United States v. Jack E. Bronston

capital expand outside with which it could LUMBARD, Before MANSFIELD per- improve its its business and chances GRAAFEILAND, Judges. VAN Circuit suading 20-year renewal of After extensive its franchise in order. MANSFIELD, Judge: Circuit capital compa- negotiations, two venture appeals judg Jack E. from a Bronston nies, (a Citicorp Capital Limited Venture ment of the of York Southern District New subsidiary Fifty-Third Citicorp) of and jury Judge a entered after trial before Mil Ventures, (collectively Inc. “the in- Street Pollack, convicting ton him of two counts of minority investors”), vestors” or “the tenta- fraud, 1341,1 mail based on the U.S.C. § tively agreed to make a substantial invest- government’s allegations that he fraudu BusTop. ment in On June lently fiduciary duty violated his as an at (“Sandy”) Lin- investors contacted Samuel by torney helping to further efforts denbaum, partner in the Rosenman Colin (“C Safety Corporation Convenience and & firm, and to advise them retained firm S”) S, Steinberg, and Saul of & chairman C making in the investment. stop to obtain a bus shelter franchise from City approximately of New at the same time York At the same time Jack Bronston, he part when the law firm in which was a partner who then a in the ner, Rosenman, Freund, Colin, Lewis & Co senator Rosenman Colin and a state (“Rosenman Colin”), representing hen Queens, learned that his friend and Shelters, group of in BusTop Inc. client, Steinberg, was also interested Saul (“BusTop”), the then current holder of retaining in Rosenman to assist him in Colin a participant competi franchise and in the stop his efforts to obtain bus shelter tion for its renewal. We affirm. The evi behalf, Steinberg’s Acting franchise. on dence was sufficient to allow the to May on Bronston met with Lindenbaum convict Bronston of mail fraud based on his to tell him that wanted to duty loyalty breach of his to his firm’s represent Rosenman to him in retain Colin clients, his concealment from the clients of endeavors, stop bus and that he his shelter promotion his to their harm of the interests appear to on his behalf wanted Lindenbaum obtaining and C & S in Lindenbaum before Board of Estimate. franchise, specific thereby intent de immediately rep- declined to undertake the very fraud his firm’s client of the economic resentation, however, because, although protect, value his firm had been retained to BusTop was not client of Rosenman itself a mailing and his further two letters in (and representation of the minori- Colin ance of the fraudulent scheme. ty yet begun), investors had not Lindenb- 8,May 1975, BusTop against aum did not feel he could work On obtained an in- BusTop, friendships terim personal franchise from the of New York view of his public and stops BusTop’s build maintain shelters at bus relations consultant Despite over a three-year period. spring attorney. In the this reaction from and do, attempting places any post provides: or 1. Title 18 so § U.S.C. depository or for mail mat- office authorized “Whoever, having intending or devised ter, any thing defraud, matter or whatever be sent any devise scheme or or artifice by Service, obtaining or or money delivered the Postal or takes property by or means of therefrom, any thing, representa- receives such matter or pretenses, or false fraudulent tions, sell, of, loan, knowingly promises, dispose or or be delivered mail or causes to thereon, exchange, alter, distribute, according give away, sup- to the direction or at the ply, procure place or furnish or for unlawful use at which it is directed be delivered any coin, spurious addressed, obligation, person counterfeit or to whom it is security, article, anything repre- thing, or other or such matter or shall fined not more be sented to or imprisoned intimated or held out to be than or than five more article, spurious such or counterfeit for the years, or both.” purpose executing such scheme artifice Safety, ful behalf of Convenience on ahead on Lindenbaum, went jeopardized Co- the financial had a Rosenman we would Steinberg’s behalf corporate up Delaware BusTop.” set investors in lin associate investment “Convenience and the name of shell under response from Cohen re- Despite clear serve as Safety which would Corporation,” accept the proposal that the firm jecting his stop bus shelter vehicle in the Steinberg’s went back representation, C S incorporated competition. C & was he proposed July to Cohen on 2, 1977. June client of a bill- authorize the establishment by this time On June “just case at some ing for & number C S had been re- Rosenman Colin aware that developed in something time the future investors, counsel tained as not a conflict.” Cohen there was firm’s new to his wrote memorandum request, expressly but acceded.to committee, suggesting business him no was to instructed work & of C S the representation firm take on C without his performed on behalf of & S vehi- an investment “which will serve as written prior approval. The memorandum shelters public bus cle for the erection bookkeeper makes to the firm’s Bronston Chicago Philadelphia, City, in New York very it that Bronston understood clear conflict This involve and Seattle. acquiescence: