U.S. v. Anderson
| Decision Date | 06 December 1985 |
| Docket Number | 83-2522 and 83-2664,Nos. 83-2519,s. 83-2519 |
| Citation | 778 F.2d 602 |
| Parties | UNITED STATES of America, Plaintiff-Appellant, v. Lowell G. ANDERSON, Defendant-Appellee. UNITED STATES of America, Plaintiff-Appellant, v. Lowell G. ANDERSON; Carolyn A. Anderson; Arthur P. Tranakos; William Pilgrim; Donald Barenson; Ronald Max Ellsworth, a/k/a Max Ellsworth; First Colonial Trust; Donald Perry, Defendants-Appellees. to 83-2670. |
| Court | U.S. Court of Appeals — Tenth Circuit |
James P. Springer, Atty., Tax Div., Dept. of Justice, Washington, D.C., and Richard A. Stacy, U.S. Atty., Cheyenne, Wyo. (Glenn L. Archer, Jr., Asst. Atty. Gen., Michael L. Paup and Robert E. Lindsay, Attys., Tax Div., Dept. of Justice, Washington, D.C., with them on briefs), for plaintiff-appellant.
Joseph Saint-Veltri, Denver, Colo., for defendant-appellee, Lowell G. Anderson.
Stephen M. Munsinger, Denver, Colo., for defendant-appellee, Carolyn A. Anderson.
Michael J. Abramovitz, Drexler, Wald & Abramovitz, Denver, Colo., for defendant-appellee, Donald Barenson.
Stephen Ross Higgins, Englewood, Colo., on brief, for defendant-appellee, William Pilgrim.
Mike DeGeurin, Foreman & DeGeurin, Houston, Tex., on brief, for Arthur P. Tranakos.
Before HOLLOWAY, Chief Judge, and McWILLIAMS and DOYLE, Circuit Judges.
By indictment, Lowell G. Anderson was charged in eight counts with aiding and abetting various individuals in willfully failing to file income tax returns in violation of 18 U.S.C. Sec. 2 and 26 U.S.C. Sec. 7203. In a second indictment, Anderson and seven other defendants were charged in eleven counts and in various combinations with conspiring to impede the lawful functions of the Internal Revenue Service, willfully failing to file income tax returns, willfully attempting to evade income taxes, willfully aiding and assisting in the filing of false income tax returns, willfully obstructing justice, all in violation of specified sections of the Internal Revenue Code. These indictments arose out of the defendants' promotion of so-called "common law trusts," whereby the defendants allegedly induced persons to enter into a series of sham transactions, having no economic substance, and solely designed to eliminate or reduce their income tax liability.
The defendants in both indictments filed motions seeking dismissal of the indictments on various grounds. The defendants' grounds for dismissal of the indictments, or certain counts therein, were improper selection of the grand jury, failure to allege a specific statutory offense, duplicitous pleading, double jeopardy, and prosecutorial misconduct during the course of the grand jury's deliberations.
The district court conducted evidentiary hearings on the motions to dismiss and rejected all the grounds urged by the defendants except the claim of prosecutorial misconduct before the grand jury. In this regard, the district court held that in four particulars the government had engaged in a "pattern of conduct calculated to infringe the grand jury's ability to exercise independent judgment." The district court's memorandum opinion and order appears as United States v. Anderson, 577 F.Supp. 223 (Wyo.1983). On the basis of prosecutorial misconduct, the district court dismissed both indictments. The government appeals. We reverse.
The four instances of prosecutorial misconduct perceived by the district court were: (1) the grand jury's use at the instance of the prosecution of undercover agents who infiltrated the defendants' organization and reported back to the grand jury the information thus acquired; (2) the use by the prosecutor of an expert witness under contract with the government who testified before the grand jury and who, in testifying, used certain promotional matter sent by the defendants to prospective customers, which material was itself before the grand jury; (3) the use by the prosecution of I.R.S. agents who "screened" potential grand jury witnesses and determined which witnesses should appear before the grand jury, and which ones had no pertinent information to give; and (4) the grant by the prosecution of "informal immunity" to prospective grand jury witnesses. As indicated, the reasoning of the district court was that the combination of these actions by the government undermined the independence of the grand jury.
