# Petition for Writ of Certiorari — Storm v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1984
- **Citation:** 469 U.S. 858

## Text

FILED

i

ALEXANOER LU. STEVAS

84 s 9 0 9 (1) [ Office - Supreme Court. US

CLERK
In THE
Supreme Court of the United States

Ocroser Term, 1984

SANFORD STORM,
Petitioner,

vs.
UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE THIRD CIRCUIT

Howarp D. CoHEeN
Counsel of Record

GutTkuy, Mitter, SHarrro & Setesner, P.A.
Attorneys for Petitioner

225 Millburn Avenue

Millburn, New Jersey 07041

(201) 467-8000

Adams Press Corp., 50 Park Place, Newark, New Jersey 07102—(201) 623-8611

AN

Question Presented

Did the District Court erroneously deprive Petitioner
of his Sixth Amendment rights (and otherwise place in
jeopardy his Fifth Amendment rights) in its denial of
a motion by his trial counsel to declare a mistrial and
to withdraw as counsel in order to render available a
member of his trial counsel’s law firm, who was then
serving as co-trial counsel, to tesiify and rebut Gov-
ernment testimony concerning statements allegedly made
by co-trial counsel.’

1The other party to this proceeding is Jerome Ashfield, a co-
defendant. Mr. Ashfield is not a party to this Petition.

San RR Bs NO AN ne A Ne

TABLE OF CONTENTS

QUESTION PRESENTED ...............-20---ccseceseees

TABLE OF AUTHORITIES

I eceememaems

JURISDICTION

CoNSTITUTIONAL Provisions AND RELEVANT Portions
oF AMERICAN Bar Association (ABA) Cope or Pro-
WRERO IAG, PEREPOMGIBIEATY oon ccsenccceeee

STATEMENT a

a I ninsninsinceeniissiesbeassinbeninensetninenmivinnst

B. Statement of pertinent facts in relation to ques-
tion presented

Reasons FoR GRANTING THE PETITION .................--------
A. Strong policies underlie DR 5-102(A) ............

B. The substantial hardship exception (DR 5-
101(B)(4)) to DR 5-102(A) is to be narrowly
I i cnt ksibiintitenncnerietsionerinn

C. An interrelationship exists between the unim-
pairment policy consideration underlying DR
5-102(A) and the Sixth Amendment right to
unimpaired representation

D. Compliance with DR 5-102 is mandated by Lo-
cal Rule 6 of the District Court -....0000000000....

PAGE

12

13

TABLE OF CONTENTS lil

PAGE

Kk. The overriding policy and constitutional con-
siderations with respect to unimpaired repre-
sentation underlying the mandate of DR 5-
102(A) when considered in conjunction with
Fifth and Sixth Amendment rights, constitutes
an important question of federal law which
has not been, but should be settled by this
Court sinliseliceldsladigiluiidtaccesataidcapiitainnial 14

F. The Third Circuit’s affirmation of the District
Court’s denial of motions for a mistrial and
to withdraw as counsel was not only incon-
sistent with the overriding policy considera-
tions underlying DR 5-102(A) and its inter-
play with the Fifth and Sixth Amendments
but also is in conflict with the rulings of other
I = ei iiisitaiaccinetiiclalncinalntccloiciniiiiicisepaticiinialceidoeetadas 16

G. Co-trial counsel’s testimony was not available
EN BI IE saiiebiticarcrinccenenicindastepseens 17

H. Had Petitioner testified in lieu of co-trial coun-
sel, Petitioner would have been required to com-
promise his Fifth Amendment rights -.............. 17

I. In its review of the District Court’s ruling on
this issue, the Court of Appeals misapplied
the substantial hardship exception and other-
wise arrived at erroneous conclusions, unsup-
ee ar Oe Oe Gs. 18

J. Co-trial counsel’s failure to testify was not a
I I igri cccadincns a cinilecaernindtbacepetninnpioeance 23

ee re ar 25

iv TABLE OF CONTENTS

PAGE
APPENDIX:
A—Opinion of the United States Court of Appeals
Oe is re scsi ascdesesicoespmenaiiaibealion la
B—Judgment and Probation Commitment Order
dated May 10, 1983, and Conditions of Pro-
bation and Order of Release dated May 10,
RI, DI TID anni tecertttttemncesicisnnicne 24a
C—Applicable Provisions of the United States
Constitution and Other Authorities -......0........... 3la
Fifth Amendment and Sixth Amendment of the
United States Constitution -......2222.....2..2......0c000- 3la
Relevant Portions of American Bar Association
Code of Professional Responsibility -............... 32a

D—Order for Stay of the United States Court
of Appeals of the Third Cireuit with Attach-
IIE sscicssccsnininininsndoceninetisenenintieansinatanicansethlninantnaaastentncaaiaih 30a

TABLE OF AUTHORITIES 4

PAGE
Table of Authorities
Cases Cited

Christensen v. United States, 90 F.2d 152 (7th Cir.
ENTE © ssnticheencbeiiensagenstubebblangiaiiiedbuiiidituai ee EE ae 16, 17

Connell v. Clairol, Inc., 440 F.Supp. 17 (N.D. Ga.
ROVE) einem 11

Kmle Industries v. Patentex, Ine, 478 F.2d 562
SOO Ns ID Salitisicentcceiannee ied ae cae 12

General Mill Supply Co. v. SCA Services, Inc., 505
F.Supp. 503 (D. Mich. 1981) 2......c.cccccccccccsseoecc--- 11, 12
Glasser v. United States, 315 U.S. 60 (2982) 0. 13, 15, 19

Hull v. Celanese Corp., 513 F.2d 568 (2nd Cir. 1975) 11

International Electronic Corp. v. Flanzer, 521 F.2d

SenONE. CNS GMD BUEN ~ cccnesccciaccaducbbewuaaiiee ee 10
J.P. Foley & Co. v. Vanderbilt, 523 F.2d 1357 sat
Se PE jsianrnivssiph lnpuacnanibadsandcadta er ane 10

Lau Ah Yew v. Dulles, 257 F.2d 744 (9th Cir. 1958) 10

MacArthur v. Bank of New York, 524 F.Supp. 1205
SRM Cas MED Siciencthnctsbcamenemenes 11, 19, 14, 15

Simmons v. United States, 39 U.S. 377 (1968) ...... 18, 19, 24

United States v. Birdman, 602 F.2d 547 (3rd Cir.
BD aniinsiaettlinatnitntteabenleleda lcci Naas ie ee 11

United States ex rel Sheldon Electric Co. v. Black-
hawk Heating & Plumbing, Inc., 423 F.Supp. 486
SRT c. MOI: :<inkicmibinstiitiiaiabscenistihiniiiahaamaia Neate a 10, 12

United States v. Vereen, 429 F.2d 713 (D.C. Cir.
UTE isncaliinsnsissshaplndeionppibetcbalpiebadiiedeidGiaiahcaatienliidaaacas toll 11, 16,17

vi TABLE OF AUTHORITIES

PAGE
Universal Athletic Sales Co. v. American Gym, Ree-
reational & Athletic Equipment Corp., 546 F.2d
530 (3rd Cir. 1976) ....-.-...--..cecec-scsnscsessssnesesnsnennseenensess 9-11
United States Constitution Cited
WiPt hn A rememe et ances snane nase nssnnsccnonens i, 2, 8, 14, 16-20, 23
Sixth AmenGmMent ...~-...--.0--ccescecssoeeoe i, 2, 8, 14, 16, 18-20, 23
Statutes Cited
26 U.S.C.
$7201 ....n.ceceecennonscenvenscesesessnsesevensensusecensnncsntenenensenanmensneee 3
28 U.S.C.:
§1254( 1) .n.n.neeeeeececeescncsesesncesssensnsesesesnsnsncstnenensnessensnsones 2
Rules Cited
Federal Rules of Evidence:
i I ani icsisinsknnitenenanemnnesicoiiniaesnnsniantietinnsmenineinia 6
Rule 803(6) ........-.-.-----s-cesesesnensnsesessrnenenensenesnnsnsnsnsnsesoes 21
Other Authorities Cited
American Bar Association Code of Professionai Re-
sponsibility Disciplinary Rule 5-101 -.......-..----------- 7,8

American Bar Association Code of Professional Re-
sponsibility Disciplinary Rule 5-101(B) (4) 3, 7, 12, 14, 20

American Bar Association Code of Professional Re-
sponsibility Disciplinary Rule 9-102 -............-..-....--- 7,8

TABLE OF AUTHORITIES Vil

PAGE

American Bar Association Code of Professional Re-
sponsibility Disciplinary Rule 5-102(A) ........ 3, 8-16, 18-
20, 24

American Bar Association Code of Professional Re-
sponsibility Ethical Consideration 5-9 00... 3, 9, 10

American Bar Association Code of Professional Re-
sponsibility Ethical Consideration 5-10 ........ 3, 11, 12,16

American Bar Association Code of Professional Re-
sponsibility Ethical Consideration 7-24 .................... 10

American Bar Association Committee on Ethies and
Professional Responsibility, Formal Opinion 339
So GS ONE MEE REE ee 9, 10, 13, 19

Developments in the Law, Conflicts of Interest in
the Legal Profession, 94 Harv. L. Rev. 1244 (198i) 10

Note, The Advocate Witness Rule: If Z, then X
But Why? 52 N.Y.U.L. Rev. 1365 (1977) ............ 9

6 J. Wigmore, Evidence §1911 (Chadbourn rev. ed.

Ne ts a FES EN a et YD Nai iD Me Cote RS att te

IN THE

Supreme Court of the United States

OcroBER Term, 19S4

-™
—

SANFORD STORM,
Petitioner,

VS.

UNITED STATES OF AMERICA,
Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
THIRD CIRCUIT

The Petitioner, Sanford Storm (“Storm”) respectfully
prays that a Writ of Certiorari issue to review the
Opinion of the United States Court of Appeals for the
Third Cireuit filed on June 1, 1984.

Opinions Below

There was no formal opinion of the District Court.
The Judgment and Probation Commitment Onder dated
May 10, 1983 and Conditions of Probation and Order
of Release dated May 10, 1983, are reproduced in Ap-
pendix B to this Petition (24a-30a)

The Opinion of the Court of Appeals has not yet been
reported. It is reproduced in Appendix A (la-23a).

2

Jurisdiction

The Opinion of the Court of Appeals (App. A infra
la-23a) was filed on June 1, 1984. Pursuant to Rule
4i(b) of the Federal Rules of Appellate Procedure, the
Court of Appeals stayed issuance of its cert:ued judg-
ment in lieu of formal mandate pending the ‘ling of
this Petition, which stay continues until final disposition
by this Court (App. D infra 35a-37a).

The jurisdiction of this Court is invoked under 28
U.S.C. §1254(1).

Constitutional Provisions and Relevant Portions of
American Bar Association (ABA) Code of Pro-
fessional Responsibility

1. The Fifth Amendment to the United States Con-
stitution provides in relevant part:

No person shall * * * be compelled in any eri-
minal case to be a witness against himself * * *.

The full text of the Fifth Amendment is reproduced
in Appendix C (3la) to this Petition.

