U.S. ex rel. S.E.C. v. Billingsley

• Citation: 766 F.2d 1015
• Decision Date: 26 June 1985
• Docket Number: No. 84-1165,84-1165
• Parties: UNITED STATES of America, ex rel. SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. Robert H. BILLINGSLEY, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 1015

766 F.2d 1015

UNITED STATES of America, ex rel. SECURITIES AND EXCHANGE

COMMISSION, Plaintiff-Appellee, v. Robert H. BILLINGSLEY, Defendant-Appellant.

No. 84-1165.

United States Court of Appeals,

Seventh Circuit.

Argued Oct. 3, 1984.

Decided June 26, 1985.

Erick Summergrad, S.E.C., Washington, D.C., for plaintiff-appellee.

Robert E. Burke, McHenry, Ill., for defendant-appellant.

Before ESCHBACH, COFFEY and FLAUM, Circuit Judges.

FLAUM, Circuit Judge.

Defendant Robert Billingsley appeals from his criminal contempt conviction following a jury trial for violating a 1965 district court order enjoining him from offering or selling unregistered, nonexempt securities. Billingsley bases his appeal on two grounds only: first, that the court below improperly found him fit to stand trial by placing the burden of proof on him rather than on the government, and second, that the court erred in instructing the jury to continue deliberating after the court had unsuccessfully tried to contact defendant's counsel concerning a question submitted by the jury foreman. We find the second ground to be without merit, but find the first sufficient to require a remand to the district court on the question of defendant's fitness to stand trial.

I. Facts

The defendant does not challenge the sufficiency of the evidence, so the factual and procedural history leading to his conviction can be summarized briefly. In 1965, Billingsley consented to an order, entered by Judge Juergens in the Eastern District of Illinois, permanently enjoining him from offering or selling unregistered securities that are not exempt from registration under the federal securities laws. S.E.C. v. Basin Oil Development Co., No. 65-47 (E.D.Ill. Apr. 9, 1965). Since this order was entered, Billingsley nevertheless has continued selling unregistered securities. Indeed, in 1969 he pleaded guilty before Judge Juergens to being in criminal contempt of the 1965 order, and was sentenced to three years probation (which was suspended after nine months). United States v. Basin Oil Development Co., No. 68-49 (E.D.Ill.1969).

In April 1982, the Securities and Exchange Commission ("S.E.C.") initiated the present case by filing with Judge Juergens, now in the Southern District of Illinois, an application for an order to show cause why Billingsley should not again be held in criminal contempt of the 1965 order. The application charged that since January 1978 Billingsley had been selling unregistered securities in the form of undivided fractional interests in oil and gas leases. Judge Juergens issued the order to show cause in September 1982, and the case was subsequently transferred to Judge McGarr in the Northern District of Illinois in late October 1982.

On September 14, 1983, four days before trial was finally set to begin, ¹ Billingsley requested a hearing on his fitness to stand trial. The court granted his request and held such a hearing on October 6, 1983. As described in greater detail below, defendant's counsel and a psychiatrist testified at the hearing that the defendant was unfit for trial, while two lay witnesses testified that the defendant did not appear to suffer any mental disability that would render him unfit. After hearing this testimony, Judge McGarr, addressing defendant's counsel, stated from the bench:

what I have heard, to this point, suggests to me that I do not find your burden of proving his lack of competence to stand trial having been met. But I have some reservation on the subject, which would cause one to want to hear some other expert, other than the doctor we heard this morning.

The court therefore asked the government to have the defendant examined by another doctor, and stated that the court would hold another hearing if the defendant desired to cross-examine the other doctor or to introduce further evidence of unfitness. ² The psychologist who thereafter examined Billingsley for the government submitted a written report finding him fit, and the defendant did not request another hearing. Accordingly, the court issued a handwritten minute order on November 4, 1983, stating, "[c]ourt finds that defendant ... is presently psychologically fit to stand trial," and setting trial for November 28. ³

The trial commenced on November 28, 1983, and lasted for about seven days. The government produced a plethora of testimonial and documentary evidence of Billingsley's activities in promoting and selling unregistered and largely worthless interests in oil and gas leases. An accountant for the S.E.C., for example, testified from his investigation that Billingsley had sold approximately $2.5 million in such interests to about 128 investors in nine states during a four and one-half year period ending in December 1982. Billingsley's first defense to these charges was that his sales of securities did not violate the terms of the 1965 order because they were covered by the intrastate or private offering exemptions from the registration requirements of the federal securities laws. His second and clearly more substantial defense, however, was that even if he did violate the terms of the 1965 order, he did not do so knowingly and willfully and thus was not in criminal contempt of the order.

