Reargued January 12, 1972 (En Banc).
Seitz, Chief Judge, and Kalodner, Van Dusen, Aldisert, Adams, Gibbons, Max Rosenn, James Rosen and Hunter, Circuit Judges. Seitz, Chief Judge (concurring). Aldisert, Circuit Judge (dissenting). Kalodner, Circuit Judge (dissenting).
Following a three week jury trial, Angelo DeCarlo and Daniel Cecere*fn1 were convicted of violations of 18 U.S.C. §§ 892, 894, prohibiting extortionate credit transactions, and they appealed. The original argument of the appeals was on December 4, 1970 and the opinion of the panel was handed down on August 5, 1971. As a result of a petition for rehearing, arguments were submitted to the Court en banc.
The points raised present vexing questions whether certain testimony, admitted into evidence as part of the government's case, should have been excluded and whether even if it were otherwise admissible it was so prejudicial that these defendants should be given a new trial. The issues are vexing not because this record permits any doubt regarding the proclivities of these defendants, but because of our abiding concern that every individual be afforded a fair trial before being convicted.
The Government's chief witness against DeCarlo and Cecere was Gerald Zelmanowitz, a securities analyst who also engaged in arbitrage.*fn2 Price differentiations between foreign and domestic markets are so small that Zelmanowitz required large sums of money in order to make his arbitrage operation profitable. He spoke to Louis Saperstein, and convinced him to deposit $50,000 in a Swiss Bank to be used for the arbitrage account, with profits to be divided equally. In search of more funds for the account, Saperstein and Zelmanowitz then approached DeCarlo and asked him to lend them $100,000. DeCarlo referred them to Cecere for the funds, but Cecere turned down their request for a loan. Cecere desired instead to invest that amount of money on behalf of DeCarlo, Polverino and himself in return for 50% of the profits. As a further element of the bargain, the three agreed to cancel a loan of $50,000 which they had previously made to Saperstein and thus increase their investment in the arbitrage operation to $150,000. From Saperstein's point of view, this arrangement reduced his outstanding loans from these men to $200,000.
In its initial period, the partnership was a financial success, netting a profit of $85,000 in its first sixteen trading days. The Internal Revenue Service, in December, 1967, however, refused to issue the necessary tax equalization forms to Zelmanowitz, thereby bringing the business to a standstill. Saperstein's serious difficulties with DeCarlo and Cecere began to develop at this point. "Vigorish" payments -- the term used by the parties to mean interest -- on the $200,000 of outstanding debt were extremely large judging from the $800 per week interest Saperstein owed on the $50,000 debt which had been cancelled. In desperate need of funds, Saperstein told Zelmanowitz that he was in fear of bodily harm because he owed these men a considerable amount of money and convinced Zelmanowitz to permit him to withdraw $40,000 from the arbitrage account in order that he might be current with his payments to DeCarlo and Cecere. In July, 1968, Saperstein again fell behind in his payments and received a loan of $5,000 from Zelmanowitz. Later in the month, Saperstein attempted to borrow an additional $80,000 from Zelmanowitz, and after being refused, asked for $5,000 to meet the "vigorish" payment. In a state of despair, Saperstein then left.
In September, 1968 presumably because of his inability to pay his debts, Saperstein disappeared. Cecere called Zelmanowitz in an attempt to locate Saperstein, telling Zelmanowitz that DeCarlo, Polverino, Landusco, and Cecere merely wanted to sit down with Saperstein to work out a schedule of payments. Zelmanowitz arranged to meet with Saperstein on September 13, 1968 in the Americana Hotel in New York. A meeting was arranged for later in the day between Saperstein, Cecere and a Cecere aide called Lenny. At the second meeting, Saperstein pleaded with Cecere not to harm him, and even went so far as to offer to take out a life insurance policy for $100,000, with Cecere as the beneficiary, and to commit suicide by jumping out a window in return for Cecere's not harming his family. Saperstein was then taken by Cecere and Lenny to a place owned by DeCarlo behind Weiland's Restaurant in Mountainside, New Jersey, and Zelmanowitz was told to meet them there. Zelmanowitz testified that on entering the house:
"There was a group of people in the first room as I entered, and I heard my name called, and there is another room attached to this room which I entered, and when I got in there Mr. Saperstein was laying on the floor. He was purple. He was bloody. His tongue was hanging out of his mouth * * * I thought he was dead * * *."