In its memorandum opinion, the district court stated that "by far the most serious act in the pattern of governmental misconduct was the use of undercover investigators to infiltrate the defense camp, and the involvement of the grand jury in that infiltration." 557 F.Supp. at 231. In this regard, it would appear that some time prior to the empanelling of the grand jury, I.R.S. undercover agents had infiltrated the "defense camp" in an effort to obtain incriminatory evidence against the defendants. These undercover agents initially contacted the defendants, or some of them, posing as potential purchasers of the tax-shelter program. One of these agents, Agent Tucker, was later subpoenaed, under his "cover name," to testify before the grand jury, and he testified as to his knowledge of the defendants and their activities. This was a "continuing" grand jury, and at the conclusion of his testimony, Tucker was "urged" by the prosecutor, on behalf of the grand jury, to continue his infiltration tactics and hopefully obtain additional information which could be used to obtain a search warrant. Agent Tucker did testify before the grand jury about statements made by some of the defendants, including an attorney, about how they would hopefully "blunt" the grand jury's investigation.
We are not shocked, as was the district court, over the grand jury's awareness of the use of undercover agents to infiltrate the defendants' operation. The grand jury is itself an investigative body vested with broad powers. United States v. Calandra, 414 U.S. 338, 343-44, 94 S.Ct. 613, 617-18, 38 L.Ed.2d 561 (1974). Indeed, the grand jury does not fulfill its investigatory duty until every clue has been run down and every witness examined. Branzburg v. Hayes, 408 U.S. 665, 701, 92 S.Ct. 2646, 2666, 33 L.Ed.2d 626 (1972). The use of informers and undercover agents is not improper, per se, but is, to the contrary, a legitimate investigative tool. In the words of Judge Learned Hand in United States v. Dennis, 183 F.2d 201, 224 (2d Cir.1950), aff'd, 341 U.S. 494, 71 S.Ct. 857, 95 L.Ed. 1137 (1951), "Courts have countenanced the use of informers from time immemorial; in cases of conspiracy, or in other cases when the crime consists of preparing for another crime, it is usually necessary to rely upon them or upon other accomplices because the criminals will almost certainly proceed covertly...." The foregoing was cited with approval in Hoffa v. United States, 385 U.S. 293, 311, 87 S.Ct. 408, 418, 17 L.Ed.2d 374 (1966). We agree with the statement of appellant's counsel that the instant case involves no more than "the everyday, garden-variety consensual monitoring by an undercover agent of putative co-conspirators who assume the risk that the third party with whom they share their conversations might be a government investigator." We do not see how the grand jury's awareness of this otherwise legitimate undercover investigation infringed the grand jury's independence. See United States v. Pino, 708 F.2d 523, 530 (10th Cir.1983).
A Professor Neal Harl, under contract with the government, was called to testify before the grand jury as an "expert witness" on trust law. Professor Harl initially testified concerning general concepts of trust law. Then, at the request of the grand jury, certain promotional materials promulgated to the general public by the defendants, or some of them, were shown the witness and he testified concerning them. These same materials were before the grand jury. The district court held that Harl's use of this promotional matter in his testimony before the grand jury violated the secrecy requirement of Fed.R.Crim.P. 6(e), which prohibits disclosure of "matters occurring before the grand jury." Indeed, the district court observed that such conduct "glitters as a piece in the pattern of governmental misconduct that abrogated the grand jury's independence." We do not see the glitter.
In attempting to uphold the district court's ruling on the Professor Harl issue, the appellees rely on United States v. Tager, 638 F.2d 167 (10th Cir.1980). The facts in Tager are far different from the present facts. 1 The facts of the instant case are more akin to United States v. Lartey, 716 F.2d 955 (2d Cir.1983), where the Second Circuit held that the government's employment of a retired I.R.S. agent to review financial records of a defendant fell within the "governmental personnel" exception to the general rule of secrecy of matters occurring before the grand jury. That court also stated that the grand jury's independence was not affected by...
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