United States v. Anderson, Crim. No. CR83010

• Decision Date: 20 October 1983
• Docket Number: Crim. No. CR83010,CR83013.
• Citation: 577 F. Supp. 223
• Parties: UNITED STATES of America, Plaintiff, v. Lowell G. ANDERSON, et al., Defendants.
• Court: U.S. District Court — District of Wyoming

577 F. Supp. 223

UNITED STATES of America, Plaintiff, v. Lowell G. ANDERSON, et al., Defendants.

Crim. Nos. CR83010, CR83013.

United States District Court, D. Wyoming.

October 20, 1983.

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Francis Leland Pico, Asst. U.S. Atty., Cheyenne, Wy., for plaintiff.

Joseph Saint-Veltri, Denver, Colo., for defendant Lowell Anderson.

Stephen M. Munsinger, Denver, Colo., for defendant Carolyn Anderson.

Mike DeGeurin, Houston, Tex., for defendant Arthur P. Tranakos.

Rod W. Snow, Denver, Colo., for defendant William Pilgrim.

Donald Bearnson, Arvada, Colo., Donald Perry, Lakewood, Colo., for defendants.

MEMORANDUM OPINION AND ORDER

KANE,^* District Judge.

This matter comes before me on various motions of the defendants, Lowell Anderson, Carolyn Anderson, William Pilgrim, Donald Bearnson and Arthur Tranakos, to dismiss or quash the indictment. A total of eight defendants are charged with conspiracy to defraud the government and related offenses, including income tax evasion and obstruction of justice, in violation of 18 U.S.C. § 371, 26 U.S.C. § 7201, 26 U.S.C. § 7206(2) and 18 U.S.C. § 1503. The indictment arose out of the promotion and sale of so called "common law trusts." These trusts are alleged to have consisted of a system of trusts established both in the United States and overseas. The purchasers of the trusts placed various assets in them, in transactions that the government alleges were without any economic substance and which were designed to evade tax liability. The trusts are alleged to have been shams in that the grantors never actually relinquished control of the assets placed in them. I will discuss the various motions individually.

I. MOTION TO QUASH INDICTMENT

In this motion, the defendants claim that violations of the sixth amendment and the Federal Grand Jury Service and Selection Act of 1968,¹ 28 U.S.C. § 1861 et seq., require me to quash the indictment of February 24, 1983. To put the motion in proper perspective, a brief description of the district of Wyoming's jury selection plan is essential.

In response to the Act of 1968, the district court formulated a plan for the random selection of grand and petit jurors. The plan was approved by the 10th Circuit Judicial Council on September 18, 1968.² The plan divided the state and district into five divisions for jury selection purposes, Cheyenne, Casper, Sheridan, Evanston and Lander, after the five principal cities in those divisions. As originally passed, grand jurors were randomly selected from the qualified jury wheels of each of the divisions and placed into a pool, from which the grand jury was selected.

By order of April 30, 1976, the plan was modified to read:

In order to ensure the more efficient and regular use of the grand jury, and to ensure that grand juries may be summoned at such times as the public interest requires without delay, unnecessary expenses or undue burden upon the citizens of the district, which delay, expense and burden necessarily result because of the great distances between cities within the district, and because all criminal trials are conducted at Cheyenne, the selection of jurors for the grand jury shall be taken at random from the Qualified Jury Wheel of the aforesaid Cheyenne Division of the district. The persons so chosen shall then be summoned as hereinbefore provided and shall constitute the grand jury array from which the grand jury shall be selected.

This modification, at issue here, was approved by the judicial council on May 19, 1976.³ The practical effect of the plan is to exempt all persons living in 19 of Wyoming's 23 counties from grand jury service. The parties have stipulated that the grand jury has never sat anywhere but Cheyenne.

The 1968 act permits groups of persons or occupational classes to be excused from jury service "on individual request ... where jury service by such class or group would entail undue hardship or extreme inconvenience to the members thereof ...." 28 U.S.C. § 1863(b)(5). The phrase "undue hardship or extreme inconvenience" is in turn defined

as a basis for excuse from immediate jury service under § 1866(c)(1) of this chapter to mean great distance, either in miles or travel-time, from the place of holding court....

28 U.S.C. § 1869(j).

As I understand the defendants' argument, they say it would be permissible for the plan to permit individual excuses for hardship,⁴ but that the wholesale exclusion of persons in 19 counties violates the act's policy of "juries selected at random from a fair cross section of the community...." 28 U.S.C. § 1861.

