*1 441 appellant’s and information as to the health and domestic life. is well settled that rule Appeals
United States
Court
is with
power
to review or revise a sentence
permissible statutory
which is within
Rosenberg,
limits. United States v.
2
Cir.,
583, 603-609,
195 F.2d
certiorari
838,
20,
denied 344 U.S.
73 S.Ct.
97 L.
rehearing
687,
1952,
Ed.
344
denied
U.S.
City, 889,
Levy,
134,
York
73 S.Ct.
Monte
New
97 L.Ed.
United
Herbert
Landi, Cir., 1957,
appellant.
States v.
2
240 F.2d
238; Jolly
States, Cir.,
v. United
6
229
Atty.,
Hughes, Jr., Asst. U. S.
Mark F.
180,
1956,
F.2d
certiorari
351
denied
U.S.
City (Paul
York, New York
D. New
S.
963,
1024,
76 S.Ct.
F.R.Crim.P. This
denial of that motion. question is no but that sen- There statutory
tence was within the allowable appel- 1461. limit. U.S.C. contention, however, impos- lant’s ing originally, and in the sentence refus- UNITED STATES of America ing judge it, ap- to reduce the district “illegal plied and unconstitutional stand- TELLIER, Joseph Walter F. Albert Proc Specifically, ards.” asserted tor, Defendants-Appellants, determining length judge in the trial Telephone Elton B. Jones and Alaska primarily upon sentence relied Corporation, Defendants. appellant’s previous record of convictions No. Docket 24665. offenses, most, for all, and that if not similar previous of these convictions would Appeals United States Court of light present stand- invalid Second Circuit. record, however, ards. The shows that Argued 10, 1957. December appellant’s prior in addition to crim- 6,May Decided Judge record, Cashin had inal the benefit data, including variety other investigation report, presentence appellant, submitted “brochure” *2 also, 19 F.R.D.
See attorney-client privilege,
violation of the following: (1) the erred in the also corporate admission into evidence of *3 Corporation Telephone records of Alaska (ATC), (2) evidence the exclusion of pertaining of to the financial condition trial, (3) failure ATC at time of judge production of the trial to order government report of made wit- a a (4) ness, and trial the failure of the give judge requested instruction. Proctor, suspended concur- who received on of rent of nine months each sentences Wegman, Burke, J. Bertram J. Richard indictment, the counts in the contests Gordon, City, (Saul York New New York City, only sufficiency evidence of the against Bernays Wiener, Wash Frederick support the verdicts him. appellant C., counsel), ington, for D. acquire ATC was formed Tellier. operate independent telephone and and City, Pinkham, York New & Colton power Among systems electric in Alaska. City, for Spencer Pinkham, York New promoters Proctor, appellant was the appellant proctor. who, upon incorporation, elected Wickersham, Jr., S.U. W. Cornelius corporation and, in director of the (Paul E.D.N.Y., Brooklyn, Atty., N. Y. secretary. Proctor serv- enlisted the Jr., Sp. Atty., Windels, New Asst. S.U. ices defendant Elton B. Linker, Guy U. City, Asst. York Julian attorney, Seattle also elected who was Brooklyn, Y.,) appellee. N. Atty., S. company’s a director and became the incorporation counsel. After its ATC MEDINA, and LUMBARD Before exchanges, acquired telephone several Judges. WATERMAN, Circuit approximately subscribers, lo- cated in small This Alaskan towns. Judge. WATERMAN, Circuit property partly cash obtained appellants, F. Tellier and The Walter stock, partly subject on credit Proctor, and con J. were tried Albert mortgages. corporation The had thirty-six upon indictment count victed operating sufficient ex- funds meet charging violations of the them with accruing penses obliga- mortgage Act of of the Securities fraud section tions, and it was unsuccessful in several 77q(a); with viola 15 U.S.C.A. § attempts capital. to raise the needed statute, mail fraud 18 U.S. tions conspiracy Maxey, April 1951, Major vio and with C. William § general manager statutes, president 18 U.S.C. late each of charges together Starr, in the indictment arise D. Sherman 371. public vice-president, approached sale of four series Tellier & during years Co., firm a securities located York in New Tellier, through concerning raising City, possibility received con who one-half sentences four current needed funds. Tellier & Co. was owned years appellant each count on and was fined and controlled $18,000, twenty thirty does employed not contest the suffi total of between who ciency him. He to sell over the salesmen contend, however, handled does that reversal his firm. When securities allegedly rep- approached by erroneous because the ATC Tellier during rulings judge made the trial he retained Bernard D. resentatives Specifically, attorney formerly Cahn, employed the trial. the course Exchange Commission, per & that the trial court erred claimed Securities alleges mitting testimony represent was a Tellier & Co. After some purchased and the sent out to all those discussion between Tellier who