U.S. v. Bavers

• Decision Date: 23 December 1985
• Docket Number: Nos. 84-3735,84-3738 and 84-3739,s. 84-3735
• Citation: 787 F.2d 1022
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Lowell J. BAVERS, Duane J. French, and May L. Bavers, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1022

787 F.2d 1022

UNITED STATES of America, Plaintiff-Appellee, v. Lowell J. BAVERS, Duane J. French, and May L. Bavers Defendants-Appellants.

Nos. 84-3735, 84-3738 and 84-3739.

United States Court of Appeals Sixth Circuit.

Argued Nov. 11, 1985.

Decided Dec. 23, 1985.

David Melcher (argued), Swinford & Sims, Cynthiana, Ky., for Lowell J. bavers.

Jeffrey Royer (argued), Kurt A. Philipps, Spalding, Grause & Philipps, Covington, Ky., for Duane J. French.

Terry Lehmann (argued), Robert Brichler, Asst. U.S. Attys., Cincinnati, Ohio, Christopher Barnes, U.S. Atty., Cincinnati, Ohio, for U.S.

Timothy A. Hickey (argued), Cincinnati, Ohio, for May L. Bavers.

Before MERRITT and WELLFORD, Circuit Judges, and JOHNSTONE, District Judge. ^*

WELLFORD, Circuit Judge.

Following their convictions on conspiracy and mail fraud charges, involving a scheme to defraud farmers, Lowell Bavers, his wife May Bavers, and Duane French ¹ assert a number of errors which they claim on appeal should entitle them either to acquittal or to a new trial. We shall, for the sake of brevity, refer to them as Lowell, May, and French hereafter.

Lowell was the chief executive officer and controlling stockholder in Detroit Steel, Inc. located in Charlevoix, Michigan, a business holding itself out to be engaged in fabrication and sale of metal farm outbuildings primarily to the midwest farm trade. It obtained names of prospective customers by advertising in farm periodicals in Michigan and Ohio, soliciting calls to a toll free number or a reply postcard incorporated in the ads. By 1981 Detroit Steel was in serious financial difficulty; it had only one source of supply for its steel buildings and during that year it paid less than $16,000 for supplies. Over forty customers, characterized by the government as victims of defendants' scheme, testified that they paid Detroit Steel over $200,000 during that same time on building orders. Only one former customer ever received any building as promised by Detroit Steel and its agents, including Lowell and French, during 1981-1982, and only one ever received any refund during this period. May served Detroit Steel as officer, bookkeeper, typist and phone receptionist. She did not work fulltime in Detroit Steel's offices.

No steel or other building material was ordered by Detroit Steel to fill customer requirements after April 1981. Earlier orders for materials not delivered were cancelled by May during August and September 1981. French, a former salesman, returned to work for Detroit Steel in November 1981, and it is from that time forward he is charged as a Detroit Steel office employee and sales representative with participating in the conspiracy and mail fraud. The government contends that the proof in a lengthy trial demonstrated that none of the defendants had any intention to fill customer orders, toward which money was being paid to Detroit Steel, after April 1981. A fourth defendant, also associated in the business, David C. Dietz (hereafter Dietz), was also charged with conspiracy in the fraud. ^2. Dietz changed his plea from not guilty to guilty on the seventh day of trial and subsequently testified as a part of the direct proof offered by the government against the remaining defendants.

With the large number of sales contracts and down payments (and on certain occasions full payment) collected from over 40 customers, Detroit Steel customers made numerous inquiries of defendants and others at Detroit Steel asking why buildings had not been delivered to them. The defendants handled the customer inquiries and complaints with a variety of false excuses, including alleged labor strikes, bad weather, vacation of personnel, and the like.

Not only were false names and false excuses employed during this process of putting off customers, but the Bavers and French also countered complaints about non-delivery by invoking a clause in the sales contract which they claimed allowed them to demand full and immediate payment before delivery of the building. ³ Letters were sent to many customers stating, in effect, that after Detroit Steel's Board of Directors had met, the customer was deemed to be a bad credit risk and as a result, that customer was required to send the balance of the money due on an order prior to delivery. Toward the end of the scheme in 1982, customers found it difficult to reach defendants by phone.

Lowell and the other defendants had also constructed effective and elaborate means to siphon the customer's money into their pockets. During the summer of 1981, Lowell asked Dietz if he knew of anyone to pose as a "purchaser" of the company. Lowell explained that in a number of lawsuits he was allegedly personally liable and therefore wanted someone else to become president and owner to avoid further problems of this kind. Lowell told Dietz that the "purchaser," if one could be located, would be president in form and not in substance because he, Lowell, would still control Detroit Steel.

