U.S. v. Blinder
| Decision Date | 02 December 1993 |
| Docket Number | No. 92-10584,92-10584 |
| Parties | Fed. Sec. L. Rep. P 98,013 UNITED STATES of America, Plaintiff-Appellee, v. Meyer BLINDER, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Stanley H. Marks, Richard A. Hostetler, Denver, CO, for defendant-appellant.
Howard J. Zlotnick, Joseph P. Dion, Asst. U.S. Attys., Las Vegas, NV, for plaintiff-appellee.
Appeal from the United States District Court for the District of Nevada.
Before: WALLACE, Chief Judge, and D.W. NELSON and O'SCANNLAIN, Circuit Judges.
Meyer Blinder ("Blinder") appeals from his convictions and sentence for securities fraud, unlawful distribution of securities, and violations of the substantive and conspiracy provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO). 1 Blinder
contends that the district court erred by (1) denying his various motions to dismiss; (2) denying his motions for judgment of acquittal or a new trial; (3) misstating jury instructions; and (4) refusing to consider his ability to pay the court-imposed fine. We reject these arguments and affirm.
On January 15, 1985, Blinder, Arnold L. Kimmes ("Kimmes"), and Michael D. Wright ("Wright") entered into an agreement concerning Blinder's securities brokerage firm, Blinder Robinson & Co., Inc. ("Blinder Robinson"). Upon demand and at prearranged prices, Kimmes and Wright were to provide substantially all of the securities for "blind pool" corporations. 2 The blind pool corporations were created and secretly controlled by Kimmes and Wright, who used figurehead officers and false registration statements to disguise their actual control. Blinder Robinson subsequently obtained one hundred percent of the securities of two blind pool corporations, Onnix Financial Group, Inc. and Executive Capital, Inc.
Blinder Robinson sold the blind pool corporations' securities to its customers without informing them that the purportedly initial "public offering" of the blind pool securities was a sham. Additionally, Blinder Robinson failed to provide the purchasers of the blind pool stock with prospectuses. Because the buying public was unaware of Blinder's secret agreement, Blinder Robinson's unlimited access to the securities of Kimmes's and Wright's corporations effectively created a rigged market. As a result, Blinder profited through riskless transactions and arbitrarily established prices.
A federal grand jury indicted Blinder and other defendants on February 23, 1990, charging violations of RICO's conspiracy and substantive provisions. The government filed a superseding indictment, charging securities fraud and unlawful distribution of securities in violation of 15 U.S.C. Secs. 77e, 77q and 77x, against Blinder and other defendants on October 29, 1991. On July 2, 1992, Blinder unsuccessfully moved for acquittal. On July 10, 1992, a jury found Blinder guilty of counts one through six, which included racketeering conspiracy, racketeering, securities fraud, and unlawful distribution of securities. The district court denied Blinder's post-verdict motion for acquittal or a new trial. Blinder was sentenced to 46 months incarceration and fined $100,000. He timely appealed. We have jurisdiction under 28 U.S.C. Sec. 1291 (1988).
We review a district court's decision to deny a motion to dismiss an indictment based on its interpretation of a federal statute de novo. United States v. Dahms, 938 F.2d 131, 133 (9th Cir.1991). The sufficiency of an indictment is judged by "whether the indictment adequately alleges the elements of the offense and fairly informs the defendant of the charge, not whether the Government can prove its case." United States v. Buckley, 689 F.2d 893, 897 (9th Cir.1982), cert. denied, 460 U.S. 1086, 103 S.Ct. 1778, 76 L.Ed.2d 349 (1983). For purposes of review, "[t]he allegations of the indictment are presumed to be true." Id. An indictment should be: "(1) read as a whole; (2) read to include facts which are necessarily implied; and (3) construed according to common sense." Id. at 899.
Blinder argues that counts one and two were insufficient on the following grounds: (1) they did not adequately allege predicate acts of racketeering activity based on securities fraud; (2) they did not adequately allege sufficient predicate acts in relation to wire fraud; (3) they impermissibly alleged an enterprise consisting solely of a group of entities; (4) they failed to allege the existence of an enterprise separate from the racketeering activity; and (5) they fail because the RICO
statute is unconstitutionally vague. In addition, Blinder contends that counts three and four were unconstitutionally vague, and that counts five and six failed to demonstrate sufficiently that no exceptions to the charged offense applied.
