U.S. v. Gentile

• Decision Date: 14 June 1976
• Docket Number: 499,Nos. 497,D,s. 497
• Citation: 530 F.2d 461
• Parties: UNITED STATES of America, Appellee, v. Phillip J. GENTILE and Hunter B. Brashier, Defendants-Appellants. ockets 75--1283, 75--1300.
• Court: U.S. Court of Appeals — Second Circuit

Page 461

530 F.2d 461

UNITED STATES of America, Appellee, v. Phillip J. GENTILE and Hunter B. Brashier, Defendants-Appellants.

Nos. 497, 499, Dockets 75--1283, 75--1300.

United States Court of Appeals Second Circuit.

Argued Dec. 2, 1975.

Decided Feb. 10, 1976.

Certiorari Denied June 14, 1976.

See 96 S.Ct. 2651.

W. Cullen MacDonald, Asst. U.S. Atty., New York City (Thomas J. Cahill, U.S. Atty. for the Southern District of New York, and John C. Sabetta, Asst. U.S. Atty., New York City, on the brief), for appellee.

John J. Tigue, Jr., New York City (Kostelanetz, Ritholz & Mulderig and Lawrence S. Feld, New York City, on the brief), for defendant-appellant Phillip J. Gentile.

Howard L. Jacobs, New York City, for defendant-appellant Hunter B. Brashier.

Before LUMBARD, FRIENDLY and MULLIGAN, Circuit Judges.

LUMBARD, Circuit Judge:

Phillip J. Gentile and Hunter B. Brashier appeal from their convictions, after a jury trial in the Southern District, for participation in a conspiracy to sell, pledge, and distribute unauthorized and fraudulently issued securities in violation of 15 U.S.C. §§ 77q(a), 77x and 18 U.S.C. §§ 1341, 2314. Gentile was also convicted on five other counts which charged fraud in the distribution of the securities. ¹ Appellants urge reversal of their convictions on numerous claims which suggest that error pervaded each stage of their prosecution from the indictment to the district judge's charge to the jury. We find no error and accordingly affirm the convictions.

The conspiracy involved an intricate scheme by which blank stock certificates were wrongfully and improperly completed and disposed of between 1970 and 1973 by Leonard Reisch, the president of Fidelity Registrar and Transfer Co., to whose care the certificates of various companies had been entrusted. Reisch issued several of the unauthorized certificates in his own name and either sold them on the over-the-counter market or pledged them to banks as collateral for loans. Other loans were obtained by co-conspirators, including Gentile, through the hypothecation of wrongfully completed certificates issued in their names. ² The proceeds of these loans were divided among one or more of the co-conspirators and Reisch. Reisch also completed stock certificates in Gentile's name that were apparently sold by Gentile through brokerage accounts.

In September 1973 the plan for distribution was altered after agents of the Securities and Exchange Commission searched the offices of Fidelity in New Jersey and seized shareholder ledgers and other implements of the scheme. Gentile and a co-conspirator, Manuel Posy, determined that the safest course to follow would be to distribute their remaining securities on the West Coast and abroad. Throughout the latter months of 1973, Gentile conferred with other members of the conspiracy concerning the best means of disposing of the securities. In December of that year appellant Brashier arranged a meeting in California between Gentile and Rochlin, a stockbroker with the Beverly Hills office of Merrill Lynch, Pierce, Fenner & Smith, who had offered, at Brashier's request, to sell some stock that Gentile had pledged as collateral for a bank loan. Approximately one month after these sales were completed Gentile was informed by Rochlin that the securities were not transferable. Although he had promised to do so, Gentile never provided documents confirming his purchase of all but one of the securities.

Brashier also introduced Gentile to Carl Hermanson, an employee of Brashier's firm on the West Coast Commodities Option Exchange, who had expressed a willingness to facilitate the sale of over-the-counter securities for Gentile through a third party's account. Hermanson found a willing conduit, Howell, who would sell the securities through his parents' account at Shields & Co., and Hermanson delivered to Howell unauthorized certificates issued in Posy's name and a letter, purportedly signed by Posy, sanctioning the sale. When Shields & Co. requested an additional notarized authorization, a person purporting to be Posy brought such a letter to Juanita Amoroso, a notary public in California who had previously notarized a similar form authorizing sale of stock in Posy's name. Upon receipt of this authorization, the brokerage house accepted the sales order. About a month later, these certificates were also discovered to be defective. When confronted by the party who had sold the stock, Brashier denied having any knowledge of its defective nature and denied even knowing who Hermanson was.

