Petition — King v. United States

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IN THE

Supreme Court of the United States

October Term, 1977

No. 2¢-463

A. ROWLAND BOUCHER,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

NORMAN B. ARNOFF, ESQ.

Attorney for Petitioner

A. Rowland Boucher

630 Fifth Avenue

Room 1910

New York, New York 10020

(212) 582-0132

ANDREW J. MALONEY, ESQ.

630 Fifth Avenue

Room 1910

New York, New York 10020

(212) 586-6006

Of Counsel

COUNSEL PRESS, INC., 55 West 2nd Street, New York, N.Y. 10036 @ (212) 391-6622

Supreme Court, U, §.

FILED

SEP 23 1977

{AROMAT HODAK,. 1k. CLERK

PAGE

Opinion Below *eoecooeseoeoeesweeeseeoeeeeoeeeeees 2

Jurisdiction. *eeeeeeeeoe#eceeeeeseoeseeeeeeoe 2

Questions Presented.ccceses eevee oeeeee

WwW

Statutory and Constitutional Provi-

sions SEs 6 6-0 6066600666666 0068068 4

Bentemens OF Gee GbOSccccccscecesecesse »

Reasons for Granting the Writ...ecoses. 15

I. Petitioner claims immunity

in connection with his tes-

timony in a Section 167

hearing in the Chapter X

Reorganization Proceeding

of King Resources Company,

a public company of which

he was then President and

Chairman of the Board. A

sound construction of the

bankruptcy statutes re-

quires that the benefits

of the immunity provisions

of the bankruptcy statute

should apply to a Section

167 hearing.

II. The Court of Appeals

erroneously did not con-

sider the immunity issue

because it limited “use"

and "derivative use" to

investigatory leads; and

did not consider, as it

properly should have, the

use of such testimony by

PAGE

the prosecution to obtain

advance knowledge of de-

fense strategy and assist-

ance in cross-examination

of the defendant. In the

case at bar, the Government,

in proceedings below, vir-

pen a conceded the use of

such bankruptcy testimony

for just such tactical ad-

vantage and assistance in

cross-examination.

III. Petitioner further urges

those issues raised by

petitioner King because

they equally affect peti-

tioner's right to a fair

trial, viz. a preclusion

by the Court limiting the

proof as to the present

value of the property

claimed to have been

fraudulently inflated by

the conduct of the defend-

ants.

P< cccnceubbesenceds Sbeeeeses 26

iii

TABLE OF AUTHORITIES

General Stores v. Shlensky, 350 U.S.

462 Pre rrr TT TTITTyT

In re Bush Terminal Co., 102 F.2d’ #;i

(2d Cir. | OTT TTT TTTTrTTre

Kastigar v. United States, 406 U.S.

4h (Jj titi ete ee teseececececeess

Standard Gas & Electric Co., 54 F.

Supp. 752 (D.C. Del. |

United States v. Bianco, 534 F.2d 501

(2d Cir. Dt eieeeeeeeGeeceeeecec

United States v. Castellana, 349 F.2d

264 (2d Cir. DEP Peseeececesesooecese

United States v. McDaniel, 482 F.2d

305 (8th Cir. DEP EPs eccccoececece Bas

United States v. Weissman, 219 F.2d

837 (2d Cir. Be dccccecesccccece 17,

STATUTES

Title 11 U.S.C. § 25(a)(1) (1952)

[Bankruptcy Act § 7(a)(10)|........3, 4,

Title 11 U.S.C. § 502 (1898

[Bankruptcy Act, ch. X §102]....eceee.

Title 11 U.S.C. § 567 (1898

[Bankruptcy Act, ch. X §167]. 3,4, 16,18

18 U.S.C.A. § 1406 Dt nescececce

18 U.S.C.A. § 2514 Ee

PAGE

,2l

PAGE

1B U.B.CoAe $ S486 (19S}S)eccccecccccess &

OTHER AUTHORITIES

6 Collier on Denksuptey (14th ed.

1972) 91718, pp. 1210-14; 917.19, pp.

L215 25 ccc were sce coseeeesesecoesses 17, 19

2 Collier on Bankruptcy (14th ed.

1972) 97 21.05pp. 248-282 [p. 278 n. l,

Pleo esc esoscsereseeesesesesesosesesens 19

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No.

A. ROWLAND BOUCHER,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Petitioner A. Rowland Boucher

prays that a writ of certiorari issue to

review a decision of the United States

Court of Appeals for the Second Circuit,

dated July 22, 1977, which affirmed a

judgment of conviction for securities

fraud (15 U.S.C. § 78(j)(b)), mail fraud

(18 U.S.C. § 371), entered in the United

States District Court for the Southern

District of New York after a trial by

jury. John King, a defendant below, also

has filed a petition with this Court.

OPINIONS BELOW

The opinion of the Court of

Appeals is included in Appendix A, pp.

la-25a. The opinion of the District

Court is included in Appendix B, pp. 26a-

44a.

JURISDICTION

The judgment of the Court of

Appeals was entered July 22, 1977. A

petition for rehearing was denied on Aug-

ust 24, 1977, and that decision is in-

cluded in Appendix C, pp. 45a-46a. The

time for filing this petition extends to

and including September 24, 1977. The

jurisdiction of this Court is conferred

by 28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

1. Whether petitioner was auto-

matically immunized under §/7(a)(10) of

the Bankruptcy Act (11 U.S.C. § 25(a)(10))

as a result of testimony given by the

petitioner in hearings held pursuant to

§ 167 of the Bankruptcy Act.

2. Whether the Government's

use of such testimony, if immunized, sub-

sequent to the indictment to gain an ad-

vance preview of what position petitioner

would take at time of trial and assistance

in preparation for petitioner's cross-

examination requires dismissal of the

indictment.

3. Petitioner further urges

those issues raised by petitioner King,

because they equally affect petitioner's

right to a fair trial, viz. a preclusion

by the Court limiting the proof as to the

present value of the property claimed to

have been fraudulently inflated by the

conduct of the defendants.

STATUTES INVOLVED

The statutory provisions involved

are § 7(a)(10) and § 167 of the Bankruptcy

Act (11 U.S.C. § 25(a)(10) and § 567).

STATEMENT

Petitioner A. Rowland Boucher

was president of King Resources Company

("KRC"), which, in 1969 and to this date,

jointly held vast tracts of oil and natural

gas resources in the Canadian Arctic along

with Fund of Funds ("FOF"), an off-shore

open-end investment company. In December,

1969, KRC's principal customer FOF reques-

ted an evaluation of a part of their joint

holdings in the Arctic. To accomplish this

evaluation, it was agreed that a small por-

tion of these jointly held Arctic leases

would be the subject of arms-length sales.

In December, 1969, KRC effected two sales

negotiated by John King, KRC's then Chairman

of the Board, its principal stockholder

and petitioner's codefendant who secretly

guaranteed, according to the Government's

proof, the buyers against any loss on

their purchase. Thereafter, the petitioner,

then President of KRC, and his codefendant

King, in confirmation letters to FOF's

auditors, falsely represented that these

sales were "arms-length" transactions.

The Government's proof at trial

included evidence on the negotiation and

consummation of these sales, the value of

the Arctic leases which were the subject

of the sales, and on other natural resource

properties sold to FOF by KRC.

The gravamen of the Government's

case against petitioner was that he had

fraudulently misrepresented, in the above-

referred to confirmation letters to the

FOF auditors, that these sales of natural

resource properties were arms-length

transactions when in fact they were not.

His defense was predicated on his denial

of guilty knowledge of any buy-back guar-

antees with respect to the aforementioned

sales as well as his good faith belief at

the time that the natural resource proper-

ties were worth as much if not more than

what the "arms-length" purchasers paid

for them.

On August 14, 1971, creditors

of KRC filed an involuntary petition in

bankruptcy against KRC in Dallas, Texas.*

Thereafter, the Bankruptcy Court appointed

a trustee, and the petitioner as an

* Those proceedings continue to this day,

with the SEC reversing itself and now

recognizing the marked increase in value

in KRC's Arctic leases during the years.

The Court at time of trial refused peti-

tioner's opportunity to prove that the

present value of these Arctic leases

are twenty or more times the value

placed on them in 1969 by the petitioner.

additional trustee. Both trustees were

to perform the "statutory duties" imposed

upon the bankrupt under the Bankruptcy

Act. At the commencement of these pro-

ceedings, petitioner, through counsel,

reserved all of his rights to any statu-

tory immunity. Appendix D, pp. 47a-54a.

Petitioner then testified for approximately

six hours.

On October 20, 1971, the bank-

ruptcy proceeding involving KRC was trans-

ferred from Dallas, Texas to a more appro-

priate venue, Denver, Colorado. A new

trustee was appointed and petitioner re-

signed as trustee, although he remained

as KRC's Chairman of the Board and Chief

Executive Officer. On August 6 and 7,

1973, the trustee's counsel examined peti-

tioner Boucher on virtually every material

subject that was to be the subject matter

of the indictment as well as on the fac-

tual material that would arise on trial

of this case.

During the period of the Chapter

X Reorganization Proceedings involving

KRC, it was undisputed that petitioner

hired and fired personnel; conducted vari-

ous drilling programs of KRC's natural

resources enterprises; performed functions

with respect to KRC's satisfying its obli-

gations to its creditors; negotiated, pre-

pared, reviewed, and implemented various

natural resource contracts entered into

during the course of the bankruptcy pro-

ceedings; and submitted affidavits to the

federal court administering the bankruptcy

in connection with the purchase and/or

sale of KRC's properties.

On the eve of trial, after sub-

stitution of counsel,* the petitioner

moved to dismiss the indictment on the

ground that he had been previously immu-

nized in connection with the bankruptcy

proceedings of KRC.

In its response, the prosecution

conceded that the following documents had

just been discovered in its files:

1. The transcript of Boucher's

deposition conducted by the Denver trustee

on August 6 and 7, 1973, which was located

in a file denominated "Irrelevant";

2. Excerpted portions of the

transcript of Boucher's testimony conducted

on September 13, 1971, in Dallas, in which,

early on in the transcript, he refused to

* The District Court had noted that peti-

tioner had for some time been acting

pro se.

waive any immunity privileges under the

Act;* and .

3. A copy of the Denver trus-

tee's report, dated October 10, 1973,

which, the Government conceded, was based

in part on Boucher's testimony.

In addition, the staff attorney

of the SEC who was responsible for the

KRC investigation (and who assisted the

prosecution to the extent of sitting at

counsel table during the trial) admitted

reading the August 6 and 7, 1973 testimony

in the summer of 1975 (prior to the trial),

* It is unknown whether this was the cause

of the 1973 deposition's finding its way

into an "irrelevant" file in the U.S.

Attorney's office. In any event, the

Government was clearly in violation of

its departmental directives in the treat-

ment of bankruptcy testimony, see Dept.

of Justice Memo No. 744, April 8, 1971,

to "All U.S. Attorneys" outlining precau-

tionary measures in dealing with bankruptcy

immunity. Appendix E, pp. 55a-59a.

but claimed he did not recall any of it

and dismissed it as irrelevant.

Further, the prosecutors ex-

plained in their affidavits that they

believed they had not read the transcripts

because they had repeatedly discussed

among themselves and their SEC colleague

what position the petitioner and his co-

defendant might take at the time of trial,

and, thus, would have remembered reading

the August 1973 transcripts.

The Court denied the motion

without a hearing but granted leave to

renew it following the trial.

POST-TRIAL

Following the verdict, a hear-

ing was held and the Court denied the

motion, inter alia, on the ground that

the Government did not obtain any "leads"

from Boucher's testimony in KRC's reorgan-

ization proceeding.

During the hearing, the SEC

staff counsel testified that he had con-

tacted the trustee's counsel shortly after

being assigned to the investigation in

September 1973, and that he had not foc-

used on the two critical sales transactions

until after he had had such contact with

the trustee's counsel. He further acknowl-

edged that he had had a number of conversa-

tions in the fall of 1973 with the trustee's

counsel after the investigation had focused

on the critical sale transactions and that

he had also obtained, in the fall of 1973,

a copy of the Trustee's Report, which ques-

tioned the bona fide nature of those two

transactions. Moreover, the Government

did not dispute that the trustee had had

to take into consideration petitioner's

testimony in the preparation of the Trus-

tee's Report and conceded, contrary to

the pre-trial position, that the August

6 and 7, 1973 transcripts contained mat-

ters relevant to the indictment and trial

of the case.

Last, the prosecutor in charge

of the investigation and trial admitted

that he had directed the SEC attorney to

examine the Dallas deposition to find a

so-called "lie" that petitioner was re-

ported to have made in that proceeding.

