Opposition Brief — Oshatz v. United States

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Jn the Supreme Court of the Gnited States

OCTOBER TERM, 1990

MICHAEL P. OSHATZ, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

KENNETH W. STARR

Solicitor General

SHIRLEY D. PETERSON

Asistant Attorney General

ROBERT E. LINDSAY

ALAN HECHTKOPF

YOEL TOBIN

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 514-2217

T AVAILABLE COP

QUESTIONS PRESENTED

1. Whether the district court abused its discretion in ex-

cluding from evidence certain documents that supposedly

went to the bias of a government witness.

2. Whether it was reversible error for the district court

to allow the prosecutor to pose guilt-assuming hypothetical

questions on cross-examination of petitioner’s character

witness.

3. Whether it was reversible error to admit into evidence

a chart summarizing government evidence.

4. Whether any other errors that may have occurred

denied petitioner his right to a fair trial.

(1)

TABLE OF CONTENTS

Page

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Te ED ey 1]

TABLE OF AUTHORITIES

Cases:

Bank of Nova Scotia v. United States, 487 U.S. 250

le ew wwe wie 8

United States \. Barta, 888 F.2d 1220 (8th Cir.

Senet Tall Seale, A A ee a a 7,8

United States v. Blackmon, 839 ¥.2d 900 (2d Cir.

RIOR ON ea ou ay lp 1]

United States v. Candelaria-Gonzalez, 547 } .2d 39]

Og EE oh ag ra 7

United States v. Citron, 783 t.2d 307 (2d Cir.

en eg nee ws 10

United States vy. Graham, 758 + .2d 879 (3d Cir.),

cert. denied, 474 U.S. 901 (1985) ............ 1]

United States v. Hasting, 461 U.S. 499 (1983) .. &

United States v. McGuire, 744 §.2d 1197 (6th Cir.

1984), cert. denied, 471 U.S. 1004 (1985) .... 7

United States v. Morgan, $54 } .2d 31 (2d Cir.), cert.

denied, 434 U.S. 965 (1977) ................ 3

United States v. Page, 808 & .2d 723 (Oth Cir.), cert.

denied, 482 U.S. 918 (1987) ................ 7,8

United States v. Polsinelli, 649 | .2d 793 (10th Cir.

IS A ng SR er 7

United States v. Siers, 873 &.2d 747 (4th Cir.

en ac 9 Alls a 7,8

United States ». White, 887 .2d 267 (D.C. Cu

Ee rN ew a baw ele de 7

IV

Cases — Continued: Page

United States v. Williams, 738 F.2d 172 (7th

i ME CN oN eer eee eke reece ere ee ee 7,8

Constitution, statutes and rules:

U.S. Const. Amend. VI (Confrontation Clause). . 5,6

Internal Revenue Code (26 U.S.C.):

aR ps oe es ns ae ee hei

aR RE err rG rarity eo rer ee Aiea ana

PR EE Dh ae bres we hice ea ehua

Fed. R. Evid.:

Sg oe ew ae aels eee eae e

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Nm N bt

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Miscellaneous:

22 C. Wright & K. Graham, Federal Practice and

PP GE so cccun ecu areee ele eee 7

Jn the Supreme Court of the Gnited States

OcTOBER TERM, 1990

No. 90-1265

MICHAEL P. OSHATZ, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS .

FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. A3-A77)

is reported at 912 F.2d 534. Opinions of the district court

are reported at 700 F. Supp. 696, 704 F. Supp. Sil (Pet.

App. E143-E159), and 715 F. Supp. 74.

JURISDICTION

The judgment of the court of appeals (Pet. App. B78-B80)

was entered on August 23, 1990. A petition for rehearing

was denied on October 10, 1990. Pet. 2. The petition for

a writ of certiorari was not filed until February 5, 1991, and

therefore is out of time under Rule 13.1 of the Rules of this

(1)

to

Court.' The jurisdiction of this Court is invoked under 28

U.S.C. 1254(1).

STATEMENT

Petitioner, a tax attorney, was convicted on one count

of conspiracy to defraud the United States (18 U.S.C. 371),

and 14 counts of filing falge income tax returns, either for

himself (26 U.S.C. 7206(1)) or for various partnerships (26

U.S.C. 7206(2)). Pet. App. A8-A9, C82. The district court

sentenced petitioner to 40 months’ imprisonment and three

years’ probation. /d. at A9.

