Petition — Colacurcio v. United States

ey FILED

82-361 AUC 3@ gap

L. STEVAS.

CLERK

IN THE

Supreme Court of the United States

October Term, 1982

FRANK F. COLACURCIO,

Petitioner,

Vv.

THE UNITED STATES OF AMERICA,

Respondent.

PETITION FOR

WRIT OF CERTIORARI

TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Wiliam A. Helsell and

R. Broh Landsman

of HELSELL, FETTERMAN,

MARTIN, TODD &

HOKANSON

Counsel of Record fer Petitioner

Frank F. Colacurcio

Office and Post Office Address:

1500 Washington Building

P.O. Box 21846

Seattle, Washington 98111

(Telephone: (206) 292-1144)

ABCO AT CRAFTSMAN PRESS. SEATTLE

i

QUESTIONS PRESENTED FOR REVIEW

1. When a defendant is charged with conspiracy to defraud

the Uni:.c States under 18 U.S.C. § 371 and aiding

preparation of materially false and fraudulent corporate tax

returns under 26 U.S.C. § 7206(2), both requiring a showing

of specific intent, and when there are no allegations of tax

evasion either by the corporations or the individual involved,

did the United States District Court err by excluding from

evidence as irrelevant: (a) copies of defendant's personal tax

returns offered to show he reported the money he received

from the corporations on his own tax returns to prove he did

not intend to defraud the United States or willfully aid

preparation of fraudulent corporate tax returns; (b) testimony

by two witnesses that defendant instructed them to keep

careful records of money received by defendant from the

corporations to prove defendant did not intend to impair or

obstruct the functioning of the Department of Treasury; (c)

testimony by the preparer of defendant’s personal returns

that defendant instructed her to report on his personal

returns income received from the corporations to prove

defendant did not intend to defraud the United States or aid

preparation of fraudulent returns; (d) testimony by a Certified

Public Accountant and former Internal Revenue Service

agent that if defendant had a secret ownership interest in

the businesses owned by the corporations as alleged by the

government, nevertheless the corporate returns correctly

omitted defendant’s share of the earnings which were

properly reported on the personal returns?

2. When a criminal defendant is charged with conspiracy,

and the entire indictment is sent to the jury, is it error for

the trial judge to tell the jury in a supplemental instruction

that the jury “‘need not be concerned with the manner and

means described in the indictment’’?

3. In the face of conflicting decisions between various

circuits of the United States Court of Appeals as to whether,

and under what circumstances, a trial court is obligated to

grant immunity to defense witnesses, are a defendant’s

constitutional rights to due process and compulsory process

clalahédt Wheatc Goh tha Aadiotant Uaited States Adteraay

obtains immunity for a witness before the grand jury; (b) the

government and defense subpoena the witness to testify at

trial; (c) the Assistant United States Attorney obtains

written authorization from the Department of Justice to

make application for immunity again for the witness at trial;

(d) during the course of a pretrial interview the Assistant

United States Attorney threatens the witness with perjury

prosecution if she persists in telling the same story at trial

as she gave to the grand jury; (e) the government elects not

to call the witness in its case; (f) when called by the defense

the witness then asserts her fifth amendment privilege before

the court; and (g) the Assistant United States Attorney

refuses to make application for immunity to the court,

denying the defense the witnesses’ exculpatory testimony?

PARTIES TO PROCEEDING IN COURT BELOW

Petitioner Frank F. Colacurcio and Kent D. Chisman were

charged by the United States of America and tried together

under a multiple-count indictment. Both defendants were

separately represented and their appeals were consolidated.

Petitioner Colacurcio separately petitions this Court for a

writ of certiorari.

TABLE OF CONTENTS

Questions Presented For Review ................ He

Parties To Proceeding In Court Below ............ ii

NN er oe ein. Gena: cane. 1

oo Pe Se A 1

Constitutional Provisions and Statutes Involved .... 2

Statement Of The Case ...................00005. 3

A. Proceedings Below ....................... 3

I os i fa da a dene dea kba'e 4

Reasons For Allowing The Writ .................. 10

A. The Decision of the Court of Appeals

Coens © Sanrtimre sae te Acceptes

and Usual Course of Criminal Judicial

to Call For an Exercise of This

Court’s Power of Supervision .............. 10

an Mrvlicalte Decisions of In Conflict

With Decisions of This Court .... 18

TABLES OF AUTHORITY

Table of Cases

Supreme Court

Page

Blumenthal v. United States, 332 U.S. 539 (1947) ... 20

Brady v. Maryland, 373 U.S. 83 (1963) ............ 25

Chambers v. Mississippi, 410 U.S. 284 (1973) ...... 25

Davis v. Alaska, 415 U.S. 308 (1974) ............. 25

Dennis v. United States, 384 U.S. 855 (1966) ....... 20

Ex parte Bain, 121 U.S. 1 (1887) ............... 22-23

Hagner v. United States, 285 U.S. 427 (1932) ...... 19

Ingram v. United States, 360 U.S. 672 (1959) .... 7,8,12

Russell v. United States, 369 U.S. 749 (1962) ...... 20

Simmons v. United States, 390 U.S. 377 (1968) ..... 24

Stirone v. United States, 361 U.S. 212 (1960) ...... 22

United States v. Caril, 105 U.S. 611 (1882) ........ 20

United States v. Cruikshank, 92 U.S. 542 (1876) .... 20

United States v. Hess, 124 U.S. 483 (1888) ........ 20

United States v. Nixon, 418 U.S. 683 (1974) ....... 25

Washington v. United States, 388 U.S. 14 (1967) .. .25,26

v

Other

Page

Eari v. United States, 361 F.2d 531 (D.C. Cir. 1966), cert.

denied, 388 U.S. 921 (1967) .................. 23,27

Government of Virgin Islands v. Smith, 615 F.2d 964

A, Sic. @ Wicts'< 240 Dns MIS oss Ooaame 24

United States v. Alessio, 528 F.2d 1079 (9th Cir. 1976),

cert. denied, 426 U.S. 948 (1976) ............... 24

United States v. Brashier, 548 P.2d 1315 (9th Cir. 1976),

cert. denied, 429 U.S. 1111 (1977) .............. 10

United States v. Borelli, 336 F.2d 376 (2d Cir. 1964), cert.

denied, 444 U.S. 1082 (1980) ................... 20

United States v. Brown, 411 F.2d 1134 (10th Cir. 1969) 11

United States v. Brown, 604 F.2d 557 (8th Cir. 1979) 21

United States v. Cambindo Valencia, 609 F.2d 603 (2d

Cir. 1979), cert. denied, 446 U.S. 940 (1980) ...... 21

United States v. Cline, 570 F.2d 731 (8th Cir. 1978) . 14

United States v. Garber, 607 F.2d 92 (5th Cir. 1979) 17

United States v. Garner, 663 F.2d 834 (9th Cir. 1981),

cert. denied, U.S. ____, 102 S. Ct. 750, 72 L.

