Full opinion text
MEDINA, Circuit Judge: This is another one of those seemingly interminable stock fraud conspiracy cases which have bedevilled this Court and judges and juries in the Southern District of New York during recent years. See also, e. g., United States v. Re, 2 Cir., 1964, 336 F.2d 306, cert. denied, 379 U.S. 904, 85 S.Ct. 188, 13 L.Ed.2d 177; United States v. Dardi, 2 Cir., 1964, 330 F.2d 316, cert. denied, 379 U.S. 845, 85 S.Ct. 50, 13 L.Ed.2d 50 ; United States v. Crosby, 2 Cir., 1961, 294 F.2d 928, cert. denied sub nom. Mittelman v. United States, 1962, 368 U.S. 984, 82 S.Ct. 599, 7 L.Ed.2d 523. It is a sad commentary upon the morals of our stock market places in general, and the over-the-counter market in particular, that at this late date in the history of federal securities regulation we are called upon once again to “memorialize the rapacity of the perpetrators and the gullibility, and perhaps also the cupidity, of the victims.” United States v. Benjamin, 2 Cir., 1964, 328 F.2d 854, 856, cert. denied sub nom. Howard v. United States, 377 U.S. 953, 84 S.Ct. 1631, 12 L.Ed.2d 497. The indictment is a formidable document containing 160 counts, naming 20 defendants and 28 alleged co-conspirators. The following individual and corporate defendants pleaded guilty before trial: John Van Allen, Irving H. Hertz-berg, F. W. MacDonald & Co., Pierre A. DuVal, DuVal’s Consensus, Inc., Martin Teller and Michael Ackman. Cases against the following defendants were severed prior to trial: Paul Hagenbach, Brandel Trust, Charles R. Stahl, De-Pontet & Co., Adam Miles, and Stahl, Miles & Co., Ltd. The trial commenced on November 14, 1962 and the jury returned its verdict some nine months later on August 7, 1963. In the meantime, on February 7, 1963 defendant Jules Bean pleaded guilty and the case against the corporate defendant Singer, Bean & Mackie was severed. Van Allen, Hertz-berg, Teller, Hagenbach and Stahl were Government witnesses at the trial. For one reason or another most of the 160 counts of the indictment were eliminated and only seven were submitted to the jury with respect to the four remaining defendants. The jury found Roy B. Kelly, Cecil V. Hagen, Milton J. Shuck and Gulf Coast Leaseholds, Inc. guilty of conspiracy as charged in Count 1. Kelly, Hagen and Gulf Coast Leaseholds, Inc. were found guilty as charged in substantive registration counts 57, 60 and 61 and they were all acquitted on the substantive fraud count 107. Shuck was not only found guilty of conspiracy as above stated. The jury also found him guilty as charged in the substantive fraud counts 93,105 and 107. Gulf Coast Leaseholds, Inc. was fined and has not appealed. Kelly and Hagen were sentenced on each of Counts 1, 57, 60 and 61 to three years imprisonment, to be served concurrently. Hagen was also fined $25,000. Shuck was sentenced on each of Counts 1, 93, 105 and 107 to eighteen months imprisonment, to be served concurrently, and his fine of $25,-000 was remitted, as was also the fine in the same amount originally imposed on Kelly. The three convicted individuals, Kelly, Hagen and Shuck have appealed to this Court and each is now on bail pending the disposition of the appeal. While the eleven months trial in United States v. Dardi, supra, 2 Cir., 1964, 330 F.2d 316, cert. denied, 379 U.S. 845, 85 S.Ct. 50, 13 L.Ed.2d 50, probably is something of a record for a criminal conspiracy case tried to court and jury, this case would seem to be a close second. The elapsed time of the trial was just short of nine months. The trial transcript covers 18,000 pages and we have before us an additional 4,000 pages of various preliminary hearings, motions, affidavits and other papers. The prosecutor informed the trial judge, just before the summations, that over 1,000 exhibits had been offered by the Government and over 500 exhibits offered by the various defendants, that 44 witnesses had been called by the Government and 18 called by appellant Shuck. We affirm in all respects the judgment of conviction against Kelly and Hagen on Counts 1, 57, 60 and 61. We reverse the judgment of conviction against Shuck on Counts 1, 93, 105 and 107 and remand the case against him for retrial on all said Counts, if the prosecutor is so advised. Synopsis of Opinion I Summary of Appellants’ Law Points for Reversal II Comprehensive and Chronological Review of the Evidence III The Conspiracy Count IV The Claims of Misconduct by the Trial Judge are Wholly Unjustified V The So-Called “Slanted” Instructions VI The Reading of the Indictment to the Jury VII Accomplices and Co-conspirators Who Pleaded Guilty VIII Miscellaneous Claims of Violation of Constitutional Rights of Kelly and Hagen IX Objections to Various Documents Offered by the Prosecutor Were Properly Overruled X The Cross-examination of the Government Witness Shreve XI It Was Not Error to Send GX990 to the Jury During Its Deliberations XII The Refusal to Excuse Juror No. 3 Was Proper XIII Omnibus Discussion of Miscellaneous Other Claims of Error XIV The Substantive Counts XV The Challenge to the Method of Selecting Jurors Was Properly Overruled XVI Conclusion I Summary of Appellants’ Law Points for Reversal The principal legal question in the case is the familiar one concerning the Government claim of a single over-all conspiracy vis-a-vis the contention of Shuck that the case should have been severed as to him, and that, in any event, the evidence was not sufficient to connect him with any single over-all conspiracy, but rather at most with a separate and distinct conspiracy. Other contentions include: Alleged prejudicial error in reading the indictment to the jury as part of the instructions at the close of the evidence. Fifty-two other separate claims by Kelly and Hagen of prejudicial error in the instructions to the jury and in refusing requests for instructions. The challenged admissibility into evidence of Government Exhibits: 104, 434(a), 442, 446(a), 446(c), 446(d), 446(e), 446(i), 446(uu), 447(a), 447(e), 447(o), 447(s), 556, 617, 773, 862, 865, 921, 933, 937, 991. Claims of improper restrictions on the cross-examination of the Government witnesses Shreve and Teller. The claim by Kelly and Hagen that Juror No. 3 should have been excused. A miscellany of points by Kelly and Hagen relating to the refusal to direct the taking of certain depositions before trial, the fixing of bail, the receipt of papers served by the Government in opposition to certain pre-trial motions, the refusal to sentence those co-defendants who had pleaded guilty before or during the trial until after the jury had rendered its verdict, the refusal of the trial court to give reasons for his rulings on the admissibility of evidence, and many other allegedly prejudicial rulings too numerous to describe in detail including, in the colorful language of counsel for Kelly, the “tenacious” refusal of the Court to furnish counsel with a copy of his charge. A further miscellany of points relating to the conduct of the trial judge and a variety of rulings, each of which is claimed to constitute a violation of the constitutional rights of Kelly and Hagen under the Fifth and Sixth Amendments, including claims that on several occasions the trial judge lost jurisdiction by ex parte continuation of the trial in the absence of Kelly and Hagen and their counsel, that he refused to hear argument and thus deprived these appellants of procedural due process, that Kelly and Hagen were deprived of