U.S.A. v. Yerardi

• Decision Date: 04 August 1999
• Docket Number: No. 99-1063,99-1063
• Citation: 192 F.3d 14
• Parties: (1st Cir. 1999) UNITED STATES OF AMERICA, Petitioner, Appellee, v. RAFIA FEGHI YERARDI, Respondent, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 14

192 F.3d 14 (1st Cir. 1999)

UNITED STATES OF AMERICA, Petitioner, Appellee, v. RAFIA FEGHI YERARDI, Respondent, Appellant.

No. 99-1063.

United States Court of Appeals for the First Circuit.

Heard Aug. 4, 1999.

Decided Sept. 21, 1999.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Copyrighted Material Omitted] Walter B. Prince with whom Peckham, Lobel, Casey, Prince & Tye LLP was on brief for respondent-appellant.

Richard L. Hoffman, Assistant United States Attorney, with whom Donald K. Stern, United States Attorney, was on brief for petitioner-appellee.

Before Selya, Circuit Judge, Cyr, Senior Circuit Judge, and Boudin, Circuit Judge.

BOUDIN, Circuit Judge.

This appeal, which presents difficult questions concerning the adverse spousal testimony privilege, arises out of the following facts. The appellant, Rafia Feghi, is married to Joseph A. Yerardi, Jr. In October 1993, Joseph Yerardi was indicted in the district court on 71 counts, including money laundering, extortion, witness intimidation, operating an illegal gambling business, racketeering and criminal forfeiture. 18 U.S.C. §§ 2, 892, 894, 982, 1503, 1512, 1955-56, 1962-63. In due course, the forfeiture counts resulted in ancillary proceedings that are the focus of this appeal.

Yerardi was released on bail in July 1994, and Feghi signed a $1.5 million appearance bond to secure his presence. When Yerardi was later charged with violating conditions of his release, the government sought forfeiture of the bond. Feghi testified at the forfeiture proceeding in February 1995, invoking certain testimonial privileges but (says the government) not invoking the adverse spousal testimony privilege. The government now relies on this failure as precluding later assertion of the privilege.

On May 1, 1995, Yerardi entered into a written plea agreement with the government. Pursuant to that agreement, Yerardi pled guilty to all counts of the indictment and, in accordance with 18 U.S.C. §§ 982, 1963, agreed to forfeit $916,000. He also consented to the entry of an asset discovery order, including the deposition of witnesses and the production of documents and related materials deemed necessary by the U.S. Attorney to implement the forfeiture agreement. At sentencing, however, Yerardi's counsel maintained Yerardi's earlier position that his only asset was $5,000 worth of jewelry.

The government believes that Feghi now controls or knows of assets that once belonged to Yerardi but have since been forfeited to the United States, and that Feghi would not qualify as a bona fide purchaser for value. 18 U.S.C. § 1963(l)(6)(B); 21 U.S.C. § 853(n)(6)(B). Further, the government wants to locate other Yerardi assets, which Feghi may control or know of, that could be available to the government to make up the value of any directly forfeited assets that can no longer be found. 18 U.S.C. § 1963(m); 21 U.S.C. § 853(p). Apparently, the government sought Feghi's informal cooperation but was rebuffed.

Accordingly, the government served a subpoena duces tecum on Feghi in October 1995, later enforced in part by the district court, and it deposed Feghi on March 22, 1996.¹ Ultimately, in response to the enforced document requests, Feghi took the position that she had no such documents, and she declined in deposition to answer further questions about the requests, as well as direct questions on a number of different issues concerning Yerardi's assets, transfers of money between Yerardi and Feghi, actions taken by Feghi pursuant to the power of attorney that Yerardi had given to her, and similar matters. The basis for these refusals was Feghi's assertion of the adverse spousal testimony privilege.

In April 1996, the government moved to compel Feghi to answer its questions. The magistrate judge allowed the government's motion to compel on September 26, 1996, primarily on the ground that the prospect of future criminal prosecution of Yerardi (e.g., for tax evasion) was too speculative to support the privilege, and also on the ground that Yerardi had disclaimed any interest in the assets held by Feghi. The district court affirmed the magistrate judge's order on May 5, 1997, when it rejected Feghi's motion for reconsideration.

Feghi continued to refuse to testify and invited the district court to hold her in contempt so that she could test its privilege ruling on appeal.² After a hearing on December 21, 1998, the district court held Feghi in contempt for refusing to answer, and it imposed prospectively civil penalties on Feghi, rising after two weeks to $1,000 per day, to compel obedience. Thereafter, on April 30, 1999, this court stayed the district court's contempt order pending Feghi's appeal. Although we thought it a close question whether Feghi was likely to prevail, accumulating fines (unless stayed) appeared likely to force Feghi to answer immediately and thereby deprive her of an effective appeal.

