Opinion ID: 1214506
Heading Depth: 1
Heading Rank: 3

Heading: Procedural history of the criminal action

Text: On January 10, 1992, Deputy Attorney General Grenville Pridham sent a Notice of Intent to Seek Indictment to various attorneys he believed represented Fullerton. One of the attorneys to whom this notice was sent was John Schell. However, according to the respondents' brief, Schell, at that time having assumed the presidency of Zip Nut, Inc., had terminated his representation of the Respondents ... [and] had begun trying to take control of the corporation, and with it the right to develop the patented product, away from Fullerton. Unrelated difficulties with the county grand jury delayed the criminal case until June 18, 1992, at which time a criminal complaint was filed charging Fullerton and Bennett with multiple violations of Nevada's Uniform Securities Act and racketeering. Later, Notices of Intent to Seek Indictment were sent again. Respondents aver that at some time in the fall of 1992, Schell hired Dominic Gentile's law firm to represent Zip Nut, Inc.'s interest in the criminal matter and pursue any possible third-party claims Zip Nut might have against respondents. [5] The grand jury proceedings were held on November 18, 1992, and included the testimony of thirteen First Phoenix investors identified in the indictment, as well as testimony by the receiver, Matthew Callister. Respondents argue this hearing was flawed in that the prosecutor failed to present exculpatory evidence, such as that the thirteen testifying investors had elected to obtain stock in Zip Nut, Inc.; that Judge Stone had found against fraud; and that Fullerton owned Crescent Products, to which the patent had been assigned. In any event, the grand jury returned a true bill and an indictment was filed on the same day charging respondents with multiple counts of violating the same provisions of NRS Chapter 90 (NRS 90.310, 90.460, 90.570) as alleged in the civil complaint; four counts of obtaining money under false pretenses, in violation of NRS 205.380 (these four counts were later voluntarily dismissed by the State, see infra ); and racketeering, in violation of NRS 207.400. The last two charges were in addition to the statutes identified in the civil complaint as having been violated, but were based upon the same conduct which formed the basis for the securities violations. At their arraignment on December 11, 1992, respondents entered a plea of not guilty; thereafter, respondents filed a motion for discovery which was heard on January 29, 1993. At the hearing, respondents' counsel argued that Schell may have divulged information that was subject to the attorney-client privilege during the course of consultations between Schell and the State and between Schell and Callister (no specificity was provided as to what privileged information may have been revealed). Prosecutor Pridham denied this, stating Mr. Schell or Mr. Callister did not consult with me to enable me to write my indictment or criminal complaint.... I have spoken with Mr. Schell, but he's indicated that he has the attorney-client privilege.... I know I didn't use anything Mr. Schell told me in preparation of any indictment. In fact, I don't even think Mr. Schell knew I was seeking an indictment until a true bill was found. On January 29, 1993, respondents petitioned the court for a writ of habeas corpus, alleging, among other things, that their rights under the double jeopardy and due process clauses of the U.S. and Nevada Constitutions were violated. On March 19, 1993, respondents also filed a motion to dismiss for prosecutorial misconduct. The latter motion alleged, Pridham's disavowals at the discovery hearing notwithstanding, that Pridham had in fact worked very closely with Schell through Dominic Gentile, the attorney Schell had hired to represent Zip Nut, Inc., in preparing and initiating the criminal charges against respondents. The motion was supported by a billing statement from Gentile's law firm charging Zip Nut, Inc. c/o John T. Schell, for services rendered. This statement (which appellant asserts was stolen from the offices of Zip Nut, Inc.) [6] showed that Gentile, in his representation of Schell's interests as president of Zip Nut, Inc., had assisted Pridham with the preparation of the criminal action against Schell's former clients and reflects numerous telephone as well as personal conferences between Schell, Gentile, and prosecutor Pridham. For example: On November 12, 1992, Gentile's activities included Telephone conf. with John Schell; telephone conference with Grenville Pridham; commenced preparation by reviewing documents received from Schell; legal research re best RICO approach. On November 13, 1992, Gentile held a conference with Grenville Pridham at his office and reviewed his witness list and original draft of proposed indictment. On November 16, 1992, Gentile conducted Legal research and telephone conferences with Grenville Pridham re eliminating most of the alternative RICO counts and settling upon one or two solid ones. Substantial factual discussion during these conversations. On November 17, 1992, Gentile held multiple telephone conferences with John Schell and Grenville Pridham. On November 19, 1992, Gentile held a telephone conf. with Grenville Pridham re modification of Proposed Indictment. [7] On April 22, 1993, a hearing was held before District Judge Agosti on Fullerton and Bennett's petition for a writ of habeas corpus and motion to dismiss. The State voluntarily moved to dismiss all four counts of obtaining money under false pretenses for failure to correctly instruct the grand jury as to that crime; accordingly, these counts were dismissed. Before hearing argument, testimonial evidence was presented to Judge Agosti that Pridham had, in another matter similar to the zip nut case, sought to use the receiver in a civil proceeding as a witness in a parallel criminal prosecution, as he had done here. [8] During oral argument, Pridham now acknowledged that he had had many conversations with Schell's attorney prior to the indictment. After hearing the various arguments, Judge Agosti dismissed all remaining counts with prejudice as having violated the petitioners' rights against double jeopardy (due to the nonremedial nature of the sanctions sought in the civil proceeding) and to due process (due to the use of information obtained by the receiver). Additionally, the district court ruled that in the event of an appeal by the State, and a subsequent reinstatement of the criminal charges, the Attorney General's office should be disqualified as the prosecutor because it had acted under a conflict of interest. Thereafter, on May 3, 1993, Judge Agosti entered an order granting petitions for writ of habeas corpus and motion to dismiss substantially coinciding with her oral recitations at the hearing. This appeal ensued.