Rehearing and Rehearing En Banc Denied in Nos. 85-1913 and 88-1268 April 4, 1989.
LEVIN H. CAMPBELL, Chief Judge.
Miguel A. Serrano, Juan Luis Boscio, and William Stamps appeal from their convictions of mail and wire fraud. 18 U.S.C. §§ 1341, 1343 (1982). We affirm the convictions of Serrano and Boscio, but vacate Stamps's conviction and remand his case for a new trial.
The defendants' convictions arose out of a series of complex financial transactions involving a number of entities in Puerto Rico. Both Serrano and Stamps worked for Shearson/American Express of Puerto Rico, Inc. ("Shearson"), a subsidiary of Shearson/American Express, Inc. Serrano was a broker and senior vice-president at Shearson; Stamps was Operations Manager at Shearson. Boscio was a local attorney, a member of the Ponce municipal assembly, and president of the board of directors of the Ponce Municipal Development Authority ("Authority"). The Authority was created by the municipality of Ponce to promote and develop new housing for the area. Along with Shearson and the Authority, the following entities were involved in the financial transactions relevant to this case: 1) Citibank; 2) Ponce Developers, Inc. ("PDI"), an entity created and owned by Serrano; and 3) Home Federal Savings and Loan Association of Puerto Rico ("Bank"), the victim of the fraudulent scheme alleged in the indictment.
In the early 1980s, the Bank was in dire financial straits; it had been losing money for several years and needed an infusion of capital to avoid bankruptcy. The Authority also needed funds to finance new housing in Ponce and to subsidize rents. In early 1982, purporting to help the Bank and the Authority raise these needed funds, Serrano arranged a series of Sale, Repurchase and Pledge of Securities Agreements, known as "REPOs" in the financial world. A REPO is essentially a short-term loan agreement whereby the lender loans money to a borrower in return for collateral such as securities owned by the borrower. A REPO may also entail the lender investing the loan proceeds on behalf of the borrower. The lender would then pay the borrower a "spread," which is the difference between the return on the investment and the interest payments the borrower owes the lender for the loan.
In arranging the REPOs in this case, Serrano opened a client account at Shearson for the Authority. As a result, the Authority began receiving monthly client account statements from Shearson. In filling out the form to open the Authority's account, Serrano listed the Bank as the "custodial agent" for assets generated by the Authority's Shearson account, although this was not the case; this automatically triggered the mailing of duplicates of the Authority's client account statements to the Bank. The receipt of these duplicate client statements led the Bank mistakenly to believe that it had an active account at Shearson and that the statements were for its own account. In fact, the Bank was not a Shearson client and did not have an account there. While Serrano did not open an account for the Bank, he opened one for PDI. In opening this account, Serrano did not disclose, as required by Shearson, that he owned PDI.
On May 19-20, 1982, the various entities entered into four related REPOs, each with a five-year term: 1) Citibank loaned Shearson $3 million in return for $3 million in
While on the surface these complex financial transactions at first appeared legitimate to the parties involved, the evidence at trial revealed a fraudulent scheme devised by Serrano and allegedly executed with the help of Boscio and Stamps. In particular, $1 million of the $3 million loan from Shearson to the Authority was transferred to PDI's account at Shearson. Serrano ordered this transfer without the authorization of either the Authority or Shearson. The $1 million was then diverted to Serrano's own personal use. In addition, the Bank was defrauded of $1.7 million worth of mortgages it had pledged in its REPO with PDI; Citibank, the initial source of the $3 million loan and the ultimate recipient of the $3 million in mortgages pledged as collateral, apparently never received $1.7 million of the collateral, nor has it ever been located.
