Petition — Cunningham v. United States
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88-1543
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IN THE
Supreme Court of the United States
OCTOBER TERM, 1983
PATRICK J. CUNNINGHAM,
Petitioner,
v.
UNITED STATES OF AMERICA.
PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
=
oe |
QUESTIONS PRESENTED
1. May a prosecutor utilize a federal court to
conduct an extensive inquisition to determine
whether a trial subpoena duces tecum has been com-
plied with where:
a) the prosecutor has already developed evi-
dence before a grand jury that the subpoe-
naed item was probably subject to tampering;
and
b) the prosecutor has no adversary, the scope of
the proceeding is never defined and results in
no findings of fact or conclusions of law?
2. Should not the procedural protections of the
criminal process or F.R.Crim. P. 42(b) be invoked
before such a proceeding commences?
3. Does such an inquiry in federal court frame a
justiciable “case or controversy” under U.S. Const.
Art. III, § 2?
TABLE OF CONTENTS
REASONS FOR GRANTING THE WRIT .............
I. THE EXPANSION OF THE INQUIRY
BEYOND THE REASONABLE BOUNDS
OF THE POWER OF A COURT TO PRO-
TECT THE INTEGRITY OF ITS FACT-
FINDING PROCESS WAS AN ABUSE OF
A FEDERAL COURT’S COMPULSORY
PROCESS AND GRAVELY VIOLATED
THE DOCTRINE OF SEPARATION OF
POWERS .. 050s sstucetacstbuceeenesie 7
COMCLIIGION . . oo ccucceveviceeseueeessneee 13
TABLE OF AUTHORITIES
Page
CASES:
Baker v. Carr, 369 U.S. 186 (1962)............ 9
Bloom v. Illinois, 391 U.S. 194 (1968) ......... 12
Brown v. United States, 245 F.2d 549 (8th Cir.
1967) 2.005 cccdscdennnanseaeeeeaeeee 9
Cammer v. United States, 350 U.S. 399 (1956). 11
Ex parte Hudgings, 249 U.S. 378 (1919) ....... 12
Flast v. Cohen, 392 U.S. 83 (1968) ............ 8
Harris v. United States, 382 U.S. 162 (1965)... 12
In Re Bianchi, 542 F.2d 98 (1st Cir. 1976) .... 10
In Re Bork, 527 F.2d 120 (7th Cir. 1975)...... 10,11
iii
Table of Authorities Continued
Page
In Re Grand Jury Investigation, 545 F.2d 385
SN, EEE s .5u6 Uke ive sens snes ies 10
In Re Grand Jury Proceedings (Schofield I), 486
os 6 fe Ey Re. | a ee epee 10
In Re McConnell, 370 U.S. 230 (1962) ......... 11
In Re Michael, 326 U.S. 224 (1945) ........... 12
In Re Oliver, 333 U.S. 257 (1948) ............. 12
Jett v. Castaneda, 578 F.2d 842 (9th Cir. 1978). 9
Lefkowitz v. Cunningham, 431 U.S. 801 (1977). 2
People v. Cunningham, 88 Misc. 2d 1065, 390
‘N.Y.S. 2d 547 (Sup. Ct. Bronx Cty. 1976).. 2
Sacher v. United States, 343 U.S. 1 (1952)..... 12
Shillitani v. United States, 384 U.S. 364 (1966). ll
United States v. Alter, 482 F.2d 1016 (9th Cir.
DEE doi. vas ChCE EN Oka bawateeneebaeeds 12
United States v. Cox, 342 F.2d 167 (5t! Cir.),
cert. denied, 381 U.S. 935 (1965) .......... 8
United States v. Cross, 170 F. Supp. 303 (D.D.C.
dans ape bia dbNiewke ea bhi ose des 10
United States v. Cunningham, 773 F.2d 217 (2d
ED «aia ocak vse Cabiavdiiu eewas han tae 1,2
5,10
United States v. Icardi, 140 F. Supp. 383 (D.D.C.
as ak cac ccbaxkenaetiees ieeaeee 10
United States v. Thayer, 214 F. Supp. 929 (D.
I RRR Pe ny aE LE I 10
United States v. Vague, 697 F.2d 805 (7th Cir.
LER ERR RADE TL SM NTS bog aL Atte oa Py 8 4
iv
Table of Authorities Continued
& Page
United States v. Weinstein, 511 F.2d 622 (2d
Cir.), cert. denied, 422 U.S. 1042 (1975) ... 9
Webster Eisenlohr, Inc. v. Kalodner, 145 F.2d
316 (3d Cir. 1944), cert. denied, 325 U.S. 867 +
SER Seay a as re own ae be ph aamay eens 8
STATUTES AND RULES:
EY 00 4.4 diy dob Sak Gah beNV wes ae baune 1
TE cde og an ctvectucskewsaankees 12
I 1 ok acc wt sa b0c0.cecewos BARES 1
96s, Sido cnind Supae Vek e ooe 1,6
ee nn, 6 dd 5 oS Gb ein wkeee seed oa 10
TI oo, cy asc dpedddnscvarsieseseuas 10
a cc Tut oth cc kae conesenune 1
Ss Las ch ence sue nee ae been 1
I os Givi cevcs ccdsacas beedeebs Oe
LEST. RR pe = Apa 12
es Sa, ess pe rpeewesaenae 9
NN a, 4s 6. su ac leone eueneee 5
PR Ds ce cecenvis cusmasetadenee 4,5,12
I oO eis ccd cc ccccuccnsccesoubase 12
Ne oe oe 12
SEIN oss Sc neon eele cele « tine dete 11,12
CONSTITUTIONAL AUTHORITIES: _
United States Constitution, Art. III, §2...... 1,9 :
OTHER AUTHORITIES: ‘=
L. Levy, Origins of the Fifth Amendment (1968). 9
“ IN THE
Supreme Court of the United States
OCTOBER TERM, 1983
No. 83- —_
PATRICK J. CUNNINGHAM,
Petitioner,
v.
UNITED STATES OF AMERICA.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF
APPEALS FOR THE SECOND CIRCUIT
Petitioner Patrick J. Cunningham prays that a
writ of certiorari issue to review the judgment of the
United States Court of Appeals for the Second Cir-
cuit, which affirmed the judgment of conviction of
the United States District Court for the Southern
District of New York sentencing him to a term of
imprisonment of three and one half years. Following
a jury trial, petitioner was convicted of conspiracy,
aiding and abetting a false statement, perjury and
falsely subscribing a federal tax return, 18 U.S.C. §§
371, 1623, 1001; 26 U.S.C. § 7206(1). Other charges of
income tax evasion, 26 U.S.C. § 7201, and false sub-
scription were dismissed by the district court post
trial, yet reinstated by the court of appeals. United
States v. Cunningham, 723 F.2d 217, 230-32 (2d Cir.
1983).
OPINION BELOW
The opinion of the court of appeals is reprinted as
Appendix A and reported as United States v. Cun-
ningham, 723 F.2d 217 (2d Cir. 1983). A timely peti-
tion for rehearing was denied on January 17, 1984, in
an order reprinted as Appendix B.
JURISDICTION
The timely petition for rehearing was denied on
January 17, 1984. This Court has jurisdiction under
28 U.S.C. § 1254(1).
STATEMENT OF THE CASE
This case presents, in a context amenable to the
drawing of rational and persuasive limitations, an
important question regarding the scope of a district
court’s power to conduct an inquiry into compliance
with a trial subpoena absent the procedural protec-
tions applicable in a contempt or criminal proceed-
ing. It illustrates the potential for abuse when a
prosecutor is permitted to convert such a proceeding
into a broad inquisition.
This Court is familiar with the historical context
of this case. Lefkowitz v. Cunningham, 431 U.S. 801
(1977). Petitioner, a former Chairman of the New
York State Democratic Party and member of the
Democratic National Committee, was the focus of
the prosecutorial efforts of former special prosecutor
Maurice Nadjari.! Following the pretrial termina-
tion of these efforts, the federal government com-
menced an investigation of Mr. Cunningham’s
1 The Nadjari office filed three state indictments against Mr.
Cunningham, all of which were dismissed on various grounds;
income taxes. Since the investigation revealed rela-
tively insubstantial under-reportings, it was vari-
ously closed and reopened over a period of several
years as the United States Attorney’s office changed
hands.
Ultimately, in an unusual proceeding before a fed-
eral judge which is challenged here, Petitioner was
convicted of perjury for testifying that he did not
recall the name of a Chinese restaurant he had vis-
ited. Petitioner received a consecutive six-month
prison term for this offense. The following discussion
is limited to those portions of the record which bear
upon this issue. ? %
On October 16, 1980, a federal grand jury investi-
gating Mr. Cunningham’s income taxes returned a
two-count indictment against John Spain for com-
mitting perjury before it. It charged that Spain
testified falsely when he denied that he had stated to
federal agent Ripa that he had paid a $2,000 cash
legal fee to Mr. Cunningham. The Spain trial began
in the Southern District before the Honorable Inzer
B. Wyatt on February 3, 1981.
On February 6, 1981, a psychiatrist testified that
Spain suffered from an impaired memory. In
response to the government’s cross-examination, the
psychiatrist produced a memorandum dated January
25, 1978, which had been received by him in his
only one is reported. People v. Cunningham, 88 Misc. 2d 1065,
390 N.Y.S. 2d 547 (Sup. Ct. Bronx Cty. 1976).
2 We contend that the improper perjury charge tainted the
entire trial and directly affected other counts which incorpo-
rated it. If this Court determines to review the issue presented
here, we will seek leave to brief this.
4
preparation for testimony. The “Spain memoran-
dum,” stated in part “spoke to John Spain today ....
Ripa asked him if he ever gave Mr. Cunningham any
cash and Spain said no....”
On February 10, 1981, Marie Falco, Mr. Cunning-
ham’s secretary, was called as a witness by Spain.
She produced, pursuant to subpoena, the original
memorandum and it was received in evidence.
On February 11, 1981, the government requested
permission of Judge Wyatt to send the original Spain
memorandum to the FBI to determine whether it
was a recent fabrication. The court asked if the FBI
inquiry would be used in the Spain trial and govern-
ment counsel said he believed so.
