United States v. Spector

• Citation: 326 F.2d 345
• Decision Date: 27 December 1963
• Docket Number: No. 13905.,13905.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Ramon SPECTOR and Charles T. Scott, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

326 F.2d 345 (1963)

UNITED STATES of America, Plaintiff-Appellee, v. Ramon SPECTOR and Charles T. Scott, Defendants-Appellants.

No. 13905.

United States Court of Appeals Seventh Circuit.

December 27, 1963.

George F. Callaghan, Anna R. Lavin, Chicago, Ill., for appellant.

Frank E. McDonald, U. S. Atty., John Powers Crowley, Asst. U. S. Atty., Chicago, Ill., James P. O'Brien, U. S. Atty., John Peter Lulinski, Asst. U. S. Atty., of counsel, for appellee.

Before DUFFY, SCHNACKENBERG and SWYGERT, Circuit Judges.

SWYGERT, Circuit Judge.

Ramon Spector and Charles T. Scott were named as principal defendants in a nine-count indictment which was returned July 28, 1959. They were charged in count one with conspiracy, under the general conspiracy statute, 18 U.S.C. § 371, to violate the provisions of 18 U.S.C. § 1006 (defrauding federal credit institutions). In counts two through nine Spector and two other persons, James W. Jacobs and Marvin Starr, were charged with violating 18 U.S.C. § 1010 (making false statements to the Federal Housing Administration).

Spector and Jacobs were named as defendants in four of the substantive counts. Spector and Starr were joined in two counts and all three were joined in the remaining two counts.

Before trial Spector moved to sever count one from the substantive counts. Starr made a similar motion. The motions were denied. At a later date, Starr renewed his motion. It was granted. Subsequently, the charges were dismissed against Starr because of his death.

Spector, Scott, and Jacobs were tried before a jury in May, 1962. All were found guilty. Spector and Scott appeal from the judgments of conviction.

This appeal presents many issues. Only three need be discussed: (1) whether the trial judge in effect amended the indictment by narrowing the duration of the alleged conspiracy charged in count one, (2) whether the allegations of that count, on proof, would sustain a conviction, and (3) whether there was reversible error in not granting a severance of count one from the remaining counts.

If defendants' contentions on the first two issues could be sustained, a reversal without remand for a new trial would be in order. We find, however, that the district court did not err in its rulings on these issues. Therefore, we must consider the severance question. On this question, we believe the district court erred and that the judgments must be reversed for a retrial.

I.

Count one of the indictment charged a conspiracy between Spector and Scott beginning in May, 1956, and continuing into November, 1956. The essence of the charge was that by engaging in certain manipulations relating to construction loans, Scott, an employee of Republic Savings and Loan Association, conspired with Spector, the owner of Su Lite, a construction company, to make false entries in the books and records of Republic, whose accounts were insured by the Federal Savings and Loan Insurance Corporation, whereby Scott would participate in the profits of the transactions.

Defendants moved to dismiss count one because section 1006 of the Criminal Code was not amended until July 28, 1956, to include officers, agents or employees of any institution the accounts of which were insured by the Federal Savings and Loan Insurance Corporation.¹ The district court denied the motion; however, it limited the government's proof to July 28, 1956, the effective date of the amendment and dates thereafter.

Defendants contend that the court's ruling effected a substantial change in the indictment. They maintain that a court cannot by direct or indirect means amend an indictment. In support of that proposition they cite Ex Parte Bain, 121 U.S. 1, 7, 7 S.Ct. 781, 30 L.Ed. 849 (1886), Stirone v. United States, 361 U.S. 212, 80 S.Ct. 270, 4 L.Ed.2d 252 (1960), and Russell v. United States, 369 U.S. 749, 82 S.Ct. 1038, 8 L.Ed.2d 240 (1962). In Bain, the indictment charged an officer of a national bank with making false statements in a bank report with intent to deceive the Comptroller of Currency and the agent appointed to examine the affairs of the association. The Court struck out the words "Comptroller of Currency and" from the indictment as surplusage and allowed a conviction of the defendant without proving an intent to deceive the Comptroller. The Court held that this was a substantial change in the indictment because "it is not impossible nor very improbable that the grand jury looked mainly to that officer the Comptroller as the party the defendant intended to deceive." The Court held that when these words were struck the indictment did not charge what the grand jury intended; and, therefore, the sentence was void.

