Justia Federal District Court Opinions

The indictment was brought in fourteen counts. Count one charged the sixteen defendants and six conspirators not named as defendants with conspiracy to commit offenses against the United States (18 U.S.C. Sec. 371 (1970)); the substantive offenses were alleged to be violations of sections 17(a) and 24 of the Securities Act of 1933, 15 U.S.C. Secs. 77q(a), 77x (1970), sections 9(a) (2) and 32(a) of the Securities Exchange Act of 1934, 15 U.S.C. Secs. 78i(a) (2), 78ff(a) (1970), and 18 U.S.C. Secs. 1341, 1343 (1970) (mail fraud)

The sixteen defendants charged were the four appellants, Arthur Keller, Stuart Projansky (Irving's son), Fred Weitz, Mark Rolland, Spero Furla, Murray Peltz, Burton Buddy Kozak, Harris Nagorsky, Herbert Werman, Edward Wetzel, Zafe Zafer, and David Zisfein. Named as co-conspirators but not as defendants were Morris and Eva Childs, George Georges, Irving Taub, the First National Bank of Lincolnwood, and Argus Capital Corporation.

Count two charged Projansky, Brainin, Leavitt, and others with violations of sections 9(a) (2) and 32(a) of the 1934 Act and 18 U.S.C. Sec. 2 (1970) for the period of August 23, 1965 to September 15, 1965. Count three charged Projansky and others with the same violations for the period of November 30, 1965 to December 9, 1965. Count four charged Projansky, Geier, and others with the same violations for the period of February 4, 1966 to February 16, 1966. Counts five through fourteen charged Projansky, Geier, and others with violations of sections 17(a) and 24 of the 1933 Act and 18 U.S.C. Sec. 2 for the period of July, 1965 to the date of the indictment.

Eight of the defendants entered pleas of guilty to one or more counts of the indictment prior to trial. Several of them testified for the government at trial. Counts 7, 11, and 14 were dismissed as to all defendants at the close of the government's case. On June 5, 1971, the jury found Irving Projansky, Brainin, and Leavitt guilty on counts one and two, Geier guilty on counts 1, 4-6, 8-10, and 12-13, Zafer guilty on counts one and three, and Peltz and Stuart Projansky not guilty on all counts. A mistrial was declared on June 7, 1971, as to Weitz when the jury was unable to reach a verdict on the counts against him. Judge Lasker sentenced Projansky to one year in jail, Brainin to 3 months in jail and a fine of $20,000, Geier to 6 months in jail, Zafer to 4 months in jail, and Leavitt to a $20,000 fine. Zafer filed a notice of appeal but withdrew it on February 16, 1972.

Transcript of Trial (Transcript) at 4357-58 (Keller), 403 (Rolland)

None of the appellants testified at trial, and no testimony was offered by them to contradict or refute the version of events as recounted by the witnesses whose testimony is quoted in text. While the appellants did attempt to impeach the credibility of the witnesses, the jury could and obviously did find them to be credible. Their testimony can thus be quoted to illustrate the contentions that the government established at trial. See Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942); United States v. D'Avanzo, 443 F.2d 1224, 1225 (2d Cir.) (per curiam), cert. denied, 404 U.S. 850, 92 S.Ct. 86, 30 L.Ed.2d 89 (1971).

Rolland not only pleaded guilty to the charges brought in this case, but also pleaded guilty to an indictment, 67 Crim. 509, charging manipulation of the price of Pentron stock.

Who also pleaded guilty to the charges brought in the Pentron indictment

Transcript at 5733 (Furla), 4358-59 (Keller), 406 (Rolland)

Mr. Brainin stated that he would like us to put up some equity towards the loan. I told him that that was completely out of the question, that I had no intention of putting up any money in a situation where I was being paid to promote the stock, and we got close to an argument

Id. at 423 (Rolland).

Id. at 4363 (Keller), 413-14 (Rolland), 4370 (Keller), 412-13 (Rolland)

Id. at 4371 (Keller)

Id. at 5769-70, 5773-74 (Furla), 1771-72 (Nagorsky)

In September Leavitt, under pressure to discharge debts remaining from his association with the ladies' garment firm, sold the 12,000 Hercules shares he had under option. His profit on the sale was $29,000

Transcript at 4410, 4413 (Keller). That the team spirit was less intense than it should have been was also evident during the meetings the brokers frequently had among themselves

A. There were periods of time when I [Furla] would bring down confirmations and Mr. Zafer would bring down confirmations and Mr. Nagorsky would bring down confirmations, trying to prove up what each did that particular day, to prove that we bought stock that day. And I remember late in October when it was added up how many each of us had purchased, it was really more than the total trading that particular day . . ..

