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United States v. Pfingst

decided: April 4, 1973.

UNITED STATES OF AMERICA, APPELLEE,
v.
JOSEPH P. PFINGST, APPELLANT



Moore, Hays and Oakes, Circuit Judges.

Author: Oakes

OAKES, Circuit Judge:

Following a four week trial before a jury and Judge Weinstein in the Eastern District of New York, appellant, Joseph P. Pfingst, who had served as a New York State Supreme Court Justice, was convicted on three of the nine substantive counts of a ten-count indictment. The indictment alleged that, while appellant was a practicing lawyer, he transferred and concealed corporate assets in contemplation of bankruptcy in violation of 18 U.S.C. § 152 and engaged in a conspiracy to do the same, 18 U.S.C. § 371. On each count he was sentenced to three years' imprisonment but with execution suspended as to all but four months, the sentences to run concurrently. On this appeal, Pfingst does not challenge the sufficiency of the evidence against him. Rather, he launches a multifaceted attack on the conduct of his trial, both by the prosecutor and trial judge. While appellant's contentions have in many cases a verisimilitude, upon close scrutiny in the light of the record none of them warrants reversal of his conviction. We therefore affirm.

I. Background.

To understand the reasons we reject appellant's contentions of error requires a somewhat detailed exposition of the evidence. In 1965, when the case begins to unfold, the Evans Dairy business consisted of a group of corporations whose stock was closely held by the Evans family. There were six related corporations dealing with all the different phases of milk production and sale: a company which operated a receiving plan, Chenango Farm Products, Inc. ("Chenango"); a purchasing company which also operated an additional milk receiving plant, W. M. Evans Dairy, Inc. ("W. M. Evans"); a processing and distributing company, Evans Amityville Dairy, Inc. ("Evans Amityville"); two companies which sold directly to retail customers, Woodside Farms, Inc. ("Woodside"), and Half Hollow Farms, Inc. ("Half Hollow"); and a real estate holding corporation that owned the property used by the processing and distributing company, Highground Realty Corporation ("Highground"). The two principal components of the business were W. M. Evans and Evans Amityville.

In 1965 one Ramon N. D'Onofrio, who pleaded guilty to charges similar to those brought against appellant*fn1 and who was the principal witness against appellant at trial, had been a salesman for and ultimately became a vice president of Evans Amityville. Early in that year D'Onofrio learned that the Evans dairy business was for sale. He was encouraged and advised by Pfingst, at that time a practicing attorney and personal friend, to purchase the business. D'Onofrio, however, could not obtain the necessary credit on his own. By virtue of associating with one Sam Marcus, an experienced and respected dairy man whose credit was excellent, D'Onofrio was able eventually to acquire the Evans dairy business jointly with Marcus from the Evans family, largely for some long-term notes. Pfingst became the lawyer for the purchasing interest in connection with the negotiations that ensued. Upon completion of the purchase, Pfingst became a director of all the corporations, secretary of all of them except Evans Amityville, a minority stockholder of Evans Amityville and Half Hollow, and general counsel to the dairy business. There was evidence, centering around Pfingst's demand for $50,000 legal fees compensating his work for the purchase, that Pfingst was aware as early as August, 1965, of the poor financial condition of the Evans dairy business. After Marcus and his son discovered that D'Onofrio had drawn checks payable to Pfingst in the sum of $26,500 from Woodside and $20,000 from Evans Amityville, Pfingst kept $10,000 and took a $30,982 mortgage owned by Highground and a $7,500 note from Evans Amityville.

In October, 1965, Sam Marcus died and plans for the rehabilitation of the Evans business accordingly suffered a severe blow. D'Onofrio, who lacked financial resources and managerial experience, could not carry on alone. As a buyer could not be found, D'Onofrio and Pfingst decided to acquire the interest of the Marcus estate in the business and, as the jury could infer, to milk whatever profit could be made before the business went bankrupt. They became, according to D'Onofrio's testimony and corroborating evidence,*fn2 75%-25% partners, acquired the interests of the Marcus estate on February 28, 1966, and refinanced some of the debt of the business by factoring accounts receivable. There was evidence from which it could be inferred that the Evans dairy business was already bankrupt at the time that it was acquired by the D'Onofrio-Pfingst partnership. In April, 1966, milk suppliers refused to extend further credit and total collapse could no longer be avoided. An assignment for the benefit of Evans Amityville creditors was made in state court that same month. Later in the year W. M. Evans and Evans Amityville were adjudicated involuntary bankrupts.

