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United States v. Tolkow

decided: March 26, 1976.

UNITED STATES OF AMERICA, APPELLEE,
v.
BERNARD TOLKOW, APPELLANT



Appeal from a judgment of the United States District Court for the Eastern District of New York, Edward R. Neaher, Judge, entered on a jury verdict convicting appellant of four counts of violating 18 U.S.C. § 1027 (1966) as amended 18 U.S.C. § 1027 (Supp. 1976) by failing to disclose in annual reports facts required by the Welfare and Pension Plans Disclosure Act.

Moore, Feinberg, Van Graafeiland, Circuit Judges.

Author: Moore

MOORE, Circuit Judge:

Bernard Tolkow, trustee of Amalgamated Local 355's United Welfare Fund ("Fund"),*fn1 appeals from a judgment entered after a jury trial in the United States District Court for the Eastern District of New York. The jury convicted appellant of four counts of violating 18 U.S.C. § 1027 for knowingly failing to disclose party-in-interest loans in the Fund's annual financial report.

Party-in-interest loans are loans made by a union pension or trust fund to businesses in which fund officials have a financial interest. 18 U.S.C. § 1027 (1966) as amended, 18 U.S.C. § 1027 (Supp. 1976) and its counterpart, The Welfare and Pension Plans Disclosure Act, Pub. L. 85-836, 72 Stat. 997 (1958), superseded by 29 U.S.C. § 1001 et seq. (1975), were enacted to curb potential self-dealing in such circumstances by requiring disclosure of such loans and relationships in a fund's annual reports. 1962 U.S. Cong. and Admin. News 1532, 1537-39, 1547.*fn2 Appellant argues, inter alia, that the evidence is insufficient to sustain his conviction and that the lower court erroneously charged the jury. A review of the facts facilitates analysis of these claims.

Appellant and the Fund became involved with Robert W. Wendell and his house building activities along the northern shore of Long Island. Wendell and his associate conducted this business through several separately named corporations including Salonga Properties, Salonga Homes and Brightwaters Associates. Wendell and his wife also conducted business in the corporate name of Harbor Planning.

Prior to 1969 Wendell received a series of loans from the Fund totalling $700,000, but the business deteriorated, and in early 1969 he sought more money. On February 24, 1969, the Fund gave him a mortgage loan earmarked for the Salonga entities.

Appellant became personally involved shortly thereafter. In April 1969 he told Wendell that he had some people who were interested in investing $100,000 in Wendell's business in return for one-half of everything that Wendell owned or might build in the future. Appellant stipulated that the money would have to go into one of the corporations which had not previously borrowed money from the Fund because he did not want to appear to be connected with the investment. Consequently, Brightwaters Associates was designated to receive the investment since it had not previously been earmarked for Fund loans.

In April and May, appellant proceeded to deliver to Wendell installments of the investment. $80,000 was ultimately invested. Wendell initially deposited the $80,000 in the Brightwaters Associates' account, but he subsequently diverted it for use in Salonga Properties' undertakings.

In the spring of 1970 the Fund loaned Wendell $45,000 for his Harbor Planning enterprises. After the loan had been repaid, on November 30, 1970, appellant invested $35,000 of his own funds in Harbor Planning, acquired 50% of its shares and became its secretary.

In August and October 1970, the Fund made additional loans to Wendell's corporations. Before each loan was authorized, Wendell gave appellant a check payable to either appellant's sister-in-law or her husband. Each check was endorsed over to appellant by the named payee or by appellant himself. Subsequently, from November 1970 until February 1971, each time Wendell requested additional loans from the Fund, he wrote a check payable to appellant's sister-in-law. Appellant signed his sister-in-law's name to each check and endorsed it to himself.

In April 1971 appellant called Wendell and asked him whether the Fund had previously loaned money to Harbor Planning. Upon being informed of the spring 1970 Fund loan, appellant made plans to be bought out, but they were not consummated until after January 21, 1972, when Wendell's stock in Harbor Planning and his other enterprises was conveyed to his attorney. His attorney formed a holding company but, despite additional Fund loans, the real estate operations collapsed into bankruptcy.

Despite appellant's investments in Wendell's enterprises, the annual reports filed by the Fund for the years 1969, 1970, 1971 and 1972 did not disclose any party-in-interest loans. Appellant testified that he never read any of the reports and that the Fund's accountant was entirely responsible for their preparation. But every report bore appellant's signature, and the accountant never asked, and ...


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