Opposition Brief — Smith v. United States

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Nos. 86-100 and 86-111

SPANIOL, J

ERK

Iu the Supreme Court of the United 5

OCTOBER TERM, 1986

WILLIAM T. SMITH, JR., PETITIONER

Vv.

UNITED STATES OF AMERICA

ALAN R. STONEMAN, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

CHARLES FRIED

Solicitor General

WILLIAM F. WELD

Assistant Attorney General

MERVYN HAMBURG

Attorney

Department of Justice

Washington, D.C. 205380

(202) 633-2217

“zs Spe:

"4

QUESTIONS PRESENTED

1. Whether Fed. R. Crim. P. 23(b), which au-

thorizes a district court to excuse a juror for just

cause after deliberations have begun and to allow

the 11 remaining jurors to return a verdict, is con-

stitutional (Nos. 86-100, 86-111).

2. Whether the district court’s supplementary in-

structions introduced a new theory of criminal lia-

bility (No. 86-100).

3. Whether the district court committed reversibie

error when it refused to order production of certain

confidential medical records of the principal govern-

ment witness (No. 86-111).

4. Whether the district court committed reversible

error when it denied petitioner Stoneman’s severance

motion (No. 86-111).

(1)

TABLE OF CONTENTS

— Page

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TABLE OF AUTHORITIES

- Cases:

Rugendorf vy. United States, 376 U.S. 528 .............. 10

United States v. Acosta, 763 F.2d 671, cert. denied,

OS Ee Ee aS) ae 11

United States v. Graham, 548 F.2d 1302 _........... 10

United States vy. Stratton, 779 F.2d 820, certs. de-

nied, No. 85-6741 (June 2, 1986)—No. 85-1919

EE 7,8

United States v. Walker, 720 F.2d 1527, cert. de-

a ohnintinbiwaccenecnies 11

Williams v. Florida, 399 U.S. 78

Statutes and rules:

Ce csdopmiasipentoniuainaticasi 2

18 U.S.C. 1841......... OF AE NAEP beets Fa 2

EL Se a Renee PE 2

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Fed. R. Crim. P.:

Rule 8(b) 0... CUE 2G PO a ee 10

ATES ERS Cr tik Aeon aD 7 8

Rule 23(b) ......... ne ee Se are ees kaa 6, 7,8

A RE ee 8

(TIT)

Iu the Supreme Court of the United States

OCTOBER TERM, 1986

No. 86-100

WILLIAM T. SMITH, JR., PETITIONER

Vv.

UNITED STATES OF AMERICA

No. 86-111

ALAN R. STONEMAN, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

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

24a) is reported at 789 F.2d 196.’

1“Pet. App.” refers to the appendix to the petition for a

writ of certiorari in No. 86-100.

(1)

2

JURISDICTION

The judgment of the court of appeals was entered

on April 28, 1986. Petitions for rehearing were de-

nied on May 23, 1986 (86-100 Pet. App. 54a-55a;

86-111 Pet. App. B1). The petition for a writ of

certiorari in No. 86-100 was filed on July 12, 1986,

and the petition in No. 86-111 was filed on July 22,

1986. The jurisdiction of this Court is invoked under

28 U.S.C. 1254(1).

STATEMENT

After a jury trial in the United States District

Court for the Middle District of Pennsylvania, peti-

tioners were convicted of conspiracy to commit mail

fraud and to travel interstate in aid of racketeering,

in violation of 18 U.S.C. 371. Petitioner Smith was

also convicted on four counts of mail fraud and four

counts of use of an interstate facility to promote acts

of bribery, in violation of 18 U.S.C. 1341 and 1952,

while petitioner Stoneman was acquitted on the sub-

stative counts. Smith with sentenced to 12 years’

imprisonment and fined $63,000. Stoneman was sen-

tenced to four months’ imprisonment and fined

$10,000. The court of appeals affirmed (Pet. App.

la-24a).

1. The evidence at trial, which is summarized in

the opinion of the court of appeals (Pet. App. 4a-7a),

showed that in 1983 and 1984 petitioners partici-

pated in a conspiracy to bribe public officials in or-

der to obtain inflated contracts from the Common-

monwealth of Pennsylvania and its political subdi-

visions. The contracts at issue were contracts to pre-

pare applications for the recovery of excess Social!

