Respondents Brief — Bank of Nova Scotia v. United States

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In the Supreme Court of the Wnited States

OcTOBER TERM, 1987

THE BANK OF NOVA SCOTIA, PETITIONER

Vv.

UNITED STATES OF AMERICA

WILLIAM A. KILPATRICK, ET AL., PETITIONERS

UNITED STATES OF AMERICA

ON WRITS OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

BRIEF FOR THE UNITED STATES

CHARLES FRIED

Solicitor General

WILLIAM S. ROSE, JR.

Assistant Attorney General

WILLIAM C. BRYSON

Deputy Solicitor General

ROBERT H. KLONOFF

Assistant to the Solicitor General

GARY R. ALLEN

ROBERT E. LINDSAY

ALAN HECHTKOPF

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

on —_—_—— =e

OLESTION PRESENTED

Whether a district court may dismiss an indictment for

misconduct in the course of a grand jury investigation,

where the misconduct has not prejudiced the defendants.

= a

PARTIES TO THE PROCEEDINGS

In addition to the parties named in the caption, the

following individuals were appellees in the court of ap-

peals and are petitioners here: Declan J. O’Donnell and

Sheila C. Lerner. Michael Alberga and C.S. Gill were also

appellees in the court of appeals but are not petitioners

here.

TABLE OF CONTENTS

Opimons below. __._.

Jurisdiction |

Statute and rules invol\ ed

Statement

Summary of argument. ................ {2 se

Argument:

An indictment may not be dismissed for grand jury

abuse in the absence of prejudice to the defendant

A facially valid indictment is ordinarily immune

from challenge based on alleged defects in the

prejudice would conflict with 28 U.S.C. 211]

and Fed. R. Crim. P.52(a) ss. ones

This Court’s decisions compel the conclusion

that an indictment may not be dismissed for pro-

cedural irregularities in the grand jury in the

absence of prejudice ....... a

Dismissal of an indictment for procedural

defects in the grand jury that do not affect the

grand jury's charging decision would be unsound

asamatter of policy........................

Dismissal of the indictment wouid be inappropriate

in this case even if an indictment may be dismissed

without a showing of prejudice......

A be wets —

Use of the term “agents of the grand jury”.

Presentation of summaries of evidence ____.

Mistreatment of an expert witness

Granting informal immunity eee

Calling witnesses who asserted their privilege

against compulsory self-incrimination

Violations of Rule 6(d)

Alleged use of grand jury to gather intorma-

tion tor civil purposes |

dil)

4 NY Nw WN

Contents — Continued: Page

8. Disclosure of the identity of targets of the in-

WOUMITIDD onc ccc ccscccccccccccescvcess 46

9. Imposition of secrecy obligations on two

EE cccetinteccvecesssvescascceuses 47

iv ccscctsebieiieueensavenceeens 640006000" 51

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TABLE OF AUTHORITIES

Atterbury, In re, 323 F.2d 726 (6th Cir. 1963) ........... 30

Baker v. United States, 389 F.2d 629 (7th Cir.), cert.

denied, 393 U.S. 875 (1968) .... 2... 6. ccc eee ee 41

Beavers v. Henkel, 194 U.S. 73 (1904) ... 2... 60. eee 9

Bracy v. United States, 435 U.S. 1301 (1978) ........... 9-10

Chambers v. Maroney, 399 U.S. 42 (1970) ............. 17

Chapman v. California, 386 U.S. 18 (1967) .......... 17, 18, 21

Coleman v. Alabama, 399 U.S. 1 (1970) ..... 2.6.2.6... 17

Costello v. United States, 350 U.S. 359 (1956) ......... 8, 9, 10,

11, 12, 22, 23, 25, 32

Delaware v. Van Arsdall, 475 U.S. 673 (1986) .......... 17, 28

Ewing v. United States, 386 F.2d 10 (9h Cir. 1967),

cert. denied, 390 U.S. 991 (1968) ....... 0.6.66 e eee 40

Grand Jury Proceedings (Mills), In re, 686 F.2d 135

(3d Cir.), cert. denied, 459 U.S. 1020 (1982) ........... 30

Grand Jury Proceedings (Pavlick), In re, 680 F.2d 1026

CES, TE oo cecccbeeseeccdcscencndecoesccoses 40

Greer v. Miller, No. 85-2064 (June 26, 1987) ........... 37

Harrington v. California, 395 U.S. 250 (1969) .......... 17

Holland v. United States, 348 U.S. 121 (1954) .......... 40

Kotteakos v. United States, 328 U.S. 750 (1946) ......... 21

Lawn v. United States, 355 U.S. 339 (1958) ............ 9, 49

Massiah v. United States, 377 U.S. 201 (1964) .......... 49

Milton v. Wainwright, 407 U.S. 371 (1972) ............. 17

Moore v. Illinois, 434 U.S. 220 (1977) ..... 2.0. oe ee 17

Namet v. United States, 373 U.S. 179 (1963) ............ 41

Palermo v. United States, 360 U.S. 343 (1959) .......... 12

Perlin, In re, 589 F.2d 260 (7th Cir. 1978) .............. 30

Pope v. Illinois, No. 85-1973 (May 4, 1987) ............ 17

Richardson v. Marsh, No. 85-1433 (Apr. 21, 1987) ...... 37

Cases — Continued: Page

Rose v. Clark, 478 U.S. 570 (1986) .............. 17, 18, 19, 20

Rushen v. Spain, 464 U.S. 114 (1983) ................. 17

Sealed Case, In re, 676 F.2d 793 (D.C. Cir. 1982) ....... 49

Spies v. United States, 317 U.S. 492 (1943) ............. 40

Strickland v. Washington, 466 U.S. 668 (1984) ......... 17

Thomas v. Arn, 474 U.S. 140 (1985) ............0...... 12, 13

United States v. Anderson, 577 F. Supp. 223 (D. Wyo.

1983), rev'd, 778 F.2d 602 (10th Cir. 1985) ........... 38

United States v. Arnold, 773 F.2d 823 (7th Cir. 1985) .... 40

United States v. Baggot, 463 U.S. 476 (1983) ........... 44, 45

United States v. Bagley, 473 U.S. 667 (1985) ............ 17

United States v. Baker, 611 F.2d 964 (4th Cir. 1979) ..... 40

United States v. Blitz, 533 F.2d 1329 (2d Cir.), cert.

denied, 429 U.S. 819 (1976) .... 2... cece eee 42

United States v. Brown, 602 F.2d 1073 (2d Cir.), cert.

Ge Gs PTE occ eve cevesccccecccccess 27

United States v. Bump, 605 F.2d 548 (10th Cir. 1979) .... 49

United States v. Calandra, 414 U.S. 338 (1974) ......... 9, 10,

32, 49

United States v. Cefalu, 338 F.2d 582 (7th Cir. 1964) .... 39

United States v. Chanen, 549 F.2d 1306 (9th Cir.), cert.

BE a 45

United States v. Claiborne, 765 F.2d 784 (9th Cir. 1985),

cert. denied, 475 U.S. 1120 (1986) .................. 30

United States v. Cosby, 601 F.2d 754 (Sth Cir. 1979) ..... 30

United States v. Crow Dog, $32 F.2d 1182 (8th Cir.

1976), cert. denied, 430 U.S. 929(1977) .............. 22

United States v. DeSapio, 299 F. Supp. 436 (S.D.N.Y.

RIE REA aS p e y ey ee e 39

United States v. Dozier, 672 F.2d $31 (Sth Cir.), cert.

I oo vnc dccccccccvceceses: 24

United States v. Drake, 494 F.2d 648 (7th Cir. 1974) ..... 37

United States v. Estepa, 471 F.2d 1132 (2d Cir. 1972) .... 22

United States v. Fields, $92 F.2d 638 (2d Cir. 1978),

cert. denied, 442 U.S. 917 (1979) ................... 27

United States v. Friedman, 445 F.2d 1076 (9th Cir.),

rrr rrr eee 39

United States v. Griffith, 756 F.2d 1244 (6th Cir.), cert.

Ss ee PO ED 0 6 Pe a vcd cd voce seeecscsce: 22

Vi Vil

Cases — Continued: Page Cases — Continued: Page

United States vy. Gullett, 713 F.2d 1203 (6th Cir. 1983), United States v. Rogers, 751 F.2d 1074 (9th Cir. 1985)... 22, 49

cert. denied, 464 U.S. 1069 (1984) ....... 2... 0.068. 38 United States v. Sears, Roebuck & Co., 719 F.2d 1386

United States v. Hasting, 461 U.S. 499 (1983) ......... 7, 8, 12, (9th Cir. 1983), cert. denied, 465 U.S. 1079 (1984)... .. 36

16, 17, 21, 24 | United States v. Sells Engineering, Inc., 463 U.S. 418

United States v. Hawkins, 765 F.2d 1482 (lith Cir. SER ap ie ta ES epee eee 31, 36, 44, 45

1985), cert. denied, 474 U.S. 1103 (1986) ...... ...... 36 United States v. Serubo, 604 F.2d 807 (3d Cir. 1979) .... 27

United States v. Jacobs, §3\ F.2d 87 (2d Cir.), vacated, United States v. Solomon, 679 F.2d 1246 (8th Cir.

429 U.S. 909, on remand, 547 F.2d 772 (2d Cir. 1976), SE Nae kgunns enbuwe hid asian dues adul ina sks ss 22

cert. dismissed, 436 U.S. 31 (1978) ............0...... 22 United States v. Stanford, 589 F.2d 285 (7th Cir. 1978),

United States v. Jones, 696 F.2d 1069 (4th Cir. 1982) .... 49 cert. denied, 440 U.S. 983 (1979) ................... 3-31

United States v. Jones, 766 F.2d 994 (6th Cir.), cert. United States v. Valenzuela-Bernal, 458 U.S. 858

denied, 474 U.S. 1006 (1985)... 2. 2 eee 30 NG ite aki cede Ties eek ees a dbaenh ox 18

United States v. Kelly, $43 F. Supp. 1303, supp. opinion, United States v. Widgery, 778 F.2d 325 (7th Cir. 1985) .. 15

550 F. Supp. 901 (D. Mass. 1982)... . 2... 6... eee, 25 United States v. Winter, 663 F.2d 1120 (ist Cir. 1981),

United States v. Lane, 474 U.S. 438 (1986) .......... 13, 17, 21 cert. denied, 460 U.S. 1011 (1983) .................. 38

United States v. Leighton, 265 F. Supp. 27 (S.D.N.Y. United States v. Wolfson, 405 F.2d 779 (2d Cir. 1968),

SD 6 a) ool eee hee ieee dee ines tees 39, 40 cert. denied, 394 U.S. 946 (1969) ................... WwW

United States v. Librach, 536 F.2d 1228 (8th Cir.), cert. United States v. Wolfson, 558 F.2d 59 (2d Cir. 1977) .... 49

denied, 429 U.S. 939 (1976) .. 1... ccc eee eee 38 United States v. Zirpolo, 288 F. Supp. 993 (D.N.J.

United States v. Mara, 410 U.S. 19(1973) ... 0.0... 6.6... 30 Py Sualsdbducanesesseenbeeieded \ -ceekhevidews 9

United States v. Martino, 825 F.2d 754 (3d Cir. 1987) .... 22, 28 Vasquez v. Hillery, 474 U.S. 254 (1986)... ........... 18, 20

United States v. McKenzie, 678 F.2d 629 (Sth Cir.), cert. Weatherford v. Bursey, 429 U.S. 545 (1977) ........... 18

CE Gs CE h ccccceccndcccecceccess 21-22 Young v. United States ex rel. Vuitton et Fils S.A.,

United States v. Mechanik, 475 U.S. 66 (1986) .......... 14, 19, I os ccc ccceceeeaseses 18

20, 22-23, 42

United States vy. Mitchell, 777 F.2d 248 (Sth Cir. 1985), Constitution, statutes and rules:

cert. denied, 476 U.S. 1184 (1986) .................. 36

United States v. Morrison, 449 U.S. 361 (1981) ......... 8, 16 U.S. Const.:

United States v. Murphy, 768 F.2d 1518 (7th Cir. 1985), I re ns DoT ag ee 16, 17, 19, 21

cert. denied, 475 U.S. 1012 (1986) ...............00. 38 Amend. V ...... sreee eres eee eres eens 11, 16, 39, 40, 41

United States v. Nathan, 816 F.2d 230 (6th Cir. 1987).... 22 | Grand Jury Clause .......-..- 000s eee eseees 10

United States v. National City Lines, Inc., 334 U.S. $73 Amend. Vi sted i ysln ah gad hea thai ald diate he 4, 16, 17, 50

EEE LISLE 12 TEED CUMNS «...- + 2-20 2e eer eeees 17, 19

United States v. Nealy, 729 F.2d 961 (4th Cir. 1984) ..... 35 Speedy Trial Act of 1974, 18 U.S.C. 3162(ay2) ......... 25

United States v. O'Keefe, 825 F.2d 314 (11th Cir. 1987) .. 22 pa a A Te Fe

United States v. Owen, 580 F.2d 365 (9th Cir. 1978) ..... 22 .

