U.S. v. Towill
| Decision Date | 24 February 1977 |
| Docket Number | Nos. 76-1793,76-2856,s. 76-1793 |
| Citation | 548 F.2d 1363 |
| Parties | 77-1 USTC P 9284 UNITED STATES of America, Plaintiff-Appellant, v. Richard M. TOWILL, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Felix A. Maciszewski, Honolulu, Hawaii, Neil F. Horton (argued), Johnston, Klein, Horton, Solomon & Baker, Oakland, Cal., for defendant-appellee.
Harold M. Fong, U. S. Atty., Honolulu, Hawaii, David H. Beitz (argued), Trial Atty., Tax Div., U. S. Dept. of Justice, Washington, D. C., for plaintiff-appellant.
On appeal from the United States District Court for the District of Hawaii.
Before BROWNING, BARNES and TRASK, Circuit Judges.
THE CASE
These are consolidated appeals by the Government from orders of the United States District Court for the District of Hawaii dismissing on April 2, 1976, Count I of a two-count indictment brought on the ground that it was barred by the statute of limitations and dismissing with prejudice Count II of the indictment for failure of the Government to prosecute.
Jurisdiction of this court to hear these appeals is based upon 18 U.S.C. § 3731, notices of appeal having been timely filed.
An indictment of December 18, 1975, charged Richard M. Towill, the defendant-appellee, with violating 26 U.S.C. § 7206(2) by assisting in the preparation of false corporate income tax returns for two separate years. 1 Count I charged that on or about December 12, 1969, Towill had assisted in the preparation of a fraudulent return, and Count II charged that on or about December 21, 1970, he had helped prepare another fraudulent return. Normally, the six year statute of limitations for the offense charged in Count I would have run on December 12, 1975. 26 U.S.C. § 6531(3). Under § 6531, however, "(w)here a complaint is instituted before a commissioner of the United States within the (statute of limitations), the time shall be extended until the date which is 9 months after the date of the making of the complaint before the commissioner of the United States." On December 11, 1975, the date before the statute of limitations would have run, Special Agent Bigler of the Internal Revenue Service filed such a complaint, charging the offense subsequently set forth in Count I of the indictment. The complainant stated that as a result of an investigation of business transactions and associates connected with Towill, he had personal knowledge that Towill had wilfully and knowingly assisted in the preparation of a false return for the Towill Corporation; in that it claimed business deductions in salaries and wages, and compensation of officers in the sum of $569,907.00, knowing such deductions were substantially over-stated (26 U.S.C. § 7206(2)). On December 18, 1975, the indictment was returned.
In response to the defendant's motion to dismiss Count I on the ground that it was barred by the statute of limitations, the Government filed the affidavit of David Beitz, an attorney with the Department of Justice. Beitz stated the reasons why a grand jury did not return an indictment within the statute of limitations: (1) although the Tax Division of the Justice Department authorized prosecution of Towill on July 7, 1975, the United States Attorney requested additional consideration of this decision, and not until December 10, 1975, after "additional consideration of the case", did the Tax Division give the final authorization to prosecute; (2) on December 10, 1975, Beitz learned that the grand jury was last in session on December 1, 1975, and that the next sessions were set for December 18 and 19; (3) the United States Attorney's office informed him that it would have been "highly impractical if not impossible to summon the grand jurors into session prior to December 12, 1975"; (4) therefore, the Government filed a complaint pursuant to § 6531 on December 11; (5) the Government did not use the time between December 11 and the return of the indictment on December 18 to prepare its case.
The court also received the testimony of Harold Fong, the United States Attorney for the District of Hawaii. Fong testified that the Clerk of the United States District Court required "at least a minimum of five days' written notice by our office before a grand jury can be summoned and called". Fong also stated that he had referred the case back to Washington for reconsideration on the merits of prosecution.
