Petition for a Writ of Certiorari — ALLSTATE MORTGAGE CORP. V. UNITED STATES (No. 74-1020)

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Supreme Court of the United States

OcToBER Term, 1974

ALLSTATE MORTGAGE CORPORATION,

CHARLES KARP,

Petitioners,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Parrick A. Turrs,

. 134 N. LaSalle Street,

- Chicago, Illinois 60602,

Attorney for Petitioners.

The Scheffer Press, Inc—(312) 263-6850

a_i REENTRNENTRREE TE —)

CONSTITUTIONAL PROVISIONS INVOLVED ......

REASONS FOR GRANTING THE WRIT ................

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Brady v. Maryland, 373 U.S. 83 (1963) .............csssseee

Bray v. Peyton, 429 F.2d 500 (4th Cir. 1970) «0.0.0.0...

Bruton v. United States, 391 U.S. 123, 88 S.Ct. 1620,

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Ear! v. United States, 361 F.2d 531 (D.C. Cir. 1966) ..

Garrity v. New Jersey, 385 U.S. 493 (1967) «0.0...

Kastigar v. United States, 406 U.S. 441 (1972) ...000...

Roviaro v. United States, 353 U.S. 53 (1957) .....0.00....

United States v. Echeles, 352 F.2d 892 (7th Cir. 1965)

United States v. Gregoric, 497 F.2d 1253 (4th Cir.

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United States v. Mendez-Rodriguez, 450 F.2d 1 (9th

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United States v. Shavin, 287 F.2d 647 (7th Cir. 1961)

United States v. Turnipseed, 272 F.2d 106 (7th Cir.

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In THE

SUPREME COURT OF THE UNITED STATES

Octoser Term, 1974

No.

ALLSTATE MORTGAGE CORPORATION,

CHARLES KARP,

Petitioners,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Petitioners pray that a Writ of Certiorari be issued to

review the judgment of the United States Court of Ap-

peals for the Seventh Circuit entered in this case on

December 10, 1974.

OPINION BELOW

The opinion below has not yet been published but is

reprinted herein as Appendix A, infra.

a” ae RUA ann

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L 4

~ 7

JURISDICTION

The judgment of the United States Court of Appeals for

the Seventh Circuit (Appendix A, infra) was entered

on December 10, 1974. A timely motion for a petition for

rehearing en bane was denied on January 13, 1975 (Ap-

pendix 3, infra). This petition is filed within 30 days

of the final order of the United States Court of Appeals.

The jurisdiction of this court is invoked under 28 U.S.C.

1254(1).

HISTORY OF THE CASE

Charles Karp and Allstate Mortgage Co. were indicted

and convicted in 11 counts for devising a scheme to

defraud wherein the mails were an integral part of the

scheme in violation of Title 18 U.S.C. See. 1341. Further,

the defendants were convicted of violations of Title 18

U.S.C. See. 1010 for causing false s*xtements to be sub-

mitted to The Federal Housing Authority (FHA).

After the convictions in a bench trial the Court sen-

tenced Charles Karp to one year imprisonment on the

mail fraud counts (to run concurrently) and one year

on the false statement counts (tq run concurrently) but

the two one-year sentences were ordered to run con-

secutively. The Corporation was fined $18,000.

ISSUES PRESENTED FOR REVIEW

1. Were the petitioners denied their rights to attendance

of witnesses and to due process of law guaranteed by

the Fifth and Sixth Amendments to the United States

Constitution when the judge would not grant use im-

munity to a material defense witness who in good faith

invoked his privilege against self-incrimination?

2. Were the petitioners denied their rights to con-

front witnesses against them as guaranteed by the Sixth

Amendment to the United States Constitution when the

trial Court took into consideration a post scheme state-

ment of a non-testifying co-defendant in deprecating a

valid defense?

CONSTITUTIONAL PROVISIONS INVOLVED

“In all criminal prosecutions, the accused shall en- ;

joy the right . . . to be confronted by the witnesses

against him; to have compulsory process for obtaining

witnesses in his favor . . .” Amendment VI to the

United States Constitution. ms

“No person shall . . . be deprived of life, liberty or °

property, without due process of law. . .” Amendment

V to the United States Constitution.

