U.S. v. Mayo

• Decision Date: 14 September 1981
• Docket Number: Nos. 79-1360,79-1399,s. 79-1360
• Citation: 646 F.2d 369
• Parties: Fed. Sec. L. Rep. P 98,006, 8 Fed. R. Evid. Serv. 440 UNITED STATES of America, Plaintiff-Appellee, v. Louis M. MAYO, Jr., and James Harold Dondich, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 369

646 F.2d 369

Fed. Sec. L. Rep. P 98,006, 8 Fed. R. Evid. Serv. 440

UNITED STATES of America, Plaintiff-Appellee, v. Louis M. MAYO, Jr., and James Harold Dondich, Defendants-Appellants.

Nos. 79-1360, 79-1399.

United States Court of Appeals Ninth Circuit.

Argued and Submitted April 14, 1980.

Decided May 26, 1981.

Rehearing and Rehearing En Banc Denied Sept. 14, 1981.

J. Frank McCabe, San Francisco, Cal., argued for Mayo; Goorjian & McCabe, on brief.

Richard L. Jaeger, San Francisco, Cal., argued for Dondich; Feldman, Waldman & Kline, San Francisco, Cal., on brief.

Mark N. Zanides, Asst. U. S. Atty., San Francisco, Cal., for plaintiff-appellee.

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

Before SCHROEDER and FLETCHER, Circuit Judges, and CLAIBORNE, ^* District Judge.

PER CURIAM:

Appellants Louis M. Mayo and James Harold Dondich appeal from their convictions for mail fraud and securities fraud, in violation of 18 U.S.C. §§ 371, 2314, 1341, 1343 and 15 U.S.C. §§ 77q(a), 77x, 78j(b), 78ff(a). We affirm.

I FACTS

Appellants Mayo and Dondich were found guilty on all counts of an 18-count indictment. Three co-defendants, Mortensen, Osness, and Jackson, were acquitted on all counts. To sum up a long and complex factual record, the appellants were involved in a scheme to market debt securities of Quimby Island Reclamation District No. 2090 (the District) at a time when it was losing money and probably had a negative net worth. In promotional material used to sell the securities, the District's assets were represented to have a value in excess of $100 million. Listed as part of the assets, at a value of $95 million, was a ranch in Colombia which appellant Dondich had deeded to the District in return for $5 million of general obligation bond anticipation notes (gobans). Dondich had no interest in the ranch which he could convey. Mayo and Dondich were both aware of these facts. In the course of their dealings, the appellants knowingly made false representations to prospective purchasers of the gobans, securities brokers who planned to resell the gobans to their own customers using the false information furnished by the appellants. Sales were in fact made relying on the false information.

II SUFFICIENCY OF THE EVIDENCE

Mayo and Dondich argue that the evidence was insufficient to support their convictions on counts III through XI of the indictment. These counts charged all defendants with violations of 15 U.S.C. § 77q(a) (fraudulent interstate transaction in the offer or sale of securities) and 18 U.S.C. § 2 (aiding and abetting). Appellants argue that they were merely aiders and abettors in the sales of the gobans and that, since the principals were acquitted, they likewise must stand acquitted as a matter of law. See United States v. Oscar, 496 F.2d 492, 493 (9th Cir. 1974).

Mayo and Dondich could themselves be held liable as principals under 15 U.S.C. § 77q(a), however. To sustain a conviction under this section, the Government is not required to show that a defendant was the actual offeror or seller of the security; rather, it is enough to show that the defendant knowingly and actively participated in a fraudulent scheme which resulted in the offer or sale. See United States v. Farris, 614 F.2d 634, 638-39 (9th Cir. 1979), cert. denied, 447 U.S. 926, 101 S.Ct. 920, 66 L.Ed.2d 839 (1980). Viewing the evidence in the light most favorable to the Government, the jury reasonably could have found that Dondich and Mayo were

involved in a fraudulent scheme to market the District's worthless gobans. The record contains substantial evidence that Mayo and Dondich made knowing and material misrepresentations which were intended to result and did result in sales to brokers and in resales to their customers. There is also ample evidence in the record that Mayo and Dondich knowingly and deceitfully caused the District to transfer assets without adequate consideration.

III ADMISSIBILITY OF EVIDENCE OF PAST CRIMES

Dondich argues that the court below committed reversible error in admitting evidence which constituted "thinly veiled allusions to Dondich's criminal record." Dondich refers to various statements made at trial to the effect that Dondich was the subject of a pending FBI investigation, and had legal problems so serious in nature that he could not travel freely. Dondich argues that these statements constitute evidence of his criminal character and were offered by the Government to prove his guilt.