Dietz contacted Paul Adams, a longtime associate of his, about Lowell's proposition. In early October 1981, Adams met Lowell and May. With May present at all times, and occasionally nodding in agreement, Lowell explained the problems described to Dietz and, to protect himself from the lawsuits, he wanted to hire Adams to pose as "John McIntyre."

Lowell further explained to Adams that "John McIntyre" would be the target of the lawsuits, and would subsequently disappear and the Bavers' assets would be protected. Lowell, again in May's presence, then had Adams put on surgical gloves and handed him a piece of paper cut to fit over the drawer portion of various checks and told Adams to write the name of "John McIntyre" on a whole series of checks, three at a time. Adams also signed a number of blank office memors at Lowell's direction.

May then typed, at Lowell's direction, a "sales agreement" indicating that "John McIntyre" was buying Detroit Steel from Lowell. Adams signed the purported agreement using the false name and pre-dated it as of June of 1981. Lowell also had Adams sign a number of other documents and paid Adams $1,000 for his services. May was present during these transactions.

Upon Lowell's later request, "McIntyre" returned in December of 1981. Before arriving at Detroit Steel, Adams stopped by Dietz' house and received $5,000 in cash from Dietz for delivery to Lowell. Dietz had previously received a Detroit Steel check drawn on the Community National Bank in the amount of $5,621 with instructions from Lowell to deposit the check in his personal account, withdraw the money by using one of Dietz' personal checks and hand the cash to Adams. Adams then took the cash to Charlevoix, gave it to Lowell, and signed more documents.

Adams made a final visit to Charlevoix in February 1982. Again, he went to the Detroit Steel office and first met with French. He afterward met with Lowell at an attorney's office where Adams posed as "McIntyre." Lowell told Adams he was concocting a lawsuit wherein "John McIntyre" was purported to be in control of Detroit Steel. When Adams returned to the Detroit Steel office, French asked Adams if he would perform some additional service for Detroit Steel which he, French, was unable to do. After being paid for these added services, Adams then left Charlevoix and had no further contact with defendants.

From approximately Labor Day in 1979 through 1982, Lowell asked Donald Collier a neighbor, to cash checks for him. Collier noticed that a check was presigned "John McIntyre" and then endorsed by Lowell. In 1981, Lowell confided in Collier that "John McIntyre" was a fictitious person who Lowell created so that Lowell could drain the assets of Detroit Steel and put the corporation eventually into bankruptcy. Lowell also showed Collier a large amount of cash he was keeping in a suitcase.

On October 13, 1981, a Charlevoix attorney who had filed suit against Detroit Steel on behalf of a client, took Lowell's deposition. At the deposition, Lowell stated under oath that he was president and sales manager of Detroit Steel and that its only bank account was at a Charlevoix bank. Lowell further indicated that Detroit Steel had had no activity for five or six months under any of the Detroit Steel trade names and that it owed approximately $200,000. Lowell also stated that "John McIntyre" was a vice president of Detroit Steel. Despite this deposition testimony by Lowell, he opened accounts at three new banks, one at a Pontiac, Michigan bank in January 1981, and subsequently others at Oxford, Michigan in September 1981, and then finally at Dayton, Ohio in January 1982.

During 1981 and early 1982, approximately $273,000 was deposited by the defendants into these three bank accounts. Detroit Steel checks were made payable directly to Lowell in the amount of $16,522, to May, $19,681, to French, $27,674, and to Dietz, $25,871. Lowell and May also wrote checks from the various Detroit Steel bank accounts for nearly $100,000, many for obvious non-business related expenses. Defendants used a variety of other devices to drain the assets of Detroit Steel while avoiding detection by customers or creditors. Lowell, May, and French received additional large cash sums after Detroit Steel checks were laundered through third parties, such as Collier.

To drain the Oxford Bank account, Lowell and May endorsed and cashed numerous Detroit Steel checks made payable to "John McIntyre," first endorsed by Paul Adams using that fictitious name. Other Detroit Steel checks were signed by "John McIntyre," then endorsed and cashed by May, Lowell, and French, the latter receiving two such checks for $8,000 and $9,250, respectively.

Lowell also contacted a local attorney, Michael, and during December 1981, and January 1982, delivered to him checks drawn on Detroit Steel's account totalling $24,950 for deposit. A few weeks later, Lowell directed Michael, who complied, to give him $24,950 in cash...