Opposition — Natelli v. United States

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JULI 1977

No. 76-1491

In the Supreme Court of the United States

OCTOBER TERM, 1977

ANTHONY M. NATELLI, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

Wave H. McCree, Jr.,

Solicitor General,

BENJAMIN R. CIVILETTI,

Assistant Attorney General,

JEROME M. Fei!ty

Joseru S. Davies, JR.,

Attorneys,

Department of Justice,

Washington, D.C. 20530.

INDEX

Page

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ESET a ee a

STTUTEEIIIIND dccibunsseicizecstennsnsuntusemmesesstensestesscstess 2

SITTIN, ‘Wicllisslidicdlitsjeameaitdanenadapneempemntesnenegmtennnstietegmegesscess 2

FRET cecccs -ccncccececncceccssccssencsescscnssquscsocssevesscssccococscooess 6

ee 10

CITATIONS

Cases:

Blackledge v. Allison, No. 75-1693, decided

IND MGHETY ctetsonsnmmmeccendinnesesmnencdnetpetnestesscescccsoese 10

Davis v. United States, 417 U.S. 333 coccccccccees 7

Donnelly v. De Christoforo, 416 U.S. 637 «0.0... 10

Egger v. United States, 509 F. 2d 745, cer-

tiorari demied, 423 U.S. B42 oo....cccccccccccceeeeeeeeeeees 7

Fontaine v. United States, 411 U.S. 213 .......... 8, 10

Hill v. United States, 368 U.S. 424 oo.ccccccccccccccceeeees 7

Jack v. United States, 435. F. 2d 317, cer-

tiorari denied, 402 U.S. 933 ..........cccccccceeeeeeeeeeeees x

Kaufman v. United States, 394 U.S. 217 .....c66000 6

Laughlin v. United States, 474 F. 2d 444, cer-

tiorari demied, 412 U.S. 94D occ cccccccccccceeeeceeeeees x

Machibroda v. United States, 368 U.S. 487 .......... 10

Mevers v. United States, 446 F.2d 37 coc cccccccccceeeees 7

ES 9

il

Cases Continued:

Sanders v. United States, 373 U.S. cocccccccccccoceceeeee 6

Scott v. United States, 545 F. 2d 1116, cer-

tiorari denied, No. 76-6073, February 22,

RE I Ak FORE Be, - NE, NO ee Le eae 7

Stephan v. United States, 496 F. 2d 527, cer-

tiorari denied sub nom. Marchesani v.

United States, 423 U.S. B60 ooo... cece cccccccccceceeceees 7

Stephens v. United States, 341 F. 2d 100 ......00....... 8

Tannehill v. Fitzharris, 451 F. 2d 1322 ........ccccc0c. x

Ugarte-Veizaga v. United States, 452 F.

Sa LS ee se 7

United States v. Granello, 403 F. 2d 337, cer-

tiorari denied, 393 U.S. 1095 ooo. cccec eee 7

United States v. Osborn, 415 F. 2d 1021, cer-

tiorari denied, 396 U.S. IOUS oo ccccccceeeeees 6

Vachon v. New Hampshire, 414 U.S. 478 .............. 7

Statutes and rule:

Securities Exchange Act of 1934, Section

32(a), 48 Stat. 904, as amended, 15 U.S.C.

PRR eect er et a a 2

i ER a tr 2, 6, 7, 8, 10

Federal Rules of Criminal Procedure, Rule 33 .. 2, 6

In the Supreme Court of the Mnited States

OctToper Term, 1977

No. 76-1491

ANTHONY M. NATELLI, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. A) is

reported at 553 F. 2d 5. The opinion of the district court

(Pet. App. C) is not yet reported. The opinion of the court of

appeals on direct appeal (Pet. App. D) is reported at 527 F.

2d 311.

