Brief for the US in Opposition — Art National Manufacturers Distributing Co. v. Federal Trade Commission

“INDEX

Opinions below. .-. --- ~~. - -

Jurisdiction. ____. nonce

Questions presented. __.._ - - ;

x Statute involved__

Statement Sat dae dia 7

A: Events leading up tou sie | present pros-

Pe cokecsnedewecemacaecne —_

rs Evidence of petitioner McCue, Jr. ‘s guilt :

. Evidence of petitioner MeCue, Sr.’s guilt _-

eeeae a tk on atetiivn tueedwbus

Conclusion ~.— _.. - _

, CITATIONS

Cases:

Brandote v. *niled States, 268 F. 559.

Browder v. United States, 312 U.S. 335

Butzman v. United States,.205 F. 2d 343, cer-

tiorari denied, 346 U.S. 828__.

Cohen v. United States, 201 F. 2d 386, certi-

orafi denied, 345 U.S. 951-20.

Conrad v, UV nited States, 255 F. 2d 247.

Cooper v. United States, 282 F. 2d 527.

De Rosier v. United Stafes,218 F.2d 420.___ -

Fisher v. United State%, 254. F. 2d 302, certi-

orari denied, 358 YS. 895_______- ina

Haminer vy. United States, 271 U.S. 620. oenes

Knowles v. United States. 224 F. 2d 168. __ -

Marzani v. United oe 168 F. 2d 133,

affirmed, 335 U.S dns hh oe ee eee

Petite v. United States, “ v S. 529...

Pittsburgh Plate Class Co. v. ‘United States,

643221-42——-1

eae

*Cases—Continued y ae a

_ Seymour v. United States,-77 F. ate. 23.

Smith v.. United States, 257 F. 2d 133__--.-- "= ae

Todorow v: United ‘States, 173 F. 2d 439, cer-

' - tiorari denied, 337 U.S. 926... -..2-.---- 21

/" . Travis v. United 8 , 269 F.2d 928, re- - ;

>, “ S versed, 36409).S. 631]-. --.-- teawchen anon 21

‘ .. United States v. Apex Distributing Co., 148 F.

RN sinks scan Mine cenad cnckce 18

i see States v. Beacon Brass! Co., 344 U. S. 43 20

nited States v. Bramblett, 848 U. 8. 503-____: 19

United Statey v. Gilliland, 312 U.S. 86. -_- 17, 18,19 -

United States v. Goldsmith, 108 F. 2d 917, cer-

” tiorari denied, 309 U.S. 678-_.__..-.------ 21

. “United States v. Kiltian, 246 F. 24.77__------ 21

United States v. McCue,.160 F. Supp. 595--- - 5s

United States v. Meyer, 140 F, 2d 652--_---.- 20

‘ United States v. Philippe, 173-F. Supp. 582... -19

* United States v. Quirk, 167 F. Supp: 462, af- ,

‘firmed, 266 F..2d 6....:... euee akc k as 2°. 18

United States v. Silver, 235 F. 2d SS 19

United States-v.. Wood? 14 Pet. 430_....--- ind 21

United States v. Zavala, 139.F. 2d S..2..... @ .

Weiier v. United States, 323-U.S. 606-.2.--.2 21:

- Young v. United States, 214 F, 2d 232.--..-. 23

—. Statutes: =

~ — Inte a Nenu Code‘of 1939:

Sec 5(a) (26 U.S.C. 1952. ed., Sec:

PUES tis de nnadaweeun sees "4,5, 11,13

Sec. 145 (b) {26 U.S.C. es ed., Sec.

Ns echo eh 4,5, 11, 13

. . Sec. 3616(a) (26 U.S.C. “1952 ed., Sec.

Re, Seen pe ee 11, 13

18 U.S.C. 1001__+.---- 2,8, 12, 13, 14, 17, 18, 19, 21

Miscellaneous; ,

Balter, Fraud Under Federal Tox Law (2d ed. ee

9 Sein tc eycdeand eae wucmerece 17

-™

ee.

3 on Qe — Court of he United Sites :

| OctoneR TERM, 1961

c

~

No. 981

.

JAMES O. McCus, JR, AND James O. McCur, SRs

e. PETITIONERS * | 3 £

| v.

_Unitep States or AMERICA,

® -

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIROUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

__ OPINIONS BELOW - |

The opinion of the court of appeals (Pet. 5a-17a)

has not yet been reported. _ One opinion of the district

court (P2A. 115a-134a)' is reported at 178 F. Supp.

426; a second opinion of. the district court (P.A-

i si is unreported.

JURISDICTION ;

The ‘uihalabaiats of the court of appeals were entered’

on March 20; 1962 (Pet. la—4a), and_a timely petition

1In this brief in opposition, as in the petition. for a writ of

certiorari, petitioners’ appendix in the court below (“Appel-

lants’ Appendix”) is. designated “P.A.,” and the government’s

(“Appellee’s Appendix”) is designated “GA. *

(1) A ,

9

for rehearing was denied on April 20, 1962.* The peti-.

tion for a writ of certiorari was filed -on May 18,

1962. The — of this Court is invoked under

28 USC. 1254(1)> eae,

QUESTIONS PRESENTED °

1, Whether. the. bringing of this“ prosecution for —

; mpking false oral statements in 1954 to Treasury agents

‘investigating petitioners’ income tax hability violated °

fair standards of federal criminal justice i in view of thé

prior ‘disposition of indictments charging petitioners

with attempts in 1951 and 1952 to evade and ‘defeat

their ineome taxes. ; .

