# Petition — Aloi v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_0992%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1975 - **Citation:** 423 U.S. 1015 ## Text . nrowr Su reme Uc Kk LA | gf 5 1973 ‘ i MICHAEL RODAK, JR., CLERK | IN THE Supreme Court of the United States October Term, 1975 N. @57306 VINCENT ALOI, Petitioner, Vv. UNITED STATES OF AMERICA, Respondent. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT KRISTIN BOOTH GLEN Attorney for Petitioner Vincent Aloi 36 West 44th Street New York, New York 10036 212-869-1940 TABLE OF CONTENTS Opinions Below SI, sie bad eet bea ialhs EY SL cos cea veneneesaehcanassat I i i a ile iN hE ES a. 5, Gy a ay hd Reasons For GRANTING THE Warr: Porrst I—The Court below drastically extended the doctrine of Pinkerton v. U.S. to permit the imposi- tion of derivative liability without first requiring the jury to determine that a substantive offense RS CE I Fon 6c ccccccatenccsccececss A. The substantive crime which formed the predicate for Petitioner’s derivative liabil- ity had, as an essential element, that it be wilfully committed by someone, and the jury was never so charged .............ssse00. B. The Court below incorrectly and unconsti- tutionally extended Pinkerton to fill this Se SUED ac ctnbd ccede ses éncescesses Porxt Il—The ‘‘use”’ of a false offering circular in Count 18 was not charged by the Trial Court and was statutorily and constitutionally misconstrued by the Court of Appeals ...............eeeeeees i Se ee CEE 6 ave dvb ne cdWksccccesees Bi Dip Gauss of AMMO oc cccccccccvccccece 12 14 14 15 ii Porrt I]J—Rule 30 does not bar review .........--- ND Cogn cc ccdcenceceseecessectease B. Under Rule 30, waiver cannot be found where an appropriate request to charge was SEE onc cccdcensespevetecxeusace ene Pornt IV—Petitioner was deprived of minimum re- quirements of due process when he was sentenced for ‘‘other crimes’’ unsupported by reliable evi- dence, and when the Trial Court refused his re- quest for confrontation and cross-examination ... A. The sentence imposed was arbitrary, capri- cious, and based on ‘‘ misinformation of con- stitutional magnitude’”’ ..............+45: B. Due process was violated by the imposition of a sentence for crimes for which Petitioner was not tried, and by denial of the right to confrontation and cross-examination ..... Ce sks kLikdk 0 6.0 684660600 b06H) od ENE RUTH Appenpix A—Opinion of the Court of Appeals Dur- ing Petition for Rehearing and Rehearing—En RES 0 HER ret robe i rey Pree Appenpix B—Opinion of Court of Appeals Affirming SE ng 0. 50:04.60680665665b0000000600696696% Appenpix C—Relevant Statutory Provisions: 15 UBC ST7(G)(O) 2... cccccvccvccccccescvess SB Ts SD nck odcateavcocccssccssesceseces Rule 256(c) [17 CFR 230-256(c)] .............. 19 21 22 = iii Table of Authorities CasEs PAGE Baker v. United States, 388 F.2d 931 (4th Cir. 1965) 26 Chatman v. U.S., 411 F.2d 1139 (9th Cir., 1969) .... 20 Findley v. United States, 362 F.2d 92 (10th Cir. ER Cored cat on tiamestnae "48 Gagnon v. Scarpelli, 411 U.S. 778 (1973) .......... 22, 29 ey BE lg ee eee re 21, 28 Gideon v. Wainwright, 372 U.S. 335 (1963) ........ 27, 28 Goldberg v. Kelly, 397 U.S. 254 (1970) ............ 21 Greene v. McElroy, 360 U.S. 474 (1959) ........... 21, 29 Kent v. United States, 383 U.S. 541 (1966) ........ 28 Haller v. Robbins, 409 F.2d 857 (1st Cir. 1969) ..... 23 Levine v. U.S., 383 U.S. 265 (1966) ............... 15 Mempa v. Rhay, 389 U.S. 128 (1967) ............ 22, 27, 28 Morrissey v. Brewer, 408 U.S. 471 (1972) ......... 21, 29 Nickens v. State, 34 Md. App. 284; 301 A.2d 49 GE RN oie cpt, a Se ee 26 Nye and Nissen v. U.S., 336 U.S. 613 (1949) ....... 13, 17 Pinkerton v. U.S., 328 U.S. 640 (1946) ........ 2, 5, 8, 9, 12 13, 14, 15 Schaeffer v. United States, 362 U.S. 511 (1960) .... 14 Specht v. Patterson, 386 U.S. 605 (1967) .......... 28 Spies v. United States, 317 U.S. 492 (1943) ........ 10 iv Stirone v. U.S., 361 U.S. 212 (1960) ............... Townsend v. Burke, 334 U.S. 736 (1948) .......... U.S. v. Allsenberrie, 424 F.2d 1209 (7th Cir. 1970) .. U.S. v. Ausmeier, 182 F.2d 349 (2d Cir. 1945) ...... U.S. v. Bollenbach, 326 U.S. 607 (1946) ............ U.S. v. Bynum, 485 F.2d 490 (2d Cir., 1973) ........ U.S. v. Byrd, 352 F.2d 570 (2d Cir., 1965) .......... United States v. Bishop, 412 U.S. 346 (1973) ...... U.S. v. Cantone, 426 F.2d 902 (2d Cir. 1970) ........ U.S. v. Doyle, 348 F.2d 715, 721 (2d Cir. 1965) .... U.S. v. Gillian, 288 F.2d 796 (1961) ............... U.S. v. Howard, 506 F.2d 1131 (2d Cir., 1974) .... U.S. v. Houle, 490 F.2d 167 (2d Cir., 1973) ........ U.S. v. Janiec, 464 F.2d 126 (3rd Cir. 1972) ........ U.S. v. Johnson, 507 F.2d 826 (7th Cir. 1974) cert. Gen. 66 GB. GE, SERB CRUG <0 osccepeceumecunerens U.S. v. Knippenberg, 502 F.2d 1056 (7th Cir., 1974) 15, 20 U.S. v. Looney, 501 F.2d 1039 (5th Cir. 1974) ...... U.S. v. Kronsby, 418 F.2d 65 (6th Cir., 1969) ...... United States v. Murdoch, 290 U.S. 389 (1933) ..... U.S. v. Picard, 464 F.2d 215 (1st Cir. 1972) ........ U.S. v. Roberts, 416 F.2d 1215 (5th Cir., 1965) .... vase States v. Robertson, 298 F.2d 739 (2d Cir., | re ee U.S. v. Rosner, 485 F.2d 1213 (2d Cir. 1973), cert. den, 417 UD. GBD (100E) .. .cccccciotcccedebeces U.S. v. Sperling, 506 F.2d 1323 (2d Cir., 1974) cert. den. 450 U.S. OER (BBTB) «cic Kite ncunwedecintbas U.S. v. Trigg, 39% ¥.2d 860 (7th Cir.), cert. den, 391 UM. O88 (IOGB) ....cscvcccccuscnneeneen 26 13 27 U.S. v. Tucker, 404 U.S. 443 (1972) ............4.. 28 U.S. v. Weston, 448 F.2d 626, 631 (9th Cir. 1971) ... 26 United States v. Williams, 499 F.2d 52 (1st Cir. 1974) 26 Williams v. New York, 337 U.S. 241 (1949) ...... 22, 25, 27 Wolff v. McDonnell, 418 U.S. 539 (1974) ........... 29 Oruer AUTHORITIES A.B.A., Project on Minimum Standards for Criminal Justice, Probation, p. 37 (Approved Draft, 1970).. 21, 27 A.B.A.,Project on Minimum Standards for Uriminal Justice, Sentencing Seciion 5.4 (Approved Draft, ERR eGEATES octtebagedbeadedddcbacees 21, 29 A.B.A., Project on Minimum Standards for Criminal Justice, Appellate Review of Sentences (Tent. Ms 6 chin dds 04.4009 0 00¢0n pees gee 21 Berkowitz, The Constitutional Requirements for a Written Statement of Reasons and Facts in Sup- ot of the Sentencing Decision: A Due Process roposal, 60 Iowa L. Rev. 205 (1974) ............ 21 Developments in the Law: Criminal Conspiracy, 72 Harv. L. Rev. 920, 998-1000 (1959) .............. 13, 15 Federal Rules of Criminal Procedure: es ca G cue ck sees ceecccces 3, 17, 18, 19, 20 EN LE EE 3, 18 Frankel, Criminal Sentences: Law Without Order, TAs Cecekdeeéccceebeseedtovceccce 21 G Key Mafia Figure Tells of ‘Wars’ and Gallo- olumbo Peace Talks, N. Y. Times, July 7, 1975, EG EE 23 Hearings on Reform of Federal Criminal Law Be- fore the Subcommittee on Criminal Law and Pro- cedures of the Senate Committee on the Judiciary, 92nd Cong., 1st Sess., pt. 1 (1974) .............. 13 PAGE Lehrich, The Use and Disclosure of Presentence Reports in the United States, 47 F.R.D. 225, 247 GHEY 9b cchbcdtcweus heey dete ceric o6ssesssess 27 Loss, 1 Securities Regulations (1961) ............. 10 Mathews, Criminal Prosecutions Under the Federal Securities Law, 39 Geo. Wash. L. Rev. 901, 950 DEY 005460060 66000000ukraseeteaiasoass ened 10 Note: Criminal Procedure: Probable Cause and Due Process at Sentencing, 50 N. Car. L. Rev. 925 GCE . cede wk bi ae tttled Bac nks ide Matis wees 26 Note: Due Process in Felony Sentencing, 81 Harv. SS FS FO ars eae e 27, 29 Note: Toward a Probable Cause Standard in Sen- tencing, 34 Md. L. Rev. 133 (1974) .............. 26 8a Moore, Federal Practice, { 32.04 (Cipes ed. 1973) 22, 23 Packer, The Limits of the Criminal Sanction, (1970) 21 Perkins, The Act of One Conspirator, 26 Hastings 2 BR ARs RE. Gk 14 Remarks of Professor Herbert Wechsler, Second Circuit Judicial Conference on Appellate Review of Sentence, 32 F.R.D. 249 (1962) .............. 22 Rule 256(a)-(e); 17 C.F.R. 230.256(a)-(e) ......... 4, 9,16 Whitney North Seymour Jr., 1972 Sentenci tud ad the Southern District of New York, v. Y. ¢. ar Journal, 163 (April, 1973) ................ 22 15 U.S.C.: ee ee, 4,9 Se Ge cbe seus bubba chs cdeccdokas Sudeeel 4,9, 10, 14 Se Get tds cechutenhtcddbcbsdtuaastiieee 16 Supreme Court of the United States October Term, 1975 No. Vixcent A101, Petitioner, v. Unrrep States or AmeEnica, Respondent. ee Vv PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Vincent Aloi, through his attorney, hereby petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Second Circuit in this case. Opinions Below The opinion of the Court of Appeals (App. B, infra pp. 3a-34a) is reported at 511 F.2d 585 (2d Cir., 1975). The opinion of the Court denying Aloi’s Petition for Rehearing and Rehearing En Banc (App. A, infra at pp. 1a-2a) is not yet reported. Jurisdiction The judgment of the Court of Appeals was entered on January 31, 1975. On July 7, 1975 the Court of Appeals denied a Petition for Rehearing and Rehearing En Banc. Mr. Justice Marshall extended the time for filing a petition for a writ of certiorari to and including September 5, 1975. The jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1). Questions Presented 1. Can Petitioner’s conviction for the substantive crime of ‘‘wilful use of a false and misleading offering circular’’ be sustained where a) Petitioner’s guilt was premised entirely upon the derivative liability theory of Pinkerton v. U.S., 328 U.S. 640 (1946); and b) an essential statutory element of the substan- tive offense was that it be committed ‘‘wilfully’’; and c) the jury was never instructed, nor did it find, that some member of the conspiracy must have ‘*wilfully’’ committed the substantive offense before derivative liability could be imposed? 