their right to a speedy trial, that a Government witness was permitted to make unresponsive answers that violated the rights of Kelly and Hagen not to incriminate themselves by testifying, and that in general the rulings of the trial judge were so uniformly favorable to the prosecutor as to place him in the role of an advocate. It is also claimed by appellants Kelly and Hagen that the procedures by which the Grand Jury was selected in the Southern District of New York were so inadequate, biased and generally unlawful as to require the dismissal of the indictment as to them. In addition to the arguments addressed by counsel for Shuck to the severance and conspiracy phases of the case, above referred to, this appellant claims the admission of the post-conspiracy testimony of Kelly and Hagen before the SEC and the Attorney General of the State of New York was prejudicial error as to him and not cured by adequate cautionary instructions to the jury. It is also asserted on behalf of Shuck that the failure of the trial judge effectively to curb the “campaign” of counsel for Kelly and Hagen, throughout the trial, “to vilify and besmirch Shuck by inflammatory statements, improper questions and misstatements of fact,” deprived him of a fair trial. Shuck also claims the evidence was not sufficient to warrant the submission of the case against him to the jury with respect to each and all counts, i. e., 1, 93, 105 and 107. Obviously, it is not possible to test the validity of these multifarious claims of error without a pretty complete understanding of the proofs, both testimonial and documentary. And yet, incredible as it may seem, counsel for all the parties prevailed upon the trial judge not to marshal the evidence supporting the factual claims of the prosecution and the defendants Kelly, Hagen and Shuck in his instructions to the jury. The voluminous briefs filed on behalf of Kelly and Hagen do not discuss the evidence, as a whole or in sequence, as they make no claim that the evidence was not sufficient to support the charges as against them, and even the Government brief is so condensed and conclusory on many critical phases of the evidence that we have had no alternative to going through this huge record of testimony and exhibits page by page. The. result is set forth in the ensuing chronological statement of facts as the jury was justified in finding them. Neither Kelly, Hagen nor Shuck testified as a witness in his own defense. II Comprehensive and Chronological Review of the Evidence The crimes of which appellants stand convicted revolve about the sale from late 1954 through 1956 of many millions of dollars worth of the unregistered common stock of Gulf Coast Leaseholds, Inc. Unwarranted public demand for this stock was stimulated by grossly exaggerated reports of Gulf Coast Leaseholds’ activities and potential and by various manipulative techniques to which the over-the-counter securities market seems peculiarly susceptible. These machinations succeeded in driving up the price of Gulf Coast stock from something over $1 per share to more than $15, notwithstanding huge losses sustained by the company. The appellants are Cecil V. Hagen, a petroleum engineer who founded and controlled Gulf Coast Leaseholds; Roy B. Kelly, an attorney who served as the company’s general counsel and was an occasional officer and director; and Milton J. Shuck, a securities dealer who passed on to the investing public more than $3,000,000 in Gulf Coast stock. The crucial question submitted to the jury was did the appellants “willfully” violate the federal securities laws ■or, per contra, were they simply and innocently conducting “business as usual.” The Government introduced one piece of evidence after another to demonstrate that Kelly and Hagen were quite familiar with the requirements of the federal securities laws and deliberately tried to evade them, that Kelly and Hagen had very substantial reasons for not wanting to disclose the true state of Gulf Coast’s affairs and for making and authorizing numerous misrepresentations, and that these appellants reaped well over $1,000,-000 in profits and secret kickbacks and under-the-table payments at the expense of the public. As we review the voluminous evidence presented to the jury we are guided by the “long established principle” that “[o]n appeal the evidence must be considered in a light most favorable to the Government.” United States v. Dardi, supra, 2 Cir., 1964, 330 F.2d 316, at 325, cert. denied, 379 U.S. 845, 85 S.Ct. 50, 13 L.Ed.2d 50. In July 1951, appellant Cecil V. Hagen was president of the Manabi Exploration Company which owned substantial oil interests in Ecuador and a very small number of non-producing and undeveloped oil leases situated in the Gulf Coast area •of Texas. At that time it was decided to separate Manabi’s foreign properties •from its domestic interests and Gulf Coast Leaseholds was formed for the purpose of exploring and developing Ma-nabi’s small holdings in the United States. The original assets of Gulf Coast Leaseholds consisted of these domestic leases, valued at $32,000, and an additional $16,000 in cash provided by Ma-nabi. In exchange for these assets, Gulf Coast Leaseholds issued on a pro rata basis about 12,500 shares of its new stock to the Manabi shareholders. During the first two years of its existence, Gulf Coast Leaseholds engaged in limited exploratory and development work and almost all of its income and expenses derived from the purchase and sale of non-producing properties. By May 31, 1953, Gulf Coast’s reported deficits totalled about $60,000. In July 1953, the company decided to expand its activities and engaged the Second National Bank of Houston (now known as the Bank of the Southwest) to serve as its transfer agent. The Gulf Coast shareholders approved a six-for-one split of the company’s stock, increasing the number of outstanding shares from 30,000 to 180,000. Bank documents revealed that immediately prior to this stock split, Hagen was the record owner of slightly more than 3400 shares and Kelly appeared as record owner of 600 shares. It seems clear, however, that Hagen also held a substantial, though indeterminable, block of shares whose record owners were his nominees. At the same time that Gulf Coast was splitting its common stock six-for-one, an attempt was made to raise $300,000 through the public offering of a newly created class of convertible preferred stock. Because of its relatively small size, the offering fell within the “small issues” exemption afforded by the Securities Act of 1933; the shares, accordingly, were not registered with the Securities and Exchange Commission and public disclosure was made through a short form (Regulation A) prospectus. The offering of these preferred shares was only partially successful and Hagen eventually bought more than one-third of the 60,000 shares offered, while Kelly purchased approximately 1000 shares. In the Fall of 1953, the company started a program whereby it acquired various interests in Texas oil wells and properties in exchange for its common stock. The Government’s detailed proof of these transactions demonstrated that Hagen, and to a lesser degree Kelly, had substantial interests in the entities selling property to Gulf Coast Leaseholds. The first two transactions were consummated on October 29, 1953. Gulf Coast Leaseholds acquired all the assets of Hickory Petroleum Corp., originally valued by Gulf Coast at $100,000, in