United States v. Graham
| Decision Date | 06 March 1939 |
| Docket Number | No. 62.,62. |
| Citation | 102 F.2d 436 |
| Parties | UNITED STATES v. GRAHAM et al. |
| Court | U.S. Court of Appeals — Second Circuit |
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John J. Taaffe, of San Francisco, Cal., and Moses Polakoff, of New York City, for appellants Graham and McKay.
Irving Spieler, of New York City, for appellant Allen Comer.
Lewis Landes, of New York City, for appellant Boies Heed.
Lamar Hardy, U. S. Atty., and William Power Maloney and W. Mahlon Dickerson, Asst. U. S. Attys., all of New York City.
Before L. HAND and CHASE, Circuit Judges.
William J. Graham, James C. McKay, Allen Comer and Boies Heed, with one other who was acquitted, were tried by a jury on all counts of two indictments, consolidated for trial, in the District Court for the Southern District of New York. The four men named were found guilty on all counts and have appealed.
The first indictment, returned April 19, 1934, charged in three counts the use of the United States mails in furtherance of a scheme to defraud in violation of the provisions of Sec. 215 of the United States Criminal Code (18 U.S.C.A. § 338). Each of the substantive counts was based on a separate letter alleged to have been mailed in Reno, Nevada, and delivered to the addressee in New York City, in the Southern District of New York, by means of the mails. The second indictment, returned March 4, 1935, charged the appellants with having conspired, each with the others and with other persons, some of whom were unknown, to violate the above mentioned statute contrary to the provisions of Sec. 37 of the United States Criminal Code (18 U.S.C.A. § 88). Four overt acts were alleged. Each was the mailing of a letter in Reno, Nevada, which was delivered through the mails to the addressee in New York City. Each of the appellants, except Heed, was sentenced upon each count of each indictment. Heed was not sentenced on the first count of the first indictment.
This was the third trial of appellants Graham and McKay on these indictments, each of two previous trials having ended in a disagreement of the jury as to their guilt. The other two appellants were tried for the first time. Several other persons had before this trial either pleaded guilty or been convicted of like offenses in connection with the swindles involved in this case. It was the claim of the government that appellants Graham and McKay, who were associated in business at Reno, Nevada, had provided in that city protection from the interference by the police with the consummation of many swindles there; that this had been done in furtherance of a widely known conspiracy to defraud in which the mails were used and in return for a share of the proceeds; and that they had actively aided in providing facilities for converting the securities of victims of the frauds into cash which could more easily be taken from them.
There was ample evidence to show that a wide-spread scheme to defraud had been carried out by confidence men during the period covered by the swindles proved in this case; and that at least twenty-four of them were consummated at Reno, Nevada, where the Riverside Bank was often used to enable those defrauded to convert the securities into the cash which was then taken from them by the swindlers by means of what is sometimes called the pay-off game.
In various cities in this country and Canada credulous persons were led to believe that they would receive large sums of money, supposedly won by race-track betting or stock market speculation, which they were deceived into thinking had been carried out partly in their behalf by the confidence men, provided they produced evidence of their financial ability to have paid, if they had lost, to the amount they were permitted to share the winnings. They would agree to do that and would sooner or later always be directed to go to Reno, Nevada, to make their financial showing and be paid. They would go there usually with the evidence of their financial responsibility in the form of securities. There they would be met by the confidence men who had previously worked upon them and be told that only cash would serve. To get the cash, they would usually be directed to sell their securities through the Riverside Bank at Reno. And when this had been done the victims would take their cash to the confidence men who would then display it to the pay-off man together with the fake money they pretended to have provided to make the total equal the sum won. The pay-off man would appear to be satisfied and make what seemed to the victims to be the payment to the confidence men of what was supposedly due and then everything would be risked on one last pretended bet or speculation. That would always be represented as having failed because of a mistake of one of the confidence men in carrying out his instructions and all would seem to be lost, including the money provided by the victims. Then the victims would be persuaded to leave Reno on the promise that restitution would be made and for which, of course, waiting was always in vain.
In the perpetration of the twenty-four frauds where different persons were swindled in the manner described, the same general pattern was followed to entice the victims to Reno; to have them convert their securities into cash; and to take that from them in the way outlined. There was direct evidence that each of appellants Comer and Heed actively participated in at least one such swindle. There was direct evidence that appellants Graham and McKay each assisted the Riverside Bank to provide some of the cash which some of the victims obtained there. And there was sufficient evidence to show a conspiracy to defraud, in the way stated, known to all the appellants at the time they acted to advance the particular swindles in which they were shown to have participated directly and which justified the verdict of the jury that they knowingly helped to carry out a scheme to defraud by the use of the mails. The letters alleged to have been mailed in Reno and delivered in New York through the mails to the addressees there were proved to have been mailed by the Riverside Bank and delivered in New York in making the sale of the securities of some of the victims. There was also evidence that in some instances appellant Graham received the money obtained in the swindle and divided it among the confidence men involved less 15% retained as pay for providing a safe place for the pay-off at Reno; the essential feature of the scheme which he and his business associate McKay were able to contribute because of their influence at Reno. All this, it may be said, was proved by the evidence other than the testimony of one Moore which was taken subject to numerous exceptions. Moore had previously pleaded guilty to the indictment; had been sentenced; and had completed serving his prison term when this trial began.
At the two previous trials of appellants Graham and McKay, Moore had testified at the call of the government to his participation in several of the swindles and had implicated both Graham and McKay. This time he was called as the government's first witness and asked about a so-called Muckenhirn swindle. His memory was faulty and the assistant district attorney undertook to remedy the defect by asking the witness if he had testified at one or the other or both of the two previous trials in accordance with questions put which incorporated what purported to be questions he had been asked at the previous trials and answers to them which he had then given. This method of refreshing his recollection was of little avail though not entirely without result. He did not, however, remember having given any testimony which implicated either Graham or McKay.
Early in the examination, he was asked if he hadn't described "the workings of this pay-off racket" to the examiner on Saturday and replied, "If you will ask me questions I will answer to the best of my ability". At once, the assistant district attorney stated to the court that the "witness's refusal takes the prosecution by surprise". Thereupon he was further examined concerning his former testimony, most of which he said he could not remember. In a little while an objection was made by the defense on the ground that the examination was contrary to the decision in United States v. Block, 2 Cir., 88 F.2d 618. It was overruled and, over the objection and exception of all the defendants, the witness was pressed to state whether he recalled more of his previous testimony but as to much of it he answered that he could not.
When the examination had proceeded in this way to some further extent, the court expressed the opinion that it had gone far enough and reminded the examiner that if he were surprised there were limits. Another question embodying a question and answer purporting to have been given by the witness at a former trial having been answered, "I don't recall it", the court directed the attorney to desist from that. He then said, "I will desist from that and go to the conclusion of that transaction, if I may, with one other point." After a few more questions had been asked the witness concerning his former testimony and he had failed to remember or said that if he had testified as indicated that it was false, he was asked whether he had testified in 1935 concerning money obtained through a swindle as follows:
At this point he was interrupted by the court and the following occurred:
Up to this point the examination had been conducted by way of impeaching a plainly...
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