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Senator BROOKE. To the best of your recollection or to the best of your reconstruction, would you have given the same charge against Loth defendants?

Judge CRAVEN. I would think so. I would be surprised if I didn't. Senator BROOKE. So, you have no independent knowledge as to why the punitive damages awarded against Mr. Casey by the jury were greater than those awarded against the corporate defendant? Judge CRAVEN. No, sir.

Senator BROOKE. Mr. Chairman, I think the letter written on March 4, 1971, by Judge Craven to Mr. Kenneth McLean should be put in the record. I think it shows not only his intent on that day but his disposition as to whether he should or should not have appeared before this committee. I think it would be a valuable part of this record. The CHAIRMAN. Without objection, the letter will be placed in the record (see page 147).

Does anyone have an additional questions?

Senator PROXMIRE. I do want to join the general chorus in thanking the judge for his appearance. I agree with Senator Stevenson, that it is a good service and I know it is inconvenient, especially since you have to pay your way up here.

Judge CRAVEN. Frankly, I thought the committee might justifiably feel outraged if I did not come. Maybe I am wrong about that, but that is the way I felt.

The CHAIRMAN. We would not have been outraged, but, that doesn't keep us from appreciating very much your coming. I think you have been most helpful to us.

Thank you very much, Judge.

(Copies of letters between Judge Craven and members of the com. mittee may be found at p. 137).

The CHAIRMAN. Next I call on Mr. Casey. You will be seated.

Mr. Casey, you have given us a copy of a statement that you were prepared to make, I believe.

(The full prepared statement of Mr. Casey follows:)

STATEMENT OF WILLIAM J. CASEY

Mr. Chairman and members of this committee-I'd like to thank you for this opportunity to appear before you again. I've been reading the newspapers and I welcome this chance to deal with the questions that have been raised and which any Senator may wish to raise at this hearing.

I would like to state at the outset that at no time did I have any desire or any intention to withhold anything from the committee, or in any way mislead the committee.

I would now like to clear up testimony I gave at the hearing on February 10th. I described and characterized what had happened at the trial of Fields v. Prentice-Hall. Institute for Business Planning and Casey from my best recollection at the time. My recollection was not the same as that of the trial judge and is not entirely supported by the record. I told this Committee at the last hearing that I would take the initiative in getting the record. I have had the record transeribed and it was delivered to the Committee, together with some other papers requested by the Committee in the Fields case. These papers, of course, reflect what happened more completely than anyone's recollection.

When Senator Proxmire brought up the Fields case, which had its inception 15 years ago and was tried 9 years ago, he expressed the understanding that the

jury had awarded $100,000. I undertook to describe the case. I said that this kind of a dispute is an occupational hazard in the publishing business, I stated that the jury award was not as high as Senator Proxmire had indicated and that the jury had come in with a verdict which was subject to being set aside as not supported by the evidence. That was the impression which had been stored in my memory.

I stated that we felt the claim had no merit and that the testimony was that my publisher would not pay more than $500 for the whole manuscript. The fact was that we had recognized that some 21⁄2 pages of our material was taken from the plaintiffs' manuscript and had offered to pay the plaintiffs $250 for that. Apart from this, I stated that the trial lasted several days and consisted primarily of a comparison of our books with the law and regulations on one hand, and Mr. Fields' manuscript on the other.

I testified that after the jury had come in with a verdict for "something like $40,000" (the actual figure was $41,450), the judge “did a highly unusual thing: he called in the two attorneys and he said to them that the verdict was not supported by the evidence in the case, and that he would set it aside, and he recommended that the parties get together and settle it. He was going to set this verdict aside, unless the attorneys could settle it he would call for a new trial." This was my impression after 9 years.

When Senator Proxmire wrote Judge Craven about this testimony, the judge wrote back as follows:

"I. I do not recall telling the two attorneys, or anyone else, after the trial, that the verdict was not supported by the evidence, and I am as reasonably sure as one can be after nine years that I made no such statement.

