United States v. Leverage Funding Systems, CR 79-159-HP.

• Decision Date: 17 October 1979
• Docket Number: No. CR 79-159-HP.,CR 79-159-HP.
• Citation: 478 F. Supp. 799
• Parties: UNITED STATES of America, Plaintiff, v. LEVERAGE FUNDING SYSTEMS, INC., a corporation, Centaur Film, a corporation, Peter S. Traynor, an Individual, William G. McDonald, Jr., an Individual, Defendants.
• Court: U.S. District Court — Central District of California

478 F. Supp. 799

UNITED STATES of America, Plaintiff, v. LEVERAGE FUNDING SYSTEMS, INC., a corporation, Centaur Film, a corporation, Peter S. Traynor, an Individual, William G. McDonald, Jr., an Individual, Defendants.

No. CR 79-159-HP.

United States District Court, C. D. California.

October 17, 1979.

Andrea Sheridan Ordin, U. S. Atty., Robert L. Brosio, Asst. U. S. Atty., Chief, Criminal Division, Theodore W. Wu, Asst. U. S. Atty., Asst. Chief, Criminal Division, Los Angeles, Cal., for plaintiff.

Richard H. Kirschner, Los Angeles, Cal., Paul J. Fitzgerald, Beverly Hills, Cal., for defendants.

ORDER DISMISSING INDICTMENT

PREGERSON, District Judge.

The Fifth Amendment to the Constitution provides that "no person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury . . .." A grand jury consists of up to twenty-three persons, F.R.Crim.P. 6(a), sixteen constituting a quorum. 8 Moore's Federal Practice ¶ 6.022, at 6-17 (2nd ed. 1978); see 18 U.S.C. § 3321, F.R.Crim.P. 6(a). For a grand jury to indict, twelve or more jurors must vote to return an indictment. F.R. Crim.P. 6(f). Defendants' motion to dismiss the instant indictment requires the court to address two questions: (1) whether at least twelve of the grand jurors who vote to return an indictment must be informed of all the evidence presented to the grand jury, and (2) whether a grand juror can be considered informed without having attended all sessions at which evidence is presented on the proposed indictment. To preserve the integrity of the grand jury system, the court rules that an indictment is valid under the Fifth Amendment and F.R.Crim.P. 6(f) only if at least twelve jurors attend all sessions at which the grand jury hears evidence on the proposed indictment. Because this requirement was not met, the indictment must be dismissed.

I. Factual Background

On February 27, 1979, a grand jury returned an indictment charging defendants with having committed various felonies under federal law. This grand jury met and heard evidence on thirteen separate days, beginning on May 9, 1978. At each session, sixteen or more jurors were present, out of the twenty that constituted the grand jury. On the thirteenth day, with nineteen jurors present, the grand jury voted unanimously in favor of indictment. At first blush it would appear that the voting requirement of F.R.Crim.P. 6(f) was satisfied.

An examination of the grand jury attendance chart revealed, however, that of the nineteen jurors voting to return the indictment, only nine had attended each of the previous twelve sessions. The chart showed that ten jurors had missed one or more sessions and therefore were possibly unaware of some of the evidence when they voted. After this information was disclosed, defendants moved to dismiss the indictment. They asserted that only jurors fully aware of the evidence presented can be counted in determining whether the voting requirement of Rule 6(f) has been met. In response, the government asserted that sixteen of the jurors—a quorum—were sufficiently aware of the evidence because seven of the absentee jurors missed evidence that was assertedly cumulative.¹ As an alternative, the government also argued that the law does not require that there be a minimum of twelve informed jurors who vote to return an indictment.

II. The Necessity of an Informed Grand Jury

To resolve the issues raised, the court must look to the role the grand jury plays in our criminal justice system. Chief Justice Warren, writing for the Supreme Court in Wood v. Georgia, 370 U.S. 375, 390, 82 S.Ct. 1364, 1373, 8 L.Ed.2d 569 (1962), eloquently described the grand jury's historic role:

This body has been regarded as a primary security to the innocent against hasty, malicious and oppressive persecution; it serves the invaluable function in our society of standing between the accuser and the accused, whether the latter be an individual, minority group, or other, to determine whether a charge is founded upon reason or was dictated by an intimidating power or by malice and personal ill will.

