Petition — In re Freeman

83-664

Office -Supreme Court, U.S.

FILE D

OCT 21 1963 |

; ALEXANDER L STEVASy

In The 7 ~~

Supreme Court of the United States

October Term, 1983

No.

GURN H. FREEMAN

Petitioner,

vs.

UNITED STATES ex. rel. Miles

Respondent.

PETITION OF WRIT OF HABEAS CORPUS

TO THE SUPREME COURT OF THE

UNITED STATES

Gerald D. Freeman

4755 N. Washtenaw

Chicago, Illinois 60625

GROUNDS FOR WRIT OF HABEAS CORPUS

1. Appellant’s right to the due process of law, wherein the

Government seeks to deprive him of his liberty, was denied when the

reviewing panel premised his guilt upon non-existent, totally false

**facts’’ instead of addressing the ‘‘actual’’ evidence contained in the

official trial record, e.g., contrary to the Unpublsihed Opinion, page

1-2, Jenkins, one of the named fourteen ‘‘alleged victim’’ witnesses,

did not testify to Appellant misrepresenting Century could fund

Jenkins’ business, but instead, the official trial record of Jenkins’ ac-

tual testimony on direct examination reflects (TR 473-74):

Q. And I realize it’s been a long time, sir, but are you able to

recall what Mr. Freeman said to you during the discus-

sions?

A. No.

2. Appellant’s right to the due process of law, wherein the

Government seeks to deprive him of his liberty, was denied when the

reviewing panel did not test the sufficiency of the evidence as to each

individual count to wit the jury found Appellant guilty, e.g., Count

1, Jenkins not shown to be defrauded by misrepresentations of Ap-

pellant, supra--Jenkins paid Century $500 to produce a joint venture

business plan calling for Jenkins to raise $15,000 (X-105-09) which he

acknowledged receiving (TR 475-76) and being informed of such du-

ty (TR 485-86) and he raised all $15,000 and never returned to Cen- -

tury (TR 476); neither the conduct of business nor the mailing con-

stitutes a violation of the Federal Mail Fraud Statutes, 18 U.S.C. §

1341.

3. Appellant was denied the right to a full and fair review of the

“‘actual’’ evidence and effectively was denied the fruits of his sixth

amendment right to confront and cross-examine his accusers (i.e.,

Jenkins, Supra) when the reviewing pane! prejudicially substituted

non-evidentiary Government argument instead of applying the actual

testiiaony and exhibits to each respective count in the Indictment.

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ........:0scsccsisboovssscccesesecees ii

CONSTITUTIONAL PROVISIONS, STATUTES AND

OTHER LEGAL AUTHORITIES ...........:cc:sseceeeseee iii

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STATEMENT OF THE CASE.............:sccseseseeessseeeeees 1

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SUIBINGARY ..-2ogeyincsnsssi-ascoinnsctnducnpaniadaaaaaan 28

CORTE AIRING «.-.-cacsisonssscnnensctllinccgndaganeiiaeiaaeaaanaan 30

APPENDIX A, OPINION OF COURT BELOW............ A, 1-10

APPENDIX B, JUDGEMENT AND ORDERS

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APPENDIX C, THE INDICTMENT .............00000: 02000 C, 1-14

TABLE OF AUTHORITIES

Cases: Page

McNabb v. United States, 318 U.S. 332 (1943) 30

Other Legal Authorities:

Amendment V, U.S. Constitution v,30

Amendment V1, U.S. Constitution v,30

i

CONSTITUTIONAL PROVISIONS AND STATUTES

Title 18, Chapter 63—Mail Fraud, ‘1341. Frauds and

swindles, p.4301, U.S.C.A.

* 1341. Frauds and swindles.

Whoever, having devised or intending to devise any

scheme or artifice to defraud, or for obtaining money or

property by means of false or fraudulent pretenses, repre-

sentations, or promises, or to sell, dispose of, loan, ex-

change, alter, give away, distribute, supply, or furnish or

procure for unlawful use any counterfeit or spurious coin,

obligation, security,or other article, or anything

represented to be or intimated or held out to be such

counterfeit or spurious article, for the purpose of cx-

ecuting such scheme or artifice or attempting so to do,

places in any post office or authorized depository for mail

matter, any matter or thing whatever to be sent or

delivered by the Postal Service, or takes or receives

therefrom, any such matter or thing, or knowingly causes

to be delivered by mail according to the direction thereon,

or at the place at which it is directed to be delivered by the

person to whom it is addressed, any such matter or thing,

shall be fined not more than $1,000 or imprisoned not

more an five years, or both. (June 25, 1948, ch. 645,62

Stat. 763; May 24, 1949, ch. 139, § 34, 63 Stat. 94; Aug.

12, 1970, Pub. L. 91-375, § (6)(j)(11), 84 Stat. 778.)

Title 18, Chapter 113—Transportation of stolen goods, securities,

money, fraudulent State tax stamps, or articles used in

counterfeiting, § 2314, p. 4371, U.S.C.A.

§ 2314. Transportation of stolen goods, securities,

moneys, fraudulent State tax stamps, or articles used in

counterfeiting.

Whoever transports in interstate or foreign commerce

any goods, wares, merchandise, securities or money, of the

value of $5,000 or more, knowing the same to have been

stolen, converted or taken by fraud; or

_-_:*.*-f.

.

Whoever, having devised or intending to devise any

scheme or artifice to defraud, or for obtaining money or

property by means of false or fraudulent pretenses,

representations, or promises, transports or causes to be

transported, or induces any person to travel in, or to be

transported in interstate commerce in the execution or con-

cealment of a scheme or artifice to defraud that person of

money or property having a value of $5,000 or more; or -

Shall be fined not more than $10,000 or imprisoned

not more than ten years, or both.

This section shall not apply to any falsely made, forg-

ed, altered, counterfeited or spurious representation of an

obligation or other security of the United States, or of an

obligation, bond, certificate, security, treasury note, bill,

promise to pay or bank note issued by any foreign govern-

ment or by a bank or corporation of any foreign country.

(June 25, 1948, ch. 645, 62 Stat. 806; May 24, 1949, ch.

139, § 45, 63 Stat. 96; July 9, 1956, ch. 519, 70 Stat. 507;

Oct. 4, 1961, Pub. L.87-371, § 2, 75 Stat. 802; Sept. 28,

1968, Pub. L. 90-535, 82 Stat. 885.)

Title 18, Chapter 19—Conspiracy, §371. Conspiracy to commit of-

fense or to defraud United States, p. 4190-91, U.S.C.A.

§ 371. Conspiracy to commit offense or to defraud United

States.

If two or more persons conspire either to commit any

offense against the United States, or to defraud the United

States, or any agency thereof in any manner or for any

purpose, and one or more of such persons do any act to ef-

fect the object of the conspiracy, each shall be fined not

more than $10,000 or imprisoned not more than five years,

or both.

If, however, the offense, the commission of which is

the object of the conspiracy, is a misdemeanor only, the

punishment for such conspiracy shall not exceed the max-

imum punishment provided for such misdemeanor. (June

25, 1948, ch. 645, 62 Stat. 701.)

iv

Title 18, Chapter 1—Principals, § 2, p. 4151-52, U.S.C.A.

§ 2. Principals.

(a) Whoever commits an offense against the United

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

cures its commission, is punishable as a principal.

(b) Whoever willfully causes an act to be done which if

directly performed by him or another would be an offense

against the United States, is punishable as a principal.

(June 25, 1948, ch. 645, 62 Stat. 684; Oct. 31, 1951, ch.

655, § 17b, 65 Stat. 717.)

Amendment V, Constitution

**No person shall be held to answer for a capital, or other-

wise infamous crime . . . be deprived of life, liberty, or

property, without due process of law...”

Amendment VI, Constition

In all criminal prosecutions, the accused shall enjoy the

right... to be confronted with the witnesses against him.

PROCEEDINGS IN THE COURT BELOW

This criminal action was commenced on 7/8/80 by the United

States of America, in the United States District Court for the

Western District of Michigan, Southern Division, against petitioner,

Gurn H. Freman, Sr. Petitioner was convicted of devising scheme or

artifice to defraud by use of U.S. mails; aiding and abetting. Counts

1, 2, 3, and 4; 18 U.S.C. § 1341; 18 U.S.C. § 2 (a). Transportation in

Interstate Commerce of securities obtained by fraud; aiding and

abetting. Count 7; 18 U.S.C. §2314; 18 U.S.C. § 2 (a). Conspiracy to

defraud the United States; aiding and abetting. Count 8; 18 U.S.C. §

371; 18 U.S.C. § 2 (a). Petitioner was acquitted of causing to be

transmitted in interstate commerce by means of a wire communica-

tion for the purpose of executing the aforementioned scheme and ar-

tifice. Counts 5 and 6; 18 U.S.C. § 1343; 18 U.S.C. § 2(a).

On 9/8/80, the District Court entered judgement finding the

petitioner guilty of 18 U.S.C. § 1341; 18 U.S.C. 2314; 18 U.S.C. 2

(a); and 18 U.S.C. § 371 and sentenced him to imprisonment for five

years as to each of Counts 1, 3 and 8, to run concurrently as to each

of these Counts—as to Counts 2, 4 and 7, is to be placed on proba-

tion for five years to run concurrently upon release from confine-

ment in a penal institution. Petioner was also fined $1,000 as to

Count 3 and $10,000 as to Count 8.

Petitioner filed notice of appeal on 9/8/80. The United States

Court of Appeals for the Sixth Circuit entered judgement on

10/1/82, affirming all Counts: 1,2,3,4,7 and 8.

The judgement sought to be reviewed was issued and entered on

October 1, 1982; petition for rehearing en banc was sought and it was

denied on November 24, 1982 and was reissued on December 9, 1982

and all of which are set forth in the Appendix as Appendix B. The

jurisdiction of the Court is invoked pursuant to 28 U.S.C. § 1254 (1).

Petitioner filed a Writ of Certiorari to the Supreme Court of the

United States on February 4, 1983. On April 18, 1983 the United

States Supreme Court entered an order denying the petition for a writ

of certiorari.

Petitioner filed a Petition for Rehearing on a Writ of Certiorari

to the United States Court of Appeals for the Sixth Circuit on May

13, 1983. On June 13, 1983 the United States Supreme Court entered

an order denying they aforementioned Petition for Rehearing.

(Orders denying Certiorari and Rehearing on Certiorari are set forth

in Appendix B)

Filed a Petition for a Writ of Mandamus with the Clerk of the

United States Supreme Court on August 5, 1983 and on October 3,

1983, the Court ruled ‘‘The motion to direct the Clerk to file a peti-

tion for writ of mandamus is denied’’.

vi

JURISDICTION

The relief sought in this petition for Writ of Habeas Corpus is

directed to the attention of this Court because petitioner has sought

review of the ‘‘merits’’ of such Unpublished Opinion being premised

upon non-evidentiary matters in the Sixth Circuit upon rehearing en

banc but such Circuit Court judges sitting en banc failed to

acknowledge the obvious prejudicial acts of their associates in

rendering the non-evidentiary findings in such Unpublished Opinion.

Petitioner therefore does not believe any Federal judge sitting in the

Sixth Circuit District could review such petition without prejudice to

the subject matter therein. The jurisdiction of this Court is invoked

pursuant to Title 28 U.S.C. § 2241.

APPLICATION FOR WRIT OF HABEAS CORPUS

Application for a writ of habeas corpus is being submitted pur-

suant to Title 28 U.S.C. § 2242 wherein Appellant submits Federal

Judge Wendell A. Miles of the Western District of Michigan current-

ly has custodial rights over him by virture of the prior decision of the

trial jury and subsequent sentencing procedure for the alleged viola-

tions of the Federal Mail Fraud Statutes.

Appellant believes his application to the Supreme Court is

necessary due to the nature and seriousness of the subject matter ad-

dressed in the petition. Furthermore, the manner in which

Appellant’s allegations of the reviewing panel lying about the actual

testimony has not been received well by anyone in the Sixth Circuit of

Appeals District.

vii

STATEMENT OF THE CASE

Appellant is submitting the writ of habeas corpus because Judge

Merritt’s Unpublished Opinion, dated October 1, 1982, chose to

premise the court’s affirmation of guilt upon:

1. Misrepresentations of the official trial record--alleging non-

existent testimony;

2. Ignoring the fact that proof is necessary to support guilt as to

each specific count (i.e., Appellant ‘‘only’’ introduced to

Clarks, court affirmed Counts 3 and 4);

3. Wholesale use of unsupported Government argument;

4. ‘‘Evidence’’ which was properly objected to and sustained by

the trial judge; and

5. Generally, not being factually in command of the trial record,

Government admissions gained via appellate briefs, and Ap-

pellant’s breifs (misquoted by court).

