United States v. Mahler

• Decision Date: 26 July 1966
• Docket Number: No. 467,Docket 30374.,467
• Citation: 363 F.2d 673
• Parties: UNITED STATES of America, Appellee, v. Arnold N. MAHLER, Appellant.
• Court: U.S. Court of Appeals — Second Circuit

363 F.2d 673 (1966)

UNITED STATES of America, Appellee, v. Arnold N. MAHLER, Appellant.

No. 467, Docket 30374.

United States Court of Appeals Second Circuit.

Argued June 17, 1966.

Decided July 26, 1966.

COPYRIGHT MATERIAL OMITTED

Arthur Levine, New York City, for appellant.

Stephen L. Hammerman, New York City (Robert M. Morgenthau, U. S. Atty. for Southern Dist. of New York, Michael F. Armstrong, Jack Kaplan, Asst. U. S. Attys., on the brief), for appellee.

Before HAYS, ANDERSON and FEINBERG, Circuit Judges.

FEINBERG, Circuit Judge:

Appellant was convicted below of knowingly giving false testimony to Securities and Exchange Commission ("SEC") investigators, and of conspiring to do the same, under 18 U.S.C. §§ 371, 1001 (1964). He was sentenced to two years' imprisonment on each count, the sentences to run concurrently. We affirm.

There is no attack on the overall sufficiency of the evidence, and a brief background statement will clarify appellant's principal contention, which relates to an overt act. The jury could have found the following facts from the government's case: Appellant owned and controlled Broadwall Securities, Inc., a brokerage firm engaged in the public sale of securities. In late October 1964, appellant met with members of another brokerage firm in Miami. It was there agreed that the latter would supply Broadwall with stock of Bankers Intercontinental Investment Co., Ltd., and that Mahler would take care of selling it to the public; a substantial "kickback" for each share sold would go to Broadwall. In early November, appellant informed Broadwall's cashier-bookkeeper, Jack Einiger, of the mechanics of the kick-back arrangement. Appellant then told his five salesmen that they would receive an "under-the-table" cash bonus of 17-20% of the sales price for each share of the stock they sold. For the six weeks ending December 11, 1964, Broadwall's salesmen sold this stock almost exclusively, charging their customers a normal commission based on the minimum New York Stock Exchange rate. In addition to their normal pay, the salesmen received from Mahler the promised cash bonus, which amounted to a total of over $27,000 for the six-week period. All of these transactions were carefully reviewed each week by Mahler, the salesmen, and the bookkeeper; Mahler instructed the latter to destroy records of the under-the-table payments, and warned the salesmen to conceal the payments by putting the cash in bank vaults and not telling anyone they had been paid in cash. On December 11, 1964, appellant was subpoenaed to testify before SEC investigators. He met with the bookkeeper and the salesmen before testifying on that same day and again immediately afterwards. In his testimony under oath to the SEC investigators, appellant stated that he was paying his salesmen only the regular commission reflected on a customer's confirmation; he denied under-the-table payments. After his SEC appearance, appellant told the others about his testimony and advised them that there would be no problems so long as everybody "stuck together." On December 21, the others were served with SEC subpoenas, and Mahler repeated his advice. On December 23, the bookkeeper and four salesmen testified before the SEC investigators. Two salesmen denied that they had received additional compensation for selling the stock; the bookkeeper testified that he was unaware of whether this was so.

Five overt acts were alleged in the conspiracy count (count one) of the indictment; one was Mahler's testimony on December 11, 1964; three of the remaining four were the just-mentioned testimony of the bookkeeper and the two salesmen on December 23, 1964. The remaining overt act was the testimony of another salesman, but was not proved at trial. Count one named Mahler, the bookkeeper, and three salesmen as defendants and alleged that they and two other salesmen (named only as co-conspirators) conspired "from, on or about" December 11, 1964, up to December 28, 1964, to violate 18 U.S.C. § 1001. Prior to trial, all defendants but Mahler pleaded guilty to count one.