2. Whether ‘petitioners’. conduct in making ‘false

oral statements to Treasury agents in‘'a matter within

the jurisdiction of the Internal Revenue Service con-

stitutes a violation of 18 U.S.C. 1001. | |

3. Whether the government’s failure to have’ cer-

tain grand jury testiniony recorded by a stenographer

constituted reversible error.

4: Whether the question: asked of petitioner Me-

Cue, Sr., in answer to which he mads a false state-

- ment, was too vague and ambiguous : to support a

conviction.

- STATUTE INVOLVED

Section 1001 of the Criminal Code (18 U.S.C. 1001)

‘provides:

‘Whoever, in any matter within the jurisdic-

tion of any department or ageney ef the United

States: knowingly and willfully falsifies, con-.

ceals or covers up by any trick, scheme, or

device a material ‘fact, or makes any false,

fictitious or fraudulent statements or repre-

”

v

sentations, or makes or uses any false writing <¢-

* orMocument knowing the same to contain any

nig fictitious or fraudulent statement or en- Ay

try, shall be fined not more than $10,000 my

five years, or hott ——_—__—_..

ot .

STATEMENT

On Fehruary 2, 1959, the petitioners were indicted —

in the United States District Court for the District

of Connecticut; each on three counts, - for having

' knowingly and wilfully made false statements and

representations to.specia] agents of the Internal Rev- |

enue Service in August 1954, in a matter within ihe

jurisdiction of the Treasury Department, Internal

Revenue Service, in violation of 18 USC. 1001 (P.A.

3a, 6a-8a, 418a-420a). After a seven-week ‘trial be-

fore a jury, petitioner McCue, Jr., was convicted in’

May 1960 on two evunts (P.A. 314a—375a ) and was

fined $5,000 on each count and sentenced to -concur-

rent one-year prison terms, execution of which was to .

be suspended after service of four months and peti-

tioner to be placed. on probation for one year from

that date (P.A. 409a). After. an eleven-day trial

before another jury, petitioner McCue, Sr., was con:

victed in October 1960 on one counit (P.A. 547a) and

was: fined $5,000 and sentence d'to serve a one-year:

prison term, with the same provision for suspension

after four months and one year’s probation running

from that date (>, A. 551a-552a).

‘A. EVENTS izapiio UP. TO THE PRESENT PROSECUTION

In the latter part of 1954, a Treastury special agent ‘

was conducting an investigation of the income tax

returns of petitioners for the years 1946-1952 and ”

y. ,

4... |

those of the Stamford Rolling Mills Company (a

corporation) for the fiseal years ended Augu&t 31,

1947, through ‘August 31, 1951 (G.A. 52-53, 435)

~

Petitionet McCue, Sr., was President and Treasurer

of the corporation; petitioner McCue, Jr., was Vice-

President; and the entire stock of the corporation

was held by the McCue family and in family trusts

(G.A. 89, 153). Petitioners made the false state-

‘ ments involved in this prosecution at separate con-

ferences: in August 1954 in» response to questions

— -put to them by the agent (see pp. 5-10, (ufra).2 Some .

- ten months later the agent submitted his report, ree-

ommending that both petitioners be prosecuted for

the wilfu! attempted evasion of income taxes (P.A.

“178a, 451a-452a; G.A. 53, 439). The agent did not -

recommend prosectition for the making of false oral

statements in 1954 (G.A. 66, 448, 451, 558).

In May 1956 the Department of Justice directed.

the then United States Attorney to institute criminal -

proceedings against both petitioners for ‘the wilful

attempted evasion of their personal income taxes

for the years 1950 and 1951, ‘in. violation of Section

145(b) of the Internal Revenue Code of 1939, a fe lony

provision (P.A. 20a). The then United States At-

- torney requested authorization to prosecute petition-

ers instead under Section 145(a) of the Code, a

misdemeanor provision, but. such authorization was

?Coilaborating in the investigation, of which the special

agent was in charge, was an. Internal Revenue agent, who

handled the “audit” or civil tax aspects of the case and avho

was present at the conferences in Atagust 1954 (G. A. 03, 415,

wil

{>

ay

denied (PLA. 19, oa). Ih, March 1957, a grand

jury indicted petitioners for a Laie of Section *

145(b) (P.A. 14a-18a). On April 15, 1957, the then |

United States Attorney, appearing in court with peti-

-tioners and their. counsel, moved the court to allow

McCue, Sr., to pleaa to a misdemeanor charge under

_ Section: 145(a) and to dismiss the charge against

MeCue, Jr. (PLA. 558a, 5660). McCue, Sr.. pleaded

nolo par ndere, and the court found him guilty a as

‘to two counts, adjudging cone urrent sentences of a

£10,000 fine, a suspended prison term of one year

and two years’ probation; the court.also dismissed the,

/indictment aghinst McCue, Jr. (PLA. 564a-566a).°

B. EVIDENCE OF PETITIONER MCCUE, JK.’S GUILT

Petitioner MeCue, Jr, aiade the false oral state-

ments toa Treasury nipgy agent at a conference held .

