Friendly, Chief Judge, and Mansfield and Timbers, Circuit Judges.
Appellant Arthur Tortorello appeals from a judgment of conviction entered upon a jury verdict returned November 12, 1971 after a ten day trial before Milton Pollack, District Judge, in the Southern District of New York finding Tortorello guilty on two counts of sale of unregistered securities, in violation of Section 5 of the Securities Act of 1933, 15 U.S.C. § 77e(a)(1) and (2) (1970); on two counts of violation of the antifraud provisions of Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q (a) (1970); on one count of mail fraud, in violation of 18 U.S.C. § 1341 (1970); and on one count of conspiracy to sell unregistered securities, to violate the antifraud provisions of the federal securities laws and to violate the mail fraud statute, in violation of 18 U.S.C. § 371 (1970).*fn1
The chief issue on appeal is whether the trial judge erred in denying after a post-verdict hearing, 342 F. Supp. 1029 (S.D.N.Y.1972), Tortorello's motion to suppress certain evidence obtained by electronic surveillance pursuant to the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. § 2510 et seq. (1970). Other subordinate claims of error are raised by Tortorello.
In view of the chief issue raised on appeal, a summary description of the fraudulent scheme and conduct for which Tortorello was convicted will suffice. Essentially the evidence established that Tortorello participated in a complicated scheme to resurrect a defunct Texas corporation, Underwriters Investment Company (UIC), to recapitalize the company so that millions of new UIC shares were authorized, to cause the company to acquire assets with apparent but no real value, and to cause the company to dispose of thousands of unregistered, worthless UIC shares to the public.
Tortorello's participation in the scheme was limited to distributing the almost worthless UIC shares. He and an associate, Fred Hesse, were provided by the principals of UIC, Peters and McKinney, with blank UIC stock certificates. They used several nominees to pledge these worthless securities as collateral for loans from various banks. This tactic proved largely unsuccessful. They then arranged for the nominees to sell the securities to various brokerage houses by deceptively creating a demand for the securities.
There was a great deal of evidence adduced at the ten day trial which established Tortorello's role in the fraudulent scheme. The evidence of course must be viewed in the light most favorable to the government at this stage of the case. United States v. D'Avanzo, 443 F.2d 1224, 1225 (2 Cir.), cert. denied, 404 U.S. 850, 30 L. Ed. 2d 89, 92 S. Ct. 86 (1971). With the exception of his claim regarding an asserted defense of good faith, Tortorello does not challenge the sufficiency of the evidence.
Tortorello's involvement in the scheme eventually was discovered through the interception of wire and oral communications, to which we now turn.
THE ELECTRONIC SURVEILLANCE
The sequence of events with respect to the electronic surveillance here involved may be briefly summarized.
On June 2, 1969, an application was made by the New York County District Attorney's office to Justice Schweitzer in the New York County Supreme Court for an eavesdropping order to intercept conversations and to tap telephone lines at the offices of the Rio Coin Corporation (hereinafter the "Rio Coin Shop") and of Jacob Maishlish (also known as Jack Mace), both located at 1147 Avenue of the Americas, New York City. The application was based on information that Mace might be dealing in stolen property and forged instruments. An order was granted on June 2 authorizing eavesdropping at the Rio Coin Shop premises. Upon application by the District Attorney, six renewal and extension orders subsequently were granted for the same premises. Tortorello was named in the applications and orders as one of the persons whose conversations were to be intercepted. The eavesdropping ended on November 22. It had continued for 173 days.
On December 9, 1969, the New York County District Attorney's office applied to Justice Schweitzer for an order permitting the police to tap two telephones at Todd Associates (one of the "Todd Associates" being described as "Arthur Tortorello, also known as Artie Todd"), 120 West 44th Street, New York City, and to place an overhearing device on the premises. The application was supported by an affidavit of Lawrence Hochheiser, an Assistant District Attorney, which incorporated by reference the earlier Mace applications and orders, described incriminating conversations which had been intercepted at the Rio Coin Shop, and contained other information which had been obtained by law enforcement officers through other investigative means. Pursuant to this application, an order was granted on December 10 authorizing officers to seek evidence of the crimes of Burglary, Forgery as a felony, Possession of Forged Instruments as a felony, Possession of Forgery Devices, Grand Larceny in the First Degree, Criminal Possession of Stolen Property in the First Degree and Conspiracy to commit such crimes. These crimes were more particularly identified in the supporting affidavit which was incorporated by reference in the order. Upon application by the District Attorney, five renewal and extension orders were obtained for the same premises. Each successive affidavit described the progress of the investigation. Conversations concerning fraudulent securities transactions unexpectedly were disclosed by the surveillance. The surveillance team thereupon notified federal authorities. Representatives of the SEC and the Joint Strike Force joined the surveillance team. This eavesdropping and wiretapping ended on May 8, 1970. It had been in operation for 149 days.
A substantial portion of the evidence against Tortorello at the trial of the instant case in the district court resulted from this eavesdropping and wiretapping.*fn2 Tortorello moved to suppress such evidence, claiming that the orders were improperly applied for, granted, renewed, and executed. After a post-verdict hearing, Judge Pollack filed a detailed, well reasoned opinion on May 18, 1972 denying the motion. United States v. Tortorello, 342 F. Supp. 1029 (S.D.N.Y.1972).
