Opposition Brief — GROSSGOLDT, IN RE (No. 74-1082)

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APR 12. 1975

No. 74-1082 mic Me

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Supreme Court of the Anited States

Ocroser Term, 1974

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IN RE NATHAN GROSSGOLD, an Attorney,

Petitioner,

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI TO THE

SUPREME COURT OF ILLINOIS

Joun F. McCartuy

100 West Monroe Street

Chicago, Illinois 60603

Commissioners of the Supreme Court of

Illinois, under Illinois Revised Statutes c.110A

The Scheffer Press, Inc.—(312) 263-6850

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Reasons For Refusing Wit ...........ssssssscssssssssnsssesesesssees 5

I. Grossgold Was Not Denied Due Process ........ 5

II. The Pardon Of Grossgold Could Not Change

The Discipline Imposed By The Illinois

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APPENDIX

App. A. Letter of Clerk of Dlinois Supreme Court

dated November 26, 1974 00..........cccccsscssseseees la

App. B. Letter of Clerk of Lllinois Supreme Court

Gated TOMOATy TB, TOT wenccnceccccccscecesacccorsecsee 2a

App. C. Rule 751, Illinois Supreme Court .................. 3a

App. D. Opinion, U.S. v. Grossgold, (1971, C.A. 7th)

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Constitution, Statutes, Rue

U. S. Constitution, Article II, Section 2, Clause 1 ...... 3

WSCA. “Fete Be, Tee BCG wissiticcettitieinsions 1

Smith-Hurd Illinois Annotated Statutes (SHA), Ch.

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PAGE

TaBLe Or Cases

Bowles v. Laws, (1930, C.A., D.C.) 45 F2d 669, 671,

59 App. D.C. 399 8

Gypsy Oil Co. v. Escoe, (1927) 275 U.S. 498 .......0.00.... 1

In re Krasner, (1965) 32 Ill.2d 121, 130, 204 N.E.2d10 6

In re McCallum, (1945) 391 Ill. 400, 419, 64 N.E.2d 310 6

The People v. Gilmore, (1905) 214 Ill. 569, 571, 572,

SII TIITT iliac cust dasbiachisatinneiicenbdensabiasnnsndninsentneabiibbinsasesseenes 8

The People ex rel. Prisament v. a (1941) 287

N.Y. 132, 38 N.E.2d 468, 470, 471 oo... cecscessseesseeeee 9, 10

Ex parte eee and Fitzhugh, (1870) 4 W.Va. 210,

IT tet ta liaiil Ianto hceces ch taaih lies dapanenbéshakemieicnatsghinbbinsnmoniienmens 10

U. S. v. Donofrio, (1971, C.A. 5th) 450 F2d 1054, 1056 10

U. 8. v. Grossgold, (1971, C.A. 7th) 447 F2d 742 .......... 3

on |

In THE

SUPREME COURT OF THE UNITED STATES

Octroser Term, 1974

No. 74-1082

IN RE NATHAN GROSSGOLD, an Attorney,

Petitioner,

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI TO THE

SUPREME COURT OF ILLINOIS

JURISDICTION

The Petition sor Certiorari was not filed in time and

should be dismissed.

Grossgold’s Petition for Rehearing was denied by the

Illinois Supreme Court on November 26, 1974, not Novem-

ber 27, 1974, as he states. (Petn. 1) (See Appendix A

of this Brief.) His Petition for Certiorari should have

been filed with this Court within ninety days of that

date, or by February 24, 1975. U.S.C.A., Title 28, Sec.

2101(c). It was not filed until February 27, 1975, and,

therefore, should be dismissed.

Grossgold’s Motion for reconsideration, based on his

pardon by the President, and for imposition of a lesser

disciplinary sanction, or, in the alternative, for reinstate-

ment, wis denied by the Illinois Supreme Court on Janu-

ary 15, ‘975. (See Appendix B of this Brief.) The

pendency of that Motion did not extend the time for

filing the Petition For Certiorari. Gypsy Oil Co. v. Escoe,

a

ISRO ALORA CS Bo OE Aa BS PR

meio

(1927) 275 U.S. 498. The Motion did not raise any new

or additional matter. The possibility of the pardon was

discussed in Grossgold’s Brief and Petition for Rehearing

in the Illinois Supreme Court.

QUESTIONS PRESENTED

There is no Federal or Constitutional question involved

in this matter.

