U.S. v. Corn
| Decision Date | 21 January 1988 |
| Docket Number | No. 87-2722,87-2722 |
| Citation | 836 F.2d 889 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Gary CORN, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Paul B. Rosen, Houston, Tex., for defendant-appellant.
Evan M. Spangler, Asst. U.S. Atty., Houston, Tex., for plaintiff-appellee.
Appeals from the United States District Court for the Southern District of Texas.
Before RUBIN, WILLIAMS, and DAVIS, Circuit Judges.
Corn pleaded guilty to criminal contempt for violating an injunction that prohibited illegal trading in securities. The district court sentenced him to serve five years in prison and to pay $6,045,527 restitution to the victims of the securities fraud. We find no merit in Corn's challenges to the injunction underlying the contempt conviction, but, because the district court did not advise Corn, as required by Federal Rule of Criminal Procedure 11(c)(1), that he might be ordered to pay restitution in consequence of his guilty plea, we remand to the district court with instructions either to allow withdrawal of his plea or to resentence Corn without ordering restitution. If after trial or re-pleading, Corn is again sentenced to pay restitution under the Victim and Witness Protection Act, 1 the court may order compensation only for those losses resulting from offenses committed after the effective date of the statute.
In 1977, the Securities and Exchange Commission sued Gary Corn charging him Between September 1, 1982, and December 31, 1983, however, Corn again became involved with illegal securities transactions, this time as vice president of sales for an organization known as the Beard Energy Group. The government prosecuted, and Corn pleaded guilty to criminal contempt for violating the injunction issued in the Hollensworth case. During the plea colloquy at rearraignment, the district court informed Corn, "if you are found guilty in this case the Court can impose just about any sentence it thinks is proper, ... everything except death." The court accepted Corn's guilty plea, however, without mentioning the possibility of a restitution order. At the sentencing hearing, the court ordered Corn confined to federal prison for five years and announced that a restitution order would follow if the prosecution and the probation office presented sufficient evidence of the losses suffered by the victims of the Beard Energy securities fraud. Three months later, the government submitted a statement showing that 160 investors had lost $6,045,527. Corn filed no objection to this evidence, and, without holding a hearing or receiving any further evidence, the court entered a restitution order, requiring Corn to reimburse each investor in full up to the more than six million dollar total.
with violations of the Securities Acts of 1933 and 1934, as amended, 2 in connection with his sale of securities in the Hollensworth Oil Company. The parties consented to resolution of this suit by the district court's issuance of a permanent injunction prohibiting Corn from dealing illegally in securities, "namely, fractional undivided working interests in oil and gas leases offered by James Edward Hollensworth, doing business as Hollensworth Oil Company, or any other securities." 3 The court specifically ordered Corn not to offer or sell unregistered securities that were subject to the registration requirements of Section 5 of the Securities Act of 1933 4 and not to use deceptive devices, make false statements, or fail to state material facts in connection with the offer, sale, or purchase of securities
Corn now challenges his conviction and sentence. He argues that the injunction entered in the Hollensworth case prohibited illegal trading only in Hollensworth securities and not in any other securities. In the alternative he asserts that the injunction was so vague or overbroad as to be unenforceable by contempt. He contends further that Judge Sterling, who convicted and sentenced Corn in connection with the Beard Energy fraud, lacked the authority to do so because only Judge Seals, who entered the injunction in Hollensworth, could legitimately enforce this order. Corn maintains that his guilty plea was not voluntary and intelligent because the court failed to inform him of the minimum and maximum possible sentences and to warn him that he might be ordered to pay restitution. Finally, he objects to the order of restitution insofar as it applies to losses incurred before January 1, 1983, the effective date of the Victim and Witness Protection Act which authorizes restitution as part of sentencing. 5
Corn's challenges to the injunction underlying the contempt conviction are without merit. The injunction repeatedly states that the prohibitions on trading reach "fractional undivided working interests in oil and gas leases offered by ... Hollensworth ... or any other securities " (emphasis added). Corn claims that this language refers to the specified interests in Hollensworth and to any other securities issued by Hollensworth. If the court had meant to limit its commands to Hollensworth securities, it would have said so. Instead, it explicitly made its order comprehensive.