exchange for 25,000 shares of Gulf Coast. These shares were issued without registration on the strength of a “no action” letter received by Kelly from the Securities and Exchange Commission to the effect that the shares were exempt from registration as a merger was involved. Nearly one-third of these 25,000 shares were subsequently transferred to Hagen when Hickory Petroleum was dissolved. In the second October 29, 1953 transaction, Gulf Coast purchased properties owned by one L. L. Beeson and valued at about $84,000 by issuing some 21,000 of its shares. As Hagen had a three-quarter interest in the properties supposedly owned by Beeson, three-quarters of these shares eventually found their way to Hagen. By far the most significant of the “insider” transactions occurred in March 1954. Early in 1954, Hagen and Kelly obtained a controlling interest in the Texas Northern Oil Corporation. As Hagen and Kelly represented that they were buying the Texas Northern stock for investment purposes and not for resale, these shares were not registered but restrictive legends were stamped upon the certificates indicating that they were “investment” shares and not freely transferable. Kelly and Hagen also embodied their investment pledge in a formal letter of investment. In March 1954, Gulf Coast purchased all the assets of Texas Northern, appraised at about $920,000, for over 350,000 shares of Gulf Coast Leaseholds. Upon Texas Northern’s subsequent dissolution, the 350,000 Gulf Coast shares were distributed to the former shareholders of Texas Northern including, of course, Hagen and Kelly, whose Texas Northern stock bore restrictive legends. Kelly, as counsel to Texas Northern, thereupon wrote to Gulf Coast’s transfer agent, stating that it was not necessary to place similar legends on the Gulf Coast stock as Texas Northern had been dissolved and the restrictions applied only to Texas Northern stock. As a result of Gulf Coast’s acquisition of Texas Northern, Hagen received 57.000 shares of Gulf Coast and an option to buy another 32,000 shares at $2.75 per share, while Kelly obtained 4000 shares of Gulf Coast and a similar option on an additional 24,000 shares. In 1953, Gulf Coast operated at a net loss of $110,000 and was strapped for the cash necessary to explore and develop its new properties. As Hagen and Kelly were reluctant or unable to increase their already considerable investment, Gulf Coast was forced to seek outside financing. Soon after the Texas Northern acquisition, the number of authorized shares of Gulf Coast was increased from 600.000 to 2,000,000 and during the Spring and Summer of 1954, Hagen and Kelly approached numerous brokers, investment bankers and private individuals in an attempt to attract buyers for the new stock. These efforts, however, proved of little or no avail. Among those approached in the endeavor to obtain financing for Gulf Coast Leaseholds was Miss Muriel Bailey, a customers’ woman employed by the New York brokerage firm of Walston & Co., who had known Hagen and Kelly for several years. Following Walston & Co.’s refusal to participate in an underwriting of Gulf Coast stock, Miss Bailey was told by another of her acquaintances, John Van Allen, that he had heard of Hagen and desired an introduction to him. Miss Bailey passed on this information to Kelly and testified that she described Van Allen as “a man of mystery” who represented secret Swiss trusts and seemed affluent. During mid-September 1954, Van Allen met Kelly in New York and preliminary negotiations for the sale of a large block of Gulf Coast stock began immediately. These negotiations were continued on September 15, 1954, when Van Allen paid a short visit to Kelly’s law office in Washington. As no important transaction could be completed without Hagen’s approval and Kelly was to leave on that day for Haiti and Venezuela, Van Allen was invited to meet Hagen in Houston where he could observe Gulf Coast’s operations. Van Allen immediately went to Houston and the general nature of the financing was speedily decided. Van Allen not only was shown several Gulf Coast Leaseholds oil fields, Hagen also gave him fifty reprints of a highly complimentary article about the company which had appeared in the September 1954 issue of Oil magazine. On September 20, 1954, Gulf Coast’s board of directors adopted a resolution purporting to amend the company’s charter by eliminating the preemptive rights of the shareholders. Hagen then joined Kelly in Haiti to iron out the details of the contemplated financing agreement. Kelly returned to New York on September 29 and drafted a simple two-page agreement that was signed by Kelly and Van Allen the following day, September 30, 1954. According to this contract, the purchaser of the Gulf Coast stock was “Brandel Trust,” an entity of the Duchy of Liechtenstein that Van Allen said he represented. On September 30, 1954, Brandel’s Swiss bank deposits amounted to $20.80. The September 30 agreement was signed on behalf of Brandel Trust as follows: “Dr. Paul Hagenbach Per J.v.a.” Hagenbach, a Swiss attorney, was the president of Brandel Trust, but he was actually more or less of a figurehead and Brandel’s affairs were completely controlled by Van Allen. Because of its central importance to this case, we quote in full in the margin the two-page agreement between Gulf Coast Leaseholds and Brandel Trust, executed September 30, 1954. The charge that Hagen and Kelly conspired to publicly distribute unregistered shares of Gulf Coast Leaseholds stock and that they “willfully” participated in an unlawful distribution of this stock, rested heavily upon the proposition that the September 30 agreement was a complete sham and that Hagen and Kelly were fully aware of the fact that Van Allen had no intention of honoring any investment pledge. In addition to the testimony of Van Allen, the Government presented the following bits of evidence to show that the circumstances surrounding the execution of the September 30 agreement were totally inconsistent with any bona fide investment intent: 1. Hagen and Kelly did not investigate Van Allen’s background before entering into the million dollar deal with him. Had such an investigation been made, Hagen and Kelly might have learned that on September 30, 1954 Van Allen was free on bail following an indictment in 1953 in the Southern District of New York for income tax evasion and that during the 1940’s Van Allen had been permanently enjoined from engaging in the securities business in New York and New Jersey. 2. Hagen and Kelly demanded no proof of Van Allen’s authority to act in Brandel Trust’s behalf. Moreover, Hagen and Kelly made no attempt to determine whether Brandel had the financial ability to hold for investment 1.3 million dollars worth of stock. As above stated, Brandel’s bank accounts totalled $20.80 on September 30, 1954. 3. In the light of Gulf Coast’s dire need of cash, the arrangement for stepped-up prices was inconsistent with any legitimate investment intent. The Government argued that had a private placement really been contemplated there would have been no reason to provide for an escalation of prices rather than payment of the average price of about $1.70 per share. If, on the other hand, a public distribution was anticipated, the profits from Van Allen’s resale of the lower priced shares would enable him to meet his commitments with respect to the higher priced shares. 