Petition — Rubin v. United States

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IN THE

Supreme Court of the United States

Octoser Term, 1979

WILLIAM RUBIN,

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

Benver & FRANKEL

Attorneys for Petitioner

225 Broadway

New York, New York 10007

(212) 227-6000

Louis BENDER

Sanpor F'RANKEL

Of Counsel

Adams Press Corp., 130 Cedar Street, N. Y. 10006—(212) 233-1050

TABLE OF CONTENTS

COIN TIMI. o.n.cccdan nineteen

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REASONS FOR GRANTING THE WRIT:

1. The decision of the Court below is in direct

conflict with decisions of the United States

Courts of Appeals for the Fifth and Seventh

Circuits, and these Courts have expressly

rejected each other’s reasonings and holdings

2. The Court below, in affirming petitioner’s

conviction despite the prosecutor’s conceal-

ment of Starns’ criminal record, ignored the

principles of Brady v. Maryland, 373 U.S. 83,

83 S.Ct. 1194 (1963), as set forth by this Court

3. Did Rule 801(d)(1)(B) of the Federal Rules

of Evidence apply a limitation only to the

use of prior consistent statements as af-

firmative evidence but not to such state-

ments when used only for rehabilitation of

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li TABLE OF CONTENTS

PAGE

APPENDIX:

A—Opinion of the United States Court of Ap-

peals for the Second Circuit .................-...---.--- la

B—Judgment of the United States District

Court for the Second Circuit .......................... 6Sa

Cases Cited

Bankers Trust Company v. Mallis, 481 U.S. 928, 97

SR ESR 7, 8

Bankers Trust Company v. Mallis, U.S. ——, 98

I a sciesctevanasyetacionnsinistinsisoncensutneeons 1,5

Blue Chip Stamps v. Manor Drug Stores, 421 U.S.

723, 95 S.Ct. 1917, 44 L.1d.2d 539 (1975)... 13

Brady v. Maryland, 378 U.S. 83, 83 S.Ct. 1194

Nee ccc i siciinsnnsceesocheswenssemeatene name 2, 14,16

Investment Properties International, Ltd. v. 10S,

Ltd., CCH Fed.See. Rep., { 92,011 (SDNY 1971) . 14

Lincoln National Bank vy. Herber, 604 F.2d 1038

sh atdinninnhdnnnakanninincwescesoteranagensuvnnsenscnes 11,12

Mallis v. Federal Deposit Insurance Corp., 568 F.2d

NG I iliac ncn mennscnsecensenctersesesconcannsenaenees 8,11, 12

Mansbach v. Prescott, Ball & Turben, 598 F.2d 1017

ie ascsty a gciaenenhensicinnearernannasnssaseesnanenss 12

MeClure v. First National Bank of Lubbock, Texas,

497 F.2d 490 (Sth Cir. 1974), cert. denied 420

TD lc siesncansoaccsartsnas sneeccssnss-asuse ssocsehy bbe De

National Bank of Commerce vy. All American <As-

surance Co., 583 F.2d 1295 (5th Cir. 1978) -........... 9,10, 12

Reid v. Hughes, 578 F.2d 634 (5th Cir. 1978) 20.00. «11

TABLE OF CONTENTS iii

PAGE

SEC v. Guild Films, 279 F.2d 485 (2nd Cir. 1960),

cert. denied sub. nom. Santa Monica Bank v. SEC,

oe US. S10, Sk S.Ct. G2 (1000) 2... 13

United Housing Foundation v. Forman, 421 U.S.

837, 95 S.Ct. 2051, 44 L.Ed.2d 621 (1975) .00000...... 11

United States v. Agurs, 427 U.S. 97, 96 S.Ct. 2392,

ee | BG, ) ERRER NSM eT Caney -oaNDr 16

United States v. Allen, 579 F.2d 531 (9th Cir. 1978) 19

United States v. Check, 582 F.2d 668 (2nd Cir. 1978) 17

United States v. Gentile, 530 F.2d 461 (2d Cir.

1976), cert. denied 426 U.S. 936 (1976) ..-..-..o..--- 6, 7, 11-13

United States v. Herring, 582 F.2d 535 (10th Cir.

5c 19

United States v. Lanier, 578 F.2d 1246 (Sth Cir.

1978) cert. denied U.S. —, 99 S.Ct. 169

1. aM AAS MECN ON ICES SITES sr Lb Ie a SNORT 19

United States v. Quinto, 582 F.2d 224 (2nd Cir.

TE. cet ciel cts cep tacenese conan ucin glen baietaie. boselniaeledonia 17-19

United States v. Spector, 343 U.S. 169, 72 S.Ct. 591

SE ILUMMIED erste Nncstidecccncscaipenonosssesassoscnceekopatasaislacsiecsaiaoia va bsunitiniondies 14

United States v. Williams, 573 F.2d 284 (5th Cir.

SET + xehccniiaialclasdanshsesidindastortctaheciasdlepactehaanebiaccdninanlauns 19

Yates v. United States, 354 U.S. 298, 77 S.Ct. 1064

CRMEG DY ciscseesdestia gncsaibagchcisshnnshacscenbneoiundsadaaaidassabiceiatedys Y

Statutes Cited

15 U.S.C. (Securities Act of 1933):

lv TABLE OF CONTENTS

PAGE

15 U.S.C.:

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BR Epica casare coe nasocapedosenanereiauangabonsienianene 2-6, 9

BN cians ts acc duc scan aaasicdistena amhaeeaaea bates 3-6

18 U.S.C.:

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Tike >. GREER EASA a este oe EC ein eRe NS A TE oe 3, 4

IG I ee eee 4,6

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UNI ices dat ateatascranicdansckatasansincosisadiionascacissebutssesiasepandialonee 4,6

28 U.S.C.:

I ne 2

Securities and Exchange Act of 1934:

a ON i sca ecwnicagcnitsnnteomtboninmians 7,9, 11, 12, 14

PE | setetncoiecdiautiatspetnesaviesscivocsameaneees 7, 9, 11, 12, 14

hE 8 5) eee nero een Ute ne teen Jeroen 3, 11

1 9710 ) Se ee, ee 3

Rules Cited

Federal Rules of Appellate Procedure:

LS SERIES EAR OPS E nC eRe PRN STEN See Le CR ERE )

Federal Rules of Evidence:

BR NN aii ccs eas cibienccae tes eccensaioesiiclnadicbanniahanes 17-19

IN THE

Supreme Court of the United States

October Term, 1979

No.

—

WILLIAM RUBIN,

Petitioner,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

Petitioner William Rubin respectfully prays that a writ

of certiorari issue to review the judgment of the United

States Court of Appeals for the Second Circuit entered

on September 6, 1979.

Opinion Below

The opinion of the Court of Appeals, which is not yet

officially reported, is annexed hereto as Appendix A. The

Judgment of the Court of Appeals was stayed pending the

determination of this petition. A copy of the Judgment of

the District Court is annexed hereto as Appendix B.

Jurisdiction

The jurisdiction of this Court is invoked under 23 U.S.C.

1254(1).

Questions Presented

Whether a pledge of stock to a bank as collateral for a

bank loan is an “offer or sale” of a security under 15

U.S.C. § T7q(a) (Securities Act of 1933).

Where a Government agent testified that petitioner

charged with having conspired with a co-conspirator

to submit a financial statement to a bank which was

false in that it gave credit for two worthless $100,000.00

ehecks signed by the co-conspirator, allegedly admitted

knowing at the time of the offense that the co-con-

spirator had previously served time in jail for passing

bad checks, was the Government required under Brady

v. Maryland, 373 U.S. 83, 83 S.Ct. 1194 (1963), to dis-

close that it possessed the co-conspirator’s criminal

record and that that record reflected no such convie-

tion?

Did Rule 801(d)(1)(B) of the Federal Rules of Evi-

dence apply a limitation only to the use of prior con-

sistent statements as aflirmative evidence but not to

such statements when used enly for rehabilitation of a

witness?

Statutory Provisions

Title 18, United States Code

Section 371

“If two or more persons conspire either to com-

mit any offense against the United States, or any

agency thereof in any manner or for any purpose,

and one or more of such persons do any act to

effect the object of the conspiracy, each shall be

fined not more than $10,000 or imprisoned not more

than five years, or both.

Title 15, United States Code

Section 2(3)

“The term ‘sale’ or ‘sell’ shall include every con-

tract of sale or disposition of a security or interest

in a security, for value.”

Section 3(a) (13)

“The terms ‘by’ and ‘purchase’ each include any

contract to buy, purchase, or otherwise acquire.”

Section 3(a) (14)

“The terms ‘sale’ and ‘sell’ each include any con-

tract to sell or otherwise dispose of.”

Section 77q(a)

“Tt shall be unlawful for any person in the offer

or sale of any securities by the use of any means

or instruments of transportation or communication

in interstate commerce or by the use of the mails,

directly or indireetly—

(1) to employ any device, scheme, or artifice

to defraud, or

(2) to obtain money or property by means of

any untrue statement of a material fact or any

omission to state a material fact necessary in

order to make the statements made, in the light

of the circumstances under which they were made,

not misleading, or

(3) to engage in any transaction, practice, or

course of business which operates or would oper-

ate as a fraud or deceit upon the purchaser.”

Section 77x

“Any person who willfully violates any of the

provisions of the subchapter, or the rules and regu-

lations promulgated by the Commission under au-

thority thereof, or any person who willfully, in a

registration statement filed under this subchapter,

makes any untrue statement of a material fact or

omits to state any material fact required to be

stated thereon or necessary to make the statements

therein not misleading, shall upon conviction be fined

not more than $5,000 or imprisoned not more than

five years, or both.”

Statement of the Case

Petitioner was indicted on January 27, 1978 in three

counts. Count 1 charged a conspiracy under Section 371

of Title 18, U.S.C., to violate (a) Section 17(a) of the

Securities Act of 19383 (77q(a) and 77x of Title 15,

U.S.C.), (b) Seetion 77e of Title 15, U.S.C., (ce) See-

tions 1014 and 2 of Title 18, U.S.C., and (d) Seetions 1341

and 1343 of Title 18, U.S.C. Counts 2 and 8 charged vio-

lations of Sections 1014 and 2 of Title 18, U.S.C., and

violations of Sections 77q(a) and 77x of Title 15, U.S.C.,

respectively.

The part of the conspiracy which is at issue here is that

which charged a violation of Sections 77q(a) and 77x of

Title 15, U.S.C. As part of the objects and means where-

by that part of the conspiracy was committed, the indict-

ment charged that the fraud in obtaining loans from the

Bankers Trust Company occurred by pledging as col-

lateral to said bank common stock of All-State Insurance

Company, Satellite Systems Corp., General Investment

Corp. and Marlin International Company.

Loans totaling $475,000.00 were made by Bankers Trust

Company to Tri-State Energy Company over a period

beginning in October, 1972 up to and including the middle

of December, 1972, and said common stock was pledged

during the same period and thereafter up to January,

1973. Petitioner was employed by Tri-State Energy Com-

pany. Tri-State Energy Company defaulted in payment

of the notes to the bank on Mareh 5, 1973. The bank there-

after sued petitioner and others on the notes (T. 1129*),

The trial began May 8, 1978 and was completed May 26,

1978. At the conclusion of the Government’s case, the

Government withdrew that part of the conspiracy charg-

ing a violation of Section 77e, Title 15, U.S.C. The jury

convicted the petitioners on Count 1, acquitted him on

Count 3, and did not reach a verdict on Count 2, which

was then dismissed. By an opinion filed September 6,

1979, the Court of Appeals in a split decision affirmed the

conviction. Timely petitions for rehearing and a sugges-

tion for a rehearing en banc were denied on November 20,

1979. By Order of the Court of Appeals previously issued

on October 10, 1979, the Court of Appeals stayed the issu-

ance of the mandate pursuant to Rule 4l(a) of the Fed-

eral Rules of Appellate Procedure in the event the peti-

* The letter “T” followed by a number designates page reference

to the transcript of the proceedings in the District Court.

tion for rehearing was denied, pending application to this

Court for a writ of certiorari.

Petitioner had moved pre-trial in the District Court,

among other things, to “strike from Count 1 the allega-

tions charging as objects of the conspiracy violations of

Sections .. 77q(a) and 77x of Title 15, U.S.C... . inso-

far as they purport to allege that pledges of the stock

referred to constitute an offer or sale of a secui.ty with-

in the meaning of those sections.” (Paragraph 2(a) of the

affidavit of petitioner’s counsel in support of the motion

addressed to the indictment). The District Court denied

the motion on the authority of United States yv. Gentile,

530 F.2d 461 (2d Cir. 1977), cert. dented 426 U.S. 936

(1976). The District Court denied it again at the con-

clusion of the Government’s case (T. 1554). The District

Court instructed the jury that the Government contended

the evidence demonstrated that the conspiracy had as its

objective the violation of Section 77q(a) of Title 15, U.S.C.,

and Sections 1014, 1341, and 1348 of Title 18, U.S.C. (T.