2. Can Petitioner’s conviction of ‘‘wilful use of a false and misleading offering circular’’ based entirely on Pinker- ton liability be sustained either a) where the trial judge charged ‘‘use’’ as ‘*issuance’’ and Petitioner was not a member of the conspiracy when the offering circular was ‘‘issued,’’ or b) where the Court of Appeals sua sponte sub- stituted the entirely novel and statutorily unauthor- ized definition of ‘‘filing’’ and ‘‘existence,’’ creating a fatal variance both from the crime charged in the indictment and the bases upon which it was sub- mitted to the jury? 3. Does Rule 30 of the Federal Rules of Criminal Pro- cedure bar review of these errors of constitutional magni- tude where a) a request for an appropriate charge was made by the government and relied upon by the defendants and, b) the trial judge, in violation of Rule 30, did not instruct the parties that he would not give such a charge, but the defendants thereafter failed to ob- ject; or c) does the ‘‘plain error’’ standard of Rule 52 permit review where an essential element of the crime is not charged? 4. As a matter of constitutional law, must the criminal sentencing procedure include ‘‘minimal requirements of due process’’ so that a) the sentencing court may not consider totally unsupported allegations of other ‘‘criminal activity’’ in imposing a greater sentence, and/or b) the procedural safeguards of confrontation and cross examination are available to a defendant who attempts to contest that misinformation? Statutes Involved The statutes involved are 15 U.S.C. 77(s)(a) and 77(x) and Rule 256(e), 17 CFR 230.256(e) printed as Appendix C, pp. 35-39a hereto. Statement 1. Procepvurat History Petitioner was convicted of one count of conspiracy, one count of wire fraud, and one count of ‘‘wilful use of a false offering circular’’* (‘‘Count 18’’) after a three month trial on a \ vulti-count, multi-defendant securities fraud indict- ment in the United States District Court for the Southern District of New York (Knapp, D.J. and a jury). On appeal Petitioner and three co-defendants separately raised extensive points which they argued required re- versal; in a lengthy, and rather rambling opinion containing virtually no citations? the Court of Appeals affirmed the convictions of three appellants, including Petitioner, and reversed the conviction of the fourth.° Aloi then petitioned for rehearing and rehearing en banc and the court called for a response from the govern- 1 He was sentenced to five years on the conspiracy count and four years on the false offering circular count, those sentences run con- secutively to each other, and consecutively to a seven year state sen- tence for one count of perjury. A five year sentence on the wire fraud count was suspended. Petitioner was also fined $16,000, the maximum amount permissible under the three federal counts. 2 The opinion is reprinted here at pp3a-34a. In thirty pages, apparently addressing over twenty claims of reversible error, the court cites but six cases, none of these on the points to which it devotes the majority of its discussion. * The conviction of Appellant John Savino was reversed for in- sufficiency of the evidence. A similar argument was made by Peti- tioner but was rejected. ment on whether the trial court’s failure to charge ‘‘wilful- ness,’’ an essential element of the crime charged on Count 18, required reversal. Subsequent to both this response and an additional ‘‘answer’’ which it permitted Aloi to file, une court denied the petition with an opinion which, while brief, served to substantially clarify the basis of its previous decision.‘ The second opinion, when read with the first, suggests strongly that a) under Pinkerton v. U.S., supra, the govern- ment need not prove, nor the court charge, that some member of the conspiracy ‘‘wilfully’’ committed the substantive crime of use of a false offering circular before finding a co-conspirator like Aloi guilty on a derivative liability theory so long as*Aloi ‘‘wilfully”’ entered the conspiracy, or b) failure to charge an essential element of a crime, notwithstanding previous settled law in the Circuit® was not ‘‘plain error’’ because of the ‘*Pinkerton’’ charge and/or because of the ‘‘broad’’ (and, we argue, unjustified) definition of the term *“‘use’’ employed for the first time by the Circuit in its first opinion. Facts The basic facts of the case, most favorable to the gov- ernment, are set forth in the court’s opinion at pp. 5a-9a. To avoid unnecessary repetition we would simply sum- marize the alleged conspiracy and add some additional * As to the issues of wilfulness and “use”. With the addition of the due process sentencing issue, which the Court of Appeals simply did not address, these are the only issues raised here. 5 See p. 18, fn. 56 infra. 6 material relevant to Count 18 which is directly at issue here. In late 1969 several co-conspirators* decided on a pub- lic offering of stock in At Your Service Leasing Co. (AYSL) a company in serious financial difficulty. Two defendants, Nelson and Miller,’ who ran a financial consult- ing business, undertook to actually arrange the offering, including (with Graifer) the preparation of an offering cir- cular, dated April 8, 1970 which was filed with the SEC. The offering circular clearly warned potential buyers that the stock was essentially worthless,* and in fact, no legitimate purchasers ever appeared. The owners and Graifer then enlisted Ralph Lombardo and Sebastian ‘‘Buster’’ Aloi® (not the petitioner Vincent Aloi) who referred them to a well known stock manipula- lator, Michael Hellerman, allegedly controlled by the de- fendant Dioguardi”™. 6 Including the owners, Price, Fredinand, Handler and Garek, all of whom were severed and never tried, and the manager Ed Graifer, who turned government witness. 7 Each of whom pleaded and testified. 8 As the Court of Appeals itself recognized. It wrote: “The offering circular was most explicit. In bold type on the first page it stated: ‘THESE SHARES INVOLVE A HIGH DEGREE OF RISK’. Under ‘Risk Factors to be Considered’, were listed seventeen factors, any one of which should have de- terred a prospective purchaser from buying the stock. And until the conspiracy began, no one did”. Op. at p. 6a. Once the conspiracy began, however, the circulars were never again “used”. See p. 7 infra. ® Lombardo was tried, convicted and has not petitioned for cer- tiorari. Sebastian “Buster” Aloi is the father Petitioner whose acts both the trial court and the Court of Appeals often mistakenly ascribe to Petitioner. 10 Hellerman also pleaded, served a very short sentence and testi- fied for the government. Dioguardi was tried, convicted and has not petitioned for certiorari. Hellerman took a look at the offering circular (T 906)" copies of which were, in turn,’? delivered to his office (T 2780). There they sat on his couch (T 2782) until the stock was long since illegally sold and the SEC moved in. These offering circulars were never seen or mentioned again and it is conceded that Petitioner'* never saw them or even knew of their existence. No stock was actually sold prior to the expiration of the SEC-proscribed offering period on July 9, and the by-then unregistered stock which was ultimately unloaded was done so by a sophisticated rigging of buy-sell confirmations and after market ‘‘ring-around-the rosy’’ mainpulation™ conducted by Hellerman and other associates. The stock was in no way sold through the ‘‘use’’ of the offering circulars which were never seen by prospective atte and which never moved from Hellerman’s office. Petitioner’s ‘‘role’’ in the conspiracy was, as the Court of Appeals put it, ‘‘collateral’’ (7a). In attempting to re- cover a legitimate debt owed by Hellerman to two of his friends*® he was told of the swindle Hellerman was under- *! References to the trial transcript are desi “T” followed by the appropriate page. + ged eal *? As the beginning of his illegal attempts to sell the stock, - man gave Nelson a bogus list of - rted “buyers”. poy pany, Tech-Ec, then typed _up ations which it placed with subscription forms and offering circulars (T 3189-90) and delivered realy so coch purchasers Ge erakuntiens, fees tas tecae urchasers i were, of course, —— mailed. ns = 18 Who had not yet, the pi yet, even under the government’s theory, entered ** In which the price of the stock is artificially inflated hony hese ceders aad it ie Saal rece I one egitimate broker. ee *® One of whom was John Savino, whose conviction was reversed. 8 taking. He allegedly put a halt to it until, sometime in June, his father convinced him’** to let the deal’? go through on the condition that the prior debt would be repaid out of the proceeds.’