Petition — Babic v. United States

IN THE Ste. ce |

SUPREME COURT 7

OF THE UNITED STATES

October Term 1979

No. 79-1352

EDWARD W. BABIC,

Petitioner,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRUCE I. HOCHMAN

HARVEY D. TACK

CRAIG I. DeROY

HOCHMAN, SALKIN and DeROY

A Professional Corporation

9100 Wilshire Boulevard

Seventh Floor - West Tower

Beverly Hills, California 90212

(213) 273-1181

Attorneys for Petitioner

IN THE

SUPREME COURT

OF THE UNITED STATES

October Term 1979

No.

EDWARD W. BABIC,

Petitioner,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRUCE I. HOCHMAN

HARVEY D. TACK

CRAIG I. DeROY

HOCHMAN, SALKIN and DeROY

A Professional Corporation

9100 Wilshire Boulevard

Seventh Floor - West Tower

Beverly Hills, California 90212

(213) 273-1181

Attorneys for Petitioner

TOPICAL INDEX

Page

Table of Authorities ii

OPINIONS BELOW 2

JURISDICTION 2

QUESTIONS PRESENTED 3

STATEMENT OF THE CASE 4

REASONS FOR GRANTING THE WRIT

I Refinement of the Dutton 6

Standard is Necessary to

Insure a Criminal

Defendant's Sixth Amend-

ment Confrontation Rights

II Refinement of the Dutton 9

Standard is Necessary to

Resolve Division Among

the Circuit Courts

III The Standard for Deter- 12

mination of Reliability

Must Be Greater Than

Mere Preponderance of

the Evidence

APPENDIX A A-l

TABLE OF AUTHORITIES Garland and Snow, The Co-Conspir- 12

ators Exception to the

Page Hearsay Rule: Procedural

/ Implementation and Confron-

Bruton v. United States, 6 . tation Clause Requirements,

391 U.S. 123 (1968) 63 J. CEE. BCs ' O Pome Be

8 (1972) i

Dutton v. Evans, 6,795

400 U.S. 74 (1970) 10,11 Saltzburg, Standards of Proof i3

and Preliminary Questions

Hoover v. Beto, 10 of Fact, 27 Stanford Law

467 F2d 516 Review, 271 (1975) j

(Sth Cir. 1972)

, The Supreme Court, 7

Puco, United States v., 10 1970 Term, 85 Harvard Law

476 F2d 1099 (2nd Cir. Review 3

1973)

4

Roberts, United States v., 10 :

583 F2d 1173 (10th Cir. ;

1978) >

Snow v. United States, 9,10 ‘

521 F2d 730 (9th Cir. .

1975), cert. denied, 423

U.S. 1090 (1976)

LAW REVIEWS .

Davenport, The Confrontation 7

Clause and the Co-Conspirator i

Exception in Criminal Prose- ;

cutions: A Functional 5

Analysis, 85 Harvard Law i

Review 1328 :

i

ii iii

IN THE

SUPREME COURT

OF THE UNITED STATES

October Term 1979

No.

EDWARD W. BABIC,

outéiienee

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TO THE HCNORABLE CHIEF JUSTICE AND

ASSOCIATE JUSTICES OF THE SUPREME

COURT OF THE UNITED STATES:

EDWARD W. BABIC, the petitioner

herein, prays that a Writ of Certicrari

be issued to review the Judgment of the

United States Court of Appeals for the

Ninth Circuit, entered in the above-

entitled case on January 31, 1980.

OPINIONS BELOW

The memorandum opinion of the

United States Court of Appeals is not

reported. It is printed and attached

hereto as Appendix A. The opinion

affirms the trial court verdict of

guilty of one count of conspiracy to

defraud the Internal Revenue Service

(IRS), 18 U.S.C. §371; and one count

of aiding and assisting the prepara-

tion and presentation of fradulent

documents to the IRS, 26 U.S.C.

§7206(2). Judgment of guilty was

entered by the District Court for the

Central District of California on

December 6, 1978.

JURISDICTION

The opinion of the United States

Court of Appeals for the Ninth Circuit

was filed on January 31, 1980. Peti-

tioner filed a Motion to Stay Issuance

of Mandate pending application for

Writ of Certiorari and to continue

defendant on bail February 19, 1980.

The Motion was granted by the Court

of Appeals on February 22, 1980.

The jurisdiction of the Supreme Court

is based on 28 U.S.C. §1254(1).

