U.S. v. Federbush

• Decision Date: 27 August 1980
• Docket Number: 78-3715,Nos. 78-3140,s. 78-3140
• Citation: U.S. v. Federbush, 625 F.2d 246 (9th Cir. 1980)
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Gilbert Max FEDERBUSH and Alain G. F. Quilici, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 246

625 F.2d 246

UNITED STATES of America, Plaintiff-Appellee, v. Gilbert Max FEDERBUSH and Alain G. F. Quilici, Defendants-Appellants.

Nos. 78-3140, 78-3715.

United States Court of Appeals Ninth Circuit.

Submitted July 16, 1980.

Decided July 23, 1980.

Rehearing Denied Aug. 27, 1980.

Jay Goldberg, New York City, Jerrold M. Ladar, Stephen Sommerhalter, San Francisco, Cal., on brief, for defendants-appellants.

Cedric C. Chao, Asst. U. S. Atty., San Francisco, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before DUNIWAY and ELY, Circuit Judges, and PORT, ^* District Judge.

DUNIWAY, Circuit Judge:

Gilbert Max Federbush and Alain Quilici were indicted in six counts charging both of them with mail and wire fraud, violations of 18 U.S.C. §§ 1341 and 1343. Each was convicted on all counts and given concurrent sentences, and each appeals. We affirm.

I. The Facts.

We state the facts in the light most favorable to the government, Glasser v. United States, 1942, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680. We state them in some detail because Quilici, but not Federbush, argues that the evidence is not sufficient to sustain his conviction, and that even if it is, reversible error was committed in permitting the government to prove certain acts similar to those charged in the indictment, when, so far as appears, they were done by Federbush, without direct participation by Quilici. We keep in mind the rule that "a common purpose and plan may be inferred from 'a development and collation of circumstances,' " Glasser, supra, 315 U.S. at 80, 62 S.Ct. at 469.

In a nine paragraph preamble, incorporated by reference in each count, the indictment charges the defendants with a scheme to defraud. It consisted of acquiring the Windward Bank (actually Windward International Bank Limited) of Kingstown, St. Vincent, West Indies, representing that it was a real bank, when it was but a shell with no assets, persuading Columbus Associates, Inc., of Massachusetts, to put its funds in a Boston bank account in the name of the Windward Bank, transferring Columbus' assets abroad, and paying Columbus' obligations with Windward Bank checks, which were worthless and would be dishonored. Further, the scheme included advising payees of the Windward checks that they were good and would be honored. In furtherance of the scheme, the mails and interstate communication facilities were to be used. The specific charges were the sending, by mail, of Windward checks to San Francisco, one to California Coastal Tours for $19,324.87, (Count One), and two to Holiday Inn for $11,945.07 total, (Count Five), and three telephone calls by Federbush in Boston to Irene D. Vasques of California Tours in San Francisco (Counts Two, Three, and Four) and one such call to Barbara Smith of Holiday Inn in San Francisco (Count Six).

All of the foregoing charges were fully proved. A charter for the Windward Bank had been issued to one Hammond, who did nothing with it until he sold it to one Donahugh in June of 1977. At that time it was a "shell," with no assets. However, Federbush and Quilici had some connection with it before that time. A Government of St. Vincent "Certificate of Registration for International Companies" dated 18th April, 1977, a part of defendants' exhibit 1, shows Gilbert M. Federbush as Director and Chairman and Alain G. Quilici as Director of Windward Bank. On August 10, 1977, Donahugh completed a sale of the "bank" to Federbush.

In June or July of 1977, Federbush, representing himself to be an investor in Windward Bank, and one possessing authority to enter into a correspondent relationship on behalf of Windward Bank, attempted, by a phone call to Vice- President Rykert of Central National Bank in Miami, Florida, to establish such a relationship with that bank. Suspecting a fraud, Central National did not enter the proposed relationship.

In July of 1977, Federbush and Quilici, representing themselves to be president and secretary-treasurer, respectively, of Windward Bank, visited the Bradford Trust Company in Boston attempting to establish a correspondent relationship with that bank. Bradford Trust permitted Windward to open an account, but under severe restrictions. Windward could not draw on the account by check or wire. When Windward wished to draw, Bradford first assured itself that checks deposited in the account had actually cleared, and then issued its own Treasurer's Check for the amount to be withdrawn. Most of the checks were delivered to Quilici, some to Federbush. This was not a normal correspondent account or relationship.

