U.S. v. Orrico, 78-5210

• Citation: 599 F.2d 113
• Decision Date: 09 May 1979
• Docket Number: No. 78-5210,78-5210
• Parties: 4 Fed. R. Evid. Serv. 881 UNITED STATES of America, Plaintiff-Appellee, v. Gennaro J. ORRICO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 113

599 F.2d 113

4 Fed. R. Evid. Serv. 881

UNITED STATES of America, Plaintiff-Appellee, v. Gennaro J. ORRICO, Defendant-Appellant.

No. 78-5210.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 7, 1978.

Decided May 9, 1979.

Bernard A. Berkman, Berkman, Gordon, Kancelbaum & Levy, Cleveland, Ohio, for defendant-appellant.

James R. Williams, U. S. Atty., Cleveland, Ohio, Deborah Watson, T. George Gilinsky, Washington, D. C., for plaintiff-appellee.

Before ENGEL, Circuit Judge, PECK, Senior Circuit Judge, and DeMASCIO, District Judge. ^*

JOHN W. PECK, Senior Circuit Judge.

The defendant Gennaro Orrico was convicted on two counts of violating 18 U.S.C. § 2314. Specifically, he was charged with having caused the transportation of certain checks in interstate commerce, knowing them to have been converted and taken by fraud. We reverse and remand for entry of a judgment of acquittal, having concluded that insufficient evidence was introduced to sustain the verdicts of guilty.

The Scheme: All the events surrounding the challenged activity occurred in 1972 and early 1973, nearly seven years ago, and a full five years before trial. This unexplained time lag created many of the problems in this case.

Globe Capital was a holding company that held shares in a variety of other insurance-related companies, including Globe Assurance and Globe Agency. Tom Bosse, Harold Franklin and Mort Franklin were the principal shareholders in Globe, and were all partners in Schreiber, Bosse & Co., a brokerage firm. Bosse served as consultant to Globe, Harold Franklin was president and chairman of the board, and Mort Franklin served as executive vice-president.

In 1972, Globe was undercapitalized and under pressure from the State of Ohio Insurance Board to improve its financial position by additional investments of at least $200,000. Insofar as can be gleaned from a sparse record, Globe's major shareholders came up with a scheme to improve Globe's position on paper without actually investing any additional capital.

At the time, an Illinois company was acting as Globe's agent in Illinois, selling credit life insurance and periodically remitting premium payments to Globe after deducting its commissions and expenses. Globe had also created Metro Insurance Service to sell credit life insurance for it in Ohio. Globe and Metro were closely linked, sharing personnel, with Globe paying the salaries of some Metro officers. The scheme devised by Bosse and the Franklins was fairly simple; a series of checks coming from Illinois to Globe were diverted into Metro's checking account, the funds then used to purchase savings certificates, and these were in turn used as collateral for personal loans to Globe directors and officers for reinvestment in the company. ¹

The Evidence against the Defendant: The question of what the defendant had to do with all of this is a natural one. It is undisputed that there is no reference to him in any of the documentary evidence amassed by the Government. He did not deposit the checks, sign for, authorize or receive any of the loans. He was neither a major shareholder nor a director of Globe. At oral argument, the Government conceded that nothing in the record indicated he had benefited in any way from the alleged conversion, and indeed, there was testimony that the assistant U.S. attorney who tried the case described him as the "patsy" for the Franklins and Bosse.

Orrico was a production manager in charge of the credit life division of Globe. The Government's theory of the case is that Orrico authorized the Metro bookkeeper, Rose Kennedy, to deposit two Globe checks to Metro's account, and later told Metro's president, Robert Jones, to endorse another Globe check to Metro's account. In this way, the Government argues, Orrico "caused" the deposit of funds, resulting in their movement in interstate commerce as they were processed through normal banking channels. ²

