Full opinion text
WYZANSKI, Chief Judge. CHARGE TO THE JURY Mr. Foreman and members of the jury, we have reached what yesterday Mr. Phinney referred to as the penultimate stage of the case. I do not know whether he intended a pun implying that I would write out my Charge. In any event, my Charge is oral and not written, for though I realize how difficult some aspects of this case are my principal object is to talk to you so that you may clearly understand your obligations and the applicable rules of law. If at any stage you have thought that I have expressed an opinion upon the facts in this case or upon how you should decide this case I assure you you have misunderstood my intention. Neither previously, nor now, nor hereafter do I intend in any way to indicate how you should decide this case. This has been a very long case. We began a month ago yesterday and this is our 17th day. It is not the longest case that I have ever tried. One ran for five years but fortunately did not involve a Jury. Nonetheless, I am aware that it has been a considerable burden upon you as well as upon the parties and their counsel, and also upon the court reporter, the clerk and many other people in attendance here during this summer session. But the ease is one of very great importance. In a real sense every case is important to the parties, and a criminal case is particularly important because, as was pointed out to you in argument, there are at stake precious interests, such as possibly the liberty of the persons involved, and certainly their honor, reputation and pride, and also there is the great interest of the society, of the United States of America and of the people in having justice administered equally and fairly. Now my Charge is necessarily going to be a long one. It won’t be as long as one that I heard a month ago in England. After 42 days of trial Mr. Justice Lawton delivered, as they call it, a summing up, which lasted three days. I hope that mine won’t take three hours. However, I have received perfectly properly voluminous requests for instructions, and I want to cover at least in substance most of the principal points that counsel were good enough to draw to my attention and such additional points as have occurred to me. I am sure that you have felt, as I have, that counsel on all sides have demonstrated great skill and ability, and that their experience and judgment have been of considerable assistance to you as well as to me in bringing this case to this point. My Charge, I said, will be long, and because it will be long I am going to do a rather unusual thing at the outset by telling you to pay particular attention whenever I talk about the burden of proof, that is the obligation of the Government to prove its case beyond a reasonable doubt as to every essential element, and I want you to note the emphasis that I place upon the three-branched aspects of this case. With respect to the duty of the Government to prove beyond a reasonable doubt with respect to a defendant, before that defendant can be convicted, that he personally, or, in the case of a corporation, an authorized individual acting for the corporation, was a party to a scheme to defraud, that he or the authorized corporate officer or representative personally specifically intended that the mails should be used in connection with that scheme and, third, that he, or in the case of a corporation, the authorized corporate representative specifically intended to defraud, that is to act in a wicked manner. Now I will say a great deal more about each of those branches of the case but what I have said initially is intended in a way as a sort of headnote or set of red markers so that you will pay particular attention to what seems to me the outstanding aspects of the questions which will come before you. In a trial of this kind the Judge gives instructions with respect to the law. You are required to follow what the Judge says is the law. A Judge, not least this Judge, makes mistakes with respect to the law. But whenever a Judge makes a mistake with respect to the law, those who believe he has made a mistake among the lawyers at the table have a right to call it to his attention, and if he doesn’t correct the mistake they have a right of appeal to the Court of Appeals for the First Circuit, sitting in Boston, and in some appropriate cases ultimately to the Supreme Court of the United States, but you are not to correct any error I make with regard to the law. The law assumes that you are at least as likely to be mistaken with respect to any attempted correction of law as you are likely to be right and, moreover, we could not tell if you were making an error of law because you would not be making it on the record the way I am at every moment. You are the judges of the facts in the case and that is a sufficiently burdensome duty. That is to say, it is you, not the Judge and not the lawyers, who are to make up your mind what was the evidence, how much of it was credible, that is to say believable, and it is up to you to determine ultimate questions and preliminary questions of fact. Anything that counsel have said or anything that I have said or may say about the facts you are entirely free to disregard. I told you the other day how impressed I was by a statement made by Mr. Justice Lawton, when he was addressing a Jury and reminding them that on questions of facts they were not in any way to defer to a Judge merely because the Jury thought a Judge had more experience and therefore might be a wiser fellow with respect to the facts. There is no reason to believe that a Judge is a wiser man with respect to facts than a juror, and there are many reasons to believe that one Judge is less wise than 12 jurors. 12 jurors represent different points of view. They have different backgrounds. And particularly, let me say, in a case where there is an out-of-state Judge presiding over a Jury drawn from what is called the vicinage, the neighborhood, the Jury is in a much better position than the Judge to determine the credibility of the local witnesses and indeed to form opinions with respect to questions of fact of every kind. Another famous English Judge, not Mr. Justice Lawton, but Lord Devlin, has said that a Jury is a parliament, a little parliament or Congress. Now if that phrase means that the Jury is representative of the community in formulating standards, there is a great deal of truth in that. Of course, the Jury is not to formulate standards contrary to the written law or the common law. But within certain areas, and particularly, I am inclined to say in the area of determining whether conduct is fraudulent or not, the Jury is a small legislative body. But let me warn you that in formulating your views of the facts you are not to bring to bear anything except the evidence you have heard in this and the earlier courtroom. You are not to take into account any gossip, if you have heard any, about this company, or these companies, or these defendants, individual or otherwise. You are to ignore anything you may have seen in the newspapers, or on television, or heard on the radio, or in any way learned about except what you learned here in court. It would be very improper for you to approach this case upon the basis of some political philosophy, such as that you