Petition — Nicoladze v. United States

Supreme Court, U.S.

80-oerFr FILED

: 950 NOV 12 1980

. i F

. IN THE SUPREME COURT OF THE UNITED STATEE io qeng

OCTOBER TERM, 1980

GEORGE C. NICOLADZE, PETITIONER

V.

UNITED STATES OF AMERICA, RESPONDENT

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JERROLD M. LADAR

Suite 310

507 Polk Street

' San Francisco, CA 94102

Telephone: (415) 928-2333

Attorney for Petitioner

QUESTIONS PRESENTED

i.

WHETHER PETITIONER'S FIFTH AMENDMENT

DUE PROCESS RIGHT TO AN ANBIASED GRAND JURY WAS

VIOLATED BY THE STATEMENT OF THE PROSECUTOR TO

THE GRAND JURY THAT THE CASE WOULD NOT BE PRE-

SENTED TO THEM. UNLESS THE I.R.S. AND THE JUSTICE

DEPARTMENT WERE SATISFIED THAT, BEYOND A REASON-

ABLE DOUBT, "THE INDIVIDUAL IS GUILTY".

Il.

WHETHER PETITIONER'S SIXTH AMENDMENT

RIGHT TO JURY TRIAL WAS IMPROPERLY IMPINGED UPON

BY ADMISSION INTO EVIDENCE OF CERTAIN CHARTS,

RESULTING IN A "TRIAL BY CHARTS".

Iii.

WHETHER PETITIONER'S RIGHT TO A FAIR

TRIAL WAS VIOLATED BY THE ASKING OF IMPROPER

IMPEACHMENT QUESTIONS TO CHARACTER WITNESSES.

INDEX

Page ,

Opinion BOiGw . 6 « » wis & ae eon 1

Jurisdiction bn. “ete Mere eee i

Ouestions Presented: ..« « » «+. « « 2

Statement .« + « » 0 ~ “oS eee eee 3

Reasons for Granting the Writ... 7

Conclusion 6 ee a ae ee Le

Appendices

Memorandum, United States v.

George C. Nicoladze, of Court

of Appeals for the Ninth

Circuit, affirming judgment

Of conviction .. ss. s-» * » «= =e

Cases

United States v. Lewis,

——— - ——

42 F.2¢ 632, 6395 (D.C. Cir. 1973)

United States v. Rintelen

235 F. 787 (1916)

United States v. Samango,

607 F.2d 871 (9th Cir. 1979)

Wood v. Georgia,

370 U.S. 375, 390. (1962)

Codes

Devitt and Blackmar, Federal Jury

Practice and Instructions,

§ 33.03 (3d ed.)

Federal Rules of Evidence, § 405

United States Code

Title 18, § 3651

Title 26, § 2701

Title 28, § 1254(1)

iii

Page

iE

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1980

GEORGE C. NICOLADZE, PETITIONER

Vv.

UNITED STATES OF AMERICA, RESPONDENT

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

The Petitioner GEORGE C. NICOLADZE

petitions for a writ of certiorari to review

the judgment of the United States Court of Ap-

peals for the Ninth Circuit.

OPINION BELOW

The opinion of the Court of Appeals

(Appendix A, infra) is not reported and is not

intended for publication. (Ninth Circuit Rules

21 (a) and (d).) The opinion was filed on Oc-

tober 22, 1980.

JURISDICTION

The opinion of the Court of Appeals

=>

was entered on October 22, 1980. The juris-

diction of this Court is invoked under

28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

I.

WHETHER PETITIONER'S FIFTH AMENDMENT

DUE PROCESS RIGHT TO AN UNBIASED GRAND JURY WAS

VIOLATED BY THE STATEMENT OF THE PROSECUTOR TO

THE GRAND JURY THAT THE CASE WOULD NOT BE PRE-

SENTED TO THEM UNLESS THE I.R.S. AND THE JUSTICE

DEPARTMENT WERE SATISFIED THAT, BEYOND A REASON-

ABLE DOUBT, "THE INDIVIDUAL IS GUILTY."

Il.

WHETHER PETITIONER'S SIXTH AMENDMENT

RIGHT TO JURY TRIAL WAS IMPROPERLY IMPINGED UPON

BY ADMISSION INTO EVIDENCE OF CERTAIN CHARTS,

RESULTING IN A "TRIAL BY CHARTS".

aad.

VHETHER PETITIONER'S RIGHT TO A FAIR

TRIAL WAS VIOLATED BY THE ASKING OF IMPROPER

IMPEACHMENT QUESTIONS TO CHARACTER WITNESSES.

