check through interstate commerce knowing the check to have been obtained by fraud. The same reasoning which applied to counts 3 and 5 applies to counts 6 and 8. Therefore, those counts do not suffer from multiplicity. Similarly, the element of causing the interstate transportation of a fraudulently obtained security is not present in count 7 so that counts 7 and 8 are not multiplicitous. Count 7, however, merely alleges the mailing of the same letter which was set forth in count 6. The Court must determine whether each of counts 6 and 7 requires proof of an element that the other does not.
Clearly, count 6 requires proof not only of the mailing of a letter but also Pray's execution of a scheme to defraud in violation of the securities laws. It is necessary that the government prove the existence of the scheme to defraud in order to establish a violation of the securities law and also the mailing of the letter in order to establish jurisdiction. In addition, the mailing of the letter must have been related in some way to Pray's execution of his scheme to defraud. 18 U.S.C. § 1341 prohibits a person who has devised a scheme to defraud from utilizing the mails for the purpose of executing the scheme. In United States v. Maze, 414 U.S. 395, 38 L. Ed. 2d 603, 94 S. Ct. 645 (1973), the Supreme Court held that in order for a Defendant to be convicted of a violation of the mail fraud statute, the use of the mails charged must be for the purpose of executing the scheme and that a mailing which is merely incidental to a scheme to defraud cannot support a conviction under that statute. Conversely, an incidental use of the mails in connection with a scheme to defraud in violation of the securities laws might be sufficient to support jurisdiction even if that use of the mails was not an integral part of the fraudulent scheme. However, in this case it appears that count 6 alleges that the mailing of the letter was for the purpose of employing the scheme to defraud and that Count 7 alleges the identical purpose. In United States v. Maze, 414 U.S. 395, 38 L. Ed. 2d 603, 94 S. Ct. 645 (1974), the Supreme Court indicated that mailings subsequent to the execution of a fraudulent scheme which were designed to lull the victims into a false sense of security, thus making the apprehension of the perpetrators of the scheme less likely, were integral parts of a scheme including the use of the mailing and could support a conviction under § 1341. Thus, the Court is of the view that Count 7 of the indictment against Pray in fact would require proof of nothing which is not alleged in Count 6 and therefore the two counts are multiplicitous. Although there may be cases in which a Defendant can properly be charged with separate violations of the securities laws and the mail fraud statute, the indictment in this case precludes such separate charges. Because Count 7 adds nothing to the indictment which is not contained in Count 6, the Court will direct that Count 7 be dismissed.
Pray also claims that Counts 9, 10, and 11 are multiplicitous. Count 9 alleges that Pray authorized the sale of two blocks of securities owned by one of his customers without her consent and that he mailed a letter to Delaware Management Corporation on December 2, 1976 in furtherance of that scheme. Counts 10 and 11 allege the unlawful transportation of the proceeds of the sale, two separate checks representing the proceeds of the sale of each block of stock having been mailed on December 13 and December 15, 1976. The argument is the same argument made with respect to Counts 3 and 5 and Counts 6 and 8 which has already been analyzed and rejected by the Court.
Pray's final contention with respect to the multiplicity of the indictment is that Count 14, which charges a pattern of racketeering activity in violation of 18 U.S.C. §§ 1961, 1962(c) and 1963 does no more than repeat the allegations of the first 13 counts of the indictment. Section 1962(c) prohibits any person associated with an enterprise which affects interstate commerce to conduct or participate in the enterprise's affairs through a pattern of racketeering activities. The act is remedial in nature and should be read broadly in order to effectuate the purpose of eliminating racketeering activity. See United States v. Frumento, 563 F.2d 1083, 1090-91 (3d Cir. 1977); United States v. Forsythe, 560 F.2d 1127, 1135-36 (3d Cir. 1977). Each particular count of the indictment requires proof of some element special to that count which is not required to prove a general pattern of racketeering activity. Indeed, not all of the counts need be proven in order to show such a pattern. On the other hand, proof of a pattern of racketeering activity is not required in any count but count 14. Therefore, the Court believes that different elements are required in the proof of counts 1 through 13 and count 14 and that the racketeering statute was designed primarily as an additional tool for the prevention of racketeering activity which consists in part of the commission of a number of other crimes constituting a pattern of such activity. The Court does not believe that the Government can charge someone with a series of crimes which would constitute a pattern of racketeering activity but not with engaging in such activity or, conversely, only with engaging in racketeering activity without being able to convict with respect to the underlying crimes. Therefore, the Court rejects Pray's contention that Count 14 is multiplicitous of the rest of the indictment.