He further testified that Polverino and Cecere were kicking and punching Saperstein when he arrived. DeCarlo then entered the room at which time Cecere said to him, "This s. o. b. stole our money. I am going to kill him." DeCarlo told Cecere and Polverino to stop the beating and get outside. DeCarlo, Cecere, Polverino, Zelmanowitz and Saperstein entered a station wagon parked outside and discussed the money owed by Saperstein. After Saperstein told DeCarlo that he had no money at all, DeCarlo told him to pay $5,000 every Thursday and the entire $200,000 by December 13, 1968 or Saperstein "would be dead". Saperstein explained that he had been paying only $3,500 per week in "vigorish" and that the maximum he could afford to pay now was $3,000. DeCarlo's reply was "Forget about it. Bring five or you're dead". Testimony indicated that from September 13, 1968, the date of the beating, until his death from acute arsenic poisoning on November 26, 1968, Saperstein was frequently very depressed.
At some time prior to his death, Saperstein wrote a letter to the Federal Bureau of Investigation that was mailed on November 25, 1968 the day before he died. The following portions of the letter were admitted into evidence with a cautionary instruction:*fn3
"Federal Bureau of Investigation, Newark, New Jersey.
"Gentlemen: I am writing you, maybe others can be helped by my plight. On September 13, 1968, I was severely beaten at a place in the rear of Weiland's Restaurant, Route 22, DeCarlo's headquarters. I was then told and given 3 months until December 13, 1968 to pay the entire accumulated amount under threat of death. Cecere, DeCarlo and Polverino, also stated many times my wife and son would be maimed or killed. Please protect my family -- I am sure they mean to carry out this threat.
"Last night from my home I called DeCarlo and pleaded for time but to no avail. Over the phone DeCarlo stated unless further monies was paid the threats would be carried out.
2. Defendants' Major Contentions
DeCarlo and Cecere advance three major contentions: (1) the statute under which they were indicted is unconstitutional; (2) the district court committed reversible error when it admitted into evidence the letter from Saperstein to the F.B.I., and (3) the admission into evidence of the cause of Saperstein's death was so prejudicial that defendants should be granted new trials.
A. Constitutionality of the Act
The first argument, that the statute is unconstitutional, was laid to rest in the past term of the Supreme Court. In Perez v. United States, 402 U.S. 146, 91 S. Ct. 1357, 28 L. Ed. 2d 686 (1971), the Supreme Court rejected the contentions advanced here and upheld the validity of 18 U.S.C. §§ 892, 894. Further consideration is, thus, unnecessary.
The second point, concerning the admissibility of the Saperstein letter, raises questions of interpretation of the Act and of the scope of the so-called state-of-mind exception to the hearsay rule. In the district court, both the Government, in offering the letter, and the court, in ruling that certain portions of it were admissible, made clear that the contents of the letter would be used solely to show Saperstein's state of mind during the period of the alleged conspiracy. DeCarlo and Cecere objected to the admission of the letter on the grounds, inter alia, that it was not a proper dying declaration, that the letter was prejudicial, and that they were denied their Sixth Amendment right to confront the witnesses against them. Here, they raise for the first time the additional contention that the letter was irrelevant for the purpose of proving a crime based on the statutory provisions under which DeCarlo and Cecere were indicted.*fn4
Hearsay is traditionally defined as an unsworn, out-of-court statement offered in court for the truth of the matter stated. See e. g., 5 J. Wigmore, Evidence § 1361 (3d Ed. 1940). Testimony relating to the state of mind of the out-of-court declarant, on the other hand, is generally not hearsay because, although the declaration is unsworn and given out of court, it is not offered for the truth of the matter stated. Doubtless, a number of out-of-court statements could have value both for the truth of the matter they contain and for the state of mind of the declarant. The Saperstein letter is such a statement.
Had the letter been admitted for the truth of its assertions, it would have tended to show that Saperstein was beaten on September 13th and in fact owed DeCarlo and Cecere a sum of money. It would have fallen then within the definition of hearsay, and would not have been admissible unless it came within one of the recognized ...