U.S. v. Grapp

• Decision Date: 10 August 1981
• Docket Number: No. 79-5468,79-5468
• Citation: 653 F.2d 189
• Parties: 8 Fed. R. Evid. Serv. 1661 UNITED STATES of America, Plaintiff-Appellee, v. Robert L. GRAPP and William Kenneth Thatcher, Defendants-Appellants. . Unit A
• Court: U.S. Court of Appeals — Fifth Circuit

Page 189

653 F.2d 189

8 Fed. R. Evid. Serv. 1661

UNITED STATES of America, Plaintiff-Appellee, v. Robert L. GRAPP and William Kenneth Thatcher, Defendants-Appellants.

No. 79-5468.

United States Court of Appeals, Fifth Circuit.

Unit A

Aug. 10, 1981.

Lewis O. Unglesby, Baton Rouge, La. (Court-appointed), for Grapp.

Jordan Green, Edward F. Novak, Phoenix, Ariz., for Thatcher.

Donald L. Beckner, U.S. Atty., Mitchell B. Lansden, Asst. U.S. Atty., Baton Rouge, La., for plaintiff-appellee.

Appeals from the United States District Court for the Middle District of Louisiana.

Before BROWN, GEWIN ^* and POLITZ, Circuit Judges.

POLITZ, Circuit Judge:

William Kenneth Thatcher and Robert L. Grapp were indicted for violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(a) & (c), mail fraud, 18 U.S.C. § 1341, wire fraud, 18 U.S.C. § 1343, and RICO conspiracy, 18 U.S.C. § 1962(d). They were also charged under the aiding and abetting provision, 18 U.S.C. § 2, and for false declarations before a grand jury, 18 U.S.C. § 1623. The false declarations counts were severed and the government dismissed the mail fraud charged in Count 7. The defendants were tried on Counts 1-6 and 8-11, ¹ and the jury returned verdicts of guilty on all counts. Thatcher and Grapp were sentenced to three years imprisonment on Count 1 and five years probation on Count 2. The imposition of sentence was suspended on all other counts. On appeal both claim the trial court erred in denying motions to sever, in making certain evidentiary rulings, and in refusing to instruct on Thatcher's defense of alibi. Both claim a variance between indictment and proof and assert prosecutorial misconduct in statements to the jury. In addition, Grapp contends the district court erred when it declined to strike portions of the indictment before permitting the jury to take it into the jury room during deliberations. Finding no reversible error in any contention, we affirm.

In 1973 Thatcher and Grapp were employed by Honeywell Information Systems, Incorporated which furnished computer equipment to the State of Louisiana. Grapp left his employment with Honeywell in mid-1973, when the State terminated the contract it then had for computer consultation services, and formed Public Systems, Incorporated (PSI) in order to provide similar consulting services. The State then contracted with PSI for these services. Grapp was a director and president of PSI and owned 30% of its stock; Edward Malo and Richard Robertson were directors and officers of PSI and each was a record owner of 30% of its stock.

The government charged that Malo secretly acted as a nominee stockholder for Thatcher, for which he was to receive 20% of Thatcher's stock. The secret nominee arrangement was necessary because Thatcher was required to make full disclosure of ownership in any company with which Honeywell did business. This nominee arrangement, an essential element of the government's case, was denied by Thatcher and was a vigorously contested factual issue.

In late 1973 the State entered into an agreement with Honeywell for the purchase of computer equipment for $6,607,094. Honeywell, through Thatcher, offered a $500,000 discount if payment was made or third party financing was arranged before a certain date. Commissioner Charles E. Roemer II, head of the State agency responsible for arranging such purchases, was under the impression that $6,607,094 represented the price after applying the $500,000 discount. This discount offer was later withdrawn by Thatcher's superior at Honeywell.

During 1974 Grapp and Thatcher continued their efforts to secure a profitable arrangement between the State and Honeywell, notably involving a subsidiary of PSI, Capital Analytics. Thatcher's ownership remained undisclosed. Subsequently, the State contracted for the purchase of various computer equipment from Honeywell. In the spring of 1975 the State accepted bids for the financing of a third-party lease of some of this equipment. In May 1975 Thatcher's superiors advised him that Honeywell was reinstating the offer of the $500,000 discount, but on a different computer than that originally proposed. Thatcher informed Roemer who thought the discount could be applied to the original computer and continued under the misimpression as to the price. Ultimately a bid by PSI was accepted.

PSI arranged to have the $6,607,094 paid into its account instead of to Honeywell. PSI then transmitted $6,084,539 to Honeywell, retaining $522,555 as "profit." ² Neither the State, Honeywell, the financial institution providing PSI with the funds nor the company acquiring PSI's position were informed that PSI retained this sum. Thatcher's superiors at Honeywell were not aware that the discount had been applied to the PSI transaction.