think that advertising is the catalyst which makes the capitalist system run, or, on the contrary, advertising is a wicked waste of money and people ought to be allowed to purchase in privacy without the intrusion of salesmen. Either kind of philosophy, or any other kind of philosophy which represents your personal economic and political and social views is out of place. Your function here is to consider the facts as developed here in the light of the instructions of law that I give you. Now you know very well that this criminal case began with an indictment returned by the Grand Jury. The Bill of Rights provides that no one in a Federal Court can be charged with a serious crime unless the matter is first presented for consideration by a Grand Jury. Grand is a French word “Grande,” and means a jury of 23, or not less than 16, in any event. Now the Grand Jury presumably heard only the evidence which the Government saw fit to offer to the Grand Jury. So far as we know, the usual practice was followed, and the only persons who ever talked to the Grand Jury were the United States Attorney and his assistants and some witnesses that the United States Attorney and his assistants suggested that the Grand Jury should listen to. The Grand Jury, so far as we know, never heard any of the defendants nor any of their witnesses, and assuredly none of their counsel. All that the Grand Jury did was to come to a conclusion that there was a case which they thought worth listening to, and they made a charge, and that charge is called an indictment. But the charge is not evidence. It is merely a framework of a complaint, and in this particular case large parts of the indictment have been struck by me even before you were called to hear this case, and I am going to tell you that other parts of the indictment have turned out to be immaterial, or irrelevant, or otherwise not for your consideration. But let me again state most emphatically that the indictment in whole or in part is not evidence. It is a mere complaint or charge. In this case, as you well know, there remain for trial five individual defendants and two corporations. Each of them is a separate person, the corporations being persons in contemplation of law, and as to each person you are to give separate verdicts, and with respect to each you are to examine most carefully the evidence on an individual basis, and this is of the greatest significance because here in every aspect personal intent is a fundamental issue. Now this being a criminal case the defendants, and each defendant, enters the courtroom with the benefit of the presumption of innocence. That presumption continues throughout the case. It is the Government that has the burden of proof. It has the burden of proof on each issue, and the burden of proof is proof beyond a reasonable doubt. That means that you must be persuaded to a moral certainty. It means you must be persuaded as you would want to be persuaded about the most important concerns of your life. After all, as I already pointed out to you, possibly the liberty, and certainly the honor, reputation and pride of these defendants are at stake here, and with respect to their vital interests, as well as society’s vital interests, in order, in integrity and in justice, it is most important that you should apply the rule that the Government must persuade you beyond a reasonable doubt with respect to every essential element of the charged crime. Now note I said “every essential element.” There are certain aspects of the indictment which are not essential. I have struck some of them and others I am going to point out to you are not essential. Without covering the whole ground, let me say that the essential elements could be reduced to three with respect to each defendant: Was he a party to a scheme to defraud? Did he have the specific intention to use or have someone else use the mails in connection with that scheme? And, third, did he have the specific intention to defraud, that is to do wrong? Now you notice I am repeating that three-branched formula. I am going to do it several times. More than 30 years ago, when I was in Illinois, on an occasion I saw a poster on a wall, something that Abraham Lincoln is alleged to have said, and I don’t know that he did say it, about talking to a Jury. He said, “If it is important, tell it to them three times.” I shall tell it to you at least three times. Now I have said that the Government has the burden of proof beyond a reasonable doubt, and there is something which, as it were, is a corollary to that. No defendant has the duty to take the stand or to offer any evidence. You must never hold it against a defendant in any way, directly or indirectly, that he or it did not take the stand directly or through a representative. In this particular case, as you will remember, the California corporation, Interstate Engineering Corporation, did not have any witness take the stand on its behalf. But that is not to be held in, any way against the California corporation because the California corporation has the right to say, “The Constitution of the United States protects me,” or “protects the corporation” in the sense that it is the Government that has the burden of proof beyond a reasonable doubt. There is a slang phrase which summarizes the position which a defendant who does not take the stand is entitled to take. The defendant is entitled to say, “So what?” In other words, it is the Government that has to prove it beyond a reasonable doubt, and the defendant may keep quiet, and that silence is in no way to be used against the defendant. It is not a direct or implied concession. It is merely a reliance upon the Constitutional right to wait until the Government offers something which seems to the defendant to be of any consequence. Much may be offered by the Government to which a defendant says, “So what?” It is up to the Jury to decide whether the evidence offered in this case satisfies the Government’s duty to persuade you beyond a reasonable doubt. Now I have made a little reference already, and I am going to make more, to the indictment even in its truncated or cut-off form. You will remember that on the 19th of June the Government’s Bill of Particulars was shown to you. The Court made some suggestions prior to trial. The defendants moved in accordance with those suggestions that the Government should render certain particulars, and the Court ordered the particulars, and pursuant to that order on July 19th the Government filed the Bill of Particulars. Now the Bill of Particulars cannot enlarge the indictment. It cannot add to it. It cannot vary the theory set forth in the indictment. All that it can do is hopefully pinpoint to some extent aspects of what has heretofore been charged by the Grand Jury. The United States Attorney has no authority to add to the indictment, and he has no authority to change a theory in the indictment. An indictment may have a number of different theories in it, and I regret to say that the indictment which was originally drawn certainly seemed to have something wanting in absolute clarity. At any rate, whatever may be said about the indictment as a whole and as originally drawn, I hope that when I get through you will have what I think is the original purpose of the Grand Jury clearly brought