The case before this Court is not a difficult case to comprehend

and digest. The lower court made this case more difficult because it

did not and would not discriminate between Government argument

which misrepresented the evidence and the official trial record which

clearly describes what relationship, if any, Appellant had with the

named alleged victims and what oral and/or written representations

were made, if any, to such named individuals. This case involves a

written contract freely entered into and acknowledged by all seven

clients Appellant met or had business discussions. Their testimony

mirrored their agreement with Century to provide a limited offering

business plan in exchange for all monies Century every received prior

to the Fall of 1975 [‘‘Business Divorce’’--Appellant no longer

associated with anyone (TR 1032-33)]. This business plan, according

to the testimony and exhibits, was not represented by anyone to be

produced for the stated purpose of obtaining financing for each

client’s business via Century fund raising efforts (Indictment, para. 3

and 4f). On the contrary, the clients knew and the Government ad-

mitted (Government’s 2nd Reply Brief dated October 14, 1981, p. 23)

that such limited offering business plans were produced pursuant to a

written contract in exchange for all monies ever received and all

limited offering business plans according to the contracts and

testimony would have to be capitalized by the client. Moreover, the

clients and the Government admitted (Government’s Ist Reply Brief,

dated Sept. 4, 1981, p. 21): ‘‘He did promise plans, and in fact did

provide them.’’ Jd. How were these people defrauded out of such

monies when limited offering business plans were contracted for and

delivered for the monies received? Neither the Government nor the

.

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lower court ever demonstrated by the official trial record, which was

subjected to cross-examination, that Appellant made oral or written

representations which he knew to be false when made.

ARGUMENT

APPELLANT’S ENTITLEMENT TO THE DUE PROCESS

OF LAW GUARANTEES AN APPELLATE REVIEW BAS-

ED UPON THE EVIDENCE CONTAINED IN THE OF-

FICIAL TRIAL RECORD.

Petitioner is acutely aware of this Court’s history of not hearing

cases involving questions of sufficiency of evidence to support a

jury’s conviction and Appellant is also aware that a writ of habeas

corpus is an extraordinary writ which commands an abnormal set of

circumstances in order to justify issuance. The case before this Court

_ involves an extraordinary set of circumstances which this Court

under its broad supervisory powers not only has a right to set

straight, but petitioner believes this Court is duty-bound to uphold

the constitutional rights which were unduly trampled upon by the

Sixth Circuit’s Unpublished Opinion which projected Appellant do-

ing many unlawful acts notwithstanding the simple fact that no

testimony or documents exist which would support their non-

evidentiary finding of guilt. Petitioner prays that what has occurred

to him via the /ower court’s misrepresentations of evidence in their

attempt to justify imprisonment is indeed abnormal and extraor-

dinary.

The Constitution of the United States guarantees the accused the

right to confront and cross-examine his accusers; the Unpublished

Opinion (October 1, 1982) frustrates and otherwise negates such right

by substituting the ‘‘alleged victims’’ actual testimony with unsup-

ported argument which the lower court proclaimed to be ‘“‘their’’

testimony. Appellant contends his entitlement to the due process of

law was abridged when the Sixth Circuit appellate reviewing panel of

Federal Judges Lively, Keith and Merritt falsified and/or otherwise

misrepresented the testimony and exhibits produced at trial,

specifically:

1. Judge Merritt, author of the ‘‘Unpublished Opinion’’ falsely

stated that all alleged victims had testified that Appellant had

falsely represented promises of funding ‘“‘by’’ Century,

specificaily:

Judge Merritt claimed (Opinion, p. 1-2) that:

**Fourteen ‘victims’ witnesses in need of ‘venture capital’ testified

about Freeman’s alleged ‘scheme to defraud’ them of money

through false representations that Century Consultants could pro-

vide them with needed capital for expanding or recapitalizing their

present business or starting new enterprises.’’

When in fact: The testimony Judge Merritt claimed exists simply

does not exist:

a. Of the fourteen ‘‘alleged’’ victims named in the Indictment,

four ‘‘post’’ Business Divorce clients'--Alexander, Green,

Bossee and Susnjara never testified at trial.

b. Three other ‘‘post’’ Business Divorce clients, ‘‘alleged’’ vic-

tims, Dawson (TR 255), Raleigh (TR 629-30) and Boeldt (TR

294-95) never provided such testimony either, they testified

they had never known of Appellant.

c. The other seven ‘‘alleged victims’’ served prior to the Business

Divorce testified as follows:

(1) Jenkins did not testify about ‘“‘any’’ representations

much less false representations as Judge Merritt said he did;

Jenkins, on ‘‘direct’’ examination (TR 473-74):

Q. And I realize it’s been a long time, sir, but are you able to

recall what Mr. Freeman said to you during the discus-

sions?

A. No.

Jenkins ‘“‘knew’’ he had to raise the joint venture money because

he was fold he would have to (TR 485-86). Jenkins did not testify

about a scheme to defraud as Judge Merritt said he did; Jenkins

acknowledged receiving the typewritten joint venture plan

(X-105-09) which calls for him to raise $15,000 in seed capital to

wit he paid Century Consultants $500 (TR 486). Moreover,

Jenkins testified he raised all $15,000 and never returned to Cen-

tury (TR 476). ;

(2) Herbert's testimony is totally void of the false rep-

resentations that Judge Merritt attributes to Appellant (TR

301-02):

1. Cooperating Government Witness Wagner provided

‘*unrebutted testimony that in the fall of 1975 Appellant had com-

pletely severed all business affiliations and termed such severance a

business divorce (herein ‘‘Business Divorce’’, TR 1032-33).

3

Do you remember anything that Mr. Freeman said to

you?

Not exactly, no. We just discussed the problems, and

possible solutions to the problems.

Now did there come a time when you had another

meeting with Mr. Freeman?

Not until the very last time we went there.

Do you recall approximately when that was, sir?

That would have probably been October, September, Oc-

tober, in that area of '74, I would believe. I’m a little

vague on years. I am not sure.

Herbert, who contracted for nothing more than a limited offering

business plan testified as to all that Appellant ever said to him

prior to entring into the written contract (X-5-8), paying the fees

and receiving his business plan (X-26-101). Herbert did not testify

about a scheme to defraud through Appellant’s alleged false pro-

mises of funding by Century as Judge Merritt had claimed. In fact,

Herbert’s testimony on ‘‘direct’’ examination contradicts what

Judge Merritt claimed (TR 303):

Q. (Mr. Morse) Were you ever told by Mr. Freeman of Cen-

tury Consultants that they would raise the money?

A. You’re speaking of Sr?

Q. Mr. Freeman, Sr?

A. No.

Herbert’s partner, Howard, on ‘‘direct’’ examination also

testified contrary to Judge Merritt’s claim (TR 343-44):

Q. Do you remember any of the discussions that were had

during that meeting?

A. Yes. We talked about what -- what we needed the money

for, how much money we needed, and how we should go

about getting the money. (emphasis added)

Q. You say ‘‘we’’, are you talking about yourself and Mr.

Herbert?

A. And Mr. Haney. (Herbert’s third partner)

Herbert and his partner could not have contradicted Judge Mer-

ritt’s rendition of their testimony in more specific terms. Herbert

also testified that his lawyer was with him at Century Consultants’

offices and prior to paying any fees his lawyer read the documents

and Herbert himself had read the contract language

... ‘This capitalization plan would be designed so that a limited

offering could be made by you and/or your officers and direc-

tors’’

>O> © > ©

before he parted with any money (Tr 323-24). The acknowledged

terms of Herbert’s contract’s also contradicts Judge Merritt’s

claim.

(3) Henry Clark did not support Judge Merritt’s claim of Ap-

pellant’s alleged false representations that Century could provide

needed capital. On ‘‘direct’’ examination, Henry Clark testified

about the only time he ever laid eyes on Appellant (TR 367-68):

Q. What occurred at that meeting, sir?

A. The -- when we immediately met them, we met in Mr.

Humphrey’s office. As I said Gurn Greeman stayed just a

short period of time, just an acquaintance type of thing,

and exchanged a few remarks. Then he left, and we --

Frank and I remained with Tom Wagner and Hubert

Humphreys in Hugh’s office for maybe a couple of

hours.

Frank Clark testified likewise (TR 409-10). ‘‘Introductory

remarks’’ and ‘‘making friends’’ do not amount to false

misrepresentations that Judge Merritt said Clark testified to. The

Clarks paid for a limited offering business plan and received it (TR

388).

(4) Erbe did not testify about Appellant making false

representations that Century could provide needed capital; he

could only recall Appellant’s representations of successful funding

by clients and not by Century (TR 97). Judge Merritt said Erbe,

one of the fourteen alleged victims, testified as to false promises of

funding ‘‘by’’ Century -- but such testimony by Erbe is non-

existent.

(5) Morgan did not testify as to Appellant making false

representations that Century could provide needed capital as

Judge Merritt had claimed (TR 497-98):

Q. Let me show you Government Exhibit #1 (X-249-53), and

ask you if that document explains the level.

This outlines the entire situation. —

(Mr. Morse) Would you please tell us then --

Well, Phase I was for me to find $200,000 in -- by making

an offering, if you will, to 20 investors for $10,000 a

piece. This was made clear to me before --before I parted

with any money. | feel that | am good enough salesman

that I could get through that phase without too much

trouble. (emphasis added)

Phase 2 and 3, however, were not in my opinion,

something that I was going to be directly involved in.

5

Po >

Morgan’s testimony does reveal that Century via Leigh

Johnson, consultant of Century, did represent Century would seek

Phase 2 and 3 monies after Morgan completed Phase I -- $200,000

limited offering (TR 497: Government Exhibit G-3, 4, 5). Each of

the three offers of service outlined how Century would attempt to

seek Phase 2 and 3. And Morgan understood when Century would

have begun such performance under the future offers of service

(TR 499):

Q. What if anything did Mr. Freeman tell you?

A. At early meeting I was told that -- that Century Con-

sultants had the contacts, had enough backing to finance

this kind of a project, and that they would finance this

project had we gotten -- once I got through these first two

phases. (emphasis added)

But Morgan never got through the first phase (TR 500) and

furthermore, Morgan never contracted for the ‘‘secondary’’

(Phase II and Phase III) financing. Morgan merely assumed Phase

2 and 3 funding by Century (TR 498). Therefore, Judge Merritt

clearly lacked an evidentiary basis upon which to conclude that

Morgan, one of the fourteen victim witnesses, testified that Ap-

pellant made false representations that Century could fund

Morgan’s Phase 2 and 3.

(6) Webster did not testify about Appellant making false

representations that Century could provide needed capital.

Webster admitted the April 22, 1975 offer of services [the contract

in evidence (F-36, X-230-34)] resulted from his first meetings with

Century and was in fact the service promised to be performed for

‘the fees paid’’ (TR 763-64):

Q. Now, Mr. Webster, the exhibit that I have — you

[F-36] dated April 22, 1975, is the exhibit that you drew

out of your first conferences with Century Consultants,

and was a basis upon which you employed them to be

your consultant, is that not correct?

A. Yes.

Webster tendered the $11,000 in fees, according to the contract,

for nothing more than a seed capital and limited offering business

plan involving $150,000 in Phase I capitalization and said agree-

ment specifically advised Webster that ‘‘he’’ would have to obtain

this seed capital and limited offering funding himself (X-232-33,

para. 3 and 4d).

Webster physically demonstrated his understanding of the

contract that ‘‘told’’ him he had to raise his own $150,000. After

receiving the business plan (X-136-215), Webster took this plan to

his second attorney, Kerns (TR 748) to ‘‘explain to (Webster) how

to protect (his) right to use the private or limited offering exemp-

tions’’ as was advised in the contract (X-232, para 4d). Mr. Kerns

prepared the limited offering circular called for in the business

plan (TR 748). Webster thereafter sought to raise the limited offer-

ing capital (TR 753):

Q. Now sir, you then sold $25,000 worth of joint venture in-

terest [seed capital]. I think you said 26,000 in your state-

ment, but something in that area?

A. It was 25,000.

Q. And then you sold about $33, to $36,000 worth of stock

on the limited offering to your people, is that correct?

(emphasis added)

A. The people that wanted it, yes.

Q. The people that you knew, that you found?

A. Yes.

Webster, like Morgan, also wanted secondary financing (i.e.,

for construction of a shopping center) and on 6-9-75, eleven days

after completing his payment under the first agreement, Webster

entered into a second agreement calling for a ‘‘future perfor-

mance’’ whereby Century would work as a ‘‘finder’’ to locate in-

stitutional sources of financing for a contingent fee of 5%

(X-227-28) once Webster had successfully completed his limited

offering, formed a new entity and prepared a new balance sheet as

was made clear in Webster’s contract. And Webster understood

such Phase Il-secondary financing was a future performance,

‘later down the road, that’s what we discussed’’ (TR 649).

Government Witness Wagner also left no doubt that the

‘future’ performance (contingent fee) contract for secondary

financing was entered into on the condition (termed ‘‘absolutely

necessary’’ in Webster’s contract) that the client must first secure

his original financing (seed capital and limited offering), (TR 960):

Q. And so you made it very clear to him that he had to go

and get his part done before ihere was any chance of the

finder’s fee business being done, is that correct?

A. That’s correct.

Q. Did Gordon Webster tell you, ‘‘well, yeah, I

understood.”’

A. Yes.

Cooperating Government Witness Wagner also made it clear

7

that finders work to locate financial sources would have only been

due as to Webster’s second (contingent fee) contract (X-227-28),

the $1,000,000 secondary financing (TR 889):

Q. Now if you know, Mr. Wagner, were these financial

sources to help Mr. Webster in the $25,000 or the early

stages [limited offering] of what?

A. No. The financial sources were to finance the project, the

$1,000,000, the project itself, the building of the shopp-

ing center, construction of the center, construction loan.