limited nature of Cohen’s and should clients of the office other memorandum has been new matter “This be discussed.” subject to the approved by Murray Cohen committee, Cohen, Murray a member of the understanding no further work will that memo, to was first receive his this matter without performed immediately him with and returnee! to explicit consent.” anything “We not do the notation: should of C August, representation & S’s [Lindenbaum], Sandy this further on until acquire New York fran effort to a definite and I talk about it. There is you to the law firm chise was transferred trial, that at a conflict.” At testified Cohen & Ohrenstein.2 Rosen Stein subsequent meeting and Lin- with Bronston Thus, no later than June told the firm denbaum he Bronston had the decision Colin firm made Rosenman its inter- represent could not & S because C BusTop rather represent “inimical” to those of the inves- ests were competition for New in than & S C was describ- BusTop. tors in The situation franchise, and stop shelter City’s bus York ed Cohen: authoritatively com- had been this decision invest, proposing “The investors were For the next Bronston. Jack municated time, $1,300,000 in period over Bus- attorneys la- Colin two Rosenman months Top counting on Bus- obviously and minority investors in bored on behalf of franchise, Top obtaining a of its renewal partici- terms of their negotiating exact going Safety was and Convenience and agreement The initial pation BusTop. in BusTop competitor be a for fran- signed and, memorializing participation therefore, we this chise if were success- seeking fact franchises outside New a mem- 2. On December Cohen received thereupon urging instructed Bronston firm to ac- York. Cohen orandum Bronston basis, per- cept representation of C S would be that no the C & S account on nationwide did, country. (Cohen representation anywhere in the on Bronston’s that no conflict mitted however, complete a BusTop small would New allow Bronston exist outside of York Jersey, response project City. assign in New which Bron- for C & S was to an asso- Cohen’s whether, pending question decision from undertaken ciate if ston had to research the approval request seeking to undertake were not shelter franchises Cohen on representation York, proper which the & S nationwide outside New it would Ro- C to be to an- accept far advanced transferred the C & account on a too senman Colin firm.) January question Bronston On Before other non-New York basis. resolved, however, inform him of Rosenman learned in wrote could be Cohen represen- Schneider, mid-January the & S decision to decline C Howard an- Colin’s 1978 from partner, tation. other Rosenman Colin August the Rosenman red to Colin offices on Stein Rosen & August, Ohrenstein in agreement provided 1977. The that the continued thereafter to at- tend meetings at which C & S business investors would make their invest- discussed, New York was kept and was stages. stage ment in several The first progress informed about the of the C & S called for the purchase investors to Important dealing bid. internal documents notes, worth of secured which with the New prepared York bid C & S would be converted into stock when if by lawyers for Stein Rosen were routine- met, certain conditions were the most im- ly occasionally by sent messen- portant BusTop’s obtaining of which was ger. Finally, billing records David stages, renewal the franchise. In later Simpson, principal- partner the Stein Rosen $1,050,055 totaling additional investments ly responsible account, for the C & S indi- would be made. At the time this initial cated that on at least six occasions between agreement was signed, parties expected December, 1977, June, 1978, that the Rosenman Colin firm would contin- participated meetings in conference calls or represent ue to sign- the investors after the Simpson billed to C & S. ing. Schneider, Howard the Rosenman Co- that, There'was also during evidence partner lin most deeply involved in the in- period secretly when working Bronston was representation, vestors described ar- against the interests of C & S those of rangement at trial: clients, BusTop and his firm’s Lindenbaum “the clear contemplation agree- meeting (Venture Cap- clients parties ments and of the was that there Fifty-Third Ventures), ital and Street would be a representation continuation of ip actively engaged negotiating agree- their of the investors for the consummation of BusTop, ment to invest in was unaware of the transactions that were contemplated S, Bronston’s activities on behalf of C & by the first financing agreement.” conferring and was with Bronston with re- At no time relevant to the indictment in spect BusTop. to the clients’ investment this case did the investors cancel These by conferences were billed Lindenb- representation. Rosenman Colin aum to the clients. At the Bron- same time At the same time ston made when these out tickets to bill C & for time efforts S spent discussing Steinberg being by were with Bron- made Rosenman Colin law ston’s conversations yers with Lindenbaum. on investors, behalf of Billing records reveal that some of these Bronston secretly continuing his rela meetings Lindenbaum-Bronston which were tionship with C & S. At