That testimony essentially dealt with

petitioner's response to questions concern-

ing the value of the natural resource

properties, which were the subject matter

of the two critical sale transactions and

which went to the very core of the indict-

ment. The chief prosecutor also acknowl-

edged to the Court that his motive in ask-

ing the SEC attorney to examine the Dallas

transcript was to ascertain what type of

witness the petitioner would make at time

of trial.

REASONS FOR GRANTING THE WRIT

I. Petitioner's claim for immu-

nity stems from his testimony in a Section

167 proceeding in the context of a Chapter

X Reorganization of KRC, of which he was

by that time the President and Chairman

of the Board. The Court of Appeals did

not address the issue of immunity in this

context because it erroneously limited

use" and "derivative use" to the furnish-

ing of investigatory leads by the immunized

testimony and not the obtaining of a tac-

tical advantage by knowing in advance of

trial the position of the defendant and

its consequent assistance in cross-exam-

ination. However, the benefits of the

immunity statute, Section 7(a)(10) of the

Bankruptcy Act (11 U.S.C. 25(a)(1)), must

apply to a witness in a hearing held pur-

suant to Section 167 as well as to other

pertinent provisions of the Bankruptcy

Act.

Section 7(a)(10) of the Bank-

ruptcy Act (11 U.S.C. 25(a)(1)), as part

of the Organized Crime Control Act of

1970, affords the bankrupt use and deriva-

tive use immunity. Section 207 of Pub.

Law No. 91-452 Cong., 2d Sess. (1970).

Section 21(a) of the Bankruptcy Act pro-

vides for an examination of the bankrupt,

his or her spouse, and other persons when

designated by Order of the Court. In the

case law which evolved in interpreting

the immunity provisions of Section 7 of

the Bankruptcy Act, the courts found that

a Section 2l(a) hearing incorporated the

immunity provision of the Act when the

witness was performing the duties of the

bankrupt. United States v. Weissman, 219

F.2d 837, 841 [L. Hand dissent] (2d Cir.

Cir. 1955); In re Bush Terminal Co., 102

F.2d 471-472 (2d Cir. 1939), 349 F.2d 264;

6 Collier on Bankruptcy (14th ed. 1972)

§ 6.19, pp. 1224-25.

Similarly, the above-cited statu-

tory provisions must be read in para materia

with a Chapter X Reorganization under the

Bankruptcy Act. Section 102 of Chapter X

(11 U.S.C. § 502) makes ". . . the provisions

of Chapters 1 through 7 inclusive [Straight

Bankruptcy] . . . apply in proceedings un-

der this chapter [Corporate Reorganization]

."' Section 167 of the Act (11 U.S.C.

§ 567) provides for an examination of the

"debtor" and, thus, is the equivalent of

a Section 21(a) examination in a "bankruptcy

proceeding". In fact, Section 167 is

broader in scope and purpose than the other

provisions in that the need for complete

financial disclosure is more extensive in

the context of a reorganization proceeding

involving a public company such as KRC.

Although there are no definitive

cases granting immunity under Section 167,

the rationale and benefits of immunity

should clearly apply to a Section 167 ex-

amination. General Stores v. Shlensky,

350 U.S. 462, 467 (1956); In re Standard

Gas & Electric Co., 54 F.Supp. 752, 754

(D.C. Del. 1944), 2 Collier on Bankruptcy,

§ 21.05, pp. 278-282 [p. 278, n. 1, 3]; 6

Collier on Bankruptcy, supra,J 7.19, pp.

1215-1221.

During the times when petitioner

testified, first in the Dallas and then

in the Denver KRC bankruptcy proceedings,

petitioner was initially a co-trustee and

then, later, as President and Chairman of

the Board, an active part of the manage-

ment of KRC, the debtor company. More-

over, he was at all times relevant a

principal corporate officer of the bank-

rupt corporation, had basic responsibil-

ity for performing the duties of the

bankrupt, and, therefore, was immunized.

United States v. Weissman, supra, 841;

United States v. Castellana, 349 F.2d

264, 273-74 (2d Cir. 1965).

Il. In affirming the judgment

of conviction, the Court of Appeals

erroneously limited use and derivative

use to "investigatory leads" and did not

consider the use made of immunized testi-

mony by the prosecution which afforded

it the opportunity to prepare for cross-

examination of the defendant as well as

for the preparation of the over-all case

by knowing in advance the position that

the defendant would take at time of trial

on issues relevant to the indictment.

The Court of Appeals for the Second Cir-

cuit, inter alia, held, at p. 4893 of

its opinion:

"Because the prosecution already

had independent sources for its

full case, Boucher is wrong in

claiming taint merely because

the SEC attorney, after the in-

dictment, in order to see what

kind of witness this appellant

would make, read Boucher's 1971

bankruptcy testimony (see United

States v. Bianco, 534 F.2d 501,

514 n. 14 (2d Cir.), cert. den-

ied, 429 U.S. 822 (Oct. 5, 1976)).

The same is true of the Govern-

ment's mere possession somewhere

in its files of Boucher's 1973

bankruptcy testimony. 9"

Thus, in footnote 9 of its opin-

ion, the Court found it did not need to

consider whether immunity applied in the

Section 167 hearing:

"Because we find no taint with

respect to any of the evidence

used by the prosecution, we

need not consider the point

that Boucher's 1973 testimony

under Section 167 of the Bank-

ruptcy Act, 11 U.S.C. Section

567, did not grant him immunity."

However, the very case cited by

the Court of Appeals at p. 4894 of its

opinion in order to affirm petitioner's

conviction, United States v. Bianco,

supra, at p. 514, n. 14, in fact supports

petitioner's contention that an improper

"use" by the Government would be the uti-

lization of immunized testimony to obtain

an advance view of what his position at

trial would be and gaining that assistance

in preparing for cross-examination, hold-

img, et p. 314, A. 14:

* The McDaniel court con-

cluded that the prosecutor's

use of the testimony could in-

clude such things as ‘assist-

ance in focusing the investi-

gation, deciding to initiate

prosecution, refusing to plea-

bargain, interpreting evidence,

planning cross-examination,

and otherwise generally plan-

ning trial strategy.’ United

States v. McDaniel, supra, 482

F.2d at 311. . ."' (emphasis

added).

In the post-trial hearings held

in the instant case before the district

court, the chief government prosecutor

acknowledged that there were numerous dis-

cussions with his SEC attorney as to what

position the petitioner would take at time

of trial and what his prospective trial

testimony would be, and, as a result, he

sent the SEC staff attorney assigned to

assist him in the case to obtain a copy

of the bankruptcy testimony of the peti-

tioner. In addition, of course, the same

SEC attorney admitted reading two volumes

of relevant testimony of the petitioner's

1973 testimony. Thus, the Government

Cannot overcome its heavy burden of estab-

lishing non-use as mandated by United

States v. McDaniel, 482 F.2d 305, 311-312

(8th Cir. 1973), and Kastigar v. United

States, 406 U.S. 441, 32 L.Ed.2d 212, 92

S.Ct. 1653 (1972).

Petitioner believes that a sub-

tle erosion of the protection of the Fifth

Amendment to the Constitution has occurred

since the enactment of the use immunity

provision of the Organized Crime Control

Act on which the bankruptcy immunity

relies.

Prior to its enactment, immunity

was ‘transactional’ and forever barred

criminal prosecution, except for false

affirmation under oath in an appropriate

proceeding. See 18 U.S.C. Sections 2514,

1406, 3486. Since the enactment of the

use immunity provisions of the aforemen-

tioned statute, prosecutors have become

bolder in skirting the grant of such immu-

nity, with the ever difficult task of a

showing of prejudice as a practical mat-

ter being shifted to the defendant in an

evidentiary hearing. Indeed, in the case

of bankruptcy immunity, which is subject

to the prying eyes of any number of

interested parties, the self-incrimination

protections accorded our citizens disinte-

grate even further.

The substantial interest of pre-

serving the integrity of the Fifth Amend-

ment privilege requires this Court to set

the strictest guidelines for the sealing

of such testimony if any criminal prosecu-

tion is to go forward. In the case at

bar, of cqurse, the record below supports

an egregious abuse of any proposed seal,

and cries out for dismissal.

CONCLUSION

For the foregoing reasons, this

Petition For A Writ Of Certiorari should

be granted.

Respectfully submitted,

NORMAN B. ARNOFF, ESQ.

630 Fifth Avenue

New York, New York 10020

Counsel for Petitioner

ANDREW J. MALONEY, ESQ.

630 Fifth Avenue, Room 1910

New York, New York 10020

Of Counsel

APPENDIX A

UNITED STATES COURT OF APPEALS

For THE Sseconp Criecvuit

Nos. 1061-2—September Term, 1976.

(Argued March 16, 1977 Decided July 22, 1977.)

Docket Nos. 76-1435, 76-1440

aS eS

Unitep States oF AMERICA,

Plaintiff-A ppellee,

Joun M. Kino and A. Rowtanp Bovcuer,

Defendants-A ppellants.

Before:

LumBarp and Trmpers, Circuit Judges,

and Davis, Judge, Court of Claims.*

wow

Appeals from judgments of conviction for securities

fraud (15 U.S.C. § 78}(b)), mai) fraud (18 U.S.C. § 1341)),

wire fraud (18 U.S.C. § 1343) and conspiracy to commit

those offenses (18 U.S.C. § 371), entered in the Southern

District of New York, Marvin E. Frankel, Judge, after a

jury trial.

Affirmed.

Micuaet F. Armstronc, New York, N.Y. (War-

ren H. Colodner and Barrett, Smith, Scha-

° Sitting by designation.

4877

piro & Simon, New York, N.Y., on the brief),

for Defendant-Appellant King.

Anprew J. Matoney, New York, N.Y. (Norman

Arnoff and Maloney, Viviani & Higgins,

New York, N.Y., on the brief), for Defen-

dant-Appellant Boucher.

Joun R. Wine, Assistant United States Attor-

ney, New York, N.Y. (Robert B. Fiske, Jr.,

United States Attorney for the Southern

District of New York, Paul Vizcarrondo,

Jr., and Lawrence B. Pedowitz, Assistant

United States Attorneys, New York, N.Y.,

on the brief), for Plaintiff-Appellee.

= =

Davis, Judge:

After a six-week trial in the Southern District of New

York before Judge Frankel and a jury, appellants John

M. King and A. Rowland Boucher were convicted on an

indictmeut charging four counts:—one of securities fraud

(15 U.S.C. §78}(b)) and related counts of mail fraud

(18 U.S.C. § 1341), wire fraud (18 U.S.C. § 1343), and con-

spiracy to commit those substantive offenses (18 U.S.C.

§ 371). King was sentenced to concurrent terms of one

year’s imprisonment on three of the counts, to be followed

. by three years of unsupervised probation on the mail fraud

count. Boucher’s sentence was to seven months concur-

rently on three counts, and thereafter also to three years

unsupervised probation on the mail fraud charge.

Since appellants do not challenge the sufficiency of the

evidence we do not set it out in detail; the barebones will

suffice for the most part. The main institutional actors in

the case were King Resource Co. (KRC), a Denver-based

public company primarily engaged in selling oil, gas and

4878

other natural resource interests, and the Fund of Funds

(FOF), an open-ended Canadian mutual fund, Geneva-

based, which was managed over-all through Investors Over-

seas Services (IOS), a Bernard Cornfeld company. King

and Boucher were Chief Executive Officer and President,

respectively, of KRC. In 1968 KRC (through King and

Boucher) agreed with FOF to sell undivided interests in

oil and other resource properties to FOF at a cost com-

parable to that charged KRC’s other customers. During

the next two years FOF because KRC’s most significant

« stomer, purchasing approximately $53,000,000 in such

properties. The main holding involved in this case was a

50 percent undivided interest in some 22 million acres of

oil and gas permits (with the potential of becoming leases)

in the Canadian Arctic, bought by FOF from KROC for

about $11 million.

FOF periodically revalued its investments in order to

determine their “net asset value” (for the sale and re-

demption of its shares) and to pay IOS, the investment

advisor, which was entitled to a commission on any ap-

preciation of FOF’s assets. One way in which this kind

of revaluation was accomplished was by a sale of a small

portion of the particular FOF asset. In 1969, after King

and Boucher had advised FOF that the Canadian Arctic

oil-and-gas holdings had substantially appreciated, FOF

decided to revalue that property and asked King to arrange

such sales (on FOF’s behalf) of 10% of the FOF interest;

it was understood that the sales had to be bona fide and

arms-length so that they could be used to ascertain the

correct market value of FOF’s Arctic interests. There-

after, at the end of 1969, sales were arranged by King and

Boucher for about $15 an acre, more or less—sales which

appeared on their surface to be genuine. On the basis of

these sales FOF’s Arctic holdings were revalued very

sharply upwards.

