Opposition — Easton v. United States

LOR Bn

/ Supreme Court, U. $7 §:

i FILED’

Nos. 77-1539, 77-1770 and 77-6908 |' Ub & 1978

"MICHAEL RODAK, JR., CLERK

|

Iu the Supreme Court of the United States

OCTOBER TERM, 1977

STEPHEN K. EASTON, PETITIONER

Vv.

UNITED STATES OF AMERICA

WILLIAM HOCKRIDGE, PETITIONER

Vv.

UNITED STATES OF AMERICA

CHARLES PETRI, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

WADE H. McCCREE, JR.,

Solicitor General,

JOHN C. KEENEY,

Acting Assistant Attorney General,

WILLIAM G. CTIS,

JOHN T. BANNON, JR.,

Attorneys,

Department of Justice,

Waskington, D.C. 20530.

INDEX

Page

I Snare See Tae 1

cc ee 2

ERS Rare ema RN an Lal RAD 2

Rule involved _. 3

sk eee a 3

Argument 9

I reac ee 8 ee 19

CITATIONS

Cases:

Government of the Virgin Islands v. Ge-

reau, 523 F.2d 140, certiorari denied,

Eee A ene ace eee 11

Mattox v. United States, 146 U.S. 140 11

McDonald v. Pless, 238 U.S. 264 11

United States v. Eagle, 539 F.2d 1166, cer-

tiorari denied, 429 U.S.1110.. 11

United States v. Green, 523 F.2d 229, cer-

tiorari denied, 423 U.S. 1074 | 11

United States v. Gullia, 450 F.2d 777 - 14

United States v. Marr, 428 F.2d 614 __ 16

United States v. Neal, 365 F.2d 188 16

United States v. Tramunti, 513 F.2d 1087,

certiorari denied, 423 U.S. 832 17

Vizzini v. Ford Motor Co., 72 F.R.D. 132,

vacated and remanded on other grounds,

rE a ecaiisecnanstcsiiinmenetonnisinntbaneniicheninxinsisare 11

Statutes and rules:

18 U.S.C. 371, 656, and 2 __........--. 3

II

Statutes and rules—Continued Page

18 U.S.C. 1014 - It A 3

Fed. R. Evid. 404(b) - 7 16

Fed. R. Evid. 606(b), 28 U.S.C. App.

(Supp. V), Advisory Committee Notes 3, 10,

11, 12,15

a cee oan 18

Fed. R. Evid. 901(a) .......... saadabatide 18

Fed. R. Crim. P. 31(b) - Asmat SH 7

vee. &. Geum. F. S3¢G) —....__._..... 16

Miscellaneous:

H.R. Conf. Rep. No. 93-1597, 93d Cong.,

2d Sess. (1974) sled 12

S. Rep. No. 93-1277, 93d i 2d Sess.

eee wees St 12

Iu the Saywreme Court of the United States

OCTOBER TERM, 1977

No. 77-1539

STEPHEN K. EASTON, PETITIONER

Vv.

UNITED STATES OF AMERICA

No. 77-1770

WILLIAM HOCKRIDGE, PETITIONER

Vv.

UNITED STATES OF AMERICA

No. 77-6908

CHARLES PETRI, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. A)’

is reported at 573 F.2d 752. The opinion of the dis-

trict court (Pet. App. B) is unreported.

1“Pet. App.” refers to the appendix to the petition in No.

(1)

2

JURISDICTION

The judgment of the court of appeals was entered

on March 27, 1978. Petitions for rehearing (in Nos.

77-1770 and 77-6908) were denied on May 15, 1978.

The petitions for a writ of certiorari were filed on

April 26, 1978 (No. 77-1539), June 13, 1978 (No. 77-

6908) and June 14, 1978 (No. 77-1770). The juris-

diction of this Court is invoked under 28 U.S.C.

1254(1).

QUESTIONS PRESENTED

1. Whether the trial court erred in refusing to set

aside a partial verdict because two jurors expressed

misgivings about their votes while the jury was still

deliberating on additional counts.