Unised States v. Peas, 008 F.24 723 (0th Cie. 1987) 18 US.C. ee es sw ananaducai 13

cert. denied, No. 86-6848 (June 8, 1987) ............. 36 IB USC. WBA eee eee . 2

United States v. Payner, 447 U.S. 727 (1980) ........... 13, 21 Ps MF nec dcunsucnencbececeocses

Vill

Statutes — Continued: Page

EE ng occ cbc bee eEsseeeseseneneeseaies 4

8. cue eeececuveseuneesoseecess 4

i CD... <ccopasscencessuscoseceveteenss 2

i PD cn . . . ceceseseeeesseseeséoduewewse 2

Se CGD TE oc ccccccccccescsccesoscccces 13

i oe ce taeeeeteenuetenes 2,8, 13,

14, 18, 22, la

rr re... cccuugeneerseeeesspeecenieess 24

Fed. R. Crim. P.:

i oe eee eeeeennceshosunsiet 14, 19, 44

DEED vc ccacecennseseeqeessocovessuenseeuse 10

PED . cndpanccescesesrocvesccesqvunsssnent 10

Rule 6(d) .......... = ici casnereh oi toes i sienna passim, \a

ED sc cccccccccccccccocccecscesesesesooees 2, 3, 4,

8, 21, 46, 47, la-4a

GEE . cc cveccccecccceccceecsensess 24, 46, 48, 2a

ip GHAR... cc ccccccccccccccccces 31, 42, 44, 2a

| «= errr rrr Ts 45, 3a

Dc cuthbocsecdocstcaceessnsncssovceeess 10

SEED cccccecceesecssesnbecessocoesebseseens 17

PEED .. . ccccccdsdsecscceessceovococoseoses 2, 8, 13,

14, 15, 20, 22, 4a

Miscellaneous:

B. Gershman, Prosecutorial Misconduct (1987) ......... 49

H.R. Rep. 304, 80th Cong., Ist Sess. (1947) ............ 13

H.R. Rep. 308, 80th Cong., Ist Sess. (1947) ........... 13

H.R. Rep. 352, 81st Cong., Ist Sess. (1949) ............ 13

Office of Professional Responsibility, Ann. Rep. to Att'y

BED ccicicdccccdeteccccesscns cccseeseeesses 24

R. Traynor, The Riddle of Harmless Error (1970) ....... 23

U.S. Dep't of Justice, DOJ Order 1752.1A, Discipline

and Adverse Actions (Apr. 27, 1981) ..............-. 24

2 aesthes—e

In the Supreme Court of the Gnited States

OCTOBER TERM, 1987

No. 87-578

THE BANK OF NOVA SCOTIA, PETITIONER

UNITED STATES OF AMERICA

No. 87-602

WILLIAM A. KILPATRICK, ET AL., PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON WRITS OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

BRIEF FOR THE UNITED STATES

The opinion of the court of appeals (Pet. App.

Al-A4l)' is reported at 821 F.2d 1456. The opinions of

the district court (Pet. App. C1-CS55, DI-D35) are

reported at 594 F. Supp. 1324 and 575 F. Supp. 325.

' “Pet. App.” refers to the appendix to the petition in No. 87-578;

“K. Tr.” refers to the transcript of the hearing before Judge Kane; “W.

Tr.” refers to the transcript of the hearing before Judge Winner.

(1)

JURISDICTION

The judgment of the court of appeals was entered on

June 18, 1987. Petitions for rehearing were denied on

August 19, 1987 (Pet. App. B1-B3). The petition for a writ

of certiorari in No. 87-578 was filed on October 9, 1987,

and the petition in No. 87-602 was filed on October 13,

1987. Both petitions were granted on January 11, 1988,

limited to Question One presented by each petition. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

STATUTE AND RULES INVOLVED

28 U.S.C. 2111 and Rules 6(d), 6(e), and 52(a) of the

Federal Rules of Criminal Procedure are set out in an ap-

pendix to this brief.

STATEMENT

1. This case stems from a 20-month investigation con-

ducted by two successive grand juries. Two attorneys from

the Tax Division of the Department of Justice assisted the

grand juries: The attorneys, in turn, were assisted by per-

sonnel from the Internal Revenue Service (IRS). In

September 1982, a 27-count indictment was returned

charging petitioners and others (in various combinations)

with conspiracy, in violation of 18 U.S.C. 371; willfully

aiding and assisting in the preparation and presentation of

false tax returns, in violation of 26 U.S.C. 7206(2); will-

fully making and subscribing false individual tax returns,

in violation of 26 U.S.C. 7206(1); mail fraud, in violation

of 18 U.S.C. 1341; and obstruction of justice, in violation

of 18 U.S.C. 1503.

The district court initially dismissed all but one of the

counts for failure to state an offense. Petitioner K:lpatrick

went to trial and was convicted on the one remaining

count (obstruction of justice). The government appealed

the dismissal of the other 26 counts. Before argument, the

court of appeals granted a defense motion to remand the

case to the district court for the purpose of determining

whether prosecutorial misconduct during the grand jury

proceedings constituted another basis for dismissal. On re-

mand, the district judge granted a new trial to petitioner

Kilpatrick on the obstruction of justice count and ordered

disclosure of the grand jury transcripts. Because he was

retiring from the bench, that district judge did not decide

whether the indictment should be dismissed for prosecu-

torial misconduct; instead, the cases were reassigned to

another judge. Pet. App. A2 & n.2, D26-D33.

The newly assigned judge, after conducting a hearing,

dismissed all 27 counts of the indictment (Pet. App. A2,

C54-C55). The court held that the government had vio-

lated Fed. R. Crim. P. 6(e) by disclosing grand jury

materials to IRS employees having civil tax enforcement

responsibilities (Pet. App. C37-C40), by failing to provide

prompt notice to the court of disclosures of grand jury

materials (id. at C38), by disclosing to potential witnesses

the names of targets of the investigation (id. at C40-C4]1),

and by instructing two grand jury witnesses that they were

not to reveal the fact that they had testified before the

grand jury or the substance of their testimony (id. at C41).

In addition, the court held that the government had

violated Fed. R. Crim. P. 6(d) because IRS agents made

joint appearances before the grand jury for the purpose of

reading transcripts to the jurors (Pet. App. C7-C8,

C35-C 3).

The court also fotind that the prosecutors engaged in

other forms of improper conduct in the course of the

grand jury investigation. The court found that one of the

prosecutors was guilty of misconduct when he argued with

an expert witness, during a grand jury recess, after the

witness had given testimony favorable to the defense (Pet.

App. C33-C34). In addition, the court held that the

government viclated the witness immunity statute (18

U.S.C. 6002, 6003) by the use of “pocket immunity” or

“letters of assurance” (Pet. App. C44-C46). The court also

found that the government presented “questionable hear-

say” to the grand jury (id. at C47), that it improperly

called several witnesses for the sole purpose of having

them assert their privilege against compelled self-

incrimination (id. at C46-C47), and that it violated the

Sixth Amendment by conducting post-indictment inter-

views of several high-level employees of the Bank of Nova

Scotia without notifying counsel for the Bank (id. at

C47-C49). The court also found that the independence of

the grand jury was compromised because IRS agents were

sworn as “agent(s] of the grand jury” (id. at C3-C8), and it

found that one of the agents gave an inaccurate summary

of evidence obtained from other witnesses (id. at

C25-C30).

The district court held that the indictment should be

dismissed because of the Rule 6(d) and (e) violations and

because of the “totality of the circumstances” surrounding

the grand jury investigation (Pet. App. C54-C55). The

court found that the conduct of the government was prej-

udicial to the defendants because the grand jury “was con-

verted into litthe more than a rubber stamp” (id. at

C53-C54). In addition, the court found that, wholly apart

from any prejudice, dismissal was appropriate as an exer-

cise of the court’s “supervisory authority” (id. at C53).

2. The court of appeals reversed the order of dismissal

and remanded the case with directions to reinstate all the

counts of the indictment (Pet. App. Al-A33). After first

concluding that the indictment was legally sufficient (id. at

A3-All), the court of appeals reviewed in detail the

various grand jury violations found by the district court.

The court stated that, based on its review of the record, it

was “not persuaded by the several reasons given for the

dismissal” (id. at A21). The court noted that the use of

summaries of evidence is “permissible and often helpful,

especially in complicated cases such as this” (ibid.); it

stated that the use of “informal immunity” was “entirely

proper” and that, in any event, “the defendants have failed

to show how the use of informal immunity prejudiced the

grand jury” (id. at A22 (footnote and citation omitted));

and it held that the government’s post-indictment ques-

tioning of bank employees “could not possibly have af-

fected the grand jury’s charging decision” (ibid.). The

court also held that the presence of more than one IRS

agent in the grand jury room for the purpose of reading

transcripts, while it violated Rule 6(d), did not warrant

dismissal of the indictment because it did not prejudice the

defendants (Pet. App. A22-A23).?

In addition, the court of appeals found no support for

the district court’s conclusion that government attorneys

“ ‘relinquished to the IRS their responsibility to determine

the persons to whom disclosure would be made’ ” (Pet.

App. A23 (quoting district court opinion)) or its conclu-

sion that IRS agents “manipulated the grand jury” in order

to “obtain materials for [use in] civil litigation” (ibid.).

The court also noted that, “{a}ssuming that [the] allega-

tion” of improper disclosure of grand jury materials to

civil IRS agents “finds support in the record,” the grand

jury’s independence was not “usurped in such a significant

way as to amount to grand jury abuse” (id. at A24 (citation

omitted)). In addition, the court observed that “[t}he aid

of IRS experts was essential to a complete understanding

of the case” and that “[t}he fact that some of the IRS per-

sonnel assigned to the grand jury investigation were from

? The court acknowledged the district court's finding that IRS

agents had convened grand jury sessions without government at-

torneys being present, but it held that the finding on that issue was

“not supported by the record” (Pet. App. A23 n.14).

the civil division is by itself not sufficient to show grand

jury abuse” (ibid.). The court cited the grand jury’s return

c* a multi-count indictment as “probative evidence that it

was not abused to obtain evidence for civil purposes” (id.

at A25 (footnote omitted)).

The court of appeals also held that the grand jury’s in-

dependent judgment was not impaired by the disclosure of

the identity of the targets of the investigation to various

potential witnesses or by the unauthorized instructions of

secrecy that were given to two witnesses at the time they

testified before the grand jury (Pet. App. A25). Regarding

the term “agents of the grand jury” that was applied to cer-

tain IRS agents, the court — without deciding whether the

use of that term was improper — found that its use did not

prejudice the defendants (id. at A25-A26). Similarly, the

court found dismissal of the indictment was not justified

on the ground that several witnesses who intended to in-

voke the privilege against compelled self-incrimination

were called before the grand jury. The court noted that the

witnesses’ expression of an intention to invoke the

privilege “cannot be transformed into a prohibition

against inquiry” and that “[o}nce the privilege was invoked

on the [rjecord, the prosecutors discontinued all question-

ing” (id. at A26-A27 (footnote omitted)). And the court

found that an incident in which one of the prosecutors

engaged in an argument with an expert witness during a

grand jury recess, while unjustifiable, did not affect the

grand jury’s ind¢ (id. at A27).

The court noted that a “presumption of regularity * * *

attaches to grand jury proceedings” (Pet. App. A27 (cita-

tion omitted)), and it found that petitioners had failed to

overcome that presumption. It observed that the grand

jury transcripts revealed “an active, independent, and

questioning grand jury, familiar with the record, one that

thoughtfully questioned, rather than submitted to state-

ments and suggestions of the Government attorneys” (id.

at A27-A28 & n.20 (citing numerous examples)). In addi-

tion, the court pointed out that, as reflected in the grand

jury transcripts, “the prosecutors frequently reminded the

grand jury of its independence and duty to make its own

assessment of the evidence introduced before it” (ibid.

(quoting examples)). The court noted that “[t}he district

court erred in focusing primarily on the propriety of the

Government's conduct rather than on possible interference

with the integrity and independence of the grand jury” (id.

at A27-A28).

Finally, the court of appeals held that “the drastic

remedy of dismissal of an indictment, whether premised

on due process or supervisory powers theories,” could not

be ordered in the absence of a “significant infringement on

the grand jury’s ability to exercise independent judgment”

(Pet. App. A32 (footnote omitted)). The court noted that,

in United States v. Hasting, 461 U.S. 499, 509 (1983), this

Court made clear that “errors that are harmless, including

most constitutional violations,” must be ignored (Pet.

App. A32 (footnote omitted); see also id. at A32 & n.23).

Judge Seymour dissented (Pet. App. A34-A41). In her

view, a showing of prejudice to the defense is not required

in order for a court to dismiss an indictment on the basis

of its supervisory powers (id. at A36-A40). She concluded

that on the facts of this case, “the district court was within

its discretion in exercising its supervisory power to protect

the integrity of the judicial process and to deter illegal con-

duct” (id. at A40-A41 (citing Hasting, 461 U.S. at 505)).

SUMMARY OF ARGUMENT

1. The issue in this case is whether a district court may

dismiss an indictment, in the exercise of its supervisory

powers, for alleged grand jury abuse that has not affected

the grand jury's charging decision. This question must be

answered in the negative for several reasons. First,

dismissal of an indictment in the absence of prejudice

would violate the rule that “[a}n indictment returned by a

legally constituted and unbiased grand jury, * * * if valid

on its face, is enough to call for a trial on the merits.”

Castello v. United States, 350 U.S. 359, 363 (1956). Sec-

ond, under 28 U.S.C. 2111 and Fed. R. Crim. P. 52(a),

federal courts are required to disregard errors that do not

affect substantial rights. A court cannot ignore those pro-

visions simply by invoking its supervisory authority.

Third, this Court has made clear in a variety of contexts

that errors that are nonprejudicial—even constitutional

errors—do not warrant dismissal of an indictment or

reversal of a conviction. See, e.g., United States v.

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

449 U.S. 361 (1981). The principles established in those

cases are fully applicable here, since the errors in this case,

for the most part, are simply procedural violations of Fed.

R. Crim. P. 6(d) and (ce). Finally, a rule authorizing

dismissal of an indictment in the absence of prejudice

would be unsound as a policy matter. Such a rule would

exact substantial costs, particularly when the indictment

stems from a lengthy and complex investigation. The ob-

jective of deterring governmental misconduct can be

achieved as effectively, if not more so, in other less drastic

ways, such as by disciplining the prosecutors who engaged

in the misconduct. Furthermore, absent a requirement of

prejudice, the courts would lack concrete standards to ap-

ply in deciding whether to dismiss an indictment. The

result of adopting petitioners’ position would be to pro-

voke pretrial litigation and produce disparate, ad hoc

judgments among courts as to when to dismiss indictments

because of grand jury abuse. In short, there is no sound

legal or policy basis to justify dismissing an indictment

where the defendant has not been prejudiced.

2. Even if dismissal of an indictment were appropriate

in the absence of prejudice, dismissal would not be war-

ranted here. To begin with, there is no evidence that the

misconduct found in this case is symptomatic of a

longstanding problem involving other prosecutors and

other cases. Thus, the exercise of supervisory authority is

not necessary to deter widespread abuse. Moreover, apart

from the isolated errors that were committed, the record

shows that the prosecutors in this case acted fairly and

professionally. The record further shows that the grand

jury was active and inquisitive, and that it retained its in-

dependent role throughout the investigation. Finally, as

we demonstrate below, petitioners greatly exaggerate the

seriousness of the alleged errors. In some instances the

claims of error involve conduct that is entirely lawful. In

the other instances, the errors constitute at worst over-

sights or exercises of poor judgment by the prosecutors,

rather than deliberate efforts to undermine the integrity of

the grand jury. In the context of a 20-month investigation,

those errors do not warrant the extreme sanction of

dismissal of the indictment.