2. The Sixth Amendment to the United States Con-
stitution provides in relevant part:

“In all criminal prosecutions, the accused shall
* * * have the Assistance of Counsel for his de-
fence.”

The full text of the Sixth Amendment is reproduced
in Appendix C (3la) to this Petition.

3

3. ABA Code of Professional Responsibility:
Disciplinary Rules:
DR 5-102(A)
DR 5-101(B) (4)
Ethical Considerations:
EC 5-9
EC 5-10

The text of the above provisions of the ABA Code
of Professional Responsibility is reproduced in Appendix
D (32a-34a) to this Petition.

Statement
A. Procedural history.

This case originated from Indictment Cr. 82-125 filed
on April 16, 1982 in the United States District Court
for the District of New Jersey charging Petitioner and
co-defendant, Jerome Ashfield (“Ashfield”), in eight counts
with criminal violations of the Internal Revenue Code.
Six of the eight counts were dismissed prior to trial
on the grounds that they were barred by the statute
of limitations.

Trial on the remaining two counts, one against Peti-
tioner and one against Ashfield, each of which charged
an attempt to evade personal income tax for the cal-
endar year 1975 (26 U.S.C. §7201), commenced on Janu-
ary 31, 1983 before the Honorable John W. Bissell, United
States District Judge, and a jury.

4

On February 9, 1983 the jury returned a verdict of
guilty against both Petitioner and Ashfield.”

On April 11, 1983, the District Court denied Peti-
tioner’s motion for a judgment of acquittal or, in the
alternative, for a new trial. The District Court granted
Ashfield’s motion for a judgment of acquittal.

On May 10, 1983 Petitioner was sentenced to a two-
year term of imprisonment, execution of which was sus-
pended except for 90 days, with a three year term of
probation to follow, and was fined $5,000.00. Petitioner
is at liberty on bail pending this appeal.

Separate appeals were filed by the Government, Pe-
titioner and Ashfield from the District Court’s post con-
viction orders and consolidated for consideration by the
United States Court of Appeals for the Third Circuit.

On June 1, 1984 the Court of Appeals filed an Opinion
which affirmed the judgment of conviction against Pe-
titioner and reversed the judgment of acquittal in favor
of Ashfield and remanded Ashifield’s case to the Dis-
trict Court for action consistent with its Opinion (App.
A infra 1a-23a).

B. Statement of pertinent facts in relation to question
presented.

The gist of the Government’s case was that in 1975
$28,000.00 in commission income received by National
Talent Associates, Inc. (“NTA”), in which Petitioner and
Ashfield were 50 percent shareholders, had been improp-
erly credited by Giblen & Co., NTA’s certified public

* The Government’s proofs alleged that Petitioner and Ashfield
cach attempted to evade the tax on $14,000.00 of income which
was not reported on their respective 1975 Federal income tax
returns.

5

accountants, to the corporation’s officers’ loans ac-
count in its general ledger in the amount of $14,000.00
each to Petitioner and Ashfield. These credits were
deemed constructive dividends which were not reported
on the personal income tax returns of Petitioner and
Ashfield, which had been prepared by Giblen & Co.

Petitioner and Ashfield did not challenge the under-
statement of income. Their defense rested upon lack
of willfulness and the result of error by their accountants.

The question presented herein arose within the fol-
lowing context. Petitioner was jointly represented at
trial by Howard D. Cohen, Esq. (“Cohen”) and Jerome
R. Miller, Esq. (“Miller”), members of the New Jersey
law firm of Gutkin, Miller, Shapiro & Selesner, P.A.
Although Cohen acted as lead trial counsel, Miller en-
tered his appearance as co-counsel for Petitioner at trial,
participated in jury selection, sat at counsel’s table, was
introduced to the jury as one of Petitioner’s trial at-
torneys, and otherwise continued as Petitioner’s attorney.

During the course of trial, the Government made an
offer of proof of its intention to introduce testimony
of IRS Special Agent Michael R. Faiella (“Faiella”)
concerning certain alleged statements made by Miller to
Faiella at a meeting in September, 1978. The meeting
took place in the presence of Petitioner and another
IRS Special Agent and related to the production of NTA
books and records in response to an IKS Summons
issued on August 16, 1978 in connection with a then pend-
ing civil tax audit of NTA. The Government alleged
through the testimony of Faiella that Miller purportediy
told Faiella that all of the documents forming the sub-
ject of the Summons had been produced.

6

Counsel for Petitioner objected to the introduction of
this testimony and requested and was granted an evi-
dentiary hearing outside the presence of the jury. At
that hearing, Special Agent Faiella testified (without cor-
roborative support from his contemporaneously made in-
terview notes or memorandum) that he had been told
by Miller at the September, 1978 meeting that all records
had been produced.

Faiella further testified that, following issuance of a
subsequent IRS Summons to the National Community
Bank, it was determined that ledgers and bank records
relating to a certain Management Trvrst Account of NTA
(into which was originally deposited NTA’s commission
income) had not been produced.

The Government argued that the original non-produc-
tion of these records was part of a cover up to pre-
sent the disclosure of documents that ultimately led
to the indictments returned against Petitioner and Ash-
field.

Notwithstanding Miller’s unequivocal denial in the evi-
dentiary hearing of ever having stated to Faiella that
all documents had been produced, the District Court de-
nied Petitioner’s motions to reject the testimony of Faiella
pursuant to Rule 403 of the Federal Rules of Evidence
or, in the alternative, to declare a mistrial and/or to
withdraw as counsel.

The application for a mistrial and/or to withdraw as
counsel was premised upon the following:

(a) Miller had entered his appearance as co-
counsel for Petitioner at trial, participated in jury
selection, sat at counsel’s table, was introduced to

the jury as one of Petitioner’s trial attorneys and
otherwise continued as Petitioner’s attorney;

(b) Miller’s law partner, Cohen, was Petition-
er’s lead trial counsel; and

(c) Miller’s testimony would be required if Fai-
ella was permitted to testify concerning the Sep-
tember, 1978 meeting.

Based upon the above, Cohen advised the District Court
that under DR 5-101 and 5-102 of the ABA Code of
Professional Responsibility, an attorney cannot act as
a witness in a proceeding in which he appears as counsel.

The District Court, in denying Petitioner’s application,
‘stated it was doing so based upon “its inherent powers
with regard to smooth and expeditious disposition of
cases, keeping in mind, among other things, the con-
siderations of the Speedy Trial Act and others deter-
mining the granting of a mistrial in this instance or
the granting of an application to withdraw as counsel”.
The District Court also expressed the view that under
the substantial hardship exception, DR 5-101(B)(4), Pe-
titioner’s attorneys ought to continue in their repre-
sentation and that Miller could testify without his firm
being required to withdraw as counsel.

Certain guidelines were fixed by the District Court
with respect to the further conduct of trial including
a prohibition against the use of Miller’s name in the
context of testimony and directing any references to
Miller to be expressed in terms of “Storm’s attorney”
or other similar references; the Court also prohibited
Miller from further participation as trial counsel.

Based upon the prohibition of DR 5-102(A), counsel for
Petitioner then moved to be relieved as counsel in order

to avoid any intentional violation of that disciplinary
rule. That motion was also denied and counsel was
ordered to proceed in his representation of Petitioner.

During the course of trial, neither Miller nor the Pe-
titioner testified before the jury to rebut Faiella’s tes-
timony concerning the September, 1978 meeting.

On appeal Petitioner unsuccessfully argued that the Dis-
trict Court’s refusal to grant a mistrial constituted error
requiring a new trial.

REASONS FOR GRANTING THE PETITION

This case presents a question of novel impression to
this Court involving the delicate balancing of the under-
lying policy considerations of DR 5-101 and 5-102 of
the ABA Code of Professional Responsibility and an indi-
vidual’s Fifth and Sixth Amendment rights, which is of
substantial importance as a matter of federal law, and
which should be settled by this Court.

DR 5-102(A) of the Code of Professional Responsi-
bility provides:

“Tf, after undertaking employment in contemplated
or pending litigation, a lawyer learns or it is
obvious that he or a lawyer in his firm ought
to be called as a witness on behalf of his client,
he shall withdraw from the conduct of the trial
and his firm, if any, shall not continue repre-
sentation in the trial, except that he may con-
tinue the representation or he and a lawyer in
his firm may testify in the circumstances enu-
merated in DR 5-101(B)(1) through (4).”

A. Strong policies underlie DR 5-102(A).

Calling a party’s attorney as a witness undermines
the integrity of the judicial process. See generally 6 J.
Wigmore, Evidence §1911 (Chadbourn rev. ed. 1976);
Note, The Advocate Witness Rule: If Z, then X. But
Why? 52 N.Y.L.J. Rev. 1365 (1977); American Bar As-
sociation Committee on Ethics and Professional Respons-
ibility, Formal Opinion 339 (January 31, 1975).

These policies are amplified in Ethical Consideration
5-9 (EC 5-9) which states, in pertinent part:

“Occasionally a lawyer is called upon to decide
in a particular case whether he will be a _ wit-
ness or an advocate. If a lawyer is both counsel
and witness, he becomes more easily impeachable
for interest, and thus may be a less effective wit-
ness. Conversely, the opposing counsel may be
handicapped in challenging the credibility of the
lawyer when the lawyer also appears as an ad-
voeate in the case. An advocate who becomes a
witness is in the unseemly and ineffective post-
tion of arguing his own credibility. The roles of
an advocate and a witness are inconsistent; the
function of an advocate is to advance or argue
the cause of another, while that of a witness is
to state facts objectively.” (Imphasis Added).

DR 5-102(A) implicitly recognizes the potential conflict
of interest with which an attorney may be faced in this
situation. Attorneys anxious to participate in the li-
tigation might fail to step aside as counsel and testify
even if their testimony could help the client; other at-
torneys might fail to step aside and testify because
the client insists upon their continued representation. EC
5-9. See Universal Athletic Sales Co. vy. American Gym,

10

Recreational & Athletic Equipment Corp., 546 F.2d 530,
539-40 (3rd Cir. 1976); Law Ah Yew v. Dulles, 257 F.2d
744, 746 (9th Cir. 1958). Thus, the jury may discount
the weight and credibility of testimony needed by the
client to the client’s detriment. American Bar Asso-
ciation, Committee on Ethics and Professional Respons-
ibility, Formal Opinion 339, P. 2 (January 31, 1975).
The Code of Responsibility seeks to prevent such con-
flicts by keeping separate the roles of attorney and wit-
ness. EC 5-9.

The Bar is ill served when an attorney’s veracity be-
comes an issue in a case; lay observers especially might
speculate whether counsel has compromised his integrity
on the stand in order to prevail in the litigation. See
International Electronic Corp. v. Flanzer, 521 F.2d 1288,
1294 (2d Cir. 1975); United States ex rel. Sheldon Elec-
tronic Co. v. Blackhawk Heating & Plumbing Co., 423
F.Supp. 486, 489 (S.D.N.Y. 1976); 6 J. Wigmore, supra,
§1911; Cf. EC 7-24 (attorney may not claim innocence
of client or justness of position to the jury). Further,
having seen the attorney take an oath on the witness
stand, the jury might accord testimonial weight to his
closing arguments, or might simply place undue weight
on the testimony of a court officer. See Developments
in the Law, Conflicts of Interest in the Legal Profession,
94 Harv. L. Rev. 1244, 1290 (1981).

