Appendix — Computer Sciences Corp. v. United States

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 81-5053

PUBLISHED

UNITED STATES OF AMERICA,

Appellant,

We

COMPUTER SCIENCES CORPORATION, JOHN W. LUKE,

Erwin L. ALLEN, THoMAs A. MARTI,

NorMAN W. Derrick, Peter C. Loux, HERBERT G. BLECKER

Appellees.

No. 81-5099

UNITED STATES OF AMERICA,

Appellant,

v.

COMPUTER SCIENCES CORPORATION, JOHN W. LUKE,

ERWIN L. ALLEN, THomas A. MartTI,

NorMAN W. DERRICK, PETER C. Loux, HERBERT G. BLECKER

Appellees.

Appeal From The United States District Court

For The Eastern District Of Virginia, At Alexandria.

Richard L. Williams, District Judge.

Argued January 7, 1982 Decided June 16, 1982

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Before: MURNAGHAN and ERV, Circuit Judges, and WIL-

KINS,* District Judge.

*The Honorable William W. Wilkins, Jr., United States

District Judge for the District of South Carolina, sitting by

designation.

MURNAGHAN, Circuit Judge:

Resourceful lawyers representing criminal defendants often

desire to be thorough ard to overlook nothing in their com-

mendable zeal to afford first-class representation. Con-

sequently in many cases they tend to excess as the inundate us

with a plethora of arguments, some good and some not so good.

Sometimes one wonders whether suen lack of selectivity is not

counterproductive, for a party raising a point of little merit

exposes himself to the risk of excessive discount for a better

point because of the company it keeps.

The present case raises numerous issues, but, in fairness to

counsel, it should be said that few, if any, of them are trivial or

frivolous.

I. The Procedural Posture Of The Case

The case comes before us from a dismissal by the district

court’ of all fifty-seven counts in an indictment charging:

(a) conspiracy to participate in the affairs of an enterprise

through a pattern of racketeering activity, 18 U.S.C. § 1962(c)

and (d) (Count 1);

The opinion is reported as United States v. Computer Sciences

Corp., 511 F. Supp. 1125 (E.D. Va. 1981).

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(b) the substantive offense of participating in the affairs of

the enterprise through a pattern of racketeering activity, 18

U.S.C. § 1962(c) (Count 2);

(c) use and the investment of income received from a pat-

tern of racketeering activity in the operation of an enterprise,

18 U.S.C. § 1962(a) (Count 3);

(d) defrauding the United States by overbilling the Gener-

al Services Administration through causing checks drawn on

the United States Treasury to be mailed, 18 U.S.C. § 1341

(Counts 4 through 27);

(e) defrauding the United States through overbilling of the

GSA for computer services employing interstate wire trans-

missions, 18 U.S.C. § 1343 (Counts 28 through 37);

(f) bringing about the mailing of improperly inflated in-

voices to GSA, 18 U.S.C. § 1341 (Counts 38’ through 43);

(g) causing the presentation of false claims to the United

States Government for computer services, 18 U.S.C. § 287

(Counts 44 through 55);

(h) two additional charges of false claims to the United

States Government, 18 U.S.C. § 287 (Counts 56 and 57).

Counts 1 and 2 charged all defendants. Count 3 charged

Computer Sciences Corporation (CSC) alone. The defendants

in Counts 4 and 5 were John W. Luke, Erwin L. Allen, and

Thomas A. Marti. Counts 6 through 37 lay against CSC, Luke,

Allen, Marti, and Norman W. Derrick. Counts 38 through 43

named as defendants CSC, Luke, Allen, Peter C. Loux, and

Herbert G. Blecker. Counts 44 and 45 charged CSC, Luke,

Allen, and M: rti. Those charged under Counts 46 through 55

For an entirely independent reason not related to the issues

disputed by the parties, namely a time-bar, the government con-

sented to the dismissal of Count 38, and did not appeal the dismissal

of that count.

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were CSC, Luke, Allen, Marti, and Derrick. Counts 56 and 57

charged CSC, Luke, Allen, Loux, and Blecker.

Dismissal by the district court of the counts proceeded on

two different bases. Counts 4 through 43 were dismissed for

the reason that the mail fraud and wire fraud offenses charged,

involving as they did fraud against the United States govern-

ment, were precluded by the false claims statute which, upon

enactment, had ousted any other statute which by its terms

might proscribe the same offenses against the government.

Consequently, on the theory on which the district judge was

proceeding, the more general mail and wire fraud statutes,

which were not yet even in existence, nevertheless

anticipatorily were foreclosed and the false claims act became

the only vehicle permitting prosecution of mail and wire fraud

crimes against the government. The district judge con-

templated that, absent a reversal on appeal, his decision would

finally dispose of Counts 4 through 43.

The second dismissal theory applied to all fifty-seven counts,

resting on the theory that the proceedings of the grand jury’

had been contaminated through the unauthorized entry into

the grand jury while that body was in session of persons to

whom Fed. h. Crim. P. 6(d) did not grant the right to be

present. That such an infringement of Rule 6(d) occurred is

admitted by the government.

Additionally, insofar as defendant Derrick was concerned,

the district judge dismissed Counts 1, 2, 6 through 37 and 46

through 55 against him with prejudice on the grounds of pro-

secutorial misconduct. Furthermore, the RICO counts (1

through 3) were dismissed for the reasons that (1) Infonet, an

unincorpor ated division of a corporation (CSC), which was the

enterprise charged in Counts 1 through 3 could not qualify as

an “enterprise,” since it lacked sufficient independent ex-

The grand jury investigation had a life of eighteen months during

1979 and 1980.

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istence for that purpose; (2) there was no showing in the

indictment of a benefit flowing from the racketeering activity

to the Infonet Division; and (3) the dismissal on the substantive

grounds of preemption by the false claims statute of the mail

fraud and wire fraud charges reduced the predicate acts

remaining to one, a bribery alleged but not prosecuted, being

more than five years old and the statute of limitations having

run. Therefore, ran the reasoning of the district judge, the

quantity of predicate acts was insufficient to establish a pat-

tern of racketeering activity.

The counts dismissed solely on grounds of impropriety in the

conduct of the grand jury proceedings were not dismissed with

prejudice, leaving it open to the government to seek reindict-

ment through a new grand jury proceeding.

II. Disposition Of The Several Contentions Raised

A. The improper presence in the grand jury room of unautho-

rized persons.

A review of the record satisfies us that the invasions of the

grand jury proceedings were rare, inadvertent and nonpre-

judicial to any defendant.‘ We do not mean to be taken as

saying that those conclusions necessarily insulate an indict-

ment and validate it in every case. Rather, each situation

should be addressed on a sui generis basis. For a prosecution as

to which the grand jury required only a day or two or a week or

two to complete its investigation and to return an indictment,

the posture in terms of frequency, inadvertence, and prejudice

might differ, although the acts sullying the purity of grand jury

It is relevant to observe that no grand jury witness complained of

the momentary intrusions. Diligent lawyers for the defendants first

raised the point following review by them of grand jury transcripts.

They were, howerver, unable to advance any basis for saying that the

defendants were prejudiced, aside from the Rule 6(d) infraction

itself.

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proceedings were substantially like the ones with which we

here concern ourselves.

In the course of grand jury investigation lasting eighteen

months, intrusions by unauthorized persons occurred on five

occasions. Duration of the entire proceedings is a significant

measuring background when it comes to assessing the import-

ance of specific interruptions. Each intrusion was brief, lasting

no more than a minute or two. On two occasions, a Deputy U.S.

Marshal came in the room, handed a document to the prosecu-

tor leading the grand jury proceeding, leaving promptly after

doing so. On a third occasion, the Marshal entered for a pur-

pose not identified in the record and left immediately. An

unidentified woman once entered, handed a document to the

prosecutor and left. The final occasion occurred in the summer

of 1979. Complaints had been made about the heat. Someone

charged with the maintenance of the air conditioning equip-

ment entered and interrupted the proceedings. He departed

on being instructed by the prosectuor to leave the room in-

asmuch as the grand jury was in session. Each intrusion

brought the proceedings to an abrupt halt, and no testimony

was taken in the presence of the unauthorized persons.

On the record we are satisfied that this is a case “absent

demonstrable prejudice or substantial threat thereof” so that

“dismissal of the indictment is plainly inappropriate. United

States v. Morrison, 449 U.S. 361, 365 (1981). Cf. United States

v. Rath, 406 F. 2d 757 (6th Cir. 1969), cert. denied, 394 U.S. 920

(1969) (“A technical violation of Rule 6(d), Federal Rules of

Criminal Procedure, occurred when an attorney who was a

stranger to this action unintentionally interrupted the grand

5One must bear in mind the long period of time over which the

incidents were distributed and also must recognize that human life

cannot be conducted on abs ute principles. Mortals must accept and

adjust to the substantial ui hood of occasional intermittent failures

to attain and maintain perfection.

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jury proceedings by entering the courtroom in which they

were being conducted. The record establishes that the

proceedings were halted at the moment of his entrance, and

were not resumed during the fifteen to twenty second period oi

his presence. We hold that the interruption did not invalidate

the proceedings or the indictment.”). See United States v.

Kazonis, 391 F. Supp. 804, 805 (D. Mass. 1975), aff'd without

opinion, 530 F .2d 962 (1st Cir. 1976), cert. denied, 429 U.S. 826

(1976).

The case before us, in short, is one where there has been no

intrusion of significant duration nor any showing of deliberate

rule disregard by the government or prejudice to the defend-

ant.“ Life must go on. Attainable reality, not perfection, here

»The existence of such considerations, including presence in the

grand jury room of much greater duration, distinguishes other cases

which have voided indictments. Cf. United States v. Edgerton, 80 F.

374 (D. Mont. 1897) (expert witness remained after testifying and

asked questions of another witness); Latham v. United States, 226 F.

420 (5th Cir. 1915) (unauthorized person was present to record testi-

mony throughout the grand jury proceeding); United States v. Car-

per, 116 F. Supp. 817 (D. D.C. 1953) (deputy marshals present

throughout of prisoner witnesses); United States v. Borys,

169 F. Supp. 366 (D. Alaska 1959) (mother of witness present

her testimony); United States v. Bowdach, 324 F. Supp.

123 (S.D. Fla. 1971) (FBI agent called upon by prosecutors to enter

grand jury room to play a recording device during the testimony of a

witness); United States v. Daneals, 370 F. Supp. 1289 (W.D. N.Y.

1974) (unauthorized agency regional counsel appeared and advised

grand jury); United States v. Braniff Airways, Inc., 428 F. Supp.

579, 589 (W.D. Tex. 1977) (unauthorized person present throughout

as observer and assistant prosecutor); United States v. Phillips

Petroleum Co., 435 F. Supp. 610 (N.D. Okla. 1977) (unauthorized

person was present throughout the testimony of a witness and con-

ducted part of the questioning).

Any support afforded by United States v. Furman, 507 F. Supp.

848, 852-54 (D. Md. 1981), for the proposition that there is an in-

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suffices. It is simply inappropriate to nullify grand jury work

stretching out over a period of eighteen months because of

technical, trivial, harmless violations of no significant duration

of Fed. R. Crim. P. 6(d).

We should not be understood as commending the practice

here. With the exception of the maintenance man, all of the

intruders were apparently under the control of the prosecu-

tors, who were obviously not diligent in keeping the sanctity of

the grand jury room inviolate. Prosecutors should not consider

what we have written as in any way amounting to an

encouragement to depart from scrupulous compliance with

Fed. R. Crim. P. 6(d). Having been fortunate enough to sur-

vive the attack here by the skin of their teeth on the basis of the

record as a whole, they cannot count with any assurance on a

similar conclusion on another record involving unauthorized

grand jury room intrusions.

B. Dismissal of the mail fraud and wire fraud counts.

The trial court’s approach involved a determination that

there had existed a legislative intent, when Congress enacted

18 U.S.C. § 287, the statute outlawing false claims against the

government, to make prosecution under 18 U.S.C. § 287 ex-

clusive, and to preclude prosecution thereafter under the sub-

sequently enacted mail fraud and wire fraud statutes for the

same activities even though they might, viewed without re-

gard to 18 U.S.C. § 287, meet the description of the crimes of

flexible requirement that an unauthorized presence in the grand jury

room mandates dismissal of the indictment (there an excused grand

juror who was unaware of her change in status participated in a day’s

proceedings) is dissipated by the reversal in United States v. Fur-

man, 4th Cir. 1981, 81-5067 (unpublished). The reversal rested on

the conclusion that Fed. R. Crim. P. 6(b), rather than Rule 6(d),

applied.

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mail and wire fraud.’ The mail fraud statute, 18 U.S.C. § 1341,"

was originally enacted in 1872, the wire fraud statute, 18

U.S.C. § 1343.“ in 1952.

The statute punishing false claims against the United States

vegan its life in 1863. was reenacted as part of a comprehen-

An implication of the district court’s rationale is that, even if 18

U.S.C. § 287 were, for some reason, ruled invalid or inapplicable, or

if it were repealed, there could still be no mail fraud or wire fraud

prosecution, where the government is the defrauded person,

although all the requirements spelled out in the mail and wire fraud

statutes would be fully satis ied.

®* Whoever, ha devised or intending to devise any scheme or

— o for obteining money or property by means

of false or fraudulent pretenses represefitations, or promises,

— or ious article, for the of executing

scheme or or attempting so to do, places in an

office or authorized for mall matter, any mater o

thing whatever to be sent or by the Service, or

takes or receives by mal or thing, or know-

causes to be mail to the direction

— — phn dw —

five years, or both.

— 2 money or property by means

of false or fraudulent — —

— — te —— — tes

LN rr.

— X. XA the purpose of

$1,000 or imprisoned not more than five years, or both.

Since the mail fraud and wire fraud statutes did not exist in 1863,

it requires a great stretch of imagination to attribute an intent to

Congress in 1863 prospectively to render inapplicable to frauds

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sive revision of the Criminal Code in 1909, and in 1948 was

divided into two parts. One of the parts became 18 U.S.C.

§ 287," which makes it criminal to present false claims against

the government. The other part, which punishes false state-

ments to the government, was codified as 18 U.S.C. § 1001."

