Petition — Strand v. United States
Supreme Court brief1980
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( JUN 21 1980
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IN THE
SUPREME COURT OF THE UNITED STATES
October Term 1979
79-2021
MICHAEL WILLIAM STRAND, Petitioner,
UNITED STATES OF AMERICA, Respondent,
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
|
RICHARD J. LEEDY
610 East South Temple
Salt Lake City, Utah 84102
Telephone: (801) 531-8997
Attorney for Petitioner
June 1980
TABLE OF CONTENTS
i Ce cent Minha io ke uk ots cucaleocen yews
es sie hath 4p need bs cuucdenshanssy xc sacs xc
1. WHETHER THE PETITIONER WAS DENIED HIS
CONSTITUTIONAL RIGHT UNDER THE SIXTH
AMENDMENT TO THE CONSTITUTION OF THE
UNITED STATES TO BE INFORMED OF THE
NATURE AND CAUSE OF THE ACCUSATION
AGAINST HIM WHERE ONE DISTRICT JUDGE
RULED BEFORE TRIAL AS TO THE PROSECUTION’S
OBLIGATIONS TO PROVE THE SUBSTANCE OF AN
OFFENSE CHARGED AGAINST THE PETITIONER
AND THEREAFTER A SECOND DISTRICT JUDGE
AFTER PRESENTATION OF THE EVIDENCE
CHANGED THE RULING OF THE FIRST JUDGE SUB-
STANTIALLY CHANGING THE NATURE OF THE
PROSECUTION’S BURDEN.
2. WHETHER THE TRIAL COURT ERRED AND DENIED
THE PETITIONER HIS RIGHT TO A JURY TRIAL
UNDER THE SIXTH AMENDMENT AND ARTICLE III
SECTION 2 OF THE CONSTITUTION OF THE
UNITED STATES BY REFUSING TO SUBMIT THE
ISSUE OF MATERIALITY OF A REPRESENTATION
CONSTITUTING AN ELEMENT OF AN OFFENSE
FOR CONSIDERATION AS AN ISSUE OF FACT BY
THE JURY.
3. WHETHER THE TRIAL COURT DENIED PETITION-
ER DUE PROCESS OF LAW IN NOT DISMISSING A
CHARGE AGAINST THE PETITIONER WHERE THE
PROSECUTION DELAYED CHARGING THE PETI-
TIONER FOR THREE YEARS TO ENABLE IT TO JOIN
ANOTHER DISTINCTLY DIFFERENT CHARGE IN
ORDER TO GAIN A PROSECUTORIAL ADVANTAGE
WHERE AS A RESULT PETITIONER WAS PRE-
JUDICED IN HIS DEFENSE.
4. WHETHER THE TRIAL COURT ERRED IN NOT
GRANTING PETITIONER RELIEF FQR THE
GOVERNMENT’S FAILURE TO PRODUCE PRE-
VIOUS RECORDED STATEMENTS OF THE
PETITIONER PURSUANT TO 16(a)(1(A) FEDERAL
RULES OF CRIMINAL PROCEDURE.
ii
5. WHETHER THE TRIAL COURT ERRED IN FAILING
TO GRANT THE PETITIONER’S MOTION FOR A NEW
TRIAL BASED UPON THE PROSECUTOR’S
CLOSING ARGUMENT IN WHICH HE REFERRED TO
AND INVITED THE JURY TO SPECULATE AS TO
MATTERS NOT IN EVIDENCE.
STATUTORY PROVISIONS INVOLVED ......................
STAT TRICE Cle We in icc cccccccccccces
iii
TABLE OF CASES
Page
Cole v. Arkansas, 333 U.S. 196 (1948) ........ccccccccccccccvccececs 10
Garris v. United States, 390 F.2d 862 (D.C.Cir. 1968) ............... 21
Ginsberg v. United States, 257 F.2d 950, 954 (5th Cir. 1958) ........ 21
Hendricks v. United States, 233 U.S. 178 (1912) ............0 cece ees 10
a eb Core, SED TIT, BF CAO, ands cecsccscvedscsccre ses sscssveses 10
In re Winship, 397 U.S. 358 (1970) ..............066: iiteceneseewes 12
King v. United States, 372 F.2d 383, 395 (D.C. Cir. 1967) ........... 21
Mullaney v. Wilbur, 421 U.S. 684 (1975) ............ceeceeeeeeeeeees 12
Nolan v. United States, 423 F.2d 1031 (10th Cir. 1969) ............. 17
Palko v. Connecticut, 302 U.S. 319 (1937) .........ccceceeeecccceees 11
Pierce v. United States, 414 F.2d 163 (5th Cir. 1969) ................ 19
Rabe v. Washington, 405 U.S. 313 (1972) ........... cece eee eee eens 10
Russell v. United States, 369 U.S. 749 (1962) ............ cece eee es 10
Sinclair v. United States, 279 U.S. 263 (1929) ............-eeee- 11, 12
United States v. American Radiator & Standard Sanitation Corp.,
PRA Be fl RR en ere errr eee Terr eee 21
United States v. Bowers, 593 F.2d 376 (10th Cir. 1979) ............. 18
United States v. Caldwell, 543 F.2d 1333 (D.C. Cir. 1974) ........... 37
United States v. Cook, 7 Wall, U.S. 168 (1872) ..............-eeeeee 10
United States v. Coppola, 526 F.2d 764 (10th Cir. 1975) ............ 19
United States v. Countryside Farms, Inc.,
OS Fe ae. BAR GE. Se TE on wv ovens cas cecccdvdcvesseeses 17
United States v. Cruickshank, 92 U.S. 557 (1876) ..............545- 10
United States v. Dowdy, 455 F.2d 1253 (10th Cir. 1972) ............. 17
United States v. Hayward, 420 F.2d 142 (D.C. Cir. 1969) ........... 11
United States v. Hodges, 480 F.2d 229 (10th Cir. 1973) ............. 17
United States v. LaBarbera, 581 F.2d 107 (5th Cir. 1978) ........... 21
United States v. Lattimer, 511 F.2d 498 (10th Cir. 1975) ............ 21
United States v. Leta, 60 FRD 127 (D.C. Pa. 1973) ...........-..4., 18
United States v. Lovasco, 431 U.S. 783 (1977) ............e0eee: 13, 15
United States v. Marion, 404 U.S. 307 (1971) ...........20200e- 13, 15
United States v. Padrone, 406 F.2d 560 (2nd Cir. 1969) ............. 19
United States v. Rivera, 513 F.2d 519 (2nd Cir. 1975) ............... 19
United States v. Smith, 496 F.2d 185 (10th Cir. 1974) ............... 17
iv
United States v. Valdez, 594 F.2d 725 (9th Cir. 1979) ............... 12
Vitek v. Jones, U.S. , 100 S.Ct. 1254 (1980) ........... 10
STATUTES
Federal Rules of Criminal Procedure, Rule 8 ...................... 8
15 United States Code §77q(a) .............ccccceccccccccccuese 3, 4, 6
a en NN I i hie bs cucu hocdlowceacvsadnetoneceul. 4
ae ee 12
er MOU ci icu nu sebov eve ldcencececelectcc. 4
26 United States Code §7206(1) ............ccccccccccccccces 3, 4,6, 11
ee Wren NU RD TI GOISY ass coo oon ovo vo vnc veecccenecnccecee 2
U.S. Constitution:
ee a cal go fete eee. eee utt 2,11
ce, TER ISB ois ait ce een ino nN 8,9
ERR Pe oe See aa oe 2, 8, 9, 10, 11
TREATISES AND OTHER AUTHORITIES
Abbott, Criminal Trial Practice, § 652 ............................. 20
Vess, Walking a Tightrope: A Survey of Limitations on the Prosecutor’s
Closing Argument, 64 Journal of Criminology 22, 28 (1973) ...... 20
IN THE
SUPREME COURT OF THE UNITED STATES
October Term 1979
No.
x
MICHAEL WILLIAM STRAND, Petitioner,
UNITED STATES OF AMERICA, Respondent,
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
The petitioner, Michael William Strand, respectfully prays
that a writ of certiorari issue to review the judgment and
opinion of the United States Court of Appeals for the Tenth
Circuit entered in this proceeding on the 19th of March, 1980.
