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appointment of his trustee in bankruptcy, of which was laid in the indictment, and fur

and before it could be known there would be a trustee. The conspiracy you may find to be an offense is the concerted plan kept on foot and existing, to have Abe Gerson conceal the moneys realized from the prior sales of his merchandise, from his said trustee, and at a time after such trustee was elected and qualified. And, if you do not find there was such conspiracy, then the offense fails in this case, and the defendants are entitled to be acquitted."

Of course, the merchandise represented by any cash concealed must have been sold before the appointment of the trustee in bankruptcy. If the wording of the indictment relied on by defendants to sustain this point comprised everything on this subject in the indictment, there would be force in defendants' position, although the practical result would be most incongruous. The wording of that part of the indictment is not clear, but reference to other parts thereof describing the exact method in which the conspiracy was to be carried out tends to clarify the situation. One part of the indictment refers to Abraham Gerson purchasing on credit a large amount of merchandise and the holding of sales for the purpose of converting the same into cash, and the withholding of said money received from a sale of said merchandise from

deposit in his bank account and placing the same in the possession of the other conspira

tors, the removal of the merchandise from one store to another, the failure to keep books of account, and the commission of acts of bankruptcy in order to force the filing of a petition against him. The indictment contemplated a series of successive acts, not one act of concealment, and the allegations there of taken together show the scheme of the conspiracy was to conceal assets from the trustee in bankruptcy, particularly money from the sale of merchandise, and not merely money received from the sale of concealed merchandise. Defendants rely largely on Gammon v. United States (C. C. A.) 12 F. (2d) 226, but that case we think is readily distinguishable from this. The scheme charged in the indictment there was entirely different from the scheme submitted by the court to the jury. We believe the theory of the trial court in the present case was correct that under the indictment the cash alleged to have been concealed from the trustee in bankruptcy need not have been cash from concealed merchandise.

The next point urged is that the court submitted to the jury two overt acts, neither

ther that one of the overt acts submitted could not constitute such overt act, as it consisted merely of nonaction on the part of the bankrupt. The two overt acts charged in the indictment which the court submitted to the jury are as follows:

"(6) That on the 7th day of February, 1925, defendant Abraham Gerson filed with John J. Hildreth, referee in bankruptcy, his schedule of liabilities and assets as required by law, and intentionally withheld and failed to list in said schedule assets consisting of merchandise in the sum and value of $15,945.47 and cash received by the said Abraham Gerson from a sale thereof, which said assets and cash belonged to his estate in bankruptcy, and which said Abraham Gerson concealed and continued to conceal from his trustee in bankruptcy after his appointment and qualification.

"(7) That on or about February 24, 1925, defendant Joseph Broida purchased the bankrupt stock of Abraham Gerson at Blackwell, Okl., for the sum of $4,320, and on the same date resold it to defendant Clara Gerson for the same sum plus a commission of $250."

These overt acts were set forth in the court's instruction as follows:

"That, after the appointment and qualification of said trustee in banruptcy, said

tee cash received by him from a sale of mer

Abraham Gerson concealed from said trus

chandise.

"That on or about February 24, 1925, Joseph Broida purchased the bankrupt stock of Abraham Gerson at Blackwell, Okl., and on the same date resold it to defendant Clara Gerson."

[5] Courts are thoroughly competent to make more concise and clear the extended statements of an indictment, and are not compelled to submit to a jury the exact language of the indictment.

[6,7] The sixth overt act above set forth is of course more specifically described in the language of the indictment than in the language of the instructions. But it seems to us that, for all practical purposes, the statements as to the overt act are substantially the same. While there is nothing in the court's reference to the overt acts as to the intentional withholding from the schedule of assets, yet the court in its charge read from the descriptive paragraph of the indictment that part thereof which is as follows: "... Conceal assets in the form of merchandise in the sum and value of $15,945.17 and the money derived from a sale thereof,

