United States v. Jacobs, Misc. No. 2528.

• Decision Date: 22 January 1971
• Docket Number: Misc. No. 2528.
• Citation: 322 F. Supp. 1299
• Parties: UNITED STATES of America, Plaintiff, v. Jeremy JACOBS, Defendant.
• Court: U.S. District Court — Central District of California

322 F. Supp. 1299

UNITED STATES of America, Plaintiff, v. Jeremy JACOBS, Defendant.

Misc. No. 2528.

United States District Court, C. D. California.

January 22, 1971.

Robert L. Meyer, U. S. Atty., Dennis E. Kinnaird, Asst. U. S. Atty., Chief, Fraud and Special Prosecutions, and John W. Hornbeck, Asst. U. S. Atty., Los Angeles, Cal., for plaintiff.

Joseph A. Ball and Douglas Dalton, Long Beach, Cal., for defendant.

OPINION, FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER FOR JUDGMENT FOR DEFENDANT

HAUK, District Judge.

This is a contempt proceeding arising out of the failure to produce a document before the Grand Jury pursuant to two subpoenas duces tecum. The cause came on regularly for hearing and trial before the Court sitting without a jury on an order to show cause why the defendant, Jeremy Jacobs, should not be held in criminal and civil contempt for noncompliance with Grand Jury subpoenas returnable August 13 and September 24, 1970. The government contends that the defendant had the ability to produce the document when the subpoenas were served, and willfully failed to produce it when he appeared before the Grand Jury. The defendant contends that he did not have the ability to produce the document because he did not have it, and that even if he had the document he would have been entitled to refuse to produce it because it was a privileged document. The Court finds that each of the defendant's contentions is well taken, and that he is therefore not guilty of contempt. The facts are as follows:

The document in question is not in evidence, but was described by Benjamen Reisman, who was the author of the document. It was a memorandum from Reisman to John Berry, dated December 30, 1966. Reisman was an attorney for Emprise Corporation. Berry was a certified public accountant who was employed by Reisman to assist him in giving a legal opinion to Emprise Corporation and its officers with respect to a proposed loan by Emprise Corporation to Phillip Troy.

At the time the memo was written, the chief executive officer of Emprise Corporation was Louis Jacobs. He was the father of defendant Jeremy Jacobs, and is now deceased. Prior to writing the memo, Reisman conferred with Louis Jacobs. Louis Jacobs related to Reisman certain facts pertaining to the proposed Troy loan. These communications were made in confidence for the purpose of obtaining a legal opinion from Reisman with respect to the transaction.

In order to give the legal opinion requested by Louis Jacobs, it was necessary for Reisman to have the technical assistance of Berry, the certified public accountant. For that purpose, Reisman wrote the memo in question wherein he related to Berry in confidence the facts pertaining to the transaction which had been disclosed to him by Louis Jacobs. Copies of the memo were also sent to other officers of Emprise Corporation, who would participate in the corporate decision to be made in the matter based on Reisman's legal advice.

There were two Grand Jury subpoenas: One was served on the "custodian of records" of Emprise Corporation on July 31, 1970; the other was served on the defendant Jeremy Jacobs on September 22, 1970. By this time Louis Jacobs was deceased, and his son, Jeremy Jacobs, was president of Emprise Corporation.

The first subpoena was returnable on August 13, 1970, and called for production of all checks, memoranda, files, correspondence, and other records relating to certain loans made by Emprise Corporation, including the Phillip Troy loan. On August 13, 1970, Else Whaley, as custodian of records, appeared before the Grand Jury and produced the Troy loan file and the other loan files described in the subpoena.

The loan files were then examined by Assistant United States Attorney John W. Hornbeck. Hornbeck found a memo in one of the other loan files, namely, the Rooks-Kachino file, which described three other documents which could not be found in any of the files. These were: (1) A statement, report and letter from Peter Bellanca, dated December 23, 1966; (2) a memo from Reisman to Berry, dated December 30, 1966; and (3) a report of Berry, dated January 25, 1967.

Since the three documents described above were not in any of the files of Emprise Corporation which had been produced pursuant to the first subpoena, Hornbeck made inquiry, and Jeremy Jacobs attempted to locate the three documents. They could not be found among any of the Emprise Corporation records. Jacobs then asked Berry to bring his file to the Emprise office to see whether the documents might be in Berry's file. Berry brought his file to Jacobs' office on August 23, 1970. At that time Jacobs examined the file and noticed that there were some documents in Berry's file which had not been in the Emprise Corporation files.

