U.S. v. Kaplan
| Decision Date | 26 May 1977 |
| Docket Number | 75-3423,76-1318,75-3418,75-3428 and 75-3337,Nos. 76-1319,s. 76-1319 |
| Citation | 554 F.2d 958 |
| Parties | UNITED STATES of America, Appellee, v. David KAPLAN, Appellant. UNITED STATES of America, Appellee, v. David GORWITZ, Appellant. UNITED STATES of America, Appellee, v. Richard DOLWIG, Appellant. UNITED STATES of America, Appellee, v. Earl VOGT, Appellant. UNITED STATES of America, Appellee, v. Walter STRADLEY, Appellant. UNITED STATES of America, Appellee, v. Douglas CASSIDY, Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Michael H. Weiss, San Francisco, Cal., argued, for appellant Cassidy.
Joseph C. Morehead, San Francisco, Cal., argued, for appellant Stradley.
Matthew Segall, Segall & Bitkower, Hollywood, Cal., appeared, for appellant Gorwitz.
Godfrey Isaac, Beverly Hills, Cal., argued, for appellant Dolwig.
George T. Davis, Joseph C. Morehead, San Francisco, Cal., argued, for appellant Vogt.
James L. Browning, Jr., U. S. Atty., Edmund D. Lyons, Jr., Special Atty., U.S. Dept. of Justice. San Francisco, Cal., argued, for appellee.
Appeals from the United States District Court for the Northern District of California.
Before GOODWIN and SNEED, Circuit Judges, and FITZGERALD, * District Judge.
**
Seven defendants were indicted upon multiple charges of mail fraud and wire fraud, together with conspiracy, in connection with a fraudulent scheme to obtain advance fees for promised loans (letters of credit) which were never delivered. The six appellants whose combined appeals are now before us present a wide variety of challenges to their convictions.
During the last part of 1974, a high demand for venture capital to develop real estate stimulated efforts to find money outside of traditional banking channels. All the methods, both legitimate and illegitimate, traded upon the willingness of developers to pay a premium for venture capital. David Kaplan and David Gorwitz, two of the appellants, were early organizers of a corporate entity known as Eurovest, chartered in the Cayman Islands, British West Indies. Eurovest, through one or more of the defendants, located individuals who were seeking to borrow large sums of money, and promised to arrange letters of credit. The victims were told that the letters of credit could be pledged to obtain capital for their projects.
In return for the promised financing, Eurovest would request ownership of some percentage of the venture. Most important, Eurovest required the victims to pay an "advance fee" to cover the alleged expenses of securing the letters of credit. More than $150,000 in advance fees were paid to Eurovest, but no letters of credit were ever issued nor were the advance fees returned.
Viewed in a light most favorable to the government, the evidence produced at trial showed that each of the appellants played a role in the scheme.
Appellant Vogt was a management consultant from New York. He testified that the major service he offers his clients is aid in locating financing for business ventures. Vogt was the initial contact between Eurovest and eight of the thirteen businessmen who negotiated with Eurovest. Each of the eight men Vogt contacted subsequently dealt with appellant Stradley, who was the acting attorney for Eurovest.
Vogt represented to the victims that Eurovest was backed by a prestigious and wealthy Florida family (the Duvals), and that Eurovest had millions of dollars in securities which could be pledged to secure letters of credit.
Appellant Dolwig was prominent in state politics. He was made the trustee of the "escrow" account into which the advance fees were paid. As a California state senator, his connection with Eurovest was supposed to lend credibility and prestige to the enterprise. On occasion, Senator Dolwig reassured victims as to the substantiality of the principals behind Eurovest. His main function in the scheme was to receive advance fees, hold them in his trust account, and turn them over to Eurovest upon written instructions from the corporation.
Appellant Cassidy, an insurance agent, sent insurance binders to some of the victims. These binders purported to protect any advance fees paid by the victims in the event that the promised letters of credit were not forthcoming. From time to time, Cassidy was called upon to vouch for the reliability of the Eurovest enterprise.
The mastermind of the scheme apparently was David Kaplan. It was Kaplan who approved the "loans" to various victims, engaged Senator Dolwig to become the west coast "escrow", convinced the Duval family to lend its name to Eurovest by furnishing the sole director and trustee of the corporation. Kaplan also personally negotiated with most of the victims.
Appellant Gorwitz worked with Kaplan. Gorwitz was the international money courier. Most of the fees from the victims were paid into Dolwig's account and then were turned over to Gorwitz. It was Gorwitz who was to deliver the letters of credit to the victims.