out in this Charge without any suggestion by me, directly or indirectly, that the Grand Jury was right or that you ought to return verdicts of guilty. I make no such suggestion. I am merely trying to clear the way so that you can reach whatever verdicts you as jurors deem to be correct. Now you will notice that at the end of the Government’s case I finally entered a judgment of acquittal with respect to one corporation, the National Budget Corporation, that I entered judgments of acquittal with respect to the California corporation on all counts except Count 35, and left that for you, and you will realize that I with respect to the New Hampshire defendants entered judgments of acquittal with respect to two counts, but left Counts 1, 23, 27 and 35. Each count is a separate charge. That is to say, it is the charge of a different crime. Now you may think this is rather funny because you may look upon these counts as being just duplications. The Federal Mail Fraud Statute, as I shall tell you a little more about later, treats as the wrong condemned by the statute the mailing pursuant to a scheme to defraud and pursuant to an intent to use the mails and pursuant to an intent to do wrong, but each separate mailing is a different crime under the statute if the three-pronged conditions have been met, to wit, proof beyond a reasonable doubt of a scheme to defraud, a specific intent to use and use of the mails, and a specific intent to do wrong and commit a fraud. That does not mean, Mr. Foreman and members of the Jury, that a Judge will necessarily impose cumulative sentences, if you as jurors should by any chance convict a defendant of more than one count. Sentencing under the Federal system, with negligible exceptions, is a function of the Judge and not the Jury, and the Judge, after he has considered the verdicts, if he finds that there are verdicts of guilty, may use his discretion — that is his judicial discretion, not his arbitrary whim — as to whether to pile one sentence on top of another or to have concurrent instead of cumulative sentences. In any event, the problem of sentencing is not for you. Now you will notice that in this particular case the California corporation, Interstate Engineering Corporation, has had two very able counsel who have spoken up, as well as two other counsel who have not spoken up, or not often, that is to say, Mr. Phinney and Mr. Call, and Mr. Kelly and Mr. Gute. The New Hampshire defendants, that is to say the remaining corporate defendant in this case, that is, New England Enterprises, Inc., and the corporation which has been acquitted, National Budget Corporation, and the five individual New Hampshire defendants have had as their counsel Mr. Brown and Mr. DeGrampre. Now you may think that the multiplicity of counsel for one corporation against the relatively small number of counsel for all the New Hampshire defendants is strange, but the New Hampshire defendants have chosen to have Mr. Brown and Mr. DeGrampre speak for all of them. They may on the basis of their long-time familiarity with Mr. Brown have decided that he is the best lawyer they could get, and even if they could only have part of him they would rather have part of him than anybody else. They may have decided for reasons of economy. They may have decided for reasons of convenience of presentation. All that I say to you is that whatever their reasons were, the fact that they have had a common counsel does not mean that you are to treat them as being one. Each individual defendant and New England Enterprises, Inc. are entitled to be separately considered, and nobody would feel this more strongly than Mr. Brown and Mr. DeGrampre, who represent all of them. Now I have told you most of the general things that I ought to say with respect to the preliminary matters, but there are a few others as to which I want to give you instruction because this is, after all, the first case at this session of Court at which any of you have served as a juror, and perhaps some of you have never served as a juror in any case, and in spite of the excellent handbook which was given to you I assume that like myself you are not injured by listening orally to what you already read. Now in this case, as you know, there remain for your consideration the New Hampshire corporation, New England Enterprises, Inc., and the California corporation, Interstate Engineering Corporation, as well as five individuals. Now those two corporations not only in the words of the street “have no soul” but in the words of an ordinary observation “have no body,” but I am not suggesting that you will treat them with any greater severity or kindness on that count. I am merely pointing out to you that they cannot appear except through living human beings. In the case of a corporation, a corporation can be represented and is represented by anybody who has adequate authority based upon the law of the State in which the corporation is organized and the bylaws of the corporation to speak for that corporation. There is no doubt, for example, that the President of a corporation can speak for the corporation in regard to almost everything, not quite everything but almost everything. There is no doubt that a person who is a Director of Sales of a corporation has authority to speak in connection with sales matters for a corporation. And so far as salesmen are concerned, their authority to speak depends upon the extent to which they are authorized to talk. Now, for example, a salesman of a corporation who- engages in sales talk is acting within the scope of his authority. If he is foolish enough to talk about the financial affairs of the corporation, and its capacity to lend money, or the like, it is obvious the salesman is outside the field of his authority. Having said this about corporate agents, I want as a special word of caution to point out to you that this criminal case against the individual defendants does not involve with respect to the individual defendants as distinguished from the corporate defendants any theory of imputed knowledge or anything of that sort. That is to say, when you are considering whether an individual X knows about something, you are to consider whether he personally knows about it, not whether some salesman acting for him knows about it, not whether some associate knows about it. In this kind of criminal case, whatever may be rules of agency in civil matters, individuals are to be judged on the basis of their personalized individual knowledge. Now there are some problems with respect to the rules of evidence in this case. I have already told you you are the judges of the evidence, but you are the judges of the evidence within certain principles of law. You are to consider only the evidence, as I told you, which you heard and which was offered to you in Exhibit form and which I admitted. You are not to consider any excluded evidence, whether I struck it or whether I didn’t admit it. You are not to treat as evidence a question which was put by counsel unless that question produced a response which incorporated as it were the question. Of course, if a lawyer asked a witness, “Were you in Concord on April 1?” and the witness answered Yes or answered No, you have to take into account the question in understanding the answer. But, on the other