U.S. v. Waterman

• Citation: 732 F.2d 1527
• Decision Date: 20 September 1984
• Docket Number: No. 83-2159,83-2159
• Parties: UNITED STATES of America, Appellee, v. John Walter WATERMAN, a/k/a Jack Waterman, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 1527

732 F.2d 1527

UNITED STATES of America, Appellee, v. John Walter WATERMAN, a/k/a Jack Waterman, Appellant.

No. 83-2159.

United States Court of Appeals Eighth Circuit.

Submitted Feb. 13, 1984.

Decided May 2, 1984.

Rehearing En Banc Granted July 3, 1984.

Opinion on Consideration En Banc Sept. 20, 1984.

Michael Tigar, Washington, D.C., argued, for appellant.

Robert F. Kokrda, Omaha, Neb., argued, for appellee.

Before LAY, Chief Judge, and HEANEY and BOWMAN, Circuit Judges.

HEANEY, Circuit Judge.

John W. (Jack) Waterman appeals from the district court's denial of his motion to vacate, set aside, or correct his sentence under 28 U.S.C. Sec. 2255 (1982). Waterman claims that an agreement between the government and the star prosecution witness against him irreparably tainted that witness' testimony, depriving Waterman of the fundamental fairness protected by the United States Constitution. We hold that the government's agreement with its key witness hampered the truth-finding function of the jury to a degree which cannot be reconciled with the fair procedures guaranteed by the due process clause of the fifth amendment. Because the testimony given pursuant to this agreement was critical to support Waterman's conviction, we reverse the district court's denial of his section 2255 motion.

We are not unfamiliar with Waterman or his case. A jury convicted him on five counts of mail fraud arising out of an arson-for-profit scheme conducted in Omaha, Nebraska, from 1976 through 1978. See 18 U.S.C. Secs. 1341-1342 (1982). On June 17, 1982, the district court sentenced Waterman to two years imprisonment on each count, the terms to run consecutively, for a total sentence of ten years. Waterman appealed to this Court, alleging that the district court improperly refused to order the production of FBI notes concerning the pretrial interviews of a prosecution witness and challenging the sufficiency of the evidence supporting each count against him. United States v. Waterman, 704 F.2d 1014, 1016 (8th Cir.1983). We found no merit to Waterman's allegation concerning the FBI notes, and held the evidence at trial sufficient to support four of the five counts on which Waterman was convicted. We reversed the conviction on the fifth count for insufficient evidence because it rested entirely upon the uncorroborated hearsay testimony of the ringleader of the fraudulent scheme, Eugene Gamst. Id. at 1017-1018.

Waterman then petitioned this Court for a panel rehearing or a rehearing en banc. He based this petition upon an allegedly improper agreement between the government and Gamst at the time of Waterman's trial. Gamst had previously pled guilty to participation in arson and fraud activities in Omaha and elsewhere. He received a twelve-year sentence for his crimes pursuant to an agreement with the government to testify against others in the scheme. Id. at 1016. We upheld the convictions of several of Gamst's accomplices on direct appeal in United States v. Lemm, 680 F.2d 1193 (8th Cir.1982), cert. denied, 459 U.S. 1110, 103 S.Ct. 739, 74 L.Ed.2d 960 (1983). After the trial in Lemm, Gamst sought a reduction of his twelve-year sentence under Fed.R.Crim.P. 35. On petition for rehearing or rehearing en banc in the Waterman appeal, Waterman alleged that the government agreed to recommend a two-year reduction in Gamst's sentence if his continued cooperation led to further indictments. Waterman asserted that this "bounty" or "contingency" agreement tainted Gamst's testimony against him.

We declined to address this matter on Waterman's petition for rehearing or rehearing en banc with the following observations:

Waterman's petition raises a serious matter. However, the alleged impropriety of the Government's agreement with Gamst was never raised on direct appeal as a matter of error by brief or directly in oral argument. In addition, it would appear that a factual record may need to be developed on this issue. Accordingly, we deny the petition for rehearing, but without prejudice to Waterman's presenting this claim to the district court by an appropriate petition under 28 U.S.C. Sec. 2255 or under Rule 35 of the Federal Rules of Criminal Procedure.

United States v. Waterman, 716 F.2d 482, 482 (8th Cir.1983) (order on petition for rehearing).

Waterman filed the present section 2255 motion on July 27, 1983. The district court held a hearing on the motion on August 11, 1983. Waterman's counsel presented exhibits, stipulations of counsel, and argument regarding the allegedly improper agreement with Gamst.