Security (FICA) taxes paid to the federal govern-

ment. In early 1983, petitioner Smith, the Republi-

can Party Chairman of Dauphin County, Pennsy]l-

3

vania, began discussions with John Torquato, the son

of a former Democratic Party Chairman for Cambria

County, Pennsylvania, about how to obtain such con-

tracts. Smith and Torquato agreed to make political

contributions to officials who could influence the

awarding of FICA recovery contracts. After enlist-

ing the help of David Herbert, the State Director of

Social Security, to identify potential sources of

FICA recovery contracts, Smith and Torquato de-

cided to concentrate on Allegheny County, the City

of Pittsburgh, and the State government. The FICA

recovery contracts for those entities were pursued

from January 1983 through October 1984 with the

assistance of petitioner Stoneman, who, like Smith,

is a lawyer. Pet. App. 4a-5a.

a. In April 1988, a contract from Allegheny

County was obtained by co-defendant CTA, Ltd., Inc.,

a corporation formed by petitioner Stoneman in No-

vember 1982. Petitioners also used CTA to buy in-

fluence with James Scanlon, the head of Allegheny

County Computer Services, and with Eugene Scan-

lon (James’ brother), the Minority Whip of the

Pennsylvania Senate. They paid for a weekend trip

to New York for James Scanlon and his family and

offered him a $50,000 job with CTA. They offered

Eugene Scanlon mailing lists for his daughter’s bus-

iness, the use of a rental car, payment of the cost of

an airline ticket for a third Scanlon brother, and

$100,000 to set up what Torquato called a “widget

factory” in Hong Kong. Pet. App. 4a-da.

On December 16, 1983, shortly after the contract

with Allegheny County came to an end, Torquato

sent Smith a check for $1,000 for his services, with

a letter discussing how to increase their influence

with Herbert. They agreed on a strategy, and on

4

January 5, 1984, Stoneman created a California cor-

poration known as Com-Max. The conspirators’ plan

was to furnish Herbert and other officials with stock

in Com-Max, which would increase in value if the of-

ficials used their influence and authority to award

excessively profitable FICA recovery contracts to

CTA or other companies associated with Com-Max.

Pet. App. 5a.

Late in January, Stoneman sent 1,500 shares of

Com-Max stock to Herbert and another 1,500 shares

to the chief clerk of Allegheny County, promising

to repurchase the stock in three years for at least

$15,000. In September 1984, Allegheny County se-

lected CTA for another FICA recovery contract,

even though other companies had submitted much

lower bids. The contract was signed by Torquato on

Stoneman’s behalf and by the chief clerk of Allegheny

County. Pet. App. 5a.

b. The City of Pittsburgh entered into a $150,000

FICA recovery contract with CTA for the year be-

ginning June 1983. CTA then hired an unsuccessful

bidder for the contract to do the work for $35,000.

CTA obtained the contract from the city by making

payments to Robert Rade Stone, the President of the

Pittsburgh City Council. Stone was given $6,374.86

in cash and options for 35,000 shares of Com-Max

stock. Both payments were made through petitioner

Stoneman. Profits from the FICA recovery contracts

were to be used to increase the value of the Com-Max

stock. Pet. App. 5a.

ce. Petitioners’ successful effort to obtain the

FICA recovery contract for all. Pennsylvania state

employees began in early 1983. Smith and Torquato

first offered money to Republican State Chairman

Robert Asher. With his assistance, they obtained

a hearing in the Governor’s Office, which controlled

5

the award of the contract. When it appeared that

the Governor’s Office would not produce a contract

for them, Smith and Torquato successfully undertook

to have legislation enacted to transfer the contract-

awarding power to Smith’s long-time friend, State

Treasurer R. Budd Dwyer. Senate Minority Whip

Eugene Scanlon and House Majority Leader Jim

Manderino helped in getting the legislation passed.

The day the bill passed in the lower house, Torquato

purchased $500 in tickets to a fund-raising event

sponsered by Manderino. Pet. App. 6a.

On May 10, 1984, the Treasurer, after discussions

with Smith and Torquato about a $300,000 payment,

awarded the Pennsylvania contract to Computer

Technology Associates, Inc., a Pennsylvania corpora-

tion that Smith and Torquato had formed the previ-

ous month. Out of the $6 million price of the con-

tract, Smith and Torquato were to receive $4 million

in profits. The afternoon the contract was awarded,

Torquato met with Herbert and offered him $100,000

to be deposited in a Swiss bank account. Pet. App.

6a.

Smith immediately sought a legal ruling from the

Attorney General of Pennsylvania that the contract

was exclusive. Through the Attorney General’s Press

Secretary, Smith offered to provide $100,000 for the

Attorney General’s reelection campaign. The Attor-

ney General ruled that the Treasurer’s Counsel could

decide the issue, and the Treasurer’s Counsel subse-

quently ruled that the contract was exclusive. Pet.

App. 6a-7a.

