ALEKSANDRS V. LAURINS, PETITIONER V. UNITED STATES OF AMERICA No. 88-1545 In The Supreme Court Of The United States October Term, 1988 On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Ninth Circuit Brief For The United States In Opposition TABLE OF CONTENTS Questions Presented Opinion below Jurisdiction Statement Argument Conclusion OPINION BELOW The opinion of the court of appeals (Pet. App. 2a-24a) is reported at 857 F.2d 529. JURISDICTION The judgment of the court of appeals was entered on September 8, 1988. A petition for rehearing was denied on January 17, 1989 (Pet. App. 1a). The petition for a writ of certiorari was filed on March 17, 1989. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTIONS PRESENTED 1. Whether there was sufficient evidence that petitioner acted with intent to obstruct justice and to commit contempt of court. 2. Whether the district court and the prosecutor engaged in misconduct that denied petitioner a fair trial. 3. Whether petitioner is entitled to dismissal of the charges against him because a hard disk storage device in a computer seized by the government suffered damage and could not be repaired. 4. Whether the $250,000 fine imposed on petitioner was proper. STATEMENT Following a jury trial in the United States District Court for the Northern District of California, petitioner was convicted on one count of obstructing justice, in violation of 18 U.S.C. 1505, and one count of aiding, abetting, and causing a contempt of court, in violation of 18 U.S.C. 401(3). The district court sentenced petitioner to consecutive terms of five years' imprisonment on the obstruction of justice count and three years' imprisonment on the contempt of court count. The court also fined petitioner $250,000 on the obstruction of justice count. Pet. App. 7a. The court of appeals affirmed (id. at 2a-24a). 1. In October 1983, the Internal Revenue Service (IRS) began an investigation of a tax shelter program offered by Gold Depository and Loan Company, Inc. (GDL), one of a group of firms known as the Co-op Banking Group Companies (the Companies), which shared offices in San Francisco. Petitioner, a former IRS attorney, tax planner, and real estate developer, was the managing director of the Companies. Pursuant to the GDL tax shelter program, called the "Dry Cargo Marine Container Purchase Program," a typical investor might buy $100,000 worth of marine cargo containers, making a $4,000 downpayment. GDL would then arrange financing for the balance of the purchase and advise the investor that he could claim an investment tax credit of 10% of the $100,000 and a depreciation deduction of $15,000 on his tax return for the year of the investment. Pet. App. 5a. In November 1983, the IRS sent GDL a letter informing it of the investigation and requesting certain documents. Bart Lee, an attorney whom petitioner had hired in January 1982 to represent both himself and GDL, requested additional time to respond. No records were produced in response to the IRS letter. Pet. App. 5a. On January 5, 1984, the IRS served GDL with a summons requiring the production of all books and records for 1982 and 1983 relating to the tax shelter. Lee told the IRS that GDL was no longer doing business in San Francisco and that its only office was in Maryland. He took the position that the summons had therefore not been properly served. Petitioner also claimed at trial that GDL had been sold to another company in the Co-op Banking Group, although he could produce no documentation of such a sale. Pet. App. 5a-6a. GDL produced no documents in response to the January 5, 1984, summons. In April or May 1984, employees at the offices that GDL had shared in San Francisco placed GDL records into boxes at petitioner's request. Petitioner then removed the boxes from the office and on several occasions produced copies of documents from the boxed records for at least one employee. Pet. App. 6a. On July 12, 1984, the district court issued an order enforcing the summons. The order was directed to Sandy Sandfort, GDL's vice president, and to GDL. A month later, Charlene Baden, purportedly the president of GDL, met with the IRS but asserted her Fifth Amendment privilege against compulsory self-incrimination and therefore produced no records. The district court then issued an amended order requiring GDL to designate an agent to testify without asserting the privilege. GDL appointed an agent who produced no records and could answer few questions. Pet. App. 6a. On June 3, 1985, the district court held GDL in contempt for willfully failing to comply with the summons. Although the court imposed a fine of $1,000 for each day the records were not produced, GDL still did not comply with the summons. Pet. App. 6a. On October 3, 1986, the FBI executed a search warrant at petitioner's home in San Francisco. The agents seized approximately 21 boxes of business records. The records bore the GDL name on nearly every