representatives offer debentures. was decided to issue securities sale an Maxey meantime, In the and Starr $300,000. rea- an amount less than ATC, and severed all connections with Regula- son for this limitation was SEC Cahn who one time had elected Regula- A, Exemption tion tion, the General resigned a director of the regis- exempted from SEC directorship. The need tration of securities certain issues capital plague ATC, continued aggregate offering price issue spoke Proctor and Jones to Cahn about *4 sug- $300,000.1 Tellier’s not exceed At this. Cahn told them additional gestion, objection Cahn and over some long public financing was inadvisable as ATC, it and York the New counsel corporation operate as the continued securities to was decided that the suggestion attempts at a loss. At Cahn’s twenty convertible issued were to be financing. private were made to obtain year carrying interest at an project This in failed. was now ATC monthly. payable Tel- annual rate of 6% money debt to the with- Government agreed lier & act as best-efforts Co. pay employees’ employees’ held from debentures, labeled underwriter for these income taxes and for excise taxes which A,” “Series and to receive therefor 20% had been collected In from subscribers. the securities the face amount of addition, ATC had not turned over ex- addition, In it to receive sold. penses was long System Alaska dis- Communications exceed in an amount not charges toll tance due which had been $20,000. collected from Final- ATC subscribers. ly, objection the trustee under A trust deben- Cahn’s to the sale of although complained that, tures, stock, indenture suf- rather than of common was deposits upon prove ficient made with it so based the failure ATC to timely payment earning to enable it to make capacity. un- it had An monthly charges, corpo- by the interest prepared audited financial statement maintaining ration nevertheless was not representatives ATC corporation disclosed deposit provide a sufficient advance barely passed break- payments period such for a six month during years point 1948-1950.2 even Nevertheless, it was to do the indenture. statement was used offering circular Cahn view of ATC’s immediate need registered Within and with SEC. inability funds and its through them to obtain de- issuance all of the several months financing, private Proctor then par, bentures, offered at which had been by approached arrange Tellier to additional Subsequently, sold Tellier & Co. financing. repeated an ear- Cahn accounting independent hired firm was warning against public financing, lier but reveal- The audit audit ATC’s books. represented Proctor ducing was re- that ATC figures profit in the contained ed that losses, that reached its it had offering errone- A circular were Series ous; point, and last the break-even that, fact, ATC quarter profit. of 1952 would show a money incorporation. losing since request for met Cahn’s an audit was up was deficit to 1951 about The total reply pos- Proctor that this was $40,000, result that ATC still the au- sible because ATC owed additionally In 1951 ATC large insisted, however, insolvent. fee. He ditors $45,000. excess of At Cahn’s corporation’s lost financial status considerably improved. corrected information was sistence Regulations Code of Federal See 2. The unaudited statements those profits years 230.215 to 230.224. reflected net as follows: $1,053 1948 ...................... 4,113 1949 ...................... 3,784 1950 ...................... objection A, de- proceeds was then Over Cahn’s more than did the Then, year by. additional cided that should issue another went Cahn, debentures; and, placate December 1953 enclosing wrote Proctor agreed also be stock a financial that common statement stating urged upon quarters year, first acquiesced, three sold. but of that Cahn importance little, any, that there im- Proctor had “been provement oper- representation period.” previous now over ATC was sup- setting ating agreed to After profit. forth financial difficul- Proctor ply supporting faced, company financial ties which the Proctor Cahn with the again represented statements, later several months believe “we pre- offering currently operating did so. An circular * * * ”3 black, repre- suggested pared sale break- of sented that ATC had reached securities so to “obtain breathing proceeds spell point of this even and that “Net from the interest bond * * expansion and new issue will be used for *Tellier contacted Cahn about working equipment capital possibility selling need- for operations.” additional de- *5 ed bentures. Debentures continue Cahn refused to handle the $150,000 were then face amount transaction. He ATC, of warned Tellier that losses, dis- issued and offered for sale at with its consistent record of 30% debentures, merely was borrowing count. These “Series money labeled as a sub- B,” substantially earning suggested money were in form similar stitute