In June 1984, shortly after securing the lucrative

state contract, Smith and Torquato, with Stoneman’s

knowledge, formed a new corporation to try to hide

the connection between Com-Max and Computer Tech-

6

nology Associates, Inc. An investigation commenced

soon thereafter. A search of Torquato’s home pro-

duced records of payments to various public officials,

including Dwyer, Herbert, Eugene Scanlon, and

Stone. The state contract was voided. An account-

ing firm eventually performed the work required by

the $6 million contract for between $845,000 and

$1,300,000. Pet. App. 7a.

2. The court of appeals affirmed petitioners’ con-

victions (Pet. App. la-24a). The court upheld the

district court’s decision to allow jury deliberations

to go forward with 11 jurors after one of the de-

liberating jurors became disabled by a car accident

on the fourth day of deliberations (Pet. App. 18a-

19a). The court of appeals held that Fed. R. Crim.

P. 23(b), which permits a district court to proceed

with a jury of 11 in such circumstances, is not un-

constitutional. The court also rejected petitioners’

contention that the district court had introduced a

new theory of liability on the conspiracy count when

the court gave the jury a supplemental instruction

on the issue of multiple conspiracies (Pet. App. 10a-

14a). The court of appeals further held that peti-

tioners’ constitutional rights were not impaired by

the trial court’s refusal to order the production of

the confidential aleoholism-treatment records of John

Torquato, who was the government’s chief witness

and whose admitted alcoholism was the subject of his

own and others’ testimony (Pet. App. 19a-21a). Fi-

nally, the court of appeals upheld the district court’s

denial of petitioner Stoneman’s motion for severance.

The court concluded that Stoneman had suffered no

prejudice, because the jury could readily separate

the evidence presented against each of the two de-

fendants (Pet. App. 2la-22a).

7

ARGUMENT

The decision of the court of appeals is correct, it

raises no signficant issue of federal law, and it does

not conflict with decisions of this Court or of other

courts. Accordingly, further review by this Court is

not warranted.

1. Petitioners challenge (Smith Pet. 11-14; Stone-

man Pet. 8-14) their convictions by an 11-person

jury as unconstitutional. On the fourth day of jury

deliberations, after a trial of almost three months,

one of the deliberating jurors was injured in an auto-

mobile accident and could no longer participate in the

deliberations. Over petitioners’ objections, the dis-

trict court directed the jury to continue deliberations

with only 11 members. That course was authorized

by a 1983 amendment to Fed. R. Crim. P. 23(b),

which permits an 11-person jury if the district court

finds it “necessary to excuse a juror for just cause”

after deliberations have commenced. The jury there-

after reached a unanimous verdict.

Petitioners’ argument that Rule 23(b) is uncon-

stitutional is meritless. The only other federal court

to consider the question readily concluded, as the

Third Circuit did here, that the provision is consti-

tutional. United States v. Stratton, 779 F.2d 820,

830-835 (2d Cir. 1985), certs. denied, Nos. 85-6741

and 85-1919 (June 2 and 23, 1986). That conclu-

sion is correct. The Constitution does not require 12

jurors for conviction. Williams y. Florida, 399 U.S.

78 (1970). Conviction by an 11-person jury is no

less valid because the jury began with 12 members.

There is a strong public interest in completing a

trial, like petitioners’, that has consumed vast public

resources; and reducing the jury from 12 to 11 in no

way impairs the interest of a defendant in a jury

8

that is fair, impartial, and deliberative.* The pro-

vision of Rule 23(b) that authorizes such a reduction

—in the district court’s “discretion,” but only when

it is “necessary” and there is “just cause’’—was

properly promulgated by this Court pursuant to 18

U.S.C. 3771 and is a sensible solution to a problem

that arises rarely and unpredictably. See Advisory

Committee Notes to Fed. R. Crim. P. 23; United

States y. Stratton, 779 F.2d at 831-833.

2. Petitioner Smith challenges (Smith Pet. 8-11)

certain supplemental jury instructions, which he

claims altered the theory of liability from the one

set forth in the indictment. The trial court initially

instructed the jury on the distinction between a

single conspiracy and multiple conspiracies in ac-

cordance with the proposed instruction that had been

discussed at the charging conference. See Pet. App.

10a-l1la (quoting instruction). The next day, be-

lieving there to be some confusion, the trial court

gave a supplemental instruction on the same point.

See Pet. App. lla-12a (quoting supplemental in-

struction). In the court of appeals, petitioners ar-

gued that the supplemental instruction introduced a

new theory of liability by permitting conviction for

multiple conspiracies. The court of appeals rejected

that argument (Pet. App. 10a-14a), correctly con-

cluding that the supplemental instruction merely

2 Contrary to petitioners’ contention, the provision of Rule

23(b), Fed. R. Crim. P., permitting an 1l-person jury does

not conflict with the provision of Rule 31(a), Fed. R. Crim.

