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United States v. Kertess

January 6, 1944


Author: Frank

Before L. HAND, CHASE, and FRANK, Circuit Judges.

The defendant Kertess was tried on four indictments, consolidated for purposes of trial, two of which charged the substantive crime of exporting platinum group metals without licenses, in violation of a Presidential Proclamation made pursuant to 50 U.S.C.A. Appendix § 701, and two of which charged conspiracy, with named defendants and others unknown, to export such metals in violation of 18 U.S.C.A. § 88. The defendant Chemical Marketing Company, also indicted in all four indictments, pleaded nolle contendere; other defendants, named only in the conspiracy indictments, failed to appear and the case was severed as to them for purposes of trial. The jury returned a verdict of guilty on which the trial judge entered judgment, fining the defendant Kertess $1,000 on each indictment, and also sentencing him to eighteen months on each indictment, the sentences to run consecutively. From that judgment, defendant appeals.

50 U.S.C.A Appendix § 701, enacted July 2, 1940, 54 Stat. 714, provides that the President, "in the interest of National Defense," may by proclamation prohibit or curtail the exportation of any military equipment or munitions or component parts thereof or material or supplies necessary for the manufacturing, servicing or operation thereof, "except under such rules and regulations as he shall prescribe"; the proclamation must describe the articles or materials included in the prohibition or curtailment contained therein; in case of the "violation of any provisions of any proclamation, or of any rule or regulation issued hereunder," a violator, upon conviction, shall be punished by a fine of not more than $10,000 or by imprisonment for not more than two years, or by both such fine and imprisonment. On July 2, 1940, the President, pursuant to that statute, promulgated Proclamation No. 2413 (5 Fed.Reg. 2467) in which he prohibited the export, inter alia, of "platinum group metals" except "when authorized in each case by a license" obtained from the Secretary of State authorizing such exportation "in accordance" with "rules and regulations" prescribed by the President. On the same day the President issued regulations (5 Fed.Reg. 2469) which prohibited the exportation of such metals "unless a license has been issued by the Secretary of State." The regulations set forth in detail the provisions of a blank form of application for such a license and provided that an application should become a license when countersigned by the Department of State. The prescribed form of application stated: "Unsigned applications or applications which omit essential information called for in the numbered spaces will be returned * * * Changes in the information set forth in licenses * * * can be effected by amendments which can be made only by the Department of State or by the Collectors of Customs or Postmaster acting under the specific instructions of the Secretary of State"; in the "numbered spaces" the applicant was required to state "the name of the applicant," the "description of articles or commodities to be exported," the "consignor in United States," the "seller in United States," the "consignee in foreign country," the "purchaser in foreign country". The form stated, "License is hereby granted to the applicant mentioned herein * * * on the following terms and conditions: This license is not transferable and is subject to revocation without notice." The regulations also so provided.

Defendant was the President of Chemical Marketing Company, with offices in New York City, and was the New York representative of the Deutsche Gold Und Silber Scheideanstalt of Frankfort, Germany, with which G. Siebert, of Hanau, Germany, and Leukon, A.G., a Swiss corporation, were affiliated.

FRANK, Circuit Judge.

1. The first indictment related to the so-called Barth transaction, the facts concerning which are as follows:

October 22, 1940, Leukon cabled defendant from Switzerland, asking for quotations on fifteen ounces of rhodium, fifteen ounces of iridium and one hundred fifty ounces of palladium (all being "platinum group metals"); deliveries were to be made to one Barth.On the same day, defendant replied that he had informed BArth in Cali, Colombia. On October 29, 1940, he further replied, quoting the price and asking that payment be made to the Irving Trust Company, New York. Leukon forwarded these funds as requested. A sale of these metals to Leukon was entered on the books of Chemical Marketing on October 31. Defendant arranged on October 31 for the purchase of these metals and completed the purchase on November 8. He purchased the palladium from a reputable dealer who was dead at the time of the trial. The rhodium and iridium defendant bought from a dealer to whom defendant falsely represented that he was not buying for export. At that time, dealers in platinum group metals sold them only for domestic consumption and customarily asked whether such metals sold by them were to be used domestically.