OPINION BELOW
The opinion of the Court of Appeals, not yet reported,
appears in the Appendix hereto. No opinion was rendered by
the District Court for the District of Utah.
JURISDICTION
The judgment of the Court of Appeals for the Tenth Circuit
was entered on March 19, 1980. An extension of time was
granted for the filing of the petition for a Writ of Certiorari
until June 21, 1980. This Court’s jurisdiction is invoked under
28 U.S.C. §1254(1).
QUESTIONS PRESENTED
1. WHETHER THE PETITIONER WAS DENIED HIS
CONSTITUTIONAL RIGHT UNDER THE SIXTH
AMENDMENT TO THE CONSTITUTION OF THE
UNITED STATES TO BE INFORMED OF THE
NATURE AND CAUSE OF THE ACCUSATION
AGAINST HIM WHERE ONE DISTRICT JUDGE
RULED BEFORE TRIAL AS TO THE PROSECU-
TION’S OBLIGATIONS TO PROVE THE SUBSTANCE
OF AN OFFENSE CHARGED AGAINST THE
PETITIONER AND THEREAFTER A SECOND
DISTRICT JUDGE AFTER PRESENTATION OF THE
EVIDENCE CHANGED THE RULING OF THE FIRST
JUDGE SUBSTANTIALLY CHANGING THE
NATURE OF THE PROSECUTION’S BURDEN.
2. WHETHER THE TRIAL COURT ERRED AND
DENIED THE PETITIONER HIS RIGHT TO A JURY
TRIAL UNDER THE SIXTH AMENDMENT AND
ARTICLE III SECTION 2 OF THE CONSTITUTION
OF THE UNITED STATES BY REFUSING TO SUB-
MIT THE ISSUE OF MATERIALITY OF A REPRE-
SENTATION CONSTITUTING AN ELEMENT OF AN
OFFENSE FOR CONSIDERATION AS AN ISSUE OF
FACT BY THE JURY.
3. WHETHER THE TRIAL COURT DENIED PETI-
TIONER DUE PROCESS OF LAW IN NOT DIS-
MISSING A CHARGE AGAINST THE PETITIONER
WHERE THE PROSECUTION DELAYED CHARGING
THE PETITIONER FOR THREE YEARS TO ENABLE
IT TO JOIN ANOTHER DISTINCTLY DIFFERENT
CHARGE IN ORDER TO GAIN A PROSECUTORIAL
3
ADVANTAGE WHERE AS A RESULT PETITIONER
WAS PREJUDICED IN HIS DEFENSE.
4. WHETHER THE TRIAL COURT ERRED IN NOT
GRANTING PETITIONER RELIEF FOR THE
GOVERNMENT’S FAILURE TO PRODUCE
PREVIOUS RECORDED STATEMENTS OF THE
PETITIONER PURSUANT TO 16(a)(1)(A) FEDERAL
RULES OF CRIMINAL PROCEDURE.
5. WHETHER THE TRIAL COURT ERRED IN FAILING
TO GRANT THE PETITIONER’S MOTION FOR A
NEW TRIAL BASED UPON THE PROSECUTOR’S
CLOSING ARGUMENT IN WHICH HE REFERRED
TO AND INVITED THE JURY TO SPECULATE AS TO
MATTERS NOT IN EVIDENCE.
STATUTORY PROVISIONS INVOLVED
United States Code Title 26:
§ 7206(1) Any person who —
Willfully makes and subscribes any return, statement,
or other document, which contains or is verified by a
written declaration that it is made under the penalties of
perjury, and which he does not believe to be true and
correct as to every material matter: . . . shall be guilty
of a felony....
United States Code Title 15:
§ 77q(a)
It shall be unlawful for any person in the offer or sale
of any securities by the use of any means or instruments
of transportation or communication in interstate com-
merce or by the use of the mails, directly or indirectly —
(1) to employ any device, scheme, or artifice to
defraud, or
(2) to obtain money or property by means of any
untrue statement of a material fact or any omission to
state a material fact necessary in order to make the
statements made, in the light of the circumstances under
which they were made, not misleading, or
(3) to engage in any transaction, practice, or course
of business which operates or would operate as a fraud
or deceit upon the purchaser.
STATEMENT OF THE CASE
The petitioner, Michael William Strand, was indicted by a
grand jury in the United States District Court for the District
of Utah on July 12, 1978. The indictment charged three counts.
Count I alleged a violation of 26 U.S.C. § 7206(1) for sub-
scribing a false tax return. It was alleged that for the calendar
year 1973 petitioner made an income tax return which he did
not believe to be true and correct as to every material matter
in that the return reported no gross income or gross receipts
when petitioner had “substantial gross receipts.” Count II
charged a violation of the Securities Act of 1933, 15 U.S.C.
§§77q(a) and 77x. Count II alleged that from May 2, 1973 con-
tinuing to on or about October, 1973, the petitioner employed a
device, scheme and artifice to defraud and did obtain money
and property by means of untrue statements of material facts
and omissions and did engage in transactions, practices and
a course of business that operated as a fraud and deceit upon
purchasers of securities. Six paragraphs of allegations of fact
were alleged in support of the charge. Count II charged a
violation of 18 U.S.C. § 2314, interstate transportation of
stolen property. Count III was dismissed at the end of the
prosecution’s case at trial. The petitioner was convicted on
jury trial of Counts I and II.
On Count II of the indictment, charging a securities
violation, the petitioner filed a pre-trial motion in the court
to dismiss the Count or to require the prosecution to sever or
elect on the grounds that the charge alleged a violation of two
or more offenses in the same Count and was, therefore,
duplicitous. The motion was heard before the Honorable
5
Aldon J. Anderson, Chief Judge of the District of Utah, on
September 22, 1978. As to Count II, counsel for petitioner
expressly stated he did not really know what defendant was
charged with:
“Your Honor, I submit I cannot defend this case
unless I know what my client is charged with doing.”
(Proceedings, Sept. 22, 1978, p.6).
It was contended that the indictment was duplicitous as it
was framed because petitioner was charged with three
separate courses of action in violation of each of the clauses
of the statute. The Court then addressed the prosecutor and
asked if that did not mean that the prosecution would have to
prove each allegation to make out its charge and the pro-
secution indicated acceptance of that position:
“THE COURT: Well, if they are all interrelated
then you are saying you have to prove them all.
MR. SNARR: Jam happy and comfortable with that,
Your Honor. I am not sure I am willing to say at this
point if I missed one I would not have proved the total
scheme to the satisfaction of the jury. We think they are
all part of the scheme and we had to charge them all and
we would be attempting to prove them all in support of the
one charge and that’s the scheme to defraud.
THE COURT: Well, the one charge, scheme to
defraud in the sale of stock, that’s the one little hangup.
These are separate transactions, Mr. Leedy says. You say
that are interrelated, that the scheme contemplated all
of these transactions would flow from the scheme.
MR. SNARR: That’s my position, Your Honor.”
(Proceedings, Sept. 22, 1978, p.22) (Emphasis added).
The Court then entered its order to govern the prosecution’s
burden of proof:
“The Court will rule that the motion is denied. The
Government is charged with proving all of those things
and it is the sales as contemplated under the statute.”
(Proceedings, Sept. 22, 1978, p. 23).
The case was subsequently tried before the Honorable H.
Vearle Payne, Judge from the District of New Mexico sitting
in the District of Utah. At the end of the presentation of
evidence and after the parties had rested, Judge Payne over-
ruled Judge Anderson’s previous order. Judge Payne took the
position that he considered Judge Anderson’s ruling wrong
and that the prosecution could sustain a conviction without
having to prove each of the allegations in the indictment.
He stated:
“THE COURT: Well, if I had made a ruling, I would
have reversed myself. If that’s what he’s ruled, that you
have to prove every one of them, because that’s not the
law. The law is that they must prove one or more. And
that’s the way I’m going to rule. So the motion will be
denied.”
