# Petition for Writ of Certiorari — Thompson v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385607_1865%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1974 - **Citation:** 419 U.S. 825 ## Text Stil ' iT, U. 3. re i a -o- 1498 MAR 29 MicuAR BFS IN THE SUPREME COURT OF THE UNITED STATES HAYDEN THOMPSON; HERBERT MESCHKE; LARRY ERICKSON; RICHARD BACKES; ~~ WILLIAMSON and MARK PURDY, etitioners, VS UNITED STATES OF AMERICA, Respondent. PETITION FOR WRIT OF CERTIORARI To the Eighth Circuit Court of Appeals KERMIT EDWARD BYE VOGEL, VOGEL, BRANTNER & KELLY 609% First Avenue North P. 0. Box 1389 Fargo, North Dakota 58102 Counsel for Petitioners St. Louis Law Printing Co., Inc., 812 Olive Street 63101 314-231-4477 => PANY THIET SS WPT ERS RS ORGS Bg URED ENGL SY are Aare 21D PRE LEE RTE OTR I INDEX ge? erp ac tee rr peste rma, Te a si ky Mae are Se id be eee a big es wig age Questions Presented ........... i Ae ces Bee tl Constitutional Provisions Involved ................... Statutory Provisions involved ...................... a I feos Sis oe. cee. Seecces Reasons for Granting the Writ ...................... 1. Did federal prosecution carry burden of proof with in camera presentation of investigation reports and grand jury minutes, without opportunity to defend- ants to examine or cross-examine about course of use and extent of taint therein, in pretrial use im- munity hearing where federal prosecution followed related State testimony under immunity? ........ 2. Did the Court of Appeals err in reversing the Dis- trict Court’s factual determination that the federal prosecution failed to carry its burden of proof? .... 3. Did the District Court or Court of Appeals more aptly apply the protective standards of Murphy and ie RS Er err oer ey a ee Ce so ee ie 352 ee Oe Late Appendix 1. The Eighth Circuit Court of Appeals opinion dated EG NS Sade oh ada pins rocenvenriee | Saree SEPT RRL SE LT I PRIN ** tw The order of the Eighth Circuit Court of Appeals denying the petition for rehearing and the request for a rehearing in banc dated March 1, 1974; ......A-14 3. Order of District Court dated January 24, 1973; ..A-15 4. The memorandum and order of District Court of ES See ree A-17 5. The federal indictment; ............----+-+0:: A-21 6. The state grand jury indictment out of Ward County, North Dakota against the same defendants; ...... A-31 7. Companion case: United Siates v. McDaniel, 449 F.2d 832 (8th Cir. 1971) cert denied, 405 U.S. 992, 92 S.Ct. 1264, 31 Law Ed.2d 460 (1972) ...... A-40 8. Companion case: United States v. McDaniel, 482 F.2d 305 (8th Cir. 1973) .......-. tocamaene A-62 CITATIONS Cases Chambers v. State of Mississippi, 410 U.S. 284, 93 S. Ct. 1038 at 1046 (1973) ......-- ee eee eee eee 13 Davis v. State of Alaska, — U.S. —, 42 L.W. 4295 (Feb. _ 27, 1974} (Unreported at this time) ........------ 13 Kastigar v. United States, 406 U.S. 441 Ceo rer rs Teese 3, 10, 11, 12, 15, 16, 17, 18,19 Murphy v. Waterfront Comm’n., 378 U.S. 52 CN i inn nd ind sinexseuss 3, 10, 11, 12, 16, 17, 19 wee United States v. McDaniel, 449 F.2d 832 (8th Cir, 1971), cert denied, 405 U.S. 992 (1972) ................ 2,7 United States v. McDaniel, 482 F.2d 305 (8th Cir. WIE feasts a Sarin be dink of ieee cic oee. oe ek Statutes United States Code, Title 18 §610 .:................ United States Code, Title 18, §371 ................ United States Constitution, Amendment V ............ United States Constitution, Amendment V] .......... 3 North Dakota Century Code § 16-20-10 .. 7... er peut: IN THE SUPREME COURT OF THE UNITED STATES PaaS TERM, 1974 HAYDEN THOMPSON; HERBERT MESCHKE; LARRY ERICKSON; RICHARD BACKES; — WILLIAMSON and MARK PURDY, etitioners, VS UNITED STATES OF AMERICA, Respondent. PETITION FOR WRIT OF CERTIORARI To the Eighth Circuit Court of Appeals The petitioners, Hayden Thompson; Herbert Meschke; Larry Erickson; Richard Backes; Gary Williamson; and Mark Purdy, respectfully pray that a writ of certiorari issue to review the judgment and opinion of the United States Court of Appeals for the Eighth Circuit entered in this proceeding on January 25, 1974, and the order denying the petition for rehearing entered in this proceeding on March 1, 1974. OPINIONS BELOW The opinion of the Eighth Circuit Court of Appeais below, in United States v. First Western State Bank of Minot, its No. 73-1567, is reported at ... F.2d ..., and is appended at page A-1 hereof. —— ar ES see The opinion of the District Court of North Dakota beiow, in United States v. First Western State Bank of Minot, its Crim- inal No. 575, is not reported, and is appended at page A-15 hereof. The opinions of the Eighth Circuit Court of Appeals in com- _panion cases of United States v. McDaniel, 449 F.2d 832 (8th Cir. 1971), cert denied, 405 U.S. 992 (1972) and United States v. McDaniel, 482 F.2d 305 (8th Cir. 1973) are appended at page A-40 and page A-62 hereof. JURISDICTION The Circuit Court of Appeals’ Opinion and Order was filed January 25, 1974, reversing the District Court's Memorandum and Order of July 16, 1973. Rehearing was denied by the Circuit Court of Appeals on March 1, 1974. Jurisdiction in the Supreme Court is based upon 28 U.S.C. $ 1254(1). Jurisdiction of the Court of Appeais was based on 18 U.S.C. § 3731. QUESTIONS PRESENTED 1. Did federal prosecution carry burden of proof with in camera presentation of investigation reports and grand jury minutes, without opportunity to defendants to examine or cross- examine about course of use and extent of taint therein, in pre- trial use immunity hearing where federal prosecution followed related State testimony under immunity? 2 2. Did Court of Appeals ert in reversing District Court's factual determination that federal prosecution failed to carry its burden of proof? ‘ii ieias 3. Did District Court or Court of Appeals more aptly apply protective standards of Murphy v. Waterfront Commission and Kastigar? CONSTITUTIONAL PROVISIONS INVOLVED Amendment V: United States Constitution F “No person shall be held to answer for a capital, or other- wise infamous crime, uxless on a presentment or indict- ment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any Criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just com- pensation.” Amendment VI: United States Constitution. “In all criminal prosecutions, the accused shali enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously as- certained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Coun- sel for his defense.” STATUTORY PROVISIONS INVOLVED United States Code, Title 18 $ 610 (relevant portion): “It is unlawful for any national bank, or any corporation organized by authority of aiiy law of Congress, to make a contribution or expenditure in connection with any election to any political office, or in connection with any primary election or political convention or caucus held to select candidates for any political office, or for any corporation whatever, or any labor organization to make a contribu- tion or expenditure in connection with any election at which Presidential or Vice Presidential electors or a Senator or Representative in, or a Delegate or Resident Commis- sioner to Congress are to be voted for, or in connection with any primary election or political convention or caucus held to select candidates for any of the foregoing offices, or for any candidate, political committee, or other person to accept or receive any contribution prohibited by this section. “Every corporation or labor organization which makes any contribution or expenditure in violation of this section shall be fined not more than $5,000; and every officer or director of any corporation, or officer of any iabor organi- zation, who consents to any contribution or expenditure by the corporation or labor organization, as the case may be, and any person who accepis or receives any contribu- tion, in violation of this section, shall be fined not more than $1,000 or imprisoned not more than one year, or both; and if the violation was willful, shall be fined not more than $10,000 or imprisoned not more than two years, or both.” od De ee cae ee United States Code, Title 18 $371: “If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to ~ effect the object of the conspiracy, each shall be fined not more than $10,000 or imprisoned not more than five years, or both. “If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punish- ment for such conspiracy shall. not exceed the maximum punishment provided for such misdemeanor. June 25, 1948, c. 645, 62 Stat. 701.” 3 North Dakota Century Code, § 16-20-10: “No person shall be excused from attending and testifying or producing any books, papers, or other documents be- fore any court upon any investigation, proceeding, or trial for violation of any of the Provisions of section 16-20-08, upon the ground that the testimony or evidence, documen- tary or otherwise, required of him may tend to incriminate or degrade him. No person shall be prosecuted nor sub- jected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he may testify or produce evidence, documentary or otherwise, and no testimeny so given or produced shall be used against him upon any criminal investigation or proceeding.” Bib be nthe iotneh A pote iA id aia ea AML igahtides idle Saas ene be emi ak «Me NAAT, edad Ra tied ELE a aie A ED re ead SHER yas be obtterdit he aia He aR STATEMENT OF THE CASE Hayden Thompson, Herbert Meschke, Larry Erickson and Richard Backes were directors and shareholders of First West- ern State Bank of Minot, North Dakota. Gary Williamson and Mark Purdy were shareholders of the Bank. Gary R. McDaniel was the Chief Executive Officer and President of the Bank, as well as a director and shareholder. On May 19, 1969, McDaniel was discharged as President of the Bank when shortages and misappropriations came to light in the course of a state audit. Both State and Federal grand juries investigated. A Federal Grand Jury convened September 23, 1969 and met at frequent intervals through July 31, 1970. A State Grand Jury convened October 14, 1969 and met almost continuously to December 8, 1969. All six of these defendants, and McDaniel, were subpoenaed and testified before the State Grand Jury. Although both State and Federal prosecutors appeared to be unaware of the immu- nity statute, North Dakota law prevents any person from re- fusing to testify before a grand jury investigating violations of the State Corrupt Practices Act, but provides full immunity from prosecution for matters disclosed. 3 North Dakota Century Code §16-20-10. On December 8, 1969, the State Grand Jury indicted Mc- -niel for 19 counts of false entries, embezzlement and viola- tions of the State Corrupt Practices Act. The Banx was in- dicted for several violations of the State Corrupt Practices Act and was subsequently convicted in state court. These six in- dividual defendants were indicted on one count of aiding and abetting political contributions by the Bank. =i a On February 4, 1970 (and July 31, 1970), Federal indict- ments were returned against McDaniel on twelve counts of embezzlement, misappropriation of funds, and making false entries in the records of a federally insured bank. On March 9, 1970, the state trial judge quashed all of the state indictments against the individuals, these six defendants and McDaniel, upon the grounds that they were immune from Prosecution because they had testified under subpoena and oath before the State Grand Jury. On July 31, 1970, Federal indictments were returned against the bank on five counts of violating 18 U.S.C. §610, and against Thompson, Meschke, Erickson, Backes, Williamson, and Purdy on one count of conspiracy to cause the Bank to violate 18 U.S.C. §610. McDaniel was named as a CO-conspira- tor but not charged in the indictment. McDaniel was subsequently convicted on eleven counts of embezzlement, misappropriation and false entries, but, after ap- peal and remand, his convictions were vacated and his indict- ments dismissed. The dismissal was affirmed by the Court of Appeals finally, on July 31, 1973. McDaniel was discharged upon the grounds that the United States Attorney had “used” his State Grand Jury testiniony given under immunity, when the U.S. Attorney on November 20, 1969, read a copy of the transcript of McDaniel’s state grand jury testimony. United States v. McDaniel, 449 F.2d 832 (8th Cir. 1971), cert denied, 405 U.S. 