Brief for the United States in Opposition — Riggs v. United States

Opinion below pion ve :

Jurisdiction . . (aolecainelice

Questions presented

Statement

_ Argument

— Conclusion

CITATIONS

Cases: . ; NEES ater

- Barnard v. United States, 16 F. 2d 451, certio- ©

rari denied, 274 U.S. 736 .._ ;

Bell v. United States, 100 F. 2d 474

Blitz v. United States; 153 U.S. 308 __.»

Crain Vv. United States, 162 U.S. 625°

Gold v. United States, 352 U.S. 985.

Halliday v. United States, 394 U.S. 831

Johnson V. United -States, 207 F, 2d 314, -certio-

rari denied, 347 U.S. 938

_ McCarthy v. United States, 394 U.S. 459 _..___

_ Morgan v. United States, 399 F.2d 93, certiorari :

denied, 393 U.S. 1025 :

_* Parker v. United‘ States, 252 F. 2d 680, certiorari :

denied, 356-U.S. 964 ___

' Remmer v. United States, 347 U. S. ee

Remmer Vv. United States, 350 U.S. 377 ______

' United States v. Crummer, 151 F. .2d 958

United States v. Greenberg, 30 F.R.D. 164 ____ j

United States v. Lennon, 246 F. 2d 24, certiorari

denied, 355 U.S. 886

* United States Vv. McGuire, 381 F. 2d 306

_ United States v. Shavin, 287 F. 2d 647

- United .States v. Sorcey, 151 F. 2d 899, certiorari

_ denied, 327 U.S. 794

United States v. Warner, 428 F. 2d 730

Vandersee Vv. United States, 321 F. 2d 57 _-___

_ Weiss Vv. United States, 122 F.'2d 675 __...___-__.

Wheaton v. United. States, 188 F. 2d 522.

Statutes and rule:

Securities Act of 1983: |

Section 17(a), 15 U.S.C. 77q(a) —~.

18 U.S.C. 371 __-

18 U.S.C. 4208 (a) (2)

Rule 7(c) F.R.Cr.P.

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“In the Supreme Court of the United States

_ ~ OcToBER TERM, 1970

"No. 1617

“LEON 0. RIGGS, PETITIONER

UNITED STATES OF AMERICA

~ No. 1635

_ Frep G, AMICK, PETITIONER

V.- “ .

UNITED STATES OF AMERICA

| .No. 1687

H. R. NASH, PETITIONER

ad 5 oa

UNITED STATES OF AMERICA —

»

No. 6964

Davin R, MAYN&,. PETITIONER |

UNITED STATES OF AMERICA =|

‘ON PETITIONS .FOR WRITS OF CERTIORARI -_TO THE

UNITED STATES COURT OF APPEALS FOR

| THE SEVENTH en’

| ees

|

BRING FOR THE UNITED STATES IN OPPOSITION |

| ‘ . . (1)

| _. OPINION BELOW

The opinion of the court of appeals (see Amick

Petition No. ae pp. adits is not yet reported. |

J URISDICTION

_ The judgment of the court of appeals was eritered

on January 22, 1971. Pétitions for rehearing were

denied on March 29, 1971. Petitions for writs of .

certiorari were filed by Riggs on April 23, 1971, by

_ Amick and Nash on April 26, 1971, and by Mayne’

on April 27, 1971. The jurisdiction of this Court is

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

QUESTIONS PRESENTED ©

‘1. Whether there was reversible drror in the man-

ner in which the indictment was drawn or in the fact

that language used in count one, which was dismissed

by the trial court, was incorporated by reference in

other counts upon which convictions were obtained

(No. 1635).

2. Whether the grand and petit juries were im-

properly selected because a substantial part of the

array. was chosen by ‘the. “keyman” system (Nos.

'- 1635 and 1637).

3. Whether, after a linings explotation of the

fact that shortly before trial a co-defendant inquired:

indirectly if a juror might be prejudiced against him,

~ the court properly concluded that the incident did not

justify a mistrial (Nos. 1617 and 6964).