JURISDICTION

The judgment of the court of appeals (Pet. App. B) was

entered on March 28, 1977. The petition for a writ of

certiorari was filed on April 27, 1977. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

(1)

2

QUES7IONS PRESENTED

1. Whether the court of appeals erred in denying

petitioner’s motion to vacate his sentence under 28 U.S.C.

2255 by relying in part on the fact that it had considered and

rejected the same claims on direct appeal.

2. Whether, in the circumstances of this case, the district

court properly denied petitioner's claims without an

evidentiary hearing.

STATEMENT.

After a jury trial in the United States District Court for

the Southern District of New York, petitioner was convicted

of willfully and knowingly making and causing to be made

false and misleading statements with respect to material

facts in a proxy statement required to be filed with the

Securities and Exchange Commission, in violation of

Section 32(a) of the Securities Exchange Act of 1934, 48

Stat. 904, as amended, 15 U.S.C. 78ff(a). He was sentenced

to serve 60 days of a one year term of imprisonment, the

‘balance to be served on probation, and was fined $10,000

(Pet. App. 3d). The court of appeals affirmed (Pet. App. D),

and this Court denied certiorari (425 U.S. 934).

1. On April 23, 1976, petitioner filed a motion to vacate

his sentence under 28 U.S.C. 2255 and for a new trial, pur-

suant to Rule 33, Fed. R. Crim. P., alleging that (1) the

government had failed to prove the falsity of the proxy

statement he was convicted of filing and (2) the prosecutor

had presented an “erroneous version” of the facts in his

summation to the jury. The background of these claims is as

follows: Petitioner, a certified public accountant and a

partner in the accounting firm of Peat, Marwick, Mitchell &

Company (“Peat”), was the engagement partner for Peat's

audits of the financial statements of National Student

Marketing Corporation (“NSMC”). In that capacity he

helped prepare a proxy statement filed by NSMC with the

3

Securities and Exchange Commission in connection with a

special meeting of NSMC stockholders that was held in the

fall of 1969 to consider issuing additional shares of common

stock and approving proposed mergers with other com-

panies. Included in the proxy statement were unaudited

financial statements for the first nine months of NSMC’'s

fiscal year 1969. The statements as prepared by NSMC

reflected an unbilled sale to the Pontiac Division of General

Motors in the amount of $1.2 million. Petitioner had

indicated that he might not permit the Pontiac sale to

remain on the books unless additional information were

provided to show that there was a firm commitment (Tr.

653, 672; Natelli Exh. H).'

Petitioner, other Peat employees, and NSMC officials

gathered in New York on the night of August 14, 1969, at the

Pandick Press, which was to print the proxy statement the

next day. At about 3:00 a.m. on August 15, petitioner told

NSMC’s president, Cortes Randell, that the Pontiac sale

could not be included in the nine-month earnings statement.

Randell responded that NSMC had an unbooked but firm

commitment from Eastern Airlines ina comparable amount

attributable to the same nine-month period (which had

ended more than two months earlier). An NSMC salesman

arrived at the printing plant several hours later with a letter

from Eastern Airlines dated August 14, 1969, purporting to

'Transcript and exhibit references are to the record of petitioner's

trial.

The Pontiac sale had been booked as of February 28, 1969, the close

of the first six months of NSMC’s fiscal year 1969, although the letter

purporting to evidence the sale was dated April 28, 1969, two months

after the close of that period, and stated only that Pontiac was then

“planning to implement * * * [NSMC] proposals that would result in

gross billings of $1,200,000" (Govt. Exh. 12). The booking of the

Pontiac sale occurred at approximately the same time as the write-off of

$1 million of 1968 sales.

