Opposition Brief — Schwartz v. New York

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FILED

DEC 2 7 1965

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JOHN F. DAVIS, CLERK

IN THE .

Supreme Court of the United State

OCTOBER TERM, 1965

. No. 725

SIDNEY SCHWARTZ,

Pulitenee,

against

PEOPLE OF THE STATE OF NEW YORK,

Respondent.

On PeEtiTION For Writ oF CERTIORARI TO REVIEW

THE JUDGMENT OF THE APPELLATE DIVISION OF THE

SuPREME CourT OF THE STATE OF NEW YORK,

First JupIcIaAL DEPARTMENT

BRIEF FOR RESPONDENT IN OPPOSITION

Louis J. LEFKow!1Tz

Attorney General of the

State of New York

Attorney for Respondent

80 Centre Street

; New York, New York 10013

SAMUEL A. HirsHOWITZ

First Assistant Attorney General

Davip CLURMAN

Aan L. Kaztow

Special Assistant Attorneys General

Barry MAHONEY

Assistant Attorney General

of Counsel | ‘

_

<a 249 Press of Fremont Payne, lnc., 80 Washington St., N. Y.—BOwling Green 9-8153

BLANK

TABLE OF CONTENTS

Preliminary, Gtatement . oo... osc cccccedcbeckc. 1

NN TN ibd ced depnswdndecs nis dee tend 2

TU: vhadcccdstivettdiaredibibdane. 2

Statutes and Constitutional Provisions Involved .... 3

Questions Presented ................ ‘aneedenouess 3

NE oe tévscasdthebe Si ee eck, 3

Arcument—Petitioner’s claim that illegally seized

evidence was used against him at trial is devoid

OF IEE vk bissedencadcaeiics vice ee, 7

A. The books and records which were used at

petitioner’s trial were the subject of a sub-

poena which had not been satisfied at the time

they were taken from pétitioner’s office on

eer Be cv cddvdracecces Seber ecdoetes 7

B. Even assuming, arguendo, that a subpoena

was not outstanding, the record shows that

petitiongy consented to the removal of the

books and records from his office ........... 8

C. The records taken were held by petitioner in

a representative capacity and are deemed to

be public or quasi-public records, and, there-

fore, not subject to the personal privilege

against unreasonable searches and seizures... 11

COD sts Kevddie doveycdes eewebdcetias tees 14

PERE 6 cds Hock idineracies takedees del 15

PTE EE cddivacervadsbanetentoxdc gases obese ona 20

BGG © ccccscsssedsccostdddecettedsiaes 21

li TABLE OF CONTENTS

CITATIONS

Cases:

Bowles v..Misle, 64 F. Supp. 835 (D. Nebraska, 1946) 12

Davis v. Securities & Exchange Commission, 109 F.

2d 6 (7th Cir., 1940), cert. dented 309 U. S. 687

SE FAG tela Cini es4s + ekbedR eee es emmny nas 11

Davis v. United States, 328 U. S. 582 (1946) ........ 12

Dunham v. Ottinger, 243 N. Y. 423 (1926), app. dis-

missed 276 U.S. 592 (1928) ......... scene 10, 11, 12°

Hale v. Henkel, 201 U. S. 43 (1906) ................ 12

Marron v. United States, 275 U. S. 192 (1927) ...... 12

McPhawl v. United States, 364 U. S. 872 (1960) ..... 13

Oklahoma Press Publishing €o. v. Walling, 327 U. S.

EE 50a) 4 in ache rans bee b erences ees 11, 12

R@pers v. United States, 340 U. S. 367 (1951) ....... 13

Shapiro v. United States, 335 U. S. (1948) .......... 11,12

Troy Laundry Co. v. Wirtz, 155 F. 2d 53 (9th Cir.,

1946), cert. denied 329 U. S. 723 (1946) ........ 11

United States v. Hopps, 215 F. Supp. 734 (D. Md.,

1962), aff’d 331 F. 2d 332, cert. dented 379 U. S.

i SR tia RD 14

United States v. Morton Salt Co., 338 U. S. 632 (1950) 12

United States v. Mulligan, 268 F. 893 (N.D.N.Y., 1920) 12

United States v. Sherry, 294 F. 684 (M. D. Ill., 1923) 10

United States v. Silverstem, 314 F. 2d 789 (2d Cir.,

1963), cert. denied 374 U. S. 807 (1963) ........ 13

United States v. Stern, 225 F. Supp. 187 (S.D.N.Y.,

EL Che advetatnsViaes fens ete naaeseessisess 12

United States v. White, 322 'U. S. 694 (1944) ........ 13

Wilson v. United States, 221 U.S. 361 (1910) ....... 12, 14

Zap v. United States, 328 U. S. 624 (1946) ........ 9,10, 12

' “Statutes: -

New York General Business Law, Art. 23-A, §§ 352

Reeth Cah ce coke chad news} enne ess apes 2, 4, 5, 11

New York Partnership Law, Article 8,$99 ......... 13

New York Penal Law, § 920 ..............ccseeeees 2

New York Penal Law, §932 ..................0005. 2

New York Penal Law, $952 . :....5.... 2. cc cceccese 2

In THE

Supreme Court of the United States

OCTOBER TERM, 1965

%

No. 725

Swwyey Scuwarrz, be

Petitioner,

against

PEOPLE OF THE STaTE oF New York,

Respondent.

