Alstom Power, Inc. v. Balcke-Durr, Inc.
Pursuant to statute (§ 42-158 l[a]), effective October 1, 1999, "[a]ny provision in a construction contract or any periodic lien waiver issued pursuant to a construction contract that purports to waive or release the right of a . . . supplier engaged to perform services, perform labor or furnish materials under the construction contract to (1) claim a mechanic's lien, or (2) make a claim against a payment bond . . . shall be void and of no effect."
1. This court did not consider the merits of the plaintiffs claim that the trial court had applied an incorrect burden of proof to the plaintiff's application to dissolve the bond by bypassing the threshold inquiry into whether the defendant, as the obligee of the bond, could establish probable cause to sustain the validity of the mechanic's lien as required by statute (§ 49-37 [b] ), the plaintiff having waived the probable cause showing in the trial court.
2. The plaintiff could not prevail on its claim that the trial court improperly applied the parol evidence rule by excluding evidence that would have established that the parties' contract became effective before October 1, 1999; because there was no ambiguity as to the effective date of the parties' contract, it being apparent from the terms of the supply agreement that both parties intended that a subsequent purchase order, and not the supply agreement, would form the legally binding contract between them, the trial court properly determined that extrinsic evidence of conduct by the parties was inadmissible to vary the effective date of the agreement.
Application to dissolve or reduce a bond the plaintiff had substituted for a mechanic's lien filed by the defendant against certain real property located in the town of Killingly on which the plaintiff was to construct a power plant, brought to the Superior Court in the judicial district of Windham at Putnam, where the court, Cosgrove, J., granted the defendant's motion to stay the proceedings pending arbitration as to the claim for reduction of the bond; thereafter, the case was tried to the court on the issue of dissolving the bond; judgment denying the application to dissolve, from which the plaintiff appealed. Affirmed.
Ben A. Solnit, with whom, on the brief, was Gerald T. Giaimo, for the appellant (plaintiff).
Richard F. Wareing, with whom were Timothy T. Corey and, on the brief, Gary F. Sheldon, for the appellee (defendant).
This appeal arises out of the trial court's judgment denying the petition filed by the plaintiff, Alstom Power, Inc., to dissolve a bond substituted for a mechanic's lien filed by the defendant, Balcke-Durr, Inc. Following a hearing, the trial court concluded that, because the parties finalized the agreement at issue in this case after October 1, 1999, General Statutes § 42-158 l(a), which nullifies lien waiver provisions in construction contracts created on or after October 1, 1999, applied to nullify the mechanic's lien waiver signed by the defendant. On appeal to this court, the plaintiff claims that the trial court improperly: (1) shifted the burden of proof to the plaintiff in derogation of General Statutes § 49-37 (b)(5) by not requiring the defendant first to show probable cause to sustain the mechanic's lien; and (2) applied the parol evidence rule to exclude extrinsic evidence of conduct that would have established that the parties' agreement had been formed prior to October 1, 1999, and therefore was within the purview of § 42-158 l(a). The defendant maintains that the plaintiff explicitly waived its right to have the defendant proceed first at trial and further contends that the trial court properly excluded the extrinsic evidence pursuant to the parol evidence rule. We agree with the defendant on both claims, and we affirm the judgment of the trial court.
General Statutes § 42-158 l(a) provides: "Any provision in a construction contract or any periodic lien waiver issued pursuant to a construction contract that purports to waive or release the right of a contractor, subcontractor or supplier engaged to perform services, perform labor or furnish materials under the construction contract to (1) claim a mechanic's lien, or (2) make a claim against a payment bond, for services, labor or materials which have not yet been performed and paid for shall be void and of no effect."
General Statutes § 49-37 (b)(5) provides: "Upon the hearing held on the application or motion set forth in this subsection, the obligee on the bond shall first be required to establish that there is probable cause to sustain the validity of the lien. Any person entitled to notice under subdivision (1) of this section may appear, be heard and prove by clear and convincing evidence that the validity of the lien should not be sustained or that the amount of the lien claimed is excessive and should be reduced. Upon consideration of the facts before it, the court or judge may: (A) Deny the application or motion if probable cause to sustain the validity of the lien is established; or (B) order that the bond is void if (i) probable cause to sustain the validity of the lien is not established, or (ii) by clear and convincing evidence, the invalidity of the lien is established; or (C) order the amount of the bond reduced if the amount of the lien is found to be excessive by clear and convincing evidence."
The defendant also raises the following alternate grounds for affirmance: (1) that § 49 of the parties' long-term supply agreement provided that Swiss law exclusively governs their agreement and, under Swiss law, a prospective lien waiver made in a construction contract is not enforceable; (2) that the lien waiver provision contained in § 19.2 of the supply agreement is defective in that it does not identify specifically the property to which it applies; and (3) that the lien waiver provision does not bar the defendant's lien rights against the owners of the property on which the plaintiff's project was to be constructed. Because we affirm the judgment of the trial court, we do not need to consider these alternate grounds.
The following facts and procedural history are relevant to our resolution of this appeal. On July 5, 1998, ABB Power Generation, Ltd., a Swiss corporation and the predecessor in interest of the plaintiff, entered into a long-term supply agreement (supply agreement) with Balcke-Durr GmbH, a German corporation and the predecessor in interest of the defendant. The supply agreement functioned as an umbrella agreement; it created no project-specific contractual obligations, but set certain standards and parameters relating to equipment that the defendant, as the supplier, would manufacture and supply to the plaintiff for use in several power plant construction projects that the plaintiff was to undertake. The supply agreement did not obligate the plaintiff to purchase any equipment from the defendant. Section 6.1 of the supply agreement provided that an obligation to purchase equipment would be established by a purchase order issued by the plaintiff that was to be signed and returned by the defendant. Section 1 of the supply agreement also defined the following terms specifically: " `Acknowledgement' shall mean the [defendant's] final acceptance of the Purchase Order(s).  `Agreement' shall mean the Long Term Supply Agreement and Purchase Order(s) setting forth the Works, including all Documents incorporated therein by reference . . . [and]  `Purchase Order' shall mean the Document issued by [the plaintiff] and entitled `Order', by which the Agreement come[s] into effect and force." The supply agreement also contained the following lien waiver provision, set forth in § 19.2: "[The defendant] hereby waives for himself, his successors in interest and assigns, and for all subcontractors, vendors, suppliers, etc., their successors in interest and assigns for all claim or right of lien upon [the plaintiff's] or [its] Employer's property or any part thereof as a result of the furnishing of labour and/or material under the terms of the Agreement."
Although the supply agreement was executed by the parties' predecessors in interest, references herein to the parties' obligations under the supply agreement are to the plaintiff and the defendant.
Section 6.1 of the supply agreement provides in relevant part: "In any event, [the plaintiff] shall have the right to accept or reject any proposal made by the [defendant] in response to [the plaintiff's] request for quotation without incurring any liability whatever to the [defendant]. This Agreement shall not imply or create an obligation for both Parties to enter into any Purchase Order(s).
"Should [the plaintiff] accept the [defendant's] proposal, such acceptance shall remain conditioned upon [the plaintiff] and the [defendant] executing a Purchase Order on terms to be mutually agreed upon. . . ."
Section 1 of the supply agreement defines "`[w]orks'" as "all supplies and services to be rendered by the [defendant] under the Agreement, Purchasing Order(s) and/or Documents."
Pursuant to the supply agreement, the parties ultimately entered into five purchase orders for five power plant projects, including the project on Lake Road in the town of Killingly (Lake Road project). On September 27, 1999, the plaintiff issued a signed, proposed purchase order for the Lake Road project (Lake Road purchase order), to the defendant. The Lake Road purchase order provided: "Please indicate your acceptance of this order subject to the terms and conditions as shown on the face and reverse side and the required shipping schedule by signing after the words `accepted by' and returning this acknowledgement. . . ." The plaintiff also appended purchase order notes and plant-related purchase conditions to the Lake Road purchase order. The purchase order notes specifically provided that, "[the Lake Road purchase order] and its integrated specifications and documents constitute the entire agreement between [the plaintiff] and [the defendant] and replaces all previous and actual verbal or written communications and agreements." The defendant received the Lake Road purchase order and accompanying documents on October 7, 1999. The defendant thereafter modified the terms of the Lake Road purchase order, and returned a signed, acknowledged copy to the plaintiff on October 15, 1999.
In its letter of acknowledgment, the defendant noted that although the Lake Road purchase order was dated September 27, 1999, it had not been received until October 7, 1999, and therefore, by returning its acceptance on October 15, 1999, the defendant was still within the ten day period for responding set forth in the purchase order notes.
By the summer of 2000, the parties had commenced arbitration to resolve a dispute regarding the Lake Road project. Thereafter, on February 12, 2002, the defendant recorded a mechanic's lien against the property on which the Lake Road project was to be constructed to secure payment for labor, material and services in the amount of $17,004,142.82. The plaintiff then posted a surety bond in the amount of $20,400,000 as a substitute for the lien and, pursuant to § 49-37 (b)(1), filed an application in the Superior Court to dissolve or reduce the bond. The defendant moved to stay the plaintiff's application to dissolve or reduce the bond pursuant to General Statutes § 52-409, until resolution of the pending arbitration. The trial court granted the stay as to the claim for reduction, but denied the stay as to the requested dissolution of the bond. The trial court also ordered further memoranda and oral argument regarding whether the defendant effectively had waived its right to assert a mechanic's lien through the lien waiver provision contained in § 19.2 of the supply agreement.
"(1) The principal or surety on the bond, if no action to recover on the bond is then pending before any court, may make application, together with a proposed order and summons, to the superior court for the judicial district in which the action may be brought, or to any judge of the court, that a hearing be held to determine whether the lien for which the bond was substituted should be declared invalid or reduced in amount. . . ."
General Statutes § 52-409 provides: "If any action for legal or equitable relief or other proceeding is brought by any party to a written agreement to arbitrate, the court in which the action or proceeding is pending, upon being satisfied that any issue involved in the action or proceeding is referable to arbitration under the agreement, shall, on motion of any party to the arbitration agreement, stay the action or proceeding until an arbitration has been had in compliance with the agreement, provided the person making application for the stay shall be ready and willing to proceed with the arbitration."