2631). The District Court further instructed that the

Government must prove that it was the purpose of the

conspiracy either to violate Section 77q(a) or Section

1014 or Section 1341 or Section 1348 or any combination

of these four sections (T. 2631). With respect to Section

77q(a) of Title 15, U.S.C., the District Court further,

instructed the jury:

“| charge you as a matter of law that the pledge

of securities with the bank is an offer and sale for

the purpose of this Act.” (T. 2669)

Petitioner urged in the Court of Appeals that the action

of the Distriet Court in holding that a pledge of seeuri-

ties constituted an offer and sale under Section 77q(a)

was in error, asked the Court of Appeals to review and

alter its previous opinion in United States vy. Gentile,

supra, and to adopt the Court of Appeals’ opinion in the

Fifth Cireuit in McClure v. First National Bank of Lub-

Lock, Texas, 497 F.2d 490 (5th Cir. 1974), cert. denicd

420 U.S. 930 (1975) (Point V, petitioner’s brief on appeal,

p. 63). The Government in opposition urged that peti-

tioner’s argument be rejected because United States vy.

Gentile, supra, was correctly decided and that the con-

viction should therefore be upheld (Point LX, Govern-

ment’s brief, p. 79). The Court of Appeals did not address

the point in its Opinion.

Reasons for Granting the Writ

1. The decision of the Court below is in direct conflict with

decisions of the United States Courts of Appeals for the

Fifth and Seventh Circuits, and these Courts have ex-

pressly rejected each other’s reasonings and holdings.

The importance of this issue was recognized by this

Court last Term when it granted certiorari in Bankers

Trust Company v. Mallis, 431 U.S. 928, 97 S.Ct. 2630, 53

L.Ed. 243, to review a holding of the Court of Appeals

for the Second Circuit that a cause of action will lie

against the bank pursuant to Section 10(b) and Rule

10(b)-5 of the Securities and Exchange Act of 1934 for

fraud in connection with the purchase and sale of a se-

curity because the bank became a “purchaser” by virtue

of its acceptance of a pledge of securities as collateral

for a loan, This Court withdrew its grant of certiorari,

however, when respondent during oral argument “took the

position that ‘the mere release of a pledge is [not] a sale’

... [and] urged that the judgment of the Court of Ap-

peals be affirmed on a theory which differed from the

reasoning cf the Court of Appeals in reversing the Dis-

trict Court . . .” —— U.S. —, 98 S.Ct. 1117, 1121-1122

(1978).

Since the decision in Bankers Trust Company v. Mallis,

supra, the conflict between the Courts of Appeals has

widened. The Courts of Appeals for the Fifth and See-

ond Cireuits have rejected the reasoning and decisions

of each other on the issue as to whether fraud which

occurs in connection with the acceptance of a pledge of

common stock is an offer to sell or a sale or purchase

under the anti-fraud provisions of the 1933 or 1934 Seeuri-

ties Act. In their path other Circuits have likewise

divided as to whether Congress intended that a mere

pledge of securities as collateral for a loan constitutes a

sale or purchase under the anti-fraud provisions of the

1933 and 1934 Acts.

These later decisions of the Courts of Appeals have

dealt basically with the same issue although they involved

civil fraud and not criminal actions. The issue is basically

the same, we submit, as made abundantly clear in Mallis

v. Federal Deposit Insurance Corp., 568 F.2d 824, 829 (2d

Cir. 1977), (before this Court) sub nom Bankers Trust

Compary vy. Mallis, supra, where the Court of Appeals

said:

“The fact that Gentile was a criminal case in

which civil standing was not an issue does not

diminish its presentation as a precedent with re-

spect to the Section 10(b) claim before us. The

existence of a ‘sale’ is as essential to a criminal

prosecution for violation of Section 17(a) as it is

to a civil action under that section. We find no

basis on the face of either the 1933 Act or the

1934 Act for denominating a pledge as a ‘sale’ for

criminal but not for civil purposes.’*

In determining whether acceptance of a pledge of stock

as collateral is a sale of a security under Section 77q(a)

of the 1935 Act or a purchase or sale under Section 10(b)

and Rule 10(b)-5 of the 1934 Act, the Court of Appeals

of the Fifth Circuit in National Bank of Commerce v.

All American Assurance Co., 583 F.2d 1295, 1296 (5th Cir.

1978), held:

“. .. that a commercial loan on a promissory note

with securities pledged as collateral is not a pro-

tected security transaction under the federal anti-

fraud statute ...”**

The Court of Appeals explicitly rejected the contrary

reasoning of the Court of Appeals for the Second Cir-

cult. It stated:

* The existence of other objects of the conspiracy in the instant

case in addition to the alleged violation of Section 77q(a) does not

avoid the issue since it is fundamental, as this Court held in Yates v.

United States, 354 U.S. 298, 312, 77 S.Ct. 1064, 1073 (1957), that:

“[{T]he proper rule to be applied is that which requires a ver-

dict to be set aside in cases where the verdict is supportable on

one ground, but not on another, and it is impossible to tell

which ground the jury selected. Stromberg v. People of State

of California, 283 U.S. 359, 367-368, 51 S.Ct. 532, 535, 75

L.Fd. 1117; Williams v. State of North Carolina, 317 U.S.

287, 291-292, 63 S.Ct. 207, 209-210, 87 L.Ed. 279; Cramer

v. United States, 325 U.S. 1, 36, 65 S.Ct. 918, 935, note 45,

89 L.Ed. 1441.”

** For purposes of this issue the Court of Appeals noted that al-

though slight differences in wording exist between the 1933 and 1934

Acts’ definition of these terms, that is, purchase, sale or offer to sell,

the definitions “are functionally equivalent and are for the purposes

of this case so treated.” 583 F.2d supra at 1298.

“Gentile and Mallis, . . . ean hardly be distin-

guished from the facts in the instant case and are

contrary to the decision reached here. In these

eases, the Second Circuit held that a pledge con-

stitutes a sale for the purpose of § 17(a) of the

1938 Act, 15 U.S.C.A. § 77q(a) and § 3(a)(14) of

the 1934 Act, 15 U.S.C.A. § 78e(a) (14), respectively.

The decisions were grounded upon the rationale that

the pledgee assumes a very real investment risk

that the pledged securities will have continuing

value, a risk that is identical in nature to the risk

taken by investors which serves as the indis-

putable basis for statutory regulation of securi-

ties transactions.

United States v. Gentile, 530 F.2d 461, 467 (2d Cir.),

cert. denied 426 U.S. 936, 96 S.Ct. 2651, 49 L.Jeéd.2d

388 (1976).

“This rationale might be a persuasive argument

that the federal securities laws ought to encompass

pledges, as well as purchases and sales. It does

little to support a decision that they in fact do cover

pledges. Congress can be presumed to know the

difference between a collateral pledge transaction

and a sale and purchase. If it had intended to cover

both, it could have easily done so by words tradi-

tionally used to differentiate between the two.

“The holding that the mere pledge of a security

as collateral for a loan does not constitute a sale

or purchase of a security within the meaning of the

federal securities laws appear sound. The federal

securities acts are designed to protect investors.

This purpose is not affected by a pledge of stock.

As Professor Loss has stated, ‘federal legislation

was hardly needed for privately negotiated pledge

transactions between borrowers and lenders.’ L.

Loss, Securities Regulation 649 (2d ed. 1961). The

pledgee, unlike a securities purchaser, has a remedy

on the note itself against makers and guarantors.”

583 F.2d supra at 1299-1300.

In reaching this conclusion the Court of Appeals fol-

lowed its prior decisions in Reid vy. Hughes, 578 F.2d 634,

683 (5th Cir. 1978), which likewise held that a mere pledge

of a security does not constitute a purchase or sale under

Section 10(b) and Rule 10(b)-5, and J/cClure v. First Na-

tional Bank of Lubbock, Texas, 497 F.2d 490 (Sth Cir.

1974), cert. denied 420 U.S. 930, 95 S.Ct. 1132, 48 L.Ed.2d

412 (1975), to the same effect. The Court of Appeals

also cited this Court’s opinion in United Housing Founda-

tion v. Forman, 421 U.S. 837, 95 S.Ct. 2051, 44 L.léd.2d 621

(1975), to the effect that

“(‘Twlith the exception of the Second Circuit, every

Court of Appeals has rejected the literal approach

urged by respondents.’ 421 U.S. at 849, n. 14, 95

S.Ct. at 2059, citing with approval McClure, among

others).”

Also noting that the Court of Appeals for the Second

Cireuit in Gentile and Mallis “adopted a literal reading

of the definition of “sale” in Section 2(3) of the 1933 Act

and Section 3(a)(13) of the 1934 Act, the Court of Ap-

peals for the Seventh Cireuit in Lincoln National Bank v.

Herber, 604 F.2d 1038, 1044 (1979),

“reject[ed] the approach of the Second Cireuit, ...

agree[ing] with the Fifth Cireuit’s position in Na-

tional Bank of Commerce of Dallas y. All American

Assurance Co., 583 F.2d 1295 (5th Cir. 1978), and

McClure v. First National Bank of Lubbock, 497 F.

2d 490 (5th Cir. 1974), cert. denied, 420 U.S. 930, 95

S.Ct. 1132, 43 L.Ed.2d 402 (1975), that a ‘sale’ of the

securities does not occur at the time the securities

are pledged.”

The conclusion of the Court of Appeals for the Seventh

Cireuit is worth noting:

“In sum, the legislative history of the 1933 and

1934 Acts is devoid of any indication of an intent

to regulate pledges of securities; the Second Circuit

decisions extending the Acts to such transactions

are distinguishable, and to the extent they are not

we disagree with their conclusion that a pledgee of

stocks takes an ‘investment’ risk; state law ade-

quately covers the area; and recent Supreme Court

decisions have manifested a reluctance to expand

the federal securities laws absent a clear indication

of Congressional intent or a need to do so to ac-

complish the purposes of the legislation. We there-

fore hold that a pledge of securities is not a ‘sale’ for

purposes of invoking the antifraud provisions of

the 1933 and 1934 Acts.” 604 F.2d supra at 1045

On the other hand, the Court of Appeals for the Sixth

Cireuit in Mansbach v. Prescott, Ball & Turben, 598 F.2d

1017, 1028 (6th Cir. 1979), addressing the same issue

under Section 10(b) and Rule 10(b)-5, said:

“We note a split of authority on the question but

we follow those cases holding that a pledge is a

‘purchase or sale.’ ”

The Court of Appeals analyzed the reasoning and deci-

sions of the Second Circuit in the Gentile and Mallis cases,

as well as those of the Fifth Cireuit in National Bank of

Commerce y. All American Assurance Co., and McClure

v. First National Bank of Lubbock, Texas, coneluding:

“We think those from the second circuit are bet-

ter reasoned and we follow them here. Thev are

sufficient authority to hold that the pledge of Mans-

bach’s bonds to PBT constituted a ‘purchase or sale

or securities.’ ” (598 F.2d supra at 1039).

Sufficient divergence of opinion exists between the

Courts of Appeals on this issue as to what Congress in-

tended to warrant the issuance of a writ to the Court of Ap-

peals for the Second Circuit. Contrary reasoning by the

Courts of Appeals for the Fifth and Seventh Circuits, we re-

spectfully submit, is more consonant with the purpose of the

Securities Acts as intended by Congress and with the prin-

ciples announced by this Court in Blue Chip Stamps vy.

Manor Drug Stores, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.

2d 539 (1975). Those decisions support the conclusion

that the Court of Appeals for the Second Circuit has

unduly, improperly and erroneously extended the defini-

tion of a sale under 77q(a) of Title 15, U.S.C., to include

the mere acceptance of a pledge of securities as collateral —

for a loan.

An additional but equally important reason to issue the

writ, we respectfully submit, is that the petitioner had no

- warning whatever that his alleged conduct in pledging

securities as collateral for a bank loan or aiding and abet-

ting such conduct could reasonably constitute a violation

of Section 77q(a) of Title 15, U.S.C. At the time of peti-

tioner’s alleged criminal acts in 1972 and 1973 Gentile had

not been decided. The Second Cireuit’s opinion in SEC

v. Guild Films, 279 F.2d 485 (2nd Cir. 1960) cert. denied

sub. nom. Santa Monica Bank v. SEC, 364 U.S. 819, 81

S.Ct. 52 (1960), was considered so uncertain in scope

and unclear in decision that a district court held that

a mere pledge of the shares of a foreign corporation was

not a purchase or sale of securities within the context of

Section 10(b) and Rule 10(b)-5. Investment Properties

International, Ltd. v. IOS, Ltd., CCH Fed.See. Rep.,

7 93,011 (1971), at p. 90,740 (SDNY 1971). Petitioner had

no prior warning, to which he was entitled, that his con-

duct could conceivably violate Section 77q(a) as the stat-

ute was applied in this case by the Government. As this

Court noted in United States v. Spector, 343 U.S. 169, 171,

72 S.Ct. 591, 593 (1952) :

“..a statute, plain and unambiguous on its face,

may be given an application that violates due proc-

ess of law, .. .”

2. The Court below, in affirming petitioner’s conviction

despite the prosecutor’s concealment of Starns’ criminal

record, ignored the principles of Brady v. Maryland as

set forth by this Court.

A key element of the Government’s proof was the fact

that a balance sheet contained in the financial statement

submitted to Bankers Trust Company reflected, among Tri-

State’s assets, two checks, each for $100,000.00, payable

to Tri-State. The payor of each of these checks was Ray-

mond Starns. The $200,000.00 face amount of these checks

was included (without specific enumeration or description)

in the “cash on hand” figure in the balance sheet, although

neither check had been deposited. These two checks turned

out to be worthless.

