Petition — Mackey v. United States

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Supreme Sout, 8. 3.

FILE D

SEP 14 1976

GAG. O08AL, BCL

In THE

Supreme Court of the United States

Ocroser Term, 1976

No. 76..2.6.- 376

JEROME MACKEY,

Petitioner,

—V.--

Untrep Srates or AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS —

FOR THE SECOND CIRCUIT

Freperick FE, WEINBERG

Attorney for Petitioner

515 Madison Avenue

New York, New York 10022

(212) 752-1720

TABLE OF CONTIUNTS

(pdedomes Below cs cece ee ee ese 6 8 6 8

Jurisdiction «ee cececrsccscecsereresceee e8 &

Questions rresented. . 6 «eee ee ee ee co ee 0 2

Relevant Statutes. «esses ecccesvres ee oD

Statement of Case. cee cc ee cece eee coc &

The Reasons for Allowins a Writ of Certiorari. .. . 6

Conclusion. «ee cee ee cece rece ee woe X

Appendices:

Appendix A, Judgment of U.S.C.A. 2d Circuit. . .. . Al

Appendix B, Order Denying Petition for Rehearing. . Bl

Appendix Bl, Order Denying Petition for Rehearing

en banc. ee ¢ © Bl-1

Appendic C, Opinion of District Court. « « «++ Cl

appendix D, Indictment. S6@ 6 @ 6.6.66 5. 8 4&4 2.9 DL

CASTS CITED: In THE

Supreme Court of the United States

: “a rm 13. eee 7

Goldberg We tie. (Cox. 2d cir.) 472 ..(2d) 5 Octoser Term, 1976

Pelz v. United States (C..\.2d Cir.) Sy *.(2d) 1001... ©

No. 76.............--

ee | 5 3 ; he .e

4S. ve Lown ( 26%S.D. of 2.Y.)115 2%. SuppeOl4 q

JEROME Mackey,

STATUIZS CITED: . Petitioner,

. @ ° 3 tore

8 UeseGe SOGe LHe we we ee eo 2 ee 8 Oye eo

— h Unrrep States or AMERICA,

SB GSeCe Sete WAR ce eee ee eee ore ess Respondent.

cocoon @

23 VeSeve Sec. 125), (1) oan 2 6 2 2.92 . | @& <>

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

To the Honorable, the Chief Justice of the United States

and the Associate Justices of the United States Su-

preme Court.

Petitioner, Jerome Mackey, respectfully prays that a writ

of certiorari issue to review the judgment of the United

States Court of Appeals for the Second Circuit entered

on June 23rd, 1976, affirming a judgment of the United

States District Court for the Eastern District of New York

convicting him of devising a scheme to defraud involving

the use of the United States mails.

Opinions Below

The Court of Appeals wrote an opinion which is not yet

officially reported. A copy is annexed hereto as Appendix

There was no opinion in the District Court, except an

opinion rendered upon its denial of petitioner’s motion to

dismiss the indictment by reason of the improper presenta-

tion of privileged testimony to the indicting grand jury.

A copy of that opinion is annexed hereto as Appendix C.

Jurisdiction

The judgment of the United States Court of Appeals

for the Second Circuit was entered on June 23rd, 1976. A

copy of the judgment is annexed hereto as Appendix A.

A timely petition for rehearing with suggestion for re-

hearing en banc was denied in orders entered on August

18th, 1976, copies of which are annexed hereto as Appendix

B and Appendix B-1.

No application has been made for an extension of time

in which to file this petition.

The Court’s jurisdiction is invoked pursuant to 28 U.S.C.

See. 1254(1).

Questions Presented

1. Whether petitioner’s awareness that certain salesmen

had made fraudulent promises was, ipso facto, suf-

ficient to establish that he had devised a scheme to

defraud as alleged in the indictment.

Whether petitioner’s instruction to his attorney to

sell to the co-defendant Nelson and to Taylor his stock

in Mackey’s Judo, Inc., of which Mackey Distributors,

Inc. was a subsidiary, was privileged and, if so,

whether that attorney’s testimony to the indicting

grand jury which repeated petitioner’s instruction to

him and described the transaction required the dis-

missal of the indictment.

Relevant Statutes

18 U.S.C, § 1341:

“$1341. Fraups anp SwinDLes.

Whoever, having devised or intending to devise any

scheme or artifice to defraud, or for obtaining money

or property by means of false or fraudulent pretenses,

representations, or promises, or to sell, dispose of, loan,

exchange, alter, give away, distribute, supply, or fur-

nish or procure for unlawful use any counterfeit or

spurious coin, obligation, security, or other article, or

anything represented to be or intimated or held out to

be such counterfeit or spurious article, for the purpose

of executing such scheme or artifice or attempting so

to do, places in any post office or authorized depository

for mail matter, any matter or thing whatever to be

sent or delivered by the Postal Service, or takes or re-

ceives therefrom, any such matter or thing, or know-

ingly causes to be delivered by mail according to the

direction thereon, or at the place at which it is directed

to be delivered by the person to whom it is addressed,

any such matter or thing, shall be fined not more than

$1,000 or imprisoned not more than five years, or

both. (June 25, 1948, ch. 645, 62 Stat. 763; May 24,

1949, ch. 139, § 34, 63 Stat. 94; Aug. 12, 1970, Pub. L.

91-375, § (6)(j)(11), 84 Stat. 778.)”

18 U.S.C. §$ 1342:

“1342. Fictitious NAME or ADDRESS.

Whoever, for the purpose of conducting, promoting,

or carrying on by means of the Postal Service, any

scheme or device mentioned in section 1341 of this

title or any other unlawful business, uses or assumes,

or requests to be addressed by, any fictitious, false, or

assumed title, name, or address or name other than his

own proper name, or takes or receives from any post

office or authorized depository of mail matter, any let-

ter, postal card, package, or other mail matter ad-

dressed to any such fictitious, false, or assumed title,

name, or address, or name other than his own proper

name, shall be fined not more than $1,000 or imprisoned

not more than five years, or both (June 25, 1948, ch.

645, 62 Stat. 763; Aug. 12, 1970, Pub. L. 91-375, § 6(j)

(12), 84 Stat. 778.)”

Statement of Case

The indictment charged that petitioner together with the

co-defendant Nelson and one Richard E. Taylor had de-

vised a fraudulent plan or scheme to sell, under the name of

Mackey Distributors, Inc., distributorships for the sale of

stereo tapes and equipment; and that that scheme had in-

volved the use of the United States mails (Appendix D).

It alleged the scheme to have been in violation of Title 18,

United States Code, Sections 1341 and 2.

The only testimony of what the agreement had been was

furnished by the prosecution witness Taylor. He testified

that it had been a tripartite profit-sharing agreement. He

testified that one of the terms of the agreement was that

the purchasers of the distributorships “were to be told just

what they were getting into” (Record, p. 237). No part of

his testimony revealed any intention to misrepresent or

otherwise defraud the purchasers of the distributorships.

It was established without contradiction that petitioner did

no selling and gave no instructions to the salesmen.

A number of purchasers having testified that they had

not received what the salesmen had promised, the jury re-

turned a verdict of guilty against petitioner under 6 counts

of the indictment. The Court of Appeals affirmed. It stated

in its opinion that the testimony showed that petitioner

and the co-defendant Nelson “were aware of the fraudulent

promises being made” (Appendix A).

One Thomas Mazza was petitioner’s former attorney.

