Source: https://law.justia.com/cases/federal/appellate-courts/F2/728/107/57346/
Timestamp: 2019-10-15 09:21:48
Document Index: 277012647

Matched Legal Cases: ['§ 1341', '§ 6', '§ 1', '§ 6', 'art:\n7', '§ 13']

United States of America, Plaintiff-appellee, v. Calvin Bein, Thomas Deangelis, Albert Vitti, and Arthurbillups, Defendants-appellants, 728 F.2d 107 (2d Cir. 1984) :: Justia
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United States of America, Plaintiff-appellee, v. Calvin Bein, Thomas Deangelis, Albert Vitti, and Arthurbillups, Defendants-appellants, 728 F.2d 107 (2d Cir. 1984)
U.S. Court of Appeals for the Second Circuit - 728 F.2d 107 (2d Cir. 1984) Argued Oct. 28, 1983. Decided Feb. 13, 1984
Appellants Calvin Bein, Thomas DeAngelis, Albert Vitti and Arthur Billups were convicted on various counts for wire fraud, mail fraud and conspiracy in violation of 18 U.S.C. §§ 1341, 1343 and 2 for their participation in a scheme to sell illegal commodity option contracts. Bein was also convicted of selling commodity options in violation of the Commodity Exchange Act as amended, 7 U.S.C. §§ 6c(c) and 13b (1976).1 We affirm.
During the grand jury proceedings, Fred Stitt, an accountant, testified about meetings he attended where Bein, DeAngelis and two attorneys discussed the type of business EKCC wanted to do. At those meetings, the attorneys called attention to Commodity Futures Trading Commission v. United States Metals Depository, 468 F. Supp. 1149 (S.D.N.Y. 1979), a decision holding that certain "deferred delivery" gold and silver contracts were illegal option contracts. After the meeting, Stitt read the case and, in a discussion with Bein outside the presence of the attorneys, recommended that EKCC not sell option contracts.
In commodity futures markets, a deferred delivery or futures contract involves the sale or purchase of specified amounts of a commodity to be delivered in the future. The purchaser of a futures contract makes a down payment and is obligated to take delivery when the contract matures. By contrast, an option contract entitles a purchaser to buy or sell a commodity by some specified date at a fixed price, known as the "strike" price, British American Commodity Options v. Bagley, 552 F.2d 482, 484-85 (2d Cir.), cert. denied, 434 U.S. 938, 98 S. Ct. 427, 54 L. Ed. 2d 297 (1977), determined by the market value of the commodity at the time the option is purchased. The grantor of an option is obligated to deliver if the purchaser exercises the option, but the purchaser has no obligation to exercise.
Because options can be sold by anyone willing to risk being able to cover obligations when and if purchasers decide to exercise their options, options markets may be entered by sellers having very little capital and willing to take such risks. Fearing such abuses, Congress has regulated the commodity futures markets in varying degrees since 1922. See S.Rep. No. 850, 95th Cong., 2d Sess., reprinted in 1978 U.S.Code Cong. & Ad.News 2087, 2097, 2099, 2100, 2102-03, 2112. Specifically, Congress amended the Commodity Exchange Act in 1978, 7 U.S.C. §§ 1 et seq. ("Act") to prohibit all trade in commodity options except by certain exempted persons specified by the Commodity Futures Trading Commission ("CFTC"). Id. at 2121-22. Deferred delivery or futures contracts, however, remain legal although subject to regulation by the CFTC.
In Commodity Futures Trading Commission v. United States Metals Depository, 468 F. Supp. 1149 (S.D.N.Y. 1979), Judge Weinfeld set forth the distinguishing features of option contracts in a discussion which we adopt:
468 F. Supp. at 1155.
Viewing the evidence in the light most favorable to the government, Glasser v. United States, 315 U.S. 60, 80, 62 S. Ct. 457, 469, 86 L. Ed. 680 (1942), there can be little doubt that the so-called "deferred delivery" contracts sold by Bein were in reality commodity options. First, purchasers paid a one-time, nonrefundable, transaction fee which merely covered sales commissions and costs and secured the right to purchase later at the strike price. Purchasers thus did not invest in the underlying commodity. Second, Bein's contracts did not obligate the purchaser to take delivery of the commodity on the specified date. Third, the purchaser could liquidate the contract and take the profits in cash if the market price had risen, or abandon it and absorb the contango fee as the only loss if the market price had declined. The jury could thus easily infer that Bein violated the prohibitions against the sale of commodity options.
