Petition — Besbris v. United States

- §$upreme Court, U. S,

| FPILED q

JUL 6 1978

IN THE

MICHABL RODAK, JR., CLERK

SUPREME COURT OF THE UNITED )

wo

OCTOBER TERM. 1978

nw. 787198

ALLAN J. BESBRIS,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

HARRY M. WEISS

4204 North Brown

Scottsdale, Arizona

85251

ATTORNEY FOR PETITIONER

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1978

No.

ALLAN J. BESBRIS,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

HARRY M. WEISS

4204 North Brown

Scottsdale, Arizona

85251

ATTORNEY FOR PETITIONER

INDEX

page

CITATION TO OPINION BELOW...... “6 korea

Bo ee

QUESTIONS Pee sao 666eS00000600668

DERE OHS SSS ECO OS OHESO Cee ESESEOCESEOS

BASIS FOR FEDERAL JURISDICTION........9

REASONS FOR GRANTING THE WRIT.........10

1.

THIS COURT SHOULD GRANT CERTIORARI

TO DETERMINE WHETHER THE DISTRICT

JUDGE ERRED IN REFUSING TO ADEQUATELY

INDIVIDUALLY EXAMINE PROSPECTIVE

JURORS AS TO THEIR ATTITUDES ABOUT

THE CRIME WITH WHICH PETITIONER WAS

CHARGED AND THEREBY DENIED PETITIONER

DUE PROCESS OF LAW.........2..-.-10

THIS COURT SHOULD GRANT CERTIORARI

TO DETERMINE WHETHER THE RULE OF

KOTTEOKAS V. UNITED STATES REMAINS

VALID LAW AND WHETHER IT PRESENTS

A QUESTION OF LAW OR FACT......15

TCS ss 64.6606 600 6Se ees eeu

a. SHOULD THE JUDGE HAVE INSTRUCTED

THE JURY ON THE ISSUE OF WHETHER

THERE WAS A SINGLE OR MULTIPLE

SCHEME (CONSPIRACY) SUA SPONTE

TT ePTTTTPTert TT TTT. eee rT es CC

b. DID THE NINTH CIRCUIT ERR IN

FOLLOWING THE PORTER CASE WHEN

NO INSTRUCTIONS WERE GIVEN

TO THE JURY ON THE QUESTION

OF SINGLE OR MULTIPLE SCHEMES

TO DEFRAUD... ccccccccccccccccsesa

DL t hochepeteecbececoeeecosoconne

ea

TABLE OF CASES

page

Kotteokas v. United States,

328 U.8. Vo 6.ns0hoes 608 6006s Ze 23

Shepard v. Maxwell,

328 U.S. 333 C2006) 6 hi Sct svavves oueeuas

United States v. Giese, No. 74-3407,

Slip Op. p. 518 (9th Cir. Feb. 16,

LOTS) wc ce ceetessasbcdeceebeoeeeeeues 14

United States v. Porter,

441 F.2d 1204 (8th Cir., 1971)..21, 23

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1978

No.

sossseeessseeesS2eSeeeeee2ee=S===52=5=======

ALLAN J. BESBRIS,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

============ se=ss==2===2=2=================

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

NINTH CIRCUIT

=s=asse=se2S2=2=55=2e255e2See=5S=5=5===S=S=====

Petitioner prays that a writ of cert-

iorari issue to review the judgment of the

United States Court of Appeals for the

Ninth Circuit entered May 4, 1978, rehear-

ing denied, June 7, 1978.

oa Caine Be ne A Pe eee

CITATION TO OPINION BELOW

The opinion of the United States

Court of Appeals for the Ninth Circuit is

reported at F.2d (No. 77-2677,

9th Cir. May 4, 1978) and attached as

Appendix A.

JURISDICTION

Jurisdiction of this Court is invoked

under 28 U.S.C. §1254(1), all issues here-

in raised having been heretofore raised

in the court below.

QUESTIONS PRESENTED

l. Whether the United States District

Court Judge erred in refusing to

individually examine prospective

jurors as to their attitudes about

the crime petitioner was charged with

in light of massive pre-trial publicity

about the crime in the District.

2. Whether the United States District

Court Judge erred in denying petitioner's

motion to sever based upon Kotteokas v.

United States, 328 U.S. 750, 66 S.Ct

1239, 90 L. Ed 1557 (1946).

a) Whether the District Court Judge

should have instructed the jury

as to the issue of single or

multiple conspiracy sua sponte.

tte

7 yr YT ee

3

b) Whether the Court of Appeals for

the Ninth Circuit erroneously

assigned a question of law to the

provence of the jury as an issue

of fact.

STATEMENT

This petition arises out of the

affirmation of the Judgment of Conviction

of petitioner of violating 18 U.S.C.§§ 1341

and 2 (mail fraud and aiding and abetting)

in fifteen counts and of violating 18 U.S.C.

§§ 2314 and 2 (interstate transportation

of property obtained by fraud and aiding

and means in two counts. (Cl. Tr.

p. 519).

Petitioner was employed by Western

Land Sales Company ("WLS") as corporate

secretary and as an employee for only

eight months from November, 1971 through

June 26, 1972. Petitioner was an attorney

admitted to proactice in California in

1971 and in Arizona on April 22, 1972.

(Rptr. Tr. pp. 1836-1839)

1. The Judgment erroneously defined §2314

as “Securities Fraud" (Cl. Tr. p. 519)

4

After graduating from the University

of Southern California Law Center in 1970,

petitioner worked for the California State

Department of Justice, Criminal Division

for approximately one year. He then moved

to Phoenix, Arizona. In Phoenix, he worked

for several months as a law clerk for a

local attorney, and then worked for a title

company for several months. Prior to his

working for WLS, petitioner did not know

— a =

and had never heard of Jacob Hood (the.

sole shareholder and President of WLS) or

of WLS itself. (Rptr. Tr. pp. 1840-1845)

Petitioner's duties with WLS had

nothing to do with the sale of real estate

or of real estate receivables, nor did he

have any job responsibilities involving

financial management of the company.

(Rptr. Tr. pp. 1847-1857)

Beginning in 1967 and continuing

after petitioner left WLS, Mr. Hood engaged

in various illegal activities involving

multiple lot sales and the creation of

fraudulent contracts on the sale of real

estate owned by WLS.

The nefarious practices engaged in

by WLS came under the general rubric of

"land fraud", a disease which seemingly

saturated the Arizona climate and press

during that period.

Petitioner professed his ignorance

of the fraudulent activities of WLS and

even the President of the company stated

{ that he never told petitioner of the

! fraudulent activities of the company.

(Rptr. Tr. pp. 1531, 1592)

The atmosphere of publicity about land fraud.