ARGUMENT

1. AN INDICTMENT MAY NOT BE DISMISSED FOR

GRAND JURY ABUSE IN THE ABSENCE OF PREJU-

DICE TO THE DEFENDANT

A. A Facially Valid Indictment Is Ordinarily Immune From

- Challenge Based On Alleged Defects In The Grand Jury

Process

In Costello v. United States, 350 U.S. 359, 363 (1956),

this Court stated that “[a}]n indictment returned by a legal-

ly constituted and unbiased grand jury, like an information

drawn by the prosecutor, if valid on its face, is enough to

call for a trial on the merits.” See also United States v.

Calandra, 414 U.S. 338, 344-345 (1974); Lawn v. United

States, 355 U.S. 339, 349 (1958); Beavers v. Henkel, 194

U.S. 73, 84-85 (1904); Bracy v. United States, 435 U.S.

1301, 1303 (1978) (Rehnquist, Circuit Justice). The Court

in Costello held that the Grand Jury Clause of the Fifth

Amendment does not require that a defendant be per-

mitted to challenge an indictment on the ground that the

evidence before the grand jury was inadequate or in-

competent. In addition, the Court refused to invoke its

supervisory powers to dismiss the indictment on that

ground. To accept such arguments, the Court held, would

“run counter to the whole history of the grand jury institu-

tion, in which laymen conduct their inquiries unfettered by

technical rules” (350 U.S. at 364).

The Costello rule reflects two fundamental considera-

tions. The first is that the grand jury plays a discrete and

limited roje in the criminal justice system. A grand jury in-

vestigation is simply a preliminary step in the prosecution

process, a screening mechanism to determine whether

there is a sufficient basis to require the suspect to stand

trial before a petit jury. See Calandra, 414 U.S. at

343-344, 349.

In contrast to a criminal trial, with its array of pro-

cedural and evidentiary safeguards, a grand jury investiga-

tion is a much less formal proceeding, and it is not pat-

terned on the traditional adversary process. The grand

jury conducts its investigation ex parte and receives

evidence only from the prosecutor; neither the suspect nor

his attorney is entitled to appear before the grand jury to

testify or present evidence, to cross-examine witnesses, Or

otherwise to rebut the prosecutor’s presentation. See

Calandra, 414 U.S. at 343-344. The rules of evidence do

not apply, and the grand jury is free to consider hearsay or

other incompetent evidence as well as evidence that was il-

legally obtained. Jd. at 345; Costello, 350 U.S. at 363. The

standard governing the grand jury’s deliberations is prob-

able cause, not proof beyond a reasonable doubt, and an

indictment may be returned if a bare majority of the grand

jurors concur. See Fed. R. Crim. P. 6(a), (b)(2), (f). Thus,

in addition to its role as an investigative body, the grand

jury serves as a flexible and informal device to screen out,

at the beginning of the criminal process, those cases in

which further proceedings are unwarranted. The infor-

mality and limited role of the grand jury in addressing the

question of guilt distinguishes the grand jury process

sharply from the trial before the petit jury, at which the

issue of guilt or innocence is decided.

The second factor underlying the Costello rule is the

recognition that, in light of the nature and function of the

grand jury, it would impose significant and unjustified

costs on the criminal justice system to subject indictments

to searching pretrial scrutiny and allow them to be dis-

missed for procedural irregularity. Litigation over issues

of grand jury irregularities would entail a substantial ex-

penditure of prosecutorial and judicial resources and

would impede the prompt adjudication of the central

question in the case—the defendant’s guilt or innocence.

See Costello, 350 U.S. at 363. And to dismiss a prosecu-

tion and require that the government seek a new indict-

ment not only entails delay, but in complex cases such as

this one it can result in a costly and onerous process of re-

presenting a large quantity of evidence to a new grand

jury.

Because the Court in Costello had before it only the

question whether hearsay evidence alone could support a

grand jury indictment, the Court did not have to address

the question whether an indictment could ever be dis-

missed for flagrant abuses that so distorted the grand

jury’s role that the defendant was in effect deprived of his

Fifth Amendment right to be indicted by a grand jury. At

the least, however, Costello sets the framework for that in-

quiry. It makes clear that if dismissal of an indictment for

grand jury abuse is ever appropriate, it cannot be based on

mere technical errors or errors involving evidentiary insuf-

ficiency. It must be based on conduct that so thoroughly

distorts the grand jury process as to make it clear that the

grand jury has failed to perform its constitutional role.

Thus, under the principles of Costello, dismissal of an in-

dictment cannot be ordered in the absence of a clear show-

ing of prejudice to the defendants.

B. Dismissal Of An Indictment In The Absence Of Prejudice

Would Conflict With 28 U.S.C. 2111 and Fed. R. Crim. P.

52(a)

Petitioners argue that the district court was entitled to

dismiss the indictment in this case in the exercise of its

supervisory power and that the court of appeals should

have affirmed the dismissal order on that ground. To be

sure, federal courts are authorized, within limits, to “for-

mulate procedural rules not specifically required by the

Constitution or the Congress.” United States v. Hasting,

461 U.S. 499, 505 (1983). A court’s invocation of its super-

visory power, however, is subject to important limitations.

One of the most significant is that a court may not devise a

rule in the exercise of its supervisory authority if that rule

would conflict with some other binding provision of law.

As this Court recently stated, “[e]ven a sensible and effi-

cient use of the supervisory power * * * is invalid if it con-

flicts with constitutional or statutory provisions.” Thomas

v. Arn, 474 U.S. 140, 148 (1985). Accord Palermo v.

United States, 360 U.S. 343, 353 n.11 (1959) (“The power

of this Court to prescribe rules of procedure and evidence

for the federal courts exists only in the absence of a rele-

vant Act of Congress.”); United States v. National City

Lines, Inc., 334 U.S. 573, 589 (1948) (“[O]jur general

power to supervise the administration of justice in the

federal courts * * * does not extend to disregarding a

validly enacted and applicable statute or permitting depar-

ture from it.”). The principle that federal courts, acting

pursuant to their supervisory powers, may not override

congressional policies is obviously a sound one. A con-

—

trary principle “ ‘would confer on the judiciary discre-

tionary power to disregard the considered limitations of

the law it is charged with enforcing.’ ” Thomas, 474 U.S.

at 148 (quoting United States v. Payner, 447 U.S. 727, 737

(1980)).

Permitting a district court to dismiss an indictment in

the absence of prejudice —or an appellate court to affirm

such a dismissal— would be inconsistent with 28 U.S.C.

2111 and Fed. R. Crim. P. 52(a). Section 2111 provides

that an appellate court “shall give judgment * * * without

regard to errors or defects which do not affect the substan-

tial rights of the parties.” Rule 52(a) provides that “{a}ny

error, defect, irregularity or variance which does not af-

fect substantial rights shall be disregarded.” Both provi-

sions reflect Congress’s judgment that prejudice is an

essential prerequisite to granting relief in a criminal case.

> Although Rule 52(a) is a court rule and has never formally been

enacted by Congress, it is clear that Congress intended for that rule to

govern harmless error questions and that the rule states congressional

policy regarding the principles of harmless error. See United States v.

Lane, 474 U.S. 438, 454-455 (1986) (Brennan, J., concurring in part

and dissenting in part). Rule $2(a) was designed to take the place of

two statutory provisions, 18 U.S.C. (1946 ed.) 556 and 28 U.S.C.

(1946 ed.) 391. When Congress revised both the Criminal Code and

the Judicial Code several years later, it relied on Rule 52(a) as the

reason for repealing the two predecessor statutes so as to avoid redun-

dancy. See H.R. Rep. 304, 80th Cong., Ist Sess. 8 (1947) (“effect was

given to the changes [made by the Federal Rules of Criminal Pro-

cedure] by revising modified sections and repealing superseded provi-

sions”); H.R. Rep. 308, 80th Cong., Ist Sess. A236 (1947) (former

Section 391 is “superseded by Rule 61 of said Civil Rules, and Rule $2

of said Criminal Rules”). The following year, Congress enacted 28

U.S.C. 2111 to ensure that the harmless error provisions applicable to

the district courts through the Civil and Criminal Rules would be ap-

plicable to appellate courts as well. See H.R. Rep. 352, 81st Cong., Ist

Sess. 18 (1949). :

As this Court has made clear, 28 U.S.C. 2111 and Rule

$2(a) apply not only to errors occurring at trial, but also to

errors occurring before the grand jury. Thus, in United

States v. Mechanik, 475 U.S. 66, 71-72 (1986), the Court

stated that “[w]e see no reason not to apply [Rule 52(a)] to

‘errors, defects, irregularities, or variances’ occurring

before a grand jury just as we have applied it to such error

occurring in the criminal trial itself.” The Court held that

the defendant’s conviction at trial rendered harmless the

violation of Fed. R. Crim. P. 6(d) that occurred in that

case (475 U.S. at 72-73). In her concurring opinion in

Mechanik, Justice O’Connor, joined by Justices Brennan

and Blackmun, expressed complete agreement with the

majority’s ruling that Rule 52(a) applies to violations of

Rule 6.‘ In reaching that conclusion, Justice O'Connor

reviewed the history of Rule 52(a). She noted (475 U.S. at

75) that “{t}he Advisory Committee’s notes to Rule 52(a)

state that ‘[t}his rule is a restatement of existing law,’

which specifically provided for a harmless error analysis

of objections going to the validity of the indictment in 18

U.S.C. § 556 (1946 ed.).” She further pointed out (475

U.S. at 75) that “[t}he language of Rule 6 does not exempt

the Rule from a harmless error scrutiny” and that, to the

contrary, the commentary to Rule 6 expressly confirms

“the rulemakers’ intent that violations of Rule 6(d) would

be among those errors subject to harmless error review.”

Petitioners appear to recognize that a court may not ex-

ercise its supervisory power if to do so would violate Con-

gress’s intent. Thus, the Bank of Nova Scotia asserts that

* Justice O'Connor's disagreement with the majority was over

whether the Rule $2(a) inquiry should focus on the petit jurors’ verdict

or on the grand jury’s charging decision. In her view, the focus should

be on the grand jury's charging decision, regardless of whether there

has been a conviction (475 U.S. at 76).

“[t}here is no doubt that Congress intended that the

dismissal sanction be employed in appropriate situations

for misconduct before the grand jury” (Br. 37 n. 28). See

also id. at 36 (noting that “[dJismissal implements the

essential rules established by Congress and this Court for

the administration of proceedings before federal grand

juries”). Yet neither petitioners nor amici explain how the

position they urge —i.e., that dismissal of an indictment is

appropriate even in the absence of prejudice (Kilpatrick

Br. 7-26; Bank Br. 30-42; ACLU Br. 5-35; NACDL Br.

6-27)—can be reconciled with 28 U.S.C. 2111 and Rule

$2(a).

At bottom, petitioners’ argument consists of reasons

why, in their view, requiring proof of prejudice in connec-

tion with grand jury misconduct would be unwise as a

matter of policy. While we disagree with petitioners’

analysis of the policy issues (see pages 22-26, infra), the

flaw in their argument is that, as 28 U.S.C. 2111 and Rule

$2(a) demonstrate, Congress and this Court have already

weighed those policy considerations and have decided that

errors that have not prejudiced a defendant should not

provide a basis for dismissing an indictment. See generally

United States v. Widgery, 778 F.2d 325, 329 (7th Cir.

1985). A court — whether acting pursuant to its supervisory

authority or otherwise — has no authority to disregard that

determination.

C. This Court's Decisions Compe! The Conclusion That An In-

dictment May Not Be Dismissed For Procedural Irregularities

In The Grand Jury In The Absence Of Prejudice

Wholly apart from 28 U.S.C. 2111 and Fed. R. Crim.

P. 52(a), this case is controlled by numerous decisions of

this Court holding that nonprejudicial errors must be

disregarded. Those decisions, several of which require a

harmless error analysis even of constitutional violations,

cannot be meaningfully distinguished from the present

case.

For example, in United States v. Morrison, 449 U.S. 361

(1981), the Court held that an indictment should not be

dismissed because of a violation of the Sixth Amendment

right to counse! that did not result in prejudice to the de-

fendant. In Morrison, the court of appeals set aside the de-

fendant’s conviction and dismissed the indictment,

without any showing of prejudice, because government

agents had intentionally sought to undermine the defend-

ant’s relationship with her attorney. This Court reversed,

holding that because the violation had no effect on the

criminal proceedings, the remedy fashioned by the lower

court was inappropriate. The Court reasoned that “[t}he

remedy in the criminal proceeding is limited to denying the

prosecution the fruits of its transgression” (id. at 366). Ac-

cording to the Court, “absent demonstrable prejudice, or

substantial threat thereof, dismissal of the indictment is

plainiy inappropriate, even though the violation may have

been deliberate” (id. at 365 (footnote omitted)). The Court

further noted (id. at 365-366) that the requirement of prej-

udice applies not only in the Sixth Amendment context,

but also in the Fourth and Fifth Amendment contexts.’

In United States v. Hasting, supra, the Court held that a

court May not use its supervisory power to reverse a con-

viction based on a prosecutor’s improper comment on the

* The dissenting judge below stated that this Court in Morrison in-

dicated that “a showing of prejudice is not required when the record

reveals ‘a pattern of recurring violations’ ” (Pet. App. A40 (quoting

449 U.S. at 366 n.2)). In fact, the Court left that issue open; it simply

noted that “the record before us does not reveal a pattern of recurring

violations by investigative officers that might warrant the imposition

of a more extreme remedy in order to deter further lawlessness” (ibid.

(emphasis added)). In any event, that language strongly suggests that,

if dismissal is ever warranted in the absence of prejudice, there must

be a history of misconduct, not simply isolated violations in a single

case. As discussed on pages 26-27, infra, under that standard,

dismissal ts inappropriate in the present case.

defendant's failure to testify if the error is harmless. The

Court noted (461 U.S. at 506) that “[s]upervisory power to

reverse a conviction is not needed as a remedy when the

error to which it is addressed is harmless since, by defini-

tion, the conviction would have been obtained notwith-

standing the asserted error.” The Court stressed that it

“has consistently made clear that it is the duty of a review-

ing court to consider the trial record as a whole and to

ignore errors that are harmless, including most constitu-

tional violations” (id. at 509). In addition, the Court

observed that “deterrence is an inappropriate basis for

reversal” where the prosecutor’s violation is “attenuaied”

and “where means more narrowly tailored to deter objec-

tionable prosecutorial conduct are available,” such as

disciplinary proceedings or “publicly chastis[ing] the pros-

ecutor by identifying him in [a judicial] opinion” (id. at

506 & n.5).°

* This Court has held numerous other errors to be subject to

harmless error analysis. See, ¢.g., Pope v. Illinois, No. 85-1973 (May

4, 1987), slip op. 4-7 (erroneous jury instruction); Rose vy. Clark, 478

U.S. $70 (1986) (same); Delaware vy Van Arsdall, 475 U.S. 673,

68 1-684 (1986) (violation of Confrontation Clause), United States v.