In Stirone, the Court reversed a conviction under the Hobbs Act because the district judge erroneously instructed the jury that it could base its verdict upon a finding that exportation of steel caused an interference with interstate commerce whereas the indictment charged only an interference with sand imports.

In Russell, it was held that deficiencies in the indictment could not be cured by a bill of particulars.

The import of these cases is that a charge in an indictment cannot be broadened, whether by a change in the wording of the indictment, a bill of particulars, or an instruction to the jury. This is made clear by the Court in Stirone when it said, "Ever since Ex Parte Bain * * * it has been the rule that after an indictment has been returned its charges may not be broadened through amendment except by the grand jury itself."

In the instant case the charge in the indictment was not broadened — it was limited. The limitation coincided with the effective date of the amendment of section 1006 which made the alleged conduct of defendants, if proved, a violation of the statute.

There is an essential difference between a broadening of the charge to embrace conduct which the grand jury did not incorporate in the indictment and limiting the charge to excise from the indictment conduct that describes no offense. After the limitation, if the remaining allegations of the indictment charge the commission of the crime, there can be no prejudice to the defendant. In fact, prejudice would lie in a failure to limit.

This view is in accord with Ford v. United States, 273 U.S. 593, 47 S.Ct. 531, 71 L.Ed. 793 (1927). The indictment charged, in addition to various statutory violations, violation of a treaty of the United States. The treaty, however, created no offense against the United States. The Court said:

"The validity of the indictment is attacked, first, because it charges that the conspiracy was to violate the treaty, although the treaty creates no offense against the law of the United States. This is true, but that part of the indictment is merely * * * The trial court took this view. But it is contended that this surplusage and may be rejected. is to amend the indictment and comes within the inhibition of the principle of Ex parte Bain. * * * That decision condemns the striking out of words from an indictment. The action here complained of is merely a judicial holding that a useless averment is innocuous and may be ignored." (273 U.S. at 602, 47 S.Ct. at 534, 71 L.Ed. 793.)

We hold that the district court did not err in limiting the government's proof to events occurring from July 28, 1956 through November, 1956.

II.

Defendants contend that the charge of conspiracy to commit an act, not a crime at the time of the agreement, will not sustain the conviction. They argue that a course of conduct not illegal until the date of the amendment of section 1006 on July 28, 1956, but which continued beyond that date, cannot support a finding that defendants intended to violate the statute.

United States v. Postma, 242 F.2d 488 (2d Cir. 1957) presented an analogous situation in that a conspiracy was charged to have begun in June, 1951, but the jury found because of a failure of proof that the conspiracy did not begin until November, 1952. The court held that there was no fatal variance between the charge and the proof.

We hold that even though Spector and Scott may have embarked upon a course of conduct not illegal before the statute was amended, similar conduct after the amendment was not immunized from the sanctions of the statute.

Count one alleged that Su Lite Distributing, Inc., engaged in the business of remodeling homes and that Spector was its principal owner and president; that Spector induced homeowners to contract with Su Lite to make home improvements and that the company agreed to obtain loans for the homeowners covering not only the construction work but also their existing debts, thereby consolidating all the debts owed by the homeowners into one obligation; that Su Lite had the homeowners sign duplicate loan agreements; that one set was submitted to Republic and the other to another financial institution, each set ostensibly to pay for the same construction work, although the total proceeds of the two loans were actually used for the dual purpose of home improvement and debt consolidation.

It was further alleged that Spector would conceal from the officers of the two financial institutions the facts regarding the existing debts of the home-owners and that duplicate loans were being obtained.

It was further alleged that Spector and Scott conspired to violate section 1006 of the Criminal Code;² that Scott would approve certain loans to the homeowner-customers of Su Lite and would cause his superior officers to approve the loans by concealing from them the conduct of Spector and by making false entries in the books and records of Republic. As a further object of the conspiracy, it was alleged that Scott with intent to defraud Republic would participate in the money, profits, and benefits of the transactions between Su Lite and Republic.

Defendants argue there was no charge that they conspired that Scott would make false entries in the books and records of Republic with intent to defraud the...