United States v. Vida, 16537.

• Decision Date: 30 December 1966
• Docket Number: No. 16537.,16537.
• Citation: 370 F.2d 759
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Ernest VIDA, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

370 F.2d 759 (1966)

UNITED STATES of America, Plaintiff-Appellee, v. Ernest VIDA, Defendant-Appellant.

No. 16537.

United States Court of Appeals Sixth Circuit.

December 30, 1966.

COPYRIGHT MATERIAL OMITTED

Jerome Goldman, Goldman, Cole & Putnick, Cincinnati, Ohio, for appellant.

Paul J. Komives, Detroit, Mich. (Lawrence Gubow, U. S. Atty., Detroit, Mich., on the brief), for appellee.

Before WEICK, Chief Circuit Judge, O'SULLIVAN, Circuit Judge, and KALBFLEISCH, District Judge.

O'SULLIVAN, Circuit Judge.

Ernest Vida appeals from a judgment entered upon a jury verdict rendered in the United States District Court for the Eastern District of Michigan finding him, and others, guilty of bankruptcy fraud, as charged in two counts of a three-count indictment. The indictment, returned April 16, 1963, charged appellant and twenty-one others with conspiracy to violate 18 U.S.C.A. § 152 (count one); with concealment of assets of the Norm Wilson Auto Sales, in contemplation of the bankruptcy of that concern (count two); and with concealment of the assets of such concern from the officers of the bankruptcy court after the institution of bankruptcy proceedings (count three). All defendants who stood trial were acquitted of the conspiracy count, but the appellant, with others, was convicted of the substantive offenses charged in counts two and three.

The involved criminal enterprise was so artless that it is hard to understand how those who designed it and those who participated in it could believe it would succeed and go unpunished. A discount house was set up as the successor to, and under the name of, a prior business, Norm Wilson Auto Sales, which, at the beginning of the venture, had a passable Dun & Bradstreet rating. A broad variety of materials was then ordered from numerous suppliers and manufacturers. The first orders were paid for promptly to satisfy credit for later and larger orders. When the goods from these purchases were received, they were quickly disposed of for cash, often at substantially less than wholesale cost. The promoters hoped in this manner to get as much money out of the business as quickly as possible and then let bankruptcy follow, leaving the creditors to bear the losses.

Handsome bargains were enjoyed by some of the customers whose payments provided funds to make the scheme work. It is surprising that so many were "let in" on the deal. A total of 23 were named in the conspiracy count. Of this company, two were not indicted and five pleaded guilty to the conspiracy count; sixteen were tried on all three counts, six to the District Judge and the remaining ten to a jury. The trial was a good deal more complicated than the involved plan. It lasted some six weeks and fourteen different lawyers represented the various defendants. Proofs for the consideration of the District Judge and the jury, as triers of the facts, were taken at the same time. Five of the defendants were acquitted by the District Judge, one by the jury; the other ten were all acquitted of the count one conspiracy charge, but found guilty of one or both of the substantive offenses.

Appellant Vida claims the trial judge erred in the following respects: 1) he failed, sua sponte, to order a severance as to Vida; 2) he failed to tell the jury that if they acquitted Vida of conspiracy, they should disregard evidence of out-of-court statements and conduct of alleged co-conspirators; 3) he failed to grant a new trial since, appellant charges, it would have been psychologically impossible for the jury to disregard testimony admitted under the conspiracy charges, even under a sufficient instruction; 4) he incorrectly conducted the trial on the assumption that there was only one conspiracy, whereas there were several conspiracies; 5) he provided inducement for certain codefendants who had pleaded guilty to testify as the government wished by withholding imposition of sentence; 6) he created the impression, by his manner of questioning, that he found a defense witness unreliable.

Appellant Vida does not argue that there was not sufficient evidence from which the trial judge and the jury could find him guilty beyond a reasonable doubt. He urges, rather, that the proportions of the trial, its complexities and length, and the use of the testimony of the admittedly guilty chief architects of the scheme — coupled with evidence of certain admissions by co-conspirators — deprived him of a fair trial. Most of these contentions now made on appeal, however, were not presented to the District Judge, except upon motion for new trial. It is not argued that Vida was denied his constitutional right to the effective assistance of an attorney. He was represented at the trial by counsel originally chosen by him, but who ultimately conducted the defense as appointed counsel. Vida's lawyer did not at any time request a separate trial for him.