Webster also testified as to his understanding of the con-

tingent fee arrangement for Phase Il-secondary financing -- if con-

sultants don’t find such sources for such financing, consultants get

**nothing’’ (TR 771-72). However, Century Consultants was never

called upon to locate any financing sources; Webster himself

**foreclosed’’ any search for sources under this ‘‘future perfor-

mance’’ contingent fee agreement (second agreement) when he

failed to complete the sale of his ‘‘limited offering’’ (first agree-

ment). Webster also admitted embezzling his shareholder’s funds

(TR 755) which would have again foreclosed any possibility of

securing sources from any institution.

The written representations in the contracts, the testimony of

both Webster and Wagner directly contradicts Judge Merritt’s

claim that Appellant made false representations that funding

could be provided ‘‘by’’ Century.

(7) Edleman did not testify about Appellant making false

representations that Century could provide needed capital as

Judge Merritt claimed.

Edleman testified that before he paid any fees to Century, he

came to Chicago with his attorney, Government Witness Conrad

(TR 136-37). Conrad, Edleman and Appellant were present at the

meeting which took place in early April (TR 122-23) and money

hadn’t changed hands unti] May 7 or 8 (TR 129).

Edleman’s attorney, Conrad, testified that he reviewed the

contract (Gov’t Ex. I-11, X-293-98) and submitted his legal opi-

nion to Edleman (TR 169-70):

THE WITNESS: Was the question, did I give an opinion?

Yes I did give an opinion.

And Conrad also understood who was to raise the private of-

fering called for in the Phase I business plan Edleman paid for (TR

176-77):

Q._...It is our opinion that the best way to proceed with the

ee

acquisition of this $250,000 is a private offering that

would be made by the principals. (Edleman contract)

Now who was supposed to be the principals of Mr.

Edleman’s enterprise?

At that time, I don’t think it was determined.

Was Mr. Edleman supposed to ve one of the principals?

Oh, certainly.

Was Mr. Gurn Freeman supposed to be one of the prin-

cipals? Be an owner of that business?

No, I don’t believe so. I never heard anything of that

sort, no.

Judge Merritt said Edleman testified as to false promises of

funding ‘‘by’’ Century, but Government Witness Conrad testified

that the ‘‘principal’’ (Edleman), not Appellant, was to raise the

funds. Moreover, Conrad further testified about Appellant’s oral

representations (TR 169):

‘*The legal documents pretty much, as far as form is concern-

ed, conform to the many conversations that we had that morn-

ing with Mr. Freeman’’...

Edleman, like Webster, wanted Century to assist him with

secondary financing after he would successfully complete his own

seed capital and limited offering funding and Edleman’s contract,

which Conrad had rendered an opinion on, Supra, called for a

‘*two’’ phase financing plan. Phase J consisted of two steps -

$25,000 seed capital (‘‘initial’’ step) and $225,000 (second step)

limited offering and the contract specifically advised Edleman that

all such Phase I financing had to be...‘‘secured privately by

yourself’’ and/or by the principals of Edleman’s company and

that the fees being tendered were for the Phase I comprehensive

business plan; and Phase I] consisted of $600-700,000 to be sought

by Century Consultants for a contingent finders fee of 5% and this

contract advised (X-296):

‘4. With respect to Phase II and the subsequent capital of

$600 ,000-$700,000:

After the $250,000 (limited offering) has been secured, the

entity formed and a balance sheet prepared, the above-

mentioned capital should be secured from venture capital

firms. We would act as a ‘finder’ in the procurement of this

$600,000 to $700,000 for finders fees hereinafter discussed.’’

With respect to Phase I, for which Edleman tendered all fees,

Edleman, like his attorney, Government Witness Conrad, directly

contradicted Judge Merritt’s statement that Edleman testified that

9

> PoP

he was promised funding ‘‘by’’ Century (TR 143):

Q.

A.

Q.

A.

Q.

A.

Now did Mr. Freeman in fact tell you that you had to

raise your money in steps?

Yes.

And he told you that first of all you should try and raise

$25,000 as an initial part of the -- of your step plan, isn’t

that correct? (emphasis added)

That was what was carried in the papers, yes.

Now you did raise that money, did you not?

No, I did not.

Edleman testified as to freely abandoning both Phase I-limited of-

fering financing and Phase Il-secondary financing (TR 149-50):

Q.

A.

And so when you decided not to, you just figured, I’m

not going to have anymore to do with this deal. I’m going

to do something else with my life. I’m not going to try to

take over North American and Kelly Photo Labs, is that

right?

I elected not to carry on with that deal.

Edleman’s abandonment of the contract does not render Ap-

pellant’s representations made thereto false merely because Cen-

tury never attempted Phase II funding efforts for Edleman. Judge

Merritt’s claim of false representations of funding as to Edleman is

without evidentiary support.

Not one of the alleged victims testified about Appellant making

any false representations that ‘Century Consultants’’ could provide

them with needed capital. Judge Merritt’s Unpublished Opinion at-

tempts to equate non-performance of secondary financing as a

misrepresentation without reviewing the circumstances for such non-

performance.

2. Judge Merritt falsely stated that ‘‘alleged victims’’ were oblig-

ed to raise only the ‘‘seed capital’’ portion of the funding and that all

funding beyoad the seed capital constituted secondary financing that

was to be obtained by Century for a contingent fee, specifically:

Judge Merritt claimed (Opinion, p. 3):

**Should the client manage to raise the required seed capital,

Century would then offer further services for obtaining the se-

cond larger phase of capital on a contingent fee basis.’’ (em-

phasis added)

When in fact:

a. The ‘‘undisputed’’ contracts to wit all fees in question were

10

tendered by all clients served prior to the Business Divorce called for

nothing more than the production of a seed capital and/or limited of-

fering business plan and all contracts specifically advised that such

funding was to be obtained ‘‘by’’ the clients, not Century (see

schedule below):

Financing Plan to be

Name of Developed for Fees Paid Total

Alleged as Specified in the Fees Contract

Victim __ Contract ____..__. Paid, ReferenceExhibit No.

Jenkins Seed Capital $ 500 TR 486 Note (1)

Herbert Limited Offering 5,000 TR 324 X-5-8

Clark Limited Offering 3,500 TR 374 X-111-i4

Erbe Limited Offering 5,000 TR 101 X-289-92

Webster Seed Capital & Limited

(Note 2) Offering 11,000 TR 770 X-230-34

*Morgan Limited Offering 5,000 TR 496 *Def Ex DG2

Edleman Seed Capital & Limited

Offering 5,000 TR 159 X-293-98

*Morgan’s retainer letter was admitted into evidence at TR 508; it is

in the record but it was inadvertently left out of the Appendix.

Note 1: Jenkin’s contract was not introduced into evidence,

however Jenkins’ testimony confirms receipt of a joint venture plan

(X-105-09) calling for Jenkins to raise $15,000 in seed capital and

Jenkins testified that he raised all $15,000 called for in the plan (TR

476 & 486). As can be seen in Jenkins’ joint venture plan, he had con-

templated a limited (private) offering following his seed capital plan

-- but Jenkins testified that he never returned to Century (TR

476)...‘‘Because of the business consultant I had in Lansing’ (TR

487).

Note 2: The Sixth Circuit’s Opinion (p. 3) advises Webster

paid...‘‘fees totalling some $27,000 (TR at 729; Exhibits App. at

122-45)”’ sthe cham’ tir te Gitte ond ce

Divorce work) paid...‘‘all of these bills that you later

them’’...A. I paid them $11,000 (TR 770). - e.g. "$3500 retainer

766) and $7500; X-244, the fees in question).

b. The ‘‘alleged victims,’’ their attorneys that testified and

Government Witness Wagner all testified that limited offerings were

to be funded by the alleged victims not Century, Supra. The Govern-

ment also admitted (Government’s First Reply Brief, p. 28):

‘**Equity’ financing was the ‘limited offering’ or ‘seed capital’

which the witnesses, at least some, indeed testified that they

had to raise themselves...”’

c. Thus the testimony, contracts, and Government admission

conclusively demonstrate Century was not to raise limited offering

capital on a contingent fee basis or upon any other basis.

d. Contingent fee financing was only contracted for by Webster

(his second agreement, supra) and by Edleman for his Phase II finan-

cing, supra -- but Century’s offer to work as a finder for such con-

tingent fee financing did not follow the seed capital financing -- all

evidence, testimony supra and contracts supra clearly demonstrate

that these alleged victims’ contingent fee financing was to follow the

successful conclusion of their ‘‘limited offering,’’ not their seed

capital financing as Judge Merritt so stated. There was no basis for

Judge Merritt’s finding that ‘‘all’’ clients were offered secondary

contingent fee financing ‘‘by’’ Century and that such contingent fee

financing followed the ‘‘seed capital’’ financing -- such ‘‘arbitrary’’

conclusion erroneously included the ‘‘limited offering’’ funding into

the second larger phase. JudgenMerritt’s claim demonstrates a total

lack of appreciation for the testimuny and exhibits contained in the

official trial record.

3. Judge Merritt claimed (Opinion, p. 5):

‘*Freeman further misrepresented that Century would provide

the sources of investors for his clients (TR at 123, 133, 162,

172)’’

When in fact:

a. The testimony of four of the seven ‘‘alleged victims’’ served

prior to the Business Divorce, Jenkins, Herbert, Clarks and Erbe is

“‘completely’’ silent as to any representation to provide sources via

the Appellant or any other defendant.

b. Morgan, like the four clients named above, also knew he

would have to provide his own sources for the Phase I limiied offer-

ing (TR 497-98). And as previously set forth, representations were

made that Century would /ook for sources upon a contingency fee

basis after he completed Phase I, but Morgan would not commit to

any of the three offers of future service (i.e., Gov't Ex. G-3, 4, 5) and

furthermore, Morgan admittedly never raised the Phase I funding

12

through his sources (TR 500).

c. Webster, like Morgan and the other four clients named above,

also knew he would provide his own sources for his Phase I seed

capital and limited offering according to his testimony (TR 753), the

contract which he admitted was the basis of the bargain (TR 763-64),

Wagner’s testimony (TR 960) and Government admissions. And as

previously set forth, representations of the future performance were

that Century would /ook for sources upon a contingency fee basis

after he completed Phase I, but Webster never completed Phase I

through his own sources (TR 753) and furthermore, Webster

embezzled Phase I funding from his shareholders, thus foreclosing

any possibility for such future service under Phase II which he admit-

ted was ‘‘later down the road’’ (TR 649).

d. Edleman, \ike Morgan, Webster and the other four clients

named above, also knew he would provide his own sources for his

Phase I seed capital and limited offering, for which all of the fees in

question were tendered, according to his testimony (TR 143, i.e.,

Edleman to raise money in steps), the testimony of his attorney, Con-

rad (TR 176-77, i.e., Edleman, not Appellant, was a principal who

was to raise limited offering), and Government admissions. And as

previously set forth, representations of the future performance were

made to Edleman regarding Century would /ook for sources upon a

contingency fee basis after he completed Phase I and Judge Merritt’s

claim depicts four instances where the future performance was

discussed (TR at 123, 133, 162, 172) in the testimony, all of which

pertain only to Edleman and only to Edleman’s Phase II financing.

However, one cannot conclude that such representations are false

merely because Century did not act because Edleman admittedly

elected not to proceed with the whole deal which included Century’s

future performance to look for sources for his secondary financing,

Phase II (TR 149-50).

Contrary testimony (i.e., all clients knew they had to raise their

own limited offering funding); silence (i.e., 4 of 7 clients’ testiinony);

and offers of a future performance (i.e., remaining 3 clients) subse-

quently rendered impossible by the client, do not support Judge Mer-

ritt’s claim of Appellant's alleged misrepresentations to provide

sources.

4. Judge Merritt claimed (opinion, p. 3):

**Mr. Edleman realized afier paying $5000 and receiving the

comprehensive business plan that he would be raising money

on his own, while paying a fee to Century (TR at 155).”’

13

When in fact:

a. Edleman’s testimony at TR 155 does not state a sudden

revelation pertaining to first paying $5,000 and thereafter finding out

he had to raise the money after receiving the comprehensive business

plan. The full question (TR 154) and answer (TR 155) is as follows

(TR 154-55):

Q. I believe you testified on cross examination, Mr.

Edleman, that you did not raise the $25,000 that Century

or Mr. Freeman fold you you had to raise, is that correct?

(emphasis added)

That’s correct. I did not raise that.

You know why you didn’t raise that?

I felt that after ! got the total comprehensive business

package in the middle of June, late June, that I would

just be continually doing most of the work myself, and

paying them a fee. The fee was spelled out in that

package, it was spelled out in the agreement that I signed.

Mr. Edleman’s testimony at TR 154-55 confirms his recognition of

the oral (i.e., Appellant told Edleman he had to raise the money) and

written representations (X-296, para. 5) in the agreement he signed

that Edleman would have to pay the $5,000 retainer plus the credit

extended for completion of the comprehensive business plan from

the first ‘‘seed capital’’ monies raised by him (Gov’t Ex. I-11,

X-296):

‘*This means that we would be extending you credit for the

work involved in ‘Phase /’ in the amount of $6,500.00 to

$8,000.00. We don’t mind commencing this job on a retainer

[$5,000] and extending this credit, however, when we have

done enough work to provide you with the preliminary plan

for the ‘acquisition and capitalization’ portion of the ‘com-

prehensive business plan’, and you have obtained at least

$8,000.00 in seed capital, our estimated fees must be paid...’’