4. Though the Texas Northern transaction previously discussed demonstrated that Kelly and, perhaps to a lesser extent Hagen were familiar with the placing of restrictive legends upon stock certificates and the execution of formal letters of investment, these simple' methods of assuring that no public distribution would take place were not followed. 5. Prior to the consummation of the Hickory Petroleum deal, Kelly secured a “no action” letter from the Securities and Exchange Commission. Though the Brandel transaction involved many times more stock, no similar procedure was adopted. 6. The provision in the September 30 contract to the effect that Brandel had the right to demand Gulf Coast stock at times earlier than the specified delivery dates was meaningless unless resales by Brandel or Van Allen were contemplated. 7. The 750,000 shares to be purchased by Brandel would have represented a serious challenge to Hagen’s control of Gulf Coast if Brandel honored its promise to hold the stock; the challenge would be insignificant upon public distribution. Accordingly, the provision for proxies in Hagen’s favor rather than the use of a voting trust or the stamping of a legend upon the stock restricting voting rights made sense only if a public distribution was contemplated. 8. By tracing the accounts of several American companies and Swiss trusts, the Government demonstrated that the contract provision for the payment of compensation to Brandel was actually a subterfuge masking the under-the-table payment of a $130,000 kickback to Hagen and Kelly. Incriminating as all these circumstances were, the Government went much further in proving its case by presenting in great detail the events which followed the execution of the September 30 agreement. It is to those events that we now turn. Gulf Coast Leaseholds stock, not being listed on any exchange, was traded over-the-counter. The over-the-counter market is serviced by the National Quotation Bureau which publishes the daily “pink sheets.” These “pink sheets” list thousands of stocks together with the names of brokerage firms “making a market” in the stock by offering to buy it at one price (the “bid” price) and offering to sell at a somewhat higher price (the “asked” price). Likewise, the pink sheets also publish the bid and asked prices for each particular stock. In the months prior to the September 30 agreement, the market for Gulf Coast Leaseholds was exceedingly thin. Though the bid price of Gulf Coast had reached about $3.00 per share in the Spring of 1954, following the announcement of the Texas Northern acquisition, the market for Gulf Coast subsequently declined to the extent that Gulf Coast stock could be obtained for about $1.25 per share on September 30, 1954. Even at that price, however, there were few, if any, takers. Faced with this dismal market situation, Van Allen, immediately after signing the September 30 agreement, turned to an old friend and former employer, Irving Hertzberg, the president of the small New York brokerage firm of F. W. MacDonald & Co. On September 30, MacDonald & Co. entered the “pink sheets” as a broker interested in “making a market” in Gulf Coast stock and purchased several thousand shares for Van Allen’s friends. As a natural result of this sudden “demand,” the price of Gulf Coast began to rise and, within a few hours, the bid price reached $2.00 per share. At this point, on the very day that Van Allen had agreed to purchase Gulf Coast stock “for purposes of investment,” he began to sell to various persons who had been “tipped off” and to others attracted by the sudden activity. In the first week following the September 30 agreement, Van Allen sold about 48,000 shares at prices steadily ascending to $2.75 per share. Van Allen also made a direct sale of 100,000 shares at about $2.00 per share to one of his friends. Under the terms of the September 30 agreement, the first block of 100,000 Gulf Coast shares was to be delivered to Brandel on November 1, 1954. Van Allen testified that this date was selected to give him the opportunity to- make the sales necessary for him to meet his initial $100,000 obligation. As noted previously, however, the contract provided that Van Allen could anticipate deliveries. Van Allen quickly exercised this prerogative and informed Kelly that he needed some stock to cover his substantial sales. Van Allen requested that the shares be in negotiable form or “good for delivery,” i. e., that they be in certificates for one hundred shares or less and in the name of someone other than a person “controlling” Gulf Coast Leaseholds. For some reason, as to which the record is hopelessly confusing, Hagen and Kelly did not respond to Van Allen’s urgent appeals for stock by having Gulf Coast issue the necessary certificates. Instead, Hagen and Kelly engaged in a complicated series of transactions to provide Van Allen with some of their own shares. When Hagen and Kelly exhausted their readily available supply, they borrowed some shares from friends and had this stock delivered to MacDonald & Co. for Brandel’s account. As much of this stock was in Hagen’s name and in certificates of large denominations, the transfer agent, the Second National Bank of Houston, was required to go through a tortuous process to prepare the shares in negotiable form. By October 7, however, some 30,000 shares had been broken down into one hundred share certificates and put in the names of Hagen nominees or other non-controlling persons. MacDonald & Co. received the certificates the next day, October 8, 1954. But 30,000 shares were not nearly enough to cover Van Allen’s resales. During the balance of October, Hagen and Kelly made four additional shipments of negotiable Gulf Coast stock, bringing to 100,000 the number of shares forwarded by them in the first month after the signing of the September 30 agreement. The budding conspiracy really began to blossom in October 1954. On October 19, the Gulf Coast board of directors held a special meeting and voted to ratify the September 30 agreement and to empower Gulf Coast’s transfer agent to issue shares pursuant to the instructions of Gulf Coast officers. This special meeting also served to increase the amount of Gulf Coast stock owned by Hagen and Kelly. One resolution accepted the offer of Falcon Petroleum Corporation, which Hagen controlled, to sell property valued at $40,000 for 18,000 shares of Gulf Coast. Another resolution increased the conversion ratio for the preferred stock, which as mentioned previously had been issued in July 1953, to two shares of common stock for each share of preferred; the resolution recited Hagen’s ownership of 21,500 shares of preferred and Kelly’s ownership of 1,000 shares. On October 26, 1954, the president of Gulf Coast Leaseholds, Robert G. Behr-man, Jr., wrote a letter to the Second National Bank of Houston, enclosing a copy of the September 30 agreement and of the October 19 directors’ resolution authorizing instructions to the bank by Gulf Coast officers. Behrman’s letter, copies of which were transmitted to Hagen and Kelly, advised the bank that Brandel Trust had exercised its right to purchase the 200,000 shares due on November 1, 1954 and on December 1, 1954. The bank was instructed to issue to Brandel Trust one thousand certificates of one hundred shares each and an additional certificate for 100,000 shares. The manager of the bank’s stock transfer department immediately notified the Gulf Coast office that as the bank had no documents showing who had the