4879

The core of the prosecution’s case was that these sales,

which seemed to be bona fide and arm’s length, and were

so represented by appellants, were collusive transactions

in which appellants arranged to supply the purchasers

with the funds to buy the property and also agreed to buy

the permits back if the purported vendees so wished. The

two sales on which the case centered and which the court’s

charge presented to the jury were one to John Mecom

and another to Consolidated Oil and Gas Co. (COG).

For the Mecom sale—as to which the prosecution’s proof

was stronger—the Government’s evidence supported the

following indicators that the transaction was not a genuine

one on which a proper revaluation of FOF’s Arctic prop-

erties could be grounded (we use the summary which the

court’s charge gave the jury of the Government’s conten-

tions on this point):

(1) That Mecom would be assured of net cash receipts

from business with KRC or with King-related companies

in the form of drilling work in the Arctic or elsewhere

sufficient to supply him with profits for the payments called

for under his contract for that purchase of the FOF in-

terests.

(2) That Mecom would be advanced by KRC or a King-

_ related company the money needed to make the down pay-

ment of something in excess of $260,000.

(3) That Mecom would not be obliged to pay any money

out of his own pocket other than moneys advanced to him

by KRC or obtained by him from KRC to King-related

companies.

(4) That King or a King-related company would at

Mecom’s request buy back the Arctic interests and hold

4880

Mecom harmless from any obligation to make the payments

that purported to be due under the sales agreement.’

1 In greater detail, the prosecution's proof showed the following for the

Mecom sale:

Late in 1969 King approached Mecom through Hulsey, a friend of

Mecom's and a KRC employee. Hulsey testified that King told him to

offer Mecom a buy-back arrangement for a sale of the Arctic interests

but that Mecom was hesitant because of lack of liquid funds. Hulsey

stated that in late December 1969 Boucher sent him to Houston with a

sales contract for Mecom and explained that an additional agreement

would be arranged later and would provide for a “repurchase agree-

ment” and an “agreement to provide work.” Hulsey told Marriott,

Mecom's attorney, that Mecom would not have any personal liability,

that payments under the sales contract would be made from profits

earned by KRC employing Mecom’s drilling rigs, and that if Mecom was

unsatisfied, King would buy the interests back. The sales contract pro-

vided that Mecom was to pay $7.50 per acre cash plus an additional

$7.50 per acre in work obligations for 347,883 acres (about 3 per cent

of FOF’s holdings). Mecom and Marriott did not want to sign the

contract because it was a straight sales agreement, and did not contain

Hulsey’s guarantees. It was then agreed that Mecom would sign but

that Hulsey would not release the contract until Marriott received a

supplemental agreement incorporating Huls_y’s promises. Hulsey tes-

tified that be then returned to Denver and that the contract was removed

from his desk and was given to Boucher’s secretary.

Lowry, KRC’s general counsel, testified that after speaking with King,

he prepared a letter agreement, an unsigned copy of which was sent to

Marriott along with a note indicating that Lowry would retain the

original, which had been signed by King. Lowry stated that he destroyed

the original in January 1972, when his offices were moved. What was

apparently Marriott's copy and the accompanying Lowry note were pro-

duced at the trial. The letter confirmed the sales contract, promised

to provide sufficient payments to be made to Mecom to meet all pay-

ments on the sales contract through October 1971, and further provided

that King would accept an assignment of Mecom’s liabilities and inter-

ests under the sales contract any time between October and December 31,

1971.

Mecom's downpayment on the sales contract, approximately $260,000,

was due on January 2, 1970. Boucher and Hulsey arranged, with King’s

authorization, to forward $275,000 to Mecom through a Colorado Corp.

subsidiary (Colorado Corp. was a King-controlled company). On Jan-

uary 22, 1970 Marriott received a check for $275,000 and arranged for

the proceeds to be used to cover the $260,000 downpayment. Appellants

claim this money was an advance on an arrangement to use one of

Mecom’s drilling rigs. Mecom never received any drilling contracts from

KRC (apparently because his equipment was unsuitable or unready).

4881

Capping the fraud, in the Government’s presentation,

were 1970 letters to FOF’s auditors, signed by both appel-

lants, representing that the Mecom and COG sales were

both arm’s length and bona fide, that no buy-back agree-

ments were involved, or any guarantee to the purchasers

of the economic results of the transactions. These letters

were written prior to FOF’s revaluation of the property

and as part of that process.

Defendants, who took the stand, denied that any of the

arrangements they entered into with Mecom or COG was

underhanded or lacking in full good faith, denied that there

were any buy-back agreements integral to the sales as

made, and asserted that any arrangements by which money

was supplied to Mecom (or to COG) were pursuant to

independent and legitimate business transactions, not de-

signed as secret inducements or side-deals in connection

with the Arctic purchases by Mecom or COG. They main-

' tained that the representation letters to FOF’s auditors

were not fraudulent but accurate characterizations of the

Mecom and COG transactions.

Though appellants do not argue sufficiency, they insist

that the prosecution’s case was very thin, and that we must

bear that in mind in appraising the various trial and evi-

dentiary points urged upon us. Judge Frankel, on the

other hand, writing on the defendant’s post-trial motions,

pointed out that “the jury’s deliberations were notably

‘swift. It seemed evident that the evidence for conviction

was clear and overwhelmingly persuasive.” He also found

“the proof of guilt powerful to the point of near certainty,”

that “the court is convinced beyond a reasonable doubt, as

the jury must have been to convict, that the defendants

swore falsely at key junctures in their testimony,” and

that “the testimony of some 49 witnesses and the large

volume of exhibits appear convincingly to justify as reli-

4882

able and accurate the conclusions the jury declared it had

reached beyond a reasonable doubt.”

From the record as well as the written and oral presenta-

tions made to us, we have no reason to disagree with the

trial judge’s view that the Government’s case was strong.

It was based, in large part, on the direct testimony co:

participants in the relevant transactions plus some telling

documenatry materials—to which was added the cement of

common sense and human experience. It is in this light

that we must evaluate the contentions for reversal which

we now take up. See United States v. Ong, 541 F.2d 331,

334 (2d Cir. 1976).

The Mecom Bankruptcy Documents

John Mecom was, as we have said, the purchaser in one

of the two revaluation sales the Government challenged

as lacking in bona fides. Some months after that trans-

action he went into bankruptcy. As a Government witness,

Mecom testified that he did not have the money to buy

the Arctic interest to be sold to him but that King (or a

King company) would supply the cash through a business

deal, and would also buy back the property later on if

Mecom wished. At the close of his cross-examination by

King’s counsel, the latter offered more than 200 pages of

official documents relating to Mecom’s bankruptcy. The

stated purpose of the offer was to show that “there are

representations made in these bankruptcy papers as to the

Arctic contract, in which it is treated in the bankruptcy

papers as a legitimate, binding contract, with no mention

of any side agreements or anything having to do with any

side agreements, up to a certain point in the bankruptcy,

where the further papers show that there was a contest

made for the first time where the contract was challenged,

but not on the grounds that have been testified about in

4883

these proceedings.” However, no specific parts of the

bundle were pointed out to court or jury as inconsistent

with Mecom’s testimony—but it was and is clear that only

a relatively small number of excerpts bore at all on those

subjects. Nevertheless, the whole “sheaf of papers” was

then summarily received. Without any further substantial

cross-examination of Mecom on the documents, counsel

concluded cross-examination.

On redirect the prosecutor elicited from Mecom that he

had prepared none of the 10 exhibits, that the papers had

been prepared by his attorneys and accountants and he

was generally ignorant of their contents, and that only

three exhibits contained documents bearing his signature.

Based on this redirect, the Government then moved to ex-

clude the documents. Defense counsel responded with a

voir dire bringing out that Mecom had apparently read the

documents he signed and that where a contractual liability

was disputable his lawyers would discuss the matter with

him. Again, no specific parts of the exhibits were segre-

gated out as inconsistent with Mecom’s testimony ; counsel

did say, however, that he would be willing to excerpt the

relevant portions and make a sub-exhibit. The court then

granted the prosecution’s motion to exclude, primarily on

the ground that defendants had not yet indicated the

claimed inconsistencies and had not sought to use the

allegedly pertinent portions in cross-examination. A short

while later, defense counsel again attempted to have the

documents admitted; he explained that his intention had

been to read to the jury the specific portions said to be in-

consistent with Mecom’s testimony but that he now realized

that he should have brought out more from Mecom, and

that at this point he merely wanted to go through certain

of the documents with the witness, especially the signed

ones, in order to bring out that the Arctic contract was

4884

listed in the bankruptcy proceedings without any question

or reservation. In this connection counsel] said: “I did not

feel that I wanted to question the witness at great length

about something that was obviously prepared by his at-

torneys but he swore to it. I was not going to make any

big point about the fact that he prepared it or sweated

over it.” Emphasizing that the defense had twice foregone

the opportunity to point out the alleged inconsistencies, to

explain the relevance of this mass of official documents,

and to connect Mecom with those contradictions, and noting

that “even as you put it now at most these [papers] are

of modest potential relevance in this case,” the court ad-

hered to its ruling of exclusion.

On this appeal, appellants have blown up this exclusion

as a major error affecting their opportunity to break down

the Government’s case. We do not so see it. The defense

has now suggested all kinds of uses to which these bank-

ruptcy documents could have been put at the trial (in-

cluding extensive cross-examination of Mecom on various

scores) but the record is clear that (a) the only purpose

suggested for the admission of the papers was that they

incorporated prior inconsistent statements of Mecom; (b)

appellants’ counsel never got down to singling out for the

court or jury the particular portions of the documentary

packet on which he relied for this purpose; (c) counsel

twice refrained from cross-examining Mecom as to these

inconsistencies when he had the chance; (d) even at the

end of the effort to get the papers admitted, counsel ob-

viously did not wish to cross-examine Mecom extensively

or thoroughly on the basis of the papers but primarily

wanted to read portions to the jury with only the lightest

of explanation from Mecom; and (e) the record, as the

defense left it, showed that Mecom’s personal connection

with the bankruptcy documents, to the extent there was

any at all, was far from deep.

4885

10a

In these circumstances Judge Frankel was within his

discretion to exclude the evidence. Counsel was very tardy

in offering to point out and segregate the few relevant

portions of the large file. See Trade Development Bank

v. Continental Ins. Co., 469 F.2d 35, 44 (2d Cir. 1972). Even

then, the plan was to read selected excerpts to the jury

without drawing from Mecom any substantial background

for or explanation of the asserted contradictions. Judge

Frankel was surely right in referring to the “modest poten-

tial relevance” of the alleged inconsistencies since there

were several reasons why Mecom and his lawyer-and-

accountant aides might not wish to mention the side-agree-

ments with appellants in the bankruptcy papers. Fen. R.

Evip. 403 authorizes a trial judge to exclude even relevant

evidence “if its probative value is substantially outweighed

by the danger of unfair prejudice, confusion of the issues,

or misleading the jury * * *.” In view of the official nature

of the documents (the judge referred to “red seals and

ribbons’) with their possible untoward effect on the jury,

the prolonged failure to pinpoint the small portions which

were at all pertinent, counsel’s refusal to explore the re-

lationship between the submission of the papers to the

bankruptcy court and Mecom’s testimony in this case,”

and the minor probative force of the evidence, the exercise

of discretion under Rule 403 was available and could prop-

erly be used.

2 Under Rule 613 of the Federal Rules of Evidence, dealing with the

admissibility of extrinsic evidence of a witness's prior inconsistent

statement, the defense was not itself required to confront the witness

with the statement or to give him an opportunity on cross-examination

to explain—so long as the witness was afforded in some fashion an

opportunity to explain or deny. However, that does not mean that in

this instance the defense was not called upon to explore the matter

further with Mecom in order to avoid exclusion under Rule 403 for “un-

fair prejudice, confusion of the issues, or misleading the jury.” Rule 613

and Rule 403 fulfill separate functions. Although admissible under 613

the papers could be excluded under 403.

4886

lla

In any event, three of the excluded bankruptcy docu-

ments were later admitted, one of which defense counsel’s

summation put to the jury as demonstrating the very in-

consistency he had stressed in trying to have the docu-

ments admitted during Mecom’s testimony. If the sub-

exhibit (containing the alleged inconsistencies) which coun-

sel belatedly asked leave to submit had been accepted, the

defense would not have been in a materially better posi-

tion since, as we have stated, the course counsel wished to

follow was to read and argue from the bankruptcy docn-

ments in just this fashion. We find no support for the

strained argument that the court’s prior handling of the

problem of the bankruptcy papers so prejudiced the jury

that any defense argument in summation (based on the

documents) could not be effective.

