The opinion of the court was delivered by: GOURLEY
In this criminal proceeding, both defendants, Hildur L. Nystrom and Samuel A. Kennedy, pose a motion for new trial. Rule 33, Federal Rules of Criminal Procedure, 18 U.S.C.A.
The defendants were jointly indicted and tried on thirty-four (34) counts of three separate indictments for misapplication of bank funds in violation of Title 18, Section 656, U.S.C.A., and for conspiracy to misapply funds of the Union National Bank at McKeesport, Pennsylvania, in violation of Title 18, Section 371, U.S.C.A.
Indictment No. 13662 originally contained twenty-two counts. Twenty-one counts of this indictment charged the defendants with making fictitious deposits in whole or in part. Counts 1 to 9 inclusive alleged that the whole deposit ticket was fictitious. Counts 10 to 21 alleged that deposit tickets were altered by adding to a deposit ticket and that the amount added was fictitious. Count 22 (referred to as the Vabich transaction) of said indictment alleged that the defendants made a deposit to Kennedy's special account which deposit was the proceeds of a check issued by an insurance company in the sum of $ 510, payable to John Vabich and the Union National Bank in full and final settlement of all claims of Vabich and the bank as a result of a fire loss to a truck owned by Vabich and insured, which check was to be applied on a loan made to Vabich by the bank on said truck but which amount was not credited to the loan account of Vabich in said bank.
In Indictment No. 13664, the defendants were charged on five substantive counts and one conspiracy count of misapplying bank funds by paying Kennedy's payroll checks from funds of the bank when Kennedy did not have a sufficient credit balance to cover and pay said checks.
In Indictment No. 13665, the defendants were charged on five substantive counts (involving 5 checks) and one conspiracy count of misapplying bank funds by paying NSF checks and making fictitious deposit tickets.
At the close of the government's evidence, each of the defendants submitted motions for judgment of acquittal on all the thirty-four counts of the three indictments. Due to insufficient evidence the Court entered judgment of acquittal for each defendant on Counts 2, 16 and 22 of Indictment No. 13663 (pertaining to fictitious deposits and the Vabich transaction); on all counts of Indictment No. 13664 (pertaining to payroll checks); on Counts 1 to 5 of Indictment No. 13665 (pertaining to NSF checks) and on that portion of Count 6 of said indictment pertaining to the conspiracy regarding the NSF checks, particularly overt acts 5 to 8. The Court refused the motions for judgment of acquittal on the nineteen substantive counts of Indictment No. 13662 and on the remaining portion of the sixth count of the Conspiracy Indictment No. 13665, alleging four overt acts. 115 F.Supp. 500. Both of these indictments pertain to fictitious deposits.
At the conclusion of all the evidence in the case, the defendants again moved for judgment of acquittal. The Court reserved decision on each of the defendants' motions and submitted the case to the jury.
On August 19, 1953, the jury returned a verdict of guilty as to both defendants on the nineteen substantive counts and the one conspiracy count.
Defendants' motions for judgment of acquittal were exhaustively argued in open court, and refused by formal opinion and order of this court dated October 21, 1953.
The government's theory of the case was as follows:
Kennedy, a businessman and customer of the Union National Bank, aided and abetted Nystrom, a teller, and both conspired over a three year period (January 1948 to December 1950) to misapply funds of the Union National Bank. This action was pursued by making fake deposit tickets in whole or in part to Kennedy's regular and special accounts in the Union National Bank for the purpose of padding those accounts in order to take care of Kennedy's NSF checks or overdrafts in the Union National Bank; that in making the fake deposits and honoring the NSF checks, Kennedy and Nystrom misapplied the bank funds with intent to injure and defraud the bank; that because of the pending merger and expected audit of the Union National Bank and Peoples Bank (the merger occurred on February 24, 1951) to the knowledge of Nystrom, Nystrom staged or faked a holdup to cover up a shortage of $ 58,744.
Defendants' theory of the case was that there was no misapplication of bank funds; that it was the policy of the bank to pay Kennedy's NSF checks; that the deposit tickets were not fictitious but genuine in that Kennedy made the deposits to his regular and special accounts from his own personal funds when his said business accounts needed money, and that subsequently he reimbursed himself from business funds from time to time by either deducting the amounts from subsequent deposit tickets when he made a deposit to his business account or by drawing a check on his business accounts to himself.
It should be noted that this trial consumed approximately 73 days of trial, that a mass of oral and documentary evidence was produced by both the government and defendants, which if transcribed, is estimated to comprise a record in the area of ten thousand pages. Over one hundred witnesses ...