U.S. v. Moynagh

• Citation: 566 F.2d 799
• Decision Date: 01 June 1977
• Docket Number: No. 77-1090,77-1090
• Parties: UNITED STATES of America, Appellee, v. John R. MOYNAGH, Jr., Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 799

566 F.2d 799

UNITED STATES of America, Appellee, v. John R. MOYNAGH, Jr., Appellant.

No. 77-1090.

United States Court of Appeals, First Circuit.

Heard June 1, 1977.

Decided Nov. 30, 1977.

Donald L. Conn, Burlington, Mass., by appointment of the Court with whom Conn, Austin, Conn & Travaline, Burlington, Mass., was on brief, for appellant.

Michael A. Collora, Asst. U. S. Atty., Boston, Mass., with whom James N. Gabriel, U. S. Atty., Boston, Mass., was on brief, for appellee.

Before COFFIN, Chief Judge, CAMPBELL and LAY, ^* Circuit Judges.

LAY, Circuit Judge.

John R. Moynagh, Jr., was convicted on 10 counts of bankruptcy fraud in violation of 18 U.S.C. § 152. ¹ Count I of the indictment charged that Moynagh fraudulently concealed and transferred specific property in contemplation of bankruptcy and Count II charged that he concealed the same property from the trustee in bankruptcy. The remaining counts charged that the defendant made a number of false oaths in bankruptcy. The district court imposed a general sentence of two years imprisonment, six months to be served and the balance suspended with an 18-month term on probation.

On appeal the defendant challenges the sufficiency of the evidence on each count and urges that submission of all counts to the jury resulted in cross-count prejudice requiring reversal on all counts. ²

The government's evidence established that John Moynagh had for a number of years been engaged in the business of installing sprinkler systems, operating under the name of John Moynagh and Company. In June of 1974 Moynagh was heavily indebted to a number of banks, including Guaranty Bank and Trust Company and the Mechanics National Bank of Worcester, Massachusetts. His promissory notes to both banks were in default. On July 15, 1974, Guaranty Bank, on the basis of its security interest in accounts receivable, notified Moynagh's customers to make further payments due Moynagh directly to the bank. The Mechanics Bank also attempted to exercise its security interest by taking possession of the inventory of Auburn Pipe Fabricators, a subsidiary of John Moynagh and Company. The financial institutions with which the defendant dealt refused to honor checks drawn on his accounts, and he was unable to pay his employees. The defendant was aware of the seriousness of his financial problems and during the summer of 1974 he discussed bankruptcy with at least one acquaintance.

In July of 1974 the defendant began to deposit money he received from his accounts receivable in the checking account of his mother, Irene Moynagh. He then wrote payroll checks on that account and made withdrawals for his personal use and business expenses from that account.

During the fall of 1974 the business operations of John Moynagh and Company terminated. However, at this time the defendant became highly involved in the activities of National Sprinkler Corporation, a sprinkler installation business incorporated by his son, John R. Moynagh III. National Sprinkler began operations in the fall of 1974 and its business consisted mainly of referrals from the defendant.

In March of 1975 the defendant filed a voluntary petition in bankruptcy.

Sufficiency of the Evidence.

The government questions the defendant's right to challenge the sufficiency of the evidence on the ground that the defendant did not expressly move for an acquittal on all counts at the close of the trial. The record demonstrates, however, that the trial judge considered the sufficiency of the evidence on all counts as if such a motion had been made. Under the circumstances we think the record sufficient to raise the issue on appeal. ³

To facilitate understanding we discuss the challenged counts by subject matter.

Counts III, IV, VI, VII, IX and XII.

Counts III, VI and VII related to the business operations of the defendant's company. Count III of the indictment charged that the defendant falsely stated his income for 1974 as $9,600 on the statement of affairs, when in fact his 1974 income exceeded $32,000. Count VI charged that the defendant falsely stated the termination date of his business operations on the statement of affairs as July of 1974, when in fact he continued to pay employees through October of 1974 and subcontracted work in August of 1974. Count VII charged that the defendant falsely stated the amount of personal withdrawals from his business account during the year prior to bankruptcy as $20,800 when in fact the amount was approximately $65,000. ⁴

Counts IX and XII related to defendant's dealings with his son's company, National Sprinkler Corporation. Count IX charged that the defendant failed to list a deposit of $3,900 with National Sprinkler on the schedule of assets. This allegation related to the proceeds of the sale of the defendant's Cadillac four days prior to bankruptcy, which the defendant deposited in the National Sprinkler account. Count XII charged that the defendant failed to disclose his financial interest in National Sprinkler Corporation on the schedule of assets. We are satisfied that the evidence adduced by the government supported an inference that the defendant had some financial interest and control in National Sprinkler.