STATEMENT

After a jury trial in the United

States District Court for the Northern District

of California at San Francisco (the Honorable

Robert F.

Peckham, Chief United States District

Judge), Petitioner was convicted of three counts

of income tax evasion (26 U.S.C. § 2701).

On October 9, 1979 he was sentenced

under 18 U.S.C. § 3651 to a "Split sentence" --

six months in custody and thirty months suspended.

At the time the case was presented to

the Federal Grand Jury, the following occurred:

“During this investigation, Mr.

Nicoladze made representations that

certain monies that he had received

from

his clients were not taxable to

him because they were contingent or

conditional upon other things happen-

ing.

give

hold

come

that

He said certain clients would

him a fee and he would have to

that fee, and it would not be in-

until he finished the services

he had rendered.

"In questioning these various

clients, no client supported that

story. They all stated that the fees

they

paid to Nicoladze were fees for

current services rendered and there

was no agreement or understanding

that

take

any of the fees would be returned."

A GRAND JUROR: Does it usually

this long, six years, to process

wer '.

this type of tax evasion, or what-

ever it is? Is six years a normal

time, or do you do it faster?

THE WITNESS [SPECIAL AGENT

VENOR]: Investigations are very

lengthy, and the review process,

which these cases go to, takes a

great deal of time. Cases are re-

viewed both locally and in the De-

partment of Justice in Washington.

It takes some period of time for

»- them to return to the U.S. Attor-

ney's office.

MS. SIMPSON [THE PROSECUTOR] :

This case we received last month.

The tax cases do follow a different

route from most cases, as Mr. Venor

pointed out.

After the Internal Revenue Ser-

vice investigates a case, the Agent

up through the District Director, de-

cides to prosecute. It doesn't come

directly to the U.S. Attorney's office,

but rather to the Council for the IRS,

and then they review the case to see if

it meets the standards for prosecution.

In other words, whether there's evidence

or proof beyond a reasonable doubt,

4 that the individual is guilty.

If the Local Council agrees that

those standards are met, it's then for-

warded to the Tax Division of the De-

partment of Justice where attorneys

for the Department of Justice again

review the case for a determination

to see whether those standards are, in

fact, met.

Then it's forwarded to us. This

case, we received last month with di-

rections to present it to you.

(Tr., p. 10, 17-18, Grand

Jury, April 11, 1979. Made

part of record on appeal by

Order, dated June 3, 1980.)

The grand jury indicted Petitioner the same

day.

During presentation of its expert

witnesses' testimony to the jury, the govern-

ment had marked and presented to the jury cer-

tain schedules (Government Exhibits 64, 65, 66,

67). The jury was handed the exhibits, looked

at them and testimony was adduced about them.

Headings such as "Diverted Corporate Income",

"Corrected Tax Liability", and "Unreported In-

come" were used on the exhibits. Defendant's

counsel brought to the court's attention United

States v. Abbas, 504 F.2d 123 (9th Cir. 1974),

and the exhibits were stricken (RT 1546, 1552).

The impact of summaries and charts upon the jury

and the teaching of Abbas caused the trial court

considerable concern:

"Mr. Lyons: In making the comment with

respect to the government, are you re-

ferring at all to --

"The Court: I am referring to your fail-

ure to know about the Ninth Circuit case

with respect to those surveys. I have

explained that to you. How the tax di-

vision of the United States Attorney's

office and the Internal Revenue Legal

Division could bring a case without

knowledge of that important decision

that affects the method of proof is

something that I am afraid I cannot

comprehend.

"There was not only a failure

to conduct the necessary research,

there also was the lack of support

for you.

"I mean, that's the kind of a

thing that someone in the Internal

Revenue Service or in the Department

of Justice in the tax division should

pick up and alert these offices. To

spend thousands and thousands of dol-

lars on a prosecution and then per-

haps commit prejudicial error sisply

because the case was not known is

what I'm talking about.

"I don't think, in light of the

total record -- but I want the trans-

cript -- that it would in this case be

prejudicial. You did not refer to it

in the argument, and I did admonish

the jury."

(RT 2148-2149)

The government's expert found a tax due

and owing; the petitioner's expert found no tax

liability.

On cross examination of government wit-

nesses during the presentation of the government's

case, defense counsel inquired as to defendant

Nicoladze's reputation. (F.R.Evid. § 405.) The

trial court permitted the question, even though

presented “out of order" and the prosecutor was

thus in a proper position to exercise his right

=-6§- ill

=z

of cross examination of the character evidence.

