Amrep Corporation

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IN THE MATTER OF AMREP CORPORATION Docket 9018. Order, Feb. 2.4, 1976 Commission affirms administrative law judges s denial of respondent' s motion to stay proceeding.

Appearances For the Commission: Perry W. Winston, Jon R. Calhoun and George E. Schulman.

For the respondent: Solomon Friend, Theodore SchaeieT and David Parkoff, In-house General Counsel for Amrep Corporation, N. Morton M. Maneker, Pros kauer, Rose, Goetz Mendelsohn New York City.

ORDER AFFIRMING ADMINISTRATIVE LAW JUDGE S DENIAL OF STAY This matter is before us upon respondent's application for review of the administrative law judge s order of January 15, 1976, disposing of respondent' s motion to stay this proceeding pending the trial of a criminal fraud case United States v. Amrep Corp. 75 Cr. 1023 scheduled to commence on October 5, 1976 in the United States District Court for the Southern District of New York. The law judge, after concluding that respondent's motion called chiefly for the exercise of administrative discretion and was, therefore, outside of his authority, see Philip Morns, Inc. 79 F. C. 1023 (1971), certified the motion to the Commission with his recommendation that the motion be denied. Rules of Practice, Section 3.22(a). The law judge also ruled that, in the event that the motion should be treated as involving questions of law or judicial discretion and was, therefore, within the scope of his authority, the motion was denied. The judge granted respondent permission to take an immediate interlocutory appeal from the ruling. Rules of Practice, Section 3.23(b).

Since the basis of respondent' s motion is that a stay is "necessary to protect respondent's right to due process and to safeguard its substantive right to defend itself' in both the criminal and administrative proceedings, Memorandum of Law in Support of Respondent' Motion to Stay Proceedings at 1 , the Commission believes that the , On .hnuary 15 , 1976, the United States District Court for the Southern District of New York ord"red a st1lY of the Commission proc"..rJingafter.July:JO, J976. urttil one month aft,' r th" entry oftbejury s verdict in the crim;naitrial 0" Januarv 27, 1976, the l:united States Court of Appeals for the Second Circuit gra.nted a stay of thp- Commission proceeding' pendiog determination of Amrep s appeal from the portion of the di trict e"urt "rter permitting this proceeding to continue throughJuly:JO, 1976 Order 87 FTC.

motion should be treated as involving questions of law and judicial discretion which are within the law judge s authority to decide. The Commission has also determined to permit respondent' s appeal. The Supreme Court has declared that "lijt would stultify enforcement of federal law to require a governmental lregulatory J agency * * * to defer civil proceedings pending the outcome of a criminal trial" United States v. Kordel 397 U.S. I , 11 (1970); see also Gordon Federal Deposit Insurance Corp. 427 F.2d 578, 580 (1970). When both civil and criminal proceedings are simultaneously pending, a stay should be granted only if it is necessary to assure that both proceedings wil bc fair. The Commission can find no error in the administrative law judge s conclusion that the pendency of the criminal action will not deprive respondent of a fair hearing in the instant administrative proceeding.

The Jaw judge reasonably found that respondent could adequately prepare its defenses in both the criminal and the administrative proceedings. The administrative complaint was issued on :\arch 11 1975, more than a year before the date now set by the law judge for trial (April 12, 1976). Three attorneys, Solomon H. Friend, Esq. Theodore R. Schreier, Esq., and David Parkoff, Esq., had made fonnal appearances for Amrep in this proceeding. Mr. Friend, Amrep s general counsel, was indicted on October 28, 1975, almost six months before the date now set for trial. The law judge twice postponed the trial date to enable ;vIorton Maneker, Esq., the counsel appearing for Amrep on the instant motion, to familiarize himself with the case. Assuming, as respondent claims, that neither Messrs Schreier Park off or Maneker would be prepared to represent Amrep on the trial, respondent has not shown that it has been unable to retain counsel who could prepare for an April 12, 1976, trial date.' The Jaw judge also properly concluded that there had been an insufficient showing that the indictment of a numher of Amrep s top executives would deprive Amrep of the only persons who can provide it the assistance necessary to respond to complaint counsel's discover:y demands and to prepare cross-examination of complaint counsel's witnesses. Respondent argued that these executives would be unavailable to Amrep because their time must be largely devoted to preparing their own individual defenses in the criminal proceeding. Respondent also argues that these executives would he unavailable because they or dof'8 th.. Commission believe that the pendency of top in5tanl prac""dir:g wiil deprive Amrep or ap y of the ind;,'idu.., criminal defend"nts ofa fair tria) in th ai,r. inaj action. , The 3ffidl!vit of ErlwHrd B. Winslow, Esq., asserting: that thre", law finm declined to represent Amrep in the Commission proceeding, fail, far hhort "f showing that counsel could not. have been retaincd after Mr. i--riend' indi('tmf'nt. . or could not now be ret.ained, who wouid be willin and able to prep:,rp for th" April 12, J97C, trial date. It should be not."rl that even if. as respondenl claims, Mpssr,. Schrcier and Parkoff would be un"ble t.o rppres"Jlt. Amn' as !cad counsel, they w()uld be avaiiable to 3:;sist in the prepar t.iu" uf Amr"p sfiefcn:;e. ), AYIREP CORP. 285 283 Order must be concerned that information they provided for use in the administrative proceeding would be construed as a waiver of their Fifth Amendment right against self-incrimination. However, respondent has not shown that there are no present or former company employees who can respond to discovery requests without the possibility of compulsory self-incrimination or who can assist respondent in preparing its defense. See Kordel, supra at 9. Finally, respondent claims that trial of this proceeding would circumvent the policy of limiting pretrial criminal discovery embodied in the Federal Rules of Criminal Procedure. A civil proceeding should be stayed, however, only upon a showing that the "government has initiated or promoted (the proceeding J for the purpose of circumventing the Federal Rules of Criminal Procedure or any constitutional right." United States v. Simon 373 F.2d 649, 652 (2nd Cir. cert. granted sub nom. Simon v. Wharton 386 U. S. 1030 vacated as moot 389 U. S. 425 (1967); see also Kordel, supra at 11- 12.' Accordingly, It is ordered That the aforesaid order of the administrative law judge be, and it hereby is, affirmed..

, Respondent has also objected tnat. under th,' law judge s di covery schedulf' It Ine ot;:y discovery i: will receive;8 a witness and exhibit lj t a month before the he rjng" commence. Since complaint cuunsel have stated that they plan to call 150 witnesses, Amrep will have a scant ao day:; to try to interview these 150 penple, whu are presumably scattered aCTOSH the cOlmtry,in order to prepare forrrossexarr. ;nation This is a matter within the sound discretion of the administrative law judge- We expect that the law judge would modify the schedule upon a showing that respondent required more than 30 days to prepare for cross-examination. " Respondent s request for oral argumentisde"ied Complaint 87 FTC.