Petition — Lieberman v. United States

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In the Loe ns, mc |

Supreme Court of the United States.

OcroBer TERM, 1979.

No. vy ¢

9-852

BENJAMIN LIEBERMAN, i

PETITIONER,

UNITED STATES OF AMERICA,

RESPONDENT.

Petition for a Writ of Certiorari to the United States Court

of Appeals for the First Circuit.

Harvey A. SILVERGLATE,

THOMAS G. SHAPIRO,

SILVERGLATE, SHAPIRO & GERTNER,

33 Broad Street,

Boston, Massachusetts 02109.

(617) 723-2624

BATEMAN & SLADE, INC. BOSTON , MASSACHUSETTS

Table of Contents.

Opinion below 1

Jurisdiction y)

Questions presented 2

Constitutional and statutory provisions involved 3

Statement of the case 5

Reasons for granting the writ 12

Conclusion 21

Appendix A: Opinion of United States Court of Appeals

for the First Circuit follows page 21

Table of Authorities Cited.

CASES.

Brady v. Maryland, 373 U.S. 83 (1963) 17n

Campbell v. United States, 365 U.S. 85 (1961) 15n

Campbell v. United States, 296 F. 2d 527 (Ist Cir.

1961) 15n

United States v. Harrison, 524 F. 2d 421 (D.C. Cir.

1975) 17n

CONSTITUTIONAL AND STATUTORY PROVISIONS.

United States Constitution

Fifth Amendment 2,3, 10

Sixth Amendment 3

ii TABLE OF AUTHORITIES CITED.

Jencks Act, 18 U.S.C. § 3500 2, 3, 7,9, 14, 15, 16 et seq.

28 U.S.C. § 1254 2

MISCELLANEOUS.

Federal Rules of Criminal Procedure, Rule 16 17n

In the

Supreme Court of the United States.

OcToBER TERM, 1979.

No.

BENJAMIN LIEBERMAN,

PETITIONER,

UNITED STATES OF AMERICA,

RESPONDENT.

Petition for a Writ of Certiorari to the United States Court

of Appeals for the First Circuit.

Benjamin Lieberman petitions for a writ of certiorari to re-

view the judgment of the United States Court of Appeals for

the First Circuit affirming his conviction.

Opinion Below.

The opinion of the Court of Appeals is not yet reported. It

is found in Appendix A, infra.

Jurisdiction.

The judgment of the Court of Appeals was entered on No-

vember 7, 1979. This Court has jurisdiction to review the

judgment below under the provisions of 28 U.S.C. § 1254.

Questions Presented.

1. Whether the practice of the Securities and Exchange

Commission (“SEC”), in investigations that are reasonably an-

ticipated to result in a reference for criminal prosecution, of

going “off-the-record” and directing the reporter not to record

portions of a formal, sworn statement that is otherwise being

recorded verbatim, violates the Government's duty to preserve

Jencks Act statements (18 U.S.C. § 3500) in order to meet its

obligations to produce such statements.

2. Whether the SEC’s practice of producing, in effect, “pre-

edited” verbatim, sworn interrogation statements taken from

witnesses for a potential criminal case, by going “off-the-

record” at selected times in order to discuss and “polish” the

substance of the witness’ response before putting that response

“on-the-record,” violates the Government’s obligations, and

the petitioner’s rights, under either the Jencks Act, 18 U.S.C.

§ 3500, or the Due Process Clause, or whether this practice re-

quires redress under the federal court’s supervisory powers

over the administration of criminal justice.

3. Whether the trial judge and the Court of Appeals im-

properly imposed a heavy burden of proof on the petitioner to

prove facts relative to the off-the-record colloquies, where the

unavailability of the evidence to prove those facts was caused

entirely by the Government.

Constitutional and Statutory Provisions Involved.

FirTH AMENDMENT.

“No person shall . . . be deprived of life, liberty, or

property, without due process of law; nor shall private

property be taken for public use, without just compensa-

tion.”

S1xTH AMENDMENT.

“In all criminal prosecutions, the accused shall enjoy

the right to a speedy and public trial, by an impartial jury

of the State and district wherein the crime shall have

been committed. . ..”

18 U.S.C. § 3500 (THE Jencks Act).

§ 3500. Demands for production of statements and

reports of witnesses.

“(b) After a witness called by the United States has

testified on direct examination, the court shall, on motion

of the defendant, order the United States to produce any

statement (as hereinafter defined) of the witness in the

possession of the United States which relates to the sub-

ject matter as to which the witness has testified. If the

entire contents of any such statement relate to the subject

matter of the testimony of the witness, the court shall

order it to be delivered directly to the defendant for his

examination and use.

“(c) If the United States claims that any statement

ordered to be produced under this section contains matter

which does not relate to the subject matter of the testi-

mony of the witness, the court shall order the United

Staves to deliver such statement for the inspection of the

court in camera. Upon such delivery the court shall ex-

cise the portions of such statement which do not relate to

the subject matter of the testimony of the witness. With

such material excised, the court shall then direct delivery

of such statement to the defendant for his use. If, pur-

suant to such procedure, any portion of such statement is

withheld from the defendant and the defendant objects

to such withholding, and the trial is continued to an ad-

judication of the guilt of the defendant, the entire text of

such statement shall be preserved by the United States

and, in the event the defendant appeals, shall be made

available to the appellate court for the purpose of deter-

mining the correctness of the ruling of the trial judge.

Whenever any statement is delivered to a defendant pur-

suant to this section, the court in its discretion, upon ap-

plication of said defendant, may recess proceedings in the

trial for such time as it may determine to be reasonably

required for the examination of such statement by said

defendant and his preparation for its use in the trial.

“(d) If the United States elects not to comply with an

order of the court under subsection (b) or (c) hereof to de-

liver to the defendant any such statement, or such portion

thereof as the court may direct, the court shall strike from

the record the testimony of the witness, and the trial shall

proceed unless the court in its discretion shall determine

that the interests of justice require that a mistrial be

declared.

“(e) The term “statement”, as used in subsections (b),

(c), and (d) of this section in relation to any witness called

by the United States, means —

“(1) a written statement made by said witness and

signed or otherwise adopted or approved by him;

(2) astenographic, mechanical, electrical, or other

recording, or a transcription thereof, which is a sub-

stantially verbatim recital of an oral statement made

by said witness and recorded contemporaneously with

the making of such oral statement; or

(3) a statement, however taken or recorded, or a

transcription thereof, if any, made by said witness to a

grand jury.”

Statement of the Case.

The petitioner was indicted in April of 1977, shortly before

the expiration of the statute of limitations period, for filing

false financial statements with the Securities and Exchange

Commission (“SEC”) and with two Boston, Massachusetts,

banks, for conspiracy, and for related securities offenses, all

arising from the use of allegedly false financial statements for

the fiscal period ending in January of 1972, of Giant Stores

Corporation (“Giant”), a corporation of which petitioner was

financial vice-president. He was convicted on all counts of the

indictment after a bench trial in July of 1978.

Giant experienced financial difficulties in 1973, and the SEC

initiated an investigation in June, 1973. In the course of its

nonpublic investigation, the SEC’s staff “deposed”! over 50

The witnesses were “deposed” in the sense that they were examined under

oath and their statements recorded by a stenographic reporter. However,

the examinations differed from a “deposition” in the critical sense that all in-

witnesses, including nearly every witness who had knowledge

of, or was involved in, Giant’s financial affairs.

In the course of these “depositions,” the SEC examiners fre-

quently directed that the proceedings go “off-the-record,” at

which times they had colloquies with the witnesses that were

not recorded. What went on while off-the-record was a mat-

ter of sharp dispute before and during the trial. However, the

Court of Appeals held that:

“We think it is appropriate to assume that some of what

was said during the off the record breaks would have

qualified as Jencks Act material had it been recorded.”

App. A, at lla-12a.

The Court of Appeals further stated:

“. . . we do think that discussions of substance took place

during some off the record proceedings.” Id. at 15a.?

The grand jury proceedings commenced on January 26,

1977 (App. A, at 17a), roughly 2'% years after the SEC “depo-

sitions,” and approximately 5 years after the events in ques-

tion. Many of the major Government witnesses were shown

terested parties were not present. Only the witness, counsel for the witness if

the witness was represented, and the SEC examiners were present. Also, the

witnesses were given Miranda warnings and advised of the penalties for per-

jury.

*The Court of Appeals could hardly have reached any other conclusion.

One of the Government's key witnesses testified that he changed his testi-

mony after being shown certain documents off-the-record; another govern-

ment witness testified that he used the off-the-record periods to ramble in re-

sponse to questions, and was able to give a “more succinct” answer when he

went back on the record. App. A, at 8a.

their SEC testimony prior to appearing before the grand jury

(see App. A, at 4a), and many Government witnesses were

shown their SEC testimony and/or grand jury testimony prior

to testifying at trial.

The petitioner moved prior to trial that the indictment be

dismissed, or in the alternative that the testimony of the rele-

vant witnesses be stricken, on the grounds that the off-the-

record breaks violated the Jencks Act (18 U.S.C. § 3500) and

the petitioner’s right to due process of law.? The petitioner

further alleged that exculpatory evidence was kept from the

petitioner by the SEC’s going off-the-record, in that exculpa-

tory statements were thereby not included in the record of the

testimony and in that the conduct of the examiners while off-

the-record intimidated or cajoled the witnesses out of giving

exculpatory statements.

Petitioner also expressed alarm, at various points during the

pretrial proceedings on this issue, that the Government had

used the pre-edited SEC interrogation transcripts to “refresh”

the memories of witnesses prior to their testifying before the

grand jury and hence to “lock in” their testimony, and that the

Government would likely use the transcripts for the same pur-

pose to prepare witnesses for trial. The magistrate and the

District Court afforded no relief from any such anticipated

practice, and notwithstanding the petitioner’s having com-

plained on repeated occasions of his fears of such a misuse of

these skewed transcripts, the prosecutor did indeed so use the

transcripts. Most of the Government’s trial witnesses testified

that they reviewed the transcripts just prior to their testimony,

and that they relied on the contents thereof (see App. A, at

16a). |

°The SEC transcripts were turned over to defense counsel in advance of

trial because of the bulk of material involved. There were thousands of

pages of testimony.

In support of his motion, the petitioner submitted as ex-

hibits numerous transcripts and portions of transcripts from

the SEC investigation. The petitioner presented to the court

an analysis of the off-the-record breaks in the recording of the

witness’ statements, which fell into the following categories,

among others:

1. A question is posed by the examiner and the exam-

iner goes off-the-record before the witness can answer.

2. The examiner cuts off the witness by going off-the-

record in the middle of an answer.

3. An off-the-record break is followed by the witness

speaking first, without there having been a question (re-

flected on the record) to be answered.

4. The examiner goes off-the-record in response to a

question or an apparent desire by the witness for some

guidance on a point of testimony.

