Full opinion text
PER CURIAM: Julian Weiner, Marvin Lichtig, and Solomon Block appeal their respective convictions for securities fraud arising out of their employment as auditors of Equity Funding Corporation of America (Equity Funding) during the time covered by the indictment. Equity Funding was incorporated in 1960 to sell life insurance, mutual funds, and “equity funding” programs. The company operated legitimately and profitably until 1964, when, the government proved, it began to publish inaccurate and false financial statements. Equity Funding was accused of massive fraud in overstating its income and claiming nonexistent assets in order to increase the market value of its stock. Wolfson, Weiner, Ratoff, and Lapin were the independent public accountants for Equity Funding from 1961 until 1971. In early 1972, the Los Angeles branch of the Wolfson, Weiner firm joined with the accounting firm of Seidman & Seidman. The combined firm served as Equity Funding’s independent public accountant until the exposure of the fraud in 1973. Julian Weiner was the Wolfson, Weiner partner in charge of the audits of Equity Funding from 1961 to 1973. He was convicted of six counts of securities fraud, 15 U.S.C. §§ 77x, 77q(a), for accounting practices which fraudulently overstated the income and assets of Equity Funding, and of four counts of willfully making untrue statements to the Securities Exchange Commission (SEC) and the New York or Pacific Coast Stock Exchanges, in violation of 15 U.S.C. §§ 77x, 77f, 78ff, 78m. Marvin Lichtig, as an employee and later as a junior partner of Wolfson, Weiner, supervised the audit field work of Equity Funding for the audits between 1963 and 1968. He reported directly to Julian Weiner. From 1968 until 1973, Lichtig served as an officer of Equity Funding and signed registration statements as the principal accounting officer of the company. Lichtig was convicted of the same six counts of securities fraud as Weiner. Lichtig was also convicted of seven counts of filing false statements with the SEC and the New York or Pacific Coast Stock Exchange in violation of 15 U.S.C. §§ 77x, 77f, 78ff, 781, 78m. Solomon Block was employed by Wolfson, Weiner in 1968 and replaced Lichtig as the supervisor of field audits. Block served as supervisor for the 1969 through 1972 audits. Block was charged with the same six counts of securities fraud as Weiner and Lichtig, but Block was convicted of only five of the counts. Block was convicted of two counts of making false statements to the SEC and the New York or Pacific Coast Stock Exchanges in violation of 15 U.S.C. §§ 77x, 77f, 78ff, 78m. A. UNANIMOUS VERDICT Defendants argue that the convictions must be reversed because the jury verdict was not unanimous. This challenge is based on juror affidavits. The jury returned a verdict of guilty, and each member of the panel was polled. The judge asked “please indicate by answering if the verdicts just read are your verdicts,” and each juror responded individually in the affirmative. The verdicts were received and the jury was discharged. Half an hour later, a juror went to the judge’s chambers and said that she had never voted “guilty”, but rather had voted “guilty with reservation” during the jury’s deliberations. She further stated that she understood that the jury’s verdict was eleven “guilty” and one “guilty with reservation”, and was confused by the events in the courtroom when she responded affirmatively that the verdict rendered was her verdict. Two other jurors made affidavits to support this juror’s statement that she had always qualified her “guilty” vote “with reservation”. The defendants moved for a new trial, based on the affidavits of the three jurors. The district judge denied the motion, holding that the affidavits were not admissible to impeach the verdicts. The district court followed established law. Jurors may not impeach their own verdict. McDonald v. Pless, 238 U.S. 264, 35 S.Ct. 783, 59 L.Ed. 1300 (1915). This rule, with narrow exceptions, is codified in Fed.R.Evid. 606(b). Defendants argue that they are not seeking to impeach the verdict. They contend that the verdict rendered in court was not the true verdict of the jury and the affidavits should be admissible to prove this fact. They cite Fox v. United States, 417 F.2d 84 (5th Cir. 1969). In that case, a juror remained silent when polled, and other jurors by affidavit said they thought a verdict by a majority wás sufficient. The court held that there was no legal verdict. But here there was a verdict, and upon a poll of each juror in open court it was unanimous. Even if the defendants were able to prove that one juror had consistently voted “guilty with reservation”, the only purpose of such testimony would be to impeach the verdict. The meaning of “with reservation” would thus be left to the ingenuity of counsel and the vagaries of social behavior in every case. The juror answered in the affirmative when asked if “guilty” was her verdict. Many jurors have some second thoughts about their verdicts. “Beyond a reasonable doubt” need not exclude all doubt. To permit this juror to contradict this verdict by an explanation that her vote was “guilty with reservation” would sanction the impeachment of any verdict in which a jur- or could be found who was willing to repudiate the answer he gave when polled. Opportunities for harassment of jurors and jury tampering would abound. Such a burden on the jury system could not long be tolerated. B. THE “ALLEN CHARGE” The defendants also argue that the jury was coerced by the giving of the Allen charge. After 5 days of deliberations, the foreman of the jury notified the judge that “one of the members of our jury feels unable to participate in deliberations with the rest of us.” After ascertaining that the juror was not suffering from a physical or mental disability, the judge gave a modified Allen instruction substantially as set out in E. Devitt & C. Blackmar, Federal Jury Practice and Instructions § 17.18 (2d ed., 1970). (This instruction is § 18.14 in the Third Edition, 1977.) This court has consistently upheld this form of the Allen charge. Sullivan v. United States, 414 F.2d 714 (9th Cir. 1969). The cases which discuss the assumed effect of the Allen charge are all appealed by defendants who were convicted. Defendants who have been acquitted after the giving of the charge have not complained. Upon review of all the circumstances of the case, we hold that the supplemental instruction was not coercive. C. PREJUDICIAL COMMUNICATIONS During the trial, the prosecutor learned that two jurors had been on an elevator during a conversation between a government attorney and a government witness. The prosecutor notified the trial judge, who called a conference in chambers with all parties to the conversation plus defense counsel. The judge determined that nothing prejudicial had been said. There was no motion for a mistrial. Defense counsel now assert that there was something sinister about the event. The record, however, reveals no reason for disturbing the trial court’s discretion in handling the matter. The same juror who had expressed her reservations in the jury room and later in a posttrial affidavit also stated in her affidavit that during the deliberations she had initiated a conversation with the bailiff by asking whether the judge expected a verdict. She said the bailiff told her that he didn’t know, but he assumed that the judge would “like” a