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UNITED STATES v. ROCCO

August 3, 1951

UNITED STATES
v.
ROCCO



The opinion of the court was delivered by: MARSH

In this case, the jury found the defendant guilty of eighteen counts contained in an indictment. Nine counts charged that he transported or caused to be transported stolen securities in interstate commerce in violation of the provisions of 18 U.S.C. (1946 Ed.) § 415, 18 U.S.C. § 2314; and nine counts charged that he sold these securities in violation of the provisions of 18 U.S.C. (1946 Ed.) § 416, 18 U.S.C. § 2315. *fn1"

Defendant moved for judgment of acquittal or in the alternative for a new trial under Federal Rules of Criminal Procedure, rules 29 and 33, 18 U.S.C. In my opinion, the motions should be denied.

 It was shown by the Government that four groups of securities of the face value of $ 240,225 disappeared from four different financial institutions located in the states other than Pennsylvania. After their disappearance and on various dates in the year 1948, defendant sold all or a part of each group of these securities. The proceeds amounted to $ 181,600 plus interest.

 On May 2, 1944, Home Owners' Loan Corporation bonds in the sum of $ 100,225 disappeared from the Bank of America in Los Angeles, California. They were owned by the Bank. On September 28, 1948, and on October 25, 1948, some of these bonds, in the sum of $ 57,600, were sold by defendant through the First National Bank of Indiana, Pennsylvania.

 On May 15, 1945, United States Treasury bonds in the sum of $ 100,000 disappeared from the Union National Bank in Newark, New Jersey, On March 16 and 24, and April 5 and 12, 1948, some of these bonds, in the sum of $ 79,000, were sold by the defendant through the Homer City Bank of Homer City, Pennsylvania. These bonds were owned by Morris Kessler ($ 24,000) and Samuel Hirsch ($ 76,000), both of whom had taken the bonds to the Bank for sale.

 On July 21, 1948, West Penn Power Company bonds in the sum of $ 20,000 disappeared from Blyth and Company, New York, New York, and were sold by defendant on September 10, 1948, through the First National Bank of Indiana, Pennsylvania. Blyth and Company owned these bonds.

 On September 17, 1948, United States Treasury bonds in the sum of $ 20,000 disappeared from Modern Industrial Bank, New York, New York, and were sold by defendant on October 20, 1948, through the First National Bank of Indiana, Pennsylvania. Henry Puchall owned these bonds and had taken them to the Bank as collateral for a loan.

 The Home Owners' Loan Corporation bonds had been called on May 1, 1944. The Treasury bonds and West Penn Power Company bonds were unmatured coupon bonds payable to bearer.

 Also, in view of this evidence, the jury was warranted in finding that the possession of these securities by defendant was not purely coincidental or a mere happenstance. From that possession and the furtive manner of disposition of some of the bonds, as hereinafter set forth, the jury was justified in inferring that the defendant knew that the bonds were stolen and that, at least, he had aided and abetted or caused *fn2" them to be transported in interstate commerce. The sale of the bonds from each purloined group by this defendant was evidence to show that he was part of a fraudulent plan, scheme, or design to dispose of stolen securities, and a strong inference of guilty knowledge arose from this possession alone. By circumstantial evidence, a strong prima facie case was proved showing that the bonds were stolen, that they were transported in interstate commerce, and that defendant knew they were stolen, converted or taken by fraud. There was overwhelming direct evidence that he sold these bonds and received the proceeds. When he failed to take the witness stand and explain his possession, he could hardly expect the jury to draw inferences in his favor and acquit him.

 In addition, it is apposite to note that after he had sold bonds in the amount of $ 79,000 in March and April of 1948 through the Homer City Bank, where he was well known, and after he had priced $ 20,000 of West Penn Power Company bonds and some Home Owners' Loan Corporation bonds *fn3" and indicated an intention to sell them at the same Bank, he went to Indiana, Pennsylvania, six miles away, where he is not so well known, and, through an attorney and director of the First National Bank in that city, in September and October of 1948, sold the $ 20,000 of West Penn Power Company bonds, $ 57,600 of Home Owners' Loan Corporation called bonds, as well as $ 25,000 of Treasury bonds. The natural inference arises that he suspected that the cashier of the Homer City Bank was suspicious of the ownership of these bonds, which was the fact.

 At the trial, defendant objected to the attorney's evidence on the ground of privilege. Since it appeared obvious that there was no attorney-client relationship but instead it was merely that of an agent to sell bonds *fn4" in furtherance of future wrongdoing, that objection was overruled. See 8 Wigmore on Evidence, 3rd Ed. 2296, 2298; Rule 212, American Law Institute's Model Code of Evidence; S.E.C. v. Harrison, D.C. Dist. Co., 1948, 80 F.Supp. 226, 230. Defendant had already learned from the cashier of the Homer City Bank that the called H.O.L.C. bonds were saleable. He also knew from previous experience that it was not difficult to sell Treasury bonds directly through banks. No legal advice was necessary from the attorney and none was given. It did not appear that this attorney made any reasonable inquiry as to the source of ownership by the defendant of these bonds, although the circumstances clearly called therefor. But even if I was mistaken in admitting this testimony, the matter was not pressed, either in the motions or at oral argument or in the briefs, and I deem the point waived. See Ace Grain Co., Inc., v. American Eagle Fire Ins. Co. of New York, D.C.S.D.N.Y. 1951, 95 F.Supp. 784, 786.

 The foregoing, I think, disposes of defendant's contentions that there was insufficient proof that the bonds were stolen, converted or taken by fraud. It also disposes of his contention that he was an innocent holder in due course for value of negotiable securities without notice. Unexplained, he was anything but an innocent holder in due course for value under the circumstances as proved. He had it in his power to explain his possession if he fitted that description, but he chose to remain silent.

 Defendant also attacks his conviction on the ground that the interstate character of the securities had terminated at the times they were sold. Here again, from the circumstances, the jury could infer that he transported or was instrumental in transporting these securities from the place of theft into Pennsylvania for sale at or about the time they were sold. Adapting McNally v. Hill, 3 Cir., 1934, 69 F.2d 38, it is certain that there comes a time in the transportation of stolen securities from one state to another when transportation ceases. If, at that moment, they lose their quality of 'moving as,' or 'which are a part of' or 'which constitute' interstate commerce, then always it would be impossible to enforce the statute against the sale or disposition of stolen securities. Plainly the statute contemplates a situation where the sale is an incident to the theft and transportation which preceded it, and when the sale is so tied up with the interstate transportation in ...


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