Although contempt rulings are sometimes said to be reviewable for "abuse of discretion," the standard depends upon the precise issue or issues presented: abstract issues of law are reviewed de novo and determinations of raw fact are tested under the clearly erroneous standard. Ocean Spray Cranberries, Inc. v. PepsiCo, Inc., 160 F.3d 58, 61 n.1 (1st Cir. 1998). Whether a future criminal prosecution of Yerardi based on Feghi's testimony is "speculative" is the kind of "mixed" question on which the district court's assessment is often, although not always, given weight. See In re Extradition of Howard, 996 F.2d 1320, 1328 (1st Cir. 1993).

In federal criminal cases, issues of privilege are resolved by judge-made rules based on common law principles, except where the Constitution or other federal enactments resolve the issue. Fed. R. Evid. 501. As revamped by the Supreme Court in Trammel v. United States, 445 U.S. 40 (1980), the privilege against adverse spousal testimony gives the witness-spouse a privilege not to testify against the defendant-spouse in criminal or related proceedings, subject to certain exceptions and to waiver. See Larkin, Federal Practice: Federal Testimonial Privileges § 4.02 (1999). The privilege is a companion to, but distinct from, the privilege protecting confidential communications between husband and wife. See id. § 4.03.

At the threshold, the government urges that the privilege has been waived because Yerardi in his plea agreement consented both to the forfeiture and to full discovery by the government of all information needed to implement the forfeiture. The plea agreement might be read as an implicit waiver of the privilege by Yerardi. However, the Supreme Court made clear in Trammel that the privilege against adverse spousal testimony belongs not to the defendant-spouse, here Yerardi, but rather to the witness-spouse, here Feghi. See Trammel, 445 U.S. at 53. Yerardi as the defendant-spouse thus had no privilege to waive and, far more importantly, he had no authority to waive Feghi's privilege to refuse to testify adversely to him.

Because the privilege is rooted in a dual desire to protect marital harmony and to avoid the unseemliness of compelling one spouse to testify against the other in a criminal proceeding, id. at 44-45, 52-53 & n.12, the privilege is limited to testimony that is adverse to the legal interests of the defendant-spouse, 8 Wigmore, Evidence § 2234, at 231 (McNaughton rev. 1961). Pointing again to Yerardi's plea agreement, the government contends that testimony cannot be adverse where the defendant-spouse has consented to it. It is hard to see how a future criminal prosecution of Yerardi--the extent of the threat is discussed below --would not be "adverse" to his legal interests.

In a separate but related objection, the government claims that Feghi herself waived the privilege by earlier testifying at Yerardi's bail forfeiture hearing. There, Feghi answered certain questions regarding her joint purchase and sale of property with Yerardi, her receipt of money from Yerardi, and her bank deposits and transfers. The government concedes that Feghi did not at any point expressly waive the privilege, which certainly she could do; but it asserts that by answering questions in the same general area without asserting the privilege, she has engaged in conduct tantamount to waiver of the privilege.

The concept of waiver by conduct exists, but often amounts simply to a determination that the privilege holder's conduct makes it unfair to allow subsequent assertion of the privilege. See Developments in the Law--Privileged Communications, 98 Harv. L. Rev. 1450, 1629-31 (1985). Probably the most common example is a privilege holder's effort to answer some questions in a subject area (usually those that serve the privilege holder's interests) but not others (those that harm the privilege holder's interest). Id. at 1633-35. Such a pick-and-choose approach may seem unfair in general or because it distorts the evidence that is presented to the factfinder.

In all events, the government's claim that Feghi waived her privilege by her earlier testimony cannot be resolved, as the government assumes, simply by asking whether Feghi testified previously about certain property or bank transactions relating to her husband. The privilege applies only to adverse testimony, and conceivably some (or all) of the questions answered in the bail hearing may not have been adverse to Yerardi. It would require a fairly detailed comparison of the prior answers given and the more recent questions that Feghi refused to answer to determine whether Feghi's prior answers precluded privilege claims now. The government has not provided any such analysis.

In another set of threshold arguments, the government says that as a matter of law the adverse spousal testimony privilege should not be invokable in criminal forfeiture proceedings. It argues that this proceeding to achieve the forfeiture is itself "more civil than criminal," affec...