Opinion ID: 1508506
Heading Depth: 1
Heading Rank: 1

Heading: The Carlough Checks.

Text: In 1936 a man named Carlough arranged for certain professional work by Dr. Schireson and an associate, Dr. Smilie, to be performed upon Mrs. Carlough. The work was done. Pursuant to the arrangement made Carlough delivered three checks to Dr. Schireson, one for $2,000 in July of 1936, and two for $1,000 each in August and November, 1936. These checks were endorsed by Dr. Schireson and deposited by Miss Roberts in her personal account in the Merchantville bank. It is the theory of the government that Dr. Schireson had placed this money in his wife's hands, in contemplation of bankruptcy, in order to conceal it from his creditors. The defendant contended that the checks were turned over to his wife in payment of debts due her by Dr. Smilie and himself. The trial court submitted fairly and adequately the fact issues between the parties with regard to these Carlough checks, adding that if the jury believed that it was Dr. Schireson's money and that he concealed it by putting it in Miss Roberts' possession, in contemplation of bankruptcy, and did not schedule it, then he, the defendant, could be convicted on both counts. It may well be within the power of Congress to declare that one who, within the shadow of the approaching specter of bankruptcy, gives away his assets may be guilty of a crime. But it is neither the crime of concealment nor false swearing with regard to assets on hand at the time the bankruptcy occurs. As said above there cannot be concealment of assets from a trustee until there is a trustee. United States v. Yasser, supra. Even if the defendant did give this Carlough money to Miss Roberts in contemplation of bankruptcy and, accepting the government's theory, retained equitable ownership therein himself, he is not guilty of concealing it unless the funds were on hand when the point of bankruptcy was reached. While the government's evidence traced with care the course of dealing in the securities turned over by the defendant to Miss Roberts in 1930, there was no evidence that any of this Carlough money remained in her possession at the time of the bankruptcy. Several months had elapsed in the meantime. Under these circumstances the inference that there was anything left from this $4,000 in Miss Roberts' hands on April 22, 1937, when the money had been turned over in the summer and fall of 1936, is not one which can be drawn without more proof than the mere turning over of the money. Reiner v. United States, 9 Cir., 1937, 92 F.2d 823. A careful search of the entire transcript fails to reveal any such proof. Since the jury were told that they could convict on the testimony with regard to these checks we feel that the defendant has been prejudiced and the case must go back for a new trial. The judgment is reversed, and a new trial ordered.