meeting the first by Bronston-Steinberg followed conferences directors, of C & S’s board of on June points importance occurred at of critical 1977, Bronston was one-year elected to a pursuing clients and to C & S in their term corporation’s as the assistant secre competing conflicting interests. For tary. separate On 15 occasions between instance, day on October after August 25, 1977, 6, 1978, and February City the New York Board of Estimate was Steinberg met with and later BusTop’s application consider for the bus filled out time tickets at his law firm indi franchise, stop Lindenbaum and Bronston cating that spent the time billable C had a one-hour breakfast discussion which & S.3 time tickets reflected an Lindenbaum billed additional half dozen meetings with other C as clients. Three hours later Bronston had during & S officials period, this same with meeting a 2V2-hour Steinberg and oth- the time recorded as billable to C & S. ers he for billing noted to & His C S. Despite legal the fact represen- clients, investors, firm’s tation of C & S’s efforts to obtain the New not informed of on his activities behalf of C City York formally franchise was transfer- in& conflict with S their interests. any directly, At no time was bill on based these time Bronston could not bill C & S since all by billing tickets sent to C S.& This have been due bills were screened the firm’s com- billing procedures to the prior fact that under mittee to transmittal. franchise, against charged under the interim emphasizing The indictment fraud, growing him with two counts of mail BusTop’s comply failure to with the terms allegedly sending of two letters out of agreement. of the The final paragraph chances of intended increase C & S’s read as follows: stop shelter wresting the New York bus upon anticipated program “Based BusTop. franchise from The first count 4,000 building (in- approximately shelters letter Rosen on C involved a sent Stein cluding purchase City from the of the New behalf to the members of the S’s approximately 400 shelters built to date City The letter York Board of Estimate. Shelters, Inc.) by BusTop assuming prepared after Bronston had met with payment City to the of between 14—16% Steinberg and Samuel of Stein Rosen Stein revenues, gross advertising City August 1977. It was decided at that per would receive in excess of million $2 meeting that a letter should be sent to the annum at the conclusion of such construc- publicly announcing Board C & S’s interest program.” tion presenting City plan building This retyped letter was a version of an shelters, operating stop bus and intro- October memorandum Henry ducing Rosen as counsel for C & S. Stein Silverman, S, Sidney President of Rosen law- C & The letter was drafted Stein Baron, consultant, yers, copy public but before it was sent a C & relations S’s changed respects hand-delivered to draft was which had been in minor review. went over the letter Bronston to eliminate reference to C and Bronston then tele- S, following pertinent portion & as the phoned Stein at Rosen to let him Stein (with changed the C & memorandum S thought good know that he it was a letter. portions underlined) shows: Bronston then noted to bill C & S for five upon anticipated program “Based our August hours of specifically services on 4,000 (in- building approximately shelters including his “review of letter with Saul cluding purchase our from the Steinberg.” He also noted an additional approximately 400 built to date shelters spent half hour on C & business on Au- Shelters, by Inc.) assuming BusTop gust telephone 26 for his conference with payment City of to the between 14-16% City “Sam re letter.” Stein When the sub- revenues, advertising gross we believe sequently responded August to the 26 let- the would receive from our ter, participated meeting Bronston in a operations per million excess of $2 Steinberg and Stein to evaluate the annum at the conclusion of our construc- response, and filled out a time ticket in the program.” tion spent. name of C & for the time typed letter was on Bronston’s official grew The second count out of a letter stationery by his Rosenman Colin Senate which Bronston himself drafted and sent on secretary and was mailed her the his official New York station- State Senate to bill enclosure. Bronston then noted C & Wells, ery Richard Executive Assistant Wells.” S for a “letter to Richard Goldin, City Comptroller to New York on 28, part, October In relevant the For its services $52,- letter read as follows: approximately Rosenman billed Colin 000, paid being without figures “I enclose which the investors some in connection existing working I been for franchise which am aware that Bronston had have, you sure but which I would like to against their and C & S and reiterate. Obviously, a renewal of the addition, was evidence interests. In there existing appear franchise would not to be jury at trial from which the could have public might interest since it be paid inferred that Bronston was non-performance.” taken for a reward for behalf of Steinberg for his efforts on C & S. 9, 1977, Bronston wrote to one-page enclosure consisted of a sum- On December mary BusTop’s performance detailing charges Steinberg, status of his time