A. At this particular meeting Mr. Zafer and I [Nagorsky] had gotten into an argument because of the fact that we both had claimed to purchase more shares of stock than traded that day, and we got into kind of a heated thing, and Spero Furla got into it because he also claimed to buy some shares that day . . ..

Id. at 5772 (Furla), 1782 (Nagorsky).

Id. at 600 (Rolland), 4464 (Keller)

Id. at 3018-19 (Kozak)

Id. at 609-11 (Rolland). In preparation for the meeting with Geier the Rolland group had Hercules "dressed up."

Q. Did you [Kozak] have any discussion with Mr. Keller about the price of the stock during this conversation?

A. I told Mr. Keller that the stock was about $11, on Thursday it was about 10 1/2 to $11, and I said that before going to New York I think it would be advisable to dress up the stock a little and move it up, so I could at least go into New York with the stock around $12.

Mr. Keller assured me that if I needed any buying power on the Friday, the day before I went to New York, he would supply it for me.

[It was supplied; Hercules closed on Friday at 11 7/8, up a point and a quarter.]

Id. at 3035-36 (Kozak).

Id. at 3075 (Kozak)

Id. at 4488, 4489 (Keller)

Id. at 3092 (Kozak)

Id. at 3115-16 (Kozak)

But see Caminetti v. United States, 242 U.S. 470, 495, 37 S.Ct. 192, 61 L.Ed. 442 (1917); United States v. Phillips, 426 F.2d 1069, 1071 (2d Cir.), cert. denied, 400 U.S. 843, 91 S.Ct. 86, 27 L.Ed.2d 78 (1970)

But see Blumenthal v. United States, 332 U.S. 539, 557, 68 S.Ct. 248, 256, 92 L.Ed. 154 (1947) (". . . the law rightly gives room for allowing the conviction of those discovered upon showing sufficiently the essential nature of the plan and their connections with it, without requiring evidence of knowledge of all its details or of the participation of others." (footnote omitted)); United States v. Vega, 458 F.2d 1234 (2d Cir. 1972); United States v. Agueci, 310 F.2d 817, 826 (2d Cir. 1962), cert. denied, 372 U.S. 959, 83 S.Ct. 1013, 10 L.Ed.2d 11 (1963). See also Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942)

Appellant Brainin points to Keller's desire, evident in his testimony, to depose Brainin from his position of influence at Hercules. We fail to see how this "subconspiracy" detracts from the case against Brainin.

See Kotteakos v. United States, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557 (1946); United States v. Calabro, 449 F.2d 885, 892-893 (2d Cir. 1971), cert. denied, 404 U.S. 1047, 92 S.Ct. 728, 30 L.Ed.2d 735 (1972); United States v. Borelli, 336 F.2d 376, 382-387 (2d Cir. 1964), cert. denied, Cinquegrano v. United States, 379 U.S. 960, 85 S.Ct. 647, 13 L.Ed.2d 555 (1965); United States v. Falcone, 109 F.2d 579, 581 (2d Cir.), aff'd, 311 U.S. 205, 61 S.Ct. 204, 85 L.Ed. 128 (1940)

Fed.R.Crim.P. 30; United States v. Lewis, 140 U.S.App.D.C. 40, 433 F.2d 1146, 1152 (1970) (per curiam); United States v. Indiviglio, 352 F.2d 276 (2d Cir. 1965) (en banc), cert. denied, 383 U.S. 907, 86 S.Ct. 887, 15 L.Ed.2d 663 (1966)

Appellants complain that the court's charge on accomplice testimony did not sufficiently emphasize the suspicion with which such testimony should be considered and that in charging on accomplice testimony the court implied that it had concluded a conspiracy had in fact been proved. The court's charge on accomplice testimony, see note 25 infra, was correct, United States v. Bellamy, 436 F.2d 542, 545-546 (2d Cir.), cert. denied, 402 U.S. 929, 91 S.Ct. 1523, 28 L.Ed.2d 862 (1971); United States v. Mattio, 388 F.2d 368, 370 (2d Cir.), cert. denied, 390 U.S. 1043, 88 S.Ct. 1643, 20 L.Ed.2d 305 (1968); United States v. Kelly, 349 F.2d 720, 767-768 (2d Cir. 1965), cert. denied, 384 U.S. 947, 86 S.Ct. 1467, 16 L.Ed.2d 544 (1966); United States v. Vita, 294 F.2d 524, 526 (2d Cir. 1961), cert. denied, 369 U.S. 823, 82 S.Ct. 837, 7 L.Ed.2d 788 (1962), and is a fortiori not reviewable, even though not objected to, as plain error under Fed.R.Crim.P. 52(b).