This fraudulent scheme was accomplished by a variety of ruses and misrepresentations: 1) Contrary to Serrano's representations to the Bank, the $2 million CD was not held in its name but in the Authority's name. Thus, the Bank never received the $2 million it was supposed to have received in its REPO with PDI. 2) Serrano, allegedly with the aid of Boscio and Stamps, kept the parties in the dark as to who they actually were dealing with. Shearson did not know that PDI (which was not even incorporated) was a front for Serrano, nor did it know of or authorize a REPO with PDI or the Bank. The Bank, based on Serrano's representations and having received the duplicate client statements, was led to believe that it was dealing directly with Shearson, that it had an asset-filled account there, and that PDI was merely a Shearson subsidiary. 3) On November 10, 1982, Serrano sent a confirmation letter to Bank auditors that falsely stated that the Bank had an account at Shearson and that a $2 million CD was held in its name. 4) On February 23, 1983, a letter signed by Stamps and prepared by Serrano was sent to the Bank with a copy being sent to the Bank's auditors. This letter also falsely stated that the Bank had an account at Shearson and that the CD was being held in its name.
Partly because of the losses it sustained in the REPO transactions, the Bank collapsed, thus triggering a multitude of audits, investigations (including an investigation by the FBI), and civil suits. These investigations not only revealed the fraudulent scheme that led to the indictments in this case, but also a series of kickbacks and public corruption involving local government officials. Serrano, granted immunity from local prosecution by the Puerto Rico House of Representatives, testified in legislative hearings regarding this public corruption and his financial dealings at Shearson.
These revelations led to three separate indictments. Count One of the indictment returned in this case charged that, by wiring funds in the May 19-20 REPOs, Serrano, Boscio and Stamps, aiding and abetting each other, committed wire fraud in violation of 18 U.S.C. §§ 2, 1341. This count alleged that the three defendants,
Counts Two, Three and Four each alleged mail fraud in violation of 18 U.S.C. § 1343. Count Two charged Serrano with mailing, for the purpose of executing the scheme to defraud, a knowingly false confirmation letter dated November 10, 1982, to the Bank's auditors regarding the "financial position of the [Bank] as to [its] account with Shearson/American Express...." Count Three charged Serrano and Stamps, aiding and abetting each other for the purpose of executing the scheme to defraud, with mailing the Bank a knowingly false "memorandum dated February 23, 1983 reflecting and representing the financial position of the [Bank] as to [its] account with Shearson American Express...." Count Four charged Serrano and Stamps, aiding and abetting each other for the purpose of executing the scheme to defraud, with mailing two knowingly false "client statement sheets to the name of the [Bank] reflecting the financial position" of the Bank.
The jury convicted all three defendants as charged. Each of the defendants now appeals, advancing arguments as to why his conviction should be overturned. We will discuss each defendant's appeal separately.
II. WILLIAM STAMPS
Stamps argues on appeal that the evidence was insufficient to sustain his conviction and that he was denied his Sixth Amendment right to confront witnesses when the district court erroneously admitted hearsay into evidence.
A. Sufficiency of the Evidence
Stamps contends that there was insufficient evidence to support his conviction and that the district court erred in denying his motion for acquittal. We have described the appropriate standard for reviewing the sufficiency of the evidence supporting a criminal conviction in United States v. Torres Lopez, 851 F.2d 520, 527-28 (1st Cir.1988):
Stamps was convicted as an aider and abettor
Stamps does not dispute that a fraudulent scheme existed and that the mails and interstate wire communications were used in furtherance of this scheme. Rather, he contends that there was insufficient evidence to find beyond a reasonable doubt that he knew of Serrano's misrepresentations or his scheme to defraud. We think there was sufficient competent evidence supporting Stamps's conviction on all three counts.
As to Count Three, there was sufficient evidence for a rational jury to find that, for the purpose of executing the fraudulent scheme, Stamps sent the letter of February 23, 1983, falsely confirming that the Bank had an account at Shearson and that the $2 million CD was being held in its name. The letter, sent to the Bank's president, with a copy to the Bank's auditors, was a central component in the effort to conceal the scheme; it lulled the Bank and its auditors into mistakenly believing that the Bank had an active account at Shearson and that the loan proceeds were safely invested in a $2 million CD in the Bank's name, as Serrano had earlier misrepresented. Serrano prepared the letter and gave it to his secretary for Stamps to sign. After Stamps refused to sign the letter at the secretary's behest, Serrano himself went to Stamps's office. After Serrano's ensuing conversation with Stamps, the contents of which are unknown, Stamps signed the letter. The jury could have reasonably inferred that Stamps, who supervised client accounts as the operations manager at Shearson, knew of the fraudulent nature of the letter and signed it intending to further the scheme to defraud.
