U.S. v. Crockett, 74-3923

• Decision Date: 28 June 1976
• Docket Number: No. 74-3923,74-3923
• Citation: 534 F.2d 589
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Edward Wray CROCKETT, Jr., Eugene Allen Fisher and Hugh R. Segars, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 589

534 F.2d 589

UNITED STATES of America, Plaintiff-Appellee, v. Edward Wray CROCKETT, Jr., Eugene Allen Fisher and Hugh R.

Segars, Defendants-Appellants.

No. 74-3923.

United States Court of Appeals, Fifth Circuit.

June 28, 1976.

Herbert Shafer, Atlanta, Ga., Bernard H. Dempsey, Jr., Orlando, Fla., for Crockett.

H. B. Edwards, III, Valdosta, Ga., for Segars.

John Kent Edwards, Valdosta, Ga. (Court appointed), for Fisher.

Ronald T. Knight, U. S. Atty., C. Nathan Davis, O. Hale Almand, Jr., Asst. U. S. Attys., Macon, Ga., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Georgia.

Before BROWN, Chief Judge, GOLDBERG and RONEY, Circuit Judges.

GOLDBERG, Circuit Judge:

Defendants Edward Wray Crockett, Jr., Hugh R. Segars, and Eugene Allen Fisher appeal from their convictions for conspiring to violate the mail fraud statute, 18 U.S.C. § 371, and for thirteen counts of violating the mail fraud statute all in connection with a planned bankruptcy, the intent and effect of which was to defraud the creditors of the bankrupt business. The jury returned guilty verdicts as to all three men on all charges. The trial judge sentenced Edward Crockett to five years imprisonment on each of the fourteen counts, Hugh Segars to two years on each of the fourteen counts, and Eugene Fisher to three years on each of the fourteen counts. All sentences were ordered to run concurrently.

In this appeal, defendants assert numerous errors. Crockett's most substantial assignments of error include: 1) the insufficiency of the evidence to sustain the jury's verdicts, 2) the failure of the prosecution to disclose impeaching evidence, and 3) the wrongful admission of evidence of prior criminal acts. Major contentions raised by counsel for Segars and Fisher include: 1) the failure of the prosecution to disclose impeaching evidence, 2) the failure of the prosecution to provide defendants with certain Jencks Act material, and 3) the admission of testimony protected by the marital privilege for confidential communications. After carefully considering these claims, we have concluded that the convictions as to each of the defendants must be affirmed.

I. THE "BUST OUT"

The indictments in this case resulted from a grand jury investigation of defendants' scheme, called a "bust out," to bilk a large number of out of state manufacturers and distributors. A bust out begins with the formation by the malefactors of a seemingly legitimate wholesale business. The fledgling business's first goal is to establish a favorable credit rating. This task is accomplished by a number of devices which can include temporarily putting cash into the business in order to create a strong balance sheet, bribing credit rating agencies, and inflating financial statements so as to vastly overstate the business's assets and net worth. Also, bills for the company's initial purchases are promptly paid thus furthering the deception through enhancement of the company's credit standing. As the business becomes more established, its promoters order considerable amounts of additional merchandise although they have no intention of paying for these goods. A huge inventory, most of it not paid for, is built up. The principals then busy themselves disposing of their purchases at substantial discounts or secreting the unsold portion for later below-cost covert sales. In other words, they "bust out" the business. The company is then petitioned into bankruptcy with the mulcted creditors left to pick over the meatless carcass of an assetless enterprise. The con men, or at least those whose names are legally associated with the bankrupt company, suffer a loss of their credit standing and "good" name. In return, they and their co-conspirators reap handsome monetary benefits for having arranged in advance the demise of a local wholesale outfit.

II. THE OFFENSES MAIL FRAUD AND CONSPIRACY

A bust out often violates Federal criminal statutes because of the need to use the United States mails. The mail fraud statute, 18 U.S.C. § 1341, first enacted in 1872, provides

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Post Office Department, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both.

