United States v. Daniel E. Manning and David A. Wooldridge

509 F.2d 1230
CourtCourt of Appeals for the Ninth Circuit
DecidedFebruary 24, 1975
Docket74-1095, 74-1341, 74-1395
StatusPublished
Cited by18 cases

This text of 509 F.2d 1230 (United States v. Daniel E. Manning and David A. Wooldridge) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Daniel E. Manning and David A. Wooldridge, 509 F.2d 1230 (9th Cir. 1975).

Opinions

OPINION

EUGENE A. WRIGHT, Circuit Judge:

Appellants were convicted of conspiracy and multiple counts of violating the registration and antifraud provisions of the Securities Act and Exchange Act and mail fraud. They argue that their convictions should be reversed because of prejudicial jury misconduct, erroneous instructions to the jury, delay in production of exculpatory material, insufficient evidence, reliance on the advice of counsel, and delay in the bringing of indictments against them. We affirm.

Appellants were participants in a wide-ranging scheme to defraud the public by the sale of unregistered stock of several shell corporations with minimal assets. The unregistered stock was sold on the basis of false and misleading statements as to the actual assets and prospects of the corporations involved. Although eight persons were indicted for this conspiracy, only five stood trial. The remaining three, including Robert A. Eisenberg, the purported counsel of the appellants, were at the time of the trial fugitives in foreign countries. Of the five who were tried, only the appellants were convicted; charges against the other defendants at trial were either dismissed or resulted in verdicts of acquittal.

A major element of the scheme was the attempt to shield the sale of unregistered stock under then Rule 133 of the Securities and Exchange Commission, 17 C.F.R. § 230.133. Appellants distributed the stock of their two shell corporations, Empire Oil and Capitol Holding, through purported shareholders of corporations which supposedly were acquired in merger transactions. Had such mergers actually taken place and had the distributees in fact been shareholders of the merged companies, Rule 133 would have permitted limited sales of the stock received to the general public, despite the lack of a registration statement. Such sales could not have been made if the purpose of the entire transaction had been in fact the sale of such unregistered stock.

By padding the shareholder lists of Empire Oil and several corporations they purportedly acquired through merger, appellants sold unregistered Empire Oil and Capitol Holding stock to the public, using friends, innocent third parties and fictitious persons as “stockholders” and conduits.

[1233]*1233Sales of such stock were halted by the S.E.C. on January 15, 1969. The acts comprising elements of the charged conspiracy ended on December 31, 1969. A Criminal Reference Report of the S.E.C. was transmitted to the Department of Justice in October of 1971, the issue was referred to the U. S. Attorney in March of 1972, and the indictments were returned by the Grand Jury on February 14, 1973.

Appellants were sentenced to four years on the conspiracy count and to two years on each of several separate counts, the latter sentences to run concurrently with each other but consecutively to the conspiracy sentence. Appellant Wooldridge was fined $10,000 on the conspiracy count while Manning was fined $8,000 on the conspiracy count and $2,000 on an anti-fraud count.

Appellants claim that the trial judge erred in refusing to grant a new trial after several jurors reported alleged misconduct on the part of the forelady. The judge held an evidentiary hearing, questioned the jurors involved, and concluded that no prejudice to the defendants resulted from the conduct of the juror in question. We find no abuse of discretion on the part of the judge in refusing to grant a new trial. Holt v. United States, 218 U.S. 245, 31 S.Ct. 2, 54 L.Ed. 1021 (1910), United States v. Brumbaugh, 471 F.2d 1128 (6th Cir.), cert. den. 412 U.S. 918, 93 S.Ct. 2732, 37 L.Ed.2d 144 (1973). No error was involved in relying on questions submitted by counsel rather than permitting them personally to cross-examine the jurors. United States v. Handy, 454 F.2d 885, 892 (9th Cir. 1971), cert. den. 409 U.S. 846, 93 S.Ct. 49, 34 L.Ed.2d 86 (1972).

The appellants argue that the trial court erred in refusing to accept their proposed instruction with respect to the vicarious liability of co-conspirators. The judge’s instructions in this respect were proper. First, the proposed instruction 1 is not a correct statement of the holding in Kotteakos v. United States, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557 (1946), since it precludes any liability except for acts in which they “knowingly and willingly participated.” Kotteakos held that it was error for the judge to instruct that conspiratorial liability could be premised on the overt act of any defendant when the underlying acts involved separate and independent conspiracies involving only a single central figure. This holding did not undercut the settled rule that a co-conspirator could be held liable for reasonably foreseeable acts committed in furtherance of the common illegal objective, Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946).

Second, given the strong evidence of a single, unified conspiracy, the instruction of the judge was proper. Blumenthal v. United States, 332 U.S. 539, 68 S.Ct. 385, 92 L.Ed. 425 (1947); United States v. King, 472 F.2d 1 (9th Cir.), cert. den. 414 U.S. 864, 94 S.Ct. 40, 38 L.Ed.2d 84, reh. den., 414 U.S. 1033, 94 S.Ct. 463, 38 L.Ed.2d 325 (1973).

Appellants also argue that the evidence was insufficient to sustain their convictions. A careful review of the evidence indicates that there was substantial evidence to support the jury’s verdict on the general conspiracy charge and on count 9 where the evidence of the appellants’ fraudulent conduct is overwhelming.2

The appellants’ contention that the government failed to prove willful violation of the registration and antifraud provisions of the Securities Act and Ex[1234]*1234change Act is without basis. See United States v. Murdock, 290 U.S. 389, 54 S.Ct. 223, 78 L.Ed. 381 (1933), United States v. Custer Channel Wing Corporation, 376 F.2d 675 (4th Cir.), cert. den. 389 U.S. 850, 88 S.Ct. 38, 19 L.Ed.2d 119, reh. den. 389 U.S. 998, 88 S.Ct. 458, 19 L.Ed.2d 503 (1967).

The assertion that the appellants’ actions were immunized by reliance on the legal advice of their alleged co-conspirator Eisenberg misreads the law in this respect. Bisno v. United States, 299 F.2d 711 (9th Cir. 1961), cert. den. 370 U.S. 952, 82 S.Ct. 1602, 8 L.Ed.2d 818 (1962). Their actions in utilizing fictitious stockholders and nominees negative any claim that they thought they were acting lawfully.

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509 F.2d 1230, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-daniel-e-manning-and-david-a-wooldridge-ca9-1975.