DR 5-102(A) applies when a lawyer “ought to be
called as a witness on behalf of his client.” That the
lawyer may not actually testify is not controlling. What
matters is that he ought to testify. See J.P. Foley &
Co. v. Vanderbilt, 523 F.2d 1357 (2d Cir. 1975). The
test is therefore whether the attorney’s testimony could
be significantly useful to his client; if so, he ought to
be called.

11

The provisions of DR 5-102(A) are mandatory: the party
cannot choose between the attorney’s testimony and his
representation. The rule embodies a conclusive prefer-
ence for testimony: “Where the question [of testimony
versus representation] arises doubts should be resolved
in favor of the lawyer testifying and against his be-
coming or continuing as advocate. EC 5-10. A party
can be represented by other attorneys, but cannot ob-
tain substitute testimony for a counsel’s relevant, per-
sonal knowledge. See MacArthur v. Bank of New York,
524 F.Supp. 1205, 1209 (S.D.N.Y. 1981). See also Hull
v. Celanese Corp., 513 F.2d 568, 571 (2d Cir.); Connell
v. Clairol, Inc., 440 F.Supp. 17, 19 (N.D. GA. 1977);
United States v. Vereen, 429 F.2d 713, 715 n.3 (D.C.
Cir. 1970). See generally Universal Athletic Sales Co.
v. American Gym, Recreational & Athletic Equipment
Corp., swpra at 538-40; United States v. Birdman, 602
F.2d 547, 551-53 (3rd Cir. 1979).

In deciding whether an attorney should be disqualified,
courts have balanced the interests underlying the rule
against the potential damage to the client. See Gen-
eral Mills Supply Co. v. SCA Services, Inc., 505 F.Supp.
1093, 1096 (D. Mich. 1981).

Absent extreme hardship to the client, the mandate
of DR 5-102(A) has been strictly invoked:

“Aside from the likelihood of actual prejudice. ..,
the court must be mindful of the possibility that
testimony by an attorney in the case may lead
the public to think ‘that lawyers may as witnesses
distort the truth’ thereby diminishing the public’s
respect for and confidence in the profession. . .

Where doubt may becloud the publiec’s view of
the ethies of the legal profession and thus impune
the integrity of the judicial process, it is the re-

12

sponsibility of the Court to insure that the stand-
ards of ethics remain high.” United Siates ex
rel. Sheldon Electric Co. v. Blackhawk Heating &
Plumbing, Inc., 423 F.Supp. 486, 489 (S.D.N.Y.
1976), quoted in General Mill Supply Co. v. SCA
Services, Inc., supra at 1098.

The Rule controls irrespective of when the need for
the attorney’s testimony becomes evident:

“Regardless of when the problem arises the [law-
yer’s] decision is to be governed by the same
basic considerations.” EC 5-10.

The mandatory ethical obligations imposed by DR 5-
102(A) cannot be overcome by the equitable defenses of
laches, waiver, or estoppel. Emle Industries, Inc. vy. Pa-
tentex, Inc., 478 F.2d 562, 574 (2d Cir. 1973).

B. The substantial hardship exception (DR 5-101(B) (4) )
to DR 5-102(A) is to be narrowly construed.

Courts have narrowly construed the substantial hard-
ship exception (DR 5-101(B)(4)). Hardship alone, how-
ever substantial, is insufficient to permit continued rep-
resentation. The deprivation to the client will be great-
est precisely when the attorney was most intimately in-
volved in, and familiar with, the events giving rise to
the suit. See e.g. United States ex rel. Sheldon Elec-
tric Co. v. Blackhawk Heating & Plumbing, Inc., 423
F.Supp. at 490. Withdrawal will be costly whenever it
oceurs. But if the expense in delay routinely incident
to disqualification satisfied the substantial hardship ex-
ception, that exception would soon swallow the Rule.
See MacArthur v. Bank of New York, supra at 1210.

13

C. An interrelationship exists between the unimpairment
policy consideration underlying DR 5-102(A) and the
Sixth Amendment right to unimpaired representation.

The fundamental policy consideration underlying the
mandate of DR 5-102(A) requiring counsel to withdraw
from the conduct of trial where he or a lawyer in his
firm ought to be called as a witness on behalf of his
client to address a contested issue is well stated in For-
mal Opinion 339, supra:

“The client’s need for the testimony from a dis-
interested source and the client’s entitlement to
an advocate whose effectiveness cannot be impaired
because of his advocate having been a witness as
to contested issues are the foundation of DR 5-
102(A).”

These policy considerations accord with this Court’s
previous holding that in order to guarantee a defend-
ant effective assistance of counsel, consistent with his
Sixth Amendment rights, such representation must be “un-
trammeled and unimpaired.” Glasser v. United States,
315 U.S. 60, 70 (1942).

D. Compliance with DR 5-102(A) is mandated by Local
Rule 6 of the District Court.

Further emphasis upon compliance with the proscrip-
tions of the Disciplinary Rules of the Code of Pro-
fessional Responsibility is found in Local Rule 6 of
the District Court for the District of New Jersey which
provides:

“The Disciplinary Rules of the Code of Profession-
al Responsibility of the American Bar Associa-
tion as amended by the Supreme Court of New

14

Jersey and the Code of Judicial Conduct of the
American Bar Association, shall govern the con-
duct of the judges and members of the Bar ad-
mitted to practice in this Court.”

E. The overriding policy and constitutional considerations
with respect to unimpaired representation underlying
the mandate of DR 5-102(A) when considered in con-
junction with Fifth and Sixth Amendment rights, con-
stitutes an important question of federal law which has
not been, but should be settled by this Court.

We respectfully submit, that the decisions by the Dis-
trict Court and Court of Appeals with respect to this
issue were erroneous in that they operated to materially
impair Petitioner’s Fifth and Sixth Amendment rights.

The District Court’s refusal to grant Petitioner’s mo-
tions for a mistrial and to withdraw as counsel, and
the Court of Appeals affirmation of the District Court’s
ruling on this issue manifest a failure to acknowledge
the substantial policy and constitutional considerations
underlying the mandate of DR 5-102(A) and its inter-
play with an individual’s Fifth and Sixth Amendment
rights.

Instead, both the District Court and the Court of Ap-
peals erroneously applied the “substantial hardship” ex-
ception (DR 5-101(B)(4) to DR 5-102(A)). A fair read-
ing of the substantial hardship exception and the narrow
construction to be accorded to it, MacArthur, supra at
1210, within the factual context of this case demonstrates
that it was misapplied thereby seriously impairing Pe-
titioner’s Fifth and Sixth Amendment rights.

It is the “exceptional situation” where a lawyer is
permitted to act as a witness. A showing that it would
be “manifestly unfair” or that an “unreasonable hard-

15

ship” would be imposed upon the client is required to
permit the lawyer-witness to continue. EC 5-10. No
such circumstances existed herein. First, Petitioner did not
seek to have Messrs. Cohen and Miller continue as his
attorneys. Petitioner was prepared to incur whatever ad-
ditional expense was required in obtaining new counsel
in order to insure a fair trial. Second, the matter on
which Miller was to testify went to the heart of the
prosecution’s case—whether or not Petitioner acted will-
fully. Were Miller’s testimony even, in part, disbelieved
or doubted, the credibility of Petitioner’s trial counsel
would inevitably have been affected adversely in the
eyes of the jury. Third, Miller was subject to impeach-
ment for interest. This needlessly would have then un-
dermined his eredibility. Fourth, in view of the con-
flicting hearing testimony of Special Agent Faiella and
Miller, counsel would have been required to argue Mil-
ler’s credibility. Such a result is expressly condemned
in Formal Opinion 339 which states that in the excep-
tional circumstance where a lawyer does act as a wit-
ness “[h]Je should also refrain from expressly arguing
the credibility of his own testimony or that of a lawyer
in his firm”. (Emphasis Added), P. 4. Petitioner’s rep-
resentation would thereby have been seriously undermined.

There was no justification for Miller and Cohen and
their firm to continue as counsel. Even assuming that
the substantial hardship exception did apply, the hard-
ship to Petitioner in such circumstances having Cohen
and Miller continue as trial counsel was far greater
than in having them withdraw. Petitioner’s Sixth Amend-
ment right to unimpaired representation was undermined
and the very foundation of DR 5-102(A) was disre-
garded. See MacArthur, supra at 1210; Glasser, supra
at 70.

The inconvenience from a mistrial would not have been
substantial. There had been only four days of trial

16

when the motion for mistrial was made. Any doubts
about a lawyer testifying should be resolved in favor
of the lawyer testifying and against his continuing as
counsel. EC 5-10.

F. The Third Circuit’s affirmation of the District Court’s
denial of motions for a mistrial and to withdraw as
counsel was not only inconsistent with the overriding
policy considerations underlying DR 5-102(A) and its
interplay with the Fifth and Sixth Amendments but
but also is in conflict with the rulings of other circuits.

In Christensen v. United States, 90 F.2d 152 (7th Cir.
1937), the defendant sought to call as a witness (like
Miller) who had participated in the trial, but was not
lead counsel. The attorney’s testimony was needed to
rebut a witness’ claim that she made a false written
statement at the request of the defendant. The state-
ment had been prepared by the attorney, who also met
with the witness. The District Court refused to per-
mit the attorney to testify. The Seventh Circuit re-
versed, holding that the attorney was a competent wit-
ness and that the District Court should have excluded
the attorney from further participation in the trial to
enable him to testify for the defendant.

In United States v. Vereen, 429 F.2d 713 (D.C. Cir.
1970), the defendant sought to introduce the testimony
of his defense counsel in connection with a pre-trial office
interview conducted by the attorney with the complain-
ing witness. The witness’ statements to the attorney
at the interview conflicted with his testimony at trial.
Thus, the defense counsel’s proffered testimony drew into
question the complaining witness’ credibility. The Dis-
trict Court denied counsel’s motion to withdraw so that
he could be called as a witness. The Court of Appeals
reversed, holding that the defendant’s attorney should
have been permitted to withdraw and to testify:

17

“(A)fter counsel found himself in these circumstanc-
es, his suggested solution—personally to withdraw
without any trial delay, substitute an associate as
counsel, and then take the stand—was manifestly
appropriate.” 429 F.2d at 715.*

Both the Christensen and Vereen cases confirm that
when an attorney is required to testify, he should not
be permitted to continue in the case. The Third Cir-
cuit’s opinion in the case herein is at variance with
these decisions of the Seventh and D.C. Circuits.

G. Co-trial counsel’s testimony was not available from
other sources.

At the evidentiary hearing before Judge Bissell, Miller
testified concerning a telephone conversation with Special
Agent Faiella. No one else was party to that conversation
and Miller was the only witness available to contradict
Special Agent Faiella’s recollection of the September
1978 meeting attended by Special Agents Faiella and Dono-
van, Miller and Petitioner. During the evidentiary hearing,
the Assistant United States Attorney stated that Special
Agent Donovan’s testimony would be similar to Special
Agent Faiella’s.

H. Had Petitioner testified in lieu of co-trial counsel, Pe-
titioner would have been required to compromise his
Fifth Amendment rights.

