United States v. Livengood

• Citation: 427 F.2d 420
• Decision Date: 04 August 1970
• Docket Number: No. 23319,23320.,23319
• Parties: UNITED STATES of America, Appellee, v. Robert W. LIVENGOOD, Appellant. UNITED STATES of America, Appellee, v. Donald D. ETHERTON, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

427 F.2d 420 (1970)

UNITED STATES of America, Appellee, v. Robert W. LIVENGOOD, Appellant.

UNITED STATES of America, Appellee, v. Donald D. ETHERTON, Appellant.

Nos. 23319, 23320.

United States Court of Appeals, Ninth Circuit.

April 6, 1970.

Rehearings Denied August 4, 1970.

R. Max Etter and Horton Herman, Spokane, Wash., for appellants.

Smithmoore P. Myers, Asst. U. S. Atty., Dean C. Smith, U. S. Atty., Spokane, Wash., for appellee.

Before BARNES and KOELSCH, Circuit Judges, and ^* WILLIAMS, District Judge.

KOELSCH, Circuit Judge.

Producers Livestock and Loan Company, Inc. was ordered into receivership on January 7, 1966, shortly after defaulting in the redemption of the first series of its "8% Callable Debentures." It had been incorporated approximately five years before and, during its relatively short business life, had raised $735,000 by public sale of these "Debentures" — essentially unsecured promissory notes.

The prosecution which gives rise to these appeals was commenced May 18, 1967. On that date an 18 count indictment was returned and filed in the United States District Court against Donald D. Etherton and Robert W. Livengood, two of Producers' officers and directors. They had publicly sold Debentures in respective amounts of $335,100 and $296,900. The indictment charged them jointly with fraud in the sale of securities (15 U.S.C. § 77q(a); mail fraud (18 U. S.C. § 1341), conspiracy (18 U.S.C. § 371) and making false statements (18 U.S.C. § 1001). Some counts were dismissed as to one or both defendants before the case went to the jury and, on others, they were acquitted; however, both defendants were found guilty on Counts 11, 12 and 15 (mail fraud) and Etherton was additionally found guilty on Counts 2 and 4 (securities fraud) and Count 10 (mail fraud).¹

The district court entered judgments on the verdicts and imposed concurrent sentences for each offense on either defendant; Etherton received three years and Livengood two years. On their appeals Etherton and Livengood have filed separate briefs, but in the main they urge the same points for reversal of the judgments.

The prosecution was not barred by positive statutory prohibition, because the crimes were all allegedly committed within the applicable five year limitation period provided by 18 U.S.C. § 3282. Defendants nevertheless contend that, because of "pre-prosecution" delay, the government should not have been permitted to press the charges. They rely indiscriminately upon the Speedy Trial Clause of the Sixth Amendment, the Due Process Clause of the Fifth and the supervisory power of federal courts to control criminal proceedings, as the basis for judicial interposition earlier than the time expressly limited by statute.

No useful purpose is served in the present context by an exposition of these Constitutional guarantees and the federal courts' inherent power. Suffice to say that two of the elements common to the application of any of them are undue governmental delay in initating or prosecuting charges against a person and prejudice occasioned him as a result of that delay. United States v. Ewell, 383 U.S. 116, 120, 86 S.Ct. 773, 15 L.Ed.2d 627 (1966); Lucas v. United States, 363 F.2d 500 (9th Cir. 1966); Wilson v. United States, 409 F.2d 184 (9th Cir. 1969); Whitted v. United States, 411 F. 2d 107 (9th Cir. 1969). This record does not demonstrate the existence of either.

Defendants maintain that the period of delay dates from approximately mid 1963. They declare that the Securities and Exchange Commission had kept Producers under constant "surveillance" from May 9, 1961, when Producers secured the first of several sales permits from the State of Washington; that in this respect the S.E.C. had examined into Producers' financial structure, had investigated its business operations and had interviewed a considerable number of debenture holders about Producers sales methods. They also note that the S.E.C.'s concern over its findings led to an informal meeting late in 1963 between representatives of Producers, the S.E.C. and the Washington Licensing Department; that at the meeting the S.E.C., indicating a belief that Producers had not made required disclosures to and had withheld significant fiscal information from prospective purchasers, threatened Producers with injunctive action. And finally, they point out that many of the fraudulent representations set out in the indictment are of the same type as those discussed at the meeting.

Defendants argue that these facts clearly demonstrate that the government was fully aware of their alleged fraudulent practices for more than three years before securing the indictment and thus unduly delayed commencing the prosecution. They rely heavily upon United States v. Parrott, 248 F.Supp. 196 (D.C. D.C.1965). We find Parrott factually inapposite. The point of difference is that there the S.E.C. had made a formal criminal reference report to the United States Attorney some 22 months before prosecution was commenced. Here, the S.E.C. did not. Nor does the record show, as defendants suggest, an early awareness by the government of the defendants' wrongdoing. The meeting in 1963 at most reflects an attempt by the S.E.C. to assist Producers in avoiding mistakes which could lead to government intervention by civil proceedings. It is also noteworthy that during the meeting Producers' attorney made explanations concerning any purported fraudulent representation and gave assurances which he concluded satisfied the S.E.C. and that thereafter Producers had no further encounter with the government. The receivership in January 1966, was an event which logically might — and in fact did — prompt an official investigation of a failed business which had "gone public." We are not prepared to say the government should be faulted for making a thorough investigation before concluding that someone connected with a business the size of Producers had defrauded investors.

Appellants are not able to point to facts or circumstances showing or tending to show that they were substantially disadvantaged or that the proceedings were rendered unfair because of the time lapse between the defendants unlawful acts and the filing of the indictment, or the filing and the eventual trial. In short, there is no substantial proof during either period that any likely witness became unavailable, that memories had dimmed, that evidence was lost, or that any other circumstance arose detrimental to defendants in making their defense.

The defendants had themselves made the sales and dealt with the investors. They evidenced little difficulty recalling most of the transactions and were able to give in considerable detail their versions of them; true, they could not recall some transactions, but as to them they nevertheless emphatically denied making any fraudulent misrepresentations, basing their denials upon the "general pattern" they assertedly followed in all sales. The fact is also significant that on all nine counts which charged the earliest crimes, the defendants were acquitted.

The charges of mail and securities fraud were couched in the language of the respective statutes and hence the indictment met the requirements of Rule 7(c) and was not defective; the alleged schemes were particularized in some detail, nevertheless the defendants were on notice that the government might adduce proof of other or additional fraudulent acts and omissions for the pleader was careful to preface the enumerations with a statement that the defendants' fraudulent acts and omissions "included, but were not limited to," those specifically alleged.

Although the offenses were such that they...