8 BY BN ere ee ere re 24

United States v. Giese, 597 F.2d 1170 (9th Cir.), cert.

denied, 444 U.S. 979 (1979) .............000055. 20

United States v. Gleason, 616 F.2d 2 (2d Cir. 1979), cert.

denied, 444 U.S. 1082 (1980) ................. 20,21

United States v. Lyman, 592 F.2d 496 (9th Cir. 1978),

cert. denied, 441 U.S. 931 (1979) ............... 22

ie >

——

vi

Page

United States v. Matot, 146 F.2d 197 (2d Cir. 1944) .. 13

United States v. Nance, 533 F.2d 699 (D.C. Cir. 1976) . 20

United States v. Ottley, 509 F.2d 667 (2d Cir. 1975) .. 11

United States v. Root, 366 F.2d 377 (9th Cir. 1966), cert.

denied, 386 U.S. 912 (1967) ..................-.. 21

United States v. Rosenblatt, 554 F.2d 36

IRR SEER SR a Be 20-21

United States v. Shoup, 608 F.2d 950 (3d Cir. 1979) .. 20

United States v. Sternstein, 596 F.2d 528 (2d Cir. 1979) 10

United States v. Taglione, 546 F.2d 194 (5th Cir. 1977) 14

United States v. Tramunti, 513 F.2d 1087 (2d Cir. 1975),

cert. denied, 423 U.S. 832 (1975) ............... 21

United States v. Turkish, 623 F.2d 769 (2d Cir. 1980),

cert. denied, 449 U.S. 1077 (1981) ......... ..+-11,24

United States v. Wilcox, 450 F.2d 1131 (5th Cir. 1971),

cert. denied, 405 U.S. 917 (1972) ............... 26

United States v. Williams, 470 F.2d 915 (2d Cir. 1972) 11

Constitutional Provisions

U.S. Const. amend. V................ 2,23,24,25,26,27

U.S. Const. amend. VI ................. 2,23,24,25,26

Statutes

WCBS ik kK eo... i,2,3,6,7,8,12,15,20

Re Be ER OS Serres 3,26

Page

i, Ae 2s dienes nee PH -MP Os Pe 00 660 oh 11

26 U.S.C. §7206(2) ................. i,2-3,6,7,8,12,15,16

OR AR + Soe Raper eee 2

Rules and Regulations

eR ER a a 20

A a ee a an kw os case ne 12

RC, ec a a eee cob saw eka 13

a CD bb's oo wh eo die oe odo cceccess 13

Other Authority

McCormick on Evidence § 249 (2d Ed. 1972) ....... 14

Morgan, A Suggested Classification of Utterances

Admissible on Res Gestae, 31 Yale L.J. 229 (1922) . 14

3 Wharton's Criminal Procedure § 504 (1974) ....... 21

6 Wigmore, Evidence § 1715 (3d Ed. 1949) ........ 14

Rae

IN THE

Supreme Court of the United States

October Term, 1982

FRANK F. COLACURCIO,

Petitioner,

Vv.

THE UNITED STATES OF AMERICA,

Respondent.

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioner Frank F. Colacurcio respectfully prays that a

writ of certiorari issue to review the opinion of the United

States Court of Appeals for the Ninth Circuit entered in this

proceeding on April 28, 1982.

OPINION BELOW

The memorandum opinion of the Ninth Circuit Court of

An order amending the opinion is reproduced in Appendix

B. The rendering the opinion consisted of Circuit

The opinion below was filed on April 28, 1982. A timely

Petition For Rehearing and Suggestion of Appropriateness

that date. ‘The Court's jurisdiction is invoked under 28 U.S.C.

E) This Petition for Certiorari is filed within sixty days of

§ 1254(1).

2

of Rehearing en Banc was denied on July 2, 1982. (Appendix

CONSTITUTIONAL PROVISIONS AND

STATUTES INVOLVED

The constitutional involved are amendments V

and VI to the United States

The United States

statutes involved are 26 U.S.C. § 7206(2) (aiding preparation

of false corporate tax returns) and 18 U.S.C. § 371 (conspiracy

to defraud the United States). The pertinent text

3

%

S88

FE oe

sat.

uu

i

igi 3

HE

UTE

Hiln

ne

an

a Hun -

EE I me

i i HIE ai i in nu

if a i Hi 1

i : 1 ; rt ii Ai

cM ree Hea aa & ED

i tna ali ae + vi RATE

4

false corporate tax returns for tax years ending March 31,

1978 and 1979, and Counts II and V charged Kent Chisman

with filing of fraudulent or materially false corporate tax

returns for the same tax years.

Trial lasted from January 12, 1981 to February 5, 1981

before Judge Donald S. Voorhees of the United States

District Court for the Western District of Washington at

Seattle (sitting in Portland, per a change of venue).

Defendants were convicted on all counts and petitioner was

sentenced to serve four years and fined $10,000 on Count

I, sentenced to three years and fined $5,000 on Count II, and

sentenced to three years and fined $5,000 on Count IV.

(Judgment and Commitment, Appendix C) The sentences on

Counts I and JI run concurrently and the sentence on Count

IV was suspended and petitioner placed on probation for a

five-year period upon release from imprisonment imposed on

Counts I and II.

The Court of Appeals affirmed petitioner's convictions on

all counts.