Petitioner would not have been an effective witness
as to what transpired at the September, 1978 meeting.

The Circuit Court held it was error not to allow defense
counsel to withdraw even though the circumstance of the defense
attorney having to testify resulted from defense counsel’s failure
to have another person present at the witness interview—con-
trary to the standards announced in the ABA Project on Minimum
Standards for Criminal Justice.

18

Even assuming that Petitioner recalled what Miller had
said at that meeting, his recollection would have been
attacked as affected by his own self-interest. More signi-
ficantly, however, by testfying, Petitioner would have
waived his Fifth Amendment privilege against self incrimi-
nation. On this particular issue, this Court’s previous
holding in Simmons vy. United States, 390 U.S. 377, 394
(1968) is clear and unequivocal:

“We find it intolerable that one Constitutional right
should have to be surrendered in order to assert
another.”

Here, because Miller was precluded by the District
Court’s ruling from being an effective witness, Petitioner’s
right to present a defense was impermissibly conditioned
upon his taking the stand and waiving his privilege against
self-incrimination. While it may appear that Petitioner
had the option of testifying or deciding to refrain from
testifying and thereby forego a benefit, in reality, he had
no option at all. “[A]n undeniable tension” was created
between his Fifth Amendment right not to testify and his
Sixth Amendment right to effective assistance of counsel,
which we submit would have been seriously impaired were
Miller to testify. Cf. Simmons vy. United States, supra at
394; Glasser v. United States, supra at 70.

I. In its review of the District Court’s ruling on this issue,
the Court of Appeals misapplied the substantial hard-
ship exception and otherwise arrived at erroneous con-
clusions, unsupported by the record.

We respectfully submit the Court of Appeals misapplied
the substantial hardship exception to DR 5-102(A). This
is so because of the critical nature of the testimony which
only Miller, but for his status as co-trial counsel, was in

19

a position to offer. There is a clear incompatibility of hav-
ing an attorney, whose firm remains as trial counsel, testify
under the substantial hardship exception to DR 5-102(A) as
to a contested issue that goes to the heart of defendant’s
defense—lack of wilfulness—and the defendant’s Sixth
Amendment right to effective assistance of counsel which
is impaired by such testimony. For looming on the horizon
is the prospect that the credibility of the testifying attorney
will be challenged by the Government in both cross ex-
amination and later argued before the jury in summa-
tion. This, in turn, leads to the untenable result of
Petitioner’s trial counsel being forced to argue the cre-
dibility of a member of his law firm before the jury
at the time of summation—a result specifically deplored
by Formal Opinion 339.

Petitioner was therefore left with the following equally
unattractive options:

1. Allowing his attorney to testify, thereby impairing
his Sixth Amendment rights to effective assistance of
counsel, contrary to the spirit of this Court’s holding in
Glasser, swpra at 70.

2. Waiving his Fifth Amendment privilege against self-
incrimination in order to rebut the Special Agent’s testi-
mony, in lieu of having his attorney testify, thereby re-
sulting in Petitioner’s surrender of his Fifth Amendment
right in order to preserve his Sixth Amendment right, a
result specifically deplored by this Court in Simmons v.
United States, supra at 394.

3. Leaving the Government testimony, which went to
the heart of Petitioner’s defense, unrebutted in deference
to preservation of Petitioner’s Fifth and Sixth Amend-
ment rights.

20

Had the District Court properly applied the proscription
of DR 5-102(A) and not misapplied the substantial hard-
ship exception under DR 5-101(B)(4), we submit Peti-
tioner would never have found himself faced with this
constitutional dilemma.

The Court of Appeals, in affirming the District
Court’s application of the substantial hardship exception,
expressed the view that the “longtime involvement of
Miller’s law firm, both in the IRS investigation and in the
trial preparation . . . would have worked a substantial
hardship on [Petitioner]”. We respectfully disagree.
Given Petitioner’s lack of objection to counsel’s motion
to withdraw, coupled with Petitioner’s Fifth and Sixth
Amendment rights and the delicate balancing of those
rights with the underlying foundation to DR 5-102(A),
we submit a far greater hardship was practiced upon
Petitioner in the District Court’s denial of the motions
for a mistrial and te withdraw as counsel.

We respectfully reject the Court of Appeals con-
clusion that the potential of Miller having to tes-
tify to rebut Special Agent Faiella’s testimony con-
cerning production of the records should have been antici-
pated by Petitioner’s attorneys. Contrary to the findings
by the Court of Appeals in its Opinion, which we submit
resulted from a misstatement of the facts by the Govern-
ment in its Briefs and are otherwise unsupported by the
record, Petitioner’s trial counsel was never alerted during
the pretrial proveedings that Miller’s testimony might be
required with respect to a contested issue, thereby raising
the possibility of Miller’s credibility being brought into
question. A search of the record will reveal that at no
time did the Government ever place Petitioner’s trial coun-
sel on notice that Miller’s credibility would be brought
into question through the proffer of Special Agent Faiella’s
testimony concerning production of the records.

21

There were at least three oceasions on which the Govern-
ment could have so alerted trial counsel and apparently
elected not to do so. The first occasion occurred shortly
after return of the indictments when the Government moved
to disqualify Miller’s firm from representing both Peti-
tioner and co-defendant Ashfield. The Government’s mo-
tion papers made no reference to the likelihood of Miller’s
testimony at trial on a matter of substance. The only
reference in the Government’s motion was with regard
to the possibility of Miller testifying about custody of
NTA’s records. Even the trial judge acknowledged that
the disqualification motion was the appropriate time for
the Government to disclose all relevant facts relating to
the possibility of Miller being called as a trial witness.
Further, prior to trial, counsel entered into a Stipulation
with the Government providing that the requirements of
Federal Rule of Evidence 803(6) were satisfied with re-
spect to the documents of NTA. The Stipulation specific-
ally provided that its purpose was “to eliminate the need
for calling a custodian of records to testify in order to lay
a foundation pursuant to Federal Rule of Evidence 803(6)
for documents of NTA ...” Thus, the prospect of Miller
being called to testify as a custodian of records was dis-
posed of prior to the commencement of trial and trial
counsel was never placed on notice that Miller might be
required to testify as to a matter of substance.

The second occasion on which the Government could
have so advised counsel of the possibility that Miller
might be required to testify as to a matter of substance
arose immediately before the commencement of trial when
the Government sought to introduce a certain memorandum
from a Special Agent named Bailey. Here, again, the
Government made no mention of Miller’s alleged state-
ment to Special Agent Faiella concerning production of
documents, nor was the alleged admission contained in

22

any Jencks Act material produced to Petitioner’s coun-
sel. Further, Judge Bissell, in denying the Government’s
application to introduce the Bailey memoranduni, speci-
fically stated that it would be unfair to plae Miller’s
credibility in question by allowing Bailey’s memorandum
in evidence, particularly given the Government’s laches
in failing to disclose during the motion to disqualify
that Miller’s testimony was needed on substantive mat-
ters.

The third oceasion on which the Government could
have informed counsel that Miller might be required
to testify to a substantive matter also arose at the com-
mencement of trial in connection with the identification
of certain disbursement sheets which Miller identified to
IRS Special Agents at the critical September, 1978 meet-
ing, as having been prepared by Petitioner. The ad-
missibility of the disbursement sheets was disposed of
by way of stipulation of counsel. Significantly, while
the Government specifically dealt with the September,
1978 meeting in relation to the disbursement sheets, it
never advised trial counsel at that time that it also
intended to place Miller’s credibility in question through
the testimony of Special Agent Faiella concerning the
production of documents.

Thus, prior to the commencement of trial, both the
District Court and Petitioner’s attorneys believed that
they had disposed of all outstanding issues relating to
the possibility of Miller having to testify, and, further,
had no reasonable basis upon which to anticipate that
Miller’s credibility would be ultimately brought into ques-
tion.

Even in the Government’s opening statement no refer-
ence was made to the alleged statement by Miller to
Faiella concerning the production of documents.

23

We therefore respectfully submit that the record fails
to support the conclusion by the Court of Appeals that
the Petitioner’s trial counsel should have anticipated the
prospect of Miller’s credibility being brought into ques-
tion with respect to vii September 1978 meeting. The
record is barren of any such knowledge or advance no-
tice. To the contrary, the record below and the pre-
trial proceedings reflect a bona fide effort on the part
of trial counsel to dispose of all matters relating to the
prospect of Miller’s testimony on non-substantive mat-
ters and the lack of any knowledge or notice from the
Government that Miller’s testimony might be required
with respect to substantive matters. The mere fact that
Miller had encounters with the Government during the
civil tax audit of NTA and subsequent criminal investi-
gation of its principals does not necessarily lead to the
conclusion that Petitioner’s trial counsel should have con-
cluded that Miller would be required to testify as to
a substantive matter absent some notice from the Gov-
ernment or indication in the documents exchanged prior
to trial that Miller’s credibility would be placed in issue
by the Government. No such indication was ever
given. Petitioner’s attorneys reasonably concluded prior
to trial that there was no foreseeable prospect of Miller
having to testify. In fact, the trial judge also similarly
concluded within the context of the Faiella/Miller issue
that ultimately developed at trial, specifically finding that
the development of the problem during the trial was
not “entirely foreseeable” by Petitioner’s attorneys.

J. Co-trial counsel’s failure to testify was not a tactical
decision.

Contrary to the Government’s arguments adopted by
the Third Cireuit, Miller’s failure to testify was not

24

“trial tactics” but rather based upon the serious dilemma
posed by the foundation of DR 5-102(A) and Petitioner’s
corresponding Fifth and Sixth Amendment rights to un-
impaired representation and privilege against self-ineri-
mination discussed hereinabove. In fact, prior to Spe-
cial Agent Faiella’s testimony before the jury, Petition-
er’s trial counsel stated:

“T do not want the record to reflect in any way
that I am now voluntarily participating in this
trial. I do not want to be subject to disciplinary
proceedings, and I respectfully move first, for a
mistrial, and secondly, if the Court is not willing
to grant a mistrial, I request to be relieved as
counsel because I will not intentionally violate a
disciplinary rule.”

We respectfully submit that overriding ethical consid-
erations and preservation of Fifth and Sixth Amend-
ment rights, under the circumstances herein, mandate,
as a matter of federal law, the disqualification of trial
counsel and his firm pursuant to DR 5-102(A). Such
a result is necessary in order to insure that an in-
dividual’s Fifth and Sixth Amendment rights are pro-
tected. Anything less, we submit, potentially places that
individual in the untenable position of having to make
the intolerable decision as to whether to forego one con-
stitutional right in order to assert another, a result spe-
cifically rejected by this Court. See Simmons v. United
States, supra at 394.

The question herein presents an important issue of
federal law involving the delicate balancing of the policy
considerations of the Disciplinary Rules and an indi-
vidual’s Fifth and Sixth Amendment rights that should
be conclusively settled by this Court.

25

CONCLUSION

For the foregoing reasons, we respectfully submit
the petition for a writ of certiorari should be granted.