The Spain trial recessed on February 12 but the
government sought and obtained an order under
F.R.Crim.P. 17(c) directing the law firm of Sweeney,
Cunningham and Krieg to produce any typewriters
which may have been used to prepare the Spain
memorandum. The order was captioned under the
Spain trial and ordered forthwith production.
The typewriter was produced. The government
found that it contained a new ribbon and assumed
that it had been tampered with. On the morning of
February 13, the government asked Judge Wyatt to
order an immediate hearing to explore its proffered
theory that there was an ongoing conspiracy to
obstruct justice in connection with the Rule 17(c)
order to produce the typewriters. Judge Wyatt
signed the proposed order, yet it . styled a general
order for inquiry, under the in caption. It
directed that forthwith subpoenas issue to John J.
Sweeney, Mark Krieg, Patrick J. Cunningham and —
oe thy! os ee
Se ee 4 ene TL "vas ee
5
Marie Falco. This special hearing was scheduled
before another judge that afternoon.
Although Krieg was within the broad scope of the
order of February 13; he had decided to become a
government witness the previous evening. Krieg was
extensively debriefed by government attorneys and
agents. Rather than producing Krieg in court the
government ushered him into the secrecy of a grand
jury which was then sitting. On the afternoon of
February 13, he testified that he saw Sweeney carry
a typewriter toward his office after the February 12
Rule 17 order was served but before the typewriters
were produced. Sweeney claimed the typewriter was
his own and later returned it to its rightful place just
before compliance with the subpoena. The govern-
ment pursued the hearing nonetheless, without
informing the court of Krieg’s testimony. ®
Mr. Cunningham appeared promptly on February
13 and testified that he had no knowledge about the
typewriter or who had handled it after the subpoena
was served. Mr. Sweeney appeared and asserted his
fifth amendment privilege.
On February 17, Gay McCreery, a part-time secre-
tary with the firm, appeared at the inquiry in
response to another forthwith subpoena issued
under the Spain caption. McCreery made clear that
the ribbon was not new and testified that she typed a
series of envelopes for a political mailing the week
before on the typewriter. That afternoon, another
3 The court of appeals mistakenly believed that the govern-
ment disclosed the Krieg grand jury testimony before the
inquiry began. App. 14a. This did not happen and would have
been a violation of Federal Rule of Criminal Procedure 6(e) in
any event.
| 6
forthwith subpoena duces tecum was served on the
law firm directing production of the envelopes.
Mr. Cunningham appeared at the inquiry on Feb-
ruary 19 on behalf of the law firm. Although Mr.
Cunningham testified that he had disposed of the
envelopes well before the subpoena was served
because the purpose of the mailing was abandoned,
the scope of the proceedings broadened. Government
counsel, who knew from the debriefing of Krieg and
his grand jury testimony that Mr. Cunningham had
called him on the evening of February 13 to try to
determine the thrust of the grand jury inquiry,‘
retraced every step Mr. Cunningham had taken since
February 12. In the context of a series of questions as
to where meals had been taken the previous week,
Mr. Cunningham was asked where he had dinner on
the evening of February 13. He responded that he
went to a Chinese restaurant with Falco, but he did
not eat. When asked whether he remembered what
restaurant it was, Mr. Cunningham responded “At
this time, I don’t.” This response was the basis of the
§ 1623 charge.
As the government conceded below, the inquiry
resulted in no findings of fact or conclusions of law.
Tr. 1147. The government, as a party in the Spain
trial, did not need and ultimately made no use of, the
“compliance hearing” in determining what legiti-
mate steps could be taken to address Sweeney’s sus-
pected misconduct. No witnesses were called after
Mr. Cunningham’s appearance on February 19. The
4 Although the indictitent later charged this contact as a
criminal overt act, it is neither improper nor improbable that a
lawyer would call his partner and ask such a question, and the
trial court so found.
a
7
government never identified its adversary.5 None of
the evidence generated in the inquiry was used in the
Spain trial and nobody, including Sweeney, was pur-
sued for contempt. The proceeding served no purpose
other than to form the basis of a perjury charge
against Petitioner.
After the indictment was returned against Mr.
Cunningham, he moved to suppress his testimony at
the inquiry, asserting that the tribunal was incom-
petent. This motion was denied and the court of
appeals affirmed.
REASON FOR GRANTING THE WRIT
I, THE EXPANSION OF THE INQUIRY
BEYOND THE REASONABLE BOUNDS
OF THE POWER OF A COURT TO PRO-
TECT THE INTEGRITY OF ITS FACT-
FINDING PROCESS WAS AN ABUSE OF
A FEDERAL COURT’S COMPULSORY
PROCESS AND GRAVELY VIOLATED
THE DOCTRINE OF SEPARATION OF
POWERS.
Perhaps the most articulate modern definition of
the “Case or Controversy” limitation on federal judi-
cial power, as extracted from Article III, § 2 of the
United States Constitution, was written by Chief
Justice Warren:
5 John Spain, the defendant in the urderlying criminal trial,
showed no interest in the proceeding and was never identified
as a possible source of the tampering. The nature of the
witnesses called by the government and the lines of quest’ on-
ing it pursued demonstrate that Spain was not the adverse
party in the compliance inquiry.
>. ne.
. ; - - a 4
8 ¥
[TJhose two words have an iceberg quality con-
taining beneath their surface simplicity sub- i
merged complexities which go to the very heart
of our constitutional form of government.
Embodied in the words ‘cases’ and ‘controver-
sies’ are two complementary but somewhat dif- :
ferent limitations. In part those words limit the |
business of federal courts to questions presented
in an adversary context and in a form histori-
cally viewed as capable of resolution through the
judicial process. And in part those words define
the role assigned to the judiciary in a tripartite
allocation of power to assure that the federal
courts will not intrude into areas committed to
the other branches of government. Justiciability
is the term of art employed to give expression to
this dual limitation placed upon federal courts
by the case and controversy doctrine.
Flast v. Cohen, 392 U.S. 83, 94-95 (1968).
When courts of appeals have been asked to review a
proceeding which is insufficiently adversarial, or is
inquisitorial in tone and content, they have borrowed
from the separation of powers aspect of the above-
stated principle. The most prominent authority in
this vein of jurisprudence is United States v. Cox, 342
F.2d 167 (5th Cir.), cert. denied, 381 U.S. 985 (1965),
where it was held that a federal judge is not empow-
ered to order 2 United States Attorney to sign an
indictment. Several other authorities have disap-
proved of judicial participation in the prosecutorial
function, an exclusively executive power. ¢®
6 Webster Eisenlohr, Inc. v. Kalodner, 145 F.2d 316 (3d Cir.
1944), cert. denied, 825 U.S. 867 (1945) (district judge suspected q
that a compromise of the complainant’s claims had been “
‘ an
: pe.
j "
%
In this context, the doctrine of separation of pow-
ers is best understood as a protection of the accused.’
Similarly, lower federal courts have invalidated the
product of grand jury and legislative inquiries when
the power of the body to inquire is exceeded. *
arrived at by fraud and appointed a special master under
F.R.Civ.P. 53 to investigate the financial condition of the com-
pany. Order reversed, finding no “general investigative pow-
ers” in a federal court. Jd. at 319-20.); United States v. Wein-
stein, 511 F.2d 622 (2d Cir.), cert. denied, 422 U.S. 1042 (1975)
(district judge without power to direct the government to
produce Selective Service files to attorneys without the defend-
ants’ authorization; “(W]e have chosen to administer justice
through the courts which are limited to the adjudication of
cases and controversies in an adversarial setting. See Art. III,
U.S. Constitution; Baker v. Carr, 369 U.S. 186, 204, 82 S. Ct. 691,
7 L.Ed.2d 663 (1962).” Id. at 628)); Jett v. Castaneda, 578 F.2d
842 (9th Cir. 1978) (a prison inmate, who was an uncharged
suspect in an assault, obtained a district court order directing
the warden to produce certain files; order finding the warden in
contempt reversed: “{a] district court has no general supervi-
sory jurisdiction over the course of executive investigations.”
Td. at 845); United States v. Vague, 697 F.2d 805 (7th Cir. 1983)
(reversing contempt order against a defense attorney for
refusing to remit a portion of his fee in a criminal case even
though the client had not complained on ground that it vio-
lated Art. III, § 2).
7™The most condemned feature of the Star Chamber was its
power to dispense with all procedural regularity in extraordi-
nary cases; the suspect was often “grilled” in a wide-ranging,
undefined inquiry until an incriminating statement was pro-
duced. L. Levy, Origins of the Fifth Amendment, 182-4 (1968).
8In Brown v. United States, 245 F.2d 549 (8th Cir. 1957), a
witness appeared before a grand jury called, sworn and sitting
in the District of Nebraska, but the false statements he made
had to do with matters which occurred in the Eastern District
10
In derogation of these fundamental principles of
power, the court of appeals has introduced the com-
pletely unprecedented and dangerous notion that a
federal court may conduct a quasi-criminal investi-
gation in its courtroom, without identifiable adver-
sarial parties before it, guided only by the drift of
subpoenas served by the government.® The prosecu-
tor was unchallenged by any adversary who had a
stake in the outcome of the proceedings and was not
of Missouri. The court of appeals reversed the perjury convic-
tion and ordered the indictment dismissed because false decla-
rations made before a grand jury material only to an investiga-
tion beyond its jurisdiction or authority do not constitute
perjury. Jd, at 552. See also United States v. Icardi, 140 F. Supp.
383 (D.D.C. 1956) and United States v. Cross, 170 F. Supp. 303
(D.D.C. 1959) (perjury convictions reversed because the legisla-
tive bodies before which the statements were made were not
competent tribunals pursuing valid investigatory purposes).
Accord, United States v. Thayer, 214 F. Supp. 929 (D. Colo.
1963).