. The atmosphere which prevailed in

| Arizona for a year or two preceding

| petitioner's trial is difficult to describe

; and equally difficult to believe. Suffice

| it to say that the term “land fraud" and

Arizona became synonymous. The local press,

including the Arizona Republic, Arizona's

6

largest newspaper, fed upon prosecutions

and revelations concerning fraudulent

or questionable land development companies,

and, in turn, the widespread and pervasive

publicity fanned the Arizona prosecutive

agencies, state and federal, into action

and perhaps over-reaction.

If, by the time of petitioner's trial,

the frenzied atmosphere created by the

continual and repeated headlining of

"crooked" land development companies did

not produce a situation resembling Salem

in 1692, or more recently, McCarthyism in

1952, it certainly was not far from it.

Even a casual perusal of the front page

stories in the Arizona Republic for the

six months preceding petitioner's trial

reveals an atmosphere having all the

earmarks of a classic and fullblown

witchhunt. (Cl. Tr. pp. 165-171, 195-272)

In the six months preceding petitioner's

trial, there were articles virtually

| :

j every other day on the subject of "land

fraud" and "land swindles". Revelation

followed revelation. Sensational head-

line followed sensational headline. Land

development companies became notorious by

virtue of the continual and relentless

media treatment. The names of these

companies may not be familiar to this

Court, but the names of Cochise College

Park, Great Southwest Land and Cattle

Company, New Life Trust Company and, be-

cause of the indictment and attendant

publicity, WLS, are seared into the minds

of the literate populous of Arizona as

infamous and patently fraudulent. Perhaps

they should be, but that is beside the point

at issue here.

But the avalanche of publicity

regarding the evils of Arizona-style land

fraud was hardly limited to fraud. Defunct

land development companies and those

associated with or employed by such companies

were inextricably tied into and held

responsible in the press for practically

every other evil, sin and wrong afflicting

Arizona. Among the other evils were

official corruption, bribery, extortion,

organized crime, and, yes, murder.

In sum, the Arizona Republic and

other Arizona news media inundated the

Arizona public with massive doses of

adverse publicity concerning individuals

associated with defunct land development

companies. Such a continual barage of

adverse publicity could have no affect

other than to create among the literate

veniremen in Arizona a strong and abiding

prejudice (a predisposition towards guilt)

against individuals employed by land

development companies who stood accused

of fraud. It was doubtlessly a "hang-the-

bastards" atmosphere, and the subconscious

conditioning leading to that hanging

climate was continuously reinforced before

es ea erent lll

Sl

hoe at ab

|

and during petitioner's trial. To

further exacerbate matters, petitioner

was an attorney, and the adverse impact

of prejudicial pretrial publicity was com-

pounded when overlayed with the prejudices

which, rightly or wrongly, since Watergate

have stained all members of the bar.

It was in this atmosphere that

petitioner went to trial.

Prior to trial, petitioner moved for

transfer of his case from the District of

Arizona. (Cl. Tr. pp. 164-171) Ata

hearing of the motion on March 8, 1977,

the District Court Judge perfunctorily

denied that motion. (Rptr. Tr. Vol. X,

pp. 27-28).

BASIS FOR FEDERAL JURISDICTION

The United States District Court for

the District of Arizona had jurisdiction

of this case under 18 U.S.C. §323l, it

being alleged that the crimes charged

were violations of federal statutes.

— _—

Dinette ee ‘ is ss imitaels tsa te SUM bins a NN en

10

REASONS FOR GRANTING THE WRIT

1. THIS COURT SHOULD GRANT CERTIORARI

TO DETERMINE WHETHER THE DISTRICT

COURT JUDGE ERRED IN REFUSING TO

ADEQUATELY, INDIVIDUALLY EXAMINE

PROSPECTIVE JURORS AS TO THEIR

ATTITUDES ABOUT THE CRIME WITH WHICH

PETITIONER WAS CHARGED AND THEREBY

DENIED PETITIONER DUE PROCESS OF LAW.

During the period prior to petitioner's

trial, commencing with this indictment,

there was but one article dealing with, in

part, petitioner. That certainly does not,

by itself, constitute massive pre-trial

publicity. There was, however, virtual

daily coverage in the media of inflamatory

news items relating to land fraud. The

coverage was for such long duration and of

such intensity that virtually every

literate veniremen in Arizona must nece-

ssarily have had some knowledge of land

fraud and must equally necessarily form-

ulated some opinion about persons accused

of that crime.

During the change of venue motion

11

hearing, the District Court Judge , recog-

nizing the pretrial publicity about land

fraud,indicated that in voir dire, that

problem could and would be taken care of.

He said:

"The Motion for Change of Venue - let

me simply say about that, I have looked

over what you have said. Basically,

the defendant Besbris goes on, the

publicity in the field of land fraud.

I think the only way to determine

whether a jury can or cannot try this

case free of any prejudice is to find

out at the time we select the jury,

and I would ask those of you who are

going to trial on the 19th to be

prepared to submit any proposed

voir dire questions, and the Court

may Or may not ask them." (Rptr. Tr.

Vol. X, pe. 27)

Unfortunately, such voir dire exam-

ination never materialized.

|

12

Extensive questions were propounded

to the judge in order to uncover any bias

or prejudice possibly held by prospective

jurors. These questions were not asked

by the trial judge.

The Ninth Curcuit Court of Appeals,

citing United States v. Giese, No. 74-3407,

Slip op. p. 518, 532 (9th Cir. Feb. 16,

1978) stated:

"in cases of less publicity,...these

procedures are not required. Several

general questions addressed to the

entire panel of jurors, followed by

individual questions of jurors who

respond affirmatively to the initial

inguiries, may be sufficient if it

becomes clear that few jurors have

any knowledge of the case. (emphasis

in original)".

In this case, the trial judge asked

no questions of prospective jurors concerning

what, if anything, they knew about land

13

fraud in general, although the court did

ask whether or not any of the prospective

jurors were aware of this case or of any

of the parties thereto.

Accordingly, the absence of any

questions addressed even to the entire

panel, en masse, about their attitudes or

experiences or information about land

fraud, gave no opportunity to determine

if additional voir dire was needed. Never

having gotten that far, it was impossible

for petitioner to determine who among the

prospective jurors could be excused for

cause, or who should be peremptorily

challenged.

Petitioner contends that this Court

ought to set standards for what constitutes

adequate voir dire, consistent with due

process, in cases where the publicity does

not attach to the defendant, per se, but

to him by virtue of the crime he is alleged

to have committed. The rule as set forth

14

by the Ninth Curcuit in Giese does not deal

with such as case and is therefore in-

consistent with fair trial standards as

set forth by this Court in Shepard v.

Maxwell, 384 U.S. 333 (1966).

This Court has very plainly stated

the standards for a fair trial re: voir

dire, in Shepard v. Maxwell, id. This

Court should review the conduct of the

trial judge and the Ninth Circuit Court

of Appeals if this rule is not to be

contorted into meaninglessness.