He testified before the indicting grand jury that petitioner

had instructed him to prepare an agreement under which

Mackey’s Judo, Inc., in which petitioner had an interest,

would sell all its stock to the co-defendant Nelson and

Taylor (Appendix D, p. 8). Mackey’s Judo, Inc., was the

parent corporation, owning all the outstanding stock of

Mackey Distributors, Inc. By that transaction, therefore,

petitioner had transferred, through the sale of his stock

in Mackey’s Judo, Inc., his interest in Mackey Distributors,

Inc. to the co-defendant Nelson and Taylor. That testimony

of petitioner’s former lawyer was the only testimony pre-

sented to the indicting grand jury which described the

transaction whereby petitioner had given the co-defendant

Nelson and Taylor an interest in the profits of Mackey Dis-

tributors, Inc. Petitioner did not waive his right to object

to the presentation of that testimony before the grand jury.

At the trial petitioner moved to dismiss the indictment

upon the ground that his former attorney had given the

indicting grand jury information which was privileged, since

revealed confidentially to his attorney in the course of the

attorney and client relationship. The motion was denied.

In the opinion of the trial court which accompanied his

denial of that motion the court stated that “the indictment

was supported by ample non-privileged evidence.” (Ap-

pendix C, p. 38). That reasoning was approved by the

Court of Appeals (Appendix A, p. 2).

The Reasons for Allowing a Writ of Certiorari

First Reason.

In a prosecution for the crime of devising a fraudulent

plan, “there must be proof of an unlawful agreement and

participation therein with knowledge of the agreement”

(1932) Pelz v. United States (C.A. 2d Cir.), 54 F. (2d) 1001,

1005.

The only evidence of the terms of the agreement between

the three men which related to their conduct thereunder

was Taylor’s testimony that the purchasers of the distribu-

torships were to be told “just what they were getting into.”

Thereby the absence of any evidence that petitioner had

devised a scheme to defraud was accompanied by testimony

of the prosecution’s witness, unequivocal and uncontra-

dicted, that there was to be no misrepresentation of any

kind.*

* Petitioner’s motions to dismiss and to set aside the verdict

were denied.

The injustice to this petitioner from this conviction is

not the sole reason why the writ should be allowed. Under

the principle implicit in petitioner’s conviction, United

States Attorneys may hereafter employ the mail fraud stat-

ute to the end of usurping the heretofore exclusive jurisdic-

tion of the state courts over prosecutions for fraud. They

will be able to do this simply by preparing indictments

which charge the devising of a fraudulent plan involving

the use of the United States mails, and then conducting

the trial without producing any proof of such a plan. That

was the procedure in this case.

If this device for extending the jurisdiction of the United

States courts is to be authorized, that practice should not

be introduced inadvertently and without explicit recogni-

tion. This situation warrants the deliberative consideration

of this court.

Second Reason.

Petitioner’s instruction to his attorney Mazza to sell his

stock in Mackey’s Judo, Inc. to the co-defendant Nelson

and to Taylor was confidential and made in the course of

the attorney and client relation. The prosecution had the

burden of showing that it had not used that information or

any information even indirectly derived therefrom. Other-

wise the indictment will be dismissed. (1973) Goldberg v.

U.S. (C.A. 2d Cir.), 472 F. (2d) 513, 516; (1953) U.S. v.

Lawn (D.C.8.D. of N.Y), i115 F. Supp. 674.

The prosecution cannot show that the grand jury had not

been influenced by the foregoing testimony in handing down

the indictment. On its face, the contrary is probable. The

premise upon which the indictment proceeded and which,

in fact, it alleged was that petitioner, the co-defendant

Nelson and Taylor had a community of interest in the sale

of stereo tape distributorships by Mackey Distributors, Inc.

The privileged testimony given to the indicting grand

jury by the petitioner’s former attorney could have had

a still more damaging significance. The transaction which

that attorney described was a circuitous one. Petitioner

sold an interest in the profits to be made by Mackey Dis-

tributors, Inc. by way of a transaction which nominally

passed title only to stock in the parent corporation,

Mackey’s Judo, Ine. In the perspective of laymen, that

might have appeared as an indirection bespeaking a fraudu-

lent concealment. Thus, the transaction of sale which peti-

tioner had confidentially instructed his attorney to conduct

might very well have predisposed the grand jury to view

the entire relationship between the three men with a jaun-

diced eye.

The trial court’s stated rationale for his refusal to dis-

miss the indictment even if the grand jury had been given

privileged testimony missed the real point. Assuming

arguendo that there had been ample proper evidence upon

the basis of which an indictment might have been handed

down, that fact would not have made this privileged tes-

timony harmless. The question is not whether the proper

testimony presented to the grand jury would have been

sufficient to support an indictment, if handed down. Rather,

the question is whether, if the privileged testimony had not

been presented, there would have been an indictment at all.

Petitioner was entitled to a determination by the grand

jury which had been based only upon the presentation to

it of proper testimony.

Any conjecture which might be made to the effect that

the grand jury might have indicted even in the absence of

the privileged testimony is inappropriate. No one can

really substitute himself for the grand jury and speculate

as to what its determination would have been in the event

that certain testimony which had been presented to it had

_been omitted.

There is still another aspect of this privileged testimony.

As already shown, the prosecution did not produce even a

scintilla of testimony of a fraudulent agreement. Since

the one witness who testified to the terms of the agreement

between the three men (Taylor) must have been i:terviewed

by the United States Attorney, one is compelled to wonder

about the source of the United States Attorney’s belief that

there had been a fraudulent agreement at all. It seems

probable that the entire basis for the charge of a fraudulent

agreement had been simply a construction, an idea which

had seemed probable to someone upon the basis of the trans-

action which petitioner’s former attorney had described.

CONCLUSION

For the above-stated reasons, the writ of certiorari

should be granted.

Respectfully submitted,

Freperick E. WEINBERG

Attorney for Petitioner

515 Madison Avenue

New York, New York 10022

(212) 752-1720

APPENDICES

- Al

APPENDIX A

JUDGENT OF U.S.C.A. SECOND CIRCUIT

At a stated Term of the United States Court of

Appeals for the Second Circuit, held at the United States

Courthouse in the City of New York, on the 23rd day of

June, one thousand nine hundred and seventy-six.

Present:

HUNORASIE HENRY J. FRIENDLY

HONORADIE WILFRED FLINBIRG

HOWORABLE SLLSWORTH A. VAli GRAAFEILAND

Circuit Judges,

sss waceet eee weeéenae eee tbsoevseace 4

UNITED STATES Or AMERICA,

Appellee,

—acainst-

JEROL= MACKSY and WILLIAi: NSLSON,

Deferdants-Apnellants.

ee ce eee nes en eeseeeceeeoaneeeece x

No. 76=1118

Appeal from the United States District Court for the

Eastern District of New York,

This cause came on to be heard on the transcript of

record from the United States District Court for the

Eastern District of New York, and was argued by counsel.

ON CONSIDERATION WHEREOF, it is now hereby ordered,

adjudged, and decreed that the judgment of said District

Court be and it hereby is affirmed.

i.2

Jerome Lackey and William Nelson appeal from their

convictions after a jury trial before Judge \Weinstein

for executing a scheme to defraud through the mails,

18 U.S.C Sec. 131. The fraudulent scheme charged was

the sale of tape distributorships by means of false and

misleading prorrises. The 21 count indictment charged 15

individual mailings of misleading advertisements and re=

ceipt of six checks through the mail. One of tne advert=-

isement counts was dismissed on government motion during

trial. Nelson was convicted on all the remaining advert-

isement counts and Mackey on six of them. Both defend-

ents were acquitted on the check counts. They were sent-

enced to five years imprisonment on each count to run

concurrently,sentences suspended on four and one-half

years of each count conditioned on probation.

