United States v. Hoffa

• Decision Date: 28 November 1966
• Docket Number: No. 14892-14898.,14892-14898.
• Citation: 367 F.2d 698
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. James R. HOFFA, Benjamin Dranow, Zachary A. Strate, Jr., S. George Burris, Abe I. Weinblatt, Calvin Kovens, and Samuel Hyman, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

367 F.2d 698 (1966)

UNITED STATES of America, Plaintiff-Appellee, v. James R. HOFFA, Benjamin Dranow, Zachary A. Strate, Jr., S. George Burris, Abe I. Weinblatt, Calvin Kovens, and Samuel Hyman, Defendants-Appellants.

Nos. 14892-14898.

United States Court of Appeals Seventh Circuit.

October 4, 1966.

Rehearing Denied November 28, 1966.

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Maurice J. Walsh, Anna R. Lavin, Chicago, Ill., Morris A. Shenker, St. Louis, Mo., Frank Ragano, Tampa, Fla., George F. Callaghan, Richard E. Gorman, Chicago, Ill., Jacques M. Schiffer, Rockville Center, N. Y., Charles A. Bellows, George J. Cotsirilos, Prentice H. Marshall, Chicago, Ill., for appellants.

Raymond E. LaPorte, Tampa, Fla., for appellant Dranow.

Howard W. Minn, Chicago, Ill., Jason E. Bellows, Sherman C. Magidson, Chicago, Ill., of counsel, for appellant Weinblatt.

Donald Page Moore, Atty., Dept. of Justice, Fred M. Vinson, Jr., Asst. Atty. Gen., Washington, D. C., Edward V. Hanrahan, U. S. Atty., Chicago, Ill., Jerome Feit, Atty., Dept. of Justice, Washington, D. C., William O. Bittman, James Canavan, Thomas J. McTiernan, William E. Ryan, Washington, D. C., of counsel, for appellee.

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

DUFFY, Senior Circuit Judge.

The appellants herein were indicted on June 4, 1963, on twenty-eight counts. The first twenty-seven counts charged substantive violations of the mail and wire fraud statutes (18 U.S.C. §§ 1341, 1343). The twenty-eighth count charged a conspiracy to commit the substantive offenses. The jury convicted all appellants on the conspiracy count, and each appellant on certain of the substantive counts.

The Court directed a judgment of acquittal of all defendants on Counts 2, 5, 11, 26 and 27. The Government dismissed Counts 10 and 18.

Except for the interstate transmission or mailing involved, the allegations of each of the first twenty-seven counts are, for all practical purposes, identical, alleging the same scheme to defraud the Central States, Southeast and Southwest Areas Pension Fund, often referred to in the record as the Teamsters Pension Fund or just the Pension Fund.

The indictment charged and the proof showed that defendant James R. Hoffa was president of the Teamsters International Union,¹ president of Local 299 of the Teamsters Union in Detroit,² and also a trustee of the Teamsters Pension Fund.

The indictment charged that the defendants conspired and did "devise a scheme and artifice to defraud the Pension Fund * * * by means of false and fraudulent pretenses, representations and promises by submitting false and misleading statements of material fact and by concealing material facts in order to obtain loans from the Pension Fund; and diverting, through various fraudulent devices, substantial amounts of the loan proceeds for their personal use and benefit."

The indictment described the alleged scheme in some detail including the following: Defendants Dranow and Burris contacted prospective loan applicants and obtained employment as their agents for procuring Pension Fund loans. Dranow and Burris induced the prospective loan applicants to retain them by holding themselves out as being in a specially favored position to obtain Pension Fund loans because of their special relationship with defendant Hoffa. Hoffa and Kovens referred some of these prospective loan applicants to Dranow and Burris. Among the loan applicants involved were defendants Strate and Hyman.

The indictment further charged that Dranow, Burris, Strate, Hyman and Kovens participated in the preparation and submission of inflated loan applications to the Pension Fund; that these applications contained material falsifications and concealed material facts and that defendant Hoffa made misrepresentations to and concealed material facts from the trustees and staff members of the Fund.

The indictment further alleged that all of the defendants enriched themselves by causing more than $1,000,000 of the fraudulently obtained loan proceeds to be diverted to purposes other than those approved by the Pension Fund trustees. In addition, the defendants, by their participation in the scheme, allegedly obtained stock options, fees and contracts for services, construction fees, and ownership and control of borrowing corporations.

