Grand Jury Proceedings, In re, s. 87-1026

• Decision Date: 09 January 1989
• Docket Number: Nos. 87-1026,87-1270,s. 87-1026
• Citation: 871 F.2d 156
• Parties: In re GRAND JURY PROCEEDINGS. Appeal of CAUCUS DISTRIBUTORS, INC., et al.
• Court: U.S. Court of Appeals — First Circuit

Page 156

871 F.2d 156

57 USLW 2610

In re GRAND JURY PROCEEDINGS Appeal of CAUCUS DISTRIBUTORS, INC., et al.

Nos. 87-1026, 87-1270.

United States Court of Appeals First Circuit.

Jan. 9, 1989.

Decided March 29, 1989.

Rehearing Denied May 30, 1989.

Michael R. Smith with whom Roger E. Zuckerman, Zuckerman, Spaeder, Goldstein, Taylor & Kolker, Washington, D.C., Michael L. Altman, and Silverglate, Gertner, Fine & Good, Boston, Mass., were on briefs, for appellants National Democratic Policy Committee, Campaigner Publications and Fusion Energy Foundation.

Barbara A.H. Smith, Boston, Mass., with whom Davis, Robinson & Smith was on brief, for appellant Caucus Distributors, Inc.

Patty Merkamp Stemler, Dept. of Justice, Washington, D.C., with whom Frank L. McNamara, Jr., U.S. Atty., and Peter E. Gelhaar, Asst. U.S. Atty., Boston, Mass., were on brief, for the U.S.

Before CAMPBELL, Chief Judge, ALDRICH and COFFIN, Circuit Judges.

COFFIN, Circuit Judge.

These are consolidated appeals by four organizations associated with Lyndon LaRouche--Caucus Distributors, Inc. (Caucus), Campaigner Publications, Inc. (Campaigner), Fusion Energy Foundation, Inc. (Fusion), and National Democratic Policy Committee (NDPC)--from partial civil contempt judgments assessed against Caucus in the amount of $6,055,000 and against each of the other three contemnors in the amount of $5,110,000.

Our earlier decision

Since this is a continuation of the proceedings previously considered by us in In re Grand Jury Proceedings, 795 F.2d 226 (1st Cir.1986), we repeat our description of the underlying litigation:

The contempt judgments were imposed by the United States District Court for the District of Massachusetts due to the failure of the appellants to cooperate with a grand jury investigation into possible credit card fraud by these and other LaRouche related entities. These organizations are suspected of obtaining hundreds of thousands of dollars in interest-free loans from credit card banks. The loans were allegedly obtained by fraudulently altering small credit card purchases or donations from persons interested in Lyndon LaRouche to reflect a charge for a large sum. The sums thus obtained were ultimately returned to the credit card bank sans accrued interest after the owner of the credit card informed the bank that the charge was not authorized.

Id. at 227-28.

Moreover, since a number of issues sought to be raised here are precluded by the arguments and holdings in that case, we summarize briefly what we then decided. An appeal from an initial contempt judgment (March 29, 1985) assessing the four contemnors a civil fine of $10,000 a day was dismissed as untimely; this ruling precluded appellants from pursuing their "sole argument," 795 F.2d at 229, against a liquidated partial judgment (April 22, 1985) of $70,000 covering their noncompliance from April 2, 1985 through April 8, 1985. We said, "Since appellants do not contest the actual contempt finding, their appeal of the April 22 judgment fails." Id. at 230. A second appeal, this one solely by Caucus, challenged a second liquidated partial judgment (November 22, 1985) of $150,000, covering noncompliance from April 9, 1985 to April 25, 1985. The two grounds asserted--defective service of process and the pendency of appeals from the judgments of March 29 and April 22--fell with our holding the appeal of the March 29 judgment untimely. The pendency of the appeal from the April 22 judgment, covering a different period of time, could not interfere with the second partial judgment.

The third appeal, also by Caucus alone, challenged a contempt judgment (January 22, 1986) fining it an additional $5,000 a day for failing to turn over index cards relating to fundraising activities. We described the controversy as follows:

Grand jury testimony by the keeper of records had revealed that fund raisers working at Caucus offices around the country kept the names of potential and actual donors on index cards, along with various other information including amounts donated. This information was of particular interest to the grand jury in its investigation into the possible involvement of Caucus in the credit card overcharge scheme. The keeper of the records, however, did not turn these index cards over to the grand jury. He claimed that he could not turn the cards over because Caucus was not in possession of the cards. The cards were in the hands of the individual fund raisers, who allegedly considered themselves and were considered by Caucus to be independent consultants rather than employees of Caucus. The fund raisers claimed the cards as their personal property and asserted that both their first and fifth amendment rights could be infringed if they were compelled to turn them over. Caucus fully concurred in and supported the claims of the individual fund raisers.

