# Appendix — Sparber v. New York > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0599%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1965 - **Citation:** 381 U.S. 951 ## Text APPENDIX A Opinion of the United States Court of Appeals for the Eighth Circuit, filed January 25, 1965: Before Vocer, Van OosterHout and Menarry, Circuit Judges. Voczi, Circuit Judge. The appellants herein, Abraham L. Koolish, David F. Koolish and John B. Carnell, together with Marvin L. Kline, Fred Fadell, Philip G. Rettig and J. George Zim- merman, were indicted by a grand jury charged in fifteen counts with mail fraud, 18 U.S.C.A. § 1341,* and a single count of conspiracy to commit mail fraud, 18 U.S.C.A. § 371.2 During the trial Philip G. Rettig was severed from the case due to illness. He is still under indictment and his trial is pending. All other defendants were found guilty by a jury of the conspiracy count and of various mail fraud counts, with the exception of Fred Fadell, who during the trial pleaded guilty to one count of mail fraud. Abraham L. Koolish and David F. Koolish were sentenced to five years’ inmprisonment on Counts 2, 4, 9 and 16 (the conspiracy count), and five years’ imprisonment on Counts 1, 13, 14 and 15, the second sentence to be served consecutively to and not concurrently with the first sen- 1 During the trial the government withdrew Counts 6, 7, 8 and 10, leaving but eleven counts of mail fraud. 2 Sixteen overt acts were charged as supporting the conspiracy count. Of such sixteen, overt acts Nos. 1, 3, 4, and 14 were withdrawn by the government. App. 2 tence. Each was also fined $17,000 and ordered to pay the costs of prosecution, which totalled $7,479.76. They wer Zvu2d not guilty on Counts 3, 5, 11 and 12. Carnell was sentenced to a term of five years’ imprisonment as a general sentence on Counis 1, 2, 4, 9, 12, 13, 14, 15 and 16, he having been found not guilty on Counts 3, 5 and 11. Kline was sentenced to serve five years’ imprisonment on Counts 1, 2, 3, 4 and 9 and five years’ imprisonment to be served consecutively thereto on Counts 12, 13, 14, 15 and 16. Kline was found not guilty on Counts 5 and 11. Zimmerman, who was found guilty on Counts 9 and 16 only, was sentenced to a term of imprisonment for five years but execution thereof was suspended and he was placed on probation for a period of five years. On the one count to which he pleaded guilty, Fadell was sen- tenced to a term of imprisonment for a period of one year and one day. Service of his sentence was stayed for 30 days, during which period he moved for further stay of commitment for two years to enable him to put his personal and business affairs in order or in the alter- native to suspend execution of the sentence and place him on probation. Disposition of that motion has been con- tinued for a period of 18 months. Abraham L. Koolish, David F. Koolish, John B. Carnell and Marvin L. Kline appealed from the judgments of conviction. On July 27, 1964, Kline withdrew his appeal. ~The appellants herein, therefore, are only the two Kool- ishes and Carnell. NAMED DEFENDANTS AND THE KENNY FOUNDATION Appellants, with their co-defendants, were charged with conspiracy and with using the mails in furtherance of a scheme to defraud and obtain money and property by App. 3 means of false representations from the Sister Elizabeth Kenny Foundation, its contributors and prospective con- tributors. The conspiracy charged was alleged to have existed over a period from January 1, 1949, to January 30, 1962, the date on which the indictment was returned. The named defendants may be described as follows: Marvin L. Kline, former mayor of Minneapolis, Minne- sota, was, during the times involved, the Executive Direc- tor of the Sister Elizabeth Kenny Foundation. Fred Fadell, of Minneapolis, Minnesota, was the owner and operator of Fred Fadell and Associates, a public re- lations and advertising agency which was retained by the Kenny Foundation ‘to perform public relations and pro- motional services, officing with the Foundation, rent free, and being paid by the Foundation first on a semi-monthly and later on a monthly basis. Abraham L. Koolish, of Chicago, Illinois, was finan- cially interested in Empire Industries, Inc., Empire As- sociates, New Century Corporation and LeMarge Mailing Service Company, all of which conducted direct mail solicitations for contributions for the Kenny Foundation. David F. Koolish, also of Chicago, Illinois, is the son of Abraham L. Koolish and together with his father was financially interested in the business entities which con- ducted the Kenny Foundation campaigns. John B. Carnell, of Chicago, Illinois, was an employee of the Kodlish companies who handled the Kenny Foun- dation account. Philip G. Rettig, of Chicago, Illinois, was president of New Century Corporation during a portion of the indict- ment period. App. 4 J. George Zimmerman, of Minneapolis, Minnesota, was a Certified Public Accountant who was engaged by the Kenny Foundation to perform independent audits of its books and render financial statem«nts. The Sister Elizabeth Kenny Foundation (variously referred to herein as ‘‘Kenny’’ and ‘‘Foundation’’) was organized in 1943. Its purpose was the treatment and rehabilitation of youngsters stricken with infantile paral- ysis. The Foundation had various sources of income, in- cluding the patients themselves, March of Dimes Cam- paign, door-to-door solicitations, gifts, bequests, grants and mail solicitations. In 1949, the Foundation turned to the two Koolishes and Carnell to assist it in raising money through direct mail solicitation. During the period from 1951 through 1960 the Koolishes, their associates and organizations, raised something more than $22,000,000 from contributors. Of that, $9,000,000 or approximately 40% of es th contributor dollar reached the Foundation. The mail campaigns produced only about 25% of the Foundation’s income for the period 1952 to 1959. THE ALLEGED SCHEME The indictment alleged that the defendants devised a single all-inclusive scheme to obtain money by false pre- tenses from the Kenny Foundation and its contributors. With minor changes, the government accepts and we adopt the appellants’ summary of the scheme as it was alleged in the detailed indictment. .It consisted of ten material parts: 1. Kenny’s Executive Director Kline and its public re- lations counsel Fadell awarded mail solicitation contracts to the Koolish companies (Empire Associates, Empire Industries, Inc., and New Century Corporation) without App. 5 obtaining competitive bids and at rates which provided ‘‘large profits’? to the Koolish companies. 2. All of the defendants (except Zimmerman) caused the fall (as opposed to spring) mailing contracts between Kenny and the Koolish companies to contain provisions for refunds by the Koolish «ompanies in the event that the mailing costs were less than the price agreed to in the contracts. However, this provision of the fall con- tracts was not fulfilled. Instead only ‘‘token refunds’’ were made and accepted because Kline and Fadell did not require audits to be made of the books of the Koolish companies to determine the amounts of the refunds due. 3. During the period 1952-1955 defendants A. L. Kool- ish, David F. Koolish, John B. Carnell and Philip G. Rettig ‘‘diverted’’ more than $350,000 of the proceeds realized from the mailing contracts to Kline and Fadell and concealed these facts from Kenney’s directors, con- tributing agencies, licensing departments of states and cities, and the Kenny donors. The Koolish companies paid money to Fadell which Fadell thereafter divided with Kline. The payments to Fadell were recorded on the books of the Koolish companies as operating costs or costs of preparing Kenny’s mailings. 4. Defendant A. L. Koolish purchased New Century Corporation (which participated in the Kenny mailing program) and he and his son, defendant David F. Kool- ish, concealed the ownership of it from Kenny, its donors and the public by appointing ‘‘dummy’”’ directors and nominai stockholders. The two Koolishes designated Car- nell and Rettig as officers of New Century and represented (a) that Carnell owned New Century and (b) that New Century was not associated with either the other Koolish companies or the two Koolishes themselves. App. 6 5. The Kéolishes, Carnell and Rettig caused New Cen- tury to make gifts and to provide entertaiz:ment for Kline, Fadell and various other officers and direstors of Kenny and charged the costs on New Century’s books as costs of preparing mailings. : 6. Kline, Fadell and Carnell arranged for Carnell to be paid $400 per month by Kenny as an administrative consultant from May 1, 1957, until March 1, 1960. 7. Kline and Fadell established a committee called the Special Events Committee which they dominated and controlled and together with Zimmerman falsely repre- sented that this committee conducted the direct mail cam- paigns of Kenny. 