Both appellants question the sufficiency of the ev-

idence to show that they knowingly participated in a

scheme to defraud through the mails. Viewing the evidence

in a licsht nest favorable to the Government, as we are re=

quired to, both defendants were aware of the fraudulent

promises bein: made and Nelson actually learned and em

ployed the fraudulent sales pitch used to induce custom

ers. Nelson also participated in the deception of cust-

omers after the departure of a co-defendant, who testi-

fied for the Government, Mackey knew of the past dub-

ious sales techniques used by a salesman hired with his

permission. Both Nelson and Lackey knew that inferior

tapes were being provided instead of the brand names

promised and when the scheme collapsed, lackey expressed

confidence that the dissatisfied eutennen would never

collect because the assets of the company had been trans-

ferred. |

Appellants also claim that the jury's guilty verdict

must be set aside as inconsistent. It has been settled

since Steckler v. United States, 7 F.2d 59 ( 2d Cir.1925)

(L. Hand, J.), and Dunn v, United States, 28) U.S. 390

(1932)( Holmes,J.), that this is not a ground for rever-

sal, and we have declined the invitation to depart from

this rule. United States v. Carbone, 378 F.2d 420 (2d

Cir, 1967)(Friendly,J.). loreover, the veridct is not

really inconsistent. It is true that Nelson and lackey

were convicted on the misleading advertisement but aq=

quited on the check counts. 3ut the jury might have felt

that appellants did not profit substantially from the

scheme and allowed that to influence them on the check

counts. Also, the jury misht have had a reasonable

doubt that appellants knew that these checks were mailed

rather than hand delivered. Similarly, a key meeting be-

tween lackey and a co=defendant might explain lackey's

acquittal on the counts involving advertisement mail-

ings that antedated that meeting. Finally, appellants's

claim that the guilty verdict was the result of prejud-

icial and irrelevant testimony by victims of the scheme

was not preserved for review since no objection was

made to any such testimony.

Individually, Newlson contends that the judge's

"conscious avoidance" charge was inadequate and should

not have not have been used on these facts. However,

the charge taken as a whole was balanced and appropriate.

Nor did the judge err in refusing to grant Nelson an

adjournnent when he changes counsel on the eve of trial.

Sovnsel did have five days to prepare and he failed to

renew his motion at any point during the trial. Also,

the judge properly exercised his Secsatten in exclud=-

inga complaint filed with the Nassau County District

Attorney,since the fact of the filing was stipulated to

end the content of the complaint was self-serving hear-

say.

Finally, Mackey claims that his indictment wes in-

valid because essential informtion before the rand

jury was improperly obtained from his lawyer in violat--

ion of his attorney-client privilege. we reject the ar

ment substantially for the reason set forth in Judge

‘ deinstein's opinion, reported at 05 F. Supp. 85 (E.D.N.Y.

1975). /9 coc 7.2 3/

We have considered all the points raised by appell-

ants and find them wnpersuasive., Judgments of convict-

ion affirmed.

Henry J. Friendly

Wilfred Feinberg

Ellsworth A. Van Graafeiland

U.S.C.JJ.

APPENDIX B

ONIN DENYING PETITION FOR RcHRARING

UNIT) ST TSS COUT UF COP U.LS 6to0M CIRCUIT

4t a Stated Term of the United States Sourt of

ipoelas, in a for the Second Circuit, held at the

United States Courthouse, tin the City of ijew York,

on the eicbtcenth day of Ausust, one thousand nine

hundred and seventy-six.

rresent:

HON, Wong J, FRITNDLY

HON, WILFRED FINBERG

HON. SLLSWOLTH A. VAI! GLAAPTILAIM

Circuit Judzes

CE IE BOA OT aye ae ye ee AE X

United States of imerica,

Plaintiff-appellee,

-—acainst-

Jerome )iackey,ichard ©. Taylor,

William Nelson,

Defendants,

7 n Nelson, Jerome lackey,

Def endants<appellants.

i. petition for a rehearing having been filed herein

by counsel for the appellant, Jerome iackey,

Upon consideration thereof, it is

Ordered that said petition be and hereoy is denied,

A, DANISL FUSARO

Clerk

APPENDIX Bl

ORDER DENYING PETITION FOR REHEARING IN BANC

UNITED STATES COURT OF LePPALS

S=COND CIRCUIT

At a stated term of the United States Court of

Appeals, in and for the Second Circuit, held at the

United States Courthouse, in the City of New York,

on the eighteenth day of susust, one thousand nine

hundred and seventy-six.

United States of -.merica,

slaintiff-ippellee,

—against+-

Jerome lackey, tichard =, Taylor,William Nelson,

Defendants,

William Nelson, Jerome lackey,

Verondants-Appallants.

A petition for rehearing containz 2 suggestion that

the action be reheard in banc having been filed herein

by counsel for the appellant, Jerome Liackey, and no act-

ive judge or judge who was a member of the panel having

requested that a voebe taken on said suggestion,

Upon consideration thereof, it is

Ordered that the petition be and it hereby is DENIED.

IRVING 2, KAUPLAN,

Chief Judge

APPENDIX C

UNIT™D STAT®S DISTRICT COURT

EASTERN DISTRICT 97 NEW YORK

-_ - + *- = -— = lhc hr h = -_-- - -— -— = x

UNITED STATES, 75 CR 468

- against - MEMORANDUM

and

JEROME MACKEY and 'JILLIAM NELSON, ORDER

i Defendants.

i eee eer ee ere ee ee eee x

: Avpearances: > -*

HOMORARLE DAVID G. TRAGER

United States Attorney

Eastern District of New York

By: HAROLD J. FRIEDMAN

Assistant United Scates Attorney

For Government

GROMAN, WOLT & ROSS, P. C.

Carle Place, New York

By: MARVIN YOLF, Fsq. :

For Defendant Mackey

McCARTHY, DORFMAN & BRENNER, Esqs.

Mineola, New York

Ry: DAVID W. McCARTHY, Esq.

"or Defendant Nelson

WEINSTEIN, D. J.

qq Oarare - - -

The defendants, Jerome Mackey and William Nelson, »

were charged with mail fraud arising from their management

of Mackey Distrioutors, Inc. 18 U.S.C. § 1341. Distributors

was organized in 1°72 for the purpose of selling stereo

tape distributorships. Mackey was president and Nelson

secretary-treasurer.

During the course of the grand jury investigation

ee ee er ee eee -

the government called as a witness an attorney, Thomas Mazza

Mr. Mazza testified that he had been retained by Jerome

Mackey to draw the incorporation papers for Distributors.

— <_< << ©

The testimony was relevant since it showed that Jerome Mackey -

took an active interest in the new corporation; this made it

more likely that he would know of the fraudulent promises

made by its salesmen.

The defendants contend that Mazza's testimony

violated the attorney-client orivilese. Having been found

guilty by a jury, they renew their motion to dismiss the

indictment. As indicated below, this motion must be denied

because the existence of a privilege is doubtful, but even

if the privilege had been violated, a dismissal would be

unwarranted.

c3 3

. CLAIM OF PRIVILEGE

Defendants’ claim of privilege requires consider-

ation of the effect of the new Federal Rules of Evidence.

The grand jury proceedings in question took place on June 5,

1975. The Rules of Evidence were enacted effective July 1,

1975. Public Law 93-595, 88 Stat. 1926-1949. The trial was

commenced on September 29, 1975. Im the preamble to the Act,’

the usual escape clause is found allowing the prior rules

of evidence to operate in pending litigations where the Rules’

"would not be feasible, or would work injustice." The

preamble reads in part as follows:

"These rules apply to actions, cases,

and proceedings brought after the rules

take effect. These rules also apply

to further procedure in actions, cases,

and proceedings then pending, except

to the extent that application of the

rules would not be feasible, or would

work injustice, in which event former

evidentiary principles apply."

