*1 America, UNITED STATES of Appellee, KELLY,

Roy B. Cecil V. Milton Shuck, Defendants-Appellants. J.

No. Docket 28018. Appeals

United States Court of

Second Circuit.

Argued Nov. 1964. July

Decided *6 Stillman, Atty.,

Charles A. Asst. U. S. City (Robert Morgenthau, York New M. Atty. U. S. for Southern District of New York, Morvillo, Robert G. Lawrence W. Martin, Jr., Newman John Asst. S. Attys., Sp. Cipes, S.U. M. Robert Asst, Atty., City, to U. York S. New brief), appellee. for Jr., Ahern, Washington, Albert J. (Marvin Segal, City, C.D. B. New York brief), defendant-appellant on the Roy Kelly. B. Segal, (Al- City

Marvin B. New York Jr., C., Ahern, Washington, bert J. D. brief), defendant-appellant Cecil Hagen. Y. Robinowitz, City Stuart New York (Robert Ellis, Roberts, L. Renee J. Jo- seph Rosenman, Colin, Zuckerman and Kaye, Freund, York Petschek & New City, defendant-appel- brief), on the lant Milton J. Shuck. MEDINA,

Before MOORE and MAR- Judges. SHALL, Circuit Judge: MEDINA, Circuit seemingly This is another one of those conspiracy stock interminable fraud cases Court which have bedevilled judges juries in the Southern during District of New York recent years. also, g., e. v. See United States Re, Cir., 1964, de nied, L. U.S. 85 S.Ct. 177; Dardi, 2 Ed.2d United States *7 denied, Cir., 316, 1964, cert. 330 ; 50, 845, 50 379 13 L.Ed.2d U.S. 85 S.Ct. 1961, Crosby, Cir., United 2 States v. 928, 294 F.2d nom. cert. denied sub 1962, States, 368 Mittelman United v. 984, 599, 523. U.S. 82 7 L.Ed.2d S.Ct. commentary upon It is sad morals general, places of our stock market par over-the-counter market ticular, his date in the that at this late regulation tory we of federal securities again upon are called once to “memorial rapacity perpetrators and ize the gullibility, perhaps cu also the pidity, v. United the victims.” States 854, Benjamin, Cir., 1964, 2 328 F.2d nom. Howard cert. denied sub 727 individuals, Kelly. convicted The three S.Ct. U.S. appealed Hagen Kelly, have and Shuck 497. 12 L.Ed.2d on each now bail Court to this docu is a formidable The indictment appeal. pending disposition of the naming containing counts, ment in Unit months trial While the eleven alleged co-conspira defendants and Cir., Dardi, supra, ed States v. following and cor tors. The individual denied, U.S. 330 F.2d guilty porate pleaded before defendants 50, probably is L.Ed.2d S.Ct. Allen, Irving H. Hertz- trial: John Van something con record for a criminal Co., berg, & A. F. W. MacDonald Pierre jury, spiracy case tried to court and DuVal, Inc., Consensus, Martin DuVal’s be a second. case would seem to close Teller and Michael Ackman. Cases just elapsed The time of trial against following defendants nine The trial tran short of months. Hagenbach, prior severed Paul to trial: 18,000 pages script covers Stahl, Trust, De- Brandel Charles R. 4,000 pages of us additional before Stahl, Co., Miles, & Adam Pontet motions, hearings, preliminary various Co.,& The trial commenced Miles Ltd. prose papers. The affidavits other jury on re November 1962 and the just judge, trial be cutor informed the turned its some nine months later verdict 1,000 summations, ex fore over August 7, meantime, on In the on 1963. had been offered the Govern hibits February 7, 1963 Jules Bean defendant exhibits offered ment and over 500 pleaded guilty against and the case defendants, 44 witnesses various corporate Singer, & defendant Bean called the Government been Allen, Mackie was severed. Hertz- by appellant 18 called Shuck. berg, Teller, Hagenbach and Stahl were judgment respects affirm in all We Government trial. witnesses against Kelly and of conviction For one reason or another most of the 60 and 61. We reverse Counts 160 counts of the indictment were elimi- against judgment of conviction only nated and seven were submitted 107 and on Counts 105 and Shuck jury respect to the four remain- against him retrial remand case ing jury Roy found B. defendants. Counts, prosecutor on all said if the Hagen, Kelly, Cecil V. Milton J. Shuck so advised. guilty Leaseholds, and Gulf Coast Inc. charged conspiracy as Count Opinion Synopsis of Leaseholds, Kelly, and Gulf Coast I charged guilty Inc. were found as sub- Summary Appellants’ Points Law registration stantive counts 60 and Reversal acquitted 61 and were all substantive fraud count 107. Shuck was II only guilty conspiracy found Chronological Comprehensive and above stated. The also him found the Evidence Review guilty charged in the substantive fraud counts and 107. Gulf Coast III Leaseholds, has not Inc. was fined and Conspiracy appealed. Count Kelly and were sen- *8 on of tenced each Counts and IV years imprisonment, 61 to three to be Hagen concurrently. served also The Misconduct Claims of $25,000. Judge Wholly fined was sentenced on Shuck Trial are Unjustified each of 105 and Counts 107 to eighteen imprisonment, months to be V concurrently, $25,- fine of served and his remitted, Instruc- The So-Called “Slanted” as was also the fine originally imposed tions amount on same VI Other contentions include: reading Reading Alleged prejudicial The of the Indictment error Jury jury part of indictment of evidence. instructions at close VII Fifty-two separate other claims Accomplices Co-conspirators and Kelly Hagen prejudicial of error and Guilty Who Pleaded jury and in re- instructions to the VIII fusing requests for instructions. of Miscellaneous Claims of Violation challenged admissibility The into evi- Rights of Constitutional of dence Government Exhibits: Hagen and 446(d), 434(a), 446(a), 446(c), 447(e), 446(e), 446(i), 446(uu), 447(a), IX 447(s), 556, 447(o), Objections Documents Various 921, 933, 937, 991. Offered the Prosecutor Were improper Claims of restrictions Properly Overruled cross-examination of the Government X witnesses Shreve and Teller. The Cross-examination of the Gov- by Kelly The claim ernment Witness Shreve Juror No. 3 should have been excused. XI miscellany by Kelly points A It Was Error to Not Send GX990 to Hagen relating to to direct the refusal Jury During Its Deliberations taking depositions certain before fixing trial, bail, receipt of XII papers op- served the Government in The Refusal Excuse Juror position pre-trial motions, to certain Proper No. 3 Was refusal to sentence those co-defendants XIII during pleaded guilty who before Omnibus Discussion of Miscellane- the trial after had ren- until ous Other Claims of Error verdict, dered its the refusal of the trial rulings give court to reasons for his XIV many admissibility evidence, The Substantive Counts rulings allegedly prejudicial other too XV numerous to describe includ- detail Challenge Method ing, language in the of counsel colorful Selecting Properly Jurors Was Kelly, the “tenacious” refusal of the Overruled copy Court furnish counsel awith charge. XVI miscellany points A further relat- Conclusion ing judge to the conduct of the trial I variety rulings, each of which Summary Appellants’ Law claimed constitute a violation Points Reversal rights constitutional principal legal question Amendments, in the case under the Fifth Sixth concerning including the familiar one the Gov- claims that on several occasions single ernment judge claim of a con- jurisdiction by over-all ex trial lost spiracy parte vis-a-vis the contention of Shuck continuation of the trial in the the case should have been severed absence of and their him, that, any event, counsel, argu- the evi- that he refused to hear dence deprived appellants was not him sufficient to connect ment and thus these single conspiracy, procedural process, over-all but due *9 Hagen right separate rather deprived at most dis- with a and were of their conspiracy. speedy tinct trial, that a Government witness Hagen evidence, unresponsive permitted an- and do discuss the to make not Kelly rights sequence, make as a whole or as swers that violated the Hagen themselves no claim the evidence was not suf- and not to incriminate charges against general support by testifying, as and that ficient to rulings judge them, uni- and so even the Government brief the trial many formly conclusory prosecutor so and favorable to the condensed place phases him in role of an advocate. that through of the evidence critical going no alternative to have had by appellants It is also claimed testimony huge ex- and this record of Hagen by procedures and which by page page. result is set The. hibits Jury was selected the Grand chronological ensuing state- in the forth so Southern District of New York were justified jury was ment facts as the inadequate, generally biased and unlaw- Kelly, finding Neither them. require ful as of the dismissal in his aas witness nor Shuck testified indictment as to them. own defense. arguments In addition to the addressed by counsel for Shuck to the severance II conspiracy phases case, and of the above Chronological Comprehensive and to, appellant referred this claims the ad- Review the Evidence testimony post-conspiracy mission of the appellants stand The crimes before the SEC late from about the sale convicted revolve Attorney and the General of State many through millions prejudicial New York was error unregistered com- dollars worth of by adequate him and not cured caution- Leaseholds, Inc. mon stock of Gulf Coast ary jury. instructions to It also public demand Unwarranted asserted on the fail- behalf Shuck that exag- grossly by stock was stimulated effectively judge ure of the trial to curb gerated Lease- reports Coast of Gulf “campaign” of counsel for potential and holds’ activities Hagen, throughout vilify trial, “to techniques manipulative to which various inflammatory and besmirch Shuck market securities the over-the-counter statements, improper questions mis- susceptible. ma- peculiarly These seems fact,” deprived statements of him aof driving up the chinations succeeded fair trial. Shuck also claims the evi- something price Coast stock of Gulf dence was not sufficient to warrant $15, not- per more than share to over $1 against submission of the him case withstanding huge losses sustained jury respect to each and all company. counts, e., 1, 93, i. 105 and 107. Hagen, a appellants Cecil V. are Obviously, possible is not to test engineer petroleum founded who validity of these multifarious claims Leaseholds; Roy controlled Gulf pretty complete error un- without a attorney Kelly, served as an who B. derstanding proofs, both testi- general company’s and was counsel documentary. yet, monial And in- director; Mil- occasional officer and may seem, credible all as it counsel for Shuck, dealer who a securities ton J. parties prevailed upon judge the trial investing public more passed on to the supporting not marshal the evidence $3,000,000 in Coast stock. than prosecution the factual claims of the question Kelly, submitted The crucial the defendants and Shuck jury. appellants “will in his was did the instructions fully” laws1 the federal securities on behalf of violate voluminous briefs filed promulgated regulations 24 of the Act of the rules Section Securities authority “penalties,” pro 77x, thereof under entitled the Commission * * § U.S.C. * upon conviction be fined shall follows: vides as imprisoned willfully $5,000 “Any person than or who violates not more years, provisions subchapter, five or both.” more than of this *10 n or,per contra, they simply During years were and in the first two exist- of its nocently conducting ence, engaged “business as usual.” Gulf Coast Leaseholds piece exploratory development The Government introduced one limited evidence after another to demonstrate work and almost all of income and ex- its Hagen quite penses familiar purchase derived from requirements By non-producing with the properties. of the federal sale of deliberately May 31, 1953, reported securities laws and tried to Gulf Coast’s them, Hagen July $60,000. evade deficits totalled about In very wanting company expand substantial for not reasons decided to its engaged to disclose the true state of Gulf Coast’s activities and Na- the Second authorizing making (now affairs and for Bank of Houston known as tional misrepresentations, Southwest) numerous and that the Bank of the to serve appellants reaped agent. $1,000,- these well over its transfer Gulf profits 000 in approved split and secret kickbacks and shareholders a six-for-one payments expense increasing company’s stock, under-the-table at the public. outstanding As we review the volumi number of shares presented 30,000 180,000. nous evidence Bank re- documents guided by “long prin immediately are prior established vealed that to this ciple” appeal split, “[o]n evidence stock the record owner was light must slightly be considered in a favor most more than 3400 shares and able to the Kelly appeared Government.” United States as record of 600 owner Dardi, supra, Cir., 1964, clear, however, shares. It seems denied, 845, Hagen though at substantial, 379 U.S. also held in- determinable, S.Ct. 13 L.Ed.2d 50. block of shares whose rec- ord owners were his nominees. July 1951, appellant In Cecil V. At the same time that Gulf Coast was president Exploration of the Manabi splitting six-for-one, its an common stock Company which owned in- substantial oil attempt $300,000 was made to raise very terests in Ecuador and a num- small through newly offering public of a non-producing undeveloped ber of oil preferred created class of convertible leases situated in the Coast area Gulf relatively stock. Because small of its (cid:127)of Texas. At that time it was decided size, offering fell within the “small foreign separate properties Manabi’s exemption issues” afforded the Securi- (cid:127)from its domestic interests and Gulf 1933; shares, according- ties Act of Coast Leaseholds was formed for the registered ly, were not with the Se- purpose exploring developing Ma- Exchange curities and public Commission and holdings nabi’s small in the United through disclosure was made original States. The assets of Gulf Coast A) (Regulation prospectus. short form Leaseholds consisted of these domestic offering preferred of these shares leases, $32,000, valued at addi- only partially successful and $16,000 provided by tional in cash Ma- bought eventually more than one-third exchange assets, nabi. In for these 60,000 offered, shares while pro purchased approximately Coast Leaseholds issued on a rata 1000 shares. 12,500 basis about shares of its new stock company In the Fall of start- program whereby Manabi shareholders. acquired ed a vari- outstanding approved by ; The number of Gulf Coast re- shareholders Leaseholds shares had been increased from ceived 400 the 2000 shares issued under 12,500 30,000 following plan. Finally, April manner: 1953 the option covering On March 1952 an board of Gulf Coast directors authorized granted private 7500 shares was to certain share- sale of about 7800 shares to the signed brokerage holders who a Gulf Coast note for firm Houston of Crockett & Co. $150,000; least these shares Hagen. May 19, 3(b) went On 1952 a stock 3. Section of the Securities Act option plan employees (b). for Gulf Coast § U.S.C. 77c *11 prop- to the Coast shares were distributed and Texas oil wells interests in ous exchange shareholders Texas Northern stock. former its common for erties Hagen Kelly, including, course, proof these and detailed The Government’s Hagen, Texas stock restric- whose Northern bore that demonstrated transactions legends. Kelly, Texas degree Kelly, tive as counsel to had substan- a and to lesser Northern, selling thereupon prop- wrote to Gulf entities interests in the tial agent, stating first Coast’s transfer erty Leaseholds. to Gulf Coast leg- necessary place not similar to consummated were transactions two ends on Coast as Texas Leaseholds the Gulf stock Coast Gulf 1953. October Hickory and the re- Pe- Northern had been dissolved acquired all assets applied only by originally strictions to Northern Gulf Texas Corp., valued troleum 25,000 acqui- exchange stock. As a result of Gulf Coast’s $100,000, for at Coast Northern, Hagen sition of received shares Texas These Coast. shares Gulf option registration shares Coast on the of Gulf and issued without were 57.000 buy per 32,000 to another shares at strength received $2.75 letter of a “no action” share, Kelly while Kelly Ex- obtained 4000 shares and from the Securities option on an of Gulf Coast a similar change and effect Commission 24,000 registration additional shares. exempt from shares were Nearly merger one- was involved.4 operated In a net Gulf Coast at 25,000 sub- were shares of these third $110,000 strapped for the loss of and was Hagen when sequently transferred develop necessary explore cash and In Hickory was dissolved. Petroleum Kelly Hagen properties. its new and As transaction, 29, 1953 October the second were their reluctant or unable increase properties owned purchased Coast Gulf already investment, considerable Gulf about valued at L. L. Beeson one seek financ- Coast was forced to outside by issuing 21,000 its $84,000 some ing. Soon Northern after Texas Hagen three-quarter had a As shares. acquisition, number of authorized supposedly properties in the interest shares Gulf Coast was increased three-quarters Beeson, of these owned during 2,000,000 600.000 Spring way eventually their shares found Hagen Summer Hagen. Kelly approached brokers, numerous in- By significant far the most private vestment bankers and individuals “insider” transactions occurred in March attempt buyers in an to attract for Early Kelly 1954, Hagen however, efforts, stock. new These controlling obtained a in the interest proved of little or no avail. Corporation. Texas Northern Oil As Among approached Hagen those in the en- Kelly they represented financing buying deavor to for Gulf Coast were obtain the Texas Northern stock Bailey, purposes Leaseholds was Miss Muriel investment and not for re- sale, registered these employed by shares were not but New customers’ woman legends Co., stamped upon brokerage restrictive were firm & York of Walston indicating Hagen Kelly certificates were who known freely years. Following “investment” shares and & trans- several Walston ferable. participate under- also embodied Co.’s refusal in an pledge Bailey writing their stock, investment in a formal letter Miss Gulf Coast acquaintances, investment. In March Gulf her was told another of purchased Allen, all the assets of Texas John Van that he had heard Northern, appraised $920,000, about and desired an introduction 350,000 Bailey passed over shares of Gulf Coast him. Miss on this infor- Upon Leaseholds. Texas de- Northern’s sub- mation and testified that she sequent dissolution, mystery” scribed Van as “a man of Allen generally Loss, Regulation (1951).

4. See SEC Rule See. Act Rel. See Securities (2d 1961). 518-542 ed. represented purporting who secret Swiss a resolution trusts to amend the company’s by eliminating seemed affluent. charter rights preemptive of the shareholders. During mid-September joined Kelly then iron Haiti to pre- Allen met in New York and contemplated out the details of the financ- negotiations liminary for the sale of ing agreement. began large block of Gulf Coast stock immediately. negotiations Sep- These returned to New York on *12 September 15, 1954, continued simple two-page on when tember 29 and drafted a paid Kelly’s agreement signed by Kelly Van Allen a short visit to that was Washington. law im- following day, September office As no Van Allen the portant completed 30, According contract, transaction could be 1954. to this Hagen’s Kelly approval purchaser without was of the Gulf Coast stock was day Duchy Trust,” leave on that for Haiti and Vene- entity “Brandel zuela, Van Allen was to meet invited he of Liechtenstein represented. Van Allen said Hagen 1954, September 30, Houston where he could ob- On operations. serve Gulf Coast’s deposits Brandel’s Swiss bank amounted agreement September 30 $20.80. immediately Van Allen went Hous- signed Trust behalf of Brandel general ton and the financ- nature Hagenbach as follows: “Dr. Paul Per ing speedily Allen decided. Van attorney, Hagenbach, J.v.a.” a Swiss only was shown several Lease- Gulf Coast president Trust, was the of Brandel but gave fields, holds oil also him figure- actually he was more or less fifty reprints highly complimentary of a head and com- Brandel’s affairs were ap- company article about the which had pletely controlled Van Allen. peared September in the 1954 issue magazine. 1954, September 20, Oil On importance Because its central 5 adopted Gulf margin Coast’s case, board directors quote full in York, 5. “New York New September 30, 1954 Trust, Brandel Leaseholds, concerning purchase Inc. Leu, by you Bank of certain shares of common stock c/o 32, Leaseholds, Bahnliofstrasse of Gulf Inc. Coast Zurich, Switzerland. agreed Leaseholds, It is Gulf you sell, buy, Gentlemen: Inc will will the follow- ing price This letter will confirm the understand- number of shares at the indicated ing yourself between and Gulf Coast on the dates set forth herein. per Number Shares Share Bate Purchased Price 100,000 1, $1.00 November 1954 100,000 $1.00 December 1954 January $1.50 65.000 1955 February $1.50 65.000 1955 $1.50 1955 70.000 March April $2.00 50.000 May $2.00 50.000 $2.00 50.000 June July $2.00 50.000 August $2.50 40.000 September 1, $2.50 60.000 $3.00 October agreed you right that, you It will have the It is understood in the event price any call the shares at the indicated fail to meet one of the commitments any time on or before the dates forth set on the dates set forth the full indicated, herein. amount of the shares the re- agreement two-page 2. no between demanded Trust, authority proof exe- to act in and Brandel of Van Allen’s Coast Leaseholds Moreover, September 1954. Brandel Trust’s behalf. Hagen cuted attempt made no charge Hagen and con- had the determine whether Brandel unregistered spired publicly distribute ability financial to hold for investment Leaseholds stock shares of Gulf Coast As 1.3 million dollars worth of stock. “willfully” participated in and that stated, above Brandel’s bank accounts stock, of this an unlawful distribution September 30, totalled 1954. $20.80 heavily upon proposition that rested light agreement September a com- In the dire Gulf Coast’s arrangement cash, step- plete need of sham and that any fully prices ped-up aware the fact that Van was inconsistent with legitimate honoring Allen had intention of investment intent. The Gov- argued private place- pledge. In ernment that had a investment testimony addition to really Allen, contemplated the Government ment been there *13 following presented provide of evidence bits would have been no reason to for pay- prices to show that the circumstances surround- ing an escalation of rather than average September price the execution of the ment of the per of about $1.70 agreement totally hand, If, inconsistent with share. on the other any public anticipated, bona fide investment intent: distribution profits from Van Allen’s resale of the 1. did not investi- priced lower would him to shares enable background gate en- Van Allen’s before respect meet his commitments with to the tering into the million dollar deal with higher priced shares. investigation him. Had such been might Though made, have learn- Northern trans- Texas September 30, previously ed that on 1954 Van Allen action discussed demonstrated following Kelly and, perhaps was free on bail an indictment that extent to a lesser placing in 1953 in New the Southern District of were familiar with the legends upon York for income tax evasion restrictive stock certificates during the 1940’s Van Allen had been the execution of formal letters of permanently enjoined engaging investment, simple' these methods as- suring public York and securities in New distribution would business Jersey. place New take were not followed. agreement Company, per being mainder of the will be terminat- such ten cent you right ed and shall no further deductible as the shares are taken down your purchase month, compensation the shares on the terms set forth. each total to be you Thirty acquiring ($130,- It is understood that Hundred Thousand are One 000.00) only group Dollars, payable these shares for a of not more than as the shares twenty-five (25) acquired Company. individuals who are ob- are from the It is fur- taining you provi- purposes for will shares of invest- ther understood that make purposes compensating ment and not for sion for of resale and Walston & Co. shares other than to this their services in connection with this limited group only financing. of individuals will be sold out- your being side the United If is in understood this accordance under- contemplated standing agreement please the sale of our indicate herein one exempt registration your provisions acceptance from the terms in the these Exchange space provided returning origi- below, the Securities and Act and the applicable. undersigned retaining various other Securities Acts nal to the you copy your It is understood that will obtain a files. proper proxy Very truly voting rights yours, for the to the Leaseholds, shares held Inc. the individuals and that Gulf Coast proxy By Boy pres- such shall run in favor of B. management. Accepted:— ent your compensation It is understood that Trust Brandel By Hagenbach

