Reply Brief — Hemlock v. United States (No. 73-1849)

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In THE

Supreme Court of the United

OCTOBER TERM, 1974

No. 73—1849

ALFRED J. HEMLOCK,

Petitioner,

v.

Untrep States oF AMERICA.

No. 73—1850

Harry Horrer,

Petitioner,

v.

Untrep States or AMERICA.

On Petrrions For Writs oF CERTIORARI TO THE UNITED

Srates Court or APPEALS FOR THE SECOND CincuIT

PETITIONERS’ REPLY BRIEF

ArTHuR KARGER

Counsel for Petitioner

Alfred J. Hemlock

600 Madison Avenue

New York, N. Y. 10022

Heratp Prick FaHRINGER

Counsel for Petitioner

Harry Hoffer

One Niagara Square

Buffalo, New York 14202

EO

PSE PX OER ICRA PES YS goer

TABLE OF CONTENTS

PAGE

I. Should action here be withheld until the Par-

ere eS re ee 2

II. The concurrent sentence doctrine is not a bar

to this Court’s consideration of any of the issues

SUN Wr I ois chan pes candkenesicccs 3

III. As to the Court of Appeals’ extension of the

Federal hearsay exception relating to co-con-

Opiratern GeclOTOGOMs .. 2. cccscccccvescceces 5

SU. DOR We er I oon hice Ce ese cccces cece 8

(a) As to the “harmless error” doctrine ...... 8

(b) As to the standards applicable under the

mail fraud statute, 18 U.S.C. § 1341 ....... 9

(c) As to the Bahamian bank secrecy statute .. 10

PE ngs Ried das cea kd cewe cen aseneiieceapess 10

Cases Crrep

Barnes v. United States, 412 U.S. 837, 848, fn.16.... 4+

Benton v. Maryland, 395 U.S. 784, 791 ............. 4

Grunewald v. United States, 353 U.S. 391, 399-402 ... 8

Holland v. United States, 348 U.S. 121, 138-139 (1954) 2

Krulewitch v. United States, 336 U.S. 440, 443-5 .... 7,8

Parness v. United States, No. 74-274 ............4.. 2

United States v. DeSapio, 435 F.2d 272, 284 (2d Cir.),

OO, Gl SE es OD din dS sccs cass cecccsceass 8

RS CONT ILS eee eee

i a

ii TABLE OF CONTENTS

PAGE

United Staies v. Enmons, 410 U.S. 396, 411 ......... 5

United States v. Williamson, 450 F.2d 585, 589 (5th

Cir.), cert. den. 405 U.S. 1026 ................. 6

Yee Hem v. United States, 268 U.S. 178, 185 (1925)... 2

Statutes CrTep

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a ead 3, 4

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I, SP I de 8

aS eam ieee

IN THE

Supreme Cowt of the United States

OCTOBER TERM, 1974

No. 73—1849

AuFreD J. HEMLOCK,

Petitioner,

Vv.

Unitep States or AMERiCA.

No. 73—1850

Harry Horrer,

Petitioner,

v.

Unitep States or AMERICA.

——

Own Petitions ror Writs or CERTIORARI TO THE UNITED

States Court or APPEALS FOR THE SEconD Circuit

dp.

.

PETITIONERS’ REPLY BRIEF

The filing of this reply brief has been delayed because of

the Solicitor General’s failure to effect a timely filing of

his opposition briefs. He has disregarded the time limits

set both in Rule 24(1) and in the August 27, 1974 letter

from the Clerk, which requested that responses be filed “on

or before September 11, 1974”.

SEE REA IBOLT: LOIN EE ENOL UOTE LESLIE IE NIE EILEEN ER ER LOTR ERO BR tc

POLL REALE RELIES SILI BRIE LE 8 NEIL SOS GT XS) Hy Ne x rer “ Bot Oe ae

2

The Government has thus impeded the right of these

petitioners promptly to bring to this Court’s attention new

considerations vitally affecting the propriety of granting

certiorari.’

