U.S.A. v. Dolah

• Decision Date: 17 October 2000
• Docket Number: Docket Nos. 00-1173
• Citation: 245 F.3d 98
• Parties: (2nd Cir. 2001) UNITED STATES OF AMERICA, Appellee, v. MOHAMMAD DOLAH, MARSHALL WEINBERG, Defendants-Appellants. (L), -1200(CON) Argued:
• Court: U.S. Court of Appeals — Second Circuit

Page 98

245 F.3d 98 (2nd Cir. 2001)

UNITED STATES OF AMERICA, Appellee, v. MOHAMMAD DOLAH, MARSHALL WEINBERG, Defendants-Appellants.

Docket Nos. 00-1173(L), -1200(CON)

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued: October 17, 2000

Decided: March 26, 2001

[Copyrighted Material Omitted] Steven D. Gordon, New York, N.Y. (Jerry D. Bernstein, Holland & Knight, LLP, New York, N.Y., on the brief), for defendants-appellants.

Kim A. Berger, Asst. U.S. Atty., New York, N.Y. (Mary Jo White, U.S. Atty., David Raymond Lewis, James J. Benjamin, Jr., Asst. U.S. Attys., New York, N.Y., on the brief), for appellee.

Before: MESKILL, NEWMAN, and CABRANES, Circuit Judges.

Appeal from the March 9 and 10, 2000, judgments of the United States District Court for the Southern District of New York (Robert L. Carter, Judge), convicting the Appellants, after a jury trial, of securities fraud violations. The Appellants challenge the use of plea allocutions of some of their company's former employees who were not immunized, after other former employees testified under grants of immunity, and the return of partial verdicts.

Affirmed.

JON O. NEWMAN, Circuit Judge.

This appeal primarily concerns a claim that the admission of out-of-court witness statements, coupled with the prosecution's selective use of immunity, resulted in the denial of a fair trial. The Government granted immunity to some former co-workers of the Appellants and presented them as live witnesses; as to other former co-workers, the Government refused to grant use immunity and instead offered their guilty plea allocutions as statements against penal interest. As a result, the Appellants could cross-examine only the co-workers deemed so entirely helpful to the prosecution that immunity was provided them, but could not cross-examine the other co-workers, portions of whose statements, helpful to the prosecution, were placed into evidence.

Mohammad Dolah and Marshall Weinberg appeal from the March 9 and 10, 2000, judgments of the United States District Court for the Southern District of New York (Robert L. Carter, District Judge), convicting them, after a jury trial, of nine counts of securities fraud (15 U.S.C. §§ 77q and 77x), and one count of conspiracy (18 U.S.C. § 371). Although the introduction into evidence of the plea allocutions of the non-immunized co-workers, following the Government's selective use of immunity for some of the co-workers, arguably presents a substantial claim of error, we conclude that, if error occurred, it was harmless. We also reject the Appellants' challenge to the return of partial verdicts. We therefore affirm.

Facts

The evidence permitted the jury to find the following facts. Dolah and Weinberg worked at Stone Asset, a brokerage firm. Dolah supervised "cold-calling" stock brokers; Weinberg was the president and a principal of the firm. The charged offenses concerned Stone Asset's private stock offering on behalf of two very small firms (one of which tried to make money by placing advertisements on the back of bicycle messengers' bicycles). Stone Asset told customers that underwriting fees and brokerage expenses would consume only 10 percent of the capital raised; in fact Stone Asset got most of the proceeds. Dolah and/or Weinberg personally altered financial statements, shredded documents, directed cold callers to use fictitious names, took delivery of cash payments from the issuers, and tried to remove their own names from all Stone Asset documents.

Dolah and Weinberg's primary defense was that they lacked knowledge of the deceit practiced at Stone Asset; they also argued that they believed the companies were good investments.

At trial, the Government's witnesses included three former employees of Stone Asset who had been given immunity,¹ and two former employees who had pled guilty pursuant to cooperation agreements. The Government also introduced the guilty plea allocutions of three other former employees who had been indicted with Dolah and Weinberg, had pled guilty prior to trial, and were awaiting sentencing. These co-defendants had indicated an intention to plead their privilege against self-incrimination if called to testify, but they were not given immunity.

The plea allocutions of the three non-immunized co-defendants were admitted into evidence, under a limiting instruction, to prove the existence of the conspiracy and the role of these non-testifying co-defendants. The names of the Appellants were redacted from the plea allocutions.

The Appellants were found guilty by the jury on all counts. The details concerning the return of partial verdicts are set forth in Part III, infra. Their sentences included terms of imprisonment of forty-six months.