for services rendered connection with Dr. Paul purchase (10%) and sale shall ten Per J.v.a.” per purchase price paid cent of the total publish 5. Prior to the consummation sheets also the bid and asked deal, Kelly Hickory prices particular Petroleum secured for each stock. the Securities a “no action” letter from prior September In the months Though Exchange Commission. agreement, the market for Gulf many involved times Brandel transaction exceedingly Coast Leaseholds was thin. stock, procedure more adopted. no similar was Though price the bid of Gulf Coast had per reached about share $3.00 Spring 1954, following provision September the announce- 6. The in the acquisition, ment of the Texas Northern contract to that Brandel the effect subsequently the market for right Gulf Coast demand stock Gulf Coast delivery declined to the extent specified that Gulf Coast times earlier than the meaningless stock could be obtained for about $1.25 dates was unless resales per September 30, contemplated. share on 1954. Even Brandel or Van Allen were price, however, few, at that there were purchased 7. The shares to be any, if takers. represented a Brandel would have Faced with this dismal market situa- Hagen’s challenge serious control tion, Allen, sign- immediately after prom- if Coast Brandel honored its ing September agreement, turned challenge stock; ise to hold would employer, to an old friend and former insignificant upon public be Accordingly, distribution. Irving Hertzberg, president provision proxies brokerage small New York F. firm of W. Hagen’s favor rather than the use September MacDonald & Co. On voting legend stamping trust or the of a “pink MacDonald & Co. entered the rights upon restricting voting the stock *14 “making sheets” as a broker interested in only public made sense if a distribution a pur- market” in Gulf Coast stock and contemplated. was chased several thousand shares for Van By tracing 8. the accounts several Allen’s friends. As a natural result trusts, companies American and Swiss “demand,” price this sudden of Gulf the Government demonstrated that began and, Coast to rise a few within provision payment contract compensation for the of hours, price per the bid reached $2.00 actually a to Brandel was share. subterfuge masking the under-the-table point, very day At this on the payment Hagen $130,000 of a to kickback agreed purchase Van Allen had to Gulf Kelly. purposes investment,” Coast stock “for Incriminating all these circumstanc- began persons he to sell to who various were, es fur- Government went much “tipped had been off” and to others at- proving by presenting ther in its case activity. tracted the sudden following In the great detail the events which followed the September first week agreement, agree- September execution of the 48,000 Van Allen sold about ment. It is to those now events that we prices steadily ascending shares at turn. per share. $2.75 Van Allen also made 100,000 direct sale of shares at about being stock, Gulf Coast Leaseholds per share to one of $2.00 his friends. any exchange, listed on over- traded September the-counter. The over-the-counter Under mar- the terms of the Quotation agreement, 100,000 ket is serviced the National the first block of Gulf daily publishes “pink Bureau Coast which shares to be delivered to “pink sheets.” These Brandel on sheets” list thou- November 1954. Van Allen together sands of stocks the names testified that this date was selected brokerage give “making opportunity him firms a market” to- make the by offering buy necessary in the stock one sales for him his initial it at to meet obligation. price (the price) offering $100,000 previous- “bid” As noted higher (the ly, however, price provided sell at a somewhat the contract price). anticipate Likewise, pink “asked” Van Allen could deliveries. Corporation, preroga- quickly of Falcon Petroleum Hagen Allen exercised Van controlled, property needed to sell valued informed that he tive and 18,000 $40,000 of Gulf his substantial sales. for shares some stock to cover requested shares be resolution increased the Allen that the Coast. Another stock, “good negotiable preferred de- form or ratio for the conversion livery,” e., they previously in certificates had been i. which as mentioned July 1953, of com- and in shares hundred shares or less issued in to two for one person preferred; other than mon for each share of the name of someone “controlling” stock ownership Hagen’s Leaseholds. Gulf Coast the resolution recited Kelly’s 21,500 preferred and shares of reason, as to which the For some 1,000 ownership shares. Hagen confusing, hopelessly record respond Allen’s did not to Van president of On October having urgent appeals Gulf stock Leaseholds, G. Behr- Robert Gulf Coast necessary certificates. issue the man, Jr., a letter to the Second wrote engaged Instead, ain enclosing Houston, Bank of National pro- complicated series of transactions agreement September copy own vide Van Allen with of their some resolution October 19 directors’ shares. exhaust- When authorizing to the bank instructions readily supply, ed their available letter, Behrman’s officers. Gulf Coast borrowed from friends and some shares copies of which were transmitted had this stock delivered to MacDonald Hagen Kelly, bank that advised the & Co. for Brandel’s As much of account. right to its Brandel Trust had exercised Hagen’s this stock was in name and 200,000 purchase shares due denominations, large certificates of 1, 1954 and on December November agent, transfer National Bank the Second instructed to issue bank was Houston, go through required certifi- to Brandel Trust one thousand prepare process a tortuous the shares and an shares each cates one hundred negotiable By how- form. October 100,000 shares. additional certificate ever, some shares had been broken manager transfer stock of the bank’s down into one hundred share certificates immediately department notified put in the names nominees no docu- Coast officethat as the bank *15 non-controlling persons. or other Mac- showing power to act had the ments who Donald & Co. received the certificates the might Trust, problems arise for Brandel day, 30,000 next October 1954. But stock. should Brandel seek to transfer nearly enough shares were not cover to accordingly letter Behrman sent a second During Van Allen’s resales. the balance directing the shares on October October, Hagen made four put W. MacDonald be in the name of F. negotiable shipments additional Gulf & Co. stock, bringing 100,000 Coast num- to Bank issued the The National Second ber of shares forwarded them the 200,000 & Co. shares to MacDonald signing Sep- first month after the of the following day, The 1954. agreement. October tember 30 single was shares certificate budding began conspiracy really to replace immediately sent blossom in October 1954. On October Brandel’s shares he had forwarded the Gulf Coast board of directors held during MacDonald’s account October. special meeting ratify and voted to apparently September agreement Hertzberg, president, empower and to huge shipment agent Gulf Coast’s concerned about transfer to issue negotiable Allen pursuant and asked Van shares securities the instructions meeting raised special sale of this stock Gulf Coast officers. This whether the suggested legal problems. Allen also served to increase Van the amount Hertzberg Kelly, law- Gulf check Coast stock owned Kelly. yer, represented accepted that as he One resolution offer but said Hertzberg Coast, would be wise to Allen’s so Van sales were substantial Gulf appointment independent of a counsel. as warrant sec- consult agent ond transfer New York. On weeks; Allen few Van the next Within 1, 1954, Kelly November wrote letter opinion letter from an attor- secured Swanson, Robert assistant cashier Foley. ney, M. letter was John City the First Bank of New National September 1954 and referred dated York, inquiring whether bank would agreement September “Au- as an becoming interested a co-transfer Foley’s agreement.” gust, letter agent handling of the to facilitate price of Gulf the market stated that as in Gulf Coast numerous transactions sharply risen since Coast stock had taking place York. Two stock in New agreement, purposes execution of days 3, 1954, later November “investment” had been of Brandel’s met with in First National Swanson it was free to sell the stock achieved and City’s Wall Street office. Swanson’s running federal without afoul memorandum of this conference indicat- Foley Bran- laws. authorized securities by Kelly ed effect that statements opinion brok- del to exhibit the letter to shareholders, 1800-2000 Gulf Coast had supplied Subsequently, ers. Van Allen including Murchison, and that one Clint letter, Hertzberg opinion with another recently the East “considerable witnessed dated November Mortimer activity” in Gulf Coast Leaseholds stock. Foley’s, letter, B. Burnside. This like request by to a Na- Pursuant the First upon proposition that no also relied City Bank, Kelly opinion tional wrote an legitimate lack of a investment intent although stating letter to the bank could be inferred from the mere fact that registered, none of Gulf Coast’s stock was market Brandel sold after the some stock trading legal in the stock as all the gone price of Gulf Coast Leaseholds exempt registration shares were up. Shortly one reason or another. there- 1954, Kelly instructed On October after, City be- First National Bank the Second National Van Bank to. send agent came co-transfer Gulf copies daily Allen transfer sheets stock. Coast, starting one for Gulf with the receiving taking September had been While all these events were huge copies daily place, selling quanti- since transfer sheets Allen Van July 31, 1954, and his letter of October ties Gulf Coast stock. To aid requested distribution, 28 to the bank that the sheets massive Allen enlisted Mackie, Singer, “in man- be sent to Van Allen the same the services of Bean & you largest ner that send them me.” then one New York’s over- brokerage firm the-counter houses. The 1,1954, On November an officer of Gulf agreed to “make a market” Coast instructed the bank to return the adding stock, Coast Leaseholds thus its agreement copy September *16 prestige mushrooming operation. to the which the bank received on had October promised 26. This letter of November 1 ally, Singer, With his new & Bean agreement copy that a be would Mackie, promise and the of the increased next resubmitted the bank before the efficiency appoint- to be afforded delivery Though Brandel. stock to ment of a York New bank as co-transfer Kelly at one time stated that he “insisted agent, Van Allen soon exhausted the copy agreement that a filed [the] 100,000 shares stock which had been with the who bank was the transfer negotiable delivered to him in form on agent they and were aware of all of its Again October 27. Van Allen turned to provisions,” there no evidence that again they and and came again copy the bank ever received a Hagen, the rescue. who had received agreement. the million-dollar single 100,000 certificate for on shares Despite cooperation by 65,000 all this the October sent Van Allen shares bank, period Houston it soon became obvious in 5 and between November part, company Kelly, for his we want- November 1954. increased value something you borrowing ed to succeeded in over have shares available therefore, price. We, at a favorable shares his “contacts” 15.000 provisions pur- Allen. made transferred stock to Van On verbal secretary chasing group Hagen’s of from that a block November 50,000 100,000 as follows: would be wrote F. MacDonald & Co. shares W. you price made a available to at 4,000 are com- “Enclosed shares approximately per share. $2.75 Leaseholds, mon stock Gulf Coast This, present time, approxi- at the is per Inc. issued list. We attached mately the cur- share under $1.25 have included one certificate of two strong rent one.” market thousand Mr. shares which lending any you may required this Whether Allen assist- time so that Van ample coverage disposing ance in of his Coast stock until new Gulf During stock seems certificates are dubious indeed. October available purchased additional November Ván Allen transfers.” 390,000 for his own account shares of precision With clockwork the “new $462,000. Gulf same Coast for In this stock certificates” became available. On 303,000 period, two-month Van Allen sold letter, the same date this November $883,000. shares for 12, 1954, Gulf Coast instructed its Hous- agent 100,000 ton transfer to issue On November 11 or November about shares stock to F. W. MacDonald for 12, 1954, Sparenberg, Mrs. Orlena stock, Brandel’s account. The which was manager depart- stock transfer to be issued in certificates of one hundred ment of Second Bank National each, represented 65,000 shares Houston, telephoned Coast’s office Gulf due, according September shares to the say contrary that, provisions of agreement, January agreement, September some of 65,000 shares due Febru- 35.000 ary 1, pursuant stock Gulf Coast issued shipped 1955. shares were agreement that had been resold within by the Houston bank to MacDonald & Sparenberg the United tes- States. Mrs. very day, Co. that November way tified in no that the call was remaining 50,000 shares were sent thought prompted by the sales that days three later. illegal under laws. the securities only Throughout cross-examination, Not Mrs. did facilitate Sparenberg pro- it Allen’s distribution maintained that efforts viding coverage” purchasers “ample him with number of rather but amazingly speedy service, situs of the occasioned transfers which also tried telephone large Sparenberg buy induce her call. Clint Mrs. tes- Murchison although Sep- number tified had re- of the shares that covered bank agreement. copy September tember 30 turned its On November agreement, she recalled the contract sent Murchison a lengthy provided describing memorandum make no Brandel would Gulf background prospects Coast’s sales within the United Within States. stating days, Sparenberg a few that Gulf Mrs. was told then had two shareholders, though Kelly, thousand the Gulf Coast office was an- ticipated lawyer, Coast’s informed of the number would been soon grow situation, he had three said Brandel Trust thousand in view of the *17 strong solely any responsible was demand domestic stock the fact that sales. “pink twelve brokers had entered the sheets” to trade Gulf Coast stock. The Sparenberg’s testimony Mrs. assumed

memorandum concluded with the follow- great significance defense when the in- ing proposal: by supposedly troduced a written letter private place- Kelly “At the time of the to Paul November

ment had Hagenbach, president mind that if the of Brandel Hagenbaeh general that insisted effect Burnside, that This letter was Trust. agent opinion letter we have had in- whose the transfer effect that previously, Bran- Brandel had advised that mentioned officials formed Gulf Coast more was resell Gulf to del that it entitled to Coast stock had transferred Gulf re- purchasers, was Coast stock and that if Gulf Coast Coast that Gulf than 25 stock, delivering impression Trust Brandel fused to continue that under the sub- buy “for the Brandel would and recover the stock sue intended to Gulf prevailing purpose for re- stantial between the and not difference of investment Kelly price sale,” Bran- far contract sure that market and the lower that but price. “under advice del’s actions had been simply Kelly to counsel” and wanted when- The defense also asserted that going on.