*The greatest frailty in the opinion below is its reliance
upon dramatically impertinent authority from other circuits
on the central issue. In support of the stated proposition that a
district court has “broad latitude” to conduct a “compliance
hearing” if the return on a trial subpoena is suspected as
incomplete, 723 F.2d at 225, App. 17a, the court cited three
cases: In Re Grand Jury Investigation, 545 F.2d 385 (3d Cir. -
1976); In Re Bianchi, 542 F.2d 98 (1st Cir. 1976); In Re Bork, 527
F.2d 120 (7th Cir. 1975). In Grand Jury Investigation, a grand
jury witness refused to answer a series of questions on fifth
amendment grounds after a coextensive immunity order under
18 U.S.C. §§ 6002-6003. The government filed a petition for
contempt, together with the added procedural protection in the
Third Circuit of a “Schofield I affidavit,” see In Re Grand Jury
Proceedings (Schofield I), 486 F.2d 85 (3d Cir. 1973). Within
minutes, the witness was held in civil contempt without any of
the procedural rights proscribed by Rule 42(b); the court
vacated the order and remanded. In Bianchi, a grand jury
a ape
D «
11
required to identify the party against whom it was
proceeding. Only in the grand jury is the government
permitted to inquire so broadly. Judicial meddling by
an Article III judge in a non-adversarial investiga-
tion under the forthwith compulsory process of the
court is an unseemly role; an improper extension of
constitutional power. It upsets the balance between
the judicial and executive branches of our constitu-
tional government.
To be sure, the power of contempt is necessary
and incidental to court proceedings. Shillitani v.
United States, 384 U.S. 364, 370 (1966). But there is no
need for a preliminary or ancillary power. to conduct
a broad-ranging inquiry and the institution of such a
power is ripe for abuse. Just as Congress” and this
witness refused to answer certain questions on fifth amend-
ment grounds after a proper grant of immunity. Six days
later, the government filed a petition for contempt. The witness
was provided certain discovery and a Rule 42(b) hearing was
held several days later. In Bork, a grand jury witness refused
to answer a series of questions on fifth amendment grounds
after an immunity grant. Five days later the government filed
a petition for contempt after which a Rule 42(b) hearing was
held and a civil contempt order entered. None of these cases, by
holding, dicta or analogy, remotely supports the asserted
power of a district court to conduct a one-week “compliance
hearing.” Indeed, each hearing in these cases had clearly iden-
tified parties and framed a justiciable contempt “case.”
10 The Judiciary Act of 1789 vested federal courts with power
to punish all conduct the court might construe as a contempt of
its authority. Great abuse of this broad undefined power led
Congress to drastically curtail the range of conduct which
courts can punish as contempt, limiting courts to the least
possible power to the end proposed. See generally In Re McCon-
nell, 370 U.S. 230 (1962); Crammer v. United States, 350 U.S. 399
12
Court" have placed intelligible limits on the scope of
the contempt power and the procedure to be fol-
lowed, the court of appeals must be disabused of its
newly formed idea that a district court may conduct
a “compliance hearing.”
The need for review is compelling here because the
government had probable cause to proceed against
Sweeney for contempt or destruction of evidence
before the “compliance hearing” commenced. The
government secretly procured Krieg’s testimony
that Sweeney carried the typewriter toward his office
after the Rule 17 order was served but before the
typewriter was produced. Although the “compliance
(1956). 18 U.S.C. § 401 now limits the contempt power to three
defined tyes of conduct, “and none other.” [Emphasis added].
4 Rule 42 of the Federal Rules of Criminal Procedure gov-
erns the exclusive procedures for adjudicating criminal con-
tempt. Since its promulgation in 1944, Rule 42(a) (summary
contempt) has been interpreted narrowly. This Court has
cautioned that Rule 42(a) is reserved for “exceptional circum-
stances” such as acts threatening the judge or disrupting a
hearing and that Rule 42(b) specifies the “normal procedure”
to be followed by a court. Harris v. United States, 382 U.S. 162,
164-65 (1965). Summary contempt is disfavored, Sacher v.
United States, 343 U.S. 1, 8 (1952) and capable of grave abuse,
In Re Oliver, 333 U.S. 257, 274 (1948). This Court has warned
against its expansive application because “criminal contempt
is a crime in every fundamental respect,” Bloom v. Illinois, 391
U.S. 194, 201 (1968), and the procedural safeguards of Rule
42(b) should be employed whenever possible. The courts of
appeals have followed this advice in civil contempt proceedings
under the recalcitrant witness statute, 28 U.S.C. § 1826. See,
e.g., United States v. Alter, 482 F.2d 1016, 1023 (9th Cir. 1973).
See Ex parte Hudgings, 249 U.S. 378 (1919) (most perjury
cannot be deemed contempt because a trial court’s view of the
truth could become a tool of oppression. /¢. at 384); accord, In
Re Michael, 326 U.S. 224 (1945).
13
hearing” was unnecessary ab initio, the questioning
of Petitioner strayed well beyond the ostensible pur-
pose of the inquiry. The entire proceeding was a non-
adversarial inquisition in breach of basic concepts of
separation of powers and in derogation of Peti-
tioner’s rights.
CONCLUSION
For all of the above reasons, it is respectfully
prayed that the writ of certiorari be granted.
Respectfully submitted,
JouN J. Privirera
(Counsel of Record)
Samue. J. Burrone
Ticar & Burrong,
A Professional Corporation
1302 18th Street, N.W.
Washington, D.C. 20036
(202) 785-8911
Attorneys for Petitioner
= eens oN .
ee «Ae Se eee ee
la
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
+
Nos. 25, 26, 27—August Term, 1983
Argued: September 28, 1983
Decided: November 28, 1983
Docket Nos. 83-1046, 83-1052, 82-1402
--
UNITED STATES OF AMERICA,
Appellee-Cross-Appellant,
—against—
PATRICK J. CUNNINGHAM,
Defendant-Appellant-Cross-A ppellee,
—and—
JOHN J. SWEENEY,
Defendant-Appellant.
eo
Before:
MANSFIELD, KEARSE and WINTER,
Circuit Judges.
-<—
315
2a
Appeal by defendants from judgments of the Southern
District of New York entered by Judge Charles L.
Brieant, Jr. after a jury found Cunningham guilty of
conspiracy, 18 U.S.C. § 371, income tax evasion, 26
U.S.C. § 7201, filing false income tax returns, 26 U.S.C.
§ 7206(1), inducing another to make false statements to
Internal Revenue Service agents, 18 U.S.C. §§ 1001 and
2, making false statements to the agents and to the U.S.
Attorney, 18 U.S.C. § 1001, and giving false testimony
before a United States district court, 18 U.S.C. § 1623.
Sweeney was found guilty of conspiracy, 18 U.S.C. § 371,
giving false testimony before a federal grand jury, 18
U.S.C. § 1623, and making false statements to Internal
Revenue Service agents and to the U.S. Attorney, 18
U.S.C. § 1001.
The government cross-appeals from an order of the
district court granting Cunningham’s post-trial motion
for a judgment vacating the jury’s verdict on three counts
(2, 4 and 5) and acquitting him on those counts.
The judgments of conviction are affirmed. The order
granting Cunningham’s motion for a judgment of acquit-
tal on Counts 2, 4 and 5 is reversed and those counts are
remanded for sentencing and entry of judgments of
conviction.
—+
MICHAEL E. TiGAR, Esq., Washington, DC
(Samuel J. Buffone, Esq., John J. Privi-
tera, Esq., Tigar & Buffone, Washington,
DC, of counsel), for Defendant-Appel-
lant-Cross-Appellee Cunningham.
316
7
he
3a
TAYLOR R. Briccs, Esq., New York, NY
(Donald J. Greene, Esq., Kim Hoyt Sper-
duto, Esq., Leon E. Roday, Esq., Le-
Boeuf, Lamb, Leiby & MacRae, New
York, NY, of counsel), for Defendant-
Appellant Sweeney.
GERARD E. Lyncu, Assistant U.S. Attorney,
New York, NY (John S. Martin, Jr., U.S.
Attorney for the Southern District of
New York, of counsel), for Appellee-
Cross-Appellant.
+
MANSFIELD, Circuit Judge:
Experience teaches that unlawful cover-up offenses are
often more heinous than the crime sought to be con-
cealed. This case falls squarely within that maxim.
Patrick J. Cunningham and John J. Sweeney appeal-from
judgments of the Southern District of New York entered
by Judge Charles L. Brieant, Jr. after a jury convicted
them of offenses related to income tax evasion, obstruc-
tion of investigations by the Internal Revenue Service
(IRS) and a grand jury, and making false statements to
the IRS, the U.S. Attorney, a grand jury and a federal
district court.' The jury found Cunningham guilty of
conspiracy, 18 U.S.C. § 371 (Count 1), tax evasion for
the years 1974 and 1975, 26 U.S.C. § 7201 (Counts 2 and
4), filing false returns for 1974 and 1975, 26 U.S.C.
>
! John Spain and Marie Falco were named as co-conspirators. Their
participation is described later herein.
317
§ 7206(1) (Counts 3 and 5), inducing John Spain to make
false statements to IRS agents, 18 U.S.C. § § 1001 and 2
(Counts 6 and 7), making false statements to agents of the
IRS and the U.S. Attorney, 18 U.S.C. § 1001 (Count 11),
and giving false testimony before a United States district
court, 18 U.S.C. § 1623 (Count 13). Sweeney was found
guilty of conspiracy, 18 U.S.C. § 371 (Count 1), making
false statements in testimony before a federal grand jury
on July 10, 1980, and July 17, 1980, 18 U.S.C. § 1623
(Counts 9 and 10), and making false statements to agents
of the IRS and the U.S. Attorney, 18 U.S.C. § 1001
(Count 12).’
Following the trial, Judge Brieant granted Cun-
ningham’s motion to set aside the guilty verdicts on
Counts 2, 4 and 5 and enter a judgment of acquittal on
those counts, from which the government appeals. We
affirm the convictions, reverse the district court’s order
and judgments acquitting Cunningham on Counts 2, 4
and 5, and remand these counts for sentencing and entry
of judgments of conviction.
The record, viewed as it must be in the light most
favorable to the government, Glasser v. United States,
315 U.S. 60, 80 (1942), reveals the following. From 1964
to September 1971 Cunningham and Sweeney, his brother-
in-law, practiced law under a loose partnership arrange-
ment in New York City with James F. O’Donoghue.
