Petition — Carr v. United States

; rene Court, U, S.

FILED |

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IN THE t

Supreme Court of the Anited States

OCTOBER TERM, 1977

No. 2271232

LARRY A. CARR,

Petitioner,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

NINTH CIRCUIT

AMOS & CURNOW

By: E. MAC AMOS, JR.

600 “B” Street, Suite 1550

San Diego, California 92101

Telephone: (714) 231-8051

Attorneys for Petitioner

INTERIM PYINTING & MAILING COMPANY

1105 WEST MORENA BOULEVARD, SAN DIEGO. CALIFORNIA 92110 — 275-3050

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TABLE OF CONTENTS

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QUESTIONS PRESENTED FOR REVIEW

STATEMENT OF ESSENTIAL FACTS ...

A. PROPRIETARY INTEREST-GRAND

JURY SUBPOENAS .................

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Copy of

Copy of Opinion of Ninth Circuit

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INDEX TO CITATIONS

CASES

Andresen v. Maryland,

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Boyd v. United States,

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Fisher v. United States,

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United States v. Echeles,

352 F.2d 892 (7th Cir. 1965) ..................

United States v. Harris,

$A 8 Ty Eo Re .. See

United States v. Martinez,

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United States v. Miller,

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United States v. Shuford,

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Wilson v. United States,

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Page

- iii -

INDEX TO CITATIONS (Continued)

STATUTES

Title 15, U.S.C.

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Title 28, U.S.C. Section 1254(1) .................

TEXTS

Search and Seizure of Private Papers: Fourth

and Fifth Amendment Consideration, 6 Loyola

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Page

IN THE

Supreme Court of the Anited States

OCTOBER TERM, 1977

No.

LARRY A. CARR,

Petitioner,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

NINTH CIRCUIT

The Petitioner, Larry A. Carr, respectfully prays that a writ

of certiorari issue to review the judgment of the United States

Court of Appeals for the Ninth Circuit entered on 12 May 1977

and the denial of a rehearing en banc rendered on 3 February

1978.

-2.

OPINION BELOW

The Court of Appeals entered its Memorandum confirming

the conviction of petitioner on 12 May 1977. A copy of that

Memorandum, which is not to be reported officially, is

attached as Appendix “A”.

JURISDICTION

On 12 May 1976 the Court cf Appeals entered judgment

confirming the convictions of petitioner for conspiring to sell

unregistered securities in violation of Title 18, U.S.C. §371,

Title 15, U.S.C. §77(eXa), 77(q)a) and 77(x) and the fraudulent

sale of securities in violation of Title 15, U.S.C. §77(qXa) and

77(x). The jurisdiction of this Court is invoked under Title 28,

U.S.C. §1254(1).

QUESTIONS PRESENTED FOR REVIEW

1. Did the Court of Appeals misapply the holding in

United States v. Miller, 425 U.S. 435 (1975) in determining

that a handwritten memorandum of petitioner Carr

constituted a “corporate record” in which the petitioner has

no proprietary interest?

2. Is severance required where the exculpatory testimony

of a codefendant is an essential element of the defense?

>. =

STATEMENT OF ESSENTIAL FACTS

The applicable facts surrounding each of the above issues

are set forth below:

A. PROPRIETARY INTEREST-GRAND JURY

SUBPOENAS

In preparation of its case, the Government utilized grand

jury subpoenas for the seizure of a number of documents.

These subpoenas were isswed by the prosecutor's office

without the knowledge or consent of the grand jury (R.T.

70).:/ In July of 1974, Customs Agent James Ingraham

obtained a grand jury subpoena and took the subpoena to the

Patterson corporate offices in Atlanta, Georgia. Upon his

arrival in Atlanta, he utilized the subpoena in lieu of a search

warrant to obtain access to the records of petitioner Carr. It

was during this time that Agent Ingraham: obtained a

document entitled “Patterson Priorities” (R.T. 2938-2940).

The two-page document entitled “Patterson Priorities”

(Exhibit 59) was a handwritten memorandum prepared by

petitioner. It outlined petitioner’s ideas and suggestions with

respect to items he and Patterson Corporation needed to

accomplish. The document bore the phrase “Get stock

purchases going throughout the United States.” At trial, the

Government argued that this document clearly indicated

petitioner’s knowledge of the manipulation and his intent to

participate in the conspiracy to sel! unregistered stock. (R.T.

5948-5949).

“R.T.” refers to Reporter's Transcript.

