United States v. Johnson, 73-3519.

• Decision Date: 03 October 1974
• Docket Number: No. 73-3519.,73-3519.
• Citation: 496 F.2d 1131
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Howard Nicholas JOHNSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

496 F.2d 1131 (1974)

UNITED STATES of America, Plaintiff-Appellee, v. Howard Nicholas JOHNSON, Defendant-Appellant.

No. 73-3519.

United States Court of Appeals, Fifth Circuit.

June 28, 1974.

Rehearing and Rehearing Denied October 3, 1974.

Charles O. Baird, Jr., Atlanta, Ga., Stuart R. Carter, Jr., Washington, D. C., Daniel J. Markey, Jr., New Orleans, La., for defendant-appellant.

John W. Stokes, Jr., E. Ray Taylor, U. S. Attys., Atlanta, Ga., David Ferber, Sol., Office of Gen. Counsel, Robert G. Ryan, S.E.C., Washington, D. C., for plaintiff-appellee.

Before GEWIN, THORNBERRY and SIMPSON, Circuit Judges.

Rehearing and Rehearing En Banc Denied October 3, 1974.

GEWIN, Circuit Judge:

Appellant Howard N. Johnson appeals from the judgment of conviction entered by the district court following his bench trial. On January 24, 1973, a nine-count indictment was returned charging appellant with various violations of Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a) (1970), Section 5(a) of the Securities Act of 1933, 15 U.S.C. § 77e(a) (1970), and 18 U.S.C.A. § 1341 (Supp.1974) (mail fraud). Following his trial conducted from August 27th through August 31, 1973, the district judge found appellant guilty of seven counts of the nine-count indictment.¹ Appellant was sentenced to concurrent three-year sentences on each of the seven counts.

On this appeal, Johnson specifies four main contentions which he asserts require reversal of his conviction. First, he alleges that the Government did not introduce sufficient evidence to warrant his conviction. Second, he contends that the Government's preindictment delay impermissibly prejudiced his ability to present an adequate defense to the charges. Third, he alleges that the trial court improperly interfered with his ability to present a complete defense to the charges. Finally, he asseverates that he did not intelligently and voluntarily waive his right to specific findings of fact by the trial judge. After a careful review of the evidence introduced and the applicable and controlling legal principles governing the issues presented by appellant, we are firm in the belief that no prejudicial error was committed below and thus affirm.

I

Since appellant was sentenced to concurrent three-year sentences on each of the seven counts under which the district court found him guilty, if there was sufficient evidence under any count, his conviction should be affirmed.² Furthermore on appeal, our standard for reversing on the ground that there was insufficient evidence to warrant an appellant's conviction is circumscribed. Viewing the evidence in the light most favorable to the Government, if the record demonstrates that sufficient evidence was introduced from which a reasonably minded trier of fact could conclude that appellant was guilty beyond a reasonable doubt, the judgment must be affirmed.³

In Counts 1 and 2, appellant was charged and convicted of violating Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a)(1970). That Section provides in relevant part:

It shall be unlawful for any person in the offer or sale of any securities . . .

(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 Government introduced evidence which fully placed appellant's acts within the prohibitions delineated above.

In early 1969, James Owens and Robert Doty decided that it would be a wise business venture to operate a television production business in Atlanta, Georgia. They envisioned that their business venture would produce television commercials and other special features for the local television stations. However, one essential ingredient was missing from their business dream. They needed a large amount of capital. Accordingly, Owens and Doty began to investigate possible sources of funds to complement their production skills gained from long experience in the television industry.

Owens and Doty were introduced to a local Atlanta realtor, Oliver Coleman. Coleman informed the two entrepreneurs that he knew a man, Howard Nicholas Johnson, a Florida resident, who might be interested in investing in their new enterprise. Accordingly Johnson was contacted by Coleman and came to Atlanta where he reviewed the tentative plans for the new business. He readily agreed that Atlanta would be a good market for such an undertaking and agreed to finance it. On April 30, 1969, these proposals were formalized into a newly incorporated Georgia corporation by Owens and Doty. Johnson was named the president of the new corporation, Television Productions, Incorporated.