Thereafter until 1978 they ceased to be partners but
2 A portion of Count | of the indictment, charging conspiracy to
evade Cunningham's 1972 income tax, was stricken by the district
court before trial as barred by the statute of limitations. Count 14,
which charged Cunningham with violation of 18 U.S.C. § 1510 was
dismissed before trial with the government's consent.
The jury acquitted Sweeney of Count 8, which charged him with
ar red barns the grand jury on April 5, 1979, in violation of 18
.C. § 1623.
5a
practiced separately in the same office suite. From Sep-
tember 30, 1978 through September 1981 they resumed
law practice together with Marc Krieg in a professional
corporation.
In 1974 and 1975, when Cunningham and Sweeney
were practicing law separately, Sweeney made a series of
payments in an unusual manner to or for the benefit of
Cunningham. The payments were made not by checks
drawn on Sweeney’s regular business checking account
but by means of bank checks drawn on an Irving Trust
Company escrow savings account into which Sweeney
normally deposited funds belonging to his clients (e.g.,
settlement proceeds, tenants’ funds, or payments toward
closings). There was no requirement that the bank checks
be reported to any authority. Nor were the payments, with
one exception, recorded in Cunningham’s ordinary per-
sonal or business records or bank accounts. In 1974, for
instance, Sweeney drew four bank checks totalling $9,436
on the escrow account, one to Cunningham and three to
schools attended by his children. In 1975 Cunningham ~-__
received similar checks totalling $6,062 made out to
schools in payment of his children’s tuition bills. In
addition, Sweeney paid $13,870 in connection with Cun-
ningham’s purchase of a new home.
There was evidence from which the jury could reason-
ably infer that the payments were made from the escrow
account rather than from Sweeney’s regular business
account and not recorded on Cunningham’s records in
order to conceal the fact that Cunningham, who was at
various times Chairman of the Bronx and New York State
Democratic Committees and a member of the National
Committee of the Democratic Party, was receiving a
portion of fees resulting from state court appointments in
319
mA
Rs: ot a
2»
t
“s
' jp ee Sa
probate and guardianship matters in which Cunningham
did no work. Disclosure of the income or its source would
have embarrassed him as a political leader by giving the
appearance that the appointments were the result of his
exercise of political influence with respect to the appoint-
ing judges and would also have required him to pay
income taxes on the monies received.’
Sweeney kept a careful private accounting of these
payments through pencilled notations in his own
handwriting on his copies of monthly escrow account
statements received from Irving Trust Co. The pencilled
notations showed that after deduction of certain expenses
the amounts paid to or for the benefit of Cunningham
represented roughly half of the sums Sweeney received
from court-appointed matters. That Sweeney and Cun-
ningham were trying to conceal these payments could
further be inferred from Sweeney’s efforts to avoid turn-
ing over his copies of the escrow account statements to a
federal grand jury convened in January 1979 to investi-
gate Cunningham’s possible tax evasion. Sweeney initially
advised the grand jury on April 5, 1979, that he was not
producing the statements because IRS Agent Glenn Ripa
had told him that they were not needed and he was later
acquitted of the charge (Count 8) that this statement was
perjurious. However, after it became clear that his copies
of the statements were being subpoenaed he refused to
comply. On July 10, 1980, when he appeared before the
grand jury for a second time, he expressly refused to turn
over the statements, now claiming that they were pro-
tected by the attorney-client privilege. After that hearing,
3 Cunningham was in 1975 the subject of an investigation by New
York State Special Prosecutor Maurice Nadjari who was looking into
charges that he had exercised improper political influence in the
selection of state judges.
320
7 3 A:
MS eed
ny Begs St ah See hee . ~- IF 4 of ae
nee MIR SS ces ay REN Tg Sir ge OREO MEM ee SESE OTE DF Toe FS OL”
Ta
when he was ordered to show cause why he should not be
held in contempt, Sweeney agreed to produce the state-
ments. Yet when he returned to the grand jury on July 17,
he did not do so. The statements finally were turned over
by his attorney while Sweeney was out of the country; by
that time, the pencilled notations—which were at the
heart of the government’s case—had been erased. It was
only through infrared enhancement that the FBI was
able to restore the notations and uncover the secret
accounting. |
In October 1975 Cunningham filed his federal income
tax return for the year 1974, which did not report as
income $9,436 received in 1974 from the Sweeney escrow
account. If disclosure had been made he would have had
to pay an additional $5,057 in taxes over the $37,539
paid. In October 1976, by which time Cunningham knew
he was under IRS investigation, Cunningham filed his
federal tax return for income received in the year 1975,
which reported the $6,062 received in 1975 from the
escrow account but did not report the $13,870 received
from Sweeney in April 1975. If reported as income the
$13,870 would have increased his tax liability by $9,709.
There was additional evidence supporting the jury’s
verdict that Cunningham, acting in concert with Sweeney,
attempted to evade reporting the $9,436 income received
from Sweeney in 1974 and at least part of the $13,870
received from Sweeney in 1975. They engaged in conduct
designed to obstruct government investigations into thé
nature and source of these payments and to cover up the
evasion. In December, 1975, Cunningham learned that he
was under IRS investigation. His 1974 return had been
filed and little could be done to alter his failure to report
the $9,436 of covert income he received that year from
Sweeney. However, Sweeney’s Irving Trust escrow ac-
321
count statements made it plain that Cunningham would
in 1976 be obligated to report as income payments total-
ling $19,932 received in 1975 from Sweeney (including the
$6,062 paid as tuition for Cunningham’s children) as a
division of legal fees. Instead of reporting this income
and the sources on his federal income tax return for 1975,
however, Cunningham decided to report only the $6,062
and to claim that $13,870 represented a non-taxable loan.
With respect to the $13,870, Sweeney corroborated
Cunningham’s account by advising Cunningham’s tax
lawyer, Barry London, that $10,000 of this sum repre-
sented part of a non-taxable $45,000 “gap” loan needed
by Cunningham to purchase a new house, $35,000 of
which had been borrowed from the Sterling National
Bank, and that the balance of $3,870 constituted the
portion of the non-taxable advance from Sweeney that
had yet to be repaid. Recognizing that this story could be
refuted by his pencilled notations on his copies of the
Irving Trust escrow account statements, Sweeney made
repeated efforts to avoid turning over his copies of these
bank records. As noted above, his pencilled computations
showing the actual nature of the payments to Cun-
ningham were erased and his copies were not turned over
to the government until he was threatened with contempt.
In the meantime Sweeney testified before the grand
jury that he loaned Cunningham nearly $13,900 in 1975
whereas his obliterated notations together with other
evidence showed that the payments represented a division
of legal fees from 1974-75 court appointments.* In 1980
4 Even if one assumes, because Cunningham had only a $5,500 credit
in the escrow account in April 1975 when Sweeney paid $10,000
toward Cunningham's purchase of a house, that the payment was
partly a loan, that loan was soon converted into taxable income. In
July 1975 Sweeney credited Cunningham with $15,675 in the escrow
a
9a
Sweeney also falsely advised the U.S. Attorney’s office
and testified before the grand jury that other payments
made by him to or for Cunningham (e.g., tuition for the
latter’s children) were from legal fees due in connection
with the 1971 dissolution of their former law firm
whereas in fact they were from later state-court appoint-
ments.’ Upon being interviewed by the U.S. Attorney’s
office in 1980 Cunningham conceded that the $9,436
received in 1974 from Sweeney (some directly and some to
schools for his children) “probably” represented report-
able income overlooked by him but that the $13,870
received in 1975 constituted non-taxable loans not yet
repaid.
As another step designed to conceal the income re-
ceived from Sweeney in 1975 Cunningham, after he
learned in December, 1975, that he was under IRS investi-
gation but before he filed his 1975 return, decided to
create some ficitious cash receipts that he could report on
his 1975 income tax return as received that year from
other sources, which would serve to account for otherwise
unexplained cash in his possession. His reporting of cash
income from other sources could mislead the IRS into
abandoning its investigation into his 1975 income. What-
ever the motive, he induced a friend, John Spain, to agree
to falsely tell the IRS that Spain had in 1975 paid him
account for more legal fees from court appointments, in addition to
which Sweeney made $6,062 in tuition payments for Cunningham's
benefit and $3,870 more toward the purchase of the house. Thus,
regardless how the April 1975 payment is characterized, Cunningham
received from Sweeney in 1975 $13,870 which was not reported on
Cunningham's return.
5 Since Cunningham reported his income on a cash basis he was in any
event obligated to pay a tax on legal fees received in 1975, whether or
not attributable to an earlier year.
tae
10a
$2,000 cash for legal services. He similarly induced
another friend, Joseph Cioccolanti, to agree to falsely
advise the IRS that he had given Cunningham $4,000
cash. Cunningham then included on his 1975 return
$8,000 cash legal fees received (he later claimed that this
included, in addition to the $6,000 from Spain and
Cioccolanti, $2,000 from George Steinbrenner). In Janu-
ary 1978 interviews requested by the IRS Spain, living up
to his promise to Cunningham, falsely advised IRS Agent
Glenn Ripa and another agent that in 1975 he had paid a
$2,000 cash legal fee to Cunningham. However, when
Spain was later called before the grand jury on two
occasions in July 1980 and asked about the payment he
twice testified that he had never paid a $2,000 legal fee to
Cunningham and he denied under oath that he had so
told Agent Ripa.
Sweeney’s testimony before the grand jury and Cun-
ningham’s statements in interviews by the U.S. Attor-
ney’s office regarding the nature of the payments received
by Cunningham or made for his benefit in 1974 and 1975
were belied by the government’s restoration of Sweeney’s
erased pencilled accounting on his copies of the Irving
Trust escrow account statements. These revealed that the
payments were taxable shares of legal fees from state
court appointments, not loans or pre-1972 legal fees. In
January 1981 Cunningham and Sweeney were given the
Opportunity, in tape-recorded government interviews later
introduced at their trial in the present case, once again to
explain the payments and the source of the $8,000 cash
legal fees reported by Cunningham as received in 1975.