on Angust 31, 1954 (G.A . do), 418-429). . McCue, J Tes

_¢ame.to the meeting seul, Was accompanied by

his attorney, was advised of his constitutional rights —

and stated that he understood them (G.A. 418). He.

gave testimony nuder oath (ibid. ). The comits as to

which he was found guilty (C ‘outs J and III) related

to false travel vouchers and to water wells drilled on

“One week later. the then United States Attorney appeared

before the court accompanied by an attorney from the dDe-

partment. of Justice and moved that the judgment convicting

MeCue. Sr., of violating Section 145(a) be vacated on the

ground that, since a violation of that section was not a lesser

included offense under Section 145(b), the court had been

without jurisdiction to render the judgment. This motion gras

denied. United States v. McCue, 160 F. Supp. 595 (2. Conn.).

oo . P ;

°

b

his personal estate. The evidenge of his guilt may be

summarized briefly as follows:

1. During the period August 1947-1951, monthly

travel vouchers were submitted tothe corporation on

behalf of petitioner McCue, Jr., averaging $1,774.00 -

per month over the, four-year period (GA, 372-399).

_ The voucher was usually prepared at the end of each

month by McCue, Jr:, and given to’ the corporation's

paymaster, who would prepare the reimbursement?”

check, «ash it at the bank and turn the cash over to

McCue, Jr. (G.A, 92, 97-98, 100, 113-114, 133-143).

No substantiating documents were ever presented to

support McCue, Jr.'s claim for payment (G.A, 104).

All of these amounts were treated as deductible ex-

penses by the corporation (G.A, 102). At the August

31, 1954, conference, the 'Preasury special agent asked

McCue, Jr., **Were you at all times at the places

shown on the dates shown on these memos 2°"; * peti-

tioner McCue, -- answered under oath, * ¥es-——fethe—-——

hest«f my knowledge we were; ves” (G.A. 427). This

answer, which was the basis for Count I, was false. -

As. the court below described the government's evi-

dence on this.point (Pet. 9a) : ,

The Government was able to show from cor-

porate records, iieluding the gatemen’s books,

cafeteria slips and telephone tol] slips and from

the records of the McCues” country club that

they were in fact at the plant or nearby on.

the dates on which, according to the travel

vouchers, they purported to be in other cities.

‘Tt is clear from the context that “memos” referred to the

travel vouchers.

.

- o . -

‘

Indeed, defense counsel conceded in his summation tu

the jury that the MeCnes were usually not at the

places on the dates shown in. the travel vouchers (G_A.

05, BIT -—BIR; R2O-BZD). | aan

2. At the Audtist 3h, 1954, conference, the Treasury

special agent asked petitioner MeCue, Jdr., about Sonne

water’ well drilling serviees that had Deen performed

on his personal estate but Which had been paid for by

the corporation and treated by it for tax purposes

as deductible expenses. The following qiestions were

asked by the agent and answered by MeCue, Jr., under

eath (GAA. 423): . |

~ Q. Wie negotiated to liave this well drilled

at vour place /

ACT haven't “any idea, not even to this day.

Q. Who paid for fhe well drilling operation ?

A. I don’t know.

, QQ. Did vou?

A. No, sir, I didn't-need it. 1 didn’t want.

it. I didy’t authorize it, and knew nothing

_ about. it. | .

As the court below found, the falsity of these stite-

tients. Whieh were the basis for Count TTL, was

‘ “amply established by the evidence (Pet. 9a): .

MeCue, Jr. ordered the well drilled, examined,

discussed and accepted the propesatprovided

a thi tits engaged for the work, and ordered

| them to undertake it. He was kept informed

of the work on the well,as it proceeded and

discussed its progress with drillers. He went

with them to choose a spot-on his property for

drilling the well. As with his father the loca-

tion of the well drilling equipment, its size and

644221-—42—- 2

&

‘the noise of the operation make it impossible

- that he. was unawave tliat a well was being

* drilled on kis property. .

The record fully supports this eapsule summary by

the court of appeals (P.A. 183a-187a, 271a-27a, 278a—-

279a : GA. 72-77, 82-84, 147-151, 184-991, 397, 399-415,

417).

_ C. EVIDENCE OF PETITIONER MCCUE, SRS GUILT

Petitioner McCue, Sr., made the false oral state-

ment to a Treasury special agent at a conference held

on August 13, 1954 (G.A. 637-653). McCue, Sr, |

through his- attorney; had’ volunteer dd to appear bée-

fore the agents to testify, and this offer.was accepted

(GA, 451). He was accompanied by his attorneys,’

was advised of his constitutional rights and stated that

he understood them. (G.A, 637-638). He gave testi-

mony under oath (G.A. 638). The connt as to which

he was found guilty (Count TIT) -related to water

wells drilled and reconditioned on. his personal estate.

