People v. Whitlow

• Decision Date: 19 February 1982
• Docket Number: Nos. 53827,53872,s. 53827
• Court: Illinois Supreme Court
• Parties: , 60 Ill.Dec. 587, Blue Sky L. Rep. P 71,726 The PEOPLE of the State of Illinois, Appellee, v. Forest P. WHITLOW et al. (James Marando, Appellant). The PEOPLE of the State of Illinois, Appellant, v. Forest P. WHITLOW et al. (Forest P. Whitlow et al., Appellees).

Page 629

433 N.E.2d 629

89 Ill.2d 322, 60 Ill.Dec. 587, Blue Sky

L. Rep. P 71,726

The PEOPLE of the State of Illinois, Appellee, v. Forest P. WHITLOW et al. (James Marando, Appellant).

The PEOPLE of the State of Illinois, Appellant, v. Forest P. WHITLOW et al. (Forest P. Whitlow et al., Appellees).

Nos. 53827, 53872.

Supreme Court of Illinois.

Feb. 19, 1982.

Peter M. Soble, Rock Island, for appellant James marando.

No brief filed for the People.

THOMAS J. MORAN, Justice:

Defendants, Forest P. Whitlow, John L. Brewer, Joseph P. Delfino, Truman K. Gibson, Jr., and James Marando, were charged in a 12-count indictment with conspiracy, theft and violations of sections 12 and 14 of the Illinois Securities Law of 1953 (Ill.Rev.Stat.1973, ch. 1211/2, pars. 137.12(F), (G), (I), 137.14). A jury in the circuit court of Rock Island County found defendants Whitlow, Brewer, Delfino and Gibson guilty on all counts. The trial judge vacated the jury's verdict on counts I and VI, the conspiracy counts, on the ground that a defendant cannot be convicted for both the inchoate and substantive offenses. The verdict on count XII was vacated because it did not properly allege an offense. Judgment was entered on the remaining nine counts. Each of these defendants was sentenced to concurrent terms of not less than one nor more than three years' imprisonment on each count. Gibson was additionally fined $20,000.

Marando's case was severed during trial due to conflicts between his defense and that of the other defendants. He pleaded guilty to counts II through V, and the remaining counts were dismissed on a motion by the State. Marando was sentenced to concurrent terms of not less than one nor more than three years' imprisonment on each count.

The appellate court consolidated the cases for review, and affirmed Marando's conviction. With respect to the other defendants, it reversed and remanded the cause for a new trial due to prosecutorial misconduct. (86 Ill.App.3d 858, 44 Ill.Dec. 888, 411 N.E.2d 1354.) We granted leave to appeal to defendant Marando in cause No. 53827 and to the People in cause No. 53872.

The State raises one issue on appeal: Did prosecutorial misconduct prejudice the defendants and thereby make a fair trial impossible? In their cross-appeal, defendants Gibson, Whitlow and Delfino raise the following questions: (1) Was the grand jury process abused? (2) Should the indictment be held void? (3) Was the evidence insufficient to support the jury's guilty verdict? In his separate appeal, Marando contends that the indictment was void because it failed to allege a necessary element of the securities law offenses. This issue was raised for the first time on appeal, but he asserts that it involves a jurisdictional defect and therefore can be raised at any time. Defendant Brewer died, and the appeal has been dismissed as to him.

Count I of the indictment charged defendants with conspiracy to violate the securities law. Counts II through V alleged various violations of the securities law. Defendants were charged in count VI with conspiracy to commit theft. Counts VII through XII alleged that defendants committed theft by deception in violation of section 16-1(b)(1) of the Criminal Code of 1961 (Ill.Rev.Stat.1973, ch. 38, par. 16-1(b)(1)). The indictment basically alleged that, in selling stock in the Royal National Investment and Mortgage Corporation (Royal National), defendants made false statements and did not inform prospective purchasers of material matters relating to the company and the stock. All of the defendants were officers and directors of Royal National with the exception of Marando, who was a commissioned salesman. Gibson, a lawyer, served as corporate counsel.

The evidence disclosed that, subsequent to the incorporation of Royal National, Marando solicited purchasers of the company's stock. The prospective purchasers were informed that the corporation intended to promote a sludge project, which involved the acquisition and transportation to the Bahama islands of processed wastes for use as fertilizer. Other corporate ventures included the training of Bahamians for employment, the establishment of a scholarship search program and the development of lithographic blankets.

