United States v. Meyer

Decision Date20 July 1959
Docket NumberNo. 17371.,17371.
PartiesUNITED STATES of America, Appellant, v. Baron deHirsch MEYER, Leonard L. Abess, W. George Kennedy and Sam R. Becker, Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

COPYRIGHT MATERIAL OMITTED

James L. Guilmartin, U. S. Atty., Miami, Fla., for appellant.

Chester Bedell, Jacksonville, Fla., George F. Gilleland, W. Sanders Gramling, W. G. Ward, William C. Steel, J Edward Worton, William Manker, Miami, Fla., for appellees. Ward & Ward, Miami, Fla., Bedell & Bedell, Jacksonville, Fla., Scott, McCarthy, Preston, Steel & Gilleland, Worton & Manker, Miami, Fla., of counsel.

Before RIVES, TUTTLE and JONES, Circuit Judges.

RIVES, Circuit Judge.

This appeal is from a judgment sustaining a motion to dismiss an indictment of twenty-one counts, which occupy forty-seven pages of the printed record.

Count one of the indictment is drawn under the general conspiracy statute, Title 18 United States Code § 371, proscribing a conspiracy "either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose." It charges that the four named defendants together with Nathaniel B. Elkins, named as co-conspirator but not defendant, conspired to violate Title 18, Sections 656, 657, and 1006 of the United States Code in the manner and by the means set forth in the count.

Section 656 of Title 18 makes it a criminal offense for an officer, director or agent of a Federal Reserve bank, member bank, national bank or insured bank to embezzle, abstract, purloin or wilfully misapply any of the moneys, funds or credits of such bank. Section 657 proscribes the like offense when committed against an institution the accounts of which are insured by the Federal Savings and Loan Insurance Corporation. Section 1006 makes criminal the act of an officer, agent or employee who, with intent to defraud any such institution or to deceive any auditor or examiner or agency of the United States, makes any false entry in any book, report or statement of or to any such institution, or who, with intent to defraud the United States or any agency thereof, participates or shares in or receives directly or indirectly any money, profit, property or benefits through any transaction, loan, commission, contract or any other act of such institution.

Substantially following the language of those three sections, count one describes the banks and financial institutions and the positions in such banks and institutions held by each of the four defendants, and charges them and the co-conspirator with conspiring:

"(a) to wilfully misapply and wilfully cause to be misapplied moneys, funds and credits of the Industrial Savings Bank, the Industrial National Bank and North Shore Bank to the use, benefit and advantage of the said defendants so that the said moneys, funds and credits would be withdrawn from and lost to the said banks during the period that the said moneys, funds and credits were beyond the control of the said banks, with intent to injure and defraud the said banks;
"(b) to wilfully misapply and wilfully cause to be misapplied moneys, funds and credits of the said Miami Beach Federal Savings and Loan Association to the use, benefit and advantage of the said defendants so that the said moneys, funds and credits would be withdrawn from and lost to the said Miami Beach Federal Savings and Loan Association during the period that the said moneys, funds and credits were beyond the control of the said Association, with intent to injure and defraud the said Miami Beach Federal Savings and Loan Association;
"(c) to make and cause to be made false entries in the books and statements of the Miami Beach Federal Savings and Loan Association and to make and cause to be made material false statements in the reports of the said Association with intent to defraud the said Miami Beach Federal Savings and Loan Association and to deceive the officers, auditors, examiners and agents of the Home Loan Bank Board and the Federal Home Loan Bank Board, Departments and Agencies of the United States of America;
"(d) to participate and share in and receive directly and indirectly money, profits, property and benefits through transactions and loans of the said Miami Beach Federal Savings and Loan Association, with the intent to injure and defraud the Federal Savings and Loan Insurance Corporation and Miami Beach Federal Savings and Loan Association."