Perusal of the false claims statute, on the one hand, and of

the mail fraud and wire fraud statutes, on the other, discloses

no language suggesting mutual exclusivity insofar as prosecu-

tion is concerned. The district court placed great reliance on

the cases of Simpson v. United States, 435 U.S. 6 (1978), and

Busic v. United States, 446 U.S. 398 (1980). However, those

cases dealt with situations where a statute includes within its

language its own enhanced punishment provisions (for ex-

ample, bank robbery with a dangerous weapon has an en-

hanced punishment as compared to bank robbery alone). Since

the particular statute controls and rules out the more general,

those cases reach the sensible result that a general enhance-

ment statute (applying to ali crimes involving use of firearms)

is ineffective as a second enhancer.

Here, however, we have the situation not at all uncommon,

as the case is of Blockburger v. United States, 284 U.S. 299

(1932), and its numerous close relatives, demonstrate, of more

than one statute infringed by a single act or combination of

Whoever, in any matter within the jurisdiction of an -

D by any trick, scheme, or device

. or covers an or a

fact, or makes any false, fictitious or fraudulent state-

ments or representations, or makes or uses any false writing or

document knowing the same to contain an false, ious or

fraudulent statement or entry, shall be not more than

$10,000 or imprisoned not more than five years, or both.

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acts. Dismissal by the district judge of the indictment as to the

counts charging wire fraud and mail fraud occurred at a very

early stage of the case, before the taking of any evidence and,

of course, before any adjudication of guilt. It will be time

enough to determine whether the Blockburger test, calling for

a restriction to a single punishment, applies if and when the

time should ever arrive when the defendants or some of them

are found guilty both of wire fraud or mail fraud, on the one

hand, and of false claims against the United States, on the

other. Whatever the answer to that question may be, however,

it does not relate to the right of the government to prosecute

under both a wire fraud or mail fraud statute and the false

claims statute. Guilt and punishment are two distinct and

separate considerations. Finding nothing in the statutory lan-

guage itself or in the legislative history of the wire fraud, mail

fraud and false claims statutes to require a determination that

prosecution under one must be at the expense of prosecuting

under the other, or any evidence of an intent to withdraw from

one statute a coverage it obviously has standing alone because

of a coverage also afforded by another statute,” we conclude

8 Cf. United States v. Weatherspoon, 581 F. 2d 595, 599-600 (7th

Cir. 1978) (There is nothing in either the language or the legisla-

tive history of the false statements statute, 18 U.S.C. § 1001, reflect-

ing any Congressional intent to create a hierarchy of sanctions that

would preempt the application of the mail fraud statute, 18 U.S.C.

§ 1341, to the submission of false statements to a government agency

through the use of the mails. . . . We hold that, by using the mails to

submit false statements to a government agency, Weavherspoon

subjected herself to separate prosecution and punishment under both

the mail fraud and false statements statutes.”); contra United States

v. Henderson, 386 F. Supp. 1048 (S. D. N.Y. 1974). The holding in

Henderson was flatly reiected in United States v. Miller, 545 F. 2d

1204, 1216 n.17 (9th Cir. 1976), cert. denied, 430 U.S. 930 (1977),

which lists several cases inconsistent with Henderson. It was ques-

tioned by its own Circuit, United States v. Morgan, 575 F. 2d 32, 49,

text at n.21 (2d Cir. 1978), cert. denied, 439 U.S. 931 (1978). See also

United States v. Shermetaro, 625 F. 2d 104, 111 (6th Cir. 1980).

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that dismissal of the wire fraud and mail fraud charges was in

error.“

In a recent, related case, United States v. Blecker, 657 F. 2d

629, 636 (4th Cir. 1981), cert. denied. U. S., 102 S. Ct.

1016 (1982), we had occasion to make an observation also

pertinent here: “[Defendants’] argument, however, is premis-

ed on a construction of the scope of the mail fraud statute that is

far too narrow.”

C. The claim of prosecutoria! misconduct with respect to

defendant Derrick.

The action of the district court in dismissing counts 1, 2, 6

through 37 and 46 through 55 with prejudice insofar as Derrick

was concerned proceeded from the conclusion that the prosecu-

tors overreached to his severe prejudice. We read the record

otherwise. As part of the investigation by the government, the

defendants, particularly the principal corporate defendant

CSC, cooperatively supplied records. Derrick was assigned

the responsibility of assembling the records in order to meet a

subpoena issued against CSC. Supposedly the government

engaged in “dirty tricks” by permitting Derrick to testify

„We pass rapidly over the contention that dismissal of the wire

fraud counts was proper in the absence of allegations that the wire

transmissions themselves were false or fraudulent. It is well recog-

nized that the wire fraud statute, patterned on the mail fraud act,

was meant to receive like interpretation. United States v. Tarnopol,

561 F. 2d 466, 475 (3d Cir. 1977); United States v. Donahue, 539 F. 2d

1131, 1135 (8th Cir. 1976). It is also well recognized that innocence in

a mailing, the consideration that a mailing was absent criminal in-

tent, (does not insulate from mail fraud prosecution if the mailing)

was a step in the fraudulent path. Badders v. United States, 240 U.S.

391, 394 (1916); United States v. Blecker, 657 F. 2d 629, 637 \4th Cir.

1981), cert. denied. U.S. , 102 S. Ct. 1016 (1982); United

States v. Caldwell, 544 F.2d 691, 696 (4th Cir. 1976).

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before the grand jury without prior warning that he was a

target of the investigation.

General counsel for CSC had asked early in the investigation

that all grand jury subpoenas for CSC records and for the

testimony of CSC employees be finalized through him. General

counsel called on Derrick to assemble the documents and to

inform government counsel and other personnel as to various

subpoena aspects. Derrick was informed by general counsel

that he was “expected to cooperate fully with the government’s

investigation.” Pursuant to the instructions of general counsel,

Derrick met several times with government counsel and on

March 5, 1980 responded to a grand jury subpoena and testi-

fied. Except for a telephone conversation with government

personnel about a subpoena to CSC which was issued about one

month after his testimony, Derrick had no further contacts

with the government’s personnel. In Octob~~ 1980, six months

later, Derrick’s indictment took place.

The government has convincingly established that only to-

wards the end of the investigation, following analysis of volu-

minous records, did the government reach a conclusion that

indictment of Derrick was merited. The government has dem-

onstrated that Derrick was not a target of the investigation at

the time he testified in March, 1980. The district judge made no

finding to the contrary. On those grounds alone we are satis-

fied that dismissal against Derrick was not warranted at all, let

alone dismissal with prejudice.

It is, therefore, unnecessary that we consider further con-

tentions to the effect that, even had Derrick been a target

when he appeared before the grand jury, the government was

not required to alert him of his exposed position. See United

States v. Washington, 431 U.S. 181 (1977). Nor do we under-

take to ascertain the strength or weakness of the government’s

contention that the warnings given to Derrick prior to his

March 5, 1980 appearance before the grand jury, although they

did not expressly allude to his “target” status, nevertheless,

sufficed to warn him of his Fifth Amendment rights.

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The distriet judge rested his determination that the counts

naming Derrick as a defendant should be dismissed with preju-

dice in large part on the following finding of fact:

In the months following [Derrick’s] — — before the

grand jury and the ing down of the indictment he still

spent about 50 percent of his time assisting the prosecu-

tion with documents and their other needs and at no time

did he ever to have been warned or in any way

alerted to the fact that he was walking with the enemy and

that everything he might be doing would ultimately come

Sock to keane tie.

However, in the period following his appearance before the

grand jury, his efforts to assemble documents and other in-

formation were attributable to compliance by him with the

direction of CSC, given for the corporate purposes of CSC. The

records produced by Derrick’s efforts after all belonged to the

corporation and Derrick consequently had no Fifth Amend-

ment privilege with respect to them. E. g. Bellis v. United

States, 417 U.S. 85, 88-92 (1974); United States v. White, 322

U.S. 694 (1944); Wilson v. United States, 221 U.S. 361 (1911);

Dreier v. United States, 221 U.S. 394 (1911).

Finally, of course, even had violation of Fifth Amendment

rights occurred, the proper sanction would not be the total

dismissal with prejudice of the pertinent counts of the indict-

ment. Suppression at trial of any materials obtained through

violations of his Fifth Amendment rights would suffice. See

United States v. Blue, 384 U.S. 251, 255 (1966) (“Our numer-

ous precedents ordering the exclusion of such illegally obtained

evidence assume implicitly that the remedy does not extend to

barring the prosecution altogether. So drastic a step might

advance marginally some of the ends served by exclusionary

rules, but it would also increase to an intolerable degree in-

terference with the public interest in having the guilty brought

to book.”).

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D. The counts under the RICO statute.

Here we confront the most troublesome point raised by the

defendants in their successful assault below on the fifty-seven

counts making up the indictment. The factual situation pre-

sents one claim of an alleged bribery occurring outside the

period of limitations and, therefore, not subject to prosecution

together with the several charges of wire fraud and mail fraud.

The list of crimes which may be considered in determining

whether the two predicate offenses necessary to make out a

RICO offense have been alleged does not extend to false claims

under 18 U.S.C. § 287.

We entertain some doubt that Congress ever contemplated

the extension of the RICO statute to include a situation where

one of the predicate offenses, separated in character and by a

long time period, could combine with a set of closely related

wire fraud and mail fraud claims essentially representing sub-

divisions of a single on-going illegal act to meet the predicate

requirements of so serious a statute. The defendants do not

immediately appear to fit a category against whom the act was

generally considered to be directed. It would be tempting

indeed to conclude that, although the act does include mail

fraud and wire fraud among possible predicate offenses, never-

theless the omission from that category of the false claims

statute, combined with the consideration relied on by the dis-

trict judge in another context, namely, the apparent complete

overlap under the facts the government expects to prove be-

tween the false claims statute and the wire fraud and mail fraud

acts, evidenced a congressional intent to foreclose considera-

tion of the putative wire fraud and mail fraud offenses for

RICO purposes.

That approach would reduce the matter to one involving but

a single predicate offense and, therefore, render RICO inappli-

cable. However, the approach, tempting as it is, is not at all

appropriate in the present stage of the proceedings. We cannot

presently tell for certain how the prosecution may develop.

Nothing in the RICO act clearly precludes the prosecutions

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here, the indictments having been carefully tailored, technical-

ly at least, to meet the requirements of the RICO act. If

legislatively mandated limitations on RICO’s applicability of

the sort alluded to above are to be ascribed to Congress, it

should not happen in a vacuum but rather only after a fully

developed factual record has been made and the necessary

precondition to a real determination, namely, a conviction, is

before us.

The district court was also impressed with an argument

which we find unsound insofar as the thrust of the RICO act is

concerned. The RICO “enterprise” was identified in the indict-

ment as the Infonet Division of CSC, an organization which had

no corporate existence separate and apart from that of CSC

itself. The district judge took the position that the Infonet

Division could not qualify as an enterprise in view of its corpo-

rate non- status. However, 18 U.S.C. § 1961(4) defines en-

terprise” as follows:

“enterprise” includes any individual, partnership,

corporation, association, or other legal entity, and an

union or group of individuals associated in fact although

not a | entity.

Possession of the characteristics of a legal entity hence is not

necessary to make out an “enterprise.” At the very least,

Infonet, having a substantial number of CSC employees work-

ing within the grouping or division known by its name, con-

stitutes a “group of individuals associated in fact although not a

legal entity.”

Nor are we impressed by the contention that Infonet could

not be an “enterprise” because it could not be treated as a

“person,” defined in 18 U.S.C. § 1961(3) as an individual or

s For a similar approach taken in the analogous circumstances of

Sherman Act conspiracies, see M. Handler and T. A. Smart, The

Present Status of the Intracorporate Conspiracy Doctrine, 3 Cardozo

L. Rev. 23 (1981).

17a

entity capable of holding a legal or beneficial interest in proper-

ty. We may assume that a corporate division may not take

formal legal title to property, but beneficial, informal rights

assigned by the corporation to the division to assist in the

conduct of its affairs appear to constitute informal beneficial

interests. We may also assume that Infonet, not being an

individual, and “not a legal entity” cannot be a “person” for

RICO purposes. Nevertheless, nothing in the statute requires

that an “enterprise” be a “person.” The use of the word “per-

son” in 18 U.S.C. § 1962 is confined to identification of whoever

is charged with “prohibited activities.” Counts 1 through 3 of

the indictment do not name Infonet as a defendant. Those

named are all individuals or CSC, a corporate entity.

There is, however, the remaining problem, restricted to

CSC, of whether Congress ever intended, in 18 U.S.C. § 1962,

that the statute prohibit activities by a person where the

activities are described as occurring with any enterprise when

there was identity between the person, on the one hand, and

the enterprise, on the other. We conclude that “enterprise”

was meant to refer to a being different from, not the same as or

part of, the person whose behavior the act was designed to

prohibit, and, failing that, to punish. To be sure, the analogy

between individuals and fictive persons such as corporations is

not exact. Still, we would not take seriously, in the absence, at

least, of very explicit statutory language, an assertion that a

defendant could conspire with his right arm, which held, aimed

and fired the fatal weapon. A corporation, in common parlance,

is not regarded as distinct from its unincorporated divisions

either. Bearing in mind that lenity applies even in RICO cases,

United States v. Anderson, 626 F. 2d 1358, 1370 (8th Cir. 1980),

cert. denied, 450 U.S. 912 (1981), we have decided that Counts

1 through 3 were properly dismissed, with prejudice, as to

CSC. Counts 1 and 2 alleged participation in the affairs of an

enterprise, namely the Infonet division. Count 3 alleged use

and investment of racketeering income in the operation of the

Infonet division, an enterprise. Nevertheless, Counts 1 and 2,

18a

inasmuch as they charged individual defendants as well as

CSC, remain outstanding as to all save CSC.“

The contention that the enterprise, the Infonet Division,

was not benefitted or advanced by the racketeering activity

arose, of course, from the unfortunate, inexact language in the

opinion in United States v. Webster, 639 F.2d 174 (4th Cir.

1981), cert. denied, — U.S. , 102 S. Ct. 307 (1981).