Lane, supra (misjoinder under Fed. R. Crim. P. 8(b)), Rushen v.

Spain, 464 U.S. 114, 117-120 (1983) (right to be present at trial);

Moore v. Illinois, 434 U.S. 220, 232 (1977) (admission of identifica-

tion obtained in violation of right to counsel); Milton v. Wainwright,

407 U.S. 371, 372-373 (1972) (admission of confession in violation of

the Sixth Amendment); Chambers vy. Maroney, 399 U.S. 42, 52-53

(1970) (admission of evidence obtained in violation of the Fourth

Amendment); Coleman v. Alabama, 399 U.S. |, 10-11 (1970) (denial

of right to counsel at a preliminary hearing), Harrington v. Califor-

nia, 995 U.S. 250, 254 (1969) (improper admission of statement of

nontestifying co-defendant); Chapman v. California, 6 US. 18

(1967) (comments and instructions on a defendant's silence); cf.

United States v. Bagley, 473 U.S. 667, 681-684 (1985) (opinion of

Blackmun, J.), and id. at 685 (White, J., concurring in part and

dissenting in part) (failure to disclose exculpatory material is reversible

error only if there is reasonable probability that the material would

have affected the outcome of the trial), Strickland vy. Washington, 466

U.S. 668, 694 (1984) (to prevail on a claim of ineffective assistance of

To be sure, this Court has dispensed with harmless error

analysis in the case of certain types of errors, but those

situations are plainly “the exception and not the rule.”

Rose v. Clark, 478 U.S. at 578. Recent decisions of this

Court leave no doubt that courts must apply the harmless

error doctrine where an error, even a constitutional one, is

susceptible to meaningful harmless error analysis, does

not necessarily render the factfinding process fundamen-

tally unfair, and does not involve a right that protects fun-

damental values unrelated to the factfinding process. See

id. at 576-579; compare Young v. United States ex rel.

Vuitton et Fils S.A., No. 85-1329 (May 26, 1987), slip op.

21-26 (plurality opinion) (appointment of interested prose-

cutor raised doubt that prosecution could be conducted in

disinterested manner, created appearance of impropriety

to which harmless error analysis would not have been sen-

sitive, and did not lend itself to ready assessment of its ef-

fects on the prosecution); Vasquez v. Hillery, 474 U.S.

254, 260-264 (1986) (racial discrimination in selection of

grand jurors struck at fundamental values of judicial

system and society, and was not susceptible to evaluation

of resulting harm); see generally Chapman, 386 U.S. 18,

23 & n.8 (1967). Exceptions to the harmless error rule are

rare and must be based on extraordinary circumstances.

As this Court recently stated, “if the defendant had

counsel and was tried by an impartial adjudicator, there is

a strong presumption that any other errors that may have

counsel, a defendant must show reasonable probability that, but for

counsel's errors, the result of the proceeding would have been dif-

ferent); United States v. Valenzuela-Bernal, 458 U.S. 858, 873-874

(1982) (showing of prejudice required where the government deported

potential witnesses before they could testify for the defendant);

Weatherford v. Bursey, 429 U.S. $45, 554-557 (1977) (defendant's

right to counsel not infringed where attorney-client information ob-

tained by government informant had no effect on trial).

occurred are subject to harmless error analysis” (Rose v.

Clark, 478 U.S. at 579 (emphasis added)).

The conduct at issue here plainly falls within the general

rule requiring a harmless error evaluation. There is simply

no reason why the alleged misconduct here — procedural

violations, primarily of Fed. R. Crim. P. 6—should be

given a preferred status over such errors as improper com-

ments on a defendant's silence, erroneous jury instruc-

tions, violations of the Confrontation Clause, admission

of evidence in violation of the Fourth Amendment, mis-

joinder, or the myriad other errors that this Court has held

to be subject to harmless error analysis (see note 6, supra).

The errors involved in this case are in no way comparable

to the limited class of errors that are not subject to

harmless error analysis, such as racial discrimination in

the selection of grand jurors or the complete denial of the

right to counsel at trial. Rather, as the court of appeals

recognized (Pet. App. Al6-A33), the conduct at issue in

this case consisted of discrete acts whose nature and poten-

tial impact were ascertainable from grand jury transcripts

and testimony at the hearings in the district court. See,

e.g., Mechanik, 475 U.S. at 78-79 (O'Connor, J., concur-

ring in judgment) (issue of whether simultaneous appear-

ance of two witnesses in the grand jury was harmless could

be resolved by reviewing pertinent grand jury tran-

scripts).’

’ Contrary to the ACL U's contention (ACLU Br. 3 n.2), this Court

in Mechanik did not leave open the question whether errors at the

grand jury stage that have not prejudiced the defendant may justify

dismissal of an indictment. The Court's analysis in. Mechanik is fully

consistent with the Court's many other decisions holding that a de-

fendam is not entitled to relief for nonprejudicial errors. In

Mechanik, the Court rejected the proposition that a violation of Rule

6id) requires automatic reversal of a subsequent conviction and

dismissal of an indictment in the absence of prejudice. While the

dismissal in Mechanik was ordered after trial, both the majority and

Finally, unlike conduct such as racial discrimination in

the selection of grand jurors, the conduct at issue in this

case does not “ ‘strike{] at the fundamental values of our

judicial system and our society as a whole’ ” (Vasquez, 474

U.S. at 262 (citation omitted)). In Mechanik, the Court ex-

plicitly stated that the considerations expressed in Vasquez

“have little force outside the context of racial discrimina-

tion in the composition of the grand jury” (475 U.S. at 71

n.1). According to the Court (/bid.), “[njo long line of

precedent requires the setting aside of a conviction based

on a rule violation in the antecedent grand jury pro-

ceedings, and the societal interest in deterring this sort of

error does not rise to the level of the interest in deterring

racial discrimination.” In light of Mechanik, it is apparent

that petitioners cannot overcome the “strong presump-

tion” (Rose v. Clark, 478 U.S. at 579) that the alleged

errors here are subject to harmless error inquiry."

concurring opinions suggested that, even in the pretrial setting, a

showing of prejudice is required before an indictment may be dis-

missed. Early in its opinion, the majority “assume|d] for the sake of

argument” that a violation of Rule 6(d) would have permitted the

district court to dismiss portions of the indictment “had there been ac-

tual prejudice and had the matter been called to its attention before

the commencement of the trial” (475 U.S. at 69-70 (emphasis added)).

At the end of its opmion, the Court stated that it was “express{ing} no

opimon as to what remedy may be appropriate for a violation of Rule

6d) that has affected the grand jury's charging decision and is brought

to the attention of the trial court before the commencement of trial”

(475 U.S. at 72 (emphasis added; footnote omitted)). Thus, the ques-

tion left open in Mechanik was not whether dismissal would be ap-

propriate prior to trial in the absence of prejudice, but whether

dismissal prior to trial is appropriate even when there Aas been pre)-

udice. See also 475 U.S. at 75 (O'Connor, J., concurring in judgment)

(recognizing that dismissal of an indictment is a “drastic remedy” tha: .

under Fed. R. Crim. P. S2(a), is “appropriate only when a violation

has ompaired the substantial rights of the accused”).

* Petitioners devote considerable attention (Kilpatrick Br. 26-45) to

thew clamm that the court of appeals erred in finding that the alleged

Just as a lower court may not avoid the effect of a

statute or court rule by invoking the supervisory power, it

may not avoid the effect of this Court's precedents by the

same device. In United States v. Payner, supra, the Court

held that a judge may not suppress evidence in a defend-

ant’s case based on an illegal search of a third party, even

when the judge bases his decision on his supervisory

authority. In reaching its decision, the Ceurt indicated

that the conclusion was compelled by its cases interpreting

the Fourth Amendment (447 U.S. at 731-732), and that

“[t}he values assigned to the competing interests do not

change because a court has elected to analyze the question

under the supervisory power instead of the Fourth

Amendment” (id. at 736). The logic of that rule is clear: if

a court could dismiss an indictment or reverse a conviction

for harmless error merely by invoking its supervisory

authority, this Court's numerous harmless error decisions

would be rendered meaningless. Such a rule, at bottom,

would give lower courts “discretionary power to

disregard” decisions of this Court with which they do not

agree (id. at 737). Plainly, “the supervisory power does not

extend so far” (ibid.); accord, Hasting, 461 U.S. at

506-507 .*

misconduct was not prejudicial According to petitioners (:bed_), the

errors in question were not harmless beyond a reasonable doubt In

the first place, however, that argument addresses the issue on which

this Court did not grant certiorari (Question 2), 1.¢., whether the court

ot appeals erred in holding that the errors were not prejudicial. In any

event, petitioners’ claim is without merit. The harmless beyond a

reasonal.. doubt standard applies only to constitutional errors. The

errors alleged in the present case, by contrast, involve primarily pro-

cedural violations of Fed. R. Crim. P. 64d) and (ce). See Lane, 474 US.

at 446 2.9; compare Chapman, 386 U.S. at 24, with Aotteotos +

United States, 328 U.S. 750, 765 (1946).

* The vast majority of the circuits that have addressed the issue

agree that an indictment may not be dismissed for procedural i-

regularities in the grand jury (or other instances of governmemal

misconduct) in the absence of prejudice. See, ¢ ¢ . United Sretes +

In addition to violating 28 U.S.C. 2111, Rule $2(a), the

principles of Costello, and this Court's decisions regarding

harmless error, a rule allowing the dismissal of an indict-

ment in the absence cf prejudice would be unsound as a

matter of policy. An analysis of the competing policy con-

siderations demonstrates that where the defendant has not

been prejudiced, the public interest is disserved by the

dismissal of an indictment.

In Mechanik, this Court identified a number of costs

associated with the reversal of a criminal conviction: (1) it

forces jurors, witnesses, courts, and the parties to expend

further time, energy, and other resources to repeat the

trial; (2) the loss of memory and disappearance of

witnesses may make retrial more difficult, if not impossi-

ble; and (3) even if a defendant is convicted on retrial, the

resulting delay undermines the goals of deterrence, reha-

biluation, and the prompt administration of justice. 475

McKenzie, 678 F 2d 629, 631 (Sth Cir.) (requiring a showing of pre)-

wdice “even on the case of ‘egregious prosecutorial misconduct" ™ (cita-

thon ometted)), cert. demed, 499 U.S. 1038 (1982); United States v.

Nerhen, 816 F 2d 230, 234 (6th Cir. 1987); United States v. Griffith,

786 Fld 1244, 1249 (6th Cir.), cert. denied, 374 U.S. 837 (1985);

nued States ». Solomon, 679 F 2d 1246, 1250-1251 (Sth Cir. 1982):

United States v. Crow Dog, $32 F 2d 1182, 1196-1197 (8th Cir. 1976),

cert. demed, 430 U.S. 929 (1977), United States v. Rogers, 751 Fld

1074, 1077 (oth Cir. 1985), United States ». Owen, S80 Fld 365,

367.368 (9th Cir, 1978), Unwed States v. O'Keefe, 825 Fld 314, 118

(tith Cir, 1987): of. Unwed States v. Martine, 825 F.2d 754, 799-760

(3d Cor 1987) (stateng that, notwithstanding some of the language in

carher cases, the Turd Cirowit has mm fact “looked to prejudice” in

“every case”). Cont a, Unwed Sretes v. Jocods, $31 F 2d 87 (2d Cir),

vacated, 429 US. 9. on remand, £47 F.2d 772 (2d Cir. 1976), cont

desmessed, 436 US. 31 (1978) Uned States v. Estepe, 471 F.2d 1132

(jd Cw. 1997)

U.S. at 72. Contrary to petitioners’ contention (Kilpatrick

Br. 26), those costs are not avoided simply because a

dismissal occurs before trial, particularly when the grand

jury investigation is a lengthy and complex one, as was the

case here. When an indictment is dismissed, the case must

be presented to a new grand jury. And while some

testimony from the first proceeding can be read to (or

summarized for) the second grand jury, a prosecutor will

often feel compelled, at least in a complex case, to let the

grand jury hear from some witnesses in person, so that the

grand jurors may ask questions and make credibility deter-

minations. The presentation of the case to a new grand

jury consumes the time of prosecutors, witnesses, and

grand jurors. In addition, it necessarily postpones the

trial, thus delaying the administration of justice and in-

creasing the likelihood that witnesses will disappear or that

their memories will fade. And if the defendant is ultimate-

ly convicted, the goals of deterrence and rehabilitation will

be undermined by the delay.

In addition, a rule sanctioning the dismissal of an indict-

ment in the absence of prejudice would almost certainly

generate considerable litigation, particularly in cases in-

volving lengthy and complex investigations. The possibili-

ty of some imperfection in a grand jury proceeding is not

difficult to allege. Litigation regarding such allegations

would entail a substantial expenditure of prosecutorial

and judicial resources and would impede the prompt ad-

judication of the central question in the case — the defend-

ant’s guilt or innocence. See generally Costello v. United

States, 350 U.S. at 363-364. Moreover, the absence of a re-

quirement of prejudice would eliminate a defendant’s need

to explain how an alleged error was prejudicial. Hearings

would thus be required not only in cases involving a

likelihood of prejudice, but in many other cases as well.

Cf. R. Traynor, The Riddle of Harmless Error 50 (1970)

(footnote omitted) (“Reversal for error, regardless of its

effect on the judgment, encourages litigants to abuse the

judicial process and bestirs the public to ridicule it.”).

Petitioners and amici claim that dismissal in the absence

of prejudice is necessary to deter prosecutorial misconduct

(see Kilpatrick Br. 9; Bank Br. 38; ACLU Br. 18-23;

NACDL Br. 21-27). However, remedies other than dis-

missal of the indictment are available to ensure com-

pliance with grand jury procedural requirements. For ex-

ample, Fed. R. Crim. P. 6(e)(2) specifically states that “[a}

knowing violation of Rule 6 may be punished as a con-

tempt of court.” See United States v. Dozier, 672 F.2d

531, 545 (Sth Cir.), cert. denied, 459 U.S. 943 (1982).

