United States v. Beitscher, 71-1669

• Decision Date: 03 October 1972
• Docket Number: 71-1670.,No. 71-1669,71-1669
• Parties: UNITED STATES of America, Appellee, v. Seymour BEITSCHER and James E. Riley, Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

467 F.2d 269 (1972)

UNITED STATES of America, Appellee, v. Seymour BEITSCHER and James E. Riley, Appellants.

Nos. 71-1669, 71-1670.

United States Court of Appeals, Tenth Circuit.

October 3, 1972.

Charles F. Brega, Denver, Colo., for appellants.

W. Allen Spurgeon, Asst. U. S. Atty. (James L. Treece, U. S. Atty., with him on the brief), for appellee.

Before SETH and HOLLOWAY, Circuit Judges, and LANGLEY, District Judge.

SETH, Circuit Judge.

This is a direct appeal from convictions of mail fraud in violation of 18 U.S.C. § 1341 by defendants, Seymour Beitscher and James E. Riley.

On October 18, 1965, Air-Way Sanitizor, Inc., an Ohio corporation which manufactures vacuum cleaners, entered into a franchise agreement with Seymour Beitscher, dba Air-Way of Colorado, for the distribution of the Air-Way Sanitizor vacuum cleaner and related parts, accessories, and attachments. The franchise was cancelled on September 27, 1966, and reference herein to Air-Way in no way relates to the Ohio manufacturer.

Appellant Beitscher, as president and chief executive officer of Air-Way of Colorado, was responsible for the hiring and training of the company's salesmen. Among the salesmen were appellant, James Riley, and defendants, Newton Paletz, John Broyles, and Albert Grey. Numerous other salesmen were employed at different times, having been trained by Beitscher, Riley, and Paletz. Larman Blanchaert, secretary-treasurer of Air-Way, was also named as a defendant, but was acquitted on all counts.

The indictment arose out of the referral selling plan devised by Mr. Beitscher. Prospective purchasers were initially contacted by either a telephone solicitor or through a classified advertisement for employment with Air-Way. Typically the advertisements stated that married women were needed "to make over $200 a month" in their spare time at home. The advertisements noted that each woman would receive a cash advance as high as $50.00, plus a bonus and free training at home. None of the advertisements mentioned the necessity of purchasing a vacuum cleaner prior to being hired. In all of the advertisements a phone number was listed through which a prospective employee could reach a representative of Air-Way, and accordingly interviews were arranged. The majority of women contacted by Air-Way were in some financial difficulty and in need of additional income. Each interview was to take place at the woman's home and in the presence of her husband.

The record shows that the employment interviews were in fact "openers" for vacuum cleaner sales. Provided with a stock sales pitch prepared by Beitscher, a salesman would appear at the prospective purchaser's home, and would seek to ingratiate himself by explaining the prospects of earning money soliciting sales appointments over the telephone. A salesman would ordinarily commend his individual ability to consummate a sale, further suggesting the likelihood of a profitable working relationship. As the interview progressed it would become apparent that employment with Air-Way was conditioned on the purchase of a vacuum cleaner, but by this time the prospect was so interested in the prospect of being gainfully employed that the purchase seemed insignificant. In this atmosphere a sale would be made, formalized by a chattel mortgage and a Purchaser Employee Agreement.

The cash price of the vacuum cleaner was $289.50. The majority of vacuum cleaners as shown by the record, however, were sold on a time payment plan, usually with a total price of $396.00, requiring monthly payments of $16.50. More often than not the paper was sold by Air-Way of Colorado to Nationwide Finance Company in Denver. When the vacuum cleaner was purchased, Air-Way then used one of several different "Air-Way Purchaser Employee Agreements" to accomplish the referral selling plan. The first agreement provided for a payment of $50.00 for every appointment the purchaser arranged which resulted in an "approved" purchase of a vacuum cleaner. Also, it was agreed that in the event no purchase was made during any given month the employee would be paid $25.00 per month plus the amount of the employee's monthly payment, provided further that the employee had arranged a sufficient number of "qualified" appointments from which twenty or more completed demonstrations resulted. An "approved" purchaser was one who met certain indicia of acceptable credit enumerated in the Purchaser Employee Agreement; a "qualified" appointment, as well, was defined in terms of credit, though the ultimate decision as to whether an appointment was qualified and a sale or purchase approved was reserved to Beitscher.

The second contract provided that a woman would receive $25.00 for the first appointment made by her which resulted in an approved purchase and $35.00 for each approved purchase thereafter. The agreement also provided that the company would make the employee's monthly payment if the woman's telephone solicitation resulted in one approved purchase per month. Absent a sale, the employee would receive $25.00 per month if she arranged twenty qualified appointments. The other three contracts were essentially the same, though payment was to be made in Gold Bond stamps instead of cash.

Each of the contract forms was prepared by Beitscher and a Denver attorney. The chattel mortgages were unmistakably chattel mortgages, and the record shows that the numerous purchasers, including the Government's twelve court witnesses, were aware that their "employment" was conditioned on the purchase of vacuum cleaners. It was also emphasized that if the phone solicitation was unproductive the employee would be responsible for the monthly payments. Finally, as a part of the overall sales scheme, the employee-purchasers were to receive a nonnegotiable advance payment coupon ranging in value from $25.00 to $50.00. The coupon could be exchanged at the company offices for a negotiable check of like amount once it had been established that the employee-purchaser's credit was satisfactory. The advance was actually in the nature of a loan, however, as the amount of the payment check was included in the purchase price of the vacuum cleaner and was to be paid back with interest. Few employee-purchasers made any money, and the few who did made little.

Appellants assert six contentions. The offenses charged in the indictment occurred between August 1965 and October 1967; the indictment, however, was not filed until April 8, 1970. As more than three years had elapsed between the last alleged offense and the commencement of trial on February 8, 1971, appellants first contend that the delay was inherently prejudicial, constituting a denial of their Fifth and Sixth Amendment rights to due process and to a speedy trial. Noting that the Sixth Amendment right traditionally has been limited to the time between arrest and trial, appellants nevertheless assert that the entire time between the date of the initial offense and sentencing should be considered. It is further urged that without explanation such a lengthy delay by the Government can be assumed to be inherently prejudicial.

The law, however, is clear: the rights of a defendant under the due process clause of the Fifth Amendment are not violated in the absence of a showing of actual prejudice resulting from the preindictment delay and that the delay was purposefully designed to gain tactical advantage or to harass the defendants. United States v. Marion, 404 U.S. 307, 92 S.Ct. 455, 30 L.Ed.2d 468. There has been no such showing here. The Sixth Amendment's guarantee of...