United States v. Olen

Decision Date28 April 1960
Citation183 F. Supp. 212
PartiesUNITED STATES of America v. Maurice OLEN, Margaret Mandeville, Lewis F. Childree, Homer Kerlin and Luther E. Clements, Defendants.
CourtU.S. District Court — Southern District of New York

S. Hazard Gillespie, Jr., U. S. Atty., Morton S. Robson, Chief Asst. U. S. Atty., New York City, Arnold Enker, Asst. U. S. Atty., New York City, of counsel, for the United States.

Davies, Hardy & Schenck, New York City, John W. Burke, Burton H. Brody, New York City, of counsel, for defendant Maurice Olen.

Margaret Mandeville, pro se.

Tompkins & Lauren, New York City, Herbert Edelhertz, New York City, Willis C. Darby, Jr., Mobile, Ala., of counsel, for defendants Lewis P. Childree, Homer Kerlin and Luther E. Clements.

CASHIN, District Judge.

Considered herein are three motions to transfer the venue of this case to the District Court for the Southern District of Alabama under Rule 21(b) of the Federal Rules of Criminal Procedure, 18 U. S.C. Defendants Olen and Mandeville move separately, and defendants Childree, Kerlin and Clements move jointly.

The indictment contain 8 counts. Counts I through V charge a violation of Section 17 of the Securities Act of 1933 (15 U.S.C.A. § 77q(a)). The counts are all pleaded in the words of the statute and differ only in that separate mailings in each count are charged. Defendant Margaret Mandeville is named as defendant only in Count I.

Section 17 of the Securities Act of 1933, the terms of which are set out in the margin,1 basically makes it unlawful, in the "offer or sale" of any securities by the use of any interstate instrumentality, to practice any fraud or deceit.

Count VI of the indictment charges a violation of Section 14 of the Securities Exchange Act of 1934 (15 U.S.C.A. § 78n). The terms of Section 14 are set out in the margin.2 Basically the crime charged is soliciting proxies in respect to a registered security in contravention of Rule 14a-9 of the General Rules and Regulations promulgated by the United States Securities and Exchange Commission in that a fraudulent proxy statement was utilized. All of the defendants, except Mandeville, are named in this Count.

Count VII charges a violation of the same statute by the filing of a false proxy statement with the Securities Exchange Commission. All of the defendants, except Mandeville, are named in this Count.

Count VIII charges all the defendants with a conspiracy, along with other co-conspirators not named as defendants, to violate both the Securities Act of 1933 and the Securities Exchange Act of 1934.

The Government opposes the motions to transfer on two grounds:

First, that the venue would be improper in the proposed transferee court as to Counts I through VII; and

Second, that in any event the interests of justice would not be served by such a transfer.

Under the provisions of Rule 21 (b) of the Federal Rules of Criminal Procedure3 I can look only to the indictment and any bill of particulars filed thereunder in determining whether the proposed transferee court has jurisdiction. A perusal of these documents indicates clearly that the basically wrongful action giving rise to all of the counts in the indictment is the allegedly fraudulent maintaining of the books and records of The Olen Company, Inc. Defendant, Maurice Olen, was president of the Company; defendant, Margaret Mandeville, was an employee of the Company whose duties consisted of maintaining these records, and defendants, Lewis F. Childree, Homer Kerlin and Luther E. Clements, were members and an employee of an accounting firm who allegedly fraudulently audited the said books.

Thus, in the first five counts a prospectus misrepresenting the financial status of the Company was purportedly used in obtaining the five specific sales which are the bases of the five counts. The specific use of the mails, charged in each of the counts, consisted of a confirmation of the purchase of stock, all of which confirmations were mailed from the Southern District of New York.

The same fraudulent maintaining of the books was the basis of the balance sheet and earnings and surplus statements which are the basis for Counts VI and VII.

It would appear clear to me that since the basically improper action which is charged took place at the home office of The Olen Company, Inc. in Mobile, Alabama, that the trial should be held in that District. The Government, however, strongly argues that since specific mailings are mentioned in the first five counts of the indictment the case is basically a mail fraud case and thus should be tried only in the District from which or into which the mailings took place. Similarly, it is argued that, with regard to Count VI of the indictment, the use of the mails occurred in the Southern District of New York since that is the place from which the proxy solicitations were mailed, and the use of the mails in Count VII occurred in the Southern District of New York where the statement was prepared and mailed to the Securities and Exchange Commission in Washington, and, thus, Mobile, Alabama could not conceivably be the proper place of venue.

