Opinion ID: 410420
Heading Depth: 1
Heading Rank: 3

Heading: Kenneth Kaminski

Text: 18 A. Kaminski first argues that the evidence before the jury was insufficient as a matter of law to sustain his conviction on either the mail-fraud counts or the conspiracy count. We, of course, have viewed the evidence contained in the record in the light most favorable to the prosecution and have deemed established any reasonable inferences consistent with the findings of guilt. See Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942). Moreover, [t]he evidence need not 'exclude every reasonable hypothesis except that of guilt[; it is enough] that it be sufficient to convince the jury beyond a reasonable doubt that the defendant is guilty.'  Durns v. United States, 562 F.2d 542, 546 (8th Cir.) (quoting United States v. Shahane, 517 F.2d 1173, 1177 (8th Cir.), cert. denied, 423 U.S. 893, 96 S.Ct. 191, 46 L.Ed.2d 124 (1975)), cert. denied, 434 U.S. 959, 98 S.Ct. 490, 54 L.Ed.2d 319 (1977). Based on this review we conclude that all counts on which Kaminski was convicted should be affirmed except for count IX, a mail-fraud count. We first discuss the affirmed mail-fraud counts. 19 The evidence of a scheme to defraud was overwhelming. As we have already noted, within a few months of FGS's incorporation Kaminski had withdrawn much of its working capital by charging FGS for consulting fees. Around the same time, March of 1977, Ulrich, one of the original parties to the formation of FGS, grew dissatisfied and arranged to sell out his interest in the company (Tr. XII, 154-60). 11 By mid-summer of that same year Swalinkavich, the second of the three original investors, wanted out of FGS. He was told that FGS had cash-flow problems and that there was not enough money available to buy his interest. He asked several times to see FGS's books but was never given the opportunity (Tr. XI, 124). 20 Next, a parade of government witnesses, customers of FGS, testified without contradiction to the misrepresentations put forth by Kaminski, Mount, and other employees of FGS. The basic sales pitch was that FGS would go into the market and buy the actual gold and silver in amounts equal to the customer's account. These purchases were to be financed by FGS, for which 8% interest per annum was charged. FGS represented that if physicals were not purchased, it would cover customer accounts through the purchase of futures contracts. The fact is, however, that for most of the life of FGS customer accounts were not fully covered by either method. Thus the very essence of FGS's way of doing business was fraudulent--it billed its product as a protected investment when just the opposite was true. In addition, when customers wanted to liquidate, they were always met with resistance from the sales force at FGS. For the most part when customers persisted, they were paid. However, they were not paid from the sale of their investment in the market, but were paid out of new customers' money. FGS customers were never told that robbing Peter to pay Paul was FGS's mode of operation. 21 Having proved the existence of a fraudulent scheme, the government need only prove that Kaminski caused the use of the mails for the purpose of executing the scheme. The five counts which we affirm as to Kaminski concern mailings taking place between January 9, 1978, and November 3, 1978. 12 There is no question that during this time he was actively participating in the fraudulent scheme. Although Kaminski was managing National Commodities at this time, he was also involved with the day-to-day operation at FGS. It is enough that Kaminski was still active in the scheme and that he knew, or could reasonably have foreseen, that the mailings would take place. But certainly there was sufficient evidence from which the jury could properly infer that the misrepresentations being made were at the direction of and with the authorization of Kaminski. And, use of the mails was an integral part of FGS's mode of operation. The mailings that are the basis of the counts in question here (except for count VII) are confirmations of sales by FGS mailed to the customer or payment checks mailed by the customer to FGS. Therefore, there can be no question that the mailings were for the purpose of executing the fraudulent scheme and that Kaminski knew the mailings would take place. 22 Kaminski makes a different argument as to count VII, which was based on the mailing of a letter from FGS to a customer, Alf Garnaas. The letter informed Garnaas that FGS had moved its offices and gave him the new address in Bloomington and the new phone numbers. Kaminski argues that this type of mailing is too unrelated to the execution of the scheme to be a sufficient basis for the charge of mail fraud. The change-of-address letter is said to be nothing more than a routine business mailing, intrinsically innocent, and thus too remote from the fraud. In support he cites the case of United States v. Tarnopol, 561 F.2d 466 (3d Cir. 1977). In that case a phonographic record company shipped records to the customers of the defendants' company. Packing slips, listing the products shipped, were then mailed to the defendants. The fraudulent scheme involved the defendants' failure to enter all of the sales on their books. The court considered the packing slips to be routine business mailings and too remote from the fraudulent scheme to be the subject of mail-fraud charges. 