US v. Serrano

• Decision Date: 27 January 1988
• Docket Number: Crim. No. 85-0024 GG.
• Citation: 680 F. Supp. 58
• Parties: UNITED STATES of America v. Miguel A. SERRANO, d/b/a Ponce Developers, Inc., Juan Luis Boscio, William Stamps.
• Court: U.S. District Court — District of Puerto Rico

680 F. Supp. 58

UNITED STATES of America v. Miguel A. SERRANO, d/b/a Ponce Developers, Inc., Juan Luis Boscio, William Stamps.

Crim. No. 85-0024 GG.

United States District Court, D. Puerto Rico.

January 27, 1988.

COPYRIGHT MATERIAL OMITTED

Daniel F. Lopez Romo, U.S. Atty., Lydia Lizarribar, Asst. U.S. Atty., Hato Rey, P.R., for plaintiff.

Blas C. Herrero, Jr., Hato Rey, P.R., for defendant Miguel A. Serrano.

OPINION AND ORDER

GIERBOLINI, District Judge.

This is one more chapter of defendant's long saga. Considering the record, what has been stated elsewhere is also applicable to defendant. His intelligence and financial wizardry are only surpassed by his penchant to get entangled with the law. Cf. United States v. Montemayor, 666 F.2d 235, 236 (5th Cir.1982).

Procedural Background

A prolonged and far reaching investigation by federal investigative agencies produced three different indictments against defendant, Miguel A. Serrano (Serrano). Since the same grand jury considered the evidence in the first two cases, and a different grand jury considered the third one, the date in which the indictments were returned becomes important. The first indictment pertains to Cr. 84-0381(JP) and was returned on November 28, 1984. In that case, Serrano pled guilty to three counts involving violations to 18 U.S.C. § 1006 (false entries in documents of federal credit institutions), § 656 (misapplication of bank funds), and § 1343 (wire fraud). After having been sentenced, defendant sought to withdraw his guilty plea, but the request was denied.

The second indictment, Cr. 85-0024(GG), the instant case, was returned on February 1, 1985. Here, Serrano was charged along with others in a four-count indictment for violation of Title 18 U.S.C. §§ 2, 1341 and 1343. Pursuant to the indictment, beginning in May 1982 through February 1983, Serrano along with two other co-defendants devised and carried out a scheme to defraud the Home Federal Savings and Loan Association of Puerto Rico and to obtain Title I notes and FHA mortgages from it with a value of approximately $1.7 million (the collateral), and to obtain a million dollars from the proceeds of a securities repurchase agreement (Repo # 196 loan), which triggered a series of transactions by which the scheme was accomplished. As a result of the above, the Home Federal Savings and Loan Association of Puerto Rico collapsed. After a two-week jury trial, defendant was found guilty as charged.

The third indictment relates to Cr. 85-0449(CC) and was returned on October 31, 1985 by a different grand jury.¹ That three count indictment charged Serrano only in the first count alleging conspiracy with two other co-defendants to obstruct commerce by extortion, in violation of Title 18 U.S.C. § 1951. There, defendant's pretrial motions were referred to Magistrate Jesús Antonio Castellanos who, after an extensive evidentiary hearing, found that the grand jury had been exposed to immunized information and that there was a lack of contemporaneous knowledge of the Kastigar problem (Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972)), as well as an absence of contemporaneous precautions against intentional or unintentional use of immunized material in furtherance of a federal investigation. He recommended that the indictment be dismissed, to which the judge agreed holding that the government failed to meet the required burden of legitimating all its evidence. However, the court made clear that its opinion and order dealt only with the indictment and prosecution against Serrano in case 85-0449(CC), not with case 84-0381(JP), or the instant case 85-0024(GG).

The post-trial motions filed in the case at bar requesting a new trial², dismissal of the indictment and the vacating of defendant's conviction were referred to Magistrate Justo Arenas. Defendant contends that the government, due to ignorance of its own guidelines, utilized his immunized testimony before the grand jury that returned the indictment against him. In opposition, the government asserts prior knowledge of all pertinent evidence and denies the possibility of any use, direct or indirect, of the immunized testimony or any information derived therefrom.

Now pending before us is an appeal by the government from the amended report issued by Magistrate Arenas recommending that the motion to dismiss the indictment be granted. After a non-evidentiary hearing, the magistrate found that some parts of Serrano's immunized testimony and/or the fruits thereof were used by the prosecution in its presentations to the grand jury during January 17 and February 1, 1985. He therefore recommended that the indictment be dismissed and the sentence vacated and set aside. The government appeals.