Although a much closer question, there was also sufficient evidence to support the jury's guilty verdict against Stamps under Counts One (the wire fraud involving the May 19-20 REPOs) and Four (the mail fraud involving the mailing of client account statements to the Bank). Stamps managed Shearson's operations department. This department executed the transactions among Shearson and its clients, transferring funds and collateral pursuant to the brokers' instructions. It also kept accounting records in which all transactions at Shearson were supposedly reflected. As manager, Stamps oversaw these activities; he supervised client accounts, the provision of client statements,
Stamps was also in charge of Shearson's internal control system created to insure compliance with internal and external regulations. Stamps was responsible for notifying the branch manager of any irregularities he uncovered. While many of the documents emanating from the REPO transactions appeared normal on their face, several witnesses described "irregularities" which were crucial to the success of the fraudulent scheme: 1) Shearson's records contained no document authorizing the transfer of $1 million from the Authority's account to PDI's account; Shearson's normal procedures required a letter from the transferor authorizing such a transfer. 2) Shearson's former branch manager testified that it was very irregular for the Bank to receive duplicates of the Authority's client statements. 3) When PDI opened its account, Shearson required PDI at some point to submit articles of certification of incorporation to the broker who would then deliver them to Stamps. This certification apparently never was submitted. Indeed, it was later discovered that PDI was never incorporated. 4) The REPO deals had a term of five years. Most REPOs have at most a one-year term.
Stamps contends that he should not be found guilty solely because of the occurrence of these irregularities, his supervisory responsibilities, and his ready access to the relevant Shearson records. There was additional circumstantial evidence, however, supporting the jury's verdict. Shearson's branch manager, who signed many of Shearson's checks, had asked Stamps and the operations department to provide him with a weekly list of all checks to enable him to properly supervise the check-writing process and to detect any irregularities in payments made from Shearson accounts. Except for submitting such a list for one week, Stamps spurned this request and instructed operations personnel not to comply with the request. In addition, while various other Shearson employees signed them, Stamps countersigned many of the checks written against PDI's Shearson account which Serrano later obtained and deposited for his own personal gain. Finally, it is Stamps who signed the materially false confirmation letter of February 23, 1983. The letter contained representations which a person in Stamps's position could and would routinely have checked out against the Bank's records before lending his personal confirmation, making it implausible that Stamps did not know they were false. Given Stamps's supervisory responsibilities, the other irregularities that took place, Stamps's refusal to submit the weekly checklists, and his signing of the PDI checks, a reasonable jury could infer that Stamps knowingly aided and abetted Serrano in the wire fraud described in Count One and the mailing of the fraudulent client statements in Count Four.
B. Admission of Hearsay Statements
In the fall of 1983, after irregularities surfaced concerning the REPOs, Shearson initiated an internal investigation. In October 1983, the Shearson investigators deposed Serrano. During this deposition, Serrano stated that Stamps was aware of and made the $1 million transfer to PDI. It was this $1 million transfer which eventually was diverted to Serrano's own personal use and which was at the heart of the fraudulent scheme alleged in the indictment. At trial, one of the Shearson investigators read into evidence parts of this deposition, including Serrano's statement concerning Stamps. This statement strongly indicated Stamps's knowledge of, and complicity in, the fraudulent scheme. Stamps argues that this statement was inadmissible hearsay and deprived him of his Sixth Amendment right to confront witnesses as Serrano did not testify at trial. The government contends that the statement was admissible under Fed.R.Evid. 801(d)(2)(E) as a coconspirator statement.
But an out-of-court statement of an alleged coconspirator will be admissible under the rule only if the district court determines by a preponderance of the evidence that the statement was made "`(1) during the course and (2) in furtherance (3) of a conspiracy (4) of which declarant is a member.'" Earle v. Benoit, 850 F.2d 836, 841 (1st Cir.1988) (quoting J. Weinstein & M. Berger, 1 Weinstein's Evidence ¶ 104, at 104-39 (1986)). See also United States v. Carroll, 860 F.2d 500, 506 (1st Cir.1988).
