Brief in Opposition to Petition for Writ of Certiorari — Masterson v. United States

Gu the Supreme Court of the United States

OCTOBER TERM, 1967

No: 1018 = .

C. PARKE MASTERSON, PETITIONER —

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE .

OR saD STATES COURT OF APPEALS FOR THE —

SECOND CIRCUIT ©

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BRIEF FOR THE UNIBED STATES IN OPPOSITION

oa OPINIONS. BELOW

The opinion of thé court of appeals (Pet. App. Al-

A7) is reported at 383 F.2d 610. The Opinion of the

district court (Pet. App. A8-A14) is reported at 251

F. . Supp. 937. |

JURISDICTION

The judgment of the court of appeals was entered

on October 3, 1967. A petition for rehearing was

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denied on October 30, 1967..On December 24, 1967,

Mr. Justice Harlan extended the time for filing a peti-

tion for a writ of certiorari to December 29. On

. January 4, 1968, Mr. Justice Harlan granted a fur-

ther extension to January 5. Both extensions were ©

granted “without prejudice to the Court’s considera-

tion of whether this application has been filed in time.”

The petition was filed on January 15, 1968, and is

‘out of time under Rules 22(2) arid 34(2) of the

_ Rules of this Court. The jurisdiction of this Court

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

QUESTIONS PRESENTED

1. Whether invoices taken by representatives of a

trustee in bankruptcy from file cabinets’ in -petition-

er’s law office kept in a place set aside for the corpora-

tion were properly admitted in evidence.

2. Whether the court’s instructions: constitute

plain. error. ,

3. Whether the parr was sufficient to aia

petitioner’s conviction for bankruptcy fraud.

STATEMENT

', After a jury trial in the United States District

Court for the Southern District of New York, peti-

tioner. was convicted on ten counts of bankruptcy

fraud, in violation of 18 U.S.C. 152. He was fined

$1,000 on each count and sentenced to concurrent

1The transcript of trial ee i) has ‘been filed with the

_ clerk ” this Court.

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terms of imprisonment for one year, the execution of

sentence being suspended and petitioner being placed

on probation for three years. The court of. appeals

- affrmed.

On January 19, 1961, Twin Lock, Inc., filed a |

voluntary petition in bankruptcy pursuant to Chapter

11 of the Bankruptcy Act. The bankruptcy court in

New York permitted the. company to be operated by~

debtors. in possession (Tr. 27), but required the post-

ing of bonds to secure creditors. An accounting firm,

represented by Ira Zarett, was appointed to review

the accounts of Twin Lock and to prepare monthly

profit and loss schedules for the referee (Fr. 25-26,

36, 76). |

Petitioner, a New York attorney who had become

_ president of the corporation in 1958 (Tr. 399), re- » |

signed as president shortly after the bankruptcy peti-.

tion was filed, but continued to perform legal services

for the corporation. In October 1961, he assumed the

_ lease on the office space occupied by Twin Lock, and

subsequently moved his legal practice there while per-

mitting Twin Lock to. carry on its business.from an

outer room (Tr. 307). On several occasions petitioner

- furnished the funds required by the referee as addi-

tional security for creditors (Tr. 319).

Prior to September 1962, almost all of Twin Lock’s

business was carried on from its California plant. °

However, in that month the billing procedures were

changed. After shipments had beén sent from the

California plant pursuant to a purchase order, the

packing sheets were sent by the plant manager to

Twin Lock’s New York City office, where invoices

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were prepared and sent to. the customers by a secre-

tary, Twin Lock’s sole full-time. employee in New

York; payment was remitted to the New York office

(Tr. 229-230). The secretary maintained the invoice .

files and these were used by Zarett for his preparation

of accounting schedules (Tr. 39, 232).

After a number of monthly schedules had been pre-

pared by Zarett, it was distovered that many of the

’ invoices were fraudulent in that they reflected ficti- <

tious sales. The effect of these false invoices was to.

inflate .the sales figures, thereby increasing ‘the gain

or reducing the deficit on the corporation’s monthly

profit and loss statements which Zarett prepared and

submitted to the referee (Tr. 72). As a result the

bankruptcy court was fraudulently induced to:reduce

the amount of the bonds. required for the debtor to

remain in possession.

At trial, it was shown that Twin Lock’s secretary

received the information from which she prepared the

invoices from three sources: petitioner, the packing -

sheets sent by Twin Lock’s agent in California, or,

| occasionally, the customers (Tr.*23).. The data on

the false invoices could not have'come from the cus-

tomers, however, since they had no knowledge of the

transactions (Tr. 105-160). Similarly, the reeords

maintained by the California plant manager indicated -

‘that he had not provided the information contained

in the false invoices (Tr. 194),

. ARGUMENT

1. Prior to trial petitioner moved to suppress cer-

tain invoices obtained by Zarett and the attorney for

the trustee from file cabinets which were reserved

solely for Twin Lock’s use and were situated in the

outer room of petitioner’s suite of law offices. This

motion was denied without a hearing on the ground

that action by private individuals i is not within the

_ purview of the Fourth Amendment. At trial, peti-

tioner renewed his motion, and Zarett testified that ©

in January 1964, he and an attorney for the trustee

in bankruptcy entered the outer office during business

hours, identified themselves to Twin Lock’s. secretary, _.

who admitted them, and ptoceeded to gather Tip the

records. The trial judge concluded that the ruling

on the pretrial motion was correct (Pet. App. Al4).