The evidence of his uilt may be summarized briefly

as follows: - - 2 asi

At the August 13, 1954, conference,, the Treasury

special agerit asked McCue, Sr., about some water

‘well drilling and reeonditigning services that had been

_perfgrmed on his personal estate... As in the case of

his son, the services had ‘been paid for by the cor-

poration, which charged the payments to ‘‘Repair—

. Expenses” and took them as deductions on its income -

’ tax return. The following questions were asked by —

°"

=

the ogent and answered by McC Ue, Sr.. under oath

(Gi. A AAR): . ,

~ Who negotiated to have the work’ done? =

. Jack McCue [ MeCug? Sr.’s brother].

: Was he told to haye it done ?

A. No, he dene-a tot of things or all things.

He was at my home with people, with .cus-

tomers, at meetings. T presume-he did.’ ‘

Q. You didn’t have a thing to do with it -

A. Not a thing. yr

These answers, the last one of which served as a basis

——for Count TLL, were. false. The eotrt of appeals suum-

marizedéthe evidence establishing their falsity as fol-

lows (Pet. Sa): : af

il McCue, Sr had in fact / fom several oe-

easions dise pa his need for More water with

Downey, the purehasing agent of the Cony: my,

and sometime late in 1950 61 carly in 1951,

his own office and in the presence of MeCue,

Jr. had instructed Downe ‘y to have wells drilled |

con his property ayd’on the property oecupied *

as a-home by Me@ue, Jr. Downey engaged the *

se PVICeS of a company in. the business of drill-

- ing wells and the.two wells were drilled.

~ Downey discussed with MeCue; Sr. certain

_ diffic ultivs which were encountered in the course

of driJling the welJs. The well on thé property. . |

of MeCue, Sr. was. about three hundred feet

_ from his house and the derrick used in drilling

"it was about foyty or fifty feet high. * The drill-

“ ing equipment/ makes a noise like a pile driver.

* é /* a2 + *

_ Jack MeQue had nothing whatever to do with

the well aril or the negotiations, and the

/ -

po

/ “

Th

men in charge of the drilling had never even

heard of him.

The court’s summary is f: lly epee, by the: ree-

ord (P.A: 452a-453a, 455a, 456a-460a; G.A. 455-459

463, 465, 467-470, 480-481, 486-487, 490-492, 506- 50,

510-5 nee 517, 518, 525, 562-563, 636,. 655-667). oO

' ‘

ARGUMENT

1. Petitioners claim here, as they urged in the court

below, that’ in “repudiating” an alleged agreement”

not to prosecute the present charges, the government —

violated “minimal standards of honor and fair deal--

ing in Government prosecutorial practices” (Pet. 9)

that should be enforced by this Court (Pet. 8-14).-

They do not make any legal argument to the effect ,

that petitioner McCue, Sr.’s plea to the earlier charge

(see p. 5, supra) was ‘falsely induced” so as to in-

validate that conviction, but rather urge intervention

by this Court as a matter, of its discretion “to exercise

its supervisory powers over the adniinistration of

federai criminal justice’’ (Pet. 9}- The short answer

to this: request is that_ the record does not syipport the

existence ‘of an agreement not to press the instant

charges. Furthermore, we respectfully. urge that as

a general rule—and certainly in the cireumstances

disclosed by ‘this case—the enforcement of informal

agreements between counsel is not a proper function

of. this Court.’

* Petitioners appear to have abandoned their contentions,

' pressed vigorously in thé court of appeals, that the. instant

prosecutions are barred on the theory of estoppel and because

their subject matter was part of a binding statutory compro-

mise entered into between defense counsel and the former

ll

(a) As the citations advanced in support of it

readily disclose, petitioners’ statement (Pet. 5) that

““Ctlhe United States Attorney promised that, if

MeCue, Sr. would plead nolo contendere to mis-

demeanor charges, the indictment against McCue, Jr.

would be dismissed and the charye that defendants

made false statements to Special Agents of the In-

ternal Revenue Service would enot be proseceuted”

(emphasis supplied) is without the slightest, foun-

dation.’ On the contrary, those references show that

the possibility of the petitioners’ being charged with

_ having made false statements to the government was

never even considered ‘in. the discussions leading up

to the alleged agreement. The only charges that

were discussed ‘were the tax evasion charge under

- Section 145(b) of the 1939 Code and its possible

reduction to a misdemeanor charge under Section

145(a) or Section 3616(a) of the 1939 Code for the

filing of false returns (P.A. 3la-32a, 39a); there

was no discussion of a possible charge for making

United States Attorney. In any event the trial court, in a

lengthy opinion, pointed out many reasons why those points

are without merit (P.A. 115a-134a), and the court of appeals

agreed (Pet. 14a-17a)., | 24

* After correctly obsetving that “the exact confines of the

agreement were never clearly defined” (Pet. 14a), the court

below stated that “it may. be assumed, for our purposes, that

both the United States Attorney and counsel for defendants

fnderstood that the offenses which are the subject of the

present prosecution were to be included in the agreed upon

disposition of the matter” (¢mphasis supplied: ./4/d.). This

assumption arguendo is not a finding that the agreement so

provided, for the court plainly meant that in view of the

grounds on which it disposed of this issue, it did not’ matter

whether or not the agreement so provided. a

12 ,

false statements to a Treasury special a agent. in vio-

lation of 18 U.S.G. 1001 (tbid.; see also G.A. 14-

15). No such chargé was then pending (B.A. 95a);