7

The document was not prepared on company letterhead and

did not bear petitioner’s signature as an officer of the

corporation. At the time of the seizure, petitioner had resigned

as an officer of the corporation, but he continued to hold

128,000 restricted shares. No evidence was presented to show

that petitioner ever abandoned ownership of this document.

When seized, the documents were being stored on the

corporate premises in Atlanta, Georgia. Petitioner could

reasonably expect that the storage of his documents such as

this handwritten memorandum would not be disturbed or

released without his prior consent and approval.

The Ninth Circuit Court of Appeals classified the

memorandum as a corporate document and held that

petitioner had no proprietary interest in the document. As a

result of this ruling, petitioner was foreclosed from contesting

the unauthorized use of the grand jury subpoena in lieu of a

search warrant.

B. SEVERANCE

During the trial, Michael Gardner, a co-conspirator and a

government witness, testified that he was contacted by co-

conspirator Joseph Merola on behalf of petitioner. Gardner

stated that Merola told him that petitioner wanted to collect

all of the outstanding Patterson stock to revive the stock

manipulation. Merola, according to Gardner, requested that

Gardner attempt to obtain the outstanding stock for petitioner

(R.T. 1773-1777). Midway through the trial, petitioner Carr

sf

learned that Merola had made a statement to Customs Agent

James Ingraham on December 2, 1974 wherein he advised

Agent Ingraham that someone other than Carr had told him

to obtain the stock from Gardner. This statement is in direct

opposition to the testimony of Gardner. Prior to this time,

motions had been made to sever petitioner’s case from the

case of codefendant Merola (R.T. 284-286). Upon learning of

the statement made to Ingraham, the issue of severance was

again raised (R.T. 2928).

Petitioner was unable to utilize the statement made to

Agent Ingraham since the trial court ruled that the statement

had not been made voluntarily. Thus, the government was

prohibited from introducing the statement at the time of trial.

Further, because of the joint trial, petitioner was unable to call

either Merola or Agent Ingraham to testify with respect to the

statement. At the conclusion of the jury trial, petitioner was

convicted on one count of conspiring to sell unregistered

securities by the use of fraudulent, manipulative and

deceptive practices. Further, he was convicted on one count of

selling unregistered securities through the use of fraudulent

statements.

Petitioner’s contact with Patterson Corporation, the issuer

of the securities in question, and his involvement with the

individuals later determined to be conspirators took place at

the end of the alleged period of the conspiracy. The testimony

of Merola was essential to petitoner’s defense to show that he

was not a part of the conspiracy at that time and that he did

x. =

not make any statements with respect to reviving or

continuing with the alleged stock manipulation. Without

Merola’s statement, the jury was left only with the statement

from Gardner that indicated petitioner had knowledge of the

conspiracy and was participating in it.

REASONS FOR GRANTING WRIT

The reasons urged for granting a writ of certiorari are as

follows:

1. The opinion in United States v. Miller, 425 U.S. 435

(1975) does not foreclose the petitioner from establishing

standing to object to the seizure of his handwritten

memorandum.

In United States v. Miller, supra, this Court held that bank

records consisting of checks and deposit slips did not con-

stitute a person’s private papers and therefore seizure of said

records did not violate the Fourth Amendment. The opinion

notes that the checks and deposit slips “. . . are the business

records of the banks” (at page 440). Thus, this Court concludes

that “We think that the Court of Appeals erred in finding the

subpoenaed documents to fall within a protected zone of

privacy.” (At page 440)

In the instant case, United States v. Miller, surpa was relied

upon by the Ninth Circuit Court of Appeals in concluding that

petitioner had no proprietary interest in the “Patterson

Priorities Memorandum” and therefore, no standing to object

“es

to the seizure. Petitioner was thus estopped from having his

argument considered, upon uncontradicted evidence, that the

subpoena had been issued without the knowledge of the grand

jury and used in lieu of a search warrant.

The Fourth Amendment’s protection extends to the

compulsory production of a man’s private papers. Boyd v.

United States, 116 U.S. 616, 622 (1886). The classification of

documents as “corporate records” as opposed to “private

papers” was before this Court in the context of the Fifth

Amendment in Wilson v. United States, 221 U.S. 361 (1911)

where the Court stated at page 380,

* * * “The question still remains with respect to

the nature of the documents and the capacity

in which they are held. It may yet appear that

they are of a character which subjects them to

the scrutiny demanded and that the custodian

has voluntarily assumed a duty which over-

rides his claim of privilege. This was clearly

implied in the Boyd Case where the fact that

the papers involved were the private papers of

the claimant was constantly emphasized.

