U.S. v. Cincotta

• Decision Date: 04 August 1982
• Docket Number: 81-1155 and 81-1407,81-1147,81-1408,81-1409,Nos. 81-1141,s. 81-1141
• Citation: 689 F.2d 238
• Parties: 11 Fed. R. Evid. Serv. 423 UNITED STATES of America, Appellee, v. Edward A. CINCOTTA, Defendant, Appellant. UNITED STATES of America, Appellee, v. John ZERO, Defendant, Appellant. UNITED STATES of America, Appellee, v. MYSTIC FUEL, INC., Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 238

689 F.2d 238

11 Fed. R. Evid. Serv. 423

UNITED STATES of America, Appellee, v. Edward A. CINCOTTA, Defendant, Appellant.

UNITED STATES of America, Appellee, v. John ZERO, Defendant, Appellant.

UNITED STATES of America, Appellee, v. MYSTIC FUEL, INC., Defendant, Appellant.

Nos. 81-1141, 81-1408, 81-1147, 81-1409, 81-1155 and 81-1407.

United States Court of Appeals First Circuit.

Argued May 3, 1982.

Decided Aug. 4, 1982.

Harvey R. Peters, with whom Paul T. Smith, and Jeffrey M. Smith, Boston, Mass., were on brief, for Edward A. Cincotta.

Joseph J. Balliro, with whom Juliane Balliro, Boston, Mass., was on brief, for John Zero.

Richard M. Passalacqua, with whom Franklin, Pearlstein & Passalacqua, Boston, Mass., was on brief, for Mystic Fuel, Inc.

Bruce A. Singal, Asst. U. S. Atty., with whom William F. Weld, U. S. Atty., Boston, Mass., was on brief, for appellee.

Before COFFIN, Chief Judge, PHILLIPS, Senior Circuit Judge, ^* CAMPBELL, Circuit Judge.

COFFIN, Chief Judge.

This criminal appeal challenges the trial court's disposition of five issues, pertaining to the sufficiency of the evidence against one individual defendant, the sufficiency of the evidence and indictment against the corporate defendant, and, involving both individual defendants, the adequacy of remedies for prosecutorial misconduct, the admissibility of a hearsay document, and the propriety of a jury instruction on the implications of a defendant's conscious avoidance of knowledge.

Factual Background

Appellant Mystic Fuel Corporation (Mystic) was engaged in the business of delivering heating oil to oil consumers. It did not own or rent oil storage tanks, but it did own several trucks for transporting oil. It used those trucks to earn money in two different ways: it entered delivery contracts whereby oil suppliers without trucks would pay Mystic a commission to deliver oil to the suppliers' customers; and it entered supply contracts whereby oil consumers would buy oil directly from Mystic, which Mystic would then acquire in its own name from suppliers.

Appellant Cincotta was a major stockholder in Mystic, and its Treasurer. He signed all the company's checks, bids, and contracts. Together with appellant Zero, he made all the major decisions of the company, as well as the rules governing its daily operation.

Appellant Zero was also a major stockholder in Mystic, and its dispatcher. He hired the truck drivers, and issued their daily orders on where to pick up and deliver oil. He also supervised Mystic's billing and accounting.

At trial, the government set forth evidence of a scheme through which Mystic would defraud the United States Department of Defense, inducing it to pay for oil that Mystic would sell in its own name to its own clients. The evidence suggested that during fiscal year 1978 (September 1, 1977, through August 31, 1978) Mystic had a delivery contract giving it a commission for delivering "number four oil" (a moderately heavy oil, generally used to heat small industrial buildings, schools, and medium-sized apartment buildings) from the Union Petroleum Corporation (Union) to Fort Devens in Ayer, Massachusetts. The evidence suggested further that on numerous occasions Mystic picked up a shipment of oil at Union, representing that the oil was for delivery to Fort Devens. Then, Mystic would sell the shipment to its own consumer clients. Finally, it would tell the Fort Devens authorities that it had in fact delivered the shipment to Fort Devens, inducing the Department of Defense to pay Union for the shipment. The net result was that Fort Devens paid for shipments it never received, and Mystic was able to sell oil that it had never paid for.

After a two-week trial, the jury deliberated for ten hours and then found all three defendants guilty of (1) conspiring to defraud the United States in violation of 18 U.S.C. § 371, of (2) wilfully causing seven specific false claims to be made against the United States, in violation of 18 U.S.C. §§ 2, 287, and of (3) knowingly and wilfully making and using seven specific false documents in relation to a matter within the jurisdiction of a United States department, in violation of 18 U.S.C. §§ 2, 1001.