4

confirm an $820,000 oral commitment ostensibly made on

May 14, 1969, two weeks before the end of the nine-month

period (Pet. App. 10d-11d). On direct appeal the court of

appeals characterized this event as follows (id. at |15d-16d;

footnote omitted):

The Eastern contract was a matter for deep sus-

picion because it was substituted so rapidly for the

Pontiac contract to which Natelli had objected, and

which had, itself, been produced after the end of the

fiscal period, though dated earlier. It was still another

unbilled commitment produced by [NSMC] long after

the close of the fiscal period. Its spectacular

appearance, as Natelli himself noted at the time, made

its replacement of the Pontiac contract “weird.” The

Eastern “commitment” was not only in substitution for

the challenged Pontiac “commitment” but strangely

close enough in amount to leave the projected earnings

figures for the proxy statement relatively intact.

{[NSMC] had only time logs of a salesman relating to

the making of the proposals but no record of

expenditures on the Eastern “commitment,” no record

of having ever billed Eastern for services on this “sale,”

and not one scrap of paper from Eastern other than the

suddenly-produced letter. * * *

Petitioner concluded that the purported Eastern com-

mitment should be booked. “When the proxy statement was

printed in final form, the Pontiac ‘sale’ had been deleted

[from the nine-months’ earnings statement], but the Eastern

‘commitment’ had been inserted in its place” (Pet. App.

11d).

The proxy statement, as filed with the Securities and

Exchange Commission on September 30, 1969, reflected,

for the nine-month period ending May 31, 1969, con-

solidated net earnings of approximately $700,000 (Govt.

Exh. 25, p. 21). As the court of appeals stated, “{a] true

5

disclosure, which was not made, would have shown that

without these unbilled receivables, [NSMC] had no profit in

the first nine months of [fiscal] 1969" (Pet. App. 11d).

2. In his motions for post-conviction relief, petitioner

alleged that the government had failed to prove the falsity of

the Eastern commitment and had presented an “erroneous

version” of the facts to the jury by arguing that one of the

indications that the commitment was false was its sudden

production at 3:00 a.m. at the Pandick Press. Petitioner

based the latter claim on the fact that Randell, NSMC's

president at the time of the proxy statement, had

subsequently testified as a government witness in criminal

proceedings against Thomas Mullen, an executive of

Eastern Airlines, that NSMC had made a proposal to

Eastern prior to the end of May 1969 and that Mullen,

having expressed a desire to proceed with the program,

followed up with the letter upon which petitioner allegedly

relied. Petitioner contended that, in view of Randell’s

testimony at Mullen’s trial, which occurred |! months after

petitioner had been found guilty, the government must have

known the facts and must therefore have deliberately

misstated that the commitment letter was “phony”.

3. The district court denied petitioner's motions without

holding an evidentiary hearing. It concluded that peti-

tioner’s claim that the government had failed to prove the

falsity of the proxy statement had been rejected on direct

appeal and that “[f}rom a review of the evidence in this area,

the argument has not gained merit in the ensuing months”

(Pet. App. 4c). It also found that Randell’s testimony at

Mullen’s trial, which petitioner relied on to support his

assertion that the prosecutor had knowingly misstated the

record, did not amount to “newly discovered evidence”

6

within the meaning of Rule 33, Fed. R. Crim. P., and did not

even contradict the statements made during the

government's summation at petitioner's trial (id. at 3c). The

court of appeals affirmed (Pet. App. A).

ARGUMENT

1. Petitioner contends (Pet. 14-21) that, in rejecting the

claim in his Section 2255 motion that the evidence of the

falsity of the Eastern contract was insufficient, the court of

appeals erred in relying on its previous determination of the

identical contention on direct appeal. Petitioner asserts that

this approach violates the Court's holding in Sanders v.

United States, 373 U.S. |, that the doctrine of res judicata is

inapplicable to collateral attacks on a conviction and that

on collateral review “controlling weight” should be given to

a claim that has previously been denied only if the ends of

justice would not be served by reaching the merits of the

subsequent application. /d. at 7-8, 15.

