United States v. Seiffert

• Decision Date: 14 March 1973
• Docket Number: Crim. No. 70-C-16.
• Citation: 357 F. Supp. 801
• Parties: UNITED STATES of America, Plaintiff, v. Louis L. SEIFFERT, Jr., Defendant.
• Court: U.S. District Court — Southern District of Texas

357 F. Supp. 801

UNITED STATES of America, Plaintiff, v. Louis L. SEIFFERT, Jr., Defendant.

Crim. No. 70-C-16.

United States District Court, S. D. Texas, Houston Division.

March 14, 1973.

COPYRIGHT MATERIAL OMITTED

Anthony J. P. Farris, U. S. Atty., Mary L. Sinderson, Henry J. Novak, Jr., Asst. U. S. Attys., Houston, Tex., for plaintiff.

James DeAnda, J. Robert McKissick, Edwards, Stone & DeAnda, Corpus Christi, Tex., for defendant.

MEMORANDUM AND ORDER

CARL O. BUE, Jr., District Judge.

I. THE FACTS

Defendant was chairman of the board of First State Bank of Aransas Pass, Texas, in 1969 when the bank failed and the Federal Deposit Insurance Corporation (FDIC) liquidated the bank's holdings. Thereafter, defendant filed voluntary petitions in bankruptcy for himself and the three corporations which he controlled. See In The Matter Of Louis L. Seiffert, Jr., et al., Bankruptcy Nos. 69-H-108, 69-H-109, 69-H-110 and 69-H-111 (S.D.Tex.). As is customary in bankruptcy proceedings, on December 10, 1969, the first meeting of creditors was held before the referee in bankruptcy, and defendant testified as the bankrupt. Commencing on February 9, 1970, defendant's deposition was taken primarily in connection with a claim by the FDIC on a fidelity bond.

II. THE INDICTMENT AND CONVICTION

Shortly thereafter, defendant was indicted along with Luther Van Elliott, the ex-president of First State Bank, for misappropriating funds of a federally insured bank in violation of 18 U.S.C. § 656. Prior to trial co-defendant Elliott entered a guilty plea to one count of the multi-count indictment, and at the trial this accomplice was a witness for the Government. During the jury trial in the United States District Court at Corpus Christi, Texas, the Government apparently assumed that it was required to establish that no evidence used by it in prosecuting the criminal action was derived from the bankruptcy proceedings. As a result, Ben Donnell, an attorney who had represented the FDIC in the bankruptcy proceeding, and John Ryan, a special agent for the Federal Bureau of Investigation, testified at the behest of the Government that no investigative leads came from the bankruptcy proceedings. Further, Assistant United States Attorney Theo Pinson stated for the record that he knew of no evidence or leads derived from such proceedings.

Subsequently, defendant was found guilty by a jury of the offenses charged in counts 2, 3 and 4 of the indictment. A mistrial was entered as to counts 1 and 5. On September 30, 1971, defendant was sentenced to imprisonment for three years on each of the three counts with the sentences to run consecutively.

III. THE APPEAL AND REMAND

On appeal, defendant's conviction was reversed and remanded with directions. The Fifth Circuit Court of Appeals determined that the 1970 Amendment to section 7(a)(10) of the Bankruptcy Act, 11 U.S.C. § 25(a)(10), was applicable to defendant. Reliance was placed upon Turner v. United States, 410 F.2d 837 (5th Cir. 1969).¹ As a result it was held that defendant was entitled to both use and derivative use immunity. The Court indicated:

That the amendment is applicable does not require a reversal. If the Government can affirmatively show that it did not directly or indirectly use Seiffert's bankruptcy testimony as a lead to other evidence his conviction must stand. The Government's attempt to do so at trial fell short of the mark. The prosecutor, the FBI agent who investigated the case, and the FDIC attorney all testified that they did not make direct nor indirect use of Seiffert's testimony. These conclusory statements are simply not enough to carry the burden . . . . The Government must show how it acquired all of the evidence admitted below.

463 F.2d at 1092. The Court delineated specific directions to the trial court as follows:

Upon remand the district court shall conduct an inquiry to determine the source of the evidence introduced by the Government. If it was not acquired through the direct or indirect use of Seiffert's testimony, the conviction shall stand affirmed by this court as entered. If, however, any of the evidence is found to be tainted, the judgment of conviction shall be reversed and Seiffert granted a new trial.