Respectfully submitted,

Howarp D. CoHEen
Counsel of Record

GuTKIN, MILLER, SHAPIRO
& Sevesner, P.A.
Attorneys for Petitioner

Dated: July 31, 1984

[APPENDICES FoLLow]

APPENDIX A

Opinion of the United States Court of Appeals
for the Third Circuit
‘INITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

NOS. 83-5344, 83-5380, 83-5384

UNITED STATES OF AMERICA,
Appellant in No. 83-5344
Appellee in No. 83-5380
Cross-Appellee in No. 83-5384

Vv.

JEROME ASHFIELD,
Appellee in No. 83-5344
Cross-Appellant in No. 83-5384

Vv.

SANFORD STORM,
Appellant in No. 83-5380

On Appeal from the United States
District Court for the
District of New Jersey

(Crim. Nos. 82-125-01 & 02)

Argued February 27, 1984

Before: ADAMS, SLOVITER, Circuit Judges,
and TEITELBAUM, District Judge*

(Opinion Filed June 1, 1984 )

* Hon. Hubert I. Teitelbaum, United States District Court for the
Wesie-n District of Perynsylvania, sitting by designation.

EE

2a

Appendix A

W. HUNT DUMONT
United States Attorney
FAITH HOCHBERG (Argued)
Sills, Beck, Cummis, Zuckerman,
Newark, New Jersey 07102

Radin & Tischman, PA.
Newark, New Jersey 07102

On the Brief:
JONATHAN S. FELD
Asst. U. S. Attorney

Attorneys for U.S.A.

Of Counsel

LAWRENCE S. HORN (Argued)
On the Brief:

TRENT S. DICKEY

Attorneys for Jerome Ashfield

Kostelanetz & Ritholz
New York, New York 10005
and
Gutkin, Miller, Shapiro &
Selesner, P.A.
Millburn, New Jersey 07041

BORIS KOSTELANETZ
LAWRENCE S. FELD (Argued)
EDWARD M. SPIRO

JAMES C. SHERWOOD
ELLIOT SILVERMAN

HOWARD D. COHEN,
Of Counsel

Attorneys for Sanford Storm

na Sa casement tart al

ON ME TO Ne oe eee

3a
Appendix A
OPINION O¥ THE COURT

ADAMS, Circuit Judge

This appeal comes to us from the trial of Sanford
Storm and Jerome Ashfield, two business associates
who were charged with attempted evasion of personal
income taxes. After a jury returned guilty verdicts
against each defendant, the trial court sustained
Storm's conviction, but ruled that the evidence against
Ashfield was insufficient and entered a judgment of
acquittal in his favor. On appeal, a careful examination
of the record leaves us satisfied that Storm’s conviction
should be affirmed. We are, however, compelled to
differ with the trial court’s weighing of the evidence
against Ashfield. While the record here, as with most
white-collar crimes, consists of a complex web of
inferential proof, we are persuaded that the evidence is
sufficient to support the jury's verdict against Ashfield.
We therefore reverse the judgment of acquittal for
Ashfield and affirm the conviction of Storm.

I.

Storm and Ashfield are the sole shareholders and
officers of National Talent Associates (NTA), a closely
held corporation that placed child models for
television, magazine and catalog advertising. NTA
essentially acted as a referral service for another, larger
talent agency. After locating interested parents by
direct mail, NTA would select suitable children, execute
a 5-year contract with the parents, photograph the
aspiring child model, and send the picture to the
Schuller Talent Agency, which would in turn accept
about one in twenty referrals, and arrange job
interviews for them. For this service, NTA charged a
one-time fee of $135 to $165 when the contract was

4a

Appendiz A

signed. Thereafter, NTA received a commission of 10%
of a child's earnings up to %1000, and 15% of any
additional earnings.

NTA established two corporate bank accounts. The
first, the management trust account, was the
repository for compensation paid by employers for the
work of the child models. From these payments, NTA
deducted its commission and sent a check for the
remainder to the client. NTA’s commission earnings
were then transferred to the second corporate account,
the operating account.

Within NTA’s operating account were various
categories such as commission income (the 10% or
15% fees transferred from the management trust
account), sales income (the %135 to 165 one-time
registration fee), and officers’ loans receivable (outlays
and repayments for personal expenses of Storm and
Ashfield).' All payments to the operating account were
credited as sales income, unless specifically designated
for deposit to some other category.

During an audit of NTA, the Internal Revenue
Service (IRS) discovered that between 1973 and 1975
almost *60,000 from the trust account was deposited
in the officers’ loans account and credited in equal
amounts to Storm and Ashfield as repayment of
personal loans. As a result of these loan repayments,
each defendant tn effect received 30,000 in dividends
that twice escaped taxation. Because the deposits were
never listed as income to NTA, no corporate tax was
paid on them, and because the deposits were never
reported as income to Storm and Ashfield, no personal
tax was paid on them.

1. Through this officers’ loans account, Storm and Ashfieid
borrowed from corporate funds to pay for such personal
expenses as rent, college tuition, tax bills, and even a
cemetery plot. App. at 526a-538a.

5a

Appendiz A

In April 1982, Storm and Ashfield were indicted on
eight counts of evading corporate and personal income
tax in 1974 and 1975. Six of the eight counts were,
however, dismissed as barred by the statute of
limitations, leaving only two counts in place: one count
each for Storm and Ashfield for attempted evasion of
personal income tax in 1975.7

At trial, the defendants did not contest that the
loan repayments had been incorrectly credited to them.
Rather, the defense asserted lack of “willfulness” on the
part of Storm and Ashfield. In particular, Storm
attempted to show through cross-examination of the
government's witnesses that the repayments were
erroneously recorded because of a mistake by NTA’s
accounting firm. Ashfield’s defense was that he had no
control over NTA's accounting practices and that he
was unaware of the errors. Neither Storm nor Ashfield
took the stand, and no other witness testified on behalf
of the defense.

On February 9, 1983, the jury returned a guilty
verdict against each defendant. But on April 11, 1983,
the district court granted a motion for acquittal of
Ashfield, ruling that “reasonable minds could not have
concluded that all of the elements of the crime charged
were established beyond a reasonable doubt....” App. at
44a. The district court, however, left in place the jury's
guilty verdict against Storm, and on May 19, 1983,
sentenced him to 90 days imprisonment, three years
probation, and a *5000 fine. Timely appeals were filed
by Storm, by the government (appealing Ashfield's

2. Specifically, Count 1 of the indictment alleged that Storm
“did knowingly and willfully attempt to evade and defeat a
large part of the income tax due and owing by him to the
United States for calendar year 1975 ... [ijn violation of Title
26, United States Code, Section 7201.” App. at 19a. Count 2
alleged the same crime by Ashfieid. App. at 20a.

6a

Appendiz A

acquittal) and by Ashfield (defensively cross-appealing
the trial court's denial of his motion for a new trial).

Although both defendants assert that the district
court committed errors requiring us to order a new
trial, the central issue before us ts the sufficiency of the
evidence against Storm and, particularly, against
Ashfield. Because a ruling that the proof adduced at
trial was inadequate would be dispositive of both of the
defendants’ appeals, we consider that issue first.

A.

To establish guilt of tax evasion under 26 U.S.C.A.
8 7201 (West Supp. 1983), the government must show:
(1) the existence of a tax deficiency, (2) an affirmative
act constituting an attempted evasion of payment of
taxes, and (3) willfulness. Sansone v. United States,
380 U.S. 343, 351 (1965). Neither Storm nor Ashfield
challenge the proof of the first two elements of the
crime; they contest only the proof of the last element --
willfulness.

For purposes of 8 7201, willfulness is defined as
the voluntary, intentional violation of a known legal
duty. See U.S. v. Pomponto, 429 U.S. 10, 11-13 (1976)
(per curiam); U.S. v. Bishop, 412 U.S. 346, 359-60
(1973). Willfulness may, however, be inferred from
circumstantial evidence. The Supreme Court has made
clear that willful tax evasion may be proven by a
consistent pattern of underreporting large amounts of
income and by the taxpayer's failure to include all his
income on his books and records. Holland v. U.S., 348
U.S. 121, 139 (1954). See Sptes v. U.S.. 317 U.S. 492,
499 (1942). Likewise in this circuit, we have repeatedly
held that repetitious conduct resulting in
underpayment of taxes may be sufficient to show
willfulness. U.S. v. Alker, 260 F.2d 135, 148 (3d Cir.

7a

Appendia A

1958) (“consistent understatement [of tax liability) is
evidence of wiilfulness”); U.S. v. Frank, 245 F.2d 284,
287-88 (3d Cir. 1957) (proof of a consistent pattern of
underreporting “is itself enough” to sustain a jury
finding of willful tax evasion). See also U.S. uv.
Greenlee, 517 F.2d 899, 903 (3d Cir. 1975) (“a two year
pattern of derelictions ... [is] itself indicative of the
willfulness.”). Recently, our Court reversed a decision
to acquit an accused tax evader, holding that the
evidence was sufficient given the proof of a long-run
pattern of reporting at variance with the taxpayer's
defense, the substantiality of the sums the taxpayer
failed to report, and the number of times taxpayer
received income checks he claimed to have forgotten.
U.S. v. Doan, 710 F.2d 124, 126 (3d Cir. 1983).
Obviously, these decisions pertaining to the
permissible scope of a jury’s inferences from
circumstantial evidence are necessarily fact-intensive
and therefore not subject to easy generalization.
Nonetheless, it is clear that a jury may find a
defendant's tax evasion was willful wholly on the basis
of inferential proof.

In the case at hand, the jury was carefully
instructed on the meaning of willfulness. The court
explained that

in this case the attempt to evade or defeat the tax
must be a willful attempt, that is to say it must be
an attempt made voluntarily and intentionally and
with specific intent to keep from the government a
tax imposed by the income tax laws which it was
the legal duty of the defendants to pay to the
government and which the defendants knew it was

their legal duty to pay.

App. at 895a. Having heard this definition as well as
seven days of testimony, the jury found that both
Ashfield and Storm were guilty of the crime charged in

8a

Appendix A

their indictment -- that is, that they “did knowingly
and willfully attempt to evade and defeat a large part of
the income tax due and owing ... to the United States.”
App. at 89la; see App. at 892a, 910a-91 la.

Given those verdicts, the trial court's ruling on the
sufficiency of the evidence was governed by strict
principles of deference to a jury's findings. In deciding
whether to grant the motions for acquittal, the trial
court was required to view the evidence in the light
most favorable to the prosecution and to draw all
reasonable inferences therefrom in the government's
favor. See Glasser v. U.S., 315 U.S. 60, 80 (1942); U.S.
v. Jannotti, 673 F.2d 578, 598 (3d Cir. 1982) (in banc).
Viewing the evidence in this light, the trial court was
obliged to uphold the jury’s verdict unless no rational
jury could conclude beyond a reasonable doubt that the
defendants willfully attempted to evade their tax
obligations. See Burks v. U.S., 437 U.S. 1, 16-17
(1978); Doan, supra, 710 F.2d at 127; Jannottt, supra,
673 F.2d at 598.