Violations of RICO require the commission of a minimum of two specified predicate acts. 18 U.S.C. Sec. 1961(5) (1988). Predicate acts that may serve as racketeering activity include "fraud in the sale of securities." 18 U.S.C. Sec. 1961(1)(D) (1988) (emphasis added). Blinder argues that counts one and two of the indictment are defective because they allege predicate acts of "purchase and sale" or "offer and sale" of securities, rather than simply "sale." Blinder argues that it is possible that the jury could have found (1) that there was a purchase and sale of securities, or an offer and sale of securities, and (2) that a fraud was committed. Blinder contends that this could effectively criminalize acts that are not specified in section 1961(1)(D). We disagree.
Blinder's interpretation belies our requirement of construing indictments according to common sense and reading them as a whole. Buckley, 689 F.2d at 899. First, it is doubtful that the jury could have misconstrued the indictment to mean that Blinder engaged in fraud in the purchase or offer of securities, exclusive of the sale. Blinder claims that the phrase "offer and sale of securities" was potentially misleading; however, the overall phrase in question refers to "a fraud and deceit upon the purchaser in the offer and sale of securities," and paragraph 16 of the superseding indictment clearly states that "[t]he victims of this racketeering activity included purchasers of the securities of ... [the] 'blind pool' corporations from Blinder Robinson" (emphasis added). Thus, there is no doubt as to the identity of the purchasing victim of the racketeering activity. Although Blinder argues that the "purchase" in question was actually Blinder Robinson's purchase of the stock from Kimmes and Wright, a common sense reading of the word "offer" can only lead to the conclusion that it is mere surplusage to the word "sale."
By separating the sale, purchase, and offer prong from the fraud prong of section 1961(1)(D), Blinder tries to argue that the jury believed that any undefined "fraud" would suffice to meet the indictment requirements. The extensive factual allegations of the superseding indictment, however, make clear that the fraud in question is securities fraud and that the transaction in question is Blinder Robinson's sale of stock to its unknowing customers.
In fact, the counts that used the phrase "the purchase and sale of securities" did not even refer to Blinder, but only to acts committed by his co-defendants. Therefore, we pursue this matter no further. Blinder also contends that the indictment wrongly alleges fraud "in connection with" the sale of securities, whereas section 1961(1)(D) refers only to fraud "in the sale of securities." Again, however, this phrase is used only in reference to defendants other than Blinder. Therefore, we need not address this argument.
Finally, Blinder argues that a nominee who parts with no money himself does not "participate" in fraud in the sale of securities. Blinder cites no authority for this reasoning. Moreover, Blinder also was convicted of participating in racketeering acts consisting of sales to his customers. Thus, we need not reach the question of whether a hypothetical nominee who fraudulently buys or "sells" her shares without compensation qualifies as a racketeer.
We have held that wire fraud has three elements: (1) a scheme to defraud; (2) use of the wires in furtherance of the scheme; and (3) a specific intent to deceive or defraud. See United States v. Bonallo, 858 F.2d 1427, 1433 (9th Cir.1988). The superseding indictment alleges these three elements. Although Blinder cites a case from our circuit, First Pacific Bancorp, Inc. v. Bro, 847 F.2d 542, 546-47 (9th Cir.1988), to support his position that wire fraud allegations must also allege pecuniary loss, that Finally, Blinder's cramped interpretation of pecuniary loss is incorrect if taken in context. In Bro, we cited United States v. Dixon, 536 F.2d 1388 (2d Cir.1976), for the proposition that a conviction for mail fraud cannot be sustained "on the basis of nothing more than the failure to mail a correct proxy solicitation where this was not in furtherance of some larger scheme contemplating pecuniary loss to someone or direct pecuniary gain to those who designed it." Id. at 1399 (emphasis added). Thus, pecuniary gain, as well as loss, will satisfy the requirement.
case is distinguishable. Bro's ruling on the pecuniary loss requirement dealt explicitly with mail fraud; the court's discussion of wire fraud did not reach the pecuniary loss issue. Id. at 547. Moreover, even if Bro were applicable, we have stated, as previously noted, that an indictment should be "read as a whole" and "read to include facts which are necessarily implied." Buckley, 689 F.2d at 899. The indictment fairly alleges that Blinder Robinson's customers suffered monetary loss from arbitrarily established prices. One of the purposes of the...To continue reading
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