25 F.(2d) 49

and omit same from his schedule in bankruptcy" so, taking the court's charge as an entirety, it is apparent that the proposition as to the omission of the assets from the schedules in bankruptcy is fully covered. This overt act is the continuous concealment of property from the trustee, and, while plaintiffs in error insist that this is a mere passive act and therefore cannot constitute an overt act, we think it must be true that a continuous and intended concealment from the trustee of property belonging to the estate in bankruptcy, even though the actual concealment of the property took place before the appointment of the trustee, is sufficient as an overt act. We quote from Collier on Bankruptcy, vol. 1, p. 899, relative to this:

"The offense is completed, if the property was concealed knowingly and fraudulently before bankruptcy, and, on the appointment of a trustee, the bankrupt fails to surrender it or to disclose the disposition he has made of it. A concealment from a trustee after his appointment and a failure to deliver over to him upon demand any property or cash which the bankrupt may have in his possession is an offense as of any date that the concealment continues." Kaufman v. United States (C. C. A.) 212 F. 613, Ann. Cas. 1916C, 466; Alkon v. United States (C. C. A.) 163 F. 810; Morrow et al. v. United States (C. C. A.) 11 F. (2d) 256.

[8] As to overt act No. 7, it is claimed that it was an act of Broida alone, and that his resale to the Gersons could not constitute an act done to effect the object of the conspiracy alleged in the indictment. Broida was one of the defendants in the case. True the indictment was dismissed as to him, but nevertheless he was charged in the indictment as being in the conspiracy. The objections urged as to the statement of the overt acts by the court are highly technical and we think entirely unsound.

[9] Error is predicated on the admission in evidence of the affidavit of Nathan Gerson obtained in November, 1925, by one T. H. Tracy, an attorney at law and special investigator for the Department of Justice. We fail to find from this record any evidence that the affidavit was made under any circumstances of inducement, promise of reward, or threats. The testimony shows that Nathan Gerson stated to Mr. Tracy, when he was asked if he wanted to make any statement, "Surely, there is nothing I am afraid of; I have done nothing." Evidently the statement was voluntarily made, and was clearly admissible as to Nathan Gerson.

Gwinn v. United States (C. C. A.) 294 F. 878; Bergera v. United States (C. C. A.) 297 F. 102; Pandolfo v. Biddle (C. C. A.) 8 F. (2d) 142; Thomas v. United States (C. C. A.) 15 F.(2d) 958; Sherwin v. United States, 268 U. S. 369, 45 S. Ct. 517, 69 L. Ed. 1001.

[10] Defendants urge error upon the part of the court in admitting in evidence certain checks, deposit slips, and other documentary evidence obtained in depositions taken under an order of the referee in bankruptcy; the particular complaint being that the check for $4,320, made by "Clara Gerson, by Phillip Gerson," and delivered to Broida on February 24, 1926, for a stock of merchandise was secured in this manner. If the subpoena had been procured by a government agent, T. H. Tracy, as a part of a scheme to secure this evidence, the question would be quite different from that presented by the record. It fails to show that Mr. Tracy caused the issuance of the subpoena or had anything to do with it. The testimony shows that he did inquire of Phillip Gerson at the time of the examination as to certain income tax matters, and that he had nothing to do with the securing of these exhibits. Therefore the record fails to show that any government representative secured these papers from the owners. They were secured in a civil proceeding pending before the referee and the District Court. The record fails to show any violation of defendants' constitutional rights. We reach this conclusion without considering the questions of how the objection now urged would be affected by the acquittal of Clara Gerson and Phillip Gerson, or whether the question was properly raised in the trial of the case, or could be availed of by codefendants.

[11, 12] Error is also urged in the admission in evidence of a certain financial statement made by the bankrupt on June 25, 1924, to the Knickerbocker Clothing Company. Objection was made to this on the ground that the copy of the letter in which the witness testified the same was requested was not produced, and also because the statement was made long before the conspiracy alleged in the indictment. Of course, the objection as to the letter is frivolous, as the letter was an entirely immaterial matter. If the statement was made before the conspiracy was formed, it was not admissible against any of the defendants other than the bankrupt. Acts of a person committed prior to the formation of a conspiracy are not admissible against his subsequent coconspirator. They must be acts done while the conspiracy is pending

and in furtherance of its object. Brown v. United States, 150 U. S. 93, 14 S. Ct. 37, 37 L. Ed. 1010; Morrow et al. v. United States (C. C. A.) 11 F.(2d) 256.