QUESTIONS PRESENTED

1. Whether refinement and

amplification by this Court of the

reliability test set forth in

Dutton v. Evans is necessary to

preserve a criminal defendant's

Sixth Amendment rights.

2. Whether the Sixth Amend-

ment and the "reliability test" of

Dutton mandate consideration of the

"crucial and devastating" nature

of testimony offered under the

co-conspirator exception to the

hearsay rule.

3. Whether Dutton requires

specific findings at trial regarding

reliability of the hearsay declarant

and the "crucial and devastating"

nature of the statements being offered.

4. Whether the government, in

a criminal case, must establish

reliability of the declarant and his

statements by a preponderance of the

evidence or some other standard.

STATEMENT OF THE CASE

The tax investigation of Lefkowitz

by Special Agents of the Intelligence

Division of the Internal Revenue

Service commenced on May 14, 1975.

The course of that investigation,

Commissioner summonses were served

upon Lefkowitz and Sullivan--the

secretary for several of Lefkowitz's

corporations, a co-conspirator, and

his girlfriend--with respect to the

books and records of several corpo-

rations and entities, including N/U

Rent a Car. From April of 1975

through June of 1976 defendant Babic,

a former Special Agent of the Intel-

ligence Division, was tax counsel and

tax advisor to Lefkowitz and some of

his entities. Lloyd Martin Fisher was

the controller employed by Lefkowitz

and the entities.

Negotiations were held with the

Special Agents, with a view to supplying

the information at a date subsequent

to the return date of the summons

itself. During the period of delay,

Fisher rewrote the records, which were

then submitted to the Internal Revenue

Service. The original records were

maintained at the corporate offices

located in Los Angeles, California,

and were subsequently moved to the

home of Lefkowitz in Granada Hills,

California. Information was later

received by the Internal Revenue

Service that the records had been

rewritten and the original records

were possibly available. Search

warrants, obtained for the corporate

offices and the Lefkowitz residence,

were executed on November 17 and 18,

1975, and the original records were

seized by the Agents of the Internal

Revenue Service.

It is clear that the records in

this case were rewritten. As to

defendant Babic, the ultimate issue is

whether there is sufficient admissible

evidence to establish beyond a reasonable

doubt that Babic participated in the

conspiracy to rewrite and falsify

records and submit them to the Internal

Revenue Service.

At trial, Sullivan was permitted,

over objection, to testify as to

statements from Babic to Lefkowitz

concerning the destruction of records

and the cover-up of the scheme. R.T.

136. None of the alleged statements

of Babic were made in the presence of

Sullivan and Lefkowitz did not testify.

That these statements were made

by Lefkowitz to Sullivan is possible,

indeed probable, in view of his

(Lefkowitz's) need to assuage the

fears of his girlfriend (Sullivan) and

maintain her cooperation as a COo-

conspirator. What better way to

accomplish this than by setting up an

attorney, Babic, as a source of approval

for the scheme.

Because of the nature of the

balance of government witnesses at

trial, Sullivan's testimony gained

Significance. Fisher relayed facts

and circumstances which were as con-

sistent with Babic's innocence as they

were with guilt. Similarly, the

Internal Revenue Service Agents could

not confirm Babic's participation. In

this sense, Sullivan's testimony, if

believed, presented the most "crucial

and devastating" kind of evidence

against Babic.

The trial court convicted Babic

of two counts and the decision was

upheld in rather summary fashion by

the Court of Appeals for the Ninth

Circuit.

REASONS FOR GRANTING THE WRIT

I

REFINEMENT OF THE DUTTON STANDARD

IS NECESSARY TO INSURE A CRIMINAL

DEFENDANT'S SIXTH AMENDMENT

CONFRONTATION RIGHTS

In Dutton v. Evans, 400 U.S. 74

(1970) this Court addressed the issue

left unanswered in Bruton v. United

States, 391 U.S. 123 (1968): whether a

statement admissible under the co-

conspirator exception to the hearsay

rule poses a threat to a criminal

defendant's confrontation right if the

declarant does not testify. The

plurality decision focused on three

factors deemed by the Court to supplant

the defendant's opportunity to confront

the declarant. The factors include:

reliability; the "crucial" nature of

the statement, or its necessity to the

proceedings; and the "devastating"

nature of the statement, or its prejudice

to the defendant. 400 U.S. 88-89.

