On Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 77 CR 558 -- Frank J. McGarr, Judge .
Before Fairchild and Cummings, Circuit Judges, and Grant, Senior District Judge.*fn*
This appeal presents several issues arising from the defendants' conviction for mail and wire fraud.*fn1 The defendants' first contention is that the indicting grand jury was incorrectly constituted with respect to both due process guarantees and Fed.R.Crim.P. 6(f), due to the fact that substitutions were made for a number of grand jurors during the course of the lengthy investigation in this case. Second, the defendants contend that the petit jury was incorrectly instructed when the trial court rejected the defendants' supplemental instructions and chose to fully reinstruct the jury with the original charge in response to juror inquiries. Finally, defendant Corder seeks a stay of his conviction and special relief based upon allegations that he was denied the effective assistance of his counsel at trial.
The defendants were charged in a 75-count indictment for mail and wire fraud violations, and convicted by jury after a two month trial. The defendants were convicted of selling fraudulent distributorships which would have enabled the defrauded distributors to market consumer goods to retailers. Defendant Lang was the moving force in this operation, while Soots, Smith and Corder were salesmen.
Lang incorporated the National Products Research and Development Corporation (NPRD) to sell a new brand of aerosol products which he intended to have made for his operation. The "Mini Mist" aerosols were to include deodorants and hair and breath sprays. Lang trained his salesmen to use a "negative sell" approach, whereby the potential victim was enticed to convince the salesman that he would be a successful distributor. The salesmen were also taught to masquerade as psychiatrists, and to lull their victims by proffering photographs of a modern company headquarters and manufacturing facility, which, alas, did not exist. By paying $3,500 to $5,500, the new distributor then had the exclusive right to market NPRD wares in a fixed geographical area, supposedly serving the retail outlets that NPRD would establish.
It took Lang six months from the date of solicitation of the first distributorship to contract with a pharmaceutical company to create "Mini Mist" products. Delivery of these aerosols was further delayed by production problems. When the products were finally marketed, it became apparent they had no satisfactory commercial shelf life. NPRD quietly, but quickly, closed its doors, without leaving a forwarding address for those who had invested in distributorships.
By the time NPRD had gone out of existence, Lang had already established a second corporation, Market Research International Corporation (MRIC), which was organized to sell a bona fide product, Watchguard Burglar Alarms, and later added Flower Power flower pots. The method of seeking distributorships remained the same, but the privilege of owning an MRIC alarm distributorship was $12,500.
When the FBI and FTC investigators widened their inquiry from the already defunct NPRD to MRIC, the latter corporation collapsed, unable to obtain credit from legitimate banking sources. Every distributor lost his investment in both NPRD and MRIC, many without seeing the product in which they had invested.
II. The Indicting Grand Jury
The Special November 1975 Grand Jury which returned the indictments in this case began its investigation in November, 1975. Although an ordinary grand jury's term of service is generally 18 months, the Organized Crime Control Act of 1970, 18 U.S.C. § 3331, et seq.,*fn2 extended this time to 36 months for special grand juries in an effort to combat organized crime and to investigate complex criminal schemes. Such special grand juries are otherwise regulated by the same rules and case law as regular grand juries. 18 U.S.C. § 3334.
Fed.R. of Crim.P. 6(g) provides for the discharge and excuse of grand jurors:
Discharge and Excuse. A grand jury shall serve until discharged by the court but no grand jury may serve more than 18 months. The tenure and powers of a grand jury are not affected by the beginning or expiration of a term of court. At any time for cause shown the court may excuse a juror either temporarily or permanently, and in the latter event the court may impanel another person in place of the juror excused.
Of the original 23 members impaneled on this special grand jury, fifteen members had, from time to time, been lawfully excused and replaced by newly sworn grand jurors by June 17, 1977, the date that indictments were returned against the appellants. Although appellants contend that only 8 of the original 23 grand jurors remained on the panel, the appellants' consolidated abstract and statement of the facts indicates that at least 11 grand jurors heard the entire investigation. On December 1, 1975, three grand jurors had been lawfully replaced, while Lang's case was not first presented to the Special Grand Jury until December, 1975. These first three "replacements" heard the entire investigation and, therefore, appellants cannot claim any prejudice from their participation on this grand jury.
The defendants became aware of these replacements when their motion for discovery of the grand jury proceedings was granted, and based upon this information, they filed a motion to dismiss the indictments, arguing that the grand jury was improperly constituted. The district court refused to dismiss the indictments, and the defendants renew their contentions in this appeal. They contend that only the eight original grand jurors who remained part of the panel from its inception were sufficiently well versed in this particular investigation to vote a "true bill". The defendants' theory is that at some point replacements cannot be allowed. Specifically, they suggest two such points. First, that the grand jury was no longer properly constituted when its original membership fell below 16. Fed.R.Crim.P. 6(a). In the alternative, the defendants contend that the grand jury cannot be properly constituted when less than 12 of the original members remain on the panel. Fed.R.Crim.P. 6(f).
Overall the defendants argue that replacement of grand jurors for good cause on the scale practiced here is unfair and unsatisfactory with respect to Rule 6; and, although their particular theory is not specifically explained, they argue the procedure violated their Fifth Amendment due process rights.
We begin our analysis by noting that the grand jury remains a creature of statute, at least in the provisions for its governance. In re Mills, 135 U.S. 263, 267, 10 S. Ct. 762, 763, 34 L. Ed. 107 (1890). In the present case, Rule 6 provides the applicable statutory standard. A literal reading of Rule 6 does not lend credence to any limitation upon the number of grand jurors who can be replaced for good cause. The only numerical limitations in the Rule appear in 6(a), (f) and (g). Rule 6(a) states in part: "The grand jury shall consist of not less than 16 nor more than 23 members." Rule 6(f) states: "An indictment may be found only upon the concurrence of 12 or more jurors." Rule 6(g), supra, provides the process for replacing grand jurors, but places no limitation upon the number of grand jurors who can be replaced. It seems axiomatic that had Congress intended to create limits on the numbers that could be replaced, Rule 6(g) is the logical place to have included such a limitation. For this reason, we hold that Rule 6 is not breached by the grand jury replacements in this case.
At least one other circuit court has reached the same conclusion. The dictates of Rule 6 were recently considered in a case which focused upon the attendance required of grand jurors. This case is typical of recurring attempts to have indictments invalidated when the individual grand jurors do not attend every session of the grand jury, although a quorum is present at each meeting. In United States v. Leverage Funding Systems, Inc., 478 F. Supp. 799 (C.D.Cal.1979), the district court invalidated indictments when it was shown that only 9 grand jurors had attended all ...