Finally, Pray contends that the grand jury proceedings in this case render the indictment invalid because only one witness, Delmar H. Mayfield, Jr., a special agent of the Federal Bureau of Investigation, was presented and that that witness's testimony consisted entirely of hearsay. Pray, relying upon United States v. Estepa, 471 F.2d 1132 (2d Cir. 1972), contends that the use of hearsay, especially "shoddy" hearsay by a law enforcement official who was not the one primarily involved in the investigation, coupled with the prosecutor's failure to explain clearly to the grand jury that the testimony was hearsay, supported the dismissal of an indictment returned on the basis of the hearsay testimony. In Estepa the United States Court of Appeals for the Second Circuit dismissed an indictment which was returned exclusively on the basis of hearsay in the exercise of its supervisory powers. In that case, the Court noted that the Assistant United States Attorney presenting the case to the grand jury relied upon the testimony of the law enforcement officer who knew the least about the case rather than subjecting other officers to the minor inconvenience of testifying before the grand jury. The Court noted, however, that the use of hearsay might be permissible if a prosecutor did not mislead the grand jury as to the nature of the testimony or if the case did not involve a high probability that if eyewitness rather than hearsay testimony had been presented the grand jury would not have indicted. United States v. Estepa, 471 F.2d 1132, 1137 (2d Cir. 1972). Pray alleges in his brief in support of his motion to dismiss the indictment that his counsel believes that at least one of the alleged victims would have given testimony that would have caused the grand jury not to indict. However, this assertion is not supported by any specific facts. Further, the Government contends that although Stephen M. Robinson, an investigator for the Securities and Exchange Commission, was deeply involved in the investigation of Mr. Pray, Special Agent Mayfield was also a primary investigator rather than a law enforcement official who was relatively unacquainted with the circumstances surrounding the transactions to which he testified.
Proof of the facts in this case will to a very considerable extent rest on documentary evidence. Conversely, Estepa involved the sale of heroin to undercover police officers. The patrolman to whom the sale was made and the officers who subsequently arrested the defendants were not called to testify before the grand jury. The witness who was called related the substance of the occurrences to the grand jury including details of which he had no personal knowledge as if he had been present when the events took place. Clearly, eyewitnesses were easily available in that case to be presented to the grand jury. A victim of a securities fraud, although perhaps possessing some first-hand information concerning the criminal activity allegedly engaged in by Pray, is not in the same position as an eyewitness to a crime because fraud, by its very nature, is concealed from the victim until after it has occurred. Pray's unsupported assertion concerning what the grand jury would have done had one or more of the victims testified is not, standing alone, a proper basis upon which to dismiss the indictment, and Special Agent Mayfield's testimony, although hearsay to some extent, was also based upon documentary evidence. Thus, it is not the "shoddy" variety of testimony condemned by the Estepa court and dismissal is not appropriate here.
An order will be entered dismissing Count 7 of the indictment.
MUIR, U.S. District Judge
1. Count 7 of the indictment returned in the above-captioned criminal case on March 16, 1978 is dismissed.
2. Pray's claims relating to the statute of limitations and whether an earlier civil proceeding acts as a bar to this action are dismissed without prejudice.
3. The remaining requests in Pray's motion to dismiss the indictment or grant such other relief as may be appropriate are denied.
MUIR, U.S. District Judge
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