On Petition ror Writ or CertTioraki TO REVIEW

THE JUDGMENT OF THE APPELLATE DIvISION OF THE

SupreMEe Court or THe State or New York,

‘First Jupicia, DeparTMENtT

A.

—_

BRIEF FOR RESPONDENT IN OPPOSITION

Preliminary Statement

On January 4, 1965 petitioner was convicted in the

Supreme Court of. the State of New York, New York

County (Backer, J.) on six counts of an indictment’ charg-

1 The indictment charged petitioner with causing a false statement

as to securities to be made, issued or published in violation of N. Y.

(Footnote continued on following page)

2

ing him with fraudulently issuing and selling both regular

and subordinated limited partnership interests in excess

of thé stated capital as represented in the prospectus (Peo-

ple’s Exhibit 1, R. 31). The judgment was unanimously

affirmed by the Appellate Division, First Department, on

July 1, 1965. Leave to appeal to the New York Court of

Appeals was denied by Judge Burke of that Court on

August 6, 1965, and reargument was denied on August 18,

1965. |

Petitioner now seeks review of the Appellate Division %

judgment of affirmance, claiming that illegally seized evi-

dence was used against him at trial in derogation of his

rights under the Fourth, Fifth and Fourteenth Amendments

to the Constitution.

Opinions Below

The judgment of the Appellate Division, affirming the

conviction without opinion, is reported at 24 App. Div. 2d

704. No opinion was written by Judge Burke when he

denied leave to appeal to the New York Court of Appeals.

Jurisdiction

- Petitioner seeks to invoke the jurisdiction of this Court

under 28 U.S.C. § 1257 (3). ‘

(Footnote continued from preceding page) -

Penal Law §952 (Count 1); obtaining a signature to a written

jnstrument by.-use .of .a false statement or writing im violation of

§ 932 of the Penal Law (Counts 2, 3, 4, 5. and 6); en ing in

Jeossdadians testes tt ateeme ta ditain cumnid 4h ethan oF

Business Law § 352 (c) (Count 7) ; and committing a fraud in the

affairs of a limited partnership.in violation of § of the Penai

Law (Count 8). Petitioner was convicted on counts 1, 3, 4, a 7

and 8.. He was sentenced to oes. pone on counts 1, 3,.4 and 5; six

months on count 7; and six months on count 8, all sentences to run

cone. urrent “ ly. a +d

a. i Pte, : -

3

Statutes and Contifitutional Provisions Involved

The pertinent provisions of Article 23-A of the General

Business Law, empowering the Attorney General to regu-

late the issuance and sale of securities including specific

authority to examine witnesses under oath, compel produc-

tion of books, documents and records, and also requiring

registrants to file annual reports with the State Depart-

ment of Law, are set forth in Appendix A, infra, p. 15.-

Questions Presented *

Whether petitioner’ s rights to be free from unreasonable

searches and seizures were violated where: ;

1, Petitioner, as a general partner of a state sididehls

real estate firm, was served with an administrative

subpoena duces tecum requiring the production of partner-

ship records to which he responded by delivering some

records and allowing representatives of the Attorney Gen-

eral to remove others from his office.

2. Petitioner concedes he consented to the search and

examination of these records at his office’ but—for the

first time—now denies he agreed to their removal, even

though he cooperafed fully with the inquiry both before and

after the removal and never asked for their return beler: to

his indictment in July of the following year. _

3.. The records removed were held by petitioner 4 ina

representative capacity and were: required: by law to 4

kept for examination. |

_ Petitioner was & pendtht ‘darter’ and in ‘control of theeis

Arts Associates, a limited partnership organized by him. in

November of 1960 for the purpose of obtaining a long

term ground lease to Beaux Arts Apartments, located in

a

+

Miami Beach, Florida (See prospectus, People’s Ex. 1,

R. 31). In order to raise the funds for acquisition of the

property Schwartz caused a prospectus (Ibid.) dated Feb-

ruary 23, 1961, to be issued. The prospectus, offering to

the public some $790,000 in additional limited partnership

interests, was filed with the Department of Law in aecord-

ance with § 352-e(1) of the General Business Law of the

State of New York. Petitioner also filed a Registration

Statement with the Securities and Exchange Commission

under the Securities Act of 1933 (Ibid.).

