Court Opinion

ID: 9462633
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:46:19.648418+00
Date Added: 2024-06-11T17:37:41.747251
License: Public Domain

*801VAN GRAAFEILAND, Circuit Judge
(dissenting):
“Proper credit judgment” is a wonderfully impressive phrase, a portentous, businesslike phrase, one that rolls readily off the tongue of bankers and financiers in their board rooms and at their clubs. But, what does it mean? The statute under which defendants were convicted contains no reference to it. The district judge never instructed the jurors as to its meaning. We have no idea how these twelve untutored laymen defined it. Last, but not least, my brothers in the majority fail to enlighten us with their interpretation. And yet, this phrase, undefined, unexplained and uninterpreted to this date, forms the very core of the Government’s case on the false statement counts as it was presented to the jury by the district judge.
The majority finds this to be merely “troublesome”. I find it the culmination of a series of errors in the district court’s charge which fairly cry for reversal. I, therefore, respectfully dissent.
Conviction of the defendants under 18 U.S.C. § 1010 required proof of three elements: the making of a false statement in the FHA application, knowing it to be false for the purpose of influencing the FHA to issue mortgage insurance. United States v. Leach, 427 F.2d 1107 (1st Cir.), cert. denied, 400 U.S. 829, 91 S.Ct. 57, 27 L.Ed.2d 59 (1970). The Government did not contend that appellants Harry Bernstein, Florence Behar and Eastern had actual knowledge of the falsity of any of the statements at issue herein. However, the judge instructed the jury that it was unnecessary for the Government to prove to a certainty that these defendants knew a statement was false. He charged that, although knowledge could not be established by proof of mere negligence, it might be found if a defendant was aware of the high probability that a statement was false, unless that defendant actually believed that the statement was not false. He charged further on the theory of conscious avoidance.
If the District Judge had stopped at that point, I would have no fault to find. United States v. Bright, 517 F.2d 584 (2d Cir. 1975); United States v. Egenberg, 441 F.2d 441, 444 (2d Cir.), cert. denied, 404 U.S. 994, 92 S.Ct. 530, 30 L.Ed.2d 546 (1971); United States v. Abrams, 427 F.2d 86 (2d Cir.), cert. denied, 400 U.S. 832, 91 S.Ct. 64, 27 L.Ed.2d 63 (1970); United States v. Sarantos, 455 F.2d 877 (2d Cir. 1972). However, the Judge continued on into what I conclude was error. He charged that it was a question of fact for the jury to determine if the FHA placed an affirmative duty on certain of the defendants.1 He charged that, if there was a duty to investigate, proof of “recklessness” would satisfy the requirement of knowledge under the statute.2 He then instructed the jury to determine as a question of fact whether the defendants Harry Bernstein, Florence Behar and Eastern had the duty to exercise “proper credit judgment” with respect to statements made *802in the mortgage insurance applications and to “insure” that such statements were true.3
The district judge never did specifically and clearly delete the word “insure” from his charge, although even the prosecution urged that he do so. His last instructions to the jury before it retired were:
Now, I also was asked to clarify the charge that I gave you concerning the affirmative duty.
You will recall that I referred to affirmative duty as being a question of fact for you to determine if the FHA [places] an affirmative duty on various defendants. I would like to clarify the nature of that duty which you may or may not find exists.
As to Eastern Service, Harry Bernstein and Florence Behar, the question is, one, was there a duty to investigate and exercise proper credit judgment with respect to statements contained in applications for mortgage insurance submitted to the FHA? [R. 21618].
I have quoted the pertinent portions of the district court’s charge above and in the margin so that the reader might draw his own preliminary conclusions as to its fairness and accuracy. My own comments follow under appropriate headings.