1. Grossgold was not denied due process in the pro-

ceedings before the Illinois Supreme Court and its Com-

missioners. He received notice of the possibility of an

increase in the discipline (suspension for three years)

recommended by Division II of the Grievance Committee

of The Chicago Bar Association, sitting as Commissioners

of the Court. He had a full hearing thereon. The increase

in discipline, based on the entire record, represented

a difference of opinion between the full Grievance Com-

mittee and the Board of Managers of the Association,

on the one hand, and Division II, on the other. Further

findings were not required. In any event, the Supreme

Court suspended (irossgold for three years, thus rein-

stating Division II’s original recommendation. No harm

or prejudice to Grossgold occurred.

In Illinois, in disciplinary matters, the Supreme Court

is the tribunal of the initial hearing and the Commission-

ers are regarded as agents for gathering and reporting

evidence and making recommendations. No interference

with, or suspension of, an attorney’s right to practice

law in Illinois occurs until after a full hearing before

the Supreme Court. Thus Grossgold’s “due process” argu-

ments and authorities are inapplicable.

2. The pardon of (Grossgold by the President could

not change the discipline already imposed by the Illinois

2 a .)

osc ec

Supreme Court. Under the United States Constitution,

Article II, Section 2, Clause 1, the pardon only affected

offenses against the United States. The conduct of Gross-

gold and the harm to the legal profession remained.

The power of the Illinois Supreme Court to regulate

the legal profession in Illinois and to maintain its disci-

pline of Grossgold cannot be impaired.

ILLINOIS SUPREME COURT RULE

The pertinent parts of Illinois Supreme Court Rule

751 (Proceeding To Strike Attorney’s Name From Roll)

are set forth in Appendix C of this Brief. This Rule

was revised effective February 1, 1973, but was retained

as to disciplinary matters then pending, such as Gross-

gold. Smith-Hurd Illinois Annotated Statutes (S.H.A.),

Ch. 110 A, See. 751.

STATEMENT OF THE CASE

Reference to additional factual material will be of

assistance to this Court.

The record contains the transcripts of the evidence

in the criminal proceedings against Grossgold for mail

fraud, as well as the opinion of the Federal Court of

Appeals therein. That opinion is found in 447 F2d 742

and is reprinted here as Appendix D. Thus the record

discloses not only Grossgold’s conviction but also the facts

in support of it.

The opinion of the Court of Appeals shows the extent

of Grossgold’s involvement. The Court said, at 447 F2d

744, “There is ample proof to justify the jury in inferring

that both Bornstein and Grossgold knowingly participated

in the proven scheme to defraud. * * * There is substantial

evidence that both Bornstein and Grossgold knew the

Be RR AEGIS TIES! OF* BC BNE

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subrogation claims were fraudulent.” And further, p. 745,

“And Grossgold’s indirect benefit from Zizzo’s and Katz’s

statements that they dealt with Bornstein was minimal

in view of the ample testimony of Grossgold’s main

participation, through his work as attorney in preparation

of the subrogation claims.”

Division II of the Grievance Committee of The Chicago

Bar Association, as Commissioners of the Illinois Su-

preme Court, originally heard the evidence in the disci-

plinary proceedings. It made certain findings and

recommended that Grossgold be suspended from the prac-

tice of law for three years. (R, Report of Grievance

Committee, 4) The full Grievance Committee, also as

Commissioners, reviewed the record and heard oral argu-

ments by Grossgold’s attorney. It recommended that

Grossgold be disbarred. (R, Order of May 1, 1973) The

order notifying Grossgold of the hearing before the full

Committee advised him that the full Committee was not

bound to accept the recommendation of Division II, but

might recommend a greater or lesser degree of discipline.

(R, Order of February 27, 1973) The Board of Managers

of The Chicago Bar Association, likewise as Commission-

ers, reviewed the record, heard further arguments by

Grossgold’s counsel and likewise recommended disbarment.

(R, Order of July 26, 1973) The order notifying Grossgold

of the hearing before the Board of Managers also advised

him that the Board was not bound to accept the recom-

mendation of the full Committee, but might, on the basis

of the entire record, alter that recommendation. (R, Order

of May 1, 1973)

The Illinois Supreme Court suspended Grossgold for

three years, thus affirming the original recommendation

of Division II. Grossgold first raised his “due process”

objections in his Brief in the Illinois Supreme Court.

Lis 5 ee eters Pt A NE CD

14

ay ee

REASONS FOR REFUSING WRIT

I.

GROSSGOLD WAS NOT DENIED DUE PROCESS.