The Government claimed that petitioner knew that these

two checks were included in the cash figure on the bal-

ance sheet, and that he also knew that these checks were

worthless. In order to attempt to establish petitioner’s

alleged knowledge of the worthless nature of the checks,

the Government offered testimony of Agent Cox that peti-

tioner had allegedly admitted to Cox in 1975 that peti-

tioner knew—in 1972, at the time petitioner allegedly

reviewed the balance sheet— “[Starns] had served time

in the penitentiary for passing bad checks.” Such proof

was obviously devastating: for it established that at the

time petitioner allegedly reviewed the balance sheet, he

knew that it included among its assets $200,000.00 of un-

cleared checks drawn by an individual who petitioner knew

had actually been convicted of passing bad checks.

Subsequent to petitioner’s conviction, during the trial of

petitioner’s severed co-defendants, evidence was elicited

establishing that (a) petitioner could not have made the

statement ascribed to him by Cox regarding petitioner’s

alleged knowledge in 1975 of Starns’ criminal record as of

1972, and (b) the prosecution knew, at the time Cox tes-

tified, that petitioner could not have made the statement

ascribed to him by Cox.

The Court below, by Order dated October 19, 1978,

granted petitioner’s motion to add to the record on appeal

the relevant portions of Starns’ testimony at the second

trial. Starns (who did not testify at petitioner’s trial)

testified at the second trial that the only offense for which

he was ever incarcerated was uttering stolen securities

in 1974. Starns had been interviewed by the prosecution

on May 6, 1978 prior to the beginning of petitioner’s trial,

for his possible use as a witness at petitioner’s trial

(though eventually he did not testify in the petitioner’s

trial). Therefore, it is clear that the prosecution knew

that the substance of Cox’s testimony regarding the peti-

tioner’s alleged admission—..e., that petitioner knew in

1972 (rather than in 1975, at the time petitioner was in-

terviewed, as petitioner attempted to suggest) that Starns

had been convicted and incarcerated for passing bad

checks—was false.

Petitioner claimed in the Court below that the conceal-

ment of the Starns criminal record violated the principles

announced hy this Court in Untied States v. Agurs, 427

U.S. 97, 96 S.Ct. 2392, 49 L.Ind.2d 342 (1976), in that the

Government’s non-disclosure fell within the first category

of violations of the rule of Brady v. Maryland, 373 U.S.

83, 83 S.Ct. 1194, 10 L.Ed.2d 215, Le, that the Govern-

ment’s case included perjured testimony, that the prose-

cutor knew, or should have known, of the perjury, and

that therefore the petitioner was entitled to a new trial

sinee there was a reasonable likelihood that the evidence

if disclosed would have affected the outcome of the trial.

Simply put, the Government introduced evidence from

Agent Cox that petitioner allegedly admitted having known

in 1972, at the time petitioner allegedly knew that $200,-

000.00 of Tri-State’s “cash” was unpaid checks drawn by

Starns, that Starns had previously been convicted and in-

earcerated for passing bad checks when in fact the Gov-

ernment knew that petitioner could not have had such

knowledge in 1972 because that state of facts did not exist

prior to 1974.

Petitioner testified and asserted his innocence at the

trial. The agent’s testimony concerning petitioner’s al-

leged admission, if believed, would have clearly tended to

indicate guilt on petitioner’s part. The extreme importance

of the agent’s testimony was illustrated by the Covern-

ment’s brief below which asserted that the agent’s testi-

mony “clearly was probative of Rubin’s [petitioner] likely

knowledge of the worthlessness of these cheeks and his

intent to defraud the bank” (Gov't Brief, p. 74). What

this Court said in United States v. Agurs, 427 U.S. supra

at 111 equally applies in the instant situation:

“For though the attorney for the sovereign must

prosecute the accused with earnestness and vigor,

he must always be faithful to his client’s overriding

interest that ‘justice shall be done.’ He is the ‘ser-

vant of the law, the twofold aim of which is that

guilt shall not escape or innocence suffer.’ Berger

v. United States, 295 U.S. 78, 88, 55 S.Ct. 629, 633,

79 L.Ed. 1814. This description of the prosecutor’s

duty illuminates the standard of materiality that

governs his obligation to disclose exculpatory evi-

dence.”

3. Did Rule 801(d)(1)(B) of the Federal Rules of Evi-

dence apply a limitation only to the use of prior consis-

tent statements as affirmative evidence but not to such

statements when used only for rehabilitation of a wit-

ness?

The Opinion of the Court of Appeals dealt primarily with

the petitioner’s claim of the erroneous admission of pre-

trial interview notes as prior consistent statements of Gov-

ernment witness Agent Cox. The Court below split on a

construction of Rule 801(d)(1)(B) of the Federal Rules

of Evidence. The majority rejected as a holding two prior

decisions of the Court of Appeals for the Second Circuit

in United States v. Quinto, 582 F.2d 224 (1978), and

United States v. Check, 582 F.2d 668 (1978). These deci-

sions had actually held, as Judge Meskill in his dissenting

opinion made clear, that Rule 801(d)(1)(B) applied to

prior consistent statements whether used for affirmative

purposes or only for rehabilitation of a witness. Judge

Friendly in a concurring opinion stated that the issue was

“important for the future to make clear that despite

the contrary dictum in United States v. Quinto, 582

F.2d 224, 233-34 (2 Cir. 1978), see also United

States v. Check, 582 F.2d 668, 681 n. 40 (2 Cir.

1978), the limitations [of Rule 801(d)(1)(B)] apply

only to the use of prior consistent statements as

affirmative evidence and are not controlling when

such statements are used only for rehabilitation.”

In reachine this conclusion Judge Friendly rejected the

substantive holding in Quinto that prior consistent state-

ments whether offered only for rehabilitation or as sub-

stantive evidence depend for their admission upon the pro-

ponent satisfying three conditions, as provided in Rule

801(d)(1)(B). Indeed, Judge Friendly even described as

dictum what the Quinto panel deseribed as a_ holding.

Thus, stated Judge Friendly:

“The statement in Qwnto with respect to rehabili-

tation was no less dictum because the opinion char-

acterized it as a holding. ... A judge’s power to

bind is limited to the issue that is before him; he

cannot transmute dictum into decision by waving a

wand and uttering the word ‘hold’.”

Judge Friendly sought to fortify his contention that the

Quinto holding was purely dictum by adding that the issue

was not even raised in the briefs before that panel. Judge

Meskill in his dissent rejected Judge Friendly’s interpre-

tation of Quinto. He likewise rejected Judge Friendly’s

characterization that the Quinto panel’s interpretation of

Rule 801(d)(1)(B) applying that rule to affirmative evi-

dence as well as rehabilitation of a witness was dictum.

Judge Meskill quoted from the Quinto Court that:

““' Wie hold that the memorandum should have

been excluded regardless of whether it was offered

for the truth of the matters asserted therein or

merely for the more limited purpose of rehabilitat-

ing the in-court testimony of [the agent].’” United

States v. Quinto, 582 F.2d at 232.

Judge Meskill added:

“T simply cannot bring myself to characterize this

holding as mere ‘dictum.’ The fact that the parties

in Check and Quinto did not choose to brief exten-

sively the question whether the memorandum was

admissible for purposes of rehabilitation as opposed

to substantive evidence should not be used to detract

from the strength of the express holding that it was

not. See Monell v. Department of Social Services

of the City of New York, 436 U.S. 658, 717-18 (1978)

(Rehnquist, J., dissenting) (‘Private parties must

be able to rely upon explicitly stated holdings of

this Court without being obliged to peruse the briefs

of the litigants to predict the likelihood that this

Court might change its mind.’). See also id. at

709 n. 6 (Powell, J., concurring) (‘the mere fact

that an issue was not argued or briefed does not

undermine the precedential force of a considered

holding’).”

The Federal Rules of Evidence were enacted to secure

fairness and uniformity in the administration of Trials

in the Federal Courts. This split decision, we respect-

fully submit, will have a profound and disturbing effect

on future trials as to what was intended by the enact-

ment of Rule 801(d)(1)(B). The use of prior statements

either for impeachment or consistency are vital trial tech-

niques. To the extent they are aids in determining the

credibility of witnesses, it is important that essentially

precise and understandable rules be available for their

use and application. A review and definitive ruling by

this Court will solve what may otherwise become “a lively

controversy”, as Judge Friendly referred to the period

before the adoption of the Federal Rules of Evidence. See

United States v. Herring, 582 F.2d 535, 541 (10th Cir.

1978), in accord with Quinto; United States vy. Allen, 579

F.2d 531 (9th Cir. 1978), in accord with Quinto; United

States v. Lanier, 578 F.2d 1246, 1256 (Sth Cir. 1978), cert.

denied U.S. ——, 99 S.Ct. 169 (1978) in aecord with

Quinto; United States v. Williams, 573 F.2d 284, 289 (5th

Cir. 1978), in accord with Judge Friendly.

CONCLUSION

For the above reasons it is respectfully submitted that

the petition for a writ of certiorari should be granted.

Respectfully submitted,

BenverR & FRANKEL

Attorneys for Petitioner

Louis BENDER

SanpDor FRANKEL

Of Counsel

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

No. 352—August Term, 1978.

(Argued November 8, 1978

Decided September 6, 1979.)

Docket No. 78-1221

UNITED STATES OF AMERICA,

Appellee,

—Y—

WILLIAM RUBIN,

Defendant-Appellant.

Before:

FRIENDLY, MANSFIELD and MESKILL,

Circuit Judges.

> -

Appeal from a judgment of the District Court for

the Southern District of New York, entered on June

30, 1978, by Judge Constance Baker Motley after a

jury trial, convicting appellant of conspiracy, 18

U.S.C. §371, to violate statutes prohibiting false

statements in connection with loan applications, and

4561

Appendix A

mail fraud, wire fraud and securities fraud. 18

U.S.C. §§ 1014, 1341, 1343; 15 U.S.C. § 77q{(a).

Affirmed.

Louis BENDER, New York, New York (San-

dor Frankel, Bender & Frankel, New

York, New York, of counsel), for

Defendant-Appellant.

RHEA KEMBLE NEUGARTEN, Assistant

United States Attorney, Southern

District of New York (Robert B.

Fiske, Jr., United States Attorney,

Robert J. Jossen, Assistant United

States Attorney, Southern District of

New York, of counsel), for the United

States of America.

MANSFIELD, Circuit Judge:

William Rubin appeals from a judgment of the

District Court for the Southern District of New

York, entered on June 30, 1978, by Judge Constance

Baker Motley, Judge, after a fifteen-day jury trial,

convicting him of conspiracy to violate a_ federal

statute prohibiting the making of false statements in

connection with a loan application, a loan renewal,

deferral of action on a loan, or substitution of secur-

ity for a loan, as well as federal statutes relating to

mail fraud, wire fraud and securities fraud.'

Rubin and four others were named in a three-

count indictment handed down on January 27, 1978.

1 Respectively: 18 U.S.C. § 1014, 1341, 1343, 2; 15 USC.

§ 77q(a). The indictment originally charged a conspiracy to

violate 15 U.S.C. § 77(e) as well but this was deleted from the

indictment before the case was submitted to the jury.

4562

Appendiz A

wount Une charged all five with conspiracy as in-

dicated above. Count Two charged Rubin and three

of the others with a substantive violation of 18

U.S.C. § 1014, the false statement statute, and 18

U.S.C. §2. Count Three charged Rubin and three of

the others with a substantive violation of 15 U.S.C.

§ 77q(a), the securities fraud statute, and 18 U.S.C.

§ 2.?

“ Prior to trial the Government moved for a sev-

erance of Rubin’s trial from the trials of the other

defendants; the trial judge granted the motion and

Rubin was tried first. The jury found Rubin guilty

on Count One but acquitted him on Count Three; the

Government then moved to have Count Two dis-

missed, which was granted. Rubin was sentenced to

three years in prison, but is free on bail pending

disposition of this appeal. Although Rubin does not

argue that there was insufficient evidence to support

his conspiracy conviction, he does raise a variety of

other legal claims in support of a dismissal of the in-

dictment or a new trial. Finding no merit in these

contentions, we affirm.

The present case arises out of the activities in late

1972 and 1973 of Rubin, Leonard James, C.W.

2 Peter Crosby, Otto Sebold, Leonard James and C.W. Deaton

were the other four named in the indictment. Crosby was not

named in Count Two; Sebold was not named in Count Three.

3 Trial of three of the other defendants began before Judge

Motley in May of 1978 and concluded a month later. Crosby was

acquitted on both of the counts in which he had been named;

Sebold and James were found guilty of conspiracy and one of

the substantive counts. Deaton was never tried. The charges set

forth in the indictment against him were not the subject of the

extradition order by which his presence in the United States had

been obtained. As to him, Judge Motley granted the govern-

ment’s application for an order of nolle prosequi. James and

Sebold have appealed their convictions to this Court, #78-1346,

and their appeal is presently sub judice.

4563

Appendix A

veavon, ana Utto Sebold in fraudulently obtaining fi-

nancing from the Bankers Trust Company and others

for a failing company, Tri-State Energy, Inc. (Tn-

State). The methods employed to obtain the funds in-

cluded use of material misrepresentations, false

documentation, worthless collateral, and_ bribery.

