U.S. v. Johnson

Decision Date25 February 1983
Docket NumberNo. 82-1136,82-1136
Citation700 F.2d 163
Parties12 Fed. R. Evid. Serv. 1081 UNITED STATES of America, Plaintiff-Appellee, v. William J. JOHNSON, Defendant-Appellant.
CourtU.S. Court of Appeals — Fifth Circuit

Leo J. Hoffman (court-appointed), Dallas, Tex., for defendant-appellant.

John Mitchell Nevins, Asst. U.S. Atty., Dallas, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before CLARK, Chief Judge, RUBIN and WILLIAMS, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge.

Johnson appeals a criminal conviction for interstate transportation of a falsely made security, 18 U.S.C. Sec. 2314, and for causing interstate telephone calls to be made pursuant to a scheme of securities fraud, 18 U.S.C. Sec. 1343. The primary issue on appeal concerns the district court's determination that the documents in question were "securities" within the meaning of the statute, as a matter of law. We affirm the district court.

FACTS

In 1977, William J. Johnson helped to launch a California corporation, International Vaults, Ltd. (I.V.), to engage in the trading of gold and other precious metals. He then left the company in 1978. I.V.'s attorneys advised the company in 1980 that it would need to become a registered company with the California Department of Corporations in order to continue trading metals and commercial paper. 1 The company suspended operations temporarily and began to prepare the financial statements needed for registration with the proper government bodies. In mid-November, 1980, the California Department of Corporations began an investigation of I.V.'s compliance with state securities laws.

The state's investigation touched off a ripple of concern within the company regarding I.V.'s financial condition, and the company hired an accountant and an independent auditor to verify the assets of the company. One of the company's major assets was an $8 million promissory note owed by Lee Eastman, I.V.'s principal agent for buying and selling the Alaskan gold. Neither Eastman nor the $8 million could be located, and the auditors told company officials that the verification process of the audit was "falling behind schedule." The ripple of concern became a wave of anxiety, and I.V. brought Johnson back on board in December, 1980 to help verify the assets, weather the storms of the outside audit, and generally calm the troubled waters surrounding I.V.

Johnson knew I.V. was a vessel in distress when he rejoined. His first effort, once on board, was to seek an $8 million asset to replace the unconfirmable promissory note owed by Eastman. In late January, 1981, Johnson traveled to Dallas to meet with William Brinlee, a friend in the gold business. Brinlee gave Johnson a document denominated "Gold Certificate Contract" made out to "Int. Vaults/William J. Johnson." The document purported to assign 35,000 ounces of gold held in a bonded warehouse in Dallas. 2 The exact meaning Johnson acquired temporary rights to the document by promising to return the certificate within three days and to pay Brinlee $75,000. The document did not mention the temporary nature of the transaction, and the original did not contain an inscription that the gold would need to be paid for upon delivery, if delivery were ever to take place. Brinlee's duplicates of the document had this "C.O.D." provision added on.

of the document is in dispute in this case. Whatever its meaning, however, its clear purpose was to placate the auditors in their search for verifiable assets.

Johnson flew from Dallas back to California with the document in hand, an act later to be labeled "in interstate commerce." I.V.'s principals immediately informed the auditors that the Eastman note had been "retired" but that this new Brinlee note could be confirmed to represent the needed $8 million. The auditors made several attempts to verify the existence of the gold underlying the Brinlee certificate, including making certain telephone calls to Dallas. These calls would later be labeled "interstate use of wire signals." The attempts were unsuccessful, and the auditors were not yet satisfied.

Johnson flew back to Dallas and met with Brinlee again. This time, Johnson returned to California with a "bill of sale" for $8 million worth of coal, which he acquired from Brinlee. Despite attempts by I.V. officials other than Johnson to represent the coal contract as being "bought" with the gold contract which in turn was "bought" with the Eastman note, the independent auditors would not verify the assets of I.V. The company capsized.

The federal government then brought criminal charges against Johnson. The charges included one count of "transporting in interstate commerce with the requisite unlawful intent and knowledge, a falsely made security in violation of 18 U.S.C. Sec. 2314," and one count of "causing to be made a telephone call in furtherance of this fraudulent scheme in violation of 18 U.S.C. Sec. 1343." After a jury trial, Johnson was found guilty on both counts, and given a three year sentence on the interstate transportation count and a five year suspended sentence on the interstate wire signal count.