Following the trial court's filing of a memorandum of decision on the defendant's motion to stay, the defendant requested a clarification of the decision. The trial court granted this motion and thereafter issued a memorandum of decision on the motion for clarification.
At oral argument before the trial court, the plaintiff claimed that the defendant, by the express terms of the lien waiver provision, had waived its right to file a mechanic's lien. The defendant maintained that § 42-158 l (a), which applies to construction contracts entered into on or after October 1, 1999, rendered the lien waiver provision "void and of no effect." The trial court concluded that, because the agreement between the parties was established on October 15, 1999, when the defendant returned the acknowledged Lake Road purchase order, § 42-158 l (a) did apply and rendered the lien waiver provision "void and of no effect." In reaching this conclusion, the trial court refused to admit evidence of conduct that had occurred prior to the defendant's acceptance of the Lake Road purchase order pursuant to the parol evidence rule. Accordingly, the trial court denied the plaintiff's application to dissolve the bond and rendered judgment in favor of the defendant.
We note that, although the trial court, in its memorandum of decision, concluded that "the plaintiff's application to discharge the defendant's mechanic's lien is denied," because the plaintiff had posted a bond as a substitute for the mechanic's lien, the trial court, in actuality, denied the plaintiff's application to dissolve the bond.
The plaintiff appealed from the trial court's judgment to the Appellate Court. We thereafter transferred the appeal to this court pursuant to General Statutes § 51-199 (c) and Practice Book § 65-1.
The plaintiff's first claim on appeal is that the trial court applied an incorrect burden of proof to its application to dissolve the bond substituted for the mechanic's lien. Specifically, the plaintiff claims that the trial court improperly bypassed the threshold inquiry into whether the defendant, as the obligee of the bond, could establish probable cause to sustain the validity of the lien as required by § 49-37 (b)(5), and instead proceeded directly to the merits of the plaintiff's case, that is, whether the plaintiff could prove by clear and convincing evidence that the bond should be dissolved. The defendant claims that the plaintiff cannot raise this issue on appeal because it waived the probable cause inquiry before the trial court. We agree with the defendant and therefore do not consider the merits of this claim.
See footnote 2 of this opinion.
Moreover, when evidence was presented to the trial court on the plaintiff's application to dissolve the bond, the plaintiff presented its witnesses first, before the defendant. Had the burden to establish probable cause been an issue at that point in the proceeding, the defendant would have presented evidence first to establish probable cause to sustain the mechanic's lien before the plaintiff presented its evidence challenging its validity. Accordingly, we conclude that the plaintiff waived the probable cause showing required under § 49-37 (b)(5), and we therefore decline to review the plaintiff's first claim.
The plaintiff next claims that the trial court improperly applied the parol evidence rule by excluding evidence that would have established, by clear and convincing evidence, that the parties' contract became effective prior to October 1, 1999. Specifically, the plaintiff claims that, because the parties' agreement was ambiguous as to its effective date, the trial court improperly failed to consider extrinsic evidence of the parties' conduct preceding the defendant's acceptance of the Lake Road purchase order on October 15, 1999. The defendant contends that both the supply agreement and Lake Road purchase order unambiguously established that a contract was formed when the defendant accepted the Lake Road purchase order on October 15, 1999, and, therefore, in the absence of any ambiguity, extrinsic evidence of conduct is inadmissible. We agree with the defendant that there was no ambiguity as to the effective date of the contract, and that the trial court properly excluded extrinsic evidence concerning the date when the contract was formed.
We note that the parties, through the supply agreement, define "`[a]cknowledgement'" as the defendant's "final acceptance of the Purchase Order(s)." Therefore, because, in this case, "acknowledgement" is synonymous with "acceptance," we refer to the defendant's October 15, 1999 letter acknowledging the Lake Road purchase order as an acceptance.
The plaintiff also claims that the extrinsic evidence should have been admitted because it merely modified an implied in fact contract that already was contemplated by the parties' conduct. Because the plaintiff did not distinctly raise this claim at trial, we decline to review it on appeal. See Practice Book § 60-5.
The following additional facts are necessary to resolve this issue. At trial, the plaintiff offered the following documents as evidence of conduct between the parties during August and September, 1999, as proof that a contract was formed prior to October 1, 1999. On August 27, 1999, the plaintiff issued to the defendant a limited notice to proceed, a notice specifically contemplated in the supply agreement. This document directed the defendant "to commence immediately with engineering, design and procurement of long lead time items and assignment of production slots . . . for the . . . Lake Road project." The parties subsequently conducted a "kick-off meeting," the minutes of which were entered into evidence, at which they discussed the start of engineering, as well as related technical issues. Following the meeting, the plaintiff issued a second limited notice to proceed. The defendant then issued a progress report on the Lake Road project covering the months of September and October, 1999. Finally, on October 12, 1999, the defendant submitted an invoice to the plaintiff for work completed in the amount of $1,886,550. Upon reviewing these proffers after the hearing, the trial court concluded that "[t]his evidence of conduct is contrary to the terms of [the] parties' written agreement. Accordingly, it is inadmissible under the parol evidence rule."
At the hearing on the application, the trial court admitted as full exhibits for consideration by the court all of the documents offered by the plaintiff. The trial court subsequently determined in its memorandum of decision that the documents were inadmissible under the parol evidence rule.
"Ordinarily, [o]n appeal, the trial court's rulings on the admissibility of evidence are accorded great deference. . . . Rulings on such matters will be disturbed only upon a showing of clear abuse of discretion. . . . Because the parol evidence rule is not an exclusionary rule of evidence, however, but a rule of substantive contract law . . . the [defendant's] claim involves a question of law to which we afford plenary review." (Citations omitted; internal quotation marks omitted.) Harold Cohn Co. v. Harco International, LLC, 72 Conn. App. 43, 48, 804 A.2d 218, cert. denied, 262 Conn. 903, 810 A.2d 269 (2002).
The parol evidence rule "is premised upon the idea that when the parties have deliberately put their engagements into writing, in such terms as import a legal obligation, without any uncertainty as to the object or extent of such engagement, it is conclusively presumed, that the whole engagement of the parties, and the extent and manner of their understanding, was reduced to writing. After this, to permit oral testimony, or prior or contemporaneous conversations, or circumstances, or usages [etc.], in order to learn what was intended, or to contradict what is written, would be dangerous and unjust in the extreme. . . .
"The parol evidence rule does not of itself, therefore, forbid the presentation of parol evidence, that is, evidence outside the four corners of the contract concerning matters governed by an integrated contract, but forbids only the use of such evidence to vary or contradict the terms of such a contract. Parol evidence offered solely to vary or contradict the written terms of an integrated contract is, therefore, legally irrelevant. When offered for that purpose, it is inadmissible not because it is parol evidence, but because it is irrelevant. By implication, such evidence may still be admissible if relevant (1) to explain an ambiguity appearing in the instrument; (2) to prove a collateral oral agreement which does not vary the terms of the writing; (3) to add a missing term in a writing which indicates on its face that it does not set forth the complete agreement; or (4) to show mistake or fraud. . . . These recognized exceptions are, of course, only examples of situations where the evidence (1) does not vary or contradict the contract's terms, or (2) may be considered because the contract has been shown not to be integrated; or (3) tends to show that the contract should be defeated or altered on the equitable ground that relief can be had against any deed or contract in writing founded in mistake or fraud." (Citations omitted; internal quotation marks omitted.) Heyman Associates No. 1 v. Ins. Co. of Pennsylvania, 231 Conn. 756, 780-81, 653 A.2d 122 (1995). Generally, however, "we continue to adhere to the general principle that the unambiguous terms of a written contract containing a merger clause may not be varied or contradicted by extrinsic evidence." Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 503, 746 A.2d 1277 (2000).
With these principles in mind, we turn to the question of whether the contract between the plaintiff and the defendant was in fact ambiguous with regard to the date when the contract was formed. "A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction. . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract. . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms. A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity. . . . Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms." (Internal quotation marks omitted.) Id., 498.
Our review of the supply agreement and the Lake Road purchase order leads us to conclude that there was no ambiguity as to the effective date of the contract. The supply agreement sets forth the procedures necessary to consummate a binding contract, and unambiguously indicated that the parties did not intend to enter into a contract for the plaintiff to purchase equipment from the defendant until the defendant accepted a purchase order issued by the plaintiff. This is evident from § 6.1 of the supply agreement, which provides that "[t]his Agreement shall not imply or create an obligation for both Parties to enter into any Purchase Order(s)." (Emphasis added.) Moreover, § 6.1 establishes that, in the future, the plaintiff "shall have the right to accept or reject any proposal made by the [defendant]. . . ." Additionally, the supply agreement precisely defines each relevant term used in § 6.1 as they relate to each other. The definitions of both "`[a]greement'" and "`[a]cknowledgement'" in § 1 of the supply agreement reference "[p]urchase [o]rder(s)." Significantly, "[p]urchase [o]rder" is defined in § 1 as "the Document . . . by which the Agreement come[s] into effect and force." (Emphasis added.) Finally, § 5.1 of the supply agreement establishes the priority of documents in the event of an inconsistency with regard to their terms. Notably, that section provides that the purchase order takes precedence over all other documents, including the supply agreement.
Thus, it is apparent from the terms of the supply agreement that both parties intended that a subsequent purchase order, and not the supply agreement, would form the legally binding contract between them. In other words, the supply agreement unequivocally indicates that the parties did not intend to enter into a binding contract until such time as the plaintiff issued a purchase order and the defendant accepted that purchase order.
We turn next to the specific language of the Lake Road purchase order issued by the plaintiff and accepted by the defendant on October 15, 1999. The Lake Road purchase order explicitly directed the defendant to "indicate your acceptance of this order . . . by signing after the words `accepted by' and returning this acknowledgement. . . ." (Emphasis added.) We reiterate that the defendant unequivocally accepted the Lake Road purchase order issued by the plaintiff in its letter of October 15, 1999. It is axiomatic that acceptance of an offer creates a valid contract. Bridgeport Pipe Engineering Co. v. DeMatteo Construction Co., 159 Conn. 242, 246, 268 A.2d 391 (1970). Thus, we agree with the trial court that the parties formed an agreement on October 15, 1999, when the defendant accepted the Lake Road purchase order.
