United States v. Birrell, 61 Cr. 692.

• Decision Date: 03 April 1967
• Docket Number: No. 61 Cr. 692.,61 Cr. 692.
• Citation: 266 F. Supp. 539
• Parties: UNITED STATES of America v. Lowell M. BIRRELL, Defendant.
• Court: U.S. District Court — Southern District of New York

266 F. Supp. 539

UNITED STATES of America v. Lowell M. BIRRELL, Defendant.

No. 61 Cr. 692.

United States District Court S. D. New York.

April 3, 1967.

Robert M. Morgenthau, U. S. Atty. for Southern Dist. of New York, for the United States, Arthur L. Liman, Sp. Asst. U. S. Atty., and Stephen L. Hammerman, Asst. U. S. Atty., of counsel.

William J. Brennan, III, New York City, for defendant, Lowell M. Birrell

OPINION

HERLANDS, District Judge.

This motion by the defendant^* to dismiss Counts Two through Sixteen of the indictment or, alternatively, to compel the Government to elect one count out of Counts One through Sixteen for purposes of trial poses an interesting question of criminal pleading usually considered under the rubrics of "duplicity," "multiplicitousness" or "fragmentation of crimes."

The answers to the questions—whether the indictment is duplicitous and whether the allegedly duplicitous counts should be dismissed or whether the Government should be compelled now to select for trial one of the challenged counts—must be formulated with some circumspection because the course of relevant decisions in this circuit is not a clear, straight line.

The Challenged Counts

Although the indictment contains a total of thirty-two counts, the disposition of this motion requires an analysis of only Counts One through Sixteen, which are the counts attacked as duplicitous.

A. The "Introduction" of the Indictment

The first nine pages of the indictment follow a subject-heading entitled "Introduction." This "Introduction" is divided into four numbered paragraphs. Paragraph "1" of the "Introduction" covers a six-year period described as from on or about August 1, 1955 up to and including the filing date of the indictment, which (as a matter of record) is July 20, 1961. This paragraph names the thirteen individual defendants and the one corporate defendant, J. A. Winston & Co., Inc.

This paragraph then identifies the securities that are the subject matter of the crimes charged as the common shares of capital stock ("common stock") of American Leduc Petroleums Limited ("American Leduc"). This paragraph— adopting and paraphrasing the language of Title 15, United States Code, Section 77q(a)—alleges (in substance) that the defendants unlawfully did the acts proscribed by said Section 77q(a); and then lists the names of fifty-six persons, described as the "persons to be defrauded" by the defendants. After listing the fifty-six names, the indictment adds: "and other persons too numerous to name herein."

Paragraph "2" of the "Introduction" is divided into nine subparagraphs lettered "(a)" to "(i)," which follow a prefatory statement that the defendants' "device, scheme, artifice to defraud, transactions, practices, and course of business"—as referred to in paragraph "1" of the "Introduction" —"involved the issuance to and acquisition by" Birrell and five other defendants (the corporate defendant, Winston, the two Bernsteins and Gilbert) of "large blocks" of American Leduc common stock for the purpose of selling said stock to the persons to be defrauded. The nine subparagraphs "(a)" to "(i)" describe acts that are stated to be "a part" of the previously mentioned "device, scheme, * * * and course of business." The acts described in these nine subparagraphs cover a period of time from 1954 to February 1, 1958.

Paragraph "3" of the "Introduction" lists twenty-three "untrue statements of material facts" by means of which the defendants obtained money and property in the sale of American Leduc common stock —these untrue statements being "a further part" of the previously described "device, scheme, artifice to defraud, transactions, etc." The twenty-three untrue statements are set forth in separately lettered subparagraphs "(a)" to "(w)".

Paragraph "4" of the "Introduction" lists three material facts that the defendants omitted to state (that should have been stated in order to make the statements that were made, under the circumstances in which they were made, not misleading), the omissions being "a further part" of the previously described "device, scheme, artifice to defraud, etc."

B. "Counts One Through Sixteen"

At page 9 of the indictment, following the paragraphs that comprise the "Introduction," there is a subject-heading entitled "Counts One Through Sixteen." The newly expressed allegations (that appear at pages 9-13 of the indictment) under the said subject-heading incorporate by express reference certain specific elements set forth in named paragraphs of the "Introduction" and also "each and every allegation contained in * * * paragraphs 1 through 4 of the portion of the indictment entitled `Introduction'."