The petitioner also presented witnesses at a hearing before

the magistrate, all of whom were important Government wit-

nesses at the trial. One witness conceded “that he may have

asked examiners to clarify some questions” off-the-record.

App. A, at 5a. Another witness acknowledged that substan-

tive matters were discussed, and documents were reviewed,

off-the-record. Id. Another witness testified that an ex-

aminer attempted to define a question while off-the-record in

an apparent effort to get the witness to change his answer that

had just been given on the record. Id. at 5a-6a.

The magistrate stated that he “thought it might have been

better practice to keep everything on the record” and “agreed

that knowledge of everything said during the SEC interroga-

tions might have been helpful to the defense.” Id. at 7a and

7a n.6 (emphasis added). The magistrate also expressed the

opinion (he made a recommendation, not a ruling, on the mo-

tion) that the Jencks Act was not violated, since the statements

that were recorded had been turned over to the petitioner.

At trial, most of the Government witnesses testified they

could not remember what transpired during the off-the-record

intervals. App. A, at 7a. But several witnesses testified that

their testimony was changed by what was said off-the-record,

or that their testimony was shaped or rehearsed off-the-record

and before an answer was put on the record. Id. at 8a.

Nevertheless, the trial judge denied the petitioner’s motions.

The judge ruled that the Jencks Act did not require striking the

testimony of the relevant witnesses.‘ The judge denied the re-

quest to dismiss the indictment, ruling that the petitioner had

failed “to produce some evidence to rebut the presumption of

regularity and put the government to its proof that there was

no abuse.” App. A, at 8a, quoting from the trial judge’s opin-

ion.

With respect to the Jencks Act issue, the Court of Appeals

rejected the Government’s argument that unrecorded testi-

mony was not a “statement” within the meaning of the Jencks

Act. The court noted that “[t]he matter is not quite [that]

simple,” and observed that the Jencks Act involves a duty to

‘Virtually every trial witness had testified before the SEC and had off-the-

record breaks. Without such witnesses, it is clear that the Government

would not have had a case that could survive a motion for acquittal, or at the

very least that the Government would have had a drastically weaker case.

However, under petitioner’s alternative theory, the District Court could

have granted petitioner some relief short of striking the testimony of all wit-

nesses who had appeared before the SEC and whose testimony went off-the-

record. Thus, the court might have stricken the witnesses’ testimony in only

the most egregious instances, or it might have stricken only those portions of

a witness’ testimony that were most obviously intertwined with, and likely

influenced or shaped by, off-the-record discussions. Similarly, the court

might have stricken only those portions of a witness’ testimony where the re-

lated off-the-record foray was not satisfactorily explained or justified by

either the witness or the SEC examiner.

. 10

preserve statements, not simply to disclose such statements as

may exist at the time disclosure is called for. App. A, at Qa.

The Court of Appeals, however, went on to reject the prop-

osition:

“that there is not only a duty to preserve whatever ma-

terial comes into the government’s hands, but also a duty

to create Jencks Act material by recording everything a

potential witness says, at least if some of it is memorial-

ized.” App. A, at 12a.

In fact, the petitioner, as will be developed more fully in

this petition, has raised a much more precise and narrow issue.

The petitioner did not, and does not, claim that there is a

generalized duty to record statements, or even that there is a

duty to record everything merely because anything said by the

witness is memorialized. Rather, the circumstances at bar

were that the witnesses were subpoenaed and required (except

for a possible Fifth Amendment claim) to give formal state-

ments, under oath, with the statements’ having been recorded

verbatim by a stenographer. The recording of the statements

was repeatedly interrupted by the examiners’ directing the re-

porter not to take stenographic notes of portions of the state-

ment. The examiners announced at the beginning of each

“deposition” * that the stenographer would go off-the-record

* As noted above, the significant distinction between the facts at bar and an

ordinary deposition is that all parties were not represented. In a normal de-

position, counsel for adverse parties are present and can hear any off-the-

record colloquies between the examiner and the witness. Moreover, the

adverse party can examine the witness, on-the-record, concerning off-the-

record discussions and the influence such discussions had on the subsequent

recorded testimony. The petitioner in this case was remitted to cross-

examining witnesses four to five years after the “deposition,” and quite

naturally most witnesses had little, if any, memory of the unrecorded off-the-

record colloquies. See App. A, at 5a, 7a.

only at the direction of the examiner. In at least some in-

stances, the answers were polished while off-the-record, and

the proceeding was put back on the record in order to record a

“more succinct” answer. App. A, at 8a.

The Court of Appeals also rejected the petitioner’s claim

that the SEC procedures violated his right to due process of

law and his right to obtain exculpatory evidence, because of

the subtle and not-so-subtle off-the-record influencing and in-

timidating of witnesses into giving inculpatory statements and

not testifying to exculpatory matters.®

The Court of Appeals ruled that the petitioner had not met

his “burden of proving that his conviction was obtained in vio-

lation of due process.” App. A, at 15a, n.19. The court fur-

ther stated that:

“. . . absent any specific indication that agency officials

were engaged in manipulative or coercive conduct, we

think that proceedings should be presumed to have been

conducted with regularity, that is, with any off-the-

record discussions being for wholly proper purposes.” Jd.

at 13a.’

°It must be noted here that if such conduct had taken place on-the-record,

defense counsel could have used the SEC transcript to cross-examine the

witness and to demonstrate for the factfinder how the witness’ testimony was

influenced. The gist of the petitioner's complaint is that such influencing

and shaping of testimony occurred off-the-record, and that by the time of

trial some five years later the witnesses could credibly, and perhaps honestly

as well, testify that they had little or no memory of the off-the-record discus-

sions, thus insulating the matter from effective cross-examination.

’ The trial judge as well had ruled that the petitioner had the burden “to

produce some evidence to rebut the presumption of regularity. . ..” App. A,

at 8a.

Reasons for Granting the Writ.

1. This petition poses an important and recurring question

concerning the practices of administrative agencies in investi-

gations which are likely to result in referrals for criminal pros-

ecution. The petition further poses a critical question as to the

extent of the courts’ duties in monitoring certain agency in-

vestigative techniques that, regardless of their merits in the in-

vestigative arena, present a high likelihood of miscarriages of

justice in criminal prosecutions years later.

The practices at issue in this case are widespread. The Court

of Appeals noted that the SEC examiner in this case “stated

that it was usual practice for SEC examiners to go off the rec-

ord during nonpublic investigations ....” App. A, at 6a.

Practitioners before the SEC and practitioners trying federal

securities cases consider the practices to be virtually routine.

Although the practice of going off-the-record is widespread,

it is undisputed that it is not conducive to the fair administra-

tion of justice. The magistrate who conducted the evidentiary

hearing in this case observed that the SEC examiners’ ques-

tions were “far from mottos [sic] worthy of trial practice

discussion.” App. A, at 7a. As the Court of Appeals noted,

apparently without disagreement, the magistrate “thought it

might have been better practice to keep everything on the rec-

ord” and “agreed that knowledge of everything said during

the SEC interrogations might have been helpful to the defense

.” Id. at 7a and 7a n.6.

The Court of Appeals admitted, as it had to in light of the

overwhelming evidence adduced at the evidentiary hearing

and at trial, that:

“some of what was said during the off the record breaks

would have qualified as Jencks Act material had it been

recorded.” Id. at lla-12a.

The Court of Appeals also said that:

“the SEC examiners often asked leading questions and

sometimes disclosed their own point of view to the wit-

nesses.” Id. at l4a.

Moreover, the Court of Appeals found as a fact that “discus-

sions of substance took place during some off the record pro-

ceedings,” id. at 15a, and found that “we are simply unable to

tell what occurred during other off the record intervals.” Id.

at 15a.

Notwithstanding these factual findings, the Court of Ap-

peals affirmed the petitioner’s conviction. Its actual holding

was that there was no:

“duty to create Jencks Act material by recording every-

thing a potential witness says, at !east if some of it is me-

morialized.” App. A, at 12a. (Emphasis added.)

As a broad, generalized proposition, the holding of the

Court of Appeals may be unobjectionable. But the issue that

was presented to the Court of Appeals, and the specific issue

raised by this petition for a writ of certiorari, is a much nar-

rower issue involving a critical aspect of administrative investi-

gative practices.

This is not a case in which the agency simply took state-

ments from witnesses. Rather, the witnesses were subpoenaed,

were administered an oath, and were formally questioned by

SEC staff attorneys (and to a small extent by staff accountants)

with a stenographic reporter taking verbatim notes. The re-

sult of this practice was a purportedly verbatim transcript of

the questions and answers, which could be used, and was in

fact used in the petitioner's criminal trial, to refresh the wit-

nesses’ memories, to prepare for grand jury and trial testimony,

and which was produced for the petitioner as Jencks Act ma-

terial pursuant to the Government's statutory obligation.

During the taking of these sworn, verbatim statements, the

SEC examiners, when and only when they chose to do so,®

went off-the-record and engaged in substantive discussions

with the witnesses about the testimony being given and re-

corded.

This practice has been characterized as “going off-the-rec-

ord.” The actual facts are that the SEC examiner directed the

reporter not to take stenographic notes at points in the exami-

nation,® and at least in some instances influenced or rehearsed

the witness’ testimony and then directed the reporter to begin

taking notes again. In effect, the agency is editing or pre-

editing the statement. The result and intent are not different

from obtaining a complete transcript, redlining portions of it,

and directing the reporting service to prepare a transcript as

edited.

The critical points, and the facts that make this an impor-

tant issue requiring the consideration of this Court, are that

the testimony is recorded verbatim, and the examiner directs

that there be deleted from the verbatim record discussions oc-

curring after the question is asked but before the answer is

given, or in many instances discussions occurring after the wit-

*The examiners made it clear to each witness that if the witness wanted to

say something off-the-record, he had to make the request of the examiner,

who had the final say as to what to instruct the stenographer to do.

* This is significant in terms of a possible argument of administrative con-

venience. Any interests of convenience or economy can be satisfied by direct-

ing the reporter to take notes, but not to transcribe the notes in preparing the

transcript. The agency thereby avoids the expense of an unnecessarily

lengthy transcript, and the notes are available for the defendant to have tran-

scribed at his expense should he later want them for trial.

ness has started answering a question but before the witness

has completed the answer.

This is not just a question of degree. Rather, the practice is

qualitatively different from situations, for example, such as

the police interviewing a witness and then taking a recorded

statement. The petitioner does not contend that any time the

Government records something a witness says, the Govern-

ment must record everything. The petitioner does respectfully

submit that when the Government takes a statement that is

recorded verbatim under oath, it may not rehearse each ques-

tion and answer before putting the question and answer on-

the-record to be enshrined in a sworn transcript. !°

The effect of this practice on a defendant’s ability effectively

to cross-examine a witness is devastating. Indeed, this prac-

tice stands the Jencks Act on its head, for a defendant is actual-

ly harmed by the existence and production of the statement.

