United States v. Harris

• Decision Date: 14 February 1968
• Docket Number: No. 15765-15767.,15765-15767.
• Citation: 388 F.2d 373
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. George HARRIS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. LeRoy SILVERSTEIN, also known as LeRoy Sterling, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Leo RUGENDORF and Larry Rosenberg, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

388 F.2d 373 (1967)

UNITED STATES of America, Plaintiff-Appellee, v. George HARRIS, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. LeRoy SILVERSTEIN, also known as LeRoy Sterling, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Leo RUGENDORF and Larry Rosenberg, Defendants-Appellants.

Nos. 15765-15767.

United States Court of Appeals Seventh Circuit.

December 13, 1967.

Rehearings Denied February 14, 1968.

Anna R. Lavin, Chicago, Ill., for LeRoy Silverstein.

Frank Oliver, Chicago, Ill., for Leo Rugendorf.

Melvin B. Lewis, Chicago, Ill., for Larry Rosenberg.

Maurice J. Walsh, Chicago, Ill., for appellants Leo Rugendorf and Larry Rosenberg.

Julius Lucius Echeles, Jo-Anne F. Wolfson, Frank Oliver, Chicago, Ill., for appellant George Harris.

Jack M. Levin, Chicago, Ill., for Leo Rugendorf.

Edward V. Hanrahan, U. S. Atty., Sheldon Davidson, Chicago, Ill., for appellee. John Peter Lulinski, Gerald M. Werksman, Lawrence Jay Weiner, Asst. U. S. Attys., of counsel.

Before DUFFY, Senior Circuit Judge, CASTLE and FAIRCHILD, Circuit Judges.

DUFFY, Senior Circuit Judge.

Defendants were charged in a 13-count indictment. The first count charged a conspiracy to defeat the Bankruptcy Act, Title 18 U.S.C. § 152, and the Dyer Act, Title 18 U.S.C. § 2312. In the second count, the defendants were charged with a substantive violation of the Interstate Extortion Act, Title 18 U.S.C. § 1951. Various of the defendants were charged singly or together with one or more of the other defendants in counts 3 through 13 with substantive violations of the Bankruptcy Act, Title 18 U.S.C. § 152.

The jury found all of the defendants not guilty as to count 2 which charged violation of the Interstate Extortion Act.

The jury recommended that defendant Harris be given leniency as to count 1. However, the trial judge sentenced Harris to five years imprisonment and $10,000 fine which was the maximum punishment under Title 18 U.S.C. § 371. In addition, defendant Harris was also sentenced to five years on count 5 to run consecutively with count 1, making a total sentence of ten years. The judge also sentenced Harris to several other five-year terms to be served concurrently.

The other counts of the indictment will not be detailed here. Suffice it to say they charged concealment of funds or other property of the bankrupt, and with conspiracy to do so in violation of the Bankruptcy Act, Title 18 U.S.C. § 371.

Defendants George Harris and LeRoy Silverstein (sometimes known and often referred to as LeRoy Sterling or Sterling) were officers and principal stockholders of Sterling-Harris Ford, Inc., Chicago, Illinois, which had a Ford agency and sold new and used cars. They were financed by Associates Discount Corporation of South Bend, Indiana, a finance company which "floor-planned" the automobiles by means of trust certificates which vested in Associates, an unrecorded first lien.

In 1960, the business of the Agency was good due, in large part, to heavy newspaper and television advertising. However, the Company could not meet all of the advertising costs which had accumulated, and the advertising was cancelled. During February 1961, sales of automobiles were greatly reduced.

On March 1, 1961 Sterling-Harris had two hundred ten automobiles on which Associates held trust certificates. The total amount due to Associates by reason of the trust certificates was approximately $430,000.

The testimony disclosed that business of the Company was slow up to Friday, March 3, 1961. Starting about 4 p. m. on that day, many people came to the premises to buy automobiles. They came mostly in small groups. Some came by taxicab. When the people were approached by salesmen, most of the "customers" said they wanted to see Mr. Sterling. Several asked to see Mr. Harris. Many of the customers milled around the showroom floor waiting for either Silverstein or Harris to take care of them. All sales of automobiles were for cash.

Defendant Leo Rugendorf was present greeting customers. He previously had visited Sterling-Harris Ford, Inc. two or three times a week during January and February of 1961. After greeting customers, Rugendorf took them to Sterling's office. Rugendorf was heard telling customers "Mr. Sterling needed the money and the customer needed a car."

Silverstein remained in his office writing out bills of sale to the customers. When they left Silverstein's office, Rugendorf took them into the rear service area from which the customers drove off in new Ford vehicles.

The sale of motor vehicles, as hereinbefore described, continued on March 3, 1961 from 4 p. m. to 9 p. m. None of the salesmen of the Company was able to make any sales or to discuss possible orders.

