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United States District Court, Northern District of Illinois, E.D

January 5, 1982


The opinion of the court was delivered by: Shadur, District Judge.


Three of the defendants (Calvin Bein, "Bein"; Thomas DeAngelis, "DeAngelis"; and Al Vitti, "Vitti") in this seven-defendant, 20-count criminal proceeding have moved under Fed.R.Crim.P. ("Rule") 21(b) for transfer to the Southern District of New York. For the reasons stated in this memorandum opinion and order, their respective motions are granted.*fn1


From September 1979 to March 1980 Bein was President, DeAngelis Treasurer and Vitti one of the sales managers of E-K Capital Corporation ("EKCC"). EKCC was engaged in the sale of illegal commodity option contracts characterized by defendants as "Deferred Delivery Contracts." Defendants falsely represented EKCC to be a well-established reliable company dealing in actual physical precious metals and in precious metals contracts.

At the heart of the scheme was the false representation to prospective customers:

  that by paying a certain fee to EKCC they could
  purchase "deferred delivery contracts," which
  would give them "control" of a specified quantity
  of metal for a specified period of time, at a
  specific price, called the "strike price;" that
  the strike price would be determined by the
  market price of the metal at the time EKCC
  received the customer's funds; and that if during
  the life of the contract the price of the metal
  rose above the strike price the client could
  either purchase the metal at the strike price or
  receive his profit from EKCC after EKCC
  "liquidated" the contract. . . .

Instead defendants employed a number of fraudulent means to avoid returning the contract profits to customers as to whom the market price of the metals had in fact advanced during the contract term. Defendants diverted the funds to their own use and benefit and for other purposes.

In the course of their activities defendants caused interstate wire communications to be transmitted (the wire transfer of customer funds). Bein and DeAngelis also executed commodity option transactions (prohibited by the Commodities Exchange Act).

Considerations Relevant Under Rule 21(b)

Rule 21(b) speaks in terms identical to those employed by its civil counterpart, 28 U.S.C. § 1404(a): Transfer may be made "for the convenience of parties and witnesses, and in the interest of justice." However the expression of the relevant considerations under Rule 21(b) has been somewhat different:

(1) location of defendant,

(2) location of possible witnesses,

(3) location of events likely to be in issue,

    (4) location of documents and records likely to
  be involved,

    (5) possible disruption of defendant's business
  if the proceeding is not transferred,

(6) expense to the parties,

(7) location of counsel,

    (8) relative accessibility of the place of
  trial, and

(9) docket conditions of each district.

Any other "special elements" can be considered as well.*fn3

1. Location of Defendants

All three movants live in New York. Platt, 376 U.S. at 245-46, 84 S.Ct. at 772 described the impact of that factor:

  The fact that Minnesota is the main office or
  "home" of the respondent has no independent
  significance in determining whether transfer to
  that district would be "in the interest of
  justice," although it may be considered with
  reference to such factors as the convenience of
  records, officers, personnel and counsel.

That statement scarcely justifies the Bein-DeAngelis-Vitti effort to paint residence as a "crucial" factor, a characterization not well supported in the case law. Rather the situation is best summed up "residence [is] a factor to be considered but not the controlling factor. . . ." Jones v. Gasch, 404 F.2d 1231, 1240 (D.C.Cir. 1967). For whatever it is worth, this factor clearly weighs for defendants.

2. Location of Possible Witnesses

DeAngelis has stated that all of his witnesses are in New York. There seem to be at least ten. Bein has submitted a list of 24 witnesses, all from New York. Vitti has simply joined in the others' motions.

In response the government estimates the location of its 40 witnesses:

(a) 15 in New York;

(b) 4 somewhere east of Ohio;

(c) 21 in Illinois or west of Ohio.

Thus the government's witnesses split almost 50-50 (21-19) if Ohio were viewed as a dividing line.

Whenever a balancing of factors is undertaken, that figure of speech tends to transform the process into a kind of mechanical counting procedure (unlike the more familiar "weight of authority" determination, where the metaphor does not foreclose a qualitative evaluation of the cases being considered). It is really impossible, without conducting a kind of pre-trial mini-trial, to evaluate the significance of the prospective witnesses to see in what direction this factor points. Nonetheless it too seems to favor transfer.

3. Location of Events Likely To Be in

There is no doubt that the entire EKCC operation was centered in New York. EKCC was a New Jersey corporation headquartered in Manhattan. All the defendants were or are from the New York metropolitan area. Telephones used to accept orders were in New York. New York counsel and a New York accountant advised EKCC. Brochures explaining its business were printed in and mailed out from New York. All funds — including the wired funds charged in the indictment — were received in New York, and a New York bank handled EKCC's accounts. Whatever commodities transactions EKCC actually engaged in were largely carried out in New York.

As against all this the government points to two Illinois-based events:

    (a) victims were solicited (apparently by
  telephone) here;

(b) victims wired funds from here.

It may be true as defendants assert that more victims were from the New York metropolitan area than from Illinois (32 against about 22, out of EKCC's 400-odd customers). But venue is properly laid in this district, and the government has prepared its case with the victims (mostly from Illinois) identified in the indictment. Defendants cannot compel the government to try the case as defendants would prefer.

