Before BIGGS, McLAUGHLIN, and KALODNER, Circuit Judges.
The defendants were found guilty in the court below upon a single indictment charging, in one count, conspiracy to defraud the United States, 18 U.S.C.A. §§ 88, and, in seventeen counts, presenting false claims to an agency of the United States, 18 U.S.C.A. § 80. A verdict was directed on two of the seventeen counts. The motions of the defendants for directed verdicts on all other counts, and later for a new trial, were denied. This appeal followed.
The indictment included others, who, together with the defendants now appealing, formed the A. C. Welding Company (hereinafter referred to as "A.C."), a partnership, for the purpose of engaging in the welding business, and more particularly for the repair and maintenance of ships. The charges against them centered about the conduct of A.C. in its performance as a sub-contractor of the Pioneer Engineering Company (hereinafter referred to as "Pioneer"), a prime contractor with the War Shipping Administration on a "cost-plus" contract basis. The government sought to prove in this case that the defendants padded the payrolls of A.C. with the result that it received more than it was entitled to for the work actually done, to the detriment of the United States and in violation of the statutes already referred to.
One of the government's witnesses was one Leonard Johnson, a former agent of the Federal Bureau of Investigation, who had audited A.C.'s books. Whether Johnson was properly utilized as an expert, and whether his testimony was essentially a summary of the government's evidence or was erroneously permitted to the prejudice of the defendants, are, in our opinion, the primary questions on this appeal.
The payroll books of A.C. contained the name of each employee, his address and social security number, and the wages paid on a weekly basis. They did not list the particular days worked in a week, or the hours, or the names of the vessels on which the work was performed.
Johnson testified he disregarded the payroll records because he found them "consistently" inaccurate and unreliable. The latter conclusion, he said, was based upon (1) a comparison of the payroll records with invoices which had been submitted by A.C. to Pioneer, (2) the "general knowledge in the trade" that no ships were "in" at certain times for which work was recorded in the payrolls, and (3) information obtained from interviewing approximately 110 A.C. employees. Johnson, however, was not preliminarily qualified as such an expert who might properly give evidence based on a "general knowledge in the trade", and the records of the interviews with A.C.'s employees were not introduced in evidence.
The invoices which A.C. has submitted to Pioneer, who paid them and was later reimbursed under its "cost-plus" contract with the War Shipping Administration, contained the name of the vessel on which work covered by the invoice was performed, the number of men employed, the type of work, the aggregate amount of time spent, the rate of pay, and the total amount of the invoice. Attached to the invoice was a list of names of men who allegedly performed the work, classified according to their particular jobs.
Having disregarded the payroll records, Johnson proceeded to "summarize", in numbers of men and amounts of money, the invoices which were "unsupported". It is asserted by the Government that this testimony was grounded upon a comparison of the invoices and attached lists with the testimony of the laborers named therein as given during the trial.
The defendants at the time did not dispute that the witness Johnson could properly compare the invoices with the testimony or other records in evidence in order to calculate for the jury the difference in dollars and cents. Cf. United States v. Johnson, 1943, 319 U.S. 503, 519, 63 S. Ct. 1233, 87 L. Ed. 1546. Indeed, the learned trial judge permitted the testimony on that reasoning and at the time Johnson was on the stand cautioned the jury as follows:
"Members of the jury, I think I should say to you now that the testimony of this witness, of course, as has been indicated, is predicated largely upon the testimony of these employees who were on the stand before. These calculations are made on that basis. It will be the determination in this last analysis as to whether or not those witnesses told the truth; and that is a matter for you to decide." (N.T., page 717)
However, it was contended in the court below, as it is here, that Johnson did not so limit his testimony and that in formulating his conclusions he relied on material dehors the record so that he was, in effect, a "thirteenth juror" to the prejudice of the defendants.
We subscribe to the defendants' contention and are of the opinion that they are entitled to a new trial.
Johnson did more than merely disregard the payroll records. He went further. In comparing the invoices and attached lists with the testimony adduced in court, he made use of other materials not in evidence, by means of which he first determined the "reliability" of the witnesses. Sworn statements had been taken by the Federal Bureau of Investigation prior to the trial from many of A.C. employees, including those who appeared as witnesses. These statements were not part of the record of the case. Johnson sat throughout the trial with prepared cards on which had been summarized the previous statements, and as each witness testified his testimony was compared with the cards to ascertain his "reliability". Just how the differences were treated was not comprehensively explained, but "in the event that the testimony of the witness differed" from the sworn statement which had been summarized on the cards, Johnson "treated each case individually" and could not state "in broad terms" his method. After having thus selected those witnesses whom he ...