Petition — Gleason v. United States
Supreme Court brief1980
Ask Donna
What actually matters in this document.
Text
IN THE "wictAbl 18 1980 all
Supreme Court of the United States
October Term, 1979
N. @€9-11:i8
HAROLD V. GLEASON,
Petitioner,
against
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Arkin & Artsoun, P.C.
Attorneys for Petitioner
600 Third Avenue
New York, New York 10016
(212) 869-1450
STANLEY S. ARKIN
Mark S. ARISOHN
Artuur T. CaMBOURIS
On the Petition
TABLE OF CONTENTS
PAGE
Opinion of the Court Below .....................5.. 1
Jurisdiction of the Supreme Court .................... Pte awit 2
Questions Presented for Review te ee 2
Constitutional Provisions, Statutes and Rules In-
volved I ere Dy igus savdnvenrossubesveeyoseese 3
elie cleecssuhcn-vivsvarecnsseeneversns 4
Point I—The trial court’s circumstantial evidence
charge permitted a conviction upon speculation,
distorting the fundamental precepts underlying a
constitutionally permissible fact finding process
in violation of the due process requirement of
proof beyond a reasonable doubt 0... ; 6
Point II—In this concededly close case, where credi-
bility was the determinative issue, the trial
court’s jury charge singling out the defendant
as the witness with the greatest motive to testify
falsely was unfair, impermissibly downgraded
the presumption of innocence and reduced the
Government’s burden to prove guilt beyond a
soc ocakieccevessacvserssecesesess 11
II
Point I1I—The Second Circuit’s interpretation of
Rule 16(a)(1)(A), Federal Rules of Criminal
Procedure, modifying the Rule’s plain language
to place a due diligence requirement on the de-
fendant and limiting the Rule’s mandate that the
Government produce ‘‘any relevant written...
statements made by the defendant’’ to include
only those statements of a defendant which
amount tw direct admissions of the particular
crime charged conflicts with the express purpose
and ail prior interpretations of the Rule
Point IV—The trial court’s refusal to order the Gov-
ernment to seek use immunity for a key exculpa-
tory witness who had invoked his privilege
against self-incrimination violated Gleason’s
right to compulsory process and due process of
law .
Conclusion -
Appendix A—Opinion of the Second Circuit
Appendix B—Constitutional Provisions, Statutes and
Rules Involved
PAGE
16
22
25
la
5da
Ifti
TABLE OF AUTHORITIES
PAGE
Cases:
Bollenbach v. United States, 326 U.S. 607 (1946) ........ 10
Carrigan v. United States, 405 F.2d 1197 (1st Cir.
' 1969), cert. denied, 396 U.S. 1028 (1970) .........0.0.... 14
In re Winship, 307 U.8. 366 (1970) .......................0.000 9
Jackson v. Virginia, —— U.S. ——, 99 S.Ct. 2781 ;
(1979) een eesseeseesneeenseneeessseessneesesnessssecessnsenssneeennseeessniees
Jencks v. United States, 353 U.S. 657 (1957) ................
Reagan v. United States, 157 U.S. 301 (1895) ................ 14
Roviaro v. United States, 353 U.S. 53 (1957) .............. 23
Taylor v. Kentucky, —— U.S. ——, 98 8.Ct. 19380 es
“(| ROR ee ae Ihab ere oats APES aS Peet a te RE ARP at ;
United States v. Alessio, 528 F.2d 1079 (9th Cir.),
cert. denied, 426 U.S. 948 (1976) ............ ee. 24
United States v. Allstate Mortgage Co., 507 F.2d 492
(7th Cir. 1974), cert. denied, 421 U.S. 999 (1975) 24
United States v. Arcentales, 532 F.2d 1046 (5th Cir.
ND ea ds hme acne ete AR tapes he oe 19
United States v. Bautista, 509 F.2d 675 (9th Cir.),
cert. denied, 421 U.S. 976 (1975) «0.0... = 24
United States v. Bear Killer, 534 F.2d 1253 (8th Cir.
1976), cert. denied, 429 U.S. 846 (1977) cesesesnesnteee 14
United States v. Beasley, 550 F.2d 261 (5th Cir.), cert.
domted, 484 UB. O65 (1977) oi... cciccsceccceciccececiees 24
United States v. Bufalino, 576 F.2d 446 (2d Cir. 1978) 18
United States v. Caldwell, 543 F.2d 1333 (D.C. Cir.
I onc ee eae eat ayes ei ceeteaseaets Soe 18
United States v. Crisona, 416 F.2d 107 (2d Cir. 1969),
cert. denied, 397 U.S. 961 (1970) «0... 19
Iv
United States v. Earl, 361 F.2d 531 (D.C. Cir. 1966)
PAGE
cert. denied, 388 U.S. 921 (1967) o.oo cccccocccecceee, 24
United States v. Gaither, 539 F.2d 753 (D.C. Cir.),
cert. dented, 429 U.S. 961 (1976) o.oo eee. 24
United States v. Housand, 550 F.2d 818 (2d Cir.),
cert. denied, 431 U.S. 970 (1977) ooo. 24
United States v. Jenkins, 470 F.2d 1061 (9th Cir.
1972), cert. denied, 411 U.S. 920 (1973) ............... 24
United States v. Johnson, 525 F.2d 999 (2d Cir.
1 /{) nen Ui foes 19
United States v. Lang, 589 F.2d 92 (2d Cir. 1978)... 2
United States v. Lewis, 511 F.2d 798 (D.C. Cir.
WING) 60a reesitiavnaonbgsalye Uy eeas este Seip ee ne 18, 19-20
United States v. Manetta, 551 F.2d 1352 (5th Cir.
yj enn 18
United States v. Neiderberger, 580 F.2d 63 (3d Cir.),
cert. denied, 99 Sup. Ct. 567 (1978) 24
United States v. Nixon, 418 U.S. 683 (aera? 5... 23
United States v. Padrone, 406 F.2d 560 (2d Cir. 1969) 19
United States v. Percevault, 490 F.2d 126 (2d Cir.
Vb if) NC 17
United States v. Reid, 410 F.2d 1223 (7th Cir. 1969) 14
United States v. Rocco, 587 F.2d 144 (3d Cir.1978) ... 24
United States v. Saletko, 452 F.2d 193 (7th Cir. 1971),
cert. denied, 405 U.S. 1040 (1972) 14
United States v. Schlesinger, 598 F.2d 722 (2d Cir.
WDTD) ssc nsedlnes en 14
United States v. Standing Soldier, 538 F.2d 196 (8th
Cir.), cert. denied, 429 U.S. 1025 ( ig: EER 14
United States v. Trejo-Zabrane, 582 F.2d 460 (9th
Cir.), cert. denied, 99 Sup. Ct. 618 (1978) ............ 24
United States v. Vega, 589 F.2d 1147 (2d Cir. 1978)... 14
United States v. Wright, 588 F.2d 31 (2d Cir. 1978),
cert. denied, 99 Sup. Ct. 1236 Ce eo 24
Wardius v. Oregon, 412 U.S. 470 (REP ceo 23
PAGE
Constitution:
ng 0 9 Vag Yeah ve oso pcaca Sop eo0oov> passim
Statutes:
I eo cos 8s aoe saciece en ciscs he ac dha oetoabrtciasis 3, 22
Rules:
Federal Rules of Criminal Procedure Rule 16(a)
aS Mie SN oe eS 3, Point III (passvm)
Miscellaneous:
Note, The Siath Amendment Right to Have Use Im-
munity Granted to Defense Witnesses, 91 Harv.
I I NI in evs ssecevssisesesenesaveussedaoass oo 24
Westin, The Compulsory Process Clause, 73 Mich.
UE I ihc bn cpaacneaeSeenstsvesuassSeaievedasensesses 24
a
- ome olin
IN THE
Supreme Court of the United States
October Term, 1979
No.
nt e
Harotp V. GLEason,
Petitioner,
against
Unitrep States or AMERICA,
Respondent.
PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Harold V. Gleason, petitioner herein, prays that a writ
of certiorari issue to review the judgment entered in this
criminal case on December 19, 1979, by the United States
Court of Appeals for the Second Circuit.
Opinion of the Court Below
The opinion of the United States Court of Appeals for
the Second Circuit sought to be reviewed is reproduced in
Appendix A and is not yet officially reported.
>
Jurisdiction of the Supreme Court
The judgment of the United States Court of Appeals for
the Second Circuit was entered on December 19,1979. Title
28, United States Code, Section 1254(1) and Rule 22(2) of
the United Supreme Court Rules confer jurisdiction on this
Court to review the judgment by a writ of certiorari.
Questions Presented for Review
1. Whether the Government’s constitutionally imposed
burden ‘o prove guilt beyond a reasonable doubt was ob-
viated by the trial court where, in this concededly close case
charging a bank’s board chairman with participating in a
scheme by subordinates to falsify the bank’s earnings state-
ment, a jury instruction on circumstantial evidence invited
speculation in the fact finding process by comparing the
chairman to a football coach and advising the jury it could
infer what the coach must have said and instructed from
evidence of the football players’ plays, penalties and in-
juries?
2. Whether the Government’s burden of proof was
lessened and the defendant’s presumption of innocence de-
meaned by instructions to the jury that the defendant’s
motive to testify falsely was greater than that of any other
witness and that accomplices are the best means of convey-
ing information about criminal activities where the deter-
minative issue in this case was credibility ?
3. Whether Rule 16(a)(1)(A), F.R.Cr.P., was improp-
erly narrowed by the Second Cireuit (1) limiting a defend-
3
ant’s right to discover his own statements possessed by the
government to only those statements amounting to a direct
admission of the particular crime charged and (2) imposing
a due diligence requirement on a defendant to uncover
documents containing his own statements which are ac-
cessible to him even though carefully selected and possessed
by the Government prior to trial?
4. Whether petitioner was deprived of compulsory proc-
ess and due process of law by the trial court’s refusal to re-
quire the prosecution to seek use immunity for a key ex-
culpatory witness who had invoked his privilege against
self-incrimination when called as a defense witness and
where the Government had granted use immunity to two of
its witnesses and thus created a serious imbalance in the
fact presenting abilities between the Government and de-
fense?
Constitutional Provisions, Statutes and Rules Involved
CoNSTITUTION:
Fifth Amendment
STATUTES AND RuLEs:
18 U.S.C. §6002
Rule 16(a)(1)(A), Federal Rules of
Criminal Procedure
Each of the above is set forth in Appendix B.
Statement of the Case
Most favorably viewed, the Government’s case against
Harold V. Gleason was weak and tenuous. The trial court
regarded the case as ‘‘extremely close,’’ and one where
‘‘the jury could come out either way’’ (R.4363).*
The core of the charge was that Gleason, the former
chairman of the board of Franklin National Bank, partici-
pated with others in a conspiracy to falsify the earnings
statement of the bank for the first quarter, 1974 by creating
profits and concealing losses. Two means of falsification
were alleged: the entering into of non-arm’s length foreign
exchange transactions resulting in increased profits in the
bank’s foreign exchange department and the concealing of
depreciation on securities held by the bank.
What proof there was against Gleason consisted prin-
cipally of testimony from Peter Shaddick and Carlo Bor-
doni regarding their claimed conversations with Gleason
about four non-arm’s length foreign exchange transactions
they entered into for the ‘‘benefit’’ of the bank. Both Shad-
dick and Bordoni were subject to serious questions of cred-
ibility—they were self confessed liars, bribe receivers and
givers, beneficiaries of plea bargains, and accomplices.
Against this polluted evidence, Gleason, a man of extraor-
dinary reputation and established decency and integrity,
took the stand and denied involvement in any wrongdoing.
* Numerical references in parentheses preceded by “R.” refer to
pages of the original stenographic transcript. References followed by |
“a” refer to pages of the appendix annexed to this petition.
——
4)
Credibility was thus the essential issue in the case. But,
as we submit in Point II, the trial court warped the cred-
ibility determination and demeaned the presumption of
innocence by charging the jury that the status of Gleason
as a defendant motivated him more than any other witness
to testify falsely. At the same time, the jury was told that
accomplices are the best means of conveying information
about criminal activities.
The circumstantial nature of the prosecution’s case
made the instructions on circumstantial evidence extremely
important. The prosecution, despite an absence of evidence,
made powerful suggestions as to what might have occurred
and what Gleason, as chairman, must have known. The
court’s charge on circumstantial evidence invited the jury
to speculate by comparing Gleason to a football team’s
coach and suggesting to the jury that it could infer what
the coach must have said or instructed from the plays, in-
juries and penalties of the players on the field. We submit
in Point I that these instructions vitiated the due process
requirement of proof of guilt beyond a reasonable doubt.
This case raises other issues important to the adminis-
tration of criminal justice warranting the grant of this peti-
tion. The Second Cireut, without precedent and in conflict
with the language, purpose and prior interpretations of the
rule providing for discovery by a defendant of his own
statements severely limited application of the rule to only
statements amounting to direct admissions of the particu-
lar crimes charged, and in addition, imposed a due diligence
requirement on a defendant to locate his own statements
6
even when the prosecutor is already in possession of them
(Point ITI).
Additionally, this case raises the open and important
issue of the extent to which a defendant may have use im-
munity conferred on a defense witness who has exculpatory
evidence but refuses to testify, asserting a Fifth Amend-
ment privilege where the government grants use immunity
to witnesses of its choice (Point IV).
POINT I
The trial court’s circumstantial evidence charge
permitted a conviction upon speculation, distorting the
fundamental precepts underlying a constitutionally per-
missibie fact finding process in violation of the due
process requirement of proof beyond a reasonable
doubt.
By illustrating the rule of circumstantial evidence with
the example that from observing the plays, penalties and
injuries of football players on the field one could infer
beyond a reasonable doubt the substance of what must have
been the coach’s instructions, the trial court obviated the
due process requirement of proof beyond a reasonable
doubt.
There was no question in this case that employees of the
bank, other than Gleason, had engaged in fraudulent trans-
actions and had falsified the bank’s financial reports. The
issue of Gleason’s guilt or innocence turned on whether he,
in his capacity as the bank’s chairman of the board, partic-
ipated in or had knowledge of the fraudulent transactions
ins se en
7
and false reports. Credibility questions aside, the case
against Gleason was tissue thin. The danger lurking in the
- ease, however, was the possibility that a conviction would
result from speculation by the jury that Gleason, as chair-
man, must have orchestrated the crimes though the evi-
dence adduced fell short of proof of guilt beyond a reason-
able doubt.
The trial court’s circumstantial evidence charge, rather
than cautioning the jury against speculating that as chair-
man of the board Gleason must have ‘‘coordinated’’* the
crimes, permitted the untoward result through the use of an
analogy—purportedly to explain the rule of circumstantial
evidence—which was unmistakably close to the facts of the
case. The jury was instructed that it could infer beyond
a reasonable doubt that the chairman directed the crimes of
the bank’s employees merely from proof of the employees’
actions. Thus, the jury was instructed as follows (R.5975-
76):
‘¢| . . Frequently in our every-day life, without
calling it circumstantial evidence, we draw conclusions
about what people must have done, must have thought,
and must have said.
‘‘Here is a little illustration that may show you
that this is a matter which can well be accomplished by
the use of common sense and common good judgment
and experience. This is an illustration that quite ob-
viously has nothing to do with the present case. Let’s
assume that you attend a football game. You see the
players and the teams performing certain plays. You
observe on the field many details about hew well or
how poorly the teams perform, whether there are a
lot of passes or a lot of runs, whether there are many
* The prosecution argued over and over in its summations that
Gleason must have been the “coordinator” of the crimes (R.5264-66,
5276, 5286-87, 5672-73).
8
penalties or few penalties, whether there are many in-
juries or few injuries, whatever details go on before
you.