(emphasis added)

b. The agreement Edleman signed is dated April 18, 1975

(Government Exhibit I-11, X-293-98); Edleman had not paid the

$5,000 retainer until May 8, 1975 (X-305). Moreover, Edleman

testified that he, his attorney Conrad and Appellant met in ‘‘early

April’ (TR 122-23); Conrad testified that Edleman asked him to

review the documents identified as Gov’t. Ex. I-11 (the 4-18-75 agree-

ment), Conrad did review this document and he did give Edleman an

opinion on the document (TR 169-70); and all prior to taking the trip

>OoP

14

to Morgantown, North Calorina on May 7, 1975. Conrad also

testified (TR 169):

**The legal documents pretty much, as far as form is concern-

ed, conformed to the many conversations that we had had that

morning with Mr. Freeman.’’

Edleman’s testimony is consistent with Government Exhibit I-11

(TR 155): ‘‘after I got the total comprehensive business package in

the middle of June, late June, that I would just be continually doing

most of the work myself, and paying them a fee...it was spelled out in

the agreement I signed.’’ And Conrad testified...‘*That was describ-

ed as the hardest part that Mr. Edleman may encounter’’ (TR 172). It

is inconceivable how a Federal judge could make such a blatantly

false statement considering Edleman’s contract, the dates on the con-

tract and the check, Edleman’s own testimony at TR 155 and 143,

and Conrad’s testimony. Edleman obviously knew prior to paying

the $5,000 retainer what tasks lay ahead for him, however, neither

Edleman no Appellant knew that Edleman would later ‘‘elect not to

proceed with that deal’’.

5. Judge Merritt claimed, (Opinion, p. 3):

**The initial interview consisted of a Century principal describ-

ing the many successful enterprises Century had financed.’’

When in fact:

a. Erbe testified as to discussions with Appellant; Erbe’s

testimony at ‘‘first glance’ appeared to substantiate this ‘‘single

allegation’’ (TR 96-97):

Q. And what did they say with regard to this particular

business? I’m sorry, what did Mr. Freeman say with

regard to this particular --

A. That they had raised funds and reorganized that, and it

was doing very well. (emphasis added)

However, the Prosecutor then questioned further as to who

‘*tthey’’ were, the person or organization that actually raised the

funds (TR 97):

Q. Forgive me, Mr. Erbe, is it your testimony that Mr.

Freeman said they had raised funding for the raising of

the house project?

A. No. The company that was doing it. The company that

was raising these houses, the construction company or

whatever it was.

Erbe’s testimony clearly contradicts Judge Merritt’s statement.

15

b. Jenkins, the ‘‘alleged victim’’ who couldn’t remember

anything any defendant even said to him, Supra; but Jenkins

remembered the house raising construction company (TR 472):

Q. Do you remember the subject of your conversations?

A. I can’t remember that, other than they showed me

brochures of businesses that had been helped by them.

Jenkins recalled a brochure being shown to him (i.e., Brown’s house

raising construction company) wherein the company would raise a

one-story house by jacks and build underneath it; he recalled no con-

versation ‘‘other than just explaining this particular business’’ (TR

474).

c. Webster alluded to Brown’s construction company, an Illinois

firm and other companies as well (TR 648):

Q. What did Mr. Freeman say to you?

A. This is what I was going to say. Mr. Freeman said that

they would have to submit this to their New Client Com-

mittee, and -- but, from what they read and checked and

talked to other people so far, that they fee/ that they have

somebody that would possibly be interested in financing

this. They have financed things of similar or like things

before.

I know he had mentioned one time there was a con-

struction firm, | can’t remember the name, but he didn’t

read off the name, in Illinois, I think it was, that they had

helped and financed, and there was also a -- oh, amuse-

ment park thing like Cedar Point, it was American, or

Americana, or something like that, and also a -- oh, right

here in Grand Rapids, there was a hotel or something

they were financing, some type of complex they were put-

ting up and he mentioned that they had quite a few in-

surance companies and doctors and people of this type.

He did mention he knew some pilots personally that like

to finance this type of thing, because they had a lot of ex-

tra income that they needed financing, tax shelters and

such.’’ (emphasis added)

Webster was referring to discussions relative to his Phase II

financing (second agreement (X-227-28)...‘‘which was later down the

road”’ (also at TR 649).

The Government never tried to clear the air as to ‘‘who’’ actual-

ly had to obtain the funds for the businesses Century had helped-the

Government knew that Century’s help amounted to the ‘‘business

16

. ee

plan’’. The Government also knew who had actullay obtained the

funds for the construction company the business plan was prepared

for as the Prosecutor so determined when Erbe had previously

testified as to who they were, Supra. The Government knew Century

wasn’t putting up hotels and therefore Century wasn’t the they

Webster was referring to. The Court’s Opinion p. 3 states:

**Freeman misrepresented to various clients that Century had

successfully funded other businesses (see, e.g., TR 648

Webster testimony that Freeman represented that Century

hadhelped finance Americana Amusement Park when, in fact,

Americana’s promoter was one of Century’s dissatisfied

clients who testified against Freeman at trial.)’’

However, no one from Americana Amusement Park ever testified at

trial, moreover Webster’s testimony...‘‘I think it was, that they had

helped and financed [speaking of the construction company],...and

there was also a -- oh, amusement park thing like Cedar Point, it was

American, or Americana, or something like that’’ is not a representa-

tion as to whether Century had Aelped or financed much less a

misrepresentation that...‘‘Century had successfully funded other

businesses.”’

d. Herbert and his partner Howard’s testimony is silent as to any

discussion of any help or funding of other clients of Century, as was

Morgan and Edleman’s testimony.

e. As to the Clarks who were only ‘‘introduced’’ to Appellant:

Henry Clarks’ testimony was also silent as to any discussions of any

help or funding by Century; Frank Clark merely testified (TR 411):

Q. And you were telling us the general nature of Mr. Hum-

phrey’s remarks?

A. He was explaining the - what Century Consultants did,

and by way of showing -- explaining this, he was showing

us a couple of exampies of other businesses that they had

helped, and the results of those helped, that they were

successful operations now, and it was the completion of

that...”

It is unrebutted that Brown, owner of the house raising con-

struction company, who also needed a plan for reorganization, raised

**more capital’’ than his ‘‘limited offering’’ business plan called for

(TR 1547-48) via Century’s help, but Brown and his principals ac-

tually did the fund raising.

It’s unrebutted that many clients had been helped by Century

and at least eleven such clients had fully succeeded in obtaining their

17

own limi'ed offering funding: Haas, who testified at trial (TR

1104-09); Witmer, who testified at trial (TR 1084-89); Brown (TR

1547-1551); Fouts (TR 595-96); Coville Engineering (TR 1656); and

others (TR 1546-47). Even the Government admitted ‘“‘that there

were 11 companies that were successful in every instance’’ (TR 1787).

As can be seen by the testimony or silence of all seven ‘‘alleged

victims’’ served prior to the Business Divorce, the initial interview

did not consist of a discussion of many successful enterprises Century

had financed as Judge Merritt had claimed above.

6. Judge Merritt claimed (opinion, p. 4-5) that:

*‘Not only did the advertisement solicit seekers of venture

capital, but the government witnesses testified that such was

their purpose in Airing Century Consultants and that that pur-

pose was emphatically set forth during initial consultations.’’

When in fact:

a. The Wail Street Journal ad solicited NO ONE; all 7 clients

were referrals from Angel Wilson (TR 102; 117; 298; 366; 470; 494;

and 645). Only Morgan testified as to seeing the ad,...‘‘coincidentally

at that time I was introduced to Century Consultants by Angel

Wilson... however...‘‘that’s really all there was to that’’ (TR 494).

b. The ad (X-328):

‘‘Need Venture Capital? Marketing Assistance? Business

Guidance? Century Consultants (312) 298-7044”’

is not misleading as Judge Merritt implied:

(1) ‘‘Venture capital’’ does not mean just funding by another;

the term encompasses many methods of raising money, including,

but not limited to ‘‘limited offering’ funding by principals

(clients).

(2) Century also directly sought sources of venture capital for

clients needing ‘‘institutional’’ sources of financing from institu-

tions or institutional investors; Coville Engineering project was

one such client in need of such type of venture capital (X-352-400)

which Appellant successfully located such a source, and it should

be noted that such client according to the Government (2nd Reply

Brief, dated October 14, 1981, p. 27): ‘‘Coville project failed for

reasons not attributable to financing.’’ /d.

c. The ‘‘alleged victims’’ did not testify that they Aired Century

Consultants to actually ‘‘seek’’ venture capital as Judge Merritt said

they did:

(1) Edleman, on direct examination, testified as to why he

came to Century Consultants (TR 117):

Q. When you went to Century Consultants, Mr. Edleman,

what did you go for?

A. To get a comprehensive business plan to obtain financ-

ing.

Additionally, Edleman testified he ‘‘went to Century to figure out

a way to do a business purpose”’ (i.e., start a new company) and

that he ‘‘went to Century Consultants fo get advice as to how to do

that’’ business purpose (TR 140 and 141) (emphasis added).

(2) Erbe testified as to discussions with Appellant concerning

his first free exploratory meeting with Appeilant (TR 90):

...“‘What we needed, our plans for reorganization or what we

would do if we could recapitalize’’ (emphasis added)

And Century’s offer of service did in fact conform with

Erbe’s reason for coming to Century and Erbe understood why he

tendered such fees (TR 102):

**THE WITNESS: We paid them $5,000 as a -- I don’t want to

say retainer. It was a partial payment, supposedly to put -- to

reorganize our company to make a prospectus; to induce in-

vestors to invest money in it.’’ (emphasis added)

The contract with Erbe (X-289-92) spelled out what type of a

reorganization plan Century would develop, if the specified fees

were tendered and how Erbe could recapitalize (X-291):

‘*This capitalization plan would be designed so that a limited

offering could be made by you and/or your officers and direc-

tors.’’ (emphasis added)

(3) Morgan, according to his own statement recorded in the

Confidential Information Booklet (provided at the first free ex-

ploratory meeting) to wit he filled out, states (X-263):

‘‘Our most pressing current objective is to create the financial

vehicle to bring this project into being.”’

Century Consultants in the August 19, 1974 contract, (Def Ex

D-G-2) set forth such a financial plan to be created so that the

‘*financial vehicle’? Morgan wanted could be provided.

Morgan's testimony reflects such a contractual understanding

(TR 496):

Q. Now were there any fees discussed?

A. There was an initial fee. In fact, yes, there were. In other

words, the whole process was laid out. The number 14 to

$16,000 was indicated as being a fee to get through this

--in other words to do this consulting work, and they

wanted $5,000 up front (emphasis added).

Morgan testified that he knew he had to raise the capital

himself and such was made clear to him before he parted with any

money, Supra. Such testimony directly contradicts Judge Merritt.

(4) Clark according to his own statement recorded in the Con-

fidential Information Booklet (provided at the first free ex-

ploratory meeting) to wit he filled eut, states (TR 459-60):

**The business is too young to have developed any grand plans

for capitalization before now, except for our individual con-

tribution to the business. Century Consultants is analyzing our

business and advising us on future capitalization.’’

Thereafter, Century advised the Clarks in writing that their

‘limited offering’’ was to be funded ‘‘by’’ the Clarks (X-113,

rra. 7).

(5) Webster testified as to why he hired Century (TR 793):

**...because of their expertise in business consulting and

marketing and finance...’’

Webster also testified (TR 765):

‘*...l was a person going to them to be hiring them as my con-

sultant, and they were telling what / needed to do to get fun-

ding. (emphasis added)

Webster admitted the April 22, 1975 offer of services (the

contract in evidence, F-36, X-230-234) resulted from his first

meeting with Century and was in fact the services promised to be

performed for ‘‘the fees paid’’ (TR 763-64):

Q. Now Mr. Webster, the exhibit that I have handed you

[F-36] dated April 22, 1975, is th’ exhibit that you drew

out of your first conferences with Century Consultants,

and was a basis upon which you employed them to be

your consultants, is that not correct?

A. Yes.

F-36 (X-230-34) covers the contr’~* to produce a ‘‘seed

capital’’ and ‘‘limited offering’’ business plan in exchange for

$11,000 ($3,500 retainer and subsequent payment of $7,500, the

fees in question).

Webster’s testimony directly contradicts Judge Merritt's

statement as to why Webster hired Century.

(6) Jenkins testified that he knew he had to raise his own

20

capital because he was ‘‘told’’ he had to raise it (TR 485-86). Ob-

viously Jenkins did not hire Century Consultants to obtain his fun-

ding as Judge Merritt said he did.

(7) Herbert testified he hired Century and paid the $5,000 re-

tainer after he had read this contract language:

‘*This capitalization plan would be designed so that a limited

offering could be made by you and/or your officers and direc-

tors’’ (TR 323-24).

Herbert's partner, Howard, also directly contradicted Judge

Merritt’s statement wherein he testified (TR 343-44): ‘‘We talked

about...how we should go about getting the money.”’ (Herbert,

Haney and Howard being ‘‘we’’)

The testimony of the allegec victims demonstrates that they

hired Century based upon the written contracts which all stated

(e.g., X-297):

‘‘Upon receipt of the aforementioned retainer of ($5,000.00),

we will commence the aforementioned work.’’