Contrary to petitioner's contentions, the decision below

fully accords with settled principles of review under Section

_ 2255. As the Court observed in Kaufman v. United States,

394 U.S. 217, 227 n. 8, “where the trial or appellate court has

had a ‘say’ on a federal prisoner's claim, it may be open to

the §2255 court to determine that on the basis of the motion,

files, and records, ‘the prisoner is entitled to no relief.’ ” This

is precisely the course followed by the lower courts here.

Notwithstanding petitioner's assertions, those courts did

not view their earlier decisions as having conclusively barred

relitigation of petitioner's contention; rather, each court

determined, after a review of the record, that petitioner had

failed to submit any reasons warranting a different result.’

> We note moreover. that petitioner's challenge to the sufficiency of

the evidence is not cognizable on collateral attack. See, ¢.g.. United

States v. Osborn, 415 F. 2d 1021, 1023 (C_A 6) (en banc), certiorari

denied. 396 U.S. 1015. The court of appeals’ decision affirming

7

Thus, the district court re}_cted petitioner's claim only after

concluding that “{f}rom a review of the evidence in this area,

the argument has not gained merit in the ensuing months”

(Pet. App. 4c), while the court of appeals rejected the claim

in reliance upon its decisions in Meyers v. United States, 446

F. 2d 37, 38 (C.A. 2), and United States v. Granello, 403 F.

2d 337, 338(C.A. 2), certiorari denied, 393 U.S. 1095, which

held that “compelling reasons” or “extraordinary cir-

cumstances” must be present to justify reconsideration of an

issue already determined on appeal. See also Scott v. United

States, 545 F. 2d 1116, 1117 (C.A.8), certiorari denied, No.

76-6073, February 22, 1977; Egger v. United States, 509 F.

2d 745, 748 (C.A. 9), certiorari denied, 423 U.S. 842;

Stephan v. United States, 496 F. 2d 527, 529 (C.A. 6),

certiorari denied sub nom. Marchesani v. United States, 423

U.S. 861; Ugarte-Veizaga v. United States, 452 F.2d 1194,

1195 (C.A. 5)?

petitioner's conviction convincingly demonstrates that this ts not a case

in which the record is devoid of “any relevant evidence as to a critical

clement of the offense charged.” Vachon v. New Hampshire, 414 U.S.

478, 480. The absence of “any relevant evidence” presumably would

elevate an insufficiency claim into a constitutional claim rooted in

the Due Process Clause, materially affecting access to collateral re-

view. ‘

*Since the court of appeals did not conclude that it was barred by res

judicata from reconsidering petitioner's sufficiency of the evidence

claim, petitioner's allegation of a conflict with the decisions of this Court

‘and of other circuits is insubstantial. In Davis v. United States, 417 US.

333, the Court did not suggest that on collateral attack a court must

always give plenary consideration to a claim that had been fully

considered and rejected on direct appeal. To the contrary, Devis

concerned “the availability of collateral relief from a federal criminal

conviction based upon an intervening change in substantive law” ‘id at

334). Indeed. in holding that collateral relief was available in that

situation. the Court relied on its statement in Hill v. United States. 368

U.S. 424, 428. that relief under Section 2255 was limited to “exceptional

circumstances where the need for the remedy afforded by the writ of

habeas corpus is apparent.” Similarly. each of the other cases on which

petitioner rehes expressly recognized that the courts of appeals need not

2. Petitioner contends (Pet. 21-27) that the district court

erred in failing to hold an evidentiary hearing to determine

whether Randell’s subsequent testrmony at the Mullen trials

showed that the government's characterization of the

Eastern Airlines commitment as “phony” in its opening and

closing arguments at petitioner's trial was a misrepresenta-

tion. An evidentiary hearing is not required under 28

U.S.C. 2255, however, if the files and records in a case

sufficiently show that the motion to vacate sentence is

without merit. Fontaine v. United States, 411 U.S. 213, 215.