verdict, The bailiff, by affidavit, denied the conversation. In any event, the defendants fail to show how such a conversation, if it occurred, could have prejudiced anyone. Since the alleged conversation occurred, if it occurred at all, nearly a week after the judge had given the Allen charge earlier complained of, it should have been apparent to even the most obtuse juror that a verdict would be a welcomed development. We find no basis for charging the trial judge with an abuse of discretion for refusing to grant a new trial upon this sort of clutching at straws. It was a long trial, and such trials frequently produce a number of imperfections. It is to the credit of the experienced trial judge that this is the sort of assignment of error to which the appellants apparently must look in their search for reversible error. D. ALLEGED MISCONDUCT BY PROSECUTOR Appellant Lichtig claims that the prosecutor made an impermissible reference in final argument to his and Block’s failure to take the stand. Block’s attorney, in his part of the summation, had made a reference to certain evidence thought to be exculpatory of Block. The prosecutor in his final argument referred to “Julian Weiner’s exculpatory testimony” and the absence of other testimony on the point. None of these comments trespassed upon the rule against calling attention to failure to testify. The jury knew very well that neither Block nor Lichtig had testified, and, if this failure left some unanswered questions in the minds of jurors, that was a risk that had been assumed long before final argument. The government took no unfair advantage of the situation, and there was no error in refusing a new trial on this score. The trial court carefully instructed the jury about the presumption of innocence, the burden of proof, and the right of the defendant to refrain from testifying. Lichtig and Block also complain about the exploitation by the prosecutor of the term “reciprocal income” during the course of the trial The point is frivolous. “Reciprocal income” and “reciprocals” were terms commonly used in the reporting of inflated or nonexisting assets. The trial court carefully instructed the jury that there was nothing illegal about reciprocal income. The illegal conduct consisted of making false or exaggerated reports about “reciprocal” and other kinds of income. E. ALLEGED IMPERMISSIBLE RESTRICTION OF CROSS-EXAMINATION OF WITNESS LOWELL The interrogation of Samuel Lowell, one of the government’s principal witnesses, commenced in the afternoon of Friday, February 21, 1975. At the close of that session the trial was continued to 9:30 a.m. on Tuesday, February 25, 1975. The direct examination continued through Tuesday and for a very short time Wednesday morning, when the case was continued to Thursday on motion of defense counsel. Cross-examination by Mr. Abeles for defendant Weiner lasted all day Thursday and all day Friday. Mr. DeSantis, representing defendant Lichtig, commenced cross-examination late Friday afternoon. On adjournment, the trial was continued to Tuesday, March 11. Mr. DeSantis cross-examined Lowell all day Tuesday, and half of Wednesday morning. Mr. Markowitz, representing defendant Block, then took over and completed his questioning in the middle of the afternoon. In addition, during the government’s case, the court permitted defense counsel to recall Mr. Lowell for further cross-interrogation on March 20, 1975. During cross-examination there were numerous and repetitive attacks upon the credibility of the witness. Counsel probed Lowell on extramarital relationships and participation in fraudulent conduct not charged in the indictment. It will serve no useful purpose to detail the specific instances in which defendants claim that cross-examination was improperly curtailed or restricted. With respect to each such assignment of error, the impeaching information came to the attention of the jury. The attack is only upon the court’s refusal to permit counsel unrestricted license to exhaust the details of the particular circumstance or transaction. There was no error. The scope and extent of cross-examination is within the discretion of the trial court, and the court’s limitation of cross-examination will not result in reversal unless it is clear that a defendant was thereby denied his constitutional right to confrontation. Smith v. Illinois, 390 U.S. 129, 132, 88 S.Ct. 748, 19 L.Ed.2d 956 (1968); United States v. Haili, 443 F.2d 1295, 1299 (9th Cir. 1971); Enciso v. United States, 370 F.2d 749 (9th Cir. 1967). The court in its discretion may limit cross-examination in order to preclude repetitive questioning, upon determining that a particular subject has been exhausted, or to avoid extensive and time-wasting exploration of collateral matters. See, e.g., United States v. Zane, 495 F.2d 683, 695 (2d Cir. 1973); United States v. Miller, 463 F.2d 600 (1st Cir. 1972). The trial court has a duty to control cross-examination to prevent it from unduly burdening the record with cumulative or irrelevant matter. Alford v. United States, 282 U.S. 687, 694, 51 S.Ct. 218, 75 L.Ed. 624 (1931); United States v. Carrion, 463 F.2d 704, 707 (9th Cir. 1972). This duty includes a specific duty to prevent counsel from confusing the jury with a proliferation of details on collateral matters. United States v. Carrion, 463 F.2d at 707. See also Fed.R.Evid. 403 and 608(b). F. ACCESS TO AND ADMISSIBILITY OF EXCULPATORY EVIDENCE Apparently two pages of notes made by prosecutor Rathje of an interview with Fred Levin, a government witness, were supplied to the defense and used by the defense in cross-examination. The government then offered the notes as evidence. Defendants objected. They wanted the notes to be censored before submission to the jury. Later the government withdrew the offer. The exhibit was never reoffered by defense counsel. The alleged error was not preserved for appellate review. This is certainly not a situation, as suggested by defense counsel, where the government has withheld or suppressed exculpatory material as was the case in Brady v. Maryland, 373 U.S. 83, 86-88, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963). See United States v. Agurs, 427 U.S. 97, 107-14, 96 S.Ct. 2392, 49 L.Ed.2d 342 (1976). Appellant Lichtig says his constitutional rights were infringed by the government’s failure to disclose a pretrial agreement (in a companion civil action) between the trustee in reorganization and the previously mentioned Lowell which allegedly absolved Lowell of civil liability in the Equity Funding litigation. Here, the verdict of the jury was returned on May 20,1975, defendants were sentenced on July 14, 1975, and appeals were taken on July 24, 1975. Lichtig claims he discovered the existence of the agreement on May 7, 1976, almost a year after the conclusion of the trial. However, the record on appeal does not contain any evidence of the agreement or of the government’s knowledge that such an agreement existed. The issue is therefore not properly before us. Lichtig also complains of the denial of his oral motion during the trial for an order requiring the government to lodge all SEC transcripts and statements and interviews with witnesses by the Federal Bureau of Investigation, the postal service, or anyone else that were in the possession of the United States Attorney, for the court’s examination to ferret out possible Brady material. As the Supreme Court noted in United States v. Agurs, 427 