Opinion ID: 410420
Heading Depth: 1
Heading Rank: 4

Heading: Stephen Mount

Text: 41 A. Mount contends that there was insufficient evidence to sustain his convictions on the seven mail-fraud charges and the one charge of conspiracy. We have reviewed the entire record, and it reeks of fraud. There was ample evidence to sustain five of the mail-fraud counts (counts III, VI, VII, VIII, and XIII) and the conspiracy count (count XV). On two of the mail-fraud counts we find the evidence lacking (counts IV and XII). 42 Discussion of the mail-fraud convictions which we now affirm need not be extensive. They are the same five counts we affirmed as to Kaminski. There now can be no question that a scheme to defraud was in place. There is also no question of Mount's direct involvement. The five relevant mailings took place from January 1978 through November 1978. Mount was the President of FGS throughout this period. All sales, misrepresentations, and mailings were accomplished at his direction, and for the purpose of executing the fraudulent scheme. There is overwhelming evidence of his willing and knowing involvement in the scheme, and thus it can easily be said that he caused the above mailings. 43 Mount's conviction on the conspiracy charge merits no discussion beyond that contained in part II-A of this opinion applying to Kaminski. Count XV is affirmed. 44 We turn now to counts IV and XII. The relevant mailings took place on April 30, 1979, and June 13, 1979, several months after the January sale of Mount's interest in FGS. The government would have us affirm these counts on the basis of an aiding-and-abetting theory, just as it urged on count IX as to Kaminski. We recognize that the law of aiding and abetting has a broad application, but we conclude that it should not be applied here. 45 The theory of aiding and abetting is well entrenched in the law. 46 In order to aid and abet another to commit a crime it is necessary that a defendant in some sort associate himself with the venture, that he participate in it as in something that he wishes to bring about, that he seek by his action to make it succeed. 20 47 Nye & Nissen v. United States, 336 U.S. 613, 619, 69 S.Ct. 766, 769, 93 L.Ed. 919 (1949) (quoting United States v. Peoni, 100 F.2d 401, 402 (2d Cir. 1938) (L. Hand, J.)). The record reveals, however, that Mount had left FGS at the time the crimes were committed. There is no direct evidence tying him to either one of the mailings. 48 Tom Perpich, an accountant at FGS and friend of Mount's, testified that neither Mount nor Kaminski came around the offices after FGS had been sold to Newham. (Tr. XIV, 96). Mount made phone calls to Perpich concerning the account FGS maintained at National Commodity Exchange, but he took no part in the operation of FGS. Perpich also testified about several checks written to Mount after January in amounts of $5,000 and $10,000. These were further payments on the sale of FGS from Newham to Mount. Other than a few discussions between Newham, Mount, and Kaminski about late payments, this is the extent of Mount's contact with FGS after January 1979. 49 We have also looked to see when FGS first contacted the customers involved with counts IV and XII. Finlay Matheson (count IV) first contacted Newham and Payne during an International Investment Seminar held on February 15-17, 1979, at the Omni Hotel in Miami, Florida (Tr. III, 55). Arthur Heth's (count XII) initial contact with FGS was by phone in early April 1979 (Tr. III, 25). So neither victim of these counts ever dealt with FGS at a time when Mount was still involved with its operation. In view of the above facts we cannot find the required affirmative acts on the part of Mount that encouraged the perpetrators of counts IV and XII. United States v. Buttorff, 572 F.2d 619, 623 (8th Cir.), cert. denied, 437 U.S. 906, 98 S.Ct. 3095, 57 L.Ed.2d 1136 (1978). Thus his conviction on counts IV and XII must be reversed. 21 50 B. Mount's next argument for reversal is that it was plain error to allow an alternate juror to accompany the jury during its deliberations, and to be later substituted, despite the consent of all defendants. Just as the jury was excused to commence deliberations, and the remaining alternate was discharged, counsel for Payne approached the bench. He asked that the alternate be kept waiting in case one of the jurors became ill. Then another defendant's counsel suggested that the alternate join the deliberations at that point so she would be apprised of the jury's progress. An extended discussion ensued. It was decided that the alternate juror would sit in with the jury during its deliberations, but that she was not to speak or otherwise take part in the discussion. In the event a regular juror had to be excused, the alternate would then be seated on the jury, which would have to reconsider any verdicts already reached. The jury was then recalled, the situation was explained by the court, and then the twelve-person jury with one alternate was excused to begin deliberations. The government showed caution but was amenable as long as all counsel for the defendants were in agreement. And each defendant gave his personal consent on the record. 