U.S. v. London, 75-3597

Citation550 F.2d 206
Decision Date06 April 1977
Docket NumberNo. 75-3597,75-3597
PartiesUNITED STATES of America, Plaintiff-Appellant, v. Carl J. LONDON et al., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

John W. Stokes, Jr., U.S. Atty., William P. Gaffney, Asst. U.S. Atty., Atlanta, Ga., for plaintiff-appellant.

Robert B. Thompson, Gainesville, Ga., for C. London and Town & Country.

Charles W. Stephens, Gainesville, Ga., for M. London.

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

Before TUTTLE, GOLDBERG and RONEY, Circuit Judges.

GOLDBERG, Circuit Judge:

This case presents the question whether an indictment charging defendants with concealing or covering up by trick, scheme, or device a material fact in violation of 18 U.S.C. § 1001 is insufficient solely because it fails to specify the precise trick, scheme or device allegedly used. 1

The district court dismissed fourteen counts of an indictment that charged the appellees, Carl and Maylon London, with concealing and covering up by trick, scheme, or device material facts in their dealings with the Farmers Home Administration. The fourteen counts identify the material facts concealed, the government agency involved, the transactions to which the facts were material, the dates of the transactions, and all participants in those transactions. The indictment tracks the statutory language in alleging that the appellees effected the concealment "by trick, scheme, or device," but fails to offer any factual elaboration. Upon the authority of United States v. Harris, 217 F.Supp. 86 (M.D.Ga.1962), the lower court held that the indictment was insufficient because it failed to set forth any essential facts regarding the trick, scheme or device.

We reverse. Although we are sensitive to the difficulty presented by applying the "trick, scheme, or device" language to the facts of this case, we do not think the difficulty should be resolved at the indictment stage. The indictment taken as a whole sufficiently protected the defendants against the possibility of double jeopardy and adequately apprised them of the charges so that they might prepare a defense. We pass only on the sufficiency of the indictment. With but incomplete and untried facts on which to rely, we do not venture to guess whether the government can succeed in proving the "trick, scheme, or device" element of those charges. We think that a question better left for the jury and the trial court.

I. Facts

Carl London and his brother Maylon were officers and directors of Town and Country Builders, Inc., which constructed homes in rural areas of Georgia. Town and Country sold more than twenty homes to persons who financed their acquisitions in part by Rural Housing loans from the federal Farmers Home Administration. We say "in part" because although a Rural Housing loan normally covers the full purchase price, the appellees were allegedly selling the homes for a price exceeding that stated in the loan application to the Farmers Home Administration. To make up the difference between the actual purchase price of the homes and that stated on Rural Housing loan applications, Town and Country extended additional loans secured by second mortgages on the acquired property. In all cases Town and Country's lien was junior to the purchase money lien of the Farmers Home Administration.

The federal government, through the Secretary of Agriculture and the Farmers Home Administration, makes and insures loans to enable rural dwellers otherwise unable to do so to purchase adequate housing. See 42 U.S.C. §§ 1471-83. The regulations of the U.S. Department of Agriculture provide that the amount of the loan is ordinarily limited to the value of the security less any other liens outstanding. Furthermore, the regulations provide that a loan will not ordinarily be made if a lien junior to the Rural Housing mortgage likely will be taken simultaneously with, or immediately subsequent to, the closing of the loan, unless the junior lien plus the Rural Housing lien and any prior lien will not interfere with repayment. 2 The purpose of these regulations is to prevent an applicant from overextending himself.

At the time of the closing of the loan, seller and borrower file papers in which both attest to the absence of unfiled or unrecorded liens against the property. The borrower executes a deed in which he promises that the property will not be further encumbered without the government's consent. The attorney designated to handle the closing for the Farmer's Home Administration is responsible for furnishing preliminary and final title opinions and for explaining to the borrower the prohibition against further encumbrances without the government's consent.