U.S. at 106, 96 S.Ct. at 2399, a request “for ‘all Brady material’ or for ‘anything exculpatory’ ” is equivalent to no request at all. The trial judge need not accord the slightest heed to such a shotgun approach. This attempt to create error has as little merit as the one preceding it. G. DISQUALIFICATION OF U. S. ATTORNEY’S OFFICE Appellant Block asserts error in the refusal of the trial judge to disqualify the United States Attorney’s office from prosecuting the case. An attorney employed by the law firm of Nelson, Liker & Merrifield while that firm represented Weiner and Block in connection with matters arising out of the Equity Funding fraud left the firm and went to work for the SEC. Appellant suggests, but the record does not confirm, close cooperation between the SEC and the Department of Justice in the management of this prosecution. In order to disqualify the U.S. Attorney’s office, the court would first have to impute to the former private attorney knowledge of the Equity Funding litigation possessed by other members of his former law firm. Second, the court would have to impute this same knowledge to the other attorneys at the SEC. And third, the court would have to impute all SEC knowledge to the office of the United States Attorney by virtue of the alleged cooperation between the Department of Justice and the SEC. The first step of the exercise may be possible (see Laskey Brothers v. Warner Brothers Pictures, Inc., 224 F.2d 824, 826-27 (2d Cir. 1955)), but the logic thereafter becomes tenuous. Problems concerning the imputation of knowledge to government attorneys are sui generis. A free flow of information may be assumed to exist within a law partnership, but the size and diversity of many government agencies makes similar assumptions about agencies wholly unrealistic. See United States v. Standard Oil Co., 136 F.Supp. 345, 360-63 (S.D.N.Y.1955). There is nothing in the record before us to support a finding that the named employee of the SEC ever investigated or passed upon the subject matter of the instant case, or that information pertaining to this case ever reached him. Cf. General Motors Corp. v. City of New York, 501 F.2d 639, 651 (2d Cir. 1974). As this court noted in Gas-a-Tron of Arizona v. Union Oil Co., 534 F.2d 1322, 1325 (9th Cir. 1976), we will not disturb the district court’s exercise of its discretion in dealing with challenges to government attorneys as long as the record reveals no sound basis for disqualification. The record in this case supports the district court’s refusal to disqualify the United States Attorney’s office. H. COCONSPIRATOR HEARSAY EXCEPTION The government originally charged twenty-two defendants on 105 counts. Twenty-two of those counts involved Weiner, Lich-tig, and Block. Count 1 alleged a conspiracy between Weiner, Lichtig, Block and some of the other defendants. Two counts involving Weiner, Lichtig, and Block were dismissed after presentation of the prosecution’s case in chief. At the close of all the evidence, the government withdrew two other counts — the conspiracy charge and a mail-fraud charge (Counts 1 and 2). The court dismissed those counts, leaving sixteen counts (Counts 6, 10-14, and 75-84) for presentation to the jury. At the time the conspiracy count was withdrawn, the defendants moved to strike all testimony admitted under the coconspir-ator exception to the hearsay rule. Previous timely exceptions had been made to the admission of the testimony. The motions were denied. Appellants now contend that the dismissal of the conspiracy count by the court made inadmissible all statements previously received under the exception. Alternatively, they claim that even if there was no absolute bar to the testimony, it was inadmissible because the standards of admissibility under the exception had not been met since there was insufficient proof aliunde of the conspiracy and defendants’ connection with it. Defendants’ first contention, that the mere dismissal of the conspiracy count mandated striking all testimony previously i admitted under the hearsay exception, is frivolous. The eventual submission of the charge does not determine the admissibility of the evidence. This circuit has established that coconspirator hearsay is admissible only when a foundation is laid to show that: (1) the declaration was in furtherance of the conspiracy, (2) it was made during the pendency of the conspiracy, and (3) there is independent proof of the existence of the conspiracy and of the connection of the declarant and the defendant to it. United States v. Snow, 521 F.2d 730, 733 (9th Cir. 1975), cert. denied, 423 U.S. 1090, 96 S.Ct. 883, 47 L.Ed.2d 101 (1976). See also United States v. Testa, 548 F.2d 847, 852 (9th Cir. 1977); United States v. Calaway, 524 F.2d 609, 612 (9th Cir. 1975), cert. denied, 424 U.S. 967, 96 S.Ct. 1462, 47 . L.Ed.2d 733 (1976); Carbo v. United States, 314 F.2d 718 (9th Cir. 1963), cert. denied, 377 U.S. 953, 84 S.Ct. 1626, 12 L.Ed.2d 498 (1964). It is not necessary for a charge of conspiracy to have been brought in order for coconspirator hearsay to become admissible. Dutton v. Evans, 400 U.S. 74, 91 S.Ct. 210, 27 L.Ed.2d 213 (1970); United States v. Williams, 435 F.2d 642 (9th Cir. 1970), cert. denied, 401 U.S. 995, 91 S.Ct. 1241, 28 L.Ed.2d 533 (1971); Lee Dip v. United States, 92 F.2d 802, 803 (9th Cir. 1937), cert. denied, 303 U.S. 638, 58 S.Ct. 526, 82 L.Ed. 1099 (1938). Nor is the exception limited to trials where coconspirators are also codefendants. United States v. Randall, 491 F.2d 1317 (9th Cir. 1974); United States v. Williams, supra. The trial judge initially decides whether the declarations of coconspirators are admissible. There is no set order of proof. The admission of the evidence subject to a motion to strike because of the insufficiency of proof of the necessary preliminary facts is well within the trial judge’s discretion. United States v. Testa, 548 F.2d at 852; United States v. Knight, 416 F.2d 1181, 1185 (9th Cir. 1969). In this case the disputed statements were clearly made during and in furtherance of the conspiracy. The only question is whether there was sufficient independent evidence of a conspiracy and the defendants’ connection to it. The quantum of independent proof necessary for the application of the coconspirator hearsay exception is sufficient, substantial evidence to establish a prima facie case that the conspiracy existed and that the defendant was a part of it. Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942); United States v. Testa, 548 F.2d at 853; United States v. Calaway, 524 F.2d at 612; United States v. Spanos, 462 F.2d 1012 (9th Cir. 1972); Carbo v. United States, supra. Once the existence of a conspiracy has been established, independent evidence is necessary to show prima facie the defendant’s connection with the conspiracy, even if the connection is slight. United States v. Freie, 545 F.2d 1217, 1221-22 (9th Cir. 1976), cert. denied, 430 U.S. 966, 97 S.Ct. 1645, 52 L.Ed.2d 1645 (1977); United States v. Knight, supra. Several officers and officials of Equity Funding who had pleaded guilty, including Jerome Evans, Treasurer until 1968, the earlier-mentioned Samuel Lowell, Controller, and Michael Sultan, Assistant Controller, testified for the prosecution. Other Equity Funding employees, and auditors and SEC examiners who had reviewed the company’s financial records after discovery of the fraud also testified. It is undisputed that the financial records of Equity Funding did not accurately reflect the financial condition of the company and its subsidiaries. Testimony about particular fraudulent financial transactions and recordkeeping abounds in the record. For example, both Sultan and Lowell testified about the purchase of Investors Planning Corporation of America (Investors Planning) in 1969. The total cost of the acquisition was approximately $10 million, $2 million assigned to book value and approximately $8 million to excess cost that included the value of the sales force acquired and of the contractual plans acquired. Thereafter, because of a shortfall in the Funded Loans and Receivables Account, the prime source of the company’s paper profit, it was decided to revalue the future premiums due under an account entitled “Clients Contractual Receivables,” which allegedly represented the trail commissions due on the Investors Planning programs. In order to substantiate the transaction, Stanley Goldblum, the president of Equity Funding, wrote a letter to the auditors informing them that a sale was in process and that he would personally guarantee a purchase of the trail commissions for close to the amount of the recorded value. After debits for commissions payable, Equity Funding increased its paper income by over $13 million by this accounting treatment of the contractual commissions. No real sale was anticipated. Lowell and Sultan testified that $2 million in funds from Equity Funding was routed through two shell corporations in Europe and then paid back to Equity Funding as the supposed down payment on the purchase. Thus, Equity Funding paid itself, and the value recorded was never received. Other improprieties testified to by various Equity Funding employees included falsification of confirmations for various assets claimed by Equity Funding. Another example was the insertion of a $2 million plug in the total of the detail making up the Funded Loans Receivable portion of the Funded Loans and Accounts Receivable account. The $2 million did not appear on the computer printouts of the detail, but only in the total. In later years the detail sheets substantiated the total, but the full account numbers were not given and accounts were randomly duplicated within the detail until the desired sum was reached. In addition, various notes receivable were created with shell corporations, some of which continued on the books at full value even after the date of maturity despite nonpayment. The testimony of the various Equity Funding officials about their personal participation in and knowledge of the various schemes showed an obvious common purpose and practice intended to inflate falsely the reported value of Equity Funding. Auditors and examiners who reviewed the financial records under the direction of the company’s receiver and the SEC confirmed the testimony of the employees. The existence of a conspiracy to provide false information to the public and to the SEC is firmly established. Defendants’ second contention, that there was insufficient independent evidence of the connection of each defendant to the conspiracy, also fails. The record again supplies ample evidence upon which the trial judge could have determined that prima facie proof existed to establish the necessary connection of each defendant with the conspiracy. The lack of agreement between the financial statements and the actual finances of Equity Funding is relevant because each defendant, Weiner, Lichtig, and Block, was involved in at least one of the audits as an independent auditor. Weiner and Lichtig were responsible for the 1968 audit, and Weiner and Block were responsible for the audits prepared for 1969, 1970, and 1971. Lichtig became Treasurer of Equity Funding during the 1968 audit. Lichtig had bought shares of Equity Funding while still acting as an independent auditor. Defendants each had several meetings with Equity Funding officials involved in the financial manipulations. Frank West, a CPA employed by Wolfson, Weiner, Ratoff and Lapin, who worked on audits of Equity Funding from 1969 through 1972, and Samuel Lowell both testified to conversations with defendants about questionable transactions. The workpapers of defendants did not reveal requests for confirmation of the amount of collateral being used as security for outstanding funded loan programs, and for the amount of internally held funding programs. Various arithmetical calculations that were incorrect in the original worksheets or Equity Funding calculations were not corrected, even in one case where the worksheets revealed that the auditors were aware of the mistake. There was much give and take between Weiner, and later Block, and the Equity Funding officials in attempts to develop auditing methods that would show income in amounts the company felt was desirable. The responsibilities of defendants were also established by testimony regarding their own statements and actions. Extrajudicial declarations made by defendants themselves are not hearsay, but qualify as independent evidence. United States v. Calaway, 524 F.2d at 613; Klein v. United States, 472 F.2d 847 (9th Cir. 1973). Such evidence included (1) Block directing auditors working under him not to pursue certain areas that involved fraudulent or falsified information despite the auditors’ requests for further information, and (2) Weiner suggesting accounting procedures that obscured Equity Funding’s true financial situation. Independent evidence to connect defendants with the conspiracy for the purpose of admitting the hearsay declarations was abundant. Some of the evidence is circumstantial; but circumstantial evidence can provide the necessary quantum of proof. United States v. Calaway, 524 F.2d at 612. Once the judge determines that the hearsay evidence is admissible, the weight to be given that evidence becomes a question for the jury. United States v. Ragland, 375 F.2d 471 (2d Cir. 1967), cert. denied, 390 U.S. 925, 88 S.Ct. 860, 19 L.Ed.2d 987 (1968); Carbo v. United States, 314 F.2d at 737. We hold that the evidence heard under the coconspirator hearsay exception to the hearsay rule was properly admitted. A pri-ma facie case was made for the existence of a conspiracy and the involvement of the particular defendants in it. Defendants further contend that the testimony of Lowell, Sultan, John Templeton (who served as Controller of Equity Funding from 1968 to 1969), and others concerning extrajudicial declarations by Goldblum violated their right of confrontation because the prosecution never called Gold-blum as a witness. Goldblum was called by the defense but refused to testify after asserting his Fifth Amendment right against self-incrimination. Goldblum’s extrajudicial statements were admissible as discussed above under the coconspirator exception. The admissibility of evidence under the coconspirator exception, however, does not automatically demonstrate compliance with the confrontation clause. United States v. Snow, 521 F.2d 730, 734 (9th Cir. 1975), cert. denied, 423 U.S. 1090, 96 S.Ct. 883, 47 L.Ed.2d 101 (1976); United States v. Baxter, 492 F.2d 150 (9th Cir. 1973), cert. denied, 416 U.S. 940, 94 S.Ct. 1945, 40 L.Ed.2d 292 (1974). In Dutton v. Evans, supra, the Supreme Court dealt with a situation where a third party testified to a conversation with Evans’s codefendant, Williams, who was tried separately. Williams did not testify at Evans’s trial. The Court did not indicate whether Williams was available to testify, and did not address the issue. In dealing with the relationship between the cocon-spirator hearsay exception and the Sixth Amendment, the Court acknowledged that the confrontation clause does not bar the admission of all hearsay. 