Petition — Baskes v. United States

No. | FEB 20 198)

pom o a STEVAS,

CLERK

In the be

Supreme Court of the United States

Octoser TERM, 1980

UNITED STATES OF AMERICA,

Respondent,

vs.

ROGER S. BASKES,

Petitioner.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT

HARVEY M. SILETS

THEODORE A. SINARS

Attorneys for Petitioner

SILETS AND MARTIN, LTD.

140 South Dearborn Street

Suite 1510

Chicago, Illinois 60603

312/263-5800

HARRIS, BURMAN, SINARS AND JIGANTI

135 South LaSalle Street

Suite 630

Chicago, Illinois 60603

312/236-2994

UNITED STATES LAW PRINTING CO., CHICAGO, ILLINO!S 60618 (312) 525-6581

QUESTIONS PRESENTED FOR REVIEW

A. Should This Court Set Procedures Requiring The

Disclosure Of The Nature And Scope Of The Prosecu-

tion’s Intended Cross-Examination Of A Defendant’s Pro-

posed Character Witnesses?

B. Can A Government Agency Obtain Inculpatory Evi-

dence Against An Attorney By Committing An Intentional

Illegal Search And Seizure Against His Client And Thus

Circumvent The Constitution’s Guarantee Of Due Process

Of Law?

C. Should This Court Reconsider Its Decision In United

States v. Payner Which Engrafted An Unprecedented

Standing Requirement Upon A Federal Court’s Supervi-

sory Powers?

ili

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Appendix—

A. United States v. Baskes, Slip Op. 77-2178

(7th Cir. September 18, 1980) 0... App. 1

B. Order denying Petition for Rehearing dated

SPUOUOOE Ty TO re cisecscsicctesnconceneen App. 20

_ PREVIOUS PAGE WAS BLANK |

iv

AUTHORITIES CITED

Cases

PAGE

Gross v. United States, 394 F.2d 216 (8th Cir. 1968),

on appeal after new trial, 416 F.2d 1205 (8th Cir.

1969), cert. denied, 397 U.S. 1018 ...... alae haieeate 8

Michelson v. United Stutes, 335 U.S. 469 ......... lp Baie 7

Mullins v. United States, 487 F.2d 581 (8th Cir. 1973) 8

United States v. Baskes, Slip Op. 77-2178 (7th Cir.

Beemcemnee 1G, TID) on inceseccicenecicccvenesscccensesamtns NOTED 1

United States v. Baskes, No. 80-1066, October Term,

BONS dinitiasctnnaes MI 8) FP ah IOS AINE SNS POE DORON 10, 11

United States v. Cook, 608 F.2d 1175 (9th Cir.), reh.

en banc, 608 F.2d 1186 (9th Cir. 1980) ............ TE boe 8

United States v. Lewis, 482 F.2d 632 (D.C. Cir. 1973) .. 8

United States v. Ming, 466 F.2d 1000 (7th Cir.), cert.

a I TFs le CED: sessenieconsevesissvnnceincsarevboimatios 8-9

United States v. Oakes, 565 F.2d 170 (1st Cir. 1977) .... 8

United States v. Payner, 65 L.Ed.2d 468 (No. 78-1729,

NN IE = enlrevnccttnensvsetiiessai asa btascstadeisencbesiouaneneiions 4

United States v. Payner, —— U.S. —— ...w.. eee 5, 10

Other Authorities

United States Constitution Amendment V_ ................ 2,9, 10

Se re NE TD rip etsdesiccconsstgecchcntkapnnieneminagiotaaitsantiuisensea! 1

In the

Supreme Court of the United States

OctToBerR Term, 1980

No.

UNITED STATES OF AMERICA,

Respondent,

vs.

ROGER 8S. BASKES,

Petitioner.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT

I.

OPINION BELOW

The opinion of the United States Court of Appeals for

the Seventh Circuit is not yet reported; United States v.

Baskes, Slip Op. 77-2178 (7th Cir. September 18, 1980).

That opinion is filed with this Court as Appendix A.

IT.

JURISDICTION

The order of the United States Court of Appeals for

the Seventh Circuit was entered on September 18, 1980. On

October 2, 1980 a petition for rehearing en banc was filed.

The Seventh Circuit denied the petition for rehearing en

bane on December 23, 1980. This Court’s jurisdiction is

envoked under 28 U.S.C. §1254(1).

ITI.

CONSTITUTIONAL PROVISIONS INVOLVED

United States Constitution Amendment V

No person shall be held to answer for a capital, or other-

wise infamous crime, unless on a presentment or indict-

ment of a Grand Jury, except in cases arising in the land

or naval forces, or in the Militia, when in actual service

in time of War or public danger; nor shall any person be

subject for the same offence to be twice put in jeopardy

of life or limb; nor shall be compelled in any criminal case

to be a witness against himself, nor be deprived of life,

liberty, or property without due process of law; nor shall

private property be taken for public use, without just com-

pensation.

IV.

STATEMENT OF THE CASE

Roger S. Baskes, a practicing attorney specializing in

federal income taxation and estate planning, was charged in

a one count indictment with conspiring to defraud the Uni-

ted States ‘‘by impeding, impairing, obstructing and defeat-

ing the lawful functions of the Internal Revenue Service. . .

in the ascertainment, computation, assessment and collec-

tion of the revenue, to-wit: income taxes and gift taxes.”’

Two other attorneys and a real estate investor were ini-

tially named as co-conspirators. Two of the defendants

were severed and the indictments subsequently dismissed.

The jury returned a verdict acquitting one attorney-defen-

dant, but finding Baskes guilty.

The substance of the proceeding involved the sale of

an office apartment complex in Reno, Nevada, a gold min-

ing claim and the estate planning for its principal owner,

3

John Cavanaugh. As part of a desire to use the sale of

this complex as an estate planning vehicle, Cavanaugh and

Baskes discussed the use of sale and leasebacks, domestic

trusts, holding companies, foreign trusts and other tax sav-

ings, tax deferment and estate planning concepts. While

the government conceded the legitimacy of each such tax

planning procedure, the crux of its case centered around

the valuation of the Nevada gold mining claim owned by

Cavanaugh. The prosecution agreed that if the mining

cJaim valuation was as set forth, then the tax plan of sale

was proper and the use of the various entities, transfers

and planning concepts was also proper. Both parties of-

fered expert geologist testimony concerning the fair mar-

ket value of the claim during the period in question. In

addition, the defense offered evidence of substantial esca-

lation in the prices of mining claims, oftentimes reaching

hundreds of thousands of dollars, and such was acknowl-

edged by the prosecution. Evidence was also presented

that Cavanaugh was cautioned by the defendant that he

would have to support the valuation of the mine, that

Cavanaugh was experienced in mining claim purchases,

and that he acknowledged full responsibility for the valu-

ation of the mine in all deeds and title transfers thereto.

