United States v. Charlick, 7657.

• Decision Date: 06 January 1939
• Docket Number: No. 7657.,7657.
• Citation: 26 F. Supp. 203
• Parties: UNITED STATES v. CHARLICK et al.
• Court: U.S. District Court — Western District of Pennsylvania

26 F. Supp. 203

UNITED STATES v. CHARLICK et al.

No. 7657.

District Court, E. D. Pennsylvania.

January 6, 1939.

J. Cullen Ganey, U. S. Dist. Atty., of Bethlehem, Pa., and Walter A. Gay, Jr., Asst. Dist. Atty., of Philadelphia, Pa.

Henry W. Balka and Bernard R. Cohn, both of Philadelphia, for defendants.

KIRKPATRICK, District Judge.

The defendants were tried upon an indictment charging them with conspiracy to violate the Act of June 13, 1934, C. 482, 40 U.S.C., § 276b, 40 U.S.C.A. § 276b, commonly called the "Kick-Back" Act. Trial by jury was waived. A summary of the evidence is as follows:

The two defendant were partners as painting contractors in December, 1934. They received a subcontract (oral and informal) for the refinishing of certain doors for the Naval Hospital in Philadelphia, a public building, financed by grants from the United States. In order to obtain the contract it was necessary that it appear that they were paying or would pay their men at the rate of one dollar and twenty cents an hour. It was also necessary in order to be permitted to carry out the contract to appear to be paying this rate during the work.

Prior to the beginning of the work and before they had definitely taken the contract, they had a meeting with their men, three of whom, Fradkin, and Leonard and Carl Swerdloff, appeared here as witnesses. In pursuance of an agreement between themselves, they told the men that they had or could get a painting contract for work at the Naval Hospital provided certain arrangements could be made about wages, but that unless the men agreed, they would not take the job, or go on with the job. It was winter and work was hard to get. At the meeting referred to, which took place at the Labor Lyceum where they were doing another job, the following contract was entered into between the defendants and the men:

The men were to receive one dollar and twenty cents per hour, which, of course, would be paid in the presence of the Government inspector and thus create the impression that the required wage scale was in force. The men would return twenty-five cents per hour immediately to the defendants. It was agreed further that when the contract was completed and the defendants paid, if the contract turned out to be profitable, the defendants would return to the men the twenty-five cents per hour, which the men had paid back to them. The foregoing was the contract of employment entered into between the defendants and the men.

In pursuance of this arrangement, the work was carried out, the men received one dollar and twenty cents per hour under the eyes of the Government inspector and immediately returned twenty-five cents of it to the defendants. The contract was completed about March, 1934. It resulted in a profit to the defendants. The men have not been paid anything further by the defendants at any time, although demand was made by them about a year and a half after completion of the work.

Some time after this, the exact date of which I do not have, McShain, the general contractor, presented a claim to the Government for additional compensation, amounting to $65,000 arising out of an increased wage scale which he had been compelled to put in force during the progress of the work. In order to effect a prompt settlement of his claim against the Government, he deposited with the Navy Department checks drawn to the order of the men sufficient in amount to cover their entire claim, with the understanding that they were not to be delivered to them until their legality could be established in some fashion, not definitely specified. This amount is still in the hands of the Navy Department.

Of course, it is evident that both the men and the defendants entered into a scheme to establish a fictitious...