15

2. THIS COURT SHOULD GRANT CERTIORARI

TO DETERMINE WHETHER THE RULE OF

KOTTEOKAS V. UNITED STATES REMAINS

VALID LAW AND WHETHER IT PRESENTS

A_QUESTION OF LAW OR OF FACT.

Introduction

Count One of the indictment in this

case covered thirteen pages and set forth

a scheme to defraud by use of the mails.

Count One named sixteen individuals as

defendants and, in substance, charges each

of them as principals or with having aided

and abetted the scheme to defraud. (Cl. Tr.

pp. 1-13). It alleged that the scheme

begain on or about February 16, 1967, and

continued until January, 1974, a period of

approximately seven years.

On its face, Count One purported to

allege one scheme by the sixteen defendants.

By the conclusion of the Government's

case-in-chief, however, it became clear

that the Government had in fact proved

four separate, distinct schemes.

Fe ee wee Bowe a Pe

Re ee

16

Moreover, some of the defendants at trial

participated in one, some in two, but

none in all of the schemes as to which

proof was aan

Four co-defendants, Stewart, Baumann,

Crowell, and McDonald, were tried jointly

with petitioner.

2. The opinion of the Ninth Circuit stated

that "Although the defendants entered and

left the operation at different times,

there was no fatal variance rendering the

joint trial improper." p. 10, Opinion.

At the close of the Government's case-in-

chief, the following discussion between

petitioner's counsel and the trial judge

took place:

"THE COURT: You mean to say theire

is more than one scheme or plan?

MR. BONNER: Absolutely.

THE COURT: I don't agree with you.

Go on to another point.

MR. BONNER: Could I just briefly be

heard on it?

THE COURT: I know the law and I

know the cases. I just don't agree

with you. I have heard the whole

case. I just don't agree that that

is a valid point. I don't see that

you have to belabor it.

MR. BONNER: Well, could I --

THE COURT: I have been through it

many a time. I don't see that there

is more than one plan or scheme here.

I think there is a continuing one which

people go in and out of but I don't

think there is any different kind of a

17

Based upon the Government's proof

the following four discrete schemes emerged:

Scheme One: The veidence showed that

McDonald, through his company, McDonald

Investment Company, purchased lot purchase

contracts at a discount from WLS and then,

through salesmen of his company, resold

such contracts to investors in the upper

midwest. Virtually all of the contracts

were sold prior to petitioner's employ-

ment at WLS. More importantly, there was

no evidence that petitioner participated

in any way in the creation of these contracts,

2. (Continued)

plan or scheme. It is the same one

all the way through. Same company,

same principle.

MR. BONNER: You certainly had

different individuals that conceivably

would have been participating, Your

Honor.

THE COURT: No. If you have two plans

and schemes they are totally separate,

they are not related to each other,

they have nothing to do with each other.

This is a continuing plan and sheme,

if it is anything, and people g_ in

and out of it at different times,

presumably." (Rptr. Tr. pp. 1783-1785)

18

their assignment to McDonald or their sale

to investors.

Scheme Two: Co-defendant Baumann was

also a mortgage broker. The evidence showed

that, like McDonald, his company, Bankers

Finance and Holding Company, bought lot

purchase contracts from WLS which were

subsequently sold to investors. All of

these sales also occurred long before

petitioner became employed by WLS and,

again, there was no evidence that petitioner

actively participated in the assignment or

sale of such contracts. It should be noted

that Baumann, of course, had no connection

with McDonald.

Scheme Three: As house counsel for

WLS, petitioner eabutetodned in arranging

three loans made by sophisticated investors

to WLS. No mortgage broker participated

in these loans. Neither Baumann nor

McDonald had any involvement with them.

19

Scheme Four: After the Securities

and Exchange Commission precluded McDonald

from selling lot purchase contracts, Hood

devised a scheme to sell corporate promissory

notes, secured by mortgages on specific

lots, through McDonald Investment Company.

No evidence was introduced to show any

connection whatever between that program

and petitioner or defendant Baumann. This

was the scheme that required cabins to be

built on the lots so mortgaged. ae

Notwithstanding the evidence of

wrongful acts in the performance of these

schemes - the failure to release lots from

trust, the failure to build cabins, the

use of forged and fraudulent mortgages and

contracts - these fraudulent programs or

schemes were clearly separately defined

and separately executed by Hood without

the participation of more than one co-

defendant in any scheme. The common nexus

in each case was Hood. The commonality

20

ends there.

When this Court @ecided Kotteokas v.

United States, 328 U.S. 750 (1946), the

rule was clearly announced that variances

between indictments and proof, and especially

in cases where the common nexus to defendants.

is one defendant who is the only connection

to the co-defendants on trial with hin,

would not be permitted.

In order not to make a mockery of that

rule, this Court should review the Ninth

Circuit's judgment in this case to enforce

the clear meaning of Kotteokas.

a. SHOULD THE JUDGE HAVE INSTRUCTED

THE JURY ON THE ISSUE OF WHETHER

THERE WAS A SINGLE OR MULTIPLE

SCHEME (CONSPIRACY) SUA SPONTE.

In its opinion, the Ninth Circuit

dealt with petitioner's claim of variance

by stating "the evidence was sufficient

to present the issue whether there was a

Single or multijple schemes as a question

for the jury. United States v. Porter,

21

441 F.2d 1204, 1213 (8th Cir.), cert.

denied, 404 U.S. 911 (1971)" Opinion at

p. 10.

It must be noted in this case,

however, the question of whether there

was one scheme or no scheme, was presented

to the jury: that was the verdict question.

The issue of whether there was one scheme

or multiple schemes, however, was not

presented to the jury. The jury received

no instructions to guide them in determining

whether there was a single or multiple

schemes. That question simply was not

presented to the jury. Although it is not

Clear from the Porter opinion, one must

presume that such instructions were given

to the jury in that case.

The prosecution presented the case as

one scheme, the function equivalent of a

Single conspiracy. The District Judge

twice denied motions based upon Kotteakos.

22

In doing so, he made it abundently clear

that he believed that only scheme existed.

The trial judge further made it clear that

he would not consider an instruction on

Single or multiple conspiracies, at least

tacitly. (Cl. Tr. pp. 2712-2713)

This Court ought to grant this

petition for Certiorari to settle the

question of whether the problem of variance

is one of fact, for the jury, of whether

it is one of law, for the trial judge to

decide.

Certainly in some cases, the existance

of a single or multiple scheme is a question

of fact, but in this case it was not. [It

was twice ruled upon as a question of law

by the trial judge. It is therefore error

to place that question before the jury

without any instructions.

b. DID THE NINTH CIRCUIT ERR IN

FOLLOWING THE PORTER CASE WHEN

NO INSTRUCTIONS WERE GIVEN TO

THE JURY ON THE QUESTION OF

23

SINGLE OR MULTIPLE SCHEMES TO

DEFRAUD.