992 (1972); United States v. McDaniel, 482 F.2d 305 (8th Cir. 1973). These defendants moved to dismiss based upon the State immunity and the Federal prosecutor’s use of the State Grand Jury testimony given under immunity. The motions were orig- inally denied on February 3, 1971, by the late District Judge Register. The motions were renewed and supplemented on Au- MO Rae aw OO rem cL rN neem ay ead, LEO eb ol Dr ee Ee ee oe Lise Means: a9 nlc atalanct! ge eat aid fazed ow G2 a gust 13, 1971. After oral arguments before Ronald N. Davies, Senior United States District Judge presiding, the District Court on January 24, 1973 ordered a pretrial evidentiary hearing in order to allow the Government “an opportunity to meet the burden of proving that all of the evidence it proposes to use was derived from legitimate independent sources” from the testimonies given by the defendants before the state grand jury. Following the evidentiary hearing held on May 8-10, 1973, the District Court issued its Memorandum and Order on July 16, 1973, holding “that the Government wholly failed to meet” its burden, that “not all of the evidence the United States Gov- ernment proposes to use was derived from legitimate, independ- ent sources and that some of the evidence is a direct result of communications between Federal and State authorities, when both State and Federal Grand Juries were in session and im- mediately prior and subsequent thereto.” The District Court concluded, “The herculean task of separating tainted evidence from that which is not could never be determined by this Court . .” and held that the in camera presentation of F.B.I. reports and federal grand jury transcripts “falls far short of the duty imposed upon” the prosecution. The Disirict Court issued a strong suppression order, suppressing “any evidence relating” to the testimony of these defendants before the State Grand Jury. The Court of Appeals reversed the order of suppression and remanded for further exploration of the issue at trial, holding that introduction of F.B.I. reports and federal grand jury tran- scripts as possible independent sources sufficed to carry the Government’s burden of proof for the pretrial evidentiary near- ing. The Court of Appeals barely noted, and did not discuss, the in camera presentation of the F.B.I. reports and federal grand jury transcripts, without opportunity to the defendants to exam- yom ine them or cross-examine about them. The Court of Appeals did not have the F.B.I. transcripts and the federal grand jury transcripts in its record, noting they “were not filed on appeal.” (Footnote 6, Court of Appeals Opinion, p. A-10 appended hereto). The Court of Appeals stated that “the District Court's order does not indicate that it has reviewed those reports. . .” The failure of the Clerk of the District Court to transmit Ex- hibits Numbered 1 to 7 both inclusive, (Transcripts of Testi- mony before the Federal Grand Jury) and Exhibits Numbered 8 to 33 both inclusive, (The F.B.I. reports) did deprive the appellees of an effectual review based on the complete evidence in the case. There is no place in the record in this case which would indicate that the Senior United States District Judge did not review the evidence, including transcripts of Federal Grand Jury testimony and F.B.I. reports, which were offered and ad- mitted into evidence over defendants’ objections. Since the report of the Circuit Court of Appeals clearly indi- cates that the Circuit Court did not review the F.B.I. reports and the Federal Grand Jury Transcripts, and since Senior District Judge Davies obviously did review those exhibits, it would appear that the Circuit Court was proceeding on an incorrect premise in determining this case. NE PLL LO GES FSR ET IE: ET IN SP ELSTON IIE RIE LUGO LAG FEY GR TY Om, See «= {9 —. REASONS FOR GRANTING THE WRIT The Court of Appeals recognized: “. . . this case has profound implications in the enforce- ment of the criminal law . . .” ¥Court of Appeals Opinion, at p. A-2 appended). bs With a federal prosecution following a state grant of immu- nity on the same subject, this case involves direct application of the protective use immunity standards forecast in this Court's decisions, Murphy v. Waterfront Commi’n., 378 U.S. 52 (1964) and Kastigar v. United States, 406 U.S. 441 (1972) which dealt with use immunity at the granting stage. The issues here include : application of the burden of proof on the prosecution to show lack of use or derivative use in a case where the District Court { found access to and communication about the immunized testi- mony. And, specifically at issue is the sufficiency of in camera proof at the pretrial evidentiary hearing on “use”, without op- portunity to defendants to examine or cross-examine to trace the course of “use” and extent of taint. 1. Did Federal Prosecution Carry Burden of Proof With In Camera Presentation of Investigation Reports-and Grand Jury Minutes, Without Opportunity to Defendants to Examine or Cross-Examine About Course of Use and Extent of Taint Therein, in Pretrial Use Immunity Hearing Where Federal Prosecution Followed Related State Testimony Under Immunity? Thus far, the protective standards of “use immunity” have been articulated by the Supreme Court in the .pre-testimony cases of Murphy v. Waterfront Commission and Kastigar, which arose from contempt orders for refusing to testify under a grant of immunity. Here, the District Court and the Court of Appeals were called on to apply these protective standards of ey” ens use immunity, for federal prosecutions following testimony under grant of state immunity. This case involves the realities of ap- plication of the protective standards only forecasted in Murphy and Kastigar. Murphy expressly held that the Fifth Amendment privilege against self-incrimination protects a state witness, testifying under immunity, against federal prosecutions. In a footnote, the standard of that protection was described: “Once a defendant demonstrates that he has testified, under a state grant of immunity, to matters related to the federal prosecution, the federal authorities have the bur- den of showing that their evidence is not tainted by es- tablishing that they had an independent, legitimate source for the disputed evidence.” Kastigar followed Murphy and held use immunity constitu- tionally sufficient for single-sovereign situations as well, describ- ing the standard of protection thus: “This burden of proof, which we reaffirm as appropriate, is not limited to a negation of taint; rather, it imposes on the prosecution the affirmative duty to prove that the evi- dence it proposes to use is derived from a legitimate source wholly independent of the compelled testimony.” and: “One raising a claim under this statute need only show that he testified under a grant of immunity in order to shift to the government the heavy burden of proving that all of the evidence it proposes to use was derived from legitimate independent sources.” Here, in spite of the testimonial protestations of the federal and state prosecutorial staffs, the District Court found access and use. Specifically, the District Court found testimony about . Serer +» —— Send : LAT LETT OT EIT EC ETE INO LIE T RECN SER EN ae OE pa AS z ss ts SE eg eo PORE NE a, ae lack of communication by the State’s prosecuting attorney “in- credible and unworthy of belief.” The District Court went on: “The number of telephone calls this witness had with the United States Attorney’s office, the Federal Bureau of In- vestigation and other investigatory or interested Federal agencies leads to the inescapable conclusion that informa- tion was conveyed to representatives of the United States Government that proscribe its use in a Federal criminal prosecution in the United States Court under the decision of the United States Supreme Court in Murphy, Kastigar and their progeny.” In this context, the District Court found the in camera evi- dentiary presentation of F.B.I. reports and federal grand jury transcripts insufficient. The District Court concluded: “This Court concludes that the Government wholly failed to meet this burden. The in camera material alluded to in the preceding paragraph sheds absolutely no light on whether the Government has met its judicially determined responsibilities.” Nearly all of the documentary material was submitted by the prosecution in camera: Exhibits 8 to 33, consisting of F.B.I. reports, and Exhibits 1 to 7, federal grand jury transcripts. The in camera offer in bulk was objected to by the defendants at the hearing, upon the grounds that they were deprived of any opportunity to examine it or cross-examine about it. (Transcript pp. 347, 349 and 360) This objection was carried forward on the appeal by this statement in Appellee’s Responsive Brief, page 26 thereof: “The Government offered evidence on an ‘in camera’ basis so that the defendants were denied the opportunity to examine or cross-examine about it to follow up on the leads as to possible use. There is no denying that the right Pe, we of cross-examination is more than a desirable rule of trial procedure. It is implicit in the constitutional right of con- frontation, and helps assure the accuracy of the truth- determining process. Dutton v. Evans, 400 US. 74, 89 (1970); Bruton v. United States, 391 U.S. 123, 135-137 (1968).” Decisions based on secret evidence strain fundamental notions of liberty under any circumstances. When they involve funda- mental constitutional rights of individuals, such as the Fifth Amendment, decisions based on secret in camera evidence surely test the credibility of our entire judicial system. This Court has only recently held that a governmental interest in preserving confidentiality must yield to the defendants con- stitutional right to cross-examine; Davis v. State of Alaska, — US.__, 42 L.W. 4295 (Feb. 27, 1974), which held it was con- stitutional error to deny a defendant the right to cross-examine a juvenile witness where it conflicted with a State’s asserted in- terest in preserving the confidentiality of juvenile adjudication of delinquency. As this Court has observed, cross-examination “helps assure the accuracy of the truth-determining process”, Chambers v. State of Mississippi, _U.S._, 93 Sup. Crt. 1038 at 1046 (1973), adding: _ its denial or significant diminution calls into ques- tion the ultimate ‘integrity of the fact-finding process’ and requires that the competing interest be closely examined.” We respectfully submit that the District Court’s determination that the federal prosecution failed to carry its burden of proof with an in camera offer of proof should be reinstated, under both the Constitutional standards of the Fifth Amendment privi- lege against self-incrimination and the Sixth Amendment right to confrontation. The Court of Appeals’ decision, which over- looked or ignored this issue in reviewing the District Court's Order, should be reviewed. ao” Se 2. Did the Court of Appeals Err in Reversing the District Court’s Factual Determination That the Federal Prosecution Failed to Carry Its Burden of Proof? The Court of Appeals observed that the District Court's order “does not indicate that it had reviewed those “eports . . .” and concluded: “The failure to review the Government’s contended inde- pendent sources was error and a misinterpretation of the eins The Court of Appeals went on to conclude: “That testimony (of no access), the lack of contradictory evidence by the defendants showing actual knowledge or access to the state grand jury transcripts by federal au- thorities, and the introduction of the F.B.I. reports and the state and federal grand jury minutes should have dis- charged the Government’s burden of proving independent sources during the pretrial hearing.” In so doing the Court of Appeals ignored the District Court’s specific findings of access through numerous telephone calls, its specific finding “that information, was conveyed”, and its specific finding that the testimony of one state prosecutor pro- testing no access was “incredible and unworthy of belief.” The Court of Appeals also criticizes the “lack of contra- dictory evidence by the defendants.” Ironically, the Court of Appeals barely notes, and does not comment upon, the fact that the in camera tender of the documentary evidence effec- tively denied the defendants the opportunity to develop the