Brauch v. Raiche

• Decision Date: 05 March 1980
• Docket Number: No. 79-1606,79-1606
• Citation: 618 F.2d 843
• Parties: Ernest Wolfgang BRAUCH, Petitioner, Appellant, v. Robert RAICHE, United States Marshal, Respondent, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 843

618 F.2d 843

Ernest Wolfgang BRAUCH, Petitioner, Appellant, v. Robert RAICHE, United States Marshal, Respondent, Appellee.

No. 79-1606.

United States Court of Appeals,

First Circuit.

Argued Jan. 11, 1980.

Decided March 5, 1980.

Nancy Gertner, Boston, Mass., with whom Harvey A. Silverglate, Silverglate, Shapiro & Gertner, Boston, Mass., Alan Dershowitz, Cambridge, Mass., John Blackburn-Gittings, and Hallinan, Blackburn-Gittings & Co., London, England, were on brief, for appellant.

Robert J. Lynn, Asst. U. S. Atty., Concord, N.H., with whom William H. Shaheen, U. S. Atty., Concord, N.H., was on brief, for appellee.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

COFFIN, Chief Judge.

Ernest Wolfgang Brauch was arrested in Vermont on July 9, 1979, pursuant to the provisional arrest procedures of Article VIII(1) of the Extradition Treaty between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland ("the Treaty"). As required by the Treaty, the government of the United Kingdom subsequently filed a formal request for Brauch's extradition. On September 13, 1979, a hearing on the extradition request was held before a federal magistrate in New Hampshire. ¹ Sitting as a committing magistrate under 18 U.S.C. § 3184, the magistrate found Brauch extraditable on three separate sets of charges and issued a Certificate of Extraditability and Order of Commitment on October 18, 1979. Brauch then brought a petition for habeas corpus in the district court for the District of New Hampshire seeking relief from the magistrate's order. The district court denied Brauch's petition on November 2, 1979, and he brought this appeal. The magistrate's Certificate of Extraditability has been stayed pending the outcome of this appeal.

The Facts

The United Kingdom's extradition request set forth charges against Brauch for violating three provisions of the English criminal laws: seven counts of violating section 16(1) of the Theft Act of 1968 ² (the "check charges"); three counts of violating section 6(1) of the Forgery Act of 1913 ³ (the "forgery charges"); and ten counts of violating section 15(1) of the Theft Act of 1968 ⁴ (the "currency charges"). These charges arise out of two independent series of transactions engaged in by Brauch in 1974 and 1975. The formal request for extradition included the English depositions and exhibits upon which these charges were based, and at the hearing before the magistrate the government presented these exhibits and depositions in support of its petition for an extradition certificate. The factual allegations and the English charges resulting from them may be summarized as follows.

A. The Commodities Transactions

From 1967 through 1974, Brauch was engaged in commodities trading on the London Commodities Terminal Markets. At different times during this period Brauch maintained trading accounts at five London brokerage houses in the names of several different trading companies. ⁵ To open these trading accounts, Brauch was required to make deposits to cover the cost of the initial dealings. Thereafter, if the value of the commodities purchased for the account declined due to market fluctuations, Brauch would receive a "margin call" requiring him to deposit additional funds to cover the decreased value of the assets held by his account.

In 1974 the commodities markets suffered a period of sharp decline. On January 3, 1974, Anthony Gibbs Commodities, Ltd., with whom Brauch had been trading since 1967, made a margin call on the account of one of Brauch's trading companies, Commodities Investment Trust. Brauch responded by sending Gibbs a check for 80,000 drawn on the account of another of Brauch's companies, Neptune Finance, Ltd. The check did not clear, however, and when no further funds were forthcoming, Gibbs, closed out Brauch's trading accounts, which by then had a deficit of 55,000 owing to Gibbs.

Brauch had also traded since 1967 with the brokerage firm of E. Bailey & Company, Ltd. Although Brauch had had difficulties meeting deficiencies in his account during 1973, Bailey allowed him to open a new account and commence trading under the name of Commodities Investment Trust, with the account personally guaranteed by Brauch. On May 15, 1974, Brauch wrote a check drawn on Neptune Finance to Bailey for 103,000 to meet a margin call, but the bank refused to honor the check for want of proper signature. On May 22, in response to a second margin call, Brauch gave Bailey a check for 300,000, signed by one M. Fulton and drawn on the account of Skokie Investments, Ltd., at the Bank of Montreal in the Bahamas. Brauch told Bailey that the check represented proceeds from the sale of some property to Fulton. When Bailey attempted to cash the check, however, it was informed that there were no funds in the Skokie account. Bailey finally closed out Brauch's account and liquidated his holdings in mid-June, resulting in a deficit of 527,825.

