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March 21, 1980


No. 2489 October Term, 1977 Appeal from the Judgments of Sentence of the Court of Common Pleas of Montgomery County Nos. 2994,2994.5, 2994.6 and 2994.8 of 1976.

Before Price, Spaeth And Watkins, JJ.

Per Curiam:

Judgments of sentence affirmed on the opinion of Judge Brown.



NO. 2994-76


MARCH 15, 1978

After trial by jury, Robert Hamilton was convicted of Deceptive Business Practices, two counts of Theft by Deception and Violation of Section 401 (70 PS 1-401) of The Pennsylvania Securities Act, Fraud in the Sale of Securities. Motions for a New Trial and In Arrest of Judgment were argued and denied. An appeal to the Superior Court from the judgment of sentence necessitates this Opinion. Viewing the evidence in a light most favorable to the Commonwealth, Commonwealth v. Rife, 454 Pa. 506 (1973), the jury could have found the following facts.

Defendant was President of 1776 Magazine, a company incorporated under the laws of Pennsylvania in 1974. The corporation was formed to publish a magazine each month during 1976 narrating events of historical interest which occurred during the same months in 1776. Also in that year, Defendant filed a form with the Pennsylvania Securities Commission seeking author to sell the common stock of the company as required by the Pennsylvania Securities Act of 1972.

From November, 1974 through August, 1975, Defendant attempted to sell advertising space in 1776 Magazine to various companies and state governments. None was sold. Despite this total failure to secure the necessary commitments, Defendant thereafter solicited numerous friends and acquaintance to invest in the venture. Between February and April, 1975, Defendant sold stock worth $56,000. He was able to induce such investment through a series of misrepresentations and omissions calculated to attract investors. Prospective stockholders were shown a highly favorable financial projection lacking any factual basis and falsely listing numerous advertising commitments. Letters from state governments and a number of large corporations were forged. They expressed great interest in the concept and indicated substantial advertising would be bought. Another forged letter, purportedly, from the American Bank, spoke of $1,900,000. in advertising commitments and a $100,000. line of credit for 1776 Magazine. Defendant also represented that a distinguished staff of historians, sociologists and psychiatrists would comprise the magazine's editorial staff. In fact, no such persons were ever contacted by the Defendant or anyone in the organization. In September, 1975, one month before publication was to begin, Defendant vacated his offices and left the state.

Defendant complains that the Trial Court erred in allowing the Commonwealth to introduce evidence of his 1965 mail fraud conviction. It is well established that evidence of other crimes committed by a Defendant is inadmissible to prove his guilt of the crime charged at trial. Commonwealth v. Allen, 212 Pa. Super 314 (1968). However, exceptions to this rule have logically developed in order to secure substantial justice. One such exception states the rule applicable to the facts here. In Commonwealth v. McKenna, 206 Pa. Super 317 (1965), the Court said that

... the commission of another offense is admissible if it became part of the history of the event on trial, or was part of the natural development of the facts."

The Commonwealth charged that Defendant wilfully falsified his application to the Pennsylvania Securities Commission by failing to truthfully answer question nine (9) which asked if the applicant had a prior criminal record. It would have been impossible for the Commonwealth to meet its burden of proof without showing the existence of a prior conviction. The Defendant's Federal conviction was "part of the natural development of the facts" necessary to sustain the false filing charge. As a material element of the crime to be proved, there was no error its admission, especially since the jury was cautioned as to its limited purpose.

Defendant next argues that because the jury did not convict under 70 PS Sec. 1-407, Filing a Misleading Document with the Securities Commission, the Court erred in submitting the charge to the jury. The record discloses ample support for such submission. The fact that Defendant was acquitted is of no more in determining whether the evidence was sufficient for submission.