Chief Judge Motley properly admitted the conversation between Stitt and Bein which took place outside the presence of the attorneys and concerned the propriety of EKCC's sales of option contracts. Since there is no accountant-client privilege in this circuit, In re John Doe Corporation, 675 F.2d 482 (2d Cir. 1982), the traditional requirements of the attorney-client privilege apply. That privilege attaches
United States v. Kovel, 296 F.2d 918, 921 (2d Cir. 1961); accord In re Horowitz, 482 F.2d 72, 80-81 n. 7 (2d Cir.), cert. denied, 414 U.S. 867, 94 S. Ct. 64, 38 L. Ed. 2d 86 (1973).
An indictment may be dismissed in order to eliminate prejudice to a defendant or to prevent prosecutorial impairment of the grand jury's function. See United States v. Hogan, 712 F.2d 757 (2d Cir. 1983). Presentation to a grand jury of hearsay or other evidence inadmissible at trial is not per se prohibited, however, at least so long as the reliance upon it is not so extensive as to mislead the grand jury as to the strength of the evidence. See United States v. Estepa, 471 F.2d 1132, 1137 (2d Cir. 1972) (failure to warn of dangers of extensive hearsay). The danger in the use of privileged material is not that a tribunal will be misled or a party's litigation position unfairly prejudiced, since the reliability of the evidence is not in question. The fear is rather that valued relationships may be disrupted by an apprehension that confidential communications may be disclosed. Given the fact that grand jury proceedings are normally secret, that an authoritative adjudication as to whether material is privileged may have to await subsequent proceedings and that dismissal of an indictment is a most serious step, courts have declined to dismiss indictments because of the use of privileged matter before the grand jury, United States v. Blue, 384 U.S. 251, 86 S. Ct. 1416, 16 L. Ed. 2d 510 (1966), including testimony by attorneys as to privileged communications, the precise issue before us. United States v. Colasurdo, 453 F.2d 585, 595-96 (2d Cir. 1971), cert. denied, 406 U.S. 917, 92 S. Ct. 1766, 32 L. Ed. 2d 116 (1972). Such testimony of course is not permitted at trial.
The trial judge has broad discretion over the trial timetable. To show abuse of that discretion, appellants must demonstrate arbitrary action substantially impairing the defense. United States v. Ellenbogen, 365 F.2d 982, 985 (2d Cir. 1966), cert. denied, 386 U.S. 923, 87 S. Ct. 892, 17 L. Ed. 2d 795 (1967); accord, United States v. Cicale, 691 F.2d 95, 106 (2d Cir. 1982), cert. denied, --- U.S. ----, 103 S. Ct. 1771, 76 L. Ed. 2d 344 (1983). Appellants have failed to meet this burden.
DeAngelis claims that introduction of evidence of his altercation with Enchelmeyer was error. We disagree. Evidence demonstrating a defendant's consciousness of guilt is admissible under Fed.R.Evid. 404(b) if the court determines that the evidence is more probative than prejudicial under Fed.R.Evid. 403. United States v. Williams, 596 F.2d 44, 50 (2d Cir.), cert. denied, 442 U.S. 946, 99 S. Ct. 2893, 61 L. Ed. 2d 317 (1979). Evidence of threats by a defendant against a potential witness against him can, if this balancing test is met, be used to show guilty knowledge. See, e.g., United States v. Cirillo, 468 F.2d 1233, 1240 (2d Cir. 1972), cert. denied, 410 U.S. 989, 93 S. Ct. 1501, 36 L. Ed. 2d 188 (1973). Chief Judge Motley's ruling is far from clearly erroneous. Since the altercation began when Enchelmeyer announced that he would not go to jail alone, DeAngelis' claim that he could not have regarded Enchelmeyer as a potential witness against him at that time rings hollow.
7 U.S.C. § 6c(c) reads in relevant part:
7 U.S.C. § 13b reads in pertinent part: