# United States v. William A. Kilpatrick, Declan J. O'donnell, Sheila C. Lerner, the Bank of Nova Scotia, Michael Alberga, C.S. Gill, and C.M. Smith

> Court of Appeals for the Tenth Circuit · August 19, 1987 · 821 F.2d 1456

URL: https://www.frixlaw.com/law-library/cases/9476361

## Case

- **Full name:** UNITED STATES of America, Plaintiff-Appellant, v. William A. KILPATRICK, Declan J. O’Donnell, Sheila C. Lerner, the Bank of Nova Scotia, Michael Alberga, C.S. Gill, and C.M. Smith, Defendants-Appellees
- **Court:** Court of Appeals for the Tenth Circuit
- **Decided:** August 19, 1987
- **Citations:** 821 F.2d 1456
- **Precedential status:** Published
- **Opinion:** Dissent by Seymour
- **Judges:** Holloway, Seymour, Bohanon
- **Cited by:** 69 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9476361

## How later opinions describe it (automated extraction)

- rejecting dismissal of the indictment where a violation of Fed.R.Crim.P. 6(d) called to the attention of the trial court before trial was not shown to be more than harmless error under Mechanik
- rejecting any “per se rule of dismissal for Rule 6(d) violations” absent prejudice

## Opinion text

*1476 SEYMOUR, Circuit Judge,
dissenting.
I respectfully dissent from the view of the majority that prejudice to the defendant must be shown before a court can exercise its supervisory powers to dismiss an indictment on the basis of egregious prosecutorial misconduct. I would affirm.
It is beyond argument that the Government’s conduct in this case was outrageous. As set out in two district court opinions, United States v. Kilpatrick, 594 F.Supp. 1324 (D.Colo.1984), and United States v. Kilpatrick, 575 F.Supp. 325 (D.Colo.1983), the record contains evidence constituting a laundry list of serious improprieties, most of which the majority neither disputes nor condones. Government officials repeatedly violated Fed.R.Crim.P. 6(d) by presenting two witnesses to the grand jury at the same time. See maj. op. at 1467 -68, 1470. The Government routinely flouted the secrecy provisions of Fed.R. Crim.P. 6(e). First, it improperly used grand jury information in civil tax audits of taxpayers who invested in the tax shelters at issue, see maj. op. at 1471; second, it improperly disclosed the identity of the grand jury targets to people who were not grand jury witnesses but with whom the targets had business and professional relationships, see id. at 1472; and third, it improperly swore to secrecy two grand jury witnesses who had formerly represented the targets in S.E.C. proceedings involving the same tax shelters, see id. at 1472. During a recess a Government attorney mistreated a tax expert, who had testified before the grand jury favorably to the targets, by shouting insults at and intimidating him in the presence of grand jurors, other witnesses, and attorneys. 1 See id. at 1472-73.
In addition, the Government attorney paraded seven witnesses before the grand jury knowing that they would invoke their Fifth Amendment privilege to refuse to answer any questions. I cannot agree with the majority’s conclusion in footnote 19 that any prejudice arising from this presentation to the grand jury was eliminated by the prosecutor’s admonition. The grand jurors had previously questioned the prosecutors on the use of the privilege, displayed frustration over its invocation, and discussed pursuing the matter with the district court to test the privilege. See rec., Remarks to grand jury, Jan. 5, 1982, at 22-29. Significantly, one grand juror stated: “I know that we are not supposed to think anything when they take the Fifth Amendment; being human, we do.” Id at 22. In view of this candid admission, the potential for prejudice arising from seven witnesses’ refusal for fear of incrimination to discuss their involvement in the very matters upon which the grand jury was asked to indict cannot be denied. Cf. United States v. Coppola, 479 F.2d 1153, 1160 (10th Cir.1973) (condemning conscious effort by Government to derive evidentiary value from adverse inference arising from invoking the privilege). Consequently, this court has held that it is improper for the Government to call a witness knowing that he will assert his Fifth Amendment privilege. See id.; see also United States v. Crawford, 707 F.2d 447, 449 (10th Cir. 1983).
After numerous hearings before two trial judges, both judges found that the Government’s pervasive misconduct evinced a deliberate and alarming disregard of standards imposed by the Federal Rules, Justice Department guidelines, ethical considerations, and civilized behavior.
