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United States v. Quinn

decided: June 4, 1971.


Waterman, Moore and Feinberg, Circuit Judges.

Author: Moore

MOORE, Circuit Judge:

Although the indictment contained 99 counts against 10 defendants, this appeal is taken by three defendants, Thomas F. Quinn (Quinn), David Gennaro (Gennaro) and Gary Seiden (Seiden) from judgments of conviction entered against them only as to a few of the counts. More specifically, Count I charged these three appellants, together with others, of conspiring to violate provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the mail fraud statutes (15 U.S.C. §§ 77e(a), 77q(a), 77x, 78i(a) (2), 78ff(a) and 18 U.S.C. §§ 371, 1341 and 1343.*fn1 Counts 10, 20 and 21 charged Gennaro and Quinn with three specific fraudulent stock sales; Counts 22, 23 and 24 charged Seiden and Quinn with three such sales; and Counts 57, 78 and 79 charged Seiden, Quinn and others with selling unregistered stock in three other transactions. Only these ten counts were sent to the jury. The jury after discriminating deliberation returned their verdicts as follows:

Count 1 (conspiracy): Seiden and Quinn convicted; Gennaro acquitted.

Counts 10, 20, 21 (specific stock sales): Quinn and Gennaro convicted.

Counts 22, 23, 24 (specific stock sales): Quinn and Seiden convicted.

Counts 57, 78, 79 (sale of unregistered stock: of the appellants, only Quinn and Seiden charged): Quinn convicted; Seiden convicted on 78, 79 and acquitted on 57.

The points relied upon for reversal by the respective appellants are so specific and limited that any resume of the facts need only be stated in the light of these points. Any general statement of the highly complicated transactions, upon which the government bases its claims of fraud, would lead only to confusion. The means by which Kent stock was manipulated and sold was described by some fifty witnesses whose collective testimony was more than adequate to support the fraudulent practices charges.

Quinn and Seiden limit their claims to (1) delay in bringing the indictment during which period allegedly key witnesses had died and (2) the alleged suppression by the prosecutor of the fact that a main government witness, J. Samuel Garrison, had been indicted in Florida during the New York trial. They do not dispute the weight of evidence.

Gennaro adopts these points but makes as his principal argument a claim of alleged error because the trial court failed to grant his motion for acquittal on the conspiracy count at the end of the government's case. Although acquitted by the jury on this count, Gennaro argues that the evidence improperly received against him on the conspiracy count prejudiced him before the jury on the substantive counts on which he was convicted.

Pre-Indictment Delay

The convictions of the appellants were based upon their participation in the sale of stock of Kent Industries, Inc. (Kent). In 1963 the Securities and Exchange Commission (SEC) commenced an investigation of an over-the-counter broker-dealer, Thomas, Williams and Lee, Inc. (TWL) in connection with its sales of Kent stock to the public. Quinn was TWL's president, Gennaro was sales manager and a salesman, and Seiden was a salesman who also had certain accounting duties. The matter remained before the SEC until 1966. In January 1966 an SEC hearing examiner recommended that Quinn, Seiden and other TWL salesmen be barred from the securities business.

Investigation of possible criminal aspects of the Kent stock sales commenced in a government prosecutorial office in New York in the spring of 1966 and after further investigation an indictment was returned in May 1968, well within the period of the statute of limitations, the primary guarantor against pre-indictment delay. United States v. Ewell, 383 U.S. 116, 122, 86 S. Ct. 773, 15 L. Ed. 2d 627 (1966); United States v. Feinberg, 383 F.2d 60 (2d Cir. 1967), cert. denied, 389 U.S. 1044, 88 S. Ct. 788, 19 L. Ed. 2d 836 (1968). On the eve of the trial, defendants Quinn, Seiden and Parma moved to dismiss the indictment for want of a speedy trial. Although denying the motion, 314 F. Supp. 233, the trial court wisely withheld final judgment on this point and gave these defendants the opportunity to renew the motions upon the trial, thus enabling them to show prejudice from any unjustified delay. Dickey v. Florida, 398 U.S. 30, 38, 90 S. Ct. 1564, 26 L. Ed. 2d 26 (1970). The motions were renewed both upon the trial and at the time of sentencing. At these times the same trial judge had had ample opportunity, after a fairly lengthy trial and hearing the testimony of the many witnesses, to appraise the claims of prejudice. In their appellate arguments appellants rely principally on the death of three persons, Nicholas Marotta, a former president and large stockholder of TWL, Herbert Check, an accountant for TWL and Michael Lekocas, a stockholder in Kent. However, the offer of proof submitted by Quinn was directed largely to showing that in his actions he was influenced by Marotta, Lekocas and Check and that as a result of reliance "upon their representations [he] lacked any criminal intent." (Applts' Br., pp. 23-24.) In the light of the quasi-nebulous relevance of these witnesses' ...

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