_ The court of appeals. agreed that the invoices were— a

_ properly admitted in evidence, but. premised its con-

clusion on the ground that petitioner lacked standing ©

to object to the. seizure of corporate recoras ike

App. A5-A7).. -

It is clear that the invoices were properly admitted

in evidence. Petitioner does not dispute the trustee’s

title to the invoices.* They were kept with petitioner’s

permission within a perimeter of space leased to him,

but in a specific area set aside solely for Twin Lock.

The trustee’s representatives limited their activities

to that part of the office occupied by Twin Lock and

_ ? Petitioner. was apparently not present at the time the

records. were removed. He had turned away the trustee’s at-

torney earlier that day. (Pet. App. A4).

5 Twelve days after the taking. of the records, the eiaias

petitioned the referee in bankruptcy for a turnover order,

which was granted shortly thereafter (Pet. App. a,

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took only the corporate documents belonging to the |

trustee. In these circumstances, their entry into the

outer office of the suite, with the permission of peti-

tioner’s secretary, ‘was not an invasion. of petitioner” 3

rights. oor

Even if the conduct of the trustee’s representatives

in obtaining the corporate papers belonging to. the

trustee were regarded as a technical trespass,. these

representatives acted as private individuals,‘ unsu-

pervised by- any government agency and unconcerned

- with the proseeution.. The purpose of the rule exclud-

ing evidence ‘obtained by an unlawful search is to

remove the incentive of government officials to dis-

. regard an individual’s right of privacy. This purpose

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would not be served by applying an exclusionary rule

in this case where no government agent was involved.®

- Burdeau v.. McDowell, 256 U.S. 465; see United

- States v. McGuire, 381 F.2d.306 (C.A. 2), certiorari

*The trustee himself is not a government agent. .As the

distriet court pointed out, such a person may derive his power

from a court, but he serves for the benefit of creditors, and, :

like an attorney—also an officer of the ‘court—cannot bind

the gavernment by his errant conduct (Pet. App. Al3).

5 United States ex rel. DeForte v. Mancusi, 379 F.2d 897

(C.A. 2), certiorari granted, Jan. 22, 1968 (No. 844, this

Term), relied upon by petitioner, does not support his claim

of standing. In that case the Second Circuit deviated from

the customary rule and determined that, in the particular

circumstances, a union official could object to a post-indictment

search by state police agents of the union’s one-room head-

quarters conducted in his presence. and over his objections,

and the seizure of union records where he had a considerable

role in preparation of the records. .

denied, January 15, 1968 (0. r. 1967, Nos. 666. ‘Mine,

_ 669 Misc., 670 Misc.). | |

2. The government did not seek: to prove that —

petitioner personally prepared the false statements.

"Rather, the prosecution’s evidence tended to show that

he furnished the false information relied upon by ©

those individuals who prepared the ‘fictitious state-

ments. ‘The court’s charge to the jury was tailored

to the issues raised at trial. Among his instructions,

the’ trial judge recited the. underlying statute (18 .

U.S.C. 152), the elements of the offense, and the aid- -

ing and abetting provisions of 18 U.S.C. 2. Defense

counsel did not object to the charge.

- Petitioner has isolated a portion of the instructions —

on the elements of the offense, where the court charged

that one violates the statute if he “made or caused to

be:made” the false statements. He now alleges that

this: instruction permitted the jury to convict him on

_a theory not asserted by the government, i.e., that he

made the false statements. Realistically, however, it

would have been impossible for anyone to have con- —

cluded, in light of the evidence présented, that peti-

tioner made the false statements. .Moreover, other

os parts of the charge made it evident that the prime

issue was the causal connection between petitioner’s

acts andthe false statements. If the judge had been -

- asked to eliminate the innocuous reference to guilt

on the basis of having “made” the statements, he un-

doubtedly would have done so. There is clearly no basis

for the claim that the charge contained plain error.

United States v. Mont, 306 F.2d 412, 417 (C.A. 2),

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certiorari: denied, 371 U.S. 935; see United States v.

Edwards, 366 F.2d" 858, 869 (C.A. 2), certiorari ‘de-

-. nied sub'nom. United States v. Jakob, 386 U.S. .908.

3. Contrary to petitioner’s contention, there was

ample evidence to support his conviction. .The bank-

~ rupt corporation was heavily indebted to him, and he

. had furnished the funds for indemnity bonds required . .

on occasions when a monthly income statement showed

a loss. Since there was no need to supply additional - o

funds if the company’s monthly transactions were in.

the black, petitioner stood to benefit if the schedules .

submitted’ to the referee indicated a profit. The testi-

‘mony of Zarett established that all of the schedules in

question were prepared on the basis of information

taken from Twin Lock’s invoice files. The secretary,

who prepared the. invoices, testified that the informa-

tion could have come from three sources, two of which

were eliminated by the testimony of Twin Lock’s

California plant manager and the various purchasing

agents of the companies appearing as the ‘purchasers.

‘Zarett further stated that after preparing the state-

ments, he discussed each one with petitioner, reviewing with

_ him the sales mgures (Tr. 71-72, 98, 96).

on the false invoices. The logical conclusion, and. the °

- one properly reached by the jury, was’ that the neat

tious information came from petitioner. |

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“CON CLUSION

For the foregoing reasons, it is respectfully. sub-

mitted that the petition for a writ of certiorari should

be denied.

_ERwin N. GRIswou,

Solicitor General.

FRED M. VINSON, JR.,

Assistant Attorney General.

BEATRICE ROSENBERG,

MERVYN HAMBURG,

Attorneys.

_ FEBRUARY 1968. ae We

° w U. S. GOVERNMENT PRINTING OFFICE; 1968 290139. 596

._ 2 .