Subsequently, the language “benefitted or advanced” was dis-

avowed following rehearing. United States v. Webster,

F.2d — (4th Cir. 1982), No. 79-5204, etc. slip op. at 4-5. Since

that consideration alone eliminates the support for defendants’

position with respect to Counts 1 and 2, it makes unnecessary

any discussion of the further government claim that it should,

at any rate, not suffer dismissal of the indictment but be

permitted to prove at trial that the affairs of the Infonet

Division had in fact been benefitted or advanced through the

racketeering activity.

For all the foregoing reasons, the decision below is reversed

and the case is remanded with directions to reinstate each of

the fifty-five counts (Counts 1 and 2, 4 through 37, and 39

through 57). Count 3 should remain dismissed with prejudice,

as should the dismissal as against CSC of Counts 1 and 2. Count

38, the dismissal of which the government has not appealed,

should, also, not be exhumed.

REVERSED AND REMANDED.

6 Count 3 named only CSC, and so was properly dismissed in toto.

19a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 81-5053

UNITED StaTeEs OF AMERICA,

Appellant,

versus

CoMPUTER SCIENCES Corp., et al,

Appellees.

No. 81-5099

UNITED STaTES OF AMERICA,

Appellant,

versus

CoMPUTER SCIENCES Corp., et al.

Appellees.

ORDER

FILED

Sept 27 1982

U.S. Court of Appeals

Fourth Circuit

Upon consideration of the appellant’s petition for rehearing,

and the appellees’ petition for rehearing and suggestion for

rehearing en banc, and no judge having requested a poll on the

suggestion for rehearing en banc,

20a

It is ADJUDGED and ORDERED that the petitions for

rehearing are DENIED.

Entered at the direction of Judge Murnaghan, with the

concurrence of Judge Ervin and Judge Wilkins (U. S. D. J.).

For the Court,

/s/ William K. Slate, II

CLERK

WILLIXN K. Stark, II

2la

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Alexandria Division

CRIMINAL NO. 80-158-A

UNITED StaTes Or AMERICA

Vv.

CoMPUTER SciExcEs Corp., et al.

Defendants.

FILED

Mar 5 1981

CLERK U.S. DISTRICT COURT

ALEXANDRIA, VIRGINIA

ORDER

On the various motions heretofore filed by the parties here-

in, it is ORDERED that:

1. All Defendants’ Motion to Dismiss the Indictment on the

Grounds of Prosecutorial Misconduct filed on November 25,

1980 is denied as to the defendants CSC, Marti, Luke, Loux,

Blecker and Allen for the reasons given in a bench ruling on

February 13, 1981. For further reasons given by the court in a

bench ruling on February 13, 1981, the defendant Derrick’s

Motion to Dismiss the Indictment on the Grounds of Prosecuto-

rial Misconduct is granted. The indictment as to defendant

Derrick is dismissed with prejudice.

2. All Defendants’ Motion to Strike Portions of Paragraph

4, Count 2 of the Indictment filed on November 25, 1980 is moot

for the reasons given in a bench ruling on January 7, 1981 on

Counts 1 through 43 and for the additional reasons set forth in

the accompanying Memorandum regarding the invasion of the

grand jury by intruders.

3. The Motion of the United States for an Order in Limine

regarding the provisions of the National Teleprocessing Serv-

ices Contract filed November 25, 1980 is moot for the reasons

given in a bench ruling on January 7, 1981 and for the additional

reasons set forth in the accompanying Memorandum regarding

the invasion of the grand jury by intruders.

4. The Motion of the United States for an Order in Limine

regarding evidentiary matters filed December 11, 1980 is moot

for the reasons given in a bench ruling on January 7, 1981 and

for the additional reasons set forth in the accompanying

Memorandum regarding the invasion of the grand jury by

intruders.

5. Allen’s Motion for Access to Jenks Act Statements of

Parker filed November 25, 1980 is denied for the reasons given

in a bench ruling on January 7, 1981.

6. Allen’s Motion to Exclude Evidence of Privileged

Communications filed November 25, 1980, and Allen’s, CSC’s

and Luke’s Motion to Suppress Evidence Subject to Attorney-

Client Privilege filed February 5, 1981 are denied for the

reasons given in a bench ruling on February 13, 1981.

7. Marti’s and Derrick’s Motion to Dismiss Counts 1 and 2

for Duplicity and Misjoinder filed November 25, 1980 is moot

for reasons set forth in a bench ruling on January 7, 1981 and

for the additional reasons set forth in the accumpanying

Memorandum regarding the invasion of the grand jury by

intruders.

8. Loux’s and Blecker’s Motion to Sever filed November

25, 1980 is denied to the extent not mooted for reasons set forth

in a bench ruling on January 7, 1981 and for the additional

reasons set forth in the accompanying Memorandum regarding

the invasion of the grand jury by intruders.

9. Luke's, Allen’s, Marti’s and Derrick’s Motion for a

Change of Venue filed November 25, 1980 is denied to the

extent not mooted for the reasons given in a bench ruling on

January 7, 1981 and for the additional reasons set forth in the

23a

accompanying Memorandum regarding the invasion of the

grand jury by intruders.

10. Marti’s and Luke’s Motion for a Continuance filed

November 25, 1980 is denied to the extent not mooted by this

court’s rulings regarding Counts 1 through 43 of the Indict-

ment and for the additionai reasons set forth in the accompany-

ng Memorandum regarding the invasion of the grand jury by

intruders.

11. The Defendants’ Motion to Dismiss the Indictment

filed November 25, 1980 is granted to the extent that the first

43 counts are dismissed with prejudice, but denied to the

extent that Counts 44 through 57 are not dismissed with preju-

dice for the reasons set forth in the accompanying Memor-

andum.

12. The Motions of defendants Loux and Blecker to Dis-

miss the Indictment on the Grounds of Collateral Estoppel and

on the Grounds of Prosecutorial Vindictiveness filed Novem-

ber 25, 1980 are denied for the reasons set forth in the

accompanying Memorandum.

13. The Motion of All Defendants to Dismiss the Indict-

ment on the Grounds that the Grand Jury was not Fully In-

formed filed November 25, 1980 is denied for the reasons set

forth in the accompanying Memorandum.

14. The Motion filed on behalf of All Defendants to Dismiss

the Indictment on the Grounds that the Jury Selection Proce-

dure is Invalid filed on November 25, 1980 is denied for the

reasons set forth in the accompanying Memorandum.

15. The Motion filed on behalf of All Defendants to Dismiss

the Indictment on the Grounds that Unauthorized Persons

Invaded the Secrecy of the Grand Jury filed January 28, 1981 is

granted without prejudice for the reasons set forth in the

accompanying Memorandum.

24a

The Clerk is instructed to mail a copy of this Order and the

accompanying Memorandum to all counsel of record.

/s/ Richard L. Williams

United States District Judge

RichaRD L. WILLIAMS

Date: March 5, 1981

25a

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Alexandria Division

CRIMINAL NO. 80-158-A

UNITED StaTes OF AMERICA

v.

CoMPUTER ScIENCES Corp., et al.

Defendants.

MEMORANDUM OPINION

This criminal action against a major domestic corporation

and six individual defendants is before the court on the follow-

ing pretrial motions:

DATE FILED MOTION

November 25, 1980 All Defendants’ Motion to Dismiss the

Indictment on Grounds That RICO,

Mail Fraud and Wire Fraud Allegations

as Well as Allegations Regarding the

Contract are Improper

November 25, 1980 Blecker’s and Loux’s Motion to Dis-

miss the Indictment on Grounds of

Collateral Estoppel

November 25, 1980 Blecker’s and Loux’s Motion to Dis-

miss the Indictment as Against the De-

fendants for Prosecutorial Vindictive-

ness

November 25, 1980 All Defendants’ Motion to Dismiss the

Indictment on the Grounds That the

Grand Jury was Not Fully Informed

November 25, 1980 All Defendants’ Motion to Dismiss the

Indictment on the Grounds That the

Grand Jury was Not Properly Selected

26a

January 28, 1981 All Defendants’ Motion to Dismiss the

Indictment on the Grounds That Unau-

thorized Persons Invaded the Secrecy

of the Grand Jury Proceedings

February 26, 1981 All Defendants’ Motion for Disclosure

of Grand Jury Testimony

These motions were accompanied by voluminous briefs, affida-

vits and supporting documents. The government responded

with voluminous briefs and affidavits. The court set certain of

the motions for argument on January 6th and 7th, 1981. Argu-

ments on the remaining motions were set for January 14th and

16th, 1981. As a result of the latter hearings, the court ordered

an evidentiary hearing on February 10th and 11th, 1981. This

Memorandum Opinion addresses each of these motions.

The 27-page indictment in this prosecution was returned by

the grand jury on October 8, 1980. It contains 57 counts against

defendants Computer Sciences Corporation (“CSC”) and

against CSC employees John W. Luke, Norman W. Derrick,

Thomas A. Marti, Peter Loux; a former CSC employee, Erwin

L. Allen; and against the president of Icarus Corporation,

Herbert G. Blecker.

In the first three counts, the indictment charges violation of

the Racketeering Influenced and Corrupt Organizations Act,

18 U.S.C. § 1981 et seq. (“RICO”). Count 1 charges a § 1962(d)

RICO conspiracy against all of the defendants. Count 2

charges a violation of § 1962(d) against all defendants; that is,

conducting an enterprise through a pattern of racketeering

activity. Count 3 charges a violation of § 1962(a), investing and

using income derived from a pattern of racketeering activity in

an enterprise, against CSC only.

Counts 4 through 27 charge various acts of mail fraud against

defendants CSC, Luke, Allen, Marti and Derrick. Counts 28

through 37 charge wire fraud against defendants CSC, Luke,

Allen, Marti and Derrick. Counts 38 through 43 charge mail

27a

fraud against defendants CSC, Luke, Allen, Loux and Bleck-

er. The conduct charged in Counts 4 through 43 is incorporated

in the first three counts as a part of the pattern of racketeering

engaged in by the defendants.

Counts 44 through 55 charge defendants CSC, Luke, Allen,

Marti and in most instances Derrick with presenting false

claims to the United States Government. Counts 56 and 57

charge False Claims Act violations against defendants CSC,

Luke, Allen, Loux and Blecker.

The allegations in these charges concern the acquisition of

the National Teleprocessing System (“NTS”) contract by CSC

and billing for computer services rendered under the contract

by the Infonet Division of CSC. Regarding the acquisition of

the contract, it is alleged that Luke bribed a GSA contracting

officer in order to obtain the NTS contract. In addition, it is

charged that the defendants overbilled the government for

Systems Resource Units (“SRU’s”) and for computer software

packages.

The motions listed above challenge the indictment on a num-

ber of grounds. First, the defendants allege that Counts 1

through 43 must be dismissed because the facts alleged do not

sustain a charge under RICO or under the mail and wire fraud

statutes. They allege that Counts 1 through 3 must be dis-

missed for failure to state a claim under RICO and because

each RICO count is improperly based upon a time-barred

bribery allegation. In addition, they allege that the first three

counts of the indictment must be dismissed because RICO

cannot constitutionally be applied to the facts here alleged.

Further, defendants allege that Counts 2, 3 and 4 through 43

should be dismissed for multiplicity. Defendants also allege

that Count through 3 are defective as they do not apprise the

defendants of the extent of property subject to forfeiture

under RICO.

The defendants also allege that the indictment should be

dismissed in its entirety under the recent Fourth Circuit deci-

sion in United States v. Race, et al., No. 78-5140 (4th Cir.,

28a

September 25, 1980), the conduct alleged in the indictment as

fraudulent is authorized by a reasonable interpretation of the

contract.

In addition, the defendants move to dismiss on grounds that

the grand jury was not fully informed due to the technical

nature of the indictment and that the grand jury was selected

in violation of the United States Constitution and laws.

Defendants Loux and Blecker move to dismiss on grounds

that the issue of whether there was a conspiracy against the

government by them was resolved in an earlier proceeding and

collateral estoppel bars the assertion here. In addition, defend-

ants Loux and Blecker move to dismiss on grounds of pro-

secutorial vindictiveness.

All of the defendants move to dismiss on grounds of pro-

secutorial misconduct and on grounds that the secrecy of the

grand jury was invaded by unauthorized persons.

I.

RICO COUNTS

A. Counts 1 - 3

The defendants are charged in Counts 1 through 3 with

violating several of the provisions of the Racketeering In-

fluenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et

seq. (“RICO”). Count 1 charges all defendants with a con-

spiracy to conduct the affairs of CSC’s unincorporated “In-

fonet” Division “through a pattern of racketeering activity” in

violation of 18 U.S.C. § 1962(d). Count 2 charges the defend-

ants with actually conducting the affairs of the Infonet Division

“through a pattern of racketeering activity” by bribery, mail

fraud and wire fraud, in violation of § 1961(c) and § 2. That

count also claims a violation of § 1963, although that section is a

recitation of criminal penalties for violation of § 1962. Count 3

alleges that CSC received income from the alleged pattern of

racketeering activities and invested that income in the opera-

29a

tion of the Infonet Division, making that investment subject to

forfeiture to the United States pursuant to § 1963(a).

The conspiracy alleged in Count 1 was to violate 18 U.S.C.

§ 1962(c), which provides that

It shall be unlawful for any person employed by or

associated with any enterprise engaged in, or the activi-

ties of which affect, interstate or foreign commerce, to

conduct or participate, directly or indirectly, in conduct of

such enterprise’s affairs through a pattern of racketeering

activity. ...

In order to understand exactly what it is that § 1962(c)

makes unlawful it is necessary to set forth several of the

„ mitions provided in § 1961. The most important and de-

tailed is the definition of “racketeering activity.” Section

1961(1) defines it as

(A) Any act or threat involving murder, kidnapping,

bling, arson, robbery, bribery, extortion, or dealing

in narcotic or other dangerous drugs, which is chargeable

under State law and punishable by — —— for more

than one year; (B) Any act which is indictable under any of

the following provisions of Title 18, United States Code:

The sections listed are ones relating to, inter alia, bribery,

mail fraud and wire fraud.

A “person” is defined as “any individual or entity capable of

holding a legal or beneficial interest in property.” Section

1961(3). An “enterprise” is “any individual, partnership,

corporation, association, or other legal entity, and any union or

group of individuals associated in fact although not a legal

entity.” Section 1961(4).