400 U.S. at 80, 91 S.Ct. 210. Although the hearsay rule and the confrontation clause have a similar basis, the two do not precisely overlap. 400 U.S. at 82, 91 S.Ct. 210, quoting from California v. Green, 399 U.S. 149, 155-56, 90 S.Ct. 1930, 26 L.Ed.2d 489 (1970). Under Dutton an analysis must be made to determine whether there are sufficient indicia of reliability to permit the introduction of the hearsay declarations in spite of the lack of opportunity for the defendant to cross-examine the declarant. United States v. Snow, supra, is instructive in this case. Snow contended that testimony by a DEA agent regarding declarations of a coconspirator denied his right of confrontation. The government argued that the defendant had been equally free to subpoena the declarant. We held that the testimony contained sufficient indicia of reliability to meet the Dutton v. Evans standards and that: “While it is unquestioned that the government has the burden of producing evidence showing the guilt of the accused beyond a reasonable doubt, it does not have the burden of calling every witness whose testimony would support a verdict of guilty, and it need not call a witness, equally available to both sides, merely because cross-examination of such a witness might prove helpful to the defense case.” United States v. Snow, 521 F.2d at 736. Goldblum was equally available to both sides during the trial, and was in fact called by the defense. He chose to assert his constitutional right against self-incrimination, and his testimony thus became unavailable to both sides. The failure of the prosecution to call Goldblum as its witness did not constitute grounds for reversal. Once Goldblum’s refusal to testify and his resulting unavailability are established and cross-examination is thus precluded, the next question is whether there are sufficient indicia of reliability to permit introduction of his declarations without violating the Sixth Amendment. «* * * The relevant factual inquiry is whether, under the circumstances, the unavailability of the declarant for cross-examination deprived the jury of a satisfactory basis for evaluating the truth of the extrajudicial declaration. * * * ” (Citations omitted.) United States v. Adams, 446 E.2d 681, 683 (9th Cir.), cert. denied, 404 U.S. 943, 92 S.Ct. 294, 30 L.Ed.2d 257 (1971). Mancusi v. Stubbs, 408 U.S. 204, 92 S.Ct. 2308, 33 L.Ed.2d 293 (1972); Dutton v. Evans, supra; United States v. Baxter, 492 F.2d at 177. Among the factors to be considered in determining the reliability of the hearsay declarations is whether the witness testifying would have had knowledge of the roles and identities of others within the conspiracy. Also significant is whether the witness’s recollection of the declarant’s statements is likely to be accurate and whether the declarant would have had any reason to have lied to the witness. The court must determine whether cross-examination of the declarant would be likely to show that the declarant’s statements were unreliable. Another important determination is whether the evidence is “crucial” or “devastating” to the defense. Dutton v. Evans, 400 U.S. at 87, 91 S.Ct. 210; United States v. King, 552 F.2d 833 (9th Cir. 1976), cert. denied, 430 U.S. 966, 97 S.Ct. 1646, 52 L.Ed.2d 357 (1977); United States v. Snow, 521 F.2d at 735; United States v. Adams, 446 F.2d at 684. Employing the Dutton approach, we hold that Goldblum’s declarations contained sufficient indicia of reliability and were properly admitted. Each of the witnesses testifying about Goldblum’s extrajudicial declarations was involved in the day-to-day running of the company. They were officers and employees of Equity Funding, and the conversations to which they testified were directed to the operation of the corporation and the maintenance of its financial records. The witnesses were talking from personal knowledge. Because of their positions within the company and, in some cases, within the conspiracy, it is unlikely that Goldblum would have been lying to them. The testimony of Lowell, Evans, and others who were among the original persons charged also contained statements against their own penal interests, a further badge of reliability. Finally, none of the declarations was “crucial” or “devastating.” There was abundant evidence regarding the manipulation of Equity Funding’s financial record-keeping, and the conversations with Goldblum were not a major component of proof against the defendants. In fact, so substantial was the other evidence that, even if error, the admission of Goldblum’s declarations would have been error harmless beyond a reasonable doubt. Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967); United States v. Adams, 446 F.2d at 684. I. ADMISSIBILITY OF LICHTIG WORKPAPERS Appellant Lichtig alleges error in the receipt in evidence of workpapers produced by Lichtig in 1968. He cites Gallego v. United States, 276 F.2d 914 (9th Cir. 1960). Nothing in Gallego supports this assignment of error. Lichtig contends that the chain of custody of the workpapers between 1968 and the trial was incomplete and that the workpapers themselves were incomplete. Assuming these insufficiencies, the trial judge has discretion to admit the workpa-pers into evidence if he “is satisfied that in reasonable probability * * * [they have] not been changed in important respects”; the jury is free to weigh the evidence according to its own evaluation of its authenticity. Gallego v. United States, 276 F.2d at 917; Williams v. United States, 381 F.2d 20 (9th Cir. 1967). This court said, in United States v. King: “It is the function of the trial court to determine whether proffered evidence has enough prima facie trustworthiness to warrant its consideration by the jury, and generally the sufficiency of a showing of authenticity of a writing sought to be introduced into evidence is a matter within the discretion of the trial judge. * * * ” 472 F.2d at 7. In this case, there was substantial testimony from witnesses who had used the work-papers or who knew the handwriting, identifying and authenticating the workpapers. The court did not abuse its discretion. See United States v. Brown, 482 F.2d 1226 (8th Cir. 1973). J. ALLEGED ERROR IN QUASHING SUBPOENA FOR THE “PARKER REPORT” Appellant Weiner alleges error in the court’s suppression of a subpoena duces te-cum for the Parker Report. The Parker Report resulted from an investigation made for the guidance and information of the attorneys retained by the accounting firm of Seidman & Seidman to defend numerous civil actions filed as a consequence of the Equity Funding fraud. Parker was a partner of Seidman & Seidman. Weiner, as noted earlier, was a partner of Seidman & Seidman at the time the report was prepared. Block also joined Seidman & Seidman in the merger with Wolfson, Weiner. Block’s attorney caused a subpoena duces tecum to be issued to the attorneys for Seidman & Seidman for a copy of the Parker Report. The Seidman & Seidman attorneys moved to quash or suppress the subpoena claiming attorney-client and work-product privileges. The motion to suppress Block’s subpoena was granted. With respect to Weiner, who assigns the error on appeal, the subpoena was never ruled