On May 15, 1969, Owens, Doty and Johnson entered into a formal agreement. Johnson agreed to guarantee the purchase of television equipment from the Ampex Corporation of California. Furthermore, he agreed to open a line of credit for the new corporation at the Fulton National Bank in Atlanta in the amount of $100,000. In return, Johnson was conveyed 50% of the stock in Television Productions, Inc. Additionally, he was given the right to vote the retained shares of Doty and Owens in the event that the new corporation should fall in arrears on its debts for a period of three months.

Thus the traditional capitalistic mixture of expertise and finances was joined in hopes of producing profits. However, the events that developed subsequently demonstrated that appellant intended the new corporation for uses other than purely television production. On June 17, 1969, without the knowledge of Owens and Doty, appellant merged Television Productions, Incorporated with Sand and Seas Industries, Inc., a Florida corporate shell. This merger was consummated by the use of the forged signatures of Doty and Owens on the merger plan. The plan stated that all the directors of Television Productions, Inc., had approved the merger at a board of directors meeting on June 6, 1969. Doty and Owens, both directors, testified that they were unaware of any such meeting and had never approved the merger. The newly merged Florida corporation was named Television Productions International Corporation (TPIC).

Johnson and an associate, J. Francke Fox, Jr., attempted to interest prospective investors in what was termed "Johnson's Georgia television company." These potential investors were taken on a tour of the Atlanta premises. Many sales of stock were culminated as a result of these visits and other contacts. As a further inducement for the sale of the stock, Johnson promised the investors that he would repurchase the stock within a certain length of time at a substantial profit to the purchaser.⁴

Furthermore, Johnson wrote the investors on stationery which listed the name of the corporation as "Television Productions International, Incorporated." At the time that Johnson wrote these letters, Television Productions International, Incorporated was not in existence.⁵ The investors easily confused the names of the existing Florida corporation, Television Productions International Corporation and Television Productions International, Incorporated. Additionally, Johnson signed these letters as president of the then non-existent corporation. Thus, the investors were led to believe that they were buying stock in the Television Productions International, Incorporated, a non-existent corporation, when in fact they were buying stock in the Florida corporation.

From their testimony, it is evident that the potential and actual investors were not experienced in trading in stock. They were not familiar with the television production business and had no prior experience with Television Productions, Incorporated, Television Production International Corporation or Television Productions International, Incorporated. They were never furnished a prospectus of Television Productions International Corporation by Johnson. Prior to their purchase of stock, they were not informed that the stock was "restricted." Furthermore, it was apparent that the investors did not understand the consequences of buying restricted stock.

On December 11, 1969, appellant opened a special bank account at the Halifax National Bank of Port Orange, Florida in the name of Television Productions International, Incorporated. The only authorized signatures for this account were shown as Howard N. and Margaret Mary Johnson. In fact, Television Productions International, Incorporated was not in existence at this time and neither Johnson nor his wife was ever legally connected with the corporation. A fraudulent corporate resolution was presented to the bank to permit Johnson to open the account. Doty, Owens and the other Television Productions International Corporation stockholders were never informed of the Florida bank account even though $19,000 of the proceeds of the sale of TPIC stock were placed in the account which could be withdrawn personally by appellant and his wife.

When the time arrived for honoring Johnson's previous promises to the investors in TPIC to repurchase the stock, he refused. Thus not only did the investors buy stock in a corporation which they did not know existed but when the time ripened for honoring a primary impetus for their investment, Johnson refused to honor his previous commitments.

We think the previously recited events amply demonstrate a violation of Section 17(a). ". . . It is not necessary that the government prove that anyone was actually defrauded in order to show a violation of the statutes under which defendant was indicted." Estep v. United States, 223 F.2d 19, 22 (5th Cir. 1955). The evidence establishes that appellant "obtained money . . . by means of...