Grossgold was afforded every right guaranteed to him

by the phrase, “due process.” He received notice of the

proceedings and the hearings therein. The notices advised

him that the full Grievance Committee and the Board

of Managers did not regard themselves as bound by

previous recommendations of discipline and might alter

the same. (R, Order of February 27, 1973, Order of

May 1, 1973) Grossgold attended each hearing and was

represented by the able counsel who appear for him

in this Court.

Division II of the Grievance Committee made certain

findings and recommended a suspension of three years.

(R, Report of Grievance Committee, 4) The full Grievance

Committee and the Board of Managers reviewed the

record, heard oral arguments of Grossgold’s attorney

and recommended disbarment. (R, Order of May 1, 1973,

Order of July 26, 1973) The reasons for their respective

actions are found in the record which they reviewed.

There was no additional evidence. There was no need

for further findings. There merely was a difference of

opinion between the full Committee and the Board of

Managers, on the one hand, and Division II, on the other,

about the appropriate discipline.

The Illinois Supreme Court further reviewed the ree-

ord, considered oral arguments aud suspended Grossgold

for three years, thus affirming Division II’s original

recommendation. Whatever may be said about any defici-

encies in this record, and we admit of none, no harm

CPA BRP OEE LEAD A BEI

‘alias

or prejudice to Grossgold can be shown. Division II’s

original recommendation was a suspension of three years.

The Supreme Court’s final judgment was just that.

Grossgold’s only “due process” argument is that the

full Committee should have assigned reasons, in writing,

when it recommended disbarment instead of suspension

for three years. In making this contention, he overlooks

the essential difference between this proceeding and those

in the decisions which he cites.

In Illinois, in disciplinary matters, the Supreme Court

is the tribunal of the initial hearing and the Commission-

ers are regarded as agents for gathering and reporting

evidence and making recommendations. Thus, for example,

in In Re McCallum, (1945) 391 Ill. 400, 64 N.E. 2d 310,

the Court said, 391 Ill. 419, “* * * for purposes of this

kind of a case (a disciplinary matter), this is a court

of initial hearing, and the commissioners are merely

agents for the purpose of gathering and reporting the

evidence.” And in In Re Krasner, (1965) 32 Ill. 2d 121,

204 N.E. 2d 10, the Court said, 32 Ill. 2d 130, “Such

recommendation (by the Board of Managers of a suspen-

sion of five years) is, of course, purely advisory, inasmuch

as. we are regarded as a court of initial hearing in a case

of this kind.”

It follows, as is the case in Illinois and with Grossgold,

that the recommendations of the full Committee and the

Board of Managers do not result in any denial of the

attorney’s rights and do not impair his right to continue

to practice law. No interference with, or suspension of,

that right occurs until after a full hearing before the

Supreme Court. Thus Grossgold’s “due process” argu-

ments are inapplicable in this situation.

* “e Ce

—

In the decisions cited and relied on by Grossgold,

the preliminary administrative hearings resulted in some

deprivation of liberty or property. Thus, in Morrissey

yv. Brewer, 408 U.S. 471, a paroled convict was detained

in jail; in Landman v. Royster, 333 F. Supp. 621, and

Krause v. Schmidt, 341 F. Supp. 1001, convicts were

disciplined; and in Goldberg v. Kelly, 397 U.S. 254, and

Coral Gables Convalescent Homes v. Richardson, 340 F.

Supp. 647, public assistance benefits and Medicare pay-

ments were stopped. Thus, “due process” requirements

were found to be applicable in those cases.

II.

THE PARDON OF GROSSGOLD COULD NOT

CHANGE THE DISCIPLINE IMPOSED BY THE ILLI-

NOIS SUPREME COURT.

The President granted Grossgold an executive pardon.

This was done after the Illinois Supreme Court had

suspended Grossgold for three years and had denied

his Petition for Rehearing. It is clear that the pardon

could not affect the discipline.

The Federal Constitution gives the President power

“to grant Reprieves and Pardons for Offenses against

the United States.” By its very terms, the Executive’s

power is limited to Federal offenses. It leaves unaffected

the rights and powers of the States and the duties and

obligations of citizens to the States. Thus the pardon to

Grossgold could not impair the discipline imposed by the

Illinois Supreme Court.

The record here contains not only the proof of Gross-

gold’s conviction but also the transcripts of the evidence

in the criminal proceedings against him and the opinion

of the Federal Court of Appeals. Thus this Court hax

3

Bee Se Sap SADR NE EAS LTT A ELT Re 0S

= on

before it, as the Illinois Supreme Court also did, the

account of Grossgold’s activities. That conduct and the

harm to the legal profession remain. The pardon of the

President is powerless to erase them.