Defendant moved for a severance of the false filing charge, contending it was separate and distinct from the other crimes charged. Since proof of it required disclosure of his prior conviction to the jury, he argues the failure to sever (Line Illegible)

Rule 228(b) specifically permits joinder of "two or more offenses... may be charged in the same information... if (the offenses) are of the same or similar character or are based on.. transactions connected together or constituting parts of a common scheme or plan." Commonwealth v. Terrell, 234 Pa. Super 325 (19 cited by Defendant, states that evidence of another crime is admissible when it tends to prove a "common scheme, plan or design involving incidents so related to each other that proof of one tends to prove the others". Terrell cites Commonwealth v. Smith, 443 Pa. 151 (1972) where the Supreme Court found admissible evidence which relates to "the establishment of the existence of larger continuing plan or scheme of which the present crime is a part". Defendant's scheme was designed to defraud investors in 1976 Magazine by inducing them to purchase stock in the company through false representations. The first step was the filing of false registration application with the Pennsylvania Securities Commission. In the application, Defendant denied a past criminal record, although in fact, he had a 1966 Federal the conviction. There is a clear nexus between such falsehood and the other charges. Had he answered truthfully, there was a substantial likelihood that authority to sell would not have been granted. Thus, under Smith and Terrell, the false filing charge was properly consolidated with other offenses arising from the common plan. Moreover, both Smith and Terrell recognized the admissibility of other crimes evidence to show intent or the absence of mistake. The false filing tended to prove Defendant's dishonest intent in selling the stock.

Defendant also asserts the joinder of these offenses and resulting complexity of the evidence prevented the jury from properly considering each charge. The jury's verdict belies such assertion. Following a directed verdict on a bad check charge, nine counts were submitted to the jury. Defendant was found guilty of four, acquitted of two and no decision was reached on three others. The decision to consolidate is "a matter of discretion with the Trial Judge, whose conclusion will be reversed only for manifest abuse of discretion or prejudice and clear injustice to the Defendant." Commonwealth v. Peterson, 45 Pa. 187 (1973).

The Defendant next argues that the complexity of the evidence, compounded by the joinder, rendered the charges so vague as to offend due process and the Rules of Criminal Procedure. He contends he was given no fair warning of the specifics of the charges. A review of the record shows that Defendant was given notice of the charges adequate to satisfy Rule 225, which requires, inter alia:

"(5) A plain and concise statement of the essential elements of the offense..." and "(6) The issues at trial."

The adequacy of the Commonwealth's response to Defendant's Bill of Particulars is also challenged. Under the Rules, Defendant of the nature of the charges against him so as to allow adequate preparation for trial. Commonwealth v. Evans, 190 Pa. Super 179 (1959). The Commonwealth did this and more. Defense counsel spent several hours with the Assistant District Attorney reviewing the case file and was permitted to read the statements of complaining witnesses, Giorgio and DiRico. He was given a list of Commonwealth witnesses and summaries of both the testimony and the physical evidence to be presented against him. Moreover, he was accorded an extended preliminary hearing, during which much relevant information was elicited. The foregoing disclosure fully satisfied the Commonwealth's responsibilities under the Rule A Bill of Particulars is not meant to be a specification of every item of evidence to be adduced by the Commonwealth. Commonwealth Evans, supra. Further, if Defendant was dissatisfied with the Commonwealth's response to his Bill of Particulars, he had the opportunity to request further information. Pa.R.C.P. 230(b).

"If further particulars are desired, after an original Bill of Particulars has been furnished, an application therefor may be made to the Court within ten (10) days after the original Bill is furnished."

Since counsel failed to file such additional Bill of Particulars, he cannot now complain of the inadequacy of the Commonwealth's original response.

The Defendant complains that certain evidence not introduced at the preliminary hearing was later brought out at trial. This evidence included a fraudulent list of advertisers and several forged letters from other purported backers of 1776 Magazine. Defendant erroneously cites Commonwealth v. Nelson, 230 Pa. Super 89 (1975) as forbidding the introduction of such additional evidence at trial.

Nelson condemned the practice of indicting for additional offenses after the preliminary hearing. Nowhere does the preliminary hearing.

The Commonwealth's burden at the preliminary hearing was to produce evidence sufficient to establish a prima facie case against the accused. This was accomplished after a two-part preliminary hearing extending over one and one-half days and consuming nearly four hundred pages of testimony. The Commonwealth had no duty to present all its evidence before the district justice.

