United States v. William J. Johnson

700 F.2d 163
CourtCourt of Appeals for the Fifth Circuit
DecidedApril 18, 1983
Docket82-1136
StatusPublished
Cited by21 cases

This text of 700 F.2d 163 (United States v. William J. Johnson) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth 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. William J. Johnson, 700 F.2d 163 (5th Cir. 1983).

Opinions

JERRE S. WILLIAMS, Circuit Judge.

Johnson appeals a criminal conviction for interstate transportation of a falsely made security, 18 U.S.C. § 2314, and for causing interstate telephone calls to be made pursuant to a scheme of securities fraud, 18 U.S.C. § 1343. The primary issue on appeal concerns the district court’s determination that the documents in question were “securities” within the meaning of the statute, as a matter of law. We affirm the district court.

FACTS

In 1977, William J. Johnson helped to launch a California corporation, International Vaults, Ltd. (I.V.), to engage in the trading of gold and other precious metals. He then left the company in 1978. I.V.’s attorneys advised the company in 1980 that it would need to become a registered company with the California Department of Corporations in order to continue trading metals and commercial paper.1 The company suspended operations temporarily and began to prepare the financial statements needed for registration with the proper government bodies. In mid-November, 1980, the California Department of Corporations began an investigation of I.V.’s compliance with state securities laws.

The state’s investigation touched off a ripple of concern within the company regarding I.V.’s financial condition, and the company hired an accountant and an independent auditor to verify the assets of the company. One of the company’s major assets was an $8 million promissory note owed by Lee Eastman, I.V.’s principal agent for buying and selling the Alaskan gold. Neither Eastman nor the $8 million could be located, and the auditors told company officials that the verification process of the audit was “falling behind schedule.” The ripple of concern became a wave of anxiety, and I.V. brought Johnson back on board in December, 1980 to help verify the assets, weather the storms of the outside audit, and generally calm the troubled waters surrounding I.V.

Johnson knew I.V. was a vessel in distress when he rejoined. His first effort, once on board, was to seek an $8 million asset to replace the unconfirmable promissory note owed by Eastman. In late January, 1981, Johnson traveled to Dallas to meet with William Brinlee, a friend in the gold business. Brinlee gave Johnson a document denominated “Gold Certificate Contract” made out to “Int. Vaults/William J. Johnson.” The document purported to assign 35,000 ounces of gold held in a bonded warehouse in Dallas.2 The exact meaning [166]*166of the document is in dispute in this case. Whatever its meaning, however, its clear purpose was to placate the auditors in their search for verifiable assets.

Johnson acquired temporary rights to the document by promising to return the certificate within three days and to pay Brinlee $75,000. The document did not mention the temporary nature of the transaction, and the original did not contain an inscription that the gold would need to be paid for upon delivery, if delivery were ever to take place. Brinlee’s duplicates of the document had this “C.O.D.” provision added on.

Johnson flew from Dallas back to California with the document in hand, an act later to be labeled “in interstate commerce.” I.V.’s principals immediately informed the auditors that the Eastman note had been “retired” but that this new Brinlee note could be confirmed to represent the needed $8 million. The auditors made several attempts to verify, the existence of the gold underlying the Brinlee certificate, including making certain telephone calls to Dallas. These calls would later be labeled “interstate use of wire signals.” The attempts were unsuccessful, and the auditors were not yet satisfied.

Johnson flew back to Dallas and met with Brinlee again. This time, Johnson returned to California with a “bill of sale” for $8 million worth of coal, which he acquired from Brinlee. Despite attempts by I.V. officials other than Johnson to represent the coal contract as being “bought” with the gold contract which in turn was “bought” with the Eastman note, the independent auditors would not verify the assets of I.V. The company capsized.

The federal government then brought criminal charges against Johnson. The charges included one count of “transporting in interstate commerce with the requisite unlawful intent and knowledge, a falsely made security in violation of 18 U.S.C. § 2314,” and one count of “causing to be made a telephone call in furtherance of this fraudulent scheme in violation of 18 U.S.C. § 1343.” After a jury trial, Johnson was found guilty on both counts, and given a three year sentence on the interstate transportation count and a five year suspended sentence on the interstate wire signal count.

Johnson now appeals, arguing that the district court erred in instructing the jury that the Gold Certificate Contract was a security as a matter of law. He argues, [167]*167first, that it was impermissible for the district court to determine the status of the document as a security rather than leaving the question entirely to the jury. Second, Johnson urges that the ruling was erroneous even if it was within the judge’s power to make. Johnson also contends that the jury’s verdict on the wire signals charge does not have sufficient basis in the evidence. Finally, he urges that the court erred in admitting certain evidence. We address each contention in turn.

WAS THE LEGAL FINDING OF “SECURITY” A VIOLATION OF THE RIGHT TO A JURY TRIAL? '

Johnson’s fundamental objection to the proceedings below is that the district court ruled that the Gold Certificate Contract was a security as a matter of law. Johnson urges us to adopt a rule that such a determination in a criminal proceeding is always for the finder of fact. We hold that his contention is not the law.

Johnson urges that if a judge has the authority to determine status as a security, this power is limited in a criminal case by the defendant’s countervailing constitutional right to a jury trial. In this proceeding, Johnson claims that the charge to the jury which required the jury to accept the Gold Certificate Contract as a security was treading on the exclusive terrain of the jury’s factfinding duties, in violation of his Sixth Amendment rights.

We recognize, of course, Johnson’s right to a full jury trial untémpered by a judge’s preemptive coloration of the facts. This right means that there may be no partial summary judgment on factual questions. United States v. Sheldon, 544 F.2d 213, 221 (5th Cir.1976); United States v. Manuszak, 234 F.2d 421 (3d Cir.1956) (the existence of a theft at all is a jury question). As was stated in United States v. Austin, 462 F.2d 724, 737 (10th Cir.), cert. denied, 409 U.S. 1048, 93 S.Ct. 518, 34 L.Ed.2d 501 (1972): “It is unquestionably desirable to submit all issues in a criminal case to the jury and to fail to do so, even where the issue appears clear to the judge, is potentially dangerous and at best hazardous.”

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United States v. William J. Johnson
700 F.2d 163 (Fifth Circuit, 1983)

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700 F.2d 163, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-william-j-johnson-ca5-1983.