United States v. Beck

• Decision Date: 02 June 1941
• Docket Number: No. 7344-7348.,7344-7348.
• Citation: 118 F.2d 178
• Parties: UNITED STATES v. BECK.
• Court: U.S. Court of Appeals — Seventh Circuit

118 F.2d 178 (1941)

UNITED STATES v. BECK.

Nos. 7344-7348.

Circuit Court of Appeals, Seventh Circuit.

March 6, 1941.

Rehearing Denied March 27, 1941.

Writ of Certiorari Denied June 2, 1941.

COPYRIGHT MATERIAL OMITTED

Harry Fishbein, of East St. Louis, Ill., Edward K. Schwartz, of St. Louis, Mo., and Edward J. Hess and Clement J. Wall, Jr., both of Chicago, Ill., for appellants.

J. Albert Woll, U. S. Atty., and A. Bradley Eben, Asst. U. S. Atty, both of Chicago, Ill., for appellee.

Before EVANS and KERNER, Circuit Judges, and LINDLEY, District Judge.

Writ of Certiorari Denied June 2, 1941. See 61 S.Ct. 1121, 85 L.Ed. ___.

KERNER, Circuit Judge.

This is an appeal from judgments rendered on verdicts of guilty upon an indictment consisting of 18 counts, charging in the first 17 counts a scheme to defraud and the use of the United States mails in the furtherance of the same in violation of Section 215 of the Criminal Code, 18 U.S. C.A. § 338. The last count charged that the defendants unlawfully conspired to use the United States mails in furtherance of a scheme to defraud and sets forth 134 overt acts to effect the object of the conspiracy, 18 U.S.C.A. § 88. The jury returned verdicts of guilty as to all appellants on counts 1, 16 and 18 and, in addition, found Stickney and Beck guilty on counts 2 to 17, Ross guilty on counts 6, 8, 13 and 14, Woodring guilty on counts 5 and 7, Golby guilty on count 11, Greenbaum guilty on counts 5, 7, 8, 12, 13 and 14 and Harriss guilty on count 9. The defendants were each sentenced to imprisonment for various terms. To reverse the judgments appellants separately appealed.

The scheme charged in the first count of the indictment in substance is that the appellants and their co-defendants devised a scheme to defraud, by means of certain false and fraudulent representations and promises, a certain class of persons (naming 28 persons, 22 of whom testified at the trial) owning various shares of stocks, bonds and other securities of value, by means of letters sent through the United States mails and by means of oral communications, by inducing the persons intended to be defrauded, to assign and deliver to the First Commonwealth Trustees their stocks, bonds and other securities for investment in burial lots in Crown Hill, a cemetery in Twinsburg, Ohio.

The facts. In 1929 Christian W. Beck purchased 260 acres of land at Twinsburg, Ohio, and there established Crown Hill, Inc., a cemetery association, and at the same time organized Crown Hill Trust as the selling agent for Crown Hill, Inc. He had a controlling interest in each, was the chief executive, and all the other trustees took orders from him.

In 1936 Beck, Robert Stickney and Mike D. Gordon held a number of conferences and as a result Stickney and Gordon came to Chicago and established First Commonwealth Trustees to handle the sales of lots in certain sections of the cemetery for investment purposes. It was also agreed that Commonwealth would pay Crown Hill, Inc. $57 for each lot and the lots would be sold by Commonwealth for $160 per lot; that Crown Hill Trust would cease selling lots at wholesale and would devote itself to the sale of lots for family use, and that Beck would finance Commonwealth up to $7,500. The lots to be sold by Commonwealth were in an undeveloped portion of the cemetery.

Commonwealth was established with Arthur C. McHenry and Helen B. Nichols as trustees. Before coming to Chicago Nichols had for seven years been employed by Beck with Crown Hill, Inc. Beck advised her to go to Chicago because he wanted her in charge to watch his money. Beck also directed Gordon to go to Chicago and take charge of the men. Stickney was general manager and supervised all of the operations. He rented the offices, handled all correspondence, prepared sales kits for the salesmen containing facsimile laudatory letters from Beck and Crown Hill Trust customers, and he told the salesmen that lots would be sold for $160 instead of $100, for which they had been sold in Cleveland; that the Union Standard Guaranty Company would guarantee to pay a premium of $6 per year per lot for two years for the resale privilege from the purchaser and gave them a list of names of security holders, who had made inquiries concerning Commonwealth's plan whereby the securities holders could recoup their losses. Gordon, who prior to 1936 had been employed by Crown Hill Trust in Cleveland as a salesman, was sales manager and supervised the work of the salesmen. He hired Wolstein, Woodring, Greenbaum, Fleeman and a number of others to act as salesmen, assigned the men to their territories, gave each man a kit and told him that Beck had said that the lots would be ready for resale between 18 months and two years.