The Nature of the Offense

Defendants were indicted on conspiracy and substantive counts for alleged violations of 18 U.S.C. § 1010, which provides in pertinent part as follows:
Whoever . . . for the purpose of influencing in any way the action of [the Federal Housing Administration], makes, passes, utters, or publishes any statement, knowing the same to be false, . shall be fined [and/or imprisoned].
Defendants were not indicted for violation of instructions contained in the FHA manual or mortgagee’s handbook.4 Nor could they be. The Supreme court has, time and again, pointed out the difference between duties imposed legislatively and those imposed administratively and has held that “[w]here the charge is of crime, it must have clear legislative basis.” United States v. George, 228 U.S. 14, 22, 33 S.Ct. 412, 415, 57 L.Ed. 712, 716 (1913). The contents of an administrative manual or handbook “cannot add to the terms of an act of Congress and make conduct criminal which such laws leave untouched.” United States v. Standard Brewery, Inc., 251 U.S. 210, 220, 40 S.Ct. 139,141, 64 L.Ed. 229, 235 (1920). One may be convicted only for wrongful conduct “defined by statute or by *803regulation having legislative authority, and then only if punishment is authorized by Congress.” Viereck v. United States, 318 U.S. 236, 241, 63 S.Ct. 561, 563, 87 L.Ed. 734, 738 (1943). As Mr. Justice Blackmun succinctly put it, while on the bench of the Eighth Circuit, “mere violation of a [Commodity Credit Corporation] ‘policy’ is not equivalent to a violation of [15 U.S.C.] § 714m(a).” Jacobs v. United States, 359 F.2d 960, 966 (8th Cir. 1966).
Section 1010 places no affirmative duty upon a mortgage insurance applicant to investigate and exercise “proper credit judgment” concerning the financial status of the mortgagor as described in the application. The majority opinion, on the contrary, does exactly that. My colleagues say that a mortgagor must “establish in an appropriate approved standard application form . . . that the mortgage payments are within his means” and that the mortgagee is required to certify that this is true to the best of its knowledge and belief. To equate defendants’ failure to exercise this “proper credit judgment” with a reckless disregard of the truth, and thus with the knowledge of falsity required by § 1010, is to read something into the statute which is otherwise totally absent.
Although the dissent is said to have misconceived the judge’s charge, the dissent conceives quite clearly that a defendant who is required to exercise “proper credit judgment” concerning a mortgagor’s ability to make mortgage payments is held to a different standard of care than one who is not. Where such a standard is not imposed by statute or legislatively authorized regulations, it should not be created out of instructions in a manual and oral testimony. Permitting this to be done was error number one.
A number of statements are made by the majority in support of their decision to affirm with which I find myself in respectful disagreement'. The first of these is Judge Oakes’ statement that the defendant Behar signed certifications “verifying the truth of the information in the applications.” In its unsworn applications for mortgage insurance, the mortgagee “represents” that “to the best of its knowledge and belief” no information contained in the papers furnished is untrue, incorrect or incomplete. A statement made to the best of a persons’s knowledge and belief does not purport to be made on such person’s actual personal knowledge and does not purport to “verify” the truth of the statement. First National Bank v. Gregg, 79 Pa. 384, 387 (1875).
The majority also says that the district court “proceeded to clarify” its charge concerning defendants’ duty to “insure” the truth of statements in the application, which, it concedes, “rather overstates the mortgagee’s responsibility.” Clarifying is what the district judge said he was doing. However, what was required concerning the word “insure” was deletion, not clarification. In the absence of any definition of the phrase “proper credit judgment”, the jury could, and in all probability did, conclude that defendants were required to exercise proper credit judgment to “insure” that the statements in the application were true. This was error number two.
I must take issue with Judge Oakes’ statement that the district court’s charge equating recklessness with knowledge was balanced, as required in United States v. Bright, supra, 517 F.2d at 588, by an additional instruction mandating acquittal if defendants actually believed that the statements made were true. In that portion of his charge dealing with conscious avoidance, the district judge did include this exculpatory clause.5 However, that portion of the *804charge dealing with the duty to exercise “proper credit judgment” and “insure” the truth of statements has been set forth in full herein, and no such instruction is included.
There is a substantial difference between knowledge of falsity as used in the civil sense and in the criminal sense. United States v. Cooperative Grain and Supply Co., 476 F.2d 47, 59 (8th Cir. 1973). Where knowledge is required for violation of a criminal statute, carelessness or lack of wisdom is not its equivalent. Jacobs v. United States, supra. I think our holding in Bright must be interpreted to mean that if a defendant actually believes that a statement is true, he cannot be convicted of a knowing falsity, regardless of how negligently he arrived at that belief. The application of this rule is especially important in a case such as this where the jury was permitted to impose duties upon the defendants derived only from administrative instructions and oral testimony. The failure of the district court to include the balancing clause required by Bright in the “proper credit judgment” portion of his charge was error number three.