The bank records introduced at trial indicate that two Globe checks were deposited in Metro's account in July, 1972, by Rose Kennedy. Quite naturally, at the time of trial, Kennedy remembered nothing of the transaction. However, approximately a year after the deposit of the checks, in the course of its investigation, the Ohio Department of Insurance prepared a statement which Kennedy signed, and this statement was offered and received at Orrico's trial as her past recollection recorded, pursuant to Fed.R.Evid. 803(5). ³ The Only evidence of the defendant's involvement, in any way, in the deposit of the two checks, is contained in one sentence of that statement. After stating that she had been sent to Bosse's office by either Mort Franklin or Robert Jones, the statement goes on:

I then recall Mr. Bosse giving me two checks for deposit to the Metro account at the Northern Ohio Bank. I remember questioning this deposit because neither of these checks for deposit were drawn to the order of Metro Insurance Services, Inc. Mr. Bosse then called Mr. Gennaro Orrico and Mr. Orrico told me over the phone to go ahead and endorse the checks anyway because Metro was acting for the payee.

The evidence that the defendant "caused" the deposit of an additional check a few months later by Metro's president, Robert Jones, is not much stronger. There was evidence that a few days before the check was deposited, Orrico discussed with the bank president the collateral which would be necessary to secure a loan to Schreiber, a partner of Bosse and the Franklins. Subsequently, Jones testified that he deposited the Globe check to Metro's account, and the funds were once again used to purchase certificates of deposit and in turn as collateral for a loan. Jones also testified that the defendant was at the bank at the time the deposit was made, but could not remember whether the defendant had accompanied him to the bank or whether the defendant was there on other business. When Jones testified that he did not remember who told him to deposit the checks, the Government attempted to impeach his lack of memory with alleged grand jury testimony, during which Jones had stated that the defendant told him to endorse the check.

Some months after the two transactions, the defendant stated at a meeting of Globe officers that the missing funds had been used to purchase certificates of deposit. While this evidence might indicate a knowledge of the scheme (indeed, the defendant testified that by this time everyone in the company knew about it), it does not shed any light on the crucial question of whether the defendant Caused the deposit of the checks. After a careful study of the entire record, we are unable to discover any evidence whatsoever, other than Kennedy's written statement and Jones' prior inconsistent testimony, that Orrico was involved in the deposit of the funds.

Sufficiency of the Evidence: We decide the issue of sufficiency of the evidence, rather than admissibility, because the former issue is determinative of the question whether Orrico may be retried. Burks v. United States, 437 U.S. 1, 98 S.Ct. 2141, 57 L.Ed.2d 1 (1978) (reversal for insufficient evidence requires acquittal). Admissibility of Kennedy's statement is not an easy issue, even given the trial judge's broad discretion in admitting evidence. Her statement was given over a year after the deposit of the checks, and displays considerable hesitancy about details. It would be difficult to conclude that the events were "fresh in her memory," however flexible that standard may be. Furthermore, the necessary foundation for admitting an opinion as to the identity of a speaker over the telephone was not laid within the statement itself, and at the time of trial, Kennedy was unable to remember anything about her familiarity with Orrico's voice when the conversation took place.

As for Jones' testimony, it appears that though it may have been admissible as a prior inconsistent statement given under oath, through some oversight, the necessary foundation for admitting it as substantive evidence was never laid, and the testimony was used solely for impeachment. Since this could be readily remedied at a new trial, we decide the more fundamental issue of sufficiency of the evidence.

The fundamental guidelines to be observed in considering the sufficiency of the evidence to support a criminal conviction are well-established. Our general hesitancy to disturb a jury verdict applies with even greater force when a motion for acquittal has been thoroughly considered and denied by the trial judge, as occurred here. Furthermore, once there has been a conviction in a criminal case, appellate courts are bound to view the evidence in the light most favorable to the Government, drawing all reasonable inferences consistent with the verdict. United States v. Green,548 F.2d 1261 (6th Cir. 1977). Nevertheless, there must be substantial evidence as to each element of the offense from which a jury could find that the accused is guilty beyond a reasonable doubt. As this Court reiterated in Green:

Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept to support a conclusion. It is evidence affording a substantial basis of fact from which the...