Cavanaugh even ordered a press clipping service to keep

track of the incredible increase in mining claim values,

again in an effort to substantiate the value.

While not charged in the indictment, the government

was permitted to offer substantial evidence concerning the

mining claim and other unrelated entities after the Cava-

naugh transaction was completed.

Baskes filed a detailed motion to suppress relating to

the acquisition of Bahamian banking records by the Inter-

nal Revenue Service through theft, bribery and suborna-

tion of foreign officials. The suppression motion was prém-

4

ised on several distinct grounds, including: (1) that it had

been obtained in an illegal and unconstitutional manner

and must be suppressed pursuant to the court’s supervis-

ory powers; and (2) that the use of such illegally obtained

evidence would violate his constitutional right to due pro-

cess of law. The district court stayed its decision until

after trial. Subsequent to the finding of guilty, a hearing

on the motion to suppress was held and Judge Decker de-

nied the motion to suppress. Baskes was then sentenced

to two years in prison.

Baskes timely filed his appeal to the United States Court

of Appeals for the Seventh Circuit and oral argument was

held in April, 1978. Subsequent to ora] argument, but prior

to any written opinion by the Seventh Circuit, the Su-

preme Court rendered its decision in United States v. Pay-

ner, 65 L.Ed. 2d 468 (No. 78-1729, June 23, 1980), holding

that evidence obtained through bad faith illegal conduct

against a third party could not be suppressed at a tax-

payer’s trial for income tax offenses. Though Roger Baskes

was attorney for the bank whose records were stolen in

Payner, the Seventh Circuit in September, 1980 held Pay-

ner dispositive of the suppression issue pending in this

case. In addition, the Seventh Circuit’s opinion affirmed

the conviction despite other substantial issues of law

raised in the appeal.

V.

THE MANNER IN WHICH THE FEDERAL

CONSTITUTIONAL CLAIMS WERE RAISED

Petitioner first asserted the Fifth Amendment by mak-

ing a pretrial motion to suppress government evidence as

being illegally obtained in violation of his right to due

process of law. Petitioner also urged that the evidence be

suppressed under the court’s supervisory powers and

5

the Fourth Amendment. The district court stayed its de-

cision on the motion until after trial. Following a trial on

the merits, petitioner renewed his motion to suppress. The

district court, however, denied the motion to suppress after °

hearing. Petitioner then appealed the district court’s order

to the United States Court of Appeals for the Seventh

Circuit. Following this Court’s decision in United States

v. Payner, ........ ee cated , the Seventh Circuit affirmed the

district court’s order and on December 23, 1980 denied the

petition for rehearing en banc.

VI.

REASONS FOR GRANTING THE WRIT

A. THE COURT SHOULD SET SPECIFIC PROCE-

DURES CONCERNING THE DISCLOSURE OF

THE NATURE AND SCOPE OF THE PROSECU-

TION’S CROSS-EXAMINATION OF A DEFEN-

DANT’S PROPOSED CHARACTER WITNESSES.

Petitioner requests this Court to adopt a rule requiring

the prosecution upon a motion in limine to disclose any

alleged fraudulent acts it intends to use on cross-examina-

tion of the defendant’s character witnesses under the guise

of ‘‘have you heard’’ questioning. The rule should be

premised on the fact that prior to the witness’ testimony

the defense set forth a full disclosure of his character wit-

nesses’ direct examination. This rule would eliminate an-

other means of gamesmanship which relegates the defen-

dant to a Hobson’s choice of either foregoing character

evidence or run the risk of government questioning on

cross-examination concerning some undisclosed alleged

‘*have you heard’’ acts of misconduct.

After the close of the prosecution’s case, petitioner

moved in limine for the district court to conduct a hearing

outside the presence of the jury to ascertain whether the

government would attempt to cross-examine his character

witnesses concerning alleged specific acts of misconduct

which previously had been inferred. In a pretrial memo-

randum the government had asserted that character wit-

nesses ‘‘may be cross-examined as to whether they heard

of particular instances of conduct pertinent to the trait

[about which the character witness testifies].’’ The pre-

trial memorandum, however, made no mention of the al-

7

leged ‘‘particular instances of conduct’’ which would be

the subject matter of cross-examination. As part of his

motion, petitioner fully advised the district judge of the

entire scope of his intended direct examination: that the

character witnesses would be asked if they knew Baskes

during the years 1969, 1970 and 1971, in what respect they

knew him and whether they knew of and what was Baskes’

reputation for honesty and integrity in the community dur-

ing those years. Having done so, the defendant requested

the court to elicit from government counsel the purported

specific acts of misconduct to which they had earlier re-

ferred. Accepting such premise, the district court sought

disclosure from the government but the prosecution evaded

such inquiries and refused to make such a disclosure. The

prosecutor merely responded that he intended to ask the

character witnesses whether they were aware of other un-

specified alleged fraudulent acts by means of ‘‘have you

heard’’ questioning and proposed that he would not offer

any evidence to prove such allegations. While the district

court expressed its own concern that the jury would be

left with the impression that these events had in fact oc-

curred, it, nevertheless, disregarded such concerns and re-

fused to conduct any further inquiry, directing the defense

to put on his character witnesses at his own risk and ruled

that the court would decide the question after the direct

testimony. Faced with this dilemma, the defense offered

no character testimony.

This Court has not considered the important procedure

and scope of character testimony since its foundation opin-

ion of Michelson v. United States, 335 U.S. 469, wherein

the district courts were cautioned to acknowledge their

‘heavy responsibility ... to protect the [have you heard]

practice from any misuse.’’ The Seventh Circuit’s pro-

cedures are in apparent conflict with the procedures set

7%

8

forth in United States v. Lewis, 482 F.2d 632 (D.C. Cir.