Its no wonder the Government admitted (2nd Reply Brief, dated

Oct. 14, 1981, p. 23):

**Appellant did provide his victims with a plan pursuant to his

contract with them.’’

Judge Merritt’s claim is contrary to the testimony and exhibits, ad-

duced at trial to wit even the Government found inescapable to

acknowledge upon appellate review.

And finally, Judge Merritt’s reiteration of the same theory,

below, in retrospect, has the lower court even appearing further

removed from the actual evidence:

**Viewed as a whole, the evidence is sufficient for the jury to

conclude that Century Consultants’ clients, based on adver-

tisements in the Wall Sireet Journal, approached that

organization for the sole purpose of finding a source of ven-

ture capital. . ."’ (Unpublished Opinion, p. 5) (emphasis add-

ed)

The court took an irrelevant ad which solicited no one and

manufactured an imaginary basis upon which the alleged victims

hired Century Consultants. This court's conduct is appalling and

is in fact a serious violation of the public’s trust in a judicial system

which is sworn to uphold the constitutional rights of an accused.

7. Judge Merritt claimed:

‘‘Further, although the written memorandum and comprehen-

21

sive business plans are written in suitably ambiguous language,

those documents read in light of oral misrepresentations made

to the clients reinforced their belief that Century would pro-

vide at least the bulk of the sources of investment.’’ (Un-

published Opinion p. 5)

When in fact:

a. Written memorandums were complete understood by the

clients and their testimony contradicts any notion of ambiguous

language, supra;

b. The comprehensive business plans likewise were anything

but ambiguous according to the only testimony received on such

issue, Mr. Abel, an expert witness, testified:

Q. Do the plans themselves do what they set out to do?

A. They--in each case there’s a charge set forth, and the sec-

tions of the report are responsive to the charge. They do

the things they say they’re going to do. (TR 1069)

c. The lower court like the government spoke of alleged oral

misrepresentations however they failed to produce any proof by

use of the official trial record.

d. It is totally uncharacteristic of a U.S. Court of Appeals to

include in their proof of a sufficiency case any matter which was

stricken from the record due to an objection being sustained by the

trial judge. However, the above statement with regard to the writ-

ten memorandum and comprehensive business plans reinforcing a

client’s belief of Century funding their business was objected to an

sustained at TR 162.

8. Judge Merritt claimed (Opinion, p.2):

**If the client retained Century and sent $5,000, the consultants

would then prepare a ‘‘Confidential Business Report’’. This

report repeated much of the information regarding

background, history and details of the proposal, as originally

presented to the consultants by the clieant.’’

When in fact of the seven alleged victims served prior to the

Business Divorce only ‘“‘cwo"’ of such clients ‘‘Confidential

Business Reports’’ (prepared by Century) and “‘information”’

reports (prepared by the client) are in evidence, Herbert and

Webster:

a. Herbert’s 12 page information report (X-13-25) tells any

person who can read the Enviish language that it contains nothing

except the prior history of the existing store operations and a

22

resume of Howard and personal financial statements of Herbert,

Howard and Haney. This 12 page information report prepared

“*by the client’’ is totally void of the ‘‘details of the proposal’’

which Judge Merritt falsely states that it contains. Century’s Con-

fidential Report (X-26-101) contains 85 pages, only 4 of such pages

are, for ‘‘disclosure’’ purpose devoted to ‘‘background history’”’

condensed from Herbert’s 12 pages; the remainder is Century’s

work product containing the ‘‘details of the proposal’’ developed

**by’’ Century -- not Herbert. Herbert himself provided testimony

concerning the ‘‘Confidential Business Report’’ prepared by Cen-

tury (TR 330 and TR 331):

Q. But it had a detailed study of how you might try to make

a real success out of your business? At least good safe

ideas on how to do it?

A. Yes.

Q. Now sir, did Century also propose some marketing plans,

and then some plans as to how you would set up capital

accounts of your company, and how you would be able to

offer the public a type of security, or offer not to the

public, but to those limited persons you would offer it to,

a security package that might be of interest?

A. Yes.

b. Webster submitted an ‘‘information report’’ (X-235-39) to

Century -- Webster’s ‘‘personal’’ background and history of his

personally owned hardware store -- Webster’s information report

does not contain ‘‘one’’ word about the ‘‘details of the proposal’’

for Webster’s Shopping Center that Judge Merritt claimed. The

‘‘details of the proposal’ were developed by Century; they were

not just ‘‘repeated’’ from Webster’s report [see Webster’s 79 page

Confidential Business Report (X-136-215)].

Appellant knows not what could compel a Federal judge to

invent evidence which cannot be supported by the official trial

record and which is in fact contradicted by such record.

9. Judge Merrit claimed (Opinion, p 3)

‘*From April, 1975, through September, 1976, Webster con-

tinued paying Century consulting fees totaling some $27,000.

(TR at 729; Exhibits App. at 122-45.) Webster never received

any funds through Century.’”’

When in fact:

a. Webster testified that the last time he ever saw Appellant

was in June, 1975 (TR 667). Webster also testified that he paid

23

Century total fees amounting to around $27,000 (TR 729). Such

total fees included ‘‘wire transfers’’ (Counts 5 and 6) that occurred

after the Business Divorce which Counts the trial jury saw fit to ac-

quit Appellant. Also included in the $27,000 was $/1,000 which

Webster paid for the seed capital and limited offering business

plan dated July 31, 1975 (X-136-215) produced pursuant to

Webster’s first contract (X-230-34) ($3,500 retainer and the $7,500

paid May 29, 1975, the fees in question). Webster’s testimony

makes it clear the other fees were paid /ater (TR 770); also see Note

2, page 11

The contract (X-230-34), testimony of Webster, Webster’s at-

torney Monte Story (TR 1060), and Government Witness Wagner

make it very clear that $11,000 tendered by Webster was for a seed

capital and limited offering business plan that was to be funded

‘*by’’ Webster and therefore ‘‘no’’ funding by Century was due

Webster as Judge Merritt so inferred.

Judge Merritt simply had no appreciation for the actual

evidence.

10. Judge Merritt claimed (Opinion, p. 3-4):

‘*Defendant argues that the written memorandum explained,

before the client parted with any money, that the client would

be responsible for rais' ig the seed capital. Second, the

memorandum and comprehensive plan stated that subsequent

phases of raising capital would not begin until after the client

had succeeded in obtaining the seed capital. Third, a separate

agreement was signed on a contingent fee basis for Century 10

act as a finder for the bulk of the desired capital.’’

When in fact:

a. The Appellant’s briefs, the clients’ testimony and their con-

tracts demonstrate the inaccuracy of the court’s misrepresentation

that such was Appellant’s arguments.

b. The above-mentioned quote demonstrates the court’s total

lack of integrity by attempting to show their argument was Ap-

pellant’s prior arguments in briefs submitted to that court and that

same concurred with their manipulation of the evidence (Court’s

opinion, top p. 3):

**Should the client manage to raise the required seed capital,

Century would then offer further services for obtaining the se-

cond, larger phase of capital on a contingent fee basis. Jd.

As Appeilant has already demonstrated, the court’s inter-

24

pretation of the services to be performed as per the testimony and

contracts of the alleged victim witnesses simply does not exist. The

court’s attempt to boot strap their argument as if it were Ap-

pellant’s argument was a cheap trick unbecoming of a Federal

Judge.

11. Judge Merritt claimed (Opinion, p. 3):

**Mr. Philip Morse refused to pay any more than the initial

$5,000 retainer because of nebulous answers to his repeated

queries as to the exact financial sources Century would tap to

obtain the needed capital for the second and third phases of his

project. (TR at 509).’’

When in fact:

a. Philip Morse cdiid not provide that testimony -— he was the

Prosecutor;

b. Morgan’s business plan for Phase I had been completed

and reviewed with Leigh Johnson on November 12, 1974 (X-287).

Leigh Johnson’s three letters Supra explain exactly how Century

was willing to pursue Morgan’s Phase II and Phase III work (i.e.,

after Morgan raised Phase I-$200,000) and they were written on

12-5-74; 12-9-74 and 12-27-74, and sometime thereafter, Morgan

made the statement (TR 509):

**I was not satisfied with where the bulk of the $20,000,000

was going to come from. I had no idea specifically, and I asked

Leigh Johnson over and over, ‘‘Now I want to know exactly

the sources of these funds before I give you another penny.

And, in my opinion, | felt that the answer to my question, even

in writing, [Leigh Johnson’s 3 December letters] was too

nebulous for me to assume any longer that that money was for-

thcoming. In other words, I had no idea where it was going to

come from, or just how they would do it.’’ (emphasis added)

Morgan’s testimony is nothing more than a feeble excuse for

not paying Century the $11,494.99 he owed Century for the only

work he ever contracted with Century to perform. His excuse

comes after he received the work and failed to raise the $200,000

which he admitted, ‘‘had we gotten (through Phase I), ‘‘Phase II

and III was Century’s job. And Morgan thought he was capable of

raising the $200,000 (TR 498):

“I feel that I am a good enough salesman that I could get

through that phase without too much trouble.”’

The above-mentioned quotation from the Unpublished Opinion

25

further demonstrates the court’s inability to appreciate who

testified and what such testimony demonstrates.

12. Judge Merritt claimed (Opinion, p. 6):

‘‘Whatever hopes Freeman might have had that the ‘Limited

Offering’ presented by his clients might help them raise

money, he could not have an honest belief that such would

raise upwards of $20 million.”’

When in fact:

a. Appellant never expressed any belief that anyone could

ever raise $20,000,000 via a ‘‘limited offering.’’

b. No ‘‘alleged victim had a plan for a limited offering that

exceeded $250,000 as can be seen by “‘all’’ contracts and

testimony.

c. The trial record has ample amount of evidence as to Ap-

pellant’s honest belief that clients could succeed through ‘‘limited

offering’’ funding (also see, Gov’t admission TR 1787; 11 prior

successes) and many of the ‘‘alleged victims’’ were confident in

their abilities up to the point of actual performance (i.e.,

Webster’s confidence, TR 959-60)--then it became Appellant’s

fault they didn’t succeed.

13. Judge Merritt claimed (Opinion, p. 5):

**None of Century’s clients who testified ever had their project

presented to Mr. Oberman, and Mr. Oberman testified that

Freeman never presented a project to him as a possible invest-

ment after the project fell through.’’

When in fact:

a. Appellant was not to present any of the seven ‘‘alleged vic-

tims’’ seed capital or limited offerings to Oberman’ or any other

source; these clients served prior to the Business Divorce paid fees

for nothing but seed capital or limited offering plans which they

**knew”’ they had to fund themselves, Supra, just as the contracts

so advised and just as the Government so admitted, Supra.

b. Had Appellant presented any of the clients’ limited offer-

ing projects to Mir. Oberman, Appellant’s source witness, such ac-

2. Oberman was a source Appellant had secured to obtain a

$1,500,000 commitment for a pre-indictment period client, Coville

Engineering (TR 1209-25) that had successfully concluded their

limited offering (TR 1656).

26

tion would have violated securites regulation as Appellant was noi

a principal of the client’s company, and would have been soliciting

an unregistered security as its exemption status would have been

violated by such solicitation. Appellant advised in every contract,

e.g., Edleman X-295:

**vour atiorney will explain to you exactly how to protect your

right to use the private or limited offering exemiptions.’’ /d.

c. Freeman never presented a project to Oberman for possible

investment because neither Edleman nor Webster completed Phase

I funding--unlike the Coville Engineering project which was

presented to Oberman, after it had successfully concluded its

Phase I-‘‘limited offering.’’

There simply is ‘‘no’’ basis for Judge Merritt’s belief that

Century should have presented alleged victims seed capital or

limited offering financing plans to any source -- such belief as

stated by Judge Merritt is contrary to ‘‘all’’ evidence.

14, Judge Merritt claimed (Opinion, p. 4):

*‘Whether or not the comprehensive business plans had some

value as a basic outline for business reorganization and

marketing, they did nothing to further the clients primary

goal; to have Century Consultants find investors for their pro-

ject.”’

When in fact:

a. The case before Judge Merritt involved people entering into

contracts by exchanging promises of performance to wit each par-

ty has, at least, in the past 200 plus years, been able to rely upon

that writing as manifesting the true intentions of the parties (par-

ticularly when such contracts were not disputed by any alleged vic-

tim) and such contracts were the basis of alleged victim’s employ-

ing Century as per their own testimony, Supra.

b. The contracts, the testimony of the alleged victims, and the

Government admitted that Appellant performed pursuant to the

contracts which called for Century to produce a limited offering

type business plan wherein such capitalization plan was specifically

designed to be capitalized by the client and/or his officers and

directors. The clients, the government and expert witness Able

agree the business plans were only to be used by the client and not

Century (TR 1072).

Judge Merritt's alleged ‘‘clients’ primary goal’’ is again

nothing more than another attempt by the court to invent evidence

27

notwithstanding an overwhelming abundance of evidence to the

contrary. Had the clients contracted for or Appellant represented

that such primary goal would be met by Century for the fees

tendered, this case would not have proceeded to this point.