Allied to the problems discussed

in paragraph 2(a) supra, is the question,

ab initio as to whether the issue of var-

iance is one for the judge or ror the jury.

In Kotteokas that question was

decided as one for the judge to decide.

There is no sound policy or reason in law

to assign that issue to the jury. To say

that the jury is the ultimate determiner of

fact is to beg the question. The trial

judge hears all of the evidence during the

trial. He need not invade the realm of the

jury to decide a question of law. The

issue of variance is one of evidence versus

pleadings; it does not involve resolving

disputed evidence.

Accordingly, this Court ought to

grant certiorari to review this question

and resolve the dispute between the opinion

in this case, the Porter case, and Kotteokas.

24

CONCLUSION

Petitioner prays that the petition

for writ of certiorari be granted.

Respectfully submitted,

Harry MJ

4204 North Brown Avenue

Scottsdale, Arizona

85251

ATTORNEY FOR PETITIONER

Dated: Scottsdale, Arizona

July 3, 1978 1.

AMENDED

CERTIFICATE OF SERVICE

I, the undersigned, being a member

of the Supreme Court Bar, certify that

I have deposited in the United States

Mail, airmail postage prepaid, the

Original and forty copies of this

PETITION FOR CERTIORARI, addressed as

follows:

Clerk, United States Supreme Court

l First Street, N.E.

Washington, D.C.

and that I deposited in the United States

Mail, airmail postage prepaid, three

copies of this PETITION FOR CERTIORARI,

addressed as follows:

Solicitor General

Department of Justice

Washington, D.C. 20530

I further certify that this Certificate

is made in compliance with Rule 33(3) (b),

Rules of the Supreme Court of the United

States.

The original Certificate of Service

was filed on July 5, 1978. This Amended

Certificate is filed on July 26, 1978.

fires Mi LJanee

arry MWeiss

4204 North Brown Ave.

Scottsdale, Arizona

Attorney for Petitioner

APPENDIX A

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v. No. 77-2677

ALLAN J. BESBRIS, OPINION

Defendant-Appellant.

eee ee ee eee eee ee

Appeal from the United States District Court

for the District of Arizona

Before: WRIGHT and CHOY, Circuit Judges,

and POOLE, District Judge.*

WRIGHT, Circuit Judge:

An Arizona land fruad scheme which

operated from 1967 to 1974 resulted in the

conviction of these appellants on counts

of mail fraud (18 U.S.C. §§ 1341-42), inter-

state transportation of fraudulently ob-

tained property (18 U.S.C. 2314) and aid-

ing and abetting (18 U.S.C.§ 2). After

considering the assignments of error pre-

sented by each appellant, we conclude that

the convictions should be affirmed as to

A-2

all except McDonald. His conviction is

reversed.

I

FACTS

Jacob Hood formed Western Land Sales

(Western) in 1966 to sell Arizona real

estate. It sold subdivision lots on con-

tracts, title remaining in trust until a

release price was vase In 1969 Western

contracted with Bankers Finance and Hold-

ing Company (Banker's) to market the ‘con-

tracts held by Wester. Bankers discounted

contracts to investors, collected from the

buyers of lots, and issued checks for each

lot's release from trust. Periodic pay-

ments received by Banker's were forwarded

to the contract assignee-investors.

Western later signed several sub-

division trust agreements requiring pay-

ments to be made to the trusts irrespective

of lot sales. As a result, its need for

* Of the Northern District of California

ready cash grew. It engaged McDonald

Investment Company (MIC) as a second

agent for marketing land sale contracts

to investors for a commission.

MIC's owner, appellant McDonald, asked

for safeguards to insure the soundness of

the contracts. Western was to guarantee

the contract assignment, ois other

contracts in escrow to cover defaults, and

arrange for an independent agency to col-

lect contract installments and forward

them to investors. Credit checks on lot

buyers were made at McDonald's request.

Western supplied him with its financial

statement and recorded the contracts

brokered through MIC with the contract

assignee shown as first mortgagees.

In the course of this business,

Western's receipts from sales of legit-

imate contracts proved insufficient to

cover operating expenses. Western and its

agents then wrote spurious contracts of

sale to persons who never intended to

make payments on them. 3/ The "“fence-

posted" contracts were then sold to in-

vestors through Banker's or MIC or pledged

as security for loans to Western or Hood.

In a few instances the signatures to the

contracts were outright forgeries.

At the same time Western continued

to contract with legitimate buyers and

those contracts were marketed through the

same agents. At Westerr s office Hood kept

secret separate files on the fraudulent

contracts.

To conceal the fraud Western and

Hood supported the forged and fenceposted

contracts by making periodic payments on

them. These were sent to Banker's, which

collected payments on the contracts it had

sold, or to Central Service Bureau (CSB),

which was employed by Western to collect

payments on other assigned contracts.

A-5

Banker's and CSB forwaded these receipts

to the assignees.

Western's financial success depended

on continuing brisk sales of contracts

because those receipts were the source of

periodic payments on bogus contracts.

Whenever Western was making payments either

because of default by the orignial obligor

Or because the contract was a fraudulent

one, the assignee was not notified.

CSB kept computer records on all

contracts it serviced and indicated in

code the contracts on which Western was

making payments. The genuineness of con-

tracts was not readily ascertainable by

others, however, and because investors

generally received regular payments, their

suspicions were not aroused until the

operation collapsed.

In 1971 the Securities and Exchange

Commission investigated Western which

agreed to stop interstate sales of un-

A-6

registered land sale contracts. Western

moved quickly to avoid SEC regulation, how-

ever, by selling contracts for sale of lots

with cabins and by selling corporate pro-

missory notes secured by first mortgages

on lots with cabins. u To further the

scheme, Hood falsified appraisals to show

the existence of cabins where none were

built. In truth, of a total of 800 lots,

only 12 had cabins. Many lots were assigned

twice and some were never released from

trust.

In August 1973, Western defaulted on

its obligations. Few note holders were

able to obtain their lots and those who

could found no cabins on them. Many

contract assignees discovered that they were

holding worthless paper.

On January 12, 1977, a federal grand

jury indicted 16 defendants with 54 vio-

lations of federal law. Several pleaded

guilty, including Jacob Hood, who became

A-7

a prosecution witness. Others proceed to

trial in two groups. The appellants here

were jointly tried and convicted on several

counts. Crowell, a co-defendant, was

found not guilty.

Each assignment of error is discussed

separately.

II

DISCUSSION

A. Pretrial Publicity.

Appellant Besbris first asserts that

the trial court erred in denying his motion

for change of venue due to prejudicial

pretrial hia I He also contends that

the limited voir dire by the district judge

was inadequate in light of the publicity.