contradictory evidence from its most likely source, the F.B.I. reports and federal grand jury transcripts. How could defend- ants trace the source of use and extent of taint, to present con- tradictory evidence, when they were denied any opportunity to examine the documentation of the investigation, or cross- examine about it? FELON PINES TING PRK EDI RN: TMT PETS PE WR RD 7 Pett eds hea 4 4 ; ao 15 — The Court of Appeals assumed that the District Court failed to review the F.B.I. reports and federal grand jury transcripts, but the District Court did not say that it had not reviewed them. The District Court listed them in its Memorandum with the other evidence submitted and considered by the Court. The transcript of the evidentiary hearing indicates the District Court deferred his decision at the conclusion of the hearing in order to read and consider the in camera material (Transcript p. 408, lines 18-23: p. 421, lines 25 to p. 422, line 2; p. 423, lines 1-4). There is nothing in the record that indicates the District Court did not review the in camera material between conclud- ing the hearing on May 10, 1973 and issuing its Memorandum and Order on July 16, 1973. The Court of Appeals itself did not review the F.B.I. re- ports and federal grand jury transcripts, which it stresses as so greatly aiding the prosecution in discharging its burden of proof. In footnote 6, to its Opinion, it states they “were not filed on appeal.” The Clerk of the District Court failed to file them on appeal with the Circuit Court. Curiously, defendants find themselves in the position of hav- ing their legal position affirmed by the Court which consid- ered the in camera exhibits, but reversed by the Court which did not even have those exhibits to consider but nevertheless stressed the great importance of them. Such a result is out of line with the usual standard of review, that Courts of review should accept factual determinations of a trial court unless “clearly erroneous.” We respectfully submit that review is appropriate to deter- mine whether the Court of Appeals erred in reversing the fac- tual determination of the District Court that the prosecution failed to carry its burden of proof as to use of immunized tes- timony. Review would also determine how “heavy” is that “heavy burden of proof” projected in Kastigar. NEO TS TT i —16— 3. Did the District Court or Court of Appeals More Aptly Apply the Protective Standards of Murphy and Kastigar? This case, and the Court of Appeals Opinion, pose several other aspects of applying Murphy and Kastigar: First, the decision rendered by the panel seems to rely upon a different standard for the two-sovereign situation, than the single-sovereign situation: “But where the prosecuting sovereign is not the immunizing sovereign, a considerably different situation is presented.” (Court of Appeals Opinion, p. A-4 appended). No such differing standards were set forth in Kastigar, when the Supreme Court adopted the séparate-sovereign use and de- rivative use immunity doctrine of Murphy v. Waterfront Commis- sioners, as the constitutional standard for the Federal single- sovereign situations. Murphy was followed in Kastigar, not distinguished. The Court of Appeals’ decision appears to drift away from both Murphy and Kastigar in a manner inconsistent with the modern trend of even handed application of constitu- tional standards. Next, the Court of Appeals suggests the issues of use and independent sources may be further explored at trial. However, F.B.I. investigation reports and Grand Jury transcripts are ordi- narily not evidence at the criminal trial itself. It is highly doubt- ful the Government would call any F.B.I. agents to testify since their testimony is primarily hearsay. If the immunity evidentiary issues are to be developed in the course of trial, it will com- pound the complexities of a multiple defendant conspiracy trial with continual chamber sessions while the jury restlessly waits as each new evidentiary revelation is explored, out of its presence, for use of leads from immunized testimony. This will hardly facilitate an orderly trial process. Thus, trial exploration. of tainted evidence issues, as suggested by the Court of Appeals, RP INS VOL TERED \s an PY AR SW TUS UY MEI a coe NM | gecereige ele Ree = oo is out of step with considerations of judicial economy, as well as current judicial thinking on the orderly process of a trial, United States v. Domau, 356 F.Supp. 1091, at 1099 (1973), including the prior Eighth Circuit expressions on the desirability of pretrial resolution of the issue; United States v. McDaniel (IT), 482 F.2d at 311: “Clearly, this test envisions, under ordinary circumstances, a pretrial evidentiary hearing at which the Government must discharge its ‘heavy burden of proof. . .’ a * * “Ordinarily, the question whether the prosecutor has made any use, direct or indirect, of the compelled testimony can ‘and should be fully explored by an appropriate hearing be- fore trial.” Neither Murphy, nor Kastigar, suggest a procedure of exploring the issue at trial. Indeed, everything said in those two cases sug- gests the need and desirability of fully resolving the issue in a pretrial evidentiary hearing. Finally, this case presents questions as to the remedial steps to be taken when use or derivative use is found. Defendants’ motions sought dismissal. Acting before the McDaniel (ID) opinion was issued, the District Court fashioned a strong sup- pression order posing great difficulties for the prosecution. Em- phasizing what it called the “immeasurable subjective effect” of derivative use, “. . . assistance in focusing the investigation, deciding to initiate prosecution, refusing to plea bargain, inter- preting evidence, planning cross-examination, and otherwise generally planning trial strategy . . .”, the Eighth Circuit Court of Appeals discharged the defendant in a companion case, United States v. McDaniel (II), supra. The Court of Appeals, in remanding this case for further exploration of the issue at trial, instructs only limited and selec- tive suppression of “proffered evidence . . . (which) has only been derived from defendants’ compelled testimonies.” us oe Such a limited proscription appears inconsistent with Kastigar, where Mr. Justice Powell writing for the majority held: “This total prohibition on use provides a comprehensive safeguard, barring the use of compelled testimony as an ‘investigatory lead,’ and also barring the use of any evi- dence obtained by focusing investigations on a witness as a result of his compelled disclosures.” Such a limited proscription also appears inconsistent with the Eighth Circuit Court of Appeals prior pronouncement in the related case: “Kastigar, after all, proscribed “any use, direct or indirect . . . And, indeed, if the immunity protection is to be coextensive with the Fifth Amendment privilege, as it must to be constitutionally sufficient, then it must forbid all prosecutorial use of the testimony not merely that which results in the presentation of evidence before the jury.” 482 F.2d at —. See also United States v. Dornau, 356 F.Supp. 1091 (S.D.N.Y. 1973). Several circumstances of this case might well call for strong sanctions for any use or derivative use that occurred: 1) It took defendants over two and one-half years simply to get an evidentiary hearing on their claims of “use” of their immunized testimony. The federal prosecution resisted all initial efforts for such a hearing on varying grounds, in- cluding insistence that no state immunity had been granted and that there had been no communication about any de- fendants’ testimony. An evidentiary hearing came only after defendants obtained and filed the public records of long distance telephone calls by the State prosecutor (show- ing communication with the federal prosecutors during critical periods), and after the belated admission by the | : = prosecuting U.S. Attorney in the Court of Appeals in Mc- Daniel (1) that he had read a transcript of McDaniel’s im- munized state grand jury testimony. 2) The indictment deals with potential First Amendment rights of association in alleging a political conspiracy that includes specified overt acts of candidacy for various state legislative and political party offices by each of the defend- ants. The sweeping reach of the indictment and the significant delay of trial resulting from the need for this “use” should be considerations in determining the remedy to be applied for any use. Thus, we submit that review is also appropriate to consider these aspects of the application of the protective standards of Murphy and Kastigar involved in the decisions of the Dustrm Court and Court of Appeals in this case: 1) Whether there are different constitutional standards of use immunity protection; 2) Whether the Constitution protection should preferably be developed through pretrial hearings or during the course of trial; and 3) What remedy is to be applied for “use”. — CONCLUSION For these reasons, a writ of certiorari should issue to review the judgment and opinion of the Eighth Circuit Court of Appeals. Respectfully submitted KERMIT EDWARD BYE VOGEL, VOGEL, BRANTNER & KELLY 609% First Avenue North P. O. Box 1389 Fargo, North Dakota 58102 Telephone: 701-237-6983 Counsel for Petitioner Of Counsel: BAIR and BROWN 210 Ist Avenue Northwest P. O. Box 100 Mandan, North Dakota 58554 LANIER, KNOX & OLSON 334 Gate City Building P. O. Box 1007 Fargo, North Dakota 58102 McGEE, HANKLA, BACKES & WHEELER, LTD. Gate City Building P. O. Box 998 Minot, North Dakota 58701 BJELLA & JESTRAB 111 East Broadway Drawer 1526 Williston, North Dakota 58801 McINTEE & WHISENAND 113 East Broadway P. O. Box 1307 Williston, North Dakota 58801 on lnk cn Dies A Stent) BRP A bl Oe had Re OE ~e pretrial evidentiary hearing. We therefore reverse the District Court's holding that any evidence relating EMOTE Ng TO aR a © eee eee — A-12 — to the subject matter of defendants’ testimonies before the state grand jury must be suppressed. We support McDaniel II’s statement that the Government's burden of proving independent sources should “under ordinary circumstances” be shouldered during a pretrial evidentiary hear- ing. Where substantial evidence is proffered showing a joint in- vestigation, as in this case, a pretrial hearing would be advisable. Not every case, however, would call for a further fragmentation of the trial process by having a full-scale suppression hearing prior to trial. The ascertaining of independent sources can often be better considered during the trial, since all the evidence is placed on the record or offered for introduction at the trial. To some extent, this is a matter of degree. For exam- ple, isolated questions concerning suppression of certain evi- dence should not call for a full-scale suppression hearing of all the evidence that is to be offered by the Government. In general, where feasible and compatible with fairness to the de- fendant, the trial process should not be further fragmented if at all possible. The resolution of the Government’s burden of proof in Mc- Daniel II during a pretrial evidentiary hearing was eased by an admission of the United States Attorney that he had read the state grand jury transcript. McDaniel Il therefore concluded the testimony read by the United States Attorney “could not be wholly obliterated from the prosecutor’s mind in his prepara- tion and trial of the case.” McDaniel II, supra at 312. In this light, the McDaniel II court held that the Government failed to prove that the United States Attorney “did not use [McDaniel’s testimony] in some significant way short of introducing tainted evidence.” McDaniel II, supra at 311. Since the United States Attorney had read the state grand jury transcript in McDaniel I and since the reading of a transcript makes proof of independ- ent sources much more difficult for the Government, resolution of this burden of proof issue duripg a pretrial evidentiary hear- ing was considerably facilitated. — A-13 — In this case, the federal officials have testified that they had no access to or knowledge of the state grand jury transcripts. That testimony, the lack of contradictory evidence by the de- fendants showing actual knowledge or access to the state grand jury transcripts by federal authorities, and the introduction of the FBI reports and the state and federal grand jury