hand, if the lawyer says to the witness, “In view of what was said by John Jones at an earlier stage about a contract made on March 1st, 1965, are you of the view that you understood that contract?” and the witness says, “I never heard about the contract,” you’re not to take into account the question and to assume that there was a contract on March 1st, because the witness’ answer does not incorporate the contract. Now in certain instances evidence may be admitted only for a particular purpose and not generally. And this is very important because you will remember the Federal Trade Commission Order, Exhibit 32-A, in this case, and you will remember that I instructed you at the time that that Federal Trade Commission Order was admitted, that it was not admitted for and could not be considered by you in connection with the question whether there was any scheme to defraud. It has no bearing upon that issue at all.. Only if by evidence independent of Exhibit 32-A you conclude that there was a scheme to defraud and you are then trying to make up your mind whether a particular defendant had the specific intent to defraud somebody you may then take into account that exhibit. Now I am going to say quite clearly again what I hope I said earlier in the trial, that what was pending before the Federal Trade Commission was not a charge of crime. What was pending before the Federal Trade Commission was a complaint. The complaint may or may not have had any merit. We don’t know. All we know is that Interstate Engineering Corporation, as well as some others, consented to the entry of an Order. Now that doesn’t mean that Interstate Engineering Corporation had then violated the Federal Trade Commission Act. It certainly doesn’t mean that Interstate Engineering Corporation had then committed a crime. As I said to you earlier, all it means is that to get rid of the case, just as in a plea of no contest, nolo contendere, in a traffic court, the California corporation said, “We will abide by the Order that is issued even if we weren’t ever guilty of anything.” Now that Order was an order with respect to future conduct and has to do with whether such future conduct specifically described would constitute what the Federal Trade Commission Act calls an unfair trade practice. Now an unfair trade practice may be or may not be a fraud. The only reason that you are allowed to consider this Federal Trade Commission Order is that if you are trying to make up your mind whether (you already being satisfied that there was a scheme to defraud a particular individual) a defendant had the specific intent knowingly to defraud, you are entitled to take into account everything he knew about questionable conduct. You may think or you may not think that what the Federal Trade Commission ordered as future music set a standard of the difference between fraudulent and nonfraudulent conduct. You may, as you see fit, decide whether this was the kind of red flag, this kind of warning, which would put somebody on notice that a scheme was a fraudulent scheme. There isn’t any law that requires you to decide it one way or the other. It is a question of fact. And all that the exhibit was introduced to show was that there was some kind of proceeding which, it is up to you to decide, was or was not a red flag. Now I have said to you that there are items of evidence which may be admitted for a particular purpose. There are also items of evidence which may be admitted only against a particular defendant or against some defendants and not against other defendants. Now you will bear in mind that repeatedly, over and over again, I provided that certain evidence was not admitted against the California corporation, Interstate Engineering Corporation. And evidence which was not admitted against that corporation is not to be considered by you in deciding whether it was guilty or not guilty. Likewise, evidence which was offered by the Government in rebuttal of the testimony of the New Hampshire defendants is not to be considered by you in adjudging the guilt or innocence of the California defendant because the California defendant rested at the end of the Government’s case, and the evidence offered thereafter by the Government is not admissible against the California corporation. Now there is some evidence which, you will remember, I did not decide one way or the other as to its admissibility against the California corporation. In particular I expressed myself at length at the time that Exhibit 43 was offered last week, and some of you will perhaps recall the rather elaborate instructions which I gave at that time. I reminded you that against the California corporation I had admitted the documents which originated with that corporation, statements made by Mr. Zobel and Mr. Wolf, who were officers or agents of that corporation, but in general, with those exceptions, I had not admitted anything against the California corporation which took place before the 28th of July, 1965. Now on the 28th of July, 1965, as you will recall, there was evidence that Mr. Zobel was in New Hampshire, he having come the day previous, and there was evidence, which you are free to believe if you wish, that he talked with at least Mr. McCadden and Mr. Lucht, and he also talked with some people at the Chamber of Commerce, and he made some inquiries as to what were the practices of New England Enterprises, Inc., and he had some contacts of various kinds with Postal Authorities. Now the question is whether, after he left, after Mr. Zobel left, statements which were made by officers and agents of New England Enterprises, Inc. may or may not be attributed to the California corporation. This includes statements which were made by New England’s officers and employees to Postal Authorities, and this includes the question as to whether items sent by attorney Connor to Postal Authorities and conferences between Mr. Connor and Postal Authorities are admissible as against the California corporation. Now all of this depends upon a preliminary question of fact which you must settle and I cannot decide. That is, what went on when Mr. Zobel was here? Did he formally or informally agree that in connection with this Postal inquiry there was a common undertaking and a common purpose and a common venture between the California corporation and the New Hampshire corporation and the New Hampshire individuals? Now if he on behalf of the California corporation did make such an agreement, formally or informally, or enter into such a common venture or plan, and if it was part of that agreement, venture or plan that from time to time there should be contacts between the representatives of New England Enterprises, Inc. and the Postal Authorities, then whatever took place between New England Enterprises, Inc. and the Postal Authorities may be considered by you against the California corporation. You have to be satisfied that there was a common venture. You have to be satisfied that the venture included discussion with the public authorities, and you have to be satisfied that this common venture and purpose continued up to the time that the statement or statements and conduct or acts occurred between New England’s representatives and the Postal Authorities. I have again and again said to you that this is a criminal case in which