The trial judge then instructed the jury contrary to Judge
Anderson’s initial ruling that the prosecution could sustain a
conviction on count II by proving one or more of the methods of
violation alleged in Count II under 15 U.S.C. § 77q(a). The
effect of the ruling of Judge Payne was to allow the pro-
secution to change its theory of the case after the evidence
had been closed. As the dissenting judge in the Court of
Appeals (Judge McKay) stated: “[TJhis decision permits the
government to inform the accused of the ‘nature and cause of
the accusation’ after the completion of the trial.”
On Count I of the indictment charging the subscribing of
false tax return, 26 U.S.C. § 7206(1), the Government requested
an instruction be given to the jury as to the issue of materiality
of the alleged falsity of the return (Tr. Vol. 5, 846, Government
Request No. 8). The petitioner also contended that the question
was one to be “determined by the jury” (Tr. Vol. 5, 846). The
trial judge disagreed with both parties and, over petitioner’s
exception, instructed the jury that the question of materiality
was a question of law for the court. The trial judge instructed
the jury that certain facts were material (Tr. Vol. 5, 921), thus
removing from the jury’s consideration any issue of fact as to
the materiality of the alleged false statements in the peti-
tioner’s tax return.
The petitioner filed several motions for discovery and the
United States Attorney for the District of Utah allowed an
open file policy. The indictment was returned on July 12, 1978
and the illegal sales referred to in Count II allegedly occurred
on or about July 18, 1973. It was obvious that ai the time of
the indictment the Government was acting under a possible
threat from the statute of limitations as to Count II. Counsel
for petitioner filed a pre-trial motion to dismiss for prejudicial
pre-trial delay. An affidavit in support of the motion contained
information discovered from the Government’s files indicating
that in May or June of 1975, a form indictment on the sub-
stance of Count II had been prepared and the United States
Attorney was ready to proceed. This was acknowledged by
Government counsel in argument before the Court of Appeals.
The Government delayed the indictment on Count II to the
last possible moment in order to join it with the tax count
which was still under investigation. Since the issues in the tax
count were distinct from those in the securities count, the
only reason for the delay was to enable the Government to
introduce into evidence matters relating to the tex issues as
they might bear upon the jury’s assessment of the securities
count and vice versa. Thus, the delay was to gain prosecutorial
—_
advantage. Because of the delay, the defense was deprived of
records and witnesses relevant to issues at trial. Critical
records in the hands of third parties were stolen and witnesses
not available. These facts as to the defendant’s prejudice was
not denied or refuted by the Government.
During the course of the trial, the defendant-petitioner took
the witness stand. On cross-examination, the Government
prosecutor attempted to impeach the defendant-petitioner
based upon prior recorded statements in the form of three
depositions taken by the Securities and Exchange Com-
mission. None of these depositions were produced by the
government, although the defendant-petitioner made a timely
motion for production pursuant to the Federal Rules of
Civil Procedure.
During the closing argument the prosecution indicated that
although the government had produced ample evidence of the
defendant-petitioner’s failure to report substantial income,
there was additional evidence which it cou'd have produced
had it chose to do so.
REASONS FOR GRANTING THE WRIT
Issue One: The decision below fails to honor the petitioner’s
Fifth Amendment rights to due process of law and Sixth
Amendment right to be informed of the nature and the cause
of the accusations against him.
The facts as to what occurred in the trial court are not
actually in dispute concerning the nature of the accusation
against the petitioner. Petitioner moved to dismiss Count II of
the indictment arguing that it was duplicitous in charging
several transactions in one count. The Court of Appeals noted
that Chief Judge Anderson entered his order in response to the
petitioner’s motion and the prosecution’s statement that it
could “live” with a requirement that it prove each of the
several allegations contained in Count II of the indictment.
Judge Anderson expressly indicated that the Government was
charged with proving all of the things alleged under the
indictment. Judge Payne clearly indicated that he felt Judge
Anderson’s ruling was wrong and changed the prosecution’s
burden at the end of the trial. Petitioner contended before the
Court of Appeals in his Brief on Appeal and Supplementary
Brief that the conduct of the trial judge denied him his Fifth
- Amendment right to due process of law and his Sixth
Amendment right to notice of accusation because not until the
end of the presentation of the evidence was he ever aware of
the Government’s burden on Count II of the indictment. Judge
McKay, in dissenting in the Court of Appeals, stated that
Judge Anderson “imposed on the Government the obligation
to prove the six alleged events and transactions set out in
Count II.” Judge Payne departed from that order in such a
fashion that Judge McKay, in his dissenting opinion in the
Court of Appeals, remarked, “I cannot imagine a more sharply
defined reversal of legal theories.” The majority of the Court
of Appeals said that there was no prejudice in the rulings.
However, it should be obvious that the petitioner was never
certain of what the prosecution had to prove until after the
case was concluded. The petitioner would undoubtedly be
under the assumption that the Government had the burden
of proving all of the allegations in the indictment. If the
Government did not present evidence on one of the alleged
transactions there was no need to refute other affirmative
evidence pertaining to Count II, since the prosecution could
not sustain a conviction unless all of the allegations were
established. By changing the rules after the game the
defendant in a criminal case is deprived of an opportunity to
10
prepare a defense or to counter evidence which, at the time it
was presented, did not seem compelling or critical. Judge
McKay’s dissent concluded that the majority opinion in the
Court of Appeals “undermined a fundamental tenet of
jurisprudence that the accused be informed of the nature and
cause of the accusation as required by the Sixth Amendment
to the Constitution.” In Russell v. United States, 369 U.S. 749,
764 (1962), this Court noted that an indictment should be
framed so that the Sixth Amendment mandate that a de-
fendant be informed of the nature and the cause of the ac-
cusation against him is followed. This obligation has been
recognized as a fundamental part of due process of law. In re
Oliver, 333 U.S. 257, 273 (1948); Cole v. Arkansas, 333 U.S. 196,
201 (1948); Rabe v. Washington, 405 U.S. 313 (1972). An
accused must be apprised of the crime charged with such
reasonable certainty that he can make his defense and protect
himself after judgment against another prosecution on the
same charge. United States v. Cruickshank, 92 U.S. 557 (1876);
Hendricks v. United States, 233 U.S. 178 (1912). The Sixth
Amendment has been held to require that a charge set forth
the offense “with clearness and all necessary certainty, to
apprise the accused of the crime with which he stands
charged.” United States v. Cook, 7 Wall., U.S., 168, 174 (1872).
In the instant case, the Sixth Amendment right to be informed
of the nature and the cause of the accusation was violated not
so much because of the deficiency of the indictment but most
importantly because of the differing orders of interpretation
of the Government’s obligation and burden on Count II of the
indictment. This Court has not addressed the question as to
whether such actions of a trial court, as were taken in tne
context of this case, can so mislead and confuse a defendant
as to violate the Sixth Amendment or violate due process. This
1]
Court should assume jurisdiction to rectify the denial -of
fundamental fairness that deprived the accused of not only
his rights under the Sixth Amendment but his rights to due
process of law as well. Palko v. Connecticut, 302 U.S. 319
(1937); Vitek v. Jones, USS. , 100 S.Ct. 1254(1980).
Issue Two: The decision below treating materiality as an
issue of law conflicts with decisions of other Courts of Appeals
and denied the petitioner his right to a jury trial under
Article ITI, Section 2, clause 3 and the Sixth Amendment to the
Constitution of the United States.