power to act for Brandel Trust, problems might arise should Brandel seek to transfer the stock. Behrman accordingly sent a second letter on October 26, directing that the shares be put in the name of F. W. MacDonald & Co. The Second National Bank issued the 200,000 shares to MacDonald & Co. on the following day, October 27, 1954. The single certificate for 100,000 shares was immediately sent to Hagen to replace the shares he had forwarded to Brandel’s account during October. MacDonald’s president, Hertzberg, was apparently concerned about the huge shipment of negotiable securities and asked Van Allen whether the sale of this stock raised any legal problems. Van Allen suggested that Hertzberg check with Kelly, a lawyer, but Kelly said that as he represented Gulf Coast, Hertzberg would be wise to consult independent counsel. Within the next few weeks; Van Allen secured an opinion letter from an attorney, John M. Foley. The letter was dated September 16, 1954 and referred to the September 30 agreement as an “August, 1954 agreement.” Foley’s letter stated that as the market price of Gulf Coast stock had risen sharply since the execution of the agreement, the purposes of Brandel’s “investment” had been achieved and it was free to sell the stock without running afoul of the federal securities laws. Foley authorized Bran-del to exhibit the opinion letter to brokers. Subsequently, Van Allen supplied Hertzberg with another opinion letter, dated November 18, 1954, by Mortimer B. Burnside. This letter, like Foley’s, also relied upon the proposition that no lack of a legitimate investment intent could be inferred from the mere fact that Brandel sold some stock after the market price of Gulf Coast Leaseholds had gone up. On October 28, 1954, Kelly instructed the Second National Bank to. send Van Allen copies of the daily transfer sheets of Gulf Coast, starting with the one for September 30. Kelly had been receiving copies of the daily transfer sheets since July 31, 1954, and his letter of October 28 to the bank requested that the sheets be sent to Van Allen “in the same manner that you send them to me.” On November 1,1954, an officer of Gulf Coast instructed the bank to return the copy of the September 30 agreement which the bank had received on October 26. This letter of November 1 promised that a copy of the agreement would be resubmitted to the bank before the next delivery of stock to Brandel. Though Kelly at one time stated that he “insisted that a copy of [the] agreement be filed with the bank who was the transfer agent and they were aware of all of its provisions,” there was no evidence that the bank ever again received a copy of the million-dollar agreement. Despite all this cooperation by the Houston bank, it soon became obvious that Van Allen’s sales were so substantial as to warrant the appointment of a second transfer agent in New York. On November 1, 1954, Kelly wrote a letter to Robert Swanson, assistant cashier of the First National City Bank of New York, inquiring whether the bank would be interested in becoming a co-transfer agent to facilitate the handling of the numerous transactions in Gulf Coast stock taking place in New York. Two days later on November 3, 1954, Kelly met with Swanson in First National City’s Wall Street office. Swanson’s memorandum of this conference indicated statements by Kelly to the effect that Gulf Coast had 1800-2000 shareholders, including one Clint Murchison, and that the East recently witnessed “considerable activity” in Gulf Coast Leaseholds stock. Pursuant to a request by the First National City Bank, Kelly wrote an opinion letter to the bank stating that although none of Gulf Coast’s stock was registered, trading in the stock was legal as all the shares were exempt from registration for one reason or another. Shortly thereafter, the First National City Bank became co-transfer agent for Gulf Coast stock. While all these events were taking place, Van Allen was selling huge quantities of Gulf Coast stock. To aid in this massive distribution, Van Allen enlisted the services of Singer, Bean & Mackie, then one of New York’s largest over-the-counter brokerage houses. The firm agreed to “make a market” in Gulf Coast Leaseholds stock, thus adding its prestige to the mushrooming operation. With his new ally, Singer, Bean & Mackie, and the promise of the increased efficiency to be afforded by the appointment of a New York bank as co-transfer agent, Van Allen soon exhausted the 100,000 shares of stock which had been delivered to him in negotiable form on October 27. Again Van Allen turned to Hagen and Kelly and again they came to the rescue. Hagen, who had received the single certificate for 100,000 shares on October 28, sent Van Allen 65,000 shares in the period between November 5 and November 16, 1954. Kelly, for his part, succeeded in borrowing something over 15.000 shares from his “contacts” and transferred the stock to Van Allen. On November 12, 1954, Hagen’s secretary wrote F. W. MacDonald & Co. as follows: “Enclosed are 4,000 shares of common stock of Gulf Coast Leaseholds, Inc. issued per attached list. We have included one certificate of two thousand shares which Mr. Kelly is lending at this time so that you may have ample coverage until the new stock certificates are available for additional transfers.” With clockwork precision the “new stock certificates” became available. On the same date as this letter, November 12, 1954, Gulf Coast instructed its Houston transfer agent to issue 100,000 shares of stock to F. W. MacDonald for Brandel’s account. The stock, which was to be issued in certificates of one hundred shares each, represented the 65,000 shares due, according to the September 30 agreement, on January 1, 1955, and 35.000 of the 65,000 shares due on February 1, 1955. 50,000 shares were shipped by the Houston bank to MacDonald & Co. that very day, November 12, 1954. The remaining 50,000 shares were sent three days later. Not only did Hagen and Kelly facilitate Van Allen’s distribution efforts by providing him with “ample coverage” and amazingly speedy service, they also tried to induce Clint Murchison to buy a large number of the shares covered by the September 30 agreement. On November 8, 1954, Kelly and Hagen sent Murchison a lengthy memorandum describing Gulf Coast’s background and prospects and stating that Gulf Coast then had two thousand shareholders, though it was anticipated that this number would soon grow to three thousand in view of the strong demand for the stock and the fact that twelve brokers had entered the “pink sheets” to trade in Gulf Coast stock. The memorandum concluded with the following proposal: “At the time of the private placement we had in mind that if the company increased in value we wanted to have shares available for you at a favorable price. We, therefore, made verbal provisions with the purchasing group that a block of from 50,000 to 100,000 shares would be made available to you at a price of approximately $2.75 per share. This, at the present time, is approximately $1.25 a share under the current market which is a strong one.” Whether Van Allen required any assistance in disposing of his Gulf Coast stock seems dubious indeed. During October and November 1954, Ván Allen purchased for his own account 390,000 shares of Gulf Coast for $462,000. In this same two-month period, Van Allen sold 303,000 shares for $883,000. On about November 11 or November 12, 1954, Mrs. Orlena Sparenberg, the