* Thereafter, his only role in the conspiracy was to collect part of Hellerman’s alleged share and dis- tribute the amount of the money debt to his friends. As a result of this participation he was convicted not only of conspiracy to commit securities fraud, but of Count 18, the wilful use of a false and misleading offering circu- lar, for which he received an additional four year sentence. REASONS FOR GRANTING THE WRIT POINT I The Court below drastically extended the doctrine of Pinkerton v. U.S. to permit the imposition of derivative liability without first requiring the jury to determine that a substantive offense had been committed. A. The substantive crime which formed the predicate for Petitioner’s derivative liability had, as an essen- tial element, that it be wilfully committed by some one, and the jury was never so charged. Petitioner was convicted of Count 18 of the indictment which charged the 16 This allegedly occurred in a telephone conversation in Italian, reported by Graifer who spoke no Italian. The entirely unproven conversation resulted in the wire fraud conviction. 1? There was also no evidence that Petitioner, unlike his father, knew anything at all about the stock swindle except that it existed and was being run by Hellerman. 18 It was this alleged “power to stop and start the deal” which both the government and the court found made Petitioner a member of the securities fraud conspiracy. It is also conceded that he ob- tained no financial or other gain from the “deal”. 9 ‘ ‘wilf . . . wd use of a false and misleading offering cir- and sentenced to four years therefor. ‘ As discussed in the statement of facts, supra, and in the pe Court opinion, Petitioner not only never ‘‘used’’?° 2 offering circular, he did not know of its existence. His oy ee npr: offense, as the court charged, was predi- cated on the derivative liability th } =~ ty theory of Pinkerton v. U.S., Pinkerton, of course, holds that a conspirator may be convicted of a substantive crime actually committed by an- other, sg that the latter is a member of the con- spiracy, and the crime is committed in f Pinkerton, supra at p. 647. as In this instance the crime allegedly committed by a member of the conspiracy was the wilful use of a misleading offering circular." Under settled case law, e g. United States v. Robertson, 298 F.2d 739 (2d. Cir., 1962) 23 wilfull- ness 1s an essential element of the offense which the govern ment must prove beyond a reasonable doubt.?* ** Iu violation of 15 USC section 77(x) t , 77(S ( a section 230, 256[e]) and Form 1A, Aah ey ane g ereof. The statutory sections and Rules are reprinted i the ppendix hereto at pp. 35a-38a. The “unlawful use” on. che as an object of the conspiracy under Count 1 of the indict- standing affirmance on other counts where the rently so as not to approve, “oven by indiredion” 20 Kn of mind, the failure to instruct the ; jury as to the requisite wilfullness, Kronsbe 48 Lacie ite Scio requires. reversal, e.g U.S. Vv. 2d Cir, 1965); U.S. v. Gillan 288 Fok be or U.S. v. Ausmeier, 152 F.2d 349, 356-57 (2d Cir., 1945)” _— -* 10 The absolute necessity of proving wilfullness is appar- ent not only from the case law, but from the statutory scheme itself. The Securities Exchange Act of 1933, 15 U.S.C., sections 77(a) et seq., is legislation aimed at inform- ing the public; in pursuit of this goal, the Act permits vari- ous civil remedies, including injunctions and damages. See generally Loss, 1 Securities Regulations (1961). It is only Section 77(x) which makes violation of the Act a criminal offense,” and that section specifically requires wilfulness as opposed to carelessness, mistake or the like.*® For the jury to find that the crime charged in Count 18 of the indictment was committed, it thus had to find that it was committed wilfully,2® yet the court never once men- tioned this in its charge. 24 For a general discussion of the wilfullness requirement in 77(x) cases see Mathews, Criminal Prosecutions Under the Federal Securi- ties ae. 39 Geo. Wash. L. Rev. 901, 950 (1971) and Loss, supra p.1309. 25 In this respect, the Securities Act is remarkably similar to the civil/criminal distinctions under the Internal Revenue Code (which provides for criminal penalties beginning at section 7201 et seq). There too, what might otherwise be mi or negligent by the tax- payer becomes criminal only when it is wilfully done. In that con- text, this Court has re i that wilfulness involves “bad faith or evil intent,” United States v. Murdoch, 290 U.S. 389, 398 (1933), or “evil motive and want of justification in view of all of the financial circumstances of the taxpayer.” Spies v. United States, 317 U.S. 492, 298 (1943). As this Court has recently reiterated, this is so because: “The Court’s ceasistent interpretation of the word ‘wilfully’ to require an elemeni of mens rea implements the pervasive intent of to construct penalties that separate the purposeful tax violator the well-meaning, but easily confused, mass of taxpayers.” United States v. Bishop, 412 U.S. 346, 361 (1973). This same rationale applies to the Securities Act. 26 There was substantial evidence in the record from which the jury could have found that the misrepresentations or omissions in the offering circular constituting the “falseness” charged in the in- dictment were not wilfull, but were rather the result of or mistake. The co-conspirator most i connected the issuance of the prospectus, Ed Graifer, i that he was not even aware it was false or fraudulent until he was indicted! (T 880). 11 Instead, it charged: I advise you as a matter of law, if you find that this circular did fail to make the disclosures men- tioned in the indictment and that if such disclosures would in your judgment have been of material in- terest to a purchaser of the securities, the issuance of that prospectus would have violated the securities laws of the United States.?" (TR. 5495 )2* The jury was thus able to find Petitioner guilty of the ‘wilful use of a false and misleading offering circular’’ which he never saw, and of whose existence he did not know solely by finding that some co-conspirator” ‘‘issued’’*° a offering circular with material non-disclosures* whether 27 : . e Pi Lang course, is true. It simply would not have violated the - —_ oer” Court went on to charge derivative Pinkerton liability as I further advise you, if you find the issuance i was in furtherance of the conspiracy and in the A othe K nym templation of the contemplation (sic) of the conspirators, you may find any defendant whom you may have found guilty of conspiracy, to be also guilty of the crime of issuing the false (Tseae) statement alleged in count 18 of the indictment. 7° The Court of Appeals opinion suggests this may have been > Norman, Miller or Hellerman, ding on one’s view of *° Petitioner argded extensively below that the non-disclosures alleged were not “material” in that they involved no additional dil . n 4 tion of the proceeds of the offering which would be of pe ine — aan, nor would the existence of any undisclosed a a oan because they did so believing in a guaran- of material interest to any of those ultimately *' The evidence was at best conflicting as to whether the alleged non-disclosures were “material” since no purchasers or prospectiv Pigasers were ever shown the offering circular. See pp. 16-17, _ 12 that ‘‘issuance’? was mistaken, negligent or, conversely, wilful. The charge was thus constitutionally defective in that it permitted a finding of guilt without a finding as to an essential element of the crime, and in fatal variance with the indictment, Stirone v. U.S., 361 U.S. 212 (1960). B. The Court below incorrectly and unconstitutionally extended Pinkerton to fill this fatal variance. In the court below, Petitioner and his co-defendants repeatedly *? argued that the clear failure to charge wilful- ness required reversal on Count 18. The Government, with equal perserverance, argued that the absence of a finding of wilfulness as to the particular crime charged, no matter by whom committed, was irrelevant so long as it was shown that Petitioner or his co-defendants had wilfully joined the conspiracy. In its main opinion the court below never dealt with either of these arguments,** but its second opinion, denying rehearing, appears to adopt the govern- ment’s theory.** Indeed this is the only theory, if accepted, upon which the conviction may be sustained. This ‘‘theory,’’ however, not only violates the rationale of Pinkerton itself, it extends that case far beyond the nar- 82 In their briefs, reply briefs and in Petitioner’s Petition for Rehearing. 38 [t apparently disposed of the whole wilfulness question on some theory of waiver, although the failure to wilfulness is mentioned only once, in conjunction with other, itional, omis- sions in the charge which were not essential elements of the crime, and which the Appellants did not claim rose to the dimensions of constitutional error. 34 As stated previously, after the Petition for Rehearing was filed, the Court called for a response by the government on the issue of wilfulness alone. The subsequent opinion, upholding the failure to charge wilfulness, states that it was not error, “in light of the trial court’s charge on Pinkerton v. U.S.” a2, infra. 