for previously except get to those that the issued sale of new debentures to money pay years matured in ten rather than on the interest old deben- might twenty. underwriting tures fee was Tellier’s be a criminal fraud which plus $10,000 “great of could the face amount involve Tellier in 10% trouble.” expenses. for Within a month Tellier Nevertheless, Tellier, and Jones Proctor though debentures, had sold all of the go decided to and issue additional ahead per- was unable to sell debentures, substantial this time in the face amount centage 40,000 of the shares common $270,000. arrangements for the stock underwriting which had been offered at the same and the terms of the de- substantially time. A later audit revealed of the bentures similar to $150,000 offering those of B Series B. The circular face amount of these Series prepared in only $9,000 connnection sale of expended with the debentures was debentures, denominated “Series working capital. equipment, new and for C,” proceeds “Net this stated Then, before another month expansion issue will used new passed, anticipated report audit dis- working equipment, capital needed closed profit that ATC had not made the operations, liquidate to continue and to quarter in the last that Proctor delinquent taxes.” No mention was made represented fact, would made. In of the tax liens that now had filed great- quarter losses were the Government, impending history, est in its and its total loss for mortgage necessity foreclosures, year nearly $100,000. was In addi- using portion pro- a substantial tion, contrary optimistic pre- to Proctor’s meeting delinquent pre- ceeds for interest money during diction, it lost first quarter payment showed, A B under the Series inden- of 1953. This audit also report made, tures, as of the date the was nor of existence defaults the Government prior had filed tax liens under the debenture issues. against substantially prop- all of ATC’s last one the Series C erty. approximately was sold two months after proceeds Shortly thereafter, So B Series deben- was offered. the issue appear presidency tures to have benefited ATC no Proctor assumed the During year $66,681.18. 1953 ATC lost Secretary- corpora- appointed replaced receiver for the Proctor Jones request Proctor Court tion the United District Treasurer. Tellier’s States At Washington. debenture all the a letter to Western District reported optimistically an amended Later that petition ATC filed holders which month Chapter informed the Bank- position and X of under ATC’s financial appoint- ruptcy con- could Act receiver was them that their debentures and the rather Bankruptcy. stock “at ed into common Trustee
verted report did premium.” The substantial holders, Tellier not tell debenture I. Proctor, “it subsequently told The chief witness for the Government [pro- apply possible funds was not Cahn, Tellier’s one-time orig- debentures] ceeds of the Series C one-time director of Cahn testi- ATC. report inally Nor did allocated.” com- fied numerous conversations and insolvency or its company’s mention the Proctor, munications between Less than operating losses. one continued himself and others. With report sent exception testimony this months after two this was admitted objection again on the into default out, went without lone Tellier. The de- objection prepayments related to con- interest posited versation trustee between Cahn and Tellier in Also, A, indentures. December and C which Cahn B warned C issue proposed time, proceeds of issuance Consequently, urges third series exhausted. of debentures. Tellier ar- conversation, 1954 to in October New York that this unlike the others came range *6 aof testified, issuance for the to which Tellier with was intended as “Series So debentures. series of confidential fourth communication between consisting being, of ten- concerning D” into came and his client in a to- legal year, debentures convertible affairs of the con- client. Hence he 6% pay- $158,000, by interest amount of tal face tends reversible error was committed prepayment monthly same testimony with able admission of this into evi- A, B, and provisions as in Series deposit Proper dence. of Tellier’s evaluation series offering this position requires greater for circular C. The that we detail with again proceeds specificity this “Net re- that circumstances stated lating objected new expansion and to the conversation to. will be used issue working capital needed equipment, for 7, 1953 Proctor wrote December On liquidate operations, to and to continue outlining precarious finan- ATC’s Tellier not The circular delinquent taxes.” urged upon Tellier the position. He cial necessity large portion however, mention, that a obtaining funds additional already proceeds issue were suggested public sale another and deposited in- with prepayments to be committed reading Tellier, Proc- after securities. for interest denture trustee fol- letter, it to