After the establishing of Commonwealth it purchased lists of names of persons who had invested in bonds and securities and a letter was sent to those residing in Minnesota, Wisconsin, Indiana, Iowa, Kansas and the two Dakotas to arouse their interest in the purchase of the burial lots, and where interest was expressed by the recipients of the letters, salesmen of Commonwealth called on them and represented to them that if the depreciated securities owned by them were turned into Commonwealth in exchange for cemetery lots at the rate of $160 per lot, the lots so purchased would be resold by Commonwealth or Crown Hill Trust within a period of two years.

When salesmen were successful in selling lots, a contract was entered into with the purchaser and forwarded to Commonwealth and deeds covering the number of lots purchased were forwarded to the purchaser or sent to the salesmen for personal delivery. The depreciated securities obtained from the purchaser were sold by Nichols for Commonwealth and the proceeds were applied on the purchase price of the lots. Of the $160 received from the purchaser on each lot, Stickney and Gordon each received a five percent commission and the salesmen a thirty percent commission. Stickney also received from Beck $5 for each lot sold, which he divided with Gordon.

A resale agreement was also entered into with each purchaser by which it was agreed that Commonwealth would resell the lots at a price fixed by the purchaser, up to a maximum of $450 per lot. The resale price was generally fixed by the salesmen so that it would appear that when the lots were resold at the price agreed upon, the purchaser would regain whatever amount he had lost by reason of his depreciation of the bonds or other securities turned in as payment for the lots.

To induce a prospective customer to enter into the contract for the purchase of the lots, a guarantee was in many instances given the customer guaranteeing the payment of fifty cents per month per lot for a period of two years. Union Standard Guarantee Company of Cleveland, Ohio, was the guarantor. This company was formed at Stickney's request and it did no other business except to guarantee the payments of premiums on the cemetery lots. Where the guarantee was used, $14 of the purchase price of the lot was forwarded to the guarantor, $12 thereof being returned to the purchaser over a period of two years, and the remaining $2 was used as a service charge.

Commonwealth closed its offices about May 1, 1937. None of the lots sold by Commonwealth to the defrauded persons were ever sold, nor was any effort made by Crown Hill Trust to resell the lots purchased by the victims. The following named appellants were employed over the following periods of time and received the amounts stated below: Stickney, $6,768.02 for 5 months; Golby, $4,789.33 for 8 months; Gordon, $6,768 for 5 months; Greenbaum, $7,194.73 for 5 months; Harriss, $2,609 for 3 months; Ross, $3,024 for 5 months; Woodring $1,665 for 3 months and Wolstein, $4,394 for 4 months.

The contested issues may be summarized as (1) the indictment was defective, (2) variance between the allegations of the indictment and the proof, (3) error in permitting Stickney to testify in behalf of appellee, (4) error in admission and exclusion of the evidence, (5) withdrawal of appellants from the conspiracy, (6) prejudicial remarks of the district attorney, and (7) no evidence to support the verdicts.

First. Appellants Ross and Golby contend that the indictment is defective in that the first 17 counts do not charge them with the use of the mails in a scheme to defraud. In other words the point is made that the indictment confined the scheme to Beck, Stickney and Gordon, and did not include the above appellants.

The first count of the indictment charges all of the defendants by name with devising a certain scheme and artifice to defraud, and to obtain money and property by means of false pretenses, representations and promises from a class of persons then residing within the United States who owned various shares of stocks, bonds, certificates of deposit, and other securities of value, designated as the persons intended to be defrauded, then follows the names of such persons. Thereafter follows allegations as to what Beck, Stickney and Gordon did in the establishing of Commonwealth, the hiring of certain appellants as salesmen, a description of the scheme upon which the indictment was founded, and concludes that the foregoing representations and promises were false and fraudulent, and that at the time they were made by the said defendants, they, the said defendants, knew they were false. The indictment further alleged in what respect the representations and promises were false and finally alleged that the said defendants so having devised the said scheme to defraud, unlawfully use the United States mails in furtherance of said fraud.

To be sure, under the statute involved, it was necessary that the indictment charge the scheme with all such particulars as are essential to constitute the scheme so as to acquaint the accused with reasonable certainty of the nature of the accusation against him. To us it seems clear that the indictment was...