4. Whether the evidence supported the conviction .

‘of petitioner Amick Fa 1635).

——————————————

3.

5. Whether the trial court erred in refusing to

‘vacate a plea of nolo contendere entered by petitioner

‘ Nash (No. 16387).

STATEMENT

. An indictment returned in the United States Dis-

trict Court for the Southern District of Indiana

charged petitioners and others in various substantive »

counts with fraud in the offer and sale of securities

and of conspiracy to commit these offenses; in viola-

tion of Section 17(a) of the Securities Act of 1933,

15 U.S.C. 77q(a), and of 18.U.S.C. 371 (App. 36- | °

75). Prior to trial, petitioner Nash entered a plea

of nolo contendere es to a portion of the charges; the ats

other charges against him were then dismissed. After —

a trial by jury, the remaining petitioners. were con-

victed on various substantive counts; all were: ac-

quitted on. the conspiracy charge. Sentences subject

to the parole eligibility provisions of 18 U.S.C. 4208

(a).(2), were imposed as-follows: Riggs, a ‘total of

three years (App: 316-317)'; Amick, a total of..six

‘years (App. 303-304); Nash, a total of four. years

- (App. 313-814); and Mayne, .a total of four years

(App. 308-309). The ‘court of appeals affirmed, ex-

cept that it set aside the conviction of Mayne an a

count upon ‘which a concurrent sentence had been

imposed .(Amick Pet. 38a).

The charges arose out of fraudulent . conduct of ies

petitioners in various offerings of. stock by Air and

1“App.” refers to appellants’ two-volume Appendix in the

caus of — which we are — herewith.

4

Space Underwriters, Inc. (ASU), a corporation

formed in May 19638 to take over the business of

Umbaugh Aircraft, which prior to institution of bank-

| _Yruptey proceedings in 1962, had been engaged through

a subsidiary in developing a gyroplane (an aircraft

roughly similar to a’ helicopter). Amick ‘was chair-

man-of the board of ASU until his resignation iin -

January 1965; Riggs was.a salesman of the stock of ©

ASU; Nash was sales manager for the gyroplane and

active in the sale of. ASU stock; and Mayne was

president of Securities Services; a corporate defend-

ant which was active in the sale of ASU stock.

In late April.or early: May of 1963, Amick and co-

defendant Irving * proposed to Raymond E. Umbaugh,

president of Umbaugh Aircraft, that ASU be formed

to take over its business. Umbaugh agreed to sup-

port the plan,‘in return for a substantial block of °

ASU stock. Amick and Irving represented to the

bankruptcy court that they and their associates would

finance the program, estimated by Irving to amount

to $1,500,000. On the day before the submission of .

the plan to the bankruptcy court an attorney advised

Amick, Umbaugh and others’ that the transfer of a

block of ASU stock-to Umbaugh would be in direct’.

violation of an earlier order of the bankruptcy court

that Umbaugh could have no intérest in any succes-

sor to the bankrupt corporation (Tr. 595-596, 3405).°

To overcome this obstacle, one Streets, a distributor

of Umbaugh Aircraft stock, was substituted for Um-

_ . * Irving has a pending petition for a writ of certiorari

(No. 1375, this Term) to which we shave separately responded.

*“Tr.” refers to the multi-volumed trial transcript. |

baugh;/the latter, eect remained an eile

principal (Tr. 597).

At a hearing in the ictes court on J uly 22,

1963, which Amick attended, Irving testified that his

personal net worth was about $1,000,000 and he’ was

prepared to.use that amount to finance the reorgan- ee

ization plan. He also stated that he had associates,

including relatives, who would provide an additional

* $1,000,000. He further testified that no arrangement

existed for Umbaugh to receive property or other:

payment in connection with the reorganization, and

that he had not dealt with Umbaugh and ‘knew of no

one interested in the plan who had been dealing with

Umbaugh.: Both Amick and- Irving remained silent

while their attorney represented to the court that

ASU had -no present arrangement for a public- issu-

ance of stock (Defdt. Exh. 126-127, 134-135, 148-

150, 152, 153). The actual fact was that’ Umbaugh » |

was involved and that Amick and his associates had

_ previously made plans for the issuance of the stock

(Tr. 3407, 3421, 3494-3495, 3498, 3501). .

