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In re Grand Jury Witness Kaare Gilboe

decided: January 14, 1983.

IN RE GRAND JURY WITNESS KAARE GILBOE, JR. UNITED STATES OF AMERICA, APPELLEE,
v.
KAARE GILBOE, JR., APPELLANT



Appeal from a civil contempt order entered in the Southern District of New York, Irving Ben Cooper, District Judge, holding a grand jury witness, who had been granted immunity, to be in contempt for his refusal to answer questions on the ground of his Fifth Amendment privilege against self-incrimination because of his asserted fear of prosecution in various foreign countries.

Friendly, Timbers, and Winter, Circuit Judges.

Author: Timbers

TIMBERS, Circuit Judge:

The question presented on this appeal is whether the District Court for the Southern District of New York, Irving Ben Cooper, District Judge, properly adjudged a grand jury witness, who had been granted immunity, to be in civil contempt for refusal to answer questions on the ground of his Fifth Amendment privilege against self-incrimination because of his asserted fear of prosecution in various foreign countries. We hold that the witness was properly adjudged in contempt. We affirm.

Kaare Gilboe, Jr., a non-resident Norwegian national, was held in contempt on November 2, 1982 pursuant to 28 U.S.C. § 1826(a) (1976). He filed a notice of appeal on November 19. The appeal was argued on December 13. In view of the time stricture of § 1826(b), and after full consideration, we entered an order on December 20 affirming the contempt order with a notation that an opinion would follow. This is that opinion.

I.

Gilboe is no stranger to this Court. United States v. Gilboe, 684 F.2d 235 (2 Cir. 1982), cert. denied, 459 U.S. 1201, 103 S. Ct. 1185, 75 L. Ed. 2d 432 (1982).

Prior to being summoned before the present grand jury, Gilboe had been convicted in the Southern District of New York on charges of fraud. The charges against Gilboe arose from activities he had directed from overseas. The grand jury was inquiring about those activities or related matters. He claimed that he could not testify regarding his overseas schemes without subjecting himself to substantial risk of prosecution in foreign countries. To understand this claim, we shall briefly outline his tangled skein of deception based on the record of his prior conviction which we affirmed. 684 F.2d 235.

In what we have described as a "massive fraud on the international shipping industry [leaving] victims on the continents of Asia, North America, and Europe", id. at 236, Gilboe leased out phantom cargo vessels. Clothed in the raiments of a respectable ship broker, he made contracts for the carriage of cargo, known in the trade as "fixtures", even though he had no ships. Once the fixture was secured, he made independent arrangements with ship owners for the transportation of the cargo. When the consignee paid Gilboe the "freight", or carriage fee, he simply pocketed the money without passing along payment to the ship owner. After Gilboe absconded with the freight, the consignee was forced to pay again, this time to the ship owner, in order to secure delivery of the goods.

Two sets of brokerage transactions involving the People's Republic of China gave rise to Gilboe's prosecution and ultimate conviction in this country. The first occurred in 1978-1979, when Gilboe operated from a ship-brokerage firm in Hong Kong to obtain a contract for the transportation of grain from Argentina to China. He then contracted with a Panamanian shipping company, Libra Shipping, for freighters. Libra substituted Librand Shipping, Ltd., a British corporation, for itself. Ultimately an Indian-owned vessel was provided. The People's Republic wired the freight to Gilboe who never paid the ship owners. To avoid the shipper's lien on the grain, the People's Republic was forced to pay the freight again.

In his second set of transactions with the People's Republic, in 1980, Gilboe worked from Tokyo. After obtaining a contract to carry grain from the United States to China, he obtained three vessels, of Danish, Greek and Indian origin, respectively. Again the People's Republic wired the freight to Gilboe. He failed to pay the ship owners. The People's Republic was forced to pay twice for the transportation of its grain.

To carry out these transactions, Gilboe managed to spin a web of fraud across several continents. He entangled in his schemes Panamanian and British ship brokers; Norwegian and British shipping companies; Indian, Danish, and Greek ship owners; and banks in the United States, Hong Kong, Canada, the Bahamas, and the Cayman Islands.

Gilboe ran afoul of the laws of the United States because of certain communications between him and parties in the United States and transfers of funds through conduit United States banks. On November 6, 1981, he was convicted after a jury trial in the Southern District of New York of wire fraud, 18 U.S.C. § 1343 (1976), and of transportation of funds obtained by fraud, 18 U.S.C. § 2314 (1976). He was sentenced to a prison term of 20 years on seven of the eight counts and was ordered to pay a fine of $43,000. On the remaining count, sentence was suspended and he was placed on five-year probation beginning with his release from prison, a condition of his ...


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