926 indicating fiduciary duty, government

date and that he would not ask prove must payment you “until your partners that the defendant used his breach in some through decide on a format which this can way that would benefit himself or harm the be done.” On June re victim of the judge fraud and that the trial personal ceived a check from failing jury erred instruct accord- (which was never & recorded C S’s test, ingly. argues, Under this books) $12,500, precise amount the conviction be must reversed since the previously which Bronston had estimated to permit evidence was insufficient to Rosenman Colin as the retainer that would to fiduciary find that he used status as a forthcoming repre in 1978 if the C & S partner of Rosenman Colin to benefit him- accepted.4 sentation were expense self or C & S at the disagree. investors. We Prior to trial Bronston moved to dismiss ground indictment on the that it failed Although fiduciary a mere breach of allege or Bronston utilized took ad- alone, duty, standing necessarily not vantage fiduciary position of his in order to fraud, mail constitute a United v. States response, effectuate the charged. fraud Mandel, (4th 1979), 591 F.2d 1347 Cir. cert. government argued in the alternative denied, 961, 1647, 445 U.S. 100 S.Ct. 64 (a) proof that: misuse the defendant’s (1980); L.Ed.2d 236 United States v. Rab position fiduciary to effectuate the fraud is bitt, 1014, (8th 1978), 1024 Cir. necessary element of a mail fraud denied, cert. 439 prosecution; is, U.S. 99 59 (b) S.Ct. even if it (1979); Bush, L.Ed.2d 75 government United States v. will at Bron- trial “that 522 (7th 1975), F.2d 648 fiduciary ston did use his Cir. cert. position to de advise nied, & 424 promote C S and to 96 interests of C U.S. S.Ct. 47 L.Ed.2d S, (1976), in opposition to 748 those of concealment and the (emphasis investors” original). material information which he is under duty The district court denied disclose to Bronston’s motion. another under circum Without deciding posed by the issue of law stances where the non-disclosure could the court held that the indict- does result in harm to the other is a viola ment adequately set forth the elements of tion of the statute. United States v. Von Barta, charged. offense intended 1980); 491 635 F.2d 999 Cir. United F.Supp. (S.D.N.Y.1980). Bohonus, (9th At Cir.), States 628 F.2d 1167 trial, conclusion denied, 928, 100 counsel for Bronston cert. proposed the following charge, L.Ed.2d 1122 United States v. Man del, supra; Keane, defraud, “in order to find a United States v. scheme to prosecution beyond (7th 1975), denied, must establish rea- cert. 976, 1481, sonable doubt that Mr. Bronston U.S. 96 S.Ct. 47 used the L.Ed.2d 746 fiduciary position (1976); Isaacs, he held on behalf of the United States v. 493 F.2d minority (7th Cir.), denied, investors to 976, further interests 1124 417 94 cert. U.S. of Safety” (emphasis 3183, Convenience and (1974). in S.Ct. 41 L.Ed.2d 1146 See original), Note, generally Intangible-Rights Doc Political-Corruption trine and Prosecutions Judge give. Pollack declined to Statute, Under Federal Mail Fraud 47 DISCUSSION (1980). 562 As we noted U.Chi.L.Rev. principal Barta, supra, proof fiduciary contention is in Von that that order to show a relationship violation of the mail fraud manipulated was used or statute based aon fraudulent of way necessary. breach some is not 1978, trial, July 20, 4. Sometime between 18 and At defense counsel introduced in evidence Steinberg Bronston’s letter to Richard Wells was uncov- a check from to pursuant 19, BusTop request 1978, July “repayment ered to a under of dated exchange." and marked Law, New York’s Freedom of Information Comptroller’s which was served on the office.