The Government comes to trial armed with a verbatim tran-

script of a prior sworn statement. The statement, however, is

one that is the product of the Government’s having rehearsed

and influenced the statement in ways and by means which do

not appear in the statement. As a result of this practice, the

Jencks Act material does not aid the defendant in cross-exami-

'°The substantial difference between the broad holding of the Court of

Appeals and the specific issue in this case is demonstrated by the Court of Ap-

peals’ citation of Campbell v. United States, 296 F. 2d 527, 531-532 (1st Cir.

1961), on remand from 365 U.S. 85 (1961), to support its holding that there is

no duty to create statements. In Campbell, the Court of Appeals had re-

jected an argument that the “F.B.I. had a duty under the Jencks Act. . . ‘al-

ways to take notes, so that a record might be there to be kept.’” App. A, at

12a. Asking a question under oath and on-the-record, rehearsing the answer

off-the-record, and putting the rehearsed answer on-the-record, is a far cry

from an F.B.1. agent’s interviewing a witness without taking notes of the in-

terview.

nation, but instead is a handicap to effective cross-examina-

tion.!!

The Court of Appeals did not reach its holding without

some difficulty. The court agreed with the petitioner in re-

jecting the Government’s argument that since it produced the

transcripts that it had, it discharged its Jencks Act obligation.

The court noted that “[t]he matter is not quite [that] simple,”

App. A, at 9a, because the statute “calls not only for timely

disclosure of statements, but also for the preservation of

statements for future disclosure.” Jd. But instead of address-

ing the question whether the duty to preserve a statement was

violated in this case, the court disposed of the issue by declar-

ing there is no duty to create statements.

Functionally speaking, there is no difference between “going

off-the-record,” and editing a transcript. Put another way,

this case does not involve any question of a duty to take notes

or to record a statement. The statement was already being re-

corded. But when the examiner chose to do so, he directed the

reporter not to take notes. The Court of Appeals never ex-

plained how or why this is different from destruction of Jencks

Act material. In fact, it is difficult to see how the practice

challenged here can be distinguished from the destruction of

Jencks Act material, except by artificial distinctions or bland

generalizations that bear no relation to the spirit or the pur-

pose of the Jencks Act, nor to the practical problems faced by

parties and their lawyers who seek to bring before the finder of

fact — whether a jury or a judge — as much information as

possible bearing on the motives of a witness and the accuracy

of his broken testimony.

'' It would be a rare witness, especially where the witness was himself con-

sidered by the SEC to be a conspirator who could and would be indicted but

for his cooperation in “hanging” the higher-ups, who would dare risk indict-

ment for securities fraud, or for perjury, by at trial deviating from the sworn

testimony enshrined in his “pre-edited” SEC transcript.

As the Court of Appeals recognized, there are differences

among the various Courts of Appeals as to the exact scope and

nature of the Government’s duty to preserve Jencks Act mater-

ial. App. A, at 10a-lla and n.13. In particular, there is a

conflict as to whether the destruction of interview notes after

writing up a report is an impermissible destruction of Jencks

Act material. Jd. at llan.13. This case is directly analogous

to the destruction of rough notes after a finished report is pre-

pared, and arguably it is a more serious Jencks Act violation.

In the destruction-of-notes cases, there was no suggestion that

the agent intentionally changed what was recorded of the wit-

ness’ statement. In the case at bar, the rough notes (or state-

ments that the reporter was directed not to record) were inten-

tionally polished, revised or changed in the final “report” (i.e.,

the statement that the examiner directed to be recorded when

he went back on the record).!?

In summary, the petition for a writ of certiorari involves a

widespread administrative practice that affects the fairness of

subsequent criminal prosecutions, and implicates major unre-

solved issues under the Jencks Act. Moreover, there is a con-

flict among the Courts of Appeals as to the Jencks Act stand-

ards at issue here.

'?The Court of Appeals distinguished the destruction-of-notes cases

(United States v. Harrison, 524 F. 2d 421 (D.C. Cir. 1975), and cases follow-

ing it) on the grounds that those decisions were based on Fed. R. Crim. P.,

Rule 16, and Brady v. Maryland, 373 U.S. 83 (1963). App. A, at lla n.13.

But in Harrison there was no finding that the destroyed notes were exculpz-

tory. The point in Harrison, which is fully applicable here, is that the

“courts, not the investigators nor the prosecutors, make the decision as to

whether evidence is discoverable, and that decision cannot be made if the

evidence has been destroyed.” 524 F. 2d at 428. The Government cannot

destroy evidence, and then argue there is no error because the evidence is not

helpful to the defense. In any event, the magistrate agreed that knowledge

of what was said off-the-record “might have been helpful to the defense.”

App. A, at 7a n.6.

Finally, the decision below can only add to the confusion on

these issues, and leave in an uncertain limbo the practices that

are permissible for administrative agencies. The court below

noted, cryptically, that “[w]e do not say that there may never

be a Jencks Act violation in failing to record a discussion with a

potential witness.” App. A, at 13a. But the court failed to

give any guidance as to the circumstances that would consti-

tute a Jencks Act violation, so that the agencies are left to act

at their peril with no guidance whatsoever.'? This warning is

all the more perplexing given the court’s failure to act on the

facts of this case. To put it candidly, one witness had his an-

swers rehearsed off-the-record immediately prior to putting

the polished answers on the record. Yet the Court of Appeals

did not order that the testimony of this witness should have

been stricken or limited because of a violation of the Jencks

Act.'*

2. The court below rejected the petitioner’s claim that the

SEC procedures violated his right to due process of law, on the

basis that “[mlJisconduct of constitutional proportions at the

SEC simply does not show forth from the record.” App. A, at

15a. Of course, it was precisely the Government’s decision to

direct the reporter not to record the passages in issue that pre-

vented the petitioner from making a better and more complete

' In view of the admitted conflict between the First Circuit and, for exam-

ple, the District of Columbia Circuit, SEC examiners who take these deposi-

tions — usually in Washington, but sometimes in other jurisdictions — will

have to guess at the degree to which they may engage in the “convenient”

practice of going off-the-record at “appropriate” times. The question

whether any resulting criminal case would ultimately be tried in Boston or in

Washington would thus become crucial in determining SEC practices to be

followed in any particular investigation. This hardly would promote cer-

tainty or uniformity.

'*“(The witness] testified that he used the off the record periods to ‘ramble’

in response to questions, and was able to give a ‘more succinct’ answer when

he went back on the record.” App. A, at 8a.

record. The court squarely placed on the petitioner’s shoulders

the burden of proving that misconduct occurred during the

off-the-record intervals.

The court ruled that:

‘“. . . absent any specific indication that agency officials

were engaged in manipulative or coercive conduct, we

think that proceedings should be presumed to have been

conducted with regularity ....” App. A, at 13a.

Stated another way, the court refused to grant relief:

“[iJn the absence of solid evidence that the testimony of

witnesses who appeared before the SEC had been signifi-

cantly and improperly shaped and trimmed. . ..” Id. at

16a.

Accordingly, this case presents the important and recurring

issue of the proper allocation of the burden of proof. More

specifically, there is the question whether a defendant can be

saddled with the burden of proof concerning events about

which the Government intentionally '® destroyed an exact rec-

ord as to just what happened.

If this heavy burden of proof is the correct standard, then it

will be virtually impossible for the federal courts to monitor

the actions of administrative agencies when those actions in-

'S The petitioner uses the term “destroyed” advisedly. This is not a situa-

tion of a failure to take notes. Verbatim notes were already being taken, ex-

cept where the Government intentionally directed that notes not be kept.

This is tantamount to destroying notes of statements that were not favorable

to the Government. If what was said off-the-record was at the time viewed

as being favorable to the Government, clearly the examiner would have had

the statement repeated on-the-record.

volve the intentional nonproduction or destruction of mater-

ials, even where it is conceded (as in the case at bar) that those

materials, if preserved, would be required by the Jencks Act to

be produced. App. A, at lla-12a.

The potential for mischief, if this doctrine is allowed to

stand, is virtually limitless. There will be nothing to stop am-

bitious, overly aggressive, or simply honest but misguided ad-

ministrative agency staff from using subtle and even not-so-

subtle off-the-record techniques for influencing and shaping

testimony which is recorded verbatim, under oath, and which

will therefore be the basis for subsequent grand jury and trial

testimony. The same techniques can be used to suggest the

persons upon whom blame should be placed, a practice which

can produce substantial injustice with respect to investigations

and prosecutions of wrongdoing in large organizations with

numerous personnel. !®

The proper burden of proof is a preliminary issue that is

present in virtually every case of possible constitutional viola-

tions, and which in many cases is determinative of the result.

Therefore, it is extremely important to the fair administration

'® When faced with petitioner's claim that the witnesses in this case were

subjected to subtle and not-so-subtle suggestions that they might head off

their own indictments by testifying that the major blame lay with Giant's

“higher-ups,” the court below, while conceding that such suggestions were

indeed made to witnesses at the SEC, said simply that it agreed with the Dis-

trict Judge's view that a decision to prosecute the higher officials while using

the lower echelon employees as unindicted witnesses was neither “uncorm-

mon, shocking, or improper.” App. A, at 16a n.20. Of course, this was not

the point made by petitioner. The real question is whether the practices here

at issue pose a substantial risk of implicating higher-ups in criminal activities

undertaken by lower echelon employees without the knowledge of their

superiors. The Court of Appeals’ apparent willingness to allow a practice

that poses a substantial danger of establishing a sort of vicarious criminal

liability for upper echelon corporate executives is what petitioner complains

of here.

of criminal justice that the question of the burden of proof be

resolved + y this Court.

Conclusion.

For the foregoing reasons, the petitioner respectfully re-

quests that the Court grant this petition.

Respectfully submitted,

HARVEY A. SILVERGLATE,

THOMAS G. SHAPIRO,

SILVERGLATE, SHAPIRO

& GERTNER,

33 Broad Street,

Boston, Massachusetts 02109.

(617) 723-2624

]

29 “

Appendix A.

United States Court of Appeals

For the First Circuit

No. 78-1465

UNITED STATES OF AMERICA,

APPELLEE,

BENJAMIN LIEBERMAN,

DEFENDANT-APPELLANT.

No. 78-1466

UNITED STATES OF AMERICA,

APPELLEE,

JACK H. SHAPIRO,

DEFENDANT-APPELLANT.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

(Hon. Watter Jay Sxinner, U.S. District Judge]

Before Corrin, Chief Judge,

CaMPBELL and Bownss, Circuit Judges.

Harvey A. Silverglate, with whom Thomas G. Shapiro, and

Silverglate, Shapiro & Gertner, were on brief for appellant Ben-

jamin Lieberman.

Peter L. Puciloski, with whom Edward J. Barshak, Natasha

Insman, and Sugarman, Rogers, Barshak & Cohen, were on brief

for appellant Jack H. Shapiro.