Admittedly active in the total enterprise, Vida's claim of innocence was that he was a mere employee, a salaried salesman, and that some of his acquisitions of property delivered to Wilson Auto Sales were in lieu of his salary.

Preliminary, we observe that it is difficult to conceive of the innocence of anyone who was a close and active participant in the bold and quite observable "shenanigans" here involved. Between the time the business got under way in April, 1962, and the filing of an involuntary petition in bankruptcy for it on July 6, 1962, it generated some $370,000 in claims filed against the bankrupt estate. We recite from the evidence the following which, if believed, disclosed in part the extent of Vida's participation.

In January of 1962, one Williamson, who ultimately pleaded guilty to the conspiracy charge, visited a business known as Giant Discount. There he met John Campbell (one of those who pleaded guilty) and appellant Vida. There were others there. Campbell was briefed on the business operation of the Giant Discount store. Such operation was ultimately to form a rough blueprint for the activities leading to the present indictment.

Williamson contacted a Mr. Wilson, who owned and ran Norm Wilson Auto Sales, a business which had a reasonably good credit rating. After having the deal explained to him, Wilson stated that he wasn't interested in going bankrupt himself, but agreed to let his business be taken over for this purpose. A Mr. Lamb was induced to join the enterprise, have the business put in his name, and undergo bankruptcy. Organizational capital was supplied by a Mr. Redwitz, and it was initially agreed that profits would be divided equally among Williamson, Lamb, Wilson and Redwitz.

Shortly after this was arranged, Williamson, Campbell (who was using his experience with Giant Discount to help Williamson), appellant Vida, and Lamb found a building in Flint, Michigan, from which to run the operation. Campbell and Vida took an active part in setting up the business, with Vida taking a $200 a week job as a salesman. There was testimony that as various of the originators dropped out, Campbell, Williamson and Vida were ultimately splitting the profits among themselves.

The name of the business was changed from "Norm Wilson Auto Sales" to "Norm Wilson Sales" and the operation actually got under way in April, 1962, buying and selling at wholesale prices building and other materials including furnaces, furniture, radios, pleasure boats, power tools, power lawn mowers, and similar lines of merchandise. By June 8, 1962, a Dun & Bradstreet report was circulating which said in effect that "there apparently were more bad guys than good guys." Appellant knew of this report, but continued his active involvement in the business.

On July 6, 1962, an involuntary petition in bankruptcy was filed against Lamb as registered owner of the business, and also against several others, including appellant, as undisclosed partners. A receiver was appointed on July 9, 1962, and the business was adjudicated bankrupt on August 2, 1962.

On November 2, 1962, a substantial amount of merchandise was found stored at two locations, at a garage located in Highland Park, Michigan, which Vida had rented on July 4, 1962, and in a warehouse in Flint which Vida had rented in April under the fictitious name of Aaron Smith. Vida had not disclosed the existence of these goods during the bankruptcy hearing. There was further evidence that as late as July 6, 1962, the date the involuntary petition was filed, appellant took an order on a boat consigned to the bankrupt company and received over $1,000 cash for it.

On July 14, 1962, five days after the bankruptcy receiver locked up the business in the presence of appellant, appellant with Williamson, Wilson and Campbell, took delivery of a truckload of Dura Craft boats, one of which was towed to Rebel Discount store, which had been, and still was, being used as an outlet for merchandise. Another of the boats was sold the following day by Williamson, and a third was used by Vida to complete the transaction he had made on July 6.

There was evidence that sometime in June, 1962, an arrangement was made whereby the then contents of the Norm Wilson Enterprise building would be traded to customers for three new Cadillacs. This transaction was agreed to at a meeting at 10:00 o'clock at night while appellant Vida and others were loading trucks at the building. Apparently Vida was to receive one of the Cadillacs, but the transaction was not concluded. On another occasion when Vida and associates were dealing with a boat concern, Dura Craft, appellant Vida advised paying for the first delivery so they could establish credit for further purchases. Such purchases were made, and Vida acquired one boat for his own use. Vida, in an effort to have a large order of furnaces placed, advised letting a salesman think that Wilson Sales was supplying a large number of furnaces to Flint builders. Furnaces arrived and it was decided to get rid of them quickly but, as the witness Williamson...