U.S. v. Canas

• Citation: 595 F.2d 73
• Decision Date: 05 April 1979
• Docket Number: No. 77-1507,77-1507
• Parties: UNITED STATES of America, Plaintiff, Appellee, v. Jose Manuel Martinez CANAS, Defendant, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 73

595 F.2d 73

UNITED STATES of America, Plaintiff, Appellee, v. Jose Manuel Martinez CANAS, Defendant, Appellant.

No. 77-1507.

United States Court of Appeals, First Circuit.

Argued Feb. 5, 1979.

Decided April 5, 1979.

Daniel S. Pearson, Miami, Fla., with whom Pearson & Josefsberg, P. A., Miami, Fla., was on brief, for appellant.

Ramon L. Walker Merino, Asst. U. S. Atty., Hato Rey, P. R., with whom Julio Morales Sanchez, U. S. Atty., San Juan, P. R., was on brief, for appellee.

Before COFFIN, Chief Judge, CAMPBELL, Circuit Judge, JAMESON, Senior District Judge. ^*

JAMESON, Senior District Judge:

Defendant-appellant, Jose Manuel Martinez Canas, was convicted in a jury trial of conspiring to make false statements to a bank insured by the Federal Deposit Insurance Corporation in an application for a business loan, in violation of 18 U.S.C. §§ 371 ¹ and 1014, ² and of making such false statements in connection with the loan application, in violation of 18 U.S.C. §§ 2 and 1014.

Factual Background

Defendant was president of a company known as Frito Lay de Puerto Rico, Inc., a subsidiary of Pepsico, Inc. Frito Lay had a line of credit with the Old San Juan Branch of Banco Popular de Puerto Rico (Bank) in the amount of $1,000,000. On or about December 22, 1976 the defendant requested, on behalf of Frito Lay, a loan of $1,500,000. The stated purpose of the loan was to permit Frito Lay to qualify for a tax exemption before the end of the year.

Sometime prior to December 22 there had been filed with the Bank a "Certificate of Resolution", dated October 14, 1976, reciting that on October 11 the Board of Directors of Frito Lay had adopted a resolution authorizing Martinez Canas to borrow from the bank and sign promissory notes in Frito Lay's name. This resolution was purportedly signed by Rafael Cortez Dapena, Secretary of Frito Lay.

On or about December 27, 1976 defendant filed with the Bank the following documents: (1) a "Continuing and Unlimited Guaranty" of Pepsico, Inc., purportedly signed by two Pepsico officers, Frank A. Peck, vice president and treasurer, and Harold Freeman, assistant treasurer, ³ which guaranteed loans to Frito Lay; (2) a "Certificate of Incumbency", signed by John Pagnucco as secretary of Pepsico, certifying that Peck and Freeman were Pepsico officers; and (3) a "Certified Copy of Resolutions", signed by Pagnucco, setting forth Pepsico resolutions authorizing its officers to execute the guarantee.

The loan was approved. The defendant then signed a promissory note for $1,500,000 as president of Frito Lay and also signed a letter directing the Bank to deposit the proceeds of the loan in an account of Distribuidoras Nacionales and then transfer $1,121,843 from that account to Frito Lay's account.

Proceedings in District Court

(a) The Government's Case

The six documents ⁴ submitted to the Bank and upon which the loan was based, were all listed in both counts of the indictment, including the receipt by the Bank of the six documents, which were received in evidence as Government exhibits. Defendant's fingerprints were found on all of the documents. One of the Bank officials testified that the Bank required the guarantee of Pepsico, Inc. before making the loan.

A lawyer, who was a notary public, testified that on December 26, 1976, at defendant's request he notarized the document signed by Frank A. Peck and Harold Freeman, who were introduced to him by defendant as the vice president and treasurer and assistant treasurer of Pepsico, Inc.

Cortes Dapena, Secretary of Frito Lay, testified that he did not sign the Certificate of Resolution dated October 14, 1976 ⁵ and was in London on that date; and that the Board of Directors of Frito Lay did not authorize the resolution. He also testified that he had no knowledge of a Frank A. Peck or Harold Freeman as officers of Pepsico, Inc., and that the treasurer of Pepsico, Inc. was Stillman Brown. He denied knowledge of any relationship between Distribuidoras Nacionales, Inc. and Frito Lay.

Lamar Lovvorn, Secretary-Treasurer of Frito Lay, Inc., a Delaware corporation, and assistant secretary of Pepsico, Inc., testified that neither Frank A. Peck nor Harold Freeman was ever an officer of Pepsico, Inc. and that Stillman Brown was vice president and treasurer of Pepsico, Inc. during 1976.