As a result of the allegedly bad checks issued to Gibbs and Bailey, and similar incidents regarding accounts opened during 1974 at G. W. Joynson & Company, Ltd., M. L. Doxard & Company, and Cometco Investments, Ltd., an indictment was returned against Brauch charging seven counts of "obtaining pecuniary advantage, namely the evasion of a debt" by means of "deception", in violation of section 16(1) of the Theft Act of 1968 (the check charges). The theory underlying these charges, accepted by the magistrate at the commitment hearing, is that by issuing these checks, Brauch was able to engage in further trading by forestalling his brokers from closing out his accounts. Moreover, as a consequence of their delay in liquidating Brauch's accounts, which in turn resulted from their reliance on Brauch's assurances that the checks he had presented would be honored, the brokers suffered additional losses between the time of their margin calls and liquidation.

The forgery charges arise out of Brauch's dealings with one of these brokers, Cometco Investments, Ltd. As a precondition for allowing Brauch, acting through the name of Histon Developments, Ltd., to establish a trading position, Cometco had demanded that Brauch deposit 84,000. On August 5, 1974, Brauch delivered a check in that amount drawn on the account of Skokie Investments at the Bahamas branch of the Bank of Montreal. On August 7, Cometco learned that the check would not clear and demanded a telex confirmation from the bank that the funds would be received or else Brauch's trading position would be closed out. That same day Cometco received a telex from Skokie Investments assuring it that the proceeds of the check would be paid by August 13 or 14. On August 9, with Brauch's account showing a deficit of 20,000, Cometco again asked for assurances. Brauch reported that the London office of the Bank of Montreal had received a telex that the 84,000 was being sent forthwith. When Cometco confirmed that this telex had been received, it once again permitted Brauch to maintain an active trading account. Finally, after Cometco still had not received the funds by August 15 and Brauch now faced a 60,000 margin call, the Bank of Montreal in London received a third telex stating that the funds were en route to London. Cometco never received the funds, however, and finally closed Brauch's account on August 20, 1974.

These three telexes form the basis of the three counts of uttering forged documents in violation of section 6(1) of the Forgery Act of 1913. The magistrate, after reviewing the evidence before him, concluded that neither Skokie nor the Bank of Montreal had sent any of the three telexes and therefore that Brauch had "sent or caused to be sent" the telexes.

B. The Currency Transactions

The events forming the basis of the currency charges against Brauch occurred while the Exchange Control Act of 1947 was in force in England. ⁶ The Act sought to freeze the amount of foreign investments held by residents of England by restricting the flow of money out of the country. The Act created two classes of foreign currency that subject to the restriction on exportation, and a second class, which came to be known as "investment currency", that could be invested abroad without obtaining special permission from the Bank of England. Because investment currency could be invested abroad, a market developed for this currency. It was sold at a premium over the exchange rate for ordinary restricted currency. Since all currency looked alike, a system evolved in which "authorized depositories" would certify appropriate currency as being investment currency. Once certified, such currency could be freely traded on the currency market at a premium.

In 1974 Brauch approached a firm of English solicitors and requested that they prepare a power of attorney to him from one Christina Reigleuth, a British citizen. Using this power of attorney, apparently with a forged signature, Brauch approached one William Crossley of the accounting firm of W. O. Crossley & Co. to sell, purportedly on Reigleuth's behalf, a packet of Grand Cayman bonds. Under then-prevailing law, if the bonds had been owned by a resident of the United Kingdom continuously since 1972, the proceeds from the sale of the bonds would issue in investment currency. Thus, by representing that Ms. Reigleuth, not himself, was the owner of the bonds, Brauch was able to secure premium-worthy investment currency from the sale. On a number of occasions from December, 1974, through early 1975, using similar means, Brauch arranged to exchange foreign securities or currency for investment currency by convincing Crossley and others to assure authorized depositories (London banks) that the currency was worthy of certification. Once these proceeds were certified, Brauch was able to convert the currency into pounds sterling on the money markets at the premium rate. During this period, Brauch realized a net...