A “pattern of racketeering activity” is defined as:

At least two acts of racketeering activity, one of which

occurred after the effective date of this chapter and the

last of which occurred within ten years (excluding any

period of imprisonment) after the commission of a prior act

of racketeering activity.

§ 1961(5).

30a

Count 1 alleges that the defendants CSC and Luke bribed a

GSA contracting officer by employing him after making sure

CSC was awarded the NTS contract. The alleged bribery

occurred in 1971 or 1972, and, standing alone, would be barred

by the statute of limitations. 18 U.S.C. § 3282. It is the

government’s contention, however, that despite this bar the

bribery can be used to meet the definition of § 1961(5) for a

“pattern of racketeering activity.”

Count 1 also alleges that CSC and co-defendants Luke,

Allen, Marti and Derrick conspired to commit mail fraud

against the government by purposely overbilling the govern-

ment under the contract through a scheme designed to confuse

the government as to how much would be charged for each

“system resource unit”—the measure used to charge for com-

puter use. The indictment also alleges that these defendants

altered the method of calculating these system resource units

to increase the charges to the government, and th:t they

fraudulently increased the cost of the software package sold

under the contract. The mail fraud theory was that by these

means the defendants cot.spired to cause the government to

send checks through the mails to pay for computer use under

the contract. Wire fraud conspiracy was alleged under the

theory that the computer signals were transmitted over in-

terstate wires, and that these signals were to be the basis for

the overbillings.

CSC, Luke, Allen, Loux and Blecker were alleged to have

also conspired to increase fraudulently the cost of the software

by fifty percent by falsely claiming that a new package was an

improvement over the old one. The indictment alleged that this

was a conspiracy to commit mail fraud because the invoices and

checks were sent through the mails, and to commit wire fraud

on the theory again that the overbillings were to be based on

computer signals sent over interstate wires.

The indictment was returned by the grand jury on October 8,

1980.

31a

Count 2 charges the substantive offenses on which the Count

1 conspiracy was based and Count 3 sets forth the investment

into Infonet and the forfeiture allegation.

A. The Enterprise

One of the things which separates a RICO charge from the

predicate acts which underlie the charge is the conducting of an

“enterprise” through a pattern of racketeering activities. By

charging CSC with the RICO counts the indictment alleges

that CSC conspired with the co-defendants and did operate its

own Infonet Division through a pattern of racketeering.

As has been often written,’ one of the main goals of RICO

was to counter organized criminal elements in their attempt to

infiltrate legitimate businesses. In passing the Act, Congress

found that organized crime in this country

Is a highly sophisticated, diversified, and — —

er-

activity that annually drains billions of dollars from

ica’s y ~~ d by wful conduct and the illegal use of

force, frau a corruption. ... [and — en |

obtained funds] are increasingly used to infiltrate an

corrupt legitimate business and labor unions and to sub-

vert and corrupt our democratic processes.

Pub. L. 91-452, § 1.

2 See, e. g., 116 Cong. Rec. 18939 (1970) (remarks of Sen. McClel-

lan); Pub. L. 91-452, § 1, 84 Stat. 922, reprinted in [1970] U.S. Code,

Cong. & Ad. News 1073; United States v. Whitehead, 618 F. 2d 523,

525 n. 1 (4th Cir. 1980); Note, 65 Va. L. Rev. 109, 109 (1979).

This court does not claim that for RICO to be invoked outside

forces must infiltrate an otherwise unadulterated business activity.

The Fourth Circuit has written that RICO “is not so limited, and that

its prohibitions apply to the use of racketeering activities to promote

any enterprise affecting interstate commerce.” United States v.

Whitehead, 618 F.2d 523, 525, n. 1 (4th Cir. 1980). See also United

States v. Mandell, 591 F.2d 1347, 1375 (4th Cir. 1979).

32a

To fight against this evil, RICO provides for stiff penalties

upon conviction‘ and for forfeiture of any interest acquired in

an enterprise from a pattern of racketeering activity.

With both the congressional purpose and the definition of

“enterprise” in mind, this court must determine whether the

Infonet Division is an enterprise for purposes of RICO — for

without an “enterprise” there can be no RICO violations.

It is the opinion of this court that the Infonet Division cannot

be an enterprise as far as CSC is concerned. Infonet has no

legal existence separate and apart from CSC, being only one of

several of CSC’s unincorporated divisions. Although Infonet

had its own officers (for example, defendant Luke was its

president) it served only an organizational purpose in practice.

An unincorporated “division of a corporation is not a sepa-

rate entity, but is the corporation itself.” In Re Sugar Industry

Antitrust Litigation, 579 F.2d 13 (8rd Cir. 1978). See also,

Western Beef, Inc. v. Compton Investment Co., 611 F. 2d 587

(5th Cir. 1980). It is clear, then, that the Infonet Division is not

“an individual, partnership, corporation, association, or other

legal entity.” At most, the division is “a group of individuals

associated in fact although not a legal entity.” However, even if

it is such a group of individuals associated in fact, CSC, by

definition, could not be included in this association. Section

1961(3) defines “person” as “any individual or entity capable of

holding a legal or beneficial interest in property.” It is clear

from this definition that “individual” is used differently from

“person” in the act to connote a living person.

*18 U.S.C. § 1963(a) provides that for violating § 1962 a person can

be fined up to $25,000 and imprisoned for up to 20 years or both and

shall forfeit to the government any interest acquired or maintained in

violation of § 1962 and any interest in, security of, claim against or

property or contractual right providing a source of influence over the

enterprise which the person has established in violation of § 1962.

5 See footnote 5.

33a

Therefore, because Infonet cannot supply the enterprise

element — at least as far as CSC is concerned — Counts 1, 2,

and 3 must be dismissed as to CSC. No authority has been

found on the question of whether the rejection of the enterprise

element for one co-defendant requires the rejection of the

alleged enterprise for the other defendants. This court, how-

ever, believes logic dictates that in order to meet his burden of

proof, the prosecutor must show that co-defendants charged

under RICO were operating the same enterprise through a

pattern of racketeering activity. Allowing the definition of the

enterprise to shift for each co-defendant would make the enter-

prise element more of an intellectual exercise for ingenious

prosecutors than a critical element in the offense — as element

essential to carrying out Congress’s purpose. Therefore, it is

this court’s opinion that for this reason the RICO counts must

be dismissed, although, as the discussion below demonstrates,

this is by no means the sole reason for dismissal of these counts.

B. Through A Pattern Of Racketeering Activity

Even assuming that Infonet could constitute an enterprise

— either as an entity or as a group of individuals associated in

fact — it is still essential that the enterprise be conducted

“through a pattern of racketeering activity.” This means the

enterprise must have “its affairs advanced or benefitted in

some fashion, direct or indirect. . . .” United States v. Webs-

ter, et al., slip op. 4th Cir., January 15, 1981 (No. 79-5204). If

the enterprise alleged in the indictment had been CSC, the

enterprise element would be less of a problem. But the indict-

ment claims the unincorporated, non-legal Infonet Division is

the enterprise — no doubt because the government sought to

include CSC as a defendant. The pattern of racketeering

alleged by the government, if it advanced or benefitted any

entity, it advanced CSC. The alleged misrepresentations

regarding the software were made by CSC, not Infonet. All of

Infonet’s assets were owned by CSC, and any money paid

under the NTS contract in no way benefitted or advanced

Infonet separate and apart from the overall advancement of

34a

CSC as a whole. When looked at in this light it becomes clear

that Infonet could not have been conducted “through a pattern

of racketeering activity.”

C. Mail Fraud

In addition to the time-barred bribery allegation, the predi-

cate acts on which the government relied to support the “pat-

tern of racketeering activity” charge are the mail and wire

fraud charges. Besides supporting the three RICO counts,

these allegations are substantively charged in Counts 4

through 43.

The basis for the alleged mail fraud is that the defendants

submitted false claims to the government by sending invoices

through the mail and were paid by the government with checks

sent by mail. The wire fraud is based solely on the fact that the

service provided by CSC was delivered over the interstate

wires. Counts 44 through 57 charge the defendants specifically

under the false claims statute, 18 U.S.C. § 287.

The mail fraud counts are, in essence, false claims with the

supposed addition of the use of the mails as an artifice to

defraud. The government claims in Counts 4 through 27 that all

of the defendants except for Blecker and Loux

ote gp te ne age . scheme and artifice to

knowingly cause to be delivered by mail

through the Postal Service . mail —

wit: a check or checks drawn on the Treasury of 1

States addressed to Computer Sciences Corporation.

Rene

computer services under the contract. The charges in Counts

30 through 43 include mailing of invoices for the alleged soft-

ware fraud.

The mail fraud statute, 18 U.S.C. § 1341, provides:

Whoever, having devised or intending to devise any

scheme or artifice to defraud, and for obtaining money or

property by means of false or fraudulent pretenses,

or or attempting so to do,

places in any Post Office or authorized i for mail

matter, any matter or thing whatever to be sent or deli-

vered by Postal Service, or takes or receives there-

y

the place at which it is directed to be delivered by the

person to whom it is addressed, any such matter or thing,

shall be fined not more than $1,000 or imprisoned not more

than five years, or both.

The offense has been called a “stopgap device” to be used “until

particularized legislation can be developed and passed to deal

directly” with a “new” type of fraud. United States v. Maze,

414 U.S. 395, 406, 94 S. Ct. 645, 651, 38 L. Ed. 2d 603, 611 (1974)

(Burger, C. J., dissenting). One district court added to this

description to say that the mail fraud statute “was to protect

the public; more precisely, the gullible public, against the

various fraudulent schemes that the cunning trickster could

devise.” United States v. Henderson, 386 F. Supp. 1048

(S.D.N.Y. 1974).°

The false claims statute provides:

Whoever makes or presents to any person or officer in

the civil, military, or naval service of the United States, or

to any department or agency thereof, a eae

nited States, or any department or

; ing such claim 28 false, fictitious, or

fraudulent, shall be fined not more than $10,000 or impris-

oned not more than five years, or both.

18 U.S.C. § 287.

It is clear that the government can elect to charge a defend-

ant under one or more statutes for a single offense if that

* Defendants have cited Henderson for its holding that the mail

fraud provisions are not to be appl. ed when the supposedly defrauded

victim is the United States government. This court has decided that

it need not reach this issue in light of its disposition of the case.

36a

offense overlaps more than one statute. Blockburger v. United

States, 284 U.S. 299, 304, 52 S. Ct. 180, 182, 76 L.Ed. 306, 309

(1932); United States v. Crew, et al., 538 F.2d 575, (4th Cir.

1976); United States v. Ponder, 522 F.2d 941 (4th Cir. 1975);

Coates v. State of Maryland, 436 F. Supp. 226 (D. Md. 1977).

The only requirement is that “each offense proscribed [must

require] proof of some fact that the other does not.” United

States v. Ponder, 522 F. ad at 943.

But it is also now clear that when a prosecutor is faced with

‘an alleged offense which violates more than one statute with

one being specifically tailored to the alleged offense involved,

the prosecutor has no discretion to charge a defendant under

any statute other than the specifically tailored one. Busic v.

United States, 446 U.S. 398, 100 S. Ct. 1747, 64 L. Ed. 381

(1980); Simpson v. United States, 435 U.S. 6, 98 S. Ct. 909, 55

L.Ed.2d 70 (1978).

Simpson involved defendants who had been charged, con-

victed and sentenced under 18 U.S.C. § 2113(d) for committing

a robbery by the use of a dangerous weapon or device.” They

also had been sentenced under 18 U.S.C. § 924(c) for using “a

firearm to commit any felony.” That provision provides for an

additional sentence of one to ten years for the first offense or

for two to twenty-five years for subsequent offenses. The

additional sentence imposed under § 924(c) cannot run con-

currently with the sentence imposed for the underlying felony.

In holding that the government could not prosecute the

defendants under both statutes, the Court did not reach the

identity of elements issue of Blockburger. Instead the Court

avoided that question’ and based its decision on legislative

history, the leniency rule, and the principle that “the more

The Court avoided the issue because the Blockburger test goes to

the question of double jeopardy—a constitutional question. Before

reaching such an issue, of course, the Court will attempt to resolve a

statutory question through non-constitutional analysis.

37a

specific statute” will be given precedence over a general provi-

sion which speaks “to the same concern.” 435 U.S. at 15, 98 S.

Ct. at 914, 76 L. Ed. at 303.

In Busic, the Court extended Simpson to hold that the

prosecutor may not choose his statute but must proceed under

the more specific one.

Despite specifically declining to reach the identity of ele-

ments issue, the Court pointed out in both Simpson and Busic

that the proof required under the two statutes was, in fact,

identical.

The legislative history of the mail fraud statute is scanty at

best. The predecessor to the present mail fraud statute was

passed in 1889, Act of March 2, 1889, Ch. 393, 25 Stat. 873. The

history as it is indicates that the statute was aimed principally

at schemers who attempted to sell counterfeit currency

through the mails. See H. R. Rep. No. 1501, 50th Cong., Ist

Sess. (1888); S. Rep. No. 2566, 50th Cong., 2d Sess. (1889). It is

obvious, therefore, that the mail fraud authors could not have

contemplated its use in a setting such as the one before this

court.

The false claims act is based on a 1909 statute, Act March 4,

1909, Ch. 321, § 35, 35 Stat. 1095, and its purpose was to

protect funds and property of the government from fraudulent

claims. Rainwater v. United States, 356 U.S. 590, S. Ct. 946, 2

L. Ed.2d 996 (1958). There is nothing specifically in the legisla-

tive history that would indicate that it was intended either to

supplement or to replace the mail fraud statute vis-a-vis the

government.

The rule of leniency requires that “doubt will be resolved

against turning a single transaction into multiple offenses.”

* Busic also involved §§ 2113(d) and 924(c).

38a

Bell v. United States, 349 U.S. 81, 84, 75 S. Ct. 620, 99 L. Ed.

905 (1955).

This policy of lenity means that the Court will not in-

terpret a federal criminal statute so as to increase the

penalty that it places on an individual when such an in-

terpretation can be based on no more than a guess as to

what congress intended.