Everyone agrees that two of the documents described above were in Berry's file at that time, namely: the statement, report and letter from Peter Bellanca, dated December 23, 1966 and the report of Berry, dated January 25, 1967. The question is whether the memo from Reisman to Berry, dated December 30, 1966, was then in Berry's file. Berry testified that he thought the Reisman memo was in his file at that time, but he is undoubtedly mistaken. Berry did not examine his file before taking it to Jacobs' office, and he did not personally look at the document which he thinks was the Reisman memo when he was in Jacobs' office. His only basis for saying that he thought his file then contained the Reisman memo was that Jacobs read to him a few lines from a two-page document wherein Reisman stated to Berry that certain work he had requested might take six to eight hours. Whatever this document was, it was not the Reisman memo dated December 30, 1966, because Reisman, who was the author of the memo, was positive that it was only a one-page document and did not contain any estimate of time for the work therein requested of Berry. Berry and Jacobs were together in Jacobs' office during the entire time that Jacobs had access to the file. After examining the file, they agreed that Jacobs could make a copy of the file. Jacobs called his secretary, and handed her the file at the door of the office. When the secretary returned with the file, she handed it to Jacobs at the door of the office, and Jacobs returned it to Berry.

Assistant United States Attorney Hornbeck later examined Berry's file, and found that it did not contain the Reisman memo. Since Berry had told Hornbeck that he thought the Reisman memo had been in the file when Jacobs examined it, Hornbeck apparently concluded that Jacobs had taken the Reisman memo out of the Berry file. Hornbeck then caused the second subpoena duces tecum to be issued and served on Jacobs, which subpoena described all three of the documents which had been referred to in the Emprise Corporation file, but which were not in the files.¹ The second subpoena was served on September 22, 1970, and was returnable on September 24, 1970. On the latter date, Jacobs appeared before the Grand Jury and produced two of the documents which had been copied from Berry's file, namely: the statement, report and letter from Peter Bellanca, dated December 23, 1966 and the report of Berry, dated January 25, 1967. He did not produce the memorandum from Reisman to Berry, dated December 30, 1966, because he did not have any such document. This contempt proceeding followed.

It is, of course, elementary that a witness is not guilty of contempt for failure to produce a document described in a subpoena duces tecum, unless it is shown that he had the ability to produce the document. United States v. Patterson, 219 F.2d 659 (2d Cir. 1955); United States v. Pollock, 201 F. Supp. 542 (W.D.Ark.1962); Healey v. United States, 186 F.2d 164, 171 (9th Cir. 1950). For a criminal contempt, the proof must be beyond a reasonable doubt, whereas only a preponderance of evidence is required for civil contempt. Cliett v. Hammonds, 305 F.2d 565, 570 (5th Cir. 1962). Here the government charges both civil and criminal contempt, but the proof is unsatisfactory under either standard.

The government's theory is that the Reisman memo was in the Berry file on August 23, 1970, when Jacobs examined the file in his office, and that Jacobs removed the Reisman memo from the Berry file at that time. The evidence will not support that theory. In the first place, there is no satisfactory proof under any standard that the Reisman memo was in the Berry file on August 23, 1970, when Jacobs examined the file. Secondly, Jacobs had no opportunity to remove any document from Berry's file. Even if it were assumed that the Reisman memo was in the Berry file at that time, the proof is still clear that the defendant did not remove this document or any other document, and had no opportunity to do so. The basic problem is in making the assumption that the Reisman memo was actually in the file. But for Berry's belief that it was there, all of the evidence indicates that it was not. The only reasonable inference that can be drawn is that Berry was mistaken in his belief, and that the Reisman memo dated December 30, 1966, was not in his file when he showed it to Jacobs. Any contrary inference is, in any event, dispelled by the fact that when the possibility of the existence of the document was specifically brought to the defendant's attention, he made a diligent search, and could not find any such document.

But even if it were assumed that there was a Reisman memo in Berry's file, and that Jacobs did somehow manage to remove it in Berry's presence,² Jacobs still would have been justified in refusing to produce the document on the ground of attorney-client privilege. This was a memo from a lawyer to an accountant stating facts in confidence (which had been related to the attorney by the client) for the purpose of the lawyer obtaining the accountant's assistance in rendering a legal opinion. It was therefore a privileged document. United States v. Kovel, 296...