U.S. v. Grubbs

• Decision Date: 22 November 1985
• Docket Number: No. 84-2324,84-2324
• Citation: U.S. v. Grubbs, 776 F.2d 1281 (5th Cir. 1985)
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Harold GRUBBS and Sherman Fricks, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1281

776 F.2d 1281

UNITED STATES of America, Plaintiff-Appellee, v. Harold GRUBBS and Sherman Fricks, Defendants-Appellants.

No. 84-2324.

United States Court of Appeals Fifth Circuit.

Nov. 22, 1985.

Fred Bennett, Dallas, Tex., for Grubbs.

C. Anthony Friloux, Andrew T. McKinney, III, Houston, Tex., for Fricks.

Daniel K. Hedges, U.S. Atty., James R. Gough, Asst. U.S. Atty., Houston, Tex., Mervyn Hamburg, Atty., Appellate Section, Crim. Div., U.S. Dept. of Justice, Washington, D.C., for plaintiff-appellee.

Appeals from the United States District Court for the Southern District of Texas.

Before GARZA, JOHNSON and WILLIAMS, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

Sherman Fricks and Harold Grubbs appeal their convictions of conspiracy to receive and solicit money with intent to influence actions and decisions relating to a labor union employee benefit plan, 18 U.S.C. Sec. 361, and the related substantive count, 18 U.S.C. Sec. 1954. Fricks and Grubbs assert several errors. Fricks contends the evidence is insufficient to sustain his convictions, and his indictment was fatally defective. Grubbs argues the trial court erred in dismissing a juror. Both defendants claim that their entrapment defense was established as a matter of law and that the government improperly used a suppressed conversation in various ways. We affirm the judgment of the district court.

I. FACTS

Fricks and Grubbs were implicated by Operation Bri-lab. ¹ The purpose of this undercover operation was to bring to justice labor union officials and public officials who were willing to accept bribes in exchange for using their influence to deliver insurance business. Grubbs was Director of Education for the Apprentice Committee associated with Local 211 of the Pipefitters Union in Houston, Texas. He was a close associate of Fricks who was the business manager for Local 211 and one of the eight trustees of the Local's health and welfare fund.

Local 211 was searching for a health and welfare insurance plan for its members. Joseph Hauser, a convicted felon, was the government agent who first contacted the defendants. ² He purported to represent Prudential Insurance Company. Hauser met with Grubbs and Fricks on July 9 1979, to discuss awarding Prudential the health and welfare insurance contract. The conversation was recorded by a tape recorder concealed in Hauser's attache case.

Hauser first met with Grubbs alone. Grubbs told Hauser Prudential's proposition would have to appear legitimate, but he assured Hauser that Prudential's prospects were good. Grubbs said that Fricks "ran the health and welfare fund trustees" who awarded the contract but that Fricks would "go along" with Grubbs's recommendations. Hauser offered Grubbs a retainer of $2,000. Grubbs refused, stating he did not want money until Prudential secured the contract. Grubbs, however, did agree to accept a fifty percent share of all commissions Hauser would earn as Prudential's broker if the Local awarded the health and welfare insurance contract to Hauser. Grubbs thought this commission was "one of the best he had heard of." To clarify his pay-off, Grubbs asked, "What's the bottom line for me?" Hauser answered he could expect a minimum of $50,000 annually or $4,000 monthly in cash. Grubbs cautioned Hauser to not mention this money to Fricks, adding that he would handle everything. He explained that Fricks was "covered by law," whereas he was not.

Hauser then again offered Grubbs $2,000. Grubbs expressed reluctance to accept money for services that had not been rendered, but he accepted the money. Hauser then gave Grubbs two envelopes. He told Grubbs to keep the envelope containing $2,000 and to give the envelope containing $1,000 to Fricks. Hauser excused himself and went to the men's room, leaving behind the concealed recorder, still running. Fricks arrived and his conversation with Grubbs was taped.

Upon Hauser's return, the three went to lunch. When they returned to Grubbs's office, Hauser saw Grubbs give Fricks one of the two envelopes he had previously given Grubbs. Before Fricks left the meeting, he told Hauser that he would find out the other insurance company's bids and would disclose them to Hauser.

As promised, in early August Fricks called Hauser to discuss submitted bids. Prudential's bid was the second lowest. During a dinner with Hauser and other undercover F.B.I. agents on August 13, 1979, Grubbs was less optimistic about Prudential obtaining the contract. Jerry Lancaster, head of the union's consulting firm, was lobbying strenuously for Washington National, the firm with the lowest bid. Grubbs thought Lancaster had "cut a deal" with Washington National and bitterly noted that "he's offered us nothing." Again the following day, Grubbs was worried that Washington National would win the contract. Grubbs told Hauser that Prudential was a latecomer, and Lancaster "had already set this deal up for [Fricks]." Grubbs lamented that Fricks would "wind up with peanuts" if Washington National got the contract.