B. Relevant Facts

In 1975 co-defendant Kent D. Chisman formed a

corporation, Reeb, Inc., to acquire and operate a tavern

known as the Bavarian Gardens located in Factoria, a Seattle

suburb. (RT 3966-67, Ex. 186, 92) In 1977, Mr. Chisman

formed a second corporation called Federal Way Tavern

Corporation to acquire and operate the Brass Tiger Tavern

located in Federal Way, also near Seattle. (RT 4054-4072,

Ex. 186, 107(a)) The Bavarian Gardens and Brass Tiger

taverns featured topless entertainment. Long before Chisman

ever got into the business several Seattle-area taverns

providing such entertainment formed the Cabaret

Association of Topless Dancing and successfully defeated

an initiative to prohibit such entertainment in King County,

Washington. (RT 3054-3059) All of the so-called ‘‘topless”’

taverns had a common problem of getting and keeping a

reliable supply of dancers and other employees and an

organization grew out of the Cabaret Association called

Talents West. (RT 3055-56) Talents West received $500 a

month from each tavern and, in return, acted as an

employment agency, furnishing dancers and other employees,

such as doormen, bartenders, and managers, as needed. (RT

2145, 3193-96) Talents West was operated by petitioner

during the years covered by the indictment. Colacurcio was

recognized as an expert in the management of topless

taverns. (RT 3085, 3171, 3431) Kent Chisman began utilizing

the services of Talents West soon after getting into the

topless tavern business. (RT 3976-78, 3981-83) Mr. Chisman,

Manner and Means

(Appendix D).

Mr. Colacurcio had learned from previous experience with

the Washington Liquor Control Board that establishments

which he owned or managed could not hold liquor licenses.

(RT 4124) To keep his management role a secret, even in the

corporate records which are periodically audited by the

Liquor Board, Colacurcio’s management fees were paid in

cash. Colacurcio offered to prove he honestly reported all

sums paid to him by the taverns on his personai tax returns

as “consulting income.” (CP 1051, RT 434, Def. Ex. Al, A2,

A3) It was his position that though his management fee was

subtracted from gross revenues before they were reported

on corporate tax returns for tax years 1978 and 1979,

false (the 26 U.S.C. § 7206(2) violation) in that they

underreported gross revenues. It also charged Chisman and

Colacurcio with having conspired to defraud the United

States (the 18 U.S.C. § 371 violation). There was no evidence

that Colacurcio had anything personally to do with

preparation of the corporate tax returns which were alleged

to have understated gross revenues. The government's entire

case against him was predicated on the fact that some of

the weekly cash sheets, delivered to the bookkeepers for the

corporations, were in his handwriting and that on

approximately 22 days during the fiscal year ending March

31, 1978 and approximately i4 days during the fiscal year

ending March 31, 1979 those weekly cash reports omitted

eo ee eee

to have been received on those same days.

7

Relying on Ingram v. United States, 360 U.S. 672, 677-680

(1959), petitioner argued at trial that although concealment

of sums paid to him to hide his management role might

violate state liquor regulations, the absence of an intent on

his part to violate federal tax law was a complete defense

to e charge of conspiracy to defraud the United States under

18 U.S.C. § 371 or to aid, willfully and knowingly, the

preparation of fraudulent or materially false corporate

returns under 26 U.S.C. § 7206(2). In addition to offering his

personal returns, petitioner sought to prove he had no intent

to defraud the United States, or to obstruct the Internal

Revenue Service by offering testimony of several witnesses

who had been instructed by him to keep careful records of

all payments he received from taverns so he could prove that

the payments were honestly reported on his personal returns.

(RT 3378-84, 4118-20) He sought to present the testimony

of the preparer of his personal returns to the effect that she

was instructed to report all payments from the corporations

on his personal returns. (RT 2966-68) He offered the

testimony of a CPA and former IRS agent who would have

testified that if Colacurcio did have a secret ownership

interest in the taverns, as argued by the government, it would

have been improper to report his share of the income on the

corporate returns and that his share of the tavern earnings

was properly reported on his owr personal returns. (RT

4338-39) The court rejected all of this evidence as irrelevant

and inadmissible. (RT 2962-65, 2971, 4119, 4342-43)

The government’s position at trial (with which the District

Court agreed) was that the exclusive issue was falsity of the

returns, not actual loss to the government, tax evasion or

fraudulent intent. It argued: (1) the corporate tax returns

were false because gross revenues were understated; (2)

petitioner contributed to the understatement of gross

revenues by receiving monies which he knew were not being

reported to the tavern bookkeepers. Therefore, said the

government, he should not be allowed to show that he

nevertheless thought the Inte.nal Revenue Service was

getting all it had coming because his efforts to do so were

“irrelevant”. Stated differently, the government said: ‘“‘We

have proof that the tax returns were incorrect. We have

proven petitioner did something that contributed to that

result. We don’t need to consider what he was thinking or

how he was acting at the time. It would be a waste of the

court’s time to even let him try to explain it. His evidence

as to his state of mind simply isn’t relevant.’’ The District

Court’s exclusion of the evidence (now affirmed by the Ninth

Cireuit), converts 18 U.S.C. § 371 and 26 U.S.C. § 7206(2)

into “strict liability” criminal statutes. A showing of falsity

of tax returns is sufficient to produce automatic guilt. No

longer can a defendant charged with violation of those

statutes defend himself on the issue of criminal intent or

introduce evidence to explain his motive in the manner

discussed by this Court in Ingram v. United States, 360 U.S.

672, 677-680 (1959).

The second issue raised in this petition is the propriety

of a supplemental instruction given by the trial court to the

jurors directing them to ignore the ‘‘manner and means’”’

allegations and the indictment. In brief, the second

superseding indictment (Appendix D) describes the specific

details of the alleged conspiracy in nine ‘‘manner and means”

paragraphs. Some of the critical allegations appear at pp.

5-6, supra.

In accordance with the agreement of all counsel, the entire

indictment was sent to the jury. (RT 3911-12) During

deliberation the jury sent out a written question as to the

“role’’ of the ‘‘manner and means’”’ portion of the indictment.

(RT 4597) The court announced that it proposed to advise

the jurors to ignore that portion of the indictment. (RT

4597-98) The defendants objected, particularly because an

Pep ey oa acon glance lial aicese

the government to prove the “manner and means”

eee (RT 4598) Defendants also argued that without

reference to the manner and means portion of the indictment

the government could charge one conspiracy and obtain a

conviction based on some entirely different conspiracy in

violation of defendants’ fifth and sixth amendment rights.

(RT 4598) Attorneys for Colacurcio proposed an alternative

response which was rejected. (RT 4600) The court instructed

the jury to ignore the ‘‘manner and means”’ allegations.