The Government's case was that Pfingst and D'Onofrio, knowing bankruptcy to be both inevitable and imminent, fraudulently moved to skim the cream of the assets of the Evans dairy business for their personal benefit. Two of the steps they took in this regard formed the basis for Pfingst's conviction. The first began on March 15, 1966, when a substantial portion of the major Evans Amityville asset, its wholesale customer business, and the Chenango milk receiving plant were sold to a competitive dairy for $229,000. Fifty thousand dollars of this amount was held by Pfingst in escrow pending completion of certain provisions in the sales contract which he had prepared. The remaining $179,000 was deposited in the Evans Amityville bank account. Three days later $160,000 was transferred from the Evans Amityville account to the W. M. Evans account. Subsequently, on March 21, 1966, a check payable to D'Onofrio for $75,000 and a check payable to Pfingst for $25,000, both marked "for Purchase of Stock," were drawn on the W. M. Evans account. These checks were not drawn according to the usual corporate procedure nor was a purchase of D'Onofrio's or Pfingst's stock by W. M. Evans authorized by corporate resolution. Furthermore, W. M. Evans was in precarious financial position at the time and could ill afford the expenditure. While Pfingst contended that the $25,000 check to him represented payment for legal fees, D'Onofrio testified that the notation "for Purchase of Stock," was pursuant to a scheme devised by Pfingst to make the transfer look like a bona fide stock transfer. The jury convicted Pfingst of fraudulently transferring the $25,000 to himself, although it acquitted him of fraudulently participating in the $75,000 transfer to D'Onofrio.

The other transfer which formed the basis of the counts on which Pfingst was convicted concerns two other checks drawn on the W. M. Evans account and paid for out of the proceeds of the March 15, 1966, sale of the dairy business's assets described above. These checks were for the aggregate amount of $10,600, with $7,950 (or 75 per cent) going to D'Onofrio and $2,650 (or 25 per cent) going to Pfingst.*fn3 The money, according to D'Onofrio's testimony, was to finance a joint venture in a Puerto Rican dairy unrelated to the Exans business, and an accountant corroborated him by his testimony that D'Onofrio and Pfingst wanted him to accompany them to Puerto Rico to look over some dairy books in connection with a "possible purchase." The checks were marked "Dividend, Woodside Farms," but there was evidence that payment of a Woodside Farms dividend by W. M. Evans was "irregular" and unsubstantiated by corporate resolution, and that W. M. Evans needed the cash used for the "dividend" to pay its debts.*fn4 The defense did not offer any explanation for this transfer and the jury found Pfingst guilty of fraudulently arranging it for his own and D'Onofrio's benefit.

It is to be noted that on all charges D'Onofrio's testimony was a considerable portion of the prosecution's case against Pfingst. D'Onofrio was involved in many other dealings that were shady, to say the least, and his credibility was a critical issue at trial. Indeed, on the charges of which Pfingst was acquitted the evidence was limited to D'Onofrio's testimony, while on the charges of which Pfingst was convicted, in contrast, documentary evidence and the testimony of other witnesses corroborated D'Onofrio's version of events.

It is important, however, to describe in some detail the unrelated bribery charge brought against appellant in the Eastern District, for it is involved in some of his contentions here. Some nine months after the indictments in the bankruptcy case a grand jury indicted him for the crime of having paid one Frederick R. Fellman, the Babylon, Long Island, town Republican leader, $50,000 in cash in return for that party's nomination in 1968 for the judgeship. The bribery indictment charged that, inter alia, Pfingst traveled and caused D'Onofrio to travel to Switzerland to arrange for the bribe money in violation of 18 U.S.C. § 1952. Fellman, but not D'Onofrio, was indicted for participation in the bribery scheme. Fellman pleaded guilty but Pfingst went to trial.

The bribery trial began one month after the verdict in the bankruptcy case, lasted five weeks, and was also presided over by Judge Weinstein. During its course D'Onofrio refused to permit the Government or the defense access to his (and supposedly Pfingst's) Swiss name bank account, "Gypsy." Rejecting D'Onofrio's claim of self-incrimination on this point Judge Weinstein held him in contempt for the duration of the trial. D'Onofrio was thus discredited in front of the jury, and the Government was deprived of D'Onofrio's further testimony. The jury acquitted Pfingst on the bribery charges. Judge Weinstein, however, denied Pfingst's motion for a new bankruptcy trial based upon the bribery acquittal, holding that the bribery acquittal did not make D'Onofrio's testimony in the bankruptcy case incredible as a matter of law.

II. Contentions of Prosecutorial Misconduct.

Perhaps the most vigorously pressed of appellant's contentions of error in this case is that individually and cumulatively various instances of prosecutorial misconduct deprived him of a fair trial. We shall treat each instance of alleged misconduct separately and then consider their alleged cumulative impact.