(Footnote omitted.) See also Stirone v. United States, 361 U.S. 212, 218, 80 S.Ct. 270, 4 L.Ed.2d 252 (1960). Others who have observed the workings of the grand jury system paint a different picture. They say that today the grand jury is a mere servant of the prosecutor and that it does not act as a buffer between the accuser and the accused. They argue that it is the prosecutor who decides which matters will be put before the grand jury, that it is the prosecutor who decides what evidence will be presented to the grand jury and thus what evidence will be ignored, and—practically and generally speaking—that it is the prosecutor who makes the ultimate decision as to who should be indicted for what. See generally M. Frankel & F. Naftalis, The Grand Jury 22-23 (1977).

There is perhaps a significant gap between the grand jury's historic role and the role the grand jury now plays in our criminal justice system. Of necessity, the grand jury must rely on the evidence presented to it by the prosecutor. Nevertheless, the grand jury has an important role to play, particularly at the federal level where the grand jury is the only potentially neutral body that can protect the individual against the initiation of arbitrary or malevolent prosecutions. If such a prosecution is started, the innocent may be forced to suffer the serious economic and social harms resulting from the return of the indictment itself.

For the grand jury to fulfill its role as the independent buffer between the accuser and the accused, at least twelve grand jurors who vote to return an indictment should be informed of all the evidence submitted by the prosecutor. Jurors who are ignorant of some of the evidence presented to the grand jury cannot effectively question the validity of the prosecution's case. For example, a juror who missed all the testimony relating to count three of a particular proposed indictment obviously cannot question the validity of that proposed count. In Wood, Chief Justice Warren aptly spoke of "the necessity to society of an independent and informed grand jury . . .." 370 U.S. at 390, 82 S.Ct. at 1373.

The Supreme Court's decision in Costello v. United States, 350 U.S. 359, 76 S.Ct. 406, 100 L.Ed. 397 (1956), does not suggest a different result. In Costello, the Court held that an indictment based entirely on hearsay is valid, if returned by a legally constituted and unbiased grand jury. The Court examined the English origins of our constitutional grand jury and the history of grand jury practice in this country and noted that the grand jury has traditionally convened as a body of laymen free from technical rules of evidence. The Court approved this practice both because the grand jury was intended to operate substantially like its English progenitor and because challenges based on evidentiary defects would produce burdensome delays in criminal proceedings. Thus, Costello stands only for the proposition that courts should not inquire into the substance of the evidence presented to the grand jury. Courts can still play a role, however, in ensuring the fairness and independence of that body. In re Grand Jury For November, 1974 Term, 415 F.Supp. 242, 244 (W.D.N.Y.1976). By requiring that grand jurors be informed for their votes to count, this court is not evaluating the sufficiency of the evidence presented. Rather, it is acting to ensure that grand jury proceedings are conducted in a manner that is fair and independent.

The Second Circuit has taken the position, in United States ex rel. McCann v. Thompson, 144 F.2d 604 (2d Cir.), cert. denied, 323 U.S. 790, 65 S.Ct. 313, 89 L.Ed. 630 (1944), and later in United States v. Colasurdo, 453 F.2d 585 (2d Cir. 1971), cert. denied, 406 U.S. 917, 92 S.Ct. 1766, 32 L.Ed.2d 116 (1972), that it is irrelevant whether the grand jurors who vote an indictment are cognizant of all the evidence, except possibly where exculpatory evidence is introduced. In McCann, defendants argued that the district court should have dismissed the indictment because less than twelve who voted to indict had heard all the evidence. The Second Circuit rejected this argument, stating:

Since all the evidence adduced before a grand jury—certainly when the accused does not appear—is aimed at proving guilt, the absence of some jurors during some part of the hearing will ordinarily merely weaken the prosecution's case. If what the absentees actually hear is enough to satisfy them, there would seem to be no reason why they should not vote.

144 F.2d at 607. The Second Circuit further said:

Against this reasoning we can think of nothing except the possibility that some of the evidence adduced by the prosecution might conceivably turn out to be favorable to the accused; and that, if the absentees had heard it, they might have refused to vote a true bill. No one can be entirely sure that this can never occur; but it appears to us so remote a chance that it should be left to those instances in which it can be made to appear that the evidence not heard was of that character . . ..

Id.

This court cannot adopt the Second Circuit's view. The Second Circuit reasoned that it is not prejudicial for an absentee to vote to indict upon hearing only some of the evidence because the missed evidence, which was also aimed at proving guilt, would not have caused him to change his vote. As the Second Circuit indicated, this reasoning does not hold true where the missed evidence is exculpatory.² The court, however, overlooked the fact that its reasoning also fails where the missed evidence was inculpatory but noncumulative. In such a situation, the absentee grand juror would be voting to indict without having heard evidence relating to elements of some of the crimes charged, or without having heard evidence relating to entire counts of the indictment. Clearly, it is...