The petitioner contended that the trial court should not have
ruled that the issue of materiality under 26 U.S.C. § 7206(1)
was an issue of law for the court. Petitioner contended that
such action violated Article III of the Constitution of the
United States requiring that in federal prosecutions “the trial
of all crimes * * * shall be by jury” and the Sixth Amendment
right to trial by an impartial jury. As the Court of Appeals
noted in its opinion “there is a diversity of authority on
whether the issue of materiality under § 7206(1) is properly one
of law for the court.” Further, as the D.C. Circuit has noted
in United States v. Hayward, 420 F.2d 142 (D.C. Cir. 1969) the
right to a trial by jury “is the right to have the jury decide all
relevant issues of fact and to weigh the credibility of wit-
nesses.” 420 F.2d 144. Further, in Sinclair v. United States,
279 U.S. 263 (1929) at p. 298, this Court noted that pertinency
in a contempt of Congress case was an issue of law where “{it]
did not depend on the probative value of evidence.” The
concept of trial by jury in a criminal case subsequent to the
time of the Sinclair case has so crystallized as to clearly
require the prosecution, as a matter of consitutional obligation,
to establish the guilt of the accused beyond a reasonable doubt
as to every fact necessary to constitute the crime charged.
12
In re Winship, 397 U.S. 358 (1970); Mullaney v. Wilbur, 421 U.S.
684 (1975). The particular facts of this case would not seem to
conform to the implications of the Sinclair decision, since the
question of whether the statement in the petitioner’s tax
return was material would depend upon the facts of his parti-
cular tax situation. Further, the Ninth Circuit Court of Appeals
has recently indicated in a prosecution under 18 U.S.C. § 1001
that the issue of materiality under that statute is one to be
submitted to the jury for resolution. United States v. Valdez,
594 F.2d 725 (9th Cir. 1979). In this particular case materiality
could very well have been a fact in dispute. The petitioner was
a trader in the over-the-counter market. He had entered into
a series of wash or match trades. These were trades in which
the petiticner sold a stock at one brokerage firm and
purchased the same stock at another brokerage firm. Thus,
there was no beneficial change in ownership. However, the
Government argued that each sale constituted gross receipts
which should have been reported on petitioner’s tax return.
However, petitioner argued that such was immaterial
inasmuch as there was no income from the sale. It is sub-
mitted, therefore, that this Court should assume jurisdiction
of this matter to resolve the conflict between the Circuits and to
further clarify the right of the accused to have the jury deter-
mine all facts at issue at trial including the question of
materiality of an alleged false statement in a tax return.
Issue Three: The decision below conflicts with prior
precedent from this Court to the effect that pre-indictment
delay may violate an accused’s right to due process of law.
Prior decisions of this Court have asserted that in some
instances an accused in a criminal case may have a valid
claim of a denial of due process of law due to pre-indictment
13
delay, United States v. Marion, 404 U.S. 207 (1971); United
States v. Lovasco, 431 U.S. 783 (1977). Two elements of a due
process claim have been considered critical by this Court.
First, that the pre-indictment delay by the Government be
intentional to gain an advantage over the defendant. Second,
that actual prejudice result to the defendant from the delay.
In the instant case both of these requirements are present
and satisfied. The Government had fully investigated and
prepared an indictment for Count II at least three years prior
to the time the indictment was actually returned. Prior to
presenting the matter to the grand jury, the prosecution
checked with other government agencies and discovered that
petitioner was undergoing an investigation by the Internal
Revenue Service. The government intentionally delayed the
presentment of the indictment on the securities violation
until the Internal Revenue Service had completed their
investigation. The prosecutor, in his argument before the
Court of Appeals indicated that the reason for so doing was
that the Internal Revenue Service refused to investigate
charges for prosecution if the target of their invegtigation was
under an indictment or crime arising out of the same facts.
Thus, the prosecutor chose to delay presentation of the
indictment to the Grand Jury until the Internal Revenue
Service had decided whether or not their case was sufficient
for criminal charges. The Internal Revenue Service invest-
igation was not completed until three years after the securities
case was ready for presentation to the Grand Jury. The
Government stated that the delay was, in actuality, to help
the defendant so that he would not be required to face two
separate charges at two separate times (although the
prosecutor did state the Internal Revenue Service would
refuse to prepare a criminal case if the target had been
14
indicted for the same conduct on another charge). Mr. Justice
McKay, of the Tenth Circuit Court of Appeals countered to the
prosecutor that it appeared to him that the Government wished
to lump as many charges as it could in one indictment and
make the defendant appear to be a bad man. The defendant
believes that the delay was to gain the advantage of a whipsaw
or symbiotic prosecution on the two counts because of the
broad joinder allowances of Rule 8, Federal Rules of Criminal
Procedure. These series of match trades or wash transactions
engaged in by the defendant were relevant to the tax
charges. However, the securities portion of the indictment
only charged three transactions and, therefore, the entire
series of wash trades would no be relevant to the stock fraud
charge, but such evidence could obviously influence the
jury as to the defendant’s machinations in the stock market.
The delay in this case enabled the prosecution to obtain an
advantage at trial. The prosecution was so concerned about
such an advantage that when the statute of limitation was
approaching in Count II, it rushed to indict on Count I without
the usual taxpayer conferences that precede federal tax
prosecutions. The statute of limitations on Count II of the
indictment would have run five days after the indictment was
reached. The indictment was returned four years, three
hundred and sixty days after the alleged transaction. The
prosecution did not dispute that, as a result of the delay,
records in the hands of third persons and companies
(Continental Securities Corporation), relevant to the peti-
tioner’s, defense, were stolen or destroyed and witnesses,
having information that would have been useful to the
petitioner, were no longer available. The delay was prejudicial
to the petitioner’s case on Count II. None of the delay was
15
attributable to the petitioner. Evidence on Count II had been
given at administrative proceedings before the Securities
Exchange Commission as early as July, 1974. Although fully
one half of the oral argument and questioning by Mr. Justice
McKay of the prosecution concerned the issue of pre-
indictment delay, the opinion of the Tenth Circuit Court
of Appeals did not even mention this issue. Consequently, the
actions of the trial court and Court of Appeals ignoring this
issue are violative of prior decisions of this Court. Although
this Court has never expressly reversed a conviction for pre-
indictment delay, this case affords an opportunity not only to
rectify an injustice, but to further clarify the standards
addressed in United States v. Marion and United States
v. Lovasco, supra.
Issue Four: This Court has never ruled on the sanctions to
be applied for the Government’s failure to produce statements
pursuant to Rule 16(a)(1)(A). That rule requires the Govern-
ment to produce “any written or recorded statements or
confessions made by the defendant, or copies thereof, within
the possession, custody or control of the Government...” The
defendant’s motion requested the Government to produce
“any written or recorded statement of the defendant, Michael
William Strand, which is in the possession of the government
or which is otherwise available to the government . . . (R-12)”.
The Government responded indicating a willingness to
comply with the provisions of the Rule and in open court
expressed a willingness to follow an “open file policy”. At no
time were any written or recorded statements of the defendant
produced. During the trial, the petitioner took the witness
stand and on cross-examination the prosecutor referred to a
deposition given by Strand before the Securities and
Exchange Commission. When counsel objected stating that
16
he had never been shown the depositions, the prosecutor did
not pursue impeachment or cross-examination of Strand with
the depositions. It became apparant that the petitioner had
not given just one deposition before the Securities and
Exchange Commission, but three. None of these were pro-
duced. This was discovered during a bench conference after
the objection. Following the jury verdict, appellant made a
motion for a new trial based in part, upon the failure of the
government to comply with the provisions of Rule 16(a)(1)(A)
(R-235). The trial court denied the motion without ever,
requiring production of the deposition or examining the
deposition to determine its relevance or potential prejudice.
This matter was raised on appeals before the Tenth Circuit
Court of Appeals. Not only did the petitioner seek reversal,
but at least, sought to have the appellate court allow an
examination of the depositions to determine whether or not
the failure to produce was prejudicial. Again, the Tenth
Circuit Court of Appeals did not opine regarding this issue.
As pointed out before, the indictment was returned almost
five years after the alleged transactions. The deposition
testimony was not something that counsel was aware of or
otherwise had access to. It was apparently given before the
Securities and Exchange Commission several years prior to
the trial. By the government’s initiation of cross-examination
and impeachment based upon the deposition and then the
cessation of such examination upon objection and ruling by
the trial court the jury was left with the obvious impression
that the testimony of the appellant was inconsistent with
some testimony given before the SEC, but the substance of the
inconsistency and the dimensions were never disclosed.