Besbris argues that extensive Arizona

press coverage of land fruad schemes at

the time of trial created a reasonable

likelihood that he could not receive a fair

6/

trial in the District of Arizona. He

A-8

claims that, the trial judge "perfunctorily"

denied his change of venue motion when the

circumstances required that it be granted

under Fed. R. Crim. P. snare

The publicity of which Besbris com-

plains, however, consisted primarily of

news stories of Arizona's fraud-ridden

real estate business. FP sbris was mentioned

by name but once, several months before

trial, when he was indicted. Articles

dealt with land frauds generally and did

not focus on these defendants. In this

respect, Besbris' appeal differs signifi-

cantly from those in which prejudicial

publicity has been found to have impaired

a defendant's right to a fair trial. E.g.,

Sheppard v. Maxwell, 384 U.S. 333 (1966);

Silverthorne v. United States, 400 F.2d

627 (9th Cir.1968).

Rule 2l(a) requires a change of venue

when there is in the district "so great

A-9

a prejucie against the defendant that he:

cannot obtain a fair and impartial trial

-++-" We do not agree with appellant that °

general press coverage of Arizona land

fraud created such prejudice against him.

When a Rule 21(a) motion is made "the

ultimate question is whether it is possible

to select a fair and impartial jury, and

the proper occasion for such a determination

is upon the voir dire examination." 8A

Moore's Federal Practice 421.10(3), at

21-10 (1977) (quoting Blumenfeld v. United

States, 284 F.2d 46, 50(8th Cir. 1960),

cert. denied, 365 U.S. 812 (1961)). See

Silverthorne v. United States, 400 F.2d

at 639-40. See generally ABA Standards

Relating to Fair Trial and Free Press § 3.2

119-124 (Approved Draft 1968).

The trial judge has a “large discretion"

in gauging the effects of allegedly pre-

judicial publicity and in taking measures

A-10

to insure a fair trial. United States v.

Polizzi, 500 F.2d 856, 879 (9th Cir. 1974),

cert. denied, 419 U.S. 1120(1975); Silver-

thorne v. United States, 400 F.2d at 637-

38. Besbris has not demonstrated that

denial of his motion for change of venue

was an abuse of discretion.

He further contends, however, that

the trial judge's voir dire was inadequate

because jurors were not quest iongg#indiv-

idually and because the questions proffered

by defense counsel were not asked. In

analyzing this claim we begin with the

proposition that

(u)nless a trial judge clearly has

erred in his estimation of the action

needed to uncover and prevent pre-

judice from pretrial publicity, an

appellate court should not intervene

and impose its estimate. The court

closest to the situation can best

evaluate the proper way to walk the

difficult line between a vigorous

voir dire to determine any possible

bias and avoidance of creating bias

by specific questions which add

"fuel to the flames" in suggesting

the presence of controversial issues.

A-11

United States v. Polizzi, 500 F.2d at 880

(citations omitted).

Relying on Silverthorne; Besbris

asserts that a voir dire examination that

calls only for the jurors' subjective

assessment of their own impartiality is

inadequate and that general questions

addressed to the entire panel do not ade-

quately protect a defendant. The assertion

is correct as far as it goes. But we

recently explained that, although rigorous

voir dire of prospective jurors is required

when voretrial publicity is great,

(i)n cases of less publicity,. ..

these procedures are not required.

Several general questions addressed

to the entire panel of jurors,

followed by individual questions of

jurors who respond affirmatively to

the initial inquiries, may be

sufficient if it becomes clear that

few jurors have any knowledge of the

case.

United States v. Giese, No. 74-3407, slip

op. p. 518, 532 (9th Cir. Feb. 16, 1978)

(emphasis added) (citations omitted).

A-12

In this case the court considered the

request for individual voir dire but con-

cluded that, although there had been

considerable publicity about land fraud,

it was clear that few jurors had knowledge

of the case before them. In these circum-

stances there was no abuse of discretion.

United States v. Polizzi, 500 F.2d at 880.

"only in a case involving extreme pretrial

publicity, with demonstrated effects on the

prospective jurors, have we held that a

trial court's voir dire was inadequate."

United States v. Giese, slip op. at 533

(citing Silverthorne, supra). This is

not such a case.

B. Severance. °

Stewart, Besbris, and Baumann contend

it was error to try them jointly. They

argue that joinder was improper under Fed.

R. Crim. P. 8(b) and, alternatively, that

the joint trial was so prejudicial as to

A-13

require that their motions for severance

under Fed. R. Crim. P. 14 be granted.

It cannot seriously be contended they

they were improperly joined for trial under

Rule 8(b), for they “participated in the

same series Qf acts or transactions con-

stituting an offense or offenses." United

States v. Roselli, 432 F.2d 879, 898

(9th Cir. 1970) cert. denied. 401 U.S. 924

(1971). See also United States v. Barney,

568 F.2d 134, 135-36 (9th Cir. 1978);

United States v. Satterfield, 548 F2d. 1341,

1344 (9th Cir. 1977).

The argument that the trial court

erroneously denied their motions for

severance under Rule 14 also lacks merit.

They maintain that during the joint trial

the jury heard considerable evidence not

properly admissible against them and that

they were prejudiced as a result.

Some prejudice necessarily inheres

A-14

when defendants are joined for trial.

However, "(i)f all that was necessary to

avoid a joint trial were a showing of

prejudice, there would be few, if any,

multiple defendant trials." 8 Moore's

Federal Practice 4 14.44(1), at 14-14.1

(1977).

Considerations of judicial economy

merit serious attention when defendants

move f-r severance. The decision whether

the prejudice attending a joint trial out-

weights the need to conserve judicial

resources and to avoid further crowding

of federal trial calendars with a succession

of factually related actions is, in the

first instance, committed to the sound

discretion of the district court. United

States v. Kennedy, 564 F.2d 1329, 1334

(9th Cir. 1977); United States v. Brashier,

548 F.2d 1315 (9th Cir.1976), cert. denied,

429 U.S. 1111 (1977).

A-15

Appellants carry the difficult burden

of demonstrating undue prejudice resulting

from a joint trial, and we will reverse

the trial court Only in those rare instances

where the refusa] to sever amounts to an

abuse of discretion. united States v.

Campanale, 518 F.24 352 359 (9th Cir.

1975), cert. denied sub nom. Grancich v.

United States, 423 U.S. 1050 (1976).

The appellants here point Only to the

Slight prejudice resulting from any joint

trial and the disparity of proof as to

each defendant. They have not demonstrated

that the jury could not reasonably have been

expected to compartmentalize the evidence

as it related to each defendant in light

of its volume and limited admissibility.

United States y. Gaines, 563 F.24 1352,

1355 (9th Cir. 1977); United States Vv. Py,

Seen >

Kaplan 554 F.24 958, 967 (9th Cir. 1977).

