Appeal from a judgment of conviction entered in the United States District Court for the Southern District of New York, William C. Conner, Judge, after a jury trial, for violation of 18 U.S.C. § 472. Reversed and remanded.
Before Waterman and Mulligan, Circuit Judges, and Wyatt, District Judge.*fn*
On December 6, 1977, the defendant in this case, Nathan Lang, also known as "Cool Breeze," made the mistake of visiting Rikers Island, a New York City penal institution and the situs of a former incarceration. His hegira was prompted not by nostalgia but in order to retrieve some personal effects. Oddly enough he submitted to a routine search by a Corrections Officer. At his request Cool Breeze opened a black pouch he was carrying which contained a quarter-inch stack of brand new five dollar bills which were in four groups and each of which had identical serial numbers. When asked about the bills, Lang admitted that they were "play money", a street term commonly employed to describe counterfeit bills. Cool Breeze, not surprisingly, was arrested, given Miranda warnings and was indicted on January 19, 1978. His trial lasted about two days. It took the jury about the same time to reach a verdict and then only after two Allen charges to the jury. Lang was convicted on June 7, 1978 in the Southern District of New York and the district judge who presided over the trial was the Honorable William C. Conner. The crime for which Lang was convicted was the possession of 30 counterfeit five dollar Federal Reserve notes in violation of 18 U.S.C. § 472.
The principal characters in the transaction at issue include his girl friend Donna Paola (spelled Payola in the transcript) also known as "Chicago." While there seems to be little doubt about the romantic relationship between Cool Breeze and Chicago, there is a serious question about their business relationship, a central issue on this appeal. Cool Breeze did not testify and Chicago, for reasons not made evident in the record, was an unavailable witness. The alleged supplier of the counterfeit bills was Ronson Carey, also known as "Raheem," who was also an unavailable witness for reasons we shall discuss in some detail. Finally, there was the inevitable undercover Secret Service Agent, Douglas James, to whom Raheem had sold counterfeit bills originating from the same plates as the bills found in the possession of Cool Breeze. There was no issue concerning the defendant's possession of the counterfeit bills and no constitutional infirmity suggested as to his search, arrest and the seizure of the bills. While some issue was raised as to whether he was knowingly in possession of counterfeit bills, his admission that it was "play money" undermined any real question on this point. The principal issue in the view of the trial judge and the one which may well have bothered the jury in its prolonged deliberations, was whether the Government had succeeded in establishing beyond a reasonable doubt that Lang possessed the money with the intent to defraud.
The trial judge's comments, made during several conferences with counsel which appear in the transcript, leave little doubt that the major source of the Government's proof and in fact its only proof that Lang intended to pass the money on for a profit consisted of a taped telephone conversation between Carey and the undercover agent James, which took place on December 9, 1977, three days after Lang's arrest. The admissibility of the taped conversation, which the trial judge characterized as "critical" to the Government's case, presents the dispositive issue on this appeal. It was admitted with considerable misgiving by the district judge, who on two occasions suggested that if he had erred, the Court of Appeals would provide guidance. We have considered the matter in detail and conclude that the taped conversation was inadmissible hearsay, not within the exceptions to the rule proposed to be applicable and further that the error cannot be characterized as harmless. Therefore, we reverse the conviction. Cool Breeze is free on bail pending this appeal.
Considerably bowdlerized, the taped conversation in issue here contained statements by Carey that Cool Breeze had gone to Rikers Island "all dust up and high" (according to expert testimony street jargon meaning under the influence of an hallucinogenic drug); that he had the counterfeit bills with him at that time; that he had been "busted" (arrested); that Carey had never met Cool Breeze but had been "juggling" (dealing) with him through his girl friend (Paola) who was his "contact" (middle person). The Government argued, and the trial court ultimately accepted into evidence, the tape recorded conversation. The conversation was held admissible as an exception to the hearsay rule, as either a statement against penal interest by an unavailable witness, Fed.R.Evid. 804(b)(3), or, alternatively as "a statement by a coconspirator of a party during the course and in furtherance of the conspiracy", Fed.R.Evid. 801(d)(2)(E). Although their Runyonesque sobriquets are more colorful, we shall refer to the participants hereafter by their proper names.