Michael A. Collora, Assistant United States Attorney, with whom

Edward F. Harrington, United States Attorney, was on brief for

appellee.

U.S. UV. LIEBERMAN

November 7, 1979

Bownss, Circuit Judge. Giant Stores Corporation, which

operated a chain of discount stores in New England, ob-

tained large bank loans and made a successful public

offering of common stock in 1972. On June 25, 1973, the

“Securities and Exchange Commission (SEC) launched a

nonpublic investigation into Giant’s financial affairs, dur-

ing which it determined that Giant had defrauded banks

and investors by overstating the company’s income in

financial statements for the fiscal year ending January 29,

1972 (FY 1972). Giant went bankrupt in 1973, and the

SEC investigation ultimately led to the indictment of four

former officers of Giant for fraud in the sale of securities,

for filing false financial statements with two Boston banks

and the SKC, and for conspiracy. 15 U.S.C. §§ 77 (q) (a)

and 77(x), 78(m) and 78(ff) ; 18 U.S.C. §§ 371, 1001, 1014.

Chairman of the Board Theodore Kaufman and Controller

Gerald Silverstein pled guilty. After a jury-waived trial,

President Jack Shapiro and Financial Vice-President Ben-

jamin Lieberman were convicted.

The trial judge made detailed special findings. Fed.R.

Crim.P. 23(c). At the outset, he found that Kaufman,

Chairman of the Board, Silverstein, the Controller, Levin,

the Assistant Controller, and other employees of Giant

overstated the net income of the company by understating

the merchandise accounts payable in two ways: (1) by

physically removing the accounts payable records from

the active files; and (2) by claiming over $1.4 million in

phony vendor credits. The court further found that ali

of the false accounting entries on the company books were

made with the knowledge and at the general direction of

Lieberman, and that Lieberman actively deceived auditors

from Touche, Ross, and Company (Touche Ross), the

accounting firm that certified the FY 1972 financial state-

OPINION OF THE COURT 3

ment.’ Although finding that Shapiro ‘‘operated only at

the periphery of this conspiracy,’’ the trial judge was

nevertheless persuaded that Shapiro participated in the

fraudulent misstatement of incou>s for FY 1972, by assist-

ing in the creation of phony credits.

In their appeal, Shapiro and Lieberman raise four major

issues: (1) whether there was a violation of the Jencks

Act, 18 U.S.C. § 3500, or of due process of law because

the SEC went ‘‘off the record’’ at times during its investi-

gative hearings; (2) whether there was error in the han-

dling and denial of a motion to dismiss for preindictment

delay; (3) whether it was an abuse of discretion to deny

a subpoena compelling Touche Ross to produce its Giant

work papers for FY 1970; and (4) whether the trial judge

imposed on defendants the burden of proving a reasonable

doubt as to their guilt. Lieberman has concentrated on the

first and fourth issues, and Shapiro on the second, which

we discuss seriatim.?

THE SEC INVESTIGATION

During its investigation of Giant’s financial affairs, the

SEC called over fifty witnesses to testify under oath.

Before being questioned, each witness was given Miranda

warnings and advised of the penalties for perjury; many

witnesses were represented by counsel. Although stenog-

1 Concerning the audit by Touche Ross, the trial judge found

that the procedures it used were inadequate, that it was under

considerable pressure to complete the audit by April 1 (so that a

certified financial statement could be filed with the SEC prelimi-

nary to an application for the registration of a new stock issue),

and that the partner in charge of the audit could not stand up to

Lieberman (himself a former Touche Ross employee). As a result

of its certification of Giant’s FY 1972 financial statement, Touche

Ross was the object of civil suits and SEC administrative pro-

ceedings.

?In their briefs, Shapiro specifically adopted arguments by

Lieberman on the first and fourth issues, and Lieberman adopted

the ‘‘relevant’’ arguments advanced by Shapiro.

4 U.S. VU. LIEBERMAN

raphers were present to record the testimony given, many

times during the proceedings one of the three SEC exami-

ners would order that the proceedings be ‘‘off the record.”’

Many volumes of testimony were generated, and tran-

scripts of the hearings were provided to the United States

Attorney’s office. Some government witnesses reviewed

pages of their SEC testimony before appearing in front

of the grand jury. After the defendants were indicted,

copies of the SEC transcripts were furnished them. Realiz-

ing that the defendants would be entitled to this material

at the trial under the Jencks Act, 18 U.S.C. § 3500, the

prosecutor made it available to defense counsel well in

advance of trial.

After receiving and reviewing the first batch of tran-

scripts, which clearly showed that the SEC proceedings

went off the record frequently, counsel for Lieberman filed

a motion to dismiss the indictment or to suppress the

testimony of witnesses who testified before the SEC. Alleg-

ing that the SEC examiners intimidated and cajoled the

witnesses, suggested what testimony they should give, and

cut them off as they were giving exculpatory or nonincrimi-

natory testimony, and that this was accomplished in part

by going off the record, Lieberman claimed that potentially

exculpatory evidence and Jencks Act material had been

effectively destroyed, in violation of the fifth amendment,

the Jencks Act, and SEC regulations. Lieberman further

asserted that the prejudice he suffered was intensified by

lengthy preindictment delay, which caused the memory of

witnesses to fade and which would cause their trial testi-

mony to be shaped by the sworn, inculpatory testimony

preserved in the SEC transcripts.‘ Subsequently, Lieber-

3 The Jencks Act does not require the government to turn over a

Statement until the person who made it has testified on direct

examination for the government. 18 U.S.C. § 3500(b).

*This aspect of Lieberman’s motion will be discussed in the

section of this opinion devoted to preindictment delay.

OPINION OF THE COURT a

man filed an ‘‘evidentiary submission’’ indexing those por-

tions of the SEC transcripts he felt supported his claims,

and further argued that the relief he requested could be

granted pursuant to the district court’s supervisory powers.

The magistrate to whom Lieberman’s motion was as-

signed held an evidentiary hearing. In an effort to re-

construct what happened off the record, Lieberman called

as witnesses four former Giant employees who testified

before the SEC, an attorney who had represented a witness

before the SEC, and a stenographer who had recorded

some of the SEC proceedings. James Palin, Morton Levin,

and Kenneth Feeley remembered little of what happened

during the off the record breaks in their SEC testimony.

Palin recalled only that he may have asked examiners to

clarify some questions; Levin thought that sometimes

Giant was discussed, documents were reviewed, or the

SEC examiners conferred; Feeley remembered some dis-

cussions about his personal comfort (he was in a body cast)

and some examination of documents. Each of these wit-

nesses denied having been threatened by the SEC exami-

ners, having been encouraged to inculpate Lieberman or

discouraged from exculpating him. Attorney Paul Fein-

berg could recall only one off the record break during

which he conferred with his client. Stenographer Jud Geer-

lings, who usually left the room to smoke during off the

record intervals, could say only that SEC proceedings

might go off the record more than other agency proceed-

ings because of the large number of documents to be

examined.

More informative and helpful to Lieberman was the wit-

ness Alphonse Miele, who was able to remember some of

what was discussed off the record during his SEC testi-

mony. Miele recalled one off the record interval, following

on the record testimony that he saw no credit at Giant

that seemed ‘‘unusually large,’? in which the examiner

6 U.S. V. LIEBERMAN

attempted to define an ‘‘unusually large’’ credit. He also

remembered telling the examiner off the record that he

saw legitimate credits every day at Giant. Miele said there

was also some on and off the record discussion of a $3,900

Rozefsky Brothers credit that the examiners suggested

to him was phony, but that he had not originally found

suspicious. Miele said some of his testimony (particularly

about the Rozefsky credit) was met by raised eyebrows,

but that no effort was made to keep information helpful

to Lieberman off the record.

The government called no witnesses at the magistrate’s

hearing, but later submitted an affidavit from Richard Pat-

terson, an attorney who conducted the SEC investigation

but subsequently went into private practice in Alabama.®

Patterson stated that it was usual practice for SEC exami-

ners to go off the record during nonpublic investigations,

and that he went off the record during the Giant investi-

gation for the following reasons: (1) at the request of

counsel for the witness; (2) to discuss a line of questioning

with fellow examiners; (3) to clarify a term used in a

previous question; (4) to take a recess; (5) to allow a

witness to examine a group of documents; (6) to speak

with the attorney representing a witness; or (7) to organ-

ize his further examination of a witness. Patterson added

that he did not preinterview the witnesses who were called

to testify, that he made no effort to keep exculpatory

evidence off the record, and that ‘‘it was [his] policy

not to conduct conversations of substance off the record,

* Lieberman’s counsel stated at the hearing that he might insist

on Patterson’s presence after seeing his affidavit. After the affidavit

was filed, Lieberman apparently made no effort to have Patterson

produced to testify before the magistrate, but did move to strike

his testimony. The government opposed the motion to strike on

the ground that the affidavit was admissible under Fed.R.Evid.

804(b) (5). No action was ever taken on the motion to strike, and

we see no reason to comment on whether it should have been

granted. The affidavit stands in evidence.

OPINION OF THE COURT

and certainly not where such conversations were not re-

flected on the record.’’

The magistrate recommended denial of Lieberman’s mo-

tion to dismiss or to suppress the testimony of those who

appeared before the SEC. The questions propounded by

the SEC examiners struck him as ‘‘far from mottos [sic]

worthy of trial practice discussion,’’ but he found nothing

in the record to indicate that the testimony they developed

was ‘‘knowingly untrue, distorted, or exaggerated.’’ Al-

though he thought it might have been better practice to

keep everything on the record or at least to summarize

for the record what occurred off the record, the magistrate

saw nothing to indicate that exculpatory evidence was

withheld or the defendant prejudiced.* Nor did he perceive

any violation of the Jencks Act, given that the SEC tran-

scripts had been turned over to defense counsel.

Lieberman pursued his motion unsuccessfully in front

of the judge to whom his case was originally assigned,”

and then renewed it at trial by moving to strike the testi-

mony of the principal government witnesses and for a

judgment of acquittal. Most of the trial witnesses who

testified before the SEC could not remember the off the

record intervals. Collectively, however, they recalled that

off the record breaks were taken for some of the reasons

listed by Patterson (e.g., to review documents, to confer

thing said during the SEC interrogations might have been helpful

to the defense, but, on the other hand, he felt that the sheer

volume of testimony provided the defense militated against a find-

ing that there was prejudice in the failure to record every word

uttered.

7 That judge heard argument on the motion and denied it with-

out stating his reasons. From the hearing transcript it appears

the judge thought the motion was premature because it was not

clear which witnesses the government would call at trial and

whether they would rely on their SEC testimony.

® At first, the trial judge thought the ruling of the first judge

was the “‘law of the case,’’ but then he agreed that it would be

appropriate to consider Lieberman’s arguments de novo.

8 U.S. UV. LIEBERMAN

with counsel, and to obtain clarification of questions).

