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UNITED STATES v. CARROLL

September 21, 1956

UNITED STATES of America
v.
Robert J. CARROLL and Sheba Bracelets, Inc., Defendants



The opinion of the court was delivered by: PALMIERI

In August, 1952, a grand jury brought an indictment, charging Sheba Bracelets, Inc., Robert Carroll, Samuel Diamant, Louis Fisher and Emil Popper with conspiring to use and acquire gold so as to violate the gold laws. Act Oct. 6, 1917, 40 Stat. 415, as amended, Act Dec. 18, 1941, 55 Stat. 839, 12 U.S.C. § 95a (1952), 12 U.S.C.A. § 95a, Exec. Order Aug. 28, 1933, No. 6260, as amended, Exec. Order Jan. 15, 1934, No. 6560, 12 U.S.C.A. § 95a note. *fn1" It also charged Sheba Bracelets Inc. and Carroll with two substantively different misrepresentations made on five different occasions on enduse certificates for semi-processed gold, in violation of Act June 25, 1948, 62 Stat. 749, 18 U.S.C. § 1001 (1952). *fn2" In 1956, the Government severed its case with respect to Popper and Diamant and with respect to misrepresentations made on three of the above dates. In September of this year the trial began before me.

At the end of the Government's case, it moved to dismiss against the defendant Fisher. This motion was granted. Defendants Carroll and Sheba Bracelets, Inc., (Sheba) then made motions to dismiss the conspiracy count for the reason that the Government had not proved anyone to be conspiring with Carroll, to strike the counts charging misrepresentation for being duplicitous, to suppress the bulk of the Government's evidence on the ground that it stemmed from an illegal search and seizure, and to dismiss all the counts for insufficiency of evidence. I believe that defendants have merit on only the conspiracy count, and, therefore, only this motion will be granted.

I. Conspiracy

 The evidence has failed to reveal the ownership of Sheba Bracelets, Inc. Because of its dominance by Carroll, and because of the absence of evidence inculpating anybody else in the corporation, a conspiracy, if it is to be found, must be found between the defendant Carroll and the business institution he used to carry out his purposes. Such a finding, it seems, would over-extend the fiction of corporate personality.

 It is true that corporations often have been held to be parties to a conspiracy. E.g., Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 1951, 340 U.S. 939, 71 S. Ct. 487, 95 L. Ed. 678; United States v. Yellow Cab Co., 1947, 332 U.S. 218, 67 S. Ct. 1560, 61 L. Ed. 2010; United States v. MacAndrews & Forbes Co., C.C.S.D.N.Y.1906, 149 F. 823, writ of error dismissed, 1908, 212 U.S. 585, 29 S. Ct. 681, 53 L. Ed. 661. However, in all such cases, one corporation had been in concert with another or with individuals who were not members of the corporation. Cf. Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., supra (affiliated corporations under common ownership and control but holding themselves out as competitors); United States v. Yellow Cab Co., supra (same). The rule does not extend to situations similar to the facts at hand. In Nelson Radio & Supply Co. v. Motorola, Inc., 5 Cir., 1952, 200 F.2d 911, certiorari denied, 1953, 345 U.S. 925, 73 S. Ct. 783, 97 L. Ed. 1356, the Government brought an action for treble damages under section 1 of the Sherman Act of 1890, 26 Stat. 209, as amended, Act Aug. 17, 1937, 50 Stat. 693, 15 U.S.C. § 1 (1952), 15 U.S.C.A. § 1, in which it charged a corporation with conspiring with its officers, employees, representatives and agents to restrain trade. The court dismissed the action, holding that the acts and states of mind of the corporate agents were imputed to the corporation and that a corporation could not conspire with itself. See also Lockwood Grader Corp. v. Bockhaus, 1954, 129 Colo. 339, 270 F.2d 193 (Civil conspiracy -- two corporations and an agent cannot be conspirators where the agent is the sole actor for the two corporations); United States v. Santa Rita Store Co., 1911, 16 N.M. 3, 113 P. 620 (criminal conspiracy -- same). But cf. State v. Parker, 1932, 114 Conn. 354, 158 A. 797 (conspiracy to commit fraud among three directors and their corporation); Potter Press v. C. W. Potter, Inc., 1939, 303 Mass. 485, 22 N.Ed.2d 68 (same, conspiracy to compete unfairly).