Those allegations are followed by a paragraph which contains the count's only reference to 12 U.S.C.A. §§ 371 or 371c mentioned by the district court in assigning its reasons for dismissing count one, and which paragraph is therefore quoted:

"That it was a further part of the said conspiracy for the defendants, who maintained control over the operations of the North Shore Bank to knowingly and wilfully allow and permit the said institution to lend money to the corporations named in paragraphs 5, 6 and 7 herein in a manner and means not permitted under the Federal Banking Laws, to wit, Title 12 U.S.C.A., Section 371c, in that such loans would not be secured by the collateral required by that section; moreover that such loans would be caused to be made, without disclosing to said bank that said loans involved no bonafide transactions of the said borrower, but that said loans would be used for the purpose of temporarily repaying loans to Federal Title and Insurance Corporation in order temporarily to improve the financial position of said corporation, and without disclosing that the proceeds of said loans were to be converted to the use of the defendants through Federal Title and Insurance Corporation."

As would be gathered from that reference to Title 12 U.S.C.A. § 371c, it prescribes the kind of collateral which must secure a loan or extension of credit from a member bank to one of its affiliates. Violation of that section is not, however, made a criminal offense.

The paragraph last quoted is followed by four other paragraphs each, like the quoted paragraph, beginning with the words, "That it was a further part of said conspiracy * * *" To facilitate an understanding of this opinion, we quote the opening clauses of each of those four paragraphs:

"That it was a further part of the said conspiracy for the defendants who maintained control of the said Industrial National Bank, North Shore Bank and Miami Beach Federal Savings and Loan Association to knowingly and wilfully allow and permit the said financial institutions to lend money to builders who were engaged in construction work on properties upon which the defendants had a financial interest * * *.
"That it was a further part of the said conspiracy for the defendants, acting through one of the corporations named in paragraphs 5, 6 or 71 to cause one of those corporations and/or builders to borrow funds from Industrial Savings Bank, Industrial National Bank, North Shore Bank and Miami Beach Federal Savings and Loan Association, which funds would be used by the said defendants for their own personal use and gain * * * "That it was a further part of the said conspiracy to make and cause to be made false entries in the books, reports and statements of the Miami Beach Federal Savings and Loan Association in that the said defendants would have the responsibility and duty of approving applications for construction loans from Miami Beach Federal Savings and Loan Association and would knowingly and wilfully fail to disclose to the Miami Beach Federal Savings and Loan Association on such applications that there was in existence an unrecorded purchase money mortgage from the applicant for construction loans to one of the corporations named in paragraphs 5, 6 or 7 herein * * *
"That it was a further part of the said conspiracy for the defendants to participate and share in and receive directly and indirectly moneys, profits, property and benefits to transactions and loans of the Miami Beach Federal Savings and Loan Association wherein the said defendants approved and caused to be approved loans to builders from Miami Beach Federal Savings and Loan Association upon property in which the defendants had and which the defendants would have a financial interest * * *"

Count one closes with the averment of the commission of certain overt acts in furtherance of the alleged conspiracy.

The district court expressed its reasons for sustaining the motion to dismiss count one as follows:

"The conspiracy count (count one) presents some difficulty. The first two statutory criminal offenses which the defendants are alleged to have conspired to commit are those defined by 18 U.S.C.A. Sections 656 and 657. The language of each statute was followed precisely in charging the defendants with a conspiracy `to wilfully misapply and wilfully cause to be misapplied moneys,\' etc. of the named banks, — `with intent to injure and defraud the said banks.\'
"Recognizing that the phrases `to wilfully misapply\' and `wilfully cause to be misapplied\' are generic terms having no settled, technical meaning, United States v. Cawthon, D.C., 125 F.Supp. 419, the Grand Jury proceeded to spell out the quo modo of misapplication.
"It is the Court\'s opinion that the Grand Jury fell into the error of supposing that any use or disposition of the moneys or funds of a `National\' or `Member bank\' in any manner or for any purpose proscribed by the Federal Reserve Act, as amended, and more particularly by the provisions of 12 U.S.C.A. Sections 371 and 371c, constitutes a criminal offense. These sections do not of themselves create any offense against the United States. Therefore, on the authority of United States v. Britton, 108 U.S. 199, 2 S.Ct. 531, 27 L.Ed. 698, the alleged acts of defendants in violations of these sections do not amount to criminal misapplication of moneys or funds, although they may raise the question of maladministration."

At the outset we are confronted...

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