[13, 14] The indictment charges the date of the conspiracy as September 1, 1924, which is some months subsequent to the time of the statement in question. Of course the exact date of the conspiracy need not be proved. If it is shown that the offense was prior to the indictment and within the statute of limitations, it is sufficient. Bold v. United States (C. C. A.) 265 F. 581; Goldberg v. United States (C. C. A.) 295 F. 447. At the time the attempt was made to introduce this statement, an objection was made on the part of all the plaintiffs in error. The government's counsel stated that the government expected to prove that the conspiracy was in existence at the time the financial statement was dated. If it was, the statement was admissible against all the alleged conspirators. If it was not in existence, it was not admissible as to the coconspirators of Abraham Gerson.

As we reach the conclusion that the government did not establish the conspiracy charged, the question as to the admissibility of this statement becomes unimportant. Its admission against the alleged coconspirators of Abraham Gerson in any further trial of the case will, we assume, be governed by whether or not the alleged conspiracy is shown to exist at the time it was given. This court has dealt with the question in Morrow v. United States, 11 F.(2d) 256. See, also, Allen et al. v. United States (C. C. A.) 4 F. (2d) 688, and Samara et al. v. United States (C. C. A.) 263 F. 12.

In view of our conclusion in this case on the questions now to be considered, the discussion in which we have indulged of the various assignments of error would be superfluous were it not for the probability of another trial.

The assignments of error covering the action of the court in overruling the demurrers to the evidence and refusing instructed verdicts of not guilty raise the serious questions in this case. The court submitted the case to the jury on the theory of a conspiracy based on Abraham Gerson's knowingly and fraudulently concealing from the trustee in bankruptcy cash proceeds from sales of his merchandise.

[15] Proof of a definite plan or formal agreement between conspirators can seldom be shown by direct evidence. Such proof is not necessary. In fact, conspiracy is generally shown by circumstantial evidence, and

such is the attempt here. The natural inferences arising from the facts and circumstances may show an agreed concert of action by the alleged conspirators in the commission of the unlawful offense, and that the overt acts were in furtherance of a common design and purpose of the conspirators. Davidson et al. v. United States (C. C. A.) 274 F. 285; Marrash et al. v. United States (C. C. A.) 168 F. 225.

[16] The charge in the indictment was a conspiracy, and the burden was upon the government to show facts and circumstances in the proof of the alleged conspiracy which excluded every other hypothesis than that of guilt. In the recent case of Van Gorder v. United States, 21 F. (2d) 939, 942, this court said:

"In order to sustain a conviction of a crime on circumstantial evidence, it must be such as to exclude every reasonable hypothesis, but that of the guilt of the accused; the facts proved must all be consistent with and point to his guilt only and inconsistent with his innocence." In Turinetti v. United States, 2 F. (2d) 15, 17, it was said by this court: "Whenever a circumstance, relied on as evidence of criminal guilt, is susceptible of two inferences, one of which is in favor of innocence, such circumstance is robbed of all probative value, even though from the other inference, guilt may be fairly deducible." See, also, Union Pacific Coal Co. v. United States (C. C. A.) 173 F. 737; Becher et al. v. United States (C. C. A.) 5 F.(2d) 45.

Mere suspicion is not sufficient on which to base conviction. Turinetti v. United States (C. C. A.) 2 F.(2d) 15.

Submitting the evidence in this case to the tests laid down in these cases, what is the result?

We review somewhat at length, without weighing in any way the same, the evidence, to determine whether the facts and circumstances shown by the government and the reasonable inferences arising therefrom exclude every reasonable hypothesis except that of guilt.

