821 F.

2d 1456

UNITED STATES of America, Plaintiff-Appellant,

v.
William A. KILPATRICK, Declan J. O'Donnell, Sheila C.
Lerner, the Bank of Nova Scotia, Michael Alberga,
C.S. Gill, and C.M. Smith, Defendants-Appellees.
Nos. 83-1363-1369, 84-2481-2487.

United States Court of Appeals,

Tenth Circuit.
June 18, 1987.
Rehearing Denied Aug. 19, 1987.

Robert E. Lindsay, Tax Div., Dept. of Justice, Washington, D.C. (Glenn

L. Archer, Jr., Asst. Atty. Gen., Robert M. Olsen, Acting Asst. Atty. Gen.,
Michael L. Paup, Alan Hechtkopf and James P. Springer, Tax Div., Dept.
of Justice, Washington, D.C., and Robert N. Miller, U.S. Atty., Denver,
Colo., were also on the brief) for plaintiff-appellant.
James E. Nesland, Ireland, Stapleton, Pryor & Pascoe, Denver, Colo., for
all defendants-appellees (Theodore H. Merriam, Richard K. Rufner and
Wagner & Waller, P.C., Englewood, Colo., and William C. Waller, Jr. and
Denis H. Mark, Waller, Mark & Allen, P.C., Denver, Colo., were on the
brief for defendant-appellee William A. Kilpatrick).
Robert G. Morvillo, Obermaier, Morvillo & Abramowitz, New York City
(Robert J. Anello, was on the brief) for defendant-appellee The Bank of
Nova Scotia.
Robert D. Grossman, Jr., Grossman and Flask, Washington, D.C. (James
L. Treece, Treece, Bahr & Arkey, Littleton, Colo., was on the brief), for
defendant-appellee Declan J. O'Donnell.
Sheila C. Lerner, pro se.
Donald E. Van Koughnet, Naples, Fla., for defendants-appellees Michael
L. Alberga and Casey S. Gill.

Before HOLLOWAY, Chief Judge, SEYMOUR, Circuit Judge, and

BOHANON, District Judge* .
HOLLOWAY, Chief Judge.
After a twenty month investigation conducted before two grand juries,
this case began with the return of a twenty-seven count indictment
charging all defendants-appellants with conspiracy, and charging several
of the defendants additionally with mail fraud and/or tax fraud.1
Defendant Kilpatrick was charged in Count XXVII with obstruction of
justice.
Initially the district court dismissed the first twenty-six counts of the
indictment as improperly pleaded and for failure to charge a crime by
failing to allege a lack of economic substance in the underlying
transactions. United States v. Kilpatrick, 594 F.Supp. 1324, 1327
(D.Colo.1984). Following a separate motion by the Bank of Nova Scotia
(Bank), the district court dismissed the counts in which the Bank was
named for failure to allege the requisite knowledge and intent by the Bank
to commit the crimes charged. Id. The Government appealed all these
dismissals in Nos. 83-1363 through 83-1369.
Before argument here, as requested we partially remanded the case to the
district court to determine whether misconduct on the part of Government
attorneys in connection with the grand jury investigation and presentation
constituted additional grounds for dismissal. Following the partial
remand, Judge Winner issued an opinion which, among other things,
summarized the status of the cases which were reassigned to Judge Kane,
granted a new trial on the obstruction of justice count against Kilpatrick,
and ordered disclosure of the grand jury transcript. See United States v.
Kilpatrick, 575 F.Supp. 325 (D.Colo.1983).

After ten days of hearings Judge Kane dismissed all twenty-seven counts of the
indictment because of prosecutorial misconduct2 . The Government also
appealed these dismissals in Nos. 84-2481 through 84-2487. With the latter
appeals we consolidated Nos. 83-1363 through 83-1369, discussed above. In
this opinion we dispose of the issues raised in appeals Nos. 83-1363 through
83-1369 and Nos. 84-2481 through 84-2487. Our separate opinion to follow
will address the issues raised in No. 83-2284, the Government's appeal from the
order for a new trial for Kilpatrick challenging adverse publicity concerning
Government counsel, and No. 84-1231, a mandamus proceeding also
complaining of adverse publicity concerning Government counsel.

We conclude that we must reverse the dismissals by the district court and order
reinstatement of all counts of the indictment.

3* Sufficiency of the indictment

4

* The Government appeals the order dismissing the first twenty-six counts of
the twenty-seven count indictment, Nos. 83-1363 through 83-1369. (I R. 274).
The indictment was based on two alleged fraudulent investment enterprises sold
to investor-taxpayers in the United States. The district court dismissed the first
twenty-six counts because of their failure to allege the lack of economic
substance in the transactions underlying the tax shelter program, and because of
the court's concern that the defendants would not be able to plead a conviction
or acquittal as a bar to subsequent prosecution. (IV R. 3-4). Furthermore, the
ten counts naming the Bank were dismissed as to the Bank on the additional
ground that the indictment failed to allege that the Bank or its representatives
had the requisite knowledge or intent to commit the crimes charged. (IV R. 711).

Count I, which related to the structured coal programs in the United States,
charged five of the individual defendants and the Bank with "unlawfully,
willfully, and knowingly conspir[ing] ... to defraud the United States of
America by impeding, impairing, obstructing and defeating the lawful functions
of the Internal Revenue Service of the Treasury Department in the
ascertainment, computation, assessment and collection of the revenue through
false and fictitious claims of deductions for advance royalty 'payments' ..." in
violation of 18 U.S.C. Sec. 371. (I R. 1-2). The crux of the conspiracy charged
in Count I was the creation in mineral leases of false tax deductions for
nonexistant advance royalty payments for investor-taxpayers. The charging
paragraph of Count I is followed by an extensive listing of "Means And
Methods" and sixty-four overt acts.

Count II, which concerned the funding of the research and development of
methanol conversion processes, charged five of the individual defendants with
a conspiracy similar to the conspiracy alleged in Count I in violation of 18
U.S.C. Sec. 371. The crux of the conspiracy charged in Count II was the
creation of false tax deductions on nonexistant research and development
payments resulting from investments in limited partnerships formed to fund
research and development of methanol conversion processes.

Counts III through X charged various defendants under 26 U.S.C. Sec. 7206(2)
with aiding and assisting in the preparation and presentation of false partnership
and individual tax returns because of representations made to various taxpayers

that the taxpayers were entitled to claim deductions for royalty payments
(Counts III through VI), or research and development payments (Counts VII
through X), when no such deductions were allegedly permissible. Counts XI
and XII charged defendants Kilpatrick and O'Donnell with willfully making
and subscribing false individual tax returns in violation of 26 U.S.C. Sec.
7206(1). Counts XIII through XXVI charged various defendants with
substantive mail fraud violations under 18 U.S.C. Sec. 1341, based on their
alleged defrauding of investors in connection with the programs alleged in
Counts I and II.
8

After extensive briefing and hearings, the district court dismissed Counts I and
II. First, the court dismissed the two counts for failure to allege lack of
economic substance of the underlying enterprises. Such justification must
necessarily rest on the view that such lack of economic substance is an essential
element of a Sec. 371 crime in these circumstances. Second, the court
dismissed the two counts because of its concern that the defendants would not
be able to plead a bar to any subsequent prosecution. The parties stipulated that
the programs which formed the basis of Counts I and II also served as the
foundation of the fraud alleged in Counts III through XXVI. (I R. 274-75). The
court thus dismissed those counts. (Id.) Moreover, the court dismissed as to the
Bank, finding that knowledge and intent on the Bank's part was not sufficiently
alleged.

B
9

An indictment is sufficient if it (1) contains the essential elements of the

offense intended to be charged, (2) sufficiently apprises the accused of what he
must be prepared to defend against, and (3) enables the accused to plead a
judgment under the indictment as a bar to any subsequent prosecution for the
same offense. Russell v. United States, 369 U.S. 749, 763-64, 82 S.Ct. 1038,
1046-47, 8 L.Ed.2d 240 (1962); see also United States v. Salazar, 720 F.2d
1482, 1486 (10th Cir.1983), cert. denied, 469 U.S. 1110, 105 S.Ct. 789, 83
L.Ed.2d 783 (1985).

10

The test is not whether the indictment could have been made more definite and
certain. Rather, before a conviction, the indictment standing alone must contain
the elements of the offense intended to be charged and must be sufficient to
apprise the accused of the nature of the offense so that he may adequately
prepare a defense. And, after a conviction, the entire record of the case must be
sufficient so as to enable the accused to subsequently avail himself of the plea
of former jeopardy if the need to do so should ever arise.

11

Clay v. United States, 326 F.2d 196, 198 (10th Cir.1963), cert. denied, 377 U.S.
1000, 84 S.Ct. 1930, 12 L.Ed.2d 1050 (1964) (footnote omitted); see also 1 C.
Wright, Federal Practice and Procedure Sec. 125, at 364-65 (2d ed. 1982).

12

We hold that the indictment is sufficiently precise to meet the requirements of

the Constitution and Rule 7(c) of the Federal Rules of Criminal Procedure.3 We
agree with the district court that the basis of Counts I and II also served as the
foundation of the fraud alleged in Counts III through XXVI. Consideration of
the first two counts alone was urged in the briefs submitted. Therefore, we
direct our attention primarily to Counts I and II. Accord United States v. Arge,
418 F.2d 721, 723 (10th Cir.1969).

C
Essential elements of the offense charged
13

The court should dismiss an indictment if it does not "contain[ ] the elements of
the offense intended to be charged." Russell, 369 U.S. at 763, 82 S.Ct. at 1047.
All the defendants contend, and the district court agreed, that the failure to
allege the lack of economic substance of the underlying programs rendered the
indictment fatally defective. We disagree.