Factual Background

From the evidence before us, it appears that with knowledge of an FBI investigation concerning many of his financial transactions and dealings while an officer of Shearson-American Express of Puerto Rico, and facing the imminence of an indictment in this court, Serrano testified under a grant of local immunity on September 25, 27 and 28, 1984 before a sub-committee of the House of Representatives of Puerto Rico that was conducting an investigation of government corruption.

Prior to Serrano's testimony before the legislative committee, the investigation that resulted in the instant case had been assigned by the FBI to special agent Harry García who had been conducting interviews as early as February 1984 in relation to an investigation known as "Shearson-American Express". The investigation dealt with the financial transactions involved in this case as well as in Criminal Cases 84-0381(JP) and 85-0449(CC). The first grand jury subpoenas were issued on March 16, 1984. As a result of the subpoenas issued, thousands of documents were obtained which became evidence in the instant case. The evidence included bank statements, cancelled checks, deposit slips, wire transfers, checks, money orders, signature cards, correspondence and other records related mainly to the Repo # 196 transaction. Agent García also interviewed numerous witnesses and prepared extensive reports of these interviews — which had been conducted prior to September 1984 — and which exhaustively detailed the transactions between Serrano and Home Federal Savings, including Repo # 196. The witnesses interviewed also provided affidavits of the aforementioned transactions, as well as to the facts related to transactions between Serrano and the Municipality of Ponce.

Likewise, by March 1984 agent Garcia had been provided with a copy of Serrano's deposition taken by the attorneys for Shearson American-Express on October 21, 1983. In his statements, which were under oath and voluntarily made, Serrano explained thoroughly the Repo # 196 transaction. Furthermore, in May 1984, four months before Serrano testified under a grant of immunity, his attorney at that time, Mr. Antonio Amadeo Murga, requested an interview with the Federal Bureau of Investigations (FBI). The request was granted and the interview was scheduled for May 10, 1984. On that date, Serrano, accompanied by counsel, arrived at the FBI offices in Hato Rey, Puerto Rico and expressed his willingness to be interviewed in relation to the transactions under investigation. The report prepared by agents Jane Erickson and García, who conducted the interview, reveals that one of the transactions for which Serrano was indicted in this case — Repo # 196 — was extensively discussed.

In September 1984 when Serrano testified before the legislative committee under a state grant of immunity, his testimony was carried on television and agent García watched and videotaped Serrano's entire testimony and later reviewed the tapes and transcripts on various occasions. Upon agent García's instructions, a transcript of Serrano's immunized testimony was hand-delivered to AUSA Lydia Lizarribar who had the primary responsibility for prosecuting Serrano.

On February 1, 1985, the Mariani grand jury returned the present indictment. Serrano thereafter moved to dismiss the indictment contending, as he again does now, that it was based upon evidence and information derived from his immunized testimony. An evidentiary hearing was held on August 24, 1985 before the undersigned. At said hearing, agent García testified that the case was complete before Serrano testified before the legislature, and that the evidence presented to the grand jury was his own testimony concerning the contents of reports of witness interviews by the FBI during investigations conducted prior to September 1984. He testified that he did not present any evidence to the grand jury derived from his reading of Serrano's immunized testimony. No improperly derived information — i.e. no communication or link between his testimony and the present criminal case suggestive of taint — was brought to the attention of the court during the hearing. The grand jury minutes related to this proceeding were provided to the court for an in camera inspection. After carefully examining them, and considering the evidence presented and arguments adduced at the hearing, the court denied the dismissal finding that the indictment returned by the grand jury was not based on evidence derived from Serrano's immunized testimony or from its fruits.

After a jury trial, Serrano renewed his contention that the government had violated his privilege against self-incrimination. In his post-trial motion, Serrano alleges that agent García made mention of defendant's immunized testimony before the grand jury in order to obtain an indictment, and that the prosecutor used such testimony directly and indirectly in focusing the investigation on the defendant, in deciding to initiate the prosecution, and in planning the trial strategy — a clear violation of Murphy v. Waterfront Commission, 378 U.S. 52, 84 S.Ct. 1594, 12 L.Ed.2d 678 (1964).

Discussion

Grants of use and derivative use immunity...