United States v. Hay, Crim. No. 72-CR-246.

• Decision Date: 30 April 1974
• Docket Number: Crim. No. 72-CR-246.
• Parties: UNITED STATES of America, Plaintiff, v. John Robert HAY et al., Defendants.
• Court: U.S. District Court — District of Colorado

376 F. Supp. 264

UNITED STATES of America, Plaintiff, v. John Robert HAY et al., Defendants.

Crim. No. 72-CR-246.

United States District Court, D. Colorado.

April 30, 1974.

COPYRIGHT MATERIAL OMITTED

James L. Treece, U. S. Atty., By Richard J. Spelts, Asst. U. S. Atty., Denver, Colo., for plaintiff; James J. Graham and Craig C. Donsanto, Dept. of Justice, Washington, D. C., of counsel.

Almon & Barsotti by Edward B. Almon, Denver, Colo., for defendant Hay.

MEMORANDUM OPINION

WINNER, District Judge.

John Robert Hay, Robert Melloni, Pierre Vallee and Theophile Siauve have been indicted for conspiracy to defraud the United States. Only defendant Robert Hay is a citizen of the United States, and he is the only defendant who has been arrested and arraigned. The case is set for trial on June 10, 1974, and it is now before the Court on crossmotions of the government and defendant dealing with the admissibility of deposition exhibits which are Swiss bank records and which were the subject of the deposition. The deposition was taken under the provisions of 18 U.S.C. § 3491-§ 3494, and, although the underlying statute was enacted in 1936, no reported case passes on its constitutionality or interprets it.¹ Thus, this is a case of first impression, and it is also a case which involves quite unusual facts and circumstances which have required numerous pretrial hearings, and which necessitate a long opinion in ruling on the motions. The pretrial ruling on the admissibility of the deposition and/or the exhibits has been requested by each of the parties because of the tremendous expense involved in bringing witnesses from all over the world if the case is to be tried, and also because of the government's candid admission that if the exhibits are not received in evidence, it is probable that the prosecution cannot defend against a motion for judgment of acquittal at the close of its case. The difficulty and novelty of the problems presented require a summary of the charges made against Hay, and a statement of the facts leading up to the taking of the deposition. Moreover, it should be mentioned that some of the problems tie directly to delicate diplomatic negotiations now in progress which it is hoped will result in a treaty between Switzerland and the United States setting forth a mutually acceptable and workable agreement between the two nations for ascertainment by the United States government of limited information concerning secret Swiss bank accounts. Other problems result from differences between the judicial systems of Switzerland and the United States, as, for example, the inapplicability of the hearsay rule in Switzerland, and the fact that the right of confrontation of witnesses under the Sixth Amendment has no parallel under Swiss law. The problems are compounded by Swiss laws which prohibit or severely restrict the conduct of foreign judicial proceedings on Swiss soil. In its last analysis, the case presents a situation in which two friendly nations are attempting to mesh their laws and governmental policies and purposes with those of the other, and, as will be seen presently, with the treaty negotiations in mind, the taking of the deposition in question caused the persons involved to walk a tightrope between the differing positions of the two nations.

With this preface, the indictment charging defendants with a conspiracy to defraud the United States was returned August 18, 1972. The government charges that in 1966-1967, Hay was employed by Hydrotechnic Corporation of New York City, and that Hydrotechnic personnel were the consulting engineers on a water system project in Saigon, South Viet Nam. It is alleged that in 1962, acting through the Agency for International Development (A.I.D.), the United States loaned the government of Viet Nam $19,500,000.00, to assist in financing the project. Construction was accomplished under five contracts, but the indictment has to do with only one of them, a contract for $9,400,000.00, for pre-stressed concrete pipe, awarded to a French corporation, Les Establissements Eiffel. The job was completed in 1966, and Les Establissements Eiffel made claim for a $5,500,000.00 cost overrun. A. I. D., which was contractually liable for overruns, refused to pay without an audit, and Touche, Ross, Bailey and Smart were employed by A. I. D. to perform the audit. The audit was completed in 1967, and a $2,300,000.00 overrun payment was authorized and made to Les Establissements Eiffel. The government contends that this sum was deposited to the French firm's account in the Chase Manhattan Bank on October 2, 1967, and that on the same day $538,000.00 of the deposit was transferred from the Les Establissements Eiffel account to the account of one of its employees, defendant Theophile Siauve. Then, says the government, two transfers were made from Siauve's account to two secret bank accounts in the Union Bank of Switzerland in Geneva. One transfer, in the amount of $125,000.00, was to account No. 580.425 P.L. and the other in the amount of $408,000.00, went into account No. 580.424 PL.