The Commonwealth called James Craig, Chief Accountant for the Pennsylvania Securities Commission, who testified to the false and misleading nature of the pro formas (projected statements of income and expenses) used by 1776 Magazine. Defendant contends this testimony was improper for two reasons. First, Craig's competence as an expert witness is challenged. The record shows that Mr. Craig was fully qualified as an expert in matters related to the preparation of pro formas and other financial statements. The qualification of an expert witness is in the sound discretion of the Trial Court. Commonwealth v. Smallwood, 350 A.2d 822(1976).

Second, counsel argues that Defendant cannot be held accountable for the deceptive nature of the pro formas since they were prepared by a Certified Public Accountant. The mere fact that the pro formas were prepared by a Certified Public Accountant does not obviate Defendant's criminal responsibility, since he supplied the false information upon which the projection was based and later used them. They were an integral part of the fraudulent scheme in which Defendant's misrepresentation, couple with supporting documents, induced the purchase of stock in 1776 Magazine. The extent of Defendant's knowledge of the misleading nature of the pro formas was a question of fact properly submit to the jury.

During defense counsel's cross-examination of George witness was called and the witness discussed his testimony with the Assistant District Attorney. The substance of that conversation concerned the witness' testimonial performance his inability to remember various dates and his general nervousness in testifying. When the cross-examination resumed, the witness denied he had discussed the case during the recess. Later, in chambers, the Assistant District Attorney admitted such a conversation did in fact take place. At this time, defense requests to strike Giorgio's testimony or declare a mistrial were refused. The Court also refused to permit the Assistant District Attorney to be called to testify as to the conversation. Instead, Giorgio was again put on the stand, and, in response to questioning by the District Attorney, admitted his earlier falsehood, claiming he had misunderstood the question. Defense counsel then vigorously cross-examined the witness on this point.

Defendant complains that this procedure had the effect of rehabilitating, rather than impeaching Giorgio by making it appear as if he was attempting to clear up the earlier discrepancy on his own initiative.

Defense counsel suggests that this diluted the impact of G orgio's falsehood and prevented the jury from weighing it against his other testimony. It is urged that Giorgio's conversation with the Assistant District Attorney is akin to violation of a sequestration order and that striking the testimony or declaring a mistrial were the only proper remedies. We disagree. Even if this conversation violated a sequestration order, it does not automatically render the other testimony inadmissible. The leading case of Commonwealth v. Smith, 227 Pa. Super 355 (1974) states the current Pennsylvania Rule:

"It is within the sound discretion of the Trial Judge to permit a witness to testify who has violated a secretion order. In exercising such discretion, the Judge should consider: What effect, if any, the violation had in shaping the testimony offered; he should consider whether the witness actually heard others testify; whether disobedience was procured by the party and whether the testi- in such a way that the disobedient witness could have been influenced or gained by knowledge."

After the improper conversation came to his attention the Trial Judge ordered full disclosure of the entire episode. The jury was instructed to consider Giorgio's conduct in evaluation the credibility of his earlier testimony. The procedure followed was a fair one under the circumstances. There was no abuse of discretion.

Defendant next maintains that the Court erred in failing to suppress documentary evidence seized by the Pennsylvania Securities Commission. These records were the subject of a subpoena, issued by Mr. Craig, who also serves as Assistant Secretary to the Commission and to whom power to issue such subpoenas had be delegated. Section 510(b) of the Securities Act of 1972, 70 PS 1-510(b) gives the Commission power to issue such subpoenas

"For the purpose of any investigation... the Commission or any officer designated by it may... subpoena witnesses and require the production of any books, papers, correspondence, memoranda, agreements or other documents or records with the Commission deems relevant or material to the inquiry."

Section 1-606(d) of the Act further provides that:

"The Commission may, by regulation, delegate any powers specified in this act to be exercised by the Commission to members of the Commission's staff, except for powers related to hearings."