(Appendix D) It is petitioner's contention that the

supplemental instruction violated petitioner's fifth and sixth

amendment rights. The manner and means ailegations were

essential factual allegations describing the skimming case

charged in the indictment. For example, the government

charged in paragraph 1 of the Manner and Means allegations

that Colacurcio hid his ownership interest in the tavern from

the Washington State Liquor Control Board. Colacurcio had

argued that he had no such interest but he agreed his secret

management fees were hidden from the liquor control board.

Suddenly the jury was told to pay no attention to that.

It was alleged that defendants took gross receipts without

accounting for them (Manner and Means paragraphs 5 and

6) and that the net result was that gross receipts were

omitted from corporate tax returns and that Chisman signed

the returns knowing they were false (Manner and Means

paragraphs 8 and 9) The trial court’s separate later

supplemental instruction in response to a specific jury

question told the jurors to pay no attention to those charges.

In effect the Court said to the jury — ““‘The government

alleged it but it doesn’t really have to prove it.”” The court’s

supplemental instruction constituted an impermissible

amendment of the grand jury indictment.

The final issue raised involves conflicts between decisions

of the United States Courts of Appeals and important

unsettled questions regarding a trial court’s obligation to

grant witness immunity when a defense witness whose

testimony is clearly exculpatory has been threatened by

government counsel with a perjury prosecution and asserts

her fifth amendment rights when called as a defense witness.

At trial the defense attempted to call one Pam Dougal as

a defense witness. She announced that she would refuse to

testify unless given a grant of immunity. (RT 3255) Her

attorney advised the court that she had previously been

given immunity when called by the government as a grand

jury witness. (RT 3252, 3316-21) The Assistant United States

Attorney refuse’ to make application for immunity for her

despite having written authorization from the Department

of Justice. (Court Ex. 5, RT 3231-32) He had planned to call

her himself as a prosecution witness during the government’s

10

case in chief. (RT 3233) He had earlier obtained immunity

for her as a grand jury witness. When she insisted on

repeating her grand jury testimony at trial (in the course of

a pretrial interview by the U.S. Attorney) he discussed the

possibility of a perjury prosecution with her. (RT 3231) He

decided not to call her as a witness and refused to seek

immunity for her even though authorized to do so. Her

refusal to testify, absent another grant of ir nunity, cost

the defense her testimony.

The District Court directed the U.S. Attorney to make an

application for immunity for another important defense

witness (Mr. DeFeo) who was also asserting his intention to

stand on his fifth amendment rights, holding that his

testimony was essential to a full and proper defense. (RT

3364) However, the court refuse to make a similar ruling as

to Ms. Dougal.

Refusal to grant Dougal immunity denied a petitioner the

testimony of an indispensable defense witness, in violation

of petitioner’s due process rights under the fifth amendment

and compulsory process rights under the sixth amendment.

REASONS FOR ALLOWING THE WRIT

A. The Decision Of The Court Of Sanctions Such

ee The Usual Course Of

—viiewiaaiin

Of This Court’s Power Of

“The critical element in a criminal tax case ... is the mental

state of the defendant. Courts have repeatedly observed that

in such cases the accused as part of his defense is entitled

to wide latitude in the introduction of evidence which tends

to show lack of specific intent.’’ United States v. Sternstein,

596 F.2d 528 (2d Cir. 1979) (numerous citations omitted;

emphasis added). Contrary to this oft recognized and

fundamental right, petitioner Colacurcio was wholly

precluded from introducing evidence corroborative of his lack

of specific intent. Most critical was the exclusion of

petitioner’s personal tax returns which the government

argued were irrelevant. (RT 2962-65) The government took

the opposite position in United States v. Brashier, 548 P.2d

1315 (9th Cir. 1976), cert. denied, 429 U.S. 1111 (1977) and

11

United States v. Williams, 470 F.2d 915 (2d Cir. 1972) in

which the two different Courts of Appeals held tax returns

other than the alleged false returns properly admissible as

of the defendants’ intent. In United States v.

Turkish, 622 F.2d 769 (2d Cir. 1980), cert. denied, 449 U.S.

1077 (1981) the court of appeals specifically commented on

the defendants failure to report monies received from a

corporation on his personal return in a case where he was

charged with causing preparation of false corporate returns.

Here the faithful reporting by Colacurcio of receipts from

the corporations on his personal returns was held irrelevant.

The Ninth Circuit affirmed the district court’s ruling here

saying only: ‘‘[tjhe District Court has wide discretion in

determining whether evidence is relevant’”’ in this context.

(Appendix A) In a single sentence the Ninth Circuit has

stripped this petitioner of a fundamental right — the right

to defend himself, to explain his conduct in a way which

might have persuaded the jury that he intended no wrong

and to contend that even though he received the proceeds

of what appeared to be a skimming operation he at least had

no thought of cheating the Internal Revenue Service or

avoiding any income taxes.

The proper approach in our criminal justice system is

exemplified by cases such as United States v. Brown, 411

F.2d 1134, 1137 (10th Cir. 1969) (when issue is specific intent

to violate 26 U.S.C. § 7206 evidence on the question of intent

may take a wider range than is allowed in support of other

issues) and U.S. v. Ottley, 509 F.2d 667, 674 (2d Cir. 1975)

(although appellate courts normally will not reverse a

conviction on an evidentiary ruling within the discretion of

the trial court, in a criminal case where the issue is intent

to defraud a defendant is entitled to introduce evidence which

will corroborate the lack of intent to defraud and refusal to

accord defendant that right is reversible error).

In affirming the District Court’s ruling the Ninth Circuit

said: “The fact that Colacurcio may have honestly paid

personal taxes on unreported corporate income has no

relevance to whether he willfully assisted in the falsification

of a material fact by underreporting the corporate income.”

(Appendix A) This is simply not so. It completely ignores

12

this Court’s opinion in Ingram v. United States, 360 U.S. 672

(1959) where this Court stated, ‘This [is] not a case where

efforts at concealment would be reasonably explainable only

in terms of motivation to evade taxation. Here, the criminality

of the enterprise under local law provided more than sufficient

reason for the secrecy in which it was conducted.”’ Id. at 679.

However, “if one of its objectives, even a minor one, be the

evasion of federal taxes, the offense is made out, though the

primary objective may be concealment of another crime."’ Jd.