2. Whether the trial court’s interview with those

jurors, undertaken with the consent of defense coun-

sel, was improper or coercive (Nos. 77-1539 and 77-

1770).

3. Whether the trial court erred in failing to poll

the jury separately as to each defendant on the con-

spiracy count (Nos. 77-1539 and 77-1770).

4. Whether the trial court abused its discretion in

admitting evidence of petitioner Easton’s complicity

in other crimes and of his financial condition (No.

77-1539) .?

* Hockridge’s petition lists three additional “Questions Pre-

sented” (Pet. 3), but he does not discuss these points in his

argument. Since these issues are adequately addressed in the

court of appeals’ opinion (Pet. App. A-5 to A-7, A-15), we

will not discuss them here.

3

RULE INVOLVED

Rule 606(b), Fed. R. Evid., provides:

Inquiry into validity of verdict or indictment.

Upon an inquiry into the validity of a verdict or

indictment, a juror may not testify as to any

matter or statement occurring during the course

of the jury’s deliberations or to the effect of any-

thing upon his or any other juror’s mind or emo-

tions as influencing him to assent to or dissent

from the verdict or indictment or concerning his

mental processes in connection therewith, except

that a juror may testify on the question whether

extraneous prejudicial information was improp-

erly brought to the jury’s attention or whether

any outside influence was improperly brought to

bear upon any juror. Nor may his affidavit or

evidence of any statement by him concerning a

matter about which he would be precluded from

testifying be received for these purposes.

STATEMENT

Following a jury trial in the United States District

Court for the Southern District of New York, peti-

tioners were convicted of misapplying the moneys and

assets of a bank, and of conspiracy to do so, in viola-

tion of 18 U.S.C. 371, 656, and 2 (Pet. App. A-2 to

A-3). Petitioner Petri was also convicted of prepar-

ing a false financial statement for the purpose of

influencing the Chemical Bank to make a $75,000

loan, in violation of 18 U.S.C. 1014 (Pet. App. A-3).

Petri was sentenced to four years’ imprisonment on

dq

each of two counts and two years on the final count,

all sentences to run concurrently (Pet. App. A-3 n. 4).

Petitioner Easton was sentenced to six months’ im-

prisonment, fined $5,000, and placed on probation

for three years (ibid.). Petitioner Hockridge was

sentenced to nine months’ imprisonment and placed

on probation for three years (ibid.). The court of

appeals affirmed in a thorough opinion on which we

principally rely (Pet. App. A).

1. The evidence showed that petitioners conspired

to defraud the Chemical Bank and the Bank of New

York by means of a loan scheme based upon the sub-

mission to these banks of false corporate financial

statements. Chemical Bank ultimately lost more than

$1,100,000 on these loans (Pet. App. A-4).

In June 1971, petitioner Petri acquired a debt-

ridden public corporation, Zavala-Riss Productions,

which he subsequently renamed Cine-Prime Corpora-

tion (Tr. 1914-1954; 2089). Shortly after the pur-

chase, Petri began to build a conglomerate by acquir-

ing Comprehensive Sports Planning, Inc. (CSPI) with

the promise that the stockholders of CSPI could ex-

change their shares for stock in Zavala-Riss (Tr.

1576-1581). At the time CSPI was acquired by Petri,

petitioner Easton was CSPI’s accountant and a mi-

nority stockholder (Tr. 1578). Shortly after the ac-

quisition of CSPI, Easton agreed to be the accountant

for Petri’s emerging conglomerate in exchange for a

salary plus a substantial amount of the stock in

Zavala-Riss (Tr. 1583-1587).

5

Petri gained the support of petitioner Hockridge,

then assistant vice president and loan officer of the

Chemical Bank, by satisfying $58,000 in loans the lat-

ter had previousiy approved to third parties, and later

by diverting to Hockridge’s checking account $14,000

of a $75,000 loan Hockridge approved for one of

Petri’s companies (Pet. App. A-4). Petri also pro-

vided Hockridge with other bribes and gratuities, in-

cluding a mink coat, golf clubs, and stock (ibid.).

