U.S. v. Hajecate, 81-2130

• Decision Date: 23 August 1982
• Docket Number: No. 81-2130,81-2130
• Citation: 683 F.2d 894
• Parties: 83-1 USTC P 9192 UNITED STATES of America, Plaintiff-Appellant Cross Appellee, v. Thomas M. HAJECATE and Thomas H. Hajecate, Defendants-Appellees Cross Appellants, Lance Eisenberg, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 894

683 F.2d 894

83-1 USTC P 9192

UNITED STATES of America, Plaintiff-Appellant Cross Appellee, v. Thomas M. HAJECATE and Thomas H. Hajecate Defendants-Appellees Cross Appellants Lance Eisenberg, Defendant-Appellee.

No. 81-2130.

United States Court of Appeals Fifth Circuit.

Aug. 23, 1982.

Michael E. Tigar, John Privitera, Washington, D. C., for the hajecates.

Joe H. Reynolds, Houston, Tex., Earl J. Silbert, Martin R. Baach, Washington, D. C., for Eisenberg.

Anna E. Stool, Asst. U. S. Atty., Houston, Tex., Michael L. Paup, Chief, Appellate Section Glenn L. Archer, Jr., Asst. Atty. Gen., Robert E. Lindsay, James A. Bruton, James Springer, Attys., Tax Div., U. S. Dept. of Justice, Washington, D. C., for the U. S.

Appeals from the United States District Court for the Southern District of Texas.

Before CLARK, Chief Judge, GEE and GARWOOD, Circuit Judges.

GEE, Circuit Judge:

In this criminal case, the government appeals the pretrial dismissal of an eleven-count indictment against businessmen Thomas M. ("Mick") Hajecate and Thomas H. ("Tom") Hajecate and their tax attorney, Lance Eisenberg. The defendants Hajecate cross-appeal the district court's denial of their motion to dismiss the indictment based on prosecutorial vindictiveness.

I. FACTS AND DISPOSITION BELOW.

On January 21, 1981, a grand jury in the Southern District of Texas returned an eleven-count indictment, charging the three defendants with violations of several federal criminal laws. ¹ All these violations stemmed from a scheme to conceal the Hajecates' interest in an offshore (Cayman Islands) bank account. As gleaned from the indictments, part and parcel of this scheme were obstruction of IRS tax collection, false statements on income tax returns, failure to report financial transactions between persons in the United States and foreign institutions to the Customs Service, and unreported transfers of money between the United States and the Cayman Islands. We shall give more details on the counts as necessary in our discussion of the issues on appeal. On February 25, 1981, a superseding indictment covering the same scheme and containing the same number of counts was filed.

The defendants sought bills of particulars on the indictment and moved for its dismissal as well. After a March 18, 1981, hearing, the district court dismissed all eleven counts as facially invalid, accepting "the Defendants' theory of law in every respect" except the allegation of prosecutorial vindictiveness.

II. THE GOVERNMENT'S APPEAL.

A. Count One.

Count one charged all three defendants with violating the federal criminal conspiracy statute, 18 U.S.C. § 371 (1976). This alleged conspiracy had four objects, all violations of federal law: (1) defrauding the United States by obstructing the IRS in its collection of income taxes; (2) defrauding the United States by obstructing Customs Service maintenance of records of financial transactions between foreign financial institutions and United States citizens; (3) knowingly and willfully making false statements on income tax returns; and (4) failure to report money transferred between the United States and the Cayman Islands. The defendants attacked the indictment's statement of each object as facially invalid, and we address each object in turn.

Obstruction of the IRS

In attacking the first object, the defendants claim that two transactions named as means and methods of furthering the conspiracy, a loan obtained by one of the Hajecates' oil companies and silver straddles engaged in by the Hajecates, are in fact legal transactions. Therefore, since these transactions are equally capable of legal interpretation, the indictment is invalid because it does not state an offense. See Standard Oil Co. v. United States, 307 F.2d 120, 130 (5th Cir. 1962). The government responds that the indictment does not allege that these transactions were illegal in and of themselves but that they lost their legal character because they were used to bring about the unlawful object of the scheme, obstruction of the IRS.

The government's position is correct: "it is well settled that acts which are themselves legal lose their legal character when they become constituent elements of an unlawful scheme." Continental Ore Co. v. Union Carbide Corp., 370 U.S. 690, 709, 82 S.Ct. 1404, 1415, 8 L.Ed.2d 777 (1962). Thus, these transactions are not "equally" capable of legal interpretation, and the government is not, as defendants' claim, testing the legality of silver straddles in this case. In the context of count one's allegation of conspiracy and recital of other illegal acts, these two transactions lose their legal character and do not render count one invalid.

