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United States v. Birrell

decided: September 8, 1971.


Clark, Associate Justice,*fn* Smith, Circuit Judge, and Zavatt, District Judge.*fn**

Author: Smith

J. JOSEPH SMITH, Circuit Judge:

Defendant Lowell M. Birrell appeals from a judgment of conviction entered after a jury trial in the United States District Court for the Southern District of New York (Frederick van Pelt Bryan, Judge). He was found guilty of transmitting in interstate commerce wire communications for the purpose of executing a fraudulent scheme, in violation of 18 U.S.C. ยง 1343. Defendant was sentenced to two years imprisonment. He had also been indicted on one count of conspiracy to commit wire fraud and on another count of wire fraud, but a verdict of acquittal was directed on both counts by the trial court. We find no error and affirm the judgment.

The thrust of the government's charge against Birrell was that he had "issued" unauthorized stock certificates in a virtually defunct public corporation, which he caused to be pledged as collateral for a bank loan, misrepresenting the certificates as genuine. According to the government's case at trial, Birrell in 1965 became interested in acquisition of Drug Products Company, Inc., an inactive manufacturer of drug products. At the time there were 1,000,000 shares outstanding, 735,662 owned by Hugh Begley and the rest owned by members of the general public. Birrell allegedly approached Gerard A. Re and his son, Gerard F. Re ("Re") and the three agreed to purchase the Begley shares. The group enlisted Charles Dressen, baseball manager and friend of the Res, to make the purchase. Re arranged an advance of funds from his cousin, Peter Borre, to Dressen totaling $35,000, most of which was used to purchase the shares. Dressen delivered the shares to Re.

In April of 1966, three months after the acquisition, Birrell went to the company's offices and obtained a Drug Products stock book containing unissued certificates. Birrell desired to obtain a bank loan, using 100,000 shares as collateral. He had Patricia Livermore, a friend, contact Lawrence Davis, a vice-president of the First National Bank of Cincinnati, who agreed to lend her $5,000 on the security of 100,000 shares of Drug Products and 100 shares of another company. Mrs. Livermore agreed to turn over the proceeds to Birrell. The bank received the 100,000 shares, which had been removed from the stock book taken by Birrell. The shares were made out in the name of C. Whitney, a former houseboy and handyman for Birrell who had become Birrell's personal secretary. They had been endorsed in blank with the name Carter Whitney. The issuance of these shares had never been authorized, and therefore, argued the government, they were entirely worthless, a fact obviously not known by the bank which had accepted them as collateral. Davis wired the $5,000 to Mrs. Livermore in New York.

In its summation to the jury, the defense argued that Birrell was unaware of what Whitney was doing, and that any criminal activity had been performed solely by the latter. The only evidence introduced by the defense at trial was the stipulated testimony of Re's attorney that he had seen documents indicating that $35,000 had been withdrawn from a Swiss bank account maintained by the Res about the time of Dressen's purchase of the Begley shares. On appeal, Birrell alleges the commission of a number of errors at trial.

I. Right of Confrontation :

Birrell contends that he was denied his Sixth Amendment right of confrontation when Re refused to answer questions on cross-examination on the basis of his Fifth Amendment privilege against self-incrimination. Re had appeared as a witness for the prosecution, testifying that Birrell owned none of the stock of Drug Products and that it was all owned by Dressen, who had received his money from Re's cousin, Borre. On cross-examination, the defense attempted to ask Re about his Swiss bank account. Specifically, the questions were the following:

"Did [the services rendered by Borre] include maintaining or taking care of any European bank accounts for you?"

"Is it not true, sir, that * * * in January of 1966, you had more than $1,000,000 in a Swiss bank?"

"Does Dr. Lanz take care of your Swiss banking accounts?"

The defense was apparently attempting to establish that it was not Borre's money given to Dressen to purchase the Begley shares, but rather his own, out of his Swiss bank account. Why such a showing would be at all helpful to Birrell, save perhaps for its impeachment value since Re had denied that his funds were involved in the purchase, is unclear.

Birrell argues that the defense's contention was that Whitney or Birrell through Whitney in fact owned 25% of the former Begley stock by virtue of the four-man joint venture agreement between the Res, Dressen and Whitney, entered into in contemplation of obtaining the Begley stock. Since Birrell was entitled to one-quarter of the shares, the loan collateral was not worthless, the argument maintains. The most that could be said is that the shares were slightly irregular, since they had not been officially authorized at the time. This, Birrell contends, was only a minor technicality. We need not consider the government's suggestion that this theory was never presented at trial and indeed was inconsistent with the defense claim that Whitney was alone responsible for any criminal activity, Birrell being totally unaware of his actions. Nor is it necessary to accept the government's position that the mere fact of Birrell's participation in the four-man joint venture agreement does not automatically entitle him to one-quarter of the shares unless the agreement so dictates. The simple fact of the matter is that the questions posed to Re bore no relevance whatsoever to the theory Birrell now argues was the justification for posing the questions. Whether the money advanced to Dressen came from Borre or from Re in no way determines whether Birrell had a legitimate legal right to the shares. See, United States v. Cardillo, 316 F.2d 606, 611 (2d Cir.), cert. denied, Margolis v. United States, 375 U.S. 822, 84 S. Ct. 60, 11 L. Ed. 2d 55 (1963), holding that a refusal by the trial court to strike the testimony of a witness who on cross-examination took his Fifth Amendment privilege when asked about collateral matters was not error. Since the most that the answers to the defense questions could have produced was impeachment of credibility on ...

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