Indeed, whether there was such an inconsistency still cannot
17
be determined, since the government has still failed to produce
the depositions. It is submitted that under such circumstances,
prejudicial error has been committed which warrants the
granting of a new trial. Rule 16(d) F.R.Cr.P. provides that on
the failure of a party to comply with a discovery provision of
Rule 16, the Court may take remedial action. The defendant
submits that in this case the Court should have granted a
new trial. Rule 16(a)(1)(A), F.R.Cr.P. provides for an un-
qualified right of production of all written or recorded
statements or confessions made by the defendant. United
States v. Caldwell, 543 F.2d 1333 (D.C. Cir. 1974). In United
States v. Countryside Farms, Inc., 428 F. Supp. 1150 (D.C.
Utah 1977), the Court interpreted Rule 16 in general as
requiring an opportunity to: “Inspect and copy all docu-
mentary evidence under the control of the government * * *”
It is apparent that in this case there was a failure to comply
with Rule 16.
The failure to make discovery has normally been before the
Tenth Circuit Court of Appeals in conjunction with the
issues of admissibility of evidence and potential prejudice
to the defendant. United States v. Hodges, 480 F.2d 229 (10th
Cir. 1973); United States v. Dowdy, 455 F.2d 1253 (10th Cir.
1972); United States v. Smith, 496 F.2d 185 (10th Cir. 1974);
Nolan v. United States, 423 F.2d 1031 (10th Cir. 1969). In
those cases, the Court has either found that the government
did, in fact, comply with Rule 16 or other production re-
quirements, Nolan v. United States, supra, or that when
examining the evidence found that it was cumulative or
insignificant and that therefore, the failure to make discovery
was not prejudicial. United States v. Hodges, supra; United
States v. Dowdy, supra. In Hodges, the Court acknowledged
18
that recorded conversations of the defendant are dis-
coverable “as a matter of right” on pre-trial discovery
motion. There is no discretion in the trial court. Even so,
the Hodges case stands for a proposition that if it is demon-
strated that no prejudice occurred there is no basis for
reversal. However, in the instant case, it cannot be said that
there wasn’t prejudice. There is simply a failure to comply
with Rule 16. If the statement of the appellant given before the
S.E.C. was in fact consistent with his testimony or con-
sistent with other testimony that had been assailed, that
evidence would have been admissible as substantive
evidence. Rule 801(d)(1)(B), Federal Rules of Evidence,
28 U.S.C.. As such, it may have been useful to the defense.
Furthermore, because of the passage of time the petitioner’s
memory concerning the events was dimmed. He could not
recall what happened with all of the proceeds from the
securities transactions alleged in Count II. The depositions
may have revealed these facts.
Most recently, in United States v. Bowers, 593 F.2d 376
(10th Cir. 1979), the Tenth Circuit Court of Appeals had
occasion to consider the Government’s failure to comply with
production requirements not disclosed as required by Rule
16 F.R.Cr.P. The Court speaking of the trial court’s decision
to allow introduction of evidence not produced when it
should have found no prejudice. In the instant case, since
the nature of the deposition is unknown and in fact, has
never been produced, there is no way of demonstrating
prejudice or lack thereof. It would be incongruous to suggest
that the Government can refuse to comply with a rule man-
dating discovery, fail to disclose the significance of the
evidence not produced, and then contend that in the absence
of demonstrated prejudice, reversal is not proper. Such action
19
would allow the Government to bootstrap its wrongdoing into
a shield for protecting itself from a legitimate claim of error.
The defendant was never given the deposition evidence
within sufficient time to determine whether it may have been
exculpatory usable to contradict Government witnesses,
substantive evidence, or to place evidence in a proper
context. The Government has a duty to turn over ex-
culpatory evidence and it is a continuing one, United States
v. Coppola, 526 F.2d 764 (10th Cir. 1975); Pierce v. United
States, 414 F.2d 163 (5th Cir. 1969). If the government acts
wrongfully, the Court may impose appropriate sanctions,
including dismissal of the charges or a mistrial, United
States v. Leta, 60 FRD 127 (D.C. Pa 1973). In appropriate cases
a new trial is proper, United States v. Rivera, 513 F.2d 519 (2nd
Cir. 1975); United States v. Padrone, 406 F.2d 560 (2nd Cir.
1969). This Court should grant a definitive ruling concerning
the sanctions to be applied for a violation of the discovery
rules by the Government and order that the petitioner is
entitled to a new trial.
Issue Five: Prejudicial error occurred during the pro-
secutor’s closing argument to the jury when he referred to an
invited the jury to speculate as to matters not in evidence.
During the closing argument of the prosecution the following
argument was made to the jury (Tr. Vol. V., p. 816):
“Ladies and gentlemen, at this point it’s difficult
to determine the exact tax liability of Mr. Strand because
these transactions were not reported to the Internal
Revenue Service. We have attempted to show you the
trading activity of Mr. Strand in various accounts. Some
of these we have admitted into evidence. But, in addition
to the ones we have admitted in evidence, you have heard
testimony on various occasions, J.C. O’Quinn acted as
Mike’s nominee; Gary Ramsey acted as Mike’s nominee.
20
We have not provided that information to try to assess
tax.
“Norma Ramsey acted as a nominee. Nancy
Peterson acted as a nominee. Lois Linford at Olsen and
Company, we have not brought her account into this
trial, and other nominees, perhaps Mr. Katter, of Mr.
Strand.
“Now all these nominees, have we really had a
disclosure of the sales transactions, or even the basis
so that a proper tax could be computed?
“We submit not.”
Appellant made a motion for a new trial based upon the above
statement (R. 235). The trial court rejected the motion (R. 253).
It is submitted such action was in error and that the pro-
secutor’s statement was prejudicial and justification for
reversal and a new trial.
The statement of the prosecution was declared to the jury
that other evidence existed, other than that presented, that
would support the prosecution’s case. The statement invited
the jury to speculate about such evidence and use their
speculations as evidence of appellant’s guilt. It is prejudicial
misconduct for a prosecutor to bring to the jury’s attention
matters not properly introduced in evidence. See, 90 ALR
3d 646, 652.
Counsel may not in closing argument, testify as to matters
not in evidence, Abbott, Criminal Trial Practice, § 652.
In Vess, Walking a Tightrope: A Survey of Limitations on
the Prosecutor’s Closing Argument, 64 Journal of Criminal
Law and Criminology 22, 28 (1973), it is observed:
“Conversely it follows from the general rule that the
prosecutor’s remarks are improper if not based directly
on the evidence, if not reasonably inferred from the
evidence, or if they relate to matters outside the issues
21
in the cases. Such comments are speculation and con-
jecture which may confuse and mislead the jury.
Furthermore, argument going beyond the evidence tends
to make the prosecutor a witness. His unsworn testimony
and personal beliefs, although worthless as a matter
of law, can be ‘dynamite’ to the jury because of the
special regard the jury has for the prosecutor, thereby
effectively circumventing the rules of evidence.
“For these same reasons it is improper to refer to
specific evidence which was never introduced or to the
existence of other evidence not in the record.”
The implication or assertion of evidence outside the record
is error. United States v. American Radiator & Standard
Sanitation Corp., 433 F.2d 174 (3rd Cir. 1970). Further,
reference to evidence not in the record is error of such severity
that the failure to object does not waive or excuse the im-
propriety. Garris v. United States, 390 F.2d 862 (D.C. Cir. 1968);
King v. United States, 372 F.2d 383, 395 (D.C. Cir. 1967).
Where a United States attorney, in argument, stated that
fifty witnesses were available to rebut the defendant’s
character witnesses, the Court found reversible error even
though there was no objection, Ginsberg v. United States,
257 F.2d 950, 954 (5th Cir. 1958). The argument of a government
prosecutor introducing before the jury matters not in
evidence was the basis for reversal in United States uv.
Latimer, 511 F.2d 498 (10th Cir. 1975).