Some years ago, the Illinois Supreme Court adopted

the view that an executive pardon should not relieve

an attorney from disciplinary action. The People v.

Gilmore, (1905) 214 Ill. 569, 73 N.E. 737. There, the

attorney had been convicted of embezzlement and _ par-

doned. In discussing the effect of the pardon, the Illinois

Supreme Court said, 214 Ill. 571-72:

“The crime of which the respondent was convicted

and imprisoned in the penitentiary of the State of

Missouri was an infamous offense, which involved

not only moral turpitude, but also the lack of pro-

fessional integrity. The conviction of that crime had

the effect to degrade him and to establish that he

was of bad moral character as a man and as a lawyer.

The pardon granted him by the then acting Governor

of the State of Missouri did not efface the moral

turpitude and want of professional honesty involved

in the crime nor obliterate the stain upon his moral

character.”

The Courts of the District of Columbia have taken

the same position. Bowles v. Laws, (1930, C. A., D. C.) 45

F2d 669, 59 App. D. C. 399, certiorari denied 283 U. S.

841. In that case, the attorney had been convicted of

concealing stolen securities. He also had been disbarred.

In 1927, he had performed certain services which the

Bar Association contended were the practice of law.

Thereafter, he received a “full and unconditional pardon”

from the President. The trial court found him guilty of

contempt and fined him. The Court of Appeals affirmed,

ones

and, in considering the effect of the pardon, said, 45

F2d 671:

“But we may add that, in the Matter of ............... ,

an Attorney, 86 N. Y. 563, where an attorney had

been granted a pardon prior to the institution of

disbarment proceedings, the court held that a pardon

wipes out the offense against the public, but does

not annul the act or affect the right of the court

to punish for professional misconduct.”

The New York Court of Appeals reached a similar

conclusion. People ex rel. Prisament v. Brophy, (1941)

287 N. Y. 132, 38 N.. 2d 468, certiorari denied 317 U.S.

625. There, in 1937, in the Federal Court in Georgia,

Prisament was convicted of robbing a member bank of

the Federal Deposit Insurance Corporation. Two years

later, he received “a full and unconditional pardon” from

the President. In 1940, in the Court of General Sessions

in New York, he was convicted of attempted robbery.

The problem was whether Prisament was a first or second

offender for the purpose of sentencing. The Court of

Appeals held that he was a second offender. In discussing

the pardon, the Court said, 38 N.I. 2d 470, 471:

“... The President is empowered ‘to grant Reprieves

and Pardons for Offenses against the United States,

except in Cases of Impeachment.’ U. S. Const. art.

II, § 2. Neither Congress nor a State Legislature

can limit the constitutional power of the President

to exempt an offender from punishment for his

offense (Ix parte Garland, supra); but the State may

still provide that in fixing the penalty for an offense

against the sovereign State, the offender’s past con-

duct, including the commission of an offense against

another sovereign, may be taken into account even

though the offender has been pardoned by such other

sovereign. The Constitution, which confers upon the

a

President the power to pardon, does not confer upon

him power to wipe out guilt. In measuring the

punishment of a person who is convicted of an

offense against this State, after he has been convicted

of an offense against the United States, the State

may determine as it sees fit both the effect that

shall be given to the previous conviction and the

effect that shall be given to a presidential pardon

for that offense.”

In this part of his Petition, (irossgold principally

relies on Ex Parte Garland, 4 Wall. 333. But that decision

can be distinguished readily and is not persuasive.

It involved a Federal offense and a Presidential pardon.

It considered the effect of that pardon on the right of

the attorney to practice in the Federal courts. It is not

authority on the effect of such a pardon on discipline

already imposed by a State court. It is clear that such

a pardon has no effect. People ex rel. Prisament vy.

Brophy, (1941) 287 N. Y. 132, 38 N.EK. 2d 468, 470, 471,

certiorari denied, 317 U.S. 625, supra; Ka parte Quarrier

and Fitzhugh, (1870) 4 W. Va. 210, 227; U.S. v. Donofrio,

(1971, C. A. 5th) 450 F2d 1054, 1056.

Sam, een

CONCLUSION

Grossgold’s Petition for Certiorari is not well founded

and should be denied.

Respectfully submitted,

Joun F. McCartuy

100 West Monroe Street

Chicago, Illinois 60603

Heretofore appearing as amicus curiae in the

Supreme Court of [llinois for the Board of

Managers and the Committee on Grievances

of The Chicago Bar Association, Sitting as

Commissioners of the Supreme Court of

5 i under Illinois Revised Statutes c 110A

Are OOPS IGE SBE.