Thus, in the case of public records and official

documents, made or kept in the administration

of public office, the fact of actual possession or

of lawful custody would not justify the officer

in resisting inspection, even though the record

was made by himself and would supply the

evidence of his criminal dereliction. If he has

embezzled the public moneys and falsified the

public accounts he cannot seal his official

records and withhold them from the prose

cuting authorities on a plea of constitutional

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privilege against selfcrimination. The

principle applies not only to public documents

in public offices, but also w records required by

law to be kept in order that there may be

suitable information of transactions which are

the appropriate subjects of governmental

regulation and the enforcement of restrictions

validly established.” * * * (Emphasis in

original quote)

The document in question is a handwritten memorandum

prepared by petitioner outlining the steps and activities to be

undertaken by himself and the company. It is not a public

record or an official document. Nor was he required to prepare

such a document in his role as a corporate officer. The

memorandum does not appear on corporate letterhead and is

not a record prepared in the normal course of business. This

document does not fall within the classification of “corporate

documents” found in United States v. Miller, supra and

Wilson v. United States, supra.

The Court’s attention is also directed to the case of

Andresen v. Maryland, 427 U.S. 463 (1976) wherein petitioner,

a lawyer, was entitled to contest the seizure of corporate files

containing the handwritten notes of a corporate employee and

other items taken from the offices of the corporation. The

opinion notes that these were not “corporate records” despite

the fact that they were found in the corporate offices and

consisted of handwritten notes of a corporate employee.

Petitioner submits that the petition for writ of certiorari

should be granted so that this Court can establish proper

i

guidelines for determining and distinguishing between

“personal papers” and “corporate documents.” The available

criteria for distinguishing between these categories is vague

and no proper criteria exists for making this determination.

See concurring opinion of Justice Brennan, Fisher v. United

States, 425 U.S. 391 (1975) at 416-428; See also Comment,

Search and Seizure of Private Papers: Fourth and Fifth

Amendment Considerations, 6 Loyola (L.A.) Law Review 274,

300-303.

2. A motion for severance is required where a defendant is

unable to introduce exculpatory evidence on an essential issue

in a joint trial.

The opinion of the Ninth Circuit notes on page 4 that

“although Carr’s motion apparently has some merit, it cannot

be said that the trial judge abused his discretion in refusing to

grant a severance.”

The Fourth and Seventh Circuits have taken the position

that severance may become obligatory where one defendant’s

case rests on the exculpatory testimony of a codefendant.

United States v. Shuford, 454 F.2d 772 (4th Cir. 1971); United

States v. Echeles, 352 F.2d 892 (7th Cir. 1965).

In United States v. Harris, 542 F.2d 1283, 1313 (7th Cir.

1976) the Seventh Circuit adopted the criteria set forth by the

Fifth Circuit in United States v. Martinez, 486 F.2d 15 (5th

Cir. 1973) for determining when severance is required in this

situation. The criteria consisted of the following questions:

-10-

a. Has the movant shown to the Court's

satisfaction that the testimony would be excul-

patory, in effect?

b. Has the movant shown to the Court’s

satisfaction that the co-defendant would in fact

testify at a separate trial?

c. What is the significance of the desired

testimony to the movant’s defense?

The facts in the instant case establish that the petitioner

can meet each of the criteria set forth above. The testimony

would be exculpatory since it would show that petitioner did

not participate in a conversation wherein he suggested

reviving the conspiracy. Second, the codefendant has

indicated he would testify.

Third, the statement is significant with respect to the

selling count as well as the conspiracy count. It was utilized

by the Government to show knowledge of the fraudulent stock

scheme in each instance. Petitioner never approached any

member of the public with respect to the sale of this stock. His

only connection was in the preparation of certain documents

which were utilized in the sale. His defense was that he had no

knowledge that these documents would be so utilized. It was

essential to his defense to establish that he had no knowledge

of the fraudulent sale of stock and therefore, it was essential

for him to show that he did not initiate or participate in the

conversation concerning the ‘revival of the stock

manipulation.” A jury which found that petitioner had

participated in this conversation could readily infer that he

=

had knowledge that the documents he prepared would be

utilized in the fraudulent sale of stock. The denial of the

severance motion prevented petitioner from utilizing the

Merola statement to show he was not a participant in this

conversation.

