Will the real United States Merchant Marine please sail forward.

Appellants have been convicted on seven counts of mail fraud (18 U.S.C.A. Sec. 1341) and one count of conspiracy (18 U.S.C.A. Sec. 371) in the operation of an alleged non-profit organization called the United States Merchant Marine (USMM). Lest we be misled, as the trial court and jury found USMM's subscribers to have been, the USMM here has no relation to the real United States Merchant Marine.1 While we accept the jury's finding that the scheme was fraudulent, and conclude the evidence if credited was sufficient to implicate them, the appellants Joseph J. Maggio and William E. Blake were denied a fair trial by the improper admission into evidence of certain telephone business records. Furthermore, we view the evidence as insufficient to support a conviction of appellant James F. Swartz. All three convictions are reversed and we remand for a new trial of Maggio and Blake.

The USMM was the realization of a long-awaited dream of Woodrow Wilson, Jr., a director of the corporation with the corporate endowed personal title of Commandant. Wilson was not present at the trial since as a fugitive he was making an extended stay in Mexico.2 The purpose of the USMM was to provide a national computerized registration headquarters in Washington, D. C. for boatowners across the country to facilitate the location of stolen boats and motors.

The corporation conducted mass mailings to boatowners, notifying them that the USMM Office of Marine Registry was presently accepting applications for small craft, boats and motors. The fees were $5.00 for both a boat and motor or $3.00 separately. The cover letter and application, emblazoned with a convincing ensign very similar to that of the United States Coast Guard, listed its Washington, D. C. office as the "Headquarters Building."3 To top off its nautical flavor the transmittal letter was signed by William E. Blake, with the seagoing title of Chief of Operations. The application form bore only one possible indication that the USMM was not a governmental agency. A statement at the bottom of the application form, in small type, stated that "This form does not exempt applicant from Federal, State or Local Regulations." Testimony was elicited from witnesses who had received applications, that they had returned them under the impression that it was a govermentally related agency and that registration was mandatory.

In viewing the evidence most favorable to the Government, we discern ample grounds on which the jury could have found the existence of a scheme to fraudulently induce registration. The adoption of the title United States Merchant Marine, use of nautical titles for the officers,4 placement of an ensign on the letterhead, and a Washington, D. C. address as "Headquarters" are all indications that the enterprise was established with the purpose of misleading people by instilling the belief that the USMM was a governmental agency with mandatory registration. The only question left to be answered is whether Maggio, Blake, and Swartz were properly shown to have been knowing and willing participants in the USMM scheme.

Joseph Maggio was an employee of National Systems and Service, Inc., of Rockford, Illinois, which contracted with USMM to perform the mass mailings. However, additional evidence was presented which indicated that Maggio was more closely associated with the activities of USMM. He was listed by Commandant Woodrow Wilson as a reference in renting the USMM headquarters, he acquired a bulk mailing permit in the name of USMM, he contacted the International Marine Boating Industry in Chicago claiming he represented the United States Coast Guard, he was seen at the "Headquarters" in Washington, and telephone records were produced at trial showing an extensive number of calls made between Maggio's home in Rockford and the USMM "Headquarters." This is the rub and nearly everything wrong that could have gone wrong in the proffer and receipt of the telephone records into evidence took place.

Because it is pertinent to the error in admission of evidence the other side of Maggio's picture revealed a classic case for jury resolution. On his theory, he was the wholly innocent independent contractor who was merely performing the common service indigenous to today's mass mailings of unsolicited pieces sometimes referred to as junk.

The records belonged to the Chesapeake & Potomac Telephone Company which services the Washington, D. C. area. The records5 consisted of numerous pages of printouts which listed calls made to and from the headquarters number in Washington and Maggio's Illinois home phone. In response to a subpoena the C&P records were produced at trial by John W. Davis, Manager of the South Central Bell office in Montgomery, Alabama, site of the trial and 800 miles from the place where the records were kept. Davis testified that he had obtained the records from his Security Manager, Howard H. Rice, who testified subsequently that he had received the records through the mails from the C&P Telephone Company's office in Washington, D. C.

While Davis stated that the records were similar to those kept by South Central Bell, there was no one present at the trial to explain the system under which the records were made, point out any possible errors, or allow the defense the opportunity to cross-examine. What was allowed at this trial was the admission of business records under the sponsorship of an employee of a subsidiary of a large corporation who had no knowledge as to the record's preparation. In view of the critical significance of all evidence bearing upon the extent of Maggio's activities in connection with the operation of USMM as well as the impressive nature and bulk of these records, we find that the Court's procedure for allowing the records into evidence as failing to comply with the proper rules for authentication of business records.

