U.S. v. Morrow

• Decision Date: 16 August 1976
• Docket Number: No. 74-2674,74-2674
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John L. MORROW et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 120

537 F.2d 120

UNITED STATES of America, Plaintiff-Appellee, v. John L. MORROW et al., Defendants-Appellants.

No. 74-2674.

United States Court of Appeals, Fifth Circuit.

Aug. 16, 1976.

Robert A. Harper, Jr., Gainesville, Fla. (Court-appointed), for morrow.

Gerald R. Herms, Tampa, Fla. (Court-appointed), for Palmer.

Robert W. Knight, Tampa, Fla. (Court-appointed), for Martin & Ford.

Ollie Ben Butler, Jr., Tampa, Fla. (Court-appointed), for Brennan.

J. Michael Shea, Tampa, Fla. (Court-appointed), for Berman.

Ralph L. Rousseau, Jr., Tampa, Fla., for Johnson.

Henry Gonzalez, James Yon, Tampa, Fla., for Edwards.

Thomas T. Steele, Tampa, Fla. (Court-appointed), for Scales.

Morton Berger, White Plains, N. Y., for Dondich & McConnell.

John L. Briggs, U. S. Atty., Jacksonville, Fla., Claude H. Tison, Jr., Asst. U. S. Atty., Tampa, Fla., for U. S.

Appeals from the United States District Court for the Middle District of Florida.

Before BROWN, Chief Judge, and THORNBERRY, Circuit Judge, and MILLER ^*, Associate Judge.

THORNBERRY, Circuit Judge:

Eleven appellants challenge on innumerable grounds their convictions in the Middle District of Florida under a ten count indictment charging conspiracy and substantive offenses. Count One of the indictment charged all appellants, and twelve other original defendants, with conspiracy to defraud the United States and to commit an assortment of substantive crimes, see 18 U.S.C. § 371, including mail fraud and wire fraud, see 18 U.S.C. §§ 1341, 1343, interstate and foreign transportation of counterfeited securities, see 18 U.S.C. § 2314, and the defrauding of federally insured banks. See 18 U.S.C. § 1014. Counts Two through Eight charged appellant Samuel Scales, along with his brother Joseph Scales, with mail fraud, wire fraud, and making false statements to a federally insured bank. Finally, Counts Nine and Ten charged appellants Jack Edwards, Charles Jess Palmer, Allen Christopher Martin, and four other defendants with interstate and foreign transportation of counterfeited securities on two separate occasions.

Three defendants Schreier, Harte, and Carol Lax pleaded guilty prior to trial; another defendant, Frank Gallo, died; trial severances were granted for defendants Hahn, Rasmussin, and McClain; and the charges against another defendant, Sam Lax, were dismissed at the request of the Government. Fifteen defendants went to trial on March 4, 1974. Four weeks into the trial, appellant Palmer withdrew his plea of not guilty and entered a plea of guilty to the charges in Counts One, Nine, and Ten. The district court, after the presentation of the Government's evidence, granted the motions of the Scales brothers to dismiss the charges against them in Count Eight. On April 16, 1974, the jury returned guilty verdicts on all counts and against all remaining defendants except one, and the district court shortly thereafter granted a judgment of acquittal non obstante veredicto for another defendant. With the exceptions of defendants Meierdiericks and Joseph Scales, all defendants convicted at trial have appealed.

I. The Evidence Showed a Single Conspiracy.

All appellants, with the exception of Palmer, argue that a variance between the indictment, which alleged a single conspiracy in Count One, and the proof at trial, which appellants contend showed the existence of several independent conspiracies to the exclusion of a single conspiracy linking all defendants, requires that we reverse, because of fatal prejudice to appellants' substantial rights, the jury's finding of guilty on Count One. At the outset, we concede to appellants the point that the Government's evidence at trial disclosed a variety of criminal activities, at times seemingly unrelated, on the parts of defendants. But we recognize that the evidence also disclosed a not insubstantial expenditure of industry and intelligence by defendants in their criminal endeavors. The multiplicity and variety of defendants' criminal activities come accordingly as no surprise. Having carefully examined the record, however, we have no difficulty concluding that the Government's evidence did establish the existence of a single, overall conspiracy among defendants, which conspiracy provided in effect an umbrella and connecting thread for the many different activities disclosed at trial. In consequence, we reject appellants' argument that there was a fatal variance between the indictment and the proof at trial.