The court of appeals correctly concluded that the files and

records showed that petitioner was not entitled to collateral

relief (Pet. App. Sa-6a):

[Randell] was an admitted swindler and briber who

was a hostile witness in the subsequent proceedings. As

we have indicated, he was never called to corroborate

the defense’s version at Natelli’s trial. His later

admissions, if anything, fortify the position of the

government that the Eastern commitment was in fact

totally fraudulent. It was produced by reason of bribes

to Mullen and was accompanied by a “side agreement”

consider under Section 2255 a claim that had been rejected on direct

appeal unless the ends of justice so required. See Laughlin v. United

States, 474 F. 2d 444, 452 (C.A. D.C.), certiorari denied, 412 U.S. 941,

Jack v. United States, 435 F. 2d 317, 319 (C.A. 9), certiorari denied, 402

U.S. 933; Tannehill v. Fitzharris, 451 F. 2d 1322, 1324 (C.A. 9),

Stephens v. United States, 341 F. 2d 100, 101 (C.A. 10).

‘Petitioner presented this claim in his petition for a writ of certiorari

after the affirmance of his conviction. In our brief in opposition to that

petition (p. 30), we observed that since petitioner had not raised this

argument in the lower courts, “[t}he proper procedure ts for petitioner to

his contentions to the district court in a motion for a new trial

under Rule 33, Fed. R. Crim. P., or a motion to vacate his sentence

under 28 U.S.C. 2255.” This statement, of course, did not indicate that

the government believed petitioner's claim to be meritorious or to

require an evidentiary hearing.

9

permitting Eastern to cancel on 30 days notice prior to

December 31, 1969. Randell in fact pleaded guilty to

conspiracy and fraud prior to Natelli’s trial and, as the

court found below, the transcripts of the allocutions of

Randell and Kelly (a co-defendant) were available to

Natelli on trial. These transcripts disclosed the

existence of the “side agreement,” making Natelli’s

argument that both he and his jury were unaware of this

possible flaw in the Eastern commitment ring hollow.

There is no claim here of suppression of evidence by the

government or perjury by government witnesses. Upon

analysis, Natelli’s argument is reduced to the claim that

he is entitled to a new trial to produce the testimony of

Randell which in our view is at best questionable, was

previously available and in any event would not be of

any significant assistance to Natelli.

Although petitioner asserts that government counsel may

have made several misleading statements to the jury in his

closing argument, the district court found that “{n]o real

contradictions appear” between the prosecutor's summa-

tion and Randell’s testimony | | months later (Pet. App. 3c).

Furthermore, it is abundantly clear —and petitioner does

not dispute— that the summation accurately reflected the

proof adduced at petitioner's trial.’ The government's

closing argument was therefore unlike that condemned in

Miller v. Pate, 386 U.S. 1, and was well within permissible

5A detailed outline of the evidence at trial supporting the govern-

ment's version of the facts argued to the jury concerning the Eastern

commitment is presented at pp. 61-96 of the government's brief in the

court of appeals, a copy of which we are lodging with the Clerk of this

Court.

10

bounds. See Donnelly v. DeChristoforo, 416 U.S. 637, 646-

648.°

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

Wape H. McCree, Jr.,

Solicitor General.

BENJAMIN R. CIVILETTI,

Assistant Attorney General.

Jerome M. Feit,

Joseru S. Davies, JR.,

Attorneys.

Jury 1977.

*Fontaine v. United States, 411 U.S. 213, Machibroda v. United

States, 368 U.S. 487, and Blackledge v. Allison, No. 75-1693, decided

May 2, 1977, upon which petitioner relies (Pet. 26), each involved de-

tailed factual allegations, not rebutted by the record, that a guilty plea

had been unconstitutionally induced —allegations that could only be

resolved after an evidentiary hearing and that, if correct, would

unquestionably have entitled the defendant to relief under Section 2255.

By contrast, an evidentiary hearing was unnecessary here because the

voluminous record contained an adequate basis for the district court to

determine whether petitioner's allegations were accurate and, if so,

whether they would warrant collateral relief from his conviction.