Besbris pres ats the related argument

A-16

that the evidence at trial demonstrated

the existance of at least four distinct

fraudulent schemes rather than the one

charged in the indictment. We disagree.

Although the defendants entered and left

the operation at different times, there

was no fatal variance rendering the joint

trial improper. The evidence was

sufficient to present the issue whether

there was a Single scheme or multiple

schemes as a question for the jury.

United States v. Porter, 441 F.2d 1204,

1213 (8th Cir.),cert. denied, 404 U.S.

911 (1971). |

The circumstances of appellants' joint

trial present no reversible error.

A-17

- Admissibility of Evidence.

Besbris charges error in the Court's

admission of testimony regarding his ac-

tions in another real estate promotion and

Statements he made to the effect that

persons investing in high risk ventures

"deserve to be screwed." He argues that

the evidence was irrelevant and highly

prejudicial.

On direct examination Besbris Claimed

no knowledge of Western's fraudulent acti-

vities. One witness then testified that

Besbris subsequently advised a real estate

developer about circumvention of subdivi-

Sion laws and other participated again in

deals involving fenceposted contracts.

This testimony was relevant to show

Besbris' motive, intent, and knowledge

as to the fraudulent conduct with which

he was charged. So, too, was that as to

his contempt for investors.

A-18

Fed. R. Evid. 404(b)2/ permits admis-

sion of evidence of other acts to prove

motive, intent, and knowledge but it must

be excluded where it serves only to prove

criminal disposition. See 2 Weinstein's

Evidence § 404[08] (1977). Whether its

probative value sufficiently outweighs its

potentially prejudicial impact is a deci-

sion committed to the sound discretion of

the trial court. United States v. Riggins,

539 F.2d 682, 683 (9th Cir. 1976), cert.

denied, 429 U.S. 1045 (1977).

Besbris put his knowledge and intent

in issue, and the challenged evidence was

relevant on those points. Its introduc-

tion may have generated some prejudice

but we cannot say that the trial judge

failed to strike the proper balance.

There was no abuse of discretion and no

error. 10/

A-19

D. Jury Instructions.

Besbris and Stewart argue that the

Court erred in refusing to give an instruc-

tion explaining “assignment with recourse"

under Arizona law. They say that, because

the land contracts were assigned with re-

course against Western in the event of

default, Western's assumption of payments

appeared proper to them. The judge refused

to give the instruction because he felt

it would oversimplify an important issue

in a complex case.

The judge explained that the legal

definition of "with recourse" was not

disputed. He commented that the applica-

tion of the doctrine to what the indivi-

dual defendants did, said, and understood

was a matter appropriately left for argu-

ment by counsel. The crucial issue was

not the term's legal definition.

Instructions are not a substi-

A-20

tute for argument to the jury.

If the judge fairly instructs

the jury as to the applicable

principles of law so as to allow

counsel on each side sufficient

latitude to argue what he con-

siders to be key points in his

case, the trial judge has per-

formed his duty.

United States v. Campanale, 518 F.2d at

362.

There was no need in this case for

an instruction on the meaning of the term

“with recourse." Defense counsel had

abundant opportunity to argue to the jury

their clients' knowledge or ignorance

of the fraud. There was no error.

E. The Statute of Limitations.

Stewart argues that his participa-

tion in the illegal scheme terminated

more than five years before the indictment

and that his prosecution was untimely.

The mailings upon which the charges

were based took place within five years

A-21

of the indictment. When he joined the

scheme by supplying Western with forged

and fenceposted contracts, his copartici-

pants' use of the mails in its furtherance

was reasonably foreseeable. Stewart was

therefore properly and timely charged.

United States v. Ashdown, 509 F.2d 793,

798 (5th Cir.), cert. denied, 423 U.S.

829 (1975). See also United States v.

Outpost Development Co., 552 F.2d 868, 870

(9th Cir. 1977); United States v. Brown,

540 F.2d 364, 376 (8th Cir. 1976) (citing

Pereira v. United States, 347 U.S. 1, 8-9

(1954).

He contends, however, that the mail-

ings with which he was charged were pay-

ments intended to "lull" investors into

inaction by concealing the fraud. Citing

Gruenwald v. United States, 353 U.S. 391

(1957), he analogizes this to a subsidiary

"concealment" conspiracy which does not

lengthen the conspiracy's duration for

A-22

purposes of the statute of limitations.

We disagree. The fraudulent scheme

depended heavily on the continued sales

of real estate investment paper and it was

essential that holders of real estate con-

tracts or secured notes not suspect that

fraud was involved. The “lulling” pay-

ments concealed the fraud, caused some

investors to invest more money, and main-

tained Western's reputation as a reliable

source of investment.

Mailings to victime after they have

parted with their money can be "for the

purpose of executing" a fraudulent scheme.

United States v. Sampson, 371 U.S. 75, 80

(1962). As in Sampson, in this case the

scheme was not fully executed at the time

LV

the mailings were made.

F. Judicial Misconduct.

Baumann asserts that the trial judge

A-23

improperly interjected himself into the

trial and prejudiced the defense.

We have said repeatedly that trial

judges are more than moderators or umpires.

The judicial role extends to examining

witnesses to clarify the evidence and to

controlling the trial and its participants

so as to minimize confusion and delay while

maximizing orderly, clear, and efficient

presentation of evidence. But a judge must

be aware of his sensitive judicial posi-

tion and be on guard to avoid even the

appearance of advocacy or partiality. See

United States v. Trapnell, 512 F.2d 10, 12

(9th Cir. 1975); Unites States v. Pena-

Garcia, 505 F.2d 964, 967 (9th Cir. 1974);

Unites States v. Harris, 501 F.2d l, 9-11

(9th Cir. 1974); United States v. Malcolm,

475 F.2d 420, 427 (9th Cir. 1973); Smith

v. United States, 305 F.2d 197, 205 (9th

Cir.), cert. denied, 371 U.S. 890 (1962).

Charges of judicial misconduct are

A-24

not dismissed lightly. But we are aware

of the enormity of a judge's task and the

physical and mental effort required to

conduct a long, complex trial. 24 We have

reviewed the record with care and have found

that, although a few of the judge's remarks .

were sharp, even sarcastic, they do not

represent an abuse of discretion that

warrants a new trial. Cf. United States

v. Harris, 501 F.2d at 9-11 (judge's con-

duct required reversal).

G. Sufficiency of the Evidence.

1. McDonald. McDonald was convicted

on seven counts of mail fraud and trans-

porting fraudulently obtained property.

The government contends that he partici-

pated actively in Western's land fraud

scheme. McDonald urges that the evidence

was unsufficient to sustain his convic-

tions because it did not show participation

A-25

with intent to defraud. He maintains that

he marketed Western's contracts without

knowledge of the fraud which he discovered

long after he ceased selling the contracts,

and that he was in fact a victim of the

scheme.

