The opinion of the court was delivered by: WYATT
This is a motion by defendant Alice Jayson (1) to dismiss the indictment because of alleged 'defects in the institution of the prosecution' (Fed.R.Crim.P. 12(b)(2)) or, alternatively, (2) to obtain a hearing 'in aid of determination of this motion', etc. The motion is also (3) to suppress as evidence all evidence secured by the Securities and Exchange Commission (the 'Commission') in alleged violation of movant's constitutional rights to counsel of her own choice. Fed.R.Crim.P. 41(e).
On August 18, 1964, co-defendants Steel and Jayson were charged in a twenty-two count indictment. Movant was named with co-defendant Steel in counts 1 through 11 and was named alone in counts 21 and 22. Count one charges movant with conspiracy to violate the Securities Act of 1933 (15 U.S.C. § 77a and following; the '1933 Act') in respect of transactions in unregistered securities and to violate the mail fraud statute (18 U.S.C. § 1341). The other counts charge movant with substantive violations of the 1933 Act and with making false statements in a matter within the jurisdiction of the Commission (18 U.S.C. § 1001). The securities involved are those of Alaska International Corporation ('Alaska'). Both defendants pleaded not guilty on August 25, 1964.
By order dated July 29, 1959 (later supplemented and amended by other orders), the Commission directed an investigation and designated officers to take testimony in the matter of Alaska, M. J. Reiter Company, and Best Securities, Inc. The order was said to be 'pursuant' to Sections 19(b) and 20(a) of the 1933 Act (15 U.S.C. §§ 77s(b) and 77t(a)) to determine whether Alaska and the two other companies had violated Sections 5(a), 5(c), and 17(a) of the 1933 Act (15 U.S.C. §§ 77e(a), 77e(c) and 77q(a)).
In response to a subpoena movant appeared on October 12, 1962, before officers of the Commission. Her appearance was in the offices of Lubell & Zito, attorneys, and there was present with her Arthur Lubell, Esq., of that firm, who noted his appearance as her counsel. She had been, but was not then, an officer of Alaska; Mr. Lubell was then general counsel to Alaska and had been since April, 1960.
Before being sworn, movant was advised by the Commission officers (among other things) that she had a right to refuse to answer any question which might incriminate her, and that any evidence given by her could be used against her.
After some testimony and colloquy, the Commission officers determined that representation by Mr. Lubell of movant and also Alaska at the same time would tend to hinder the investigation. Attention was drawn to Rule 3(c) of the Commission which as it then stood was as follows (25 Fed.Reg. 6729 (July 15, 1960); 17 CFR § 201.3 (revised as of January 1, 1964)):
'(c) Counsel for Witnesses in Investigations. Any person compelled to appear in person at an investigation designated in paragraph (a) of this rule may be accompanied, represented and advised by counsel, but such counsel may not represent any other witness or any person being investigated unless permitted in the discretion of the officer conducting the investigation or of the Commission upon being satisfied that there is no conflict of interest in such representation and that the presence of identical counsel for other witnesses or persons being investigated would not tend to hinder the course of the investigation.'
It was left to Mr. Lubell to decide whether to represent movant or Alaska and there was an adjournment for that purpose, it being made clear that if Mr. Lubell decided to represent Alaska, movant would have to secure independent counsel.
Mr. Lubell evidently elected to represent Alaska and not movant.
On October 19, 1962, movant appeared before the Commission officers at the New York offices of the Commission. She had no lawyer as a result of her own decision. She said that the value to her of Mr. Lubell was because he 'knows about the situation, about the corporation' and made it clear that is value to her was not for any legal advice but because 'he knows something I don't know, or remembers something I can't remember' (Transcript, p. 64). She claimed her rights were being infringed. She was again warned that any evidence she gave could be used against her and was again advised that she could refuse to answer any question which might incriminate her, etc. She then testified voluntarily.
Thereafter, as above set forth, an indictment against movant was returned.
The claim that constitutional rights of movant were violated is entirely without merit.
The Sixth Amendment, invoked for movant, provides for assistance of counsel in all 'criminal prosecutions'. The investigation by the Commission was obviously not a criminal prosecution. Hannah v. Larche, 363 U.S. 420, 440 n. 16, 80 S. Ct. 1502, 4 L. Ed. 2d 1307 (1960).
The Fifth Amendment, invoked for movant, prohibits deprivation of life, liberty, or property, 'without due process of law'. But when a government agency is conducting an investigation, as here, in contrast to making an adjudication, 'due process' does not require granting to those being investigated 'rights * * * normally associated only with adjudicatory proceedings'. Hannah v. Larche, ...