Much of the government's proof centered around the experience of one Paul Heck. Heck paid $60,000 in advance fees to Eurovest. When Eurovest failed to deliver its promised letter of credit, Heck began to pursue the Eurovest principals around the country. He made representations to Kaplan, Dolwig, Vogt, and Stradley that the entire Eurovest operation was fraudulent. Heck also warned Arthur Lachman, a broker who was dealing with Eurovest on behalf of a client named Conrad Preiss. Lachman, in turn, warned Vogt and Stradley. This evidence became important when some of the defendants insisted that their representations to the victims of Eurovest had been made in good faith.
All the appellants challenge the trial court's denial of the motions for acquittal under Fed.R.Crim.P. 29 and for a new trial, on the grounds that the evidence was insufficient to convict them.
As a practical matter, the trial court in deciding a motion for acquittal in a criminal case and the court reviewing that decision on appeal use the same test. United States v. Leal, 509 F.2d 122 (9th Cir. 1975); United States v. Nelson, 419 F.2d 1237, 1241 (9th Cir. 1969). That is, viewing the evidence in a light most favorable to the government as prevailing party, is the court satisfied that the jurors reasonably could decide that they would not hesitate to act in their own serious affairs upon factual assumptions as probable as the conclusions that the defendant is guilty as charged? United States v. Nelson, supra.
With that test in mind, we turn to appellants' arguments:
1. Dolwig.
The government's proof at trial showed that, among other things, Dolwig performed the following acts in relation to the Eurovest scheme: As trustee of the account into which the advance fees were deposited, he participated in setting up a fictitious "escrow". There was no escrow, and Dolwig knew it. The account was simply a conduit to move money from the victims to Gorwitz. Dolwig reassured Paul Heck as to the substantiality of the Eurovest principals; he failed to inform other Eurovest "clients" after he knew of problems Paul Heck was having in securing his letter of credit; he appeared with appellant Kaplan in a hotel different from the one in which Kaplan had told Heck he would be, and Dolwig's wife aided Kaplan in eluding Heck.
Dolwig does not question the factual accuracy of the government's proof, but contends that it fails to establish the requisite intent on his part to join or participate in the conspiracy. Dolwig claims that he himself was a victim who was duped into lending his good name to the Eurovest enterprise. This was a question for the jury. Although the evidence against Dolwig is entirely circumstantial, it does not have to exclude every hypothesis but that of guilt. United States v. Nelson, supra. Once the existence of a conspiracy is shown, only slight evidence is needed to connect a defendant with it. United States v. Marotta, 518 F.2d 681, 684 (9th Cir. 1975); Fox v. United States, 381 F.2d 125, 129 (9th Cir. 1967).
The jury could infer from the evidence that Dolwig knowingly participated in the conspiracy. It was proved that he did nothing to stop the fraud or warn others after Heck had told him that the scheme probably was a total fraud. " * * * (A) conspirator's intent to defraud may be inferred from the fact that he personally knew that the venture was operating deceitfully * * *." Phillips v. United States, 356 F.2d 297, 303 (9th Cir. 1965), cert. denied, 384 U.S. 952, 86 S.Ct. 1573, 16 L.Ed.2d 548 (1966). As we hold that the jury's decision had support in the evidence, we must affirm Dolwig's conviction of conspiracy in this case.
2. Vogt and Stradley.
Both Vogt and Stradley admit that they engaged in various business transactions on behalf of Eurovest. However, they claim that they were duped into believing that Eurovest was a legitimate operation. Vogt testified that, but for a lack of funds, he would have invested his own money in Eurovest letters of credit.
The government contends that Vogt and Stradley intended to defraud, and that such intent was shown by their conduct after receiving warnings from both Heck and Lachman that the scheme was a fraud. That is, Vogt and Stradley continued to negotiate deals with other Eurovest victims without any mention of Heck's and Lachman's warnings and accusations.
Credibility was for the jury. The jury had to resolve evidentiary conflicts and draw reasonable inferences therefrom. United States v. Nelson,supra; United States v. Barham, 466 F.2d 1138, 1140 (9th Cir. 1972), cert. denied, 410 U.S. 926, 93 S.Ct. 1356, 35 L.Ed.2d 587 (1973). An inference of criminal intent can be drawn from circumstantial evidence. United States v. Childs, 457 F.2d 173 (9th Cir. 1972); United States v. Oswald, 441 F.2d 44 (9th Cir. 1971).
We agree with the trial judge that the jury could reasonably have inferred from the evidence that Vogt and Stradley possessed the...
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