Discussion

I. The Admission of the Plea Allocutions

Judge Carter admitted into evidence the guilty plea allocutions of the three co-defendants under the provision of the Federal Rules of Evidence that exempts from the prohibition of hearsay a "statement against interest" (i.e., a statement contrary to the interests of the declarant, such as an admission of criminal liability). Fed. R. Evid. 804(b)(3). Such statements are admissible only if the declarant is "unavailable as a witness," id. 804(b), and "'[u]navailability as a witness' includes situations in which the declarant... is exempted by ruling of the court on the ground of privilege from testifying concerning the subject matter of the declarant's statement," id. 804(a)(1). Here, the three co-defendants had indicated they would invoke their self-incrimination privilege. Rule 804 also provides that "[a] a declarant is not unavailable as a witness if...refusal...is due to the procurement or wrongdoing of the proponent of a statement for the purpose of preventing the witness from attending or testifying." Id. 804(a).

The Appellants challenge the admission of the co-defendants' plea allocutions as contrary to both Rule 804 and the Constitution.

A. Rule 804

The argument based on Rule 804 has two parts. At its fullest, the argument is that the Government has not satisfied the "unavailability" requirement of Rule 804(b) because the co-defendants would have testified had the Government displaced their self-incrimination privilege by giving them use immunity. See 18 U.S.C. § 6002 (use immunity). More narrowly, the Appellants contend that even if the co-defendants would normally be considered "unavailable" within the meaning of Rule 804(b), their unavailability was attributable to "wrongdoing" by the Government within the meaning of Rule 804(a) because the Government withheld immunity from the three former Stone Asset employees whose plea allocutions they wanted to introduce after selectively conferring immunity on other former employees.

Unavailability. It is settled in this Circuit that a witness who invokes the privilege against self-incrimination is "unavailable" within the meaning of Rule 804(b) even though the Government has the power to displace the witness's privilege with a grant of use immunity. We made that clear many years ago in United States v. Lang, 589 F.2d 92, 95-96 (2d. Cir. 1978), and recently adhered to that position in United States v. Gallego, 191 F.3d 156, 166-68 (2d Cir. 1999) (upholding admissibility of plea allocution of co-defendant); see also United States v. Petrillo, 237 F.3d 119 (2d Cir. 2000) (same); United States v. Moskowitz, 215 F.3d 265, 268-69 (2d. Cir. 2000) (same).² "[T]he law appears to be well settled that the power of the Executive Branch to grant immunity to a witness is discretionary...." Lang, 589 F.2d at 95-96; see also Earl v. United States, 361 F.2d 531, 534 (D.C. Cir. 1966).

Between Lang and Gallego some doubt had arisen in our Circuit whether a witness invoking the privilege against self-incrimination remained unavailable to the Government in view of the Government's power to displace the privilege by granting immunity. In United States v. Salerno, 937 F.2d 797, amended by 952 F.2d 623 (2d Cir. 1991), rev'd, 505 U.S. 317 (1992), we ruled that the "similar motive" requirement of Rule 804(b)(1)³ did not apply to grand jury testimony offered by defendants against the Government, see 937 F.2d at 805-08, a ruling rejected by the Supreme Court, see 505 U.S. at 321-24. We also ruled that the grand jury witnesses, who invoked their self-incrimination privilege at trial, were unavailable to the defendants, see 937 F.2d at 805; 952 F.2d at 623, a ruling not questioned by the Supreme Court. In making the latter ruling, we added in dictum that the grand jury witnesses were available to the Government, see id., reasoning that the Government could displace their self-incrimination privilege, see 937 F.2d at 805. That reasoning was questioned, see United States v. Salerno, 952 F.2d 624, 624-26 (Newman, J., with whom Kearse, Mahoney, and Walker, JJ., join, dissenting from denial of rehearing in banc), and subsequently disavowed by the author of the Salerno panel opinion as an unwarranted reading of that opinion, see United States v. Bahadar, 954 F.2d 821, 827 (2d Cir. 1992) (The argument that "the government would be unable to invoke any of the rule 804(b) hearsay exceptions in criminal cases, since the government always has the ability to immunize a witness who claims the fifth amendment privilege and thereby make that witness available... would be an unrealistic reading of the rules of evidence, of the law of immunity, and of the Salerno decision itself.").⁴

The Appellants contend that United States v. Peterson, 100 F.3d 7 (2d. Cir. 1996), supports a contrary rule. In Peterson, a defendant, who relied on his self-incrimination privilege by refusing to testify at his federal trial, sought to introduce his own prior state grand jury testimony, claiming he was "unavailable." We rejected the attempt, ruling that the defendant was not "unavailable" to testify at trial because he retained the decision whether to testify. Id. at 13-14 (alternate holding) ("[H]e has made...