463 F.2d at 1092.

IV. THE BURDEN OF PROOF

The Government must affirmatively prove that the evidence which was adduced at defendant's trial was not tainted. The initial inquiry becomes one of ascertaining the appropriate burden of proof to be employed in weighing the evidence forthcoming at the evidentiary hearing. It appears clear that the applicable legal standard can be delineated by looking to closely related areas. In Lego v. Twomey, 404 U.S. 477, 489, 92 S.Ct. 619, 626, 30 L.Ed.2d 618 (1972), the Supreme Court indicated that:

To reiterate what we said in Jackson: when a confession challenged as involuntary is sought to be used against a criminal defendant at his trial, he is entitled to a reliable and clear-cut determination that the confession was in fact voluntarily rendered. Thus, the prosecution must prove at least by a preponderance of the evidence that the confession was voluntary.

As a result of the Lego decision it is well settled that the standard to be employed in deciding the issue of voluntariness of a proffered confession is that of a preponderance of the evidence. United States v. Britt, 460 F.2d 1023 (5th Cir. 1972); United States v. Watson, 469 F.2d 362 (5th Cir. 1972); United States v. Cluchette, 465 F.2d 749 (9th Cir. 1972); United States v. Collins, 462 F.2d 792 (2d Cir. 1972). Similarly, the preponderance of the evidence is the applicable standard for proving that investigative leads did not derive from illegal electronic eavesdropping. United States v. Cole, 463 F.2d 163 (2d Cir. 1972), cert. denied, 409 U.S. 942, 93 S.Ct. 238, 34 L.Ed.2d 193 (1973). The applicability of these decisions to the instant situation cannot be contested. See Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972); United States v. Nolan, 420 F.2d 552 (5th Cir. 1969), cert. denied, 400 U.S. 819, 91 S. Ct. 36, 27 L.Ed.2d 47 (1970).

V. THE APPLICABLE STANDARD FOR PURPOSES OF THE EVIDENTIARY HEARING

In addition to the authorities set forth in the opinion of the Court of Appeals, it is helpful to state precisely the criteria determinative of the outcome of the proceedings in this Court. It is abundantly clear that as a result of the 1970 Amendment to the Bankruptcy Act no oral testimony or other information secured from a bankruptcy witness can be subsequently used against him in a criminal proceeding. The legislative history of the omnibus Organized Crime Control Act, to which section 7(a)(10) of the Bankruptcy Act, 11 U.S.C. § 25(a)(10), was amended to conform, reflects that:

Title II is a general Federal immunity statute that will afford "use" immunity rather than "transaction" immunity when a witness before a court, grand jury, Federal agency, either House of Congress, or a congressional committee or subcommittee, asserts his privilege against self-incrimination. It is contemplated that the title will enable effective displacement of the privilege against self-incrimination by granting protection coextensive with the privilege; that is, protection against the use of compelled testimony directly or indirectly against the witness, in a criminal proceeding.

H.Rep.No.91-1549, 91st Cong., 2d Sess., U.S.Code, Cong. & Admin.News, p. 4008 (1970).

Section 201 of the Organized Crime Control Act of 1970 was recently interpreted in Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972). In Kastigar it was held that:

The statute's explicit proscription of the use in any criminal case of "testimony or other information compelled under the order (or any information directly or indirectly derived from such testimony or other information)" is consonant with Fifth Amendment standards. We hold that such immunity from use and derivative use is coextensive with the scope of the privilege against self-incrimination, and therefore is sufficient to compel testimony over a claim of the privilege. While a grant of immunity must afford protection commensurate with that afforded by the privilege, it need not be broader. Transactional immunity, which accords full immunity from prosecution for the offense to which the compelled testimony relates, affords the witness considerably broader protection than does the Fifth Amendment privilege. The privilege has never been construed to mean that one who invokes it cannot subsequently be prosecuted. Its sole concern is to afford protection against being "forced to give testimony leading to the infliction of `penalties affixed to . . . criminal acts.'" Immunity from the use of compelled testimony and evidence derived directly and indirectly therefrom affords this protection. It prohibits the prosecutorial authorities from using the compelled testimony in any respect, and it therefore insures that the testimony cannot lead to the infliction of criminal penalties on the witness.

406 U.S. at 453, 92 S.Ct. at 1661, 32 L. Ed.2d at 222.

The Court indicated that its decision was entirely consistent with an earlier decision, Counselman v. Hitchcock, 142 U.S. 547, 12 S.Ct. 195, 35 L. Ed. 1110 (1892), since the immunity afforded by 18 U.S.C. §§ 6002-03, as does 11 U.S.C. § 25(a)(10), would not permit the use of the compelled testimony to search out other testimony to be subsequently used in a criminal proceeding. Similarly, the statute would preclude the obtaining and use of witnesses and evidence which were directly attributable to the compelled testimony. Further, the statute precludes the use of the compelled testimony to gain knowledge of the details of the crime and sources of information which would supply other means of convicting the witness in a subsequent criminal proceeding. 406 U. S. 414, 92 S.Ct. 1653, 32 L.Ed.2d at 222. See Ullmann v. United States, 350 U.S. 422, ...