Essentially they stuck to the outlines of their earlier
version that the $13,870 represented loans. Both contin-
ued to state that $10,000 of the $13,870 was borrowed to
324
lla
complete a $45,000 “bridge” loan needed to finance
Cunningham’s purchase of a new home after Sweeney
had been told by the bank that it would not loan more
than $35,000. However, Cunningham could not now re-
call receiving $2,000 from Spain as the source of a
portion of the $8,000 listed as cash receipts. Although he
admitted that the $9,436 received from Sweeney in 1974
represented legal fees he did not remember whether he
had reported it on his income tax return. Nor could
Cunningham recall whether he had paid. back the loan
from Sweeney for purchase of the house or still owed this
amount to Sweeney.
In October 1980 Spain was indicted on the charge that
he committed perjury in denying to the grand jury that he
told Agent Ripa that he had paid $2,000 to Cunningham.
Thereupon he consulted Cunningham, whose secretary,
Marie Falco, presented to Spain what purported to be a
contemporaneous memorandum typed by her on the same
day as Spain’s interview with Agent Ripa ‘4 years
previously (January 25, 1978). The memo reporicd Spain
as denying to Falco that he had told Ripa that he had paid
any cash to Cunningham. The memorandum was intro-
duced by Spain at his February 1981 trial on the perjury
charge after authentication by Ms. Falco. Suspecting that
it was fabricatei, the government obtained from Judge
Wyatt of the district court a subpoena ordering Cun-
ningham’s law firm to produce “forthwith” any type-
writers in its possession of the model used to type the
purported memorandum of January 25, 1978. The gov-
ernment planned to examine the typewriter ribbons
(which were carbon film ribbons that could be used only
once and would reveal what had been typed on them) to
determine whether the memorandum had recently been
fabricated, i.e., typed in November 1980.
325
12a
Following service of the subpoena by government
agents at 4:30 PM. on the afternoon of February 12,
1981, Marc Krieg, one of the three partners in the firm,
asked the agents to leave. Krieg then ascertained that
there were two typewriters of the kind subpoenaed, one
of which was located on the office’s reception desk. At
5:20 P.M. Krieg saw Sweeney carrying the typewriter from
the reception desk to his office and closing the door
behind him. When the typewriter was examined by gov-
ernment agents that night it was found to have a new,
virtually unused ribbon on it.* That evening Krieg advised
an Assistant U.S. Attorney that he had seen Sweeney
remove the typewriter to his office that afternoon after
the subpoena had been served but before the typewriter
was turned over to the government. Krieg apparently
6 At the trial of Cunningham there was other evidence, including
expert testimony, enabling the jury to find that the ribbon had been
changed between the service of the subpoena on February 12 and the
delivery of the typewriter to the agents on the same date. That the
ribbon was replaced in order to conceal the recent fabrication of the
memorandum was further supported by Spain's testimony that he had
never had the conversation with Falco which she testified to having
typed on January 25, 1978.
Sweeney argues that the ribbon on the typewriter had been changed
by a service man sometime in late December 1980, or early January
1981—after the Spain memorandum appeared in November 1980—so
that in fact the ribbon that was removed from the typewriter on the
afternoon of February 12, 1981 would not have contained imprints
from that memorandum. Moreover, Sweeney claims that he was aware
of this before the typewriter was turned over to the government on the
evening of February 12, so that he had no incentive to change the
ribbon that day. While there was testimony that when questioned by
Sweeney, Ms. McCreery told him that the ribbon had been changed in
December or January, the jury could well have concluded that Sweeney
doubted the accuracy of the undocumented information provided by
McCreery (indeed, Sweeney conceded that he called McCreery at home
on the evening of February 13 to question her further) and decided to
take no chances in the matter. Certainly there can be no dispute but
that the ribbon was changed after the subpoena was served.
326
13a
confirmed this statement in testimony given the next day,
February 13, before the grand jury.
On the same date, February 13, 1981, Judge Inzer B.
Wyatt, who was presiding at the Spain trial, granted the
government’s motion for a hearing, which was then held
by Judge Edmund Palmieri, to determine whether anyone
had tampered with the subpoenaed typewriter before
surrendering it to the government. At a continuation of
the hearing on February 17, Gay McCreery, receptionist
at the Cunningham-Sweeney firm, testified that she had
used the subpoenaed typewriter on February 12, 1981, to
type addresses on envelopes which Cunningham planned
to use in a personal campaign mailing to members of the
Democratic National Committee. However, the ribbon on
the typewriter turned over by Cunningham and Sweeney
in response to the subpoena did not show the imprints of
this typing, as it would if it were the ribbon used by Ms.
McCreery. When the typed envelopes were then sub-
poenaed and Krieg and McCreery were unable to find
them, Cunningham testified on February 19, 1981, before
Judge Palmieri that after deciding to withdraw from his
political race on Monday, February 16, 1981, he stuffed
the typed envelopes into his pocket and disposed of them
in a street trash basket. This conduct indicated that the
typed envelopes had been concealed or destroyed because,
if produced, they would prove that the ribbon had been
changed on February 12. That in turn would support the
government’s contention that the tell-tale ribbon bearing
typing imprints of Cunningham’s envelopes would a!so
bear imprints of the Spain memorandum, proving it to be
a recent fabrication.
Obviously concerned that this important subpoenaed
evidence be produced or that its concealment or destruc-
327
l4a
tion in defiance of the subpoena be established, Judge
Palmieri permitted the government to inquire into the
surrounding circumstances. One of these circumstances
was revealed by Krieg’s testimony that on the night of
February 13th, after he had testified that day before a
grand jury to facts indicating that Sweeney had changed
the ribbon, Falco and Cunningham had telephoned him
at his Long Island home from a New York restaurant to
find out whether he had given any harmful testimony
about the ribbon. Falco testified in the Spain trial before
Judge Wyatt that she could not recall such a telephone
conversation with Krieg. When asked about the matter on
February 19th before Judge Palmieri, Cunningham testi-
fied that he could not recall the restaurant he visited on
the night of February 13th. Disclosure of the name of the
restaurant (which the government did succeed in obtain-
ing from other sources) would have enabled the prosecu-
tion to obtain toll call records corroborating Krieg’s
testimony regarding the phone calls from Falco and
Cunningham. All of this evidence provided the basis
for the perjury charge against Cunningham alleged in
Count 13.
Thus there was overwhelming proof that Cunningham
and Sweeney sought to obstruct the Spain trial by con-
cealing or destroying the typewriter ribbon that they
feared would have revealed the recent fabrication of the
purported January 25, 1978, Spain memorandum and
that Cunningham then sought to cover up this obstruc-
tion by giving false testimony at the hearing before Judge
Palmieri.
Although Cunningham and Sweeney testified in their
own defense at the trial of the present case, their efforts
to explain incriminating facts were clearly refuted by
328
l5a
other evidence and rejected by the jury as incredible.
Indeed, Cunningham had no explanation for his failure
to report his 1974 income. While he sought to explain the
$8,000 cash income reported on his 1974 return as coming
from Spain ($2,000), Cioccolanti ($4,000) and George
Steinbrenner, owner of the New York Yankees ($2,000),
his testimony was inconsistent in material respects with
his statements in earlier government interviews and with
other proof. For instance, he described in detail a $2,000
payment purportedly received from Steinbrenner at
Yankee Stadium during a 1975 ball game, only to be faced
with the fact that that Stadium was undergoing renova-
tion and was inoperative at that time.
Sweeney’s testimony that his payments in 1975 to
Cunningham did not represent a sharing of state-court
appointment fees but a repayment of old firm debts was
refuted by his handwritten accountings on the Irving
Trust bank statements. His effort to label the payments of
$13,870 in 1975 to Cunningham as loans was likewise
shown on cross-examination to be riddled with incon-
sistencies, entitling the jury to reject his testimony as
incredible.
After the jury on June 18, 1982 returned its verdict
finding Cunningham guilty of 9 counts and Sweeney
guilty of 4 counts, Judge Brieant on October 25, 1982,
granted Cunningham’s motion for a judgment of acquit-
tal on Counts 2 (evasion of $5,057 tax due for the year
1974), 4 (evasion of income tax due for the year 1975),
and 5 (filing of a false federal income tax return for the
year 1975). Judge Brieant reasoned that the amount of
income tax evaded for the year 1974 was not “substan-
tial” enough to violate 26 U.S.C. § 7201. With respect to
Counts 4 and 5 the court, although conceding that the
329
16a
evidence established that Cunningham and Sweeney had
conspired to evade payment of the former’s income tax
due for the year 1975, concluded that since Cunningham
knew he was under IRS investigation he had decided not
to evade payment of the taxes due on the $13,870 income
received from Sweeney in 1975.
DISCUSSION
Cunningham
Cunningham first argues that his conviction of perjury
committed during the hearing before Judge Palmieri
(Count 13) must be set aside on the grounds that the
Palmieri court lacked jurisdiction to hold a hearing to
determine whether Cunningham’s firm had fully com-
plied with the subpoena issued in the Spain case and that
Cunningham’s testimony was immaterial. He further con-
tends that his conviction of conspiracy (Count 1) must
also be reversed because certain criminal objectives and
overt acts alleged in Count | were the subject of substan-
tive counts that were dismissible as a matter of law
(Count 13), dismissed by Judge Brieant after the guilty
verdicts (Counts 2, 4 and 5), or no longer sustainable in
view of Judge Brieant’s withdrawal of certain specifica-
tions of false testimony alleged in Counts | and 11. We
disagree.
Count 13 charged Cunningham with violation of 18
U.S.C. § 1623, which prohibits the making of false state-
ments under oath “in any proceeding before . . . any
court. . . of the United States.” The proceeding at which
Cunningham testified was conducted by the district court
to determine whether Cunningham or anyone else in his
law firm had failed to comply with a valid subpoena, and
330
17a
to enforce compliance with the subpoena by such civil
contempt orders as might become necessary. Non-produc-
tion of records by the possessor in open court in defiance
of the court’s order would clearly provide the basis for a
coercive civil contempt order.
Cunningham contends that the district court lacked
authority to conduct a hearing for the purpose of deter-
mining whether there had been compliance with its Rule
17(c) subpoena. He argues that no “case or controversy”
existed within the meaning of Art. III, § 2, of the Consti-
tution and that the court was therefore relegated to an
adversarial proceeding under Fed. R. Crim. P. 42(b). We
disagree. Trial courts have the “inherent power to enforce
compliance with their orders through civil con-
tempt. . . . And it is essential that courts be able to
compel the appearance and testimony of witnesses.” Shil-
litani v. United States, 384 U.S. 364, 370 (1966); 28
U.S.C. § 1826(a). The same principle governs the court’s
authority to compel production of documents or records
subpoenaed by it.