One week later (July 29, 1963) .arrangements for

a public offering of stock were completed at an ASU

board meeting (Tr. 603, 612-613). The first sale of

" ° stock was made on August 14, 1963, the day on which

the bankruptcy court’ entered its formal: order ap- -

proving the amended reorganization plan (Defdt.

Exh. E). Between August 1963 and July 1965, in

excess of $2,100,000 worth of stock was publicly sold

through the efforts of petitioners. These sales were

accompanied by numerous misrepresentations con-

cerning such matters as the number of orders which

6

is we a ela ie aie Sth a aE ta Nig A he es hg AA tr hs eee ee ee ay eee eae teLe “ —

.

‘ ° '

° at

;

e |

;

;

existed for the gyroplane, its price, and, actual and .

- anticipated production plans. At the same time, pe-

titioners failed to disclose, inter alia, the serious fi-.

- nancial difficulties: being experienced by the company

in its operations, In summarizing the record ‘in this

regard, the court below stated (Amick Pet. No. 1635,

p. 2a):

_ It appears, virtually beyond Aisiite 3 that ‘devine ate

this period [of the public offerings] the effort to .

promote “sales of ASU stock included general re-

leases and individual communications which con-

tained untrue statements of material facts,

-omitted material facts: necessary to make the

statements made not misleading, and- included

‘devices to defraud and practices which would

operate as.a fraud upon the purchaser, * * *

ARGUMENT

* “The opening cori of count 1 eed in

the language of Section 17(a) of the Securities Act

of 1933,* that Amick and other’ named defendants in

the: offer and sale of securities “(1) did employ de-

vices, schemes, and artifices to defraud; (2) did ob-

tain money and property by means of untrue state-

ments of material facts and omissions to state mate-

rial facts necessary in order to. make the statements

made, in the light of the circumstances under which

they were made, not misleading; and (3) did engage

in transactions, practices, and courses of business.

. which would and did operate as a fraud and deceit

' 4The statute is set out in the Amick Petition No. 1635 at -

Pp. ‘5.

Ge

‘upon purchasers of the common stock of ASU * + 49

(App. 36-87). This general statement was. followed

by a particularized account of the: <develdpment and

execution of the overall plan (App. 37- 50), the false

representations which were made, specifying’ 14 in-

stances (App. 50-51), and the failure to state mate-

rial facts, specifying ten instances (App. 51-52). It

- was-alleged in paragraph 4 of that count that Amick

and certain named co-defendants on a described occa-

sion used the mails in the furtherance of the plan

(App. 52-53). Counts 2 through. 38 were identical .

with count 1 as to paragraphs 1-3 of that count in- —

corporating those paragraphs by reference; the critical -

difference was that each of the remaining counts va-

ried as to the co-defendants named with Amick and

charged a separate use of the mail for the sale of

securities to separate purchasers: (App. 53- 68).

a. Contrary to the contention of petitioner Amick.

(Amick Pet. 11-13), the counts were not rendered

duplicitous because each method of. violating 15

U.S.C. 77q(a) was charged ‘in the conjunctive in each

count.* See Crain v. United States, .162 U.S. 625,

634; United States v. Lennon, 246 F. 2d 24 (C.A. 2), -

peer denied, 355 U.S. 836; Untted States v. ©

' Warner, 428 F. 2d 730, 735 (C.A. 8); United States

v., Greenberg, 30 F.R.D. 164, 169 (S.D. N:Y.); Weiss

v. United States, 122 F. 2d 675, 680-681 (C.A. 5);

United States v. Crummer, 151 F. 2d 958, 963-964

- (C.A. 10). An indictment so framed. does not preju-

dice an accused, because a verdict of- guilty upon |

’ Amick was convicted on eight of the twenty-seven counts

which had been submitted to the — ;

iM ees

proof that the accused has done any of the acts

charged will act as a bar to subsequent prosecution

for any of the. matters. therein alleged. Crain ‘v.