Since the grand jury proceedings were completed

prior to the Rules having taken effect, and the motion is

directed at those grand jury proceedings rather than at the

proceedings during the triel, it would be reasonable to

os ea ck ee 8

apply "former evidentiary principles." The United States

actorney who was conducting the grand jury proceedings, |

should obviously not be charged with any failure with respect.

to a rule subsequently adopted. No Rule of Evidence in

effect at the time of trial was violated because the testi-

mony of the attorney was not offered at the trial. Neverthe-

less, as we shall show below, there is no difference of

substance between the principles governing the instant case

under the Federal Rules of Evidence and prior practice.

In understanding what those prior practices are

it is useful to consider the present Rules of Evidence.

Drafted as they were by an Advisory Committee whose members

were actively engaged in litigation and approved by the

Supreme Court, which is itself engaged in reviewing litigatior

as well as by Judiciary Committees of Congress made up of

attorneys who were aware of prior practice, the Rules in

general are consonant with prior procedure. ‘In turn, earlier

practices are useful in interpreting the meaning of the Rules

themselves. We know, too, that on the floor of the Congress

the debate on the Rules was limited to a relatively small

group of Congressmen and Senators who were, in fact, parti-

cularly concerned with and learned in, the arts of litigation

{

cS 5

Thus, all those involved in the creation and enactment of

the Federal Rules of Evidence were learned in the law. We

may, in general, assume, therefore, unless otherwise indicated

by legislative history or Advisory Committee Commentary, thet.

the enacted Rules reflect the learning and experience of the |

drafters under prior practice. Accordingly, in the ree

which follows we have relied heavily on the present Federal |

Rules of Evidence as explicating practice at the time the |

grand jury met. |

There is no question that under the Federal Rules :

of Evidence the attorney-client privilege applies to grand

jury proceedings. Rule 1191(c) expressly states that "[t]he )

rule with respect to privileges apvlies at all stages of all

actions, cases, and proceedings." In addition, Rule 1101(d),

which provides that the rules of evidence shall not apply to

proceedings before grand juries, specifically excepts the

rules governing privileges.

While the Supreme Court promulgated a eines ;

article covering privileges, including that for attorneys and

clients, Congress eliminated specific references to any

privileges. Compare 56 F.R.D. 184, 230 ff, (1973) with

Article V of the Federal Rules of Evidence. The only pro-

vision of the enacted Rules covering testimonial privileges

in criminal cases embodies "principles of the common law"

. |

66 6

as "interpreted by the Courts of the United States in the ,

light of reason and experience." It reads:

" Rule 501.

GENERAL RULE

Except as otherwise required by the Constitution of the Unit-

_ ed States or provided by Act of Congrets or in rules prescribed

by the Supveme Court pursuant to statutory authority, the priv-

ilege of a witness, person, government, State, or political subdi-

vision thereof shall be governed by the princip!es of the common

law. as they may be interpreted by the courts of the United

tates in the light of reason and experience. However, in civil

actions and p:cceédinzs, with respect to an elernent of a claim

or defense as to which State law supplies the rule of decision,

the privilege of 2 witness, person, goverrment, State, or political

subdivision thereof shall be determined in accordance with State

law. "

Despite their deletion by Congress, the privilege

rules promulgated by the Supreme Court remain of consider-

able utility as standards. Congress expressed no disagree-

ment with their substance; it eliminated them primarily be-

cause they were considered substantive in nature, and not a

fit subject for rule making.

The specific rules on privilege promulgated by

the Supreme Court are reflective of "reason and experience."

They are the culmination of three drafts prepared by an

Advisory Committee consisting of judges, practicing lawyers

and academicians. In its many years of work, the Committee

eensiéored hundreds of suggestions received in response to

}

- slightly more violated by giving weight to this vote than

C7 aes te a 7

the circulation of the drafts throughout the legal community,

Finally, they were adopted by the Supreme Court by an eight |

to one vote. The rule against advisory opinions is pnly

it would have been had Congress not vetoed these provisions,

and had they become “Rules,” rather than "standards." |

As its commentary indicates, the Advisory Com-

mittee in drafting the privilege rules was for the most part

restating the law applied in the federal courts. These rules

or standards, therefore, are a convenient comprehensive guide

to the federal law of privileges as it now stands, subject

of course to a considerable flexibility of construction.

The ehcenensettene privildége was covered by the

Supreme Court 's Rule 503. The rule, significantly, tracks

the common law in the sense that it applies only to "con‘i-

dential communications." A litigant is entitled to object

to adverse testimony by a former attorney only when such testi-

mony would tend to reveal matters disclosed by the litigant

in confidence. Subdivision (b) of this Rule stated:

<3 8

'(b) General rule of privilege. A client has a privilege to re-

fuse to disclose and to prevent -ny other person from disclosing

confidential communications mm..de for the purpose of facilitating —

the rendition of professional legal services to the client, (1)

between himself or his represeriative and his lawyer or his law-

yer’s representative, or (2) between his lawyer and the lawyer's

representative, or (3) by him or his lawyer to a lawyer repre-

senting another in a matter of common interest, or (4) between

representatives of the client or between the client and a repre-

sentative of the client, or (5) between lawyers representing the

client. .

The minutes of Mazza's testimony before the grand ,

jury reveal very little, if anything, that would quality

as a confidential communication from the defendant Mackey.

In substance, Mazza's testimony brought five relevant facts

to the attention of the grand jury: 1) in 1972 Mazza repre-

sented Jerome Mackey in the formation of Distributors;

2) Mazza filed the certificate of incorporation and was the

sole incorporator; 3) he prepared a corporate kit consisting

of various documents which he retained until June 7, 1973 ©

at which time he turned the kit over to an employee of Jerome

Mackey; 4) he first became aware that Distributors was owned

by Jerome Mackey Judo, Inc., another corporation in which

Jerome Mackey had an interest, in the fall of 1972; and

5) at that time he prepared an agreement whereby Judo would

sell 1007, of its stock to Nelson and another person.

According to Mazza his sole source for the information

Ld...

‘employee of Jerome Mackey.

c9 3 ace

contained in this contract was either Jerome Mackey or an

The employee was a necessary intermediary to

transmit the information. See Supreme Court Rule 503(b)(1).:

Apparently Nelson was never a client and would have no

standing to rely on the privilege. In the discussion which |

follows we shall treat the claim as one by Jerome Mackey

only.

Since the minutes indicate that Mazza believed

he was acting for Jerome Mackey personally rather than for

Jerome Mackey Judo, Inc., we also make that assumption in

the analysis which follows. Under other circumstances this

issue might present a critical question of fact, requiring a

hearing.

The courts have held that ordinarily the concept

of a confidential communication does not include the

identity of a client or the fact that someone has become a

client. Colton v. United States, 306 F.2d 633 (2d Cir. 1962)

cert. denied, 371 U.S. 951, 9 L.Ed.2d 499, 83 S.Ct. 505

(1963); United States v. Pape, 144 F.2d 778, 782-783 (2d Cir.),

ee ; |

cert. denied, 323 U.S. 752, 65 S.Ct. 86, 89 L.Ed. 602 (1944) ;

ceunelle -tip. + tn0- ame Queene! ame GuAEEONED an-0.<m CEE OUD ece a ce o--om om |

This Circuit has held that the privilege does not prohibit

C10 | 10

Behrens v. Hironimus, 170 F.2d 627 (4th Cir. 1958); Goddard ~

v. United States, 131 F.2d 220 (Sth Cir. 1942); 8 Wigmore, |

Evidence § 2313 (McNaughton rev. 1961); McCormick, Evidence

§ 90 (2d ed. 1972). See also, In Re Grand Jury Proceedings,

United States v. Ganes, 517 F.2d 666 (Sth Cir. 1975). °

testimony concerning the general nature of the services per-

formed by the attorney. Colton v. United States, supra.

There is no reason in this case to depart from the general

rule. Facts 1, 2, and 3 above, therefore, were not privileged

from disclosure before the grand jury.

