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UNITED STATES v. GRUBERG

October 29, 1979

UNITED STATES OF AMERICA, Plaintiffs, against GERALD I. GRUBERG and CHARLES S. RONDER, Defendants.


The opinion of the court was delivered by: CONNER

OPINION AND ORDER

Defendant Ronder was indicted on June 18, 1979 on two counts. Count 1 of the indictment alleged that defendant, the independent accountant for the Ulster Electric Supply Company of Kingston, New York, had conspired with Gerald Gruberg, the president of that company and a named co-conspirator, and Grace Ede, the company's bookkeeper, an unindicted co-conspirator, to make and subscribe false tax returns on behalf of the company in violation of 26 U.S.C. § 7206(1). Count 3 alleged that defendant Ronder knowingly aided and advised the preparation and filing of a false tax return on behalf of the Ulster Electric Supply Company, in violation of 26 U.S.C. § 7206(2). Count 2 of the same indictment charged co-defendant Gruberg with a substantive violation of 26 U.S.C. § 7206(1).

On June 28, 1979, defendants Ronder and Gruberg were arraigned. Each pleaded not guilty. On September 9, 1979, co-defendant Gruberg withdrew his plea of not guilty and pleaded guilty to Count 2 of the indictment. Defendant Ronder has now moved to transfer this case to the Northern District of New York under 18 U.S.C. § 3240 or Rule 21(b), F.R.Crim.P. In addition, Ronder has moved to dismiss Count 1 of the indictment as being in violation of Wharton's Rule; to dismiss the entire indictment on grounds that residents of Columbia, Greene and Ulster counties were systematically excluded from the Grand Jury array, in violation of the Fifth and Sixth Amendments of the United States Constitution and of the Jury Selection and Service Act of 1968, 28 U.S.C. § 1861 et seq.; that the Grand Jury was an unconstitutional "open-ended" referral of an investigation by the Internal Revenue Service to the Justice Department in violation of Rule 6(e), F.R.Crim.P.; that the prosecution improperly disclosed evidence to the Grand Jury, in violation of Rule 6, F.R.Crim.P.; and that the indictment was the result of prosecutorial misconduct; to inspect the Grand Jury minutes, pursuant to Rule 6, F.R.Crim.P.; for discovery; to suppress defendant Ronder's Grand Jury testimony, on the grounds that Ronder was a target of the Grand Jury investigation at the time that he testified; to suppress statements made by Charles Simmons, an attorney who at one point apparently represented the Ulster Electric Supply Company; and to take the depositions of Gerald Gruberg, Charles Simmons and Grace Ede the former bookkeeper for the Ulster Electric Supply Company, who was named as an unindicted co-conspirator in the indictment. The Government has opposed defendant's motions to transfer, to dismiss the indictment, to inspect the Grand Jury minutes, to suppress, and to take depositions, and has asserted that all material requested in defendant's motion to compel discovery has been provided to defendant.

 For the reasons stated below, the Court will grant defendant Ronder's motion to transfer under Rule 21(b), F.R.Crim.P. The motion to dismiss Count 1 of the indictment will be denied. The motion to dismiss the indictment under 28 U.S.C. § 1867 will be denied without prejudice. The motions to dismiss due to the "open-ended" nature of the Grand Jury proceeding, improper disclosure of matters occurring before the Grand Jury, lack of competent evidence before the Grand Jury and prosecutorial misconduct will be denied. The motions to inspect the Grand Jury minutes and to take depositions will be denied. Decision on the discovery motion and on the motion to suppress will be deferred, pending transfer of the case to the Northern District of New York.

 1. Motion to Transfer

 A. 18 U.S.C. § 3240 claim

 Defendant's first contention is that he should be granted a transfer to the Northern District of New York "as of right" pursuant to 18 U.S.C. § 3240, covering venue in criminal cases where a new federal judicial district or division is transferred or where territory is transferred from one district or division to another district or division. The basis for defendant's claim is that Ulster County, the county in which the offices of the Ulster Electric Supply Company are located and where the acts alleged in the indictment are alleged to have taken place, was transferred from the Southern District of New York to the Northern District of New York, effective March 31, 1979, pursuant to P.L. No. 95-408, § 4(c), 92 Stat. 885 (1978) (codified at 28 U.S.C. § 112). Defendant asserts that § 3240 requires the Court to transfer a prosecution for offenses committed within a transferred county, such as Ulster County, prior to the transfer to the new district, here the Northern District of New York, whenever the defendant so requests.