Cahn with the sent tor’s deposited the terms so lowing notation: indentures, also were four of all “Berney, put out see we can pay its fees the trustee to committed W.F.T.” more bonds. offering price of a $100 expenses. although $70, and debenture was D Series notation; another then under And greater somewhat resistance sales fifty issue, Tel- one hundred months “Another thou- seven within to this ninety practical- dispose issue to net them sand been able lier maybe continued hundred issue, ATC trick or two ly also. do the all every year money, it had in dollar issue. The common thousand lose Finally, autumn so it can be withdrawn or in the don’t sell existence. of its Chapter XI die.” it filed let November 1955 “W.F.T.” Bankruptcy In Act. Cir., 1956, receiving imme- letter, Cahn 231 F.2d certiorari de- Upon nied 351 Tellier, L.Ed. diately telephoned warned S.Ct. go Shibley, United additional D.C.S.D. him ahead States v. not to with Cal.1953, offerings F.Supp. would for to do so pointed “great He trouble.” volve him We conclude advice that Cahn’s use proposed to out letter Proctor’s privileged Tellier dis for the proceeds issue new trial, for, closure at the under the cir offering B purposes same Series presented record, cumstances proceeds of represented circular is clear that under this advice was not for, B used Series were to be stood either Cahn or Tellier B representation made confidential. The evidence establishes break- ATC reached the circular that expected prepare that Tellier Cahn to false, proven point had even a letter which was to set forth Cahn’s selling a substitute objections to the issuance selling earning money, “this and that debentures and which was forward sale pay of bonds to back interest enlight ed to Proctor and Jones for their you in a Ponzi of new will involve bonds enment. The letter which Cahn did in conversa- scheme.” Cahn concluded the prepare fact and which was into admitted informing he would tion Tellier that objection, evidence without is further evi copies for with letter write a dence that Cahn and Tellier understood setting substantially telephone that the substance of their con forth conversation versation was to be communicated to legal pointing reasons there Proctor and Jones. That letter recited any public at this sales should not be the substance of what Cahn had told letter, time. Cahn copies, telephone conversation, Tellier in i.e., copies letter and sent the that certain statements made in the conflict in Tellier. There some offering proven B circular had respect to whether proposed false, use the that Proctor copies forwarded so received ever proceeds of the new issuance him Proctor Jones. proceeds purposes B *7 same day event Tellier wrote Jones on the same for, used on were to have been that Cahn he talked to that that factors the basis several additional understanding “some trouble Cahn had believe it does not “Bernie Cahn any the how we hold out basis for can get you possible be would filing through debentures.” to invest at the S.E.C. con The letter contained Cahn’s ultimate clusion, time.” previously he had informed as proposed issuance raised that the at is of essence the It the legal “very problems” and that serious privilege torney-client it is limited participate nor Tellier neither he “should in communications are those financing debenture further “The confidential. moment tended to Company, present least cir under Eldon, ceases,” said Lord confidence “privilege cumstances.” Lowten, Parkhurst v. ceases.” (1819). 194, copies 216 8 that the this letter 2 Swanst. Consult The fact Wigmore (3rd may Evidence 2311-2316 on them never §§ have 1940). Thus is well established ed. Tellier to sent Jones pre- between an communications attor that ney of no relevance. fact that it was though client, private understanding pared his made demonstrates the privileged ly, not it was understood are and Tellier as which Cahn to the prior telephone information communicated in confidentialness conveyed was to conversation conversation. Nor do we attach Fisher, D.C.S.D.N.Y.1931, significance In re to the fact others. that Cahn’s let- proposed Wilcoxon v. United 51 F.2d refer ter did not issuance scheme,” constituting “Ponzi as An examination of the phrase telephone talk. indicates insuffi used in the indeed there was competent couch his letter cient That Cahn chose to evidence to establish that language dur- he used kept more ing than the books and formal records were telephone Tel- ordinary conversation course of business. Neverthe portion less, they some lier doesnot rule indicate were admissible by the the conversation parties understood laid down this court United States privi- Feinberg, 592, confidential, Cir., 1944, v. 140 F.2d lege 596, com- of a substance attaches to the denied A.L.R. certiorari particular munication and not to the 64 S.Ct. 88 L.Ed. express communica- words used where we held that if defendant has