Should action here be withheld until the Parness

case is reached? 7

Chief among the new factors here presented is the filing

of a. petition for certiorari in Parness v. United States, No.

74-274, on September 13, 1974. The Court may wish to con-

sider withholding action on the instant petitions until it

reaches the Parness petition, which raises in a most dra-

matic fashion one of the critical issues in the instant cases

—i.e., whether the Second Cireuit committed constitutional

error when it sanctioned the jury’s drawing of otherwise

impermissible inferences simply because the petitioners had

not taken the stand and presented a ‘‘credible exculpatory

version’? of the alleged crime.

In the Parness case, the Second Circuit quoted and relied

upon that portion of the opinion below that articulates this

strange new constitutional doctrine. The Parness petition

not only raises this matter as a question presented but notes

(pp. 33-34) that this doctrine appears ta be an extension

and a perversion of a concept created by this Court in Hol-

land v. United States, 348 U.S. 121, 138-139 (1954), and

Yee Hem v. United States, 268 U.S. 178, 185 (1925).

This is far from what the Solicitor General has described

(br., p. 12) as a ‘‘passing comment by Judge Friendly.”

It is a ruling and a precedent, already used in Parness, that

‘In this reply brief, unless otherwise specified, figures in

parentheses followed by the letter ‘‘a’’ refer to the pages of the |

defendants’ Joint Appendix in the Court of Appeals; references

to ‘‘Pet.’’ are to the Hemlock petition (No. 73—1849) ; and refer-

ences to the Government’s brief (‘‘br.’’) are to its brief in oppo-

sition to the Hemlock and Hoffer petitions.

a

3

poses a serious threat to the right given a defendant not to

have adverse inferences drawn against him by reason of

his failure to testify in his own defense. It may be noted

that, contrary to the Government’s assertion (br., p. 11),

the trial court here did not give any instructions with rela-

tion to petitioners’ ‘‘right to remain silent without infer-

ences being drawn from such silence.’’ This prohlem

obviously deserves review by this Court.

The concurrent sentence doctrine is not a bar to

this Court’s consideration of any of the issues raised

by petitioners.

Contrary to the Government’s contention (br., p. 9), the

concurrent sentence doctrine is not a bar to this court’s

consideration of the issue relating to 18 U.S.C. § 1342, the

“fictitious name” statute.? Further, no claim is, or could

be, advanced by the Government that that doctrine could

possibly affect any of the other issues raised by petitioners."

? Petitioner Hemlock received concurrent sentences of four

years each, and petitioner Hoffer concurrent sentences of two

years each, on (a) Count 1 of the indictment, charging con-

spiracy, (b) Counts 2 through 5, charging substantive violations

of 18 U.S.C. § 2314. and (ce) Counts 6 and 7, charging substantive

violations of 18 U.S.C. § 1342, the “fictitious name” statute. In

addition, petitioners Hemlock and Hoffer each received separate

sentences of one year each—to run concurrently with each other

but consecutively to the other sentences—on Counts 12 and 13,

charging substantive violations of the mail fraud statute, 18 U.S.C.

§ 1341. The trial court also imposed a fine of $10,000 on petitioner

Hemlock, which, the court specifically recited, was “to cover all

counts” (957a-958a; emphasis supplied).

’ The issue relating to the mail fraud statute (Pet., pp. 19-21)

bears directly on petitioners’ convictions on Counts 12 and 13, on

which they received separate sentences. The remaining issues,

relating to the co-conspirators’ declarations (Pet., pp. 8-12), the

“harmless error” doctrine (id., pp. 14-17), the effect of petitoners’

failure to take the stand (id., pp. 17-19), and the Bahamian bank

secrecy statute (Frank Pet., pp. 16-19), affect petitioners’ convic-

tions on all the counts.

4

Thus, this Court has held that ‘‘there is no jurisdictional

bar to consideration of challenges to multiple convictions,

even though concurrent sentences were imposed.’’ Benton

v. Maryland, 395 U.S. 784, 791. All that was held in Barnes

v. United States, 412 U.S. 837, 848, fn. 16, on which the

Government relies, was that it is discretionary with this

Court to decide whether to review a case involving con-

current sentences.