The present statement was inadmissible hearsay as to Stamps because it was neither made in the course or in furtherance of the alleged conspiracy. It should have been stricken as evidence against Stamps. Cf. United States v. Palow, 777 F.2d 52, 57 (1st Cir.1985) (post-arrest statements not made in furtherance of conspiracy), cert. denied, 475 U.S. 1052, 106 S.Ct. 1277, 89 L.Ed.2d 585 (1986). The statement was made during a deposition arranged by upper-echelon Shearson officers and attorneys to investigate irregularities concerning the REPOs. The deposition took place on October 21, 1983. By that time, the objectives of the alleged conspiracy had long since "either failed or been achieved." Advisory Committee Notes on Rule 801(d)(2)(E). The last substantive act alleged against defendants in the indictment took place on February 23, 1983. Various audits of the Bank had taken place, the last one completed on September 30, 1983. The Bank had instructed Serrano to cancel its REPO deal in September 1983, and Serrano himself apparently submitted his letter of resignation to Shearson in the summer of 1983. Finally, Shearson initiated its internal investigation around September of 1983. In short, whatever the fraudulent scheme achieved in 1982 and early 1983, it is evident that it had collapsed by the time of Serrano's statement at the deposition in October 1983, and thus it was not made in the course or furtherance of any alleged conspiracy.
While conceding that the overt acts of the scheme had long since passed, the government contended at oral argument that the statement was made to conceal the scheme and thus to assure its success by avoiding detection, and consequently is admissible under Rule 801(d)(2)(E). But when asked at oral argument what was left to conceal by the time the statement was made, the government could point to nothing. The Supreme Court has rejected an interpretation of the coconspirator statement exception to the hearsay rule that would go as far as the government here urges. In Krulewitch v. United States, 336 U.S. 440, 443-44, 69 S.Ct. 716, 718-19, 93 L.Ed. 790 (1949), the Court stated:
This does not mean that acts of concealment can never have significance where they are "done in furtherance of the main criminal objectives of the conspiracy." Grunewald v. United States, 353 U.S. 391, 405, 77 S.Ct. 963, 974, 1 L.Ed.2d 931 (1957). See also United States v. Medina, 761 F.2d 12, 18 (1st Cir.1985) (conspiracy continued so long as coconspirators were acting together to destroy incriminatory evidence); United States v. Davis, 623 F.2d 188, 192 (1st Cir.1980) (acts of concealment made in furtherance of main criminal objectives of the conspiracy and were thus admissible). But when the acts of concealment are done after the central objectives have been attained, for the purpose only of covering up after the crime, they are inadmissible. See Grunewald, 353 U.S. at 405, 77 S.Ct. at 974. As this is the case here, the statement was inadmissible hearsay and should not have been considered as evidence against Stamps.
We also find that the admission of this statement was not harmless error.
III. JUAN LUIS BOSCIO
Boscio was convicted as an aider and abettor of the wire fraud alleged in Count One of the indictment. See pages 4-5 supra. On appeal he argues there was insufficient evidence to sustain his conviction. He also purports to appeal from the denial of several post-conviction motions he made subsequent to the filing of his initial notice of appeal.
A. Sufficiency of the Evidence
Boscio moved for a judgment of acquittal under Fed.R.Crim.P. 29 at the close of the government's case and after the jury returned its guilty verdict. The district court denied both motions. We affirm the district court's rulings because we find, viewing the record as a whole and in the light most favorable to the government, that there was sufficient evidence supporting Boscio's conviction as an aider and abettor.
Taking advantage of these connections, Boscio helped initiate and arrange the REPO deals that provided the basis for the fraudulent scheme. He played a key role in the Authority's involvement in the REPO. The Authority had a client account at Shearson and had been doing business there for some time. When Shearson's lawyers questioned the Authority's power to engage in such business with Shearson, as opposed to Shearson dealing directly with the municipal government of Ponce, Boscio strongly disagreed and told Shearson that the Authority did have such power. It was around this time that Boscio suggested that the Authority retain Serrano to help it obtain the financing that led to the REPOs. Boscio introduced the Authority's executive director, Augusto Zayas, to Serrano. Although Zayas signed the REPOs on behalf of the Authority, it was Boscio who authorized and, in fact, instructed him to do so. Before signing the REPO with PDI, Zayas questioned Serrano as to why PDI was involved in the deal; at the time, Zayas did not know what PDI was. Serrano, angered by the question, insisted that if the deal with PDI was not signed, the Authority would not be able to obtain the $3 million in financing. Afraid that the deal would fall through and because "there was no objection on the part of the president [Boscio]" who was present, Zayas signed the REPO deal. Shearson sent at least one of the Authority's client account statements emanating from this REPO to Boscio. As it turned out, the Authority never did receive the $3 million in financing.
