United States v. Gibson

690 F.2d 697 (9th Cir. 1982)

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Nature of the Case

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Facts

Gibson (D) started a corporation by the name of Gibson Marketing International to sell franchise and franchise distributor rights to fast food restaurants, which it called 'Burgher Haus' and 'Kelly's Basket.' Prospective investors were lured to Phoenix Arizona and told that the corporation would provide all kinds of business services and personnel training, local advertising, site location and discounted national material purchasing accounts. Many of the investors were urged to purchase area distributorships rather than the less expensive single unit franchises. The corporation did not provide any of the services promised. Evidence showed that the only business being conducted was the support of D's habits at various Las Vegas gambling spots. There was evidence that D had instructed corporation personnel to convey false information to complaining investors. During trial, the court allowed the testimony of investors regarding statements made by corporation employees and salesmen. D was convicted and appealed.