We further agree with the trial court that the Lake Road purchase order as accepted by the defendant on October 15, 1999, constituted the entire agreement between the parties. The purchase order notes provided that, "[the Lake Road purchase order] and its integrated specifications and documents constitute the entire agreement between [the parties] and replaces all previous and actual verbal or written communications and agreements." (Emphasis added.) Accordingly, we conclude that the language of this merger clause is conclusive evidence of the parties' intent to create a fully integrated agreement. Therefore, because we determine that the integrated agreement contains no ambiguity, we further conclude that the trial court properly determined that extrinsic evidence of conduct was inadmissible to vary the effective date of the agreement.


800America is committing an egregious financial fraud by falsifying virtually all of its reported revenues and millions in expenses and assets.
Rabi and Steeples - both criminal recidivists - are conducting an unregistered offering of 800America stock, engaging in insider trading by selling the stock into the market while knowing about their fraud, and misappropriating 800America assets.
800America is making misrepresentations in its public filings and a press release about Rabi's and Steeple's criminal pasts and about 800America's purported corporate officers.
2. Specifically, 800America is falsely reporting millions of dollars in fictitious sales, expenses, and assets. 800America accomplished the fraud by submitting fictitious bank statements and a falsified general ledger to its auditor. Some of the falsified bank statements also include bogus checks and deposit slips. The actual bank statements, however, do not support any of the fictitious sales or expenses. The scope of the fraud is massive relative to the size of the company. For example, the Commission has determined that 800America's general ledger contained at least $22,219,920 in fictitious sales in the 2001 calendar year -- more than 100% of the $21,401,169 in revenues 800America reported generating in its audited financial statements contained in its 2001 Form 10-KSB.
3. Second, Rabi and Steeples obtained large blocks of 800America stock through a purported S-8 registration and through a reverse-merger, placed the shares into their nominee accounts, and sold -- and continue to sell -- the stock to the investing public in unregistered offerings. Rabi and Steeples have accumulated at least 1,369,750 shares of 800America stock, and, through their nominee accounts, have sold at least 1,188,150 shares for $2,731,760.27, increasing 800America's float by 19.02 %. Some of the money raised in these unregistered offerings has gone back to 800America or its subsidiaries, and at least $330,105.00 has gone to Rabi and Steeples. 800America has not disclosed the unregistered stock sales or the misappropriation of 800America assets.
4. Third, on January 17, 2002, 800America issued a press release falsely denying that Rabi had a criminal past. In fact, on January 3, 1997, Rabi, using the alias Edward Rabie, pleaded guilty in Kentucky state court to charges of securities fraud, acting as an unregistered broker-dealer, and selling unregistered securities. To date, 800America has not disclosed Rabi's felony conviction. Beyond that, 800America's public filings contain other misrepresentations or omit material facts: (a) the Company's most recent 10-KSB identifies as officers or directors several individuals who either have left the Company or cannot be located by the Company; (b) the filings fail to disclose that Steeples is a de facto control person of the Company and has signatory authority over 800America's bank accounts; and (c) the Company's filings fail to disclose that on November 14, 1996, Steeples pleaded guilty to charges of delivering cocaine into a detention facility where prisoners are quartered.
5. The fraud is continuing. The Defendants are still opening nominee accounts, sending unregistered 800America securities into those accounts, and selling the unregistered securities to the investing public. The Defendants are still preparing and filing false financial statements. As recently as August 2002, Rabi certified false financial statements.
6. The Commission brings this action pursuant to the authority conferred upon it by Section 20 of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. § 77t(b), and Section 21(d) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78u(d), to temporarily, preliminarily, and permanently enjoin the Defendants as follows: (a) 800America, enjoining it from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c), 77q(a), and Sections 10(b), 13(a), and 13(b)(2) of the Exchange Act, 15 U.S.C. §78j(b) 15 U.S.C. §78m(a) and §78m(b)(2), and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder, 17 C.F.R. §§ 240.10b-5, 240.12b-20, 230.13a-1, and 240.13a-13; and (b) Rabi and Steeples, enjoining them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c), 77q(a), Sections 10(b), and 13(b)(5) of the Exchange Act, 15 U.S.C., §78m(b)(5), and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, 17 C.F.R §§ 240.10b-5, 240.13b2-1 and 240.13b2-2, and, pursuant to Section 20(a) of the Exchange Act, 15 U.S.C. § 77t(a), from violating as control persons Sections 17(a) of the Securities Act, 15 U.S.C. §77q(a), and Sections 10(b), 13(a) and 13(b)(2) of the Exchange Act, 15 U.S.C. § 78j(b) §§78m(a) and 78m(b)(2), and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder, 17 C.F.R. §§ 240.10b-5, 240.12b-20, 240.13a-1, and 240.13a-13, and from aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act, 15 U.S.C. §78m(a) and §78m(b)(2), and Rules 12b-20, 13a-1, and 13a-13 thereunder, 17 C.F.R. §§ 240.12b-20, 230.13a-1, and 240.13a-13.
7. In addition, the Commission is seeking an order appointing a receiver for 800America; expedited discovery; an accounting of each of the Defendants' assets; asset freezes against each of the Defendants; repatriation orders; disgorgement of all ill-gotten gains plus prejudgment interest; civil penalties; an order preventing the destruction of documents and evidence; and, against Rabi and Steeples interim and final penny stock and officer and director bars and a forfeiture of stock under their control.
8. The Defendants have engaged, and unless enjoined will continue to engage, directly or indirectly, in acts, practices, or courses of business, that constitute violations of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.
9. The Defendants have engaged, and unless enjoined will continue to engage, directly or indirectly, in conduct that constitutes violations of Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c).
10. Rabi and Steeples have engaged, and unless enjoined will continue to engage, directly or indirectly, in conduct that constitutes violations of Section 13(b)(5) of the Exchange Act, 15 U.S.C. §78m(b)(5), and Rules 13(b)(2)(A), 13(b)(2)(B), and 13(b)2-2 thereunder, 17 C.F.R §§ 240.13(b)(2)(A), 240.13(b)(2)(B), and 240.13(b)2-2.
11. 800America has engaged, and unless enjoined will continue to engage, directly or indirectly, in conduct that constitutes violations of Sections 13(a) and 13(b)(2) of the Exchange Act, 15 U.S.C. §§78m(a) and 78m(b)(2), and Rules 12b-20, 13a-1, and 13a-13 thereunder, 17 C.F.R. §§240.12b-20, 240.13a-1, and 240.13a-13. Rabi and Steeples are liable for 800America's reporting violations as control persons. In the alternative, Rabi and Steeples have aided and abetted violations, and unless enjoined will continue to aid and abet violations, of Sections 13(a) and 13(b)(2) of the Exchange Act, 15 U.S.C. §§78m(a) and 78m(b)(2), and Rules 12b-20, 13a-1, and 13a-13 thereunder, 17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-13.
12. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and 22(a) of the Securities Act, 15 U.S.C. §§ 77t(b), 77t(d) and 77v(a), and Sections 21(d), 21(e) and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d), 78u(e) and 78aa.
13. Venue lies in this Court pursuant to Section 22(a) of the Securities Act, 15 U.S.C. § 77v(a), and Section 27 of the Exchange Act, 15 U.S.C. § 78aa. Certain of the transactions, acts, practices and courses of business alleged herein occurred within the Southern District of New York. In particular, 800America maintains its executive office at 420 Lexington Avenue, New York, New York.
14. Defendants, directly or indirectly, have made use of the means or instrumentalities of interstate commerce, the means or instruments of transportation or communication in interstate commerce, and/or the mails, in connection with the acts, practices and courses of business alleged herein.
15. 800America is a Nevada corporation, has an executive office in New York, and has operations at 1301 North Mount Juliet Road, Mount Juliet, Tennessee. 800America became a public company in July 1999, when World House Entertainment, a public shell company, issued 10,000,000 shares of restricted common stock to acquire all of the issued and outstanding common stock of 800America, Inc. and renamed itself 800America.com, Inc. 800America's common stock is registered with the Commission pursuant to Section 12(g) of Exchange Act, 15 U.S.C. §78l(g), and is traded on the OTC Bulletin Board.
16. 800America purports to own and operate several Internet websites that retail various products, particularly clothing, or that provide links to websites of other retailers. 800America's public filings claim that 800America operates "one of the world's busiest and most popular Web-based trading communities, and has several operating divisions representing both e-commerce companies and technology businesses." 800America reports having the following subsidiaries: InShop.com, Internet Web Guide Magazine, Inc., Rothman Closeouts, Fileshooter.com, Inc., Ebiz 4Biz.com, IRSpayment.com, cs-live, Igain, Inc., YouTopia.com, and One Two Click.
17. Rabi, age approximately 62, is the Chief Executive Officer, the Chief Financial Officer, a Director, and the majority shareholder of 800America. Rabi also served as 800America's President for most of the period from July 9, 1999 through January 2002. Rabi controls 50.6 % of 800America's outstanding common stock, mostly through the 9,308,000 shares he controls in a purported trust named American Deductible, Inc. ("American Deductible"). On January 3, 1997, Rabi pleaded guilty in McCracken County, Kentucky, to state felony charges of securities fraud, acting as an unregistered broker-dealer, and selling unregistered securities. Rabi was sentenced to four years imprisonment, which was commuted, based on the four years Rabi had already served in Tennessee state prison fighting extradition to Kentucky on these charges. Although not part of his plea, the grand jury that indicted Rabi charged him as a Persistent Felony Offender because Rabi had allegedly been convicted of financial fraud in Israel, Italy, Monaco and New York, using various aliases.
18. Steeples, age 55, is not disclosed as having any affiliation with 800America in 800America's public filings, but is acting as an undisclosed control person of the Company. Among other things, she controls some of 800America's bank accounts, and represents that she is 800America's secretary, both in her own name and under the alias "Ruth Walley." On November 14, 1996, in Nashville, Tennessee, Steeples pleaded guilty to delivering cocaine into a detention facility where prisoners are quartered. Steeples was sentenced to six years imprisonment for this conduct, and was incarcerated from January 1, 1997 to November 24, 1999.