minutes should have discharged the Government's burden of proving independent sources during the pretrial hearing. After reviewing the FBI reports and the state and federal grand jury transcripts, the District Court may indeed find that proffered evidence by the Government during the forthcoming trial has only been derived from defendants’ compelled testi- monies. If that occurs, suppression of that evidence is de- manded. The District Court's order of suppression is reversed and the case is remanded for further proceedings consistent with this opinion. A true copy. Attest: Clerk, U:S. Court of Appeals, Eighth Circuit. — A-14— APPENDIX 2 United States Court of Appeals for the Eighth Circuit Pee ey Ly Pe ~ September Term, 1973 Og ee 73-1567 United States of America, ink 5 bet he tak tial AppeMant, | Appeal from the vs. United States Dis- ‘ trict Court for the : First Western State Bank of Minot, District of North ; North Dakota, et al., Dakota Appellees. J F : The Court having considered petition for rehearing en banc filed by ‘counsel for appellees and, being fully advised in the premises, it is now here ordered that the petition for rehearing en banc be, and it is hereby, denied. Considering the petition for rehearing en banc as a petition for rehearing, it is now here ordered that the petition for re- hearing also be, and it is hereby, denied. ; March 1, 1974 PREP ere Sa “ PONE OES ot I Ee are REE er ree en + SRRUENTE HI eT ye me — A-15 — APPENDIX 3 In the United States District Court for the District of North Dakota Northwestern Division United States of America, ‘ Plaintiff, vs. | First Western State Bank of Minot, [ Criminal No. 575. North Dakota; Hayden Thompson, ; Herbert Meschke; Larry Erickson; | Richard Backes; Gary Williamson; | and Mark Purdy, | Defendants. Order for Evidentiary Hearing as to Claim of Immunity The Government having conceded that each of the individual defendants herein gave testimony before a North Dakota State Grand Jury under a grant of immunity, and it appearing that the individual defendants may have testified to matters relating to the subject matter of the indictment (cne count of conspiracy as to the individual defendants), and it further appearing that the defendants have made a prima facie showing of frequent communications between Federal and State authorities at times when both State and Federal Grand Juries were in session, and immediately prior and subsequent thereto, It Is Ordered that a pre-trial evidentiary hearing be held at the Federal Courtroom at Minot, North Dakota, commencing May 8, 1973, at 10:00 o'clock a.m., to give the Government an opportunity to meet the burden of proving that all of the = tate eeteeecarrs ae . oe a I ee eee Tey RED SFE E Pe we De mel a ek ets eo Spent isa AVS ao vk Blind i lla i eli — A-16 — ' evidence it proposes to use was derived from legitimate inde- pendent sources. i Dated at Fargo, North Dakota, this 24th day of January, A.D. 1973. ‘s/ Ronald N. Davies Senior United States District Judge CAEN OO rap oe — 7 7 . 4 oT : e oo tee \ : \ \ \ 4 =n 19. On or about March 10, 1969, in Bismarck, North Da- kota, Defendant Larry Erickson met with Defendants Hayden Thompson, Richard Backes, and Herbert Meschke, and co-con- spirator Gary McDaniel, at a meeting of the Executive Com- mittee of the Board of Directors of First Western State Bank. 20. In the general election of 1968, Defendant Richard Backes was a candidate for the office of State Representative, Third Legislative District of the State of North Dakota. 21. In or about 1966, in Minot, North Dakota, Defendant Richard Backes gave instructions to Glory Ann Dickinson con- cerning the preparation and mailing of campaign literature in connection with his candidacy for the office of State Representa- tive, Third Legislative District of the State of North Dakota. 22. On or about April 29, 1969, Defendant Richard Backes met with Defendants Hayden Thompson, Herbert Meschke and Larry Erickson, and co-conspirator Gary McDaniel, at a meet- ing of the Executive Committee of the Board of Directors of First Western State Bank. 23. In the general election of 1966 in the State of North Dakota, Defendant Gary Williamson was a candidate for the office of State Representative, Fifth Legislative District of North Dakota. 24. In or about June, 1968, in Minot, North Dakota, Defend- ant Gary Williamson met with Defendant Mark Purdy and co- conspirator Gary McDaniel, and with Robert Larson, Cheryl rgstrom, Caroline Gardiner, and Douglas Sutter. 5. In or about June, 1968, at the State Convention of the ratic Non-Partisan League of North Dakota, Defendant Mark\Purdy was a candiate for Democratic National Committee- — man for the State of North Dakota. 26. I or about January, 1969, at Bismarck, North Dakota, Defendant, Mark Purdy met with Defendants Herbert Meschke BIRT eae ATA RNR HY “ree me ees ee gee Ba aa iia Vee oar DET RIORT VE O ’ and Larry Erickson, and with Robert Larson, and introduced Robert Larson to Fred Harris. — A-30 — 27. On or about August 13, 1966, in Minot, North Dakota, co-conspirator Gary McDaniel directed Alex Leslie to purchase United States postage stamps in the total amount of $1,000.00. 28. On or about September 3, 1968, co-conspirator Gary McDaniel approved payment of the sum of $3,500.00 to Doug- las Sutter. 29. On or about June 22, 1968, co-conspirator Gary Mc- Daniel approved payment of the sum of $420.00 to United Democrats for Humphrey. 30. On or about June 6, 1968, co-conspirator Gary McDan- iel approved payment of the sum of $1,500.00 to Robert Larson. as 31. On or about February 6, 1968, co-conspirator Gary Mc- Daniel paid the sum of $3,000.00 to Defendant Larry Erickson. 32. On or about March 20, 1967, Defendant Herbert MeSthke became the Registered Agent of Western Management Corporation. (In violation of Title 18 United States Code, Section 371.) A True Bill. Harold O. Bullis United States Attorney John E. Clark Special Attorney Indictment Indictment under Section 16-20-08 of the North Dakota Cen- tury Code, as amended, making unlawful political contributions by a corporation in the years of 1966 and 1968, in which State-wide elections were held. \ s I The Grand Jury of the County of Ward, in the Fifth Judi- cial District, State of North Dakota, duly and legally impan- eled, charged and sworn according» to law in open Court at the special October term of the District Court in the year 1969, in and for the said County and State, in the name and by the authority of the State of North Dakota, does hereby charge that at different times in the years of 1966 and 1968, up to May 19, 1969, the First Western State Bank at Minot, North Dakota, a corporation organized and incorporated under the laws of the State of North Dakota, and doing business in this State, did directly or indirectly pay, use, offer, consent, or agree to pay or use, any money, property or anything of value to aid a political party, committee or organization, or to aid a corporation or association organized or maintained for political purposes, or to aid candidates for political office, which po- litical contributions were in violation of the provisions of Sec- tion 16-20-08 of the North Dakota Century Code, as amended, and were made, wholly or substantially, by one or more of the following methods, or combinations thereof: A. The said corporation acquired control of a license agency on or about October 9, 1967, and employed deceptive, circui- tous methods in making political contributions by and through such license agency so as to make it appear that such con- —— ‘te oe LOMPYAR PEE TI te pg SO RE RE ERLE NEE FORESEES REIT TSE BY — A-32 — tributions and secretarial services for political purposes came from the earnings of the license agency, whereas, in fact, the political contributions substantially exceeded the earnings of said license agency and consisted of funds of the First Western State Bank which were made available by allowing overdrafts on the License Agency’s checking account, making available to said License Agency and allowing it to use proceeds of loans from said bank on notes executed by Jeannie Quick, with the oral understanding and agreement that no demand or collec- tion will be enforced by said bank against Jeannie Quick for such notes, by fictitious loans made by said bank on notes executed in the names of Leonard and Alfred Pietsch, the pro- ceeds of which were used to remove from the bank records loans made by said Jeannie Quick and the overdrafts of the License Agency, by using funds of said bank to pay the salary of Jeannie Quick while she was managing the License Agency and not performing any services for said bank. B. The said First Western State Bank encouraged the acti- vation of and financed the North Dakota Secretarial Service the successor to the Ward County Research and Development Company, to perform stenographic and clerical services for political candidates or organizations which, as of May 19, 1969, had not paid for such services, but the costs were financed from the proceeds of a loan made by the First Western State Bank on a note executed by Glory Ann Dickinson with the oral understanding that no demand or collection will be enforced against said Glory Ann Dickinson on said note, and from pro- ceeds of a loan on a note executed by the First Western Man- agement Company in favor of Leonard Pietsch, for which a real estate loan with said bank by Leonard Pietsch was re- duced in the amount of the Glory Ann Dickinson note, which was later removed from the records of the said bank from the proceeds of fictitious notes of Leonard and Alfred Pietsch, and in this manner the said First Western State Bank made political - contributions in violation of law by and through such North Dakota Secretarial Service. REAR PEER TL SSPE TEAS EE PE EH LO ONE SELL LIIN LTE Ke oe MI ER ATE S| — a C. The said bank also expended its funds in making avail- able for political purpuses goods, materials, and typing equip- ment without charging or being reimbursed for same, D. The said bank paid from its funds salaries, fees or wages “ to certain persons for performing political services; and E. The said bank in certain instances allowed overdrafts on checking accounts, which accounts were known by said bank to be used solely or primarily for political purposes and activities. The specific violations are, to wit: Count 1 : That said First Western State Bank, as stated and charged in Paragraph I. above, did in the year of 1968 make political con- tributions in violation of Section 16-20@8% of the North Dakota Century Code to the campaign activities of Hubert H. Humphrey, the Democrat candiate for United States President, in the manner set forth in Paragraph A. above, by making a payment from the License Agency on June 22, 1968, in the amount of $420.00 to the United Democrats for Humphrey. Count 2 That said First Western State Bank, as stated and charged in Paragraph I. above, did at different times in the year 1968, from June Ist to November Sth of said year, make political con- tributions in violation of Section 16-20-08 of the North Dakota Century,Code to the campaign activities of Hubert H. Humphrey, Democrat candidate for United States President, by paying for the political services and expenses of the “Humphrey Girls” and other personnel to appear and campaign for said’ Hubert H. Humphrey at different times and places in the State of North Dakota and in the State of South Dakota. Pit nsmrs sn CETERA FRI area wes Sat Bi caer EP NE AOE LOY DUT EER. ay eae Count 3 That said First Western State Bank, as stated and charged in Paragraph I. above, did on or about August 13, 1966, make political contributions in violation of Section 16-20-08 of the NDCC to the campaign activities of Rollin Redlin, the Democrat- NPL candidate for United States Congress, in the form of stamps paid for from funds of the First Western State Bank in the amount of approximately $1,000.00. Count 4 That said First Western State Bank, as stated and charged in Paragraph I. above, did at different times in the year 1968, make political contributions in violation of Section 16-20-08 of the NDCC to the campaign activities of Rollin Redlin, the Democrat-NPL candidate for United States Congress, in the form of secretarial services ali paying for some expenses from funds of said bank through the License Agency, as described in