Some time in October, 1940, defendant had told Heemsoth, president of Heemsoth-Kerner Corporation, a concern which acted as a customs broker and freight forwarder, that defendant "had a shipment of these metals * * * to ship to Colombia"; that they were not to be shipped in the name of Chemical Marketing Company, but that Heemsoth should arrange to have them shipped by, and in the name of, Western Commercial Company, which was to secure the export licenses and other necessary documents, and "to be the only parties known in the transaction"; and that Western Commercial was to buy the metals with funds supplied by defendant. Heemsoth "broached the whole subject" to Gross, president of Western Commercial, telling him that defendant had "some reason for not to wish to handle" the transaction "directly." Gross "was agreeable to proceed in the transaction." On October 21, 1940, Heemsoth prepared applications for export licenses for fifteen ounces of rhodium, fifteen ounces of iridium and one hundred fifty ounces of palladium, and Gross signed them in the name of Western Commercial as applicant. The applications stated that Western Commerical was the consignor and seller, that the purchaser was Barth of Colombia, and that the licenses were to be sent to Heemsoth. On October 21, Heemsoth forwarded the applications to the State Department which on October 23 countersigned them, so that they became licenses, and sent them, as requested, to Heemsoth. The license applications and the licenses were on the forms prescribed by the regulations. Each of the licenses accordingly stated, "License is hereby granted to the applicant herein mentioned * * * on the following terms and conditions: This license is not transferable and is subject to revocation without notice." Defendant did not supply Western Commercial with any funds; Western Commercial received no order for these metals from Barth or anyone else. Gross had never met defendant and had had no previous dealings with defendant's company, and in this transaction had no dealings with defendant or his company except through Heemsoth.

On October 29, after Heemsoth received the licenses from the State Department, he so advised defendant who then told Heemsoth to send them to defendant as "he would accomplish the shipping of the merchandise himself" and said that "Gross could be out of the picture." On November 13, defendant wrote Heemsoth concerning the licenses "granted in the name of Western Commercial" and saying, "We would like to have this shipment go forward as early as possible and would appreciate your prompt attention in securing Export Declaration and other necessary papers. We attach hereto pro forma invoice covering this lot; such invoice will have to be made on the forms of Western Commerical since the license is in their name. Kindly send us the necessary papers as soon as possible, and we shall despatch the parcel promptly." On November 18, Heemsoth's company prepared the "Shipper's Export Declaration," required by the President's regulations of July 2, 1940, to be filed with the Collector of Customs; in the blank space in the form of declaration calling for "name of actual shipper" there was inserted the statement, "Shipment by Western Commercial Co.," and Barth, Cali, Colombia, was shown as the consignee. Heemsoth's company sent this declaration to defendant on November 18 with a bill for services. The same day, defendant, using the licenses and the false export declaration, exported the metals to Barth on November 19. On the same day, defendant so advised Leukon by letter. The licenses accompanied the shipment and were checked against the export declaration when it was exported, at Miami, Florida, by the deputy Collector of Customs; had the declaration not corresponded with the licenses, export would not have been permitted. Barth, upon receiving the shipment, promptly reshipped it to Chili whence it was at once sent to Rome, Italy, consigned to Siebert.

Gross never received the licenses; neither he nor Western Commercial assigned or attempted to assign them; neither they nor anyone else notified the State Department that Western Commercial did not intend to use them, although Gross, because not supplied with funds, "withdrew from the transaction." Heemsoth, when on the witness stand, asked whether there was anything unusual about defendant's request to have this shipment made, testified, "The only unusual part of it was that it was not to be shipped in his name."

The regulations plainly contemplated that a license was to be issued only to the particular person named in the application; the licenses were not transferable nor were they transferred. Neither defendant nor his company, Chemical Marketing Company, were named in the licenses, those names having been intentionally and deliberately withheld in the applications. The defendant, having exported without licenses, violated the President's regulations and therefore violated 50 U.S.C.A. Appendix § 701.The conviction for this exportation was porper.

The conviction, based upon the second indictment under 18 U.S.C.A. § 88, for conspiracy in connection with the Barth transaction, was also without error, since the jury could properly conclude that the defendant conspired with Heemsoth. For it could properly infer that Heemsoth knew that defendant, the real seller and consignor, intended to export without the legally required licenses and that Heemsoth actively participated in the commission of the crime. That Heemsoth was not named in the conspiracy indictment was at most an immaterial variance.

2. The two other indictments have to do with an illegal export, and a conspiracy with respect thereto, relating to the so-called Mueller transaction, the facts of which are as follows:

In June, 1942, Murray, a federal internal revenue agent, was engaged in auditing the income tax returns of Chemical Marketing Company. Being dissatisfied with the entries on its books concerning certain rhodium, Murray spoke to the defendant about the matter. Defendant then made a statement of facts to Murray which, on June 26, 1942, defendant set forth in an affidavit signed by him on behalf of, and as president of, Chemical Marketing. At that time, defendant had not been charged with any violation of 50 U.S.C.A. Appendix § 701, nor was there ...

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