United States v. DeMarco

Citation401 F. Supp. 505
Decision Date25 September 1975
Docket NumberNo. CR 75-1188-F.,CR 75-1188-F.
CourtU.S. District Court — Central District of California
PartiesUNITED STATES of America, Plaintiff, v. Frank DeMARCO, Jr., Defendant.

COPYRIGHT MATERIAL OMITTED

Jay Horowitz, Asst. Sp. Prosecutor, Watergate Sp. Prosecution Force, Los Angeles, Cal., for plaintiff.

Charles A. McNelis, Welch & Morgan, Washington, D. C., Donald C. Smaltz, Los Angeles, Cal., for defendant.

MEMORANDUM OPINION

FERGUSON, District Judge.

On April 4, 1974, Attorney General William Saxbe directed the Watergate Special Prosecution Force "to investigate and prosecute all violations of law arising out of the preparation of President Nixon's 1969 income tax return and the deductions in subsequent years for the gift of pre-Presidential papers to the National Archives ...."

This case involves one of the charges brought pursuant to that assignment.

Frank DeMarco, Jr. was indicted on July 29, 1975 in the Central District of California for alleged false statements made to an Internal Revenue Service special agent in violation of 18 U.S.C. § 1001, and he has moved to dismiss that indictment. The motion is granted for two independent reasons. First, due process and this court's responsibility to supervise the administration of criminal justice require the dismissal of this indictment. A contrary decision would permit the "potential for vindictiveness" proscribed in Blackledge v. Perry, 417 U.S. 21, 28, 94 S.Ct. 2098, 40 L.Ed.2d 628 (1974) to deter the exercise of rights guaranteed to criminal defendants by federal statute. Second, the failure of the prosecutor to inform the grand jury of the relevant facts preceding the initiation of the decision to charge the defendant in California requires the dismissal of this indictment. Any contrary decision would violate the defendant's right to an "independent and informed grand jury" (Wood v. Georgia, 370 U.S. 375, 390, 82 S.Ct. 1364, 8 L.Ed.2d 569 (1962)) and would seriously undermine the proper function of the grand jury in our system of criminal justice.

Factual Background

The factual background leading to the defendant's July 29, 1975 indictment in California is as follows:

1. Frank DeMarco, Jr. was initially indicted together with Ralph Newman on February 19, 1975 by a federal grand jury in the District of Columbia.

a. Mr. DeMarco was charged with three offenses:
i. participation in a conspiracy to defraud the United States in violation of 18 U.S.C. § 371;
ii. the making of false and fraudulent statements to Internal Revenue Service agents in the District of Columbia in violation of 18 U.S. C. § 1001;
iii. an endeavor to unlawfully, willfully, knowingly, and corruptly obstruct the proceedings of the Joint Committee on Internal Revenue Taxation of the Congress of the United States in violation of 18 U.S.C. § 1505.
b. Mr. Newman was charged with two offenses:
i. participation in a conspiracy to defraud the United States in violation of 18 U.S.C. § 371;
ii. aiding in the preparation of a false and fraudulent document with knowledge of its falsity in connection with the filing of the 1969 joint federal income tax return of Richard M. and Patricia R. Nixon in violation of 26 U.S.C. § 7602(2).

2. Defendants Newman and DeMarco timely filed motions which insisted upon their statutory right to be tried in the district of their residence. 18 U.S.C. § 3237(b). DeMarco conceded that 18 U.S.C. § 3237(b) did not authorize a transfer of the 18 U.S.C. § 1001 charge against him but contended that that charge too should be transferred to his home district in order to effect the convenience of the parties and witnesses and the interest of justice. Fed.R.Crim. P. 21(b).

3. The government vigorously opposed these motions contending that the charges contained in the indictment were not subject to the transfer provisions of 18 U.S.C. § 3237(b).

4. On April 16, 1975, Judge Oliver Gasch granted the defendants' motion. He, therefore, ordered that the charges against Mr. Newman be transferred to the Northern District of Illinois and that the charges against Mr. DeMarco be transferred to the Central District of California.

5. On April 17, 1975, Charles McNelis, counsel for DeMarco, received a telephone call from Jay Horowitz of the Watergate Special Prosecution Force. In substance, Mr. Horowitz informed Mr. McNelis that the government was considering filing a motion for reconsideration of the order of transfer, that if the defendant successfully transferred his case to California the government would consider bringing more counts against him, and that the government would "restructure" the case against him if it came to California.