PYLE LAE

OPES BOS Tear ey

— la —

APPENDIX A

Strate Or ILLINo!Is

Orrice OF

Clerk Of The Supreme Court

SPRINGFIELD

62706

Justin Taft Telephone

Clerk Area Code 217

782-2035

November 26, 1974

Mr. John MeCarthy

Counsel

Chicago Bar Association

100 W. Monroe St.—Room 2000

Chicago, Til. 60603

No. 46062—In re: Nathan Grossgold, an Attorney. Infor-

mation.

You are hereby notified that the Supreme Court to-

day denied the petition for rehearing in the above en-

titled cause.

Very truly yours,

Justin Taft

Clerk of the Supreme Court

—_

APPENDIX B

Orrice OF

Clerk Of The Supreme Court

State Or ILiur1no1s

SPRINGFIELD

62706

January 15, 1975

Mr. Robert S. Bailey

Mr. James R. Bellmann

Attorneys at Law

53 West Jackson Blvd.

Chicago, Illinois 60604

In re: Nathan Grossgold. No. 46062

Gentlemen :

The Supreme Court today made the following announce-

ment concerning the above entitled cause:

“The motion by Nathan Grossgold for reconsidera-

~ tion of the order entered September 17, 1974, and

to impose a lesser disciplinary action, or, in the

alternative, to consider this motion as a motion for

reinstatement is denied.”

Very Truly yours,

‘lerk of the Supreme Court

CLW :jae

ec: John F. McCarthy

Carl H. Rolewick

ae, eee

APPENDIX C

See, 751. (SUPREME COURT RULE 751). PROCEED-

ING TO STRIKE ATTORNEY’S NAME

FROM ROLL

(a) The Board of Governors and its existing Com-

mittee on Grievances, and their successors as such, of

the Illinois State Bar Association, and the Board of

Managers and its existing Committee on Grievances, and

their successors as such, of the Chicago Bar Associa-

tion, are hereby appointed as Commissioners of the

Supreme Court and are empowered and charged to make

investigations from time to time, as may be necessary,

concerning practices of attorneys at law which tend to

defeat the administration of justice or to bring the

courts and the legal profession into disrepute. To this

end, these commissioners are further empowered and

charged to receive, entertain, inquire into, and take proof

concerning complaints against attorneys at law of this

state, and may call to their assistance in such inquiries

other members of the bar or bar associations of the

state, may make all necessary rules and regulations con-

cerning the conduct of such inquiries, and may them-

selves, or by such committees as they may designate,

take the evidence of witnesses, as hereinafter provided.

(d) Upon application by such commissioners, or com-

mittees, the clerk of the Supreme Court shall issue writs

of subpoena ad testificandum, writs of subpoena duces

tecum, or dedimus potestatem to take depositions. The

commissioners and their committees are empowered to

take and transcribe the evidence of witnesses, who shall

be sworn by a commissioner or any person authorized

by law to administer oaths, and the commissioners shall

report to the Supreme Court the failure or refusal of

any person to attend and testify in response to any

subpoena. The hearings before the commissioners or com-

PRE EI t OAHEE A Ne =

pan

mittees shall be private unless the respondent shall re-

quest that they be public.

(e) At the conclusion of a hearing upon any com-

plaint against any attorney before such commissioners

or committees, the Board of Governors or Board of Manag-

ers, as the case may be, shall, if action by “he Supreme

Court of any kind is recommended, make report to the

Supreme Court of its conclusions of fact and law con-

cerning the complaint, answer and proof; and thereupon

such matters shall stand for hearing and disposition in

this Court. Such report shall be entered on the docket

and entitled in the name of the respondent. Upon the

filing of any such report with proof of service of a copy

thereof on the respondent in the same manner as briefs

are required by rule of the Supreme Court to be served,

the respondent therein shall have ten days from the date

of such filing to file exceptions thereto, and shall, within

twenty days after the filing of such exceptions, bring

to the Supreme Court the record and proofs, or such

parts thereof as may be necessary to enable the Court

to pass upon such exceptions. The commissioners, upon

request of the respondent and payment of the actual

cost thereof, shall certify to the Court the proofs and

record, or such parts thereof as the respondent may

designate. With such record the respondent shall file a

printed brief and designation of excerpt from record

or an abstract as provided in rules 341, 342, and 344.