The record developed below contains a December 16, 1980, letter from Gamst's attorney to an assistant United States attorney in Omaha setting forth the terms of a purported oral agreement for Gamst's further cooperation with the government. ¹ The government attorney replied by letter dated December 18, 1980, stating that the government "would be interested in Mr. Gamst's further cooperation by way of truthful testimony in any further Grand Jury investigations, indictments, and trials, if necessary." He agreed that "the government would be willing to acquiesce in a recommendation of two years reduction of sentence in the motion to reconsider sentence now pending." ²

The district court considered these letters and a stipulation of counsel regarding their meaning, and received other evidence reflecting the government's actions after Gamst's testimony against Waterman. The court found:

After Gamst's conviction and incarceration, he agreed to collaborate with the government in order to provide a basis for charging additional participants in the arson scheme. The substance of the agreement was that, if Gamst's cooperation in the form of truthful testimony led to further indictments, the government would (1) affirmatively recommend that Gamst's sentence be reduced by two years, and (2) inform appropriate federal agencies of the fact and extent of Gamst's cooperation. If, however, Gamst's testimony did not lead to the indictment of other individuals, then the government would acknowledge and inform the Court of Gamst's cooperation, but would not specifically recommend any reduction in his sentence. The record reveals that as a result of Gamst's testimony at the grand jury investigation and trial of Waterman, the government in fact made an affirmative recommendation that Gamst's sentence of imprisonment be reduced by two years.

United States v. Waterman, CR 81-0-47 (D.Neb. August 17, 1983) (memorandum opinion and order) (emphasis added).

Waterman questioned the constitutionality of this agreement under the sixth amendment provisions ensuring the fairness of criminal proceedings and the due process clause of the fifth amendment. He also claimed that the agreement violated the spirit, if not the letter, of 18 U.S.C. Sec. 201 (1982), which proscribes bribery of witnesses; that it encouraged perjury to an extent which could not be rectified by cross-examination; and that it undermined the integrity of our judicial system.

The district court disagreed with Waterman's assertions that the agreement with Gamst violated the Constitution or any other provision of law. The court noted that agreements not to prosecute or to recommend leniency in punishment in exchange for cooperation with the government have long been approved. It stressed that the agreement with Gamst was admitted into evidence at the Waterman trial and subjected to thorough cross-examination by Waterman's attorneys, that the agreement only supplemented Gamst's earlier commitment to testify truthfully as part of his plea bargain, and that substantial evidence other than Gamst's testimony supported Waterman's conviction. The court concluded that the government's conduct in this context did not violate the fundamental fairness mandated by the due process clause. United States v. Waterman, supra, CR 81-0-47 at 3-4. Waterman's appeal is in essence a disagreement with the legal conclusion drawn from the facts by the district court.

The parties have been unable to cite us any cases directly on point. We are not faced with the situation of a paid informant who might be more likely to entrap a defendant because of the contingent nature of her or his compensation. See United States v. Civella, 666 F.2d 1122, 1129 (8th Cir.1981). Nor do the facts before us resemble government participation in illegal activity with a defendant prior to trial through undercover agents or paid informants which, although not technically entrapment, is so outrageous as to deny the defendant due process of law. See United States v. McCaghren, 666 F.2d 1227, 1230-1231 & nn. 5-7 (8th Cir.1981). Likewise, we are not asked to find a due process violation based upon the government's failure to disclose an immunity agreement with a prosecution witness. See Giglio v. United States, 405 U.S. 150, 153-155, 92 S.Ct. 763, 765-766, 31 L.Ed.2d 104 (1972); United States v. Bigeleisen, 625 F.2d 203, 205-210 (8th Cir.1980). Instead, we must decide whether an agreement to procure testimony about accomplished facts, which places a premium on testimony adverse to a defendant, creates a risk of perjury so great that even the jury's full knowledge of the agreement is insufficient to protect the fundamental fairness inherent in the due process clause.

We recognized that an agreement granting government favors to a prosecution witness in return for truthful testimony about others is not per se illegal in United States v. Librach, 536 F.2d 1228, 1229-1230 (8th Cir.), cert. denied, 429 U.S. 939, 97 S.Ct. 354, 50 L.Ed.2d 308 (1976). In Librach, we went on to discuss the court's supervisory powers to require fair conduct at trial by the government, however, and held that the immunity agreement entered with a witness named Fowler in that case did not constitute unfair prosecutorial conduct. We stated,

The agreement was made and binding upon the government before Fowler testified; it was not contingent upon the government's...