United States v. Light

• Decision Date: 16 May 1968
• Docket Number: Docket 31232.,No. 318,318
• Citation: 394 F.2d 908
• Parties: UNITED STATES of America, Appellee, v. Michael LIGHT, Michael F. Dermer, Arthur Kapplow, Hugh Strump and Charters & Co. of Miami, Inc., Appellants.
• Court: U.S. Court of Appeals — Second Circuit

394 F.2d 908 (1968)

UNITED STATES of America, Appellee, v. Michael LIGHT, Michael F. Dermer, Arthur Kapplow, Hugh Strump and Charters & Co. of Miami, Inc., Appellants.

No. 318, Docket 31232.

United States Court of Appeals Second Circuit.

Argued March 18, 1968.

Decided May 16, 1968.

Stephen L. Hammerman, Stephen F. Williams, James D. Zirin, Pierre N. Leval, Asst. U. S. Attys., Robert M. Morgenthau, U. S. Atty., for appellee.

Richard Harbus, New York City, for appellants.

Before LUMBARD, Chief Judge, FRIENDLY, Circuit Judge, and CLARIE, District Judge.^*

CLARIE, District Judge:

The appellants were convicted, by a jury, of having conspired, in violation of 18 U.S.C. § 371, to violate specified sections of the Securities Act of 1933, 15 U.S.C. §§ 77q(a) and 77x and the mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343. Sentences were imposed ranging from a fine of $10,000 to three years imprisonment and a committed fine of $2,500.¹ The indictment contained forty-one counts, but the appellants were named only in the first count. The remaining counts charged six other defendants and co-conspirators with fraud² in the sale of stock to the public. The judgment of the trial court is affirmed.

Appellants Kapplow, Dermer and Strump were officers of Charters and Co., Inc. (Charters), a Miami, Florida securities brokerage. Appellant Light was not an officer or stockholder in Charters but was one of its biggest customers. The government's evidence introduced at trial disclosed the existence of an involved scheme, whereby the price of stock in two nearly defunct corporations, Bankers Intercontinental Investment Co., Ltd. (Bankers) and Florida Patsand (Patsand) was artificially inflated and the stock sold to the public; proceeds from the profits were kicked back to the dealers, Charters and Broadwall Securities, Inc. (Broadwall), a New York broker-dealer. The appellants had originally arranged with Robert Evans, the principal stockholder of Bankers, to have the quoted bids for that stock placed on the National Daily Stock Quotation Service's "pink sheets" and gradually manipulated upward. The stock was then to be marketed to the public through Broadwall in return for a cash kick-back, from Bankers to Charters, which was initially set at 33 1/3%, and later increased to 40%, of the sales price. In return for its services, Broadwall was to receive a 30% cash kick-back from Charters. To implement this plan a financial report of Bankers had been prepared which falsely described the company as engaging in a number of profitable businesses and having substantial earnings. This report carried the name of a reputable Nassau accounting firm so as to impart to it an aura of authenticity. In December of 1964, however, the Securities Exchange Commission began an investigation into the widespread activity in Bankers stock and appellants decided to stop promoting its sale and change to another stock. This new stock was Patsand. Appellant Light had managed to acquire a large amount of Patsand stock and, after arrangements were made with Broadwall, this stock was begun to be sold to the public under a similar pattern of kick-backs and price raising.

Appellants all testified in their own defense. They denied any participation in the kick-back scheme, either in making or receiving payments, or agreeing to do so. They admitted the occurrence of many of the meetings and transactions testified to by government witnesses, but contradicted the government version of what went on at these meetings and what the transactions represented.