The Function of Court and Jury

In the early days of our country, it was customary in most courts for juries to be judges of both the law and the facts. Ill Wharton’s Criminal Procedure § 1745, at 2184 (10th ed. 1918); Foley, Instructions to Juries — Their Role in the Judicial Process, 42 Yale L.J. 194, 202 (1932). However, in most jurisdictions, this practice did not long survive. Over one hundred years ago, this Court firmly announced its adherence to the doctrine that the court decides the law and the jury the facts. United States v. Riley, 5 Bl.C.C. 204 (2d Cir. 1864). Finally, in 1895, in the landmark case of Sparf v. United States, 156 U.S. 51, 15 S.Ct. 273, 39 L.Ed. 343 (1895), the Supreme Court dedared that this procedure would henceforth be followed in all federal courts.
I have already expressed my firm conviction that the strictures imposed upon the defendants by 18 U.S.C. § 1010 could not be enlarged upon by instructions contained in handbooks or manuals of the FHA. Whether they were so enlarged upon in this case, we will never know. This knowledge is secure in the bosom of the jury. The district court left it to the jury to determine as a question of fact from the FHA booklets “and whatever evidence there was, if any, in the case” whether defendants had the affirmative duty to investigate the financial status of mortgage applicants and exercise “proper credit judgment” with respect to statements contained in their applications.
This was not a question of fact; it was a question of law. The construction of statutes and regulations is for the court, not the jury. United States v. Santiago, 528 F.2d 1130, 1135 (2d Cir. 1976); United States v. Guterma, 281 F.2d 742, 751-52 (2d Cir.), cert. denied, 364 U.S. 871, 81 S.Ct. 114, 5 L.Ed.2d 93 (1960); United States v. Gillilan, 288 F.2d 796-97 (2d Cir.), cert. denied sub nom. Apex Distributing Co. v. United States, 368 U.S. 821, 82 S.Ct. 38, 7 L.Ed.2d 26 (1961); Caldwell v. United States, 95 U.S.App.D.C. 35, 218 F.2d 370, 372 (1954), cert. denied, 349 U.S. 930, 75 S.Ct. 773, 99 L.Ed. 1260 (1955). If this were not so there would be as many rules as there are verdicts. Northern Pacific Railway Co. v. Finch, 225 F. 676, 678 (D.N.D.1915).
As Wharton points out, “if juries have any moral right to construe the law, it becomes essential to know what is the construction they adopt.” Wharton’s Criminal Procedure, supra, at 2186. Otherwise defendants will be left rudderless and without established standards to guide them. Moreover, an appellate court will have no means of determining whether a violation of rules *805and regulations, as they have been interpreted by a jury, has occurred.
I cannot better point out the necessity of knowledgeable appellate review than by reference to language in the majority opinion. Judge Oakes states that “if the jury decided that there were no such affirmative duties . . . [defendants] would have been entitled to acquittal . . . .” Let us assume — we will never know — that the jury did decide there were no affirmative duties. Should defendants not have been acquitted? How can we answer this? We are left to ruminate in a vacuum. We do not know what legal duties were imposed upon these defendants by the jury; no other court will ever know, and hundreds of other FHA mortgagees who would like to comply with the law will be equally at sea.
My brothers say that defendants were not prejudiced by the submission of these issues to the jury because the affirmative duty of exercising “proper credit judgment” was imposed upon defendants as a matter of law. I must again disagree. A statement that one is obligated as a matter of law to exercise “proper credit judgment” has little meaning if one doesn’t know what “proper credit judgment” is. If my brothers would come forth with a definition of this phrase and then guarantee that the jury used the same definition in finding the defendants guilty, I might agree that no prejudice existed. So long, however, as the jury was free to define for itself the nature of the duty which, the majority says, was imposed upon defendants as a matter of law, the possibility of prejudice was inescapable.
Moreover, despite a thorough review of the FHA mortgagee’s handbook and pertinent Federal regulations, I find nothing in any instruction, rule or regulation which imposes a duty upon a mortgagee to investigate and exercise “proper credit judgment” with respect to the statements contained in the mortgage insurance applications. This was the responsibility of the Commissioner. 24 C.F.R. § 203.34 provides that “a mortgagor must have a general credit standing satisfactory to the Commissioner.” Section 203.33 provides that a mortgagor’s income may be considered adequate even though certain prescribed limitations are exceeded “if there are other, favorable compensatory factors present, as determined by the Commissioner.”