upon. Action on the motion was withheld or suspended at Weiner’s request, and the motion was never thereafter properly brought before the court for action. There is no basis for an assignment of error. In the reply brief Weiner states: “Weiner had every reason to believe that the ‘Parker’ report contained totally exonerating information regarding his personal absence from all of the auditing functions at * * * [Equity Funding].” This speculation is unsupported by anything in the record. In the same brief, Weiner seeks to rely on United States v. Agurs, supra, and Brady v. Maryland, supra, to support this assignment of error. How prosecutorial misconduct in a Brady context can be inferred in this situation is not demonstrated. K. DENIAL OF BLOCK’S MOTION TO SUPPRESS HIS TESTIMONY BEFORE THE SEC Block contends that he was deprived of his right to counsel during his various appearances at investigative hearings before the SEC. More specifically, Block asserts that counsel who appeared with him during his testimony before the SEC, and upon whose advice he decided to testify, had a conflict of interest because the attorneys’ law firm represented certain accounting firms of which Block was a present or past employee at the same time the attorneys were appearing with Block. The trial court denied Block’s motion to suppress his testimony before the SEC, after finding that Block had not been deprived of his right to counsel and that he had voluntarily waived his right to be represented by his own attorney. It is firmly established that a party compelled to appear before an investigation by the SEC has a right to retain counsel. The Administrative Procedure Act, 5 U.S.C. § 555(b), provides in pertinent part: “A person compelled to appear in person before an agency or representative thereof is entitled to be accompanied, represented, and advised by counsel or, if permitted by the agency, by other qualified representative. A party is entitled to appear in person or by or with counsel or other duly qualified representative in an agency proceeding * * * This right to have an independent counsel can, however, be waived. See United States v. Kutas, 542 F.2d 527, 530 (9th Cir. 1976); United States v. Frame, 454 F.2d 1136, 1138 (9th Cir. 1972); Kaplan v. United States, 375 F.2d 895 (9th Cir. 1967). Here, the finding of waiver by the trial judge is amply supported by evidence. L. DENIAL OF SUPPRESSION OF BLOCK’S BANKRUPTCY TESTIMONY Block personally was adjudicated a bankrupt on November 14, 1973. He testified at the first meeting of his creditors on December 11, 1973, which was continued on January 7, 1974, and June 24, 1974. On January 7, 1974, Block refused to answer certain questions on Fifth Amendment grounds. The district court held Block to be in contempt. To purge himself of contempt, he then answered the questions. Prior to trial, Block moved for suppression of any evidence obtained by the government from the testimony given by him at those first meetings of his creditors. He based his motion on section 7(a)(10) of the Bankruptcy Act, 11 U.S.C. § 25(a)(10), which in pertinent part provides that the bankrupt shall: “ * * * [A]t the first meeting of his creditors, at the hearing upon objections, if any, to his discharge and at such other times as the court shall order, submit to an examination concerning the conducting of his business, the cause of his bankruptcy, his dealings with his creditors and other persons, the amount, kind, and whereabouts of his property, and, in addition, all matters which may affect the administration and settlement of his estate or the granting of his discharge; but no testimony, or any evidence which is directly or indirectly derived from such testimony, given by him shall be offered in evidence against him in any criminal proceeding, except such testimony as may be given by him in the hearing upon objections to his discharge * * * This immunity cast on the government the heavy burden of affirmatively showing that the evidence it intended to present was derived from a legitimate source wholly independent from Block’s bankruptcy testimony. Kastigar v. United States, 406 U.S. 441, 461-62, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972); Block v. Consino, 535 F.2d 1165, 1169 (9th Cir. 1976). The trial court denied Block’s motion to suppress, ruling that the government’s affidavits and testimony met the burden. Pri- or to its ruling, the court offered to allow Block to call additional witnesses in support of his motion if he presented a written summary showing how his testimony before the SEC differed from his bankruptcy testimony, and if he represented that those witnesses could give competent and relevant testimony. Otherwise, the court thought, there was nothing in the bankruptcy proceedings which was not covered before the SEC. Block’s counsel said a comparison of the SEC and the bankruptcy testimonies would be attempted. However, nothing was done to comply with the court’s suggestion, and Block did not raise the subject again. Block now contends that the district court improperly put the burden upon him to prove that the government’s evidence was tainted by use of his bankruptcy testimony. However, the record shows that the court first required the government to prove by affidavits and testimony that no government attorneys or personnel connected with them in this case had seen, read or used Block’s bankruptcy testimony, directly or indirectly, before denying the motion to suppress. We have reviewed the pertinent portions of the record in this appeal, and agree with the district court that the government met its burden under Kastigar. The court properly denied Block’s motion to suppress. M. PROPRIETY OF PROTECTIVE ORDER ISSUED IN BANKRUPTCY PROCEEDINGS While Block’s bankruptcy was in progress during the pendency of this criminal case in the district court, Equity Funding was also undergoing Chapter X bankruptcy proceedings in the same district court. Block’s bankruptcy was before Bankruptcy Judge Russell Seymour, and Equity Funding’s bankruptcy was before Bankruptcy Judge James Moriarty. Block obtained bankruptcy subpoenas from Judge Seymour under Rule 205, Rules of Bankruptcy, to examine 61 witnesses. Block’s acknowledged purpose in obtaining those subpoenas was to prepare for his criminal trial. Because two of those witnesses were located in Washington, D.C., Block initiated an ancillary proceeding in the bankruptcy court of that federal district pursuant to order of Judge Seymour, and subpoenas were issued there. Meanwhile, the trustee in reorganization for Equity Funding filed an application for a protective order to prevent the examination of the two District of Columbia witnesses, who had been lawyers for Equity Funding in connection with SEC matters. The trustee’s reason (among others) was that examination of those witnesses would unduly disrupt the reorganization proceedings. On recommendation of Judge Moriarty, the district court issued the protective order enjoining the enforcement of the District of Columbia Bankruptcy subpoenas. Block contends that the protective order deprived him of his right to prepare adequately for trial and his right to effective assistance of counsel. The district judge characterized this argument as frivolous. Bankruptcy Rule 205(d) provides: “The examination under subdivisions (a) and (b) of the rule may relate only to the acts, conduct, or property of the bankrupt, or to any matter which may affect