REASONS FOR GRANTING THE WRIT

THE PETITIONERS WERE DENIED DUE PROCESS

OF LAW AND THEIR RIGHT TO COMPEL ATTEN-

DANCE OF WITNESSES WHEN THE TRIAL COURT

DID NOT GRANT USE IMMUNITY TO A MATERIAL

DEFENSE WITNESS WHO HAD ASSERTED HIS

PRIVILEGE AGAINST SELF-INCRIMINATION.

In the last eight counts of the indictment Charles

Karp and/or Allstate Mortgage Co., a mortgage broker-

age firm, not a mortgagee, were charged with violations

of 18 U.S.C. 1010 for causing false statements to be sub-

mitted to the FHA to induce them to issue mortgage

insurance. It was alleged that on the FHA Form 2900,

a form used by the FHA to pass on mortgage insurance

applications, a figure less than the true broker’s fee was

listed. These counts charged the petitioners with causing

these lesser amounts to be submitted.

An outline of the procedures involved in obtaining an

FHA insured mortgage will be set out here for a complete

understanding of the issues.

When a home owner applies for an FHA insured mort-

gage he fills out a form known as a 2800 Form. This

document contains information about the physical struc-

ture of the premises such as number of rooms, type of

heat, type of construction and other factors which would

help assess a value on the property. An FHA inspector

then inspects the property and based on all these factors

the FHA gives a conditional commitment—that is, the

maximum mortgage amount it will insure.

ray OA

The owner through the mortgagee then submits a

credit statement to the FHA which is referred to as Form

2900. On this form the applicant lists his income, his

liabilities, his dependents and other information pertinent

to his ability to repay the insured mortgage.

In addition there is space on Form 2900 for the amount

of money needed at the closing of the transaction. This

includes payment of the principal indebtedness, pay-

ments to lien holders and closing costs. Amongst the

closing costs is space for any broker’s fee to be entered.

In the instant case it was established that the figure

for the broker’s fee on Form 2900 and the amount re-

ceived by the petitioner at the closing did not match

and that the petitioner received more than listed on

Form 2900.

However, the Government’s own witness testified that

the mortgagee—not tlie hroker—completed the Form 2900

and did not show them to the petitioner for his approval

nor did the petitioner in any way assist in the completion

of the document.

In an attempt to show that the mortgage hroker does

not fill out the Form 2900 and that it was an industry

practice in Chicago for mortgagees to use estimates in-

stead of actual figures for the closing cost requirements

on the form, the petitioner called as a witness Wyatt Ross,

the former manager of Mortgage Associates, a mortgage

banking firm in Chicago.

Mr. Ross asserted his privilege against self-incrimina-

tion when asked about the industry practice in completing

Form 2900.

A petition was presented to the Court in an effort to

grant Mr. Ross use immunity along with an offer of what

Mr. Ross would say if granted use immunity.

ALA AAIEL CARBIDE AA ce Nic Gtep Padd a

— oC

Mr. Ross, the petitioner offered to prove, would testify

that it was the practice of Mortgage Associates and

the mortgage banking industry in Chicago to first com-

pute all of the debts and enter them in the Form 2900

and then enter the difference between all monies needed

to close the transaction and the conditional commitment

from the FHA as the broker’s fee. It was, of course,

clear that the monies to be dispersed at the closing

could not exceed the conditional commitment. Mr. Ross

did testify, as did others, that they knew Allstate Mort-

gage Company’s fee was $1,000 in all cases.

An example of the industry practice is as follows:

If the conditional commitment by the FHA was $20,000

and there was an outstanding balance of $18,000 on the

existing indebtedness and $1,500 in closing costs, the

mortgage company would reflect Allstate’s broker’s fee

as $500 on the 2900 because that was the only figure they

could insert in the form without exceeding the $20,000

conditional commitment. At the time of the closing, how-

ever, which might have been 6 to 8 months later, the exist-

ing indebtedness would be reduced and Allstate would

receive its full $1,000 fee or as much of it as was available

at the time of closing.

