United States v. Sam Goody, Inc.

• Decision Date: 08 January 1981
• Docket Number: No. CR 80-507,XCR 80-95.,CR 80-507
• Citation: 506 F. Supp. 380
• Parties: UNITED STATES of America, v. SAM GOODY, INC., George Levy and Samuel Stolon, Defendants.
• Court: U.S. District Court — Eastern District of New York

506 F. Supp. 380

UNITED STATES of America, v. SAM GOODY, INC., George Levy and Samuel Stolon, Defendants.

Nos. CR 80-507, XCR 80-95.

United States District Court, E. D. New York.

January 8, 1981.

COPYRIGHT MATERIAL OMITTED

E. R. Korman, U. S. Atty. E. D. N. Y., Brooklyn, N. Y. by John Jacobs, Sp. Atty., for plaintiff.

Dewey, Ballantine, Bushby, Palmer & Wood, by Kenneth H. Holmes, New York City, for Sam Goody, Inc.

Lowenthal, Landau & Fischer by Robert E. Fischer/Barry Singer, New York City, for George Levy.

Gold, Farrell & Marks, by Martin Gold, New York City, for Samuel Stolon.

MEMORANDUM AND ORDER

PLATT, District Judge.

In a sixteen-count indictment filed February 28, 1980, the Government charged Sam Goody, Inc. (hereinafter the "Corporation"), its president, George Levy, and its vice-president in charge of procurement, Samuel Stolon, with various offenses arising from the Corporation's business of buying and selling musical phonograph records, eight track tapes, and cassette tapes. Specifically, that indictment charges that the defendants knowingly defrauded the public, various sound recording companies, and various recording artists and musicians by dealing in unauthorized recordings of copyrighted works.

Last Spring (1980) defendants made several pretrial motions relating to discovery, the conduct of the prosecution, and the legal sufficiency of the indictment. Following a full briefing of the issues and oral argument, the Court made rulings on the discovery motions and reserved decision on the remaining motions. Subsequently, on August 25, 1980, this Court indicated the substance of its rulings on the remaining motions at a conference attended by all parties, with the understanding that a written opinion would follow. Herewith, that opinion, along with our opinion on other motions.

I

A The Original Indictment

The original indictment may be considered to consist of two distinct parts. The first part, consisting of counts 1 through 4, alleges felonies; the second, consisting of counts 5 through 16, alleges misdemeanors. All counts treat the defendants collectively.

Count 1 alleges a violation of the Racketeer Influence and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., in that the individual defendants, in conducting the affairs of the Corporation, engaged in a "pattern of racketeering activity", as that phrase is defined in § 1961(5). "Racketeering activity" is itself defined in § 1961(1) to include, inter alia, certain enumerated federal felonies. Count 1 alleges that the underlying felonies for this RICO count are three separate violations of 18 U.S.C. § 2314, interstate transportation of stolen property in the form of counterfeit sound recordings purporting to have been produced and distributed by legitimate recording companies, including CBS, Inc., Casablanca Record and FilmWorks, Inc., Arista Records, Inc., and RSO Records, Inc.

Count I further alleges that the results of this pattern of racketeering activity were fourfold: (1) It was fraudulently represented to the public and to business enterprises dealing in sound recordings that the defendants dealt in legitimate recordings, when in fact a number of such recordings were counterfeit; (2) certain specified recording artists were fraudulently deprived of their rightful royalties and payments; (3) unspecified studio musicians were fraudulently deprived of their rightful income from the sale of the affected recordings; and (4) sound recording companies, including those mentioned above, were fraudulently deprived of their rightful royalties and income.

The alleged felonies underlying the RICO count are embodied in counts 2, 3, and 4. Each of the three counts alleges that the defendants caused to be transported in interstate commerce between Maspeth, New York, and Minneapolis, Minnesota, counterfeit recordings having a value in excess of $5,000. Count 2 alleges one such shipment to have occurred within the period June 9-28, 1978; count 3 alleges the second such shipment during August 2-9, 1978; and count 4 alleges the third during October 17-25, 1978. Each of these shipments is alleged to have amounted to a violation of 18 U.S.C. § 2314, interstate transportation of stolen property, inasmuch as the counterfeit recordings constituted "goods, wares, or merchandise" which the defendants knew to have been "stolen, converted, or taken by fraud."

