U.S. v. Kennedy

• Decision Date: 28 November 1977
• Docket Number: Nos. 76-1333,76-1238 and 76-1880,s. 76-1333
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. J. Joseph KENNEDY, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Robert J. MYERS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Lawrence F. CARLSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1329

564 F.2d 1329

UNITED STATES of America, Plaintiff-Appellee, v. J. Joseph KENNEDY, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Robert J. MYERS, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Lawrence F. CARLSON, Defendant-Appellant.

Nos. 76-1333, 76-1238 and 76-1880.

United States Court of Appeals, Ninth Circuit.

Nov. 28, 1977.

Joe Reichmann (argued), Gregory A. Wedner (argued), Los Angeles, Cal., W. Bryan Osborne (argued), San Diego, Cal., for defendants-appellants.

Leonard Sharenow (argued), Los Angeles, Cal., for plaintiff-appellee.

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

Before GOODWIN and KENNEDY, Circuit Judges, and McNICHOLS, District Judge. ^*

McNICHOLS, District Judge:

Appellants, with eleven other persons, ¹ were each named in some counts of a forty-county indictment charging conspiracy and substantive offenses relating to an overall scheme to obtain money from a federally-insured bank for the purpose of funding the purchase of an insurance business chartered in the State of Washington. A jury trial ensued and appellants were each found guilty of one or more offenses. ² Each perfected an appeal from the judgment of conviction, and the Government moved to consolidate these appeals, which motion was granted.

J. Joseph Kennedy ("Kennedy"), a licensed attorney, was charged in Count Five with making false statements on a bank loan application (18 U.S.C. § 1014; § 2); in Count Six with aiding and abetting the misapplication of bank funds (18 U.S.C. § 656; § 2); and in Count Seven with aiding and abetting the making of false entries on bank records (18 U.S.C. § 1005; § 2). He was convicted on all counts and sentenced to one-year imprisonment and assessed a fine of $5,000. The term of imprisonment was suspended and the appellant placed on probation.

Robert J. Myers ("Myers"), who did not testify but is apparently not gainfully employed (on a loan application his employment is listed as "philosopher" and his employer as "Humanity"), was charged in Count Twenty-two with making a false statement on a loan application (18 U.S.C. § 1014; § 2); in Count Twenty-three with aiding and abetting the misapplication of bank funds (18 U.S.C. § 656; § 2); and in Count Twenty-four with aiding and abetting the making of false entries on bank records (18 U.S.C. § 1005; § 2). He was found guilty on all three counts, was fined $1,000, and placed on probation for three years.

Lawrence F. Carlson ("Carlson"), who did not testify but apparently acted as an unpaid assistant to a man named Russell, who in turn was a stock and insurance promoter with a felony record (Carlson's counsel described Carlson as a "gopher" one who runs errands), was charged in Count One with conspiracy (18 U.S.C. § 371; § 2); in Count Seventeen with false statement of a loan application (18 U.S.C. § 1014; § 2); and in Count Eighteen with aiding and abetting the misapplication of bank funds (18 U.S.C. § 656; § 2). He was convicted of Count One; acquitted of Count Eighteen; and the jury was unable to reach a verdict as to Count Seventeen, leading to a mistrial as to that count. Carlson was the only one of the three defendants ordered imprisoned. He was sentenced to two years' imprisonment, plus a $5,000 fine.

Some factual background common to all three appeals will serve to put the respective claims of error in perspective.

In the summer of 1973 Herbert Adair ("Adair"), a co-indictee who pled guilty to several counts, including conspiracy, began negotiations to purchase an insurance company chartered in the State of Washington under the title "General Security Life Insurance Company" ("General Security Life"). Adair was unable to raise sufficient capital to consummate the purchase. He contacted Eugene A. Kramer, another indictee, who has heretofore pled guilty to conspiracy, and who was a vice president and loan officer employed by the Bank of America ("bank"). Kramer had authority to grant loans on behalf of the bank up to $25,000 on each loan without further approval. It was therefore agreed that Adair would secure a number of individual borrowers ("nominees") who would apply for loans which Kramer would approve. The nominees were to turn the proceeds of such loans over to Adair, ostensibly to be used to obtain control of General Security Life. Kramer was to receive the sum of $15,000 for his part in the arrangement.

A number of persons, including those indicted in this case, as such nominees, thereafter were severally brought by Adair to Kramer's desk at the bank where false and misleading loan applications were executed, the loans approved, and the funds eventually funneled to Adair. Such was the scheme from which the charges arose. We turn now to the appeals of the individual appellants.