1973) and the Eighth Circuit’s divergent opinions in Mul-

lms v. United States, 487 F.2d 581 (8th Cir. 1973) and

Gross v. United States, 394 F.2d 216, 223 (8th Cir. 1968)

on appeal after new trial, 416 F.2d 1205 (8th Cir. 1969),

cert. denied, 397 U.S. 1013. Furthermore, recent trends of

decision encourage motions in limine in other areas, in-

cluding prior to a defendant’s testimony, in order to avoid

‘‘trial by ambush.’’ United States v. Cook, 608 F.2d 1175

(9th Cir.) reh. en banc, 608 F.2d 1186 (9th Cir. 1980). In

Cook, fourteen judges of the Ninth Circuit specifically con-

cluded that prior to a defendant taking the stand, pursu-

ant to a motion in limine, the government must disclose

any and all prior convictions it intends to use for impeach-

ment purposes and the court must rule on the propriety of

the use of such convictions at that time. The rule

is premised on the defendant establishing on the record

(1) that he will take the stand and testify if the prior con-

victions are excluded, and (2) that he sufficiently outline

the nature of his testimony. While not adopting an abso-

lute per se rule, the First Circuit has also strongly en-

couraged the use of motions in limine and ruling thereon

in advance of actual testimony, whether during pretrial

proceedings, at the close of the government’s case, or be-

fore the defendant or other affected witness takes the

stand. United States v. Oakes, 565 F.2d 170, 172 (1st Cir.

1977).

The importance of character evidence in this case

cannot be questioned. Baskes was a practicing lawyer

with an excellent reputation and stood ready to pre-

sent substantial character evidence on his behalf. Baskes

would have been entitled to a jury instruction that the

character evidence alone could create a reasonable doubt

of his guilt. United States v. Ming, 466 F.2d 1000 (7th

9

Cir.), cert. denied, 409 U.S. 915 (1972). The specific charge

related to Baskes’ legal practice and the character traits

at issue. The character evidence rose to even greater im-

port in view of the prosecution’s repeated references and

heated arguments on alleged similar act type evidence.

Thus, the government clearly attempted to question the

defendant’s character without the defense being able to

produce significant character evidence on his own behalf.

The Seventh Circuit has refused to follow other Cir-

cuits’ use of motions in limine. This Court now has an

opportunity to set forth the procedural guidelines to be

used in considering motions in limine in character evidence

cases as well as in other related areas of law. The only

disadvantage to the use of such procedure is to eliminate

‘*trial by ambush’’ and gamesmanship while further en-

hancing the jury’s function in its search for truth.

B. TO DETERMINE WHETHER AN ATTORNEY

WHO IS THE TARGET OF A GOVERNMENT IN-

VESTIGATION HAS STANDING TO SUPPRESS

EVIDENCE ILLEGALLY SEIZED FROM HIS CLI-

ENT ON THE GROUNDS THAT ITS USE AGAINST

THE ATTORNEY WOULD VIOLATE HIS FIFTH

AMENDMENT (IGHT TO DUE PROCESS OF

LAW.

The Internal Revenue Service was conducting an in-

vestigation of offshore tax havens. Included among their

targets were Castle Bank and Trust (Bahamas), petitioner

and his law firm, which represented the bank. As part of

that investigation, Internal Revenue Service agents broke

into an apartment and stole the briefcase of Michael Wols-

tencroft, an officer of the bank. The purpose of the Internal

Revenue Service search and seizure was to obtain inculpa-

tory evidence against the bank’s attorney, petitioner. The

10

government obtained information relating to the instant

prosecution which was derived from the seized material.

The charges pertained to tax advice given by petitioner

to another of his clients. Petitioner urged that the con-

stitutional guarantee of due process of law prohibited the

‘use of the product at his trial.

In Umted States v. Payner, ........ RENE soscicses , this Court

held that a federal court, utilizing its own supervisory

powers, could not suppress evidence illegally seized in the

manner set forth above on the basis of a defendant’s

Fourth Amendment rights or its own supervisory powers.

This Court, however, was neither presented with, nor re-

solved the issue of, whetiier such evidence should be sup-

pressed to assure the defendant’s Fifth Amendment right

to due process of law. In a related proceeding, a petition

for writ of certiorari to the United States Court of Ap-

peals for the Seventh Circuit has been filed specifically

raising this issue. Umted States v. Baskes, No. 80-1066,

October Term, 1980. To date, the Supreme Court has not

yet ruled on whether or not to grant such petition. The

petitioner herein reasserts the reasons for granting the

writ as set forth in his related petition and should the

Court grant his petition for certiorari in such proceeding,

the petitioner requests that this petition similarly be

granted as containing an identical issue.

C. UNLESS THE HOLDING IN UNITED STATES v.

PAYNER IS RECONSIDERED, THE U*#{TED

STATES COURTS WILL BECOME UNWiLLING

ACCOMPLICES IN THE PERPETRATION OF UN-

LAWFUL ACTS OF GOVERNMENT AGENCIES.

This Court should reconsider the holding in United

States v. Payner and confirm specific standards for the

exercise of supervisory powers. Otherwise, Payner will

11

stand as an imprimatur to Executive abuse in the osten-

sible enforcement of the law. In Payner, this Court abdi-

cated any supervisory control over the Executive Branch

solely on the ground that a third party was the object of

the government’s criminal conduct, even though the exclu-

swe reason for such bad faith criminal conduct was to ob-

tain evidence for use in the courts. This Court has a duty

to protect the integrity of the federal judicial system and

deter bad faith law enforcement and, thereby deny the

government fruit of its conscious criminal] conduct. In no

other way can the administration of justice be protected

from the Machiavellian attitude that government criminal

conduct should be rewarded.

As previously noted, in a related proceeding a petition

for writ of certiorari to the United States Court of Ap-

peals for the Seventh Circuit has been filed specifically

raising this issue. United States v. Baskes, No. 80-1066,

October Term, 1980. To date, the Supreme Court has not

yet ruled on whether or not to grant such petition. The

petitioner herein reasserts the reasons for granting the

writ as set forth in his related petition and should the

Court grant his petition for certiorari in such proceeding,

the petitioner requests that this petition similarly be

granted as containing an identical issue.

12

CONCLUSION

For the foregoing reasons, this Court should grant

certiorari.

Respectfully submitted,

TuHEopore A. SINARS

S1tets anp Martin, Ltp.

140 South Dearborn Street

Suite 1510

Chicago, Illinois 60603

312/263-5800

Harris, BuRMAN, SINARS AND JIGANTI

135 South LaSalle Street

Room 630

Chicago, Illinois 60603

312/236-2994 r

APPENDIX

APPENDIX

in the

United States Court of Appeals

For the Seventh Cirrnit

No. 77-2178

Unirep States or AMERICA,

Plaintiff-Appellee

Rocer S. Baskgs,

Defendant-A ppellant.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 76-CR-585—Bernard M. Decker, Judge.