51 On the third day of deliberations, Friday, December 5, 1980, the court was informed that one of the jurors had had a death in her family. She was excused at the end of deliberations on that day, and the alternate took her place on the twelve-member panel the following Monday. Once again all counsel were unanimous in their approval of this procedure. Over the course of the next week the jury continued to deliberate without incident. By Friday, December 12, all verdicts as to all defendants were returned, and the jury was dismissed. 52 Mount now argues that the presence of the alternate during deliberations amounts to plain error which requires reversal and a new trial. He offers cases from two circuits which adhere to this per se plain-error rule, United States v. Beasley, 464 F.2d 468 (10th Cir. 1972), and United States v. Virginia Erection Corporation, 335 F.2d 868 (4th Cir. 1964). See also United States v. Chatman, 584 F.2d 1358, 1361 (4th Cir. 1978). Other circuits, however, have shunned the per se rule by requiring reversal only where there is some showing of prejudice. See, e.g., United States v. Allison, 481 F.2d 468 (5th Cir. 1973), aff'd after remand, 487 F.2d 339 (5th Cir. 1973), cert. denied, 416 U.S. 982, 94 S.Ct. 2383, 40 L.Ed.2d 759 (1974); United States v. Phillips, 664 F.2d 971 (5th Cir. 1981); United States v. Watson, 669 F.2d 1374 (11th Cir. 1982); see also Johnson v. Duckworth, 650 F.2d 122 (7th Cir. 1981) (in state court, trial alternate's presence during jury deliberations did not deny appellants a fair trial). We consider this to be the better rule. 53 We do not question that the procedure followed here was at odds with the Federal Rules of Criminal Procedure. Rule 23(b) provides for submission of a case to a jury of less than 12 only where all counsel and defendants agree in writing. Neither the Constitution nor the rules contemplate that a case may ever be submitted to a jury of more than 12. And Rule 24(c) states that [a]n alternate juror who does not replace a regular juror shall be discharged after the jury retires to consider its verdict. These rules are mandatory. It does not necessarily follow, however, that any variance therefrom requires reversal. 22 This is especially so here, where the erroneous procedure was employed at the behest of defense counsel and even consented to by each defendant. The verdicts were returned without complaint, and no serious argument is made that prejudice occurred. We disapprove this procedure, but there has been no violation of substantial rights. On the specific facts presented here, the deviation from proper procedure was not so fundamental as to require reversal. 54 C. Mount's final arguments involve instances of claimed prosecutorial misconduct and the trial court's failure to grant his motions for severance. We reject these arguments for the reasons set forth in parts III-B and C of this opinion. 55 D. The record confirms that Mount received a fair trial and that there was sufficient evidence to support the judgment on counts III, VI, VII, VIII, XIII, and XV. Having rejected all other arguments for reversal we affirm as to these six counts, and reverse counts IV and XII for the reasons stated in part IV-A.V. Douglas Payne 56 A. Douglas Payne was convicted on ten counts of mail fraud (Counts I, II, IV, V, VIII, IX, X, XI, XII, and XIV). The mailings that were the basis of these counts took place from November 3, 1978, up to the time FGS was closed in September 1979. Payne's first argument is that there was insufficient evidence. We disagree. 57 Payne came to work at FGS in January 1978 soon after his close friend, Richard Newham, joined the company. He immediately started serving as Director of Market Research. At this point the fraudulent scheme was in full swing. The question then becomes whether and when Payne began taking an active part in the scheme to defraud. 58 Newham testified that in the summer of 1978 Mount informed him that FGS was virtually broke. He further testified that he discussed the matter fully with Payne (N. I, 24). Payne was taking an active part in making sales to FGS customers. For instance, there was John Reedy, a customer first contacted by FGS in April 1978. 23 He was then called three or four more times by Payne before he was persuaded to invest with FGS (Tr. V, 146). Reedy made another purchase on October 31 of the same year through Payne (id. at 149). Soon thereafter gold prices dropped considerably. On November 17, Payne called Reedy and asked for some money to make a margin call. Reedy refused. After several other calls from various FGS people, such as Mount and Newham, Reedy was told that his account was being closed out and that he would be hearing from FGS's attorney. The call from the attorney never came. 59 This is damaging evidence as to Payne, for it demonstrates that at this point he was aware of the implications of using the margin call to force customers to close out their accounts. Newham testified that every time FGS salespeople made a margin call they were lying to the customer because they had not financed the balance of the contract for the purchase of physicals or otherwise covered the investment (N. I, 36). Moreover, closing out customer accounts, rather than meaning a loss to FGS, meant a gain to it because it decreased the level of obligations on contracts that were never fully covered. 