23 The mailing in question here, though arguably routine in some sense, occupies a very different position relative to the fraudulent scheme. In Tarnopol the packing slips were evidence of the amount of the defendants' sales. The mailing of the slips, however, did nothing to further the fraudulent scheme--the concealment of the true level of sales. Our change-of-address letter, on the other hand, was mailed to one of the victims of the fraudulent scheme. It transmitted information that facilitated Garnaas's continued participation, as a victim, in the scheme. Its very purpose was to further the scheme, and as such, it was sufficiently closely related to [defendant's] scheme to bring his conduct within the statute. United States v. Maze, 414 U.S. 395, 399, 94 S.Ct. 645, 648, 38 L.Ed.2d 603 (1974). 24 We now turn to count XV, the conspiracy charge, on which only Kaminski and Mount were found guilty. The offense of conspiracy under 18 U.S.C. Sec. 371 consists of an agreement between the conspirators to effect the object of the conspiracy, together with at least one overt act to carry it out. United States v. Pelton, 578 F.2d 701 (8th Cir.), cert. denied, 439 U.S. 964, 99 S.Ct. 451, 58 L.Ed.2d 422 (1978). The agreement may be established by circumstantial evidence, as conspiracies seldom lend themselves to proof by direct evidence. Ibid. We find ample evidence to support the jury's finding of guilt on the conspiracy charge. 25 Kaminski and Mount ran FGS from the very beginning. They hired and trained the sales staff that helped carry out the fraudulent scheme. They both had intimate knowledge of the inner workings of FGS and its financial condition. For instance, in August of 1978 Mount told Newham that FGS was virtually broke. 13 Yet for many months afterward the misrepresentations to customers continued with the knowledge and approval of Kaminski and Mount. Then in January of 1979, at a meeting between Kaminski, Mount, and Newham, FGS was sold to Newham for $250,000 to be paid for with funds from FGS, 14 despite the company's precarious financial condition. From this evidence and much more the jury could have inferred the existence of a conspiracy and the intentional participation therein of Kaminski and Mount. 26 As we noted earlier, we are unable to affirm Kaminski's conviction on count IX for mail fraud. The mailing in question was the payment to FGS from Gerald Ellis for the purchase of a quantity of gold coins on margin. The date of the mailing was July 7, 1979. What troubles us about this count is that the mailing took place many months after Kaminski's withdrawal from FGS in January of 1979, when the business was sold to Newham. The government concedes as much. Gov.Br. p. 16. The government theorizes, however, that Kaminski's prior contact with Ellis in November of 1978 somehow aided and abetted the other defendants some eight months later. We cannot agree. 27 Ellis contacted FGS in November of 1978 about the purchase of silver coins. He dealt with Dan Silkowski, an FGS salesman. Two cash purchases were consummated in the middle of November, and he received the coins as ordered. Then in the latter part of November he contacted Mr. Silkowski again about buying some Mexican pesos. Mr. Ellis was referred to Kaminski at this point, and the sale was made through the House of Crowns, a company owned by Kaminski. Confirmation of this cash sale came from Kaminski on House of Crowns letterhead. Mr. Ellis had no further contact with Kaminski, and it was not until eight months later that he called FGS and was persuaded to enter into a margin contract. Kaminski's sale through the House of Crowns in no way facilitated the later margin sale, which took place several months after Kaminski had withdrawn from FGS. The judgment as to count IX is reversed. 15 28 B. Kaminski's next argument for reversal is that repeated instances of prosecutorial misconduct denied him a fair trial. As we have said, the trial was lengthy and complex. A defendant is entitled to a fair trial but not necessarily a perfect one. But of course there is a point at which prosecutorial misconduct, whether inadvertent or intentional, will have a sufficient impact to require reversal. 29 Kaminski alleges several instances of misconduct on the part of government counsel, Douglas A. Kelley. The one we find most troubling involves Kelley's cross-examination of defense witness Lloyd Kadish. Kadish, an attorney, represented FGS during the summer of 1979 when it was being investigated by the Minnesota Securities Commission. Kadish was called to the stand as a witness for Douglas Payne. During cross-examination Kelley asked him the following question: 30 [MR. KELLEY]: Q. Isn't it also true that concerning your proposed testimony here, you strongly considered coming and taking the Fifth Amendment? 31 Tr. XX, 59. There was an immediate objection and a motion for a mistrial outside the presence of the jury. After a bench conference the objection was sustained, the motion for a mistrial was denied, and a cautionary instruction was given to the jury upon their return. 32 Kaminski argues that by posing the question Kelley implied that FGS's own attorney recognized that he, and, by inference, the company, might be involved in illegal activities, and that the impression of criminality thus left might have been transferred to the defendants. 