Appellant was convicted in the lower court on 34 counts of a 36 count indictment. Counts 1 to 9, both inclusive, charge a violation of Section 77 q(a) (1) of Title 15 U.S.C.A. 1 Counts 10 to 35, both inclusive, charge a violation of Section 338 of Title 18 U.S.C.A. 2 and Count 36 charges a conspiracy to commit the substantive offenses described in Counts 1 to 35 both inclusive in violation of Section 88, Title 18 U.S. C.A. 3 A nolle prosequi was entered as to Counts 5 and 9 at the close of the Government’s case and the Court directed a verdict of acquittal of two co-defendants.
The indictment is so voluminous (143 pages of the printed record) that it is neither practical nor possible, within reasonable bounds, to state accurately and completely the charges there made. The first Count charges in minute detail a scheme and artifice to defraud on the part of the appellant and two co-defendants and this charge is carried forward into each suc-cceding count by reference. The scheme charged was that appellant organized the Neological Foundation ostensibly as a vehicle to disseminate the philosophy of self-betterment ; that by radio programs, lectures and writings he solicited dues-paying members whom he called “students”; that by assuming scholarly degrees and by false representations as to his birth, education, wealth and studies in India and Tibet, he inspired his following with trust and confidence in himself and his teachings; that by talks and writings he solicited and induced his followers to invest their money in the Neological Foundation and several so-called business ventures he sponsored; that he represented that all money placed with him would be guaranteed against loss and that he would pay the lender 6% interest per annum and a 4% bonus; that the earnings from his organization and business ventures were insufficient to guarantee the principal or interest on the moneys placed with him; and as a result a great many of his investors were not repaid, their money having been appropriated by the appellant to his own use and benefit. The count charges that “from, on or about the first day of June, 1935, and continuously thereafter up to and including the date of the return of the indictment defendants unlawfully devised and intending to devise a scheme and artifice to defraud and for obtaining money and property by means of false and fraudulent pretenses, representations and promises, and by omissions to state material facts, from a certain class of persons * * * who were, would be induced to become, and who are members of the Neological Foundation, and who were desirous of making profitable and paying investments in the promissory notes, receipts and other evidences of indebtedness” of the defendant Carruthers or any of his various *514 activities such as “Nan-Gene” and “Happy Hearts.” This is followed by twenty paragraphs alleging- in detail the facts claimed by the Government to constitute the alleged scheme and artifice. Each of the mailing counts then sets out specifically the mailing of a letter or other document in furtherance, as the indictment charges, of said fraudulent scheme.
Appellant began his operations in Pitts-burg, Pennsylvania, about June, 1935, but early in 1936 moved to Chicago where the balance of the activities charged in the indictment originated. He organized the so-called Neological Foundation and lectured to the general public by radio and otherwise on the philosophy of right living, as he conceived it. He claimed to be a doctor of medicine and a doctor of divinity; told some that he was bom in England, had studied for the ministry and later was a monk at a lamasary in Tibet, that he had been an aviator in the first world war and was shot down resulting in his becoming blind. He said he regained his sight by following the principles and teachings that he was then advancing to his various audiences. To some he administered to their physical needs and to others he gave mental solace. He obtained a following of large proportions and his Neological foundation acquired a membership in excess of 4,000, each member paying dues of two dollars per month. His followers were bringing their money to him by way of loans or contributions far in excess of the dues required. He undertook at one time to market a product to be used as a shampoo which he called “Nan-Gene” and his public were invited to invest, the invitation being accepted in large numbers by the faithful. Later the shampoo formula proved unsatisfactory and he substituted a laxative product to be marketed under the name of “Happy Hearts.” He gave those who had invested in “Nan-Gene” the opportunity of withdrawing their funds or leaving them with him for the advancement of “Happy Hearts.” Few, if any, undertook to withdraw, but by reason of their abiding faith in the “doctor” continued their investment in the laxative product. The faithful may have reasoned that if the public were not interested in cleaning their hair with “Nan-Gene” that they might in any event cleanse their intestinal tract with “Happy Hearts.”
It would unduly lengthen this opinion to further recite the activities of appellant, but it is sufficient to say that at least some of his representations were completely withoift foundation in truth. He stipulated during the trial that prior to 1934 he had been known under the name-of Henry J. Boerum, and that except for a period in the latter part of 1919 and 1920 he had never been out of the territorial boundaries of the United States. Mary Wells testified that her father’s name was Henry Boerum and that she had a brother by the name of Henry Boerum whom she had not seen for 19 years, but believed the defendant Car-ruthers to be her brother. John W. Gage testified that he was married to Ellen Boe-rum who had a brother Henry whom he had not seen since 1919 but believed defendant Carruthers to be that Henry Boe-rum.
