APPEAL from the Circuit Court of Rock Island County; the Hon.
JAY M. HANSON, Judge, presiding.
MR. JUSTICE SCOTT DELIVERED THE OPINION OF THE COURT:
After a lengthy trial in Rock Island County the defendants Whitlow, Brewer, Delfino, Gibson and Marando were all found to be guilty of the offenses charged in a 12-count indictment. Briefly summarized, the 12 counts charged that all the defendants sold stock in a corporation known as Royal National Investment and Mortgage Corporation and that in selling the stock they made false statements and omitted to inform prospective purchasers of material matters relating to the stock and the company. Counts I through V charged the defendants with conspiracy and substantive violations of the Illinois Securities Law of 1953 and specifically sections 12(F), (G), (I) and 14 (Ill. Rev. Stat. 1973, ch. 121 1/2, pars. 137.12(F), (G), (I) and 137.14). Count I charged the defendants with conspiracy to violate the Illinois Securities Law of 1953. Count VI charged the defendants with conspiracy to commit the offense of theft in violation of section 8-2(a) of the Criminal Code of 1961 (Ill. Rev. Stat. 1973, ch. 38, par. 8-2(a)). Counts VII through XII charged the defendants with theft by deception in violation of section 16-1(b) of the Criminal Code of 1961 (Ill. Rev. Stat. 1973, ch. 38, par. 16-1b).
All of the defendants with the exception of Marando were officers and directors of Royal National. Marando was a salesman of the corporation who was paid a commission on the stock sales he made.
After approximately three weeks of trial the trial of the defendant Marando was severed from that of the other defendants when it became apparent that his defense was antagonistic to that of the other defendants. He later pleaded guilty to counts II through V (securities law violation) of the indictment and was sentenced to concurrent terms of not less than one nor more than three years of imprisonment.
Subsequent to the jury return of guilty verdicts against the defendants Whitlow, Brewer, Delfino and Gibson on all 12 counts of the indictment, the trial judge vacated and dismissed judgments on counts I, VI and XII. The order dismissing counts I and VI (the conspiracy counts) was entered pursuant to section 8-5 of the Criminal Code of 1961 (Ill. Rev. Stat. 1973, ch. 38, par. 8-5), which mandates that judgment shall not be entered on substantive counts as well as a conspiracy count. Count XII was dismissed on the grounds that it did not properly allege an offense.
The trial court permitted the judgments of guilty on the remaining nine counts to stand. The defendant Gibson was sentenced to concurrent terms of imprisonment of not less than one nor more than three years on each count and was further fined in the amount of $20,000. The defendants Whitlow, Brewer and Delfino were sentenced to concurrent terms of imprisonment of not less than one nor more than three years on each count.
A brief summary of the facts which resulted in the defendants' convictions is as follows: The evidence adduced at the trial of the defendants disclosed that after the incorporation of Royal National they personally and/or with the assistance of their salesman, the defendant Marando, proceeded to sell stock. The stock was sold for $1 per share and in most instances a minimum purchase of 10,000 shares was required. In opening statement the State informed the jurors that when selling the stock it was represented to a number of prospective purchasers that the corporation would engage in the aquisition of "sludge" which would be transported to the Bahamas or other Caribbean islands for use as fertilizer on nonproductive soil. The term "sludge" is used in referring to processed wastes, primarily human wastes, the disposal of which is presenting a problem to large municipalities. Other possible ventures mentioned were the building of condominiums in the Bahamas, a program to train Bahamanian people for various types of employment and the ownership of a scholarship research program. The record further establishes that the defendant Gibson was interested in and did do a considerable amount of investigation, research and other activities in regard to the "sludge" program. A great portion of his time for a 1 1/2-year period was devoted to promoting a sludge project. He worked with officials from the Metropolitan Sanitary District of Chicago which is engaged in a sludge project. He also had numerous contacts with officials from the Bahamian Government and the United States. The sludge project never materialized, and the jury was confronted with a factual question as to how much if any of defendant Gibson's activities relating to sludge were performed on behalf of Royal National. Ultimately, approximately $220,000 was realized from the sale of Royal National's stock, a great portion of which was disbursed to the defendants Whitlow, Brewer, Delfino and Gibson as payment of salaries and for the reimbursement for alleged expenses. The defendant Marando received a comparatively smaller amount for commissions earned. None of the investors ever realized any financial gain, but on the contrary all suffered losses.