Pre-indictment Delay

The indictment was brought in January 1975, towards

the end of the limitations period but within it. Appellants

claim, under United States v. Marion, 404 U.S. 307, 324-25

(1971), that they were deprived of due process by the

delay between the occurrence of the’alleged criminal acts

and the beginning of the case. This issue was twice con-

sidered by the District Court, once before trial and, again,

after trial. On the basis of extensive affidavits and docu-

mentation, Judge Frankel decided each time that there was

insufficient merit in the point. In his post-trial ruling he

concluded that “defendants show neither intentional delay

for tactical advantage nor measurable prejudice * * * .”

Appellants suggest no adequate ground for overturning

this considered determination.

A recent Supreme Court decision has clarified the prin-

ciples underlying a finding that a pre-indictment delay vio-

lates the Due Process Clause. United States v. Lovasco,

4887

12a

U.S. Sup. Ct. No. 75-1844, decided June 9, 1977, 45 US.

L.W. 4627. The Court first ruled that “proof of prejudice

is generally a necessary but not sufficient element of a due

process claim, and that the due process inquiry must con-

sider the reasons for the delay as well as the prejudice to

the accused” (45 U.S.L.W. at 4629); then held that the

prosecutor does not go against due process by refusing to

seek indictments “unti] he is completely satisfied that he

should prosecute and will be able promptly to establish

guilt beyond a reasonable doubt” (45 U.S.L.W. at 4630) ;

and concluded that “to prosecute a defendant following

investigative delay does not deprive him of due process,

even if his defense might have been somewhat prejudiced

by the lapse of time” (45 U.S.L.W. at 4630-31). The Court

indicated, however, as it had in Marion, that a “tactical”

delay by the prosecution would violate the Constitution

and implied that the same could well be true for a reckless

disregard of the defendant’s rights (45 U.S.L.W. at 4630,

fn. 17).

Appellants’ contention is that, as early as 1971-72, the

Securities and Exchange Commission had enough facts to

warrant a further investigation and a speedier indictment.

It may well be that in those years the S.E.C. received in-

formation giving it probable cause to believe that both the

Mecom and COG transactions were suspect, incorporating

secret buy-back agreements.’ But Lovasco, supra, explic-

itly teaches that prosecution need not, should not, follow

where the Government merely has probable cause. It was

not until July 1973 (after an attorney for FOF’s successor

went directly to the S.E.C. Director of Enforcement) that

the S.E.C. initiated a full formal investigation into the

Arctic deals (with one investigator). Meanwhile, the Den-

3 However, the 8.E.C. did not then have adequate information as to

appellants’ representations in 1970-1971 to FOF’s auditors.

4888

13a

ver office of the agency was heavily involved in investi-

gating other of appellants’ transactions of which it had

earlier learned, but the S.E.C. cannot be faulted, in view

of the limitations on its budget and staff, for concentrat-

ing on those other aspects, especially since the Arctic in-

formation available to it, though suggestive, was by no

means conclusive. Similarly, the United States Attorney’s

Office in Denver was centering on these other phases of

appellants’ activity. At the very least, we find no basis

whatever for thinking that the S.E.C.’s delay in starting

to investigate the Arctic transactions, or the Department

of Justice’s judgment regarding priorities during this

earlier period, was “tactical,” intended to deprive the

appellants of their rights of defense, or reckless of those

rights. After the formal investigation began in the sum-

mer of 1973, an extensive inquiry was had, involving more

than 80 interviewees and thousands of documents. The

case was referred to the Department of Justice for pos-

sible prosecution in September 1974, and considering the

complexity of the matter the indictment was promptly re-

turned in January 1975.

The upshot is that, in our view, the period since July

1973 certainly fell within the type of “investigative delay”

which Lovasco held not to deprive an accused of due pro-

cess.‘ The prior time from 1971 to the middle of 1973,

though not taken up with investigation focused on the

Arctic, should likewise not be counted against the Gov-

ernment. During that period the federal agencies (S.E.C.

and the Justice Department) plainly did not have nearly

enough evidence to prove guilt beyond a reasonable doubt;

they were not required to divert their energies from the

4 The Court held in Lovasco that a prosecutor could delay, even after

be had developed the minimum evidence to prove guilt beyond a reason-

able doubt, so long as he was continuing his investigation in good faith

to firm up his case.

4889

14a

other inquiries to delving into appellants’ Arctic transac-

tions; and they were neither attempting “to gain tactical

advantage over the accused,” United States v. Marion, su-

pra, 404 U.S. at 324, nor knowingly reckless of the risks

to appellants in delaying prosecution. No plausible rea-

son has been given us why the Government would have, or

had, any purpose in 1971-1973 other than to concentrate

on the separate investigations (into appellants and KRC)

which at the time seemed to it much more likely to reveal

provable wrongdoing; there is no substantial indication

that placing the Arctic transactions “on hold” for that

period was designed to injure appellants or harm their

defense. When FOF’s successor management brought the

matter forward again in 1973, the S.E.C. stepped up its

interest and the formal investigation began and proceeded

in due course.

The other facet of appellant’s presentation on this point

is that they were substantially prejudiced by the lapse of

time. As we have pointed out, Lovasco countenances some

prejudice due to bona fide investigative delay. Judge

Frankel] said, after the trial, that he had “a definite con-

viction that defendants were not injured to any material

extent by the lapse of time.” Giving weight to this ap-

praisal by the trial judge, we too find that any delay-

prejudice appellants may have suffered did not deprive

them of due process. They stress the death in June 1974

of Edward Cowett,’ a high functionary of FOF, but are

basically unable to say with any specificity or assurance

what he would have said on the stand or how his testi-

mony would have aided their case. We see no reason to

believe that his testimony, if he were called, would have

helped appellants. Cowett had, as far as the record re-

5 Lovasco, which held that no due process violation bad been shown,

involved the death (during the pre-indictment delay) of two persons

said by the accused to be material witnesses for him.

4890

l5a

veals, nothing to do with any side-arrangements between

appellants and Mecom or COG. On that, the heart of the

case, he could have added little or nothing. Although there

are materials suggesting the contrary, he may conceiv-

ably have known and approved the profits KRC generally

made on its continuing sales of property to FOF, but if

that were the corporate view of FOF appellants could and

should have called Bernard Cornfeld, or other officers or

directors of FOF, to show it.‘

Another claim of prejudice is through the absence of

two documents destroyed in ordinary course during the

pre-indictment period. One was the original of the written

buy-back letter agreement with Mecom (which had been

retained by King’s lawyer and later disposed of as no

longer in effect), there being produced at the trial only

unsigned copies which appellants challenged as inaccurate

and never seen or authorized by King. Their main pwosi-

tion is that if the original was also unsigned it would have

tended to corroborate their contention that such a secret

pact was never put into effect. This may possibly be so

but we think that, against the weight of ora] and written

evidence showing that King actually made such a side buy-

back agreement, the loss of this origina! was too slight

and too conjectural a prejudice to warrant dismissal of

the indictment for delay for which the Government cannot

properly be faulted under Marion and Lovasco. Also lost

were the notes taken at the time by a newspaper reporter

of a conversation with a high officer of COG in which the

latter declared that he had a buy-back arrangement with

KRC. This loss seems insignificant since the reporter’s

6 $Cowett’s evidence was not wholly lost because his 1970 grand jury

testimony—given in apotber connection but including a part of the

general relationship between KRC and FOF—was read to the jury at

appellants’ request.

4891

16a

story was published the next day, and he was available at

the trial for full cross-examination.

We have also considered the other instances of claimed

prejudice, all of which were discussed extensively by both

parties in the presentations made to the court below and

here again, and again we find them too speculative, too

peripheral, and too slight to call for dismissal. We men-

tion only (a) the assertion of diminished recollection, a

type of genera] prejudice which this court has already re-

jected, United States v. Finkelstein, 526 F.2d 517, 526 (2d

Cir. 1975), cert. denied, sub nom. Scardino v. United States,

425 U.S. 960 (1976); United States v. Payden, 536 F.2d

541, 544 (2d Cir. 1976) and (b) appellants’ claimed lessened

ability to assemble evidence from the KRC files, a general

allegation unsupported by a showing of what such docu-

ments could be or why they were not subject to subpoena.

The result is that, on the whole case, appellants have failed

to show such substantial prejudice, considering that the

Government was not at fault in the delay, as to require

dismissal of the indictment.’

Immunization Because of Bankruptcy Testumony

Appellants both urge that the prosecution improperly

used bankruptcy testimony given by them under a statu-

tory grant of immunity—King during his personal bank-

ruptey proceedings in 1971 and 1973, Boucher, in 1971 and

1973, with respect to KRC’s reorganization. This point

7 This court has upheld several convictions with comparably lengthy

pre-indictment delays. See United States v. Schwartz, 535 F.2d 160

(1976); United States v. Eucker, 532 F.2d 249, 255 (1976), cert. denied

sub nom. Anderson V. United States, 429 U.S. 827 (1976); United States

v. Ferrara, 458 F.2d 868, 875, cert. denied, 408 U.8. 931 (1972); United

States v. Iannelli, 461 F.2d 483, 485, cert. denied, 409 U.S. 980 (1972);

United States v. Feinberg, 383 F.2d 60 (1967), cert. denied, 380 U.8.

1044 (1968).

4892

17a

was likewise gone into twice by the trial judge, before trial

in written submissions (including affidavits) and after trial

by further extended written presentations and an oral

hearing. The gist of the Government’s response was that

only the S.E.C. attorney-investigator, not the United States

Attorney’s staff, had looked at this bankruptcy evidence

and then only at some of it—and that there were indepen-

dent sources for all the Government’s material used to

obtain the indictment or offered at the trial. Judge Frankel

found post-trial, “a totally convincing demonstration by

the prosecution that there was no use or derived use of

the kind defendants posit. Clear, specific and credible ac-

counts are given to display the untainted sources of the

Government’s witnesses and other evidence. Cross-exami-

nation [of the S.E.C. attorney] has not served to impair

the persuasive showing made by the Government on this

subject.” The judge assumed that the prosecution has a

heavy burden to disprove taint and held that burden met.

We have no reason, after reviewing the record, to ques-

tion the court’s conclusion. The investigation below into

possible taint was thorough and exhaustive, there is no

claim that the Government failed to make full disclosure,

the appellants had a full and fair opportunity to break

down the Government’s showing but failed to make a sig-

nificant dent.* Because the prosecution already had inde-

pendent sources for its full case, Boucher is wrong in claim-

ing taint merely because the S.E.C. attorney, after the

indictment in order to see what kind of witness this appel-

lant would make, read Boucher’s 1971 bankruptcy testi-

8 King says that the Government should have had transcribed certain

of his bankruptcy testimony which was left untranscribed. Aside from

his lateness in making this request, it was his obligation, which he did

not fulfill, to show that prima facie the untranscribed testimony con-

cerned matters related to the prosecution. Kastiger v. United States,

406 U.S. 441, 460 (1972).

4893

18a

mony (see United States V. Bianco, 534 F.2d 501, 514 n.14

(2d Cir.), cert. denied, 429 U.S. 822 (Oct. 9, 1976)). The

same is true of the Government’s mere possession some-

where in its files of Boucher’s 1973 bankruptcy testimony."

Refusals to Charge

Boucher says that the court erred in refusing to charge

his defense that he relied on counsel in signing the repre-

sentation letters to FOF’s auditors. There are multiple

defects in this claim. Boucher’s position throughout the

trial was that he knew nothing of any side-deals or buy-

back arrangements with either Mecom or COG; it is very

hard to see how in those circumstances a defense of re-

liance-on-counsel, which goes to unlawful intent not knowl-

edge of the facts, could have any relevance. See, €.g-,

Powell v. United States, 513 F.2d 1249, 1251 (8th Cir.),

cert. denied, 423 U.S. 853 (1975). Second, Boucher specifi-

cally testified on cross-examination that he did not recall

relying on counsel before signing the representation let-

ters; thus, there was no factual predicate for the requested

instruction. Third, there was no showing that before he

relied on counsel, if he did, he gave the lawyer all the

relevant facts as to the Arctic transactions. See Bisno v.

United States, 299 F.2d 711, 720 (9th Cir. 1961), cert.

denied, 370 U.S. 952 (1962). Lastly, significant representa-

tions were made as to specific facts (e.g. that there were

no buy-back agreements) and as to those we cannot under-

stand how a businessman who knows that such factual

representations are ul.‘rue can screen himself by trying to

9 Because we find no taint with respect to any of the evidence used by

the prosecution, we need not consider the point that Boucher’s 1973

testimony under Section 167 of the Bankruptcy Act, 11 U.S.C. § 567,

did not grant bim immunity.