Counts 5 through 16 allege twelve separate acts of copyright infringement, in violation of 17 U.S.C. §§ 106(3) and 506(a), between June 9, 1978, and January 17, 1980. Each of these counts makes reference to a specific sound recording by a well-known musician or group of musicians, released and distributed by one of the legitimate recording companies noted above. In each instance, the allegations of infringement noted the rightful copyright owner.

As indicated above, this Court on August 25, 1980, indicated to the attorneys for the parties herein that if it were called upon to make a decision at that time it would hold that the conduct alleged in counts 2, 3 and 4 would constitute an offense "more closely akin" to the proscription contained in 18 U.S.C. § 2318 than that contained in 18 U.S.C. § 2314. In this connection we noted that the Government, in a Stipulation and Order dated April 15, 1980, agreed to a limitation of the theory of prosecution to a charge of stealing, converting or taking by fraud only insofar as counterfeit labels allegedly were affixed to pre-recorded tapes.

Specifically counts 2, 3 and 4 all charge the defendants with interstate transportation of goods, wares and merchandise,

"knowing the same to have been stolen, converted, and taken by fraud, that is, counterfeit and unauthorized phonorecords of copyrighted sound recordings which were falsely and fraudulently represented as having been produced, recorded, duplicated and released by the recording companies identified on the labels of said phonorecords." (Emphasis added).

Paragraph 9 of the Stipulation and Order reads in full as follows:

"The Government contends and will contend at the trial of this action that with respect to Counts 1 through 4 of the Indictment each of the pre-recorded tapes allegedly transported or caused to be transported between Maspeth, New York and Minneapolis, Minnesota was stolen, converted, and taken by fraud as charged in the Indictment only in that it was counterfeit in that it was falsely and fraudulently represented as having been produced, recorded, duplicated and released by the recording companies identified on the labels of said pre-recorded tapes." (Emphasis added).

The Government argues with considerable justification that from the outset of this case these defendants knew that they were charged in Counts 2, 3 and 4 with the illegal transportation in interstate commerce of sounds fixed upon counterfeit phonorecords of copyrighted sound recordings and that it never intended to be limited to proving false labeling in these counts of the indictment. The Government points specifically to the fact that these three counts not only cite 18 U.S.C. § 2314 as the statute alleged to have been violated but that they "parrot" the words of that Section in the heart of the charges themselves and merely add descriptive additions that do not limit the proof that may be offered thereunder. Much the same is true with respect to paragraph 9 of the Stipulation, the Government asserts.

B The Superseding Indictment

After a discussion of this question in open Court on August 25, 1980, wherein the Court pointed out that there was nothing to prevent the Government from re-presenting the case to the Grand Jury to obtain a superseding indictment which might be more artfully drawn so as to avoid any question about the nature of the charges, the Government, in an excess of caution, did just that and the new Counts 2, 3 and 4 now charge the defendants with unlawful interstate transportation of goods, wares and merchandise,

"knowing the same to have been stolen, converted and taken by fraud, that is, the aggregation of sounds fixed upon counterfeit and unauthorized phonorecords of copyrighted sound recordings, which phonorecords were manufactured and distributed without authorization of the copyright proprietors."

Faced with this turn of events, defendants have now moved to dismiss the superseding indictment or, in the alternative, to hold the Government bound by its stipulation. In support of their motion to dismiss they argue that "the superseding indictment represents an abuse of the grand jury system, violates the requirements of due process and should be dismissed pursuant to the Court's supervisory powers over the proceedings before it." Defendant's Memorandum in Support of Motion to Dismiss Superseding Indictment at page 3.

Superseding indictments to cure pleading defects or inartfully drafted charges are not only commonplace but have been held to be perfectly proper, not abusive and not violative of due process. United States v. Drebin, 557 F.2d 1316, 1324-25 (9th Cir. 1977), cert. denied, 436 U.S. 904, 98 S.Ct. 2232, 56 L.Ed.2d 401 (1978). Nothing more or less was intended or accomplished here and as the Court of Appeals said in Drebin "we find no merit in any of the defendants' contentions." Id. at 1325.

The same is true with respect to paragraph 9 of the stipulation as to which the Government has requested to be relieved if there be any question about the extent of its proof under Counts 1 through 4 of the indictment. Since the defendants have known from the outset (and in any event at the very least since the Government filed its opposition papers to their motions addressed to the original indictment) what the Government intended to prove under those counts of the indictment, they cannot claim inadequate notice of the charges, insufficient time to prepare a defense, or any other harmful prejudice. Defendants' argument, that if they had waited until the trial and possibly to the...