page. Pet. App. 6a-7a. 2. Petitioner was prosecuted for obstruction of justice and aiding and abetting GDL in a contempt of court. Following his conviction, the court of appeals affirmed (Pet. App. 2a-24a). The court first found that petitioner was properly convicted of aiding and abetting GDL, even if the company lacked the requisite intent to be convicted of contempt of court as a principal. The court explained that "'(a) person who causes the commission of an offense is punishable as a principal even though the person who completes the wrongful act violates no criminal statute because of lack of criminal intent or capacity'" (id. at 8a (citation omitted)). The court also held that there was sufficient evidence that petitioner intended to obstruct justice, finding "ample evidence * * * that (petitioner) had concealed GDL's files after the summons was issued, with the permissible inference that his intent was to frustrate the enforcement of the IRS summons" (id. at 12a-13a). Next, "review(ing) * * * the entire trial transcript" (Pet. App. 13a), the court rejected petitioner's claim of judicial and prosecutorial misconduct. The court concluded that the district court had "managed the trial with fairness and a concern for clarity" (id. at 15a), and that certain remarks by the prosecutor, which "may have bordered on impropriety" (id. at 19a), did not constitute plain error. The court also held that petitioner had suffered no prejudice as a result of damage to a hard disk storage device, which occurred when the government transported a GDL computer to the Federal Building in San Francisco. The court found "no showing that the government intentionally destroyed the disk," and it noted that petitioner had not "established that the disk contained exculpatory evidence" (id. at 16a). Finally, the court upheld the admission of evidence that GDL had never purchased the cargo containers that were the subject of the tax shelter. The court stated that that evidence corroborated the fraudulent nature of the tax shelter and thus explained petitioner's motive to disobey the court order and obstruct the IRS investigation (id. at 22a-23a). /1/ ARGUMENT 1. Petitioner contends (Pet. 10-16) that there was insufficient evidence that he acted with the intent to obstruct justice and to commit contempt of court. He asserts that GDL could not have complied with the order to produce records and, moreover, that its failure to comply was not willful. Since, in petitioner's view, the company could not have been convicted as a principal, petitioner contends that he was improperly convicted as an aider and abettor. It is well settled, however, that under 18 U.S.C. 2 a person who causes another to commit an offense is punishable as a principal, even where the person who completes the wrongful act lacks the criminal intent or capacity required to be separately convicted. United States v. Causey, 835 F.2d 1289, 1292 (9th Cir. 1987); United States v. Cook, 745 F.2d 1311, 1315 (10th Cir. 1984), cert. denied, 469 U.S. 1220 (1985); United States v. Tobon-Builes, 706 F.2d 1092, 1100 (11th Cir. 1983); United States v. Ruffin, 613 F.2d 408, 412-413 (2d Cir. 1979); United States v. Catena, 500 F.2d 1319, 1322-1323 (3d Cir.), cert. denied, 419 U.S. 1047 (1974); United States v. Levine, 457 F.2d 1186, 1188-1189 (10th Cir. 1972); United States v. Lester, 363 F.2d 68, 72 (6th Cir. 1966,) cert. denied, 385 U.S. 1002 (1967). See also United States v. Giles, 300 U.S. 41, 48-49 (1937). Petitioner also contends (Pet. 11) that he had dissociated himself from GDL by the time of the court order and that there was no evidence that he had aided and abetted the company in its contempt. That claim is meritless. A court order to a corporation binds those who are legally responsible for the conduct of its affairs, and de facto as well as de jure officers are responsible for enabling a corporation to comply with orders directed to it. Wilson v. United States, 221 U.S. 361, 376 (1911); United States v. Seetapun, 750 F.2d 601, 607 (7th Cir. 1984); NLRB v. Maine Caterers, Inc., 732 F.2d 689, 691 (1st Cir. 1984). As the court of appeals explained (Pet. App. 10a), there was abundant evidence that petitioner continued to exercise at least de facto control of GDL after the issuance of the IRS summons. He authorized attorney Lee to represent GDL before the IRS in late 1983, and he met with Lee to discuss the investigation a number of times afterward. Bank records examined by the IRS showed that petitioner signed GDL checks having a total value of more than $4 million between January and April 1984, and petitioner remained the only person authorized to sign checks on GDL accounts without a co-signor. In the fall, after the order enforcing the summons was issued, petitioner sent a San Francisco employee to the corporate offices of the Co-op Investment Bank in St. Vincent, British West Indies, to create "records" of lease income from containers