Some of the most significant testimony from Lieberman’s

point of view came from Alphonse Miele, Morton Levin,

Alfred Bloom, and Maurice Halperin. Miele, whose pre-

trial testimony was introduced into evidence, stated un-

equivocally that matters of ‘‘substance’’ were discussed

off the record. Levin admitted that, having been shown

certain documents off the record, he changed his testimony

on the record to say that certain credits taken by Giant

were not legitimate. Al Bloom, another former Giant em-

ployee, testified that he used the off the record periods

to “‘ramble’’ in response to questions, and was able to give

a ‘‘more succinct’’ answer when he went back on the record.

Maurice Halperin, the head of one of Giant’s vendors,

stated that during one off the record break, SEC exami-

ners told him that if he did not divulge all of his bank

accounts and safe deposit boxes, the information would be

subpoenaed. (Halperin then complied.)

In denying Lieberman’s motion, the trial judge observed

that all witnesses had testified that they were not intimi-

dated or coerced by SEC personnel during off the record

discussions. Although the court said it could envision pos-

sible abuse of the SEC’s off the record practice, it noted

that Lieberman had failed ‘‘to produce some evidence to

rebut the presumption of regularity and put the govern-

ment to its proof that there was no abuse.’’ Likewise, the

court did not believe the Jencks Act required it to strike

the testimony of government witnesses who had appeared

before the SEC.

We first consider whether, contrary to the opinions of

the magistrate and the trial judge, the SEC’s off the record

proceedings violated the Jencks Act.® At first blush, Lieber-

man’s Jencks Act argument seems fully answered by the

words of the Act, which requires the production of any

* This point received the most emphasis in Lieberman’s brief.

OPINION OF THE COURT 9

government witness’ statement ‘‘in the possession of the

United States’’ once the witness has testified on direct,

and which defines a ‘‘statement’’ as follows:

(1) a written statement made by said witness and

signed or otherwise adopted or approved by him;

(2) a stenographic, mechanical, electrical, or other

recording, or a transcription thereof, which is a

substantially verbatim recital of an oral statement

made by said witness and recorded contempora-

neously with the making of such oral statement.

18 U.S.C. § 3500(e) (emphasis supplied.)#® From the sta-

tute, it can be argued that the government’s only obligation

was to turn over whatever ‘‘statements’’ it had in its

possession at the relevant time, and that this obligation

was met because it turned over everything it had and any

unrecorded remarks made off the record were not part of

a ‘‘statement’’ within the meaning of the Jencks Act.

The matter is not quite this simple. Cases under the

Jencks Act have indicated that the Act calls not only for

timely disclosure of statements, but also for the preserva-

tion of statements for future disclosure. In Campbell (1)

v. United States, 365 U.S. 85, 98 (1961), a majority of the

Supreme Court found it unnecessary to decide when de-

struction of possible Jencks Act material would require

sanctions, but failed to adopt the minority view that the

Act imposed no duty of preservation, id. at 102.1! Subse-

10The statement must, of course, be ‘‘relate[d] to the subject

matter as to which the witness has testified,’’ 18 U.S.C. § 3500(b).

If the government claims that tle entire statement does not satisfy

this requirement, it must turn the statement over for in camera

inspection, so that the court can decide whether there are irrelevant

portions to excise. 18 U.S.C. § 3500(c).

11 Justice Frankfurter, in a concurring and dissenting opinion

joined by three other justices, said that the history of the Jencks

Act did not suggest that Congress intended to require the govern-

ment to preserve all records and notes taken during countless

interviews, and specifically rejected the argument that the statu-

10a

10 U.S. V. LIEBERMAN

quently, the Court implied there was some duty to pre-

serve, holding that the destruction of an F.B.I. agent’s

notes was not impermissible as long as the data in them

had been incorporated in another document and the notes

had been destroyed in good faith and in keeping with gen-

eral practice. Killian v. United States, 368 U.S. 231, 242

(1961). See also United States v. Augenblick, 393 U.S. 348,

395-56 (1969) (government had duty of producing tapes

covered by Jencks Act, or explaining why it could not do

so). Lower courts have held that the intentional destruc-

tion, even in good faith, of a government witness’ statement

can violate the Jencks Act and warrant sanctions. £.9.,

United States v. Bufalino, 576 F.2d 446, 448-50 (2d Cir.),

cert. denied, 439 U.S. 928 (1978) (although no sanctions

imposed for the destruction of backup tapes of drug trans-

actions, deliberate destruction of Jencks material will ordi-

narily call for sanctions in the future); United States v.

Well, 572 F.2d 1383, 1384-85 (9th Cir. 1978) (routine

destruction of interview tapes justified a mistrial and sup-

pression of testimony), United States v. Carrasco, 537 F.2d

372, 375-77 (9th Cir. 1976) (routine good faith destruction

of informant’s diary called for a new trial) ; United States

v. Bryant, 439 F.2d 642, 650-53 (D.C. Cir.) (negligent or

bad faith nonpreservation of tapes of a drug transaction

might call for sanctions; remanded), appeal after remand,

448 F.2d 1182 (1971); Lee v. United States, 368 F.2d 834,

837-38 (D.C. Cir. 1966) (testimony of agents whose reports

tory language ‘‘in the possession of’’ meant ‘““possession at any

prior or present time.’’ Campbell (1) v. United States, 365 U.S.

85, 102 (1961). In our own Campbell opinions following remand

from the Supreme Court, we doubted the existence of a duty tc

preserve Jencks Act material, although we put to ome side cases

involving bad faith destruction. Campbell v. United States, 29¢

F.2d 527, 531-32 & n.8 (1st Cir. 1961), and 303 F.2d 747, 75)

(1st Cir. 1962). When the case went to the Supreme Court for ¢

second time, the Court again did not reach the issue whether any

sanction would attach to the destruction of the notes in question

Campbell (II) v. United States, 373 U.S. 487, 491 & n5 (1963)

lla

OPINION OF THE COURT 11

had been detstroyed in the ordinary course of business

should have been stricken) ; United States v. Lonardo, 350

F.2d 523, 527-30 (6th Cir. 1965) (deliberate destruction of

stenographic transcripts required mistrial). Compare, ¢.g.,

United States v. Miranda, 526 F.2d 1319, 1328-29 (2d Cir.

1975), cert. denied, 429 U.S. 821 (1976) (inadvertent or

negligent, nonprejudicial loss of tape of drug transactions

did not warrant sanctions); United States v. Perry, 471

F.2d 1057, 1062-66 (D.C. Cir. 1972) (unintentional, non-

negligent loss of grand jury minutes woald not justify

sanctions; remanded).

Relying upon some of these cases and others,” Lieber-

man contends that the government violated its duty to

preserve Jencks Act material by failing to record all that

was said before the SEC. We think it is appropriate to

assume that some of what was said during the off the record

breaks would have qualified as Jencks Act material had it

12 The rationale expressed for sanctions for the intentional de-

struction of Jencks Act material (but not less culpable behavior)

was either that they are necessary to prevent circumvention of

the Jencks Act (and Fed.R.Crim.P. 16 and Brady v. Maryland.

373 U.S. 83 (1963) ), or that destruction of a witness’ statement

is an ‘‘elec[tion] not to comply’’ with the Act that requires striking

the witness’ testimony or declaring a mistrial, 18 U.S.C. § 3500(d)

13 Analogizing his case to one in which a government agent

destroys rough notes of an interview of a witness after writing up

a report, Lieberman also relies on United States v. Harrison, 524

F.2d 421 (D.C. Cir. 1975), which condemned this F.B.I. pro-

cedure. Although the third and ninth circuits have followed Har.

rison, United States v. Vella, 562 F.2d 275, 276 (3d Cir. 1977).

cert. denied, 434 U.S. 1074 (1978); United States v. Harris, 5432

F.2d 1247, 1248 (9th Cir. 1976), other circuits have taken a

different view. See cases collected in Harrison, supra, at 430 n.25.

Because the Harrison holding was based upon Fed.R.Crim.P. 1¢

and Brady v. Maryland, 373 U.S. 83 (1963), we do not find if

particularly enlightening on the Jencks Act issue in this ease

and we need not consider whether we would follow Harrison o1

adhere to the views we expressed in Campbell v. United States

296 F.2d 527, 531-32 & n.8 (1st Cir. 1961).

12a

12 U.8. V. LIEBERMAN

been recorded.* But, as the government points out, in

all of the cases cited by Lieberman, ‘‘[s]omething was

destroyed rather than not recorded or made.’’ Lieberman,

however, sees no material difference between the destruc-

tion of existing Jencks Acts material and the refusal to

record it in the first place, and contends that going off

the record violates the Jencks Act just as much as editing

a full transcript of the SEC proceedings would.

We are not persuaded. What Lieberman would have us

hold is that there is not only a duty to preserve whatever

material comes into the government’s hands, but also a

duty to create Jencks Act material by recording every-

thing a potential witness says, at least if some of it is

memorialized.

In the first place, such a holding would be at odds with

one of our previous decisions. In Campbell v. United States,

296 F.2d 527, 531-32 (1st Cir. 1961), on remand from the

Supreme Court, 365 U.S. 85 (1961), we rejected a sugges-

tion that the F.B.I. had a duty under the Jencks Act not

only to preserve notes, but ‘‘always to take notes, so that

a record might be there to be kept.”’

Moreover, it stretches the language of the Jencks Act

too far to read it to require complete recordation of a

statement without regard to its length or the circumstances

in which it is made. The statute speaks in terms of turn-

ing over ‘‘statement[s]’’ ‘‘in the possession of the United

States.’’? 18 U.S.C. § 3500(b). When all that a witness said

was recorded and then wholly or partly destroyed, it was

at least once contained in a ‘‘statement’’ ‘‘in the posses-

*No contrary finding was made below, and there was, among

other things, testimony by Miele that matters of substance were

discussed by him and testimony by Bloom that he ‘*ramble[d]’’

in response to questions about Giant Stores.

5 Lieberman carefully avoids asserting that the SEC is obli-

gated to record its interrogations, arguing only that as long as it

elects to record them, full statements must be taken and provided.

l3a

OPINION OF THE COURT 13

sion of the United States.’’ 18 U.S.C. § 3500(e). When

some of what a witness said was not recorded, however,

it was never part of a ‘‘statement’’ within the meaning of

the Jencks Act (and was arguably never ‘‘in the possession

of the United States”’ either).

Apart from the language of the Jencks Act, nothing in

the legislative history or in the case law that has been

called to our attention persuades us to adopt Lieberman’s

position. We are left with the conviction that Congress

would not have expected an interpretation of the Jencks

Act that would bar off the record discussions during SEC

or other agency proceedings. No court has gone as far as

Lieberman would have us go; as the Fifth Circuit stated

in an analogous context (the selective recording of grand

jury testimony), ‘‘no part of the Jencks Act has ever been

construed to require the government to develop potential

Jencks Act statements’’ (emphasis added). United States

v. Head, 586 F.2d 508, 511-12 (5th Cir. 1978), quoting from

United States v. Cruz, 478 F.2d 408, 411 (5th Cir. 1973).