United States, supra, 162 U.S. at 636. As the court

‘below held (Amick Pet. 6a-7a), the indictment here .

clearly met the requirements that it apprise the ac-

cused with reasonable certainty of the nature of the

charges against him, so that he could prepare his de-

-fense and be able to plead the judgment as a bar to

any subsequent prosecution for the same offense. Cf.

Vandersee v. United States, 321 F. 2d 57 (C.A. 8); _

United States v. MeGuire, 381 F. 2d 306, 318-319

(C.A. 2); United States v. Greenberg, sipra.

b. Under Rule 7(c), F. R. Crim. P., “[a]llega-

tions made in one count may be incorporated by ref-

erence in another count.” Petitioner Amick contends

that the language incorporated here lost its. vitality

‘since count one’ was dismissed (Amick Pet. 13-15).

The governing law is tothe contrary. Failure of

proof as to the count.setting forth the allegations in

full does not vitiate the other counts which adopted

its language. Blitz v. United States, 153 U.S. 308,

317; Crain v. United States, supra, 162 U.S. at

- 633; United States v. Shavin, 287 F. 2d 647, 650

(C.A. 7); Parker v. United- States, 252 F. 2d 680

(CA. 6), certiorari denied, 356 U.S..964; Bell v.

United ‘States, 100 F. 2d 474 (C.A: 5); Barnard v.

United States, 16 F. 2d 451 (C.A. 9), certiorari-de-

nied, 274 U.S. 736.

2. Challenges to the manner in hide the grand

‘and petit juries were selected (Amick Pet. 15-19, °

Nash Pet. 33-34) are answered in the government's

* gociate communicated this information to the juror,

9

brief in opposition to Irving v. United States, No.

1375 this.Term, pp. 9-12; we are sending copies of

this brief petitioners’ ona |

8. After the jury had: been impaneled, bat ates

the trial had begun, the court told counsel that there

had been an occurrence with regard to one of the

jurors which he was going to investigate (App. 609).

He then questioned* the juror in thambers, with only -

the court reporter present. The juror said that, over

the weekend, co-defendant Vollmer* had telephoned

the juror’s business associate and had asked him if

he thought that the juror remembered Vollmer -in

connection with a past business transaction. . The as-

who told the court that he had no recollection of Voll-

mer. or the’ business transaction. The associate had

informed Vollmer that he was certain that the juror

would give him fair consideration as to any matter ©

. that might arise at. trial, The juror said that he did

not feel that this occurrence would in any way in-

fluence his verdict (App. 610-611). :

After the reporter read the transcript of this in-+

terview to counsel, the court asked for suggestions as

to the proper procedure. Counsel for petitioner Mayne

moved for dismissal of the jury; the court rejected

this approach noting that “it would be an easy way

to keep from getting tried, particularly in a con-.

spiracy case, to take turns creating prejudice, and

- nobody ever gets tried” (App. 612-614). The: court

~ stated that the juror did not have the impression that

*Vollmer has also filed a petition for a writ of certiorari

(No. 1678, this Term) which we are responding to separately.

7 ae

/ ,

anyone was trying to influence him and had reported

_ the incident. to the court because of his previous an-

_.swers on voir dire that he knew nothing about .the

_ case (App,615). Counsel for petitioner Riggs moved

_ for a severance (App. 624-625). When the court

overruled this motion, Riggs moved to substitute the

‘alternate: juror (App. 629); such substitution was

_ opposed by Amick (App. 629, 631) and Vollmer

wished to continue the trial with the jury as consti-

| tuted (App. 627).. The court outlined what it would —

‘say to the jury, to which there was no objection

(App. 629-632). The court then called in the jury

| and advised them as follows (App. 637) :

Members of the Jury, we have had a little

incident happen, as sometimes happens in the.

trial of cases. One of the parties, over the week-

_ end, contacted an acquaintance and asked him.a

question which required the acquaintance to ask

a member of the jury for. the answer, thus, of

course, bringing to the\attention of the juror the .

party who asked-the, questidh-in the first place.

