Opposition — Graves v. United States

No. 77-846

In the Supreme Court of the United States

OCTOBER TERM, 1977

GLEN D. GRAVES, ET AL., PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

WapDeE H. McCree, Jr.,

Solicitor General,

BENJAMIN R. CIVILETTI, |

Assistant Attorney General,

SIDNEY M. GLAZER,

JOHN VOORHEES,

Attorneys,

Department of Justice,

Washington, D.C. 20530.

| =~ Supreme Court, U. S.

FILED

| MAR @ 1878

MICHAEL RODAK, JR., CL!

In the Supreme Court of the Hnited States

OCTOBER TERM, 1977

No. 77-846

GLEN D. GRAVES, ET AL., PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. la-1!8a)

is reported at 556 F. 2d 1319.

JURISDICTION

The judgment of the court of appeals was entered on

August 5, 1977. A petition for rehearing and rehearing en

banc was denied on October 12, 1977 (Pet. App. 19a). Mr.

Justice Powell extended the time for filing a petition for a

writ of certiorari to December 11, 1977 (a Sunday), and

the petition was filed on December 12, 1977. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

(1)

2

QUESTION PRESENTED

Whether the prosecution of petitioners for filing

statements with the Federal Housing Administration

falsely representing that certain down payments had been

made denied them due process of law because government

employees erroneously informed petitioners that down

payments were not required.

STATEMENT

Petitioners were charged in a 42 count indictment filed

on March 30, 1976, in the United States District Court for

the Western District of Louisiana, with conspiracy to

submit false statements to the Federal Housing Ad-

ministration (FHA) and io defraud the government

(count 1), and with the substantive false statement

offenses (counts 2-42), in violation of 18 U.S.C. 371, 1010,

and 2

Petitioners filed pre-trial motions alleging that em-

ployees of the FHA knew of, acquiesced in, approved,

and encouraged the submission of the false statements

charged in the indictment, and contending that this

constituted governmental misconduct warranting the

dismissal of the indictment as a matter of law. The district

court held a hearing, at which the government contended

that the defense of entrapment could be raised only at

trial. Alternatively, it argued that the defense could not be

asserted in light of the fact that the FHA employees whose

conduct was in question were not authorized to enforce

criminal laws. The district court heard testimony from

defense witnesses and then dismissed the indictment. On

the government’s appeal, the court of appeals reversed

(Pet. App. la-18a).

The evidence adduced by petitioners at the pre-trial

hearing is summarized by the court of appeals (Pet. App.

3a-4a). Briefly, it showed that petitioner Graves operated

3

a construction company and built homes for low-income

families who were able to obtain financial assistance

through the FHA. Prior to February or March 1971, he

complied with FHA regulations each time he submitted a

customer’s application for financial assistance to the

FHA. However, he discovered that several customers,

whom he had refused to accept because they did not have

the requisite $200 down payment for the housing

application, were obtaining FHA approved financing

through his competitors. He filed complaints with the

local office of the FHA but was informed by FHA

employees that he should not be concerned with FHA

approval of other applications than his own. Petitioner

then obtained approximately 75 affidavits from home

buyers who had not furnished the builder with the $200

down payment and presented them to the local director of

the FHA. After reading these documents the director

informed Graves that a down payment was not essential

and that he had authority to waive any of the FHA

requirements. According to petitioners, Graves then began

accepting applications for FHA approved low income

housing without requiring the $200 down payment, and

filing false statements with FHA that the payment had

been made.

The government cross-examined petitioners’ witnesses

but declined to present rebuttal testimony, adhering to its

initial argument that the defense of entrapment could not

be raised in a pre-trial motion to dismiss the indictment.

The district court held that the testimony of the defense

witnesses established the existence of entrapment as a

matter of law and, relying on United States v. Bueno, 447

F. 2d 903 (C.A. 5), dismissed the indictments because the

government failed to produce affirmative evidence to

rebut the claim.

4

The court of appeals, after ruling that petitioners’

motion to dismiss the indictment raised a question of law

that could be appropriately considered by the district

court prior to trial, reversed the order dismissing the

indictment. The court held that the facts adduced at the

pre-trial hearing did not establish the defense of

entrapment as a matter of law and did not establish any

deprivation of petitioners’ due process rights (Pet. App.

14a-16a). It concluded (Pet. App. 14a):

There is no indication that the FHA employees here

induced Graves to commit unlawful acts for the

purpose of prosecuting him for those acts. They acted

in concert with him, but he did not become immune

from prosecution because they condoned or even

encouraged his unlawful activity. Were we to uphold

the appellees’ defense, anyone dealing with corrupt

government bureaucrats could expect to join them in

crime without fear of prosecution.

ARGUMENT

1. The petition challenges the court of appeals’ reversal

of the district court’s pre-trial dismissal of the indictment.

That reversal, however, places petitioners in the same

position as if the district court had ruled against them in

the first instance. Since such a ruling would not have been

subject to interlocutory appeal (see Cobbledick v. United

States, 309 U.S. 323; Brotherhood of Locomotive

Firemen & Enginemen v. Bangor & Aroostook Railroad

Co., 389 U.S. 327), review by this Court of the court of

appeals’ decision would be premature. At trial petitioners

may be acquitted, in which case their claim will be moot.

