U.S. v. Toney, 78-5432

• Decision Date: 26 October 1979
• Docket Number: No. 78-5432,78-5432
• Citation: 605 F.2d 200
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. James Finis TONEY, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 200

605 F.2d 200

UNITED STATES of America, Plaintiff-Appellee, v. James Finis TONEY, Jr., Defendant-Appellant.

No. 78-5432.

United States Court of Appeals, Fifth Circuit.

Oct. 26, 1979.

Ronald W. Maxwell, Jacksonville, Fla., for defendant-appellant.

Thomas E. Morris, Asst. U. S. Atty., Jacksonville, Fla., for plaintiff-appellee.

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

Before GODBOLD, Circuit Judge, SKELTON, Senior Judge, ^* and RUBIN, Circuit Judge.

SKELTON, Senior Judge.

Appellant James Finis Toney, Jr. (Toney), William B. Rice, and Sondra G. Hagans, were jointly indicted for a scheme to defraud and for obtaining money and property by means of false and fraudulent pretenses, representations and promises from persons who could and would be induced by them to purchase distributorships of a sound reproducing device known as "Fantacoustic." The indictment alleged that the false and fraudulent pretenses, representations and promises so devised and intended to be devised by them in the scheme were, in substance, as follows:

A. It was part of said scheme and artifice that the defendants would and did place newspaper advertisements designed to lure persons to invest in distributorships of Tradewinds Ltd., Inc.

B. It was further part of said scheme and artifice that a representative of Tradewinds Ltd., Inc. would and did meet with persons who had been enticed to contact the company for the purpose of inducing such persons to pay several thousand dollars for a distributorship which would entitle the person to sell a sound reproducing device known as Fantacoustic. At these meetings, false and fraudulent pretenses, representations and promises would be and were made by the Tradewinds Ltd., Inc. representatives to induce persons to purchase a distributorship in Tradewinds Ltd., Inc., which false and fraudulent pretenses, representations and promises included but were not limited to the following:

1. That the sound reproduction device Fantacoustic would sell quickly at retail outlets.

2. That the sound reproduction device Fantacoustic was sold exclusively by Tradewinds Ltd., Inc.

3. That the Fantacoustic would reproduce sound at sufficient volume when attached to any radio, phonograph or tape player.

4. That a distributor of Fantacoustic should recover his investment in a few weeks.

C. It was further part of said scheme and artifice that the Tradewinds Ltd., Inc. representative sent to train the distributor and locate retail sales outlets would attempt to convince the distributor to order additional Fantacoustics from the representative on the basis that the distributor would need a supply for establishing additional outlets and filling reorders at initial outlets.

D. It was further part of said scheme and artifice that the defendants would and did evade complaints from investors.

E. It was further part of said scheme and artifice that the defendants would and did send and cause to be sent to distributors of Tradewinds Ltd., Inc. agreements and correspondence to lull distributorship holders into a belief they had invested in an active organization which would fulfill the promises and representations made at the time of their investment.

F. It was further part of said scheme and artifice that the defendants would not and did not fulfill the pretenses, representations and promises listed in paragraph B, but nonetheless would not and did not return in full the moneys invested by the distributor.

The indictment alleged further in Count One that for the purpose of executing the scheme, the defendants Toney, et al., knowingly caused to be placed in a United States mail depository in Jacksonville, Florida, the following letter to be sent and delivered to Mr. Harry G. Hyra, an attorney for a Mr. Theodore Fisher, in Hillside, New Jersey:

December 7, 1971

Dear Mr. Hyra:

Thank you for your letter of November 16, 1971, concerning your client as captioned above.

As you are aware, our company had previous and concurrent correspondence from your client and it was our desire to resolve all of these matters at one time.

Frankly, Mr. Hyra, we are at a loss to understand some of the difficulties being encountered by Mr. Fisher. We feel that under the circumstances it is best for the inventor (Mr. William Ashworth) personally to come to Hillside and look into the difficulties being experienced by your client.

Plans have been made for Mr. Ashworth to arrive shortly in Hillside, New Jersey. Your client has been informed of Mr. Ashworth's time of arrival.

Very truly yours,

TRADEWINDS LTD., INC.

