United States v. Phillips

• Decision Date: 28 April 1980
• Docket Number: No. 78-03382-04-CR-W-2.,78-03382-04-CR-W-2.
• Citation: 488 F. Supp. 508
• Parties: UNITED STATES of America, Plaintiff, v. Russell E. PHILLIPS, et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

488 F. Supp. 508

UNITED STATES of America, Plaintiff, v. Russell E. PHILLIPS, et al., Defendants.

No. 78-03382-04-CR-W-2.

United States District Court, W. D. Missouri, W. D.

April 28, 1980.

Robert Schneider, Asst. U. S. Atty., Kansas City, Mo., for United States.

C. Brooks Wood, Kansas City, Mo., for defendant Bledsoe.

Richard L. Anderson, Reeds Spring, Mo., for defendant Burks.

James Crabtree, Shawnee Mission, Kan., for defendant Cloninger.

James H. Bernard, Jr., Kansas City, Mo., for defendant Stafford.

MEMORANDUM AND ORDER ON RENEWED MOTION OF DEFENDANT BLEDSOE TO SUPPRESS EVIDENCE OF FELONY CONVICTION, JOINED BY OTHER DEFENDANTS, SIMILAR MOTION OF DEFENDANT CLONINGER, AND MOTION TO SEVER OF THE DEFENDANT STAFFORD

URBOM, Chief Judge.

The defendants Bledsoe and Burks¹ are on trial with four other defendants on charges of conspiracy, racketeering, mail fraud and securities fraud brought under 18 U.S.C. §§ 1961, 1962, 1963, 1341 and 2, and 15 U.S.C. §§ 77q(a) and 77x.

Present charges center upon activities of the defendants with two agricultural cooperatives that operated in Missouri, one agricultural cooperative that was set up in Oklahoma, and another that existed in Arkansas. The motif of the prosecution is that the creating and operating of these cooperatives were for the purpose of defrauding investors by siphoning off investors' funds for the personal use of the defendants.

The defendants Bledsoe and Burks were convicted in the United States District Court for the Southern District of Illinois on July 28, 1979, of mail fraud and conspiracy to commit mail fraud in connection with the activities of another agricultural cooperative in Illinois.

The cooperatives related to the present charges were Progressive Farmers Association (PFA), United Farmers of America, Inc. (UFA-Missouri), Consumer-Farmers Association (CFA), and United Farmers Association of America, Inc. (UFA-Oklahoma). The cooperative directly involved in the Illinois charges was Illinois Farmers Marketing Association (IFMA).

Before commencement of the trial I denied the defendant Bledsoe's motion to suppress the government's use for any purpose of the Illinois conviction.² The trial began October 2, 1979, to a jury. On March 31, 1980, at the close of the prosecution's case in chief that defendant renewed the motion in light of more information received about that prior felony conviction. The defendants Burks and Stafford have orally joined the renewed motion, and the defendant Cloninger has separately and orally moved for the same relief for a somewhat different reason. Evidence was received on the motions on April 15.

The defendant Bledsoe's argument on the renewed motion is built almost entirely upon an observation by Judge Waldo Ackerman, the judge who presided at the trial in the District of Illinois at which the defendants Bledsoe and Burks were convicted. The judge's comment was at a sentencing hearing and included the following:

"You see, I would have rathered sentenced Mr. Burkes sic and Mr. Bledsoe after that case the present Missouri-based action had been concluded. I'd know then what happened there. The problem is that the jury almost necessarily had to assume, and I don't know if what the jurors thought, but I assume they to some extent at least were saying that this was a fraud exported to Illinois from Missouri by Mr. Burkes sic and Mr. Bledsoe. Now, if it wasn't, if it was a legitimate —"

Counsel for the defendant Bledsoe now extracts the words, ". . . the jury almost necessarily had to assume . . . that this was a fraud exported to Illinois from Missouri by Mr. Burkes sic and Mr. Bledsoe . . ." and argues that those words mean that

the Illinois jury "found defendant's conduct in Illinois culpable only by viewing it as an extension — an importation — of fraudulent conduct in Missouri;"

the conviction was based on "a presumption of criminal culpability with regard to PFA;"

The conviction was "based in large part on its premature assumption;"

the "`validity' of the conviction . . . depend(s) on the jury's finding in the Missouri case . . .;"

the Illinois jury made a "`conditional' determination" of guilt; and

"It is highly doubtful whether defendant could or would have been convicted in Illinois without the introduction of PFA evidence."