13 row construction placed on it by this Court, Nye é Nissen v. U.S., 336 U.S. 613, 620 (1949) to permit separate, addi- tional criminal punishment for any overt act, not neces- sarily itself criminal, committed in furtherance of a con- spiracy.*® Pinkerton and all of its progeny** clearly hold that be- fore derivative criminal liability can be imposed, a ‘‘crime’’ or ‘‘substantive offense’’ must first have been committed, e.g. Pinkerton, supra at pp. 647-48, Nye & Nissen, supra.*" The Court’s decision below would turn this holding on its head and allow, in true Alice-in- Wonderland fashion, the determination of one aspect of derivative liability** to itself *° The fear of additional punishment even for criminal acts which ure also charged as overt acts of the iracy is reflected in Con- gress’s decision in the proposed Federal Criminal Code to reverse “a judicially developed doctrine which imposes complicity liability based solely upon membership in the conspiracy.” Hearings on Re- form of Federal Criminal Law Before the Subcommittee on Criminal Law and Procedures of the Senate Committee on the Judiciary, 92nd Cong., Ist Sess., pt. 1 at p. 225 (1974). This aspect of Pinkerton has also been criticized in, inter alia, Developments in the Law: Criminal Conspiracy 72 Harv. L. Rev. 920, 998-1000 (1959). **In shepardizing all citations of Pinkerton, counsel has not found a single case where this fundamental proposition was not un- derstood and honored. As one recent but typical exegisis of Pinker- ton states: _In the Pinkerton case there was so evidence that Daniel Pinkerton had committed the substantive offense for which he had been convicted, but it was clear that the offense had been commitied and that it had been committed in furtherance of an unlawful conspiracy of which he was a member. U.S. v. Sperling, S06 F.2d 1323, 1342 (2d. Cir., 1974) cert. den. 420 U.S. 962 (1975). aimee al , in rg & Nissen, Fe in Pinkerton, derivative li- was t to im where the irators who committed the substantive aise vane | canton victed of them . see Nye & Nissen at p. 628 (dissenting op. of Justice Murphy). Here, of course, none of those co-conspirators who might have been directly guilty of Count 18 were ever tried or convicted of it. 3 i.e. participation in a conspiracy. | i’ 14 independently establish an essential element of the crime for which another member of the conspiracy is held deriva- tively liable. There are dangers enough in strict application of Pink- erton®® and in conspiracy in general*® that this new, un- precedented approach should be immediately disavowed. This Court should grant certiorari to do so unqualifiedly. POINT II The “use” of a false offering circular in Count 18 was not charged by the Trial Court and was statutorily and constitutionally misconstrued by the Court of Appeals. A. The Trial Court. Although the indictment charged that the defendants ‘‘wilfully used and caused to be used’’** a false offering cir- cular, the trial judge never instructed the jury as to ‘‘use’’ 3® Commentators have that the iety of Pinkerton is itself in question, see ns, The Act of ne Conspirator 26 Hastings L.J. 337 (1974) and this Court’s | Silence on the issue similarly suggests a possible lack of present ; *° As Justice Douglas, dissenting in another case, and on other grounds prophetically stated: Se Conspiracy presents lexing problems that con- cerned son Ng See Keulewitch . U.S. 336 U.S. 440, Delli Paoli v. U.S., 352 U.S. 232. While it is proper at times to join a conspiracy count with substantive counts even where the latter are the same as the overt acts charged in the counts, Pinkerton v. U.S., there is danger of multiplication. loose practice of trying to bring together into one conspiracy those Chose tee ore ot bent cusemely tnneus Ses ee See oe ticized. We allow conspiracy to be put to new uses when we sanction the practice roved why 4 Vv. United States, 362 U.S. 511, 524 (1960) (dissenting opinion of Justice Douglas) (footnotes omitted). ‘1 Tracking the language of the SEC Rule, pp. 36a-38a infra whose violation was made criminal under 15 U.S.C. 77(x). 15 at all. Instead, he charged only that if the jury found that the circular had been ‘‘issued’’*? it could find the defend- ants, including petitioner, guilty under Pinkerton. This rather peculiar substitution** requires reversal either because it constitutes a fatal variance from the in- dictment, Stirone v. U.S. supra,“ or, if ‘‘use’’ properly in- cludes ‘‘issuance’’, because Petitioner was not a member of the conspiracy at the time the circulars were issued,** and accordingly could not be convicted under the derivative lia- bility of Pinkerton. U.S. v. Cantone, 426 F.2d 902, 904 (2d Cir., 1970).** See Levine v. U.S. 383 U.S. 265, 266-67 (1966) (per curiam).** B. The Court of Appeals. In an apparent attempt to avoid both the argument above and Aloi’s argument that the offering circulars were *? The entire charge, at p. 11, fn. 28, supra, employs the term “issued” or issuance four times; “use” or “using” never appear. ** Petitioner believes that the trial judge charged the narrower “jssauance” rather than “use” because the record could support no prin filed, es containing them sat, apparently forever, on the couch in Hellerman’s office, never to be seen again (T 2780, 2782) and see infra. not ** Stirone, of course, holds that a jury may find guilt on a theory which the grand jury did not *® The offering circular was filed on i 8, 1 ernment’s own theory, Petitioner did not enter the until some time in June of 1970. ** Accord: U.S. v. Knipperbeng, 502 F.2d 1056, 1059-60 (7th Cir., 1974); U.S. v. Roberts, 416 F.2d 1215 (Sth Cir., 1965). See Developments in the Law: Criminal Conspiracy, supra at p. 924. **In Levine this Court reversed Pinkerton convictions based upon the concession of the Solicitor General that “an individual can- not be held criminally liable for substantive offenses committed by he had withdrawn the conspiracy.” To the extent that this reversal based on concession falls short of a clear holding, this Court should take this opportunity to unequivocably so hold. 16 in fact never ‘‘used.’* the Court of Appeals was forced to stretch for an entirely novel ** and unjustified construc- tion of the term ‘‘use’’. The Court wrote: To be sure, the offering circular was not used in the manner normally to be expected, namely, mailed to the prospective purchasers before sale (sic) were consummated. But having been filed with the SEC, it was the genesis of the subsequent plan to defraud, and facially at least, the existence of the filed circu- lar lent an aura of legitimacy to the scheme.® Op. at p. 28a (emphasis added). Use is thus defined for the first time as either ‘‘filed’’ or ‘‘existing.’’ The former construction is completely er- roneous under the very regulation sought to be construed © *® The purpose of an offering circular is, of course, to fully in- form prospective purchasers of all relevant facts concerning the com- pany whose stock they may buy. Accordingly, an offering circular must be filed with the SEC as a condition precedent to the granting of a “Reg. A exemption” and must be delivered prior to or at the time of sale of all exempt stock to which it pertains. 15 U.S.C. sec- tion 77(s) [17 C.F.R. section 230.256]. Petitioner argued that the offering circulars were never “used” because they were never shown or sent to prospective customers or buyers. See fn. 43 supra. The government based its argument solely on supposed inferences that the circulars were in fact mailed, but the Court of A f agreed with Petitioner that no such inferences could be drawn from the record. Op. p. 28a fn. 9. *® The Court’s opinion in the Petition for Rehearing tacitly rec- ognizes this, referring to “the broad definition of ‘use’ we have pre- viously approved” p. 2a. °° This statement represents a rather fanciful leap. To whom was the “aura of legitimacy” lent by the offering circulars? Since no one but a few of the conspirators ever saw , it is hard to imagine who the Court of Appeals had in mind. 5! The regulation whose violation is specifically em- ploys the terms “prepared,” “filed” and “used” separately; clearly the latter may not, in an immediately succeeding sentence, subsume 17 and the latter definition not only offends all notions of common sense and usage, but, if seriously adopted, would cause the crime to be invalidated either as unconstitution- ally vague or as a prohibited ex post facto offense. Finally, the conviction for ‘‘use’’ so construed is in- valid under the well settled principle that a jury may only constitutionally find ‘‘guilt where the proof adduced ana the basis on which it was submitted were sufficient to sup- port the verdict’? Nye & Nissen, supra.