Other sanctions that a court has available in cases of

proved prosecutorial misconduct include directing the

prosecutor to show cause why he should not be discip-

lined, requesting the Department of Justice to initiate

disciplinary proceedings against the prosecutor,'® report-

ing the prosecutor’s conduct to the disciplinary commitiee

of the bar of which he is a member, or chastising the pros-

ecutor in a public judicial opinion. See generally Hasting,

461 U.S. at 506 n.5. Because these alternatives focus on

the person responsible for the improper conduct and do

not impose unjustified costs on the criminal justice

'° The Department of Justice has established procedures for in-

vestigating alleged misconduct by federal prosecutors. Department

regulations establish penalties for the violation of rules governing of-

ficial conduct that range in severity from an official reprimand for a

single instance of minor misconduct to removal from office for

serious offenses or repeated acts of misconduct. See U.S. Dep't of

Justice, DOJ Order 1752.1A, Discipline and Adverse Actions ch. 2 &

app. | (Apr. 27, 1981). The Attorney General has established an Of-

fice of Professional Responsibility (OPR) for the purpose of in-

vestigating allegations of unethical conduct by Department attorneys

and other personnel. See 28 C.F.R. 0.39a. During 1985, the year after

the dismissal of the indictment in this case, OPR completed 278 in-

vestigations of complaints involving alleged misconduct by Depart-

ment of Justice employees. See OPR, Anv. Rep. to Att'y Gen. (1985),

at 3-5; see id. at 6-7 (discussing specific examples).

system, they are plainly preferable to the remedy of

dismissal. See generally United States v. Kelly, 543 F.

Supp. 1303, 1314, supp. opinion, 550 F. Supp. 901 (D.

Mass. 1982).

Where, as in this case, the errors did not affect the

grand jury’s charging decision, dismissal of the indictment

in the absence of prejudice would be an exercise in futility.

If the errors in the grand jury proceeding did not affect the

first grand jury’s charging decision, it logically follows

that, absent some unusual circumstance, another grand

jury will hand down an indictment as well.'' In such cases,

the whole process of dismissal and reindictment would ac-

complish very little except for delay.'? In contrast, where

prejudice Aas occurred, dismissal is more likely to have a

meaningful effect on the disposition of the case, because

of the prospect that a new grand jury, not exposed to the

'' As we have discussed (pages 9-12, supra), under the Costello rule,

an indictment may not be dismissed unless an error has so profoundly

tainted the grand jury process as to render the charging document in

effect something other than the “indictment of a Grand Jury” (U.S.

Const. Amend. V). Under Costello, there may be circumstances in

which dismissal is not appropriate even where there Aas been an effect

on the grand jury’s charging decision. No such issue is presented here,

however, since the court of appeals viewed this case as one in which

the errors did nor affect the grand jury's decision to indict (see Pet.

App. Al8 & n.9, A22; see also id. at A39 (dissenting opinion)).

'2 To be sure, the prospect of having to reindict a case — an incon-

venient and often time-consuming task — will provide some deterrence

when a prosecutor is otherwise deliberately inclined to commit error.

Cf. Speedy Trial Act of 1974, 18 U.S.C. 3162(a)(2) (authorizing

dismissal of an indictment when a defendant is not brought to trial

within specified time limits). Yet, a prosecutor who deliberately

engages in misconduct presumably has concluded that such miscon-

duct will benefit his case. The threat of dismissal when the defendant

has been prejudiced would itself provide a deterrent in that situation.

More fundamentally, we believe that the threat of contempt,

disciplinary action, or judicial disapproval in a published decision

provides a greater deterrent against prosecutorial misconduct without

imposing the substantial costs on the public described above.

error, will refuse to indict. Thus, a requirement of preju-

dice does not, as the Bank of Nova Scotia alleges (Br. 36),

render the rules governing grand jury proceedings “dead

letters,” any more than the harmless error rule makes

“dead letters” of the rules of evidence and procedure that

are designed to ensure a fair trial.

Finally, petitioners have not offered a workable test for

determining when a court should dismiss an indictment in

the absence of prejudice. For example, would one

deliberate error count for more than a large number of

negligent errors? Would dismissal ever be appropriate in

the absence of bad motive? Cf. Kilpatrick Br. 11 (noting

that even unintentional misconduct threatens the grand

jury’s integrity). Should a court be less willing to dismiss

an indictment stemming from a lengthy investigation?

Would dismissal ever be appropriate when an error is not a

recurrent one in a particular jurisdiction? Should constitu-

tional errors weigh more heavily than violations of rules of

procedure? Would the extent of the prosecutor’s prior ex-

perience in conducting grand jury investigations be rele-

vant? In addition, questions would no doubt arise as to

whether dismissal in the absence of prejudice would be ap-

propriate during trial but before the jury has rendered its

verdict. These difficult questions underscore the prospect

of endless litigation — and widely varying standards among

jurisdictions —if this Court were to sanction dismissals of

indictments in the absence of prejudice.

il. DISMISSAL OF THE INDICTMENT WOULD BE INAP-

PROPRIATE IN THIS CASE EVEN IF AN INDICTMENT

MAY BE DISMISSED WITHOUT A SHOWING OF PREJ-

UDICE

A. Even if dismissal of an indictment in the absence of

prejudice were appropriate in some class of cases,

dismissal would be inappropriate in this case.

The Second Circuit, which is the only circuit that has

ever dismissed an indictment in the absence of prejudice,

has stated that dismissal is appropriate only when “the

course of official misconduct is a demonstrated, long-

Standing one,” i.e., when “the pattern of misconduct is

widespread or continuous.” United States v. Fields, $92

F.2d 638, 648 (2d Cir. 1978), cert. denied, 442 U.S. 917

(1979); accord, e.g., United States v. Brown, 602 F.2d

1073, 1076-1077 (2d Cir.), cert. denied, 444 U.S. 952

(1979).

In the present case, there is no claim that the conduct at

issue has been widespead in the District of Colorado (or in

any other district). The district judges never suggested that

any of the conduct that the court of appeals found to be

improper had arisen regularly in other cases or involved

persons other than the prosecutors who conducted the in-

vestigation in this case. To the contrary, Judge Winner

went out of his way to point out that “I have had my fair

share of experience in dealing with Tax Division lawyers

for whose ability and ethics I have the highest regard”

(Pet. App. D10). He expressed similar high regard for the

United States Attorney’s Office in Denver (see id. at D1,

D2). And petitioners have likewise made clear that they

are not alleging any widespread abuse extending beyond

this case. As Judge Winner noted (id. at D2), “[djefense

counsel carefully point out that neither they nor their

clients complain about anything other than acts of the IRS

and Department of Justice Tax Division lawyers who ran

the grand jury and tried the [obstruction of justice] case.”

Thus, even under the standard applied in the Second Cir-

cuit, dismissal would not be appropriate here.

A second possible standard for dismissing indictments

in the absence of prejudice is the one proposed by amici

(NACDL Br. 26; ACLU Br. 15): to dismiss if the error was

more than an inadvertent or isolated occurrence. Even

under that standard, which has not been applied by any

court of appeals,'* dismissal would not be required here.

The test advocated by amici was proposed by the Third Circuit in

United States \. Serubo, 604 F.2d 807, 817 (1979). The Third Circuit,

The record in this case reveals that the alleged errors were

isolated instances in a 20-month investigation that in-

volved dozens of witnesses and thousands of documents.

It would be unreasonable to expect that no errors would be

uncovered following such a lengthy investigation, par-

ticularly when thousands of pages of grand jury materials

were made available to the defense for line-by-line

scrutiny.'* See generally Van Arsdall, 475 U.S. at 681

(noting the “virtually inevitable presence of immaterial

error” ina criminal trial and stating that a defendant 1s en-

titled “to a fair trial, not a perfect one”). The record in the

present case reveals that, on the whole, the investigation

was conducted fairly and professionally. The transcripts

of the prosecutors’ statements to the grand jury

throughout the 20-month investigation demonstrate that

the prosecutors undertook to ensure that any indictment

returned would be the result of a fair and independent

grand jury investigation (see generally Pet. App. A27-A28

n.20 (citing examples)). For instance, the prosecutors

repeatedly admonished the grand jury that an indictment

should not be returned unless the grand jurors were con-

vinced that the targets of the investigation had willfully

violated the law (J.A. 95-97, 165, 167-169, 176, 181). On

several occasions, the prosecutors stated that they were ad-

vocates and that the grand jurors should evaluate their

remarks in that light (J.A. 116, 177, 191-192). In addition,

the prosecutors explained that the grand jurors were the

however, has never applied that test, as it has never dismissed an in-

dictment in the absence of a showing of prejudice. See United States v.

Martino, 825 F.2d 754, 759-760 (1987).

'* The Bank of Nova Scotia errs in asserting (Br. 4, 6-7 & n.6) that

the prosecutors deliberately tried to conceal misconduct by suppress-

ing certain grand jury transcripts. While some proceedings were ap-

parently overlooked and not transcribed, there is nothing in the record

to indicate that the failure was intentional, and the district court made

no such finding (see Pet. App. C2-C3).

sole judges of credibility (J.A. 171). Those remarks of the

prosecutors — made throughout the investigation — belie

the view that the prosecutors were deliberately attempting

to usurp the grand jury’s independence.

By the same token, the transcripts rebut the district

court’s assertion (Pet. App. C54) that the grand jury “was

converted into litth more than a rubber stamp.” As the

court of appeals noted, “[t}he grand jury transcripts por-

tray an active and questioning grand jury,” one that was

“familiar with the record,” asked “thoughtful{]” ques-

tions, and “vigorously questioned the prosecutors” (Pet.

App. A27-A28 & n.20 (citing numerous examples)).

In short, while we concede that the prosecutors com-

mitted certain nonprejudicial errors, we submit that peti-

toners are wrong in describing the record in this case as

reflecting “[ujmprecedented, deliberate and pervasive

governmental misconduct” (Kilpatrick Br. 3). Since the

overall conduct of the prosecutors during the investigation

was proper, the extreme sanction of dismissal of the in-

dictment would be inappropriate.

B. An analysis of the specific allegations of miscon-

duct made by petitioners further shows that petitioners

have greatly exaggerated the seriousness of the alleged

misconduct and that dismissal would be inappropriate

here. Petitioners cite nine purported violations committed

by the prosecutors in this case (see Bank Br. 8-25).'* In

several instances, the “errors” involve conduct that is en-

tirely lawful. In others, there is no evidence to support the

district court's findings. And in the remainder of the

categories, the errors constitute at most exercises of poor

judgment on the part of the prosecutors, rather than

deliberate efforts to undermine the integrity of the grand

pury.

'* For convenience, we will follow the Bank of Nova Scotia's

categories in discussing the vanous alleged errors.

1. Use of the term “agents of the grand jury”

During the grand jury investigation, one of the pros-

ecutors administered an oath to certain IRS agents who

appeared before the grand jury and referred to them as

“agents of the grand jury” (see, e.g., J.A. 91). The court of

appeals did not decide whether the use of that term was

error; rather, it held that petitioners had not suffered any

prejudice from its use (Pet. App. A26). In our view, the

designation of the agents as “agents of the grand jury” was

not error at all. In any event, it is surely not the kind of

egregious misconduct that would warrant dismissal of an

indictment.

The term “agents of the grand jury” was not created by

the prosecutors; that term has been used by this Court and

numerous other courts.'® In United States v. Jones, 766

F.2d 994, 1001, cert. denied, 474 U.S. 1006 (1985), the

Sixth Circuit specifically rejected the view of the district

court in this case and held that the swearing of a govern-

ment agent as an “agent of the grand jury” was not prose-

cutorial misconduct and did not warrant dismissal of an

indictment. The court stated that it was “not persuaded

*** that use of the word ‘agent’ in connection with

government personnel assisting a grand jury will under-

mine the foundation of public trust and confidence in the

system” (idid.). See also United States v. Stanford, 589

F.2d 285, 292 (7th Cir. 1978) (expressing approval of the

grand jury’s taking “precautions to preserve secrecy * * *

by swearing the FBI personnel as agents and cautioning

them about the need for secrecy”), cert. denied, 440 U.S.

'6 See, e.g., United States v. Mara, 410 U.S. 19, 20 (1973); id. at 24

(Douglas, J., dissenting); Jn re Grand Jury Proceedings (Mills), 686

F.2d 135, 136 (3d Cir.), cert. denied, 459 U.S. 1020 (1982); Jn re

Perlin, 589 F.2d 260, 262 (7th Cir. 1978); see also United States v.

Cosby, 601 F.2d 754, 757-758 n.6 (Sth Cir. 1979); In re Atterbury, 323

F.2d 726 (6th Cir. 1963); but cf. United States v. Claiborne, 765 F.2d

784, 794-796 (9th Cir. 1985), cert. denied, 475 U.S. 1120 (1986).

983 (1979).'’ The term “agent of the grand jury” was a

reasonable shorthand way to refer to the agents’ proper

role in the investigation, in which they served as “govern-

ment personnel * * * deemed necessary by an attorney for

the government to assist an attorney for the government in

the performance of such attorney’s duty to enforce federal

criminal law.” Rule 6(e)(3)(A)(ii); see also Pet. App.

A25-A26; United States v. Sells Engineering, Inc., 463

U.S. 418, 430 & n.13 (1983).

The prosecutors did not attempt to mislead the grand

jury by referring to the IRS agents as “agents of the grand

jury.” In particular, they did not urge the grand jurors to

treat the agents as somehow more reliable because they

were serving as the grand jurors’ agents. Indeed, it is

significant that, On numerous occasions, the prosecutor

referred to the agents as “my agent(s)” (see, e.g., J.A. 96,

98, 99, 108, 110, 113, 114, 115, 117, 137, 153, 163, 165,

171, 176). Similarly, contrary to the Bank of Nova Scotia’s

contention (Br. 12), the record reveals that the grand jury

understood that the agents were aligned with the prose-

cutors and that their testimony could not be accepted

without assessment of their governmental bias. For in-

stance, during discussions with the prosecutors, grand

jurors referred to the agents as “your guys” or “your

agents” (see J.A. 117, 157).'* For these reasons, the use of

‘7 Moreover, the prosecutor who administered the oath to the

agents testified at the hearing that in Atlanta, Georgia, where he had

had prior experience, government agents had been sworn and referred

to as agents of the grand jury (J.A. 45-46). He also testified that he

was aware that the practice was followed in the Southern District of

Florida (J.A. 46). The prosecutor admitted that he was not authorized

to administer an oath (J.A. 57; Pet. App. C4). The real issue,

however, is not that technical error but the propriety of the designa-

tion “agents of the grand jury” and the role played by the agents.