60 Another aspect of Payne's role at FGS was argued to the jury during closing argument. As the Director of Market Research Payne's expertise was depended on when there was a big sale or when there was trouble with a customer's account. In other words, he was the one with the facts, figures, market statistics, and technical jargon that gave FGS an air of legitimacy. One such problem account was that of a Mr. Barnett from Seattle, Washington. At one point he became dissatisfied with the salesman handling his account. The salesman told him not to panic, that he would visit him in Seattle and would bring along an expert. The expert was Douglas Payne. Over lunch Payne brought out charts and graphs and talked at length about the metals market. He closed the meeting with a sales pitch he had used more than once. He told Barnett that he had some bags of silver that he had bought the week before. As a special favor he was willing to let Barnett buy them at the previous week's lower price. This meant a savings of several hundred dollars a bag. As a result Barnett ordered fifty bags of silver at a purchase price of $361,580 (Tr. XVIII, 108-09). Although he received a confirmation on the transaction, when FGS was closed down the next month Barnett learned that the purchase of the metals was never made. 61 This is not a full chronicle of the evidence relevant to Payne's involvement with the fraudulent dealings at FGS. It is enough, however, to demonstrate that Payne was intimately involved with the fraudulent scheme, and that his involvement predated the earliest mailings that were the basis of his convictions. Thus the jury's conclusion that Payne caused the ten mailings that were the basis of his convictions, see Pereira v. United States, supra, and that he possessed the requisite intent to defraud, DeMier v. United States, supra, is amply supported by the record. 24 62 B. Payne, like the other defendants, complains that the instances of prosecutorial misconduct denied him his right to a fair trial. As discussed earlier (see part III-B, ante), we are troubled by the improper cross-examination of Lloyd Kadish. Kadish was called as a defense witness for Payne, and thus an argument can be made that the incident had a greater prejudicial impact as to him. We have considered this possibility but still conclude that under the Namet analysis Payne was not denied his right to a fair trial. His position vis-a-vis the other defendants is not sufficiently different to warrant a different result. 63 C. Payne's last contention is that the trial court erred when it did not grant his many motions for severance. Payne argues that he was prejudiced by the joint trial because much of the alleged misconduct took place prior to his employment with FGS, and, even after he was positioned there, he had minimal contact with the customers who testified. Payne's counsel also argued at trial that severance was necessary because of the different nature of involvement of defendants Payne, Fahr, and Brownrigg. Unlike Kaminski, Mount, and Newham, they were not part-owners of FGS at any time. Therefore, he argues, the jury could not separate the evidence applicable to the two groups of participants. 64 There is some force to this argument as to Payne, as well as Fahr and Brownrigg. Separate trials, however, are not required just because the quantum of proof against each defendant is unequal, United States v. Jackson, 549 F.2d 517, 525 (8th Cir.), cert. denied, 430 U.S. 985, 97 S.Ct. 1682, 52 L.Ed.2d 379 and 431 U.S. 923, 968, 97 S.Ct. 2195, 2968, 53 L.Ed.2d 236, 1064 (1977), or because each defendant did not participate in every act constituting the joined offenses. Haggard v. United States, 369 F.2d 968, 973 (8th Cir. 1966). Further, clear prejudice and an abuse of discretion must still be shown as grounds for reversal. United States v. Losing, supra. This standard has not been met here. The trial court made every effort to give cautionary instructions to the jury about the applicability of evidence to the various defendants. The consistency of the jury verdicts, viewed as a whole, demonstrates the jury's ability to compartmentalize the evidence as it related to each defendant. And our review of the record convinces us that the verdicts also demonstrate a considerable amount of caution as to the jury's findings of guilt. In sum, we find no clear prejudice or abuse of discretion on the part of the District Court. 65 D. In conclusion, we are satisfied that defendant Payne received a fair trial and that there was sufficient evidence to support his convictions. The judgments of the District Court as to Payne are affirmed.