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February 25, 1982

James Mitchell NEWMAN, Defendant

The opinion of the court was delivered by: HAIGHT


This memorandum deals with a number of motions argued by counsel on February 24, 1982.

The Government's application (I so construe the correspondence and oral argument) to dismiss the present superseding indictment without prejudice is granted. Defendant's motion that the dismissal be with prejudice is denied.

 While not conceding that the indictment is subject to dismissal in law, the Government applies for dismissal without prejudice because of the possible presence of unauthorized personnel in the grand jury room. These were Jerome Merin and Rhonda Brown, both of whom appeared before the grand jury as Special Assistant United States Attorneys. A letter from the Deputy Attorney General appointing Merin to that status is attached to AUSA Richards' letter of February 19, 1982; defendant challenges its legal sufficiency. As to Brown, the Government is unable to locate a copy of her written authorization; she is said to recall "sitting in on (but not participating in) one brief session of the Grand Jury proceedings on this case." Id.

 These circumstances cannot conceivably justify dismissal of the indictment with prejudice. In United States v. Fields, 592 F.2d 638, 647 (2d Cir. 1978), the Second Circuit stated generally:

"The extreme sanction of dismissal of an indictment is justified in order to achieve one or both of two objectives: first, to eliminate prejudice to a defendant in a criminal prosecution; second, to "help to translate the assurances of the United States Attorneys into consistent performances by their assistants.' " (footnotes omitted).

 By agreeing to seek a new indictment from an entirely different grand jury, the Government eliminates any possible prejudice to the defendant resulting from the presence of unauthorized persons in the grand jury room. That is so, even though prejudice to the defendant from the presence of unauthorized persons in the grand jury room is presumed in law, United States v. Heinze, 177 F. 770, 772-73 (C.Ct., S.D.N.Y.1910); both actual and presumed prejudice are remedied by submissions to a new grand jury. Thus the first Fields objective will be accomplished without imposing upon the Government the "extreme sanction" of a dismissal with prejudice. As to the second Fields objective, no assurances of the United States Attorney requiring specific performance are suggested, apart from the obligation (subsumed in the first objective) to keep unauthorized persons out of the grand jury room.

 No useful purpose would be served by an evidentiary hearing to plumb Merin and Brown to their respective depths. Counsel for defendant urged on argument that Merin or Brown may have repeatedly and wilfully attended the grand jury without authorization; that by their presence or participation they may have overborne the jury's judgment; that their association with the S.E.C. brought about a conflict of interest prejudicial, in some way, to defendant. This is all speculation, but of course I do not deny a hearing on that ground: evidence may fill the gaps left by speculation. Rather, I base my decision on the ground that assuming the worst with respect to the most awful of counsel's speculations, the harm is entirely remedied if the Government starts afresh before a different grand jury. If that grand jury refuses to return an indictment, the Government will have paid the price for unauthorized attendance; but I will not foreclose resubmission of the case against the defendant, and decline the request for a hearing.

 Defendant cites no authority for dismissal of an indictment with prejudice, in the circumstances either presented by the record or assumed in counsel's arguments. At least since the turn of the century, it appears to have been the practice in this District to resubmit to grand juries indictments tainted by the presence of unauthorized persons. Thus in United States v. Rosenthal, 121 F. 862, 873-74 (C.Ct., S.D.N.Y.1903), Judge Thomas said in quashing an indictment obtained by unauthorized persons:

"Every citizen is amenable to the secret inquisition of the grand jury, and he may demand justly that his essential rights be guarded by the wholesome preservation of settled systems and policies, that give greater certainty to legal proceedings, and fix on the designated prosecuting officer of the locality inevitable accountability for what is done or omitted. The inconvenience of resubmitting the matter to the grand jury is temporary; the injustice of denying the defendants investigation pursuant to the law of the land would be perpetual. It is provident also that the present inattention to the statutory demarcation of duties be corrected at this early stage of the prosecution, lest, after possible years of litigation, when perchance the statute of limitations shall have run against the actions, it should be decided that there was error in the initiation of the proceedings. The indictments are not faulty, save for the single reason that they are based upon proceedings in great part conducted without authority by the special assistant to the Attorney General, and on that sole ground the motions to quash are granted." (emphasis added). *fn1"

 As to the statute of limitations in the case at bar, I incline to the view that the plain wording of 18 U.S.C. § 3288 tolls the statute. *fn2" The circumstances of which defendant complains constitute an "error, defect or irregularity with respect to the grand jury"; that is precisely one of the situations which § 3288 addresses. United States v. Grady, 544 F.2d 598, 601 n.3 (2d Cir. 1976); United States v. Macklin, 535 F.2d 191 (2d Cir. 1976); United States v. Hill, 494 F. Supp. 571 (S.D.Fla.1980). Because the point was not fully briefed on the present motions, defendant may address a further motion on this point to the new indictment, if one is returned.

 Defendant also seeks an evidentiary hearing to explore further the prior connection of John S. Martin, Jr., the present United States Attorney, with this case. It is said that impropriety or the appearance thereof may lead to an alternative basis for dismissal of the indictment with prejudice. The facts, to the extent presently revealed by correspondence attached to the motion papers, are these.

 In mid-1978, Mr. Martin, then in private practice, was retained by one Norman Seiden in connection with an investigation by the office of the United States Attorney for this District into possible violations of the securities laws in respect of "inside information" trading. Seiden had been informed that his son-in-law, the present defendant Newman, was a target of that investigation. Seiden told Martin that he wished to assist in the defense of his son-in-law. Seiden's letter to Martin of January 8, 1982 reads in part:

"Pursuant to your counsel and advice I gave information and documents to the Office of the ...

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