'8Similarly, there is no evidence that the agents attempted to make

use of their designation in performing their duties. The agents testified

at the hearing that, to their recollection, they never used the term

the term “agent of the grand jury,” even if it was technical-

ly inaccurate, was not the type of conduct that warrants

dismissal in the absence of prejudice.

2. Presentation of summaries of evidence

The district court found that the government presented

inaccurate and misleading summaries of evidence to the

grand jury (Pet. App. C25-C31). The court of appeals ap-

proved the use of summaries in general, especially in com-

plex cases (id. at A21). The court, however, found it un-

necessary to decide whether the summaries were accurate,

since the court concluded that any error on that score

resulted in no prejudice to the defendants (id. at

A28-A29). At bottom, the challenge to the accuracy of the

summaries is indistinguishable from the argument that

unreliable or incompetent evidence was presented to the

grand jury, a claim that this Court has held not to be a

valid basis for dismissing an indictment. See Calandra,

414 US. at 344-345 (validity of an indictment “is not af-

fected by the character of the evidence considered”);

Costello, 350 U.S. at 364 (defendants may not challenge

indictments “on the ground that they are not supported by

adequate or competent evidence”).

Although the court of appeals did not expressly reject

the district court’s findings as to the accuracy of the sum-

maries, the court rejected the argument that the Bank of

Nova Scotia makes in this Court —that the government’s

handling of the summaries deprived the grand jury of its

ability to make an independent determination of probable

cause with respect to the Bank. See Pet. App. A28-A29.

“agent of the grand jury” when interviewing witnesses (J.A. 29, 31, 35).

On a related point, the district court was plainly wrong in finding (Pet.

App. C8) that the agents convened grand jury sessions. The court of ap-

peals, in rejecting that finding, stated that it was “unable to find an in-

stance in the record [where] the IRS agents convened the grand jury ses-

sions without Government attorneys being present” (id. at A23 n.14).

We submit that the record supports that finding by the

court of appeals, and fails to support the district court’s

finding that the summaries were inaccurate and were

presented in a misleading fashion.

The summaries in dispute relate primarily to testimony

by IRS Agent Richard Mendrop on September 29, 1982,

the day before the indictment was returned, regarding the

evidence against the Bank of Nova Scotia. The district

court found that the government misled the grand jury in-

to believing that the summaries were based solely on prior

testimony before the grand jury rather than on other in-

formation obtained by Mendrop during his investigation

(Pet. App. C26).

In fact, Mendrop never testified that he was just sum-

marizing prior testimony, and the prosecutor never said

that he was. The district court’s conclusion was based in

large part on the following statement by a prosecutor

shortly before Mendrop appeared (J.A. 176): “I will put

my agents up here to summarize, just walk through, one

more time, and refresh your memory.” See also J.A. 161.

But the prosecutor, in making that remark, did not state

that Mendrop would be summarizing only testimony

previously heard by the grand jury. And Mendrop himself

made it clear that he was discussing not only evidence

previously presented to the grand jury but also evidence he

had obtained in assisting the prosecutor in conducting the

grand jury investigation. Thus, at the beginning of the

testimony at issue, Mendrop informed the grand jury that

he had “analyzed the evidence which [he had] gathered”

and that he would “summarize the evidence” for the grand

jury (J.A. 181). Later, in discussing information that he

had obtained, Mendrop referred to a “statement” (as op-

posed to “testimony”) from a particular person (J.A. 190).

Moreover, the grand jury was well aware that some of the

information it received during the investigation was based

on interviews conducted outside the grand jury’s presence

(see, e.g., J.A. 113-115, 136-137, 155-156, 158-159; see

also J.A. 163-164). And a grand jury can reasonably be ex-

pected to know which witnesses have testified before it and

to recall the testimony of such witnesses.

The district court found that Mendrop’s summary was

“an inaccurate recitation of ‘facts’ in several significant

respects” (Pet. App. C28). Specifically, Mendrop testified

that Tom Waters—a former owner of another bank (to

which petitioner Kilpatrick owed money) — had stated that

he had been introduced to Monte Smith, the manager of

the Bank of Nova Scotia’s Cayman Islands branch, at

Kilpatrick’s offices in Denver (J.A. 189-190). The district

court found (Pet. App. C28) that this testimony was incor-

rect because Waters’ description of Smith at petitioner

Kilpatrick’s trial on the obstruction of justice count of the

indictment did not seem to fit Smith.

In the first place, the question whether Smith visited

Kilpatrick in Denver was not essential to the government’s

proof of the Bank’s criminal conduct. Other evidence per-

taining to the Bank was presented both during Mendrop’s

summary'? and during other parts of the investigation.?°

'? For instance, Mendrop noted that the Bank permitted Kilpatrick

to close a certain account and remove the funds even though Kilpatrick

did net have signature authority (G.J. Tr., Mendrop, 9/29/82, 9:32

a.m., at 68-69); that the Bank had knowledge of Kilpatrick’s various

business entities involved in the tax shelters (id. at 70-71); that, in trans-

actions involving purported financing of the tax shelter scheme, the

Bank stopped payment on a check and backdated another check (in-

volving about $18 million) under suspicious circumstances (id. at 65-66;

see Indictment 17); and that the Bank received a legal bill for work per-

formed in examining a tax shelter that the Kilpatrick organization had

put together (but did not sell) (J.A. 188).

20 For instance, testimony of various witnesses demonstrated that

the Bank was knowingly involved in a check kiting scheme that was

part of the fraud under investigation (J.A. 101-108, 117-119). In addi-

tion, exhibits before the grand jury included records of the Bank

relating to fraudulent tax shelter transactions (see, e.g., J.A. 172-173).

The exhibits showed that the Bank had received a prospectus regard-

ing an investment entity put together by the Kilpatrick organization,

In any event, there was no showing that the prosecutors

o.fered evidence that they knew to be false, even on the

narrow question of whether Smith had visited Kilpatrick

in Denver.?' In short, petitioners have failed to show that

there was any misconduct concerning the summaries, let

alone any conduct that was so egregious as to warrant

dismissal of the indictment.??

3. Mistreatment of an expert witness

Both the district court (Pet. App. C33-C34) and the

court of appeals (id. at A27) criticized the treatment of

Roland Hjorth, a tax professor at the University of

and that the Bank therefore had reason to know that Kilpatrick was in

the tax shelter business (see Gov't C.A. Br. 29). There was also

testimony (J.A. 174-175) relating to the Bank’s suspicious backdating

and substitution of a check.

2! As recounted by Mendrop, Smith’s visit was described not only

by Waters, but also by Kilpatrick’s chauffeur (see J.A. 189). The

district court noted that the government had doubts about the ac-

curacy of Waters’ statement regarding Smith (Pet. App. C28). In the

testimony cited by the district court, however, the prosecutor was

referring to doubts that arose several months prior to the indictment;

he testified that steps were subsequently taken to resolve those doubts

(J.A. 88). In any event, doubts by the government would not

necessarily mean that Waters’ statement was wrong. And there is no

requirement that a prosecutor inform a grand jury any time he is not

absolutely certain that a particular piece of evidence is reliable.

22 Similarly, the district court erred in determining (Pet. App.

C30-C31) that a prosecutor mischaracterized the evidence against the

Bank when he stated, shortly before Mendrop’s summary (J.A.

178-179): “ ‘{A]s my agents will tell you there is evidence that the bank

knew it was the IRS—they were in fact told that it was the IRS they

were defrauding.’ ” The evidence (see, e.g., notes 19 and 20, supra)

provided a reasonable inference that the Bank knew that the IRS was

being defrauded, even if it was not “told” that explicitly. Cf. United

States v. Nealy, 729 F.2d 961, 962-963 (4th Cir. 1984). In any event,

the prosecutors repeatedly stated during the investigation that they

were advocates and that the grand jury should scrutinize their

statements as such (see J.A. 116, 177, 191-192).

Washington Law School, by one of the prosecutors.?? As

the court of appeals concluded, that incident did not prej-

udice petitioners (id. at A27). We submit that the prose-

cutor’s actions, while regrettable, do not warrant dismissal

of the indictment.

The incident, which occurred during a lunch break while

the grand jury was not in session (W. Tr. 491-493), was at

worst a debate between two lawyers arising out of a dis-

agreement as to legal theories, in which the prosecutor

may have expressed himself too strongly in the heat of the

moment (see W. Tr. 496-507 (testimony of Hjorth)). In-

deed, in appearing before the grand jury after the incident,

Hjorth stated that he appreciated the prosecutor’s “prod-

ding” him into thinking things through (G.J. Tr., Hjorth,

7/20/82, 4:05 p.m., at 6). And Hjorth testified at the mo-

tions hearing that his grand jury testimony was not af-

fected by the prosecutor’s conduct (W. Tr. 481-482). In

fact, when the incident occurred, Hjorth had already said

all that he intended to say to the grand jury, and he was

** Hjorth testified as an expert witness at the request of a target (see

Pet. App. D1S). The prosecutors called Hjorth to discuss tax law even

though they were under no legal duty to do so. Although the law is not

entirely settled, several circuits have held that a prosecutor has no duty

to present exculpatory evidence to the grand jury. See, e.g., United

States v. Mitchell, 777 F.2d 248, 263 (Sth Cir. 1985), cert. denied, 476

U.S. 1184 (1986); United States v. Hawkins, 765 F.2d 1482, 1488 (11th

Cir. 1985), cert. denied, 474 U.S. 1103 (1986); United States v. Sears,

Roebuck & Co., 719 F.2d 1386, 1394 (9th Cir. 1983), cert. denied, 465

U.S. 1079 (1984). Subsequent to the indictment, the Tenth Circuit

held, contrary to several circuits, that a prosecutor is required to pre-

sent “substantial” exculpatory evidence to the grand jury. See United

States v. Page, 808 F.2d 723, 727-728 (1987) (collecting conflicting

authorities), cert. denied, No. 86-6848 (June 8, 1987). It is doubtful

that the prosecutors would have been required to present Hjorth’s

legal theory to the grand jurors, much less call Hjorth as a witness,

even under the standard later adopted by the Tenth Circuit. Cf.

United States v. Selis Engineering, Inc., 463 U.S. 418, 430 (1983)

— that the prosecutor “advises the [grand] jury on the applicable

aw”).

‘

{

asked only a few questions when he appeared again before

the grand jury later in the day (see W. Tr. 472-473, 491).**

Finally, although two grand jurors may have heard the

conversation (see J.A. 61; W. Tr. 377, 493), the prose-

cutors later instructed the grand jury (on the day the in-

dictment was returned) to disregard anything they may

have heard in conversations between a prosecutor and a

witness (J.A. 191).?°

24 Contrary to Judge Winner's suggestion, which Judge Kane ap-

parently adopted (see Pet. App. C34), Hjorth did not testify that the

prosecutor “ ‘impl{ied) that the Tax Division of the Department of

Justice will take after the witness and will complain to the University

of Washington.’ ” Hjorth testified that during the conversation at

issue, the prosecutor stated, “I'll see you in court” (W. Tr. 502). The

prosecutor acknowledged that he had made such a statement, but he

testified that he did not mean it as a threat to prosecute the witness

(J.A. 50). The prosecutor described the statement as “a rather flippant

expression meaning * * * I don’t think you can support that position

anyway, anywhere” (J.A. 63). Hjorth conceded at one point during

the hearing that he was not intimidated by the statement and that, in

the context of two lawyers debating a legal point, the statement could

be characterized as, “I sure as heck don’t agree with that and I'll have a

judge test this one if you want to keep that concept alive” (W. Tr.

§03-504). Hjorth also testified that the prosecutor had called him a

discredit to his profession as a law professor for testifying on behalf of

one of the targets (W.Tr. 377-378, 496-497). The prosecutor denied

making such a statement (J.A. 60), and Hjorth was unable to recall

when in the sequence of events the statement was allegedly made (W.

Tr. 504-507).

25 As this Court has indicated with respect to petit jurors, there is an

“almost invariable assumption of the law that jurors follow their in-

structions.” Richardson v. Marsh, No. 85-1433 (Apr. 21, 1987), slip

op. 6; accord, e.g., Greer v. Miller, No. 85-2064 (June 26, 1987), slip

op. 9 n.8; see also United States v. Drake, 494 F.2d 648, 650 (7th Cir.

1974) (possibility that petit jurors may have overheard a witness tell

the prosecutor that the defendant’s alibi witness sas “lying” not re-

versibie error, since there was no direct evidence that any jurors ac-

tually heard the remark and the trial court gave a general curative in-

struction).

4. Granting informal immunity

In dismissing the indictment, the district court stated

that the prosecutors “ignored entirely the federal immuni-

ty statute (18 U.S.C. §§ 6001, et seg.) * * * and, instead,

secured testimony by engaging extensively in * * * bestow-

ing ‘informal immunity’ through ‘letters of assurance’ ”

(Pet. App. C20). According to the district court, that prac-

tice was “not merely damnable * * * [but] clearly illegal”

(id. at C20 n.13). In reaching that decision, the district

judge relied heavily on one of his own decisions, which

was later reversed by the Tenth Circuit, United States v.

Anderson, 577 F. Supp. 223, 233 (D. Wyo. 1983) (Kane,

J.), rev’d, 778 F.2d 602, 606 (10th Cir. 1985).

The court of appeals rejected the district court’s holding

that the use of informal immunity was illegal (Pet. App.

cords with the ruling of every other circuit that has square-

ly faced the issue. See United States v. Winter, 663 F.2d

1120, 1133 (Ist Cir. 1981) (citing cases), cert. denied, 460

U.S. 1011 (1983); United States v. Librach, 536 F.2d 1228,

1230 (8th Cir.), cert. denied, 429 U.S. 939 (1976); cf.

United States v. Murphy, 768 F.2d 1518, 1532 (7th Cir.

1985), cert. denied, 475 U.S. 1012 (1986); United States v.

Gullett, 713 F.2d 1203, 1208 (6th Cir. 1983), cert. denied,

464 U.S. 1069 (1984).?’

26 As the court of appeals’ treatment of this issue illustrates (see also

pages 39-41, 43-46, infra), the Bank of Nova Scotia is profoundly

wrong in repeatedly asserting that the Tenth Circuit did “not disput[e]

the impropriety of the [prosecutors’] conduct” (Br. 27) and that “[t}he

misconduct findings of Judge Kane were not disturbed by the majority

of the panel of the Court of Appeals” (id. at 7); see also id. at 4, 26,

32; but see Kilpatrick Br. 40).