"II. I did not indicate that I would set the verdict aside and order a new trial unless the parties got together and settled the case. In five years as a state trial judge and five years as a federal trial judge, I do not recall ever having done that." The transcript of the trial record shows that after the verdict was rendered, my attorney made an extensive argument requesting the judge to set aside the verdict. He said he was shocked in the verdict and surmised that the judge was also. He spelled out how the verdict was grossly excessive and wholly against the evidence. When he asked that the verdict be set aside, the trial judge's response was: (Transcript, p. eba51)

"THE COURT (Judge Craven): Well, gentlemen, I am going to think a long time about it. I am not going to attempt to decide it at 9:15 or 9:30 at night. I think I can give it more careful consideration after a night's sleep."

A little later the transcript reads as follows:

(Transcript, p. eba53)

"THE COURT: The Court defers ruling on the motions until 10:30 a.m. Friday morning.

"Gentlemen, I believe I will confer with you in chambers just a few minutes, with Mr. Diskin and Mr. Garfield. There won't be any ruling. I just want to talk to you generally about the problem."

The transcript then reads: (Transcript, p. eba53)
"(Adjourned to Friday, March 9, 1962 at 10:30 a.m.)"

Now, I was not present at the conference in chambers which the judge had with the two attorneys. I fully accept Judge Craven's statement. But the record shows that the judge thought the motion to set aside the verdict required serious consideration, and the fact is that Mr. Garfield-an experienced trial lawyer who is now dead-negotiated a settlement with his client's consent, of $20,500 instead of the $41,450 brought in by the jury.

I can only say that firmly lodged in my memory over the intervening years was the impression that the judge had evidenced an attitude which caused Mr. Fields and his attorney, Mr. Garfield, to settle for half the amount of the jury's verdict. Transposed into that situation was my interpretation that the judge had somehow indicated the verdict would be set aside and a new trial ordered unless the parties could agree to a settlement. The judge says this did not happen, but this was what I thought had, in effect, occurred up until the time I saw his letter.

That recollection is in line with what happened and is supported by much in the record. The record shows that the judge had stated that the jury was not understanding the case and that the jury might come in with a verdict as low as $250.

I was wrong when I testified that the judge took the initiative in sealing the record in the Fields case. I have refreshed my recollection from the tran

script, and it is clear that the judge did not take the initiative, but that I did. The judge had met privately with the lawyers for a second time and out of that meeting came the judge's order to expunge the verdict. But the record shows that I took the initiative in asking that the record be sealed. The judge did not seal the record but did order that no transcript be made. The judge's order, as shown by the transcript, correctly states what was done: (Transcript, p. eba66)

"THE COURT: After the conference was terminated and subsequently thereto, the Court directed as follows: In view of the foregoing settlement and the consent of all of the parties and their counsel, that the verdict be expunged from the record, the Court orders and directs the court reporter that no transcript of any portion of the trial whatsoever shall be made, sold, or delivered to any person whomsoever."

The record states that, at the close of the entire proceedings, my attorney thanked the judge for “the fine way you brought the parties together here this morning and effected the disposition of this case." The impression I have carried in my mind was that this was what, in general effect, the judge had done.

When Senator Proxmire asked me if I would make the transcript available, I said "I would certainly interpose no objection to anybody seeing that record, and I would be happy to have it open." When Senator Proxmire asked if I would take the initiative to have the trial transcript submitted to the Committee, I agreed. I then took the necessary steps to authorize reproduction of the transcript and to deliver it to the Committee.

Now let me deal with the other questions raised in the memorandum Senator Proxmire submitted to a recent meeting of this Committee.

Now, the question arises whether I deliberately used portions of the Fields' manuscript. I always conceded that two and a half pages of that manuscript appeared in the Casey book. The plaintiff brought in a former employee of mine as a witness. He testified that he had never been directed to copy anything. Fields testified that he and I had an understanding that we would explore the possibility of Fields contributing to the Institute for Business Planning volumes on a basis of being paid $250 a month for specific assignments received from my organization. With a view to implementing this, I had my editorial staff look over the Fields manuscript to see what Fields could contribute. Upon receiving a negative report, I wrote Fields saying that it did not seem practical to work with him on contributions over 3,000 miles.