An appropriate step toward compelling production is
an evidentiary hearing to ascertain the whereabouts of the
subpoenaed materials and to give the person charged an
Opportunity to explain why they have not been produced.
See In re Grand Jury Investigation, 545 F.2d 385 (3d Cir.
1976); In re Bianchi, 542 F.2d 98 (lst Cir. 1976); /n re
Bonk, 527 F.2d 120 (7th Cir.), stay denied, 423 U.S. 942
(1975). To relegate the court to slower, more protracted
proceedings would unduly hamper its conduct of an
on-going trial and encourage non-compliance. Moreover,
in its compliance hearing the court should be accorded
broad latitude to uncover facts with respect to the con-
cealment or destruction of the subpoenaed evidence.
331
18a
Under 28 U.S.C. § 1826(a) the court is empowered to
issue a coercive contempt order provided basic due
process procedures are observed, Jn re Kitchen, 706 F.2d
1266, 1271 (2d Cir. 1983); In re Rosahn, 671 F.2d 690, 697
(2d Cir. 1982). There was no denial of such due process by
Judge Palmieri in the compliance hearing in this case.
Decisions relied upon by Cunningham for the proposi-
tion that the court is powerless to hold such a hearing are
clearly distinguishable. In Brown v. United States, 245
F.2d 549 (8th Cir. 1957), the grand jury of the District of
Nebraska obviously lacked authority to investigate a
crime committed in the Eastern District of Missouri.
Similarly, courts lack authority to compel parties to con-
tinue the conduct of properly settled litigation, Hunger v.
Andrus, 476 F. Supp. 357, 360 (D.S.D. 1979), to force a
United States Attorney to sign an indictment, United
States v. Cox, 342 F.2d 167 (Sth Cir.), cert. denied, 381
U.S. 935 (1965), or to adjudicate non-existent cases. See,
e.g., Jett v. Castaneda, 578 F.2d 842, 845 (9th Cir. 1978)
(“Without an indictment or other charge bringing a
defendant before the court . . . a district court has no
general supervisory jurisdiction over the course of execu-
tive investigations.”). It is in situations such as these that
the “case or controversy” requirement bars judicial pro-
ceedings. No such situation obtains here where the district
court had a pending criminal trial in progress for which
the materials had been subpoenaed.
The ribbon subpoenaed from Cunningham’s office was
a crucial piece of evidence needed in the on-going Spain
trial for the reason that the ribbon probably would have
revealed that the Spain memorandum was a recent fabri-
cation. Examination of the typewriter indicated that a
new ribbon had just been installed. This and other evi-
332
19a
dence (e.g., Krieg’s Feb. 12, 1981, description of his
having seen Sweeney remove the typewriter from the
receptionist’s desk to his office in the short period after
the subpoena was served and before the machine was
surrendered) provided grounds for reasonable belief that
the telltale ribbon had been removed and a substitute
installed. Under these circumstances Judge Wyatt acted
within his authority in ordering an immediate hearing to
determine the facts and to use the court’s coercive civil
contempt power, if necessary, to secure compliance with
the subpoena, including production of the ribbon and any
other related materials bearing on its replacement. Since
Judge Wyatt was actively engaged in trial of the Spain
case and could not conduct two proceedings at the same
time, he properly had another Article III judge of the
same court conduct the compliance hearing. See, e.g.,
United States v. Teresi, 484 F.2d 894 (7th Cir. 1973). Once
that hearing got under way Judge Paimieri was entitled to
explore fully the surrounding circumstances, including
evidence bearing on the credibility of Falco, and on her
February 13th phone call to Krieg to determine what he
had testified regarding the typewriter.
Cunningham’s next argument, that his testimonial in-
ability on February 19th to recall the restaurant to which
he and Falco went on the night of February 13th was
immaterial to the Palmieri hearing, must likewise be
rejected. Materiality is ordinarily to be determined by the
court by a preponderance of the evidence. United States
v. Berardi, 629 F.2d 723, 727-28 (2d Cir.), cert. denied,
449 U.S. 995 (1980); United States v. Marchisio, 344 F.2d
653, 665 (2d Cir. 1965). Here Cunningham’s perjured
testimony was adjudged to be material both by the trial
judge and by the jury, to which Judge Brieant delegated
Ls
the issue with directions that the government must estab-
lish materiality by proof beyond a reasonable doubt, thus
giving Cunningham a dual advantage (determination of
materiality by the jury as well as by the judge and
imposition of a higher standard of proof) to which he was
not entitled. United States v. Berardi, supra.
Regardless of the scope of the proceeding in which
testimony is given, see United States v. Byrnes, 644 F.2d
107, 111 (2d Cir. 1981) (grand jury); United States v.
Freedman, 445 F.2d 1220, 1226-27 (2d Cir. 1971) (SEC
hearing on alleged securities law violation), the test of
materiality is essentially whether a truthful answer would
have aided the inquiry. United States v. Berardi, supra,
629 F.2d at 728. In the present case the inquiry was with
respect to the existence of the typewriter ribbon used to
type the Spain memorandum and Cunningham’s political
campaign envelopes, both of which had been subpoenaed
by the court. If Cunningham had truthfully disclosed the
restaurant he and Falco visited on February 13th the
government would, by obtaining that restaurant’s toll
calls for that date, have had the opportunity to establish
that they had called Krieg at his Long Island home. Along
with all the other suspicious circumstances, this would
have been one more piece of evidence indicating that they
were trying to prevent disclosure of Sweeney’s removal of
the ribbon and thereby avoid Cunningham’s being com-
pelled to produce the envelopes or face a civil contempt
order. Truthful testimony would thus have confirmed
Judge Palmieri’s earlier impression that the missing evi-
dence existed within Cunningham’s control and that he
had failed to furnish a reasonable explanation for his
failure to produce it. See Sigety v. Abrams, 632 F.2d 969,
974-75 (2d Cir. 1980) (an inference of continuing posses-
334
sion may be drawn by the court with respect to materials
known to be in the possession of a subpoenaed witness
shortly before service of a subpoena). Cunningham’s
movements with Falco on the night of February 13th were
therefore material to Judge Palmieri’s inquiry.
Cunningham next contends that his conviction of con-
spiracy (Count 1) must be set aside because some of the
objectives which are charged as substantive counts (in-
come tax evasion (Counts 2 and 4) and filing of a 1975
false income tax return (Count 5)) were dismissed by
Judge Brieant after the trial and another objective (per-
jury (Count 13)) should be reversed. Relying principally
on United States v. Natelli, 527 F.2d 311 (2d Cir. 1975),
cert. denied, 425 U.S. 934 (1976), he argues that the jury
might not have reached a guilty verdict in the broad
conspiracy charge if these objectives had been eliminated
before the case was submitted to it.
Since we here affirm the perjury conviction (Count 13)
(see supra) and reverse the dismissal of Counts 2, 4 and 5
(see infra), the essential premises upon which Cun-
ningham bases his argument evaporate. Even aside from
this fatal defect, however, since conspiracy is a separate
crime from the substantive offenses which may be its
aims, proof that the defendants failed to achieve their
unlawful objectives would not entitle them to a dismissal
or retrial of the conspiracy charge. United States v.
Frank, 520 F.2d 1287, 1290-91 (2d Cir. 1975), cert. de-
nied, 423 U.S. 1087 (1976). Indeed where, as here, some
objects of a conspiracy have clearly been achieved, we
will not normally upset the conspiracy conviction because
others have not. United States v. Sindona, 636 F.2d 792,
799 n.§ (2d Cir. 1980), cert. denied, 451 U.S. 912 (1981).
335
For similar reasons the court’s post-verdict withdrawal
from Count 11 of one of the specifications of Cun-
ningham’s false statements (that Sweeney told him that
the maximum loan he could obtain from the Sterling
National Bank was $35,000) does not affect the jury’s
guilty verdict on that count. Cunningham now contends
that the Count 11 conviction should not stand because it
is possible that the jury was unanimous only as to the
dismissed specification. See United States v. Natelli, su-
pra, 527 F.2d at 325. However, his failure to object at trial
to multiple specifications precludes his raising the issue
on appeal. See United States v. Bonacorsa, 528 F.2d 1218,
1222 (2d Cir.), cert. denied, 426 U.S. 935 (1976).
Regardless of the waiver of the issue the district court
in our view erred in dismissing the falsity specification for
lack of direct evidence that Sweeney had not told Cun-
ningham that $35,000 was the maximum that the bank
would loan. There was ample circumstantial evidence
permitting the jury to make such a finding. Evidence was
introduced to the effect that Sweeney did not in fact seek
a $45,000 loan from Mr. Hugh Malloy of the Sterling
National Bank. Given Sweeney’s demonstrated willing-
ness to transfer to Cunningham his share of fees from
court appointments and the absence of any motive for
Sweeney to deceive Cunningham as to the true facts or to
require him to accept a loan rather than a distribution of
fees, the jury could reasonably infer that Sweeney told
Cunningham: the truth, namely, that Cunningham needed
to borrow only $35,000, not $45,000, because he was
entitled under their agreement to a distribution of $10,000
in fees from the escrow bank account.
Nor do we find any merit in the claim that the district
court erred in failing to instruct in its second supplemen-
336
tary charge to the jury that it might convict Cunningham
of conspiracy only if it found that an overt act had been
committed within the pertinent limitations periods,
namely, after July 1, 1975, in the case of acts in
furtherance of tax evasion objectives, 26 U.S.C. § 6531,
and after July 1, 1976, as to all other overt acts, 18
U.S.C. § 3282. Judge Brieant originally charged without
request or objection by the defendants that the jury could
only find the defendants guilty of conspiracy as charged
in Count | if it found “that persons were committing
overt acts in furtherance thereof after July 1, 1976.” In
response to a later jury request he instructed that the
government must prove that the conspiracy existed after
July 1, 1976, and that if it found that an overt act had
been committed after that date it might infer that the
conspiracy existed after that date. This instruction was
proper under the circumstances. In any event the jury’s
verdicts finding Cunningham guilty of substantive crimes
occurring after July 1, 1976, which were alleged as overt
acts, eliminate any doubt about the matter.