Prior to becoming associated with Tri-State and with

James and Deaton, who were its principal officers,

Rubin, a certified public accountant and law school

graduate, was a principal in North American Plan-

ning Corporation (NAPC), a brokerage firm. In June,

1972, Rubin borrowed 10,000 shares of All States

Life Insurance Company of Alabama from Tri-State

on Deaton’s representation that the shares were

freely tradeable, only to find that they were

restricted and unacceptable as collateral, which led to

NAPC’s demise. Left without a job, Rubin, though

put on notice of the fraudulent business methods

used by James and Deaton, became associated with

them in Tri-State‘ in the fall of 1972, and soon em-

barked upon the fraudulent scheme which led to the

indictment in the present case.

Tri-State had recently acquired a small coal mine

in Kentucky, which operated very briefly in the lat-

ter part of 1972.° The mining properties were used

by James and Deaton as a means of obtaining loans

from Bankers Trust by falsely representing that they

were a viable coal operation. In addition, Tri-State

4 Rubin was not given a stock interest in the company. Instead,

he was to receive a salary, bonuses, and 20% of the profits.

James was president of the company, and Deaton was called

secretary-treasurer. In reality, Deaton appears to have been the

“de facto chief executive officer” of the corporation.

5 The mine was under the supervision of Deaton’s brothers,

Jack and Robert.

4564

Appendia A

acquired control of other virtually worthless publicly-

owned companies, such as American Leisure Corpora-

tion, with a view to giving the appearance, on paper

at least, of a thriving enterprise. Rubin’s function,

aside from obtaining some initial small loans from

friends for the venture and negotiating some of the

acquisitions, was to dress up Tri-State’s financial

statement in order to give it the false appearance of

a company with a substantial net worth that would

generate attractive profits in the future.

In October 1972, Rubin and Deaton (possibly ac-

companied by James), approached Leonard Ludwig, a

branch manager of Bankers Trust Company, with

whom Rubin had had dealings before joining Tri-

State, to seek a loan for Tri-State. Ludwig refused a

loan on the ground that the bank first needed

evidence that Tri-State was a viable coal operation.

Deaton, James and Rubin responded by preparing

various materially false documents, including a finan-

cial statement regarding Tri-State’s operations and

conditions.

A second meeting with Ludwig on October 19,

1972, resulted in his agreeing to make a loan of

$50,000 and to discuss additional loans after he had

seen more Tri-State financials. Ludwig then obtained

approval of the loan from John Keating, another of-

ficial of the bank, as required by the bank’s rules.

At either their first or second visit with Ludwig,

Rubin and Deaton told Ludwig that if he took care

of Tri-State it in turn would take care of him. After

the second visit Rubin, Deaton, and James agreed

that a payment of $1500 should be made immedi-

ately to Ludwig, to be followed by more at a later

time. To accomplish this, Deaton gave Rubin a $1500

Tri-State check payable to cash which Rubin cashed

4565

Appendix A

at his country club. Rubin then gave the $1500 in

cash to Ludwig, adding that more money would

follow. True to his word, Rubin later gave Ludwig an

additional $2500 in cash at a meeting in a bar. At

Ludwig’s suggestion, Rubin also made two payments

of $500 cash each to Keating, one by placing the

money in Keating’s pocket in the men’s room at his

Bankers Trust branch and the other in an envelope

at the bank.

In addition to the loan of $50,000 which was ob-

tained on October 19, 1972, Rubin and Deaton were

able during the following six weeks to borrow

$425,000 from Bankers Trust. On November 22, Tri-

State renewed the original $50,000 loan for three

months and borrowed another $50,000. Eight days

later, Tri-State borrowed another $100,000 for three

months. After another six days, Tri-State borrowed

still another $275,000, also for three months.

In addition to their use of bribery of the bank’s

officers, Rubin, James and Deaton also used mater-

ially false financial documentation and bogus col-

lateral to secure approval of the loans and later to

prevent the bank from taking action that’ would

precipitate Tri-State’s collapse. In response to Lud-

wig’s earlier request, a financial statement was sub-

mitted to the bank, which was materially false in

several respects. For example, it listed as Tri-State’s

principal asset a $7.5 million receivable from a com-

pany by the name of Charter Financial, supposedly

resulting from a coal purchase by that company.

There was no such account receivable.* The statement

6 There did exist a conditional contract between Tri-State and

Charter Financial, and it was in fact signed by Charter Finan-

cial’s president, Stanton Kahm. But that was not the contract

4566

Appendiz A

also showed that Tri-State had over $250,000 in

cash. Of this cash amount, $200,000 was in fact at-

tributable to two undeposited, uncashed checks

drawn by one Raymond Starns on his personal check-

ing account and in the possession of Tri-State. The

financial statement also reflected $180,000 worth of

coal inventories. In fact, Tri-State had far less.

The October 20th statement had initially been pre-

pared by an outside accountant named Max

Englander. Englander’s original draft balance sheet

showed the Charter Financial contract as an asset

but failed to show any liability. Rubin corrected this

by offsetting the “asset” with a liability for income

taxes of $3.75 million. Englander’s draft also had

itemized the company’s available cash, dividing it in-

to $200,000 cash on hand and a little over $50,000

in various banks; the draft identified the $200,000

as consisting of the two checks written by Raymond

Starns. Rubin “corrected” these entries by con-

solidating them and eliminating reference to the

Starns checks. Rubin made no change relating to the

coal inventory, but there was evidence from which

the jury could infer that he knew at the time that

the Kentucky mine was only minimally operational

and that the coal inventory figure was overstated.

Englander testified that, after Rubin had made his

corrections, Deaton instructed him to make additional

changes so as to increase the company’s net worth

above what it would have been using Rubin’s com-

putations. It is the Government’s position that, al-

though the copy of the statement that Rubin worked

shown to the bank. To the contrary, a signed, unconditional con-

tract between the two companies was offered to the bank.

Kahm’s signature on that contract was forged.

4567

Appendiz A

on was not the one ultimately turned over to the

bank, Rubin’s work on the statement made the Char-

ter Financial asset appear more regular than it really

was and eliminated the possibility of the bank’s

becoming suspicious about the company’s available

cash.’

From the beginning of its relationship with Tri-

State, Bankers Trust had made it clear that any

loans must be collateralized. As collateral Tri-State

turned over to the bank a certificate for 400,000

shares of American Leisure stock, which was in Tri-

State’s name, unregistered, and bore a restrictive

legend. Keating recognized that unregistered stock

was of doubtful value as collateral in the event of

default and told Tri-State that he would accept the

stock but preferred marketable collateral. He was

then assured by Rubin and Deaton that Tri-State

would present such collateral and was promised that

the restriction on the American Leisure stock would

be removed.

7 Besides this financial statement, Tri-State presented Bankers

Trust with a written projection of Tri-State’s revenue, a docu-

ment which Keating and Rubin apparently discussed and which

Keating used as support for his decisions to approve the loans.

This document projected a gross income of $540,000 based on

anticipated sales of coal to companies by the name of Continen-

tal Coal Corporation and Repoca Resources and on a long-term

export contract with a German firm by the name of Roland

Werkstatten. In fact, there had never been any discussions with

Repoca, and the contract with the German firm was a sham,

having been prepared by Rubin’s co-defendant Otto Sebold, a

representative of the German firm who used office space at Tri-

State. From all of the surrounding circumstances the jury could

infer that Rubin knew that the revenue projection was false and

misleading.

In addition, Rubin furnished to the bank a map overstating

Tri-State’s coal reserves, a forged letter of intent from Repoca,

and a statement valuing Tri-State’s coal reserves at $3 per ton

in place when the actual value of such coal was only $1 per ton.

4568

Appendiz A

Between October of 1972 and January of 1973

Tri-State pledged the stock of several other com-

panies as collateral, including stock in All States.*

The stock was represented to Keating to be

‘marketable, owned by Tri-State and to have been ob

tained through the sale of coal rights to the Ken-

tucky mine. In fact, as Rubin knew, most of the col-

lateral was not owned by Tri-State but had been

“rented” by it for a fee. Moreover, the shares were

virtually worthless, since none of them were freely

tradeable, five of the stocks had never been reg-

istered, the sixth had not been registered since 1944,

and the American Leisure shares bore a restrictive

legend. Rubin had participated in attempting to

establish a misleading value for the All States shares

by having the stock placed in the over-the-counter

“pink sheets” by a friend in a brokerage house, Mar-

shall Murray & Co. The stock, however, was virtually

never traded during the four month period from

October, 1972, to February, 1973, when it was so

carried.

Each of the notes signed by Tri-State and given to

Bankers Trust for the loans contained conditions

which made them collectible before maturity if any

representation in connection with the loans proved to

be “untrue or incomplete,” if there was an “adverse

x The following additional stocks were pledged with Bankers

Trust on the dates indicated:

2,000 shrs All States 11/10/72

20,000 shrs Marlin Investment Company, 11/22/72

100,000 shrs Management Dynamics, Inc., 12/6/72 (returned

to Tri-State a few days later)

175,000 shrs General Investment Corp., 12/10/72

50,000 shrs_ Satellite Systems Corp., 1/19/73

All shares were pledged as collateral for each of the loans.

4569

10a

Appendix A

change” in Tri-State’s condition, or if a legal pro-

ceeding should be commenced against Tri-State by a

judgment creditor. As Tri-State began to sag its prin-

cipals reassured the bank that all was well. These re-

assurances were quite plainly untrue. In December of

1972 the Tri-State payroll checks for the Kentucky .

mine began to bounce; by Christmas the mine was

closed and the Deaton brothers had left town. By

early January the company was dishonoring checks

throughout its operation. In one way or another,

these developments came to the bank’s attention.

Beginning in January or February of 1973,

Keating had the bank’s credit department check into

the various items of collateral that had been pledged

by Tri-State as support for the loans. He also began

to make sure that the bank had sufficient documen-

tation on the collateral to support a foreclosure if

that turned out to be necessary. Buttressed by reas-

surances from Tri-State that the company was not

only in no financial difficulty but was in fact pros-

pering, and despite all the bad news that seemed to

swarm around the Tri-State transactions, Keating de-

cided that the best way to prevent a loss to the

bank, as well as to save himself from a potentially

embarrassing situation, was to consolidate the four

outstanding time loans into a single demand note at

a higher interest rate. On February 26, 1973, amid

continuing assurances by Rubin, Deaton and James

as to Tri-State’s prosperity, a demand note was ex-

ecuted by James on behalf of Tri-State. The loans

were not called.

Two days later the bank received an inquiry from

the United States Justice Department asking for in-

formation about Tri-State. On March 5 the bank de-

4570

lla

Appendix A

manded full payment within three days. This demand

went both unpaid and unenforced and on May 14,

1973, Deaton met with several people from the bank

in an effort to forestall payment of the note. Deaton

even asked for an additional loan, to be used to

develop Tri-State’s assets to the point of being able

to pay off the note. The bank declined and initiated

a lawsuit against Tri-State. Subsequently, Rubin

signed a confession of judgment against himself but

he then filed a petition in bankruptcy. In all, the

bank has recovered about $2,500 of the $475,000

(plus interest and expenses) due from Tri-State.

The Government investigation led to its interroga-

tion of Rubin, beginning in July 1973. Rubin was

told of the nature of the Government’s investigation,

was advised to obtain counsel, and was asked to con-

sider cooperating with the Government by furnishing

evidence against his co-conspirators on the informal

understanding that the Government was “not going

to let him walk away” but would consent to his

pleading guilty to one felony count. Rubin decided to

cooperate, after consulting his counsel, with whom he

appeared in July, 1973, whereupon he was advised of

his constitutional rights and interrogated in his

counsel's presence. From July 1973 to July 1976,

Rubin was interviewed approximately 13 times by

various Government agents (including Edward J.

Levitt) and attorneys. No written statement was

taken from him but some of the agents took exten-

sive notes during the interviews, cryptically sum-

marizing the substance of what Rubin recounted,

with quotes here and there. These notes, totalling

more than 70 pages, were later marked Government

Exhibit (GX) 66 for identification at the trial of

4571

12a

Appendia A

Rubin. Since Rubin was at the time of the interviews

a cooperating prospective defendant expected to plead

guilty, no effort was made to obtain his signature to

or his formal approval of the notes. As time went

on, however, Rubin ceased cooperating with the Gov-

ernment and decided to stand trial, apparently after

he was unsuccessful in renegotiating his arrangement

with the prosecution to one whereby he would be

granted immunity in lieu of pleading guilty to one

felony count.

On January 27, 1978, an indictment was filed in

the District Court for the Southern District of New

York, naming Rubin and various co-conspirators, in-

cluding James, Deaton, Otto Sebold, and Peter

Crosby. Upon the Government’s motion a severance

of Rubin from his co-defendants was granted for the

reason that his pre-trial interview statements, which

the Government proposed to introduce, would create

problems under Bruton v. United States, 391 U.S.

