U.S. v. Deffenbaugh Industries, Inc., s. 91-3187

• Decision Date: 18 February 1992
• Docket Number: 91-3199,91-3200,Nos. 91-3187,s. 91-3187
• Parties: , 1992-1 Trade Cases P 69,736 UNITED STATES of America, Plaintiff-Appellant, v. DEFFENBAUGH INDUSTRIES, INC., doing business as Deffenbaugh Disposal Services, Inc.; Ronald D. Deffenbaugh; Joseph E. Wehmeyer, Defendants-Appellees. UNITED STATES of America, Plaintiff-Appellee, v. DEFFENBAUGH INDUSTRIES, INC., doing business as Deffenbaugh Disposal Services, Inc., Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Ronald D. DEFFENBAUGH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 749

957 F.2d 749

60 USLW 2560, 1992-1 Trade Cases P 69,736

UNITED STATES of America, Plaintiff-Appellant, v. DEFFENBAUGH INDUSTRIES, INC., doing business as Deffenbaugh

Disposal Services, Inc.; Ronald D. Deffenbaugh;

Joseph E. Wehmeyer, Defendants-Appellees.

UNITED STATES of America, Plaintiff-Appellee, v. DEFFENBAUGH INDUSTRIES, INC., doing business as Deffenbaugh

Disposal Services, Inc., Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Ronald D. DEFFENBAUGH, Defendant-Appellant.

Nos. 91-3187, 91-3199, 91-3200.

United States Court of Appeals Tenth Circuit.

Feb. 18, 1992.

Rehearing Denied March 20, 1992.

James W. Lowe, Attorney (James F. Rill, Asst. Atty. Gen., Charles A. James, Deputy Asst. Atty. Gen., John J. Powers, III, and David Seidman, Attorneys, Of Counsel, David A. Blotner, Dwight Dickinson, and David J. Lang, Attorneys, with him on the briefs), Dept. of Justice, Washington, D.C., for U.S.

Gordon Ankney of Thompson & Mitchell, St. Louis, Mo. (Richard D. Rhyne of Craft, Fridkin & Rhyne, Kansas City, Mo., with him on the briefs, for Deffenbaugh Industries, Inc. and Richard J. Braun of Richard J. Braun & Associates, Nashville, Tenn., for Ronald D. Deffenbaugh, also with him on the briefs).

Before HOLLOWAY, LOGAN and BALDOCK, Circuit Judges.

LOGAN, Circuit Judge.

In No. 91-3187 the United States filed an interlocutory appeal, permitted by 18 U.S.C. § 3731, of the district court's order dismissing Count 10 of the indictment against defendants Deffenbaugh Industries, Inc., and Ronald D. Deffenbaugh. That count charged defendants with willfully and knowingly making and submitting to the Department of Justice "false, fictitious and fraudulent statements and representations about material facts in a matter within the jurisdiction of the Department of Justice" in violation of 18 U.S.C. § 1001. In cross-appeal Nos. 91-3199 and 91-3200 defendants filed an interlocutory appeal of the district court's denial of various motions. In the cross-appeals, however, the only issue briefed was the denial of a motion seeking access to the record of the number of persons concurring in the finding of the indictment, and at oral argument counsel conceded that was the only issue being pursued in the cross-appeals.

I No. 91-3187

We must consider the United States' appeal, although it is interlocutory, because it is explicitly permitted by 18 U.S.C. § 3731. See United States v. Wilson, 420 U.S. 332, 95 S.Ct. 1013, 43 L.Ed.2d 232 (1975) (upholding constitutionality of the statute). The issue presented in the United States' appeal--whether the defendants' alleged conduct is prosecutable under 18 U.S.C. § 1001--is a question of law, subject to de novo review by this court. United States v. Lawson, 809 F.2d 1514, 1517 (11th Cir.1987); see also Allis-Chalmers Credit Corp. v. Tri-State Equipment, Inc. (In re Tri-State Equip., Inc.), 792 F.2d 967, 970 (10th Cir.1986) (questions of law are subject to de novo review).

In Count 10 of the indictment, the United States contended that defendants violated the false statements statute, 18 U.S.C. § 1001, when they submitted a false affidavit of compliance in response to a grand jury subpoena duces tecum issued by a federal grand jury. ¹ The subpoena required defendant Deffenbaugh Industries to produce all documents reflecting payments to its creditors. The subpoena is not part of the record, but the government represents that the subpoena ordered the documents to be delivered directly to the grand jury itself. Reply Brief for Appellant at 1 n. 1. It was not the subpoena, but a letter from a government lawyer, which gave Deffenbaugh Industries the option of submitting the documents to the Antitrust Division of the Department of Justice in Washington, D.C., rather than to the grand jury. ²

Defendants chose to submit the documents to the Department of Justice and were required by the Department, in accordance with its usual procedure, to sign a form affidavit prepared by the Department stating that "[t]o the best of my knowledge, information and belief" the documents sent "constitute all the documents in the possession, custody or control of the Company that fall within the terms of the subpoena and compliance with the subpoena has been fully and completely complied with." Affidavit of Compliance, Motion to Supplement Record on Appeal, filed June 3, 1991, app. A. The government alleged that defendants intentionally withheld production of certain documents, and, therefore, the affidavit of compliance constituted a false statement under 18 U.S.C. § 1001.

