United States v. Solomon Weiss
752 F.2d 777, 1985 U.S. App. LEXIS 28638 (1985)
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Rule of Law:
A conviction for mail fraud and RICO will be upheld against claims of constructive amendment if the trial theory and proof, while using a 'shorthand' term like 'cash fund,' do not modify an essential element of the offense charged in the indictment, and a breach of fiduciary duty resulting in non-corporate use of funds, even without direct personal gain, is sufficient for mail fraud.
Facts:
- In 1972, Leonard Horowitz became involved in the Westchester Premier Theatre (WPT) and in May and June of 1973, WPT conducted an initial public stock offering that sold sluggishly.
- Horowitz offered secret inducements to select WPT stock purchasers, approaching Jay Emmett, a Vice President of Warner Communications, Inc. (Warner), with an offer for 10,000 WPT shares for $75,000.
- Emmett declined the offer but informed Steven Ross, Chairman of Warner, who suggested that Solomon Weiss, then Assistant Treasurer for Warner, might be interested.
- Weiss counter-offered to Horowitz, proposing Warner would buy 20,000 shares of WPT stock for $150,000 if WPT would 'kick back' $100,000 to Warner, and Horowitz immediately gave Weiss $50,000 in cash, promising another $50,000 later.
- When WPT could not produce the remaining $50,000, Weiss arranged for Warner to issue $50,000 in checks to Horowitz in exchange for $20,000 in cash, directing Horowitz to create a false, back-dated invoice from an attorney, Dennis Konner.
- In July 1973, Weiss and Horowitz made a second agreement for Warner to purchase 20,000 additional WPT shares for $100,750, in exchange for a $100,000 rebate when the theatre opened.
- Between 1974 and 1977, after WPT's opening plans fell through, Weiss induced Warner to issue ten bogus checks totaling $171,950 to Horowitz, who then returned $100,000 in cash to Weiss, which Weiss concealed with false documents in Warner’s accounting system and a plagiarized report.
- Solomon Weiss's statements to a grand jury on April 10, 1978, regarding the Konner bill and its connection to Horowitz, later conflicted with his own accounts, which formed the basis for perjury charges.
Procedural Posture:
- Solomon Weiss was tried under a thirteen-count indictment on charges of mail fraud, perjury, racketeering (RICO), and tax fraud in the United States District Court for the Southern District of New York.
- After a three-week trial, a jury found Weiss guilty of one RICO violation, three mail fraud violations, and three perjury violations, and acquitted him of one mail fraud count and four tax fraud counts.
- Weiss filed various post-trial motions, including claims of jury contamination, which the District Court denied after an extensive hearing.
- The District Court entered a judgment of conviction on March 13, 1984, sentencing Weiss to concurrent five-year terms of probation, ordering him to disgorge shares and warrants valued at approximately $412,000, and fining him $58,000.
- Weiss appealed his conviction to the United States Court of Appeals for the Second Circuit.
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Issue:
Does the government's trial theory and proof of a 'cash fund' scheme constitute an unconstitutional constructive amendment of an indictment that charged 'bribery and conversion' and 'personal enrichment,' thereby violating a defendant's Fifth Amendment rights, or is it a permissible variance?
Opinions:
Majority - Kelleher, Senior District Judge
No, the government's trial theory and proof regarding a 'cash fund' scheme did not constitute an unconstitutional constructive amendment of the indictment. The court found that the infiltration of extra-record evidence into jury deliberations was harmless, as there was an abundance of properly admitted evidence. The mail fraud statute applies when a fiduciary fails to disclose material information that could harm the employer; it does not require direct tangible economic loss or personal benefit to the fraudulent actor, but merely evidence of a non-corporate purpose for the misappropriated funds. The jury could reasonably infer a non-corporate purpose from Weiss's actions, such as creating fake feasibility studies and bogus invoices. The court rejected Weiss's arguments that he was not an 'officer' or that he was acting under superiors' direction. Furthermore, the court held that the materiality of perjurious grand jury testimony is a question for the court, not the jury. Regarding the alleged constructive amendment, the court distinguished between an 'amendment' (altering charging terms, per se prejudicial) and a 'variance' (proving materially different facts, requires showing prejudice). The court concluded that the 'cash fund' theory presented at trial was not an alternative theory but merely a 'shorthand expression' for the fraudulent scheme detailed in the indictment, which included accepting cash bribes and converting corporate assets. The evidence presented was substantially the same as that before the grand jury, and the indictment was silent on the ultimate destination of funds. Weiss also had adequate notice of the government's theory through a bill of particulars and prosecutor's opening statements, and his failure to object at trial undermined his claim of surprise or prejudice.
Dissenting - Jon O. Newman, Circuit Judge
Yes, an unconstitutional constructive amendment of the indictment occurred, warranting reversal of the RICO and mail fraud convictions. The dissent argued that the indictment clearly charged a scheme to extract bribes and convert corporate funds, implying personal detriment to the corporation and personal enrichment for Weiss. In contrast, the government's case at trial and the jury instructions focused on a scheme to create a 'cash fund' for the corporate employer, which was presented as being for the benefit of the corporation. These two schemes are fundamentally different in nature and effect. The indictment specified that Weiss 'accepted cash bribes' and 'received ... $100,000 in cash,' which implied personal retention. However, at trial, it was said he received cash 'on behalf of Warner' for a 'Warner cash fund.' This switch from 'personal gain, hurt company' to 'company fund, helped company' is a major change to the core accusation. Such a fundamental shift in the nature of the crime from what was charged to what was proved constitutes a constructive amendment, which is a per se violation of the Fifth Amendment and cannot be dismissed as harmless error, regardless of whether the defendant was surprised or prejudiced or failed to object. The dissent found the majority's characterization of 'cash fund' as a 'short-hand expression' unpersuasive, stating that helping to raise secret cash for a corporation is not shorthand for accepting bribes.
Analysis:
This case highlights the complex and often contentious distinction between an impermissible constructive amendment of an indictment and a permissible variance. It solidifies the expansive interpretation of mail fraud, particularly regarding a fiduciary's duty, where actual direct harm or personal enrichment is not a prerequisite for conviction, but rather an inference of non-corporate use of funds suffices. The dissenting opinion underscores concerns about due process and the vital role of the grand jury indictment in ensuring a defendant is tried only on the charges presented. This precedent emphasizes the trial court's broad discretion in managing jury misconduct and underscores the importance of a defendant's timely objections to preserve certain claims on appeal.
