United States v. Feldman

• Decision Date: 08 June 1943
• Docket Number: No. 180.,180.
• Citation: 136 F.2d 394
• Parties: UNITED STATES v. FELDMAN.
• Court: U.S. Court of Appeals — Second Circuit

136 F.2d 394 (1943)

UNITED STATES v. FELDMAN.

No. 180.

Circuit Court of Appeals, Second Circuit.

June 8, 1943.

Marshall, Bratter & Seligson, of New York City (Seymour M. Klein, of New York City, of counsel; Ruth F. Rosenthal and Harry L. Wechsler, both of New York City, on the brief), for appellant.

Mathias F. Correa, U. S. Atty., of New York City (Frederick H. Block, Peter J. Donoghue, and Thomas K. Fisher, Asst. U. S. Attys., all of New York City, of counsel), for appellee.

Before SWAN, AUGUSTUS N. HAND, and CLARK, Circuit Judges.

SWAN, Circuit Judge.

The appellant was prosecuted upon an indictment of nine counts, each of which charged a scheme to defraud and a use of the mails in furtherance thereof, in violation of section 215 of the Criminal Code, 18 U.S.C.A. § 338. Seven of the counts were left to the jury. The appellant was found guilty on all of them and was sentenced to imprisonment for a term of five years.

The fraudulent scheme charged in the indictment was the "kiting" of checks. Such a scheme when the maker knows that he has no prospect of paying the checks and uses the mails in furtherance of his scheme is a violation of the mail fraud statute. Federman v. United States, 7 Cir., 36 F.2d 441, certiorari denied 281 U.S. 729, 50 S.Ct. 246, 74 L.Ed. 1146; United States v. Lowe, 7 Cir., 115 F.2d 596, certiorari denied 311 U.S. 717, 61 S.Ct. 441, 85 L.Ed. 466; see also Charles v. United States, 4 Cir., 213 F. 707, Ann.Cas.1914D, 1251.

The proof showed that in August, 1936, Feldman caused a small checking account to be opened in the name of "J. Feldman," his father, in a bank in Petoskey, Michigan. Then, operating in New York with blank checks signed by the father, he would fill in the amounts and the names of payees and would present the checks to various persons to be cashed, knowing that the funds on deposit were insufficient to meet the checks and that neither he nor his father had the financial means to pay them. During the first eight months of 1937 a mounting series of such checks were cashed, frequently by the Essex House, where Feldman rented an apartment. Knowing that it would take four or five days for the checks to be cleared through the Petoskey bank, he would present and cash additional checks and telegraph money to pay the checks previously issued. On August 20, 1937, when the managing director of the corporate owner of the Essex House learned of the check kiting, the J. Feldman account in the Petoskey bank had on deposit 24 cents, while the outstanding checks which Essex House had cashed between August 16 and 20, inclusive, totaled $30,700. During the period from January to August inclusive, the appellant had telegraphed to the Petoskey bank more than $860,000 to cover checks previously cashed. When confronted by the attorney for Essex House with a demand that he take care of the outstanding $30,700 of checks, he said that neither he nor his father could pay them. Nevertheless on August 21st he telephoned a young man named Reynolds, who mailed him a number of checks signed in blank drawn on Reynolds' account in a bank at Dayton, Ohio. Reynolds told the appellant that he had no money in the account and that the checks were not to be cashed unless the appellant sent the money to cover them. Disregarding this, the appellant filled in and cashed checks on Reynolds' account and thereby obtained the money to take up the outstanding Essex House checks. The fact that the latter were paid is no defense, since it is immaterial whether the unlawful scheme succeeds in actually defrauding an intended victim. Foster v. United States, 6 Cir., 178 F. 165; United States v. Rowe, 2 Cir., 56 F.2d 747, 749, certiorari denied 286 U.S. 554, 52 S.Ct. 579, 76 L.Ed. 1289; Baker v. United States, 8 Cir., 115 F.2d 533, certiorari denied 312 U.S. 692, 61 S.Ct. 711, 85 L.Ed. 1128, rehearing denied 312 U.S. 715, 61 S.Ct. 731, 85 L.Ed. 1145.

The Reynolds checks were protested. Thereupon Reynolds, accompanied by his fiancee, his mother and his mother's attorney, came to New York and interviewed Feldman, who told them he was "broke" and could not pay. Later he gave Mrs. Reynolds notes to cover the money she advanced to make her son's checks good, but these were never paid.

