US v. Galanis, S87 Cr. 520-CLB.

• Decision Date: 28 September 1988
• Docket Number: No. S87 Cr. 520-CLB.,S87 Cr. 520-CLB.
• Parties: UNITED STATES of America v. John Peter GALANIS, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

695 F. Supp. 1565

UNITED STATES of America v. John Peter GALANIS, et al., Defendants.

No. S87 Cr. 520-CLB.

United States District Court, S.D. New York.

September 28, 1988.

Vincent Briccetti, Steven Robinson, Asst. U.S. Attys., Rudolph Giuliani, U.S. Atty., New York City, for the U.S.

Brian Barrett, New York City, for defendants.

MEMORANDUM AND ORDER

BRIEANT, Chief Judge.

On September 28, 1988, defendant John Peter Galanis was sentenced by this Court following his conviction by a jury on 44 out of 58 Counts for various federal felonies including Conspiracy, under 18 U.S.C. § 371; Filing of False Tax Returns; Securities Fraud; Interstate Travel; Interstate Transportation; Fraud by Investment Adviser; Theft of Investment Company Assets; Criminal Contempt; RICO; and RICO Conspiracy. This judgment of conviction was based upon a jury verdict which was returned on July 5, 1988. Arrested in California on May 13, 1987, Mr. Galanis was on bail, subject to strict pretrial supervision, from about August 1, 1987 through July 5, 1988, when the verdict was rendered, and he was continued on bail pending sentence over the objection of the Government. The terms of his bail, which also cover a pending fraud case in the Supreme Court of the State of New York, County of New York, are a Personal Recognizance Bond in the amount of Twenty Million ($20,000,000.00) Dollars, signed by defendant and co-signed by his mother, wife, sister and brother-in-law, secured by liens on four (4) parcels of real estate having an equity of 1.7 Million Dollars. Bail limits are restricted to New York State, and daily personal reporting to the Federal Pretrial Services Agency is required.

Following imposition of sentence, the defendant sought to be continued on bail pending appeal to the Court of Appeals of the Second Circuit from his judgment of conviction. The Government opposed. This Court granted the application subject to making its formal findings and conclusions in writing, which are set forth below.

The issue of release or detention pending appeal by a defendant is now regulated by Title 18 U.S.C. § 3143(b). This statute requires detention pending appeal unless the Court finds that the defendant shows by clear and convincing evidence that he is not likely to flee or pose a danger to the safety of the community if released. 18 U.S.C. § 3143(b)(1). Also, defendant must show by a preponderance of the evidence, that his "appeal is not for purpose of delay and it raises a substantial question of law or fact likely to result in reversal or an order for a new trial." 18 U.S.C. § 3143(b)(2).

We now consider this statutory provision against its historical background. Unlike bail prior to trial, bail pending appeal was unknown to the common law. Furthermore, the constitutional provisions concerning bail have been deemed not to relate to bail pending appeal. Since 1891, when direct federal criminal appeals of right were first authorized, changing standards have been followed in deciding whether bail pending appeal should be granted. Traditionally, the most important factor has been the legal merit of the proposed appeal. An oft cited case, Rossi v. United States, 11 F.2d 264, 265-66 (8th Cir.1926) presented the relevant analysis:

"One who suffers imprisonment after conviction and during the pendency of his writ of errors suffers the same injustice if his case is reversed and he is acquitted that one who is denied bail before his trial and is subsequently acquitted endures, and it was to prevent just such imprisonment that the acts of Congress and the rules of court allowing bail were adopted. In view of this fact this difference in the situation of the two classes of defendants does not seem to us a sound reason for depriving convicted persons of bail during the pendency of their writs of error.

The basic principle which underlies and ought to govern the allowance of bail both before and after trial is the same, and it has been stated by the Supreme Court in these words: `The statutes of the United States have been framed upon the theory, that a person accused of crime shall not, until he has been finally adjudged guilty in the court of last resort, be absolutely compelled to undergo * * * punishment, but may be admitted to bail, not only after arrest and before trial, but after conviction and pending a writ of error.' Hudson v. Parker, 15 S.Ct. 450, 453, 156 U.S. 277, 285 (39 L.Ed. 424)."

The Rossi Court also held:

"In the orderly and convenient administration of justice, such an application should first be made, as in the case at bar it has been made, to the District Judge who tried the case. The applicant has no absolute right to bail. The grant or refusal of his application rests in the discretion of the judge, not in his personal preference or desire, but in his sound, fair, judicial discretion, governed and exercised in accordance with the established rules of law and the controlling decisions and practice of the federal courts upon this subject."