Liberal as we are to the fullest use of 28 U.S.C.A. Sec. 1732, there are two prerequisites both of which are to be demonstrated to permit admission of business records. First, the Federal Business Records Act6 states that the offeror must establish that the records were kept in the regular course of business. Louisville & Nashville Railroad Co. v. Knox Homes Corp., 5 Cir., 1965, 343 F.2d 887; United States v. Barson, 5 Cir., 1970, 434 F.2d 127, 128. Secondly, testimony must be given by a custodian adequately authenticating the record's accuracy and explaining the efforts employed to ensure this accuracy. United States v. Dawson, 2 Cir., 1968, 400 F.2d 194, 198-199, cert. denied, 1969, 393 U.S. 1023, 89 S. Ct. 632, 21 L. Ed. 2d 567; Bridger v. Union Railway Co., 6 Cir., 1966, 355 F.2d 382, 391-392.

It is the circumstances under which the records are recorded, kept, maintained and used that gives the reliability essential to the law's conclusion that without any independent recollections by those who made the succession of entries they are reliable, precisely because the business relies on them for important business judgments. This principle of business acceptance was recognized by our Court in Missouri Pacific Railroad Co. v. Austin, 5 Cir., 1961, 292 F.2d 415, when we stated:

"In the approach of the Model Act trustworthiness comes from a record (1) regularly made in the course of a business, (2) if it is a part of the regular course of that business to record the event or transaction at or near the time of its occurrence. Most frequently the inquiry concerns the regularity of the making of that record in a particular business.

292 F.2d at 422.

While the trial court does have wide discretion in determining the admissibility of documents as business records, United States v. Middlebrooks, 5 Cir., 1970, 431 F.2d 299, 302, cert. denied, 400 U.S. 1009, 91 S. Ct. 569, 27 L. Ed. 2d 622; McDaniel v. United States, 5 Cir., 1965, 343 F.2d 785, 788, cert. denied, 382 U.S. 826, 86 S. Ct. 59, 15 L. Ed. 2d 71, there must be minimal authentication proof to give them reliability.

Over the pointed objection of Maggio's counsel not a single legal or factual theory was urged to suggest the admissibility of records whose only claim to authenticity came from the marks on them and the corporate relationship between the local voucher's employer and Chesapeake & Potomac Telephone Company. We cannot view this obvious error as harmless and therefore Maggio's conviction cannot stand.

A review of the trial record shows that there was enough evidence on which the jury could have found that Blake was a participant in the scheme.7 However, the C&P telephone records admitted at trial also contained listings of calls from the USMM headquarters to a phone in Indiana registered to appellant Blake.8 While Blake's attorney did not preserve the error by objection, the impressive number of C&P telephone records, 10 from USMM to Blake and 136 to Maggio, and the nature of the crime being a conspiracy in which Maggio had so much to do, we cannot reject the possibility that the erroneous impression created by the records did not affect Blake. Therefore, he must be afforded the benefit of a new trial.

We find the evidence to be insufficient to justify the conviction of appellant Swartz in the perpetration of the scheme. While the name James Swartz appears on the Articles of Incorporation for USMM, there is only dubious evidence identifying the James Swartz on trial as the same James Swartz whose name appears on the incorporation document. The weakness of the Government's case is revealed by the fact that the Government handwriting expert could not even make a comparison of signatures since the Government electrostatic copy of the Articles was of such a poor quality. Only one Government witness identified the appellant at trial and that was John Toner, an employee of the National Bureau of Lathing and Plastering which officed in the same building as USMM. Toner stated that he had seen the appellant in the building where the USMM headquarters were located-but never in the USMM offices. At most all of the Government's case suggests is that Swartz rented some office furniture and hired a secretary-who could not identify the appellant at the trial as the man who had hired her.

The most convincing evidence that the appellant was connected with USMM was a record of 11 telephone calls between May and August of 1972. One call from the USMM headquarters went to the appellant's home and 10 calls were made to or from his place of business, Metro Cable Corporation. While these calls are sufficient to identify the appellant as USMM's Swartz, there was no other proof that the appellant was a participant in the conspiracy of mail fraud. No evidence was produced which proved that Swartz had any knowledge of the solicitation letter sent out by USMM. Even viewing the facts most favorable to the Government, the case was insufficient to justify a conviction of the appellant James Swartz.

Since Swartz did not file a motion for new trial, we reverse with directions to dismiss the indictment as to him. United States v. Musquiz, 5 Cir., 1971, 445 F.2d 963; United States v. Restano, 5 Cir., 1971, 449 F.2d 485.

Reversed with directions in part; reversed and remanded in part.