U.S. v. Beery, 79-1464

Decision Date14 May 1982
Docket NumberNo. 79-1464,79-1464
Citation678 F.2d 856
Parties11 Fed. R. Evid. Serv. 264 UNITED STATES of America, Plaintiff-Appellee, v. Jerome G. BEERY, Defendant-Appellant.
CourtU.S. Court of Appeals — Tenth Circuit

Jerome G. Beery, pro se.

Stephen K. Lester, Asst. U. S. Atty., Wichita, Kan. (James P. Buchele, U. S. Atty., Topeka, Kan., was also on the brief), for plaintiff-appellee.

Before HOLLOWAY, BARRETT and DOYLE, Circuit Judges.

HOLLOWAY, Circuit Judge.

Defendant-appellant Jerome G. Beery was charged with three counts of concealing assets from Dan E. Turner, the receiver and later the trustee in the bankruptcy proceeding in which Beery was adjudicated a bankrupt, in violation of 18 U.S.C. § 152 (1970). Beery was similarly charged with one count of withholding a document from the receiver/trustee in violation of 18 U.S.C. § 152. Beery was also charged with violating 18 U.S.C. § 1623, perjury before the grand jury. Beery was tried before a jury and convicted on the concealment and withholding counts and acquitted of perjury. He has brought this timely appeal.

The facts surrounding Beery's bankruptcy proceeding are briefly noted. 1 Beery originally filed a voluntary petition seeking relief under Chapter XI of the Bankruptcy Act on January 16, 1976. Dan Turner was appointed receiver on January 19. Upon Beery's failure to file the required statements and schedules and his voluntary motion to withdraw the Chapter XI proceeding, the proceeding was converted to one in straight bankruptcy and Beery was adjudicated a bankrupt on April 15, 1976. Dan Turner was appointed trustee at that time.

As noted, Beery was charged with and convicted of three counts of concealing assets and one count of withholding assets from Dan Turner, who served as receiver and later as trustee. On appeal Beery claims a number of errors. The arguments meriting discussion are treated below.

I

Beery argues that the district court erred in not granting his motion to dismiss the indictment based on his assertion that he was forced to testify in the bankruptcy proceeding over his Fifth Amendment objections. Beery points to the immunity granted by 11 U.S.C. § 25(a)(10) (1976), 2 which provides in pertinent part:

The bankrupt shall ... at the first meeting of his creditors, at the hearing upon objections, if any, to his discharge and at such other times as the court shall order, submit to an examination concerning the conducting of his business, the cause of his bankruptcy, his dealings with his creditors and other persons, the amount, kind and whereabouts of his property, and, in addition, all matters which may affect the administration and settlement of his estate or the granting of his discharge; but no testimony, or any evidence which is directly or indirectly derived from such testimony, given by him shall be offered in evidence against him in any criminal proceeding, except such testimony as may be given by him in the hearing upon objections to his discharge ... (Emphasis added).

Beery asserts that these immunity protections were violated in that witnesses against him in the grand jury proceeding and at the criminal trial had been his interrogators when he was compelled to testify in the bankruptcy proceedings; that his compelled testimony at a Rule 205 hearing in February 1976 and a hearing in September 1977 was detailed and covered areas in this criminal case; and that violation of his constitutional rights as protected by the immunity provisions of 11 U.S.C. § 25(a)(10) (1976) requires reversal, citing Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212, inter alia. (Brief of Appellant at 29-34; Reply Brief at 2-4).

A

We turn first to the argument that the indictment should have been dismissed because Beery's immunized testimony was used in the grand jury proceeding. At the outset we consider the question whether such a claim may serve as a basis for attacking the indictment.

An indictment valid on its face is not subject to challenge on the ground that the grand jury acted on inadequate or incompetent evidence, or even on information obtained in violation of a defendant's privilege against self-incrimination. United States v. Calandra, 414 U.S. 338, 345, 94 S.Ct. 613, 618, 38 L.Ed.2d 561; Lawn v. United States, 355 U.S. 339, 349-50, 78 S.Ct. 311, 317, 2 L.Ed.2d 321; United States v. Nunez, 668 F.2d 1116; 1125-26 (10th Cir.). The Supreme Court, however, has recognized that there may be a different result where what was transpiring before the grand jury would itself violate a constitutional or statutory privilege. See United States v. Calandra, 414 U.S. at 346, 94 S.Ct. at 619. Where such a violation is occurring in the grand jury proceeding itself, the violation of the constitutional right or privilege is a proper basis for dismissal of an indictment. United States v. Helstoski, 635 F.2d 200, 203-05 (3d Cir.).