PSI's retention of the $522,555 was not publicly revealed until 1977, at which point Thatcher urged Malo not to reveal the nominee stock arrangement. Malo initially complied with Thatcher's request but later recanted and gave the authorities, including the grand jury, a candid account of his knowledge of the transaction.

Thatcher denied the nominee stock relationship and denied informing Grapp about the discount prior to the closing. He further testified that he thought the discount had gone to the State and not to PSI.

Severance

Thatcher and Grapp contend that denial of their motions to sever constitutes reversible error. Both originally based their motions on allegations of antagonistic defenses. When it became apparent that Grapp would probably not testify, Thatcher again moved for a severance contending that he needed the exculpatory testimony Grapp could provide. Thatcher's appeal on the severance issue is based on the latter contention.

Rule 14 of the Federal Rules of Criminal Procedure authorizes the trial court to grant severances when "it appears that a defendant ... is prejudiced by a joinder of ... defendants ... for trial together." The question of severance is a matter within the sound discretion of the trial judge, United States v. Salomon, 609 F.2d 1172 (5th Cir. 1980), and we are hesitant, as a reviewing court, to second guess the trial court's refusal to sever. United States v. Marino, 617 F.2d 76 (5th Cir. 1980), cert. denied, --- U.S. ----, 101 S.Ct. 575, 66 L.Ed.2d 474 (1980). Absent a showing of abuse of discretion, the trial court's decision will not be disturbed. United States v. Bolts, 558 F.2d 316 (5th Cir.), cert. denied, 434 U.S. 930, 98 S.Ct. 417, 54 L.Ed.2d 290 (1977). "In order to demonstrate abuse of discretion, the defendant bears a heavy burden of establishing compelling prejudice." United States v. Salomon, 609 F.2d at 1175. Severance should be granted only when the defendant can demonstrate compelling prejudice which the trial court could not alleviate. United States v. Horton, 646 F.2d 181, 186 (5th Cir. 1981), citing United States v. Crawford, 581 F.2d 489 (5th Cir. 1978). "Severance is allowable when antagonistic defenses are present, but the conflict must reach a point where the defenses are irreconcilable and mutually exclusive." Horton, 646 F.2d at 186.

One seeking a severance on the grounds that he needs the testimony of a co-defendant must demonstrate:

(1) a bona fide need for the testimony; (2) the substance of the testimony; (3) its exculpatory nature and effect; and (4) that the co-defendant will in fact testify if the cases are severed.

United States v. Butler, 611 F.2d 1066, 1071 (5th Cir.), cert. denied, --- U.S. ----, 101 S.Ct. 97, 66 L.Ed.2d 35 (1981).

Thatcher did not meet these requirements. There was no indication that Grapp would "in fact testify if the cases (were) severed." Id. Thatcher recognizes that there was no assurance that Grapp would testify; he relies on the assumption that a severed co-defendant is more likely to testify and on other considerations which he suggests, make it "reasonably certain Grapp would testify." ³ Thatcher's argument is not persuasive. Where "there is no showing that there is anything more than a gleam of possibility in the defendant's eye," the court is not required to sever. United States v. Wilson, 500 F.2d 715, 721 (5th Cir. 1974), cert. denied, 420 U.S. 977, 95 S.Ct. 1403, 43 L.Ed.2d 658 (1975).

Further, Thatcher did not demonstrate that Grapp's testimony would be as exculpatory as Thatcher might hope. The proffered testimony was that which led to Grapp's indictment for false declarations. We are not prepared to label as an abuse of discretion the trial court's refusal to sever because of such testimony.

Grapp contends his trial should have been severed in order to avoid the prejudice he suffered as a consequence of Thatcher's defense. He contends that the cross-examination of government witnesses by Thatcher's attorney, and the testimony of witnesses Thatcher called, worked to his prejudice. When antagonistic defenses are claimed, severance is mandated only when "the defenses are irreconcilable and mutually exclusive." United States v. Horton, 646 F.2d at 186. This degree of conflict was not reached in the instant trial. The defenses of Thatcher and Grapp differed, but they were not irreconcilable.

Grapp's reliance on United States v. Crawford, 581 F.2d 489 (5th Cir. 1978), wherein we held that severance was required because the sole defense of each was the guilt of the other, is misplaced. Grapp does not base his defense on Thatcher's guilt. Rather, he takes the position that the transaction was a legitimate business deal with the $522,555 earned as a trade discount. Nor does Thatcher rely on Grapp's guilt. Thatcher insists that he was acting in the best interest of the State and Honeywell, that he did not own an interest in PSI, and that he was unaware of PSI's retention of the discount.

Unlike the situation in Crawford, the witnesses in the case before us showed no hostility to Grapp. While questions by Thatcher's counsel during cross-examination did indirectly...