Paragraph A. above. Count 5 That said First Western State Bank, as stated and charged in Paragraph I. above, did at different times in the year of 1968, make political contributions in violation of Section 16-20-08 of the NDCC to the campaign activities of William L. Guy, the Democrat-NPL candidate for Governor of the State of North Dakota, by paying the salary and expenses of Robert Larson as Chairman of “The Dakotans for Guy”, from the funds of said bank through the License Agency as described in Paragraph A. and from funds described in Paragraph D. above. Count 6 That said First Western State Bank, as stated and charged in Paragraph I. above, did during the year of 1968, make political * i “ Lag PET ESSE RR IES TE PS IL EOS EE ONL EE MN LN IES IE SY _ — A-35 — contributions in violation of Section 16-20-08 of the NDCC to the campaign activities of Robert P. McCarney, the Republican candidate for Governor of the State of North Dakota, by paying a special consideration of $2,500.00 to Glory Ann Dickinson for returning to North Dakota from Colorado to perform secretarial services for Robert P. McCarney at Bismarck, North Dakota, and by paying approximately $1,000.00 as part of her salary while she was performing such secretarial service, which pay- ments were made from the funds of said bank through the Li- cense Agency, as described in Paragraph A. above. Count 7 That said First Western State Bank, as stated and charged in Paragraph I. above, did in the year of 1968, in the month of June, make political contributions in violation of Section 16-20-08 of the NDCC to campaign activities of Mark F. Purdy, a candidate for the office of National Committeeman of the Democrat Party, by providing material, telephone and printing matter and expenses of personnel to campaign at the Democrat Convention in Bismarck, North Dakota, the cost of which was paid for by said bank through the License Agency in the man- ner as described in Paragraph A. above. : Count 8 That said First Western State Bank, as stated and charged in Paragraph I. above, did on or about July 5, 1968, make po- litical contributions in violation of Section 16-20-08 of the NDCC, to the campaign activities of Thomas L. Burgum, the Democrat-NPL candidate for Attorney General of the State of North Dakota, by paying to said activity the sum of $2,500.00 from the License Agency, which came from funds of the First Western State Bank, as described in Paragraph A. above, and by creating a checking account in the name of “Burgum for — A-36 — Attorney General”, which was overdrawn in its inception in the amount of approximately $3,416.90, and subsequently charged off through a fictitious note. Count 9 That said First Western State Bank, as stated and charged in Paragraph I. above, did on or about April 7, 1969, make a political contribution in violation of Section 16-20-08 of the NDCC to the Democrat-NPL political organization of the Fifth Legislative District of the State of North Dakota, in the amount of $2,100.00 in a check drawn on the License Agency, which funds were in reality funds of the First Western State Bank, as described in Paragraph A. above. Count 10 That said First Western State Bank, as stated and charged in Paragraph I. above, did in the years of 1966, 1967, and 1968, make political contributions in violation of Section 16-20-08 of the NDCC to the “Century Club”, an inter-party organization created and existing solely for the benefit of the Democrat-NPL political organization, by paying dues for certain members of said “Century Club” from funds of the bank in the amount of $1,300.00 on April 14, 1967. Count 11 That said First Western State Bank, as stated and charged in Paragraph I. above, did in the year 1968 make political con- tributions in violation of Section 16-20-08 of the NDCC to “Lloyds of Bismarck”, an organization or association function- ing primarily for the arranging of and providing for political ad- vertising in newspapers, radio and television for candidates of the Democrat-NPL political party, by allowing and permitting Bh a cae eT lk RE Ne ed Ad RA OME NER DE OER ASS: 5 LRM OTR EES YO RAYS — said organization to overdraw its checking account with the First Western State Bank and by using a fictitious note to re- move the overdraft. Count 12 That said First Western State Bank, as stated and charged in Paragraph I. above, did on or about November 27, 1968, pay to the “Pietsch Flying Service” the sum of approximately $2,086.85 for airplane transportation service used for political activities, in violation of Section 16-20-08 of the NDCC, which funds came from the First Western State Bank through the License Agency, as described in Paragraph A. above. Count 13 That said First Western State Bank, as stated and charged in Paragraph I. above, did on or about July 13, 1967, make a political contribution in violation of Section 16-20-08 of the NDCC. to the “John F. Kennedy Memorial”, which is also to serve as headquarters for the Democrat-NPL Party, in the amount of $4,500.00, which funds came from the First West- ern‘State Bank. Count 14 That said First Western State Bank, as stated and charged in Paragraph I above, did make political contributions in violation of Section 16-20-08 of the NDCC to the Democrat-NPL Party on or about April 14, 1967, in the amount of $1,300.00; on or about June 6, 1968, in the amount of $984.00; and on or about June 10, 1968, in the amount of $658.00, which payments came from funds of the First Western State Bank. Count 15 That said First Western State Bank, as stated and charged in Paragraph I above, did make political contributions in violation a —_ Ne HG RMR MEIER — A-38 — of Section 16-20-08 of the NDCC to the campaign activities of Douglas Sutter, a candidate for Alderman of the Fifth Ward of the City of Minot, in a special election originally scheduled to be held on April 15, 1969, but which was actually held on June 17, 1969, by permitting the account entitled “Sutter Campaign Func” to be created by an overdraft on March 19, 1969, and continued to be overdrawn to July 16, 1969, in the amount of $1,656.73, which amount has been charged off as a loss. Contrary to the form of the statute in such case made and provided, and against the peace and dignity of the State of North Dakota. State of North Dakota vs. First Western State Bank 15 Counts A True Bill, dated December 8, 1969 /s/ Bruno P. Serrano Foreman of the Grand Jury Note: Names of witnesses appearing before the Grand Jury are set forth on the page attached and made a part hereof. ert ae oe , Clerk of the Ward County District Court, Minot, North Dakota, filed the within instrument on the . day of December, 1969. — A-39 — Elaine Hendrickson Hayden Thompson Joan Parks Herbert Meschke Gary Williamson: Herbert L. Thorndal Jeanette Seitzer Alfred Pietsch Robert Larson Palmer Rustan Karen Peterson Louise Vigness Marjorie Parizek Linda Donnelly Margaret Keller Richard Dobson Jean Quick Larry Fiedler Patricia Wallen Connie Filler Thomas Burgum Wesley Keller Alex Leslie Leonard Pietsch James Norton Gary McDaniel Robert Keim Richard Backes Sheryl Bergstrom Lloyd Omdahl Mark Purdy Larry D. Erickson Charles Boyd-Snyd James McDonald John Cousins Carolyn Gardiner Richard Spaulding Jonathan Eaton Mike Dolan Douglas Sutter Judith Fitzgerald Evelyn Pottinger Patricia Gefroh Clair Watne Glory Ann Dickinson Harold Moen Karen Morris Kathy Putz Marlene Olson a 449 F.2d 832 (1971) United States of America, Appellee, v. Gary R. McDaniel, Appellant. Nos. 20722-20724. United States Court of Appeals, Eighth Circuit. Oct. 14, 1971. Rehearing and Rehearing En Banc Denied Jan. 3, 1972. Court for the District of North Dakota, George S. Register, Chief Judge, of embezzlement and misappropriation of funds and making false entries in records of federally insured bank, and he appealed. The Court of Appeals, Gibson, Circuit Judge, held that if defendant, who had been compelled to testify be- fore state grand jury, with grant of immunity from state prose- cution, had testified before jury as to matters related to federal prosecution, the federal indictment should have been dismissed, in view of the fact that the United States attorney had viewed transcript of testimony before state grand jury. Remanded. ; 4 3 os eee en es en a — A-41 — 1. Indictment and Information Key 137(1) A motion to quash the indictment is the proper method of raising issue whether a defendant who has been compelled to testify before state grand jury and who has been granted trans- actional immunity is entitled to transactional as opposed to use immunity as regards related federal prosecution. 2. Indictment and Information Key 140(1) Where defendant moved to suppress indictment and filed ac- companying motion to take evidence on immunity issues and indicated that once relevant evidence had been discovered he would move to suppress any tainted evidence but who made no motion to suppress evidence to which grant of immunity was claimed to attach issue whether defendant, who had been compelled to testify before state grand jury and who had been granted full immunity from prosecution for matters disclosed, was entitled to “transactional” as opposed to “use” immunity as regards related federal prosecution had been properly raised. 3. Indictment and Information Key 140(2) Once a defendant demonstrates that he has testified, under state grant of immunity, to matters related to federal prosecu- tion, the federal authorities have the burden of showing that their evidence is not tainted by establishing that they had an independent, legitimate source for the disputed evidence. 4. Witnesses Key 297(14), 304(1) — A-42 — within meaning of rule preventing federal use of testimony compelled by a state grant of immunity. U.S.C.A.Const. Amend. 5. 5. Witnesses Key 297(14), 304(1) Rule preventing use of state compelled testimony by the fed- eral gevernment also forbids federal access to testimony com- pelled by state grant of immunity. U.S.C.A.Const. Amend. 5. 6. Criminal Law Key 42 Where the sovereign questioning a defendant under grant of immunity is also the prosecuting sovereign, defendant is en- titled to transactional immunity and may not be prosecuted as to those matters to which the testimony relates. U.S.C.A. Const. Amend. 5. 7. Criminal Law Key 42 Although Congress can extend immunity against state prose- cution if it so desires by way of supremacy clause, states do not have a corresponding power to impose their immunity grants on the federal government. U.S.C.A.Const. Amend. 5. 8. Criminal Law Key 42 Where there has been a state grant of immunity in return for compelled testimony, the federal government can obtain access to that testimony only at the cost of foregoing federal prose- cution as to those matters to which the testimony relates, not- withstanding that the federal government might have an inde- pendent source for its evidence. U.S.C.A.Const. Amend. 5. ke A-43 — \ 9. Criminal Law Key 42 we Fact that defendant’s compelled testimony before state grand jury related only to charges f “bribery” and “corrupiion”, and not to charge of “embezzlement” and “misapplication of bank funds” did not establish that there was no immunity from fed- eral prosecution for embezzlement and misapplication of bank funds since test of whether immunity has been acquired in return for compelled testimony is not what legal labels are attached to the criminal conduct which is the subject of the incriminating testimony but whether the conduct revealed by the compelled state testimony is related to the subject matter of the federal prosecution. U.S.C.A.Const. Amend. 5. 10. Criminal Law Key 1181 Remand for evidentiary hearing on issue whether compelled state testimony relating to violation of North Dakota Corrupt Practices Act was related to subject matter of federal prose- cution for misappvopriation of funds and making false entries and records of federally insured bank was required where there were not sufficient facts in record to enable reviewing court to make final determination of such issue but there was enough evidence to indicate that defendant's allegation that he had testified to matters relating to federal prosecution was not frivo- lous. 18 U.S.C.A. §§ 2, 656, 1005; NDCC 16-20-01 et seq., 16-20-10; U.S.C.A.Const. Amend. 5. 