Opposition — Michael v. United States

No. 79-598 LAF 49

2s Sap Got ie Hoe Ste

OcTOBER TERM, 1979

MurRRAY H. MICHAEL, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

WapkE H. McCrer, Jr.

Solicitor General

Puitie B. HEYMANN

Assistant Attorney General

TERENCE J. LYNAM

Attorney

Depariment of Justice

Washington, D.C. 20530

In the Supreme Court of the United States

OcTOBER TERM, 1979

No. 79-598

MurRAY H. MICHAEL, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. al-a3)

is not reported. The opinion of the district court on the

sufficiency of the indictment is reported at 456 F. Supp.

335.

JURISDICTION

The judgment of the court of appeals (Pet. App. a4)

was entered on August 17, 1979. A petition for rehearing

was denied on September 12, 1979. The petition for a

writ of certiorari Was filed on October I1, 1979. The

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

1254(1).

(1)

QUESTIONS REPRESENTED

|. Whether, in a prosecution for aiding and abetting

the misapplication of bank funds, the instructions

permitted the jury to convict petitioner on the erroneous

theory that he had directly violated 18 U.S.C. 656 while

acting as a bank officer.

2. Whether the concurrent sentence doctrine was

properly invoked by the court of appeals.

3. Whether the conspiracy count of the indictment

charged an offense.

STATEMENT

Petitioner was charged in a 17-count indictment

returned in the United States District Court for the

District of New Jersey with various offenses growing out

of the payment of kickbacks to secure a series of bank

loans (Pet. App. a9-a44). Count one charged that

petitioner conspired with James M. Neveras, a former

officer of the Trust Company of New Jersey, to misapply

bank funds, in violation of 18 U.S.C. 371 and 656.

Counts two through fourteen charged that petitioner

misapplied bank funds when he secured various loans

from the Trust Company of New Jersey, in violation of

18 U.S.C. 656 and 2. Counts fifteen through severiteen

charged that he travelled in interstate commerce with the

intent to commit bribery, in violation of 18 U.S.C. 1952

and 2. Following a jury trial, petitioner was convicted as

charged.' He was sentenced to concurrent terms of five

years’ imprisonment. The court of appeals affirmed (Pet.

App. al-a3).

'Neveras pleaded guilty to conspiracy to misapply bank funds and

testified as a government witness at trial.

1. Petitioner, a real estate developer, obtained loans

from the Trust Company of New Jersey (TCNJ), an

FDIC-insured bank in Jersey City, New Jersey, by

paying kickbacks to Neveras, then a vice-president in the

bank’s commercial lending department. The money was

obtained ostensibly to finish construction on a partially

completed motel in Orlando, Florida (Tr. 4.26-4.28), and

it was given to petitioner without the investigation that

sound banking practices dictate (Tr. 2.6-2.8).

In January 1974, Neveras first arranged and approved

an unsecured $100,000 loan from TCNJ to petitioner

(Tr. 1.195), in exchange for which he received a $10,000

kickback from petitioner (Tr. 1.199, 2.6). In April 1974,

petitioner again paid a $10,000 kickback to Neveras in

exchange for his approval of a $100,000 loan to a

corporation controlled by petitioner (Tr. 2.88-2.92).

Later that month petitioner paid another $10,000

kickback in exchange for a third $100,000 loan (Tr.

2,100-2.104).

In October 1974, when payments became delinquent

on all three loans (Tr. 2.107), two more unsecured loans

were issued to “dummy” corporations controlled by

petitioner, and funds from these loans were used to make

payments on the first three loans: (Tr. 2.107-2.108, 2.115-

2.116). Thereafter, throughout 1975 and the first seven

months of 1976, other new loans were approved by

Neveras in order to assist petitioner in repaying previous

loans and to finance other projects of petitioner (Tr.

2.119-2.164).

In all, petitioner gbtained $833,00U in loans and was

unable to repay $593,000 in principal. He converted

more than $250,000 of the loans received to cash (Tr.

5.17-5.18, 5.124, 5.125).

ARGUMENT

|. Petitioner contends that, although he was not a

bank officer, the trial court permitted the jury to convict.

him on counts two through fourteen on a factual finding

that he was a bank officer who misapplied funds of the

bank, in violation of 18 U.S.C. 656. This contention

lacks merit.

The statute, 18 U.S.C. 656, proscribes misapplication

of bank funds by “an officer, director, agent or employee

of, or [a person who is] connected in any capacity with

* * *" an insured bank. Since petitioner did not occupy

any position with TCNJ, he obviously could not, on his

own, violate this statute. As part of its instructions, the

court charged the jury (Tr. 7.175-7.176):

If you find that the conspiracy alleged in Count |

has been proven, and you find that in furtherance of

that conspiracy either of the co-conspirators com-

mitted one or more of the substantive crimes

charged in Counts 2 through 14, then you may find

the defendant, Murray H. Michael, guilty of those

substantive crimes even if he did not commit them

directly. This is so because a conspiracy can be

viewed as a partnership in crime and each partner is

responsible for the criminal acts of his’ co-

conspirators which were committed in furtherance of

the conspiracy.

This instruction, contrary to petitioner's contention,

would not have led the jury to conclude that petitioner

could be convicted of the substantive offenses on the

theory that he was acting as a bank officer under the

statute. While the instruction is inartfully phrased, it was

obviously designed to inform the jury that it could

convict petitioner even if he did not directly commit the

—

substantive offenses.2 Significantly, nothing in the

evidence suggests that petitioner acted directly to

misapply the funds. Rather, the evidence of conspiracy

was that petitioner paid substantial kickbacks to a bank

official for loans; the natural consequence of such

payments was the misapplication of bank funds by the

official. There was simply no possibility that the jury, on

the evidence before it, could have convicted on the

hypothesis that petitioner was himself a bank officer who

had misapplied the bank’s funds. There was, therefore,

no prejudicial error in this instruction.?