the administration of the bankrupt’s estate, or to his right to discharge.” The rule pertains to preparation for bankruptcy proceedings only — not to preparation for defense of a criminal action, which was Block’s avowed purpose. The protective order did not purport to limit any right Block had under Fed.R.Crim.P. 15, 16, and 17 to use subpoenas, have discovery, and take depositions in connection with his criminal trial. We agree with the district judge that Block’s contention is frivolous. N. PROPRIETY OF CERTAIN COUNTS ON WHICH APPELLANTS WERE CONVICTED Lichtig contends that, as a matter of law, he could not have been convicted on Counts 6 and 10 through 14 because these six counts reallege by reference portions of Counts 1 and 2, which were dismissed before the case was submitted to the jury. Block and Weiner adopt this argument as to the relevant counts on which each of them was convicted. Count 1 charged Lichtig, Weiner, Block, and nineteen others with conspiracy to commit securities fraud by mail, in violation of 18 U.S.C. § 371. Count 2 charged all twenty-two defendants with securities fraud in violation of 15 U.S.C. §§ 77q(a) and 77x. Count 2 incorporated by reference certain informational paragraphs of Count 1. The six counts each consisted of two paragraphs, the first of which incorporated by reference all the allegations of Count 2 (except the last paragraph of Count 2, which pertained only to defendant Evans), and the second paragraph of which related a particular transaction wherein certain defendants, other than Lichtig, Weiner, and Block, used the mails. From these facts, Lichtig argues, reversal is required on the six counts because the first paragraph of each count merely realleges Counts 1 and 2, which no longer exist, and the second paragraph does not even refer to him. Lichtig overlooks the following: (1) Fed.R.Crim.P. 7(c)(1), which provides, “Allegations made in one count may be incorporated by reference in another count”; (2) settled law that the dismissal of one count of an indictment which is referred to in the remaining counts does not vitiate the remaining counts where, as here, the reference is sufficiently full to incorporate the matter from the dismissed count (Crain v. United States, 162 U.S. 625, 633, 16 S.Ct. 952, 40 L.Ed. 1097 (1896); United States v. Shavin, 287 F.2d 647, 650 (7th Cir. 1961); Barnard v. United States, 16 F.2d 451, 453 (9th Cir. 1926)); (3) settled law that one of several defendants may be charged with and convicted of a substantive offense when, as here, the evidence shows that he joined the conspiracy and that the substantive offense was committed in furtherance of the conspiracy, even if that defendant did not do and was not specifically aware of all the acts constituting the offense (Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946); see also United States v. Iannelli, 461 F.2d 483, 486 (2d Cir. 1972); United States v. Roselli, 432 F.2d 879, 894-95 (9th Cir. 1970)). O. SUFFICIENCY OF THE EVIDENCE Defendants contend that there was insufficient evidence to sustain their convictions. In our review we must take the evidence in “the light most favorable to the verdict.” United States v. Nelson, 419 F.2d 1237, 1241 (9th Cir. 1969); Glasser v. United States, 315 U.S. at 80, 62 S.Ct. 457; United States v. Hood, 493 F.2d 677, 680 (9th Cir.), cert. denied, 419 U.S. 852, 95 S.Ct. 94, 42 L.Ed.2d 84 (1974). Weiner was convicted of ten counts, Lichtig of thirteen, and Block of seven. Each defendant was sentenced to concurrent sentences on all counts. We need only find evidence sufficient to support conviction on one count for each defendant in order to sustain the verdicts under the concurrent-sentence doctrine. United States v. Valdovinos, 558 F.2d 531, 534 (9th Cir. 1977); United States v. Monroe, 552 F.2d 860, 865 (9th Cir. 1977); United States v. Rodriguez, 546 F.2d 302, 308 (9th Cir. 1976). We will, however, consider more than one count as to each defendant, because of the nature and complexity of the case. The counts under consideration may be divided into two groups. Counts 75, 78, 80, and 84 allege that one or more of the defendants “willfully made or caused to be made untrue statements of material fact” in various registration statements filed with the Securities and Exchange Commission. The allegedly false statements were that the firm of Wolfson, Weiner, Ratoff and Lapin had audited the financial statements of Equity Funding and its subsidiaries using generally accepted auditing standards (GAAS) and had found them to be in conformity with generally accepted accounting principles (GAAP). The second group, Counts 76, 77, 79, 81, 82, and 83 charge Lichtig, and others not tried here, with willfully making and causing to be made untrue or false and misleading statements of material fact or willfully omitting or causing to be omitted statements of material fact about specific accounts contained in the financial statements included in the registration statements filed with the SEC. These counts deal with errors in the actual amounts reported. These two groups of counts were treated together by the judge as the “false filing charges.” In his instructions to the jury he stated the three necessary elements that the prosecution must establish in order to warrant a conviction: “The first element is that the defendant under consideration in the specific document named in the count made or caused to be made a false statement of material fact, or, where alleged, omitted or caused to be omitted a material fact required to be stated therein or necessary to make the statements therein not misleading. “Counts 76, 77, 79 and 81 allege both false statements and omissions to make certain disclosures. The other counts allege only false statements. “The second element is that the document named in each respective count has been filed with one or more of the bodies named in the count. “The third element is that the defendant under consideration acted wilfully and, with respect to Counts 82, 83 and 84 that he additionally acted knowingly.” As previously stated, it is undisputed that the financial statements of Equity Funding failed to reflect the actual condition of the company. Thus, the first element is satisfied because the financial statements contained false statements of accounts. The connection of the defendants with the statements was shown by their individual responsibilities in relation to the audits. Each had a managerial role and had responsibilities for the overall audit and the final reports. Lichtig’s connection, when he was an officer of Equity Funding, was shown by his signature on each registration statement as the Executive Vice President with financial responsibilities. The second element is also easily shown, as each document in question bears proof on its face of filing with the SEC. The remaining inquiry is whether defendants approved of and concurred in the grossly misstated reports in the good faith belief that the statements were accurate representations or whether they knowingly and willfully acquiesced in the dissemination of false statements. See United States v. Colasurdo, 453 F.2d 585, 594 (2d Cir. 1971), cert. denied, 406 U.S. 917, 92 S.Ct. 1766, 32 L.Ed.2d 116 (1972); United States v. Simon, 425 F.2d 796 (2d Cir. 1969), cert. denied, 397 U.S. 1006, 90 S.Ct. 1235, 25 L.Ed.2d 420 (1970). In our discussion of intent in United States v. Kaplan, 554 F.2d 958 (9th Cir.), cert. denied,-U.S.