United States v. Onassis

• Citation: 125 F. Supp. 190
• Decision Date: 09 September 1954
• Docket Number: No. 1647-53.,1647-53.
• Parties: UNITED STATES of America, v. Aristoteles S. ONASSIS, alias Aristotle S. Onassis, Robert L. Berenson, Nicolas Cokkinis, Joseph E. Casey, Joseph H. Rosenbaum, Robert W. Dudley, Charles Augenthaler, George Cokkinis, Harold O. Becker, United States Petroleum Carriers, Inc., a corporation, Victory Carriers, Inc., a corporation, Central American Steamship Agency, Inc., a corporation, Sociedad Industrial Maritima Financiera Ariona Panama, S.A., a corporation, Sociedad Maritima Miraflores, a corporation, Transatlantica Financiera Industrial, Panama, S.A., a corporation, Defendants.
• Court: U.S. District Court — District of Columbia

125 F. Supp. 190

UNITED STATES of America, v. Aristoteles S. ONASSIS, alias Aristotle S. Onassis, Robert L. Berenson, Nicolas Cokkinis, Joseph E. Casey, Joseph H. Rosenbaum, Robert W. Dudley, Charles Augenthaler, George Cokkinis, Harold O. Becker, United States Petroleum Carriers, Inc., a corporation, Victory Carriers, Inc., a corporation, Central American Steamship Agency, Inc., a corporation, Sociedad Industrial Maritima Financiera Ariona Panama, S.A., a corporation, Sociedad Maritima Miraflores, a corporation, Transatlantica Financiera Industrial, Panama, S.A., a corporation, Defendants.

No. 1647-53.

United States District Court District of Columbia.

September 9, 1954.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Leo A. Rover, Allen J. Krouse, J. Frank Cunningham, Howard F. Smith, Frederick W. Becker, Washington, D. C., for plaintiff.

William E. Leahy, Washington, D. C., Charles H. Tuttle, Edward J. Ross, Colby Stilson, Stuart H. Johnson, Jr., New York City, Edward B. Williams, Martin McNamara, Washington, D. C., Frank

L. Ball, Jr., Arlington, Va., Mathias F. Correa, New York City, Arthur J. Hilland, Vincent Burke, Jr., Washington, D. C., for defendants.

YOUNGDAHL, District Judge.

This is one of a series of cases arising out of the disposition of surplus vessels after the Second World War. At that time there were many surplus vessels which had been built to carry supplies and troops. As a result, Congress passed The Merchant Ship Sales Act of 1946, 50 U.S.C.A.Appendix, § 1735 et seq., which gave authority to the Maritime Commission to sell the vessels and set a price formula for the Commission to follow in selling them. The Act is merely directory to the Commission. It contains no penal provisions. Among other things, the Act provides that preference in the sale of the surplus vessels shall be given to citizens of the United States, 50 U.S.C.A.Appendix, § 1740, and adopts the definition of citizenship appearing in Section 2 of the Shipping Act of 1916, as amended.¹

Suspicion arose that some alien purchasers were misrepresenting their citizenship in order to obtain vessels, and on terms as favorable as those given to citizen purchasers. An investigation was initiated. It has resulted in thirteen indictments against an aggregate of ninety-one defendants on the criminal side and libel proceedings against many of the vessels on the civil side.

These defendants have been indicted under 18 U.S.C. § 1001, and for violation of Section 1001. Section 1001 makes it a crime to knowingly and willfully falsify a representation of a material fact in any matter that is within the jurisdiction of an agency of the United States. In administering the Merchant Ship Sales Act of 1946 and the regulations and orders authorized and promulgated by the Act it was the duty of the Maritime Commission to determine: (1) the qualification of applicants for the purchase of vessels; (2) the preference of United States citizen applicants over non-citizen applicants; (3) that the applicants possess the minimum financial requisites; (4) that the applicants have the ability to make the required payments; (5) the terms and conditions of the contract of sale; and (6) the continued financial responsibility of the purchasers to make deferred payments.

The Government charges that the defendants, willfully and knowingly, conspired to violate and violated Section 1001 by making and using false applications, balance sheets and financial statements in order to qualify for the purchase of vessels. The Government has alleged that the applications were false in that defendant Victory Carriers was represented as meeting the citizenship requirements of Section 2 of the Shipping Act of 1916, whereas in fact the corporation was under alien control. The Government has alleged that the balance sheets and financial statements were false in that the cash balance was reported to be greater than it really was.