123 (1968), as to his co-defendants. At the trial of

Rubin the Government, as part of its direct case, in-

troduced testimony of various witnesses, including

Ludwig, Keating, Englander, Levitt and government

agents. One of the principal witnesses was Internal

Revenue Agent Thomas Cox, who was present at 12

of the 13 interviews of Rubin and testified to

Rubin’s detailed incriminating account of the Tri-

State fraud upon Bankers Trust. In his defense,

Rubin took the witness stand and called various wit-

nesses in an effort to show that he had not intended

to use Tri-State as an instrument of fraud, but had

acted in a good faith effort to promote Tri-State as a

viable business.

4572

13a

Appendix A

DISCUSSION

Admission of Agents Interview Notes

Rubin’s most serious claim is that the trial judge

committed reversible error in admitting into evi-

dence, upon the Government’s redirect examination

of Agent Thomas Cox, a few of the more than 70

pages of notes made by other government agents pre-

sent at the preindictment interviews of Rubin, after

Cox had used them on his direct examination to

refresh his recollection and Rubin’s counsel had used

them extensively on his cross-examination of Cox.

Although Cox had not personally made the notes, he

had been present at the interviews recorded in the

notes, had participated in the interrogation of Rubin,

examined the notes at the conclusion of each inter-

view and testified that the notes accurately reflected

what had been said at the interviews attended by

Cox. Thus Cox, in effect, adopted the notes as his

own.

Upon direct examination, Cox testified to Rubin’s

incrim .ai ag history of his becoming associated with

James and Deaton in Tri-State, the poor state of Tri-

State’s business and finances, their fraudulent nego-

tiation of the loans from Bankers Trust to Tri-State,

the bribery of Ludwig and Keating, and their pre-

paration and use of false Tri-State financial

statements, other false documentation and bogus col-

lateral to obtain the loans and lull the bank into tak-

ing no action to call the loans.

In a prolonged and somewhat confusing cross-

examination of Cox, Rubin’s counsel, Louis Bender,

though he had repeatedly objected to Cox’s direct tes-

timony on the ground that it was based on the

4573

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Appendiz A

agent’s interview notes rather than on his own inde-

pendent recollection, now adopted the strategy of us-

ing the notes extensively in an effort to show that

Cox’s present testimony was either inconsistent with

the notes or not supported by them. In pursuing this

line of inquiry Bender, although the interview notes

were not in evidence, frequently read verbatim ex-

cerpts which, when taken out of context, tended to

indicate that Rubin’s interview admissicns had not

been as incriminating as those attributed to him by

Cox and then elicited from Cox a confirmation that

Bender had accurately quoted the portions so read by

him to the witness. (See e.g. Tr. 762, 767-68, 784,

798, 800, 801, 807, 811, 816-17, 819, 820, 852, 864,

867, 872). When a suggestion was made by the pros-

ecutor and the Court that if Bender was going to

continue reading from the notes perhaps they should

be introduced as evidence, Bender demurred, claming

a right “to read a prior inconsistent statement, if it

is.” Tr. 763. Although it was then agreed that the

notes would be so used only with respect to matters

as to which Cox had relied upon them rather than

on his independent recollection, Tr. 764-65, Bender

continued to quote from the notes as he had done

previously.

Some examples of the foregoing attempted im-

peachment of Cox’s credibility are found in the cross-

examination of him with respect to (1) whether

James had attended the first meeting with Ludwig

at Bankers Trust at which Rubin and Deaton sought

a loan to Tri-State, Tr. 758-59, (2) whether Rubin

told Ludwig that he would be taken care of if the

loan were approved, Tr. 768-69, and (3) whether

Rubin had known in October, 1972, that Raymond

4574

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Appendiz A

Starns, whose undeposited checks for $200,000 were

carried as “cash” on the Tri-State’s October 20, 1972,

financial statement used to obtain some of the loans,

had been imprisoned on certain charges. Tr. 784.

With respect to most of these matters Bender quoted

portions of the interview notes that appeared

possibly to be inconsistent with testimony given by

Cox on direct, thus furnishing the jury with these

portions. For instance, Cox on direct attributed to

Rubin an admission that at his first meeting with

Ludwig, Rubin had said to Ludwig, “Look, Ray, if

you can see your way clear to help us, we will take

care of you.” Tr. 667. On cross Bender pointed out

that while the interview notes contained the

statements in quotes “If you take care of us we will

take care of you” they were followed by the notation,

not in quotes, “No—Don’t know,” Tr. 767-69. Cox

could not recall Rubin’s making the latter statement.

Bender’s purpose in bringing it out, however, was

manifest: to cast doubt on Cox’s veracity.

Turning to the four exhibits forming the basis of

appellant’s present claims (GX 66A, 66B, 66C, and

66D) the first, 66A, consisting of two pages, rep-

resents a portion of Agent Levitt’s notes of an Oc-

tober 10, 1974 interview of Rubin in which he re-

counted events immediately following Ludwig’s

meeting on October 20, 1972, with Rubin, Deaton

and James at the bank, at which Ludwig approved

the first $50,000 loan to Tri-State. The notes start

with the word “Pay-off” and then describe the dis-

cussions between Rubin, Deaton and James, their

decision to pay Ludwig $1500 immediately, the draw-

ing of the check in that amount to cash, the cashing

of the check by Rubin, his payment of the proceeds

4575

16a

Appendix A

to Ludwig and his report to Deaton and James. The

detailed notes appear completely consistent with

Cox’s testimony on direct. However, on cross, before

the notes were offered, Bender pointed out to Cox

that he could not say whether Rubin had used the

word “Pay-off” in the interview, although Rubin did

state that he had given the money to Ludwig.

Upon redirect the Government offered GX 66A as

a “prior consistent statement” by Cox regarding what

he had been told by Rubin at the October 10, 1974,

interview, to which Rubin objected on the grounds

that the notes were not what Rubin had said but the

agents’ characterization of what Rubin had said and

that the notes should in any event be introduced

through the agent who made the notes (Levitt)

rather than through Cox. These objections were over-

ruled. The excerpt from the notes was received and

read to the jury.

The next exhibit objected to on this appeal, GX

66B, is a typed excerpt from notes of a February 14,

1975, interview of Rubin in which he discussed the

Tri-State $7.5 million receivable from Charter Finan-

cial which had been included as an asset, supposedly

resulting from a coal purchase by that company from

Tri-State, in the latter’s false financial statement sub-

mitted by Rubin to Keating of Bankers Trust in sup-

port of Tri-State’s application for a loan. When

checking the balance sheet, Rubin had told Englander

of Tri-State to include a liability for income taxes of

$3,750,000. The Government’s theory at trial was

that Rubin knew that the listing of the Charter

Financial asset was fraudulent (as indeed it was) and

that his suggestion that a liability be included on the

balance sheet operated to make the asset look more

4576

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Appendiz A

“regular,” thus preventing the bank from becoming

suspicious.

On direct, Cox testified that Rubin had said dur-

ing the interview that the “assets involved in [the

balance sheet] were worthless, and he knew it,” Tr.

672, and that “[a]Jt the time he was given this bal-

ance sheet to approve or to comment on he knew

that that balance sheet was totally false,” Tr. 673.

Cox also referred to Rubin’s putting in the tax li-

ability, but said it had not been put in against any

particular asset. Tr. 668. He testified that the only

matters Rubin had talked about relating to the bal-

ance sheet and the value of the assets were “those

two items,” meaning the Raymond Starns’ checks

totalling $200,000, Tr. 674, and that the only con-

tracts that Rubin had talked about were contracts

that had. been purportedly made with German con-

cerns. There was no reference to the Charter Finan-

cial contract.

On cross Cox, in response to questions by Bender

about the Charter Financial “contract,” testified that

it had been brought up at one of the interviews at

which he was present but that he (Cox) had not been

“too interested in it,” Tr. 809, and that Rubin had

indicated that he was not deeply involved with

Charter Financial. Tr. 809-10.

On redirect the Government introduced as GX 66B

the third paragraph of page 3 of the typed notes of

the February 14, 1975, interview of Rubin “as a

prior consistent statement of the witness,” Tr. 885,

which reads:

Deaton did enter into one deal with Charter

Financial whose representative was Stanley

Kamm of Milwaukee, Wisc. Apparently there

4577

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Appendix A

was some sort of guarantee of the Home In-

surance Co. on Maiden Lane attached to the ex-

ecutory contract which Tri State had in its files.

The contract was not executed, but was signed

by Mr. Kamm. Also Kamm had previously done

some business had some connection with Mort-

gage Guaranty of Milwaukee, MAGIC.

When Bender objected on the ground that the wit-

ness had not given any testimony contradicting the

agent’s notes, the prosecutor argued the excerpt was

admissible “to show Mr. Rubin’s state of mind,”

whereupon it was admitted and read to the jury.

GX 66C is an excerpt from the agents’ notes of a

January 9, 1975, interview of Rubin dealing with his

statement regarding Raymond Starns, who had writ-

ten two $100,000 checks that were turned over to

Tri-State and, although not cashed by it, were car-

ried by it as “cash” on the October 20, 1972, Tri-

State false financial statement used by Rubin to ob-

tain the bank loans. The original draft of the balance

sheet showed the cash entry as being represented by

the two Starns checks in Tri-State’s possession. How-

ever, Rubin changed the cash entry by consolidating

the cash amount and eliminating reference to the

Starns checks.

Cox testified as follows as to Rubin’s explanation

for the change in the balance sheet: “He made a

comment about the two checks because Raymond

Starns who wrote these two checks in blank that

were never negotiated, Rubin knew that he had

served time in a_ penitentiary for passing bad

checks.” Tr. 669. Bender immediately objected to

Cox’s use of the word “knew,” arguing that Cox was

4578

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Appendiz A

implying that Rubin had known at the time of his

work on the balance sheet that Starns had spent

time in jail for passing bad checks. Bender’s point

was that, at most, Rubin had said that he knew at

the time of the interview that Starns had been im-

prisoned on such charges. Cox insisted, however, that

Rubin had said at the interview that he knew at the

time of working on the balance sheet that the checks

by Starns were probably worthless because he knew

at that time that Starns had been in jail for passing

bad checks. Tr. 669-74, 784.

On cross-examination, Bender read to Cox the fol-

lowing excerpt from the interview notes dated

February 14, 1975: “According to Rubin, Raymond

Starns is now in jail in New Orleans, possibly a bad

check charge.” Tr. 784. Cox then acknowledged that

the term .“now” in the excerpt referred to the date of

the interview and not to the time when the balance

sheet was prepared or the financial statement was

offered to the bank. Tr. 784. Cox steadfastly main-

tained, however, that the October 14 note was not

inconsistent with his earlier testimony regarding

Rubin’s knowledge of Starns’ imprisonment. After a

recess, Cox said that he could not find anything in

the interview notes to support his version of Rubin’s

knowledge, but he did refer to page 12 of the notes

dated January 9, 1975, and mistakenly conceded that

that page was the one read to him by Bender and

the only place in the notes where there was

reference to Rubin’s comments on Starns’ jailing.

The Government took advantage of this discrep-

ancy on redirect, suggesting that on January 9 Rubin

had not said that Starns was then in jail for passing

bad checks but that Starns had been jailed on such

4579

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Appendia A

charges. Cox agreed with this interpretation. The

Government then offered the January 9 notes into

evidence “as a prior consistent statement of the wit-

ness.” Tr. 890. Bender did not object, the exhibit

was received into evidence, and Cox read the entry

to the jury. GX 66C states:

Raymond Starns—2 check—? Starns & Deaton—

old friends—Raymond Starns gave Deaton mine.

Jail—New Orleans—bad Checks— Salt Lake.

GX 66D, two pages of agents’ handwritten notes

of an interview of Rubin on March 28, 1975, relates

to Rubin’s purchases of All States stock, allegedly

made on behalf of Tri-State in order to establish a

public record that would convince the bank that that

All States collateral was valuable. Bankers Trust, in

evaluating over-the-counter stock that was offered as

collateral, consulted the price of the stock as listed

in the “pink sheets” published by the National Daily

Quotation Service. All States had not been listed in

the pink sheets since September 27, 1972, and, ac-

cordingly, would not be viewed by the bank as

valuable collateral. To remedy this situation, Deaton

told Rubin to write a personal check to the Marshall

Murray & Co. stock brokerage firm for the purchase

of 100 All States shares. The stock was to be

ordered in Rubin’s, not Tri-State’s, name; Rubin was

reimbursed out of Tri-State’s funds. The effect of

this transaction was that All States appeared in the

pink sheets during the time that the loans were be-

ing sought and “collateralized.” Rubin acknowledged

making the purchase, but denied doing so in order to

bring up the pink sheet price.

4580

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Appendiz A

On direct, Cox testified that Rubin had described

this series of transactions during one of the inter-

views. On cross, Bender brought out the fact that

Deaton was the one who had had a conversation

with Marshall Murray & Co. regarding the pink

sheets, and that he (Cox) had only assumed that

Rubin was present during that conversation. On re-

direct, the Government introduced the two pages of

hand-written notes “as a prior consistent statement

on the subject of pink sheets.” Tr. 895. Bender ob-

jected that no inconsistencies had been developed on

cross; the Government responded that doubts may

have been raised on cross regarding Rubin’s intent

and knowledge. The notes were admitted and read to

the jury.

Rubin does not dispute the relevance of the agents’

notes (GX. 66A-D) to the issues in the case. However,

relying upon our recent decisions in United States v.