On appeal we view the evidence and the

reasonable inferences therefrom in the light

most favorable to the government. Glasser

v. United States, 315 U.S. 60, 80 (1942);

United States v. Valentin, No. 77-2748,

Slip op. p. 553, 554 (9th Cir. Feb. 17,

1978). In reviewina denial of the motion

for acquittal we ask: Could the jurors

reasonable decide that they would not

hesitate to act in their own serious affairs

upon factual assumptions as probable as

the conclusion that the defendant is guilty?

United States v. Oropeza, 564 F.2d 316,

321 (9th Cir. 1977); United States v.

Kaplan, 554 F.2d at 963.

A-26

The government contends that McDonald

displayed a willful disregard of the truth

in his business activities and that such

disregard was tantamount to actual knowledge

of the fraud. The prosecution theorized

that McDonald was aware of a "high proba-

bility" that some or all of the contracts

he sold were fraudulent, but that he

deliberately shut his eyes to avoid learn-

ing the truth. Such conduct will support

a criminal conviction. See Leary v. United

States, 395 U.S. 6, 46 n.93 (1969); United

v. Jewell. 532 F.2d 697, 701-02 (9th Cir.

1976) (en banc). See also United States

v. Murrieta-Bejarno, 552 F.2d 1323, 1325

(9th Cir. 1977); United States v. Esquer-

Gamez, 550 F.2d 1231, 1235 (9th Cir. 1977).

In mail fraud cases, "[o]ne who acts

with reckless indifference as to whether

a representation is true or false is

is chargeable as if he had knowledge of

its falsity." United States v. Love,

a

A-27

535 F.2d 1152, 1158 (9th Cir.), cert.

denied, 429 U.S. 847 (1976) (quoting Irwin

v. United States, 338 F.2d'770, 774 (9th

Cir. 1964), cert. denied, 381 U.S. 9311

(1965).

The government maintains that

McDonald's general knowledge of the

Arizona real estate business, his know-

ledge that in 1972 one of his salesmen

who had purchased a Western contract had

not received regular payments, and his

actions in covering his own losses when

the fraud was exposed add up to crimin-

ally reckless conduct.

The record, however, is entirely

devoid of proof that McDonald had the

intent necessary to sustain a conviction.

It shows that he merely mentioned that

fraud was a possible cause of his sales-

man's problems and that the delays in

payment were satisfactorily explained

later. +7 Although McDonald's actions

eee ee a a ee ee ee ae ee

A-28

in covering his own investments and loans

to Western by demanding bona fide con-

tracts to replace fenceposted agreements

sold and pledged to him may have been

unfair to his former customers, those

acts came long after he ceased selling

contracts and could not alone establish

fraudulent intent at the time he sold

them. Finally, the safeguards he demanded

and the precautions he took demonstrate

that McDonald dealt cautiously with

Western and Hood. 24/

While he was selling the contracts,

he had no complaints from investors and

invested heavily in the contracts himself.

He made several trips to Arizona to meet

with Hood and to observe the property

offered for sale. When the scheme fell

apart, McDonald was one of the big losers.

McDonald's "mere ‘involvement in an

unsavory, fly-by-night scheme' is not

sufficient to establish ‘knowing partici-

A-29

pation in a scheme to defraud.'" United

States v. Piepgrass, 425 F.24 194, 199

(9th Cir. 1970) (quoting Windsor v. United

States, 384 F.2d 535 (9th Cir. 1967). We

cannot infer from the facts in the record

that McDonald had, beyond doubt, the

specific intent to defraud “because the

logical relationship between what he

could have known and a specific intent

has no rational basis." United States

v. Piepgrass, 425 F.2d at 199-200 (em-

phasis in original). See also United

States v. Klein, 515 F.2d 751 (3d Cir.

1975).

2. Stewart. The government's

proof showed that Stewart was deeply

involved in Western's fraudulent opera-

tions. He and those under his direction

supplied Western with forged and fence-

posted contracts as later as 1972.

The mailings that formed the basis

of the counts in the indictments were

A-30

were reasonably foreseeable results of

his affiliation with the scheme.

His conviction on each of five counts

related to payments mailed to investors

intending to lull them into inaction by

concealing the fraud. LY It was not

necessary for the government to show that

Stewart himself deposited the payments

in the mail. His participation in a

scheme entailing reasonably foreseeable

use of the mail was sufficient to sustain

his conviction. United States v. Outpost

Development Co., 552 F.2d at 870; United

States v. Brown, 540 F.2d at 376.40

3. Baumann. Baumann, who owned

Banker's, brokered contracts and mortgages

for Western. He was convicted on four

counts of mail fraud.

Three of the counts concerned his

mailing of monthly payments to investors

holding contracts for which Western supplied

funds. The fourth count concerned a letter

I

| A-31

to Hood, billing him for payments due to

an investor holding a contract on which

the named obligor had never made a pay-

ment.

There was sufficient circumstantial

evidence from which the jury could infer

Baumann's intent to defraud, including

testimony that he had been involved in

other fenceposting schemes. 2// The mail-

ings were part of the mechanism employed

to insure continuing generation of fraudu-

lently procured revenues. United States

| v. Sempson, 371 U.S. at 80.29

III. CONCLUSION

McDonald's convictions are reversed.

The convictions of the other appellants

are affirmed on all counts.

Bail is revoked now as to the

defendants-appellants Baumann, Besbris

and Stewart. The mandate will issue at once.

FP RATT LOPE ORE ERI OR Ur

A-32

FOOTNOTES

1/ Typically, Western would obtain an

interest in a tract of land with title

held in trust by the owner. The trust

agreement gave Western the right to suk-

divide into lots. As lots were sold, a

"release price" was paid into the trust

and the trustee issued a deed for those

lots in the name of Western.

Lot purchasers contracted for a

down payment and subsequent monthly in-

Stallments of the purchase price Western

held the deeds as security until final

payment.

2/ Contracts were assigned with "full

recourse” against Western in the event of

default by the contract lot purchaser.

3/ Sham buyers signed contracts with

the assurance that they were not expected

to make payments. Some of them were paid

$50. for their signatures.

4/ The changes in practice reflected an

attempt to avoid the registration require-

ments of the Securities and Exchange Act

of 1933 by marketing instruments within

the execption of Rule 234, 17 C.F.R.

Section 230.234 (1977). The fraudulent

character of the scheme, however, remained

unchanged.

5/ Besbris, an attorney admitted to

practice in California and Arizona, worked

for Western for five months late in 1971

and early in 1972. He was convicted of

seventeen counts of mail fraud, aiding

and abetting and interstate transportation

of fraudulently obtained property. While

es r

A-33

‘at Western he served as corporate

secretary and house counsel.