927 Steinberg and C promoted interests to a mail fraud viola “Thus make out a that the in their efforts obtain bus shelter tion, must show & S the Government City New specific in from the York and franchise scheme devised to, from, to disclose defraud, v. “did conceal and fail g., e. United States tent BusTop 1975), 534, (7th BusTop investors Keane, 544 Cir. 552 F.2d advising pro- 976, 1481, denied, the fact that he 424 96 S.Ct. cert. U.S. Steinberg and C moting (1976). . . . the interests 47 L.Ed.2d 746 coupled with the allegations, These S.” fraud, prosecution prove mail “To $50,- charge received that Rosenman Colin use of the that the must also demonstrate it, that for services 000 the scheme was mails in furtherance of $12,500 from Bronston received a check for foreseeable, Pereira v. reasonably g., e. interests of 1, 8-9, promoting States, 347 74 United U.S. S.Ct. Steinberg and with the intent of 362, (1954). C & S 358, Further 98 L.Ed. 453 harming BusTop, Bronston caused more, and that gone the deceit must mailed in furtherance of bargain, v. two letters nature of the United States Co., 1174, scheme, Regent F.2d to state a viola- Supply Office 421 were sufficient is, 1970); (2d any nondisclo of the mail fraud statute. 1182 Cir. that tion misrepresentations sures or affirmative standards, evi these Applying material, see, g., must have e. Unit been sup before the was sufficient dence 641, Bush, ed 647 - 48 v. 522 F.2d States alleged for the mail fraud. port conviction denied, 977, (7th 1975), cert. 424 U.S. Cir. beyond as member is clear doubt that It 96 47 L.Ed.2d 748 S.Ct. Bronston owed the Rosenman Colin firm F.2d Bryza, United v. States clients, duty its fiduciary (7th 1975), denied, cert. 425-26 Cir. investors, promoting inter and that in 2237, 48 96 S.Ct. L.Ed.2d competition and C ests & S (1976). although the And Government clients, his firm’s conflict with those of victims need not show the scheme’s DR5-105, duty. violated that defrauded, v. were in fact United States Responsibility. of Professional See Code Andreadis, (2d Cir. Rotunda, Morgan T. and R. Pro generally denied, 1966), cert. 385 U.S. (2d 1981). Responsibility, ed. 53-58 fessional (1967), prosecu 17 L.Ed.2d 541 Having retained the Rosenman Colin tion must that some actual harm or counsel, as their contemplated, injury was at least United part loyalty its the undivided entitled to Dixon, States v. 1399 n.11 ners. ployee’s duty to disclose material transforms a mere “The additional element which criminal offense is a n.24, 1006.” mation to his Office v. Von ^[*] Supply Barta, supra, 1976); ^[*] employer.” Co., United States ^[*] supra, violation ^[*] United States breach into 421 F.2d at ^[*] of the em- frequently at 1005 Regent infor- ^[*] engaged, without clients, tors who dependent upon ing renewal was likewise established. C nancial evidence The element of & S’s efforts to his law firm was in an commitment had entered into a ongoing its BusTop’s specific intent disclosure to his firm’s obtain the franchise for franchise, BusTop, representing significant role in There was success long-term fi- knowledge which was in secur- defraud secretly ample inves- itself, cause serious harm to present In the ease the indictment which would pro- charged Despite explicit his firm’s disregard that in the clients. against any involvement on fiduciary duty he as a member of the further owed hibition S, frequent attended meet- BusTop inves behalf of C & he Rosenman Colin to the benefiting ings & bid for the New purpose tors and for at which the C S detriment, By filling was discussed. Steinberg to York franchise and C & S their arguing out showing BusTop time tickets C & S as the client that investors were meeting whenever he attended such merely protected “per- lenders who by were engaged in other activities in connection security fect” which would leave them un- S, gave jury ample C & Bronston harmed even if C & S were to win the ground for he finding perceived that him He franchise. also contends that condi- S, self acting as on behalf of C & even specified August tions in the though he professionally obligated agreement between the investors and Bus- loyal BusTop remain to the interests of the Top BusTop made renewal of the franchise investors.5 generally See Cinema Ltd. v. such a possibility remote that Bronston’s Cinerama, Inc., 1976). 528 F.2d 1384 efforts on behalf of C & were irrelevant. S Finally, writing an anti-BusTop letter to unpersuaded. We are Richard participating Wells and in the There was sufficient evidence before the preparation city of another letter offi support finding that support bid, cials in of C & S’s Bronston position investors’ August after whether was engaging furthering in the scheme to characterized equity as one lender or BusTop defraud and its investors. investor, sufficiently risky give them The element concealment of a material an economic interest in the future of Bus- fact, necessary alleged scheme Top. moneys While the initial advanced to defraud, was also established. At no BusTop technically were in the nature time BusTop did Bronston reveal loan which was collateralized all Bus- working investors that he was hand Top’s tangible (principally assets the com- glove Steinberg and C & S to obtain shelters), pleted testimony bus there was at the franchise for C & to their detriment. trial Gerry Citicorp from Peter Venture materiality The of this fact is self-evident. Capital validity Limited that the of the lien This was no mere technical failure on a law thereby granted to the investors was in part firm’s potential to disclose all conflicts doubt because the terms the interim of interest to its imagine clients. One can prohibited BusTop franchise itself few nondisclosures more crucial to an attor- granting Moreover, liens on the shelters. it ney-client relationship than the fact was Gerry’s testimony that the investors the law firm which the client has is retained participation conceived of their BusTop actively engaged designed in efforts as equity more in the nature of an invest- precise frustrate endeavor which the ment than a They loan. therefore con- client had engaged pursue. the firm to sidered renewal of the franchise of cen- importance record is tral equally clear to the economic success of scheme to defraud participation BusTop. argu- and its their investors stop bus shelter imposed franchise was ment de- conditions in the signed to agreement inflict actual August economic harm on unlikely were so to be capable investors and was of met that there was no real chance that the doing statement, disputes so. Bronston upon investors would ever have been called that, argues partners had he intended to deceive his and the partners conceal his C & S activities from his but rather of his state as of mind he met with BusTop investors, and the he would never have during and associates 1977 and 1978. listing filled out time tickets C S& as the client By noting that his time would at some future accounting and then sent them to the firm’s account, time billed to the &C S registry office for on the firm’s books. How- declaring graphic in a most fashion that he ever, any there is no evidence of in-house conceived of his efforts on behalf of brought mechanism which would have the time being professional and the others as rather charges anyone to the attention of at Rosen- redounding than social and as to C & S’s bene- recognized man Colin who would have their fit. The fact that under the circumstances impropriety; fact, they only up turned may have been foolish for Bronston to have after Bronston’s had been uncovered activities behalf of C S& exculpa- made the entries does not render them through other means. tory. case we find Bronston’s time ticket principally probative entries not of his intent matter, matter or depository any for mail their and turn complete their investment or highly whatever to be sent delivered thing is shares of stock notes into Service,” his in furtherance of inherently unprovable. Postal and the speculative The letter which served as scheme.6 properly could have fraudulent Surely it not and had sent to Richard Bronston drafted the issue of economic taking a basis for event, language, statutory as Wells falls within the jury. away from the harm it is indictment, Bronston, concede. While Bronston seems to the as alleged in the in conduct, participation Bronston’s benefited true that his fraudulent means of $12,- mailing the to the and of letter receiving preparation a check for to the extent of less of Estimate was returned members Board Steinberg which was from active, under the cases it was sufficient activities only fraudulent after See, g., v. clients, and, e. Pereira support addi- conviction. in by his firm’s discovered States, 347 U.S. harm the clients United prospective the tion to Rabbitt, v. the L.Ed. 453 United States loss of BusTop’s potential from faced 1023; supra, to the 583 F.2d at United States franchise, they actual loss suffered 1976). (8th Brown, paying of the Rosenman Colin extent the loyal- one commentator has summarized for undivided As their counsel as Moreover, law: they case which did not receive. ty