Here the claim is that the prosecution violated Beery's statutory right not to have his compelled testimony used against him. Section 25(a)(10) mandates that a bankrupt's testimony given during certain hearings, and evidence derived therefrom, shall not be used against him in any criminal prosecution. A grand jury hearing is clearly a criminal proceeding under this statute. See In re North Am. Inv. Co., 559 F.2d 464, 466 (7th Cir.); United States v. Boyd, 404 F.Supp. 413, 416 (S.D.N.Y.), aff'd, 538 F.2d 314 (2d Cir.), cert. denied, 429 U.S. 918, 97 S.Ct. 309, 50 L.Ed.2d 283, 430 U.S. 909, 97 S.Ct. 1182, 51 L.Ed.2d 586; United States v. Lawson, 255 F.Supp. 261, 263 (D.Minn.); 1A Collier on Bankruptcy 1023 n.24 (14th ed.); and cases cited in Annot. 22 A.L.R.Fed. 643, 662-63. Thus, as the introduction of immunized testimony or of evidence derived by its use occurs before the grand jury, there would be a direct violation of the bar in § 25(a)(10) against such use or derivative use of evidence by the Government, infringing defendant's immunity. Under such circumstances the indictment must be dismissed. See In re North Am. Inv. Co., 559 F.2d 464, 466 (7th Cir.); cf., United States v. Helstoski, 635 F.2d 200, 205-06 (3d Cir.) (dismissal of indictment held the proper remedy where testimony was presented to grand jury in violation of the Speech or Debate Clause); United States v. Nemes, 555 F.2d 51, 55-56 (2d Cir.) (dismissal of indictment held proper remedy where evidence derived from testimony given under state grant of immunity was introduced to grand jury, but the court refused to decide whether dismissal was invariably required); United States v. McDaniel, 482 F.2d 305, 311-12 (8th Cir.) (remedy held proper where prosecutor had read defendant's state grand jury testimony given under immunity).

In sum, we conclude that if defendant's immunity granted by 11 U.S.C. § 25(a) (10) was violated by any use or derivative use before the grand jury of testimony which defendant was compelled to give at bankruptcy proceedings covered by § 25(a)(10), the indictment must be dismissed, unless the error is held harmless, beyond a reasonable doubt. 3

B

As noted above, defendant Beery argues that his immunity was violated by witnesses testifying, at the grand jury proceeding and at trial, that they were persons who had interrogated him in the bankruptcy proceedings when he was compelled to testify, that his compelled testimony was detailed and covered areas in this criminal case, and that his rights granted by the immunity statute, 11 U.S.C. § 25(a)(10), were violated, citing Kastigar, inter alia. (Brief of Appellant at 29-34; Reply Brief at 2-4). The Government says that Beery made no argument in the trial court complaining of violation of his use immunity rights; that he relied only on a claim of transactional immunity, which lacks merit. (Brief of Appellee at 18-19).

We conclude that the claim was presented sufficiently in the trial court so that we must consider the merits of the use and derivative use issue. It will be helpful to outline in some detail the defendant's contentions and the development of the issue in the trial court.

Defendant Beery asserts on appeal that some of his bankruptcy testimony was repeated by the trustee, Dan Turner, to the grand jury and refers to three portions of Turner's testimony. First, Beery points to the following statement before the grand jury by the trustee (IV R. 7-8):

... (W)hen the arrangement prepared by Beery was presented to the Court ... he was supposed to provide the Court with an itemized list of all his debts and his assets and he refused. His attorney prepared it and he refused to sign that document and verify that this was a complete list of all his assets and liabilities ...

Second, Beery complains about the following grand jury testimony of the trustee, Mr. Turner (IV R. 9):

Q (W)hen you serve in each position (as receiver or trustee), you take the assets-they must be turned over?

A The bankrupt must be candid with you and turn over all his assets.

Q In this case, was Mr. Beery candid with you?

A No, he never has been, never.

Beery further points to that part of the trustee's grand jury testimony where Turner was asked to explain what he knew about some of the money Beery had allegedly concealed. Turner responded (IV R. 12):

We don't know what became of that money, whether he gambled it away, whether he took it or what, but that money has been lost or we have no idea what he did with it. I know we have questioned him on several occasions about it. His first response was, "You show me what I've did with it or where we took it and then I'll tell you if you're right," and then after we traced it out and we showed him that he had the money, he took the Fifth Amendment and he wouldn't testify to it in Court, so we've never been able to make a determination what he did with it. (Emphasis added).

It is true, of course, that the statute confers use and derivative use immunity only. Moreover the clear holding in Kastigar v. United States, supra, 406 U.S. at...

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