From September 1971 to June 1972, Hockridge

approved more than 20 unsecured corporate loans to

companies controlled by Petri (Pet. App. A-3 to A-4).

The rules of the Chemical Bank prohibited its loan

officers from unilaterally approving loans in excess

of $75,000 to two or more corporations controlled by

the same party or parties (Tr. 539-543). To make

it appear to bank officials that the loans approved by

Hockridge were unrelated, Easton and Petri had a

number of employees sign corporate promissory notes

and corporate resolutions as officers of the various

corporations within the conglomerate that were to

receive loans from the bank (Tr. 639-675; 868-882;

1267-1304; 1352-1377; 1999-2004; 2174-2182; 2405-

2425). Hockridge then prepared fictitious reports for

the bank files indicating that before approving the

loans he had spoken with corporate officers about the

loans and their repayment.’

*’ Numerous government witnesses testified that these repre-

sentations that Hockridge had spoken to them were false (Tr.

639-675, 1036-1040, 1267-1304, 1406-1410, 2742-2757, 2719-

2724, 2405-2425, 1943-1946, 2913-2916).

6

For all but two of the corporate loans approved by

Hockridge at Chemical Bank, Easton prepared un-

signed corporate financial statements which he and

Petri submitted to Hockridge (Pet. App. A-4).* These

financial statements grossly overstated the assets of

the corporations on whose behalf loans were sought.’

Hockridge was aware that these statements were

false; on one occasion he told a government witness

to warn Petri and Easton “to come down off some

of these wild balance sheets” (Tr. 1035). Easton and

Petri then manipulated the loan proceeds, paying off

loans to one corporation with part of the proceeds of

loans to others, in order to create the impression that

the corporations making up the conglomerate were

viable entities doing a substantial volume of business.

Easton was also instrumental] in obtaining a $150,-

000 loan from the Bank of New York for Todays

Stores Services, Inc., one of the companies in the con-

glomerate. Easton told a Bank of New York loan

officer that he was the treasurer of Todays Stores

and that the company was part of a group of busi-

nesses controlled by Cine-Prime Corporation. He

* Robert Fillet, who had been employed by Petri as a con-

sultant, testified that Easton told him that he (Easton) was

not concerned about the false statements that he had pre-

pared because he had not signed them (Tr. 1637-1638).

’ For example, Easton listed $261,800 in assets in the Cord

Automobile Co. financial statement, and $189,918 in assets in

the Talmadge Furniture Co. financial statement, when two

months previously Petri had acquired all of the assets of both

companies from the bankruptcy court for one hundred dollars

(Tr. 1440-1450).

7

stated that the group did all its business at Chemical

Bank, but that Cine-Prime Corporation was growing

so rapidly that its banking relationships needed to

be expanded (Tr. 3137-3138). After Easton sub-

mitted two false financial statements to the Bank of

New York, it agreed to extend the $150,000 loan

(Gov’t. Exs. 26(f) (1), 26(f)(2); Tr. 3143, 3150).

Some of the proceeds from this loan went to Easton,

who received $2,500 plus an additional $15,000 that

was used to pay off a Chemical Bank loan to his

company, Tax by Telephone (Tr. 2540-2570).

2. The jury began its deliberations on Friday

morning, February 11, 1977 (Pet. 7). It reconvened

on Monday morning and continued deliberations.. At

the end of the day the district judge indicated that he

intended to exercise his prerogative under Fed. R.

Crim. P. 31(b) to ask the jury whether it had reached

a partial verdict (Tr. 5897, 5900).°

In response to the court’s inquiry, the jury an-

nounced a verdict of guilty as to Petri, Easton, and

Hockridge on Count One, the conspiracy count (Tr.

5901-5902). The court then asked counsel if they

wanted the jury polled; and although only counsel

for Hockridge responded affirmatively, the jurors

were asked whether they found all three defendants

guilty on Count One. Each juror responded affirma-

tively, and the verdicts were recorded (Tr. 5902).’