Check, 582 F.2d 668 (2d Cir. 1978) and United

States v. Quinto, 582 F.2d 224 (2d Cir. 1978), he

contends that they are inadmissible hearsay, whether

offered as prior consistent statements to rehabilitate

the witness Cox or to prove the facts stated, and

that their admission was highly prejudicial to Rubin

since the notes dealt with the main issue raised by

his defense, which was whether Rubin intended his

payments to Ludwig and Keating to be bribes or

merely gifts that were not designed to influence

their approval of the loans to Tri-State.

Rubin argues that the excerpts from the notes

should have been excluded for the reason that the

Government failed to satisfy the three conditions

precedent .to admission of prior consistent statments

specified by us in Quinto, supra, 582 F.2d at

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Appendix A

233-234: (1) that the prior statement be consistent

with the witness’ in-court testimony (2) that the

prior statement be “offered to rebut an express or

implied charge against him of recent fabrication or

improper influence or motive,” Fed.R.Evid. 801 (d)

(1) (B), and (3) that the statements have been made

prior to the time when the motive to fabricate arose.

If Cox’s adopted prior statements had been offered

as substantive evidence under’ Fed.R.Evid.

801(dX1)(B), the Government would undoubtedly have

been obligated to meet these conditions. Whether or

not some lesser standard would be required if the

prior statements had been offered merely to bolster

Cox’s credibility as a witness may be debated, as our

esteemed brother, Judge Friendly, forcefully explains,

notwithstanding our indication in Quinto that the

standards for use of such statements for rehab-

ilitative purposes should be the same as those under

Fed.R.Evid. 801(d)1\B), 582 F.2d at 233. It is true

that prior to the adoption of the Federal Rules of

Evidence we had taken a more lenient and flexible

attitude toward use of prior consistent statements for

rehabilitation purposes. See, e.g., United States v.

Lombardi 550 F.2d 827 (2d Cir. 1977); Appelbaum v.

American Export Isbrandtsen Lines, 472 F.2d 56,

60-62 (2d Cir. 1972). If the agents’ notes in this case

had been admitted on that limited basis, the trial

judge would have been required if requested by

Rubin to instruct the jury as to the limited purpose

for which they were received, i.e., as bearing on

Cox’s credibility and not as substantive evidence,

United States v. Di Lorenzo, 429 F.2d 216, 220 (2d

Cir. .1970), cert. denied 402 U.S. 950 (1971). How-

ever, we consider it unnecessary to resolve that issue

4582

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Appendiz A

in this case for the reason that the admission of the

excerpts from Cox’s adopted notes must in any event

be sustained on other grounds.

Since the record reveals no objection by defense

counsel to the admission of GX 66C, which dealt

with the Starns checks and the time when Rubin

knew of Starns’ imprisonment on a bad check charge,

Rubin is precluded from raising the issue on appeal.

As for GX 66A, which used the term “Pay-off,” to

which Rubin now objects on hearsay grounds, we

note that it was Rubin’s own counsel who first read

the word “Pay-off’ from the exhibit to the jury upon

his cross-examination of Cox, so that the jury was

fully aware that the exhibit bore the damning word

even before GX 66A was introduced. If this did not

waive any objection it at least served to mitigate or

eliminate any prejudice caused by the use of the

word in the exhibit as later received. Aside from this

opening of the door, defense counsel at no time ob-

jected to the receipt of GX 66A on the hearsay

grounds urged on appeal. The sole grounds urged by

him were that the exhibit contained the agents’ char-

acterizations of what Rubin had said rather than

Rubin’s words and that the proper witness through

whom to offer the exhibit was the agent who made

the notes (Levitt) rather than Cox.®

Neither of these specific objections is sustainable.

Since Cox had, immediately following the interview

of Rubin, adopted the notes as accurate and in ac-

cord with his own recollection, they could be prop-

erly treated as a prior consistent statement made by

him.’® Assuming the notes were otherwise not ob-

) Actually Levitt, now an attorney in the Department of

Justice, did testify later as a Government witness.

10 Bender's objection that the notes were not Cox’s statements

was not implausible when made. When Bender first tried to read

4583

2Aa

Appendix A

jected to, the claim that they represented “char-

acterizations” of what Rubin had said would go to

their weight rather than to their admissibility.

In short, defense counsel registered two specific

objections to the exhibit, neither of which was valid.

When the Government then sought to support the of-

fer as a “prior consistent statement” there was no

objection by defense counsel that the Government

had failed to show a claim by Rubin of recent fabri-

cation or improper influence or motive on Cox’s part,

or that the statement had been made prior to such a

motive. Nor was there any answer to the prosecutor’s

argument to the trial judge that since Bender had

sought to attack Cox’s credibility by quoting “specific

inconsistencies” and going to “peripheral matters” the

exhibit should be received in the interest of

completeness, i.e., in order to preclude Bender’s later

arguing to the jury that his quotations from the ex-

hibit were “illustrative of the whole.”

Rule 103(a) of the Federal Rules of Evidence pro-

vides in relevant part as follows:

Error may not be predicated upon a ruling

which admits...evidence unless a_ substantial

right of the party is affected, and...a timely

objection or motion to strike appears of record,

stating the specific ground of objection, if the

from the notes, the Government objected on the ground that the

notes should be put in evidence if Bender was going to read

them. Bender responded that he was only using the notes as

prior inconsistent statements to impeach Cox's testimony. Judge

Motley ruled that he could not so use the notes because they

were not Cox’s statements but statements of someone else which

could not be attributed to Cox. Tr. at 763-64. At a later point

Judge Motley after hearing further testimony and argument,

revised this ruling.

4584 fi

25a

Appendiz A

specific ground was not apparent from the con-

text....

The reason for such a rule has been aptly summar-

ized:

The initiative in excluding improper evidence

is left entirely to the opponent,—so far at least

as concerns his right to appeal on that ground

to another tribunal. The judge may of his own

motion deal with offered evidence; but for all

subsequent purposes it must appear that the op-

ponent invoked some rule of Evidence. A rule of

Evidence not invoked is waived.

The function of the objection is, first, to sig-

nify that there is an issue of law, and, secondly,

to give notice of the terms of the issue.

The cardinal principle (no sooner repeated by

Courts than ignored by counsel) is that a general

objection, if overruled, cannot avail the objector

on appeal.

The only modification of this broad rule is

that if on the face of the evidence, in its rela-

tion to the rest of the case, there appears no

purpose whatever for which it could have been

admissible, then a general objection, though over-

ruled, will be deemed to have been sufficient.

A specific objection overruled will be effective

to the extent of the grounds specified, and no

further. An objection overruled, therefore, nam-

ing a ground which is untenable, cannot be

availed of because there was another and tenable

ground which might have been named but was

not.

4585

26a

Appendix A

1 Wigmore on Evidence §18, at 321-22, 332, 336,

339-40 (emphasis in original; footnotes omitted). See

also McCormick, Law of Beidence §52 (2d ed. 1972);

21 Wright & Graham, Federal Practice and Pro-

cedure: Evidence §§ 5031 et seq.

On a number of occasions we have spoken of the

importance of this rule and the strictness with which

it should ordinarily be ‘applied. See, e.g., United

States v. Maultasch, 596 F.2d 19, 29 (2d Cir. 1979)

(in the absence of an “objection that clearly stated

the specific ground now asserted on appeal” the

claim of error is “unavailing”); United States v.

Moore, 571 F.2d 76, 88 (2d Cir. 1978); United States

v. Del Llano, 354 F.2d 844, 847 (2d Cir. 1965) (en

banc); United States v. Indiviglio, 352 F.2d 276 (2d

Cir. 1965) (en banc), cert. denied, 383 U.S. 907

(1966).

Regardless of Rubin’s failure to object on any

proper grounds, there remains the question of

whether the receipt of the notes should be treated as

“plain error.” See Fed.R.Crim.P. 52(b); Fed.R.Evid.

103(d); United States v. Check, supra, 582 F.2d at

676-78 & n.28. Compare United States v. Moore,

supra, 571 F.2d at 88-89, with United States v.

Indiviglio, supra, 352 F.2d at 280-81. We believe not.

On the contrary, GX 66A appears to have been

clearly admissible under the doctrine of completeness,

Fed.R.Evid. 106. The notes had been used extensively

and quoted from copiously by Rubin’s counsel on his

cross-examination of Cox, possibly leaving a confus-

ing or misleading impression that the _ portions

quoted out of context were typical of the balance. In

offering as a “prior consistent statement” the context

from which Bender had quoted, the prosecutor was

4586

27a

Appendix A

in reality urging that the entire context would re-

move the misleading or confusing impression created

by the words quoted by Bender, which Rubin might

otherwise point to as “illustrative of the whole.” Tr.

at 879. This amounted to an invocation of the com-

pleteness doctrine.

We have repeatedly recognized that where substan-

tial parts of a prior statement are used in cross-ex-

amination of a witness, fairness dictates that the bal-

ance be received so that the jury will not be misled,

United States v. Lev, 276 F.2d 605, 608 (2d Cir.

1959), cert. denied, 363 U.S. 812 (1960); United

States v. Weinbren, 121 F.2d 826, 828-29 (2d Cir.

1941); see generally 7 Wigmore, supra, _ at

§§ 2113-2125; Wright & Graham, supra, at §§ 5072,

5075, regardless of whether an improper motive ex-

isted at or after the prior statement, see United

States v. Fayette, 388 F.2d.728, 733-35 (2d Cir.

1968); United States v. Corrigan, 168 F.2d 641, 645

(2d Cir. 1948). In this case the context introduced by

the prosecutor in the interest of completeness was

carefully restricted in scope, being limited to but a

few of the 70-odd pages of notes. We are satisfied

that these few pages were properly admitted.

Lastly, even if the admission of the excerpts of

notes in GX 66A were treated as error, the error

would be harmless. The prejudice claimed by Rubin

from GX 66A is its use of the word “Pay-off.”

However, Rubin’s counsel had, in his cross-

examination of Cox, opened the door when he asked

“For example, you have in the notes there [GX 66A]

| the word ‘payoff.’ Did Mr. Rubin ever tell any of you

that he made a payoff?” Thus the jury was made

4587

28a

Appendix A

aware by Rubin himself that the notes described him

as saying that there had been what amounted to a

payoff of Ludwig. This was confirmed not only by

Cox’s testimony but by the balance of the context in

which the word was used. Thus the introduction of

the notes added little to what the jury already knew.

GX 66B, the agents’ one-paragraph note dealing

with Rubin’s knowledge about the unexecuted con-

tract between Tri-State and Charter Financial, and

GX 66D, two pages of notes pertaining to Rubin’s

participation in the manipulation through Marshall of

the OTC pink sheet quotations for All State stock,

stand on a somewhat different footing. Prior to their

being offered by the Government, there had been no

effort by Rubin on cross-examination of Cox to show

that they were in any way inconsistent with his

direct testimony. They therefore represent prior Cox-

adopted statements of what he had been told by

Rubin. Rubin’s objections to their admission, prin-

cipally on the ground that no inconsistency had been

shown, were rejected. Although these notes are hear-

say and if objected to on that ground should not

have been admitted, we are satisfied after a careful

examination of them that the error was harmless.

The substance of GX 66B was peripheral; that in GX

66D was entirely consistent with Cox’s detailed

testimony on the subject of Rubin’s participation in

the listing of All States stock in the “pink sheets” by

Marshall Murray & Co. Indeed, they even include the

statement that “Rubin did not ask Marshall to go in-

to sheet on Allstate.” None of the excerpts received

in evidence (GX 66A-D), singly or collectively, ap-

proximate “a neat condensation of the government’s

whole case”, United States v. Ware 247 F.2d 698,

4588

29a

Appendix A

700-701 (7th Cir. 1957), or a detailed summary of

the Government’s evidence, amounting to “the single

most important piece of evidence, testimonial or

documentary” against the defendant, United States v.

Quinto supra, 582 F.2d at 235-36. We can safely say

that the few pages of cryptic phrases in this case

could not have had any appreciable effect on the

jury, in view of the detailed testimony of the

Government agents themselves regarding what they

were told by Rubin. See United States v. Ruffin 575

F.2d 346, 359 (2d Cir. 1978)

Rubin’s only other evidentiary claim is that the

trial court erred in admitting testimony by Keating

that in February, 1973, he was told by Rubin and

Deaton that they had applied to a New Jersey bank

for a loan that would enable Tri-State to pay its

obligations to Bankers Trust but that the New

Jersey banker was demanding a bribe. Rubin con-

tends that this testimony was both hearsay and inad-

missible as a similar criminal act. See Fed.R.Evid.

404(b). We disagree. The statements were admissible

as statements made by the conspirators in fur-

therance of the conspiracy, Fed.R.Evid. 801(d)(2)(E),

one objective of which was to lull Bankers Trust into

the belief that Tri-State was in good financial condi-

tion and would pay its obligation to the bank.

Moreover, the New Jersey banker’s demand for a

bribe did not imply and improper or criminal conduct

on Rubin’s part.