Recently, in United States v. LaBarbera, 581 F.2d 107
(5th Cir. 1978), in reversing a conviction, the Court stated:
“Several of the prosecutor’s comments made during
the trial and closing argument, whether intentional or
inadvertant, could easily be construed as indicating that
the prosecutor knew that defendant was involved in
other criminal misconduct and that the prosecutor had
22
knowledge of evidence not before the jury which showed
defendant’s guilt of the present crime. The cases
consistently hold that such comments deprive a
defendant of a fair trial.”
The prosecutor in the instant case made reference to ad-
ditional evidence that had not been presented to the jury and
invited the jury to speculate that the prosecution’s case was
based on more evidence than that actually presented. Such
action in this case was prejudicial and warrants reversal.
CONCLUSION
For these reasons, a writ of certiorari should issue to
review the judgement of the Tenth Circuit Court of Appeals.
Respectfully submitted,
RICHARD J. LEEDY
610 East South Temple
Salt Lake City, Utah 84102
Counsel for Petitioner
23
PUBLISH
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. > No. 79-1155
MICHAEL WILLIAM STRAND,
Defendant-Appellant.
—
Appeal from the United States District Court
For the District of Utah
(D.C. Cr. No. 78-000091)
Steven W. Snarr, Assistant United States Attorney
(Ronald L. Rencher,
United States Attorney, with him on the brief),
Salt Lake City, Utah, for Plaintiff-Appellee.
Richard J. Leedy,
Salt Lake City, Utah,
for Defendant-Appellant.
Before McWILLIAMS, BARRETT and McKAY,
Circuit Judges.
BARRETT, Circuit Judge
24
Michael William Strand (Strand) appeals his jury conviction
of subscribing a false income tax return in violation of
25 USCA § 7206(1) and fraud in the sale of securities in
violation of the Securites Act of 1933, 15 U.S.C.A. § 77q(a)
and 77x. A third charge for interstate transportation of
stolen property was dismissed upon Strand’s motion at the
conclusion of the Government’s case.
The alleged violations occurred during 1973. Strand was
then involved in numerous selling and purchasing stock
transactions of Epoch Corporation (Epoch), being traded on
the over-the-counter exchange. Strand effectuated these
transactions through his own accounts and through various
nomince accounts! at different brokerage houses. By utilizing
both his own and various nominee accounts, Strand was able
to control the purchase and sale “prices” of Epoch stock and
create the appearance of an active market for its securities.
In summarizing these transactions, Special Agent David
Jensen of the Internal Revenue Service estimated Strand’s
Epoch transactions produced gross receipts of $293,793.37.
The Government also established that during this same time
frame, Strand was involved in preparations for two mergers
for which he received finder’s fees of $29,000.00.
Exhibit 27, admitted as a certified copy of Strand’s income
tax return for 1973, showed zero tax computations and income.
It did not contain references to the gross receipts relating to
Strand’s sale of stocks or the aforesaid finder’s fees.
1A nominee account is one in which the account is listed in the name
of an individual, when in fact the transactions within the account
are for someone other than the named individual.
25
Strand defended the charge that he had subscribed a false
income tax return in violation of § 7206(1) on the basis that
he had actually suffered a loss of $7,000 in 1973 on the Epoch
transactions; that he did not realize he had any tax reporting
obligation until after 1973 when he “heard” that even though
he did not have income he was obliged to file; and that, accord-
ingly, in January, 1975, he filed a 1973 return.
Strand defended the fraud in the sale of securities charge
on the basis that: he took over trading in Epoch corporation
when he thought its proposed merger with an insurance
company would cause its stock to increase in value; the sales of
Epoch stock, giving rise to the charges, was initiated by one
Bruce Allen Jensen (Jensen); Jensen managed the entire
transaction and was the principal actor throughout the whole
transaction; he (Strand) was not aware that his account had
been improperly used by Jensen; and when, as here, the alleged
defrauded party, Jensen, was a principal in the transaction
and wholly aware of the nature of the fraud, there was no fraud
on that person simply because the transaction did not prove
to be as beneficial as expected.
Following the jury verdicts of guilty on the charges of
subscribing a false tax return (Count I) and fraud in the sale
of securities, (Count II), Strand was sentenced to three years
on Count I, and five years on Count II, with all but six months
suspended. Strand was ordered to serve the six months in a
‘jail type” facility. He was placed on probation for the balance
of the sentence.
On appeal, Strand contends the trial court erred, inter
alia, in: (1) instructing the jury on materiality in Count I;
(2) not granting his motion to sever the Counts; (3) allowing
specific evidence “of the general bad character of the ap-
pellant”; (4) imposing a different burden of proof on Count II
26
in contradiction to another district judge’s previous ruling;
(5) not correcting the prejudicial error committed by the
prosecutor’s failure to produce evidence properly discoverable
under Rule 16(a)(1)(A); and (6) refusing to dismiss Count II
because of prejudicial pretrial delay.
I.
Strand contends the Court erred in instructing the jury on
the materiality issue found in Count I of the indictment and in
treating the issue as one of law. Strand argues that in so
instructing, the Court effectively denied him his right to
trial by jury.
Count I charged Strand with subscribing a false tax return
in violation of § 7206(1). Section 7206(1) provides in part:
Any person who -
1) Willfully makes and subscribes any return . . . which
contains or is verified by a written declaration that it is
made under the penalties of perjury, and which he does
not believe to be true as to every material matter...
* * *
shall be guilty of a felony...
In instructing on Count I the Court stated:
The question of materiality of the allegedly false
statements made in connection with the subscribing of
a tax return is a question of law for the Court. The Court
instructs you that if you find that a substantial amount
of gross receipts or other income was omitted from the
tax return at issue herein, such omission is of a material
matter as contemplated by Section 7206, Subsection 1,
of Title 26 of the United States Code.
[R., Supp. Vol. VI at p. 921].
27
Section 7206(1) is a felony statute, which “is violated when
one ‘[wlillfully makes and subscribes any return’, under
penalties of perjury, ‘which he does not believe to be true and
correct as to every material matter.’””. United States v. Bishop,
412 U.S. 346 (1973) at p. 350.
While acknowledging that there is a diversity of authority on
whether the issue of materiality under §7206(1) is properly one
of law for the court, Strand contends that the correct rule
is set forth in United States v. Null, 415 F.2d 1178 (4th Cir.
1969) wherein the Court stated that the test of materiality was:
... whether a particular item must be reported “in order
that the taxpayer estimate and compute his tax correctly”
... This issue was properly submitted to the jury.
415 F.2d at p. 1181.
This Court has not heretofore ruled on whether the issue of
materiality under § 7206(1) is properly one of fact for the
jury or one of law for the court. We hold that it is one of law
for the court. We agree with this rationale contained in
United States v. Taylor, 574 F.2d 232 (5th Cir. 1978), cert.
denied, 439 U.S. 893 (1978):
This appeal raises squarely the question of whether
a taxpayer’s failure to report substantial amounts of
gross livestock receipts on Schedule F renders the return
materially false. We hold that it does.
The trial judge did not err in deciding the question
of materiality as a matter of law rather than submitting
it to the jury. We have long held that in a prosecution for
perjury the materiality of the alleged false statement is
a question of law. Blackmon v. United States, 108 F.2d
572, 574 (5th Cir. 1940). The rule applies to prosecutions
under section 7206(1). Hoover v. United States, 358 F.2d
87 (5th Cir. 1966), cert. denied 385 U.S. 822, 87 S. Ct. 50,
28
17 L.Ed.2d 59 (1966); accord, United States v. Romanow,
509 F.2d 26 (1st Cir. 1975).
The Court, in Taylor, supra, further noted:
Other courts of appeals have considered directly
whether omission of gross receipts is a material false-
hood. In Siravo v. United States, 377 F.2d 469 (1st Cir.
1967), the court affirmed a conviction under section
7206(1), holding that gross receipts from the taxpayer’s
business were “material items necessary to the com-
putation of income.” Jd. at 472. In striking similarity to
Taylor, Siravo received wages, which he reported,” and
also operated a jewelry assembling business. He made no
entry on his Form 1040 opposite the heading “profit (or
loss) from business,” nor did he file a separate Schedule C.