 The purpose behind not merging conspiracy into a completed crime, as happens with attempts, is separately to penalize and to deter criminal organization, an evil quite apart from the substantive delicts which more likely than not result from such organization. This purpose is served by holding combinations of corporations, and often combinations of directors of one corporation, guilty of conspiracy. Cf. Nelson Radio & Supply Co. v. Motorola, Inc., supra (delict is combination of businesses, not combination of officers of one business). However the policy does not apply when one man uses a corporate form to carry out his crime. There is no organization and no one other than the sole criminal to deter or to punish. In effect, a man would be more severely punished if he chose to commit his crime by using a corporate form than he would be if he committed it through another business device. If the Government's theory were valid, it would mean that any individual corporate officer, who committed an illegal act within the framework of his corporate duties, also conspired with the corporation to commit that act. I have found no support for such an assertion and neither counsel has cited any. On the contrary, the traditional understanding of the term conspiracy repels such a notion.

 This reasoning is particularly true in the case at hand. The Government failed to prove the conspiratorial web among the principals; therefore, it seeks to accomplish the same purpose by breathing life and purpose, and thereby creating the requisite independent personality, into an institution manipulated solely by the individual from whom independence is required for criminality. This, the prosecution cannot do and it must fail on this count.

 II. Duplicity

 The two different types of misrepresentations, charged by the grand jury, are as follows: Defendants stated (a) that the industry, profession or art in which they were engaged requiring the use of gold was manufacturing jewelry, and (b) that the gold which was sold to Sheba Bracelets, Inc. as a result of the above representation would be used by it in the industry, profession or art in which it was regularly engaged. Each of these alleged misrepresentations forms a separate count, and since end-use certificates on two dates are in question, four counts are involved.

 I believe that the counts are not duplicitous. Sheba might have been regularly engaged in jewelry manufacturing and yet have acquired gold at a particular date for a purpose other than use in the profession, industry or art in which it was regularly engaged. The converse might also be true. Cf. United States v. Michelson, 2 Cir., 165 F.2d 732, affirmed 1948, 335 U.S. 469, 69 S. Ct. 213, 93 L. Ed. 168 (to 'offer' a bribe is a different crime from to 'give' a bribe where statute *fn3" reads, 'Whoever shall promise, offer, or give, * * * any money * * *'). The instant statute is sufficiently broad to have each misrepresentation stand as a separate crime (see footnote 2, supra).

 III. Search and Seizure

 Both parties have submitted briefs and affidavits on this issue. I accept the Government affidavits, as mentioned below, as a reliable account of what transpired.

 Defendant complains that certain papers were seized and statements taken pursuant to an unauthorized arrest. He further complains that he was kept incommunicado and lengthily questioned between his arrest and arraignment, but not only does this charge lack substantiation, but, as far as I can see, the Government gained nothing from this questioning. The Government attests that no aid to its case resulted from these papers, and since defendant does not indicate anything to the contrary, indeed does not disclose what papers were taken, this part of defendant's motion is denied.

 The statement taken, which was introduced in evidence, was to the effect that defendant would not say anything about the gold in which he allegedly was dealing for fear or implicating other people. This was an admission against interest, and since it was made well before Carroll could have been illegally detained, assuming for the moment that he was detained, it is admissible whether or not the arrest was legal. Cf. United States v. Carignan, 1951, 342 U.S. 36, 72 S. Ct. 97, 96 L. Ed. 48; United States v. Mitchell, 1944, 322 U.S. 65, 64 S. Ct. 896, 88 L. Ed. 1140; United States v. Leviton, 2 Cir., 1951, 193 F.2d 848, certiorari denied, 1952, 343 U.S. 946, 72 S. Ct. 860, 96 L. Ed. 1350 ('subsequent illegality cannot make invalid an already competent confession,' at 853); 3 Wigmore on Evidence 851 (1940). The federal policy against ...


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