4894

19a

rely on advice of counsel, See Williamson v, United States,

207 U.S, 425, 453 (1908),"*

The only other attack respecting the charge is the refusal

of the court to tell the jury that “if you do not fully under-

stand the nature of the proof or the charges against cither

defendant, then you must acquit the defendant”. In this

case, with its components of Anancial and technical proof,

much of it peripheral to the core issue of the Mecom and

COG transactions, a sweeping charge of that kind was ob-

viously inappropriate, The court gave unexceptionable

instructions on reasonable doubt and burden of proof, and

rightly centered its instruction on the paramount question

of the bona fides of the Mecom and COG sales, The jury

received the necessary guidance from the court to help it

separate out the wheat. :

Admission of Evidence as to the Profitability of

KRC's Business with FOF and of Loss to FOF

from the Mecom and COG Transactions

The Government spent some time putting, in evidence—

through an S.E.C, accountant and a number of charts

drawn from the books and records of KRC and King-

related companies—of the profitability of KRO’s business

of selling undivided interests in natural resource proper-

ties to FOF." Since appellants did not make any direct

profit from the revaluation sales to Mecom and COG, the

Government wanted to show the appellants’ motive for

arranging those tainted transactions. That motive, as the

prosecution presented it, was to enable KRC to demon.

strate to FOF that the former's continuing project of sell.

10 Tt ie noteworthy that, althongh no charge was given on the point,

defense counse! suggested the defense in his summation.

1 Including the profita from the business of Colorado Corporation, a

King controlled (and mostly King-owned) company,

4895

20a

ing properties to FOF was to the latter's financial ad-

vantage, thereby inducing FOF to prolong its program of

purchasing from KRC (which was to KRC'’s great benefit),

It is in the trial judge’s discretion to admit evidence

suggesting the defendants’ motive for the crime charged,

Moore v, United States, 150 U.S. 57, 60-61 (1893); United

States v. Fernandes, 497 F.2d 730, 735-36 (9th Cir, 1974),

cert, denied, 420 U.S, 990 (1975), The evidence objected to

was carefully limited by the court to the question of mo-

tive for the allegedly sham sales to Mecom and COG, and

the jury was instructed not to consider it as showing that

KROC fraudulently overpriced its own sales to FOF, Ap-

pellants insist that nevertheless the evidence was highly

prejudicial because it led the jury to consider them “bad

men” who simply ought to be punished for milking FOF

through high prices. We cannot accept this complaint. The

information was highly relevant to the case; it explained

why appellants would do what they were said to have done.

The prosecutor's summation stressed i RO's financial in-

terest but he tied it directly to the Mecom and COG sales

as showing the motive why they were planned, Above all,

the court kept the jury on the track in its instructions, in

a specific direction as this evidence came in, as well as in

the final charge. We do not think the jury was permitted

to avoid confronting the summit issue of the Mecom and

COG sales by sliding down the tempting slope that appel-

lants were conviction-worthy simply because they were

financial highbinders.

Appellants also say that the Government's presentation

on this point was both excessive and inaccurate, Neither

the time taken (half-a-day in a six-week trial) nor the

amount of the evidence was immoderate, especially since

appellants had refused (despite the judge's urging) to

stipulate to sales and gross profite figures, and their sum.

mary concession of the profitability to KRC of the

4896

21a

FOF business came out subsequently in defendants’ case

(through the testimony of King), The claimed inaccuracy

is that the Government's evidence, using gross profit

figures, failed to take account of substantial indirect costs

of KRC. The presentation followed the way in which KRC

and Colorado Corporation kopt their books, and appel.

lante had full opportunity to challenge the correctness of

the prosecution's calculations and to offer their own, See

United States v, Kyle, 257 F.2d 559, 563-64 (2d Cir, 1958),

cert, denied, 358 U.S. 987 (1959), The judge was not re-

quired to exclude the Government's evidence, based as it

was on the books of KRC and KRC-related companies, be-

cause the defendants disputed that it accurately reflected

the amount of KRO’s and appellants’ gain.

In the same vein, defendants challenge certain proof

used by the prosecution to tell the jury that shareholders

of FOF suffered a loss as a result of the fraudulent re-

valuation of the Arctic properties, There was evidence

that in 1970 FOF faced a liquidity crisis because of the

combination of the fact that a large percentage of its as-

nets were the illiquid natural resource properties sold it

by KRC and Colorado Corporation, together with the fact

that large numbers of FOF shareholders redeemed their

shares to take advantage of the increased valuation. To

alleviate the situation FOF spun off the natural resource

properties to a new closed company called Global, In sum.

mation the prosecutor pointed out that before the spin-off

FOF"s natural resources accounted for about $11 worth of

each FOF share, but afterwards Global shares sold only

for $2 to $3, This comparison, it is said, led the jury to

think mistakenly that the $2-8 price was all the Arctic

properties were actually worth at the time, far less than

the revalued figure obtained through the mala fide Mecom

and COG sales, The prosecutor's short reference to the

Global spin-off was probably too cryptic but it came in a

4897

22a

series of citations to other instances of damage to FOF

and its shareholders, damage not susceptible to challenge

ae misleading; we think that the spin-off remark, to the

extent it may have been implicitly inaccurate, was not so

injurious or so important as to be reversible error in itself.

Ezaclusion of Evidence as to the 1976 Value

of the Arctic Interests

The trial court precluded appellants from offering evi-

dence on the current (1976) value of the KRC-FOF Arctic

holdings. This is tagged as error because, defendants say,

(a) proof of the high present value would have confirmed

their belief in the properties in 1969-1970 and would have

demonstrated their lack of intent to defraud, (b) proof of

1976 value goes toward showing 1969-1970 value,” and (c)

present value demonstrates that appellants did not mis-

represent in urging FOF to revalue its Arctic interests

upward.

It may be that 1976 value would have some slender and

marginal utility in firming up some of these propositions

but Judge Frankel could properly exclude it because the

complexity and delay which would be injected would far

outweigh any contribution toward proving a proposition

important to appellants’ defense. See Fev. R. Evin. 403;

United States v. Corr, 543 F.2d 1042, 1051 (2d Cir. 1976).

If the case is seen in proper framework, it is beside the

point that defendants had faith in the Arctic holdings in

1969-1970, that those assets had a good potential at that

time, or that in the long run FOF and its shareholders

benefited from their Arctic properties. The basic accusa-

tion was that appellants knowing’; misrepresented in 1969-

1970 that the sales to Mecom and COG were arms-length,

12 Appellants were not prevented from showing or arguing 1968-1970

value.

4898

23a

including no buy-back side-deals, so as to induce FOF to

revalue upward its Arctic assets. As we have stressed, the

case went to the jurors under instructions expressly di-

recting them to Mecom-COG as the focus of the fraud

charged against appellants. That accusation poses an issue

entirely separate from the actual value of the Arctic prop-

erties in 1969-1970, and theoretically the value of the

properties in those years would not be directly pertinent.

But even if one assumes that proof of 1969-1970 worth

could help appellants to demonstrate that at that time

they had no need, motive, or intent to concoct sham sales,

disputable evidence of 1976 value is too remote and too

far down the road to compel the trial judge to tolerate the

additional complexities, delay, and possible confusion re-

sulting from a side-battle over 1976 value (including the

effect of the Arab oil embargo).

The MacKenzie Statement in Boucher’s Presence

In January 1971 a KRC directors’ meeting, attended by

Boucher, considered a suit which had been threatened by

COG to rescind the latter’s Arctic purchase. At that meet-

ing, Neil MacKenzie, a KRC official and head of its Cal-

gary office, said, in answer to a query whether the price

paid by COG for its Artic interest wasn’t too high, that it

was “ridiculous.” Boucher admitted that he heard that

remark and said nothing in response; his explanation

(when the matter came up during his cross-examination)

was that he “wasn’t concentrating on this particular aspect

at that time.” MacKenzie’s statement was admitted as an

admission by silence on the part of Boucher,” and was

used by the prosecutor to tell the jury that the price paid

13 MacKenzie was living in South Africa at the time of the trial and

could only be produced, if at all, at great expense.

4899

24a

by COG was much too high and Boucher knew it. This is

said to be prejudicial error.

The acceptance of MacKenzie’s remark as an admission

* by silence on the part of Boucher was not incorrect. The

general rule is to look at the circumstances to see whether

it was more reasonably probable that a man would answer

the charge made against him than that he would not.

United States v. Flecha, 539 F.2d 874, 877 (2d Cir. 1976).

Here, Judge Frankel could reasonably conclude that that

test was met, Boucher having fuli opportunity to justify

and explain his silence. MacKenzie was a knowledgeable

official of KRC; the meeting was called to discuss what

KRC should do (e.g. 2zettle) about the anticipated COG

lawsuit; MacKenzie’s comments were serious ones about

a matter in which Boucher had been and was directly in-

volved, and they had a plain bearing on the course KRC

should take on the COG suit; Boucher did comment on

certain of MacKenzie’s other statements but not on the

observation that the price was “ridiculous.” We cannot

say that the court exceeded its discretion in allowing the

jury to have this information.**

Once admitted, such an admission-by-silence was not

hearsay and could be taken as an admission by Boucher of

his belief in the statement and its truth. See Fev. R. Evm.

801(d)(2)(B). This was how it was used by the prose-

cutor in his argument. MacKenzie’s view was not admitted

or urged upon the jury as expert testimony; the Govern-

ment, in suggesting that Boucher accepted MacKenzie’s

valuation, simply pointed out that in Boucher’s own mind

14 We read United States v. Lam Lek Chong, 544 F.2d 58, 65 n.8 (2d

Cir. 1976), as holding no more than that, in the very different circum-

stances of that case, the Flecha rule was not met.

4900

25a

MacKenzie was a good judge of the level of the price COG

paid.”

The conclusion we have reached, after carefully examin-

ing all the issues presented by each appellant,’* is that

none of them, singly or in combination, calls for reversal

of either of the convictions.

The judgment as to each appellant is affirmed.

King complains that MacKenzie’s remark, although admitted only

against Boucher, was improperly used against King as well in the Gov-

ernment’s arguments to the jury. That summation, however, linked the

remark to Boucher alone, and King’s counse] had the opportunity to

point out in his answering summation that King was not present or

bound by MacKenzie's statement.

Although appellants, who are Denver-based, have made scattered re-

fiections on the difficulties and unfairness of trial in New York, they

have not raised in this court (though they did below) the refusal of the

District Court to transfer the case to Denver or the due process unfair-

ness of requirixg ‘them to stand trial in New York. If the case had been

transferred to Denver it is almost certain that it would have had to be

moved again because of intense publicity there.

4901

26a

APPENDIX B

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

eee weeuewwweewwwweeewanee2aeaeeee eo @ x

75 Cr. 70

UNITED STATES OF AMERICA, ' (MEF)

— s 1 MEMORANDUM

ON DEFEND-

JOHN M. KING and 1: ANTS' POST-

A. ROWLAND BOUCHER, TRIAL MOTIONS

Defendants.

me ee ee ee ee ee eee x

FRANKEL, D. J.

With characteristic thoroughness

and scholarship, defense counsel have moved

after verdict for judgments of acquittal

and/or dismissal of the indictment. The

court has concluded that the motions should

be denied. Some of the issues thus deter-

mined, together with reasons for this re-

sult, are as follows.

1. Renewing a contention pressed

before trial, defendants say the indictment

should be dismissed for wrongful and preju-

dicial delay in presenting the charges to

27a

a grand jury. The point is urged earnest-

ly, ingeniously, and at length. It is,

nevertheless, no more impressive now than

it was before the case was tried.

After a trial of some six weeks,

the jury's deliberations were notably

swift. It seemed evident that the evidence

for conviction was clear and overwhelmingly

persuasive. As defense counsel recalls in

the present motion papers, defendants'

“credibility was a critical issue in the

case." (Affidavit of Michael P. Armstrong,

Esq., sworn July 22, 1976, p. 29.) ‘The

problem was not failure of memory in any

significant respect. Rather, viewing the

central matters covered in defendants' tes-

timony, their problems were (a) occasional

failures of memory that were incredible

and, more importantly, (b) sworn recollec-

tions and denials that were at least equal-

ly incredible in themselves and in the set-

ting of the record as a whole.

28a

These inferences as to how the

jury must have reasoned cannot, obviously,

be drawn with certainty. They reflect in

at least some measure the court's own

appraisal of the record. The court does

indeed find the proof of guilt powerful to

the point of near certainty. And the

court is convinced beyond a reasonable

doubt, as the jury must have been to con-

vict, that the defendants swore falsely at

key junctures in their testimony. These

basic observations on the state of the

record are of consequence now for assess-

ing defendants' claims that evidence lost

to them by the passage of time could plaus-

ibly be imagined to have made a difference

in the outcome.