8. Kline, Fadell and Zimmerman withheld audit state- ments of the Special Events Committee from Kenny di- rectors, licersing departments of states and cities, Better Business Bureaus, contributing agencies and Kenny do- nors. Zimmerman prepared Kenny’s consolidated audit reports wiuich falsely stated the costs of the direct mail campaigns by reporting only a fractional part of the actual costs as ‘‘Cosis of Fund Campaigns’’ and allocat- ing the balance to ‘‘Costs of Therapist Training Opera- tions; Medical Education and Training Programs; Public Education and Information Services; Promotion and De- velopment of Additional Treatment Facilities; Grants for Medical Reseaxch; Publicity and Public Relations Oper- ations, Provided Through National Headquarters’’. 9. Defendants Carnell and Rettig in the name of New Century Corporation contracted with Kline to do mail- ing and list maintenance for the Foundation and then caused these services to be performe’ by ‘1e LeMarge Mailing Service Company. App. 7 10. All of the defendants (except Zimmerman) caused the list of names of Kenny contributors to come into the possession of the Koolish companies and the Koolish com- panies rented these names to others and credited Kenny with only a fraction of the proceeds of the rentals, the major portion thereof being paid to the Koolish com- panies. FALSE REPRESENTATIONS All of the defendants were alleged to have made false representations, pretenses and promises to the Founda- tion, the contributing agencies, the licensing departments of states and cities, donors, contributors and prospective contributors to the éffect that: 1. The actual costs of the mail campaigns to Kenny were accurately and completely shown on Zimmerman’s consolidated audit reports. 2. Kenny’s direct mail campaigns were conducted by the Speciai Events Committee. 3. The Special Events Committee was an entity sepa- rate from the Kenny Foundation. 4. The Koolish companies (excepting Empire Associates and Empire Industries, Inc.) performed mailing services for Kenny ai cost. 5. The Koolish companies (excepting Empire Associ- ates and Empire Industries, Inc.) were the low bidders on the mailing services and materials for Kenny. 6. Carnell was the owner of New Century and was not associated with A. 1. Koolish or David Koolish in the corporation. 7. A. L. Koolish and David Koolish held no ownership or control in New Century. App. 8 8. Carnell performed administrative consultant serv- ices for the Foundation in return for fees of $400 a month paid by the Foundation. Each mail fraud count alleged the use of the mails for the purpose of executing the scheme and artifice to de- fraud. . Count 16, the conspiracy count, alleged some 16 overt acts committed by the defendants in furtherance of the conspiracy. Overt acts numbered 1, 3, 4 and 14 were with- drawn. The remainder are summarized as follows: 2. Abraham L. Koolish directed a nominee, Manuel Rosner, to purchase stock of New Century Corporation. 5. Defendant Kline authorized payments to John B. Carnell. 6. Defendants Carnell and Rettig paid approximately $630 for World Series tickets, transportation and enter- tainment, causing this expenditure to be entered on the books of New Century as costs of the 1957 fall mailing of the Foundation. 7.. The defendant Carnell signed and sent a letter to H. M. Dean, Financial Director of the Foundation, re- questing advance payment of $300,000 to New Century. 8. On or about October 20, 1958, defendants Carnell for New Century and Kline for the Foundation executed a mail campaign solicitation contract. 9. On or about March 2, 1959, Rettig for New Century and Kline for the Foundation executed a mail campaign contract. 10. On or about August 6, 1959, Fadell depo After some nine weeks of trial, the jury was growing tired and restless. The questions of witnesses and the evidence was becoming repetitious. The Court in chambers suggested to counsel that it might be wise from the view- point of both sides if they contemplated closing the testi- mony in the near future. All parties agreed. This fact is recited in order to suggest that it is not un- likely that if the prosecutor were afforded the opportunity, he could have proved some or maybe many of the infer- ences contained in the questions asked on direct and cross- examination to which defendants’ counsel make objection. Fred Fadell did not testify. The decision of the United States Attorney not to call him—although he several times stated his intention to do so—may nave been based on the many vigorous anticipatory objections by defense coansel to the calling of Fadell. But, had Fadel] been called, it is not improbable that his testimony would have proved many of the inferences to which objection is made. But, at all events, the prosecutor had the duty as legal counsel for the government, to vigerously present his case as best he could and to bring out every facet of the evi- App. 75 dence which would go to prove the guilt of the defendants. A rereading of the claimed prejudicial questions and in- ferences does not persuade that they were prejudicial. But, to negative any improper inferences, the Court, at the specific request of the defendants, gave an extensive instruction directing the jury to completely disregard all the inferences and implications recited. The instruction is set out in full in the footnote below.® * And now I have a series of instructions in which I wish to eall your attention to certain comments and statements” made by the prosecutor concerning which no evidence was subsequent- ly offered, and the purpose of this instruction is to invite your attention to those events, and to caution you and instruct you that you are to disregard any inferences that might arise from Mr. Lord’s reference to these matters. You will recall, for instanee, that Mr. Lord was interrogating A. L. Koolish, and he mferred that a meeting took place in Chi- cago in February of 52, either the fall of ’52 or sometime in ’52, attended by Kline, Fadell and Koolish. Allegedly discussions took place about Kline’s paying his income tax on money re- ceived by hin from Fadell. The inference was that this group made a trip to Palm Springs, California, and remember there was a big eight-passenger Cadillac automobile, allezediy at that time the inference was that certain conversations took place be- tween Mr. Koolish, Mr. Kline and Mr. Fadell concerning the Fadell payments to Kline. Mr. Koolish denied any such meet- ings in Chicago. He denied a recollection of a trip to Palm Springs or that any such conversations inferred by Mr. Lord took place.- You will reeall also that during his examination of Philip Koolish, he was asked questions, Mr. Philip Koolish was, in- ferring that a meeting had taken place in Chicago attended by Mr. A. L. Koolish, Marvin Kline, Fred Fadell and D. W. Onan at which there was a discussion respecting receipt of payments by Mr. Kline from Mr. Fadell. On that occasion it was repre- sented by Mr. Lord that such conversation took place. The wit- ness denied the meeting and the conversation and no evidence App. 76 REQUESTS TO STIPULATE It is also complained that counsel for the government, in the presence of the jury, requested defense counsel to was offered with reference to the Chicago meetings or the Palm Springs vacation meeting. Neither the statements made nor the questions put by Mr. Lord are evidence that the Chicago meet- ing, the Palm Springs trip, or the alleged conversations took place or that defendant A. L. Koolish had knowledge of any arrangement between or any monies paid by Fred Fadell & As- sociates to Mr. Kline, and so you must entirely disregard and erase those items from your mind. In the course of his examination of Mr. Philip Koolish, Mr. Lord asked questions he inferred or in which he made a state-. ment that A. L. Koolish told Ferguson to destroy Postmasters’ letters ; That at Boston in one year over a third of hundreds of thou- sands of letters had to be thrown away; That Cleveland and Cincinnati, Ohio did not have very high returns ; That the witness or one of the Chicago mail concerns gave Mr. Fadell $2,500 to make a loan to Dr. Warden. The witness Philip Koolish denied that any of these events or conversations took place. No evidence was offered by the Government to prove that any of these events or conversations inferred or suggested did take place. Those questions, statements, inferences with respect to these matters are not evidence, and you must disregard them in reach- ing your verdict. In the course of his examination of Mr. A. L. Koolish, Mr. Lord asked questions of the witness in which he exhibited to the wit- ness in onr presence four New Century Corporation checks, and by his questions to the witness, he inferred that the checks were payable to Mr. Fadell and covered monies pai” to Mr. Fadell for ulterior purposes. None of these checks was received in evidence. They“were not id-~utified or offered, and no testimony with respect to them was received. They, too, are