It is the theory of the United States that Hay conspired with the other three defendants, all of whom were employees of Les Establissements Eiffel, to defraud the United States, and that the $125,000.00 transfer by Siauve to secret account No. 580.425 PL was a payment to Hay in furtherance of the conspiracy. The government asserts that Hay is the owner of secret account No. 580.425 PL, and, manifestly, proof of that fact is probably crucial to the government's case. Additionally, the government claims that the Swiss bank records will disprove certain statements made by Hay in the course of the investigation concerning the history and source of the secret account.

Not surprisingly, the investigation of this alleged conspiracy extended over a long period of time and into many foreign countries. More than 100 persons were interviewed, and the geographic area of the investigation included Vietnam, Thailand, Canada, France, Switzerland, Iran, Spain, Guam, Laos, Tunisia, and, of course, the United States. The first suggestion that Hay was involved in criminal activity in connection with the cost overrun settlement was received in January, 1969, and this triggered the long investigation. In March, 1972, the Federal Department of Justice and Police of Switzerland arranged to have the Union Bank of Switzerland furnish to the Department of Justice copies of records of secret account No. 580.425 PL, and those records purport to show that the account is in Hay's name. As will be discussed later, this information was acquired by a Swiss Magistrate's search warrant. At that point in time, the State Department was required to make inquiry as to whether a bank officer would be willing to come to the United States to testify, and it was learned that the bank would not consent to have a bank officer testify in this country. Negotiations were then commenced to see if agreement could be reached with the Swiss government and with the bank for the taking of a deposition under 18 U.S.C. § 3491. In the meantime, a search for Hay was initiated, and in June, 1972, it was learned that he was working in Mali on another A. I. D. project.

In July, 1972, at least a tentative agreement was reached with the Union Bank of Switzerland and the Swiss government to permit an unprecedented deposition in Switzerland under the provisions of 18 U.S.C. § 3491. With these preliminaries out of the way, an indictment was presented to and was returned by a grand jury.² The indictment was ordered sealed, and efforts were made to persuade Hay to return to the United States from Mali under pretext of need for consultation with A. I. D. officials on the Mali project. Hay declined all invitations to return, and he could not be extradited because there is no extradition treaty between Mali and the United States. The State Department informally agreed with the government of Mali to have Hay declared persona non grata, and Mali cancelled his visa. The Mali police saw to his boarding of a plane for Dakar, Senegal, where he boarded another plane destined for New York City. By singular coincidence, United States Marshals were also aboard, and Hay was arrested as the plane started to land in New York. He appeared before a Magistrate in New York City, and was brought to Denver, where he again appeared before a Magistrate in advance of his June 1, 1973, arraignment.

Numerous motions have been filed and argued, and Hay has pressed his Sixth Amendment rights to a speedy trial. He has demanded that the indictment be dismissed because of claimed violation of those rights, and I have ruled that because of the unusual nature of the case, the indictment should not be dismissed because, as will be discussed presently, the government has done nothing to intentionally delay the case, or to take advantage of Hay, and it has done all that can be reasonably required of it to push the case to trial.

Nothing I might say would add to the abundant appellate case law on a defendant's Sixth Amendment right to a speedy trial. As to pre-indictment delay, I have studied United States v. Marion (1971), 404 U.S. 307, 92 S.Ct. 455, 30 L.Ed.2d 468; Barker v. Wingo, 407 U.S. 514, 92 S.Ct. 2182, 33 L.Ed.2d 101; United States v. Beitscher (1972), 10 Cir., 467 F.2d 269; United States v. Merrick (1972), 10 Cir., 464 F.2d 1087, and many other cases. Applying the tests outlined in Barker, the pre-indictment delay was long, but the reasons for the delay are understandable and justifiable. The defendant has pressed his claim for dismissal because of pre-indictment delay, but his showing of prejudice from the delay is minimal, and no deprivation of either Fifth or Sixth Amendment rights has been established.

The post-indictment delay presents a separate question. Defendant has pressed for trial, and he has shown that his ability to earn a living has been impaired—especially in light of the...