2’? The Bank of Nova Scotia attempts to argue that the manner in

which informal immunity was used prejudiced petitioners (Br. 17-18),

but its argument is in essence just a quarrel with the practice of pro-

viding promises of immunity to prospective witnesses in exchange for

their cooperation and truthful testimony. The court of appeals found

(Pet. App. A22) that the defendants suffered no prejudice based on

the use of informal immunity.

5. Calling witnesses who asserted their privilege against com-

pulsory self-incrimination

The district court held (Pet. App. C23-C25) that the

prosecutors engaged in misconduct by bringing before the

grand jury seven witnessess who the prosecutors believed

were likely to invoke the Fifth Amendment. That holding

was erroneous, and it was properly rejected by the Tenth

Circuit (id. at A26-A27).

The courts have held that even a target of an investiga-

tion may be compelled to appear before a grand jury and,

in effect, be tested in front of the grand jurors. See, e.g.,

United States v. Friedman, 445 F.2d 1076, 1088 (9th Cir.),

cert. denied, 404 U.S. 958 (1971); United States v. Cefalu,

338 F.2d 582, 584 (7th Cir. 1964). It follows, a fortiori,

that there is no bar to calling a third party, whose assertion

of the privilege would have little likelihood of prejudicing

the target. =

The rule is no different even when the prosecutor Is in-

formed (or otherwise has reason to believe) that a witness

intends to invoke the Fifth Amendment. Numerous courts

have held that calling a witness before the grand jury

under such circumstances is not improper. See, e.g.,

United States v. Wolfson, 405 F.2d 779, 784-785 (2d Cir.

1968) (collecting cases), cert. denied, 394 U.S. 946 (1969);

United States v. DeSapio, 299 F. Supp. 436, 440

(S.D.N.Y. 1969); United States v. Zirpolo, 288 F. Supp.

993, 1007 (D.N.J. 1968); United States v. Leighton, 265 F.

Supp. 27, 36-38 (S.D.N.Y. 1967).

The logic of these cases is apparent. Even if the prose-

cutors expected that the witnesses would assert the Fifth

Amendment, they could not be certain of that until the

witnesses actually appeared under oath before the grand

jury. Witnesses not infrequently change their strategies

when they must actually appear before a grand jury.

Moreover, by calling the witnesses, the government was

able to make a complete record on the thoroughness of its

investigation (see J.A. 65), an issue that sometimes arises

at trial in tax prosecutions. See generally Holland v.

United States, 348 U.S. 121, 135-136 (1954).

If petitioners weie correct that prosecutors may not call

before the grand jury witnesses who announce an inten-

tion to assert their Fifth Amendment privilege, a witness

“could automatically gain immunity from Grand Jury sub-

poena” merely by advising the prosecutor that he intends

to invoke the Fifth Amendment; in such a case the witness

“ ‘would denude that ancient body of a substantial right

of inquiry’” (Leighton, 265 F. Supp. at 38 (citation

omitted)).?8

Finally, as the court of appeals pointed out (Pet. App.

A26, A27), the record reveals that the prosecutors ceased

their questioning once each witness invoked the Fifth

Amendment (see J.A. 139-140, 141-142, 143, 150-151,

153-154, 154-155, 158). And the prosecutors in no way

tried to build their case around these assertions of the

Fifth Amendment. To the contrary, they took care to pre-

vent prejudice to the defendants by repeatedly advising the

?* Contrary tc the district court’s conclusion (Pet. App. C46-C47),

there is nothing improper in the fact that four of the witnesses were

asked questions concerning payment of their attorneys’ fees (see J.A.

139-140, 141-142, 143, 149-150). The grand jury was entitled to know

whether one of the targets was paying the attorneys’ fees for witnesses

who were refusing to testify before the grand jury. Payment of such

fees, for example, could constitute an act in furtherance of a con-

spiracy. See generally Jn re Grand Jury Proceedings (Pavlick), 680

F.2d 1026, 1028 (Sth Cir. 1982). In addition, “any conduct, the likely

effect of which would be to mislead or conceal,” is evidence of

willfulness in a criminal tax prosecution. Spies v. United States, 317

U.S. 492, 499 (1943). An attempt by a target to induce witnesses to

withhold information from the grand jury would constitute such con-

duct and would therefore be evidence of intent and guilty knowledge.

See generally Ewing v. United States, 386 F.2d 10, 15 (9th Cir. 1967)

(attempt to bribe a witness), cert. denied, 390 U.S. 991 (1968). Fur-

thermore, a corrupt endeavor to cause a witness to assert the Fifth

Amendment constitutes obstruction of justice. See, e.g., United States

v. Arnold, 773 F.2d 823, 824 (7th Cir. 1985); United States v. Baker,

611 F.2d 964 (4th Cir. 1979).

grand jurors that they should not draw any adverse in-

ferences from a witness’s invocation of the Fifth Amend-

ment (see, e.g., J.-A. 109, 130-131, 131-132, 155, 169-170).

That advice was given not only months prior to the time

the witnesses asserted the privilege, as acknowledged by

the district court (Pet. App. C25), but also virtually con-

temporaneously with the testimony of two of the witnesses

(see J.A. 153-155; see also J.A. 169-170). In short, there is

nothing about the brief appearances of the seven witnesses

who invoked the Fifth Amendment that would warrant

dismissing the indictment. See generally Namet v. United

States, 373 U.S. 179, 186-189 (1963); Baker v. United

States, 389 F.2d 629, 630-633 (7th Cir.), cert. denied, 393

U.S. 875 (1968).

6. Violations of Rule 6(d)

We do not dispute that Fed. R. Crim. P. 6(d) was

violated by the simultaneous appearances before the grand

jury of two IRS agents to read testimony given before the

prior grand jury. The violations, however, were only

technical ones. The prosecutors did not have any improper

motive, and, as the court of appeals found (Pet. App.

A18), the joint appearances could not possibly have preju-

diced the grand jury.

The joint reading of transcripts began when the agents

complained of colds and sore throats and asked the prose-

cutors whether they could read together to break up the

procedure (J.A. 52-53). Previously, only one agent had

appeared at a time to read transcripts (see, e.g., J.A. 119).

The prosecutors agreed to permit two agents to read

transcripts at the same time (one reading the questions and

the other reading the answers) (J.A. 54). Thus, the pro-

cedure was initiated for an entirely innocent reason, even

though it was technically inconsistent with Rule 6(d). .

The two special agents who did most of the joint

readings —Mendrop and Raybin — were familiar figures

who had appeared before the grand jury individually prior

to their joint appearances (e.g., G.J. Tr., Mendrop,

8/4/81, 9:25 a.m.; G.J. Tr., Raybin, 9/9/81, 10:02 a.m.).

It is not disputed that the agents gave no testimony of their

own when they appeared together before the grand jury.

And according to the agents’ testimony in the hearing

before Judge Kane (J.A. 66-67)— which was not contra-

dicted by the transcripts of the grand jury proceedings (see

J.A. 53-54)—no questions were asked during the readings.

Indeed, the prosecutors took steps to make sure that ques-

tioning would not occur. Thus, as the district court noted

(Pet. App. C8), the grand jurors were advised not to ask

questions when the agents appeared to read transcipts. In-

stead, they were instructed to jot down any questions they

had, so that the prosecutors could answer them later (J.A.

137-138). And the prosecutors instructed the agents not to

answer any questions (J.A. 53). The prosecutors also ad-

vised the grand jurors that if they were not satisfied with

having particular evidence introduced through the

transcript, the witness could be called in person (J.A. 138).

The joint reading of transcripts was a purely ministerial

function that did not place the agents’ credibility at issue.

Cf. United States v. Blitz, 533 F.2d 1329, 1344 (2d Cir.),

cert. denied, 429 U.S. 819 (1976). Thus, the technical

violation of Rule 6(d) in this case did not implicate the

concerns to which the rule is addressed —i.e., to safeguard

the secrecy of the grand jury proceedings and to protect

the grand jurors from the possibility of undue influence.

See Mechanik, 475 U.S. at 74 (O’Connor, J., concurring

in judgment). Here, grand jury secrecy was not jeopar-

dized; the agents were persons to whom disclosures of

grand jury information could properly be made under

Rule 6(e)(3)(A)(ii). And there was no danger of undue in-

fluence or intimidation of the grand jurors. Unlike in the

case of in tandem testimony, where there is a potential for

undue influence because each witness may corroborate the

other’s account and add to the other’s credibility, a risk of

undue influence is not present when the joint appearance

of witnesses involves only the reading of transcripts. And

there is nothing inherently intimidating about two agents

reading transcripts to the grand jury.2? In short, the

technical violation of Rule 6(d) in this case does not even

remotely warrant dismissal of the indictment.

7. Alleged use of grand jury to gather

information for civil purposes

The district court found that the record “suggests that

information was disclosed to other IRS agents for use in

civil cases” (Pet. App. C9). The district court also found

that there was a “serious possibility” that the grand jury

was “manipulated in order to obtain evidence useful in

later civil litigation” (id. at C12). The court of appeals re-

jected those findings, noting the lack of record support for

them (id. at A23) and pointing out (id. at A25 (footnote

omitted)) that the grand jury’s return of “an extensive in-

dictment is probative evidence that it was not abused to

obtain evidence for civil purposes.”*° ~—

The court of appeals correctly rejected the district

court’s findings. The district court’s determination that in-

formation may have been disclosed for civil purposes is

not only without evidentiary support but is in conflict with

prior findings made by the district court itself. Near the

end of the hearing, Judge Kane stated (J.A. 89-90), “[Ajs I

recall the testimony of the I.R.S. special agents, they have

emphatically denied turning over grand jury material to

29 Indeed, multiple government personnel routinely appear before

grand juries. For example, Rule 6(d) provides that government

“{a}ttorneys” (emphasis added) may be present in the grand jury, along

with “the witness under examination” (who may himse!f be a govern-

ment agent). Thus, the presence of more than one government official

in the grand jury is not deemed dy Rule 6(d) to be coercive per se.

in noting that the court “held that the return of an indictment

demonstrates that the grand jury wag not abused for solely civil pur

poses” (Bank Br. 21 n.19 (emphasis in original)). The italicized

language is nor part of the court’s holding.

the civil branch and I haven’t seen any evidence yet that

Says that that indeed was done.” No such evidence was of-

fered at any time after Judge Kane made that observation.

Similarly, the district court’s finding of manipulation is

based entirely on speculation. In making that finding, the

district court cited the fact that the IRS had an interest in

the evidence-developed (Pet. App. C12-C13), that several

investors in the tax shelters were interviewed by govern-

ment agents but were not called before the grand jury (id.

calculations of the taxes due on some of the investors’ tax

returns and that those calculations were not presented to

the grand jury (id. at C13-C14). Those factors do not sup-

port the district court’s finding of possible manipulation.

Most criminal tax cases involve alleged violations of

provisions of the tax laws that, in the absence of

willfulness, would still constitute civil violations. Thus,

the mere fact that the government performed calculations

of tax liability and gathered information that may also

have been relevant in a civil action is not enough to permit

an inference that the grand jury was manipulated. That is

especially true in the present case. As one of the special

agents testified (J.A. 29-30), the computations of tax

liability had no civil purpose, and those computations

were not turned over to anyone at the IRS who had a civil

function. And as the court of appeals noted (Pet. App.

A24), nothing in Fed. R. Crim. P. 6 prohibited the prose-

cution from availing itself of the expertise of IRS civil per-

sonnel, who performed the computations. See Fed. R.

Crim. P. 6(e)(3)(A)ii); United States v. Sells Engineer-

ing, Inc., 463 U.S. 418, 428 (1983).3!

me According to the district court (Pet. App. C38), the government

acted “in direct contravention” of this Court’s decisions in United

States v. Sells Engineering, supra (holding that Justice Department

Cc ° Division attorneys may not obtain grand jury materials for use in

civil actions without a court order), and United States v. Ba

) , . Baggot, 463

U.S. 476 (1983) (holding that an IRS civil tax audit is not

Furthermore, the investor interviews were entirely

proper as part of a thorough investigation. It is apparent

that in a criminal investigation involving a tax shelter, in-

vestors can be a source of information on the harm caused

to the government by the shelter. Moreover, the interviews

were relevant to possible mail fraud charges. At a trial for

mail fraud, the testimony of investors as to their reasons

for investing in the tax shelters would be relevant to

establish the representations that were made to investors

and to show that those representations had the potential to

defraud the investors. Indeed, during the hearings before

the district court, an agent explained the purpose of the in-

vestor interviews and indicated their relationship to mail

fraud (J.A. 26). In addition, the grand jury transcripts

reveal that at least three investors appeared before the

grand jury (see G.J. Tr., Long, 12/9/81, 10:04 a.m., at

5-6; G.J. Tr., Henkel, 2/4/82, 12:52 p.m., at 6-7, 9; G.J.

Tr., Moffet, 3/2/82, 3:05 p.m., at 4-8).*? Finally, the

27-count indictment itself confirms that the interviews

were conducted for a valid criminal purpose. The indict-

ment names investors whom the defendants assisted in fil-

ing false returns and to whom the defendants mailed items

(Indictment 48, 55). In short, the court of appeals properly

“preliminarily to or in connection with a judicial proceeding” for pur-

poses of Rule 6(e)(3)(C)(i). The district court’s conclusion is factually

incorrect, as we have shown. Moreover, it should be noted that Sei/s

Engineering and Baggot were not decided until after the indictment in

the present case was returned. And the law was anything but clear

prior to those decisions, as Chief Justice Burger's dissenting opinions

in those cases demonstrate.

32 There is, of course, no requirement that every person interviewed

by government attorneys or agents be presented to the grand jury. Cf.

United States v. Chanen, $49 F.2d 1306, 1312 (9th Cir.) (noting that

“the grand jury generally relies on the prosecutor to determine what

witnesses to call” and that the prosecutor “determines what evidence

to present before the grand jury”), cert. denied, 434 U.S. 825 (1977).

The fact that various investors were interviewed but did not testify

before the grand jury does not show that the investors were inter-

viewed for an improper purpose.

rejected the district court’s finding that the grand jury had

been manipulated for civil purposes.??

