United States v. Freedman, 605

• Decision Date: 06 July 1971
• Docket Number: No. 605,Docket 35524.,605
• Citation: 445 F.2d 1220
• Parties: UNITED STATES of America, Appellee, v. Harold FREEDMAN, Appellant.
• Court: U.S. Court of Appeals — Second Circuit

445 F.2d 1220 (1971)

UNITED STATES of America, Appellee, v. Harold FREEDMAN, Appellant.

No. 605, Docket 35524.

United States Court of Appeals, Second Circuit.

Argued February 9, 1971.

Decided July 6, 1971.

COPYRIGHT MATERIAL OMITTED

William B. Gray, Walter M. Phillips, Jr., Andrew J. Maloney, Asst. U. S. Attys., Whitney North Seymour, Jr., U. S. Atty., for appellee.

Jerome J. Londin, Allen Green, Kenneth A. Lapatine, Carro, Spanbock & Londin, New York City, for appellant.

Before FRIENDLY, Chief Judge, WATERMAN, Circuit Judge, and McLEAN, District Judge.^*

WATERMAN, Circuit Judge:

Harold Freedman, charged with having violated 18 U.S.C. § 1621, appeals his conviction by a jury for four instances of perjury¹ committed while he was testifying before the Securities and Exchange Commission in connection with an investigation into possible violations of the federal securities laws by three corporations, General Development Corp., Universal Controls Co., and Seven Arts Ltd.,² and, in particular, with the activities of Louis Chesler,^* a then-current ten per cent beneficial owner and officer or director of all three. Appellant was sentenced to concurrent one-year and one day terms of imprisonment on each of Counts Three, Four and Five, and ordered to pay an aggregate payment of $3000 in fines; a sentence on Count One was suspended and Freedman was placed on unsupervised probation for a period of five years with the special condition that he not engage in the securities business in any manner during the five year period. For the reasons stated below, we affirm the conviction on Count One, and reverse the convictions on Counts Three, Four and Five.

Freedman was, for the period 1958-1962, a registered sales representative and manager of Bache and Company, a New York based stock brokerage firm; during that time Bache transacted sales of more than one million shares in the three corporations. Freedman was also a close friend of Chesler. Freedman was called to testify before the SEC and appeared on four occasions. On July 7, 1964 and February 17, 1965 he was specifically questioned under oath about any gifts he had received or profit-sharing arrangements he had made with his customers. It was conceded that such are proscribed by the rules of the New York Stock Exchange to which Freedman had subscribed. Some of his responses are believed to have been falsehoods and they were the basis for the prosecution for perjury. Among these responses were the statements set forth in the four counts of perjury upon which he was convicted.

COUNT ONE

Freedman denied, while testifying on February 17, 1965, that Chesler had "anything to do" with the financing of the purchase of General Development stock in the latter part of 1959 by Maxwell Gluck, former United States Ambassador to Ceylon, and a customer of Bache. The jurors could find from the evidence at the perjury trial that in October 1959 Freedman entered into a profit-sharing arrangement with Gluck. The agreement provided that if Gluck would put up a certain amount of cash toward the purchase of 10,000 shares of General Development, Freedman would supply financing for the balance, each of them to share equally in any profit or loss upon a subsequent sale of the stock so purchased. Freedman, in order to fulfill his part of the agreement, contacted a Norman Robbins, who had previously been successful in financing stock purchases through money lenders, to obtain a bank loan for him. At Freedman's trial Robbins testified that Freedman stated to him that Chesler would guarantee the loan. Robbins contacted Ben Cohen, President of Right-gold Trading Co., a money lender, but when Cohen learned that Chesler was to be the guarantor he refused to make the loan. Freedman and Chesler then individually telephoned Elliot Hyman, Board Chairman and Chief Executive Officer at Warner Bros.-Seven Arts, who agreed to act as guarantor only after he was assured by Chesler that he would not be "hurt as a consequence" thereof. Freedman confirmed in a letter to Hyman that Hyman was to endorse Robbins's note on behalf of Chesler and Freedman.³ Robbins testified that it was his understanding that the loan Hyman guaranteed was for the benefit of Gluck and Freedman. The total purchase price was $230,000; Gluck paid $60,000 in cash and Cohen, the money lender, provided the $170,000 remainder.⁴ Even though Robbins's testimony differed from Hyman's, Hyman's testimony and the introduction of Freedman's letter to Hyman were sufficient to show that Chesler had quite a bit "to do" with the arrangement Freedman had made with Gluck, and was enough to justify Freedman's conviction on this count.