Boscio also played a role in the Bank's involvement with the REPOs. The president of the Bank first contacted Serrano regarding the Bank's dire financial situation at the behest of a relative of Boscio who was a member of the Bank's board of directors. In addition, several months after the Bank entered into the REPO in May 1982, Boscio contacted Angelo Vigna, an official at the Federal Home Loan Bank of New York which regulates thrift institutions, regarding the Bank's financial situation. Boscio told Vigna that he represented the mayor of Ponce and asked Vigna to consider a plan that would recapitalize the Bank. Several weeks later, Boscio, Serrano, and officials from the Bank met with Vigna in New York where this proposed plan as well as the REPOs were discussed.
B. Post-Conviction Motions
A year after Boscio was convicted, he moved under Fed.R.Crim.P. 33 for a new trial based on the ground of newly discovered evidence. Boscio also moved at this time to dismiss the indictment because of certain alleged prosecutorial improprieties in the grand jury proceedings. The district court denied these motions in a written order dated November 12, 1987, and filed with the clerk's office on November 13, 1987; the docket entries prepared by the clerk of the district court indicate that this order was also entered on the docket on November 13 and that the parties were notified of the ruling on November 17. On November 24, 1987, Boscio filed a notice of appeal from the order. This appeal was consolidated with his appeal from his conviction. However, at least as the record currently stands, his notice of appeal from the order denying his post-conviction motions was untimely: it was filed 11 days after the order appears to have been entered on the criminal docket. Fed.R.App.P. 4(b) requires that "the notice of appeal by a defendant shall be filed in the district court within ten days after the entry of the judgment or order appealed from.... A judgment or order is entered within the meaning of this subdivision when it is entered in the criminal docket." (Emphasis added.) Thus, Boscio's notice of appeal had to be filed by Monday, November 23, ten days after the order appears to have been entered on the docket on November 13.
Boscio claims, however, that the order was actually entered on November 20 and thus his notice of appeal was timely. In the district court, he filed a motion under Fed.R.Crim.P. 36 to correct the docket so that it would indicate November 20 as the entry date for the order. In support of this motion, Boscio's attorney submitted a sworn statement indicating the following: 1) On November 20, in an effort to have the district court's order entered on the docket, Boscio's attorney communicated with the district court clerk's office and was told that the order had not been entered on the docket. 2) After communicating with the district judge's chambers the same day, he was told that the order had been entered on the docket that afternoon. Thus, according to Boscio, November 13, the date appearing on the docket, is merely the date the order was filed with the clerk's office; the clerk's office mistakenly never added the
Boscio appeals from this ruling, asking this court to reverse the district court's denial of his Rule 36 motion.
Even, however, if we had jurisdiction over this appeal, we would not upset the denial of Boscio's post-conviction motions. The district court acted within its discretion in denying Boscio's motion for a new trial based on newly discovered evidence. See United States v. Angiulo, 847 F.2d 956, 983-84 (1st Cir.) (applying abuse of discretion standard), cert. denied, ___ U.S. ___, 109 S.Ct. 314, 102 L.Ed.2d 332 (1988). There was simply nothing new about the "newly discovered" evidence — that the Bank never endorsed the mortgage notes used as collateral in the REPOs and thus, according to Boscio, the Bank could not have been defrauded of the notes. This matter was raised at trial when the Bank's president testified that the notes were not endorsed by the Bank when they were transferred during the REPOs "because the Bank had to keep ... title to the notes." Boscio's attorney chose not to cross-examine this witness. It also appears that Boscio was provided copies of the notes before trial. Because the evidence was not "in fact newly discovered," Boscio was not entitled to a new trial. United States v. Rodriguez, 738 F.2d 13, 17 (1st Cir.1984).