Acting pursuant to his statutory mandate to protect the

public against fraudulent practices in the sale of securities

(See App. A, §352 (1)) the Attorney General, in April

of 1962, commenced an investigation into the activities of

the petitioner in the real estate securities field. The full

chronology of the investigation is set forth in an affidavit

dated August 8, 1963 of Saul S. Cohen, Esq., the Assistant

Attorney General in charge of the inquiry, submitted in

opposition to petitioner’s pre-trial motions for inspection .

of the grand jury minutes and dismissal of the indictment

and for suppression of certain evidence.? The factual

allegations of this affidavit have never been disputed by

petitioner, except as herein indicated. ~

According to the Cohen affidavit, Schwartz appeared at

the Attorney General’s office with counsel on May 21,

1962, and was served with a subpoena duces tecum calling

for the production of: ‘‘all books, papers, records and©

other documents in relation Beaux Arts Assoc.’’ [sic]. He

was at that time informed that he might be excused from

answering any question put to him or from producing any

2 See papers in support and in opposition to petitioner’s motion

of August 9, 1963 to inspect the Grand Jury minutes and to dismiss

the indictment, and decision of Mr. Justice Gellinoff dated October

21, 1963 denying said motion. Appendix B, infra, p. 20. See also

decision of Mr. Justice Sarafite dated February 27, 1964 denying

petitioner’s motion to suppress brought on same papers as the

previous motion to inspect. Appendix C, infra, p. 21.

* Exh. 7 annexed to Mr. Cohen’s affidavit dated August 8, 1963.

5

books, papers’ or other documents on the ground or for

the reason that his ‘answer or the documentary evidence

requested might tend to incriminate him. Petitioner ex-

pressed his understanding of this admonition and further

stated his willingness to cooperate fully and submit all

materials which the Attorney General deemed useful in

the investigation (Id. pp. 2 and 4).

It was agreed that petitioner would not have to bring

any of these documents to the Attorney General’s office,

but could send them down by messenger (Jd. p. 3). On

June 12, 1962, some of the requested documents—specifi- “

cally, the cash books, bank ledger and bank reconcilations

of Béaux Arts Associates—were transmitted to Assistant

Attorney General Cohen (Jd., Exh. 8).

Throughout the course of the investigation, petitioner

submitted various other books and records ,relating to a

number of his transactions in the real estate field in-

cluding documents relating to Beaux Arts Associates

(Jd., Exh. 11). In regard to some of the books and records

subpoenaed by the Attorney General, Schwartz appeared

at the Department of Law office on September 11,. 1962,

with his attorney, and claimed he was unable to produce

them because a robbery had taken place in his office and

his controller and head bookkeeper had resigned (Id., p.

6). He stated, however, that the books were only mis-

placed, and agreed to allow members of the “Attorney Gen-

eral’s staff to examine all books and records at his office

and remove those records which they deemed pertinent to

the inquiry (Jd., p. 6). .

After receiving a letter of authorization dated September

13, 1962* prepared by Schwartz’ attorney, Mr. Gombar, an

* Jd., Exhibit 16. The letter reads: “This is to advise that

pursuant to your request Mr. Sidney Schwartz’ office has au-

thorized to make all books and records available for your examination

at Mr. Schwartz’ office.”

el La te a Te ee

6

accountant from the Attorney General’s office, visited: peti-

tioner’s office and made a preliminary examination.

- On September 24, 1962 petitioner again appeared at the

Attorney General’s office, accompanied by counsel, and con-

sented té%a second visit by additional members of the De-

partment of Law arranged for October 2, 1962. Three

representatives of the Attorney General met Schwartz at

his: office on that date, and petitioner repeated that all

books and records were available for examination and that

those deemed relevant to the investigation could be taken.°

The books and records were removed on authority of the

outstanding subpoena and with petitioner’s consent.

On the following day, October 3, 1962, petitioner ap-

peared at the Attorney General’s office. He made no com-

plaint about the manner of the examination of his premises

or of the books taken. Significantly, petitioner never

denied in the courts below that he explicitly consented to

the removal of these records on September 11, 1962. To

the contrary, petitioner argued that the records were re-

moved in compliance with a subpoena which had previ-

ously been served upon him.‘ His sole contention was that

the records taken and the testimony given by him at the

administrative hearings held by Mr. Cohen were all ac-

complished ‘‘under compulsion of subpoena,’” and that

this somehow violated his constitutional rights.

At no time prior to his arrest. did Schwartz or his at-

torney demand the return of any of the books and records

"8 See affidavits of Mr. Gomber, Mr. Hatem and Mr. Cantor,

submitted in opposition to petitioner’s motion to inspect the Grand

‘Jury minutes and to dismiss the indictment and incorporated by

reference in opposition to the motion to suppress. =

*See affidavits of Sidney Schwartz, dated July 30, 1963 and

August 14, 1963 submitted in support of the motion to inspect the

Grand Jury minutes and incorporated by refererite in the motion to

* Id., affidavit dated July 30, 1963, pp. 2 and 4. ‘a

7

in issue. Instead, he cooperated fully, furnished the-state

with additional documents regarding Beaux Arts property

as late as February. 13, 1963,° and readily consented (with

the advice of counsel) to subsequent visits at his office ad

members of the Attorney General’s staff.’

ARGUMENT

Petitioner’s claim that illegally seized evidence was

used against him at trial is devoid of merit.

A. The books and records which were used at petitioner's

trial were the subject of a subpoena which had not been

satisfied at the time they were taken from ns

office on October 2, 1962.

The decision of Mr. Justice Sarafite (Appindix’ ©, sofra,

p. 21), asserted to be erroneous in the petition (Pét.'9), is

based on the finding that the books and records were -ob-

tained according to lawful process of subpoena which peti-

tioner neither sought to quash nor refused to respond. -

Petitioner argues in a vacuum, wholly ignoring the exist-

ence of the subpoena of May 21, 1962 which directed ‘him

to produce ‘‘all books, records, papers-and other documents

in relation Beaux Arts Assoc.’’ This subpoena was only

partially satisfied by the production on June 12,1962 of

the cash book, general ledger and bank reconciliation’ of

Beaux Arts Associates,;and by-the-production.on:August 9,

1962 of a list of subordinated units-on-the Beaux: Arts prop-

erty. As clearly documented in the affidavit of Assistant

Attorney. General Cohen. and confirmed in Schwartz? affi-

davits-of July. 30, 1963-and. August 14; 1963, 4submitted in

support of the motion ‘to suppress), the October-2nd visit

was made with the latter’ s consent in an effort wo satiety

outstanding eet

*Td., p.10. Meda ei

°Id.,p.9. * EOE ie eae Re Be

8

Petitioner admitted this when he stated in his affidavit

of July 30, 1963 (p. 4):

‘*Under the compulsion of subpoena I have been com-

pelled to testify against myself and have been com-

pelled to produce my books and records.’’

The record is replete with similar admissions (see papers

in support of this motion and R. 443). These statements

offer compelling proof that all the books and records were

obtained pursuant to subpoena. The decision in the court

below denying the motion to suppress, is thus amply sup-

ported by the record. Petitioner, having failed to persuade

the state courts that the subpoena power was improperly

used, has now completely shifted his position to claim there

was no subpoena.

The suggestion in the petition (Pet. 11) that no sub-

poena was outstanding is based on excerpts taken out of

context from statements made by the trial prosecutor” and

wholly ignores statements of Schwartz, admitting that he

produced the records pursuant to subpoena, as well as the

obvious fact that the subpoena of May 21, 1962 was never

satisfied. The inescapable fact is that a subpoena requiring

the production of these books and records was unsatisfied

and outstanding at the time they were obtained.

B. Even assuming, arguendo, that a subpoena was not out-

standing, the record shows that petitioner consented to

the removal of the books and records from his office.

Petitioner concedes that he consented to allow members

of the Attorney General’s staff to search and examine all

records at his office on October 2, 1962 (Pet. 7, 8, and 11).

0 Petitioner is in error when he states (Pet. 9) that the Attorney

General has admitted that there was no subpoena outstanding at the

time the records were taken on October 2. The full context of the

statement of the Attorney General at the trial, to which petitioner

refers (id.) makes it ound that the trial prosecutor stated that ‘to the

best of his recollection there was'no subpoena outstanding. at that

time. (See R. 507.)

9

However, he now—for the first time—blandly disputes the

allegations in Assistant Attorney General Cohen’s affidavit

to the effect that petitioner told him on September 115 1962

that representatives of the Attorney General could take

whatever records they felt were pertinent to the. investi-

gation.

Even without considering this tardy refutation, and view-

ing only Schwartz’ well documented, indisputable pattern

of cooperation before and after the October 2nd visit, it is

clear that he had consented to the removal of the records.

Petitioner voluntarily and upon request furnished docu-

ments and information regarding his syndication activities

before October 2nd." Likewise, after said date, additional

information and documents requested were supplied with-

out protest. (Id., e.g., Exh. 40). The visit on October 2nd

was made with petitioner’s express consent and after the

Attorney General had received a letter of authorization pre-

pared by his attorney (Jd. Exh. 16). Significantly, on

October 3rd, the day following the allegedly objectionable

seizure, Schwartz readily consented to an examination of

various records kept at his office (Id. p. 9). After receiv-

ing another letter of authorization prepared by his attor-

ney (Jd. Exh. 38), an examination taking several days was

made. Notably, excerpts from the records were taken

without objection (Id. p. 9).