. neither ‘thad the investigating agent’ recommended

_ the prosecution of such a charge (G.A, 66), nor had - -

the Department of Justice been requested to authorize | -

such a charge (P.A. 9la). The then. United States

Attorney who had made the alleged agreement with

petitioners had never given **any thought’’ ( P.A. 99a)

- to the possibility of bringing a charge under 18 U.S.C.

1001; ‘‘all [he] had in mind”’ in making the agree- _

ment, was “the disposal of the indictments’’ then

pending (P.A.-9la), and he had not ‘intended, nor -

did he Consider himself authorized, .tv. bind the .

; government a any charges not then pending”

ie ‘short, pa the extent that any agre ement not to —

prosecute urider 18 U.S.C. 1001 ever existed, it existed

only. in the minds of petitioners’ trial counsel—who,

for all the record ‘shows, had not themselves. enter-

tained any thought of a possible prosecution for the

making of false. staterients to the government, but

who would presumably have been quite receptive. to

the notion of blanket immunity for their clients from

prosecution on any conceivable charges., It borders,

we suggest, on an affront to the responsibility of the

* The United States Attorney did state that, in making the

agreement, he “never intended to bring any other charges”

(P.A. 99a); however, he testified that he had never disclosed

that intention to petitioners’ attorneys (ibid.). Moreover, as

we have noted, that intention was arrived at without due

consideration having been given to the possibility that peti-

tioners should be poesecuted under 18 U.S.C. 1001.

. 13

Pern. Beet mae '

then United States Attorney to allege that be would

make a, Wholesale agreement not to prosecute peti-

~ tioners on chargés which neither he nor they (so far

as tW® record shows) had ever considered. - Such an.

agreement would be so plainly contrary to public

policy as not only to be unworthy of enforcement but

"as to raise serious questions as to the good faith of the

partie s entering inte it.

Nor is it reasonable to suppose that even the broad-

‘est sort of agreement not to proseeute further any

matters arising out of the filing of petitionérs’ tax”

returns would embrace the prosecution of charges

under 18 U.S.C. 1001. That statute is wholly’ distinct

from the tax statutes and serves an entirely different

governmental purpose. While the criminal tax laws,

such as Sections 145(a), 145(b) and 3616(a) of the

1939 Code, supra, ave designed to protect the federal

revenue, 18 U:S.C, 1001 is designed to enforce every

citizen's obligation to deal truthfully with his govem-

ment in all matters within its proper jurisdiction.,

So diverse are these.two classes of enactments that

an agrecinent to refrain from’ prosecuting. urider )

one of them could not. properly be considered as

embracing ‘the other’ where such a broad purpose had

‘not been spelled out with the most unequivocal spec-

ificity. Especially is this so where, as here, the prose-

cutions under the two sets of statutes involve wholly

separate, transactions. The 1957 prosecution under

Seetion 145 of the Internal Revenue Code of 1939 was,

for attempts, carfied out in 1951 and 1942, to evade

and defeat income taxes for the years-1950 and 1951

by filing false and fraudulent income tax returns ( P.A.

‘

oe /

“\14a-17a) ; the 19 09 prosec ution under 18 U.S. C. 1001

was for making false oral statements under oath in

1954 to a duly authorized representative of the govern-_

_ ment acting in a matter within the jurisdiction of his

-agency.. Plainly enough, the fact, that. the latter .

offense oc courted in the course of the. investigation of

the former does not create the identity hetw een the two

upon which petitioners basé their argument. .

(b) Petitioners’ efforts retrospectively to transform

what was at most a simple agreement not to press

any pending tax evasion charges into a wholesale ah-

dication of the prosecutor’s responsibilities suggests

what is perhaps the most compelling reason for the

Court’s not entertaining this issue; namely, that such

agreements are, not ordinarily ‘susceptible of effective,

judicial enforcement. Agreements between counsel ~

for the parties toa law suit, whether in a civil pro-

ceeding or between prosecution and defense, are nor-

mally inforthal. They are not usually, reduced to writ-

ing or made a matter of record: indeed, as was the

* ease here (G.A. 12-13), the court is often not even

informed of the existence of an agreement, let alone

of its terms, for the parties to such an agreement

do not contemplate. that it will ever be judicially

enforced gr in any way be binding on any court. As

the trial court..discovered: in unsuccessfully attempt-

ing to make an accurate reconstruction of this agree-

ment, the parties’ recollections of such informal trans-

actions soon fade and, consciously or unconsciously,

eften tend to reflect what they later wish the agree-

ment had provided (see, e.g. G.A. 34-35). Such.