In October 1974, when Brashier was interviewed by an Assistant United States Attorney and an agent of the Securities and Exchange Commission, he made numerous false exculpatory statements concerning his relations with the parties in the two transactions with Rochlin and Hermanson.

Neither Gentile nor Brashier testified at trial. Brashier's only witness, his fiancee, testified as to his activities during December and January. Gentile introduced evidence to show that he was in Fresno, California, at the time when he had allegedly appeared before Amoroso in Los Angeles.

I. Sufficiency of the Evidence as to Brashier.

Appellant Brashier contends that the evidence against him was insufficient to allow the jury to conclude that he was guilty beyond a reasonable doubt. See United States v. Frank, 494 F.2d 145, 153 (2d Cir.), cert. denied, 419 U.S. 828, 95 S.Ct. 48, 42 L.Ed.2d 52 (1974); United States v. Taylor, 464 F.2d 240 (2d Cir. 1972). We disagree. There was ample evidence from which the jury could properly have found beyond a reasonable doubt that Brashier was a knowing and willing member of the conspiracy. Brashier's conduct consistently demonstrated a desire furtively to shield himself from view as a participant in the liquidation of the certificates held by Gentile. Thus, Brashier requested Hermanson to find a third party who would be willing to sell some of the stock as nominee rather than simply contacting a securities broker himself, despite Brashier's familiarity with the securities field. ³ He further insisted that Hermanson deliver the proceeds of the stock sale--a total of $8900--to him in cash, although Hermanson had received a check from the nominee-seller. Finally, the series of false exculpatory statements made by Brashier during his interview with government officials evidenced a desire to disassociate himself from the transactions and thus showed consciousness of guilt. See United States v. Jacobs, 475 F.2d 270, 279, 281 (2d Cir.), cert. denied sub nom. United States v. Lavelle, 414 U.S. 821, 94 S.Ct. 116, 38 L.Ed.2d 53 (1973).

II. Single or Multiple Conspiracy.

Brashier also claims that he was not a member of the conspiracy charged in the indictment. He contends that the evidence demonstrated that the individuals who had conspired to sell and pledge unauthorized securities terminated their plan shortly after S.E.C. agents searched Fidelity's offices and found instrumentalities of the conspiracy. Since he was not involved in any dealings with the conspirators at this point--shortly after September 21, 1973--Brashier argues that his later assistance to Gentile could not make him a member of the conspiracy. ⁴ We disagree.

There was abundant evidence from which the jury could have found that the conspiracy began in 1970 and continued through the latter part of 1973 when Brashier assisted Gentile in disposing of certificates. That there was a variance in the places and means of disposition and some of those participating did not necessarily create a different conspiracy. Brashier's ignorance of the identity or scope of activities of other conspirators would not exonerate him from inclusion in the conspiracy charged in the indictment. See United States v. Wyler, 487 F.2d 170 (2d Cir. 1973). 'Despite the existence of multiple groups within an alleged conspiracy, we have considered them as part of one integrated loose-knit combination in instances where there existed . . . a permissible inference, from the nature and scope of the operation, that each actor was aware of his part in a larger organization where others performed similar roles equally important to the success of the venture.' United States v. Bertolotti, 529 F.2d 149, 154 (2d Cir. 1975). In this instance, where Brashier was familiar with transactions in securities and must have known the difficulties in obtaining bogus stock, he could not have failed to know that Gentile, who was not in the business of marketing stocks, could not have come into possession of these securities without the aid of others. Furthermore, the jury was properly instructed that it must find that defendants were members of the conspiracy charged in the indictment and that Brashier had joined the conspiracy.

Brashier relies primarily upon the testimony of his co-defendant Posy to support his argument that the conspiracy charged in the indictment terminated long before Brashier's involvement with the sale of Gentile's securities. He maintains that Posy left the country shortly after September 21, met Gentile in Israel in November and at that time they agreed to abandon their efforts at distribution. Posy later returned to the United States to give Gentile the stock that was ultimately sold, presumably without Posy's knowledge or consent, through Shields & Co. Posy then left the country a second time.

Posy's testimony, however, was more equivocal. His recognition that the scheme had been discovered led him to agree with Gentile in Israel that it would be disastrous to dispose of additional stock 'at this time.' Posy's willingness to surrender to the authorities and thereby terminate his role in the conspiracy was similarly ambiguous. In response to questions from Gentile's attorney, Posy testified that he returned the stock he held to Gentile 'to hold the stock until such time that it could be given back to Mr. Reisch or turned over to the authorities.' (emphasis added). Posy...