UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
Appeals from the United States District Court for the District of Columbia (D.C. Criminal No. 549-73).
Lumbard,* Senior Circuit Judge, and Wright and Wilkey, Circuit Judges. Opinion for the court filed by Senior Circuit Judge Lumbard.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LUMBARD
Paul Sachs, Seymour Pollack and William Cudd were convicted on December 17, 1973 after a four-week trial before Judge Oliver Gasch in the District of Columbia for mail fraud, wire fraud, sale of unregistered securities, and aiding and abetting in violation of 15 U.S.C. §§ 77e, 77x and 18 U.S.C. §§ 2, 1341, 1343. *fn1 The indictment under which they were tried accused appellants of participation in an intricate scheme to obtain virtually worthless property, exchange it for stock of Control Metals Corporation on the basis of fraudulent reports and appraisals that the property contained highly valuable onyx deposits, and then sell the stock to the public before the issuing corporation could detect the fraud. Appellants now assign as error an ingenious variety of claims. Of those alleged errors that merit discussion, none is so compelling as to require reversal. We therefore affirm the convictions in all respects.
A summary of the government's evidence will suffice for purposes of our discussion. In March 1969, appellant Cudd purchased 640 acres of undeveloped prairie land, including four onyx placer claims, near Mayer, Arizona. Even as Cudd was negotiating his purchase of the property and agreeing to obtain the financing necessary to put the placer claims into production, Seymour Pollack was soliciting exchanges of the property for stock. In July 1969, Pollack approached George Hall and other directors of Control Metals Corporation, a publicly owned forger of metals, located in Arizona, and suggested a plan to ameliorate the corporation's precarious financial condition. The plan required Pollack to invest $300,000 in Control Metals and the latter to purchase a one-tenth undivided interest in the Cudd property which Pollack claimed had "an exceptionally large deposit of good grade onyx." Pollack asserted that the property was owned by Fountainhead International, Inc., a company incorporated in the District of Columbia with which he claimed to be "involved." Pollack produced a letter, an appraisal and a promise of further reports testifying to the value of the property. By August 4, 1967 it had been agreed that in return for the cash and the Cudd property, Control Metals was to transfer four million shares of its common stock to Fountainhead and 600,000 shares of restricted investment stock to International Marketing, Inc., another company controlled by Pollack. Aside from the economic incentives, Pollack offered to obtain the resignations of dissident directors of Control Metals who were not involved in the discussions involving the onyx property. Paul Sachs, an attorney practicing in the District of Columbia, who had been presented to Hall as Pollack's attorney, urged Control Metals to accept the offer to avoid financial collapse. Sachs asserted that he was a shareholder of Control Metals who wanted to protect his investment.
Agreements to effectuate the proposed transaction were drawn up in Washington by Sachs and Thayer Lindauer, the attorney for the directors, and executed there by two of Pollack's employees, Joseph Gold and Georgia Liakakis, who signed as officers of Fountainhead and International Marketing although they were not. The Board of Directors of Control Metals agreed to the arrangement after Pollack executed a personal three-year guarantee that the property would produce $100,000 gross earnings annually.
As the Control Metals board was deliberating whether to accept the proposal, Pollack and Sachs took steps to dissolve Fountainhead and generate a false list of shareholders of that corporation. When Sachs informed Lindauer that Fountainhead would be dissolved, he also noted that Pollack would procure proxies from Fountainhead's shareholders so the Control Metals stock, and the voting rights inherent therein, would not be dispersed. The clear implication of this statement was that the shares would not be resold to the general public.
In mid-August 1969, Sachs sent Lindauer an unsigned draft of an opinion letter concerning the registration requirements of the Securities Act of 1933 as they affected the Control Metals stock distribution to Fountainhead. After receiving additional documentation from Pollack, Lindauer issued an opinion letter indicating that the certificates to be presented to Pollack required no printed restrictions on salability and could be resold by Fountainhead shareholders as stock acquired in a liquidation under SEC Rule 133 which was then in effect. Three days later, at Lindauer's insistence, a second opinion letter was drafted certifying the legality of the dissolution of Fountainhead and explicating the salability of Control Metals stock when received by Fountainhead shareholders. Although Sachs played a major role in preparing the opinion letter, he informed Lindauer that he would prefer not to sign it because of previous difficulties with the SEC. Sachs recommended that the letter be signed by Stanley Kaiser, another Washington attorney "familiar" with the transaction, and Lindauer agreed to this arrangement.
