United States v. Tallant, Crim. A. No. 74-225A.

• Decision Date: 16 September 1975
• Docket Number: Crim. A. No. 74-225A.
• Citation: 407 F. Supp. 878
• Parties: The UNITED STATES v. Fred C. TALLANT, Sr. and William M. Womack, Jr.
• Court: U.S. District Court — Northern District of Georgia

407 F. Supp. 878

The UNITED STATES v. Fred C. TALLANT, Sr. and William M. Womack, Jr.

Crim. A. No. 74-225A.

United States District Court, N. D. Georgia, Atlanta Division.

June 20, 1975.

Motion for Severance Denied September 16, 1975.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Dorothy T. Beasley, Asst. U. S. Atty., Atlanta, Ga., for plaintiff.

E. Lewis Hansen, Atlanta, Ga., Carl L. Shipley, Washington, D. C., for defendants.

ORDER

RICHARD C. FREEMAN, District Judge.

This is a prosecution for fraud in the sale of securities, mail fraud, conspiracy, and obstruction of justice. See 15 U.S.C. § 77q(a); 18 U.S.C. §§ 371, 1341 and 1505. In a prior order, this court denied in part defendants' motion to dismiss the indictment based on objections to the array of the Grand Jury, but deferred a final ruling pending submission of evidence by the Government regarding the vote of the Grand Jury. United States v. Tallant, Criminal Action No. 74-225A (N.D.Ga. March 11, 1975). The Government has filed an affidavit to the effect that fifteen grand jurors voted to return the indictment; therefore, as noted in the prior order, the disqualification of one of their members does not compel dismissal of the indictment. See id; Rules 6(b)(2) and 6(f), Fed.R.Crim.P. Defendants concede that this information requires rejection of their motion. Accordingly, the motion to dismiss the indictment because of defects in the array of the Grand Jury is DENIED.

This action is also pending on several other motions, including "combined motions" for discovery and inspection, a motion to inspect Grand Jury minutes, a motion to dismiss the indictment, and a motion for a bill of particulars. These motions will be discussed seriatim.

In the "combined motions", defendants seek discovery, as pointed out by the Government, of virtually the entirety of the Government's case. Defendants seek to discover all written, as well as oral statements made by the defendants to Government agents; all tangible and documentary evidence in the possession of the Government; a list of all Government witnesses, including informants and other persons having information relevant to the charges in the indictment; copies of "any prior criminal record of Government witnesses? . . . available to the attorney for the Government;" and all evidence favorable to the defendants. Defendants predicate their motion on Rules 16 and 17(c), Fed.R. Crim.P. and the due process clause. In opposition, the Government points out that Rule 17(c) is not a discovery device, e. g., Bowman Dairy Co. v. United States, 341 U.S. 214, 71 S.Ct. 675, 95 L.Ed. 879 (1951); that some of the matters raised in this motion are more properly raised in the motion for a bill of particulars; that some of the information sought is not discoverable under the Jencks Act; and that a request for virtually all of the Government's tangible and documentary evidence is unreasonable and overbroad, and impermissible under Rule 16(b). The Government's contentions in this regard are correct; and moreover, it appears, on review of the Government's response, that some of the information sought by the instant motion has been provided by the Government, thereby rendering a portion of the motion moot. Arguably the only portion of the motion which may not be moot deals with the production of documentary and tangible evidence, see Local Court R. 181.414; and this court agrees that a generalized request for such evidence is insufficient. On the other hand, the old, strict limitations on discovery, some of which the Government obviously seeks to rely on in this action, have largely been eliminated by modern practice. See generally 8 J. Moore, Moore's Federal Practice ¶ 16.054 (1975). The emphasis under modern practice is on reasonableness and cooperation by counsel. This emphasis is carried forward in the local rules of this court. See Local Court R. 181.43.

In accordance with the foregoing, it is inappropriate for this court to rule on the remaining viable portions, if any, of the motion for discovery at this time. Should defendants desire additional discovery, they should ensure that their request fully complies with the letter and spirit of Local Court R. 181.43 et seq. Furthermore, to the extent defendants desire additional discovery pursuant to Rule 16, Fed.R.Crim.P., they should fully comply with Local Rule 91.5 (conference with opposing counsel) and Local Rule 91.1 (motion must be accompanied by memorandum of law). Accordingly, the "combined motions" are hereby DENIED as moot, without prejudice to the filing of subsequent motions for discovery, not later than fifteen (15) days from the date of this order, upon compliance with the aforementioned procedural requirements.