here, Moreover, where, representations concerning as made tion’s content. given agreed that corporation, information and it financial condition of party, third competent it is to be transmitted to books of that are information, only specific then not fraud him in a mail prosecution. Feinberg re- but more detailed circumstances the authen lating subject ticity disclosure. corporate are books and records Thus, Shibley, supra. case, present United assuming States was foreclosed. however, Tellier, In the warning aof questioning that Cahn’s oral while not intended authenticity “Ponzi had not been scheme” of the books and records further, then to be communicated even introduced into evidence those of privileged urges authenticity was not a communication. has been es closely by competent Hence, connected with the was too tablished evidence. they com- contends, formation which intended to were not admissible Feinberg Jones to be municated to Proctor and even under the Tellier’s rule. subject severed from matter appears upon the entire contention assumption to be based contemplated that Proctor which it authenticity that the informed. and Jones were to be records was for the and, court determine consequently, inad judge prop- trial We conclude missible until the Government had estab erly testimony concern- admitted Cahn’s authenticity by competent proof. lished ing conversation between assumption This is erroneous. The issue Tellier and him. authenticity was for once II prima case had been made fade assigns ad- Tellier next error the Wigmore on Government. 7 Evidence mission into evidence of the books 1940); (3rd ed. Model Code of These records of ATC. exhibits Evidence, 601(a) (1942). Rule *8 during testimony of the admitted Casagrande Consequently, only who witness Government’s we need de tracing had several schedules there whether was termine sufficient evi proceeds authenticity sales. of the debenture to dence make objected genuineness prima Counsel to the Gov- case for the fade attempt place sched- ernment’s the documents. We have no hesitation ground holding that the ules in evidence on in that was. Some of the they by had books and records which documents were identified ATC’s being bookkeeper The taken were not in evidence. been the records of the place addition, Casagrande’s corporation. offer the under- Government’s lying testimony and records in evidence was was books sufficient evidence from they might objection jury not met with the which the have found that the regu- kept to have been and records shown books were authentic. Casa grande not, by course, testify 28 of business as could lar course as judge genuineness bookkeeper, 1732. The trial U.S.C. over- did ATC’s § knowledge. objection first hand and admitted the from did, He could ruled and however, testify records into evidence. of his and own knowl- books
449
purport-
important, however,
edge
Even
is the
and records
the books
they
was
fact that
ATC
in November
1955
ed
those
placed
he was
in
in
bank-
as an accountant
the hands of a trustee
records which
corpora-
by
seeing kept
ruptcy,
reorganization,
and,
cor-
in
accustomed
tion,
poration
operating
records were
radi-
and that the books
was
under such
corpo- cally
by
of the
him at the office
altered conditions
it was
found
testimony
Clearly,
ATC’s
entity
effect a
ration.
different
than that which
Casagrande
bookkeeper
representations
sufficient
was
it had been
when
authenticity
operating
finding
not
of the
made.
sustain a
by
overwhelming
payments
introduced
and records
burden of
the books
Consequently,
plagued
trial
which had
debt-service
so
Government.
judge correctly
previously.
possible
admis-
purpose
to the
could
ruled as
No
by admitting
sibility
have been
these documents.
served
evidence
corporation’s
position
financial
Ill
during
charged Tellier and
indictment
The
IV
having defrauded
his co-defendants with
C,
A, B,
remaining
by
purchasers
of the Series
The
raised
issues
“
* *
*
they
long,
means Tellier
and D debentures
need not detain us
clearly
material
untrue statements of
facts
are
without
cross-
merit. On
counsel,
material
and omissions to state
facts
Tellier’s
examination
wit
necessary
prosecution
order
make the state-
ness for
referred to
light
pre
of the circum-
made in
memoranda
pared.
the witness
ments
which
they
not
inquired
were made
wheth
stances
Tellier’s counsel
* *
*
misleading
available,
”. At
the trial
er these
memoranda were
replied
proffered
defendants which
the witness
bearing upon
not,
condition of were.
counsel
financial
Tellier’s
how
ever,
1957,
request
during
years
the memoranda be
made
him.
cir
available to
Under the
a trustee
after
the hands of
cumstances, Jencks v. United
bankruptcy.
ex-
This evidence was
1957,
S.Ct.
grounds
judge
the trial
on the
cluded
L.Ed.2d
now modified
18 U.S.C.
rulings
irrelevancy,
are now
and these
require
reversal.
does
constituting
urged by Tellier
error
requiring
required by
reversal.