We do not say that there may never be a Jencks Act vio-

lation in failing to record a discussion with a potential

witness. But absent any specific indication that agency

officials were engaged in manipulative or coercive conduct,

we think that proceedings should be presumed to have been

conducted with regularity, that is, with any off-the-record

discussions being for wholly proper purposes.

We next consider Lieberman’s contention that the SEC

procedures and the use to which the transcripts were subse-

quently put by the prosecution violated his right to due

process of law and call for the exercise of this court’s

supervisory powers.’* Lieberman’s major complaint is

16 This argument is not as carefully fleshed out as Lieberman’s

Jencks Act argument. Taking what may be termed a ‘‘kitchen

sink’’ approach, Lieberman contends he was deprived of a fair

trial by a combination of fourteen factors haphazardly listed in

l4a

14 U.S. UV. LIEBERMAN

that the SEC examiners badgered and coerced witnesses

and made suggestive remarks to them off the record.”

Having reviewed the district court testimony of witnesses

who testified before the SEC and the SEC transcripts

themselves, we see nothing rising to the level of a due

process violation. It does appear, even from the record

passages, that the SEC examiners often asked leading

questions and sometimes disclosed their own point of view

to the witnesses. To us, this alone does not offend the

due process clause, however desirable blander questioning

might have been. See generally Hannah v. Larche, 363

U.S. 420, 446-48 (1960) (dictum) (due process does not

require that SEC investigations be conducted like trials).

his brief: (1) the hundreds of off-the-record discussions before

the SEC; (2) the suspicious circumstances of these off-the-record

breaks, coupled with direct evidence of SEC ‘‘suggestiveness,

badgering and outright coercion’’; (3) the fact that only an SEC

examiner could order the stenographer to go off-the-record; (4) the

government's failure to justify the off-the-record procedure;

(5) Lieberman’s difficulty in reconstructing what occurred during

the off-the-record breaks; (6) the government’s failure to justify

the long preindictment delay; (7) the defendant’s efforts to obtain

pretrial relief; (8) the government’s use of the SEC transcripts

to prepare witnesses for trial and ‘‘lock in’’ their SEC testimony :

(9) the complexity of the issues and the witnesses’ motivation to

inculpate high Giant officials; (10) the witnesses’ faded memories

and reliance on the SEC transcripts; (11) witnesses’ reluctance

to deviate from their SEC testimony; (12) the impossible burden

placed on Lieberman to prove what happened off the record;

(13) the fact that the government’s evidence against Licberman

was essentially testimonial; and (14) Lieberman’s difficulty in

obtaining certain documents from the SEC and Touche Ross.

The cases Lieberman cites in conjunction with this listing relate

almost exclusively to whether and when the government should be

required to record grand jury proceedings fully, and do not seem

to us particularly apposite.

17 Lieberman also argues in passing that the SEC violated its

own rules by going off the record. We do not read the applicable

rule, 17 C.F.R. § 203.6, to require recording of everything said

during an SEC investigation, and, therefore, we cannot conclude

that the SEC deprived Lieberman of due process by failing to

follow its own published rules. See United States v. Leahey, 434

F.2d 7 (1st Cir. 1970).

l5a

OPINION OF THE COURT 15

We are not convinced that anything more sinister occurred.

Many of the off the record breaks seemed to have been

for the innocuous purposes cited in the Patterson affidavit,

e.g., for the examination of documents, for discussions be-

tween a witness or an SEC examiner and the witness’

counsel, and for conferences between examiners. Although

we do think that discussions of substance took place during

some off the record proceedings, perhaps when the witness

asked that a question be clarified, we are simply unable

to tell what occurred during other off the record intervals.

We are unable to conclude that the witnesses before the

SEC were coerced into giving inculpatory evidence or that

exculpatory evidence was stifled. The testimony given in

the district court was to the contrary, and the SEC tran-

scripts are not as inherently suspicious as Lieberman makes

them out to be.** Misconduct of constitutional proportions

at the SEC simply does not show forth from the record.”

18 For example, comparing Miele’s district court and SEC tes-

timony convinces us that SEC examiners were openly skeptical

of what he had to say about Giant’s credits and eventually per-

suaded him to be suspicious of the credits, but not that they

coerced Miele or buried information useful to Lieberman off the

record. Halperin’s district court testimony that he was warned

off the record that a subpoena could issue for his personal records

does not demonstrate to us that he was threatened. much less that

evidence inculpatory of Lieberman was improperly extracted by

the SEC staff.

1° Because we have undertaken our own review of the SEC pro-

ceedings to see if due process was violated. we need not dwell on

Lieberman’s claim that the trial judge saddled him with an impos-

sible burden of proving what occurred off the record and that the

SEC staff acted outrageously toward each of the witnesses whose

testimony he wanted stricken (in the obviously hyperbolic terms

used by the trial judge, that ‘‘there was somebody standing by

rolling pieces of bamboo ready to go under the fingernails of the

witness’’). It suffices to say that, in general. a defendant bears

the burden of proving that his conviction was obtained in violation

of due process, see Woodcock v. Amaral, 511 F.2d 985, 988 (1st

Cir. 1974), cert. denied, 423 U.S. 841 (1975). and that here we

see nothing unfair in expecting Lieberman to have shown enough

of what occurred off the record to permit an inference that his

rights were violated.

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16 U.S. UV. LIEBERMAN

Perceiving no due process violation in the SEC investi-

gation, we do not accept Lieberman’s further argument

that the prosecutor’s use of the SEC transcripts to pre-

pare government witnesses to testify before the grand jury

and at trial violated his rights. Lieberman complains bit-

terly that, after preindictment delay had allowed memories

to fade, the transcripts were used to ‘‘lock in’’ the testi-

mony of witnesses. In the absence of solid evidence that the

testimony of witnesses who appeared before the SEC had

been significantly and improperly shaped and trimmed, we

see nothing fundamentally unfair about allowing them to

review their previous statements. Nor do Lieberman’s addi-

tional allegations—e.g., that many of the witnesses disliked

him and were motivated to inculpate him,” that most of

the evidence against him was testimonial, and that the line

between guilt and innocence (or between liberal and fraud-

ulent accounting) was subtle—create a total picture viola-

tive of due process of law.

Finally, we reject Lieberman’s argument that, in the

peculiar circumstances of this case, we should exercise our

supervisory powers to reverse his convictions. Our super-

visory powers are to be used sparingly. See Lopez v.

United States, 373 U.S. 427, 440 (1963). We would be

reluctant to exercise them to overturn a conviction that

was not the product of manifestly improper conduct by

federal officials, id. at 440; see United States v. Shelton, 588

20 Lieberman plausibly argues that middle echelon employees at

Giant could have gotten the impression from the SEC staff that

they would fare better if they testified against high echelon Giant

employees such as Lieberman. Indeed. counsel for Robert Wesley

McDonough obtained a letter from SEC examiner Patterson that

indicated MeDenough might be treated as a witness rather than

a defendant if he were knowledgeable about the fraud because he

was ordered by higher officials to carry it out. We agree with the

trial judge that the SEC's preference for prosecuting high officers

of Giant, even if it was communicated to lower echelon employees,

was not of itself uncommon, shocking, or improper.

17a

OPINION OF THE COURT 17

F.2d 1242, 1246 (9th Cir. 1978), cert. denied, 99 S.Ct. 2822

(1979) ; United States v. Jones, 433 F.2d 1176, 1182 (D.C.

Cir. 1970), cert. denied, 402 U.S. 950 (1971). For the reasons

already stated, we are unable to conclude such misconduct

occurred here.

PREINDICTMENT DELAY

We now turn our attention to the issue of preindictment

delay. The chronology of events was as follows:

1. June 25, 1973—SEC commences its investigation.

2. November 20, 1974—all witnesses except two have

testified before the SEC.

3. July 3, 1975—the last two witnesses have testified

before the SEC.

4. August 1, 1975—SKC staff’s preliminary recom-

mendations.

do. Spring, 1976—SEC informally contacts the United

States Attorney’s office in Boston.

6. August 4, 1976—SEC staff’s final recommendations

favoring injunctive and administrative proceedings.

7. September 2, 1976—SEC commences a civil action

against various defendants, including Lieberman and Sha-

piro, in federal district court in Washington, D.C.; SEC

institutes administrative proceedings against Touche Ross.

8. September 3, 1976—consent decree entered in the

civil action.

9. October, 1976—SEC formally refers the case to the

United States Attorney’s office.

10. January 26, 1977—grand jury investigation begins.

11. April 20, 1977—indictment returned.

Since almost four years elapsed from the initiation of

the SEC investigation to indictment, Shapiro moved to dis-

miss the indictment primarily because of preindictment

delay.** At the hearing before the magistrate on his motion,

211t is conceded that the indictment was returned before the

statute of limitations had run.

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18 U.S. UV. LIEBERMAN

Shapiro called Donald Bonacci to testify in an attempt to

show that the delay had prejudiced him. Bonacci, who was

a vice-president at Giant from July, 1972, to August, 1973,

testified that he was something of a ‘‘house shrink’’ in

whom some Giant employees confided. Interested in writing

a case study or a book about management techniques,

Bonacci began, in November, 1972, to tape record at night

his recollections of events that transpired at Giant. Re-

corded on these tapes was his best, most detailed memory

of conversations he had with Shapiro and three govern-

ment witnesses who testified against Shapiro at the SEC

investigation: Gerald Silverstein, Richard Lesser, and

Robert Wesley McDonough. At the time of the magis-

trate’s hearing, Bonacci was still able to remember the

substance of some of these conversations. He said that, dur-

ing the 40-50 conversations he had with Shapiro, Shapiro

complained that he was being kept in the dark about the

financial affairs of the company and admitted no wrong-

doing. He also recalled a meeting at which Silverstein

threatened to implicate Shapiro in the 1972 financial fraud

if he were not promoted to vice-president and given a

Substantial raise. Bonacci also remembered that Lesser,

a merchandise manager, started out by saying that Shapiro

told him to get as many credits as he could, and only later

alleged that Shapiro told him to get phony credits. Bonacci,

however, recalled that McDonough, director of advertising

sales, always gave a consistent, inculpatory version of

Shapiro’s involvement in the company finances. Bonacci

said he offered his tapes to SEC investigators in May, 1973,

but they rejected the offer, saying the tapes were worthless

hearsay. In October, 1974, while on an emergency assign-

ment for his new employer, Bonacci erased these recollec-

tions by recording over the tapes. By the time an SEC

lawyer requested the tapes in December, 1976, Bonacci’s

recollections had been destroyed.

