UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA UNITED STATES OF AMERICA, : CRIMINAL NUMBER 80-00080-1 Plaintiff : VIO: 15 USC 1703(a)(2)(a) vs. 15 USC 1703(a)(2)(b) : 15 USC 1703(a)(2)(c) JACK HALPERIN 15 USC 1717 PHILIP COHEN : 18 USC 1341 Defendants 18 USC 2 : BRIEF OF UNITED STATES IN OPPOSITION TO DEFENDANT JACK HALPERIN'S MOTION TO DISMISS INDICTMENT _________________________________________ COUNTER-STATEMENT OF FACTS On July 25, 1980, Defendant Jack Halperin and Philip Cohen were indicted by a Grand Jury in the City of Scranton in the Middle District of Pennsylvania. The Indictment charged the Defendant with thirteen (13 Counts of Interstate Land Sales violation and twenty (20) Counts of Mail Fraud. On August 4, 1980, Defendant Jack Halperin, by his respective counsels, filed a Motion to Dismiss the Indictment and Brief in support thereof. On August 14, 1980, Defendant Jack Halperin, by his respective counsels, filed a Supplemental Motion to Dismiss the Indictment without Supporting Brief. The government shall respond to the initial Motion to Dismiss the Indictment filed by the Defendant as no Brief in support of the Supplemental Motion to Dismiss the Indictment has been filed by the Defendant, Jack Halperin. ARGUMENT The Defendant, Jack Halperin, in this matter asserts two propositions in support of his Motion to Dis- miss the Indictment. The first being that the Indictment charging violations of 15 U.S.C., section 1703, Sub- section (a)(2)(a), (a)(2)(b), (a)(2)(c), should be dis- missed as 15 U.S.C., Section 1703 et seq. imposes liability __________1 against a developer or as defined in 15 U.S.C., section 1701. Furthermore, the Defendant avers that the govern- ment has failed to allege this essential element, thus necessitating dismissal of the Indictment. Secondly, the Defendant alleges that Counts 1 through 13 charging violations of 15 U.S.C., section 1703 et seq. must be dismissed because of the violation occurring beyond the Statute of Limitations. The Defendant wrongfully asserts that the allega- tions contained in Counts numbered 1 through 13 of the Indictment charging violation of 15 U.S.C., section 1703, do not meet the critical and necessary elements of the offense as charged. A review of Section 1701 of Title 15 United States Code, defines "developer" in several terms, and clearly delineates various classes of persons in legal associations which fit within the definition of "developer". Section 1701, Paragraph 4, states as follows: "Developer" means any person who, directly or indirectly, sells or leases, or offers to sell or lease, or advertises for sale or lease any lots in a subdivision; furthermore, Subsection 2 of 1701 states: "Person" means an individual, or an un- incorporated organization, partnership, association, corporation, trust or estate; Section 5 defines "agent" as: "Agent" means any person who represents, or acts for or on behalf of, a developer in selling or leasing, or offering to sell or lease, any lot or lots in a subdivision; but shall not include an attorney at law whose representation of another person consists solely of rendering legal services. A fair reading of the Indictment together with the statutes charged, reflects that the Counts against the Defendant are proper. Section 1701, 15 U.S.C., clearly defines a "person" to include an individual. The De- - 2 - fendant, Jack Halperin, is an individual. Moreover, the allegations contained in the Indictment clearly estab- lishes that Jack Halperin not only was a developer him- self, but also acted through the corporation, High Vista, Inc., and directly or indirectly, sold lots in the Sub- division. Paragraph 5 of the Introduction of the Indictment states that Jack Halperin was the President, Chairman of the Board of Directors and Stockholder of High Vista, Inc., and at all times relevant hereto, was directly responsible for the management of High Vista, Inc. and its affiliate corporation. Paragraph 5 not only indicates that the De- fendant was the moving force behind High Vista, Inc., and responsible for its entire operation, but also outlines his specific responsibilities. The Indictment repeatly alleges that the De- fendant, Jack Halperin, was responsible for officers, agents and individuals of High Vista, Inc., and the Valley of Lakes Subdivision. Paragraphs 5, 12, 22, 23, & 24, the Introduction, Counts 1 through 13, Paragraph C(1), Count #1, and the Introduction, County Nos. 14 through 33, reiterate the Jack Halperin Agency relationship with the Subdivision. It is apparent from various allegations contained in the Indictment with statutory definition of 15 U.S.C., section 1701, it is seen that this defendant easily fits within the definition as mentioned. In the case cited by the Defendants, Bartholomew v. North Hampton National Bank of Easton, 584 F2d 1288 (3rd Circuit 1978( the Court held: - 3 - "In view of the fact that the Land Sales Act clearly limits liability for untrue state- ments and omissions of material facts to those who satisfy statutory definitions