However, the prosecution attempted to improve its position by introducing, over defense objection, an alleged prior similar act, not contained in or charged in the indictment, wherein Freedman had falsely sworn to the SEC that he had not received a $20,000 check drawn by Hyman "on behalf of" Chesler.⁵ Hyman had testified that he had given a check to Freedman in that amount "for" Chesler.⁶ Appellant first argues that this evidence should not have been admitted because its only relevance was to show Freedman's disposition to commit crimes. He next complains that even if the evidence were properly admitted it should have been withdrawn from jury consideration after it became apparent that the evidence of this prior act was not corroborated under the "two-witness rule." And Freedman finally claims that, in any event, the court erred in charging the jury that it could find that he had a criminal intent to lie at the SEC hearings if it believed that Hyman had made the $20,000 payment.

We find no merit in appellant's first contention. Evidence of similar acts by a defendant is admissible to prove his knowledge, intent, or design if knowledge, intent, or design "is placed in issue in the case at trial, either by the nature of the facts sought to be proved by the prosecution or the nature of the facts sought to be established by the defense." United States v. DeCicco, 435 F.2d 478, 483 (2 Cir. 1970); see United States v. Deaton, 381 F.2d 114 (2 Cir. 1967); United States v. Rosenblum, 339 F.2d 473 (2 Cir. 1964). Here, the prosecution's theory was to demonstrate that Freedman did not make any mistake and that he did have an intent or design when he denied that Chesler had any connection with the Gluck transaction. Cf. United States v. Robbins, 340 F.2d 684 (2 Cir. 1965). Whether the probative value of this evidence was outweighed by its potential prejudicial effect was a matter for the trial judge, United States v. Deaton, supra, and a limiting instruction was given. Inasmuch as the prior activity involved a highly similar situation, that is, the denying in the same inquiry the existence of Chesler's role in another deal, and inasmuch as intent was an element of the Government's case, there was no error. United States v. Blount, 229 F.2d 669 (2 Cir. 1956).

Appellant's second argument seems to be somewhat related to the first contention. He claims that all the evidence relating to the $20,000 payment by Hyman should not have been submitted to the jury because the testified-to act was not sufficiently corroborated under the "two witness" rule applicable to proof of perjurious testimony.⁷ However, the prosecution was not seeking a conviction on this prior act; the court limited the introduction of this evidence solely as relative to demonstrating appellant's intent when he denied Chesler's role in the Gluck transaction, the lie for which he was being prosecuted. The high standard of proof for a charge of a perjury does not govern the admissibility of prior similar acts admitted only to show criminal intent. See Weiler v. United States, 323 U.S. 606, 65 S.Ct. 548, 89 L.Ed. 495 (1945).

Finally, Freedman's objection to the jury instruction is not persuasive. He argues that the court's charge erroneously permitted the jury to consider the fact of Hyman's payment as having a bearing on Freedman's intent, and did not require the jury first to find that Freedman had lied about the payment before they determined whether there had been, in fact, a payment.⁸ Appellant mistakes the context of the instruction. During the trial the jury heard the relevant portion of the SEC transcript wherein Freedman denied receiving the check. Hyman's testimony that he had given Freedman the check joined that issue. The court's charge that the jury could find criminal intent if it found that the check had actually passed as Hyman claimed was correct. We agree that further explanation might have been helpful to the jury in its deliberations, but we point out that appellant failed to make this objection at trial even after the court had offered appellant a second opportunity to suggest corrections in the instruction. See Fed. R. Crim.P. 30.

COUNT THREE

Count Three alleged perjury on February 17, 1965 when Freedman asserted that his arrangement with Gluck was the only profit-sharing arrangement he had made with any customer. Richard Brown, a former customer of Freedman, and an officer of Filmways Television Productions, testified to contradict this statement.

Over objection that the arrangement Brown was testifying about had not been between Freedman and Brown but had been between Mrs. Freedman and Brown, Brown was permitted to explain that he and Freedman had agreed to share the profits resulting from the purchase and later sale of 1400 shares of Universal Controls. The stock was sold three months after the purchase. The arrangement was reduced to writing in the form of a letter, introduced into evidence, purportedly signed by Mrs. Freedman, but in fact signed by the defendant. In addition, a check drawn by Brown and made payable to Mrs. Freedman for one-half of the profits resulting from the sale was introduced in evidence to corroborate Brown's testimony. Defendant argues on appeal that this transaction was not material to the SEC investigation....