Kotteakos v. United States

328 U.S. 750 (1946)

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Nature of the Case

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Facts

Simon Brown came up with a scheme to induce various financial institutions to grant credit to various people with the intent that the loans for advances would then be offered to the Federal Housing Administration for insurance upon applications containing false and fraudulent information. In May 1939, Lekacos (D1) told Brown that he wished to secure a loan in order to finance opening a law office. Brown made out the application, as directed by D1, to state that the purpose of the loan was to modernize a house belonging to the estate of D1's father. D1 obtained the money. D1 then secured another loan through Brown, in the names of his brother and sister-in-law. D1 also received part of the proceeds of a loan for which one Gerakeris, a defendant who pleaded guilty, had applied. In June 1939, D1 sent Brown an application for a loan signed by Kotteakos (D). It contained false statements. Brown placed the loan, and D thereafter sent Brown applications on behalf of other persons. Two were made out in the names of fictitious persons. The proceeds were received by D and petitioner Regenbogen, his partner in the cigarette and pinball machine business. D also sent Brown an application for a loan in Regenbogen's name. This was for modernization of property not owned by Regenbogen. The latter, however, repaid the money in about three months after he received it. All the rest of the transactions were similar. No connection was shown between them and petitioners, other than that Brown had been the instrument in each instance for obtaining the loans. In many cases, the other defendants did not have any relationship with one another, other than Brown's connection with each transaction. As the Government puts it, the pattern was 'that of separate spokes meeting at a common center,' though we may add without the rim of the wheel to enclose the spokes. Seven of the thirty-two persons indicted were eventually found guilty. Simon Brown pled guilty and was the common figure in all the transactions proven. When the loans were applied for Brown knew that the proceeds would not be used for the purposes stated in the applications. The Court of Appeals aptly drew analogy in the comment, 'Thieves who dispose of their loot to a single receiver-a single 'fence'-do not by that fact alone become confederates: they may, but it takes more than knowledge that he is a 'fence' to make them such.' It stated that the trial judge 'was plainly wrong in supposing that upon the evidence there could be a single conspiracy, and in the view, he took of the law, he should have dismissed the indictment.' Nevertheless, the appellate court held the error not prejudicial, saying among other things that 'especially since guilt was so manifest, it was 'proper' to join the conspiracies,' and 'to reverse the conviction would be a miscarriage of justice.' The Supreme Court granted review.