Are American Juries at Fault?

I

IN three outstanding Federal criminal conspiracy trials of recent years, the verdict of the jury, contrary to widespread and justifiable public expectation, has been either ‘not guilty’ or a disagreement. In a long array of similar prosecutions, less in the public eye, the result has been the same — a verdict of acquittal despite a consensus of well-informed opinion that criminality existed.

Is the widespread criticism of the jury system which has followed these verdicts justified? Are the juries primarily to blame for these apparent miscarriages of justice?

In each of these three outstanding cases, which I shall take as illustrative, a most careful weeding-out process attended the selection of the jury. The prosecution participated in this, as well as the defense. In two of the cases the jury throughout the trial was segregated in the custody of Federal marshals, so that sinister influence might have difficulty in reaching it. Upon each juror’s every action and reaction the watchful gaze of government counsel, as well as the eye of a presumably vigilant court, was focused throughout the trial. These jurors were marked men from the moment they entered the courtroom as members of the panel from which they were chosen.

Had these trials all resulted in disagreements, it would be easy to suppose that an individual juror had been ‘reached,’ and that under our rule requiring unanimous verdicts his faithlessness had sufficed to obstruct the processes of justice. But in only one of the three cases was there a disagreement, and in that case — the prosecution of Harry M. Daugherty, former Attorney-General of the United States — a second trial also terminated in a disagreement, with the result that the Government voluntarily dropped the indictment. In the other two cases twelve men fully conscious of their responsibility returned unanimous verdicts of ‘not guilty.’

Is it reasonable to deem each member of each of these juries corrupt? Is it reasonable to suppose each member of each of these juries unintelligent? If we bear in mind that these cases are simply illustrative of what has happened time and again in the Federal courts, whenever competent counsel has represented defendants charged with crime under the conspiracy statutes, is it good common sense to blame primarily the jurors for the apparent miscarriage of justice? May not the law itself be primarily to blame?

As Special Assistant to the AttorneyGeneral, I prosecuted one of these outstanding cases myself, and after the acquittal discussed it at length with two jurors whose intelligence and fairmindedness no one could doubt. This was the prosecution of Charles A. Stoneham, owner of the New York Giants Baseball Club, Elmore D. Dier, and others, for conspiracy and fraudulent use of the mails in a brokerage transaction.

One of the jurors in the first Daugherty trial — a college graduate with a highly trained, alert mind — was a client of mine, and when the case was over he recounted to me in detail the long and grueling struggle of the jurors to reach a verdict.

In the Sinclair trial, which has brought this subject up once more so vividly, we have the benefit of an unusually informative statement from one of the jurors, Kenneth Carter, a bank employee, published in the newspapers the day after the verdict was announced.

It is impossible for a fair-minded man to study the story of these verdicts and lay any considerable part of the responsibility for the outcome upon the jurors. From several hundred jury cases which I have personally tried, the conviction has come that the average American jury, when properly made aware of the seriousness of its task, is intelligent, conscientious, fair-minded, and frequently amazingly able to comprehend complicated situations of fact and pass upon them. Corruption in juries is a rare and uncommon thing, and, because of the rule of law that verdicts must be unanimous, exceedingly difficult of successful accomplishment.

If we regard the Stoneham, Daugherty, and Sinclair cases as illustrative, their careful study will serve to establish, so far as the juries’ part in the verdicts is concerned, a high sense of fairness, an almost astonishing ability to comprehend and digest the facts, and a discriminating intelligence of the highest order in applying them to the law as expounded by the court. What is more, it will disclose a sturdy readiness, which is fundamentally laudable, to resist popular clamor and hue and cry.

II

I know that the foregoing is contrary to opinion frequently voiced of late in even well-informed circles, but to my mind these conclusions are inescapable. The fault for miscarriages of justice lies primarily, I am convinced, not with the juries, but with the antiquated concepts of law with which they are shackled in arriving at their verdicts. Within the limitations of these shackles, the average American jury is as competent a tribunal for the finding of fact and the even-handed doing of justice as any that mankind has yet devised. It remains the impregnable bulwark of our liberties which the founders of the Republic conceived that it would be. Not lightly should it be shorn of its power.

To establish by a study of the Stoneham, Daugherty, and Sinclair cases the broad generalizations which I have made regarding the competency of juries must seem like a large undertaking. Yet let us examine the facts.

Each of these cases involved charges of conspiracy.

In the common acceptance of the term, a conspiracy suggests a clandestine meeting together for the purpose of scheming some illicit design. Under our law, the mere act of scheming is not sufficient to constitute a crime; it is necessary that some act be done to effectuate the scheme. This is what the language of the criminal law terms an ‘overt act’; and, in order to convict of conspiracy, an overt act must be both charged and proved.

The wording of the section of the United States Criminal Code making conspiracy a crime is as follows: —

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 ten thousand dollars, or imprisoned not more than two years, or both.

The Federal mail-fraud statute, under which many prosecutions for fraudulent conspiracy are instituted, reads in its material part 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 . . . 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 office ... or authorized depository for mail matter, to be sent or delivered by the post-office establishment of the United States . . . shall be fined not more than one thousand dollars, or imprisoned not more than five years, or both.