The offer of proof also showed that Mr. Ross would

have testified, if granted immunity, that these manipula-

tions with numbers were done by the mortgage com-

panies without the knowledge or complicity . the mort-

gage broker.

At the trial the Government objected to the grant

of immunity. The trial judge ruled that he was inclined

to receive evidence of other transactions, which would

show Charles Karp’s knowledge or good faith. The Court

found the proffered testimony to be material and that

\ cs |

— a

Mr. Ross was asserting his privilege in good faith but

in the final analysis held that he did not have the author-

ity to grant a defendant’s petition for immunity, The

Court further ruled that he was not reaching the ques-

tion of his discretion in the matter but was denying the

petition solely on the ground that he did not have power

to entertain it.

The Government in opposing th: petition for immunity

cited to the Court Earl v. United States, 361 F.2d 531

(D.C. Cir. 1966), a case which dealt with the prior statute

on immunity, 18 U.S.C. 1406. The immunity provided

for and which was considered in the Earl case was transac-

tional immunity; that is to say, that a witness could

not be prosecuted about any transaction which was men-

tioned in his testimony. Congress had granted the power

to grant such immunity only to the prosecution, and

Earl v. United States, supra, recognized that by giving

transactional immunity over the Government’s objectiun,

the Court was denying the prosecution the ability to

prosecute and was interfering with decisions best left

to the prosecution. At the time of the petition in this

ease, however, Title 18 had been amended to allow for

use immunity under Title 18 U.S.C. 6003. Although that

provision still only deals with governmental petitions

for immunity, the grant of immunity does not preclude

the government from prosecuting the witness, but only

bars them from using the testimony so compelled or any

leads therefrom against the witness. This Court in

Kastigar v. United Staies, 406 U.S. 441 (1972) upheld

the constitutionality of the use immunity statute and Jus-

tice Blackmun writing for the majority in the case held

that granting use immunity was no different than if the

witness had not testified at all, but instead stood on

his Fifth Amendment privilege.

a ee

If the trial Court granted immunity to this essential

defense witness in the instant case it would not have

prevented the Government from using the testimony or

leads therefrom against him. And as mentioned in Kastigar,

the situation would have been no different than if the

witness had not testified at all.

The Sixth Amendment to the United States Constitu-

tion guarantees the compulsory attendance of witnesses

on behalf of the defendant and cases have held that when

the Government interferes with the defendant’s ability to

freely call witnesses on his own behalf, due process of law

and the rights guaranteed by the Sixth Amendment are

denied. In Bray v. Peyton, 429 F.2d 5v0 (4th Cir. 1970)

the jailing of a witness against whom the charges were

dropped earlier was held to have a chilling effect on his

ability to testify and thereby a violation of the Sixth

Amendment. In United States vy. Mendez-Rodrigue:, 450

F.2d 1 (9th Cir. 1971) the prosecution returned a material

defense witness to Mexico and this was held to be a bla-

tant denial of access to witnesses and therefore a violation

of due process. gue

The proposition that the prosecutor cannot suppress

evidence favorable to the defendant which was enun-

ciated in Brady v. Maryland, 373 U.S. 83 (1963) would be

an anomaly if that same holding did not apply to the

Government’s refusal to acquiesce in the grant of use

immunity to a material defense witness. For all prac-

tical purposes what difference is there between the situa-

tion where the Government suppresses evidence favor-

able to the defendant or where the Government refuses to

go along with the grant of use immunity for a material

defense witness? The Government contended at trial that

it is an interference with a basie prosecutorial decision

whether someone should receive immunity or not. We

fan ae

submit that the question now is not giving the witness

total immunity versus prosecution but only giving him

use immunity and still a'lowing the prosecutors, if they

so see fit and if they have the evidence, to prosecute the

witness with evidence ir.dependent of his testimony.

The trial Court poirted out the anomaly of this situa-

tion by stating that if he had ruled that Ross had to

testify, notwithstand'ng his assertion of the privilege, he

would in effect be granting Ross use immunity. Such

testimony having been compelled by a Court could not be

considered the voluntary statement of a witness and that

statement or any leads therefrom could not be used against

the witness. In Garrity v. New Jersey, 385 U.S. 493 (1967)

this Court recognized the psychological compulsion aspect

in giving statements and ruled that statements given

under compulsion of giving a statement or losing one’s

job would not be admissible in Court. So, too, a statement

psychologically compelled in Court by a judge would

lead to the same conclusion.