Before adding a few words on

that, the court notices defendants’ condem-

natory descriptions of the delay in indict-

ing. Basically, the argument is that the

SEC was “on notice" by early 1971 of facts

29a

and evidence that should have led to a for-

mal order to investigate the matters here

involved well before the order actually

issued on July 24, 1973, which led to the

indictment herein. There is no doubt, with

hindsight, that this Arctic exploration

might have followed from information pos-

sessed by or available to SEC staff members.

It is equally clear, however, and entirely

reasonable that they were so busy with

Other activities of defendant King and his

enterprises that the Arctic problems now

before us stayed out of focus until 1973.

And what is still clearer is the entire ab-

sence of any devious or otherwise improper

conduct accounting for the delay in per-

ceiving the Arctic misdeeds. However much

defendants tend to infer or hint at on this

score, the court discerns no semblance of

a basis for suspicion and no ground for

inquiry into the behavior of government

investigators or prosecutors.

30a

Similar observations apply to

criminal investigations by the United

States Attorney and a grand jury in Denver

in 1973. There is no doubt there were

similarities and relationships between

the matters explored there and the trans-

actions on which defendants have been con-

victed here. Equally beyond doubt, the

instant transactions are separate and dis-

tinct from those pursued in Colorado. The

Colorado prosecutor had, or had access to,

some of the evidence and witnesses embraced

in our trial record. At least as impres-

sive is the catalogue of key witnesses and

materials in the instant case unknown or

unavailable to the Colorado investigators.

There is in sum no basis for in-

puting to the Government "fault" in any

possibly pertinent sense for the delay in

proceeding to indict the defendants.

The argument for setting aside

the convictions and dismissing for pre-

3la

indictment delay is not stronger ir its

remaining material aspect, the claim of

prejudice. It is never a good thing to

have long delays between events and the

effort to reconstruct them in lawsuits.

Memories do fade. People die. Things

are lost. Several instances of such re-

gretable losses exist in this case.

Viewed in perspective, however, they com-

prise no substantial picture of injury to

the defendants in fighting the charges

against them. It is not necessary to

track each of the items of lost or faded

evidence defendants say they would or might

have had if the case had been brought ear-

lier. The specific items are treated by

the Government in a response the court

finds sound and sufficient in substantially

every detail. (See affidavit of John R.

Wing, Esq., sworn August 2, 1976, pars. 14-

31.) It is sufficient to note that many

of the claims thus refuted are improbable

32a

and conjectural to a large degree, most

notably the things defendants "believe"

the late Mr. Cowett would or might have

said. Some of these speculations, aside

from their improbability, go beyond any

plausible rationale the defense might have

invoked had the witness survived. Other

claims of this nature relate to details of

a peripheral and subordinate character,

matters that could not have been of conse-

quence in the jury's deliberations. The

whole account, seen in the light of the

evidence, including defendants’ own, that

was available and heard, leaves the court

with a definite conviction that defendants

were not injured to any material extent by

the lapse of time. To put the point more

positively, the testimony of some 49 wit-

nesses and the large volume of exhibits

appear convincingly to justify as reliable

and accurate the conclusions the jury de-

clared it had reached beyond a reasonable

33a

doubt.

Thus, defendants show neither

intentional delay for tactical advantage

nor measurable prejudice, both of which

would seem requisite to their position.

United States v. Eucker, Docket Nos. 75-

1246, etc., (2d Cir. 3-8-76), slip op. at

2468. Their application for dismissal or,

alternatively, a hearing on the claim of

pre-indictment delay will be denied.

2. A second argument in which

both defendants join is another renewal of

a pretrial position: that use immunity or

derivative use immunity they acquire under

§7(a)(10) of the Bankruptcy Act, 11 U.S.C.

§25(a)(10), when testifying in bankruptcy

proceedings was violated in their indict-

ment (and then in their trial) requiring

erasure of their convictions and dismissal

of the indictment. The position has been

re-examined at length and with care.

Defendants, after the trial, were given

extensive access to government files, rec-

ords, and working papers. Defense counsel

were permitted to cross-examine at length

Mr. Thomson Von Stein, the SEC attorney

who had investigated the pertinent events

in 1973, had thus been instrumental in

bringing about the criminal reference, and

later came to assist in the preparation

2 Accepting the

and conduct of the trial.

credibility of the Assistant United States

Attorneys who tried the case, defense coun-

sel disclaimed any desire to interrogate

them. Upon the amplified record, the

court reaffirms the prior ruling.

In treating this subject, the

court assumes that the defendants' failure

ever to claim immunity in giving their

bankruptcy testimony is not a bar to the

contention now made. See United States v.

Dornau, 491 F. 2d 473, 480 n.13 (2d Cir.),

cert. denied, 419 U.S. 872 (1974). It is

also assumed, but with far greater doubt,

35a

that “taint” of the kind asserted could

suffice to vitiate an indictment duly found

and conviction so solidly supported. See

id., 491 F.2d at 481 n. 15, and the refer-

ence there to United States v. Calandra,

414 U.S. 338, 345 (1974),

Proceeding from such assumptions,

the court finds here a totally convincing

demonstration by the prosecution that there

Was no use or derived use of the kind def-

endants posit. Clear, specific, and cred-

ible accounts are given to display the un-

tainted sources of the Government's wit-

nesses and other evidence. Cross-examina-

tion has not served to impair the persuas-

ive showing made by the Government on this

subject. For all their speculations be-

fore and after trial, defendants adduce

no substantial grounds on which the court

could reject the prosecution's position

that the evidence to indict and convict

was “derived from the independent sources

36a

described in the government affidavits."

United States v. Boyd, 404 F. Supp. 413,

417 (S.D.N.Y. 1975), aff'd, Docket No.

75-1393 (2d Cir. 4-15-76). This is dis-

positive, apart from the several alterna-

tive refutations, including the independ-

ently sufficient proposition, which the

court reaffirms, that the claimed immunity

was not available to defendant Boucher in

any event.

Defendants rely heavily upon the

idea that the Government's burden to show

the absence of taint is "insurmountable"

or at least "virtually undischargeable"

once it is shown that any government per-

son saw any of the immunized testimony or

any reflection of it. But the quoted ad-

jectives come from a case, United States

v. McDaniel, 482 F.2d 305, 311, 312 (8th

Cir. 1973), where the immunized testimony,

given before a grand jury, comprised three

volumes (1) in which the defendant had

37a

“fully confessed his misdeeds" and (2)

which “were read in their entirety by the

United States Attorney * * * when * * *

[he] was unaware that the testimony came

pursuant to a grant of immunity, and he

therefore could have perceived no reason

to segregate * * * [the] testimony from

his other sources of information." Id. at

311. Assuming that the impossible burden

announced in the cited case would ever be

prescribed in this Circuit, the present

circumstances are notably different.

Apart from the fact that none of

the material was read by the prosecutors

herein, and little by the SEC attorney,

defendants have been notably vague and in-

consistent in saying what "leads" or other

uses should be thought to have come from

their bankruptcy testimony. Defendant

King has said substantially nothing in

response to the suggestion that he be con-

crete and specific in this respect.

38a

Defendant Boucher has offered some specific

suggestions, but they are modest and unim-

pressive in the setting of the record as a

whole. Indeed, defendant Boucher, not re-

quired of course to be foolishly consistent,

argues in a prior branch of his post-trial

motions that the Government's case against

him “totally and almost exclusively relies

upon the tessimony of one Robert Hulsey

(Affidavit of Andrew J. Maloney, Esq.,

sworn July 22, 1976, par. 4), obviously not

derived from or traceable to the bankruptcy

testimony. And both defendants have argued

strenuously in another connection that the

evidence against them was largely available

to the Government before and apart from

any bankruptcy testimony.

In sum, assuming many issues in

defendants' favor, including the proposi-

tion that the Government has a heavy bur-

den to disprove taint, the court finds the

burden to have been met in this case.

39a

3. There was a pretrial motion

to change the venue to Denver, Colorado.

The motion was substantial. For various

reasons, however, including the seemingly

inevitable prospect that Denver would be

only a stopping-place preceding another

shift (to avoid publicity), the motion was

denied. Now, defendants argue the trial

in New York denied them due process.

It seems evident, as it did

before trial, that the proceeding here

added to the hardships defendants would

have borne in Denver, or in some other

city nearer to Denver than this. Never-

theless, the post-trial claims scarcely

approach due process proportions; upon

analysis, they add substantially nothing

to what was considered before trial.

Defendant King tenders a long list of

“potential witnesses * * * who resided in

the Denver area or points west * * * "9

He does not say what evidence they would

40a

have given or, more importantly, why none

of them was called. Similarly, he says it

would have been enormously costly to sub-

poena scores of potential witnesses, ten-

dering travel expenses, but the details

are again vague, and it is by no means denm-

onstrated that any such lavish course was

necessary Or appropriate. Once more, the

factual predicate of the motion is specu-

lative and unpersuasive.

Even the insistent claims of

financial hardship have been left as bare

arguments of counsel, despite opportuni-

ties and invitations for more solid docu-

mentation. It is the court's recollection

that defendants were invited during trial

to give financial statements, with the un-

derstanding that assistance under the

Criminal Justice Act or by other means

would be sought for them if at all possible

on any plausible and generous appraisal of

their circumstances. Defendants chose not

4la

to pursue this possibility, perhaps, as

King's counsel now says on behalf of

Boucher, because of “wrongful pride and

the presence of a Denver news correspond-

é or for other

ent in the courtroom",

humanly appealing and understandable rea-

sons. The fact remains that mere asser-

tions by counsel, without doubting their

sincerity for a second, cannot sustain a

due process argument for nullifying the

verdicts in question.”

4, If the bounds of adversary

fairness are narrower than those of love

and war, it remains standard practice

after conviction to charge "prosecutorial

misconduct." Defense counsel, serving

until recently as illustrious targets,

follow the practice here at impressive

length and with gusto. It seems sufficient

to acknowledge that the prosecutors may

have caused a blemish or two, marring the

perfection for which we all strive in vain,

42a

and that references should be eschewed

from now on to what kind of defense money

can buy. It is also necessary and agree-

able to add that these same prosecutors

displayed through a long trial wholly ad-

mirable qualities of fairness, restraint,

and professional rectitude. However iso-

lated phrases look in post-trial briefs,

this is a case in which the routine assault

upon the prosecutors might perhaps have

been foregone.

5. Other grounds of the motions

have been dealt with orally or, in any

event, require no additions to this memo-

randum.

Defendants' post-trial motions

are in all respects denied.

So ordered.

Dated: New York, New York

September 1, 1976

U. S. D. Jd.

43a

FOOTNCTES

1. For example, defendants suggest that

Cowett maybe would have said he "auth-

Orized" side deals with the Arctic

purchasers. Armstrong Affidavit, sworn

July 22, 1976, p. 34 Or, defendants

continue, Cowett might have known a

King company gave Mecom the $275,000

for his down payment on a supposedly

arm's length sale to Mecom. While

such imagined testimony might have

paved Cowett's way to jail, it is

scarcely the kind of probable loss

from which they can now show prejudice.

2. The sentence was adjourned for about

three weeks beyond the original date

(which had been set for some seven

weeks after the verdict) to accommo-

date a generous schedule for prepara-

tion, briefing, and argument, all in

addition, of course, to the months

available for this subject prior to

trial. After the hearing and a time

for still further supplemental brief-

ing, on August 25, 1976, counsel for

defendant King delivered a letter re-

porting the discovery of further mate-

rial that might be pertinent and re-

questing further delay to explore the

material. The court declines to ex-

tend any further the time for reolu-

tion of this motion and the imposition

of sentence.

3. Boucher is not helped by a new and

strained suggestion that there was an

invasion of "a zone of information

that achieved a sanctity comparable

to the confidential communications be-

tween attorney and client." Supple-

mental Memorandum 10.

Lia

The court would reach this result even

if there had been some slight and acci-

dental leakage from the bankruptcy pro-

ceeding to this one. The drastic rem-

edy of voiding an indictment and con-

viction ought to be available, if at

all, when the prophylaxis serves a sub-

stantial end, punishing some substan-

tial invasion. Here, never claiming

immunity, never seeking to have their

testimony shielded from the widest dis-

semination in the press and elsewhere,

defendants were in no sense whipsawed

or imposed upon. On the other side,

as the grand jury and trial minutes

show, there was no purpose to evade or

to slight defendants' rights. MThis

would be, in short, a fortuitous and

slightly magical reason for concluding

now that defendants should not have

been rried and convicted after all.