The juror very properly related : this to the |

Clerk, who related it to me, and I have now

made it known to the attorneys, And, having

considered the matter very carefully, it seems

to me that nothing improper was intended. It

was an impropriety. It shouldn’t have been

done—an irregularity, if you want to call: it

- that, but I‘think nothing more than that. But

I mention it to you as something that you should

know about. It is possible that more will be

made of it than is justifiable. In case any of

. this should come to your attention—although it _

~ \ shouldn’t—I thought I would make that state-

‘ f

»

11

e

- ment. It is explanatory of what has occupied .

‘me and the lawyers for the last several min-

utes, and, also, it is illustrative of what I keep _

telling you in my admonitions at times that we |

take a recess—that you are not to form or ex-

_.. ‘press an opinion about the case, that you are not

- to discuss it with yourselves or others or permit

others to discuss it with you or in your hearing

or presence, and I frequently add to that if any-

one does attempt to discuss the case with you

or in your hearing or presence, you — i

promptly report it. | re

And a prompt report was made in. this case.

‘I think on thorough reflection,-that nothing im-

proper was intended, although, as I say, it was

an irregularity on the part of the person who

did it, which I am sure will not be repeated by —

any -party to this action.. ‘So, ‘with that little

_ Statement, we will go on with the trial of the _-

case. I. am sure nothing out of the way will .

‘happen in the future; but if anything does,

please report it promptly. |

‘Consideting the differing views of counsel and the

tangential nature of the incident it was well within -

the court’s discretion to instruct the jury as it did .

and then proceed with .the trial. The court’s state-’

ment was low-keyed and avoided any possible preju-

dice by pointing out that “nothing improper was in-.

tended.” There an be no presumption of prejudice -

from this inconsequential occurrence. See, e.g., Mor-

gan v. United States, 399 F.2d 98, 96-97 (C.A. 5),

certiorari denied, 393 U.S. 1025; Johnson v. United. -

' States; 207 F, 2d 314 (C.A. 5), certiorari denied,

_ 847 U. S. 938; United States v. Sorcey, 151 F. 2d 899 -

12

_ (CA. 7), certiorari denied, 327 U.S. 794; Wheaton

vi United States, 188-F. 2d 522, 527 (C.A. 8).’

4. The contention that the evidence was insuffi- |

-cient to sustain the gonviction of petitioner Amick

(Amick Pet. 19-22), who was at the center of the.

operation, is fully answered by the‘ opinion of the

court below upon which we big — Pet. 13a-

~ 16a).

5. On the day. this case was set i trial, peti-

tioner Nash and co-defendant Irving. elected to with-

draw their pleas of not guilty and to plead nolo con-

-tendere to certain counts of the indictment. Erle

Kightlinger, appearing for defendant: Irving, stated

that Nash was not represented by counsel but that

he had advised him as to the effect of such a plea.

With “the express’ permission of Nash, Kightlinger

stated the counts. to which the plea would be entered

_ (App. 486-487). Addressing both defendants, the

— court — the possible penalties that could be

7 Remmer Vv. United States, 347 US. 227; 350 U. S, 877; is

clearly. distinguishable. In that case an unidentified person

suggested to a juror that an acquittal would be profitable

for him. The court took the matter up’ with the prosecution

aloné and an F.B.I. agent questioned the juror. The defense |

learned of the incident. only after the trial was over, by '

reading of it in a newspaper. In that particular context,

-where the juror admitted to being under “terrific pressure,” -

this court held that it could not be said that the juror was

‘unaffected in his freedom of action. 350 U.S. at 381. Gold v. -

United States, 352 U.S. 985, is comparable to Remmer,. Neither

a ‘decision is. apposite to this case, where the juror attached

_no significance, to the telephorie ¢all and the lawyer for the. ,

party who had made the call wanted to continue the trial

without substitution of the alternate.