In our review of the sufficiency of the evidence, we
must apply the same standard of deference to the jury's
findings. See Burks, supra, 437 U.S. at 17; U.S. v.
Dixon, 658 F.2d 181, 188 (3d Cir. 1981). Thus, we
must independently re-examine the record and
determine as a matter of law whether the evidence
could support an inference of guilt beyond a reasonable
doubt. See Jannottt, supra, 673 F.2d at 598. Our task
is not to decide what we would conclude had we been
the finders of fact; instead, we are limited to
determining whether the conclusion chosen by the
factfinders was permissible.

After hearing argument on Storm's motion for
acquittal, the district court announced that “there was
more than ample evidence in the record to justify the

9a

Appendix A

jurors in determining and assessing guilt of Mr. Storm
beyond a reasonable doubt.” App. at 994. We agree.

As the officer in charge of NTA’s bookkeeping,
Storm was responsible for producing the financial
records which were in turn used by NTA’s accounting
firm to prepare the corporation's tax returns. App. at
174a, 234a. Most importantly, Storm’s bookkeeping
duties included the task of filling out the internal
deposit slips. These slips designated the source of
money being deposited in NTA’s operating account and
the particular category of the operating account -- such
as officers’ loans or commission income -- to which the
money was to be credited. App. at 240a, 242a, 337a,
342a. Under NTA’s accounting practices, unidentified
deposits were treated as sales income. App. at 241a.
The accountants could not credit a deposit to any
category other than sales income without an express
designation on the internal deposit slip or specific
instructions from Storm himself. App. at 244a-45a,
342a, 419a, 42la, 436a. Consequently, any deposit
credited as a repayment to the officers’ loans account
had to be requested -- directly or indirectly -- by Storm.

Between 1973 and 1975, a series of repayments to
the officers’ loan account followed a consistent pattern.
In 1975, checks for 20,000 and $8,000 were drawn
from the management trust account and deposited in
the operating account as officers’ loan repayments,
divided equally between Storm and Ashfield. App. at
482a, 647a, 730a. In 1974, by the same procedure,
9,000 and then %6,000 from the trust account were
credited as loan repayments. App. at 526a, 660a, 662a,
665a. Likewise in 1973, $6,500 and then $10,000 were
transferred from ‘he trust account to the loan account.
App. at 661a-65a. For three consecutive years, there-
fore, the same method was used to understate the
corporate income of NTA and the personal income of
the defendants. |

10a
Appendiz A

In view of Storm's control of the NTA books and
especially the designation of deposits to the officers’
loan account, a rational jury could conclude beyond a
reasonable doubt that the three-year pattern of
misreported loan repayments was the product of a
voluntary and intentional effort by Storm to evade
payment of taxes. When we consider, in addition,
certain other inculpatory facts, we must conclude that
the evidence against Storm rises well above the level
necessary to sustain a guilty verdict. Storm had taught
accounting, App. at 686a, and accordingly there can be
little question that he understood the implications of
crediting a deposit as an officers’ loan repayment.
More significantly, there is evidence that Storm sought
to conceal the records pertaining to the management
trust account and thereby evinced consciousness of the
impropriety of using commission earnings to repay
officers’ loans. Before the IRS audit, none of NTA’s
accountants knew of the management trust account or
of the separate ledger maintained for it. App. at 325a,
331a. When the IRS served a summons on NTA
requesting all financial records, Storm produced no
document containing any reference to the trust
account and, through his attorney, claimed that the
production was complete. App. at 689a-90a. Placed
alongside the other evidence, this evidence of
attempted concealment by a person trained in
bookkeeping confirms that the district court properly
denied Storm's motion for acquittal.

C.

Less compelling is the evidence against Ashfield
because, in contrast to Storm, he did not directly
participate in preparing NTA’s bookkeeping entries.
Nevertheless, viewing the evidence in the light most
favorable to the government, as we must, we believe
that the record was sufficient to sustain the jury's
guilty verdict against Ashfield.

lla
Appendix A

The district judge reached the opposite conclusion
in a brief oral opinion that relies on U.S. v. Forrest, 620
F.2d 446 (5th Cir. 1980).* By focussing on the Forrest
case, the district judge intimated his concern that
Ashfield was convicted merely on the basis of his close
business association with Storm. In Forrest, the Fifth
Circuit held that a wife's guilty knowledge could not be
inferred simply from the fact that she was married to
the kingpin of a large-scale illegal operation. 620 F.2d
at 451. The Forrest court emphasized:

That one is married to, associated with, or in the
company of a criminal does not support the

3. The district court's analysis of the record consisted of the
following statement:

I am not going to recite chapter, line and verse of the evidence
that bore upon the knowledge, the intent, the guilt, if you
will, of Mr. Ashfield. It has been amply explored here by both
counsel.

The Court realizes also that it does not sit as a super jury to
retry this case and [sic] if the jury had not rendered its
verdict. Whether or not I would reach a different result as the
trier of the facts is not the standard, and the [U.S. v.]Gross|,
375 F. Supp. 971 (D.N.J. 1974)] and Curley [v. U.S., 160
F.2d 229 (D.C. Cir. 1947)] test which I have described here
makes that clear.

However, based upon what I consider to be well-reasoned
precedent in United States v. Forest |sic], (620 F.2d 446 (5th
Cir. 1980)], which I have cited earlier, I determine that giving
indeed due regard to all of the functions of the jury here as
the triers of the fact and the drawers of legitimate inferences,
reasonable minds could not have concluded that all of the
elements of the crime charged were established beyond a
reasonable doubt as to the defendant Ashfield.

The record and the evidence which might have served as a
source for the jury's verdict in that respect was insufficient to
permit the jury’s verdict based upon that high standard and
burden of proof.

Accordingly, this Court will enter a judgment of acquittal
with regard to the defendant Jerome Ashfield.

App. at 44a-45a.

12a

Appendix A

inference that that person is a criminal or shares
the criminal’s guilty knowledge.

Id. (footnotes omitted). We do not take exception with
this statement; rather we believe that the evidence of
Ashfield’s participation in a tax evasion scheme goes
well beyond a mere professional association with
Storm.

Between 1973 and 1975, Ashfield borrowed
$29,000 of corporate funds and spent it for such
personal expenses as tuition payments for his child at
Rider College and individual income tax payments to
the IRS. App. at 532a, 534a. For a person whose
maximum reported income during this three-year
period reached approximately $41,000 in 1975, App. at
675a, these loans from NTA were not negligible. The
jury could reasonably infer that Ashfield was aware of
his substantial personal indebtedness to the
corporation.

To repay this debt legally, Ashfield should have
deposited funds from his personal, after-tax income in
NTA’s operating account and designated these deposits
as repayments to his loan account. Ashfield did this
only once, however, during the period 1973-75. In
1975, he endorsed a $4,000 salary check -- from which
tax had been withheld -- and deposited it as a loan
repayment. App. at 750a-5la. From this evidence, a
rational jury could infer that Ashfield knew the proper
method to be employed in repaying his loans from NTA.

In contrast to this one legal repayment of 4,000,
the record shows that from 1973 to 1975 seven
deposits totalling almost *60,000 were transferred
from the trust account and credited one-half to
Ashfield as loan repayments. App. at 674a-82a. This
repetition of a particular transaction whereby
corporate funds were used to repay the officers’
persona! debts would support an inference that the

13a

Appendiz A

deposits were being misreported by plan, not by
accident. The question left open by this pattern of
misreporting is whether Ashfield willfully participated
in the arrangement, either by affirmative act or by tacit
approval.

When we consider the record as a whole, we are
persuaded based on the inferential proof that a jury
could rationally conclude beyond a reasonable doubt
that Ashfield at least tacitly approved of his fellow
officer's tax evasion scheme. The record links Ashfield
to one of the series of transactions by which the tax
evasion scheme was implemented. In 1973, Ashfield
wrote a %6,500 check on the trust account and
deposited it in the operating account as a loan
repayment, equally divided between him and Storm.
App. at 661la. Each of the other six transfers of NTA
income from the trust account to the officers’ loan
account during 1973-75 were evenly divided between
Ashfield and Storm. Since nothing in the evidence
indicates that NTA’s accounting system ordinarily
required the officers to repay their loans in equal and
simultaneous sums, the jury could infer that the loan
repayments were being shared intentionally. It seems
improbable that Ashfield’s business associate wouid be
so scrupulously honest about splitting the profits of
the tax evasion scheme if Ashfield were unaware of its
existence. This inference is strengthened by the
evidence that these loan repayments permitted
Ashfield to escape a substantial proportion of his
personal income tax during 1973-75, rising from
nineteen per cent in 1973, to twenty per cent in 1974,
and to thirty-six per cent in 1975. App. at 676a, 678a,
682a. These do not appear to be the sort of
insignificant amounts that an experienced business
executive would easily overlook.

Our review of this evidence is further influenced by
Ashfield’s substantial role in the management of a

l4a

Appendix A

successful enterprise. Since its incorporation in 1969,
Ashfield was a fifty per cent shareholder and one of the
two officers of NTA, a firm that realized gross income
exceeding %452,000 in 1975. App. at 608a. As the
corporation's vice president, Ashfield’s responsibilities
included supervising NTA’s pension plan and
investments. App. at 336a, 768a. Moreover, although
Ashfield did not prepare NTA’s bookkeeping records, he
did attend financial meetings with the accountants.
App. at 190a-9la, 324a-26a. At none of the meetings
did he disclose the existence of the trust account. When
he filled out a tax preparation questionnaire from the
firm's accountants, Ashfield certified that there was no
income other than that disclosed on the records of
NTA’s operating account. App. at 296a-98a, 764a-65a.

When Ashfield’s managerial and ownership role at
NTA is viewed alongside all the evidence of his
profitable involvement with the officers’ loan account,
we believe that the record is adequate to support a jury
finding that Ashfield willfully participated in a tax
evasion scheme. The district court’s judgment of
acquittal must therefore be reversed. We do not ,
however, mean by this holding to foreclose the district
court from reconsidering Ashfield’s motion for a new
trial. The district judge denied that motion “for the
record,” App. at 45a, without stating his reasons and
immediately after granting Ashfield an acquittal.
Consequently, his ruling may perhaps have been
premised on the view that the acquittal mooted the
motion for a new trial. Given our decision today, and
the fact that the district judge's focus on U.S. v.
Forrest, 620 F.2d 446 (5th Cir. 1980), may indicate his
concern that the jury's deliberations were tainted by
the spillover effect of evidence against Storm, we
expressly leave open to the district court, in its
discretion, the option of considering a renewed motion

15a

Appendix A

for a new trial of Ashfield. Cf. U.S. v. Dixon, 658 F.2d
181, 193 (3d Cir. 1981).

Il.

Having determined that the evidence was
sufficient to support the guilty verdicts rendered
against both defendants, we turn to Storm and
Ashfield's* assertion that during their trial the district
court committed reversible error.

A.

The defendants claim that the district court
erroneously excluded a hearsay statement suggesting
that the misreporting of income occurred by mistake.
Specifically, the defense sought at trial to establish that
Irwin Giblen, owner of NTA’s accounting firm (Giblen &
Co.), had characterized the treatment of the loan
repayments as an “accounting error.” Because Giblen
died prior to trial, this comment could be admitted only
as a “statement against interest” under Fed. R. Evid.
804(b)\(3). After a special hearing on admissibility, the
trial court ruled that this comment, at least as recalled
by accountant Donald Smith, was not a statement
against interest and was therefore inadmissible
hearsay. Storm and Ashfield contend that this ruling
constitutes an incorrect application of the rules of
evidence.