The Government's evidence, viewed in the most favorable light, see Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942); United States v. Brasseaux, 509 F.2d 157, 158 (5 Cir. 1975), established the existence of a national chain, with an international link, for the distribution of stolen and counterfeited securities. In structural terms, which are helpful, but never decisive, see United States v. Perez, 489 F.2d 51, 64 (5 Cir. 1973), cert. denied, 417 U.S. 945, 94 S.Ct. 3067, 41 L.Ed.2d 664 (1974), the flow of counterfeited securities contemplated by the "agreement" of the defendants followed, in the descriptive jargon of the field, an "H-shaped" chain conspiracy beginning with two groups of "suppliers" operating out of Orlando, Florida, and Chicago, Illinois, passing through a host of "middlemen" or "wholesalers" working principally in Florida, and coming to rest with two groups of "retailers" ready to supply Los Angeles, New York, and Toronto. It must be borne in mind, and it should become clear as the story unfolds, that there was substantial overlap among the links in the conspiracy, which fact among others reinforces our conclusion that the Government did establish the existence of a single conspiracy. See United States v. Perez, supra at 59; United States v. Morado, 454 F.2d 167 (5 Cir. 1972). But most important in our conclusion that the evidence showed a single conspiracy, we recognize that the character of the property involved here and the nature of the crime are such that knowledge on the part of any one member of the conspiracy concerning the existence and function of other members of the conspiracy, devoted as it was to the illicit distribution of counterfeited and stolen securities, was a permissible inference on the part of the jury. Cf. United States v. Bruno, 105 F.2d 921, 922-23 (2 Cir. 1939) (narcotics conspiracy). Independent of any showing of actual knowledge and the Government made many such showings in this case the original suppliers knew with substantial certainty that their crime was not complete with the act of counterfeiting. Similarly, the middlemen and retailers properly were charged with knowledge of each other and the original suppliers. Only when the counterfeited and stolen securities came to rest in the hands of unsuspecting members of the public would the force of the criminal conspiracy be spent; all knew this and acted accordingly. See United States v. Perez, supra at 59.

We turn first to the alleged suppliers, represented on appeal by Samuel Scales (Orlando), John Brennan (Chicago), and William Berman (Chicago). The Government's evidence again, in the most favorable light showed that in early May, 1972, appellant Scales, who was a stock broker in Orlando, fraudulently procured a two-hundred share certificate of stock in Walt Disney Productions with the assistance of his brother, Joseph. Joseph Scales delivered the fraudulently procured, but nevertheless original, certificate in turn to another defendant, Fritz Hahn, for the purposes of counterfeiting. Hahn, after having a printer prepare counterfeits, delivered both the original and counterfeited certificates to Joseph Scales, who on May 15 returned the original to the brokerage house from which it had been obtained by his brother.

In August, 1972, Joseph Scales procured five original $1000 Trans World Airlines bonds through a Jacksonville, Florida, brokerage house. Again working with defendant Hahn, Joseph Scales had 650 counterfeits of the TWA bond prepared by the same printer who had earlier counterfeited the Walt Disney stock. In the following month, September, Hahn contacted defendant Fred Schreier in Orlando and informed him about the counterfeited TWA bonds and Walt Disney stock. Schreier was provided with two counterfeits of the TWA bond and one counterfeit of the Walt Disney stock in order that he could show the "merchandise" to prospective buyers. Schreier contacted appellant Charles Palmer, showed him the merchandise, and Palmer agreed to join a selling venture.

Contemporary with the Florida counterfeiting operation, the Chicago supply group, which consisted of appellants John Brennan and William Berman, and defendants Frank Gallo and Anthony Brennan, was engaged in the distribution of stolen securities. At an earlier time, Berman and Anthony Brennan had disposed of stolen Oklahoma City Housing Authority bonds and Westinghouse stock through appellant Robert Johnson and defendant Maurice Harte, who both were part of the Florida wholesaling operation that will be described below. Thus, the connecting link between the Chicago suppliers and the Florida wholesalers had been established in the past and was only renewed in the instant case.

Florida middleman, and appellant Jack Edwards provided the link between the two supply groups located in Orlando and Chicago respectively, and with his confederates in Florida, Edwards was the intended conduit for the flow of stolen and counterfeited securities to the retailing groups. Edwards had dealt in the past with the Philip Wilson, a major distributor of illicit securities operating out of St. Louis, and Wilson put Edwards in contact with defendant Carol Lax, a Los Angeles retailer, in midsummer, 1972. Edwards flew to Los Angeles in August for discussions with Carol Lax about a large sale of stolen securities to buyers represented by Lax. A tentative agreement on a sale of stolen Westinghouse, Hoover, and ITT stocks and stolen Oklahoma City...