19. To create the image of a vibrant enterprise, the Defendants have fraudulently reported millions in fictitious earnings, revenues, expenses, and assets. To conceal the true results, 800America, through Rabi and Steeples, created fictitious periodic statements purportedly from Wilson Bank and Trust in Mount Juliet, Tennessee ("Wilson Bank"), a falsified general ledger, and phony advertising invoices, and submitted them to the Company's auditor, Jack F. Burke Jr. of Hattiesburg, Mississippi. These falsified documents show large credits and debits that appear nowhere in the actual bank statements.
22. The falsified Wilson Bank statements support the debits by identifying purported checks that do not appear on the actual statements.
23. 800America, Rabi and Steeples, using the alias Ruth Walley, provided 800America's auditors with the false financial information, including the phony bank statements, phony checks, phony advertising invoices, and the fake general ledger.
(a) 800America intentionally and materially misstated its earnings, revenues, and expenses in its Form 10-QSB, filed with the Commission on August 15, 2001, for the quarter ending on June 30, 2002 ("2002 Q2 10-QSB"). A comparison of the general ledger, the false bank statements and the real bank statements shows that 800America reported at least $8,428,345 in fictitious sales during the second quarter of 2002 - more than all of the $7,641,048 in revenues 800America reported generating in its 2002 Q2 10-QSB.
(b) 800America's general ledger also contains $2,225,000 in bogus advertising expenses during the second quarter of 2002. The fabricated advertising expenses amount to 99% of the $2,226,000 in advertising expenses reported in 800America's 2002 Q2 10-QSB, and 56% of the $3,938,905 in total expenses reported in 800America's 2002 Q2 10-QSB. The general ledger also contained $1,214,528 in fake payments to the IRS during the second quarter of 2002.
(a) 800America intentionally and materially misstated its earnings, revenues, and expenses in its Form 10-QSB, filed with the Commission on May 20, 2002, for the quarter ending on March 31, 2002 ("2002 Q1 10-QSB"). A comparison of the general ledger, the phony bank statements, and the real bank statements shows that 800America reported at least $7,737,268.13 in fictitious sales during the second quarter of 2002 - 99% of the $7,768,164 in revenues 800America reported generating in its 2002 Q1 10-QSB.
(b) 800America's general ledger also contains $2,300,000 in bogus advertising expenses during the first quarter of 2002. The fabricated advertising expenses amount to 100% of the $2,300,000 in advertising expenses and 50% of the $4,563,607 total expenses reported in its 2002 Q1 10-QSB. 800America's general ledger contained at least $22,219,920 in fictitious sales in the 2001 calendar year -- more than 100% of the $21,401,169 in revenues 800America reported generating in audited financial statements contained in its 2001 10-KSB.
(a) 800America intentionally and materially misstated its earnings, revenues, and expenses in its Form 10-KSB, filed with the Commission on April 12, 2002, for the fiscal year ending December 31, 2001 ("2001 10-KSB"). A comparison of the actual bank statements, the fake bank statements, and the general ledger shows that 800America reported at least $22,219,920 in fictitious sales in the 2001 calendar year -- more than 100% of the $21,401,169 in revenues 800America reported generating in audited financial statements contained in its 2001 10-KSB. Similarly, 800America's general ledger contains $4,159,003.81 in bogus advertising expenses in 2001. The fabricated advertising expenses amount to 94% of the $4,443,249 in advertising expenses and 44% of the $9,446,174 in total expenses reported by 800America in its 2001 10-KSB.
(a) 800America also intentionally and materially misstated its earnings, revenues, and expenses in its Form 10-KSB, filed with the Commission on March 29, 2001, for the fiscal year ending December 31, 2000 ("2000 10-KSB"). A comparison of the actual bank statements, the fake bank statements, and 800America's general ledger shows that 800America reported at least $5,828,642 in fictitious sales in the 2000 calendar year - 36% of the $15,980,529 in revenues 800America reported generating in audited financial statements contained in its 2000 10-KSB.
(b) 800America's 2000 general ledger also contained $1,777,250 in bogus advertising expenses. The fabricated advertising expenses amount to 100% of the $1,777,250 in advertising expenses and 14% of the $12,866,629 total expenses reported by 800America in its 2001 10-KSB. 800America's 2000 general ledger contains other false expense entries, including hundreds of thousands of dollars in fictitious payments to the IRS.
25. In sum, since at least the first quarter of 2000, much of 800America's reported revenues and reported advertising expenses were fictitious. Since at least January 1, 2001, virtually all of 800America's reported revenues were fictitious. As the CEO and a Director of the Company, Rabi signed each of the Company's filings, including the filings listed in paragraph 24 hereof.
26. Rabi and Steeples knew, or were reckless in not knowing, of the misrepresentations made to 800America's auditors and in 800America's public filings described in paragraph 24 above, and thus to the investing public. On August 15, 2002, 800America filed a certification of 800America's 2002 Q2 10 QSB signed by Rabi. Rabi knowingly and willfully certified the 2002 Q2 10-QSB knowing that the periodic report accompanying the 2002 Q2 10-QSB was materially false.
27. The Defendants also intentionally materially misstated 800America's assets. To convince its auditor of the fictitious assets, the Defendants provided the auditor with fictitious bank statements showing large cash balances.
28. For example, 800America reported having $13,201,125 in cash and $13,573,598 in total assets in its 2001 10-KSB. 800America provided its auditor with a fake Citibank account statement for the period December 11, 2001 through January 9, 2002 that stated that as of December 31, 2001, 800America's Citibank account number 619508 contained $12,669,962.70 in cash. However, the actual statement for Citibank account number 619508 shows that during that period, the account never had more that $640.66. Accordingly, at least 96% of the cash assets and 93% of the total assets reports in 800America's 2001 10-KSB were false.
B. Unregistered Fraudulent Offerings Through Nominee Accounts.
29. Rabi and Steeples are accumulating blocks of 800America stock through a purported S-8 registration and through shares obtained in 800America's reverse merger with World House Entertainment, a shell company. After issuing the stock, Rabi and Steeples place it in nominee Internet brokerage accounts. Rabi and Steeples then sell the stock to the public and send the proceeds to accounts controlled by 800America, Rabi, or Steeples. To date, Rabi and Steeples have sold at least 1,188,150 shares of 800America stock for $2,731,760.27.
Each of the accounts identified in this paragraph 30 are nominee accounts controlled by Rabi or Steeples.
31. With the exception of the Steeples account, the majority of the proceeds of the bogus S-8 stock sales are transmitted to 800America or one of its subsidiaries. Steeples sends most of the proceeds to Accurate Business Forms, a company controlled by Steeples and Rabi, and some proceeds to her own checking account and to Rothman Closeouts, a subsidiary of 800America.
32. Rabi also obtained control of at least 389,750 shares of 800America stock as a result of 800America's reverse-merger with World House Entertainment. The shares were deposited in an account at E-Trade in the name of Clyta Debenham ("Debenham"), which, in fact, was a nominee account for Rabi. At least 374,750 shares of 800America stock were sold from the Debenham account for a total of $752,672.89. Between April 2001 and September 2002, at least $621,900.00 was transferred from the Debenham account to accounts under Rabi's and Steeple's control: $371,200.00 was sent to Rothman Closeouts, $242,200.00 was sent to 800America, and $8,500.00 was sent to InShop.com, a subsidiary of 800America.
33. Rabi, as 800America's Chief Executive Officer, Chief Financial Officer, and as a director of 800America, was an insider of 800America, and he owed a duty to keep confidential, and not use for personal gain, material, nonpublic information concerning 800America.
34. Steeples was an undisclosed control person of 800America. Steeples held herself out as the Secretary for 800America. Steeples, consequently, was an insider of 800America, and owed a duty to keep confidential, and not use for personal gain, material, nonpublic information concerning 800America.
35. Rabi and Steeples sold their undisclosed stock holdings while in possession of material nonpublic information, namely, that 800America's reported earnings, revenues, expenses, and assets were fictitious, as alleged in paragraphs 19 through 28. Through these sales, Rabi and Steeples breached their fiduciary duties to 800America or similar duties arising out of relationships of trust and confidence with 800America.
36. Rabi knew, or was reckless in not knowing, that he was breaching a fiduciary duty, or other similar duty arising out of a relationship of trust and confidence with 800America, by selling 800America common stock while using material, nonpublic information concerning 800America.
37. Steeples knew, or was reckless in not knowing, that she was breaching a fiduciary duty, or other similar duty arising out of a relationship of trust and confidence with 800America, by selling 800America common stock while using material, nonpublic information concerning 800America.
38. Rabi and Steeples also are misappropriating assets from 800America. For example, after Rabi sent the proceeds of the "Debenham" stock sales to Rothman Closeouts, Rabi transferred $261,800 from a Rothman Closeouts account to an account he controls under the name American Deductible. Although 800America's public filings state that American Deductible is a trust for Rabi's children, it is actually a standard checking account where Rabi deposits his 800America paychecks. Rabi uses the American Deductible account as a personal bank account to pay his expenses, and the expenses of Steeples and Steeple's children. Rabi and Steeples have paid themselves and are continuing to pay themselves hundreds of thousands of dollars in salary while they are orchestrating the fraudulent scheme.
39. The evidence indicates that Rabi and Steeples are looting large sums of 800America assets. For example, on September 7, 2001 Rabi caused a transfer of approximately $4 million from 800America's bank account to three funds managed by Renaissance Capital Growth & Income Fund III, Inc. This withdrawal does not appear on 800America's 2001general ledger provided to the Commission staff by 800America's current auditor.
D. Rabi and 800America Made False Statements and Omissions About Rabi's Criminal Past and Have Failed To Disclose Rabi's Felony Securities Fraud Conviction.