All these events conclusively establish a pattern of con-

tinuing cooperation throughout the entire investigation and

belie petitioner’s belated denial that he consented to the

removal of the records. It is significant that at no time

prior to his arrest did he object to their removal or. request

their return. Airis

This case is even stronger than Zap v. United States, 328

U. S. 624 (1946), vacated on other grounds 330 U. S. 800

(1947), where this Court upheld the admission into evi-

*1 See Exhibits 9, 10 and 11 annexed to Cohen affidavit of August

8, 1963. i -

10

dence of a check seized by the government,*without the de-

fendant’s explicit consent, during an examination of his

books and records to which he had agreed. In the affidavits

submitted by petitioner in support of the pre-trial motions,

he admits that he turned over the records in response to

outstanding subpoenas. Even assuming a subpoena was not

outstanding on October 2nd, the records were unquestion-

ably subject to subpoena and the Attorney General could

have compelled their production at his offices at any time.

To soften its impact, petitioner attempts to distinguish

the Zap case by emphasizing inconsequential facts (Pet.

11 and 12). He urges, for example, without reference to

the record, that the State could not make a ‘‘meaningful

analysis’’ before seizing the records (Pet. 11). However,

the fact that the State representatives spent a full day at

petitioner’s offices and took only selected records wholly

refutes this assertion.

The record clearly shows that the Attorney General had

subpoenaed these records and was entitled to examine them

at his office. Dunham v. Ottinger, 243 N. Y. 423 (1926),

app. dismissed 276 U. S. 592 (1928). Furthermore, peti-

tioner had expressly consented to the search and ‘‘. . . the

taking of the papers which the United States had the right

to inspect to the government offices cannot be viewed as an

unreasonable seizure within the meaning of the Fourth

Amendment.’’ United States v. Sherry, 294 F. 684, 686

(M. D. IIL, 1923).

Petitioner, having consented to the search and exam-

ination, was-not prejudiced by the fact that the examination

took place in the state’s offices rather than his own. Cer-

tainly, ‘‘. . .. The agreement to allow an inspection carried

consequences, = least so great.’’? Zap v. United States,

supra, at 6

12 Petitioner mistakenly assumes the introduction in evidence of

the books and records removed on October 2 was necessary to his

(Footnote continued on following page)

11

C. The records taken were held by petitioner in a repre-

sentative capacity and are deemed to be public or quasi-

public records and, therefore, not subject to the personal

privilege against unreasonable searches and seizures.

The issuance and sale of real estate syndication securi-

ties is regulated under both federal law (Securities Acts of

1933 and 1934) and New York State law (Articles 23-A of

the General Business Law of the State of New York, § 352

et seq.). It cannot be questioned that by virtue of the

broad investigative and administrative powers conferred

under these statutes,"* the books and records of a firm

which registered a securities offering pursuant to those

statutes are of a public or quasi-public nature and there-

fore non-privileged. Cf. Oklahoma Press Publishing Co,

v. Walling, 327 U. 8. 186 (1945); Troy Laundry Co. v.

Wirtz, 155 F. 2d 53 (9th Cir. 1946), cert. denied 329 U. S.

723 (1946) ; Dunham v. Ottinger, supra; Davis v. Securities

. and Exchange Commission, 109 F. 2d 6 (7th Cir. 1940),

cert. denied 309 U. S.°687 (1940).

In Shapiro v. United States, 335 U. S. 1 (1948), this

Court said:

. . Accordingly, the principle enunciated in the

Wilson Case, and reaffirmed as recently as the Davis

Case, is clearly applicable here: namely, that the privi-

lege which exists as to private papers cannot be main-

tained in relation to ‘records required by law to he

kept in order that there may be suitable information

_of transactions which are the appropriate subjects

of governmental regulation and the enforcement of

(Footnote continued from preceding page)

conviction (Pet. 4, 5 and 6). However, the oversale of the $85,000

in subordinated units was established entirely by independent evi-

dence and would be sufficient to uphold his conviction. See P. 19

of Respondent’s Brief submitted to the Appellate Division, First

Department. saith

*8 See Appendix A, infra, p. 15, General Business Law, §§ 352

(1), (2), and § 352-e (8). 7 “it =

12

restrictions validly established’. (citations omitted) ’’

(pp. 32 and 33)

In Bowles v. Misle, 64 F. Supp. 835 (D. Nebraska 1946),

cited with approval in Shapiro, supra, at 23, the Court

declared :

‘*. .. the immunities of the Fourth and Fifth Amend-

ments are not absolute but rather subject to waiver

and that he who enters into, or continues in, a business

subject to official regulation voluntarily submits his

business records and papers to such visitorial exam-

ination as the law contemplates, and, in that measure

waives his constitutional immunities of privacy in

respect to his papers and against compulsory testi-

mony.”’ (p. 843)

See also: Hale v. Henkel, 201 U. S. 43 (1906); Wilson

v. United States, 221 U. S. 361 (1910); Davis v. United

States, 328 U. S. 582 (1946); United States v. Mulligan,

268 F.. 893 (N. D., N. Y. 1920). The records here involved

are required by law to be kept for inspection and examina-

tion by the State (see supra, p. 11) and are therefore

non-privileged. Cf. Dunham v. Ottinger, supra.