The defendant Gibson prior to and at the time of the incorporation of Royal National was a lawyer. From August 1971 to July 1974, he maintained an office on North Michigan Avenue in the city of Chicago. From May 1973 to January 1974, defendant's office space was also used by Royal National, which entered into a rental agreement with a company known as Tuesday's Publications, the owner of the office building or the entity in charge of renting the same. While Royal National used the office facilities they were also used by defendant Gibson in handling business other than that of Royal National.
This appeal presents a multiplicity of issues, so a further recitation of additional facts will be set forth if and when they become pertinent.
Attention is first directed to the defendants Whitlow, Brewer, Delfino and Gibson's contention that they should receive a new trial because of prejudicial misconduct throughout the trial on the part of the prosecutor.
A number of incidents occurred during the trial which are claimed by the defendants to have resulted in misconduct on the part of the prosecutor of such a serious nature as to require a reversal of their convictions and a remandment for the purpose of a new trial. Those incidents complained of occurred in the prosecutor's opening statement, voir dire examination and closing argument. This court will consider them sequentially.
The defendants contend that in the opening statement the prosecutor claimed that the evidence to be adduced would prove that the investors were told of certain matters which would influence a reasonable investor in arriving at his decision as to whether or not he should purchase stock. Specifically, the defendants cite the following comment made by the prosecutor:
"They [the investors] were never told that the one legitimate bill ever incurred by Royal National, a bill to send something [sic] to the Bahamas to see if some of these projects might be feasible, a bill for $2500.00, a bill amounting to not even one percent of the total income of Royal National never was paid and goes unpaid to this date."
Evidence disclosed that a bill was owed by Royal National to Dr. W.J. Bauer, a consulting engineer. Dr. Bauer's business was contacted and retained by James Braxton, an official of the Metropolitan Sanitary District, to conduct a study in certain areas of the Bahamas as to the feasibility of a sludge operation in the areas designated. Braxton and defendant Gibson had frequently met and worked together in regard to a sludge project. It is evident that Braxton, who employed Bauer's business, was acting for Gibson. Bauer was to testify that he assigned Dr. Tom Hinsley of the University of Illinois to journey to the Bahamas and make the requested study. Hinsley did so in the summer of 1974. It was Bauer's further testimony that the bill was for $1,200 rather than $2,500, but in any event it remained unpaid as of the dates of the trial.
The defendants correctly argue that it would have been impossible to advise the prospective purchasers of the unpaid bill since it was not incurred until long after the sales of stock.
1 This court has stated:
"Assumptions and statements of fact which are not based upon evidence admitted at trial, may not properly be argued to the jury. (People v. Beier, 29 Ill.2d 511, 194 N.E.2d 280.) Upon similar reasoning the prosecutor cannot comment during his opening statement upon what testimony will be introduced at trial and then fail to produce such testimony. Such arguments and comments effectively assert the prosecutor's own unsworn testimony in lieu of competent evidence." People v. Rogers (1976), 42 Ill. App.3d 499, 502, 356 N.E.2d 413, 416.
It is the State's contention that the complained-of comment was merely made in an incorrect context. It is difficult if not impossible to perceive a context where such a comment would be justified and permissible because it is not susceptible of proof. The State's other response to the defendants' claim of error is that prejudice was eliminated as the result of the trial court advising the jury that opening statements as well as closing arguments were not evidence in this case. The record supports the State's assertion that the jury was so cautioned.
The prosecutor in his opening statement to the jury informed them that the defendants had lied to prospective investors by telling them that Royal National would use some of the money received from stock sales to invest in a venture, the purpose of which was to build condominiums in the Bahamas. Twenty-three witnesses testified for the State. Seventeen of the witnesses were individuals who had purchased stock from the corporation. The record is devoid of any testimony from these witnesses that their money would be used to construct condominiums. Witness Westercamp testified that some representations had been made to him that Royal National might engage in locating or finding money for mortgage purposes and referred to housing in the Bahamas as a project that might have a need for mortgage money. There was no testimony regarding the ownership, management or construction of condominiums by Royal National. Again the prosecutor produced a situation where an allegation was made in his opening statement which was not later supported by the evidence. If the jury relied upon the prosecutor's promise of proof as to allegations concerning a condominium venture by Royal National, the defendants were as a result prejudiced. People v. White (1978), 56 Ill. App.3d 757, 372 N.E.2d 691.
