Opposition Brief — Gregory v. United States

Office- Supreme Court, U.S.

(n) FILED

ed WOY 23 1984

No. 84-520

ALEXANDER L. STEVAS,

SubRi—

Iu the Supreme Court of the Hnited States

OCTOBER TERM, 1984

E.A. GREGORY AND VONNA JO GREGORY, PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE ELEVENTH CIRCUIT

MEMORANDUM FOR THE UNITED STATES IN OPPOSITION

Rex E. LEE

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

TABLE OF AUTHORITIES

Page

Cases:

Grand Jury, In re, 524 F.2d 209, cert. denied,

EE ee Sete dd CRU A a SMR a 6cdcecescess 5

Kastigar v. United States, 406 U.S. 441 ......... 4

United States v. Blue, 384 U.S. 251 ............ 5

United States v. McDaniel, 482 F.2d 305 ....... 5

United States v. Pantone, 634 F.2d 716 ......... 5

United States v. Seiffert, 463 F.2d 1089 ........ 3

Statutes:

Bankruptcy Reform Act of 1978, 11 U.S.C. 344 .. 2

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(I)

In the Supreme Court of the Hnited States

OCTOBER TERM, 1984

No. 84-520

E.A. GREGORY AND VONNA JO GREGORY, PETITIONERS

Vz

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE ELEVENTH CIRCUIT

MEMORANDUM FOR THE UNITED STATES IN OPPOSITION

Petitioners contend that the government, both before the

grand jury and at trial, utilized evidence tainted by their

prior immunized testimony in a bankruptcy proceeding.

1. Following a jury trial in the United States District

Court for the Southern District of Alabama, petitioners

were convicted on one count of conspiracy to misapply

bank funds, make false statements, and commit wire fraud,

in violation of 18 U.S.C. 371, and on eight counts of misap-

plication of bank funds, in violation of 18 U.S.C. 656.!

Petitioner E.A. Gregory was sentenced to concurrent two-

year terms of imprisonment on each count. His wife, peti-

tioner Vonna Jo Gregory, was sentenced to concurrent

'Two co-defendants, G.W. Atkinson and Robert Spurlock, were

convicted on the conspiracy count. Atkinson was also convicted on six

of the substantive counts. Spurlock’s certiorari petition, which raises an

issue unrelated to the instant petition, is pending before the Court in

No. 84-542.

(1)

2

three-year terms of probation on each count. The court of

appeals affirmed in part but remanded for a further eviden-

tiary hearing to establish whether the government’s proof

had been derived entirely from sources independent of peti-

tioners’ immunized testimony. Pet. App. 1 B-67B; 730 F.2d

692.

The pertinent facts are se: out in the opinion of the court

of appeals (Pet. App. 17B-22B). Briefly stated, in November

1975 petitioners purchased a controlling interest in the

Bank of Camden (Alabama), which was renamed the Wil-

cox County Bank. Both petitioners were on the board of

directors, and petitioner E.A. Gregory was chairman of the

board. While they controlled the bank, petitioners, aided by

their co-conspirators, engaged in various forms of self-

dealing at the bank’s expense. The substantive counts

against petitioners related to a series of loans made by the

bank to corporations owned by petitioners in the month

following petitioners’ sale of their bank stock. The loans

totalied $864,000 and were made in April and May 1977.

Petitioners and their corporation sought relief from their

creditors under the Bankruptcy Act. Five weeks later, peti-

tioners met with their creditors. Pursuant to 11 U.S.C. 344,

they requested and were granted immunity under 18 U.S.C.

6002 covering their testimony in the bankruptcy proceed-

ings. At the time of the bankruptcy proceedings, the FBI

and the Federal Deposit Insurance Corporation (FDIC)

were investigating petitioners for possible criminal viola-

tions. FDIC personnel, along with representatives of some

23 creditors, attended the meetings at which petitioners

gave their immunized testimony.

Prior to their criminal trial, petitioners moved to dismiss

the indictment on the ground that it was tainted by the prior

immunized testimony. The district court required petition-

ers to cite specific immunized testimony and to state how

=

3

that testimony affected the government’s case. As to each

item cited by petitioners, the government demonstrated

that it had an independent source for its proof. The district

court then denied the motion to dismiss. See Pet. App.

1A-3A.