Cunningham also questions his conviction of making
false statements to IRS agents and members of the United
States Attorney’s office on January 15, 1981, in violation
of 18 U.S.C. § 1001, on the ground that admission of his -
statements violated Fed. R. Evid. 410 and Fed. R. Crim.
P. 11(e)(6) because they were made in the course of plea
negotiations. However, since no objection to admission of
these statements was made at trial the issue, absent a
showing of plain error, cannot be raised at this late date.
United States v. Ruffin, 575 F.2d 346, 355 (2d Cir. 1978).
Moreover, the tape recordings of the interview demon-
Strate beyond doubt that no error was committed in
admitting them. At the outset of the interview Cun-
337
ningham, himself a lawyer, and his counsel, an expe-
rienced criminal lawyer, stipulated that anything he said
could be used against him by a grand jury or in any
subsequent proceeding and that if he made a false state-
ment of fact he could be prosecuted for perjury. These
stipulations confirm that the interview was not a plea
bargaining conference but an effort by him to convince
the government that he was not guilty of any crime. The
rules invoked by him are inapplicable to such an inter-
view. {
We have examined the other claims of error advanced
by Cunningham and find them to be totally lacking in
merit.’ There was ample evidence of his guilt of Count 3
(filing of false 1974 tax return) and Counts 6 and 7
(inducing John Spain to make false statements to IRS
agents on two occasions in January 1978). Although
Cunningham’s counseling of Spain may have occurred at
an earlier date, the crime aided and abetted was not
committed until January 1978 when Spain carried out his
agreement to falsely tell the agents that he had paid
$2,000 to Cunningham. United States v. Ruffin, 613 F.2d
408, 412 (2d Cir. 1979). Finally, the suggestion that
Cunningham must have intended and instructed Spain to
lie to a federal or IRS agent, as distinguished from some
other authority, borders on the frivolous. There is no
requirement that the aider and abettor have had a juris-
dictional intention. United States v. Feola, 420 U.S. 671
(1975); Barnes v. United States, 412 U.S. 837, 847 (1973).
7 Cunningham has abandoned his argument that the Spain compliance
hearing violated his Fifth Amendment rights, in view of the Supreme
Court’s recent decision in United States v. Rylander, 103 S.Ct. 1548
(1983). Vv)
338
: ¢ . 2 : ee “4 ‘ke eee
Se Oe tiger eee pI ee Pe ge AT ae See Ee nS CS hee | 3
es TA AS MRE ae ee, Po ee eS a ag opine tae ee g Rt, 7 2a
Sweeney
Sweeney’s first contention is that, although the indict-
ment charged a single conspiracy (Count 1), two con-
spiracies were proved, amounting to a fatal variance
requiring a new trial. United States v. Bertolotti, 529 F.2d
149, 154 (2d Cir. 1975); see Kotteakos v. United States,
328 U.S. 750 (1946). Count 1 charges a conspiracy by
Cunningham and Sweeney from on or about January 1,
1972 to July 1981, joined in by Falco and Spain as
co-conspirators, to evade Cunningham’s 1974 and 1975
taxes and file false income taxes for those years, to
obstruct investigation of these crimes by the IRS and the
grand jury, to impede the perjury trial of Spain for
denying that in 1978 he told IRS agents that he paid a
$2,000 cash legal fee to Cunningham, to make false
statements to government departments and to give false
testimony to the grand jury. Sweeney claims that the
evidence showed, first, a tax evasion conspiracy from
1974 to 1976 and, second, a later separate conspiracy to
conceal the first. He argues that the government improp-
erly tried to extend the life of the first, which is barred by
the Supreme Court’s decisions in Grunewald v. United
States, 353 U.S. 391,.399 (1957), Lutwak v. United
States, 344 U.S. 604, 616-17 (1953), and Krulewitch. v.
United States, 336 U.S. 440, 443-44 (1949). We disagree.
Since the question of whether there were multiple
conspiracies rather than the single conspiracy charged is
one of fact for a properly charged jury (and there was no
error in Judge Brieant’s charge on that issue) we are
normally unwilling in the absence of a showing of plain
error to set aside the jury’s finding of the single con-
spiracy charged. United States v. Alessi, 638 F.2d 466,
472 (2d Cir. 1980); United States v. Murray, 618 F.2d 892,
339
902 (2d Cir. 1980); United States-v. McGrath, 613 F.2d
361, 367 (2d Cir. 1979), cert. denied, 446 U.S. 967 (1980).
Moreover, even if two conspiracies were shown the vari-
ance would not entitle Sweeney to a new trial in the
absence of a showing that it prejudiced his substantial
rights. United States v. Alessi, supra, 638 F.2d at 474-75.
Here the evidence reveals one continuous conspiracy
between Cunningham and Sweeney, joined in by lesser
co-conspirators (Spain, Cioccolanti, Falco), to enable
Cunningham to evade payment of substantial federal
taxes on his 1974 and 1975 taxable income and to take
such steps as might become necessary to defraud the
government into the belief that all income taxes due for
those years had been paid. Sweeney became a member of
that conspiracy at the outset when he agreed to conceal
his payments to Cunningham of a share of fees in state
court-appointed matters by funneling them to Cun-
ningham through the special Irving Trust escrow account.
This device was designed to minimize the chances that the
unreported income would be detected by the IRS. The
aim of the conspiracy, which was to defraud the federal
government of the taxes due on Cunningham’s reportable
income, would not be completed until the government (if
it audited his 1974 and 1975 returns as might be antici-
pated) had been satisfied that all taxes due had been paid.
In this respect this case differs sharply from Grunewald,
Lutwak, and Krulewitch, supra, where cover-up or con-
cealment was not an actual part of the basic conspiracy
but merely an implied consequence. Here, in contrast, the
success of the scheme to defraud depended on the parties’
deceit of federal authorities, before and after the filing of
the returns, as to the amount of income tax due from
Cunningham.
340
Yes dN
* ; ' a FT ee ne
iS age Pee fe ees te Pee Cree Lee Ey eee Rag ee, nt ee
In furtherance of the scheme, when Cunningham came
under IRS investigation in 1976, Sweeney sought to carry
out their objective by telling Barry London, Cun-
ningham’s tax adviser, that $13,870 of the money paid out
of the escrow account in 1975 represented non-taxable
loans when in fact he knew, as his subsequently restored
pencilled accounting later confirmed, that the payments
represented taxable income to Cunningham, i.e., a share
of fees received in court-appointed matters. Thereafter
Sweeney continued to further the conspiracy’s objective
by refusing to obey a subpoena to produce his copies of
the special escrow account statements with their in-
criminating pencilled notes until he was threatened with
contempt, by his erasing the pencilled notations on them,
and by his falsely telling IRS agents, prosecutors and the
grand jury that the $13,780 payment was a loan and that
the tuition payments were from pre-1972 legal fees earned
before the dissolution of the former Cunningham-
Sweeney-O’ Donoghue partnership. Thus, since Sweeney
participated in the unlawful activities from the beginning
to the end, he would not be able, even if multiple
conspiracies had been shown, to demonstrate any result-
ing prejudice to himself. United States v. Alessi, supra,
638 F.2d at 474-75.
Nor do we find any merit in Sweeney’s argument that
he cannot be found guilty of a conspiracy that involved
activities and persons unknown to him (Cunningham’s
arrangement with Spain and Cioccolanti). To be con-
victed, a member of a conspiracy need not know the
identity of every co-conspirator or all of the means
employed to achieve the agreed-upon, unlawful objective,
as long as he is aware of the essential nature of the plan.
United States v. Gleason, 616 F.2d 2, 16-17 (2d Cir. 1979),
341
4
ck
RG eed Pn Wy : Te By"
er ASL Piet ae” 2 a eee, eo La ia iste, Ret Gee ee a +S" af _» ee” at Cee ee MS are
cert. denied, 444 U.S. 1082 (1980). The evidence of
Sweeney’s knowledge of the fraudulent scheme and that
the obstruction of the Spain trial was in furtherance of
the scheme is overwhelming.
Sweeney’s claim that the trial court abused its discre-
tion in denying him a severance of his trial from that of
Cunningham must likewise be rejected. Since Sweeney
participated in a series of acts that were part of the
conspiracy, joinder was permissible under Fed. R. Crim.
P. 8(b); United States v. Bernstein, 533 F.2d 775, 789 (2d
Cir.), cert. denied, 429 U.S. 998 (1976). A trial court’s
denial of a severance sought under Fed. R. Crim. P. 14,
which is addressed to that court’s discretion, Opper v.
United States, 348 U.S. 84, 95 (1954), will be reversed
only upon the appellant’s successfully assuming the heavy
burden of showing that he suffered substantial prejudice
due to the joint trial. United States v. Carson, 702 F.2d
351, 366 (2d Cir.), cert. denied, 103 S.Ct. 2456 (1983);
United States v. Losada, 674 F.2d 167, 171 (2d Cir.), cert.
denied, 457 U.S. 1125 (1982); United States v. Soto-
mayor, 592 F.2d 1219, 1228 (2d Cir.), cert. denied, 442
U.S. 919 (1979). No such showing is made here.
Sweeney’s claim that he was prejudiced by the “spill-
over” effect of evidence introduced with respect to Cun-
ningham, including the testimony of Spain and
Cioccolanti, is unsupportable since all of the evidence
would have been admissible against him in a separate trial
of him alone as a member of a single conspiracy. Nor are
we dealing here with a trial in which there was a strong
likelihood of confusion because of the number of counts,
the number of defendants, see, e.g., Katteakos v. United
States, supra, 328 U.S. at 766 (32 defendants), or the
length of the proceedings. There were only two defen-
342
%
4
dants and the jury was quite capable of giving individual
consideration to each, see, e.g., United States v. Carson,
supra, 702 F.2d at 362 (four defendants not enough to
confuse jury), as it demonstrated by acquitting Sweeney
on Count 8 (false statement to grand jury on April 5,
1979). Lastly, Judge Brieant protected Sweeney against
any possible confusion by carefully instructing the jury to
consider separately the charges and evidence against each
defendant. Thus Sweeney received a fair trial and his
conviction must be affirmed.