Section 203.43a provides for the issuance of mortgages in older urban areas such as are involved herein, subject to a determination by the Commissioner “that the mortgage to be insured is an acceptable risk”. The foreword to the mortgagee’s handbook, prepared over the signature of the Commissioner, states that the eligibility of an application for mortgage insurance will be determined “only after complete analysis by the FHA field office with jurisdiction”.
There is nothing in any of these provisions which places upon the mortgagee the duty of exercising credit judgment. We reach far afield when we find such a duty in the requirement that approved mortgagees must “service insured loans”. 12 U.S.C. §§ 1709(b)(1), 17151(d)(1); 24 C.F.R. § 203.9. “Insured” loans have already been made and insured. Servicing them has nothing to do with the exercising of “proper credit judgment” at the time the application for mortgage insurance was being made.
We also indulge in a dangerous practice when we cite cases from the civil side of the court as “analagous” when a determination of criminal liability is being made. First National Bank, Henrietta v. Small Business Administration, 429 F.2d 280 (5th Cir. 1970), and Mt. Vernon Cooperative Bank v. Gleason, 367 F.2d 289 (1st Cir. 1966), the cases cited by the majority, illustrate this very well. First National was an action to recover on a loan guaranty agreement, and the Court of Appeals held that the District Court erred in not submitting to the jury the question of whether the bank had been guilty of negligent misrepresentations in connection with the loan application. Mount Vernon was an action for declaratory judgment to determine the liability of the Veterans Administration under a loan guaranty certificate, the application for which had been forged. The regulations *806governing the issuance of such certificates provide that there shall be no liability where the application therefor is a forgery. The Court held that the Administrator might rely on this disclaimer of liability. For purposes of determining the guilt of appellants in this criminal case, these decisions, I think, are not analogous.
We should also be careful not to transpose the fiduciary responsibilities imposed by the securities laws into a completely alien field. United States v. Squires, 440 F.2d 859, 863 (2d Cir. 1971). Where, as here, the FHA requires that it be furnished credit reports from established credit agencies such as Dun and Bradstreet, it can hardly be said to be relying upon the credit acumen of the mortgagee. Where the FHA furnishes a “Verification of Deposit” form for completion by the mortgagor’s bank and a “Verification of Employment” form for completion by the mortgagor’s employer, it certainly does not expect the mortgagee to go beyond the information contained in these forms and the Dun and Bradstreet credit report and conduct a credit investigation of its own. If it did so expect, it did not say so. The charge of the trial court which permitted the jury to find such a duty was error number four.
The record is clear that the issue of “proper credit judgment” was inserted in the case at the instance of the Government and that it was the Government which wanted this issue submitted to the jury as a question of fact. The defendants opposed this from the outset, and the transcript is replete with illustrations of this fact. Defense counsel advised the court, for example, that the question of affirmative duty “was a legal issue rather than one that should be phrased for the jury to decide”; that it was “an affirmative legal duty, and it seems to me that the legal duty is to be determined solely by the Court and not by the jury”; that “its existence or lack of existence was a matter of law which must necessarily be determined in the first instance by the Court”.
The trial judge did not decide upon his course of action until defense counsel Obermaier was in the middle of his summation. The colloquy between court and counsel at this point is set forth in full in the margin.6 *807I do not construe this exchange between court and counsel as a request by the defendants to charge affirmative duty as a question of fact. The defendants’ subsequent exceptions' to the charge as given clearly indicate that they did not so construe it. Assuming at the worst that defendants did not make their position clear to the trial judge, I would, nonetheless, conclude that his charge was so deficient and defective in material respects as to amount to plain error. United States v. Clark, 475 F.2d 240, 250 (2d Cir. 1973).