1. The evidence at trial showed that between 1979 and

1983, petitioner assisted in the formation of a number of

affiliated partnerships known as the “Monetary Group.” The

partnerships purportedly were set up to engage in securities

transactions in which any losses would be available as tax

deductions. Pet. App. A4-A7.

Many of the tax losses reported by the partnerships,

however, did not arise out of legitimate trading. Pet. App.

A7. Edward Markowitz, the head trader for the Monetary

Group, testified that he falsified trade documents to reflect

transactions that never occurred. /bid. The partnerships also

engaged in transactions that had no market risk and

therefore could not generate valid tax losses. These trans-

actions were documented fraudulently so that they would

appear to give rise to valid tax deductions. /d. at A7-A8.

2. On appeal, petitioner contended, inter alia, that the

trial court improperly excluded certain documents he of-

fered during his cross-examination of Markowitz; that, in

cross-examining petitioner’s character witness, the pros-

ecutor improperly posed hypothetical questions that asked

' Simultaneously with the filing of his petition, petitioner filed an

application for an extension of time within which to file the petition,

but the appiication was returned as untimely.

the witness to assume that petitioner was guilty; and that

the trial court erred in admitting a summary chart prepared

by the prosecution. The court of appeals found that the

district court had not committed any reversible error and

therefore affirmed the convictions.?

a. The bulk of the court of appeals’ opinion dealt with

petitioner’s argument that the prosecution’s cross-

examination of his character witness constituted prejudicial

error. Pet. App. A10-A33.3 The prosecutor asked the

witness if her opinion of petitioner’s character would be af-

fected if she learned that petitioner had known that certain

transactions were backdated. The witness replied, “Yes.”

Id. at A10-A11. Similar questions were asked and answered

concerning other aspects of the wrongdoing for which peti-

tioner was on trial. /d. at All.

The court of appeals acknowledged that there was

“arguably an ambiguity” as to the propriety of the prose-

cutor’s questions under the Second Circuit’s earlier decision

in United States v. Morgan, 554 F.2d 31 (2d Cir.), cert.

denied, 434 U.S. 965 (1977), Pet. App. A1l9, but agreed with

petitioner that the cross-examination was improper. In its

view, guilt-assuming hypothetical questions create too great

a risk of impairing the presumption of innocence. Pet. App.

A23. The majority also reasoned that when jurors have

repeatedly heard a prosecutor assure the judge of his good-

faith basis for asking other hypothetical questions, the jurors

> The court of appeals also affirmed the convictions of petitioner’s

co-defendant, Leonard A. Messinger, who has not sought review by

this Court.

* The government initially called the witness, but the defense adopted

her as a character witness during cross-examination. Like petitioner and

the court of appeals, Pet. App. A10, we will refer to the defense’s ques-

tioning of this witness concerning petitioner’s character as direct ex-

amination, and the prosecutor’s questioning on the character issue as

cross-eXamination.

4

might assume from a guilt-based hypothetical that the

prosecutor has extra-record evidence of guilt. /d. at

A23-A24.4

Turning to “traditional harmless error considerations,”

Pet. App. A31, the court nevertheless declined to reverse

petitioner’s convictions because it believed the prosecutor’s

questions created no substantial risk of prejudice. /d. at

A31-A33. The court noted that the trial judge gave the jury

appropriate cautionary instructions, in which it pointed out

the limited purpose of this type of questioning and reminded

the jurors that it was their responsibility to determine guilt

or innocence. /d. at A31. The court also found the evidence

of guilt “so substantial as to preclude any reasonable

likelihood that the [questioning in dispute] contributed to

the verdicts.” Jd. at A31-A32.

b. The court of appeals also rejected petitioner’s argu-

ment that the trial court erred in excluding certain

documents petitioner attempted to introduce during cross-

examination of Markowitz, the head trader for the various

partnerships whose affairs were in question. Pet. App.