Argued April 28, 1978—Decided September 18, 1980

Before Farrcuitp, Chief Judge, Markey, Chief Judge,*

and Bauer, Circuit Judge.

Farrcui.p, Chief Judge. Defendant-appellant Roger S.

Baskes was charged in a one-count indictment with con-

spiring with others to defraud the United States by im-

peding and obstructing the assessment and collection of

* The Honorable Howard T. Markey, Chief Judge of the United

States Court of Customs and Patent Appeals, is sitting by designa-

tion.

tn

3

App. 2

income and gift taxes by the Internal Revenue Service.

After a jury trial, defendant was found guilty. Kanter,

who was tried with Baskes, was acquitted. The cases of

other defendants were severed. Following a post-trial de-

nial of the defendant’s motion to dismiss the indictment

or suppress allegedly illegally acquired evidence, defen-

dant was sentenced to the custody of the Attorney General

for a period of two years. This appeal followed. For the

reasons hereinafter stated, we affirm.

I. Backgrownd

During late 1968 and 1969, Samuel Zell, a real estate

investor, entered into negotiations for the purchase of the

Arlington Towers, a twenty-two story office-apartment

complex, and the adjacent Arlington Plaza, an eleven-

story hotel built on top of a six-story garage. The Towers

and the Plaza are located in Reno, Nevada. The ‘lowers

was owned by a partnership whose partners were John

and Margery Cavanaugh (90%), their son John HK. Cava-

naugh, Jr. (5%), and Barbara and William Thornton, their

daughter and son-in-law (5%). The garage and the Plaza

were owned entirely by John and Margery Cavanaugh.

While these negotiations were taking place, Zell was in

repeated contact with his brother-in-law, Roger Baskes, a

Chicago attorney specializing in federal income taxation

and real estate planning. Zell advised the Cavanaughs

that the tax ramifications of any sale could be handled by

defendant Baskes’ law firm. The parties then devised a

highly complicated transaction which they claim would

legitimately minimize the tax consequences of any sale as

well as provide the Cavanaughs with a certain amount of

cash after taxes.

Under the terms of the transaction structured by the

defendant Baskes, $700,000 which was allegedly part of

App. 3

the purchase price for the Towers and the Plaza was

treated as the ultimate purchase price of a third asset

owned by the Cavanaughs, tiie Hornet No. 2, a gold mining

claim in the Manhattan, Nevada mining district. The par-

ties, in August 1969, orally agreed to a plan whereby the

Towers, the Plaza and the mining claim would be sold. A

letter memorializing the prior oral agreement between Zell

and Cavanaugh was prepared in November, 1969.

Pursuant to the plan, John Cavanaugh transferred the

mining claim to Jeffrey Investment Company (Jeffrey) in

exchange for all its preferred stock. Jeffrey was a shelf

Nevada corporation already formed by Baskes’ law firm.

The common stock of Jeffrey was issued to Castle Trust

Company, Ltd., Nassau, Bahamas, as Trustee of T-5088,

the foreign trust held for the benefit of Cavanaughs’ chil-

dren. On liquidation of Jeffrey, in January 1970, Cava-

naugh, Sr. would receive $10,000 in exchange for its pre-

ferred stock with ownership of the mining claim going to

the foreign trust as common stockholder. In February,

Zell, the buyer, deposited the $700,000 in T-5088 and the

mining claim was then transferred to Zeno, N.V., a foreign

affiliate of Castle Trust Co.' The claim was then trans-

' The parties disagree as to whether Zeno paid any consideration

for the mining claim. It appears that the Cavanaughs assigned to

Alan Hammerman, acting as trustee for Zeno, an option to pur-

chase the Plaza for $290,000 cash plus the assumption of $2.4 mil-

lion of mortgages. It is not clear whether Hammerman paid any

consideration for this assignment. Hammerman then reassigned this

option to Zell for $700,000. This $700,000 was paid by Zell to

Castle Trust and deposited in T-5088 for Zeno’s account. In ex-

change, the mining claim was transferred from T-5088 to Zeno.

So, after the unraveling, Zell apparently paid $700,000 to T-5088

for the mining claim, and the mining claim was transferred to the

possession of Zeno.

(footnote continued)

_

App. 4

ferred to Hornet Mining, Inc., a newly formed corporation,

in exchange for its stock. The Hornet Mining stock was

then sold to a partnership called Tonopah Vein in which

Fantasy-Galaxy, Inc. had a 99% stock interest and Buckeye

Oil Co. had a 1% stock interest. Defendant Baskes’ law

firm was tax counsel to Fantasy-Galaxy and Baskes him-

self was a trustee and partner in Buckeye Oil. As a result

of this transaction, Fantasy-Galaxy claimed a partnership

loss on account of prepaid interest of $153,000. Finally,

Fantasy-Galaxy was dissolved and all of its assets, includ-

ing the mining claim, were transferred to Argosy Venture,

a Bahamian partnership associated with Castle Trust.

The government presented the case on the theory that

the defendant Baskes, Burton W. Kanter, Alan H. Ham-

merman, and Samuel Zell conspired together to structure

the sale of the Towers and the Plaza in such a manner as

to disguise and falsify the true tax consequences of the

sale to the seller, John E. Cavanaugh, Sr. and family, by

falsely treating $700,000 which was really part of the pur-

chase price of the real estate and a part of the Cavanaugh

gain, as if it were paid for the mining claim. The claim

allegedly was worthless. The government argued that this

scheme was carried out by a series of manipulations

(footnote continued)

Zell, in April 1970 exercised the option to purchase the Plaza

by paying the Cavanaughs $290,000 cash and assuming $2.4 million

ot mortgages. Earlier, in December of 1969, Zell apparently paid

$10,000 cash and assumed $4.9 million in mortgages for the Towers.

It appears, therefore, that Zell paid consideration worth approxi-

mately $8.4 million in exchange for the Plaza, Towers and mining

claim. While it is not clear, it further appears that in 1969 the

Cavanaughs sold the land under the Towers and Plaza for $700,000

which was then leased back to the Cavanaughs with an option to

purchase. Zell had once offered $9.1 million for the Towers and

Plaza.

A

App. 5

through the use of corporate entities, corporate stock,

foreign trusts, partnerships, backdated documents and

ostensible, transfers of ownership in order to conceal the

true nature of the sale of the Towers and Plaza.