Petitioner’s suggestion that the books and records re-

moved from his office were improperly taken because they

were not instrumentalities of a crime” is not relevant in

this case, where the petitioner had consented to an exam-

ination of the records and the records were removed pur-

suant to an administrative proceeding in a regulated

industry. Cf. Zap v. United States, supra; Oklahoma

Press Publishing Co. v. Walling, supra; United States

v. Morton Salt Co., 338 U. S. 632 (1950). In such cases

‘the disclosure sought will be allowed if reasonable, i.e.,

14 For cases holding books and records as instrumentalities of a

crime, see Marron v. United States, 275 U. S. 192 (1927) ; United

-States v. Stern, 225 F. Supp. 187 (S. D. N. Y. 1964).

13

if the investigation is authorized by statute and the docu-

ments sought are relevant to the inquiry (Ibid.). Un-

doubtedly, this test is met here.

In addition, the books and records taken“were held by

petitioner in a representative rather than in a personal

capacity and, therefore, were not subject to the personal

privileges against self-incrimination or unreasonable

search and seizure. United States v. Silverstewm, 314 F.

2d 789 (2d Cir. 1963), cert. denied, 374 U. S. 807 (1963);

cf. McPhaul v. United States, 364 U. S. 372 (1960), re-

hearing denied 364 U. S. 925 (1960); Rogers v. United

States, 340 U. S. 367 (1951); United States v. White, 322

U. S. 694 (1944). Petitioner himself stated in the pros-

pectus (People’s Ex. 1, R. 31) at page 14: ‘‘a limited

partner has the right to inspect the partnership books,

to have on demand information regarding partnership

affairs and to obtain an accounting wherever circumstances

render it just and reasonable.’’®

Petitioner attempts to becloud the issue in arguing that

two of his purported ‘‘personal books’’ were allegedly

illegally seized (Pet. 4). Not only were these books deliv-

ered with the other partnership records in response to the

subpoena aforementioned but further they contain numer;

ous partnership transactions. Laura Satz, petitioner’s

bookkéeper and office manager, acknowledged this when she

testified that People’s Exhibit 51 (‘‘Sidney Schwartz Spe-

18 New York Partnership Law, SArticle 8, §99 provides: “(1)

A limited partner shall have the same rights as a general partner

to (a) Have the partnership books kept at the principal place of

business of the partnership, and at all times to.inspect and copy any

of them. (b) Have on demand true and full information of all

things affecting the partnership, and a formal account of partner-

_ affairs whenever circumstances render it just and reason-

able .~.” Res:

16 People’s Exh. 51 contains receipts of monies from Beaux Arts

investors from August 12, 1960 to June 4, 1961; People’s Exh.- 52

records payment of distributions to various Beaux Arts investors as

well as payment of partnership’s organization” and office expenses

(see C. D. 32, 55 and 61).

14

¢

cial Royal State Bank’’, R. 456) ‘‘. . . is mainly holding |

the receipts of the different syndications’’ (R. 455) and/

People’s Exhibit 52 (‘‘Sidney Schwartz Regular Trade

Bank’’, R. 458) ‘‘. . . was for the organization, office pay-

roll, office expenses’’ (R. 457).

The fact that the petitioner failed to contest the sub-

poena either before or after delivery of these books and

never claimed they were personal books until the aforesaid

motion to inspect and the motion to suppress is strong

evidence they are the partnership’s books. United States

v. Hopps, 215 F. Supp. 734, 755 (D. Maryland 1962), aff’d

331 F. 2d 332, cert. denied 379 U. S. 820 (1964). Obviously,

the character of the books will not be changed because they

reveal improper conduct or contain some unrelated trans-

actions. Cf. Wilson v. United States, supra, p. 378.

CONCLUSION

The petition for certiorari should be denied.

Dated: New York, New York, December 23, 1965.

Respectfully submitted,

Louis J. LerKow1Tz

Attorney General of the.

State of New York

Attorney for Respondent

80 Centre Street .

New York, New York 10013

Samvue. A. HirsHow!1Tz

First Assistant Attorney General :

Daviy CLURMAN

Auan L. Kazitow

Special Assistant Attorneys General

Barry | ManHoNeEY

Assistant Attorney General

of Counsel

15

APPENDIX A

Article 23-A of the General Business Law of the —

State of New York.