11. Judgment Key 828(3.10) priation of bank funds we. -overed by defendant’s testimony under grant of immunity unc:r siaic Corrupt Practices Act was not ultimately binding on the federal government on issue whether any of defendant's compelled testimony related to fed- SP Retr s 3 a ee eral prosecution for misappropriation of funds and making false entries in records of a federally insured bank. U.S.C.A. Const. Amend. 5. 12. Criminal Law Key 1036(1), 1044 Where all evidence seized in response to subpoena was made available to defendant and his attorneys prior to trial, .attor- neys made photocopies of anything they desired, no motion to suppress or objection to admission was made on ground that certain evidence fell within attorney-client privilege and no motion to quash subpoena had been made, reviewing court would not determine whether or not such material was protected by attorney-client privilege. 13. Criminal Law Key 641.7(1) Where counsel of defendant’s own choosing was appointed some 5% months prior to trial and apparently had been work- ing on case for some time prior to that, during that period de- fendant had been allowed extensive discovery and all costs of discovery and trial were borne by the government, it was not abuse of discretion, in absence of factual showing, to deny mo- tion for an additional attorney some four days prior to date case was set for trial. 14. Criminal Law Key 633(1) Where no motion for change of venue, on ground of preju- dicial pretrial publicity, was made prior to trial, most pretrial publicity had occurred quite some time before trial, any pub- licity which occurred shortly before trial was due to statements made to press by defendant and his attorney and any member of jury panel who indicated that he had formed an opinion 7 ae BR Te I — A-45 — due to newspaper publicity was excused for cause, there was no error with respect to trial as regards bias and prejudice al- legedly due to pretrial publicity. . 15. Criminal Law Key 126(1) 3 ~ Where court could find no error with respect to first trial, as regards bias and prejudice allegedly due to prejudicial pre- trial publicity, and there were no intervening circumstances be- tween first and subsequent trials which would justify a change of venue on ground of bias and prejudice, motion for change of venue of subsequent trials was properly denied. i ~ For the foregoing reasons, we conclude that if in fact Mc- Daniel testified before the state grand jury as to taatters related to the instant prosecution, then simce the Government has seen that testimony, the indictments should be dismissed. To avoid possible misunderstanding, we thimk it appropr’ate to empha- size that the failure of the Federal prosecution here arises not because McDaniel was granted immunity under state law, but because the Federal Government took advantage of this im- munity to gain access to his testimony. Had there been no such access, the prosecution could have proceeded as normal, subject, on proper objection, to a showing that the Government had an independent source for its evidence. [9] We next deal with the Gowernment’s contention, which was accepted by the trial court as the basis for disposition of this issue, that there is no immunity, either use or transactional, in- { volved in this case because McDaniel’s testimony before the i state grand jury related only to charges of bribery and corrup- | tion, not embezzlement and misapplication of bank funds. The test, however, of whether immunity has been acquired in return for compelled testimony is not what legal labels are attached to the criminal conduct which is the subject of the incriminating testimony, but whether the conduct revealed by the compelled testimony is related to the subject matter of the federal prosecu- tion. The defendant must demonstrate “that he has testified, under a state grant of immunity, to matters related to the federal prosecution * * *.” Murphy v. Waterfront Comm'n, 378 U.S. i at 79 n. 18, 84 S.Ct. at 1609 (emphasis added). This obviously 3 is a question of fact which cannot be determined without an evi- dentiary hearing. — A-59 — [10] Since no evidentiary hearing was held on this matter in the trial court, there are not sufficient facts in the record to en- able us to make a final determination on this issue. The Gov- ernment, though admitting that it has seen the transcript of the state grand jury testimony, denies that McDaniel testified as to any matters relating to the federal prosecution. There is enough evidence in the record, however, to indicate that McDaniel’s al- legation that he has testified as to these matters is not frivolous and that therefore a remand for an evidentiary hearing is war- ranted. [11] The essence of McDaniel’s defense has been that what- ever wrong-doing he participated in with regard to the bank’s operations was solely for the purpose of “covering up” the po- litical machinations of the bank and its directors. There is evi- dence in the record to support this contention. While such facts would of course constitute no defense to the instant charges, they lend credence to his contention that in testifying before the state grand jury as to matters relating to the unlawful political ac- tivity at the bank, he testified to matters related to the instant charges. Furthermore, it is to be noted that the state charges against McDaniel, including charges of embezzlement and mis- appropriation of bank funds, were dismissed on the grounds that they were covered by his testimony under the grant of im- munity. While this state finding is not ultimately binding on the Federal Government, it is certainly relevant to McDaniel’s prima facie showing that he has in fact testified as to the matters here prosecuted. In light of the present state of the record as to the immunity issue, the cause is remanded for an evidentiary hearing. If the trial court finds that McDaniel testified before the state grand so testify, the judgments shall stand, subject of course to the right of either party to appeal as to this issue. a 7 aa ee [12] As to the other claims of error raised by the defendant, we affirm the judgment, and will discuss them only briefly. McDaniel claims that error was committed when his attorneys were forced to turn over evidence to the federal grand jury in response to a subpoena, which evidence fell within the attorney- client privilege, relying on Schwimmer v. United States, 232 F. 2d 855 (8th Cir.), cert. denied, 352 U.S. 833, 77 S.Ct. 48, 1 L.Ed.2d 52 (1956). We need not determine on this record whether or not this material was protected by the attorney-client privilege, for we find that the error, if any, has not been properly raised in the trial court. The record reveals that all the evidence so seized was made available to McDanie! and his attorney prior to trial for their inspection, and that they made photocopies of anything they desired. If any of this evidence was thereafter offered or used at the trial, a motion to suppress or an objection to its admission on these grounds should have been made. A motion to quash the subpoena could also have been made. No such motions were made, and indeed even in this court, Mc- Daniel does not indicate which evidence was improperly ad- mitted because it came within the attorney-client privilege. No reversible error has been shown in this respect. [13] He also isa that he was denied a fair trial be- cause, being indigent, he was not afforded adequate resources at government expense to prepare his defense. His allegations in this respect are most vague and general. Counsel of defendant's own choosing was appointed by the court on April 1, 1970, and apparently had actually been working on the case for some time prior to that. The case did not come to trial until September 15, 1970. During this period the defendant was allowed extensive discovery of the Government’s evidence, and all costs of dis- covery, and trial, such as witness’ fees, subpoenas, etc., were borne by the Government. The only specific claim of error is that the trial court denied his request for an additional court- appointed attorney. The record reveals that the motion for an additional attorney was not made until only four days before ie aaa ats ee cee Lee et eel chain Aina : TAPES — A-61 — the case was set for trial and that no factual showing was made as to why a second attorney was needed at this late date. Nor has any such showing been made in this court. There was no abuse of discretion in the trial court’s failing to grant the motion for a second appointed attorney. [14] The defendant also complains that he did not receive a fair trial because the jury was biased and prejudiced, in this regard, he contends that the trial court erred in denying his mo- tion for a change of venue to‘an adjoining state. The first trial was held in Minot and no motion for a change of venue was made as to this trial. The record reveals that most pretrial publicity had occurred quite some time before the trial and that any publicity which occurred shortly before the trial was due to statements made to the press by the defendant and his at- torney. Upon this occurrence the irial court entered an order restricting pretrial statements. Any members of the jury panel who indicated that they had formed an opinion on the case due to newspaper publicity were excused for cause. No record was made as to the extent of the pretrial publicity. We find no error with respect to the Minot trial. 15] Immediately following the guilty verdict at the Minot trial, defense counsel moved to have the remaining trials trans- tcrred to Bismarck. This motion was granted and trial set for September 15. On September 9, the defense moved for a change of venue to another state. No intervening circumstances which would justify this change were presented, and as before, no rec- ord as to the pretrial publicity was made. The motion was de- nied. We also find no error in this regard. All other cortentions raised by the defendant have been con- sidered and rejected as being without merit. The case is remanded for further proceedings consistent with this opinion. — A-62 — 482 F.2d 305 (1973) United States of America, Appellant, Vv. Gary R. McDaniel, Appellee. Nos. 73-1051 to 73-1053 United States Court of Appeals Eighth Circuit Submitted May 18, 1973 Decided July 31, 1973 Defendant was convicted before the United States District Court for the District of North Dakota, George S. Register, Chief Judge, of embezzlement and misappropriation of funds and making false entries in records of federally insured bank, and he appealed. The Court of Appeals, 449 F.2d 832, remanded for evidentiary hearing to determine whether defendant had testified before state grand jury under grant of immunity and, if so, whether testimony related to subject matter of federal prose- cution. On remand, 352 F.Supp. 585, the District Court, Paul Benson, Chief Judge, answered both questions in the affirmative and vacated convictions and quashed indictments, and the Gov- ernment appealed. The Court of Appeals, Matthes, Chief Judge, held that in view of fact that United States attorney was unaware, as — A-63 — at time he read transcript, that defendant's state grand jury testi- mony came pursuant to grant of immunity, the Government was confronted with insurmountable task in discharging heavy but- den of proving that compelled testimony was used, directly or indirectly, in subsequent federal prosecution. Affirmed. 1. Grand Jury Key 36 Defendant, who had been subpoenaed to appear before North Dakota grand jury investigating possible violations of state’s Corrupt Practices Act, was not required to first invoke consti- tutional privilege against self-crimination and then be informed that Act conferred transactional immunity, to avoid having been found to have appeared voluntarily and, thus, to have waived automatic statutory protection; defendant, who did not volunteer nonresponsive confessions in attempt to acquire immunity for crimes not under inquiry, did not lose privilege as to any por- tion of his testimony. NDCC 16-20-01 et seq., 16-20-10. 