know what was Kelly complained Allen that Van ever agree- regarded and their this his sales violated the law As the Government designed ment, cleverly Burnside’s Allen referred to Van letter as a fabrication by Kelly, conspira- opinion suit should Gulf and threatened some of other give promised knowledge, stock. false Coast fail to deliver the tors with his knowledge defense, however, apparently con- impression of The that first unregistered more a stock- was the ceded that Burnside was sale stock attorney. telephone practicing from Mrs. broker a result of the call than Government, accordingly, Sparenberg, produced as witness stressed a lawyer alleged Hagenbaeh, recipient improbability Kelly, sheer that categor- by November 16 letter. He denied would been intimidated such “legal” ically And, course, opinion. that and the no one he had ever seen it Hagenbaeh reasonably dispute defense conceded never can the evidence that Moreover, responded permit Mrs. con- to the letter. was sufficient to Sparenberg’s testimony Kelly, her con- far from call clude that being Allen, Hagenbaeh by and not cerned the situs the transfers coerced Van buyers willing Burnside, actually part- the number of was bolstered proving bank No- documents that until ners in the massive distribution of impossible vember 18 it would have been Coast stock Sparenberg for Mrs. more to know that entirely presented The Government And, place. than 25 transfers taken while different of what went on version course, the Government contended that Kelly and Allen were in Zurich. Van Kelly’s evidence such as letters Swan- Hagenbaeh, who came to the son on November 1 and to Murchison apeared wit- as a Government States concerning November 8 the number receiving promise ness a written after strength Gulf Coast shareholders and the duly United States authorized Assistant stock, of the demand for the as well as Attorney would the Government providing the November 11 letter about against him, the case move to dismiss “ample Kelly’s coverage,” claim belied only receipt of the November denied put that it was the him bank which first previously Kelly 16 letter referred reselling on notice Allen that Van meeting Kelly at but he also denied bought the shares he for investment. February prior Allen time went to Zurich On testified that he and November and Van wanted November 1954 because Allen met in Paris from whence days journeyed, later, trust to form a secret Swiss trust. This Zurich. two payments subject per cent was to receive the ten What occurred in Zurich agreement September de- controversy The which the bitter at the trial. compensation for Brandel but scribed as defense visited asserted that being actually Hagenbaeh kick- protest which were made Brandel’s sales Kelly. previous Two backs to violated both the securities laws and payments $10,000 made September agreement. each had been defense meeting alleged on October three Brandel was to the version *18 35,000 70,000 Hagen due, un- days of the delivered Gulf shares after first September agreement, on at Mac- der Brandel’s the Coast stock to account Go., On after March 1955. December Donald & and on November 100,000 accordingly shipped shares the bank sent Houston Houston bank negotiable single 65,000 These for in the 27. certificate shares form on October up totalling $20,000 name of F. W. MacDonald & Co. wound two cheeks bearing the certificate number C2157 Enter- bank account of Potomac Hagen Inc., company office. never prises, and the Gulf Coast This stock Though Instead, they reached MacDonald. on Decem- admitted owned. 15, 1954, sought payments explain Gulf ber Coast returned certifi- defense these saying they loans, no cate Houston number C2157 bank were there 65,000 explaining any and directed to reissue the the lack of that evidence Hagen Enterprises repaid shares friends. these one of his Potomac ever “loans” that these coincidences coup, Notwithstanding this brilliant following immediately occurred “loans” shipments conspiracy experienced first soon its Bran- of Gulf Coast stock serious setback. On December “loans” del’s account and that these advisor, Allen met with his Burn- Van per purchase equalled ten cent Singer side, Singer, & Herbert Bean price delivered, shares then Singer’s Joseph Mackie, attorney, figure September precise specified by the Connolly. According to tes- Van Allen’s agreement “compensation” to Bran- timony, pre- this conference had been del. Sing- questions ceded er, a series of legality regarding Van Allen Bean & Mackie testified that he introduced prominent attorney, to a Dr. Zurich distribution Gulf Coast stock. apparently Walter Keller-Staub. In Burnside failed to consideration convince $25,000 lawyer Allen, Singer’s paid by in- Keller- Van the substantial trust, price Staub formed Uni- crease in a secret the market of Gulf Coast Swiss justified resales, Company, versal Finance stock Connolly Van for Allen’s Kelly, Singer trust, and another Investment he ac- Sun told would Company, Questions cept responsibility for Van future Allen. exactly by Singer, to who trusts sales Bean & owned these secret Mackie of significant highly Connolly’s became stock. The firm when heeded Gov- trading proved warning immediately ernment of sub- transfers ceased Brandel; stantial amounts of In- stock on cash from Sun Gulf Coast behalf of repre- Singer, continued, vestment & Universal Finance Bean Mackie how- payments ever, sented Van Allen to to trade Gulf Coast for firm’s $130,000 of the balance of account. own kickback. Unperturbed by, perhaps unaware immediately of, development, On December office Gulf Coast very day, after and Van Allen returned next December began complicated there instructed Houston bank to deliver designed 35,000 series of stock to re- transfers shares one hundred cer- share pay 65,000 for the of Gulf shares tificates to Brandel’s Mac- account at Coast which he complete to Brandel delivered Donald. This stock was to 16, delivery between November 5 and November due under March the contract on Though Coast, 1954. Gulf on December in- some inconvenience might expected structed the partial Houston deliver to bank to from with- single Singer, the Gulf Mackie, Coast office a certificate drawal of Bean & 65,000 conspirators shares issued in the name could be content with F. W. MacDonald & Co. This stock was fact months about 2% represent remaining 30,000 during said to ahead of schedule. And Decem- supposed managed dispose shares which Gulf Coast was ber Allen February 1,1955 to deliver to Brandel on almost shares of Gulf Coast *19 average slightly day Kelly-Shreve price more On same as this than the an conference, Hous- Gulf Coast directed the per share. $4 25,000 ton bank to one issue shares in investi- an SEC to forestall Whether hundred share certificates to MacDonald gation hope outside that some or in an day, January 12, & next Co. The approval approval qualified form of Gulf Coast the bank to send instructed might unregistered shares sale 25,000 MacDonald in sim- another shares undisclosed for some other obtained or be purpose, 50,000 repre- ilar form. These shares Kelly should decided it was that April 1, delivery sented the due on Washington office of SEC. visit the bank forwarded the stock arranged Accordingly, a Allen meet- Van January last 1955. was to It be the Kelly January 11,1955, ing, held between delivery from the Houston bank Mac- to Tait, As- T. Executive and Edward & Donald Co. until March of the SEC. sistant to the Chairman According testimony, Allen’s official Tait an administrative As was Kelly’s meeting report of his with the legal advisor, he referred than a rather Kelly SEC was to the been effect that had he attorney Shreve, an to Charles E. nothing quite successful and there was Corporation Division of in the SEC’s group worry for Allen about. Van charge of Finance. This Division was questions distributing merrily way went on his registrations. relating to stock pub- Gulf Coast Leaseholds stock testimony Shreve’s what occurred lic; 36,300 January his sales came to January 1955 com- this conference of pletely price $180,000. It a shares at seems, however, total Kelly’s he made refutes claim that Hertzberg, that full and of all the ma- fair disclosure president Co., had & MacDonald still Moreover, terial facts. testified Shreve misgivings was some about whether he upshot of the conference was that doing right unregister- selling all this recognized the shares that that January 31, ed On Gulf Coast stock. registered would to be 1955, Hertzberg very letter wrote short promised more deliveries of un- that no Kelly asking Kelly’s opinion by registered stock would authorized legal. Feb- these On whether sales According Shreve, Gulf Coast. ruary 1, 1955, Kelly’s secretary acknowl- completely misrepresented the true situa- edged Hertzberg’s receipt of letter tion to him. out of on busi- stated that town Hertzberg, Kelly’s response ness. Among the falsehoods and omissions February 10, 1955, dated was to Kelly’s description pur- were: effect that as he counsel to Gulf “group of investors” as a Swiss chasers Brandel, was Leaseholds and not he trust; anonymous than rather Kelly’s representation Swiss legality position pass upon no price sales Kelly’s sen- Brandel’s activities. final a share for the net,” was “about stock $1.87 event, tence “In in this letter was: fact that with no mention of the company presently process in the agreement September provided for the stepped-up prices; registration preparing statement to disclose the failure regis- Leaseholds, Inc., which Gulf Coast reselling group” began “Swiss ready for tration filing should be statement day very the Gulf Coast stock comparatively future.” in the near agreement was entered “investment” Again Hertzberg what- facilitated received into forwarding Bran- ever own reassurance he needed their resales these agent its having issue del at MacDonald continued account transfer stock activity huge noted Coast stock. As for one hundred loads certificates Sep- previously, covered shares each. memorandum shares Shreve’s during agreement were issued conference, Exhibit tember Government solely February National its the Second in evidence was received bearing month, During credibility. Bank of Houston. this on Shreve’s however, MacDon- the Brandel account at been “met the increase [Gulf bought open than on the market more ald inherent value.” Coast’s] Coast; amount shares of Gulf *20 significance The memorandum this purchases dur- exceeded the ing of such sum though hotly trial, disputed was at the preceding months. the three Sales stipulated it was memorandum that the February 32,000 shares for totalled typed had been on a machine owned per the end at about share. Towards $5 Kelly. argued The that was defense this month, Ex- the Securities and “complete example of dis- another the began investiga- change an Commission making closure” SEC, was to the that Hertzberg tion of MacDonald & Co. purpose of the and said that the got Allen, quickly in with Van who touch memorandum was to advise Com- the Kelly; the matter Van discussed with would mission that Gulf Coast shares the advisor, prevailed upon Allen then registered. con- not be The Government Burnside, pay in to the a visit to SEC not usu- tended that honest disclosure is Washington. through unsigned ally and un- made dated memorandum and that facts the very short, cryptic, A almost memo- just in set forth the memorandum randum to the files the admin- SEC’s incomplete about as and inaccurate as Burn- istrative officerTait indicates that by Kelly in those recited to Shreve their probably on side and Tait conferred Finally, January 11 conference. the apparently March 1955. Burnside Government asserted that the reason unsigned provided un- Tait with an why this document was executed typed pages on three dated memorandum brought the offices derived SEC’s plain paper white effect that conspirators’ hope from the that it would Trust, financial cor- Brandel “a Swiss “planted” in Commission’s files the large poration,” purchased had a block thought represent an in- would be pur- Gulf Coast Leaseholds stock Commission ternal memorandum the poses Subsequently, ac- of investment. unnecessary concluding that it cording memorandum, Coast Gulf register the Gulf Coast stock. large and, oil discovered amount of Allen Burnside re- Van testified that result, price of the as a the market meeting ported him tell that the back to group” “The there- stock rose. Swiss with had not successful SEC been purposes upon determined regis- ought to be and that the shares had been “met” and investment avoiding interest trouble. tered portion group disposed “of a of their response According Allen, Kelly’s shares.” memorandum continued The not want and was that Gulf Coast did were sold that “certain of through shares” money. spend could not afford to recently MacDonald & which Co. informed it had “on sev- Brandel that Gulf Coast Later March inquiries Report eral about occasions” received Annual Leaseholds released its representative year ending these from a 1954. transactions for the December year $257,- reported of the SEC. memorandum then The loss say representatives stated, company’s went on to 000. As ending year reported Gulf Coast “have had some discussions De- loss for the concerning $110,000. the Bran- S. E. C.” cember 1953 had been contract, Coast, message president in- del and that Coast Gulf of Gulf Coast) (Gulf Behrman, Jr., formed Brandel which consti- Robert G. money position spend pages preceding “is not in a the com- tuted the four registration statements, pany’s statement as ven- discussed the such financial n consuming gas pro- costly ture is both and time oil and Gulf Coast’s increase drilling management.” duction, company’s The memorandum its active program, purchase by Bran- concluded with the statement that Gulf right dispose productive properties del had of the shares includ- various ing purposes acquisition of its Northern investment of Texas Corporation April 2, 1955, pre- Coast directed the Oil which we have viously outlined, Brandel Gulf Houston bank to issue to the soundness of financing plans another Coast’s of Gulf at MacDonald account management greatly expand hundred certificates. Coast’s “to one share shares operations delivery, completed April in 1955.” Behrman’s mes- This constituted, sage shipment due under the concludedwith the statement: “The loss, agreement July September net at all unusual for oil com- panies stages again conspiracy development, about initial Once primarily resulted GCL’s share of three months ahead schedule. * * * dry completion hole and costs. previously have mentioned We *21 anticipate We that with income substan- Bran- December 1954 the account of tially advancing dry hole di- costs Singer, del & Mackie Trust at the Bean minishing, report next our annual should brokerage privilege was denied the house operating show Gulf Coast Leaseholds at though trading stock, of in Gulf Coast profit.” Report of this Release Annual in stock the firm continued to deal the n occasioned only very very minor and for the firm’s own account. Towards the temporary price decrease the market activity of March end the firm’s of Gulf Coast stock. considerably, stock Gulf Coast increased days On March a few after April Brandel on about Report published, the Annual was Gulf again privilege Trust was extended the Coast instructed the Second National involving executing of Gulf transactions Bank Houston to of resume the issuance During April Coast. the balance of pursuant of agreement; September stock 30 1955, Singer, Brandel account at previously, as we stated of Bean & Mackie sold 6550 shares of issuance such stock had been discon- average price Gulf Coast at an of about January 13, tinued on 1955. The Hous- per sales Brandel Trust’s total $8 share. ton bank was directed to issue to the figures 72,000 April for 1955 were shares Brandel account at F. W. MacDonald & price $530,000. sold at a of Co., 100,000 of shares Gulf Coast in stage” approach We now “second n certificatesof one hundred shares each. conspiracy, to the deben- relative shipment, completed following probable precise tures. It n day, 26, 1955, represented March course of cannot be traced events May 1, shares due 1955 and June il- are this record but luminating the documents 1955. gaps and some are of The Government contended that one by testimony. event, up filled In why agreed substantial reason Gulf Coast May 1955, Van others Allen provide 100,000 Van Allen with these working price of with him boosted the shares, payment by $80,000 awas of Van touting, prin- Gulf stock but Coast Hagen. According Allen to cipally by manipulation mar- Government, to part payment ket, buying selling. early as As per of the ten kickback cent ar- 7, 1954, Kelly, Hagen and the October rangement which we have discussed. Allen on to Van Gulf Coast office sent every The Government introduced a letter writ- they scrap could of information ten on March 1955 Van Allen to lay soon their hands on. As shall Keller-Staub, directing Dr. Walter see, cause a real boom the efforts to attorney $80,000 Swiss to transfer from and re- stock were doubled later Company, Sun Investment which was way By anticipation, and doubled. of trust, Van Allen’s Swiss to Universal understanding of an to facilitate Company, Finance the secret Swiss trust events, sequence here we mention belonged Kelly. May 26, dated the fact that a document signed Van Allen for Brandel sales March 1955 came Van Allen’s 50,000 Coast, average by Kelly price evidenced at for Gulf shares an slightly agreement $1,000,000 per Brandel share. On sell excess $6 $1,000,000 debentures, Gulf Coast con- at convertible sale of Gulf signed. There debentures was per vertible Reminiscent of share. $8.00 backing filling con- purchase much of the was kickback on the 10% 750,000 shares, great- plans spirators even receive laid their was to Brandel already “profits” real- than in excess er but not debentures 10% First, to be $100,000. in- ized. the debentures were A note placement.” “private issued sold another were to be dicated the debentures n “ona $2,- private placement not Then the was increased basis and amount register. subject registration.” The final and it decided to SEC objec- Finally, many $2,000,- agreement, purchase raised so the SEC for the registered registration statement with tions to the to be debentures By SEC, filed that it was withdrawn. was enclosed placement” August 25, “private had become 1955. in a letter time the quite impossible, Allen ¡8, however, agreement, on November date bore This agreed by Kelly May 17, and Van a ratifica- 1955 it was 1955 and recited meeting purchase Allen of the debentures that the tion at the directors’ May May and not resale. In investment Coast on should August stamped selling In Each debenture was to be about stock was $7. *22 making legend im- resales will be a restrictive the was above It market $10. 17, interesting peripheral possible until when the November to see scene, and Shuck enters the defendant strongly on the Government relied The contact, all, with he in if at how comes conspirators principal in of the conduct Hagen. persons three May 26, 1955 and interval between the alleged constituting nucleus the the 8, 1955 on November the decision were, single, conspiracy over-all put stamp out them the debentures and course, Kelly, Hagen Allen. and Van Indeed, combination of circulation. the striking proof May maneuvers was Coast instruct- of these On Gulf unscrupu- ingenuity and the utter Houston Bank of the ed the Second National 40,000 constituted the those who in hundred lousness of to deliver shares one conspiracy. hard Brandel account core of the share to the certificates & This stock at F. W. MacDonald Co. thought it was still a time At when August 1, represented on the shares due “private placement” procedure could the bank the Houston and was sent again put across, that decided be it was n on May 24, May 16, the 1955. On opinion another be well to obtain it would 60,- another bank directed send was stating lawyer all a from letter cer- in one hundred share shares 750,000 prior Brandel resales representing shipment, This tificates. original con- shares, under the received September was the stock due on legal. September tract May 26,1955. completed on So, went to Allen June Van shipments stock In two between these Hagenbach for officeof Paul Zurich meeting regular of the Gulf was a there Hagenbach, having purpose of long a sent directors. While Coast attorney, president of was who Swiss n “night Al- from Houston to Van letter” Trust, SEC. a write letter Brandel puffing news quoting in York a len New effected. This scheme clever release, new no is reference there Allen prepared the letter testimony financing, is to the and the addressed It was to with him. had it financing subject new effect Exchange Company” in & to “Securities May 18 board mentioned not promptly Hagenbach com- York. New meeting. pur- plied. referred The letter 750,000 of Gulf Kelly, shares chase of the pretty clear that It seems on to nego- and went planning Coast investment for and Van Allen were following May purchase “cer- this tiating state that time some before finan- agreement suffered several tain of our clients 1955 memorandum 37,400 cial in other neces- sales reverses investments June were shares sold for sitating liquidation $215,000. portion beginning of a Also in June 1955 reports by a investment rash of Gulf Coast.” The circulars and vari- advisers, letter said also that Brandel still owned ous brokers and investment ex- 400,000 tolling planned many shares of Gulf Coast and Gulf virtues of Coast began stock, appear. Perhaps sales. The final further sentence providing you letter, letter was: “We are earliest was a June one opinion page length, prepared duPasquier of United Counsel States concerning Landeau, our & investment in these members the New York Parenthetically, Exchange. shares.” Stock This should letter stated that surprise preparation being us to find that on the same made a day, listing “prompt June the Houston bank was shares exchange”; directed to issue final American lot of stock “Amongst September Directors, Roy shares due under B. agreement. significant represents important It also that Murchison in- 50,000 shares, Dallas”; these in one terests of hundred share that “the financial certificates, very company good”; were made name situation of out Singer Co., Singer, & a nominee of and concluded with statement Mackie, Bean & who “GULF thus came COAST LEASEHOLDS back seems very interesting growth into the fold. This was the first time situation.” Singer, agreed accept Bean & Mackie 27, 1955, weekly On June bulletin newly issued shares of Gulf Coast di- put Consensus, Inc., out DuVal’s rectly agent transfer in Hous- approximately 5,000 which boasted sub- ton. scribers, write-up contained opinion stated, “of Coun- Leaseholds. The States bulletin sel,” among Hagenbach’s things, (Kel- referred to in other “that each of the *23 ly’s) outstanding letter to the 1.4 million SEC turned shares out be is backed by by Blinkoff, oil; amazing one specialist truly Jack over N. a a $35 sum young producer” SEC for matters. It so a was dated June that “Gulf pages capable and covered five Coast of elaborate Leaseholds is believed climbing grounds high price discussion of per various for to as a as $50 Sep- period.” conclusion that the stock share within sold the intermediate registra- exempt tember 1954 was The bulletin concluded with- the state- private placement. tion as a prose- ment: The “This ‘Oil Man’s Oil Stock’ is right quite buy large cutor was when rated now he branded near term and “phoney” profits.” later, this letter as on its It intermediate Two weeks face. just “phoney” Hagenbach July 11, 1955, weekly on as the bul- DuVal’s letter, again glaring Coast, and full of misstatements letin wrote about re- Gulf activity company just fact. porting The Coast Gulf “has ac- touting attributed, quired highly stock important to the claims in some manipulation by and the of the market the oil district of Louisiana [which] cohorts, Van Allen and his but are worth estimated close $25 unusual success million.” The Coast’s oil drill- bulletin concluded: “Gulf ing. regarded Blinkoff added: “All sales con- the ‘hottest’ one cededly today.” country were made brokers in the outfits in the ordinary course of business without Perhaps significant of most these market, effort to influence the and with- reports by Singer, prepared Bean & any attempt out to solicit orders for the This, during July 1955. two- Mackie stock.” page sent, request, document was brokerage through- big June 1955 was a month hundreds houses conspiracy. Singer, country. paragraph & head- Bean Mackie had out the scruples ings, overcome or hesita- which indented and featured whatever prominently, tion had EX- made them Brandel’s “DYNAMIC cautious. were: PANSION”; “OUTSTANDING MAN- vestor is further enhanced AGEMENT”; company’s operations “GROWTH OF RE- fact that SERVES”; “ACQUISITIONS”; development “CUR- are concentrated in the PROGRAM”; type RENT EXPLORATION of natural resources PLAY”; provide “URANIUM and “CAPITALI- which tax in the shelter depletion ZATION.” The “CONCLUSION” read: form of allowances and historically appre- whose value has history “The Lease- Gulf Coast ciated at a rate excess the con- spectacular holds has one of been ex- tinuing pansion of overall inflation rate under the direction of an outstanding management economy large.” which has negligible translated initial assets By spectacular far of all most organization into a well-rounded “Special Report” pub- these items was a in- derives substantial and July 29, 1955. This lished DuVal’s creasing monthly cash flow from the page one ANNOUNCE- “FLASH gas considerable oil reserves following printed MENT!” had the company. controlled Attrac- large growth-minded type: tiveness for the in- Spurt Sudden, “This Stock Price is Set Extensive Urge Delay We You to Avoid ... Place Your Order NOW— Purchase Dynamic Begins.

