778 F.2d 602 (10th Cir. 1985), 83-2519, United States v. Anderson

Docket Nº:83-2519, 83-2522 and 83-2664 to 83-2670.
Citation:778 F.2d 602
Party Name: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.
Case Date:December 06, 1985
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 602

778 F.2d 602 (10th Cir. 1985)

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.

Nos. 83-2519, 83-2522 and 83-2664 to 83-2670.

United States Court of Appeals, Tenth Circuit

December 6, 1985

Page 603

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.

McWILLIAMS, Circuit Judge.

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

Page 604

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...

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