13 hee

imposed, the right t to trial by jury, the sania

_ of innocence, the right to participate in the selection

of the jury and to make challenges and the nature

of the plea of nolo contendere Sess 488-490). The 3

court further said (App. 490):

Now, -Mr. Nash is not ia by counsel

- this morning, but in the past he at one time had —

counsel. Counsel withdrew his appearance, stat- |

ing at that’ time- Mr. Nash was financially able.

to hire counsel. but had not completed. his ar-

rangements with counsel. Mr. Nash has never

indicated to the Court that he is not financially

able to hire counsel.. He has appeared here as

his own counsel on one or two oceasions, the last

being yesterday morning, so° counsel has not.

been appointed for Mr. Nash. It. has been my

finding or opinion, as things have gone, that he

has elected to represent himself. Is that right,

Mr. Nash?

Petitioner answered affirmatively, He further

stated that no one had made any representations that -

his plea would affect’ the sentence imposed ; the court

responded that.-any such representation ‘would have -

- been false (App. 491-492). In the colloquy which

followed, Mr. Kightlinger ‘stated that it had been

his understanding with the assistant United States _

Attorney that the court might. consider the evidence .

-to be heard in the trial as constituting the factual _

basis for the plea. It was. also understood that the

evidence already heard by the court in a related civil »

: action might furnish this basis (App. 492-494). All

parties were sentenced after fhe ‘conclusion. ‘of the

trial. The court found ‘Nash guilty oni the basis of ;

14

his plea, the evidence heard by the court in the prior

civil action, and upon the evidence -heard at this trial;

he was sentenced to imprisonment for ‘five -years.

_ Nash was not represented at, the sentencing and did

-- not specifically waive counsel at that time (App. 509,

—5638).- .

Nash thereafter moved to set aside the gagacn

of conviction and to withdraw his plea of nolo con-

.tendere (1) because it had been agreed that the fac-

tual basis of his plea was the evidence in the civil

suit, which was alleged to be inadequate to show his

‘guilt, and (2) because he was not represented by

counsel at sentencing (App. 350-354). The court re-

fused permission to withdraw the plea beause no

. adequate ground therefor was stated, but’ held that,

since petitioner did not specifically waive counsel at

-sentencing,. he should be re-séntenced (App. 354-356).

Petitioner was thereafter re-sentenced. to ‘four years’

“imprisonment (App. 813-314). Z

The erux of petitioner’ s present complaint—a mat-

ter which he did not raise in his original motion to

withdraw his plea—is that he was denied counsel at

the time of his plea. As the facts show, however, that

was not the case at all: Nash, who earlier had .re-

_tained counsel, chose to represent himself at the time

of the plea, although he- was financially able to em- .

ploy counsel. Despite his vague allegations that he

was promised leniency in exchange for his plea, noth-

_ing in the record supports such a claim, and he un-

; equivocally- -denied at the heari ring that any such rep-

- resentations had been made. The voluntariness of

petitioner’s plea was properly determined. at the orig-

* .

C2 x ee

15

inal hearing, and affirmed by the court below.’ There

is no reasén for. plenary review of that. claim by

this: Court.

CONCLUSION

For the. foregoing reasons, it is respectfully sub-

-mitted that the petitions for writs of certiorari should

he denied. :

ERWIN N. GRISWOLD,

e Solicitor General.

WILL WILSON,

Assistant Attorney Geyeral.

BEATRICE ROSENBERG, | ‘

KIRBY W. PATTERSON,

-" Attorneys..

JUNE 1971.

- 8In an addendum to its denial of the petitions for rehear-

ing, the court below stated that although the district court

had “cagetully explained the consequence of the plea,” it had

“omittedéxplanation of the nature of the charge.” The

court of appeals held, however, that since the plea was entered -

before the decision in McCarthy v. United States, 394 U.S.

- 459, there was no automatic requirement that Nash be allowed |

to plead anew. Halliday v. United States, 394 U.S. 831 (Nash

Pet. No. 1637, pp. 34a-85a). The fact that Nash had been

represented by counsel at an earlier stage of the proceedings

_ and that he had entered his plea after consultation with de-

fendant Irving’s counsel supports the view that he understood

the nature of the charges against him. —

WT UV. &. GOVERNMENT PRINTING OFFicE; 1971 426651 ‘692