623 F.2d 769 (2nd Cir. 1980), 608, United States v. Turkish
|Docket Nº:||608, 795, Dockets 79-1326, 79-1396.|
|Citation:||623 F.2d 769|
|Party Name:||UNITED STATES of America, Appellee, v. Norman TURKISH, Defendant-Appellant.|
|Case Date:||May 27, 1980|
|Court:||United States Courts of Appeals, Court of Appeals for the Second Circuit|
Argued Jan. 15, 1980.
Ronald Podolsky, New York City, for defendant-appellant.
Allen R. Bentley, Asst. U. S. Atty., New York City (Robert B. Fiske, Jr., U. S. Atty., Gregory L. Diskant, Asst. U. S. Atty., New York City, on the brief), for appellee.
Before LUMBARD, MANSFIELD and NEWMAN, Circuit Judges.
NEWMAN, Circuit Judge:
This criminal appeal concerns primarily the issue of whether a defendant is entitled to have immunity conferred upon defense witnesses who invoke their privilege against self-incrimination. The appeal is brought by Norman Turkish, who was convicted by a jury in the Southern District of New York (Vincent L. Broderick, Judge) of evading income taxes and filing false income tax returns, 26 U.S.C. §§ 7201, 7206, and conspiring to defraud the United States, 18 U.S.C. § 371. The trial of Turkish and three co-defendants lasted 11 weeks. Turkish and one co-defendant were found guilty; only Turkish appeals.
The Government's evidence established that Turkish was a principal participant in a scheme that used fraudulent means to enable C.R. Rittenberry & Associates, Inc., an oil company, to create artificial tax losses in one year, offset by equally artificial taxable gains in a subsequent year, thereby postponing for a year the taxes on millions of dollars of corporate income. The scheme involved the use of tax "straddles," the simultaneous purchase and sale at different prices of equal numbers of commodity futures contracts to be performed in different months. In the normal use of tax straddles, opportunities for arguably lawful tax avoidance are created when the market price varies from the prices at which the original contracts were both bought and sold. If the market declines, the trader offsets his purchase with an equivalent sale, thereby locking in a tax loss on his original purchase. He then offsets his original sale contract with an equivalent purchase, thereby locking in an approximately equal profit on his original sale contract. He benefits when the profit is taxable in the year following realization of the loss. In normal transactions the trader takes the risk that market price movements will be too narrow to create much opportunity for tax postponement and also the more serious risk that prices will not move uniformly with respect to both his original contracts. In the latter event the profit available to be locked in may be less than the locked-in loss. Turkish and others avoided these risks by fraudulently manipulating virtually the entire business of one trading ring on the New York Cotton Exchange, the Crude Oil Futures Market. This enabled them to move prices up and down at will, so that Rittenberry could take short-term capital losses during one tax year and defer an equal amount of off-setting capital gain to a subsequent year, all with no risk and a considerable saving in the postponement of
taxes. Turkish not only orchestrated the fraudulent aspects of the scheme but also evaded taxes on the money he received as compensation for his role.
Turkish contends that his conviction should be reversed because the conspiracy count of the indictment (Count One) did not charge an offense and was unconstitutionally vague. The conspiracy count alleged that Turkish and others conspired to "defraud the United States by impeding, impairing, obstructing and defeating the lawful functions of the Department of the Treasury in the collection of income taxes." The crime of conspiring to defraud the United States, 18 U.S.C. § 371, includes acts that "interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery," Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S.Ct. 511, 512, 68 L.Ed. 968 (1924). The creation of artificial tax losses for a business by fraudulent manipulation of prices in a commodity market qualifies as such an act. Turkish contends that there would have been no crime had the oil company not taken the resulting losses as tax deductions. Even if the manipulation of prices was not, by itself, a federal offense, it became evidence of a federal offense when it was done to avoid federal taxes. The Government alleged that Turkish's activities on the Crude Oil Futures market were part of a conspiracy that involved other acts, not that these activities constituted the entirety of the crime.
The indictment is also sufficiently precise to meet the requirements of the Constitution and the Federal Rules of Criminal Procedure. Fed.R.Crim.P. 7(c) states, in part: "The indictment or the information shall be a plain, concise and definite written statement of the essential facts constituting the offense charged." Count One specified Turkish's alleged efforts to manipulate the Crude Oil Market in order to create tax losses for his co-defendant's client. This was sufficient to inform him of the charges against him, and to enable him to prepare his plea and his defense accordingly. See Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 2907, 41 L.Ed.2d 590 (1974).