not evidence, and neither they nor any infer- ence suggested with respect to them is to be considered by you in reaching your verdict. os * ange: a ES BELTS eC App. 77 stipulate to certain facts in evidence, which constituted prejndicial mis-onduct. As has been pointed out, this was a long trial. But it would have been much longer were it not for the coopera- tive attitude of all counsel in entering into stipulations for the admission of facts and evidence, particularly in- cluding books and records of account of the several busi- ness organizations involved. Mr. Sprowl, one of the counsel for the Chicago defendants, was very cooperative in this regard. Before trial, the Court held pretrial con- ferences in order to secure, if possible, agreement of coun- sel as to the admission of evidence and other matters; and almost every afternoon following trial, the Court held in- formal] conferences in the courtroom and on the record with reference to the course of proceedings and the admission of evidence for the next day. This visualized the expedi- tion of the trial. It was particularly effective during the presentation of the government’s case. The United States Attorney was requested to advise defense counsel as to the exhibits contemplated to be offered the next day. This permitted defense counsel to determine in advance wheth- er or not they wanted to make objection or to agree to the admission of exhibits. This resulted in doing away with many unnecessary delays in the trial which would have otherwise taken place. As previously stated, defense counsel were very cooperative in stipulating to the intro- duction of exhibits. When the various grounds for claimed prejudicial re- quest to stipulate are examined in the light of the practice above outlined, it will be seen that the colloquy originated by the United States Attorney with reference to stipula- tions were, in many instances, an outgrowth of the previous discussions about the reception of evidence. But none of App. 78 the claimed suggestions for stipulation evidenced a pur- pose or desire to embarrass or take advantage of defend- ants or defendants’ counsel or to prejudice the defendants in any way. REBUTTAL ARGUMENT OF UNITED STATES ATTORNEY It is also urged that the rebuttal argument of the United States Attorney was inflammatory and resulted in a ver- dict based on passion and prejudice. Many grounds are cited in support of this claim, and the argument of the prosecutor is dissected and many parts of it are particular- ly commented upon. It is not urged that the principal jury argument, made by the Assistant United States Attorney, was prejudicial. It must be realized that the United States Attorney, like the attorneys representing the defendants, is an advo- cate and ‘‘it is entirely proper for him as earnestly as he can to persuade the jury of the truth of his side, of which he ought to be thoroughly convinced before he begins at all.’? DiCarlo v. Umted States, 6 F.2d 364, 368 (2d. Cir.) cert. denied, 268 U.S. 706 (1925). The Court in DiCarlo, supra, went on to say that: ‘‘To shear him of all oratorical emphasis, while leaving wide latitude to the defense, is to load the scales of justice; ...”’ And so, ‘‘some latitude must be given to lawyers’ language in a hard-fought case... .’’ United States v. Kravitz, 281 F.2d 581, 586 (3rd Cir. 1960), cert. denied, 364 U.S. 941 (1961). The cases uniformly hold that it is only when the claimed misconduct furnishes good reason to believe that it in- fluenced the jury’s verdict that it will be held to be prej- udicial and grounds for a new trial. Marks v. United ‘App. 79 States, 260 F.2d 377, 383 (10th Cir. 1958), cert. denied, 358 U.S. 929 (195$}. Our own Highth Circuit Court of Appeals, in its most recent expression in Isaacs v. United States, 301 F.2d 705, 736 (8th Cir.), cert. dented, 371 US. 818 (1962), said that: The dominating question. always, is whether the argu- ment complained of was so offensive as to deprive the defendant of a fair trial. The Court listened attentively to the rebuttal argument of the United States Attorney, and has reread it. While in many respects it is not a model type of prosecutor’s argument, stili when it is appraised in its entirety, and in the light of the long trial and the provocation by defense counsel for some of the prosecutor’s comments, the argu- ment was not so awry as to have unfairly influenced the jury or deprived the defendants of a fair trial. The evi- dence of guilt was voluminous and persuasive, and the Court is of the view it was upon that, not the rebuttal jury argument, that the verdicts were based. As was reasoned by the Court of Appeals in Blwmen- field v. United States, 284 F.2d 46 (8th Cir. 1960), cert. denied, 365 U.S. 812 (1961), the fact that the jury was so discriminating in finding guilt on some counts as to some defendants and not as to others, is persuasive that the jury reached its verdicts of guilt based only on the evi- dence. As was observed by the Ninth Circuit Court of Appeals in the recent case of White v. United States, 317 F.2d 231 (9th Cir. 1963), some of the prosecutor’s ‘‘remarks had been better left ‘unremarked,’ ’’ but in context we do not find them inflammatory. Before argument to the jury, all counsel agreed (Tr. p. 8171) that objections to the remarks of counsel would not App. 80 be made i: the course of those arguments. ‘This arrange- ment was agreed to after the Court advised counsel (Tr. 8169) of the observations of the Court of Appeals in the case of Isaacs v. United States, 301 F.2d 706 (8th Cir.), cert. dented, 371 U.S. 818 (1962), that the better practice is for counsel to make their objections when the allegedly offensive argument is being made, rather than to wait for the conclusion of the argument. Mr. Lord, the prosecuting attorney, agreed to this, but said thai he would have no objection to being interrupted at any time by defense coun- sel. But, undoubtedly prompted by gentlemanly observ- ance of the agreement, defense counsel did not do so. But at the very first opportunity—that is, in the jury charge—the Court instructed the jury that the arguments of counsel were not to be considered as evidence. See particularly Tr. p. 8735 where the Court said, ‘‘the argu- ment, comments, observations, expressed beliefs ard opin- ions of these lawyers are not evidence, and they should not be considered as such by you.’’ So that, conceding that some of the comments and observations the prosecut- ing attorney made in the rebuttal argument were not germane, it must be presumed that the jury followed the instructions of the Court. It is the Court’s opinion based on, participation in and observation of the trial, acquaintance with counsel and the jury, a consideration of the volume and kind of evidence received, the verdicts reached, and a knowledge of the relationship between the jury and counsel, that the prosecu- tor’s rebuttal argument was not inflammatory or preju- dicial, was not a basis for the jury’s verdicts, and did not deprive the defendants of a fair trial. See United States v. Brennan, 137 F. Supp. 888 (D. Minn. 1956), affirmed, 240 F.2d 253 (8th Cir.), cert. denied, 353 U.S. 931 (1957), and cases there cited. ~~ . a te Ne ak i ei ee App. 81 CLAIMED ERROR IN ADMISSION OF EVIDUNCE — CONCERNING OTHER CHARITY SOLICITATIONS The Chicago defendants complain that the Court erred in admitting evidence concerning their activities with re- spect to other charities. It was the government’s theory that the Chicago defendants, while not the apparent, were the actual, owners of several Chicago-based mail solicita- tion concerns, particularly Empire Associates, Lamarge Mailing Company, and New Century Corporation. Evi- dence was received concerning these corporations and their conduct of business with other charitable organizations such as the National Foundation for Asthmatic Children, the Disabled American Veterans, Father Flanagan’s Boys’ Town and Piney Woods Country School. This evidence was-received on several grounds—principally to show that similar acts of the Chicago defendants evidenced their in- tent and knowledge, and the absence of mistake and ac- cident, in their modus operandi in connection with the Sister Kenny Foundation. This was proper. Moses v. United States, 297 F.2d 621, 624 (8th Cir. 1961) ; Goodman v. United States, 273 F.2d 853, 857 (8th Cir. 1960). The evidence was also received to show the nature and extent of the participation and control by the Koolishes in the operation of Empire, Lamarge and New Century Corporations as was alleged in the indictment, paragraphs 3 and 4. Since it was claimed by the government that the mail fraud encompassed action of the Chicago defendants in im- properly renting Kenny contributor names to the other charitable foundations, the evidence was properly admissi- ble to prove that fact. The Court cautioned the jury as to the limited purpose for which this evidence was received in the following words: App. 82 You