Ladner v. United States, 358 U.S. 169, 178, 79S. Ct. 209, 211, 3

L. Ed.2d 199, 200 (1958).

Under the rule of Simpson as amplified in Busic, this Court

must apply

The principle that gives precedence to the terms of the

more specific statute where a general statute and a speci-

fic statute speak to the same concern.

Simpson v. United States, 435 U.S. at 15.

The elements of a mail fraud violation are: (1) formation of a

scheme with the intent to defraud; (2) using or causing the use

of the mails; (3) in furtherance of the fraudulent scheme.’ The

elements of a false claims violation under § 287 are: (1) making

or presenting a claim against the United States or any agency

or department thereof; (2) such statement must be false, ficti-

tious or fraudulent; and (3) the defendant must know that his

claim is false, fictitious or fraudulent.”

While a recitation of the elements of the two crimes would

make it appear as if the offenses are somewhat different —

thereby avoiding the Blockburger test — in practice, when the

false claim is mailed to the government, the offenses are identi-

cal. The only difference between a false claim violation and a

For a discussion of the mail fraud elements see 18 Am. Crim. L.

Rev. 199-205 (1980).

10 For a discussion of the false claims elements see 18 Am. Crim. L.

Rev. 282-86 (1980).

39a

mail fraud violation, when the mail fraud is based on a false

claim, is the use of the mails.

The indictment involved in this case charges the defendants

with mail fraud by causing the Treasury Department to issue

checks and send them through the mails. However, it is the

policy of the Treasury Department to make all disbursements

to contractors by mail. In the Department of the Treasury,

Division of Disbursement Procedure Manual, Part 3, “Pay-

ment, Services and Operations” p. 34-24, it is written that

It will be the policy of the Division of Disbursement to mail

all checks to vendors. As a general rule, checks issued in

payment of obligations of the United States must be

mailed eevee A the payees at their bena fide address.

aed 8 er General Decision A-83685, March 12,

By virtue of this policy, any false claim submitted by a vendor

will — as long as the false nature of the claim is not discovered

immediately — cause a use of the mails by the Treasury De-

partment.

The same is true for those counts of the indictment which

charge software fraud. In these counts, however, the indict-

ment does allege that invoices were mailed by the defendants.

The gravamen of the offense, nevertheless, is presenting “a

claim against the United States.. knowing such claim to be

false, fictitious, or fraudulent.” § 287.

Under the theory the prosecutors followed in this case,

virtually all false claims charges could be transformed into mail

fraud charges, with the attendant increase in penalties and

with the potential for transforming great numbers of garden

variety false claims cases into RICO cases. The prosecutors

would have this court sanction a method of racheting an offense

specifically proscribed into another offense so that it can bring

it within a third statute — RICO — the penalties of which are

vastly more serious and which would allow the government to

subject the defendants to the forfeiture provisions. The use of

this building block method in a criminal case requires close

40a

scrutiny by the court, which is charged with insuring that the

criminal justice system operates fairly. Accordingly, the court

will not approve such a stretching of the acts involved in this

case. It is the court’s opinion that Congress did not intend to

have mail fraud charges tacked onto all false claims charges,

and certainly did not intend to have false claims charges be-

come the basis for RICO charges. In fact, Congress excluded

false claims from the list of offenses categorized as racketeer-

ing activities in § 1961(1).

The wire fraud allegations, which were brought pursuant to

18 U.S.C. § 1343, are subject to the same analysis as the false

claims. Any time a computer company is providing services to

the government and that company is alleged to have submitted

false claims regarding that service, wire fraud, under the

theory the prosecutors have followed in this case, could be

charged. Still, the false claims statute is the more particula-

rized statute under which the claims should be brought. Furth-

ermore, the only involvement of the interstate wires in this

case was the use of the wires to provide this service. There is no

allegation that the service was in any way deficient or fraudu-

lent. None of the false representations are alleged to have been

communicated over the interstate wires. For this additional

reason, therefore, § 1343 is inapplicable.

Having decided that neither the mail nor the wire fraud

charges are proper, Counts 4 through 43 must be dismissed."

In making this decision, this court is aware of the Seventh Cir-

cuit’s holding in United States v. Weatherspoon, 581 F. 2d 595 (7th

Cir. 1978). In Weatherspoon the court held that a defendant could be

charged with both mail fraud under § 1341 and making false state-

ments in violation of 18 U.S.C. § 1001. That case, however, involved

a different statute and presented less compelling reasons for follow-

ing the Simpson-Busic reasoning. The case involved a fact situation

involving a defendant presenting fraudulent certificates of attend-

ance to the Veterans Administration for the purpose of receiving VA

4la

The dismissal of these counts would alone require the dis-

missal of Counts 1 through 3, since the predicate acts on which

the RICO charges were brought were the one incident of

case, the court need not address the issue argued by defend-

ants that the bribery allegation is barred by the statute of

educational benefits. That case, unlike the case now before this court,

did not involve a situation in which virtually anyone who violated

§ 1001 would have to violate § 1341 and thus have the offense pyra-

mided as a matter of course.

The government also cites the court to United States v. Huber, 603

F.2d 387 (2d Cir. 1979) and United States v. Precision Medical

Laboratories, Inc., 593 F. 2d 434 (2d Cir. 1978). In Huber, the defend-

ant was charged with having violated RICO, §§ 1961, 1962(c), 1963

and 18 U.S.C. § 2, as well as the false statements statute, § 1341, and

several other statutes. In short, the defendant was charged with

submitting inflated invoices for hospital supplies to the hospitals

which in turn were reimbursed by the federal government under the

Hill-Burton Act, 42 U.S.C. § 291 et seg. The Second Circuit upheld

the conviction without specifically addressing the argument raised

by defendants in the case before this court. But in so doing the court

clearly believed that the evidence had shown that the mail fraud had

been committed when “the mails were used in connection with the

scheme to defraud the hospitals.” Jd. at 391. Clearly that case is

distinguishable since the hospitals were not being reimbursed 100%

by the federal government, thus causing the hospitals to pick up a

portion of the fraudulently inflated tab.

In Precision Medical Laboratories, the defendant was convicted of

submitting false claims to the government in connection with

laboratory services performed for patients covered by the Medicare

and Medicaid programs. The indictment charged violations under

§ 287 and § 1341. While this case is more closely related to the case at

bar than Huber, the defendant apparently never made the argument

the defendants have made in the case before the court. The Second

Circuit, therefore, did not address this question. For this reason,

that case is of minimal value to this court.

42a

limitations and cannot be a predicate act for a RICO charge.

Without the mail and wire fraud charges, the bribery allega-

tion would be the only predicate act on which to base a RICO

charge. There being only one, there can be no “pattern of

racketeering activity.”

For the reasons stated above, therefore, Counts 1 through

43 are hereby dismissed with prejudice. Because of the court’s

dismissal of these counts, it is unnecessary to address the other

arguments the defendants made in this motion.

THE CONDUCT ALLEGED AS FRAUDULENT WAS

AUTHORIZED BY A REASONABLE INTERPRETATION OF

THE CONTRACT

The defendants argue that all counts of the indictment

should be dismissed as the conduct alleged as fraudulent was

authorized by a reasonable interpretation of the contract. For

this proposition, the defendants cite the recent Fourth Circuit

decision in United States v. Race, et al., No. 78-5140 (4th Cir.,

September 25, 1980).

The Race decision involved a contract between Consolidated

Services, Inc. (“CSI”) and the Charleston, South Carolina

Naval Supply Center. This contract secured the delivery of

labor and services, indefinite as to quantity, time and materials

but subject to an ultimate dollar limit.

The Navy, charging a violation of 18 U.S.C. § 1001, alleged

that CSI charged the Navy a travel per diem rate greater than

that it actually paid its employees. CSI argued that such a

billing was authorized by the contract. The Court of Appeals

noted that the “exact language of the clause is as clear-cut and

precise as a careful drafter could make it” and was “convinced

that the contract very clearly authorized CSI to bill the Navy”

at the higher rate. Slip op. at 11, 13. It noted that the clause in

question involved “no words of art, but only words of common

43a

understanding, requiring no special expertise for their in-

terpretation.” Id. at 14. Thus, it held that the meaning of the

clause, “couched as this one is was in language of common use

and understanding, was purely a matter of law for the court”

and that the district court should have granted a motion to

dismiss. Id.

The Court of Appeals stated further that had the provision

been ambiguous, that is, susceptible of at least two reasonable

interpretations, and had CSI’s conduct come within one of

those interpretations, it could not be held criminally liable

under a reasonable doubt standard. The court noted that “one

cannot be found guilty of a false statement under a contract

beyond a reasonable doubt when his statement is within a

reasonable construction of the contract.” Id.

The NTS contract is not “clear-cut,” “precise,” or comprised

of “words of common understanding.” At this stage of the

proceedings, it is impossible for the court to make a determina-

tion of what is and is not reasonable under the complex and

technical NTS contract. The Race decision does not compel a

district court to conduct a lengthy pretrial hearing to deter-

mine the meaning of a complex, highly technical contract

where the identical issues will have to be put before the jury

again if the matter is tried.

The Race decision is applicable to Counts 44 through 55 of

the instant indictment just as the reasonable doubt standard is

applicable. However, this motion is brought under Fed. R.

Crim. P. 12(b). In order to prevail on this motion, the defend-

ants must show a defect in the indictment. Counts 44 through

55 properly allege violations of 18 U.S.C. § 287 and no further

inquiry need be made. Consequently, while the Race decision

is applicable to these facts and while the contract should be

construed by the court, the defendants’ motion is more proper-

ly made under Rule 29 at the close of the government’s evi-

dence.

dda

COLLATERAL ESTOPPEL AND PROSECUTORIAL

VINDICTIVENESS

Defendants Peter Loux and Herbert Blecker move to dis-

miss the indictment against them for two reasons not applica-

ble to the other defendants. First, they claim that under the

double jeopardy clause of the Fifth Amendment, the govern-

ment is collaterally estopped from prosecuting this indictment.

They allege that in an earlier prosecution, United States v.

Icarus Corp., et al., Cr. No. 79-137-A, Eastern District of

Virginia, it was determined that Loux and Blecker had not

conspired to defraud the government. Secondly, these defend-

ants contend that they have been deprived of due process of

law as a result of prosecutorial vindictiveness. They allege that

bringing this action after their vigorous defense in the earlier

action at the least appears vindictive and hence the indictment

should be dismissed.

These motions were argued on January 7, 1981. The motions

were denied from the bench on that day. On January 30, 1981,

these defendants, by counsel, proffered a digest of the trans-

cript of the earlier action. By a bench ruling on February 13,

1981, the court opened the record to admit this digest and then

treated the expanded record as though it was before the court

as a motion for reconsideration.

After careful consideration of the briefs, arguments of coun-

sel, the digest and the indictments, the court is of the opinion

that Blecker’s and Loux’s motions should be denied.

A. The Collateral Estoppel Motion

An indictment that involves essential elements of facts and

law which have been tried and decided in an earlier case should

be dismissed. Ashe v. Swenson, 397 U.S. 436, 90S. Ct. 1189, 25

L. Ed. 469 (1970); Brown v. Ohio, 432 U.S. 161, 97S. Ct. 2221,

53 L. Ed. 187 (1977). In ruling on such a motion, the court must

determine exactly what was decided at the earlier trial. United

States v. Davis, 369 F. 2d 775, 777 (4th Cir. 1966), cert. denied,

45a

386 U.S. 909, 87 S. Ct. 858, 17 L. Ed.2d 783 (1967). It is the

burden of the moving party to demonstrate that the issue they

urge is foreclosed logically constituted the basis of the earlier

jury verdict. Jd. “Only those issues necessarily determined by

the first jury are conclusive in a second trial.” Jd. However,

“the inquiry ‘must be set in a practical frame and viewed with

an eye to all the circumstances of the proceedings. United

States v. Davis, 460 F. 2d 792, 796 (4th Cir. 1972), quoting Ashe

v. Swenson, supra, 397 U.S. at 444, 90S. Ct. at 1194, 25 L. Ed.

at

Defendants allege that the issue of whether there was any

conspiracy to defraud the government was resolved against

the government by the earlir trial. The government may not

prosecute some aspects of the conspiracy in one case and, after

an acquittal of the defendants, prosecute other aspects of the

same conspiracy. Conspiracy is a single crime. Short v. United

States, 91 F.2d 614, 622 (4th Cir. 1937).

As the court has dismissed the conspiracy counts of the

indictment, the defendants’ motion to dismiss on grounds of

collateral estoppel is moot.

Even if the motion was not mooted, the defendants’ asser-

tion that the conspiracy involved in this action and the con-

spiracy involved in the earlier indictment are the same has no

merit. The two indictments do involve overlapping periods of

time and do occur in the same location. In the first indictment,

the co-conspirators are alleged to be Icarus Corporation, Her-

bert Blecker, Peter Loux, and Paul Scanlon. In this indict-

ment, the co-conspirators are Computer Sciences Corporation,

John Luke, Erwin Allen, Thomas Marti, Norman Derrick,

Peter Loux, and Herbert Blecker. In the first action the con-

spiracy allegation involves transactions between Blecker,

Loux, Icarus and Scanlon to present false invoices to CSC who

then, presumably innocently, would pass the inv ices on to the

federal government. Blecker and Icarus would ialsify the re-

sumes of Icarus Corporation employees. Loux would approve

these resumes for CSC after which Loux and Blecker and

46a

Icarus would mail the inflated invoices from CSC to the GSA

for payment.

In addition, Blecker allegedly paid kickbacks to Loux in

exchange for Loux’s generating work for Icarus Corporation

under a contract between CSC and the government. Payments

from Loux would then be made to Scanlon as president of Data

Processing & Technical Consultants. Blecker and Icarus in-

voiced CSC for work performed, Loux would issue to Icarus a

fictitious invoice from Data Processing & Technical Con-

sultants. Upon receipt of that invoice, Blecker and Icarus

would draw a check payable to Data Processing & Technical

Consultants.