Commentators, in general, feel

that the time has come for this Court

to refine its factor test. The Supreme

Court, 1970 Term, 85 Harvard Law

Review 3, 199. It is speculated that,

in Dutton, this Court purposefully

left the door wide open for interpre-

tation and expansion by the circuit

courts. Davenport, The Confrontation

Clause and the Co-Conspirator Exception

in Criminal Prosecutions: A Functional

Analysis, 85 Harvard Law Review 1328,

1381. In the 10 years since the

decision, few courts have accepted the

invitation. Now is the time for

review by this Court.

It has been asserted that a "due

process" type balancing was intended

by this Court. The more crucial a

statement is to the prosecution's

case, or the more devastating admission

of the statement is to the defendant,

the greater the standard of reliability

required for admission of the statement.

85 Harvard Law Review 197.

If that is the case, the dissent

position articulated by Justice Marshall

gains new Significance. It was his

view that, post balancing, a co-

conspirator's statement will almost

always be prejudicial and that reli-

ability can be assured only by cross-

examination of the declarant. Simply,

where the declarant does not testify

these statements should be excluded

regardless of necessity.

The impact of clarification on

the case at bar is tremendous. Here,

the most "crucial" and "devastating"

testimony at trial came in the form of

double hearsay--statements alleged to

have been made by Babic to Lefkowitz

and then repeated to Sullivan, the

testifying co-conspirator. The impact

of Sullivan's testimony was heightened

by the absence of Lefkowitz for purposes

of cross-examination.

By virtue of the fact that Lefkowitz

did not cake the stand, the reliability

of his statements to Sullivan went

untested. This fact becomes increasingly

Significant in light of Lefkowitz's

high motive for fabrication. What

better way to keep the support and

ease the trepidations of a co-

conspirator (Sullivan) than to sanction

the conduct with imagined words from

his attorney (Babic). Such motivation

becomes even greater when you are

trying to sanctify your acts in the

eyes of your girlfriend in order to

assure her continued cooperation and

participation.

At the very least, evaluation of

reliability must be accomplished on

both levels of the hearsay statements

admitted at trial through Sullivan.

Not only must Sullivan's reliability

be tested but the reliability of

Lefkowitz must also be reviewed. To

say that the evidence elicited in this

manner was neither crucial nor devas-

tating is to dramatically overstate

the government's case.

For these reasons it becomes

imperative to establish criteria to

assure focus by the trial court on the

reliability issue. That is, if the

intent of the Court in Dutton is to

safeguard Sixth Amendment rights

through a careful analysis of reliability,

clarification and refinement of the

principles articulated must be given.

II

REFINEMENT OF THE DUTTON

STANDARD IS NECESSARY TO

RESOLVE DIVISION AMONG

THE CIRCUIT COURTS

Attempts by circuit courts to

define and implement the Dutton reli-

ability standards have produced con-

flicting results. The leading Ninth

Circuit decision in this area, Snow v.

United States, 521 F2d 730 (9th Cir.

1975), cert. denied, 423 U.S. 1090

(1976) all but ignores the "crucial

and devastating" aspect of the Dutton

test. And, in spite of decisions in

the Second, Fifth and Tenth Circuits,

confusion abounds.

In the Second Circuit, for instance,

Dutton requirements are reduced, in

most cases, to finding the declaration

to have been made in furtherance of

the conspiracy, "[A]lthough the holding

in Dutton is apparently not sui generis,

its scope is uncertain in view of both

the facts of the case and other recent

decisions." United States v. Puco,

476 F2d 1099, 1103 (2nd Cir. 1973).

Contrary to the avoidance by the

Ninth Circuit and confusion of the

Second, the approach taken by the

Fifth and Tenth circuits is enlightened.

The Fifth Circuit--from which Dutton

emanated--held that where hearing

evidence is admitted the record must

affirmatively show those inducia of

the statement's reliability and trust-

worthiness which in turn serve as

adequate substitutes for the right of

cross-examination. Hoover v. Beto,

467 F2d 516, 533 (5th Cir. 1972).

When this issue was addressed by

the Tenth Circuit in United States v.

Roberts, 583 F2d 1173 (10th Cir. 1978)

a “laundry list" approach was used.

Unlike the Ninth Circuit in Snow, the

Tenth Circuit highlights "crucial" and

"devastating" criteria and also seems

to require specific findings--a

concept arguably at the heart of the

Dutton mandate.

10.

