U.S. v. Hyde, CR02-0016 PJH.

• Decision Date: 17 June 2002
• Docket Number: No. CR02-0016 PJH.,CR02-0016 PJH.
• Citation: 208 F.Supp.2d 1052
• Parties: UNITED STATES of America, Plaintiff, v. John HYDE, Defendant.
• Court: U.S. District Court — Northern District of California

208 F.Supp.2d 1052

UNITED STATES of America, Plaintiff, v. John HYDE, Defendant.

No. CR02-0016 PJH.

United States District Court, N.D. California.

June 17, 2002.

Matthew Jacobs, Asst. U.S. Atty., San Francisco, CA, for U.S Rebecca Silbert, Deputy Federal Public Defender, San Francisco, CA, for defendant.

ORDER RE DEFENDANT'S MOTION TO KEEP FINANCIAL AFFIDAVIT UNDER SEAL

CHEN, United States Magistrate Judge.

On January 22, 2002, the federal grand jury returned a 64-count indictment against John B. Hyde for, inter alia, mail fraud, health care fraud and money laundering violations, and seeking forfeiture of over $1.2 million of monies traceable to money laundering.

On February 5, 2002, defendant Hyde requested the Court appoint counsel to represent him, and submitted a financial affidavit in support of is request. At defendant Hyde's request, the Court provisionally placed the financial affidavit under seal and continued the matter to review the affidavit. On February 8, 2002, the Court questioned defendant Hyde ex parte and under seal about the affidavit and his finances. Prior to the ex parte examination, the Government suggested areas of inquiry since the Government was in possession of deposition testimony and documents obtained in the context of prior proceedings before the Securities Exchange Commission (SEC) involving defendant Hyde, and had some knowledge of his finances. Satisfied with the information provided by defendant Hyde, on February 13, 2002, the Court appointed the Federal Public Defender to represent him.

On February 25, 2002, defendant Hyde filed this motion to keep the financial affidavit under seal to which the Government opposed. Subsequent to hearing the motion, on March 27, 2002, the parties submitted supplemental briefs and evidentiary material. Based in part upon the supplemental brief and evidence filed by the Government raising numerous factual issues, the Court conducted a further ex parte examination of defendant Hyde under oath and under seal, on April 24, 2002. The Court also ordered defendant Hyde to produce numerous documents upon which he was examined. On April 30, 2002, the Court, inter alia, ordered that defendant Hyde contribute $500 per month towards the cost of defense, subject to re-evaluation and re-assessment should new information come to light or circumstances change.

ANALYSIS

Defendant Hyde contends that the Court should keep his financial affidavit under seal in order to preserve his Fifth Amendment rights against self-incrimination. He contends that his financial affidavit contains financial information which the Government may use, or which could lead to evidence, against him in the underlying case. On the other hand, the Government argues that defendant Hyde's financial affidavit should not be sealed, because of the public interest in open proceedings, sealing is premature and obstructs the truth-seeking function of the court, and because the Fifth Amendment is not implicated in case at bar.

To the extent the Government's opposition to sealing is predicated on an asserted interest in vindicating the public's right of access to documents filed with the court under Seattle Times Co. v. U.S. District Court, 845 F.2d 1513 (9th Cir.1988), the Ninth Circuit has held that the Government does not have third party standing to assert said right. United States v. Hickey, 185 F.3d 1064, 1066 (9th Cir.1999) ("Hickey II"). Unlike Seattle Times, supra, no party representing the public interest such as a newspaper organization is before the Court. Accordingly, the court's discussion in Seattle Times of the First Amendment scrutiny of closed judicial proceedings is inapposite here.

The Government also asserts an interest in protecting the truth seeking function of the court, noting that ex parte examination without the benefit of the full adversarial process of cross-examination compromises the ability of the court to ascertain the truth and permits a defendant to commit perjury with virtual impunity. See United States v. Harris, 707 F.2d 653, 662 (2nd Cir.), cert. denied, 464 U.S. 997, 104 S.Ct. 495, 78 L.Ed.2d 688 (1983). While the court recognizes the benefit of the full adversarial process, it notes that courts retain the authority (and so exercised that authority here) to conduct an ex parte examination of defendant Hyde.¹ The effectiveness of that examination can be enhanced where, as here, specific areas of inquiry are suggested by the Government based on a previous examination and investigation of defendant Hyde in SEC proceedings. More importantly, as the Ninth Circuit pointed out in Hickey II, supra, once a defendant has testified or concluded his testimony, the Government will have a stronger argument for unsealing the affidavit since at that point the Fifth Amendment concern will be greatly diminished. Hickey II, 185 F.3d at 1067. The Government thus maintains the right to investigate possible perjury in the affidavit after trial, see id., and ultimately the truth seeking function will not be compromised.

