United States v. Daileda, Crim. No. 13711.

• Decision Date: 12 May 1964
• Docket Number: Crim. No. 13711.
• Parties: UNITED STATES of America, Plaintiff, v. George J. DAILEDA and August J. Lippi, Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

229 F. Supp. 148

UNITED STATES of America, Plaintiff, v. George J. DAILEDA and August J. Lippi, Defendants.

Crim. No. 13711.

United States District Court M. D. Pennsylvania.

May 12, 1964.

Bernard J. Brown, U. S. Atty., Carlon M. O'Malley, Jr., Asst. U. S. Atty., Scranton, Pa., for plaintiff.

Edwin Kosik, James Walker, Scranton, Pa., for defendants.

NEALON, District Judge.

The defendant, August J. Lippi, having been tried by a jury and convicted on 34 Counts of violations of Title 18 U.S.C. §§ 2, 656, 1001 and 1005, has filed this motion for judgment of acquittal and, in the alternative, a new trial.

The defendant, President of the First National Bank of Exeter, Pennsylvania, was indicted together with George Daileda, Cashier of the Bank, but at the time of arraignment Daileda entered a plea of guilty to the 34 Counts in the indictment and subsequently testified for the Government at the defendant's trial.

The indictment charged the defendant, in the first 27 Counts, with having

(a) Willfully, knowingly and fraudulently aided and abetted George J. Daileda, who was the cashier of said bank, in the misapplication of funds of the said bank by drawing and presenting for payment at the said bank various checks, at a time when he knew that he did not have sufficient funds in his account to pay said checks, and inducing, aiding and abetting the said Daileda to misapply funds of the bank to cover said checks, with intent to defraud and injure the said First National Bank of Exeter, in violation of 18 U.S.C. 2¹ and 18 U.S.C. 656;

in Counts 28, 29 and 30, with having

(b) Willfully, knowingly and fraudulently aided and abetted the said Daileda in the making of false entries in the books and records of The First National Bank of Exeter with intent to deceive the Federal Deposit Insurance Corporation and agents and examiners thereof, and with intent to injure and defraud the said First National Bank of Exeter, in violation of 18 U.S.C. 2 and 18 U.S.C. 1005;

and in Counts 31, 32, 33 and 34, with having

(c) Knowingly, willfully and fraudulently filed and caused to be filed with the Comptroller of Currency false and fraudulent "Reports of Conditions" of the First National Bank of Exeter, in violation of 18 U.S.C. 1001.

The reasons assigned by defendant will be considered in the following order:

Motion for Judgment of Acquittal

The defendant contends that the Court erred in denying his motion for acquittal made initially at the conclusion of the Government's case and again at the close of all the evidence. Defendant's principal argument is that the Government's own evidence negated the requisite intent in such cases.

There is no doubt that it is incumbent upon the Government to prove that there was a willful misapplication of the funds of the bank by Daileda and that the defendant knowingly and willfully, with specific intent, aided and abetted Daileda in the misapplication. There can be no question but that there was a willful misapplication of funds, but defendant contends that the Court should have taken the case from the jury as there was insufficient evidence of specific intent on his part to justify a conviction.