The only thing clear from Dutton

and its progeny in the circuits is

that nothing is clear. The circuit

courts have been unable to piece

together an integrated picture of this .

Court's concept of reliability.

an the case at bar, this confusion

can be seen in the trial court's

avoidance of the issue and the rather

summary opinion issued by the Ninth

Circuit. That Sullivan's testimony

was both "crucial" to the government's

case and "devastating" to Babic is

easily seen in light of the weak and

inconsistent testimony of Fisher.

Taken alone, Fisher's report of

the sequence of events is as consistent

with good practice by Babic, the

attorney, as it is with culpability. ,

Only after the introduction of Lefkowitz's

statement as interpreted and related

by Sullivan does Babic's role become

tainted.

The Court should note that the

re-written records did not exculpate,

a fact which Babic, as a former

Special Agent, would realize and which

the laymen, Lefkowitz and Fisher,

would not appreciate. The amateurish

plan could not have been profession-

ally orchestrated.

As an attorney, Babic must be

responsible for advice given Lefkowitz,

his client. It is wholly unfair and

prejudicial, however, to permit fabri-

cations by Lefkowitz to become primary

Ads

»

evidence against Babic without giving

Babic an opportunity to expose his

client's motivation and deceit through

cross-examination.

a ef

THE STANDARD FOR DETERMINATION OF

RELIABILITY MUST BE GREATER THAN

MERE PREPONDERANCE OF THE

EVIDENCE

As a preliminary hurdle to the

admission of hearsay statements under

the co-conspirator exception, the

government must establish that a

conspiracy existed, that the declarant

made the statement during the conspiracy

and that the statement was made in

furtherance of the conspiracy. The

import of the third requirement,

furtherance, is to prevent admission

of statements which satisfy the first

two requirements but which are still

unreliable. Obviously, however, the

degree of protection afforded by these

requirements depends entirely upon the

standard by which the government must

establish the preliminary facts.

If a "prima facie" standard is to

be used guarantees of reliability

provided by the requirements are too

dilute. Several commentators have

suggested that the preliminary determi-

nation be made at least at the pre on-

derance level. Garland and Snow, The

12.

Co-Conspirators Exception to the Hearsay

Rule: Procedural Implementation and

Confrontation Clause Requirements, 63 J.

Crim. L.C. & P.S. 4, °8 (i372). [One

authority even suggests the proper stan-

dard to be the level of criminal proof--

beyond a reasonable doubt. Saltzburg,

Standards of Proof and Preliminary Ques-

tions of Fact, 27 Stanford Law Review 271,

303 (1975)]. Under this standard, the

judge would at least have to determine

whether evidence establishing each of

the preliminary facts was more convincing

than evidence to the contrary.

By natural extension, it is

arguable that the standard of review

for the determination of reliability

itself would be at least at the level

of preponderance of the evidence. If

this standard is less stringent than

the one applied to the threshold

factors, effective guarding of Sixth

Amendment rights would be lost.

There is no indication in the

trial court decision or in the opinion

of the Ninth Circuit Court of Appeals

that any such standard of review was

utilized in this case. And, even if

the preponderance standard had been

used, it is probable that the govern-

ment would be unable to meet its burden

of proof regarding the reliability of

Lefkowitz.

Any lesser consideration than

that described above unduly burdens

the attorney-client relationship by

i3.

forcing counsel to be almost paranoid

about any contact with clients. Ob-

viously this argument is not intended

to suggest in any manner that attorneys

should be able to knowingly participate

in the transmittal of false evidence

Or any other improprieties. However,

the process to determine when such

improprieties have occurred must be

embarked upon with strict security to

protect and preserve the function of

legal counsel which lies at the heart

of due process.

CONCLUSION

; For these reasons, a writ of

certiorari should issue to review

the judgment and opinion of the

Ninth Circuit.

Respectfully submitted,

BRUCE I. HOCHMAN

HARVEY D. TACK

CRAIG I. DeROY

HOCHMAN, SALKIN and DeROY

A Professional Corporation

By wok Lac

' BRUCE I./HOCHMAN

Attorneys for Petitioner

EDWARD W. BABIC

14.

APPENDIX A

IN THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

)

)

Plaintiff-Appellee, ) No. 79-1231

)

Vv. ) DC CR 78-758

)

EDWARD W. BABIC, ) MEMORANDUM

)

Defendant-Appellant.)