40. On January 3, 1997, Rabi, using the name Edward Rabie, pleaded guilty to state felony charges of securities fraud, acting as an unregistered broker-dealer, and selling unregistered securities in McCracken County, Kentucky. The charges against Rabi stemmed from misrepresentations he made while selling securities of Onecard Health Systems Corporation ("Onecard"), a business he owned and controlled. Among other misstatements, Rabi misrepresented that Onecard had contracts with Blue Cross/Blue Shield, that Onecard was building a facility in Kentucky, that Onecard stock would be registered on the American Stock Exchange by July 1992, and that Onecard's liabilities totaled $148,535.00, when in fact Onecard's liabilities exceeded $600,000.00. Rabi was sentenced to four years imprisonment, which was commuted, based on the four years he had already served in Tennessee state prison fighting extradition to Kentucky on these charges. Although not part of his plea, the grand jury that indicted Rabi charged him as a Persistent Felony Offender because he had allegedly been convicted of financial fraud in Israel, Italy, Monaco and New York, using various aliases.
It has come to the attention of the Company through published reports and other information that one or possibly more persons who have names similar to our Chief Executive Officer may have been or were involved in or associated with activities of a criminal nature. The Company emphatically states that its Chief Executive Officer, Mr. David E. "Elie" Rabi, has never been convicted of any crime nor does he have any knowledge of the activities associated with the persons named in the published reports and other information. Mr. Rabi continues to serve in a full time capacity as the Company Chief Executive Officer.
E. 800 America Has Failed To Disclose The Departure Or Unavailability Of Most Of Its Purported Corporate Officers and That Steeples, Herself A Felon, Controls 800America's Bank Accounts.
Our success depends largely on the skills of David E. Rabi, our Chief Executive Officer, and certain other key management and technical personnel . . .. Our performance is also substantially dependant on the services and performance of our management team at the parent and subsidiary levels. The loss of Mr. Rabi or one or more of our other board members, key management and technical personnel may materially and adversely affect our business, results of operations and financial condition.
44. However, most of 800America's officers, directors and significant employees, are either no longer with 800America or are otherwise unavailable. By letter dated September 12, 2002, 800America represented to the Commission staff that Bobby Walley left 800America to become a missionary in the Ukraine. Darvin Pierce resigned as director of 800America on March 6, 2002 by sending an e-mail to Rabi. Counsel for 800America represents that it has been unable to locate Richard Sullivan, Jerry Kavoun, and Vincent Ren. In addition, Rabi claims to suffer from a debilitating illness that has forced him to forego appearing for testimony at the Commission three times. 800 America has not disclosed that most of its officers and directors are either not with the Company or otherwise unavailable.
[Steeples] illegally sent cocaine to her husband is prison, apparently with the intentions of allowing her husband to overdose on the drug so he would not have to stand trial. Also, since her husband's insurance policy apparently did not have a "suicide clause," [Steeples] was able to collect more than a half-million dollars as a result of her husband's death.
State v. Steeples, No. 01c01-9706-CR-00211, 1998 WL307963, at *8 (Tenn. Crim. App. June 12, 1998) (upholding decision to deny Steeples bail).
46. In addition, Steeples has assumed the identity of Ruth Walley, claiming to be Secretary of 800America under that name. The actual Ruth Walley died on July 23, 1997.
F. The Fraud Is Ongoing And 800America Is Obstructing the Commission's Investigation.
47. The fraud is ongoing. Rabi has switched transfer agents, opened new nominee accounts, and is liquidating his 800America holdings as soon as he puts stock into nominee accounts. In September 2002, brokerage accounts were opened in the names of Tillie Ruth Steeples and John Steeples, one of Steeples' children, at HMS Securities in Mount Vale, NJ, and Rabi opened another brokerage account in the name of 800America at HMS Securities. In the account opening documents, Rabi provided the same P.O. Box that was provided in brokerage account opening documents provided for the Steeples and Nissani brokerage accounts identified in paragraph 30 hereof.
48. In addition, Rabi and 800America have obstructed the Commission's investigation. For example, after being read privacy act disclosures, including the disclosure concerning criminal penalties for knowingly providing false information to the Commission, Rabi represented to the Commission staff (a) that he had no criminal background, and (b) that he had retained a private investigator to research the allegations, which he claimed was an attempt by market-makers to depress the price of 800America stock. Later, Rabi, through counsel, provided the name, address and phone number of the purported investigator. The Commission staff has determined that the investigator does not exist, that the address provided does not exist and that the phone number was a line at 800America.
49. In an initial response to the subpoena served upon him, Rabi indicated that he had not sold 800America stock for the past three years. As indicated above, Rabi in fact sold over 1 million shares of 800America stock through nominee accounts during this period.
51. The Commission repeats and realleges the allegations contained in paragraphs 1 through 50 by reference as if fully set forth herein.
52. Defendants, directly and indirectly, singly and in concert, knowingly or recklessly, by the use of the means or instruments of transportation or communication in, and the means or instrumentalities of, interstate commerce, or by the use of the mails, in the offer or sale, and in connection with the purchase or sale, of securities, have: (a) employed devices, schemes or artifices to defraud; (b) obtained money or property by means of, or otherwise made untrue statements of material fact, or omitted to state material facts necessary to make the statements, in light of the circumstances under which they were made, not misleading; and (c) engaged in transactions, acts, practices and courses of business which operated or would operate as a fraud or deceit upon purchasers of securities or other persons.
53. As part of and in furtherance of this violative conduct, the Defendants, directly or indirectly, made misstatements or omissions of material facts, including, but not limited to: misstatements of earnings, revenue, expenses and assets in 800America's 2002 Q2 10-QSB, 2002 Q1 10-QSB, 2001 10-KSB, and 2000 10-KSB; issuing a false press release about Rabi's criminal history; and omitting to disclose of material facts to the investing public through several public filings about Rabi's and Steeple's prior criminal records, and about the resignations or unavailability of most of its officers and directors. In addition, as part of and in furtherance of this violative conduct, Rabi and Steeples, directly or indirectly, made misstatements or omissions of material fact, including, but not limited to: failing to disclose that the proceeds of the S-8 issuances were going to 800America, Rabi, and Steeples; Rabi and Steeples selling 800America stock while in possession of material nonpublic information - namely, the falsity of the company's public filings and press releases; selling 800America stock at prices and in a market artificially maintained by the Defendant's misrepresentations; and failing to disclose their misappropriation of 800America assets.
54. The false statements and omissions made by Defendants, more fully described above, were material.
55. The Defendants knew, or were reckless in not knowing, that these material misrepresentations, more fully described above, were false or misleading.
56. By reason of the foregoing, the Defendants, directly or indirectly, singly or in concert, have violated, are violating, and, unless permanently enjoined, will continue to violate Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10-b-5.
57. The Commission repeats and realleges the allegations contained in paragraphs 1 through 56 by reference as if fully set forth herein.
58. Defendants, directly or indirectly: (a) made use of the means or instruments of transportation or communication in interstate commerce or of the mails to sell securities through the use or medium of a prospectus or otherwise; or carried securities or caused such securities to be carried through the mails or in interstate commerce, by means or instruments of transportation, for the purpose of sale or for delivery after sale; and (b) made use of the means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy, through the use or medium of any prospectus or otherwise, securities without a registration statement having been filed or being in effect with the Commission as to such securities.
59. The stock that Rabi and Steeples sold through nominee accounts was not properly registered with the Commission or subject to an exemption to the registration requirements of the Federal securities laws. Similarly, Rabi's resales of the stock he obtained and sold through the "Debenham" nominee account were not properly registered.
60. By reason of the foregoing, the Defendants violated, and unless enjoined, will again violate Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c).
61. The Commission repeats and realleges the allegations contained in paragraphs 1 through 60 by reference as if fully set forth herein.
62. 800America failed to file with the Commission, in accordance with the rules and regulations prescribed by the Commission, such annual reports as the Commission has prescribed and 800America failed to include, in addition to the information expressly required to be stated in such reports, such further material information as was necessary to make the statements made therein, in light of the circumstances in which they are made, not misleading, in violation of Section 13(a) of the Exchange Act, 15 U.S.C. § 78m(a), and Rules 12b-20 and 13a-1, 17 C.F.R. §§ 240.12b-20 and 240.13a-1. As described above, 800America's annual and quarterly reports were false and misleading, among other reasons, because most of the revenues and expenses charged were fictitious, and because the reports failed to disclose Rabi's and Steeple's prior felony convictions.
63. At all relevant times hereto, Rabi and Steeples each was a controlling person of 800America for the purposes of Section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a). Rabi and Steeples each, knowingly or recklessly, directly or indirectly, singly or in concert, engaged in fraudulent practices resulting in material overstatements of 800America's net income on its books and records and in financial statements included in its public filings.
64. By their conduct, previously alleged, Rabi and Steeples each, knowingly or recklessly, directly or indirectly, singly or in concert, engaged in fraudulent practices resulting in falsification of 800America's 2002 Q2 10-QSB, 2002 Q1 10-QSB, 2001 10-KSB, and 2000 10-KS .
65. By reason of the foregoing, 800America violated Section 13(a) of the Exchange Act, 15 U.S.C, §78m(a), and Rules 12b-20 and 13a-1, 17 C.F.R. 240.12b-20 and 240.13a-1; and unless it is enjoined, 800America will again violate Section 13(a) of the Exchange Act, 15 U.S.C., §78m(a), and Rules 12b-20 and 13a-1, 17 C.F.R. 240.12b-20 and 240.13a-1.
66. By reason of the foregoing, Rabi and Steeples are each liable as a controlling person, pursuant to Section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a), for 800America's violations of Section 13(a) of the Exchange Act, 15 U.S.C. §78m(a), and Rules 12b-20 and 13a-1, Rules 12b-20 and 13a-1, 17 C.F.R. 240.12b-20 and 240.13a-1; and unless they are enjoined, Rabi and Steeples will again engage in conduct that would render them liable, pursuant to Section 20(a) of the Exchange Act, 15 U.S.C. §78t(a), for violations of Section 13(a) of the Exchange Act, 15 U.S.C. §78m(a), and Rules 12b-20 and 13a-1 thereunder, 17 C.F.R. 240.12b-20 and 240.13a-1.