While the second indictment also charges mail fraud and

False Claims Act violations, the underlying conduct is totally

different. In this criminal prosecution, Loux and Blecker

allegedly conspired with Luke, Allen, Marti and Derrick and

CSC to conduct Infonet’s affairs through a pattern of

racketeering activity. As a part of this pattern, they allegedly

defrauded the government by increasing the amount charged

for the use of the COST/BPS software system. Allegedly these

defendants misled the GSA into believing that a new software

product with additional features had been devised and that the

old system was no longer available. The mail fraud substantive

counts against Loux and Blecker include invoices submitted on

different dates than those involved in the first indictment with

the exception of one invoice. Lastly, this prosecution alleges

that the other defendants along with Loux and Blecker pre-

sented a false claim to GSA for “application charges.”

The conspiracy alleged in the first indictment relates to that

of the second indictment only in that the same contract with the

government was in question and defendants Loux and Blecker

were involved. The scheme alleged in the second indictment is

a different and totally unrelated scheme. The software product

of Icarus, COST or COST/BPS, was not at issue at all in the

first indictment or trial, although there were scattered refer-

ences to it. In the first indictment, the Icarus invoices were

47a

alleged to be fraudulent and that they were based upon false

resumes. In the present indictment they are false in that the

amount claimed for “application charges” was based upon a

misrepresentation as to the nature of the software system. The

first indictment only involved labor charges, as distinguished

from the cost of the software program. The conspiracy in-

volved in the instant indictment also differs from the first

conspiracy in that CSC and its officers were not alleged to be

members of the earlier Blecker-Loux conspiracy, and in fact

were dupes of that scheme. In the instant indictment, the heart

of the conspiracy is a scheme to conduct the affairs of CSC’s

Infonet Division through acts of racketeering.

Consequently, the court is of the opinion that no facts con-

cluded in the former trial have again been put in issue in this

case. As a result, no facts involved in the instant action can be

held to be established by collateral estoppel.

B. Prosecutorial Vindictiveness

The defendants argue that the indictment against Blecker

and Loux should be dismissed because their right to due proc-

ess of law has been violated as the conduct of the prosecutors

contained a “realistic likelihood” of vindictiveness. Citing

Blackledge v. Perry, 417 U.S. 21, 94 S. Ct. 2098, 40 L. Ed.2d

628 (1974), they argue that the appearance of vindictiveness

rather than vindictiveness in fact controls a determination of

whether a defendant’s due process rights have been violated.

They urge that charging an individual with additional criminal

acts after he has asserted his rights against an initial charge is

prohibited, if the government knew the factual basis for the

charges at the time of the initial decision to indict.

Where a defendant has exercised his rights, and the prosecu-

tor, on the same facts, has indicted him on more serious

charges, vindictiveness may be presumed. Thus, in United

States v. Johnson, 537 F. 2d 1170 (4th Cir. 1976), the prosecu-

tor obtained a superceding indictment on the same facts where

a guilty plea to drug charges was overturned on appeal. The

18a

Fourth Cireuit there allowed the conviction to stand on the

counts brought in the original indictment, but dismissed counts

which were not present in the first indictment. In United

States v. De Marco, 550 F. 2d 1224 (9th Cir. 1977), the govern-

ment obtained a superceding indictment on the same facts as

the original indictment. These facts were known to the govern-

ment before the first indictment was obtained. The Court of

Appeals held that due process required dismissal of the new

indictment. In United States v. Andrews, 612 F.2d 235 (6th

Cir. 1979), the defendants were allowed to make bail, despite

the government’s request that they not be admitted to bail.

The government obtained a superceding indictment with a

conspiracy count on the identical facts. This conduct was held

to be impermissibly vindictive.

The situation presented here by the two indictments charg-

ing Loux and Blecker is very different. Two schemes are

involved. The conduct involved is different and distinct. The

co-conspirators are different. It is not clear that the govern-

ment possessed information sufficient to bring this indictment

at the time the Blecker-Loux indictment was returned. Ac-

cording to the affidavits submitted in opposition to this motion,

twenty-nine interviews were conducted after the first indict-

ment. Additional subpoenas duces tecum were issued and

several additional witnesses testified to the grand jury.

Even assuming the government has produced sufficient evi-

dence to indict both schemes at the same time, there is a strong

argument that it should not have done so. The two prosecu-

tions simply do not involve the same facts or the same acts. The

prosecutors here have merely exercised their discretion to

structure the prosecution of two totally different schemes with

two different indictments.

Lastly, an element of prosecutorial vindictiveness is that the

later charges are the greater magnitude than the earlier

charges. Given this court’s ruling dismissing Counts 1 through

43 of the indictment, it cannot be said that the charges brought

49a

against Blecker and Loux are of a greater magnitude than

those brought in the first indictment.

For these reasons, the motion of defendants Blecker and

Loux to dismiss on grounds of prosecutorial vindictiveness is

denied.

IV.

THE GRAND JURY WAS NOT FULLY INFORMED

All of the defendants move for a dismissal of the indictment

on the ground that it was not properly found and concurred in

by twelve or more informed grand jurors, as contemplated by

the Fifth Amendment of the Constitution and Rule 6(f), Fed.

R. Crim. P.

Specifically, the defendants allege that the twenty-nine page

indictment returned by the grand jury in this case is so “in-

credibly arcane and complex, both in terms of the statutory

offenses charged and in terms of the facts alleged” that it is

impossible for lay grand jurors to make an informed, in-

dependent determination of the matters contained in the in-

dictment.

The court finds no merit in the defendants’ contentions. To

accept the position is to hold that the presence of technical

terms in an indictment gives rise to a presumption that a lay

jury cannot fulfill its mission. Such a holding would require

that a grand jury always be composed of experts in the field in

which those under investigation are engage To hold that the

legal theories set forth in this indictment are not comprehensi-

ble to lay people would require that, in any minimally complex

case, the grand jury be composed of criminal lawyers. The

court finds no need in this case for such a blue ribbon panel.

Neither does the Fifth Amendment contemplate such a grand

Jury.

The indietment here is perfectly regular on its face. An

indictment regular on its face is not subject to challenge on

grounds of the adequacy of the evidence, e.g., Reyes v. United

50a

States, 417 F.2d 916 (9th Cir. 1969); United States v. Bertolot-

ti, 529 F. 2d 149 (2d Cir. 1975); United States v. Guillette, 547

F. 2d 743 (2d Cir. 1976); United States v. Radetsky, 535 F. 2d

556 (10th Cir. 1976); United States v. Herbst, 565 F.2d 638

(10th Cir. 1977); United States v. Fried, 576 F. 2d 787 (9th Cir.

1978); United States v. Gallagher, 602 F. 2d 1139 (3d Cir. 1979).

Defendants ask that the court conduct a full-blown trial to

determine what evidence was presented to a grand jury in any

instance where technical terms are repleat in the indictment or

where multiple offenses are charged. The court declines that

invitation.

V.

JURY SELECTION PROCEDURES

All defendants have moved to dismiss the indictment, alleg-

ing that jury selection procedures in the Eastern District of

Virginia violate federal law and the Constitution of the United

States. Specifcally, defendants allege a violation of the Jury

Selection and Service Act of 1968, 28 U.S.C. § 1861, et seq.,

and of the Fifth and Sixth Amendments to the Constitution.

A. The Eastern District Of Virginia Jury Selection Plan

The United States District Court for the Eastern District of

Virginia adopted a written plan for random selection of grand

and petit jurors entitled “Plan Proscribing Method for

Composition of Jury Wheels and Selection of Jurors in All

Divisions of this District in Accordance with the Jury Selection

and Service Act” (hereinafter the “Plan”). The Plan provides

that the “source list” of potential jurors is to be compiled from

the voter registration list of the Eastern District of Virginia. A

master jury wheel is selected, consisting of names drawn

directly from the source list. The master wheel is large enough

to satisfy estimated juror needs for a period of at least six

months and up to two years. From time to time, at thedirection

of the Clerk of the Court, names and addresses are drawn from

5la

the master wheel and juror qualification questionnaires are

mailed to these people in order to compile a “qualified wheel.”

The Clerk examines the completed and returned question-

naires and eliminates people who must be excluded because

they are statutorily disqualified or exempt. Congress has ex-

empted those who have not resided in this jurisdiction for at

least a year or who cannot speak English or are so illiterate that

they cannot fill out the qualification form or are incapable

because of mental or physical infirmity or are convicted felons.

28 U.S.C. § 1865(d). Congress also exempted three groups of

citizens: members of the armed forces, policemen and firemen

and public officials. 28 U.S.C. § 1863(b)(6).

Other people are eliminated because the Plan, purportedly

in conformity with 28 U.S.C. § 1863(b)(5), allows these people

a privilege to excuse themselves from jury duty by making a

request for an excuse on the returned questionnaire. The Plan

gives nine occupational groups—lawyers, doctors, dentists,

pharmacists, nurses, school teachers and supervisors, clergy,

morticians, and some individuals engaged in the movement of

interstate commerce—the privilege of excusing themselves.

In addition, before the March 10, 1980 amendments to the

Plan, all females with legal custody of a child twelve years of

age or younger were allowed to excuse themselves.”

Those persons who are not eliminated on the basis of the

questionnaire are placed on the qualified wheel. Random draw-

ings from this wheel produce the names of persons who are

then summoned to appear for service as grand or petit jurors.

Anyone who is actually summoned for jury service under 28

U.S.C. § 1866(c)(1) may be excused by the court by a personal

showing of undue hardship or extreme inconvenience.

The Plan now provides for the exclusion of all persons having

legal custody of a child the age of ten or under. The grand jury in this

case was selected before the amendment.

52a

B. The Constitutional Challenge

The Fifth and Sixth Amendments to the Constitution entitle

defendants in criminal cases to grand and petit juries selected

at random from a fair cross section of the community. Taylor v.

Louisiana, 419 U.S. 522, 95 S. Ct. 692, 42 L. Ed. 690 (1975).

The standard for determining when the Sixth Amendment

requirement to a fair cross section has been violated is pro-

vided by Duren v. Missouri, 439 U.S. 359, 364, 99 S. Ct. 664,

58 L. Ed. 579 (1979):

In order to establish a prima facie violation of the fair-

cross section requirement, the defendant must show (1)

that the p alleged to be excluded is a “distinctive”

group in the community; (2) that the representation of this

group in venires from — 2 — — of

and reasonable in relation to the number of such persons in

the community; and (3) that this underrepresentation is

due to systematic exclusion of the group in the jury-

selection process.

Fifth Amendment Due Process“ cases differ from Sixth

Amendment cases in that a discriminatory purpose is an essen-

tial element of the violation. Castenada v. Partida, 430 U.S.

482, 97 S. Ct. 1272, 51 L. Ed. 498 (1977). It is a defense to a

Fifth Amendment case that the government had a non-

discriminatory purpose while in the Sixth Amendment con-

text, “systematic disproportion itself demonstrates an in-

fringement of the defendant’s interest in a jury chosen from a

fair community cross section.” Duren v. Missouri, supra at

368, n. 26.

The defendants do not allege, and this court does not find,

any discriminatory purpose in allowing these ten groups of

individuals to excuse themselves from jury service. The

Court’s purpose in formulating the Plan was to provide juries

drawn from a broad cross section of society while minimizing

delays and expense to the justice system and undue hardship to

those subject to service. The Plan thus does not violate the

Fifth Amendment.

53a

Despite the great wealth of legal talent and energy in the

large group which makes up the defense team, the defendants

have provided the court no evidence regarding the representa-

tion of the excluded occupational classes and women with

young children in the qualified wheel from which jurors are

summoned. They have also not presented the court with any

evidence regarding the representation of these groups in the

voter registration list of the Eastern District of Virginia.

Rather, they provide data from the 1970 census regarding the

work force of the entire Commonwealth of Virginia. Aggregat-

ing all of the excluded occupational groups from Virginia’s

work force in 1970, these groups represent 9.1% of the labor

force. Regarding mothers with children under twelve, defend-

ants represent that the 1970 census report for Virginia shows

that 40.5% of the 1,654,442 women in Virginia over the age of

sixteen have children under the age of seventeen.

Defendants’ statistical showing simply faiis to make out a

prima facie case. The court has no basis on which to conclude

who is and is not represented in the qualified wheel. The

defendants have not represented to the court that the Clerk of

the Court has been unwilling or unable to provide data on the

qualified wheel. Instead, the defendants complain that Virgi-

nia, unlike Massachusetts, does not keep such information on a

computer. An alleged lack of sophisticated data retrieval does

not give this court license to base a decision upon ten year old

data regarding the work force of the entire state when the

relevant concern is current data on the voter lists and the

qualified wheel of this District.

Thus, the court need not reach the first and third concern of

Duren v. Missouri, supra. There is no need to decide whether

each of the occupational groups or, as defendants claim, the

aggregate of the excluded groups is a “distinctive” group in the

community. Neither does the court have to determine whether

an unproven representation is the result of systematic ex-

clusion.

5da

It is the burden of the defendants to establish a prima facie

case. United States v. Smaldone, 485 F. 2d 1533, 1547 (10th

Cir. 1973), cert. denied, 416 U.S. 936 (1974). Defendants have

failed to meet that burden and their motion must be denied.

C. The Statutory Challenge

The Jury Selection and Service Act of 1968, 28 U.S.C.

§ 1861, et seq. (hereinafter “the Act”), establishes the require-

ments for the selection of grand and petit jurors to serve in the

federal courts. Section 1861 sets forth the policy of the United

States to entitle “all litigants in the federal court [to] have the

right to grand and petit jurors selected at random from a fair

cross section of the community in the district or division where-

in the court convenes.” Further “all citizens shall have the

opportunity to be considered . . . and shall have an obligation

to serve as jurors.” Exclusion from service on the basis of race,

color, origin, sex and national origin or economic status is

explicitly prohibited by § 1862. Section 1963 provides that each

United States District Court shall devise a plan for random

jury selection. Section 1863(b)(5) states that the court shall

specify

Groups of persons or occupational classes whose members

shall, on individual request therefor, be excused from jury

service. Such Ba or classes shall be excused only i the

district court finds, and the plan states, that j my cereus

by euch class or group would entail undue hi

extreme inconvenience to the members thereof —

cuse of members . . . would not be inconsistent with sec-

tions 1861 and 1862.