All the cases cited by the Government and by the 7th

Circuit in affirming this conviction dealt with the transac-

tional immunity Statute, 18 U.S.C. 6003. There has been

no case, to your petitioner’s knowledge which has decided

the issue herein.

Recently the issue was raised in United States v.

Gregorio, 497 F.2d 1253 (4th Cir. 1974). The Court there

declined to pass on the matter pointing out however that it

might have considered it if the petition for immunity

had been presented to the District Court (as it was

here), and there had been an offer of proof to provide a

basis for an intelligent disposition of the petition (such

an offer was made in the instant case).

This Court has held that the right to offer relevant testi-

mony is a fundamental right to present a defense guar-

Si aah hy

—

IPE MOLINE, PD EE IE ‘

anteed by the due process clause. Washington v. Texas,

388 U.S. 14 (1967).

By denying the defendant the opportunity to present

a material witness in his own behalf, the defendant did

not have the right to present a defense.

To argue that Congress only granted the Government the

authority to petition for immunity misreads the Statute.

While 18 U.S.C. 6001 allows the Court to act on the

Government’s petition for immunity there is nothing in the

act which prohibits the Court from acting on a defen-

dant’s petition. Courts have inherent rights in the con-

duct of trials before them to see that justice is accom-

plished.

This Court has in the past found that a citizen has

a remedy in money damages for an illegal search and

seizure where no such remedy existed by Statute. Bivens

v. Six Unknown Named Federal Narcotics Agents, 403

U.S. 388 (1971).

What is needed here is a balancing between the Govern-

ment’s right to prosecute and a defendant’s right to

present material witnesses on his own behalf. This Court

in Roviaro v. United States, 353 U.S. 53 (1957) weighed

the interest of the Government in protecting confidential

informants versus the defendant’s rights to present a

material witness on his behalf and having done so, decided

for the defendant.

As mentioned earlier, the Courts now have the power

to grant use immunity which does not preclude the Govern-

ment from prosecuting the witness with independent evi-

dence. The Court, therefore, is not interfering with the

prosecutor’s functions as would have been the case un-

der the former Statute. In balancing the right of the

Government to prosecute, which is not lost under these

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circumstances versus the right of a defendant to present

a material witness, which has been lost here, the choice

seems clear. The Government is not being injured by

the granting of use immunity but the defendant may be

irreparably harmed by the refusal tg grant the petition.

As this is an important issue which materially affects

these petitioners and all others similarly situated we

respectfully ask this Court to issue the writ of certiorari

to review the decision of the United States Court of

Appeals for the Seventh Circuit Court of Appeals.

Il.

THE PETITIONERS WERE DENIED THE RIGHT TO

CONFRONT THE WITNESSES AGAINST THEM

WHEN THE COURT TOOK INTO.CONSIDERATION

A POST SCHEME STATEMENT OF A NON-TESTI-

FYING CO-DEFENDANT IN DISREGARDING A

VALID DEFENSE.

Karp and Allstate Mortgage Co. were in the business

of trying to get persons who had purchased their homes

under a contract or articles of agreement to convert that

contract into a mortgage. Various salesmen, including

Karp, contacted home owners and tried to sell them

on the advantages of having a mortgage instead of only a

contract. It was alleged that the sales persons did not

inform the owners that there would be a $1,000 fee pay-

able to Allstate if a mortgage was obtained. The Govern-

ment called 12 witnesses who testified that they were

contacted by an Allstate salesman, that they decided to

try to get a mortgage, signed certain documents but

never were told that they would be indebted to All-

state for $1,000. Most of the people testified that the

agreement with Allstate was blank at the time of the

signing. It was established that at the closing, aiter a

mortgage was obtained, $1,000 of the mortgage proceeds

were paid to Mr. Karp on behalf of Allstate. This $1,000

was then included in the indebtedness that the owner paid

off in monthly installments to the mortgagor.