14

Count I charges all the individual defendants and the Bank with defrauding the
United States of America "through false and ficticious claims of deductions for
advance royalty 'payments'...." (I R. 2). We believe the allegation in Count I of
"false and ficticious claims of deductions" is sufficient when read in light of the
entire Count. It is true that indictments under the broad language of the general
conspiracy statute "must be scrutinized carefully as to each of the charged
defendants because of the possibility, inherent in a criminal conspiracy charge,
that its wide net may ensnare the innocent as well as the culpable." Dennis v.
United States, 384 U.S. 855, 860, 86 S.Ct. 1840, 1843, 16 L.Ed.2d 973 (1966)
(citations omitted). However the indictment should be read as a whole and
interpreted in a common-sense manner. See United States v. Hajecate, 683 F.2d
894, 898 (5th Cir.1982), cert. denied, 461 U.S. 927, 103 S.Ct. 2086, 77 L.Ed.2d
298 (1983); see also 8 J. Moore, Moore's Federal Practice p 7.04, at 7-20 (2d
ed. 1985). Count I charges that five of the individual defendants and the Bank
conspired to defraud the United States (unlawful objective) by false and
ficticious claims of deductions (the means). Accord Schino v. United States,
209 F.2d 67, 69 (9th Cir.1953), cert. denied, 347 U.S. 937, 74 S.Ct. 627, 98
L.Ed. 1087 (1954).

15

Count II charges five of the individual defendants with the same conspiracy but

15

Count II charges five of the individual defendants with the same conspiracy but
as to research and development payments. It states the gist of the offense of
conspiracy and adequately lays out the grand jury's charges and the general
factual circumstances underlying them. The fact that the defendants contest the
substance of the offense charged does not render the indictment insufficient.
See United States v. Crooks, 804 F.2d 1441, 1450 (9th Cir.1986). We do not
feel that a lack of economic substance allegation is required in an indictment
already alleging that the defendants conspired to defraud the United States
through false and ficticious claims of deductions for research and development
payments.4

16

The Bank further contends that Count I fails to allege the requisite knowledge
and intent on its part, which it says is necessary to state an offense under 18
U.S.C. Sec. 371. It points to "key charging" paragraphs which list various
individual defendants, but which do not name the Bank.

17

It is axiomatic that "all the material facts and circumstances embraced in the
definition of the offence must be stated, or the indictment will be defective."
United States v. Hess, 124 U.S. 483, 486, 8 S.Ct. 571, 573, 31 L.Ed. 516
(1888). Moreover, a court cannot by implication add an essential element to the
indictment. "[A defendant] cannot be convicted on the basis of facts not found
by, and perhaps not even presented to, the grand jury." United States v. Keith,
605 F.2d 462, 464 (9th Cir.1979) (citations omitted). Courts, however, do not
insist that any particular word or phrase be used in stating an essential element.
See United States v. Garcia-Geronimo, 663 F.2d 738, 742 (7th Cir.1981).

18

The requisite mental element for a Sec. 371 offense must be alleged in the
indictment. See United States v. Stevens, 612 F.2d 1226, 1230 (10th Cir.1979),
cert. denied, 447 U.S. 921, 100 S.Ct. 3011, 65 L.Ed.2d 1113 (1980). The
charging paragraph in Count I uses the phrase "unlawfully, willfully, and
knowingly conspire ... to defraud the United States of America ... in the
ascertainment, computation, assessment and collection of the revenue...." (I R.
1-2). Moreover, the allegations in Count I go further to charge the requisite
knowledge and intent. Under the "Means and Method" portion of Count I the
indictment alleges that the Bank, along with other named defendants, "devised
and/or participated in a scheme to make it appear that the required payments
had, in fact, been made...." (Id. at 6). It is further charged that the Bank "agreed
to further conceal the fact that the purported payments by P & J Coal Company
could not be made and that the basis of the 1978 funding was nothing more
than a 'check kite' and/or 'check swap'...." (Id. at 7). It is further charged that
the Bank "knew that this type of 'check kite' was ficticious, and was conducted
to create checks to make it appear that P & J Coal Company had made its
required loans." (Id. at 8). It is also alleged that the Bank "knew that P & J Coal

Company had not in actuality made its payments as required and that the
transaction was a fiction designed to create the illusion that P & J Coal
Company had made payments to investors...." (Id. at 9). Furthermore, it is
stated that the Bank conspired with the named defendants to have "the records
of and pertaining to Marlborough Investments, Ltd., as well as other entities, ...
moved, altered, and/or destroyed." (Id.).
19

Both the initial charging paragraph and the several "Means And Methods"
paragraphs aver the requisite knowledge or intent on the part of the Bank.
Whether the exact term used is "knowledge" or "devised" or "agreed to
conceal" is not relevant; "[t]here is no magic to the words used ... to allege
guilty knowledge." Davis v. United States, 347 F.2d 378, 379 (10th Cir.1965)
(per curiam). Moreover, "[w]hen the same mental element is required for each
act ... an initial recital of the element is sufficient." Stevens, 612 F.2d at 1230.
Count I depicts the Bank as an active participant in a conspiracy to defraud the
IRS in its assessment and collection of income taxes. The essence of Count I is
the alleged concerted conduct on the part of all the defendants. Thus Count I
adequately charges a conspiracy to defraud the United States, and with the
required specificity alleges the culpable role of each of the defendants. Dennis,
384 U.S. at 860, 86 S.Ct. at 1843; see also United States v. Turkish, 623 F.2d
769, 771 (2nd Cir.1980), cert. denied, 449 U.S. 1077, 101 S.Ct. 856, 66
L.Ed.2d 800 (1981). And we conclude that the indictment sufficiently charged
the requisite mental element on the part of the Bank.5

D
Notice of the charges
20

We must decide next whether the indictment was adequate to inform the
defendants of the charges.

21

Allegations of the means and methods as well as the overt acts may be
considered in judging the sufficiency of the conspiracy counts. See United
States v. Watson, 594 F.2d 1330, 1341 (10th Cir.), cert. denied, 444 U.S. 840,
100 S.Ct. 78, 62 L.Ed.2d 51 (1979). Counts I and II set out the transactions
purporting to be the gravamen of the conspiracy charges with specificity.
Relevant names, dates, companies involved, and amounts of money are averred
in detail. An extensive listing of "Means and Methods" and "Overt Acts" is
made. Thus the indictment is replete with the particulars of the acts on which
the two counts are predicated. It adequately charges the individual defendants
and the Bank with definiteness, certainty, and with reasonable particularity as to
time and place, naming persons or entities involved in the conspiracies. See,

e.g., Wong Tai v. United States, 273 U.S. 77, 81, 47 S.Ct. 300, 301, 71 L.Ed.
545 (1927).
E
Preclusion of double jeopardy
22

Finally we must consider whether the indictment is sufficient to adequately

protect the defendants against double jeopardy.

23

In addressing this question we note that the defendants are permitted to use the
entire record and the judgment, not merely the indictment, in asserting double
jeopardy. See Arge, 418 F.2d at 725; Clay, 326 F.2d at 199; see also 1 C.
Wright, supra at Sec. 125, p. 365. We are not persuaded that the indictment
fails to adequately protect the defendants. It lays out the necessary facts with
specificity as to the relevant times, places, persons, and entities and the charges
made against each defendant. Along with the entire record in this case, the
indictment will provide adequate safeguards against double jeopardy.

II
Prosecutorial misconduct
24

* The Fifth Amendment provides that "[n]o person shall be held to answer for a
capital, or otherwise infamous crime, unless on a presentment or indictment of a
Grand Jury...." The grand jury is a "grand inquest, a body with powers of
investigation and inquisition, the scope of whose inquiries is not to be limited
narrowly by questions of propriety...." Blair v. United States, 250 U.S. 273,
282, 39 S.Ct. 468, 471, 63 L.Ed. 979 (1919). The function of the grand jury
"was not only to examine into the commission of crimes, but to stand between
the prosecutor and the accused, and to determine whether the charge was
founded upon credible testimony or was dictated by malice or personal ill will."
Hale v. Henkel, 201 U.S. 43, 59, 26 S.Ct. 370, 373, 50 L.Ed. 652 (1906). A
grand jury proceeding is not adversarial but ex parte. See United States v.
Calandra, 414 U.S. 338, 343-44, 94 S.Ct. 613, 617-18, 38 L.Ed.2d 561 (1974).
We are mindful of the oft-quoted words of Judge Learned Hand that "[s]ave for
torture, it would be hard to find a more effective tool of tyranny than the power
of unlimited and unchecked ex parte examination." United States v. Remington,
208 F.2d 567, 573 (2d Cir.1953) (L. Hand, J., dissenting), cert. denied, 347
U.S. 913, 74 S.Ct. 476, 98 L.Ed. 1069 (1954).

25

The separation of powers doctrine mandates judicial respect for the

independence of both the prosecutor and the grand jury. See United States v.
De Rosa, 783 F.2d 1401, 1404 (9th Cir.), cert. denied, --- U.S. ----, 106 S.Ct.
3282, 91 L.Ed.2d 571 (1986); United States v. McClintock, 748 F.2d 1278,
1283 (9th Cir.1984), cert. denied, --- U.S. ----, 106 S.Ct. 75, 88 L.Ed.2d 61
(1985). Dismissals of indictments for prosecutorial misconduct are rarely
upheld. United States v. Anderson, 778 F.2d 602, 606 (10th Cir.1985); United
States v. Pino, 708 F.2d 523, 530 (10th Cir.1983); see also United States v.
Buchanan, 787 F.2d 477, 487 (10th Cir.1986). Dismissal of an indictment for
prosecutorial misconduct rests upon two distinct though closely related theories.
A court may dismiss on the bases of the Fifth Amendment Due Process or
Grand Jury Clauses.6 The constitutional concerns focus on the fairness to the
defendant and on remedying any harm to his basic rights. See McClintock, 748
F.2d at 1284; Pino, 708 F.2d at 530-31.
26

A court may also dismiss an indictment by relying on its supervisory powers.

See Pino, 708 F.2d at 530. The supervisory powers theory is premised on the
federal courts' inherent ability to "formulate procedural rules not specifically
required by the Constitution or the Congress." United States v. Hasting, 461
U.S. 499, 505, 103 S.Ct. 1974, 1978, 76 L.Ed.2d 96 (1983). The supervisory
powers theory focuses on deterring illegality and protecting judicial integrity.
See McClintock, 748 F.2d at 1285 (citing United States v. Payner, 447 U.S.
727, 735 n. 8, 100 S.Ct. 2439, 2446, n. 8, 65 L.Ed.2d 468 (1980) ). However,
the common theme of the cases is that prosecutorial misconduct alone is not a
valid reason to dismiss an indictment. "An indictment may be dismissed for
prosecutorial misconduct which is flagrant to the point that there is some
significant infringement on the grand jury's ability to exercise independent
judgment." Pino, 708 F.2d at 530 (emphasis added); see also United States v.
Page, 808 F.2d 723, 726-27 (10th Cir.1987).