A41-A43. Markowitz testified on direct examination that

he had forfeited all of his possessions to the government,

including whatever money he had acquired through the part-

nerships. /d. at A41. Petitioner cross-examined Markowitz

about several transfers of money he allegedly had made to

family members or to family-controlled businesses. When

Markowitz could not recall those transfers, petitioner sought

to introduce extrinsic evidence of their occurrence. Because

Fed. R. Evid. 608(b) limits the introduction of extrinsic

evidence to support attacks on credibility, the district court

* Judge Mukasey, who concurred in the judgment and in the other

sections of the court’s opinion, disagreed with the majority’s reading

of Morgan and concluded that the questioning was entirely proper. Pet.

App. A46-A77.

refused to allow petitioner to introduce the evidence for that

purpose. Petitioner argued that he was seeking to introduce

the evidence to establish that Markowitz had a motive to

testify falsely in favor of the government, so that the govern-

ment would not seek forfeiture of the assets he had hid-

den, The trial court excluded the proffered evidence. Pet.

App. A41-A42.

The court of appeals held that a fair review of the record

reveals that the trial court understood it had discretion to

admit the evidence regarding Markowitz’s transactions,

quoting the tr.al court’s statement that the issue was “com-

mitted to the discretion of the trial court.” Pet. App. A43.

The court then concluded that exclusion of the evidence did

not constitute an abuse of discretion in view of the wide-

ranging cross-examination petitioner was allowed to con-

duct and the speculative nature of the theory under which

the evidence was offered. /bid.

c. Finally, the court of appeals rejected petitioner’s argu-

ment that admission of the government’s summary chart

constituted reversible error because it was not provided to

petitioner before trial and because it was published to the

jury (although not admitted) before the government

demonstrated the accuracy of the method by which it

prepared the chart. Pet. App. A43-A45. The court held that

petitioner was not prejudiced because he had ample time

during trial to check the chart and cross-examine govern-

ment witnesses concerning any errors, and because the chart

was not actually admitted until all the errors on the chart

were corrected. /d. at A4S5.

ARGUMENT

1. Petitioner first argues that the trial court violated the

Confrontation Clause of the Sixth Amendment by excluding

evidence petitioner claimed would prove that Markowitz had

6

a financial incentive to curry favor with the government.

Pet. 27-39. Petitioner, however, offers no substantial reason

to believe that the court of appeal. erred, much less allowed

the district court to transgress constitutional limitations, in

limiting the introduction of extrinsic evidence with regard

to Markowitz. Although petitioner claims that the trial

court’s ruling allowed the government to “hide its pecuniary

arrangements with prosecution witnesses,” Pet. 39, the

evidence he sought to introduce did not relate to the govern-

ment’s arrangements with Markowitz, but instead sup-

posedly would have documented transfers of money from

Markowitz to relatives or to family businesses. Pet. App.

A41-A42. The court of appeals correctly characterized as

entirely speculative petitioner’s theory that those purported

transfers would show that Markowitz had a motive to lie

on the stand. /d. at A43. As the court of appeals noted,

ibid., petitioner was accorded “wide latitude” in cross-

examining Markowitz. The petition itself acknowledges that

petitioner cross-examined Markowitz for “many hours,” Pet.

38, asking “hundreds of questions,” Pet. 36. This is simply

not a case where the trial court cut off a whole line of ques-

tioning or otherwise unduly restricted defense attempts to

cross-examine a government witness. °

2. Next, petitioner argues that the government violated

petitioner’s presumption of innocence because the prose-

cutor asked a defense character witness whether her opin-

ion of petitioner’s character would change if she were shown

evidence that petitioner had engaged in various aspects of

> Petitioner also argues that any Confrontation Clause error that oc-

curred was not harmless. Pet. 33-38A. That question, of course, would

be relevant only if the Court held that the Confrontation Clause had

been violated. Because the court of appeals did not find such an error,

it conducted no harmless error analysis.

|

the wrongdoing for which he was being tried.® Pet. 39-44.

