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

Opinion below _.

Jarisciction .......... Ae aes

2

2

. Questions presented Sane | 2

8

6

Statement __...

Argument “

Conclusion - 2 Gers 15

CITATIONS

Cases: .

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

' rari denied, 274 U.S. 736 .. oe, PE 8

Bell:v. United-States, 100 F. 2a “AT4 PEM Sa tere 8

Blitz v. United States, 153 U.S. 308 8

Crain Vv. United States, 162 U.S. 625 -...._._. 48

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

Halliday v. United States, 394 U.S. 8381 Cd

Johnson Vv. United States; 207 F. 2d 314, certio- —

' rari denied, 347 U.S. 938 cos ll

McCarthy Vv. United States, 394 U.S. 459 __. - 367

Morgan V. United States, 399 F. 24.93, certiorari . ©

denied, 393 U.S. 1025 __..... +

Parker Vv. United States, 252 F. 2d 680, certiorari

denied, 356 U.S. 964 - —_ “SEL ar 8

Remmer v. United States, 347 US. 227 | ph ee a: ee

Remmer y. United States, 350 U.S. 377 —.. > ie

United States v. Crummer,.151 F. 2d 958° caaaeeataak 7

- United States v. Greenberg, 30 F.R.D. 164°... 7,8

United States’ v. Lennon, 246 F. 2d 24, —

Gael, BT Te cp i es are.

. United, States v. McGuire, 381 F. 2d OR re 8

United States v. Shavin, 287 F. 2d 647 _.- 8

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

denied, 327:.U.S.:794 _........ MLE aa ex ae NO 11-12

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

Vandersee V. United States, 321 F.2d 57... 8

Weiss v. United States, 122 F. 2d 675 7

Wheaton v. United States, 183 F. 2d 522... 12

. Statutes and rule: . _ ° Page

Securities Act of 1988: ~\. eee

Section 17(a), 15 U.S.C. 77q(a) — - 8,7

18 U.S.C. 371 : :.

18 U.S.C. 4208 (a) (2) . = 3

Rule 7(c) F.R.Cr.P.— , 8

‘ oo eae al Ls

»

In the Supreme Court of the United States

ie OcToBER TERM, 1970

waged oe

| No. 1617. is

LEON O. RIGGS, PETITIONER

v. a ae

UNITED STATES OF AMERICA

No. 1635.

FRED G.. AMICK, PETITIONER _

: | v.° j | 4 este &

’ UNITED STATES OF AMERICA _

<

+ No. 1687

H. R. NAsH, PETITIONER

oan UO |

‘UNITED STATES OF AMERICA

| No. 6964

‘Davin R, MAYNE, PETITIONER

"UNITED an OF Aneel

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) z

2

OPINION scarred

’ The opinion. of the court of appeals (see Amick. |

Petition No. 1635, pp. 1a-334) is not yet reportéa. |

ae | JURISDICTION = °—@

/ . Eo ka

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 — 28 U. S.C. 1254(1).

eee PRESENTED

_ 1. Whether there was reversible 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 petit juries were im-

properly selected because a substantial part of the

array \was chosen by the. acc aawal system (Nos.

"1635 and 1637).

8. 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 spon Amick (No. —-

3

8

- 5. "Whether the trial court erred in refusing to.

». . vacate a plea of nolo contendere antares by petitioner —

a Nash bic 1637). |

_ STATEMEN T

An ‘iidictehont 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 as toa 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-

cept that it set aside the conviction of Mayne on a ‘

count upon which. a concurrent sentence had been.’

imposed (Amick Pet. 33a).

The charges arose out of fraudulent conduct of

petitioners in various offerings. of stock by Air and

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

court of appeals which_we are lodging herewith. -

4

-. Space Underwriters, Inc; (ASU), a corporation

formed in May 1963 to take over the business of

Umbaugh Aircraft, which prior to institution of bank-

ruptcy 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.

“Tn late: ‘April or. early May of. 1963, Amick and co- .

| defendant Irving * pr 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. 2 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 co 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 ees, was substituted for Um-

' 2Trving has a nie petition for a writ of certiorari ©.

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

s “Tr? = refers to ‘the multi-voluméd trial transcript.