8. Disclosure of the identity of targets of the investigation

During the investigation, the government sent letters to

potential witnesses who had had business relationships

with the targets of the grand jury investigation, but who

were beyond the reach of the grand jury’s subpoena

power. Those letters identified the targets and the general

nature of the investigation. The letters indicated that “[i]t

has been determined that your testimony will be helpful in

resolving questions which still face the Grand Jury,” and

they invited the recipients to appear before the grand jury.

Pet. App. C15-C16. The district court concluded (id. at

C15-C17) that the government’s disclosure of the identities

of targets of the investigation violated Rule 6(e). In our

view, that ruling is erroneous and provides no basis for

dismissal of the indictment.

The letters in question did not constitute improper

disclosures of “matters occurring before the grand jury”

(Fed. R. Crim. P. 6(e)(2)); they revealed no more than

would typically be revealed to a witness during questioning

when he appeared to meet with a prosecutor or to testify

before the grand jury. Any blanket prohibition against

disclosing to potential witnesses the identity of the targets

or the general subject matter of an investigation would

make it impossible for the prosecutor to direct a witness’s

testimony to the matter under investigation or for him to

determine whether the witness had any information that

was of use to the grand jury. Petitioners have cited no

authority—and we know of none—holding that the

>> There is likewise no merit jn the district court’s finding (Pet. App

C9) that the prosecutors relinquished to the IRS their responsibility to

determine the persons to whom disclosures of grand jury material

would be made. As the court of appeals concluded (id. at A23), the

district court’s finding is unsupported by the record.

government, in private letters to, or discussions with,

potential witnesses, may not reveal anything about the

subject matter of a grand jury investigation. Thus, it was

not unreasonable for the prosecutors to believe that such

disclosures were a permissible way of obtaining informa-

tion for the grand jury investigation.**

9. Imposition of secrecy obligations on two witnesses

In two instances, a prosecutor instructed witnesses, con-

trary to Fed. R. Crim. P. 6(e), that they should not reveal

the fact that they had testified before the grand jury or the

contents of their testimony (Pet. App. C18). Both

witnesses were attorneys who had previously represented

petitioners Kilpatrick and O’Donnell in administrative

34 Also failing to support dismissal of the indictment is the district

court’s finding (Pet. App. C9-C12) that disclosure lists required by

Rule 6(e) were inaccurate and were not filed promptly. The district

court noted, without any citation to the record, that numerous IRS

personnel given access to grand jury material were never identified on

the lists and “remain unknown even now” (Pet. App. C9). The district

court also found (id. at C11) that persons involved in a project to

prepare a computerized index of grand jury materials were “apparent-

ly” omitted from the lists. However, the record does not show that any

IRS employee was omitted from the disclosure list. Moreover, an

agent had an imprecise recollection at the hearing that three people on

the disclosure list were key punch operators involved in the computer

project (K. Tr. 76). And we know of no evidence that any key punch

operators were actually omitted. As for the promptness of the

preparation of the disclosure lists, it is true that the government

prepared a “catch-all” disclosure list at the end of the investigation (see

Pet. App. A24). But in a 20-month investigation, it was inevitable that

some personnel would not have been listed previously. There is no

evidence that the prosecutors and agents deliberately delayed the addi-

tion of names to the disclosure lists for some improper purpose. On

the contrary, an agent testified (J.A. 19) that the U.S. Attorney's Of-

fice, which handled the preparation of the lists, was requested to add

names to the lists “at or about the time that people were to be in-

volved.” Significantly, Judge Winner stated, “I have no fault to find

with the paper trail left in this matter insofar as the disclosure re-

quirements are concerned” (Pet. App. D25).

proceedings involving the tax shelters (id. at C19). The

prosecutor told the grand jury that they were calling the

attorneys as witnesses because “[t]he primary focus of our

investigation involving the financing is the factual repre-

sentations made concerning Marlborough Investments

Limited, IFDC.” The prosecutors explained that they

wanted “to know what the lawyers were told by the prin-

cipals, and what information they relayed to the parties”

(ibid.). Based on that statement, the district court con-

cluded that the secrecy obligations were imposed for the

strategic purpose of “prevent{ing] defendants from deter-

mining the nature and extent of any such communication

so _ have been revealed and to foreclose a challenge

oO such testimony based upon an i ivilege”

(ibid.). That conclusion is — —

During the hearing before Judge Kane, the prosecutor

acknowledged that he had made a mistake when he at-

tempted to impose a secrecy obligation on the witnesses

but that he had done so because of his concern over grand

jury leaks (J.A. 72-75).35 The prosecutor also testified that

he had conducted only one grand jury investigation prior

to the instant investigation (J.A. 87). He further testified

that, at the time he examined the two attorneys, while he

was familiar with Rule 6(e)(2), he was not focusing on the

provision of that rule that has been interpreted as pro-

ake of secrecy obligations on witnesses

Statements of the prosecutor before the grand jury show

that the prosecutor was seeking only unprivileged ma-

terials and information from the targets’ attorneys, as

to which the privilege had already been waived (A.

125-126, 128-129).3* Neither the court nor petitioners have

** Earlier, there had been allegations by Kilpatrick’s attorney that

someone had approached Kilpatrick and attempted to sell hi

jury information (J.A. 73, 75). P im grand

tions between the attorney witnesses and their clients does not by itself

cited anything in the grand jury testimony of the two

witnesses (or in any other part of the record) to indicate

that the prosecutor attempted to pressure either witness in-

to violating the attorney-client privilege.

Finally, it does not appear that the prosecutors had

anything to gain by imposing the secrecy obligations. If

the two attorneys had voluntarily disclosed privileged

communications before the grand jury, those communica-

tions could not have been suppressed at the grand jury

stage, even if petitioners had learned about the testimony

immediately after it occurred. Cf. United States v. Calan-

dra, supra; Lawn v. United States, supra; United States v.

Rogers, 751 F.2d 1074, 1079 (9th Cir. 1985). More fun-

damentally, a secrecy obligation that takes effect after a

witness has testified in the grand jury could not have the

effect of inducing the witness to breach the attorney-client

privilege (or preventing the client from stopping such a

breach).*’

7 * * * *

indicate that he was seeking privileged information, since not every

communication between a lawyer and his client is privileged. See, e.g.,

United States v. Jones, 696 F.2d 1069, 1072-1073 (4th Cir. 1982); Jn re

Sealed Case, 676 F.2d 793, 808-809 (D.C. Cir. 1982); United States v.

Bump, 605 F.2d $48, 550-551 (10th Cir. 1979); B. Gershman, Prose-

cutorial Misconduct § 2.4(d), at 2-22 to 2-23 (1987); cf. United States

v. Wolfson, $58 F.2d 59, 66 (2d Cir. 1977) (noting that the “ordinary

presumption [is] that a lawyer is competent to protect his client’s con-

fidential interests before the grand jury”).

}? In addition to the nine grounds discussed above, petitioners cite

additional alleged misconduct that warrants only brief response. First,

they claim (Bank Br. 29; Kilpatrick Br. 41) that one of the prosecutors

violated this Court’s decision in Massiah v. United States, 377 U.S.

201 (1964), by interviewing employees of the Bank of Nova Scotia,

without counsel for the Bank being present, after the issuance of the

indictment. As the court of appeals (Pet. App. A22) and Judge Kane

(id. at C49) recognized, that incident obviously could not have af-

fected the grand jury’s charging decision, since it occurred after the in-

dictment was returned. Moreover, the prosecutor involved, who was

In sum, we submit that there is no legal or policy basis

for dismissing an indictment in the absence of prejudice.

But even if it were proper in some circumstances for a

court to do so, that drastic step would not be appropriate

here. For the most part, the present investigation was

handled in a professional manner, and the record reflects

that the grand jury was independent and active. Much of

the alleged misconduct found by the district court was en-

tirely lawful. The rest of the acts were isolated incidents

limited to this case. Thus, even if petitioners were not re-

quired to demonstrate prejudice, the alleged errors, taken

together, would not warrant the drastic remedy of

dismissal of the indictment in this 20-month investigation.

not one of the prosecutors who conducted the grand jury investiga-

tion, had only a limited role in the case prior to the return of the in-

dictment (J.A. 36; K. Tr. 1095-1096). In any event, the conduct does

not appear to have been improper. Since a corporation is a distinct en-

tity from its stockholders, officers, and employees, the prosecutor

could reasonabiy conclude that there was no Sixth Amendment princi-

ple that barred him from interviewing an unindicted employee of the

Bank without first contacting the Bank’s counsel.

In addition, the Bank of Nova Scotia refers to a statement pur-

_portedly made by a prosecutor that even if the target was not guilty,

the government would “break” him with the cost of the defense (Bank

Br. 3). The prosecutor strongly denied making that statement (Pet.

App. C14), and both Judge Kane and Judge Winner declined to

resolve the question whether the witness who attributed the statement

to the prosecutor was telling the truth (see Pet. App. C14, D14-D15).

ee a

CONCLUSION

The judgment of the court of appeals should be af-

firmed.

Respectfully submitted.

CHARLES FRIED

Solicitor General

WILLIAM S. ROSE, JR.

Assistant Attorney General

WILLIAM C. BRYSON

Deputy Solicitor General

ROBERT H. KLONOFF

Assistant to the Solicitor General

GARY R. ALLEN

ROBERT E. LINDSAY

ALAN HECHTKOPF

Altorneys

MARCH 1988

APPENDIX

STATUTE AND RULES INVOLVED

Section 2111 of 28 U.S.C. provides:

Harmless error

On the hearing of any appeal or writ of certiorari in any

case, the court shall give judgment after an examination of

the record without regard to errors or defects which do not

affect the substantial rights of the parties.

Rule 6, Federal Rules of Criminal Procedure, provides in relevant

part:

The Grand Jury

* * * * *

(d) Who May Be Present. Attorneys for the government, the

witness under examination, interpreters when needed and,

for the purpose of taking the evidence, a stenographer or

operator of a recording device may be present while the

grand jury is in session, but no person other than the

jurors may be present while the grand jury is deliberating

or voting.

(e) Recording and Disclosure of Proceedings.

(1) Recording of Proceedings. All proceedings, except when

the grand jury is deliberating or voting, shall be recorded

stenographically or by an elecronic recording device. An

unintentional failure of any recording to reproduce all or

any portion of a proceeding shall not affect the validity of

the prosecution. The recording or reporter’s notes or any

transcript prepared therefrom shall remain in the custody

or control of the attorney for the government unless other-

wise ordered by the court in a particular case.

(la)

(2) General Rule of Secrecy. A grand juror, an interpreter, a

stenographer, an operator of a recording device, a typist

who transcribes recorded testimony, an attorney for the

government, or any person to whom disclosure is made

under paragraph (3)(A)(ii) of this subdivision shall not

disclose matters occurring before the grand jury, except as

otherwise provided for in these rules. No obligation of

secrecy may be imposed on any person except in accord-

ance with this rule. A knowing violation of Rule 6 may be

punished as a contempt of court.

(3) Exceptions.

(A) Disclosure otherwise prohibited by this rule of mat-

ters occurring before the grand jury, vwcher than its

deliberations and the vote of any grand juror, may be

made to—

(i) an attorney for the government for use in the

performance of such attorney’s duty; and

(ii) such government personnel (including person-

nel of a state or subdivision of a state) as are deemed

necessary by an attorney for the government to assist

an attorney for the government in the performance of

such attorney’s duty to enforce federal criminal law.

(B) Any person to whom matters are disclosed under

subparagraph (A)(ii) of this paragraph shall not utilize

that grand jury material for any purpose other than

assisting the attorney for the government in the perform-

ance of such attorney’s duty to enforce federal criminal

law. An attorney for the government shall promptly pro-

vide the district court, before which was impaneled the

grand jury whose material has been so disclosed, with the

names of the persons to whom such disclosure has been

made, and shall certify that the attorney has advised such

persons of their obligation of secrecy under this rule.

ee —— or

a eee i ee

el ein hee

ters occurring before the grand jury may also be made —

(i) when so directed by a court preliminarily to or in

connection with a judicial proceeding;

(ii) when permitted by a court at the request of the

defendant, upon a showing that grounds may exist

for a motion to dismiss the indictment because of

matters occurring before the grand jury;

(iii) when the disclosure is made by an attorney for

the government to another federal grand jury; or

(iv) when permitted by a court at the request of an

attorney for the government, upon a showing that

such matters may disclose a violation of state criminal

law, to an appropriate official of a state or subdivi-

sion of a state for the purpose of enforcing such law.

If the court orders disclosure of matters occurring before

the grand jury, the disclosure shall be made in such man-

ner, at such time, and under such conditions as the court

may direct.

(D) A petition for disclosure pursuant to subdivision

(e)(3)(C)(i) shall be filed in the district where the grand

jury convened. Unless the hearing is ex parte, which it may

be when the petitioner is the government, the petitioner

shall serve written notice of the petition upon (i) the at-

torney for the government, (ii) the parties to the judicial

proceeding if disclosure is sought in connection with such

a proceeding, and (iii) such other persons as the court may

direct. The court shall afford those persons a reasonable

opportunity to appear and be heard.

(E) If the judicial proceeding giving rise to the petition is

in a federal district court in another district, the court shall

transfer the matter to that court unless it can reasonably

obtain sufficient knowledge of the proceeding to deter-

mine whether disclosure is proper. The court shall order

transmitted to the court to which the matter is transferred

the material sought to be disclosed, if feasible, and a writ-

ten evaluation of the need for continued grand jury

secrecy. The court to which the matter is transferred shall

afford the aforementioned persons a reasonable oppor-

tunity to appear and be heard.

(4) Sealed Indictments. The federal magistrate to whom an

indictment is returned may direct that the indictment be

kept secret until the defendant is in custody or has been

released pending trial. Thereupon the clerk shall seal the

indictment and no person shall disclose the return of the

indictment except when necessary for the issuance and ex-

ecution of a warrant or summons.

(5) Closed Hearing. Subject to any right to an open hearing

in contempt proceedings, the court shall order a hearing

on matters affecting a grand jury proceeding to be closed

to the extent necessary to prevent disclosure of matters oc-

curring before a grand jury.

(6) Sealed Records. Records, orders and subpoenas relating

to grand jury proceedings shall be kept under seal to the

extent and for such time as is necessary to prevent

disclosure of matters occurring before a grand jury.

* * * * »

Rule 52, Federal Rules of Criminal Procedure, provides in relevant

part:

Harmless Error and Plain Error

(a) Harmless Error. Any error, defect, irregularity or

variance which does not affect substantial rights shall be

disregarded.

~- US GOVERNMENT PRINTING OFFICE 1987— 202-.037'60367

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.