Under Fed.R.Evid. 404(b), evidence of past crimes or wrongful acts is admissible for purposes such as proof of motive, state of mind, or intent. In this case, the record shows that the challenged evidence was admitted to show the motive, state of mind, and intent of a co-defendant, Mortensen. Although the evidence may have been admissible as against Mortensen, it was inadmissible against Dondich and its use against him was therefore improper. However, in view of the strong case against Dondich independent of the challenged evidence, and in light of the trial court's limiting instructions, we find the error to be harmless.

IV DOUBLE JEOPARDY

Dondich contends that his conviction violates the double jeopardy clause of the fifth amendment. In 1976, Dondich and seven others (none of whom were defendants in this case) were convicted in the Central District of California on charges of conspiracy. The indictment alleged that Dondich and his co-defendants had used a number of "sham corporations" to induce investors to purchase futures contracts for the sale and delivery of sugar. The defendants had allegedly represented that the assets of one of the "sham corporations" included a ranch in Colombia the same ranch involved in the case at bar. To establish the facts surrounding the true ownership of the Colombian ranch, the Government called the same witnesses in the sugar futures case as in the case at bar.

Dondich was convicted, and his conviction was affirmed on appeal. United States v. Dondich, No. 76-1221 (9th Cir. Nov. 14, 1977) (unpublished memorandum), cert. denied, 436 U.S. 906, 98 S.Ct. 2238, 56 L.Ed.2d 405 (1978). Dondich now argues that the conspiracy for which he was convicted in the Central District of California and the conspiracy alleged in this case in fact constitute one giant, overall conspiracy, and that his conviction here thus violates the double jeopardy clause. See United States v. Westover, 511 F.2d 1154 (9th Cir.), cert. denied, 422 U.S. 1009, 95 S.Ct. 2633, 45 L.Ed.2d 673 (1975).

In Arnold v. United States, 336 F.2d 347, 349-50 (9th Cir. 1964), cert. denied, 380 U.S. 982, 85 S.Ct. 1348, 14 L.Ed.2d 275 (1965), we held that an offense charged in a second indictment violates the double jeopardy clause only if the proof of the matter set out in the second indictment would be admissible as evidence under the first indictment, and could sustain a conviction under the first indictment. We compared the differences in the periods of time covered by the alleged conspiracies, the places where the conspiracies were alleged to occur, the persons charged as co-conspirators, the overt acts alleged to have been committed, and the statutes alleged to have been violated. Applying these factors to the facts of this case, it is obvious that the conspiracy alleged here was completely distinct from the sugar futures conspiracy. The two involved different co-conspirators, different victims, different purposes, different timespans,

different locales, and different sections of the United States Code. The only similarity between the two was a similar use of the Colombian ranch. The second conviction thus does not violate the double jeopardy clause. See Rogers v. United States, 609 F.2d 1315, 1317-18 (9th Cir. 1979).

V APPEARANCE OF PROSECUTORIAL IMPROPRIETY

Appellants argue that the indictment should have been dismissed because one Zanides, a former SEC attorney who had been involved in a civil investigation of the appellants' alleged misconduct, had later participated in the criminal investigation on behalf of the Justice Department. It is clear that Zanides had no actual conflict of interest, but appellants argue that the appearance of impropriety warrants dismissal of the indictment. This argument was also raised before the trial court, see United States v. Dondich, 460 F.Supp. 849 (N.D. Cal.1978), and the trial court's analysis was specifically approved by this court in United States v. Wencke, 604 F.2d 607, 611 (9th Cir. 1979). There is no merit to appellants' position.

VI PROPRIETY OF PRISON TRANSFER

As a result of his conviction in the Central District of California, Dondich was incarcerated in the United States Prison Camp in Lompoc, California at the time the grand jury returned the indictment in the present case. Seven months later, Dondich was transferred to the Federal Correctional Institution at Safford, Arizona. Dondich alleges that the Government has never given a justifiable reason for the transfer; that, as a result of the transfer, he lost some living privileges and some papers; and that his San Francisco counsel had more difficulty conferring with him while he was incarcerated in Safford than in Lompoc.

Dondich asks us to reverse his conviction on this ground, as a prophylactic against willful prosecutorial misconduct. See United States v. Gerard, 491 F.2d 1300, 1302-03 (9th Cir. 1974). The record reveals no prosecutorial misconduct, since Dondich's rights were not violated by this transfer. No statutes or regulations were violated and Dondich's interests in remaining at Lompoc and retaining his living privileges do not implicate the due process clause of the fifth amendment. See Walker v. Hughes, 558 F.2d 1247, 1252-53 (6th Cir. 1977); Smith v. Saxbe, 562 F.2d 729, 734 (D.C. Cir. 1977); see also Meachum v. Fano, 427 U.S. 215, 224-26, 96 S.Ct. 2532, 2538-39, 49 L.Ed.2d 451 (1976).

Dondich also argues that the prison transfer denied him his sixth...