The government proved that he had received gross
receipts ranging from $22,242 to $54,319 for the three
years in question.
574 F.2d at p. 236. [Footnote omitted ].
This view was also adopted in United States v. Warden,
545 F.2d 32 (7th Cir. 1976). The Court there stated:
The test of materiality with respect to a false return
case “is whether a particular item must be reported ‘in
order that the taxpayer estimate and compute his tax
correctly.’ ”» United States v. Null, 415 F.2d 1178, 1181
(4th Cir. 1969). Since deductions are subtracted from
fross income or adjusted gross income to reduce the
ultimate tax liability, they are material to the contents of
the return. Stated otherwise, the deduction will in-
variably affect the taxpayer’s liability. Thus, when Judge
McLaren instructed the jury that the deductions were
material matters as that term is used in the indictment,
he did no more than state the obvious fact that deductions
affect the computation of tax liability.
545 F.2d at p.37
29
In adopting this rule, we do not, as well stated in United
States v. Haynes, 573 F.2d 236 (5th Cir. 1978), cert. denied,
439 U.S. 850 (1978), interfere with the jury’s obligation of de-
ciding the ultimate issue of whether the returns were willfully
falsified:
Accordingly, we hold that the materiality question
under § 7206(2) should be treated no differently than the
same issue under § 7206(1) and other federal perjury
statutes. This is, materiality is a question of law to be
decided by the court. We point out that the jury still must
decide the ultimate issue of whether the returns had been
willfully falsified, and this issue is generally the focal
point of § 7206 cases. See United States v. Pomponio, 429
U.S. 10, 97 S. Ct. 22, 50 L.Ed.2d 12 (1976); United States
v. Bishop, 412 U.S. 346, 93 S. Ct. 2008, 36 L.Ed.2d 941
(1973); United States v. Brown, supra. In the instant case,
the jury had to find that Haynes had willfully inflated
legitimate deductions or manufactured non-existent
deductions in order to find him guilty. See United States
v. Warden, 545 F.2d 32(7th Cir. 1976). Thus, the trial judge
in the instant case correctly concluded that the material-
ity question was one of law for the court to decide.
573 F.2d at pp. 240-241.
Il.
Strand argues that the Court erred in not granting his
motion to sever Count I, (subscribing a false tax return) from
the counts of fraud in the securities transactions and inter-
state transportation of stolen property. (As noted, supra,
Count III, charging Strand with interstate transportation of
stolen property was dismissed by the Court at the end of the
Government’s case.)
30
Strand contends that the joinder of Counts I and II was
improper under the Fed. Rules Cr. Proc. rule 8(a), 18 U.S.C.A.,
which provides:
(a) Joinder of Offenses. Two or more offenses may be
charged in the same indictment or information in a
separate count for each offense if the offenses charged,
whether felonies or misdemeanors or both, are of the
same or similar character or are based on the same act
or transaction or on two or more acts or transactions
connected together or constituting parts of a common
scheme or plan.
Strand further argues that even if Counts I and II were
properly joined under Rule 8(a), the Court abused its dis-
cretion in failing to grant his motion to sever and elect under
Fed. Rules Cr. Proc. rule 14, 18 U.S.C.A. Rule 14 provides in
part:
If it appears that a defendant or the government is
prejudiced by a joinder of offenses or of defendants in an
indictment or information or by such joinder for trial
together, the court may order an election or separate
trials of counts, grant a severance of defendants or
provide whatever other relief justice requires.
The decision to grant a severance is within the sound
discretion of the trial court and its decision will not ordinarily
be reversed in the absence of a strong showing of prejudice.
United States v. Heath, 580 F.2d 1011 (10th Cir. 1978), cert.
denied, 439 U.S. 1075 (1979). A trial court may grant a
severance if it appears that the defendant or Government is
prejudiced by joinder. United States v. Herring, 582 F.2d
535 (10th Cir. 1978). In order to obtain a severance, a defendant
must show clear prejudice resulting from joinder at trial.
United States v. Bridwell, 583 F.2d 1135 (10th Cir. 1978). The
fact that severance would improve chances for acquittal is not
31
sufficient. United States uv. Heath, supra; United States
v. Campanale, 518 F.2d 352 (9th Cir. 1975), cert. denied 423 U.S.
1050 (1976).
Applying these standards to the case at bar, we hold that
the trial court did not err in refusing to grant Strand’s motion
for severance. The interrelationship of the evidence, vis-a-vis
the charges of submitting a false tax return and fraud in
the sale of securities, was extremely clear, and, for the most
part, inseparable. Strand’s argument that the investigations of
the charges were handled separately and that severance was
necessarily proper is of no moment, when, as here, evidence of
submitting a false tax return was directly related to evidence
of fraud in the sale of securities. Furthermore, as urged by the
Government, the Court properly instructed the jury on the
separate nature of the offenses charged..
[By the Court]
You are instructed that you must consider each of
the two counts by itself. Each offense charged is a
separate offense and must be considered by you as a
separate offense.
If the essential elements charged as to any count
have been established by the evidence to your satis-
faction and beyond a reasonable doubt, it is your duty
to find the defendant guilty as charged in the particular
count of the indictment. On the contrary, if any one or
more of the essential elements of the offense charged as
to any count has not been established by the evidence to
your satisfaction and beyond a reasonable doubt, orif you
believe the defendant to be not guilty of such count, or if
you have a reasonable doubt thereof, it is your duty to
return a verdict of not guilty as to the defendant as to
such count.
[R., Supp. Vol. VI at pp. 918-919].
32
We hold that the trial court did not err in refusing to grant
Strand’s motion to sever.
IIl.
Strand contends “[tJhe trial court committed error as to
Count II of the indictment in instructing the jury in the
alternative as to acts sufficient to convict where another
district judge had imposed a different burden on the prose-
cution in refusing to dismiss Count II as duplicitous, and as
framed Count II of the indictment was insufficient to allow
defendant to know the nature of the charge against him and
was duplicitous.” [Appellant’s brief at p. 39]. Disposition of
this contention requires elaboration of specific facts relating
thereto.
Several weeks prior to trial, on September 22, 1978, a
hearing was held on Strand’s motion to dismiss Count II of the
indictment. During the course of the hearing Strand argued
that Count II was duplicitous in that three sales were set
forth in the indictment, that the most fatal defect in the
indictment was the failure to allege the instrumentalities (of
interstate commerce) which were used and how, and that it was
impossible to defend the case ‘“‘unless I know what .. . [Strand]
... 18 charged with doing.”.
In response, Government counsel stated that the indict-
ment was sufficient in that it: (1) charged a crime with
sufficient clarity so as to allow Strand to prepare a defense and
(2) protected Strand against being twice placed in jeopardy for
the same offense; that Count II of the indictment set forth one
scheme or device in connection with the offer or sale of certain
securities; and that the six subparagraphs of Count II setting
forth specific events and transactions all portray and describe
33
different aspects of a complete transaction, and, as such,
they all constitute part of one scheme.
In denying the motion to dismiss, the Court stated:
The Court will rule that the motion is denied. The
Government is charged with proving all of those things
and it is the sales as contemplated under the statute.
[R., Supp. Vol. I at p. 23]
In so doing the Court ruled, according to Strand, that the
Government was obligated to prove each of the offenses
conjunctively alleged in Count II.
Strand’s case was thereafter assigned to another judge.
After all of the trial evidence was presented, but prior to the
Court’s instructions to the jury, the following colloquy
occurred in chambers:
THE COURT: All right. Make your motion.
MR. LEEDY: [Counsel for Strand] If it please the
Court, prior to instructing the jury, we would request that
the Court give an instruction that the government be
required to prove all of the allegations contained in
count two of the indictment. This motion is made on the
grounds and for the reason of the earlier ruling of Judge
Anderson in this case that the indictment would not be
dismissed, because of the representations of the U.S.
Attorney that they would prove all of the allegations
contained in count two, and that such proof would be
necessary before a conviction.
MR. SNARR: [Government Attorney] I would like
to respond to that, Your Honor, if I might.
THE COURT: All right.
