United States v. Marachowsky, 10540

• Citation: 201 F.2d 5
• Decision Date: 06 February 1953
• Docket Number: 10541.,No. 10540,10540
• Parties: UNITED STATES v. MARACHOWSKY et al.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

201 F.2d 5 (1953)

UNITED STATES v. MARACHOWSKY et al.

No. 10540, 10541.

United States Court of Appeals Seventh Circuit.

January 7, 1953.

Rehearing Denied February 6, 1953.

COPYRIGHT MATERIAL OMITTED

Jacob Geffs, Janesville, Wis., Edwin Conrad, Madison, Wis., David A. Canel, Chicago, Ill., Leonard A. Canel, Chicago, Ill., of counsel, for appellant.

Frank L. Nikolay, U. S. Atty., Madison, Wis., Thomas E. Fairchild, Verona, Wis., for appellee.

Before MAJOR, Chief Judge, and KERNER¹ and LINDLEY, Circuit Judges.

LINDLEY, Circuit Judge.

Defendants, indicted in fourteen counts charging the making of false oaths in a bankruptcy proceeding and in one, the 15th, with conspiracy, having been found guilty and sentenced, perfected this appeal. They are man and wife. It should be observed, however, in order to avoid confusion, that Belle Marachowsky's maiden name was Canel; that she married Joseph Blitz, divorced him and resumed her maiden name, and, later, married Jake Marachowsky.

Counts 1, 3, 5, 7, 9, 11 and 13 charged Belle Marachowsky with making false oaths in the bankruptcy proceedings of the Portage Wholesale Company in support of her amended claim for $126,780.09 filed against that estate. Counts 2, 4, 6, 8, 10, 12 and 14 charged false oaths upon the part of Jake Marachowsky in the same proceeding in support of Belle Marachowsky's claim. Count 15, as we have observed, charged conspiracy by both to present a false claim against the debtor estate and to make false oaths in such proceeding in relation thereto. Belle Marachowsky was sentenced to two years in the custody of the Attorney General and to pay a fine of $10,000. Jake Marachowsky, upon each of the substantive counts, was sentenced to five years in the custody of the Attorney General, all the sentences to run concurrently. Upon counts 2, 4, 6, 8 and 10, he was fined the sum of $5000 each, or $25,000 in all. On the 15th count he was sentenced to two years in the custody of the Attorney General, to run concurrently with the other sentences.

Upon appeal defendants urge that the evidence adduced by the government was not sufficient to meet the requirements abiding in prosecutions for taking false oaths; that the court should have allowed their motions for acquittal, and that the court committed certain procedural errors. In view of the first mentioned contention, it becomes necessary to examine, somewhat in detail, the evidence submitted by the government.

Among the salient facts as established by the evidence viewed in its aspects most favorable to the government are the following. The Portage Wholesale Company was a corporation doing business in Portage, Wisconsin, of which the defendant, Jake Marachowsky, owner of 52 per cent of the capital stock, was president and manager; associated with him was his brother Jule. The company was engaged in buying and selling butter, cheese, corn, syrup, dextrose and other food products during the years 1945 and 1946, while price control was in effect. It bought merchandise apparently within controlled prices and disposed of the same on the black market at sharply increased over-ceiling prices.

Preceding those years Joe Blitz and defendant Belle Marachowsky, then Belle Blitz, lived at Chippewa Falls, Wisconsin. In December, 1944, they came to Portage where Joe was employed by the company. He remained there, however, only a short time, after which he proceeded to New York, where he acted as agent of the company, selling the products in eastern territory. Very frequently the larger part of his sales prices was received in currency and placed in envelopes which, from time to time, he and his wife carried from New York back to Portage. Blitz received his instructions from Jake Marachowsky by letters and unsigned typewritten memoranda. Many of these instructed Joe to get from 15 to 16 cents per pound for corn syrup and 18 to 19 cents per pound for dextrose, at a time when the legal maximum price was 5 cents and 7 cents respectively. Frequently cars of merchandise were shipped on open bill of lading consigned to Blitz, who received and delivered the bill of lading to others, collecting the sales price fixed as aforesaid. If a car was shipped with draft attached to the bill of lading, Joe would pay the draft with cash received from selling the company's products and then sell the car. He was employed on a commission basis; the company always owned the merchandise and never sold it to him.

One John Olson was, during the year 1946, employed by the company to purchase products in Iowa and Nebraska. Jake supplied Olson with signed checks of the company which Olson filled in and used in making purchases. Olson also received from the company, cash aggregating some $75,000, which he used in buying products for the company. Olson received all his instructions from Jake and none from Belle, although at Jake's request he was handed money by Belle in envelopes, for which he accounted to the company. He was working for the Portage Wholesale Company and considered Belle its agent.

