U.S. v. Londe, 78-1416
| Decision Date | 22 January 1979 |
| Docket Number | No. 78-1416,78-1416 |
| Citation | 587 F.2d 18 |
| Parties | 78-2 USTC P 9771 UNITED STATES of America, Appellee, v. Michael LONDE, Appellant. |
| Court | U.S. Court of Appeals — Eighth Circuit |
John J. Stewart, Clayton, Mo., for appellant.
David W. Harlan, Asst. U. S. Atty., St. Louis, Mo., argued, Robert D. Kingsland, U. S. Atty. and David W. Harlan, Asst. U. S. Atty., St. Louis, Mo., on brief, for appellee.
Before BRIGHT, STEPHENSON and HENLEY, Circuit Judges.
Appellant, Michael Londe, was indicted by a grand jury for violating two sections of the Internal Revenue Code. Count I charged him with failing to file an income tax return for calendar year 1970 in violation of 26 U.S.C. § 7203. Count II charged Londe's tax return for 1971 was perjurious in violation of 26 U.S.C. § 7206(1). After pleading not guilty to both counts, Londe waived trial by jury and the case was heard before the Honorable John F. Nangle, United States District Judge for the Eastern District of Missouri.
In the course of a lengthy trial, the government offered in evidence testimony on stipulations from approximately one hundred witnesses along with several hundred exhibits. Defendant Londe, on the other hand, introduced little evidence in support of his defense other than a few exhibits.
Although not requested to do so, the trial judge prepared and filed a full memorandum which includes findings of fact and conclusions of law as well as general findings of guilt. See Fed.R.Crim.P. 23.
Londe was convicted of both counts and received a $15,000.00 fine and four years imprisonment. The district court determined that Londe had engaged in an elaborate "Ponzi scheme" or confidence game, See Cunningham v. Brown, 265 U.S. 1, 7-8, 44 S.Ct. 424, 68 L.Ed. 873 (1924). This finding was based in part on uncontroverted evidence which showed that from 1969 to 1972 Londe had represented to numerous individuals that he was able to purchase ambulance "shells" direct from a factory, equip them himself and resell them at a substantial profit. He promised to share this profit with investors who would loan him money to purchase the "shells" in exchange for his promissory notes. The notes were to bring a large rate of return over a short period of time.
The government's theory at trial was that this ambulance business was nonexistent. None of the companies that supposedly had supplied the "shells" or purchased Londe's finished product had any record of dealing with him. He stipulated that he had forged the signatures of various officers of one reputable ambulance company in an effort to establish his affiliation with it.
Several of the many disgruntled investors testified to conversations they had with Londe. This testimony showed that he had given them conflicting statements as to why he was unable to obtain ordinary financing for his venture and why he failed to repay his debts to them promptly. Six such witnesses stated that Londe told them there would be no need to report any profits from their investments to the I.R.S. since all the transactions were in cash and he was not going to report his earnings.
The district court found these "investments" were not true loans since the funds were obtained by fraud and the evidence indicated that Londe recognized no obligation to repay them but instead used the borrowed money for his own purposes, repaying only those loans necessary to preserve his scheme with money borrowed from other investors. Witnesses testified that he had issued them checks which were returned by his bank without clearing. Many investors realized little or no return of capital.
The government's documentary evidence showed that Londe's gross income in 1970 was $114,000.00. This figure increased to more than $250,000.00 in 1972. These dollar amounts largely represent the difference between the money received from Londe's investors and the money he returned to them in partial repayments. In 1970 the personal expenditures from his seven checking accounts totalled $47,994.00. In 1971 the total was $40,432.00. Yet he declared no income in 1970 and only $28,000.00 in income in 1971.
Londe attempted to explain his large personal expenditures on furs, jewelry,...
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