Nor is reversal
the re-
judge
give
fusal
of the trial
begin
agree.
with,
cannot
We
To
following
request-
instruction Tellier
gist
charges
the de
ed:
not,
suggests,
fendants
as Tellier
duty
your
“While it is
confer
they falsely represented
that ATC
your
jurors
fellow
discuss
eventually
prosperous.
would
them, your
the evidence with
verdict
charged
representations
tenor of the false
represent
judgment
must
the real
were the statements and omissions con
you,
conclusionof
honest
each of
cerning
cor
the current
condition
charge you
you
I
that each of
poration.
falsity
repre
of these
*9
duty
arriving
your
has the
of
at
misleading
the
sentations and
effect of
separately
conclusions
no
and that
the
proof
could not be altered
omissions
you may
one of
surrender
earn-
his
profit
operating
that ATC was
at a
belief,
upon
evidence,
est
if
the
based
trial,
at the time of
or that rate increases
merely
purpose
preventing
of
granted
had
at
time after the
been
some
disagreement.”
a
relinquished
had
control
a
defendants
bankruptcy. Similarly,
charge,
in
Tel
trustee
This
insofar
it
as
prosperity
jury
you
in the eventual
lier’s belief
the
“each
informs
that
of
has
arriving
your
corporation
duty
of the
could not serve to the
at
conclusions
culpability
separately,”
his
lessen the
conduct.
is not a
statement
correct
examination of the
Proctor. An
Supreme Court
As the
of the law.
1896,
him
States,
the evidence
indicates that
Allen United
dicated in
v.
clearly
the verdict
to sustain
154,
is
sufficient
41 L.Ed.
492, 501,
17 S.Ct.
guilty.
upon the evi-
attack
Proctor’s
reached
jury’s
is to
the
verdict
two-pronged.
first
dence is
He contends
also, Papadakis United
v.
in concert. See
jury
a
An that
does not warrant
the evidence
Cir., 1953,
945.
States,
208 F.2d
finding
offering
only
mailed
that
circulars
duty
the
juror
has
individual
purchasers
debentures were
of the
jurors and to
his fellow
to confer with
misleading.
urges
there
that
them,
also
He also
but
discuss
the
jury
justify
insufficient
evidence to
jury
approach
deliberations
the
finding
validity
participated
in and
recognize
he
willingness
the
knowledge
per-
fraud that was
re-
of the
juror’s opinion. Tellier’s
of each
quested
upon
public.
petrated
because
erroneous
instruction
point.
convey
latter
it fails to
The first
Proctor’s contentions
juror as
might
interpreted
well be
frivolous,
appears
from even
cur-
ap-
to his own
to adhere
an invitation
reading
sory
record. The material
of the
go
merely to
proach
case and
to the
circulars,
misstatements of
fact
listening
through
form of
material
as well as the failure to disclose
event,
jurors.
views of his fellow
disclosed,
facts that should have been
-
requested instruction
if
even
misrepresentations
precisely
unexceptionably phrased, we think
been
purpose of
kind it
the fraud stat-
is the
charging
propriety
was
against.
protect
And
utes to
court.
the trial
discretion of
within the
Although
adequate
evidence from
there
sim-
somewhat
an instruction
jury
find
knowl-
could
that Proctor’s
requested
has oc-
Tellier
ilar to that
edge
participation
of and
fraud
given
part
casionally
been
beyond
proven
a reasonable doubt.
see, e.g.,
charge-in-chief,
the court’s
Proctor was one of the founders of
Reid,
charge
D.C.D.
v.
in United States
together
and,
with the defendant Jones
Del.1913,
page
210 F.
brought
corporation,
whom he
into the
C.C.D.Del.1898,
Kenney,
United States
he
from 1951 until 1955
controlled it
appear
page
would