I find myself clearly constrained to disagree with the contention of the Government. This constraint is impelled by a consideration of the rationale of United States v. Johnson, 1944, 323 U.S. 273, 65 S.Ct. 249, 89 L.Ed. 236. In the Johnson case the defendants were being prosecuted for using the mails for sending dentures in violation of the Federal Denture Act of 1942 (18 U.S.C. § 1821). The Government indicted the defendants in the District Court for the district into which the dentures had been mailed. This indictment was quashed and the Government appealed. The Federal Denture Act did not have any specific venue provision. Defendants' contention was that they should be tried in the district from which they had mailed the dentures. Because of my strong reliance on the rationale of the Johnson case I will quote, at length, from that opinion wherein the question posed was answered in favor of the defendants

"Must these appellees be tried in the Northern district of Illinois or may they be tried in the district of any State through which the dentures were carried including Delaware, the place of delivery? Has Congress authorized such discretion in the enforcement of this Act? If it has, there is an end to the matter, for Congress may constitutionally make the practices which led to the Federal Denture Act triable in any federal district through which an offending denture is transported. Armour Packing Co. v. United States, 209 U.S. 56 28 S.Ct. 428, 52 L.Ed. 681. An accused is so triable, if a fair reading of the Act requires it. But if the enactment reasonably permits the trial of the sender of outlawed dentures to be confined to the district of sending, and that of the importer to the district into which they are brought, such construction should be placed upon the Act. Such construction, while not required by the compulsions of Article III, § 2 of the Constitution and of the Sixth Amendment, is more consonant with the considerations of historic experience and policy which underlie those safeguards in the Constitution regarding the trial of crimes.
"Aware of the unfairness and hardship to which trial in an environment alien to the accused exposes him, the Framers wrote into the Constitution that `The Trial of all Crimes * * * shall be held in the State where the said Crimes shall have been committed * * *.' Article III, § 2, cl. 3. As though to underscore the importance of this safeguard, it was reinforced by the provision of the Bill of Rights requiring trial `by an impartial jury of the State and district wherein the crime shall have been committed.' Sixth Amendment. By utilizing the doctrine of a continuing offense, Congress may, to be sure, provide that the locality of a crime shall extend over the whole area through which force propelled by an offender operates. Thus, an illegal use of the mails or of other instruments of commerce may subject the user to prosecution in the district where he sent the goods, or in the district of their arrival, or in any intervening district. Plainly enough, such leeway not only opens the door to needless hardship to an accused by prosecution remote from home and from appropriate facilities for defense. It also leads to the appearance of abuses, if not to abuses, in the selection of what may be deemed a tribunal favorable to the prosecution.
"These are matters that touch closely the fair administration of criminal justice and public confidence in it, on which it ultimately rests. These are important factors in any consideration of the effective enforcement of the criminal law. They have been adverted to, from time to time, by eminent judges; and Congress has not been unmindful of them. Questions of venue in criminal cases, therefore, are not merely matters of formal legal procedure. They raise deep issues of public policy in the light of which legislation must be construed. If an enactment of Congress equally permits the underlying spirit of the constitutional concern for trial in the vicinage to be respected rather than to be disrespected, construction should go in the direction of constitutional policy even though not commanded by it." 323 U.S. at pages 274-276, 65 S.Ct. at page 250.4

The Supreme Court has clearly taught, therefore, that any criminal statute should be construed, if possible, so as to lay the venue of a case at the home area of a defendant, at least so long as that home area has any connection with the wrong charged. It does not even matter that the act done in the home district was by the laws of the state of domicile innocent for such conceivably would be the situation in the Johnson case. This is true because the Federal Denture Act makes unlawful only the use of instrumentalities of interstate commerce to transport dentures into areas where the dentures were prescribed or manufactured in violation of the laws of the...

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  • U.S. v. Spy Factory, Inc., S1 95 cr 737 (SS).
    • United States
    • U.S. District Court — Southern District of New York
    • January 8, 1997
    ...weekends could make a substantial difference." United States v. Aronoff, 463 F.Supp. 454, 458 (S.D.N.Y.1978) (citing United States v. Olen, 183 F.Supp. 212, 219 (S.D.N.Y.) (transfer allowed defendants to use evenings and weekends to maintain their accounting practice), mandamus denied sub n......
  • United States v. Gruberg, 79 Crim. 447 (WCC).
    • United States
    • U.S. District Court — Southern District of New York
    • October 29, 1979
    ...factor given little weight when other considerations of convenience suggest transfer of a trial under Rule 21(b), see United States v. Olen, 183 F.Supp. 212 (S.D.N.Y. 1960), mandamus denied sub nom. United States v. Cashin, 281 F.2d 669 (2d Cir. 1960). In addition, the delay of three weeks ......
  • U.S. v. Wood
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • April 19, 2004
    ...from, through, or into, but where an aspect of the scheme to defraud was devised and executed"). The third case is United States v. Olen, 183 F.Supp. 212 (S.D.N.Y.1960), which, although not a mail fraud case, discusses the general venue statute for continuing crimes, 18 U.S.C. § 3237(a). In......
  • United States v. Luros
    • United States
    • U.S. District Court — Northern District of Iowa
    • June 29, 1965
    ...trial away from the defendant's home. United States v. Johnson, 323 U. S. 273, 65 S.Ct. 249, 89 L.Ed. 236 (1940) and United States v. Olen, 183 F.Supp. 212 (S.D.N.Y.1960). The underlying rationale of both these cases is best expressed by the strong dictum of the Supreme Court in United Stat......
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