The Government’s Cross-Appeal
In ruling upon Cunningham’s post-trial motion under
Fed. R. Crim. P. 29(c) to set aside guilty verdicts and
enter a judgment of acquittal on Counts 2 (1974 tax
evasion), 4 and 5 (1975 tax evasion and filing of false
return) the trial judge was required to view the evidence in
the light most favorable to the government, and to
determine
“whether upon the evidence, giving full play to the
right of the jury to determine credibility, weigh the
evidence, and draw justifiable inferences of fact, a
reasonable mind might fairly conclude guilt beyond a
reasonable doubt. If he concludes that upon the
evidence there must be such a doubt in a reasonable
mind, he must grant the motion. . . . If he con-
cludes that either of the two results, a reasonable
doubt or no reasonable doubt, is fairly possible, he
must let the jury decide the matter.” United States v.
Rodriguez, 706 F.2d 31, 41 (2d Cir. 1983) (quoting
United States v. Lieberman, 637 F.2d 95, 104-05 (2d
Cir. 1980)).
343
Similarly, upon our review of the district court’s decision
we apply the same standard, without need for deference
to the trial judge’s decision. See United States v. Artuso,
618 F.2d 192, 195 (2d Cir.), cert. denied, 449 U.S. 861
(1980). Applying this test to the present case we conclude
that the district court did not follow these principles and
that his decision granting the motion must be reversed.
The district court directed entry of a post-verdict judg-
ment of acquittal as to Count 2, which charged Cun-
ningham with evading taxes for 1974, on the ground that
the amount evaded, which it calculated at $2,617 rather
than the $5,057 asserted by the government, was not
“substantial” within the meaning of that term as used in
26 U.S.C. § 7201. However, “substantiality” is a question
for the jury. United States v. Siragusa, 450 F.2d 592, 595
(2d Cir. 1971), cert. denied, 405 U.S. 974 (1972). The jury
in this case could reasonably have found on the evidence
before it that the tax evaded by Cunningham was substan-
tial, and indeed it did so find. The evidence was over-
whelming that Cunningham had intentionally failed to
report $9,436 of taxable 1974 income. An expert witness
called by the government testified that following the same
methods used by Cunningham to calculate his 1974 tax
liability the additional income would have increased his
liability by $5,057 for that year. No contrary testimony
was Offered by Cunningham for the year 1974. Neverthe-
less, the trial judge, applying post-trial tax arguments not
addressed to the jury, in effect decided that income
averaging based on Cunningham’s receipt of $12,500 in
an earlier year should not have been used even though
Cunningham’s counsel had stated at trial that he did not
dispute its use. Using his own method, the trial judge
concluded that the amount of tax evaded would thereby
344
3la
be reduced by $1,440.* The judge further concluded that
Cunningham had been entitled to an additional 1974 tax
credit of $1,660 by reason of an imputed interest deduc-
tion that Cunningham had neither claimed nor made the
subject of proof at trial. In substituting his methodology
and calculations, based on assertions not before the jury,
the trial judge erred. Since a reasonable jury could, on the
evidence it found to be credible, have determined that the
1974 tax evaded was $5,057 the trial court was bound by
the jury’s verdict.
Even if the amount evaded is assumed to have been the
$2,617 found by the court, it was error on this record to
conclude as a matter of law that it was insubstantial.’
While it is true that at some point a court may as a matter
of law find that the liability avoided was insubstantial,
the threshold is a low one, and the court must look to all
the circumstances. As we stated in United States v.
Nunan, 236 F.2d 576, 585 (2d Cir. 1956), cert. denied, 353
U.S. 912 (1957):
“But [substantially] is not measured in terms of gross
or net income nor by any particular percentage of the
8 The government contends that the trial judge's calculations are
erroneous and, even accepting his premise that income averaging
should not be applied, the reduction of the deficiency would be $52
instead of the $1,440 figure found by the court. Since the judge's
determination of insubstantiality must be reversed on other grounds we
need not resolve this issue. °
years, respectively); United States v. Gross, 286 F.2d $9 (2d Cir.), cert.
32a
tax shown to be due and payable. All the attendant
circumstances must be taken into consideration
. . .. [A] few thousand dollars of omissions of
taxable income may in a given case warrant criminal
prosecution, depending on the circumstances of the
particular case. Otherwise the rich and powerful
could evade the income tax law with impunity.”
Among the other relevant circumstances in the present
case were the existence of a scheme under which portions
of Cunningham’s income for two years were not re-
ported, the prolonged attempt to cover up the income, the
making of false statements to IRS agents and the U.S.
Attorney’s office, and perjury before a grand jury and
the court. Yet Judge Brieant concluded that the $2,617
was not substantial solely by comparing it to Cun-
ningham’s total tax due of $33,539. Such a ruling cannot
stand in light of Nunan.
The district judge’s decision setting aside the jury’s
guilty verdict on Counts 4 and 5, which alleged tax
evasion and filing of a false tax return by Cunningham
for the year 1975, is likewise erroneous. The judge de-
cided that although “[t]he proof was more than adequate
to show a conspiracy to evade income taxes due from
Cunningham for 1974 and 1975” a jury was nevertheless
obligated to have a reasonable doubt as to whether
Cunningham continued in October 1976, when he filed
his 1975 return, intentionally to omit any taxable income.
Thus, in effect the judge found that an intent to evade
existed in 1974 and 1975 but that it must have been
abandoned by October 1976.
The court’s decision that a reasonable doubt must
necessarily exist was based on Cunningham’s knowledge
f
ii an et Pee ee ai —
33a
by October 1976 that he was already under IRS investiga-
tion, which would in Judge Brieant’s view lead him to
make a “scrupulous effort” to be careful in preparation
of his 1975 return, and on Cunningham’s consultation of
a tax attorney (Barry London) whom he referred to
Sweeney for information about the $19,932 paid by him
to Cunningham. With respect to the latter, the trial judge
concluded that the failure to report the $13,870 “loan”
was attributable to error or wrongdoing on Sweeney’s
part.
Here again, however, the jury had evidence before it
entitling it to find that Cunningham intentionally filed a
false 1975 return even though he knew he was under
investigation. First, Cunningham. lied to his tax attorney
about the source of $8,000 of the income reported by
him. Secondly, Sweeney had all along cooperated with
Cunningham to evade payment of income taxes and was
not likely, in view of his careful pencilled accounting
notes, to have mistaken the $13,870 payment for a loan
instead of a sharing of court-appointment legal fees.
Given this evidence, including the credibility of Cun-
ningham and Sweeney as witnesses, the jury could have
reasonably found beyond a reasonable doubt that, while
Cunningham felt forced by the pending investigation to
report the $6,062 tuition payments made out of the
escrow account as income, he and Sweeney were willing
to take a chance on evading taxes on the $13,870 by
labelling the paymen. a loan. Under these circumstances
the trial judge was not entitled to set aside the guilty
verdict simply because he would have reached a different
result if he had been the fact-finder. See United States v.
Rodriguez, supra, 706 F.2d at 41.
347
7
4
ote vt ‘ ~ hele
: ; 7 _— . mia _ tt Yon. 4."
34a
The judgments of conviction are affirmed. The order
and judgments setting aside the jury’s guilty verdicts on
Counts 2, 4 and 5 are reversed, and the case is remanded
for sentencing and judgments of conviction on those
counts.
35a
APPENDIX B
At a stated term of the United States Court of Appeals,
in and for the Second Circuit, held at the United States
Courthouse, in the City of New York, on the 17th day of
January, one thousand nine hundred and eighty-four.
IN THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT.
Nos. 83-1046, 83-1052, 82-1402
UNITED STATES OF AMERICA,
Appellee-Cross-Appellant,
Vv.
PATRICK J. CUNNINGHAM and JOHN J. SWEENEY,
Defendants-A ppellants-Cross-A ppellees.
A petition for rehearing containing a suggestion that
the action be reheard in banc having been filed herein
by counsel for the appellant-cross-appellee, Patrick J.
Cunningham,
Upon consideration by the panel that heard the appeal,
it is
Ordered that said petition for rehearing is DENIED.
It is further noted that the suggestion for rehearing in
banc has been transmitted to the judges of the court in
regular active service and to any other judge on the panel
that heard the appeal and that no such judge has requested
that a vote be taken thereon.
FILED: Jan. 17, 1984
A. Daniel Fusaro, Clerk
/s/_ Francis X. Gindhart
by FRANCIS X. GINDHART,
CHIEF DEPUTY CLERK
36a
APPENDIX C
CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED
U.S. CONST., ART. ITI, § 2
ARTICLE III
Section 2. [1] The judicial Power shall extend to all
Cases, in Law and Equity, arising under this Constitution,
the Laws of the United States, and Treaties made, or which
shall be made, under their Authority;—to all Cases affecting
Ambassadors, other public Ministers and Consuls;—to all
Cases of admiralty and maritime Jurisdiction;—to Contro-
versies to which the United States shall be a Party;—to
Controversies between two or more States;—between a
State and Citizens of another State;—between Citizens of
different States;— between Citizens of the same State claim-
ing Lands under the Grants of different States, and between
a State, or the Citizens thereof, and foreign States, Citizens
or Subjects.
RULE 42(b)
Rule 42. Criminal Contempt
(b) Disposition Upon Notice and Hearing. A crimi-
nal contempt except as provided in subdivision (a) of this
rule shall be prosecuted on notice. The notice shall state the
time and place of hearing, allowing a reasonable time for
the preparation of the defense, and shall state the essential
facts constituting the criminal contempt charged and
describe it as such. The notice shall be given orally by the
judge in open court in the presence of the defendant or, on
application of the United States attorney or of an attorney
appointed by the court for that purpose, by an order to show
cause or an order of arrest. The defendant is entitled to a
trial by jury in any case in which an act of Congress so
provides. He is entitled to admission to bail as provided in
these rules. If the contempt charged involves disrespect to
or criticism of a judge, that judge is disqualified from pre-
siding at the trial or hearing except with the defendant’s
consent. Upon a verdict or finding of guilt the court shall
enter an order fixing the punishment.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.