 The defendant's construction of § 3240 as conferring an automatic right to transfer on a defendant who so requests cannot be supported by the language of § 3240, the case law construing the section, or the policy considerations underlying these venue provisions. § 3240 states that:

 
"Whenever any new district or division is established, or any county or territory is transferred from one district or division to another district or division, prosecutions for offenses committed within such district, division, county, or territory prior to such transfer, shall be commenced and proceeded with the same as if such new district or division had not been created, or such county or territory had not been transferred, unless the court upon the application of the defendant, shall order the case to be removed to the new district or division for trial." (emphasis added).

 Defendant first argues that the Court should read the language of the last sentence as a mandatory "shall," requiring a transfer to the new district following application by the defendant. The use of the word "shall" in this context, however, is grammatically not in a mandatory sense, but rather, as a conditional subjunctive following "unless"; the statutory language is thus silent on the standards under which the Court should review the defendant's application to transfer.

 Further, the legislative history indicates that the Court should look to the Federal Rules of Criminal Procedure in this case, Rule 21 on transfer from the district for trial in implementing the final sentence of § 3240. The section was initially enacted as part of § 59 of the Judiciary Act of 1911, c. 231, § 59, 36 Stat. 1103, formerly codified at 28 U.S.C. § 121, (1940 ed.). Section 59 covered venue in both civil and criminal actions affected by the creation of a new judicial district or the transfer of territory from one district to another, and referred to § 58 of the Judiciary Act, codified at 28 U.S.C. § 119, the precursor of current 28 U.S.C. § 1404 covering change of venue in civil cases, to provide the mechanism for transferring cases from the original district to the new district. In 1948, those venue provisions of § 59 which related to criminal cases were transferred to Title 18 on Criminal Procedure Act of June 25, 1948, c. 645, 62 Stat. 827; in 1949, this new section was amended, Act of May 24, 1949, P.L. No. 72, c. 139, § 50, 63 Stat. 96, to delete the reference to the transfer mechanism of 28 U.S.C. § 119 (now 28 U.S.C. § 1404), since, as the House report indicated, that reference was "surplusage in view of Rule 19 et seq. of the Federal Rules of Criminal Procedure." H.R.Rep.No.352, 81st Cong., 1st Sess. (1949), reprinted in U.S.Code Cong. & Admin.News, pp. 1248, 1262 (1949). The history of the statute thus suggests that current Rules 20 through 22 *fn1" on transfer of criminal proceedings establish the circumstances under which a court should order a case arising in one judicial district to be transferred to a newly established or expanded judicial district which encompasses the territory in which the offense allegedly occurred.

 This interpretation is supported by the fact that none of the cases construing § 3240, or its predecessor § 59, have found that defendant had the right to transfer under the venue section unless Rule 21(b) factors were also present.

 The majority of cases interpreting this section have not dealt directly with the issue of standards for transfer. In Lewis v. United States, 279 U.S. 63, 49 S. Ct. 257, 73 L. Ed. 615 (1929), the defendants were alleged to have committed certain violations of the national banking laws in Tulsa, Oklahoma prior to the transfer of Tulsa County and nine other counties from the Eastern District of Oklahoma to the newly created Northern District of Oklahoma. Defendants were indicted and convicted in the Eastern District. They then moved to dismiss the indictment on the grounds that the court lacked jurisdiction to hear the case and that the Grand and Petit Juries had not been legally constituted, id. at 66, 49 S. Ct. at 258. The Supreme Court found that neither § 59 nor the provision of the Sixth Amendment granting defendant a right to be tried by "jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law" had been violated, since the Eastern District continued to have jurisdiction over crimes committed in its former territory under § 59, the prior statute establishing the Eastern District, and the statute transferring the ten counties in question to the new Northern District, and since the juries had been selected under the Eastern District court's power to call jurors from all counties within the district's former territory. Id. The Lewis case did not specifically consider the standards to be applied in granting a transfer under § 59 if the defendant had made a transfer application, but noted only that the defendant had failed to "claim the right to be tried in the Northern District," id. at 69 n.3, 49 S. Ct. at 258 n.3.