‘‘Now, on the basis of common experience and com-
mon sense, and on the basis of whatever information
you know about football and about your observing this
game, you can logically and reasonably infer some
things about what people did and said and thought be-
fore that game and in preparation for that game, al-
though you were not present in the locker room or on
the training field and although no witnesses come to
tell you what went on. You can infer that—there are
some things that you will be able to infer about
whether the coach gave good or bad training, what in-
structions he gave, what he must have said in sub-
stance, what acts were done by the coach and the play-
ers in preparation for that game. There will be some
things that a person in the audience could reasonably
and logically infer and know beyond any doubt; there
will be some things that they could not reasonably and
logically infer beyond a doubt. But that kind of
thought process, if anybody went through it, would be
something which would not be a super human effort
or bizarre or unusual.
‘‘Now, you’re being asked in this ease to not only
eval. ste the direct evidence but to determine what the
circumstantial evidence shows as to what various peo-
ple did, said, and thought. The question for you is:
What you can infer and what you cannot reasonably
infer?’’
What this charge necessarily communicated to the jury
was that what the chairman, Gleason, ‘‘must have said in
substance”’ and ‘‘what instructions he gave’’ were similarly
inferrable from proof of the bank’s employees’ activities.
This invitation to speculate in the fact finding process
violated the fundamental constitutional requirement . of
9
proof of guilt beoynd a reasonable doubt. In re Winship,
397 U.S. 358, 361-364 (1970). As this Court wrote in
Winship:
‘The reasonable doubt standard... is a prime in-
strument for reducing the risk of convictions resting
on factuaherror.’’? Id. at 363.
And, more recently, this Court powerfully reaffirmed
Winship in the following language:
‘‘In short, Winship presupposes as an essential of
the due process guarantee ... that no person shall
be made to suffer the onus of a criminal conviction
except upon sufficient proof—defined as evidence neces-
sary to convince a trier of fact beyond a reasonable
doubt of the existence of every element of the offense.’’
(Emphasis supplied.)
Jackson v. Virginia, U.S. , 99 S.Ct. 2781, 2788
(1979). See also Taylor v. Kentucky, —— U.S. ——, 98
S.Ct. 1930, 1935 (1978).
The jury charge in this case thoroughly vitiated the re-
quirement of proof beyond a reasonable doubt. It per-
mitted a finding of guilt based upon speculation about
‘‘what must have been said [by Gleason] in substance’’ and
‘what instructions’? he gave from proof of the acts of
Gleason’s subordinates ‘‘although no witnesses come to tell
you what went on.”’
The Second Circuit agreed that the circumstantial evi-
dence charge was ‘‘[u]nquestionably . . . ill-conceived, con-
fusing and inappropriate’’ (16a), ‘‘inaccurate’’ (17a), and
‘Can invitation to speculate’? (17a). Reversal was avoided,
however, because in the Circuit’s opinion, when ‘‘viewed
in context,’’ the charge did not have ‘‘any serious preju-
10
dicial effect’’ and the trial court told the jury that the
charge had nothing to do with the case (17a-18a).
But when ‘‘viewed in context’? the prejudicial effect of
the charge is clear. The jury was invited to speculate that
Gleason, the chairman of the board, must have given in-
structions to the subordinate employees to commit. their
erimes and convict even though without such speculation
there was reasonable doubt of his guilt.
Concededly, the trial court charged the jury that in
order to convict it must be satisfied of guilt beyond a rea-
sonable doubt and ‘‘reasonable doubt’? was defined. But
these abstract principles charged early on in the instrue-
tions cannot be taken to eradicate the extreme error in the
circumstantial evidence charge given to the jury near the
tail end of the instructions. As Mr. Justice Frankfurter
pointed out in Bollenbach v. United States, 326 U.S. 607,
612 (1946):
‘*Particularly in a criminal trial, the judge’s last
word is apt to be the decisive word. If it is a specific
ruling on a vital issue and misleading, the error is not
cured by a prior unexceptional and unilluminating ab-
stract charge.’’
Given the court’s circumstantial evidence charge, the jury
could well have believed that speculation on ‘‘what must
have been said in substance’? or what Gleason’s instruc-
tions must have been, was, as the court put it, ‘‘some thing
that ... [the jury] could reasonably and logically infer
and know beyond any doubt... .”’
Finally, any reliance on the court’s statement that the
charge had nothing to do with the case is inapposite. This
‘*disclaimer’’ was immediately preceded by the trial court’s
rejection of the standard circumstantial evidence example
nie
11
—proof that people walking into the courtroom with wet
raincoats and umbrellas gives rise to the inference that it’s
raining—upon the ground, expressly stated to the jury,
that such a charge is not ‘‘helpful’’ because ‘‘ You are not
really trying 1: decide whether some weather condition
exists, at least I don’t know that that’s a major problem
in this ease’’ (R.5974). The court then charged the foot-
ball analogy. The only fair implication was that the foot-
ball illustration charged had great relevance to the facts
of the case—indeed, it did.
Certiorari should be granted in this ease because the
circumstantial evidence charge unconstitutionally permitted
a finding of guilt to be based upon speculation rather than
proof beyond a reasonable doubt.
POINT II
In this concededly close case, where credibility was
the determinative issue, the trial court’s jury charge
singling out the defendant as the witness with the
greatest motive to testify falsely was unfair, imper-
missibly downgraded the presumption of innocence
and reduced the Government’s burden to prove guilt
beyond a reasonable doubt.
Credibility was the determinative issue in this case. As
the Second Circuit acknowledged :
‘¢. . . the trial of the case boiled down to a battle of
credibility between each of the three defendants, on
the one hand, and the Government witnesses, Inc.uding
accomplices, on the other, who gave diametrically op-
posed testimony with respect to material aspects of
12
each of the alleged dishonest transactions forming the
basis of the indictment.
* * .
se
- . we recognize that the witnesses’ credibility was
a central issue and played a decisive role in the case.
... (14a, 18a).
But the trial court did not present the credibility issue to
the jury in a fair, balanced and impartial way. Rather, the
charge overwhelmingly skewed the credibility determina-
tion in favor of the Government, thereby substantially
downgrading the presumption of innocence. Thus, in
powerful language, the court emphasized and re-em-
phasized the concept that more than any other witness, the
defendant has a strong, personal motive to testify falsely.*
At the same time, the court downplayed the reasons for the
jury to be skeptical of the testimony of the Government’s
witnesses (accomplices, perjurers, plea bargainers and con-
_ *The full text of the court’s charge on the defendant’s credibility
is as follows:
“One further point relates to the fact that each defendant took
the witness stand. A defendant is not required to take the witness
stand. But once he has, the defendant’s credibility must be de-
termined by you. Obviously he has a deep personal inteerst in
the result of this prosecution. Indeed, it is fair to say that he has
the greatest kind of stake in its outcome as far as he is concerned
Interest creates, at least potentially, a motive for false testimony.
The greater the interest, the stronger the motive. 4 defendant’s
tterest in the outcome of this trial is of a character possessed by
no other witness. In appraising the credibility of a defendant as
a witness, you may take these elements into consideration. How-
ever, it by no means follows that simply because a person has a
vital interest in the end result of a case he is not capable of telling
a truthful, candid, and straight-forward story. Again, it is for
you to give the most careful and fair consideration to the testi-
mony of each defendant and to the factors which in your judgment
could weigh for or against its credibility. After you’ve weighed
those factors, then it is for you to determine whether you accept
the testimony of a defendant in whole, reject it in whole, or accept
part and reject part.” (Emphasis supplied. ) .
.
13
victed felons) and indeed, enhanced their credibility by
charging that such witnesses ‘‘are often the best means of
conveying information about criminal activities.’’* To be
sure the court did state that a testifying defendant can also
testify truthfully and that witnesses called by the Govern-
ment are not ‘‘automatically telling the truth.’’ But the
inescapable thrust of the words actually spoken to the jury
on the ‘‘central issue’’ in this case—the way in which a rea-
* The full text of the court’s charge on the credibility of the Gov-
ernment’s witnesses is as follows:
“You have heard certain witnesses who have admitted to crim-
inal charges in connection with various matters and who, the Gov-
ernment claims, were participants in crimes here alleged.
You have heard that certain of these witnesses are awaiting
sentence, and they have stated in their testimony that they expect
the Court, in connection with that sentence, to take into account
the extent of their cooperation in this case.
Now, J instruct you that in the prosecution of crime, the Gov-
ernment ts frequently called upon to use witnesses who are ac-
complices or participants in criminal acts. If these witnesses
will testify truthfully, they are often the best means of conveying
information about criminal activity. Often the Government has
no choice but to rely on witnesses to criminal transactions even
though such persons are not of good character and have commit-
ted various crimes, including perjury, themselves. Now, this
means that you must consider the various factors which I have
described to you most carefully in determining whether you do
or do not credit the testimony of these persons who are admitted
participants in the alleged criminal acts.
It does not follow that because certain persons are in the posi-
tion that I have described that they are automatically to be dis-
believed or that they cannot tell the truth. It does not follow
that they are automatically telling the truth simply because they
are called by the Government as witnesses.
The point is—and this is the essential point—is that you must
view these witnesses with particular caution and scrutinize them
with particular care. After you do that, it is of course up to you
to determine whether you will reject their testimony in its en-
tirety—I’m not speaking as a group. But the point is it’s up to
you whether you will determine to accept or reject each witness’
testimony in its entirety, or whether you believe part of it may be
accepted and part of it must be rejected.” (Emphasis supplied.)
14
sonable juror could have interpreted them—is that a testi-
fying defendant is, by definition, not as credible as Govern-
ment witnesses, even accomplices, perjurers, felons and
plea bargainers whose testimony must be weighed carefully.
Imbalanced instructions singling out a defendant’s tes-
timony for special scrutiny have been condemned by the
First Circuit, the Seventh Circuit and the Kighth Circuit
and have been criticized by five judges of the Second Cir-
cuit. See, United States v. Standing Soldier, 538 F.2d 196,
204 (8th Cir.), cert. denied, 429 U.S. 1025 (1976); United
States v. Bear Killer, 534 F.2d 1253, 1260 (8th Cir. 1976),
cert. denied, 429 U.S. 846 (1977) ; United States v. Saletko,
452 F.2d 193, 197 (7th Cir. 1971), cert. denied, 405 U.S. 1040
(1972) ; United States v. Reid, 410 F.2d 1223, 1227-28 (7th
Cir. 1969) ; Carrigan v. United States, 405 F.2d 1197, 1198
(1st Cir. 1969), cert. denied, 396 U.S. 1028 (1970) ; United
States v. Vega, 589 F.2d 1147, 1155 (2d Cir. 1978) (Gurfein,
J. concurring, joined by Oakes, J .); Umted States v. Schles-
inger, 598 F.2d 722, 727 (2d Cir. 1979) (opinion by Lum-
bard, J., joined in by Feinberg and Meskill, JJ.).*
Judge Gurfein’s concurring opinion in United States
v. Vega, supra, 589 F.2d 1147, articulated the constitutional
infirmity in charging the jury that a defendant’s motive to
lie is greater than any other witness’:
‘‘Tf there is one thing of which a lay juror need not be
reminded, it is that a person accused of a crime has a
* These cases evidence a trend away from a strict following of
Reagan v. United States, 157 U.S. 301 (1895). In any event, unlike
the instant case, Reagan was not a case where a defendant was singled
out as the witness with the greatest motive to lie at the same time that
the credibility of Government witnesses was enhanced by the trial
court’s credibility instructions.
15
strong temptation to lie his way out of it. va The
common tendency to view a defendant’s testimony as
self-serving and subject to doubt hardly needs re-
emphasis from a trial judge.... The error is serious
because the heavily weighted instruction makes the
choice of the defendant to testify on his or her own
behalf the basis for inferentially downgrading the pre-
sumption of innocence.’”’ Id. at 1155. (Emphasis
supplied.)
In this case where credibility played a ‘‘decisive role,”’
in addition to ‘‘downgrading the presumption of innocence’’
the credibility charges reduced the Government’s burden
of proof by permitting petitioner’s status as a defendant
to be viewed by the jury as proof that his testimony was
false, i.e., as evidence of guilt. These constitutional viola-
tions in the charge require reversal. Cf. Taylor v. Ken-
tucky, —— USS. , 98 S.Ct. 1930, 1936 (1978).
We submit that the closeness of this case and the crucial
role of the credibility issue makes this case an appropriate
one for certiorari to be granted so that this Court can,
consistent with the First, Seventh and Eighth Circuits,
eliminate from federal criminal trials credibility instruc-
tions which are unfairly tilted in the Government’s favor
and which downgrade the presumption of innocence and
reduce the Government’s burden of proof.
—
ey ten area Re te PE ES Eee (oe FC PORT
16
POINT III
The Second Circuit’s interpretation of Rule 16(a)
(1) (A), Federal Rules of Criminal Procedure, modi-
fying the Rule’s plain language to place a due diligence
requirement on the defendant and limiting the Rule’s
mandate that the Government produce “any relevant
written . . . statements made by the defendant” to
include only those statements of a defendant which
amount to direct admissions of the particular crime
charged conflicts with the express purpose and all prior
interpretations of the Rule.
Gleason’s defense was a straightforward denial—he did
not participate in and had no knowledge of the falsification
of the bank’s financial statement. In support of that de-
fense Gleason adduced proof that his function at the bank
was mainly in public relations and as an image maker and
argued that his role was inconsistent with any inference
that as chairman he must have known or participated in
the alleged falsifications. On cross-examination, however,
Gleason was confronted with five documen‘s: a 1965 letter
he wrote in which he expressed his view that the bank’s
head should closely follow its earnings and his own hand-
written statements on four agendas of the bank’s board
meetings of late 1973 and early 1974 indicating that he had
been aware of the bank’s financial operations. These five
documents were selected by the Government out of some
90 million bank documents warchoused by the Federal
Deposit Insurance Corporation, the bank’s receiver.
Gleason challenged his conviction* upon the ground that
the Government’s withholding of his written statements
* At trial Gleason objected to the prosecution’s use of the state-
ments specifically upon the ground that the statements should have
been produced under Rule 16 (R.2854-55, 2857, 2858, 2876, 2881).
Bl
17
until its surprise use of them to cross-examine him was
violative of Rule 16(a)(1)(A)’s mandate that a defendant,
prior to trial, be permitted to discover his own written
statements. The Second Cireuit rejected the challenge by
narrowly and without precedent interpreting Rule 16(a)
(1)(A)’s production mandate to encompass only those
statements of a defendant which amount to direct admis-
sions of the particular crimes charged and by modifying
the Rule’s plain language to impose a due diligence require-
ment on the defendant.* This ruling, severely contracting
the Government’s discovery obligations, conflicts with the
purpose, language and all prior interpretations of Rule 16
(a)(1)(A).
The Government’s disclosure obligation codified in Rule
16(a)(1)(A) is unequivocal: it ‘‘shall permit the defend-
ant to inspect and copy ... any relevant written... state-
ments made by the defendant... .’? The purpose of the
Rule is grounded in the constitutional right of a defendant
to prepare adequately for trial. United States v. Perce-
vault, 490 F.2d 126, 129-30 (2d Cir. 1974). Albeit Rule
* In the words of the Court of Appeals, the Government was not
obligated under Rule 16(a)(1)(A) to produce the documents at
issue here containing Gleason’s statements because they “. . . were
hardly ‘relevant’ to the crimes charged against him; they did not tend
to show that he had participated in any falsifications of the bank’s
earnings statement for the first quarter of 1974” (41a). In any event,
the Court continued, “the documents were at all times in the custody
of the Federal Deposit Insurance Corporation . . . and were as avail-
able to Gleason as they were to the Government. .. . Although the
... records... were voluminous [footnote omitted] Gleason had. . .
been provided with an inventory of them .. . and should, with the
aid of the inventory, have ... extracted [these documents] .. . from
the mass for examination” (42a).
