Van Riper v. United States

• Decision Date: 27 July 1926
• Docket Number: 405,406.,No. 401-403,401-403
• Citation: 13 F.2d 961
• Parties: VAN RIPER et al. v. UNITED STATES, and four other cases.
• Court: U.S. Court of Appeals — Second Circuit

13 F.2d 961 (1926)

VAN RIPER et al. v. UNITED STATES, and four other cases.

Nos. 401-403, 405, 406.

Circuit Court of Appeals, Second Circuit.

July 27, 1926.

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Joseph F. Kroppy, of New York City, for plaintiff in error Hedrick.

Alexander T. Hussey, of New York City, for plaintiffs in error Sweet and Ish.

Patrick J. Dowd, of Waltham, Mass., John P. Feeney, of Boston, Mass., and Thomas H. Mahoney, of New York City, for plaintiffs in error Maloney and McCluskey.

Andrew Foulds, Jr., of New York City, for plaintiff in error L. C. Van Riper.

Harlah E. Cecil, of New York City, for plaintiff in error C. E. Van Riper.

Alexander Ackerson, of New York City, pro se.

Guido Pantaleoni, Jr., of New York City, for the United States.

Before MANTON, HAND, and MACK, Circuit Judges.

HAND, Circuit Judge (after stating the facts as above).

We can see no reason to say that there were involved in this case two separate schemes to defraud. Such a scheme, when shared among several, becomes a conspiracy, so that in fact the conspiracy count adds nothing of substance to the charge, except as it relieves the prosecution of the necessity of showing the connection of all the defendants to be charged at the date of the posting of the letters laid in the indictment. The same rules which govern the trial of conspiracies are therefore applicable to such trials. Hence, if the conspiracy was continuous, the scheme to defraud was continuous. It is quite true that most of the several defendants entered and left this scheme at different times, and this, as will appear, had an effect upon the result, but it did not turn it into a series of separate schemes. We agree that mere identity of content will not make identical two schemes which have no common participants (Terry v. U. S. C. C. A. 9, 7 F.2d 28), and that a scheme or conspiracy may be definitively abandoned, though some of the participants resurrect it later, because it is defined as much by the persons who engage in it as by the purposes they have in view. But in the case at bar Maloney and McCluskey sold or tried to sell Parco stock from the very beginning in June until May of 1925, when the whole business was stopped. They formed the nucleus from which the rest slipped away, and to which Ackerson and Rabinowitz, and later Brown, for a second time, adhered.

Moreover, though there was an interval in the selling of stock, there was no abandonment of the scheme, because Ackerson had already suggested to Maloney that he go into his employ before the elder Van Riper left, and under circumstances which showed that he had acquainted himself with Van Riper's plans, better than Maloney himself. In so reviving the moribund business and taking over both salesmen and Resnick the stenographer, Ackerson continued the old scheme and the organization, at least in part. At any rate the jury might have so concluded, just as they might have concluded that, in offering Parco stock after they opened the "uptown" offices, they were acting with Ackerson's knowledge and in accordance with their original understanding with him. Thus it appears to us that the learned judge was right in overruling the point.

The question of chief importance, however, is not that, but whether the case should have gone to the jury. The defendants have argued their position, ignoring the case of Durland v. U. S., 161 U. S. 306, 16 S. Ct. 508, 40 L. Ed. 709, which set down the rule, long recognized in civil deceit, that a promise which the promisor does not mean to perform, or knows that he cannot, is as good a ground for prosecution as a misrepresentation of some fact outside his mind. It was not necessary here for the prosecution to rest upon the statements made about the well at Parco or the plant at Nitro, or to show that the defendants knew them to be false. It was enough for it to prove that they had no belief that the stocks had the value which they ascribed to them, or that they were wholly sceptical as to the prospects of the well and the other property. They represented themselves as believing in these prospects, and that was a material fact likely to influence their customers. We have twice very recently discussed the question, and need do no more than refer to our own decisions. Bentel v. U. S., 13 F.(2d) 327, June 17, 1926; Knickerbocker Merchandising Co. v. U. S., 13 F. (2d) 544, July 14, 1926. The jury might therefore convict these defendants because it concluded that they were in a far better position to judge than the unsophisticated public to whom they sold, and that they had no belief in the possibility of striking oil or in the gasoline plant's becoming a valuable asset, but thought it the merest gamble. If they had no more belief than that, it did not justify their gaudy predictions of success, nor is it an excuse to protest that they might themselves have been deceived. It was for the jury to say whether or not they were, or whether they were without any belief one way or the other.