Section 1867 provides that in criminal cases a defendant may

move to dismiss the indictment or to stay the proceedings

against him on the ground of a substantial failure to comply

with the Act. This section also allows the moving party to

present a “sworn statement of facts which, if true would con-

stitute a substantial failure to comply with” the Act. In addi-

tion, the movant can present the testimony of the jury commis-

sion or the clerk and make use of “any relevant records and

55a

papers not public or otherwise available used by the jury

commission or the clerk and ary other relevant evidence.”

The exclusion of the occupational groups and of women with

young children rests upon a factual finding by this court that

jury service by these groups would entail undue hardship,

extreme inconvenience or serious obstruction or delay in the

fair and impartial administration of justice. The defendants

must thus show that this finding by the district court is clearly

erroneous. Other courts have held that exclusion of these same

professional groups was not clearly erroneous. United States

v. Goodlow, 597 F.2d 159, 162 (9th Cir. 1979), cert. denied, 442

U.S. 913, 99 S. Ct. 2830, 61 L. Ed. 280 (1979). The finding as to

women with children was upheld in United States v. Test, 550

F. 2d 577, 595 (10th Cir. 1976), cited generally with approval in

this circuit in United States v. Coates, 611 F.2d 37 (4th Cir.

1979), cert. denied, 446 U.S. 909, 100 S. Ct. 1836, 64 L. Ed. 261

(1980). Defendants have made no attempt to show that this

court’s reasoning is clearly erroneous.

In addition, United States v. Test, supra, holds that the

standards for determining the validity of a jury selection plan

under the Constitution and under the Act are identical. Thus,

defendants have no more made out a prima facie case that the

Plan violates the Act than they have that it violates the Con-

stitution. Once again, the court can make no decision when it

has not been provided with the data upon which the decision

should be made. United States v. Goodlow, supra, at 162.

Defendants’ motion under the Act to dismiss the indictment

is also denied.

VI.

UNAUTHORIZED PERSONS INVADED THE SECRECY OF

THE GRAND JURY PROCEEDING

Defendants have moved the court for a dismissal of the

indictment on the grounds that unauthorized persons invaded

the secrecy of the grand jury proceedings in violation of Rule 6,

Fed. R. Crim. P.

56a

Five intrusions of the grand jury have been pointed out. Of

these five, four were by individuals presumably under the

control of the Assistant United States Attorney. These four

persons were never informed on the record that they should

not come into the room. In three instances, documents were

delivered to the prosecutors. These four instances, one by an

unidentified woman and three by United States Marshals, all

interrupted or occurred during the taking of testimony.

The five instances are as follows:

Incident #1.

On July 12, 1979, Paul N. Zeitlin was called to testify before

the grand jury which returned this indictment. The transcript

of that appearance, at page 12, reveals the following incident:

Q: —— you give us a, a layman’s definition of an algor-

ithm?

A: It’s, it’s a well-defined procedure.

Q: Do you—

A: You know, where, where there’s nothing that says,

“Toss a coin,” or, or, you know, what p of the

moon it is, or, or something like that.

Q: Okay. In what context at CSC are the terms “algor-

ithm” used?

(Whereupon, an unidentified woman entered the Grand

Jury room; remarks were made toward Mr. Leiser on an

unrelated matter off the record. The woman left the Grand

Jury room, after which the following occurred:)

MR. LEISER: Just, just for the record, this is return of

a document that was subpoenaed by this Grand Jury with

the return dated this date and -delivered to us by an

un-named individual who just came in the Grand Jury.

BY MR. LEISER (Resuming):

Q: Mr. Zeitman, [sic] the question I, I believe I asked

ou is: In what context at CSC are the terms “algor-

ithm” or “algorithms” used?

* * *

57a

Incic it #2.

On pages 57-58 of the transcript of Mr. Zeitlin’s testimony

there appears the following transaction:

Q: Mr. Zeitlin, do you know whether or not the Govern-

ment group of weights were — — the

life of the contract? In other words, were there vari-

ous changes to that Government group of weights?

We know that there was a difference in —1—

were two; one group commercial, one group Govern-

ment. The question now is whether or not the

Government group was changed.

(Whereupon, at 11:00 a.m. a U.S. Marshal entered the

Grand Jury room, handed a document to Mr. Leiser, after

which the f following occurred:)

THE MARSHAL: Mr. Leiser

MR. LEISER: Yes.

(Whereupon, the Marshal left the Grand Jury room,

after which tl the following occurred:)

MR. LEISER: Just so the record’s clear, I just received

a message from one of the Marshal’s.

* * *

Incident #3.

On August 30, 1979, Thomas W. Fife appeared before the

grand jury and the following episode occurred, as reflected on

pages 3-4 of the transcript:

PROCEEDINGS

9:36 a.m.

MR. LEISER: Mr. Fife, just sion in here, please. The

forelady will swear you in if you jusi put your left hand on

the Bible and raise your right.

(Whereupon, an unidentified male entered the Grand

Jury room.

58a

A JUROR: We’ve got a maintenance man.

MR. LEISER: One second. One second please.

UNIDENTIFIED MALE: I’m from building mainte-

nance. I understand you have a complaint about the—

MR. LEISER: Yes, it’s too hot in here. There seems to be

no air conditioning and we’ve got a Grand Jury that’s

presently—

UNIDENTIFIED MALE: It’s 78 degrees.

MR. LEISER: Okay. Fine. If that’s as cool as you can get

it, we'll accept that. You’ve got to leave the Grand Jury

room.

UNIDENTIFIED MALE: Okay, you know. I had to

check out a complaint. If you all have a complaint, I have to

check it out.

MR. LEISER: Okay. Fine. If you could make it any

cooler, we’d appreciate it.

UNIDENTIFIED MALE: No Sir.

MR. LEISER: If you can’t—

UNIDENTIFIED MALE: No Sir.

MR. LEISER: Okay, thank you.

(Whereupon, the above unidentified male left the Grand

Jury room, after which the following occurred.)

MR. LEISER: Mr. Fife, if you'll

THOMAS W. FIFE, called as a witness by the Govern-

ment, having been first duly sworn, was examined and

testified as follows:

* * *

Incident #4.

On April 3, 1980, Clinton De Gabrielle was called before the

grand jury. As set forth on pages 22-23, the grand jury

proceedings were again interrupted by an outsider:

A: Let me try and give you an example in lay terms. If

— 4 =

59a

back end to it and that costs you “Y” number of dollars

and — keep using that truek until whatever your

is requires more capacity and you make an overt

— 2 — truck

(Whereupon, a Marshal entered and left the Grand Jury

room.)

THE WITNESS: —yov’re going to increase the capac-

ity of the back end.

* X *

Incident #5.

On August 13, 1980, Mr. Kenneth Walls appeared before the

grand jury and the following intrusion was recorded at page 5.

Q: Referring to the period of time when you were Direc-

tor of rations, that is from sometime in 1973 until

1977, what was your function as Director of Opera-

tions?

A: I was responsible for the operation of computer

centers,—

(Whereupon, at 11:21 a.m. there was a knock on the

Grand Jury room door, after which the Marshal opened

the door, and passed unidentifed documents to Mr. Lynch,

and left the room, after which the following occurred:)

BY MR. LYNCH (Resuming):

Q: Yes, sir, continue.

x * *

Rule 6(d), Fed. R. Crim. P., explicitly limits the persons

who may enter the grand jury room while it is in session:

(d) Who May Be Present. Attorneys for the govern-

ment, the witness under examination, interpreters when

needed and, for the purpose of taking the evidence, a

stenographer or operator of a recording device may be

present while the grand jury is in session, but not other

persons other than the jurors may be present while the

grand jury is deliberating or voting.

A long standing and well recognized rule in the federal

courts is that the mere appearance of an unauthorized person

60a

before a grand jury is a sufficient ground for dismissing an

indictment. United States v. Echols, 542 F.2d 948, 951 (5th

Cir. 1976); United States v. Latham, 226 F. 420, 422 (5th Cir.

1915); United States v. Furman, Cr. No. Y-80-0432, District of

Maryland, 1981; United States v. Phillips Petroleum Corp.,

435 F. Supp. 610, 618 (N.D. Okla. 1977); United States v.

Braniff Airways, Inc., 428 F. Supp. 579 (W.D. Tex. 1977);

United States v. Kazonis, 391 F. Supp. 804, 805 (D. Mass.

1975); United States v. Bowdach, 324 F. Supp. 123, 124 (S. D.

Fla. 1971); United States v. Borys, 169 F. Supp. 366 (D. Alaska

1959); United States v. Carper, 116 F. Supp. 816 (D. D.C.

1953); United States v. Amazon Industrial Chemical Corp., 55

F. 2d 254, 261-62 (D. Md. 1931); United States v. Edgerton, 80

F. 374 (D. Mont. 1897). These courts have noted that it is

nearly impossible for an accused to prove actual prejudice as a

result of the presence of the unauthorized person. Rather, the

presence of the unauthorized person has been held to result in a

presumption of prejudice; or, at the most, the accused must

show “probable prejudice.” United States v. Edgerton, supra;

United States v. Carper, supra; United States v. Borys, su-

pra.

However, “probable prejudice,” as applied, does not mean

that it is more likely than not that an accused has suffered

actual prejudice. Rather, probable prejudice is supplied by a

showing that “there may have been improper influence or

suggestion in the grand jury room while a witness was testify-

ing.” United States v. Edgerton, supra; United States v.

Borys, supra, 169 F. Supp at 368; United States v. Isaacs, 347

F. Supp. 743, 749 (N. D. III. 1972). Another court has held that

a defendant need only show “probable prejudice to the grand

jury system.” United States v. Carper, supra, 116 F. Supp. at

820.

The government in its brief urges that an indictment should

be dismissed only when there is a sustained presence of an

unauthorized person in the grand jury room that results in

improper influence. It contends that the intrusions here were

6la

momentary and carry no possibility of improper influence as no

one, “except perhaps the marshal” who opened and closed the

door heard testimony. The government contends that these

facts should be treated as those in United States v. Rath, 406

F.2d 757 (6th Cir. 1969). In Rath, an attorney, waiting for

another proceeding in the courthouse wandered into the grand

jury room. The Assistant United States Attorney immediately

halted proceedings and told the man to leave. The man left

within twenty seconds of his entry.

With the exception of the intrusion by the maintenance man,

the intrusions here are different from the brief, inadvertent

Rath intrusion. Here, four of the five intrusions were by per-

sons under the control of the United Staets Attorney. Three

delivered documents and/or messages to him. Whenever per-

sons obviously under control of the government flagrantly

invade the grand jury, without reprimand, there is a possibil-

ity of undue suggestion or influence. When the government

allows its supportive personnel to enter where a target wit-

ness’s attorney or a child witness’s mother or a juror’s spouse

may not, there is a great probability of, perhaps even certain

prejudice to the grand jury system.

“The fact that grand jury proceedings are secret, ex parte

and largely under the control of the federal prosecutor, magni-

fies [the] concern” the court must show” . . for the right to

indictment by an unbiased grand jury.” United States v. Seru-

bo, 604 F.2d 807, 816 (3d Cir. 1979). [The grand jury is not

meant to be the private tool of a prosecutor.” United States v.

Fisher, 455 F.2d 1101, 1105 (2d Cir. 1972).

Neither should the prosecutor allow himself or his staff

privileges before the jury that its members or witnesses are

denied. To allow marshals and an “unidentified woman” to

interrupt a witness’s testimony before the grand jury to deliv-

er documents to or to have off the record conversations with

the prosecutor is in gross violation of Rule 6 and destroys the

secrecy and inviolacy of the grand jury proceedings. It is of no

consequence that a witness has the good manners to stop in

62a

mid-sentence and not to resume speaking until the intruder is

gone. The prosecutor’s receipt of messages and documents

while a witness is on the stand may have profound psychologi-

cal effects upon the witness. The witness may feel the docu-

ment or message refutes his testimony; he may feel his testi-

mony is so unimportant that interruptions are allowed; he may

lose his train of thought, and so forth. The grand jurors may be

influenced by the greater privileges the prosecutor allows

himself. They cannot receive mail or business correspondence

during the proceedings. The prosecutor, perceived as having

special privileges, could attain even greater control and in-

fluence.

Thus, the unreprimanded intrusions here carry a strong

possibility of improper suggestion and a grave threat to the

grand jury system. These facts bear no similarity to United

States v. Rath, supra. In this instance the court must gnore

the likelihood of guilt of the defendants. The economic ourden

of reindicting is equally irrelevant. The grave cost to society of

sanctioning repeated, unreprimanded intrusions into the

grand jury room of persons under the control of or acting for

the convenience of the federal prosecutor requires that this

indictment be dismissed.

On February 27, 1981, fourteen days after the court’s bench

ruling dismissing the indictment on grounds of invasion of the

grand jury, the defendants moved under Rule 6(e), Fed. R.

Crim. P. for disclosure of the remaining transcripts of the

grand jury. That motion is denied. The defendants have shown

more than that “grounds may exist for a motion to dismiss the

indictment;” they have shown that such grounds do exist and

their motion has been granted. The court’s ruling would not be

affected by the presence or absence of additional instances of

invasion.

CONCLUSION

In accordance with the order this day entered, Counts 1

through 43 are dismissed as to all defendants with prejudice;

and dismissed as to the remaining defendants without preju-

dice.

/s/ Richard L. Williams

United States Distriet Judge

RICHARD L. WILLIAMS

Date: March 5, 1981

For reasons not discussed in this opinion, Counts 44 through 57

are dismissed as to defendant Derrick with prejudice.

64a

APPENDIX D

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Alexandria Division

Criminal No. 80-158-A

THE Unirep States Or AMERICA

vs.

COMPUTER SCIENCES CORPORATION., et al.

RULINGS ON MOTIONS

January 7, 1981

Hon. Richard L. Williams, Judge

THE COURT: Gentlemen, so you can more easily follow the

Court’s rulings, I will make them in the sequential order that

they were heard in, and that appears in my letter of January 5

to Mr. Bonner and Mr. Lynch.