The witnesses responded to the defend-

ant's inquiry by asserting the defendant's excel-

lent reputation. [E.g., government witness

Doshier: "I'd say it was above -- if there is

such a thing above excellent -- above excellent."

(RT 874).] The prosecutor promptly cross-examined:

"Would your opinion change if I suggested to you

that on occasion Mr. Nicoladze lied under oath?"

(RT 874). Prompt objection was made. The prose-

cutor's basis for the question was a deposition

given by Nicoladze in a civil suit in Nevada in

1976. The deposition was admitted in evidence

through witness Horton (RT 767-783). Whether

Nicoladze had read it after transcription or had

made any sworn acknowledgement to any attachment

to it was not clear (RT 773-775, 780). Nor was

the falsity of any statement made in the deposi-

tion clearly established.

REASONS FOR GRANTING THE WRIT

Grand Jury Misconduct: In effect,

the grand jury was told that the IRS, the Justice

Department and the United States Attorney believed

there was evidence beyond a reasonable doubt

that defendant is quilty and that cases with less

evidence will not be presented to a grand jury,

due to the lengthy and careful review process.

The grand jury had no opportunity to meaningfully

evaluate any percipient witnes' veracity. It was

not told of Nicoladze's contentions nor of the

losses which would have raised substantive doubt

as to any tax due and owing. Several witnesses

at trial did not support the facts related by the

IRS agent.

This court has pointed out on several

occasions that one purpose of the requirement

that an individual be indicted by a grand jury

is to place between the prosecutor and the accused

an independent body which can evaluate the evi-

dence and determine if the charge is based upon

reason. Wood v. Georgia, 370 U.S. 375, 390 (1962);

Stirone v. United States, 361 U.S. 212, 218 (1960);

Ex parte Bain, 121 U.S. 1 (1887). The accused has

a right "to have the Grand Jury make the charge

On its own judgment." Stirone v. United States,

Supra, at 219. "Neither by depriving the Grand

Jury of its opportunity to evaluate the credibility

of witnesses, nor by making prejudicial remarks

to sway the Grand Jury, may the prosecutor deny

the accused this substantial right . .." United

States v. Gallo, 394 F.Supp. 310 (D.Conn. 1975).

To accept less than this as a right is

unthinkable. Former Chief Judge Friendly of the

Second Circuit Court of Appeals, said, with a hint

of sarcasm: “When the framers of the Bill of

Rights directed in the Fifth Amendment that ‘no

person shall be held to answer .. . unless on a

presentment of an indictment of a Grand Jury',

they were not engaging in a mere verbal exercise.

United States v. Estepa, 471 F.2d 1132, 1136 (2d

Cir. i972}.

There is no shield if the lay body of

grand jurors is misled, misinstructed and misir-

formed by the accuser. There is no shield if the

grand jury cannot hear evidence free from biased

interpretation and argument, thereby corrupting

its independence. "The very purpose of the re-

quirement that a man be indicted by a Grand Jury

is to limit his jeopardy to offenses charged by

a group of his fellow citizens acting independently

of either prosecuting attorney or judge." Stirone

-9-

v. United States, 361 U.S. 212, 218 (1960). As

a right wrung from kings and deeded to us as our

heritage, we should guard it well, and maintain

its vitality with our vigilance. The proceedings

before the grand jury that returned this indict-

ment are a challenge to our dedication.

A restatement of these principles has

been made in recent decisions.

Honorable William G. Last, Senior United

States Judge for the District of Oregon, wrote for

the Court in United States v. Samango, 607 F.2d

871 (9th Cir. 1979):

Although deliberate introduction of per-

jured testimony is perhaps the most fla-

grant example of misconduct, other pro-

secutorial behavior, even if uninten-

tional, can also cause improper influ-

ence and usurption of the grand jury's

role.

Samango at 882.

The cumulative effect of the above errors

and indiscretions, none of which alone

might have been enough to tip the scales,

operated to the defendants' prejudice by

producing a biased grand jury.

Samango at 884.

Neither by depriving the grand jury of

its opportunity to evaluate the credi-

bility of witnesses nor by making preju-

dicial remarks to sway the grand jury

may the prosecutor deny the accused this

substantive right.

(Citing, United States

v. Gallo), Samango at 884.