manager of the stock transfer department of the Second National Bank of Houston, telephoned Gulf Coast’s office to say that, contrary to the provisions of the September 30 agreement, some of the Gulf Coast stock issued pursuant to that agreement had been resold within the United States. Mrs. Sparenberg testified that the call was in no way prompted by any thought that the sales were illegal under the securities laws. Throughout cross-examination, Mrs. Sparenberg maintained that it was not the number of purchasers but rather the situs of the transfers which occasioned her telephone call. Mrs. Sparenberg testified that although the bank had returned its copy of the September 30 agreement, she recalled that the contract provided that Brandel would make no sales within the United States. Within a few days, Mrs. Sparenberg was told by the Gulf Coast office that Kelly, Gulf Coast’s lawyer, had been informed of the situation, and he had said Brandel Trust was solely responsible for any domestic sales. Mrs. Sparenberg’s testimony assumed great significance when the defense introduced a letter supposedly written by Kelly on November 16, 1954 to Paul Hagenbach, the president of Brandel Trust. This letter was to the general effect that the transfer agent had informed Gulf Coast officials that Brandel had transferred Gulf Coast stock to more than 25 purchasers, that Gulf Coast was under the impression that Brandel Trust intended to buy Gulf Coast stock “for the purpose of investment and not for resale,” but that Kelly was sure that Bran-del’s actions had been “under advice of counsel” and Kelly simply wanted to know what was going on. As the Government regarded this letter as a fabrication cleverly designed by Kelly, or some of the other conspirators with his knowledge, to give the false impression that his first knowledge of the sale of the unregistered stock was the result of the telephone call from Mrs. Sparenberg, it produced as a witness Hagenbaeh, the alleged recipient of the November 16 letter. He denied categorically that he had ever seen it and the defense conceded that Hagenbaeh never responded to the letter. Moreover, Mrs. Sparenberg’s testimony that her call concerned the situs of the transfers and not the number of buyers was bolstered by bank documents proving that until November 18 it would have been impossible for Mrs. Sparenberg to know that more than 25 transfers had taken place. And, of course, the Government contended that evidence such as Kelly’s letters to Swanson on November 1 and to Murchison on November 8 concerning the number of Gulf Coast shareholders and the strength of the demand for the stock, as well as the November 11 letter about providing “ample coverage,” belied Kelly’s claim that it was the bank which first put him on notice that Van Allen was reselling the shares he bought for investment. On November 20, 1954, Kelly and Van Allen met in Paris from whence they journeyed, two days later, to Zurich. What occurred in Zurich was the subject of bitter controversy at the trial. The defense asserted that Kelly visited Hagenbaeh to protest that Brandel’s sales violated both the securities laws and the September 30 agreement. The defense version of this alleged meeting was to the effect that Hagenbaeh insisted that Burnside, whose opinion letter we have mentioned previously, had advised Bran-del that it was entitled to resell the Gulf Coast stock and that if Gulf Coast refused to continue delivering the stock, Brandel would sue and recover the substantial difference between the prevailing market price and the far lower contract price. The defense also asserted that whenever Kelly complained to Van Allen that his sales violated the law and their agreement, Van Allen referred to Burnside’s opinion and threatened suit should Gulf Coast fail to deliver the promised stock. The defense, however, apparently conceded that Burnside was more of a stockbroker than a practicing attorney. The Government, accordingly, stressed the sheer improbability that Kelly, a lawyer would have been intimidated by such a “legal” opinion. And, of course, no one can reasonably dispute that the evidence was sufficient to permit the jury to conclude that Hagen and Kelly, far from being coerced by Van Allen, Hagenbaeh and Burnside, were actually willing partners in the massive distribution of Gulf Coast stock The Government presented an entirely different version of what went on while Kelly and Van Allen were in Zurich. Hagenbaeh, who came to the United States and apeared as a Government witness after receiving a written promise by a duly authorized Assistant United States Attorney that the Government would move to dismiss the case against him, not only denied receipt of the November 16 letter by Kelly referred to previously but he also denied meeting Kelly at any time prior to February 1956. Van Allen testified that he and Kelly went to Zurich in November 1954 because Kelly wanted to form a secret Swiss trust. This trust was to receive the ten per cent payments which the September 30 agreement described as compensation for Brandel but which were actually being made as kickbacks to Hagen and Kelly. Two previous payments of $10,000 each had been made by Brandel on October 11, 1954, three days after Hagen first delivered Gulf Coast stock to Brandel’s account at MacDonald & Go., and on November 4, after the Houston bank shipped 100,000 shares in negotiable form on October 27. These two cheeks totalling $20,000 wound up in the bank account of Potomac Enterprises, Inc., a company which Hagen and Kelly admitted they owned. Though the defense sought to explain these payments by saying they were loans, there was no explaining the lack of any evidence that Potomac Enterprises ever repaid these “loans” or the coincidences that these “loans” occurred immediately following shipments of Gulf Coast stock to Bran-del’s account and that these “loans” equalled ten per cent of the purchase price of the shares then delivered, the precise figure specified by the September 30 agreement as “compensation” to Bran-del. Van Allen testified that he introduced Kelly to a prominent Zurich attorney, Dr. Walter Keller-Staub. In consideration of $25,000 paid by Van Allen, Keller-Staub formed a secret Swiss trust, Universal Finance Company, for Hagen and Kelly, and another trust, Sun Investment Company, for Van Allen. Questions as to who exactly owned these secret trusts became highly significant when the Government proved that transfers of substantial amounts of cash from Sun Investment to Universal Finance represented payments by Van Allen to Hagen and Kelly of the balance of the $130,000 kickback. On December 6, 1954, immediately after Kelly and Van Allen returned to the United States, there began a complicated series of stock transfers designed to repay Hagen for the 65,000 shares of Gulf Coast which he had delivered to Brandel between November 5 and November 16, 1954. Gulf Coast, on December 6, instructed the Houston bank to deliver to the Gulf Coast office a single certificate for 65,000 shares issued in the name of F. W. MacDonald & Co. This stock was said to represent the remaining 30,000 shares which Gulf Coast was supposed to deliver to Brandel on February 1,1955 and 35,000 of the 70,000 shares due, under the September 30 agreement, on March 1, 1955. On December 9, 1954, the Houston bank accordingly sent a single certificate for 65,000 shares in the name of F. W. MacDonald & Co. and bearing the certificate