vague and often hiased retrospect prov ides no proper

*, : : 15

basis for judicial action. The execution of most such

agreements must very largely de pend, as it has always

depended, upon the parties’ conte miporary under-

standing and knowledge of. its. terms and purposes

and upon the confide nee of each in the: good faith of

the other. ©. |

Moreover, there. are many considerations bearing

Upon Whether, or the extent to which, an informial

agreement between counsel should be given. effect.

that can be adequately appreciated and acted upon

~, only by the. parties themselves. There may, for ex-

ample, be a critical change in the. cireumstances to

: which the agreement relates.. Or one or the other of

_ the parties aay have failed to make a full disclosure

of the relevant facts. By. the same token, it would

seem that the fact that, in this ease, the then United

States Attorney acted not only without. the authority

of the Departnient-of. Justice in. making the alleged

agreement but directly contrary to its instructions

(see pp. 4-9, supra) would have some -relevance in

deternuning how generously the alleged agreement

ought fe be construed and in what way any douwbts

should he resolved. Each of thesg consider ‘ations must

be weighed by each party in relation to the terms and

purposes of the agreement ‘in question and to his own

professional and personal éonscience. None of thém.

ean be: properly exyaluated in its full context by a

court far removed from the circumstane es that gave

; rise cay the agreement.

. Petitioners also argue (Pet. 13-14) that tiaie

voilicteala for tax exasion and their subsequent indict-

_ment on-the present false statement charges consti-

16 «

‘tuted “multiple prosecutions” such as to raise ‘‘seri-

‘ous questions for the administration of federal

eruminal justice.”’ be Petitioners do not argue, nor

could they argue, that there was any legal bar to the

present. prosecution; no question, for example, of

double jeopardy is involved. “What they do contend

is that the general policy of the Attorney General,

cnunciated in the government’s Motion to Vaeate the

Judgment and Dismiss the Indictment (p. 3) in Petite

v. United States, 361 U.S. 529, 530, that **several of-

*+* & *&

fenses arising out of a single transaction ‘ should

not be made the basis of multiple prosecutions” ought

to be enforegg—indecd, judicially enforeed—in this

case. |

We note at the outset that the two prosecutions

involved here—one based on the filing of fraudulent -

_ tax returns in 1951 and 1952, the other. based.on false

oral statements made in 1954—in no sense arose “*out

of a sirigle transaction”’ (see pp. 13-14, supra). More

importantly, however, the enforcement of such policies -

as this, as well as the ultimate exercise of that broad

power of judgment known as the “prosecutor’s dis-~

cretion,” have always heen thought properly to reside ~~

in the Attorney General. Petitioners have suggested

no sound reason for transferring that administrative

function to this or any other court. Nor does the

manner in which executive discretion was exercised in

this case suggest any occasion for judicial concern.

The prosecution of petitioners and the arguments

made on appeal in support of these convictions were ,

authorized, reviewed and re-reviewed at the highest

levels of the Department of Justice. While the fraud

attempted to be perpetrated upon the government by

m

aa 17

petitioners’ false oral statements plainly called tor

vigorous prosecution, the fact that petitioners had

previously been prosecuted for. tax’ evasion on not

wholly unrelated facts was, of course, a matter to be

takep into acceunt. ° But no less relevant was the

consideration that’ one petitioner (McCue, Sr.) had

at that time been convicted of only a misdemeanor

and the other ‘had cotten off scot free—both in cir-

cumstances Where the Department's otherwise in-

variable policy has been to press for a felony convie-

tiun (see G.A. 25-26; Balter, Fraud Under Federal

Tar Law (2d ¢d.), p. 140). The executive determina-

tion was neither hightly nor carelessly made, nor, we

submit, Was it inequitable. We suggest that, on the

‘contrary, a failure to prosecute might well have been

viewed as a gross discrimination in favor of the

wealthy and influential. -

3. Petitioners contend (Pet, 15-25) that Section

1001 of the Criminal Code does not apply to the false,

‘statements they made to the Treasury special agent

because (a) in their view, the false Statements did not

pervert the functioning of government. offices, (b)

the statements weré made in response to questions put

by a criminal investigator, and (c) the statements.

were oral. None of these arguments has’ merit.’

* Petitioners’ argument as’ ‘o the severity of the punishment

permissible’ under 18 U.S.C. 1001 (Pet. 17) was answered by

this Court 20 years ago when. it stated (United Ntates vy. Gilli-

land, 312 U.S. 86, 95): “The matter of penalties lay within the

_ discretion of Congress. Section [1001] covered a variety of

offenses and the penalties prescribed were maximum penalties

which gave a range for judicial gemtences according to the

circumstances and gravity of parficular violations.”

*

18

(a) Petitioners repeatedly (Pet. 16; 17, 18) urge

that their conviction cannot stand because their false

. Statements’ did not ‘sueceed. in perverting the fune-

“tioning of.a government office: But it is settled

that the existence of an offense under 18 U.S.C. 1001

does not depend upon the false statement’s having

_ sueceeded jn its fraudulent purpose. United Stites

Vv. Gilltiand, 312 US. 86, 933° Butzman ve United

States, 205 F. 2d 3483 (CLAL 6), certiorari denied,

346 U.S. 828: De Roster v. United States, 218 F.2d

420, 423 (CLA. 5) : United States v. A pew Distributing

Co, 148 F. Supp. 365, 371 (DRL): United States v.

