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UNITED STATES v. ISAACS

May 30, 1972

UNITED STATES OF AMERICA
v.
THEODORE J. ISAACS ET AL.



The opinion of the court was delivered by: Robert L. Taylor, District Judge.

      MEMORANDUM

Defendants have filed a combined total of forty-three motions (exclusive of alternative motions and motions filed after the deadline agreed to by counsel in January), supported by the same number of briefs. The Government has responded and defendants have filed rebuttal briefs. The reading of the motions and briefs alone involved considerable time and effort. Some of the motions raise difficult questions about which the courts have expressed divergent views.

Motions of Judge Kerner

Motions filed by Otto Kerner, Jr. will be considered in numerical order first, as they were the first to be filed. There are thirteen in number.

Unauthorized Persons in Grand Jury Room

The first is a motion to dismiss the indictment because of the presence of unauthorized persons in the grand jury room during its sessions. This motion is supported by affidavit and is based on an alleged violation of Rule 6(d), F.R.Cr.P., which provides:

    "Attorneys for the government, the witness under
  examination, interpreters when needed and, for the
  purpose of taking the evidence, a stenographer or
  operator of a recording device may be present while
  the grand jury is in session, but no person other
  than the jurors may be present while the grand jury
  is deliberating or voting."

The attached affidavit of Kerner states, in substance, that he testified on August 6, 1971 before the May, 1971 grand jury which returned the indictment; that during his testimony on that day he saw in the grand jury room the grand jurors, the reporter, the Government lawyers and three other men not shown by the transcript to have been present; that he recognized one of the three men as Internal Revenue Agent T.R. Johnson, with whom he had spent several days in June, 1965, in the course of an audit of certain of his income tax returns; and, that he did not know the identity of the other two men.

An old case dealing with the subject is United States v. Edgerton, 80 F. 374 (D.C.Mont., 1897). In that case, an expert witness was not only permitted to remain after he had testified before the grand jury, but was also permitted to propound questions to subsequent witnesses. The Government argued that the defendant was not prejudiced by these actions. The Court rejected this contention and stated that the common law rule excluding all but the witness and the United States Attorney from the grand jury sessions admitted no exceptions.*fn1 Potentials for prejudice were listed that could occur by the presence of an expert witness. The Court concluded that if the presence of an unauthorized person is excused, it will be impossible to set the bounds to prevent abuse. This statement comes as close as possible to a per se rule requiring dismissal.

Latham v. United States, 226 F. 420 (C.A.5, 1915) is another case often cited in support of a per se rule regarding dismissal because of the presence of an unauthorized person in the grand jury room while the grand jury is deliberating. In that case, a stenographer, who was also a clerk for the United States Attorney's Office, was allowed to be present and to record testimony. The stenographer had taken an oath to keep secret the grand jury proceedings. The Court, nevertheless, dismissed the indictment. Addressing itself to the question of whether the defendant was required to show prejudice, the Court stated that the unauthorized presence was a matter of substance*fn2 and the presence if unauthorized was illegal.*fn3

The foregoing cases were largely conclusory in their reasoning. United States v. Carper, 116 F. Supp. 817 (D.C.D.C., 1953), is better reasoned and supports a per se rule. There three deputy marshals were permitted to remain in the room while the prisoners they were guarding testified. The Government argued that the deputies' presence was both necessary for protection and in no way prejudiced the defendant. The Court said that at most the defendant need only show "probable prejudice" by the deputies' presence. This prejudice was supplied by a finding that the capacity of the deputies as the witnesses' keepers could well have influenced their testimony. It was pointed out that Rule 6(e) could possibly allow the deputies to divulge what they had heard since that section stated secrecy could not be imposed on anyone other than those listed. Finally, the Court noted the virtual impossibility of an accused ever showing prejudice. This statement severely limited the remarks about showing "probable prejudice." Probable prejudice in this case was supplied and the case was dismissed.