The government claims the following facts have been established by the evidence:

In a general way the operating of clothing stores by Abraham Gerson at different times, commencing in 1922, and at various places, viz. Apperson, De Noya, Lyman, Webb City, North Shidler, South Shidler, and Blackwell (all in Oklahoma), which were operated generally, except the store at Blackwell, under the name and style of the Palace Clothing Company. That on June

25 F.(2d) 49

25, 1924, Abraham Gerson made a property statement to the Knickerbocker Clothing Company of St. Louis showing assets of $14,646.75, of which $14,146.75 was merchandise, and liabilities of $5,281.10, of which $4,781.10 constituted accounts not due for merchandise. That the Knickerbocker Clothing Company shipped $1,400 worth of merchandise on the strength of this statement to Abraham Gerson at De Noya. That eventually the various stores came together, and there remained one store at South Shidler and one at Blackwell, the stock from the other stores having been moved from place to place, and what remained thereof eventually reaching these two stores. That on September 10, 1924, there had been a fire in the North Shidler store, which was then being conducted by Ike Gerson, and that the amount of goods or merchandise, if any, destroyed is not known. That the store at Blackwell was conducted in the name of the Hub Clothing Company, and that Ike Gerson held a lease on the building where this business was carried on, which he had procured from the American Legion, owner thereof. That, after Abraham Gerson had started business at Blackwell, Ike Gerson made a lease of the building in his name for another year from January 1, 1925. That the so-called Hub Clothing Company occupied this building with its store until bankruptcy, Abraham and Ike Gerson being in charge of and conducting it. That the Gersons did the buying and paid the bills; that they kept no books. That a sale was put on at the South Shidler store, the only Shidler store remaining after the fire, which continued for two weeks. That Ike Gerson instructed the party in charge of the Shidler store, one Snyder, not to keep books, but to make out tickets on blank deposit slips in the store, to sell the goods, and send the money by Domar, another employee, to them at Blackwell. That Domar took merchandise every few days from the Shidler store to Blackwell on a truck. That Snyder took in money at the Shidler store and gave the same to Ike Gerson or to Domar, at one time shortly before bankruptcy giving Ike Gerson $150. That Ike Gerson at times put the money in his shoes. That the merchandise of the Shidler store was marked by Ike Gerson, and the clerk sold it at the marked price. That a sale was put on at the Blackwell store for Abe Gerson by one Riley, which continued from October 31, up to November 15, 1924, and that the sales amounted to $3,000. That from December 10, 1924, up until Christmas in the Blackwell store one clerk's sales amounted to $300.

That Abraham Gerson deposited in the Security National Bank at Blackwell from November 1 to November 15, 1924, $414.79 (that is, during the time the sale was carried on), and that from December 10th to December 25th he deposited in said bank $185.74. That the total amount deposited from November 1, 1924, when the account was opened, to January 23, 1925, when the account was closed, was $1,570.03. That during November and December, 1924, Ike and Abraham Gerson would come to the bank and cash checks and take the cash, often calling for $50 bills. That an involuntary petition in bankruptcy was filed against Abraham Gerson January 13, 1925, and a receiver was appointed who took charge of the merchandise in the Shidler and Blackwell stores. That inventories were taken by the receiver which showed as of date January 26, 1925, merchandise in the Blackwell store $5,887.71, and in the Shidler store $4,749.81, making a total of merchandise in both stores of $10,637.52. That the assets turned over by the bankrupt consisted of merchandise, an automobile, and a small number of accounts receivable. That on February 4, 1925, Abraham Gerson was adjudged a bankrupt, and one Hildreth was appointed reféree, who made an order directing the bankrupt to file schedule R-44, and that on February 9th the bankrupt filed such schedule, showing wages due to various people, and priority debts for rent. That schedule A-3 sets forth a list of 110 creditors for merchandise whose claims were unsecured in the amount of

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Making total schedule A-3... $37,489.39

That schedule B-2 showed the property of the bankrupt consisting of merchandise, fixtures, and a Ford truck to be of the value of $7,800, and the liabilities to be $38,891.39. That at the first meeting of creditors a trustee was appointed. That creditors' claims for merchandise which were approved by the bankrupt were acted upon and allowed by the referee, and that these claims aggregated $32,920.07, on which there were credits shown of $1,163.27. That the amount owing