It is conceded by all parties that the transaction would

not have defrauded the government had the mining claim

actually been worth $10,000 originally and then appreci-

ated to $700,000.27 The mining claim was introduced into

2 If the mining claim was actually worth $10,000 at the time of

the first exchange and then quickly appreciated in value to $700,000,

the transaction would have been a variation of a common estate

planning technique used in disposing of an asset which is expected

to increase significantly in value. The asset (the mining claim)

is transferred to a corporation in return for preferred stock equal

to its current value. The common stock of the corporation is issued

to the transferor’s heirs or to a trust for cash in an amount equal

to the value of the common stock. If the contributed asset holds or

decreases in value, the transferor is protected, since on liquidation

of the corporation he would receive all proceeds up to the stated

value of the preferred stock. If however, the asset increases in

value, all the benefits of such increase are realized by the holders

of the common stock, since the transferor, as preferred stockholder,

would only be entitled to receive the fixed redemption amount of

his issued preferred stock. The value added asset is thus effectively

removed from the transferor’s estate with all growth potential held

by his beneficiaries. Further, under the Internal Revenue Code, if

the common stockholder were a foreign trust, no tax would be paid

by such foreign trust on the sale of that capital asset after liquidation.

26 U.S.C. § 871. Such gain would be taxed only upon distribution

to beneficiaries who were United States citizens. 26 U.S.C. § 662

(a)(2). Thus, the entire gain could be used by this foreign trust to

earn incorie all of which would not be taxed until the USA dis-

tribution.

In this case, however, the value of the mining claim was disputed

and the jury could find that it was worthless. In this event, the

transaction would no longer be legitimate. It would be only a

sham device to hide $700,000 of the price actually received for the

real estate and a gift to the younger Cavanaughs.

App. 6

the transaction, according to the government, because un-

favorable tax consequences due to depreciation recapture

would have resulted in the Cavanaughs being unable to

recover their cash investment had the Towers and the

Plaza been sold alone. Moreover, the government argued

that a gift of the senior Cavanaughs’ portion of the

$760,000 was accomplished, without payment of gift taxes.

Defendant Baskes does not challenge the sufficiency of

the evidence in this appeal. Rather, defendant contends:

(1) the trial court erred in failing to dismiss the indictment

or suppress evidence derived from certain illegal govern-

ment conduct; (2) the government failed to disclose an

understanding with two key prosecution witnesses; (3) the

trial court erred in refusing to require the government to

disclose the scope of its intended cross-examination of

defendant’s proposed character witnesses; (4) the trial

court unduly restricted cross-examination of a key witness;

(5) the trial court erred in failing to instruct the jury on

the essential elements of the conspiracy charge; and (6) he

was denied his right to a fair trial by the admission of

substantial evidence outside the charged conspiracy. We

affirm.

II. Illegally Seized Evidence

We first note that this court delayed the decision in this

case pending a Supreme Court decision in United States

v. Payner. The Supreme Court recently issued its opinion.

48 U.S.L.W. 4829 (June 23, 1980). At issue in Payner

was the effect of the government’s illegal conduct in seiz-

ing certain documents from a briefcase belonging to

Michael Wolstenecreft, which were introduced at defen-

dant Payner’s trial to help convict him. The Court held

that Payner lacked standing to suppress the documents

under the fourth amendment and ‘‘the supervisory power

does not authorize a federal court to suppress otherwise

App. 7

admissible evidence on the ground that it was seized un-

lawfully from a third party not before the court.’’ Id. at

4830-31.

Here, documents seized at the same time as the docu-

ments in Payner from the same briefcase allegedly led

the government to prosecute defendant Baskes. The Su-

preme Court’s decision in United States v. Payner is dis-

positive of defendant’s contention in this case that because

of the illegal seizure of evidence the indictment should be

dismissed or other action taken to avoid the taint.

III. Alleged Failure to Disclose Promise of Leniency

Defendant contends that the government’s failure to

disclose a promise of leniency made to two key prosecution

witnesses in exchange for testimony requires a new trial.

The government’s case against defendant Baskes de-

pended extensively on the testimony of John E. Cava-

naugh, Jr. and William Thornton. During the direct

testimony of both witnesses the government asked whether

they had received any promises in exchange for their

testimony. Both witnesses replied they had not. In ad-

dition, Thornton was asked whether he asked for or re-

ceived any immunity, to which he again responded that

he had not.

Following the jury verdict, at a post-trial hearing held

on defendant’s motion to suppress certain evidence, the

prosecution called Bernard Schoenberg, an attorney repre-

senting Cavanaugh, Jr. and Thornton, to testify. On cross-

examination Schoenberg testified that he would do every-

thing in his power to prevent a criminal case from being

directed at his clients. Schoenberg testified that, although

the government told him his clients were not then the

target of any investigation and he believed his clients had

a complete defense to any fraud charge, he stated to the

App. 8

government that his clients would not furnish any state-

ments or documents to the government until ‘‘this matter

was resolved civilly in a way which would . . . my clients

were willing to pay whatever tax they owed, that I wanted

to resolve the matter civilly without penalties and we

wanted to be left out and everything else.’’

Other evidence indicated that the government was not

particularly interested in charging Cavanaugh, Jr. or

Thornton. One agent thought that there was sufficient evi-

dence to institute a civil fraud case against John Cava-

naugh, Sr. and that the institution of civil fraud pro-

ceedings against the Cavanaughs was explored. Further

evidence was introduced of a phone conversation between

an Internal Revenue agent and a Department of Justice

attorney in which the attorney stated that he ‘‘may’’ have

to give the Cavanaugh group informal immunity. No

charges were instituted against Cavanaugh, Jr. or Thorn-

ton.

Based on this evidence defendant argues that Cavanaugh,

Jr. and Thornton falsely answered that they had never

been promised leniency or immunity in return for their

testimony and thus they are entitled to a new trial based

on Giglio v. United States, 405 U.S. 150 (1972). In Giglio

the Supreme Court held that a convicted defendant is

entitled to a new trial if he can establish that the govern-

ment failed to correct materially false testimony relevant

to the credibility of a key prosecution witness at the trial,

including evidence of a promise or agreement concerning

a future prosecution between the witness and the govern-

ment. Id. See also United States v. Esposito, 523 F.2d

242, 248 (7th Cir. 1975), cert. denied, 425 U.S. 916 (1976) ;

United States v. Harris, 498 F.2d 1164, 1168 (3d Cir.),

cert. denied, 419 U.S. 1069 (1974).