§ 352. Investigation by attorney-general. 1. Whenever

it shall appear to the attorney-general, either upon com-

plaint or otherwise, that in the advertisement, purchase or

sale within this state of any commodity dealt in on any

exchange within the United States of America or the de-

livery of which is contemplated by transfer of negotiable

documents of title all of which are hereinafter called

commodities, or that in the issuance, exchange, purchase,

sale, promotion, negotiation, advertisement or distribution

within or from this state, of any stocks, bonds, notes, evi-

dences of interest or indebtedness or other securities, in-

cluding oil and mineral deeds or leases and any interest

therein, sold or transfered in whole or in part to the pur-

chaser where the same do not effect a transfer of the title

in fee simple to the land, or negotiable documents of title,

or foreign currency orders, calls or options therefor here-

inafter called security or securities, any person, partner-

ship, corporation, company, trust or association, or any

agent or employee thereof, shall have employed, or em-

ploys, or is about to employ any device, scheme or artifice

to defraud or for obtaining money or property by means

of any false pretense, representation or promise, or that

any person, partnership, corporation, company, trust or

association, or any agent or employee thereof, shall have

made, makes or attempts to make within or from this state

fictitious or pretended purchases or sales of securities or

commodities or that any person, partnership, corporation,

company, trust or association, or agent or employee thereof

shall have employed, or employs, or is about to employ, any

deception, misrepresentation, concealment, suppression,

fraud, false pretense or false promise, or shall have en-

gaged in or engages in or is about to engage in any prac-

tice or transaction or course of business relating to the

purchase, exchange or sale of securities or commodities

16

Anpendiz: A.

which is fraudulent or in violation of law and which has

operated or which would operate as a fraud upon the pur-

chaser, or that any broker, dealer, or salesman, as defined

by section three hundred fifty-nine-e of this article, or any

agent or employee thereof, has sold or offered for sale or

is attempting to sell or is offering for sale any security

or securities in violation of the provisions of said section

or section three hundred fifty-nine-ee, any one or all of

which devices, schemes, artifices, fictitious or pretended

purchases or sales of securities or commodities, deceptions,

misrepresentations, concealments, suppressions, frauds,

false pretenses, false promises, practices, transactions and

courses of business are hereby declared to be and are

hereinafter referred to as a fraudulent practice or fraudu-

lent practices or he believes it to be in the public interest

that an investigation be made, he may in his discretion

either require or permit such person, partnership, corpo-

ration, company, trust or association, or any agent or em-

ployee thereof, to file with him a statement in writing

under oath or otherwise as to all the facts and circum-

stances concerning the subject matter which he believes it is

to the public interest to investigate, and for that purpose

may prescribe forms upon which such statements shall be

made. The attorney-general may also require such other

data and information as he may deem relevant and may

make such special and independent investigations as he

may deem necessary in connection with the matter.

2. The attorney-general, his deputy or other officer desig-

nated by him is empowered to subpoena witnesses, compel

their attendance, examine them under oath before him or a

magistrate, a court of record or a judge or justice thereof

and require ‘the production of any books or papers which

he deems relevant or material to the inquiry. Such power

of subpoena and examination shall not abate or terminate

/

17

Appendiz A.

se

by reason of any action or proceeding brought by the

attorney-general under this article.

3. No person shall be excused from attending such in-

quiry int pursuance ta the mandates of a subpoena, or from

producing a paper or book, or from being examined or re-

quired to answer a question on the ground of failure of

tender or payment of a witness fee and/or mileage,wunless

at the time of such appearance or production, as the case

may be, such witness makes demand for such payment as a

condition precedent to the offering of testimony or produc-

tion required by the subpoena and unle8s such payment is

not thereupon made. The provisions for payment of wit-

ness fee and/or mileage do not apply to any officer, di-

rector or person in the employ of any person, partnership,

corporation, company, trust or association whose conduct

or practices are being investigated.

4, If a person subpoenaed to attend such inquiry fails

to obey the command of a subpoena without reasonable

cause, or if a person in attendance upon such inquiry shall

without reasonable cause refuse to be sworn or to be

examined or to answer a question or to produce a book or

paper when ordered so to do by the officer conducting such

inquiry, or if a person, partnership, corporation, company,

trust or association fails to perform any act required

hereunder to be performed, he shall be. guilty of a

misdemeanor.

§ 352-e. Real estate syndication offerings. 1. (a) It shall

be illegal nd prohibited for any person, partnership, cor-

poration, company, trust or association, or any agent or

employee thereof, except companies organized under and

pursuant to the provisions of articles nine or twelve: of

the public housing law or chapter eight hundred forty-five ”

of the laws of nineteen hundred forty-two, to make or take

18

Appendiz- A.

part in a public offering or sale in or from the state of

New York or securities constituted of participation inter-

ests or investments in real estate, mortgages or leases, in-

cluding stocks, bonds, debentures, evidences of interest or

indebtedness, limited partnership interests or other secu-

rity or securities as defined in section three hundred fifty-

two of this article, when such securities consist primarily of

participation interests or investments in one or more real

estate ventures, including cooperative interests in realty,

unless and until there shall have been filed with the depart-

ment of law, prior to such offering, a written statement or

statements, to be known as an ‘‘offering statement’’ or

‘*prospectus’’ concerning the contemplated offering which

shall contain the information and representations required

by paragraph (b) of this subdivision unless the security

offering is exempted hereunder or under section three

hundred fifty-nine-f, subdivision two, of this article by rule

or action of the attorney-general. The term ‘‘real estate’’

