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United States v. Nat Tarnopol

argued: May 5, 1977.

UNITED STATES OF AMERICA
v.
NAT TARNOPOL (NO. 76-1542), PETER GARRIS (NO. 76-1543), IRVING WIEGAN (NO. 76-1544), LEE SHEP (NO. 76-1545), CARL DAVIS, MELVIN MOORE AND CARMINE DE NOIA, APPELLANTS



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (Criminal No. 75-312).

Gibbons, Maris and Hunter, Circuit Judges.

Author: Maris

MARIS, Circuit Judge:

The appellants, Nat Tarnopol, Peter Garris, Irving Wiegan and Lee Shep, appeal from their convictions of violations of the federal mail fraud statute, 18 U.S.C. § 1341, and of conspiracy to commit mail fraud in violation of 18 U.S.C. § 1341, wire fraud in violation of 18 U.S.C. § 1343, and fraud against the United States in violation of 18 U.S.C. § 371.

The facts of the case as they appear from the evidence viewed in the light most favorable to the government may be briefly summarized. See Glasser v. United States, 315 U.S. 60, 86 L. Ed. 680, 62 S. Ct. 457 (1942). Brunswick Record Corporation (herein "Brunswick"), a New York corporation with offices in New York City, New York and Chicago, Illinois, and Dakar Records, Inc. (herein "Dakar"), a Pennsylvania corporation also with offices in New York City and Chicago, from 1971 to 1975, the period relevant to the criminal charges against the appellants, were engaged in the business of producing, marketing and selling phonograph records featuring artists' renditions of "soul" and " rhythm and blues" music. Columbia Record Productions (herein "Columbia"), a division of CBS, Inc., at its record pressing plant and distribution center located in Pitman, New Jersey, manufactured records from original recordings produced by Brunswick and Dakar. Columbia shipped records thus manufactured to customers according to instructions received from Brunswick and Dakar.

Nat Tarnopol was president and controlling stockholder of Brunswick and sole stockholder of Dakar. Peter Garris was executive vice-president, sales manager and a stockholder of Brunswick. Irving Wiegan was secretary-treasurer of the two corporations and a stockholder of Brunswick. Lee Shep was production manager for the corporations in charge of placing and processing customers' orders with Columbia. Carl Davis, Melvin Moore and Carmine De Noia, also known as "Doc Wassel", were acquitted co-defendants of the appellants. Davis was a vice-president and stockholder of Brunswick in charge of operations at Brunswick's recording studio in Chicago. Moore was in charge of promoting Brunswick and Dakar recordings with distributors and disc jockeys. De Noia, although not employed by Brunswick or Dakar, allegedly used their facilities from time to time and was engaged in the sale of records including those produced by Brunswick and Dakar.

It was the government's contention that sales of over $350,000 worth of Brunswick and Dakar records were not recorded on the corporations' books, that the proceeds of the sales in the form of cash or merchandise were retained by the defendants or used to create a fund out of which improper payments were made to disc jockeys and program directors of radio stations to secure favored treatment of Brunswick and Dakar recordings, and that the transactions were used to defraud the United States by impeding the functions of the Internal Revenue Service, and to defraud artists, song writers and publishers to whom the corporations were obligated to pay royalties based on sales as well as radio stations and the listening public who were deprived of the honest services of the radio stations' employees. Three of the government's witnesses were Brunswick employees, Edward Hurley, an unindicted participant in the alleged criminal activities, who was employed by Brunswick to solicit sales from the military and the export market, and Martha Archie and Anita Campbell, Brunswick bookkeepers. Other government witnesses included recording artists under contract to Brunswick, representatives of record distributors and retailers, a disc jockey and program directors for radio stations located in Cleveland, Ohio and Chicago, Illinois.

Sales of Brunswick and Dakar records were processed as follows. Garris informed Shep of customers' orders for records. Shep directed Columbia, by telephone, to fill the orders. This Columbia did out of its stock of records. If the stock was depleted, Columbia manufactured the required quantity and made shipment directly to the customer. A shipping document known as a "packing slip" accompanied each shipment, Columbia retaining one copy of the shipping document and mailing a second copy to the Brunswick offices in New York, attention of Shep, to confirm the fact of shipment. Wiegan, who opened the mail at Brunswick, channeled to Shep these confirmation slips, the Brunswick copies of the packing slips.

With the exception of sales made for cash or in exchange for merchandise, Shep, after noting on the slip the number, type and price of the records, passed it on to the billing department where Mrs. Archie entered the sale in the sales journal, posted it to the customer's card in the accounts receivable ledger which she maintained, and prepared an invoice for billing purposes. The sales for cash or merchandise were not recorded in these books.*fn1

In the case of sales of records - usually at substantial discounts - for cash or merchandise,*fn2 where the buyer received delivery from Columbia, Shep retained the confirmation slips instead of transmitting them to the billing department, and the transactions were not recorded by Mrs. Archie. Some sales for cash were made out of a large stockpile of records kept in Tarnopol's New York office. These transactions were also unrecorded on the books kept by Mrs. Archie. Various other artifices were employed by the defendants and adjustments made to Brunswick's sales records to conceal the nature of the payments made for records received from Brunswick or to eliminate the purchaser's obligation appearing on the books.

When Cardinal Export Corporation demanded payment of the value of merchandise delivered to the defendants in excess of the value of the Brunswick records it had received, false invoices were prepared by a Brunswick employee purporting to have been sent to Brunswick by Cardinal Export Corporation for recording equipment never actually ordered or received by Brunswick and costing an amount equaling that owed Cardinal Export Corporation. Cardinal Export was then paid out of Brunswick's funds.

Tarnopol arranged with Joseph Voynow, president and owner of Carol Distributing Company, to purchase a new Cadillac Eldorado automobile which Voynow had recently acquired. Payment by Brunswick for the car was reflected on Brunswick's books by a "correction" to Carol Distributing Company's account with Brunswick resulting in a credit to that company in the amount of the cost of the car.

Other instances of false documentation and false entries made in Brunswick's books to conceal payments received by the defendants for records furnished by Brunswick were letters falsely stating that a customer's orders for records had been cancelled and credits entered in the books of Brunswick for returned records which, in fact, had not been returned.

Although the amount of royalties owed by Brunswick and Dakar to artists, writers and publishers depended upon their total record sales, periodic statements of royalty obligations were prepared from the records kept by Mrs. Archie which did not include the cash sales and exchanges for merchandise described above. The government, however, did not offer evidence as to the amount of royalties actually owed with reference to the corporations' total sales and there was evidence that Brunswick's and Dakar's advances of ...


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