although manipulation use or to have ‘caused’ “A defendant is deemed a relationship was not breach mailing reasonably if have a he could conviction, proof the prerequisite only foreseen it .... The [additional] Bronston, a confer- immediately following mailing must requirements are that regarding their ence with Lindenbaum reached the scheme has not occur after BusTop, investment in discussed fruition, mailing clients’ not con- and must provided Morano, with conversation The scheme.” flict activity Bed, that such for an inference basis A Procrustean Statute: Mail-Fraud frustrated government (1980).” occurred. was 51-52 14 J.Mar.L.Rev. these eliciting any respect in detail up a argues that decision rather by Lindenbaum’s conferences every “would render holding his conviction the sub- strange inability to recall even which act ethically questionable or disloyal discussed, the re- of what was stance mailing a a letter accompanied by the is (President fusal Silverman Although hypo disagree. We crime.” S), they apparently of C & who indicated be in which one could posed can thetical privi- would invoke Fifth Amendment their of a fraud on the basis for mail prosecuted lege, testify. fig- central accompanied by fiduciary duty breach conversations, in both his con- ure exercised to disclose more than a failure little right take in his stitutional not to the stand duty was person whom the breach own defense. owed, of substantial any prospect without victim, is not Finally, was harm to the the evidence at trial economic awith jurisdictional we are faced support pred sufficient to such a case. Here in which fraud straight-forward icate contained the mail statute economic fraud merely to was object of the scheme defendant found to undivid- of a law firm’s “place[d] any post deprive office authorized the victims deprive argues the overall scheme to 6. Bronston count the indict- one of ment, letter August At the time the of its which was based on the renewal franchise. written, understanding of C & it was the letter sent members of Board of relationship Stein, between that “the Estimate Samuel must be dismissed officials Shelters, being Inc. is because it had alleged of New York and no material connection (cid:127) August disagree. Since the at this time.” scheme. We reviewed prevent BusTop justified letter, finding intended to that this letter was obtaining quick, unopposed its publicly renewal interest intended announce C & S’s franchise, clearly building overall presenting material to the plan maintain- shelters, ing stop bus was material element scheme. 930 $52,000, loyalty, they paid they