Thus the impact of this factor is not nearly so one-sided as Bein-DeAngelis-Vitti would have it. Nevertheless the "events likely to be in issue" do appear to favor a New York forum by at least a small margin. Accord, such cases as United States v. Alter, 81 F.R.D. 524 (S.D.N.Y. 1979).

4. Location of Documents and Records

Most of the EKCC documents and records are now in Chicago, but this is a result of the government having seized them in New York and bringing them here. Two things are clear:

    (a) It would be grossly unfair to permit the
  government to "create" venue, or to alter the
  balance of relevant considerations, simply by
  shipping documents.

    (b) Documents moved here can just as easily be
  moved back to New York, or photocopies may be
  shipped there.

This factor must therefore be viewed as essentially neutral. It thus drops out of the equation.

5. Disruption of a Defendant's Business

(a) DeAngelis

DeAngelis and his wife operate a fledgling personnel agency. Just as defendants cannot compel the government to try this proceeding their way, so the government cannot prevail in its unsupported assertion that DeAngelis' wife (mother of a year-old daughter) can run the business just as well in his absence (an argument controverted by the affidavit of DeAngelis' New York lawyer).

Clearly this factor weighs strongly in favor of transfer as to DeAngelis. This is especially true because of the likelihood of a lengthy trial.

(b)-(c) Bein and Vitti

Neither of these defendants has mentioned anything specific (Vitti has not even submitted a separate brief). So it must be assumed that no business will be hurt as to either of them. This factor then would tend to weigh in the government's favor.

6. Expense to Parties

There is no doubt that a Chicago trial will greatly increase defendants' costs (DeAngelis estimates an extra $20,000 as to him; Bein, an extra $50,000). In response the government speaks of the expense of bringing witnesses to New York. But given the almost even split of the government's own witnesses, it is difficult to evaluate any cost differential to the government. Much the same is true as to the expense of government lawyers, who may or may not be required to travel to New York if the proceedings are transferred (see the next section). Although this factor is not susceptible to precise definition, it too appears to favor transfer.

7. Location of Counsel

All three defendants (understandably because they themselves are New Yorkers) have New York lawyers as their principal or only counsel. As for the government, it states that the two Assistant United States Attorneys now assigned to the case "would most likely not travel to New York to try the case" (again volunteering to shape government handling of the matter, defendants say that government counsel from Chicago can handle the New York proceeding).*fn4

Contrary to defendants' contentions, the convenience of government counsel is a relevant factor.*fn5 But many of the cases cited by the government involved transfer motions on the eve of trial (e.g. Keuylian, Testa). In view of the complexity of this case and the fact that transfer has been occasioned by defendants' motion, a finding of Speedy Trial Act excludable time under 18 U.S.C. § 3161(h)(8) would seem to be unexceptionable and to minimize that consideration.

This factor poses a close call, but the Court gives a slight edge to defendants. While the government has New York counsel available, defendants do not have an equivalent call on Chicago counsel.*fn6

8. Relative Accessibility of Place of Trial

This factor drops out of consideration where, as here, two major metropolitan areas are involved.

9. Docket Condition

Here too (especially in light of the Speedy Trial Act, enacted since Platt) there is nothing either way. Defendants and the government agree this is not a factor.

10. Special Elements

(a) DeAngelis

DeAngelis notes that he is subject to a related criminal indictment in the New York state courts.

(b) Bein

Bein submits a doctor's letter describing a medical condition that imposes severe dietary restrictions. It would be much more difficult for Bein to subsist on restaurant food for a long period of time than if he were able to live at home.*fn7

(c) Government

One of the government's strongest points is that granting the motion to transfer will split this trial. Judicial economy would be disserved, and it will certainly be far more inconvenient for witnesses forced to testify twice. That did not preclude the partial transfer in United States v. Aronoff, 463 F. Supp. 454 (S.D.N.Y. 1978), but the government urges "that such a result should not be repeated."

This Court has considerable empathy for the government's concerns, but they are after all the product of the government's decision to bring the indictments here in the first place. Had the natural center of gravity — New York — been chosen, none of the defendants who now disavow the transfer motions could have moved for transfer away from the Southern District of New York (all are themselves New Yorkers). There would have been no prospect of a split trial.


Alter is the case closest to this one, and it decided on transfer to the home base of the fraudulent boiler shop operation. Other cases illustrating the balancing of factors and ordering transfer are Aronoff (resulting, as already observed, in a split trial); United States v. Haley, 504 F. Supp. 1124 (E.D.Pa. 1981); United States v. Gruberg, 493 F. Supp. 234 (S.D.N.Y. 1979).

Were it not for the splitting of the proceeding, transfer would unequivocally be indicated. And even on that score each defendant has rights that cannot fairly be subordinated to the decision of his co-defendants to resist transfer (or put another way, to the government's choice of a less appropriate forum in the first instance).

Accordingly this proceeding is transferred to the United States District Court for the Southern District of New York as to each of defendants Bein, DeAngelis and Vitti. Bein's and DeAngelis' other motions remain to be considered by the transferee judge.

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