United States v. Kaiser

• Decision Date: 13 January 1960
• Docket Number: Crim. No. 3756.
• Citation: 179 F. Supp. 545
• Parties: UNITED STATES of America, Plaintiff, v. John C. KAISER, Gordon R. Brasch, Paul N. Crawford, Ralph W. DeVine, Herman Duyvejonck, Thomas M. Downs, Clair R. Hamburg, Edgar A. McDonald, Guy E. Sherman, Charles F. Thorpe, John D. Wilson, and Ernest Woodward, Defendants.
• Court: U.S. District Court — Southern District of Illinois

179 F. Supp. 545

UNITED STATES of America, Plaintiff, v. John C. KAISER, Gordon R. Brasch, Paul N. Crawford, Ralph W. DeVine, Herman Duyvejonck, Thomas M. Downs, Clair R. Hamburg, Edgar A. McDonald, Guy E. Sherman, Charles F. Thorpe, John D. Wilson, and Ernest Woodward, Defendants.

Crim. No. 3756.

United States District Court S. D. Illinois, N. D.

January 13, 1960.

Harlington Wood, Jr., U. S. Atty., Springfield, Ill., for plaintiff.

Winstein & Rimmerman, Rock Island, Ill., for defendants Crawford, Kaiser, Hamburg and Woodward.

John W. Heberling, Rock Island, Ill., for defendants Brasch, Duyvejonck, Sherman and Wilson.

Robert W. Brinn, Rock Island, Ill., for defendant McDonald.

Henry N. Neuman, Davenport, Iowa, for defendant Ralph W. DeVine.

Sinnett, Rink & Coryn, Rock Island, Ill., for defendant Charles F. Thorpe.

MERCER, Chief Judge.

Defendants are charged by indictment with the crime of conspiracy to defraud the United States in violation of Title 18 U.S.C. § 371. That section provides in pertinent part: "If two or more persons conspire * * * to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each" shall be punished as provided therein.

The conspiracy charged is alleged to consist of a scheme by defendants to embezzle a part of the tolls paid by motorists using the Rock Island Centennial Bridge. The indictment alleges that the City of Rock Island, Illinois, constructed that bridge pursuant to an Act of Congress which authorized the City to construct a bridge across the navigable waters of the Mississippi River. That act further permitted the City to fix and collect tolls from the users of such bridge for the purpose of defraying costs of operation and maintenance of the bridge and for amortizing the cost of construction of the bridge itself. The defendants were, at all pertinent times, employed as toll collectors by the Rock Island Centennial Bridge Commission, a municipal corporation, created by the City of Rock Island to operate the bridge, collect tolls, and administer the financial machinery for amortization of cost of construction. The indictment further charges that the City, acting through the Bridge Commission, did fix a schedule of tolls which it was defendants' duty to collect, and for which defendants were duty bound to account. Finally, the indictment alleges that defendants conspired together to embezzle and convert to their own use a part of the tolls received by them from motorists using the bridge and, in furtherance of that scheme, did the overt acts alleged in paragraph 7 of the indictment.

Defendants have moved to dismiss the indictment on various grounds, including the ground that it does not charge an offense against the United States. In the view which I take of the case, we need consider only the latter ground for dismissal.

Paragraph 6 is the meat of the indictment and upon this paragraph the indictment must stand or fall. That paragraph is therefore quoted, in haec verba, to wit:

"6. That on or about July 28, 1954, and for a long time prior thereto, and continuously thereafter up to and including July 28, 1959, said John C. Kaiser, Gordon R. Brasch, Paul N. Crawford, Ralph W. DeVine, Herman Duyvejonck, Thomas M. Downs, Clair R. Hamburg, Edgar A. McDonald, Guy E. Sherman, Charles E. Thorpe, John D. Wilson, and Ernest Woodward, hereinafter referred to as defendants, at, to-wit, said City of Rock Island, in the County of Rock Island, in the State of Illinois, in said Northern Division of said Southern District of Illinois, and at divers other places to the grand jurors unknown, did knowingly, wilfully, wrongfully, fraudulently, and illegally combine, conspire, and confederate together, and with each other, to defraud the United States of America by hampering impeding, hindering, controverting and delaying the accomplishment of the intent and purpose of the several Acts of Congress referred to in paragraphs 1 and 2 of this indictment, which authorized the City to construct, and later to reconstruct, the bridge, to promote interstate commerce, to improve the postal service, to provide for the military, and particularly with the purpose and intent of said Acts of Congress that the said tolls should be utilized in part to accomplish the amortization of the cost of the construction and expansion of said bridge and its approaches as soon as possible, so that payment of tolls by the United States of America, its agents, officers and employees, and others using said bridge, would no longer be required, that is to say:

"(a) It was a part of said conspiracy that the said defendants would and did purloin, embezzle, misappropriate and convert to their own use and benefit, tolls and portions of tolls received by them from transits over said Centennial Bridge; and

"(b) It was a further part of said conspiracy that said defendants would and did falsely report to said Rock Island Centennial Bridge Commission the amount of tolls actually collected for transits over the said bridge and would and did conceal and cover up by trick, scheme, and devise, the amount of the tolls which said defendants, and each of them, had misappropriated to his own use and benefit."

The principal basis for defendants' contention that no crime against the United States is charged, is the averment that the only crime alleged is one to embezzle monies from the City of Rock Island, not from the United States, and the further averment that there is no charge of interference with any governmental function of the United States.

The definitive interpretation of the application of Section 371 is found in Hammerschmidt v. United States, 265 U.S. 182, 44 S.Ct. 511, 68 L.Ed. 968. There it was argued that the phrase "defraud the United States" as used in the statute Section 37, predecessor of Section 371, required a cheating of the government out of some property right or money. That narrow construction of the language was rejected by the Court in the following language, 265 U.S. at page 188, 44 S.Ct. at page 512: "To conspire to defraud the United States means primarily to cheat the government out of its money, but it also means to interfere with or to obstruct one of its lawful governmental functions by deceit, craft, trickery, or at least by means that are dishonest." There are numerous reported cases which construe the phrase "defraud the United States," to the effect that the statute penalizes any conspiracy to defraud the government either of a property interest or by obstructing some lawful function of the government. E. g., Wolf v. United States, 7 Cir., 283 F. 885, certiorari denied 260 U.S. 743, 43 S.Ct. 164, 67 L.Ed. 492; United States v. Klein, 2 Cir., 247 F.2d 908, 916; Heald v. United States, 10 Cir., 175 F.2d 878, certiorari denied 338 U.S. 859, 70 S.Ct. 101, 94 L.Ed. 526; Berenbeim v. United States, 10 Cir., 164 F.2d 679, certiorari denied 333 U.S. 827, 68 S.Ct. 454, 92 L. Ed. 1113; Fowler v. United States, 9 Cir., 273 F. 15; Cendegarda v. United States, 10 Cir., 64 F.2d 182; Outlaw v. United States, 5 Cir., 81 F.2d 805.

No case is found which has exceeded the limits of the Hammerschmidt rule in sustaining a conspiracy indictment. To constitute a crime against the United States the acts alleged as a violation of Section 371 must have as their purpose either a purpose to defraud the government of some property right or pecuniary interest or a purpose to obstruct or defeat some lawful function of the government, or a department, or agency thereof. In my opinion those limits should not, and cannot, be expanded. Unless this indictment reasonably charges a scheme to defraud the United States of some pecuniary interest or a scheme to obstruct some lawful function of the United States, the indictment should not be dignified by judicial recognition.

To find a peg upon which to hang this indictment, the government relies on the language of the enabling act which provides that tolls might be charged and adjusted to provide a fund sufficient to pay for the cost of maintaining, operating, and repairing the bridge and to establish a sinking fund for the amortization of the costs of construction thereof, and, further, that after a sinking fund of sufficient size to amortize the costs of the bridge had been established, the bridge should thereafter, be toll free. The government recites that provision and seeks to hang a governmental interest upon the congressional purpose, or hope, that some day the bridge will be toll free. The government says, first, the hope that some day the bridge would be toll free for its use, as well as for the use of other persons, is a governmental property right which is infringed by the alleged embezzlement by defendants of tolls collected from users of the bridge. It says, secondly, that the provision for a...