(f) Upon the filing of exceptions to such report by

the respondent, the Board of Governors or the Board of

Managers, as the case may be, shall designate a member

of the bar to file such certificates of proof, additional

designation of excerpts or additional abstract, and brief,

as may be deemed necessary fully to advise the Court.

Such additional designation or additional abstract, if any,

and brief shall be filed within twenty days after the

filing of the respondent’s designation or abstract and

brief, and respondent may file a reply brief and excerpts

from record in 10 days. The number of excerpts or ab-

stracts and briefs and the manner of their duplication

and service shall be governed by rule 344.

» . a ORL NRE COE ANA PEA AIRE

ey een

APPENDIX D

UNITED STATES of America,

Plaintiff-Appellee,

v.

Melvin S. BORNSTEIN, Defendant-

Appellant.

UNITED STATES of America,

Plaintiff-Appellee,

v.

Nathan GROSSGOLD, Defendant-

Appellant.

Nos. 17860, 17861

United States Court of Appeals,

Seventh Circuit.

June 9, 1971.

Certiorari Denied Oct. 12, 1971.

See 92 S.Ct. 88.

Before KILEY and CUMMINGS, Circuit Judges, and

MORGAN, District Judge.’

KILEY, Circuit Judge.

Defendants Bornstein and Grossgold were each con-

victed by a jury under nine counts of an indictment charg-

ing violation of 18 U.S.C. § 1341 in the use of mail to

further a scheme to defraud. Both have appealed. We af-

firm.

Bornstein and Albert Rosenthal, a “relative” of Born-

stein, formed the Whitehall Insurance Company in 1961.

In May, 1961, they acquired an inactive insurance com-

pany and activated it under the name of Whitehall Mutual

ABA ee Vek ot oe

— 6a —

Fire and Marine Insurance Company. Bornstein’s brother-

in-law, Grossgold, a New York attorney, became claims

manager of Whitehall in 1962. In March of 1963 his em-

ployment by Whitehall was terminated, but as an inde-

pendent attorney working in the Whitehall office building

he continued to handle subrogation claims for Whitehall

against other insurance companies on a percentage basis.

It is upon the falsity in documents supporting the subro-

gation claims filed by Grossgold that the charges of fraud

before us are based.

Whitehall ceased doing business in December of 1963,

and its assets and records were turned over to the [IIli-

nois State Bureau of Liquidations in November of 1964.

The indictment before us was filed in June, 1968.

Each defendant contends that the evidence is insuffi-

cient to sustain the verdict against him; that he was

denied his constitutional right to a speedy trial; that re-

versible error was committed by the court’s denial of

severance of his trial from that of the other; and that

he was prejudiced by denial of continuance to obtain

another lawyer. \

1.

[1] Defendants contend there is insufficient evidence

to support the guilty verdicts. We see no reason to dis-

cuss in detail the abundant proof adduced at trial to

sustain the verdict. The fraudulent scheme was shown

by the testimony of Palumbo, one of the garage owners

involved in the scheme, that either Bornstein or Gross-

gold would call him to make arrangements for repair

of a damaged automobile covered by a Whitehall policy.

After examining the car, Palumbo would make up a

written estimate for the cost of repairs and convey it to

Whitehall, and an agreement would be made between

Palumbo and Bornstein or Grossgold to repair the auto-

mobile at a cost lower than the estimate. The estimate,

marked “paid,” would then be sent to the insurer of the

person whose car collided with that of Whitehall’s insured,

along with a subrogation claim written by Grossgold.

= 74 —

Whitehal] would then be paid the amount stated on the

estimate.

This testimony was fully corroborated by Whitehall’s

files. For example, insured Baugh’s file, used in proof of

Count V, contains an estimate on Palumbo’s stationary

in the amount of $190.25, marked “paid;” a cover letter

written by Grossgold to Economy Fire and Casualty Co.,

insurer of the driver of the other automobile involved in

the Bavgh collision, referring to “the paid repair bill in

the amount of $190.25” which was sent with the letter ;

and a check from Economy in the amount of $190.25

made payable to Baugh and/or Grossgold. The file also

shows a bill from Palumbo for “agreed price $150.00”

minus “100.00 Ded.,” with a balance due of $50.00; a

check made payable to Palumbo in the amount of $50.00

signed hy Melvin Bornstein on behalf of Whitehall; and

a letter to insured Baugh directing him to pay his $100.00

deductible directly to Palumbo. Palumbo testified that he

and Whitehall agreed on $150.00 to make that particular

repair, and that he received $100.00 of that amount from

the insured (the policy had $100.00 deductible) and $50.00

from Whitehall. The pattern was followed, generally,

with respect to each count in the indictment.