Maloney and McCluskey.

These defendants were connected with the business throughout, as we have already said. Whatever their ignorance while the drilling continued and the "downtown" offices remained open, they could have had no further illusion while in Ackerson's employ. The case is too plain for argument, without the evidence of the deceits by which they persuaded existing shareholders to take on new shares; i. e., "reloading them," as the phrase goes, by promises that their holdings, if completed, had already found a market.

Lewis E. Van Riper.

Whatever may be said as to the original connection of Lewis E. Van Riper with the business, he was in active charge of the Moore street offices after Hedrick left on August 10th. He did not finally abandon it until November, and he knew, or at least he could be found to have known, that on September 13, 1924, the drilling had stopped, and that there was no further justification for holding out the promises for the future of the well which were made thereafter, as, for example, in the issue of the Analyst of October 18th. Whether or not any sales were made after that date is unimportant; that issue betrays the scheme and it is enough.

Moreover, the disposition so shown is not to be limited to the precise time of that issue. Van Riper was an officer of the Parco Company, had been closely associated with Hedrick from the outset, and it was a proper — indeed, in our opinion, an inevitable — inference that he shared with the rest whatever knowledge they had. If, as we think, the jury was justified in concluding that the scheme was a fraud at an earlier period, say from July 15th, the date of the earliest count, they were justified in supposing that Van Riper was equally in it with the rest.

Charles E. Van Riper.

This defendant had only a slight connection with the enterprise, and it would in our judgment be appropriate to reduce his sentence. But with that we have nothing to do. He was constantly at his father's office in room 201 Moore street, and took part in the business, at least to the extent of receipting for the money taken in, and of signing, if not dictating, some of the letters in Hedrick's name. He is also said to have overheard Maloney and McCluskey at work upon their "reloading" operations. We, of course, recognize that in such cases a man, especially a subordinate, may go along in ignorance of the purposes of his superiors. That may have been the case here; in such matters absolute certainty is impossible. But when we consider that he was Lewis Van Riper's son, and engaged daily in his office, it appears to us that the extent of his acquaintance with what went on must rest with the jury.

Harry Hedrick.

This defendant especially insists upon the insufficiency of the evidence to charge him, chiefly based upon his supposed withdrawal from New York on August 10th. We cannot agree in the argument. Among them all he was the head and front; his name was used on all the circulars and correspondence, and more generally than that of any one else in oral communications with customers. It is incredible that this should have been done without his consent, even if Resnick is wrong in supposing that she heard Maloney and McCluskey use his name within his hearing in selling Parco stock. It is, indeed, true that he left New York before affairs were in extremis, but that by no means proves that he had cut his communications with the business. On the contrary, he stopped over at Wyoming for several days to examine the well, where he must have learned the facts.

It is argued that he could not be held criminally responsible for what took place in his absence, on the theory that a man may not commit crime through an agent. But we do not to-day distinguish between principals and accessories before the fact, the only distinction which was ever important in the subject. That crime may not be imputed to a principal through implied authority is not to the point. Hedrick left an organization in New York which he had created more than any one else; it used his name and would presumably keep on. He knew that it would sell stock, and he had been privy to its sales. Until he dissociated himself from his fellows, he remained in the scheme and in the conspiracy. If those who were left had diverged widely from the earlier common practices, a question might arise; but they did not. The conduct of the sales, at least through August, the jury might find to be part of a scheme to which Hedrick remained a party.

However, it is not necessary to depend upon his personal observations at Wyoming, or what was done when he left, for it was clearly a question for the jury how far Sweet, on his return in June, told him the truth, especially about casing in a 50-barrel well, and how far Brown's wires throughout July served to open his eyes. It is hardly credible that these men were engaged in deceiving each other. The jury was to say how much he was...