For the sake of completeness, it should be noted that the inventory,
a three inch thick document, contains no document descriptions, but
rather identifies warehouse drawer numbers and document numbers.
18
16(a)(1)(.A) does not define the term ‘‘relevant written
statement,’’ when the drafters of Rule 16 intended to nar-
row the scope of discoverable evidence their intent was
expressed very clearly. See Rule 16(a)(1)(A) (providing
for discovery of a defendant’s oral statements ‘‘which the
government intends to offer in evidence’’); Rule 16(a) (1)
(C) (providing for a defendant’s discovery of documents
and tangible objects ‘‘which are material to the prepara-
tion of his defense or are intended for use by the govern-
ment as evidence in chief at the trial’’) ; Rule 16(a)(1)(D)
(providing for a defendant’s discovery of scientific test
results ‘‘which are material to the preparation of the de-
fense or are intended for use by the government as evidence
in chief at the trial’’).
Moreover, prior judicial interpretations are uniform in
liberally construing the production requirement of Rule
16(a)(1)(A) consistent with the principal purpose of dis-
covery: ‘‘to advise defense counsel what the defendant
faces in standing trial.’’ United States v. Lewis, 511 F.2d
798, 802 (D.C. Cir. 1975). Before the Second Circuit’s
opinion here, no other court has ever limited the discovery
obligation to include only those statements of a defendant
which amount to direct admissions of the particular crime
charged. F.g., United States v. Bufalino, 576 F.2d 446, 449
(2d Cir. 1978) (‘*. . . government agencies must keep in
mind the broad definition of discoverable ‘statements’ in-
corporated in the governing texts’’); United States v.
Manetta, 551 F.2d 1352 (5th Cir. 1977) (reversing a con-
viction for the Government’s failure to disclose a defend-
ant’s statements that he wished to make ‘‘no statement’’) ;
United States v. Caldwell, 543 F.2d 1333 (D.C. Cir. 1975)
(holding discoverable under Rule 16 a letter written by the
——
19
defendant while in jail to a group of friends and provided
to the prosecution by another inmate); United States v.
Johnson, 525 F.2d 999, 1005 (2d Cir. 1975) (‘‘ Discovery of
defendant’s statements within the Rules must not be re-
stricted in niggardly fashion’’); United States v. Crisona,
416 F.2d 107, 114-115 (2d Cir. 1969), cert. denied, 397 U.S.
961 (1970) (‘‘This broad interpretation of ‘statement’ in
Rule 16[a] is supported by the . . . recommendation of the
ABA Project on Minimum Standards for Criminal Justice,
Standards Relating to Discovery and Procedure Before
Trial 62 [1969] ... [a recommendation] we agree with
eee |
A particularly egregious violation of the Rule is where,
as in the case at bar, the Government withholds a defend-
ant’s statement and reveals it for the first time on the
defendant’s cross-examination. Such conduct requires re-
versal. United States v. Lewis, supra, 511 F.2d 798; United
States v. Padrone, 406 F.2d 560 (2d Cir. 1969); and com-
pare United States v. Arcentales, 532 F.2d 1046, 1050 (5th
Cir. 1976), where the Fifth Circuit held a Rule 16 viola-
tion not reversible because, unlike this case, ‘‘the govern-
ment was not lying in wait with statements that could im-
peach the defendant if he decided to testify.’’
The plain conflict between the Second Circuit’s ruling
here and prior interpretations of Rule 16 is exemplified by
the D.C. Cireuit case, United States v. Lewis, supra, 511
F.2d 798 (1975). The prosecutor in that case failed to
make disclosure of a statement the defendant had made to
an arresting officer regarding his prior use of nareotics.
At his trial on charges of possession of narcotics with in-
tent to distribute, the defendant testified that the contra-
20
band and narcotics implements seized by the police were
not his, and he denied that he was an addict. The prose-
cutor then confronted the defendant on cross-examination
with the statement he made to the arresting officer regard-
ing his prior use of narcotics, and the defendant was con-
victed.
The D.C. Court of Appeals, in direct conflict with
the Second Circuit’s ruling here, reversed the conviction
and held that the prosecution violated Rule 16 and ‘‘... the
trial judge should have excluded any reference to the de-
fendant’s ... statement, whether presented on the govern-
ment’s case or brought forth in any way at a later stage
of the trial’’ (id. at 801). (Emphasis supplied.) Judge
Lumbard wrote as follows (id. at 803):
‘* Although the government presented a strong case
even without the use of the statement, we cannot say
that the error was harmless or did not prejudice Lewis,
as use of the statement not only impeached Lewis’s
credibility in general, but undermined a significant ele-
ment in his defense—namely that he had not been ad-
dicted at the time of his arrest.’’
Gleason’s written statements were used by the prosecu-
tion in this case with precisely the same effect as in Lewis:
Gleason’s credibility was impeached and a significant ele-
ment in his defense—that his role at the bank was incon-
sistent with his knowing of or participating in falsifying
the earnings statement—was undermined. And while in
Lewis, there was no way of accurately assessing the effect
of the error on the jurors’ deliberations, in this case there
can be no doubt that the jury, following the prosecutors’
repeated suggestions in summation, made extensive use of
21
the material erroneously withheld from the defense: on
the first full day of deliberations the jury requested by ex-
hibit numbers the statements at issue here. Even more
important, however, iue case against Gleason, unlike the
one against Lewis, was not ‘‘strong,’’ it was concededly a
very weak one (R.4363).
The Second Circuit’s further restriction on Rule 16(a)
(1)(A)—the imposition of a due diligence requirement on
the defendant—modifies the Rule’s plain language. The
Rule could not be clearer in mandating that the Government
permit a defendant to discover his own written statement
which is ‘‘within the possession, custody or control of the
government, the existence of which is known, or by the
exercise of due diligence may beconie known, to the attorney
for the government.’’ (Kmphasis supplied.) And there
is no dispute in this case that the existence of Gleason’s
statements became known to the Government at the outset
of trial. There is simply no qualification to Rule 16(a) (1)
(A) as read into it by the Second Cireuit that the prose-
cutor is not obligated to disclose a defendant’s statements
which the defendant might or could have discovered on his
own. Simply put, the ‘‘due diligence’’ requirement in the
Rule is a requirement on the Government, not the defendant.
The Second Circuit’s restriction on a defendant’s right
to discover his own statements conflicts with the purpose
of Rule 16(a)(1)(A), its plain language and prior judicial
interpretations of it. The novel ruling will have a signifi-
cant effect on the ability of defendants, at least in the Sec-
ond Circuit, to intelligently prepare for trial. Certiorari
should be granted.
22
POINT IV
The trial court’s refusal to order the Government
to seek use immunity for a key exculpatory witness
who had invoked his privilege against self-incrimina-
tion violated Gleason’s right to compulsory process and
due process of law.
Michele Sindona, the bank’s major shareholder, was an
unindicted co-conspirator who, according to Government
witnesses, was the directing force behind their fraudulent
transactions and record falsification. A critical piece of
the Government’s case against Gleason was evidence that
Gleason, shortly before the March 28, 1974, board meeting,
visited Sindona in a London hotel room. Though the Gov-
ernment adduced no testimony of what transpired during
the meeting, it freely exploited the speculative possibilities
throughout its summations that Gleason and Sindona must
have been discussing the bank’s earnings and scheming to
falsify the financial statement (R.5271, 5272-74, 5275-76,
5651, 5683, 5685-87).
Gleason denied that anything untoward occurred at the
meeting and sought to secure testimony from Sindona, the
meeting’s only other participant. When Sindona refused
to testify, asserting his Fifth Amendment privilege, Glea-
son, with an explicit offer of proof that Sindona would
provide exculpatory testimony regarding his London meet-
ing with Gleason, moved the court to order the Government
to seek use immunity pursuant to 18 U.S.C. §6002. The
court refused and sustained Sindona’s assertion of privi-
lege. The Government, although granting use immunity to
two of its witnesses, thus prevented Gleason from adducing
crucial exculpatory evidence.
23
The rigid rule invoked by the Second Cireuit in reject-
ing Gleason’s constitutional claim arising from his being
prevented from adducing Sindona’s exculpatory testimony
(‘*the power of the Executive Branch to grant immunity to
a witness is discretionary and no obligation exists on the
part of the United States Attorney to seek such immunity’’)
(49a) conflicts with this Court’s cases requiring trial courts
to exercise a supervisory power over Executive Department
prerogatives in order to cure due process imbalances in the
fact gathering and fact presenting abilities between the
Government and defense. See Roviaro v. United States,
353 U.S. 53 (1957) (the Government’s prerogative to pre-
serve informants’ anonymity is limited by ‘‘fundamental
requirements of fairness’’ [id. at 59-60] and must yield
when an informant’s identity or information is material
and exculpatory); Jencks v. United States, 353 U.S. 657
(1957) (the Government’s prerogative to withhold as ‘‘pri-
vileged’’ the reports of its agents called as witnesses against
a defendant was found ‘‘incompatible with our standards
for the administration of justice in the federal courts’’
[id. at 668]); Wardius v. Oregon, 412 U.S. 470 (1973)
(where a state statute requiring a defendant to disclose
alibi evidence did not provide for reciprocal disclosure by
the state was held violative of due process because it skewed
‘‘the balance of forces between the accused and the ac-
cuser’’ [id. at 474]); United States v. Nixon, 418 U.S. 683
(1974) (where the Court held that a president’s ‘‘execu-
tive privilege’’ had to yield to the ‘‘specific need’’ [id. at
713] for evidence in a pending criminal trial).
Lower courts, too, have recognized that the executive’s
prerogative to refrain from granting immunity to a defense
24
witness is subject to corrective action from the judiciary
where, as in this case, discriminatory use of immunity by
the Government enables it to obtain an unfair advantage
over a defendant. See Uiited States v. Earl, 361 F.2d 531,
034 n.1 (D.C. Cir. 1966), cert. denied, 388 U.S. 921 (1967) ;
United States vy. Allsiate Mortgage Co., 507 F.2d 492, 495
(7th Cir. 1974), cert. denied, 421 U.S. 999 (1975); United
States v. Jenkins, 470 F.2d 1061, 1063-64 (9th Cir. 1972),
cert. denied, 411 U.S. 920 (1973). See also Westin, The
Compulsory Process Clause, 73 Mich. L. Rev. 71, 166-170
(1974); Note, The Siath Amendment Right to Have Use
Immunity Granted to Defense Witnesses, 91 Harv. L. Rev.
1266 (1978).
Certiorari should be granted in this case* so that the
Court can resolve an open and important question in the
* We point out that this case is unburdened by any of the flaws
that have proved fatal to similar claims for defense-witness immunity.
Here, the witness was placed on the stand (cf. United States v.
Wright, 588 F.2d 31, 36-37 [2d Cir. 1978], cert. denied, 99 Sup. Ct.
1236 [1979]; United States v. Neiderberger, 580 F.2d 63, 67 [3d
Cir.], cert. denied, 99 Sup. Ct. 567 [1978] ; United States v. Bautista,
509 F.2d 675, 678 [9th Cir.], cert. denied, 421 U.S. 976 [1975]), and
a timely request was made to have immunity sought for him (cf.
(nited States v. Housand, 550 F.2d 818, 824 [2d Cir.], cert. denied,
431 U.S. 970 [1977]; United States v. Gaither, 539 F.2d 753, 754
[D.C. Cir.], cert. denied, 429 U.S. 961 [1976]). No one doubted
that the proffered testimony was useful and probative (cf. United
States v. Lang, 589 F.2d 92, 96 [2d Cir. 1978]; United States v.
Rocco, 587 F.2d 144, 148 [3d Cir. 1978] ; United States v. Beasley,
550 F.2d 261, 268 [5th Cir.], cert. denied, 434 U.S. 863 [1977];
United States v. Trejo-Zabrane, 582 F.2d 460, 464 [9th Cir.], cert.
denied, 99 Sup. Ct. 618 [1978]). Nor can Sindona’s testimony be
viewed as cumulative (cf. United States v. Alessio, 528 F.2d 1079,
1082 [9th Cir.]. cert. denied, 426 U.S. 948 [1976]). To suggest as
did the Second Circuit that testimony from the only other participant
to a conversation with the defendant is “cumulative” disregards the
important right of a defendant to present evidence in corroboration
of his own testimony. And given the court’s credibility charge (Point
II, supra), corroboration of the defendant’s testimony could well have
been crucial.
el Eh es She AS rei 7
Ont ek RT lsat Ot Me
25
administration of criminal justice—namely, the extent of
a defendant’s right to have immunity granted to defense
witnesses.
Conclusion
For the reasons stated herein, this petition for a
writ of certiorari should be granted.
January 18, 1980
Respectfully submitted,
Arkin & Arisoun, P.C.
Attorneys for Petitioner
600 Third Avenue
New York, New York 10016
(212) 869-1450
Stran.ey S. ARKIN
Mark S. ArisoHNn
Artuur T. CamBouris
On the Petition
Appendix A
Opinion of Second Circuit
ae a * nee oe
1a
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
>
Nos. 125, 126, 137—September Term, 1979.
(Argued October 9, 1979
Decided December 19, 1979.)
Docket Nos. 79-1147, 79-1151, 79-1208
>—
UNITED STATES OF AMERICA,
Appellee,
—against—
HAROLD V. GLEASON, PAUL LUFTIG
and J. MICHAEL CARTER,
Defendants-Appellants.
Before:
LUMBARD, MANSFIELD and MESKILL,
Circuit Judges.
—~p>—
Appeals from judgments of conviction entered on
March 27, 1979, by Judge Thomas P. Griesa in the
District Court for the Southern District of New York
convicting appellants, officers of the Franklin Na-
tional Bank of (1) making false entries in the bank’s
records for the first quarter of 1974 in order to —
2a
show earnings of $79,000 when the bank had suf-
fered a loss of over $7 million, resulting in frauds
upon the federal government, The Manufacturers
Hanover Trust Company, and stockholders of the
bank, in violation of 18 U.S.C. §§1105, 1014 and
§10(b) of the Securities Exchange Act, 15 U.S.C.
§ 78)}(b), and of (2) conspiracy to perpetrate the fore-
going frauds, 18 U.S.C. §371. The charge against ap-
pellant Oaffer of falsification of the bank’s records
through fictitious foreign exchange contracts (Count
Three) was dismissed by the district court.
The convictions are affirmed.
——
STANLEY S. ARKIN, Esq., New York, NY
(Mark S. Arisohn, Esq., Arthur T.
Cambouris, Esq., Stanley Neustadter,
Esq., Arkin & Arisohn, P.C., New
York, NY, of counsel), for Appellant
Gleason.
HAROLD R. TYLER, JR., Esq., New York,
NY (Michael B. Mukasey, Esq., Ken-
neth A. Caruso, Esq., Marjorie T.
Coleman, Esq., Mark R. Hellerer,
Esq., Patterson, Belknap, Webb &
Tyler, New York, NY, of counsel), for
Appellant Luftig.
Otto G. OBERMAIER, New York, NY (Mar-
tin L. Perschetz, Esq., Obermaier,
Morvillo, Abramowitz & Fitzpatrick,
New York, NY, of counsel), for Ap-
pellant Carter.
3a
JOHN J. KENNEY, Assistant United States
Attorney, New York, NY (Robert B.
Fiske, Jr., United States Attorney for
the Southern District of New York,
Mary Ellen Kris, Charles M. Car-
berry, Richard D. Weinberg, Assistant
United States Attorneys, New York,
NY, of counsel), for Appellee.
MOoRE BERSON LIFLANDER & MEWHINNEY,
New York, NY (Earle K. Moore, Esq.,
Matthew L. Lifflander, Esq., New
York, NY, of counsel), for Amici
Curiae Greup of Bankers.