In any event, the fine of $10,000 which was imposed on

petitioner Hemlock was, by its terms, based on all the

counts of which he was convicted, including the two counts

charging violations of § 1342, and it is sheer speculation for

the Government to suggest (br., p. 9, fn. 3) that ‘‘there is

little likelihood that the amount of the fine was affected by

the Section 1342 convictions.”” Furthermore, the Court of

Appeals itself did not regard the issue relating to § 1342 as

barred by the concurrent sentence doctrine; indeed, that

court expressly stated that if the interpretation of § 1342

urged by petitioners were accepted, ‘‘there would have to

be a reversal not only of the convictions under Counts 6

and 7 [charging substantive violations of § 1342] but per-

haps also of the conviction on the conspiracy charge, Count

1, since the [trial] judge instructed that a finding of a con-

spiracy to violate § 1342 would warrant a conviction on the

conspiracy count’’ (Pet., App. A, p. 17a).

In attempting to support the expanded reading accorded

to § 1342 by the Court of Appeals, the Government asserts

(br., p. 9) that ‘‘nothing in the legislative history of the

statute supports an opposing view.”’ It is clear, however,

that nothing in the legislative history of the statute sup-

ports the broad interpretation applied by the Court of

Appeals; certainly, the legislative history of the statute, to

which the Government briefly refers in its brief in opposi-

tion to the separate petitions filed herein by co-defendants

Borgman and Frank (Nos. 73-1603, 73-1674), has no bear-

ing whatever on the issue here presented. Clearly, in such

circumstances, the settled canon is here applicable that “a

ee

5 .

criminal statute . . . must be strictly construed, and any

ambiguity must be resolved in favor of lenity.’’ United

States v. Enmons, 410 U.S. 396, 411.

Ill.

As to the Court of Appeals’ extension of the Fed-

eral hearsay exception relating to co-conspirators’

declarations.

In an evident attempt to avoid meeting the issue as to

the validity of the Court of Appeals’ extension of the

Federal hearsay exception relating to co-conspirators’

declarations (Pet., pp. 8-12), the Government (br., pp. 12-

13) urges (a) that the issue was not properly preserved

for review in the trial court, (b) that the co-conspirators’

declarations here involved did not actually constitute hear-

say, and (c) that, in any event, such declarations were “not

a significant part of the case” against petitioners. There

is no merit whatever to any of these contentions, and it is

significant that the Court of Appeals in no way attempted

to rest its decision on any such grounds and in fact

squarely rejected the Government’s contention that the

issue had not been preserved for review.

As the Court of Appeals pointed out (Pet., App. A,

p. 20(a), fn. 16), the trial judge had early in the trial “ruled

that he would provisionally admit all declarations of alleged

co-conspilators subject to a subsequent blanket motion to

strike evidence the submission of which was not warranted

under the conspiracy exception” (195a, 203a, 217a-218a,

519a, 566a), and such a motion to strike was made by each

defendant at the close of the Government's case (727a).*

*It may be noted that at an early point in the trial, counsel for

petitioner Hoffer made a request of the trial court—which under

the court's ‘‘ground rules’’ enured to the benefit of the other de-

fendants (134a)—for ‘‘a limiting instruction’’ with reference to

testimony which would not be admissible against a particular de-

fendant unless justified under the rules relating to conspiracy ; that

the trial court stated it would ‘‘indicate at the proper time to

what references the jury's attention should be drawn and to whom

they apply’’; but that the court never did so (203a).

6

Contrary to the Government’s assertion (br., pp. 12-13),

the declarations made by co-defendants Frank and Borg-

man (also known as “Miller”) at the meeting of September

24, 1968 were “introduced for the purpose of proving facts

contained in, or asserted by, those statements” and were

consequently hearsay. See United States v. Williamson,

450 F.2d 585, 589 (5th Cir.), cert. den. 405 U.S. 1026 (cited

by the Government). As a matter of fact, such declarations

constituted the only direct evidence binding on any of the

defendants to show the excessiveness of the prices paid by

Planinvest to the Bahamian corporations, Columbia and

Splindian, for the two parcels of Canadian real property

here involved.