number C2157 to the Gulf Coast office. This stock never reached MacDonald. Instead, on December 15, 1954, Gulf Coast returned certificate number C2157 to the Houston bank and directed it to reissue the 65,000 shares to Hagen and one of his friends. Notwithstanding this brilliant coup, the conspiracy soon experienced its first serious setback. On December 17, 1954, Van Allen met with his advisor, Burnside, Herbert Singer of Singer, Bean & Mackie, and Singer’s attorney, Joseph Connolly. According to Van Allen’s testimony, this conference had been preceded by a series of questions from Singer, Bean & Mackie regarding the legality of the distribution of Gulf Coast stock. Burnside apparently failed to convince Singer’s lawyer that the substantial increase in the market price of Gulf Coast stock justified Van Allen’s resales, for Connolly told Singer that he would accept no responsibility for any future sales by Singer, Bean & Mackie of Gulf Coast stock. The firm heeded Connolly’s warning and immediately ceased trading in Gulf Coast stock on behalf of Brandel; Singer, Bean & Mackie continued, however, to trade in Gulf Coast for the firm’s own account. Unperturbed by, and perhaps unaware of, this development, the Gulf Coast office on the very next day, December 18, 1954, instructed the Houston bank to deliver 35,000 shares in one hundred share certificates to Brandel’s account at MacDonald. This stock was to complete the delivery due under the contract on March 1, 1955. Though some inconvenience might be expected from the partial withdrawal of Singer, Bean & Mackie, the conspirators could be content with the fact that they were about 2% months ahead of schedule. And during December 1954, Van Allen managed to dispose of almost 42,000 shares of Gulf Coast at an average price of slightly more than $4 per share. Whether to forestall an SEC investigation or in an outside hope that some form of approval or qualified approval of the sale of the unregistered shares might be obtained or for some other undisclosed purpose, it was decided that Kelly should visit the Washington office of the SEC. Accordingly, Van Allen arranged a meeting, held January 11,1955, between Kelly and Edward T. Tait, the Executive Assistant to the Chairman of the SEC. As Tait was an administrative official rather than a legal advisor, he referred Kelly to Charles E. Shreve, an attorney in the SEC’s Division of Corporation Finance. This Division was in charge of questions relating to stock registrations. Shreve’s testimony of what occurred at this conference of January 11, 1955 completely refutes Kelly’s claim that he made a full and fair disclosure of all the material facts. Moreover, Shreve testified that the upshot of the conference was that it was recognized that the shares would have to be registered and Kelly promised that no more deliveries of unregistered stock would be authorized by Gulf Coast. According to Shreve, Kelly completely misrepresented the true situation to him. Among the falsehoods and omissions were: Kelly’s description of the purchasers as a “group of Swiss investors” rather than an anonymous Swiss trust; Kelly’s representation that the sales price for the stock was “about $1.87 a share net,” with no mention of the fact that the September 30 agreement provided for stepped-up prices; the failure to disclose that the “Swiss group” began reselling the Gulf Coast stock on the very day that the “investment” agreement was entered into and that Hagen and Kelly facilitated these resales by forwarding their own stock and having the transfer agent issue huge loads of certificates for one hundred shares each. Shreve’s memorandum of the conference, Government Exhibit 921, was received in evidence solely for its bearing on Shreve’s credibility. On the same day as this Kelly-Shreve conference, Gulf Coast directed the Houston bank to issue 25,000 shares in one hundred share certificates to MacDonald & Co. The next day, January 12, 1955, Gulf Coast instructed the bank to send MacDonald another 25,000 shares in similar form. These 50,000 shares represented the delivery due on April 1, 1955, and the bank forwarded the stock on January 13, 1955. It was to be the last delivery from the Houston bank to MacDonald & Co. until March 26, 1955. According to Van Allen’s testimony, Kelly’s report of his meeting with the SEC was to the effect that he had been quite successful and there was nothing for the group to worry about. Van Allen went merrily on his way distributing Gulf Coast Leaseholds stock to the public; his sales for January came to 36,300 shares at a total price of $180,000. It seems, however, that Hertzberg, the president of MacDonald & Co., still had some misgivings about whether he was doing right in selling all this unregistered Gulf Coast stock. On January 31, 1955, Hertzberg wrote a very short letter to Kelly asking Kelly’s opinion as to whether these sales were legal. On February 1, 1955, Kelly’s secretary acknowledged receipt of Hertzberg’s letter and stated that Kelly was out of town on business. Kelly’s response to Hertzberg, dated February 10, 1955, was to the effect that as he was counsel to Gulf Coast Leaseholds and not Brandel, he was in no position to pass upon the legality of Brandel’s activities. Kelly’s final sentence in this letter was: “In any event, the company is presently in the process of preparing a registration statement for Gulf Coast Leaseholds, Inc., which registration statement should be ready for filing in the comparatively near future.” Again Hertzberg had received whatever reassurance he needed and the Bran-del account at MacDonald continued its activity in Gulf Coast stock. As noted previously, no shares covered by the September 30 agreement were issued during February 1955 by the Second National Bank of Houston. During this month, however, the Brandel account at MacDonald bought on the open market more than 11,000 shares of Gulf Coast; this amount exceeded the sum of such purchases during the three preceding months. Sales for February 1955 totalled 32,000 shares at about $5 per share. Towards the end of the month, the Securities and Exchange Commission began an investigation of MacDonald & Co. Hertzberg quickly got in touch with Van Allen, who discussed the matter with Kelly; Van Allen then prevailed upon his advisor, Burnside, to pay a visit to the SEC in Washington. A very short, almost cryptic, memorandum to the SEC’s files by the administrative officer Tait indicates that Burnside and Tait probably conferred on March 2, 1955. Burnside apparently provided Tait with an unsigned and undated memorandum typed on three pages of plain white paper to the effect that Brandel Trust, “a Swiss financial corporation,” had purchased a large block of Gulf Coast Leaseholds stock for purposes of investment. Subsequently, according to this memorandum, Gulf Coast discovered a large amount of oil and, as a result, the market price of the stock rose. “The Swiss group” thereupon determined that the purposes of the investment had been “met” and the group disposed “of a portion of their shares.” The memorandum continued that “certain of the shares” were sold through MacDonald & Co. which recently informed Brandel that it had “on several occasions” received inquiries about these transactions from a representative of the SEC. The memorandum then went on to say that representatives of Gulf Coast “have had some discussions with the S. E. C.” concerning the Bran-del contract, and