# Petition — Rubin v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1981
- **Citation:** 449 U.S. 424

## Text

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

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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 . GREER EASA a este oe EC ein eRe NS A TE oe 3, 4
IG I ee eee 4,6
RR GTR A ate aR boar AM IRE ne Terk tee OM ns Ceo 4,6
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.

N

s

to

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.

q

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

9

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.

10

~

“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

11

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:

13

“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

14

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-

15

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

16

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-

17

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.”

18

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

19

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.

20

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

2a

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

3a
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

4a

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

da
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

6a

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

7a

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

8a

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

9a

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

14a

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

15a

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

17a

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

18a

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

19a
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

20a

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

2la

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

4581

22a

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

23a
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.
2

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

30a

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.

See also note 9, infra.

4606

ERTS PRG I rer res eres —wt

47a

Appendix A

At least for purposes of this dissent, the most impor-
tant portion of his testimony is that which follows.

Cox testified on direct as to what Rubin had told
the agents about the meetings he had had concerning
the approval of the requested loans. For example,
Cox said that Deaton, Rubin and James went to the
bank with the prepared financial statement, had the
loan approved, and then had a discussion afterwards
about their success. Cox testified that Rubin had
told the agents that this discussion included the
following:

Cox: Deaton said that Ludwig had to be taken
care of.

And he asked Rubin how much should he give
him. And Rubin said, “I don’t know. I’ve never
paid off before.” And Deaton said, “Well, what
about 5 percent?” And he said, “That should
keep Ludwig happy.”

On cross-examination, the following exchange took
place:

BENDER: Because you are trained people, you put
down your own thoughts on what you pick up
from outsiders on notes when you are interro-
gating a witness? For example, you have in the
notes there the word “payoff.” Did Mr. Rubin
ever tell any of you that he made a payoff?

Cox: Using those two words together, he didn’t
—actually, that he said “payoff”? I can’t say he
used that expression.

BENDER: He said he gave money to Mr. Ludwig
and he gave money to Mr. Keating, isn’t that
right?
Cox: That’s right.

4607

48a
Appendiz A

BENDER: Did Mr. Rubin ever tell you that he us-
ed the word in talking with you, “bribe”?

Cox: I can’t say he used the word “bribe” either,
no.?

On redirect, the government offered pages 1 and 2
of the handwritten notes from the interview dated
October 10, 1974, as a “prior consistent statement”
by Cox, that is, as a prior statement by Cox relating
to Rubin’s statements during the October 10 inter-
view regarding payments. The government offered
these notes under this theory despite the trial court’s
earlier ruling that Bender could not treat the notes
as prior statements by Cox for purposes of impeach-
ment, the apparent theory being that Bender had
used the notes as “prior inconsistent statements” by
Cox, that Cox had “adopted” the notes as his own
statements, and that because of the nature of the
cross-examination the government was entitled to put
in Cox’s “prior consistent statements.” The exhibit
was marked GX66A; the text of GX66A is set out in
the margin.*

2 Earlier in the cross-examination of Cox, Cox had said to
Bender that he did not have to rely on the notes in order to
recall the “bribe,” meaning the payment of money by Rubin to
Ludwig. Bender immediately asked that the answer be struck,
explaining that Rubin had not used that term in his interview.
At this point the government attorney said that if Bender were
to ask Cox if the words “paid off” and “bribe” were Rubin's or
his, that Cox would say they were Rubin’s. The court suggested
that Bender ask precisely that question, but Bender said he did
not want to ask it because “that’s like putting my head in the
lion’s mouth.” The court then told the jury that they were the
ones who would have to decide whether the payments to Lud-
wig were bribes.

3 GX66A
[October 10, 1974
Pages 1 & 2
Attended by Rubin and Ruffa (Rubin’s lawyer) and Levitt,
DeGroot, Uberall and Cox (of the government) handwritten] .

4608

49a
Appendix A

Bender immediately objected:

BENDER: Your Honor, in view of the fact that
Mr. Cox has indicated that some of the notations

Pay-off

Day L. approved loan (10-20-72)
as per bk. for “after bk.’]

In st. (R&D)—conv.

cont’d—in office W. J.

Street D—wants to know—how much
$ for L?

R—Don’t know—never pd. off
D—Asks if 5% wld. be o.k.
R—Don’t know.

D—We'll discuss with J.

when back in office. But we
better take care of L. on Monday.
D & L tell J. abt. L.
Discussion—what to pay “L”
D—Expect [or “Exper.”]—5% to bankers.
R—Rumors L “on take”

J—Give L something

D—Only 1500 avail. from
proceeds after budgeting

L will be satisfied & will

owe balance to him.

Tells R—You know L best
—You give money. Tell

him there will be more.

Deaton draws ck. to cash ($1500
Endorses.

D—Wants R to cash at bank
R—Thought too risky.

R—Will cash at Englewood

CC over wkend.

R cashes over wk’nd.

RD&J

Monday morning in office
R—Have money do you

want to turn over now

or shld we wait—might

be cash short.

D—Instructed to take cash

to L. & put in envelope

Coffee shop episode—O.K.

R tells L—more coming.

R then goes to office

& tells D & J money delivered.
D&J—L happy?

R—Told L more coming &

L seemed to be pleased.

4609

50a
Appendia A

which appear in these notes are notations whicn
were written without any relationship, or that is,
were written not from what Mr. Rubin said but
their own characterizations, I cannot see how
this could be a memorandum of a recollection
past recorded as to what Mr. Rubin said to
them. Certainly it doesn’t have any credibility, at
least as far as this case is concerned, what an
agent may characterize something to be, rather
than what Mr. Rubin himself is reflected as hav-
ing been said.

So that actually these notes really do not
reflect what the agents state Mr. Rubin said
and, for that reason, it’s objectionable.

I have no objection to Miss Neugarten going
in and asking him any question that I did about
the notes and see if it refreshes his recollection;
but to put this in evidence as if statements
which appear here in this paper come from Mr.
Rubin, when this witness said they have not,
would be, I think, objectionable.

NEUGARTEN: Your Honor, the witness had _in-
dicated that he “adopted the statement,” by
reviewing the notes soon after they were taken,
believing them to be accurate.

The witness has been cross-examined as to
allegedly prior inconsistent statements concerning
what Mr. Rubin said.

Given that, I believe that there has been an
implied or expressed challenge, either to the wit-
ness’ recollection or his credibility, and that as a
result I am allowed to permit prior consistent
statements.

4610

5la

Appendia A

The court then inquired as to the inconsistency that
the government was hoping to clear up by the intro-
introduction of the notes, the assumption apparently
being that if the government could point to an incon-
sistency in Cox’s testimony that Bender had un-
covered during cross then the government would be
allowed to introdu

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_2180%3A1. Public record. Not legal advice.