“The numerous abuses and violations of rules and constitutional principles must be considered particularly serious because of the admissions in these hearings that, for the most part, the activity was undertaken knowingly and purposefully.”
Kilpatrick, 594 F.Supp. at 1352 . Based on its finding that the Government’s conduct *1477 was intentional, which includes credibility assessments this court may not lightly disregard, the district court found that “the substantial departures of prosecutors in this case from established notions of fairness, from clearly articulated rules of law, from specific rules of procedure and, indeed from the Department of Justice’s own manual and operating directives constitute systematic and pervasive overreaching.” Id. The court concluded that the cumulative effect of the Government’s conduct prevented the grand jury from undertaking independent action. Id. at 1353 .
Although acknowledging most of the improprieties set out in the lower court opinions, the majority does not agree with the district court that the Government’s actions impaired the grand jury’s ability to exercise its independent judgment, which is the standard that must be met before the indictment may be dismissed under the Fifth Amendment. Significantly, the majority also concludes that the sanction of dismissing the indictment is not a proper exercise of a district court’s supervisory power unless the same standard is met, that is, unless there is a legally sufficient showing that the Government’s misconduct adversely affected the grand jury’s independence. Putting aside whether the impact of the Government prosecutors’ behavior on the decision-making process of this grand jury can realistically be evaluated, I do not believe that such a showing is a prerequisite to the pre-trial dismissal of an indictment under a court’s supervisory power.
In McNabb v. United States, 318 U.S. 332 , 63 S.Ct. 608 , 87 L.Ed. 819 (1943), the Supreme Court did not employ a harmless error analysis in considering whether the invocation of its supervisory power was appropriate. To the contrary, the Court found it unnecessary to determine whether the defendants had been prejudiced by a constitutional violation before exercising its supervisory powers to reverse a conviction. In so doing, Justice Frankfurter said for the Court:
“In the view we take of the case, however, it becomes unnecessary to reach the Constitutional issue pressed upon us. For, while the power of this Court to undo convictions in state courts is limited to the enforcement of those ‘fundamental principles of liberty and juctice; Hebert v. Louisiana, 272 U.S. 312, 316 [ 47 S.Ct. 103, 104 , 71 L.Ed. 270 (1926)], which are secured by the Fourteenth Amendment, the scope of our reviewing power over convictions brought here from the federal courts is not confined to ascertainment of Constitutional validity. Judicial supervision of the administration of criminal justice in the federal courts implies the duty of establishing and maintaining civilized standards of procedure and evidence. Such standards are not satisfied merely by observance of those minimal historic safeguards for securing trial by reason which are summarized as ‘due process of law’ and below which we reach what is really trial by force.”
Id. at 340 , 63 S.Ct. at 613 .
In a recent consideration of supervisory powers, the Court set out the three purposes underlying their use: 1) to remedy the violation of recognized rights; 2) to preserve the integrity of the judicial process; and 3) to deter illegal conduct. See United States v. Hasting, 461 U.S. 499, 505 , 103 S.Ct. 1974, 1978 , 76 L.Ed.2d 96 (1983). The Court pointed out that securing these objectives by the exercise of supervisory power may frustrate the societal concern for the conservation of judicial resources and the prompt administration of justice embodied in the harmless error rule. See id. at 509 , 103 S.Ct. at 1980 . The Court held that a court contemplating the exercise of its supervisory power must weigh the benefits to be obtained against the cost to the countervailing interest in finality. See id. at 506-07 , 103 S.Ct. at 1979 . The weight to be given the harmlessness of the error obviously increases in significance when the balancing is done after trial and conviction. 2 Implicit in the *1478 Court’s guidance on this issue is its recognition that although the harmlessness of the alleged misconduct is an element to be balanced against the desired result, it is not always dispositive. If the exercise of supervisory power were per se precluded by a finding of lack of prejudice, a balancing process would never be necessary.