4. Most of Ashfield's brief is devoted to arguing that the district
court correctly granted his motion for acquittal. Ashfield also
argues, however, that if we reverse the judgment of acquittal,
we should order a new trial because of purported trial errors
of the district court. On these issues, Ashfield’s brief
incorporates the arguments pressed in Storm's brief, except
for one claim based on newly discovered evidence. See Part
IV, infra.

16a

Appendix A

At the hearing held to determine the admissibility
of the Giblen hearsay statement, Smith testified that
prior to meeting with an IRS agent to discuss the
investigation, he received instructions from Giblen as
to “how to deal with the revenue agent.” App. at 441a.
Smith at first maintained that Giblen told him to say
“an accounting error had been made,” and that “an
accountant had made a mistake.” App. at 439a. But on
cross-examination, Smith conceded that the
“accounting error” explanation “may well have come
from either Mr. Storm or Mr. Ashfield,” App. at 446a,
and finally acknowledged that no one other than Storm
and Ashfield “would know whether there was an error.”
App. at 449a.

Following this hearing, the trial court found that
“basically ... [Giblen’s statement] is a position that is
go:ng to be taken with the IRS.” App. at 453a. More
importantly, the judge found that the statement was
“not one which Mr. Giblen was necessarily adopting or
endorsing or vouching for as being true.” App. at 455a.
Based on these findings, the court determined that
Giblen’s statement was not a statement against
interest “either of himself or his company.” App. at
453a.

Rule 804(b)(3) provides that an out-of-court
statement by an unavailable witness is admissible if it
was

at the time of its making so far contrary to the
declarant’s pecuniary or proprietary interest, or so
far tended to subject him to civil or criminal
liability ... that a reasonable man in his position
would not have made the statement unless he
believed it to be true.

Thus, an essential predicate for applying this rule
is that the hearsay be objectively contrary to the

17a

Appendix A

declarant’s interest. In the case before us, the district -
court concluded that this prerequisite was lacking.
Because, in the court’s view, Giblen failed to “adopt{] or
endorsie] or vouch{] for” the explanation, his statement
was not objectively contrary to his interest and
therefore did not satisfy Rule 804(b)(3)’s threshold
requirement.

Reviewing this determination under the abuse of
discretion standard, we are satisfied that the trial court
properly exercised his discretion in excluding the
Giblen hearsay. Two factors undergird our conclusion.
First, Giblen’s comment was so general that it never
expressly assumed responsibility by a Giblen & Co.
accountant: no accountant was named and no
particular error was identified.* Second, Giblen made
his statement after his firm had begun to act as a
representative of Storm and Ashfield in the IRS
investigation. Giblen seems to have been serving as a
conduit for defenses suggested by his clients.

The defendants have suggested that the trial
judge’s exclusion of this hearsay is at odds with his
decision to admit another Giblen hearsay statement.
Allen Stockelberg, the second-in-command at Giblen &
Co., was permitted to testify about Giblen’s comments
after an evidentiary hearing at which he reported
Giblen as saying “we had fouled up.” App. at 207a.° As
we view this statement, it differs substantially from the
excluded comments in that it approaches a direct and

5. Indeed, despite all the testimony by accountants, no
accounting error was ever identified at trial. Moreover, the
Giblen & Co. accountant who actually worked on NTA's books
during 1973-75, Maurice Fleinblatt, told Smith that no error
was made. App. at 447a.

6. Before the jury, however, Stockelberg testified that Giblen
had said the loan repayments “should have been handled
differently.” App. at 365a.

18a

Appendix A

personal assumption of responsibility by Giblen & Co.'s
owner. Certainly the distric: judge acted within his
discretion in admitting this statement while excluding
Donald Smith's recollection of Giblen’s other
comments.

Storm and Ashfield also argue that the district
court erred in refusing to grant a mistrial in order that
the law firm representing Storm could withdraw from
the case and one of its attorneys could take the stand.
The defendants assert that the significance of the
lawyer's testimony was not apparent until the
government surprised them at trial with unexpected
evidence that the lawyer could rebut and that the
court’s decision not to grant a mistrial effectively
deprived them of their right to present a complete
defense.

The issue arose when, at trial, an IRS special agent
testified about a September 1978 meeting with Storm
and his attorney, Jerome Miller. Storm was supposed
to produce all of NTA’s financial records for 1973-75,
and, according to the special agent, Storm claimed that
he had indeed produced all the documents required by
the IRS summons. The IRS later discovered, through
NTA’s bank, that records for the management trust
account were not produced, and this discovery
ultimately led to the uncovering of the illegal loan
repayments.

When the testimony regarding the missing
documents was introduced, Storm moved for a
mistrial. Storm argued that because Miller's law firm
represented him at trial, and because Disciplinary
Rules 5-101 and 5-102 of the Model Code of
Professional Responsibility (1979) prevented Miller
from testifying in a case in which his firm acted as

19a

Appendix A

counsel, a mistrial was necessary to permit Storm to
retain new counsel and to put Miller on the stand to
impeach the special agent’s report of the September
1978 meeting. The trial court refused to grant a
mistrial, declaring that Storm's attorneys had “fully
discharged their obligation” and that they fell under an
exception to the rule because they were “now so
completely immersed in this case” that they would
“surely [provide] the most effective representation.”
App. at 628a-629a. Despite these assurances from the
judge, the defense chose not to call Miller to the stand.

The district court's decision not to order a new trial
because of this development was proper for two
reasons. First, assuming for the moment that Storm
was indeed surprised at trial by the special agent’s
testimony, the district court properly invoked an
exception to the disciplinary rules. Although ordinarily
a lawyer must withdraw from representation of a client
when “it is obvious that ... a lawyer in his firm will be
called as a witness on behalf of his client,” Model Code,
supra, DR 5-102(A), the Model Code permits an
attorney to continue “[als to any matter, if refusal
would work a substantial hardship on the client
because of the distinctive value of the lawyer or his firm
as counsel in a particular case.” Id. at DR 5-101(B). We
agree with the district court that in view of the
longtime involvement of Miller's law firm, both in the
IRS investigation and in the trial preparation, the
firm's withdrawal would have worked a “substantial
hardship” on Storm.

Second, and more importantly, the record
demonstrates that the defense knew the September
1978 meeting might well be brought up at trial. Far
from being a “booby trap” -- the term used in Storm's
brief -- the testimony by the IRS special agent was
brought to the defense’s attention with adequate time
to prepare a response. Well before trial, the government

20a

Appendiz A

sent the special agent's memorandum of the
September 1978 meeting to the defense as part of the
Brady production. Once again during pretrial
evidentiary rulings, the government moved to
introduce Miller's statement during the September
1978 meeting as an adoptive admission of Storm. In
light of these early warnings, we believe the
government fairly characterizes Miller's failure to
testify as a “tactical decision.”

The defendants argue that they should have been
specifically put on notice about the special agent's
testimony on three other occasions: (1) when the
prosecution moved to disqualify Miller's law firm; (2)
when the prosecution moved for admission of a
memorandum containing statements by Miller about
the document production; and (3) when the
prosecution agreed with Storm to stipulate to
admission of NTA financial records without calling a
document custodian. But this catalog of purported
“concealment” by the government simply reaffirms the
conclusion that, despite Miller's extensive involvement
in the IRS investigation, and despite the innumerable
points on which he could have testified, the defense
intentionally chose to keep Miller's firm in the case.
The September 1978 meeting was anything but an
isolated “booby trap”; the prosecution's evidence was
replete with such encounters, a fact the defense well
knew. Having made the decision to use Miller's firm
nonetheless, the defense is not persuasive in its
contention that we should order a new trial to be
conducted by other counsel.

C.

Storm and Ashfield’s final claim of trial error arises
from a statement by the prosecutor that they insist
constitutes a comment on the defendants’ failure to

2la

Appendiz A

take the stand. In his rebuttal summation, the
Assistant United States Attorney stated:

Sure trust accounts are common in business.
There is nothing wrong with having a trust
account. It is part and parcel of a business where
you have client income. You heard no explanation
of the reason why it was necessary to keep such a
trust account secret except to avoid payment of
taxes.

App. at 872a. Defense moved for a mistrial and curative
instruction, but the judge ruled that “I didn’t find
anything offensive” and “I don't feel there is the
likelihood of the jury drawing an improper inference.”
App. at 874a-875a. The judge gave only the standard
cautionary instruction about not drawing inferences
from a defendant's failure to testify.

In the circumstances of this case, we do not believe
this comment required a mistrial. The “explanation”
for the secrecy could have come from a number of
witnesses. Trust accounts were discussed at length in
the testimony of several Giblen & Co. accountants and
a talent agency employee, and an explanation for the
secrecy surrounding NTA’s trust account could have
been extracted from them if the defense so chose.
Thus, when the prosecution asked rhetorically why no
explanation was proffered, the question might just as
well have referred to persons who took the stand. Since
it was far from clear that the prosecutor's statement
referred to the defendants, we believe that the judge
acted within the proper scope of his discretion in
refusing a mistrial.

IV.

On behalf of Ashfield alone, it is asserted that the
district judge erroneously denied a post-verdict motion
for a new trial based on the discovery of an

22a

Appendix A

accountant’'s workpaper containing the notation “7500
- each officer was withdrawn to personal name from
escrow account.” According to Ashfield, the discovery
of this document required a new trial because the
notation proved that NTA’s accountants knew of the
existence of the management trust account, and
therefore supported the claim that the underpayment
of taxes resulted from an accounting error. To prevail
on a motion for a new trial based on newly discovered
evidence, a defendant bears the heavy burden of
establishing five requirements: the evidence must be
newly discovered; facts must be alleged from which the
court may infer diligence on the part of the movant; the
evidence must not be merely cumulative or
impeaching; it must be material to the issues; and it
must be such that, on a new trial, it would probably
produce an acquittal. U.S. v. Rocco, 587 F.2d 144, 146
(3d Cir. 1978). We have carefully considered the
document as well as the record on the basis of this
exacting standard. In view of Ashfield’s limited
showing of diligence and failure to demonstrate that
this new evidence would probably produce an
acquittal, we are satisfied that the district judge
properly exercised his discretion in refusing Ashfield a
new trial on the ground of this newly discovered
document.

J

The judgment of conviction against Storm will be
affirmed. The judgment of acquittal in favor of Ashfield
will be reversed, and Ashfield’s case will be remanded to
the district court for action consistent with this
opinion.

23a

A ppendiz A
A True Copy:

Teste:

Clerk of the Untted States Court of Appeals
Sor the Third Circutt

24a

APPENDIX B

(Filed—May 12, 1983)

Judgment and Probation Commitment Order dated
May 10, 1983, and Conditions of Probation and
Order of Release dated May 10, 1983, attached

thereto

Received: Allyn Z. Lite, Clerk, the District of New
Jersey. May 12, 1983. 11:18 A.M. Docket No. CR.
82-125.

Defendant: Sanford Storm.
Counsel: With counsel, Howard Cohen, Esquire.
Plea: Not guilty.