Sufficiency of the Evidence Against Cincotta

Appellant Cincotta contends that the trial judge erred in denying his motion for a judgment of acquittal at the close of the government's case. He argues that the evidence was not sufficient to permit the jury to conclude beyond a reasonable doubt that he personally violated the statutes under which he was convicted. Although he does not contest the sufficiency of the evidence establishing a conspiracy to present false claims, he does contest the sufficiency of the evidence that he was a part of the conspiracy.

Our review of the trial judge's decision on this point is quite limited. We are required to affirm that decision unless the evidence, viewed in the light most favorable to the government, could not have persuaded any rational trier of fact that Cincotta was guilty beyond a reasonable doubt. Moreover, "(p) articipation in a criminal conspiracy need not be proved by direct evidence; a common purpose and plan may be inferred from a 'development and a collocation of circumstances.' " Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942) (citation omitted).

Given this standard of review, we cannot reverse the trial judge's decision. Although there was no "smoking gun" that directly demonstrated Cincotta's sponsorship of the fraudulent conspiracy, there was ample circumstantial evidence. The principal source of that evidence was Elaine Kelly, Cincotta's secretary at Mystic. Mrs. Kelly testified that all major decisions at Mystic were made by either Cincotta or Zero. She testified further that "John Zero and Eddie Cincotta talked over everything that was going on ... (W) ho eventually made the final decision I don't know. I would think it would be a mutual thing, or maybe one or the other had a better decision than the other." She also testified that Cincotta "made all the rules ... for the truck drivers, during the course of the day." Although Zero normally gave the drivers their instructions regarding deliveries to Fort Devens, Cincotta gave them their instructions in Zero's absence. And although Zero and Cincotta mutually handled all company firing decisions, Cincotta alone signed the corporation's checks, contracts, and bids. Finally, the extent of Cincotta's interest in Mystic's activities is magnified by the fact that his mother and two uncles worked with him in the small company office.

In addition to Mrs. Kelly's testimony there was corroboration in regard to the Fort Devens fraud in the testimony of other witnesses. Frederick Taubert, the Vice President of Marketing at Union Petroleum, testified that he dealt with either Zero or Cincotta on any issues involving the Fort Devens contract, and that he perceived Cincotta to be in charge of the whole operation of Mystic on a day-to-day basis. Patricia Phelan, the supply clerk and ordering officer at Fort Devens, testified that Zero and Cincotta usually came in together twice a week to have her sign the fuel tickets acknowledging delivery of fuel shipments to Fort Devens. She testified further that on those occasions when another Mystic employee brought in the fuel tickets for her signature, if the tickets did not show to what building the oil had allegedly been delivered she would call up Zero or Cincotta and they would give her a building number to fill in. And several truck drivers, including Anthony Carpenter and Brian Esterbrook, referred to the duo collectively, as "John or Eddie", "Zero or Cincotta", in describing the source of their delivery instructions.

In sum, there was sufficient evidence of Cincotta's pervasive involvement in Mystic's operations-both generally and with regard to the Fort Devens deliveries in particular-for a reasonable juror to infer that Cincotta knew of, profited from, and encouraged the conspiracy and each of the individual fraudulent acts that underlay the substantive counts for which he was convicted.

Sufficiency of the Evidence and Adequacy Of the Indictment

Against Mystic Fuel

A corporation may be convicted for the criminal acts of its agents, under a theory of respondeat superior. But criminal liability may be imposed on the corporation only where the agent is acting within the scope of employment. That, in turn, requires that the agent be performing acts of the kind which he is authorized to perform, and those acts must be motivated-at least in part-by an intent to benefit the corporation. United States v. DeMauro, 581 F.2d 50, 54 n.3 (2d Cir. 1978); United States v. Beusch, 596 F.2d 871, 878 & n.7 (9th Cir. 1979). Thus, where intent is an element of a crime (as it is here), a corporation may not be held strictly accountable for acts that could not benefit the stockholders, such as acts of corporate officers that are performed in exchange for bribes paid to the officers personally.

Mystic argues that the trial court erred in denying its motion for acquittal. It contends that the government failed to produce evidence of Cincotta's and/or Zero's intent to benefit the corporation through their scheme to defraud the United States. This argument may be rejected out of hand. The mechanism by which the fraudulent scheme worked required money to pass through Mystic's treasury. When Fort Devens paid Union for the undelivered shipments, the shipments were not resold in Zero's name or Cincotta's name. Rather, they were sold to Mystic's customers in Mystic's name. Mystic-not the individual defendants-was making money by selling oil that it had not paid for.

Mystic also argues that, even if there was adequate proof against it at trial, the indictment was fatally defective because it failed to aver that the individual defendants intended to benefit the corporation through their scheme. It is well settled that an...