Johnson now appeals, arguing that the district court erred in instructing the jury that the Gold Certificate Contract was a security as a matter of law. He argues,

first, that it was impermissible for the district court to determine the status of the document as a security rather than leaving the question entirely to the jury. Second, Johnson urges that the ruling was erroneous even if it was within the judge's power to make. Johnson also contends that the jury's verdict on the wire signals charge does not have sufficient basis in the evidence. Finally, he urges that the court erred in admitting certain evidence. We address each contention in turn.

WAS THE LEGAL FINDING OF "SECURITY" A VIOLATION OF THE RIGHT
TO A JURY TRIAL?

Johnson's fundamental objection to the proceedings below is that the district court ruled that the Gold Certificate Contract was a security as a matter of law. Johnson urges us to adopt a rule that such a determination in a criminal proceeding is always for the finder of fact. We hold that his contention is not the law.

Johnson urges that if a judge has the authority to determine status as a security, this power is limited in a criminal case by the defendant's countervailing constitutional right to a jury trial. In this proceeding, Johnson claims that the charge to the jury which required the jury to accept the Gold Certificate Contract as a security was treading on the exclusive terrain of the jury's factfinding duties, in violation of his Sixth Amendment rights.

We recognize, of course, Johnson's right to a full jury trial untempered by a judge's preemptive coloration of the facts. This right means that there may be no partial summary judgment on factual questions. United States v. Sheldon, 544 F.2d 213, 221 (5th Cir.1976); United States v. Manuszak, 234 F.2d 421 (3d Cir.1956) (the existence of a theft at all is a jury question). As was stated in United States v. Austin, 462 F.2d 724, 737 (10th Cir.), cert. denied, 409 U.S. 1048, 93 S.Ct. 518, 34 L.Ed.2d 501 (1972): "It is unquestionably desirable to submit all issues in a criminal case to the jury and to fail to do so, even where the issue appears clear to the judge, is potentially dangerous and at best hazardous."

Johnson urges that under the circumstances of this case, finding the certificate to be a security necessitates an adoption of factual testimony presented at trial. Unlike a bank check, travelers check, or other document that is expressly, unequivocally covered under the statute, the Gold Certificate Contract falls into a more nebulous description under the statute. That description includes an "instrument or document or writing evidencing ownership of goods, wares, and merchandise, or transferring or assigning any right, title, or interest in or to goods, wares, and merchandise...." 18 U.S.C. Sec. 2311.

The wording of the certificate falls literally into the statutory definition by purporting to "assign" gold. In spite of this precise conformity with the definition, Johnson claims that the statutory definition requires a factual determination. He contends that any jury charge that the Gold Certificate Contract is unequivocally a security would in effect be directing a verdict against him in violation of his Sixth Amendment rights. As we stated in United States v. McClain, 545 F.2d 988, 1003 (5th Cir.1977): "When the jury is not given an opportunity to decide a relevant factual question, it is not sufficient 'to urge that the record contains evidence that would support a finding of guilt even under a correct view of the law' ", quoting United States v. Casale Car Leasing, Inc., 385 F.2d 707, 712 (2d Cir.1967).

Johnson directs our attention to a criminal securities case where this Court required a jury's factual findings as to a security transaction in examining a criminal conviction. In Roe v. United States, 287 F.2d 435 (5th Cir.), cert. denied, 368 U.S. 824, 82 S.Ct. 43, 7 L.Ed.2d 28 (1961), this Court faced a complicated factual record revolving around the ultimate sale of investment interests in mineral leases. Roe and his associates had mailed promotional brochures offering great profits through investments in these lease interests. The profits did not exist, and Roe was charged Our examination on appeal lingered on the realization that the district court had instructed the jury that the evidence showed the existence of a sale of securities as a matter of law. We found no "real doubt that offerings of oil leases in this fashion may amount to an 'investment contract.' " 287 F.2d at 437. And we further found that the evidence of the lease sales could, as a matter of law, constitute the sale or delivery of an investment contract, hence a sale of a...

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