Samango's roots lie in the oft-cited

case of Costello v. United States, 305 U.S. 359

(1956), which calls for an unbiased and independ-

ent Grand Jury. The Samango Court construed this

premise to mean a jury free from the prejudicial

effect of prosecutorial misconduct. The court in

Wood v. Georgia, 370 U.S. 375 (1962), expanded

upon Costello and required that an independent and

unbiased Grand Jury also must be an informed Grand

Jury.

In June, 1979, the Ninth Circuit Court

of Appeals addressed the subject of a testifying

prosecutor and said:

The chief fear which underlies the ethi-

cal rules, it is commonly acknowledged,

is not that the testifying prosecutor

actually will overreach a hapless defend-

ant, but that he will appear to a skep-

tical public to have done so. The legal

profession's disapprobation of the ad-

vocate-witness is thus closely related

to the injunction in Canon 9 of the ABA

Code of Professional Responsibility that

"{a] lawyer should avoid even the appear-

ance of professional impropriety." Par-

ticularly where the lawyer in question

represents the prosecuting arm of the

Government, the ethical rule serves to

implement the maxim that "justice must

satisfy the appearance of justice."

This function of preserving public trust

may be especially necessary in proced-

ings of the grand jury, which more than

~ll-

7

a few critics have characterized as a

mere tool of prosecutors.

United States v. Birdman,

602 F.2d 547 (9th Cir.

1979).

Sixty years ago Judge Augustus N. Hand,

then sitting in the United St-tes District Court

for the Southern District of New York, faced a

question in United States v. Rintelen, 235 F. 787

(1916), directly related to the one before this

Court. Although he found no injury done by the

prosecutor's dispassionate review of evidence

coupled with a recital of applicable law, Judge

Hand referred with approval to standards enunci-

ated some time before:

"The limit of the District Attor-

ney's duties is reached when he has ex-

plained the maning of the laws, laid

before you all evidence in his hands

officially, and aided in the examina-

tion of the witnesses. He should take

no part whatever in your discussion

as to guilt. The weight and credi-

bility of the testimony is wholly for

you, without even a suggestion from

him. His opinion as to the suffi-

ciency of the evidence to prove guilt

should never be given, even if asked

by a jury. His opinion in reference

to the meaning of the law should never

be withheld. Whether the facts are

proved, he has no right to suggest

even. The purpose of these instruc-

tions was to secure a fair independent

-12-

investigation by the Grand SUEY 5 wer

(Emphasis added.)

United States v. Rin-

telen, supra, 793.

Unequivocably, and contrary to the spirit

and intent of those instructions, the prosecutor

here made a finding of guilt, judged the credibil-

ity of the witness, and pronounced the case proved.

To compound the error, the "witnesses" never ap-

peared before the jury and their credibility was

never scrutinized by the grand jurors.

Trial by Chart: The Sixth Amendment

guarantees to the Petitioner a right to jury trial.

That right includes a protection against usurption

'

of the petit jury's functions by a "trial by chart".

"The use of this type of evidence, how- |

ever, has inherent danger to an accused,

for a jury is often unfairly and unduly

impressed by the apparent authenticity

of a government witness' chart computa-

tions, as such, rather than by the truth

and accuracy of the underlying facts and

figures supporting them. A trial court

is charged with grave responsibilities

in such instance to insure that an ac-

cused is not unjustly convicted in a

‘trial by charts,' however impressive

the array produced. Ordinarily, it

would be the better practice, not so

carefully observed in this instance, to

required that the source of the facts

and figures upon which such a chart is

based by fully disclosed before its ad-

mission into evidence. Whenever pos-

Sible, such charts should be confined

~12*:

in their preparation to strictly math-

ematical computations, subject to de-

tailed explanation upon the trial by

the testimony of expert government wit-

nesses, and they should not be encum-

bered by such impressive, conclusion-

ary captions as 'Overstatement of Mer-

chandise Purchases', 'Overstatement of

Delivery Expenses', 'Unreported and Un-

deposited Cash Receipts Invested in

United States Savings Bonds', 'Unre-

ported Net Income of Mr. E. C. Lloyd',

‘Income Tax Unreported and Unpaid by

Mr. Lloyd', such as were used on the

Government charts here in dispute.

While a prosecution witness may tes-

tify as to such conclusions from his

mathematical computations, we think

the danger in permitting the unrestric-

ted use of such phrases upon charts re-

sults from a jury's natural tendency to

accept such unsworn, conclusionary ver-

biage as authentic, primary proof, in-

stead of purely in summarization and

explanation of sworn testimony or au-

tenticated documentary evidence.

