U.S. v. Mandel

Citation591 F.2d 1347
Decision Date11 January 1979
Docket NumberNos. 77-2487,s. 77-2487
Parties5 Fed. R. Evid. Serv. 133 UNITED STATES of America, Appellee, v. Marvin MANDEL, Appellant. UNITED STATES of America, Appellee, v. W. Dale HESS, Appellant. UNITED STATES of America, Appellee, v. Harry W. RODGERS, III, Appellant. UNITED STATES of America, Appellee, v. William A. RODGERS, Appellant. UNITED STATES of America, Appellee, v. Irvin KOVENS, Appellant. UNITED STATES of America, Appellee, v. Ernest N. CORY, Jr., Appellant. UNITED STATES of America, Appellant, v. W. Dale HESS, Harry W. Rodgers, III, and William A. Rodgers, Appellees. to 77-2492 and 78-5022.
CourtU.S. Court of Appeals — Fourth Circuit

Arnold M. Weiner, Baltimore, Md., Lead Counsel, for appellants and for Marvin Mandel, appellant.

Michael E. Marr, Baltimore, Md., for William A. Rodgers, appellant.

Charles G. Bernstein, Federal Public Defender, Baltimore, Md. (Michael Schatzow, Asst. Federal Public Defender, Baltimore, Md., William C. Brennan, Jr., DePaul, Willoner & Kenkel, College Park, Md., on brief), for Ernest N. Cory, Jr., appellant.

Eugene Gressman, School of Law, University of North Carolina, Chapel Hill, N. C., D. Christopher Ohly and M. Albert Figinski, Baltimore, Md., for Marvin Mandel.

William G. Hundley, Washington, D. C., for W. Dale Hess.

Thomas C. Green and William W. Taylor, III, Washington, D. C., for Harry W. Rodgers, III.

Norman P. Ramsey and William F. Gately, Baltimore, Md., for Irvin Kovens, on brief, for appellants.

Daniel J. Hurson, Asst. U. S. Atty., Baltimore, Md., (Russell T. Baker, Jr., U. S. Atty., and Barnet D. Skolnik and Elizabeth H. Trimble, Asst. U. S. Attys., Baltimore, Md., on brief), for appellee.

Before BUTZNER, RUSSELL, and WIDENER, Circuit Judges.

WIDENER, Circuit Judge:

Marvin Mandel, Governor of the State of Maryland, W. Dale Hess, Harry W. Rodgers, William A. Rodgers (brother of Harry Rodgers), Irvin Kovens, Maryland businessmen, and Ernest N. Cory, a Maryland attorney (hereinafter "Appellants"), appeal from their convictions for mail fraud and racketeering violations under 18 U.S.C. § 1341 1 and 18 U.S.C. § 1961 et seq. 2 (The Organized Crime Control Act), respectively. Appellants were each adjudged guilty of fifteen counts of mail fraud under § 1341 and one count of prohibited racketeering activity under § 1961 et seq. 3 Appellant Mandel was sentenced to a four-year prison term; Appellants Hess, Harry Rodgers, and Kovens were each sentenced to four years' imprisonment and fined $40,000; Appellant William Rodgers was sentenced to 20 months' imprisonment and fined $40,000 The gist of the mail fraud counts of the indictment charged that beginning between January 7, 1969 and the spring of 1971, and continuing thereafter to the date of the filing of the indictment, Appellants devised and intended to devise a scheme and artifice:

and Appellant Cory was sentenced to 18 months' imprisonment. Additionally, pursuant to 18 U.S.C. § 1963(a), Appellants Hess, Harry Rodgers, William Rodgers, Kovens, and Cory were ordered to forfeit their ownership interests in the Southern Maryland Agricultural Association, Inc., based upon their convictions under count 24 of the indictment.

"(a) To defraud the citizens of the State of Maryland, and its governmental departments, agencies, officials and employees, both executive and legislative, of their right to the conscientious, loyal, faithful, disinterested and unbiased services, actions and performance of official duties of MARVIN MANDEL, in his official capacities as Governor of the State of Maryland, free from bribery, corruption, partiality, willful omission, bias, dishonesty, deceit, official misconduct and fraud;

"(b) To defraud the citizens of the State of Maryland, and its governmental departments, agencies, officials and employees, both executive and legislative, of their right to have the state's business and its affairs conducted honestly, impartially, free from bribery, corruption, bias, dishonesty, deceit, official misconduct and fraud, and in accordance with the laws and Code of Ethics of the State of Maryland;

"(c) To defraud the citizens of the State of Maryland, and its governmental departments, agencies, officials and employees, both executive and legislative, of their right to have available and to be made aware of all relevant and pertinent facts and circumstances when:

(1) drafting, considering and deliberating upon proposed legislation for the State of Maryland with respect to the Maryland horse racing industry and to other matters;

(2) administering the laws of the State of Maryland with respect to the Maryland horse racing industry and to other matters; and

(3) transacting business for and on behalf of the State of Maryland;

"(d) To obtain, directly and indirectly, money, property and other things of value, by means of false and fraudulent pretenses, representations, and promises, and the concealment of material facts, relating to the Marlboro Race Track, the Bowie Race Track, the Security Investment Company, Ray's Point, Inc., and to other matters." (from count 1, para. 13, of the indictment).