Certain law review articles have suggested that the purpose of the rule is to maintain secrecy.*fn4 Wigmore argues that the rule is not for the accused but for society, witnesses and jurors. Wigmore on Evidence, Vol. VIII, §§ 2360-63, pp. 728-41 (1961). Secrecy is undoubtedly a purpose behind the rule but the rule is based on a broader ground and that is the possibility of undue influence. In Latham, supra, the stenographer had taken an oath of secrecy and there was no allegation that it had been broken. Nevertheless, the Court dismissed the indictment. In Carper, supra, the Court pointed out that the prejudice would be the coercive atmosphere generated by the deputies' presence.

Two recent cases reinforce the undue influence factor as the basis for the rule. The first is that of United States v. Borys, 169 F. Supp. 366 (D.C.Alaska, 1959). In that case, the mother was permitted to remain in the grand jury room while her seven-year-old child was testifying. The Court held that this invalidated the indictment. The other case is that of United States v. Bowdach, 324 F. Supp. 123 (S.D.Fla., 1971), in which an FBI agent was in the grand jury room to operate a machine playing tapes for the purpose of refreshing a witness' recollection. In that case, the Court said:

    "Rule 6(d) and the cases construing it lay down a
  hard and fast rule which allows for no exceptions."

p. 124

We conclude that an evidentiary hearing is necessary to determine if unauthorized persons were in the grand jury room during its sessions. United States v. Brumfield, 85 F. Supp. 696, 706 (W.D.La. 1949).

Mail Cover

Defendant's alternative motion for an order requiring the Government to disclose all facts surrounding the mail cover and any other mail cover imposed on the defendant, and any direct or indirect use thereof, is sustained.

The Government is directed to state for the use of the defendant the following: (1) the full extent and duration of the mail covers; (2) the circumstances under which it was instituted, including the names and positions of all persons who authorized it; (3) the procedure by which it was instituted, including the names and positions of all persons involved therein; (4) the purported justification for its institution; (5) the information it produced; (6) the names and positions of all persons to whom such information was transmitted and the date of such transmission; (7) the use made of such information.

Many of the courts that have dealt with the mail cover question have held that the Fourth Amendment does not prevent postal inspectors from copying information contained on the outside of sealed envelopes in the mail where no substantial delay in delivery is involved. Lustiger v. United States, 386 F.2d 132, 139 (C.A.9, 1967); United States v. Costello, 255 F.2d 876, 881 (C.A.2, 1958); United States v. Schwartz, 283 F.2d 107 (C.A.3, 1960); Canaday v. United States, 354 F.2d 849 (C.A.8, 1966); Cohen v. United States, 378 F.2d 751, 760 (C.A.9, 1967). We have examined the case of Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967) relied upon by the defendant and do not find anything in that decision which holds mail cover operations are unconstitutional. See Hoffa v. United States, 385 U.S. 293, 87 S.Ct. 408, 17 L.Ed.2d 374 (1966).

We are not impressed with the Government's position that Judge Kerner is not in a position to question the mail cover operations on constitutional grounds until he received the mail from the sender. See Jones v. United States, 362 U.S. 257, 80 S.Ct. 725, 4 L.Ed.2d 697 (1960).

Although this Court neither approves nor condones the mail cover of Judge Kerner's chambers as a federal appellate judge, this will not justify the extreme action of dismissing the indictment for alleged violation of his rights under Article III and the First and Fourth Amendments to the Constitution, as argued by his attorneys.

Destruction of Essential Evidence

Defendant Kerner moves to dismiss Count XV on the ground that the Government destroyed essential evidence. The Government in reply states that on July 15, 1970, Special Agents Stufflebeam and Campbell interviewed the defendant. During the interview, both of them took notes for the purpose of later incorporating them into a memorandum of interview. Later on the same date, the agents dictated their rough notes and their recollection of what defendant Kerner told them to the IRS secretary. Based upon the agents' dictation, the secretary typed a memorandum of interview. On the evening of July 15, 1970, the agents compared their notes with the formal memorandum of interview and determined that the formal memorandum accurately and fully reflected their rough notes. On, or shortly after July 15, in accordance with the established practice, the rough interview notes were destroyed. See affidavits of Stufflebeam and Campbell, Exhibits A and B to the Government's response.