Lloyd v. United States,

ge0.7.206 9 (tH Cir.

1955); quoted in United

States v. Abbas, 504 F.2d

123 (9th Cir. ir. 1974)1/

Improper Impeachment: The decision of

the Court of Appeal ignores this Court's decisions

in Michaelson v. United States, 335 U.S. 469 (1948),

and Bronston v. United States, 409 U.S. 352 (1973).

i/ United States v. Gardner, 611 F.2d 770, 776

(9th Cir. 1980), confirming the court's power to

allow the use of charts, does not detract from

Abbas' reasoning and caution.

~14-

7 &

—-

Michaelson approved the principle that specific

acts of misconduct of the Petitioner may be in-

quired of upon cross examination of Petitioner's

character witnesses. The inquiry re misconduct,

however, must be made in good faith and the prose-

cutor must be prepared to furnish the basis for

such questions.

However, the government's basis for such

inquiry was that the deposition testimony was in-

consistent with statements made by the defendant

to IRS agents during the tax investigation. This

is not a good faith basis for propounding a ques-

tion about “lying under oath" -- i.e., perjury.

At the least, the good faith basis for propounding

such a question should include evidence of the

standard three elements of perjury. [See: Devitt

and Blackmar, Federal Jury Practice and Instruc-

tions, § 33.03 (3d ed.).] The prosecutor had no

such good faith basis and the trial court was seri-

ously concerned with the government's conduct (RT

1551).

The record is devoid of any evidence to

establish which, if any, of the two statements in-

volved was untrue. The prosecutor assumed for his

-15—

Own purpose that the deposition testimony under

oath was untrue, but this was never established.

The deposition testimony under oath could have been

true and the later unsworn interview statement to

the IRS agent untrue. OR the latter statement

could have also been true in the context in which

it was given. Neither the preciseness of the ques-

tions at deposition nor at the IRS inquiry were es-

tablished.

In order for the prosecutor to properly

propound a question re "lying under oath" (perjury),

the statement at deposition must be known to meet

the standards required for perjury set forth in

this Court's decision in Bronston v. United States,

409 U.S. 352, 357 (1973). This was not done. The

prosecutor chose the exact characterization --

lying under oath -- and must, under Berger v. United

States, 295 U.S. 78, 88 (1935), be responsible for

2/

the impact.= That there exist "criminally fraud-

ulent" statements or "false impressions" is not suf-

ficient. Cf. Bronston, supra, at 358, n. 4.

2/ As an officer of the court, the prosecutor --

an experienced Assistant U.S. Attorney -- should

have followed the procedures mentioned in United

States v. Lewis, 482 F.2d 632, 639 (D.C. Cir. 1973),

and Gross v. United States, 394 F.2d 216 (8th Cir.

1968).

s

es

DATED:

CONCLUSION

The Petition should be granted.

November 20, 1980

Respectfully submitted,

JERROLD M. LADAR

JERROLD M. LADAR

507 Polk Street

Suite 310

San Francisco, CA 94102

Counsel for Petitioner

-l17-

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

No. 79-1740

D.C. No. CP79-0146-RFP

Plaintiff-Appellee,

MEMORANDUM

GEORGE C. NICOLADZE,

)

)

)

)

vs. )

)

)

)

Defendant-Appellant. )

)

Submitted -- October 9, 1980

Appeal from the United States District court

for the Northern District of California

Robert F. Peckham, District Judge, Presiding.

Before: KENNEDY, PREGERSON and POOLE, Circuit

Judges.

Nicoladze appeals from his conviction

of three counts of income tax evasion in violation

of 26 U.8.C. § 7201.

His assignments of error concerning the

government's presentation of the case to the grand

jury, the government's attempted impeachment of

character witnesses, the government's use of charts

and summaries with allegedly improper headings,

the government's alleged violation of his confron-

tational rights, the sufficiency of the evidence

APPENDIX A

of his guilt, and the propriety of the court's

instructions are meritless.

The prosecutor's elaborate description

of the process employed to decide whether to pro-

secute a tax case, although in response to a ques-

tion asked by a grand juror inquiring into the

reason for the delay in presenting the case to a

grand jury, should as a matter of prudence and good

judgment have been left unsaid. The error, how-

ever, did not meet the standard for prosecutorial

misconduct set forth in United States v. Vargas-

Rios, 607 F.2d 831 (9th Cir. 1979).

The evidence of Nicoladze's guild of the

offense charged, if not overwhelming, was quite

strong.

AFFIRMED.