®? This Court should grant certiori to clearly disavow ™ a statutory construction so dangerous and unprecedented. POINT III Rule 30 does not bar review. The Court of Appeals attempted to sidestep reversal on the issue of failure to charge an essential element of the all the former. The regulation reads as follows: “(e) If the offer- ing is not completed withi nine months from the date of the offering circular, a revised offering circular shall be prepared, filed and used in accordance with these rules as for an original offering circular, ex t that in the case of offering under stock purchase, savings, stock option or other similar plans for the benefit of loyees, if the offering is not completed within 12 months from the of the offering circular, a revised offering circular shall be prepared, filed and used in accordance with these rules as for an original circular. *? See also U.S. v. Bollenbach, 326 U.S. 607, 613-615 (1946 where this Court chastised the Court of Appeals because it “.. . evi- stan tie ke yes — ao in charge’ only on its as- sump e t convicted on another theory Id. p. 610 a . 5* Obviously this is required to give guidance not lower courts, but to law enforcement. ond poccseution offictals ~~ may otherwise act on supposition that crime legislatively come into existence. — — 18 crime and, to some extent the ‘‘use’’ issue by apparent ** r“ance on Rule 30 of the Federal Rules of Criminal Pro- cedure. There are at least two reasons why this is not the case; a decision by this Court on either would constitute an ex- tremely important and useful exegesis of the otherwise generally ignored provisions of Rule 30. A. Plain error. Rule 52 requires reversal of a conviction based on ‘‘ plain error’’ even in the absence of objection. At least two Circuits ** have held that the failure to charge an essential element of the crime constitutes such 5* The Court's discussion and disposition of all issues raised as to the charge is rather confused, see op. at p. 18a, but the reference to plain error in the opinion on petition for rehearing supports this understanding. 55 Rule 30, in its entirety, reads as follows: At the close of the evidence or at such earlier time during the trial as the court reasonably directs, any party may file ten requests that the court instruct the jury on the as ao 2 oe. At the same time copies of such shall be furnished to adverse parties. The court shall inf counsel of its proposed action upon the requests prior to arguments to the jury, but the court shall instruct the the arguments are completed. No party may assign as portion of the charge or omission therefrom he thereto before the jury retires to consider its verdict, distinctly the matter to which he objects and the grou objection. Opportunity shall be given to make the objecti of the hearing of the jury and, on request of any the presence of the jury. °° With the rather aberrant exception of the instant case, this is clearly the rule in the Second Circuit, e.g. U.S. v. Howard, 506 F.2d F.2d to 1131 (2d Cir., 1974). Accord Findley v. United States, 362 92 (10th Cir., 1966). In the Second Circuit, in fact, the fai charge an essential element is deemed so serious that it requires reversal even where the parties have not raised the issue on ‘ U.S. v. Houle, 490 F.2d 167, 171-72 fn. 10 (2d Cir., 1973). £5 5 eh38 3 : i zs i ry 4 d 19 ‘plain error’. As wilfulness was such an essential ele- ment, see I, supra, this Court should grant certiorari and so hold. B. Under Rule 30, waiver cannot be found where an appropriate request to charge was made. Eleven days prior to conclusion of the trial, the judge passed around a charge in another securities case to give counsel ‘‘the gist of how [he] handled it.’’*” Subsequent to this, both sides submitted requests to charge on various issues. The government, tracking the statutory language, specifically requested a charge on wil- fulness for Count 18,°* and the defendants, who opposed a number of the government’s requests, did not object. After these requests were made, in fact, the judge indi- cated that he basically agreed with the government on the law, but when the charge was finally given, no mention of wilfulness was made. *? This occurred rather casually at a morning conference in chambers at which a number of other matters were being discussed. Counsel were not given copies to take and read at leisure, nor as the judge stated, was the same charge to be given—. “It is just my approach I am showing you.” T3657 5® The government’s request was as follows: REQUEST NO. 24 Elements of Count 18 Count 18 charges as follows: Please read Count 18 The relevant statute is violated if the government has proven the following elements beyond a reasonable doubt. First: That a defendant, tor or other i - nection with the offer or sale of a security, used an offering circular which was false and misleading in light of the circumstances then Second: That the defendant under consideration the jury, did so wilfully and knowingly or caused others to do s0 wilfully on, knowingly. iN 20 Petitioner has argued that once an appropriate request to charge is made, a defendant may rely on that request regardless of who submitted it®* and that subsequent failure to object should not constitute a waiver. This is particularly true where, as here, the judge did not inform counsel, as required by Rule 30, that the request on Count 18 would not be honored.” In our reading of Rule 30, this fact is most significant. The purpose of the rule is to give counsel an opportunity to tell a trial judge what they want, and for him to inform them, prior to giving his charge, what they will get. At the completion of the charge, having been alerted to what has been omitted,®? counsel must determine whether to object. Where the judge does not inform the parties that he refuses to charge as they have requested, they should not, pursuant to the statutory scheme, be deemed to have waived the ‘‘ob- jection’’ presented in their proposed charges. This Court should grant certiorari to decide this previ- ously undetermined issue. 5° The obvious purpose of the Rule, see fn. 62 infra, would seem to make any such distinction irrelevant. 60 While this is apparently an issue of first impression, a number of such cases suggest this position since, in referring to preservation of the objection they speak in the disjunctive—i.e. the defendant waived because he neither requested nor objected. See e.g. U.S. v. Knippenberg, 502 F.2d 1056, 1061 (7th Cir., 1974). US. Vv. Bynum, 485 F.2d 490, 503 (2d Cir., 1973); Chatman v. U5S., 411 F.2d 1139 (9th Cir., 1969). , 61 The rule specifically provides that after requests have been led: “The Court shall inform counsel of its proposed action upon their requests prior to their arguments to the jury.” °2 The clear intent of the Rule’s requirement of prior judicial notification is precisely to avoid what happened here—i.e. counsel not previously alerted to omissions from the request to charge missing those omissions in the heat of trial. 21 POINT IV Petitioner was deprived of minimum requiremen due process when he was sentenced for “other poet unsupported by reliable evidence, and when the Trial C : ourt gy his request for confrontation and cross- In recent years judges,®* academics* and practicing law- yers® have increasingly pointed out that Nowhere is the incomprehensibility and inconsist- ency of our system of criminal justice more clearly revealed than in the sentencing process. Berkowitz, The Constitutional Requirements for a Written Statement of Reasons and Facts in Sup- port of the Sentencing Decision: A Due Process Pro- posal, 60 Iowa L. Rev. 205 (1974). While this Court has expanded the concept of the avail- ability of ‘‘minimum requirements of due process,”’ includ- ing confrontation and cross-examination to, inter alia wel- fare recipients, Goldberg v. Kelly, 397 U.S. 254, 269 ( 1970) holders of government connected jobs, Greene v. McElroy, 360 U. S. 474, 496 (1959), juveniles, In re Gault, 387 U.S 1 (1967), and, most recently, to parolees, M orrissey Vv. Brewer, - : (1973) e.g., Frankel, Criminal Sentences: Law Without Order, a See, e.g., Packer, The Limits of the Criminal Sanction, (1970). See, e.g., Berkowitz, infra; A.B.A. Project on Minimum Stand- ards of Criminal Justice, Sentencing (Approval Draft 1968). As another ABA report began, “Among the ironics of the law—{are] of the most striki involves a comparison of the methods nini a the methods for determining oe Oe ty 9 1 For, at sentence, “. . . the whole intricate network tection whi ent "ye = .- trial vanishes = ose way Ay raat judici iscretion. ABA Project : Standards of Criminal Justi e Rein ee p. 1 (Text Draft 1967)" PPenate Review of Sentences, 22 408 U.S. 471 (1972), and probationers, Gagnon v. Scarpelli, 411 U.S. 778 (1973) in the critical®* area of sentencing, this Court has not spoken since Williams v. New York, 337 U.S. 241 (1949). Its failure to do so has resulted in an anachron- istic island of arbitrariness and lawlessness in the midst of a system otherwise controlled by the mandates of the con- stitution. It is time for the Court to address the problem of mini- mal due process safeguards in sentencing, and this case pro- vides the perfect opportunity. A. The sentence imposed was arbitrary, capricious, and based on “misinformation of constitutional magnitude”. The necessity for the imposition of certain due process requirements is nowhere better displayed than in a situation where their absence is dispositive. In this case the Petitioner was sentenced to the un- usually®’ long term of nine years (five and four year sentences running consecutively) and, equally unusually, this sentence was to run consecutively to a state sentence of seven years. In determining the sentence, the trial judge relied not only on the traditional presentence report, but also on a ** Mempa Vv. Rhay, 389 U.S. 128, 134 (1967). *7? The likelihood of a prison sentence for securities fraud is onl 21.5% in all federal courts; in the Southern District of New Yo when a prison sentence is imposed, its average duration is one year and seven months; Whitney North Seymour Jr., 1972 Sentencing Study for the Southern District of New York, N.Y.S. Bar Journal, 163, 164-65 (April, 1973). ** Federal sentences, particularly for multiple counts based on a single criminal act or transaction, are almost invariably concurrent. See, e.g., Remarks of Professor Herbert Wechsler, Second Circuit Judicial Conference on Appellate Review of Sentence, 32 F.R.D. 249, 289 (1962) 8a Moore, Federal Practice 4 32.04 (6) at pp. 32-71, 32-73 (Cipes. ed. 1973). 