When Fields complained that some of his material had appeared in a supplement to the publication "Pay Plans," I had no knowledge that any use had been made of the Fields manuscript. I asked my executive editor whether Fields' material had been used and how it had happened. I reported the results of this check to Fields and offered to pay $250 for the two and a half pages which were concededly used. A full disclosure was made to Fields as to what had happened and instructions were given to see that it did not happen again. When the case came to trial some five years later all the employees who were doing editorial work on my publications were ordered to make full disclosure of everything that had transpired during the period in question. At one point in the trial, the record shows the judge stating that the jury might not award more than the $250. Testimony at the trial showed that the material in the Fields manuscript had been covered in previously published material which had been prepared under my direction. Therefore, there was never any need or incentive for anyone in the Institute for Business Planning organization to misuse the Fields material.

QUESTIONS ON THE BOGGS MATTER

I would now like to turn to the Boggs matter. As spelled out in great detail in the papers I have submitted to the Committee, this was an attempt to impose a statutory liability on me on the basis that the sale of 80 shares at $1,000 each to about 12 people was a public offering. The plaintiff's attorney has written the Chairman that there was no evidence of personal wrongdoing on my part. The Attorney General has responded to your request for comment, Mr. Chairman. The others who bought these shares at the time have stated that they understood it as a private offering of a risk investment and that they did not consider themselves misled.

The investors were believed to be sophisticated in technology or in risk investments and except for Boggs none of them has complained. Boggs was an old

associate of the president of the issuer, he was familiar with electronic technology. He made a second investment after 4 months of association with the company.

On this episode, other questions have come up.

Let me summarize certain facts. I did tell Mr. Thornton that Mr. Doundoulakis had some developments which I considered interesting. I did make a telephone call to introduce Mr. Doundoulakis and Mr. Thornton. All subsequent arrangements were made between Mr. Doundoulakis and L, H. Rothchild. I agreed to advance $100,000 on the basis that L. H. Rothchild had undertaken to sell 80 shares for $80,000 in a private offering. The Advancement Devices directors authorized this program. Mr. Doundoulakis provided L. H. Rothchild with information and L. H. Rothchild prepared and sent out the memo of October 25th which described the private offering. It went out over the name of Charles Thornton for L. H. Rothchild & Co. I did not approve this memo nor did I see it until after it had been sent out. I don't remember exactly when I first saw it but I am certain that I did not approve it or see it in advance. The developments which the Rothchild memo describes were the subject of formal assignments by the engineers to the company so that there is no validity to the allegation that the company did not own the new developments described in the Rothchild

memo.

ROOSEVELT RACEWAY QUESTION

There is an incorrect statement in the SEC letter dated February 26, 1971. The letter states that Casey became a director in 1967. He did not become a director of this company until August 1969. Similarly, Hall, Casey, Dickler & Howley did not resume doing legal work for Roosevelt Raceway until September 1969. This means that there was no obligation to report any payments or obligations to that law firm until the Proxy Statement of September 1969.

There is no misstatement in any filing by Roosevelt Raceway of fees paid Hall, Casey, Dickler & Howley. Every filing is factually correct. The area of controversy arises on a question of whether the filings also should have stated what Roosevelt Raceway was obligated to pay in subsequent periods. On this point, the partner reviewing the proxy statement prepared by Roosevelt believed that this information was not called for by the applicable regulations.

In its 10 K for 1967, Roosevelt Raceway did report its obligation to pay legal fees which includes a $240,000 payment to Hall, Casey, Dickler & Howley for services in collecting monies in an antitrust suit. As the SEC states, Casey was not responsible for the filing of any of these documents except that a partner in his law firm in charge of the work for Roosevelt Raceway did review the 1960 Proxy Statement.