* Petitioners did not object to the district court’s decision

to take a partial verdict, nor challenge the district court’s

authority to do so pursuant to Rule 31(b) (Tr. 5880-5901).

’ At this time, petitioners made no request that the jury be

individually polled as to each defendant (Tr. 5901-5902).

8

On Tuesday, February 15, at approximately 5:00

p.m., the judge announced that he had received a note

from Juror Number Four asking to see him (Tr.

5909). After receiving the views of counsel, the court

stated that he did not intend to interview Juror Four

until the jury concluded its deliberations (Tr. 5909-

5914). However, when the jury reconvened the next

morning, the court received a note from Juror Num-

ber Three asking to see the judge and stating that

she believed she had committed an injustice by rush-

ing into a verdict (Tr. 5920).

With the consent of petitioners’ counsel, the court

conducted an in camera interview with Jurors Three

and Four (Tr. 5921-5924). At the interview, the

two jurors expressed misgivings about the verdict on

Count One (Tr. 5928-5932). The court reminded the

jurors that he did not want them to surrender their

honest convictions because of other jurors, and he

suggested that they resume deliberations and discuss

their concerns with the other members of the jury.

The judge also mentioned the possibility that the

jurors could discuss the problem further with him

later (Tr. 5927-5935).

Following the in camera interview, the court de-

nied the motion by all defendants to set aside the

verdict on Count One, and he also denied Easton’s

request to have the jury polled individually as to him

on Count One (Tr. 5935-5942).

The next day, at approximately 2:00 p.m., the jury

informed the court that it had reached verdicts on

three additional counts (Tr. 5967-5968). The jury

9

found petitioners guilty on Count Two and acquitted

them on Counts Three and Four (Tr. 5969-5970).

The jurors were polled, and each agreed that this was

his verdict (Tr. 5970). The following day after the

jury announced partial verdicts on nine more counts,’

the court discharged the jury and dismissed the re-

maining 11 counts (Tr. 5996-6001, 6021-6023). The

court denied post-trial motions to set aside the verdict

because of jury misconduct, refusing to permit peti-

tioners to interview Jurors Three and Four because

they could not impeach their own verdict, and holding

that even if the two jurors’ statements were to be

considered in ruling on the motion, they had not sur-

rendered their honest convictions in finding petitioners

guilty on Count One (Tr. 6041-6046; Pet. App. A-18

to A-19).

ARGUMENT

1. Petitioners contend that the trial court erred

in refusing to set aside the partial verdict or to order

redeliberation after Jurors Three and Four expressed

misgivings about their votes. They urge that since

the verdicts on Count One were not unanimous, re-

versal is required.

a. Petitioners rely upon the statements of Jurors

Three and Four to demonstrate the jury’s lack of

unanimity. These jurors stated that they had doubts

about their verdict on Count One that had not been

* Petitioner Petri was convicted on one additional count,

and otherwise petitioners were acquitted on each of these

counts (Tr. 5971-6021).

10

resolved and that they had been rushed into a verdict

by pressure from the other jurors. The answer to this

contention, however, is that the statements of the two

jurors, reciting no outside influence and coming after

the verdict on Count One had been rendered, con-

firmed by a poll of the jury, and recorded, were too

late to impeach the result.

As the court of appeals correctly concluded, Fed.

R. Evid. 606(b) explicitly forbids recourse to evidence

of this nature in order to impeach a verdict. The

Rule provides that “[u]pon an inquiry into the

validity of a verdict * * * a juror may not testify as to

any matter or statement occurring during the course

of the jury’s deliberations or to the effect of anything

upon his or any other juror’s mind or emotions as

influencing him to assent to or dissent from the ver-

dict or indictment or concerning his mental processes

in connection therewith * * *.”° The focus of Rule

606(b) and its judicial antecedents is on the “insula-

tion of the manner in which the jury reached its ver-

dict, and this protection extends to each of the com-

ponents of deliberation, including arguments, state-

ments, discussions, mental and emotional reactions,

votes, and any other feature of the process.”’ Notes

of the Advisory Committee on Proposed Rules, Fed.