27

Since briefing and argument we now have the Supreme Court's opinion in
United States v. Mechanik, 475 U.S. 66, 106 S.Ct. 938, 89 L.Ed.2d 50 (1986),
for which we abated these appeals, and supplemental briefs thereon and our
opinion in United States v. Taylor, 798 F.2d 1337 (10th Cir.1986). In
Mechanik, the defendants moved before the verdict for dismissal of the
indictment on the ground that the simultaneous presence and examination of
two Government agents had violated Fed.R.Crim.P. 6(d) (i.e., unauthorized
presence before the grand jury). 475 U.S. at ----, 106 S.Ct. at 940. The district
judge took the motion under advisement until the conclusion of the trial, when
he denied it. Id. at ---- - ----, 106 S.Ct. at 940-42. The Fourth Circuit reversed in
part, dismissing one count of the indictment using a per se dismissal rule. The
Supreme Court reversed in part, holding that "[m]easured by the petit jury's
verdict, then, any error in the grand jury proceeding connected with the

charging decision was harmless beyond a reasonable doubt." Id. at ----, 106
S.Ct. at 942 (footnote omitted). Moreover, the Court held:
28
[H]owever
diligent the defendants may have been in seeking to discover the basis
for the claimed violation of Rule 6(d), the petit jury's verdict rendered harmless any
conceivable error in the charging decision that might have flowed from the violation.
In such a case, the societal costs of retrial after a jury verdict of guilty are far too
substantial to justify setting aside the verdict simply because of an error in the earlier
grand jury proceedings.
29

Id. at ----, 106 S.Ct. at 943.

30

In Taylor we distinguished between technical errors like those addressed in

Mechanik and errors which adversely threaten a defendant's right to
fundamental fairness in the criminal process. The former category of error falls
within the rule announced in Mechanik, while the later category of error is not
rendered moot by a petit jury's determination of guilt. See Taylor, 798 F.2d at
1340.

31

In light of Mechanik and the analysis in our Taylor and Pino opinions, we
conclude that consideration of dismissal of an indictment because of
prosecutorial misconduct before a grand jury calls for weighing several factors.
First, a reviewing court must determine whether the claimed errors should be
characterized as technical or procedural and affecting only the probable cause
charging decision by the grand jury, or whether the alleged errors should be
characterized as threatening the defendant's right to fundamental fairness in the
criminal process. If the errors can be characterized as procedural violations
affecting only the probable cause charging decision by the grand jury, then the
defendant must have successfully challenged the indictment before the petit
jury rendered a guilty verdict. Mechanik, 475 U.S. at ---- - ----, 106 S.Ct. at 94143. If, however, the errors can be characterized as threatening the defendant's
rights to fundamental fairness as "go[ing] beyond the question of whether the
grand jury had sufficient evidence upon which to return an indictment, ...," a
determination of guilt by a petit jury will not moot the issue. Taylor, 798 F.2d
at 1340.

32

Second, it must be determined whether the prosecutor engaged in flagrant or

egregious misconduct which significantly infringed on the grand jury's ability
to exercise independent judgment. Pino, 708 F.2d at 530. Thus even assuming
misconduct, a failure by the defendant to show a significant infringement on
the ability of the grand jury to exercise its independent judgment in the
charging decision will result in the denial of a motion to dismiss. "The relevant

inquiry focuses on the impact of the prosecutor's misconduct on the grand

jury's impartiality, not on the degree of the prosecutor's culpability." De Rosa,
783 F.2d at 1405 (citation omitted).7
33

Here the district court dismissed the indictment as a whole, stating that the
indictment was dismissed for numerous violations of Rule 6(d); that the
indictment was dismissed because of numerous violations of Rule 6(e); that the
indictment was not dismissed solely for use of "pocket immunity" in
contravention of 18 U.S.C. Secs. 6002 and 6003; that the indictment was not
dismissed solely for violations of the Fifth Amendment; that the indictment was
not dismissed solely for the knowing and deliberate presentation of
misinformation to the grand jury; that the indictment was not dismissed solely
for violations of the Sixth Amendment; and that the indictment was dismissed
because of the totality of the circumstances, including the numerous violations
of Rule 6(d) and (e), the violations of 18 U.S.C. Secs. 6002 and 6003, the
violations of the Fifth and Sixth Amendments, the knowing presentation of
misinformation to the grand jury, and the mistreatment of witnesses. 594
F.Supp. at 1353.

34

In its separate dismissal for violations of Rule 6, the district court employed a
per se rule of dismissal. However, in dismissing the indictment under the
totality test, the court employed the standard explicated in Pino, 708 F.2d at
530. The Government contends that the district court's factual findings as well
as the legal conclusions drawn were in error. Moreover, the Government
alleges that the indictment was the product of an independent grand jury and
thus valid. We agree substantially with the Government's argument and
therefore must reverse.

B
35

The defendants-appellees vigorously argue that the appropriate standard of

review for the district court's findings is the clearly erroneous standard, under
which they contend that reversal is not warranted. Our review of whether the
prosecutors engaged in specific flagrant or egregious misconduct before the
grand jury involves questions of historical fact governed by the clearly
erroneous standard. Campbell v. United States, 373 U.S. 487, 493, 83 S.Ct.
1356, 1360, 10 L.Ed.2d 501 (1963); cf. Anderson v. Bessemer City, 470 U.S.
564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985). Of course, such
findings of historical fact are clearly erroneous only when "although there is
evidence to support it, the reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been committed." Anderson v.
Bessemer City, 470 U.S. at 573, 105 S.Ct. at 1511 (1985).

36

Here, however, the facts are essentially admitted or specifically found by the
district court and the law is undisputed. In such instances the issue is whether
the law applied to the facts satisfies the legal standard of conduct binding on
the prosecutor. Although the question can be viewed as one going to an ultimate
fact, i.e., whether the independent judgment of the grand jury has been
infringed, we nevertheless conclude that the issue primarily involves the
consideration of legal principles, calling for de novo review by the appellate
court. See Supre v. Ricketts, 792 F.2d 958, 961 (10th Cir.1986); cf. Chaney v.
Brown, 730 F.2d 1334, 1346 (10th Cir.1984), cert. denied, 469 U.S. 1090, 105
S.Ct. 601, 83 L.Ed.2d 710 (1984) (holding that the issue whether withheld
evidence might have affected guilt or punishment determination so that due
process was denied is open for federal court review despite presumption of
correctness of state court findings).

37

Accordingly, as to the trial court's critical rulings that the misconduct found
tainted the grand jury indictment with its illegality, see, e.g., 594 F.Supp. at
1349, that the abuses constituted systematic and pervasive overreaching, that
the grand jury "was usurped and that time-honored constitutional principles
were sullied," 594 F.Supp. at 1352, we review the rulings de novo, while we
accept the underlying findings of historical fact, with some exceptions noted in
this opinion. See De Rosa, 783 F.2d at 1404 ("We review de novo a district
court's determination of whether a prosecutor's alleged misconduct before a
grand jury warrants dismissal of the indictment." ).

C
Rule 6(d) violations by unauthorized presence before the grand jury
38
39

The district court found that "the [IRS] agents made many joint appearances
before the grand jury, without the presence of government counsel, and read
transcripts to the jurors." 594 F.Supp. at 1330 (citations to record omitted).
Finding the tandem reading of transcripts of proceedings before the first grand
jury by the IRS agents to the second grand jury violative of Fed.R.Crim.P. 6(d),
the district court found these violations to be one independent ground for
dismissal of the indictment. 594 F.Supp. at 1344.
Rule 6(d) provides:

40

Who May Be Present. Attorneys for the government, the witness under
examination, interpreters when needed and, for the purpose of taking the
evidence, a stenographer or operator of a recording device may be present
while the grand jury is in session, but no person other than the jurors may be

present while the grand jury is deliberating or voting.

41

We agree there was a violation of the rule. The record clearly shows that on
several occasions IRS agents appeared before the grand jury jointly reading
transcripts. (XIX R. 482-85; XX R. 633-34, 692-93, 709-11). The record also
shows that the prosecutors at times would leave the proceedings, allowing the
agents to continue reading.8

42

Nevertheless, we disagree with the dismissal. We believe that Mechanik, which

the district judge did not have before him, forecloses the use of a per se
dismissal rule for violations of Rule 6:

43

We cannot accept the Court of Appeals' view that a violation of Rule 6(d)
requires automatic reversal of a subsequent conviction regardless of the lack of
prejudice. Federal Rule of Criminal Procedure 52(a) provides that errors not
affecting substantial rights shall be disregarded. We see no reason not to apply
this provision to 'errors, defects, irregularities or variances' occurring before a
grand jury just as we have applied it to such error occurring in the criminal trial
itself. See United States v. Hasting, 461 U.S. 499, 509 [103 S.Ct. 1974, 1981,
76 L.Ed.2d 96] (1983); Chapman v. California, 386 U.S. 18, 21-24 [87 S.Ct.
824, 826-828, 17 L.Ed.2d 705] (1967); United States v. Lane, 474 U.S. 438,
106 S.Ct. 725, 88 L.Ed.2d 814 (1986) ].

44

Mechanik, 475 U.S. at ----, 106 S.Ct. at 942.9

45

While here the violations were called to the attention of the court before trial so
that we do not have a verdict of guilty to serve as a basis for holding that no
prejudice in the charging decision occurred, we nevertheless are convinced that
a per se rule of dismissal for Rule 6(d) violations as earlier applied in United
States v. Pignatiello, 582 F.Supp. 251, 254-55 (D.Colo.1984) (and cases cited
therein), is no longer proper since Mechanik. We find no other circumstances
showing that the violation of the Rule resulted in prejudice or infringement on
the grand jury's independent functioning, as discussed below. Thus the
dismissal for violations of Rule 6(d) without more cannot stand.