Finding and Judgment: Guilty on count 7 of original
indictment (count 1 of redacted indictment). Defend-
ant has been convicted as charged of the offense of
income tax evasion, 26: 7201.

Sentence or Probation Order: The court asked whe-
ther defendant had anything to say why judgment
should not be pronounced. Because no sufficient cause
to the contrary was shown, or appeared to the court,
the court adjudged the defendant guilty as charged
and convicted and ordered that: The defendant is
hereby committed to the custody of the Attorney Gen-
eral or his authorized representative for imprisonment
for a period of two (2) years; and on condition that
the defendant be confined in a jail-type or treatment
institution for a period of ninety (90) days, the exe-
cution of the remainder of the sentence of imprison-
ment is hereby suspended and the defendant placed
on probation for a period of three (3) years to com-
mence upon the defendant’s release from confinement.

25a
Appendiz B

Special Conditions of Probation: Ir 1s FurrHer Orperep
that the defendant be fined $5,000. and that said fine
be paid within (9) months from this date or stand
committed.

FurtHer Orperep the defendant is to submit financial
records to the probation office as requested particu-
larly income tax returns.

FurrHer Orperep the execution of sentence be stayed
pending appeal.
Dated: May 10, 1983

/s/ Joun W. BIssEL,
U.S.D.J.

26a
Appendix B
ConDITIONS OF PROBATION

UNITED STATES DISTRICT COURT
For the District of New Jersey

Docket No. Cr. 82-00125-01

To: Sanford Storm.

Address: 101 W. Lindsley Road, Cedar Grove, New
Jersey.

In accordance with authority conferred by the United
States Probation Law, you have been placed on pro-
bation this date, May 10, 1983, for a period of three
years by the Hon. John W. Bissell, United States Dis-
trict Judge, sitting in and for this District Court at
Trenton, N.J.

It is the order of the Court that you shall comply
with the following conditions of probation:

(1) You shall refrain from violation of any law
(federal, state, and local). You shall get in touch
immediately with your probation officer if arrested
or questioned by a law-enforcement officer.

(2) You shall associate only with law-abiding
persons and maintain reasonable hours.

(3) You shall work regularly at a lawful occu-
pation and support your legal dependents, if any,
to the best of your ability. When out of work
you shall notify your probation officer at once.
You shall consult him prior to job changes.

27a
Appendiz B

(4) You shall not leave the judicial district with-
out permission of the probation officer,

(5) You shall notify your probation officer im-
mediately of any change in your place of residence.

(6) You shall follow the probation officer’s in-
structions.

(7) You shall report to the probation officer as
directed.

The special conditions ordered by the Court are as
follows: Committed to the custody of the Attorney Gen-
eral for two years, and on condition that the defendant
be confined in a jail-type institution for 90 days, the
execution of the remainder of the sentence of imprison-
ment is hereby suspended and defendant placed on pro-
bation for 3 years to commence upon release from con-
finement. Fine of $5,000 to be paid within 9 months
or stand committed. Special Condition: To submit fi-
nancial records to the probation office as requested, par-
ticularly income tax returns. You shall carry out all
rules, in addition to the above, as prescribed by the Chief
U.S. Probation Officer, or any of his associate Proba-
tion Officer.

I understand that the Court may change the condi-
tions of probation, reduce or extend the period of pro-
bation, and at any time during the probation period or
within the maximum probation period of 5 years per-
mitted by law, may issue a warrant and revoke proba-
tion for a violation occurring during the probation
period.

28a
Appendiz B

I have read or had read to me the above conditions
of probation. I fully understand them and I will abide
by them.

/s/ Ilegible
Probatiouer

Dated: May 10, 1983.
You will report as follows:
Mail written reports on the last day of the month

to the U. S. Probation Office, 100 Hamilton Plaza,
Post Office Box 2097, Paterson, N.J. 07509.

/s/ Illegible
U.S. Probation Officer

Dated: May 10, 1983.

29a
Appendix B
ORDER OF RELEASE

UNITED STATES DISTRICT COURT
For the District of New Jersey
Crim. No. 82-125

L-
—_

UNITED STATES OF AMERICA

VS.

SANFORD STORM

_.
a

It is, on this 10th day of May, 1983, Orprrep:

That bail be fixed at $10,000 and the defendant be re-
leased upon:

a. Executing an unsecured appearance bond.

b. Executing an appearance bond and depositing
in cash in the Registry of the Court % of the
bail fixed.

ce. Executing an appearance bond with approved
sureties, or the deposit of cash in the full amount
of the bail in lieu thereof, without 10% cash al-
ternative.

It is further Ordered that the Clerk furnish to the
defendant a copy of this order and a notice of the penal-
ties applicable to violation of conditions of release.

/s/ John W. Bissell
U.S. D. J.

30a
Appendix B

I hereby certify that the defendant was furnished (per-
sonally—by mail) a copy of this Order and a Notice of
Penalties Applicable To The Violation of Conditions of
Release.

John T. O’Brien
Deputy Clerk

3la

APPENDIX C

Applicable Provisions of the United Staies Constitution and
Other Authorities

Firth AMENDMENT AND SIxtH AMENDMENT OF THE
Unitrep States CoNSTITUTION

Constitutional Amendment Involved:
AMENDMENT V

No person shall be held to answer for a capital,
or otherwise infamous crime, unless on a present-
ment or indictment of a Grand Jury, except in
cases arising in the land or naval forces, or in
the Militia, when in actual service in time of War
or public danger; or shall any person be subject
for the same offense to be twice put in jeopardy
of life or limb; or shall be compelled in any crim-
inal case to be a witness against himself, nor
be deprived of life, liberty, or property. without
due process of law; nor shall private property be
taken for public use, without just compensation.

CJOF OY LE Re, LEG | ESE ae Ce ee 7

AMENDMENT VI

In all criminal prosecutions, the accused shall
enjoy the right to a speedy and public trial, by an
impartial jury of the State and district wherein
the crime shall have been committed, which district
shall have been previously ascertained by law, and
to be informed of the nature and cause of the
accusation; to be confronted with the witnesses
against him; to have compulsory process for ob-
taining witnesses in his favor, and to have the
Assistance of Counsel for his defence.

32a
Appendiz C

Revtevant Portions or ABA Covr or Proressiona, Re-
SPONSIBILITY :

Disciplinary Rules:

DR 5-101 (B) A lawyer shall not accept em-
ployment in contemplated or pending litigation if
he knows or it is obvious that he or a lawyer
in his firm ought to be called as a witness, ex-
cept that he may undertake the employment and
he or a lawyer in his firm may testify:

(1) If the testimony will relate solely to an
uncontested matter

(2) If the testimony will relate solely to a
matter of formality and there is no reason to
believe that substantial evidence will be offered
in opposition to the testimony.

(3) If the testimony will relate solely to the
nature and value of legal services rendered in the
case by the lawyer or his firm to the client.

(4) As to any matter, if refusal would work a
substantial hardship on the client because of the
distinctive value of the lawyer or his firm as
counsel in the particular case.

DR 5-102 (A) If, after understaking employment
in contemplated or pending litigation, a lawyer
learns or it is obvious that he or a lawyer in his
firm ought to be called as a witness on behalf of
his client, he shall withdraw from the conduct of
the trial and his firm, if any, shall not continue
representation in the trial, except that he may
continue the representation and he or a lawyer in
his firm may testify in the circumstances enumer-
ated in DR 5-101(B)(1) through (4).

33a

Appendix C

Ethical Considerations:

EC 5-9 Occasionally a lawyer is called upon to
decide in a particular case whether he will be a
witness or an advocate. If a lawyer is both counsel
and witness, he becomes more easily impeachable
for interest and thus may be a less effective witness.
Conversely, the opposing counsel may be handi-
capped in challenging the credibility of the lawyer
when the lawyer also appears as an advocate in the
ease. An advocate who becomes a witness is in the
unseemly and ineffective position of arguing his own
credibiliy. The roles of an advocate and of a witness
are inconsistent; the function of an advocate is to
advance or argue the cause of another, while that
of a witness is to state facts objectively.

EC 5-10 Problems incident to the lawyer-witness
relationship arise at different stages; they relate
either to whether a lawyer should accept employ-
ment or should withdraw from employment. Regard-
less of when the problem arises, his decision is to
be governed by the same basic considerations. It is
not objectionable for a lawyer who is a potential
witness to be an advocate if it is unlikely that he
will be called as a witness because his testimony
will relate only to an uncontested issue. In the
exceptional situation where it will be manifestly
unfair to the client for the lawyer to refuse em-
ployment or to withdraw when he will likely be a
witness on a contested issue, he may serve as advo-
eate even though he may be a witness. In making
such decision, he should determine the personal or
financial sacrifice of the client that may result from
his refusal of employment or withdrawal there-

34a
Appendiz C

from, the materiality of his testimony and the effee-
tiveness of his representation in view of his personal
involvement. In weighing these factors, it should
be clear that refusal or withdrawal will impose an
unreasonable hardship upon the client before the
lawyer accepts or continues the employment. Where
the question arises, doubts should be resolved in
favor of the lawyer testifying and against his
becoming or continuing as an advocate.

35a

APPENDIX D

Order for Stay of the United States Court of Appeals
of the Third Circuit with Attachment

UNITED STATES COURT OF APPEALS

For rue Tuirp Circuit

Nos, 82-5433, 83-5380 and 83-5384

—+
UNITED STATES OF AMERICA
vs.

JEROME ASHFIELD,
Appellant in Nos. 83-5344 and 83-5384

SANFORD STORM,
Appellant in No. 83-5380

Pursuant to Rule 41(b) of the Federal Rules of Appel-
late Procedure, it is ORDERED that issuance of the
certified judgment in lieu of formal mandate in the above
cause be, and it is hereby stayed until August 1, 1984.

Argus M. Apams
Cireuit Judge

Dated: June 22, 1984

36a,
Appendiz D

Office of the Clerk
UNITED STATES COURT OF APPEALS
for the Third Circuit
21400 United States Courthouse
Independence Mall West
601 Market Street
Philadelphia 19106

Satty Mrvos Telephone
Clerk 215-597-2995

June 22, 1984
Lawrence 8. Feld, Esquire
Kostelanetz & Ritholz
80 Pine Street
New York, New York 10005

Howard D. Cohen, Esquire

Gutkin, Miller, Shapiro & Selesner, P.A.
225 Millburn Avenue

Millburn, New Jersey 07041

Re: U.S.A., Appellant in No. 83-5344 vs. San-
ford Storm, Appellant in No. 83-5380 vs.
Jerome Ashfield, Appellant in No. 83-5384

Dear Counsel:

Enclosed herewith is a conformed copy of order filed

If during the period of the stay we receive notification
from the Clerk of the Supreme Court that a petition for
today staying the issuance of the mandate to August 1,
1984, in the above entitled cases.

37a
Appendix D

writ of certiorari has been filed, the stay shall continue
until final disposition by the Supreme Court.

Very truly yours,

Sally Mrvos, Clerk
By: Berry J. Ropinson
Betty J. Robinson
Deputy Clerk
Direct Dial
597-3134

ml

ec: Faith 8S. Hochberg, Esquire
Lawrence 8. Horn, Esquire

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_2582%3A1. Public record. Not legal advice.