>
MANSFIELD, Circuit Judge:
Harold V. Gleason, former Chairman of the Board
of the Franklin National Bank (FNB), Paul Luftig,
its former president and chief administrative officer,
and J. Michael Carter, its former senior vice presi-
dent in charge of its Investment Division, appeal
from judgments of the District Court of the Southern
District of New York, entered on March 27, 1979, by
Judge Thomas P. Griesa after an eight-week jury
trial, convicting them (except for dismissal of charges
in Count Three against Carter) of (1) making false
entries in the bank’s records on or about March 31,
1974, by false evaluation of securities with intent to
defraud, thereby concealing operating losses in excess
of $5 million and making it appear that FNB had a
profit of $79,000, for the first quarter of 1974, all
in violation of 18 U.S.C. §1005' (Count Two), (2)
1 Title 18 U.S.C. § 1005 provides in pertinent part:
“Whoever makes any false entry in any book, report, or
statement of such bank with intent to injure or defraud such
i
4a
making false entries in the bank’s records on or
about March 31, 1974, with intent to defraud, by
causing FNB to enter into fictitious foreign exchange
contracts showing a non-existent profit in excess of
$2 million, which falsely made the bank appear to
have a profit for the first quarter of 1974 when in
fact it had suffered heavy losses, also in violation of
18 U.S.C. §1005 (Count Three),? (3) making false
statements to the Manufacturers Hanover Trust Com-
pany on or about April 18, 1974, to influence its ac-
tion in fulfilling a $35 million loan commitment
previously made to FNB, by submitting to Manufac-
turers Hanover a consolidated income statement for
the first quarter of 1974, ending March 31, showing
a profit of $79,000 when in fact the bank had suf-
fered losses of over $7 million, in violation of 18
U.S.C. §1014* (Count Four), (4) employing a
bank, or any other company, body politic or corporate, or any
individual person, or to deceive any officer of such bank, or
the Comptroller of the Currency, or the Federal Deposit In-
surance Corporation, or any agent or examiner appointed to
examine the affairs of such bank, or the Board of Governors
of the Federal Reserve System—
“Shall be fined not more than $5,000 or imprisonment not
more than five years, or both.”
2 The charge in Count Three against Carter was dismissed by
the court at the end of the Government’s case.
3 Title 18 U.S.C. § 1014 provides in pertinent part:
“Whoever knowingly makes any false statement or report,
or willfully overvalues any land, property or security, for the
purpose of influencing in any way the action of . . . any bank
the deposits of which are insured by the Federal Deposit In-
surance Corporation, any member of the Federal Home Loan
Bank System, the Federal Deposit Insurance Corporation, the
Federal Savings and Loan Insurance Corporation, or the Ad-
ministrator of the national Credit Union Administration, upon
any application, advance, discount, purchase, purchase agree
ment, repurchase agreement, commitment, or loan, or any
Pe 5a
manipulative scheme or device during March 1974
and on various dates in April and May 1974, in con-
nection with the purchase and sale of FNB stock by
using the foregoing falsifications of bank records to
make it appear that the bank had realized a profit
for the first quarter of 1974, when in fact it had
suffered heavy losses, in violation of 15 U.S.C.
§§ 78j(b) and 78ff* (Counts Five through Fourteen),
and (5) conspiracy to commit each of the foregoing
crimes, in violation of 18 U.S.C. §371 (Count One).
In addition, Luftig alone was convicted of making
false material declarations on or about March 15,
1977, with respect to some of the matters that are
the subject of the foregoing charges in his testimony
before a grand jury in violation of 28 U.S.C. § 1623
change or extension of any of the same, by renewal, defer-
ment of action or otherwise, or the acceptance, release, or
substitution of security therefor, shall be fined not more than
$5,000 or imprisoned not more than two years, or both.”
4 Title 15 U.S.C. § 78j(b) provides:
“It shall be unlawful for any person, directly or indirectly,
by the use of any means or instrumentality of interstate com-
merce or of the mails.
” . 7 * *
“(b) To use or employ, in connection with the purchase or
sale of any security registered on a national securities ex-
change or any security not so registered, any manipulative or
deceptive device or contrivance in contravention of such rules
and regulations as the Commission may prescribe as necessary
or appropriate in the public interest or for the protection of
investors.”
Title 15 U.S.C. § 78ff provides:
“{Ajny person who willfully and knowingly makes, or causes to
be made any statement in any application, report, or docu-
ment required to be filed under this chapter or any rule or
regulation thereunder . . . which statement was false or
misleading with respect to any material fact, shall upon con-
viction be fined not more than $10,000, or imprisoned not
more than two years, or both... .”
6 a
(Count Fifteen). Appellants claim that numerous er-
rors were committed in the trial of the case. After
careful consideration of each of these contentions we
affirm the convictions.
The evidence, viewed favorably to the Government
(as it must be at this stage, Glasser v. United States,
315 U.S. 60, 80 (1942)), shows that, although FNB
suffered an operating loss in excess of $7 million
during the three-month period ending March 31,
1974, it issued a financial statement on April 18,
1974, for the same first quarter of 1974 falsely
representing that it had realized earnings of approx-
imately $79,000. The financial statement was of
special significance to FNB because of its anticipated
influence in obtaining Government approval of a pro-
posed FNB merger with Talcott National Corpora-
tion, a factoring and finance company, and in bor-
rowing some $35 million from Manufacturers
Hanover to be used by FNB for the purchase from
Michele Sindona, the principal stockholder of FNB,
of his interest in Talcott.®
FNB had begun to suffer substantial losses during
the first three months of 1974, partly due to a
decline in the market value of government securities,
which had been acquired with a view to realization
5 FNB, with deposits at the end of 1973 of $3.7 billion and
assets of $5 billion, was a subsidiary of Franklin New York
Corporation, registered with the Federal Reserve Bank of New
York as a bank holding company. In 1972 Sindona purchased
21.6% of the holding company’s outstanding stock for $40
million. In the spring of 1973 Sindona, through a company con-
trolled by him (Fasco) purchased 1.6 million shares of Talcott for
$27 million, which he later offered to sell to FNB for a price
equal to his cost plus expenses and interest, subject to approval
of the Board of Governors of the Federal Reserve Bank pursuant
to the Bank Holding Company Act of 1956.
“ Bt. BB CRE ke MS
va
of a profit when interest rates declined, but which
then fell in value when interest rates increased. By
the end of March those losses together with others
had swelled to approximately $7 million. The loss
was concealed to the extent of about $5 million by
falsely showing FNB-owned securities as worth more
than the prices at which they should have been car-
ried. The balance of the loss was concealed by having
FNB engage in four fictitious foreign exchange trans-
actions with European banks controlled by Sindona
and his colleague Carlo Bordoni, who at Sindona’s re-
quest had served as a director of the holding com-
pany, Franklin New York Corporation, which con-
trolled FNB. These bogus transactions made it ap-
pear, by using fictitious exchange rates, that FNB
had a $2.2 million unrealized profit when in fact its
foreign exchange department had suffered a loss.
The false evaluation of securities was accomplished
in part by backdating two transfers of government
bonds from FNB’s bond trading account to its invest-
ment account at inflated prices and by one such
transfer of municipal and corporate securities at
prices which had not been reduced to show losses in
value. Securities in the bank’s trading account, hav-
ing been acquired for resale, were required to be car-
ried at the lower of cost or market value, which was
computed by determining the value of each security
so held at the end of each month. Securities held in
FNB’s investment or portfclio account, on the other
hand, were carried at cost with a straight line ad-
justment to amortize premiums or discounts. Upon
transfer of a security from the bank’s trading to its
investment account, the bank was required to value
the security at the lower of cost or market value on
the date of transfer.
8a
On March 26, 1974, Luftig, FNB’s President, faced
with mounting losses on the part of the bank,
learned this evaluation rule from John Sadlik, FNB’s
chief financial officer, and asked Sadlik whether such
a transfer could be backdated if instructions previ-
ously given to make the transfer had not been exe-
cuted. After checking with Cornell Wright of Ernst
& Ernst, FNB’s independent certified public accoun-
tants, Sadlik responded that backdating was permissi-
ble if there was documentary verification of the ear-
ey instructions, Luftig then advised Sadlik that he
nad documentation showing that instructions had
been given on March &, 1974, to transfer $100 mil-
lion in United States Treasury certificates from the
bank's trading to its investment account. The market
value of these securities on March 11, 1974, the next
business day after March 8th, had been approxi-
mately $2 million higher than their value on March
26. Sadlik thereupon arranged for Wright to visit
the bank on March 27 in order to verify the docu-
mentation of the March 8th instruction which Luftig
represented he had given.
On March 27, 1974, according to the testimony of
Howard D. Crosse, the bank’s Vice-Chairman in
charge of its Investment Division, Luftig advised
Crosse that if Ernst & Ernst could be convinced that
the claimed instruction to transfer the securities had
been given on March 8th it would not object to the
bank’s evaluating the securities as of March 11,
1974, and asked Crosse in substance to assist in
making this possible and falsely to tell Wright that
the instruction had been given. As Crosse left the
room, he first noticed Gleason standing in the door-
way. Gleason patted him on the shoulder and said,
ee NBER a
1 -9a
“Good luck.” At a meeting with Wright and Sadlik
later the same day, after initial documentation
proved unacceptable to Ernst & Ernst, Luftig falsely
stated to Wright that the instruction had been given
by him earlier in March and prepared a confirmatory
memorandum.
On the following day, March 28, at a meeting
with Sadlik, Wright and a more senior Ernst &
Ernst partner, James Russell, Crosse corroborated
Luftig’s fraudulent repres«itation by falsely confirm-
ing that he had been instructed by Luftig in early
March to make the transfer and had relayed the in-
struction to Carter. The failure to carry out the in-
struction was then explained to Wright and Russell
by J. Michael Carter, the bank’s Senior Vice-Pres-
ident in charge of its Investment Division, who
falsely told them that the transfer had not been
made because he had in effect misunderstood the
earlier instruction as one to liquidate rather than to
make a transfer between accounts.® Crosse added sup-
port to this explanation by furnishing to Ernst &
Ernst his own handwritten memorandum falsely sum-
marizing directions supposedly given to him by Luf-
tig in early March and stating that the failure to ex-
ecute them had only just been discovered.
Relying upon these false representations Ernst &
Ernst did not object to the bank’s March 29 transfer
of the $100 million in Government securities to its
investment account at March 11 market values,
which enabled FNB to conceal a loss of about $2
million.
6 Even assuming that an order to liquidate had been made by
Luftig, Carter at trial testified it was not made until March 18,
1974.
10a
In the meantime, on March 27, 1974, Carter
directed employees of the bank to transfer $62.5
million in U.S. Treasury and government agency
bonds from the bank’s trading account to its invest-
ment account at cost rather than at lower market
prices in response to his false representation in
writing that the securities had been purchased by
traders without his consent when he had been in-
structed to keep security trading positions as low as
possible. In fact, as Carter later conceded, the pur-
chases had been authorized by him and he had not
received any such instructions to the contrary prior
to March 20, 1974. The effect of the transfer of
$62.5 million of Government securities at cost was to
conceal approximately $2 million in losses suffered
by the bank during the first quarter of 1974.
The third transfer, which concealed a loss of ap-
proximately another $1 million during the first
quarter, was made after Crosse, on or about April
12, 1974, was advised by Carter that municipal and
corporate securities in the trading account had not
been “marked to market” (i.e., evaluated at the lower
of cost or market) at the end of March as was re-
quired. This information was passed on by Crosse to
Luftig who told Crosse to “transfer them to portfolio
[investment account] as best you can.” Crosse
thereupon directed Carter to transfer the securities
to the bank’s investment account at March 11
market values, thus concealing an intervening decline
in market value of approximately $1 million that had
occurred by March 31.
The generation of approximately $2.2 million in
fictitious profits from contrived foreign exchange
transactions for the quarter ending March 31, 1974,
was arranged by Gleason ae Riv R. Shaddick, Ex-
ecutive Senior Vice-President of FNB and direccor of
Franklin New York Corp., who was in charge of its
International Division. Following a conference with
Sindona in London on March 26, 1974, Gleason
returned to New York where he advised Shaddick on
March 27, 1974, that unless the foreign exchange
department showed a $700,000 profit for the month
of March the bank would have a loss for the quarter.
After advising Gleason that the department would
actually have a loss for the month of March Shad-
dick, upon learning from Andrew N. Garofalo, the
head of the bank’s foreign exchange department, that
the loss would be from $1 million to $1% million,
told Garofalo that they would probably have to “pass
an entry” with Bordoni that would wipe out the loss
and create an apparent profit of $700,000. The term
“pass an entry” meant entering into a fictitious
foreign exchange contract with a European bank con-
trolled by Sindona and Bordoni, showing a purchase
or sale of foreign currencies for future delivery at
prices that would permit the bank to show a profit
on the bank’s earning statement.
Shaddick thereupon revealed to Gleason the loss
and the steps that would be taken to reflect the fic-
titious $700,000 profit, receiving the latter’s thanks.
On March 28, after Bordoni was advised by Gleason
of the foreign exchange department’s predicament
and agreed to help, Shaddick and Bordoni arranged
for the FNB to “pass a contract” with the Amincor
Bank in Zurich. Gleason was informed of the ar-
rangement by Shaddick. Thereupon, pursuant to in-
structions from Shaddick, Garofalo entered into four
contracts for future delivery of foreign exchange, two
122
with the Amincor Bank and two with Banca Unione
in Milan, a bank controlled by Sindona, of which
Bordoni was managing director. The contracts were
made at fictitiously high exchange rates unrelated to
market prices, enabling the bank’s foreign exchange
department to show au unrealized profit of $2.2
million on the transactions and a $700,000 profit for
the quarter.
The foregoing falsifications enabled FNB and its
holding company to show a profit of $79,000 in
their quarterly statement published and sent on April
18, 1974, to the bank’s stockholders and to Manufac-
turers Hanover Trust Company, whereas in fact FNB
had suffered a loss of over $7 million. In the mean-
time on April 3, 1974, FNB received from Manufac-
turers Hanover $30 million of the $35 million loan
which the latter had obligated itself to make to
FNB.
At trial the Government presented its case prin-
cipally through accomplices (Crosse, Shaddick, Bor-
doni, Garofalo), various FNB employees, Ernst &
Ernst partners Wright and Russell, Government
agents, and documentary proof. Each of the three ap-
pellants testified in his own defense. Luftig denied
knowledge of or participation in the making of any
of the alleged false entries. He testified that on
March 8, 1974, he had directed Crosse to transfer
the $100 million in Government securities from the
bank’s trading to its investment account, ordering a
liquidation of the trading account, and that when he
found out on March 26 from Sadlik that the direc-
tion for the transfer had not been carried out he
asked Sadlik to review the matter with Ernst &
Ernst, furnishing a memorandum confirming his
WRB dl oss a to
is > 13a
earlier instruction and later learning that Ernst &
Ernst did not object to the transfer as of the date
when the transfer order had been given. Luftig did
acknowledge that on April 11, 1974, he had been ad-
vised by Crosse that a trader had failed to mark
some securities to market.
Carter testified that after the bank had with his
approval increased its trading position in government
securities by purchasing up to $100 million in
December, 1973, he was authorized by Luftig on
March 18, 1974, to liquidate these securities at a
loss, which he undertook to do over the following
weeks; that on March 27 he was instructed by
Crosse to transfer all but $100 million of the ~
securities from the trading account to the investment
account at cost, with a memorandum noting that the
securities being transferred had been _ purchased
without Carter’s knowledge and consent at a time
when he had been instructed to keep the bank’s
trading accounts as low as possible; that he gave the
instruction and he signed the memorandum knowing. ~
it to be false but did it because ordered; that with
respect to the March 28 meeting with Sadlik, Crosse,
Russell and Wright, he could only recall stating in
response to an inquiry that he had heard of a bank
transferring securities from its trading account to its
investment account but that this had not been done
at the Chase Manhattan Bank where he had prev-
iously worked; that thereafter at Crosse’s directions
he had transferred the $100 million in Government
securities at March 11th prices; and that in the first
week of April under Crosse’s orders he directed that
municipal and corporate bonds be transferred to the
investment account at cost although they had
144
depreciated in value by $1 million and had not been
marked to market at the end of March.