‘as used in the paragraph shall not include mineral, oil or

timber leases or properties, or buildings, structures, land

‘or other realty housing or containing business offices or

‘industry, owned or leased by the issuer, where the issuer

is not primarily engaged in the business of buying and

selling such building or other realty or leases or interests

therein. The circulation or dissemination of a non-firm

offer (including circulation or dissemination of a prelim-

inary prospectus pursuant to section ten (b) of the

securities act of nineteen hundred thirty-three, and the

rules thereto appertaining ) shall not constitute the making

of taking part in a public offering — the meaning of

this section.

§ 352-e(8). Within four months after the end of its

fiscal year, every syndicate which shall have been required

‘to file an offering statement or statements or prospectus

19

Appendix A.

under subdivision one of this section. shall file with the de-

partment of law at its office in the city of New York an

annual report of the syndicate operation, including ‘an

annual balance sheet and profit and loss statement certi-

fied by an independent certified. public accountant. - The

department of law shall collect a fee of. five dollars for the

filing of each such annual _— :

20

APPENDIX B

Opinion of Justice Gellinoff, dated October 21, 1963.

SUPREME COURT

New Youg County |

Speciat anp Trur Term—Pagr 30

Index No. 2531/63

A.

vv

PEOPLE OF THE STATE OF NEw YORE,

against

is Smpney ScHwaktTz,

Defendant.

GELLINOFF, J.: i

Defendant moves for an inspection of the Grand Jury

minutes and for a dismissal of the indictment. Insofar

as the motion urges that the indictment is based on in-

sufficient legal evidence, it is denied (see People v. Howell,

3 N Y 2d 672). In the respect that the motion is based on

the claim that defendant’s constitutional rights were vio-

lated in that he was compelled to testify and furnish evi-

dence against himself, it is likewise denied. The facts of

this case, and the circumstances under which defendant

testified before the Attorney General, do not bring him

within the ratio decidendi of the cases relied on by him

(e.g., People ex rel. Kenny v. Adams, 292 N. Y. 65; People

v. Steuding, 6.N Y 2d 214; People v. Laino, 10 N Y 2d 161).

The defendant did not testify before the Grand Jury, his

testimony before the Attorney General was not submittdd

to the Grand Jury and, to the extent that books and

records delivered by him to the Attorney General under

compulsion of a subpoena were later used as evidence be-

fore the Grand Jury, defendant never availed himself of

his privilege to immunity as delineated in the provisions

of section 2447 of the Penal Law and section 359 of the

General Business Law.

Dated: October 21, 1963

J.8. C.

21

_APPENDIX C

Opinion of Justice Sarafite, dated F ebruary 27, 1964.

SUPREME COURT,

New York County,

SPECIAL AND TRIAL TERM, Part XXX.

INDICTMENT No. 2531-63

+

of

Tue PEOPLE OF THE StTaTE oF NEW Yous

agamst

Smpney Scmwaktz,

Defendant.

A

4

SaraFirTeE, J.

This is a motion to suppress evidence obtained by the

Attorney General.

Defendant has been indicted on five counts of obtaining

the signatures of persons to written instruments with the

intent to cheat or defraud, and three counts of related

crimes.

All of the evidence (books, records, documents, etc.)

were produced by defendant pursuant to subpoena served

by the Attorney General. The defendant, represented by

counsel, neither tested the validity of the subpoena by

motion to quash nor, after responding to it, did he refuse

to answer questions or produce evidence. Neither did he

assert any privilege to withhold any answer given or evi-

dence produced (See General Business Law, § 359, and

Penal Law, 4$ 2447).

It is difficult to comprehend how it could ever be argued

that such evidence was obtained as a result of unlawful

search and seizure.

22

Appendiz C. Pe)

Moreover, the issue raised here was passed upon in an-

other form in a motion by the defendant to inspect the

Grand Jury minutes and to dismiss the indictment ‘‘upon

the ground that the evidence here presented was in viola-

tion of the defendant’s constitutional rights in that de-

fendant was compelled to testify and furnish evidence

against himself’’ pursuant to subpoena, and that the in-

dictment was allegedly based on insufficient legal evidence.

_That motion was denied in all respects by the court,

(Gellinoff, J., N.Y.L.J., October 24, 1963, p. 14, ¢. 5) hold-

ing that ‘defendant never availed himself of his privilege

to immunity as delineated in the provisions of section 2447

of the Penal Law and section 359 of the General Business

Law. 99

Defendant, ‘on the same papers, now moves to suppress

this same evidence.

The motion is denied.

Submit order.

Dated: February 27, 1964.

JosepH A. SaRaFite, hod

J.8. C.