for merchandise purchased after the fire of September 10, 1924, was approximately $22,686.26. That the bankrupt stock was sold by the trustee to one Broida for $4,320. That immediately after Broida had paid the trustee he was served with notice to vacate the building in which the store at Blackwell was located. That afterwards Ike Gerson attempted to buy the stock from Broida, and that Broida, on account of the notice to vacate, sold it to him for $4,820, receiving three checks, one of which was on the First National Bank of Wichita, Kan., for $4,392.50, payable to Joe Broida, and signed, "Clara Gerson, by Phillip Gerson." That Clara Gerson is the mother of Ike, Abe, and Nathan Gerson, and lives at Wichita, Kan., and that on the 22d day of July, 1924, she opened an account in the name of "Clara Gerson, by Phillip Gerson," in the First National Bank of Wichita, and made deposits in various sums between July 22, 1924, and February 25, 1925, aggregating approximately $6,000. That, after payment of the Broida check for $4,392.50 and one check for $30, she had a balance left in the bank of $6.50. That Abraham Gerson contributed $5 per week toward the support of Clara Gerson, his mother, and Nathan Gerson contributed to his mother about $100 during the last six months of the year. That, after the purchase of this stock from Broida, Abraham and Ike Gerson opened a store at Blackwell and conducted the business under the name of Hub Clothing Company, the same as Abraham Gerson had conducted it prior to bankruptcy. That on February 17, 1925, Broida purchased a bankrupt stock at Ponca City, Okl., for $6,520, known as the Max Berg stock, which he sold to Nathan Gerson for $6,900, who paid him with checks on various banks, one for $1,000 on Wichita State Bank, Wichita, Kan., one for $2,000 on First National Bank, Wichita, Kan., one for $2,000 on Home National Bank, Arkansas City, Kan., one for $1,500 on Home National Bank, Arkansas City, Kan., which was the amount of the loan made by Nathan Gerson from said bank on February 16, 1925. That this Max Berg stock of goods also reached the store carried on by Abraham and Ike Ger、 son at Blackwell. That Nathan Gerson had made large deposits in these various banks, one in the Home National Bank of Arkansas City, Kan., on November 22, 1924, after banking hours, of $1,000 in currency, another of $2,000 in currency in the First National Bank of Wichita, Kan., on December 15, 1924, which remained intact until it was checked out by Nathan Gerson on

February 17, 1925, to apply on payment of the Max Berg stock. Another deposit in currency was made in the Wichita State Bank of $1,000, December 29, 1924, which deposit remained intact, and was used as part payment on the Max Berg bankrupt stock. That on April 6, 1925, Abraham and Ike Gerson purchased an automobile for $1,000, paying $500 in cash, balance to be paid in 30 days. That a chattel mortgage was given on the automobile for the balance, signed, "Clara Gerson, by Ike Gerson," and later the note secured by the chattel mortgage was paid by checks signed, "Ike Gerson, by Phillip Gerson."

We are forced to the conclusion from a careful study of the record that the government failed to prove some of the substantial matters included in the foregoing narrative.

The keystone of the alleged conspiracy was that Abraham Gerson should purchase on credit a large amount of merchandise, a part of which at least was to be disposed of and the cash received therefrom secreted from the trustee in bankruptcy. It was vital we think to the government's case to prove, as alleged in the indictment, the purchase of a substantial amount of merchandise. If the allegation of the indictment, that Abraham Gerson purchased a substantial amount of merchandise on credit, and concealed from the trustee the cash received from a sale thereof, is not proved, then there is nothing to sustain the charge of a conspiracy to do this very thing. There is no foundation upon which to build the government's case. From the statement made by Abraham Gerson June 25, 1924, to the Knickerbocker Clothing Company, he had merchandise of the value of $14,146.75 cost-marked. The record shows that after that he received at some of his stores $1,400 worth of merchandise on the strength of that statement. The theory of the government's case rests on the inference to be drawn from comparing this statement with the indebtedness for merchandise that existed at the time of the bankruptcy. How is the latter shown? The government in its argument sets forth and relies on schedule A-3 in the bankruptcy proceeding to prove the same. In the brief of government there appears the following: "Creditors whose claims are unsecured. 110 creditors for merchandise $31,117.39." This is not a correct statement of schedule A-3. words "for merchandise" do not appear in said schedule, but merely the words "creditors whose claims are unsecured." plete list of creditors was filed, showing a very large number thereof, but nowhere in

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