* Rule 606(b) does not bar a juror’s testimony “on the ques-

tion whether extraneous prejudicial information was im-

properly brought to the jury’s attention or whether any out-

side influence was improperly brought to bear on any juror.”

Petitioners do not contend that any such extraneous influence

was exerted upon any juror.

11

R. Evid. 606(b), 28 U.S.C. App. (Supp. V), p. 2331.

Forbidding inquiry into these matters is intended to

encourage free and open discussion among the jurors,

to promote the stability and finality of verdicts, to

protect jurors against annoyance and embarrassment,

to discourage jury tampering, and to prevent fraud

by jurors. McDonald v. Pless, 238 U.S. 264, 267-269;

Mattox v. United States, 146 U.S. 140, 148-149;

United States v. Eagle, 539 F.2d 1166, 1170 (C.A.

8), certiorari denied, 429 U.S. 1110; Government of

the Virgin Islands v. Gereau, 523 F.2d 140, 148-150

(C.A. 3), certiorari denied, 424 U.S. 917; United

States v. Green, 523 F.2d 229, 235 (C.A. 2), certio-

rari denied, 423 U.S. 1074; Advisory Committee

Notes, supra, Rule 606(b).

To be sure, petitioners argue that Rule 606(b)

should not be applied where the jurors’ statements

were made before the jury had been finally discharged.

But the distinction petitioners seek to draw is not

supported by the language of Rule 606(b), which

applies “[u]pon an inquiry into the validity of a ver-

dict,” not upon the discharge of the jury. See Vizzini

v. Ford Motor Co., 72 F.R.D. 132 (E.D. Pa.), vacated

and remanded on other grounds, 569 F.2d 754 (C.A.

3)."° Moreover, the poiicy considerations underlying

1° Petitioner Petri urges (Pet. 13-15), notwithstanding the

language of Rule 606(b), that as a general rule “the cut-off

point for finality”—after which a juror’s statements may not

be received to impeach a verdict—is the time of the jury’s

discharge. An examination of the cases cited in support of this

contention, however, reveals that although many hold that

statements made after discharge are not admissible to impeach

12

Rule 606(b) are applicable to partial verdicts as well

as to complete verdicts. Congress adopted the Senate

version of Rule 606(b), which was based upon the

view that any inquiry into the mental processes of

the jurors would be undesirable. S. Rep. No. 93-

1277, 93d Cong., 2d Sess. 13-14 (1974); H.R. Conf.

Rep. No. 93-1597, 93d Cong., 2d Sess. 8 (1974). In-

deed, inquiry into the jury’s deliberations while the

jury is still considering its verdict on additional

charges may well be more intrusive than inquiry after

the jury has been discharged. Rule 606(b) also

serves the interest of ensuring the finality of ver-

dicts. As the court of appeals recognized, partial

verdicts are intended to give finality to a part of the

case upon which the jurors have reached agreement.

The partial verdict thus serves as a “hedge” (Pet.

App. A-14) against the possibility that events during

the course of long deliberations might require retrial

of the entire case. Allowing the impeachment of par-

tial verdicts whenever a juror has second thoughts

frustrates the goal of giving final effect to that part

of the litigation, and thus defeats the purpose of

taking a partial verdict. As petitioner Petri recog-

nizes (Pet. 16), this would render partial verdicts

no more than “tentative, working hypotheses.”

the verdict, none deals with the situation where the juror’s

impeaching statements are made after the verdict is recorded

but before discharge. These cases thus furnish no precedent

for disregarding the express terms of Rule 606(b), which bar

the admission of a juror’s statements once a verdict has been

recorded, i.¢., “[uJpon an inquiry into the validity of a

verdict.”

13

As the court of appeals correctly concluded (Pet.