The indictment charged that in disposing of some of the diverted loan proceeds, the defendants applied more than $100,000 to the repayment of debts incurred by Sun Valley, Inc., a Florida real estate corporation, in which Hoffa had a substantial secret interest. Repayment of these debts enabled Sun Valley to extricate itself from reorganization proceedings under Chapter X of the Bankruptcy Act. Included among the Sun Valley debts that the diverted proceeds assisted in repaying was $400,000 owed by Sun Valley to a Florida bank. Repayment of this Sun Valley debt enabled Hoffa to withdraw from the Florida bank $400,000 of Teamster money which Hoffa had deposited in a non-interest-bearing account at the bank as security for the bank's $400,000 loan to Sun Valley.

Separate counts of the indictment contained allegations of the mailings, telegrams and telephone calls by which the alleged scheme was furthered. The indictment concluded by charging that all of the defendants conspired together to devise and carry out the scheme.

At the trial, the Government presented testimony and documentary evidence tending to prove the charges made in the indictment. As often happens, where a number of defendants are charged and convicted of participating in a conspiracy, counsel for appellants will present their arguments based largely on testimony favorable to or given by their clients, while completely ignoring other testimony of a contrary nature. They will, perhaps, give lip service to the well-established doctrine and rule that in resolving the issue of sufficiency of the evidence to sustain a conviction, an appellate court must view the evidence and the reasonable inferences which may be drawn therefrom in the light most favorable to the Government. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680; United States v. Mims, 7 Cir., 340 F.2d 851, 852. But, after giving such lip service, the rule often is ignored. We feel that is true in the instant case.

The Government offered proof which was received in evidence as to a number of specific transactions in which various of the defendants were involved. In all of these transactions except No. 1, loans were made by the Teamsters Pension Fund. These transactions were designated as:

1. The Florida Bank-Sun Valley transactions;

2. The Connelly-Everglades transactions;

3. The Strate-Pelican-Fontainebleau transactions;

4. The Hyman-Key West Foundation transactions;

5. The First Berkeley transactions;

6. The Kovens-Sager-Good Samaritan Hospital transactions;

7. The Kipnis-Causeway Inn transactions;

8. The Simon-Airport Hotel transactions;

9. The Strecker-4306 Duncan transactions; and

10. The Dioguardi-Club 300 loan.

Within the limits of this opinion it is not practical to discuss in any detail all of the various transactions hereinbefore listed, nor the part played in each by the various defendants. Therefore, we shall not refer in detail to more than two of these transactions.

The Government offered proof which tended to show that the scheme or conspiracy commenced in 1958 when defendant Hoffa began his efforts to rescue Sun Valley, Inc. from insolvency and thus, so the Government argues, to protect himself from possible charges that he had been misusing Union funds.

Sun Valley, Inc. was a real estate promotion in Florida. It was planned that lots in the Sun Valley project would be sold to members of the Teamsters Union as well as to others. Henry Lower, a former Teamster employee, was the president of Sun Valley. Hoffa promoted Sun Valley lot sales at Teamster meetings and had an option to purchase 45% of the Sun Valley stock. Hoffa also had countersigned $75,000 worth of Sun Valley notes of which a total of $25,000 were outstanding and unpaid. He also owned a number of lots within the project.

After Henry Lower's death, an instrument bearing Hoffa's signature was found in a cookbook in Lower's desk by his son. This document disclosed that Lower held 22½% of Sun Valley stock in secret trust for Hoffa. Although Hoffa denied that it was his signature on the document, handwriting experts at the trial testified that it was genuine.

In 1956, Sun Valley was in need of funds. The property was mortgaged. When Sun Valley applied to the Florida National Bank for loans, the bank insisted that Hoffa's local Union No. 299, at all times, maintain on deposit in the bank, a restricted non-interest-bearing account, in a sum equal to the amount of the Sun Valley borrowings. Hoffa then deposited money belonging to the Union and the bank immediately made loans to Sun Valley equalling the amount of the Union deposits.³

From July 1958 to July 1960, Sun Valley, being unable to meet its bills, was involved in a reorganization proceeding under Chapter X of the Bankruptcy Act. During this period, Sun Valley owed Florida National Bank $399,000 and Hoffa's Detroit Local had $400,000 tied up in the "restricted" account at the bank. On three occasions during 1959, Hoffa tried to withdraw the Detroit Local's $400,000 but the bank would not honor the checks.

Under the heading "The `Bail-Out' Effort Begins," the Government cites negotiations with one Sanson, and offered proof to show that Sanson, a Florida business man, had a large loan application pending before the Teamsters Pension Fund trustees. In the summer of 1958, Dranow told Sanson that his loan would be put through if Sanson paid a substantial "fee" to him. Sanson agreed to do so, but told Dranow that the "fee" would be paid by check which would contain an explicit reference to the true purpose of the check. Apparently Dranow then lost interest and...