There is ample proof to justify the jury in inferring

that both Bornstein and Grossgold knowingly partici-

pated in the proven scheme to defraud. In addition to

Palumbo’s testimony as to the active participation of both

Bornstein and Grossgold, there is the testimony of Pekin,

another Whitehall employee who occasionally wrote letters

regarding subrogation claims, that Bornstein told him

that the reason the subrogation claims were inflated was

to cover legal costs and handling expenses. And the

record also contains a note written by Bornstein to Gross-

gold directing Grossgold to see if he could collect on

another subrogation claim, and if he could, Whitehall

would “pay and get subro agreement for better amount.”

There is also evidence that Grossgold, who directly

handled the subrogation claims, wrote a note to an unin-

sured motorist whose car had collided with that of a

native

Whitehall insured, concerning arrangements for payment

of a subrogation claim in the amount of $500.00. The

top of the Whitehall file in that case reflected that total

payments by Whitehall were only $350.00, and Gross-

gold admitted that he had written on the Whitehall file

a notation of a conversation with the uninsured motorist.

And the note from Bornstein and another note from

Palumbo indicated that Grossgold was aware that White-

hall sent out inflated subrogation bills, even if Grossgold

did not pursue the claims in those particular cases. There

is substantial evidence that both Bornstein and Gross-

gold knew the subrogation claims were fraudulent.

In imprisoning Bornstein for two years, and merely

fining Grossgold, the district court evidently had in mind

the pro rata fraudulent participation of defendants in

the several offenses. The distinction between the defen-

dants’ guilt shown in sentencing, however, is no indica-

tion that the joint trial resulted in the jury’s convicting

Grossgold merely because of his association with Born-

stein. Rather the sentences show the court’s determina-

tion of the degree of guilt of each defendant.

IL.

{2] The crimes charged in the indictment are alleged

to have occurred between June 17, 1963 and December 4,

1963. Whitehall voluntarily turned over its books and

records to the Illinois Department of Insurance at the

end of 1963.7 The Department alerted the postal authorities

who in 1965 or 1966 began the investigation which led to

the indictment. The investigation, involving over 140 files,

ended on April 18, 1968. The indictment followed on June

18, and the jury returned its verdicts March 10, 1969.

During the investigation interviews were conducted of

Whitehall’s insureds and of persons insured by other

*The books and records were warehoused by the De-

partment until a liquidator for Whitehall was appointed

in 1965 and the records removed for examination by the

Department.

DRM IOREL ES SE LIAB ELS

ais

companies. Hoffman, a claim adjuster for Whitehall, died

in Jenuary, 1963. Zizzo, owner of one of the garages al-

legedly involved in the scheme, was interviewed in March,

1968, and died in October, 1968. Katz, another Whitehall

adjuster, was interviewed in February, 1968, and died

in November, 1968. The investigation ended and the re-

port was given the United States Attorney in April, 1968.

Postal Inspector Potter who conducted the investigation

filed an affidavit in sunport of the government’s response

to defendants’ motion to dismiss the indictment for the

delay. In this affidavit, Potter stated that Zizzo told him

at the March, 1968 interview that he had, at Bornstein’s

request, “inflated bills” for repairs and either mailed or

delivered them to Bornstein; and that Katz told Potter

at the February interview that he worked for Bornstein,

that Bornstein and Grossgold took care of all the claim

work and that Katz always turned over the work to Born-

stein. No written statements were signed by Zizzo or

Katz and neither testified before the grand jury.

Both defendants contend that this delay between the

time the offense was committed and the day the indictment

was returned denied defendants the right to a speedy

trial and to due process. Both defendants rely upon

Dickey v. Florida, 398 U.S. 30, 90 S.Ct. 1564, 26 L.Ed.2d

26 (1970), and the prejudice resulting from the delay.

Specifically, the prejudice relied upon is the death of Zizzo

and Katz, and the destruction of part of Grossgold’s

records—all of which events occurred between 1965 and

1968.

We see no merit in the contention that the district

court committed reversible error in denying the motion

to dismiss. The statute of limitations would have run

against the offenses if indictment was delayed four days

longer. But this is not conclusive, United States v. Hag-

gerty, 419 F.2d 1003 (7th Cir. 1969). See United States v.

Ewell, 383 U.S. 116, 86 S.Ct. 773, 15 L.E.2d 627 (1965).