I want to say that the power of sentence in this Court is reposed in the Judges, and only in the Judges, and the United States Attorney and Assistant United States Attorneys have no power whatever with respect to the sentence. In saying this, however, I do not wish to suggest what weight should be given to the defense argument that a human being may color his testimony in the hope that some Judge may give him recognition for such cooperation, if such it can be called. You should consider this matter in your assessment of the credibility of these witnesses. As you did with other witnesses, you must ask yourselves, is he telling the truth? In the case of the witnesses I am talking about, have they colored their testimony in the unwarranted hope that they can secure more favorable treatment? This is for you and you alone to decide

Transcript at 9404-05.

See generally United States v. Kahaner, 317 F.2d 459, 479 (2d Cir.), cert. denied, 375 U.S. 836, 84 S.Ct. 74, 11 L.Ed.2d 65 (1963)

As to the witnesses who have admitted lying to the grand jury or otherwise in the past you should consider their testimony and decide whether you wish to accept or reject it in whole or in part. You may decide, for example, that an admitted liar is unbelievable, or, conversely, you may accept his testimony recognizing that in life there are persons who have lied in the past but are not incapable of telling the truth in the present. Again, this is for you and only you to decide

Transcript at 9405.

In the prosecution of crime the Government is often called upon to use witnesses who are accomplices in the commission of the crime itself. This is particularly so in cases of conspiracy. Conspirators do not publicly proclaim their intentions to operate openly. It often happens that only members of the conspiracy have evidence which is relevant to and important in the case

However, experience has shown that accomplices may be motivated to place the responsibilities on others than themselves. Accordingly, an accomplice's testimony should be closely examined, weighed with care, checked with the facts which you find to exist in this case, and against the evidence which may corroborate them, and then you should give the testimony such value or weight as you deem important under the circumstances.

In the Federal Courts accomplice testimony by itself may be sufficient to convict if, but only if, it convinces you of the defendant's guilt beyond a reasonable doubt.

It is, of course, proper for you to consider the interest which a witness has in the outcome of a case, whether that witness be a defendant himself, a government witness, or a defense witness. All witnesses are to be judged by the same standards. But in determining the credibility of a witness, his interest in the outcome of the case is certainly a matter you are entitled to take into consideration. I do not mean to suggest that a witness who has an interest in the outcome of the case may not be telling the truth in spite of his interest, but you may consider that factor in determining what weight to give his testimony.

Id. at 9403-04.

United States v. Cafaro, 455 F.2d 323, 326 (2d Cir. 1972); United States v. Pordum, 451 F.2d 1015, 1016-1017 (2d Cir. 1971) (per curiam), cert. denied, 405 U.S. 998, 92 S.Ct. 1249, 31 L.Ed.2d 467 (1972); United States v. Calabro, 449 F.2d 885, 889 (2d Cir. 1971), cert. denied, 405 U.S. 928, 92 S.Ct. 978, 30 L.Ed. 2d 801 (1972); United States v. Jacobs, 431 F.2d 754, 760-761 (2d Cir. 1970), cert. denied, 402 U.S. 950, 91 S.Ct. 1613, 29 L.Ed.2d 120 (1971); United States v. Calarco, 424 F.2d 657, 660 (2d Cir.), cert. denied, 400 U.S. 824, 91 S.Ct. 46, 27 L.Ed.2d 53 (1970); United States v. Eskow, 422 F.2d 1060, 1069-1070 (2d Cir.), cert. denied, 398 U.S. 959, 90 S.Ct. 2174, 26 L.Ed.2d 544 (1970); United States v. Baker, 419 F.2d 83, 88-89 (2d Cir. 1969), cert. denied, De Norscio v. United States, 397 U.S. 971, 90 S.Ct. 1086, 25 L.Ed.2d 265 (1970); United States v. Geaney, 417 F.2d 1116, 1120 (2d Cir. 1969), cert. denied, Lynch v. United States, 397 U.S. 1028, 90 S.Ct. 1276, 25 L.Ed.2d 539 (1970); United States v. Nuccio, 373 F.2d 168, 173-174 (2d Cir.), cert. denied, 387 U.S. 906, 87 S.Ct. 1688, 18 L.Ed.2d 623 (1967); United States v. Borelli, 336 F.2d 376, 387 (2d Cir. 1964), cert. denied, 379 U.S. 960, 85 S.Ct. 647, 13 L.Ed.2d 555 (1965); United States v. Stadter, 336 F.2d 326, 329-330 (2d Cir. 1964), cert. denied, 380 U.S. 945, 85 S.Ct. 1028, 13 L.Ed.2d 964 (1965); United States v. Stromberg, 268 F.2d 256, 265-266 (2d Cir.), cert. denied, 361 U.S. 863, 80 S.Ct. 119, 4 L.Ed.2d 102 (1959); United States v. Dennis, 183 F.2d 201, 230-231 (2d Cir. 1950) (dictum), aff'd on other grounds, 341 U.S. 494, 71 S.Ct. 857, 95 L.Ed. 1137 (1951); United States v. Pugliese, 153 F.2d 497, 500-501 (2d Cir. 1945); United States v. Nardone, 127 F.2d 521, 523 (2d Cir.), cert. denied, 316 U.S. 698, 62 S.Ct. 1296, 86 L.Ed. 1767 (1942)