In the Madison Square Garden registration statement, there were no fixed obligations to Hall, Casey, Dickler & Howley which were not disclosed. There was an unsettled amount of $16,000 and a reserve of $40,000 established by the Corporation for its own purposes without knowledge of Hall, Casey, Dickler & Howley which were not included in the initial filing by Madison Square Garden but which were included in subsequent information to stockholders, Counsel for Madison Square Garden takes the position that such information is not called for by the applicable regulations.

KALVAR QUESTION

The president and directors of Kalvar Corporation made a business decision that Kalvar should acquire a sales organization, without which the company's continued existence was in serious question. It was also decided that Kalvar should go into the paper business in order to make fuller use of its coating lines to absorb some of its overhead. For this purpose an agreement was made to acquire approximately 85% of the stock of S. O. Systems, Inc. (Standard Office Systems) which was owned by six stockholders.

S.O.S. had approximately 300 other stockholders which owned the remaining 15% of the stock. Many of these stockholders were residents of California. The exchange offer was registered with the SEC. A petition was also made for the approval of the offer in California before the Division of Corporations. When the approval of the California Commissioner was not forthcoming when the regis tration statement before the SEC was about to become effective, it was determined that the offer would not be made in California and the cover page of the

After the registration statement became effective, the petition in California was still pending and was being pressed for action by California counsel. However, because of business exigencies, it became necessary to make a decision about the immediate acquisition by Kalvar of S.O.S. stock. Kalvar was a Louisiana corporation and three law firms were of the opinion that it was entirely appropriate and proper to make the offer to S.O.S. stockholders in Louisiana and to close the transaction there.

California counsel reported that the California Commissioner of Corporations suggested that this transaction should be ratified by Kalvar stockholders and that sending copies of the prospectus to these stockholders might obviate the necessity of a hearing in California. Kalvar made the mailing of the prospectus with notice of and proxy for its annual meeting at considerable expense. The S.O.S. acquisition was ratified by Kalvar stockholders at the annual meeting held on July 15, 1965.

In the almost six years since the transaction has been consummated, no complaint has been received from the Commissioner of Corporations of the State of California and I have been informed by California counsel that recent inquiry indicates that the Commissioner's office considered the case closed in 1966.

The acquisition of the S. O. Systems stock was submitted to Kalvar shareholders at the annual meeting which was scheduled for June 25, 1965. Approximately ten days before this meeting the objecting Kalvar shareholders applied for and obtained a delay of a postponement of the shareholders meeting until July 15, 1965 and, in the order granting the postponement, the judge enjoined the voting of the shares which had been issued in exchange for the shares of S. O. Systems stock. Another application to postpone the meeting was denied on July 14 and the meeting was held and the exchange overwhelmingly approved at the meeting held on the following day.

AGRO RESOURCES QUESTION

I did not participate in any way in the AGRO transaction and didn't know anything about it until I received a report dated June 12, 1970 which stated that the transaction had been closed on March 31, 1970, at least ten weeks earlier.

Mr. CASEY. I have given you a copy of the statement which deals with the questions which were raised in Senator Proxmire's memorandum. I feel that the committee has, on that basis-they can ask me any questions that they want. There is no need for me to repeat it again. But, what I would like to do, I would like to deal with the matters which Judge Craven has testified to.

Then I have had two gentlemen come down from New York and Boston who want to deal with my qualifications for this post and I would like to put them on for as long as they need. But, I would like to come back and deal with the other questions.

The CHAIRMAN. All right. You say you have two-which one do you want?

Mr. CASEY. I will deal with the matters that Judge Craven testified to first, if that is all right with you.

The CHAIRMAN. All right, go right ahead.

Mr. CASEY. In the first place, to make it clear, it was I, at the request of the committee, who took the steps to make the transcript available. I never realized that this was such a good courtroom story until I heard Judge Craven's testimony.

He testified to a discussion to which the defendents had indicated, through an attorney who was new in the situation, that they would be glad to pay the full verdict if the record could be sealed. I never heard of any such discussion. I don't know who could have authorized it or conducted it. It is very strange. If the defendant was, indeed, willing to pay the entire verdict if the record could be sealed that the plain

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