67. Alternatively, by reason of the foregoing, Rabi and Steeples are each liable, pursuant to Section 20(f) of the Exchange Act, 15 U.S.C. §78t(f), as an aider and abettor of 800America's violations of Section 13(a) of the Exchange Act, 15 U.S.C. §78m(a), and Rules 12b-20 and 13a-13, 17 C.F.R. § 240.12b-20, 240.13a-13; and unless they are enjoined, Rabi and Steeples will again engage in conduct that would render them liable, pursuant to Section 20(f) of the Exchange Act, 15 U.S.C. §78t(f), for violations of Section 13(a) of the Exchange Act, 15 U.S.C. §78m(a), and Rules 12b-20 and 13a-13, 17 C.F.R. § 240.12b-20, 240.13a-13.
68. The Commission repeats and realleges the allegations contained in paragraphs 1 through 67 by reference as if fully set forth herein.
c. in violation of Section 13(b)(2) of the Exchange Act, 15 U.S.C § 78m(b)(2). As described above, the Defendants falsified the Company's books and records, and, in particular, 800America general ledgers and bank statements, resulting in the misstatements of earnings, revenue, expenses and assets in 800America's 2002 Q2 10-QSB, 2002 Q1 10-QSB, 2001 10-KSB, and 2000 10-KSB.
70. At all times relevant hereto, Rabi and Steeples each was a controlling person of 800America for the purposes of Section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a). Rabi and Steeples each, knowingly or recklessly, directly or indirectly, singly or in concert, engaged in fraudulent practices resulting in material overstatements of 800America's net income on its books and records and in financial statements included in 800America's public filings.
71. By their conduct, previously alleged, Rabi and Steeples each, knowingly or recklessly, directly or indirectly, singly or in concert, engaged in fraudulent practices resulting in falsification of 800America's 2002 Q2 10-QSB, 2002 Q1 10-QSB, 2001 10-KSB, and 2000 10-KSB; and (ii) other material misstatements in 800America's 2000, 2001, and 2002 public filings.
72. By reason of the foregoing, 800America is liable for its violations of Section 13(b)(2) of the Exchange Act, 15 U.S.C. § 78m(b)(2); and unless it is enjoined, it will again engage in conduct that would render it liable for violations of Section 13(b)(2) of the Exchange Act, 15 U.S.C.§ 78m(b)(2).
73. By reason of the foregoing, Rabi and Steeples are each liable as a controlling person, pursuant to Section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a), for 800America's violations of Section 13(b)(2) of the Exchange Act, 15 U.S.C. §78m(b)(2); and unless they are enjoined, Rabi and Steeples will again engage in conduct that would render them liable, pursuant to Section 20(a) of the Exchange Act, 15 U.S.C. §78t(a), for violations of Section 13(b)(2) of the Exchange Act 15 U.S.C. §78m(b)(2).
74. Alternatively, by reason of the foregoing, Rabi and Steeples are each liable, pursuant to Section 20(f) of the Exchange Act, 15 U.S.C. §78t(f), as aiders and abettors of 800America's violations of Section 13(b)(2) of the Exchange Act, 15 U.S.C. §78m(b)(2), and Rules 12b-20 and 13a-13, 17C.F.R. §§240.12b-20 and 240.13a-13; and unless they are enjoined, Rabi and Steeples will again engage in conduct that would render them liable, pursuant to Section 20(f) of the Exchange Act, 15 U.S.C. §78(f), for violations of Section 13(b)(2) of the Exchange Act, 15 U.S.C. §78m(b)(2).
75. The Commission repeats and realleges the allegations contained in paragraphs 1 through 74 by reference as if fully set forth herein.
76. Rabi and Steeples each knowingly circumvented or knowingly failed to implement a system of internal accounting controls and knowingly falsified, directly or indirectly, or caused to be falsified 800America's public filings by falsification of its books, records and accounts that were subject to Section 13(b)(2)(A) of the Exchange Act, 15 U.S.C. § 78m(b)(2)(A). As described above, Rabi and Steeples each participated in the scheme to falsify 800America's bank statements, general ledger, and other corporate business records that were used in the preparation of the Company's public filings.
77. By reason of the foregoing, Rabi and Steeples have violated, and unless enjoined will again violate, Section 13(b)(5) of the Exchange Act, 15 U.S.C. § 78m(b)(5), and Rule 13b2-1, 17 C.F.R. § 240.13b2-1.
78. The Commission repeats and realleges the allegations contained in paragraphs 1 through 77 by reference as if fully set forth herein.
79. Rabi and Steeples, directly or indirectly, made or caused to be made materially false or misleading statements, or omitted to state or caused another person to omit to state material facts necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading to an accountant, in connection with 800America's 2002 Q2 10-QSB, 2002 Q1 10-QSB, 2001 10-KSB, and 2000 10-KSB.
80. By reason of the foregoing, Rabi and Steeples have each violated, and unless enjoined will again violate, Exchange Act Rule 13b2-2, 17 C.F.R. § 240.13b2-2.
Orders temporarily and preliminarily, and Final Judgments permanently, restraining and enjoining each of the Defendants, their agents, servants, employees, attorneys in-fact, and all persons in active concert or participation with them who receive actual notice of the injunction by personal service or otherwise, and each of them, from violating Sections 5(a), 5(c) and 17(a) of the Securities Act and Sections 10(b), 13(a) and 13(b)(2) of the Exchange Act, and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder.
Orders temporarily and preliminarily, and Final Judgments permanently, restraining and enjoining defendants Rabi and Steeples, their agents, servants, employees, attorneys in-fact, and all persons in active concert or participation with them who receive actual notice of the injunction by personal service or otherwise, and each of them, from violating Section 13(b)(5) and the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder.
An Order directing that each of the Defendants' assets be frozen, including: (1) assets in the names of aliases referenced in this Complaint; (2) assets over which the Defendants have control, including assets in the names of corporate entities over which they have signatory control.
An Order freezing the nominee accounts identified in paragraph 30 of this Complaint.
An Order directing 800America, Rabi, and Steeples, to repatriate assets held outside of the United States.
Orders temporarily and preliminarily, and Final Judgments permanently, restraining and enjoining Rabi and Steeples from participating in any future penny stock offering, pursuant to Section 20(g) of the Securities Act, 15 U.S.C. § 77t(g), and Section 21(d)(6) of the Exchange Act, 15 U.S.C. § 78u(d)(6).
Orders temporarily and preliminarily, and Final Judgments permanently, restraining and enjoining Rabi and Steeples from serving as an officer or director of any issuer that has a class of securities registered or that is required to file reports pursuant to Section 15(d) of the Exchange Act, 15 U.S.C. §78o(d), pursuant to Section 21(d)(2) of the Exchange Act, 15 U.S.C. §78u(d)(2).
An Order appointing a receiver for 800America.
An Order directing Rabi and Steeples to forfeit all stock under their direct or indirect control and ordering them to tender all such stock to the Court appointed receiver.
An Order directing each of the Defendants to file with this Court and serve upon the Commission, within five business days, or within such extension of time as the Commission agrees in writing or as otherwise ordered by the Court, verified written accountings, signed by each of them under penalty of perjury.
An Order enjoining and restraining each of the Defendants, and any person or entity acting at their direction or on their behalf, from destroying, altering, concealing, or otherwise interfering with the access of the Commission to relevant documents, books and records.
An Order enjoining and restraining each of the Defendants, and any person or entity acting at their direction or on their behalf, from witness tampering, suborning perjury or otherwise impeding discovery or the prosecution of this case.
A Final Judgment requiring each of the Defendants to disgorge their ill-gotten gains from the violative conduct alleged in this Complaint, and to pay prejudgment interest thereon.
A Final Judgment imposing civil monetary penalties against each Defendant pursuant to Section 20(d) of the Securities Act, 15 U.S.C. §77t(d), and Section 21(d)(3) of the Exchange Act, 15 U.S.C. §78u(d)(3), and, in addition, against Rabi and Steeples, pursuant to Section 21A of the Exchange Act, 15 U.S.C. §78u-1(A).


(a) In General.-The authority of the Secretary of Transportation to provide insurance and reinsurance under any provision of this chapter other than section 44305 is not effective after December 11, 2014.
(b) Insurance of United States Government Property.-The authority of the Secretary of Transportation to provide insurance and reinsurance for a department, agency, or instrumentality of the United States Government under section 44305 is not effective after December 31, 2019.
44310 49 App.:1542. Aug. 23, 1958, Pub. L. 85–726, §1312, 72 Stat. 806 ; July 20, 1961, Pub. L. 87–89, 75 Stat. 210 ; June 13, 1966, Pub. L. 89–447, 80 Stat. 199 ; Sept. 8, 1970, Pub. L. 91–399, 84 Stat. 837 ; Aug. 9, 1975, Pub. L. 94–90, §2, 89 Stat. 439 ; July 31, 1976, Pub. L. 94–374, 90 Stat. 1065 ; Nov. 9, 1977, Pub. L. 95–163, §6, 91 Stat. 1280 ; Oct. 14, 1982, Pub. L. 97–309, §3, 96 Stat. 1453 ; Oct. 30, 1987, Pub. L. 100–148, 101 Stat. 878 ; Oct. 31, 1992, Pub. L. 102–581, §402, 106 Stat. 4897 .
The words "is not effective after" are substituted for "shall expire at the termination of" for clarity and consistency in the revised title.
2016-Subsec. (b). Pub. L. 114–328 substituted "December 31, 2019" for "December 31, 2018".
2014-Subsec. (a). Pub. L. 113–235 substituted "December 11, 2014" for "the date specified in section 106(3) of the Continuing Appropriations Resolution, 2015".
Pub. L. 113–164 substituted "the date specified in section 106(3) of the Continuing Appropriations Resolution, 2015" for "September 30, 2014".
Pub. L. 113–76 substituted "September 30, 2014" for "the date specified in section 106(3) of the Continuing Appropriations Act, 2014".
2013-Pub. L. 113–66 designated existing provisions as subsec. (a) and inserted heading, substituted "any provision of this chapter other than section 4430" for "this chapter", and added subsec. (b).
Pub. L. 113–46 substituted "the date specified in section 106(3) of the Continuing Appropriations Act, 2014" for "December 31, 2013".