 Later cases have followed Lewis in finding that jurisdiction over an offense committed in the former district's territory remains with that district, Hayes v. United States, 407 F.2d 189 (5th Cir.), cert. dismissed, 395 U.S. 972, 89 S. Ct. 2133, 23 L. Ed. 2d 777 (1969); Westover v. United States, 394 F.2d 164 (9th Cir. 1968), unless the defendant makes a specific claim for transfer, see Mizell v. Vickrey, 36 F.2d 327 (10th Cir. 1929); Briggs v. White, 32 F.2d 108 (8th Cir. 1929); cf. Quinlan v. United States, 22 F.2d 95, 98 (5th Cir. 1927), cert. denied, 276 U.S. 627, 48 S. Ct. 321, 72 L. Ed. 739 (1928) (decided prior to Lewis ). While subsequent cases have also followed Lewis in describing the last phrase of § 3240 (or the same phrase as it appeared in § 59) *fn2" in language suggesting a "right" to transfer, Briggs, supra ; Hale v. United States, 25 F.2d 430 (8th Cir. 1928), such language, like the language in Lewis, has always been dicta and has always been couched either in ambiguous phrasing, as in Lewis, supra ("claim the right" (emphasis added) rather than "exercise the right"), or in Briggs, supra at 109 (the trial and subsequent proceedings should be in (the old) district "unless the defendant should apply for an order removing the trial" (emphasis added); defendant made no claim that such application had been made) or by a finding of such circumstances as would satisfy the requirements of Rule 21 for a transfer. In Hale, supra, for instance, defendants moved to transfer to a specific county redistricted from the Western District of Oklahoma to the Northern District of Oklahoma under § 59 and § 40 of the Judiciary Act of 1911; *fn3" the court recited the convenience factors, such as the distance of the respective courthouses to the location of the alleged offense, the location of witnesses and the expense to defendant of securing attendance of witnesses at trial, id. at 432, favoring the transfer; treated the motion primarily as one to remove to a specific county; noted that the Western District court had no authority to transfer cases to a specific county in another district under § 40, and that no motion had been made under § 59 "for transfer to the Northern District " (emphasis added); but that "(i)f such application had been made, it would have been the duty of the District Court for the Western District to transfer the case to the Northern District generally," id. at 433, in effect incorporating the convenience test of current Rule 21(b) into the court's § 59 (now § 3240) analysis. See also Mizell v. Vickrey, supra (transfer clause of § 59 could have no application to a criminal offense committed in territory now part of a new district, since the new district could never have jurisdiction over an offense committed prior to the creation of the new district (note that this interpretation of jurisdiction in criminal offenses is now modified under Rule 21(b) so that transfer of criminal cases is permissible under that Rule whether or not the transferee court would have had original jurisdiction over the case, see discussion of Rule 21(b) infra )); cf. United States v. Rosenberg, 226 F. Supp. 199, 200-01 (S.D.Fla.1964) (noting that defendant in certain tax cases may transfer as of right under 18 U.S.C. § 3237(b) to the jurisdiction where the defendant resides; and suggesting that defendant's alternate motion for transfer under § 3240 was not as of right, since the court noted that the Government "had no objection"; 3237(b) motion granted); cf. Mizell v. Beard, 25 F.2d 324 (N.D.Okl.1928) (finding that new district without jurisdiction over offenses committed prior to the creation of the new district).

 Finally, the policy considerations underlying § 3240 and the venue provisions in criminal cases generally suggest that if the district in which the site of the alleged crime was initially located has jurisdiction over a crime allegedly committed prior to the redistricting as if that district had retained its original jurisdiction, see Lewis, supra; Westover, supra ; and if the new district has no original jurisdiction over the offense by virtue of the redistricting, see Mizell v. Vickrey, supra ; then the defendant who wishes to transfer his case from the original district to the new district is in the same position as any defendant wishing to transfer a case to another district for convenience factors under Rule 21(b), and should not be placed in a better position than any other defendant by the fortuitous transfer of the territory where the crime was allegedly committed from one federal district to another, see Westover, supra at 166. For the foregoing reasons, defendant in this case is not entitled to an automatic transfer under 18 U.S.C. § 3240.

 B. Rule 21(b) motion

 The Court will, however, grant defendant's motion to transfer under Rule 21(b), providing for transfers for the convenience of parties and witnesses and in the interests of justice. *fn4" In Platt v. Minnesota Mining & Mfcting. Co., 376 U.S. 240, 84 S. Ct. 769, 11 L. Ed. 2d 674 (1964), the Supreme Court noted 9 factors to be considered in making a determination under Rule 21(b): (1) location of the defendant; (2) location of witnesses; (3) location of events likely to be in issue; (4) location of documents and records; (5) disruption of the defendant's business; (6) expense to the parties; (7) location of counsel; (8) relative accessibility of place of trial; and (9) docket conditions in each district. Platt at 243-44, 84 S. Ct. at 771-772; see also United States v. Keuylian, 602 F.2d 1033, at 1037-1038 (2d Cir., 1979). In addition, a court may consider "any other special elements which might affect the transfer." Platt, supra, 376 U.S. at 244, 84 S. Ct. at 771; Keuylian, supra, at 1037. Under the Rule as amended in 1966, a court does not need to consider whether the transferee court would have original jurisdiction over the case. United States v. Williams, 437 F. Supp. 1047, 1051 (W.D.N.Y. 1977). The decision to transfer is at the discretion of the trial judge. Platt, supra ; Keuylian, supra ; Williams, supra.