Under these statutes the great majority of Federal fraud prosecutions are instituted. What is the legal burden which they impose upon the prosecutor — the burden which I have stated is largely responsible for so many miscarriages of justice?

The courts have held — and the conclusion seems inescapable — that under the wording of these statutes the prosecution must prove, in order to convict, that there has been (1) a plotting, a conspiracy, a scheming together to accomplish, (2) an unlawful purpose (or a lawful purpose in an unlawful manner), and (3) an act done to effectuate the plot.

Note that the plot must in point of time precede the act — in the case of the mail-fraud statute, the mailing of the letter. Note that the plotting must be proved, as well as the unlawful object intended or accomplished, and the overt act. Note also that each of these elements must, in the familiar language of our criminal law, be ' proved beyond a reasonable doubt.’ This is the law of the land, and when the judge so charges the jury, — as he is in duty bound to do, — under its oath the jury is bound conscientiously to search the record for evidence establishing ‘beyond a reasonable doubt’ (1) a plotting or scheming together, (2) an act thereafter done to effectuate the plot, and (3) the fraud intended or accomplished.

Now, what is the situation which the jury almost invariably finds?

In the type of fraud case which comes before the Federal courts, direct evidence of plotting or scheming together, of conspiracy in the usual acceptance of the term, is practically unprocurable, if not in fact non-existent. No less an authority than Martin T. Manton, Senior Judge of the United States Circuit Court of Appeals for the Second Circuit, declares in a recent opinion (the appeal of Thomas W. Miller, former Alien Property Custodian): —

In charges of conspiracy to defraud, there is usually no direct evidence of the corrupt arrangement. . . .

It is possible that the uncouth type of thug, gangster, or safe-cracker congregates with his ‘mob’ over a table in the back room of a saloon or ‘speakeasy’ and deliberately plans with his comrades in crime their next ‘job.’ And an informer or stool pigeon, present at such a gathering, can later give direct testimony thereof.

‘White collar’ banditry does not design so crudely. Rare the scheme which when offered is not fair on its face. The fraudulent design is insidious and implicit; not often are conferences held at which it is disclosed. In point of fact, the plan may be, and most frequently is, entirely fair, guileless, and promising on its face, and only in the last stages of its execution, after the victims have been beguiled into it, does the fraud begin to operate. Up to that point the schemers usually try to leave themselves in a position where they can withdraw from the enterprise or abandon their illegitimate purpose, should circumstances make such a change of procedure advisable.

More likely than not, there is no actual plot at the outset, and no plotting. The plan which culminates as a far-reaching fraud may be hatched in a single mind, with others joining at its bidding in the fashioning of details of the design, content in the thought that ultimately they will in some way, not expressed, profit. Or, if there are several ‘master minds,’ they may reach their understanding in the most casual way — no promises asked, none given. Only when the fraud is completed, when the entire design is exposed, comes the realization that mere chance did not accomplish the result. And the scheme may have been progressive; the plan may have developed with time; many overt acts which in retrospect are part of the plan may in fact have preceded in time its full formulation.

III

The subtle and secret mental process connected with the fashioning of a fraudulent plan is what the prosecutor is called upon to prove, ‘ beyond a reasonable doubt,’ preceded the execution of the plan itself! He must prove at the outset, in every conspiracy case, the formulation of a scheme. It is not enough that he establishes a fraud perpetrated, accomplished. He must prove that it was intended, and that the intention preceded the execution.

Juryman Kenneth Carter puts it very clearly in the following words: —

I don’t believe Sinclair was guilty of the charge. I don’t believe he agreed to pay Fall anything before he got the lease [italics the author’s]. It may be that after Sinclair did get the lease Fall got some money from him by the argument that he favored Sinclair with the lease.

I mean that, suppose I did something for somebody and then later came around and asked a loan or a gift on the plea that I had done a service for him. If he should give me the money you could n’t say that he was guilty of a conspiracy.

In the Stoneham case the fraud charged was that, in transferring his brokerage business to Dier, Stoneham failed to deliver over $5,000,000 of securities he was supposed to be holding for customers, but delivered only about $2,100,000 (much of this being of the ‘cat and dog’ variety), making a cash settlement as to the rest. When the ‘bull market’ started a few months later, Dier, ‘short’ of the securities undelivered, failed, with huge losses to creditors. The letters to customers — mailed just before the transfer commenced — stated that the ‘accounts’ would be transferred, which of course implied that the securities in the accounts would be transferred.

There is no doubt that a flagrant fraud was committed; in a recent related civil case the New York Appellate Division has sustained a jury verdict against Stoneham for the recovery of the value of securities undelivered. But in the criminal case the jurymen with whom I spoke explained to me painstakingly that they had acquitted Stoneham because of their inability to discover proof of an agreement between Stoneham and Dier, preceding the transfer of the accounts, that the full amount of the securities should not be delivered.