The Instructions

We find no merit in Rubin’s further contention

that the trial judge committed reversible error in her

instructions to the jury. It was not improper to in-

4589

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Appendix A

struct the jury that it is a crime for a banker such

as Ludwig or Keating to receive a free gift for pro-

curing a loan, or for one to aid and abet such con-

duct. This was a correct statement of the law, 18

U.S.C. § 215, and was appropriate in view of Rubin's

repeated efforts during the trial to suggest that a

banker’s receipt of gifts from a borrower was

customary and proper, but that the Government was

using the threat of criminal prosecution to put

pressure on Keating as a witness to testify against

Rubin. The court properly advised the jury that it

could consider the payments as evidence regarding

the means for carrying out the alleged conspiracy

and whether Keating had a motive to testify for the

Government. :

Similarly, the instructions regarding the credibility

of witnesses were quite adequate. Since Rubin did

not contend that Keating was an accomplice, it was

unnecessary to give any instruction to the effect that

his testimony must be scrutinized with great care

because of such a status. United States v. Swiderski

539 F.2d 854, 860 (2d Cir. 1976). Nor did the grant

of immunity to Keating require such an instruction

in the circumstances of this case. United States v.

Leonard, 494 F.2d 955 (D.C. Cir. 1974), cited by ap-

pellant is distinguishable in that the witnesses testi-

fying under immunity were also accomplices, al-

though no accomplice witness instruction had been

requested. The full exploration of immunity on the

cross-examination of Keating and in summation,

coupled with the trial judge's instructicn to the ef-

fect that fear of prosecution was a factor to be con-

sidered in weighing a witness’ testimony was ade-

quate to apprise the jury of any interest adverse to

that of Rubin which Keating might have. See United

4590

3la

Appendiz A

States v. Sarvis, 523 F.2d 1177, 1180-81 (D.C. Cir.

1973) (appeal following retrial after Leonard)

The Severance of Rubin

Rubin next argues that it was an abuse of discre-

tion for Judge Motley to have granted the Govern-

ment’s motion to sever Rubin from his co-defendants

and to try him separately. We disagree. Although a

severance at the Government’s insistence is probably

a rarity—usually it is the defendant who seeks such

relief—it is permissible under the language of F.R.

Crim.P. 14 which provides in relevant part that “iff

it appears that .. . the government is prejudiced by

a joinder of . . . defendants in an indictment . . . or

by such joinder for trial together, the court may .. .

grant a severance of defendants or provide whatever

other relief justice requires.” Although it is true that

“(als a general rule persons jointly accused should be

tried in a single trial, particularly where the charges

may be proved against all the defendants by substan-

tially the same evidence, or are based upon the same

or a similar series of acts,” United States v. Zim

Israel Navigation Co., 239 F. Supp. 446, (S.D.N.Y.

1965) (Weinfeld, J.), “ijt [is] within the sound discre-

tion of the trial judge as to whether the defendants

should be tried together or severally . . . .” Opper uv.

United States, 348 U.S. 84, 95 (1954).

The basis for the Government’s motion was its

plan to introduce against Rubin admissions he made

during the interviews with the federal agents, which

would create potential problems under Bruton uv.

United States, 391 U.S. 123 (1968), with respect to

other defendants. The interview notes contained a

great deal of detail regarding the conduct of Rubin’s

4591

32a

Appendix A

co-defendants. Rubin’s defense depended heavily on

his argument that although he committed certain

acts he did so innocently, and that those who were

giving him instructions: were the ones with the cor-

rupt motives. The likelihood that Rubin’s_ co-

defendants would have invoked their Fifth Amend-

ment privilege at a joint trial, the inability of the

Government or the court to ascertain at the time of

the motion whether Rubin would take the stand in

his own defense, demonstrate that the trial judge

acted well within her discretion in granting a

severance. See Garris v. United States, 418 F.2d

467, 470, n.6 (D.C. Cir. 1969); United States uv.

Dioguardi, 20 F.R.D. 10, 14 (S.D.N.Y. 1956). This

case is an appropriate one for application of the prin-

ciple that “[nJo accused person has any recognizable

legal interest in being tried with another, accused

with him, though he often has an interest in not be-

ing so tried.” United States v. Bronson, 145 F.2d

939, 943 (2d Cir. 1944) (L. Hand, J.). See United

States v. Marchant, 25 U.S. (12 Wheat.) 480, 482-83

(1827); United States v. Arcuri, 405 F.2d 691, 695

(2d Cir. 1968), cert. denied, 395 U.S. 913 (1969). In

view of the cogent reasons for a separate trial, the

balance weighed heavily in favor of granting the

Government’s motion.

Statute of Limitations and Pre-Indictment Delay

Rubin’s next contentions—that the indictment,

which was filed on January 27, 1978, should have

been dismissed as barred by the five-year statute of

limitations, 18 U.S.C. §3282, and _ because of

unreasonable pre-indictment delay, require little

discussion. The former claim is based on the er-

4592

33a

Appendix A

roneous premise that the conspiracy terminated on

December 6, 1972, when the last of the fraudulently-

obtained loans were turned over by Bankers Trust to

Tri-State, or at least on January 19, 1973, when the

last collateral was pledged. This misconceives the

scope of the alleged conspiracy, which was to con-

tinue the scheme of fraudulently obtaining loans and

lulling lenders into not calling them. Toward this end

Rubin, Deaton and James in January and February

1973 attempted to borrow funds from _ others,

misrepresented to Ludwig and Keating Tri-State’s

financial condition and the value of the pledged col-

lateral, and falsely listed the All States stock in the

OTC pink sheets, with the result that on February

26, 1973, James executed a consolidated rollover de-

mand note, falsely representing to Keating that a

railroad strike had hampered coal deliveries. This

overt act was clearly in furtherance of the conspiracy

and not a mere coverup or concealment of a com-

pleted scheme. See Grunewald v. United States, 353

U.S. 391, 405-06 (1957); United States v. Knuckles,

581 F.2d 305, 313 (2d Cir. 1978); United States v.

Floyd, 555 F.2d 45, 48 (2d Cir.), cert. denied, 434

U.S. 851 (1977); United States v. Frank, 494 F.2d

145, 155-56 (2d Cir.), cert. denied, 419 U.S. 828

(1974).

To establish denial of due process based on ex-

cessive pre-indictment delay Rubin bears the heavy

burden, for the reasons stated by the Supreme Court

in United States v. Lovasco, 431 U.S. 783 (1977), of

showing not only that he was prejudiced by the

delay but that it was so unfair as to violate fun-

damental concepts of fair play and decency, such as

would occur if the prosecutor deliberately used the

4593

34a

Appendix A

delay to achieve a substantial tactical advantage. 431

U.S. at 790, 795. The statute of limitations still pro-

vides “the primary guarantee against bringing overly

stale criminal charges,” United States v. Marion, 404

U.S. 307, 322 (1971); see also United States ov.

Eucker, 532 F.2d 249, 255 (2d Cir.), cert. denied,

429 U.S. 822 (1976).

No such showing has been made here. After a

thorough hearing Judge Motley found that the delay

had not been “due to any [Government] attempt to

gain a tactical advantage” and that Rubin had failed

to demonstrate actual prejudice. We find no grounds

for disturbing these findings. The pre-indictment

delay was justified in large measure for several

reasons, including the complexity of the evidence, the

pendency of an extensive investigation into tax eva-

sion charges, which then had to be dropped for

venue reasons, and the resulting interviews of many

witnesses from different parts of the country,

coupled with an analysis of voluminous financial

records, which led to the indictment on _ non-tax

counts. The prosecutor was justified in not seeking

the indictment until she was convinced that there

would be sufficient evidence to prove guilt beyond a

reasonable doubt. Moreover, prior to indictment the

prospective defendant suffers no restraint on his

liberty. In any event our review of the record fails to

reveal any actual prejudice of the type that is legally

cognizable. Faded recollections and missing peripheral

witnesses are not enough, United States v. Vispi.

545 F.2d 328, 331-332 (2d Cir. 1976).

We have examined each of the other points raised

by Rubin and find them to be without merit.

The judgment of conviction is affirmed.

4594

35a

Appendix A

FRIENDLY, Circuit Judge, concurring:

Although Judge Mansfield’s opinion thoroughly

demonstrates that Rubin’s conviction should be af-

firmed even if the limitations of Federal Rule of Evi-

dence 801(d1\B) applied in terms when a prior con-

sistent statement was offered only for rehabilitation,

it seems to me important for the future to make

clear that despite the contrary dictum in United

States v. Quinto, 582 F.2d 224, 233-34 (2 Cir. 1978),

see also United States v. Check, 582 F.2d 668, 681

n. 40 (2 Cir. 1978), the limitations apply only to the

use of prior consistent statements as affirmative evt-

dence and are not controlling when such statements

are used only for rehabilitation. Some background is

needed to illuminate the problem. ‘

Before adoption of the Federal Rules of Evidence,

there had been a lively controversy summarized in 4

Wigmore, Evidence, §1126 (Chadbourn rev. 1972),

over the use of prior consistent statements to re-

habilitate a witness whose credibility had been at-

tacked on the basis of a prior inconsistent statement.

There had been little need to consider the use of

prior consistent statements as affirmative evidence,

since they were no more probative for that purpose

than what the witness had said or could say on the

stand; indeed, the case law was_ practically

unanimous in rejecting the use of prior consistent

statements as affirmative evidence although the Uni-

form Rule of Evidence 63, adopted in a few juris-

dictions, was to the contrary. See 4 Wigmore, supra,

§§ 1124, 1132. On the point that was in controversy,

namely, the use of prior consistent statements for

rehabilitation after impeachment by an inconsistent

4595

36a

Appendix A

statement, a number of views had emerged. Two of

these, both rather simplistic, were a minority view

“that if a contradictory statement counts against the

witness, a consistent one should count for him”, and

a majority view that “since the self-contradiction is

conceded, it remains as a damaging fact, and is in

no sense explained away by the consistent state-

ment.” Jd. at 259. However, adherents of the majori-

ty view recognized an exception when the making of

the prior consistent statement would tend to dispel a

charge of recent fabrication or improper motive. See

Note, Evidence of Prior Consistent Statements Ad-

missible for Rehabilitation when Witness’ Testimony

Assailed as Recent Fabrication, 45 Calif. L. Rev. 202

(1957).

A third view, apparently originating in Judge

Cooley’s opinion in Stewart v. People, 23 Mich. 63,

74-76 (1871), rightly considered the problem to be

more complex and not susceptible to any bright-line

solution. Judge Cooley pointed to a number of situa-

tions beyond those of recent fabrication and im-

proper motive where it would outrage common sense

to reject the prior consistent statement for rehabilita-

tion. The clearest case was when the making of the

inconsistent statement was disputed. Thus, when a

person was “testifying in a case where he had spent

a considerable period of time and a large sum of

money in pursuing an alleged criminal to conviction,

and he is confronted with evidence of his own con-

flicting statements,” he should be entitled to dem-

onstrate “such circumstances of his connection with

the case as would make the impeaching evidence ap-

pear to be at war with all the probabilities.” Beyond

these, “other cases may readily be supposed in which,

4596

37a

Appendiz A

under the peculiar circumstances, the fact that the

witness has always previously given a consistent ac-

count of the transaction in question might well be

accepted by the jury as almost conclusive that he

had not varied from it in the single instance testified

to for the purpose of impeachment.” He concluded

that “though such evidence should not generally be

received,” its admission “ought not to be set aside ex-’

cept in a clear case of abuse” of discretion.

The most cited decision on the subject in this cir-

cuit was Judge Learned Hand’s opinion in United

States v. Sherman, 171 F.2d 619, 621-22 (1948),

cert. denied sub nom. Grimaldi v. United States, 337

U.S. 931 (1949). In that case, a prosecution for steal-

ing goods :n interstate commerce, one Oliva testified

that Sherman not only was a party to the theft but

drove the truck used to effectuate it. The defense im-

peached Oliva with a written post-arrest statement in

which he had not mentioned Sherman and had iden-

tified one Whelan as the driver of the truck, and the

trial court then allowed the prosecution to introduce

a second written statement, made a few weeks after

the first, which coincided with the trial testimony. In

reversing, Judge Hand said this:

Concededly the second statement was not com-

petent unless the admission of the impeaching

statement made it so, for when Oliva made it he

had the same motive to fabricate—the hope of

lenity—that he had while on the stand. Rational-

ly, it is true, the fact that he changed his story

so soon after making the contradictory state-

ment, may have added to the persuasiveness of

his testimony; and for that matter most persons

would probably consider any earlier consistent

4597

38a

Appendix A

account, in some measure at least, confirmatory

of a witness’s testimony. The reason for its ex-

clusion is because it has not been made on oath

rather than because it has no probative value,

although courts have often spoken as though it

had none. However, such a statement is as in-

competent when the witness has been impeached

by an inconsistent statement, as when he has

not been. So the Supreme Court decided many

years ago; and although the point has apparently

never come up again in that court, the lower

federal courts have several times applied or

recognized the doctrine. (footnotes omitted)

With all respect, the analysis is hard to follow.

Judge Hand clearly rejected the irrelevancy argument

which was the cornerstone of the majority view. His

reason for excluding the evidence was rather that it

had “not been made on oath,” which sounds in hear-

say although he did not add “and subject to cross-

examination.” But Oliva’s second statement was not

hearsay since, apart from other considerations, it was

not offered as proof of the matter asserted but only

because the very fact of its having been made would

“break the force of the impeachment”.