2. Criminal Law Key 42 Issue dispositive of whether subsequent criminal prosecution of person who has been compelled to testify under grant of im- munity violates constitutional privilege against self-incrimination is not whether compelled testimony relates to subsequent charges but whether the prosecution has used the compelled testimony in prosecuting subsequent charges. U.S.C.A. Const. Amend 5. *) 3. Criminal Law Key 223 Ordinarily once a defendant demonstrates that he has testified * under a prior grant of immunity as to matters related to subse- | quent prosecution, a pre-trial evidentiary hearing is necessary for the Government to discharge its heavy burden of proof that BWA seme — ORTH VOTE AT HAR —_ A-64 — all of the evidence it proposed to use in subsequent prosecution was derived from legitimate independent sources. U.S.C.A. Const. Amend. 5. 4. Criminal Law Key 1134(2) Even though FBI reports received by United States attorney prior to commencement of state grand jury proceedings were excluded from evidence by trial judge in determining whether evidence produced at subsequent federal prosecution was de- rived from source independent of witness’ compelled state grand jury testimony, Court of Appeals was free to consider Govern- ment’s offer of proof of reports as it was part of record on ap- peal. U.S.C.A.Const. Amend. 5; Fed.Rules Civ.Proc. rule 43 (c), 28 U.S.C.A 5 Witnesses Key 304(3) To be coextensive with constitutional privilege against self-in- crimination, the immunity granted a witness on compelling him to testify must forbid all prosecutorial use of such testimony, di- rect as well as indirect, and not merely that which results in presentation of evidence before a jury; immunized use includes assistance in focusing investigation, deciding to initiate prosecu- tion, refusing to plea-bargain, interpreting evidence, planning cross-examination and otherwise generally planning trial strat- egy. U.S.C.A.Const. Amend. 5. 6. Crimins! ‘aw Key 42 Where United States attorney was unaware that compelled state grand jury testimony came pursuant to grant of immunity, federal attorney could not have perceived any reason to segre- gate witnesses’ testimony from his other sources of information; under such circumstances Government was confronted with bo Sate ss TSS — A-65 — insurmountable task in discharging heavy burden of showing that all evidence used in subsequent federal prosecution was derived from legitimate sources wholly independent of com- pelled testimony; in view of inescapable conclusion that com- pelled testimony could not be wholly obliteraved from prosecu- tor’s mind in preparation and trial of case a finding of proscribed use of compelled testimony was mandated and indictments were required to be dismissed and federal conviction vacated. NDCC 16-20-01 et seq.; U.S.C.A.Const. Amend. 5. Harold O. Bullis, U. S. Atty., Fargo, N. D., for appellant. William R. Mills, Bismark, N. D., for appetice. Before Matthes, Chief Judge, and Lay and Stephenson, Cir- cuit Judges. Matthes, Chief Judge. We have for consideration the government's appeals from judgments entered after an evidentiary hearing held on remand as directed by this court on defendant's appeals from his con- victions. See United States v. McDaniel, 449 F.2d 832 (8th Cir. 1971), cert. denied, 405 U.S. 992, 92 S.Ct. 1264, 31 L.Ed. 2d 460 (1972). The judgments from which appeals are now taken vacated the earlier judgments of conviction, dismissed the indictments, ordered McDaniel discharged, and his bond exonerated. The factual circumstances warrant detailed ex- plication. Defendant Gary McDaniel* was, prior to these proceedings, President of the First Western State Bank in Minot, North Da- kota. That bank and McDaniel apparently were for some time engaged in irregular and illegal activities involving the bank * Hereinafter McDonald is referred to as “defendant” or by his surname. ) 1h te Bh dining tad ete Distt oon assets. These irregularities were first discovered on or about May 12, 1969, by state bank examiners who were soon followed by examiners for the Federal Deposit Insurance Corporation. Consequently, state prosecutorial authorities began investigating the political machinations of the bank and its officers as possible violations c¢ North Dakota’s Corrupt Practices Act, 3 N_D. C.C. § 16-20-01 et seq.; and the United States Attorney for the District «i North Dakota began investigating the personal manevverings of the bank officers for the purpose of determin- ing whether federal criminal statutes had been violated. On September 23, 1969, defendant, who was then residing in the state of Minnesota, was subpoenaed to appear before a federal grand jury at Fargo, North Dakota, on Ociober 7, 1969. He appeared, but claimed his privilege against self-in- crimination, and gave no testimony. McDaniel went from the grand jury room to the United States Attorney’s office, where the local sheriff immediately served him a subpoena .o appear before a state grand jury at Minot, North Dakota, on October 15, 1969. Prior to his appearance before the state grand jury, defend- ant sought, in exchange for his testimony, immunity from prose- cution under 6 N.D.C.C. § 31-01-09 (Supp.1971), which was denied. Defendant’s attorney then discovered 3 N.D.C.C. § 16- 20-10, which provides in pertinent part: “No person shall be excused from attending and testify- ing . . . before any court upon any investigation . . . for a violation of . . . section 16-20-08, upon the ground that the testimony or evidence, documentary or otherwise, re- quired of him may tend to incriminate . . . him. No per- son shiall be prosecuted nor subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he may testify or produce evi- —-e— McDaniel’s attorney realized that this statute automatically conferred transactional immunity upon any witness subpoenaed to testify in an investigation under the North Dakota Corrupt Practices Act, and accordingly he advised McDaniel to appear before the state grand jury and fully divulge all his illegal actions. That the state prosecutors were unaware of this automatic immunity statute is evidenced by the fact that they subpoenaed all potential defendants, thereby immunizing every suspect ¢x- cept the bank itself, and by the fact that they expressly granted immunity to one grand jury witness under the more recent statute, § 31-01-09. In any event, McDaniel appeared at the state grand jury and gave self-incriminating testimony filling three volumes of tran- script. On November 6, 1969, the United States Attorney requested a copy of McDaniel’s testimony from an Assistant State Attorney General, which he received the late afternoon of November 20. Since the United States Attorney too appar- ently was unaware that McDaniel’s testimony was protected by a statutory grat of immunity, ne read the three volumes of transcript and then returned them the next morning. Thereafter, on December 8, 1969, McDaniel was indicted by the state on fifteen counts of violating the Corrupt Practices Act, one count of embezzlement, and three counts of making false entries. Federal indictments were returned on February 4 and July 31, 1970. The four counts of the initial federal indictment dealt with the of the Ranger Bar, a cocktail lounge. Three of these ts charged that McDaniel had violated 18 U.S.C. § 656 in that he had embezzied and misapplied $56,- 637.20 to finance the transaction by issuing cashier's checks from the bank in that amount without repaying the bank. The — A-68 — fourth count charged a violation of 18 U.S.C. § 1005, alleging that, to cover the issuance of the cashier’s checks, McDanicl had made a false entry in the bank records showing as an asset a nonexistent deposit with another bank. The seven counts of the second federal indictment dealt with miscellaneous schemes. In four counts, McDaniel was charged with embezzling and misapplying $44,716.90 by issuing two checks without repaying the bank, converting a third check to his personal use, and issuing a fourth on a fundless account, all in violation of § 656, supra. The final three counts alleged that McDaniel had further violated § 1005 by making three separate false entries of fictitious deposits by the bank to show assets to cover the sums embezzled. McDaniel sought to have all state and Federal indictments quashed on the ground that the Fifth Amendment precluded his prosecution for transactions touched upon by his immunized State grand jury testimony. The state court, Judge Coyne, ac- cepted the argument that § 16-20-10 conferred transactional immunity and quashed the state indictment; but the federal court, Judge Register, declined to quash the federal indictments. Consequently, McDaniel was tried in federal court in two trials, convicted on all eleven counts, and sentenced to five years im- prisonment on one conviction and concurrent terms of three and two years on the others. McDaniel then appealed tc this court, and at oral argument on that appeal the United States Attorney conceded that he had read McDaniel’s state grand jury testimony on the evening of November 20, 1969. This court held that the United States Attorney’s reading of McDaniel’s state grand jury testimony “constitutes a prima facie ‘use’” of it, and therefore, if that testimony was given under a grant of immunity, and if it related to the subject matter of the federal prosecutions, McDaniel could not be prosecuted for those transactions. United States — A-69 — v. McDaniel, supra. Accordingly, the cause was remanded to the district court for an evidentiary hearing to determine whether McDaniel had testified under a grant of immunity, 449 F.2d at 840, and, if so, whether the testimony related to the subject matter of the federal prosecution. 449 F.2d at 841. After conducting the mandated evidentiary hearing, Judge Benson answered both propounded questions affirmatively and therefore, in accordance with his conception of our opinion, vacated the convictions and quashed the indictments. 352 F. Supp. 585. However, Judge Benson’s task at the evidentiary hearing was complicated by the intervening decision of the Supreme Court in Kastigar v. United States, 406 U.S. 441. 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972). This court’s prior opinion in McDaniel I, authored by Judge Gibson, had interpreted the pre-Kastigar decisions of the Su- preme Court to establish a double standard with respect to the constitutionality of statutes which grant immunity to witnesses in order to compel testimony. First, this court determined that Counselman v. Hitchcock, 142 U.S. 547, 12 S.Ct. 185, 35 L. Ed. 1110 (1892), applied full transactional immunity when the federal government was both the questioning sovereign and the prosecuting sovereign, thereby preventing federal prosecution for any crime relating to the subject matter of the compelled testimony. If, on the other hand, the questioning sovereign were the state, Murphy v. Waterfront Commission, 378 U.S. . $2, 84 §.Ci. 1594, 12 L.Ed.2d 678 (1964), governed, and the federal government was permitted to prosecute the witness for crimes related to his testimony, so long as there was no use of the compelled testimony or its fruits. Thus we ruled that, in inter-jurisdictional cases, the Fifth Amendment required no more than use and derivative use immunity, even while single jurisdictions were bound by full transactional immunity. 