This court is urged to consider the issue when severance is

required where a codefendant is in the position to provide

exculpatory evidence on a critical issue but is prohibited from

doing so because of a joint trial. Several circuits have

attempted to establish criteria for the granting of severance in

this situation. Petitioner has complied with the guidelines

established in the Fifth and Seventh Circuits. It is requested

that this Court establish criteria which can be applied

uniformly in all circuits.

CONCLUSION

For the foregoing reasons, petitioner requests that a writ of

certiorari issue to review the judgment of the United States

Court of Appeals for the Ninth Circuit.

Respectfully submitted,

AMOS & CURNOW

By

E. MAC AMOS, JR.

Attorneys for Petitioner

A-1

DO NOT PUBLISH

UNITED STATES COURT OF APPEALS

FOr’ THK NINTH CLRCUIT

Unirep STaTES oF AMERIQA, ; )

Appellee,

vs. Nos. 76-1213

76-1251

Ricuarp B. ANpEeRSON, CLEO H. BULLARD, 716-1348

and Larry A. Carr,

Appellants. | MEMORANDUM

(May 12, 1977]

Appeal from the United States District Court

for the Southern District of California

A P P E N D 7 X Before: ELY and WALLACE, Circuit Judges, and

SPENCER WILLIAMS,® District Judge.

After a prolonged jury trial, Larry Carr was convicted of

conspiracy and selling unregistered securities by the use of

fraudulent, manipulative, and deceptive practices. Codefendants

Bullard and Anderson were convicted on six counts of the same

and codefendants Merola and Linza were acquitted on all counts.

Carr and Bullard received concurrent 18month terms and

Anderson received concurrent 3-year and 2-year terms. All three

join in this appeal. For reasons discussed below, all convictions

are affirmed.

FACTS

In late 1972, ecodefendant Smith, who died prior to trial,

devised a scheme whereby he would obtain a shell corporation,

inflate the value of the stock by overrating its assets and

manipulating the supply of its stock, and then “blow it off” to

*Hooermble Spencor Willimns, United States District Judge, Northern

junit of Caliorma, siti by desgeuation,

BEST COPY AVAILABLE

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A-2

United States of America vs.

ie public. Bullard owned substantially all the shares of such a

corporation (Patterson Corp.) and willingly made it available

for Smith’s scheme. He and Anderson reassembled most of the

outstanding shares by merely dropping the shareholder’s names

irom the corporate records and reissuing the stock in the names

of Bullard and Smith’s nominees.

Thereafter, and in order to inflate the value of Patterson’s

assets, Smith and Anderson exchanged stock in Patterson for

700,000 pounds of helicopter parts variously appraised at

between $20,000 and $6 million. They then prepared a financial

statement representing the value of the helicopter parts to be

$22 million and commenced manipulation of the price of the

stock. This was accomplished by controlled sales by and between

various stock brokers whose cooperation was assured through

payoffs and kickbacks. The plan was to create the appearance

of a steadily advancing market and the goal was to increase

the market price from twenty-five cents ($.25) to $10.00 per

share. By September of 1973 the price had been pumped up to

$2.75. At about this time Smith and Anderson acquired Carr’s

failing corporation through an exchange of stock and installed

Carr as First Vice-President of Patterson. Carr’s first assign-

ment was to prepare a brochure about the Patterson Corporation.

Called the “Patterson Update” it painted a false and mislead-

ing picture as to the status of the corporation and specifically

as to the value of Patterson’s assets. The ‘update’ was used in

connection with the sale of Patterson stock.

The scheme fell through in October 1973 when Anderson

admitted part of the fraud at a SEC hearing. The following

month Carr replaced Anderson as president of Patterson and

the SEC suspended trading in Patterson stock. Shortly there-

aiter, according to testimony of unindicted coconspirator

Gardner, Merola came to him at the behest of Carr and sought

his assistance in reviving the scheme. He was unable to do

so aud the manipulation collapsed. Appellants raise eleven issues

on appeal.

SINGLE CONSPIRACY INVOLVING CARR

Appellant Carr argues tit the Government aetually alleged

Vl a ;

LWou COlopiracics, One prion lo thins joing the seheme aod a

A-3

Richard B. Anderson, et al.

later revival in which he was involved. The rule in the Ninth

Circuit is that “once a conspiracy is shown, slight evidence is

ali that is required to connect the defendant with the con-

spiraecy [citation omitted].” Diaz-Rosendo v. United States, 357

F.2d 124, 130 (9th Cir. 1966) cert. denied 385 U.S. 856.

