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IN RE GRAND JURY SUBPOENA DUCES TECUM

June 20, 1990

IN RE GRAND JURY SUBPOENA DUCES TECUM DATED MAY 9, 1990.


The opinion of the court was delivered by: Sweet, District Judge.

OPINION

Defendant has moved to quash a grand jury subpoena pursuant to Rule 17(c) of the Federal Rules of Criminal Procedure. For the reasons set forth below the motion is granted.

The Instant Motion

Defense counsel accepted a grand jury subpoena duces tecum on behalf of movant, requiring movant to appear before the grand jury on May 18, 1990. The subpoena orders production of "any and all diaries, appointment books and telephone and address books" maintained by movant during the period from January 1, 1978 through December 31, 1984 and all tape recordings of conversations between movant or co-defendant and any vendor or contractor who did or sought to do business with a certain corporation (the "corporation") during the same time period. The government represents that it has cause to believe that these materials may contain evidence of movant's soliciting and receiving kickbacks from various vendors who did business with the corporation, including those named in the indictment and others unnamed or unknown to the government.

By consent of the government, the appearance date was adjourned to enable movant to make this motion which was heard on May 25, 1990 and, along with the letters of May 31, June 4, and June 6, considered submitted as of that date.

At the hearing, the government offered movant immunity for the act of production of the subpoenaed materials. Movant established by affidavit that the subpoenaed materials were personal to him and that the tape recordings were made after the termination of his employment with the corporation.

Prior Proceedings

On April 27, 1990, the government in a four-count indictment, charged movant with one count of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371, and two counts of subscribing to false income tax returns for tax years 1983 and 1984, in violation of 26 U.S.C. § 7206(1). The indictment alleges that movant extorted kickbacks from two vendors who did business or sought to do business with the corporation. The indictment further alleges that movant failed to report those kickbacks as income on his income tax returns for tax years 1983 and 1984.

In the fourth count, the indictment also charges co-defendant with subscribing to a false income tax return for the tax year 1983. Co-defendant pled guilty to this count on June 4, 1990 and entered into a cooperation and plea agreement with the government.

Since the return of the initial indictment, the government has continued its investigation of movant's activities at the corporation with the alleged intent of seeking a superseding indictment against him should additional evidence of criminal conduct be uncovered. As a result of this ongoing investigation, the government obtained information concerning additional vendors involved with kickbacks and other payments to movant and now possibly seeks to indict others.*fn1

The government has alleged that it seeks the materials subpoenaed to bring a superseding indictment which would broaden the scope of the conspiracy charge in the existing indictment and add additional tax fraud charges against movant and possibly others.

On April 20, 1989, one week before charges were filed against movant, movant's counsel met with a trial attorney at the Tax Division of the Department of Justice in Washington, D.C. to present evidence to the government on behalf of movant in an attempt to dissuade the government from bringing the indictment. Counsel's representations included assertions about vendors interviewed by counsel who stated that they had never provided gratuities of any sort to movant and information about various persons already known to the government.

The Issues

Movant seeks to quash the subpoena on the grounds that the government's dominant and improper purpose in issuing the subpoena is to discover evidence for use at trial against movant and that the materials sought to be produced in the grand jury are private and as such will fall within movant's invocation of the Fifth Amendment's protection against self-incrimination.

I.  The Purpose of the Grand Jury Subpoena

It is well-settled that "[i]t is clearly 'improper to utilize a Grand Jury for the sole or dominating purpose of preparing an already pending indictment for trial.'" United States v. Vanwort, 887 F.2d 375, 387 (2d Cir. 1989) cert. denied, ___ U.S. ___, 110 S.Ct. 1927, 109 L.Ed.2d 290 (1990) (quoting Payden v. United States (In re Grand Jury Subpoena Duces Tecum Dated January 2, 1985 (Simels)), 767 F.2d 26, 29 (2d Cir. 1985) and United States v. Dardi, 330 F.2d 316, 336 (2d Cir. 1964), cert. denied, 379 U.S. 845, 869, 85 S.Ct. 50, 117, 13 L.Ed.2d 73 (1964)).

In the absence of a factual showing to the contrary, however, there is a presumption of regularity of the grand jury proceedings, see In re Grand Jury Proceedings, 632 F.2d 1033, 1041 (3d Cir. 1980), and it is entirely proper to issue grand jury subpoenas following the return of an initial indictment if the grand jury is continuing its investigation with the purpose of considering a superseding indictment. See Vanwort, 887 F.2d at 387; In re Grand Jury Subpoenas of Clay, 603 F. Supp. 197, 200-201 (S.D.N.Y. 1985); In re Grand Jury Subpoena Dated November 9, 1979, 484 F. Supp. 1099, 1101 (S.D.N.Y. 1980).

Of course, it "is difficult, if not impossible, to enforce" the rule barring use of the grand jury to gather evidence improperly for trial in view of the propriety of the authority to use the grand jury to garner evidence for a superseding indictment. Simels, 767 F.2d at 30 (citing 8 J. Moore, Moore's Federal Practice ¶ 6.04[5] at 6-86 (1984)). Absent some clearly indicative sequence of events such as those present in Simels, a court will be faced with having to take at face value the government's word that the dominant purpose is proper, even when the subpoena will inevitably produce evidence applicable to prosecuting the existing indictment pending trial.

Movant urges that because the indictment was returned one week after movant's counsel demonstrated to the Department of Justice the "many weaknesses and flaws in the Government's case" and because one week after the indictment the government was told that trial would be set for June 25, just seven weeks away, that the government "suddenly found itself facing imminent trial on a case riddled with problems." Although movant's self-serving interpretation of the sequence of events may be entirely plausible, the government has represented to the court that the grand jury investigation is continuing and that after the return of the indictment, additional evidence developed indicating that movant received kickbacks from vendors not named in the current indictment.*fn2

According to the government, this new information, when developed, is likely to result in the government's request for the grand jury to vote a superseding indictment against movant and possibly others. Although the subpoena calls for the production of recordings and documents which relate to the charges contained in the initial indictment, the government believes that the evidence contained in these materials may enable the grand jury to revise the conspiracy count to charge additional overt acts involving the vendors already named in the indictment. The government also believes that the material may contain evidence of specific payments to movant which might enable the grand jury to charge movant with income tax evasion, in violation of 26 U.S.C. § 7201, in addition to the false subscribing charges already contained in the initial indictment.

Accordingly, although the materials requested may well relate to issues relevant to the existing indictment, because of the government's representations, there is no basis on which to conclude that the government's dominant purpose is preparation for trial, rather than investigation for the purpose of superseding the ...


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