Although petitioner does not discuss the point, the courts

of appeals do not agree on whether this type of question-

ing is proper. The Sixth and Seventh Circuits refuse to per-

mit such questioning under any circumstances. See United

States v. McGuire, 744 F.2d 1197, 1204-1205 (6th Cir. 1984),

cert. denied, 471 U.S. 1004 (1985) (in dictum); United States

v. Williams, 738 F.2d 172, 176-177 (7th Cir. 1984). The

District of Columbia Circuit permits such questioning if the

witness is offering an opinion as to character, but not if

the witness is testifying as to reputation of character. See

United States v. White, 887 F.2d 267, 274-275 (1989). The

Fourth, Fifth, Eighth, and Tenth Circuits have condemned

asking these questions of reputation witnesses, but have not

directly addressed whether such questions can be put to

opinion witnesses. See United States v. Siers, 873 F.2d 747,

749 (4th Cir. 1989) (type of witness not entirely clear);

United States v. Candelaria-Gonzalez, 547 F.2d 291, 293-295

(Sth Cir. 1977); United States v. Barta, 888 F.2d 1220,

1224-1225 (8th Cir. 1989); United States v. Polsinelli, 649

F.2d 793, 795-797 (10th Cir. 1981); United States v. Page,

808 F.2d 723, 731 (10th Cir.), cert. denied, 482 U.S. 918

(1987).

Because he prevailed on this point in the court of appeals,

petitioner has not presented this question to the Court for

review. We agree with petitioner that the correctness of the

court of appeals’ ruling as to the propriety of the prose-

cutor’s cross-examination of the defense character witness

6 The witness was permitted to testify about her opinion of petitioner's

character. Before the adoption of the Federal Rules of Evidence,

character witnesses in federal trials were permitted to testify only as

to a person’s reputation. Fed. R. Evid. 405(a) changed that rule to per-

mit a character witness to testify as to the witness’s opinion of a per-

son’s character. See generally 22 C. Wright & K. Graham, Federal Prac-

tice and Procedure § 5265 (1978).

is not properly presented here. Even if the Court were to

address this point and resolve it in favor of the defendant,

the judgment below would not be altered, because the court

of appeals already has agreed with petitioner on the issue,

but has determined that the error was harmless. For that

reason, the sole question petitioner presents is whether the

posited error indeed was harmless.

With regard to his harmless error point, petitioner does

not seem to contend that an error of the sort the court of

appeals found in this case should be per se grounds for re-

versal.’ Instead, he argues that the court of appeals erred

by finding that the alleged error was harmless on these par-

ticular facts. Although petitioner attempts to show that he

was harmed by the district court’s action in permitting the

cross-examination in question, the court of appeals, after

a full review of the record, was fully satisfied that there was

no substantial risk of prejudice. Pet. App. A31-A32.

~ Nor would he find support for such an argument. The Court has

held that reversal of a criminal conviction is not the necessary result

of every minor error in a criminal trial. See, e.g., Bank of Nova Scotia

v. United States, 487 U.S. 250, 254-257 (1988); United States v. Hasting,

461 U.S. 499, 509 (1983). In Hasting, the Court stressed that it “has

consistently made clear that it is the duty of a reviewing court to con-

sider the trial record as a whole and to ignore errors that are harmless,

including most constitutional violations * * *.” 461 U.S. at 509. The

Court also has explained that “deterrence is an inappropriate basis for

reversal where ‘means more narrowly tailored to deter objectionable

prosecutorial conduct are available.’” Bank of Nova Scotia, 487 U.S.

at 255 (quoting Hasting, 461 U.S. at 506).

Moreover, all five of the courts of appeals that have addressed the

question in this particular context have concluded that errors of this

type can be harmless. In addition to the decision in this case, see United

States v. Siers, 873 F.2d 747, 749-750 (4th Cir. 1989); United States

v. Williams, 738 F.2d 172, 177 (7th Cir. 1984); United States v. Barta,

888 F.2d 1220, 1225 (8th Cir. 1989); United States v. Page, 808 F.2d

723, 731-732 (10th Cir.), cert. denied, 482 U.S. 918 (1987).

9

It is clear that the trial judge was sensitive to the risk of

prejudice. He forced the prosecutor on at least one occa-

sion to rephrase his question when he thought the form of

the question was overly suggestive. Pet. App. A15. The trial

judge also gave appropriate instructions regarding the

limited purpose for which the questioning was being per-

mitted and reminded the jurors that they had the ultimate

responsibility to determine the guilt or innocence of peti-

tioner. /d. at A31. Furthermore, although petitioner con-

tends that he chose not to call additional character witnesses

because of the judge’s erroneous ruling, the decision not

to call these witnesses was petitioner’s; the district court’s

ruling regarding the prosecutor’s cross-examination did not

in any way force petitioner to abandon his plan to call his

proposed character witnesses. And it is highly unlikely that

this type of cross-examination would have affected peti-

tioner’s rights any more with respect to the uncalied

character witnesses than it did with respect to the witness

who testified. In sum, in light of all the relevant cir-

cumstances, it is highly unlikely that the district court’s error,

if the court in fact erred, had any effect on the verdict. The

court of appeals’ conclusion that any error was harmless

therefore was correct and in any event does not warrant

review by this Court.