What Is Proper Credit Judgment?

On October 3,1967, Mr. P. N. Brownstein, Assistant Secretary-Commissioner, spoke at an FHA director’s conference. He said that the requirement for a finding of economic soundness in riot or riot-prone areas was being eliminated. He stated that the FHA “must be willing to take the risks necessary to accomplish the urgent job of assisting and encouraging private enterprise to house low-and moderate-income families, and to revive the inner city.” He told the directors “we should be prepared to take the risks that are justified and prudent in the light of the urgent social objectives to be achieved.” C # 1164-78. These were the professed aims of the FHA, made in accordance with a national housing policy seeking the elimination of sub-standard and other inadequate housing. 42 U.S.C. § 1441.
What, then, is the standard by which the “proper credit judgment” required of the defendants should be measured? Is it that which would be exercised by a prudent private investor, or should the broad social purposes of the National Housing Program be taken into account? The district court didn’t say, and we, like the jury, are left in doubt. Such vagueness is fatal to the Government’s position, because the jury was without any clearly defined standards by which defendants’ guilt could be determined. United States v. L. Cohen Grocery Co., 255 U.S. 81, 41 S.Ct. 298, 65 L.Ed. 516 (1921); Smith v. Goguen, 415 U.S. 566, 94 S.Ct. 1242, 39 L.Ed.2d 605 (1974).
In United States v. Clark, supra, 475 F.2d at 249, we quoted with approval Judge Hand’s statement in United States v. Gillilan, supra, 288 F.2d at 797, that “the statute requires some definition of the meaning of the words which may not be left to the jury.” In Clark, we found error in the trial judge’s failure to charge the meaning of “specific intent” and “inference”, which seem to me to be more easily defined than *808“proper credit judgment”. Where a jury, as in the instant case, is left to operate “almost completely in the dark”, United States v. Howard, 506 F.2d 1131, 1134 (2d Cir. 1974), in an area as vital as this, it cannot be said that defendants have been fairly tried and convicted. This was error number five.

Conclusion

In permitting the jury to determine as a question of fact whether the defendants Harry Bernstein, Eastern Service Corporation and Florence Behar were to be held to an undefined standard of exercising “proper credit judgment”, the district court committed prejudicial error which requires reversal of the conviction of these defendants on the false statement counts.
Moreover, the prejudicial effects of the district court’s errors cannot be limited to these charges and these defendants. Because the conspiracy charge against all defendants encompassed both bribery and the filing of false statements, I believe we have no alternative but to reverse all of the conspiracy convictions. The court’s erroneous charge on the making of false 'statements must be held to have tainted the conspiracy convictions as well.
If the convictions on the conspiracy count are reversed, we are presented with the question of whether defendants were prejudiced by the eight months’ trial involving 64 other counts, held together only by the charge of conspiracy. I agree with the majority that, so long as the conspiracy provided a link sufficient to demonstrate a common scheme or plan for joinder purposes, the question of prejudice, while close, was within the trial court’s discretion. United States v. Miley, 513 F.2d 1191, 1209 (2d Cir. 1975). Moreover, there is no “hard- and-fast formula that, when a conspiracy count fails, joinder is error as a matter of law.” Schaffer v. United States, 362 U.S. 511, 516, 80 S.Ct. 945, 948, 4 L.Ed.2d 921, 925 (1960). However, the trial judge does have a continuing duty at all stages of the trial to grant a severance if prejudice does appear, id. at 516, and I think the duty to remedy prejudice becomes ours if such prejudice does not become apparent until the matter reaches our court.
In United States v. Branker, 395 F.2d 881, 887 (2d Cir. 1968), cert. denied sub nom. Lacey v. United States, 393 U.S. 1029, 89 S.Ct. 639, 21 L.Ed.2d 573 (1969), where the conspiracy count was dismissed at the close of the government’s case, we said:
Originally twelve defendants and six co-conspirators were named in eighty-four counts. The eight defendants who were tried were named in eighty substantive counts charging violation of six criminal statutes. While it is true that this court has on several occasions sustained convictions on substantive counts after dismissal of a conspiracy count relied upon to justify joinder [citations omitted], we are not aware of any such case in which the number of counts even approached the number involved here. It is obvious that as the number of counts is increased, the record becomes more complex and it is more difficult for a juror to keep the various charges against the several defendants and the testimony as to each of them separate in his mind. [Citations omitted].
This kind of prejudice is particularly injurious to defendants who are charged in only a few of the many counts, who are involved in only a small proportion of the evidence, and who are linked with only one or two of their co-defendants. The jury is subjected to weeks of trial dealing with dozens of incidents of criminal misconduct which do not involve these defendants in any way. As trial days go by, “the mounting proof of the guilt of one is likely to affect another.” [Citations omitted].
This quotation describes exactly the situation which existed in the trial below. The relationship between the false statement counts and the bribery counts was tenuous at best, and there was bound to be an adverse spillover effect from one to the other in this unduly long trial. United *809States v. Kelly, 349 F.2d 720, 759 (2d Cir. 1965), cert. denied, 384 U.S. 947, 86 S.Ct. 1467, 16 L.Ed.2d 544 (1966). I will give only two illustrations. Appellant Rose Bernstein was forced to sit through eight months of unrelated and prejudicial testimony in order to be convicted on four counts of aiding and abetting bribery. Appellant Cardona was required to wait five months after the Government completed its proof against him before he was able to offer any testimony in his own defense. I cannot escape the “definite and firm conviction” that defendants may have been prejudiced by the trial resulting from the conspiracy charge which, in my opinion, cannot stand, and therefore their convictions must be reversed. See 1 Wright, Federal Practice and Procedure § 227, at 470 (1969.)
Following his conviction, Mr. Bernstein, a reputable “white collar” businessman, was sentenced to prison for five years. For this 67 year old man who had had a heart attack during the course of the trial, this could well be a life sentence. His 65 year old wife was given a four year sentence. Fines levied against them and their company totaled $685,000. Although the other defendants were treated somewhat more kindly by the District Judge, this was indeed, a vigorous performance of his duties. Before I can join my colleagues in approving this result, I must be more satisfied than I now am that the defendants received a fair trial.
I dissent.7