of developers or agents of developers and that the Act further defines "developers" as persons who directly or indirectly engage in selling . . . " Page 1292. Clearly, the definition cited in this case can be applied to the Defendant, Jack Halperin, who is not only the developer individually, but the alter ego of High Vista, Inc., a developer as alleged in the first paragraph of the Introduction of the Indictment. The government maintains that the definitions contained in Sections 2, 4 and 5 of 15 U.S.C., section 1701, are all inclusive and are intended to encompass any entity or syndication which is engaged directly or indirectly in the sale or lease of undeveloped real estate. It also becomes apparent that the intent of the statutes is not to allow any party to escape criminal liability under 15 U.S.C., section 1703, merely by reason of their legal definition or form of syndication. Furthermore, the Indictment charges violation of 18 U.S.C., section 2. That statute uses the language, "whoever either aids the commission of a crime or whoever causes an act to be done which if directly performed by him or another would be an offense, is punishable as a principal". This statute adds further credence to the proposition that an individual may be charged and convicted of a crime that he participates in and associates himself with and cannot avoid responsibility although the act is performed, allegedly, by another. Nye Nissen v. United States, 336 U.S. 613, 619 and U.S. v. Provenzano, 334 F2d 678 (C.A. 3, 1964). - 4 - In conclusion, it is apparent that the Defendant clearly fits within the definition of Sections 2, 4 and 5 of 15 U.S.C., section 1701, and also 18 U.S.C., section 2. Therefore, Indictment has properly charged the Defendant in violation of 15 U.S.C., section 1703 et seq. Defendant misinterprets the three year Statute of Limitations contained in 15 U.S.C., section 1711. The Statute of Limitations for violation of 15 U.S.C., section 1703 et seq., is a general Statute of Limita- tions found in section 3282 of 18 U.S.C. This Statute of Limitations is applied to non-capital offenses in states as follows: "Except as otherwise expressly provided by law, no person shall be prosecuted, tried or punished for any offense, non-capital un- less the indictment is found, or the infor- mation is instituted within five years next after such offenses shall have been committed." Since all of the alleged offenses have occurred within the five years preceding the Indictment, Counts 1 through 13 are not beyond the Statute of Limitations and do not warrant dismissal. The three-year Statute of Limitations contained in 15 U.S.C., section 1711, exclusively deals with Civil Remedies and Liabilities formulated in Section 1709 of 15 U.S.C. This Statute stands for the proposition that a purchaser or lessee may bring an action at law or an equity against the developer or agent if the sale or lease was made in violation of Section 1703(a) of this Title. Section 1709 deals with the civil liabilities a violator will incur when he defrauds a purchaser or lessee. This action must be maintained by a purchaser or a lessee. It is not instituted on behalf of the government for criminal violations. Rather, it affords a defrauded person - 5 - an opportunity to sue a developer or aid him civilly, at law or in equity, so that he may be made whole. Section 1709 goes on further to state "in a suit authorized by the subsection, the Court may order damages, specific per- formance, or such other relief as the Court deems fair, just and equitable". An intelligent reading of 15 U.S.C., section 1711, in conjunction with 1709 to which it refers, clearly states that its applicability is limited to civil action. In the notes following Section 1709, note 6(a), page 22, 15 U.S.C.f it is explained that the provisions of this chapter were designed for the protection of the consumer. Rockefeller v. The High Sky, Inc., D.C. PA 1975f 394 F. Supp. 303. It is not designed for the enforcement of crimes by the government, rather 15 U.S.C., section 1703, undertakes that purpose, and as such, the general Statute of Limitations contained in 18 U.S.C., section 3282 pre- vails. Title 15 does not, in any manner, supercede the scope of 18 U.S.C., section 3282. In the Bloom Case cited by Defendant's counsel, says absolutely nothing pertinent to the case at bar. The original legislation taken from 15 U.S.C., section 1711, that is, section 78(i) of 15 U.S.C., covered exclu- sively remedies available to consumers from a civil standpoint. See page 598, 78 FRD. 591, 1977. The defend- ant also cites United States Code Congressional and Admin- istrative News at page 2354, concerning the legislative history of the aforesaid statute. Again, the Defendant clearly misinterprets the meaning of 15 U.S.C., section 1711. The bill amending the Statute of Limitations affect- ing all violations related to the property part of State- ment of Record to three years applies to civil actions - 6 -
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