United States v. Kahn

• Decision Date: 12 September 1967
• Docket Number: No. 15665-15667.,15665-15667.
• Citation: 381 F.2d 824
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. S. Lawrence KAHN, Arthur B. Sachs and M. Prial Curran, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

381 F.2d 824 (1967)

UNITED STATES of America, Plaintiff-Appellee, v. S. Lawrence KAHN, Arthur B. Sachs and M. Prial Curran, Defendants-Appellants.

Nos. 15665-15667.

United States Court of Appeals Seventh Circuit.

June 29, 1967.

Rehearing Denied September 12, 1967.

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Richard E. Gorman, Anna R. Lavin, William T. Kirby, Don H. Reuben, Lawrence Gunnels, John E. Angle, of Kirkland, Ellis, Hodson, Chaffetz & Masters, Thomas W. Bloss, of Hubachek, Kelly, Miller, Rauch & Kirby, Chicago, Ill., for appellants, Arthur B. Sachs and M. Prial Curran.

Edward V. Hanrahan, U. S. Atty., Michael B. Nash, Asst. U. S. Atty., Chicago, Ill., for appellee, John Peter Lulinski, Richard G. Schultz, Lawrence Jay Weiner, Asst. U. S. Attys., of counsel.

Before HASTINGS, Chief Judge, and SWYGERT and FAIRCHILD, Circuit Judges.

Rehearing Denied September 12, 1967, en banc.

HASTINGS, Chief Judge.

We consider separate appeals by S. Lawrence Kahn, Arthur B. Sachs and M. Prial Curran from their convictions, following a jury trial in the district court, upon jury verdicts of guilty.

Kahn, and Sachs and Curran, attorneys for Kahn, were indicted with others as conspirators in a scheme to illegally use moneys of a number of federally insured banks and savings associations for their personal benefit. In addition to the conspiracy count, the defendants were charged in a number of other counts as principals or as aider-abettors in illegally misapplying funds deposited in federally insured institutions.¹

Kahn and Sachs were each sentenced to serve five years on a number of separate counts of the indictment, the sentences to run concurrently. Curran was sentenced to two years on each of a number of counts, the sentences to run concurrently.

The sufficiency of the evidence is not challenged. Since we are not required to review the evidence for its sufficiency, only the essential nature of the Government's case need be shown.

The evidence put on by the Government, which the jury could have believed, tended to show that this was a case of untrustworthy men in trust; of loans without security, mortgages without property, checks without funds; of grossly unrealistic appraisals of real estate; of emptied banks acquired for their tills; of furtive manipulation and deceit. All this, in an accelerating necessity of acquisition, by taking from one bank as Peter to pay another as Paul, a pace in front of examiners, and a suspicion ahead of interested parties, to the ultimate benefit of defendants.

On appeal, defendants contend that the trial court committed error in many respects. Sachs and Curran urge that the indictment is fatally defective in its substantive counts as well as in its conspiracy count. They claim that the trial court gave a prejudicial credibility instruction and that they were prejudiced by the trial court's failure to give a "La Buy" instruction concerning lying witnesses. They further contend that the trial court should have granted a mistrial when a co-defendant, Thomas Joyce, pleaded guilty in the early stages of the trial as an aider and abettor. Finally, they assert that prejudicial error was committed by the trial court's refusal to grant them a severance from Kahn.

In Kahn's appeal, in addition to the above contentions respecting the defectiveness of the indictment, the joinder of defendants and the mistrial upon Joyce's plea of guilty, which he also urges, Kahn claims that there was an improper joinder of counts, that the trial court erred in not giving a certain instruction as his theory of defense, and that irrelevant and immaterial evidence was wrongly admitted at trial.

Sufficiency of the Indictment

At the outset of our consideration, we note that we do not suffer the inability of the antique common law "to understand or accept a pleading that did not exclude every misinterpretation capable of occurring to intelligence fired with a desire to pervert." Paraiso v. United States, 207 U.S. 368, 372, 28 S. Ct. 127, 129, 52 L.Ed. 249 (1907). Indictments are read for their clear meaning, and convictions are not reversed because of minor deficiencies which did not prejudice the accused. Smith v. United States, 360 U.S. 1, 9, 79 S.Ct. 991, 3 L.Ed.2d 1041 (1959).

It is not necessary in a conspiracy indictment to allege with precision all the elements essential to the offense which is the object of a conspiracy; allegations clearly identifying the offense defendants conspired to commit are sufficient. Wong Tai v. United States, 273 U.S. 77, 81, 47 S.Ct. 300, 71 L.Ed. 545 (1927).