Thus, while there was evidence to show the prices paid

to the original sellers by the intermediate purchasers,

Kay and Miss Comeau, for such properties, there was no

evidence to show how much was paid by Columbia to Kay

for the parcel involved in the first transaction, or by

Splindian to Miss Comeau for the parcel involved in the

second transaction (See Pet., p. 6). Furthermore, there

was otherwise no evidence as to the values of the two

parcels of land involved, nor any expert testimony thereon.

Nor was there any evidence to show that petitioners

Hemlock or Hoffer had any knowledge of the prices paid

to the original sellers (Pet., p. 6).

The admissions made by Frank and Borgman as to

the excessiveness of the prices paid by Planinvest, coupled

with their bizarre explanation as to the use made of the

money ‘‘to pay off the CIA’’, constituted highly damaging

evidence which must surely have prejudiced petitioners

Hemlock and Hoffer in the minds of the jury in view of

the absence of any limiting instructions. It may be noted

in this connection that all the activities which the Govern-

ment notes (br., p. 13), were shown to have been engaged

in by Hemlock and Hoffer, were fully consistent with

7

their having acted merely in their capacity as attorneys

(see Pet., p. 17).

The additional arguments advanced by the Government

(br., pp. 13-14) are fully answered in the petitions herein

(Hemlock Pet., pp. 8-12; Hoffer Pet.. pp. 10-11). It may

be noted that there is not an iota of evidence in the ree-

ord—and none is cited by the Government—to support its

contention (br., p. 13) that *‘the conspiracy was still in

effect after the two real estate transactions had been

consummated, since there was evidence of a willingness

to make further fraudulent deals if the opportunity pre-

sented itself’? (see Hemlock Pet., p. 11, fn. 6).

In a further spurious effort to show that the conspiracy

was still continuing on September 24, 1968, when Frank

and Borgman made the declarations here involved, the

Government (br., pp. 13-14), attempts to give the errone-

ous impression that the cash withdrawals from the time

deposits in the Columbia and Splindian bank accounts in

Nassau were wiade at or about the same time. The evi-

dence, however, showed that the time deposits were opened

in about January or February 1968 and that the cash

withdrawals were made therefrom within a period of 30

to 60 days thereafter; i.e.. no later than March or April

1968, more than five months prior to the meeting of

September 24, 1968 (637a-642a).

It is immaterial that Frank’s purpose might have been

“to protect the success of the fraud”, as asserted by the

Government (br., p. 14), or to forestall any civil suit by

Mrs. Dominguez, as asserted by the Court of Appeals

(Pet., App. A, pp. 20a-21a). As pointed out in the Hem-

lock petition (pp. 11-12), any efforts on the part of the

conspirators to retain the fruits of their crime or to fore-

stall a civil suit by the victim, would be the equivalent of

nothing more than a purpose to “conceal” or “cover up”

their crime, such as was involved in Krulewitch v. United

8

States, 336 U.S. 440, 443-5, and Grunewald v. United States,

353 U.S. 391, 399-402.

Cases on which the Government relies, such as United

States v. DeSapio, 435 F.2d 272, 284 (2d Cir.), cert. den.

402 U.S. 999, are clearly distinguishable. Thus, in

DeSapio, the court emphasized that the purpose of the

declarant co-conspirator was, not “to conceal facts in order

to prevent detection, conviction and punishment”, but

rather to attempt to achieve some remaining affirmative

objectives of the conspiracy (435 F.2d at 284). No such

situation is here presented.

IV.

As to the other issues.

(a) As to the “harmless error’ doctrine.

The Government (br., pp. 14-16) makes uo effort to meet

the issue raised by petitioners (Pet., pp. 14-17) as to

whether there is any warrant for anplying different

standards of harmless error on the basis of whether the

error affects constitutional rights.