23 specially prepared report and set of recommendations sub- mitted by the prosecutor at the judge’s request.** Both reports, and the prosecutor’s oral presentation, relied far less on the securities fraud of which Petitioner was con- victed than on a Godfather-like scenario in which Peti- tioner was accused of being, inter alia, ‘‘The head of the organized crime family in New York,’’ A 137, 1387 and of having authorized an open contract to murder Joey Gallo (with] the murder actually carried out by his asso- ciates. A 139-140". In surveying this mass of inflammatory and unsup- ported charges the trial judge himself stated This case in a sense poses a dilema. These are various facts about other things except what is in- volved in this case, the probation report and the sentence, in that the writer, the probation officer said if was beyond his power to separate fact from fiction *° The use of such a — itself is unusual and raises serious questions, see, e.g., U.S. v. Rosner, 485 F.2d 1213 (2d Cir. 1973), cert. den. 417 U.S. 950 (1974), U.S. v. Allsenberrie, 424 F.2d 1209 (7th Cir. 1970). Haller v. Robbins, 409 F.2d 857 (1st Cir. 1969), Moore, supra, | 32.04[3]. In any event, the submission of - Prosecutor’s recommendations—which were, not isingly, or maximum, consecutive te hicall - versary nature of the sentencin ig procedure ond Peer mens sity for protection which classically accompany such adversary pro- "® References are to the Appendix on Appeal to the Second - cuit, where the relevant sentencing minutes were reproduced. - v8 a oe, a notorious New York mobster, was murdered in 1972. one has ever been charged with, or convicted of his death. Significantly, a recent and extensive New York Times feature article, to be an inside, eyewitness account of the murder, entirely to mention Petitioner while naming many other land res in connection with the murder. Gage, Key Mafia Figure Tells of “Wars” and Gallo-Columbo Peace T. , N.Y. Times, July i\ 24 and 1 am afraid it is beyond my power, too. A 153- 54 (emphasis added) Petitioner’s lawyer, confronted by all the admitted innu- endos, character assasinations and unsupported en specifically requested a right of confrontation an cont examination (A 147-148) to demonstrate the falsity > information which was being considered against his client. The trial judge denied these requests and, clearly rely- ing in part on the F.B.1. and Prosecutor’s untested and un- supported charges,”* imposed the extraordinary sentence discussed above. B. Due process was violated by the imposition of a sentence for crimes for which Petitioner was not tried, and by denial of the right to confrontation and cross-examination. The outregeous miscarriage of justice and the misuse of the judicial process in this case could have been 4 vented in two ways, both of which, we believe, are consti- tutionally mandated. First, as a matter of due process, the information _ sidered by the trial judge could have been limited to actua crimes resulting in conviction, or, at the very least, in erimi- nal charges, rather than unsupported allegations of gen- eralized ‘criminal activity.”’ The Circuits are clearly in conflict on this issue and certiorari should be granted to resolve it. 72 The material in the presentence report and ey recommendations was almost entirely double and =. beng passed through the F.B.I. by the usual ‘unidentified . : —~ mae Gham 78 The judge clearly believed that Aloi “knew something the Galle fase pore he was “in some way involved in a killing.” A 169, 170, 171. He also apparently believed epee wy wal tA accusations about alleged death threats to witnesses => = 142), although those witnesses had earlier testified made mention whatsoever of such “threats. 25 Second, a requirement of confrontation and cross-ex- amination, when crucial and probably dispositive facts are clearly in issue, should clearly have been imposed in line with this Court’s general exegesis of minimum require- ments of due process. Both of these imperative due process considerations require the granting of certiorari, and will be discussed briefly and seriatim. (i) Consideration of ‘‘Crimes’’ Without Convictions. There is no more deeply ingrained concept of due pro- cess than that a man should not be deprived of his liberty for crimes he has not committed, and for which he has not been tried or convicted. Nevertheless, the present entirely uncireumscribed area of sentencing ‘‘discretion”’ permits this precise unthinkable occurrence to happen, as here, again and again. Relying on this Court’s 1949 decision in Williams v. New York, supra, many lower courts have permitted trial judges unbridled discretion in considering any and all material, suppe ‘ed or unsupported, about a defendant’s unrelated ‘‘criminai activity.’ As general concepts of due process and fairness have subsequently been expanded by this and other courts, the Williams decision has come under frequent attack, and commentators’* and judges” have suggested that it be limited strictly to its facts. ** See, e.g., Note: Due Process of Felony Sentencing 81 Harv. L. Rev. 821 (1968); Berkowitz, supra. *® As Judge Swygert of the Seventh Circuit recently wrote, I recognize that present authority may permit a sentencin judge to consider hearsay statements even when they relate to other criminal activity for which there has not been a conviction (citing Williams and other subsequent authorities). It should be noted, however, that in Williams the defendant did not challenge i \ 26 In the absence of recent guidance from this Court, the lower courts have grappled with the question with widely differing results. Some Circuits have refused to allow sentencing con- sideration of prior criminal acts unless there is proof of an actual, constitutionally valid conviction, ¢.g., Baker v. United States, 388 F. 2d. 931, 933-34 (4th Cir. 1965) (lay- ing down minimal standards for presentence reports). See U. S. v. Janiec, 464 F. 2d. 126, 129 (3rd Cir. 1972). Other Circuits, relying on Williams, clearly allow con- sideration of all criminal behavior, whether or not result- ing in conviction, e.g., U. S. v. Johnson, supra (7th Cir.), U. S. v. Doyle, 348 F. 2d. 715, 721 (2d Cir. 1965). Still another approach is taken by the Ninth Circuit, which has held that information about other criminal activity may not be considered unless it essentially meets a probable cause standard. U. 9. v. Weston, 448 F. 2d. 626 (9th Cir. 1971), cert. den. 404, U.S. 1061 (1972)."* Even the American Bar Association has taken a posi- tion, specifically recommending that all arrests and other the contention o> ae committed oo crimes. The specific question of use of prior arrests pending charges an ant adie Williams and I believe the case should be strictly limited to its facts. U.S. v. Johnson, 507 F. 2d 826 (7th Cir. 1974) cert. den. 95 S. Ct. 1682 (1975) ( te — ons oe ae in ). Accord, U.S. v. Weston, 448 F. 2d 626, 631, 663 ( ir. 1971). 76 The Weston rationale has been followed by other courts, ¢.g., United States v. Williams, 499 F. 2d 52, 55 (1st Cir. 1974), Nickens v. State, 34 Md. App. 284, 301 A. 2d 49 (1973) and discussed approvingly by commentators, e.g., Note, Criminal Procedure; Prob- able Cause and Due Process at Sentencing, 50 N. Car. L. Rev. 925 (1972), Note: Toward a Probable Cause Standard in Sentencing, 34 Md. L. Rev. 133 (1974). A variation in this approach is that taken by the Fifth Circuit which — vacation of sentence “based on es not su in record.” U.S. v. Looney, 501 F. 2d 1039, 1042 (Sth Cir. 1974). 27 dispositions short of judgment should be excluded from 2g cage reports. A.B.A., Project on Minimum Stand- a or Criminal Justice, Probation, p. 37 (A Draft, 1970). , — at Whatever this Court may finally determine on this issue it is clear that it is now overripe for decision, and that the uniform administration of criminal justice would best be served by granting certiorari and resolving the question once and for all. (il) The Right to Cross Examination and Confrontation. Reading together this Court’s due process prohibition on sentences based on misinformation, Townsend v. Burke, 334 U.S. 736 (1948), and its more recent determination that due process requires counsel at sentencing Mempa v. Rhay, 389 U.S. 128 (1967),"" one is compelled to the con- clusion that those safeguards deemed the ‘‘minimal require- ments of due process’’ are also required at sentencing. Indeed, this Court’s expansion of those requirements and the instances in which they are constitutionally mandated, see pp. 21-22, supra, requires such a conclusion and the accompanying disavowal of dicta in Williams v. New York to the contrary."