In support of this latter defense, Billingsley himself took the stand and professed his good faith belief that his sales of securities did not violate the 1965 order. More importantly for present purposes, Billingsley offered testimony at trial from the psychiatrist who testified as to Billingsley's unfitness at the fitness hearing, along with another physician and a lay witness, to support his contention that he suffered from some mental disability that prevented him from understanding or complying with the injunction. The government rebutted this testimony by offering testimony from the psychologist who previously had given the written report concluding that Billingsley was fit, from another psychologist who performed further tests on the defendant, and from various lay witnesses including investors who had purchased securities from Billingsley. Therefore, the testimony given at trial focused further on Billingsley's mental capacity.

The case was ready for submission to the jury on the afternoon of December 8. After instructing them on the relevant law, the judge explained to the jurors that they could communicate with him during their deliberations by submitting to the Marshal a written note signed by the foreperson, whereupon the judge "will discuss it with the attorneys and we will respond in whatever way is appropriate." Further, the judge reassured the jurors that they would not be held overnight by stating: "If you do not reach a unanimous verdict before 4:30 or quarter to 5:00 tonight, we will just ask you to resume your deliberations tomorrow morning."

At approximately 3:10 P.M., the jury began deliberating. Counsel for the defendant and the government then had a brief conference on the record in which defendant's counsel waived his and defendant's presence during deliberations and at the reading of the verdict, assuming the jury reached a verdict that afternoon. The judge also asked defendant's counsel to give the Marshal a phone number where he could be reached for consultation if the jury should submit a question to the court, and counsel did so. ⁴ Approximately forty-five minutes later, after defendant's counsel had departed, the jury did submit a question to the court which read: "May we have the exemptions that the defendant alleges?" The judge attempted to reach defendant's counsel by phone, but to no avail. The judge thus consulted in chambers with the two attorneys for the government who were present, and then told the Marshal to instruct the jurors simply to continue their deliberations based on the instructions they had been given previously.

Soon thereafter, the jury returned a verdict of guilty, and the court left a message so notifying defendant's counsel at the phone number he had provided to the court. Billingsley then moved for a new trial on the same grounds that he now argues on appeal. At a hearing held on January 17, 1984, the court denied the motion for a new trial, and sentenced Billingsley to three years imprisonment with the provision that he could be released on parole at any time within the discretion of the Parole Commission if he should develop health problems. See 18 U.S.C. Sec. 4205(b)(2) (1982). Finally, the judge denied Billingsley's motion for a stay of his sentence pending appeal, expressing his concern that Billingsley would continue to engage in illegal and dishonest conduct if he remained free.

We will begin by discussing our bases for rejecting Billingsley's contentions concerning the court's response to the question from the jury, and then will proceed to a more detailed delineation of our reasons for concluding that a remand is necessary on the issue of Billingsley's competency to stand trial.

II. The Jury Communication

It is clear that a criminal defendant has a right to be present during all stages of his trial--including the jury deliberations--and that this right can be abridged when a trial judge communicates with the jury without first contacting the defendant or his counsel. Fed.R.Crim.P. 43(a); Rogers v. United States, 422 U.S. 35, 39, 95 S.Ct. 2091, 2094, 45 L.Ed.2d 1 (1975). It is also clear, however, that the defendant can waive this right, Fed.R.Crim.P. 43(b)(1), and that even when a trial judge does erroneously communicate with the jury without notifying the defendant, such error can sometimes be considered harmless. United States v. Silverstein, 732 F.2d 1338, 1348 (7th Cir.1984); United States v. Clavey, 565 F.2d 111, 119 (7th Cir.1977), modified en banc on other grounds, 578 F.2d 1219 (7th Cir.1978) (per curiam). See also Rogers v. United States, 422 U.S. at 40, 95 S.Ct. at 2095. This case requires us to apply these principles to a rather difficult and disconcerting fact situation.

A...