MR. SNARR: I think what Mr. Leedy has reference
to are the six subparagraphs of the count two which spell
out the scheme to defraud that the government has
alleged. We do allege that each of those six subparagraphs
34
are part of the same scheme to defraud, and that they are
all interrelated and a necessary part of that scheme. We
feel that the Court’s suggested instruction coming from
Devitt and Blackmar, Section 54.07, covers the point in
that it requires that the jury find the defendant to be
involved with that particular scheme which we have
spelled out in those six subparagraphs, and with that
instruction, and entitled, “You must find: specific scheme
as charged,” we believe that that is an appropriate in-
struction consistent with the law, and also consistent
with Judge Anderson’s ruling on that point.
THE COURT: Well, if I had made a ruling, I would
have reversed myself. If that’s what he’s ruled, that you
have to prove every one of them, because that’s not the
law. The law is that they muxt prove one or more. And
that’s the way I’m going to rule. So the motion will be
denied.
[R., Supp. Vol. VI at pp. 844-845].
Pursuant to this ruling, the Court instructed the jury in
detail relative to Count II by reading Count II, verbatim and
by reading §§ 77q(a) and 77x verbatim, and thereafter further
instructing:
The burden is on the prosecution to prove each of
these elements beyond reasonable doubt. The law never
imposes on the defendant in a criminal case the burden of
introducing any evidence or of calling any witnesses.
[R., Supp. Vol. VI at p. 926]
Strand contends that by reason of the aforesaid pretrial
ruling of Judge Anderson the Government was obligated to
prove each of the offenses conjuntively alleged in Count II,
i.e., that he did employ a device, scheme, and artifice to
defraud; that he had obtained money and property by means of
untrue statements of materials facts and omissions; and that
he engaged in transactions and practices in a course of
3u
business which operated as a fraud and deceit upon principals
of Epoch Corporation stock. [Appellant’s Brief at pp. 39-40].
Thus, Strand contends that the Court was obligated to prove,
conjunctively, the violations set forth disjunctively under
§ 77q(a) which provides:
§ 77q. Fraudulent interstate transactions
(a) It shall be unlawful for any person in the offer
or sale of any securities by the use of any means or
instruments of transportation or communication in
interstate commerce or by the use of the mails, directly
or indirectly —
(1) to employ any device, scheme, or artifice to
defraud, or,
(2) to obtain money or property by means of any
untrue statement of a material fact or any omission
to state a material fact necessary in order to make
the statements made, in the light of the circum-
stances under which they were made, not mis-
leading, or
(3) to engage in any transportation, practice, or
course of business which operates or would operate
as a fraud or deceit upon the purchaser.
15 U.S.C.S., § 77q(a). [Emphasis supplied ].
We disagree with Strand’s construction of the two rulings
in question. It is clear that during the course of the pretrial
hearing, Strand repeatedly argued that Count II was du-
plicitous in that the six subparagraphs set forth therein
alleged three separate violations. It is equally clear that the
Government defended Count II on the basis that it set forth
and alleged one scheme or artifice to defraud and that the sub-
paragraphs simply delineated or identified the interrelated
events and transactions forming the single scheme or artifice
to defraud. It is in this setting that the trial court, in our
36
view, correctly ruled that because the Government was
alleging a single scheme or artifice to defraud, it had to prove
each of the events and transactions delineated within the six
subparagraphs of Count II. Such a ruling, however, is not in
conflict with the trial court’s subsequent ruling, prior to sub-
mitting instructions to the jury, that under § 77q(a) the
Government need only prove one or more of the three sub-
sections set forth therein. Thus, we hold that the rulings
were not in conflict. One presiding judge at pretrial ruled on
the burden of proof relating to a particular count, and there-
after the trial court judge ruled on the proof necessary to
convict under a specific statute. To be sure, we acknowledge
the direct relationship between Count II and § 77q(a). Even so,
the rulings are not pari materia as alleged by Strand. Thus,
they do not give rise to any prejudice or reversible error. This
is particularly true, when, as here, the instructions given,
when considered in whole, were proper and adequate.
IV.
Whereas Strand attacks the sufficiency of the evidence
under Count II vis-a-vis the participation of Bruce Allen
Jensen as an officer of Associated Underwriters, he has
failed to cause to be transmitted to this Court as part of the
record on appeal, a transcript of the trial proceedings. See
United States v. Hubbard. 603 F.2d 137 (10th Cir. 1979). Thus,
we decline to consider any sufficiency of evidence con-
tentions “since we cannot make a meaningful evaluation of
the claims of error”. Herron v. Roselle, 480 F.2d 282, 288
(10th Cir. 1973).
Assuming, without conceding, on the basis of Strand’s
record on appeal, that Strand’s appellate brief constitutes a
37
challenge to the sufficiency of the evidence, we are bound, in
reviewing the sufficiency of the evidence, following a verdict
of guilty, to view the evidence in the light most favorable to
the Government to determine whether there is sufficient sub-
stantial proof, direct and circumstantial, together with
reasonable inferences to be drawn therefrom, upon which a
defendant might be found guilty beyond a reasonable doubt.
United State v. Gibbons, 607 F.2d 1320 (10th Cir. 1979).
Viewed in this light we are satisfied that the evidence amply
supports the conviction.
We have carefully considered Strand’s remaining alleg-
ations of error. We hold that they are, individually and
collectively, without merit.
WE AFFIRM.
38
No. 79-1155 UNITED STATES OF AMERICA
v.
MICHAEL WILLIAM STRAND
McKAY, Circuit Judge,
concurring in part and dissenting in part:
I concur with the majority’s treatment of the issues con-
cerning Count I of the indictment. I believe, however, that
Part III of the majority opinion seriously undermines a
fundamental tenet of our jurisprudence — that an accused
defendant “be informed of the nature and cause of the
accusation,” U.S. Const. amend. VI, in order that he may
prepare and present his defense.
I agree with the majority that Judge Anderson, who
presided at the pretrial hearing, imposed on the government
the obligation to prove the six alleged events and trans-
actions set out in Count II, but not each of the alternative
subparts of § 17(a) of the Securities Act of 1933. However, I find
no basis for the majority’s position that the trial judge did not
reverse Judge Anderson on that more limited issue. I do not
find in the trial judge’s language, reproduced by the majority
at page 14 of its opinion, even the slightest room for doubt
about the subject of his ruling.
A comparison of the pretrial hearing discussion with the
trial judge’s jury instruction makes clear that the majority’s
characterization is at odds with what in fact occurred.
Immediately before his ruling, Judge Anderson engaged in the
following colloquy with the government attorney:
THE COURT: Well, if [the six events and trans-
actions] are all interrelated than you are saying you have
to prove them all.
MR. SNARR: I am happy and comfortable with that,
Your Honor. I am not sure I am willing to say at this point
if I missed one I would not have proved the total scheme
39
to the satisfaction of the jury. We think they are all part
of the scheme and we had to charge them all and we would
be attempting to prove them all in support of the one
charge and that’s the scheme to defraud.
[R., Vol. I at p. 22]
Judge Anderson then charged the government with
“proving all of those things.” Jd. at 23. In contrast, the trial
judge instructed the jury that the fraudulent scheme could be
shown much more easily:
While a number of representations are alleged in the
indictment, it is not incumbent upon the government to
prove each and every one of them, but is incumbent upon
the government to prove one or more, or a sufficient
number of them to indicate and show to you beyond
reasonable doubt that the scheme alleged was actually
set up.
[R., Supp. Vol. 6 at p. 932].
I cannot imagine a more sharply defined reversal of legal
theories.
The implications of the majority’s opinion are especially
troublesome. In this case the defendant properly believed
that the government was working under one theory, and his
defense was based upon that understanding. Only after his
entire case was presented were the rules of the game changed.
To hold, as the majority does, that the rulings “do not give
rise to any prejudice,” maj. op. at 16, is to render the mandates
of the Fifth and Sixth Amendments meaningless. Read
expansively, but not unfairly, this decision permits the
government to inform the accused of the “nature and cause
of the accusation” after the completion of the trial.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.