United States v. Kelly

569 F.2d 927
CourtCourt of Appeals for the Fifth Circuit
DecidedMarch 20, 1978
DocketNo. 76-2236
StatusPublished

This text of 569 F.2d 927 (United States v. Kelly) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Kelly, 569 F.2d 927 (5th Cir. 1978).

Opinion

GEWIN, Circuit Judge:

Appellant Harry Neil Kelly was tried by a jury and convicted on all counts of a three-count indictment charging violations of 18 U.S.C. §§ 2314, 2, & 371, in that he caused and conspired to cause a person to travel in interstate commerce in execution of a scheme to defraud.1 On appeal Kelly challenges: (1) the sufficiency of the evidence to support his conviction, (2) failure to charge the jury on accomplice testimony, (3) refusal to give requested instructions, (4) denial of his motion for continuance, (5) denial of his motion for severance, (6) admission of testimony allegedly barred by the attorney-client privilege, (7) failure to grant a mistrial, and (8) failure of the government to comply with the court’s discovery order. Finding his assignments of error without merit, we affirm.

FACTS

In 1969 appellant Kelly chartered an offshore mutual fund, the Allied Fund for Capital Appreciation (AFCA) in Panama. Kelly was the president of the fund which was managed from Munich, Germany. AFCA shares were distributed by a Munich concern called Select Distributors (Select). Kelly worked as an agent for Select, which was managed by a Miss Smith and two AFCA directors, a Mr. Bennett and a Mr. Gravesteyn.2 Kelly received funds from Select and placed them in Midwest National Bank (Midwest), an institution he had chartered in Panama through an attorney. In Kelly’s own words, Midwest was “a proof.” (R. 316). The bank’s headquarters consisted of an 18 by 24 foot room furnished with some tables and chairs, filing cabinets, a typewriter and Telex machine, and a small refrigerator. Midwest’s primary function was to serve as a depository of funds from AFCA’s largest shareholder, the KARA trust. The trust, which according to testimony was named for Kelly’s daughter Kara and controlled by Kelly as her guardian, received AFCA shares and in turn transferred funds, at least on the books, to Midwest.

AFCA itself operated by receiving money from investors throughout the world and issuing shares in the fund in return. Investments in the fund were solicited on the basis of prospectuses and financial statements representing that AFCA had millions [932]*932of dollars worth of blue chip securities.3 AFCA’s assets were allegedly held by Midwest and Drabun, Inc., a New Orleans brokerage firm, according to confirmations furnished AFCA’s auditor Eric Gaeckler by Midwest and Drabun.4 Drabun’s owner, Peter Schreiber, however, testified that he had never held any assets for AFCA, and that when he received a letter from Select asking him to verify these assets he called Kelly on the matter. Kelly replied that there was “paperwork” at the office of the fund showing that Drabun held the assets, but not to worry about it, that “[t]hey will never surface,” that “Mr. Gravesteyn had control of it.” (R. 119).

In the late spring of 1970, Gaeckler, in endeavoring to prepare a financial statement for the fund, discovered that all of its assets had been transferred to Midwest.5 The following spring Gaeckler travelled to Panama to audit the assets allegedly held by Midwest and found nothing but a sparsely furnished room. Upon this discovery he notified Select to stop all transactions and redemptions involving AFCA. Gaeckler subsequently met Kelly in Mexico City and confronted him with what he had learned in Panama. Kelly informed him that AFCA’s assets were located in a Mexico City bank. Gaeckler visited the bank and requested a written confirmation of the assets. He never received a confirmation and eventually discovered that only a few thousand dollars remained to the credit of the fund.

This case arose out of a transaction between Kelly and William R. Ponsoldt in April of 1970, in which 200,000 shares of AFCA were exchanged for all the shares in Ponsoldt’s Schweiz-Deutseh Land Company (SDL).6 SDL purportedly held 160 acres of property in New Jersey and a substantial amount of securities. Apparently AFCA never received the property but received shares in a company of questionable worth called Computronics. The AFCA shares were restricted from redemption for one year.