Carl London directly participated in the sale and financing of homes secured by the Rural Housing mortgages. Maylon London, although not involved in the daily operation of Town and Country, was designated to handle loan closings for the Farmers Home Administration and was in fact the closing attorney in four Rural Housing loans for homes sold by Town and Country. In three of these transactions he signed the second mortgage as notary. Neither brother informed the Farmers Home Administration that Carl was taking second mortgages on the homes to cover the amounts by which the actual purchase prices exceeded those stated on the loan applications.

The Government secured a thirty-seven count indictment charging either or both of the appellees with conspiring to defraud the United States in violation of 18 U.S.C. § 371, making false statements in violation of 18 U.S.C. § 1001, and concealing and covering up material facts in violation of § 1001. The district court dismissed the fourteen counts charging concealing and covering up. 3 Eleven of these charged that the appellee(s) concealed the fact that Town and Country was taking a second mortgage against property that secured a Rural Housing loan. 4

II. Sufficiency of the Indictment

Each count of the indictment stated a material fact that appellees allegedly concealed, but none specified by what trick, scheme or device the fact was concealed. The government does not dispute the notion that the "by trick, scheme, or device" language represents an essential element of the offense charged. We shall show that by proceeding under the little-used "concealment by trick, scheme or device" clause of § 1001 rather than the more commonly applied "false statement" clause, the government undertook the burden of proving at trial the means of concealment. The issue immediately at hand, however, is whether the district court correctly held that the bare allegation of a "trick, scheme, or device" was insufficient for purposes of indictment.

A. Did the Indictment Sufficiently Inform Appellees of the Charges Against Them?

The Supreme Court has held that an indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense. Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 2907, 41 L.Ed.2d 590 (1974). See also United States v. Briggs, 514 F.2d 794, 801 (5th Cir. 1975). The appellees do not seriously urge that the indictment is so vague that they could be in danger of further prosecution placing them in double jeopardy. Hence the point in contention is whether the indictment fairly informs the appellees of the charges against which they must defend.

There can be little doubt that the indictment adequately performed its function of alerting the defendants to the charges against them. Each concealment count pointed to a specific transaction, the date of that transaction, the parties participating, the fact concealed, and, by virtue of the nature of the transaction, the materiality of the concealed fact. Although the trick, scheme or device was not specifically identified, it is clear that the government supposed that the appellees' failure to inform the Farmers Home Administration of the existence or imminence of second mortgages on the property securing the Rural Housing loan a second mortgage made necessary by the sale of homes at a price greater than that represented on the loan applications constituted the essential concealment. Whether that "concealment" comprised a trick, scheme, or device was, to be sure, a separate question, but it is a question of the legal significance of those words. The appellees could have been in no doubt regarding the accusation notwithstanding the fact that the indictment merely tracked the words of the statute in alleging a "trick, scheme, or device."

It is generally sufficient that an indictment set forth the offense in the words of the statute itself as long as those words fully, directly, and expressly, without any uncertainty or ambiguity, set forth all the elements necessary to constitute the offense intended to be punished. See Hamling v. United States, supra, 418 U.S. at 117, 94 S.Ct. at 2907; United States v Lester, 541 F.2d 499, 501 (5th Cir. 1976); Downing v. United States, 348 F.2d 594, 599 (5th Cir. 1965). This is not a case in which guilt depends crucially on a specific identification of fact left obscure by the mere repetition of a statutory term. See Russell v. United States, 369 U.S. 749, 764, 82 S.Ct. 1038, 1047, 8 L.Ed.2d 240 (1962) (where indictment under 2 U.S.C. § 192 charged that defendants refused to answer questions "pertinent" to a subject under inquiry by a Congressional committee but failed to identify that subject, indictment was deficient for failing to apprise defendant of the accusation). The crucial transactions relied upon to demonstrate the offense were identified. See United States v. Smith, 523 F.2d 771, 779 (5th Cir. 1975). The appellees could have elicited additional details regarding those transactions by a bill of particulars. The test is not...

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