Defense Witness Immunity
The claim for defense witness immunity arose in the following circumstances. The Government presented its case by calling a number of witnesses involved in the fraudulent transactions, several of whom were coconspirators. Of these, three had pleaded guilty to participation in the conspiracy and had received letter agreements that they would not be prosecuted for any other commodity market crimes or related tax offenses if they testified truthfully. Two other prosecution witnesses who had not been indicted received similar letters, one of which was sufficient to persuade its recipient to return from Switzerland for the trial. In addition, one prosecution witness was formally granted "use" immunity under 18 U.S.C. § 6002.
During the trial, and after the Government had concluded its case, Turkish and his co-defendants moved that seventeen of the prospective defense witnesses be granted "use" immunity and required to testify under 6002. They argued that these witnesses could provide exculpatory testimony, but would invoke their Fifth Amendment privilege and decline to testify unless compelled to do so. Judge Broderick invited the Government to consider granting "use" immunity to these witnesses pursuant to 6002. The Government did consider the matter, but decided not to grant immunity. Judge Broderick then reserved decision on defendants' motion until after the trial, at which time the defendants moved for a new trial or acquittal. On August 23, 1979, Judge Broderick denied the defendants' motion.
In a subsequent opinion, United States v. Turkish (S.D.N.Y.1979), Judge Broderick set forth his analysis of the issue and his reasons for denying the motion. Judge Broderick concluded that the Compulsory Process
Clause of the Sixth Amendment does not give a defendant the right to require immunization of a witness, but that such a right is "probably" contained in the Due Process Clause of the Fifth Amendment. Id. However, he declined to accord the defendants the benefit of this "probable" Fifth Amendment right to defense witness immunity for two reasons. First, he ruled that the defendants' motion was untimely, since it should properly have been made at the beginning of the trial. Second, he concluded that defense witness immunity would be available only to secure testimony that was material and exculpatory and that the defendants had not shown that any of the witnesses for whom they sought immunity would give material, exculpatory testimony.
To assess Turkish's challenges to these rulings we deem it appropriate to explore the concept of defense witness immunity, a matter arising with increasing frequency before this and other courts. See, e. g., United States v. De Palma, 476 F.Supp. 775 (S.D.N.Y.1979), appeal pending sub nom. United States v. Horwitz, No. 79-1315 (2d Cir.); Government of the Virgin Islands v. Smith, 615 F.2d 964 (3d Cir. 1980).
Granting immunity to a defense witness at the defendant's request seems to have been considered for the first time, in a reported decision, by Chief Justice Burger, then a Circuit Judge, as dictum in Earl v. United States, 361 F.2d 531, 534 n.1 (D.C. Cir. 1966), cert. denied, 388 U.S. 921, 87 S.Ct. 2121, 18 L.Ed.2d 1370 (1967). Since then it has been much discussed by courts and commentators. 1 Interest in defense witness immunity was considerably heightened after Congress enacted the "use" immunity statute, 18 U.S.C. §§ 6001-6005, in 1970, and the Supreme Court subsequently upheld its constitutionality, Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972). No longer did an immunity grant forbid prosecution of the witness for crimes referred to in his testimony ("transactional" immunity). Now the Government could still prosecute the witness; it was barred only from making any use of his immunized testimony, either directly by putting the testimony in evidence at the witness's trial, or indirectly by obtaining other evidence from leads that the testimony supplied.
Claims for defense witness use immunity have been uniformly rejected by this Court, United States v. Gleason, 616 F.2d 2 (2d Cir. 1979); United States v. Praetorius, 622 F.2d 1054 (2d Cir. Dec. 10, 1979), modified on rehearing, --- F.2d ---- (2d Cir. May 7, 1980); United States v. Lang, 589 F.2d 92, 96 n.1 (2d Cir. 1978); United States v. Wright, 588 F.2d 31, 33-37 (2d Cir. 1978), cert. denied, 440 U.S. 917, 99 S.Ct. 1236, 59 L.Ed.2d 467 (1979); United States v. Stofsky, 527 F.2d 237, 249 (2d Cir. 1975), cert. denied, 429 U.S. 819, 97 S.Ct. 65, 50 L.Ed.2d 80 (1976); see also United States v. Housand, 550 F.2d 818, 823-824 (2d...
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