U.S. v. Duncan

• Citation: 598 F.2d 839
• Decision Date: 10 May 1979
• Docket Number: 77-2607,Nos. 77-2606,s. 77-2606
• Parties: 4 Fed. R. Evid. Serv. 848 UNITED STATES of America, Appellee, v. Edwin DUNCAN, Jr., Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 839

598 F.2d 839

4 Fed. R. Evid. Serv. 848

UNITED STATES of America, Appellee, v. Edwin DUNCAN, Jr., Appellant.

Nos. 77-2606, 77-2607.

United States Court of Appeals, Fourth Circuit.

Argued Nov. 17, 1978.

Decided May 10, 1979.

Jack W. Floyd, Greensboro, N. C. (Richmond G. Bernhardt, Jr., Frank J. Sizemore, III, Keith C. Long, Smith, Moore, Smith, Schell & Hunter, Greensboro, N. C., on brief), for appellant.

Patricia W. Lemley, Allen Holt Gwyn, Jr. and V. Edward Jennings, Jr., Asst. U. S. Attys., Greensboro, N. C. (H. M. Michaux, Jr., U. S. Atty., Durham, N. C., on brief), for appellee.

Before HAYNSWORTH, Chief Judge, and WIDENER and PHILLIPS, Circuit Judges.

PHILLIPS, Circuit Judge:

Convicted by one jury of electronic eavesdropping in violation of 18 U.S.C. § 2511(1)(b)(iv)(A) and of conspiracy to commit that offense in violation of 18 U.S.C. § 371 and by another jury of six counts of misapplication of bank funds in contravention of 18 U.S.C. § 656, Edwin Duncan, Jr. appealed both convictions, assigning numerous errors. The two cases were consolidated for briefing, argument and decision. Finding no prejudicial error, we affirm in both cases.

Part I of this opinion will sketch the factual and procedural background for the discussion that follows. Parts II and III consider the errors assigned in the eavesdropping and misapplication actions respectively. Part IV examines a series of contentions that relate to the validity of both sets of convictions.

I. Background

Duncan's troubles, insofar as they are pertinent to these appeals, began in September 1971 when agents of the Internal Revenue Service came to the Northwestern Bank Building in North Wilkesboro, North Carolina to conduct an audit of defendant, the Bank and related taxpayers. At that time Duncan was president of The Northwestern Bank. The agents were assigned a small office on the third floor of the bank building. They were given keys to the office door and to the filing cabinet in it.

During the first month of the agents' visit, Duncan directed a bank employee, John T. Absher, to plant a radio transmitter in the office used by the agents. Absher rode to Winston-Salem, North Carolina, with Duncan to purchase batteries for the transmitter. Upon their return to the bank about 10:00 p. m., the two men entered the office assigned to the I.R.S., Absher climbed on a desk and, drilling a hole in the Celotex ceiling with his penknife, installed the microphone. Duncan then wiped the doorknob of the agents' office clean and the two left the bank.

Another bank employee, Jerry Duncan, was assigned the task of monitoring the conversations of the agents. Defendant instructed him on the use of the FM equipment required to intercept the conversations and the tape recorder used to preserve them. Although assured by defendant that the activity was legal, Jerry Duncan was instructed to keep it confidential. He and his office-mate, Athel Phillips, began to lock the door to their office to prevent anyone from happening upon the interception. In Jerry Duncan's absence, Phillips monitored the conversations. On one occasion when Jerry Duncan was out of town for a week, another employee, Robert Green, monitored the agents' work at defendant's instruction.

Periodically, defendant would come to Jerry Duncan and ask what was going on or Jerry Duncan would go to him and report. The cassettes upon which the conversations were recorded were delivered to defendant. Thirteen of the cassettes, however, malfunctioned and Jerry Duncan threw them in a drawer of his desk. Later he removed them to his car and then to his house where they remained until the summer of 1977 when he brought them to the United States Attorney's office.

The monitoring of the agents continued until January 1973 when the agents moved to the Federal Building in Wilkesboro, in part out of suspicion that they were being spied upon.