Ingram stands for the simple proposition that intent to violate

a state law which results in falsification of a federal tax return

will not support a federal conviction without proof of intent

to violate federal law. Thus, in this case petitioner had the

cifficult burden of proving that concealment of payments to

him on the corporate tax returns (by underrep<: ang gross

revenues and not taking corresponding consulting fee

deductions) was in no sense motivated by the desire to evade

federal taxes, but solely to hide his involvement from the

Washington State Liquor Control Board. In order to prove

this petitioner sought to introduce his personal returns to

prove he carefully paid all taxes owing on his corporate

earnings in support of his claim that. he had no intent to falsify

resurns and defraud the federal government. The difficulty

of demonstrating that the prohibited intent played no role at

all in Colacurcio’s thinking made every bit of evidence tending

in that direction critical. Any relevant fact not otherwise

presented to the jury might trigger the reasonable doubt

which prevents conviction.

Relevant evidence is ‘‘Evidence having any tendency to

make the existence of any fact that is of consequence to the

determination of the action more probable or less probable

than it would be without the evidence.”’ Fed. R. Evid. 401.

The question before this Court, then, is: Would the jury of

laymen have considered it less probable that Frank

Colacurcio intended to defraud the United States (18 U.S.C.

§ 371) or willfully aided preparation of fraudulent or

materially false corporate returns (26 U.S.C. § 7206(2)) if they

had been allowed to hear testimony that, during the same

years when the corporate returns were filed, Colacurcio filed

testimony

The Ninth Circuit's opinion errone~usly concludes, ‘“The

14

he received from skimmed gross receipts should be handled

for tax purposes. Is it reasonable to believe that a man who

was honestly reporting and paying taxes to the United States

on those amounts was attempting nevertheless to defraud

the government?

It is well established that evidence of acts and utterances

showing the state of mind of a defendant is not hearsay. United

States v. Cline, 570 F.2d 731 (8th Cir. 1978) (circumstantial state

of mind testimony is not hearsay). This principle is reflected

in the writings of the leading authors on evidence, Professors

McCormick, Wigmore and Morgan. McCormick on Evidence

§$ 249 at 590 (2d Ed. 1972) (declarations which impliedly,

indirectly, or inferentially indicate mental state are not hearsay),

6 Wigmore, Evidence § 1715 at p. 61 (3rd Ed. 1940)

(circumstantial evidence of mental state is not hearsay);

Morgan, A Suggested Classification of Utterances Admissible

on Res Gestae, 31 Yale L.J. 229, 232 (1922) (circumstantial

evidence of mental state is not hearsay). See also United States

v. Taglione, 546 F.2d 194, 200-01 (5th Cir. 1977) (error to exclude

testimony of defendant’s former attorney as to a conversation

in which defendant made statements showing his then existing

state of mind and corroborating his defense of lack of intent

to defraud).

The trial court’s ruling as to relevancy extended beyond

exclusion of the personal returns to all evidence offered as

to mental state. Petitioner sought to prove he had no intent

to impair, obstruct or impede the Department of Treasury

by asking specific questions of two witnesses. The District

Court excluded the evidence as irrelevant on both occasions.

(RT 4118-20, RT 3379-84) First, Kent Chisman would have

testified that in connection with the secret consulting fees

paid by the two taverns, Colacurcio instructed him to keep

accurate records of compensation paid to Colacurcio in case

later proof was necessary. (RT 4118-20) In addition, another

witness, Philip McKibben, would have testified that in

connection with a similar compensation arrangement for a

different tavern, defendant Colacurcio admonished

McKibben to keep accurate records of the amounts paid to

him. (RT 3378-80) Even the government expressly conceded

at trial on several occasions that the offered McKibben

15

testimony was relevant. (RT 3370, 3349, 3251 (Assistant U.S.

Attorney Sim: “I think that area is relevant. .. ."’; “I think

it is relevant evidence. . . .”)) These acts are totally

purpose.

Thi is especially clear when the nature of the supposed

obstruction is considered. The government argued below that

it needed only to prove petitioner intended to deprive the

government of the ability to properly review and audit the

tax affairs of Reeb, Inc. or Federal Way Tavern Corporation

to establish a violation of 18 U.S.C. § 371. The government

in essence was claiming that a man who honestly paid his

own taxes, and who told those who paid him to keep accurate

records so he could prove the amounts of the payments he

received, nevertheless concealed the amounts of those

payments to frustrate any IRS auditor who might review

the returns of Chisman’s businesses. This argument strains

credulity. Evidence of defendant Coiacurcio’s concern with

making accurate records regarding his consult fees from

the very taverns in question went to the heart ox and was

directly relevant to the issue of whether defendant intended

to impair the IRS's ability to function.

The offered evidence was also plainly relevant on the issue

whether defendant Colacurcio willfully aided the preparation

of fraudulent returns under 26 U.S.C. § 7206(2). Defendant

Colacurcio’s actions in seeking to insure he could prove the

amounts of payments made to him tend to show his complete

good faith with respect to the federal taxing authorities. His

instructions to keep careful records as to the money he received

make it less likely that he believed omissions of those payments

from gross revenues reported on the corporate returns at issue

were material. The relevance of his conclusions in that regard

was demonstrated by the testimony of Mr. Paul Garrett, CPA

and former IRS agent, (which was admitted) to the effect that

taking Colacurcio’s consulting fees “‘off the top” and failing

to claim a legitimate deduction for them vroduced no net tax

loss to the United States. (RT 4351)

16

The trial court also excluded as irrelevant offered testimony

of Ethel Fitzpatrick, the preparer of petitioner's tax returns,

who would have testified that petitioner, as a matter of

consistent practice, gave her written information about his

consulting fee income from taverns. (RT 2966-2971) She would

also have testified that he consistently told her he could not

show the names of the taverns from which he received fees

on his tax returns because the Liquor Control Board would

revoke the licenses. (RT 2966) The trial court wrongfully

excluded this evidence as irrelevant and the Ninth Circuit

agreed. Colacurcio’s established practice in honestly reporting

such payments, and in keeping a written record of them even

though they were received in cash, is totally inconsistent with

the government’: theory that he entered into an agreement

whose purpose was to “impair, obstruct or ” the

Internal Revenue Service. Ethel Fitzpatrick’s would

have shown defendant had no such purpose. Ms. Fitzpatrick’s

testimony was also relevant to whether petitioner willfully

aided preparation of a fraudulent return under 26 U.S.C. §

7206(2). Her testimony would have shown his conduct was

that of a taxpayer attempting to comply with the tax laws

as to large cash payments, not trying to circumvent them.