Quirk, 167 F. Supp. 462, 464.(¢6,D. Pa.), affirmed

per ‘curiam, 266 F.2d 26 (C.AL 3). Moréover; peti-

tioners’ conduct here .(see pp. 5-10, spray was -

plainly caleulated to pervert the functioning of ‘the

Internal Revenue Service—i.v., deceptively to induce

"misdirected administrative action by persuading the

Treasury agents that the investrgations weninst both

petitioners and their corporation sheuld be wonnd

up without criminal or civil sanctions, and with as,

small a‘tax deficiency assessment as possible. The

fact that the effort failed is of no consequence so far

as 18 U.S.C. 1001 is coneerned.

(b) Equally. without merit is petitioners’ broad

“argument (Pet. 17-20) that the statute was not. in-

tended to apply to any false statements’ made te

criminal investigators.” The statute contains no such’

‘Tt shonld be recalled (see note 2. p. bosivvrr) that the false

statements here were made not only to the special agent but also

to the Internal Reverrne agent who was, present and who was

in charge of the civil aspeets of petitioners’ tax cases. See

Knowles v. United States, 224 F.2d 168 (CLA. 10), sp

e

1Y | -

limitation, and the appellate cases are to the con-

trary. Brandow, v. United States, 268 F. 2d 559

(C.A. 9); United States v. Silver, 935. F.2d 375, 377

(C.A. 2); Cooper v. United States, 282 F. 2d 527,

530 (C.A. 9); Cohen v. United States, 201 Fy 2d 386,

392 (CLA. 9), certiorari denied, 345 US. 951." This

Court has said that 18 U.S.C. 1001 should be con-

strued ‘‘according to its literal and natural import”

(United States v. Gilliland, 312 U.S. 86, 90-91) and

that Congress had made ele ar its purpose (312 U.S.

at 93) 7

to protect the authorized functions of govern-

mental departments and agencies from the per-

version Which might result-from the deceptive -

practices deseribed. We see no reason why

this apparent intention should be frustrated

by construction. a es

See also United States v..Bramblett, 348 U.S. 503, -

09-10, We submit that te-constre48-ES.C- 100b

as not applying to duly. authorized representatives

of government departments.conducting ‘investigations

upon substantive matters within the jurisdiction of

the same departments, because a eviminal prosecut lon

Was foreseeable, would plainly frustrate the intention

Petitioners rely (Pet. 18-19) of three district court cases—

two of them from the Second Circuit and only one ‘of’ whieh,

United States ve Philippe. V3 F. Supp. 582 (S.D.N.Y.), in-

volved a Treasury special. agent. The rationale of Ph/Jippe

was that false statements to a special agent “are hardly caleu-

——tted-to, and cannot ‘possibly pervert the authorized functions

of a Special Agent” (173 F. Supp. at 584). As we have

shown (see p. 1S, supra), this is an erroneous assumption, and

the Second Circuit in the case at bar expressly overruled the

_ Philippe case (Pet. 13a).

20 :

of Congress to protect: the authorized functions of °

the government.”

(c) The third part of petitioners’ argument that

Section 1001 does not apply to their case is that it

-Was a to cover only written statements (Pet.

25). The argument is without foundation, | ig

ma of the statute is clear and comprehensive ; *

as this Court pointed out in United States v. Beacon

Brass Co.; 344 U.S. 43, 46,°“no distinction is made

in [Section 1001] between written and oral state-

ments,” and the courts of appeals have uniformly held

that the statute does apply to oral statements. United

States v. Meyer, 140 F. 2d 652, 655 (CA. 2); United

States v. Zavala, 139 F. 2d 830 (CA. 2) ; Marzani v.

United States, 168 F. 2d 133 {C.A.D.C.), affirmed by

equally divided Court, 335 U.S. 895; Knowles v.

United States, 224 F. 2d 168 (C.A. 19); ef. Smith v

United States, 257 F. 2d 133 (CA. 10); Cooper v.

United States, 202 F, 2d 527 (CLA. %). Petitioners

recite at length the legislative history, of a bill that —

never beeame law (Pet. 20-24), but all they are able

oor < : F . ° a

" Petitionérs express the “hope” (Pet. 1s) that “| w le have * * *

come too far along the road in-the development of our national

traditions to entertain any notion that a citizen owes an allegiance

of fidelity to an individual Government criminal investiga

tor’. We suggest that, on the contrary, it is a mark of the

high development of our national traditiotis that we, reeog-

nize the citizen's “allegiazce of. fidelity” to his government,

whether he deals with that government through “an individual

Government” administrator, “aw individual) Government” judge

or “an individual Govermnert criminal investigator.”

“2 1t is’ hoteworthy that the statate deals with both “false,

fictitious or fraudulent statemer: is or representations” aad “any

false writing or document.” indic ‘ating a clear infention to

comprehend something broader than mere writingssor documents.

