U.S. v. White

Decision Date26 February 1979
Docket NumberNo. 78-5083,78-5083
Citation589 F.2d 1283
PartiesUNITED STATES of America, Plaintiff-Appellee, v. William D. WHITE and Terry L. Keno, Defendants-Appellants.
CourtU.S. Court of Appeals — Fifth Circuit

P. Bruce Kirwan, Federal Public Defender, Atlanta, Ga., for defendants-appellants.

J. Richard Young, Atlanta, Ga., for William D. White.

Glen A. Garrett, Atlanta, Ga., for Terry L. Keno.

William L. Harper, U. S. Atty., Gale McKenzie, Asst. U. S. Atty., Atlanta, Ga., for plaintiff-appellee.

Appeals from the United States District Court for the Northern District of Georgia.

Before BROWN, Chief Judge, and TUTTLE and THORNBERRY, Circuit Judges.

THORNBERRY, Circuit Judge:

Terry Keno was office manager for the Atlanta, Georgia, warehouse of Alside, Inc., a subsidiary of United States Steel Corporation. Alside manufactured and sold aluminum, steel, and fiberglass products for the home improvement industry. Ward Broussard was an Alside salesman working out of the Atlanta warehouse. William White was a close friend of Keno. In 1972 Keno and Broussard set up an account under the name of Georgia Remodeling, with White listed as firm president. Under Alside policy, Georgia Remodeling was entitled to a rebate on all purchases in order to offset discounts offered by Alside's competitors.

In 1976 Alside filed a state civil suit against Keno, Broussard, and White, alleging that they had employed Georgia Remodeling as a dummy account in order to skim off the amount of the rebated competitive discount. 1 This scheme became the focus of a federal grand jury investigation, and fifty count indictments were returned against the three. 2 After a jury trial, Keno and White were convicted on all counts. 3 They now appeal asserting separate contentions. We affirm.

I. White

A. White claims that his counsel in the civil trial, retained by Keno, failed to inform him of his fifth amendment right against self-incrimination and allowed him to testify in order to exculpate Keno, and that this amounted to ineffective assistance of counsel in violation of the sixth amendment 4 and deprivation of his fifth amendment right against self-incrimination. We fail to see any error in the admission of this testimony.

The crux of White's argument is that uncounseled inculpatory testimony in a civil case given in ignorance of the fifth amendment privilege is inadmissible in a subsequent criminal case as violative of due process. To the extent this argument could be construed to advocate Miranda -like warnings we reject it. See United States v. Vecchiarello, 187 U.S.App.D.C. 1, 569 F.2d 656 (1977); United States v. Cecil, 457 F.2d 1178 (8 Cir. 1972); Hale v. U. S., 406 F.2d 476 (10 Cir. 1969), Cert. denied, 395 U.S. 977, 89 S.Ct. 2129, 23 L.Ed.2d 765 (1970). In the absence of the special circumstances of custodial interrogation, the costs of such a prophylactic outweighs its utility. Moreover, the failure to inform White of his fifth amendment privilege in the civil context does not make the testimony given in the civil case involuntary. Cf. Cole v. Florida, 413 F.2d 1046 (5 Cir. 1969) (voluntariness of confession pre-Miranda based on totality of circumstances). White in fact admitted that he wanted to testify in order to rebut Alside's allegations. 5 He also was aware that an indictment was pending at the time of the civil trial, and he does not contend that he did not know that the testimony could be used against him in the criminal trial. Finally, there is no indication that White was in any way compelled to take the stand. Admission of testimony given under these circumstances is not violative of due process. 6

B. During the criminal trial, the United States introduced a passbook covering a $50,000 savings account of which White was the beneficiary. This evidence was proffered as subsequent unexplained wealth. 7 White contends on appeal that the admission of such evidence was irrelevant to his guilt because he was merely a beneficiary of the savings account without a vested interest under state law, and therefore, he did not "possess" any subsequent unexplained wealth.

In the present case, however, the United States charged that White and Keno conspired in a scheme to defraud, the natural consequence of which would be an increase in the wealth of the conspirators. The fact that Keno retained the legal title to the funds did not make such increase in wealth irrelevant to White's guilt, in light of the facts that White was the beneficiary, that Keno and White owned other property in common, that they were close friends and housemates, and that they were admitted, albeit professedly innocent, participants in the Georgia Remodeling ploy. See United States v. Crisp, 435 F.2d 354 (7 Cir. 1970), Cert. denied, 402 U.S. 947, 91 S.Ct. 1640, 29 L.Ed.2d 116 (1971); United States v. Smith, 428 F.2d 1183 (4 Cir.), Cert. denied, 400 U.S. 907, 91 S.Ct. 149, 27 L.Ed.2d 145 (1970). Cf. Self v. United States, 249 F.2d 32 (5 Cir. 1959). Although Keno was caught "holding" the money, the existence of this account was not irrelevant as to his coconspirator. Submission of this evidence to the jury did not amount to an abuse of discretion.