795 F.2d at 232. The issue on appeal was whether there should have been an evidentiary hearing to allow Caucus opportunity to show that the index cards were personal documents. We held that, under the circumstances, where testimony from fundraisers would have merely repeated the assertions made in detailed affidavits and would likely have resulted only in further delay, the court did not violate due process in deciding the question "whether the cards were sufficiently involved in Caucus' business of fund raising so that they could be considered corporate documents regardless of their prior uses or ownership." Id. at 235.

Events subsequent to our earlier decision

Our decision was issued on July 3, 1986. Nothing had happened in the meantime, since the January 22, 1986 contempt judgment against Caucus, except an event unremarked by anyone at the time--the expiration of the grand jury some time in January, 1986. The investigation apparently remained in limbo until June, 1986, when another grand jury was empaneled and resumed work on these matters.

Six days after our opinion issued, the government, on July 9, 1986, wrote both Campaigner and Caucus, referring to our decision and asking them to "produce a legitimate Keeper of the Records with actual knowledge of the records." There was no action forthcoming. On September 1, 1986 the government filed a motion for partial judgment seeking $6,055,000 from Caucus and $5,110,000 from each of the other contemnors, these amounts covering noncompliance through September 1, 1986. All appellants opposed the motion, claiming that they had complied with all they had been ordered to do.

On October 6, 1986 federal agents searched offices in Leesburg, Virginia, and in Quincy, Massachusetts. Subsequently, pursuant to its expressed intent to supply proof of noncompliance, on November 12, 1986 the government filed an affidavit by FBI Special Agent Martha Wilkes memorializing her personal undercover visits to the Quincy office of Caucus prior to the search and her review of index cards seized at Leesburg. The salient facts averred were:

--at Quincy she saw thousands of index cards, naming potential contributors;

--a Caucus employee told her the cards were used for fundraising and that "the organization" was "inputting" the index card information into a computer linked with another in Leesburg;

--on October 6, FBI and Secret Service agents searched "the contemnors' offices" in Quincy and Leesburg and seized thousands of index cards;

--her examination of many cards from Quincy showed notations, usually by more than one person, indicating their existence prior to February 1, 1985, the date of the subpoena being February 6;

--her review of a sample of cards from Leesburg showed notations to similar effect;

--the claim of Caucus, in its opposition paper, that individuals controlled the custody of the index cards and refused to turn them over was false because "the contemnor organizations had custody of literally thousands of index cards."

To this affidavit were attached seven of the cards seized at Quincy. The notations were difficult to decipher but two contained clear references to NDPC and two, possibly three, had references to Fusion.

Appellants moved for a stay, alleging the likelihood of prejudice because of then pending criminal proceedings. The court denied the stay on December 12, 1986, but gave contemnors twenty days in which to respond to the Wilkes affidavit. On the twentieth day, January 1, 1987, contemnors asked for an extension until January 9 to prepare their responses. But instead of responding, on January 9 Caucus and Campaigner noticed an appeal from the denial of stay. On January 19 Fusion and NDPC, in a supplementary memorandum, merely argued that they had produced a mass of documents and that "no one had ever contended" that the index cards had belonged to them. On February 26, 1987 the court, after concluding that nothing had been submitted to contradict facts set forth in the Wilkes affidavit, entered its contempt judgments.

Analysis

A number of issues may be considered together. They encompass challenges to the procedure, impact and amount of the fines, the coverage of the initial contempt judgment, and the adequacy of the Wilkes affidavit. What these issues have in common is that they are affected, indeed profoundly controlled, by the history of these cases. A final issue is unrelated to anything that has been decided in the past: does an order for daily coercive fines for failure to produce documents have validity beyond the existence of the grand jury before which the documents were ordered to be produced?

Appellants advance the following arguments attacking the fines assessed by the district court: that the fines of five and six-plus million dollars are excessive; that no particularized decisionmaking has taken place, e.g., that there was no specific focus on the government's loss, no weighing of the degree of noncompliance or of the financial impact on the contemnors; that no periodic review has been undertaken of the appropriateness of the fines; and that there was no...