CONSTITUTIONALITY OF TITLE III
Tortorello contends that Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. § 2510 et seq. (1970) (the Act), is unconstitutional on its face.
This claim was not brought to the attention of the trial court. We nevertheless shall consider the constitutional issue raised since it affects "substantial rights". Fed.R.Crim.P. 52.
Those portions of Title III which are germane to this appeal may be briefly summarized. The Act defines the circumstances under which interception of wire or oral communications*fn3 may be authorized by a state. Section 2516(2) provides that, upon application by the "principal prosecuting attorney" of a state or a political subdivision thereof, a state judge "may grant in conformity with section 2518 of this chapter and with the applicable State statute" an order authorizing interception of wire or oral communications to obtain evidence of certain enumerated offenses.*fn4 Section 2516(2) requires that a state statute authorizing the interception by law enforcement officers of wire or oral communications must contain certain minimal safeguards, in conformity with Section 2518, against intrusion upon rights protected by the Fourth Amendment.
On May 26, 1969, the State of New York enacted Chapter 1147 of the Laws of 1969, effective June 26, 1969, which harmonized New York law with the Act. N.Y.Crim.Proc.Law, art. 700 (McKinney 1971). The New York statute virtually tracks the language of Title III.
The threshold question is whether Tortorello has standing to challenge the constitutionality of Title III. The wiretapping and eavesdropping orders involved in this case were applied for by a state district attorney and were issued by a state judge authorized by state law to approve the interception. The state statute clearly conforms to the Act with regard to the procedures for obtaining a valid order. If it did not, the order of course would be unlawful even though authorized by state law. But the Act itself does not authorize a state judge to issue a wiretap or eavesdrop order upon application of a state officer, nor does it require that a state enact empowering legislation.
We nevertheless conclude that Tortorello has been directly affected by Title III. Were it not for the Act, the evidence uncovered by the state's electronic surveillance would not have been admissible in the instant federal action. This would have been so because of the Supreme Court's decision in Benanti v. United States, 355 U.S. 96, 2 L. Ed. 2d 126, 78 S. Ct. 155 (1957). Benanti involved Section 605 of the Federal Communications Act which prohibited the interception and use of wire communications without prior authorization from the sender. The Court held that wiretap evidence obtained by state officers under sanction of state law, but in violation of Section 605, could not be used in a federal court. See Schwartz v. Texas, 344 U.S. 199, 97 L. Ed. 231, 73 S. Ct. 232 (1952). Since the evidence here was intercepted by state officers, with some participation by federal officers, it could not have been used in the district court below without the authorization provided by Title III. See Section 2517(1) and (3). We hold that Tortorello has standing to challenge the constitutionality of the Act.*fn5
The crux of Tortorello's argument challenging the constitutionality of the Act is that the procedures provided by Section 2518 for obtaining a wiretap or eavesdrop order suffer from the same constitutional infirmities as those provided for in the former New York electronic surveillance statute which was invalidated by the Supreme Court in Berger v. New York, 388 U.S. 41, 18 L. Ed. 2d 1040, 87 S. Ct. 1873 (1967). Tortorello also relies on Katz v. United States, 389 U.S. 347, 19 L. Ed. 2d 576, 88 S. Ct. 507 (1967), where another electronic surveillance was held to violate the Fourth Amendment. Berger and Katz did not hold, however, that all electronic surveillance is prohibited by the Fourth Amendment. They merely held that the wiretaps and eavesdrops involved in those cases were infected with certain faults which rendered them unconstitutional.
In Berger, the grounds upon which the statute was held unconstitutional were as follows:
(1) The statute failed to require a showing of probable cause that a particular offense had been or was being committed.
(2) The statute failed to require that a description provided of the particular conversations or communications to be intercepted.
(3) The statute failed to require particularity as to the duration of the intrusion. The Court held that the intrusion should not be so long as to be "the equivalent of a series of intrusions, searches, and seizures pursuant to a single showing of probable cause". 388 U.S. at 59.
(4) The statute failed to require particularity as to when a surveillance should be ended after the particular conversation sought was intercepted. As to this, the Court held that discretion should not be vested in the executing officer.
(5) The statute failed to provide for either notice to the persons whose conversations were to be intercepted or a showing of special facts or exigent circumstances necessitating the withholding of notice.
In Katz, where the eavesdropping officers had exercised great restraint and had limited their intrusion, the Court restated the requirements of Berger, but with special emphasis on the necessity for a showing of probable cause before an independent judicial officer who also would establish the precise limits to be observed in executing the eavesdropping order.
The Act represents an attempt by Congress to establish a limited system of electronic surveillance within the guidelines of Berger and Katz. Section 2518 obviously was drafted with these decisions in mind. We are satisfied that the Act does comply with the guidelines established by the Court in Berger and Katz. An examination of the relevant sections of the Act shows that they provide for particularity in the application and order, judicial supervision, and ...