The fact that Jerome Mackey Judo, Inc. at one

point owned all of Distributors’ outstanding stock was

nationally publicized and utilized by defendants' salesmen

as a selling point when attempting to sell distributorships

to potential customers. 411 the non-privileged evidence

showed that this was accomplished with Jerome Mackey's con-

sent. Hence, there can be no claim that that information

was given to Mazza in confidence.

This leaves only that portion of Mazza's testimony

which indicates that Nelson and another, one Taylor, were

to purchase Jerome Mackey Judo, Inc.'s stock in Distributors.:

tial for purposes of the privilege.

Cll | 11

We assume for this discussion that Jerome Mackey, the

sheen. told this to Mazza; had the information come from

the non-clients, Nelson or Taylor, there would be no

privilege.

One of the central allegations of fraud involved

in this case is that the defendants permitted potential |

customers to think that Distributors was a wholly owned :

subsidiary of Jerome Mackey Judo, Inc. at a time when Nelson

’

and Taylor owned its stock. Thus, this testimony may have

helped persuade the grand jury to indict. The first issue, |

then, is whether this communication may be deemed confiden- |

A corporation is subject to the visitorial powers

of the government. A corporate officer or agent holds its

books and records subject to examination ™ authorized

representatives of the government. Morgan, Basic Probiems

of Evidence, 162 (4th ed. 1963). An officer, for example,

is generally not entitled by reason of his privilege against

self-incrimination to refuse to produce books and records owned

by the corporation. Essgee Co. of China v. United States, 262

é |

U.S.151, 43 S.Ct.514, 67 L.Ed. 917 (1923). Thus the names |

c12 eaere, Pas 013 43

of shareholders, which are clearly a matter of corporate . Canon 4. Certainly, he would have been wrong to circulate

. | .

record,.are not normally the kind of confidential information this intelligence for commercial purposes without his client's

| Sar

which is subject to the attorney-client privilege. This . consent. Put a lawyer's ethical obligation to protect

i a |

is true even of a closely held corporation such as Distri- | ' clients’ confidences against the world are broader than his |

butors. This case, then, would seem analogous to situations | | obligation -- or right as defined by the privilege -- to |

in which the courts have denied a claim of privilege on the withhold information from a court.

ground that information had been given to an attorney with !

If complete secrecy with respect to the transfer

the understanding that it could be transmitted to others.

' of shares was the intention from the outset it could be |

See, e.g., Colton v. United States, 306 F.2d 633, 638 (2d

Cir. 1963) . denied, 371 U.S. 951, 83 S.Ct. 515. 9 L.Ed ; argued that there was no privilege. By the fall of 1972

Be » cert. denied, 8. . .Ct. . Ed. |

i Jerome Mackey would have known that the salesmen's strong

2d 499 (1963); United States v. Tellier, 255 F.2d 441, 447

- gelling point was that Distributors was "credible" and

(2d Cir.), cert. denied, 358 U.S. 821, 79 S.Ct. 33, 33 L.Ed. (

od 62 (1958); 8 Wi Evidence § 2321 Qhileushten rev » Yeliable because it was a subsidiary of the publicly held

; gmore, Ev .

_ Jerome Mackey Judo, Inc. To have deliberately kept the

1961); McCormick, Evidence § 91 (2d ed. 1972). }

transfer secret would have been, under the circumstances,

It is perhaps arguable that Jerome Mackey and to nade aided a fraud.

Mazza understood that the purchase of Distributor stock by

Communications in aid of fraud are not privileged.

Nelson and Taylor would not be bruited about indiscriminately,

though they must have realized that stock ownership would ‘have

: As the Supreme Court's Rule 503(d) put it:

to be revealed for tax and regulatory purposes. If so, "(d) Exceptions. There is no privilege under this ©

rule:

(1) Purtherance of crime or fraud: If the services

of the lawyer were sought or obtained to enable or

aid anyone to commit what the client knew or

net mang should have known to be a crime or

raud;. .. '

Mazza may have been under an ethical obligation to maintain

the confidentiality of that information against non-govern-

mental inquiry. A.B.A. Code of Professional Responsibility,

_—-—_—_—_-—_+

. wi aan

cus 14

a) aaron ae cls 15

Nevertheless, it cannot be said that the claim Wik

of privilege is without some force. Arguably we are on the We have found no federal cases raising this pre-

borderline of the privilege. At any rate, as explicated cise issue. There is some authority, however, bearing on

' te’

below, for the purposes of this motion to dismiss we can ! the consequences of a grand jury's violation of a defendant s

; |

assume, without deciding, that the c nication might be constitutional privilege against self-incrimination. United —

east dinaaiaien States v. Lawn, 115 F.Supp. 674 (S.D.N.¥. 1953), appeal dis- |

‘missed as untimely Sub nom. United States v. Roth, 208 F.2d

Il.

467 (2d Cir. 1953), was a prosecution for wilfully causing a |

POWER OF THE COURT TO DISMISS THE INDICTMENT corporation to fail to pay income taxes. An initial informa-

The case law governing grand jury practice suggests

tion had been filed against several defendants in 1950. In

three conceptual bases upon which dismissal of the indict- |

1952, they were called before a grand jury conducting a further

' ment might be predicated when a defendant's evidentiary |

i !

| privilege is violated before the grand jury. None assist the

investigation into the same charges. All testified and one |

defendant produced partnership records. All this evidence was

defendant. incriminatory. The court held that the defendants had a right

First is the attorney-client privilege itself. The to invoke their constitutional privilege against self-

theory is simple enough -- just as the admission into evidence cnentatastsen Senese Ce Que Say ane Gas & Ge Hes

at trial of testimony which violates the privilege might be of 6 AGRE SETS. CR HR Aes nee See ee, Se

ground|tor reversal, so too sdaission of such evidence might court further noted that it would be a clear violation of the

warrant dismissal of the indictment. 8 Wigmore, Evidence, © privilege to compel the defendants = testify ws produce

records at a trial and concluded that

§ 2364 (McNaughton rev. 1961). Im short, the right implies

an appropriate remedy.

————

: for inspection of the grand jury minutes in order to determine

16 16

"for similar reasons, an indictment is

invalid if a defendant against whon |

a criminal information has been filed,

is called by the prosecution as a

witness before the grand jury to obtain

evidence tending to sustain an indict-

ment against him, which supersedes the

earlier information."

115 F.Supp. at 677. The court, accordingly, dismissed the

indictment. The quoted language -- analogizing the grand

jury right to the trial right -- lends some support to

defendants’ position here.

The Supreme Court, however, shortly thereafter,

seemingly rejected the district court's approach in a related

case. Lawn v. United States, 355 U.S. 339, 78 S.Ct. 311, 2

L. Ed. 321 (1958).

against the same defendants which superseded the one dismiss

by the district court. This new indictment was the product o

a@ separate grand jury investigation. The defendants again

moved for dismissal and, in the alternative; for a hearing and

| whether the government, in procuring the indictment, had used

testimony or documents produced before the first grand jury

‘or evidence obtaineu through leads and clues.

The government had obtained an indictment

Cl7 17

The Court affirmed the district court's denial

of this motion on the ground that defendants’ affidavits

and submissions did not support an inference that the govern-

ment had made any use of the defendants’ prior testimony |

and documents. But, in rather sweeping dicta, it went

on to suggest that government use of that evidence would not!

have warranted dismissal of the indictment, in any event.

Relying principally on Costello v. United States, 350 U.S.

359, 76 S.Ct. 406, 100 L.Ed. 755, discussed below, the

Court said:

". . . [e]his Court has several times

ruled that one indictment returned by

@ legally constituted nonbiased grand

jury, like an information drawn by a

prosecutor, if valid on its face, is

enough to call for a trial of the

charge on the merits and satisfies the

requirements of the Fifth Amendment.