Defendants made various arguments concerning their compliance. The only argument we address, and which we find controlling, is that the affidavit under the circumstances here is not within the ambit of 18 U.S.C. § 1001. That section says specifically that to constitute a false statement it must be "in any matter within the jurisdiction of any department or agency of the United States." Defendants assert that the affidavit is not on a matter within the jurisdiction of the Department of Justice but was one within the jurisdiction of the grand jury itself. The government contends that because its role is to aid and abet the activities of the grand jury, it has the power to require the affidavit and to punish under 18 U.S.C. § 1001 any falsity.

This is an issue of first impression in an appellate court so far as we can ascertain. We have found one district court case in which a witness was indicted under § 1001 for allegedly false answers to questions propounded to him by a grand jury. United States v. Allen, 193 F.Supp. 954 (S.D.Cal.1961). The court there held the indictment improper "because the federal Grand Jury is not an 'agency of the United States' within the meaning of § 1001, and because this statute was not intended to cover the situation in which defendant is accused of having made a false and fraudulent reply when interrogated by the Grand Jury." Id. at 959. The United States Attorneys' Manual, § 9-69.267 indicates that "[p]rosecutions should not be brought under 18 U.S.C. § 1001 for false statements submitted in federal court proceedings," but rather such prosecutions should be under 18 U.S.C. §§ 1503 and 1621. Federal grand juries, of course, are called by and impaneled before federal district courts, 18 U.S.C. §§ 3321, 3331; their proceedings are governed by the Federal Rules of Criminal Procedure, applicable to proceedings in federal courts. See Fed.R.Crim.P. 1, 6, 16(a). See In re Grand Jury Empanelled, 597 F.2d 851, 856-57 (3d Cir.1979) (grand jury investigation is a 'criminal proceeding' for purposes of the federal rules); Bacon v. United States, 449 F.2d 933, 939-41 (9th Cir.1971) (same).

"The Constitution itself makes the grand jury a part of the judicial process." Cobbledick v. United States, 309 U.S. 323, 327, 60 S.Ct. 540, 542, 84 L.Ed. 783 (1940). Most circuits have recognized a "judicial function" exception to the application of § 1001, based on finding that a court is not a "department or agency," and that "section 1001 should not be extended 'to its literal breadth,' and should not be permitted to swallow up perjury." United States v. Mayer, 775 F.2d 1387, 1390 (9th Cir.1985) (quoting United States v. Bedore, 455 F.2d 1109, 1110 (9th Cir.1972)); see also United States v. Masterpol, 940 F.2d 760, 766 (2d Cir.1991); United States v. Holmes, 840 F.2d 246, 248-49 (4th Cir.), cert. denied, 488 U.S. 831, 109 S.Ct. 87, 102 L.Ed.2d 63 (1988); United States v. Lawson, 809 F.2d 1514, 1519 (11th Cir.1987); United States v. Abrahams, 604 F.2d 386, 393 (5th Cir.1979); United States v. Erhardt, 381 F.2d 173, 175 (6th Cir.1967) (holding § 1001 does not apply to the introduction of false documents as evidence in a criminal proceeding). The Supreme Court has acknowledged this line of authority, but expressed "no opinion on the validity of this line of cases." United States v. Rodgers, 466 U.S. 475, 483 n. 4, 104 S.Ct. 1942, 1948 n. 4, 80 L.Ed.2d 492 (1984). We are satisfied grand jury investigations are criminal proceedings that are a part of the judicial process. Particularly given the government's concession that false statements made to the grand jury are not prosecutable under § 1001, see Reply Brief for Appellant at 7 n. 5, we have no problem holding § 1001 inapplicable to the case before us unless Rodgers or some other authority compels a different conclusion.

In Rodgers the Supreme Court has found jurisdiction under § 1001 when there is either a statutory basis for an agency or department's request for information, 466 U.S. at 481, 104 S.Ct. at 1947, or when the agency or department "has the power to exercise authority in a particular situation." Id. at 479, 104 S.Ct. at 1946. In this case, the Department of Justice does not have a statutory basis to require or request the information sought by the subpoena or the affidavit, nor does it have a statutory basis to require an affidavit upon receipt of the discovery. See 1 Sarah S. Beale & William C. Bryson, Grand Jury Law and Practice § 6:10, at 6-60 (1986) (hereafter Beale & Bryson ) ("the federal prosecutor has no independent subpoena power.... subpoenas for witnesses or physical evidence are issued under the authority of the court in the name of the grand jury"). The grand jury's subpoenas are issued pursuant to Fed.R.Crim.P. 17, which contemplates a response directly to the grand jury, as the subpoena here apparently stated directly. The alternative of allowing the response to be sent to the prosecutors directly is apparently a practice that has developed as an administrative convenience. It is not discouraged by the grand juries themselves nor condemned by courts because of the special role of the prosecutor to assist the grand jury by organizing and evaluating evidence and giving it legal advice. See Beale & Bryson § 6:02, at 6-4; United States v. Ciambrone, 601 F.2d 616, 622-23 (2d Cir.1979).

"Because no judicial officer is present to...