The Government's evidence revealed that (a) defendant first approached Daileda in 1942, told him that he had sustained expenses for household improvements, and asked him to cover up certain checks drawn to pay these expenses inasmuch as defendant did not have sufficient funds in his checking account; (b) Daileda told defendant he would cover up these checks, but that he had to use bank funds to do it; (c) this practice continued up to September, 1959, and defendant would take from nine months to a year and a half to reimburse the Cashier for bank funds used during this period; (d) from September, 1959, to January, 1962, the period involved under the present indictment, defendant, then President of the Bank, issued twenty-seven checks when, in each instance, there were insufficient funds in defendant's checking account; (e) the Cashier during the indictment period told the defendant that bank funds were being used and repeatedly asked him to refund the money, whereupon in one instance defendant exclaimed "What the hell good is this bank if I can't use it?"; (f) during the indictment period the defendant made no deposits in his checking account; (g) the bank ledger cards and other evidence revealed that on the day each check was cleared, either a sufficient deposit was made at that time to cover the check or Daileda produced cash and "bought back" defendant's check which was being held up by the head teller inasmuch as the balance in the checking account was inadequate; (h) the total amount covered by Daileda for the defendant was $38,976.88; (i) in maintaining bank records, false entries had to be made by Daileda to conceal the $38,976.88 misapplied; (j) in submitting financial statements to the Comptroller of Currency, false and fraudulent representations were made in order to conceal the $38,976.88 misapplied; (k) at the time financial statements, viz. "Reports of Conditions", were presented to defendant for his signature, defendant and the Cashier would discuss the need for defendant to reimburse the bank for deposits withheld; (1) defendant did sign the "Reports of Conditions" which were then forwarded to the Comptroller of Currency. Further, the Government's evidence indicated how and where the false entries and fraudulent statements were made. The Government's proof disclosed that the defendant was the President of the First National Bank of Exeter during the period in question, was very active in the conduct of its business, and visited the bank and consulted with the Cashier, Daileda, two to three times a week. The Government maintained, with apparent success, that this knowledge of the internal operation of the bank, coupled with the other evidence showing defendant's actual participation in diverting bank funds, demonstrated that defendant was familiar enough with bank records and documents to know that false entries were being made and fraudulent statements submitted.

Certainly there was ample evidence to warrant the submission of this case to the jury. Defendant's intent was a factual issue and specific intent may be inferred from all the relevant circumstances, since direct proof of intent is rarely available. Benchwick v. United States, 297 F.2d 330 (9th Cir. 1961); United States v. Nystrom, 237 F.2d 218 (3d Cir. 1956); Hall v. United States, 286 F.2d 676 (5th Cir. 1961). If, with knowledge of the fraudulent misapplication by the Cashier, the defendant continued to engage in a course of conduct which so misapplied the funds of the bank and which required the expected collaboration of the Cashier to make it successful, * * * the evidence was sufficient to take the case to the jury on the issue of aiding, abetting, or inducing. Logsdon v. United States, 253 F.2d 12 (6th Cir. 1958). See also, United States v. Speare, 297 F.2d 408 (2d Cir. 1962). It is not necessary that an aider and abettor know the modus operandi of the person whom he is charged with aiding and abetting; it is sufficient to show that the defendant shared the Cashier's criminal purpose to injure and defraud the bank. McClanahan v. United States, 230 F.2d 919 (5th Cir. 1956); Russell v. United States, 222 F. 2d 197 (5th Cir. 1955). Knowledge of the Cashier's specific acts of concealment would have been relevant evidence that defendant had the requisite intent, but it was not the only evidence. Benchwick v. United States (supra).

Defendant points out that Daileda testified that defendant promised to pay back the amounts covered; that in all instances up to September, 1959, the defendant did, in fact, repay bank funds used for checks that were covered by Daileda; that defendant not only specifically denied involvement, but was a man of some financial means who would have no need to cover his bank obligations, all of which, according to defendant, thoroughly weakened the Government's case.

However, these matters were for the jury to consider in arriving at its decision concerning the existence or nonexistence of specific intent. To maintain that this testimony so negated the requisite intent as to require the Court to remove the case from the jury and direct a verdict of acquittal is absurd and without merit.

The jury could very well have concluded that during the indictment period from September, 1959, to January, 1962, the defendant issued twenty-seven checks drawn on his checking account in which he knew there were insufficient funds; that he knew, as a result of an arrangement and understanding with Daileda, that Daileda would cover these checks with bank funds; that it was his intention to injure and defraud the bank when he issued the checks; that this intention to defraud was apparent because defendant made no attempt, during the indictment period, despite repeated requests by Daileda, to deposit any money in his checking account; that he intended "* * * to use the bank * * *" for a criminal purpose; that he knew Daileda made false entries in bank records to cover these transactions; that he knew when he signed the "Reports of Conditions" that they had been fraudulently prepared to conceal the exact condition of the bank, and that he acted willfully, feloniously, and with specific intent to injure and defraud the First National Bank of Exeter. The defendant was allowed to present his version of these transactions and, after a fair charge by the Court, to which no exceptions were taken, the jury declined to accept it. Under these circumstances, the Court has no right to disturb the jury's findings.

Motion for a New Trial

The numerous reasons assigned in support of the motion for a new trial can be distilled into three principal arguments: (a) the Court erred in admitting evidence of alleged prior...