A. Pre-trial publicity. Appellant complains that the United States Attorney (with the Suffolk County District Attorney) held a televised press conference to announce the "much more sensational" bribery indictment on the eve of the bankruptcy trial and this resulted in prejudice to his rights. His complaint has two components: first, that the prosecutor deliberately manipulated the timing of the bribery indictment and that the remedy for this misconduct is to award appellant a new trial; and second, that the publicity attendant upon the announcement of the bribery indictment created an atmosphere in the community which made a fair trial for appellant impossible.

The charge of deliberate manipulation of the timing of the bribery indictment is not supported by the record. Although D'Onofrio told the FBI about the bribery plan in January, 1971, before the bankruptcy indictment was filed on February 8, 1971, indictment on the bribery count was delayed until September 1, 1971, when the Government had the evidence of actual payment of the bribe supplied by Fellman's confession of August 4, 1971. Once Fellman confessed, the Government decided to press forward with the bribery case because it was far simpler and the supporting evidence was thought to be stronger than on the bankruptcy fraud charge. Both Judge Bartels and Judge Rosling, who each presided over aspects of the pretrial maneuvering in both cases, agreed with the Government's contention that the bribery case should be tried first. Judge Weinstein, to whom both cases were eventually assigned, was of a similar view, but nonetheless acceded to the defense request that the bankruptcy case be tried first. The announcement of the bribery indictment was made in early September, 1971, and while the trial date for the bankruptcy case had been set in June tentatively for October 15, 1971, it was not actually tried until March of 1972. The timing of the bribery indictment was obviously related to Fellman's confession and cannot support an inference of deliberate prosecutorial misconduct in connection with the bankruptcy case when the latter's trial date was set for six weeks later and then set only tentatively.

The form of the public announcement of the bribery indictment, however, raises more troublesome questions. The announcement emphasized the allegations that the bribe money had been withdrawn from a Swiss bank account and that this was the first federal indictment of a state Supreme Court justice. The Government properly argues that the presence of the Suffolk County District Attorney was justified as evincing state and federal law enforcement cooperation on a matter of joint interest. While the information about the Swiss bank account was a matter of public record and the unprecedented nature of the indictment is not disputed, it is contended that the press conference violated the spirit, if not the letter, of Rule 8 of the Criminal Rules of the Eastern District of New York.*fn5 These circumstances and remarks do seem too much designed for dramatic effect and to call attention to the prosecutors rather than for public information and enlightenment about the administration of justice in Suffolk County. Judge Bartels, indeed, took the Government correctly to task for its conduct during this phase of the proceedings. The press conference did not, however, create the kind of "carnival atmosphere" resulting from pretrial publicity that requires a new trial under the sixth amendment and the due process clause. Sheppard v. Maxwell, 384 U.S. 333, 358, 86 S. Ct. 1507, 16 L. Ed. 2d 600 (1966); see Estes v. Texas, 381 U.S. 532, 85 S. Ct. 1628, 14 L. Ed. 2d 543 (1965); cf. ABA Standards Relating to Fair Trial and Free Press 27-40 (1968). The press conference occurred some six months before the jury in the bankruptcy trial was drawn; the memory of the public for such news is short. The degree of pre-trial publicity in this case is minor compared to the kind of on-going, never-ending sensationalist publicity which infected the trial in Sheppard, or in the other cases where reversal has been warranted. Appellant never moved for a change of venue. Furthermore, unlike Sheppard, the trial judge here "fulfill[ed] his duty to protect [the defendant] . . . from inherently prejudicial publicity . . .," 384 U.S. at 363, 86 S. Ct. at 1522, Judge Weinstein scrupulously examined the jurors before they were impaneled on questions relating to the possible influence of pre-trial publicity. Only one potential juror was excused on that ground. We are satisfied that appellant's trial was not rendered unfair by this one press conference.

B. Publicity during the trial. Appellant contends that the Government deliberately arranged for or "had" Fellman plead guilty to the bribery charge on the second day of the bankruptcy trial and that the resulting publicity made the bankruptcy trial constitutionally unacceptable. This contention is baseless. In fact the defense withdrew a charge of deliberate manipulation below, while maintaining that the Government is charged "with knowing the natural consequences of their act . . .." Rather than being the result of a prosecutorial conspiracy the timing of Fellman's plea and sentencing was arranged by the trial judge and Fellman's counsel at the pre-trial conference in the bribery case. Appellant's counsel was present and stood silent when the date for the pleading was set. Probably as a result of this silence the trial court apparently thought the sentencing date favorable to appellant. The defense had concurred in the trial court's desire to have D'Onofrio sentenced before the bankruptcy trial began, presumably because the defense wanted the fullest possible ammunition for D'Onofrio's cross-examination. By virtue of defense counsel's silence the trial court may well have thought the defense wanted the same tactical advantage for Fellman's testimony in the forthcoming bribery trial.