The motion to inspect Grand Jury minutes has also been mooted in part by the aforementioned affidavit relating to the vote of the Grand Jury, to the extent that the motion is predicated on possible undue influence by the disqualified juror. The other portions of the motion remain viable; however, it is evident that defendants seek, in part, to challenge the sufficiency of the Government's evidence presented to the Grand Jury. It is well settled that an indictment is not subject to challenge on the ground that the Grand Jury acted on the basis of inadequate or incompetent evidence. See, e. g., United States v. Calandra, 414 U.S. 338, 345, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974); Costello v. United States, 350 U.S. 359, 76 S.Ct. 406, 100 L.Ed. 397 (1956); United States v. Newcomb, 488 F.2d 190 (5th Cir. 1974). As a result, a motion to inspect Grand Jury minutes predicated on this ground is insufficient. Defendants also seek to inspect the Grand Jury minutes to determine the effect of pre-trial publicity on the deliberations of the Grand Jury. Defendants have also filed a motion to dismiss the indictment on this ground. In light of the disposition of this motion, as discussed below, inquiry into the Grand Jury minutes on this ground is unwarranted. As a final matter, the inspection of Grand Jury minutes to determine the effect of defendants' being unable to appear during the deliberations of the Grand Jury is also not warranted, since prospective indictees "may not, as a matter of a constitutional right, compel transcription of the grand jury proceeding, attend the proceedings personally or through counsel, cross-examine witnesses at the proceeding, or introduce evidence or compel the introduction of exculpatory evidence at the proceeding." Cohen v. Stokes, Civil Action No. 75-765 (N.D.Ga. April 22, 1975), reconsideration denied, (N.D.Ga. May 6, 1975). See United States v. Calandra, supra. Accordingly, defendants' motion to inspect the Grand Jury minutes is hereby DENIED.

Defendants have also filed a motion to dismiss the indictment. The indictment in question charges defendants with violation of the securities laws, mail fraud, obstruction of justice, and conspiracy, and consists of twelve counts, containing substantial recitation of overt acts and other information regarding the charges. Because of the length of the indictment, and the length of defendant's motion with regard to dismissal of the indictment, to the extent possible, the court will consider the merits of defendants' arguments in relation to the various counts of the indictment to which they apply.

The first portion of the motion to dismiss relates to Counts I-VI¹ of the indictment. These counts charge defendants with five types of activities alleged to be violative of § 17 of the Securities Act of 1933, 15 U.S.C. § 77q(a). Four of these activities are listed in Count I. First, the indictment charges that defendants

did, directly and indirectly, wilfully and knowingly employ a device, scheme and artifice to defraud, obtain money and property by means of untrue statements of material facts and omissions to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, and engage in transactions, practices and a course of business which operated and would operate as a fraud and deceit upon purchasers of said securities . . . whom defendants believed could be induced to purchase said securities . . ..

Following this allegation, Count I lists several pages of acts purportedly constituting this violation. In essence, these acts consist of the sale of securities on time payment plans, the reacquisition of the securities upon default by the purchasers, and the resale of the stock as original issue stock. On resale, the defaulted stock was purportedly falsely represented to be original issue stock, the proceeds of which would be used for the purpose of Preferred Land Corporation (hereinafter PLC). This portion of Count I also charges defendants with causing certain corporate records to be falsified in order to conceal the allegedly fraudulent scheme.

Paragraph (2) of Count I alleges that "defendants made and caused to be made divers false, misleading and fraudulent representations, pretenses and promises, both orally and in writing, well knowing that said representations . . were false." The representations listed consist of alleged statements in a prospectus, dated January 8, 1969, regarding the source of the common stock offered by means of that prospectus, the amount and disposition of the net proceeds, and the potentiality of a public market for the shares. No specific instances of "oral" misrepresentations are charged. The third species of conduct charged in Count I relates to the actual marketing of the PLC stock. This portion of the indictment alleges that "defendants concealed and omitted and caused to be concealed and omitted in prospectuses, sales presentations, solicitations and otherwise, material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading . . .." The specific omissions and...