Count IV of the indictment charged that the defendant failed to reveal his interest in National Sprinkler and two boats on the statement of affairs filed in bankruptcy. The government's evidence showed that for a number of years prior to 1974 the defendant had maintained a power boat and a sailboat at the Harwich Port Boat Works on Cape Cod. In July of 1974 the defendant notified the boat works that the boats had been sold the previous January to the Marlin Boat Company, a corporation whose sole stockholders were the defendant's mother and his son. Testimony indicated that the actual value of the boats was around $16,000, but the bill of sale recited a purchase price of $5,000. The defendant explained that the transfer was made to enable his son to use the boats for a chartering service. The boats were registered in the name of Marlin Boat Company on September 27, 1974.

During July of 1974 the defendant paid most of the indebtedness which had accrued for maintenance on the boats. However, the proprietors of the boat works testified that in September of 1974 the defendant still owed around $3,500 on his account. Other creditors filed liens against the boats totaling $1,500 in September of 1974, and the boat works then filed a maritime lien for its bill. The defendant personally satisfied the other creditors' liens, and the proprietors of the boat works decided not to force a sale to satisfy their lien. Although the defendant requested that the boats be made ready for the 1975 season in the spring of that year, no further services were performed and the boats were eventually auctioned in 1976. When the defendant completed the schedules in bankruptcy in June of 1975, he failed to list any interest in the boats.

The charge in Count IV of the indictment presents a close question. When the defendant failed to list an interest in the boats on the statement of affairs in June of 1975, title had been transferred and registered in the name of Marlin Boat Company. However, registration of title is not always conclusive of ownership. Pallett v. United States, 228 F.2d 671, 673 (5th Cir. 1956). Even if the defendant retained only an equitable interest in the boats, failure to list that interest could support the charge. See United States v. Schireson, 116 F.2d 881, 883 (3d Cir. 1940); Goetz v. United States, 59 F.2d 511, 512 (7th Cir.), cert. denied, 287 U.S. 649, 53 S.Ct. 95, 77 L.Ed. 561 (1932). See also Duggins v. Heffron, 128 F.2d 546, 548 (9th Cir. 1942).

We conclude that there existed sufficient evidence for the jury to find that the defendant retained an equitable interest in the boats and that the court did not err in submission of Count IV to the jury.

We find sufficient evidence to sustain the conviction on these six counts. In each instance it was undisputed that the defendant made the misstatement or omission set out in the indictment. In light of all the facts and circumstances established by the government, these counts were properly submitted to the jury. Furthermore, the jury could reasonably have concluded that the defendant acted knowingly and fraudulently in each instance. See Metheany v. United States, 390 F.2d 559 (9th Cir.), cert. denied, 393 U.S. 824, 89 S.Ct. 81, 21 L.Ed.2d 94 (1968). We therefore affirm the convictions on Counts III, IV, VI, VII, IX and XII.

Count XI.

Count XI charged that the defendant failed to list on his schedule of assets a debt owed him by Cannon's, Incorporated, in the amount of $2,200. We find that the conviction under this count should be set aside.

The defendant had performed certain contracting work for Cannon's, Incorporated, in early 1974 for which only partial payment had been received. In July of 1974 Cannon was advised to make further payment on the balance due Moynagh to the Guaranty Bank pursuant to the assignment of the account receivable. Payment was in fact made to the bank in April 1976. The government made no contention that Moynagh had not assigned all his right, title and interest in the account to the bank, and there was no evidence that the defendant had any equitable interest or title in the account on the date the schedule of assets was filed. The assignment was valid under Massachusetts law. Under the controlling Massachusetts law, Guaranty Bank had the sole right to receive payment on this account after it notified Cannon of its security interest in July of 1974. Mass.Gen.Laws Ann. ch. 106, § 9-318. See Framingham Welding & Engineering Corp. v. Bennie Cotton, Inc., 361 Mass. 866, 281 N.E.2d 236 (1972). We conclude that the defendant could not have been found guilty of a fraudulent omission under the bankruptcy laws for failure to disclose this debt.

Counts I and II.

The defendant challenges the sufficiency of...