Joseph C. McHale v. United States of America, Martin J. McHale v. United States of America, Robert L. McHale v. United States

BAZELON, Chief Judge:

Appellants, three brothers, were among several defendants tried jointly and convicted of mail fraud in connection with the operation of a debt consolidation business. The primary contentions of Robert and Joseph McHale are that the trial court should have granted their motions for severance. Joseph McHale also argues that the trial court improperly failed to instruct the jury on his theory of the case. Martin McHale, youngest of the brothers, contends that there was insufficient evidence to demonstrate his participation in the scheme and that the prosecution improperly relied on events subsequent to the last mailing named in the indictment.

I

The seven defendants in this case were all charged with participating in a scheme to defraud the customers of two debt consolidation companies. The Supreme Court has recognized that when several people are tried together there is a danger that adverse evidence against some of the defendants will improperly rub off on the co-defendants. In Blumen-thal v. United States, 332 U.S. 539, 559-560, 68 S.Ct. 248, 257, 92 L.Ed. 154 (1947), the Court said “Perhaps even at best the safeguards provided by clear rulings on admissibility, limitations of the bearing of evidence as against particular individuals, and adequate instructions, are insufficient to ward off the danger entirely. It is therefore extremely important that those safeguards be made as impregnable as possible.”

In United States v. Kelly, 349 F.2d 720 (1965), the Second Circuit held that in some cases an even stronger safeguard— severance — might be required. Kelly involved fraudulent stock transactions. The evidence against one of the defendants (Shuck) was far less extensive and far less incriminating than that against the other two. The court concluded that Shuck was inevitably prejudiced by the introduction of evidence against the co-defendants “[which] must have stamped them in the eyes of the jurors as unscrupulous swindlers of the first rank.” 349 F.2d at 759.

To obtain severance under Kelly a defendant must at the very least prove that the evidence against his co-defendants is far more damaging than the evidence against him. It may well be that this is too rigid a requirement. It may well be that the dangers in these joint trials are so great that severance should be granted almost as a matter of course. But neither Kelly nor any other ease goes that far. And careful consideration of the record convinces us that neither Robert nor Joseph McHale was entitled to severance under Kelly.

Joseph McHale contends also that the trial court improperly neglected to employ a safeguard recommended by the Supreme Court — adequate instructions. See Blumenthal, supra, 332 U.S. at 559, 68 S.Ct. 248. At trial Joseph submitted a written instruction stating at the outset that “Joseph McHale’s defense is not that there was no scheme among any of the defendants. Rather, his defense is that the evidence shows he was not a party to any scheme, if there was one.” The trial court gave no individual instruction for any defendant. Instead it advised the jury that: “The theory of the defense throughout is, first that there was no scheme to defraud; that if there was a scheme to defraud, the individual defendants had no knowledge of it and that each was acting in good faith in conducting his operations within the company.” We cannot say that the difference between these two instructions is so great as to warrant reversal, particularly since appellant’s instruction did not categorically accept the existence of a scheme, but hedged by using the phrase “if there was one.”

*759II

Martin McHale, who was only 22- at the time of the last mailing named in the indictment, contends that there was insufficient evidence that he knowingly participated in a scheme to defraud. The record demonstrates that, while the evidence against Martin was hardly overwhelming,1 it was sufficient to send the case to the jury.

Martin’s second contention is that the Government improperly presented evidence concerning events which took place after the dates mentioned in the indictment. The Government responds that these “subsequent acts of fraud were manifestations of the same continuing scheme to defraud, and were illuminating on the prior intent. * * * ” One difficulty with this view is that the subsequent events took place when Martin had assumed a managerial position.2 Hence they are not necessarily relevant to show his intent or knowledge at an earlier stage when he held less responsible positions.

Secondly, even if the subsequent acts have some relevance the question remains whether they were presented in such detail that Martin was in fact being tried for crimes not named in the indictment. The record indicates that most of the evidence against Martin concerned events subsequent to the mailing of the last count letter. This is clearly reflected in the transcript version of the Government’s summation to the jury. Over three of the five pages of the summation deal with subsequent events.

McCormick makes plain that in determining the admissibility of other crimes evidence the trial court must employ a “balancing” process. McCokmick, EVIDENCE 332 (1964). Here the balance must take into account that the evidence of misconduct prior to the last count letter was not great, that the evidence of subsequent misconduct was not completely relevant, and that the volume of the latter evidence far exceeded that of the former. Under these circumstances, we believe it was reversible error for the court to permit such extensive testimony on events subsequent to the last count letter.

Nos. 20,598 and 20,600 are affirmed. No. 20,599 is reversed.

. One of the pieces of evidence against him was that he used a written interview procedure in which he represented to prospective customers that the company’s accountants would determine when and in what amounts the company would deduct the installation charge, even though the company did not employ certified public accountants.

. The date of the first count letter was Sepember 23, 1961 and the date of the last was February 4, 1963. Martin apparently became a manager of the Baltimore office of General Budget sometime during the second week in February, 1963.