BEFORE the Ascent Buy ... LEASEHOLDS,

GULF COAST INC.” repeated “Special Report” presented much opportunity buy then with an appeared very large property of the information that had amount of from the weekly Company. bulletin and stated: DuVal’s National Associated Petroleum August 30, “WE FEEL VERY STRONGLY On and Na- Gulf Coast you agree- BUY NOW—before the those who tional Associated entered into an develops pay required for this stock scramble ment Gulf Coast —will *24 dynamic climbs $2,500,000 cash in on one of the most than in for more cash the yet property the mammoth Over-the- to hit to was receive. So Hagen persuaded buy $2,- Counter list.” Van Allen to 000,000 debentures, worth of instead of messages produced All sales these soon May $1,000,000 provided the in the sales desired Brandel’s the effect. for agreement. way memorandum of In some July 37,300 at a 1955 amounted to shares entirely clear, ar- the new August price $254,000. For total of rangement changed regis- require was to figures 110,000 sold the climbed shares startling prior tration. This reversal of $1,100,000. unlike month for And procedure probably of in- was the result May 1955, only 8750 were when shares by protec- sistence Van Allen for his own by purchases on the sold open Brandel but its But, selling tion. with the stock at over 15,000 totalled more than market shares, July August pur- rate 10 how conversion be almost could the $8 open easy. August justified? market were made chases on This was On Brandel. “dupli- Allen sent Van contract, original” purchase cate of the selling touting While all this was May and it turned dated back to out May taking place debenture deal recital and contained the false changes, undergoing 26, 1955 was two May 1955 meet- ratification at the a few more and the result of these was ing Gulf Coast board directors. maneuvers. Gulf Coast of the fraudulent registration agreement our September months of or before On covering effec- the debentures was November 1956 unless an statement Registration Hagen- SEC, has tive Statement been Coast with filed Gulf having signed Ex- in due filed with the Securities and the contract bach change Commission of Brandel. course on behalf of States.” nothing connect Shuck in Still According letter, Brandel’s reason alleged way single, over-all con- with the agreeing change plans to this “grossly spiracy over-priced to distribute lapse has convinced us “the of time unregistered corporate to an securities the debentures and warrants so sound are investing pub- uninformed deluded that we would in- rather hold them for lic!” present vestment and have no intention time, proce- At formal about this same these sell bonds warrants.” Accord- Coast to dures were instituted ingly, registration statement was approved common stock list- have its withdrawn Gulf Coast on November Exchange. ing An American on the Stock 28, 1955. important step accomplish- towards the During September 1955, Brandel sold goal ment this occurred on October 26,000 price shares of Gulf Coast aat when the Board Governors slightly $300,000; in excess of sales for Exchange approved the American Stock October 1955 were shares for listing and action the Se- certified this $320,000. price of Gulf Coast Lease- Exchange Ap- curities Commission. jumped per holds from stock about $13 parently, however, SEC was dissatis- share on October to about $14 fied financial with the statements both 5, 1955, October 1955. On October registration statement for the deben- day Exchange ap- the American listing application tures and proved listing stock, of Gulf Coast commonstock. These difficultieswith the price days reached As $15.375. appear ques- SEC to have stemmed passed with no announcement pro- as to tions whether Gulf Coast was listing approved SEC had either viding full of the transactions disclosure common Ex- the change stock on American during through 1953 and 1954 which Ha- registration or the con- gen large acquired his associates debentures, price began vertible amounts Gulf Coast stock and whether fall. accurately properly Gulf Coast was Allen, Hagen estimating all its oil the state- reserves keep price anxious to of Gulf Coast ments submitted the SEC. per stock above share so that conver- $8 On November and Van sion debentures at that rate would Allen executed a further modification profit. result Van Allen’s interest agreed the debenture contract obvious; but the Government registration covering the statement give agreement also showed that the debentures and on file the SEC *25 per of the Brandel ten cent debentures and Brandel would be withdrawn that cover-up was a for another kickback to purchase would for in- the debentures Kelly. kickback, un- and As this purposes vestment for resale. A and not original September one for like the the embodying parties’ letter the intent to 30,1954 agreement cash, in in- which was modify the debenture Purchase Contract $175,000 of volved the transfer some provided be that each debenture would Kelly, of worth debentures to following stamped with restrictive they too to it incentive to see legend in order assure resales price per Coast exceeded Gulf $8 would be made: share, rate at the debentures which (or warrants) bonds shall could converted after November “These be sold, assigned, And, course, Hagen be transferred and 1956. (or high converted) eighteen general a within had a desire to maintain they Shuck and Van a re- could when effected price Allen Coast so Gulf selling pic- large by profits reap conciliation Shuck re-entered the continue holdings of Coast ture. the substantial acquiring over had been stock graphi- operandi modus Shuck’s years. cally by portrayed who had Martin Teller manager as the sales- served Shuck upon for the the scene Shuck enters specializing room in Gulf Coast Lease- man who was Thus first time. he was the pleaded guilty in holds. Teller this case by Allen with the re- Van entrusted guilty during pleaded 1962 he also up price sponsibility keeping violating charges to two unrelated through a stock Coast Leaseholds Gulf selling being laws, plea one federal securities frequently operation that was Connecticut, other in Ohio. made in trial as “boiler characterized at the In Teller had been convicted of re- sup- in market room.” Shuck’s role port goods ceiving in he was stolen approximately fol- activities was mail hired fraud. Shuck convicted of under-the-table : consideration lows September 1955 after estab- Teller lishing Singer, by Allen, & payments Bean had no convictions dur- that Teller agreed purchase shares of Gulf Mackie years, period ing preceding ten open mar- on the Leaseholds offered by specified National Association ; confirmed would then be ket this stock joined Dealers, which Shuck Securities (De- brokerage through firms one of two May Co., York the New & a member Pontet Co., Stahl, Exchange, & job Miles Teller’s Stock first for Shuck was aas Canada) Edmonton, telephone controlled Ltd. salesman and he worked at friends, Broadway, R. Allen’s Charles Manhattan, one of Van in downtown Company, Stahl, trade Sep- M. J. Shuck where Shuck had his own In office. business; did hired, Shuck name tember when Teller was resell the stock selling firm would Shuck’s then Shuck’s main interest was in public would be who stock named members Great Oil & Sweet Grass began selling persuaded stock for substan- hold the Gas Teller stock this keep telephone periods it from and thus over a of time tial monitored Shuck. returning would apparently impressed by where it market Shuck was Tel- depressing ability Allen testi- effect. Van have a ler’s and soon offered to make him manager part played fied, however, as to of a salesroom located at Mackie, Singer, Street, Shuck away. & Bean Broad a short distance given responsibility about was also “didn’t know that.” Teller recruiting room the salesmen this original understanding between approxi- seems that least one Van Allen and Shuck that Van Allen mately 25 men hired had been convicted pay equivalent would Shuck the of a ten during of stock fraud the 1930’s. per price cent on the discount Shuck was campaigns paying for Shuck’s sales worked essen- stock. Shuck insisted that following tially dealings brokerage manner. Shuck with a house mailing would rent lists various that was member of the New York Stock Exchange. magazines, houses, financial This mail order turned to be De- out & securities firms and other establishments. Pontet Co.above to. For referred some mailing entirely clear, These lists would be turned over reason which is not mailing consisting arrangement proved unsatisfactory to a staff of about girls twenty refused, 1955, buy would Shuck more who send December person “lead-getter,” During more the list a Gulf Coast each stock. *26 basically by period M. which was an invitation between November 7 and Decem- however, purchased Company prospec- supply J. Shuck Shuck the ber and ad- about shares of Gulf Lease- tive customer with information Coast times, holds. Just all of these shares were vice the stock market. At about about “lead-getter” public by February 1956 in resold to the the referred to no stock simply particular by offered financial ad- but nies controlled Murchison and general; times, likely logical develop- vice in at other “lead- a the “could be and getter” specific ment,” listing a one would cite stock as and statement that Company, with about which M. J. Shuck the common had been stock of Gulf Coast location, something. approved Wall knew of the American its Street the Board Sometimes, “lead-getter” Exchange pending would even Stock and “is now provide SEC, information detailed about clearance listing which after particular stock which M. J. Shuck was will be effected.” pushing. printed up four-page bro- Shuck also a after Shuck in Soon became interested page The first chure about Gulf Coast. a Coast Leaseholds he circulated Gulf brochure as follows: this was one-page mimeographed about the sheet large top, printed in letters there through company his the medium of Inc.”; LEASEHOLDS, “GULF COAST “lead-getters.” sheet, information This large page to a most of picture was devoted strikingly dated November an and with the oil well tanks every respect report similar to a draft- letters, caption, Gulf in small “Oil from ed on November 1955 Van Allen’s City League Coast Leaseholds’ North friend Charles testified that Stahl. Stahl flowing tanks”; picture Field into given copy a of his draft on caption and in a box enclosed November 1955 and dictated several following legend the box was the beneath changes one Stahl’s secretaries. fairly type: “Reprinted small from gave mimeo- Stahl then Van Allen six newsmagazine ‘OIL,’ Petro- The graphed copies of draft modified this Industry, Be- 3.” leum Vol. XIV No. by Kelly, firm, & but Stahl’s DePontet legend larger letters this neath Co., publicly report did not distribute the Broadway J. was: “M. CO. SHUCK until December BOwling 9- Green York Y. New N. pages bro- 2500.” The three other reports traced The Shuck and Stahl graphs demon- chure consisted various progress” made Gulf “remarkable strating growth production, re- of oil during year of 1954. Coast Leaseholds gross income, monthly and an serves “analysis,” during the Statements were made that many respects similar year production had net oil increased why reports Coast Gulf earlier barrels, from 480 a month to 3840 barrels investment. a Leaseholds was such smart grew “only 2,240,000 bar- from reserves “4,800,000 pages proven in the brochure oil reserves” rels” to These latter three “only from “income” went prepared by $8200 basis Shuck were all high $14,250 in De- a month” to “as draft, Annual Gulf Coast of Stahl’s According re- these cember 1954.” materials, Report other earning $27,000 ports, company “was any published in issue had never been per month” in March 1955 and since magazine. Oil “earnings $80,- increased to summer have mailing initial per not the understand Whether month and we prospective con- per customer $140,000 month Shuck risen particu- about reports information it was tained stated that date.” expected invariably year company, the re- invited lar cipient that “before the end convey in Shuck’s interest company will earn somewhere the vicinity through medium of en- per $170,000 The re- services month.” envelope stamped reply or a property card ports closed various went on to discuss appears financing, drilling Co. It plans to M. J. Shuck acquisitions, addressed anticipate about drilling agreement could that Shuck also disclosed a receiving people per Murchison, cent of the shall two with Clint Upon respond. re- “lead-getter” reports would con- explain in due course. answers, mail ceiving would merger Shuck suggestion these cluded with the compa- about Gulf materials additional various Coast and between *27 any testimony again response ob- was Teller’s that Shuck was “without invite a going pretty aware of what was ligation your much part.” on inon the salesroom. prospective Only had a customer after meantime, In the affairs Gulf more oc- the expressed on two his interest or apace. proceeding placed on Leaseholds were be a would his name casions During company en- December the people to receive tele- destined list of agreement, tered into an effective phone Co. These from Shuck 'calls M. J. Drill- October with the Weston into individ- broken down lists were then ing agreed Company whereby relatively given Weston were ual cards which inexperienced drilling $2,000,000 salesmen, “open- invest about dubbed properties those Gulf Coast which Weston ers,” attempt first make the would who commercially pro- contained on satisfied cards distributed these sales. Teller capable oil was to ability; ductive Weston re- reserves. more basis of outlays plus per ceive its cent names five furnished with salesmen were profits living oil on persons recovered these phone fur- numbers of significant given away lands. Not least element less ca- than those ther transaction pable. this was the fact that Wes- there that Teller stated Drilling by Company ton was controlled standard “2000 variations” about Though agreement Clint Murchison. “pitch” “opener” for an Tell- line nothing proper way with Weston was more than an er testified about the then option part, Weston’s a close sale. telling Allen, went around Van Stahl and Depending level of resistance on the many others Murchison had a made customer, any particular would variations $2,000,000 firm commitment to invest “pitch.” Thus, be into this introduced the future In of Gulf Coast Leaseholds. might bandy opener around the fact, only $100,000 Weston invested about name, a mer- Murchison or mention that deciding before it could do without ger Leaseholds between Gulf Coast drilling by properties owned Gulf Coast going “majors” to take one of the Leaseholds. computing place, profits or start help expedite approval To SEC’s would accrue the stock reached when listing per Coast common Gulf had share. And once customer $50 Exchange, bait, stock on Stock the American was not M. J. Shuck taken Allen, 2,1955, through on December executed him. His name would placed provided super-sales- an affidavit which was submitted a list affidavit, In Commission. which Van These men known as “loaders.” “load- prepared “pitch” Allen Jack N. testified was had of their own and it ers” Blinkoff, lawyer job who drafted June was their to see to it that the custom- opinion bought which we have er letter all the Coast stock he already discussed, possibly by suggesting forth Van Allen set could dispose in which Brandel “circumstances” customer his other stock hold- September ings. predict and Gulf Coast executed the The “loader” would agreement 30, 1954 and the reasons tell the future Gulf Coast and $100 things which led Brandel to sell some the Gulf customer wonderful about how bought for stock which in- would Ameri- Coast be when Gulf Coast hit the Exchange, any day refinement can vestment. The affidavit was a it would now. Allen and in it Van And to make sure that the customer letter Blinkoff's Coast, employee of Bran- would hold he on to Gulf the “loader” stated that was an $50,000, explain cap- Trust, salary would to him beauties of del an annual gains testimony ital instructed taxation. Teller’s and that he had been “pitches” agreement employer about these corroborated execute the many September 30, details various witnesses “after considerable pur- negotiations.” who had been lured them into continued The affidavit chasing subsequently Gulf Coast Leaseholds. And it been in- that Van liad Allen *28 by employer According per DuVal's, formed his that “one two or month.” participants company recently of * * * Trust Brandel increased its necessary liquidate by “acquiring properties found it reserves taining con- immediately proven certain order to shares well sites 8.7 dollars,” proven obtain American and this was million barrels oil of reserves.” by followed individuals paragraph sales to three DuVal’s final as follows: who knew all about Gulf Coast Lease- shortly “Gulf Coast should an- promised holds and hold for stock producing nounce it is ten thousand say The on to investment. affidavit went daily, completion barrels and its that as a various result Gulf Coast’s thirty over new wells. The sched- price of its increased. successes the stock drilling many uled 1956 of as Van Allen informed Afterwards substantially will add wells Brandel incurred losses in of its some gas the almost 400 oil and wells now other investments that Brandel de- producing in six The firm states. “gradually cided to sell some Gulf Coast figure important could soon in an * * * in the event that bids were re- merger which should afford added trial, ceived.” At the Van Allen testified appreciation appeal. This is a defi- completely that this affidavit was false. ‘Buy’ ite recommendation imme- already during We indicated purchase diate A at the market. the Summer of 1955 DuVal’s Consensus speedy rise is foreseen.” developed issuing spectacu- the habit of write-up This of DuVal’s Consensus reports lar about Gulf Leaseholds Coast prompted ingeniously letters, two worded weekly its In its subscribers. January 26, one 1956 to Du- published January bulletin Du- by Kelly January Val and the other Val’s Consensus featured another write- Hagen. 1956 to is re- motive up of Coast. The Gulf bulletin started copies vealed the fact that of each let- by saying off how well those investors Washing- ter were sent to the Texas and original who followed the recommenda- ton offices of the SEC. berates buy selling tion to when Gulf Coast was strong including DuVal in terms false doing at $7.50 now it was sell- misleading write- statements ing write-up $13. went on to up. long, Near the end detailed say: 3-page following appeared letter two believe, however, “We that consider- paragraphs: upside potential able further exists publication feel that “We expected —and this issue’s admis- exaggerated or false information to trading sion to on the American buying public concerning Gulf Exchange during Stock the next few Leaseholds, harmful, Inc. is days signal should as the for a serve unequitable, unfair, and detrimental major price advance. Ex- That public to the best interests change already accepted has Company. well as the listing. Coast for And the inside formality

word is that the of Gov- individual, particular- “As an I am clearing grade high ly ernmental of this your my disturbed over use of gas security oil and natural is con- name in connection with the Janu- cluded, ready ary about to be an- publication, I because provide nounced.” any did not of this informa- you report, tion to nor either began DuVal’s then to talk about how would the officers directors beginning since the of 1954 “Gulf Coast Company.” expanded daily Leaseholds has oil its out- put fold, quad- Kelly’s more than a making hundred has letter is devoted to ex- rupled gas reserves, oil and Kelly, its and has cuses for DuVal the face of average monthly taking increased letter, income the blame on himself amazing “vicinity $170,- for the series of “honest misunderstand- 1500%” upshot The edge” ings” by this “additional knowl- DuVal of statements writing says was that Gulf Coast was he DuVal. made properties down the value its more receiving if SEC was As property $700,000. than Much of this enough about information fraudulent acquired by had been Gulf Coast Hagenbach, Leaseholds, Gulf Coast *29 Corporation Texas Northern and Oil president Trust, Brandel of submitted in 1954 in other deals Hagen 1953 and which early in Feb- affidavit to the Commission many shares received ruary much 1956. This covered affidavit exchange of in their in- Gulf Coast for ground of as Allen’s affida- the same Van properties. in these terests opin- vit in and Blinkoff’s December just ion of June letter was February 1956, Towards the of end Hagenbach the Swiss false. stated that stated, patch- above Shuck Allen and Van secrecy prevented of the laws disclosure agreed up ed their differences and Shuck “participants” of in Brandel names the purchases his to resume of Gulf Coast Trust, and follows: he concluded as from firms the controlled Charles per- knowledge appears was Stahl. It that Shuck “To best of the his rejoin information, a participants venture new all of suaded agreement “commission” Van Allen. of Brandel Trust had been informed agreement agreed precise willing terms of this are and had and were not clear to us. Van Allen testified he hold their stock at the for investment 20%, guaranteed mark-up purchase of of Shuck a but time of the securi- calculating his method makes ties but that thereafter economic 20% something event, developments In it look like else. and other occurred to testimony participants it is clear from Van Allen’s certain of in arrangement opinion liquidation. that substan- their was forced under-the-table, payments cash, in participants tial have Some since regretted payments necessity liquida- that were made that such agreement terms tion in one of the since stock has risen that, price, they a resold his if Shuck but felt had customer time, period Shuck stock a short at the time.” choice lose that would his “commission” Hagenbach’s duly affidavit authenti- sale. by a cated Vice Consul of the in Zurich who usual States attached the Upon full-time distri- his return to the spuriousness red ribbon to it. The of the stock, of Gulf Leaseholds bution Coast is, statements contained in this affidavit continued circulate materials Shuck perhaps, exemplifiedby the fact that best containing misleading false state- Hagenbach had on November began with One Shuck ments. question, letter prepared a document for Van Allen you to learn about “Would like that Mr. effect and Mrs. John future?” This with a stock $14 $100 Allen were the sole owners Brandel Hagen’s for- on to about letter went talk Trust. Superior Oil mer association with the produc- Company false in- Coast’s But not even this and about Gulf stream of monthly budge ap- reserves, gross income, tion, into formation could proving the SEC holdings drilling plans. property application for list- It Gulf Coast’s Exchange. ing “Mur- also stated this letter on the American Stock nearly $2,- February recently advanced On Gulf chison has about drilling stating: listing Company de- application, amended its course, knowledge Shuck, velopment wells.” “As the result of additional League bandying name about producing Nosffh been Murchison’s obtained stated, and, during part for some as we have City time the last Field 20, 1955, report geologists company’s substan- November Shuck draft No- com- based on Stahl tially which was their reduced estimate approved 1, 1955, document mercially field.” vember oil recoverable by Kelly, paragraphs profit period large contained two de- for this due to linking expenditures during Murchison with voted to Gulf research, exploration develop- Coast Leaseholds. properties ment of held Nevertheless, one Government’s Company however, effectively which, was a letter exhibits at the trial dated gas increased oil and reserves. March addressed Shuck and expenditures expected These are by Kelly. upbraided written This letter bring important long-range benefits using Murichson’s Shuck for name through Company the discov- stated, “I “recent release” and do want ery exploitation produc- new you pleased to know we are ing properties, and the substantial your firm has an interest the com- increase of Coast Leaseholds’ pany. However, feel state- gas explora- oil reserves. concerning *30 ments made Clint Mr. W. development proper- tion and of new Murchison not have been made.” should growth are ties vital to the and con- Kelly had, There was no that evidence company, tinued success of oil fact, Shuck; in mailed this letter and Gulf Coast Leaseholds has been supposedly its at the use trial was limited outstanding prog- fortunate in the showing Kelly’s state mind. In- being part ress in made this of its deed, any proof we are find unable to that expansion program.” Kelly approved Shuck knew had that Stahl draft. only Company Not was “the able report profit” reported a net for Early April dis- Coast $393,586. figure a net loss of And this Report tributed its Annual any way did not in reflect the fact that impressive-looking This document con- Gulf Coast had down written the value pictures, maps tained numerous properties by $700,000 its than more graphs showing company how well the because the estimates of oil reserves doing gross monthly income, was production, in its proven those lands had erroneous. This gas reserves, pro- oil and total way was in sizable writedown men- ducing wells, and new wells total drilled “prose” tioned in the An- sections annually. Among the statements made Report nual or in of Prof- the Statement were: “Since December 1954 Gulf Coast it and Loss. writedown rele- was gross multiplied daily Leaseholds has its gated following entry to the near the production times, oil ly more than near- bottom of the Statement of Paid-in Sur- gas reserves, doubled its net oil and plus Deficit, capital account: gross monthly and increased its income “Adjustment for decrease in esti- approximately times”; gross “Total mated oil and condemnation reserves income for December amounted to nonproducing certain leaseholds $118,961, compared $9,286 with for the (Note 3) 736,574.” ............ previous December”; “According to the appraisal independent of an evaluation statements, Note 3 to the financial with engineer, including heading net oil reserves “Property Equipment,” proved drilled, proved prob- undrilled and acquisitions first discussed various made proven able during as of reserves December Gulf Coast 1954 and 1955 and barrels, 7,340,103 got 1955 amounted to then to “the drastic reduction in esti- -x- -x- * ]STet year ago] commercially oil [one reserves mated recoverable oil” including proved probable undrilled and which necessitated the writedown of proven reserves, 4,400,000.” properties. Under a week Within after the An- heading “Earnings” Report issued, price was follow- nual was of Gulf ing: per Coast decreased from almost $14 share to $12.25. gross produc-

“While income 1956, just tion both records April 18, set new for Gulf On re- after Report Coast the Com- Leaseholds lease of the Annual pany report Kelly hearing was not net able testified at a Securi- Exchange igno- Kelly ties and held in insisted that he Commission was “rather York Dur- rant” the Commission’sNew ing office. about the federal securities laws. Kelly testimony, April the course of also revealed his that minutes, Kelly ran for outlined Gulf Coast and about Brandel executed another background involving September sales contract bearer deben- agreement legends Brandel Trust. The tures with restrictive with gist Kelly’s testimony was: none of the that Gulf debentures had been con- thought position Kelly in a bad financial dur- verted. that he owned ing through 30,000 1954 and the Summer of about on shares Gulf Coast Bailey, September 30, Muriel the customers’ woman at 1954 and about Hagen Co.,Kelly day testifying. Finally, Walston & met Van he was September Allen and executed the stated that he nor neither agreement; responsible anyone ever talked with & Shuck inserting provision effect Co. and he nor neither “even September agreement con- know who are.” private placement stituted a and that later, May 3, 1956, Two weeks Ha- only assurance that Van Allen would gen hearing testified SEC New comply provision Al- was Van Hagen’s attorney York. session at this signature; len’s made at- testimony just and the lasted tempts in the United States to determine one over hour. also described *31 identity participants in Bran- negotiations leading up Sep- del Trust and went to Switzerland agreement tember 30 that testified early pur- October or November for the way knowing he had no of whether Bran- pose evaluating of Brandel’s financial transferring del was stock in of violation ability commitments; to meet its that agreement, inquiries that made no he shares were issued in name of any activity, about such it and that was MacDonald & Co.because Van Allen said Kelly’s function as chief Gulf Coast’s red-tape would be involved were the keep problems. counsel to abreast these of shares issued in the name Brandel of Hagen paid denied that he had ever Trust; first Mac- learned that stock, securities firms to tout Gulf Coast although selling Donald & Co. was the shares he stated that in November during October 1954 and that he met requests Gulf Coast received numerous Burnside, adviser, with who Brandel’s brokers, from for information various right said Brandel had the resell and specifically denied ever communicat- would sue if Gulf Coast discontinued the Coast; ing DuVal ac- with about Gulf shipments stock and that wrote cording Hagen, Coast did fur- Gulf Hagenbach, president, Brandel’s about Singer, & Mac- nish information to Bean got any response; the resales but never kie. visited the office of Gen- During April 1956, part the latter of during eral Counsel of the SEC October price Lease- market of Gulf Coast 1954 and was told that the SEC would holds continued to decline to about $10.50 opinion not issue a formal unless formal Hagen- per April 30, 1956, share. On proceedings before it were instituted bach, attorney presi- the Swiss who was and that declined to commencesuch of dent Brandel Trust and who had been proceedings; subsequently that he had a urging European buy investors Gulf short conference with Tait at the SEC great Coast, his concern communicated and Burnside also visited SEC in during reported about Gulf Coast’s loss Washington; and that all the de- stock Hagen “$1,300,000.” responded 1955 of payments Septem- liveries and under the May 9, 1956,pointing op- on out that agreement completed. ber had been erating by loss as indicated the Annual Kelly also testified that he had never Report actually $328,000 and “such a any opinion by seen letters accounting Burnside figure of is the result certain Foley throughout testimony practices companies his used oil say, Hagen reported, appeared that Allen it on to went United States.” $120,000.” owed Shuck “about take into considera- must all times at “we prevailing situation income tax tion the reaping only one was not Shuck corporations. United States as it affects huge profits of Gulf the distribution * * * Actually, computing cash- from a income Coast Leaseholds stock. Federal Company standpoint, the in and cash-out he reveal that tax returns filed we, oil plus side and came out on the men, 95,000 reported of Gulf shares sales badly situ- do feel too about not during a total 1955 at Coast Leaseholds same said how the ation.” also Hagen’s According profit $414,000. thing companies like happened 25,400 he shares sold tax return for Hagenbach Superior Oil, provided during year $129,000. profit of at a things figures to show that with various Kelly’s he sold tax returns reveal that good pretty Coast at Gulf looked back during 49,000 1955 at about shares Hagen also enclosed a news Leaseholds. just profit $206,000, over clipping April from the taken profit $64,000. during shares 1956 at Daily edition the Tulsa World Furthermore, contended the Government story Gulf Coast’s wrote a about Van Allen to kickbacks Report Annual under headline: Kelly, on which were reflected “FIRM NEW RECORDS.” SCORES returns, tax addition- their constitued Kelly’s urging, office At Coast al source substantial funds. Gulf wrote a to all its letter stockholders collapse price of came when the May began: 15, 1956. The letter By collapsed. Novem- Coast stock Gulf annual stock had fallen to $5.50.