will recall that evidence was received concern- ing the operations of mail campaigns for the D.A.V., Father Flanagan’s Boys’ Town, for the Tucson organ. ization and other similar organizations. Now, while there was an interrelation between the work carried on by the Chicago mailing concerns and other charitable groups, and evidence with reference to this was pertinent in connection with the extent of list rentals and other matters, the evidence was offered, and received, primarily for the limited purpose of showing the presence or absence of the required crimi- nal intent of the defendants to carry out the claimed fraudulent scheme or plan, and to conspire to do so, as is alleged in the indictment. So you must consider this evidence only for that limited purpose. You ‘nay not consider it as having any bearing on the disposi- tion of the defendants to commit a crime. Tr. p. 8754. ADMISSION OF CHARTS AND SUMMARIES Complaint is also made to the admission of certain charts and summaries tendered by the government as be- ing misleading and speculative. But substantial evidence was introduced and received as a basis for the reflections sought to be shown by the charts and summaries. This is proper. United States v. Johnson, 319 U.S. 503, 63 Sup. Ct. 1233, 87 L. Ed. 1546 (1943); Epstein v. United States, 246 F.2d 563 (6th Cir.), cert. dented, 355 U.S. 858 (1957); Kamomeyer v. United States, 227 F.2d 313 (8th Cir. 1955), cert, denied, 351 U.S. 904 (1956) ; Somberg v. United States, 71 F.2d 637 (7th Cir. 1934) ; Untted States v. Park Avenue Pharmacy, 56 F.2d 753 (2nd Cir. 1932). The Court gave the jury an extensive cautionary in- struction with reference to these charts and summaries as follows: The testimony of an accountant and any summaries or charts prepared by him and admitted in evidence are competent for the purpose of explaining facts dis- App. 83 closed by books, records and other documents which are in evidence. However, such charts or summaries are not in and of themselves evidence and were permitted 3 to be used here only as a matter of convenience in understanding the evidence. So, unless you find that they are in truth summaries of facts and figures showu 1 ‘by the evidence, you are to disregard them entirely. You will recall that counse: had some argument among themselves as to whether certain charts which weve offered correctly reflected the facts which they sought to reflect. That is particularly true, I recsil, of Government’s Exhibit 318, which was a computation of the the payments to Fadell and the alleged repey- ments of part of those monies to Kline between 1952 and 1956. I think all counsel or many of them brought that out in their arguments yesterday. Well, that chart, Exhibit 318, was a reflection, an interpretation in a way, of the facts as they were found by the Gov- ernment’s accountant. The defense took some excep- tion to that. You will recall that that chart sought to show that the money was being equally divided between Fadell and Kline. The defense took the posi- tion that that wasn’t true; that the accountant in setting up that chart had to do a good deal of in- terpreting to get it to come about even. I caution you about that. 4 If you find that that chart does not accurately reflect the facts, of course, discount it accordingly, or disre- gard it. Another example of the same thing was Govern- ment’s Exhibit 613, which embodied the estimated con- tributors’ names used in the fall mailings between 1952 and 1959. There, too, you might view those as only estimates or maybe interpretations of the fi: ot, but at least the position of the Government was that that chart was an accurate reflection of what the facts actually were, although the defendants took a differ- ent position. NS See! 5 DNS AEN AERIS Ne BC te MN IN Ah Tie EDM te Naot HP eee 7 ; Pere, cn — . . PETS ee ee eee ae ee ee et App. 84 So I caution you, when you are studying these charts and all of the charts, that you must make sure that they really reflect the facts. Tr. pp. 8762-64. . SUFFICIENCY OF EVIDENCE The Court is satisfied that there was sufficient evidence received upon which the jury could reach the verdicts which it did. The only defendant who strongly urges otherwise is Zimmerman. While the proof as against Zimmerman was not as voluminous, as direct, or as compelling as that received as to the other defendants, there was sufficient evidence to justify the conclusion of guilt as to Counts 9 and 16 as was found by the jury, and, in fact, sufficient evidence to justify a finding of guilt as to other counts of the indictment as well. The evidence did not disclose that Zimmerman received any bribes or payments other than reasonable compensation for his professional services as a Certified Public Accountant; but there was other evi- dence from which the jury could wel! find guilt to be established. There was a substantial showing to justify the conclusion that Zimmerman falsified the audits of the Kenny Foundation, particularly as to the actual costs of the mail compaigns, and knew that the audits were intended for the public and for those charged with policing charit- able drives. Zimmerman was the accountant for Kline and Fadell and knew that Kline and Fadell were receiving very substantial ‘‘payments’’ which came from the Chicago de- fendants; he did not report this or other questionable aspects of the Kenny operations of which he had knowl- edge, to the Board of Directors of the Kenny Foundation, albeit his professional partner, Moen, urged him to do so. After the Mir.nesota Attorney General started an investi- gation, Zimmerman changed the then current audit report to skow a complete reflection of the costs of the mail opera- tions. There was evidence that other Certified Public Ac- countants and accountants viewed Zimmerman’s audits of the books of the Kenny Foundation as being improper. App. 85 The trial was a long one, extending from March 19, 1963 to May 29, 1963. Eighty-five witnesses testified and 803 exhibits were received. The Court Reporters said that the Record of 8,810 pages was the longest in their experience in this District. This case was tried ‘‘to the record.’’ Every plausible objection was made, with supporting arguments and in de- tail, to almost every item of evidence offered and to most courses of action attempted by the government. It is not to be inferred that counsel for any of the defendants acted improperly. Each of them was most courteous and cooper- ative with the Court, and conducted himself in the highest professional manner. All of the defendants were repre- sented by competent and experienced lawyers. The attor- ney for Kline was a long-time Justice of the Minnesota Supreme Court and one-time Attorney General of Minne- sota. Zimmerma::’s counsel possessed special competence in accountancy and the tax laws. The Chicago defendants were represented by a team of three well-known attorneys of long experience. The rights of each of these defendanis was meticulously guarded at every stage of the proceedings. All defense counsel were conscientious and dedicated to their professional responsibilities. No lawyers could have represented the rights of these defendants more vigorously. Although the defendants in thei: motion complain abov* improper instructions given to the jury, no instance of this is cited. The fact is that the Court gave every, or almost every, instruction which was requested by the defendants, and usually in the language suggested. Literally dozens of those requested by the United States Attorney were denied. The Court many times stated to the Urited States Attorney that if there was any question as to its sulings on App. 86 a close, disputed point of evidence or procedure in the trial, the ruling would be made in favor of the defendants. (See, e.g., Tr. pp. 2105, 2106, 3557, 5695) It was. Because this case was tried principally ‘‘to the record,’’ the Court herein has discussed more extensively than usual the principal points which will undoubtedly be urged in the inevitable appeal that will follow. This has been done not alone to reflect the reasoning behind the action which the Court takes with reference to the motions made, but also to afford to the members of the Court of Appeals a greater insight and ‘‘feel’’ of the actual irial, the problems as- sociated with it, and the reasoning behind the disposition which the trial Court made of the disputed points. The Court is fully satisfied that each of these defend- ants received a fair trial from an impartial jury: that all evidence received was properly received; that no action of the trial Court was prejudicial to the defendants; and that the verdicts of guilt as expressed in the verdicts are ampiy supported by competent evidence. All motions are denied. Dated: ‘September 10, 1963. Edward J. Devitt United States District Court App. 87 APPENDIX D Judgment of the United States Court of Appeals for the Eighth Circuit, entered January 25, 1965: This cause came