The mailings charged in the several counts of the indictment occurred in August, 1937. Two relate to checks cashed by Essex House, the other five to the Reynolds transaction. Nevertheless a very large part of the voluminous record consists of evidence concerning the appellant's resumption of kiting checks drawn on the J. Feldman account and cashed by Stout & Company between September, 1938, and April, 1939. There was also testimony as to transactions with Emanuel & Co. in 1930. Most of the errors in the conduct of the trial of which the appellant complains relate to these "similar transactions" which were relevant only on the issue of the appellant's fraudulent intent in the check kiting to which the mailings related. Why the government thought it necessary or desirable so greatly to lengthen the trial by the introduction of a mass of evidence relating to similar transactions we find difficult to understand in view of the completeness of its proof as to the Essex House and Reynolds transactions. Indeed the appellant's fraudulent intent was proved out of his own mouth by the introduction of testimony given by him in supplementary proceedings conducted by judgment creditors in courts of the State of New York. In these examinations he stated under oath that there were about 150 judgments against him representing an indebtedness of nearly $350,000; that he had no business and no source of income, was living on money borrowed from family and friends, and was contemplating bankruptcy. He even explained the precise scheme with which the indictment charged him, saying, "I am taking advantage of my father's credit by `kiting' his checks, to pay off obligations I have incurred, and also meeting the checks I have used of his. * * * I cashed his checks from time to time, and wire the money to him to make the checks good that I have already cashed until such time as I can borrow the money to make good the last one," folio 4868. "He sends me blank checks signed. I use them as I see fit," folio 4870. "`Kiting' as you mention it, and have been doing it for seven months. * * * I have no money," folio 4883. He also admitted tearing up Western Union receipts for money wired to his father, his purpose being "Not to have people know what I am doing," folio 4863. These excerpts are from examinations sworn to in July, 1937; that is, during the very period covered by the indictment. Several of them were stressed in the government's summation. With this evidence before the jury a verdict of guilt was inevitable.

The appellant did not take the stand to testify in his own behalf. He objected to the admission of his examinations in supplementary proceedings as a violation of his constitutional privilege under the Fifth Amendment not to be compelled to be a witness against himself. If the objection was well taken the judgment must be reversed; if it was not well taken the appellant's guilt is so clearly established that other alleged errors in the conduct of the trial may well be disregarded as nonprejudicial.

Under the law of New York a judgment debtor can be compelled to give testimony concerning his affairs and cannot refuse to answer on the ground of selfincrimination since his testimony cannot be used against him in a state prosecution. N. Y. Civil Practice Act § 789 (formerly § 791); People v. Carlson, 222 App.Div. 54, 225 N.Y.S. 149. Although Feldman did not claim immunity under the Fifth Amendment on the ground that his answers might subject him to a federal prosecution, his counsel argues that such a claim could not have prevailed had it been made. Jack v. Kansas, 199 U.S. 372, 26 S.Ct. 73, 50 L.Ed. 234, 4 Ann.Cas. 689.¹ Consequently it is urged that the first opportunity Feldman had to claim his constitutional privilege was when his examinations in supplementary proceedings were offered in evidence, and he then did so. The argument assumes that the constitutional privilege operates to render inadmissible in a federal prosecution testimony given under a threat of judicial compulsion in litigation in a state court. No controlling authority has been cited for this proposition. Clark v. State, 68 Fla. 433, 67 So. 133, the only case relied upon by the appellant, presents the converse of the situation at bar. There testimony which the defendant had given in a bankruptcy proceeding was put in evidence against him in a state prosecution for embezzlement. Without discussion of the problem the opinion held this to be a violation of a provision in the state constitution which is the counterpart of the federal privilege under the Fifth Amendment. We are not convinced that this decision should control determination of the case at bar. In Johnson v. United States, 228 U.S. 457, 33 S.Ct. 572, 57 L.Ed. 919, 47 L.R.A.,N.S., 263, the defendant was convicted upon an indictment for concealing money from his trustee in bankruptcy. His books, title to which passed by operation of law to his trustee, were used against him. In affirming the conviction Mr. Justice Holmes remarked, "A party is privileged from producing the evidence, but not from its production." In United States v. Murdock, 284 U.S. 141, 52 S.Ct. 63, 76 L.Ed. 210, 82 A.L.R. 1376, the defendant was indicted for refusing to answer questions propounded by an internal revenue agent concerning deductions claimed in the defendant's income tax returns. His refusal was based on the claim that his answers might incriminate him under state law. In discussing his claim of privilege the court said at page 149 of 284 U.S., at page 64 of 52 S.Ct., 76 L.Ed. 210, 82 A.L.R. 1376: "The English rule of evidence against compulsory self-incrimination, on which historically that contained in the Fifth Amendment rests, does not...