It should be unnecessary to say that

we are not here dealing with the use

of incompetent or illegal evidence in

a trial on the merits, nor with the

right to decline to give incriminating

testimony in legal proceedings or to

suppress the direct or derivative use

at the trial of evidence illegally

obtained."

355 U.S. at 349-350, 78 S.Ct. at 317-318.

were not entitled to a "preliminary hearing to

The distinction drawn between the status of the

privilege at trial and before the grand jury is critical.

For, although the precise holding of the case was that petitioners

enable them to

satisfy their unsupported suspicions,’ 355 U.S.

o: 31S, the Court has very recently cited Lawn for the pro-

position that "an indictment valid on its face is not subject

t> challenge on the ground that the grand jury oe © OT

acted

tie besis of information obtained in violation

Fifth Amendment privilege against self-incrimination."

United States v. Celandra, 414 U.S. 338, 345, 94 S.Ct. 613,

| 618, 38 L.Ed.2d 561 (1974).

It would seem to follow, a fortiori, that the right

to invoke a common law testimonial privilege, which does not

stand on a constitutional footing, does not imply any right

to a dismissal of an indictment. The only limitation on

| this principle has been the suggestion by some courts that

‘an indictment is invalid if it could not be supported without

'the privileged matter. See United States v. James, 493 F.2d

323 (2d Cir.), cert. denied, 419 U.S. 834, 95 S.Ct. 87 (1974);

United States v. Pepe, 367 F.Supp. 1365, 1370 (D.Conn. 1973). :

at 350, 78 S.Ct.

of a defendant's

cig | 19

See also People v. Eckert, 2 N.¥.2d 126, 128, 157 N.¥.S.2d

551, 554 (1956) (admission of doctor's testimony in violation

of defendant's privilege was improper but indictment would

not be dismissed where there was sufficient competent evi- .

dence also presented to the grand jury). |

In the instant case, there was overwhelming evi- |

dence of defendants’ mail fraud \ presented to the grand jury’

apart from Mazza's testimony. Mere violation of the attorney-

client privilege, would not support dismissal. !

A second theoretical basis for dismissal is that |

portion of the Fifth Amendment which guarantees that "No

person shall be held to answer for a capital, or otherwise

infamous crime, unless on a presentment or indictment of a

grand jury." U.S. Const. Amend. V. The theory here would

be that this constitutional protection assumes that the

grand jury will conform to the law and confine its deliber-

‘ations to —— or otherwise legally obtainable evidence.

This sppreach was largely rejected by the Supreme Court in

Costello v. United States, 350 U.S. 359, 76 S.Ct. 406,

100 L.Ed. 397 (1956).

In Costello the defendant moved to

dismiss the indictment on the ground that the only witnesses |

_ the Fifth Amendment grand jury provision.

ifs

———SSSse SS SS

| practices of the early English grand jury

C20 ogi 20

to appear before the grand jury were three government investi-

gators who had no first hand knowledge of the acts of tax

evasion with which defendant was charged and who were only

able to repeat the hearsay declarations of others. Costello

argued that an indictment based solely on hearsay violated

The Court based its analysis primarily on the

"The basic purpose of the English grand

jury was to provide a fair method for

instituting criminal proceedings against

persons believed to have committed crimes.

Grand jurors were selected from the body

of the people and their work was not

hampered by rigid procedural or evidential

rules. In fact, grand jurors could act

on their own knowledge and were free to

make their presentments or indictments

on such information as they deemed satis-

factory."

350 U.S. at 362, 76 S.Ct. at 408.

The Court concluded that:

"If indictments were to be held open to

challenge on the ground that there was

inadequate or incompetent evidence before

the grand jury, the resulting delay would

be great indeed. The result of such a

rule would be that before trial on the

merits a defendant could always insist

on a kind of preliminary trial to

determine the competency and adequacy

in United States v. Calandra, 414 U.S. 338, 94 S.Ct. 613,

| 38 L.Ed.2d 561 (1974), affords some additional insight.

cal 21

“of the evidence before the grand jury.

This is not required by the Fifth |

Amendment. An indictment returned by

a legally constituted and unbiased !

grand jury, like an information drawn

by the prosecutor, if valid on its

face, is enough to call for trial of

the charge on the merits. The Fifth

Amendment requires nothing more." |

, 350 U.S. 363, 76 S.Ct. at 408, 409. |

Fairly read, Costello may be said to stand for the

proposition that the validity of an indictment under the :

Fifth Amendment is in no way dependent on the legality of

the evidence received by the grand jury. Arguably, however,

the facts if not the language of Costello are distinguishable

in the sense that there defendant's contention went essentially

to the reliability and, hence, the sufficiency of the evidence

presented to the grand jury. In this case, by contrast,

defendant's objection centers on the violation of his right to

confidential communication with his attorney -- i.e., on the

legality of the government's conduct in obtaining the evidence,

in the first instance.

In this connection, the Court's recent decision

, least where there has not been a prior adjudication that

C22 22

Calandra had obtained an order from a district court provid-

ing that he need not answer a grand jury's questions which |

were based upon records seized from his place of business |

in violation of the Fourth Amendment. The Supreme Court |

reversed the Sixth Circuit's affirmance, holding that at

evidence has been illegally seized, a witness who has not

been indicted may not invoke the exclusionary rule to secure

suppression of evidence nor relief from the duty to testify.

See esp. n. 8, 414 U.S. at 352, 94 S.Ct. at 622. It is

true that the question in Calandra was the existence of a

right to exclude evidence before the grand jury -- a right

assumed here -- and that the primary rationale for the

decision was the majority's view of limitations on the

exclusionary rule. 414 U.S. at 347-355, 94 S.Ct. 619-624.

But it is hardly likely that the Court would permit the intro

duction of illegally seized evidence if it anticipated the

dismissal of a resulting indictment on the basis of the

Fifth Amendment. This observation, coupled with the re-

liance placed on its own gecteten in Lawn v. United States,

noted above, indicate that the Court perceives no limitations

inherent in the Fifth Amendment on the kind of evidence thet |

may be considered by a grand jury. ;

' 21 L.Ed.2d 131, (1968); United States v. Johnson, 419 F.2d 56,

c23 a 23

The conclusion that an indictment is not invali-

dated by grand jury reception of illegally ovtained evidence

| is further supported by dicta in United States v. Blue,

- 384.U.S. 251, 255 n. 3, 86 S.Ct. 1416, 1419, 16 L.Ed.2d

/ §10 (1966) and by a broad consensus of lower court authority.

| +2. States v. Doe, 455 F.2d 1270 1274 (ist Cir.

See, £-Z-, United Doe, 4' , :

. 1972); united States ex rel. Almeida v. Rundle, 383 F.2d 421,

424 (3d Cir. 1967); cert. denied, 393 U.S. 863, 89 S.Ct. 144,

| 58 (4th Cir. 1969), cert. denied, 397 U.S. 1010, 90 S.Ct. 1235

| 25 L.Ed.2d 423 (1970); Hunter v. United States, 405 F.2d 1187 |

(9th Cir. 1969).

SS See ee

to dismiss an indictment based entirely on tainted evidence,

}see, e.g., Laughlin v. United States, 385 F.2d 287, 291

'(D.C. Cir. 1967), cert. denied, 390 U.S. 1003, 88 S.Ct. 1245,

'20 L.Ed.2d 103 (1968); United States v. Kahn, 366 F.2d 259,

‘264 (2d Cir.), cert. denied sub nom. Pacyili v. United States,

(385 U.S. 948, 87 S.Ct. 321, 324, 17 L.Ed.2d 226, rehearing

A number of cases suggest that it may be necessary

denied, 385 U.S. 984, 87 S.Ct. 502, 503, 17 L.Ed.2d 445 (1966) ;

United States v. Isaacs, 347 F.Supp. 743, 757 (N.D. Ill. 1972) ;.