SUMMARY

Appellant was entitled to a sufficiency of the evidence ruling

based upon the actual evidence contained in the official trial record.

The reviewing panel responded by falsely stating the existence of

testimony which cannot be found in the official trial record. Ap-

pellant has der. onstrated by example after example that such lower

court’s comprehension of the actual testimony and exhibits was in-

credible.

Appellant has not sought this writ of habeas corpus upon a few

isolated examples of the court’s misapprehension of minor facts (i.e.,

Philip Morse, the prosecutor, didn’t testify at TR 509, it was Mr.

Morgan). The lower court’s concept of Appellant’s alleged

misrepresentations being verified by testimony from four persons

who never testified, from three persons who never knew of him, from

one person who could not remember any discussion with Appellant,

and the like--can only be likened to the justice one finds in coni-

munist countries.

Appellant has demonstrated that neither he nor anyone else

misrepresented what services would be provided for the fees

tendered. No client testified he was solicited by an advertisement, all

were referrals. No client testified he hired Century to fund their

business. No clienc testified Century had successfully funded

previous clients’ businesses. All clients who knew of Appellant

testified there was a written contract specifying Cencury was retained

to produce a business plan designed to be capitalized by the client via

a seed capital plan and/or a limited offering prospectus prepared by

an attorney utilizing such business plan. Both the clients and the

Government admitted Appellant provided business plans pursuant to

their contracts.

The lower court held Appellant responsible for not providing

limited offering funding under the business plans for which all fees

were tendered nothwithstanding all the evidence to the contrary. The

court also held Appellant responsible for not providing secondary

funding (Phase II). However, only three clients ever had discussions

calling for secondary funding by Century. And such secondary fun-

ding, according to their testimony, was supposed to follow their

limited offering capitalization. But Morgan never completed his

28

capitalization and never even contracted for such future perfor-

mance. Webster contracted ror such future performance but prior to

completing his capitalization, he embezzled shareholders’ money.

Edleman also contracted for such future performance, but ‘‘elected

not to proceed’’ even prior to attempting his limited offering

capitalization. Not one of the three clients claimed Century

represented secondary funding efforts prior to completion of their

limited offering capitalization. Only the lower court’s non-

evidentiary finding holds Appellant responsible for all fund raising

beyond the seed capital.

It is clear from the Government's briefs and the Unpublished

Opinion that instead of taking the ‘‘evidence in a light most

favorable to the government’’ [Unpublished Opinion, App. A, (1a)],

the lower court merely applied unsubstantiated government argu-

ment ‘“‘in a light most favorable to the government’”’ in order to

justify its findings of sufficient ‘‘evidence’’ from which the jury

could have allegedly found Appellant guilty beyond a reasonable

Aoubt. However, considering the jury never had knowledge of such

non-existent ‘‘evidence’’ because such alleged facts are not contained

in the official trial record, the question of sufficiency of the evidence

remains unanswered.

The Unpublished Opinion appears tidy and complete on its face,

however, it should not be said that such review, substituting govern-

ment argument for actual evidence, satisfied the constitutional man-

date which guarantees the right to a full, fair review of the actual

evidence, the right to a fair trial based upon the fruits of confronting

the accusers with regard to the charges of illegal conduct set forth in

each count of the Indictment, and the right to an independent and

unbiased court of review. Count | essentially claimed Jenkins was

defrauded by Appellant misrepresenting many things, however,

Jenkins could not remember any representations made by Appellant

or any other person. Count 2 claimed Herbert was defrauded by Ap-

pellant misrepresenting many things, however, Herbert and his part-

ner, Howard, contradicted such alleged representations. Counts 3

and 4 claimed the Clarks were defrauded by Appellant’s misrepresen-

tations, but the Clarks were only introduced to Appellant. Counts 5

and 6--Appellant acquitted. Count 7 claimed Webster was defrauded

($7,500) by Appellant misrepresentations tut Webster admittedly

received the specific performance promised for such $7,500 and

himself foreclosed the future performance via embezzlement, no

misrepresentation of service to be rendered was demonstrated. Count

8 alleged conspiracy to take money via misrepresentations but no

misrepresentations were shown and one cannot conspire to perform

29

consulting services per acknowledged written contracts to wit perfor-

mance was admittedly rendered for the fees tendered. One cannot ex-

cuse or overlook the negligence expressed in the Unpublished Opi-

nion. To cover up injustice when directly confronted with shortcom-

ings of such constitutional magnitude is a perilous course for a

judicial system to take in a political system which encourages free

speech and a strong independent mass media.

This Writ of Habeas Corpus is warranted in the above-entitled

case because this is not an ordinary ‘‘sufficiency of the evidence’’

case. This Court should exercise its supervisory power for the reason

Justice Frankfurter stated in McNabb v. United States, 318 U.S. 332

(1943):

**Judicial supervision of the adminstration of criminal justice

in the federal courts implies the duty of establishing and

maintaining civilized standards of procedure and evidence.

Such standards are not satisfied merely by observance of

those minimal historic safeguards for securing trial by reason

which are summarized as ‘due process of law’ and below

which we reach is really trial by force.’’ (emphasis added)

When due process of the law can be circumvented by a reviewing

panel falsifying testimony, an accused constitutional right to con-

front and cross-examine his accusers has most certainly been lost and

what we have reached is indeed trial by force.

Petitioner respectfully believes that such Writ of Habeas Corpus

is warranted in a sufficiency of the evidence case wherein the lower

court so totally misconstrues the evidence that justice and petitioner’s

constitutional rights cannot be said to be satisfied.

CONCLUSION

We respectfully pray such Writ of Habeas Corpus issue for the

purpose of directing the Sixth Circuit Court of Appeals to reverse

' and remand this case upon a finding of Judgment of Acquittal

(N.O.V) as to all Counts.

Respectfully itted,

ERALD D. FREEMAN

Attorney for Petitioner

4755 N. Washtenaw

Chicago, Illinois 60625

30

APPENDIX A

UNPUBLISHED OPINION

No. 80-1624

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNrrep STATES OF pom pe = Own Appeat From The

nED-Appenee, | United States District

v. Court for the West-

Gurn H. FREEMAN | ern District of Michi-

Defendant-Appellant.| %*”:

Decided and Filed October 1, 1982.

Before: Live.y, Kerra and Merartt, Circuit Judges.

Menarrt, Circuit Judge. We affirm Gurn Freeman’s convic-

tion of six counts of mail fraud, transportation of a check

“knowing the same to have been taken by fraud,” and conspira-

cy to commit mail and wire fraud in violation of 18 U.S.C.

§§ 1341, 2314. He was sentenced to five years imprisonment

followed by five years of probation and fined $11,000. Most

of the issues presented on appeal were considered by District

Judge Miles in his opinion denying a motion for a new trial.

Mr. Freeman forcefully and effectively argued his own ap-

peal. The main issue on appeal is whether the prosecution

presented sufficient evidence of a scheme to defraud to con-

stitute a violation of 18 U.S.C. § 1341, viewing, as we must,

the evidence “ ‘in the light most favorable to the government.”

United States v. Stull, 521 F.2d 687, 689 (6th Cir. 1975), cert.

denied, 423 U.S. 1059 (1976). Fourteen “victim” witnesses in

need of “venture capital” testified about Freeman’s alleged

“scheme to defraud” them of money through false representa-

(1 a)

2 United States v. Freeman No. 80-1624

tions that Century Consultants could provide them with

needed capital for expanding or recapitalizing their present

business or starting new enterprises. Century Consultants

placed an advertisement in the Wall Street Journal which of-

fered: “Need Venture Capital? Marketing Assistance? Busi-

ness Guidance? Century Consultants [phone number].” Each

of Century’s clients stated their needs for capital from the

beginning. The initial interview consisted of a Century prin-

cipal describing the many successful enterprises Century had

financed, and the interviewee atempting to “sell” his project

to the firm. The prospective client left with an elaborate ap-

plication requesting extensive information on his financial

status, the history of the company or business to be capitalized,

the projected plan, and personal history. After the form was

returned, Century would then submit the project to its “New

Client Committee,” which was invariably enthusiastic about

the profit potential and investment feasibility of the planned

project and accepted the new client.

Century mailed an acceptance to the new client, accom-

panied by a memorandum which set forth a rough plan for

recapitalization by incorporation, limited partnership, joint

venture, or similar device, and divided investment potential

into at least two phases. The potential client was always told

that he must first present a stronger position to investors by

obtaining an initial capitalization through “A Limited Offering”

which Century Consultants, if retained, would help the client

prepare. The retainer for such work was $5,000, out of which

would come the $50 per hour consulting fee, and the total fee

was estimated to range from $7,500 to $16,000. See, e.g.,

Exhibits App. at 5-8, 105-09, 111-14, 230-34, 293-98.

If the client retained Century and sent $5,000, the consul-

tants would then prepare a “Confidential Business Report.”

This report repeated much of the information regarding back-

ground, history and details of the proposal, as originally pre-

sented to the consultants by the client. This report would

(2 a)

No. 80-1624 United States vy. Freeman 3

suggest a limited offering to raise the initial or “seed capital.”

Should the client manage to raise the required seed capital,

Century would then offer further services for obtaining the

second, larger phase of capital on a contingent fee basis. Con-

sulting fees continued, however, at $50 per hour plus all

expenses for travel and accommodations, and the fees were

paid from the seed capital raised by the client.

Clients became disenchanted with Century at various stages

of the scheme. Mr. Edleman realized after paying $5,000

and receiving the comprehensive business plan that he would

be raising money on his own, while paying a fee to Century.

(Tr. at 155.) Mr. Phillip Morse refused to pay any more

than the initial $5,000 retainer because of “nebulous” answers

to his repeated queries as to the exact financial sources Cen-

tury would tap to obtain the needed capital for the second

and third phases of his project. (Tr. at 509.) Gorden Webster

was the most tenacious of the clients who testified. He raised

his own “seed capital” of $25,000 even before Century com-

pleted the comprehensive business plan. From April, 1975,

through September, 1976, Webster continued paying Century

consulting fees totaling some $27,000. (Tr. at 729; Exhibits

App. at 122-45.) Webster never received any funds through

Century.

Essentially, defendant argues that the above scheme in-

volved no more than a client receiving:

. . exactly what Century contracted to give him. The

real question is whether or not a person who delivers

what he promises, in language at least plain enough for

most people to understand, can be guilty of fraud be-

cause of a failure to deliver what the customer desired

and believed (in some instances) would be forthcoming.

Appellant’s Brief at 13. Defendant argues that the written

memorandum explained, before the client parted with any

money, that the client would be responsible for raising the

seed capital. Second, the memorandum and the comprehen-

(3 a)

4 United States v. Freeman No. 80-1624

sive plan stated that subsequent phases of raising capital

would not begin until after the client had succeeded in

obtaining the seed capital. Third, a separate agreement was

signed on a contingent fee basis for Century to act as a

finder for the bulk of the desired capital. And fourth, the

client was always encouraged to employ a lawyer and an

accoumtant to participate in the proceedings. Finally, defen-

dant offered the testimony of an expert witness that the com-

prehensive business plan had “some value.” (Tr. at 1069.)

Even assuming the five factors noted above to be true, there

is sufficient evidence in the record of a scheme to defraud.

In order to be prosecuted under the mail fraud statute, the

defendant must commit an actual fraud; that is, he must have

a specific intent to deceive or defraud. Epstein v. United

States, 174 F.2d 754 (6th Cir. 1949). The scheme must

include representations made by the defendant which are

known to be false, and one or more persons must be defrauded.

United States v. Rabinowitz, 327 F.2d 62 (6th Cir. 1964). Prov-

ing intent through misrepresentations does not require a show-

ing that Freeman never entertained any hope that his clients’

ventures would be successful. Rather, the jury may find that

Freeman had “no basis in fact for believing that the business

to be operated . . . would be profitable, and that appellants’

expressed opinion to that effect was therefore not actually

entertained or at least not honestly entertained.” Irwin v.

United States, 338 F.2d 770, 774 (9th Cir. 1964), cert. denied,

381 U.S. 911 (1965). Nor is proof that a defendant intended

or desired to complete a project for his investors an excuse for

knowing misrepresentations. United States v. Habel, 613 F.2d

1321, 1325 (5th Cir.), cert. denied, Carcaise v. United States,

447 U.S. 925 (1980).

Whether or not the comprehensive business plans had some

value as a basic outline for business reorganization and market-

ing, they did nothing to further the clients’ primary goal:

to have Century Consultants find investors for their projects.

Not only did the advertisement solicit seekers of venture

No. 80-1624 United States v. Freeman 5

capital, but the government witnesses testified that such was

their purpose in hiring Century Consultants, and that that

purpose was emphatically set forth during initial consultations.

Further, although the written memorandum and comprehen-

sive business plan are written in suitably ambiguous language,

those documents read in light of oral misrepresentations made

to the clients reinforced their belief that Century would

provide at least the bulk of the sources of investment. Free-

man misrepresented to various clients that Century had suc-

cessfully funded other businesses. (See, e.g., Tr. at 648, Web-

ster testimony that Freeman represented that Century had

helped finance Americana Amusement Park when, in fact,

Americana’s promoter was one of Century’s dissatisfied clients

who testified against Freeman at trial.) Freeman further

misrepresented that Century would provide the sources of

investors for his clients. (Tr. at 123, 133, 162, 172.) Freeman

offered the testimony of a single “source,” to rebut the charge

that he had no such sources. Ike Oberman, a certified

accountant, testified that he became interested in a project

for which Mr. Freeman had asked him to prepare a financial

projection. (Tr. at 1211.) Taking the initiative, Oberman

suggested that he might be interested in becoming a principal

for the project and could ask other sources to invest as well.