I. The Charge

Appellants' first claim of error involves the alleged failure of the trial judge to marshal fairly the evidence in his charge. They contend that the Court's review of the evidence against each defendant in turn, rather than in the order in which it was presented, was indicative of a partisan and biased attitude in favor of the prosecution. In charging the jury in this case, the trial judge was faced with the monumental task of summarizing the large volume of evidence adduced during a long and complex trial, in which well over one hundred exhibits were introduced and two thousand pages of testimony taken. He had the all too familiar problem in multi-defendant conspiracy cases of selecting that evidence which would most likely aid the jury in putting the case in perspective while at the same time eliminating much of the evidence, the inclusion of which would render his charge unwieldy and confusing. It is axiomatic that a trial judge in a criminal case must use the utmost care not to give the jury the impression that he is partisan to either side. United States v. DeSisto, 289 F.2d 833 (2d Cir.1961). However, it is also true that in a long trial in which the prosecution has introduced far more evidence than the defense, the judge is not required to devote equal time in his summary to both the defense and the prosecution. United States v. Edwards, 366 F.2d 853, 868 (2d Cir. 1966), cert. denied, 386 U.S. 966, 87 S. Ct. 1048, 18 L.Ed.2d 117 (1967); United States v. Dardi, 330 F.2d 316, 330 (2d Cir.1964), cert. denied, 379 U.S. 845, 85 S.Ct. 50, 13 L.Ed.2d 50 (1964); United States v. Kahaner, 317 F.2d 459, 476 (2d Cir.1963), cert. denied, 375 U.S. 836, 84 S.Ct. 74, 11 L.Ed.2d 65 (1963). The trial judge exercises broad discretion in determining what evidence he will comment upon and as long as he does not invade the province of the jury, or adopt the role of an advocate, no error will be found in his failure to mention all of the evidence favorable to the defense. See, United States v. Bentvena, 319 F.2d 916, 940 n. 14 (2d Cir.), cert. denied, 375 U.S. 940, 84 S.Ct. 345, 11 L.Ed.2d 271 (1963). The trial judge included throughout his charge the usual admonitions that the jurors were the exclusive finders of fact, that they should consider all of the evidence, and that he should not influence them. Moreover, after having completed his charge and received the appellants' exceptions and additional requests, in an abundance of caution, he gave this supplementary instruction:

"Ladies and gentlemen, I have not reviewed all of the evidence in this case. If I had tried to do that, I would have been here a much longer time than I have. I want to emphasize that all of the evidence in the case is before you; * * *.

"You must not feel that I have in any way attempted to select out evidence and cover up other evidence. That has not been my purpose. I have tried to be helpful to you, but always with that utmost and sincere respect for your exclusive fact finding function * * *."

We find no abuse of discretion in the Court's marshaling of the evidence. Nor was it improper for him to review the evidence pertaining to each defendant in turn, having in mind the duty of the trial judge in multi-defendant cases to make the jury constantly aware that separate individuals are on trial and each must be judged solely on the evidence against him. United States v. Agueci, 310 F.2d 817, 840, 99 A.L.R. 2d 478 (2d Cir. 1962), cert. denied, 372 U.S. 959, 83 S.Ct. 1016, 10 L.Ed.2d 12 (1963).

Appellants also complain that the trial judge erroneously charged that they had denied any kickbacks were made in connection with the sales of Bankers and Patsand stock, while they only had denied that they made any agreement to receive or had received kickbacks themselves. They claim that in view of the substantial evidence in the case that Broadwall and its salesmen had received kickbacks, the charge prejudiced defendants by leaving the jury with no choice but to assume defendants were lying. Having reviewed the charge in its entirety, we find no such prejudice. Whatever incorrect impressions might have been imparted to the jury by the two short sentences which appellants cite to support their argument³ were dispelled by the trial judge's statements, as he reviewed the testimony of each defendant, that such defendant was denying his own participation.⁴ The jury were alerted to the possibility that they could acquit any one or more of the appellants because of lack of personal participation and still find that a fraudulent scheme, including kickbacks, had existed.

The third claim of error with respect to the charge stems from the misstatement by the judge of the factual pattern concerning Bankers stock. The jury was charged that on October 23, 1964, appellant Light sold 1900 shares of Bankers to Charters, whereas this transfer actually took place on two separate days; 1,000 shares on October 23, and 900 shares twelve days later on November 4. Appellants urge that had the Court correctly stated that two separate transactions were involved, the jury could have more readily found that the sales were made in the ordinary course of business rather than as part of the conspiracy. We fail to see how this trivial factual mistake could have seriously affected the defense here, especially in view of the Court's clear instruction that it was the recollection of the jury in this respect which was controlling.

II. The Refusal of the Trial Court to Strike the Rebuttal Testimony

The government called Doctor Felix Fudge, a customer of Charters, as a rebuttal witness. He testified as to two of Charters' checks, payable to Michael Light, each in the amount of $3,000, which were endorsed to Fudge's order, and deposited in the latter's account at Charters. Light had testified that the checks represented loans from himself to Fudge. The latter, however, not only disclaimed any knowledge of the checks, but denied ever having borrowed from Light. Three other checks were also offered, which were payable to Fudge and endorsed with his purported signature, and deposited in Charters' account. Fudge testified that these signatures were not his and that he had authorized no one at Charters to sign his name. Appellants moved to have this testimony stricken as it imputed to them the commission of larceny and forgery, both felonies, and collateral to the crime...