Price ceilings terminating on June 30, 1946 were never renewed, so far as corn was concerned, but were placed in force once more on corn syrup and dextrose after July 25, 1946. The company paid Burbridge of Omaha a finder's fee for corn, which, before ceilings were removed, was $200 per car and thereafter $100 per car. This firm dealt with Jake and Olson, never with Belle. This corn was shipped from Nebraska and Iowa to brokers in Chicago on sight draft. The brokers paid the drafts and delivered the corn to the refinery, American Maize Products Company. If the market price dropped while the goods were in transit, the drafts were reduced and the company paid the difference to the elevator which had supplied the corn. For every six cars of corn so made available to American Maize, the Portage Wholesale Company was permitted to buy from the refinery one car of dextrose, or two cars of corn syrup, which were then shipped to Portage with draft attached. The company paid for them and reshipped them, invoicing them to Blitz in New York within the ceiling price, who then sold them at prices suggested by Jake Marachowsky, in excess of ceilings.

Despite the volume of business transacted, the company apparently found itself without funds in January, 1947, when it filed a petition for arrangement under Chapter XI of the Bankruptcy Act, 11 U.S. C.A. § 701 et seq.

About a week before the debtor proceeding was instituted, Belle brought suit against the company for some $36,000 which she claimed to have loaned to it. At about the same time, Joe Blitz commenced divorce proceedings against Belle who, on adverse examination, testified that this $36,000 was all the company owed her. However, in August, 1947, she filed claim against the debtor for $67,926.06. On October 14, 1947, she was divorced from Blitz and resumed her maiden name, Canel. On October 20, 1947 she filed a bill of particulars of her claim in which she said that no notes or other written evidence existed to support her demand except certain checks listed therein. On March 22, 1948, at an adverse examination, Belle produced, for the first time, a series of invoices, known as Exhibits 11 to 16 inclusive, partly in Jake's handwriting and partly in Belle's, purporting to have been prepared in 1946. No one had ever seen these invoices before March 22, 1948 except Jake and herself. The circumstances appearing in the record fully support the government's contention that they were fraudulently manufactured solely to support Belle's claim.

Some three months later she filed an amended claim for $126,780.09. At a hearing in July and August, 1948, before the referee, Belle and Jake gave the testimony charged in the indictment to have been false. The company was ultimately adjudicated bankrupt and claims against it can not be paid in full. In November, 1948, Belle and Jake were married.

With this sketchy picture in mind, we divert our discussion for the time being to the statute and the authorities. The wording, "knowingly and fraudulently makes a false oath" in a bankruptcy matter, is that of the revised criminal code, Title 18, Sec. 152, superseding a similar provision in the Bankruptcy Act, Sec. 52, Title 11 U.S.C. (1940 Ed.), in effect removing the latter entirely from the Bankruptcy Act but including it in the revised code, under Chapter 9 as a part of "Bankruptcy." Consequently the perjury statute, 18 U.S.C. § 1621 is not involved here, previously Title 18 U.S.C. (1946 Ed.) Sec. 231. One accused of false swearing in a bankruptcy proceeding was punishable under either former Sec. 52 of Title 11 or the general perjury statute, the punishment only under Sec. 52 being different. Epstein v. U. S., 7 Cir., 196 F. 354.

Various decisions have from time to time indicated that there is a legal difference between the crime of a false oath in bankruptcy proceedings and perjury. This Court, in Goetz v. U. S., 59 F.2d 511, 512, in reviewing a conviction under the earlier provision of the Bankruptcy Act, similar in all ways to the present one, said: "Appellant seeks to interpret each count of the indictment in the light of the statute and decisions relating to perjury, and they are not applicable to the instant case." Recently, Judge Kerner, speaking for the court, in U. S. v. Lynch, 7 Cir., 180 F.2d 696, said, at page 701: "But this court has held that proof of false oath in bankruptcy need not contain all of the elements of perjury." In Wechsler v. U. S., 2 Cir., 158 F. 579, the court held that the bankruptcy provision did not create a new offense but merely prescribes a different penalty for the crime of perjury already defined by Congress, when committed in or in relation to bankruptcy proceeding. And in Schonfeld v. U. S., 2 Cir., 277 F. 934, 938, the same court said: "False swearing in bankruptcy is not equal in enormity to the crime of perjury denounced by the general statute. Kahn v. U. S., 2 Cir., 214 F. 54, 130...