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July 27, 1981

SAM GOODY, INC., George Levy and Samuel Stolon, Defendants

The opinion of the court was delivered by: PLATT


This case, involving a sixteen-count indictment charging defendants with violations of 18 U.S.C. § 1961 ("RICO"), 18 U.S.C. § 2314 (interstate transportation of stolen property), and 18 U.S.C. § 2318 (criminal copyright violations), *fn1" was tried to a jury during the month of March and the first few days of April. At the conclusion of the government's case and upon motion by defense counsel, the Court entered a judgment of acquittal on Indictment Count Nos. 1, 9, 12, 13, 14, 15 and 16 against Sam Goody, Inc. ("the Corporation") on Indictment Count Nos. 9, 12, 13, 14, 15 and 16 against Samuel Stolon and on all counts in the Indictment against George Levy, the prosecutor conceding on the oral argument of defendant Levy's motion that the government's evidence against him was insufficient.

 At the conclusion of the entire case the Corporation and Samuel Stolon moved to dismiss the remaining counts against them and their motions were denied.

 After deliberating for five and one-half days the jury returned a verdict against the Corporation on Indictment Count Nos. 3, 4, 6, 7 and 8 and against Samuel Stolon on Indictment Count Nos. 4 and 6 and acquitted both defendants on all of the remaining Counts against them. Defendants are now moving, pursuant to Rule 29 of the Federal Rules of Criminal Procedure, for judgments of acquittal or, alternatively, pursuant to Rule 33 of the Federal Rules of Criminal Procedure, for a new trial.

 In passing upon defendants' motions to set aside the verdict, we must consider all of the evidence in the light most favorable to the government and can only overturn a guilty verdict if no reasonable mind could fairly find guilt beyond a reasonable doubt. See United States v. Artuso, 618 F.2d 192 (2d Cir. 1979), cert. denied, 449 U.S. 861, 101 S. Ct. 164, 66 L. Ed. 2d 77 (1980). Under that standard of review we think the evidence, viewed in each instance in its entirety, is sufficient to sustain the findings (i) that the defendants knew the tapes and cassettes were counterfeit, (ii) that the tapes and cassettes were shipped by the defendants in interstate commerce, (iii) that the value of the sound recordings so shipped exceeded the requisite amounts, and (iv) that the copyrights in question were valid. *fn2" Consequently, we must deny defendants' motions for acquittal.

 Defendants' motion for a new trial, "to further the interests of justice," however, presents entirely different matters for our consideration. *fn3" It is this Court's belief that defendants are entitled to a new trial, first, "because of the distinct risk that the jury was influenced in its disposition of this (case) ... by the allegations of the RICO count," United States v. Guiliano, 644 F.2d 85, 88 (2d Cir. 1981); second, because of the false testimony of the Government agent and the prosecutor's failure to correct this false testimony prior to the conclusion of the Government's case even though the Court furnished to the prosecutor authority in this Circuit requiring the Government to do so, see Giglio v. United States, 405 U.S. 150, 92 S. Ct. 763, 31 L. Ed. 2d 104 (1972); United States ex rel. Washington v. Vincent, 525 F.2d 262 (2d Cir. 1975), cert. denied, 424 U.S. 934, 96 S. Ct. 1147, 47 L. Ed. 2d 341 (1976), *fn4" and third, because of the possible cumulative adverse affect that the various unproven charges may have had upon the jurors' deliberations.

 The risk that all of these conditions may have tainted the jury's deliberations requires this Court, pursuant to Rule 33, to exercise its discretion to order a new trial in the interests of justice. See United States v. Weinstein, 452 F.2d 704 (2d Cir. 1971), cert. denied sub nom. Grunberger v. United States, 406 U.S. 917, 92 S. Ct. 1766, 32 L. Ed. 2d 116 (1972). Cf. United States v. Perez, 565 F.2d 1227 (2d Cir. 1977).

 The Second Circuit has already expressed its concern about the government's use of a RICO count which it is not able to sustain. See United States v. Guilano, supra, 644 F.2d at 89. Granting that the facts of the instant case are much different from the Guilano facts, we nevertheless remain concerned about the effect of the RICO charge, particularly the "racketeering" implications contained therein, upon the jury's deliberations. While we did hold, in our earlier opinion on the matter, that defendants could properly be subject to a RICO charge, we did not, at that time, have all the evidence in the case before us. Having heard and seen the evidence and having expressed our doubts about the proof along the way, we are now in a position to consider the effect that the RICO charge may have had upon the jury and believe that there may well have been some prejudicial impact particularly when the jury came to consider the slim (albeit sufficient) circumstantial evidence produced on the issues of shipments in interstate commerce *fn5" , knowledge and copyright validity. Id. at 1768-69. Therefore, while in a normal case we might not order a new trial on this ground alone, the totality of the circumstances constrains us to consider important the prejudice engendered by the unsustained RICO count. Thus, the "taint" of the RICO count, to wit, "tarring the defendant with the label of "racketeer' ", id., taken together with the prosecution's use of false testimony and the failure of proof on the other unsustained counts caused defendants to suffer such substantial prejudice that a retrial is required. See id.; see also, United States v. Armocida, 515 F.2d 29 (3d Cir. 1975).

 In this connection, under the relevant case law the prosecutor had a duty, upon learning of the false testimony given by the Government agent, to correct the same promptly and put the truth before the jury. In this case, the government failed to give the jury the proper version and apparently had no intention of doing so, even though the Court furnished the prosecutor with the law on the subject, for it rested its case, despite our admonitions, without making any effort to get the truth to the jury. Only after the Court, in effect, directed the government to do so did it correct the false testimony. By that time, many days after the false testimony had been given, much, if not all, of the significance of the falsity of the testimony may well have escaped the jury. Moreover, but for the intervention of the Court in the presentation of the case, the government's error and misconduct would never have been corrected and the defendants would unquestionably have been entitled to a new trial. In the normal case, such failure on the part of the government to correct promptly the false testimony and such limited intervention on the part of the Court might not warrant the relief sought herein. However, as indicated, this was not a normal case; the false testimony sat before the jury for a long period of time and there is a strong possibility that it influenced their consideration of the rest of the evidence. Cf. United States v. Antone, 603 F.2d 566 (5th Cir. 1979). In addition, this was not the first but the second time that the Court was put in the position of having to correct errors of the government. See United States v. Sam Goody, Inc., 506 F. Supp. 380, at p. 384 (E.D.N.Y.1981).

 Under these circumstances, in this Court's view, the defendants are entitled to a new trial without the stigma of the RICO charges and without the government's attempted cover-up of the false statements given by its agents. We also note, though we have not deemed it worthy of much discussion, that the retrial will be free from the prejudice of the many unproven charges levelled against the defendants, which charges might also have had a cumulative adverse effect on the merits of the case against them in the minds of the jury. We do not grant this motion lightly; this case took one month to try and we hesitate to burden further the judicial resources of this District. Nevertheless, we believe there was substantial prejudice suffered by the defendants here as a result of the factors enumerated above and must, in the interests of justice, order a new trial.

 Accordingly, we deny defendants' motions to dismiss but grant their motion for a new trial on the remaining counts of the indictment.

 SO ...

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