D
Rule 6(e) violations
46

The district court also found that the Government attorneys violated
Fed.R.Crim.P. 6(e) by improperly disclosing and using grand jury materials,

and by violating the rules of secrecy applicable to grand jurors, interpreters,

stenographers, recording device operators, typists, Government attorneys, and
persons to whom disclosure is made under Rule 6(e)(3)(A)(ii). 594 F.Supp. at
1331. The court held:
47
[W]here
violations of Rule 6(e) are intentional or reckless and systematic, the
sanction of contempt is insufficient and dismissal of the indictment is warranted.
Under such circumstances, it is not necessary for the defendant to show that he has
been prejudiced by the violations. In the instant case, however, such showing of
prejudice has been convincingly made.
48

Id. at 1348 (emphasis added).

49

Rule 6(e) implements the traditional policy of cloaking grand jury proceedings.
See United States v. Sells Engineering, Inc., 463 U.S. 418, 425, 103 S.Ct. 3133,
3138, 77 L.Ed.2d 743 (1983). The Supreme Court noted several reasons for the
policy of secrecy:

50

First, if preindictment proceedings are made public, many prospective

witnesses would be hesitant to come forward voluntarily, knowing that those
against whom they testify would be aware of that testimony. Moreover,
witnesses who appeared before the grand jury would be less likely to testify
fully and frankly, as they would be open to retribution as well as to
inducements. There also would be the risk that those about to be indicted would
flee, or would try to influence individual grand jurors to vote against
indictment. Finally, by preserving the secrecy of the proceedings, we assure
that persons who are accused but exonerated by the grand jury will not be held
up to public ridicule.

51

Douglas Oil Co. of California v. Petrol Stops Northwest, 441 U.S. 211, 219, 99
S.Ct. 1667, 1673, 60 L.Ed.2d 156 (1979) (footnote ommitted). Rule 6(e)
operates as the measure of the privilege of access to grand jury materials.

52

The Government contends that dismissal of an indictment is not an appropriate

remedy for a Rule 6(e) violation. In so arguing, the Government relies on the
maxim "expressio unius est exclusio alterius." The Rule provides "[a] knowing
violation of Rule 6 may be punished as a contempt of court." Fed.R.Crim.P.
6(e)(2). The contempt language is permissive only. In the usual case Rule 6(e)
can be enforced by a contempt citation. See United States v. Malatesta, 583
F.2d 748, 753 (5th Cir.1978), modified on other grounds, 590 F.2d 1379 (5th
Cir.) (en banc), cert. denied, 444 U.S. 846, 100 S.Ct. 91, 62 L.Ed.2d 59 (1979).

Nevertheless, violations of Rule 6(e) may justify dismissal of the indictment

where there has been an abuse of the grand jury process. See United States v.
Kabbaby, 672 F.2d 857, 863 (11th Cir.1982) (per curiam); Malatesta, 583 F.2d
at 753. However, the focus of our inquiry must be on the integrity of the grand
jury's process and independence, rather than on the propriety of the
Government's conduct. See Kabbaby, 672 F.2d at 863; United States v.
Phillips, 664 F.2d 971 (5th Cir.1981), cert. denied, 457 U.S. 1136, 102 S.Ct.
2965, 73 L.Ed.2d 1354 (1982).
53

Here the district court found reckless and systematic violations of Rule 6(e).
Insofar as the court's opinion relied on such Rule 6(e) violations as a per se
ground of dismissal, we again disagree. We hold that dismissal cannot be
premised on such Rule 6(e) violations, ipso facto.

54

The court did find in addition that the violations caused prejudice, and we will
treat that point in discussing the dismissal based on the totality of the
circumstances.

E
The totality of misconduct before the grand jury
55
56

The district court concluded its opinion by stating:

57

The indictment is dismissed because of the totality of the circumstances which

include numerous violations of Rule 6(d) and (e), Fed.R.Crim.P., violations of
18 U.S.C. Secs. 6002 and 6003, violations of the Fifth and Sixth Amendments
to the United States Constitution, knowing presentation of misinformation to
the grand jury and mistreatment of witnesses.

58

594 F.Supp. at 1353. The court employed the totality of the circumstances test
of Pino, 708 F.2d at 530, to dismiss all twenty-seven counts of the indictment.
The dismissal was premised on findings that Rule 6(d) and (e) were
systematically violated; that IRS agents were sworn as "agents of the grand
jury;" that summaries of evidence were misleading; that granting informal
immunity was improper; that calling seven witnesses to appear solely to assert
their Fifth Amendment privilege was improper; that a grand jury witness was
mistreated; and that there were post-indictment violations of Massiah v. United
States, 377 U.S. 201, 84 S.Ct. 1199, 12 L.Ed.2d 246 (1964).10

59

We first consider whether the defendants challenged the indictment before the

petit jury rendered a guilty verdict. It appears that all the named defendants
successfully moved to dismiss the first twenty-six counts of the indictment
before the commencement of the trial. The defendant Kilpatrick successfully
moved to dismiss the twenty-seventh count (obstruction of justice) after the
petit jury had rendered a guilty verdict. However, the district judge granted his
motion for a new trial. Therefore, we will treat the defendant Kilpatrick's claim
as to the twenty-seventh count along with that of the other defendants.11 Thus
we need not decide which errors affected only the probable cause determination
of the grand jury and which errors implicated the defendants' rights to
fundamental fairness. The rationale for foreclosing review recited in Mechanik
is not applicable with respect to this issue.
60

We are not persuaded by the several reasons given for the dismissal. First,
summaries of evidence given before the grand jury are permissible and often
helpful, especially in complicated cases such as this. It must be remembered
that this complicated tax fraud case spanned twenty months and involved two
grand juries. Moreover, the district court is prohibited from looking behind the
indictment to determine if it was based on inadequate or incompetent evidence.
Costello, 350 U.S. at 363, 76 S.Ct. at 408; see also United States v. Kysar, 459
F.2d 422, 424 (10th Cir.1972).12 We cannot in these proceedings go into trial of
the general issue, the insufficiency of proof, or the errors in the evidence before
the grand jury.

61

Second, we have held that the use of "informal immunity," 13 which has been
frequently upheld, is entirely proper. See United States v. Anderson, 778 F.2d
602, 606 (10th Cir.1985) (and cases cited therein). Moreover, the defendants
have failed to show how the use of informal immunity prejudiced the grand
jury. See, e.g., id. at 606.

62

Third, the district court's findings of post-indictment violations of Massiah

could not possibly have affected the grand jury's charging decision. Thus the
use of such violations to justify dismissal was incorrect.

63

The remaining findings have somewhat more force but are insufficient to
warrant dismissal of the indictment. The district court found systematic
violations of Rule 6(d), causing prejudice to the defendants. 594 F.Supp. at
1353. After review of the district court opinions, the records of the hearings,
and the grand jury proceedings, we are not persuaded that the defendants were
prejudiced by the readings of prior grand jury testimony by IRS agents to the
subsequent grand jury. We do not condone unsupervised readings by IRS
agents unattended by Government attorneys; however, we are unable to find
any evidence in the record of infringement on the grand jury's ability to

exercise its independent judgment.14

64

The district court further found systematic violations of Rule 6(e). The court
found that the Government attorneys "relinquished to the IRS their
responsibility to determine the persons to whom disclosure would be made."
594 F.Supp. at 1345. The court also found that the IRS agents manipulated the
grand jury to obtain materials to be used for civil litigation. Id. We do not find
support for these findings.

65

The district court points to the extensive disclosure of grand jury materials to
IRS civil employees as well as the haphazard and post hoc method of
identifying those to whom disclosure was made as probative of Rule 6(e)
violations. 594 F.Supp. at 1343-44. The court also cites as grounds for
dismissal the "serious possibility" that IRS representatives improperly
manipulated the grand jury to obtain materials for civil litigation purposes; the
judge later found that the record "confirms that the grand jury's extraordinary
powers and resources were, in part, initiated and channeled for just such a
purpose." Id. at 1332 (footnote omitted). The court found also that the
prosecutors showed a disregard for the secrecy provisions of Rule 6(e); that
grand jury information had been disclosed in violation of Rule 6(e); and that a
prosecutor had improper motives when he imposed unauthorized secrecy
obligations on grand jury witnesses.

66

Rule 6(e)(3)(A)(ii) permits the Government attorney to make disclosure,

without court order, of matters occurring before the grand jury to "such
government personnel ... as are deemed necessary by an attorney for the
government to assist an attorney for the government in the performance of such
attorney's duty to enforce federal criminal law." Fed.R.Crim.P. 6(e)(3)(A)(ii).
The defendants point to portions of the record showing that disclosure of grand
jury information was made to unknown numbers of civil IRS personnel who
indexed all the subpoenaed grand jury documents. The computer indexing was
done at Lowry Air Force Base in Colorado, in Ogden, Utah, and in Dallas,
Texas. As to the latter two sites, there were no employees shown on the Rule
6(e) disclosure list. Assuming that this allegation finds support in the record,
we fail to see how the grand jury's independence was usurped in such a
significant way as to amount to grand jury abuse. See Pino, 708 F.2d at 530.