There is also no merit to Boscio's claim that the district court erred in denying his motion to dismiss the indictment because of alleged "irregularities which occurred during the presentation of this case to the grand jury." One such "irregularity" was the presence at one point of three Assistant United States Attorneys ("AUSA") in the grand jury room; according to Boscio, this created an "overbearing and undue influence on the grand jurors." Fed.R.Crim.P. 6(d) expressly states, however, that "[a]ttorneys for the government ... may be present while the grand jury is in session." (Emphasis added.) Moreover, all three AUSAs had a legitimate reason for being there: one was presenting the evidence to the grand jury; one, a newcomer to the United States Attorney's office, was simply observing a grand jury proceeding for the first time; and the third apparently introduced the newcomer to the grand jurors and then awaited his turn to present a different matter to the grand jury. The third AUSA had previously worked for the municipality of Ponce. Boscio argues that this created a conflict of interest. We reject this argument because the district court found that this AUSA did not participate or assist in the grand jury investigation that led to the indictments in this case. There is nothing in the record to contradict this finding. The remaining alleged "irregularities" do not warrant discussion.
IV. MIGUEL A. SERRANO
Serrano appeals from the district court's denial of his pretrial motion to dismiss the indictment. He argues, as he did in his pretrial motion, that the government used his immunized testimony before a subcommittee of the Puerto Rico House of Representatives to obtain the indictment in this case. We affirm.
Serrano's financial dealings at Shearson and his involvement with various officials of the municipality of Ponce, popularly known in Puerto Rico as the "Shearson scandal," spawned two federal grand jury investigations which led to three separate indictments against Serrano. The first grand jury, empaneled on October 19, 1983, and discharged on April 10, 1985, returned the indictment against Serrano, Stamps, and Boscio in the present case, CR 85-0024(GG), on February 1, 1985, and also returned the indictment in CR 84-0381(JP) against Serrano alone on November 28, 1984. The indictment pertaining to CR 84-0381(JP) charged Serrano with wire fraud, 18 U.S.C. § 1343, misapplication of bank funds, 18 U.S.C. § 656 (1982), and making false entries in documents of federal credit institutions. 18 U.S.C. § 1006 (1982). A different grand jury, empaneled on December 3, 1984, and discharged in November 1986, returned the indictment in CR 85-0449(CC) on October 31, 1985, against Serrano, Boscio, and Jose Tormos Vega, the former mayor of Ponce. Count One of this indictment charged Serrano with conspiring with Boscio and Tormos to obstruct commerce by extortion in violation of 18 U.S.C. § 1951 (1982).
The "Shearson scandal" also led to an investigation by the Puerto Rico legislature into allegations of public corruption. In order to obtain his testimony in subcommittee hearings regarding these allegations, the Commonwealth's House of Representatives granted Serrano "absolute immunity" from local prosecution. As a consequence, prior to the return of the three federal indictments, Serrano testified before the committee on September 25, 27, and 28, 1984. His testimony received wide publicity and was fully televised.
Watching Serrano's immunized testimony on television was Harry Garcia. Garcia was the FBI agent responsible for the federal investigations of Serrano and the "Shearson scandal"; he testified before both grand juries that returned the three indictments against Serrano. Garcia had the testimony videotaped and also subsequently obtained a complete transcript of Serrano's testimony. He sent a copy of this transcript to Lydia Lizarribar, the Assistant United States Attorney in charge of the investigation and prosecution in this case (CR 85-0024(GG)).
Before trial, Serrano moved to dismiss the indictment on the ground that his Fifth Amendment privilege against self-incrimination had been violated when, according to Serrano, "agents and officers of the United States ... obtained, directly and indirectly and as a result of [his] immunized testimony, evidence which resulted in the indictment by the grand jury." See Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972); Murphy v. Waterfront Commission of New York Harbor, 378 U.S. 52, 84 S.Ct. 1594, 12 L.Ed.2d 678 (1964).