APPEAL OF J. JOSEPH KENNEDY, No. 76-1333

Kennedy, a practicing attorney, had represented Adair in legal matters. Adair approached Kennedy and requested him to act as a borrower. Kennedy agreed to do so, extracting in return a commitment from Adair for future retainers for legal services. Adair accompanied Kennedy to the bank, where a loan of $25,000 from the bank to Kennedy was arranged. The loan application form grossly overstated Kennedy's financial condition. Kennedy indicated to Kramer that the purpose of the loan was to purchase certain condominium property. This purported purpose of the loan was, by Kramer, entered into the bank's records. All three persons involved in the loan knew this representation to be false. Kennedy turned the proceeds of the loan over to Adair. A week later Kennedy became a member of the Board of Directors of General Security Life, and soon thereafter of the Board of Directors of another insurance company which Adair was negotiating to acquire.

Kennedy was charged with, and convicted of, the three counts heretofore described, i. e., (1) false statements on the bank loan application; (2) aiding and abetting Kramer in the misapplication of bank funds; and (3) aiding and abetting Kramer in making false entries on bank records.

Appellant Kennedy relies on several citations of error to support reversal of the judgment of conviction.

1. The first ground alleges that there was an impermissible joinder of defendants in the indictment under Rule 8(b), F.R.Cr.P., and that the Court below erred in denying appellant's motion to sever on that ground in accordance with Rule 14, F.R.Cr.P.

2. Secondly, error is predicated on the manner in which the U.S. Attorney presented evidence involving Kennedy to the grand jury. It is claimed that certain exculpatory evidence was excluded from grand jury consideration.

3. Next, appellant objects to the manner in which the trial jury was instructed relative to separate treatment of the evidence as to each defendant.

4. And, finally, appellant contends that the Court erred in rejecting a requested instruction purporting to present a theory of defense.

The first ground relied upon by Kennedy involves a consideration of Rule 8(b), F.R.Cr.P. Appellant claims to have been improperly joined in the indictment with the other defendants. He contends that, since he participated only in his own loan application, he was not a participant in a series of acts or transactions so as to permit joinder with the other persons accused in the single indictment. Rule 8(b) authorizes the charging of multiple defendants in one indictment where they are alleged to have participated in a series of acts or transactions constituting an offense or offenses. The trial judge carefully considered the issue and determined that the joinder was proper. We agree.

Kennedy's activities in applying for and obtaining a loan, the proceeds of which went to Adair, were clearly part of a series of transactions calculated to carry out a common plan which formed the basis of the offenses.

"It is implicit in the language of Rule 8(b) that so long as all defendants participate in a series of acts constituting an offense or offenses, the offenses and the defendants may be joined even though not all defendants participated in every act constituting each joined offense." United States v. Roselli, 432 F.2d 879, 899 (9th Cir. 1970), cert. denied, 401 U.S. 924, 91 S.Ct. 883, 27 L.Ed.2d 828 (1971).

When this standard is applied to the facts of the case it is evident that the joinder complained of was proper.

Appellant urges alternatively that if joinder was authorized, then the Court erred in rejecting his timely requests for severance ³ under Rule 14, F.R.Cr.P. Rule 14 provides that where it appears that a defendant may be prejudiced by a joint trial with other defendants, the Court may grant the defendant a separate trial. By the language of Rule 14 the matter is left to the sound discretion of the trial judge, to be exercised in the light of the potential prejudice to the defendant on the one hand and the obvious interest of judicial economy on the other. United States v. Brashier, 548 F.2d 1315 (9th Cir. 1976), cert. denied, 429 U.S. 1111, 97 S.Ct. 1149, 51 L.Ed.2d 565 (1977). The standard of review is abuse of discretion. Reversal is only appropriate upon a showing that the Court below abused its discretion in refusing to grant the motion to sever. United States v. Campanale, 518 F.2d 352, 359 (9th Cir. 1975), cert. denied, Grancich v. United States, 423 U.S. 1050, 96 S.Ct. 777, 46 L.Ed.2d 638 (1976). Appellant has the difficult burden of demonstrating prejudice and the ruling of the trial court will seldom be overturned on appeal. Id.

Here the claim of prejudice is based upon the fact that because a conspiracy was charged (Kennedy was not specifically named as a conspirator), much hearsay evidence could be expected to be admitted. Likewise, he pointed out that great portions of the evidence admitted to prove the numerous counts would be inapplicable to him, but would have a prejudicial effect. He contends that "the government's ploy...