## Facts

- Robert Edwin Brown served as president of Buckeye Mines, Inc., and its subsidiaries Arizona-Florida Development Corporation (AFD) and Corona de Tucson.
- AFD was formed to develop land projects in Florida and Arizona; Corona de Tucson was involved in a land development south of Tucson.
- The government alleged Brown participated in offering and selling investment instruments and interests to investors through representations and solicitation materials.
- The prosecution’s theory was that these transactions involved securities and that Brown used misrepresentations and omissions in connection with their offer or sale, violating 15 U.S.C. § 77q(a).
- Brown was tried in a bench trial in the District of Arizona and convicted on ten substantive securities-fraud counts and one conspiracy count under 18 U.S.C. § 371.

## Issues

1. Whether certain substantive counts were time-barred under the applicable statute of limitations.
2. Whether the evidence was sufficient to support convictions on several substantive § 17(a) counts.
3. Whether criminal liability for § 17(a), through the Securities Act’s criminal penalty provision, required proof Brown knew the instruments were “securities.”
4. Whether the proof as to one count materially varied from the indictment, requiring acquittal.
5. Whether pre-indictment delay violated due process and required dismissal.
6. Whether the evidence was sufficient to support the conspiracy conviction under 18 U.S.C. § 371.

## Decision

- The Ninth Circuit affirmed the judgment on all counts.
- The challenged counts were within the limitations period when measured from completion of the offense conduct.
- The evidence on the contested substantive counts was sufficient for a rational factfinder to find guilt beyond a reasonable doubt.
- The government was not required to prove Brown had actual knowledge that the instruments were securities; it was enough that he willfully engaged in the fraudulent conduct proscribed by § 17(a).
- Any variance between indictment and proof on count 10 was not material and did not prejudice Brown’s substantial rights.
- Brown failed to show actual prejudice and improper governmental purpose from pre-indictment delay.
- The record supported the existence of a conspiracy, Brown’s knowing participation, and at least one overt act in furtherance of it.

## Legal Principles

- Appellate review of evidentiary sufficiency asks whether, viewing the evidence in the light most favorable to the government, a rational trier of fact could find guilt beyond a reasonable doubt.
- For criminal enforcement of 15 U.S.C. § 77q(a), “willfully” does not require proof the defendant knew the instruments were securities as a matter of legal classification; it requires intentional commission of the acts constituting the fraudulent conduct.
- A variance between an indictment and trial proof warrants relief only if it is material and prejudices substantial rights.
- Due process relief for pre-indictment delay requires (1) actual, non-speculative prejudice and (2) delay undertaken to gain tactical advantage or to harass.
- A conspiracy conviction under 18 U.S.C. § 371 requires proof of an agreement, knowing participation, and an overt act.

## Conclusion

The Ninth Circuit upheld Brown’s convictions for securities fraud and conspiracy, rejecting challenges based on timeliness, proof, and delay, and holding that criminal “willfulness” under the Securities Act does not require the defendant to know the instruments were legally classified as securities.


United States v. Brown, 578 F.2d 1280 (9th Cir. 1978)