Our opinion in United States v. Pino, 708 F.2d 523 (10th Cir.1983), was filed only three days after Hasting and does not cite that decision. Moreover, I cannot agree with the majority’s reading of Pino to establish that prosecutorial misconduct must be shown to have affected the grand jury’s independence before supervisory power can be invoked, particularly in a pretrial setting. In Pino , the defendant contended that the prosecutor’s behavior had unfairly infringed on the grand jury’s independent judgment. The district court found no effect, and the defendant appealed after his conviction. This court pointed out that dismissal of an indictment may be based either on the Fifth Amendment Due Process Clause or the court’s inherent supervisory powers. See id. at 530 . We distinguished between those two inquiries, however, stating:
“We are not persuaded that the circumstances as a whole show such flagrant misconduct that the grand jury was overreached or deceived in some significant way, or that the prosecutor’s conduct significantly infringed on the ability of the grand jury to exercise its independent judgment. We are also not convinced that the circumstances here justify exercise of the court’s supervisory power to protect the integrity of the judicial process by dismissing the indictment.’’
Id. at 531 (citation omitted) (emphasis added). Our separation of these distinct bases for dismissing an indictment indicates that Pino should not be read to hold that the finding of prejudice needed to support a dismissal on due process grounds is also required when supervisory powers are invoked.
Our subsequent cases citing Pino to require a showing of prejudice simply do not indicate which basis for dismissing the indictment was at issue. See United States v. Page, 808 F.2d 723, 726 (10th Cir.1987); United States v. Buchanan, 787 F.2d 477, 487 (10th Cir.1986); United States v. Anderson, 778 F.2d 602, 604-05, 606 (10th Cir.1985). 3 It is also important to emphasize that, contrary to the present case, Hasting, Pino, Page, and Buchanan are all cases in which the argument to dismiss the indictment was made after conviction, a time at which the interest in finality is very substantial and the harmlessness of the error is therefore weighted heavily. 4 Moreover, we said in Page :
“This clearly is not a case involving abuse, bad faith, or vindictiveness. Instead the prosecutor’s failure to correct Agent West’s testimony was, at worst, an oversight. The extraordinary remedy of dismissal of the indictment is not called for here.”
808 F.2d at 727 .
In sum, I am convinced that neither the Supreme Court in Hasting nor our opinions in Pino and its progeny establish that a court is barred from exercising its supervisory powers to dismiss an indictment prior to trial absent a showing that the misconduct affected the grand jury’s charging *1479 decision. Such a requirement would render a court’s supervisory power superfluous because misconduct that does affect the grand jury’s independence is a constitutional violation remediable under the Fifth Amendment.
The circuits are split on the need to show prejudice. See United States v. Holloway, 778 F.2d 653, 658-59 (11th Cir.1985) (noting authority on both sides of issue), cert. denied, — U.S. -, 106 S.Ct. 2276 , 90 L.Ed.2d 719 (1986). The Third Circuit has specifically rejected the prejudice requirement when there is “evidence that the challenged activity was something other than an isolated incident unmotivated by sinister ends or that the type of misconduct challenged has become ‘entrenched and flagrant’ in the circuit.” United States v. Rosenfield, 780 F.2d 10, 11 (3rd Cir.1985) (per curiam) (quoting United States v. Serubo, 604 F.2d 807, 817 (3rd Cir.1979)), cert. denied, — U.S. -, 106 S.Ct. 3294 , 92 L.Ed.2d 709 (1986). Contra United States v. Griffith, 756 F.2d 1244, 1249 (6th Cir.), cert. denied, — U.S. -, 106 S.Ct. 114 , 88 L.Ed.2d 93 (1985); United States v. McKenzie, 678 F.2d 629, 631 (5th Cir.), cert. denied, 459 U.S. 1038 , 103 S.Ct. 450 , 74 L.Ed.2d 604 (1982). This standard comports with the Supreme Court’s indication that a showing of prejudice is not required when the record reveals “a pattern of recurring violations.” United States v. Morrison, 449 U.S. 361 , 366 n. 2, 101 S.Ct. 665 , 668 n. 2, 66 L.Ed.2d 564 (1981). Further, such a test is not inconsistent with Hasting and our circuit opinions, and is particularly appropriate when, as here, a dismissal is granted prior to trial. 5