It had not run when the indictinent was filed, United

%% - . , i ae SS

So RARE ROIS Asan DEAE LMLE *

— on

States v. Panczko, 367 F.2d 737 (7th Cir. 1966), and

while it is possible that a delay within the statute of

limitations could be so unreasonable and prejudice so

great that due process would be violated, United States

v. Deloney, 389 F.2d 324 (7th Cir. 1968), this is not such a

case.

The affidavit of Potter indicates that both Katz and

Zizzo would have incriminated Bornstein if they were

alive and had testified. Their death prior to trial was in

effect prejudicial to the prosecution and not the defense.

And Grossgold’s indirect benefit from Zizzo’s and Katz’s

statements that they dealt with Bornstein was minimal in

view of the ample testimony of Grossgold’s main partici-

pation, through his work as attorney in preparation of

the subrogation claims. Also, Hoffman’s testimony would

have been of no value to the defense since he died in

January of 1963, a time prior to most of the activities

alleged in the indictment. And we are unable to see how

Grossgold’s destruction of his records could prejudice

him under the facts here.

Dickey v. Florida, supra, does not compel a decision

here that the delay was a violation of defendant’s right

to a speedy trial. In Dickey there was an eight year delay

between arrest and trial, during which Dickey continually

demanded trial, and the prosecutor provided no good

reason for rejecting the demands. Here there was a two

year delay in discovery of the possible fraud and a three

year delay during which the postal authorities examined

140 files and selected 29 files for further investigation.

This delay is not unusual in a case which requires ex-

tensive investigation of documents. We cannot say that

it constituted “[d]Jeliberate governmental delay designed

to harm the accused” condemned in Dickey. This case

is closer to United States v. Lee, 413 F.2d 910 (7th Cir.

1969). There we rejected a similar claim on the basis

that testimony at the trial showed no prejudice and de-

fendant was able to recall specific facts concerning the

incident in question.

—lla —

III.

[3] Each defendant also claims reversible error in

the court’s denial of each defendant’s motion for server-

ance. This ruling was made within the court’s discretion.

United States v. Echeles, 352 F.2d 892, 897 (7th Cir. 1965).

We see no abuse of discretion. Implicit in each one’s argu-

ment on this point is a claim of prejudice in being tried

with the other—the culprit. Bornstein’s defense was good

faith reliance on attorney Grossgold who “had complete

knowledge of the files.” Grossgold’s argument is that

trial with Bornstein exposed him to a finding of guilt by

association with Bornstein and Whitehall, since he was

an attorney for Whitehall and tenant of the office space

in the same building and relied upon bills prepared

Bornstein.

Mutual hostility between the defendants is evident.

But that does not alone control the court’s discretion on

the severance motions. Dauer v. United States, 189 F.2d

343, 344 (10th Cir. 1951), cert. den., 342 U.S. 898, 72

S.Ct. 232, 96 L.Ed. 672. The district court was not required

on the showings made to conclude that the respective as-

serted defenses precluded a fair trial to each. See United

States v. Hutul, 416 F.2d 607, 620-621 (7th Cir. 1969).

Although each sought to escape conviction by placing the

guilt on the other, their defenses were actually compati-

ble since both claimed ignorance of the transactions.

Defendants cite United States v. Echeles, 352 F.2d 892

(7th Cir. 1965) and Campbell v. United States, 122 U.S.

App.D.C. 143, 352 F.2d 359 (1965). Those cases are dis-

tinguishable. In Echeles, a co-defendant made a state-

ment which could have exculpated the defendant and this

court ordered a severance. In Campbell, the evidence

against one defendant was overwhelming and the evidence

against the other insignificant. The court ruled that the

defendants’ trial should be severed because the person

against whom the evidence was slight could be prejudiced

by being tried with the other defendant. The showings

ELE RAO ROR aE! neg Ene Pa mh 8

=

made by the defendant in both those cases went far

beyond a showing of hostility.

IV.

[4] Both Bornstein and Groussgold claim prejudice in

denial of their motion for a continuance in order to obtain

an additional attorney. They argue that representation

by the same attorney prejudiced each. We see no merit

in this point. The motions for separate trials were made

November 23, 1968, and a 60 day continuance was sought

to obtain an additional attorney. Although the motion was

not granted, the trial began more than 60 days after the

motion was made. There was ample time to obtain the

attorney before trial to avoid what prejudice, if any,

resulted from lack of an additional attorney.

For the reasons given, the judgment is affirmed.

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