The principal attacks upon the judgment of the lower court rest upon the assertion by appellant that:—
1. The scheme to defraud alleged in the indictment is not alleged to have been devised prior /to the alleged mailings.
2. The undisputed evidence shows that ■ the recipient of the count letters had in each instance parted with his or her money prior to the mailing of the letters.
3. The Court’s charge to the jury violated defendant’s constitutional freedom of religion.
4. Defendant was unalterably prejudiced by a juror’s reading during the trial of a newspaper article critical of defendant.
These points were appropriately raised and preserved during the trial and, althotígh only points 3 and 4 were argued orally in this Court none were waived.
1. In support of point 1, appellant urges that the indictment alleges a continuous devising of the fraudulent scheme from June 1, 1935, to October 25, 1944, the date of the returning of the indictment and that, therefore, the scheme was not completely devised until the returning of the indictment and consequently the letters alleged to have been mailed could not have been mailed in furtherance of the fraudulent scheme. Counsel for appellant reasons that the pleader found it necessary to aver a continuing scheming and devising in order to avoid charging more than one separate and unrelated Scheme. McLendon v. United States, 6 Cir.,
2. Appellant also challenges his conviction for the reason, as he asserts, that each of the letters constituting the basis of each of the mailing counts, was mailed after the alleged fraud was committed and after the addressee had parted with all of the money paid by him or her to appellant. He reasons that the only justifiable conclusion to he drawn from the evidence is that any alleged fraudulent scheme had at the time of the mailing been abandoned and that further attempts to obtain money in connection therewith had been abandoned. He supports his position with the decision of the Supreme Court in Kann v. United States,
and circumstances in the case. Whether this or other letters actually brought further contributions or “investments” cannot be the sole test of whether it was in furtherance of the continuing scheme to defraud pleaded in the indictment. If defendant was engaged in a fraudulent scheme of obtaining funds from a gullible group of individuals in the beginning, certainly the Cunningham letter evidences no abandonment of the purpose. We think the record justifies the conclusion that there was one scheme, continuously in operation during the time charged and that the count letters
*517
referred to were sent in furtherance of such scheme. That the letters may not have been successful on each occasion may be considered, but is not conclusively determinative of their character. The facts clearly distinguish our case from the Kann case, supra. See Brady v. United States, 9 Cir.,
3. Under this point appellant urges that the Court’s charge to the jury violated his constitutional guaranty of freedom of religion. The instruction on this subject is set forth in a footnote
5
the italicised portion being the subject of the attack. It is said that the phraseology of this instruction left a fact question to the jury as to appellant’s religious belief on the subject of “Breathing, silence and position of persons during sleep” contrary to the holding of the Supreme Court in United States v. Ballard,
4. Under this point appellant seriously urges that it was reversible error for the Court to refuse to declare a mistrial on account of an article appearing in the Chicago Daily News after the close of the evidence in the case which article concededly referred to appellant. The hearing of evidence was concluded on a Friday afternoon and the jury were permitted to separate and go to their homes. During that evening the article set forth in footnote 6 appeared in the News and was given wide circulation. When Court next convened on Monday morning counsel for Carruthers presented his motion to withdraw a juror and for a mistrial alleging that the article was probably read by the jurors and was highly prejudicial. The Court at the request of appellant thereupon asked the jurors collectively whether any had read the article. Juror Vincent answered: “I might have. I don’t remember it unless I saw it again.” The Court then said to the jury: “If you have, I told you when you were being selected that the only evidence that you would consider would take place in this court room and which was admissible and was ruled on by the Court. If any of you have read anything concerning this case, and if any of you have read anything, or of any of the defendants, that you did not hear in the court room by sworn testimony or documents you are to entirely disregard it, or anything that might have appeared before you get this case for your deliberation. Now I take it that you all understand it?” The jury at the request of appellant was then polled on the question of whether they had read the article, and when juror Vincent’s name was reached on the' roll call, the following colloquy occurred :
“Juror Vincent: I remember it. I would like to see it again, to be sure. I read the News. I probably read it.
“The Court: Do you recall now if there was anything in the article, if you did read it, that was not in evidence in this case, in this courtroom?