2. Petitioner contends that the court of appeals abused

its discretion by invoking the concurrent sentence

doctrine and declining to pass upon his conviction under

the three Travel Act counts (Counts 15-17). Petitioner's

attack on his conviction on those counts rested on his

argument that the Travel Act does not © roscribe

2It is well settled that a defendant can be convicted of aiding and

abetting in or conspiring to commit an offense that he is personally

incapable of committing owing to his exclusion from the class whose

conduct is proscribed by the statute. United States v. Tokoph, 514

F. 2d 597, 602 (10th Cir. 1975). See also United States v. Socony-

Vacuum Oil Co., 310 U.S. 150, 224-225 n.59 (1940); United States v.

Rabinowich, 238 U.S. 78, 86 (1915); United States v. Lester, 363 F.

2d 68 (6th Cir. 1966), cert. denied, 385 U.S. 1002 (1967).

‘The cases cited by petitioner are inapposite. United States v.

Weitzel, 246 U.S. 533 (1918), held only that a receiver of a bank

cannot be convicted of violating Rev. Stat. 5209 (now 18 U.S.C.

656). Since the Court had no occasion to consider whether a

receiver could be convicted of conspiring with others to violate the

statute, it did not decide how a jury should be instructed on such a

conspiracy count. United States v. Tornabene, 222 F. 2d 875 (3r Cir.

1955), heid that a ronbank officer may be convicted of aiding and

abetting a misapplication of bank funds only if a bank officer

actually commits the substantive offense. Tornabene does not

address the Pinkerton instruction about which petitioner complains.

6

commercial bribery. Since this Court has now held to the

contrary in Perrin v. United States, No. 78-959 (Nov. 27,

1979), petitioner’s attack on these convictions plainly

lacks merit. It is thus immaterial whether the concurrent

sentence doctrine was properly applied in this case.

3. Petitioner’s final argument is that the conspiracy

count (Pet. App. a9-al5) does not charge an offense

because it merely tracks the language of 18 U.S.C. 656

‘and thus does not give a satisfactory description of the

conspiratorial objective.

“A conspiracy indictment is sufficient if it sets out the

essential elements of the charge and lists overt acts

committed in furtherance of the conspiracy.” United

States v. Evans, 572 F. 2d 455, 483 (Sth Cir.), cert.

denied, 439 U.S. 856, 858, 870 (1978). As this Court

stated in Wong Tai v. United States, 273 U.S. 77, 81

(1927): “It is well settled that in an indictment for

conspiring to commit an offense—in which the con-

spiracy is the gist of the crime—it is not necessary to

allege with technical precision all the elements essential

to the commission of the offense which is the object of

the conspiracy * * *.”

This standard is clearly satisfied here. Count one (Pet.

App. a9-all) charges that petitioner borrowed in excess

of $800,000 from TCNJ in his own name and in the

name of certain identified business entities of which he

was a principal, that he conspired with Neveras to cause

Neveras to willfully misapply funds and credits of the

bank with intent to injure and defraud the bank in

violation of 18 U.S.C. 656 and 2, that these loan

proceeds were obtained by petitioner and Neveras based

on “false, fictitious, and fraudulent documents and

information,” and that in return for approving loans

Neveras received kickbacks of approximately 10% of

their face value. Finally, Count one alleges (Pet. App.

all) that petitioner and Neveras performed other acts to

conceal the acts committed in furtherance of the

conspiracy.

This statement of conspiratorial purpose, quite apart

from the allegations of the substantive counts, sets forth

the objective of willful misapplication of bank funds

through loans to a named debtor (a petitioner-controlled

corporation) made without regard to its financial

capabilities, with an intention of looking for repayment,

if at all, only from a third party (petitioner) who actually

received the proceeds and to whom the bank was

unwilling to grant a formal loan.‘

In any event, it is well established that “it is not

necessary that the object of [a] conspiracy be described

in the detail which would be required to charge a

violation of the substantive offense.” United States v.

Evans, supra, 572 F. 2d at 483. Various courts of appeals

have held that an indictment using the language of 18

U.S.C. 656 is sufficient to charge the offense of bank

fund misapplication. United States v. Mann, 517 F. 2d

259, 268 (Sth Cir. 1975), cert. denied, 423 U.S. 1087

(1976); United States v. Tokoph, 514 F. 2d 597, 605-606

(10th Cir. 1975); United States v. Llaca Orbiz, 513 F. 2d

4See the district court’s discussion of this point in United States v.

Michael, 456 F. Supp. 335, 343-346 (D.N.J. 1978).

816, 818 (Ist Cir.), cert. denied, 423 U.S. 861 (1975):

United States v. Fortunato, 402 F. 2d 79, 81 (2d Cir.

1968), cert. denied, 394 U.S. 933 (1969).5

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

WapE H. McCree, Jr.

Solicitor General

PHitip B. HEYMANN

Assistant Attorney General

TERENCE J. LYNAM

Attorney

DECEMBER 1979

‘The cases cited by petitioner (Pet. 8) do not hold that the

requirement of a conspiratorial objective is not satisfied merely by

tracking the statutory language. United States v. Britton, 108 U.S.

199 (1883), is apposite only in its statement of the general

proposition that “[a] conspiracy must be sufficiently charged.” 108

U.S. at 205. United States v. Knox Coal Company, 347 F. 2d 33 (sc

Cir.), cert. denied, 382 U.S. 904 (1965). actually supports the

government's position. It held that when, as here, the conspiratorial

objective is “an offense [under] another section of the Criminal

Code, every element of that offense need not be set forth” in the

conspiracy count. 347 F. 2d at 38.

DOJ-1979-12