The elements of the offense were recently discussed at length by this Court in United States v. Green, 5 Cir. 1974, 494 F.2d 820. There Judge Ainsworth said:

The two basic elements of a mail fraud offense are (1) the scheme to defraud, and (2) causing a mailing for the purpose of executing the scheme. Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954); see United States v. Bruce, 5 Cir., 1973, 488 F.2d 1224, 1230; Bass v. United States, 5 Cir., 1969, 409 F.2d 179, cert. denied, 396 U.S. 863, 90 S.Ct. 138, 24 L.Ed.2d 117. While the mailing must, as the statute requires, be "for the purpose of executing the scheme," Kann v. United States, 323 U.S. 88, 94, 65 S.Ct. 148, 151, 89 L.Ed. 88 (1944), "(i)t is not necessary that the scheme contemplate the use of the mails as an essential element. United States v. Young, 232 U.S. 155, 34 S.Ct. 303, 58 L.Ed. 548," Pereira v. United States, supra, (347 U.S.) at 8, 74 S.Ct. at 362; see United States v. Maze, 414 U.S. 395, 400, 94 S.Ct. 645, 648, 38 L.Ed.2d 603 (1974). Indeed, it is sufficient if the mailing that is caused is "a part of the execution of the fraud," Kann v. United States, supra, (323 U.S.) at 95, 65 S.Ct. at 151, or is "incident to an essential part of the scheme," Pereira v. United States, supra, (347 U.S.) at 8, 74 S.Ct. at 363; see Parr v. United States, supra, (363 U.S. 370) at 390, 80 S.Ct. (1171) at 1183, 4 L.Ed.2d 1277. One "causes" the mails to be used when one "does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended . . . . United States v. Kenofskey, 243 U.S. 440, 37 S.Ct. 438, 61 L.Ed. 836." Pereira v. United States, supra, (347 U.S.) at 8, 74 S.Ct. at 363; see United States v. Maze, supra, (414 U.S.) at 399, 94 S.Ct. at 648. The things caused to be mailed may be "innocent in themselves" without effecting immunization from the mail fraud statute, as long as the mailing is " 'a step in a plot.' Badders v. United States, 240 U.S. 391, 394, 36 S.Ct. 367, 368, 60 L.Ed. 706." Parr v. United States, supra, (363 U.S.) at 390, 80 S.Ct. at 1183. Intent, in other words, "may make an otherwise innocent act criminal, if it is a step in a plot." Badders v. United States, 240 U.S. 391, 394, 36 S.Ct. 367, 368, 60 L.Ed. 706 (1916).

494 F.2d at 823-24.

A defendant need not do any of the mailing so long as there is sufficient evidence to connect him to the fraudulent scheme involving use of the mails. Milam v. United States, 5 Cir. 1963, 322 F.2d 104, 107. Each separate mailing in furtherance of the scheme to defraud constitutes a separate offense. United States v. Ashdown, 5 Cir. 1975, 509 F.2d 793, 800; Milam, 322 F.2d at 109-10.

The conspiracy statute, 18 U.S.C. § 371, under which all three appellants were convicted, states:

If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined not more than $10,000 or imprisoned not more than five years, or both.

The Government must prove two elements in order to sustain a conspiracy verdict: (1) the existence of an agreement by two or more persons to combine efforts to accomplish an illegal purpose (or to use illegal means to accomplish a legal purpose) and (2) a single overt act by any one of the conspirators in furtherance of the conspiracy. United States v. Falcone,311 U.S. 205, 210, 61 S.Ct. 204, 207, 85 L.Ed. 128, 132 (1940); United States v. Fontenot, 5 Cir. 1973, 483 F.2d 315, 321; United States v. Warner, 5 Cir. 1971, 441 F.2d 821, 830. Often the agreement cannot be proved by direct testimony because the plot is nurtured in secrecy. Therefore, the existence of the agreement or common purpose may rest upon inferences drawn from relevant and competent circumstantial evidence, usually the acts and declarations of the conspirators themselves. Fontenot, supra; Warner, supra. Having established the presence of an illegal conspiracy, the Government need only introduce "slight evidence" to connect an individual defendant to the common scheme. Fontenot, supra; Warner, supra; Lopez v. United States, 5 Cir. 1969, 414 F.2d 909, 911.

III. THE ACCUSATIONS AND THE DEFENSES

The Government charged that Edward Crockett, Reginald Cochran, Allen Fisher and Hugh Segars, named as defendants, and Stanley Cochran and Helen Moore, the last two named as participants but not as defendants, conspired to and did defraud numerous manufacturers and suppliers of household and automotive goods through the device of a pre-planned bankrupt the Mid-State Distributing Company (Mid-State) of Bainbridge,...