Inasmuch as all of the activity was directed toward the same

end, i.e., to manipulate the value of Patterson stock, the Govern-

ment has demonstrated that only one continuing conspiracy

existed. Blumenthal v. United States, 332 U.S. 539 (1947).

The evidence should be taken in its most favorable light to

sustain the lower court’s conviction of appellant. Diaz-Rosendo,

supra. And the record is sufficient to demonstrate that Carr

knew of the false and misleading nature of the Patterson

Update when he released it to the public. This involvement in

an integral part of the fraudulent scheme is sufficient to link

Carr to the conspiracy.

ANDERSON’S SEC TESTIMONY

Appellant Anderson cvutests the admission of his statements

made before the SEC sims the hearing officer knew of the

concurrent criminal proceeding against the Patterson Corpora-

tion. Therefore, according to Anderson, he should have been

given the full panoply of Miranda warnings. The only Miranda

warning not given was that if he could not afford one, an

attorney would be appointed for him. He repeatedly waived his

right to counsel. There was no evidence of involuntariness or

coercion at the SEC hearing. The Ninth Circuit and the

Supreme Court have ruled that Miranda warnings need not be

given in these circumstances. United States v. Robson, 477 F.2d

13 (9th Cir. 1973); Beckwith v. United States, 425 U.S. 341

(1976).

GRAND JURY SUBPOENA

Appellants object to the prosecutor’s issuance of a grand jury

subpoena without the grand jury’s kmowledge or consent. We

need not reach the issue since none of the appellants have

satisfied the standing requirement necessary to challenge a search

ond seizure on Fourth Amendment grounds. Brown vw. United

Nlales, 411 TLS. 223 (i972). AM of the appellants had resigned

A-4

United States of America vs.

their position with Patterson prior to the seizure and none were

on the premises when the “Patterson Update” was seized. Carr

alleges a proprietary interest in the document, since it was in

his own handwriting. However, the content of the memo makes

it clear that he was outlining a corporate, rather than a personal,

plan of action. Therefore, he does not have the proper propri-

etary interest. United States v. Miller, 425 U.S. 435 (1976).

CARR’S MOTION FOR SEVERANCE

During its investigation of the case, the Government learned

from Merola that his statement implicating Carr in the revival

ot the scheme was not true. The court found that this state-

ment was involuntarily taken and would not permit Carr to

introduce it at trial. Merola stated that he would be willing to

testify at a separate trial and Carr asked for a severance.

Absent an abuse of discretion, the ruling of the trial judge

not to grant a severance will rarely be disturbed on review.

United States v. Campanale, 518 F.2d 352 (9th Cir.) cert. denied

423 U.S. 1059, reh. denied 424 U.S. 950 (1975). Although Carr’s

motion apparently has some merit, it cannot be said that the

trial judge abused his discretion in refusing to grant a severance.

Even if the jury would give credence to Merola’s later state-

ment, there was a plethora of other evidence related to Carr’s

role in the conspiracy and it seems unlikely that he would have

been acquitted at a separate trial. Even if he were acquitted

of the conspiracy charge he would be unable, in view of his

conviction on the selling count, to demonstrate any prejudice

under the concurrent sentence rule.

SUPPLEMENTAL JURY INSTRUCTIONS

After three months of trial and four-and-a-half days of de

liberations, the jury reported that it had reached a verdict in

regard to four of the defendants and was deadlocked as to the

fifth. The trial judge told them:

Ladies and Gentlemen of the jury, at this time you will

be allowed to go home and tomorrow morning at 9:00

o’clock I would request that you continue your deliberations

following the same pattern that you have previously. I’m

not going to make any comments beyond what T have jut

said.

A-5

Richard B. Anderson, et al.

The next morning the jury deliberated for two-and-a-half hours

before returning the final verdict.

In order to find a supplemental jury instruction improper, it

must be shown that it was unduly coercive. Sullivan v. United

States, 414 F.2d 714 (9th Cir. 1969). The judge had earlier

told the jurors to maintain their honest conviction as to the

weight of the evidence. Therefore wher he later told them to

continue in the same pattern, that did not have the effect of

coercing the jury into reaching a verdict.

Appellants raise five further issues, none of which have any

merit. For the reasons stated above, all convictions are affirmed.