In the Matter of the Complaint That ) October 23, 1958 ) THE PAY OFF, ) P-Y-F PUBLISHING CO. ) "SPECKLES" ROWE, RACING EDITOR, ) "SPECKLES" ROWE, and ) S. R. KING, ) ) at ) ) New York, New York, ) P.O.D. Docket No. 1/29 ) are engaged in conducting a scheme for ) obtaining money through the mails in ) violation of 39 U.S. Code 259 and 732. )
A complaint in the above matter was issued on July 2, 1958, charging that the Respondent, as the publisher of a racing newsletter, was engaged in conducting a fraudulent scheme for obtaining money through the mails. The Complainant seeks the issuance of an order in accordance with 39 U.S.C. 259 and 732. The Complainant alleges that the Respondent is representing that he can "regularly and consistently" pick winners in horse races, which will pay large sums to patrons of his service. The Respondent answered the complaint on the 25th of July and a hearing was held before a Hearing Examiner on August 14, 1958. At the conclusion of the hearing, oral proposed findings were submitted by both parties and the examiner rendered an oral Initial Decision finding that the allegations of the complaint were true and recommending the issuance of an order.
The Respondent has filed exceptions to the Initial Decision of the Hearing Examiner in a bill of eight separate exceptions. The Complainant replied on September 18, 1958.
The first exception of the Respondent is based on constitutional grounds. This question is not for the consideration of administrative agencies. Engineers Public Service Corporation v. S.E.C., 138 F.2nd 936. It is disallowed.
The second exception of the Respondent is to the denial of the application for a change of venue. The Hearing Examiner did not err in this ruling since the Respondent failed to comply with Section 201.10 of the Rules of Practice of the Post Office Department. The exception is disallowed.
The third exception of the Respondent is to the denial of his application to inspect the records of the Department. The request of the Respondent was a mere fishing expedition. No witness was on the stand whose papers or documents could have been produced. Thus, assuming the doctrine of Jencks v. U.S., 353 U.S. 657, applies to administrative proceedings, 1/ no proper foundation was laid by the Respondent for the request. The exception is disallowed.
The fourth exception of the Respondent is to the allegation of entrapment. This exception is without merit and is disallowed.
The fifth exception of the Respondent is to the denial of a continuance by the Hearing Examiner. This request was made after the commencement of the hearing, and the Examiner did not err in refusing the continuance. An adequate opportunity had been allowed for preparation of a defense by the Respondent. The exception is disallowed. The sixth exception of the Respondent is to the introduction of Department Exhibits 2, 5, 8, and 12. These papers were typewritten unsigned notes of Inspector Fein. They were neither official documents nor "statements" within the contemplation of Section 201.21(h) of the Rules of Practice as is contended by the Complainant. I believe it would have been better procedure not to have introduced these documents since the witness was testifying and could have testified about the events that transpired using, if necessary, these memoranda to refresh his recollection.
Although it is better practice to follow the accepted rules of evidence in administrative proceedings and it might have been more proper for the examiner to have required the Complainant to adhere to those rules, the rules are somewhat relaxed in administrative proceedings 1/ and I do not believe that the examiner erred in admitting these documents. Even assuming that the examiner did err, the error was not material. The exception is disallowed.
In the seventh exception the Respondent excepts to the denial of his motion to dismiss the proceeding for failure of the Post Office Department to present a prima facie case against the Respondent. The facts of this case are essentially as follows. The Respondent, S. R. King, is producing a publication in the form of a newsletter that gives information on horse races. Various names set forth in the caption of the complaint are used by him. There is no evidence that this publication as such costs anything to a user. A person who does use this service calls Mr. King, usually on the day of the race, at a number in New York which is given to him in the newsletter. Mr. King furnishes him with a tip on a race in return for his promise to bet $10 on behalf of Mr. King on a particular horse which is recommended to him. The bet would presumably be to "win" since the caller promises to remit the proceeds of that bet to Mr. King if the horse wins. He remits nothing to the Respondent if the horse does not win. The caller presumably makes his own bet which I assume could be to "win", "place", or "show" depending on his confidence in the tip. The Respondent handles no money belonging to other people and he does not place bets for other people. He has been engaged in this operation for thirty-two years and testified at the hearing that his income was around $10,000 per annum from this enterprise.
The evidence introduced by the Complainant at the hearing consisted of ten copies of the Respondent's publication "The Payoff" and "S. R. King, Greater Than Ever," and the testimony of Postal Inspector Fein who received tips from Mr. King in accordance with the procedures outlined above. This occurred on four separate occasions for four races. The first time, May 10, 1958, Mr. King recommended that the Inspector bet on "Equa Bleu", which was to be ridden by a jockey named Bolan. Bolan did not ride and the horse did not finish in the money. On the second occasion, May 12, it was recommended that the inspector bet on "The Hon". It came in second and paid $6.30 for
a "place" bet. On the third occasion, May 13th, it was recommended that he bet on "Willing Miss". "Willing Miss" came in fourth. On the fourth occasion, May 16th, it was recommended that he bet on "Conduct Code," which came in third in the race and paid $3.10 for a "show" bet.
Department Exhibit 1 is the issue of "The Payoff" that told of the first race. The issues mentioning the other three races on which Inspector Fein placed bets were not offered into evidence. The other nine copies of the Respondent's publication (Department, Exhibits 16-23) concern races other than the four which were the subject of the test operation. They cover a period of several months.
The statements of the Respondent in his newsletters give the impression that inside information is available and that the information is accurate and reliable. Such terms as "Grade A', "Great Financial Gain to Our Steady Clients," "It is a Winner" (Exhibit 16), "Picking It Up", "Win It In a Walk" (Exhibit 1), "Will Keep Up All Summer" (Exhibit 18) are used and underlined in the newsletter.
The overall effect clearly gives the impression that the Respondent has accurate information upon which the betting public can rely. While many of the statements in the newsletters are general in nature, many others are specific in that they deal with a particular race. In addition to some of the above, the following specific statements are used, "This Horse Has Been Readed Up" (Exhibit 21), "Saturday's Horse" (Exhibit 22), "One of My 'Top' Moves" (Exhibit 23).
In some of the exhibits what purports to be some of the specific past results of the Respondent's services are outlined indicating that he has been successful in picking winners. The names of the various
horses and the amounts paid are given. The figures are apparently based on $2.00 bets. The following is an example from Exhibit 20:
SHREWIE $14.20 LEPAFORT $ 7.60 ROCKY BOND $11.60
FAITHFUL SONG 16.20 MUEZZIN 23.80 DICK ROYAL 15.00
ADMIRAL JOHN 13.40 AMBIORUN 16.00 AMBEHAVING 9.80
The Complainant introduced these exhibits but made no effort to show that any of these statements were false. The Complainant relies on the evidence of the results of the four races over a six-day period to prove the charges against a Respondent who has been in this business for thirty-two years. There is not even any evidence as to what representations, if any, were made in the newsletters about three of those four races. Certainly some higher degree of proof is required before a free republican government should invoke its authority to destroy the livelihood of one of its citizens.
The Hearing Examiner erred in not dismissing the complaint at the conclusion of the Complainant's case since he had failed to prove a prima facie case. The exception is allowed. There is no necessity to pass on the eighth exception. The decision of the examiner is reversed.
Charles D. Ablard
Judicial Officer
1/ See NLRB v. Adhesive Products Corp., 2d Cir. 7/3/58, 27 LW 2929, and RA-Rich Corp. 121 NLRB 96.
1/ 34 Minnesota L. R. 581