The opinion of the court was delivered by: PALMIERI
The defendants are charged in nineteen counts with violating and conspiring to violate the registration provisions of the Securities Act of 1933 (15 U.S.C. § 77e(a)) with respect to the allegedly illegal distribution to the public of common stock in the Continental Enterprises, Inc. (Continental).
They move for various forms of relief, several of which are dealt with here at the outset inasmuch as they are, in effect, repetitive of motions made with respect to another indictment - 66 Cr. 832. This indictment was filed by the same Grand Jury against these defendants, as well as others, and will be referred to for convenience as the Merritt-Chapman case.
These repetitive motions seek to dismiss the indictment on two separate grounds: first, that the Grand Jury which handed down the indictment was selected in violation of the Fifth Amendment and 28 U.S.C. §§ 1861, 1862, 1863, 1864 and 1865,
and second, that the defendants' Constitutional rights were violated by allegedly improper conduct of the United States Attorney before the Grand Jury. The allegedly improper conduct relates to the calling of a possible defendant to testify before a Grand Jury investigating his activities, after being advised that the prospective witness would assert his Fifth Amendment privileges; and the management of such a witness' questioning before the Grand Jury as well as the availability of his legal counsel during such questioning. The basic facts relating to the motions in both cases are the same. The Grand Jury, the Grand Jury minutes, and the defendants
are identical with respect to the motions in both the Continental and the Merritt-Chapman cases. Under date of April 4, 1967, Judge Cooper of this Court filed an extensive opinion denying the relief requested on both grounds. Similar contentions have been made by other defendants in two recent cases with respect to similar alleged improper conduct of the United States Attorney and have been ruled on adversely to the defendants by Judge Tenney of this Court (United States v. Leighton, et ano, 66 Cr. 894, Jan. 23, 1967) and by Judge Weinfeld of this Court (United States v. Pilnick, et al., 66 Cr. 958, April 25, 1967). There is no valid reason for any departure by this Court from the views expressed by the three Judges approving the conduct of the United States Attorney in each instance. Accordingly, the motions are denied for the reasons set forth in their respective opinions.
The defendants additionally have moved, concededly pro forma, for a list of the witnesses expected to be called by the Government at the trial. This relief has been previously denied by this Court in a noncapital case and is denied here for the reasons set forth in United States v. Manhattan Brush Co., 38 F.R.D. 4 (S.D.N.Y. 1965).
The remaining motions seek (1) transfer of the trial to the Middle District of Florida, (2) dismissal of the substantive counts, and (3) dismissal of the indictment. These will be discussed seriatim.
This motion is made pursuant to the provisions of Rule 21(b), Fed. R. Crim. P.
A previous motion to transfer based upon Rule 21(a), Fed. R. Crim. P.,
was denied by Judge Tyler of this Court on December 13, 1966. In essence, the defendants claim that since the defendants live in Jacksonville, Florida, and since the corporate records of Continental are in Jacksonville, the trial should be transferred to Florida. Additionally, personal reasons of health and convenience are advanced. It is also contended that prospective defense witnesses will come from Florida and can appeal more readily and testify more effectively if the transfer were allowed. The defendants also urge that a review of their motion previously denied by Judge Tyler may impel a different result when considered along with the factors asserted in support of the motion now made pursuant to Rule 21(b), Fed. R. Crim. P. The relief requested must be denied because none of the factors, whether considered singly or collectively, would justify transfer of the trial. This motion is concededly addressed to the Court's discretion. Platt v. Minnesota Mining Co., 376 U.S. 240, 245, 11 L. Ed. 2d 674, 84 S. Ct. 769 (1964), and must be sufficiently persuasive to override the general rule that a criminal prosecution should be retained in the original district. United States v. United States Steel Corp., 233 F. Supp. 154 (S.D.N.Y. 1964). The venue here is correct and is based upon substantial financial transactions which took place in this district. The defendants are persons of substantial means to whom questions of travel and transportation should not present serious difficulties. Moreover, the trial court has sufficient power and latitude in the management of the trial to take account of matters which seriously affect the convenience of parties or witnesses. Additionally, extensive and rapid facilities for travel between New York and Florida are available. Indeed, the defendants are directors of the Merritt-Chapman & Scott Corporation which has its main offices in New York.
Finally, the matter of timeliness deserves mention. Rule 22, Fed. R. Crim. P., provides:
A motion to transfer under these rules may be made at or before arraignment or at such other time as the court or these rules may prescribe.
Substantially all of the grounds asserted as the basis for this motion could have been put forward when the prior motion before Judge Tyler was argued in November, 1966. This indictment was filed on September 19, 1966, and the related Grand Jury proceedings to which defendants were subpoenaed took place in August and September, 1966. While the motion is denied on the merits and not for lack of timeliness, this Court feels constrained to point out that the renewed and revamped motion for transfer is made about seven months after the indictment, and on the eve of trial.
The Motion to Dismiss the Substantive Counts
The substantive counts of the indictment, Counts 2 through 19, allege mailings of confirmations of sales of securities to the defendant or his agent. Counts 2 through 11 and 17 through 19 each alleges the mailing of a confirmation of sale from the New York broker who executed the sale to the defendant Wolfson. Counts 12 through 16 alleges the mailings of similar confirmations to James Mullaney of Jacksonville, Florida, presumably a person whose agency relationship will be established at trial. These allegations have been amplified by a bill of particulars.
The "use * * * of the mails to sell through the use or medium of any prospectus or otherwise," is forbidden by 15 U.S.C. § 77e(a) (1). Anyone who causes such a "use" is responsible for it under 18 U.S.C. § 2.
The defendants suggest that the confirmations alleged are not within the purview of the statutory prohibition because they constituted mailings to a seller allegedly after consummation of the sale. Mailings of confirmations to purchasers are within the purview of the statute, United States v. Greenberg, 30 F.R.D. 164 (S.D.N.Y. 1962). The defendants, while conceding that a confirmation sent to a purchaser "might be a mailing offensive to the policy of the Securities Act of 1933", argue ...