—————S—_——Oo = ———==--—_—_

—— > — =

c2h

United States ex rel. Pacheco v. Casseles, 312 F.Supp. 554,

556 (S.D.N.Y. 1970). As noted, this is not the case here.

A third basis for dismissal of the indictment

would be in the exercise of inherent "supervisory powers"

over the conduct of government attorneys before the grand

jury. See United States v. Estepa, 471 F.2d 1132, 1136

(2d Cir. 1972).

The Supreme Court in Costello, however, specific-

ally held that this power should not be exercised so as to

permit defendants to challenge indictments on the ground that’

they are not supported by competent evidence. The Court

concluded that:

"[nJ]o persuasive reasons are advanced

for establishing such a rule. It

would run counter to the whole history

of the grand jury institution, in which

laymen conduct their inquiries unfettered

by technical rules. Neither justice

‘nor the concept of a fair trial requires

such a change. In a trial on the merits,

defendants are entitled to a strict ob-

servance of all the rules designed to

bring about a fair verdict. Defendants

are not entitled, however, to a rule

which would result in interminable delay

but add nothing to the assurance of a

fair trial."

| 350 U.S. at 364, 76 S.Ct. at 409.

_ 24

| not applying the rules of evidence to grand jury proceedings

| the Committee did not provide similar guidance on why the

rules of privilege were excepted from that policy.

| Advisory Committee Notes to Rules 1101(c) and (4).

025 2s

’ Given that dismissal of the indictment’ is not

required by the court's interests in reliable fact finding by

the grand jury or in preserving fairness to the defendant,

it would seem to follow that the exercise of the court's

supervisory power to dismiss can only be justified. by extrinsic

' policy considerations -- specifically, the policy considerations

underlying that portion of Rule 1101(d) of the Federal Rules

of Evidence which, in conjunction with Rule 1101(c),

preserves the common law privilege in grand jury proceedings.

Although the Advisory Committee which drafted the |

| Federal Rules was explicit in setting forth the reasons for

-- relying on the quotations from Costello set out above --

ee ee

Pre-

i federal Rules of Evidence cases which have either upheld or ret.

cognized the right to invoke a testimonial privilege in a grand

jury proceeding are likewise silent as to the reasons for doing

so, See, United States v. Pappadio, 346 F.2d 5, 9 (2d Cir.

1965) (attorney client privilege), vacated sub nom. Shillitani

v. United States, 384 U.S. 364, 86 S.Ct. 1531, 16 L.Ed.2d 622

C26 26 C27 27

(1966); In Re Goldman, 331 F.Supp. 509 (W.D. Pa. 1971)

See 1 C. Wright, Federal Practice and Procedure [Criminal]

(attorney-client privilege); Blau v. United States, 340 U. Ss.

§ 106 (1969). It is true that no such obligation is imposed |

332, 71 S.Ct. 301, 95 L.Ed. 306 (1951); United States v.

on the witness, but there is no reason to assume that

George, 444 F.2d 310 (6th Cir. 1971) (marital privilege) ;'

testifying before a grand jury will render a privileged communi-

In Re Verplank, 329 F.Supp. 443 (C.D. Cal. 1971) (priest-

cant more likely to disclose confidential matter in the future.

penitent privilege).

At trial additional protections come into play. It

The preservation of the traditional testimonial pri-

is axiomatic that a testimonial privilege can only be waived

' vwileges in the grand jury context is consistent with several

by the holder. Accordingly, the revelation of privileged

policy objectives. One function of the rule is to preserve

matter before the grand jury by an attorney, for example, would

, the secrecy of confidential communications. Subdivision(c) of not constitute a waiver of the client's privilege so as to |

Rule 1101 supports the view that confidentiality once destroyed entitle the government to introduce that matter at trial.

cannot be restored, and that a privilege is effective only if _ Supreme Court Rule 512 expressly provided that a disclosure

c bars all disclosures at all times. Nevertheless, in the of privileged information is not admissible against a holder

| grand jury context, this unquestionably serious concern about

| protecting important relationships is substantially mitigated by

who had no opportunity to claim the privilege. The rule

provided:

| Several factors. Rule 6(e) of fhe Federal Rules of Criminal "Rule 512.

Procedure imposes a strict obligation of secrecy on all jurors,

Privileged Matter Disclosed Under

Compulsion or Without Opportunity

_attorneys, interpreters, stenographers, operators of recording to Claim Privilege. .

Evidence of a statement or other disclosure

of privileged matter is not admissible

against the holder of the privilege if the

disclosure was (a) compelled erroneously

or (bt) made without opportunity to claim

the privilege."

‘devices, and typists involved in a grand jury proceeding.

\Such persons may disclose matters occurring before the grand

jury only to government attorneys for use in the performance

‘of their duties or as otherwise directed by the court.

ont

ST Se

—— ee ee

aaa OO eee Oe Se

Since the defendant Jerome Mackey was not before the grand

jury when the testimony was given, he had no opportunity to

claim the privilege. He would have been entitled, therefore,

to object to Mazza's testimony at trial had it been offered

by the overnment. It is also significant that where the

holder of the privilege is called before the grand jury and

compeiled erroneously to testify, Supreme Court Rule 512

would provide that no waiver occurs.

Congress struck Rule 512 but, as already noted, th

provision still is useful as a standard. Accordingly, the

defendant would retain his right to invoke the privilege at

trial, either to exclude testimony by the communicant or to

bar introduction of his own prior statesent as an admission.

In addition, the court would have some discretion to bar

the fruit of the privileged testimony, at least where the

government was a party to the improper breach.

Finally, Supreme Court Rule 513 would prohibit any

comment on the claim of privilege. The rule, as promulgated

the Supreme Court but not adopted by Congress, stated

— ee oe

C29 29

"Rule 513.

COMMENT UPON OR INFEKENCi: FROM CLAIM OF

PRIVILEGE: INSTRUCTION

(a) Comment or inference not permitted. The claim of a

privilege, whether in the present proceeding or upon a prior oc-

casion, is not a proper subject of comment by judze or counsel.

No inference may be drawn therefrom.

(b) Claiming privilege without knowledge of jury. In jury

cases, proceedings shall be conducted, to the extent practicable,

80 as to facilitate the making of claims of privilege without the

knowledge of the jury.

the jury might draw an adverse inference from a claim of priv-

ilege is entitled to an instruction that no inference may be drawn

therefrom.

This approach is in accord with pre-existing practice in the |

federal courts. See, e.g., Courtney v. United States, 390 |

| F.2d 521, 527 (9th Cir.), cert. denied, 393 U.S. 857, 89 S.Ct.

98, 21 L.Ed.2d 126, rehearing denied, 393 U.S. 992, 89 S.Ct.

| 440, 21 L.Ed.2d 457 (1968). |

| |

In sum, there exist substantial safeguards which

guarantee continued secrecy for confidential communications

improperly disclosed to a grand jury. Dismissal of an indict-

ment would add little to these protections.

A second objective of Rules 1101l(c) and (d) may be

to supplement the traditional function of the privileges then-

selves in encouraging the formation of protected confidential

= ———— >? + 1

= — Se

C30 30

relationships and free and frark discussion within those re-

lationships. See, e.g., Wigmore, Evidence §§ 2285, 2286, 2290,

2291, 2332, 2333 (McNaughton rev. 1961); McCormick, Evidence

§§ 72-74, 78, 87, 98 (Cleary ed. 1972). It should be

observed, however, that only a small fraction of attorneys,

spouses, physicians, and other privileged communicants are

called before grand juries. Those that are called are al-

ready guaranteed their authority to claim the privilege by

Rule 1101.

al ethical obligation to refuse to disclose confidential

matters. A.B.A. Code of Professional Responsibility, Canon

4. Their training should alert them to the issue so that

inadvertent breaches are unlikely. See, In Re Stolar,

397 F.Supp. 520 (S.D.N.¥. 1975); United States v. Mitchell,

372 F.Supp. 1239 (S.D.N.Y. 1973), and In Re Terkeltoub

NS el

256 F.Supp. 683 (S.D.N.Y. 1966). It would thus appear that

a rule guaranteeing dismissal of an indictment should a

privilege be erroneously breached, would constitute, at best,

a wholly speculative, marginal incentive to the formation

of confidential relationships. In United States v. Calandra,

the Court refused to extend the exclusionary rule to grand

juries because of the slight incremental deterrent impact on

police misconduct of such extension.