In Murphy, 378 U.S. at 77-78, 84 S.Ct. at 1609, the Supreme Court held that "the constitutional privilege against self-incrimination protects a state witness against incrimination under federal as well as state law...." The protection afforded a witness who testifies under a state grant of immunity is limited, however, to barring the use of the immunized testimony in the federal prosecution; it does not serve to bar the federal prosecution altogether:
Id. at 79, 84 S.Ct. at 1609-10 (footnote omitted). Thus, the Fifth Amendment prohibits "the use of [immunized] testimony, as well as evidence derived directly and indirectly therefrom." Kastigar, 406 U.S. at 453, 92 S.Ct. at 1661.
The government does not dispute that Serrano testified under immunity at the legislative hearings "to matters related to the federal prosecution." Murphy, 378 U.S. at 79 n. 18, 84 S.Ct. at 1609 n. 18. It was thus incumbent upon the government to show that it "had an independent, legitimate source for the disputed evidence." Id. The district court found that the government had met this burden. In its ruling denying Serrano's post-conviction motion, the district court described its findings regarding Serrano's pretrial motion as follows:
Serrano, 680 F.Supp. at 62.
Based on our review of the record, we cannot say that the district court's subsequent findings were clearly erroneous. The federal investigation that led to the indictment in this case began in November 1983, nearly a year before Serrano gave his immunized testimony in September 1984. From February to May 1984, the grand jury subpoenaed numerous documents, and agent Garcia interviewed numerous witnesses, including officials of Shearson, the Bank, the Bank's auditors, the Authority, and Serrano himself. During this same period, Garcia had been in contact with an official of the local Treasury Department, which had initiated an investigation into Serrano's dealings before the federal investigation had begun. Garcia obtained documentary evidence from this official, including PDI's ledgers. Garcia had also obtained three depositions given by Serrano — one given to Shearson investigators in October 1983, one given to Treasury investigators in March 1984, and one given to SEC investigators in May 1984. According to Garcia, 90 percent of his investigation in this case had been completed by the time Serrano gave his immunized testimony. The remaining ten percent consisted of interviewing several witnesses and retrieving documents he had already reviewed and requested before Serrano testified in the legislative hearings. Garcia testified in the pretrial evidentiary hearing that Serrano's immunized testimony did not provide any additional evidence or trigger any additional investigation in this case.
Garcia testified before the grand jury that indicted Serrano in this case. Indeed, he appears to have been the government's key witness, explaining the REPO deals and summarizing the evidence he had gathered regarding Serrano's fraudulent scheme. At the evidentiary hearing, Garcia stated that, at least in regard to the indictment returned in this case, he did not "use or present any documents, evidence, information that [he] had not known prior to the September 1984 Legislative hearings" in his testimony before the grand jury. At the end of one grand jury session, Garcia did mention that Serrano had testified under immunity in the legislative hearings and told the grand jury that Serrano
Serrano argues that, apart from alleged evidentiary use of his immunized testimony, the government used it improperly for "nonevidentiary purposes." One court has described such nonevidentiary use as "conceivably includ[ing] assistance in focusing the investigation, deciding to initiate prosecution, refusing to plea bargain, interpreting evidence, planning cross-examination, and otherwise generally planning trial strategy." United States v. McDaniel, 482 F.2d 305, 311 (8th Cir.1973). To what extent the Fifth Amendment's privilege against self-incrimination bars the nonevidentiary use of immunized testimony is a difficult question. Neither Murphy nor Kastigar addressed this question, and lower courts have disagreed on the issue. Compare United States v. Semkiw, 712 F.2d 891 (3d Cir.1983); McDaniel, 482 F.2d 305; United States v. Carpenter, 611 F.Supp. 768 (N.D.Ga.1985); United States v. Smith, 580 F.Supp. 1418 (D.N.J.1984) (all requiring government to show no nonevidentiary use of immunized testimony) with United States v. Mariani, 851 F.2d 595 (2d Cir.1988); United States v. Crowson, 828 F.2d 1427 (9th Cir.1987), cert. denied, ___ U.S. ___, 109 S.Ct. 87, 102 L.Ed.2d 63 (1988); United States v. Byrd, 765 F.2d 1524 (11th Cir.1985) (all rejecting claim that nonevidentiary use warranted dismissal of indictment). The commentators are also divided over this issue. Compare Humble, Nonevidentiary Use of Compelled Testimony: Beyond the Fifth Amendment, 66 Tex.L.Rev. 351 (1987) (arguing that Fifth Amendment prohibits only evidentiary uses of immunized testimony) with Strachan, Self-Incrimination, Immunity, and Watergate, 56 Tex.L.Rev. 791 (1978) (discussing dangers of nonevidentiary use of immunized testimony and arguing for transactional immunity to avoid these dangers). We have uncovered no First Circuit case discussing the issue.
