Kotteakos v. United States

Facts

Simon Brown, president of the Brownie Lumber Company, acted as a broker for others who wanted loans under the National Housing Act, and he charged a five per cent commission. He knew the loan proceeds were not to be used for the purposes stated in the applications. In May, 1939, petitioner Lekacos told Brown he wanted a loan to finance opening a law office, and Brown wrote the application to say the money was for modernizing a house. Lekacos later sent Brown an application signed by petitioner Kotteakos that contained false statements. Kotteakos then sent Brown applications for other persons, two in fictitious names, and he and his partner, petitioner Regenbogen, received the proceeds. The indictment named thirty-two defendants and charged one conspiracy to get financial institutions to grant credit, with the loans then offered to the Federal Housing Administration for insurance on false applications. Nineteen defendants were brought to trial, and the names of thirteen went to the jury. The evidence against the others was similar, but it showed no connection between them and petitioners except that Brown had obtained each loan. The Court of Appeals described at least eight separate groups, each dealing with Brown, and the Government admitted the proof showed several conspiracies, not the single one charged.

Issues

1. Were petitioners substantially prejudiced by being convicted of one general conspiracy on evidence that proved eight or more separate conspiracies linked only through Brown?
2. Under the harmless error statute, can a conviction stand merely because the evidence against each defendant would have been enough to convict him in a separate trial?

Holding

The Government charged one conspiracy but proved eight or more separate ones, linked only by one man who took part in all, and the instructions let the jury treat them as one. The Court thought it highly probable that this error substantially influenced the verdict, so it was not harmless under § 269 and the convictions could not stand.