App. A-14), there were “no reasons of sufficient mag-

nitude to depart from the normal rules governing

impeachment of jury verdicts” simply because the

verdict in the instant case was a partial one, and ac-

cordingly the statements of Jurors Three and Four

were not admissible to impeach the verdict on Count

One.

b. In any event, even if the jurors’ statements are

considered, the record supports the court’s finding

(Pet. App. A-10) that neither juror had “surren-

der{ed] [her] honest convictions,” and thus the ver-

dict on Count One represented the unanimous decision

of the jurors. The trial judge had firsthand knowledge

of the case, and he observed the two jurors when they

were polled on each count, including the count about

which they later expressed doubts. After the in

camera interview, the jurors in question returned to

their deliberations, and the trial judge had an oppor-

tunity to observe the interaction of the jury on the

days that followed as they reviewed additional evi-

dence and reached verdicts on one count after an-

other. The day following the in camera interview,

Jurors Three and Four joined the remainder of the

jury in finding petitioners guilty on a second count,

and neither of them expressed any doubts about this

verdict when she was polled. The jury subsequently

announced its verdict on 11 more counts, and in each

instance Jurors Three and Four agreed with these

verdicts when polled. They expressed no further

doubts or concerns. Accordingly, even considering the

14

jurors’ statements of their second thoughts, the record

supports the trial judge’s finding that both jurors

had voluntarily assented to the jury’s verdict on

Count One.

Since the jury’s verdict on Count One was unani-

mous, there was no ground for setting aside the ver-

dict or ordering the jury to redeliberate on that

Count.”

2. Petitioners Easton and Hockridge also contend

that the court’s in camera interview with the jurors

was improper. First, they urge that the judge gave

the jurors private instructions of the type disapproved

in United States v. Gullia, 450 F.2d 777 (C.A. 3).

To the contrary, however, the record demonstrates

that the trial judge’s comments to Jurors Three and

Four were a far cry from the “additional instruc-

tions” in Gullia, where before any verdict had been

recorded the court “instructed the juror, again and

again, during the conference upon the meaning of

‘aids, abets, counsels, commands, induces or pro-

cures,’”’ and responded to the juror’s question about

the effect of her holding out with the comment “ ‘[i]t

would mean that we have just wasted two weeks

** *?” 450 F.2d at 778-779. Here, in contrast, the

" Petitioner Petri urges (Pet. 2) that this case presents

the question whether the errors affecting Count One, the con-

spiracy count, also require reversal of the substantive counts,

since the jury was instructed that members of the conspiracy

could be found guilty of substantive crimes carried out in fur-

therance of the conspiracy (see Pet. 5). Since, as we have

shown, the verdict on Count One was not defective, we need

not reach this question.

15

im camera interview was devoted primarily to the

judge’s effort to learn the basis of each juror’s con-

cerns. The judge made no attempt to reinstruct the

jurors: indeed, although Juror Three asked what

constituted a reasonable doubt (Tr. 5931), the judge

did not repeat his instructions on this point, or any

other.

The record likewise provides no support for peti-

tioners’ related contention that the judge’s comments

during the interview were coercive and tantamount

to an Allen charge on Count Two.” Before asking the

two jurors to return to the deliberations, the judge

reminded them that he did not want them to sur-

render their honest convictions, suggested that they

get “hardened to” the fact that “Jurors disagree in-

evitably,“and advised them to relax and “see how it

goes today” (Tr. 5931-5932). As the court of ap-

peals correctly concluded, this conduct “was the oppo-

site of coercive’ (Pet. App. A-15), and it bore no

resemblance to an Allen charge.

3. Petitioners Easton and Hockridge next contend

they were denied their right to have the jury polled

on Count One separately as to each of them. How-

% Petitioners also suggest that the two jurors may have

been coerced to give up their doubts on Count One. As the

court of appeals correctly noted, the trial judge’s suggestion

that the two jurors raise their concerns about Count One

with the other jurors was clearly not coercive, although under

the court of appeals’ construction of Fed. R. Evid. 606(b) it

was error to suggest that the verdict on that count could be

reconsidered (Pet. Arp. A-15 n. 20). That error, however,

would favor rather than prejudice petitioner.