Appeal from the United States

District Court for the Central

District of California

Before: DUNIWAY, CHOY AND SCHROEDER,

Circuit Judges.

Babic was convicted, after a non-

jury trial, of conspiracy to defraud

the Internal Revenue Service (IRS), 18

U.S.C. § 371, and of aiding and assisting

the preparation and presentation of

fradulent documents to the IRS, 26 U.S.C.

§ 7206(2). We affirm.

Contentions on Appeal

Babic contends that (1) hearsay

testimony linking him to the conspiracy

was improperly admitted under Fed. R.

Evid. 801(d){2)(E) because (a) there

A-1

was no independent proof of the con-

spiracy, and (b) the hearsay state-

ments were not made in furtherance of

the conspiracy; (2) his Sixth Amendment

right of confrontation was denied

because the hearsay declarant was not

available for cross-examination; and

(3) excluding the hearsay testimony

which the court had admitted, there

was insufficient evidence to convict

him of conspiracy.

We reject the first two contentions,

and thus need not reach the third.

Admission of the Hearsay Testimony

Invocation of Fed. R. Evid. 801

(d) (2) (E) requires (1) independent

evidence sufficient to support a finding

of the existence of a conspiracy, and

(2) evidence of at least a slight con-

nection between the defendant and the

conspiracy. E.g., United States v.

Testa, 548 F.2d 847, 853 (9th Cir.

1977); see United States v. Dunn,

564 F.2d 348, 356-57 (9th Cir. 1977).

Once these prerequisites are met, out-

of-court statements by co-conspirators

are admissible if they were made in

furtherance of the conspiracy. See

United States v. Eubanks, 591 F.2d 513,

519-20 (9th Cir. 1979).

The independent evidence sufficient

to support a finding of the conspiracy

need not be direct evidence; the con-

spiracy may be inferred from circum-

stantial evidence. E.g. United States

Vv. Turner, 3528 F.2d 143, 162. (Sth Cir.),

A-2

cert. denied, 423°>U.S. 996 (1975). Here,

there was overwhelming evidence estab-

lishing a conspiracy, including direct

and mutually supporting evidence from

several witnesses, and indirect evi-

dence in the form of IRS records.

Babic's attack on the credibility of

certain of these witnesses is out of

place here. It is for the trial court

alone to determine witness credibility.

Viewing, as we must, the evidence

in the light most favorable to the

government, there was also non-hearsay

evidence (for example, the direct

testimony of the other conspirators)

sufficient to establish at least a

slight connection between Babic and the

conspiracy.

The admitted out-of-court statements

were in furtherance of the conspiracy:

they were made by co-conspirator Lefkowitz

to induce another (Sullivan) to join

the conspiracy and to further the con-

spiratorial objectives. See United

States v. Eubanks, 591 F.2d at 520.

Rule 801(d) (2) (E) was properly

invoked, and the out-of-court statements

were properly admitted.

Babic's Right of Confrontation

Babic charges a violation of his

Sixth Amendment right because the

declarant of the admitted out-of-court

statements was not available for cross-

examination. The test for such a

violation is "whether, ‘under the

A-3

circumstances, the unavailability of

the declarant for cross-examination

deprived the jury [or, as here, the

judge,] of a satisfactory basis for

evaluating the truth of the extra-

judicial declarations.' (citation

omitted)" United States v. Snow,

521 F.2d 730, 734 (9th Cir. 1975),

cert. denied, 423 U.S. 1090 (1976).

Four factors to be considered in

this determination are (1) whether the

declaration contained no assertion of

past fact; (2) whether the declarant

had personal knowledge of the identity

and role of the participants in the

crime; (3) whether the declarant was

possibly relying on faulty recollection;

and (4) whether the circumstances under

which the statement was made provide

reason to believe the declarant had

misrepresented the defendant's involve-

ment in the crime. [Id., citing

Dutton v. Evans, 400 U.S. 74, 88-89

(1970) (plurality opinion).

Here, the declarant was the orga-

nizer and “hub" of this "wheel-type"

conspiracy, and knew.better than anyone

Babic's involvement therein; the

declarations, being of contemporaneous

facts, do not suggest faulty recollec-

tion on the part of the declarant; and

the circumstances under which the

declarations were made do not provide

any particular reason to doubt the

declarant's veracity.

Because the challenged evidence

implicating Babic in the conspiracy

was properly admitted, we need not

reach Babic's contention that, without

it, the evidence is insufficient.

AFFIRMED.