The case of Killian v. United States, 368 U.S. 231, 82 S.Ct. 302, 7 L.Ed.2d 256 (1961), also is cited on the question of whether the notes were destroyed due to ordinary or gross negligence or for the purpose of preventing them from being used as evidence. The Court observed that if the notes of Ondrejka of expenses were made only for the purpose of transferring the data thereon to the receipts to be signed by Ondrejka and if after having served that purpose they were destroyed by the agents in good faith and in accordance with their normal practice, it will be clear that their destruction did not constitute an impermissible destruction of evidence nor deprive defendant of any right. On the other hand, if they were destroyed for the purpose of depriving the accused of evidence, or in bad faith, such would constitute impermissible destruction.

Defendant relies upon United States v. Bryant, 142 U.S.App.D.C. 132, 439 F.2d 642 (1971), to support his motion to dismiss the income tax count of the indictment because of the destruction of the agents' notes. In that case, the Court held that where Government agents made a tape recording of motel room conversations between defendant and an undercover agent concerning sale of narcotics, and the Government claimed it lost the recording, the case should be remanded to determine the degree of negligence or bad faith involved on part of the Government and the importance of the evidence lost.

Another case is that of United States v. Heath, 147 F. Supp. 877 (D.C.Hawaii 1957), appeal dismissed 260 F.2d 623 (C.A.9, 1958). In that case, defendant was charged with evading his income taxes for the years 1949 and 1950 in violation of 26 U.S.C. § 145(b). His books and records were turned over to the agents of the Government in 1952. The trial court found that the records of the defendant turned over to the Government for at least a part of the period covered by the indictment were corrected by defendant in his handwriting and initialed and that those records were in existence prior to the time the Government agents received certain records from the accused and that those records were in the hands of the Internal Revenue agent during the period they were investigating the civil and criminal tax liability of the accused for the period 1949 and 1950. The Court held that it would be a denial of a constitutional trial to compel the defendant to go to trial in the absence of the records.

In the instant case, the notes were made for the purpose of preparing a formal memorandum. The memorandum has been furnished to the defendant. It is not uncommon for Government agents to destroy their rough notes. See Killian, supra; United States v. Hoffa, 349 F.2d 20 (C.A. 6, 1965), aff'd 385 U.S. 293, 87 S.Ct. 408, 17 L.Ed.2d 374 (1966).

Accordingly, the Court must hear proof before a final ruling can be made on this question.

Statement of Offense under Travel Act

Motion is made to dismiss Counts I through V for failure to charge an offense against the United States under Title 18 U.S.C. § 1952, or in the alternative to dismiss Counts II through V for duplicity.

In considering the motion to dismiss for failure to state an offense, it is appropriate to recall the language of the United States Supreme Court in Hagner v. United States, 285 U.S. 427, 431, 52 S.Ct. 417, 419, 76 L.Ed. 861 (1932):

    "The rigor of old common-law rules of criminal
  pleading has yielded, in modern practice, to the
  general principle that formal defects, not
  prejudicial, will be disregarded. The true test of
  the sufficiency of an indictment is not whether it
  could have been made more definite and certain, but
  whether it contains the elements of the offense
  intended to be charged, `and sufficiently apprises
  the defendant of what he must be prepared to meet,
  and, in case any other proceedings are taken against
  him for a similar offence, whether the record shows
  with accuracy to what extent he may plead a former
  acquittal or conviction.' Cochran and Sayre v. United
  States, 157 U.S. 286, 290, 15 S.Ct. 628, 630, 39
  L.Ed. 704; Rosen v. United States, 161 U.S. 29, 34,
  16 S.Ct. 434, 480, 40 L.Ed. 606."

Attacking these counts, defendant Kerner first claims that the indictment fails to charge that the proceeds of the unlawful activity were distributed after the use of the interstate facility or travel in interstate commerce. The indictment in this case identifies the offense the defendants allegedly conspired to commit and apprises them of what they must be prepared to meet and is sufficiently accurate to prevent a future prosecution. See United States v. Kahn, 381 F.2d 824, 829 (C.A. 7, 1967); United States v. Airdo, 380 F.2d 103, 104 (C.A. 7, 1967).