2008-Pub. L. 110–181 substituted "December 31, 2013" for "March 30, 2008".
2003-Pub. L. 108–176 substituted "March 30, 2008" for "December 31, 2004".
Pub. L. 108–11, substituted "2004" for "2003".
2000-Pub. L. 106–181 substituted "after December 31, 2003." for "after August 6, 1999."
1999-Pub. L. 106–31 substituted "August 6, 1999" for "May 31, 1999".
Pub. L. 106–6 substituted "May" for "March".
1998-Pub. L. 105–277 substituted "March 31, 1999" for "December 31, 1998".
1997-Pub. L. 105–137 substituted "December 31, 1998" for "September 30, 2002".
Pub. L. 105–85 substituted "September 30, 2002" for "September 30, 1997".
Pub. L. 105–137, §5(b), Dec. 2, 1997, 111 Stat. 2641 , provided that: "The amendment made by subsection (a) [amending this section] takes effect on October 1, 1997."
Pub. L. 105–85, div. A, title X, §1088(b), Nov. 18, 1997, 111 Stat. 1921 , provided that: "This section [amending this section] shall take effect as of September 30, 1997."
Pub. L. 102–581, title IV, §404, Oct. 31, 1992, 106 Stat. 4898 , provided that: "Notwithstanding any other provision of law, the provisions of title XIII of the Federal Aviation Act of 1958 [now this chapter] and all insurance policies issued by the Secretary of Transportation under such title, as in effect on September 30, 1992, shall be treated as having continued in effect until the date of the enactment of this Act [Oct. 31, 1992]."


text:
“Amicus curiae occupy a unique place in the courts: non-parties who are nevertheless advocates, who are not bound by rules of standing and justiciability, and who can present the court with new information and arguments. Amicus participation has increased dramatically in recent years, and threatens to alter the adversarial process. Yet scholars and courts treat amicus curiae as a single category, not fully recognizing that this friendly term actually covers several very different types, ranging from court appointed advocates of a particular position, to friends of a party (sometimes paid by the party), to persons or groups who just missed qualifying as interveners.
To understand the reality of amicus practice, this article develops a taxonomy of amicus based on the relationship to the court and the parties. The article supports this taxonomy with a look at the history of amicus, and a survey of the rules and judicial attitudes in different jurisdictions. I [Helen A. Anderson] also explore the persistence of a myth that amicus should be “disinterested,” a myth that has led to confused reasoning about the proper role of amicus.
“Forty-three times since 1954 – approximately twice every three Terms – the Supreme Court has heard a case in which no party argued one side of the issue before the Court, generally because the party who prevailed in the lower court refused to defend its victory below. When faced with this unusual, nonadversary posture, the Court has tapped an attorney to brief and argue the case as an amicus curiae in support of the orphaned argument. This practice raises a number of questions: First, at the most basic descriptive level, why has it been necessary? If the respondents themselves did not wish to defend their victories below, then whom were the appointed amici representing? Second, did these uncontested cases run afoul of Article III’s limitation of federal jurisdiction to “cases” and “controversies,” or the American tradition of adversarial litigation? And third, even if the invitations were constitutionally permissible, was it prudent for the Court to spend its scarce certiorari grants on them rather than waiting for more traditional cases to present the same issues?
“The number of amicus curiae briefs filed at the Supreme Court is at an all-time high. Most observers, and even some of the Justices, believe that the best of these briefs are filed to supplement the Court’s understanding of facts. Supreme Court decisions quite often turn on generalized facts about the way the world works (Do violent video games harm children? Is a partial birth abortion ever medically necessary?) and to answer these questions the Justices are hungry for more information than the parties and the record can provide. The consensus is that amicus briefs helpfully add factual expertise to the Court’s decision-making.
“Preview is an eight-issue subscription publication that provides, in advance of oral argument, expert, plain-language analysis of all cases given plenary review by the Supreme Court. Preview Issues 1-7 precede the Court’s seven argument sessions from October to April. Published in July following the close of the Court’s term at the end of June, Preview Issue 8 reviews the term using a combination of charts, statistics, case summaries, and essays.” The web site features links to briefs from the current term and the preceding ten years.
1 See Genesis 18:16-33 (KJV).
2 See Ken Armstrong, Broken on the Wheel, The Marshall Project, Mar. 12, 2015 (“For Voltaire, the Calas case was but the beginning of his life’s last chapter. In his twilight years he became an 18th Century version of the Innocence Project, taking on, and prevailing in, one case after another. For so long a darling of high society, he became a champion of the people.” Id.); Voltaire –Father of the Innocence Campaign, Justice Denied, Winter 2007, at 29.
3 See Donald E. Wilkes, Jr., “J’accuse …!” Emile Zola, Alfred Dreyfus, and the Greatest Newspaper Article in History, Flagpole Mag., Feb. 11, 1998, at 12. See also Douglas G. Morris, Chp. 8 “A German Dreyfus Affair: The Rule of Law, Reaction, and Honor in the Fechenbach Case” in Justice Imperiled: The Anti-Nazi Lawyer Max Hirschberg in Weimar Germany (U. Mich. Press 2005)(“Thus, the Dreyfus Affair and the Fechenbach case involved convictions of persons with claims of different types of innocence, but to actual innocence nonetheless—whether because the crime was pinned on the wrong person, as with Dreyfus, or because innocent acts were criminalized, as with Fechenbach.” Id. at 187).
4 Indeed, the concept of collective responsibility for justice likely began with the question: “Am I my brother’s keeper?” See Genesis 4:9 (KJV). See generally Eyal Benvenisti, Sovereigns as Trustees of Humanity: On the Accountability of States to Foreign Stakeholders, 107 A.J.I.L. 295 (2013); Paul Mertenskotter, National Courts as “Trustees of Humanity”?, 46 N.Y.U. J. Int’l L. & Pol. 291 (2013).
5 The friends of justice come from many walks of life. See generally John Dugdale, Facts and Fictions: Literary Advocates of Justice, The Guardian, June 17, 2009.
6 See generally Padideh Ala’i, Judicial Lobbying at the WTO: The Debate Over the Use of Amicus Curiae Briefs and the U.S. Experience, 24 Fordham Int’l L.J. 62 (2000)(“The use of amicus curiae briefs dates back to Roman law. “The function of the amicus curiae at common law was one of oral ‘shepardizing'” or “the bringing up of cases not known to the judge.” Amicus curiae also included testimony by those who had been involved in the legislative process and in cases where the meaning of a statute was at issue. Any bystander, including non-lawyers, was allowed to appear as amicus curiae if they possessed either a knowledge of the fact or the law that was deemed by the court to be relevant in achieving a just result. Historically an amicus curiae “did not even have to be an attorney to intervene, and the general attitude of the courts was to welcome such aid, since ‘it is for the honor of a court of justice to avoid error.'”” Id. at 84-85 (footnotes omitted).); Michael K. Lowman, The Litigating Amicus Curiae: When Does the Party Begin After the Friends Leave, 41 Am. U.L. Rev. 1243 (1992) (“[T]he amicus curiae has a long lineage extending from Anglo-American common law, from as far back as the 14th century, and Roman law. Traditionally, the amicus curiae was not a party to the litigation, but served as an impartial assistant to the judiciary, providing advice and information to a mistaken or doubtful court. . . . No longer a mere friend of the court, the amicus has become a lobbyist, an advocate, and, most recently, the vindicator of the politically powerless. As federal courts confronted ever more complex cases and sought innovative techniques to manage judicial resources and secure fair representation of interests outside their jurisdiction, the amicus curiae device provided a potential solution. . . . As evidenced in recent litigation, the amici performed various roles normally reserved for party participants.” Id. at 1243-1246).
7 Posthumous case investigations are another species of amicus addressed to present and future generations. See, e.g., Paul C. Giannelli, Junk Science and the Execution of an Innocent Man, 7 N.Y.U. J.L. & Liberty 221 (2013) (“Cameron Todd Willingham was tried and executed for the arson deaths of his three little girls. The expert testimony offered against him to establish arson was junk science. The case has since become infamous, the subject of an award-winning New Yorker article [David Grann, Trial by Fire: Did Texas Execute an Innocent Man?, The New Yorker, Sept. 7, 2009], numerous newspaper accounts, and several television shows.”); James S. Liebman et al., Los Tocayos Carlos, 43 Colum. Hum. Rts. L. Rev. 711 (2012) (“The Wrong Carlos and this accompanying website help to answer these haunting questions. Based on one of the most thorough investigations of a criminal case in U.S. history, the groundbreaking book by Columbia Law School Professor James Liebman and a team of his former students: Shawn Crowley, Andrew Markquart, Lauren Rosenberg, Lauren Gallo White and Daniel Zharkovsky, uncovers evidence that Carlos DeLuna, a poor Hispanic man with childlike intelligence who was executed in Texas in 1989, was innocent.” See also James S. Liebman and the Columbia DeLuna Project, The Wrong Carlos: Anatomy of a Wrongful Execution (Colum. U. Press 2014)); Paul Finkelman, U.S.-Dakota War of 1862: ‘I Could Not Afford to Hang Men for Votes.’ Lincoln the Lawyer, Humanitarian Concerns, and the Dakota Pardons,” 39 Wm. Mitchell L. Rev. 405 (2013) (“In 1862 there was a short war in Minnesota initiated by some members of the Dakota (Sioux) Nation. The Dakota fought against settlers in central Minnesota, and ultimately against the Minnesota militia and U.S. Army elements. After the War was over the Army tried nearly 400 Dakota soldiers by military commissions, and sentence 303 to death. President Lincoln, acting under the militia act of 1862, refused to sign the warrants of execution for 87 percent of those sentenced to die. In the end Lincoln reprieved 265 of the condemned men. The remain 38 were eventually hanged. This even was both the largest mass hanging in American history and also the largest mass pardon of my people sentenced to death.”). See also Mary Kelly Tate, Temporal Arbitrariness: A Back to the Future Look at a Twenty-Five-Year-Old Death Penalty Trial, SSRN (2015)(“This essay grapples with a previously unexamined feature of the death penalty: temporal arbitrariness. How does the circumstance of time affect capital defendants? What might this mean for the stability of our notions of justice? I [Mary Kelly Tate] explore these questions using a 25-year-old death penalty trial as a case study, examining the procedural and factual highlights of the case and situating it in its temporal milieu. I then explore how the roles of doctrine, policy, and cultural attitudes would dramatically alter the nature and probable outcome of the case today, illustrating how temporal arbitrariness further exposes the death penalty’s unsteady administration and indeed, its crumbling legitimacy.”).