On June 28, 1970 Ponsoldt met with Harry Bloomfield, president and owner of a controlling interest in Bloomfield Building Industries (BBI), a corporation listed on the American Stock Exchange, at the Brilund Yacht Club in the Bahamas to discuss a trade of AFCA shares for Bloomfield’s controlling interest in BBI. Bloomfield trav-elled to this meeting by plane, flying from his home in Memphis, Tennessee, to Miami, Florida, where he spent the night. The next day he met Ponsoldt in Nassau and together they flew to the yacht club.

Under the terms of the trade, which had been worked out in advance of this meeting, Bloomfield was to receive approximately $2,400,000 in AFCA stock plus cash or another asset agreeable to him in return for Bloomfield’s shares in BBI. Bloomfield, however, was concerned about the restriction on the redemption of the AFCA shares. Ponsoldt assured Bloomfield that the restriction only applied to Ponsoldt, not to third party purchasers of the stock, and stated that Bloomfield could redeem the AFCA shares in seven days at the market price. Satisfied with Ponsoldt’s answer, Bloomfield concluded the contract.

[933]*933Bloomfield subsequently attempted to redeem the AFCA stock but was unsuccessful.7 On November 4, 1970, he travelled from Memphis to Miami for a meeting with Ponsoldt to resolve the problem of the redemption of the AFCA shares. Present at this meeting was Kelly, whom Ponsoldt introduced as the head of the AFCA fund. When Bloomfield demanded that either the AFCA shares be redeemed or the deal be rescinded, Kelly remarked that generally when one tried to cash in stock prior to the redemption date one could only get fifty cents on the dollar. Bloomfield replied that he might accept that arrangement. Kelly and Ponsoldt then left the room to discuss the proposal. When they returned, Bloomfield was told that they would have to contact the “people” in Germany and was assured that they would get in touch with him later. No reply was ever forthcoming from Germany. In May of 1971 Ponsoldt and Bloomfield rescinded their agreement and made a settlement agreement.

I. Sufficiency of the Evidence The jury has weighed the evidence and determined the credibility of the witnesses presented by both sides in this case. Taking, as required, the view most favorable to the government, we must sustain the jury’s verdict if substantial evidence exists to support it. Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942).

Appellant challenges the sufficiency of the evidence under Counts I, II and III of the indictment. Both Counts I and II charge violations of 18 U.S.C. §§ 2314 and 2.8 Section 2314 defines the substantive offense and section 2 defines the offense of aiding and abetting. Count III alleges that appellant conspired to violate section 2314.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

United States v. Giles
300 U.S. 41 (Supreme Court, 1937)
Avery v. Alabama
308 U.S. 444 (Supreme Court, 1940)
Glasser v. United States
315 U.S. 60 (Supreme Court, 1942)
Hirabayashi v. United States
320 U.S. 81 (Supreme Court, 1943)
Opper v. United States
348 U.S. 84 (Supreme Court, 1954)
Ungar v. Sarafite
376 U.S. 575 (Supreme Court, 1964)
Vern Mac Thogmartin v. United States
313 F.2d 589 (Eighth Circuit, 1963)
J. W. Williamson, Jr. v. United States
332 F.2d 123 (Fifth Circuit, 1964)
United States v. Donald Lyle Hassel
341 F.2d 427 (Fourth Circuit, 1965)
Cyril Charron v. The United States
412 F.2d 657 (Ninth Circuit, 1969)
United States v. John Joseph Powers
437 F.2d 1160 (Ninth Circuit, 1971)
United States v. Humberto Dumenigo
444 F.2d 253 (Fifth Circuit, 1971)
United States v. Nicholas Dekunchak
467 F.2d 432 (Second Circuit, 1972)
United States v. Mayo Perez, Defendantsappellants
489 F.2d 51 (Fifth Circuit, 1974)
United States v. Richard Duncan Pearson
508 F.2d 595 (Fifth Circuit, 1975)
United States v. Basil Miller
513 F.2d 791 (Fifth Circuit, 1975)
In Re Grand Jury Proceedings. United States
517 F.2d 666 (Fifth Circuit, 1975)

Cite This Page — Counsel Stack

Bluebook (online)
569 F.2d 927, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-kelly-ca5-1978.