Recordkeeping is the antithesis of the defrauder’s way. Ethel

Fitzpatrick’s testimony was relevant to show petitioner's good

faith efforts to accurately report to federal tax authorities and

made less probable the charge that defendant willfully aided

preparation of false corporate returns.

Finally we seek review of the exclusion of certain expert

testimony offered by petitioner. In the indictment the

accused Colacurcio of having a secret ownership

interest in the taverns. (Manner and Means paragraph 1,

Appendix D) An Assistant U.S. Attorney told the jurors in

opening statement: ‘“The evidence will show you that Frank

Colacurcio was in fact a secret or silent partner or perhaps

the full owner of both of these taverns.”’ (RT 373) Colacurcio

steadfastly maintained he owned no interest in the taverns.

Nevertheless, Colacurcio felt compelled to offer testimony

of the tax consequences if the jury concluded he did possess

an ownership interest as charged by the government. The

testimony of Paul Garrett, a Certified Public Accountant and

17

former Internal Revenue Service agent would have

established that if Colacurcio was a joint venturer with the

corporations in the tavern businesses his share of the

earnings should have been excluded from the corporate

returns and properly belonged on his personal returns. (RT

4337-4343) The government, however, objected to the offered

the opinion. In short, the government, after making the

allegation, objected to a defense expert opinion based on the

government's own charges. The record was clear that Kent

Chisman had personally made the financial investment to

acquire both taverns and had formed separate corporations

to acquire each tavern. (RT 3971-72, 4072, 3696, Ex. 92) It

was uncontroverted that the corporate entities were the legal

owners of each tavern and that Kent Chisman was the sole

shareholder of each corporation. (Ex. 186, RT 4072) If

Colacurcio had an ownership intezest as charged, the only

logical assumption was that Colacurcio was a silent partner

or joint venturer with the corporations. This was the

assumption upon which petitioner’s expert was prepared to

testify. This assumption was supported by the indictment

(Appendix D) and the government's opening statement. (RT

373) There could be no error more clearly erroneous than to

deny petitioner the opportunity to prove the tax

consequences of the government's charge. See United States

v. Garber, 607 F.2d 92, 97 (5th Cir. 1979).

The exclusion of evidence outlined above was not a matter

of incidental concern or harmless error. It effectively removed

mens rea as an element of the criminal offenses charged. No

other evidence was admitted on any of the points which cured

the exclusions. The court’s rulings effectively denied

petitioner the opportunity to defend himself based on his

mental state. Because the critical element in a criminal tax

case is the mental state of the defendant cou:ts have

repeatedly observed that in such cases the accused is entitled

to wide latitude in the introduction of evidence which tends

to show lack of specific intent. Excluding all evidence as to

18

mens rea is a gross departure from the accepted and usual

course of criminal judicial proceedings. This Court should

exercise its power of supervision and review the actions of

the lower courts.

B. In Sanctioning The Trial Cvart’s Instruction To The

Fae Tihs ge Tagg camer! geome ta erry Sof

(RT 4597) The court advised counsel that it proposed to give

ag etyeg moe in Count I

of the indictment you need not be conce with the

ov as tr lalliikeuess Reem eiseederede than came

are indictment because procedur must

be in the indictment. In the or

forth ix the Court's Instruction No. 9 rather than tothe

Manner and Means section of the indictment.

(Emphasis supplied.) (RT 4597-98) Instruction No. 9, to which

the jury’s attention was directed, was as follows:

In order to establish that either of the defendants

oa ie fee in Count I of the

agencies, out of money or property

to

which substantially

~o by the Bavarian

G and Brass Tiger

3. That the defendant in became a

eee fe ee wed inte l thrmeree whine

one of the defendants within the

Western District of W at least one overt act in

furtherance of the objective of the conspiracy.

(RT 4395-96)

provided to the jury by agreement of all parties (RT 3911,

3912), argument had been based on the failure of the

government to prove the manner and means allegations (RT

4598), and the Government had to prove the particular

alleged in the indictment and not some other

of some conspiracy other than that pleaded. You

ee pean ab trmerlenem Sgt meee =

Count I as given to you in the Court’s Instruction No. 9.

The court refused the defense’s proposed response and

gave its own response quoted above to the jury’s questions.

(RT 4600) In instructing the jury that it need not consider

the manner and means allegations and need only look at the

elements of the crime as set forth in Instruction No. 9, the

district court committed reversible error.

To be constitutionally sufficient, an indictment must

contain the elements of the offense charged and sufficiently

apprise the defendant of the charge against which he must

defend. It must be so specific as to enable him to plead double

jeopardy in a subsequent prosecution. Hagner v. United

States, 285 U.S. 427, 431 (1932). An indictment drawn in the

language of the statute is not sufficient ‘‘unless those words,

in and of themselves, fully, directly, and expressly, without

any uncertainty or ambiguity, set forth all the elements

necessary to constitute the offense intended to be punished.”

United States v. Caril, 105 U.S. 611, 612 (1882). If the statute

defines tl . offense in generic terms only, the indictment ‘‘must

state the species, — it must descend to particulars.’’ United

States v. Cruikshank, 92 U.S. 542, 558 (1876). “Undoubtedly

the language of the statute may be usec in the general

description of an offense, but it must be accompanied with such

a statement of the facts and circumstances as will inform the

accused of the specific offense, coming under the general

with which he is charged.” United States v. Hess,

124 U.S. 483, 487 (1888).

These basic principles of fundamental fairness have retained

their full vitality under modern concepts of pleading, and

under Rule 7(c) of the Federal Rules of Criminal

Procedure. Russell v. United States, 369 U.S. 749 (1962); United

States v. Nance, 533 F.2d 699 (D.C. Cir. 1976). These

are fully applicable to indictments under 18 U.S.C. § 371, the

general conspiracy statute. See, eg, United States v.

Rosenblatt, 554 F.2d 36 (2d Cir. 1977); United States v. Giese,

597 F.2d 1170 (9th Cir.), cert. denied, 444 U.S. 979 (1979).

Moreover, an indictment charging a conspiracy ‘‘under the

broad language of the general conspiracy statute must be

scrutinized carefully” because of its potential for abuse. Dennis

v. United States, 384 U.S. 855, 861 (1966); United States v.

Shoup, 608 F.2d 950, 955 (3d Cir. 1979).