that were supposedly involved in the tax shelter scheme, and he provided the employee with a suitcase filled with GDL documents. Pet. App. 10a. In short, petitioner was clearly playing a role in the corporation's affairs that imposed on him a legal duty to enable GDL to comply with the district court's order enforcing the summons. Instead of complying with that obligation, he concealed producible records in his home. From that evidence, the court of appeals correctly concluded (ibid.) that petitioner aided and abetted GDL's failure to comply with the district court's order. Petitioner next contends (Pet. 11-13) that there was insufficient evidence that he specifically intended to obstruct the IRS investigation of GDL. Contrary to his assertion, however, petitioner did not merely "remain silent" (Pet. 11); he actively concealed the records called for by the court order. By his own admission, petitioner secured the GDL documents with the intention to delay or prevent IRS access to them; he testified at trial that he intended to wait for the government to summon him personally and planned at that point to assert his Fifth Amendment privilege (Pet. App. 12a). In light of the refusal or inability of other GDL agents to produce records or answer questions, the jury could reasonably infer that petitioner acted as he did in order to prevent the government from learning that he was in possession of the summoned records. Petitioner contends (Pet. 13-14), however, that he relied on this Court's decision in United States v. Doe, 465 U.S. 605 (1984), and thus believed in good faith that he was permitted to retain the summoned documents and await the opportunity to assert a Fifth Amendment claim. He further asserts that not until this Court's decision in Braswell v. United States, 108 S. Ct. 2284 (1988), was there any reason to doubt that a custodian of corporate records lacks the right to assert the Fifth Amendment. There is no basis for that claim. First, Braswell did not "change() the law" (Pet. 13) in any respect; it merely applied "(t)he plain mandate of (prior) decisions * * * (that) a corporate custodian * * * may not resist a subpoena for corporate records on Fifth Amendment grounds" (108 S. Ct. at 2290). Moreover, shortly after the Doe case was decided, and well before the contempt order was entered in this case, the Ninth Circuit had held in United States v. Malis, 737 F.2d 1511 (1984), that the custodian of records of a collective entity is not entitled to assert the Fifth Amendment privilege to avoid producing the records. Since Malis referred to Doe (737 F.2d at 1513 n.2), it was clear in the Ninth Circuit, where petitioner committed his acts, that Doe had not overruled the well-established collective entity rule. See United States v. Vallance, 793 F.2d 1003, 1006 (9th Cir. 1986). In any event, even if, after Doe, petitioner believed that he had a right not to produce the GDL records himself, he plainly had no right to prevent the corporation from doing so and had no reason to believe that he had such a right. See, e.g., United States v. Lang, 792 F.2d 1235, 1240 (4th Cir.), cert. denied, 479 U.S. 985 (1986); United States v. Sancetta, 788 F.2d 67, 74 (2d Cir. 1986). /2/ 2. Petitioner contends (Pet. 17-24) that the district court and the prosecutor engaged in misconduct that denied him a fair trial. The court of appeals "review(ed) * * * the entire trial transcript" and concluded that "no reversible misconduct occurred" (Pet. App. 13a). That fact-bound determination warrants no further review. /3/ With respect to the prosecutor's conduct, petitioner contends that the prosecutor was permitted to express his personal beliefs to the jury. In the examples given by petitioner, however, the prosecutor did not express a personal belief in the guilt of the petitioner or of any witness's credibility. Rather, the prosecutor simply stated why he thought particular items of evidence were relevant. Moreover, the jury was instructed that its recollection of the evidence governed -- and not that of the attorneys -- and that statements of the attorneys were not evidence (Gov't C.A. Br. 24-26). Petitioner further asserts (Pet. 19-21 & n.10) that it was improper for the prosecutor to present evidence that the cargo containers supposedly involved in the GDL tax shelter did not exist. The court of appeals correctly rejected that claim (Pet. App. 22a-23a), explaining that the evidence was directly relevant to the charges against petitioner. As the court of appeals noted (id. at 23a), the nonexistence of the cargo containers tended to prove that the tax shelter was fraudulent, and thus established petitioner's motive for disobeying the court order and obstructing the IRS investigation. 