19a

OPINION OF THE COURT 19

The only other witness called by Shapiro was Allen

Bornheimer, an attorney with whom Shapiro consulted

when he reported irregularities in the FY 1972 statement

to two Boston banks and the SEC. Bornheimier stated that

Shapiro had exculpated himself in their discussions and

that the SEC had never contacted him, although Shapiro

had waived his atorney-client privilege with respect to

their conversations. Shapiro also established by affidavit

that the SEC had declined his offer to take a lie detector

test.

The magistrate recommended denial of Shapiro’s motion

to dismiss. He agreed that the Bonacci tape recordings

would have been a valuable aid to defense counsel in pre-

paring to cross-examine government witnesses and in help-

ing Bonacci to refresh his recollection. Nevertheless, he

concluded that the unavailability of the tapes did not

establish ‘‘sufficient prejudice to trigger due process con-

siderations’’—first, because Bonacci would be called as an

impeaching witness (and then only if Lesser and Silver-

stein denied making certain statements to him), and, sec-

ond, and more important, because Bonacci still possessed

a recollection of the substance of the important conver-

sations from Shapiro’s point of view.

Claiming that the magistrate’s proposed findings were

deficient, Shapiro asked for and was granted a hearing on

his objections before the judge to whom the case was origi-

nally assigned. At the hearing, no further evidence was

taken; Shapiro argued that the magistrate should have

made further findings, especially concerning the SEC’s

rejection of his offers to waive his attorney-client privi-

lege and to take a lie detector examination, and should have

recommended dismissal of the indictment. The district

judge denied Shapiro’s motion to dismiss without stating

his reasons,

20a

20 U.8. U. LIEBERMAN

Shapiro contends, at the outset, that the manner in which

his motion was handled was improper. This contention

does not detain us long. Although Shapiro now complains

that the magistrate was not authorized by local rules to

hear his motion, he did not object to the referral of his

motion to the magistrate. We see no reason to consider

the objection for the first time on appeal, since the magis-

trate was not improperly designated as the final arbiter of

the motion and made no credibility judgments.?? Cf. Cruz

v. Hauck, 515 F.2d 322, 326-30 (Sth Cir. 1975), cert. denied

sub nom. Andrade v. Hauck, 424 U.S. 917 (1976) (plaintiffs

waived their right to object to reference of civil case to a

magistrate who sat as a special master). Shapiro has criti-

cized throughout the magistrate’s proposed findings as in-

complete, but, even if there was anything amiss in his

failure to make each and every finding Shapiro requested,

we think Shapiro was unharmed because the entire record

developed by the magistrate was, in any event, available

to the judge to whom objections about the findings were

22 We doubt the objection has merit in any event. It is true

that at the time the motion to dismiss was heard, the district court

Was operating under rules that did not provide for hearings by

magistrates on motions to dismiss. Rules 2 and 6 of the Rules for

United States Magistrates in the United States District Court for

the District of Massachusetts, promulgated November 5, 1974

But, the 1976 amendments to 28 U.S.C. § 636 expressly authorizec

judges to designate a magistrate to hear and make proposed find.

ings and recommendations on a motion to dismiss an indictment

28 U.S.C. § 636(b)(1)(B), and we are not altogether convincec

further authorization by local rule was required, compare 28 U.S.C

§ 636(b) (4) (1976) (requiring courts to establish rules ‘“pursuan

to which the magistrates shall discharge their duties’’) with 2!

U.S.C. § 636(b) (1968) (permitting district courts to authoriz

the assignment of additional dutics to magistrates by rule). Th

local rules have now been revised to reflect the 1976 amendments

Rule 3 of the Rules for United States Magistrates in the Unite:

States District Court for the District of Massachusetts, promul

gated February 12, 1979.

2la

OPINION OF THE COURT 21

made.” See Moran v. Hogan, 494 F.2d 1220, 1223 (1st Cir.

1974). Despite Shapiro’s insistence that the judge, in iss»-

ing no further findings or opinion of his own, abdicz

to the magistrate his responsibility to decide the motiou.,

we think he fulfilled his obligation to make ‘‘a de novo

determination of those portions of the report or specified

proposed findings or recommendations to which objection

is made,’’ 28 U.S.C. § 636(b)(1)(C), by hearing argument

on Shapiro’s objections with the record developed by the

magistrate available to him.* The First Circuit cases re-

lied upon by Shapiro involved a judge’s adoption of a

magistrate’s report without holding any hearing on objec-

tions to it and were decided before a 1976 amendment to

28 U.S.C. § 636(b)(1)(B) made it plain that a magistrate

had author:ty to hold an evidentiary hearing. O’Shea vy.

United States, 491 F.2d 774 (1st Cir. 1974), disapproved

on other grounds, Wingo v. Wedding, 418 U.S. 461, 473

n.19 (1974); Reed v. Board of Election Commissioners of

the City of Cambridge, 459 F.2d 121 (1st Cir. 1972) ; Rainha

v. Cassidy, 454 F.2d 207 (1st Cir. 1972).25

23 Shapiro specifically takes issue with the magistrate’s failure

to make certain findings about the preindictment delay and the

SEC’s indifference to his offers to waive his attorney-client privi-

lege and to take a lie detector test. Although reference to these

matters may have been in keeping with the magistrate’s obligation

to furnish a full accounting of all “‘argumentatively relevant mat-

ters,’’ O’Shea v. United States, 491 F.2d 774, 777 (1st Cir. 1974),

disapproved on other grounds, Wingo v. Wedding, 418 U.S. 461,

473 n.19 (1974), this is not a case where ‘‘a magistrate’s summary

opinion prevented the district court from considering facts and

arguments that might have altered the final decision.’’ Moran v.

Hogan, 494 F.2d 1220, 1223 (1st Cir. 1974).

*4 Shapiro makes much of the judge’s alleged failure to ‘‘accept,

reject, or modify, in whole or in part, the findings or recommenda-

tions made by the magistrate’’ or to ‘‘receive further evidence

or recommit the matter to the magistrate with instructions.’’ But

28 U.S.C. § 636(b)(1)(C) provides only that the judge may take

such actions, and we think the judge in effect “‘accept[ed]’’ the

magistrate’s findings and recommendations.

25 This case is also unlike United States v. Raddatz, 592 F.2d 976

(7th Cir. 1979), in which the Supreme Court recently granted

22a

22 U.S. V. LIEBERMAN

The real question is whether Shapiro’s motion to dismiss

Should have been granted on the merits. We conclude that

its denial was proper.

It is established that, since statutes of limitations are the

primary safeguards against overly stale criminal charges,

the due process clause has a limited role to play in protect-

ing against oppressive pretrial delay. United States v.

Lovasco, 431 U.S. 783, 789 (1977) ; United States v. Marion,

404 U.S. 307, 322-24 (1971). To determine whether due

process requires dismissal of a delayed indictment, a court

inust first consider whether the delay caused the defendant

actual prejudice, and then evaluate the reasons for the

delay.

[P ]roof of actual prejudice makes a due process claim

concrete and ripe for adjudication .... [P]roof of

prejudice is generally a necessary but not sufficient

element of a due process claim.... [T]he due process

inquiry must consider the reasons for the delay as well

as the prejudice to the accused.

United States v. Lovasco, supra, at 789-90, interpreting

United States v. Marion, supra, at 324-26. As Shapiro

concedes, the burden of proving actual prejudice is with

the defendant. E.g., United States v. King, 560 F.2d 122,

131 (2d Cir.), cert. denied, 434 U.S. 925 (1977); United

States v. Mays, 549 F.2d 670, 677 (9th Cir. 1977) ; Schlinsky

v. United States, 379 F.2d 735, 737 (1st Cir.), cert. denied,

389 U.S. 920 (1967). What the defendant must show is

certiorari, 48 U.S.L.W. 3185 (U.S. October 1, 1979) (No. 79-8).

Raddatz held that, where the credibility of ps ae ae Prost

to the outcome of a motion to suppress and a magistrate credited

the testimony of government witnesses in recommending denial of

the motion, the district court denied the defendant due process

by, adopting the magistrate’s recommendation without holding an

evidentiary hearing. Here, the magistrate made no such critical

credibility judgments. Also, in Raddatz, the defendant apparently

objected below to the procedure employed by the judge, id. at 983,

but here Shapiro did not object to the initial reference to a magis-

trate or request an evidentiary hearing before the district judge.

23a

OPINION OF THE COURT 23

that his defense has been impaired. E.g., United States

v. Pallan, 571 F.2d 497, 501 (9th Cir.), cert. denied, 436 U.S.

911 (1978); United States v. Barket, 530 F.2d 189, 193

(8th Cir. 1976).

This Shapiro fell short of doing. True, Shapiro did

something more than make an unsupported claim that

witnesses’ memories had faded, United States v. Marion,

supra, at 326, or that witnesses or evidence had been lost

that might have been helpful to him, United States v. Pal-

lan, supra, at 501. Before the magistrate, Shapiro did

establish that Bonacci’s memory of the exact wording and

timing of certain conversations had actually faded and

that the lost tapes would have helped refresh his memory.

But, the extent to which Bonacci’s ability to impeach Sil-

verstein and Lesser was reduced remained difficult to gauge

and whether the defense would actually be handicapped

remained open to considerable doubt. As it turned out, the

evidence that persuaded the trial judge to find Shapiro

guilty did not come from Silverstein and Lesser, the sub-

stance of whose statements Bonacci related, but from

Robert Wesley McDonough and Linda Jewett (Lieber-

man’s secretary), witnesses about whom Bonacci never

claimed to have any impeaching information.”®

In short, we do not think Shapiro made a ‘‘showing of

prejudice sufficient to support a deeper due process inquiry

under Lovasco’’ into the reasons for the preindictment

delay. United ‘States v. Ramos Algarin, 584 F.2d 562, 567

(1st Cir. 1978). We add that the destruction of the Bonacci

tapes occurred while the SEC proceedings were ongoing,

during a period of investigative delay in which the Su-

preme Court has held some prejudice can be tolerated.

United States v. Lovasco, supra, 431 U.S. at 796. Further-

more, much, if not all, of the delay prior to indictment

26In his special findings, the trial judge made it plain that he

convicted Shapiro on the strength of testimony by McDonough

Q4a

24 U.S. UV. LIEBERMAN

appears justified by the length of the SEC’s investigation,?”

the prosecutor’s need to review the complex case, and the

grand jury’s own proceedings. Although the ill-explained

period between August 1, 1975 (when the SEC investiga-

tion was complete and the staff’s preliminary recommen-

dation made), and October, 1976 (when the case was for-

mally referred to the United States Attorney’s office), is

of concern, it looks from the record as though the SEC

decided to pursue civil remedies before referring the case

for possible criminal prosecution.2® We cannot say that

this would be unreasonable. United States v. Naftalin, 534

F.2d 770, 774 (8th Cir.), cert. demied, 429 U.S. 827 (1976).