 In this case, the factors under consideration suggesting trial in the Northern District outweigh the factors suggesting trial in New York City, namely the convenience of the Government attorneys, and the delay which will inevitably result from a transfer to another district.

 The next term in the Northern District at which defendant could be tried is a term beginning in Albany on November 14. Albany is approximately 50 miles from Kingston, New York, the home of defendant Ronder and the location of the alleged crime, while New York City is approximately 100 miles away. All of the other possible witnesses in the case also live in or near Kingston. While the documents in the case are currently in New York City, these documents are not so extensive that they could not be moved to Albany (the documents were originally brought to New York City from Kingston, and occupy "at most" two file drawers). All these factors favor an Albany location for the trial. In addition, an Albany location would be less disruptive of defendant Ronder's business, and less expensive to defendant Ronder, who could commute daily from his home in Kingston to Albany during the trial, but could not conveniently do so to New York City. Weighed against these considerations, and favoring trial in New York, are the inconvenience to the Government of trying the case in Albany, and the docket conditions of the respective courts, in particular, the delay between the trial date set in this court (October 22) and the possible trial date in the Northern District (since the Albany term will not begin until November 14), which may infringe upon both defendant's Sixth Amendment right to a speedy trial, Barker v. Wingo, 407 U.S. 514, 92 S. Ct. 2182, 33 L. Ed. 2d 101 (1972); United States v. New Buffalo, 600 F.2d 368 (2d Cir. 1979); United States v. Lane, 561 F.2d 1075 (2d Cir. 1977); United States v. Polizzi, 500 F.2d 856 (9th Cir. 1974), cert. denied, sub nom. Emprise Corp. v. United States, 419 U.S. 1120, 95 S. Ct. 802, 42 L. Ed. 2d 820, 95 S. Ct. 803 (1975), and on defendant's interest and the Government's and the Court's interest in providing a prompt trial under the Speedy Trial Act of 1964, 18 U.S.C. § 3161 et seq., *fn5" as amended by Speedy Trial Act Amendments of 1979, P.L. No. 96-43, approved August 2, 1979. The Government's convenience is, however, a factor given little weight when other considerations of convenience suggest transfer of a trial under Rule 21(b), see United States v. Olen, 183 F. Supp. 212 (S.D.N.Y. 1960), mandamus denied sub nom. United States v. Cashin, 281 F.2d 669 (2d Cir. 1960). In addition, the delay of three weeks does not appear to infringe significantly on defendant's Sixth Amendment right to a speedy trial). The delay may be too short even to trigger the Sixth Amendment inquiry laid down by Barker, see Barker, supra, 407 U.S. at 530, 92 S. Ct. at 2192; in addition, defendant has requested the transfer, which makes a subsequent finding of a Sixth Amendment violation due to delay occasioned by the transfer unlikely, see Barker, supra ; New Buffalo, supra ; Lane, supra (when continuances granted at defendant's request to prepare for trial, no Sixth Amendment violation). Finally, while the Speedy Trial Act time limits required trial of this defendant by August 27, 1979, this Court has already made a specific finding on the record under § 3161(h)(8) that a continuance until September 19, 1979 was warranted to enable defendant's new counsel to prepare for trial, and that the period from September 20 to October 29 during which this Court considered defendant's pending motions is excludable under § 3161(h) (1)(F), (J) and (h)(8); and an extension of time pending transfer of this case to the Northern District is specifically excluded from the computation of Speedy Trial Act time periods by § 3161(h)(1)(G). Clearly, the equities lie with defendant and the action will be transferred to the Northern District of New York.

 However, to avoid burdening the transferee judge with a number of motions ripe for decision, this Court will proceed to dispose of certain pending motions before transfer.

 2. Wharton's Rule Claim

 Defendant has moved to dismiss Count 1, the conspiracy count of the indictment under 18 U.S.C. § 371, on the ground that indictment for the conspiracy charged here and for a substantive violation of 26 U.S.C. § 7206(2) violates the principle of Wharton's Rule that a defendant shall not be charged with conspiracy to commit a substantive offense where the substantive offense necessarily "requires the participation of 2 (or more) persons for its commission," Iannelli v. United States, 420 U.S. 770, 774, 95 S. Ct. 1284, 1288, 43 L. Ed. ...


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