United States v. Gary Corn

836 F.2d 889, 1988 U.S. App. LEXIS 1497, 1988 WL 2745
Court of Appeals for the Fifth Circuit·Decided January 21, 1988·No. 87-2722·Published·Cited by 43 cases

Opinions

ALVIN B. RUBIN, Circuit Judge:

Corn pleaded guilty to criminal contempt for violating an injunction that prohibited illegal trading in securities. The district court sentenced him to serve five years in prison and to pay $6,045,527 restitution to the victims of the securities fraud. We find no merit in Corn’s challenges to the injunction underlying the contempt conviction, but, because the district court did not advise Corn, as required by Federal Rule of Criminal Procedure 11(c)(1), that he might be ordered to pay restitution in consequence of his guilty plea, we remand to the district court with instructions either to allow withdrawal of his plea or to resen-tence Com without ordering restitution. If after trial or re-pleading, Com is again sentenced to pay restitution under the Victim and Witness Protection Act,1 the court may order compensation only for those losses resulting from offenses committed after the effective date of the statute.

I.

In 1977, the Securities and Exchange Commission sued Gary Com charging him [891] with violations of the Securities Acts of 1933 and 1934, as amended,2 in connection with his sale of securities in the Hollens-worth Oil Company. The parties consented to resolution of this suit by the district court’s issuance of a permanent injunction prohibiting Corn from dealing illegally in securities, “namely, fractional undivided working interests in oil and gas leases offered by James Edward Hollensworth, doing business as Hollensworth Oil Company, or any other securities.”3 The court specifically ordered Corn not to offer or sell unregistered securities that were subject to the registration requirements of Section 5 of the Securities Act of 19334 and not to use deceptive devices, make false statements, or fail to state material facts in connection with the offer, sale, or purchase of securities.

Between September 1, 1982, and December 31, 1983, however, Corn again became involved with illegal securities transactions, this time as vice president of sales for an organization known as the Beard Energy Group. The government prosecuted, and Corn pleaded guilty to criminal contempt for violating the injunction issued in the Hollensworth case. During the plea colloquy at rearraignment, the district court informed Corn, “if you are found guilty in this case the Court can impose just about any sentence it thinks is proper, ... everything except death.” The court accepted Corn’s guilty plea, however, without mentioning the possibility of a restitution order. At the sentencing hearing, the court ordered Com confined to federal prison for five years and announced that a restitution order would follow if the prosecution and the probation office presented sufficient evidence of the losses suffered by the victims of the Beard Energy securities fraud. Three months later, the government submitted a statement showing that 160 investors had lost $6,045,527. Corn filed no objection to this evidence, and, without holding a hearing or receiving any further evidence, the court entered a restitution order, requiring Corn to reimburse each investor in full up to the more than six million dollar total.

Corn now challenges his conviction and sentence. He argues that the injunction entered in the Hollensworth case prohibited illegal trading only in Hollensworth securities and not in any other securities. In the alternative he asserts that the injunction was so vague or overbroad as to be unenforceable by contempt. He contends further that Judge Sterling, who convicted and sentenced Corn in connection with the Beard Energy fraud, lacked the authority to do so because only Judge Seals, who entered the injunction in Hollensworth, could legitimately enforce this order. Corn maintains that his guilty plea was not voluntary and intelligent because the court failed to inform him of the minimum and maximum possible sentences and to warn him that he might be ordered to pay restitution. Finally, he objects to the order of restitution insofar as it applies to losses incurred before January 1, 1983, the effective date of the Victim and Witness Protection Act which authorizes restitution as part of sentencing.5

II.

Corn’s challenges to the injunction underlying the contempt conviction are without merit. The injunction repeatedly states that the prohibitions on trading reach “fractional undivided working interests in oil and gas leases offered by ... Hollensworth ... or any other securities ” (emphasis added). Corn claims that this language refers to the specified interests in Hollensworth and to any other securities issued by Hollensworth. If the court had meant to limit its commands to Hollensworth securities, it would have said so. Instead, it explicitly made its order comprehensive.

[892] Corn asserts that, if the injunction prohibits illegal trading in all securities, it amounts to nothing more than a vague order to obey the law. Federal Rule of Civil Procedure 65(d) provides: “Every order granting an injunction and every restraining order shall set forth the reasons for its issuance; shall be specific in its terms; [and] shall describe in reasonable detail ... the act or acts sought to be restrained.” The purpose of the rule is to put the parties on fair notice of what they are forbidden to do.6 Thus, an injunction ordering a party to “obey the law” might well fail as overbroad. But the injunction issued in Hollensworth compelled more than mere obedience to the law; it set forth in specific terms the types of securities transactions proscribed. That the court incorporated into the injunction language from the securities laws does not make the injunction vague so long as the borrowed language “adequately describe^] the impermissible conduct.”7 We find the Hollensworth injunction both specific and clear, and nonetheless so because it adopts terms from the securities laws.8

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United States v. Gary Corn, 836 F.2d 889, 1988 U.S. App. LEXIS 1497, 1988 WL 2745 (5th Cir. 1988).

836 F.2d 889 (United States v. Gary Corn) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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