II. Keno

A. Keno contends that being forced to go to trial in a civil case while criminal charges arising out of the same conduct were pending forced him to choose between preserving his fifth amendment privilege and losing the civil suit. It appears to us, however, that Keno overstates his dilemma. He was not forced to surrender his privilege against self-incrimination in order to prevent a judgment against him; although he may have been denied his most effective defense by remaining silent, 8 there is no indication that invocation of the fifth amendment would have necessarily resulted in an adverse judgment.

The Supreme Court has recently addressed a similar problem in Baxter v. Palmigiano, 425 U.S. 308, 96 S.Ct. 1551, 47 L.Ed.2d 810 (1976). In Baxter, plaintiff asserted that a Rhode Island rule allowing the fact-finder in a prison disciplinary proceeding to draw an adverse inference from a failure to testify derogated his fifth amendment privilege. The Court rejected this argument, finding that this rule was not an invalid attempt to penalize the exercise of the privilege. Justice White wrote for the majority,

. . . a prison inmate in Rhode Island electing to remain silent during his disciplinary hearing, as respondent Palmigiano did here, is not in consequence of his silence automatically found guilty of the infraction with which he has been charged. Under Rhode Island law, disciplinary decisions "must be based on substantial evidence manifested in the record of the disciplinary proceeding." Morris v. Travisono, 310 F.Supp. 857, 873 (R.I.1970). It is thus undisputed that an inmate's silence in and of itself is insufficient to support an adverse decision by the Disciplinary Board. In this respect, this case is very different from the circumstances before the Court in the Garrity (V. New Jersey, 385 U.S. 493, 87 S.Ct. 616, 17 L.Ed.2d 562)-Lefkowitz (V. Turley, 414 U.S. 70, 94 S.Ct. 316, 38 L.Ed.2d 274) decisions, where refusal to submit to interrogation and to waive the Fifth Amendment privilege, standing alone and without regard to the other evidence, resulted in loss of employment or opportunity to contract with the State. There, failure to respond to interrogation was treated as a final admission of guilt. Here, Palmigiano remained silent at the hearing in the face of evidence that incriminated him; and, as far as this record reveals, his silence was given no more evidentiary value than was warranted by the facts surrounding his case.

Id. at 1557-58.

Similarly, there is no indication that invocation of the fifth amendment in this case would have resulted in an adverse judgment. Alside, as plaintiff, was put to the proof of its case, See Brown v. Techdata Corp., 238 Ga. 622, 234 S.E.2d 787 (1977), and there is no indication that under Georgia law silence on the part of defendant would compel a verdict for plaintiff. Since there is no forfeiture of any property or benefit, we can see no impermissible effect on Keno's fifth amendment privilege in the present case. See also Arthurs v. Stern, 560 F.2d 477 (1 Cir. 1977), Cert. denied, 434 U.S. 1034, 98 S.Ct. 768, 54 L.Ed.2d 782 (1978); DeVita v. Sills, 422 F.2d 1172 (3 Cir. 1970); United States v. Sloan, 388 F.Supp. 1062 (S.D.N.Y.1975); Keene v. Rodgers, 316 F.Supp. 217 (D.Me.1970).

Keno also asserts that the state trial court effectively compelled waiver of self-incrimination in ordering him to respond to a motion for summary judgment. As an initial matter, we accept the proposition that a grant of summary judgment merely because of the invocation of the fifth amendment would unduly penalize the employment of the privilege. See 8, C. Wright & A. Miller, Federal Practice & Procedure § 2018, at 148 (1970). There is no indication in the federal or state court records that the state judge actually foreclosed invocation of the privilege. From what we can determine, the state judge merely ordered defendants to be more responsive to the affidavits of Alside. It does not appear that the judge was in fact hostile to the invocation of the fifth amendment. In fact, the record does reveal that the judge issued an order limiting discovery on the basis of possible self-incrimination, a stance clearly inconsistent with an antagonistic attitude toward the defendant's claim. We fail to perceive how the judge's order to respond compelled an abandonment of fifth amendment rights.

Once it is recognized that Keno was not compelled to testify, it becomes clear that his decision to do so was a product of trial strategy. Any "waiver" of the fifth amendment must be voluntary, but invocation of the privilege does not release defendant from any choice concerning the use of his or her testimony. The fifth amendment preserves the right to choose, and the voluntariness of the choice is...

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