On August 30, 1979, Fricks met with Grubbs and Hauser. Fricks stated that he had decided to support Prudential, but the bid had to look "kosher." He proposed Prudential expand its coverage to make its higher bid look like the best offer. He added Washington National had offered him one-third of one-percent of the commissions. He said he had done research, and this would only yield a thousand dollars a month maximum. He asked Hauser how much Lancaster would make, and he was dismayed to learn that Lancaster would earn $100,000 over three years. Fricks was miffed that Lancaster had not told him about this deal with Washington National. Fricks noted he would be meeting Lancaster later that day, but he would not "tip his hand" to Lancaster. In fact, Fricks stated, the trustees' decision to award the contract to Prudential would come as a complete surprise to Lancaster; Fricks expected a trustee representing management to make the motion to approve Prudential.

On September 9, Hauser gave Grubbs two envelopes each containing $1,000 and told him to give one of the envelopes to Fricks. Later that evening, another government agent, Wacks, asked Fricks if he had received his envelope. Fricks replied that he had and that he appreciated it. On September 26, 1979, the trustees of health and welfare fund awarded the insurance contract to Prudential. Hauser presented Grubbs and Fricks with their first monthly pay-off of $2,000 each on October 17, 1979. He complimented them on their efforts to secure the contract for Prudential despite the pressure to award the contract to Washington National. Fricks and Grubbs agreed that it had not been easy, but they had succeeded.

Grubbs and Fricks were summoned to testify about their involvement in operation Bri-lab before a federal grand jury in February of 1980. The grand jury indicted the two on May 26, 1981, and they were arrested the next day. The defendants' jury trial began November 1, 1983 and lasted over five months. The jury found both defendants guilty as charged. The defendants appeal.

II. ENTRAPMENT

Both defendants claim that their defense of entrapment was established as a matter of law. Defendants argue that they carried their burden by presenting evidence of entrapment, and the government then presented no evidence of predisposition. We must determine if the evidence in the defendants' favor is "so overwhelming that it [is] patently clear or obvious that [they were] entrapped as a matter of law." United States v. Lentz, 624 F.2d 1280, 1287 (5th Cir.1980), cert. denied, 450 U.S. 995, 101 S.Ct. 1696, 68 L.Ed.2d 194 (1981); quoting from United States v. Bower, 575 F.2d 499, 504 (5th Cir.), cert. denied, 439 U.S. 983, 99 S.Ct. 572, 58 L.Ed.2d 654 (1978).

After a full review of the record, we conclude that the government presented sufficient evidence of predisposition to send that issue to the jury. It is well established that entrapment is a jury question. United States v. Lentz, 624 F.2d at 1286. Predisposition may be proved by evidence of the defendants' "conduct and statements subsequent to initial contact with the government agent, as well as proof of state of mind before the contact was made." United States v. Garrett, 716 F.2d 257, 274 (5th Cir.1983), cert. denied, --- U.S. ---, 104 S.Ct. 1910 (1984), citing United States v. Dickens, 524 F.2d 441, 445 (5th Cir.1975), cert. denied, 425 U.S. 994, 96 S.Ct. 2208, 48 L.Ed.2d 819 (1976). Both Grubbs and Fricks expressed readiness to steer the insurance contract to Prudential, cautioning Hauser that Prudential's bid had to appear legitimate. Grubbs assured Hauser he could deliver the contract to Prudential because Fricks "ran the trustees" and Fricks would "go along" with Grubbs recommendations. Grubbs asked Hauser "what is the bottom line for me?," and Hauser told him he would split the commission fifty/fifty and Grubbs could expect $50,000 cash. Grubbs warned Hauser not to contact Fricks because he was "covered by law;" he would take care of Fricks.

A source of discontent for Grubbs and Fricks was the deal Jerry Lancaster, head of the union's consulting firm, apparently had made with Washington National, one of Prudential's competitors. Grubbs and Fricks were disgruntled because Lancaster would receive a lion's share of the profits, $100,000 over a three-year period. Grubbs complained that Lancaster had "offered us nothing." Fricks complained because Washington National had offered him one-third of one percent commission, and his research indicated that this would only amount to a paultry $1,000 a month maximum.

Grubbs makes much of the fact that he was initially reluctant to accept payment. This alone does not mandate a directed verdict, particularly in light of the fact that Grubbs did not refuse because those payments were illegal, but because the deal might not be successful.

It is apparent, therefore, that there is some evidence that Fricks and Grubbs...