Affidavit of Michael F. Armstrong,

Esqe, sworn to July 22, 1976, par. 15.

Id., par. 18.

In explaining this conclusion, the

court has not overlooked, but has

deemed it unnecessary to retrace, fur-

ther points made by government counsel.

It is fair to say, however, that such

points have weight: e.g., the long

and costly preparation defendants obvi-

ously did manage; the ample discovery

they were given; the obvious friendli-

ness to them of many of the people,

including a large proportion of the

Government's witnesses, having knowl-

edge of the relevant events; and the

probable willingness of many such peo-

ple to stand ready to testify whether

or not they were tendered travel expenses

long in advance and on a standby basis.

45a

APPENDIX C

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

At a Stated Term of the United States

Court of Appeals, in and for the Second

Circuit, held at the United States Court

House, in the City of New York, on the

twenty-fourth day of August, one thousand

nine hundred and seventy-seven.

Present: HON. J. EDWARD LUMBARD,

HON. WILLIAM H. TIMBERS

Circuit Judges

HON. OSCAR H. DAVIS

Court of Claims

United States of America,

Plaintiff-Appellee,

76-1435

John M. King,

A. Rowland Boucher,

Defendants-Appellants.

wee ee ee ee

A petition for a rehearing hav-

ing been filed herein by counsel for the

appellant, A. Rowland Boucher

Upon consideration thereof, it

46a

Ordered that said petition be and

it hereby is denied.

A. DANIEL FUSARO

Clerk

47a

APPENDIX D

May 21, 1976

Hon. Marvin E. Frankel

United States District Court

Southern District of New York

United States Courthouse

Foley Square - Room 2002

New York, New York 10007

Re: U.S. v. King and Boucher, 75 Cr. 70

Dear Judge Frankel:

Enclosed please find 4 pages

which were just hand delivered to me by.

A. Rowland Boucher and which were obtained

by him yesterday from the United States

Courthouse, Denver, Colorado. The remain-

ing transcript, I was just informed by

Boucher, is 6 to 8 inches thick and remains

in the courthouse in Denver.

The enclosed transcript is evi-

dence that at a very early date, October

1971, the SEC, represented by Mr. Waldeck,

was made aware of the possibility, if not

probability of immunity under the bankrupt-

cy act and until this issue was raised at

the llth hour by the defendant Boucher,

the court and his counsel were totally in

the dark.

It is our firm belief that the

government had an affirmative duty to in-

form Boucher at least of the enclosed

transcript and he should not now suffer

the hardship of a lengthy trial because

of that derelection.

With respect to Your Honor's

48a

Opinion filed this date; we respectfully

submit page two of your opinion is incor-

rect when it states, "no one connected

with this prosecution has access to or

read the bankruptcy testimony". See Von

Stein's affidavit submitted by the Govern-

ment; Mr. Wing's affidavit to which is

attached excerpts from the 1971, Dallas

Texas, proceeding.

Very truly yours,

Andrew J. Maloney

cc: John R. Wing, Esq.

Michael F. Armstrong, Esq.

Parties on Enclosed Transcript:

Mr. Waldeck, SEC

Mr. Gesas, Attorney KRC

Mr. Neary, Attorney for

Trade Creditors Committee

49a

[89]

MR. WALDECK: If Mr. Boucher

understands what I've said, I will be

satisfied with that, Your Honor.

MR. GESAS: May I address

the Court, please? There's a recent

statute --

THE REFEREE: Yes, I know.

MR. GESAS: -- which provides

for immunity automatically when testi-

mony is given. Now, let us consider

the --

MR. WALDECK: Your Honor,

it is my contention that Mr. Boucher

is not being called pursuant to Sec-

tion 7Al10, which Section provides a

blanket immunity, rather it is my

contention he is being called either

as additional Trustee or as a chief

executive of the company to testify

on the question of venue, not to ren-

der the statement of affairs, which

50a

the officer of a bankrupt is required

to render and to submit to examina-

tion with respect to -- in connection

with Section 7A10, Section 21A or Sec-

tion 167.

MR. GESAS: Your Honor, I

didn't want to be understood as claim-

ing this immunity. Assuming I was in

a position to

[90]

claim it for Mr. Boucher individually,

which I am not. I'm only pointing out

that inasmuch as we're discussing

privilege that we better have every-

thing on the boards. Now, it may be

that Mr. Waldeck is correct, I guess

he'll have to live with that prospect

if he’s wrong and I merely took the

liberty of saying, and as the Court

is well aware of, that there is a

problem in this area. What the con-

struction of 7Al10 or 167 is I certainly

5la

have no expertise to determine --

THE REFEREE: Mr. Waldeck

and Mr. Gesas, may I see you at the

bench, please?

(Whereupon a discus-

amet a held at the

THE REFEREE: All right, Mr.

Boucher, would you take the stand and

then Mr. Waldeck will make a statement

to you.

MR. A. ROWLAND BOUCHER,

having been first duly sworn to tell the

truth, the whole truth and nothing but the

truth, testified on his oath as follows:

THE REFEREE: All right, Mr.

Waldeck.

MR. WALDECK: Mr. Boucher,

do you

[92]

understand, Sir, that anything you

state here today could be used against

you?

52a

THE WITNESS: Yes.

MR. WALDECK: And do you

understand, Sir, that you need not

answer any question which you believe

will tend to incriminate you, Sir?

THE WITNESS: I do.

MR. WALDECK: And do you

understand that you need not testify?

THE WITNESS: Yes, I do.

MR. WALDECK: And do you

understand that you are entitled to

a personal Counsel to represent you

personally?

THE WITNESS: Yes, I do.

MR. WALDECK: And given

these understandings are you never-

theless willing to testify?

THE WITNESS: Yes, I am.

MR. GESAS: By the state-

ments in answer to Mr. Waldeck, you

do not, by those statements, waive

any general immunity you may be

53a

entitled to?

THE WITNESS: No, sir.

MR. WALDECK: The question of

[92]

immunity is one of law. I am quite --

MR. GESAS: Sure, but inas-

much as the statements have been ren-

dered, I want to be sure that does

initiate the law in regard to that.

THE REFEREE: All right, Mr.

Boucher, you responded to the state-

ments of Mr. Waldeck, I believe, in

the affirmative?

THE WITNESS: Yes, sir.

THE REFEREE: All right, you

may proceed, Mr. Neary.

DIRECT EXAMINATION

BY MR. NEARY: ,

Q Mr. Boucher, would you state your

full name for the record.

A A. Rowland Boucher.

Q And what is your present position

Sha

with King Resources Company?

A Chief Executive Officer of the

King Resources Company and Additional

Trustee.

Q And you are so serving at the

present time under appointment of this

Court?

A That is correct.

Q All right, have you given a

deposition in connection with this matter?

55a

APPENDIX E

Memo No. 744

TO: ALL UNITED STATES ATTORNEYS

SUBJECT: Bankruptcy Immunity Under the

Organized Crime Control Act of

1970 (Public Law 91-452, October

15, 1970)

As you know, Title II of the

above Act amended clause (10) of Section

7(a) of the Bankruptcy Act (11 U.S.C.

25(a)) to provide that the automatic immu-

nity applicable to the testimony of the

bankrupt under the Section 7(a) is extended

to "any evidence which is directly or in-

directly derived from such testimony."

‘mis has the effect of barring the use of

any leads derived from the testimony of

the bankrupt in a criminal investigation

or prosecution.

Under 18 U.S.C. 3057 bankruptcy

referees, receivers, and trustees are re-

quired to report criminal violations to

United States Attorneys. With the enact-

ment of the new immunity provision, if

successful prosecution of the bankrupt is

to result from such referrals, it will be

necessary that the Government be in a posi-

tion to show that no evidence or leads

used in the investigation or prosecution

were directly or indirectly derived from

his immunized testimony. Since this will

require close cooperation between bank-

ruptcy officials, the Federal Bureau of

Investigation, and United States Attorneys,

we have discussed referral procedures un-

der the immunity statute with representa-

tives of the Bankruptcy Division, Adminis-

56a

trative Office of the United States Courts.

While it is recognized by all concerned

that no referral procedures can be devel-

oped that will preserve the criminal case

in all instances, certain safeguards can

be undertaken that, if followed, might rea-

sonably be expected to protect against in-

advertent use of the bankrupt's testimony

in developing a criminal case against him.

The Bankruptcy Division of the

United States Courts has agreed to recom-

mend the following procedures to bankruptcy

referees in handling criminal referrals in

bankruptcy proceedings:

(1) In criminal referrals based

upon evidence or leads not directly or in-

directly obtained from the testimony of

the bankrupt, the existing referral proce-

dures will be followed.

(2) In any case in which the bank-

rupt testifies and a criminal investigation

is underway or is anticipated, the bankrupt-

cy referee will order that no one shall

have access to the transcript of the bank-

rupt's testimony without first identifying

himself and signing an appropriate record

reflecting that he has requested and been

granted access to the transcript. Adoption

of this procedure will assist the Govern-

ment in showing in any subsequent criminal

proceeding that the prosecution did not

have the benefit of a review of that por-

tion of the bankruptcy record.

(3) In addition, in any case in

which the bankrupt testifies and a criminal

investigation is underway or is anticipated,

the bankruptcy referee will appropriately

advise trustees, receivers, creditors,

attorneys, and other persons who heard the

57a

bankrupt's testimony that, in the event

they are interviewed concerning criminal

aspects of the case, no disclosure should

be made concerning the content of the inm-

munized testimony of the bankrupt.

(4) In any instance in which the

only evidence of criminality is developed

in the bankrupt's testimony, the referee

will refer the case to the United States

Attorney for possible criminal investiga-

tion without making reference to any in-

formation based directly or indirectly

upon the bankrupt's testimony. The United

States Attorney will request the Federal

Bureau of Investigation to conduct a limi-

ted investigation, possibly including a

review of available books and records and

the bankrupt's schedules, to determine whe-

ther there is independent evidence upon

which a criminal investigation may be predi-

cated. (The Criminal Division recognizes

that the argument may be raised that the

immunity bars a referral based solely upon

the immunized testimony, but it is believed

that in cases of significant import, at

least, the Department has a responsibility

to investigate. )

(5) When the bankrupt is a corpo-

ration, bankruptcy referees will consider

the feasibility of clearly designating an

individual not suspected of criminal con-

duct as the person to represent the bank-

rupt under 11 U.S.C. 25(b), thus possibly

avoiding a grant of immunity to a prospec-

tive criminal defendant.

In any instances in which a bank-

ruptcy criminal investigation is initiated

on the basis of information derived from

sources Other than the bankruptcy referee

or a bankruptcy proceeding, United States

58a

Attorneys should be alert to apprize the

bankruptcy referee of the investigation in

order that, if necessary, he may institute

the above safeguards. United States Attor-

neys are reminded to advise bankruptcy ref-

erees Of the disposition of criminal inves-

tigations in bankruptcy matters.

Bankruptcy referees and United

States Attorneys should be alert to the

fact that the immunity under the Act ex-

tends only to the bankrupt. Incriminating

testimony of witnesses other than the bank-

rupt may properly be the subject of a rou-

tine referral under 18 U.S.C. 3057.

In developing these referral pro-

cedures, consideration was given to the

question whether the immunity conferred in

a Section 7(a) hearing (first meeting of

creditors) is applicable to subsequent pro-

ceedings conducted pursuant to Section 21(a)

of the Bankruptcy Act (11 U.S.C. 44(a)).

There is case law supporting the argument

that the Congress did not intend that the

immunity be applicable to a 21(a) hearing.

However, the Second Circuit has questioned

this distinction on the basis that a 21(a)

hearing is merely a continuation of the

7(a) hearing and, therefore, the immunity

attaches. While the discussions on this

point are dicta, the reasoning of the Sec-

ond Circuit is persuasive and might well

be adopted by the Supreme Court if the

issue were brought before it. See Uni

States v. Weisman, 219 F.2d 837 (1955);

eal States v. Castellana, 344 F.2d 264

1965).

United States Attorneys are re-

quested to keep the Fraud Section advised

of significant problems and developments

in the application of these immunity pro-

59a

visions.

Copies of this memorandum are

being furnished to the Bankruptcy Division

of the United States Courts and the Fed-

eral Bureau of Investigation for their

information.