During the voir dire, and after four jurors had been accepted and sworn, counsel for the defendant Marando informed the court that one of the four jurors had misrepresented certain facts during voir dire. In order to prevent or minimize any prejudice which could possibly result from a further interrogation of this juror, the court concluded to question the juror, Mrs. Hicks, in chambers with all counsel present. The prosecutor interrupted the in-chambers interrogation by the court of Mrs. Hicks by making the following statement, "I think that it should be clear that it is not the people, Your Honor, asking these questions." Mrs. Hicks was later selected to serve as foreman of the jury.
2 The statement of the prosecutor was not in context with any other statements made by anyone or answers submitted by Mrs. Hicks. At the time the prosecutor interjected his statement no questions had been submitted by any party except the court. The only interpretation that can be gleaned from the statement is that the prosecutor wished to convey to Mrs. Hicks that if she was in any way discommoded, or if she felt her integrity was being questioned, it was not because of any action on the part of the State. The statement of the prosecutor smacks of a calculated effort on the part of the prosecutor to prejudice the defendants. Such comment was totally unwarranted, for it is incumbent on both the prosecutor and the defense to strive to obtain a jury free from any taint of bias or prejudice. The comment to a degree served to defeat the very purpose of the trial court's decision to hold an in-chambers interrogation, that purpose being to foreclose any possible prejudice that might result from an examination of Mrs. Hicks in open court.
In the presentation of its case the State called Mrs. Bernice Streeter. Mrs. Streeter testified as to being contacted by the defendant Marando, who desired to sell stock in Royal National. She further testified as to representations concerning the corporation's interest in a sludge operation and scholarship program. She further testified that her husband was present and that they purchased stock and received a receipt which she identified. At the conclusion of Mrs. Streeter's testimony her husband, Percy Streeter, was called as a witness. The sole testimony elicited by the prosecutor from Mr. Streeter was as follows:
"Mr. Streeter: Yeah, I told him [defendant Marando] I didn't have the money to invest and I was strapped and then I started the story a few years before that I lost my daughter and I had an insurance policy on her since she was a little girl and she left two little girls and I had that $10,000 life insurance policy so I asked him if it was a good place to invest it for these two little girls and he said it was and so that is where the $10,000 went."
Counsel for the defendant Gibson moved for a mistrial or that the testimony be stricken and counsel for other defendants joined in these motions. The trial court denied both motions. In examining the record it is clear that Mr. Streeter did not testify as to any of the misrepresentations charged in the indictment and in fact to have done so would have been repetitious since his wife Bernice had testified in depth as to such matters. It should be further noted that defense counsel, even though requested, had received no prior statement as to what Mr. Streeter's testimony would be and that further the witness had refused to talk to defense counsel.
It is the contention of the defendants Whitlow, Brewer, Delfino and Gibson that the witness was called to the stand for the sole purpose of relating a story which was calculated to instill sympathy in the minds of the jurors to the prejudice of the defendants. Defense counsel categorized the calling of the witness and his testimony as a "planned operation" which, because of lack of knowledge, precluded the defendants as well as the trial court from doing anything to prevent the introduction of what was referred to as "devastating and prejudicial" testimony. The prosecutor acknowledged that he knew what the testimony of Mr. Streeter would be and that was the precise reason he put him on the stand. The prosecutor further agreed that the testimony was prejudicial and devastating to the defendants but explained that devastating testimony was what the defendants' behavior merited. The trial court admonished the prosecutor to try to refrain from what verges on somewhat inflammatory testimony and then denied the defendants' motion for mistrial.