on to be heard on the record from the United States District Court for the District of Minnesota, and was argued by counsel. On Consideration Whereof, It is now here Ordered and Adjudged by this Court that the judgments and sentences of the said District Court, in this cause be, and the same are hereby, affirmed. And it is further Ordered by this Court that the defend- ants in the said District Court, Abraham L. Koolish, David F. Koolish and John B. Carnell, do surrender themselves to the custody of the United States Marshall for the District of Minnesota if not now in custody, in execution of the judgments and sentences imposed upon them and zach of them, within thirty days from and after the date of filing of the mandate of this Court in the District Court. App. 88 APPENDIX E Order entered March 26, 1965 by the Supreme Court of the United States (per Mr. Justice Byron R. White): Upon Consideration of the application of counsel for petitioners, It Is Ordered that the time for filing a petition for writ of certiorari in the above-entitled case be, and the same is hereby, extended to and including April 26, 1965. APPENDIX F Constitutional Provisions, Statutes and Rules Involved The Fifth Amendment to the Constitution of the United States provides: No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger, nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just com- pensation. The Sixth Amendment to the Constitution of the United States provides: In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertaimed by law, and to be informed of the nature and cause of the accusation; to be confronted App. 89 with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence. Ruie 21(a) of the Federal Rules of Criminal Procedure provides : 21. Transfer from the District or Division for Trial (a) For Prejudice in the District or Division. The court upon motion of the defendant shall transfer the proceeding as to him to another district or division if the court is satisfied that there exists in the district or division where the prosecution is pending so great a prejudice against the defendant that he cannot obtain a fair and impartial trial in that district or division. Rule 29(a) of the Federal Rules of Criminal Procedure provides : 29. Motion for Acquittal. (a) Motion for Judgment of Acquittal. Motions for directed verdict are abolished and motions for judgment of acquittal shall be used in their place. The court on motion of a defendant or of its own motion shall order the entry of judgment of acquittal of one of more offenses charged in the indictment or informa- tion after the evidence on either side is closed if the evidence is insufficient to sustain a conviction of such offense or offenses. If a defendant’s motion for judg- ment of acquittal at the close of the evidence offered by the government is not granted, the defendant may offer evidence without having reserved the right. App. 90 APPENDIX G Rebuttal argument of the United States Attorney deliv- ered May 27, 1963 (T. 8668-8691) : Mr. Lord: Your honor, Judge Devitt, ladies and gen- tlemen of the jury. I don’t suppose that I have ever been or ever will be in a trial where there have been more capable adversaries in terms of counsel for the defendants. Harry Peterson is a man of great integrity ard broad experience, who was Attorney General for many years and then one of our most learned and able justices on the Supreme Court before he resigned. Mr. Jenner, who probably has more mer:. badges for being a great trial lawyer than any man in America, and Mr. Sprowl, his senior partner, who has had even more experience. Also, Mr. Mikeworth, who brings to us all of his ex- perience as a certified public accountant and former In- ternal Revenue Agent man, and an attorney in his own right. These are really men with whom it is a privilege to work. One of the real gratifications you get out of being a Government counsel and having men itike this defending the folks who are charged with a crime, is that it takes some responsibility off from the Government. Otherwise you would have to try both sides of the case, in a way, but here we have been able to allow the adversary system to work. They have ably defended the rights of the men who are here charged. Well now, I have one-half hour to try to tell you why ] think that what all of these folks have said is not right. I want to tell you, we have all been in such a rush that Pep Sefer ori pagal Bt. aN “ei wy Kee OP? App. 91 we haven’t taken the time to teil you that I am sure each of the lawyers and everybody involved here will tell you, that you have been a wonderful and attentive jury. We want to thank you for it. ou have been intelligent, you have read those exhibits. I am sure that all of these charts now are old friends of yours. You are familiar with them. Wr -i I refer to a chart, I don’t have to go back and tell you a long story about it, because you know about it. We sometimes have even identified—counsel have accused us of leading questions, but I think it’s made for a better understanding of the case. A. L. Koolish never answered the question, and I asked him four times what he saw in Minneapolis, what he wanted. Now is the time I can tell you what I think he saw here. He saw that angelic person, Sister Kenny, walking through the midst of crippled children, helping and curing as she went. He saw that picture, and he knew what an appeal that would have for the kind of business he could go into. He could take that image and put it into his sailing machine and out would come millions and millions of dol- lars for Koolish and some for the crippled children; Sister Kenny here, the crippled children here, and out there millions of soft-hearted Americans who would be soft to the kind of touch he was very capable of putting on them, and that’s exactly what he did. There is no miracle about that. There should be no surprise in this part of my argu- ment to show exactly what he did. You have seen hun- dreds of these little pictures that I have shown to you. It says, ‘‘Thanks for your help. Thanks for your help.’’ This was addressed to the contributor. It should really be a group picture of A. L. Koolish up here and Dave App. 92 over there, and Phil 2 little fainter, because he was a long ways away. Marvin Kline could be standing there with his hand on the little boy’s shoulder, and Fred Fa- dell could be standing there taking notes for his public relations. Zimmerman could be trying to compute just how much the wheel chair cost. It’s really quite a picture. A fine businessman, Mr. Sprowl said high-class busi- nessmen. High-class. Do you remember how they charged Kauth $50 for the names then Mr. Epstein in his report wrote back to Sister Kenny $25. Then Mrs. Duerr, the lady I should have called, you remember they said Mr. Lord should have called Mrs. Duerr, they wrote down, ‘‘Kauth thinks he is getting $5 names. They are only $2 names.’’ That is just a small example of a high-class businessman. When Mr. Koolish saw what was happening in Minne- apolis, he wanted to get it going, wanted to get his pump working. He worked it on the D.A.V. a million and a half dollars renting D.A.V. names. He worked it on Boys’ Town. He bought Miller, Miller’s outfit, he con- trolled Miller. He was an employee. He worked it on Tucson. Now, these things His Honor will tell you are all rele- vant to the intent of these defendants. Just because they may have done something wrong ‘vefore is no sign you should charge them with a crime here and find them guilty. It only bears on their intent. What did they know? Was it an accident what they did here in Minneapolis when they hired Kline and Fadell? Was it an accident? Was it a happenstance? Did Fred Fadell fool those folks when he said he was a public relations man? App. 93 No, folks, chey knew what they ‘vere doing. They got together on this.-’Fhe presents that went to the National Adjutant of the D.A.V. were no more accident than the money that went back to Kline and Fred Fadell. His Honor will instruct you that certain questions I asked were improper, and I agree that they were, because I never followed up to prove what came after those ques- tions. If you will remember, I asked Mr. Koolish some- thing about some certain activities that took place at a meeting in Chicago. I shouid never have asked him that question because I wasn’t able afterwards to prove the fact of the things that I inferred; or a ride in a Cadillac where they talked about the payments to Kline, all those things should be put out of your minds. But that doesn’t mean that we haven’t proven all those things, same things by other means. Wkat His Honor will tell you is to disregard the ques- tions that Mr. Lord asked, but in so doing, he doesn’t ‘mean that you are forbidden from finding that A. L. Koolish knew about these payments. You ars allowed to accept the inferences on the evidence that is here. Now, what did John Carnell say? I asked him: *‘Did you say that Phil Koolish knew about that?’’ About the fact Kline was getting part of the money paid to Fadeli, page 7300, and he said, ‘I reported it to Mr. Phil Koolish as Mr. Kline being hired by Mr. Fadell as a consultant.’’ Do you remember that? Carnell, that gentleman sitting there said that he re- ported it to Phil Koolish. App. 94 Now, what did Phil Koclish say about how that company was run? I asked Phil Koolish: **So a discussion of how you handled your relationship with Sister Kenny, would you say that that was a trivial, lower echelon matter? ‘*A. Quite the contrary. It was one of the major mat- ters to be discussed and decided upon. “Q. By whom! ‘“‘A. By us as a group. **Q. Who was that group? ‘‘A. The group again, would be A. L. Koolish, George W. Ehrlich, Mr. Carnell, David Koolish, inyself, and Miss Herter on occasion, depending on what matters were in- volved.’’ a So Carnell brought the message back to Phil Koolish. Phil said that the Kenny Foundation was important. The Judge will instruct you that you don’t have to disregard the inference that arises therefrom. Ladies and gentlemen, the case is quite clear against these defendants. You can look at the computation Mr. Nordin asked you to make 108 million pieces, and figure it out, divide it by $3 per thousand. It comes out, if you take the amount that they received, subtract the 17,060 divided into the 108 million, comes out to $3.16 a thousand. That gave the boys an incentive, gave Kline and Fadell the incentive to be on the same side, to work on the Koolish team. When they did that, they were not working for the crippled children, they were working, ladies and gen- tlemen, for Kline, Fadell and the Koolishes. They had pointed out a thousand contracts to you, or many of them. Those contracts, they say, who made them out? Kline and Fadell. Who were Kline and Fadell work- ing for? The Koolishes. 2 Ne SOLO RO ea orARNIN) Rea eB oer cseteeai) } App. 95 I toid you in my opening statement that I was going to prove that the Kooliskes operated the Sister Elizabeth Kenny Foundation financially. I think we have proven that, ladies and gentlemen. I think rou are satisfied with it. I think you are satisfied that the amount of the contracts was set by the Koolishes, that they decided what the charges would be, that they should decide how many were mailed out, that they decide what campaigns should be run and what tests should be run. £o now, we have talked about a lot of r. important things. I think in that way the Government has wasted some of your time here. I apologize for that, because we didn’t know many things that we only knew as they came be- fore you here on the witness stand. One of the very important things we knew which our ease boils right down to, one exhibit, and if we had—all you have to do is know that Kline and Fadell got back part of the booty, they got back part of the loot, as Mr. Peterson described it—he had another word for it, and that overcharges were made, substantial profits. Look at this exhibit, ladies and gentlemen. This tells the whole story in this case that we have been working on here for months and weeks and years. It’s right there. In Minneapolis we could have done it for $39.55. In Chi- cago they did it for $67. What took them to Chicago? What took them to Chicago is shown right in this ex- hibit right there. That is what took them to Chicago, and that is your motive, that is your intent, that is your reward. That is all you need to know. You can give away Tucson, you can give away Asthmat- ic, you can give away D.A.V.—I had a list of them here. You can forget about the Disabled American Veterans, a it App. 96 Boys’ Town. You can disregard the undeliverable mail. That’s in the light of what we have now brought before you late in this case, when the Government finally, and I am ashamed to say it, the Government got smart enough to ade’ up the bids and see what the real picture was. We brought you Government Exhibit 656, so let’s for- get about the undeliverable mail, forget about list rental and forget about telephone directories. Put aside the whiskey and the parties. Don’t consider the gifts. For- get about the football games. Do away with the fishing trips. Never mind the lawsuit or the IBM lists; Asthmatic, Boys’ Town, D.A.V., the blind, the poor, the war orphans, the brain injured. Forget them. Please forget them. Look at these two exhibits, this exhibit, $39,000 to Fadell, half to Kline, they talked about allocation, they got roughly half there, ladies and gen- tlemen, and what did they get it for? They got it for this, $335,000 in 1959, just about what they had to steal back from there and sweeten their list by about that same amount to make their profit. That’s what they did in- stead of fulfilling their guarantee, they took from the con- tributors, from the good people who were right over here and they made up the deficit that they wouldn’t make up by making a decent mailing. You are allowed, ladies and gentlemen, His Honor has allowed these green figures in, the Government made them green so that you would know that they were esti- mates, but the computations are there and you are allowed to infer that every year as a result of that kind of activity, by sweetening the list there was this kind of activity that would have been losses had it not been for the use of the list, and you are also allowed, ladies and gentlemen, to use your own good sense as to whether or not if they over- App. 97 charged to that extent in 1959, they didn’t do it every year, $335,000 a year, multiply that by eight or ten years, and then look at the Koolish figure, that exhibit which shows a five million dollar net worth, and add your three or four million dollars on there, and their excuse, ‘‘ Well, we were gocl for the Foundation,’’ they say, ‘‘We, look, we were good, look at all the money we made for the Foundation.”’ Is it an excuse that a bank messenger goes with that truck every day and then every once in a while or once he walks away with a suitcase full of money, is it a justification for his crime to say, ‘‘Look at ail the days I delivered the money,’’ or two bags of money and carry- ing them and he only takes one. Is it a justification to say, ‘Look, they got one bag, I only took one.’’ That’s what their excuse is. That’s the closest thing they have come to an excuse in this case is that it was a good business, and it’s not a business. Do you feel like a business when you get that good feeling in your heart and send in your money to a charity, do you feel you are getting a big break if about a quarter out of a dollar gets to the crippled children? Whose business is this? What is this charity? They can talk about good business, but I don’t think it rings true to you folks. Now, there is some talk about, you are going to hear instructions from the—from His Honor, he will give cer- tain instructions that the defendants have asked for that say, well, there is nothing illegal about hiding, about hav- ing a nominee in a corporation, there is nothing illegal about having corporate minutes made up and mailed out. There is nothing illegal about a lot of things; and that’s true, and that’s the law, and these folks want those in- App. 98 structions. They are entitled to them. But you are going to listen to the rest of the Judge’s instructions and he will say thai any conspiracy where folks have gotten to- gether and they have an evil plan, a plan to violate the United States Laws, and in this instance the mail fraud laws, they can have an overt act, one act in furtherance of that plan, it can be a very innocent act, such as a man walking across the street, as simple as that. There is nothing illegal, assuming you don’t go through a red light, about walking across the street, but they can have that kind, that can be an overt act, the mere lighting of a cig- arette at the right time or place, and as here, the estab- lishment of a corporation, the manner in which they car- ried it out. Those facts in themselves may not be illegal, but every one of them is designed to fool. It’s designed to be a part of this scheme to hide, to hide the identity the Koolishes, and to keep them underground so their repu- tation wouldn’t come out, so that their previous activities wouldn’t be charged to Carnell and Rettig, so that the Board would be lulled into a sense of security. Now, about the Board. Take it at its worst. Let us as- sume that the Board of Directors of Sister Kenny were actively and progressively in concert with these people. Let us assume, and I don’t assume that for a moment, I think this was a fine, honorable board, and all good hon- orable business men, but take it at its worst. Take it at its worst, that the Board of Directors, those 12 or 15 peo- ple were in on the take, would that forgive Kline and Fadell? Would their actually being involved in this scheme, if they knew every element of it, including the kick-backs which nobody did, including the high charges, including the mis-mailed