Gleason testified that his duties as Chairman were
principally of a customer and public relations nature
and that he did not involve himself in the day-to-day
Operations of the bank. He denied discussing the
bank’s earnings or the proposed Talcott merger with
Sindona at their March 26, 1974, meeting in London,
denied asking Shaddick to: create a false profit
through fictitious foreign exchange transactions or
having any conversations about the matter, and de-
nied having known that the bank’s financial state-
ment for the first quarter of 1974 was false.
Thus the trial of the case boiled down to a battle
of credibility between each of the three defendants,
on the one hand, and the Government witnesses, in-
cluding accomplices, on the other, who gave diametri-
cally opposed testimony with respect to material
aspects of each of the alleged dishonest transactions
forming the basis of the indictment.
DISCUSSION
Since certain errors claimed by appellants to have
been committed during the trial apply to all and
some to only specific appellants, we initially consider
the jointly-shared arguments. The first of these re-
lates to the trial judge’s instructions to the jury,
which, including post-instruction discussions with
counsel, cover some 157 trial transcript pages and
were discussed extensively by the judge with counsel
before the charge was given.
15a
THE INSTRUCTIONS *
(1) Circumstantial Evidence and Credibility
Appellants contend that they were irreparably prej-
udiced by a portion of the trial judge’s charge in
which he sought to illustrate the nature of cir--
cumstantial evidence and the drawing of inferences
by reference to a football game. The’ pertinent por:
tion of the instruction is footnoted.’ Briefly. sum-
~)
“Sometimes judges give illustrations to jurors about ‘the use
of circumstantial evidence. A familiar one is the one where if
you look out the window and see a lot of people with um-
brellas, you can infer it’s raining. I never know how that is
helpful to a jury. You are not really trying to decide whether
some weather condition exists, at least I don’t know that
that’s a major problem in this case. But the point is that I
think if you thought for a minute you would realize that this
is not a novel or unusual or super human kind of process that
the lawyers and that the Court have asked you to give con-
sideration to. Frequently in our every-day life, without calling
it circumstantial evidence, we draw conclusions about what
people must have done, must have thought, and must have
said.
“Here is a little illustration that may show you that this is
a matter which can well be accomplished by the use of com-
mon sense and common good judgment and experience. This is
an illustration that quite obviously has nothing to do with the
present case. Let’s assume that you attend a football game.
You see the players and the teams performing certain plays.
You observe on the field many details about how well or how
poorly the teams perform, whether there are a lot of passes
or a lot of runs, whether there are many penalties or few
penalties, whether there are many injuries or few injuries,
whatever details go on before you.
“Now, on the basis of common experience and common
sense, and on the basis of whatever information you know
about football and about your observing this game, you can
logically and reasonably infer some things about what people
did and said and thought before that game and in preparation
for that game, although you were not present in the locker
room or on the training field and although no witnesses come
to tell you what went on. You can infer that—there are some
things that you will be able to infer about whether the coach
16a
marized, it advised the jury that on the basis of com-
mon sense and experience a jury could infer from a
team’s performance on the field what previous in-
structions and training had been given by the coach
and what had been done by the players in prepara-
tion for the game, even though the jury had not
been present in the locker room or on the training
field and hence had not witnessed the instructions
and training.
Unquestionably the example used in the instruc-
(ion was ill-conceived, confusing and inappropriate.
Since the three defendants were top officers of the
FNB, the exampie exposed them to the risk that the
jury might interpret it as implying ‘hat they could
be considered to have piayed the role of “football
coaches” who hed from behind the scenes directed
bank offiials or employees on the “team” (e.g.,
Crosse, Shaddick, Garofalo, etc.) to commit the alleg-
ed crimes. As we thought we had made clear in
United States v. Dizdar, 581 F.2d 1031 (2d Cir.
1978), the choice of an example too close or
analogous to the facts of the case on trial is likely to
be more prejudicial than “helpful” and is quite un-
gave good or bad training, what instructions he gave, what he
must have said in substance, what acts were done by the
coach and the players in preparation for that game. There will
be some things that a person in the audience could reasonably
and logically infer and know beyond any doubt; there will be
some things that they could not reasonably and logically infer
beyond a doubt. But that kind of thought process, if anybody
went through it, would be something which would not be a
super human effort or bizarre or unusual.
“Now, you're being asked in this case to not only evaluate
the direct evidence but to determine what the circumstantial
evidence shows as to what various people did, said, and
thought. The question for you is: What you can infer and
what you cannot reasonably infer?”
MS ONEBE SES SSNS Ota BIDE ote it CRE ec 5D we 68
17 a
necessary when other clearly non-prejudicial examples
are available.
Moreover, the example was inaccurate. Experience
demonstrates that one cannot logically or reasonably
infer that players’ actions on a football field are
necessarily or even probably the result of a coach’s
directions or training. It hardly requires an expert to
appreciate that some “plays,” “passes,” “runs,” “penal-
ties” and “injuries,” see n.7 supra, may arise from
circumstances unrelated to a coach’s training or
instructions, such as a quarterback’s inspiration of
the moment or sheer luck or happenstance. Well-
trained and coached teams have been known to per-
form poorly and vice-versa. In effect, therefore, the
example could be viewed as an invitation to speculate
rather than to use logic and reason in drawing in-
ferences from circumstantial evidence.
Notwithstanding these weaknesses in the example,
we are not persuaded that it calls for a reversal in
this case. When the entire charge on the subject is
viewed in context, as it must be, see United States
v. Hanlon, 548 F.2d 1096, 1101 (2d Cir. 1977);
United States v. Guillette, 47 F.2d 743, 750 (2d
Cir. 1976), cert. denied, 434 U.S. 839 (1977); United
States v. Gentile, 5380 F.2d 461, 469 (2d Cir.), cert.
denied, 426 U.S. 936 (1976), we do not view the ex-
ample as having any serious prejudicial effect. The
jury was adequately advised of the nature of cir-
cumstantial evidence. It was repeatedly told to use
“common sense,” “common experience” and “common
good judgment” in drawing inferences from facts
found by them and that inferences depended on the
jury's acting “logically and reasonably.” Moreover,
before launching into the “football coach” example
18 a
the court carefully stated “This is an illustration that
quite obviously has nothing to do with the present
case.” We believe it would be denigrating the in-
telligence of the average jury to conclude that it
would forsake its own common sense and experience
for the suggestions implied in the court’s ill-conceived
“example.”
Turning to the court’s instructions on the subject
of credibility, we recognize that the witnesses’
credibility was a central issue and played a decisive
role in the case, in view of the diametrically conflict-
ing testimony of the Government’s witnesses, on the
one hand, and the defendants, on the other, with
respect to crucial materia! facts. Appellants contend
that with this background the court’s charge pre-
cluded a balanced assessment of the witnesses’
credibility because it failed adequately to warn of the
inherently suspect nature of the testimony of the ac-
complices called by the Government, some of whom
had admitted to a series of frauds, perjury and other
criminal acts, and others of whom had pleaded guilty
pursuant to plea bargains and were awaiting
sentence, and because it exaggerated the reasons for
distrusting a defendant’s testimony. We disagree.
Unquestionably, it is the court’s duty, in instruc-
ting a jury on the subject of witnesses’ credibility, to
give balanced instructions. Where the court points
out that testimony of certain types of witnesses may
be suspect and should therefore be scrutinized and
weighed with care, such as that of accomplices or co-
conspirators, e.g., United States v. Santana, 503 F.2d
710, 715-16 (2d Cir.), cert. denied, 419 U.S. 1053
(1974), those who have made plea bargains or are
awaiting sentence, see, e.g., United States v. Cor.
,
i
d
4
‘
‘
4
+2
|
s
i
19 a
clone, 592 F.2d 111, 116-17 (2d Cir.), cert. denied,
99 S.Ct. 1545 (1979); United States v. Projansky,
465 F.2d 123, 136 (2d Cir.), cert. denied 409 U.S.
1006 (1972); Good v. United States, 410 F.2d 1217,
1221 (5th Cir. 1969), cert. denied, 397 U.S. 1002
(1970), those who have been granted immunity,
United States v. DeLoach, 530 F.2d 990, 994 & n.5
(D.C. Cir. 1975), cert. denied, 426 U.S. 909 (1976),
and defendants, United States v. Rucker, 586 F.2d
899, 903-04 (2d Cir. 1978); United States v. Martin,
525 F.2d 703, 707 & n.3 (2d Cir. 1975), it must also
direct the jury’s attention to the fact that it may
well find these witnesses to be truthful, in whole or
in part. United States v. Vera, 589 F.2d 1147, 1154
(2d Cir. 1978). In short, the court should not em-
phasize the suspect nature of the testimony of cer-
tain witnesses without pointing out that they may be
believed. Although a trial judge has the right to com-
ment on credibility of specific witnesses, this right is
limited and its exercise is appropriate only when
necessary to assist the jury. Quercia v. United States,
289 U.S. 466, 469-71 (1933). Confidence in our jury
system leads us to leave credibility solely to the jury
which, as the conscience of the community, is ex-
pected to act with sound judgment.
Applying these basic principles here we conclude
that Judge Griesa’s credibility charge, viewed in its
entirety, satisfied all legal requirements and was
neither unfair to the appellants nor weighted in
favor of the Government’s witnesses. The court
pointed out that the Government is frequently out of
necessity required to rely on _ participants, ac-
complices, and persons who have committed crimes,
including perjury, as witnesses and that “you must
20a
view these witnesses with particular caution and
scrutinize them with particular care.” Similarly,
although Judge Griesa noted that a defendant “has a
deep personal! interest in the result of this prosecu-
tion” and “the greatest kind of stake in its outcome”
which “creates, at least potentially, a motive for false
testimony” and “is of a character possessed by no
other witness,” which has been the standard language
used by district judges for many years, he continued
with the same boiler-plate language to the effect that
“it by no means follows that simply because a person
has a vital interest in the end result of a case he is
not capable of telling a truthful, candid, and
straight-forward story” and that it was for the jury,
after weighing these factors, and giving “the most
careful and fair consideration to the testimony of
each defendant and to the factors which . . . could
weigh for or against its credibility” to determine its
credibility. Thus the instructions were balanced and
did not preclude the jurors from making a fair
assessment of the credibility of the witnesses who
had appeared before them.
(2) Conspiracy
Appellants contend that since the alleged con-
spiracy was one to engage in fraudulent falsification
of entries (in violation of 18 U.S.C. §§ 1005, 1014
and 15 U.S.C. §§78j(b), 78ff) by means of two
distinct types of transactions (i.e., false evaluation of
securities and fictitious foreign exchange transac-
tions), the trial judge was not only required to in-
struct the jury regarding the entire alleged plan or
scheme, including all means to be used to effectuate
it, but to advise the jury that no defendant could be
wustesheteiSaccnnntnb eile canes ik idence
(Slt th 5: RO Ag Attn at iad inc i» DNB GPS
214
convicted unless he comprehended its full scope and
knew of every means which the jury found to have
been employed in furtherance of the conspiracy. They
cite United States v. Peoni, 100 F.2d 401, 403 (2d
Cir. 1938), for this proposition. Failure to give such
a charge, they claim, allowed the jury to convict
defendants who may not have been knowing parties
to the entire scheme.
The scope of the conspiracy alleged in the present
case, while rather broad and encompassing conduct
that would violate several laws, was by the time of
trial sufficiently defined to be clearly comprehensible
and, if proven, to warrant a conviction for violation
of 18 U.S.C. § 371.
The objective of the alleged conspiracy was to
falsify FNB’s operating statement for the first
quarter of 1974 so that the bank would appear to
have made a profit when in fact it had suffered a
loss of over $7 million, and thereby to deceive
anybody who might normally be expected to rely on
the statement (e.g., federal authorities, lenders,
stockholders, etc.) as an honest and _ accurate
representation of the bank’s operations for the
quarter. The alleged motives, which were relevant
but not elements of the crime and need not be
proven, included the desire to gain approval of the
proposed Talcott merger by Federal bank authorities.
Two principal means were allegedly used to accom-
plish the goal of the conspiracy: (1) false evaluation
of securities, and (2) fictitious foreign exchange tran-
sactions.
Review of a few basic principles of conspiracy law
is essential to determine whether the charge here
was sufficient. To be convicted as a member of a
R24
conspiracy, a defendant need not know every objec-
tive of the conspiracy, United States v. DiGeronimo,
598 F.2d 746, 755 (2d Cir. 1979); United States uv.
Bernstein, 533 F.2d 775, 793-94 & n.12 (2d Cir.),
cert. denied, 429 U.S. 998 (1976); United States uv.
Papadakis, 510 F.2d 287, 297 (2d Cir.), cert. denied,
421 U.S. 950 (1975), every detail of its operation or
means employed to achieve the agreed-upon criminal
objective, Blumenthal v. United States, 332 U.S. 539,
557 (1947); United States v. Rosenblatt, 554 F.2d
36, 38 (2d Cir. 1977), or even the identity of every
co-conspirator, United States v. Sperling, supra, 506
F.2d at 1340; United States v. Sisca, 503 F.2d 1337,
1345 (2d Cir.), cert. denied, 419 U.S. 1008 (1974).
There must, however, be agreement on the “essential
nature of the plan,” Blumenthal v. United States,
supra, and on the “kind of criminal conduct .. . in
fact contemplated.” United States v. Gallishaw, 428
U.S. 760, 763 n.1 (2d Cir. 1970). See also United
States v. Rosenblatt, supra, 554 F.2d at 38-39. In ad-
dition
“a person may be held to intend that which is
the anticipated consequence of a particular action
to which he agrees, when that action is
unreasonable in view of that consequence.”
Developments in the Law—Conspiracy, 72 Harv. L.
Rev. 920, 932 (1959). See also 1 Wharton’s Criminal
Law and Procedure § 90, at 197 (1957). In short, the
conspirator must agree to and participate in a
scheme which he knows to have an illegal objective.
If, in the course of the conspiracy, there occur other
illegal acts not specifically contemplated by ‘an indi-
vidual conspirator but reascnably akin to the antici-
234
pated illegality and in furtherance or in consequence
of the scheme, the conspirator may not on that ac-
count escape liability for participation in the con-
spiracy.
With these principles in mind we are satistied that
Judge Griesa’s conspiracy charge was sufficiently
clear to provide the jury with the basic legal prin-
ciples it needed to determine whether there was a
conspiracy in violation of 18 U.S.C. §371 and
whether each defendant joined it with knowledge of
its illegal objective. At the outset he accurately sum-
marized Count One as charging generally that the
three defendants “conspired .to falsify the first-
quarter 1974 financial statement of the Franklin Na-
tional Bank, for various purposes.” Having thus
described the general goal, Judge Griesa described
the various federal offenses which were alleged to
have been committed in the course of the conspiracy
and correctly noted that in order to convict a defen-
dant the jury need not find that he “conspired to
achieve all of the objects alleged or to violate all of :
the statutes or rules referred to.” (A.67).
The court’s next step, stated as being in the in-
terest of simplicity, was to select one of the alleged
objects of the conspiracy—violation of 18 U.S.C.
§ 1005, which makes it a crime for an officer or
director of a national bank to make a false entry in
a report or statement of the bank with the intent to
defraud—as the vehicle for explaining the basic
elements that must be proved beyond a reasonable
doubt to establish the alleged conspiracy. The court
properly instructed that there must be proof of an
agreement between two or more persons “to make a
false entry, namely, the $79,000 net income item in
244
the statement of earnings of the Franklin National
Bank for the first quarter of 1974, with the purpose
of defrauding or deceiving;” that “the particular
defendant you are considering, knowingly joined in
the conspiracy;” and “that at least one of the con-
spirators committed at least one overt act charged in
the indictment.” The jury was then accurately in-
structed that the FNB was a national bank within
the meaning of § 1005 and that the $79,000 item in
its first quarter statement of earnings was an “en-
try,” as were the other figures in the quarterly state-
ment including the earnings figures of $1,301,000
for the trading account and $2,454,000 for the for-
eign exchange trading account.