On Saturday, March 4, 1961, customers again began coming into the agency. If approached by a salesman, they would say "We are waiting to see the boss," or "I would like to see Mr. Sterling," or "We are taken care of."

Rugendorf arrived about 9 a. m. on March 4th and remained for the entire day. He again introduced customers to Silverstein who busied himself all day in his office with customers and writing out bills of sale. Business was so heavy that Silverstein didn't go out to lunch. After the customers left Silverstein's office with bills of sale in their hands, Rugendorf took them into the rear service area from which the customers drove off in new Ford motor vehicles.

On Saturday, Harris was also in his office busy with customers. When the customers left his office, they walked into the service area and drove off in new automobiles.

The sale of motor vehicles as described continued all day Saturday and also on Sunday, March 5, 1961, except that on Sunday, neither Rugendorf nor Rosenberg was observed at the showrooms at 2626 North Cicero Avenue, Chicago, Illinois.

On Monday morning, March 6, 1961, the showroom and the lot on Cicero Avenue were empty of automobiles.

On Friday, March 3, 1961, Sterling caused a corporate check of $10,000 to be cashed. On Monday, March 6, 1961, two additional corporate checks each in the amount of $10,000 were caused to be cashed by Sterling and Harris. On the same morning the cash in the cashbox on the premises contained less than $200.

On March 10, 1961, Silverstein received a check payable to the corporation in the amount of $25,000. This was from the landlord and was for surrendering the showroom premises and the lease. The sum represented a security deposit with the landlord.

The $25,000 check was deposited on March 10, 1961 in a Sterling-Harris Ford, Inc. special account. The deposit was entered as of March 13, 1961. The $25,000 deposit was transferred on March 13, 1961 to the Attorney Korem Special Account. Korem wrote a check on this account to Silverstein in the amount of $7500 dated March 15, 1961, and one dated March 20, 1961 in the amount of $7500 to George Harris. Each check was endorsed by the respective payee.

Out of the balance of $10,000, $5,000 was paid to Attorney Brown and $5,000 was paid to the Trustee in Bankruptcy. However, after turnover proceedings and civil litigation regarding the turnover orders, Harris and Silverstein each delivered $7500 to the Trustee.

On Tuesday, March 7, 1961, Harris was seen driving near a number of automobiles which were on a lot near Park City and Waukegan, Illinois. These cars had been driven there during the night of Sunday, March 5, 1961, from the Sterling-Harris automobile warehouse on Fullerton Avenue, Chicago. The arrangements to transport the cars were made by one Casey Swieringa and government witnesses Hamphton and Lipken. Swieringa was an auctioneer for one Bembinster who owned an automobile auction at Wausau, Wisconsin.

On Monday, March 6, 1961, all four defendants were in a room in the Schroeder Hotel in Milwaukee, Wisconsin. By pre-arrangement, they were to meet Swieringa and some men who would buy the automobiles wholesale. Swieringa came into the room with Bembinster and the latter's clerk. Bembinster spoke of buying the one hundred fifteen automobiles for $115,000, but upon learning the cars were financed, expressed concern that he could not obtain good title. Bembinster had spoken with Attorney Thompson who represented Thorpe Finance Company, which company was supposed to finance the deal.

Bembinster told the group that the "Finance Man" would not approve the transaction and the deal was off. Bembinster then left the hotel and went to the airport where he saw defendants Rugendorf, Rosenberg and Silverstein. Harris was not present. Rugendorf and Rosenberg proposed that they go into partnership with Bembinster and sell the cars at auction, dividing the proceeds.

On Tuesday, March 7, 1961, Associates took possession of the one hundred twelve cars on the lot at Park City, Illinois. Involuntary bankruptcy proceedings were filed on March 13, 1961. Silverstein was questioned by the Receiver-Trustee concerning the automobiles or the money received from the sale thereof, but he did not answer the questions. Neither Harris nor Silverstein informed the Receiver-Trustee in Bankruptcy where any of the corporate cash or books were located.

All defendants complain of the form of the indictment claiming a misjoinder of counts 1 and 2, and alleged multiplicity as to counts 3 through 13.

Rule 8(a), Federal Rules of Criminal Procedure, provides that "Two or more offenses may be charged in the same indictment * * * if the offenses charged * * * are of the same or similar character or are based on the same act or transaction or on two or more acts or transactions connected together or constituting parts of a common scheme or plan." We hold that the trial court did not err when it refused to dismiss the indictment for misjoinder of counts 1 and 2.

The writer of this opinion thinks a different situation is presented with reference to counts 3 to 13 in that they were duplicitous, and that the Government should have been required to elect. However, a...