“Juror Vincent: I read in the paper something. The rest I didn’t hear. It was discussed after the case was dismissed Friday afternoon.
“The Court: It was discussed by whom?
“Juror Vincent: A motion was made by the defendants.
“The Court: Yes.
“Juror Vincent: That is what I read. “The Court: That is purely a legal question.
“Juror Vincent: That is what I figured. “The Court: Anything else except the denial of that motion.
“Juror Vincent: That is what I recall.
*519 “The Court: For your information, that is done in every case.
“Juror Vincent: That is all I recall of the article.
“The Court: That means whether it is a question of law for the Court or jury to pass upon. That is what you have reference to ?
“Juror Vincent: That is my understanding.”
All other eleven jurors answered that they had not read the article. The Court thereupon denied the motion and following the closing arguments again admonished the jury that they were permitted to consider only the evidence as presented in open Court and were not to consider or be influenced by any article which might have appeared in any newspaper or other publication. The Court in its instructions also told the Jury: “Under the law the defendant in a criminal case is not required to testify in his own behalf. He may do so, or not, as he chooses. The failure of any defendant to take the stand as a witness in his own behalf must not be considered by you in any way as an element against such defendant, nor be permitted by you in your deliberation to militate against him.”
It cannot be denied but that the newspaper article in question was inflammatory and prejudicial in character and its publication prior to verdict, improper and unethical. Its publication could, under some circumstances have brought to naught a long, tedious and expensive trial. Whether the Court should have in this instance declared a mistrial depends upon all the circumstances. A motion of this character is addressed to the sound discretion of the trial Court. United States v. Hirsch, 2 Cir.,
Other assignments of error are made which have had our consideration, but none warrant a reversal. The judgment of the District Court is
Affirmed.
Notes
“(a) It shall be unlawful for any person in tbe sale of any securities by the use of any means or instruments of transportation or communication in interstate commerce or by tbe use of tbe mails, directly or indirectly — (1) To employ any device, scheme, or artifice to defraud, or”
“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 * ® * shall, for the purpose of executing such scheme or artifice or attempting so to do, place, or cause to be placed, any letter, postal card, package, writing, circular, pamphlet, or advertisement, * * * in any post ofiice * * * of the United States * * * shall be fined not more than $1,000, or imprisoned not more than five years, or both.”
“If two or more persons conspire either to commit any offense against the United States, or to defraud the United States in any manner or for any purpose, and one or more of such parties do any act to effect the object of the conspiracy, each of the parties to such conspiracy shall be fined not more than $10,000, or imprisoned not more than two years, or both.”
November 25, 1941
Dear Friend and Fellow:
This letter is intended to serve a double purpose. I hope you will read it carefully and that you will give it your sincere consideration. * * *
Look back on last year and you will see that within the short space of two years and two months our student membership grew from the original fifty-eight to four thousand, seven hundred and twenty-two persons; and that is a record, you will allow. A number of those students failed to continue to pay tuition when I was accused and arrested. The larger number continued in good faith, because knowing me well they knew I could never be guilty of such a crime. * * *
For several good reasons I am bringing to your attention once more the simple facts which I believe warrant this letter. First: I (and The Neological Foundation) am in need of money. I can secure more than I need by selling a part interest in this activity and organization. Two offers have been made. * * * Personally, I should rather hold The Neological Foundation in our own control and develop our activities into a nation-wide campaign myself, with eventual large membership and business income. This I can do easily as soon as I have the decision and may go ahead.
Second: With a rather reasonable amount behind me I can build this organization into tremendous proportions, and in doing so I should much rather work and build with you behind me than to include others outside of the organization. A new fund will enable me to go ahead now, put the campaign into effect, *516 and at the same time offer you, who help me, something exceptional in the future.
If, as seems to be inevitable, inflation comes upon this country; if money becomes practically useless, and taxation so high that buying power is drastically curtailed if war brings chaos to us and our government and bombings and destruction to our country; if the population is regimented into a defense unit, and some of the prophesies for the next three to four years are realized, you not only will not have any money, but you will not have any way of earning or getting any money. Then the fact that you have something behind you, as a loan with me and The Neological Foundation, will be a security. No matter what happens, your loan will be at the basic value of the amount you loan me now. No matter what kind of money may be in use, the amount with me will be on the basis of its value at the time the loan is given.