that Gulf Coast informed Brandel that it (Gulf Coast) “is not in a position to spend money for a registration statement as such a venture is both costly and time consuming to its management.” The memorandum concluded with the statement that Bran-del had the right to dispose of the shares as the purposes of its investment had been “met by the increase in [Gulf Coast’s] inherent value.” The significance of this memorandum was hotly disputed at the trial, though it was stipulated that the memorandum had been typed on a machine owned by Kelly. The defense argued that this was another example of the “complete disclosure” that Kelly was making to the SEC, and said that the purpose of the memorandum was to advise the Commission that the Gulf Coast shares would not be registered. The Government contended that honest disclosure is not usually made through an unsigned and undated memorandum and that the facts set forth in the memorandum were just about as incomplete and inaccurate as those recited by Kelly to Shreve in their January 11 conference. Finally, the Government asserted that the reason why this document was executed and brought to the SEC’s offices derived from the conspirators’ hope that it would be “planted” in the Commission’s files and would be thought to represent an internal memorandum of the Commission concluding that it was unnecessary to register the Gulf Coast stock. Van Allen testified that Burnside reported back to tell him that the meeting with the SEC had not been successful and that the shares ought to be registered in the interest of avoiding trouble. According to Van Allen, Kelly’s response was that Gulf Coast did not want and could not afford to spend the money. Later in March 1955, Gulf Coast Leaseholds released its Annual Report for the year ending December 31, 1954. The loss reported for the year was $257,-000. As we have stated, the company’s reported loss for the year ending December 31, 1953 had been $110,000. The message of the president of Gulf Coast, Robert G. Behrman, Jr., which constituted the four pages preceding the company’s financial statements, discussed the increase in Gulf Coast’s oil and gas pro- ■ duction, the company’s active drilling program, the purchase by Gulf Coast of various productive properties including the acquisition of Texas Northern Oil Corporation which we have previously outlined, the soundness of Gulf Coast’s financing and the plans of Gulf Coast’s management “to greatly expand operations in 1955.” Behrman’s message concluded with the statement: “The net loss, not at all unusual for oil companies in initial stages of development, resulted primarily from GCL’s share of dry hole and completion costs. * * * We anticipate that with income substantially advancing and dry hole costs diminishing, our next annual report should show Gulf Coast Leaseholds operating at a profit.” Release of this Annual Report ■occasioned only a very minor and very temporary decrease in the market price of Gulf Coast stock. On March 25, 1955, a few days after the Annual Report was published, Gulf Coast instructed the Second National Bank of Houston to resume the issuance of stock pursuant to the September 30 agreement; as we stated previously, the issuance of such stock had been discontinued on January 13, 1955. The Houston bank was directed to issue to the Brandel account at F. W. MacDonald & Co., 100,000 shares of Gulf Coast in ■certificates of one hundred shares each. The shipment, completed the following ■day, March 26, 1955, represented the shares due on May 1, 1955 and June 1, 1955. The Government contended that one substantial reason why Gulf Coast agreed to provide Van Allen with these 100,000 shares, was a payment of $80,000 by Van Allen to Kelly and Hagen. According to the Government, this payment was part of the ten per cent kickback arrangement which we have discussed. The Government introduced a letter written on March 26, 1955 by Van Allen to Dr. Walter Keller-Staub, directing the Swiss attorney to transfer $80,000 from Sun Investment Company, which was Van Allen’s Swiss trust, to Universal Finance Company, the secret Swiss trust which belonged to Hagen and Kelly. Van Allen’s sales for March 1955 came to 50,000 shares at an average price slightly in excess of $6 per share. On April 2, 1955, Gulf Coast directed the Houston bank to issue to the Brandel account at MacDonald another 50,000 shares in one hundred share certificates. This delivery, completed April 5, 1955 constituted, the shipment due under the September 30 agreement on July 1, 1955. Once again the conspiracy was about three months ahead of schedule. We have mentioned previously that on December 17, 1954 the account of Bran-del Trust at the Singer, Bean & Mackie brokerage house was denied the privilege of trading in Gulf Coast stock, though the firm continued to deal in the stock for the firm’s own account. Towards the end of March 1955, the firm’s activity in Gulf Coast stock increased considerably, and on about April 15, 1955, Brandel Trust was again extended the privilege of executing transactions involving Gulf Coast. During the balance of April 1955, the Brandel account at Singer, Bean & Mackie sold 6550 shares of Gulf Coast at an average price of about $8 per share. Brandel Trust’s total sales figures for April 1955 were 72,000 shares sold at a price of $530,000. We now approach the “second stage” of the conspiracy, relative to the debentures. It is probable that the precise course of events cannot be traced in this record but the documents are illuminating and some of the gaps are filled by testimony. In any event, up to May 1955, Van Allen and the others working with him boosted the price of Gulf Coast stock by touting, but principally by the manipulation of the market, buying and selling. As early as October 7, 1954, Kelly, Hagen and the Gulf Coast office sent on to Van Allen every scrap of information they could lay their hands on. As we shall soon see, the efforts to cause a real boom in the stock were later doubled and redoubled. By way of anticipation, and to facilitate an understanding of the sequence of events, we mention here the fact that a document dated May 26, 1955, signed by Van Allen for Brandel and by Kelly for Gulf Coast, evidenced an agreement to sell Brandel $1,000,000 of Gulf Coast debentures, convertible at $8.00 per share. Reminiscent of the 10% kickback on the purchase of the 750,000 shares, Brandel was to receive 10% of the debentures but not in excess of $100,000. A note from Kelly indicated the debentures were to be issued ■“on a private placement basis and not subject to SEC registration.” The final agreement, for the purchase of $2,000,-000 of debentures to be registered with the SEC, was enclosed by Kelly to Van Allen in a letter of August 25, 1955. This agreement, however, bore the date of May 17, 1955 and recited a ratification at the directors’ meeting of Gulf Coast on May 18, 1955. In May the stock was selling at about $7. In August the market was above $10. It will be interesting to see when the peripheral defendant Shuck enters the scene, and how he comes in contact, if at all, with Kelly and Hagen. The three persons constituting the nucleus of the alleged single, over-all conspiracy were, of course, Kelly, Hagen and Van Allen. On May 12, 1955, Gulf Coast instructed the Second National Bank of Houston to deliver 40,000 shares in one hundred share certificates to the Brandel account at F. W. MacDonald & Co. This stock rep