2. On appeal from petitioners’ convictions, the court of

appeals affirmed in part but remanded the case for a further

hearing on the issue of whether the immunized testimony

had tainted the proceedings. The court of appeals found

that the district court had erred in placing on petitioners the

burden of going forward to challenge specific items of the

government’s proof (Pet. App. 20B-29B). Rather, the court

concluded, it was the government’s burden to “ ‘show how

it acquired all of the evidence admitted below.’ ” /d. at 28B,

quoting United States v. Seiffert, 463 F.2d 1089, 1092 (Sth

Cir. 1972). The district court was directed to dismiss the

indictment unless the government could establish an inde-

pendent source for all of the evidence presented to the grand

jury. A new trial was to be ordered if the government was

unable to establish an independent source for all of its trial

proof. Pet. App. 28B-29B. The court of appeals upheld the

district court’s finding that an independent source had been

established for the items originally proffered by petitioners

at the district court’s direction. /d. at 24B & n.2.

3. Petitioners seek review on three grounds relating to

the district court’s rulings on whether their immunized tes-

timony tainted the proceedings. First, they allege that the

district court, in finding that there was no taint with respect

to the evidence considered by the grand jury, improperly

speculated that independent sources would have led the

government to that proof (Pet. 21-24). Second, petitioners

argue that the district court misstated the law in ruling that

the prosecution may have access to and may have studied

immunized testimony without necessarily having used that

testimony (Pet. 24-28). Third, they contend that the

4

government’s investigation following the bankruptcy pro-

ceedings must have drawn upon various aspects of the

immunized testimony (Pet. 29-38). All of these complaints

relate to the investigatory and grand jury phases of the

proceedings below.

Petitioners’ claims are not presently ripe for review by

this Court. On remand the government must discharge its

“heavy burden” of establishing that all its grand jury proof

and all its trial proof not previously examined was pro-

duced from sources wholly independent of petitioners’

immunized testimony. Kastigar v. United States, 406 U.S.

441, 461-462 (1972). As yet there has been no determination

of taint regarding the government’s evidence presented to

the grand jury. Thus, at a future hearing, the district court

may determine that some or all of the government’s evi-

dence was tainted and, accordingly, may dismiss the

indictment or order a new trial. On the other hand, if the

court finds that the government has satisfactorily shown

that all of its evidence was derived from a source wholly

independent of petitioners’ immunized testimony — as the

courts have already done with respect to ten categories of

trial evidence? — then petitioners may seek review of that

determination in an appeal after remand. It is obviously

premature, however, for this Court to address petitioners’

complaints regarding the grand jury proceedings until after

2As to the ten specific categories of trial evidence, the government

affirmatively demonstrated that knowledge of each item was derived

from a source before and independent of the hearing at which petition-

ers gave immunized testimony (Pet. App. 24B-26B n.2). Petitioner does

not challenge the concurrent factual determinations of the courts below

that such sources existed, and thus his hypothetical independent source

argument has no conceivable application with respect to this untainted

evidence.

5

the remand hearing on that issue mandated by the court of

appeals.3

Petitioner’s complaints about the district court's referen-

ces to a speculative independent basis for certain evidence

and the possibility that government agents examined

immunized testimony were not addressed by the court of

appeals. Both of the district court’s references were made in

the context of the grand jury proceedings that will be sub-

ject to examination on remand (Pet. App. 2A-3A). On

remand, the district court will have to determine whether

the government made any use of their immunized testi-

mony. Mere access to that testimony is not sufficient to

establish taint. United States v. Pantone, 634 F.2d 716,

719-722 (3d Cir. 1980); In re Grand Jury, 524 F.2d 209, 219

(10th Cir. 1975), cert. denied, 425 U.S. 927 (1976). Compare

United States v. McDaniel, 482 F.2d 305 (8th Cir. 1973)

(taint found when prosecutor read three volumes of defend-

ant’s immunized testimony prior to seeking indictment).

These factbound questions should be decided in the first

instance by the district court. Should that court rule against

petitioners, they will be free to litigate that determination

through post-remand appellate review.

It is therefore respectfully submitted that the petition for

a writ of certiorari should be denied.

Rex E. Lee

Solicitor General

NOVEMBER 1984

3We note in this connection our disagreement with the holding of the

court of appeals that dismissal of the indictment would be a proper

remedy upon a showing that petitioners’ immunized testimony had

been directly or indirectly used before the grand jury. See United States

v. Blue, 384 U.S. 251, 255 n.3 (1966).

DOJ-1984-11