“At Gulf Coast Leaseholds’ ber meeting May 2, 1956, company end discontinued At the Shuck encourag- By operations. De- presented middle officers a most ing report company cember market activities and 16, 1957 it December at the end the first $3.75 conditions selling quarter In a share. 1956. This cents information 87% *32 Stahl, Co., repeated meantime, Ltd. the Miles for of & here benefit the on Van Allen’s debentures those who unable foreclosed stockholders were they by bought meeting other none hear and to attend the annual Hagen. report person.” than As usual when the and conspiracy partici- end the comes to an “marked The letter then discussed the pants are at each other’s throats. pro- operating advance” in income and “profit duction and stated the seemingly foregoing The elaborate and picture encouraging” loss is most and over-long the is ab- review of evidence “predicted the Coast officers solutely background indispensable aas report quarter that the for the of second concerning questions consideration of Leaseholds would show Gulf Coast severance, claim Shuck’s motion for a operating to be in the black.” receiving of of error into the evidence testimony previously in certain We have indicated that administrative February Allen At- and Van and torney before the SEC and the Shuck During York, effected reconciliation. the General of the of New their State describe, and his Summer of Van and Shuck which we are about to Allen dispute payments had a about the to be claims that the evidence as a whole was alleg- made cash insufficient him under their under-the-table to connect with arrangement. According single, conspiracy war- Van Allen over-all or to ed thought him fraud Shuck that Van Allen owed rant submission of the substantive $40,000 jury. good part while Van Allen that he counts to the A of this insisted overpaid by testimony $80,000. post-conspiracy had agreed It Shuck administrative given that the matter would resolved and 1958 one of by working exhibits was to the excoriation accountants Shuck devoted misleading making and Van Allen. When the accountants of Shuck false and corporate an None of securities uninformed about Gulf Coast. statements against investing Shuck, quoting public,” and deluded this was admissible Judge against Hagen, opinion in as we have Smith’s United case abundantly Crosby, already Cir., shown, States establish- 928, 944-945, it, but, trial ed without nevertheless the cert. denied sub nom. Mit testimony judge prior telman v. 368 U.S. received this cautionary exhibit, in- with mild S.Ct. L.Ed.2d then, jury. much, struction to the So told in We are the Government brief preliminaries. charged the “nub of the offense” public Count “was the distribution of Ill millions dollars of Gulf Coast worth Conspiracy Leaseholds, Count stock, by Inc. means fraud- designed generate techniques ulent an First we Con- address ourselves to the unwarranted stock demand for the spiracy Count because we think a careful would enable the to sell at defendants analysis allegations the indict- high unreasonably price,” and that ment, proofs and the instructions “public place distribution in two took Conspiracy with relation to the stages,” “interdependent.” which were ensuing greatly simplify Count will proofs revealed, What as we have many points argued by discussion of the many persons, seen, conspiracy awas judgment counsel for a reversal Allen, Kelly with as against Kelly, conviction nucleus, to distribute shares of Shuck. unregistered Gulf Coast Leaseholds stock interesting It notice the various price to boost the market stock phrases by prosecution to used de- a series maneuvers that constituted alleged conspiracy” scribe “the in Count manipulation a fraudulent of the market. 1 of the In Be- indictment. Government selling merely idea dis- quest adopted No. which was tributing beyond prices the stock far charge judge jury, trial in his person acquainted what reasonable charges is said “the indictment facts its would consider real selling conspiracy objective had the value, persuading purchasers but also public Gulf Coast Leaseholds stock to the to hold stock the time restric- until without disclosure of the true condition expired, tion on debentures had did company, regis- required by not come into until November existence provision Act, tration of the Securities register plan when the the de- fraud, prohibited means of *33 bentures and were abandoned Act, the Securities and Mail Wire and stamped legend forbidding with the the just Fraud statutes.” This hits about assignment resale, conversion of or the the Bequest nail on the head. In No. debentures before November It 18, charged by judge, also the trial the the was about time when this limitation conspiracy merely is referred to as one placed upon disposition was of the the “to sell Gulf Coast stock in violation of debentures Allen turned to the law.” There are various references help up keep price Shuck to him the requests in the prosecu- submitted the high enough the so it stock would be adopted by judge tion and the trial to permit expected 1956 November to alleged purposes “the unlawful of the hoped profit, and which was the conspiracy.” There are also numerous equivalent of the at which amount de- objective references to “the con- price stock at benture could sold be spiracy.” “Single And, subject on the per share, excess of the conversion $8 Multiple Conspiracies,” or Bequest No. rate. 24, the Government’s contention is that basically the evidence “a cen- The first we shall establishes observation plan think, tral make, which, to elimi effect issuance and and one sale * * * grossly overpriced unregistered problems nates a number of from 756 rulings to “clear case, each minimized is that as to bearing admissibility, jury find limitations of the unquestionably to entitled against particular indi- they, together as Allen evidence with Van and, instructions,” single, viduals, adequate

others, participants in over- were extremely added, alleged im- conspiracy he portant “It is indict- therefore as all safeguards broadly made as nar- or however those ment. However impregnable possible.” construed, rowly allegations are finding justified, if not that a clear compelled, from which there was While evidence Kelly, to that as to effect might that Shuck the together inferred have stages two and Van Allen the Allen, salesmen with Van conspiracy single, to part of a over-all perhaps others con- in spired Shuck’s office public the distribution defraud the campaign, pressure to undertake grossly Gulf Coast Leaseholds stock operation in- induce or room” “boiler prices. inflated buy dividual investors prices and at inflated de Leaseholds stock that certain It is well settled it, proof supporting participation conspiracy hold in multi-faceted fendants single, conspiracy illegal in the over-all Shuck can in an cases be so enmeshed alleged unnecessary indictment is quite tenuous scheme as to make it nothing through inquire unsubstantial. knew about He into the methods unregis- original developed sale shares scheme filling backing proliferated tered stock over as to them. United States Cir., 854, Benjamin, 1964, and their sale to Brandel F.2d debentures v. 2 328 not tell Trust. Van Allen testified did Howard he cert. denied sub nom. v. Singer, paying States, Shuck that he was Bean S.Ct. 84 U.S. buy 497; & Gulf Coast Leaseholds Mackie 12 L.Ed.2d United States Falcone, Cir., 1940, stock as it came on market and that 109 F.2d af very part firmed, this was a L. substantial 311 U.S. 61 S.Ct. public. 128; Cir., Aviles, stock to sell to Shuck was Ed. United States v. Moreover, 179, 187-190, that Shuck knew the evidence 274 F.2d cert. denied giving States, the information out was he sub nom. v. United 362 U.S. Evola good part 1009; false is indirect and rests upon 4 L.Ed.2d Unit S.Ct. credibility Teller, except for Cir., 1963, Bentvena, ed States v. post-conspiracy testimony 916, 926-929, nom. cert. denied sub SEC and the At- before the v. United 375 U.S. Ormento York, torney General of the State New S.Ct. L.Ed.2d 271. and the con- letter Shuck position, But in a Shuck is different cerning Murchison, Clint and this evi- judge the failure trial against plainly dence was inadmissible recognize this difference and to take the Shuck. rights necessary steps protect Shuck’s necessary safeguards pro makes it judgment us reverse the What were the against Shuck, judge of conviction tection of the trial Shuck “impreg applied on the substantive counts as well as the should and made conspiracy count, by Mr. Jus and to remand the nable” ? One not mentioned *34 Blumenthal, Rutledge tice in case a retrial as to him. The classic but applied joint conspiracy peculiarly applicable to in by in rule be these is this case Rutledge granting trials the to was stated Mr. Justice a severance as Shuck likely States, 1947, appeared 332 the it he Blumenthal v. United moment that was 539, 559-560, 248, prejudiced by to be the accumulation of U.S. 68 S.Ct. 92 L.Ed. 154, wrongdoing by his to the that each evidence co-defenda effect defendant is by making protected dangers to clear and nts.6 Another was the obvious appears or the “If it that a defendant 6. Rule 14 of the Federal Rules of Criminal joinder by Procedure, prejudicial government prejudiced which deals with joinder, provides in- in an of offenses or of defendants as follows:

757 jury court that the trial to error so and so in the instructions vital against prejudicial require proofs from to as to Shuck were different Shuck re against Kelly Hagen, versal, despite proofs and the fact the error was was, by pointing excepted not or out as noticed to counsel what difference sentences, just By in a few Shuck. done failure realize that we have making given proofs justify sure that Shuck was state was such as to and jury finding separate as dis and individual attention Hagen. participants single tinct third were over-all A conspiracy safeguard was, by not, but that interim instructions Shuck judge by positive together lumped trial and clear instructions at them all gave give every nothing” charge ease, of the the “all close Shuck or con possible protection against by Judge Friendly demned in United the use prejudicial testimony Borelli, Cir., 1964, and inadmissible States v. 2 F.2d 336 376, safeguards 4, & 384-386 nom. exhibits. None these n. cert. denied sub Cinquegrano 1965, “impregnable” States, was made most and the 379 v. appears 960, 647, 85 effective them have been U.S. S.Ct. 13 L.Ed.2d 555. completely disregarded. Thus, case, judge in this in trial jury: structed the as this one In a such ease analyzing you “In the evidence important particularly must determine whether there was proofs fashion in such be marshalled single, continuing conspiracy overall jury clearly place differ before separate, independent conspira- against Kelly ence between the evidence separate cies with and distinct against Hagen and the evidence groups involved, no overall cen- single, conspiracy on the over-all Shuck purpose. you separate tral If find phase States also United case. See conspiracies de- and that some of the 653, 1965, Marchisio, Cir., 2 F.2d 344 v. belonged fendants to one and not to Cir., Agueci, 666; 2 v. United States other, then there would be 478, 1962, 829, 817, F.2d 99 A.L.R.2d 310 single charg- proof conspiracy Guippone United cert. denied sub v. nom. indictment; ed in the in that 1013, 1963, 959, States, 83 372 U.S. S.Ct. you case must return verdict Dardi, 11; 10 L.Ed.2d United States v. guilty not as to all of defend- 316, 1964, 330, Cir., 2 330 F.2d cert. conspiracy ants count.” 50, denied, L. 85 S.Ct. 13 379 U.S. Bentvena, Cir., See also United 2 judge States v. not Ed.2d 50. trial should 916, 938-940, 319 F.2d agreed cert. denied request counsel States, sub nom. Ormento v. United marshalling of be omit this the evidence 345,11 U.S. Kahaner, S.Ct. L.Ed.2d ted. But cf. United States v. Cir., 1963, equivalent 479-480 & n. of an instruc- This was the States, denied, acquit Corallo United v. Shuck tion that the could conspiracy U.S. 11 L.Ed.2d also ac- S.Ct. count without on the Keogh Nothing Hagen. quitting v. United could U.S. But, Hag- helpful Kelly S.Ct. L.Ed.2d 65. if this were have been more all, probably point en, should find it naturally difficult do not who raise nothing acquiescence here, and, token, ascribe reversible error the same urgent participated request prejudicial in an could have more been prosecutor Borelli, as well as counsel F.2d at As Shuck. noted pages 382-383, interpret all defendants. Cf. United hold- States as we Giuliano, grave Cir., ing, 348 F.2d 217. error conse- such thing another, quence But one leads to and the fall cate- to Shuck as to into the *35 proofs probably gory “plain failure to marshal led into the of error” to be taken counts, grant oi’ dictment information or such of a severance of defend- joinder together, provide court trial the other relief ants whatever separate requires.” may justice an order election or trials 758 Page single or a sentences exhibit. counsel few if not noted even consideration Kelly testimony only page of the and However, fair after it trial. at the Judge Hagen say that, excoriated Shuck for his fraudu- judge to trial to the misrepresentations. say all filed lent To that Friendly’s opinion been in Borelli Kelly prove to and brought of the this was relevant that the attention thus to knew about judge prior the true condition commencement trial credu- “all-or- Gulf Coast Leaseholds strains our the case trial

of the lity. Gordon, nothing” also have been See United not States v. instruction would 1958, 177, Cir., Furthermore, 7 253 F.2d given. matter 182-183. lest the replete any doubt, “all- record is with other evidence hold that in left knowledge part or-nothing” such case was in this instruction Hagen. in requiring even “plain reversal error” objection trial. absence of Moreover, there was such a volume Crim.Pro., 52(b). Fed.Rules proof, clearly such not it was so necessary against to the Government case It is incom is not But this all. Hagen, that we are constrained prosecutor prehensible to us that cautionary hold that amount of in offering into taken risk should have could structions have undone the harm parts evidence Re, Cir., Shuck. Cf. United 2 States v. testimony post-conspiracy the SEC before 1964, denied, 316-317, 336 F.2d Attorney of the State and the General 379 U.S. 85 S.Ct. L.Ed.2d letter New York and fact, 177. As a matter of the instructions giving Shuck, charged with which Shuck given were mild and ineffectual. Cf. false out information about Delli States, Paoli v. United terms told and in no uncertain Leaseholds U.S. 77 S.Ct. 1 L.Ed.2d stop. testi him This administrative Surely they were not such as to constitute mony hearsay clearly inadmissible “impregnable” against barrier the use against persuasive and Shuck it was documentary this testimonial and evi in to one of the critical issues relevant prejudice dence to the of Shuck. also See namely Shuck, his case vis-a-vis Cianchetti, Cir., 1963, States v. knowledge representations he 584, 589-591; 315 F.2d v. United States making false. This investors were Aviles, Cir., 1960, 274 F.2d 193 & testimony particularly letter 4,n. cert. denied sub nom. Evola United Murchison, about Shuck’s references U.S. S.Ct. L. was referred summation Ed.2d 1009. prosecutor and other ex was sent with juryroom request into hibits at the not Even this is all. Before jury during during their final deliberations.7 trial and on numerous occasions proof Nor this line of to a confined trial counsel for for a Shuck moved any management 7. The letter read as follows: with the neeted development “March he interests wells which Company may through J.M. Shuck com- are handled some Broadway panies he either or controls owns through relationship New York New York some company. Gentlemen: of the officers Litera- only damage Mr. Clint W. Murchison has called to as this ture such can my your relationship hope attention a recent release which and we there will company leaseholds, made on Gulf Coast name be no further connection of his you company. fact, Inc. I do want that we are know In with the we would pleased your any you appreciate firm has an interest if literature which company. us would be checked with distribute However, accuracy sending we feel statements before it out. concerning Again you your made Mr. Murchison Clint W. let me thank inter- company. not have should been made. Mr. Mur- est Very truly yours, chison does not own stock company. Kelly” Roy Mr. con- Murchison B. *36 759 peak against It When this accumulation reached its of the as him. severance case judge offer into of adminis- trial is under evidence is well settled that the testimony Kelly continuing stages duty of and trative “a at all by Kelly therewith, grant prejudice” if letter connected trial to a severance testimony and this particular and the letter were is made manifest. defendant evidence, States, 1960, received it is clear to us 362 Schaffer v. United 511, 516, U.S. 945, 948, motion then counsel for L.Ed.2d 921. made 80 S.Ct. 4 for a should Shuck granted. severance have been While would seem to have been there judicial nothing papers It was an abuse in the submitted or the deny arguments discretion to the motion a sever- trial com- advanced when the justify holding by ance at that menced to time.8 us that the denial of Shuck’s motion for a severance We now turn to the mass judicial discretion, still, anwas abuse of exceptions by Kelly taken dragged beyond as the trial on far portions judge’s various trial given two or three months estimate charge requests and to the denial of jurors being selected, as charge, general subject on the con prejudice to Shuck and more became more spiracy count. sub apparent day. passing with each Not requests mitted 125 for instructions. We only presence required was his in court seldom, ever, hodge have if such a seen for three or months before his name more podge. Plainly erroneous statements of mentioned, was even but his illness and law, assumptions issue, argu facts inability present to be caused several ad- ambiguities mentative matter and are journments that were most unwelcome to intermingled with an occasional accurate jurors and his straitened finances statement of law. A few these were delays caused over the selection of new flatly denied; most of them were “denied complaints by counsel. There were some except charged.” as jurors length about the of time respect to the instruc With juror, finally consumed and one who was may whole, requests tions and as a excused, made it clear that he blamed the generally repeat ac well to one rulings two delay defendants,” on “the which natural- cepted that counsel fre federal ly Shuck, might included as his illness forgotten quently or to seem have regarded malingering. have been it is not the overlooked. The first is that lengthy, judge put prejudice, principal function of confusing trial inevitable requests however, in the slow but or inaccurate was caused winnowing through or sift structions inexorable accumulation evidence ing process practices to select what fraudulent eo-de- an endeavor Shuck’s Hagen. ingeni- good reject If a fendants what is bad. any respect designs they proffered request in ous formulated is in schemes correct, request a States, is not cover their tracks as well as the shame- the denial such Cir., way they manipulated Aeby error. 1953, 5 less market, v. United denied, 296, 299-330, 206 cert. thumbed their noses at SEC F.2d 390; 885, 136, public 346 98 L.Ed. feathered their nests at the U.S. 74 S.Ct. 1963, Cir., expense, concealing States, ill-gained pay- Carbo v. United 9 their organizations offs means of formed 314 F.2d cert. denied sub nom. 1964, secrecy States, under Palermo v. United 377 U.S. laws Liechtenstein 498; Switzerland, stamped 84 12 L.Ed.2d must have them S.Ct. eyes Grandsinger States, Cir., jurors unscrupulous in the United 10 v. States, 80; swindlers of first F.2d Lash United rank. That some of 332 Cir., 1955, 240-241, off this rubbed F.2d Shuck we cannot doubt. Cir., 1955, States, 8. See Delli Paoli v. United Schaffer v. Note, 820; 278; 1 L.Ed.2d 54 A.L.R.2d U.S. S.Ct. Note, States, 1946, (1965); Colum. Kotteakos v. United Yale L.J. 553 (1957). U.S. 66 S.Ct. 90 L.Ed. 1557 L.Rev. 387 *37 760 55, requests 826, and for instructions submit- denied, 100 to U.S. 76 S.Ct. 350 by Kelly Hagen. in Groopman, 2 In a case 738; ted and v. L.Ed. United States denied, portion 782, 785, of the inconsiderable Cir., 1945,147 F.2d cert. 445; transcript trial almost inces- 29, is devoted to 745, 90 L.Ed. 326 U.S. 66 S.Ct. argument by repetitive 1962, States, Cir., sant and counsel 301 5 Huff v. United Kelly Hagen, 922, often 768, denied, and counsel 760, 371 cert. U.S. F.2d judge despite to statements trial 289, the The second 83 9 L.Ed.2d 230. S.Ct. already the or judge effect that had ruled that, in he has included if trial is the up made his mind and desired no further charge-in-chief instructions accurate argument, surprising case, in oral is to find covering phase it of the this that Kelly Hagen various repeat the and briefs substan is not error to refuse tially claims for because were re- reversal statement same or a different the argue opportunity their fused the principles lan of law in the of the same points orally reason the guage and that for this counsel. United submitted rights Hagen Kelly and Cir., 1964, constitutional Press, F.2d 2 336 States v. infringed by pro- 1965, had been denial denied, the cert. 379 U.S. process. cedural due Much of this discus- 965, 559; L.Ed.2d United 85 S.Ct. alleged cutting sion is Haskell, addressed Cir., F.2d States v. 2 327 argument off of oral in connection with denied, 84 377 U.S. rulings requests exceptions and on 1351, 12 307; S.Ct. L.Ed.2d United States jury. 883; final to the instructions to the We Gaydos, Cir., 1962, v. 2 310 F.2d and States, Cir., 1961, have examined the record with care

