United States v. Dwain Knigge

832 F.2d 1100
CourtCourt of Appeals for the Ninth Circuit
DecidedMay 18, 1988
Docket86-5099
StatusPublished
Cited by22 cases

This text of 832 F.2d 1100 (United States v. Dwain Knigge) 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. Dwain Knigge, 832 F.2d 1100 (9th Cir. 1988).

Opinion

NOONAN, Circuit Judge:

Dwain Knigge appeals his conviction of wire fraud in violation of 18 U.S.C. § 1343; conspiracy to commit wire fraud, to transport in interstate commerce property taken by fraud, and to commit bribery all in violation of 18 U.S.C. § 371; and of travel to commit bribery in violation of Utah State *1103 Law and in violation of 18 U.S.C. § 1952. We affirm the conviction.

FACTS

In 1975 Dominic Del Grande was the secretary-treasurer and stock transfer agent of G.E.T., a small research and development company in San Diego, California. Del Grande stole a stock certificate of 500,-000 shares of stock belonging to the company’s president, C.R. Possell and canceled it. In debt to a sinister group of lenders, Del Grande paid off by issuing new certificates in place of the old, making them out in the name of four Mexicans who had no right to the stock and no part in any conspiracy and whose names were used as covers, and delivering nine such certificates representing a total of 402,000 shares to Robert Paduano and his associates, A1 Madrid, Nick Nardi and Michael Rizzitello.

In 1981 the stock was selling for about $5.00 a share and the illegitimate certificates were worth about $2 million, if they could be negotiated. Possell had discovered the loss of his certificate and knew about the fraudulent certificates issued in its place. G.E.T. had put a stop transfer in effect on their transfer. Del Grande had in the meanwhile died. The new stock transfer agent was American Registrar and Transfer Co. of Salt Lake City, Utah. Its owner was Knigge.

The problem of their possessors was to circumvent the order and obtain new, negotiable certificates. To obtain their objective, Paduano and his associates involved John Hanna Brownfield, who in turn enlisted John James Badger, a stock promoter in Salt Lake City. Paduano, Brownfield and Badger developed a plan in accordance with which the certificates would be presented to the transfer agent for payment and a suit brought to set aside the stop order; Knigge would be bribed to cause the transfer agent to consent to the suit and would then issue the new certificates. The plan had some initial success. Brownfield went to Salt Lake City, hired a lawyer, Robert Meredith, and filed suit against Knigge’s company. Without telling G.E.T. of the suit, Knigge on May 9, 1981 consented to judgment and the same day issued the new certificates. In return for his services, Knigge in May and June 1981 was paid a portion of the stock.

ANALYSIS

Knigge, Brownfield and Badger were tried together. All were convicted. In his appeal Knigge primarily challenges the admission of certain evidence against him. We will review each challenge in turn.

1. The Admissibility of the Testimony of Deidre Burton. Burton was the administrative assistant of Paduano in his capacity as president of TICO Financial, a financial services company, in whose name 300,000 of the new certificates were issued; she was also secretary-treasurer of this company and Paduano’s live-in girlfriend. She testified extensively as to Paduano’s arrangements with Brownfield and as to how Brownfield brought back from Salt Lake City certificates for 300,000 shares of G.E.T. stock on May 14, 1981 and $82,000 in cashier’s checks on May 21,1981. After depositing these checks, Burton met with Brownfield and Paduano to discuss the division of the G.E.T. stock and its proceeds. Brownfield produced a diagram. The diagram showed that 402,000 shares had been obtained; that he had brought back 300,-000; and that the rest had gone either directly or through nominees to Brownfield himself, Badger, and Knigge.

This testimony was admitted against all three defendants. It was properly admitted. Brownfield’s diagram and his accompanying explanation were statements of a co-conspirator with Burton and Knigge. That a conspiracy existed involving Knigge and Brownfield was proved by the statements themselves, United States v. Bourjaily, — U.S. -, 107 S.Ct. 2775, 2782, 97 L.Ed.2d 144 (1987), as well by the other evidence of conspiracy set out below:

(1) Although Knigge informed G.E.T. when Brownfield’s suit was first brought against American Registrar and Transfer and G.E.T. had its counsel, Marvin Sears, discuss the suit with Knigge, and although Knigge was told by Sears that some of the *1104 shares at issue came from the stolen certificate, Knigge failed to inform Sears when the complaint was amended to make G.E.T. a defendant and Knigge consented to judgment in the suit without either giving notice to G.E.T. or raising the objection that the shares were based on a theft. Knigge falsely told Meredith, Brownfield’s attorney, that G.E.T. was “perfectly satisfied that the shares were transferable and were legitimate” and that he would therefore consent to judgment.

(2) Knigge received part of the proceeds from Brownfield’s plan. Tony Ladakis was one of Brownfield’s intermediaries in Salt Lake City. On May 20, 1981, he received a G.E.T. certificate from Brownfield for 4,000 shares, of which he entered 1,300 shares in Dwain Knigge’s account at Northridge Securities. Knigge thanked Ladak-is and on the same day sold the stock for $5,460. Two other certificates, representing 2,500 shares apiece and traceable to the new G.E.T. certificates, were placed in accounts at Western Capital and Securities. The accounts were in the names of Knigge’s twin sons. Knigge sold the shares and told the boys that the shares were gifts from him.

(3) On June 22, 1982 Agent Ralph Lump-kin of the Federal Bureau of Investigation interviewed Knigge, telling him that he was investigating the allegation that Knigge had been linked to the transfer of 402,000 shares of G.E.T. stock. Knigge told him that he had transferred the stock because Sears, counsel for G.E.T. had told him it was okay to do so. This statement was a falsehood, protecting Knigge and the others involved.

To prove a conspiracy in order to obtain admission of a co-conspirator’s statements, the government need only prove the existence of the conspiracy by a preponderance of the evidence. In this case, Knigge’s lies, his acquiescence in the sham suit where some of the stock involved was to his knowledge based on a stolen certificate, and his participation in the proceeds proved that the conspiracy existed.

The statements reported by Burton were made by Brownfield in the course of the conspiracy and in furtherance of the conspiracy, for what Brownfield had to say bore on the division of the spoils of the conspiracy. The testimony was an exception to the hearsay rule. Fed.R.Evid. 801(d)(2)(E).

2. The Testimony of Elroy Rickard Giddens.

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832 F.2d 1100, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-dwain-knigge-ca9-1988.