United States v. Bessesen

• Decision Date: 19 August 1971
• Docket Number: No. 18319.,18319.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Henry BESSESEN and Buni Bessesen, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

445 F.2d 463 (1971)

UNITED STATES of America, Plaintiff-Appellee, v. Henry BESSESEN and Buni Bessesen, Defendants-Appellants.

No. 18319.

United States Court of Appeals, Seventh Circuit.

July 6, 1971.

Rehearing Denied August 19, 1971.

Jerome Rotenberg, Chicago, Ill., for defendants-appellants.

William J. Bauer, U. S. Atty., Michael H. Berman, John Peter Lulinski, Michael P. Siavelis, Asst. U. S. Attys., Chicago, Ill., for plaintiff-appellee.

Before KILEY, FAIRCHILD and SPRECHER, Circuit Judges.

SPRECHER, Circuit Judge.

Henry A. Bessesen, also known as Henry J. Adrian, and his wife, Buni A. Bessesen, also known as Buni A. Adrian, were charged in each count of a five-count indictment with mail fraud violations of 18 U.S.C. § 1341.

Henry Bessesen was found guilty by a jury on all counts and was sentenced for five years on counts 1 and 2, the sentences to run concurrently, and for five years on counts 3, 4 and 5, the sentences to run concurrently but consecutively to the counts 1 and 2 sentences and to sentences theretofore imposed on him by the United States District Court for the District of Minnesota, Fourth Division. Buni Bessesen was acquitted on counts 1, 2 and 3, and was found guilty on counts 4 and 5. She was sentenced to one year on count 4 and placed on probation for a period of five years on count 5. The Bessesens have appealed. We affirm.

Henry Bessesen ("defendant") was an actor from 1937 to 1948. During that period, he used the name Henry Adrian; thereafter he used both names but appeared to prefer Adrian. In the early 1950s he incorporated the Bessen Company in Illinois to distribute washing machines. He also organized another corporation known as Illinois Dishwasher and Remodeling Corporation. He opened checking accounts for the Bessen Company at the Upper Avenue National Bank of Chicago in 1953, for Illinois Dishwasher at Mid-America National Bank of Chicago in 1957, and a personal account for himself and his wife Buni, using the Adrian name, at Mid-America in 1959.

Bessen Company became inactive in 1956 or 1957 and Illinois Dishwasher ceased doing business in 1958 or 1959, but defendant did not close out either of the checking accounts. About the same time, defendant started a business in Chicago to provide credit cards for health expenses called Credit Health System. He opened a checking account for that organization at National Boulevard Bank of Chicago in 1959.

In 1960 defendant left Chicago and went to Arizona. The four bank accounts at the three Chicago banks were all kept open.

Exactly what happened to the Credit Health System when defendant went to Arizona was not made clear by defendant's testimony, but the total evidence on the subject shows the following facts: Defendant sold a franchise license to a Mr. Castelli in Tucson, Arizona, who (defendant presumed) in turn sold the license to Leah Rosa Simpson in 1961. Mrs. Simpson's attorneys incorporated Credit Health System, District 3, Division 1 of Arizona. At this point defendant testified that Mrs. Simpson became his "boss." However, the office manager of Credit Health System, Tucson, testified that she was employed "for Mr. and Mrs. Adrian"; defendant "owned" the business, was its president and made the business decisions; the home office was at 600 South Michigan, Chicago; the number of employees fluctuated from 4 to 10 and one of the employees in 1960 was Mr. Castelli; and that Mrs. Simpson was "our landlord." Mrs. Simpson's attorney testified that Credit Health System of Arizona, District 3, Division 1, never was a going concern; that Mrs. Simpson owned the premises at 532 North Fourth Avenue, Tucson; that those premises were occupied by two of defendant's businesses — Commerce and Health Credit System and Commerce and Health Development Corporation; and that Mrs. Simpson was not defendant's boss.

In any event, defendant and his wife opened a checking account in their Adrian names at the Southern Arizona Bank of Tucson in 1960; they opened an account for the Two-Fund Health Credit System, a division of Arizona Credit Health System, at the Arizona Bank of Tucson in 1961.