16

ever, although the court inquired whether any of the

defendants wished to have the jury polled on Count

One, neither requested that the jury be polled sepa-

rately as to each defendant (Tr. 5902). Indeed,

Easton did not request a poll at all. Since petitioners

made no timely request, they cannot now complain

that a single poll for the three defendants was in-

sufficient. Fed. R. Crim. P. 31(d); United States v.

Marr, 428 F.2d 614 (C.A. 7); United States v. Neal,

365 F.2d 188, 190 (C.A. 6).

4. Petitioner Easton contends (Pet. 30-35) that

the district court erred in admitting evidence that

petitioner characterizes as irrelevant and prejudicial.

This contention is without merit.

a. Easton first argues (Pet. 30-32) that the dis-

trict court improperly admitted evidence showing that

he failed to withhold taxes from the paychecks he

prepared for employees of corporations within the

conglomerate. The answer is that evidence of other

crimes, although inadmissible to prove the actor’s

criminal character or disposition, is admissible to

show “motive, opportunity, intent, preparation, plan,

knowledge, identity, or absence of mistake or acci-

dent.” Fed. R. Evid. 404(b).

The evidence in question was introduced to estab-

lish the fact—which the defense vigorously disputed

—that corporations formed by Petri existed only on

paper for the purpose of obtaining fraudulent loans

from the Chemical Bank. Evidence showing that

Easton failed to withhold taxes from “employees’ ”

17

paychecks drawn on the accounts of these corpora-

tions clearly supported this inference, and was prop-

erly admitted as proof of the conspirators’ fraudulent

plan.

b. Easton also urges (Pet. 32-33) that the district

court erred in allowing the government to elicit on

cross-examination the fact that his net worth had in-

creased by more than $2,000,000 from 1972 to 1974

(Tr. 5033). He contends (Pet. 32) that “[t]here

was no evidence that [he] derived personal benefit

from the loans made to the corporate borrowers,” and

charges that the government’s purpose in introducing

the irrelevant evidence of his increased net worth

was to mislead and prejudice the jury. But the fact

is that the government presented evidence showing

that Easton had diverted loan funds to a personal

checking account (Tr. 4890-4895). Moreover, a large

part of the proceeds of the $1,100,000 loans petitioner

and his co-defendants procured are still unaccounted

for. In these circumstances, there was nothing im-

proper in questioning Easton about whether he used

some of this money to finance various business ven-

tures that had significantly increased his net worth

(Tr. 5003-5034). See United States v. Tramunti, 513

F.2d 1087 (C.A. 2), certiorari denied, 423 U.S. 832.

In any event, Easton failed to object to this line of

questioning, thus waiving the issue on appeal.

ce. Easton also argues (Pet. 33-34) that the dis-

trict court erred in admitting into evidence financial

statements that he contends were not properly au-

18

thenticated and constituted hearsay. The contention

that the financial statements were hearsay is without

merit. Since the statements were not admitted as evi-

dence of the truth of the matters reported therein (in-

deed the government sought to show they were false),

they did not constitute hearsay. Fed. R. Evid. 801(c).

His contention that the statements were not authen-

ticated is equally unavailing, since there was ample

evidence to establish they were what the government

claimed—the statements submitted to Hockridge to

justify loans to the Cine-Prime conglomerate. See

Fed. R. Evid. 901(a). The statements were admitted

as part of the corporate loan files of Chemical Bank

(Tr. 116-117). Hockridge testified that these finan-

cial statements were the ones given him during the

course of the conspiracy (Tr. 3542-3544). In any

event, since Easton did not object to the admission of

the documents on the ground they were unauthenti-

cated, he has waived any objection he might have

made.

19

CONCLUSION

It is therefore respectfully submitted that the peti-

tion for a writ of certiorari should be denied.

WADE H. McCREzE, Jr.,

Solicitor General.

JOHN C. KEENEY,

Acting Assistant Attorney General.

WILLIAM G. OTIs,

JOHN T. BANNON, JR.,

Attorneys.

JULY 1978.

W wv. 2 Covernwanr paintine orrice, 1978 266472 51