8 See, e.g., First Amendment Amicus Brief Clinic (UCLA Law); Robert S. Chang, The Fred T. Korematsu Center for Law and Equality and Its Vision for Social Change, 7 Stan. J. C.R. & C.L. 197(2011) (“I [Robert S. Chang] present the Korematsu Center’s approach to its work that integrates research, advocacy, and education. I discuss two of our major initiatives, our Civil Rights Amicus Project and our efforts to address racial disproportionality in Washington State’s criminal justice system. Both of these efforts show how our integrated approach that combines research, advocacy, and education can provide a model for how a center located within a law school can help to achieve durable social change.” Id. at 200.).
9 Indeed, the role of amicus can approach the status of parties, third party intervenors, public advocates, class actions, compulsory joinder or consolidation, private attorney generals, jus tertii, special masters and conceptually resemble standby counsel, second prosecutors, trustees, guardians, magistrates and law clerks, without the encumbrances of procedural or jurisdictional boundaries. See Lowman, supra note 6, at 1246 (“[S]ome federal district courts have permitted the amicus to actively engage in oral argument, to introduce physical evidence, to examine witnesses, to conduct discovery, and even to enforce previous court decisions upon party-participants to the litigation.” Id.).
10 There is the subtle problem of amicus facts entering into the content of judicial opinions without sufficient screening, a collateral consequence of “cut-and-paste” opinion writing and the vagaries of independent judicial research. See Pamela Corley et al., Influence of Amicus Curiae Briefs on U.S. Supreme Court Opinion Content, SSRN (2013)(methodology included use of “plagiarism detection software”); Matthew Laroche, High Court Studies: Is the New York State Court of Appeals Still “Friendless?” An Empirical Study of Amicus Curiae Participation, 72 Alb. L. Rev. 701 (2009)(citation study). See generally Ken Strutin, Case Law in an Era of Heightened Scrutiny, LLRX, Aug. 18, 2014 (citing cut-and-paste studies). Thus, overreliance on amici without sufficient vetting of their facts and hidden biases might dilute impartial fact-finding. See Allison Orr Larsen, Trouble with Amicus Facts, 100 Va. L. Rev. 1757 (2014).
11 See Brian P. Goldman, Should the Supreme Court Stop Inviting Amici Curiae to Defend Abandoned Lower Court Decisions?, 63 Stan. L. Rev. 907 (2011).
12 See Larsen, supra note 10.
13 See, e.g., R. Sup. Ct. U.S. Rule 37; Fed. R. App. Proc. Rule 29.
14 See Bruce A. Green, Gideon’s Amici: Why Do Prosecutors So Rarely Defend the Rights of the Accused?, 122 Yale L.J. 2336 (2013)(“In Gideon v. Wainwright, [372 U.S. 335 (1963)] twenty-three state attorneys general, led by Walter F. Mondale and Edward McCormack, joined an amicus brief on the side of the criminal accused, urging the Supreme Court to recognize indigent defendants’ Sixth Amendment right to appointed counsel in felony cases. This was a unique occurrence.”).
15 See, e.g., Davis v. United States Sentencing Comm’n, 716 F.3d 660 (D.C.C. 2013) (Pro se prisoner, appellant Brian A. Davis, challenged federal sentencing laws on grounds of equal protection. To explore and further explain the habeas-channeling rule raised by his motion for declaratory relief, the Circuit court appointed amicus counsel. “Davis appealed, and we appointed an amicus to brief and argue the case on his behalf.” Id. at 662. The dismissal of his complaint was reversed.). See generally Brian P. Goldman, Should the Supreme Court Stop Inviting Amici Curiae to Defend Abandoned Lower Court Decisions?, 63 Stan. L. Rev. 907 (2011).
16 See generally Ken Strutin, Post-Conviction Representation, Pro Se Practice and Access to the Courts, LLRX, Feb. 19, 2013.
17 See Ken Strutin, Realignment of Incarcerative Punishment: Sentencing Reform and the Conditions of Confinement, 38 Wm. Mitchell L. Rev. 1313 (2012); Ken Strutin, Justice Without ‘Bounds’ and the Poverties of Confinement, N.Y.L.J., Sept. 23, 2014, at 5. Indeed, some commentators have suggested that attorneys would benefit from consulting with super-litigants, akin to amici, based on their expertise in knowledge, formats and forums. See, e.g., William C. Kinder, Putting Justice Kagan’s “Hobbyhorse” Through Its Paces: An Examination of the Criminal Defense Advocacy Gap at the U.S. Supreme Court, 103 Geo. L.J. 228 (2014). See also Tyler J. Buller, The Effect of Counsel on Criminal Appeals, SSRN (2015). Notably, a prisoner’s ability to express their position and concerns is circumvented by the limited right to file a supplemental pro se brief and sometimes the opposition of an Anders brief [Anders v. California, 386 U.S. 738 (1967)] filed by appellate counsel, which can indirectly reduce an imprisoned petitioner to an amicus in their own case. See generally Eric B. Schmidt, A Call to Abandon the Anders Procedure that Allows Appointed Appellate Criminal Counsel to Withdraw on Grounds of Frivolity, 47 Gonz. L. Rev. 199 (2011); Martha C. Warner, Anders in the Fifty States: Some Appellants’ Equal Protection Is More Equal than Others’, 23 Fla. St. U. L. Rev. 625 (1995-1996).
18 See Jeffrey C. Dobbins, New Evidence on Appeal, 96 Minn. L. Rev. 2016, 2052 (2012); Ellie Margolis, Beyond Brandeis: Exploring the Uses of. Non-Legal Materials in Appellate Briefs, 34 U.S. F. L. Rev. 197. (2000); Ellie Margolis, Teaching Students to Make Effective Policy Arguments in Appellate Briefs, Perspectives, Winter 2001, at 73. In addition, clemency clinics offer an example of how such a program might take shape. See Ken Strutin, Clemency Clinics: A Blueprint for Justice, LLRX.com, June 17, 2012. See generally Ken Strutin, Clemency: A Remedy in Need of Revival, N.Y.L.J., Aug. 21, 2013, at 4; Ken Strutin, Clemency: Justice to the Nth Degree, N.Y.L.J., Apr. 20, 2012, at 4. What is more, such a clinic would open the door to addressing systemic issues such as forensic evidence reform. See Ken Strutin, Forensic Clemency: Using Science to Bend the Arc of Justice, N.Y.L.J., Sept. 25, 2012, at 5. And they would offer the opportunity for interdisciplinary collaboration. See, e.g., Ken Strutin, Allied Learning Experiences: Multidisciplinary Internship Collaborations, AALS Sect. on Teach. Methods Newsl., Winter 2011-2012, at 21. See generally Robert R. Kuehn and David A. Santacroce, 2013-14 Survey of Applied Legal Education (Center for the Study of Applied Legal Education 2015).
19 See generally Ken Strutin, Post-Conviction Justice in the Information Age: The Trial Never Ends, N.Y.L.J., Nov. 19, 2013, at 5. An example of amicus interest in prisoner cases is the filings in the long running litigation that resulted in the Supreme Court’s decision in Brown v. Plata, 131 S.Ct. 1910 (2011). See Schwarzenegger, Gov. of California v. Plata, Docket No. 09-1233 (ABA Sup. Ct. Preview); Plata v. Brown / Coleman v. Brown Three-Judge Court (Civ. Rts. Litigation Clearinghouse). On the other hand, it is sometimes necessary for a potential amicus to join such litigation as a full-fledged party in interest. See, e.g., CRIPA Investigation of the New York City Department of Correction Jails on Rikers Island (U.S. Atty S.D.N.Y. Aug. 4, 2014)(“The Department [of Correction] is currently the subject of a class action lawsuit brought by current and former inmates at Rikers alleging system-wide, unconstitutional use of force by staff against inmates. See Nunez v. City of New York, 11 Civ.5845 (LTS) (THK).” Id. at 3 n. 5); Benjamin Weiser et al., U.S. Plans Suit Over Conditions at Rikers Island, N.Y. Times, Dec. 19, 2014, at A1 (“Instead of filing a separate lawsuit against the city, Mr. Bharara’s office asked a federal judge in Manhattan on Thursday for permission to join in an existing class-action lawsuit over brutality at Rikers, Nunez v. City of New York, that had been filed by the Legal Aid Society and two private law firms, Emery Celli Brinckerhoff & Abady and Ropes & Gray. In contrast to Mr. Bharara’s investigation of the treatment of adolescent inmates, the Nunez case focuses on all Rikers inmates, regardless of age.”); John F. Wagner Jr., Validity, Construction, Application, and Effect of Civil Rights of Institutionalized Persons Act [CRIPA], 42 U.S.C.A. SS 1997-1997j, 93 A.L.R. Fed. 706 (1989).
20 The legislatures’ role in amicus work, an extension of interpellation, is beyond the scope of this article. See, e.g., Judithanne Scourfield McLauchlan, Congressional Participation as Amicus Curiae before the U.S. Supreme Court (American Legal Institutions 2005).
21 This is only a select list of resources. Amicus briefs can be found on official court sites, on the web pages of the parties themselves, and in the brief banks of law libraries, academic centers and legal publishers.
22 This site includes a very useful guide for constructing web searches and an insightful observation about the limits of amicus collections: “NOTE:—Experience has shown that maintaining a collection of links to amicus curiae briefs is impractical (for a small staff, at least). Briefs are numerous and transitory on the internet, and finding new links is inordinately time-consuming. Therefore, while the links on this page will be preserved for as long as they are viable, new links will not be added.” And with the advent of the Internet, electronic court filing, and legal databases, the search for amicus briefs can go well beyond the collections of courts, parties and law libraries.

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