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United States v. Heimann

decided: April 14, 1983.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLANT,
v.
LOUIS HEIMANN, DEFENDANT-APPELLEE



Appeal from an order of the United States District Court for the Southern District of New York, Robert W. Sweet, Judge, granting judgment of acquittal on counts of mail fraud, 18 U.S.C. § 1341 (1976), wire fraud, 18 U.S.C. § 1343 (1976), and foreign transportation of goods acquired by fraud, 18 U.S.C. § 2314 (1976), after finding prejudicial variance in government's proof of fraudulent scheme for shorter time period than was alleged in the indictment.

Van Graafeiland, Meskill and Pratt, Circuit Judges.

Author: Pratt

PRATT, Circuit Judge.

The United States appeals from an order of the United States District Court for the Southern District of New York, Robert W. Sweet, Judge, granting defendant Louis Heimann's motion under Fed. R. Cr. P. 29(c) to set aside the jury's verdicts and to enter a judgment of acquittal on each of the nine counts on which defendant was found guilty. The motion was made on the ground that there had been a prejudicial variance between the charges in the indictment and the proof at trial.

After a two week trial on a seventeen count indictment, the jury convicted Heimann on five counts of mail fraud, 18 U.S.C. § 1341 (1976), two counts of wire fraud, 18 U.S.C. § 1343 (1976), and two counts of foreign transportation of goods obtained by fraud, 18 U.S.C. § 2314 (1976). Heimann's wife, who was also charged in the indictment, was acquitted on all counts.

The district judge granted Heimann's Rule 29(c) motion in an unreported opinion dated June 28, 1982. Construing the indictment as charging Heimann with a fraudulent scheme that began in January 1978, the district judge interpreted the government's trial presentation as having abandoned any claim of fraud prior to the seven months beginning in June 1980. Because of the time disparity that he perceived in the scope of the frauds alleged and proved, he determined that there was a variance that "was prejudicial to defendant's right to a fair trial." He concluded: "Therefore the conviction is reversed as to all counts."

Although no formal judgment of acquittal was signed by the district judge, the clerk of the district court, and apparently the parties as well, have interpreted Judge Sweet's opinion and order as a direction for a judgment of acquittal. The docket sheet reads "Deft. acquitted by the court's opinion of 6-28-82", and neither party has questioned the accuracy of that entry. On this appeal the government has focused on the merits of the variance issue and has not claimed alternatively that instead of acquittal, the court should have ordered a new trial, which ordinarily would be the remedy for an unfair trial. Without approving the procedures followed, we accept the parties' interpretation of the proceedings below as a setting aside of the jury's verdicts of guilty and an entry of judgment of acquittal on counts 2, 3, 4, 5 and 6 (mail fraud), 8 and 9 (wire fraud), and 16 and 17 (transportation in foreign commerce of goods obtained by fraud). We do not consider whether a new trial would have been permissible or required.

On the central issue we reject the district court's finding of a prejudicial variance and conclude that the government's proof at trial substantially conformed to the allegations of the indictment. We also conclude that defendant was not prejudiced by any uncertainty as to when his own fraudulent intent was formed. Accordingly, we reverse and reinstate the jury's verdicts on all nine counts and remand the case to the district court for sentencing. We note in passing that since the reasoning of the district court, even if valid, would not support a judgment of acquittal on the two transportation counts, which did not require proof of a fraudulent scheme of any particular length, those convictions would have to be reinstated in any event.

BACKGROUND

The indictment charged that beginning in or around January 1978 and continuing until the indictment was filed in December 1981, defendant Heimann and his wife devised and executed a scheme to defraud a small group of antique jewelry merchants, auction houses and banks out of substantial sums of money and precious objects. The indictment identified Jan Skala and Isi Fischzang, two merchants who operated shops on West 47th Street in Manhattan, as the Heimanns' principal victims. It alleged that throughout 1979 and 1980, the Heimanns obtained valuable merchandise from Skala and Fischzang, initially by outright purchase, but eventually "on memorandum", a customary transaction in the jewelry business in which the buyer is entrusted with merchandise and agrees either to pay for it or to return it by a certain date.

The Heimanns allegedly transported the merchandise they obtained "on memorandum" to several Swiss auction houses, represented that they had full ownership rights, and then entered into consignment arrangements pursuant to which they received significant cash advances to be charged against the anticipated auction proceeds. These advances were obtained either directly from the auction houses or indirectly through a number of Swiss and American banks.

The indictment further charged that to effectuate the scheme the Heimanns made substantial payments to the merchants until the summer of 1980, during which time the level and frequency of their dealings escalated. Thereafter, they allegedly consummated the fraud by obtaining approximately $3.8 million in merchandise "on memorandum" for which no substantial payments were ever made. The indictment also alleged that the Heimanns attempted to lull the merchants into a false sense of security throughout the fall and winter of 1980 by making numerous false promises that payment would be forthcoming.

In substance the fraudulent scheme charged was that the Heimanns carefully cultivated their relationships with Skala and Fischzang throughout 1979 and early 1980 in order to earn their trust and then in the latter part of 1980 swindled them out of approximately $3.8 million. Insofar as the early transactions were necessary to induce the merchants to later part with more valuable property without security, they were a critically important component of the scheme.

It is beyond dispute that the actual evidence introduced by the government at trial substantially supported these allegations. With one exception, the government proved each of the pre-June 1980 transactions in great detail, placing particular emphasis on Louis Heimann's deceitful conduct during that period. For example, the government introduced evidence to show that Heimann repeatedly misrepresented to Skala and Fischzang as early as the fall of 1979 that he had wealthy, private buyers for the merchandise he was obtaining "on memorandum"; that Heimann lied to Skala when he represented that he owned the luxurious Park Avenue apartment where merchandise was often exchanged; and that Heimann lied to both Skala and Fischzang in the spring of 1980 when he claimed that his failure to make timely payments was due to bookkeeping errors by his nonexistent partner. In sum, the government sought at trial to establish a pattern of false and deceitful conduct that characterized the pre-June 1980 transactions. This evidence was suggestive of Heimann's intent and was entirely consistent with a charge that Heimann had schemed to defraud from the outset of his dealings with Skala and Fischzang.

The defense also focused on the early transactions, attempting to show that the surrounding circumstances were inconsistent with the government's theory that Heimann had embarked on a preconceived scheme to defraud the merchants. The defense therefore emphasized that Heimann not only made substantial payments up to June 1980, but that he was consistently late in making those payments, a course of dealing that was not likely to inspire the merchants' confidence. As further evidence of Heimann's innocent state of mind, the defense sought to prove that Heimann, a foreigner who did not understand English, could reasonably have regarded the transactions in question not as "memorandum" arrangements, but as credit sales which would have lawfully entitled him to consign the merchandise to the auction houses. All of this evidence raised an issue of fact for the jury as to whether Heimann had devised a scheme to defraud; but the jury rejected defendant's arguments and accepted the inference of fraud urged by the government, at least with respect to the transactions underlying counts 2, 3, 4, 5, 6, 8 and 9.

The thrust of Heimann's Rule 29 motion was not directed at the actual evidence that was introduced at trial, but instead at some remarks the prosecutor made in his opening statement and closing argument. At the very beginning of his opening, the prosecutor explained:

[This case] is about a scheme to defraud two jewelry merchants on 47th Street out of millions of dollars worth of jewelry and precious objects over a seven month period in the last part of 1980. (emphasis added)

In his summation, the prosecutor stated:

It is not the government's contention in January of 1979, when Louis Heimann walked into Jan Skala's shop that at that time he had formulated a specific perfectly laid out plan and scheme to obtain jewelry some time later. ...


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