Accord, United States v. Bey, 437 F.2d 188, 191-192 (3rd Cir. 1971); Carbo v. United States, 314 F.2d 718, 735-738 (9th Cir. 1963), cert. denied, 377 U.S. 953, 84 S.Ct. 1625, 12 L.Ed.2d 498 (1964).

Bruton v. United States, 391 U.S. 123, 88 S.Ct. 1620, 20 L.Ed.2d 476 (1968)

The effect of the rule [of Dennis et al.] is to admit evidence of conversations and statements of fact by people (such as George Georges) who are not called by the Government, and who convict with their un-cross examined utterances. As Judge Dooling pointed out in [his dissent in] Calarco, this denial of the right of cross examination approaches the due process point raised in Bruton v. U. S., 391 U.S. 123 [88 S.Ct. 1620, 20 L.Ed.2d 476] (1968). We do claim that this rule deprives the Defendants of due process. Amendment V, United States Constitution

Brief for Appellant Brainin at 44.

Appellants also refer us to the apparent practice in a few of the circuits requiring the jury to determine the defendant's membership in the conspiracy beyond a reasonable doubt based solely on the evidence independent of the co-conspirators' hearsay declarations. See Dennis v. United States, 346 F.2d 10, 16 (10th Cir. 1965), rev'd on other grounds, 384 U.S. 855, 86 S.Ct. 1840, 16 L.Ed.2d 973 (1966); Newman v. United States, 331 F.2d 968, 971 (8th Cir. 1964), cert. denied, 379 U.S. 975, 85 S.Ct. 672, 13 L.Ed.2d 566 (1965); Landers v. United States, 304 F.2d 577, 582 (5th Cir. 1962). The issue was not really analyzed in these cases; to the extent that it was, we find their analyses unpersuasive in light of the arguments of Judge Learned Hand in United States v. Dennis, 183 F.2d 201, 230-231 (2d Cir. 1950), aff'd on other grounds, 341 U.S. 494, 71 S.Ct. 857, 95 L.Ed. 1137 (1951) and Judge Merrill in Carbo v. United States, 314 F.2d 718, 735-738 (9th Cir. 1963), cert. denied, 377 U.S. 953, 84 S.Ct. 1626, 12 L.Ed.2d 498 (1964).

Particularly in light of the narrowing of Bruton evident in Dutton v. Evans, 400 U.S. 74, 91 S.Ct. 210, 27 L.Ed.2d 213 (1970) and California v. Green, 399 U.S. 149, 90 S.Ct. 1930, 26 L.Ed.2d 48 (1970). See Davenport, The Confrontation Clause and the Co-Conspirator Exception In Criminal Prosecutions: A Functional Analysis, 85 Harv.L.Rev. 1378, 1379-81 (1972)

Fed.R.Crim.P. 14; Stilson v. United States, 250 U.S. 583, 585-586, 40 S.Ct. 28, 63 L.Ed. 1154 (1919); United States v. Vega, 458 F.2d 1234, 1236 (2d Cir. 1972); United States v. Borelli, 435 F.2d 500, 502 (2d Cir. 1970), cert. denied, 401 U.S. 946, 92 S.Ct. 963, 28 L.Ed.2d 229 (1971)

Now, in the spring of '65 Gerald Leavitt meets with Irving Projansky and Arthur Keller at the First National Bank of Lincolnwood. They discuss Hercules Galion. Irving Projansky told Leavitt that he was unhappy with what was happening with the Hercules Galion stock. So what does Gerald Leavitt say? He says, "I got a brother-in-law. His name is Rolland. He can really help you out with the price of the stock. He can really get Hercules Galion up in price."