App. 9

In the present case the defendant has not established

the required undisclosed agreement of leniency.’ Defen-

dant has not offered any direct evidence of promises of

leniency in exchange for testimony. Instead, defendant

asks us to infer promises from Schoenberg’s hope that

his clients could, if necessary, avoid exposure to criminal

or civil fraud proceedings by disclosing what they knew.

of the transactions. Such a hopeful expectation even when

supplemented by evidence that a government attorney

used language concerning the possibility of granting in-

formal immunity is not sufficient to warrant a new trial

under the rationale of Giglio. See United States v.

Ramirez 608 F.2d 1261, 1266-67 (9th Cir. 1979); United

States v. Piet, 498 F.2d 178, 182 (7th Cir.), cert. denied,

419 U.S. 1069 (1974). The situation is too equivocal to

deem the witnesses’ answers false and the government

under a duty to correct or qualify them.

IV. Court’s Refusal to Require Disclosure of

Intended Cross-Examination

Defendant argues that the district court erred in not

compelling the government to disclose the specific in-

stances of defendant’s conduct which it intended to use in

cross-examination of defense character witnesses, prior

to the time they were to testify. As a result, defendant

claims he was forced to withhold significant character

testimony rather than risk its impeachment by undisclosed

and unverified conduct.

*In cases in which courts have ordered a new trial based on

Giglio v. United States, 405 U.S. 150, an undisclosed agreement of

leniency between the government and the witness prior to the testi-

mony was clearly established. See Giglio, 405 U.S. at 152-53:

Compbell vy. Reed, 594 F.2d 4, 7 (4th Cir. 1979) ; United States v.

Butler, 567 F.2d 885, 888 (9th Cir. 1978) ; United States v. Harris,

498 F.2d 1164, 1169 (3d Cir.), cert. denied, 419 U.S. 1069 (1974) ;

Tnited States v. Gerard, 491 F.2d 15v0, 1304 (9th Cir. 1974).

App. 10

We find no rule which mandates such disclosure. This

circuit requires the trial judge to consider the truth of

the basis for impeaching questions prior to cross-exami-

nation of a character witness. United States v. Jordan,

454 F.2d 323, 325 (7th Cir. 1971).* However, the purpose

of the inquiry is to prevent improper questioning which

might have a prejudicial impact on the jury and which

cannot be adequately cured by instructions. Disclosure

is merely ancillary to verification of the conduct to be in-

corporated in the questions. No rule or rationale guar-

antees the defense advance knowledge of legitimate im-

peachment before it calls a witness.

The scope of character testimony is generally left to

the discretion of the trial court since it is in the best

position to consider the context in which it is to be

presented.

[C]jourts of last resort have sought to overcome dan-

ger that the true issues will be obscured and confused

by investing the trial court with discretion to limit

the number of [character] witnesses and to control

cross-examination. Both propriety and abuse of hear-

say reputation testimony, on both sides, depend on

numerous and subtle considerations difficult to detect

*We note that there is some conflict among the circuits on this

issue. Jordan was decided on the basis of Gross v. United States,

394 F.2d 216, 223 (8th Cir. 1968), on appeal after new trial, 416

F.2d 1205 (8th Cir. 1969), cert. denied, 397 U.S. 1013 (1970).

However, the Eighth Circuit has since drawn into question its

holding in Gross. Mullins v. United States, 487 F.2d 581 (8th

Cir. 1973). In Mullins the Eighth Circuit found that the propriety

of impeaching questions need not be decided “either before trial or

before questioning if the matter is satisfactorily resolved during trial.”

Id. at 588.

App. 11

or appraise from a cold record, and therefore rarely

and only on clear showing of prejudicial abuse of

discretion will Courts of Appeals disturb rulings of

trial courts on this subject. [Footnote omitted. ]

Michelson v. United States, 335 U.S. 469, 480 (1948).

Among these considerations are concerns for fairness and

efficiency as they emerge from the conduct of the trial.

Normally the judge will be free to exercise his discretion

in weighing these concerns and deciding when to rule

on a specific issue.

Accordingly, we find no abuse of discretion in the trial

court’s refusal to rule on the scope of cross-examination

without benefit of having heard the direct testimony.

While there may be some advantages to deciding the

matter before the witnesses take the stand, there are also

compelling reasons for waiting to hear them first. ‘‘[U]n-

less the judge has a grasp of how much ground has been

... traversed by the offering on good character, he cannot

define ‘the ground which the cross-examination may cover

in attempting to discredit that testimony.’’ United States

v. Lewis, 482 F.2d 632, 644 (D.C. Cir. 1973). The trial

court must decide for itself when it has enough informa-

tion to make a proper ruling. While the court had much

of the information found lacking in Lewis, we cannot find

it unreasonable in having required more, particularly in

light of the absence of prejudice to defendant’s right to

prior consideration.

The defense asked for a ruling on this issue at the close

of the government’s case. While the court declined to

rule at that time, it made it clear that it would fully

consider the matter after a witness had testified and

before the cross-examination began. Furthermore, it in-

dicated that this consideration would take place outside

App. 12

the hearing of the jury. Given these precautons, the

defendant would have been amply protected from the like-

lihood of improper questioning of his witnesses. The

decision by the defense to withhold character testimony

was freely made and based on no greater risk than that

inherent in all trial proceedings. The defendant is bound

by the consequences of that decision.

V. Restrictions on Cross-Examination

The defendant next claims that the trial court erred in

refusing to permit him to ask a question of a key prose-

cution witness.

Alan Hammerman, an attorney practicing in the same

law firm as the defendant, was named in the indictment

as a co-conspirator. At the government’s request, Ham-

merman was severed for trial from defendant with the

understanding that if Hammerman testified consistently

with a prior statement his indictment would be dismissed.

Hammerman testified that he worked under defendant’s

supervision in structuring and implementing the Cava-

naugh transaction and he also testified to various aspects

of the sales transaction.

On cross-examination defendant’s counsel asked Ham-

merman:

Mr. Hammerman, did you unlawfully, knowingly and

wilfully conspire to defraud the United States to-

gether with Sam Zell, Roger Baskes and/or Burton

Kanter?

Mr. Hammerman, did you unlawfully, knowingly

and wilfully combine and agree together with Roger

Baskes, Burton Kanter and Sam Zell to defraud the

United States of America?

App. 13

The trial court sustained the prosecution’s objection to

these questions. Basing his argument on Rule 704 of the

Federal Rules of Evidence and United States v. Standard

Oil Co., 316 F.2d 884 (7th Cir. 1963), defendant asserts

that such refusal is reversible error.

