458 F.2d 759 (D.C. Cir. 1971), 24193, United States v. Stamp
|Docket Nº:||24193, 24194, 24197, 24198.|
|Citation:||458 F.2d 759|
|Party Name:||UNITED STATES of America v. R. Marbury STAMP, Appellant. UNITED STATES of America v. Harlan E. FREEMAN, Appellant. UNITED STATES of America v. E. Neil ROGERS, Appellant. UNITED STATES of America v. Walter R. REYNOLDS, Appellant.|
|Case Date:||December 20, 1971|
|Court:||United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit|
Argued June 2, 1971.
Petitions for Rehearing Denied Feb. 22, 1972.
Certiorari Denied June 7, 1972.
[Copyrighted Material Omitted]
Mr. Stanley M. Dietz, Rockville, Md., for appellant in No. 24, 193.
Mr. Lester M. Bridgeman, Washington, D. C. (appointed by this court) for appellant in No. 24, 194.
Mr. Farley M. Warner, Washington, D. C. (appointed by this court) for appellant in No. 24, 197.
Mr. J. Alan Galbraith, Brattleboro, Vt., with whom Messrs. Vincent J. Fuller, and Robert L. Weinberg, Washington, D. C., were on the brief, for appellant in No. 24, 198.
Mr. Paul J. Schaeffer, Atty., Department of Justice, of the bar of the Supreme Court of Oregon, pro hac vice, by special leave of Court, with whom Mr. William S. Lynch, Atty., Department of Justice, was on the brief, for appellee.
Messrs. Thomas A. Flannery, U. S. Atty., and John A. Terry, Asst. U. S. Atty., also entered appearances for appellee in Nos. 24, 193, 24, 194 and 24, 198.
Before BAZELON, Chief Judge, and TAMM and ROBB, Circuit Judges.
TAMM, Circuit Judge:
In this case the six defendants, Walter R. Reynolds, Bertram G. Dienelt, Jr., Harlan E. Freeman, R. Marbury Stamp, A. Claiborne Leigh and E. Neil Rogers, were tried by a jury on a 13-count indictment in the United States District Court for the District of Columbia. With the
single exception of Dienelt they were all found guilty on each of the 13 counts of the indictment. The first count charged that, in violation of 18 U.S.C. § 371 (1964), the appellants and two other defendants 1 conspired to violate D.C.Code § 22-1301 (1967) (false pretenses) and D.C.Code § 22-1401 (1967) (forgery) in connection with the refinancing of loans that had been extended by Eastern Savings and Loan Association of Washington, D. C. (hereinafter either "Eastern" or "the Association"), on 17 parcels of land. Counts 2-13 of the indictment charged each of the defendants, with the exception of Dienelt, with substantive violations of D.C.Code § 22-1301 (1967) in the refinancing of 12 separate parcels. The appellants have raised a number of claims of error, either individually or which have been joined in by other appellants. While we do not find it necessary to discuss each of the claims raised by the appellants, we have given each of them careful consideration. Nonetheless, this court is compelled because of the reasons outlined below to affirm each of the convictions of the District Court.
I. Statement of Facts
The issues in this case are highly complicated and therefore an in-depth analysis of the events leading up to the indictment will be required in order to understand the contentions of the appellants and those of the Government.
Sometime prior to 1963 a special project was formed by the Internal Revenue Service for the purpose of investigating corruption among certain public officials in Fairfax County, Virginia. The project was formed jointly by the United States Department of Justice and the Internal Revenue Service, and was staffed by Revenue and Special Agents of the Internal Revenue Service. 2 Legal assistance to this group, known as "Metro" Project, was provided by the Organized Crime and Racketeering Section of the Department of Justice.
The purpose of this investigation was explained by Edward Joyce, an attorney with the Organized Crime and Racketeering Section of the Criminal Division, Department of Justice, who served as legal advisor to the project. Joyce stated that
[T]he investigation was an income tax investigation into various activities in Fairfax County, that is, to ascertain whether the people who were accepting bribes were paying income taxes on the bribes accepted and whether the people who were paying the bribes were properly charging them or not charging, rather, as an expense, and the gambling was conducted under Wager Tax Stamp Act. [Sic.]