-, 98 S.Ct. 483, 54 L.Ed.2d 315 (1977), we stated: “Credibility was for the jury. The jury had to resolve evidentiary conflicts and draw reasonable inferences therefrom. * * * An inference of criminal intent can be drawn from circumstantial evidence. * * * ” 554 F.2d at 964. (Citations omitted.) As we discuss below, there was sufficient evidence from which the jury coulj) find that defendants willfully and knowingly produced the documents containing erroneous information. 1. Sufficiency — An Overview Each group of counts charged similar acts in different years. An erroneously recorded transaction in one year often persisted into the following years. Our eount-by-count analysis is chronological, but in order to understand the full impact of particular actions a general examination is helpful. Equity Funding’s unorthodox bookkeeping began in the early sixties. Evidence of the manipulation before 1968 was presented to the jury. By 1968 a pattern had emerged in which the Funded Loans and Accounts Receivable asset account (FLAR) was being used as an umbrella account for numerous and varying false entries. Other accounts, both assets and liabilities, were inflated or created as needed to present the desired picture of a healthy, growing corporation. Weiner and Lichtig had audited the company since the early sixties. After Lich-tig became Equity Funding’s Executive Vice President, Block became the audit manager. They were thus involved with the company’s financial history almost from its inception. Weiner and Lichtig also helped engineer many of the “innovative” accounting techniques utilized over the years. Various Equity Funding officials testified to the falsity of the figures that appeared on the financial statements and to the fact that in many instances no backup papers supported the entries. Therefore, if the auditors had attempted to confirm the information given to them they would have been unable to do so. The lack of backup and supporting schedules would have been a clear indication that something was wrong. Since such backup often was not even fabricated, the jury could infer that the auditors either completely failed to audit the areas, in disregard of GAAS, or consciously failed to audit in “cooperation” with the Equity Funding officials, thus purposely avoiding the false entries. If the questionable areas had been audited and no backup found, the failure of the auditors to reflect that fact in their report would have clearly contravened GAAS and the purpose of an independent audit. After the fraud was discovered in 1973, Touche, Ross & Co. was appointed to audit the financial statements of Equity Funding in accordance with GAAS and GAAP. Touche, Ross & Co. made substantial adjustments after finding it impossible to confirm properly many of the recorded transactions or upon finding that mathematical calculations were erroneous. Many of the adjustments related to transactions that occurred years before. The total final adjustment to the FLAR account alone was a deduction of $62,305,353 to eliminate the items related to false or improper entries. The remaining valid balance was approximately $44,000,000. The testimony of William Simpson, an SEC accountant, further supported the findings of the auditors from Touche, Ross & Co., as did the testimony of the Equity Funding employees regarding the development of nonexistent assets. The sheer magnitude of the adjustment, and the length of time over which Weiner, Lichtig, and Block were involved with the company, warrants at first consideration a strong inference that the defendant auditors either were totally inept or, more likely, were at least partly aware of the false inflation of Equity Funding’s accounts. Our discussion of the FLAR and other accounts in the financial statement for 1968 through 1971 will detail the particular treatment of several items later found to be false. 2. The Audits a. 1968 At the beginning of the 1968 audit, Jerome Evans, Treasurer of Equity Funding, disappeared. The company’s books also vanished. John Templeton was appointed controller and, with the cooperation of Equity Funding employees and the auditors, attempted a reconstruction of the books. Starting from the unaudited third-quarter statement, they developed a yearly statement. • The FLAR account showed a balance of $36,311,037. The opposite liabilities account, Notes Payable and Funded Loans and Accounts Receivable, totaled $15,564,-629.29. The Consolidated Statement of Financial Condition that appeared in registration statements filed with the SEC on April 22, 1969, and December 31, 1969, contained these figures. Count 75 of the indictment alleges that defendants Weiner and Lichtig “willfully made and caused to be made untrue statements of material fact” in the April registration statement which stated that an independent audit of the financial statement using GAAS had found it to reflect truthfully the financial condition of the company and its operations and to have been prepared according to GAAP. Count 76 charges that Lichtig and another defendant “wilfully made and caused to be made untrue statements of material fact” or “wilfully omitted and caused to be omitted statements of material fact” in the December registration statement. The untrue statements were in the Accountant’s Report submitted to the SEC with the registration statement. The untrue facts and omissions were the erroneous reporting of various specific accounts contained in the financial statement and incomplete descriptions of certain accounts. There is no question about the inaccuracy of the figures contained in the financial statements. The necessary determination is whether there was sufficient evidence to support the jury’s verdict and the underlying finding that defendants had acted willfully and with knowledge in filing the incorrect financial data and certifying its reliability. The FLAR and Notes Payable Accounts contain references to footnote 4 in the Notes to the Consolidated Financial Statement, which states: “Under the method of operations of the company, this represents, in the aggregate, the amount that clients owe as a result of the various ‘funding programs’ offered by the company, together with loans and/or receivables where ‘funding programs’. have terminated and where the respective shares have not been liquidated as of December 31, 1968. “The Funded Loans and Accounts Receivable are offset, in part, by the Contra Notes Payable in Funded Loans and Accounts Receivable. The difference, in the amount of $20,746,408 is held by Equity Funding Corporation of America or one of its subsidiaries.” Contrary to the footnote, the FLAR was not composed only of sums related to the funding programs. Templeton had been unable to support the estimated figure for the FLAR with detail from funding programs in his original work and had been told that the discrepancy was due to the fact • that $13,500,000 included in the account represented reciprocal commissions (recip). At Templeton’s insistence, Weiner and Lichtig were informed of the inclusion of “recip” in the FLAR account. They were told it was necessary to place the item in the account because problems could arise if there were an open reporting of the funds. Lichtig and Weiner agreed to the inclusion of the amount without any confirmation. The inclusion of the “recip” in the FLAR account was misleading. The footnote for the account contains no indication that it represents any money other than that related