Based on these provisions, there is no question that delegation of the subpoena power to Craig was permissible.

Dudley Buzby, a Commission Field Examiner, served the subpoena on Richard Stein, General Manager of the building in which 1776 Magazine had its offices. Stein had come into possession of the subpoenaed materials through a valid distraint order. The circumstances surrounding that order and the subpoena were fully considered during the suppression hearing (Line Illegible) documents were not in the possession of Defendant and he therefore lacks standing to complain of any irregularities.

As to the production of books and records, it is well established that a corporation may not assert the privilege against self-incrimination, nor may the officer of a company refuse to produce its records on the basis that they may incriminated him. Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186 (1946); Dole v. Philadelphia, 337 Pa. 375 (1940).

The protection afforded in such cases is that the disclosure sought be reasonable. Reasonableness is determined by the validity of the proceedings involved and the relevancy of the papers to the specific inquiry. Oklahoma Press, supra; Annenberg v. Roberts, 333 Pa. 203 (1939).

It is next argued that the Court erred in refusing to permit defense counsel's Motion to withdraw from the case immediately prior to trial. Counsel, in support of his Motion, cited the personal involvement of his law partner in Defendant's affairs and the potential ethical problem in calling him as a defense witness.

The relation of an attorney to his client is one of the greatest confidence. After an attorney enters an appearance for a Defendant, such appearance should not be lightly withdrawn. What is sufficient cause to justify withdrawal depends on the circumstances of each case. The Trial Court has great discretion in such matters and will not be reversed in the absence of plain error. Hernandez v. Japort, 416 Pa. 304 (1965).

According to the Code of Professional Responsibility, Rule 2-102, an attorney should withdraw from a case only if he or a lawyer of his firm ought to be called as a witness on behalf of his client. Defense counsel consistently refused to apprise the Court of just what relevance any testimony of his law partner might have to the case. Consequently, the Court was unable to make an informed decision concerning the propriety of his withdrawal. To this date he has not disclosed what evidence supporting the defense would have come from the lips of his partner.

During cross-examination of Shirley Thomas, an Officer of the American Bank, defense counsel asked certain questions which were outside the scope of direct examination, seeking to establish that Defendant had a line of credit with the Bank. The District Attorney objected saying if counsel intended to introduce new evidence helpful to the defense, he had a responsibility to do so in his case-in-chief, rather than through cross-examination of a Commonwealth witness. Defense counsel protested that he had no obligation to do anything. The Court immediately cautioned the jury that Defendant has no obligation to prove his innocence. Later, in the charge, the Court reiterated the fundamental principle that the Commonwealth has the burden of proof and that Defendant need not present evidence or prove anything in his own defense.

It should be noted that defense counsel brought this on himself by his improper attempt to introduce defense evidence under the guise of cross-examination. A Defendant is not permitted to put in his defense under cover of cross-examination. Agate v. Dunlevy, 398 Pa. 26 (1959); accord, Commonwealth v. White 340 Pa. 139 (1940), Henry, Pa. Evidence Sec. 817 (1953 ed.). In condemning this practice, in Kline v. Kachmar, 360 Pa. 396 (1948), the Court adopted the statement in Hughes v. Westmoreland Coal Co., 104 Pa. 207 (1883):

"to permit a party to lead out new matter, constituting his own case, under the guise of cross-examination, is disorderly and unfair to the opposing party..."

A review of the record indicates the Commonwealth's response to counsel's improper cross-examination was reasonable, suggesting only that if counsel wished to proffer such a defense, he should do so in his case-in-chief and not during the cross-examination of Mrs. Thomas. If there was any error, it favored the Defendant who got more than he should have from the Court in the caution to the jury.

The case was fairly tried by competent counsel on both sides and defendant represented with zeal. The verdicts of guilty were just and amply supported by the evidence.


Lgwrve Azonn / J.

C.C.TO: Neil E. Jokelson, Esquire Jon Fox, Esquire, Assistant District Attorney

Copies of this Opinion sent First Class Mail on March 15, 1978.

Alice I. Costello


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