The central purpose of the organization was to look at the income tax investigations of the people in Fairfax County. The decision to proceed on Section 1952 was not made until there was an assessment of all of the evidence obtained. 3
A full description of "Metro's" modus operandi was given by Special Agent Kenneth E. McElroy, who at the time of the investigation was assigned to the Internal Revenue Service's Intelligence Division in Richmond, Virginia:
The practice was that a revenue agent was assigned in a case to make an audit, and at the completion of his audit or at the time that he figured he had gone far enough, if he found what were indications of fraud-and we say indications of fraud is all he is required to find-upon finding this, he
writes what is known as a Referral Report. This Referral Report is sent to the Chief of the Intelligence Division in Richmond, Virginia, and he has to make the decision as to whether there will be what is spoken of as a joint investigation. And if so, then a special agent is assigned, and the special agent assigned and the revenue agent, in most cases the same revenue agent, continues on with the investigation.
"Metro" Project was placed under the supervision of Oral Cole, who was named project director. One of the prime targets of their investigation was A. Claiborne Leigh, who was, at the time, chairman of the Fairfax County Board of Supervisors. In June 1963 Cole, acting on a tip received from an informer, instructed Revenue Agent Hansell to audit Leigh's income tax returns for the year 1960. Leigh gave Hansell permission to inspect his records and to copy certain cancelled checks, bank statements and deposits. At this time Hansell did not make Leigh aware of his concern with potential criminal activity on Leigh's part. However, on January 20, 1964, Hansell returned to Leigh's office with Special Agent Kenneth E. McElroy, at which time Leigh was notified that he was under suspicion for criminal tax evasion and he was then given the required warnings with regard to his constitutional rights.
Prior to June 1963 Leigh was engaged in the practice of law with appellant Rogers. When Hansell visited Leigh's office he learned that some of the records of this partnership were in Rogers' possession. Interested in examining these records, Special Agent McElroy visited appellant Rogers in February 1964 and told him that he desired to examine certain records of the Leigh-Rogers partnership in connection with a criminal investigation of Leigh in which he was then engaged. McElroy assured Rogers that he was not under investigation, and after these assurances McElroy received several documents in the form of settlement files from Rogers. Several months later, in October and November 1964, McElroy again interviewed Rogers; this time with reference to the "straw" transactions which are at issue in this case. Finally, in April 1965, Rogers himself was subjected to an audit by a revenue agent. At no time was Rogers told that he was a criminal suspect nor was he advised of his constitutional rights. 4
In another aspect of the "Metro" Project operation, Director Cole instructed Michael J. Evangelist, a revenue agent, to audit certain tax returns of the Reynolds' Construction Company, of which appellant Reynolds was the president. In addition, Agent Evangelist was assigned to audit personal returns of both Reynolds and his wife. During the course of these audits, Evangelist was "to obtain all the financial transactions between Reynolds and Leigh." (J.A. 41.) McElroy made this request based on his suspicion that Reynolds had bribed Leigh. In March 1964 Evangelist visited the company's offices and was given permission to inspect all corporate records by George R. Steele, secretary-treasurer of the company and an accountant. Evangelist did not tell Steele of the criminal aspect of his investigation.
To fully understand the facts in this complicated case, it will be helpful to explain the Government's theory of the litigation. Reynolds Construction Company had borrowed heavily from Eastern over the years in order to finance a housing project in McLean, Virginia. Soon after
this project was completed Reynolds desired additional loans from Eastern. Reynolds understood from Eastern, however, that additional loans could not be granted until the company could sell a number of the homes which were encumbered by the construction loans. Reynolds, unsuccessful in his efforts to sell the homes to legitimate purchasers, devised a scheme to sell these homes to "straw" purchasers, who would in turn borrow money from Eastern under the guise of loans enabling purchase of the improved lots from Reynolds. This would, therefore, change the nature of the loan from one issued to Reynolds for construction purposes to one issued to the ultimate purchaser as a mortgagetype transaction. The money realized from the loans to "straw" purchasers would be used to liquidate the construction loans with the balance finding its way to Reynolds, who by this time would arrange for a re-transfer of the property from the "straw" purchaser. According to the Government, Reynolds was aided in his ruse by the other three appellants and the two defendants not involved in this appeal.
Appellant Stamp, a mortgage broker, was responsible for submitting various loan applications to Eastern; none of the "straws" made personal application to the bank for any of the loans. Appellant Freeman, secretary of Reynolds Construction, and defendant Dienelt, Reynolds' outside accountant, were instructed by Reynolds to...
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