U.S. v. Kattar

Decision Date02 November 1987
Docket NumberNo. 87-1172,87-1172
Citation840 F.2d 118
Parties25 Fed. R. Evid. Serv. 11 UNITED STATES of America, Appellee, v. George T. KATTAR, Defendant, Appellant. . Heard
CourtU.S. Court of Appeals — First Circuit

Michael Avery with whom Ellen K. Wade and Avery & Friedman, Boston, Mass., were on brief, for defendant, appellant.

Gary C. Crossen, Asst. U.S. Atty., with whom Frank L. McNamara, Jr., Acting U.S. Atty., Boston, Mass., was on brief, for appellee.

Before COFFIN and BREYER, Circuit Judges, and CAFFREY, * Senior District Judge.

COFFIN, Circuit Judge.

Appellant George Kattar was indicted in 1986 on three counts of wire fraud, one count of stolen or fraudulently taken monies, and one count of extortion under the Hobbs Act (18 U.S.C. Sec. 1951). The trial court granted a motion for judgment of acquittal on one of the fraud counts at the close of the government's case. Following a thirteen-day trial, the appellant was acquitted of all remaining counts except the extortion charge, on which he was convicted. He appeals from that judgment of conviction.

I.

Because of the complicated nature of appellant's argument on appeal, it is necessary to marshal the facts of the case in some detail.

In June 1982, someone attempted to pass a counterfeit $2,000,000 check drawn on the account of L. Ron Hubbard, the founder and, until his recent death, the head of the Church of Scientology. This attempt failed. The check was part of a scheme concocted by a former attorney named Larry Reservitz, who had access to genuine checks and inside information at Hubbard's bank, the Bank of New England. The government soon discovered that the check scheme was Reservitz's brainchild. The government subsequently enlisted Reservitz for assistance in investigations of the Church. The government evidently suspected that the Church was attempting to obtain false incriminating testimony regarding the check scheme in order to discredit certain individuals. Reservitz, himself not a member of the Church, was sent undercover to acquire information concerning the Church's own investigation of the Hubbard counterfeit check scheme.

At some point in 1984, an attorney named Michael Flynn, considered by the Church to be an enemy of Scientology, alerted a probate court to the check scheme, as evidence of serious mismanagement of Hubbard's funds by the Church. The Church responded to Flynn's charges by stepping up its own investigation of the check forgery.

Geoffrey Shervell was put in charge of the Church's investigation. Shervell, who testified as a government witness in this case, oversaw the investigation in his capacity as Director of Scientology's Investigation Section. The Church ran advertisements in several major newspapers, including the Boston Globe, offering a $100,000 reward "for information leading to the arrest and conviction of the person or persons responsible for the forgery and attempted passing of [the] check." Shervell employed private investigators to look into the check scheme. Some evidence was adduced at trial that these investigators, particularly Eugene Ingram, suborned false statements from various persons in order to implicate Flynn himself in the check forgery. The statements against Flynn were given substantial play in the Church's newspaper, Freedom. The Church also publicized these allegations in a number of press conferences.

Shervell was removed from the check scam investigation for several months due to his "ineffectiveness" in procuring information, but was reinstated by the Church in August 1984. At this point Reservitz, the actual mastermind of the check scheme, became a cooperating witness and operative of the government. Reservitz testified that he approached Church investigators to see if they would attempt to procure false testimony from him. In effect, he was to be bait for possible illegalities by the Church. Church investigator Ingram did in fact try to get Reservitz to implicate Flynn. Reservitz, while wearing a body recorder provided by the FBI, negotiated with the Church investigators about how much he was to be paid for his incriminating statements.

At about the same time, Shervell had contacted Harvey Brower and appellant George Kattar for further leads in the check investigation. Brower persuaded Shervell that Kattar had information which might be helpful. Brower also said that Kattar had other information about Flynn that might interest the Church. Eventually, in September, Brower reported to Shervell that Kattar would provide information relating to the check scheme in exchange for the $100,000 reward payment. The negotiations went back and forth for a while, and there is much dispute over the exact understanding each party had as to the terms of any agreement they might enter into. Shervell seemed reluctant to part with the $100,000 without more assurance from Kattar about the content of his information, while Kattar insisted on a guarantee of payment before he would provide any statement. Shervell did testify that Kattar at one point told the Church investigators something to the effect of "I know what you want, I have the information you have advertised for. I know you want Flynn and I can get that information for you."

