing instalments of their promissory notes, appellants, though they had avowed intended long sojourn in the attractive city of Portsmouth — but lived in hotels — found the city no longer attractive, and left.

Appellants contend that the indictment does not sufficiently state an offense against the laws of the United States. The same contention was rejected in Cohen v. United States, supra, in which the indictment was for violation of the same statute involved in the substantive counts in this case: namely, section 1731 (a), Title 12, U.S.C. Judge Allen said: "The indictment was drawn in the language of the statute, and each count supplies the specific information applicable to the particular transaction described therein. This is in general sufficient. Rule 7(c), Federal Rules of Criminal Procedure, 18 U.S.C.A.; Sutton v. United States, 5 Cir., 157 F.2d 661; Mellor v. United States, 8 Cir., 160 F. 2d 757; Robertson v. United States, 5 Cir., 168 F.2d 294. * * * The various offenses were fully and clearly charged since the counts of the indictment specified the time and place of each transaction, and the uttering and publishing, in each case, of a false credit application and note, particularly described, in violation of the statute." In Pierce v. United States, 6 Cir., 86 F.2d 949, 951, this court quoted from its earlier opinion in Bettman v. United States, 6 Cir., 224 F. 819, 826, as follows: "The certainty required in an indictment is only such as will fairly inform the defendant of the crime intended to be alleged, so as to enable him to prepare for defense and so as to make the judgment a complete defense to a second prosecution for the same offense." As to the substantive offenses charged, the indictment in the instant case meets this required standard. So, also, does the conspiracy count, which, in pleading the twelfth overt act, charges that the false and fraudulent statements were uttered, published and passed to the Universal C. I. T. Credit Corporation. We find no merit in the argument that counts two and eleven were duplicitous. See Cohen v. United States, supra; Troutman v. United States, 10 Cir., 100 F.2d 628.

The further contention is made by appellants that they merely assisted borrowers in procuring loans, and that section 1731(a) has application only to borrowers. But the statute is not susceptible to this narrow interpretation, for it applies in express language in the alternative to anyone who "for the purpose of influencing in any way the action" of the Federal Housing Administration under the Act is guilty of the actions condemned, and provides punishment therefor.

The appellants' argument has been rejected by the Court of Appeals for the Fifth Circuit in Hartwell v. United States, 107 F.2d 359, 361, where Judge Hutcheson said with respect to the statute: "But, we think it plain, that the act must be considered as a whole and in the light of the purposes and objectives it was designed to achieve, and that so considered to place upon it, a construction which would limit its scope to borrowers alone, is an unreasonable narrowing of its scope and effect." In the Cohen case, our court pointed out that the essence of the crime is the uttering and...

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