Seitz, Van Dusen and Adams, Circuit Judges.
Richard Mischlich was tried and convicted in the District Court for the District of New Jersey of making or causing to be made false entries in the accounts receivable ledger of a member bank of the Federal Reserve System in violation of 18 U.S.C.A. § 1005, and was sentenced to pay a fine of $3,500. Mischlich has appealed, asserting six assignments of error.
On June 30, 1967, a federal grand jury indicted Mischlich, vice-president of the Egg Harbor Bank and Trust Company (Bank),*fn1 and four others on nine separate counts. Count one alleges that Mischlich and the other defendants had conspired to transport fraudulent warehouse receipts in violation of 18 U.S.C.A. § 2314,*fn2 to misapply funds of the Bank with the intent to injure and defraud the Bank in violation of 18 U.S.C.A. § 656,*fn3 and to make or cause to be made false entries in the books of the Bank with the intent to defraud the Bank and the Federal Deposit Insurance Corporation in violation of 18 U.S.C.A. § 1005.*fn4 Counts two through five alleged four separate acts of transporting fraudulent warehouse receipts in violation of 18 U.S.C.A. § 2314. Count six charged that Mischlich had made fraudulent statements to the Small Business Administration in violation of 18 U.S.C.A. § 1001.*fn5 Counts seven and eight alleged that Mischlich made or caused to be made false entries in the accounts receivable ledger of the Bank in violation of 18 U.S.C.A. § 1005. And count nine alleged that Mischlich had violated 18 U.S.C.A. § 656 by misapplying the funds of the Bank for the benefit of James, Mary and William Pappas, three of Mischlich's four co-defendants.
On June 17, 1969, the first of Mischlich's two trials began. The three Pappas defendants pleaded guilty and the Government proceeded to present its evidence to the jury regarding Mischlich and his remaining co-defendant, F. Justin Dick, also a vice-president of the Bank.
The "heart" of the Government's case against Mischlich at the first as well as the second trial was presented by Mrs. Mary Pappas, who testified as follows: The Pappas family controlled the Aristone Canning Company (Aristone)*fn5a and Mrs. Pappas acted as the Company bookkeeper. The Bank had loaned a substantial amount of money to Aristone and had accepted as collateral warehouse receipts representing approximately $27,000 of canned goods. The warehouse receipts, however, were fraudulent in that the canned goods reflected on the face of the receipts were nonexistent. When an impending warehouse audit threatened to expose the absence of canned goods and the worthlessness of the warehouse receipts, Mischlich and the Pappases decided to disguise the lack of goods by substituting accounts receivable for the warehouse receipts. At Mischlich's urging the Pappases pretended to sell the non-existent canned goods to the University Pizza Company, and prepared false documents indicating that University Pizza owed approximately $27,000 to Aristone for the mythical canned goods. Knowing that the accounts receivable were false and non-existent, Mischlich arranged the substitution of the accounts for the warehouse receipts as collateral for the Bank's outstanding loan to Aristone. Dick was the bank official who actually completed the substitution and directed that the appropriate entries be made in the Bank's books.*fn5b
At the close of the Government's case at the first trial, both Dick and Mischlich moved for judgments of acquittal. In response, the trial court dismissed all nine counts of the indictment as to Dick, and as to Mischlich the court dismissed all of the counts except six and seven. Thereafter, Mischlich moved for a mistrial as to counts six and seven on the ground that the jury had heard evidence on all the charges against Dick, and the seven counts against Mischlich, all of which had by then been dismissed, and that the evidence regarding the dismissed counts would necessarily prejudice the jury against Mischlich. Mischlich strenuously urged that instructions to the jury would be ineffective to cure the prejudice created by the introduction of evidence against him unrelated to counts six and seven, which had survived his motions to dismiss. The District Court at first denied Mischlich's motion for a mistrial as to counts six and seven. However, the next day it decided, after reflecting on the problem, that Mischlich's motion should have been granted and consequently declared a mistrial as to the remaining two counts of the indictment. The district judge stated that his reason for declaring a mistrial, after first having denied the motion, was that he believed the jury would be unable to separate the evidence relevant to counts six and seven from the evidence pertaining to the counts against Dick and the counts against Mischlich, which had been dismissed.
On August 25, 1969, Mischlich's second trial began, and following a lengthy proceeding the jury found him guilty of the offenses charged in counts six and seven. After the jury's verdict, however, the court entered a judgment of acquittal as to count six on the ground that the District of New Jersey constituted improper venue as to this count, D.C., 310 F. Supp. 669. Thus left standing against Mischlich was solely the conviction under count seven.
As his first point on appeal Mischlich contends that his acquittal on count one, the conspiracy count, at the close of the first trial collaterally estopped at the second trial his conviction of the substantive offense charged in count seven. The effect of the prior acquittal upon Mischlich's second trial is a thorny question, raising issues that have confused and bedeviled the courts at least since the seventeenth century. Modern decisions have not dispelled the fog created by interrelated and overlapping doctrines grouped together under the rubric of double jeopardy. See Note, Twice in Jeopardy, 75 YALE L.J. 262 (1965). Mischlich contends that the prohibitions of three of these related doctrines have been violated in the present case -- collateral estoppel, relitigation of decided facts, as well as the basic constitutional protection against being twice tried for a single offense.
In an effort to make his way through the thicket Mischlich first refers to Ashe v. Swenson, 397 U.S. 436, 90 S. Ct. 1189, 25 L. Ed. 2d 469 (1970); Hoag v. New Jersey, 356 U.S. 464, 78 S. Ct. 829, 2 L. Ed. 2d 913 (1958); Sealfon v. United States, 332 U.S. 575, 68 S. Ct. 237, 92 L. Ed. 180 (1948); and State v. Cormier, 46 N.J. 494, 218 A.2d 138 (1966). He contends that the holdings of these cases regarding the doctrine of collateral estoppel require us to reverse the conviction under count seven. The general principle enunciated in these decisions is that "* * * when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit." Ashe v. Swenson, supra, 397 U.S. at 443, 90 S. Ct. at 1194. In determining whether the Government is bound by a prior criminal judgment, the courts are exhorted to examine the first proceeding to determine whether a jury in the first case might rationally have based its verdict "* * * upon an issue other than that which the defendant seeks to foreclose from consideration [in the second case]." Ashe v. Swenson, supra, at 444, 90 S. Ct. at 1194, quoting Mayers & Yarbrough, Bis Vexari: New Trials and Successive Prosecutions, 74 HARv. L.R. 1, 38-39. Here, there is no need to reconstruct the basis for the acquittal in the first case, as often is the situation when the prior judgment is premised upon a general jury verdict, for the district judge when he dismissed the conspiracy count specifically stated for the record his reason for so doing:
"In the instant case the defendant was acquitted of the conspiracy count only because the Court failed to find that the conspiracy had as its object any of the substantive violations therein alleged including that embraced in Count VII. This failure of proof is entirely consistent with the determination in the second trial that the substantive offenses had ...