3. Petitioner asserts (Pet. 24-27) that he is entitled to dismissal of the charges against him because a hard disk storage device in a computer seized by the Government suffered damage and could not be repaired. Petitioner contends that the disk contained accounting data that would have corroborated his claim that the documents seized from his residence were not called for by the IRS summons. The court of appeals correctly rejected that claim. The government's destruction of potentially exculpatory evidence does not violate due process unless the defendant shows that the government acted in bad faith or that the lost evidence would have been both material and favorable to the defense. Arizona v. Youngblood, 109 S. Ct. 333, 336-337 (1988). See United States v. Valenzuela-Bernal, 458 U.S. 858, 867-872 (1982) (defendant failed to show that deportation of witnesses violated Fifth or Sixth Amendment where Government acted in good faith and defendant failed to show how the witnesses' testimony would have been material and favorable to his defense). Petitioner is unable to dispute the court of appeals' conclusion that "there is no showing that the government intentionally destroyed the disk" and that petitioner failed to "establish() that the disk contained exculpatory evidence" (Pet. App. 16a). /4/ 4. Petitioner finally contends (Pet. 28-29) that the $250,000 fine imposed upon him on the obstruction of justice count was improper. Recognizing (Pet. 29) that a fine in that amount was authorized for convictions of felonies committed after December 31, 1984, /5/ he contends that his offense was committed on or about July 12, 1984. We note, first, that petitioner failed to raise that argument in the court of appeals. Accordingly, he may not do so here. In any event, the indictment charged petitioner with an offense continuing from on or about January 5, 1984, through October 3, 1986 (Indictment at 1), and the evidence showed that petitioner's offense consisted not of a single act, but of a course of concealment, a continuous violation. See Land v. United States, 177 F.2d 346, 348 (4th Cir. 1949). Thus, petitioner committed his offense in part after December 31, 1984, and was subject to a $250,000 fine. CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. WILLIAM C. BRYSON Acting Solicitor General JAMES I.K. KNAPP Acting Assistant Attorney General ROBERT E. LINDSAY ALAN HECHTKOPF Attorneys MAY 1989 /1/ The court also rejected petitioner's challenge to the admissibility of the records seized from his home (Pet. App. 19a, 23a-24a) and the admissibility of testimony of his former attorney (id. at 20a-22a). The court likewise rejected petitioner's claim that consecutive sentences could not be imposed in this case (id. at 24a). The petition does not present those issues. /2/ Petitioner asserts (Pet. 15-16) that his conviction was improper because he did not appear in the civil contempt proceeding brought against GDL. However, he cites no authority requiring an individual to participate in a contempt proceeding before he may be prosecuted for preventing a corporation from complying with a court order enforcing a summons. And United States v. Seetapun, 750 F.2d 601 (7th Cir. 1984), on which petitioner relies, imposes no such requirement. /3/ Petitioner takes issue (Pet. 22-23), in passing, with the trial court's refusal to hold bench conferences in this case. He contends that the decision below, upholding the trial court's practice in this case, is in conflict with the Ninth Circuit's prior decision in United States v. Wellington, 754 F.2d 1457, 1469, cert. denied, 474 U.S. 1032 (1985). Wellington does not, however, require bench conferences to be held in every case and, in any event, any intra-circuit conflict on that issue does not justify review by this Court. See Wisniewski v. United States, 353 U.S. 901, 902 (1957). We note that in United States v. Ledesma, 632 F.2d 670, cert. denied, 449 U.S. 998 (1980), the Seventh Circuit stated, "Although Rule 103(c) (of the Federal Rules of Evidence) does not require the court to hold all proceedings pertaining to the admissibility of evidence outside the jury's presence, * * * an automatic 'no sidebar' rule is contrary to the requirement that proceedings 'be conducted, to the extent practicable, so as to prevent inadmissible evidence from being suggested to the jury . . .'" (id. at 674). But the Seventh Circuit held that the trial court's no-sidebar rule was not reversible error, because the practice had no more than a slight effect on the jury. Petitioner has likewise failed to demonstrate that the trial court's procedure had any impact on the verdict. /4/ Contrary to petitioner's suggestion (Pet. 26-27), the trial court did not give a mistaken jury instruction concerning the missing computer evidence. Fairly read, the instruction advised the jury that it could infer that the evidence would have been favorable to petitioner (see id. at 27). /5/ Such a fine was initially authorized by 18 U.S.C. 3623(a)(3) (Supp. II), enacted on October 30, 1984, and is now authorized by 18 U.S.C. 3571(b)(3), which petitioner miscites (Pet. 29) as 18 U.S.C. 3571(a)(3).