While Serrano advances on appeal his argument that the government made nonevidentiary use of his immunized testimony, he did not raise it in his pretrial motion to dismiss the indictment.
Applying these factors here, we decline to consider whether the government made nonevidentiary use of Serrano's immunized testimony, and if so, whether this warrants the dismissal of the indictment. The record on appeal is clearly inadequate to resolve this highly factual issue. In determining whether the government made evidentiary use of the testimony in deciding Serrano's pretrial motion, the district court considered the testimony of agent Garcia and the grand jury transcripts. The nonevidentiary use of the testimony not being in issue, the government did not present to the district court evidence to disprove nonevidentiary use such as: 1) its investigative file;
Furthermore, the issue Serrano has raised for the first time on appeal is not "so compelling as virtually to insure [his] success." Johnston, 595 F.2d at 894. We disagree with the Eighth Circuit's statement in McDaniel, 482 F.2d at 311, that, where the prosecutor has been exposed to the immunized testimony, "the government is confronted with an insurmountable task in discharging the heavy burden" of proving no nonevidentiary use. Such an approach amounts to a per se rule that would in effect grant a defendant transactional immunity once it is shown that government attorneys or investigators involved in the prosecution were exposed to the immunized testimony. Kastigar made clear that "[t]ransactional immunity ... affords the witness considerably broader protection than does the Fifth Amendment privilege." 406 U.S. at 453, 92 S.Ct. at 1661. Instead, the purpose of the Fifth Amendment bar against the use of immunized testimony is to "`leave the witness and the Federal Government in substantially the same position as if the witness had claimed his privilege' in the absence of the grant of immunity," id. at 458-59, 92 S.Ct. at 1664 (quoting Murphy, 378 U.S. at 79, 84 S.Ct. at 1609) (emphasis added), not in the identical position or in a position as if the witness had remained silent. See United States v. Apfelbaum, 445 U.S. 115, 127, 100 S.Ct. 948, 955, 63 L.Ed.2d 250 (1980) ("For a grant of immunity to provide protection `coextensive' with that of the Fifth Amendment, it need not treat the witness as if he had remained silent.").
As do most courts, we do not think this purpose is automatically frustrated by the government's mere exposure to immunized testimony. See Crowson, 828 F.2d at 1430; United States v. Pantone, 634 F.2d 716, 720 (3d Cir.1980). We also reject the notion that all nonevidentiary use necessarily violates the Fifth Amendment. While we need not decide whether certain nonevidentiary uses of immunized testimony may so prejudice the defendant as to warrant dismissal of the indictment, we agree with the Second Circuit that a prosecution is not foreclosed merely because the "immunized testimony might have tangentially influenced the prosecutor's thought processes in
Because we reject the notion that the mere exposure to immunized testimony or the mere possibility of nonevidentiary use automatically results in the dismissal of the indictment, Serrano's claim of nonevidentiary use is not so compelling as to warrant our consideration of this newly raised issue in the context of the circumstances of his case.
To summarize: 1) While there was sufficient evidence to support his conviction, we vacate Stamps's conviction and remand his case to the district court for a new trial because the jury may have been swayed by incriminatory hearsay statements erroneously admitted into evidence. 2) We affirm the denial of Boscio's motion for acquittal as there was sufficient evidence supporting his conviction. We also affirm the denial of Boscio's motion to correct the record; as a consequence, we dismiss for lack of jurisdiction his appeal from the denial of his post-conviction motions for a new trial and to dismiss the indictment. 3) Finally, we affirm the denial of Serrano's pretrial motion to dismiss the indictment.
18 U.S.C. § 1343.
18 U.S.C. § 1341.