Appellant's first argument is that submission to the jury of overt act one, appellant's SEC testimony, was an error requiring reversal. Appellant claims that the evidence shows, as a matter of law, that any conspiracy to give false testimony to the SEC could not have been formed until after Mahler testified on December 11; therefore, Mahler's testimony could not have been in furtherance of that conspiracy. Since there is no way of determining whether the jury reached its verdict solely because of overt act one, appellant concludes that the verdict cannot stand. The government replies that the point was never raised at trial and, therefore, should not be considered now, that any error was harmless because overt acts three, four and five were clearly established, and that, in any event, the conspiracy alleged was in existence prior to Mahler's testimony on December 11.

We feel that the last point is the most telling and is dispositive. There is no doubt from the evidence that the kickback scheme was in operation well before December 11, and that all involved agreed to destroy any possibly incriminating records and to conceal the fact of cash payments. Assuming arguendo, however, that this would not suffice to prove a conspiracy specifically to give false information to the government, it provides the background leading to the crucial facts. These are that on December 11, 1964, Mahler was suddenly served with an SEC subpoena to testify that day and that he immediately met with the bookkeeper and his salesmen to discuss the subpoena. Mahler told the others that there was nothing to worry about and he would find out the matters in which the SEC was interested. The jury could reasonably have inferred that at that time all of the conspirators understood and tacitly agreed that Mahler should conceal the one fact they were all most anxious to hide — the existence of the under-the-table cash payments. United States v. Mack, 112 F.2d 290, 292-293, (2d Cir. 1940). It should be remembered that we have here not the usual amorphous collection of scattered alleged conspirators with defendant claiming — and perhaps correctly — that there is no single common conspiracy at all.¹ Mahler's group was tightly organized, well-run and limited in number and duration — almost a classic case of conspiracy. We find that there was sufficient evidence that Mahler's testimony before the SEC was in furtherance of a conspiracy already in existence to violate 18 U.S.C. § 1001; accordingly, no error was committed in allowing overt act one to go to the jury. Moreover, appellant never urged below the argument he raises here. Therefore, we hold alternatively on these facts, where the evidence of guilt was overwhelming and the evidence as to overt acts three, four and five was clearly sufficient, that appellant has not overcome the burden of demonstrating "plain error." United States v. Indiviglio, 352 F.2d 276 (2d Cir. 1965) (en banc), cert. denied, 383 U.S. 907, 86 S.Ct. 887, 15 L.Ed.2d 663 (1966). Under this view of the case, it is not necessary to deal with the government's further argument that it was harmless error to submit overt act one to the jury so long as other overt acts were proven. Compare United States v. Bletterman, 279 F.2d 320, 322 (2d Cir. 1960), with Cramer v. United States, 325 U.S. 1, 36 n. 45, 65 S.Ct. 918, 89 L.Ed. 1441 (1945).

Appellant also claims prejudicial curtailment of cross-examination of cashier-bookkeeper Einiger, who was an important government witness. Toward the end of a not insubstantial cross-examination,² defense counsel asked Einiger about his plea of guilty to count one of the indictment, which charged him as a co-conspirator and co-defendant. After bringing out that Einiger had not yet been sentenced, counsel asked him whether anybody had promised him any consideration in connection with imposition of the sentence. After a negative response, counsel asked if his lawyer had told Einiger anything with regard to the penalty in the event he was to plead guilty. An objection was overruled, and Einiger answered he had been told that he could have easily been sent to prison. Counsel asked whether the lawyer told Einiger that if he testified for the government after pleading guilty he might receive some consideration. The witness answered "yes," whereupon the court brought out that Einiger had known that only the judge could determine the amount of punishment. After a colloquy between court and defense counsel as to what counsel was trying to demonstrate, the court said that the subject had been touched on enough. Counsel went on to establish, without...