Windisch United 5 v. place 531; States, find at one or another each and Bary that 295 F.2d United every points 59; one of of counsel were Cir., 1961, Dra 10 292 F.2d sufficiently trial States, Cir., 1962, stated to advise the now v. United judge precisely desired 545, 568-570; how counsel F.2d Sanseverino v. United judge on each of Cir., trial to rule questions In- discussed in the briefs. conspiracy On the instruc- count the Judge deed, patience we marvel at the given unexceptionable tions as as are far as, guise excepting Cashin under the Hagen Kelly and concerned. These are actually portions of the instructions as description conspiracy cover a of what a given, Kelly counsel for and counsel is, determined, how its existence is to be Hagen sufficiency arguing took turns pursued by jury the method to validity requests they pre- and had deciding whether or not defendants viously already submitted and which had joined conspiracy, and each of them Judge been denied. It was in that vain cautionary statement on the use of acts jury Cashin reminded counsel that and statements in furtherance the con- waiting deliberations commence spiracy, and allied matters. That already verdict, passed on the that he had prosecutor submitted these instructions requests, on the he wished coun- language adopted by gen- in the courts pointing sel to confine remarks their erally, judge gave them, and that the trial alleged instructions out errors he checking after over cases cited to just given jury. to the support them, strange. According- is not ly, hold we was no error there in the point Another little given subject instructions as on the evidently good thrown in for measure conspiracy prej- count and find no we grant judge “promised” trial udicial error in the denial of parts Kelly Hagen requests requests by Kelly Hagen submitted changed later this but his mind subject. on this rulings and other amounted to a refusal may point comply At 30 of the Federal well Rule dispose of a few Rules of im other contentions ad Criminal Procedure and paired ability vanced counsel for of counsel to make a charge proper jury relation to the main summation to on behalf 50; Hagen. phrase- In 85 S.Ct. L.Ed.2d different Cir., ology phases Crosby, 294 F.2d various this same theme States v. 928, 943-944, are cert. denied sub nom. adverted to here there States, 1962, briefs. Counsel for Mittelman v. United part point to a U.S. L.Ed.2d 523. 82 S.Ct. lengthy Perhaps practice colloquies requests do not at the time the counsel who *38 parties temptation yield of all were under discussion. The the Second to Circuit the judge “yes” indulge thing trial said in a to in of often answer to this sort more question by single counsel as to whether than others. In this not a one “denied case except charged” request by as of meant that the the claims of misconduct the trial granted judge justification would be “in substance in of in but not finds a the shred precise language the Coun- find submitted.” record. To matters worse make we interpret promise repeated impertinence, sel a to as cover of chur instances “subjects” lishness, respect all discourtesy the in included the re- and of lack quests. probability dignity court, principally is for the that the trial judge by applica- Kelly, per intended his answer to be for cannot counsel we request subject pass ble to the on the of mit to rea- comment. It is bad without only. any enough sonable event, In doubt we when for a defendant with counsel think guns the prose most he could have intended a weak case turns his on the say parts cutor, requests against was that the of these similar unfounded action proper judge presiding seemed to him the would in- over the trial be is not cluded in his final instructions but in not be tolerated. also Dranow See precise language the by States, Cir., 1962, submitted coun- United F.2d sel. 549-550, See also Windisch v. United 571-572. Cir., 1961, 295 F.2d 533. And in chief instructions are not “a judge By is what the trial did. requests copy carbon of the Government’s way summary, of prejudi- find we no judge say charge,” nor trial did the any cial error in of the instructions every by prose- “Amen” to contention the given prejudicial as and no error cutor, charged. many grant as In instances the the refusal of the re- wording requests quests of was altered certain for instructions submitted on substantially. ma- In numerous instances Kelly Hagen. behalf of Moreover, and terial from we the instructions emanated think adequately the instructions cov- Indeed, pros- judge the trial himself. the ered all applicable the issues and the law ecutor and to be com- his associates are fairly thereto that can be said to be preparing for with such and mended care performance relevant diligence requests that were sub- its passing upon guilt function of mitted on behalf of Government. The or Kelly Hagen innocence and on the preparation conspiracy trial of this for the intricate registration and counts. We proofs shall, presentation and case nevertheless, discuss later several investigation task, arguments was an as the arduous Hagen ad- including covered a wide distant dressed field sufficiency correctness and parts of the United States several specific subjects. instructions on foreign We countries. commend the prosecutor L. IV Arthur Liman done, particular- well associates for a task The Claims Misconduct the Trial ly every required plugging as it Judge Wholly Unjustified Are through hole upon might just escape punishment Vitriolic attacks the fair impartiality judge Surely ness and of the trial cannot now awaits them. commonplace prose- expected seem to have become to reverse because the conspiracy requests these criminal cases. See cutor formulated numerous for Dardi, Cir., 1964, States v. skill and with such instructions with such 316, denied, regard prior laid 379 U.S. as down the law mistrial; (e) Hagen; (d) a proper state- accurate (cid:127)cases that these another district judge. of the case to transfer adopted the trial were ments visiting “by a of a trial later the direction judge.” of miscon claims Some judge charged trial that the It require detailed state duct somewhat firm conviction that had a indicated he Kelly discussion. ment and a brief charged guilty January 3,1963, months three some On automatically that he was therefore commenced,Milton R. Wes- trial after the “proceeding,” disqualified, that the sel, Esq., defendant Jules counsel called, Mr. with Wessel conversation guilty, Bean, yet pleaded not who had part it was trial and that go end of the bench at the (cid:127)occasion to presence conducted judge day, speak to trial court counsel, in violation and their having wholly matter unrelated rights Sixth secured them case connection whatever of counsel The claims Amendment. *39 not trial. While conversation the spectrum Kelly Hagen a wide and covered reported, for Mr. informed counsel Wessel protested promptly that and Mr. Wessel they Kelly Hagen and that after the discussion misinterpreted completely the had concluded, of the unrelated matter was Although judge’s of the statement. tenor judge the trial a that he made comment guilty Kelly Hagen pleaded nor neither requested to to Mr. Wessel communicate incident, and it is undis- as a result of the n counselfor Kelly, Hagen and Shuck. looking negotiations puted that no according purport was, Mr. of this way, guilty pleas is were finder then memorandum: Wessel’s species a of characterized as nevertheless * * * any in of There is no merit coercion. said could not “He he contentions and on United these reliance why Kelly, Hagen and understand Tateo, S.D.N.Y., 1963, 214 F. States v. Supp. fighting way. He Shuck were all the wholly misplaced. is every said that bit of that evidence came in another ‘nail in their added may it would we assume that While coffin,’referring Hagen Kelly and judge kept been had the trial better -* * “good “compassion” his and his inten I “He said that should tell them himself, that tions” to think it clear being posi- placed in that he was a “pro a in no the conversation was sense want, tion did not because which he ceeding,” any what nor was it sense jury if the a of con- returned verdict part of the trial. United States v. ever a might viction, he well conclude that Gironda, Cir., 1960, F.2d cert. 2 prison, he had to them to sentence denied, 1961, 852, 81 S.Ct. 365 U.S. including Kelly.” even 816; 5 L.Ed.2d Cir., 1962, v. United Stein judgment In view of our of reversal denied, against (cid:127)of find no conviction Shuck we 10 L. U.S. 83 S.Ct. any (cid:127)occasion to discuss further reference States, Cir., 417; Ed.2d Cox v. United to him. nothing find F.2d 614. We judge that the trial had decided indicate it is said that under- While “counsel Kelly good in his own mind that stands the of essential intentions” guilty. suggestion inclined judge, if we were the trial were Even is Subject, speculate “compassionate” one, we are to not, on that (cid:127)called a the imme- to the trial statement ascribed diate result was motion for a the follow- judge any ing respect relief, was not with views based the statement which of held himself but what reaction (a) was made to Mr. an Wessel: im- jury might all, judgment Kelly trial acquittal be. After mediate of as to later, they judge jury Hagen; disqualification instructed were (b) guilt judge judges preside or innocence the sole continue over the defendants, he trial; against In fact told (c) he. a severance case many he had no V in so words that Moreover, subject. opinion con- on that The So-Called “Slanted” Instructions counsel, trary a mass to the assertion are filled briefs prior to had been received evidence vague charges judge trial with that things January 3,1963, of which all made the-prosecution, became “advocate” Hagen. look Without bad “inflamma- the instructions were belaboring point, our review closing argu- tory” and “no than a more by January 3, record indicates Government,” ment in favor of the Hag- perfectly it was clear that subjects the instructions on such as rea- pledge en knew that investment em- proof sonable doubt and burden agree- September 30, bodied in the away and buried in the instruc- hidden complete sham and it had ment was a tions fashion as to as whole such clearly they been demonstrated that impression upon the minds make little materially actively participated in and jurors, respects other public dis- facilitated the substantial judge “partisan.” trial These ani- tribution of Coast Leaseholds stock. upon performance of madversions judicial judge duties trial charge that the trial Another should made. never have been There judge parte proceeding an ex conducted syllable justification not a to be found the absence in this massive record these rights their counsel violation thing It attacks. is a cruel to resort secured Sixth Amendment based against judge such innuendoes *40 on an incident that occurred while the many years record of fine faithful juors deliberating on their verdict. bench, who, by service on the federal jury judge in a to sent note the trial office, virtue of his cannot defend himself. which read: “We should like to have the by perhaps What counsel means all this court’s comment on the basis for the probably bombast no than par is more this: determination of intent and wilful time, prosecutors in ticipation.” the course of they Counsel demanded that copy charge defense counsel culled out of thou- be furnished a of the entire juries they sands of instructions to portions certain so could select of the particular they phraseology charge they thought think has repeated should be tendency, subconsciously, perhaps jury. a in- they to the this When was denied jurors favorably prosecu- right fluence demanded to sit down with the particu- judge tion or to the defense. As these reporter trial and the court again supervise lar judge deciding instructions mentioned or are assist the in again by affirming appellate courts in judge what “comment” the trial would judgments where such instructions were make. It all sounds like in Wonder Alice objected to, surprise it should not us to presumptuous suggestion land. This prosecutors find who seek have these rejected, and, vigorous protest over the particular in instructions used whole counsel for the trial part ground they on the have been judge “comment,” requested made his as “approved” by the courts. thinkWe this by jury, doing and in so read from he by is all counsel means “slanted” instruc- pertinent parts various of the instruc tions. already given. tions as After a further happens It so a there are few objections parts statement of read portions of the instructions in this case judge the trial and to his omission fairly that can said to eome within Judge parts, quietly read other Cashin category just above What defined. reminded counsel that asked judge trial did is revealed a careful only “comment,” added, for his and he study charge of the as a whole. He took for, “That is all asked and that is all requests parties, submitted they got, period.” agree carefully We with him. them checked with what he read 764 vague doubt, support him in nor a nor fanciful cases in the cited changed conjecture

requests of them some A or surmise and then doubt. mere form this in the submitted. In and used others is not a reasonable doubt. dispose examples de- Two will suffice case a reasonable doubt argument charged guilt about “slant- fendants’ of the crimes is instructions. of America ed” the United States such a doubt thereof as a rational Request on The Government well man or woman would consider mar forth in the is set reasonable doubt full fair delibera- founded after 9gin example typical “slant as a upon trust- tion worthy all credible and to the hearts ed” prosecutors. dear instruction case; or, evidence this on the trial It was used stated, has a for which been doubt 1962, Agueci, Cir., 310 2 United States v. given. can be reason 478, 817, denied 99 A.L.R.2d cert. F.2d “Now, case such doubt in this States, Guippone sub nom. 1963, v. United entitles the defendants to verdict 1013, L. 10 372 83 S.Ct. U.S. guilty. consequence, In not United Ed.2d on the trial case law is such that a criminal Kahaner, Cir., 1963, F. v. 317 States enough proved de- if that the denied, Corallo United 2d v. guilt beyond fendants’ be established States, L. 84 S.Ct. U.S. doubt, beyond all a reasonable not 65, Keogh Ed.2d v. possible doubt.” 11 L.Ed.2d U.S. S.Ct. Hagen object Exercising discretion, sup While counsel he wrong nothing this, virtually Judge we find posed do, thought Cashin this Accardi, Cir., language with it. United States v. appropriate for case. 342,F.2d 699; United States prepared heSo an instruction of his own 864; Davis, Cir., cf. defend more favorable to the Johnson, Cir., ants, United States v. as follows: 343 F.2d 5. plainer “There are words than By way contrast, the words ‘reasonable doubt.’ The Gov *41 may, subject Request term defines itself. You how- on ernment the ever, by proof be aided the idea of what a character elicited from some of the by Hagen’s reasonable is not. A doubt reason- Government witnesses counsel part Hagen’s possible able doubt is not a as mere defense was used imagined “The has the a Government burden of It an It is not is not doubt. proving charges against juror might conjure up de- in the each a doubt beyond performing unpleas- It fendant a reasonable doubt. avoid order duty. repeat, shifts re- is a burden that never ant Let it is task or us upon through- mains the Government a reasonable doubt. The burden is guilt A out the entire trial. defendant does the the establish Government beyond prove not have to his innocence. On the the a doubt. defendants reasonable contrary, presumed necessary to be he innocent not Government is It is guilt prove in in- be- accusations contained to yond defendants possible dictment. doubt. a If that were presumption only rule, women, guilty if This is removed few man however you be, they might The and when are satisfied the Gov- would be convicted. prov- is ernment its burden of in it has sustained is that this world ours reason guilt ing beyond impossible person practically of a a to be defendant a absolutely completely reasonable doubt. convinced may any You well ask what is meant fact which nature controverted its expression ‘Beyond susceptible a cer- reasonable is tainty. of mathematical not consequence, I doubt.’ give the words In is such believe themselves the law enough if answer. It is a doubt in a criminal case is based that proof reason, guilty from the es- which arises evidence that a defendant is beyond doubt, or absence It a of evidence. is a doubt tablished reasonable might beyond possible which a man or reasonable woman all doubt.” entertain. a It is not fanciful doubt. stantly recurring every change. criminal case. used in also was It without Kahaner, supra, the common We think it better leave F.2d v. United States 459, States, judge powers denied, law of the trial unfettered United cert. Corallov. 65, unimpaired. 11 L.Ed.2d 375 U.S. S.Ct. Keogh 375 U.S. v. United VI and reads as 11 L.Ed.2d S.Ct. Reading The the Indictment follows: Jury to the trial, “During the course of the by the Gov- witnesses called several undoubtedly a mis This was on cross-examina- ernment testified Even somewhat abbreviated take. good a tion that defendant reading form of the indictment cov community. reputation in You his pages ered more than 50 of the trial togeth- should consider this evidence transcript. cases, It is idle cite with in de- er all the other evidence general does, for the Government termining guilt or innocence. discretionary that it statement is good may, reputation Evidence judge trial to read or not to read itself, create a doubt reasonable a the indictment to the criminal where without such evidence rea- long, case. This indictment was too too if, sonable doubt would But exist. sup and too involved for us to detailed evidence, you from all the are satis- reading pose helpful it would be beyond fied doubt that reasonable jury. probabilities it mere are that guilty, showing is defendant jurors ly bored waited enjoyed previously repu- that he get judge trial down to business. good tation of character does not any reading event, In of the indict justify offense, or excuse was in no ment small measure due you merely acquit should not him acquiescence unfortunate of the trial you because believe he has been a suggestion judge in of all counsel that person good repute.” he omit reference the facts supposed This way marshalling to be “slanted.” Cf. the evidence. More Birnbaum, Cir., 1964, over, jurors very States v. plain told 490, 498-499, simply with United States words: “The indictment an ac Kabot, Cir., 1961, proves nothing.” 295 F.2d 855 cusation and trial denied, 1962, & n. judge jury: 369 U.S. also instructed the “It is system S.Ct. principle jus 7 L.Ed.2d and United cardinal of our Crosby, Cir., 1961, every States v. 928, person 294 F.2d tice that of crime accused guilt 947-948 & n. presumed cert. denied sub is to be innocent until his States, 1962, nom. Mittelman proof v. United is established sufficient in law. *42 984, 599, 368 U.S. 82 presumption protects S.Ct. 7 L.Ed.2d 523. defendants The the Haskell, Cir., See also 1964, every stage United v. 2 States at That here presumption this trial. 286, 281, denied, goes F.2d 327 cert. 377 follows this case as it 945, 1351, may U.S. 84 you. presumption S.Ct. 12 L.Ed.2d re to pelled That be 307.r “slanted,” only your Whether or not it is we think or overthrown ver exception the taken to this instruction is dict.” not well founded under of the cases instructions, way, These the above cited. The instruction is in all proof, others on burden of reasonable respects correctly accurate and it states subjects important and other doubt legal principle involved. early charge, part included in the suggests just Counsel it is better for before the statu- reference judges give tory the trial provisions what de counsel defendants were reading charged violating plate” scribes as “standard” or “boiler and the subjects on instructions such as burden indictment. These same are the proof, innocence, presumption would instructions place,” reasonable doubt and other matters were “out of “out of con- us believe 766 essentially ap away one task

context,” that no irrelevant to our so or hidden alleged praising preju errors and the notice them. would dicial effect thereof. Cf. United States prejudicial in the error find no We Dominicis, Cir., 1964, 2 v. De 332 F.2d reading of the indictment. may 207, 210. The same be said of the during trial be internecine warfare VII hand, Hagen, tween one Co-conspirators Accomplices prose Guilty and Shuck on other. Doubtless Who Pleaded always hope cutors co-defendants will Kelly and contentions of turn on one another and thus enhance general subject accomplices and on the guilty. that all will found chances be many co-conspirators It and varied. are may exasperating counsel, This be but may that, interval between well be unlikely that, it when all is said filing 24, on March of the indictment done, justice the ends of will be at and the commencement of trial 1960 See, g., tained. e. United States v. Houli 14, 1962, prosecutor on November han, 1964, Cir., 2 332 F.2d cert. trying best, consid- and with denied, 828, 379 U.S. 85 L.Ed. S.Ct. success, coopera- to obtain the erable 2d 37. many result tion co-defendants. The against Hagenbach, was: Paul cases by Kelly It is claimed and Ha- Stahl, Trust, Brandel DePon- Charles R. gen, however, that “the tenacious refusal Co., Stahl, & Adam Miles tet Miles and impose of the Court to on Van sentence prior trial; & John Co. were severed Allen” before conclusion of trial Allen, Irving Hertzberg, H. F. W. theory constitutes reversible error. Co., DuVal, MacDonald Du & Pierre A. given that, seems to be if sus he Consensus, Inc., Val’s Martin Teller pended posi proof would sentence this pleaded guilty prior Michael Ackman eyes jurors tive that was he trial; guilty pleaded Bean Jules perjuring himself to earn his reward. February 7, 1963, after the trial had authority support going find no We on for been several months. Van Allen, Hagenbach Hertzberg, Teller, claim of error. The uniform current of Stahl were Government witnesses authority place seems to such matters trial. entirely within the discretion of the trial judge. Cir., States, Barlow v. United 1 begin with, To is futile 105; 1925, reargue attempt 6 F.2d v. counsel United States in this Pruitt, Cir., 1965, 700; questions credibility 4 341 Court F.2d De that have already States, 1962, See, Cir., jury. v. bardeleben United 9 been decided g., 362; Anderson, Cir., 1964, Epperson Dardi, 307 F.2d C.Cir., 1963, D. e. United v. States v. 2 665; 325, Bankey 316, denied, F.2d 330 F.2d 845, 326 v. cert. 379 U.S. D.C.Ga., 756, 50, 50; Sanford, 1947, F.Supp. 85 S.Ct. 13 L.Ed.2d United 74 affirmed, Cir., Robbins, Cir., 165 F.2d de States v. 684, 687; cert. 340 F.2d nied, 1948, Cir., Mims, United U.S. S.Ct. States v. 1130; Grabina, denied, 92 L.Ed. 340 F.2d cert. 85 S.Ct. States 1535; Cir., 1962, denied, Cir., 2 Proffit v. United 705; 316 F.2d U.S. 83 S.Ct. United States v. *43 1057; Moran, Cir., 1945, 2 L.Ed.2d v. Tannuz 151 F.2d 661. But United States “castigate” zo, Cir., 177, 1949, temptation 2 F.2d de 174 cert. the such for 815, 38, nied, 94 L.Ed 338 mer friends and U.S. 70 S.Ct. associates seems be States, strong 493. See also United too for but the most ad Leach v. able 1964, U.S.App.D.C. 197, may F.2d 118 334 vocates to resist. It well be particular lot, 945. In this there were Van Allen is the case worst of the waiting many cogent per reasons for the that Teller the best has record sentencing juring verdict and then all defend himself whenever it to his ad is together. vantage this, however, to do is ants so. All

767 ly charged permit Nor it error to as who co-defendants and guil co-defendant, Bean, plead pleaded guilty trial, before well Jules as as ty during progress accomplices co-conspirators of trial. the the with Cir., 1961, necessary Crosby, records, 2 v. criminal it United States 928, 948, judge accurately 294 nom. the trial F.2d cert. denied sub to instruct subject States, 1962, pleas v. the Mittelman United 368 the of the 523; 984, 599, just U.S. 82 S.Ct. 7 L.Ed.2d other referred circumstances to. agree Aronson, 1963, difficulty Cir., v. 2 We United with this. is that States 48, give 52, denied, judge 319 F.2d the trial did cert. 375 U.S. of un- series 920, 164; exceptionable 264, 11 84 S.Ct. L.Ed.2d United instructions on these mat- Dardi, and, usual, Cir., 1964, requests States v. 2 ters by Kelly as 330 F.2d submitted 316, 333, denied, 845, cert. 379 U.S. were For 85 defective. 50, example, 50; S.Ct. 13 L.Ed.2d Koolish v. Unit submitted Re- quest States, Cir., 1965, 513, subject. ed 8 No. 54 on 340 F.2d We cannot this why 529-531, they 1965, cert. 85 understand denied S.Ct. 1805. insist that the tes- timony noted, accomplices however, It is to be that in must be corrobo- this guilty plea clearly case the presence rated. The federal rule to the was not in the made contrary. jury, g., jurors of the nor E. v. Caminetti United any way apprised States, 1917, 495, 470, 242 U.S. 37 S.Ct. the fact it had 192, 442; been made. 61 L.Ed. v. While the statement in United States Cros by, quoted Agueci, 1962, 817, 833, Cir., also 2 verbatim in 310 F.2d the later cas cited, goes say Guippone es above cert. denied sub nom. v. United that there impropriety States, 1963, 1013, is no jury 959, or error “even 372 U.S. 83 S.Ct. for the present 11; pleas to be 10 when L.Ed.2d v. Strom United States are entered,” opinion berg, Cir., the writer 2 268 F.2d cert. wish disagreement S., S., es to record his denied v. U. Puco v. U. [Lessa with this may S., S., view. It well U. Mai per be that the Teitelbaum v. Mirra v. U. rule mitting pleas S., S., such mone Behrman U. De to be v. U. v. entered in the full jury, S., view of pre v. 361 80 S.Ct. and even Saverio U. U.S. arrangement ; 123, 124, 130, prosecutor 4 L.Ed.2d 108] judge, Cir., 1964, States, trial has Williamson 5 been in v. United force in this so, many years. 132; Vita, Circuit for 332 F.2d v. United States If time change If, Cir., 1961, when, rule. F.2d dur ing progress joint trial, denied, 1962, of a S.Ct. 369 U.S. a co- pleads guilty, entry 788; defendant v. United L.Ed. Williams such plea possibly 664; Cir., 1962, cannot United States beneficial to the 132; Mule, Cir., interests of the other 45 F.2d defendants. v. In the very Gallo, Cir., absence of exceptional 123 F.2d some circum States stance, Evidence, giving generally Wigmore, way such to a See sud impulse 1940). part (3d den on the 2056-60 ed. the individual Sections pleading guilty, the dramatic and emo clear, specific Moreover, and com- ain tional upon entry features attendant appear- prehensive of instructions series plea presence jurors inclusive, ing 17484-17491, pages should be avoided. In the natural course judge transcript dealt the trial trial guilty pleas during joint events trials just above referred matters with all the anticipated. are to be they At least can balanced, are well to. These instructions not be plain duty avoided. It is justice full all do correct presiding judge nothing to do to in fact he said that Thus defendants. possibility prejudice crease guilty pleaded defendants that certain remaining defendants. guilt of proof “is whatever * * * Hagen argue, are on trial these who defendants how ever, testimony guilty may used pleas that there not be was so much their *44 against against by way persons you any or joint- them as evidence who were 768 promptly any on deemed waived not defendants trial “is if to of the

unfavorable trial”; Hertzberg, opinion Teller, Allen, As the of this asserted.” writer that Van rule of Lustman Hagenbach interested is of the view that the Stahl were modified, law, all and that inflexible and should matter of too be as witnesses 353, perjurers People Prosser, 1955, testimony v. 309 N.Y. of admitted cf. 891, (Fuld, 295 caution 130 N.E.2d 57 A.L.R.2d considered with “should D.C.Cir., J.); States, great v. weighed added: Marshall United He with care.” briefly 1964, 119, 337 F.2d to we refer not a witness whether or “Consider indicating of the a few circumstances with re- concerned or is interested that, at least in the circum- this case ceiving or considera- reward some clearly require application of stances against immunity possible or tion extremely Lustman rule. The case against prosecution punishment or sufficiently appears complicated, any with offenses offense or lengthy indictment, its 20 named the defendants, with charged might be the witness co-conspirators 28 160 charged. All evidence has been or counts, far-ranging and the character of self-interest a witness whose proofs in our Review of described might to such attitude is shown be lapse from the the Evidence. The of time testimony prompt unfavora- to tend filing 24, March the indictment on consid- accused should be ble 1960 the commencement of trial weighed with caution and ered with 14, on November 1962 was excessive great care.” in view of the motions made numerous no findWe error United the defendants. See States accomplices, to relative instructions Allen, 1961, S.D.N.Y., 28 F.R.D. v. Van co-defendants, guilty pleas of some F.Supp. 208 331. Once the of some of records the criminal particulars bill of was filed Gov- generally on witnesses Government ernment, Kelly apparently credibility subject all wit of the speedy zeal fur- lost their for a trial and nesses. procedural ther motions other matters delay made. were While there was VIII original disposing motions, some Violation Miscellaneous Claims of given pre- consideration must be occupation Rights Constitutional prob- of the court with other Kelly and complicated and the lems various features A any event, In the case. it is evident delay prejudice that this did not probably It is sufficient an Hagen. Hag- by Kelly to the contention swer right deprived were en of their B speedy the Sixth under Amendment to Lustman, Hag- trial United cite States v. It is claimed denied, Cir., 475, rights 1958, 2 258 F.2d cert. their Amendment en Fifth 880, infringed 118, 358 U.S. 79 3 L.Ed.2d S.Ct. both failure to 109, long respect in this and the line of cases Allen restrain Van some following unresponsive Circuit Lustman.10 There answers cross- delay by instructing took after examination and bring and, steps request ac to trial case at the close case cording right speedy Lustman, objections to a and over Shuck 1964, Haller, Cir., F.Supp. 653-654; 1957, States v. 2 155 United United denied, Patrisso, S.D.N.Y., 21 F.2d cert. 379 U.S. v. 363; 333 States 334; United F.R.D. Harlow United 85 S.Ct. L.Ed.2d Cir., 1961, 361, 366-367, Allen, Cir., cert. States v. F.2d denied, denied, L.Ed. 371 U.S. S.Ct. 368 U.S. 37; L.Ed.2d States 2d 56. S.Ct. S.D.N.Y., Foundation, Inc., v. Research

