Troy v. Post, Jr. v. United States of America, Bill M. Allen v. United States of America, Leroy W. Pickett v. United States

407 F.2d 319
Court of Appeals for the D.C. Circuit·Decided February 24, 1969·No. 20861-20863_1·Published·Cited by 44 cases

Opinions

SPOTTSWOOD W. ROBINSON, III, Circuit Judge:

Appellants were convicted by a jury of conspiracy1 and mail fraud 2 stemming from their activities in the promotion of Lakewood Country Club, in the area of Rockville, Maryland, and the concomitant sale of memberships therein. On these appeals, they allege error in three rulings by which evidence was excluded as irrelevant to their efforts to show their good faith in transactions impugned by the indictment. They also attack an instruction which defined for the jury appellants’ criminal liabilities as promoters of the club. Two additional contentions which they advance are effectively foreclosed by decisions rendered subsequent to their trial.3

[321] In the summer of 1958, appellants conceived the blueprint for a new country club to be developed in the vicinity of Washington.4 Locating a suitable site in 1959, they organized four corporations through which the club was to be established and operated,5 and embarked upon the promotional phase from which emanated the events giving rise to the indictment. An advisory board, generally nonfunctional, of well known citizens was organized, a sales office was opened and a sales staff hired, and a thoroughgoing campaign for members was launched. There was extensive newspaper advertising, and tens of thousands of direct mail advertisements were sent to area residents. The promotional literature was issued under the apparent auspices of the advisory board, and appellants’ names were omitted.

Opportunities for affiliation with the incipient club assumed the form of $1,000 life memberships and $300 regular memberships, and the distinctive characteristics of each were publicly proclaimed. Life members would be immunized from all dues, assessments and minimum spending requirements, but regular members would be required to pay monthly dues. Life memberships would also be in “limited number;” applicants therefor were told that their ratio to others would be about one in ten, and the maximum number was variously fixed between 100 and 300. By October 1,1960, however, 1,124 life memberships had been sold, as compared with only 719 regular memberships, and the club’s bylaws, when distributed, authorized the directors — appellants’ appointees —to impose a minimum spending requirement upon all members irrespective of class.6

Appellants’ promotional crusade met instant and spectacular success, garnering membership fees aggregating more than $1,250,000.7 While membership solicitations continued unabatedly, construction of the club’s facilities got under way, and proved to be a lucrative enterprise for appellants. Acting through their wholly-owned corporations,8 they turned handsome profits on a land lease to the club9 and on contracts for the construction of its facilities.10 They were also paid more than [322] $200,000 during a 20-month period in salaries, commissions and fees pursuant to a variety of intracorporate arrangements. In addition, they advanced from the monies collected for initiation fees large sums to other country clubs in which they were financially interested.11 The evidence warranted the conclusion that Lakewood’s membership, actual and potential, remained unaware of appellants’ proprietary stake in the country club complex and the extent to which they were profiting from it.

By the fall of 1960, the club’s funds were exhausted, and construction on its clubhouse came to a halt.12 A membership meeting in December culminated in the election of a new board of directors, which during the next several months endeavored unsuccessfully to negotiate an accord with appellants. Finally, in March, 1961, suit was filed in the District Court for the District of Columbia seeking a conservatorship, the ouster of appellants, and the recapture of monies claimed to have been wrongfully diverted.13 On March 31, 1961, a conservator was appointed for all of the corporations involved in the affair, and appellants were prohibited from further operation of the club. Thereafter, in February, 1962, the litigation was settled by a consent order.14

The indictment leading to appellants’ convictions charged, in substance, material misrepresentation associated with the sale of memberships, including the use of the names of the advisory committee members, the statements as to the “limited number” of life memberships and their nonassessable character, and the nondisclosure of appellants’ interests in and their profiteering from the club. At the trial, the core question was whether Lakewood Country Club was, as the Government contended, a scheme to defraud prospective members or was, as appellants insisted, a legitimate business venture that unexpectedly and unfortunately failed. Appellants concede that the record contains evidence which amply supports the jury’s verdicts.15 They urge, however, that by virtue of the three exclusionary rulings, the jury was precluded from hearing evidence critical to their defense, and that, in consequence of the instruction under assault, was inadequately informed as to the Government’s burden of proof and the criminal intent prerequisite to conviction. With these contentions we do not agree, and we accordingly affirm the convictions.

I

We approach our review, against the factual backdrop summarized, of the three exclusionary rulings advertent to familiar admonitions validated by generations of judicial experience. “It is for ordinary minds,” we are instructed, [323] “not for psychoanalysts, that our rules of evidence are framed. They have their source very often in considerations of administrative convenience, of practical expediency, and not in rules of logic.”16 Not the least of the evidentiary principles so shaped are those by which the relevance of proffered evidence is to be measured.

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Troy v. Post, Jr. v. United States of America, Bill M. Allen v. United States of America, Leroy W. Pickett v. United States, 407 F.2d 319 (D.C. Cir. 1969).

407 F.2d 319 (Troy v. Post, Jr. v. United States of America, Bill M. Allen v. United States of America, Leroy W. Pickett v. United States) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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