* "' There the Court reiterated the holding of Gideon i wright, 372 _ 335 (1963), as standing for the p it +7 appointment counse! is required “at every sta a criminal proceeding where sult iantial rights of a cated command may be affected. Mempa, supra, at p. 134. It went on to hold, that “In particular, Townsend Vv. Burke, supra, illustrates the critical nature of sentencing in a criminal case... .”id. "8 In Williams, of course, the defendant never requested con- frontation or cross examination; Williams, ra, at 244 many courts and commentators have since polated a a. oe restrictive principle for which it is cited far beyond what the facts See, e.g., U. S. v. Picard, 464 F.2d. 215 219 (1st Cir. 1972), U.S. v. Trigg, 392 F.2d 860, 869 (7th Cir.). lies Williams” has changed dramatically. Note: D ; Felony Sentencing, supra at pp. 827-28. a Ona a This court’s consistent 10 year line of procedural due process cases in the area of criminal prosecution is simi- larly compelling. Since Kent v. United States, 383 U.S. 541 (1966) and In re Gault, supra, this Court has required minimum safe- guards in quasi-criminal proceedings previously character- ized as ‘‘discretionary.’’ Next, sentencing was expressly recognized as an integral part of the criminal process where counsel was required, Mempa v. Rhay, supra, and a due process hearing was re- quired at a post sentencing procedure where the defendant was subject to additional punishment. Specht v. Patterson, 386 U.S. 605 (1967). Subsequently, this Court held that sentences based upon consideration of a prior record including convictions ob- tained without a lawyer violated Townsend v. Burke, supra, and must be set aside. U.S. v. Tucker, 404 U.S. 443 (1972).” Finally, in two post-conviction situations which were expressly recognized as ‘‘not a part of the criminal prose- cution,’’ this Court extended the ‘‘minimum requirements of due process’’ including the right to confrontation and cross examination to parole and probation revocation pro- 7° In holding that a sentence possibly based on convictions ac- knowledged by the defendant but obtained without a lawyer must constitutionally be set aside, the Court in Tucker returned to the underlying rationale of Gideon v. Wainwright, 372 U.S. 335 (1963), the basic unreliability of convictions so obtained. The Court speci- fically found “quite beside the point” the question of whether the outcome of those prosecutions would have been different if the defendant had been aided by counsel, id. at p. 447-48. If considera- tion of a conviction for a crime obtained after trial but without counsel is “misinformation of constitutional magnitude,” id., p. 447, how 1 unreliable is consideration of “convictions” with no trial at all. 29 ceedings. Morrissey v. Brewer,’ supra, at p. 489, Gagnon v. Scarpelli, supra, at p. 781. There is no way to square this line of cases, particularly Morrissey v. Gagnon" with denial of the right, at sentenc- ing, to rebut allegedly incorrect or inaccurate information*? by confrontation and cross examination.** This Court should grant certiorari to correct this glar- ing anamoly and to insure that due process safeguards are available wherever constitutionally mandated. 8° In Morrissey, Justice Powell noted that revocation i parole or probation is tke a trial in thet it has “two analydcally distinct components.” The first, like the criminal trial itself, is whether the parolee has, in fact, acted in violation of one or more of the conditions of his parole. The second, analagous to sentencing, is whether the parolee should be recommitted to prison, or whether other steps should be taken. Morrissey, supra, at pp. 479-80. Sig- nificantly, he found that in requiring two hearings to determine these two —- questions, the latter must be “less summary . . . be- cause decision under consideration is the ultimate [one].” id. It is the determination of this latter dispositional issue, i.e., the second a. which requires confrontation and cross examination. id., §! This Court’s recent decision in Wolff v. McDonnell, 418 U.S. 539 (1974) is in no sense to the contrary. Unlike sentencing, prison disciplinary ———- are not “a part of the criminal prosecution,” id., p. 55. Even more significantly, Justice White distinguished Mor- rissey V. Gagnon stating . - - OMe cannot automatically apply procedural rules designed for free citizens in an open society, or for parolees or proba- tioners under only limited Testraints, to the very different situa- a ne ee eae oe. id., In the spectrum thus Grawn by the Court, the still free citizen who pousedurel geotections han Ge pascine or pockunons che han ar p or probati — parolee or p oner who has al- *? It is precisely for this purpose that the rights of confrontation and cross examination have and been applied. Greene v McElroy, supra, at pp. 496-97. 83 This is the position taken by the A.B.A., Standards to n iseee Ss my he 9 iw Soe Section 5.4 ( ao Draft, ‘ ote, Process in Felony encin Harv. L. Rev. 821, 824-25 (1968). eee, Oe — —— 30 CONCLUSION For all of the above reasons, this Court should grant a writ of certiorari to review the judgment below. Respectfully submitted, Kerstin Bootn Gien Attorney for Petitioner Vincent Alot 36 West 44th Street New York, New York 10036 (212) 869-1940 New York, New York September 2, 1975 APPENDIX UNITED STATES COURT OF APPEALS For tre Seconn Crrcvir -or Nos. 1144, 1150, 1159, 1171—-September Term, 1973. (Decided July 7, 1975.) Docket Nos. 74-1220, 74-1278 74-1614, 74-1727 -_ —— i Unitep States oF AmMEniIcA, Plaintiff-Appellee, —against— Vincent Axor, et al., Defendants-A ppellants. Before: Moore and Frinxperc, Circuit Judges, and Paumieni, District Judge.* a Ow Petition ror REHEARING Per CurtmmM: Appellants Vincent Aloi and Ralph Lombardo have urged in a petition for rehearing that the failure to charge willfulness as to Count 18 was not waived and was plain error under the Jaw of this circuit, citing, e.g., Umted States v. Howard, 506 F.2d 1131 (2d Cir. 1974), and United States v. Fields, 466 F.2d 119 (2d Cir. 1972). ° Of the United States District Court for the Southern District of New York, sitting by designation. 6093 $a However, in view of Judge Knapp’s charge to the jury, applying the principles of Pinkerton v. United States, 328 U.S. 640 (1946), and in view of the broad definition of “use” we have earlier approved, 511 F.2d at 599-600, we do not agree that there was plain error. The petition for rehearing is denied. 460—7-9-75 USCA—4147 3a UNITED STATES COURT OF APPEALS For tue Secon» Circuit tO Nos. 1144, 1150—September Term, 1973. 1159, 1171 (Argued June 24, 1974 Decided January 31, 1975.) Docket Nos. 74-1220, 74-1278 74-1614, 74-1727 i i 2 Unitep States or AMERICA, Plaintiff-A ppellee, -—against— Vincent Avo, Jonx Driocvarpt, Ratex Lomparvo and Jonx Savino, Defendants-A ppellants. Before: Moore and FEnserc, Circuit Judges, and Patmirnt,” District Judge. a Appeal by appcllants from judgments of conviction of conspiracy to violate certain securities laws (all appel- lants), of use of a false and misleading offering circular (all appellants), and of wire fraud (Appellants Aloi, Dio- guardi and Lombardo) entered after a jury trial in the United States District Court for the Southern District of New York, Hon. Whitman Knapp, Judge. © Of the Southern District of New York, sitting by designation. 6057 4a Affirmed as to Appellants Aloi, Dioguardi, and Lom- bardo and reversed as to Appellant Savino. —— ——_ -—~+e > Kristen Bootn Guen, New York, N.Y. (Michael Ratner, of Counsel), for Appellant Aloi. GretcHeN Wuite Osperman, New York, N.Y. (Jay Goldberg, of Counsel), for Appellant Dioguardi. Jory A. Brenner, Mineola, N.Y. (Gustave H. Newman, New York, N.Y., of Counsel), for Appellant Lombardo. Geratp L. Smarcer, New York, N.Y. (La Rossa, Shargel & Fischetti, of Counsel), for Ap- pellant Savino. Bancrort Litrieririp, Jr., Assistant United States Attorney (I’aul J. Curran, United States Attorney for the Southern District of New York, Alan R. Kaufman, T. Gor- man Reilly, Peter I. Truebner, Daniel Beller, S. Andrew Schaffer, Assistant United States Attorneys, of Counsel), for Appellee. +e. Moorg, Circuit Judge: Vincent Aloi, John Dioguardi, Ralph Lombardo and John J. Savino were convicted under Count 1 of conspiracy to violate federal securities laws. 15 U.S.C. $§ 77q(a), 77s(a), 77x, 17 C.F.R. §§ 230.256 and 240.10b-5, 18 U.S.C. $§ 371, 372. All four were also convicted under Count 18 of use of a false and misleading offering circular. Aloi (Count 10), and Dioguardi and Lombardo (Count 9) were con- victed of wire fraud. All defendants appeal. For the 6058 5a reasons hereinafter stated, we affirm the convictions of Aloi, Dioguardi and Lombardo and reverse the convictions of Savino. The various appellants raise so many points of alleged reversible error, the separate points of each being in- corporated