769 Hagen, presump- granting to the effect “no find no We basis here for against any by Kelly tion inference of kind” or motion for a mis any of or them preju defendants trial. There nowas error and no States, Cir., out of their “to take wit- arise failure dice. See v. Peel United 5 testify” 1963, 907, 912, ness stand their own 316 F.2d sub cert. denied you defense, permit “and must not States, nom. Crane v. United 375 U.S. slightest degree weigh 896, 125; 174, 11 fact against 84 S.Ct. L.Ed.2d United any them, nor Parness, 1964, him or of should Cir., States v. 3 331 your 703, denied, 993, this fact deliberations or enter into cert. 377 U.S. 84 S.Ct. 1919, discussions in manner.” type 12 L.Ed.2d in 1045. This expected cident is more less to in a be respect With to the Fifth Amendment long Judge way trial and the Cashin unexcep instructions we think are entirely proper. it was To have handled tionable, that, request after Shuck’s presence admonished Van Allen judge trial had no than alternative other given jury perhaps of the would give instructions, these it jury impression that this trivial would not have for him to been error incident conse some give matter them even if Shuck had not made quence. request. States, Bruno v. United 1939, 198, 287, 308 60 U.S. S.Ct. 84 L.Ed. C 257; Garguilo, Cir., 2 United States v. 1962, 249, 252; 310 F.2d Becher v. Kelly Hag- Before trial States, Cir., 45, 1924, United 2 5 F.2d deposi en made a motion to take 49, denied, 1925, 602, cert. 267 45 U.S. Stahl, tion of Adam Miles Miles & 462, 808; S.Ct. 69 Smith v. United L.Ed. Co., Ltd., denied, and this motion was 1940, 187, App.D.C. 72 112 F.2d fugitive jus as Miles was then 217, denied, cert. 311 U.S. 61 S.Ct. tice. We shall not take the time to enter 20, 85 L.Ed. 425. digression subject into a on the occasionally many While Van Allen supporting other factors ex threw a few shafts in the direction judicial ercise of discretion. Suffice Hagen, judge think the trial say that we think the denial of this properly handled the matter and that his proper. motion was Soblen, S.D.N.Y., v. United States admonition to Van Allen taken with what F.Supp. charge, was said in the main 568-569, affirmed, Cir., 1962, above 301 F.2d described, quite makes it clear denied, cert. 82 S.Ct. U.S. prejudice. 810; suffered no For States v. L.Ed.2d example, prodded during when Bentvena, cross-ex Cir., 319 F.2d give answer, amination to a “Yes or No” cert. denied sub nom. States, v. Ormento United replied: Van Allen 345, 11 U.S. S.Ct. significance L.Ed.2d 271. The of this Oh, plenty “A. I can answer ruling here, however, that, cer when questions Yes and No. Wait until produced tain documents were from the Hagen get Mr. and Mr. on the Stahl, Co., Ltd., the files of Miles & ad stand. Let them answer Yes or No. evidence, into mission these documents that, “The Court: Never mind coupled with the of the motion to denial now. question. Please answer the deposition Miles, take said No comment.” rights violate the refusing After request compulsory counsel’s process that he and “to confronted “castigate” Allen, judge against them, the trial with re the witnesses” quietly firmly took a recess and quired but told the Sixth and also Amendment robing

Van Allen in the deprive room and out them of a fair trial and to presence deny process that he must them due under the law stop thing, explaining this sort of his Fifth A Amendment. somewhat similar reasons, stop. argument and Van Allen did is made reference to doc- during testimony Riccardi, Cir., 1949, 174 F.2d produced uments denied, Hagenbach, 337 U.S. 69 S.Ct. motion to as a similar *46 1746; States, Hagenbach Papalia L.Ed. v. United deposition before 93 of take the 1957, 437; Rumely Cir., v. 5 243 F.2d No authorities denied.

trial had been 532, States, Cir., 1923, United 2 293 F. support of vi of claims are cited in 552, denied, 713, 44 cert. 263 U.S. S.Ct. Amend Fifth and olations of the Sixth 38, 520; v. 68 L.Ed. Commonwealth of documents ments the use these Butts, 1964, Pa.Super. 302, 204 A.2d 204 and after denial the absence of Miles Hagenbach’s 481; 1962, depo People, v. 151 Colo. Jordan the motion take 1963, 133, 699, denied, argu P.2d 376 cert. merit these sition. We see no 944, 1553, 10 L.Ed.2d 373 U.S. 83 S.Ct. ments. also United States v. Rosen See 699; 1957, People blum, Cir., 1964, Gardner, It v. Cal. 2 339 F.2d 473. 147 614; App.2d 530, strange 305 P.2d State v. Brad would a affairs indeed be state 556; fugitive ley, 1950, 267, by becoming Mo. 234 if a 361 S.W.2d defendant People Weinberger, 1925, justice excluding v. 239 N.Y. from could succeed in Wig- 307, generally documentary against 146 N.E. 434. See 3 co-con evidence his (3d more, Evidence, spirators prosecutor 734-55 Sections unless the consented 1940); McCormick, taking deposition 590- ed. Evidence abroad. his (1954); Annots., Soblen, supra, 95 82 A.L.R.2d 473 See also United States v. S.D.N.Y., (1962), (1940). 1961, F.Supp. 542, 568, Pro 125 A.L.R. 19 As 203 af Wigmore firmed, Cir., 1962, 236, cannot be 2 fessor states: “It 301 F.2d denied, past 944, 1585, of a 370 82 doubted the use recorded U.S. S.Ct. 8 (under relationship conditions L.Ed.2d 810. recollection We see be later) occupies taking firm and dep tween now the denial examined practice Hagenbach place unassailable in our ositions Miles and and the Wigmore, 736 at use of doctrine.” 3 Section evidence, the documents in view necessary of the fact reason overrule these We see no founda question tion the soundness was laid to make authorities or to the documents ad They highly reasoning policy were, course, and the missible. their application of this relevant issues on trial. underlies them. The relating doctrine, principles like the D testimony declarations, dying prior Scraping the bottom of the virtually witnesses, and indeed deceased up barrel came rule, hearsay exceptions to the all the another claim of violation of constitu any deprivation not involve does rights tional to the effect that the rule right the Sixth of confrontation admitting documentary past evidence as interpreted has been Amendment recollection recorded should be overruled. Leathers, 2 v. construed. United States argument, upon dissenting The based 511; People 507, v. opinion 1943, Cir., 135 in the rather situation extreme 1963, Hobson, supra, 189, presented by 119 People Hobson, 1963, 369 Mich. v. 369 581; 1937, Kinsey State, 189, 49 581, v. Mich. 119 N.W.2d N.W.2d runs some 3; thing 1141, 201, 65 P.2d 125 A.L.R. Ariz. like this: a document received in 158, State, 1960, A.2d past Md. 162 Hall v. 223 evidence as recollection recorded is Cir., Rosenblum, 751; present received United States v. when the witness has no 473; facts, State 339 F.2d Pointer v. recollection of the therefore the net Texas, 1965, 85 S.Ct. 380 U.S. deprived is that result accused is 923; Kay opportunity v. United 13 L.Ed.2d cross-examine 480-481, right States, Cir., 255 F.2d hence his confrontation im denied, S.Ct. pugned. past 358 U.S. rt. doctrine of recollec ce 65; long Matthews tion 3 L.Ed.2d recorded been favored has 418; Cir., 1954, 217 F.2d practically federal and the state all Corp., v. Johns-Manville States courts that have had occasion to decide United - F.Supp. 694 E.D.Pa., question. See, g., United States e. brought 696; Wigmore, Evidence, by Hagen Sections debentures 1397; Evidence, Kelly. McCormick, mightily Sec- Van Allen was dis- 483; development Note, tion 231 at this U.Det.L.J. tressed letter “I, by (1963). from reflects reaction: certainly token, the same can not under- question arose in case con- Corpus stand the Christi situation and nection with the memorandum made long time the Van Allen one back. the witness Robert Swanson about his Why I he would think the villain in conference with on November bonds, with the I connection GCL do 1954. At that time Swanson was asso- know; certainly *47 off when he has taken City ciated with the First Bank National 73,000 Corpus with some of our shares York New and the conference con- ” * * * added.) (Emphasis Christi appointment cerned the of that bank as a documentary proof The Government’s agent co-transfer of Gulf Coast Lease- Hagen sought to that when establish holds stock. Corpus 73,000 “our” to referred shares of We would not have mentioned a con- talking 73,000 Christi, he about was lacking except tention so in merit for the by shares owned Universal Finance fact that perfectly we wish to make it July 26,1956 by Universal transferred plain argument, especially that no one to Brandel Trust. Finance Van Allen’s alleged addressed to violation con- rights, stitutional has been overlooked begins sequence Government The given or not full consideration. April 446(a), Exhibit a dated letter lawyer by Keller-Staub the Swiss IX Porter, brokerage firm of to the Houston Objections to Various Documents trading Co., Stacy opening account & by the Prosecutor Were Offered Company. The for Universal Finance Properly Overruled Stacy take Porter, to letter authorizes Kelly Hagen assert purchases and sales for instructions seventeen documents offered into evi from account either securities by dence improp the Government were step Hagen. Roy Kelly next or Cecil erly study received. Our of the record 446(d), another Exhibit is Government convinces us that each of these seventeen May dated Keller-Staub letter written plainly documents was either admissible Stacy Porter, 2, 1955, requesting to close or admitted purposes for such limited Ex- account. Government the Universal prejudice Kelly there was no to sig- Kelly’s 446(e) a letter over is hibit Hagen. instructing May 3, 1955, dated nature Stacy Porter, shares forward some A Hagen and which Coast Leaseholds Many challenged documents “borrowing” Kelly from the Uni- were direct in the Government’s links May On account. Finance versal proof demonstrating Kelly chain of Univer- 1955, Keller-Staub, on behalf Hagen owned the secret Swiss trust Exhibit wrote Government Finance sal Company Universal Finance and that cancelling Stacy Porter, 446(i) Universal Finance was the medium May 2, close ac- 1955 to direction through collect- begins: special “On This letter count. per ed their ten cent kickback from Van Roy agent, Mr. advisor and of our desire Allen. The culmination of line this you today follow- Kelly, sent we B. proof “private was a and confidential” ing OUR TO CLOSE NOT BEG cable: letter dated Decem- WITH DEPOSITS AND ACCOUNTS part ber 1956. This letter was MAINTAIN TO BUT CONTINUE YOU Government Exhibit 990. At the tail- BOTH.” Evidence, end of our Review of the we 21, 1955, Kelly mentioned the On to Por- fact December June wrote Stahl, ter, Stacy Miles & Co. enclosed the Universal foreclosed on Van represent- Allen’s Gulf Coast account No. 18090 and these “certificate debentures ing seventy-three unwilling thousand firm shares extend Van Refining Corpus Company.” Allen pur- Sub- Christi further credit cover the sequently, price shares, Por- $146,000. Universal account at chase of these ter, Stacy accordingly closed and a one It new decided that until Van Ray Co., opened Stahl, & paid Johnson another Allen’s debts to Miles were brokerage off, firm. Government Houston Universal Finance would not be able Porter, 446(uu), $146,000. By a letter from Exhibit is use the December Stacy Ray Johnson & Co. dated Au- had still not Allen satisfied gust begins: debt, “As 1955. This letter and the letter Hagen, taking requested V. Mr. Cecil Allen about Van off with you Corpus CHRIS- hand herewith CORPUS “our Christi” and which we have previously TI REPINING COMPANY certificate described was written. The shares.” certifi- final document series Govern- #18090 up February cate according ment over next turns Exhibit letter Miles’ Hagen’s signature February 15, written This to letter dated secretary, recapitu- which is Exhibit Government letter addressed to to De lates 433. This was addressed Brandel-Universal letter details *48 brokerage Co., Corpus of & the transaction in Christi. Pontet one friend controlled Van Allen’s houses admissibility The of several of these Enclosed with letter Charles Stahl. the questioned here for ob- documents is * * * is No. 18090 “Certificate unchallenged vious docu- reasons. These seventy-three the of thousand amount Hagen’s ments are: letter about (73,000) Corpus of stock of shares the Kelly’s Corpus Christi”; “our letter of Refining Company.” Christi letter The transmitting 21, 73,000 the 1955 June “Mr. continues: has instructed Porter, Stacy Corpus shares of Christi you are to be these shares sent Co.; & and Government Exhibits 433 Stahl, for of the account Miles and Com- concerning 434, and these the letters carry pany, Ltd. will this stock [which] Hagen's secretary to shares written Financing for account of Universal February during 1956. DePontet & Co. Company.” Hagen argue, however, that and complications

Apparently reception into other some at evidence brokerage impeded speedy re- houses described constitutes ex- documents above Hagen’s of these documents ecution instructions. On Feb- error as each versible ruary Hagen’s hearsay 24, secretary 1956, under rule. wrote was inadmissible 434, challenged letter, Government Exhibit documents five another These include Co., requested to DePontet & ac- letters about the Universal Finance handling” Stacy Co., Porter, firm to “correct the cer- count at & Government through 446(e), 446(i) 446(a), 446(d), that it tificate so would held Exhibits Stahl, 446(uu), Universal The and and two letters Miles for Finance. sign- reply, Miles, 434(a), Exhibit Exhibits 434 Government Adam Government 5, concerning (a) 442, ed Adam Universal Miles dated March 1956, Stahl, & Co. addressed to states: account at Miles your “Please note that in accordance with testimony in connection offered request 73,000 Corpus shares of challenged exhibits, as well with these [sic], Christie all certificate No. one themselves, makes documents 18090 will be held for account quite “made in each was [the] clear that Financing Universal Co.” regular 28 business.” U. course July Accordingly, mentioned, during 1732(a). each of As S.C. § we though Stahl, hearsay, documents, 1956 account Universal these plainly under the standard of Cor- admissible transferred shares Miles pus permitting hearsay exception rule Trust. to Van Allen’s Brandel Christi however, into point, Allen was the introduction of business At records exception hearsay considerably Stahl, evidence. The in debt Miles

773 $10,000 $90,- recently has been dis and Gulf Coast records Leaseholds business 000; 826, United States and Government Exhibit dated such cases as cussed 311-314, Re, Cir., 1964, payment of 2 directs v. 336 F.2d June denied, $5,000 85 S.Ct. 379 U.S. to Universal Finance. Each rt. ce LeRoy v. Sab L.Ed.2d these instructed Keller-Staub letters Cir., 1965, necessary Belgian take In- Airlines, 2 World funds Sun ena 266, 271-274, vestment, See also F.2d 279. Van Allen’s own secret Swiss Trading v. trust. All Nations Co. United Cir., 1964, 501; Korte v. New 338 F.2d Though all of re- was defense, this evidence Cir., 1951, R., York, N. H. & H. R. objection by ceived without 86, 88-91, denied, 342 U.S. F.2d Hagen protested counsel 652; La Porte 72 S.Ct. L.Ed. strongly repeatedly to the admission States, Cir., 300 F.2d v. United into evidence Government Exhibit 773. Cir., 878; Olivo, States unsigned three-page This exhibit is Wig- generally 5 415. See copy Sep- of a letter Van Allen dated (3d more, Evidence, 1517-33 Sections pages tember The first two 1940); Evidence, McCormick, Sec ed. payments consist of statement of the (1954). Accordingly, 281-89 with tions receipts Sun Investment. going out into a detailed discussion page third as follows: to which letters extent these various you your “I thank information co-conspirators in declarations of about CHRISTIE CORPUS [sic] conspiracy, con furtherance REFINING CORPORATION. Un- say Govern it sufficient that the sider happily, illiquid I am rather sustained ment its burden demonstrat must therefore this matter discuss *49 ing applicability rec of business my with wife. exception to documents ords each of the regards “With kindest improperly re now claimed have been to very sincerely,”. namely, “Yours case, as in evidence ceived 442, 434(a), 446 Exhibits Government grounds objection of asserted at the 446(d), 446(e), 446(uu). (a), 446(i), by Kelly Hagen trial and counsel were hearsay, that this document was that the B lay proper Government failed to foun Having thus the secret established that dation for admission into its evidence Company trust Swiss Universal Finance and that the best evidence rule barred Hagen by and and owned controlled During its admission into evidence. Kelly, proceeded to dem- Government argument appeal oral of this counsel money that substantial of onstrate sums argument premised abandoned the paid to Universal Finance Van were light in au best evidence rule of the testimony Allen’s concern- Allen. Van thority Ross, Cir., United 2 of States v. Kelly ing Hagen and the kickbacks to 1963, 61, 69-70, denied, 321 during detailed, rather and 894, 170, 84 11 U.S. S.Ct. L.Ed.2d testimony of this course the Government 123. introduced numerous written letters Keller-Staub, respect Allen at- Van to Swiss to the of With claim torney, Kelly to proof directed Keller-Staub that there was no payments authenticity Fi- various to Universal make of Ex Government proper execute certain other trans- nance hibit no hence founda Thus, evidence, actions Van Allen’s behalf. tion laid for its admission into during Exhibit March dated Fall Government Van testified that Allen Allen’s instruc- plead contains Van after he had decided $80,000 guilty, attorney tion to Keller-Staub transfer he authorized his Finance; Ex- request to Universal Government write to Keller-Staub and Keller May 12, hibit dated directs Staub to all of deliver his relevant docu pay Finance Keller-Staub Universal ments to the United States so that claims of find Ac considered their error and could examine them. Government testimony, cording them. Gov merit contents Allen’s As Van many nu documents are rather these ernment Exhibit was one confusing complicated and involve merous documents sent over Keller that he matters to the basic issues in Allen also testified collateral Staub. Van case, original al- we shall not burden this had of Government received ready lengthy opinion September with dis- 1955 but had further Exhibit 773 diligent admissibility these doc- search for it without suc cussion made many Moreover, uments. cess. entries Exhibit 773 were corrobo Government X documents, other rated such Gov Exhibits 826 and 828 above ernment The Cross-examination conclude, accordingly, referred to. We Witness Government sufficient, prosecution made a Shreve showing though entirely circumstantial, January On Exhibit Government 773 was au Light, his, pursuant of William friend States, La v. thentic. See Porte United appointment Al an with made Cir., 1962, 878; 300 F.2d United States Washington aid, Ed len’s met in with 415; Olivo, Cir., 1960, v. 278 F.2d SEC, who referred ward T. Tait Corp., States Johns-Manville attorney Shreve, E. an them Charles E.D.Pa., F.Supp. 693-694. Executive Assistant Director later generally Evidence, McCormick, See Sec Finance, Corporation of the Division of (1954). note, pass tions 185-94 We who had SEC been since ing, counsel They problem said had a and this given ample opportunity more than unregistered out to shares turned be the argue Ex to the that Government Allen Coast Leaseholds that Van spurious hibit 773 was a Van Allen crea help with the Corp. tion. See Esco v. United selling. testimony concern been Shreve’s Cir., 1965, 340 F.2d 1008-1014. day was, ing on that the conversation Finally, we turn to the conten Kelly’s brief, effect that stated tion that Exhibit in Government 773 was Light exemp he told hearsay. admissible We considered the *50 they said tion and that available problem applicability busi any delivering “they refrain from would exception ness records to the unorthodox reg contract until stock under the more n documents by made used members achieved, had and that istration been conspiracy a stock fraud in United States pay they expected group to the Swiss Re, supra, Cir., 1964, 306, v. 2 F.2d 336 significance, registration.” equal Of 313, denied, 904, cert. 379 U.S. 85 S.Ct. however, state was the series of false 188, 177, 13 L.Ed.2d concluded: we by Kelly and omissions made con ments fact “The were not main the records subject cerning to the facts relevant tained in the most like business or effi might jury exemption. well have The way cient on is likewise immaterial found visit to have been the whole admissibility.” threshold issue of thought ingenious by up device testimony Allen’s that he the effect tracks. cover his frequently reports received similar event, on cross-examination In upon them, to Keller-Staub relied Kelly produced certain SEC counsel gether other sur with the circumstances written and one or more books releases rounding the execution and the contents by on authorities the securities laws n 773, it Government Exhibit rendered began practices and he to ask Shreve SEC admissible as business record. agreed certain or not he whether C or the in the releases books. statements Objections questions objected sus- to these to several carefully additional have tained. documents. We