. Now, it is a question of fact for you as jurors to determine from the evidence you have heard in this case — and you have heard testimony from HUD representatives and from others, the exhibits that you will find were introduced and received in evidence, the papers from which I just read now, which the Court took judicial notice of, and the mortgagee’s handbook and the FHA manual, and whatever other evidence there was, if any, in the case, is for you to determine if the FHA, of the Housing and Urban Development, places an affirmative duty on certain of the defendants in this case.
You may in making such a determination consider the regulations that have been read to you during the course of the trial, the testimony of the witnesses concerning them, the instructions concerning the applications necessary to be filed, and the papers necessary to make up the complete application. You recall they referred to that as a package, if I recall correctly. [R. 21386],

. Finally, in the contest [sic] of this case there is a third way of satisfying the requirement of knowledge. Where a person who makes, passes, utters or publishes a false statement is under an affirmative duty to investigate the element of knowledge is satisfied by proof beyond a reasonable doubt that a defendant recklessly stated as facts things of which he was ignorant, or acted with a reckless disregard of whatever statements made were true. [R. 21425].

. Now, in the light of the National Housing Act, part of which I read, and about which you heard testimony from Mr. Hipps, I believe, and possibly Mr. Sanders, the Federal regulations which were set forth in the eligibility requirements for approval of mortgagees who submit applications to the FHA and which set forth eligibility requirements for mortgagors, the the instructions contained in the mortgagee’s handbook, the requirement that a mortgagee certify that all information in an application is true and complete to the best of its knowledge and belief, and the underlying policy of reliance by the FHA on ■ the mortgagee to submit complete and truthful information, you may find that the FHA program places a duty on the mortgagee to investigate and exercise proper credit judgment with respect to statements contained in applications for mortgage insurance submitted to the FHA.
Now, if you find that there is such an affirmative duty, then the standard of recklessness, which I mentioned earlier, is applicable to the defendant Eastern Service Corporation, which is an approved mortgagee.
You should also in that regard consider what persons played a role in setting the policy of Eastern Service Corporation with respect to credit applications, and what person had the responsibility to sign the mortgagee certificate on behalf of Eastern Service Corporation. Also, in this regard you may determine whether or not the evidence shows beyond a reasonable doubt that the defendants Harry Bernstein and Florence Behar occupied such a position. You may find that any person in such a position had an affirmative duty to insure that statements made in the application were true, and if you so find, then the standard of recklessness is also applicable to such a person. [R. 21425-26],

. Although the District Court used the term “regulations”, testimony introduced by the government indicated that the procedures outlined in the FHA manual and mortgagee’s handbook were not regulations, but rather instructions.

. Judge Oakes correctly states that the District Judge gave his “balanced” charge twice. However, this took place three days prior to the “proper credit judgment” portion of the District Judge’s charge, when he was distinguishing between negligence on the one hand and reckless disregard and conscious avoidance on the other. The portion of the charge in which this occurred had nothing to do with the affirmative duty of exercising “proper credit judgment”. The District Judge charged that, where such a duty existed, there was a “third way” of satisfying the requirement of knowledge. He then stated that when a defendant is under an affirmative duty to investigate, “the element of knowledge is satisfied by proof be*804yond a reasonable doubt that a defendant recklessly stated as facts things of which he was ignorant, or acted with a reckless disregard of whatever statements made were true.” To conclude that the jury was sophisticated enough to apply the balancing requirement of Bright to this “third way” of proving knowledge, is to credit these twelve laymen with a prescient grasp of legal principles not readily found even among lawyers.