During July and August, 1977, several papers purporting to be cashier's checks of Windward Bank appeared in Los Angeles. Two, for $3,000 and $5,000, were deposited in Security Pacific National Bank in July. The Bank was unable to collect on them. One, dated August 24, was forwarded by Bank of America for collection. It was not honored. One, for $6,500, dated July 28, was forwarded for collection by City National Bank, Los Angeles. It was not honored. During City Bank's efforts to obtain payment, Federbush told Warkentine, of City Bank, on August 19, by telephone, that the Windward Bank was in the process of establishing a correspondent relationship with Central National Bank in Miami. One was forwarded for Collection by Union Bank, Los Angeles, in August. It was not honored. All but two of these checks were signed by Federbush. Two purported to be signed by Quilici. It was stipulated that a handwriting expert of the FBI examined them and was unable to reach any conclusive results, one way or the other. There is no other evidence as to the authenticity of these signatures. Another check dated August 2, was deposited in Wells Fargo Bank, Los Angeles. The Bank was unable to collect. The check was signed "Alain Quillici." The foregoing stipulation applies to this signature, also. None of the banks had any other contact with Quilici.

All of the evidence about these Los Angeles checks came in over Quilici's objection, and under a limiting instruction, that it was admitted "for the purposes that prove motive, opportunity, intent, plan, knowledge or absence of mistake or accident, or other innocent reason . . . for those purposes only." Over the objection of counsel for Quilici, the evidence was received against both defendants. The judge declined to limit it to Federbush.

On August 19, 1977, Columbus Associates, a travel agency in Dorchester, Mass., was purchased by one Arthur DeSaulniers, for $175,000. Part of the payment was made with a check drawn on the Windward Bank. Shortly after August 26, Columbus' two bank accounts with the Shawmut Bank were closed, and the balance in each was deposited in the Windward Bank's Account in the Bradford Trust in Boston. Thereafter all of Columbus' receipts were deposited in that account. At the same time, an "account" in its name was opened at Windward Bank. Columbus had a separate payroll account in a Massachusetts bank, which was replenished from time to time by means of Bradford Trust Treasurer's Checks, from the Windward account at Bradford. Quilici or Federbush would hand cash to Barnes, of Columbus, to replenish the payroll account. Columbus issued checks drawn on the Windward Bank to pay its other obligations. During the week of August 26, and thereafter, Federbush and Quilici were often in the office of Columbus Associates, meeting with DeSaulniers. They were "the bankers." Beginning three or four weeks after August 26, Columbus Associates got numerous calls from creditors who were unable to obtain payment of the checks drawn on the Windward Bank. Of over 300 such checks, only two were honored. Eventually, Columbus Associates went bankrupt.

Meanwhile, in early September, Federbush and Quilici arrived at the office of Rykert of Central National Bank in Miami to talk further about establishing a correspondent relationship. Rykert said he would need financial information. Quilici, who was taking notes, promised to furnish the information, but never did.

Bradford Trust, in Boston, never got the information it wanted; so it closed the Windward Bank account in late September. Thereupon a new account in the name of the Windward Bank (an ordinary commercial account, not a correspondent account) was opened at City Bank and Trust Company, in Boston, on September 28. The then balance in the Bradford Trust account was put in the City Bank account, and all further receipts of Columbus Associates went into the new account. Federbush and Quilici met with Doty, of City Bank, at that bank, on September 28, to open the account. The account was closed on October 31, by City Bank. There were only three withdrawals from the account, one payable to the telephone company, one ($25,000) to Shawmut Bank, and one, to Windward Bank, of $92,348.80. City Bank closed the account because it could not find out what Windward Bank really was.

Columbus Associates had regularly arranged tours with California Coastal Tours and the Holiday Inn, both of San Francisco, and had enjoyed satisfactory business relations with each. When Columbus changed its banking arrangements, the two California businesses began having difficulty in obtaining payment of checks drawn on Windward Bank. These difficulties formed the basis for the six counts of the indictment against Quilici and Federbush. Each of the counts involved either a phone call by Federbush involving his promise on behalf of Windward Bank to cover the obligations of Columbus or the mailing of a Windward Bank check to either California Coastal Tours or Holiday Inn.

The Windward International Bank Limited was what Mr. Rykert of Central National Bank in Miami called a "fraud," a "bustout," a "scam or flimflam," like "the Bank of Sark."

A. The Bank of Sark was an offshore bank set up in the Channel Islands that issued certificates of deposit and cashier's checks. People...