Here, too, Judge Weinstein scrupulously protected the trial from being infected with prejudice by any of the publicity surrounding Fellman's plea. Although rejecting appellant's mistrial motion based on it, the judge immediately renewed his stern warnings to the jury against reading, seeing or listening to news reports about the trial. He examined each individual juror on this subject, and found that none had violated his instructions. Thereafter, he opened court each day by asking the jurors collectively and individually whether they had been exposed to publicity about the case. He closed each court day with a stern warning to the jury to avoid it. Appellant has made no colorable showing that there was any prejudice from the timing of Fellman's plea, at least in the light of this very careful judicial conduct.

C. The prosecutorial " demand." A central issue at trial was whether Pfingst and D'Onofrio in fact established a partnership to take over the Evans dairy business or whether, as the defense contended, Pfingst merely acted as a lawyer representing D'Onofrio's interests. To prove that Pfingst was D'Onofrio's partner on the third day of what was to be a four week trial and during D'Onofrio's direct examination, the Government offered in evidence its Exhibit 14. This exhibit was a conformed copy of a signed agreement with the estate of Sam Marcus, which released, on various conditions, the interest of that estate in the Evans dairy business to Pfingst and D'Onofrio. One of the recitals in Exhibit 14 states, "D'Onofrio and Pfingst desire to acquire the stock theretofore owned by Sam Marcus in Evans Amityville Dairy, Inc. . . .," thus clearly indicating that Pfingst and D'Onofrio were in fact partners in acquiring the Evans dairy business.

By virtue of discovery proceedings, the marking of the exhibit for identification two weeks before trial, and the understanding that objections to authenticity would be made in letter form, the defense had adequate opportunity to but did not object to the admissibility of Exhibit 14 prior to trial. It did object, however, when Exhibit 14 was offered into evidence, on what the trial court articulated as a "best evidence" ground. To meet this objection the Government sought to lay a foundation for the introduction of the copy by establishing that D'Onofrio returned the original from which Exhibit 14 was copied to Pfingst and never regained possession of it. In an excess of zeal, which almost caused a mistrial on the spot, the prosecutor "ask[ed] the defendant to produce the signed agreement." The trial court immediately interrupted examination of D'Onofrio, admonished the prosecutor, "We will have no such demand in the future," and told the jury, "The demand should not have been made, the defendant does not have to turn over anything. There is no indication the defendant has any such document in its [sic] possession." Almost immediately thereafter a recess was declared. The defendant then moved for a mistrial because of the prosecutor's demand. The trial court denied the motion, but again admonished the Assistant United States Attorney (who admitted his error and apologized). At the defense's request when the jury returned the court instructed them:

Ladies and gentlemen, it was improper for the Government attorney to make any such demand on the defendant, as I told you earlier, not only for the reasons I indicated, that is that the defendant is not obligated to produce anything, which I indicated at the outset of the case, and no inference against a defendant may be drawn from the fact that he doesn't produce anything. It is not his obligation.

But more important in this particular instance there is no evidence at all that the defendant had the original of these documents.

The prosecutor, at the defense's request and under the guidance of the trial court, then recounted to the jury the Government's efforts to obtain the original, which established that Pfingst had not been asked previously to produce it. The court then admitted Exhibit 14 with an appropriate cautionary instruction as to its weight.*fn6 A post-verdict new trial motion based in part on the prejudice allegedly flowing from the demand was denied, erroneously appellant submits here.

The Government quite properly concedes that the demand was erroneous. It obviously violated the principle that the burden is on the Government to prove the defendant's guilt beyond a reasonable doubt; it also goes to the defendant's privilege against self-incrimination. See generally 8 J. Wigmore, Evidence § 2264 at 379 (McNaughton rev. 1961); Rex v. Purnell, 1 Black W. 37, 45, 96 Eng.Rep. 20, 23 (K.B. 1749); see also State v. Squires, 1 Tyler 147 (Vt. 1801). There remains, however, the question whether the error was serious enough to require a new trial. In deciding this question we must consider, in the circumstances of this case, the degree of prejudice created in the minds of the jurors by the demand, the quality and forcefulness of the trial judge's corrective action and the strength of the Government's case. United ...


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