47 F. Supp. 676 (D. Mass. 1942)
The United States brought this criminal prosecution in the United States District Court for the District of Massachusetts against Procter & Gamble Company and related corporate and individual defendants.1 The moving defendants were Procter & Gamble Company, The Procter & Gamble Distributing Company, The Procter & Gamble Manufacturing Company, Raymond J. Lamping, D. Paul Smelser, and Cleo W. Knappenberger.2 These parties faced an indictment containing at least forty counts.3
The case involved allegations concerning the transfer of confidential information from Lever Brothers Company.4 Six defendants submitted demurrers attacking the indictment on multiple grounds.5 They also entered pleas asserting that the statute of limitations barred prosecution of counts 1 through 9 and count 40.6 Defendant Smelser filed additional papers including a plea in abatement.7 He further moved to quash the indictment and sought access to grand jury materials.8
The events underlying counts 1 to 9 took place more than three years before the indictment's return.9 An affidavit from the United States Attorney established that Lamping and Knappenberger had fled from justice in the intervening time.10 Smelser went before the grand jury but limited his participation to reading prepared statements.11 He declined to produce subpoenaed records and invoked his privilege against self-incrimination.12
Count 40 set forth a single ongoing conspiracy covering the entire described period.13 No supporting evidence accompanied the motion to quash the indictment.14 The proceedings took place without any demonstration of irregularity in how the grand jury had conducted its business.15
Whether the demurrers should be sustained?16
The mail fraud statute 18 U.S.C.A. § 338 reaches schemes to defraud that involve bribing employees to obtain an employer's confidential information.17 Such conduct breaches the duty of loyalty through the continued false representation of honesty.18 The statute is construed broadly to prevent use of the mails for fraudulent designs.19
No. The indictment alleges that Procter & Gamble Company and its subsidiaries paid gratuities to Lever Brothers Company employees in exchange for experimental cakes of soap, secret processes, formulas, facts and figures.20 This conduct tampers with the employer-employee relationship to cause a breach of loyalty and involves trick and overreaching as an essential element of the scheme.21
The demurrers are overruled.22
Whether the statute of limitations bars prosecution of the substantive offenses in counts 1 to 9?23
The statute of limitations bars prosecution of substantive offenses committed more than three years before the indictment unless the defendants were fugitives from justice during the intervening period under 18 U.S.C.A. §§ 582 and 583.24
Yes. The substantive offenses charged in counts 1 to 9 all occurred more than three years prior to the indictment's return.25 The United States Attorney's affidavit established that Lamping and Knappenberger were fugitives from justice so the statute does not bar prosecution as to them while the bar applies to the remaining defendants.26
The pleas stand as a bar to prosecution of counts 1 to 9 against all defendants except Lamping and Knappenberger.27
Whether the statute of limitations bars prosecution under the conspiracy count 40?28
A count alleging one continuing conspiracy during the described period is not barred by the statute of limitations even if the defendants attempt to divide the period into separate conspiracies.29
No. Count 40 describes one continuing conspiracy during the period described in the count.30 The defendants contended that there were three separate conspiracies encompassed within the count.31 This contention is an ingenious division of time for the sole purpose of attacking the indictment.32 Therefore the statute of limitations does not bar the prosecution under Count 40.33
The pleas of the statute of limitations as to Count 40 are dismissed.34
Whether Smelser's plea in abatement should be granted?35
No. Defendant Smelser appeared before the grand jury and read prepared statements declining to produce subpoenaed records.38 He invoked his privilege against self-incrimination on advice of counsel.39 By doing so he refused to testify except as to his name and those matters.40 Therefore he cannot claim that he testified without waiving immunity.41
The plea in abatement is dismissed.42
Whether the motion to quash the indictment should be granted?43
A motion to quash the indictment must be supported by evidence and is denied when no evidence is submitted in support of the motion.44
No. In support of his motion to quash the indictment, defendant Smelser made statements regarding the proceedings.45 No evidence was submitted to the court in support of the defendant Smelser's statement in the motion to quash the indictment.46 The court therefore had no basis upon which to grant the requested relief.47 The motion is therefore denied for lack of supporting evidence.48
The motion to quash the indictment is denied.49
Whether the motions for inspection of the grand jury minutes should be granted?50
In the absence of evidence of irregularity there is no right to inspect or obtain copies of grand jury minutes and the court is not required to make such an inspection because the proceedings are presumed regular.51
No. There was no demonstration of irregularity in how the grand jury had conducted its business.52 A presumption exists that the proceedings of the grand jury were regular.53 In the absence of evidence of irregularity the defendant has no right to inspect or obtain copies of the grand jury minutes.54
The motions for inspection of the grand jury minutes are denied.55