. Mr. DePetris [Asst. U. S. Atty.]: As I understand it you would tell the jury, you may find that there is an affirmative duty if you so find that the principle of recklessness—
The Court: Yes, instead of as a question of law. Because I have checked not only the National Housing Act, but all the regulations that have been discussed in the course of the trial and — and the argument produced by Defense Counsel — I don’t remember which it was particularly — to the effect that there is no specific requirement in any of them stating that there is an affirmative duty on the part of anyone, except insofar as the mortgagee handbook is concerned which could be deduced such a duty insofar as the mortgagee is concerned, and those dealing with the application — the 2900 form. But I found nothing directly along the lines that might be applicable either to Dun & Bradstreet, Prescott & — and 1 just heard somebody quirp Eastern Service. But of course, I am not thinking about that.
Mr. Soviero: I wasn’t quirping.
The Court: I know you weren’t but you did say something in there. But Eastern Service I am categorizing as a mortgagee approved lender. And they are at least in command of, in possession of the mortgagee handbook from which some decisions could be arrived at by the jury to the effect that there is some duty owing to the FHA. Whom 1 meant, however, was Cronin, I believe.
Now, if there is anything further, Mr. DePetris, I would be very happy to hear you before I make my decision final.
Mr. DePetris: No, Your Honor. In fact, that was the way we had initially submitted it in our request to charge. That is, leave it as a question of fact for the jury. And it was only that Defense Counsel requested that it be charged as a question as a matter of law. If Your Honor prefers to leave it to the question of the jury, then that’s all right with us.
So as I understand it, they will be told they may find a duty — an affirmative duty. And if they do find, then the principle of recklessness—
The Court: Then it would apply.
Mr. DePetris: Fine.
The Court: But it’s up to them to find.
Mr. Obermayer: Our application this morning was without prejudice to our position that it’s not an appropriate subject for the jury.
The Court: All right.
Mr. Wall: Mr. Prescott will join in Dun & Bradstreet’s motion.
The Court: Well, their position, if I understand it correctly, is that—
Mr. Wall: It’s a question of law which should be charged to the jury.
*807The Court: Yes.
Mr. DePetris: Wait. As I understand it—
The Court: Mr. Obermeyer and Mr. Prescott — rather Mr. Obermayer and Mr. Wall both argue that it should be a question of law for the Court to decide and not for the jury to decide as a matter of fact.
Mr. Obermayer: Our position is — at least my position is that under these circumstances no affirmative duty arises, and the whole subject of affirmative duty should not be discussed with the jury. We understand the Court will discuss it with the jury and we are bound by Court’s ruling in that regard.
The Court: All right.
Mr. DePetris: Is it your position that it should be charged one way or another as a matter of law?
The Court: No. He is saying not to take up the subject at all.
Mr. DePetris: Fine.
The Court: Do you understand that?
Mr. DePetris: Yes.
Mr. Obermayer: That’s fine.
Mr. Wall: That is precisely Mr. Prescott’s position.
Mr. Rosenkranz: Mrs. Behar joins in that.
The Court: Mr. Rosenkranz.
Mr. McEvoy, on behalf of Eastern Service and Harry Bernstein.
All counsel join? Is there any counsel who does not join?
Mr. Soviero: I don’t join because I am not involved in any false statement counts. But I am named in the conspiracy count so I join.
The Court: All right. Mr. Soviero, well, you weren’t—
Mr. Soviero: Well—
The Court: Your client.
Mr. Soviero: It’s getting to feel that way, Your Honor.
The Court: All right. Then all counsel join. All right. I suppose, Mr. McEvoy, you join on behalf of Mr.—
Mr. McEvoy: Mr. Bernstein.
The Court: On behalf of Mr. Brodsky.
Mr. McEvoy: Yes.
The Court: All right. May we proceed then.
[R. 19770-74].

. Among the issues which divided this panel was the claimed multiplicity of bribery counts. In order that disposition may be made of this issue, I join in so much of the opinion and judgment as holds that such counts were not multiplicitous.