U.S. v. O'Malley, 75-1282

• Decision Date: 22 April 1976
• Docket Number: No. 75-1282,75-1282
• Citation: 535 F.2d 589
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John B. O'MALLEY, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 589

535 F.2d 589

UNITED STATES of America, Plaintiff-Appellee, v. John B. O'MALLEY, Jr., Defendant-Appellant.

No. 75-1282.

United States Court of Appeals, Tenth Circuit.

Decided April 22, 1976.

Rehearing Denied July 8, 1976.

James L. Treece, U. S. Atty., and Richard P. Slivka, Asst. U. S. Atty., Denver, Colo., for plaintiff-appellee.

Lawrence M. Henry, Denver, Colo., for defendant-appellant, and John B. O'Malley, Jr., defendant-appellant, filed additional pro se brief.

Before LEWIS, Chief Judge, and BREITENSTEIN and McWILLIAMS, Circuit Judges.

McWILLIAMS, Circuit Judge.

John B. O'Malley, Jr., and Thomas K. Hudson were jointly charged in a three-count indictment with violation of the so-called fraud by wire statute. 18 U.S.C. § 1343. Specifically, both were charged with devising a scheme and artifice to defraud Matthey-Bishop, Inc. of Malvern, Pennsylvania by means of false and fraudulent pretenses, representations and promises, well-knowing that such representations were false and that in connection therewith had transmitted sounds by means of certain telephone conversations in interstate commerce. Each count was based on a different interstate telephone conversation. O'Malley's case was severed for trial purposes, and in a jury trial O'Malley was convicted on each of the three counts. On appeal counsel for O'Malley raises what is essentially one proposition, namely, the evidence is legally insufficient to show that O'Malley devised, or had an intent to devise, a scheme to defraud Matthey-Bishop. In other words, it is conceded here, as it was established in the trial court, that O'Malley and Hudson had used the telephone in interstate commerce to further their relations with Matthey-Bishop. It is O'Malley's contention, however, that he had not devised, nor did he ever intend to devise, a scheme to defraud Matthey-Bishop. Rather, according to counsel, the evidence only showed preliminary business negotiations between the two defendants and Matthey-Bishop, which negotiations did not culminate in an agreement between the parties, and which, under the peculiar circumstances of the case, never could have resulted in any agreement. The facts are somewhat on the bizarre side, and a brief summary thereof will put the case in focus.

O'Malley, a licensed civil engineer, had through practical experience acquired some knowledge in the fields of metallurgy and chemistry. O'Malley was the president of Applied Chemicals, Inc., a Colorado corporation, which had a refinery located in Denver, Colorado. Thomas K. Hudson, a Denver lawyer, represented both O'Malley and Applied, and O'Malley maintained a business office in Hudson's suite of law offices.

In June 1974, O'Malley and Hudson contacted various commodity brokers and let it be known that Applied had 300,000 ounces of platinum for sale. Brokerage agreements were made between these brokers and the two defendants. These brokers in turn contacted other brokers in their search for potential buyers of platinum. It was in this manner that a Mr. Cote eventually contacted Matthey-Bishop in Pennsylvania to ascertain if the latter was interested in buying platinum. Matthey-Bishop is a United States subsidiary of an English company which is one of the world's largest refiners of platinum. Matthey-Bishop immediately became suspicious because, in the first place, they were not familiar with Cote, and also because they were totally amazed at the large amount of platinum which was allegedly available for purchase. Because of these suspicions, Matthey-Bishop contacted the F.B.I. at once. It was agreed that Matthey-Bishop would follow through and make contact with O'Malley and Hudson, and that one Joseph Lanahan, the manager of the metal control group of Matthey-Bishop, would go to Denver and make the actual contact. It was further agreed that one Michael Melvin, an F.B.I. agent, would accompany Lanahan and would pose and be introduced as Lanahan's newly hired assistant.

Lanahan and Melvin made two trips to Denver and on each occasion had rather extended conversations with both O'Malley and Hudson. Also, Lanahan and Melvin were escorted around the plant premises of Applied by O'Malley. The latter in his conversations represented that: (1) Applied had a present capacity to produce 300,000 ounces of platinum at a cost to Matthey-Bishop of some $60,000,000; (2) that he, O'Malley, had a secret process for extracting precious metals in the form of platinum, gold and silver from ore and metal bars, known as dore bars, stockpiled on the premises of Applied; and (3) that a metal bar known as a "dore bar," given by O'Malley to Matthey-Bishop to show his "good faith," contained in excess of 85% platinum family elements. There was evidence adduced at trial by the Government to show that these representations, as well as others, were false.

Once O'Malley had exhibited his "good faith," as above referred to, O'Malley and Hudson were continually requesting Matthey-Bishop to show its "good faith" by issuing either a letter of credit or a letter of intent, or some other form of collateral, which they said would be placed in an escrow account which they (O'Malley and Hudson) claimed to have in the First National Bank of Nashville, Tennessee. When Lanahan and Melvin refused to thus show their "good faith," Hudson stated that there could be no loss to Matthey-Bishop if there was non-performance by O'Malley, since the...