P., requiring that the jury’s verdict be unanimous. After a

court has authorized deliberations to continue with an 11-

person jury, the remaining 11 jurors must still be unanimous

in their verdict. Petitioners’ suggestion that there is no

difference between a unanimous 11-person verdict and a non-

unanimous 12-person verdict is specious.

9

clarified the original instruction and still required

the jury to find a single conspiracy in order to con-

vict. Neither petitioner challenges the contents of

the supplemental instruction in this Court.

Petitioner Smith, however, challenges two different

supplemental instructions (see Smith Pet. 10) on the

same ground—that they allowed the jurors to “con-

vict on. the conspiracy even if they found three sepa-

rate schemes involving different people in an unde-

fined relationship to a master conspiracy” (Smith

Pet. 11). This contention is patently devoid of merit.

The instructions to which Smith now objects were not

the ones that were the focus of petitioners’ challenge

below. Moreover, the two instructions on which peti-

tioner Smith now focuses relate only to the substan-

tive mail fraud counts of the indictment, not to the

conspiracy count. The challenged instructions thus

have no bearing on the distinction between single and

multiple conspiracies.

3. Petitioner Stoneman challenges (Stoneman Pet.

14-18) the denial of access to certain medical records

that he sought in order to impeach the government’s

chief witness, John Torquato. Torquato had attended

an alcoholism-treatment program. Petitioners, seek-

ing to impeach his credibility, moved for production

of Torquato’s records from that program, which are

confidential, absent “good cause,” under the federal

statute protecting the secrecy of the records of drug-

rehabilitation programs. 42 U.S.C. 290dd-3. The trial

court and the court of appeals both concluded that the

“good cause” exception did not apply and that the

Constitution did not require disclosure (Pet. App.

20a-21a, 46a).

Petitioner Stoneman argues that his due process

rights were violated by the unavailability of the re

10

quested medical records. The court of appeals’ rejec-

tion of that argument is both correct and inherently

fact-specific. Torquato admitted his alcoholism, and

both he and other witnesses were subjected to exten-

sive cross-examination on the subject (Pet. App. 20a-

21a, 46a). The records would have “only marginally”

helped impugn Torquato’s credibility, yet their dis-

closure would have “severely prejudice[d] [the]

public interest requiring confidentiality” (Pet. App.

21a). In these circumstances, petitioner Stoneman

was not unlawfully hindered in his ability to chal-

lenge the case against him. See United States v.

Graham, 548 F.2d 1302, 1314 (8th Cir. 1977); ef.

Rugendorf v. United States, 376 U.S. 528 (1964)

(disclosure of informer’s identity subject to balancing

test).

4. Petitioner Stoneman finally argues (Stoneman

Pet. 18-24) that the district court’s refusal to sever

his case from that of petitioner Smith denied him a

fair trial. The court of appeals correctly held that

denial of the severance motion was within the district

court’s discretion (Pet. App. 2la-22a). Petitioners

were properly tried together because they were

charged with the same conspiracy (id. at 22a). See

Fed. R. Crim. P. 8(b). Moreover, there is ample sup-

port for the court of appeals’ conclusion that Stone-

man was not prejudiced because the jury was able to

“compartmentalize the evidence against each defen-

dant” (Pet. App 22a). The jury had before it only

two individual defendants. Petitioner Stoneman’s

role in the criminal activity (chiefly sending stock

certificates and forming corporations) was clearly

distinguished at trial from Smith’s role (making di-

rect approaches to public officials). The jury was

instructed that Stoneman’s participation in the con-

11

spiracy must be proved by his own acts and state-

ments. And the acquittal of petitioner Stoneman on

the substantive counts, together with the conviction

of Smith on some of those counts, indicates that the

jury could and did carefully sift the evidence against

each defendant separately. See, e.g., United States

Vv. Acosta, 763 F.2d 671, 697 (5th Cir.), cert. denied,

No. 85-5312 (Oct. 7, 1985) ; United States v. Walker,

720 F.2d 1527, 1533-1535 (11th Cir. 1983), cert.

denied, 465 U.S. 1108 (1984).

CONCLUSION

The petitions for a writ of certiorari should be

denied.

Respectfully submitted.

CHARLES FRIED

Solicitor General

WILLIAM F.. WELD

Assistant Attorney General

MERVYN HAMBURG

Attorney

NOVEMBER 1986

vw ues. GOVERNMENT PRINTING OFFICE; 19866 161483 40098