United States v. Dixon

536 F.2d 1388 (1976)

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Nature of the Case

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Facts

D was the president of AVM Corporation. AVM was subject to the proxy and reporting requirements of the Securities Exchange Act of 1934. During 1970 D had an outstanding loan balance with AVM of $65,000. Under SEC disclosure requirements held that officers owing more than $20,000 to the company must be reported on the annual Form 10-K. In December 1970, D initiated a number of transactions which gave the appearance that he had retired a large portion of his debt. He had AVM's secretary transfer $9,000 to D's father's account, the elder Dixon being at that time Chairman of the Board of AVM. D paid AVM $30,000, which he had borrowed from a Jamestown bank. He then had the secretary take an advance of $5,000 on the secretary's account and apply the money to the debt. D then paid an additional $700, which brought the total indebtedness to $19,100 as of December 31, 1970. D then renewed his AVM loans after January 1 and used the monies to pay off the loans from the bank and the secretary by which he had reduced his AVM accounts prior to the year's end. Apparently, this was a rinse and repeat event. The proxy statement sent out March 19, 1971, and the 10-K report filed on March 25, 1971, did not contain the information on D's indebtedness that was required. D was charged with knowingly, willfully and unlawfully soliciting proxies in violation of the SEC's Rules as the proxy statement did not disclose loans to D during the fiscal year ended December 31, 1970. D argued ignorance of the law and that the end of year debt was the only amount that triggered the reporting requirement. Also, AVM’s accountants provided D with financial forms to detail transactions between employees and AVM. D did not use them to report his loans. A jury found D guilty, and D appealed.