I RULE 804(b)(3) STATEMENT AGAINST PENAL INTEREST
a) Unavailability as a Witness
Before the hearsay exceptions under Rule 804 become applicable, subdivision (a) of the rule requires that the declarant whose statement is sought to be introduced be unavailable as a witness. Judge Conner properly found that Carey was unavailable as a witness under Rule 804(a)(1), which provides that a declarant is unavailable if he is exempted by ruling of the court on the ground of privilege from testifying concerning the subject matter of his statement. Carey appeared in court with his attorney pursuant to subpoena and on direct examination by the Government invoked the Fifth Amendment with respect to any questions concerning the sale in issue. In contesting the finding of unavailability, the appellant relies upon the last sentence of Rule 804(a) which provides that "a declarant is not unavailable as a witness if his exemption . . . is due to the procurement or wrongdoing of the proponent of his statement for the purpose of preventing the witness from attending or testifying." There is no suggestion that the Government in any way prevented Carey from testifying. He was represented by his own counsel and his refusal to testify was in his self-interest. Rather, the appellant proceeds on the theory that the Government acted wrongfully in not granting Carey immunity. However, the law appears to be well settled that the power of the Executive Branch to grant immunity to a witness is discretionary and no obligation exists on the part of the United States Attorney to seek such immunity. United States v. Bautista, 509 F.2d 675, 677 (9th Cir.), cert. denied sub nom. Monsivais v. United States, 421 U.S. 976, 95 S. Ct. 1976, 44 L. Ed. 2d 467 (1975); United States v. Ramsey, 503 F.2d 524, 532-33 (7th Cir. 1974), cert. denied, 420 U.S. 932, 95 S. Ct. 1136, 43 L. Ed. 2d 405 (1975); United States v. Berrigan, 482 F.2d 171, 190 (3d Cir. 1973); Earl v. United States, 124 U.S.App.D.C. 77, 80, 361 F.2d 531, 534 (1966) (Burger, J.), cert. denied, 388 U.S. 921, 87 S. Ct. 2121, 18 L. Ed. 2d 1370 (1967); People v. Sapia, 41 N.Y.2d 160, 166, 391 N.Y.S.2d 93, 359 N.E.2d 688 (1976), cert. denied, 434 U.S. 823, 98 S. Ct. 68, 54 L. Ed. 2d 80 (1977).
The appellant relies solely upon United States v. Morrison, 535 F.2d 223, 229 (3d Cir.), cert. denied sub nom. Boscia v. United States, 429 U.S. 824, 97 S. Ct. 78, 50 L. Ed. 2d 87 (1976), which we find totally distinguishable. There the witness, who ultimately claimed the Fifth Amendment privilege, had initially indicated her willingness to testify for the defendant. However, the Assistant United States Attorney on several occasions advised her that if she did testify she would be liable to prosecution for perjury. She was served with an invalid subpoena under which she appeared in his office. There, in the presence of three undercover agents whose testimony she would have undermined, she was again advised of the dangers inherent in her testifying at trial. Under these circumstances the court found not surprisingly that the Government was guilty of such prosecutorial misconduct that use immunity should have been requested. No such circumstances existed here.
The appellant argues, however, that since Carey had already pled guilty to the crime of selling drugs to James, the undercover agent, and the Government had shown no interest in prosecuting him for his transaction with Paola, its failure to grant Carey use immunity gave the prosecution a tactical advantage in introducing Carey's telephone conversation without the necessity of producing Carey for cross-examination. However, these facts parallel those in Earl v. United States, supra, where Judge (now Chief Justice) Burger held that there was no obligation to request immunity where the Government had previously dismissed certain pending charges against a witness and accepted a plea of guilty to another criminal transaction. "What Appellant asks this court to do is to command the Executive Branch of government to exercise the statutory power of the Executive to grant immunity in order to secure relevant testimony. This power is not inherent in the Executive and surely is not inherent in the judiciary." 124 U.S.App.D.C. 80, 361 F.2d at 534.*fn1
It is doubtful, in any event, that Carey's testimony would have been helpful to Lang. Carey was called at trial as a witness for the Government and then claimed immunity. Certain interstices in the knowledge of Carey as to Lang's ultimate purchase of the bills which are not indicated in the tape might well have established the Government's case. We note that this court has held that the government is not obligated to grant immunity to witnesses so that they may be made available to testify on behalf of the defendant. United States v. Stofsky, 527 F.2d 237, 249 (2d Cir. 1975), cert. denied, 429 U.S. 819, 97 S. Ct. 66, 50 L. Ed. 2d 80 (1976). In any event, there are sound policy considerations to support the case law here. While Carey had pled guilty to the sale to James, there were indications that he had been dealing in counterfeit notes with Paola and Lang and possibly others. Had he been given use immunity in this case he could have testified on direct or cross-examination to other transactions which would have resulted in effect in an immunity bath. Since there was no prosecutorial misconduct and no discriminatory use of immunity to obtain an unfair advantage over the defendant, there is no reason to depart from the case law and the clear language of the rule.
b) Statement Against Penal Interest
Appellant also argues that Carey's statements were not against his penal interest and thus not within Rule 804(b)(3). This subsection of the Rule defines a statement against interest insofar as here relevant as one which "at the time of its making . . . so far tended to subject (the declarant) to . . . criminal liability . . . that a reasonable man in his position would not have made the statement unless he believed it to be true." That Carey's statement reveals his criminal conduct as a seller of counterfeit notes is not open to question. Appellant argues, however, that since Carey made the statement to a person to whom he had recently sold counterfeit bills and who he believed to be a confederate, he could not reasonably be aware that by making the statement he was subjecting himself to criminal liability. This position, in our view, is not tenable. The Rule does not require that the declarant be aware that the incriminating statement subjects him to immediate criminal prosecution. Rather, it simply requires that the incriminating statement sufficiently "tended" to subject the declarant to criminal liability "so that a reasonable man in his position would not have made the statement unless he believed it to be true." This is how Rule 804(b)(3) has been consistently interpreted. Thus, in United States v. Barrett, 539 F.2d 244, 249-51 (1st Cir. 1976), the court found that the reliability of an inculpatory hearsay statement made to an acquaintance during a card game was not impugned because the declarant "might not so readily have perceived the disserving ...