United States v. Hersey

• Court: U.S. District Court — District of Massachusetts
• Citation: United States v. Hersey, 288 F. 852 (D. Mass. 1923)
• Decision Date: 11 April 1923
• Docket Number: 3607.
• Parties: UNITED STATES v. HERSEY et al.

288 F. 852

UNITED STATES v. HERSEY et al.

No. 3607.

United States District Court, D. Massachusetts.

April 11, 1923

Essex Abbott, of Boston, Mass., for the United States.

S. A Gilbert Cox, of Boston, Mass., for defendant Bernard.

Chas H. Innes, of Boston, Mass., for defendant Gilcreast.

Robert G. Dodge, of Boston, Mass., for defendants Ball, Cadwell Flint, Gudebrod, Blaisdell, and Inman.

Henry V. Cunningham, of Boston, Mass., for defendant Clements.

MORTON District Judge.

This is an indictment for using the mails in a scheme to defraud. The defendants have demurred upon the ground that no offense is charged. The indictment alleges in substance that the defendants engaged in a scheme to defraud persons by selling to them stock in the Petroleum Corporation of America by means of certain false and fraudulent statements and representations concerning said corporation which are set out in the indictment. There is no allegation that the stock sold was in fact worth less than the price received for it. It is upon this ground principally that the demurrer is based.

The contention of the defendants is that, although fraudulent misrepresentations were made by them about the stock, it may nevertheless have been worth as much as was paid for it, and that, if so, the purchasers were not defrauded. This view finds support in Miller v. U.S., 174 F. 35, 98 C.C.A. 21 (C.C.A. 7th), and U.S. v. Schwarz, 230 F 537 (D.C. Cal.) The contention of the government is that there was a scheme to defraud, within the meaning of the statute, if the defendants intended to effect sales of stock by fraudulent misrepresentations concerning it, regardless of whether the stock was intrinsically worth the price actually received for it. In other words, the defendants contend that a person is not defrauded by a transaction in which he has not lost anything, while the government contends that a scheme to procure sales of stock by fraudulent misrepresentations is a scheme to defraud, regardless of whether the purchaser lost by the transaction. The government's contention is fully supported by Wilson v. U.S., 190 F. 427, 111 C.C.A. 231, in which the court said:

'But whatever may be the rule in civil cases, we are satisfied that damage is not made an essential element of the federal statutory offense of using the mails to execute a scheme or artifice to defraud. We are of the opinion that a scheme or artifice is established by

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