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

Questions presented -

Argument

Conclusion 3 oe L

"Cases: ee

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

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

Opinion below

MIR oS ee Lived ©

Statement - Ned 4 one sees

CITATIONS .

sari denied, 274 U.S. 736...

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

Crain V. United States, 162 US. 625

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

- Halliday v. United States, 394 U.S. 881 _.

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

rari denied, 347 U.S. 938

McCarthy v. United-States, 394 U.S. 459 | sabaettelnis

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

denied, 393 U.S. 1026 .

Parker v. United States, aa F. 2d 680, certiorari

‘denied, 356 U.S. 964 - tha

‘Remmer v. United States, 347 U. S. 227 scnencnsbanciin

Remmer V. United States, 350 U.S. 5 A Ee

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 . Str be ce

United States v. McGuire, 381 F. 2d 306 AAS Ne oe

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

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

_ denied, 327°U.S.-794 PEN Be ei es

Unitéd States Vv.. Warner, 428 F. 2d 730 _.____

Vandersee Vv. United States, 321 F. 2d 57 45

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

Whéaton v. United States, 133 F. 2d 522 =

~

‘Statutes and rule: . -

Securities Act of 1933:

Section 17 (a), 15 U.S.C. TTa(a) -

18 U.S.C. 371

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

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

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= he Supreme Court of Mnited States

_ OCTOBER ‘TERM, 19

No. 1617

LEON O. RIGGS, PETITIONER

v. es

UNITED STATES OF AMERICA

en No. 1685

’ FRED G. AMICK, PETITIONER

Vv. °

UNITED STATES OF AMERICA

No. 1637 ©

H. R. NASH, PETITIONER

‘4 ’

_ UNITED STATES OF AMERICA

- No. 6964

-Davip R, MAYNE, PETITIONER .

. Vv. °

UNITED STATES OF AMERICA

ON PETITIONS FOR WRITS OF CERTIORARI TO .THE

UNITED STATES COURT OF APPEALS FOR

| THE SEVENTH CIRCUIT ,

BRIEF FOR THE UNITED STATES IN OPPOSITION °'

VA ate

2: .

OPINION BELOW

ee opinion of the court of “appeals (see Amick

Petition No. 1635, pp. 1a-33a) is not yet reported.

oa te ) JURISDICTION

The intmiias of the prea 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 reversible error in the man-

ner in which the indictment was drawn or in the fact ~

_ that language used i 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).

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 petitioner Amick (No, 1635)..

=

————

Ley 8

5. Whether the trial ‘court erred in refusing to

vacate a plea of nolo contendere entered by petitioner Fass

Nash oe 1637). :

STATEMENT T

An indictment returned in the United States Dis-

trict Court for the Southern District of Indiana

charged petitioners and others in various substantive

counts iwith 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 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-

cept. that it set aside the conviction of Mayne on a,

count upon which .a concurrent sentence had been

imposed (Amick Pet, 38a). pital

- The charges arose out of fraudulent conduct of

petitioners in’ various offerings of stock by Air and

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

court of appeals which we are. a herewith. ;

4 . : e

Space Underwriters, Ine, (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.

_ 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, estima d by Irving to arnount ~

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

' pléck of. ASU stock to Umbaugh would be in diregt

_ 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 _

oa of Umbaugh Aireraft, stock, was — for Um-

2 Irving on a pending petition for a writ of certiorari

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

3“Tr,” refers to the mblti-volumed trial transcript.

id y

5 .

-baugh; the latter, however, remained an undisclosed

principal (Tr. .597). |

-- At a hearing in the barikruptey court on July 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 testified that no arrangement

existed for Umbaugh to receiye 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, 184-135, 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, $421, 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 enteréd 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

4

i

6

existed for the gyroplaneé, to age, 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. 1685,

p. 2a):

It appears, Gistualiy beyond dispute, that shaving

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

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 ..

p.5. ator

7

He “upon purchasers of the common stock of ASU iy one

.-. (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 :n-

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 I 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. 11-18), 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 £7 2d 958, 963-964 . -

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

dice an accused, because a verdict of guilty — |

; "6 Amick was ree | 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 ptead 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, 881°F. 2d 306, 318-319

(C.A, 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- |

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 to the contrary. Failure of

proof as to the count setting fo®th the allegations in -

full ddes not vitiate the other @unts 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

3 (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 (C.A. 9), alana de- -

_ nied, 274 U.S. 786. |

2. Challenges to the manner in which the grand

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

Nash Pet. 33-84) are answered in the government’s

°

4

et

A eo

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

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

_ this brief to petitioners’ counsel.

8. After the jury had been impaneledabut iio 7

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).

e 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 turris creating prejudice, and

- nobody ever gets tried” (App. 6125614). ‘The court

stated that the juror aia not have the i impression that

6 Vollmer has ae filed a petition for a writ of certiorari

(No. 1678, this Term) — mye are responding to separately.

™~

y

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

- ease (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 alittle

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 whiclfrequired 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 sheuldn’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

thi@should come to your attention—although it

| shouldn’t—I taupe. T would make that state-

5 Se

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 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 dges attempt to discuss the case with you ~

or in your ,hearing or presence, you should |

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

_ease. I am sure nothing out of the way will

happen in the future; but if anything 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 ‘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, ¢.g., Mor- _

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

eertiorari 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

tne,

2

(CA. 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~

ee operation, is fully answered by the opinion of the

court below upon which we rely’ (Amick Pet. “1Ba-

16a).

5. On the day: this ease. 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. fp¥ 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

* 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

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

-reading ef 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 @uror 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 call and the lawyer for the

arty who had made the call wanted to continue the trial

_ without substitution of the alternate.:

Pins

s

18

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 represented 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. N asit==Et 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, ie. 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 —

(ee

his ie. the evidence heard by the court ‘in the prior

civil’ actjon, 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 aside the ana

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 présent complaint—a sient

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-.

eo oe

inal hearing, and affirmed by the couf below." - There

is no reason for plenary review of —_ claim by

this Court. as

CONCLUSION =.

For the foregoing reasons, it is respectfully sub-:

mitted that the petitions for writs of certiorari should

_be denied.

ERWIN N. GRISWOLD,

Solicitor General.

WILL WILSON,

Assistant Attorney General.

BEATRICE ROSENBERG, “<

KIRBY W, PATTERSON,

___,__Attorneys. - es

JUNE 1971. ee wees

®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,” @\had

“omitted explanation of the nature of the charge.” o-

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

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

represented: by counsegat 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.

WW GV. &. GOVERNMENT PRINTING OFFICE; 197? 426651 692

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

oy