The opinion of the court was delivered by: Robson, Chief Judge.
MEMORANDUM AND ORDER ON GOVERNMENT'S MOTION TO DISCLOSE GRAND
JURY TESTIMONY TO THE AGENTS OF THE INTERNAL REVENUE SERVICE
The United States Attorney has presented a motion pursuant to
Rule 6(e) of the Federal Rules of Criminal Procedure, seeking an
order directing him to make available to agents of the Internal
Revenue Service (IRS) subpoenaed books, records, and transcripts
of testimony of the July 1973 Grand Jury proceedings No. 73 GJ
1785, relating to Rawlin Stovall and American Cash Commodities of
Missouri, Inc. (American). Stovall and American object to the
government's motion on two grounds: (1) the government's request
is beyond the authority of the U.S. Attorney under Rule 6(e), and
(2) that court approval of the government's request would
constitute a severe abuse of grand jury powers. For the reasons
herein stated, the government's motion shall be granted.
In support of its motion, the government states that the IRS
has requested access to the grand jury transcripts and exhibits
to determine whether civil or criminal violations of U.S.C. Title
26 exist and whether there are additional civil tax liabilities
due and owing to the United States. The United States Attorney
states that he is to be assisted by the IRS in determining if
further criminal violations have occurred.*fn1
Rule 6(e), Federal Rules of Criminal Procedure, provides:
"Secrecy of Proceedings and Disclosure. Disclosure of
matters occurring before the grand jury other than
its deliberations and the vote of any juror may be
made to the attorneys for the government for use in
the performance of their duties. Otherwise a juror,
attorney, interpreter, stenographer, operator of a
recording device, or any typist who transcribes
recorded testimony may disclose matters occurring
before the grand jury only when so directed by the
court preliminarily to or in connection with a
judicial proceeding or when permitted by the court at
the request of the defendant upon a showing that
grounds may exist for a motion to dismiss the
indictment because of matters occurring before the
grand jury."
Rule 6(e) was intended to implement the long established policy
that maintains the secrecy of grand jury proceedings in the
federal courts. See Notes of Advisory Committee on Rules. The
policy of secrecy surrounding grand jury proceedings is rooted in
the history of that institution and is widely known. See United
States v. Rose, 215 F.2d 617, 628-629 (3rd Cir. 1954). In
considering applications for disclosure of grand jury materials
the court's task is to scrutinize the request against the reasons
for the rule of secrecy. In re William H. Pflaumer & Sons, Inc.,
53 F.R.D. 464, 471 (E.D.Pa. 1971).
The government asserts on this motion that
". . . the grand jury, having already returned a
criminal indictment properly wishes assistance [of
the IRS] in determining if further criminal
violations have occurred." Government's Memorandum in
Support of Its Motion, p. 3.
"Moreover, on the record as it is now before us, it
appears: (1) that with respect to the criminal tax
investigation, the entire investigation will be
conducted under the aegis of the United States
Attorney's Office; and (2) that with respect to any
possible civil tax investigation, there is no present
prospect that the records will be removed from the
aegis of the United States Attorney. Accordingly,
subject to your determination on the good faith issue
(see infra), we deny the motion for a protective
order and thereby refuse to bar the IRS agents access
to the records so long as they remain under the aegis
of the attorneys for the government, i.e., the United
States Attorney for the Eastern District of
Pennsylvania and his Assistants,. . . ."
In opposing the government's motion, Stovall and American place
heavy reliance upon In re April 1956 Term Grand Jury,
239 F.2d 263 (7th Cir. 1956) (hereinafter cited as: "Shotwell") and United
States v. John Doe, 341 F. Supp. 1350 (S.D.N.Y. 1972). The court
is of the opinion that these cases are inapposite. Shotwell and
John Doe involved attempts by the government to abuse the grand
jury, i.e., to use it for non-legitimate purposes. In Shotwell,
the Seventh Circuit noted that the grand jury subpoenas were
being used as a subterfuge by the Treasury Department to obtain
books and records that could not otherwise be obtained in a civil
investigation. Thus, absent a showing of bad faith by the
government, Shotwell is not controlling on this motion. In fact,
Shotwell recognizes that third persons may use grand jury
materials when they are assisting the grand jury in its work. The
court stated at 239 F.2d 272:
While we hold that the district court cannot properly
interfere with the action of the grand jury in
turning over to third persons, including treasury
agents, voluminous records and accounts for the sole
purpose of examination and report to the grand jury,
as an assistance to it, we also hold that persons,
nonmembers of the grand jury, thus having access to
said . . . documents, have no right to use them for
any purpose whatsoever except to assist the grand
jury in its work. [Emphasis added].
In the present case, the United States Attorney is seeking the
assistance of the IRS to determine if there were additional
violations of the federal criminal law. In this circumstance, no
abuse of grand jury processes is apparent to the court.
In United States v. John Doe, supra, the court found that the
purpose of the grand jury investigation was "ab initio the
exploration of possible civil claims." 341 F. Supp. at 1351. In
John Doe, no criminal indictment had been returned and the real
danger was that the grand jury was being used to obtain evidence
in a civil ...