After defining accurately the term “false entry,”
“defraud,” and “intent to deceive” as used in the
statute and indictment, the district judge focused on
the two means charged in Paragraphs 5 and 6 of
Count One of the indictment as those whereby the
conspiracy was allegedly to be effectuated, i.e., by
concealment of depreciation in the value of securities
in the trading account and by fictitious foreign ex-
change contracts to create the false appearance of
profits, pointing out that the jury was not required
to find that both means had been used in order to
convict the defendants, and that it might convict all
three defendants if it found they had conspired to
falsify the financial statement and used either or
both means. This instruction was qualified by the
statement that Carter could not be found guilty if
the jury found that the conspiracy was solely to
falsify through foreign exchange contracts. The
reason for this qualification and the court’s dismissal
of the Count Three charge (fictitious foreign ex-
254
change contracts) against Carter was that there was
no evidence that he had anything to do with such
contracts. Lastly, the court properly charged the jury
that to convict on the conspiracy count it must find
a single conspiracy of the type alleged. It also ad-
vised the jury that if it found two separate indepen-
dent conspiracies it must acquit.*
Thus the conspiracy instructions were adequate
and conformed to basic principles of conspiracy law
as they have evolved. As long as the jury found one
conspiracy to falsify the bank’s books in order to
produce a false income statement for the first
quarter of 1974 and that each defendant played a
part in that conspiracy it was unnecessary for the
Government to establish that each defendant agreed
to each of unlawful acts or means that might be
used to achieve that goal.
It hardly necessitated any great mental gymnastics
for any reasonable person logically to conclude in the
present case that when a bank officer participated in
the falsification of bank entries designed to hide a
huge depreciation in the value of the bank’s assets
he did so for the purpose of enabling the bank to
falsify its quarterly financial statement, not for his
own edification or to alter the bank’s internal book-
keeping system but to mislead others who would nor-
mally rely upon the statement as a true representa-
tion of the bank’s financial picture. Any major par-
rs] This instruction was more favorable to the defendants than
the law required, since it is subject to the qualification that
where there is proof of the conspiracy charged in an indictment,
a finding of other conspiracies would not mandate acquittal.
United States v. Tramunti, 513 F.2d 1087, 1108 (2d Cir.), cert.
denied, 423 U.S: 832 (1975).
264
ticipant aware of the ultimate objective and _ its
achievement through one type of false entry could
also reasonably foresee that other types of entry fal-
sification, such as fictitious foreign exchange transac-
tions, might well be used to achieve that goal. There
was an abundance of evidence from which the jury
could infer that each of the appellants agreed to the
general objective of fraudulently falsifying FNB’s
first quarter 1974 earnings statement.
Our earlier decisions in United States v,. Peoni,
supra, and United States v. Falcone, 109 F.2d 579
(2d Cir. 1939), affd., 311 U.S. 205 (1940), relied
upon by appellants, do not require a contrary conclu-
sion. In each of those cases there was simply no
evidence from which a jury could infer an agreement
to which the defendant could have been a party or
that he willfully or knowingly participated in the
alleged conspiracy. Here, on the other hand, there
was ample evidence to permit a jury to infer a
general agreement on the part of FNB’s top officials
to falsify its financial statement for the first quarter
of 1974 and that each played some part in it.
No defendant here was held liable beyond “the fair
import of the concerted purpose or agreement as he
understands it.” United States v. Peoni, supra, 100
F.2d at 403. The appellants would have us read this
broadly, to mean that to be a conspirator, one must
have full knowledge of each facet of the conspiracy.
We have, however, read Peoni and Falcone more nar-
rowly than this, see, e.g., United States v. Calabro,
467 F.2d 973, 981 (2d Cir. 1972), cert. denied, 410
U.S. 926 (1973); United States v. Tramaglino, 197
F.2d 928, 930 (2d Cir.), cert. denied, 344 U.S. 864
(1952), and we do not believe they contradict our
statement above of the legal principles involved here.
tail ty a
27 a
Luftig contends that the court erred in failing to
instruct the jury, as it did with respect to Carter,
that if the jury found a conspiracy to falsify FNB’s
quarterly earnings statement solely by fictitious
foreign exchange transactions it should not convict
him. We doubt that Carter, who did not participate
in or know of the foreign exchange transactions, was
entitled to this instruction, since there was evidence
of his participation in the broad conspiracy to falsify
FNB’s quarterly earnings statement and, as we
stated above, it was unnecessary for the Government
to prove that he knew of each means used to carry
it out. Moreover, even if there was error in denying
Luftig the charge, the error was harmless. Since the
jury convicted Carter, it had to have found that the
conspiracy was not carried out solely by fictitious
foreign exchange transactions. Thus Luftig’s convic-
tion could not have been based on a conspiracy car-
ried out solely by that means.
In any event, the jury found all defendants guilty
of falsification by concealment of the depreciation in |
value of the securities in its trading account (Count
Two) and Luftig guilty of perjuring himself before
the grand jury when he swore that he had in early
March ordered the transfer of the $100 million from
the bank’s trading account to its investment account.
Thus there was ample evidence to support a finding
of conspiracy to falsify the bank’s earnings statement
in which Luftig played a major part.
(3) Pinkerton Charge
The Supreme Court in Pinkerton v. United States,
328 U.S. 640 (1946), held that a conspirator may be
found guilty of a substantive offense committed by a
co-conspirator in furtherance of and as part of an
alleged conspiracy even though he personally did not
commit the acts constituting the substantive crime
itself. In accordance with Pinkerton Judge Griesa in-
structed the jury that if it found that a defendant
was a member of the conspiracy alleged in Count
One but did not commit the acts constituting one of
the alleged substantive crimes (e.g., violation of 18
U.S.C. §§ 1005 (Count Two), 1014 (Count Three), or
§10(b) of the Securities Exchange Act), it might
nevertheless find him guilty of a substantive crime
committed by a co-conspirator in furtherance of the
conspiracy and as part of it, provided the conduct
“was within the scope of the conspiracy and a forsee-
able consequence of it,” since the defendant commit-
ting the substantive crime, like a partner, might then
be treated as an agent of the other members of the
conspiracy.
Appellants contend that this instruction was er-
roneous. First they argue that no Pinkerton charge
at all should have been given because there was in-
sufficient evidence of the existence of a general con-
spiracy, in furtherance of which the substantive of.
fenses were committed, to warrant such a charge, cf.
United States v. Sperling, supra, 506 F.2d at
1341-42. We disagree.
There was ample evidence independent of the
substantive crimes themselves from which the jury
could find beyond a reasonable doubt that the top of-
ficers of FNB joined in a plan to falsify its first
quarter earnings statements so that it would appear
to show a profit and that to accomplish the unlawful
objective some engaged in criminal acts that were
either known or should have been reasonably fore-
a
seeable to the others. AHhaugh there was little
evidence of Luftig’s knowledge of or participation in
the fictitious foreign exchange transactions or of
Gleason’s participation in the false evaluation of the
bank’s trading account securities, there was ample
proof, crediting as we must the testimony of Crosse
and Shaddick, that each defendant in his own way
joined in a scheme to falsify the bank’s <arnings
statement. This was sufficient to permit the giving
of a Pinkerton charge with respect to the reasonably
foreseeable crimes that might be committed by fellow
conspirators in furtherance of that scheme. Indeed,
the obvious purpose of falsifying the bank’s earnings
statement was to commit frauds.°®
Appellants’ second objection is that the court’s
Pinkerton charge permitted the jury to find them
guilty of substantive crimes which were not part of
the conspiracy. We disagree.
When Judge Griesa explained the conspiracy count
to the jury, he used the § 1005 violation, which was
. one of the alleged objectives of the conspiracy, as an
example. He did not go through the § 1014 and Rule
10b-5 counts at that time; rather he stated that he
had not stricken the others, but was trying to
simplify his explanation. However, when it came
time to explain the Pinkerton rule, the court said:
) Although the court dismissed Count Three against Carter on
the ground that he had not personally participated in the
foreign exchange transactions, this was not required since, upon
the evidence before it, the jury could find that Carter joined the
conspiracy to falsify FNB’s first quarter 1974 financial state-
ment and could reasonably anticipate that his partners in crime
might commit other criminal acts, including use of fictitious
foreign exchange transactions, to misrepresent the bank’s earn-
ings.
30a
“And remembering that the conspiracy count re-
lates to 1005, and of course some of these sub-
stantive counts relate to other statutes—1014,
Section 10(b) of the Exchange Act, and ~> forth
—but nevertheless, if you have found any defen-
dant guilty under Count one [the conspiracy
count], then you are obliged to reconsider his
guilt on the substantive count you are consider-
”
ing.
Appellants argue that this statement permitted the
jury, once it found a conspiracy to violate one
statutory provision, to use Pinkerton to hold a con-
spirator liable for violations of other provisions not
among the objects of the conspiracy and not done in
furtherance of the conspiracy.
A diligent reading of the charge, however, reveals
that Judge Griesa properly instructed the jury. He
followed the passage quoted above with the instruc-
tion that in order to convict:
“You must find that the crime charged in sub-
stantive count was committed by co-conspirator
and that it was committed during and in fur-
therance of the conspiracy charged in the con-
spiracy count. You must find that the crime
charged in the substantive count was within the
scope of the conspiracy and a foreseeable conse-
quence of the unlawful agreement.”
As already noted, he had previously instructed the
jury that the alleged objective of the conspiracy was
to falsify FNB’s first quarter 1974 financial state-
ment by making a false entry to the effect that it
had a net income of $79,000 when it had in fact suf-
fered losses, all with a view " defrauding others.
Thus the court’s Pinkerton charge was in accordance
with the principles enunciated by the Supreme Court,
see Nye & Nissen v. United States, 336 US. 613,
618 (1949), and by this court, see United States v.
Molina, 581 F.2d 56, 60-61 (2d Cir. 1978). The in-
struction was therefore sufficient, and there was am-
ple evidence from which the jury could have con-
cluded that the substantive violations were commit-
ted in furtherance of the conspiracy charged, if in-
deed the jury found it necessary to reach the ques-
tion of Pinkerton liability at all.
(4) Aiding and Abetting
The indictment charged and the court gave in-
structions regarding liability of the defendants for
“aiding and abetting” or “causing” the various crimes,
pursuant to 18 U.S.C. §2.'° Appellants argue that
the court erred in failing to instruct the jury that
before it might find any defendant guilty as an aider
and abettor the principal must be identified, or in.
failing to identify the principal himself.
We have held that under 18 U.S.C. § 2(a) a person
charged as an aider and abettor “cannot be found
guilty .. . unless a principal whom he has aided and
abetted committed the criminal act.” United States v.
Bernstein, 533 F.2d 775, 799 (2d Cir. 1976). See also
United States v. Erb, 543 F.2d 438, 446 (2d Cir.),
10 18 U.S.C. § 2 provides:
“(a) Whoever commits an offense against the United States
or aids, abets, counsels, commands, induces or procures it com-
mission, is punishable as a principal.
“(b) Whoever willfully causes an act to be done which if
directly performed by him or another would be an offense
against the United States, is punishable as a principal.”
32 4
cert. denied, 429 U.S. 981 (1976). Under 18 U.S.C.
§ 2(b) a person who causes an innocent party to com-
mit an act which, if done with the requisite intent,
would constitute an offense may be found guilty as a
principal even though he personally did not commit
the criminal act."
In the present case there was sufficient evidence
to permit the jury to find that at least one defen-
dant or co-conspirator participated in each of the
alleged criminal acts, either as a principal, an aider
and abettor, or under Pinkerton as a co-conspirator
who could reasonably foresee that the substantive
crimes might be committed by fellow conspirators in
furtherance of the conspiracy.
Absent some indication that there was a failure to
prove that a defendant committed one of the alleged
criminal acts or participated knowingly in the com-
mission of such an act by another, we believe that
the court’s refusal to require the jury first to iden-
tify the principals and then to identify the aiders
and abettors was proper. Several other circuits have
held that there is no such requirement, see United
States v. Staten, 581 F.2d 878, 887 (D.C. Cir. 1978);
United States v. Bryan, 483 F.2d 88, 93-94 (3d Cir.
1973) (en banc); United States v. Austin, 462 F.2d
724, 731 (10th Cir.), cert. denied, 409 U.S. 1048
(1972); Feldstein v. United States, 429 F.2d 1092,
1095 (9th Cir.), cert. denied, 400 U.S. 920 (1970),
and we agree. It is sufficient that the court instruct
11 We are not confronted here with a case where any defendant
was legally incapable of committing an alleged offense. See
United States v. Ruffin, Dkt. No. 78-1361 (2d Cir.); United
States v. Lester, 363 F.2d 68, 72-73 (6th Cir. 1966), cert.
denied, 385 U.S. 1002 (1967).
TL
33 a
the jury that in order to convict under 18 U.S.C. § 2
the acts must have been committed by someone.
Judge Griesa’s charge was entirely adequate in this
respect, and there was sufficient evidence to permit
the jury to find that at least one defendant or co-
conspirator acted as principal in the commission of
each of the crimes charged.'”
(5) Potential Adverse Effect on
Bank Depositor-Jurors
Appellants contend that by implying in his charge
that bank depositors were victims of the crimes
alleged, Judge Griesa destroyed appellants’ Sixth
Amendment right to an impartial jury, since most of
the jurors were undoubtedly bank depositors and one
had been a depositor in FNB. The claim is so specu-
lative as to border on the frivolous.
In the first place, the record gives no indication
that any juror had been an FNB depositor. Regard-
less of this side-issue, the court’s instruction did not
suggest that depositors were victimized. Judge Griesa
quite properly stated that the term “any other com-
pany or body politic or corporate or any individual
person,” as used in §1005, “obviously includes per-
sons who are depositors and other customers of the
bank, borrowers from the bank; it also includes other
banks which lend money to the particular bank.”
We find nothing inflammatory or unfair about this
accurate description of the type of persons whom the
12 _ We are not here confronted with a case where a possible prin-
cipal was acquitted. See United States v. Ruffin, Dkt. No.
78-1361 (2d Cir.); United States v. Standefer, ___. F.2d ____ (3d
Cir. Dkt. No. 78-1909, Aug. 10, 1979).
344
statute was designed to protect. Nor is there any
indication that any defendant was prejudiced or like-
ly to have been prejudiced by the description, which
must be shown for reversal. Mikus v. United States,
433 F.2d 719, 724 (2d Cir. 1970). Cf. Irvin v. Dowd,
366 U.S. 717, 723 (1961); United States v. Tramunti,
513 F.2d 1087, 1114 (2d Cir.), cert. denied, 423 US.
832 (1975).
EVIDENTIARY RULINGS
(1) Prior Similar Conduct by Crosse
Luftig contends that the district court erred in
refusing to permit him to offer certain evidence
tending to establish his innocence of any false eval-
uation of FNB’s securities and unduly restricted his
cross-examination of Crosse on the same subject. We
disagree.
As evidence of Luftig’s participation in the false
evaluation of bank securities by backdating the trans-
fer of some from the bank’s trading to its invest-
ment account in March, 1974, and by failing to
“mark to market” other securities in the trading ac-
count, the Government introduced Crosse’s testimony
regarding Luftig’s instructions. In his defense Luftig
sought to introduce a series of eight items, including
evidence that during the period 1971-74 Crosse, both
prior to and after Luftig’s joining FNB, had without
Luftig’s knowledge repeatedly transferred securities
from the bank’s trading to its investment account
without proper evaluation and had failed to reeval-
uate or “mark to market” securities in the trading
account or establish adequate depreciation reserves,
thus concealing hundreds of thousands of dollars of
&
“
35a
depreciation. The purpose of the offer, of course, was
to try to show that in March, 1974, as on prior occa-
sions, Crosse had acted on his own without Luftig’s
knowledge and that Crosse’s testimony implicating
Luftig was incredible.