5

baugh; _ latter, however, remained an undisclosed ;

principal (Tr. 597). <p |

At a hearing. i in the bankruptcy’ court on July 22,-

1963, which attended, Irving testified that his

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

os prepared to use sais amount to finance the. reorgan-_.

ization plan. He also stated that he had associates,

me 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 attdrney 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 fater (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 ’

‘ the bankruptey . court’ entered its formal order a

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- ° —

ped corning. — matters as the number. of orders which.

“

— | . : : , 6

ante Doe the gyroplane, its price, ‘end ‘nebant acl

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 esi (Amick Pet. No. 1635,

P =a);

It aan virtually beyond. ispute, that during

this period fof the public offerings] the effort to

\prontete 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 :

be operate as a fraud upon the purchaser,’ —

i 3

“ARGUMENT |

1. ‘The opening paragraph of count 1 charged, 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

‘ The statute is set out in the Amick Petition No. 1635 at

P. 5.

a

aw

.:

upon Sainididdens- of the common stock of’ ASU ashes ste

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

‘by a particularized account of ‘the development and —

execution of the overall ‘plait (App. 37-50), the false a:

| representations which weré made, specifying 14 in-. -

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

ial facts, specifying ten instances (App, 51-52), ‘Jt.

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 1-8 ‘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

Soro}

_ 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), -

certiorari denied, 355 U.S. 836; United 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 = of guilty _

6

pa Antick was convicted on eight of the twenty-seven counts ;

‘which had been’ submitted to the jury.

8:

- 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, 3); -

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

- (CA. 2); United States v. Greenberg, supra. |

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

tions made in one count may be incorporated by ref-

erénce in another count.”. Petitioner Amick coritends

that the language incorporated here lost its vitality

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

The governing law is to the 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

(C.A. 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 ae 9), certiorari de-

nied, 274 U.S: 736.

. 2. Challenges to the manner in which’ the erent

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

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

9

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

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

this brief to petitioners’ counsel.

8. After the jury had been impaneled, but iar

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 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 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.

Wee ae Cee

anyone was trying to influénce 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. In case any of

this should come to your attention—although it

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

-

ment, It is sicilaabane of what has occupied _ ree

- 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 should

promptly report it. :

And a prompt, report was. s. made in 1 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 —s does,

please report ‘it promptly.

Considering 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 avoidedé&ny possible preju-

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

tended.” There can 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

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

v. United States, 133 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 rely (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 express permission of. Nash, Kightlinger

stated the counts to which the plea would be.entered

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

court explained the possible penalties that could ‘be

t Remmer V. 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

2 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 |

decision is apposite to this case, where the juror attached

- no significance to the telephone ‘and the lawyer for the

party. who had made ‘the call

without substitution of the al

nted to continue the trial:

13

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 ee 488-490). =

: court further said (App. 490) : :

Now, Mr. Nash is not suannaial 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 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 to represent himself. Is that right,

Mr. Nash? —

Petitioner answered - ieee 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 conclusion of the

trial. The court found Nash guilty on the basis of

4

|

14

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

‘ eivil action, and upon the evidence heard at this trial;

jhe was feed to.imprisonment for five years.

Nash was represented at the sentencing and did

not scene waive counsel at that time (App. 509,

563).

Nash thereafter nova to set aside 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 (5) 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

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

wate dye anne) 15

c

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

is no reason for plenary review ‘of that claim by

this Court.

i CONCLUSION -

‘For the foregoing reasons, it is respectfully sub- /

mitted that the petitions for writs of certiorari should

be — . . : |

eee ei es ERWIN N. GRISWOLD,

cae . - - Solicitor General. = ~_ .

aie t ; Fes

ete oe WILL WILSON, — :

Assistant Attorney General,

BEATRICE ROSENBERG, hy |

KIRBY. W. PATTERSON,

Attorneys. .

~ JUNE 1971.

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

ing, the court below stated that although the district court

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

“omitted explanation 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

nf Pet. No. 1637, pp. 34a-35a). The fact that Nash had been

ine 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.

@

+

wus. coveenwent PRINTING OFFICE; 1971 - 426651 692

. ° . ‘