Some people who applied for -a mortgage, received a

favorable credit report but refused to go through with

the agreement were sued for either the costs of Allstate

in applying for the mortgage or the full $1,000.

In defense Karp presented 12 witnesses who were home

owners and were similarly situated to the prosecution

witnesses. They all testified that the Allstate salesman

told them about the fee and they were extremely satisfied

with the mortgages obtained by Allstate for them. Such

a defense is proper. United States v. Shavin, 287 F.2d

647 (7th Cir. 1961)

At his arrest a co-defendant, Howard Berg, an Allstate

salesman, told the FBI that on many occasions he would

not tell a prospective mortgage applicant about the All-

state fee if he thought they would refuse to sign the

application. (Allstate salesmen would receive $25 for each

application they brought in.)

Prior to trial Karp and Allstate moved for a severance

from Berg because of this post arrest statement but the

Court denied the motion, ruling instead that he would

handle the problem at the time, if ever, it arose during

the trial. The Court agreed, however, that Berg’s state-

ment was only attributable to Berg and no one else.

During the closing argument, the attorney for Karp

and Allstate argued that there was no scheme to defraud

and pointed to the satisfied witnesses of the defense to

emphasize his position.

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—

The Court, however, then stated in response to Counsel

for Karp:

“Mr. Tuite: Of course not, no. But I submit that if

there was a scheme, there would have been people

of—I shouldn’t say of lack of educational background,

or similar people would have been similarly defrauded.

I don’t see why if there was a scheme, that a Mr.

Wiginton would be defrauded, or there would be a

scheme to defraud him and not Mrs. Demetral, or any

of the other people that testified.

I don’t think I perceived any great intellectual

superiority of defense witnesses over Government

witnesses; that the reason these people weren’t de-

frauded is that they were intellectually sharper and,

therefore, they couldn’t be.

I think these were just ordinary, middle or even

lower-middle class people who were in financial dif-

ficulties and were dealt with.

Of course, you can defraud one person and not the

other. But it doesn’t seem reasonable that they would

pick on those 12 that the Government had come in,

and not 10 other people who were similarly situated

in life, and whose educational background, as far as

I could see, did not set them apart.

Mrs. Curry was 18 years with the Government, but

then again you have Mrs. Ham Ying who seemed to

be a very intelligent, educated woman. The Powells—

an ordinary couple, I don’t think much ditrcrent than

a number of people that the Government called to

testify, all at about the same time.

These transactions all took place about the same

‘time, in the same areas. And | submit that it at least

raises the question of doubt, it raises the question

of reasonable doubt if there was a scheme to defraud.

The Court: It shows—in a degree, though, Mr.

Tuite, it shows the real problems which attend proof

of so-called similar transactions. Because the con-

ceded similarity—and I assume the Government would

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concede it, that these people are from essentially the

same background, and they were all for one reason

or another interested in refinancing. But beyond that,

the method of selling here, totally apart now from

whether there was or wasn’t a scheme—the personal

encounter, method of selling, door to door selling,

those conversations unfolded in such a way that as

Agent Van Loon has testified Mr. Berg said, he didn’t

disclose the fee if he was afraid he was going to lose

the sale or the customer. And in some instances it

seems reasonable to infer that a person in the situa-

tion that your witnesses were would demonstrate a

particular type of interest in the transaction, might

inquire on their own about what the fee was, the

conversation might proceed in such a way as to

cause the salesman to believe, ‘Here | can disclose it

to them.’

And, indeed, you end up with a couple of agree-

ments that are footnoted, percentages are used rather

than dollar figures, and then you take angiher person

who manifests apprehension about the fee, and the

salesman concludes in this case, ‘I’m not going to tell

him.’ (R. 2516-19) (emphasis added)

It is clear therefore that the Court, contrary to his

initial ruling that Berg's statement would orly be admis-

sible against Berg, took into consideration in deprecating

a proper defense, an inadmissible statement of a co-de-

fendant.