Judge Griesa restricted Luftig to two items, one a
transfer at Crosse’s discretion on September 20,
1973, of $37.85 million of securities at cost from
FNB’s trading to its investment account, which al-
legedly concealed more than $695,000 of depreciation
and the other a failure in July, 1973, to “mark to
market” securities in four trading accounts or to
establish adequate reserves for some $3 million in
losses, which were concealed from Crosse’s superiors.
Evidence regarding the other six items was excluded
on the ground that whatever probative value the evi-
dence might have was outweighed by the danger of
confusing the jury regarding the issues on trial by
diverting its attention to collateral issues.
Upon this review the propriety of the district
court’s ruling must be tested by the standard of
whether the exclusion of the evidence constituted a
clear abuse of discretion. Hamling v. United States,
418 U.S. 87, 124-25 (1974); United States v. Corr,
543 F.2d 1042, 1051 (2d Cir. 1976). Given the cir-
cumstances before the trial judge, we find no such
abuse.
A clear showing that Crosse had engaged in prior
similar misconduct without Luftig’s knowledge would
have some probative value (though far from conclu-
sive) on the issue of whether he later acted under
Luftig’s directions in March and April 1974. See,
e.g., United States v. Matot, 146 F.2d 197, 198 (2d
Cir. 1944) (exclusion of evidence of offer by one
36a
charged with fraud based on overdrafts to make
good on deficiencies held error); United States uv.
Platt, 435 F.2d 789, 793 (2d Cir. 1970). Crosse’s
engagement in earlier wrongdoing, on the other
hand, would not preclude a finding that Luftig and
he joined together in the later misconduct, with Luf-
tig willing to take the lead for obvious reasons.
Moreover, where such proof, though of some rele-
vance, may lead to confusing and time-consuming
disputes with respect to collateral issues the trial
judge may properly reject or limit it. United States
v. King, 560 F.2d 122, 134 (2d Cir.), cert. denied
434 U.S. 925 (1977); Fed. R. Evid. 403. This appears
to have been the situation confronting the district
court in this case.
Even with respect to the September 20, 1973,
transfer of securities, serious collateral issues were
raised regarding the extent of Crosse’s involvement
in the transfer and whether it was made by lesser
employees (possibly by mistake), possibly without his
knowledge. Moreover, the Government contended
that some purchases of securities ostensibly for the
bank’s trading account were in fact made from the
outset for the investment account, which had no
traders of its own, using trading account traders and
then transferring acquisitions to the investment ac-
count. If this were established, the transfer from
trading to investment at cost might have been justi-
fied or excused as a mistake. Lastly, Carter vigor-
ously opposed introduction of evidence as to the ear-
lier security transfers and failures to “mark to mar-
ket” since they might reflect upon his honesty as
vice-president in charge.
Faced with these complaxttige “which could lead to
“trials within the trial,” Judge Griesa—sensibly in
our view—limited Luftig to two of the earlier exam-
ples, permitting evidence as to the September, 1973,
transfer on the ground that the matter had been
opened up by the Government on its examination of
Crosse.'* We find no abuse of discretion in this rul-
ing.
(2) The May 12 Press Release
Luftig next argues that the court erred in refusing
to permit him to testify that on May 12, 1974, sev-
eral weeks after the principal fraudulent conduct
which was the subject of the indictment, he opposed
the issuance by FNB of a press release, favored by
Sindona, which failed to disclose certain hidden for-
eign exchange transactions concededly “unrelated” to
the transactions that were the subject of the indict-
ment. We find no abuse of discretion in this ruling
which properly avoided getting into more complicated
collateral issues with respect to other differences that
developed later between Luftig and Sindona, leading
to the former’s being asked to resign. At most the
evidence would show a disagreement between the two
having nothing to do with the criminal conduct al-
leged in the indictment. Further evidence of Luftig’s
differences with Sindona over unrelated matters
would be of doubtful probative value with respect to
the issues on trial and could confuse the jury."
13 Even as to the September, 1973, transfer the record discus-
sion regarding the side issues created by its introduction covered
almost 50 pages of transcript.
14 Luftig was permitted to testify that beginning on May 6,
1974, despite Sindona’s strong opposition, he actively supported
38 a
(3) Cross-Examination of Crosse
Similarly we find no merit in Luftig’s claim that it
was error to bar him from bringing out that Crosse
had vigorously opposed before FNB’s board of directors
a management proposal to disband the bank’s munici-
pal dealer department. Luftig argues that the evidence
indicates unlikelihood that Crosse would have done
Luftig’s bidding to falsely value $100 million of the
bank’s securities by backdating to March 11, 1974,
their transfer from its trading to its investment ac-
count. Here again, aside from the tenuousness of the
inference sought to be drawn and the fact that the
subject was beyond the scope of cross-examination,
since it had not been opened up on direct, see
Fed.R.Evid. 611(b), to permit such questions could
open up a flood of evidence regarding a possibly con-
fusing collateral issue, with the Government seeking to
establish dissimilarities or reasons why Crosse would
act differently under one circumstance than under the
other. We find no abuse of discretion in the judges
precluding cross-examination of Crosse on this subject
matter. See United States v. Carr, 584 F2d 612, 617
(2d Cir. 1978).
(4) Testimony Challenged as Hearsay
Appellant Luftig argues that the court erred in ad-
mitting testimony by Cornell Wright, an Ernst & Ernst
partner, that on May 17, 1974, he was told by Carter
that the March 27, 1974, transfer at cost of $62.5
million of U.S. Government agency securities had been
a merger of FNB with Manufacturers Hanover, and that he (Luf-
tig) requested an FBI investigation into the bank’s non-disclosure
of certain unrelated foreign exchange transactions.
39a
“ordered by someone superior to Howard Crosse.” Luf-
tig contends that the statement was post-conspiracy,
narrative hearsay as to him, see United States v. Birn-
baum, 337 F.2d 490, 494-95 (2d Cir. 1964). We dis-
agree.
There was sufficient independent evidence to justify
a finding by the trial judge that the conspiracy was
still alive on May 17 and that Luftig and Carter were
participants. Carter's cuoted statement was therefore
admissible against Luftig under Fed. R. Evid. 801(d\2)
(E) as a statement in furtherance of it designed to allay
suspicion on Wright’ part regarding the propriety of
the March transfer. United States v. Ruggiero, 472
F2d 599, 607 (2d Cir), cert. denied, 412 U.S. 939
(1973); United States v. Geaney, 417 F.2d 1116 (2d Cir.
1969), cert. denied, 397 U.S. 1028 (1970).
The testimony of John Sadlik, the bank’s chief finan-
cial officer, to the effect that after Luftig had left FNB
Sadlik had ordered Carter to reverse the March, 1974,
transfer from the bank’s trading to its investment ac-
count and to revise the March 31 quarterly financial
statement is also objected to by Luftig as hearsay.
However, the underlying corporate memorandum and
entry confirming the instruction was properly admitted
as a record made in the regular course of business,
Fed.R.Evid. 803(6), and Sadlik’s testimony was admissi-
ble to explain the background of the document. In any
event, assuming the admission of the memorandum
was error, it was harmless.
40 4
CLAIMS OF PROSECUTORIAL MISCONDUCT
(1) Alleged Violation of FR.Cr.P. 16(a) by
Non-Disclosure of Statements
Appellant Gleason, formerly FNB’s chief executive
officer, argues that the Government violated FR.Cr.P
16(aX1XA) by failing to disclose before trial a letter
written by him on August 30, 1965, to FNB’s then
Chairman, years before the events here in issue, and
notations in his handwriting on various financial state-
ments and agenda of FNB board meetings during the
period from December 20, 1973, to March 28, 1974,
after Gleason had himself become Chairman. We dis-
agree.
The issue arose when the Government sought to use
the foregoing material in its cross-examination of Glea-
son, who had testified on direct that following the
creation in November, 1973, of the “Office of Chair-
man” at the bank (consisting of himself, Shaddick and
Luftig) he (Gleason) ceased to be involved in the day-
to-day activities of the bank. He testified that thereaf-
ter he devoted himself primarily to public relations
activities on behalf of FNB, visiting important domes-
tic customers and cultivating its foreign relationships
with a view to improving its image, while Shaddick
supervised the bank’s international operations and Luf-
tig its domestic operations. He denied being privy to
any instructions by Luftig to Crosse to falsify the va-
lue of the bank’s securities by backdating their transfer
and denied asking Shaddick to create false profits by
fictitious foreign exchange transactions. Thus Gleason
sought to divorce himself from sufficient responsibility
for the bank’s earnings’ statements to have been in-
volved in the falsification of its earnings’ report for the
first quarter of 1974.
41a
On cross-examination the Government, in an effort
to impeach Gleason’s denials and his posture of igno-
rance, confronted him with the August 1965 letter in
which, in advocating himself for the presidency of the
bank, he had urged that the bank’s head should closely
follow its earnings. He was also faced with his various
handwritten notations on FNB Board agendas and
earnings statements in early 1974 to indicate that he
had been keeping himself advised of the bank’s finan-
cial operations in some detail at the very time when,
according to his direct testimony, he had been ignorant
of these essential financial facts.
Rule 16(a) obligates the Government upon request to
permit a defendant to inspect “any relevant written or
recorded statements made by the defendant, or copies
thereof, within the possession, custody or control of
the government, the existence of which is known, or by
the exercise of due diligence may become known, to
the attorney for the government.” The rule, of course,
is intended to enable a defendan’ to obtain prior to
trial any of his own statements relevant to the crime
charged against him so that he will be able to prepare
properly to face the evidence that may be introduced
against him at trial.
Gleason's 1965 letter, which predated by almost 10
years the events in issue, and his mere notations on
agenda and financial statements, were hardly “rele-
vant” to the crimes charged against him; they did not
tend to show that he had participated in any falsifica-
tion of the bank’s earnings statement for the first quar-
ter of 1974. The fact that a bank officer once believed
that its president should follow its earnings statements
does not implicate him in any dishonest underlying
transaction that is not in the bank's earnings reports.
as
—
424
The Government was not therefore required by Rule
16(a) to disclose the documents because they were not
“relevant . . . statements” within the meaning of that
Rule. The documents became relevant for impeachment
purposes only after Gleason testified on direct that he
did not personally keep acquainted with the bank’s day-
to-day operations, thus seeking to corroborate his de-
nials of involvement in the transactions at issue. See
United States v. Hodges, 480 F.2d 229, 232-33 (10th
Cir. 1973); United States v. Skillman, 442 F2d 542,
550 (8th Cir.), cert. denied, 404 U.S. 833 (1971).
The Government's failure to turn over the docu-
ments prior to trial, moreover, did not prevent Gleason
from preparing to meet the charges against him. The
documents were at all times in the custody of the
Federal Deposit Insurance Corporation (FDIC) as liqui-
dator of FNB and were as available to Gleason as they
were to the Government, which obtained them on the
eve of trial, approximately November 27, 1978. Al-
though the F'NB records in custody of the FDIC were
voluminous,’® Gleason had long before trial been pro-
vided with an inventory of them and in preparing a
strategy of ignorance should have known that Board
minutes and earnings statements to which he might
have been exposed would be important and should,
with the aid of the inventory, have been extracted from
the mass for examination.
The Government is not obligated by Rule 16(a) to
anticipate every possible defense, assume what the
defendant’ trial testimony (if he decides to testify) will
15 Gleason’s counsel did visit the FDIC depository, but only once,
and may have attended a deposition in a civil suit, In re
Franklin National Bank & Securities Litigation, MDL 196
(E.D.N.Y.), at which the documents may have been used in the
examination of Gleason.
be, and then furnish him 438 otherwise irrelevant
material that might conflict with his testimony. With
respect to such material, if any obligation to disclose
existed under Rule 16(a) it was satisfied by making the
underlying files available to the defendant prior to
trial. United States v. Haldeman, 559 F-2d 31, 74 n.80,
76 n.93 (D.C. Cir. 1976), cert. denied, 431 U.S. 933
(1977) (White House files); United States v. Cirillo, 499
F2d 872, 882 (2d Cir), cert. denied, 419 U.S. 1056
(1974) (wiretaps). From that point on it was Gleason's
task to prepare his defense.
Lastly, Gleason has failed to show any legally cogni-
zable prejudice as a result of the failure to have the
documents in advance of trial. It is not suggested that
if he had received them he would have decided not to
testify. Indeed, no request was made for a continuance
to permit preparation of a more plausible reconciliation
between the documents and his direct testimony.
(2) Alleged Improper Rebuttal Summation
Gleason argues that he was denied a fair trial be-
cause the prosecutor, in his rebuttal summation pur-
suant to ER.Cr.P 29.1, introduced prejudicial new
matter and the court refused to give a curative instruc-
tion.
The controversy arose out of the apparent absence
from the record of any explanation or basis for the
$700,000 profit figure which Gleason told Shaddick
that the bank’s foreign exchange department must
have for the month of March, 1974, if FNB was to
avoid showing a loss for the first quarter. During his
main summation the prosecutor commented sardoni-
cally that the defendants would probably claim the
$700,000 figure was dreamt up by Shaddick on the
444
beaches of Acapulco. Accepting this suggestion,
Gleason’s counsel in his summation then argued that
the figure was indeed the product of Shaddick’s imagi-
nation. The prosecutor responded in his rebuttal sum-
mation with an adding machine tape which totalled
losses from the liquidation of government securities
during the period March 15-27, 1974, at $699,431.86,
almost precisely the same as the figure of $700,000
that had been used by Gleason in stating the profit
needs of the foreign exchange department.
Gleason contends that it was unfair and improper to
introduce such new material in a reply summation,
citing Moore v. United States, 344 F.2d 558, 560 (D.C.
Cir. 1965), and United States v. Rubinson, 543 F.2d
951, 946-66 (2d Cir.), cert. denied, 429 U.S. 850
(1976), to which the Government replies that the
material was not new but a response, based entirely
on exhibits already in evidence, negating Gleason’s
claim in his counsel’s summation that Shaddick in-
vented the $700,000 figure.
Had Gleason’s summation been the first occasion
for the latter argument, the Government’s reply
might be persuasive, because it could then argue that
it had no intention of referring to the computation
unless and until Gleason challenged the source of the
$700,000 figure. Fairness would dictate that a copy
be furnished to Gleason well enough in advance of
its use to permit a reply rather than confront him
with a new theory (albeit based on record evidence)
at almost literally the last minute of a long trial. See
1975 House Judiciary -Committee Report regarding
proposed F.R.Cr.P. 29.1 (H.R. Rep. No. 94-247).'®
16 The House Judiciary Committee commented:
(footnote continued on next page)
45a
Since the argument of this appeal, however, the Gov-
ernment has represented in writing that only after
Gleason’s summation did it for the first time calcu-
late the total losses and discover that they totalled
approximately $700,000, which led to its use of the
tabulation in its rebuttal summation.
Had no action been taken by the court after the
Government's surprise reply summation, a reversal
might be required. But Judge Griesa, recognizing the
eleventh-hour unfairness and surprise, offered Gleason
and the other defendants the opportunity to respond
by way of a surrebuttal summation after they had
sufficient time to confer and review the trial transcript
and exhibits forming the basis of the Government’
computation. This in our view adequately protected the
defendants against any prejudice. For reasons best
known to themselves, possibly their inability to find
any material errors in the Government's computation,
defense counsel refused the court's offer and instead
asked for a curative instruction.'? Absent proof that
“The Committee believes that .. . fair and effective adminis-
tration of justice is best served if the defendant knows the
arguments actually made by the prosecution in behalf of con-
viction before the defendant is faced with the decision
whether to reply and what to reply.”