If, on the other hand, petitioners are convicted and the

convictions are affirmed on appeal, they will then be able

to present all their contentions to this Court by way of a

petition for certiorari seeking review of the final judg-

ment.

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2. Petitioners do not contend that the facts establish an

entrapment defense as that defense has been most recently

expounded in Hampton v. United States, 425 U.S. 484

(see Pet. 3, 8-15). Rather they contend (Pet. 8-15) that the

facts establish the kind of due process defense that has

been suggested by some statements of this Court—that is,

circumstances “in which the conduct of law enforcement

agents is so outrageous that due process principles would

absolutely bar the government from invoking judicial

processes to obtain a conviction, cf. Rochin v. California,

342 U.S. 165 (1952) * * *.” United States v. Russell, 411

U.S. 423, 431-432. See also Hampton, supra, 425 U.S. at

489.

The court of appeals correctly concluded that the facts

had not established such a defense. At most the facts

established that petitioners acted in concert with certain

corrupt or irresponsible government employees. There

was no evidence or basis to conclude that those

employees misled petitioners for the purpose of

prosecuting them. Cf. United States v. Bueno, supra.'

Moreover petitioners do not claim that their decision to

'The court of appeals held that the district court erroneously

dismissed the indictment, because petitioners had not established “the

factual predicate for a Bueno defense, i.e., a ‘full circle’ sale of

contraband” (Pet. App. 16a). In United States v. Bueno, supra, the

court ruled that where a defendant sells contraband to a government

agent that has been furnished by another government agent or

informer, entrapment exists as a matter of law. The court of appeals

noted that the Bueno rule has been seriously questioned since

Hampton vy. United States, supra. See United States v. Evers, 552 F.

2d 1119 (C.A. 5); United States v. Puma, 548 F. 2d 508 (C.A. 5) (Pet.

App. 9a-l3a). The court of appeals has subsequently held that

Hampton overruled Bueno. United States v. Benavidez, 558 F. 2d 308

(C.A. 5).

6

submit false statements in connection with their

applications for FHA financing was urged or even

Suggested by the FHA employees.? We are aware of no

case suggesting that a prosecution under these cir-

cumstances would deprive petitioners of due process. As

the court of appeals concluded (Pet. App. 14a), “{w]ere

we to uphold [this] defense, anyone dealing with corrupt

government bureaucrats could expect to join them in

crime without fear of prosecution.”

Petitioners erroneously rely on Cox v. Louisiana, 379

U.S. 559, and Raley v. Ohio, 360 U.S. 423, for their

*At most petitioners claim, and the evidence adduced by them at

the pre-trial hearing suggests, that certain supervisory personnel at

the local FHA office implied to petitioners that the $200 down

payment that was required by FHA regulations was not necessary

because those individuals had authority to waive the down payment

(which petitioner Graves admitted that he knew was required by the

regulations (III R. on App. 403)). Petitioners have offered no

explanation why, if that were the case, they felt it necessary to submit

applications falsely representing that the down payment had been

made. At the hearing, a loan specialist at the FHA office who

processed applications prior to their review by her superiors testified

* that she would not process applications unless they contained

Statements indicating that the required down payments had been

made. III R. on App. 294. That testimony suggests the reason why

petitioners made the false statements, and would, at trial, support the

allegations in the indictment that petitioners submitted “material false

statements, knowing the same to be false, for the purpose of

influencing the action of the Federal Housing Administration * * *”

(I R. on App. 2).

At the hearing petitioners did not call as witnesses the FHA

employees who allegedly stated that the down payment was not

required, and if the issue is relevant to any defense raised at trial, the

government may well prove that no such representations were made.

‘After the pre-trial hearing, one of the FHA employees who

allegedly made erroneous representations to petitioners was indicted

and convicted in connection with other acts committed during his

employment at FHA.

5

assertion that they may not be prosecuted for criminal

violations where administrative officials have condoned or —

encouraged their unlawful activity. In Cox, the Court

reversed a criminal conviction (based on a statute that

forbade demonstrations “near” the steps of the court

house) because the “highest police officials of the city” in

effect advised the defendant that his conduct would not

violate the statute. 379 U.S. at 571. In Raley v. Ohio, the

Court reversed criminal convictions where the chairman

of the “Un-American Activities Commission” of the State

of Ohio apprised the defendants that they could assert the

privilege against self-incrimination, and the state then

prosecuted the defendants for asserting the privilege. In

both cases the due process rights of the defendants were

denied by prosecution of their activity, which they had

been told was lawful by authoritive agents of the state.

Here, petitioners may not complain that their due process

rights have been infringed by the prosecution because they

were aware from the start that their conduct was

unlawful. The fact that they may have been induced to

violate the law by government employees who through

negligence or design did not enforce their own regulations

is immaterial in light of the fact that petitioners were

aware that their activity was in direct violation of the

housing regulations. The ruling dismissing the indictment

was properly reversed by the court below.

CONCLUSION

It is therefore respectfully submitted that the petition

for a writ of certiorari should be denied.

WADE H. McCREE, JR.,

Solicitor General.

BENJAMIN R. CIVILETTI,

Assistant Attorney General.

SIDNEY M. GLAZER,

JOHN VOORHEES,

Attorneys.

MARCH 1978.

DOJ-1978-03