mail, including the parties, in- cluding the gifts, that wouldn’t forgive Kline. Fadel] and the Koolishes. App. 99 Take the other extreme, that the Board had nothing to do with it, but when they fod out about it, they condone it, and tried to ratify it. They have no legal power to ratify a crime. They have only one duty, and Mr. Haver- stock testified to that, they have the highest possible fidu- ciary duty, a duty to do nothing, to get in no position, to take no action or to fail to take any action which is not in absolutely the best interests of two groups of people, that millions of people who contributed to the Founda- tion and those little crippled children. The Board has no— it’s not the Board’s Foundation. That Board just acts there for the public, for folks like you and me and the rest of us here. That Board has a duty to do nothing that is inconsistent with the best interests of those chil- dren. They couldn’t approve of those payments, you see, on Government’s Exhibit 319, back to Kline and Fadell. They would only succeed in doing one thing, of getting themselves in trovble because it wouldn’t make a bit more right. A man cannot serve two masters. Kline tried it. Fadell tried it. A. L. Koolish didn’t like it wuen Carnell tried to serve two masters. He said, ‘‘Oh, my, you are a full-time employee, you shouldn’t be working for the Foundation.’’ What did he think of the people he was hiring away from the Foundation? What did he think as he went about sending contracts up to Minaeapolis and asking them to be signed on behalf of the Sister Kenny Foundation? And don’t you think he had to grin to himself and chuckle as he knew that the men who were signing that contract were his tools, his servants? Yes, fine honorable clients, fine business nen. Successful, yes, the Government stipu- lated they . w more about mailing than any other men in America, and particularly about this kind of mailing. They did a good job for what they wanted to do. App. 100 The low bids. Mr. Peterson has talked about the low bids throughout this case. The only significance low bids have in this case is that they represented that they were the lowest bidders. No duty on them whatsoever, on a charity to take the lowest bid, although it would be wise, but they went around and said these are the lowest bid- ders and kept other bidders out, only took from these folks because they said they were doing it at the lowest bid price. Henry knew something about costs of mail. Some of the other directors did. Where did they go? What did they get for a reward of making inquiry? They got the gate, that’s what they got. It’s not necessary that each of these men knew each other. It’s not necessary, according to the law as His Honor will read it to you, that George Zimmerman never met A. L. Koolish. All they have to know is that there was a scheme, there was a scheme to defraud, and they have knowingly and intentionally entered it. Now, it hurts me to think that George Zimmerman had a part in this scheme. Government’s Exhibit 305 cannot be ignored. It’s an integral part of it. They couldn’t have done it without George Zimmerman. That’s a shame that a professional man, a man who has had a good reputa- tion in this community, should become a part of this scheme of this kind, but George Zimmerman was a part of it and he stands charged with his part in it. I submit that the Government has proven his part in it and the accounting wouldn’t be so bad if anybody else had that kind of ac- counting, if they had brought somebody in here, or if he hadn’t affirmatively represented, as just one of the last exhibits his attorney read, he piled an error on top of an error. If the original audit statements certified, or con- solidated financial statement was wrong and he let it go App. 101 at that, that’s a problem, but then when he misrepresents it even to the folks who are supervising it, knowing what he is using this financial statement for, how do you for- give him? How can he help but be guilty? Ladies and sentlemen, and how do you say hindsight, hindsight, what does George Zimmerman now see that he didn’t see then? What is there we should now retract from and say, ‘‘ Well, George didn’t know about it then’’? He knew about the payments to Kline. He knew about the payments to Fadell. He knew the Board didn’t know and he didn’t want to tell the Board He knew about the kick- backs and he knew he was hiding the mail costs. He hadn’t met A. L. Koolish, but he was a part of this scheme. You know, they talk a lot about accounting standards, about what standards are—just give me the Indictment— whai are accounting standards? We have read them here in court. One of them was written on the finger of stone— on a table of stone by the finger of God thousands of years ago, and said, ‘‘Thou Shalt Not Bear False Witness’’ The accountants manual has it in there. It says whether it is a long form, whether it is a short form, whatever it is, be guided by the truth, the whole truth and nothing but the truth. And do you think we have had that? Now, on the overt acts, remember, there is a mail fraud section here in which we charge mailing Counts. There is a conspiracy or an illegal] agreement charged in the last Count of the Indictment that says that these folks got together and made an illegal agreement to violate the mail fraud statutes. Now, that’s a crime to get together and agree to violate the law, a kind of partnership in crime, which in itself is a crime, I think, because the rationale is that you can App. 102 do much more harm if you get together, so they make it a crime to get together. That is a crime separate from an individual crime that a person might commit individually. So when we get a group together that becomes a con- spiracy. We have the overt acts listed under it. I won’t read them all. It says that Koolish directed Rosner to do such and such and that Kline signed his initials on such and such. You can read this and you will recall where it comes. You are going to have to do a little work when you get back in there to deliberate. I want to talk to you a little bit more about what you might say the over-all philosophy of this case is. The case involves a breach of the fiduciary relation by Marvin Kline to the contributors, to the crippled children, to the public as a whole. The case involves the over-reach- ing by the Koolishes when they hired away these two fiduciaries, hired them away, and where they should have been working for the good of the children and the public, they began to work for the Koolishes, and the Koolishes got them hired, and then they started to really take the money. As to the Koolishes, there was no more charity in their hearts. It wasn’t charity. It was money. They may be wealthy, but they like more money. So you folks are going to be called upon to decide the guilt or the innocence of these people. You are going to have to go back in—you don’t have the benefit of the transcript. You will have to rely on your memory, and you are going to have to listen to His Honor’s instruc- tions, RS ite ha ecoten nS Nal hk et G59 App. 103 If you try to listen to each one of them, there will be some things ix there that make you wonder. What you are asked to do is take this case in its over- all perspective, and you are asked to take the Judge’s instructions in their over-all perspective. Then you go back to the jury room and you will have the exhibits with you, and examine all of them. You will have your old friends in the form of the charts, and you will be able to look at them, and I submit that it wouldn’t be fair to these defendants nor would it be fair to the Government, al- though if you deride they are not guilty, come back at any time you are ready and we will be waiting, a little bit disappointed, of course, but if you decide that they are guilty, you ought to take plenty of time to deliberate. You ought to take time to look at ali the exhibits and as to each Count, be satisfied in your own heart that the mailing was done, that the scheme was there, and that the defendants were involved. That is, out of fairness to the defendants, you should take at least several hours to deliberate in this case. Now, it’s been said that Mr. Lord is trying to stampede you. You don’t stampede intelligent people. The only pictures of a stampede that I have seen are of cattle. I don’t think there is any stampeding involved here. I have tried not to appeal to you on that basis. Sometimes the feelings have run high in the courtroom, and forgive us. I have what I think is important work to do and I am sure the defense counsel feel that they have important work to do. I feel, ladies and gentlemen, that you will decide that the Government has proven its case to your satisfaction. App. 104 The Court will tell you beyond a reasonable doubt, to an abiding certainty, such as you have in the most im- portant affairs, the kind of knowledge you must have before you decide the most important affairs in your