Pollack received over 3 million shares of Control Metals stock in 682 separate certificates on August 12, 1969, the day after Lindauer had issued the initial opinion letter. At Pollack's request, large denomination certificates were broken down into smaller amounts by the Control Metals transfer agent, and were reissued in the names of various individuals and businesses. *fn2 In order to generate investor interest in Control Metals, Pollack and the directors of the corporation issued a press release asserting that the onyx property acquisition would bring guaranteed income of $100,000 per year. This information had been supplied to the issuing public relations firm by Pollack. *fn3
Most of the 4 million shares of Control Metals stock ultimately given to Pollack were sold through straws, nominees and shell corporations named in accounts opened by the defendants with securities dealers throughout the country. Other shares were transferred directly to creditors in settlement of debts and these creditors resold the stock to the public. In addition to these methods of distribution, Pollack encouraged Michael Gardner, a securities dealer in New York and head of Gardner Securities, to enter into a partnership whereby Gardner's brokers would retail the stock directly to their investment clients and buy the stock for themselves. These measures avoided open market sales of large quantities of stock that might depress the per share price. There was also testimony that Sachs encouraged Gardner to manipulate the stock price by purchasing shares of Control Metals when the price started to decline. Sachs received proceeds of most of his sales only after they had been routed through an account established by defendant Harold Rothman at the New Jersey firm of P.J. Gruber and Company in the name of a shell corporation and then transmitted by check to Sachs' girl friend, Jill Ciganek, who cashed them.
None of the appellants took the stand in his defense. They presented three witnesses who testified to the value of the Arizona onyx property and the validity of signatures on the appraisal of the property on which the Control Metals directors had relied.
The Right to a Speedy Trial
Appellants' trial began on November 19, 1973, some six months after the return of the indictment and 4 years after the last acts charged by the government. Prior to the commencement of the trial, Pollack moved for dismissal of the indictment on the ground that the interim delay deprived him of his Sixth Amendment right to a speedy trial and Fifth Amendment right to due process and therefore the court should have dismissed the indictment pursuant to Fed.R.Crim.P. 48(b). We hold that Judge Gasch properly denied the motion.
The Sixth Amendment right to a speedy trial does not attach until the defendant becomes an "accused" either by means of indictment or information or arrest. United States v. Marion, 404 U.S. 307, 320, 30 L. Ed. 2d 468, 92 S. Ct. 455 (1971). Our determination of whether that right was violated in this instance, therefore, is limited to the six-month interval between return of the indictment and commencement of the trial. See United States v. Parish, 152 U.S. App. D.C. 72, 77, 468 F.2d 1129, 1134 (1972), cert. denied 410 U.S. 957, 35 L. Ed. 2d 690, 93 S. Ct. 1430 (1973). The record on appeal shows that pre-trial conferences and hearings and informal communications among the parties pervaded the entire period. We would expect no less in a multiparty securities fraud case where complex factual circumstances require pre-trial preparation of substantial scope and depth. Indeed, Pollack has also assigned as error the trial court's denial of his motion for a continuance to allow him additional time for discovery because he was held in New Jersey on an unrelated matter. *fn4 Given the posture of this case, the length of the delay, and the degree of prejudice to the defendant, see Barker v. Wingo, 407 U.S. 514, 530, 33 L. Ed. 2d 101, 92 S. Ct. 2182 (1972), we find no infringement of Pollack's speedy trial right.
There is similarly no evidence to support the claim that pre-indictment delay was caused by the prosecution's desire to "gain tactical advantage over the accused" or that it caused substantial prejudice to appellants' right to a fair trial in violation of the Fifth Amendment. 404 U.S. at 324. See Nickens v. United States, 116 U.S.App.D.C. 338, 342, 323 F.2d 808, 812 (1963), cert. denied 379 U.S. 905, 13 L. Ed. 2d 178, 85 S. Ct. ...