by reference by the others, that some initial general analysis and sifting of the facts must be made. The main charge, Count 1, alleges a conspiracy, the ob- ject of which was unlawfully, wilfully and knowing!y to offer and to sell to the public common stock of a com- pany, At-Your-Service Leasing Vorp. (AYSL), which was in a weak financial condition and consistently operated at a loss. The original purpose of the financing was to raise money for AYSL to enable it to pay off loans on which certain of the defendants who owned AYSL were person- ally obligated and to raise additional funds to carry on the business. A conspiracy of this nature resembles a mosaic or a jig-saw puzzle. The picture consists of a myriad of in- dividual pieces which when placed together reveal the ul- timate image. Many artisans are frequently required, each contributing his segment. Despite the number of separate participants, it is one picture. And so here. An effort will be made sketchily to portray the part each ap- pellant-conspirator and certain co-conspirators played. At all relevant times, AYSL was an automobile leasing corporation doing business in West New York, New Jer- sey. Its owners and managers were defendants Sanford L. Price, Arthur Ferdinand, Murray A. Handler, J. Jack Ganek, and Edmund Graifer.' Defendants Andrew Nelson’ and Gerald Miller’ conducted business as Tech-Ec Systems 1 Price, Ferdinand, Handler and Ganek were also certified public accoun- tante. They were indicted but their trial was severed. 2 Nelson was indicted and pleaded guilty. 3 Miller pleaded guilty. 6059 6a (financial consultants). Miller was also an attorney. In and subsequent to July 1969, Nelson, a financial con- sultant (Tech-Ee) agreed with the principals of AYSL to arrange an AYSL stock issue for a $20,000 fee. The issue was to be an unregistered exempt (Regulation A) issue of 100,000 shares at $3 a share, 50,000 shares of which had to be sold within 90 days of the SEC effective date, April 8, 1970, or the subscribed money refunded. An offering circular was prepared by Nelson and Miller dated as of April 8, 1970. Apparently a broker-dealer, TDA Securities, Inc., whose principals were defendants Gilbert C. Dragani, Donald Fisher and Louis Nova,‘ was ostensibly supposed to be the underwriter. The offering circular was most explicit. In bold type on the first page it stated: “TuHese Soares Invotve a Hicu Decree or Risk.” Under “Risk Factors to be Considered,” were listed seven- teen factors, any one of which should have deterred a prospective purchaser from buying the stock. And until the conspiracy commenced, no one ‘id. To summarize briefly, at this point there was an offering circular under which $300,000, less proper expenses, could potentially be obtained from the public. Graifer’s and AYSL’s financial conditions were such that they needed money by fair means or foul. Fair means having failed, they chose to investigate the possibilities of the other alternative. There being no AYSL stock sales, Graifer as an owner and manager was called upon by his associates to remedy the situation. From this point on, the pieces of the mosaic began to be filled in rapidly. Graifer had a friend, Ralph Lombardo, and another friend in Florida, Sebastian Aloi,‘ 4 | Dragani, Fisher and Nova were indicted and pleaded guilty. 5 Sebastian Aloi, originally indieted, was severed for health reasons prior to trial. 6060 ——_ 7a father of Vincent Aloi.* Graifer and Lombardo went to Florida to consult with Sebastian. Sebastian instructed Lombardo to get in touch with a Michael Hellerman, a well-known stock swindler, to sce if he could put the sale across. Hellerman was associated with defendant John Dioguardi, who owned a percentage of Hellerman’s profits. Thereafter, Lombardo, to whom Hellerman owed $10,000 on a loan, approached Hellerman, who agreed, after seeing the offering circular, to sell 50,000 shares provided he re- ceived a secret kickhack of $45,000, “under the table”, half of which, he said, had to be paid immediately in order to bribe brokers to tout the stock. Lombardo and Hellerman then proceeded to Dioguardi’s office to obtain Dioguardi’s approval of Hellerman’s par- ticipation therein, which was granted. Lombardo, Heller- man and Dioguardi then telephoned Sebastian in Florida and informed him of the terms. Thus, there was a guar- antee by Sebastian of Graifer’s performance and by Dio- guardi of Hellerman’s. About the middle of June, because Graifer was unable or unwilling to pay the required $22,500, Lombardo pro- duced and delivered $22,500 (half of the $45,000) to Dio- guardi’s office." By July 7th, the expiry date for the sale of the 50,000 shares, Hellerman, despite his previous suc- cesses, had failed to cause the stock to be sold. Accord- ingly, Dioguardi returned the $22,500 to Lombardo. Somewhat collateral to the stock sale but definitely re- lated thereto was an incident which brought three addi- tional defendants into the picture, Pasquale Fusco,’ John 6 Because of the two Alois, first »ames will be used to identify them. 7 Details of delivery of $22,500 to « defendant Ira Schultz in an abor- tive attempt to induce him to try to sel] the stock and the return of $22,000 thereof are omitted. 8 Fusco became il] during the trial and was severed. 6061 8a Savino and Vincent Aloi, Sebastian’s son. Hellerman in a previous unsuccessful stock deal had lost $10,000 belong- ing to Fusco and Savino. They were apparently withoat power to obtain its return without the aid of Dioguardi. Fusco and Savino were friends of Vincent and through an Aloi-Dioguardi arrangement, Hellerman was to pay the $10,000 when financially able to do it. When Fusco and Savino learned that Hellerman was going to receive $45,000 without making any provision to pay them, Fusco said that he would see Vincent to obtain his aid in getting their money back. This development temporarily halted any efforts to sell AYSL stock but Graifer, who was most se- riously affected by the stoppage, again went to Florida, saw Sebastian and explained the difficulty. Sebastian told him not to worry, telephoned his son, Vincent, and al- though he spoke to Vincent in Italian, immediately there- after told Graifer in English that everything would be straightened out and that Hellerman and the stock deal would be reinstated. Hellerman was informed by Dioguardi that he could continue with his scheme but that Vincent had specified some variation in the former terms. Out of Hel- lerman’s $45,000, Fusco and Savino were to receive $10,000, Hellerman was to repay Lombardo the $10,000 loan and Dioguardi was to receive the $25,000 balance. Despite the passing of July 7th, the expiry date for the legal sale of the stock, money camie in from sales effected by Hellerman and his henchmen, namely, brokers engaged by him. On July 28, 1970, some three wecks after the legal expiry date, a purported “closing” under Hellerman’s supervision took place. Present were Lombardo, Hellerman, Graifer, Ferdinand (a principal of AYSL), Nelson and Winter (Hellerman’s attorney). Hellerman produced $150,000 in ‘checks (50,000 shares at $3 a share), some bogus and some 6062 9a not honored. Hellerman arranged to have TDA backdate its records to July 7th to give an appearance of legality. Subsequently these checks to the extent of $127,500 became good. In August 1970 Graifer, from the proceeds, delivered the $45,000 to Lombardo. Lombardo passed it on to Dioguardi. Dioguardi then gave $20,000 of this sum to Vincent who then distributed $10,000 to Fusco and Savino and $10,000 to Lombardo. The remaining $25,000 Dioguardi used to repay that amount on an indebtedness owed by him and Hellerman. This manner of this distribution was there- after confirmed, each to the other, including Graifer. Concerning activities after these events, it is sufficient to say that Hellerman, consistent with his reputed skill in this sort of activity, then conducted a series of spurious manipulations in the AYSL stock and reported them at least to Graifer and Lombardo. Again to summarize, what had started as an effort to raise money for AYSL had been taken over by Hellerman, Lombardo, Vincent Aloi and Dioguardi as a scheme to obtain money from the public via the sale of AYSL stock for their own use and purpose without disclosure of this fact to the purchasers. Before embarking on a more detailed analysis of the many points raised by appellants’ counsel, some comment upon the trial must be made based upon an appellate per- spective as obtained from the record. The trial lasted for over eight weeks. The transcript was almost 6000 pages, of which hundreds of pages were devoted to colloquy be- tween court and counsel. The four appellants were repre- sented by experienced defense lawyers whose seizure of every opportunity technical and otherwise on behalf of their clients in aid of their defense bespeaks the adequacy te 10a of their representation. Scores of motions for a mistrial are sprinkled throughout the reeord. Fundamentally the case resolved itself into a question of witness credibility. The government’s principal wit- nesses were Graifer and Hellerman. heir criminal ree- ords were well known. Following usual trial strategy techniyue, the government on its