Attorneys, in particular, are under a profession-.

C31 31

The preservation of the testimonial privileges

in grand jury proceedings also serves to prevent govern~-

mental interferences with the protected relationships. An

attorney or spouse, for instance, is very often a fertile

source of incriminatory information. Without the Rule a |

privileged communicant called as a witness would face the

problem of choosing between disclosing confidential matter,

testifying falsely, and possibly incurring contempt by remain

silent. It is at least arguable that the risk of a

dismissal of any resulting indictment is the only effective

means of discouraging zealous prosecutors from improperly

seeking privileged matter for grand juries in violation of

Rules 1101(c) and (d). If valid, such an hypothesis would

directly support the exercise of the court's supervisory

power. In this connection, a line of Second Circuit de-

cisions dealing with the use of hearsay in grand jury pro-

ceedings is particularly instructive.

In United States v. Umans, 368 F.2d 725 (2d Cir.

1966), cert. granted, 386 U.S. 940, 87 S.Ct. 975, 17 L.Ed.2d

872, cert. dismissed as improvidently granted, 398 U.S. 80,

88 S.Ct. 253, 19 L.Ed.2d 255 (1967), the Court strongly ad-

monished the government not to make excessive use of hearsay:

C32 32

"“Jhile we are not condemning the pro-

cedure used here before the grand jury,

we think it not amiss for us to state

that excessive use of hearsay in the

presentation of government cases to

grand juries tends to destroy the

historical function of grand juries

in assessing the likelihood of pro-

secutorial success and tends to destroy

the protection from unwarranted pro-

secutions that grand juries are supposed

to afford to the innocent. Hearsay

evidence should only be used when direct

testimony is unavailable or when it

is demonstrably inconvenient to summon

witnesses able to testify to facts from

personal knowledge."

368 F.2d at 730.

In United States v. Arcuri, 252 F.Supp. 247

(E.D.N.Y.), aff'd, 405 F.2d 691 (2d Cir. 1968), cert. denied

395 U.S. 913, 89 S.Ct. 1760, 23 L.Ed.2d 227 (1969), this

court after reviewing the decisions refused to overturn an

indictment, despite the unjustified reliance on hearsay by

the government, because the grand jury could not possibly

have failed to indict on the basis of the non-hearsey evi-

dence. But the government's continuing failure to comply

with the Second Circuit's admonition in Umans was felt to

warrant a stronger rule and more uniformly applied sanctions.

It was held that a timely motion to dismiss an indictment

handed down after March 31, 1968 would be granted without

C33 | : oe

a showing of prejudice to the defendant if it were clear

° t

that hearsay alone was deliberately relied upon when better |

evidence was readily available. This local dismissal rule |

has been exercised on at least one occasion. See United

States v. Chesimard, 72 CR 5 (oral decision 1975).

Finally, in United States v. Estepa, 471 F.2d 1132:

(2d Cir. 1972), the Court of Appeals ordered an indictment

dismissed because of the deliberate and misleading presenta-

tion of hearsay to the grand jury. The Court reached the con-

clusion that the time had arrived for the exercise of its

supervisory power on the basis of the following considerations:

‘Ye had hoped that, with the clear

warnings we have given to prosecutors,

. . « and the assurances given by

United States Attorneys, ...- 4

reversal for improper use of hearsay

before the grand jury would not be

required. Here the Assistant United

States Attorney, whether wittingly or

unwittingly -- we prefer to think the

latter, clearly violated the first of

these provisos. We cannot, with proper

respect for the discharge of our duties,

content ourselves with yet another ad-

monition; a reversal with instructions

to dismiss the indictment may help to

translate the assurances of the United

States Attorneys into consistent per-

formanca by their assistants.”

| 471 F.2d 1136-37. |

| Man

t \

ee ere ee eee cee

ee -

C34 C35 35

ine upshot of these decisions is that just as a | :

, (Stir Cir. 1970) (motion to quash indictment on ground that -

court may exercise its supervisory powers to enforce the

prosecutor had inaccurately informed grand jury that defendant

standards of prosecutorial conduct licit in the Fifth

- inp had a long record addressed to discretion of trial court;

Amendment grand jury guarantee, so too the court may exercise

& jury g ° y discretion not abused where other competent evidence had been |

presented to the grand jury and misrepresentation by prosecution

was not deliberate); United States v. Tane, 329 F.2d 848, 853-4 :

those powers to enforce the standards of prosecutorial conduct

contemplated by Rules 1101(c) and (d) of the Federal

Rules of Evidence. But, in determining whether to sh ‘ .

, g vues (24 Cir. 1964) (trial court had discretion to dismiss indict-

facially valid indictment, the court must weigh the added

F ment based wholly on testimony procured as fruit of illegal

deterrent effect of a dismissal against the substantial counter-

. " wiretap); United States v. Thomas, 342 F.2d 132 (6th Cir.),

ili id ti ticulated by the Supreme Court in Costell

ee Ve oe me ee OSeen a F cert, denied, 382 U.S. 855, 86 S.Ct. 105, 15 L.Ed.2d 92, (1965)

Such an assessment turns, for the most part, on the deliberateness (motion to dismiss indictment on ground that presentation of

of the government's conduct, the egregiousness of the violation testimony to grand jury violated prior promise by government not

aad the extent to which the defendant has beer prejudiced. In the to use certain evidence against defendante properly denied where

absence of these factors, the court should consider whether the other competent evidence had been presented but some counts

challenged practice contravenes an outstanding judicial admonition quashed); United States v. Pepe, 367 F.Supp. 1365 (D.Conn. 1973

or 4 prior statement of policy by the government. (although dismissal of indictment not required for violation of

= court would

Other cases have adopted a similar discretionary ap- defendant's privilege against gsi dani

e "s conduct was

proach to the exercise of the court's supervisory power where exercise discretion to dismiss ee

imilar values have been threatened by prosecutorial

sia 369 F.Supp. 1396 (E.D.N.C. 1973) (indictment dismissed because

misconduct. See, United States v. Fox, 425 F.2d 996, 1001

' here is at best tenuous. Defendants have not alleged tha:

C36

prosecutor deliberately introduced by questions and remarks

irrelevant evidence designed to inflame grand jury and create

prejudice).

By any of these standards, the indictment in

this case should not be dismissed. The claim of privileg:

the government acted with bad faith in questioning Mr. om

The Assistant United States Attorney who handled this cas:

hes presented en affidavit which discloses that he and Mr.

Mazza carefully considered in advance the problems raised

by the attorney-client privilege and concluded after dis-

cussion that Mr. Mazza's testimony would not disclose cor

fidential matters. Moreover, the defendants were not meming-

fully prejudiced by Mr. Mazza's appearance. Even in the

absence of his testimony, the grand jury could not con-

ceivably have failed to indict.

Ill.

OBLIGATION OF UNITED STATES ATTORNEY

To comply with the policy of Rule 1101 the Un:ted

States Attorney should not knowingly violate a privilege

before the grand jury. He should be sensitive to possib.e

problems. If there is any substantial possibility of a

~ Brn SEH

. he cannot afford one; to refuse to answer questions if he