Additional reasons supporting bail pending appeal suggest themselves. To the extent that imprisonment is rehabilitative, a concept not entirely abandoned in currently fashionable sentencing philosophies, no rehabilitation will ensue for a defendant who is pursuing what he regards as a meritorious appeal. In the case of a sophisticated fraud such as charged here against Galanis, whose transactions have been rendered so complex as to be hardly understandable to anyone, an appellant may provide material assistance to his appellate attorney if he is readily accessible at all times to discuss the proof in the trial record and the inferences flowing therefrom. Furthermore, a defendant who is awaiting trial on related or identical crimes, as is Galanis, can present a better defense in the next trial if he is free on bail.

In Hudson v. Parker, 156 U.S. 277, 284, 15 S.Ct. 450, 453, 39 L.Ed. 424 (1895), Justice Gray announced the policy behind the granting of bail pending appeal:

"The statutes of the United States have been framed upon the theory that a person accused of a crime shall not, until he has been finally adjudged guilty in the court of last resort, be absolutely compelled to undergo imprisonment or punishment, but may be admitted to bail, not only after arrest and before trial, but after conviction and pending a writ of error." Id. at 285, 15 S.Ct. at 453.

For many years thereafter, it was generally perceived that the granting of bail pending appeal was addressed to the judicial discretion of the trial court, which would not be disturbed by an appellate court absent an abuse of that discretion. See Garvey v. United States, 292 F. 591, 593 (Manton, Ch. J.), (2d Cir.1923); United States v. St. Johns, 254 F. 794 (7th Cir. 1918), but Cf. McKnight v. United States, 113 F. 451, 453 (6th Cir.1902) (holding that bail pending appeal was mandatory if there was not a risk of flight.)

Interesting on this issue generally is United States v. Motlow, 10 F.2d 657, 659 (7th Cir.1926). In that case, involving Lem Motlow, the proprietor of the famous Jack Daniels Distillery, Supreme Court Justice Pierce Butler, sitting as Circuit Justice for the Seventh Circuit, considered the bail application of a number of defendants accused with having conspired to violate the National Prohibition Act. Justice Butler held:

"It is the purpose of the law—and many statutes, federal and state, have been enacted—to safeguard litigants so far as possible against erroneous judgments. Review in appellate courts is favored in all cases where the grounds on which it is claimed are assigned in good faith on advice of counsel that in law they are valid and well taken; and parties properly seeking review are not to be burdened by avoidable expense, loss, sacrifice or punishment."

From 1934 to 1956, Criminal Appeals Rule 6 and then Rule 46(a)(2) (1946) of the Federal Rules of Criminal Procedure provided for bail pending appeal only if the appeal involved "a substantial question which should be determined by the appellate court." With the adoption of Criminal Appeals Rule 6, the standard for granting bail pending appeal became more restrictive. The appeal had to involve a substantial question, not merely one which was not frivolous, and the burden of proof was transferred from the government to the defendant to make such a showing. Johnson v. United States, 218 F.2d 578 (9th Cir.1954). Once a substantial question was shown to exist, bail was a matter of discretion. Williamson v. United States, 184 F.2d 280, 281 n. 4 (2d Cir.1950). The Bail Reform Act of 1966 left this practice intact, although it made bail more accessible prior to conviction.

With the proliferation of crime, and the increase in criminal appeals, consequent upon hypertechnical evidentiary rules, producing reversal of convictions without regard to guilt or innocence, and the availability of a free attorney to take an appeal, some social discontent arose concerning the perceived ineffectual administration of the criminal law. It came to be understood that many appeals were taken solely for purposes of delay, and persons on bail awaiting resolution of their appeals were committing additional crimes, engaging in flight, and evading punishment.

Thus, the Bail Reform Act of 1984 was enacted, because Congress wished to reverse the presumption in favor of bail that had been established under the prior statute, the Bail Reform Act of 1966. Under that Act, even after conviction the defendant was entitled to bail for a non-frivolous appeal "unless the court or judge has reason to believe that no one or more conditions of release will reasonably assure that the person will not flee or pose a danger to any other person or any other community." § 3(a), 80 Stat. 214, 215 (1966) (formerly codified at 18 U.S.C. § 3148). As noted, Congress intended Section 3143 of the 1984 act to reverse the then prevailing presumption in favor of post-conviction bail; however, our Court of...