Although I recognize that supervisory powers should be exercised sparingly, I would apply the Third Circuit criteria in this case and uphold the district court’s dismissal. After an evidentiary hearing, the district court here found that the ongoing misconduct, which pervaded the investigation of the case and its presentation to the grand jury, was motivated by bad faith and “improper strategic purpose[s]”. See, e.g., Kilpatrick, 594 F.Supp. at 1335, 1338 . The evidence clearly supports this credibility determination. The record of the Government’s conduct evinces a determination to circumvent or simply ignore the standards governing grand jury proceedings when to do so would enhance the presentation of its case. Under these circumstances, the district court was within its discretion in exercising its supervisory power to protect the integrity of the judicial process and to deter illegal conduct, see Hasting, 461 U.S. at 505 , 103 S.Ct. at 1978 , particularly when the interest in finality had not been supported by a conviction.
Finally, it is important to point out that the exercise of supervisory power in this case does not violate the separation of powers by encroaching on the prosecutor’s authority. A prosecutor may not invoke separation of powers to avoid the consequences of his intentional disregard of judicial standards specifically directed toward his conduct. The Supreme Court recently held that a court may exercise its supervisory authority to appoint a special prosecutor notwithstanding the argument that to do so would usurp the prosecutor’s function. See Young v. United States, — U.S. -, 107 S.Ct. 2124 , 95 L.Ed.2d 740 (1987). “The exercise of supervisory authority is especially appropriate in the determination of the procedures to be employed by courts to enforce their orders, a subject that directly concerns the functioning of the judiciary.” Id. at---, 107 S.Ct. at 2138 . This holding is equally applicable when, as here, a court exercises its supervisory authority to enforce the Criminal Rules, which are also directly concerned with the functioning of the judicial process.
I conclude that a finding of prejudice to the defendant should not be required to dismiss an indictment when prosecutorial misconduct during the grand jury proceedings is pervasive. Prejudice to the integrity of the judicial process should be sufficient. Because the lower court’s exercise of its supervisory power is supported by *1480 the facts and the law, I would affirm the dismissal of the indictment.
. The district court also found that the special agents who summarized the evidence against defendant Bank of Nova Scotia mischaracterized this evidence. See Kilpatrick, 594 F.Supp. at 1339-40 . Although I agree with the majority that the agent’s use of hearsay was not improper per se, see maj. op. at 1470, the majority does not address the serious allegation that the hearsay itself was inaccurate and misleading.
. Although United States v. Mechanik, 475 U.S. 66 , 106 S.Ct. 938 , 89 L.Ed.2d 50 (1986), did not address the exercise of supervisory power, the Supreme Court’s decision to reverse the automatic dismissal of an indictment for a Rule 6(d) violation was premised upon the importance the *1478 Court placed upon finality when an indictment is dismissed for a technical, harmless error after trial. See id. 106 S.Ct. at 942-43.
. I cannot agree with the majority that our opinion in Anderson makes clear the requirement of prejudice. The district court opinion in Anderson refers to the denial of due process as a basis for its decision to dismiss the indictment, both by its own discussion of the constitutional function of the grand jury and by its references to the discussion of that constitutional function in United States v. Dionisio, 410 U.S. 1, 16-17 , 93 S.Ct. 764, 772-73 , 35 L.Ed.2d 67 (1973). See United States v. Anderson, 577 F.Supp. 223, 230-32 (D.Wyo.1983). Our opinion in Anderson, which does not refer to the exercise of supervisory powers, concludes only that "the record in the instant case does not support the conclusions of the trial court which formed the basis for the dismissal." 778 F.2d at 606.
. Although in Anderson this court did reverse a dismissal granted prior to trial, we held that, contrary to the conclusion here, none of the challenged conduct was improper.
. As the majority recognizes, Kilpatrick is in essentially the same position as a pretrial defendant because he was granted a new trial. See maj. op. at 1470.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9476361. Public record. Not legal advice.