Transcript at 9139. An objection was made to this portion of the prosecutor's summation. Id. at 9203.

United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 239-240, 60 S.Ct. 811, 84 L.Ed. 1129 (1940); United States v. D'Anna, 450 F.2d 1201, 1205-1206 (2d Cir. 1971); United States v. Dibrizzi, 393 F.2d 642, 646 (2d Cir. 1968); United States v. DeAlesandro, 361 F.2d 694, 696-697 (2d Cir.), cert. denied, 385 U.S. 842, 87 S.Ct. 94, 17 L.Ed.2d 74 (1966); United States v. Angelet, 231 F.2d 190, 192 (2d Cir.), cert. denied, 351 U.S. 952, 76 S.Ct. 849, 100 L.Ed. 1476 (1956)

Platt v. Minnesota Mining & Mfg. Co., 376 U.S. 240, 245, 84 S.Ct. 769, 11 L.Ed.2d 674 (1964); Wagner v. United States, 416 F.2d 558, 561-562 (9th Cir. 1969), cert. denied, 397 U.S. 923, 1015, 90 S.Ct. 915, 25 L.Ed.2d 104 (1970); United States v. Aronson, 319 F.2d 48, 52 (2d Cir.), cert. denied, 375 U.S. 920, 84 S.Ct. 264, 11 L.Ed.2d 164 (1963). See generally Jones v. Gasch, 131 U.S.App.D.C. 254, 404 F.2d 1231 (1967), cert. denied, 390 U.S. 1029, 88 S.Ct. 1414, 20 L.Ed.2d 286 (1968)

Applying this table of measurement [the criteria of Platt, 376 U.S. at 243-244, 84 S.Ct. 769, 11 L.Ed.2d 674] to the case at hand, I find that:

(1) There are apparently six Chicago defendants and four New York defendants. Counsel on both sides indicates that there may be a plea of guilty by one defendant from each city, but of course the mere possibility of the pleas is too tenuous to affect the situation. The present ratio of Chicago to New York defendants is not sufficient to grant the motion and is no different from what it apparently was at the time of Judge Frankel's decision, in spite of his statement that the number of defendants was then evenly divided between the two cities.

(2) The witnesses appear to be evenly divided between the two cities.

(3) The events in issue were well distributed between Chicago and New York.

(4) The documents and records likely to be involved, although possibly evenly divided between the cities in the past, have now been largely collected and located in New York.

(5) The business of a Chicagoan standing trial in New York will undoubtedly be disturbed to some extent if trial occurs in New York, but this would be equally true of New York defendants in the event of a Chicago trial.

(6) Chicago defendants will undoubtedly incur expense by being required to be present in New York, as would New York defendants if required to be present in Chicago.

(7) By far the greater number of counsel on both sides are located in New York.

(8) Both forums are equally accessible as a place for trial.

(9) The docket conditions in both courts are substantially equivalent, but in any event the case has already been scheduled for trial in the Southern District of New York to commence the first week of January, 1970.

The Court: Gentlemen, before I am overwhelmed by your motions and forget what I wanted to tell you myself, I would like to make a few announcements

I have determined as far as jury challenges are concerned, there will be 16 challenges for the defendants and 8 for the government on the regular jurors, and as to the alternates-and I propose to pick six alternates because we have accommodations for them and a long case-6 challenges for the defendants and 3 for the government.

Transcript at 47.

Id. at 54-55

See Fed.R.Crim.P. 51; United States v. Indiviglio, 352 F.2d 276 (2d Cir. 1965) (en banc), cert. denied, 383 U.S. 907, 86 S.Ct. 887, 15 L.Ed.2d 663 (1966)

Accord, New England Enterprises, Inc. v. United States, 400 F.2d 58, 68 n. 6 (1st Cir. 1968), cert. denied, 393 U.S. 1036, 89 S.Ct. 654, 21 L.Ed.2d 581 (1969). See United States v. Silverman, 449 F.2d 1341, 1344 (2d Cir. 1971), cert. denied, 405 U.S. 918, 92 S.Ct. 943, 30 L.Ed.2d 788 (1972); United States v. Potts, 420 F.2d 964, 964-965 (4th Cir.) (per curiam), cert. denied, 398 U.S. 941, 90 S.Ct. 1855, 26 L.Ed.2d 276 (1970); Krause v. Chartier, 406 F.2d 898, 901 (1st Cir. 1968), cert. denied, 395 U.S. 960, 89 S.Ct. 2102, 23 L.Ed.2d 749 (1969)