Only two years later this court rendered a decision

fundamentally inconsistent with Judge L. Hand’s

hearsay theory. In United States v. Corry, 183 F.2d

155, 156-57 (1950), the court, speaking through

Judge A. N. Hand and following Judge Cooley, ap-

proved the sensible action of then District Judge J.

Joseph Smith in allowing the jury to consider prior

consistent statements by government witnesses,

without any limitation on the score of difference in

4598

39a

Appendix A

motivation, where there was an issue whether an al-

leged inconsistent statement had been made. We reg-

ularly permitted use of consistent statements for re-

habilitation without the need of any further showing

when, as here, they were needed in the interest of

completeness, see United States v. Weinbren, 121

F.2d 826, 828-29 (2 Cir. 1941); United States v. Lev,

276 F.2d 605, 608 (2 Cir.), cert. denied, 363 US.

812 (1960); United States v. Fayette, 388 F.2d 728,

733-35 (2 Cir. 1968) (Medina, J.). Later in Felice v.

Long Island Railroad Co., 426 F.2d 192, 197-98 (2

Cir.), cert. denied 400 U.S. 820 (1970), we again ap-

proved Judge Cooley's approach, recognizing the

peculiar appropriateness of admitting prior state-

ments, quite apart from a claim of recent fabrication,

in order to explain away a claim of incompleteness

in a statement used in impeachment, and said that

“a good deal of latitude should be accorded trial

judges in admitting prior consistent statements for

rehabilitation.” Shortly thereafter, in Applebaum uv.

American Export Isbrandtsen Lines, 472 F.2d 56,

60-62 (1972), the court, speaking through Judge

Mansfield, reversed a judgment because of the exclu-

sion of a prior consistent statement offered for

rehabilitation in the face of a later inconsistent state-

ment, even though there was nothing to indicate any

difference of motivation on the two occasions. This

court’s flexible approach to the use of prior consis-

tent statements for rehabilitation, with an _ ap-

propriate limiting charge to be given if requested,

was the rule generally followed in the federal courts

when the Federal Rules of Evidence were being fram-

ed. Affronti v. United States, 145 F.2d 3, 7-8 (8 Cir.

1944) (Sanborn, J.) (if some portions of a statement

4599

40a

Appendiz A

are used tor impeachment, other relevant portions

may be used to meet its force); Cafasso v. Penn-

syluvania R. Co., 169 F.2d 451, 453-54 (3 Cir. 1948)

(Maris, J.). See also McCormick, Evidence § 49 at

106 (Cleary ed. 1972).'

Since the only mention of prior consistent state-

ments in the Federal Rules of Evidence is in Rule

801(d1\B) and this limits admission to cases where

the statement “is offered to rebut an express or im-

plied charge against him of recent fabrication or im-

proper influence,” lawyers and judges can be forgiven

for being misled into concluding, as was done by dic-

tum in United States v. Quinto, supra,* that the

1 The decisions of this court in United States v. Lombardi, 429

F.2d 216, 220 (1970) and United States v. Zito, 467 F.2d 1401,

1403-04 (1972), approving the admission of prior consistent

statements for rehabilitation to rebut a charge of recent fabrica-

tion in no way show that this was the only instance in which

such use was permissible. As indicated, in several cases we had

gone beyond this.

2 The statement in Quinto with respect to rehabilitation was no

less dictum because the opinion characterized it as a holding. As

the Quinto opinion clearly showed, the trial court had received

the agents’ memorandum as direct evidence “under 801(d\1\2)

{sic],” see 582 F.2d at 231-32, which provides for admission for

the truth of the matter asserted. This court held such admission

to constitute error under that provision. Anyone reading the opi-

nion can readily see that this was the only issue presented;

nothing in the opinion suggested that questions had been raised

whether the memorandum could be used solely for rehabilitation

if that issue were to arise on a new trial and the briefs show

that none had been. It is particularly puzzling that Judge

Meskill should regard ourselves as bound by the unnecessary

statement in Quinto with respect to rehabilitation when, as he

correctly says, the Federal Rules of Evidence have not changed

the law governing admission of prior consistent statements for

that purpose which was considerably broader than Rule 810(d)

(1XB). A judge’s power to bind is limited to the issue that is

before him; he cannot transmute dictum into decision by waving

a wand and uttering the word “hold”. There should hardly be

need to recall the long established Supreme Court jurisprudence

4600

4la

Appendix A

limitation applies to the use of prior consistent

statements for rehabilitation as well as for direct

evidence. However, analysis makes it clear that Rule

801(d1\B) simply does not deal with the extent to

which prior consistent statements may be used for

rehabilitation.

The cited provision is in a definitional section of

the article of the Rules which deals with hearsay;

Rule 801(d) says that certain consistent statements,

among them consistent statements of the kind there

enumerated, are not hearsay. But, pace Judge

Learned Hand’s statement in Sherman, consistent

statements used only for rehabilitation are never

hearsay since they are not “offered in evidence to

prove the truth of the matter asserted”, Rule 801(c),

but only for the fact of their having been made, 4

Wigmore, supra, § 1132 at 294 and cases there cited

in n. 1. By allowing certain prior consistent state-

that, as said in Cohens v. Virginia, 6 Wheat. (19 US.) 264,

399-400 (1821):

It is a maxim, not to be disregarded, that general expres-

sions, in every opinion, are to be taken in connection with

the case in which those expressions are used. If they go be-

yond the case, they may be respected, but ought not to con-

trol the judgment in a subsequent suit, when the very point

is presented for decision. The reason of this maxim is ob-

vious. The question actually before the court is investigated

with care, and considered in its full extent. Other principles

which may serve to illustrate it, are considered in their

relation to the case decided, but their possible bearing on

all other cases is seldom completely investigated.

So far as concerns United States v. Check, 582 F.2d 668, 680-81

(2 Cir. 1978), the text of the opinion, written by the dis-

tinguished author of Quinto and filed only three weeks earlier,

carefully and properly limited the effect of Rule 801(dX1XB) to

the use of consistent statements as affirmative evidence, again

the only point there at issue, although note 40 volunteered that

“the statements were not admissible even for the more limited

purpose of bolstering the witness’ credibility.”

4601

42a

Appendix A

ments to be used as proof of the matter asserted, as

they could not previously have been, Rule

801(dX1XB) does not imply that others not meeting

that standard can never be used for rehabilitation.

The Note of the Advisory Committee reproduced in

the margin’ makes clear that the purpose of Rule

801(dX1XB) was to admit for general use a category

of prior consistent statements that “traditionally” had

been admissible for rehabilitation. It does not at all

follow, as was said in Quinto, supra, 582 F.2d at

233, without benefit of briefing, that the exemption

of only certain consistent statements from exclusion

as hearsay also determines “which varieties of prior

consistent statements can be admitted for the more

limited purpose of rehabilitation.” Apart from the

fact that an article of the Rules concerned with hear-

say would be a strange place for dealing with

rehabilitation, the very fact that the latter is a

“more limited purpose” would suggest that the stan-

dard should not be so rigorous. What other types of

consistent statements might be received for

rehabilitation is a subject, like many others, to which

the Rules do not speak.‘ Judge Weinstein’s treatise

3 Prior consistent statements traditionally have been ad-

missible to rebut charges of recent fabrication or improper in-

fluence or motive but not as substantive evidence. The prior

statement is consistent with the testimony given on the stand,

and, if the opposite party wishes to open the door for its ad-

mission in evidence, no sound reason is apparent why it

should not be received generally.

4 It is not entirely clear why the Advisory Committee felt it

necessary to provide for admissibility of certain prior consistent

statements as affirmative evidence. As indicated above, this had

been a non-problem. Evidently the Committee considered that

since it was permitting certain types of inconsistent statements

to be admitted as proof of the facts stated, Rule 801(d)(1)(A), in

line with our decision in United States v. DeSisto, 329 F.2d 929,

cert. denied, 377 U.S. 979 (1964), it ought to confer a similar

benefit on some consistent statements.

4602

43a

Appendiz A

attests that the purpose of Rule 801(d\1XB) was

simply to give substantive effect to prior consistent

statements meeting its standards, 4 Weinstein’s

Evidence, 9 801(dX1)B)[01] at 801-99 (1978), thereby

moving part but not all of the way toward Uniform

Rule of Evidence 63. To apply the severe limitations

of Rule 801(dX1XB) as a universal rule restricting the

use of prior consistent statements for rehabilitation

is thus unjustified as a matter of language and of

history, and would run counter to the instruction of

Rule 102 that:

These rules shall be construed to secure

fairness in administration, elimination of unjusti-

fiable expense and delay, the promotion of

growth and development of the law of evidence

to the end that the truth may be ascertained

and proceedings justly determined.

Liberality in allowing prior consistent statements

for rehabilitation is peculiarly demanded when, as

here, a court is dealing with a record of what was

said as distinguished from a narrative of what oc-

curred. The fact to be proved by Agent Cox’ testi-

mony was not what Rubin had done but what he

had said in his interviews by the agents, Rule

801(dX2). The allegedly inconsistent and consistent

statements were all in one set of records, made at

substantially the same time. Under such cir-

cumstances, a court that has received inconsistent

statements in such records for impeachment should

be generous in allowing consistent ones for rehabilita-

tion, since they bear on whether, looking at the

whole picture, there was any real inconsistency. This

is the great principle of completeness, now enacted

4603

44a

Appendix A

in Kule 106. The important thing is that, unless the

prior consistent statements are admissible as af-

firmative evidence under Rule 801(dX1\B), the jury

should be clearly apprised, if requested, that they are

to be considered solely as breaking the force of the

impeachment.

—>

MESKILL, Circuit Judge, dissenting:

I respectfully dissent. Although I agree with the

majority that neither the pre-indictment delay uor

the statute of limitations requires dismissal of the

indictment against Rubin, and that the severance of

Rubin’s trial from that of his co-defendants was not

an abuse of discretion, I dissent from the view that

the judgment of conviction should be affirmed. The

unusual circumstances of Rubin’s trial which I believe

require reversal and a new trial deserve review in

considerable detail.

Between July of 1973 and July of 1976 Rubin

was interviewed by government agents and attorneys,

including Internal Revenue Service Agent Thomas

Cox, several times. Rubin was told of the nature of

the government investigation, was advised to obtain

counsel, and was asked to consider cooperating. He

was also told that “the Government was not going to

let him walk away.” No written statement was taken

from Rubin, but the agents took extensive notes dur-

ing their interviews. These notes totalled more than

70 pages and were marked Government Exhibit (GX)

66 for identification. Although Cox himself took

none of the notes, he testified that he reviewed the

notes at the close of each session and believed that

they accurately reflected the interviews. Rubin was

4604

45a

Appendiz A

never shown the notes; nor was he asked to sign

them as accurately reflecting the interview; nor were

they signed by the agent who had written them.

Some of the notes were handwritten and some were

typed.

Cox took the stand early in the trial. He said he

had been present at approximately twelve of the

Rubin interviews. He at first had some difficulty

remembering when he began attending the sessions

with Rubin, saying once “around January 1973” and

another time “something like October ’73.” Asked if

there were any documents that would help him be

more specific, he said the notes of the interviews

might help him. Using GX66 to refresh his recollec-

tion, he said that January 9, 1974, appeared to be

the date being sought. Louis Bender, Rubin’s

attorney, objected that Cox was reading the notes

rather than refreshing his recollection, and Cox was

instructed to use the notes only to refresh his recol-

lection. Cox then proceeded to testify as to what he

remembered Rubin saying during the interviews he

attended. He constantly was reminded to use the

notes only for the refreshment of his recollection.

On cross-examination, Bender began to use the

notes to challenge Cox’s recollection of what Rubin

had said during the interviews. Bender wanted to

show that although Cox had testified that Rubin had

said certain things during the interviews, the notes

of the interviews did not bear him out. The govern-

ment then suggested that Bender: should offer the

notes into evidence, a suggestion Bender character-

ized as “unnecessary” and “self-serving.” The court,

too, said that “if we are going to read from the

notes and ask the witness to read from them, they

4605

46a

Appendia A

should be in evidence.” Bender then explained that

he was treating the notes “like a prior statement

made by an agent who was present” and that he had

a right “to read a prior inconsistent statement, if it

is.” The court then made the following ruling:

THE Court: It isn’t his statement. He said that

he did not write those notes. He said that some-

body else made that memorand[um]. He used it

to refresh his recollection. So you can’t use that

to impeach his credibility. You can use any

statement which he made or any report which

he made in writing to impeach his credibility.

When somebody else has made the notes you

can’t attribute it to him.

Bender and the court then made the following agree-

ment—Bender could use the notes to challenge Cox’s

earlier testimony where he could show that Cox had

relied on the notes instead of his independent

recollection, but Bender could not use the notes to

impeach Cox’s credibility.. Cox was on the stand for

the better part of two days, going through direct

examination, cross-examination, redirect and recross.

1 Compare Fed. R. Evid. 612, which provides in part:

Except as otherwise provided in criminal proceedings by sec-

tion 3500 of title 18, United States Code, if a witness uses a

writing to refresh his memory for the purpose of testifying,

either—

(1) while testifying, or

(2) before testifying, if the court in its discretion deter-

mines it is necessary in the interests of justice,

an adverse party is entitled to have the writing produced at

the hearing, to inspect it, to cross-examine the witness

thereon, and to introduce in evidence those portions which

relate to the testimony of the witness.