United States v. Gilliam

• Decision Date: 21 July 1967
• Docket Number: No. 36339.,36339.
• Citation: 273 F. Supp. 507
• Court: U.S. District Court — Central District of California
• Parties: UNITED STATES of America, Plaintiff, v. Howard GILLIAM, Defendant.

273 F. Supp. 507

UNITED STATES of America, Plaintiff, v. Howard GILLIAM, Defendant.

No. 36339.

United States District Court C. D. California.

July 21, 1967.

Manuel L. Real, U. S. Atty. (at time of indictment and trial but since November 14, 1966 and presently, United States District Judge, Central District of California); John K. Van de Kamp, U. S. Atty., November 14, 1966 — March 29, 1967; Wm. M. Byrne, Jr., U. S. Atty., March 30, 1967 to present; Robert L. Brosio, Asst. U. S. Atty., Chief, Criminal Division; Arthur I. Berman, Asst. U. S. Atty., Los Angeles, Cal., for plaintiff.

Allen Kaufmann, Beverly Hills, Cal., for defendant.

DECISION, FINDINGS OF FACT AND CONCLUSIONS OF LAW

HAUK, District Judge.

Indictment in twelve counts, charging eight counts of mail fraud and four counts of wire fraud against three defendants for allegedly implementing a "check-kiting" scheme. After dismissal of one defendant and plea of nolo contendere by a second, the case proceeded to jury trial against the remaining defendant for six days, at the conclusion of which the jury deliberated for two more days but wound up in a hopeless deadlock and was discharged.

Prior to the jury submission, defendant moved for judgment of acquittal, the Court reserved ruling thereon and the motion was renewed after the jury was discharged. The Court now holds that the evidence in the case, considered in the light most favorable to the Government, is sufficient to support a verdict against defendant and should be submitted to and passed upon by a jury. Therefore the Court orders that the motion for judgment of acquittal be denied, declares a mistrial and sets the cause down for new trial.

This is a prosecution brought under an indictment in twelve counts charging defendant Howard Gilliam and codefendants Manuel Cohen and Florence Cohen with eight counts of mail fraud in violation of 18 U.S.C.A. § 1341¹ and four counts of wire fraud in violation of 18 U.S.C.A. § 1343.²

The indictment charges that the three defendants, Manuel Cohen, Florence Cohen, and Howard Gilliam, had devised and intended to devise a so-called "check-kiting" scheme and artifice to defraud the Beverly Hills National Bank and others, and that in carrying out the scheme they had utilized the United States mail.

The basic plan and device charged in the indictment is the classic "check-kiting" operation. It is alleged that there would be and were maintained by Cohen, Mrs. Cohen and Gilliam six individual and separate checking accounts at six different banks which they utilized as fraudulent contrivance.

The primary and only local account was maintained in the name of Atlantic-Pacific Auto Leasing, Inc., at the Beverly Hills National Bank, Beverly Hills, California, upon which the defendants Manuel Cohen and Howard Gilliam were authorized to write checks. Four accounts, each in the name of Florence Cohen, were located in Covington, Louisiana; Houston, Texas; Gulfport, Mississippi; and Las Vegas, Nevada. The sixth account, in the name of Manuel Cohen, was located in Syracuse, New York.

As a further part of the scheme and artifice to defraud, it is alleged that beginning about May 24, 1963 and continuing to about May 31, 1963, the defendants Cohen and Mrs. Cohen would and did cash and deposit at the Beverly Hills National Bank a series of checks drawn on the five out-of-state accounts, knowing that at the time they were so cashed and deposited, the funds on deposit in these out-of-state accounts were insufficient to pay the checks drawn upon them and deposited in the Beverly Hills National Bank, and that the defendants did not have and would not have sufficient funds with which to cover those checks when they would be presented for payment.

It is further alleged that these checks were sent by United States mail and that the defendants knew that they would be sent by mail from the Beverly Hills National Bank to the out-of-state bank accounts for presentation for payment; that prior to the arrival of the checks at the out-of-state banks for presentation for payment, the defendants would and did make withdrawals by checks drawn on the Beverly Hills National banks to cover the prior checks upon withdrawals by wire to the out-of-state banks to cover the prior checks upon their presentation for payment; that for the purpose of executing this scheme and device the defendants placed in the mail or caused to be placed in the mail certain letters or other matter, including checks, to be delivered by the Post Office establishment of the United States, as charged in Counts 1, 2, 3, 7, 8, 9, 11, and 12; and in addition thereto transmitted by wire funds on several different occasions, as charged in Counts 4, 5, 6, and 10.

