Securities and Exchange Com'n v. Geyser Minerals Corp.
| Decision Date | 10 December 1971 |
| Docket Number | No. 71-1256.,71-1256. |
| Citation | 452 F.2d 876 |
| Parties | SECURITIES AND EXCHANGE COMMISSION, Appellee, v. GEYSER MINERALS CORPORATION et al., Appellants. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Duncan J. Cameron, Denver, Colo., for appellant C. George Swallow.
Walter P. North, Associate Gen. Counsel, S. E. C., Donald J. Stocking, Robert H. Davenport and Douglas J. Reich, Denver, Colo., for appellee S. E. C.
Before SETH, HAMLEY,* and McWILLIAMS, Circuit Judges.
This is an injunction suit instituted by the Securities and Exchange Commission (Commission) pursuant to section 20(b) of the Securities Act of 1933, as amended (15 U.S.C. § 77t(b)), and section 21(e) of the Securities Exchange Act of 1934, as amended (15 U.S.C. § 78u(e)). The Commission sought to enjoin the defendants, Geyser Minerals Corporation (Geyser), Mineral Aggregates Corporation (Aggregates), and C. George Swallow, from engaging in acts, practices and a course of conduct alleged to constitute violations of the statutes and rule cited in the margin.1
The Commission charged, in count one of the complaint, that, since on or about September 1956, Geyser, Aggregates and Swallow have been utilizing the means of interstate transportation and communication to offer for sale, and to sell and deliver, their own securities, while no registration statement covering such securities was in effect or filed. In count two, the Commission charged that, since on or about September 1956, the three defendants, singly and in concert, in the offer and sale of their own securities, and by use of interstate transportation and communication, have been engaging in a wide range of practices and conduct which is unlawful under section 17(a) of the Securities Act of 1933, as amended (15 U.S.C. § 77q(a)).2
In count three, the Commission charged that, since on or about September 1956, the three defendants, in connection with the sale of their own securities, and by use of interstate transportation and communication, have been using, and continue to use manipulative and deceptive devices and contrivances in contravention of the Commission's Rule 10b-5 (17 CFR § 240.10b-5), prescribed for the protection of investors pursuant to section 10(b) of the Securities Exchange Act of 1934, as amended (15 U.S.C. § 78j(b)).3
Defendants' joint answer is primarily a general denial of the critical allegations of the complaint. Pursuant to Rule 56, F.R.Civ.P., the Commission filed a motion for summary judgment enjoining defendants as prayed for in the complaint. In support of this motion the Commission referred to affidavits, written records and reports on file in the case and the Commission's memorandum in support of a preliminary injunction as establishing that there were no genuine issues of material fact and that the Commission was entitled to judgment as a matter of law.
The motion was set for argument on January 29, 1971. On that day defendant Swallow filed an affidavit in opposition thereto. After the argument, the district court found that there was no genuine issue of material fact as to count one (registration requirements), and granted a summary judgment of permanent injunction as to that count. This judgment was entered on February 1, 1971.
At the January 29, 1971 hearing the district court also requested the parties to submit memoranda with regard to the motion for summary judgment on counts two and three (anti-fraud provisions). These memoranda were filed and, on March 23, 1971, the district court entered summary judgment of permanent injunction on counts two and three.
All three defendants appealed from the judgment of March 23, 1971. Defendants Geyser and Aggregates, however, have made no appearance and filed no briefs in this court. While the Commission has not moved for dismissal of their appeals because of such failure (see Rule 31(c) F.R.App.P.), we will assume that Geyser and Aggregates have abandoned their appeals, and those appeals should accordingly be dismissed.
Defendant Swallow has advised the court that he does not, on this appeal, challenge the summary judgment entered on count one. As to the summary judgment for the Commission on counts two and three, Swallow first contends that a genuine issue of material fact remains to be decided, thereby precluding entry of a summary judgment. See Rule 56 (c), F.R.Civ.P.
Swallow advances several arguments in support of this general contention. The first has reference to the allegations in count two, paragraph 10(a) of the complaint. It is there alleged that defendants have been and now are employing a device, scheme and artifice to defraud. Swallow asserts that a genuine issue of material fact remains to be determined as to this allegation because it "is apparent from Plaintiff's argument and from Plaintiff's affidavits and exhibits" that no attempt is made to show any particular device, scheme, and artifice to defraud in which Swallow was allegedly engaged.
According to Swallow, it was thus left to the imagination of the court as to what method, scheme or device was used by Swallow and those with whom he may have been working in order to effect the fraudulent practices alleged in the complaint. He adds that summary judgment procedure does not require him to refute, by affidavit, evidence which should have been supplied by the Commission.
Swallow's assertions are erroneous. His alleged scheme was described in detail in the Commission's complaint, its memorandum to the district court, and its argument before the court at the January 29, 1971 hearing. The scheme consisted of defendants' practice and conduct in making allegedly untrue statements and omission to make material statements, in engaging in transactions which operated as a fraud and deceit upon purchasers and prospective purchasers of securities, in the organization of Geyser, Aggregates and other corporations, in solicitation of investments in the securities of defendants, in opening and maintenance of bank accounts and transfer of money between bank accounts, and in many other practices, all described at length in the materials referred to above.
Swallow next points to the fact that, by his affidavit, he had denied the allegations in certain affidavits filed by the Commission to the effect that he had made certain oral representations.
While the affidavits referred to by Swallow pertain in part to certain oral representations assertedly made by Swallow, the Commission ultimately did not seek a summary judgment upon the basis of such oral representations. As made clear in the Commission's supplemental memorandum filed in the district court, the record contains a wealth of documents emanating from Swallow and others showing that Swallow utilized written and printed means of engaging in the practices charged in counts two and three. In his counter-affidavit, Swallow did not deny the authenticity of, his authorship of, or his signature on the numerous documents attached as exhibits to the investor affidavits discussed in Swallow's affidavit.4 He only denied having made certain oral representations referred to in the affidavits.
In his affidavit, Swallow did deny that he offered or sold securities to the individuals enumerated in his affidavit, and alleged that if such securities were sold, they were sold by another. However, with one exception, Swallow did not deny that he obtained money from such individuals or that he signed, issued and mailed his notes, and the notes and certificates for the capital stock of Geyser and Aggregates, to such investors. These notes and certificates are attached to the investors' affidavits. Nor did Swallow deny that the means and instruments of interstate transportation and of the mails were used in connection with these transactions. In addition, neither Swallow nor the other defendants deny, except in their unverified answer, that they omitted to state material facts as alleged in detail in the complaint, or that the omitted facts are true.
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