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United States v. Amrep Corp.

decided: November 1, 1976.

UNITED STATES OF AMERICA, APPELLANT,
v.
AMREP CORPORATION, RIO RANCHO ESTATES, INC., ATC REALTY CORPORATION, HOWARD W. FRIEDMAN, CHESTER CARITY, IRVING W. BLUM, HENRY L. HOFFMAN, HERMAN B. OBERMAN, SOLOMON H. FRIEND, AND DANIEL FRIEDMAN, DEFENDANTS-APPELLEES



Appeal pursuant to 18 U.S.C. § 3731 from orders of the District Court for the Southern District of New York, Metzner, J., dismissing certain counts of the indictment and excluding certain items of evidence.

Lumbard, Van Graafeiland, Circuit Judges, and Bonsal, District Judge.*fn* Bonsal, District Judge (dissenting).

Author: Per Curiam

This appeal is taken pursuant to 18 U.S.C. § 3731, which permits pretrial appeals by the Government:

1. From a decision or order of a district court dismissing an indictment as to any one or more counts;

2. From a decision or order of a district court suppressing or excluding evidence.

Section 3731 provides that its provisions shall be liberally construed to effectuate its purposes.*fn1 See United States v. Flores, 538 F.2d 939 (2d Cir. 1976).

The matter came before this court on October 29, 1976 on the expedited hearing of a motion to stay the trial scheduled to commence on November 3, 1976, until the expedited hearing of the appeal on the merits. During oral argument, the parties agreed that the issues should be presently determined on the merits in order that the trial might proceed as scheduled.

The original indictment herein charged the defendants in 70 counts with violation of the mail fraud statute, 18 U.S.C. § 1341, and in 10 counts with violations of the fraud provisions of the Interstate Land Sales Full Disclosure Act, 15 U.S.C. § 1703 (a). The District Judge concluded that this indictment contained many unnecessary factual allegations and ordered that they be deleted.

Accordingly, on July 13, 1976, a superseding indictment was filed substantially eliminating much of the evidentiary detail. However, the substance of the 80 counts was realleged. The District Court felt that the trial would be unduly prolonged if the prosecution called the 70 allegedly defrauded witnesses required to prove the 70 counts of mail fraud and directed the prosecutor to select 20 of them for production at the trial. Over objection, the Government designated the names of 20 allegedly victimized purchasers, and the court then dismissed the remaining 50 counts of mail fraud.

While we are most sympathetic with the desire of the District Judge to reduce the pending trial to manageable proportions, we think that the procedure which he followed was improper. The Government has indicated its willingness to limit its proof to 20 counts but argues strongly that it should not be required to make the choice of counts in advance of trial. Should witnesses prove unavailable, incompetent or inadequate as to any of these pre-selected counts, the charges against particular defendants and various facets of the case could be undermined by the resulting lack of proof.

We think the District Court should have refrained from dismissing 50 counts until the prosecution had put in its case on 20 counts for which proof was available.*fn2

The District Court has also ruled that it would not receive any evidence as to the following evidentiary matters alleged in paragraph 18(g) in the original indictment but deleted from the superseding indictment:

(ii) the defendants and co-schemers would and did plan and devise their sales campaigns and dinner presentations in order to exploit any lack of financial sophistication and knowledge on the part of the persons to be defrauded concerning the making of reasonably secure financial investments;

(vi) the defendants and co-schemers would and did cause their salesmen to distribute "Confidential Surveys" at the beginning of the sales dinners which were designed to elicit information from the persons to be defrauded as to the maximum amount of money they could "invest" and which were further intended and designed to encourage the persons to be defrauded to remove moneys already invested in mutual funds, stocks, insurance and savings and to reinvest these funds in the purchase of lots at Rio ...


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