daily lives. You have had ten weeks to look at this case, and I think that you have seen the evidence, you have heard the wit- nesses, you have had some doubts. The man from Cowles Press told you everything was - okay as to the Koolishes, a wonderful thing to mail. I didn’t have this exhibit to ask him about at the time, but if this involves a little repudiation of the Cowles Press, I am not against it. If you have to decide this man came here and that you didn’t agree with him, why it is perfectly agreeable with the Government. We think you, as intelligent members of this commu- nity, are here to do your duty, that you are ready to do your duty, and we have done our duty. The Postal Inspectors that you have seen come in and out of this courtroom, the witnesses, the expenses that are inherent in this kind of thing; Mr. Nordin, who is one of the finest assistants any Attorney General or United States Attorney ever had, has worked two or three years on the case, two and a half years. All of these things have to be done. Now it is your turn. You are the folks who have been sitting patiently here, and you have a duty to ao. It may not be a pleasant duty. I don’t always find my duties pleasant. I did as you did, I took an oath, and I do it. App. 105 My particular presence here as United States Attorney has nothing to do with the fact that I originally investigated the Sister Kenny case. It is just one of those accidents, happy or unhappy, as it may be. The Sister Kenny in- vestigation was started by the Federal Government be- fore I became United States Attorney by Mr. Janes, who is now a Judge in St. Paul. We merely carried on from there. And so I am, I believe, able to look at this case dis- passionately. I believe that the Government has carried its burden. The obligation is yours, and in the jargon of the old World War I people, to you we hand the torch, be yours to hold it high. Many sins have been committed in the name of sweet charity. Many crimes have been committed in the name of sweet charity. Let this one not go unpunished. Thank you, ladies and gentlemen. or ERE 65 te eee Bee > > SF st Min RS RCO P RIT AF RE FT a i ae Be ead AY gS) App. 107 APPENDIX H Story appearing in The Minneapolis Star, Tuesday, De- cember 25, 1962. (R. 948.) EASIER THAN TAX CASES NOW MAIL FRAUD LAWS TRIP U. 8S. RACKETEERS By Lazgy Firzmavrice Minneapolis Star Staff Writer This is the story of an era which began in 1930 when Scarface Al Capone became the first major underworld gangster to be convicted under the federal income tax law and which seemingly ended when Capone’s Chicago suc- cessor, Tony Accardo, beat a similar rap a few months ago. In the intervening 30 years, the T-men (Treasury Agents) have used the tax fraud law thousands of times to convict the nation’s hoodlums and racketeers when other local, state and federal laws failed. Today the emphasis—in the Twin Cities as elsewhere— by federal law enforcement officials is on use of the mail fraud statues [sic] for similar purposes. %t’s Easier. The reason? The mail fraud law is easier to use than the somewhat cumbersome, statistical tax fraud statute. Nearly every wrong-doer will inadvertently or nécessarily use the mails in some phase of his crooked operations. The switch is to police legitimate business with the tax law and to nail rucketeers with the mail fraud statute. Benjamin Dranow, onetime Minneapolis department store owner and financial racketeer, was convicted under both laws and is serving two 7-year sentences. App. 108 But wke« the nation’s gangsters were running rampant over local, state and most federal laws during and follow- ing the prohibition era, there was always, since 1930 at least, the ever-present T-man armed with the tax statute to bring the hoodlums to book. An Expire. At the height of his criminal career Al Capone had suc- cessfully defied the city of Chicago and the state of Illinois in the creation of an empire built on bootleg whisky, vice, gambling, labor terror and other rackets. In his heyday in the late 1920’s and early 1930’s, Capone was called more powerful than the mayor of Chicago. He was credited with approximately 135 gangland slayings. He was the original ‘‘untouchable.’’ Despite Capone’s power, financial affluence created by a $100 million a year take from the rackets, and his elaborate private espionage system, the gang leader failed to reckon with an obscure agent in the intelligence unit of the Inter- nal Revenue Service in St. Paul. ‘Get Capone’. His name was Mike Malone, a tough, cagey, clever Lrish- man who drew an assignment in 1929 to ‘‘get Capone.’’ Using the alias Mike O’Rourke, Malone moved into Chicago. He joined a minor segment of the Capone outfit. In two years he worked hi; way to the top echelon of the Capone hierarchy. He gathered evidence of Capone’s fabulous income as he went along. Assisting Malone was a team of intelligence agents, in- cluding undercover men, accountants jand lawyers in the federal service. cabot dete dary tiaid oomts san at App. 109 Capone went to trial before a jury charged with failure to report about $1 million dollars in income and spent most of the next 10 years in Alcatraz. ‘Protection’. As time marched on, the nation’s racketeers got smart. They could buy ‘‘protection’’ or deceive local and state authorities regarding the illicit sources of their income. They hired the best lawyers and accountants to keep th . in the clear with the tax collector. Internal Revenue agents worked intermittently for 25 years trying to convict Isadore (Kid Cann) Blumenfeld, head of a Minneapolis liquor syndicate. When they brought Blumenfeld and four Kid Cann syndicate members to trial on the somewhat watered down charge of filing false statements regarding ownership of the places, the Federal Circuit Court of Appeals at St. Louis, Mo., set aside the convictions and threw the case out of court. Miles W. Lord, United States district attorney, said the shift of emphasis from use of the tax statute to the mail fraud statute in prosecuting racketeers has been gradual, but effective. It is the mail statute under which Marvin L. Kline, one time mayor of Minneapolis and long time executive direc- tor of Sister Elizabeth Kenny Foundation, and several others will go to trial in Minneapolis Fcderal Court Jan. 9. Lord has characterized the alleged $10 million bilking of Kenny funds as among the ‘‘greatest frauds in Amer- ican history.’’ App. 110 APPENDIX I The following is an excerpt from a speech delivered during the Fall, 1962 political campaign by Minnesota Attorney General Walter F. Mondale, who was running for re-election, and broadcast over KSTP-TV. (R. 1027): ‘‘My investigation of the Sister Elizabeth Kenny Foundation and other charitie: have disclosed that although most charities are honest and efficient, there are a few that are not, and that the public is entitled to protection so that their charitable dollar goes as far as possible and is not diverted into private pockets. We have taken steps to correct the wrongs of the Sister Kenny Foundation, and I think today it is one of thc finest charities in the nation. But we all reaiize that more had to be done if our citizens were to be protected from a reoccurrence of this unfortunate waste and misuse of their funds. And J am proud to report that through our efforts, we were able to have adopted, at the last session, the Charities Registration Act of 1961, which now better protects the citizens of Minnesota from charity rackets than are the citizens of any other state in the union.”’ The following is a transcribed 58 second spot announce- ment that was televised 7 times and broadcast on radio 38 times by Minneapolis and St. Paul television and radio stations between October 15, 1962 and November 5, 1962, during the 1962 political campaign. (R. 1029-1032.) : ay oath ype engl Ha ON Sey Ses App. 111 WALTER F. MONDALE: ‘‘This is your Attorney General, Walter F. Mondale. Two years ago as your Attorney General I reperted to you an exemple of a mis-managed charity. This report showed that money contributed by you was wasted in excessive fund raising costs, high salaries and administrative overhead. I assisted in the prosecution of one official of that charity. [Co-defendant Marvin L. Kline] His con- viction for fraud has been annealed. In addition, the auditor’s license [Co-defendant J. George Zimmer- man] to practice as a CPA was revoked on my petition. As a result of these disclosures the Minnesota legis- lature, at my urging, passed a charities law, which re- quires charities to publicly disclose to you the infor- mation necessary to make an intelligent judgment as to how charitabic funds are being used. Our new law, designed to protect the public, is the most effective charity law in the nation today.”’ ANNOUNCER: ‘*Protect charities and your charity. Re-elect your Attorney General, Walter F. Mondale.’’ --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0599%3A3. Public record. Not legal advice.