United States v. Sanders, Cr. No. 8032.

• Decision Date: 06 June 1941
• Docket Number: Cr. No. 8032.
• Citation: 42 F. Supp. 436
• Parties: UNITED STATES v. SANDERS.
• Court: U.S. District Court — Southern District of Texas

42 F. Supp. 436

UNITED STATES v. SANDERS.

Cr. No. 8032.

District Court, S. D. Texas, Houston Division.

June 6, 1941.

Douglas W. McGregor, U. S. Atty., and J. Harold Bates, Asst. U. S. Atty., both of Houston, Tex., for plaintiff.

Bernard A. Golding, of Houston, Tex., for defendant.

ALLRED, District Judge.

The indictment is based on that portion of Sec. 35 of the Criminal Code, 18 U.S. C.A. 80,¹ making it an offense knowingly and wilfully to "make or cause to be made * * * any false or fraudulent statements or representations * * * in any matter within the jurisdiction of any department or agency of the United States * * *." The indictment charges, in substance, that defendant "did unlawfully, knowingly and fraudulently make and present, and cause to be made and presented to the Veterans Administration, a department and agency of the United States, a false and fraudulent statement and representation, in a matter within the jurisdiction of the said Veterans Administration, a department and agency of the United States."

The indictment further alleges the pendency in the county court of Grimes County, Texas, of a guardianship proceeding of the person and estate of one Otis Monroe Peters, a person of unsound mind and a veteran of the World War entitled to receive financial benefits from the United States; that James Monroe Peters was duly appointed guardian and, as such, has been receiving financial benefits from the United States for many years; that said guardian was required by law to submit reports and accounts to the Veterans Administration, showing the application of payments received by him for the benefit of the ward in order to continue receiving such benefits; that about July 17, 1928, the defendant, an attorney engaged in the practice of law, fraudulently obtained a check from his client (the guardian) in the sum of $2,500 on the pretense that said amount of money was to be invested in a note for the benefit of the estate but which said sum defendant unlawfully and fraudulently converted to his own use; that thereafter, on or about August 13, 1938, defendant prepared and submitted to the county court of Grimes County, Texas, and to the Veterans Administration an annual account made by the guardian showing that there was on hand, belonging to the estate, among other property, a note made by one J. A. Hendrix in the principal sum of $2,500, purchased by the guardian under proper court orders, secured by vendor's and deed of trust liens against real estate worth more than double the amount; and showing the collection of interest upon said note from year to year; and that by the making and presentation to the Veterans Administration of such account, defendant procured the continuance of payments by the United States to the guardian.

The purported "true and correct annual report" of the guardian, allegedly made and presented to the Veterans Administration, by defendant, is set out in haec verba. It shows on its face to be a report made to the county judge of Grimes County in Cause No. 1218. It is signed by defendant as attorney for the guardian; and is also signed and sworn to by the guardian, now alleged to be deceased. It covers the period from July 1, 1937, to July 1, 1938, and shows, among other things, the receipt of $200 as "interest on Hendrix's note." It also contains an affidavit by the cashier of the Citizens State Bank of Houston to the effect that the Hendrix note of $2,500 was exhibited to said cashier as the property of the estate.

It is then alleged that the statements in the report to the effect that the estate owned and held the vendor's lien note, and that its payment was secured by a vendor's lien and deed of trust liens against improved real estate worth more than double the amount of said notes, was false, fraudulent and untrue, and known by defendant to be false, fraudulent and untrue at the time he made and presented the aforesaid accounting to the Veterans Administration, in that said Hendrix note was false, fictitious and fraudulent, and was not purchased by the guardian under proper court orders, and was not secured in its payment by such liens; and that in truth and in fact defendant, while acting as attorney for the guardian, pretended to invest said sum of $2,500 in the Hendrix note and secured from the guardian a check for the sum of $2,500 payable to defendant, which check defendant cashed and appropriated to his own use and benefit.

Defendant demurs to the indictment and has filed a motion to quash upon various grounds, which will be discussed as stated.

Defendant's principal contention is that the indictment charges no offense against him; that under Sec. 80, Title 18, U.S.C. A., even after the amendment of 1934, "the gist of the offense * * * is a fraud or false claim against the government which causes pecuniary or property loss to the government."² This contention, and the line of cases upon which it is based, was permanently disposed of by the Supreme Court in United States v. J. W. Gilliland et al.,³ 312 U.S. 86, 61 S. Ct. 518, 85 L.Ed. 598. See, also United States v. Goldsmith, 2 Cir., 108 F.2d 917; United States v. Mellon et al., 2 Cir., 96 F.2d 462.

It is provided in § 450, Title 38, U.S.C. A. (a part of the World War Veterans Act of 1924, as amended, Title 38, § 421 et seq.), with reference to payment of compensation, adjusted compensation, etc., in part, as follows: "Whenever it appears that any guardian, curator, conservator, or other person, in the opinion of the Administrator, is not properly executing or has not properly executed the duties of his trust or has collected or paid, or is attempting to collect or pay, fees, commissions, or allowances that are inequitable or in excess of those allowed by law for the duties performed or expenses incurred, or has failed to make such payments as may be necessary for the benefit of the ward or the dependents of the ward, then and in that event the Administrator is empowered by his duly authorized attorney to appear in the court which has appointed such fiduciary, or in any court having original, concurrent, or appellate jurisdiction over said cause, and make proper presentation of such matters: Provided, That the Administrator, in his discretion, may suspend payments to any such guardian, curator, conservator, or other person who shall neglect or refuse, after reasonable notice, to render an account to the Administrator from time to time showing the application of such payments for the benefit of such incompetent or minor beneficiary, or who shall neglect or refuse to administer the estate according to law." (Italics supplied.)

In addition to this authority, the Administrator is authorized by § 426, Title 38, U.S.C.A., to promulgate rules and regulations necessary or appropriate to carry out the purposes of the Act. Pursuant to that authority the Administrator has promulgated rules and regulations, generally prescribing, among other things, the duty of the chief attorney and of his subordinates to investigate and check into the administration of estates of incompetent persons. A specific rule, § 20.5322, 38 Code of Fed. Regulations, reads as follows: "Accountings and certificates of balance. Except in cases where accountings are not required as explained in 20.5305, accountings will be obtained at least once a year by the chief attorney from all guardians of Veterans' Administration beneficiaries appointed by the courts within the territory of his office. These accountings will be obtained direct from the guardian. When the State courts require accounting once a year, the chief attorney will advise the guardian 60 days prior to the date his account is due in the court of appointment, and forward at the same time two copies of Form 4706 series. The original may be used by the guardian in submitting his account to the court, and a copy forwarded duly certified by the clerk of the court as a true copy of the account filed with the court, together with a certification from the bank or trust company in which the estate of the ward is deposited, showing a balance. Account Form 4706c will be used in lieu of Form 4706, revised,...