Corn asserts that, if the injunction prohibits illegal trading in all securities, it amounts to nothing more than a vague order to obey the law. Federal Rule of Civil Procedure 65(d) provides: "Every order granting an injunction and every restraining order shall set forth the reasons for its issuance; shall be specific in its terms; [and] shall describe in reasonable detail ... the act or acts sought to be restrained." The purpose of the rule is to put the parties on fair notice of what they are forbidden to do. 6 Thus, an injunction ordering a party to "obey the law" might well fail as overbroad. But the injunction issued in Hollensworth compelled more than mere obedience to the law; it set forth in specific terms the types of securities transactions proscribed. That the court incorporated into the injunction language from the securities laws does not make the injunction vague so long as the borrowed language "adequately describe[s] the impermissible conduct." 7 We find the Hollensworth injunction both specific and clear, and nonetheless so because it adopts terms from the securities laws. 8
Corn asserts that the injunction and the contempt conviction must fall, nonetheless, because a court may not prohibit acts, such as mail or securities fraud, already forbidden by statute. In punishing him for contempt in this case, Corn argues, the court improperly circumvented the sentencing structure designed by Congress to punish mail or securities fraud and exercised instead its own unfettered discretion in imposing a penalty for disobedience to a court order. 9 Courts of equity, however, have long had the power to enjoin and to punish as contempt acts forbidden by statute, 10 including acts that might have been punished as mail or securities fraud. 11 Indeed, a single course of conduct may lead to punishment for several distinct offenses under separate statutes, 12 and Congress has clearly defined contempt as an offense distinct from mail or securities fraud. 13 Moreover, that the Hollensworth injunction was entered by the consent of the parties vitiates Corn's objections to the order, as does his decision to plead guilty to the criminal contempt charge rather than to a specified number of counts of mail and securities fraud. Having made his plea bargain, Corn may not now complain of the contempt conviction on the ground that it carries penalties different from those for a fraud conviction.
The argument that Judge Sterling may not enforce Judge Seals's injunction also fails. Corn cites Waffenschmidt v. Mackay for the proposition that "[e]nforcement of an injunction through a contempt proceeding must occur in the issuing jurisdiction because contempt is an affront to the court issuing the order." 14 This statement is true enough. The problem lies in Corn's attempt to equate the judge with the court. The Hollensworth injunction issued from the United States District Court for the Southern District of Texas and was not the personal command of Judge Seals, Judge Sterling, or any other judge on that court. "Each judge of a multi-district court has the same power and authority as each other judge." 15
Corn contends that the district court erred in accepting his guilty plea without admonishing him as required by Federal Rule of Criminal Procedure 11(c)(1). Rule 11(c)(1) provides:
Before accepting a plea of guilty or nolo contendere, the court must address the defendant personally in open court and inform the defendant of, and determine that the defendant understands ... the nature of the charge to which the plea is offered, the mandatory minimum penalty provided by law, if any, and the maximum possible penalty provided by law, the effect of any special parole term and, when applicable, that the court may also order the defendant to make restitution to any victim of the offense. (Emphasis added.)
Corn asserts that the court's statement, at rearraignment, that it could "impose just about any sentence it thinks is proper, ... everything except death," was too sweeping to inform him of the real consequences attendant upon his plea. The contempt statute under which Corn was convicted 16 contains no mandatory minimum penalty and leaves the maximum penalty within the sound discretion of the court. Corn acknowledged his understanding that he was pleading to a crime for which the court alone would determine the sentence, not only during rearraignment, but also in the plea agreement he signed, which stated, in relevant part, "I am aware that the maximum sentence provided by statute for the offenses charged in the Criminal Information is not limited in any way and that the court may impose a term of imprisonment and/or a fine of any duration or amount it may choose."
Rule 11(c)(1),...
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