The test for the sufficiency of an indictment is "whether it contains the elements of the offense intended to be charged, `and sufficiently apprises the defendant of what he must be prepared to meet, and, in case any other proceedings are taken against him for a similar offense, whether the record shows with accuracy to what extent he may plead a formal acquittal or conviction.'" Hagner v. United States, 285 U.S. 427, 431, 52 S.Ct. 417, 419, 76 L.Ed. 861 (1932); United States v. Airdo, 7 Cir., 380 F.2d 103 (June 19, 1967).

The last two conditions of the test are not equivalent to the first, for the first establishes what must be proved, that combination of elements without which there is no crime alleged. Whether the elements are sufficiently alleged does not depend upon nice attention to technicality or formulistic recitals. "Upon a proceeding after verdict at least, no prejudice being shown, it is enough that the necessary facts appear in any form, or by their fair construction can be found within the terms of the indictment." Hagner v. United States, supra 285 U.S. at 433, 52 S.Ct. at 420. Cf. Rule 52(a), Federal Rules of Criminal Procedure, 18 U.S.C.A.

While Hagner may be distinguished by the fact that it was concerned with a post verdict attack upon an indictment, its reasoning is applicable to indictments attacked before verdict, as long as no prejudice to defendants is shown in the indictment.

It is, however, in an asserted incomplete allegation of elements that defendants attack the sufficiency of the indictment.

The defendants contend that the first count of the indictment, the conspiracy count, is fatally defective because it contains no allegation that any of the alleged conspirators was connected in any capacity with any of the institutions named in the count.

Count I, brought under § 371, 18 U.S. C.A., alleges a conspiracy to violate §§ 656, 657, 1001, 1005, and 1006, 18 U.S. C.A. Of these statutes, only § 371, which prohibits conspiracy to commit an offense or to defraud the United States, and § 1001, which relates to false and fraudulent statements, do not require that the alleged offender be "an officer, agent or employee of or connected in any capacity" with federally authorized or protected financial institutions. The substantive count of the indictment relating to § 1001, count XVIII, was dismissed. Defendants assert, therefore, that the § 1001 reference in count I cannot cure the failure of the count to allege the requisite capacity called for in the remaining four substantive statutes.

Count I, however, does allege that defendants controlled the management and operation of certain named financial institutions. In addition, it alleges certain overt acts in furtherance of the conspiracy; and some of the charged overt acts note certain official connections with the financial institutions named in the indictment.

These read as follows:

"3. On or about November 1, 1962 at Chicago, Illinois, S. Lawrence Kahn presided at a meeting of the Executive Committee of the Chatham Bank of Chicago.

* * * * * *

"10. On or about December 20, 1962 M. Prial Curran executed an escrow agreement as escrow agent for Chatham Bank of Chicago relating to the sale of permanent reserve shares of Equitable Savings and Loan Association.

* * * * * *

"14. On or about February 19, 1963 at Chicago, Illinois Rudy Weinberg was elected Secretary-Treasurer and Arthur B. Sachs appointed General Counsel of Equitable Savings and Loan Association by the Board of Directors of Equitable Savings and Loan Association." Emphasis added.

Defendants, however, citing Pettibone v. United States, 148 U.S. 197, 13 S.Ct. 542, 37 L.Ed. 419 (1893); Brenner v. United States, 2 Cir., 287 Fed. 636 (1922); United States v. Devine's Milk Laboratories, Inc., D.Mass., 179 F.Supp. 799 (1960), assert that allegations of overt acts cannot cure an inadequacy in a conspiracy indictment.

In Pettibone, supra 148 U.S. at 203, 13 S.Ct. at 545, the Supreme Court said:

"* * * the conspiracy must be sufficiently charged, and cannot be aided by averments of acts done by one or more of the conspirators in furtherance of the object of the conspiracy."

The strictness of Pettibone was eroded, however, in Hyde v. United States, 225 U.S. 347, 32 S.Ct. 793, 56 L.Ed. 1114 (1912) where the Court interpreted § 5440 of the Revised Statutes, the present § 371 conspiracy statute, which in its critical language reads exactly as § 5440 did.² It was stated that while at common law it was not necessary to aver or prove an overt act, § 5440 did require, as does § 371, some act to effect the conspiracy. Consequently, an overt act was required to be alleged along with conspiracy to constitute the offense under the federal statute.

Since an overt act is part of the offense, we see no reason why it may not be used to clarify the remainder of the count. This reading of the count as a whole is in accord with modern practice in reading indictments.³ Cf. Smith, supra; Hagner, supra; Rule 52(a), supra. Reading count I of the indictment as a whole, we hold that its allegations of control of management and operation, together with the factual allegations of overt acts, naming or at least intimating each of the defendants to have an official position with some of the financial institutions involved, satisfy the requirement that at least one of...