Defendants have moved to dismiss and have moved for a bill of particulars. The grounds alleged in support of their claims are similar except that certain defendants assert, as an additional ground in their motion to dismiss, that they are entitled to immunity from prosecution under the Fifth Amendment and by virtue of Section 28 of the Shipping Act of 1916, 46 U.S.C.A. § 827, which is an immunity provision. These defendants are Nicolas Cokkinis, Joseph E. Casey, Joseph H. Rosenbaum, Robert W. Dudley, Harold O. Becker and Charles Augenthaler. The claims of immunity will be considered first. The claim of immunity by Charles Augenthaler, having a different basis than that of the others, will be considered separately.

Immunity

Section 28 provides:

"No person shall be excused, on the ground that it may tend to incriminate him or subject him to a penalty or forfeiture, from attending and testifying, or producing books, papers, documents, and other evidence, in obedience to the subpoena of the commission or of any court in any proceeding based upon or growing out of any alleged violation of this chapter; but no natural person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing as to which, in obedience to a subpoena and under oath, he may so testify or produce evidence, except that no person shall be exempt from prosecution and punishment for perjury committed in so testifying."

The defendants claim that they are entitled to immunity under Section 28 because they testified, under subpoena, before a grand jury in a proceeding "based upon or growing out of" alleged violations of the Shipping Act of 1916, and that their testimony was concerning the subject matter of the present indictment. The defendants testified before a grand jury impanelled in the District of Columbia on September 2, 1952. That grand jury returned the indictment in this case.

The sole purpose of immunity is to compel evidence that is otherwise not obtainable because of the Fifth Amendment privilege against self-incrimination. The history of immunity provisions has been recently considered in United States v. Monia, 1943, 317 U.S. 424, 63 S.Ct. 409, 87 L.Ed. 376 and in Smith v. United States, 1949, 337 U.S. 137, 69 S.Ct. 1000, 93 L.Ed. 1264.² Further discussion here is inappropriate. It is sufficient to note that this history has simply been the process of making the immunity provisions effective by giving a witness the full protection to which he is legally entitled under the Fifth Amendment,³ while at the same time providing safeguards against their misuse.⁴ With this in mind we come to consideration of defendants' claims of immunity.

Two questions are presented: (A) Is Section 28 applicable to the Grand Jury proceeding before which the defendants testified? and (B) Are the defendants entitled to its protection?

A. Is Section 28 Applicable to the Proceeding Before Which the Defendants Testified?

The language in Section 28 makes it applicable in "any proceeding based upon or growing out of any alleged violation of this chapter". The Government claims that the proceeding was not based upon nor did it grow out of alleged Shipping Act violations, but rather was limited to inquiry of possible violations of 18 U.S.C. § 371 and 18 U.S.C. § 1001 which contain no immunity provision. In support of this the special assistant to the Attorney General who was in charge of the proceeding has submitted his letter of authority for that special grand jury. The letter only makes reference to possible violations of 18 U.S.C. § 371 and § 1001. And, of course, the indictment which that grand jury returned was brought under these sections only. The Government further argues that the subject matter of that inquiry was not related to Shipping Act violations, but only concerned possible false applications, balance sheets, and financial statements submitted to the Commission for the purchase of vessels, and that the procedure for the sale of the surplus vessels was covered only by the Merchant Ship Sales Act of 1946, which contains no immunity provision. Specifically, the Government claims that the defendants were examined only as to the applications, balance sheets and financial statements and were not questioned as to any matter based upon or arising out of Shipping Act violations.

The question is what comprises a "proceeding based upon or growing out of any alleged violations of this chapter".

The test clearly cannot be that the indictment must be brought under the Shipping Act or whatever act contains an immunity provision. The result of a special grand jury investigation often indicates violations of different or additional laws than those on which the proceeding was initially "based". The words "growing out of" must be given their common sense meaning. The undesirable consequence of the test the Government suggests is easily seen. Assume that a witness' compelled testimony indicated possible violations of Act A, which has an immunity provision, and Act B, which does not. The Government then prosecutes the witness under Act B arguing that the proceeding, as seen by the indictment, was one neither based upon nor growing out of alleged violations of Act A. If the Government's argument were successful, the immunity provision in Act A would be unconstitutional since its protection was not as broad as that which the witness was legally entitled to under the Fifth Amendment, Counselman v. Hitchcock, 1892, 142 U.S. 547, 12 S.Ct. 195. Consequently the witness could refuse to testify in spite of the immunity provision, and accordingly, a witness could refuse to testify whenever his testimony would indicate a possible violation of an act containing no immunity provision. Such a result would indeed thwart the purpose of immunity provisions.

The requirements of the Fifth Amendment, as suggested above, and the phrasing of the immunity statutes "but no natural person shall be prosecuted or subjected to any penalty or forfeiture for...