This Co in Bruton v. United States, 391 U.S. 123,

88 S. Ct. 16.0, 20 L.Ed.2d 476, held it to be a violation of

the Sixth Amendment right to confrontation of witnesses

to use a hearsay statement of a co-defendant in a joint

trial even though limiting instructions are given. Although

the instant case involved a bench trial and there is a

presumption that the trial Court only will consider com-

petent evidence that presumption is not unrebuttable and

R a (eee POS EL Pt LP ROE COVELL! LOE I LEC LOTTA I

a, ea

where the record is clear that the trial Court did con-

sider improper evidence, a reversal is warranted.

This Court in Wong Sun v. United States, 371 U.S. 471,

83 S. Ct. 407, 9 L.Ed.2d 441, reversed a conviction when

it was not clear that the trial Court, also in a bench trial,

may not also have considered a co-defendant’s statement

as corroboration of the accusation. This Court held

that even though the case was tried without a jury where

the Court overruled objections concerning the admissi-

bility of the statement as against a non-declarant it would

not be presumed that the Court disregarded the state-

ment in considering the non-declarant’s guilt.

In United States v. Turnipseed, 272 F.2d 106 (7th Cir.

1959) the trial Court made certain remarks which appear

in the co-defendant’s confession and that Court in revers-

ing the conviction held that where there was a number

of defendants tried together in a bench trial and the

evidence is received as to some, but not as to others, that

it was error for the Court to consider evidence admissible

only as to one in reaching its findings as to all.

While Bruton, supra, dealt with the use of an extra-

judicial statement which inculpates the non-declarant de-

fendant, there appears to be no logical reason to refuse

to apply the rule to this type of case. The use of an ex-

trajudicial statement of a co-defendant which statement

was not under oath and not subject to cross-examination

and which is used in considering the guilt of the defen-

dant is a violation of this rights guaranteed by the Sixth

Amendment.

To allow the use of Berg’s statement to the obvious

detriment of the petitioners is a classic violation of the

right to confrontation.

;

a am

Berg never testified and the petitioners could not call

a co-defendant as their own witness. United Siates v.

Echeles, 352 F.2d 892 (7th Cir. 1965).

While Bruton and its progeny have dealt with the use

of a co-defendant’s hearsay statement to incriminate a

defendant there is as strong a need for the rule to apply

when the statement is used to thwart a valid defense. A

clear example of this type of harm can be seen where

after an alibi is presented by a defendant, a police officer

testifies in rebuttal that another person told him that the

defendant was not where he testified he was. While the

hearsay statement does not incriminate the defendant, it

surely materially affects his defense without the ability to

cross-examine.

For this reason your petitioners also pray this Honor-

able Court to grant the petition for certiorari.

CONCLUSION

For the above-stated reasons your petitioners pray

this Honorable Court to grant the writ of certiorari to

review the judgment of affirmance of the Circuit Court

of Appeals for the Seventh Circuit.

Respectfully submitted,

Patrick A. TuITE

134 N. LaSalle St.

Chicago, Illinois 60602

Attorney for Petitioners

aT Mah ne ERE

a oe

APPENDIX A

In The

UNITED STATES COURT OF APPEALS

For the Seventh Cireuit

No. 74-1322

Unitep States or AMERICA,

Plaintiff-A ppellee,

ALLSTATE Mortcace Corporation,

Cuartes Karp and Howarp Bere,

Defendants-A ppellants.

Appeal from the United States District Court

for the Northern District of Tlinois, Eastern Division

No. 73 CR 481

Prentice H. MarsHau, Judge

Arcuep Octoser 23, 1974— Dectpep DecemBer 10, 1974

Before Swycert, Chief Judge, Castie, Sentor Circuit

Judge, and Kitxennxy, Senior Circuit Judge.*

Per Curntam. Appellants were indicted and convicted,

in a court trial, on eleven mail fraud counts in violation

of 18 U.S.C. § 1541. Additionally, appellants’ Allstate

and Karp were indicted and convicted on two and Karp

alone on three false statement counts in violation of 18

U.S.C. §& 1010.

*Honorable John F. Kilkenny of the United States

Court of Appeals for the Ninth Circuit is sitting by desig-

nation.

eee |

nn.