67

Further, we do not see how the preparation of a catch-all disclosure list

significantly infringed the grand jury's independence. We note that the
investigation lasted twenty months and involved the efforts of two grand juries.
Moreover, the grand juries were presented with a complex tax fraud case. The
aid of IRS experts was essential to a complete understanding of the case. The

fact that some of the IRS personnel assigned to the grand jury investigation
were from the civil division is by itself not sufficient to show grand jury abuse.
There is nothing in Rule 6 to keep the Department of Justice from having IRS
civil agents assigned to a grand jury investigation. See Sells Engineering, 463
U.S. at 428, 103 S.Ct. at 3140; see also Coson v. United States, 533 F.2d 1119,
1121 (9th Cir.1976) (per curiam).
68

Federal employees assisting the prosecutor in the investigation and prosecution

of federal criminal violations are permitted access to grand jury materials
without prior court permission. However, such support personnel may not use
the materials except for purposes of assisting Government attorneys to enforce
federal criminal laws. Sells Engineering, 463 U.S. at 428, 442, 103 S.Ct. at
3140, 3147; see also 8 J. Moore, supra at p 6.05. [a], at 6-119.15 The Rule 6(e)
proscription is on the use of the grand jury material and not on who obtains it.
Sells Engineering, 463 U.S. at 428, 103 S.Ct. at 3140; see United States v.
Baggot, 463 U.S. 476, 480, 103 S.Ct. 3164, 3167, 77 L.Ed.2d 785 (1983).
Furthermore, the fact that the grand jury returned an extensive indictment is
probative evidence that it was not abused to obtain evidence for civil
purposes.16

69

The court further found that fifteen letters prepared by the Government and
mailed to the defendants' business associates identifying the subject and the
targets of the investigation violated the secrecy obligations of Rule 6(e) and
should lead to dismissal of the indictment. 594 F.Supp. at 1334-35. We fail to
see how such a violation of Rule 6(e) should result in dismissal of the
indictment. There is no support for a finding that the grand jury's independent
judgment was infringed in any significant way. Moreover, the investigation by
the IRS agents of numerous investors in the transactions in question here was
proper even though the IRS agents limited the scope of the interviews by
revealing the subject matter of the inquiry. Any misconduct was not so flagrant
that the grand jury's independence was infringed.

70

Finally, we agree with the district court's finding that the prosecutor imposed
unauthorized secrecy obligations on two witnesses before the grand jury. Id. at
1335-36. Although the admonition to the witnesses was contrary to the dictates
of Rule 6(e)(2), no prejudice was shown in connection with the admonition, see
United States v. Radetsky, 535 F.2d 556, 569 (10th Cir.), cert. denied, 429 U.S.
820, 97 S.Ct. 68, 50 L.Ed.2d 81 (1976), and the admonition cannot serve as a
basis for dismissal of the indictment.

71

The district court found that the use of the title "agents of the grand jury" by
IRS agents mislead the grand jury.17 However "Fed.R.Crim.P. 6 contemplates

the use of government agents, such as I.R.S. agents, to assist an attorney for the
government in his handling of a grand jury investigation." Anderson, 778 F.2d
at 605. We need not decide here whether the use of "grand jury agents" violated
the Rule 6 prohibition against unauthorized presence or unauthorized
disclosure.18 There is no showing by the defendants as to how this record
reveals any actual prejudice to them in the proceedings by overreaching the
grand jury or usurping its independence through this conduct.
72

Moreover, we do not see how the invocation of Fifth Amendment rights by

grand jury witnesses should lead to dismissal of the indictment. The record
shows that once the privilege was invoked the Government attorneys ceased
questioning. See United States v. Thibadeau, 671 F.2d 75, 78 (2d Cir.1982). "
[T]he privilege accorded one called before a grand jury is the election to refuse
to give testimony which might tend to show he had committed a crime. It is not
designed to effect a prohibition against inquiry by an investigative body."
United States v. Cefalu, 338 F.2d 582, 584 (7th Cir.1964). The fact that several
witnesses planned to invoke their Fifth Amendment privilege if called before
the grand jury cannot be transformed into a prohibition against inquiry. Once
the privilege was invoked on the record, the prosecutors discontinued all
questioning.19

73

Finally, the district court found that the prosecutor's mistreatment of a witness
favorable to the defense prejudiced the defendants. 594 F.Supp. at 1343. We
find the mistreatment of the witness, an expert on tax matters, unjustifiable.
The mistreatment occurred during a recess but within the hearing of several
grand jurors, witnesses, and attorneys. The district court's opinion, however,
focuses entirely on the conduct of the prosecutor and not on any resulting
prejudice to the defendants. We conclude that the defendants have failed to
show how the grand jury's independence was breached. The defendants are
hard put to argue that this incident in the course of a twenty-month
investigation threatened the grand jury's independence. See Pino, 708 F.2d at
530.

74

There is a presumption of regularity that attaches to grand jury proceedings.

Hamling v. United States, 418 U.S. 87, 139 n. 23, 94 S.Ct. 2887, 2918 n. 23, 41
L.Ed.2d 590 (1974). Here the defendants failed to sustain their burden of
overcoming the presumption. The grand jury transcripts show an active,
independent, and questioning grand jury, familiar with the record, one that
thoughtfully questioned, rather than submitted to statements and suggestions of
the Government attorneys.20 The district court erred in focusing primarily on
the propriety of the Government's conduct rather than on possible interference
with the integrity and independence of the grand jury. "Dismissal of an

indictment returned after deliberation by a grand jury is a very drastic action."

Anderson, 778 F.2d at 606. It can only be warranted when the misconduct
complained of significantly infringes "on the grand jury's ability to exercise
independent judgment." Pino, 708 F.2d at 530.
75

We conclude that the totality of conduct before the grand jury did not warrant
dismissal of the indictment. The accumulation of misconduct by the
Government attorneys did not significantly infringe "on the grand jury's ability
to exercise independent judgment." Pino, 708 F.2d at 530. Accordingly we hold
that the district court erred in its conclusions that the grand jury's function was
usurped and that the indictment was tainted with illegality, 594 F.Supp. at
1349, 1352, following the de novo review we feel we should conduct. See Part
II-B, supra. We are also persuaded that if those determinations are ultimate
fact-findings, they are clearly erroneous in light of the record.21

76

As stated, we conclude that the accumulation of misconduct by the

Government attorneys did not significantly infringe on the grand jury's ability
to exercise independent judgment. Without such infringement, the drastic
remedy of dismissal of the indictment is unwarranted. We cannot agree that the
remedy can be used without such a showing on the theory of exercise of
supervisory powers, as the dissent concludes. Our decisions do not support such
a view, and those of the Supreme Court have not established a different rule. In
Anderson the opinion of Judge Kane is clear that his dismissal was based on an
exercise of supervisory powers. 577 F.Supp. 223, 232-33 (D.Colo.1983) ("It is
well within a district court's supervisory powers to insure that the grand jury's
integrity as an independent body is not destroyed in the public eye" ), and the
Judge concluded that the Government conduct there significantly impaired the
grand jury's ability to exercise independent judgment. Id. at 234. We reversed,
concluding that the grand jury's independence was not shown to have been
infringed, citing Pino. Anderson, 778 F.2d at 604, 605, 606. Our Pino opinion,
quoted by the dissent, is arguably unclear on the point. Pino does discuss the
exercise of supervisory powers in a statement separate from that on
infringement of the grand jury's judgment. However the full discussion in the
opinion shows no holding that a dismissal is justified without "some significant
infringement on the grand jury's ability to exercise independent judgment."
Pino, 708 F.2d at 530 (citations omitted). That requirement is stated
immediately following citations and a statement that "dismissal may be based
on the Fifth Amendment Due Process Clause or upon the court's inherent
supervisory powers." Id. In any event, Anderson makes clear the requirement of
infringement of the grand jury's independence.

77

We do not read the Supreme Court's opinions as opening the door to dismissals

on supervisory power notions without a showing of infringement on the grand

jury's functions in cases like this. McNabb v. United States, 318 U.S. 332, 63
S.Ct. 608, 87 L.Ed. 819 (1943), relied on by the dissent, did say that it was
unnecessary to reach the constitutional issue and reversed as an exercise of
judicial supervision over the administration of criminal justice, "establishing
and maintaining civilized standards of procedure and evidence." Id. at 340, 63
S.Ct. at 613. While this was the stated basis for the reversal, the opinion in no
way suggests that such a ruling should be made without regard to the harmless
error rule. See Fed.R.Crim.P. 52. Young v. United States, --- U.S. ----, 107 S.Ct.
2124, 95 L.Ed.2d 740 (1987), also furnishes no basis for a conclusion that the
Court favors an exercise of supervisory powers to dismiss indictments without
regard for whether the grand jury's functions were infringed. The plurality
opinion (Brennan, Marshall, Blackmun and Stevens, JJ.), held that society's
interest in disinterested prosecution would not adequately be protected by
harmless error analysis, but there was no majority opinion expressing that view
in the circumstances of that case. Moreover Young involved special
circumstances where appointment of private counsel, having professional
obligations to his client, for prosecution of a criminal contempt proceeding
raised special conflicts problems of an unusual nature.
78

We remain convinced that the drastic remedy of dismissal of an indictment,

whether premised on due process or supervisory powers theories, cannot be
exercised without a significant infringement on the grand jury's ability to
exercise independent judgment.22 We are instructed clearly in United States v.
Hasting, 461 U.S. 499, 509, 103 S.Ct. 1974, 1980, 76 L.Ed.2d 96 (1983), to
ignore errors that are harmless, including most constitutional violations.23
Finally, United States v. Russell, 411 U.S. 423, 435, 93 S.Ct. 1637, 1644, 36
L.Ed.2d 366 (1973), reversed a dismissal, cautioning against a "chancellor's
foot" veto over law enforcement practices of which a court disapproves.

III.
79

The judgment of the district court dismissing the indictment is reversed and the
cases are remanded with directions to reinstate all counts of the indictment.

80

SEYMOUR, Circuit Judge, dissenting.

81

I respectfully dissent from the view of the majority that prejudice to the
defendant must be shown before a court can exercise its supervisory powers to
dismiss an indictment on the basis of egregious prosecutorial misconduct. I
would affirm.

82

It is beyond argument that the Government's conduct in this case was

outrageous. As set out in two district court opinions, United States v.
Kilpatrick, 594 F.Supp. 1324 (D.Colo.1984), and United States v. Kilpatrick,
575 F.Supp. 325 (D.Colo.1983), the record contains evidence constituting a
laundry list of serious improprieties, most of which the majority neither
disputes nor condones. Government officials repeatedly violated Fed.R.Crim.P.
6(d) by presenting two witnesses to the grand jury at the same time. See maj.
op. at 1467-68, 1470. The Government routinely flouted the secrecy provisions
of Fed.R.Crim.P. 6(e). First, it improperly used grand jury information in civil
tax audits of taxpayers who invested in the tax shelters at issue, see maj. op. at
1471; second, it improperly disclosed the identity of the grand jury targets to
people who were not grand jury witnesses but with whom the targets had
business and professional relationships, see id. at 1472; and third, it improperly
swore to secrecy two grand jury witnesses who had formerly represented the
targets in S.E.C. proceedings involving the same tax shelters, see id. at 1472.
During a recess a Government attorney mistreated a tax expert, who had
testified before the grand jury favorably to the targets, by shouting insults at
and intimidating him in the presence of grand jurors, other witnesses, and
attorneys.1 See id. at 1472-73.