Suggestions in Support of (Renewed) Motion of Defendant Bledsoe to Suppress the Government's use for Impeachment of his Felony Conviction in United States District Court for the District of Illinois, pages 2, 3, 6

This exuberant reading of a remark of the sentencing judge is not warranted. The judge was not announcing findings of fact or conclusions of law, but discussing sentencing options with counsel. The judge's concern was that the ultimate disposition of charges in this Western District of Missouri case might have a legitimate bearing on the sentence that could be imposed in the Illinois case. After discussing the subject with counsel, he said that he would sentence "assuming the worst" — that is, that Bledsoe and Burks would be found guilty in the Missouri action — and then, if they were found not guilty in the Missouri case, he would be inclined "to think that your argument for a light sentence or probation is somewhat persuasive" and "what they did here takes on a less serious tone." He concluded that if the defendants "are found not to have been involved in any kind of criminal activity there in the Missouri action I will reconsider the sentence and reduce it on the thirty-five motion which I am sure you will file."

Judge Ackerman did not suggest that the validity of the Illinois conviction rested upon a verdict of guilty in this Missouri proceeding. His reasoning always related to sentence, never to innocence; it always had to do with degree of guilt, never to lack of guilt.

Furthermore, Bledsoe's Illinois counsel, John Martin, has not thought that fraud in the Missouri operation was an issue in the Illinois trial. He disagreed at once with Judge Ackerman's indication that the jury must have assumed an exporting of fraud from Missouri to Illinois, and testified at the hearing on Bledsoe's present renewed motion that in the Illinois action the government never claimed or argued that the Missouri activities amounted to fraud. Martin's description of the evidence as to the role Bledsoe played in the Illinois Farmers Marketing Association, the farm cooperative around which the Illinois charges pivoted, was:

"Well, the Government's theory as stated in their trial briefs during the trial and as argued throughout the trial was that PFA itself was not a fraud or they did not contend that it was a fraud, but that in selling the PFA concept, the farmers marketing concept, to investors in Illinois, Mr. Bledsoe and Mr. Burks, as well, had overstated the success of the PFA operation in Missouri and had led people to believe that PFA was a profitable organization that was going great guns, whereas, in fact, it was losing money, and according to the Government's theory in that case, doomed from Day 1."

Transcript of testimony, Volume 114, page 107.

The argument of the defendant Bledsoe on the renewed motion has, first, a constitutional tone. Although conceding that the double jeopardy clause has apparently not been extended by interpretations so far as to bar the present trial, counsel nonetheless argues that use of the Illinois conviction should be prevented by that concept to protect "against more than one jury determination on the question of defendant's criminal liability with respect to PFA." (Suggestions, page 5) No cases in point or analogous are cited and I have found none.

Another constitutionally phrased argument is that it would be fundamentally unfair and therefore violative of due process to permit use of the Illinois conviction, because that conviction is based on activities that are at issue in this current trial.

It is true that at least five witnesses in the Illinois trial testified primarily about Mr. Bledsoe's involvement with PFA, the farm cooperative at the center of the present Missouri trial. However, the presentation in the Illinois trial of evidence of Missouri activities of Bledsoe and Burks does not result in a conclusion that double jeopardy or a denial of due process will be experienced if the Illinois conviction impeaches those defendants. The Illinois charges were distinct and separate from the Missouri charges; use of the conviction as impeachment is not allowing "more than one jury determination on the question of defendant's criminal liability with respect to PFA," as argued by the defendant Bledsoe. It bears, rather, on whether the jury in this present case is to believe the testimony of Mr. Bledsoe and Mr. Burks. To say that the jury here should decide all issues without any input from the Illinois jury on the defendants' credibility is to count the Illinois jury's conclusion wholly without validity or so weak as to have no value. The record before me affords no support for such a gutting. Judge Ackerman did not so view the verdict in Illinois, and neither do I.

The Illinois jury, it is pointed out by defense counsel, received some evidence of the activities of the defendants Burks and Bledsoe in Missouri, but a full airing was not made of the nature of those activities and neither Burks nor Bledsoe testified in the Illinois proceeding. That statement is quite true. The indictment did not allege that any act of Bledsoe or Burks in Missouri or relating to PFA was fraudulent, but some evidence of their activities in Missouri relating to PFA was received. Nothing prevented a full exploration of those acts to the extent any party wanted them explored. Bledsoe and Burks did not testify, as a matter of trial strategy, primarily to avoid jeopardizing a motion that was pending in the current case here as well as in the Illinois proceeding and because the defendants' counsel thought that the defendants would not be convicted in Illinois. That...