In general, the indictment must allege the elements which

are the gist of the offense: the agreement, the object to be

accomplished, and an overt act in furtherance of the

United States v. Giese, supra, at 1177. Because

the gist of the offense is the agreement, it is essential to

determine what kind of agreement existed. United States v.

Borelli, 336 F.2d 376 (2d Cir. 1964), cert. denied, 379 U.S.

960 (1965). Although it is unne-essary to allege and prove

all the details or specifics of the agreement, United States

v. Gleason, 616 F.2d 2 (2d Cir. 1979), cert. denied, 444 U.S.

1082 (1980), the “essential nature of the plan’’ must be

shown. Blumental v. United States, 332 U.S. 539, 557 (1947).

The “essential nature of the plan” is not shown by

allegations simply in the language of 18 U.S.C. § 371. Since

“fbjoth clauses of the conspiracy statute use broad, generic

terms which are insufficient, standing alone, to define the

21

‘essential nature’ of a given conspiratorial plan,’’ United

States v. Rosenblatt, 554 F.2d 36, 41 (2d Cir. 1977), a

conspiracy to defraud indictment must ‘descend to

particulars.” The particulars to which this indictment

descended were the allegations in the nine paragraphs

captioned ‘‘Manner and Means"’ and nowhere else.

Here the gist of the offense was skimming, the omission

of certain gross receipts from the corporate tax returns and

the willful filing of those returns by Chisman, knowing they

were false. The only portion of the indictment which

descended to particulars and contained those specific

allegations were the Manner and Means paragraphs. Those

were the paragraphs which the District Court told the jurors

they “need not be concerned with.”’

It is hornbook law that the Government must prove the

allegations of the indictment necessary and material to describe

the offense charged. 3 Wharton's Criminal Procedure § 504

(1974). This requirement stems from the fundamental principles

not an element of the offense. Id. § 505; United States v. Brown,

604 F.2d 557 (8th Cir. 1979). However, “[wjords that are

employed in an indictment that are descriptive of that which

is legally essential to the charge in the indictment cannot be

striken out as surplusage.”” United States v. Root, 366 F.2d

377, 381 (9th Cir. 1966), cert. denied, 386 U.S. 912 (1967). The

allegations concerning manner and tneans were “descriptive

of that which [was] legally essential to the charge in the

indictment. . . .” Id. The Government had to prove that the

defendant entered the particular conspiracy described and that

at least one of the alleged means was used. United States v.

Gleason, supra, 616 F.2d at 17.

To convict either defendant the jury had to ‘“‘find that he

was a member of the conspiracy charged in the indictment

and not some other conspiracy.’ United States v. Cambindo

Valencia, 609 F.2d 603 (2d Cir. 1979), cert. denied, 446 U.S.

940 (1980), quoting, United States v. Tramunti, 513 F.2d

1087 (2d Cir. 1975), cert. denied, 423 U.S. 832 (1975). By

instructing the jury that they need not be concerned with

the manner and means allegations, the trial court removed

from their consideration the essential element of the

Government's case. There is now no way to conclude that

the jury determined that the conspiratorial agreement or any

single element of it, as charged in the indictment, was proven.

Ever since Ex parte Bain, 121 U.S. 1 (1887), it has been

the rule that an indictment may not be amended except by

the grand jury itself. In that case the trial court ordered

certain specific allegations be stricken from the indictment.

The result was to allow the defendant to be convicted without

proof of those allegations. In holding that this could not be

done, this Court stated that it is not for the court to say

whether the grand jury would have returned the indictment

without the language at issue. See also Stirone v. United

States, 361 U.S. 212 (1960) (the court may not by any means

alter the material and essential nature of an indictment).

The court of appeals for the Ninth Circuit held the trial

court’s instruction proper on the theory that a trial court

may strike allegations in a conspiracy indictment which are

‘non essential elements of the government’s proof’’ citing

United States v. Lyman, 592 F.2d 496, 500-01 (9th Cir. 1978),

cert. denied, 441 U.S. 931 (1979)

However, that is not what happened here. The crux of the

alleged scheme to defraud the government alleged in the

conspiracy count was skimming (Manner and Means

paragraph 5), preparation of accounting forms which omitted

the skimmed amounts and submission of those forms to

bookkeepers so false tax returns could be prepared (Manner

and Means paragraph 6), and final consummation of the

fraud by Chisman filing the tax returns knowing they were

false (Manner and Means paragraph 9). All of the above

allegations were in effect stricken when the jury was told

to pay no attention to them. Nothing remained of the basic

factual allegations on which the charge of fraud on the United

Se ne eee eee

the indictment was peng mere Nether as aot

indictment of the other doctrine would

121 U.S. at 13.

In short the trial court’s instruction to the jury resulted

in a material alteration of the offense charged in violation

of defendant's fifth amendment rights. The jury was allowed

to convict defendants of a “‘conspiracy’’ which no longer had

any parameters or defined elements. The court should not

have substituted its judgment for that of the grand jury.

In sanctioning the trial court’s instructions to the jury to

ignore the manner and means portion of the indictment, the

Court of Appeals decided an important question of federal

law in conflict with applicable decisions of this Court. A writ

of certiorari to the United States Court of Appeals for the

Ninth Circuit should issue.

C. This Court Shouid Finaily Resolve Numerous

Decisions Of The Of Appeals As To

Whether Under What Circumstances A Trial

Court Is To Grant Immunity To Defense

Whether, and under what circumstances, a trial court is

obligated to grant immunity to defense witnesses under the

due process clause of the fifth amendment and the

compulsory process clause of the sixth amendment is an

important federal question which has generated numerous

conflicting decisions in the courts of appeals and which has

not been addressed by this Court. The origin of this issue

can be traced to a footnote written by then Circuit Judge

Burger in Eari v. United States, 361 F.2d 531 (D.C. Cir. 1966),

cert. denied, 388 U.S. 921 (1967). In footnote i to that case

Chief Justice Burger recognized that when the government

secures testimony from one witness by granting him

immunity while declining to seek immunity for a witness

whose testimony is favorable to the defense, arguments could

be advanced that due process prohibits the government from

using the immunity statute for its advantage unless the same

mechanism is available to the accused. Jd. at 534 n.1. A

multitude of conflicting decisions has arisen in the circuit

courts of appeals since Chief Justice Burger raised the issue,

and this Court has not heretofore granted certiorari to finally

resolve the conflict. Because this case presents a factual

24

situation cominon with many of the conflicting decisions it

presents a perfect opportunity for the Court to finally decide

this issue.