Next, the defendants allege that count one failed to particularize the alleged scheme.

The test to determine the sufficiency of an indictment is well established. An indictment is sufficient if it contains the essential elements of the offense so that it fairly informs the defendant of the charges against him and if it adequately enables the defendant to be protected against further prosecution for the same offense. Furthermore, an indictment is to be read in light of its purpose, which is to inform the accused of the charges against him. Its validity is governed by practical, not technical, considerations.

United States v. Mouton, 657 F.2d 736, 739 (5th Cir. 1981) (per curiam) (citations omitted). Conspiracy indictments have been given particularly careful scrutiny:

It is our affirmative duty to carefully scrutinize indictments under the broad language of the conspiracy statute because of the possibility, inherent in a criminal conspiracy charge, that its wide net may ensnare the innocent as well as the guilty.

United States v. Porter, 591 F.2d 1048, 1057 (5th Cir. 1979).

In examining a conspiracy indictment, the first test is to ascertain whether it goes beyond the generic terms of 18 U.S.C. § 371 and the statutes violated by the conspiracy to allege specific details about the scheme. See Van Liew v. United States, 321 F.2d 664, 669-74 (5th Cir. 1963). The IRS obstruction claim easily passes this test. A concise paragraph makes the allegation, and numerous "overt acts" and "means and methods" are cited in support in the remainder of count one. This has rendered count one longer and more complex than the other counts, yet it is still the plain and concise statement required by Fed.R.Crim.P. 7, since it outlines the essential elements of the complex conspiratorial scheme charged against the defendants. Unnecessary detail not found in count one was made available to defendants through two lengthy bills of particulars.

Defendants posit several specific failures to particularize that we must address. First, they claim that an allegation of Eisenberg's purpose in obstructing the IRS is fatally lacking. This argument has no merit. Eisenberg is clearly alleged to be a conspirator, and he thereby shares the purposes of the conspiracy, which are also clearly alleged in the indictment.

Second, defendants claim a lack of clarity as to whose taxes the IRS was obstructed from ascertaining. This lack of clarity allegedly arises from reading the indictment and the government's answers to a bill of particulars. The government responds that the indictment reveals that the taxes at issue are those of the Hajecates and that the four corporations that they allegedly owned were used in the obstruction. Thus, the government stated in response to the bill of particulars that the IRS obstruction charge involved all six taxpayers.

We see no flaw here. The defendants see an inconsistency between the indictment and the bill of particulars where none exists. They are clearly on notice from the indictment that the obstruction charge goes to the Hajecates' taxes only and that the four corporations were used to conceal those taxes.

Even if the bill was inconsistent with the indictment, the proper remedy is not dismissal of the indictment but clarification of the bill. The indictment here, unless properly amended or superseded, constitutes the full statement of the charges against the defendants. They face no additional jeopardy from a bill, since it cannot be used to amend an indictment, see United States v. Willoz, 449 F.2d 1321, 1323 (5th Cir. 1971). It is the government that suffers if the bill goes beyond the indictment and improperly adds new charges. Thus, any inconsistency here does not harm the defendants in a constitutional sense, since the indictment is clear and determines the issues of notice and jeopardy. ²

Finally, the defendants complain of ambiguity in the definitions of several terms in the indictment-"shell company," "affiliates," and "utilized and controlled." We believe that they are clear in their contexts and that any ambiguity does not rise to the level of a constitutional defect. Therefore, the appropriate remedy is to request a bill of particulars, not dismiss the indictment.

Overall, then, there is no defect in the first object of count one. What the defendants seek in many of their allegations is essentially the disclosure by the government of its full theory of the case and all the evidentiary facts to support it. That is not and never has been required at the indictment stage-the only requirements are notice to the defendants and preclusion of double jeopardy. The government need do no more in the indictment. The ready remedy of a motion for a bill of particulars is available to add specifics beyond those required for the indictment to pass constitutional muster, see United States v. Williams, 203 F.2d 572, 574 (5th Cir.), cert. denied, 346 U.S. 822, 74 S.Ct. 37, 98 L.Ed. 347 (1953), although, of course, even a bill of particulars cannot be required to compel revelation of the full theory of the case or all the evidentiary facts, see United States v. Murray, 527 F.2d 401, 411 (5th Cir. 1976); United States v. Bonnet, 247 F.Supp. 415, 417 (E.D.La.1965) (Ainsworth, J.)....