On April 2, 1976, the court entered a written order dismissing Count I of the indictment. The court stated that one limitation upon the use of § 6531 is that "the purpose of the statute is to afford the Government additional time to indict a defendant where no Grand Jury is in session at the end of the normal limitations period." (C.T. Vol. I at 115). Because the court did not accept the Government's reasons for the delay after the initial prosecution authorization, it concluded that the Government had ample time to present its case to one of the grand juries sitting between July 7 and December 12, and that its invocation of § 6531 was not within the statutory purpose of that section. As a second ground for dismissing the Count, the court found that the complaint failed to set forth sufficient facts to enable the United States Magistrate to determine whether probable cause existed for believing that Towill had committed the offense. Id. at 116. In support of its findings of law, the court relied upon Jaben v. United States, 381 U.S. 214, 85 S.Ct. 1365, 14 L.Ed.2d 345 (1965).
On March 26, 1976, the court had announced its intention to dismiss Count I. The Government moved for a continuance of the trial of Count II pending appeal of the dismissal of Count I, but on March 30, 1976, the court denied this motion. The court denied a second motion for a continuance on April 2, 1976, and directed that trial on Count II begin on April 27, 1976. On April 19, 1976, the Ninth Circuit Court of Appeals denied the Government's motion for a stay of proceedings pending its appeal from the dismissal of Count I (Exhibit C, Brief for Appellee in 76-2856).
On April 22, 1976, the Government filed a motion in the district court for a dismissal without prejudice of Count II of the indictment under the provisions of Rule 48(a) of the Federal Rules of Criminal Procedure. The court denied this motion. The Government then filed a notice of intention not to prosecute. The court warned that if the Government did not proceed to trial on April 27, it would grant a motion for dismissal with prejudice for failure to prosecute the case. On April 27, the court orally granted this motion. In its written statement of August 18, 1976, and amended statement of September 1, 1976, the court formally denied the Government's motion to dismiss without prejudice under Rule 48(a), and granted Towill's motion to dismiss Count II with prejudice under Rule 48(b). 2
(1) Did the district court err in dismissing Count I of the indictment?
(a) Did the court err in concluding that the Government could not resort to the complaint procedure of § 6531?
(b) Did the court err in concluding that the complaint did not show probable cause?
(2) Did the district court err in denying the Government's motion for dismissal of Count II without prejudice and in granting Towill's motion for dismissal with prejudice?
The district court's conclusion that the complaint procedure of § 6531 was unavailable to the Government appears based in part upon its finding that the Government could have convened a grand jury on December 10, 1975, to meet by December 12, 1975. In its findings of fact, the court stated that while the practice of the United States Attorney was to give the court clerk five days' notice before summoning a grand jury.
This statement appears two paragraphs before the court's finding that "the Government had ample opportunity to present its case to the Grand Jury before December 12, 1975."
To the extent that the court based its dismissal on this reasoning, its order is not supported by case law. Jaben v. United States, 381 U.S. 214, 85 S.Ct. 1365, 14 L.Ed.2d 345 (1965), held that because § 6531 is not intended to give the Government an automatic nine month extension to make its case, the provision is available only "in the event that a grand jury is not in session at the end of the normal limitation period . . . (and the Government) cannot obtain an indictment because of the grand jury schedule." (id., pp. 219-220, 85 S.Ct. p 1368). The district court's opinion erroneously suggests that as long as a grand jury is empanelled, and regardless of its schedule, it is "in session" within the meaning of Jaben. A close reading of Jaben convinces us that the Court meant to equate "session" with the current "grand jury schedule", not with the theoretical possibility of summoning a grand jury on short notice. Justice Goldberg's separate opinion also indicates that the words "session" and "schedule" refer to the time when a grand jury is actually "sitting". Id. at 226, 85 S.Ct. 1365.
Two courts have explicitly rejected the idea that § 6531 is unavailable merely because a grand jury has been empanelled. In United States v. Smith, 371 F.Supp. 672 (M.D.N.C.1973), the factual situation was very similar to that in Towill. A grand jury existed, but it was not in session at the end of the limitations period. In allowing a § 6531 complaint, the court stated:
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