21

to say (and, indeed, all that can be said in support of

their position) about the bill that produced Section

1001 in its present form is that “there is not a soli-

tary suggestion” in the legislative background that

the statute was to apply to oral statements (Pet. 25).

AS was said aheut a comparable attack on this statute

shortly after it was enacted, **such uncertain and at

hest negative evidence of legislative purpose cannot

serve to limit the clear statement-of the new statute.”

United States v. Goldsmith, 108 &. 2d 917, 9 «A ‘A.

2}, certioriri a 309 US. 678.) ef. Browder v.

Unit: d States, 312 U.S. 335, 338." }

: 4. The contention ger 2 20y, that the govern

ment committed reversible error in failing to have

certain grand jury testimony recorded is without

© Potitionen alee stgrgeest ‘Pet, 17) that the “twee Wit ness”

rile applicable to perjury prosecutions shonkd have been saris

fied in the present. case and was not. This Wa argued for

the first time im ihe court below, ne sueli point having been-

raised in the distriet court. In Wesler 0. Vinited Soaten, 425

TS. 606. rehed upon by -petitioners (Pet iT). 9 perjury

conviction Was reversed for the trial conrt’< failure to give

a rejuested instruction relating to the “two-witness” rule | In

the case at bar the petitioners hot only failed’ to reg cost uch

an onstruction but requested inconsistent instructions. @uder

which verdicts of wilt could be based on cirenmstantial evi

dence (GA. S67, 368, 650-651). Moreover. the “two Witness”

rule does not apply to prosecutions under Section iw, Vnited -

States v¥. Aitiian, 246 ¥F. 2d 7 Gé- 82 (CA. 90: Fisher vw. Vnitid com

States, 254 F. 2d wm (CPR, 9), Josininast denied, 358 10S

895: Todorow v. United States, WS FF. 2k 430 (CLAY 9).

certiorari denied, 337 US. 925: Traris ¥. Vnited States, 269

F. 2d 828 (CLA. 10). reversed on other grounds, 34 TS G51.

Finaily, the proof in the instant case was so -frong that the

“twe witness” rule was satisfied (se pp. 2 Wa saprere com

pare Thanmer sv. Vonited States, 271 ULS. 620, 625: honited

Sah v. Wood, 14 Pet. $508, 4455)

22

merit. It is true, of course, that there are occasions

when a trial court may in its diseretionjordertrand -

jury testimony produced for a defendant's use in the

cross-exammination of government witnesses, Pifts-

burgh Plate Glass Co. v. United States, 40 U.S, 395,

_ 400, but there is no rule that we are aware of requir-

ing the’ recording of such testimony. Petitioners’

main ‘complaint is that the testimony of the special

agent was not recorded. However, there was no heed

to record such. testimony, for at both trials the govern-

ment turned over to the cgurt a largesnumber of

reports and memoranda "ae by the agent, after

which a large part of this material (ineluding some

of the exhibits to. the reports) was turned over to

the defense for use in cross-examining the agent

(GA. 61, 443-445). “These reports and memoranda

adequately took the place of a transertpt vf the agent's

_ testimony, for there obviously would be no reason

for him to give testimony before the grand jury in

conflict. with his prior reports and- memoranda and

his later testimony at the trial. :

». Equally lacking in merit is the contention (Pet.

98-30): that -the Treasury’ agent's questions to. pett-

tioner McCue, Sr, were too vague. > The argument.

>is that when he. answered, “Not a thing,” to the ques-

tion, “You. didi?’t have a thing to do with it?” (see

pp. 8-9 supra), all he meant was that he did not

personally negotiate. with the well-drdling firm ‘to

have the well drilled. The ‘point was faised at the ©

trial, and the jury was instructed in minute detail

“-

_ tiorari should be denied, °

r 23

as to what it would have to find in order to conviet™*

This submission was proper, for the jury had to ¢on-

“sider the context in. which the ene Was asked.

Conrad x. United States, 255 F. 2d 247 (CLA,

Seymour \. United States, TT BF. 2d S77, 584 Ok

8): Young v. United. States, 214 F, 2d 232 -(C.A.

D.C).

_ CONCLUSION

For the reasons stated. the petifion fer a writ-of cer-

.

Respectfully submitted, ‘

ARCHIBALD Crix,

Solicitor General,

Aoun DB. Jonte, dr.

Acting Assistant Attorney General,

; J: Witte Doone,

. Assistant to th: Soliciter General,

Ricnanp b. peng sacha ara od

Attorney,

Taternal Reroute Se rvicc,

Washington 25, D.C.

JUNE 1962:

-

.

**To summarize: In order to convict on this third count of

the ‘indictment, you must find the pronoun ‘it’ in the question

refers to having the ry: done: that thesdefendant fully an-

derstood that the word ‘it’, as used—by the questioner, re ‘ferred

to having the work ye poet the defendant in his answer did

‘not intend to indicate only. that he had nothing to do with

the negotiations for or the actual performance of the well

drilling and reconditioning services, and that the defendant

did intend falsely to say that he had net told Dowzey to have

well drilling and reconditioning services performed on McCue,

Sr.’s, private estate” (PLA. 5338).

*

© GOWER NET NT PR RTING OFFICE segs

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