the Government has the burden of proving its case beyond a reasonable doubt. There is no rule of law that makes the Government have quantitatively the larger share of the evidence. If the Government produced a 15-year old child, whom you believe, and the defendants produced 12 Bishops, whom you don’t believe, under those circumstances you can find that the Government has proved its case beyond a reasonable doubt. That is, there is no business of counting heads or weighing bodies. What you do is decide whether or not on the evidence offered you are persuaded beyond a reasonable doubt. There is no rule of evidence in this case that leads one to prefer written to oral testimony or oral testimony to written testimony. It’s entirely a question for you as to which kind of testimony you in this particular case find to be credible. Sometimes you may think the written testimony is better, sometimes you may think the oral testimony is better, sometimes you may think some mixture is better. It is up to you. There is no rule of law that you must prefer direct evidence to circumstantial evidence, or circumstantial evidence to direct evidence. A jury can choose. Some jurors may believe that the direct testimony is better than the circumstantial. Some may think that the circumstantial evidence is better. Some may form their opinion by a combination. It is entirely a jury question. It is not true that a jury must exclude the testimony of somebody who has told a lie. You may think, if you want to, that a person who is false in one respect is false in all, or you may, on the contrary, say a person is false in one respect but believable in others. It is just a question of your own common sense applied to the particular testimony which is offered. Now there is no rule of law that you must believe or disbelieve a biased or friendly or hostile witness. It’s up to you. Of course, I assume that anybody will take into account whether a person is subject to a bias, whether he has a motive to tell the truth, or a motive to lie. But many people who have a motive to lie tell the truth, and many people who are subject to a bias of interest are nonetheless able to overcome their bias. I rather think that the whole judge and jury system proceeds on the notion that men are able to transcend to overcome their bias. Mr. Justice Brandéis, when he was a lawyer, in appearing before the Interstate Commerce Commission said something which I have always treasured, and which I have often quoted as an aid to juries, but this is Mr. Brandéis speaking as a lawyer, not as a Justice, and is in no sense binding upon any of you or upon me. Mr. Brandéis said that if he wanted to think about whether to believe a witness he would inquire as to, first, what were his opportunities for observation? Second, what was his capacity for recollection? Third, what was his capacity for narration, for telling the story afterwards? And, fourth, and in Mr. Brandéis’ opinion most important, what was the witness’ ability to understand the relation of his particular piece of testimony to the case as a whole? I would like to add a fifth, although it is a little presumptuous to add anything to what Mr. Brandéis said. I think it is very important to inquire as to motivation or bias, and to see whether the witness has really shown the capacity to overcome the kind of bias that unfortunately every human being is subject to, some more, some less. Now in this case, as you know from what I have said, and indeed from what was argued to you by counsel, one of the most important questions, Mr. Brown said the most important question, and I am not inclined to disagree with him, is what was the intent of the various individuals and of the corporations as expressed through their representatives? Mr. Wall said to you, “There are no photographs of intent.” That was a pretty good statement. But how are you going to judge intent? In the Middle Ages a judge, speaking as of the state of knowledge of that date, said, “The devil himself knoweth not the mind of man” to which a very witty Nineteenth Century Judge, Lord Bowen, answered, “A man’s state of mind is as much a fact as the state of his digestion and you tell it in the same way — by the way he acts.” Well, there are all kinds of ways of coming to a conclusion with respect to a man’s intent. You every day in your ordinary lives judge the intent of people by the way they act. You know perfectly well that if you are struck a blow, if you’re hit by somebody, you come to some kind of conclusion as to whether he did it intentionally or accidentally. Sometimes, of course, he makes a statement which helps you, but sometimes there is enough in his appearance to let you know whether it was a blow in anger or by accident, and sometimes the prior relations between the two of you give you a sufficient clue. There are many circumstances which enable one to arrive at a conclusion with respect to intent, and in a case of this sort there has been furnished to you a great deal of information with respect to intent. I must now deal with a particular problem in connection with intent, and that has to do with a defendant or other person who acts upon the advice of counsel. Now if an individual having at his command all the relevant facts before taking any action places all the relevant facts before a competent attorney whom he believes to act in good faith and asks that attorney his opinion, and that attorney having considered all the relevant facts, and speaking in advance of any action taken, indicates that the conduct is lawful, under such circumstances you cannot find that the client has knowingly, intentionally violated the law, if he acts in accordance with expert counsel, chosen in a disinterested and honest way, and acting, so far as the client knows, in a disinterested and honest way. - [46] Now it may happen that the client consults his lawyer mid-way in the course of his action. If he consults him mid-way, anything which is done pursuant to the advice of counsel after the consultation also is conduct as to which one cannot say that the client has acted in a fraudulent or dishonest or knowingly and intentionally unlawful way. But, of course, everything depends on whether there has been placed before the lawyer everything which is relevant and whether the lawyer has been selected in an honest and disinterested way, and whether, so far as the client knows, the lawyer has acted in an honest and disinterested way. You do not as a client get an immunity bath by going around and talking to a lawyer. You have to tell the lawyer everything you know that is relevant. You have to have selected your lawyer honestly and, so far as you know, the lawyer has to be acting honestly, and the opinion he gives you will protect you with respect to what you do afterwards. He isn’t a Court giving a judgment with respect to what you did before. He can’t give you a retroactive bath of immunity. And in this situation you the jury are entitled to take into account in connection with the defendants the degree to which they did or did not lay their knowledge before a lawyer in advance of some or all of their conduct, and the degree to which they made a selection with integrity, and the degree to which they had a right to assume that the lawyer was acting with integrity. I am