The status of the law in the circuits is discussed at length

in several opinions. In United States v. Turkish, 623 F.2d 769

(2d Cir. 1980), cert. denied, 449 U.S. 1077 (1981) the Second

Circuit held that the sixth amendment does not authorize

judicial grants of defense witness immunity. Nor said the court

does the due process clause of the fifth amendment apply:

[without precluding the possibility of some

find i ibadascemedinciones coment teqanaties yt thet

in

defense witness immunity must be ordered whenever

it seems fair to grant it.

Id. at 777.

In contrast the United States Court of Appeals for the

Third Circuit in Government of Virgin Islands v. Smith, 615

F.2d 964 (3d Cir. 1980) concluded that judicial immunity

must be granted when immunity is properly sought in the

district court, the defense witness is available to testify, the

proffered testimony is clearly exculpatory, the testimony is

essential, and there is no strong countervailing governmental

interest. Id. at 972.

The United States Court of Appeals for the Ninth Circuit

applies yet a different standard: ‘““We have defined the question,

however, as whether the defendant ‘was denied a fair trial

because of the government’s refusal to seek immunity for

defense witnesses.”” United States v. Garner, 663 F.2d 834 (9th

Cir. 1981), cert. denied, US. , 102 S.Ct. 750, 72 L.Ed.

2d 161 (1982), quoting, United States v. Alessio, 528 F.2d 1079,

1082 (9th Cir. 1976), cert. denied, 426 U.S. 948 (1976).

While this Court has not directly passed judgment on this

issue, there is strong Supreme Court precedent for a judicial

order that the government obtain immunity for defense

witnesses. Judicially created use immunity premised on

constitutional considerations was fashioned by this Court

in Simmons v. United States, 390 U.S. 377 (1968)

(defendant's testimony at suppression hearing barred from

use at trial). This Court recently balanced the concern for

separation of powers versus the right to production of

evidence at a criminal trial and declared, ‘‘[t}he right to the

production of all evidence at a criminal trial. . . has

constitutional dimensions. . . . It is the manifest duty of the

courts to vindicate [the fifth amendment and sixth

amendment] guarantees, and to accomplish that it is essential

that all relevant and admissible evidence be

United States v. Nixon, 418 U.S. 683, 711 (1974). The Court

expressed a flexible interpretation of the separation of powers

doctrine and a willingness to balance competing

constitutional interest and protect those individual rights

endangered by the activities of another branch.

Protection of a defendant’s constitutional rights by requiring

immunization of defense witnesses falls clearly within the recent

strong line of decisions by this Court guaranteeing defendants’

access to evidence in their favor. That line of cases includes

Davis v. Alaska, 415 U.S. 308 (1974); United States v. Nixon,

supra; Chambers v. Mississippi, 410 U.S. 284 (1973);

Washington v. United States, 388 U.S. 14 (1967); and Brady

v. Maryland, 373 U.S. 83 (1963).

In Davis this Court held the defendant’s confrontation

right under the sixth amendment to gain impeachment

testimony outweighed the state’s and witnesses’ interest in

privacy of juvenile offender records. In Nixon, a claim of

executive privilege yielded to the due process need for all

relevant evidence in a criminal trial. In Chambers, the

defendant’s due process right to present an effective defense

was held to have been violated by state evidence rules

from testifying on behalf of a co-participant, deciared:

The to offer the testimony of witnesses and to

their atten ‘nce, if , is in plain terms

the to present a defense, the right to present the

388 U.S. at 19. This Court recognized that the constitution

requires more than merely “‘giving to a defendant the right

to secure the attendance of witnesses whose testimony he

‘had no right to use.” Id. at 23. The Court squarely held that

the compulsory process clause of the sixth amendment

imposes certain affirmative duties on the state in securing

the testimony of witnesses in defendant’s behalf.

Witness immunity played a large role in this case. The

government sought and obtained immunity for three

witnesses whose testimony it desired in order to prosecute

its case. (Witness Carlson, RT 138, 468; Witness Buck, RT

470; Witness Pauole, RT 677} Petitioner sought the

exculpatory testimony of two witnesses, both of whom

asserted their fifth amendment rights. (Witness DeFeo, RT

3480; Witness Dougal, RT 3258) The court ruled that

petitioner would be denied due process unless the

government applied for immunity for one witness, Carmen

DeFeo, and the government then did so. (RT 3364) The court

refused to make a similar ruling for witness Dougal.

The government did not deny that it subpoenaed witness

Dougal as did the defense. (RT 3257) Nor did the government

deny that the Assistant United States Attorney was authorized

by letter to request a grant of immunity pursuant to 18 U.S.C.

$ 6003, but refused to do so. (Court Ex. 5, RT 3281-82) The

government did not deny that it told Pam Dougal and her

lawyer she would be called as a trial witness and granted

immunity. (RT 3233) Finally the government did not deny the

Assistant United States Attorney discussed a possible perjury

prosecution with witness Dougal. (RT 3231)

There is no doubt that the perjury discussion with the U.S.

attorney gave the witness a legitimate fear of prosecution

and therefore a legitimate fifth amendment claim on that

basis alone. United States v. Wilcox, 450 F.2d 1131 (5th Cir.

1971), cert. denied, 405 U.S. 917 (1972). The threat to

prosecute a witness for perjury if she repeats at trial her

previous grand jury testimony is a terrible weapon, available

only to the prosecution. Using it to deprive the defense of

an important witness is to compound the misconduct. The

government's remedy, if it believes a witness has not testified

truthfully is to proceed to present its alleged perjury claim

27

to a second grand jury and if an indictment issues to proceed

decisions which have arisen since Earl v. United States, supra,

and resolve an important federal question.

28

CONCLUSION

For these reasons a writ of certiorari should issue to review

the judgment and opinion of the Ninth Circuit.

DATED this

day of August, 1982.

Respectfully submitted,

William A. Helsell and

R. Broh Landsman of

HELSELL, FETTERMAN,

MARTIN, TODD & HOKANSON

1500 W

P.O. Box 21846

Seattle, Washington 98111

Telephone: (206) 292-1144

Counsel of Record for Petitioner

Frank F. Colacurcio

er