3. Next, petitioner contends that the admission of the

government’s summary chart constituted reversible error.

Pet. 44-47. Petitioner characterizes the figures on the chart

* Although petitioner contends that the government engaged in

“deliberate defiance” of prior Second Circuit precedent on this matter,

and that the trial court “knowingly joinfed] with the government” in

violating his rights, Pet. 42-43, the court of appeals saw it differently,

acknowledging that the Second Circuit’s prior decision on the subject

was “susceptible to misinterpretation,” that the government was entitled

to urge its position, and that the district court could not be faulted for

“misreading” of prior Second Circuit law. Pet. App. A32-A33.

10

as “glaring” and “erroneous” and suggests that the chart

should not have been published to the jury until the govern-

ment demonstrated its reliability. Pet. 46. The court of ap-

peals acknowledged that the better practice would be to sub-

mit the chart to the defense prior to trial to give the defense

an advance opportunity to analyze it. The court concluded

that there was no prejudice in this case, however, because

petitioner had ample time and opportunity during the trial

to check the chart and to cross-examine government

witnesses regarding its contents. Pet. App. A44-A45.

Moreover, the prior conditional admission of the uncor-

rected chart could not have prejudiced petitioner. The chart,

which related to the conspiracy charge against petitioner,

originally reflected phony losses totalling $1.8 billion. Gov’t

C.A. Br. 111. The chart as corrected reflected phony losses

of $1.6 billion. /bid. The issue of defendant’s guilt did not

depend on whether the losses totalled $1.6 billion or $1.8

billion. Compare United States v. Citron, 783 F.2d 307, 317

(2d Cir. 1986) (reversing conviction for tax evasion where

“the seemingly arbitrary figures” used in the government’s

summary chart were an important link in its case). Thus,

petitioner was not prejudiced by the errors in the original

summary chart.

4. Finally, petitioner complains in passing (Pet. 48)

about “the improper introduction of unfairly prejudicial

government proof and the failure to review jury im-

proprieties.” But petitioner has presented no separate argu-

ment concerning either of these two issues before this Court,

and he thus should be deemed to have waived any right to

have the Court consider them.

Assuming, however, that petitioner’s description of the

post-trial proceedings in his statement of the case, Pet. 18-22,

sufficiently raises the juror misconduct issue, he has failed

to present any evidence of misconduct. The alleged state-

ment by a-juror that the jurors’ minds were made up after

11

Markowitz testified, Pet. 19, is not evidence that premature

deliberations occurred. The jurors could have told each

other when deliberations began that they had previously

made up their minds, and it is purely speculative to assume

otherwise.

Nor is there any merit to petitioner’s claim that a juror’s

request to be excused on the Chinese New Year because of

family obligations that would “forbid” him from

deliberating that day, a note by the jury asking permission

to adjourn at 1:00 p.m. to accommodate that juror, and

the jury’s verdict at 12:55 p.m. that same day constitute

evidence of improper outside influence on the jurors. Pet.

20-22. That sequence of events provides no evidence at all

that any outside party tried to influence the verdict in any

way. Nor does it demonstrate improper coercion of the

jurors by the trial court. See United States v. Blackmon,

839 F.2d 900, 915 (2d Cir. 1988); United States v. Graham,

758 F.2d 879, 883-885 (3d Cir.), cert. denied, 474 U.S. 901

(1985).

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

KENNETH W. STARR

Solicitor General

SHIRLEY D. PETERSON

Assistant Attorney General

ROBERT E. LINDSAY

ALAN HECHTKOPE

YOEL. TOBIN

Attorneys

APRIL 199]

US GOVERNMENT PRINTING OFFICE 1991 —282-061/20459

a