sure that you will have in mind, without my specifically calling it to your attention, that the New Hampshire defendants had as their counsel, at least at some stages of this matter, Mr. Con-nor, and you will bear in mind what the testimony was with respect to what was laid before Mr. Connor and what opinions he gave. I think it only fair for me to point out to you that Mr. Connor for a considerable period of time had been representing the New Hampshire defendants with respect to litigation, and that he had represented them in the New Hampshire State Courts, and he undoubtedly had been giving advice of some kind to the defendants for a very long period of time. We also know that in October of 1965, if not earlier, and it is up to you, he, as he said, took into account the Federal Trade Commission Order, Exhibit 32-A, and he took into account the State Court proceedings, and he took into account certain State Lottery and other Statutes. It does not appear from what he said, if I remember correctly, but you can correct my memory, you are not bound by what I remember of the evidence, if I remember correctly he did not take into account the statute, 18 United States Code, Section 1341, the Mail Fraud Statute under which this Indictment in this case has been laid. I think it might be a good idea if I give you a recess for about 10 minutes. (Recess.) Mr. Foreman and members of the Jury, you will remember that before the recess. I was talking about the application of the principle of consultation of counsel, and I referred specifically to Interstate — sorry — to New England Enterprises, Inc. and the New Hampshire individual defendants having as their counsel at an early stage Mr. Connor. I did not refer, and I really should refer, to the fact that Interstate Engineering Corporation, the California corporation, has had as counsel at all stages, so far as I know, Mr. Gute, who is a partner of Mr. Call and who has been in the courtroom, as you know, and Mr. Gute was consulted by Interstate Engineering Corporation, the California corporation, with respect to certain matters, and you are to apply in connection with that consultation the same kind of principles that I already indicated with respect to an attorney-client relationship and its bearing upon the issue of intent and guilty participation or not guilty participation. I do think that this would be a very good time for me to underline the fact that I instruct you as a matter of law that the documents which were prepared by Interstate Engineering Corporation, the kind of documents which you will find in this folder, Exhibit 2, and which include the Compact Owner— Recommendation Program, the Explanation of the Compact Owner-Recommendation Program, the form of Conditional Sales Contract and the form of Promissory Note on the same sheet, and the forms in general which originated with the California corporation are in no sense fraudulent and do not constitute misrepresentations and could not in themselves, no matter what the indictment says, be taken as the basis of a conviction. In other words, insofar as Mr. Gute may have advised his clients to that effect, I agree with him on that point and instruct you so as a matter of law. You are well aware that this is an action which is brought under the Mail Fraud Statute. You have had it before you as an exhibit, but I see no reason why I shouldn’t follow the usual practice of reading it to you, so far as it is pertinent, and I will omit the penalty part because I already told you that is none of your concern. The statute, 18 United States Code, Section 1341, reads as follows: “Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Post Office Department, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be” punished as the statute provides, subject to the discretion of the Judge. Now earlier I made it quite plain that so far as you are concerned the three 'essential elements in the statute which the Government must prove beyond a reasonable doubt with respect to any defendant before you can convict that defendant are, first, that there was a scheme to defraud in which the particular defendant participated; second, that the mail was used and there was a specific intent in the plan that the mail should be used; and, third, and most important, that there was a specific intent on the part of the particular defendant to defraud, that is, knowingly, wilfully, intentionally to do a wicked act. Now let us go back and look at some of these three essential elements in a little more detail. Now if you listened attentively, or if you read the statute carefully when you had it in your hands as an item of evidence, you will notice that the emphasis is upon a scheme or artifice to defraud. It isn’t necessary for the Government to prove that anybody was in fact defrauded. To take an extreme case which I used in talking to counsel in advance of the Charge, if two persons agree to try to sell gold bricks as though they were solid gold, and they insert an ad in the newspaper that they have gold for sale at a reduced rate, and they then mail that advertisement to a proposed gullible customer, it isn’t necessary for the Government to show that the proposed gullible customer bit. On my hypothetical ease, as put to you just now, there was an intentional scheme to defraud contemplating a use of the mails and the mails were used as a step to carry out the scheme. Of course, and this is an important kind of footnote to this case, it might be that A and B were in the business of' supplying theatrical props, and if they put a notice that they had gold bricks for sale in magazines like Variety, which they thought reached the theatrical trade, and the intention was to offer gold bricks as theatrical props rather than as items of great and almost incalculable value, then there wouldn’t be any scheme to defraud. That would be a perfectly legitimate device. Now I haven’t really taken you very far by that gold brick example except to point out to you that it is no part of the necessary proof of the Government that. anybody was in fact defrauded. However, I suppose, like any other body of sensible human beings, you will take into account the people who were offered this plan or subjected to this plan and what their responses were as a guideline in determining whether the plan really was a plan to defraud. In order to constitute a plan or scheme to defraud it is necessary that the plan or scheme should be of a kind which is capable of defrauding the sort of people to whom it is addressed. Now in determining whether a plan is capable of defrauding the kinds of people to whom it is addressed you take into account the whole range of persons to whom it is likely to be offered. You don’t consider only the most foolish and least restrained, people who are drunk. You don’t take into account only the most sophisticated Police Chiefs. You take into account everybody to whom it is likely to be offered. And in New Hampshire you are entitled to take into account the kinds of people who live in New Hampshire, and particularly the kinds of people who are in the social and economic classes who would probably be the persons to whom the goods were offered, and you take into account their intelligence, their experience and the like. Now something which to you as very