/s/ Will Wilson

WILL WILSON

Assistant Attorney General

Criminal Division

60a

APPENDIX F

§ 25. Duties of bankrupts

(a) The bankrupt shall (1) attend at the first meeting of his

creditors, at the hearing upon objections, if any, to his application

for a discharge and at such other times as the court shail order;

(2) comply with al! lawfu! orders of the court; (3) examine and

report to his trustee concerning the correctness of all proofs of

claim filed against his estate; (4) execute and deliver such papers

as shall be ordered by the court; (5) execute and deliver to his trus-

tee transfers of all his property in foreign countries; (6) immedi-

ately inform his trustee of any attempt by his creditors or other

persons to evade the provisions of this title coming to his knowledge;

(7) in case of any person having to his knowledge proved a false

claim against his estate, disclose that fact immediately to his trus-

tee; (8) prepare, make oath to, and file in court within five days

after adjudication, if an involuntary bankrupt, and with his petition,

if a voluntary bankrupt, a schedule of his property, showing the

amount and kind of property, the location thereof and its money

value, in detail; and a list of all his creditors, including al! persons

asserting contingent, unliquidated, or disputed claims, showing their

residences or places of business, if known, or if unknown that fact

to be stated. the amount due to or claimed by each of them, the con-

sideration thereof, the security held by them, if any, and what

claims, if any, are contingent, unliquidated or disputed; and a

claim for such exemptions as he may be entitled to; all in triplicate,

one copy for the clerk, one for the referee, and one for the trustee: |

Provided, however, That the court may for cause shown grant fur-

ther time for the filing of such schedules if, with his petition in a

voluntary proceeding or with his application to have such time

extended in an involuntary proceeding, the bankrupt files a list of

all such creditors and their addresses; (9) file in triplicate with the

court at least five days prior to the first meeting of his creditors a

statement of his affairs in such form as may be prescribed by the

Supreme Court; (10) at the first meeting of his creditors, at the

hearing upon objections, if any, to his discharge and at such other

times as the court shal) order, submit to an examination concerning

the conducting of his business, the cause of his bankruptcy, his deal-

ings with his creditors and other persons, the amount, kind, and

whereabouts of his property, and, in addition, al] matters which

may affect the administration and settlement of his estate or the

granting of his discharge; but no testimony given by him shall be

offered in evidence against him in any criminal proceeding, except

such testimony as may be given by him in the hearing upon objec-

tions to his discharge: Provided, however, That when the bankrupt

is required to attend for examination, except at the first meeting

6la

end at the hearing upon objections, if any, to his discharge, he shall

be paid actual and necessary traveling expenses for any distance

in excess of one hundred miles from his piace of residence at the date

of bankruptcy: And provided further, That the court may for cause

shown, and upon such terms and conditions as the court may im-

pose, permit the bankrupt to be examined at such place as the court

may direct whether within or without the district in which the pro-

ceedings are pending; and (11) when required by the court, pre-

pare, verify, and file with the court in duplicate a detailed inven-

tory, showing the cost to him of his merchandise or of such other

property as may be designated, as of the date of his bankruptcy.

(b) Where the bankrupt is a corporation, its officers, the members

of its board of directors or trustees or of other similar controlling

bodies, its stockholders or members, or such of them as may be

designated by the court, shall perform the duties imposed upon the

bankrupt by this title. July 1, 1898, c. 541, § 7, 30 Stat. 548; May 27,

1926, c. 406, § 4, 44 Stat. 663; Jume 22, 1938, c. 575, § 1, 52 Stat. 847;

July 7, 1952, c. 579, § 4, 66 Stat. 422.

62a

APPENDIX G

§ 502. Application of other provisions

The provisions of chapters 1 to 7, inclusive, of this title shall, in-

sofar as they are not inconsistent or in conflict with the provisions

of this chapter, apply in proceedings under this chapter: Provided,

however, That section 46, subdivisions (h) and (n) of section 93,

section 104, and subdivision (f) of section 110 of this title, shal! not

apply in such proceedings unless an order shai] be eniered directing

that bankruptcy be proceeded with pursuant to the provisions of

chapters 1 to 7, inclusive. For the purposes of such application,

provisions relating to “bankrupts” shall be deemed to relate also to

“debtors”, and “bankruptcy proceedings” or “proccedings in bank-

ruptcy” shall be deemed to include proceedings under this chapter.

For the purposes of such application the date of the filing of the

petition in bankruptcy shall be taken to be the date of the filing of

an origina! petition under section 528 of this title, and the date of

adjudication shall be taken to be the date of approval) of a petition

filed under section 527 or 528 of this title except where an adjudica-

tion had previously been entered.

July 1, 1898, c. 541, § 102, as added June 22, 1938, c. 575, § 1, 52

Stat. §33. ;

63a

APPENDIX H

§ 567. Powers and duties; trustee

The trustee upon his appointment and qualification—

(1) shall, if the judge shall so direct, forthwith investigate the

acts, conduct, property, liabilities, and financial condition of the

debtor, the operation of its business and the desirability of the con-

tinuance therecf, and any other matter relevant to the proceeding or

to the formulation of a plan, and report thereon to the judge;

(2) may, if the judge shall so direct, examine the directors and

officers of the debtor and any other witnesses concerning the fore-

going matters or any of them;

(3) shall report to the judge any facts ascertained by him per-

taining to fraud, misconduct, mismanagement and irregularities, and

to any causes of action available to the estate;

(4) may, subject to the approval of the judge, employ such person

or persons as the judge may deem necessary for the purpose of as-

sisting the trustee in performing the duties imposed upon him under

this chapter;

(5) shall, at the earliest date practicable, prepare and submit a

brief statement of his investigation of the property, liabilities, and

financial] condition of the debtor, the operation of its busiuess and

the desirability of the continuance thereof, in such ferm and man-

ner as the judge may direct, to the creditors, stockholders, indenture

trustees, the Securities and Exchange Commission, and such other

persons as the judge may designate; and

(6) shall give notice to the creditors and stockholders that they

may submit to him suggestions for the formulation of a plan, or pro-

posals in the form of plans, within a time therein named.

July 1, 1898, c. 541, § 167, as added June 22, 1938, c. 575, § 1, 52 Stat.

890.

64a

APPENDIX I

§ 1406. munmunity of witnesses

Whenever in the judgment of a United States attorney the testi:

mony of any witness, or the production of books, papers, or other

evidence by apy witness, in any case or proceeding before ang grand

jury or court of the United States involving any violation ef—

(1) any provision of part I or part II of subchapter A of

chapter 29 of the Internal Revenue Code of 1954 the penalty fcr

which is provided in subsection (a) or (b) of section 7237 of

such Code,

(2) subsection (c), (h), or (i) of section 2 of the Narcoti¢

Drugs Import and Export Act, as amended (21 U.S.C., sec. 174)»

(3) the Act of July 11, 1941, as amended (21 U.S.C., sec. 1848).

is necessary to the public interest, he, upon the approval) of the AY

torney General, shall make applicaticn to the court that the witness

shall be instructed to testify or produce evidence subject to the pro-

cisions of this section, and upon order of the court such witness

shall not be excused from testifying or from producing books, papers,

or other evidence on the ground that the testimony or evidence re-

quired of him may tend to incriminate him or subject him to a penalty

or forfeiture. But no such witness shall be prosecuted or subjected

‘o any penalty or forfeiture for or on account of any transaction,

matter, or thing concerning which he is compelled, after having

claimed his privilege against self-incrimination, to testify or pro-

duce evidence, nor shal] testimony so compelled be used as evidence

in any crimina] proceeding (exeept prosecution described in the

next sentence) against him iu any court. No witness shall be exempt

erder this section from prosecution for perjury or contempt com-

mitted while giving testimony or producing evidence under compul-

sion as provided in this section. Added July 18, 1956, c. 629, Title II,

$ 201, 70 Stat. 574.

65a

APPENDIX J

§ 2514. Immunity of witnesses

Whenever in the judgment of a United States attorney the testi-

mony of any witness, or the production of books, papers, or other

evidence by any witness, in any case or proceeding before any grand

jury or court of the United States involving any violation of this

chapter or any of the offenses enumerated in section 2516, or any

conspiracy to violate this chapter or any of the offenses enumerated

in section 2516 is necessary to the public interest, such United States

attorney, upon the approval of the Attorney General, shal] make ap-

plication to the court that the witness shall be instructed to testify

or produce evidence subject to the provisions of this section, and

upon order of the court such witness shal] not be excused from tes-

tifying or from producing books, papers, or other evidence on the

ground that the testimony or evidence required of him may tend to

incriminate him or subject him to penalty or forfeiture. No such

witness shal] be prosecuted or subjected to any penalty or forfeiture

for or on account of any transaction, matter or thing concernins

which he is compelled, after having claimed his privilege agains‘

self-incrimination, to testify or produce evidence, nor shal] testimony

so compelled be used as evidence in any criminal proceeding (except

in a proceeding described in the next sentence) against him in any

court. No witness shall be exempt under this section from prosecu-

tion for perjury or contempt committed while giving testimony cr

producing evidence under compulsion as previded in this section.

Added Pub.L. 90-351, Title III, § 802, June 19, 1968, 82 Stat. 216.

66a

APPENDIX K

§ 3486. Compelled testimony tending to incriminate wit-

nesses; immunity

(a) In the course of any investigation relating to any interfer-

ence with or endangering of, or any plans or attempts to interfere

with or endanger the national security or defense of the United

States by treason, sabotage, espionage, sedition, seditious conspiracy

or the overthrow of its Government by force or violence, no witness

sha)) be excused from testifying or from producing books, papers,

or other evidence before either House, or before any committee of

either House, or before any joint committee of the two Houses of

Cungress on the ground that the testimony or evidence required of

him may tend to incriminate him or subject him to a penalty or for-

feiture, when the record shows that—

(1) in the case of proceedings before one of the Houses of

Congress, that a majority of the members present of that House;

(2) in the case of proceedings before a committee, that two-

thirds of the members of the ful] committee shal] by affirmative

vote have authorized such witness to be granted immunity un-

der this section wi.h respect to the transactions, matters, or

things concerning which he is compelled, after having claimed

his privilege against self-incrimination to testify or produce

evidence by direction of the presiding officer and

that an order cf the United States district court for the district

wherein the inquiry is being carried on has been entered into the

record requiring said person to testify or produce evidence. Such

an order may be issued by a United States district court judge upon

application by a duly authorized representative of the Congress or

of the committee concerned. But no such witness shall be prose-

cuted or subjected to any penalty or forfeiture for or on account of

any transaction, matter, or thing concerning which he is so com-

pelled, after having claimed his privilege against self-incrimination,

to testify or produce evidence, nor shall testimony so compelled be

used as evidence in any criminal proceeding (except prosecutions

described in subsection (d) hereof) against him in any court.

(b) Neither House nor any committee thereof nor any joint com-

mittee of the two Houses of Congress shall grant immunity to any

witness without first having notified the Attorney General of the

United States of such action and thereafter having secured the ap-

proval of the United States district court for the district wherein

such inquiry is being held. The Attorney Genera] of the United

States shall be notified of the time of each proposed application to

67a

the United States district court and shall be given the opportunity

to be heard with respect thereto prior to the entrance into the record

of the order of the district court.

testimony of any witness, or the production of books, papers, or

other evidence by any witness, in any case or proceeding before any

grand jury or court of the United States involving any violation of

section 1751 of title 18 of the United States Code, or involving any

interference with or endangering of, or any plans or attempts to

interfere with or endanger, the national security or defense of the

United States by treason, sabotage, espionage, sedition, seditious

conspiracy, violations of chapter 115 of title 18 of the United States

Code, violations of the Internal Security Act of 1950 (64 Stat. 987),

violations of the Atomic Energy Act of 1946 (60 Stat. 755), as amend-

ed, violations of sections 212(a) (27), (28), (29) or 241(a) (6), (7)

or 313(a) of the Immigration and Nationality Act (66 Stat. 182-186;

204-206; 240-241), and conspiracies involving any of the foregoing,

is necessary to the public interest, he, upon the approval of the At-

torney General, shal] make application to the court that the wit-

ness shal] be instructed to testify or produce evidence subject to

the provisions of this section, and upon order of the court such wit-

ness shal! not be excused from testifying or from producing books,

papers, or other evidence on the ground that the testimony or evi-

dence required of him may tend to incriminate him or subject him

to a penalty or forfeiture. But no such witness shall be prosecuted

or subjected to any penalty or forfeiture for or on account of any

transaction, matter, or thing concerning which he is compelled after

having claimed his privilege against self-incrimination, to testify or

produce evidence, nor shall testimony so compelled be used as evi-

dence in any criminal proceeding (except prosecution described in

subsection (d) hereof) against him in any court.

(d) No witness shall be exempt under the provision of this sec-

tion from prosecution for perjury or contempt committed while giv-

ing testimony or producing evidence under compulsion as provided in

this section.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.