Ray v. United States
| Decision Date | 23 March 1967 |
| Docket Number | No. 23140.,23140. |
| Citation | 374 F.2d 638 |
| Parties | Louis M. RAY, Appellant, v. UNITED STATES of America, Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
James D. Sparks, Robert C. Cudd, III, Thompson, Thompson & Sparks, Monroe, La., for appellant.
Edward L. Shaheen, U. S. Atty., Stephen Wizner, Sp. Atty., Dept. of Justice, D. H. Perkins, Asst. U. S. Atty., Shreveport, La., Michael R. Sonnenreich, Dept. of Justice, Washington, D. C., for appellee.
Before JONES, WISDOM and GOLDBERG, Circuit Judges.
The Small Business Administration, created by Congress, is an agency of the United States and is known in Federal jargon as S.B.A. To stimulate the national economy and, in particular, the small-business segment thereof a program was set up in S.B.A. to supply such financing for small businesses as might not be otherwise available in adequate supply. 15 U.S.C.A. § 671. The act of Congress provided that small business investment companies, chartered under state law, having articles of incorporation approved by S.B.A. might be issued a license to operate under the Federal act, 15 U.S.C.A. § 681 et seq. S.B.A. is authorized to purchase the debentures of small business companies and to make loans to and acquire the obligations of such companies. Small business investment companies are authorized to finance or refinance small-business concerns to the extent permitted by and subject to the limitations of the statute.
S.B.A. like most, perhaps all agencies of the United States, is empowered to prescribe regulations, and in particular has authority to prescribe regulations governing the operations of small business investment companies. By statute it is provided that "Each small business investment company shall be subject to examinations made by direction of the Administration S.B.A. by examiners selected or approved by the Administration * * *." 15 U.S.C.A. § 687(c). The S.B.A. Regulations contain the following:
The appellant, Louis M. Ray, was the organizer, principal stockholder and the managing officer of First Louisiana Investment Corporation, herein called FLIC. It was licensed by S.B.A. as a small business investment company. Its place of business was in Monroe, Louisiana. On June 7, 1963, two S.B.A. examiners, Messrs. Schutz and Moore were in Monroe for the purpose of conducting an examination of FLIC. S.B.A. had previously received information which suggested that the operations of FLIC were not being conducted as the law required and that other corporations, controlled by Ray, might be involved in prohibited transactions with FLIC. Before going to the FLIC offices, the examiners went to the court house where they obtained additional information about some of the Ray controlled corporations which furnished further grounds for a belief that FLIC was not being operated in a lawful manner.
At the FLIC offices the examiners found J. D. Sims, a clerk and typist of FLIC. The examiners identified themselves. Sims told them that Mr. Ray and Mr. Gentry, his accountant, were in Florida and he could not show them the FLIC records. Sims got Ray on the telephone and Schutz stated who he was and his purpose. Ray refused to permit any examination until his return from Florida. Schutz gave the telephone back to Sims who talked further with Ray. While Sims was on the telephone, the examiners crossed a corridor to an office of Gentry and his partner Williams which was used almost entirely for handling the business of FLIC and other corporations controlled or dominated by Ray. There on the floor the examiners found journals and ledgers of FLIC and they proceeded to examine them. From the testimony of Schutz it would appear that Sims acquiesced in the examination. From the testimony of Sims it would appear that he strenuously objected to the examination. We do not think it matters. In the room were boxes or cartons which, it seems, were marked with names of corporations, one of which was FLIC and the others were of Ray controlled or dominated companies which were borrowers from FLIC. The boxes contained cancelled checks and bank statements. These were examined by Schutz and Moore. About five o'clock in the afternoon Sims stated that he had to lock up. Schutz and Moore left. On the following morning they reappeared and were informed by Sims that they could not see any records in the absence of Ray. Schutz and Moore departed.
Some days later, two weeks perhaps, Schutz returned to Monroe accompanying Stanley Levy, an investigator of S.B.A. The appellant J. D. Ray was at his FLIC office. FLIC records were further examined. Ray refused to permit examination of the books and records of the other companies. Levy then issued administrative subpoenas duces tecum to Ray for the production of books and records of the other companies. Application was made to the United States District Court for an order to require obedience to the subpoena. Testimony was taken. While the case was pending the United States brought an action against FLIC and Ray alleging a default in the discharge of the obligations of FLIC to S.B.A. and charging that funds have been wrongfully diverted to Ray. A money judgment, injunction and receivership were sought. A preliminary injunction was granted and a receiver was appointed. The appointment of a receiver was affirmed. First Louisiana Investment Corporation v. United States, 5th Cir. 1965, 351 F.2d 495. The receiver took possession of the books and records of FLIC. A Federal grand jury in the District of Columbia began an investigation of the operation of FLIC. The records in the possession of the receiver were made available to it and to the Department of Justice. An indictment against Ray, in seven counts, for mail fraud, in connection with the operation of FLIC, was returned by the grand jury in the District of Columbia. The case was transferred to the Western District of Louisiana. The proceeding for the enforcement of the administrative subpoenas duces tecum was dismissed as moot. Ray was convicted on all counts of the indictment. He was sentenced to fourteen months imprisonment on each of the first six counts, to run concurrently, with sentence suspended on the seventh count. Before us is the appeal from the conviction and sentence.
It is contended by the appellant that the examination by Schutz and Moore of June 7, 1963, was "a brazen and illegal search" made "in flagrant disregard of the rights guaranteed by the Fourth Amendment" and subsequent actions of S.B.A. to procure and make use of the "tainted fruit" of the wrongful search must be held to be violations of guaranteed rights and as unavailable for the procuring of an indictment and conviction. The district court did not pass upon the legality of the June 7, 1963 examination, but held that the evidence used was obtained by means independent of the June 7, 1963, examination.
The appellant opens his attack upon the examination of ...
To continue reading
Request your trial
-
U.S. v. New Orleans Public Service, Inc.
...open to official inspection so that the administrative agency can determine whether the company is complying. See Ray v. United States, 5 Cir., 1967, 374 F.2d 638, 641-42 (citing 79 C.J.S. Searches & Seizures § 36, at 803), cert. denied,389 U.S. 833, 88 S.Ct. 35, 19 L.Ed.2d 94 (1967); cf. M......
-
Jones v. Warden, Louisiana State Penitentiary
...any illegality. They were made known by an independent source (were not tainted) and were admissible in evidence." See Ray v. United States, 5 Cir. 1967, 374 F.2d 638. Cf. Wong Sun v. United States, 1963, 371 U.S. 471, 83 S.Ct. 407, 9 L.Ed. 2d While we do not believe that a prisoner is enti......
-
Associates Discount Corporation v. Ray, Civ. A. No. 10258.
...upon the Small Business Administration during the course of Ray's manipulations of the affairs of that company. See: Ray v. United States, 374 F.2d 638 (5 Cir. 1967). It will be seen that the First Louisiana Investment Corporation (FLIC) affair was in progress during the time of or just aft......