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United States v. Platt.

decided.: April 24, 1950.


Author: Hand

Before AUGUSTUS N. HAND, CLARK and FRANK, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

The defendant was convicted, after a trial before a jury, of violating § 1341 of Title 18 of the United States Code, which so far as pertinent reads as follow:

" § 1341. Frauds and swindles

"Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, * * * for the purpose of executing such scheme or artifice or attempting so to do, * * * knowingly causes to be delivered by mail according to the direction thereon, * * * any * * * matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both." 18 U.S.C.A. § 1341.

All counts of the indictment under which the defendant was convicted are identical, except that they charge different mailings.

Each count alleges that the defendant devised a scheme and artifice to defraud in the sale of hot water heaters to be attached to cold water faucets; that these heaters were offered to the public by advertisements which stated that they gave "hot water when and where you want it, instantly" and that if purchasers were not completely satisfied the purchase price would be refunded upon the return of the hot water heater; and that it was a part of the scheme to defraud that the defendant would convert money sent for purchases without furnishing any merchandise in return.

The evidence in support of conviction was to the effect that the defendant was the president of Marvel Sales Corporation; that he opened a bank account on its behalf in the National Safety Bank and Trust Co. where he or Frank Schere, the vicepresident, were authorized to sign for the company; that the defendant opened a second bank account in the Irving Trust Company where, under a corporate resolution, he alone was authorized to act for the corporation in banking transactions; also that he, as president of the Marvel Sales Corporation, directed a letter to the Postmaster at Grand Central Station authorizing the payment of money orders made out to the Marvel Sales Corporation either to himself or to one of two employees. There was also evidence that Platt controlled the corporation, arranged the advertising program, hired and discharged employees, signed the corporation checks, and paid its rent by such checks.

Twenty-two witnesses testified that when transmitting an order for a heater they sent either a check or a money order but never received any merchandise for their remittances, and that all their letters of inquiry addressed to Marvel Sales Corporation remained unanswered. Several of these letters of inquiry were registered letters delivery of which was established. There was proof that six of the money orders were cashed at the Post Office, and that sixteen payments - consisting of twelve checks and four money orders - were deposited in the bank accounts of the Marvel Sales Corporation upon receipt at its office.Four witnesses testified that heaters which they received were unsatisfactory. Three of them said that they returned the heaters but obtained no refund. One said that he cast aside the heater as unsatisfactory without returning it.

The defendant asks for a reversal of the judgment against him because of alleged errors by the trial judge. The only one of these errors requiring any serious attention is found in a portion of the charge which we quote as follows:

"Jasper, the advertising agent for the defendant, testifying as a witness for the Government, described in some detail his relations with the defendant since, as I recall it, 1945. He said that prior to the launching of the Marvel Corporation * * * the defendant had been engaged in selling a heater similar to the one involved in the present case under the trade name 'The Kem Company,' and I think it is conceded that that company was not an incorporated company, but it was a name used by the defendant personally for the purpose of carrying on this business prior to the organization of the Marvel Sales Corporation. Jasper also testified that the heater sold by the Kem Company was advertised extensively throughout the United States. He told also about the advertising of the Marvel heater in newspapers and magazines throughout the country. He said that he dealt exclusively with the defendant in the preparation of the advertising and that all copy was approved by the defendant before being sent to the newspapers or magazines for printing. The general character of the advertising of the heater appears in the exhibits in evidence, which were identified either by Jasper or by other witnesses in the case.

"There is testimony also that the defendant was the president and the dominant official of the Marvel Sales Corporation during the period involved, that he opened the corporation's bank accounts and signed all checks, that he personally directed the affairs of the corporation, paid the rent of the office at 18 East 41st Street, and was actively engaged in the operation of the business. Now, under these circumstances, I charge you as a matter of law that the defendant cannot shield himself behind the corporation."

The judge had previously given full instruction to the jury as to the proof required if the defendant was to be convicted for violation of the statute. These instructions were as follows:

"Under [the] statute there are two elements of the crime, namely, one, a scheme intended to defraud and second, an actual use of the United States Mails. A scheme ordinarily implies some degree of planning. It does not, however, require any formal action to make it effective. It may be shown by circumstances or inferences derived from proven facts. The particular kind of scheme denounced by the statute is one to defraud or for obtaining money or property by means of false or fraudulent representations or promises. There is, thus, included everything designed to ...

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