It is perfectly possible that there was no such previous agreement; that only after Stoneham had delivered to Dier the $2,100,000 of ‘cat and dog’ stock which he had in his vaults was the arrangement made to substitute a cash settlement for the stock remaining undelivered. Such an arrangement would then have postdated the letters to customers, and there could be no conviction under the mail-fraud statute unless the jurymen inferred an agreement previous to the mailing of the letters — an agreement possibly nonexistent in fact. If, on the other hand, we assume that there was a prior agreement, only Stoneham and Dier, who made it, could give direct proof of it — and they were both defendants. Necessarily, therefore, the proof of such an agreement ‘beyond a reasonable doubt,’ which the law exacts, would depend upon inference from circumstantial evidence, of which juries are notoriously, and possibly quite properly, shy.

Let it be noted, however, that whether Stoneham and Dier made such a previous agreement or not, whether they intended it from the inception of their transaction or not, the grim fact remains that a fraud costing thousands of investors millions of dollars was perpetrated. It is scarcely satisfying to the victims to say that the defendants must be acquitted because there is no proof that they intended to do what they did.

So, in the Daugherty case, the evidence amply showed that Jess Smith and others closely identified with the former Attorney-General received large blocks of securities which were traced from Richard Merton, the German director of the Société Suisse, through various brokerage houses, down to the Attorney-General’s account in the Washington Court House Bank in Ohio, of which Mal Daugherty was president, where the investigators ran up against the destroyed records, the story of which is familiar history.

There was no doubt in the jury’s mind, as the story was related to me, that some of the Merton bonds found a destination with the former Attorney-General. The proposition which stumped the jurors and prevented them from reaching a verdict as to Daugherty was that nowhere was there direct evidence showing that he agreed with Merton, Miller, King, and the others beforehand upon the fraud ultimately consummated, and upon the payment and division of bribe money after the allowance of the Société Suisse’s claim against the Alien Property Custodian. Such an agreement lay only in inference; so far as Daugherty was concerned, he never even saw Merton. It is quite conceivable that he knew no details of the plot, but merely aided it by writing the short letter of official approval which implicated him, and for which he doubtlessly got his reward. Under such circumstances, with the law standing as it does, it is small wonder that the jury found itself in true distress.

IV

Where lies the solution? It is obvious that in the prosecution of cases such as these the Government is not equipped to contend against the shrewd and subtle machinations of clever schemers whose every move is calculated to keep them just barely ‘within the law,’ with an antiquated legal machinery designed to cope with a far more simple and far less dangerous type of offender. The law strait-jackets the jury, and the prosecution is faced from the outset with an almost hopeless task. The task is not merely hopeless, but intellectually somewhat degrading. It amounts to creating such an overwhelming moral indignation in the jury’s mind as to the enormity of the fraud perpetrated that the jury will be ‘drugged’ into a finding of a fraudulent initial scheme precedent to the consummation of the fraud. Where the jury is intelligent and conscientious and scrupulously observes the court’s charge of the law, it is practically futile ever to expect in this class of case a verdict of conviction.

The cure lies in ‘putting teeth’ into the law, in amending and strengthening it so that it may cope with the subtle type of fraud which is the cancer of modern finance, which is immensely profitable when successful, and which invites the participation of the sharpest and shrewdest of designing minds, frequently masking under cloaks of eminent respectability — the type of fraud in which the schemer’s tracks are carefully covered as he goes along, so that only the results of the operation stand forth, and it is almost incredibly difficult to establish the earlier steps in the scheme.

Some of the judges of our higher courts have been very much aware of these statutory difficulties with our criminal law. Recently, Judge Learned Hand of the United States Circuit Court of Appeals, tracing the history of the law, stated in a case: —

A conspiracy to perpetrate a civil fraud (under the common law) was a crime, though the fraud itself was not one. In the early eighteenth century, frauds in general were probably still crimes even when not of a public character, and not within the statute of false tokens, though the question was not settled . . . (and) afterward the doctrine was narrowed and only frauds of a public nature remained criminal. . . .

The cure in part lies in legislation tending to make the proof of intent in these fraud cases simple so far as the prosecution is concerned. It is high time to consider whether there should not be created by law a presumption of prior intention, which in every conspiracy and fraud case will impose upon the defendants the burden of proving that they did not from the outset intend the wrongful acts which are the true gravamen of their offense.

In homicide cases, the carrying of a dangerous weapon creates a legal presumption of intent to use it in the accomplishment of the offense, and the burden is on the defendant to negative and overcome such presumption. If the law will create such a presumption of intent where human life is at stake, why hesitate when the stakes are immeasurably less?

When a fraud is practised which has caused possibly thousands of guileless victims to suffer, is there any ground in reason or justice why those participating in the transaction should not be called upon to exonerate themselves and to establish by preponderating evidence that they possessed no wrongful intent? When a public official accepts bribe money after doing a discretionary official act, is there any fair reason why he should not be required to disprove a presumptive wrongful initial intent? I fail to see any such ground in either case. An outraged public conviction of the futility of our present legal equipment to cope with the situation demands a change. To blame the juries is beside the point and entirely to avoid the crux of the difficulty.