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

INDEX

EEN Murne

Jurisdiction ........ AEE EE Mls nA PE See

Questions presented — 02 eae ee

ee wee eer es

te DORMER NF

CITATIONS.

Cases:

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

rari domled,-274 UB. TOG cccicnccdecciccincpeseicseecpqecee

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

Blitz v. United States, 153 U.S. 308 2 "i;

Crain V. United States, 162 U.S. 625

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

Halliday v. United States, 394 U.S. 831. EE = a

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

rari denied, 347 U.S. 938 ___ Ue eae

McCarthy Vv. United States, 394 U.S! 459 Ee rae

Morgan V. United States, 399 F. 2d 93, certiorari

denied, 393 U.S. 1025 __ 7

Parker v. United States, 252 F..- od 680, certiorari

denied, 356 U.S. 964 - se npg nigliae Nisan ees °

Remmer Vv. United States, 347 U.S. 997 at ier cea

Remmer V. United States, 350 U.S. 377 .- ae

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

United States v. Greenberg, 30 F.R.D. 164 ______—

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

‘denied, 355 U.S. -836 - snamaitichccletameana eee

United States v. McGuire, 381 F. 2d 306 ____________-

United States v. Shavin, 287 F. 24 647 __-...-

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

denied, 327 U.S. 794 . ; bcs ticabass

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

Vandersee V.. United States, 321 F. 2d 57 ________

Weiss Vv.‘ United States, 122 F. 2d 675 __.......

Wheaton v. United States, 183 F. 2d 522

Page

ao won rs &

15

11-18 °

Sj

Statutes. and rule:

Securities Act of 1933:

18 U.S.C. 871

Section 17(a), 15 U.S.C. a) on

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

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

own a

FFI RST OS

‘In the hasan Court af the Muted States

COTgaEs TERM, 1970

No. 1617

LEON 0. RIGGS, PETITIONER

; Vv. |

UNITED STATES OF AMERICA

| No. 1635

FRED G, AMICK, PETITIONER ~

_- UNITED STATES OF-AMERICA aiatees

No. 1637

H. R. NASH, PETITIONER

UNITED STATES OF AMERICA

No. 6964

'.Davip R. MAYNE, PETITIONER.

_ UNITED STATES OF AMERICA -

5

ON PETITIONS FOR WRITS OF CERTIORARI TO THE

-’. UNITED STATES COURT OF APPEALS FOR

_THE SEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION -

(1)

2

OPINION BELOW

The opinion of the court of appeals (see Amick

Petition No, 1635, pp. la-33a) is not! yet a

2 URISDICTION

The judgment of the court of appeals was entered

on January 22, 1971: Petitions 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 veiinitite error 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 aele 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 thorough exploration 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 (No. 1635).

“3 LO ELMO LEAP ICLP NL LL ARE ALPES ASOD OOS OR TS A So tise Page

r i "

e

-

- 9. Whether the trial dia erred in refusing to .

vacate a plea.of nolo contendere entered by: petitioner

Nash (No. ils | 2 |

STATEMEN :

An: indictment returned in the United States Dis-

trict Court for the Southern District of Indiana

charged petitioners and others in various substantive

~~ eounts 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 contengere as to a portion of the charges; the

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. 313-314); and Mayne, a total of four ‘years

(App. 308-309). The court of appeals affirmed, eX-2

— cept that it set aside the conviction’ of Mayne on a

count upon which a concurrent | sentence had been

imposed (Amick Pet. 38a).

The charges arose out of fraudulent conduct of

petitioners in various offerings ‘of stock by Air and

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

court of “5 which we are lodging herewith. =

=] . S e F

. 2 P .

. -

FRSA EM ROL OTE

sy

4:

Space Underwriters; Inc. (ASU), a corporation

formed in May 1963. to take over the business of |

Umbaugh Aireraft, which prior to institution of bank-

ruptey 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 in—

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 gnd co-

2 defendant Irving * praposed 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 stéck to Umbaugh would be in direct

violation of an earlier order of the bankruptcy. court

that Umbaugh could have no interest 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 subst tuted for Um-

; ‘ee, .

_ 8 Irving |} a. pending petition for a writ of certiorari.

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

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

‘existed for Umbaugh to

payment in connection with the reorganization, and pee

5

hoe the latter, however, conniiad ‘an undisclosed : |

principal (Tr.. 597). :

At a hearing in the bankruptey court on 7 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-

ization plan, He also stated that he had_ associates,

including relatives, who would provide an additional

$1,000,000. He further apo that no arrangement

lve property or other —

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

=

| 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. Za):

It appears, virtually beyond aiapnite, that ter

this period [of the public offerings] the effort to

promote-sales of ASU stock included general re- | |

leaseg.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

1. The opening paragraph of count 1 charged, in”

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

of 1938,‘ 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 faets 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: wauld and did operate as a fraud and deceit

p. 5.