I shall until December 15th, 1941, offer six per cent interest per annum, plus a bonus of four per cent per annum (based on future earnings), to be repaid during July, 1945. Or if, at that time, you wish to allow your loan to remain with us, interest and bonus shall continue in force. After the 15th day of December, I cannot make this offer. I am, therefore, making the offer now.
If you want to lend me/us five dollars, ten dollars, fifteen dollars, twenty dollars, twenty-five or fifty dollars, or more, on the above basis, I shall appreciate it and I am sure you will be glad that you did so when July, 1945 comes around. Of course, Christmas is with us. Doubtless you are going to need money for buying. Why not save, at least five dollars (or more if you see the wisdom of doing so) that will return to you later with good interest and bonus. Tou will certainly be helping me, helping your organization, helping advance this gospel of Right Living through Right Thinking,' helping thousands of persons to learn to, live healthier, happier and more successful lives, and setting aside something you will need desperately in a few years.
A five dollar bill, or a ten dollar bill (or any amount you decide) saved now, loaned to me/us, will be wonders for me/us and for you.
If I were pastor of your church, you’d be asked to contribute without expectation of any return. A pastor or a church could not need money more right now than we need it. However, I prefer to ask you for a contribution-loan, which I can repay with good interest, rather than to beg for a donation.
Will you help me at this time?
A peculiar truth has proved itself times without number, during the past year; it is this: those who have loaned me any money have been blessed, have increased their incomes, have improved in many ways. Why? Because “inasmuch as you do it unto one of the least of these, you do it unto me,” and great shall be your reward.
Ask yourself this question: “If I lost, or gave away, five or ten dollars now, would it break me?” Five or ten dollars, or even more if you want to set aside something for future income, loaned to Hugh Greer Carruthers and The Neological Foundation now will return to you, with good interest in 1945.
Will you help me and help yourself?
Thanks for your faith, kindness and help heretofore; thanks, too, for your help now, and going to you are the love and good wishes of — ■
Tours servant in Him,
Hugh G. Carruthers.
Please send, or bring, your loan amounts to Miss Evelyn Kroell, Secretary, Civic Opera Building, % the Neo-logical Foundation, and make cheques or money orders payable to Hugh G. Car-ruthers. A receipt will be mailed to you upon receipt of your loan.
“The first amendment of the constitution of the United States provides, as follows:
“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.
“This provision of the constitution as a matter of law protects the defendants, and each of them, from any inquiry by you into the truth or falsity of any of the religious beliefs, or doctrines, or representations made by the defendants, or any of them, which dealt with such beliefs or doctrines. In the consideration of the question of the guilt or innocence of the defendants in this ease you must assume that any and all representations made by the defendants, or any of them, concerning matters pertaining to their religious beliefs or doctrines, were true at the time they were made, and this is so, irrespective as to whether such representations were written or oral, or partly written and partly oral, or merely based upon inferences which you may draw from printed or written documents in evidence.
“You are further instructed that representations of the defendants, or any of them, concerning or relating to the subjects of breathing, silence, and position of persons during sleep, if you believe that they are matters within the field of religion, as taught by the defendant Carruthers, and the truth or falsity of sueh representations, if any, may not be questioned in any way by you in arriving at your verdict in this ease.”
“Lama Dodges Questioning on Robbery.”
“The Kum Bum Lama dodged the ■witness stand in his Federal Court fraud trial this afternoon, and averted a show-up of his career as highway robber before he grew a bear'd and named himself Dr. Hugh Greer Carruthers.
“The defense rested, and then Judge Philip L. Sullivan denied a defense motion for a directed verdict of not guilty offered for Carruthers. The Judge held in abeyance, ’ until he receives the jury’s verdict, motions for directed acquittal of the other defendants, Evelyn Kroell and Mary Morel.
“Prosecutor Francis J. McGreal had planned to put into the record, in cross-examination, the fact that Carruthers, under his real name of Henry Boerum, Jr., served a prison term in New York state for highway robbery.
“The failure of Carruthers to testify prevented this.
“The defense attorneys, Walter Baeh-rach and Edward Hess asked a directed acquittal on argument that Carruth-ers’ Neological Foundation was a religion, like the T am’ cult, whose sponsors won in the high courts.
“The Defense had conceded in court that the ‘doctor’ was really only Henry, a postal clerk from Brooklyn, and had not been educated as a lama in Tibet, but had merely learned the alphabet and some words as a fifth grade pupil in a Brooklyn public school.
“Closing arguments will begin Monday.”