83

In addition, the Government attorney paraded seven witnesses before the grand
jury knowing that they would invoke their Fifth Amendment privilege to refuse
to answer any questions. I cannot agree with the majority's conclusion in
footnote 19 that any prejudice arising from this presentation to the grand jury
was eliminated by the prosecutor's admonition. The grand jurors had previously
questioned the prosecutors on the use of the privilege, displayed frustration
over its invocation, and discussed pursuing the matter with the district court to
test the privilege. See rec., Remarks to grand jury, Jan. 5, 1982, at 22-29.
Significantly, one grand juror stated: "I know that we are not supposed to think
anything when they take the Fifth Amendment; being human, we do." Id at 22.
In view of this candid admission, the potential for prejudice arising from seven
witnesses' refusal for fear of incrimination to discuss their involvement in the
very matters upon which the grand jury was asked to indict cannot be denied.
Cf. United States v. Coppola, 479 F.2d 1153, 1160 (10th Cir.1973)
(condemning conscious effort by Government to derive evidentiary value from
adverse inference arising from invoking the privilege). Consequently, this court
has held that it is improper for the Government to call a witness knowing that
he will assert his Fifth Amendment privilege. See id.; see also United States v.
Crawford, 707 F.2d 447, 449 (10th Cir.1983).

84

After numerous hearings before two trial judges, both judges found that the
Government's pervasive misconduct evinced a deliberate and alarming

disregard of standards imposed by the Federal Rules, Justice Department

guidelines, ethical considerations, and civilized behavior.
85 numerous abuses and violations of rules and constitutional principles must be
"The
considered particularly serious because of the admissions in these hearings that, for
the most part, the activity was undertaken knowingly and purposefully."
86

Kilpatrick, 594 F.Supp. at 1352. Based on its finding that the Government's
conduct was intentional, which includes credibility assessments this court may
not lightly disregard, the district court found that "the substantial departures of
prosecutors in this case from established notions of fairness, from clearly
articulated rules of law, from specific rules of procedure and, indeed from the
Department of Justice's own manual and operating directives constitute
systematic and pervasive overreaching." Id. The court concluded that the
cumulative effect of the Government's conduct prevented the grand jury from
undertaking independent action. Id. at 1353.

87

Although acknowledging most of the improprieties set out in the lower court
opinions, the majority does not agree with the district court that the
Government's actions impaired the grand jury's ability to exercise its
independent judgment, which is the standard that must be met before the
indictment may be dismissed under the Fifth Amendment. Significantly, the
majority also concludes that the sanction of dismissing the indictment is not a
proper exercise of a district court's supervisory power unless the same standard
is met, that is, unless there is a legally sufficient showing that the Government's
misconduct adversely affected the grand jury's independence. Putting aside
whether the impact of the Government prosecutors' behavior on the decisionmaking process of this grand jury can realistically be evaluated, I do not believe
that such a showing is a prerequisite to the pre-trial dismissal of an indictment
under a court's supervisory power.

88

In McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819 (1943),
the Supreme Court did not employ a harmless error analysis in considering
whether the invocation of its supervisory power was appropriate. To the
contrary, the Court found it unnecessary to determine whether the defendants
had been prejudiced by a constitutional violation before exercising its
supervisory powers to reverse a conviction. In so doing, Justice Frankfurter said
for the Court:

89

"In the view we take of the case, however, it becomes unnecessary to reach the
Constitutional issue pressed upon us. For, while the power of this Court to undo
convictions in state courts is limited to the enforcement of those 'fundamental

principles of liberty and juctice; Hebert v. Louisiana, 272 U.S. 312, 316 [47
S.Ct. 103, 104, 71 L.Ed. 270 (1926) ], which are secured by the Fourteenth
Amendment, the scope of our reviewing power over convictions brought here
from the federal courts is not confined to ascertainment of Constitutional
validity. Judicial supervision of the administration of criminal justice in the
federal courts implies the duty of establishing and maintaining civilized
standards of procedure and evidence. Such standards are not satisfied merely by
observance of those minimal historic safeguards for securing trial by reason
which are summarized as 'due process of law' and below which we reach what
is really trial by force."
90

Id. at 340, 63 S.Ct. at 613.

91

In a recent consideration of supervisory powers, the Court set out the three
purposes underlying their use: 1) to remedy the violation of recognized rights;
2) to preserve the integrity of the judicial process; and 3) to deter illegal
conduct. See United States v. Hasting, 461 U.S. 499, 505, 103 S.Ct. 1974,
1978, 76 L.Ed.2d 96 (1983). The Court pointed out that securing these
objectives by the exercise of supervisory power may frustrate the societal
concern for the conservation of judicial resources and the prompt
administration of justice embodied in the harmless error rule. See id. at 509,
103 S.Ct. at 1980. The Court held that a court contemplating the exercise of its
supervisory power must weigh the benefits to be obtained against the cost to
the countervailing interest in finality. See id. at 506-07, 103 S.Ct. at 1979. The
weight to be given the harmlessness of the error obviously increases in
significance when the balancing is done after trial and conviction.2 Implicit in
the Court's guidance on this issue is its recognition that although the
harmlessness of the alleged misconduct is an element to be balanced against the
desired result, it is not always dispositive. If the exercise of supervisory power
were per se precluded by a finding of lack of prejudice, a balancing process
would never be necessary.

92

Our opinion in United States v. Pino, 708 F.2d 523 (10th Cir.1983), was filed
only three days after Hasting and does not cite that decision. Moreover, I cannot
agree with the majority's reading of Pino to establish that prosecutorial
misconduct must be shown to have affected the grand jury's independence
before supervisory power can be invoked, particularly in a pretrial setting. In
Pino, the defendant contended that the prosecutor's behavior had unfairly
infringed on the grand jury's independent judgment. The district court found no
effect, and the defendant appealed after his conviction. This court pointed out
that dismissal of an indictment may be based either on the Fifth Amendment
Due Process Clause or the court's inherent supervisory powers. See id. at 530.

We distinguished between those two inquiries, however, stating:

93

"We are not persuaded that the circumstances as a whole show such flagrant
misconduct that the grand jury was overreached or deceived in some significant
way, or that the prosecutor's conduct significantly infringed on the ability of
the grand jury to exercise its independent judgment. We are also not convinced
that the circumstances here justify exercise of the court's supervisory power to
protect the integrity of the judicial process by dismissing the indictment."

94

Id. at 531 (citation omitted) (emphasis added). Our separation of these distinct
bases for dismissing an indictment indicates that Pino should not be read to
hold that the finding of prejudice needed to support a dismissal on due process
grounds is also required when supervisory powers are invoked.

95

Our subsequent cases citing Pino to require a showing of prejudice simply do

not indicate which basis for dismissing the indictment was at issue. See United
States v. Page, 808 F.2d 723, 726 (10th Cir.1987); United States v. Buchanan,
787 F.2d 477, 487 (10th Cir.1986); United States v. Anderson, 778 F.2d 602,
604-05, 606 (10th Cir.1985).3 It is also important to emphasize that, contrary to
the present case, Hasting, Pino, Page, and Buchanan are all cases in which the
argument to dismiss the indictment was made after conviction, a time at which
the interest in finality is very substantial and the harmlessness of the error is
therefore weighted heavily.4 Moreover, we said in Page:

96

"This clearly is not a case involving abuse, bad faith, or vindictiveness. Instead
the prosecutor's failure to correct Agent West's testimony was, at worst, an
oversight. The extraordinary remedy of dismissal of the indictment is not called
for here."

97

808 F.2d at 727.

98

In sum, I am convinced that neither the Supreme Court in Hasting nor our
opinions in Pino and its progeny establish that a court is barred from exercising
its supervisory powers to dismiss an indictment prior to trial absent a showing
that the misconduct affected the grand jury's charging decision. Such a
requirement would render a court's supervisory power superfluous because
misconduct that does affect the grand jury's independence is a constitutional
violation remediable under the Fifth Amendment.

99

The circuits are split on the need to show prejudice. See United States v.
Holloway, 778 F.2d 653, 658-59 (11th Cir.1985) (noting authority on both

sides of issue), cert. denied, --- U.S. ----, 106 S.Ct. 2276, 90 L.Ed.2d 719
(1986). The Third Circuit has specifically rejected the prejudice requirement
when there is "evidence that the challenged activity was something other than
an isolated incident unmotivated by sinister ends or that the type of misconduct
challenged has become 'entrenched and flagrant' in the circuit." United States v.
Rosenfield, 780 F.2d 10, 11 (3rd Cir.1985) (per curiam) (quoting United States
v. Serubo, 604 F.2d 807, 817 (3rd Cir.1979) ), cert. denied, --- U.S. ----, 106
S.Ct. 3294, 92 L.Ed.2d 709 (1986). Contra United States v. Griffith, 756 F.2d
1244, 1249 (6th Cir.), cert. denied, --- U.S. ----, 106 S.Ct. 114, 88 L.Ed.2d 93
(1985); United States v. McKenzie, 678 F.2d 629, 631 (5th Cir.), cert denied,
459 U.S. 1038, 103 S.Ct. 450, 74 L.Ed.2d 604 (1982). This standard comports
with the Supreme Court's indication that a showing of prejudice is not required
when the record reveals "a pattern of recurring violations." United States v.
Morrison, 449 U.S. 361, 366 n. 2, 101 S.Ct. 665, 668 n. 2, 66 L.Ed.2d 564
(1981). Further, such a test is not inconsistent with Hasting and our circuit
opinions, and is particularly appropriate when, as here, a dismissal is granted
prior to trial.5
100 Although I recognize that supervisory powers should be exercised sparingly, I
would apply the Third Circuit criteria in this case and uphold the district court's
dismissal. After an evidentiary hearing, the district court here found that the
ongoing misconduct, which pervaded the investigation of the case and its
presentation to the grand jury, was motivated by bad faith and "improper
strategic purpose[s]". See, e.g., Kilpatrick, 594 F.Supp. at 1335, 1338. The
evidence clearly supports this credibility determination. The record of the
Government's conduct evinces a determination to circumvent or simply ignore
the standards governing grand jury proceedings when to do so would enhance
the presentation of its case. Under these circumstances, the district court was
within its discretion in exercising its supervisory power to protect the integrity
of the judicial process and to deter illegal conduct, see Hasting, 461 U.S. at
505, 103 S.Ct. at 1978, particularly when the interest in finality had not been
supported by a conviction.
101 Finally, it is important to point out that the exercise of supervisory power in this
case does not violate the separation of powers by encroaching on the
prosecutor's authority. A prosecutor may not invoke separation of powers to
avoid the consequences of his intentional disregard of judicial standards
specifically directed toward his conduct. The Supreme Court recently held that
a court may exercise its supervisory authority to appoint a special prosecutor
notwithstanding the argument that to do so would usurp the prosecutor's
function. See Young v. United States, --- U.S. ----, 107 S.Ct. 2124, 95 L.Ed.2d
740 (1987). "The exercise of supervisory authority is especially appropriate in