17 We disagree with Gleason’s argument that additional summa-
tions which might result in introduction of the Government’s
computation, could not resolve the problem because they would
only serve to magnify the unfair impact of the prosecutor’s
rebuttal. If the computation, based on evidence already in the
record, was accurate, the jury was entitled to have the summary
as an aid in analyzing the complex proof before it rather than
be forced to the laborious task of making its own computation.
The situation here is clearly distinguishable from that in cases
relied upon by Gleason where the Government improperly re-
ferred to matter not in the record. See, e.g., Moore v. United
States, supra; United States v. Robinson, supra, 543 F.2d at
966.
46a
the Government’ computation was erroneous, the trial
judge did not abuse his discretion in refusing a cau-
tionary instruction.
(3) Alleged Suppression of Exculpatory Evidence
Gleason charges that the Government suppressed ex-
culpatory evidence and permitted witnesses to give ma-
terially false testimony, thereby depriving him of a fair
trial. The record reveals these charges to be both base-
less and irresponsible. ;
Specifically Gleason contends that the Government
withheld from the jury evidence supporting multi-
count indictments, filed on September 29, 1975, Janu-
ary 5, 1977, and March 19, 1979, against Sindona,
Shaddick and Bordoni in the Southern District of New
York, charging that prior to the falsification of FNB’s
March 1974 statement those three men, without
Gleason's knowledge, had falsified every single monthly
foreign exchange profit and loss report beginning with
the month of January, 1973, yet permitted Shaddick to
testify that he had engaged in falsifying the bank’
books on only three occasions during this period and
Bordoni to testify that he had participated in only six
such transactions. In addition, Gleason argues that the
superseding indictment filed against Sindona and Bor-
doni on March 19, 1979, after Gleason had been con-
victed, contains a paragraph" revealing that the
Government had evidence that Bordoni and Sindoni
18 “On or about March 31, 1974, Sindona and Bordoni, the de-
fendants, and other co-conspirators caused the Franklin Na-
tional Bank to hide losses in the bond trading operation by
misvaluing securities held in bond trading account.” Indict-
ment S75 Cr. 948, count I, Par. 54 (S.D.N.Y. March 19,
1979).
474
were involved in the misevaluation of securities in
FNBss bank trading account.
The fallacy of Gleason’s claims with respect to the
1973-74 false foreign exchange transactions lies in his
failure to distinguish between a fraudulent transaction
and a false financial statement. Although the fraudu-
lent transactions during this period of time were rela-
tively few, they were reflected in subsequent monthly
and quarterly financial statements, which were many.
Since each one of the financial statements could pro-
perly be charged in a separate count, see United States
uv. Huber, 603 F2d 387, 398-99 (2d Cir. 1979), and
some statements were also charged as violations of
federal mail and wire fraud statutes, the number of
counts in the superseding indictment far exceeded the
number of fraudulent transactions. There is thus no
proof that the Government knowingly allowed false
testimony.
Were Gleason's counsel unaware of this differentia-
tion, his specious charges might be pardonable. But the
earlier superseded indictments (one filed on Sept. 29,
1975, and another on Jan. 5, 1977), which contain
basically the same allegations with respect to the 1973-
74 foreign exchange transactions, were made available
to defense counsel before the trial of the present case,
were used extensively by Gleason's counsel on his cross-
examination of Bordoni and Shaddick, and could have
been used to reveal the supposed perjury on their part.
Under the circumstances, Gleason is wholly unjustified
in labelling the Government's conduct, as he does in his
brief on appeal, as “prosecutorial misconduct,” “sup-
pression of evidence,” “knowing use of false testimony,’
failure “to correct false testimony,” silence “in the face
of their witnesses’ perjury,” “foul conduct,” and resort
: 48 4
to “slippery and less than thoroughly upright con-
duct.” *
As for the allegation in the last superseding indict-
ment that on March 31, 1974, Sindona and Bordoni
caused FNB to conceal losses in its bond trading ac-
count by misvaluing securities, the simple and com-
plete answer is that it does not refer to their personal
participation in the false security evaluation but
merely to acts committed by their co-conspirators in
furtherance of the conspiracy to falsify the bank’s earn-
ings statement for the first quarter of 1974, for which
they could be held criminally responsible under Pinke.-
ton v. United States, supra.
»
GOVERNMENT'S REFUSAL TO CONFER IMMUNITY
ON SINDONA
Gleason contends that his due process rights were
violated by the Government's failure to accede to his
request that use immunity (i.e., immunity from the use
of his testimony and evidence derived from it in subse-
quent prosecution) be extended to an alleged principal
accomplice and co-conspirator, Sindona, who was at the
time and remains a defendant named in a separate
indictment, 75 Cr. 948, charging him and Bordoni with
participation in the same false foreign exchange trans-
actions as those forming a major part of the case
against Gleason. We disagree.
19 These scurrilous statements, which indicate a reckless disre-
gard by counsel for the facts of record, exceed the bounds of re-
sponsible advocacy in our adversarial system and merit consid-
eration by the Bar Association Grievance Committee for appro-
priate action. ABA Code of Professional Responsibility, DR 7-
102(A) (1), (2).
49a
As we pointed out in United States v. Lang, 589
F.2d 92, 95-96 (2d Cir. 1978), the law is
“well settled that the power of the Executive
Branch to grant immunity to a witness is discre-
tionary and no obligation exists on the part of the
United States Attorney to seek such immunity.
United States v. Bautista, 509 F2d 675, 677 (9th
Cir.), cert. denied sub nom. Monsivais v. United
States, 421 U.S. 976, 95 S.Ct. 1976, 44 L.Ed.2d
467 (1975), United States v. Ramsey, 503 F2d
023, 532-33 (7th Cir. 1974), cert. denied, 420 U.S.
932, 95 S.Ct 1136, 43 L.Ed.2d 405 (1975); United
States v. Berrigan, 482 F2d 171, 190 (3d Cir.
1973); Earl v. United States, 124 U.S. App. D.C.
77, 80, 361 F.2d 531, 534 (1966) (Burger, J.), cert.
denied, 388 U.S. 921 87 S.Ct. 2121, 18 L.Ed.2d
1370 (1967); People v. Sapia, 41 N.Y.2d 160, 166,
391 N.YS.2d 93, 359 N.E.2d 688 (1976), cert. de-
nied, 434 U.S. 823, 98 S.Ct. 68, 54 L.Ed.2d 80
(1977).
* * * * *
“We note that this court has held that the govern-
ment is not obligated to grant immunity to wit-
nesses so that they may be made available to
testify on behalf of the defendant. United States
v. Stofsky, 527 F.2d 237, 249 (2d Cir. 1975), cert.
denied, 429 U.S. 819, 97 S.Ct. 66, 50 L.Ed.2d 80
(1976).”
Moreover, there was no representation that if
granted immunity Sindona would furnish specific ex-
culpatory evidence unobtainable from any other source.
50 3
The most that was suggested through Sindona’s coun-
sel, who refused to permit Sindona to talk with Glea-
son, was that Sindona “would deny any wrongdoing or
conversations in furtherance of any wrongdoing with
Gleason,” which would at best be merely cumulative of
Gleason’ testimony and from an obviously interested
witness who would be subject to intensive cross-ex-
amination that might well destroy his credibility.
Nor is this a case where the Government deliber-
ately manipulated grants of immunity to gain an un-
fair advantage over any defendant, United States v.
Lang, supra, 589 F.2d at 96-97. The major accomplices
who testified (Crosse, Shaddick, Bordoni and Garofalo)
were not granted immunity. Only two lesser figures,
Thomas Murphy and Bruce Carlton, were promised by
the United States Attorney that their statements to
him would not be used against them. No sound reason
exists, therefore, for departing from the general rule
that the Government may refuse to grant immunity.
THE ALLEGED INSUFFICIENCY OF THE CHARGES AND
PROOF OF USE OF DECEPTIVE DEVICES IN CONNECTION
WITH THE SALE OF SECURITIES
Gleason contends that Counts 5-14, which allege
that the defendants, in violation of §10(b) of the Se-
curities Exchange Act, 15 U.S.C. §78j(b) and Rule 10b-
5, used interstate commerce and the mails to employ
manipulative and deceptive devices in connection with
the purchase and sale of FNB’s stock, which was pur-
chased ‘by 12 identified persons on specified dates after
the issuance of the false FNB financial statement for
the first quarter of 1974, are insufficient for failure to
contain specific allegations of misconduct and to set
51a
forth all of the elements of a crime. The contention
must be rejected for the reason that each count of the
indictment followed the precise language of §10(b),
thus alleging all of the essential elements of the crime
charged, see Hamling v. United States, 418 U.S. 87,
117 (1974); United States v. Carr, 582 F2d 242, 244
(2d Cir. 1978). Moreover, by incorporating by reference
paragraphs 6-8 of Count One into Counts Four through
Fourteen the Government specified the nature of the
alleged criminal conduct in sufficient detail to enable
the defendants to prepare their defenses and to plead
an acquittal or conviction in bar of any future prosecu-
tion for the same offense.
Gleason’s further contention that the counts should
have been dismissed for the Government’ failure to
prove any reliance by the specified purchasers of FNB
shares upon the bank’s false financial statement for the
first quarter of 1974 must also be rejected. Despite
contrary suggestions in earlier decisions relied on by
appellants, the law is settled that the Government
need only prove that the false representation is one
that a reasonable stockholder would rely on in purchas-
ing or selling the relevant corporate shares, SEC uv.
Texas Gulf Sulphur Co., 401 F2d 833, 860 (2d Cir.
1968) (en banc), cert. denied, 394 U.S. 976 (1969); cf.
TSC Indus. v. Northway Inc., 426 U.S. 438, 449
(1976), and Judge Griesa so instructed the jury. It is
also settled that the same standards apply to civil and
criminal liability under the securities law. United
States v. Peltz, 433 F2d 48, 53 (2d Cir. 1970), cert.
denied, 401 U.S. 955 (1971).
O24
THE CLAIM THAT THE RECORDS OF THE FRAUDULENT
FOREIGN EXCHANGE TRANSACTIONS ARE NOT “FALSE
ENTRIES” WITHIN THE MEANING OF 18 U.S.C. § 1005
Gleason’s last contention, derived principally from
Coffin v. United States, 156 U.S. 432, 462-63 (1895), is
that those counts of the indictment based on the four
deceptive foreign exchange transactions which showed
FNB as earning a profit must be dismissed because the
transactions took place and were reflected in the bank’s
books, thus precluding a claim that they were “false
entries” within the meaning of §1005. The argument
disregards the indictment and later authority control-
ling the interpretation of the term “false entry.”
The indictment (e.g., Count Three) alleges that the
defendants caused a false entry to be made in the
bank's books and earnings statement by representing in
its financial statement that the bank had earned a
profit of $79,000 for the first quarter of 1974 when in
fact it had suffered a loss of over $7 million and that
this had been accomplished “by means of fictitious and
false foreign exchange contracts between said bank and
Amincor Bank, Zurich, Switzerland, and Banca Unione,
Milan, Italy, which reflected a fictitious profit in the
foreign exchange operations of approximately
$2,000,000.”
It is true that in Coffin the Court stated that a crime
of making a false entry is not committed if the trans-
action entered on the books actually took place and
was entered as it occurred. 156 U.S. at 463. However,
this was modified by Agnew v. United States, 165 U.S.
36, 52-54 (1897), holding that a false entry statute
may be violated by entering on the books a transaction
known to be fraudulent, even though the entry might
53 a
be accurate. See United States v. Darby, 289 U.S. 224,
"226-27 (1933); United States v. Huber, 603 F.2d 387,
397-98 (2d Cir. 1979). While an entry is not false
merely because the underlying transaction is illegal,
see United States v. Manderson, 511 F.2d 179, 180-81
(5th Cir. 1975), here the profit shown on the record of
the foreign exchange transactions was known by the
defendants to be false and fictitious, concocted for the
very purpose of distorting the financial statement. The
result was a violation of 18 U.S.C. §1005. See Bil-
lingsley v. United States, 178 Fed. 653, 663 (8th Cir.
1910).
We find no merit in appellants’ remaining conten-
tions, which require little or no discussion. The district
court’ grant of one extra peremptory challenge to the
Government without the defendants’ consent after
granting three peremptories to the defendants, while
not in compliance with FR.Cr.P. 24(b),” is not shown to
have resulted in the selection of a jury that was unre-
presentative of the community, or biased in any other
way. Nor is any prejudice to appellants shown. The
proportional advantage accorded defendants by Rule
24(b) (10 peremptories as against 6 for the Govern-
ment) was approximately maintained. While the court's
action was improper in the absence of defense counsels’
consent, we do not believe that reversal is warranted
in the absence of prejudice to the defendants.
The judgments of conviction are affirmed.
20 Although F.R.Cr.P. 24(b) does not authorize the granting of
additional peremptories to the Government, it is not uncommon
for the court to condition the grant of a defendant’s request for
additional peremptories on his consent to a proportionate in-
crease being accorded to the Government.
Appendix B
Constitutional Provisions, Statutes and Rules Involved
doa
Constitutional Provisions, Statutes and
Rules Involved
Constitutional Provisions:
Constitution of the United States, Amendment 5
No person shall be held to answer for a capital, or
otherwise infamous crime, unless on a presentment of
indictment of a Grand Jury, except in cases arising
in the land or naval forces, or in the Militia, when in
actual service in time of War or public danger; nor
shall any person be subject for the same offense to be
twice put in jeopardy of life or limb; nor shall be com-
pelled in any criminal case to be a witness against
himself, nor be deprived of life, liberty, or property,
without due process of law; nor shall private property
be taken for public use, without just compensation.
Statutes:
18 U.S.C. § 6002. Immunity generally
Whenever a witness refuses, on the basis of his
privilege against self-incrimination, to testify or pro-
vide other information in a proceeding before or ancil-
lary to—
(1) a court or grand jury of the United States,
(2) an agency of the United States, or
(3) either House of Congress, a joint committee
of the two Houses, or a committee or a subcommit-
tee of either House,
and the person presiding over the proceeding commu-
nicates to the witness an order issued under this part,
the witness may not refuse to comply with the order
on the basis of his privilege against self-incrimination;
but no testimony or other information compelled under
the order (or any information directly or indirectly
56a
derived from such testimony or other information)
may be used against the witness in any criminal case,
except a prosecution for perjury, giving a false state-
ment, or otherwise failing to comply with the order.
Rules:
Federal Rules of Criminal Procedure
Rule 16. Discovery and Inspection
(a) Disclosure of Evidence by the Government.
(1) Information Subject to Disclosure.
(A) Statement of Defendant. Upon request of a
defendant the government shall permit the defendant
to inspect and copy or photograph: any relevant writ-
ten or recorded statements made by the defendant, or
copies thereof, within the possession, custody or con-
trol of the government, the existence of which is known,
or by the exercise of due diligence may become known,
to the attorney for the government; the substance of
any oral statement which the government intends to
offer in evidence at the trial made by the defendant
whether before or after arrest in response to interro-
gation by any person then known to the defendant to
be a government agent; and recorded testimony of the
defendant before a grand jury which relates to the
offense charged. Where the defendant is a corpora-
tion, partnership, association or labor union, the court
may grant the defendant, upon its motion, discovery of
relevant recorded testimony of any witness before a
grand jury who (1) was, at the time of his testimony,
so situated as an officer or employee as to have been
able legally to bind the defendant in respect to conduct
constituting the offense, or (2) was, at the time of the
offense, personally involved in the alleged conduct con-
stituting the offense and so situated as an officer or
employee as to have been able legally to bind the de-
fendant in respect to that alleged conduct in which he
was involved.
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.