16 There is no question that this was a completely improper form of impeachment. See United States v. Williams, 464 F.2d 927, 930 (8th Cir. 1972). The question is whether it was an error sufficiently prejudicial to require reversal. 33 The leading case is Namet v. United States, 373 U.S. 179, 83 S.Ct. 1151, 10 L.Ed.2d 278 (1963). There the Court examined the question of reversible error vel non by looking to the surrounding circumstances of the case with the primary focus on two factors, each of which suggests a distinct ground for error. Id. at 186, 83 S.Ct. at 1154. First the Court recognized that reversible error may occur when the Government makes a conscious and flagrant attempt to build its case out of inferences arising from use of the testimonial privilege. Ibid. It was also noted that a worse situation is presented when the government makes an additional reference to use of the privilege during closing argument. The first of these circumstances may be present here, but after a cautionary instruction was put to the jury, no further mention was made of Kadish's consideration of invoking the privilege. 34 The second factor discussed in Namet involves the conclusion that, in the circumstances of a given case, inferences from a witness'[s] refusal to answer added critical weight to the prosecution's case in a form not subject to cross-examination, and thus unfairly prejudiced the defendant. 373 U.S. at 187, 83 S.Ct. at 1155. This situation is not present here. The evidence of Kaminski's guilt was more than substantial, if not overwhelming. The improper impeachment of Kadish was not crucial in any sense. And if the objectionable question was prejudicial, the instruction to the jury to disregard it sufficiently cured the error. 17 Ibid. 35 Kaminski points to several other alleged instances of prosecutorial misconduct. 18 We have examined the record and the corresponding arguments presented in his brief, and we conclude that no extended discussion of the allegations is necessary here. The incidents do not rise to the level of reversible error when viewed in light of the strength of the government's case, the length of the trial, and the trial court's timely corrective actions. See Namet v. United States, supra, 373 U.S. at 187, 83 S.Ct. at 1155. 36 C. Kaminski also contends that the District Court erred when it failed to grant his numerous motions for severance. He argues that severance was necessary because the complexity of the case prevented the jury from considering the evidence on each charge against each defendant. 37 Severance is required when the proof is such that a jury could not be expected to compartmentalize the evidence as it relates to the separate defendants. United States v. Reeves, 674 F.2d 739, 744 (8th Cir. 1982). Our scope of review on this issue is narrow. Denial of a motion for severance is not a basis for reversal unless the appellant can show that the denial resulted in clear prejudice and was an abuse of discretion on the part of the District Court. United States v. Losing, 560 F.2d 906, 911 (8th Cir.), cert. denied, 434 U.S. 969, 98 S.Ct. 516, 54 L.Ed.2d 457 (1977). 38 We begin by noting that as a general rule alleged co-conspirators should be tried together. United States v. Singer, 660 F.2d 1295, 1306 (8th Cir. 1981), cert. denied, --- U.S. ----, 102 S.Ct. 1030, 71 L.Ed.2d 314 (1982). Moreover, this case, because it also involves a single, ongoing scheme, lends itself to a logical compartmentalized analysis. It was not difficult for the jury to sort out the scope of each defendant's involvement throughout the life of FGS. Certainly this is so in Kaminski's case. He was involved with FGS from the very beginning up to the time he withdrew from the company in early 1979. For the most part, the jury's verdict as to Kaminski reflects this. 19 Nor can it be said that Kaminski's theories of defense were inconsistent with those of his co-defendants. For the most part they all attacked the credibility of Newham, the government's star witness, and tried to saddle him with the entire blame for the downfall of FGS. They also claimed that their actions were taken and their statements made in good faith with no intent to defraud. Apparently the jury did not believe these theories as to any of the defendants, and there is no indication that separate trials would have led to a different result. 39 Finally, Kaminski argues that a severance would have shielded him from an improper closing argument made by counsel for one of his co-defendants, in which a reference was made to the failure of any of the defendants to testify in their own behalf (Tr. XXIV, 85). The reference was made, however, only by way of making the point that no adverse inference should be drawn on that basis. Though this argument may have represented a minor difference in defense strategy, it certainly did not rise to the level of prejudice which would require severance. After all, a similar instruction was put to the jury by the trial court, and properly so. In sum, we find no clear prejudice or abuse of discretion in the District Court's denial of Kaminski's motions for severance. 40 D. This concludes our discussion of Kaminski's arguments on appeal. We are satisfied that he received a fair trial, and that the proof of guilt on each count we now affirm was more than sufficient. Accordingly the judgments of the District Court as to him on counts III, VI, VII, VIII, XIII, and XV are affirmed, and the judgment on count IX is reversed.