(Tr. at 1212 et seg.) Although Freeman agreed and a good

deal of potential capital was raised, that particular project

never progressed past the planning stage. None of Century’s

clients who testified ever had their project presented to

Mr. Oberman, and Mr. Oberman testified that Freeman never

presented a project to him as a possible investment after the

project fell through.

Viewed as a whole, the evidence is sufficient for the jury

to conclude that Century Consultants’ clients, based on ad-

vertisements in the Wall Street Journal, approached that

organization for the sole purpose of finding a source of venture

capital; that Freeman intentionally misrepresented to them

that Century had procured investors for several projects and,

(5 a)

6 United States v. Freeman No. 80-1624

should they be accepted as clients, could tap extensive sources

for financing; that the clients never received any funding

from Century; and that Freeman could not have believed,

or honestly believed, that he would procure such sources of

capital.

These misrepresentations distinguish this case from United

States v. Rabinowitz, 327 F.2d 62 (6th Cir. 1964), cited by

the appellant as requiring reversal of his conviction. In

Rabinowitz, this Court analyzed the permissible bounds of

sales talk in overturning a mail fraud conviction. Customers

in that case never paid any money until they had been shown

the object of their purchase, a knitting machine, and had a

lesson on how to use it. The machine “was not a flimsy fake.

It was excellently designed and well built.” Id. at 80. Only

14 of 689 purchasers testified for the government that they

could not make the garments fast enough to make the pay-

rffents on the machine, while “a number” testified that they

had indeed been able to make enough garments to make the

payments easily. Thus this Court concluded:

There was sales talk, yes — there weze exaggerations.

But they were made to people who had seen the ma-

chines and could presumably know ther own capabilities.

That both salesmen and purchasers were mistaken as to

this does not spell out an intent to deceive.

Id. at 81. In the case before us, in contrast, clients were

never given an opportunity to examine potential financial

sources because there were none. Whatever hopes Freeman

might have had that the “L.imited Offering” presented by his

clients might help them raise money, he could not have an

honest belief that such would raise upwards of $20 million

In sum, Freeman’s sales talk exaggerated and puffed up an

underlying illusion, not a well built machine available for a

customer's inspection.

The recent case of United States v. Shelton, 669 F.2d 446

(7th Cir.), cert. denied, Bledsoe v. United States, 102 S.Ct.

(6 a)

j

No. 80-1624 United States v. Freeman 7

1989 (1982), is similar on the facts to the case before us. In

what was described by the Court as “a bucolic variant of a

‘Ponzi scheme,’” the defendants in Shelton sought investors

for a farmers’ cooperative which would establish facilities for

the buying and selling of farm products and equipment. The

defendants, though very successful at raising funds, paid them-

selves so much in management and “consulting fees” that

the cooperative’s proposed facilities “remained an improbable,

if not impossible, dream.” Id. at 450. The Court concluded

that there was sufficient evidence for the jury to infer that

the defendants defrauded investors with the farmers coopera-

tive concept, which provided “the potential for lucrative

personal returns through the . . . consulting agreement” and

that the defendants had made “various misrepresentations

about the success of [a prior] operation.” Id. at 453. The

case before us also involves an unsound concept for raising

large sums of capital which offers lucrative personal gain for

the defendants through consulting fees and includes mifs-

representations about the success of prior financing projects.

Even if a scheme to defraud is proven, Freeman contends,

Count One of the conviction must be vacated because the

government failed to prove that the letter involved was mailed

to witness Jenkins rather than hand delivered. Title 18 U.S.C.

§ 1341 is violated when the perpetrator of a fraudulent scheme

“places in any post office or authorized depository for mail

matter, any matter or thing whatever to be sent or delivered

by the Postal Service . . . or knowingly causes to be delivered

by mail. . .” any such matter. As has been stated by both

this Court and the Supreme Court, “ “Where one does an act

with knowledge that the use of the mails will follow in the

ordinary course of business, or where such use can reasonably

be foreseen, even though not actually intended, then he

‘caused’ the mails to be used.’” United States v. Talbott,

590 F.2d 192, 195 (6th Cir. 1978), quoting Pereira v. United

States, 347 U.S. 1, 8-9 (1954). Further, “‘[t]hat the confirma-

tion letters and mailed check could have been hand-delivered

(7 a)

8 United States v. Freeman No. 80-1624

or delivered otherwise than through the mails, is immaterial.’”

Talbott, supra, at 195, quoting United States v. Stull, 521

F.2d 687, 689 (6th Cir. 1975), cert. denied, 423 U.S. 1059

(1976). Mr. Jenkins received the letter in question in March,

1975. (Tr. at 475; Exhibits App. at 110). At that time, Free-

man ran the company. (Tr. at 867). He continued to be

active on a regular basis after the sale of Century to Misters

Powell and Wagner, completed May 14, 1975 (Tr. at 867;

Exhibits App. at 329). The above is ample evidence that

Freeman “caused” the letter to be mailed.

Freeman raises three more issues which may be dealt with

briefly. First, he asserts that the trial judge committed pre-

judicial error by allowing a question and answer which in-

formed the fury that Wagner had been indicted for activities

concerning Century Consultants. Wagner was a co-defen-

dant, but entered, a plea of guilty before the trial began. In

this same assignment of error, Freeman claims to have been

prejudiced by the testimony of a witness that Powell had been

“duped” when he bought Century from Freeman, and by

questions during cross-examination concerning two civil cases

bought against Freeman in 1964 and 1970. We agree with

Judge Miles that “in neither case was the potentially prejudi-

cial testimony allowed to proceed beyond the point at which

the possible prejudice to defendant became evident, and in

both these instances any prejudice to defendant was mini-

mized by prompt remedial action.” (Opinion and Order on

Motion for New Trial, App. at 47; see Tr. at 1126-32; 1735-45. )

Second, Freeman asserts that the trial judge considered mat-

ters outside of the trial record when a directed motion for

acquittal was denied. Specifically, the trial judge mentioned

in his oral denial that:

(8 a)

No. 80-1624 United States v. Freeman is)

instances, when they came to Angel Wilson, . . . they

were routed to the defendants... .

(Tr. at 1052-53.) Judge Miles sets out his reasons for denying

the motion for acquittal carefully and thoroughly in pages

1048 through 1055 of the Transcript. It is quite apparent

that the reference to Mr. Wilson’s past history with that

court is merely made in passing and that Judge Miles did not

rely on it in any way in making his ruling. It was clearly

harmless error which did not affect any substantial rights of

the defendant. Rule 52(a), F.R.Crim.P.

Third, the defendant complains that he should have been

allowed to obtain credit reports on the government's witnesses

in order to refute the suggestion that Century Consultants

was the cause of their business failures. The rule for appellate

review of discovery orders is:

If the order is adverse to the defendant it may be re-

viewed on appeal after conviction, but the possibility of

reversal is slighi, since the courts hold that they must

affirm unless the trial court abused its discretion and

will not reverse if the court order was not prejudicial.

1 Wright, Federal Practice and Procedure § 261, p. 534, and

cases cited therein (1969 & 1980 Cum. Supp.). Judge Miles

denied the appellant's motion for the discovery order after

carefully weighing the minimal, collateral relevance of the

credit reports of the witnesses against the substantial privacy

right of and potentially serious prejudice to the witnesses.

(Tr. 28-31.) He did not abuse his discretion in such a ruling.

Finally, Freeman submitted to this Court a pro se brief

attacking virtually every element of his conviction. We have

considered the arguments presented therein and have con-

cluded that appellant received a fair trial on all counts.

Specifically, the Government presented sufficient evidence to

establish intent to defraud, a conspiracy, and use of the mails;

the trial court’s denials of several motions for severance were

(9 a)

10 United States v. Freeman No. 80-1624

proper; the trial judge did not abuse his discretion in admitting

evidence of the sale of stock; and the prosecutor did not go

beyond the acceptable bounds of argument in his closing

statement.

Accordingly, the conviction is affirmed.

(10 a)

Ga

APPENDIX B

; FILED

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT CCT 1 2

NO. 80-1624 JOHN P. HEHMAN, Clerk

UNITED STATES OF AMERICA

Plaantiff-Apcellee,

vs.

GURN H. FREEMAN,

Defendant-Appellantc.

Before: LIVELY, KEITH and MERRITT, Circuis Judges.

GMEN?

APPEAL {rom the United States District Court for the Western

District of wichigan.

THIS CAUSE came on to be heard on the record from the United States

District Court for the western District of Michigan

and was argued by Gurn Freeman for appellant, Phillip Morse for appellee.

ON CONSIDERATION WHEREOF. Tt is sow bere ordered and adjudged by

this Court that the judgment of the said District Court in this cause be

and the same is hereby affirmed.

No costs taxed.

ENTERED BY ORDER OF THE CouRT

John ?. Hehman, Clerk

Me Vein nr

1S Clerk

Tesued as Mandate: yovemser 29, 1942 A True Copy

COSTS IONE Attest

Pas EP Cre ; f

~ Q-

Total $ EE ——-——

Mo. 80-1624 FILED

UNITED STATES COUPT OF APPEALS

NOV 24 19

JOHN P. HEHMAN, Clerk

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMEPICA,

Plaintiff-Appellee

ORDER DENYING PETITION

v. ) FOR REHEARING EN BANC

GURN H. FP REEMAN,

)

;

)

Defendant-Appellant )

)

Before: LIVELY, KEITH and MERRITT, Circuit Judges

A majority of the court havine not voted in favor

of an en banc rehearing, the petition for rehearing has

been referred to the hearing panel for disvosition.

Upon consideration, it is OPDEPED that the

petition for rehearing be and herebv is denied.

ENTERED BY ORDEP OF THE COURT

Ate Aras

(2b)

—

No. 80-1624

UNITED STATES COURT OF APPEALS FILED

FOR THE SIXTH CIRCUIT Lee 9 19g

JOHN P. HEHMAN, Clerk

UNITED STATES OF AMERICA,

Plaintiff-Appellee

CRDER DENYING PETITION

v. FOR REHEARING EN BANC

GURN H. FREEMAN,

ee eee eee ee ee

Defendant-Appellant

Before: LIVELY, KEITH and MEKRITT, Circuit Judges

A majority of the court having not voted in favor

of an en banc rehearing, the petition for rehearing has

been referred to the hearing panel for disposition.

Upon consideration, it is ORDERED that the

petition for rehearing be and hereby is denied.

ENTERED BY ORDER OF THE COURT

Nie hl ne

} Clerk

(3 b)

SUPREME COURT OF THE UNITED STATES

OFFICE OF THE CLERK

WASHINGTON. 0.C. 20543

fortl 8,

Mr. Gerald 0. Freeran

4755 North Washtens.

Chicages Ik 60625

Re: Gurn #. Freeman,

ve Urited States

NO 87°1°74

Dear Pr. Freeman:

The Court today erteredc the following order

entitlec case:

1087

tn

the above

The petition for » writ cf cortiorar! ts dentec.

Very truly yours,

Slewander lL. Stewage

Clerk

(4b)

> — OS a ee

Se ee 2D . * t

SUPREME COURT OF THE UNITED STATES

OFFICE OF THE CLERK

WASHINGTON. 0D C 20843

>

“ june 13, 1983 yen

Mr. Gerala 0. Freesen

4755 Worth Washtenee

Chicegor Ik buer*

ae: Gurn By Freeaen,

vw. Untied Stetes

uc. 82-1376

Oear Mr. Freeman:

4

Tre Court todey enterec tne following croer in the adove

entitled case: ;

The petition for rehearing ts cenies. .

Very truly yours, 3

Alexancer L. Stewass Clerk

Meranda &sklevae-

3

4

,

APPENDIX C

.

UNITED STATES DISTRICT COURT FOR THE «= ef

, ae ;

WESTERN DISTRICT OF MICHIGAN, SOCTEERN DIVISION" 3° -

1 z= 7

-~-s "se © «= «= - _

[ fs < “

| “= 5

OWITED STATES OF AMERICA, ) .. 2

) =

Plaintiff, | a

) Bo. SA-/f cr. /

)

8g. SR. )

. , ? MU ISL alt

W. ELLIS POWELL,

Defendants. )

ceecrrreerercer eee Benjamua F. Gibson

The Grand Jury Charges:

Count 1

1. ‘That commencing on or about January 1, 1974,

and continuing up to March 2, 1977, in the Western District

of Michigan and elsewhere,

Gefendants herein, did devise and intend to devise 4 scheme

and artifice to defraud and for obtaining money and property

by means of false and fraudulent pretenses, representations

and promises from various individuals and business entities,

including but not limited to:

Richard L. Serbert dba Spoiled Rotten, Inc.

East Lansing, Michigan

Millet Die Co., Inc.

Michigan

Richard 8. Jenkins

Benry Clark, et al Prank Clark 4 Associates

Grand Rapids,

Video Communications, Inc.