After the government filed and lost its motion for reconsideration, Mr. Horowitz in another telephone call told counsel for DeMarco that if DeMarco did not agree to a joint trial with Newman he would be indicted in Los Angeles for the offense which has since become the subject of this motion.

Mr. Horowitz has informed the court that the facts supporting the charge which is the subject of the California indictment were developed long before these telephone calls (indeed long before the indictment was brought in the District of Columbia), and that the government had communicated this fact to Mr. McNelis before DeMarco's indictment in the District of Columbia, but that the government had refrained from filing the charge because venue in the District of Columbia would not lie and the government did not wish to bring two separate prosecutions against the defendant.

Mr. Horowitz further indicates he informed DeMarco's counsel that in restructuring the charges in Chicago (against Newman) and in Los Angeles (against DeMarco) the government would "perhaps consent to the dismissal of some of the pending charges." (emphasis added). Moreover he maintains that the "tone" of the telephone conversations was not "threatening."

In short, the government characterizes these telephone conversations as "common and entirely proper discussions between adverse counsel litigating over a complicated procedural issue."

This court finds no basic inconsistency between the renditions of these conversations as reported by opposing counsel. The "tone" of these conversations was probably not threatening; the substance surely was. The government in an effort to prevent the defendant from asserting his statutory venue rights threatened him with a new indictment in California. This is not to say that the government has now filed this charge out of vindictive or punitive motives; it is to say that at the time of the telephone conversations, the government deliberately used the threat of a new indictment in California to deter the defendant from exercising his statutory rights. Moreover this court finds that the defendant at the time of the telephone conversations was deliberately placed on notice that if he exercised his statutory venue rights, the prosecution threatened to respond by "upping the ante." Blackledge v. Perry, 417 U.S. 21, 28, 94 S.Ct. 2098, 40 L.Ed.2d 628 (1975). The government's specific promise to drop a charge did not come until after the case had been transferred.

6. The defendant elected to transfer this case to California. During the arraignment on July 28, 1975, Mr. Horowitz informed this court that he intended to present evidence to the grand jury charging the defendant with a violation of 18 U.S.C. § 1001 (for false statements made in California) and that if the grand jury returned an indictment the government would consent to a dismissal of the 18 U.S.C. § 1001 charge (for false statements made in the District of Columbia) contained in the District of Columbia indictment.1 Mr. Horowitz explained that the government preferred to bring this charge because the statements made in California had been transcribed, but the statements made in the District of California had not. After the defendant filed a motion to dismiss this indictment, the government shifted its position as to which count it intended to drop. In his affidavit of September 5, 1975 (filed in support of the government's opposition to the defense motion), Mr. Horowitz stated that, "the Government still intends to consent to a dismissal of one count of the Indictment — the precise count obviously dependent, in the first instance, upon this Court's rulings upon defendant's pre-trial motions."

7. After this court denied defendant's motions to dismiss the counts contained in the District of Columbia indictment and informed the prosecution that the California indictment would be dismissed, the government moved to dismiss the conspiracy count, citing considerations of trial strategy.

8. At no time did the government inform the grand jury in Los Angeles of the facts surrounding the transfer of the case from Washington, D.C. Indeed the grand jury was not informed that any other charges had been filed against the defendant.

The Charge of Retaliation

As previously mentioned, the principles delineated in Blackledge v. Perry, supra, call for a dismissal of the California indictment. In that case the defendant Perry was initially charged in North Carolina with a misdemeanor charge of assault with a deadly weapon. After a trial without a jury, he was convicted. Under North Carolina procedure, the defendant by filing a notice of "appeal" can annul a misdemeanor conviction and obtain an entirely new trial in the Superior Court. The prosecutor responded to Perry's filing of a notice of appeal by obtaining a grand jury indictment charging him with a felony, i. e., assault with a deadly weapon with intent to kill and inflict serious bodily injury. The United States Supreme Court ruled that the initiation of the felony charge violated due process of law. 417 U.S. at 28-29, 94 S.Ct. 2098.

Significantly the Court noted that there was no evidence that the prosecutor "acted in bad faith or maliciously in seeking a felony indictment against Perry." Id. at 28, 94 S.Ct. at 2102. The Court insisted that no...

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