I disagree. Section 1861 mandates randomly selected juries from a fair cross section of the community "in the district or division wherein the court convenes." (Emphasis added.) As defined in § 1869(e), "division" includes:

in judicial districts where there are no statutory divisions, such counties, parishes, or similar political subdivisions surrounding the places where court is held as the district court plan shall determine: Provided, That each county, parish, or similar political subdivision shall be included in some such division.

(Emphasis added.) The Wyoming judicial district has no statutory divisions. 28 U.S.C. § 131. Accordingly, the Wyoming divisions are those where court is held under the district plan, so long as each county is included in such a division. By statute, 28 U.S.C. § 131, and under the plan, court is held in Casper, Cheyenne, Evanston, Lander and Sheridan. All of the 23 counties in Wyoming feed jurors into the master jury wheel for each of the divisions. None are excluded.

Although this precise issue is one of first impression, other district courts have upheld their plans as they pertain to petit juries against similar challenges. Jeffers v. United States, 451 F.Supp. 1338, 1347 (N.D.Ind.1978) ("A defendant may be indicted by a grand jury drawn from one division of the district and tried by a jury drawn from another division, without offending constitutional or statutory standards"); United States v. Smith, 463 F.Supp. 680, 685 (E.D.Wisc.1979) ("Likewise, a petit jury may be drawn constitutionally from only one division and not the whole district."); (Unites States v. Raineri, 521 F.Supp. 30, 38 (W.D.Wisc.1980) aff'd, 670 F.2d 702 (7th Cir.1982) ("Defendant has no constitutional or statutory right to a jury drawn from throughout the district.")

An argument similar to the one made here was raised in United States v. Test, 550 F.2d 577, 594 (10th Cir.1976). There, the court said:

"The fourth ground for attack is that the plan effectively excludes from petit jury service all persons who reside in the Pueblo and Grand Junction divisions, because the vast majority of the trials in this district are held in the Denver division. But the partitioning of a district into jury divisions is sanctioned by the statute, and ... is clearly not unconstitutional, absent evidence that some cognizable group has been systematically excluded by "gerrymandering" the division lines.'

A further problem with the defendants' argument is suggested by a footnote in the Test opinion. In its discussion of cognizable and distinctive groups, the court quoted from Hernandez v. Texas, 347 U.S. 475, 478, 74 S.Ct. 667, 670, 98 L.Ed. 866 (1953):

Other differences from the community norm may define other groups which need the same protection. Whether such a group exists within a community is a question of fact. When the existence of a distinct class is demonstrated, and it is further shown that the laws, as written or as applied, single out that class for different treatment not based on some reasonable classification, the guarantees of the Constitution have been violated.

550 F.2d at 585 n. 6. (emphasis in original). See also United States v. Foxworth, 599 F.2d 1, 4 (1st Cir.1979), United States v. Butera, 420 F.2d 564 (1st Cir.1970). Here, the defendants allege that the Cheyenne division has a higher percentage of federal government employees than the other divisions. This may be true. The defendants have not however, come forward to show either that the population of the Cheyenne division is somehow thereby biased or that the population of the other 19 counties constitutes a distinct or cognizable group within the meaning of United States v. Test, supra.

Mere geographical imbalance, absent evidence that an identifiable and cognizable segment of the community has been systematically excluded or underrepresented by reason of such imbalance, does not violate the statutory and constitutional requirement that the jury represent a `fair cross-section "of the community."'

550 F.2d at 581-2 n. 4. The motion to dismiss for failure to comply with the Grand Jury Selection and Service Act of 1968 is therefore denied.

II. MOTION TO DISMISS COUNT I

Defendants Tranakos, Pilgrim, Bearnson and Lowell and Carolyn Anderson have moved to dismiss Count I of the indictment on the ground that it fails to allege a specific statutory offense as the object of the conspiracy. The government responds that 18 U.S.C. § 371 authorizes prosecution for a conspiracy whose sole object is to defraud the United States, and not the violation of any other criminal statute. While the defendants assert correctly that when the government proceeds under the extremely broad "conspiracy to defraud" branch of § 371, the prosecution must be scrutinized carefully, the procedure is not prohibited. U.S. v. Rosenblatt, 554 F.2d 36 (2nd Cir.1977). The government must be careful to "plead and prove an agreement with respect to the essential nature of the alleged fraud." 554 F.2d at 42. The sections of Count I entitled "Object of the Conspiracy," "Background" and "Manner and Means of Conspiracy," however, plead such an agreement and, in conjunction with the overt acts, notify the defendants of the nature of the charge against them.

Count I is not fatally defective. Its language is, however, broad and general and subject...