Structurally, the material pleaded as Counts One through Sixteen is presented in two numbered paragraphs ("1" and "2") and in a table (at pages 11-13 of the indictment) setting forth detailed allegations under five horizontal columnar headings entitled "Count", "Date", "Name & Address of Purchaser", "Matter", and "Defendants".

As to the named defendant, there are seven defendants named in each such count. Six of those seven are the same for each of the sixteen counts, namely, Birrell, J. A. Winston & Co. Inc., Joel A. Winston, Albert and Irving Bernstein, and Morrison Gilbert. The seventh named defendant sometimes varies. The seventh named defendant is Count One is Harry Levine; in Count Two, Benof Berman; in County Three, Bernard Rotter; in Count Four, Benof Berman; in Count Five, Leo Glassman; in Count Six, Matthew Naphtali; in Count Seven, Phil F. Krumholz; in Count Eight, Matthew Naphtali; in Count Nine, Bernard Rotter; in Count Ten, Leo Glassman; in Count Eleven, Max Levine; in Count Twelve, Phil F. Krumholz; in Count Thirteen, Benof Berman; in Count Fourteen, Max Levine; in Count Fifteen, Harry Levine; and in Count Sixteen, Benjamin N. Saporta.

For each of the said sixteen counts, there are different named purchasers, except with respect to the second and fourth counts where the same purchaser (Dr. Justin H. May) is named.

For each of the said sixteen counts, there are different named dates, except with respect to the twelfth and thirteenth counts, where September 19, 1956 is specified and the fourteenth, fifteenth and sixteenth counts, where November 16, 1956 is specified.

For each of the said counts, the listed "matter" is different, inasmuch as each count appears to deal with different purchases of American Leduc Petroleums Limited shares of stock and different stock certificates.

Paragraph "1", referring to the said table, alleges that, on or about the date stated in each respective count of the said sixteen counts, the defendants named in each such count sold the particular shares of American Leduc common stock referred to in each such count to the respective purchaser named in that count. Paragraph "1" further alleges that "in each such sale" the defendants (as named in the particular count) unlawfully, willfully and knowingly in the Southern District of New York did the acts then described in subparagraphs "(a)" to "(d)."

Subparagraph "(a)" states that the defendants named in each such count employed the device, scheme and artifice— described in paragraphs 2, 3 and 4 of the "Introduction"—to defraud the purchaser named in each such respective count.

Subparagraph "(b)" states that the defendants obtained money and property from the purchaser named in each such count by means of untrue statements of material facts and omissions to state material facts—as set forth in paragraphs 3 and 4 of the "Introduction."

Subparagraph "(c)" states that the defendants engaged in the transactions, practices and course of business—as described in paragraphs 2, 3 and 4 of the "Introduction"—which operated as a fraud and deceit upon the purchaser named in each such count.

Subparagraph "(d)" states that the defendants caused to be carried through the mails the matter described in each such count, enclosed in an envelope bearing an address set forth in each such count, to the purchaser named in each such count.

Paragraph "2" incorporates into each of Counts One to Sixteen by express reference all of the allegations contained in paragraphs "1" through "4" of the "Introduction."

Counts One through Sixteen cite Title 15 U.S.C. §§ 77q(a) and 77x, and Title 18 U.S.C. § 2. The latter provision is the aiding and abetting statute. The title 15 provisions are part of the Securities Act of 1933. Section 77x is the penalties provision, attaching criminal liability to wilful violations of the statute. Section 77q(a) is the substantive provision that defines the acts declared to be illegal. We turn now to an analysis of Section 77q(a).

Title 15 U.S.C.A. § 77q(a) Analyzed

This statute provides:

"(a) It shall be unlawful for any person in the offer or sale of any securities by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly—

(1) to employ any device, scheme, or artifice to defraud, or

(2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser."

The prefatory language of Section 77q(a) is contained in that portion of the provision which precedes the subdivisions numbered "(1)", "(2)", and "(3)". This prefatory language speaks of an offer or sale of securities, and of the use of the mails or interstate commerce in connection with such offer or sale. The different physical acts that—under the conditions specified in the preface—are declared to be "unlawful" are those defined in the separate subdivisions numbered "(1)", "(2)" and "(3)". Each of the numbered subdivisions "(1)", "(2)" and "(3)"...