The Government (br., p. 16) apparently suggests that

petitioners are in no position to complain of the errors

committed by the trial court since they did not “offer a

written version of the instruction they would have pre-

ferred (Rule 30, Fed. R. Crim. P.)’’. That suggestion,

however, is wholly without merit. The Court of Appeals

itself pointed out in its opinion that the issue as to whether

a conviction in the criminal case would be entitled to col-

lateral estoppel effect in Mrs. Dominguez’ civil action, was

properly raised in the trial court, not only by objections

to the trial judge’s charge but also by defense counsel’s

9

request for an instruction on the subject (see Pet., p. 14;

id., App. A, pp. 28a-29a).°

There is likewise no merit to the Government’s claim

(br., p. 16) that “the instructional error was harmless even

by the stricter Chapman standard.” (See Pet., p. 15, fn. 9).

(b) As to the standards applicable under the mail fraud

statute, 18 U.S.C. § 1341.

The Government (br., p. 10; see also br. op. Borgman-

Frank petitions, pp. 12-13) attempts to distinguish United

States v. Maze, 414 U.S. 395, on the ground that the two

real estate transactions here involved necessarily remained

incomplete until the Canadian notary, Solomon, had suffi-

cient documentary evidence to be satisfied that Mrs. Domin-

guez’ Luxembourg corporation, Planinvest, was “em-

powered to buy and hold real estate.”

The evidence, however, undisputedly shows that Solomon

proceeded with the closing of the first transaction, even to

the point of filing the pertinent documents in the Montreal

registry office, without waiting to receive any of the papers

which Hoffer promised to send him (Pet., p. 19). Similarly,

even though Solomon never received the information relat-

ing to Planinvest’s power to own real estate, for which he

* As a matter of fact, as was pointed out in petitioners’ joint

petition for rehearing in the Court of Appeals (pp. 4-5), the

Government’s requested instructions on the issue of collateral

estoppel, which were adopted practically verbatim by the trial

court in its main charge, were embodied in supplemental requests

to charge which were not served on defense counsel until the

morning of the day on which the trial judge delivered his charge

to the jury, and no opportunity was afforded to defense counsel to

voice any objections thereto until the trial court delivered its

charge adopting the Government’s supplemental requests. Indeed,

as the Court of Appeals itself pointed out (Pet., App. A, p.

32a), it was not necessary at all for the trial court to charge on

the matter here involved. It was only the Government that re-

quested such a charge, and defense counsel could not be certain

until the actual charge that there would be any instructions on

the subject.

10

wrote to Hoffer on January 30, 1968, Solomon nevertheless

proceeded with the consummation of the second transaction

in Nassau on February 5, 1968 (Pet., pp. 19-20).

{c) As to the Bahamian bank secrecy statute.

In its brief herein (pp. 10-11), as well as in its brief in

opposition to the Borgman and Frank petitions (p. 17), the

Government urges that the individual petitioners have no

standing to raise the issue relating to the Bahamian bank

secrecy statute since the Bahamian bank accounts here in-

volved were opened by petitioners Hemlock and Hoffer in

the names of the two Bahamian corporations, Columbia and

Spindian. It is submitted, however, that the individual

petitioners do have such standing, particularly since the

Government has here urged that the two Bahamian corpo-

rations were actually petitioners’ alter egos. In any event,

the Government has in no way shown that the issue raised

by petitioners is not an important one worthy of review by

this Court, and its injection of the issue of standing mereiy

serves to present an additional important and novel ques-

tion for this Court’s consideration.

CONCLUSION

For the reasons set forth in the petitions herein

and in this reply brief, the petitions for writs of cer-

tiorari should be granted.

Respectfully submitted,

ArtHuR Karcer,

Counsel for Petitioner Alfred J. Hemlock,

600 Madison Avenue,

New York, N. Y. 10022.

Heratp Price FAnRINGER,

Counsel for Petitioner Harry Hoffer,

One Niagara Square,

Buffalo, New York 14202.

EvucGene GrEsSMAN,

Of Counsel.

AO IIR OS