_4The statute is set out in the Amick Petition No. 1685 - 35

rs

; upon purchasers of the common stock of ASU +e an

(App. 36-37). This general statement was followed _ :

”

by a: particularized account of the development: 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- “pian. Ss

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

with count 1 as to paragraphs 1-8 of that count in:

_ corporating those paragraphs by reference; the critical

difference was that each of the remaining counts va- .

-. Yied 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 i in the conjunctive in each

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

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

_ certiorari dtnied, 855 U.S, 836}. United States vy.

Warner, 428 F. 2d 780,735 (C.A. 8) ; United States

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

dice an accused, because a verdict of guilty upon

* Amick was convicted on eigtit of the twenty-seven counts

omen had been submitted to the jury. .

~ °

_" v, United States, 122 F. 2d 675, fs0-s81 (C.A..5): >

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

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

. _ PP pee TET POLES LONI OAPI ERI SELES TT TD oe

P >.

a |

-

bid 8

eocaae

v

wae 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

2 below held (Amick: Pet. 6a-7a), the indictment here’

‘clearly met the requirements that it apprise the ac--

- -eused with reasonable certainty of the nature of the ~

_ charges against him, so that he could prepare his des |

_.._fense and be-able to plead the judgment as a bar to

ure any subsequent prosecution for the same offense. Cf. -

“\ Vandersee v. United States, 821 F. 2d 57 (C.A..3);_-

-- / United States-v. McGuire, 881 F.2d 306, 318-619.

= (CA. 2); United States v. Greenberg, supra. : =

b. Under Rule “7 (¢),. F. R. Crim. P., “Ca ]llega-

3 ‘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. 18-15). .

'. The governing law is to the contrary. Failure. of

on ; proof. as to the count setting forth the allegations in -

ees full does not vitiate the other ‘counts which adopted

its Tanguage. 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

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

(C.A. 6), ce 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. as certiorari de-

nied, 274 U.S. 736.

wie. Challenges tothe manner in which the ee |

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

= Nash Pet; 33-34) are answered in the. government’s

. Sos. r " Ph,

St SPRL SI RN MNT IIE TG FLYER SRA DORI ME IEL a CER LIN PTR A BE SECRET TIO IE OMT pa Porte

9

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

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

this brief to petitioners’ counsel.

8. After the jury. had been impaneled, but: hefoe

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. irivestigate (App. 609)..

He then questioned the juror in chambers, 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-’

sociate communicated this information to the juror,

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 dismiseal 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 1 impression that

6 Vollmer has also filed. a petition for a writ of certiorari

: (No. 1678, this — which we are @ responding to separately.

> 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 question 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. Im case any of

this should come to your. attention—although -it

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

11 .

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 admgnitions 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 - “shonid ;

. promptly report it. ;

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 anviting does,

please repprt it promptly.

Considering the differing views of sda ‘nid the

_ tangential nature of the incident it was well within

the court’s discretion to instruct the jury ‘as it did “a

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 can be no presumption of prejudice

from this inconsequential occurrence. See, ¢.9.,; 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; :

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

12

(C.A. 7), certiorari denied, 327 U.S. 794; Wheaton

v. United States, 183 F. 2d 522, 527 (C.A. 8).’

4: The contention that the evidence was insuffi-

~. cient: to sustain the conviction: 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 a (Amick Pet. 18a-

16a).

5. On the day this case was set. for 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 se permission of Nash, Kightlinger

" stated the edunts to which the plea would be entered

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

court explained’ the possible penalties that could be

"+ Remmer Vv. United States, 347 U.S. 227; 350 U.S. 377;.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

alone 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 Vv.

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

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

—ho significance to the telephone call and the lawyer for the —

_ party who had- made the call wanted to-eontinue the trial.

| without ‘substitution of the alternate.

|

imposed, the right to trial by jury, the presumption :

* 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 (App. 488-490). The

court further said (App. 490):

Now, Mr. Nash is not eteanicn “e 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 occasions, 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 ta 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. the conclusiori of the

trial. The court found Nash guilty on the basis of

\

\

Yebner : , : ra sR HOR

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,

563).

Nash thereafter moved to set hside the judgment

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-sentenced (App. 354-356).

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

| imprisonment (App. 318-314). .

The crux 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 hearing that any such rep-

_ resentations had been’ made.. The voluntariness’ of

7 petitioner's plea was properly determined at the orig-

15

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

is no reason for plenary 1 review of that claim by

_ this Court.

‘CONCLUSION.

For the foregoing reasons, it is respectfully sub- x

mitted that the petitions for writs of certiorari should

be ——

JUNE 1971.

: ERWIN N. GRISWOLD,

Solicitor General. ‘

WILL WILSON, ;

Assistant Attorney General.

| BEATRICE ROSENBERG, .

_ KIRBY -W. PATTERSON,

- Attorneys.

geet

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

ing, the court below stated that although the district court

_ had “carefully explained the consequence, of the plea,” it had |

“omitted explanation ef 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 US... °

_ 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-35a). 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.

°

WG. 8. covsanment rarwtine orrice; 1971 426681 692

MAA O OAT? 405; PEPPERS A eS tape omanses Ba TE te 5 EI ee