An attorney in the Law Department of Pepsico, Inc. testified that Stillman Brown was vice president and treasurer of Pepsico, Inc. in December, 1976; that to his knowledge there had never been a Frank A. Peck or a Harold Freeman serving as officers of Pepsico, Inc.; nor had there been any secretary by the name of John Pagnucco. ⁶ He testified also that the "Continuing and Unlimited Guaranty" did not follow the format customarily used by Pepsico, Inc.

At the close of the Government's case the court denied defendant's motion for acquittal, but dismissed from both counts of the indictment the portions of the charge based upon the promissory note and letter of instructions to the Bank, for the reason that both of these documents had in fact been signed by the defendant and were not false documents.

(b) Defendant's case

The defendant did not take the stand. His defense consisted of the testimony of the expert witness with respect to Cortes Dapena's signature on the Certificate of Resolution and three character witnesses.

At the close of all the evidence, the defendant renewed his motion for a judgment of acquittal, which was denied. The court also denied defendant's request that the jury be directed to render a special verdict. Defendant was found guilty on both counts of the indictment and sentenced to concurrent prison terms of five years and two years.

Contentions on Appeal

On appeal, defendant contends that:

(1) his right to a fair trial was destroyed by the conduct of the prosecutor in cross-examination of defendant's character witnesses and in closing argument in referring to his wealth and national origin and suggesting other criminal conduct;

(2) there was insufficient evidence to support a finding that he knew of the falsity of one of the documents specified in the indictment, and a general verdict accordingly violated due process;

(3) the prosecutor's reference during closing argument to the grand jury's considering his case and returning a true bill denied him a fair trial; and

(4) the court's instruction to the jury to view weaker and less satisfactory evidence with suspicion constituted an impermissible comment on the defendant's exercise of his right not to testify.

I. Misconduct of Prosecutor

Appellant argues first that (a) the prosecutor's interrogation of the defendant's character witnesses and (b) his closing comments with respect to defendant's wealth and national origin and innuendoes as to how defendant obtained his wealth were improper and highly prejudicial. It is necessary to review the alleged misconduct in the light of the direct examination, defendant's objections thereto and the rulings of the district court, and the weight of the entire evidence.

The defendant called as character witnesses an actress, who was also a theatre and television producer, a well known concert pianist, and the director of the Carnegie Library in San Juan. All of them on direct examination (in addition to testifying as to defendant's reputation for truth and veracity and as a law abiding citizen) testified regarding defendant's many contributions to the arts, both personally and financially in the "theatre, music and painting", his support of the Library and his collection of paintings and musical instruments. ⁷

It is true that the prosecutor interrogated two of the character witnesses at length with respect to defendant's wealth and lifestyle, and the probable value of his many works of art. ⁸ The district court properly sustained a number of objections to specific questions and on one occasion instructed the jury to disregard the comment of the United States attorney and ordered the comment stricken from the record.

On cross-examination one of the witnesses testified that she knew the defendant was a Cuban and had lived in Puerto Rico about fifteen years. The prosecutor indicated at a bench conference that he intended to ascertain whether the witness knew defendant's reputation in Cuba. Counsel for the defendant moved for a mistrial. The court denied the motion and instructed the United States attorney to limit his cross-examination to the general reputation of the defendant in the community. The attorney then decided not to pursue further questioning with respect to defendant's reputation in Cuba.

In closing argument the prosecutor referred to the fact that defendant could not have brought his works of art from Cuba and that the jury could "wonder where they came from". Defendant's counsel objected and moved for a mistrial. The court sustained the objection, denied the motion for mistrial, and instructed the jury:

The comments by Mr. Quiles are stricken from the record and the members of the jury are instructed to disregard it and I really instruct you to disregard it. We are not trying a man by how he may have accumulated his wealth. We are trying a man by whatever he is charged in the indictment.

In support of his contention that appeals to class prejudice have always been condemned, appellant cites United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1939), where the Court recognized that "appeals to class prejudice are highly improper and cannot be condoned and trial courts should ever be alert to prevent them". The Court noted further, however, that "each case necessarily turns on its own facts". The Court concluded that the prosecutor's improper statements were "minor aberrations in a prolonged trial and not cumulative evidence of a proceeding dominated by passion and prejudice" and that "reversal would not promote the ends of justice", Id. 240, 60 S.Ct. 852. The Court took into consideration the fact that...