Of course, it is finally charged in the indictment that this "check-kiting" scheme and artifice along with the various mailings and wires add up to what has been referred to, for lack of a better or shorter term, as mail fraud in violation of 18 U.S.C.A. § 1341, and wire fraud in violation of 18 U.S.C.A. § 1343.

The defendant Manuel Cohen pled nolo contendere, and sentencing in that matter has been continued by the Court to await the outcome of the Gilliam matter.

The defendant Florence Cohen was dismissed from the case by the Government.

Thereupon the case of United States v. Gilliam came to trial in this Court, and upon evidence adduced for six days the matter was submitted to the jury. After two days of deliberation the jury returned and asked for further instructions. Having received such instructions the jury again deliberated, but without conclusive result, disagreeing and finding no reasonable probability of arriving at a verdict. The Court thereupon discharged the jury.

Prior to the submission of the matter to the jury, motion for judgment of acquittal was made on behalf of the defendant Gilliam pursuant to Rule 29 of the Federal Rules of Criminal Procedure, but the Court reserved decision on the motion and submitted the case to the jury. This motion for acquittal, then, is before the Court after the discharge of the jury without having returned a verdict.

It might be noted parenthetically, that upon inquiry by the Court after discharge, the jury indicated that they could not arrive at a verdict, standing deadlocked eight to four for acquittal; that when the jury first started deliberations they stood seven to five for conviction; that at the time the Court reinstructed the jury on certain points of law, they stood seven to five for conviction; and that prior to the time of final disagreement they stood six to six, finally winding up eight to four for acquittal.

Now, the Court having duly considered the briefs on both sides—opening, reply, supplemental, and supplemental reply— having heard the arguments, and having taken the matter under submission, the time has come for ruling on this motion for judgment of acquittal.

This is not an easy matter to resolve. First we must look at the facts; and then we must apply the law that has been laid down in the appellate cases for the guidance of the trial courts. This is what we shall try to do as briefly as possible.

The Court being fully advised in the premises now makes its Findings of Fact and Conclusions of Law as follows:

FINDINGS OF FACT

Business Difficulties—Shortage of Working Capital

The defendant Gilliam was joined with the defendant Manuel Cohen in an enterprise known as Atlantic-Pacific Auto Leasing Company, Inc., which originated as a drive-away business, and then branched out into and almost completely became the business of auto leasing. This was a business which, by the testimony of all the witnesses, required a great deal of working capital or ready cash from time to time, particularly since large sums of money were always tied up in the purchase of automobiles which had to be floored until they were leased out, even though a certain amount of cash was obtained by way of conditional sales contracts, chattel mortgages, or other security transactions customarily used in the business.

In the course of this business, Cohen and Gilliam had a very difficult time raising funds to carry on and pay creditors as things moved in to the month of May 1963. In fact, along about May 14, 1963, the need for cash was desperate and something had to be done.

The defendants had sought the help of the Beverly Hills National Bank where they carried on their banking, but had not been able to raise any additional credits for financing of cars and for paying of creditors, although they did have some assets in addition to the automobiles which were already heavily covered with finance paper as security for monies already borrowed.

The defendants did have, at this point, some remaining unsold car leases, which could be sold at the discounted value of the remaining lease terms. Negotiations were under way for selling some of these leases to a Mr. Silver in Phoenix, Arizona.

It also appeared that Cohen had initiated some negotiations in Phoenix for a debenture issue, working with a Charles Johnson, then a prominent attorney, and later head of the Federal Housing Agency in the Phoenix area.

Yet the need for new credit became increasingly and extremely severe and the first of a series of checks was written on the six out-of-state accounts which did not have, at the moment of the writing of the checks, sufficient funds to cover them.

The following is a summary of the check transactions in each of the out-of-state banks involved:

Syracuse Bank Transactions (Manuel Cohen Account)

The first check relevant to this motion for acquittal is a check written on May 16, 1963, for $15,000.00 on the account of Manuel Cohen in the Lincoln National Bank & Trust Company, Syracuse, New York, at a time and date when the balance there was $288.74. This check was in the handwriting of Gilliam and signed by Cohen.

Prior to the time this check arrived for presentment and payment at Syracuse, it was covered by a wire transmittal of...