U.S. v. Frick

• Decision Date: 26 January 1979
• Docket Number: No. 77-5697,77-5697
• Citation: 588 F.2d 531
• Parties: 4 Fed. R. Evid. Serv. 256 UNITED STATES of America, Plaintiff-Appellee, v. Robert Lee FRICK, Ellis Jay Pailet, and Frank Harris, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 531

588 F.2d 531

4 Fed. R. Evid. Serv. 256

UNITED STATES of America, Plaintiff-Appellee, v. Robert Lee FRICK, Ellis Jay Pailet, and Frank Harris Defendants-Appellants.

No. 77-5697.

United States Court of Appeals Fifth Circuit.

Jan. 26, 1979.

Rehearing Denied Feb. 28, 1979.

Daniel J. Markey, Jr., New Orleans, La. (Court-appointed), for Frick.

Edward M. Baldwin, New Orleans, La., for Pailet.

Ellis Pailet, pro se.

Robert J. Zibilich, New Orleans, La., for Harris.

John P. Volz, U. S. Atty., Ernest C. Chen, Robert J. Boitmann, Asst. U. S. Attys., New Orleans, La., for plaintiff-appellee.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before WISDOM, GODBOLD and TJOFLAT, Circuit Judges.

GODBOLD, Circuit Judge:

Defendants Frick, Harris and Pailet were convicted by a jury of conspiracy, 18 U.S.C § 371, mail fraud, Id. § 1341 and wire fraud, Id. § 1343. All defendants claim there was insufficient evidence to sustain the jury's verdict. We reject this contention. Pailet and Frick also claim that testimony concerning Pailet's sexual relationship with Frick's secretary was highly prejudicial and should have been excluded. As to Pailet, we agree. As to Frick, we hold that the evidence was admissible. Finally, Pailet contends that the jury charge on the duties of an escrow agent were not sufficiently specific and precise. The contention is without merit. We affirm the convictions of Frick and Harris and reverse the conviction of Pailet.

I. Sufficiency of the evidence

Defendants moved for a judgment of acquittal at the close of the government's case. The motion was denied, and the defendants failed to renew their motion after presentation of their evidence. The motion was therefore waived, and the convictions must be affirmed unless it would result in a manifest miscarriage of justice. U. S. v. Juarez, 566 F.2d 511, 512-13 (C.A.5, 1978); U. S. v. Perez, 526 F.2d 859, 863-64 (C.A.5), Cert. denied,429 U.S. 846, 97 S.Ct. 129, 50 L.Ed.2d 118 (1976). In such a case our standard of review is clear:

In evaluating a claim of insufficient evidence in accordance with the lesser standard (when the motion is not renewed), we must consider the evidence in the light most favorable to the government, Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942), resolving all reasonable inferences and credibility choices in support of the jury's verdict. United States v. Zweig, 562 F.2d 962, 963 (5th Cir. 1977); United States v. Prout, 526 F.2d 380, 384 (5th Cir.), Cert. denied, 429 U.S. 840, 97 S.Ct. 114, 50 L.Ed.2d 109 (1976); United States v. Black, 497 F.2d 1039, 1041 (5th Cir. 1974). To reverse we must find that a reasonably minded jury necessarily must have entertained a reasonable doubt as to defendant's guilt. United States v. Haggins, 545 F.2d 1009, 1013 (5th Cir. 1977).

U. S. v. Juarez, supra at 513 (footnote omitted).

Under this standard the following facts could have been found by the jury. Frick was a loan broker doing business as Lakeside Investment Advisors, Inc. (LIA). Harris, an acquaintance of Frick, assisted Frick in the two loan transactions that gave rise to the indictment. Pailet, an attorney, served as the escrow agent in the two transactions.

The wire fraud convictions are based on a loan transaction with William Lucky, owner of Calculator & Computer Center, Inc. Lucky's business was in distressed financial condition and needed a loan of $500,000. After Lucky made unsuccessful attempts to secure the loan from banking institutions, he was referred to Frick as a person who might be able to put a loan agreement together. On October 12, 1976, Lucky signed an agreement with LIA, appointing Frick as the person to obtain the loan. The agreement also obligated Lucky to pay LIA $5,000 for finding a person willing to make a $500,000 loan commitment. Lucky gave Frick a promissory note for the brokerage fee. At that meeting Frick told Lucky that Kentfield Trust, a California business entity with $30,000,000 in assets would give Lucky a $500,000 letter of credit.

At the next meeting, October 25, Frick told Lucky that the lender wanted $10,000 placed in an escrow account payable according to the instructions of the lender at the time the commitment letter was signed. Pailet was designated by Frick as the escrow agent. Lucky made out four checks to Pailet each in the amount of $2,500. Three of the checks were paid and the fourth was returned for insufficient funds. Lucky was told that the $10,000 was the fee the lender required for giving the loan commitment.