There is no difficulty in determining that the evidence produced by the testimony of Mr. Streeter was the result of contrivance on the part of the State, since the prosecutor admitted that the testimony was prejudicial, inflammatory and that he knew what the witness would say. In weighing the tendency of offered evidence to prove an issue in dispute against its tendency to produce passion and prejudice out of proportion to its probative value, the matter is largely within the sound discretion of the trial court. Evidence, however, which will only serve to prejudice the minds of the jury is properly excluded. See 29 Am.Jur.2d Evidence § 260, at 310 (1967).
With these guidelines in mind it must be determined if the probative value of the testimony outweighed its prejudicial effect. The State argues that the testimony was relevant to illustrate the unethical conduct of the defendant Marando (whose case at the time had not yet been severed from that of the other defendants) and that it further was relevant to the state of mind of the defendants. The State in presenting this argument overlooks the fact that dispassionate proof of misrepresentation both by commission and omission as well as participation in an artifice or scheme to defraud, would equally as well if not better illustrate unethical conduct or the state of mind of the defendants. A planned contrivance to prejudice, inflame or create sympathy in the minds of jurors should not be glossed over by a court of review. Mr. Justice Schaefer of our supreme court was confronted with a similar situation in the case of People v. Newbury (1972), 53 Ill.2d 228, 290 N.E.2d 592. The justice in Newbury, while affirming the conviction of a defendant for murder, nevertheless made the observation that questions deliberately designed to prejudice the defendant and the same being irrelevant could warrant a reversal.
The complained-of incident concerning Mr. Streeter's testimony occurred early in the trial of the defendants. The trial court in denying defendants' motions admonished the prosecutor as to "somewhat inflammatory testimony" but indicated that the jury would be hearing a lot of testimony. It is apparent that the trial court did not consider this incident occurring early in a trial which was to continue for approximately three weeks necessitated the granting of a mistrial. The trial court should not be faulted for this ruling. The incident upon review, however, should be considered in conjunction with other alleged instances of prosecutorial misconduct.
The defendants further complain of certain statements made by the prosecutor in his closing argument. The first complained-of statement centers around the renting by Royal National of office space in the city of Chicago. The space rented was that which had been rented by the defendant Gibson in 1971 for his law office. Royal National commenced using the space in May 1973 in conjunction with Gibson, who was secretary of the corporation. Commencing in May 1973, Royal National paid all the rent which was in the sum of $625 per month. In his closing argument the prosecutor stated:
"What about these offices? Necessary? Unnecessary? Extravagant? Unextravagant? I won't for a minute stand here and tell you that a company doesn't need offices but I will tell you that when rent jumps $400 a month for the same space at 625 North Michigan Avenue in Chicago, something is wrong and you can look at the ledger sheets yourself and find out how much Truman Gibson was getting during the time he was associated with this company to pay his rent, where was that extra $400 a month going? I submit to you it was going into Mr. Gibson's pocket." (Emphasis added.)
The State does not contend that this statement of the prosecutor was supported by the evidence, but instead argues that great latitude is granted to a prosecutor in the presentation of his final argument. It should be observed, however, that such latitude does not encompass a totally unsupported charge that a defendant committed a theft. The charge that the defendant Gibson was "pocketing money" was not made in the form of an innuendo but was a flat, forthright assertion.
3 An affidavit of the president and chairman of the board of the company in charge of the rental of the premises wholly refutes the prosecutor's statement that the defendant Gibson received any portion of the rental payments made by Royal National and that the rental charge for the office space did not materially increase when used by Royal National. The error committed by the prosecutor in this instance is compounded in that the record clearly supports the fact that the State had pretrial knowledge as to the absence of any wrongdoing on the part of Gibson as to the rental arrangement. An accusation unsupported by evidence that a defendant unlawfully pocketed money classifies him as a thief and consequently is inflammatory and prejudicial. The prosecutor violated the rule that has been consistently adhered to by this court that assumptions and statements of fact not based upon the evidence in a case may not be argued to the jury. People v. Johnson (1976), 35 Ill. App.3d 666, 341 N.E.2d 443; People v. Young (1975), 33 Ill. App.3d 443, 337 N.E.2d 40.
This court in adhering to the principle that every defendant is entitled to a fair trial has not been loath to reverse criminal convictions because of improper comments by a prosecutor which served to deny a fair trial. See People v. Thomas (1976), 37 Ill. App.3d 320, 346 N.E.2d 190; People v. Monroe (1975), ...