the determination of the procedures to be employed by courts to enforce their

orders, a subject that directly concerns the functioning of the judiciary." Id. at --- - ----, 107 S.Ct. at 2138. This holding is equally applicable when, as here, a
court exercises its supervisory authority to enforce the Criminal Rules, which
are also directly concerned with the functioning of the judicial process.
102 I conclude that a finding of prejudice to the defendant should not be required to
dismiss an indictment when prosecutorial misconduct during the grand jury
proceedings is pervasive. Prejudice to the integrity of the judicial process
should be sufficient. Because the lower court's exercise of its supervisory power
is supported by the facts and the law, I would affirm the dismissal of the
indictment.

The Honorable Luther L. Bohanon, United States District Judge of the Eastern,
Northern and Western Districts of Oklahoma, sitting by designation

The Bank of Nova Scotia was charged in ten counts with conspiracy to defraud
the United States (18 U.S.C. Sec. 371) (Count 1) and aiding and abetting a mail
fraud (18 U.S.C. Secs. 1341, 2) (Counts 13-21)

The district court's first dismissal left standing Count XXVII of the indictment
which charged the defendant Kilpatrick with obstructing the grand jury
investigation of the tax shelters. After a jury trial the defendant Kilpatrick was
found guilty of obstruction of justice. See United States v. Kilpatrick, 575
F.Supp. 325, 326 (D.Colo.1983). However, the defendant Kilpatrick moved for
a new trial, which Judge Winner granted. See id. at 342

The Sixth Amendment provides in part that "[i]n all criminal prosecutions, the
accused shall enjoy the right ... to be informed of the nature and cause of the
accusation;...." Rule 7(c)(1) provides in part:
The indictment or the information shall be a plain, concise and definite written
statement of the essential facts constituting the offense charged.

The defendants cite a number of cases which consider the economic substance
of a given transaction to be pivotal to the outcome of the case. E.g., Frank Lyon
Co. v. United States, 435 U.S. 561, 573, 577, 98 S.Ct. 1291, 1298, 1300, 55
L.Ed.2d 550 (1978); see also United States v. Mallas, 762 F.2d 361, 363 (4th
Cir.1985); United States v. Carruth, 699 F.2d 1017, 1021-22 (9th Cir.1983),
cert. denied, 464 U.S. 1038, 104 S.Ct. 698, 79 L.Ed.2d 164 (1984); United
States v. Ingredient Technology Corp., 698 F.2d 88, 89, 94 (2d Cir.), cert.
denied, 462 U.S. 1131, 103 S.Ct. 3111, 77 L.Ed.2d 1366 (1983). They do not,

however, address the sufficiency of an indictment, nor do they provide

principles helpful here. The sufficiency of an indictment on a motion to dismiss
is tested by its allegations. Fed.R.Crim.P. 12(b)(2). The points defendants argue
are to be tested at trial. See United States v. Knox, 396 U.S. 77, 83 n. 7, 90
S.Ct. 363, 367 n. 7, 24 L.Ed.2d 275 (1969); cf. Crooks, 804 F.2d at 1448
We do not feel that the holdings in Frank Lyon or the other cases show a fatal
defect in the indictment here for want of an allegation of lack of economic
substance to the underlying transactions. The indictment does charge a lack of
resources to make payments and loans, fictitious transactions, and check kites
and check swaps used therefor, in the Count I and II statements of "Means and
Methods." The indictment is thus sufficient as a statement of the offenses
charged.
5

The Bank cites as supplemental authority United States v. Golitschek, 808 F.2d
195 (2d Cir.1986), for the proposition that the omission of the Bank from the
indictment's list of defendants with specific knowledge of the alleged violations
of tax laws is fatal. Golitschek does not address the sufficiency of an
indictment; rather, that case reviews the propriety of certain jury instructions
concerning the defendant's knowledge as to the legality of planned shipments of
helicopters from the United States to Iran. Id. at 197
Moreover, in focusing exclusively on the omission the Bank fails to recognize
one of the fundamental canons of construction in interpreting an indictment;
that is, an indictment must be read as a whole and interpreted in a commonsense manner. Employing this canon, we are convinced that the indictment
sufficiently charged the requisite mental element on the part of the Bank.

We have pointed out that dismissal has been based on the Fifth Amendment
Due Process Clause or on the court's supervisory power. Pino, 708 F.2d at 530,
and cases there cited. The Ninth Circuit has cited the Grand Jury Clause as a
constitutional ground for dismissal. See United States v. Sears, Roebuck and
Co., 719 F.2d 1386, 1391 n. 7 (9th Cir.1983), cert. denied, 465 U.S. 1079, 104
S.Ct. 1441, 79 L.Ed.2d 762 (1984)

The first consideration is necessitated by the Supreme Court's opinions in

Mechanik, 475 U.S. 66, 106 S.Ct. 938, 89 L.Ed.2d 50 (1986) and United States
v. Hasting, 461 U.S. 499, 103 S.Ct. 1974, 76 L.Ed.2d 96 (1983). The second
and third factors are proper because of the concerns highlighted in Costello v.
United States, 350 U.S. 359, 76 S.Ct. 406, 100 L.Ed. 397 (1956), where the
Court held that "[a]n indictment returned by a legally constituted and unbiased
grand jury, like an information drawn by the prosecutor, if valid on its face, is
enough to call for trial of the charge on the merits. The Fifth Amendment

requires nothing more." Id. at 363, 76 S.Ct. at 409 (footnote omitted)

8

The record further shows that one or possibly two of the agents were not placed
under oath before reading the transcripts. (XIX R. 486-90; XX R. 709-11).
Nevertheless, we do not believe the clarification of this issue is necessary to the
resolution of this case
The defendants point out in their supplemental briefs that the Court in
Mechanik expressed "no opinion as to what remedy may be appropriate for a
violation of Rule 6(d) that has affected the grand jury's charging decision and is
brought to the attention of the trial court before the commencement of trial."
Mechanik, 475 U.S. at ----, 106 S.Ct. at 943 (emphasis added) (footnote
omitted). We feel that this language did leave open a determination whether
dismissal for such a violation, timely raised, may be justified if prejudice is
shown affecting the charging decision

10

The district judge noted that the Massiah violations by definition occurred after
the indictment was returned, and that defendants have demonstrated no
prejudice from these violations; that the Bank's counsel had performed "ably
and adequately throughout the litigation." He therefore concluded that
dismissal of the indictment was an inappropriate remedy for the Massiah
violations. 594 F.Supp. at 1351. Nevertheless the judge also said that the
"Massiah violations must enter into my general qualitative assessments of the
prosecutor's and grand jury's conduct." Id. He thus apparently weighed these
violations as one element of the totality of the circumstances--one ground for
dismissal of the indictment

11

We do not hold that every defendant can attack an indictment alleging errors
affecting only the probable cause determination by the grand jury after they
successfully move for a new trial. That issue is not now before us. However,
the peculiar facts of this case permit us to consider Kilpatrick's claims without
prejudice to any party

12

We note that no claim was made nor did the court find that the Government
attorneys used perjured testimony, knowingly or unknowingly, before the grand
jury

13

" 'Informal immunity' is contrasted with 'statutory immunity,' which by statute

requires the approval of a Senior Justice Department Official and of the district
court judge. See 18 U.S.C. Secs. 6002, 6003." United States v. Anderson, 778
F.2d 602, 606 n. 2 (10th Cir.1985)

14

We are unable to find an instance in the record where the IRS agents convened
the grand jury sessions without Government attorneys being present. Thus, the

district court's findings that the IRS agents may have convened the grand jury
sessions is not supported by the record
15

United States v. Doe, --- U.S. ----, ----, ----, 107 S.Ct. 1656, 1659, 1663, 95
L.Ed.2d 94 (1987), illustrates permissible limited use, on a showing of
particularized need, by disclosure to Government civil attorneys in the
Department of Justice Civil Division and a United States Attorney's Office, of
grand jury material for purposes of consultation in deciding whether civil
actions should be initiated

16

Whether grand jury records can be used as evidence in future civil litigation can
be properly decided on a timely motion to suppress in such a case. See Witte v.
United States (In re Grand Jury Subpoena of Fred R. Witte Center Glass No.
3), 544 F.2d 1026, 1029 (9th Cir.1976)

17

At the beginning of work of the indicting grand jury on July 8, 1981, the
prosecutor asked for Mr. Raybin to be sworn in as a Grand Jury agent, saying
this meant it was "very, very clear" that when the agent looked at evidence it
was not so much as an IRS agent but as the Grand Jury's agent. The oath
administered at that time also referred to secrecy to be maintained concerning
the evidence, subject to instructions by the Foreman or a federal judge. (G.J.
Tr., Colloquoy, July 8, 1981, 9:11 A.M., at 2-3). Agent Mendrop was given a
similar oath. (G.J. Tr., Colloquy, July 8, 1981, 12:14 P.M., at 2)