sophisticated people, after five weeks of trial, may be clear, may or may not be clear to somebody who is an average New Hampshire person in the social and economic groups and with the intelligence of average New Hampshire people. I don’t flatter you when I say I rather think from looking at you that you may not have been selected merely as a cross-section of New Hampshire. You seem to me to have a little more than perhaps the cross-section Jury qualities which I observe in Massachusetts. That’s a parenthesis, not to be taken as part of the instructions of law and not, please, only as a compliment. But I am now referring to a passage which was a passage in one of the early Opinions of Mr. Justice Black in Federal Trade Commission against Standard Education Society, 302 United States 112, more particularly about page 116 and 117. Now he was, Mr. Justice Black was dealing with a question of alleged false representations with respect to the sale of encyclopedias, and the salesmen there represented that the company would give customers a set of encyclopedias free provided that they paid $69.50 for the looseleaf supplements which came after-wards. A judge, with whom I have great sympathy of every kind, Judge Learned Hand, thought that, “We cannot take seriously the suggestion that a man who is buying a set of books and a ‘ten years’ extension service,’ will be fatuous” — that means foolish — “will be fatuous enough to be misled by the mere statement that the first are given away, and that he is paying only for the second. Such trivial niceties are too impossible for practical affairs, they are will-o’-the-wisps, which divert attention from substantial evils.” From those remarks and others in his Opinion Judge Learned Hand was adversely criticized and his judgment was reversed by the Supreme Court of the United States, Mr. Justice Black saying, “The fact that a false statement may be obviously false to those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception.” Now I don’t want you to think that just because I read that Opinion I think that this particular case which is before you is a clear case for the Government. All I am saying is that the test is not how a — (a bell rings)- — -Is that serious? We will assume it isn’t. The test is not how a sophisticated person reacts. The test is how an average person of a class presumed to be prospective customers would react to the kind of statements which are made. Now what is a fraud? Of course, a fraud can relate to goods and can be a fraud which involves a misdescription of the goods or their quality, but there is no basis whatsoever in this case for your assuming that there was any misdescription of the Compact Cleaner or vacuum cleaner as such. You saw a demonstration, and I think you will agree with me that there is absolutely nothing which would justify you in concluding that the goods supplied were inferior in quality. If I may be forgiven this, I will tell you that I said to my wife, our wedding anniversary being on Sunday, “I don’t think I could do better than to give you a Compact Cleaner,” (laughter) as far as its quality goes but we are not dealing with the question of the quality of the cleaner. No case at all turns on that. The alleged fraud is on the other end of this transaction. That is, the claim is that the customer incurred an obligation which he didn’t fully understand, and that the obligations as set forth in the documents prepared by Interstate Engineering Corporation, the Compact Owner-Recommendation Plan, et cetera, were not fully understood, so it is claimed, by the customers because they were diverted by, so it is claimed, misrepresentations of an oral character made to the customers at the time that they were being induced to sign these written agreements, the Conditional Sales Contract and the Promissory Note in particular. Now although there is a suggestion, and something more than that, in Paragraph One and in Paragraph 19 of Count One of the Indictment that the fraud consisted in part of an omission on the part of the defendants to state material facts, I instruct you as a matter of law that on the evidence as it developed in this ease you could not convict any defendant here on the basis of an omission of a material fact. The only basis upon which I am leaving this case to you are the other aspects of the Indictment which charge that the defendants made material misrepresentations of facts which they knew to be false. Fraud can include an intentionally false representation of a material fact, and it is up to the jury to determine whether a representation was made, whether it was false, whether it was material and whether it was intentional, the Government having the burden on every one of those aspects. Was the representation made? That is just a question of fact as to what was said. Was it false? That is, was it true at the time it was said or was it not true at the time it was said? That is a question of fact. Was it material? That is, was it a substantially important fact inducing the customer to act? You will remember that I said that the chatter about Black & Decker Motors was not material. And some things may be so obviously not material that a Court will say a jury cannot possibly conclude rationally that something is a material misstatement. But there are other matters in this case which I am leaving to you, not the Black & Decker question, which I am taking away from you. Now was it intentional? That is to say, did the person who is charged with this representation which is said to be false and said to be material, was that made by the individual knowingly with the intent to deceive? If all those elements are present, and the Government has proved it beyond a reasonable doubt, then it has proved a fraud. I’m sorry. It has proved a scheme to defraud. That slip was an important slip of the tongue because I already told you that the Government doesn’t have to prove that there was a .victim. There is no burden upon the Government to prove that the plan succeeded. The Government would be happy if it nipped in the bud plans without waiting for success provided that they are fraudulent and intentionally so. With respect to the mails, the second major part that I told you was in this case, the Government has to prove beyond a reasonable doubt that the mails were used, and in each of the counts here there is a specific reference to a specific mailing, but the Government must also prove that the particular individual intended that the mails should be used as part of the scheme. It is not necessary for the Government to show that the particular individual himself dropped the letter in the box. It is quite enough if he caused the letter to be put in the box and if he entered into a plan with the knowledge that the mail was going to be used, you as jurors can find that he caused the' mails to be used, if they were used pursuant to his expectation and pursuant to the plan. Now we come to what Mr. Brown has said is the most important issue — intention. He referred to Genesis, and I shall not add any other authority because I don’t suppose there is any higher authority. There are some crimes which one can commit without a specific intent to commit a crime. Suppose, for example, you are charged with driving an automobile on the streets of