United States v. Platt, 17943.

• Decision Date: 15 December 1970
• Docket Number: No. 17943.,17943.
• Citation: 435 F.2d 220
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Gordon L. PLATT, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

435 F.2d 220 (1970)

UNITED STATES of America, Plaintiff-Appellee, v. Gordon L. PLATT, Defendant-Appellant.

No. 17943.

United States Court of Appeals, Seventh Circuit.

December 15, 1970.

Brent A. Barnhart, Kenneth Kern & Associates, Indianapolis, Ind., for defendant-appellant.

Stanley B. Miller, U. S. Atty., William W. Knowles, William Andrew Kerr, S. D.Ind., Asst. U. S. Attys., Indianapolis, Ind., for plaintiff-appellee.

Before SWYGERT, Chief Judge, KNOCH, Senior Circuit Judge, and PELL, Circuit Judge.

KNOCH, Senior Circuit Judge.

Defendant-Appellant, Gordon L. Platt, was indicted in twenty-one counts, all charging violations of Title 18, U.S.C. § 1341.¹

As set out in the indictment, the proposed victims of the scheme to defraud allegedly devised by Defendant-Appellant (and others also indicted with him, with whom we are not here concerned) were holders of distressed property who would be induced to trust in the financial advice of Appellant and prospective tenants who would be induced to rent, and improve property, in reliance on representations by Appellant who concealed the fact that they were paying rent for, and making improvements to, distressed property from which they could be evicted at any time. The scheme was set out in full in Count I, which also alleged use of the mails in furthering the execution of the scheme. The remaining counts realleged the scheme and set out other uses of the mails in furthering its execution.

On Appellant's motion based on local prejudice arising from adverse newspaper publicity, trial was held in New Albany, Indiana.

Just prior to presentation of its case, the government moved to dismiss fourteen of the twenty-one counts. This motion was sustained. The trial of the remaining seven counts took a full week. The jury rendered a verdict of guilty on all seven counts. Appellant was sentenced to serve a maximum of five years in the Federal Penitentiary on each count, the sentences to be served concurrently.

Briefly summarized, the evidence at the trial disclosed the following. Appellant's secretary would mail a letter, offering Appellant's assistance in refinancing their property, to owners of distressed property whose names she obtained by checking mortgage foreclosures listed in the local legal newspaper. Defendant also visited the homes of owners of distressed property to offer his assistance in refinancing. Witnesses testified that, as requested by Appellant, they paid him monthly the amount they had been paying on their mortgages, but that he made no effort to secure refinancing and their redemption periods elapsed without accomplishment of refinancing. Witnesses also testified that Appellant would induce persons to become purchasers of real property under the guise of merely renting it to them. Witnesses testified further that Appellant misrepresented to the owners of distressed property that selling their property to him would leave them free and clear of all obligations including the risk of a deficiency judgment, and further that Appellant on acquiring such property by quitclaim deed, would rent it to tenants who would make improvements in lieu of rent, without informing those tenants that they were subject to eviction at any moment.

Appellant presented a witness who testified to the difficulty of securing refinancing for distressed property owners and the legitimacy of fees for real estate brokers who added their own credit to that of the distressed property owners to secure refinancing. Another witness testified that he had been so aided by Appellant and had secured refinancing for his property.

It is conceded that a motion for continuance is addressed to the sound discretion of the Trial Judge, but the Appellant argues that there was an abuse of discretion in denying his motion for continuance after dismissal of the fourteen counts. A great volume of detail and many documents were involved in the various dealings listed in the indictment. Appellant's counsel expressed surprise when the government's motion to drop the fourteen counts was allowed, although there was no objection as simplification of the case had been sought earlier. Notice of the motion to dismiss these counts had been sent to the defense counsel's office in Indianapolis. The trial, as indicated, was being conducted in New Albany as a consequence of the Appellant's motion to move the trial from Indianapolis. Both of the defense attorneys stated that they had not actually seen the motion before reaching the courthouse the morning of the trial.

The District Judge did not believe that dropping counts could be prejudicial in any way by complicating or confusing the defense, defense counsel having stated that they had sought to dismiss some counts earlier but had been unsuccessful. The Trial Judge noted that the present government counsel had come into the case only very recently. The motion to continue the trial based on a need to consolidate past efforts respecting all twenty-one counts, and to separate files, papers and documents, was denied.

Appellant contends that refusal of a continuance at this point denied him his Sixth Amendment right to effective assistance of counsel. In support of the claim that his defense counsel (who are not the Appellant's counsel on appeal) were put at a disadvantage by the dropping of the counts, Appellant refers to the Court's adverse comments on the slow pace of the trial, critical of the delays between questions put to the witnesses. The transcript shows that these comments were addressed to counsel on both sides and only during presentation of the prosecution's case.

As the District Judge said, obviously the defense would not be putting on evidence for several days and considering the experience of defense counsel, the Court thought that the defense case might be reorganized by throwing out two-thirds of the evidence with virtually no problem at all.

We see no abuse of discretion in the Trial Judge's ruling on the motion for continuance.

Appellant argues that it was "plain error" for the Trial Judge to give no instruction regarding the distinction between actual and "constructive" fraud.

At the trial, defense counsel tendered their instruction No. 9 which was refused.² Appellant's present counsel indicate some dissatisfaction with the instruction but assert that some instruction should have been given that for a finding of fraud there must have existed an overall scheme to defraud and that mere fraud in the course of a legitimate enterprise could only support a finding of constructive fraud.

The District Judge read from the pertinent section of the United States Code and defined "false" and "fraudulent" with respect to statements or misrepresentations, "scheme to defraud" and "good faith".

Appellant now asserts that the jury should have been instructed further that there is a distinction between a scheme to defraud and a fraud perpetrated in the course of an enterprise not in itself fraudulent. A typical example (as set out in United States v. Bachman, D. E.D.Pa.1917, 246 F. 1009, 1012, one of the cases on which Appellant relies) would be sale of stock in a company used in the development of a real business project, where the entrepreneur found himself in a cramped financial condition and sought to extricate himself by false representations to particular investors. The government concedes that such a...