18

Compare United States v. Jones, 766 F.2d 994, 1001 (6th Cir.), cert. denied, --U.S. ----, 106 S.Ct. 526, 88 L.Ed.2d 458 (1985) ("agent of grand jury" sworn by
foreman at prosecutor's request not prosecutorial misconduct) with United
States v. Claiborne, 765 F.2d 784, 794 (9th Cir.1985), cert. denied, --- U.S. ----,
106 S.Ct. 1636, 90 L.Ed.2d 182 (1986) (use of "grand jury agents" not proper)

19

During the grand jury investigation, one juror indicated that the grand jury
might consider the fact that a witness asserted the Fifth Amendment privilege
against self-incrimination. (G.J. Tr., Colloquy, May 3, 1982, 9:15 A.M., at 7.)
A prosecutor promptly cautioned the grand jury that it was not to consider the
assertion of the privilege

20

It is evident from the grand jury transcripts that the prosecutors frequently
reminded the grand jury of its independence and duty to make its own
assessment of the evidence introduced before it. A prosecutor specifically
advised the grand jury that "these men are entitled to a fair and impartial
deliberation by the Grand Jury." (G.J. Tr., Colloquy, Aug. 5, 1981, 4:11 P.M.,
at 4). The prosecutor further stated to the grand jury:
Once again, at any time you have a question, by all means, either ask me or ask

my agents. I'll try to clarify it. Like I told you the first day, don't be satisfied
with what we tell you. Push us. Make sure that the documents are there and the
evidence is there and the testimony is there. If you don't think it is there, tell me
and if I can't get it better to you, to your satisfaction, then I'm failing my duty.
(G.J. Tr., Colloquy, Sept. 9, 1981, 10:15 A.M., at 2).
Furthermore, just before the prosecutors asked the grand jury to return an
indictment they reiterated the roles of the Executive Branch and the grand jury:
Mr. Blondin and I are advocates, and we are paid advocates. Thus, you should
remember that Mr. Blondin and I are just that: advocates. And what we have
said to you in the past and will say to you today is that of an advocate, and you
should consider what we say only in the light of what we say makes sense: is it
logical? is it rational? is it based on evidence? If it is, then you should consider
the argument; if you reject it and find it is weak at some point, then reject it.
(G.J. Tr., Colloquy, Sept. 30, 1982, 9:07 A.M., at 5).
The grand jury transcripts portray an active and questioning grand jury. During
the investigation the grand jury vigorously questioned the prosecutors (see,
e.g., G.J. Tr., Colloquy, July 8, 1981, 8:39 A.M., at 9, 12, 13, 17; G.J. Tr.,
Colloquy, Aug. 5, 1981, 4:11 P.M., at 2-4) and the IRS agents (see, e.g., G.J.
Tr., Raybin, July 8, 1981, 9:11 A.M., at 13-14, 16-23, 33; G.J. Tr., Mendrop,
Aug. 5, 1981, 4:04 P.M., at 3-7; G.J. Tr., Mendrop, Sept. 29, 1982, 9:32 A.M.,
at 14-15, 20-22, 25, 43-44, 47-49, 54; G.J. Tr., Raybin, Sept. 29, 1982, 2:32
P.M., at 20-21). Moreover, one juror questioned whether the evidence
presented was sufficient to charge one of the defendants, the secretary Ms.
Lerner, and vigorously interrogated the prosecutor on that point. (G.J. Tr., Sept.
29, 1982, 8:52 A.M., at 5-11).
21

We have earlier explained our reasons for concluding that no showing

justifying dismissal of the indictment was made in connection with the calling
of witnesses who asserted their protection against self-incrimination. We quote
below the colloquy cited by the dissent which shows the discussion and some
reasons for calling the witnesses:
JUROR: I want to ask you a question. I know that we are not supposed to think
anything when they take the Fifth Amendment; being human, we do.
MR. BLONDIN: Strike that out of your mind. You cannot assume-JUROR: Can you speculate on why he wouldn't answer for us?

MR. BLONDIN: There are various reasons, and I can't speculate for you.
He has a right, especially since he is a target of the investigation, the right not
to answer any questions a truthful answer to which may tend to incriminate
him.
Now, I cannot speculate nor can the Grand Jurors, anybody in the room,
speculate as to the reason why. You, as well as Mr. Pettingill, have that
privilege; you can assert it for any reason: on advise of counsel, your own
reasons, maybe your aunt or somebody else gave you advice on it. We are not
going to speculate on it; and get rid of it, it has nothing whatsoever to do with
your deliberations.
We cannot even begin to think of reasons for that. There could be some very
legitimate reasons for him to assert the Fifth Amendment. Just the specter of a
Grand Jury investigation-JUROR: I'm sure that's easy for you and for us because we-MR. BLONDIN: There are two options on what we can do when a witness
takes the Fifth. All right, take it up--compel his testimony or her testimony, go
to the Judge; the Judge says, "That's not privileged, you don't have a Fifth
Amendment privilege, you testify. Give us answers."
At that point the witness says, "No, I am not going to testify." Then we go to
court again, hold him in contempt; and it doesn't end there. There is an
elaborate appellate procedure that we have to go through to get the issue
resolved before we can get answers to questions that we propound before the
Grand Jury.
The other option, we can give a witness immunity; and once he is granted
immunity, we can compel him to testify, and he has no privilege.
Targets of the investigation, no immunity.
JUROR: I got a question for you. You asked him who all had the right, I guess,
to see these files, to obtain these files; he pleaded the Fifth. How can that be
incriminating to him?
MR. BLONDIN: There may be other people that have access to them, that we
don't know about. He may not have known the answer and just took the Fifth.
He, in this case, may have taken the Fifth on advise of counsel. That gets into
speculation, and I can't. The questions I asked of him--and I was going to go in
a more--go through it piece by piece, but I could see there is no way we could

do that. All right. I tried to shortcut, just laid the foundation that these were
business records, they were authentic business records that could be admissible.
The problem we had in the hearing before Judge Carrigan on the foreign
corporations compelling production of those records was that there was
objection made by defense counsel as to the admissibility of certain corporate
records. We had subpoenaed Mr. O'Donnell and Mr. Kilpatrick, and we had
asked their counsel to provide a custodian of records, somebody that could
identify that these were business records.
They provided a witness that they assured us could identify the records, that
would say they were corporate--a corporation does not have a Fifth Amendment
privilege. All right. There are a number of Supreme Court cases that have
resolved that issue, that a corporation has to provide a custodian to identify the
records, and that's part of our foundation that the government or the prosecutor
had to lay before the records could come in as evidence in a trial.
They objected to it. As a consequence of that we said, "All right, we are calling
people in, and they are going to identify these business records." And that's
why we have to go through this.
(G.J. Tr., Colloquy, Jan. 5, 1982, 9:09 A.M., at 22-25).
22

Accord United States v. De Rosa, 783 F.2d 1401, 1406-07 (9th Cir.), cert.
denied, --- U.S. ----, 106 S.Ct. 3282, 91 L.Ed.2d 571 (1986) (defendant must
show prejudice before court will dismiss indictment on either the constitutional
or supervisory grounds); United States v. Griffith, 756 F.2d 1244, 1249 (6th
Cir.), cert. denied, --- U.S. ----, 106 S.Ct. 114, 88 L.Ed.2d 93 (1985) (same);
United States v. McKenzie, 678 F.2d 629, 631 (5th Cir.), cert. denied, 459 U.S.
1038, 103 S.Ct. 450, 74 L.Ed.2d 604 (1982) (same). Contra United States v.
Rosenfield, 780 F.2d 10, 11 (3d Cir.1985) (per curiam) cert. denied, --- U.S. ---, 106 S.Ct. 3294, 92 L.Ed.2d 709 (1986) (no prejudice required)

23

The Court pointed out that deterrence is an inappropriate basis for reversal
where an attenuated violation is involved "and where means more narrowly
tailored to deter objectionable prosecutorial conduct are available." 461 U.S. at
506, 103 S.Ct. at 1979. And the Court referred specifically to such a less drastic
remedy where a Government attorney made improper arguments to a grand
jury. Id. at 506 n. 5, 103 S.Ct. at 1979 n. 5

The district court also found that the special agents who summarized the
evidence against defendant Bank of Nova Scotia mischaracterized this
evidence. See Kilpatrick, 594 F.Supp. at 1339-40. Although I agree with the
majority that the agent's use of hearsay was not improper per se, see maj. op. at

1470, the majority does not address the serious allegation that the hearsay itself
was inaccurate and misleading
2

Although United States v. Mechanik, 475 U.S. 66, 106 S.Ct. 938, 89 L.Ed.2d
50 (1986), did not address the exercise of supervisory power, the Supreme
Court's decision to reverse the automatic dismissal of an indictment for a Rule
6(d) violation was premised upon the importance the Court placed upon finality
when an indictment is dismissed for a technical, harmless error after trial. See
id. 106 S.Ct. at 942-43

I cannot agree with the majority that our opinion in Anderson makes clear the
requirement of prejudice. The district court opinion in Anderson refers to the
denial of due process as a basis for its decision to dismiss the indictment, both
by its own discussion of the constitutional function of the grand jury and by its
references to the discussion of that constitutional function in United States v.
Dionisio, 410 U.S. 1, 16-17, 93 S.Ct. 764, 772-73, 35 L.Ed.2d 67 (1973). See
United States v. Anderson, 577 F.Supp. 223, 230-32 (D.Wyo.1983). Our
opinion in Anderson, which does not refer to the exercise of supervisory
powers, concludes only that "the record in the instant case does not support the
conclusions of the trial court which formed the basis for the dismissal." 778
F.2d at 606

Although in Anderson this court did reverse a dismissal granted prior to trial,
we held that, contrary to the conclusion here, none of the challenged conduct
was improper

As the majority recognizes, Kilpatrick is in essentially the same position as a

pretrial defendant because he was granted a new trial. See maj. op. at 1470