SUFFICIENCY OF EVIDENCE

Without going into the fetid details of appellants’

fraudulent schemes and false statements, it is sufficient

to say that the record supports their convictions on each

of the counts on which they were convicted. This is

particularly true when we invoke the rule in Glasser

v. United States, 315 U.S. 60, 80 (1942), and view the

evidence and all permissible inferences in the light most

favorable to the government. The fact that the court ac-

quitted most of the co-defendant salesmen fortifies, rather

than undermines, the validity of the convictions. This

action clearly demonstrates the alertness of the covrt

on the issue of intent. Obviously, the district court, as

trier of fact, had a doubt on whether the salesmen, as

distinguished from appellants, had an intent to partici-

pate in the fraudulent schemes. The record before us

bears no resemblance to United States v. Maybury, 274

F.2d 899 (CA2 1960), upon which appellants rely. Nor

did the court’s offhand reference in its findings to co-

appellant Berg’s post-scheme statement in any way af-

fect its ultimate findings of guilt against Allstate and

Karp. It is clear that the court considered Berg’s post-

scheme statement only with reference to Berg, even

though in many respects his actions characterized an

important aspect of the over-all scheme to defraud. Ab-

sent a showing of substantive prejudice, the court, in a

hench trial, is deemed to have considered only admissi-

ble and relevant material. United States v. Penick, 496

F.2d 1105, 1108 (CA7 1974). Even if, as contended by

Allstate and Karp, the evidence was erroneously ad-

_ mitted as to them, the action should be considered harm-

less under Rule 52 (a), FRCrimP. There remains, aside

from such evidence, an abundance of relevant and com-

petent evidence to establish their guilt beyond a reason-

able doubt.

The court's findings are sufficient to sustain the judg-

ments of convictions as to all appellants and are fully

supported by the evidence.

DESEO T I Pi BRAN PRE ae 9G i

ir peel TYREE eae WEED Oa BR, OE rng ee eee foe ee ee rs SO TOR

IMMUNITY

Without citing authority in support of their views, ap-

pellants Karp and Allstate contend that the district

court committed error in denying Alistate’s petition ask-

ing that defense witness Ross be granted use immunity

from self-incrimination under the provisions of 18 U.S.C.

§§ 6002 and 6003. Ross, an employee of an independent

mortage company, asserted his Fifth Amendment privi-

lege during the course of his direct examination and re-

fused to answer questions with reference to the use of

certain FITA forms.

In the petition for immunity, appellants offered to

prove that Ross would testify that it was the policy and

practice of his company and, so far as he knew, the

practice of the mortgage banking industry to follow the

practice commonly followed by appellants in filling out

the particular forms. The district court held that it had

no power under the statutes to grant the petition. We

agree.

In our view, there is no significant difference between

the statute before the court in Earl v. United States, 361

F.2d 531 (DC Cir. 1966), cert. denied 388 U.S. 921

(1967), and 18 U.S.C. §§ 6002 and 6003. Appellants’

argument that the immunity involved in Karl was trans-

actional and that the immunity before us is use, is a

distinction without a difference. Under neither statute is

anyone other than the United States Attorney, with the

approval of superior officials, authorized to request an

order granting immunity to a witness. While the Con-

gress may have the power to grant appellants a right

comparable to the right granted to the government, the

judicial creation of such a right is beyond the power of

the courts. Karl, supra, at 534.

The rule in Farl has been uniformly followed subse-

quent to the enactment of §{ 6002 and 6003. Cerda v.

United States, 488 F.2d 720, 723 (CA9 1973); United

States v. Berrigan, 482 F.2d 171, 190 (CA3 1973); United

States v. Jenkins, 470 F.2d 1061, 1063-1064 (CA9 1972),

Bey 4

cert. denied 411 U.S. 920 (1973). As recently as August

6, 1974, this circuit in United States v. Ramsey, .... F.2d

...» No. 73-1580 (CA7 1974), in speaking on the subject,

said: “[T]here is no merit to the argument that a defen-

dant has a constitutional right to have immunity con-

ferred upon a defense witness who exercises his privilege

against self-incrimination.” Here, as in Ramsey, the prose-

cution did not secure any of its evidence by means of an

immunity grant. Our recent decision in United States v.

Watkins, .... F.2d ...., No. 74-1287 (CA7 Nov., 1974), is

consistent with these conclusions.