He next claims that Counts II-V should be dismissed because the alleged connection between the illegal conduct charged and the alleged use of interstate commerce is purely incidental to the illegal conduct charged. He contends that this is an insufficient use of interstate commerce to bring the charged illegal conduct within the purview of 18 U.S.C. § 1952.

The defendant relies strongly on the case of United States v. Altobella, 442 F.2d 310 (C.A.7, 1971), which held that the mailing of a check [drawn on a Philadelphia bank] and deposited by a third party endorser in a Chicago bank was an insufficient interstate act to come within the Congressional intent behind 18 U.S.C. § 1952 because the use of the interstate facility was incidental to the extortion scheme and because the mailing was done by the bank.

He also relies on Rewis v. United States, 401 U.S. 808, 91 S.Ct. 1056, 28 L.Ed.2d 493 (1971), which held that § 1952 was not intended to reach criminal activity solely because it was patronized by out-of-state customers but was aimed primarily at organized crime of persons residing in one state while operating illegal activities in other states through interstate facilities. The Court in Rewis indicated an unwillingness to construe federal legislation so as to alter a sensitive state-federal balance, absent a clear Congressional mandate.

He likewise relies on United States v. Bass, 404 U.S. 336, 92 S.Ct. 515, 30 L.Ed.2d 488 (1971). Bass construes 18 U.S.C.App. § 1202(a), which is ambiguous, as to whether proof that a firearm traveled in or affected interstate commerce was an essential element of the offense. The Court held that it was, because an ambiguity in a penal statute is resolved in favor of lenity. It was particularly concerned that a broad construction would permit a novel intrusion into traditionally state criminal jurisdiction and upset the delicate federal-state balance. The Court concluded that absent a clear statement of Congressional intent to alter this balance, none would be imputed. The relevance of Bass to the instant case is based on the above policy, that is, under the Bass philosophy of federal-state relations defendant contends 18 U.S.C. § 1952 should not be construed to reach an essentially intrastate crime.

In light of Lee the indictment appears to charge an offense under § 1952. The acts charged are alleged to have been instigated by participants in the bribery scheme set forth in the indictment.

Defendant argues that Congress enacted § 1952 with a specific intent of controlling organized crime in interstate commerce. He, therefore, contends that the deposit of checks for collection as charged in Counts II-IV, by itself, does not charge a violation of § 1952 but amounts to a meddling in state matters by the federal government. The Government answers that § 1952 was intended to deny the use of interstate facilities to those who corrupt public officials and that a deposit of a check for collection is such a use of an interstate facility. See United States v. Wechsler, 392 F.2d 344, 347, n. 3 (C.A. 4, 1968), cert. den. 392 U.S. 932, 88 S.Ct. 2283, 20 L.Ed.2d 1389.

The Ninth Circuit in United States v. Roselli, 432 F.2d 879 (C.A. 9, 1970) discussed the scope and legislative intent behind 18 U.S.C. § 1952. The Court pointed out that while Congress intended to strike at those illicit activities that provide organized crime with its profits it did not limit the prohibitions of § 1952 to:

    ". . . only those persons who could be shown to be
  members of an organized criminal group . . . nor
  against only those kinds of gambling, liquor,
  narcotics, and prostitution offenses that racketeers
  were engaged in at the time Congress acted. The words
  of section 1952 are general; they contain no
  restriction to particular persons or to particular
  kinds of gambling, liquor, narcotics, and
  prostitution offenses."

p. 885

The reasons for not restricting the class of persons covered by § 1952 is self-evident. It would be difficult, if not impossible, to prove a particular defendant's association with or control by a clandestine criminal organization. On the contrary, Congress intended to make § 1952 generally applicable to anyone engaged in an "unlawful activity" as defined in that statute. Bribery in violation of the laws of the state is clearly such an unlawful activity. There is nothing to suggest that Congress intended to restrict the statute to racketeers. The essence of the crime is the fraudulent scheme. The interstate communication merely provides a constitutional basis for the exercise of federal power. Therefore, knowing interstate travel or knowing use of an interstate facility is not an essential element of a violation of § 1952. United ...


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