ed for which but views as the evidence and deprive BusTop and its inves- any draw inferences as to his views not to BusTop partner A tors of franchise. or from of his comments statements. specific Boatner, 737, firm law used the mails v. 478 F.2d United States 848, defrauding denied, firm’s own (2d Cir.), intent of one of his cert. 414 741-42 U.S. precise which it 136, (1973). clients interest had 38 L.Ed.2d 96 94 S.Ct. been retained to defend. This falls within The exclusion of testimony Freund’s the ambit of the mail statute. fraud regarding the ethical propriety of Bron ston’s conduct in promoting the interests of We have examined Bronston’s oth proper. C & S was Unlike Lindenbaum and er claims of error and find them to be who, witnesses, Schneider as fact testified reading without merit. A of the trial tran to discussions with Bronston back in script us Janu satisfies the district court’s ary 1978 regarding impropriety handling of his impartial. of the trial was fair and representing S, C jury which were adequately charged that & relevant mind, Bronston’s state of Freund good complete Bronston’s faith had had would be contemporaneous no defense and that conversations burden was on the or deal ings government respect Bronston with good lack of faith mat ter and did not beyond a discuss it with reasonable doubt. The him court until after his conduct had properly been discovered excluded as irrelevant evidence of BusTop investors, BusTop’s non-performance obviously which of its bus shelter contract, placed the Rosenman Colin firm which Bronston in the em support offered barrassing position defending of his claim good that he acted in faith ac as a secret member, tivities of a State Senator. The record is clear which conflicted with the Bronston did not client's interests. Once officership disclose his Bronston’s it, fraud exposed, C & S or had been relationship his under al which though testimony paid he Freund as to was to be Bron for his services to C & S. post ston’s Indeed, self-serving factum he received declarations C & S’s inadmissible, Chairman, Judge Pollack Steinberg, repaid neverthe only permitted Bronston, less after who did learned of Bronston’s not take letter to stand, Wells, Richard introduce Executive Assistant substantial New Goldin, hearsay amount of this Comptroller self-serving York urging through non- However, Freund. expert testimony by renewal of the franchise. Since Freund regarding provide question evidence at trial did the ultimate support whether contention that conduct to a repre Rosenman Colin’s amounted breach clearly sentation of inadmissi investors was as ble. As a member of scope maintains, limited in Bronston’s own law as Bronston hardly firm Freund charge impar failure could be labelled to so was not erroneous. testimony tial. Moreover would in sub Judge questioning Pollack’s of wit conveyed nothing stance have more to the proper nesses was for the purposes of clari jury “general than his belief as how the ambiguities, fying correcting misstate case should be decided.” v. Marx Co. ments, obtaining information needed to Inc., Club, 505, (2d Diner’s 550 F.2d 510 rulings, make all of which were within his Cir.), 861, denied, cert. 434 U.S. 98 S.Ct. responsibilities as judge. trial United See (1977). 54 L.Ed.2d 134 was a This matter Robinson, (2d v. States 635 F.2d 986 jury’s province. within the exclusive 1980); Lamont, Cir. United 565 States The conviction is affirmed. 1977), denied, cert. 98 S.Ct. 55 L.Ed.2d 505 GRAAFEILAND, Judge, Circuit VAN Bernstein, United States v. dissenting: (2d Cir.), denied, cert. 429 U.S. strength (1976). 50 L.Ed.2d Although yield He re I to no one in the peatedly should adhere my lawyers advised the that he had no of conviction that see, inquiry. To whom is he a fiduci- standards, further g., e. highest ethical obligations does he as a Cinerama, Inc., ary? What owe 528 F.2d v. 5 Ltd. Cinema has respect he failed fiduciary? In what 1976), equally strongly I feel (2d Cir. 1384 obligations? discharge those And of based on lawyers accused crimes that of consequences his devia- entitled to what are conduct are alleged unethical duty? tion from of what I believe trials. Because fair below, I re- in the court prejudicial errors 85-86, 80, Chenery 318 U.S. Corp., SEC v. dissent. spectfully 454, 458, (1943). 63 87 L.Ed. 626 S.Ct. statute, 18 fraud U.S.C. present mail The dealing Courts and commentators 1341, 301 of the is to section the successor claims in to- § conflict of interest individual revise, and amend consolidate 1872 Act struggled law day’s colossal firms De relating to the Post-Office the Statutes unfair, applied for- mechanically avoid rules 283, (1872). While 323 partment, 17 Stat. as a time when such law firms mulated at sparse, what there is history See, is legislative g., e. Arm- existed were small in size. originally indicates that the statute strong McAlpin, (2d F.2d 606 28 Cir. v. use the mails court, at flimflam artists who 1979), aimed 625 F.2d vacated en banc v. United gullible. Durland to defraud the (1980), vacated 449 101 U.S. S.Ct. 433 508, 511, 306, 314, States, 161 16 S.Ct. Note, U.S. (1981); 835 The Chi- 66 L.Ed.2d v. (1896); L.Ed. 709 United States Von 40 Disqualifi- nese Defense Law-Firm Wall Barta, 1980); 635 1005 Cir. F.2d (1980); cation U.Pa.L.Rev. 677 Ander- 128 Note, Intangible-Rights Doctrine and son, 807 of Interest 52 Wash.L.Rev. Conflict under Political-Corruption Prosecutions Note, Chang- Unchanging Rules in Statute, Fraud 47 U.Chi.L. Federal Mail Times; Ethics Intra- ing The Canons of (1980). In Rev. contravention of Interests, 568 73 Yale L.J. Firm Conflicts general “ambiguity concerning that rule opinion among (1964). 1058 Differences ambit of statutes should be criminal persons not knowledgeable are uncommon. in see lenity”, resolved favor of United stake, at these When a man’s freedom is 1388, 1401 (2d Dixon, v. Cir. States opinion fully ex- should differences States, 1976), quoting Rewis v. 401 United un- believe that the defense was plored. I 1056, 1059, 28 L.Ed.2d respect duly unfairly hampered this (1971), broadly 1341 has been section questions, rulings, instructions who use interpreted apply to fiduciaries of the trial court. position personal pecuniary gain. for their This a case in which defendant is not 1399; Dixon, supra, F.2d United at fiduciary advantage of used took Buckner, (2d Cir.), v. 108 F.2d 921 States to do them relationship with firm clients denied, cert. 309 U.S. 60 S.Ct. Judge statement that harm. Mansfield’s (1940). liability has L.Ed. 1016 Where been an support there was sufficient evidence