On November 3, Frick and Lucky met again. Together they wrote a draft of a loan commitment Lucky would be satisfied with. At this meeting Lucky learned for the first time that First Charter Acceptance Corporation (FCAC) was the company that was to provide the loan commitment. Frick told Lucky that FCAC was a subsidiary of Kentfield Trust. The following day, November 4, Harris traveled to Dallas, Texas, the home of FCAC, where he met with Marion Braxton, a founder of FCAC. ¹ The meeting took place in the answering service office of a large commercial building in Dallas. At the time Harris went to Dallas, FCAC had no employees and no office. Its calls were handled by the building answering service. Harris presented Braxton with the draft of the loan commitment and asked that the draft be typed on FCAC letterhead. One of the persons working at the answering service typed the loan commitment and Vernon Gatewood, an associate of Braxton, signed it. Braxton testified that both Harris and Frick told him that FCAC's only obligation would be to sign the loan commitment.

Between November 2 and 4 Braxton and Gatewood prepared three sets of instructions to Pailet for the disbursement of the money held in escrow. One was based on the premise that all of Lucky's checks would clear, the second that $7,500 would clear and the third that $5,000 would clear. Because $7,500 had cleared, Braxton gave Harris the second set of instructions and Harris carried these instructions to New Orleans on November 5. On the same day Harris gave the loan commitment and the disbursement instructions to Pailet.

On November 5, Lucky was also busy trying to gather information about FCAC. He called Kentfield Trust and was told that they knew nothing of FCAC. Lucky relayed this information to Frick, but he was reassured by Frick that everything was going fine. Lucky also called Pailet that day, asked him if he still had the money and Pailet said that he did. Lucky told him not to disburse any of it. On Monday, November 8, Pailet disbursed the escrow funds, $2,466 each to Frick, Harris and FCAC, and $102 to himself.

The loan commitment given by FCAC required Lucky to accept or reject it within ten days of November 4, the date it was signed. Lucky first saw a signed copy of the commitment on November 12. A copy, however, was of no value because a bank would accept only an original. The original was in Pailet's hands. In a letter dated November 11, Pailet sent the original to Lucky. Though the letter was dated the 11th, the postmark on the envelope was November 16. Lucky testified that he received the letter on either November 16, 17 or 18. The commitment letter was received by Lucky after the 10-day option period had already expired. All parties now agree that even if the option had not expired the loan commitment was worthless because FCAC had no assets to back up the commitment.

The wire fraud statute under which defendants were convicted, 18 U.S.C. § 1343, condemns all schemes to defraud in which interstate wires are used to further the scheme. U. S. v. Jackson, 451 F.2d 281, 281 (C.A.5, 1971), Cert. denied, 405 U.S. 928, 92 S.Ct. 978, 30 L.Ed.2d 801 (1972); See U. S. v. Bradford, 571 F.2d 1351, 1354 (C.A.5), cert. denied, 437 U.S. 908, 98 S.Ct. 3100, 57 L.Ed.2d 1140 (1978). The defendants argue that they were entitled to an acquittal because there was no evidence showing that they knew that FCAC had no assets, and without this knowledge, they argue, there could be no intent to defraud. We find that there was enough evidence from which the jury could infer that the defendants knew they were delivering Lucky a worthless piece of paper.

When Harris went to Dallas FCAC had no office or employees. The jury could infer that Harris realized that FCAC was a company without resources and that a loan commitment signed by FCAC was of no value. Other evidence supports this inference. Frick lied to Lucky when he told him that FCAC was a subsidiary of Kentfield Trust. The jury could have considered the falsehood as evidence that Frick was aware that FCAC could not back up its loan commitment, and that he tried to give FCAC an air of legitimacy by claiming it was a subsidiary of Kentfield Trust. Moreover, Lucky called Frick on November 5 and told him that he had discovered through Kentfield that FCAC was not related to Kentfield Trust and had found through his own banker that FCAC had no resources. The late mailing of the loan commitment by Pailet, which guaranteed receipt of the letter only after the option had expired, supports the jury's conclusion that Frick, Harris and Pailet never intended to procure a loan for Lucky. The jury could conclude that Pailet back-dated his cover letter so it would appear that he sent the loan commitment in a timely fashion, additional support for a finding of an intentional scheme to defraud Lucky.

Other factors support a jury conclusion that the defendants knew they were not obtaining a bona fide loan commitment. The preparation of three sets of disbursement instructions is inconsistent with a bona fide business transaction pursuant to which Lucky would be obligated to pay a $10,000 fee and FCAC obligated to guarantee a bank loan of $500,000 to Lucky. With so much at stake, the jury could justifiably infer that the lack of concern with Lucky's ability to make a $10,000 good faith deposit is both...