Moreover, the interest in protecting the public fisc is protected inasmuch as appointment of counsel can be conditioned on a defendant's obligation to repay defense costs should it be later determined he or she is in fact able to pay. Irretrievable loss would occur only if after finding out a defendant's true finances the court is unable to recover defense costs because defendant's assets have dissipated in the interim. Whether the Government has standing to assert this interest is unclear. The Government has cited no case establishing such standing.

Nonetheless, nothing precludes the Court in this context from taking steps sua sponte to protect the First Amendment interest of the public and/or the Court's interest in protecting its truth seeking function and public fisc for appointment of counsel over which it maintains some responsibility. Irrespective of the Government's possible lack of standing, the Court finds it appropriate to scrutinize defendant Hyde's Fifth Amendment claim to ensure it warrants sealing. Cf. Northern District of California Civil Local Rule 79-5 (only information requiring confidentiality should be sealed).

"The Fifth Amendment privilege against self-incrimination protects the accused from being incriminated by his or her own compelled testimonial communications." United States v. Hickey, 997 F.Supp. 1206, 1207 (N.D.Cal.1998) ("Hickey I"), dismissed and aff'd. on other grounds, Hickey II, 185 F.3d at 1064; see Seattle Times, 845 F.2d at 1518. The parties agree that to claim the Fifth Amendment privilege against self-incrimination, the accused must be confronted by substantial hazards of self-incrimination that are "real and appreciable" and not merely "imaginary and unsubstantial." Seattle Times, 845 F.2d at 1518; see also Hickey I, 997 F.Supp. at 1207. However, "the information that would be revealed by direct answer need not be such as would itself support a criminal conviction, however, but must simply `furnish a link in the chain of evidence needed to prosecute the claimant for a federal crime.'" United States v. Neff, 615 F.2d 1235, 1239 (9th Cir.), cert. denied, 447 U.S. 925, 100 S.Ct. 3018, 65 L.Ed.2d 1117 (1980), quoting, Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 95 L.Ed. 1118 (1951). It is enough if the responses would merely provide a lead or clue to evidence having a tendency to incriminate. Neff, 615 F.2d at 1239.

The Government argues that the Court's current sealing of defendant Hyde's financial affidavit is premature to the extent that the Government has not yet attempted to use any of the information contained therein. The Government cites Seattle Times, supra, to support this contention, wherein the court stated, "[w]e do not know what use, if any, the government will try to make of the information contained in the affidavits. Therefore, any fifth amendment problem is at this juncture speculative and prospective only." Seattle Times, 845 F.2d at 1519. (Wiggins, J.)

While Judge Wiggins' opinion in Seattle Times appears to embrace the view that "[t]he time for protection will come when, if ever, the government attempts to use the information against the defendant at trial or if the government attempts to use any information derived from the facts revealed in the affidavits," Id. at 1519 (internal citation omitted), his views did not command a majority of the panel. Judge Reinhardt's concurring opinion, which provided the dispositive vote in ordering release of the financial affidavits under seal,² did not go so far. Judge Reinhardt found only that "[i]n the case before us the appropriate time for considering the fifth amendment issue is ... if and when the government seeks to use any material contained in the affidavit supplied by Nickell," and that the disclosures at issue were "innocuous" and "highly unlikely to be incriminatory." Id. at 1519-29 (emphasis added). Importantly, Judge Reinhardt concluded:

The opinion should not be understood as holding that the only appropriate time to consider the fifth amendment issue is when the government seeks to use the testimony in question. At least until the question left open by the Court in Kahan is decided [whether use immunity applies to statements a defendant makes with respect to his finances in obtaining court-appointed counsel], "it is appropriate for a defendant to raise a fifth amendment objection at the time he is required to submit the financial information necessary to obtain court-appointed counsel."

Id. at 1520 (emphasis added). Judge Reinhardt's concurring opinion implies that only where on its face the financial affidavit is unlikely to be incriminatory—e.g., where it has no evident relationship to the charges in the underlying criminal case— the hazards of self-incrimination are not sufficiently "real and appreciable" to warrant consideration of a Fifth Amendment objection prior to attempted use by the Government. Conversely,...