After several meetings with Brower, Kattar's intermediary, Shervell was told that Kattar would provide the information pursuant to an initial payment of $33,000, which was to represent a good faith demonstration of the Church's willingness to part with the reward money. The $33,000 was to be placed in an escrow account, to be withdrawn by Kattar after the conditions of the agreement had been met. Shervell did not respond immediately to this plan. Brower then contacted Shervell to convey that Kattar was angry with the delay. Brower told Shervell that if the $33,000 was not provided within two days, Kattar would go to Flynn and tell him that the Church had tried to bribe him into giving false information about Flynn. At this point, the Church authorized the $33,000 payment to Brower to be placed in escrow. According to Shervell, he gave the money to Brower, on the understanding that it would be shown to Kattar, and then returned to Shervell pending Kattar's revelation of the information. However, Brower apparently never returned the money to Shervell.

At a meeting the next day, Kattar provided Shervell information that merely reiterated what the Church already knew about the check fraud. Shervell told Brower that he was dissatisfied with this worthless information, and asked for the $33,000 back. Brower called Shervell back to inform him that Kattar was furious with the suggestion that the money be returned. Shervell testified that Brower conveyed a threat by Kattar that if the demand for repayment were pressed, then Kattar would tell Flynn that the money had been paid to Kattar as a contract on Flynn's life.

At this point, Shervell contacted the FBI. Arrangements were made for Special Agent George DiMatteo to go undercover as a Church associate of Shervell's.

DiMatteo accompanied Shervell to a meeting with Kattar on October 2, 1984. Both Shervell and DiMatteo testified that Kattar was incensed at that meeting. DiMatteo testified about Kattar's actions at the meeting as follows He said he was in charge of the rackets in that area, that he had unchallengeable power, that he had worked with several people in that area, that when he made money everyone had to make money. He said that he held our fate, not in these words, but in his hands. He told us that if we were not more receptive to his way of doing business that he, quote, "would throw our names in the hat."

DiMatteo testified that Kattar used a threatening tone of voice and threatening gestures at this meeting. Kattar acknowledged receiving the $33,000, and demanded that the additional $67,000 be paid at their next meeting, claiming that he would there provide information that would be useful to the Church. According to DiMatteo, Kattar directed Shervell and DiMatteo "not to go to the Feds," because his power "was unchallengeable in that area" as well.

On the next day, Kattar had a meeting with Larry Reservitz to discuss information that Kattar could give to the Church. Kattar and Reservitz had previously discussed the check fraud when that scheme was in its incipiency, so Kattar knew that Michael Flynn was not part of it. Kattar also knew that Reservitz was a source for details about the scheme. On October 3d, Kattar did not know that Reservitz was working for the government and equipped with a hidden body recorder. Kattar and Reservitz discussed the fact that the Church would not release the $67,000 unless Kattar provided the name of someone at the Bank who might have been involved in the check scheme. They agreed that this name would have to be that of someone who was not in fact part of the scheme, so as to protect Reservitz. On the tape of this meeting, Kattar is overheard describing to Reservitz his meeting the day before with the Church representatives:

I says you gotta fuckin' deal with me--you're not gonna back out. Your whole fuckin' church is coming down. I wasn't bullshitting.

....

I said I'll break your fuckin' head you motherfucker. You gonna deal with me--you fuckin' better. 1

Later that same day, Reservitz met again with Kattar. On this occasion they discussed at length the fabricated information Kattar was to give to the Church. Kattar reiterated that he had warned Shervell that "I'll break your fuckin' head." Shervell also testified that these various threats had been made.

The next day, October 4, 1984, Shervell and DiMatteo again met with Kattar. DiMatteo wore a body recorder to this meeting. Kattar provided the phony information he had concocted with Reservitz, including that Flynn had helped plan the check scheme in order to create bad publicity for the Church in his campaign against it. Kattar explained that this information would "bury" Flynn. Although Kattar did...

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