this city without an automobile license in your possession. You forgot that your license expired last week. You did not renew it. If the law of New Hampshire is like the law of Massachusetts you can be convicted even though it was a lapse of memory on your part. You were nonetheless driving without a license, and it isn’t necessary to show that you had the specific intent to drive without a license. The present statute is not like this hypothetical motor vehicle law in New Hampshire. In this statute before anybody can be convicted he personally, or in the ease of a corporation its authorized representative personally, must have the intent, the specific intent to do wrong. He must be acting knowingly to defraud and meaning to participate in it. Now I am not going to go over in detail evidence with respect to such matters as knowledge and the like. Counsel did a very good job, I think we will all agree, in addressing you on the specific evidence as they recalled it, and I am sure you recall it very well. Mr. Brown told us of, according to his count, a score of customers, who consisted of 12, I believe, that the Government produced in its direct case and five that the New Hampshire defendants produced and three that the Government produced in rebuttal. Mr. Wall reminded us of representatives who had come to the stand, who were salesmen, and indeed there were other representatives called, some by the defense and some by the Government, who were clerks, and there were individual defendants, each of whom took the stand. You have ample evidence which will enable you to determine whether indeed there was a plan or scheme to defraud, whether it was part of the scheme to use the mails and the mails were used, and whether any particular defendant had or did not have the necessary intent. I told you that Mr. Brown had a hard job because he had to represent so many different persons, but he would want you to look very carefully at each of his clients separately. So would Mr. Wall. In fact, Mr. Wall went through with rather great care what he thought was the evidence with respect to each of the individual New Hampshire defendants and their intention or lack of intention. Again you will have this problem in connection with intention of weighing what there is, if anything, in the exculpation, in the relief from blameworthiness, furnished by the opinions given by counsel, by Mr. Connor, to the New Hampshire defendants, and by Mr. Gute to the California defendant. I have told you the principles to apply, and I really do not want to comment upon Mr. Connor or Mr. Gute, or any other lawyer, more than to tell you what principles are -to be applied. Now I think it is at least time, and maybe some of you will have thought I should have done this earlier, it is at least time to look at the particular Indictment and what parts of it survive. Before I do that, let me just repeat some of the things which have been said in argument, but it is rather important they should be said by the Judge as well. If the Indictment says there is something wrong in forming the corporations, New England Enterprises, Inc. and National Budget Corporation, I tell you there is nothing to that charge. It isn’t wrongful at all. If there is any suggestion in the Indictment that there is anything wrong in conducting a Cadillac Contest, or any implication, direct or otherwise, that the Cadillac Contest was run in an improper way, there is nothing to that. If there is any suggestion that the S&H Green Stamps were improperly used, there is nothing to that. If there is anything with regard to the Black & Decker motor, you can forget that also. There is nothing to that. I have already drawn to your attention that National Budget Corporation is no longer in this case, it having been acquitted. Now I want to make it clear that under this Indictment and under my instructions a referral scheme of selling as such is not a fraudulent scheme. That is to say, there can be bona fide referral schemes. I am not saying this is one. I am leaving that to you. But it is perfectly consistent with the declared law in the Federal and State decisions for a scheme to be operated as a referral scheme in which a customer is offered by a seller the opportunity to get a reduction in price, or a bonus, or some other kind of advantage from furnishing the name of some prospect who indeed later on does become a customer. Referral schemes are not necessarily fraudulent. If they were, presumably the Federal Trade Commission would never have issued the Order which is before you as Exhibit 32-A because you will notice that the Federal Trade Commission did not outlaw referral systems, it merely put conditions with respect to what referral systems hereafter used by the defendants involved in that proceeding would have to do in order to comply with the prospective provisions of that Order. I further instruct you as a matter of law that despite what is said in Paragraph 19 of the Indictment, and I pause to allow you to turn to it, you cannot convict the defendants in this case on the basis of an endless chain theory, or a geometric progression theory, or something of that sort. As the plan was explained to us by all the witnesses, the maximum period of time open to a customer to furnish names of prospects was six months. There was no indication at all that within that period of time so many names could be dug up as to create a problem of exhaustion of potential ' customers. There is no indication before us that there was a promise on the part of Interstate, the California corporation, or New England Enterprises, or anybody else, that this system would be carried on forever and a day in an endless form. And, therefore, whatever might be appropriate under other kinds of chain systems, you cannot convict on the basis of what is set forth in Paragraph 19 of Count One. Nor can you hold it against the defendants as a fraud if they refused to take back merchandise whenever a customer wanted it taken back. Under the applicable law a customer has undoubtedly a right to have his transaction rescinded if there were a fraud, or if there were some other defect of a kind recognized under what is. now called the Commercial Code and used to be called the Sales Act. But the fact that a seller isn’t willing to take back merchandise doesn’t constitute a fraud. You and I may have dealt with merchants who in a kindly way were willing to take back goods which we bought, but the fact that as a matter of courtesy merchants often take back goods in order to have good will doesn’t mean that there is any legal obligation to take back goods unless the goods were sold fraudulently, or in a way that involved a misdescription of quality or quantity, or involved some other defect in the goods themselves, or in the transaction, such as is recognized under the law. Now there is another point which I don’t think I can emphasize sufficiently because here I really think that the Indictment repeatedly relies upon something which just is not the law. The Indictment frequently makes references to the fact that part of the fraudulent scheme was to sell Compact Cleaners at a grossly inflated price. Now I’m not concerned at all, and neither are you, with what it cost Interstate Engineering Corporation to manufacture the vacuum cleaner or