found, however, inevitably it was because manipulation of of “use of or inference relationship fiduciary enabled de relationship” Bronston’s breach of wrongful fendant commit acts support in the record. completely is without which he convicted. position at the The Government took the Where, here, predicated liability as is required trial it was not outset of the upon fiduciary responsibility the vicarious information prove confidential lawyer large, an modern- individual by Bron- wrongfully utilized or leaked day law firm and there is no evidence that ston, it. did not and the Goverment exploited the defendant the vicarious rela- prove that did not even The Government tionship gain, the statute personal na- a confidential there was information of applied with careful attention to should wrongfully dis- might have been ture that purpose. its basic Every queried who was witness closed. mis- there was no say fiduciary only testified that a man is a the matter [T]o prose- information. analysis; gives an it direction to use confidential begins say support tainly good one word relevant to the issue cution did faith summation, your this contention in and the dis- recognized Honor has aas charge. trict its court did not discuss vital issue in this case.

Violation of 18 U.S.C. 1341 could not be § expert testimony The' which defendant predicated upon misuse of confidential in- sought to introduce should have been ad- formation; proof wrongful of other conduct mitted for purpose. United States required. Garvin, (8th 1977). 522-23 jurors counsel and rejection trial court told The district summary court’s numerous occasions that whether or not testimony with the comment “We are case, ethics,” a trying there was breach of ethics was not an not a breach of was disagree. prejudicial issue in the case. I The essence error. wrongful of the crime of mail fraud is having jury After stressed to the that the States, 1001, intent. 54 F.2d Pelz United ethical propriety of defendant’s conduct (2d 1932). 1005 For Cir. there to have been case, was not an issue in the the district statute, violation the mail fraud there interjected court itself into the questioning knowing must have been a “conscious in witnesses, of one of the Government’s and defraud”, tent to Kyle, United States v. 257 following colloquy occurred: denied, (2d 1958), 564 Cir. cert. THE subject COURT: Now (1959), L.Ed.2d 308 opened, know, has been I would to like as a conscious knowing violation of defend firm, a member of the was Mr. Bronston ant’s obligations. ethical Evi promote mutually free to exclusive dence concerning the defendant’s motives competitor interests of your client on propriety his belief in the of his conduct subject engagement of the firm’s material, was might because it have tended the client? to repel the inference fraudulent intent. object that, your MR. NIZER: I to Id. at 563. Honor. [Sjince only be inferential- [intent] THE COURT: Overruled. ly Wigmore proven, on Evidence §§ No, THE absolutely WITNESS: not. 3d Ed. no events actions Why THE COURT: not? which bear remotely probabil- even on its Objection, MR. NIZER: sir. ity should be jury withdrawn from the Well, THE COURT: I will leave it for tangential unless the confusing ele- the jury question why to answer the not. interjected ments by such evidence clear- your objection. I sustain ly outweigh any might relevancy it have. object MR. NIZER: And I that com- Brandt, United States v. ment, Honor, your say as if—I won’t fur- 1952). ther. I move to strike it out. Contrary to the repeated district court’s THE COURT: What comment? assertions, question whether defend- you MR. NIZER: That it to leave ant’s conduct properly could considered jury question, to answer that as if the as conforming legal profession’s Code implication on that— Responsibility Professional squarely you objected THE COURT: What bearing upon the case as the defendant’s I you have sustained on. That is not good intent argument faith. This being jury. left to the made to the district court defense coun- MR. NIZER: I see. sel: THE is no COURT: There further im- There is a ground, third is and that it plication. would bear on the witness’ state of mind

and his intention. If in fact is reasona- questioning This the district court ble to charged believe that what he is legal dealt either a breach of with ethics or doing pro- was not a violation of a alleged violation of section ethics, fessional then I think that is cer- purpose. It could have had no other posed” twenty-year renewal without instructions judge’s view of the trial bidding companies. other competitive concerned jurors were not ethics, well have they might the question of colleagues prepared say my now Are them judge pointing that the concluded “quick, unopposed” renewal that if the so, the statutory If violation. a clear BusTop’s place, contract had taken prejudiciously errone- judge’s conduct ripped not have off? I City would been ous. have been it. not the doubt Should hand, If, question dealt other on the facts so it could have given all the con- the ethics of defendant’s solely with fair, determination made even-handed duct, part equally of an erroneous it was defendant, whether the a State Senator permitted the pattern. Although judge Queens, was Borough representing witnesses prosecution question several pre- acting good attempting faith in asserted nature of concerning the unethical given all rip-off? jury was vent a conduct, he blocked defense defendant’s prevented it. the facts. The district court contrary. the counsel’s efforts Defendant’s letter that stated stymied defense on Having effectively the The under its contract. was in default issue, jury as a judge charged the the goes di- falsity of this statement truth of lawyer such as the matter of law that “[a] heart rectly to the of the Government’s duty not E. has a defendant Jack faith. lies the truth? claim of bad Where manner which is inconsistent act know, we. jury doesn’t and neither do Thereafter, with a client’s interest.” dealing impropriety with Questions charged: court of BusTop’s effects harmful conduct were the con- already explained you I sustaining pertinent. held not to be After duties, fiduciary lawyer’s duties cept of objections to defense the Government’s knowing you. You consider a facts, developing at questions aimed such duties defendant breach of charged jury: court you Bronston if find that such a Jack E. keep your attention riveted You must intent to breach occurred as evidence of trying the the issue on trial. We are defraud. indictment, of the the accusation. terms The district court’s of the emasculation trying question We are not here good stop faith there. defense of did not competitor to a fran- which was entitled jury that Although charged the court terms, trying we on what nor are chise or good part defendant in faith on of the Shelters, was or Top Bus Inc. whether complete was a urging competitive bidding original compliance with the was not in defense, rulings instructions other are not City. with the Those agreement sop for meaningless made this a the court you to decide. matters are here that the defense. The defense contended thereby. Don’t be sidetracked unop- colleagues “quick, my what term a falsity suggest truth or I posed renewal” of the franchise but a “sidetrack” letter defendant’s of the “rip-off” people was in fact a the case. If the fundamental issue in was a York. letter from the City of New with intent to acted an honest defendant Comptroller, defendant was no object, laudable there accomplish a case, linchpin in the was the Government’s States, supra, 161 v. United crime. Durland was in default stated under 313-14, 40 L.Ed. City, its contract short-term less BusTop had built than half of the weigh required to Since build, agreed and had shelters had only fides half bona defendant’s the disad- erected almost none them in it, my agree I before cannot facts After this vantaged areas of Bronx. a fair trial. that defendant had colleagues terminated, BusTop agreement been had unop- reverse. push through “quick, I would attempted to

Case Details

Case Name: United States v. Jack E. Bronston

Court Name: Court of Appeals for the Second Circuit

Date Published: Aug 19, 1981

Citation: 658 F.2d 920

Docket Number: 1291, Docket 81-1015

Court Abbreviation: 2d Cir.