United States v. Earnhardt, 8866.
| Decision Date | 26 March 1946 |
| Docket Number | No. 8866.,8866. |
| Citation | 153 F.2d 472 |
| Parties | UNITED STATES v. EARNHARDT. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Walter W. Duft, William McKinley, and Paul E. Price, all of Chicago, Ill., for appellant.
B. Howard Caughran and Paul A. Pfister, U. S. Atty., both of Indianapolis, Ind., for appellee.
Before SPARKS, MAJOR and KERNER, Circuit Judges.
Appellant and another were found guilty by a jury on eleven counts of an indictment charging use of the United States mails in furtherance of a scheme to defraud, in violation of § 215 of the Criminal Code, 18 U.S.C.A. § 338; violation of § 17 of the Securities Act of 1933, 15 U.S. C.A. § 77q; and conspiracy to violate the two statutes. Appellant was sentenced to five years imprisonment and ordered to pay a fine of $1,000.
Two issues are raised by this appeal: Whether the trial judge committed error in (1) overruling appellant's demurrer to the indictment, and (2) in his participation in and conduct of the trial. There was no motion for directed verdict or in arrest of judgment or for new trial, hence there is no question raised here as to the sufficiency of the evidence to sustain the conviction.
Appellant challenges the indictment on the ground that the mailings set forth to support the allegation of the illegal use of the mails all occurred after the alleged scheme had been completed, and were in no way in furtherance of that scheme or its execution. Hence we shall discuss the allegations of the indictment rather than the evidence offered to support the charge.
The indictment charged in substance that appellant caused the incorporation of the Big Bend Realty and Development Company, an Indiana corporation, of which he was president and director. His codefendant, one Schneider, was vice-president. These defendants caused Big Bend to acquire large tracts of land in Brewster County, Texas. They then engaged in the sale of parcels of these lands to investors by means of fraudulent representations that the tracts were valuable oil lands and that Big Bend would drill oil wells on land located close to acreage being offered for sale, which drilling would create a "lease-play," a market for leases on those lands. They also promised that defendants would look out for the interests of the investors and would assist them in selling leases for the lands purchased from the corporation at profits in excess of the funds invested; that the investors could rely on the efforts of the defendants to secure a profitable return on their investments; and that the defendants would deliver warranty deeds executed by Big Bend and recorded in the deed records of Brewster County, Texas, conveying the acreage contracted to be sold to them by Big Bend.
The indictment further charged that as a part of the scheme to defraud, defendants had a sectionalized map of Brewster County prepared, showing the location of a number of oil wells falsely represented to be producing oil at that time. Thereafter the defendants had the deeds executed by Big Bend, conveying to the investors the acreage purchased by them, omitting the county and state of residence of the investors, and they had these deeds mailed to the County Clerk of Brewster County with instructions to record and return to Big Bend; after the return of the deeds, the defendants had the county and state of residence of the grantees filled in and then delivered the completed deeds to the investors.
As a further inducement to investors to invest in the Big Bend lands, defendants represented that a great black pool of oil lay under the surface of Brewster County, extending out into the Gulf of Mexico, although, in fact, the geology of the county is such that it is very unfavorable for the production of oil, and defendants knew that there is no such pool, and that the county is a volcanic region not likely to have any oil, and that a total of forty-three oil wells had been drilled, no one of which had ever produced any oil. Defendants also represented that there were producing wells in the county, although they knew that all the wells drilled had been completed as dry holes, and that no oil had ever been produced in...
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