Paragraphs 14 through 32 of count 1 set forth the specifics of the alleged scheme to defraud. These specifics include allegations of bribery and the misrepresentation and concealment of material information on the part of the Appellants. Counts 2 to 20 incorporate by reference the allegations contained in count 1 and charge Appellants with various particular uses of the mails in the execution of the alleged scheme.

In the racketeering counts, the government charged Governor Mandel in count 21 with acquiring and maintaining an interest in and control of the Security Investment Company through a pattern of racketeering activity that included mail fraud and bribery. Count 23 charged Hess, Harry Rodgers, and William Rodgers with conducting and participating in the conduct of the affairs of the Security Investment Company through a pattern of racketeering activity that included mail fraud and bribery. Count 24 charged Hess, Harry Rodgers, William Rodgers, Kovens, and Cory with conducting and participating in the conduct of the affairs of the Marlboro Race Track through a pattern of racketeering activity that included mail fraud.

The evidence adduced at trial focused upon the specific allegations contained in count 1 of the indictment, i. e., the alleged bribery of Governor Mandel and the alleged misrepresentation and concealment of material information on the part of Appellants. The facts developed at trial touching upon the alleged bribery of the Governor and the alleged misrepresentation and concealment of material information by Appellants were essentially uncontroverted. The dispute centered on the proper inferences that could be drawn from these facts.

The evidence adduced at trial included the following: In February 1971, the owners of Marlboro Race Track (who at the time did not include any of the Appellants), a small half-mile track located in Prince George's County, Maryland, contracted with the owners of Hagerstown Race Track, a half-mile track located in Washington County, Maryland, for the transfer to Marlboro of the 18 racing dates allotted to Hagerstown. Since the Maryland horse racing industry is regulated by the State and the permanent transfer of racing days requires the affirmative approval of the Maryland General Assembly, a bill designated as House Bill 1128 was drafted by attorneys for Marlboro and Hagerstown and submitted to the Maryland House of Delegates. The bill, as initially drafted, provided for a straight-forward approval of the transfer contract. However, prior to its passage, the bill was amended to provide that Marlboro would make its payments to the State of Maryland and then the State would make payments to Hagerstown. On May 28, 1971, Governor Mandel vetoed the bill in its amended form because he was advised that the payment provision was unconstitutional.

Subsequent to the veto, the owners of Marlboro actively began to attempt to sell the racetrack. Cory, acting on behalf of undisclosed clients, negotiated with the owners of Marlboro for its purchase. On December 31, 1971, the controlling interest in Marlboro was sold to the group represented by Cory. As of December 31, 1971, that group consisted of Appellants Hess, Harry Rodgers, William Rodgers, and Irving Schwartz, a longtime friend and business associate of Kovens. Schwartz had previously purchased 17,000 shares of Marlboro stock. At the time of settlement, the sellers of Marlboro did not know the identity of the members of the purchasing group except for Schwartz.

The purchase of Marlboro was in part financed by a $1,825,000 loan from the Suburban Trust Company. The balance of the purchase price was funded by Schwartz and Harry Rodgers. The government contended that Schwartz was merely a nominee for Kovens in the purchase of Marlboro. It introduced evidence to show that Kovens provided much of the funding for the initial purchase payments and subsequent loan interest payments made by Schwartz; that Kovens and Schwartz altered check stubs and other documents manifesting Kovens' financial involvement in the purchase of Marlboro; and that Kovens played a major role in the management of Marlboro following its purchase.

The Marlboro purchasing group did not want their identities revealed. Thus, on January 1, 1972, Eugene Casey, who had been chosen by the purchasers to act as president of Marlboro, announced at a press conference that he was the new purchaser of Marlboro. On January 7, 1972, Casey and Cory prepared and sent a letter to the Maryland General Assembly stating that Casey had recently acquired ownership of Marlboro and requested that Governor Mandel's veto of House Bill 1128 be overridden. A disputed issue of fact was whether Governor Mandel knew the true identities of the new purchasers of Marlboro.

On January 12, 1972, the General Assembly overrode...

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