See United States v. United States Gypsum Co., 550 F.2d

115, 118 (3d Cir. 1977), cert. denied sub nom. Brown v.

United States, 438 U.S. 915 (1978).

We are also unpersuaded by Shapiro’s argument that

additional factors combined with the delay to deny him due

process of law. For example, it seems to us that, in spurn-

ing the original offer by Bonacci of his tapes, the SEC

examiners were, at most, negligent,”® see United States v.

Smyth, 556 F.2d 1179, 1182 n.7 (Sth Cir.), cert. denied,

434 U.S. 862 (1977), and that, in deciding to appraise

Shapiro’s credibility without having him take a lie detector

and Jewett, which he concluded ‘‘beyond a reasonable doubt’’ was

‘*substantially true.’’ As noted in the findings, McDonough testi-

fied that Shapiro told him he lead to dig up advertising ercdits

in order to save the eezapany and said everyone had to make a

moral judgment ané@ consider what was best for the company ;

Jewett testified that Shapiro had her type up a Millbrook Dis-

tributors credit memo, which, the court found, showed a phony

credit of $257,000. The trial judge also stated in his findings that

Shapiro did not strike him as “altogether forthright’’ in his

testimony.

27 It is true that all but two of the witnesses called by the SEC

had testified by the end of November, 1974. Much of the period

until August, 1975, when the staff made its recommendations,

may have been devoted to digesting the large quantity of testi-

monial and documentary evidence received.

78 The prosecutor’s affidavit mentions that negotiations with

prospective civil defendants took place during this period, and

25a

OPINION OF THE COURT 25

test or hearing from his former counsel, the SEC was

acting within its discretion. Although Shapiro complains

that the SEC investigators induced witnesses to give in-

culpatory testimony and aborted exculpatory evidence, this

claim has no more force or substantiation than the similar

claim by Lieberman. Viewing ‘‘the whole course of the

proceedings,’’ as Shapiro requests, we do not detect gov-

ernment conduct that so violated ‘‘the community’s sense

of fair play and decency’’ as to deprive him of due procéss

of law. Rochin v. California, 342 U.S. 165, 169, 173 (1952).

Lieberman’s preindictment delay claim fares no better

than Shapiro’s. Like Shapiro, Lieberman did not show that

the delay caused actual prejudice to his defense. Lieber-

man’s major claim of prejudice was that the passage of

time had dulled the memory of witnesses, making it diffi-

cult for him to reconstruct what occurred during the

off the record proceedings at the SEC. Although he was

able to show that many witnesses indeed had difficulty

remembering the breaks, he did not show that they had

likely forgotten information that would have buttressed

his claim that the conduct of the SEC examiners deprived

him of due process of law. We suspect the contrary—that

if witnesses had been as bullied as Lieberman claimed,

some of them or their lawyers would have remembered.

Lieberman also claims that the delay contributed to his

inability to obtain financial records of Giant vendors,

because many vendors destroyed their records after seven

years. Whether such records would have advanced Lieber-

the magistrate’s findings indicate that a consent decree was en-

tered one day after a civil suit was filed.

7° Although it seems fair to assume that the tapes would not

have been lost to Shapiro if the SEC had accepted Bonacci’s offer,

it also must be pointed out that Shapiro might have asked for the

tapes himself before they were destroyed. Bonacci testified that

Shapiro knew he was making tapes, and from the record it is clear

that Shapiro knew he was under investigation before the tapes

were destroyed in October, 1974.

26a

26 U.S. VU. LIEBERMAN

man’s defense (e.g., by impeaching testimony that certain

credits were never authorized or by showing that credits

were commonly given and Lieberman could have believed

Some were valid) is purely a matter of speculation.™

United States v. Smyth, supra, 5096 F.2d at 1182. There

was no error in the failure to dismiss the indictment

against Lieberman for preindictment delay, which appears

to have been largely justified.

THE SUBPOENA FOR TOUCHE ROSS PAPERS

The next issue is whether the district court erred in

denying Lieberman access to Touche Ross’ work papers

for its audit of Giant in FY 1970. Prior to trial, Lieberman

sought production of Touche Ross’ FY 1969-1973 Giant

audit work papers pursuant to Rule 17(c) of the Federal

Rules of Criminal Procedure.*! After the government

agreed to produce work papers from FY 1972 and 1973,

the magistrate ordered Touche Ross to produce the FY

1970 and 1971 work papers. As a result of an appeal by

Touche Ross, the judge to whom the case was first assigned

limited the subpoena to the 1971 work papers.

The enforcement of a pretrial subpoena duces tecum is

committed to the sound discretion of the district court.

United States v. Nixon, 418 U.S. 683, 702 (1974); United

States v. Bearden, 423 F.2d 805, 809 (5th Cir.), cert. denied,

400 U.S. 836 (1970). The moving party must show, among

other things, that the material he seeks is evidentiary and

relevant. United States v. lozia, 13 F.R.D. 335, 338 (S.D.

N.Y. 1952), cited in United States v. Nixon, supra, at 699.

3° Records made seven years before the indictment was returned

in 1977 would not directly relate to Giant’s FY 1972. which was

largely part of calendar year 1971. Two vendors said at the time

of trial that they had destroyed records from calendar years 1969

and 1970.

31 The Rule provides:

A subpoena may also command the person to whom it is

directed to produce books, papers, documents or other objects

27a

OPINION OF THE COURT 27

Lieberman contended below that the FY 1970 work

papers would have established that vendor credits were on

Giant’s books before he joined Giant in the fall of 1970

and, therefore, would have shown he was not the author

of the 1972 credits and had no reason to suspect any

were fraudulent. But the existence of credits in FY 1970

would not have excluded Lieberman’s involvement in the

FY 1972 fraud, and Lieberman in any event was given

access to records for FY 1971, which, according to him,

showed that credits had been given that year. In these

circumstances, we cannot say that it was an abuse of

discretion to limit the subpoena to records from the later

time period. See United States v. Iozia, supra, at 338-40.

See generally 1 C. Wright, Federal Practice and Procedure

§ 275 at 560-61 (1969 ed.), stating that, although a ruling

quashing a subpoena is appealable after conviction, the

trial court has so much discretion in this area that reversal

is unlikely.*?

THE BURDEN OF PROOF

BEYOND A REASONABLE DOUBT

Lieberman’s final contention is that the trial judge erro-

neously imposed upon him the burden of creating a reason-

able doubt about his guilt. This claim focuses on the trial

judge’s refusal to ‘‘instruct himself,’’ as the finder of fact,

in the following terms proposed by Lieberman: ‘‘The de-

fendant does not have any duty to create a reasonable

designated therein. The court on motion made promptly may

quash or modify the subpoena if compliance would be un-

reasonable or oppressive. The court may direct that books,

papers, documents or objects designated in the subpoena be

produced before the court at a time prior to the trial or prior

to the time when they are to be offered in evidence and may

upon their production permit the books, papers, documents

or objects or portions thereof to be inspected by the parties

and their attorneys.

Fed.R.Crim.P. 17(c). a

32The government contends that this issue was waived by

Lieberman’s failure to issue a trial subpoena for the FY 1970

28a

28 U.S. V. LIEBERMAN

doubt or to establish a reasonable doubt. It is not the

function of the defendant’s evidence to raise a reasonable

doubt as to the defendant’s guilt.’’ In refusing to adopt

the second sentence of this proposed ruling of law, the trial

judge remarked that, although the defense did not have to

introduce evidence to raise a reasonable doubt, he could

see no other function that the defendant’s evidence would

have other than that of raising a reasonable doubt.

To Lieberman, this demonstrates that the trial judge

harbored the same misconception about burden of proof

as he conveyed in the case of United States v. Harrigan,

586 F.2d 860 (1st Cir. 1978). In Harrigan, we found re-

versible error in the following instruction to the jury:

‘‘(T]he defendant’s evidence has no greater function than

simply to raise a reasonable doubt in your minds, if it does.

The defendant is not required to go any furthec.’’ This

instruction, along with similar remarks during the prose-

cutor’s summation, gave the impression to the jury that

the defer.dant had some burden to establish doubt in their

minds. Jd. at 862.

There are, however, salient differences between this case

and Harrigan. Harrigan was a jury case. The court’s in-

struction came hard on the heels of a statement by the

prosecutor in which he asked the jury if they were convinced

that the defendant had proven that another person was the

real offender (the bookmaker). The only way the court’s

statement could be construed was that the defendant had to

prove there was a reasonable doubt by the evidence he

work papers. We note, however, that after learning that two

vendors had destroyed their records for 1969 and 1970, Lieber-

man advised the trial judge that he was still interested in Touche

Ross’ FY 1970 work papers, and the trial judge said he was not

inclined to disturb the order limiting the subpoena. Although we

think this rather informal discussion with the trial judge cuts

against a finding that Lieberman waived his request for the FY

1970 papers, neither do we think it presents us with the question

whether the trial judge would have been warranted in quashing

a trial subpoena.

29a

OPINION OF THE COURT 29

introduced. There was not the interchange between the

court and counsel as here, where the court made it clear

that it understood fully that the government had to prove

the defendant guilty beyond a reasonable doubt:

Then the context I gave it, that’s the only proof.

That’s also my feeling. The defendant has no burden

of proof and the only function of the defendant’s

evidence is to raise a reasonable doubt.

If I were to do so [accept the requested instruction],

I would then be led to either one of two conclusions,

that the function of the defendant’s evidence is to

satisfy some burden of proof, which is plainly wrong,

or that it has no function at all, in which case, I would

be obliged to disregard it, which would be equally

wrong.

So that I cannot accept your instruction without

doing serious injustice to the defendant in the case.

(emphasis added).

It is clear to us from reading the entire colloquy between

the court and counsel that each ascribed a different mean-

ing to the words ‘‘function of the evidence.’’ Defense coun-

sel interpreted the phrase to mean burden of proof. We

think the court meant that if the defendant chose to intro-

duce evidence, the purpose obviously was for the court to

consider it in determining whether the government had

proven the defendant guilty beyond a reasonable doubt.

Other remarks by the trial judge in the court of the trial,

when read in context, are wholly in keeping with his proper

understanding of the allocation of the burden of proof.*

33 F.g., the following exchange during the testimony of one

government witness:

THE COURT: Now, the question of what you have to

prove, of course, is not the issue at all. As you correctly

state, you don’t have to prove anything. But you do, if you’re

trying to undercut the government’s proof by some sort of

30a

30 U.S. V. LIEBERMAN

Our review of defendants’ claims and the record as a

whole has convinced us that there was no error warranting

dismissal of the indictment or a new trial. The convictions

of Jack Shapiro and Benjamin Lieberman are therefore

affirmed.

positive assertion, why, it has to be a positive assertion that

is persuasive.

MR. SHAPIRO: Yes, your Honor.

THE COURT: And the purpose of my questioning is to

find out whether your positive assertion is persuasive enough.

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.