My basic scheme will be to announce my rulings, and then we

will recess court until two o'clock. That will give you a chance to

have some lunch and caucus if you need to, and we will recon-

vene at two o'clock so that I can hear from you on what

evidence needs to be taken on January 14 and the limits that my

various rulings impose on it.

On the Omnibus motion to dismiss all counts of the indict-

ment that appears to have been joined in by all defendants, I

sustain the motion as to all defendants insofar as they relate to

Counts 1 through 43.

On the Omnibus motion insofar as it relates to Counts 44

through 57, the motion is denied.

On defendants Marti and Derrick’s motion to dismiss Counts

1 and 2, their Rule 8 motion, and Rule 14 motion, I rule as

follows. Their motion as to Counts | and 2 is mooted by my

ruling on the Omnibus motion. Their Rule 8 motion is denied.

65a

Their Rule 14 motion is denied, but on a trial of Counts 44

through 57 it will be my intention to require the Government to

try Counts 56 and 57 first on a separation-of-counts trial, and I

believe that will give them partial relief on their Rule 14

motion.

On item 3, all defendants’ motion to dismiss Count 2, para-

graph 4, that is mooted by my ruling on the Omnibus motion to

On item 4, the motion to dismiss for improper Grand Jury

selection, that motion is denied.

On item 5, a motion by Loux and Blecker to dismiss on

grounds of collateral estoppel, that motion is denied to the

extent that it was not mooted by my ruling on the Omnibus

motion to dismiss.

On item 6, the motion to dismiss as to prosecutorial vindic-

tiveness, that motion is denied to he extent that it is not

mooted by my ruling on the Omnibus motion.

On item 7, the motion for severance by Loux and Blecker,

that is covered by my ruling on motion No. 2. But, here again, I

will require the Government under a separation-of-counts trial

to procede with Counts 56 and 57 first, and I believe that that

will clear up that situation.

On item 8, the motion by Luke, Allen, Marti, and Derrick for

a change of venue, that motion is denied.

On item 9, Allen’s motion to exclude the Parker memo, that

is deferred until trial as it is more appropriately a trial issue. To

the extent that I have heard substantial evidence and have

read some of the filings on it, I have not been persuaded that

the subject has much merit from the defendants’ standpoint.

But, nevertheless, a final ruling on that is deferred, but, to the

extent that it is permissible to give you an advisory opinion, I

am doing so.

On item 10, the United States’ motion in limine on contract

issues, a ruling on that is deferred until the trial as it is more

appropriately a trial issue.

On item 11, the motion of the United States of America for a

motion in limine for a ruling on evidence relating to fair market

value, customer satisfaction, and possible sentencing, a ruling

on that is deferred until the trial as it is a more appropriate trial

issue.

I believe that there is one outstanding motion by Marti for a

continuance for a time greater than that which was granted at

the last hearing, and after having heard from all counsel,

knowing the extent of Marti’s involvement as it relates to the

case, and the involvement of the other defendants, I see no

reason why Marti ought to have continuance beyond the March

9 trial date, and that motion is denied.

Now, in view of those rulings, and after counsel have had a

chance to discuss it with your various clients, and maybe get

together and caucus amongst yourselves, I want you to report

back to me at two o’clock on what you think you now need in the

way of a hearing on the 14th,

My own view is very little because by eliminating the counts

that i did I am not so sure that that didn’t moot any claim that

you have made now on prosecutorial misconduct. But, here

again, that is scheduled for a different time and place and I will

give you an evidentiary hearing on the 14th if you are so

advised.

Recess court until two o'clock.

67a

APPENDIX E

Title 18, United States Code, §§ 1961—1964, provide as

follows:

91961. Definitions.

As used in this chapter

(1) “racketeering activity” means (A) any act or threat

involving murder, kidnaping, gambling, arson, robbery, bribe-

ry, extortion, or dealing in narcotic or other dangerous drugs,

which is chargeable under State law and punishable by

imprisonment for more than one year; (B) any act which is

indictable under any of the following provisions of title 18,

United States Code: Section 201 (relating to bribery), section

224 (relating to sports bribery), sections 471, 472, and 473

(relating to counterfeiting), section 659 (relating to theft from

interstate shipment) if the act indictable under section 659 is

felonious, section 664 (relating to embezzlement from pension

and welfare funds), sections 891-894 (relating to extortionate

credit transactions), section 1084 (relating to the transmission

of gambling information), section 1341 (relating to mail fraud),

section 1343 (relating to wire fraud), section 1503 (relating to

obstruction of justice), section 1510 (relating to obstruction of

criminal investigations), section 1511 (relating to the obstruc-

tion of State or local law enforcement), section 1951 (relating to

interference with commerce, robbery, or extortion), section

1952 (relating to racketeering), section 1953 (relating to in-

terstate transportation of wagering paraphernalia), section

1954 (relating to unlawful welfare fund payments), section

1955 (relating to the prohibition of illegal gambling business),

sections 2314 and 2315 (relating to interstate transportion of

stolen property), sections 2541-2346 (relating to trafficking in

contraband cigarettes), sections 2421-24 (relating to white

slave traffic), (C) any act which is indictable under title 29,

United States Code, section 186 (dealing with restrictions on

payments and loans to labor organizations) or section 501(c)

(relating to embezzlement from union funds), or (D) any

68a

offense involving fraud connected with a case under title 11,

fraud in the sale of securities, or the felonious manufacture,

importation, receiving, concealment, buying, selling, or other-

wise dealing in narcotic or other dangerous drugs, punishable

under any law of the United States;

(2) “State” means any State of the United States, the Dis-

trict of Columbia, the Commonwealth of Puerto Rico, any

territory or possession of the United States, any political sub-

division, or any department, agency, or instrumentality

thereof;

(3) “person” includes any individual or entity capable of

holding a legal or beneficial interest in property;

(4) “enterprise” includes any individual, partnership,

corporation, association, or other legal entity, and any union or

group of individuals associated in fact although not a legal

entity;

(5) “pattern of racketeering activity” requires at least two

acts of racketeering activity, one of which occurred after the

effective date of this chapter and the last of which occurred

within ten years (excluding any period of imprisonment) after

the commission of a prior act of racketeering activity;

(6) “unlawful debt” means a debt (A) incurred or con-

tracted in gambling activity which was in violation of the law of

the United States, a State or political subdivision thereof, or

which is unenforceal.e under State or Federal law in whole or

in part as to principal or interest because of the laws relating to

usury, and (B) which was incurred in connection with the

business of gambling in violation of the law of the United

States, a State or political subdivision thereof, or the business

of lending money or a thing of value at a rate usurious under

State or Federal law, where the usurious rate is at least twice

the enforceable rate;

(7) “racketeering investigator” means any attorney or in-

vestigator so designated by the Attorney General and charged

with the duty of enforcing or carrying into effect this chapter,

69a

(8) “racketeering investigation” means any inquiry con-

ducted by any racketeering investigator for the purpose of

ascertaining whether any person has been involved in any

violation of this chapter or of any final order, judgment, or

decree of any court of the United States, duly entered in any

case or proceeding arising under this chapter;

(9) “documentary material’ includes any book, paper,

document, record, recording, or other material; and

(10) “Attorney General” includes the Attorney General of

the United States, the Deputy Attorney General of the United

States, any Assistant Attorney General of the United States,

or any employee of the Department of Justice or any employee

of any department or agency of the United States so desig-

nated by the Attorney General to carry out the powers con-

ferred on the Attorney General by this chapter. Any depart-

ment or agency so designated may use in investigations 2utho-

rized by this chapter either the investigative provisions of this

chapter or the investigative power of such department or

agency otherwise conferred by law.

§ 1962. Prohibited activities.

(a) Itshall be unlawful for any person who has received any

income derived, directly or indirectly, from a pattern of

racketeering activity or through collection of an unlawful debt

in which such person has participated as a principal within the

meaning of section 2, title 18, United States Code, to use or

invest, directly or indirectly, any part of such income, or the

proceeds of such income, in acquisition of any interest in, or the

estabi) hment or operation of, any enterprise which is engaged

in, or the activities of which affect, interstate or foreign com-

merce. A purchase of securities on the open market for pur-

poses of investment, and without the intention of controlling or

participating in the control of the issuer, or of assisting another

to do so, shall not be unlawful under this subsection if the

securities of the issuer held by the purchaser, the members of

his immediate family, and his or their accomplices in any pat-

70a

tern or racketeering activity or the collection of an unlawful

debt after such purchase do not amount in the aggregate to one

percent of the outstanding securities of any one class, and do

not confer, either in law or in fact, the power to elect one or

more directors of the issuer.

(b) It shall be unlawful for any person through a pattern of

racketeering activity or through collection of an unlawful debt

to acquire or maintain, directly or indirectly, any interest in or

control of any enterprise which is engaged in, or the activities

of which affect, interstate or foreign commerce.

(c) It shall be unlawful for any person employed by or

associated with any enterprise engaged in, or the activities of

which affect, interstate or foreign commerce, to conduct or

participate, directly or indirectly, in the conduct of such enter-

prise’s affairs through a pattern of racketeering activity or

collection of unlawful debt.

d) It shall be unlawful for any person to conspire to violate

any of the provisions of subsections (a), (b), or (e) of this

section.

§ 1963. Criminal penalties.

(a) Whoever violates any provision of section 1962 of this

chapter shall be fined not more than $25,000 or imprisoned not

more than twenty years, or both, and shall forfeit to the United

States (1) any interest he has acquired or maintained in viola-

tion of section 1962, and (2) any interest in, security of, claim

against, or property or contractual right of any kind affording a

source of influence over, any enterprise which he has estab-

lished, operated, controlled, conducted, or participated in the

conduct of, in violation of section 1962.

(b) In any action brought by the United States under this

section, the district courts of the United States shall have

jurisdiction to enter such restraining orders or prohibitions, or

to take such other actions, including, but not limited to, the

acceptance of satisfactory performance bonds, in connection

Tla

with any property or other interest subject to forfeiture under

this section, as it shall deem proper.

(e) Upon conviction of a person under this section, the

court shall authorize the Attorney General to seize all property

or other interest declared forfeited under this section upon

such terms and conditions as the court shall deem proper. If a

property right or other interest is not exercisable or transfer-

able for value by the United States, it shall expire, and shall not

revert to the convicted person. All provisions of law relating to

the disposition of property, or the proceeds from the sale

thereof, or the remission or mitigation of forfeitures for viola-

tion of the custoins laws, and the compromise of claims and the

award of compensation to informers in respect of such forfei-

tures shall apply to forfeitures incurred, or alleged to have

been incurred, under the provisions of this section, insofar as

applicable and not inconsistent with the provisions hereof.

Such duties as are imposed upon the collector of customs or any

other person with respect to the disposition of property under

the customs laws shall be performed under this chapter by the

Attorney General. The United States shall dispose of all such

property as soon as commercially feasible, making due provi-

sion for the rights of innocent persons.

§ 1964. Civil remedies.

(a) The district courts of the United States shall have

jurisdiction to prevent and restrain violations of section 1962 of

this chapter by issuing appropriate orders, including, but not

limited to: ordering any person to divest himself of any in-

terest, direct or indirect, in any enterprise; imposing reason-

able restrictions on the future activities or investments of any

person, including, but not limited to, prohibiting any person

from engaging in the same type of endeavor as the enterprise

engaged in, the activities of which affect interstate or foreign

commerce; or ordering dissolution or reorganization of any

enterprise, making due provision for the rights of innocent

persons.

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b) The Attorney General may institute proceedings under

this section. In any aetion brought by the United States under

this section, the court shall proceed as soon as practicable to

the hearing and determination thereof. Pending final

determination thereof, the court may at any time enter such

restraining orders or prohibitions, or take such other actions,

including the acceptance of satisfactory performance bonds, as

it shall deem proper.

(e) Any person injured in his business or property by

reason of a violation of section 1962 of this chapter may sue

therefor in any appropriate United States district court and

shall recover threefold the damages he sustains and the cost of

the suit, including a reasonable attorney’s fee.

(d) A final judgment or decree rendered in favor of the

United States in any criminal proceeding brought by the

United States under this chapter shall estop the defendant

from denying the essential allegations of the criminal offense in

any subsequent civil proceeding brought by the United States.

§ 287. False, fictitious or fraudulent claims.

Whoever makes or presents to any person or officer in the

civil, military, or naval service of the United States, or to any

department or agency thereof, any claim upon or against the

United States, or any department or agency thereof, knowing

such claim to be false, fictitious, or fraudulent, shall be fined

not more than $10,000 or imprisoned not more than five years,

or both.

§ 1341. Frauds and swindles.

Whoever, having devised or intending to devise any scheme

or artifice to defraud, or for obtaining money or property by

means of false or fraudulent pretenses, representations, or

promises, or to sell, dispose of, loan, exchange, alter, give

away, distribute, supply, or furnish or procure for unlawful use

any counterfeit or spurious coin, obligation, security, or other

article, or anything represented to be or intimated or held out

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to be such counterfeit or spurious article, for the purpose of

executing such scheme or artifice or attempting so to do, places

in any post office or authorized depository for mail matter, any

matter or thing whatever to be sent or delivered by the Postal

Service, or takes or receives therefrom, any such matter or

thing, or knowingly causes to be delivered by mail according to

the direction thereon, or at the place at which it is directed to

be delivered by the person to whom it is addressed, any such

matter or thing, shall be fined not more than $1,000 or impris-

oned not more than five years, or both.

§ 1343. Fraud hy wire, radio, or television.

Whoever, having devised or intending to devise any scheme

or artifice to defraud, or for obtaining money or property by

means of false or fraudulent pretenses, representations, or

promises, transmits or causes to be transmitted by means of

wire, radio, or television communications in interstate or for-

eign commerce, any writings, signs, signals, pictures, or

sounds for the purpose of executing such scheme or artifice,

shall be fined not more than $1,000 or imprisoned not more than

five years, or both.

Rule 6(d) of the Federal Rules of Criminal Procedure

provides as follows:

Rule 6. The Grand Jury.

(d) Who May Be Present. Attorneys for the government,

the witness under examination, interpreters when needed

and, for the purpose of taking the evidence, a stenographer or

operator of a recording device may be present while the grand

jury is in session, but no person other than the jurors may be

present while the grand jury is deliberating or voting.