Lansing, Michigan

Robert W. Alexander

(Ic) :

a Bey

R 6&6 K Fabrication fac.

Hastings, Michigan

Roger lL. Green,

et al

Gordon 8. Webster

Laingsburg, Michigan

Willis 2. Morgan Ameripark, Inc.

: Grand Rapids, Michigan

Ralph J. Erbe Mocular Crafts Inc.

Union, Michigans

North American ?hoto tIac.

Dearborn, Michigan

James L. Udleman

Ronald #. Sosse De Ro Na, Inc.

McHenry, Illinois

Wesbanque Developments

Cedar Falls, Iowa

Roger A. Dawson

; &.' £4 tee

Robert W. Raleigh, Jr.,

et al Forreston, Illinois

Kenneth Susujara dba Thermwood Corp.

Dale, Indiana

Prederick Boeldt 4ba Commerical Enterprises

Development

Sheboygan, Wisconsin

well knowing that the pretenses, representations and promises

would be and were false when made, and which scheme and

artifice was devised by the defendants in the tanner and

means as follows:

2. At all times material herein, the defendants

GURN 8. FREEMAN, SR.

THOMAS C. WAGNER

W. ELLIS POWELL

held themselves out to be financial consultants and advisors

of Century Consultants, Inc., Century Consultant Corp., and

Century Consultants International (hereafter referred so as

“Century Consultants").

3. At all times material herein, the defendants,

purported business activities were to provide financial

(2c)

Sleepy Hollow Shopping Center

Crown Roofisg Tile Co., Inc.

‘ : or ,

counseling and to produce a written business plan for the

stated purpose of obtaining financing for their clients’

business endeavors.

4. It was part of the scheme and artifice to

defraud and to obtain money, and property by means of false

and fraudulent pretenses, representations and promises, and

to effect the objectives thereof that, the defendants,

would hold meetings with various individuals and business

owners during which defendants represented that they wane

agents of Century Consultants;

(a) that they were successful in obtaining

funding for numerous previous clients;

(b) that Century Consultants had numerous

sources cf funding which had funded previous clients;

(c) that defendants dealt with said sources

on a continuing basis;

(4) that these sources were confidential and

therefore could not be divulged to the clients until the

time funding was actually arranged;

(e) that the sources for funding included,

but were not limited to, private investors, banks, insurance

companies, and pension funds;

(f) that the Defendants would prepare a

business plan for each client which would show what methods

ef funding Century Consultants would use to obtain funding

for the client.

5S. It was a further part of the scheme and artifice

to defraud and to obtain money, and property by means of

false and fraudulent pretenses, representatiions and promises,

(3c)

and to effect the cbhjectives thereof that, the defendants,

GURN H. FREEMAN, SR.

THOMAS C. WAGNER

W. ELLIS POWELL

would represent to clients that they must be accepted by the

“New Client Committee" before they would begin preparing the

business plans, thereby lulling the clients into believing

that their particular bcsiness venture would be funded

through Century Consultants’ sources if they were accepted

as clients.

6. It was a further part of the scheme and artifice

to defraud and to obtain money, and property by means of

false and fraudulent pretenses, representations and promises

and to effect the objectives thereof shat after luliiag

clients into believing that Century Consultants’ sources

would provide funding, the defendants

would inform the clients that a certain amount of "seed

capital" would have to be raised from the clients’ own

sources and that it would have to be paid to Century Consultants

for fees in order to continue work on arranging the majority

of the financing, x<nowing at the time that the clients would

ultimately have to obtain the entire financing from their

own sources because in truth and fact Century Consultants

had no sources of funding.

7. It was a further part of the scheme and artifice

to defraud and to obtain money, and property by means of

false and fraudulent pretenses, -epresentations and promises

and to effect she objectives thereof that the defendants

did obtain financial statements and cther documents from

various individuals and business entities for the purpose of

lulling them into a false sense of security by representins

to them that such statements and documents were required ané

would be used to obtain financing for them through Century

Consultants’ sources, when in truth and fact as the Defendants

then well knew, ee eee

through their own sources.

8. It was a further part of the scheme and artifice

to defraud and to obtain money, and property by means of

false and fraudulent pretenses, representations and promises

and to effect the objectives thereof that the defendants

GURN #. PREEMAN, SR.

THOMAS C. WAGNER

W. ELLIS POWELL

would and did retain for their own use and benefit the money

obtained from the said various individuals and business

entities and would not and did not perform the services

promised to be performed in behalf of the said various indi-

viduals and business entities.

9. That on or about March 14, 1975, in the

Western District of Michigan, Southern Division,

GURN HB. FREEMAN, SR.

THOMAS C. WAGNER

W. ELLIS POWELL

the defendantsherein, for the purpose of executing the

aforesaid scheme and artifice, and attempting to do so, did

knowlingly cause to be delivered by mail, according to the

direction thereon, a letter addressed to Mr. Richard £.

Jenkins, Millett Die Co., Imc., 5320 Lansing Road, Lansing,

‘Michigan 486917, from Century Consultants, Inc., W. Ellis

(Sc)

Count 2

1. The Grand Jury realleges and incorporates by

* reference herein, all paragraphs of Count 1 of this indiccmant,

excepting the last paragraph thereof, as constituting a

scheme and artifice to defraud, anc further alleges:

2. Theat on or about March 3, 1975,

the defendants herein, for the purpose of executing the

aforesaid scheme and artifice, and attampting to do so, did

knowlingly cause to be delivered by mail, according to the

direction thereon, a statement addressed to Mr. Richard L.

Zerbert, Spoiled Rot<en, Inc., 1071 Trowbridge Road, Zast

‘Lansing, Michigan 48823, from Century Consultants, iac.

18 0.$.C. § 1341

18 0.$.C. § 2(a)

coupe 3

i. The Grand Jury reslleges and insorporstes by

reference herein, all paragraphs of Count 1 of this indictment,

excepting the last paragraph thereof, as constituting a

scheme and artifice to defraud, and furthé alleges:

2. That om cr about April l, 1975,

GURN EH. FREDCAN, &R.

and

THOMAS C. WAGNER

the defendants herein, for the purpose of e.iecuting the

aforesaid scheme and artifice, and attempting to do so, did

knowlingly cause to be delivered by mail, according to the

direction thereon, 4 statement addressed to

Messrs. Frank F. Clark and Henry T. Clark, Claire Rapids

Companies, Inc., 1945 28th Street, &.W., Wyoming, Michigan

49509, from Century Consultants.

18 0.S.C. § 1341

18 0.8.C. § 2(a)

(7c)

Count 4

l. ‘The Grand Jury realleges and incorporates by

reference herein, all paragraphs of Count 1 of this indictment,

excepting the last paragraph thereof, as constituting a

scheme and —— to defraud, and further alleges:

2. That om or about May $, 1975,

GUBM 3. FREEMAN, SR.

and

THOMAS C. WAGNER

the defendant herein, for the purpose of executing the

aforesaid scheme and artifice, and attempting to do so, did

knowlingly cause to be delivered by mail, according to

Girection thereon, a statement addressed to

Messrs. Frank Ff. Clark and Henry T. Clark, Claire Rapids

Companies, Inc., 1945 28th Street, S.W., Wyoming, Michigan

49509, from Century Consultants.

18 0.$.C. 1341

18 U.S.C. 2(a)

(8c)

1. The Grand Jury realleges and incorporates by

reference herein, all paragraphs of Count 1 of this indictment,

excepting the last paragraph thereof, as constituting a

scheme anc artifice to defraud, and further alleges:

2. That on or about December 24, 1976,

GURN H. FREEMAN, SR.

THOMAS C. WAGNER

and

W. ELLIS POWELL

the defendants herein, for the purpose of executing the

aforesaid scheme anc artifice, and attempting to do so, did

cause to be transmitted in interstate commerce by means of

& wire communication, that is, a taletype between Lansing,

in the State of Michigan, and Des Plaines in the State of

Tllincis, certain signs, signals and sounds, for the purpose

of transferring funds and for the purpose of executing and

concealing the aforesaid scheme and artifice to defraud.

18 0.S.C. § 1343

18 U.S.C. § 2(a)

Count 6

1. The Grand Jury realleges and incorporates by

reference herein, all paragraphs of Count 1 of this indictment, -

excepting the last paragraph thereof, as constituting a

scheme and artifice to defraud, and further alleges:

2. TRat on or about January 26, 1977,

GURN 8. FREEMAY, SR

THOMAS C. WAGNER

and

W. ELLIS POWELL

the defendants herein, for the purpose of executing the

aforesaid scheme and artifice, and attempting to do so, did

cause to be transmitted in interstate commerce by means of a

wire communication, that is, a teletype between Lansing, in

the State of Michigan, and Des Plaines, in the State of

Illinois, certain signs, signals and sounds, for the purpose

of transferring funds and for the purpose of executing and

concealing <he aforesaid scheme and artifice to defrziud.

18 9.8.C. §1343

18 0.S.C. § 2(a)

(10c) &

. ss

Count 7

1. The Grand Jury realleges and incorporates by

reference herein, all paragraphs of Count 1 of this indictment,

excepting the last paragraph thereof, as constituting «

scheme and artifice to defraud, and further alleges:

2. That on or about May 30, 1975, in the Western

District of Michigan, Southern Division,

and

W. ELLIS POWELL

the defendants herein, for the purpose of executing the

aforesaid scheme and artifice, and attempting to do so did

knowingly transport and cause to be transported in inter-

state commerce securities of the value of $5,000.00 or more,

to wit: a check drawn on the Michigan National Bank,

Lansing, Michigan, in the amount of Seven Thousand Five

Bundred Dollars ($7,500.00), knowing the same to have been

taken by fraud.

18 U.S.C. § 2314

18 U.S.C. § 2(a)

Count 3

l. The Grand Jury realleges and incorporates by

reference herein, all paragraphs of Count 1 of this indictment,.

excepting the last paragraph =herec‘!, as constituting a

scheme and artifice so defraud, and further alleges:

2. That sommencing on our about January 1, 1974, and

continuing up to and including March 2, 1977, in the Western

District of Michigan, and elsewhere,

GURN H. FREEMAN, SR.

THOMAS C. WAGNER

and

W. ELLIS POWELL

the defendants herein, did «nowingly, willfully and unlawfully

combine, conspire and agree together to commit the following

offenses against <he Cnited States; that is, (A) to knowiagly

and willfully use and cause to be used the United States

mails; (B) to knowingly and willfully cause to be transmitted

a teletype in interstate commerce by means of a wire communi-

cation; and (C) ts knowingly transport and cause to be

transported in interstate commerce securities of the value

of $5,000.00 or more to be used in furtherance of a scheme

and artifice to defraud and for obtaining money and property

by means of false and fraudulent pretenses, representations

and promises from various individuals and business entities,

iacluding but sot limited co those individuals and business

activities listed in paragraph 1 of Count 1 of this indictment,

well knowing shat the pretenses, representations and promises

would be and were false when sade, and which scheme snd

artifice was devised by the defendants in <he manner and

means as set forth in paragraphs cwo through eight, inclusive,

of Count 1 of this indictment which are incorporated by

reference as if duly set forh herein, in violation of Title

18 U.S.C. $$ L941 and 2(a), Title 18 0.S.Cc. §§ 1343 and

2(a), and Title 18 0.$.c. $$ 2314 and 2(a).

CFP es! red

Mies 2

12c) . oh ae f.

‘ 2, a " : % Ex pan shes . rt my

a A at ee ee > tn % . a » _ Yshei-

3. Im furtherance of the conspiracy and to effect

the objects thereof,

the defendants herein, did and caused to be done the acts

set forth in Counts 1 through 8, inclusive, of this

indictment, on the dates, at the places, and in the manner

set forth, all of which are set forth and incorporated by

reference herein as separate and distinct overt acts.

OVERT ACTS

4. In addition to the foregoing, in furtherance

of the conspiracy, and to effect the objects thereof, the

defendants herein committed, among others, the additional

following overt acts:

(a) On or about July 12, 1974, GORN gd.

FREEMAN, SR. caused to be delivered by mail according to the

@irections thereon an envelope containing memorandum generally

outlining the proposed business financing plans and requesting

@ $5,000.00 retainer, to Mr. Ralph Erbe, Moduler Crafts,

Inc., Union, Michigan 49130.

(b) Om or about Movember 12, 1975, THOMAS C.

WAGNER caused to be delivered by mail according to the

directions thereon an envelope containing « business plan

generally outlining the proposed financing plans and requesting

@ $2,500.00 retainer fee to Mr. Roger Dawson, 3118 Pridemole

Drive, Cedar Falls, Iowa 50613.

(c) Om or about September 29, 1976, THOMAS C.

WAGNER caused to be placed in an authorized depository for

mail matter an envelope containing a check in the amount of

$1,500.00 from Mr. Ronald Bosse, 3415 NW. Riverside Dr.,

McHenry, Illinois 60050, addressed to Century Consultants,

1400 £. Touhy Ave., Des Plains, Illinois 60018.

(4) Om oF about January 26, 1976, #. ELLIS

POWELL advised Mr. Ray Quasius, Jr., 1716 NM. léth Street,

Sheboygan, Wisconsin, that the money to fund the building of

& bowling lanes in Sheboygan, Wisconsin was forthcoming.

18 3.3.C. §37

16 5.5.C. § 2(a)

A TROE SILL