The company's stock sold at $1 per share, and most purchasers acquired 10,000 shares. A number of witnesses testified that they were informed the stock would go public in the near future and sell over the counter at $5 per share. In fact, the company dissolved in a few years without going public. Various witnesses also testified that defendants claimed they each invested $50,000 in the corporation, when in fact only $220 was contributed by one defendant.

Additional evidence showed that the corporation was financed almost solely by proceeds realized from the stock sales. Between March and July of 1973, over 60% of the money acquired was disbursed to the defendants, although they had claimed they received no salaries from the corporation.

Defendants Gibson, Whitlow and Delfino first contend, in their cross-appeal, that the grand jury process was abused because the sole witness appearing before the grand jury was unsworn. We disagree. The transcript does not indicate whether or not the witness was sworn. Therefore, this is not a case where it is clear that the grand jury was presented with unsworn testimony. There is a presumption that an indictment returned by a legally constituted grand jury is valid, and it is sufficient to justify a trial of the charge on the merits. (See People v. Jones (1960), 19 Ill.2d 37, 43, 166 N.E.2d 1.) Defendants have indicated no circumstances which would overcome this presumption. They merely assert that the transcript fails to state the witness was sworn. In the absence of any evidence to the contrary, we must presume that the grand jury foreman properly administered the oath, as required by law. Ill.Rev.Stat.1975, ch. 38, par. 112-4(c).

Defendants further assert that the grand jury process was abused because no evidence of criminal conduct was presented to the grand jury. A review of the grand jury transcript indicates that evidence was presented from which defendants' illegal conduct could be inferred. Additionally, there are numerous cases to the effect that a court will not inquire into the adequacy of the evidence. (E.g., People v. Creque (1978), 72 Ill.2d 515, 522, 22 Ill.Dec. 403, 382 N.E.2d 793.) If it were otherwise, "a defendant could always insist on a kind of preliminary trial to determine the competency and adequacy of the evidence before the grand jury. This is not required by the Fifth Amendment." Costello v. United States (1956), 350 U.S. 359, 363, 76 S.Ct. 406, 408-09, 100 L.Ed. 397, 402.

In their cross-appeal, defendants Gibson, Whitlow and Delfino raise a number of contentions which they assert require dismissal of the indictment. First, they allege that counts II through V of the indictment should have been dismissed because they fail to state an offense. Specifically, they claim that these counts fail to allege specific intent to defraud as an element of securities law violations.

The statute under which defendants were convicted provides, in relevant part:

"Sec. 12. Violation. It shall be a violation of the provisions of this Act for any person:

F. To engage in any transaction, practice or course of business in connection with the sale or purchase of securities which works or tends to work a fraud or deceit upon the purchaser or seller thereof;

G. To obtain money or property through the sale of securities by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading;

I. To employ any device, scheme or artifice to defraud in connection with the sale or purchase of any security, directly or indirectly. " Ill.Rev.Stat.1973, ch. 1211/2, pars. 137.12(F), (G), (I).

"14. Sentence. * * *

B. Any person who violates any of the provisions of sub-sections E, F, G, H, I, and J of Section 12 of this Act shall be guilty of a Class 4 felony. " Ill.Rev.Stat.1973, ch. 1211/2, par. 137.14(B).

The State asserts that these provisions do not mention, and therefore do not require, any mental state on the part of individuals accused of violating the statute. Consequently, it is argued that the legislature intended that securities law violations be absolute liability offenses.

Section 4-9 of the Criminal Code of 1961 (Ill.Rev.Stat.1973, ch. 38, par. 4-9) provides:

"A person may be guilty of an offense without having, as to each element thereof, one of the mental states described in Sections 4-4 through 4-7 if the offense is a misdemeanor which is not punishable by incarceration or by a fine exceeding $500, or the statute defining the offense clearly indicates a legislative purpose to impose absolute liability for the conduct described." (Emphasis added.)

Absolute liability cannot apply in this case since the offenses charged are felonies, unless the legislature clearly indicates the intent to impose it. The securities law provisions in question are silent as to the required mental state. However, it has been held that "(t)he mere absence of express language describing a mental state does not per se lead to the conclusion that none is required." (People v. Valley Steel Products Co. (1978), 71 Ill.2d 408, 424, 17 Ill.Dec. 13, 375 N.E.2d 1297.) There is no indication that the legislature intended to impose absolute liability for securities law offenses. Indeed, the harshness of potential penalties for these violations militates against such a conclusion.

When the statute does not prescribe a mental state, and the offense does not involve absolute liability, "any mental state defined in Sections 4-4, 4-5 or 4-6 is applicable." (Ill.Rev.Stat.1973, ch. 38, par. 4-3(b).) These sections refer to intent, knowledge and recklessness....