775 although that, McCormick, Evidence, are told counsel We Section 296. See given opinion expert generally Annot., (1958). or Shreve 60 A.L.R.2d 77 examination, on direct still evidence his XI credibility and, issue if coun- was in It Was Not Error to Send GX990 get agree with the sel could Shreve Jury During to the Its books, coun- in the releases statements Deliberations might up sel lead him to a situation opin In the sub-division of this might jury appear it where relating admissibility ion of cer unlikely Kelly that an he advised ex- prosecutor tain documents offered emption was not available. objected counsel possible It that an cross- is extensive Hagen, relationship we described the be rulings about examination various SEC tween the several letters relevant to the exemptions and the views text writ- ownership issue of the Fi of Universal might Kelly’s helped ers have claim by Kelly nance kick good probable, faith. It is much more paid back to them via Finance. Universal think, that the of such cross- result letters, part One of these of Government examination would been confusion. 990, 24, Exhibit is a letter of December might One of such confusion well effect Hagen Kelly containing 1956 from have been to the attention of the divert statement, “Why [Van he would Allen] jury from statements false mass I think that was the villain in connection by Kelly, and omissions which we have bonds, know; with the GCL I do not described in Review the Evidence. our certainly when he has taken off with Corpus some shares of our Christi questions On such of cross-ex ” * * * This one of the letters to essentially amination into collateral mat objection which no was made. given judge ters the trial dis wide After a few hours of deliberations cretion. Alford v. United judge sent in note to trial 687, 694, 282 51 L.Ed. U.S. S.Ct. 75 asking for exhibits. fourth some 624; Dardi, Cir., 2 United States v. item the list written was “Letter denied, 330 F.2d cert. U. Hargen Mr. in- to Mr. about our 50; L.Ed.2d S. S.Ct. vestment Universal.” Cardillo, Cir., v. States ascertaining jury the After from the denied, 606, 610-611, 316 F.2d information that the was meant reference 55; U.S. 11 L.Ed.2d S.Ct. Hagen, colloquy to be to Mr. there was a Rich, Cir., 1959, United States v. covering side bar several matters 418-419; United States relating jury had re- to the exhibits the 645-646, Ruehrup, Cir., 1964, 333 F.2d quested. judge trial he indicated denied, 903, 85 S.Ct. rt. 379 U.S. ce described. would send the letter above 177; Lyda 13 L.Ed.2d v. United *51 objected Counsel for 793; 788, Cir., 1963, 9 F.2d 321 ground on that the letter made McCormick, (1954). Evidence, 29 Section specific to Finance. Universal reference While in instance it would not have this agree opinion trial We with the of the questions that been to allow the error judge that this letter the one was objected though to, were even Shreve in the to obtain. As noted wished witness, testifying expert an was only brief this “is the Government letter certainly judicial not an of was abuse Hagen Kelly from to that was letter Pinkus, Reilly discretion to refuse. v. error here. find no evidence.” We 110, 1949, 269, 275-276, 338 U.S. 70 S.Ct. XII 63; Owens, 94 2 L.Ed. United States Juror to Excuse The 720; Refusal Cir., 1959, 263 v. Fen Ruth Proper Was No. 3 chel, 1956, 373, 171, 21 N.J. 121 A.2d J.); Wig- length (Brennan, a trial was 6 The A.L.R.2d 71 18-22; more, Evidence, con- to all much discomfort 1700 at source of Section jurors, cerned, especially judge colloquy who In the between the trial told at the that case and Juror latter had been outset No. 3 the showed not the go might slightest against prejudice appellants, on three months. for two or days any occasional off or of them. Nor do discern There were “the iceberg juror tip prejudice” consult and to allow to of an of re- funeral a already illness, physician. his Shuck’s mark of Juror No. 3 to the effect that interruptions only to, day spoke caused he as of the referred inter- his days. lasting many “Being human, rogation, I don’t trial There delays going caused discussions I am to feel about it a numerous know how robing kept jurors today in the room which the case month whenever daily waiting proceedings around ends.” April 29, Finally, to commence. governing disposition rule 9, complained had Juror No. who may applications old that such is an one delays hardships had caused and the trial of be traced back to the treason thought personally, that him he stated John Aaron Burr in which Chief Justice intentionally doing it “the defense stated, 1 Marshall Burr’s Trial at ex- with an ulterior motive.” So he was (1807): having judge cused, after told the trial “light impressions, may fairly which subject that he had not mentioned presumed yield be to to the testi- feelings jurors; of the other of his mony may offered, that place. There and an alternate took his may open leave the mind to a fair ar- also some discussion of a news testimony, consideration of the con- Sunday, Times of New York ticle objection stitutes no sufficient pos- April 7, 1963 which mentioned * * * juror; strong but those strategy by sibility coun- of a defense deep impressions which close consuming pos- “of much time as sel against testimony the mind that sible.” may opposition them, be offered in again May 6, subject this testimony On which will combat interrogation Juror pursued and the force, and resist its do constitute demonstrated, replies objection No. 3 elicited sufficient to him.” Hagen, according Kelly and counsel for Dowd, 1961, See Irvin v. also 366 U.S. part No. of Juror of mind on the state 717, 751; 81 S.Ct. 6 L.Ed.2d Holt disqualify a character as such States, 1910, v. United 218 U.S. jury in further service him from 1021; Spies 31 S.Ct. 54 L.Ed. v. Peo judge Juror trial retained case. The ple Illinois, State of 123 U.S. to remove the motion No. 3 and denied 8 S.Ct. 31 L.Ed. It is true an alternate. We him and substitute this Court also has a function to rulings. Indeed, agree with these bearing perform, in mind the fact think trial that we is so clear record seeing judge the trial had the benefit judge than to other had no alternative hearing See, person. Juror No. in3 did. dispose as he matter g., Louisiana, 1963, e. Rideau v. State substance the statement Jur- U.S. 83 S.Ct. 10 L.Ed.2d 663; or No. 3 is that he read the article United States ex rel. Bloeth v. Denno, Cir., Times, in the New York that he 313 F.2d opinion denied, that it would not 372 U.S. 83 S.Ct. influence regard governing verdict rule “with or L.Ed.2d 143. But the defense prosecution”; concerning jur- respect questions but that he did have with *52 feeling finding prejudice some “about the case.” He is: of the trial whole or “The explained animosity ought upon that while had no not to be he court issue against any may reviewing court, parties, the “I unless of feel set aside slight Reynolds animosity pro- toward the whole error is manifest.” the ceedings.” strange States, 1878, It would indeed 98 U.S. be Dowd, supra, if he not. did L.Ed. 244. also Irvin v. See 723-724, XIV 81 S.Ct. 366 U.S. us, Keviewing The Substantive record before the Counts taking into con- applicable law and the carefully We have considered disagree- sideration, find we no basis by Kelly the numerous made contentions rulings the below. with ment Hagen respect and with to their convic registra tions on three substantive the XIII counts, tion and have found no in merit Miscellaneous Discussion Omnibus of any Accordingly, of affirm them. we in Error Other Claims of respects Kelly all the convictions of and Hagen. findWe no merit of Shuck, however, in an the stands other multifarious claims of error entirely position. different Kelly Hagen we As have made in the briefs. already pointed out, Many the upon accumulation of procedures of are based these wrongdoing by Kelly practices evidence of that are not followed in the Hagen especially York, the admission into Southern District of New this or portions of evidence substantial of example, the Circuit. For counsel post-conspiracy testimony of requested prosecutor Attorney required up before the SEC and the to sum before counsel for of reply General State New York and the defense and that his be restrict Kelly’s letter, subject Government Exhibit ed to new matter not the of his Shuck, They and the failure to sever as repeated to summation in chief. also prejudicial ly requested to him on all so counts as to be furnished with require judgment charge reversal of of copy jury of to entire against conviction on purpose Shuck the substan preparing for the both their tive fraud con counts well as summations and also to facilitate the spiracy noting count. exceptions See United States v. Bent portions vena, 955-956, Cir., 1963, charge they might objection find sub nom. Ormento v. United denied able. Much their time was consumed 940, 84 345, 11 375 U.S. S.Ct. judge explain demands that trial rulings 271. Most of other various admissibility L.Ed.2d his of evi dence, documentary claims of error advanced counsel and otherwise. Oth that are not Shuck relate incidents er claims error mis have do with a likely trial of the cellany on the new procedural arise minutiae concern against do not think ing handling case Shuck pre-trial motions and necessary to them. The suffi discuss In matters. connection with the other ciency against Shuck on alleged of the evidence “promise” judge trial not jury which the found all counts on to mention the evidence or facts of briefly guilty alleged discussed will be charge, him the case his it is opinion. prejudicial that, respect the end of this error particular phases of the various case re XV charge, judge to in the ferred trial Challenge the Method by giving “promise” this “broke” Selecting Was Jurors description back brief of the factual Properly Overruled ground necessary to make his that was already intelligible. many if As this case was are instructions There sufficiently complex, launched error, the defense more of such claims of some upon charge. methods em relating a full-scale attack parts them ployed every District of New say Southern one each and it to Suffice grand and York select members of on behalf of the claims of error made juries. petit procedures utilized our close has received district and of this prejudicial clerk find no error attention. We carefully set forth against Hagen, assistants been either below, 1962, F.Supp. opinion them, in the record. *53 hearings consuming 331, prospective jurors source of of is which followed names Judge Rights Bryan’s improper days, in of four court under the Civil Act contrary opinion Greenberg, in v. runs head into the United States Greenberg, S.D.N.Y., F.Supp. 382, authority 1961, of v. 200 which United States heartily supra, 382; F.Supp. in United States v. 200 United endorsed States 833-834, 1962, 833-834; Agueci, Cir., 817, Agueci, 817, supra, 2 310 F.2d F.2d v. 310 Guippone States, Cir., 1963, rt. denied sub nom. v. Gorin v. 1 313 United ce 1963, States, 959, 641, 643-644, denied, 372 83 United U.S. F.2d cert. 374 U.S. 1052; 1013, 829, 1870, 11. S.Ct. 10 L.Ed.2d And most 83 10 L.Ed.2d S.Ct. say appellants States, 1963, Cir., what have to sub 5 this Chance v. 322 United dating ject 202-205, rehearing denied, 201, decisions 5 is foreclosed F.2d Foster, Cir., 1964, 473, denied, v. D.C. back United States F.2d cert. 379 331 34; 1949, 197, F.Supp. 823, nom. 47, 83 affirmed 13 L.Ed.2d sub U.S. 85 S.Ct. Dennis, 1965, Cir., 1950, Kenner, S.D.N.Y., United 2 183 States United States v. 201, 1951, say 216-224, F.2d 341 affirmed 36 F.R.D. it to' that these 391. Suffice 494, 857, palpably per U.S. 95 L.Ed. 71 S.Ct. 1137. See make it clear that cases Flynn, 1954, Cir., registered also United States v. do sons who not vote are 354, 378-389, 1955, “any denied, group 216 F.2d cert. identifiable constitute 713; community may subject 348 U.S. 99 L.Ed. S.Ct. which Cir., Agueci, supra, prejudice.” United States v. State of Ala Swain v. 817, 833-834, bama, 1965, 310 F.2d cert. denied 85 S.Ct. 380 U.S. Guippone States, sub nom. v. United 13 L.Ed.2d 759. U.S. 83 S.Ct. The next claim is that Accordingly, L.Ed.2d 11. we find it un Rights Civil precludes Act of 1957 necessary engage any prolonged practice whereby jury clerk and his why appellants’ discussion of we consider large assistants excuse number of patently contentions without merit. We persons ap who have received notices to per trust later sooner or it will be pear jurors prospective but who claim of stare principles decisis ceived that and demonstrate that such service would applicable are as branch of the impose hardships. undue financial We any law other. Kovens v. United nothing find language, purpose in the Cir., 1964, 338 F.2d legislative history Act, or discussed denied, 1965, 380 U.S. 85 S.Ct. Greenberg, supra, United States v. 271; 1338, 14 L.Ed.2d Katz v. United F.Supp. 393-395, pur 382 at States, Cir., 1963, 8. ports compel persons such to fulfill responsibility The first contention that the use jury their civic service registration primary irrespective hardships, voter lists as the financial known, district, competent is well 71 Stat. 634. As to serve as a Rights grand petit juror Civil Act of 1957 was the first or unless— Congress passed (1) such act to be He has been convicted in a State days since the of Reconstruction. Federal court record of a crime punishable by imprisonment 1957 Act the United established States for more Rights, provided year rights Commission on Civil than one civil Attorney by pardon an additional General Assistant not been restored or am- sought guar nesty. of the United States equality (2) read, write, antee right in the exercise of He is unable to part English speak, to vote. The final of the Act and understand the lan- provides by jury guage. for trial certain cases contempt Act, (3) arising incapable, by out of this He reason of pre physical § amended 28 U.S.C. 1861 which mental or infirmities to ren- qualifications ju scribes the federal der service.” efficient That now reads: rors. Section Prior if law had been effect that “Any person incompetent States citizen of under State age twenty- juror who has attained law to serve as a the courts years State, incompetent one period has resided for and who he was likewise judicial juror. year within the one serve as a Federal

779 might ties, otherwise, from that accrue where notices were take sent. We or judicial v. United States service. See also notice of the fact that in 1960 such 651, Woodner, Cir., 649, 1963, population York, 2 317 F.2d New Bronx 192, 903, denied, 3,930,000, 84 S.Ct. 375 U.S. and Westchester Counties cert. 144; eight Hen population v. United States 11 L.Ed.2d while remain- 522, Cir., 1962, ing derson, cert. 7 298 F.2d counties in the District was Southern 1150, 8 denied, 770,000. conclude, 82 accordingly, 369 S.Ct. that U.S. We anything controlling. find 280. Nor do we is also L.Ed.2d Gottfried still See that, proposition Titus, Cir., 2 210 which undermines United States v. subject prop practical to as a matter F.2d 212-213. Courts, supervision the District er improper that claim it The jury vested with must be officials jury only send notices to to the twelve large determine to measure of discretion County cities towns Westchester particular should individual whether City, York of the closest New the situs jury from serv or should be excused United States Courthouse for the South supra, Flynn, v. States ice. See United York, District of 28 ern New U.S.C. § 386-388; v. at United States 216 Judge groundless. 112(b), equally As 220-221; Dennis, supra, F.2d at 183 Bryan pointed out in v. United States Foster, F. supra, 83 v. States United Greenberg, supra, F.Supp. at 200; v. Green Supp. at United States population of West about 80% F.Supp. at berg, supra, 388-389. County cities lives in twelve chester these contending Finally, and towns. In that there there is a claim that mailing jury improper power jury limit clerk reasonably appear close to the his assistants notices areas to send notices only prospective jurors Courthouse, appellants apparently over to residents of language York, 28 U.S.C. Bronx look the clear New and Westchester Coun § Titus, 1865(a).12 ties instead of of all eleven United States v. to residents See 212-213; comprise supra, Katz v. 210 F.2d counties which the Southern 7; District, Cir., 1963, improper 321 F.2d that it was to re United S.D.N.Y., 1965, mailing Kenner, of these v. strict notices States and towns of twelve cities Westchester F.R.D. 391. County City. New The closest to York XVI rejected in claim was United States first Conclusion Gottfried, Cir., 165 F.2d v. 363-365, denied, U.S. against judgments of conviction The 1139, in which 68 S.Ct. 92 L.Ed. 1, 57, 60 and Counts judicial that took Learned Hand notice respects affirmed. all 61 are 4,400,000 1940, 3,850,000 of resi against judgment District lived of conviction Southern dents York, Coun- 107 is 105 and New Bronx Westchester on Counts Shuck Which, frequency provides: deed, very de- 12. with which jurors objec- comprehensive petit “Grand and shall counsel raise fense jurors selecting selected from such time to time be to the method tions frequency parts as the directs courts of the district court with which the and the upon compelled pass im- most favorable to an these con- so as partial be are challenges, trial, sistently groundless unneces- renders and not incur jury sary expense unduly the citi- or burden the contentions frivolous subjected any part inade- of the district with zens officials have been quate judicial supervision jury or service.” judges offi- claim officials have these are unaware what gee doing, powers usurped District have been also vested cials opinion below, 337; F.Supp. as well Courts is belied record Gottfried, history. Steel, S.D.N.Y., See United States v. United States v. 360; F.Supp. supra, 165 F.2d United States supra, Flynn, In- 216 F.2d 386-388. against reversed and the case him is re- he conceded admitted that he was un manded worthy for a new trial. of belief. Doubtless he is an unsavory may character. It well already We said that *55 perjure will perjured he himself and has finding support to there evidence himself from time to time when he Shuck, perhaps that Van Allen and thought advantage it was to his to do so. conspired others in a fraudulent scheme credibility jury. But his for pressure campaign to undertake a or Dardi, Cir., 1964, United States v. 2 330 operation “boiler room” induce indi denied, 845, F.2d cert. 379 U.S. buy vidual investors to stock Gulf Coast 50; 85 S.Ct. L.Ed.2d United States prices at inflated and hold it. Whether Robbins, 1965, 684, v. 2 Cir., 340 F.2d not' or there was evidence sufficient 687; Mims, 1965, Cir., United States v. 7 single, connect Shuck with the over-all 851, denied, 1535; 340 F.2d cert. 85 S.Ct. conspiracy question is a close which States, Cir., 1963, Proffit v. United 9 316 appeal. proofs do not decide on this appellate F.2d 705. An court dis cannot may barely think, be sufficient. how We regard testimony. ever, that it is in the interest substan portions The motion to strike of the justice question open tial to leave this brief, during Government submitted decision, necessary, if new argument oral of the case counsel only trial. We this entertain view Hagen, is denied. trial, because the new insofar as it re Hagen. Affirmed conspiracy charge, may as to lates to the be Re- alleged versed and conspiracy remanded in for new trial as to restricted volving Shuck, Shuck. just Van Allen and others to, Russano, 2

referred United States v. 1958, 712, 716; Cir., 257 MOORE, Judge F.2d see United (concurring): Circuit Dunn, 1962, Cir., 299 F.2d v. 6 States only I concur not with result Cir., 548, 555; Ratke, 6 United States v. reached but also with the fundamental 225; Bryan 1963, United 316 v. (with exceptions reasons herein set States, 1950, 338 U.S. S.Ct. forth) ably expressed by my so Brother States, 335; 94 L.Ed. Yates v. United Although proof Medina. is convinc- 327-334, 1957, 354 S.Ct. U.S. ing participant that Shuck not a L.Ed.2d 28 U.S.C. § gyrations Kelly, the financial which far- also because of serious but indulged and Van Allen in where- ruling reaching implications on the aof by the stock was made available for their charge alleged conspiracy single, over-all purposes, law, fraudulent it is the as I brokers, respect broker-dealers necessary it, understand that it is not appa whole and others involved every defendant-conspirator marketing of stocks. See ratus conspiracy working or know of and be Crosby, Cir., United States purposes towards the fulfillment of its 928, 938-943, denied sub 294 F.2d during period the total existence. its nom. Mittelman v. possible proof Nor be offered L.Ed.2d S.Ct. U.S. against simultaneously every defendant long multi-defendant cases. There are against We direct a new trial of substan- bound to be defendants whom against proof participation tive counts Shuck because we is not adduced un- agree argument days do not with the advanced til the latter A trial trial. judge on Shuck’s behalf to the effect that the end until of the trial has support way knowing evidence is insufficient the nature and extent allegations proof may of Counts 105 and which to tie be offered argument the indictment. The must rest one more defendants the con- into principally upon spiracy upon proof the contention that Tell- testimony may er’s should been eliminat- have have to the character of the decide entirety because, said, in its as it conspiracy. Therefore, ed with the conclu- impliedly Lastly, during I hesitate even en- sion that the trial “It was proposition func- deny it is the judicial dorse a abuse discretion appellate court to review the severance, of an tion motion for a time retrospect what agency to ascertain testi- record [when the administrative acting court, objections trial if as mony and the might counsel, made. were received],” Counsel I must differ letter objections to says my position strongly. may be, such in a make It well might charge in the Brother, have been us that that “it is clear to in7 They did not of the defendants. terest motion then counsel Shuck made grant- judge been should have do so. The trial for a been severance should have *56 given objections be- their our benefit of to us” from ed” but what is “clear change might vantage contemplative well have been point cause a review objec- charge possibly to meet the have not made entire record could may “plain judge doctrine error” at the clear to trial who tions. The been ruling error required where the function could a useful time when serve highly prejudicial to a defend- record would not known what would be Kelly- to with cau- me, be resorted To admission of the ant but should be. testimony my opinion, such occasion and suf- In was error tion. SEC presented not attribute here. I would ficient for reversal. the motion for

error denial

severance. Nor would I characterize a mistake reading long indictment.

Probably jury little from benefited reading pro- its but I would hold this

cedure to be within the discretion of the judge.

trial acceptance As to pleas guilty MARTIN, Appellant, James Edward during from trial, defendants handling manner of plea and the VIRGINIA, C. C. OF COMMONWEALTH informing method of thereof Virginia Peyton, Superintendent of the depend upon many will circumstances Penitentiary, Y. Robert Honorable State appraised by which can best be the trial Virginia, Attorney Button, General judge. I, disagree therefore, with the Phillips Chew, James W. P. and Charles opinion subject. comments in the on this Shields, members of Pleasant The trial court refrained sum- Board, Appellees. Virginia Parole marizing charge. the evidence in his No. 9613. respective parties Counsel for the re- quested that the court so refrain. Their Appeals Court United States judgment gained as to the benefits Circuit. Fourth thereby pre- for their clients must be Argued April 1965. wisely properly sumed to have been Aug. Decided length, exercised. In trial such utterly impossible would have been judge to have evi- summarized all the

dence to the satisfaction of all. Counsel

undoubtedly that, felt rather than have judge’s facts, they pre- views of the jury’s I,

ferred recollection. there-

fore, to the cannot subscribe statement judge trial should not have “The

agreed request by counsel that this

marshalling of be omitted.” the evidence