(Signed) William B. Rice

In Count Two of the indictment, it was alleged that the following additional letter was sent by the defendants on February 9, 1972 via U.S. Mail from Jacksonville, Florida to Mr. Hyra in Hillside, New Jersey, for the same purpose:

Dear Mr. Hyra:

This will acknowledge receipt of your letter dated January 28, 1972, concerning your client as captioned above. Prior to receiving your communication, we have received notification from your client that he did not intend to pursue his distributorship and wished to be informed as to the procedure for termination.

Our agreement with your client provides that upon cancellation of the agreement and upon receipt of a written demand, that he agrees to return all product to the company and to accept the price paid by him at the time of purchase.

We are presently attempting to divert your client's product to another distributor in the Northeastern United States. If this is accomplished, your client can expect to receive the price at which his product purchase was made. Our records reflect that two hundred seventy-five (275) units were purchased at a cost of $8.95 each and that one hundred forty-four (144) units were purchased at $7.95 each.

You may expect to hear further from us within a period of two or three weeks.

Very truly yours,

TRADEWINDS LTD., INC.

(Signed) William B. Rice

The indictment alleged that the aforesaid scheme to defraud and the sending of the above letters was in violation of Title 18 U.S.C. Sections 2 and 1341. ¹ Attorney Hyra represented Mr. Fisher, one of the alleged victim-investors in the scheme.

The case against Sondra G. Hagans was dismissed after the Government obtained the results of a psychiatric examination. William B. Rice pleaded guilty to Count One under a plea agreement and received a probated sentence. Defendant Toney pleaded not guilty and went to trial on May 2, 1978. The jury returned a verdict of guilty on both counts on May 8, 1978, whereupon the court sentenced Toney to five years imprisonment on Count One to run concurrently with the sentence imposed in Case No. 77-138-Cr-J and Case No. 77-137-Cr-J, and two years imprisonment on Count Two; thereafter, the court suspended execution of the sentence of imprisonment imposed on Count Two and placed Toney on probation for two years to run consecutively with that imposed in Case No. 77-138-Cr-J (II-270). Thereafter, Toney filed this appeal.

Three main points of error are raised by Toney. First, the evidence was insufficient to establish a scheme to defraud, or to show that Toney was a willing participant with intent to defraud, or to establish the essential elements of mail fraud.

Second, the evidence was insufficient to prove that the two letters in question (the count letters) were in execution or furtherance of a scheme to defraud.

Third, the court erred in admitting into evidence declarations by salesmen of Tradewinds Ltd., Inc. to investors and prospective investors out of the presence of Toney.

We find no reversible error and affirm the conviction.

I. Sufficiency of the Evidence

(a) The Scheme to Defraud

Appellant contends that there is insufficient evidence to support a finding that Tradewinds' operations constituted a scheme to defraud. The test by which we review the sufficiency of the evidence of guilt has been well stated for this court in Clark v. United States, 293 F.2d 445 (5 Cir. 1961):

"This court, although recognizing that questions as to the credibility of witnesses and weight of evidence are for the jury, has the right and, we may say, is under a duty, to examine the record and determine whether there (is) any competent and substantial evidence fairly tending to support the verdict of guilt. In so reviewing the sufficiency of the evidence to justify a finding of guilt beyond a reasonable doubt in a circumstantial evidence case, the test we are to apply is whether the jury might reasonably find that the evidence excluded every reasonable hypothesis except that of guilt. Riggs v. United States, 5 Cir., 1960, 280 F.2d 949; Cuthbert v. United States, 5 Cir., 1960, 278 F.2d 220; Dicks v. United States, 5 Cir., 1958, 253 F.2d 713."

Or, as we recently stated in United States v. Wentland, 582 F.2d 1022 (5 Cir. 1978):

"If a reasonable jury could decide that the evidence is not consistent with any theory of defendant's innocence, it is sufficient." (Citations omitted). 582 F.2d at 1026.

But in examining the sufficiency of the evidence, we do so "taking the view most favorable to the Government." Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942). The evidence shows the following facts.

Appellant was the owner or primary stockholder of American Funding Corporation. American Funding was a holding company which operated several subsidiary companies out of a single suite of offices in Jacksonville, Florida. One of these subsidiary companies was Tradewinds Ltd., Inc. (Tradewinds) of which Appellant was the chief executive and office manager.

Tradewinds' operation consisted of selling distributorships for a sound reproducing device manufactured under the label "Fantacoustics." This device was invented by a Mr. William Ashworth and is a coneless sound reproducer which, when attached to any object, transforms that surface into a sounding board. Furthermore, it can be attached to any sound...