In 1962, the Tucson Inn was owned by the Egbarth Corporation, the capital stock of which was in turn owned by Phil Baker and Lyndon Miner. Defendant testified that on October 15, 1962, Mrs. Simpson bought Baker and Miner's stock in Egbarth by executing and issuing a promissory note in the amount of $250,000 to each of them and by assuming a first mortgage held by the American Insurance Company for $600,000. Mrs. Simpson was supposed to invest an additional $100,000 in the Inn to convert the hotel rooms into efficiency apartments. Defendant, in return for his services as manager of the Inn, was to receive a one-third ownership when it became a paying proposition. He signed the notes as a co-signer with Mrs. Simpson; he became president and his wife became secretary and treasurer of Egbarth Corporation; and the stock in Egbarth was transferred to defendant and his wife, who then signed the stock certificate to Mrs. Simpson in blank and delivered the stock to her.

Mrs. Simpson's attorney testified that Mrs. Simpson was 89 years old, frail and blind, and had periods of mental confusion and memory lapses; that she had income of about $10,000 a year; and that her assets consisted primarily of the real estate upon which was situated her home, which she sold in 1962 or 1963 for $100,000, less than $20,000 of the purchase price being in cash. He further testified that Mrs. Simpson had been advised by his law firm not to invest in the Tucson Inn; that she told him that she did not sign any notes in connection with it; and that when she was sued for $287,500 by Phil Baker in August, 1965, her defense was that if the note was signed by her at all, her signature was secured by trick, artifice and fraud by misrepresentation of the instrument signed.

Defendant described Mrs. Simpson as a "very wealthy woman" who was very active and used a large magnifying glass which she kept in her purse for reading. He admitted, however, that she was "very old looking" and could have been anywhere from 60 to 95 years of age. The defendant's office manager for the Credit Health System testified that Mrs. Simpson was "close to 80" and "she was almost blind."

In any event, defendant and his wife opened a checking account in the name of Second Fund Tucson Inn, a division of Egbarth Corporation, at the Bank of Tucson on February 19, 1963; they opened an account for the Bagdad Club and Carousel Club, which were part of the Tucson Inn, at the First National Bank of Arizona at Tucson on February 19, 1963.

At this point in time, defendant and his wife were signatories on four active checking accounts in three Chicago banks and on four active accounts in four Tucson banks. The payment due each month on the Tucson Inn first mortgage was in excess of $5,000, the monthly payments due on the Baker and Miner notes were $1,900 each, and the Inn was losing about $3,000 each week. Defendant testified that Mrs. Simpson promised to pay the Tucson Inn expenses; that she did so for a time until she had put in about $40,000; and that she then gradually stopped paying those expenses.

Taking advantage of the fact that it takes several days to clear checks between banks in different cities and the fact that often banks will honor checks drawn against uncollected funds and accept overdrafts for a period of time, the defendants drew checks upon one bank where there were no or insufficient funds in favor of another bank; before the checks reached the drawee bank for payment other checks were drawn against another bank where there were no or insufficient funds and deposited in the drawee bank. When, as here, the checks must be drawn and passed in rapid succession in an endless chain, the procedure is characterized as check-kiting. The defendant's accelerated check-writing activity apparently began shortly after opening the last two Tucson accounts on February 19, 1963, and the tempo and volume quickly picked up until a crescendo was reached in May, 1963. One of the banks, the Mid-America National Bank of Chicago, discovered the abnormality of the defendants' account about May 28, 1963, and a few days later the check-flow was ended.

An internal auditor for the Post Office Department testified that the total deposits to the Two-Fund Credit Health System account at the Arizona Bank during the period of May 14 to May 24, 1963 amounted to $177,662, of which $114,630 was deposited from checks drawn on Chicago banks. Total deposits to the Arizona banks during this period were $443,372, of which $370,966 was made up of deposits of checks drawn on Chicago bank accounts. Total deposits to the Illinois banks during this period totaled $300,267, of which $299,574 was deposited to the Chicago banks on checks drawn on the Arizona banks.

In four days $69,000 in worthless checks were deposited at the Arizona Bank; in three days $49,915 of worthless checks were deposited in the Bank of Tucson; in five days $43,000 of worthless checks were deposited at the First National Bank of Arizona; $51,801 of worthless checks were deposited to the Southern Arizona Bank and Trust Company; in a three-day period $31,000 in worthless checks were deposited to the account at the Mid-America National Bank of Chicago; and $25,388 was deposited to the Upper Avenue National Bank of Chicago during a six-day period. Deposits amounting to $349,000 in worthless checks were deposited during the seven-day period. The total amount of loss to four banks was $84,085.99.

Defendant conceded upon cross-examination that when he deposited those checks in those banks, he knew there were not enough funds to pay them all. An FBI agent testified that he met defendant in September, 1963, in Minneapolis, where defendant had moved in May, 1963; that defendant told him he had deposited checks upon accounts he knew had no or insufficient funds but he was able...