We find that in prohibiting cross-examination as to the

legal implications of what occurred, the trial court did

not abuse its discretion. Under Rule 701 of the Federal

Rules of Evidence a witness, not testifying as an expert,

is limited in testimony in form of opinions and inferences

to those opinions which are ‘‘helpful to a clear under-

standing of his testimony or the determination of a fact

in issue.’’ Fed. R. Evid. 701(b); Stoler v. Penn Central

Transportation Co., 583 F.2d 896, 898-99 (6th Cir. 1978).

When, as here, a witness is asked whether the conduct in

issue was ‘‘unlawful’’ or ‘‘wilful’’ or whether the de-

fendants ‘‘conspired,’’ terms that demand an understand-

ing of the nature and scope of the criminal law, the trial

court may properly conclude that any response would not

be helpful to the trier of fact. The witness, unfamiliar

with the contours of the criminal law, may feel that the

legal standard is either higher or lower than it really is.

If either event is true the jury may accord too much

weight to such a legal conclusion. In addition, in this

case the trial court permitted the defendant to exten-

sively cross-examine Hammerman concerning his involve-

ment in the transaction. Defendant does not complain

that he was unable to question Hammerman as to any

factual matter, only that he could not ask Hammerman

about the legal implications of the conduct. The limita-

tion on the cross-examination was not an abuse of dis-

App. 14

cretion.» See Stoler v. Penn Central Transportation Co.,

585 F.2d at 898-99; 3 Weinstein & Berger, Weinstein’s

Evidence, {| 701[02], at 701-13-701-17 (1978).

Defendant argues that under Rule 704 of the Federal

Rules of Evidence testimony in the form of an opinion is

not objectionable because it embraces an ultimate issue in

the case and thus the district court erred in limiting cross-

examination. Rule 704 abolished the ultimate issue ob-

jection, which had prohibited witnesses from expressing

opinions upon ultimate issues. The purported purpose

of the former rule—to prevent witnesses from ‘‘usurping

the province of the jury’’—had been deemed ‘‘empty

rhetoric.’’ Advisory Committee’s Note on Rule 704

(quoting 7 Wigmore, Evidence, § 1920, at 17 (3d ed. 1940) ).

Rule 704, however, does not provide that witnesses’ opin-

ions as to the legal implications of conduct are admissible.

See Umted States v. Scavo, 593 F.2d 837, 844 (8th Cir.

1979). The Rule specifically provides that testimony must

be ‘‘otherwise admissible,’’ and here we have found that

the trial court did not abuse its discretion in concluding

that the testimony was not otherwise admissible. It is

not claimed that there had been any direct testimony which

made these questions proper solely as cross-examination.

* Defendant relies on United States v. Standard Oil Co., 316 F.2d

884 (7th Cir. 1963), for his claim that the refusal to permit the

cross-examination is error. In Standard Oil, a price-fixing con-

spiracy case, this court found that the trial court committed error in

not permitting defense witnesses to answer questions as to whether

there had been an “agreement,” “understanding,” “promise,” or

“commitment,” concerning prices. /d. at 889-90. Unlike the situation

here, those words have well-established lay meanings and do not

demand a conclusion as to the legal implications of conduct.

App. 15

VI. Failure to Tender Conspiracy Instruction

Defendant next argues that the trial court erred in fail-

ing to give the jury adequate instructions on the essential

elements of the conspiracy charge. While it is conceded

that the court explained what was required for proof of

conspiracy, defendant contends he was entitled to an in-

struction which clearly identified the specific elements as

essential to a finding of guilt. Error is premised on the

court’s inadvertent omission of the precise language of

an instruction previously agreed upon by the court and

both counsel.®

It is settled law that jury instructions should be con-

sidered in their entirety and not judged in ‘‘artificial iso-

lation.’’ United States v. Brown, 518 F.2d 821, 826 (7th

Cir.), cert. denied, 423 U.S. 917 (1975). While the court

did not recite the elements of a conspiracy in the agreed

upon form, all elements were incorporated in a lengthy

discussion of the terms of the indictment and the applicable

law. As we noted in United States v. Barclay, 560 F.2d

812, 817 (7th Cir. 1977), omission of a formal instruction

on a particular element may sometimes be alleviated

where the element is fully defined in other terms and its

applicability to the case is clear.

The thrust of defendant’s argument is that the trial

court obscured the elements of the charge by providing

such a lengthy explanation and failing to reduce the terms

to a simple formula. While a summary instruction may

have aided the jury’s understanding, we cannot find that

they were anything but fully informed of the elements of

° The agreed upon instruction was borrowed from 2 Devitt &

Blackmar, Federal Jury Practice and Instructions, § 27.08, at 25-26

(3d ed. West 1977).

App. 16

the charge. The jury was told what constituted a con-

spiracy and that its various elements must be proven be-

yond a reasonable doubt. The instructions were not

incomplete, nor did they contain misleading information.

In view of the parties’ agreement the omission was un-

fortunate, but we are not persuaded that the omission was

reversible error.

VII. Admission of Evidence of Mining Claim

Outside Charged Offense

The final issue is whether the trial court properly per-

mitted the government to introduce evidence concerning

the ownership of the mining claim subsequent to the

sale of the claim by the Cavanaughs to Zell. The objected-

to-evidence involved the transfer of the claim from Zeno,

N.V. to Hornet Mining, Inc. in exchange for stock; the

sale of the claim to Tonopah Vein which was 99% owned

by Fantasy-Galaxy, a partnership to whom defendant was

tax counsel, which sale resulted in a subsequently dis-

allowed $153,000 partnership loss on account of prepaid

interest for Fantasy-Galaxy; and the subsequent dissolu-

tion of Fantasy-Galaxy and the transfer of its assets to

Argosy Venture, a Bahamian partnership. Defendant ob-

jected to the introduction of this evidence as beyond the

scope of the indictment, irrelevant, an attempt by the gov-

ernment to infer additional illegal acts, and evidence of a

separate conspiracy which violated the multiple conspiracy

rule.

The trial court initially instructed the jury that the

Fantasy-Galaxy evidence should only be considered for

the purpose of showing the subsequent history of the min-

ing claim. The court also warned that the defendants were

only on trial for the acts charged in the indictment. While

deliberating, the jury submitted a written question to the

App. 17

judge asking him to clarify his instruction concerning

Fantasy-Galaxy. After discussion with the parties, the

court added the further instruction that the Fantasy-

Galaxy evidence ‘‘may be considered by you only to the

extent, if at all, you find such subsequent history bears on

the intent and purpose of the defendants in the use of...

this mining claim in the Cavanaugh transaction.’’