In March 1977, federal investigators again came to the Northwestern Bank, this time from the Federal Bureau of Investigation. One matter that came to their attention was the manner in which Duncan handled his checking account. The account was classified as "Code 3" for purposes of computer handling of the checks drawn on it. The computer was programmed to reject all items drawn on a "Code 3" or "no activity" account; each was then posted by hand. This "Code 3" classification was designed for special use to prevent forgeries when a customer's checkbook was lost or stolen; Duncan's account was the only one that was permanently so classified. As each of defendant's checks reached the Cash-Items clerk, she had them paid without debiting defendant's account. Periodically, Duncan would collect the checks being held, examine them, send some back through the computer "transcoded 27" so that they would not be rejected again and replace the others with a debit memo. Often, defendant went as long as six months between the times he reviewed the checks. One occasion that always triggered a clearance of the account was an audit visit from the state and federal bank examiners. On April 21, 1977, an agent of the F.B.I. found $11,800 worth of defendant's checks held in cash items. That day, Duncan's account was reclassified to a normal account.

Early in July, the F.B.I. discovered that the office they were occupying in the bank premises was equipped with electronic eavesdropping equipment. After first obtaining a search warrant, they searched the bank and found the equipment in place. Three days later, on July 15, arrest warrants for Duncan issued. The charges were electronic eavesdropping on both the I.R.S. and the F.B.I. and misapplication of bank funds.

After a magistrate initially found there was no probable cause to bind over Duncan on the charge of eavesdropping on the F.B.I., on August 12 the grand jury returned two indictments against Duncan. The first, in two counts, charged defendant with electronic eavesdropping on the I.R.S. and with conspiracy to commit that offense. The second, in six counts, charged misapplication of bank funds, each count corresponding approximately to a period during which defendant's checks were held in cash items at his direction without being debited to his account.

The grand jury investigation continued as the parties litigated a variety of preliminary motions. On September 6, the grand jury again indicted Duncan, this time on the charge of eavesdropping on the F.B.I.

On September 26, 1977, the trial of the I.R.S. charges began. Duncan relied principally on two defenses: that the agents could have exhibited no justifiable expectation of privacy in their conversations, and that he had withdrawn from the alleged conspiracy before August 12, 1972, the date prior to which prosecution was barred by the statute of limitations. The fact of the bugging was not disputed. Duncan's defenses did not persuade the jury and on October 3 they returned a verdict of guilty on both counts. Sentencing was postponed and the bank misapplication trial began.

Again defendant did not controvert the objective facts concerning the manner in which his account had operated, but he vigorously challenged the illegal characterization placed upon his conduct by the Government. The jury once more found Duncan guilty on all counts.

The F.B.I. trial was called for trial for November 7. Duncan pleaded guilty, pursuant to a plea bargain, on the charge of conspiracy to eavesdrop on the F.B.I.

On November 11, defendant was sentenced to a total fine of $22,000 and eight jail sentences, to run concurrently, the longest of which was three years. No sentence was imposed in the F.B.I. case. These appeals followed.

II. The I.R.S. Case

In what will hereinafter be referred to as the I.R.S. case, defendant was convicted of the electronic interception of oral communications in violation of 18 U.S.C. § 2511(1)(b)(iv)(A) and of conspiracy to commit that offense in contravention of 18 U.S.C. § 371.

18 U.S.C. § 2511(1)(b)(iv)(A) was enacted as part of Title III of the Omnibus Crime Control and Safe Streets Act of 1968, Pub.L.No.90-351, 82 Stat. 197. It provides:

Except as otherwise specifically provided in this chapter any person who

(b) willfully uses, endeavors to use, or procures any other person to use or endeavor to use any electronic, mechanical, or other device to intercept any oral communication when

(iv) such use or endeavor to use (A) takes place on the premises of any business or other commercial establishment the operations of which affect interstate or foreign commerce . . .

shall be fined not more than $10,000 or imprisoned not more than five years, or both.

The offense includes four essential elements that the Government was required to allege and prove: that an interception was effected through the use of an electronic or mechanical device, that it was done willfully, that it was an interception of an "oral communication," and that the interception occurred on the premises of a business the operation of which affected interstate commerce. The term "oral communication" is defined in 18 U.S.C. § 2510(2) as "any oral communication uttered by a person exhibiting an expectation that such communication is not subject to interception under circumstances justifying such expectation."

A. The Indictment

Duncan begins his attack on these convictions by challenging the indictment. The indictment consisted of two counts, the first alleging the conspiracy and the second setting forth the substantive offense in a paraphrase of the statute. ¹ Our concern at this point is with the latter. ² It provided in essence that between September 1, 1971 and January 31, 1973, defendant willfully used a radio transmitter to "intercept oral communications between certain individuals then present in a third floor office in the Northwestern Bank Building" and that the operations of that bank affected interstate commerce.

Rule 7(c)(1) of the Federal Rules of Criminal Procedure provides an indictment...