12S LAR SONI A PIA GLE ORIG CLLR AES POE AE ETT ; —~ By means of this analysis, it was determined that under ordinary circumstances McDaniel would only be entitled to use immunity, since kis grand jury testimony had been com- pelled by the state, and the federal government was acting as prosecutor. However, because the United States Attorney had read the three-volume transcript of McDaniel’s testimony, our court felt forced to conclude that the federal government was in the same position as if it were the questioning sovereign, and that therefore transactional immunity applied. The only ques- tion then remaining was whether McDaniel had in fact testified before the state grand jury a grant of immunity to mat- ters related to the prosecution, and, as seen, that caused the remand. In Kastigar, of course, Cy Court held that use and derivative use immunity is constitutionally sufficient to compel testimony over a claim of Fifth Amendment privilege even in cases in which the federal government is both questioner and prosecutor. Accordingly, at the evidentiary hearing in this case, the government sought to open a third issue by seeking to prove under the Kastigar guidelines that it had independent sources for the evidence it used to convict McDaniel. For this purpose, it offered into evidence F.B.I. reports based upon an investiga- tion of McDaniel that had been received by the United States Attorney’s office prior to McDaniel’s testimony. But McDaniel’s counsel objected to this evidence on the ground that this court's mandate did not allow the trial court to explore that issue. The district court sustained this objection, and excluded the reports from evidence, admitting them only as an offer of proof. Never- theless, in his memorandum dismissing the indictments, the dis- trict judge observed that could he apply Kastigar his result would differ: “On the basis of the government's offer of proof in the McDaniel evidentiary hearing, this Court finds that the government had, prior to the grand jury testimony, all the ts <2 EE RT SFMT Rr ee oe -e ~_ - — Nl — evidence used in the McDaniel prosecution, and further finds that evidence was derived from legitimate sources wholly independent of the compelled testimony. This evi- dence consists of comprehensive investigative Federal Bu- reau of Investigation reports. See Government's Offer of Proof, Exhibits 36-41 inclusive.” It is with this extensive and complicated factual background that we consider the government's three contentions on appeal: (1) that McDaniel’s testimony was not given under a grant of immunity; (2) that the testimony did not relate to the subject matter of the federal prosecution; and, alternatively, (3) that the United States did not “use” that testimony to convict Mc- Daniel. [1] First the government contests Judge Benson's conclusion of law that when McDaniel testified before the state grand jury pursuant to a subpoena, he was automatically granted immunity by § 16-20-10. The government's position tacitly concedes that, ordinarily, the statute automatically confers immunity on any witness subpoenaed to testify upon an investigation of vio- lations of § 16-20-08, but contends that since McDaniel seized this opportunity to gain absolution of his wrongs, he waived — the immunity. The essence of this argument is the contention that unless McDaniel first invoked the Fifth Amendment and then was told that § 16-20-10 granted him immunity, he was acting voluntarily and thus waived the statutory protection. But the Supreme Court has held precisely to the contrary in a case involving a federai statute worded similarly to § 16-20-10. See United States v. Monia, 317 U.S. 424, 430, 63 S.Ct. 409, 87 L.Ed. 376 (1943). Accord, State v. Hennessey, 195 Or. 355, 245 P. 2d 875, 881 (1952) (en banc). Furthermore, it is not contended that McDaniel lost the privilege as to any portion of his testimony by volunteering nonresponsive confessions in an attempt to acquire immunity for crimes not under inquiry. Cf. United States v. Wilmington Chemical Corp., 254 F.Supp. 92 a — A-72 — ~ (N.D. Ill. 1966). Accordingly, we find no error in Judge Benson’s conclusion that McDaniel’s testimony was covered by a grant of immunity. [2] The government’s second contention faults Judge Ben- son’s finding of fact that McDaniel’s testimony “related to” the federal prosecution. However, this inquiry, which was man- dated by this court’s earlier remand, is, in light of Kastigar, no longer germane. Because we held transactional immunity to be required by the Fifth Amendment, it was necessary under our earlier opinion to inquire whether the indictment had to be quashed on grounds that the testimony “related to” the transac- tion giving rise to the prosecution. But under Kastigar, that no longer is a basis for quashing the indictment. The question under Kastigar is not whether the testimony relates to the charges,’ ~ but whether the prosecution has “used” the testimony in prose- cuting those charges. It is to that dispositive question that we turn. In writing for the Court in Kastigar, Mr. Justice Powell equated the protection provided by the statute in question with the protection provided by the Fifth Amendment and held that the 1 Even if the question were whether the testimony related to the federal charges, we think that the following finding by Judge Benson would nei d: clearly erroneous. “Alter reading the entire grand jury transcript, it is this court's findixg that testimony discernably be separated from ma- terial incriminating to McDaniel. Alli counts are in some way connected to the shortage of $214,900 [which McDaniel ex- plained to the grand jury}. Taken as a whole, the 472 pages of grand jury testimony im- plicate McDaniel in every aspect of the various schemes. The insignificance appears only when a line or page is viewed as a complete unit. We note that in support of this conclusion the trial court meticu- lously set out in its memorandum opinion each count of the two federal indictments, coupled with a summary of that portion of Mc- Daniel's incriminating grand jury testimony which related to that count. = PRLS Segre © OE ROI Se eS ONT OLE REDE SS LEE IE NIT ELE UE IE IEW at — hia “statute provides a sweeping proscription of any use, di- rect or indirect, of the compelled testimony and any in- formation derived therefrom . . . This total prohibition on use provides a comprehensive safeguard, barring the use of compelled testimony as an ‘investigatory lead,’ and also barring the use of any evidence obtained by focusing in- vestigation on a witness as a result of his compelled dis- closures.” 406 U.S. at 460, 92 S.Ct. at 1664. In order to enforce this prohibition of use of immunized testimony, the Court reaffirmed the rule of Murphy: “‘Once a defendant demonstrates that he has testified, under a state grant of immunity, to matters related to the federal prosecution, the federal authorities have the burden of showing that their evidence is not tainted by establishing that they had an independent, legitimate source for the dis- puted evidence.’ This burden of proof . . . is not limited to a negation of taint; rather, it imposes on the prosecution the affirma- tive duty to prove that the evidence it proposes to use is derived from a legitimate source wholly independent of the compelled testimony. s * a * s a & . . .. One . . . need only show that he testified under a grant of immunity in order to shift to the government the heavy burden of proving that all of the evidence it pro- poses to use was derived from legitimate, independent sources.” 406 U.S. at 460, 92 S.Ct. at 1665 (citations cmitted) (emphasis supplied). [3] Clearly, this test envisions, under ordinary circumstances, a pre-trial evidentiary hearing at which the government must discharge its “heavy burden” of proof; but both parties here Began ay ere es : — A-74 — contend such a hearing is unnecessary. The government says Judge Benson has already explored that contention and made a finding of fact that the government has carried its burden. Defendant contends that in the peculiar circumstances of this case it is impossible for the government to furnish the degree of proof Kastigar requires. Judge Benson’s finding that the evidence produced on the government’s behalf at McDaniel’s trial was derived ¥fom a source independent of McDaniel’s state grand jury testimony was premised upon the court’s careful examination of the gov- ernment’s offer of proof by the F.B.I. reports received by the United States Attorney prior to the commencement of the state grand jury proceedings. [4] We are free to consider the offer of proof as it is a part of the record before us, even though excluded from evidence by the trial judge. United States v. Agy, 374 F.2d 94, 95 (6th Cir. 1967); F. H. McGraw & Co. v. Milcor Steel Co., 149 F.2d 301 (2d Cir. 1945). See Rule 43(c), Fed.R.Civ.P.; 5 Moore’s Federal Practice § 43.11, p. 1383 (2d ed. 1971). [5] We find, however, that even though the voluminous re- ports, which we have examined, may have afforded proof of an independent source of the evidence adduced at McDaniel'’s trial, such reports nevertheless fail to satisfy the government’s burden of proving that the United States Attorney, who admittedly read McDaniel’s grand jury testimony prior to the indictments, did Not use it in some significant way short of introducing tainted evidence. See The Supreme Court, 1971 Term, 86 Harv.L. Rev. 181, 186 (1972); Note, Standards for Exclusion in Im- munity Cases after Kastigar and Zicarelli, 82 Yale L.J. 171, 185, 186 (1972). Such use could conceivably include assist- ance in focusing the investigation, deciding to initiate prosecu- tion, refusing to piea-bargain, interpreting evidence, planning cross-examination, and otherwise generally planning trial strategy. 2 ESE EEL NLT PORN RE Ey errr Raat Ss RRS OTA Akal aa SpMtexam, tox sso Kastigar, after all, proscribed “any use, direct or indirect. . . .” And, indeed, if the immunity protection is to be coextensive with the Fifth Amendment privilege, as it must to be constitu- tionally sufficient; then it must forbid all prosecutorial use of the testimony, not merely iat which results in the presentation of evidence before the jury. = The three volumes of transcript in which McDaniel fuily con- fessed his misdeeds were read in their entirety by the United States Attorney three and eight months, respectively, before the two federal indictments were handed down. Furthermore, they were read when the United States Attorney was unaware that the testimony came pursuant to a grant of immunity, and he therefore could have perceived no reason to segregate McDan- iel’s testimony from his other sources of information. Under these circumstances, we are of the opinion that the government is confronted with an insurmountable task in discharging the heavy burden of proof imposed by Kastigar. In this regard, we note with interest that in United States v. Dornau, 359 F.Supp. 684 (S.D.N.Y. 1973), District Judge Metzner recently arrived at a similar conclusion on strikingly similar facts, stating: “{[O]nce the subject matter was touched upon in the privileged testimony, and the prosecutor had read it, he could have used it in a variety of ways in this criminal prosecution. The possibility of such use, and the impossi- bility of clearly showing that the use did not occur calls for the holding in this case that the defendanis were denied the constitutional protection that their silence would have given them.” [6] Because the trial court apparently failed to consider the immeasurable subjective effect of the prosecutor’s reading of McDaniel’s state grand jury testimony, we conclude that the court’s finding that the government had fulfilled the burden of proof required by Kastigar cannot stand. Rew it~ In so concluding, we cast no reflection upon the integrity or motives of the United States Attorney. To the contrary, he has demonstrated by his appearances in our court and the records of the trials in the district court that he is a prosecutor who ad- heres to the high professional standards of the legal profession and to the duties and responsibilities of a United States At- torney. But even so, the United States Attorney is subject to human frailties. Thus, although he asserts that he did not use McDaniel’s testimony in any form, we cannot escape the con- clusion that the testimony could not be wholly obliterated from the prosecutor’s mind in his preparation and trial of the case. We agree with Judge Metzner that “[iJt is difficult for the court to speculate as to the effect that the reading of the minutes might have had on the conduct and thinking processes of the [prosecu- tor].” United Staies v. Dornau, supra. We also deem it appropriate to observe that this appea! and the troublesome question presented derive from unusual circum- stances. By reason of the principles promulgated in Kastigar, the problem at hand is not likely to reoccur with any degree of frequency. Ordinarily, the question whether the prosecutor has made any use, direct or indirect, of the compelled testimony can and should be fully explored by an appropriate heagsing before trial. Here, as we have seen, the question was not ven- tilated until after the trial. In sum, the unusual circumstances attending the controversy renders the government’s burden of proof in this case virtually undischargeable. Another remand for yet another evidentiary hearing would be a futile gesture. Accordingly, the judgments vacating the convictions and dis- missing the indictments are affirmed. MIC Ne TEE AIO LONER AI SIO RTE IRIS: ENE LERST IAG PRIETO MEMER EE IO ETT a --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385607_1865%3A1. Public record. Not legal advice.