We note that the fact that evidence is offered of events

which occurred prior or subsequent to those charged in

the indictment does not make the evidence objectionable.

United States v. Fairchild, 526 F.2d 185, 188-89 (7th Cir.

1975), cert. denied, 425 U.S. 942 (1976); United States v.

O’Connor, 433 F.2d 752, 754-55 (1st Cir. 1970), cert. denied,

401 U.S. 911 (1971). Evidence of other events is not ad-

missible, however, ‘‘to prove the character of a person in

order to show that he acted in conformity therewith.’’ Fed.

R. Evid. 404(b). Such evidence is admissible for other

purposes such as proof of intent, knowledge, motive, and

preparation. Fed. R. Evid. 404(b). In this case evidence

concerning the subsequent ownership of the mining claim

was probative of defendant’s intent and knowledge.’

Intent is an essential element of the crime with which

defendant was charged. Baskes’ knowledge was also im-

portant because one of his defenses was that he relied on

Cavanaugh as to valuation of the claim. Both parties

7 Defendant Baskes in his reply brief argues that the subsequent

transfers of the mining claim were not substantially similar to the

Cavanaugh transaction and thus they were not admissible. The

degree of similarity is relevant, however, only insofar as the acts are

sufficiently alike to support an inference of criminal intent. United

States v. O’Brien, 618 F.2d 1234, 1238 (7th Cir. 1980); United

States v. McPartlin, 595 F.2d 1321, 1343 (7th Cir.), cert. dented,

444 U.S. 833 (1979). Here, involving as it does the same mining

claim and occurring soon after the Cavanaugh sale, the evidence is

sufficiently connected to the charged acts.

App. 18

have agreed that the value of the mining claim was crucial

to the unlawfulness of the transaction. Other evidence

at trial was offered to establish that the claim was nearly

worthless. Evidence of the subsequent shuffling of the

ownership of the worthless claim to different entities, both

foreign and domestic, and for different consideration, ail

pursuant to the counsel of the defendant’s law firm, is not

only relevant, but persuasive, in demonstrating Baskes’

knowledge that the claim was worthless and his intent to

use it as an apparently valuable asset to accomplish a tax

result.®

Defendant further argues, however, that the probative

value of this evidence was outweighed by its prejudicial

effect and thus it should be excluded under Rule 403 of

the Federal Rules of Evidence. He contends that addi-

tional illegalities could be inferred from the evidence and

that the complicated nature of the transaction might con-

fuse the issue and mislead the jury.

Under Rule 403 the balancing of probative value and

prejudice is committed to the sound discretion of the trial

judge and we are obligated to give great deference to the

evidentiary ruling of the trial court. United States v. Wat-

son, No. 79-2337, at 7 (7th Cir., June 11, 1980); United

8 Baskes objects on appeal to the introduction of evidence con-

cerning litigation between Fantasy-Galaxy and the Internal Revenue

Service involving the purchase of the mining claim by a partnership,

99% of which was owned by Fantasy-Galaxy. In the purchase

Fautasy-Galaxy claimed a $153,000 prepaid interest deduction. As

a product of litigation, Fantasy-Galaxy agreed to pay back the

$153,000 prepaid interest deduction. Baskes claims Rule 408 of the

Federal Rules of Evidence makes such evidence inadmissible. Re-

gardless of the merits of Baskes’ argument his failure to object to

evidence of the settlement at trial means such vbjection has been

waived. Fed. R. Evid. 103(a)(1).

App. 19

States v. O’Brien, 618 F.2d 1234, 1238-39 (7th Cir. 1980).

Examining the record, we do not believe the trial court

abused its discretion in admitting the evidence.

The district court told the jury that the evidence of the

subsequent history of the mining claim could only be used

for the purpose of establishing the defendant’s intent.

Given the importance of this evidence, its undisputed and

proximate character, and the qualification on the purposes

for which it was admitted, the trial court did not abuse

its discretion in admitting it. See United States v. Brunson,

049 F.2d 348, 359-60 (5th Cir. 1977).

Defendant further argues that the admission of the chal-

lenged evidence violated ‘‘the multiple conspiracy rule of

Kotteakos v. United States, 328 U.S. 750 (1946).”’ We

are at a loss to apply Kotteakos to this case.

Defendant contends, apparently, that the ‘‘other acts’’

evidence establishes a conspiracy distinct from the one

charged. Assuming that is true, the balancing process

under Rule 403, is still the test. Kotteakos was a case

where a single conspiracy was charged, but not proved,

although there was evidence of several, related only

through a common member. Here the indictment charged

one conspiracy and there was evidence tending to prove

it. The fact that further evidence relevant to intent may

also have proved a distinct and subsequent conspiracy does

not change the character of the balancing process under

Rule 403.

The judgment appealed from is affirmed.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

App. 20

APPENDIX B

UNITED STATHS COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

December 23, 1980.

Before

Hon. Thomas #. Fairchild, Chief Judge

Hon. Howard T. Markey, Chief Judge*

Hon. William J. Bauer, Circuit Judge

No. 77-2178

Unirep States or AMERICA, Plaintiff-Appellee

v.

Roger S. Baskes, Defendant-Appellant.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 76-CR-585—Bernard M. Decker, Judge.

ON PETITION FOR REHEARING

In his petition for rehearing, defendant asserts

that we erred in stating that ‘‘|rjegardless of the

merits of Baskes’ argument [under FRE 408] his

failure to object to the evidence of the settlement at

trial means such objection has been waived.’" We

* The Honorable Howard T. Markey, Chief Judge of the United

States Court of Customs and Patent Appeals, is sitting by designation.

' See footnote 8 of our opinion in United States v. Baskes, No.

77-2178 (decided September 18, 1980).

App. 21

have reviewed the record generally and specifically the

pages cited to us by defendant to check this assertion and

find no indication that an objection was made on the ground

that the evidence constituted inadmissible proof of a civil

compromise.

The government, moreover, in its answer to the peti-

tion, claims that no evidence of the settlement was ever

communicated to the jury. Our examination of the trans-

cript shows this to be correct.

No member of the panel and no judge in regular active

service having requested that a vote be taken on the sug-

gestion for an en banc rehearing, and the panel having

voted to deny a rehearing,

IT IS ORDERED that the petition of defendant-appel-

lant for a rehearing in the above mentioned appeal be, and

the same is hereby denied.