6/ Appellant supplemented the record

with the transcript of a hearing on a

motion for change of venue in an unrelated

land fraud prosecution originally scheduled

for trial in Phoenix, later moved to

Prescott, Arizona, and then to San Diego,

California. In that case one reason for

the venue change from Prescott to San Diego

was extensive pretrial publicity. Ap-

pellant considers the transcript germane

ba bp change of venue he sought and was

enied.

The United States Attorney supple-

mented the record with the affidavit of

the government's trial attorney in that

case. It reveals that the motion there

was unopposed. Furthermore, that trial

involved a second group of defendants

linked to an illegal scheme for which

many of their associates had already been

convicted. The defendants had been named

repeatedly in the press. Moreover, limited

courtroom facilities in Prescott made it

undesirable for the lengthy trial contem-

plated there.

Even were we to consider the publici-

ty in this case comparable to the publici-

ty in that one, it would be far simpler to

find impartial veniremen in a city the

size of Phoenix than in Prescott.

7/ Rule 21. Transfer From the District

for Trial.

(a) For Prejudice in the District.

The court upon motion of the de-

fendant shall transfer the proceeding

as to him to another district whether

A-34

or not such district is specified

in the defendant's motion if the

court is satisfied that there exists

in the district where the prosecution

is pending so great a prejudice

against the defendant that he cannot

obtain a fair and impartial trial at

any place fixed by law for holding

court in that district. }

* * * *

8/ The trial judge was aware that some

evidence related to less than all defendants.

In those instances he carefully instructed

the jury on the limited consideration such

evidence should receive. The admonitions

adequately safeguarded the defendants’

rights.

The sum of appellants’ argument is

that they stood a better chance of ac-

quittal had they been separately tried.

That is too insubstantial a basis to

establish an abuse of discretion. United

States v. Cella, 568 F.2d 1266 (9th Cir.

1978).

9/ Rule 404--Character Evidence Not

Admissible To Prove Conduct; Exceptions;

Other Crimes

(b) Other crimes, wrongs, or acts.

Evidence of other crimes, wrongs, or

acts is not admissible to prove the

character of a person in order to

show that he acted in conformity

therewith. It may, however, be ad-

missible for other purposes, such as

proof of motive, opportunity, intent,

preparation, plan, knowledge, identity,

or absence of mistake or accident.

A-35

10/ Fed. R. Evid. 401 recites an expansive

“definition of relevance and Fed. R. Evid.

402 provides that all-re’.evant evidence is

admissible as a general cule. Under Fed.

R. Evid. 403, “ a lthough relevant, evi-

dence may be excluded if its probative

value is substantially outweighed by the

danger of unfair prejudice."

Appellant asserts that the evidence

in guestion should have been excluded.

Among other things, he argues that the

fact that the testimony described conduct

and statements subsequent to the criminal

acts with which he was charged renders it

irrelevant. We are convinced, however,

that the evidence was relevant to the

issues raised. The timing of the state-

ments and conduct attributed to appellant

was a factor to be considered by the court

in weighing probative value against the

danger of unfair prejudice. Cf. United

States v. Hearst, 563 F.2d 1331,

(Sth Cir. 1977) (evidence of subsequent

crimes relevant to intent and defense of

duress).

Decisions regarding admissibility re-

quire application of the balancing formu-

la in the rules, an undertaking unmistak~

ably committed to the discretion of the

trial judge. See United States v. Curtis,

568 F.2d 643, 645-46 (Sth Cir. ;

United States v. Butcher, 557 I.2s 666,

+ ‘

11/ As to whether the mailings in ques-

tion were for the purpose of executing

the scheme, see note 16 infra.

12/ The trial lasted five weeks. The

“Yeporter's transcript exceeds 3,300 pages.

A-36

13/ The salesman's investigation re-

“vealed that the original contract obli-

gor had, indeed, intended to purchase

the lot in question but had defaulted on

his obligation. Western offered to sub-

stitute another contract for the one in

default but the salesman asked to receive

instead, and was given, a refund of his

investment.

14/ There was evidence that McDonald sold

several contracts with his personal assur-

ance that the investment was "good as gold."

When he made those remarks, he had no

reason to believe otherwise.

McDonald may have in some respects

violated a fiduciary duty to his invest-

ment clients, but that in itself would

not demonstrate the specific intent

necessary to sustain a conviction. Post

v. United States, 407 F.2d 319, 329 (D.C.

Cir. 1968), cert. denied, 393 U. S. 1092

(1969).

15/ It has been recognized that each

“Mailing in execution of a fraudulent

scheme constitutes a separate offense of

mail fraud. See, e. Atkinson v. United

States, 344 F.2d 97, 98 (8th Cir. 1965);

panraben. v. United States, 348 F.2d 363.

D. Le e

Stewart argues that his convictions

on counts 8 and 9 cannot stand because,

although they are based on mailings of

separate checks, each representing a

monthly payment on a separate fraudulent

contract, the checks were sent tc one

investor in a single envelope. Thus, he

contends, there was but one "mailing."

The argument cannot stand. The

eee Om eee

A-37

essence of the offense is use of the mails

to defraud. Each check was mailed pursuant

to the scheme to lull investors into a sense

of security as to their investments, en-

abling Western to continue to operate un-

impeded. That the two checks, each of

which independently helped to execute the

plan, were sent in one envelope is of no

consequence.

16/ Stewart contends that to find that

“the mailings were part of the fraud's exe-

cution would be to broaden unduly the

construction previously given that element

of the crime. We agree that to sustain a

conviction there must be more than a show-

ing of a scheme to defraud, defendant's

involvement, and the fact that a mailing

occurred. See United States v. Maze, 414

U.S. 395, 395-402 (1574); Parr v. United

Sates, 363 U.S. 370 (1960); Kann v. United

States, 323 U.S. 88 (1944); United States

v. Kaplan, 554 F.2d 958, 965 (Sth Cir. 1977).

There must be proof that the mailing "was

in furtherance of the scheme to defraud."

United States v. Kaplan, 554 F.2d at 965.

Unlike Maze, Parr, and Kann, however,

where mailings took place after the defen-

dants had accomplished their criminal ob-

jective, this case resembles more closely

United States v. § son, 375 U.S. at 80,

in which the eairitaee. - ewere designed

to lull the victims into a false sense of

security, postpone their ultimate complaint

to the authorities, and therefore make the

apprehension of the defendants less likely

than if no mailings had taken place.”

United States v, Maze, 414 U.S. at 403.

17/ Unlike appellant McDonald, Baumann

“was closely tied to Western's operations

almost from their inception. His

mers Nee = re

ee

A-38

relationship with Hood and the manner in

which he managed Banker's supplied ample

evidence from which the jury could conclude

beyond doubt that he participated knowingly

in the fraud or, being aware of its “high

probability," intentionally shut his eyes

to it.

18/ See note 16, supra.