No. 88 March Term 1975, Appeal from the Judgments of Sentences dated July 24, 1974, Court of Common Pleas, County of Franklin, at Nos. 525 & 529 of 1968.
Louis Lipschitz, Philadelphia, with him Sidney L. Krawitz, Milford, for appellants.
Glenn F. Gilman, Deputy Attorney General, Harrisburg, for Commonwealth, appellee.
Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ. Van der Voort, J., dissents. Watkins, former President Judge, and Hoffman, J., did not participate in the consideration or decision of this case.
[ 260 Pa. Super. Page 497]
This is an appeal from judgments of sentence for embezzlement by officers of an insurance company, fraudulent conversion, destroying or mutilating the books of a corporation, and conspiracy.*fn1
National Capital Insurance Company was incorporated under the laws of the District of Columbia; it never registered in Pennsylvania, and its only office was in the District of Columbia. A majority of National Capital's stock was owned by Bankers Allied Mutual Insurance Company, a Pennsylvania corporation with its office in Gettysburg, Adams County. On November 24, 1965, as the result of an exchange of stock between Bankers Allied and Bankers & Telephone Employees Insurance Company, also a Pennsylvania corporation with its office in Gettysburg, Bankers & Telephone acquired the majority of National Capital's stock.
There was substantial overlap in the management of the three corporations. Appellants were officers and members of the board of each corporation, and constituted the investment committee of National Capital and Bankers Allied. They also controlled Tower Investments, Inc., a Georgia corporation, which figured in the two transactions that led to the present case.
The first transaction was National Capital's purchase of 266,285 shares of Steel Crest Homes, Inc., at $3 per share. To finance this purchase, National Capital sold some securities
[ 260 Pa. Super. Page 498]
through a New York broker. The broker sent the proceeds of the sale, some $835,000, to National Capital's account in the Bank of Virginia, in Norfolk, Virginia. National Capital's books matched a November 30, 1965, disbursement of $850,000.50 (purchase price plus brokerage and legal fees) with the acquisition of the Steel Crest shares on December 1, 1965. However, apparently the sellers of the Steel Crest shares were in fact not paid with the proceeds of the sale of the securities. Instead, Bankers Allied transferred $400,000 from an account in the Gettysburg National Bank to an account in Bankers Allied's name in the Bank of Virginia. That money was then transferred to Tower Investment's account in the Philadelphia National Bank in Philadelphia. Tower bought 300,000 shares of Steel Crest, and paid the sellers $337,500 in cash, and the balance in Tower's notes.*fn2 Of these 300,000 shares, 266,285 were transferred to National Capital.
The National Capital account, in which the proceeds of the sale of securities had been deposited, was virtually empty by October 28, 1965, and was closed in December. There was no evidence of what in fact became of the proceeds.
The second transaction involved the purchase by Bankers Allied of additional Steel Crest shares. Bankers Allied paid Tower $101,145 cash for 33,715 shares (the number of shares Tower had left, after its sale of shares to National Capital in the first transaction). The Bankers Allied board approved that purchase and directed a further purchase of 83,333 more shares direct from Steel Crest without going through Tower. The resulting contract with Steel Crest provided that as payment for these shares Steel Crest would accept a $250,000 certificate of advance of surplus, which Bankers ...