APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
Before Rosenn, Van Dusen and Garth, Circuit Judges.
These appeals concern three different varieties of allegedly unethical behavior by attorneys for the United States Government.
Appellant Harvey Birdman raises two questions relating to federal grand jury proceedings: (1) does a Government attorney's alleged violation during such proceedings of the ABA Code of Professional Responsibility's rules against an advocate's testimony constitute an offense warranting dismissal of the resulting indictments; and (2) does the dual employment status of a United States Government agency staff attorney who is deputized as a Special Attorney of the United States Department of Justice to conduct a grand jury investigation constitute a conflict of interest warranting dismissal of an indictment? Appellant William Richman raises these two questions plus a third: did the prosecution break its promise "to consider deferred prosecution" for Mr. Richman, so as to warrant suppression of all evidence allegedly induced by that promise?
We answer all three questions in the negative and affirm the district court's judgments of conviction and sentence.
A. Facts relating to grand jury conduct
The facts relating to the first two questions are largely undisputed.
One Dennis Taylor was a senior staff attorney for the Securities and Exchange Commission ("SEC"). From 1973 to 1975, he directed the SEC investigation of Delphi Capital Corporation ("Delphi") and of several other companies whose stock was thought to have been manipulated by Delphi. Appellant Birdman was president of one of those companies, Uni-Shield International Corporation, while appellant Richman had had dealings with Uni-Shield stock. Mr. Taylor initiated discussions with the United States Justice Department regarding possible criminal prosecutions of subjects of the SEC investigation, and in May 1975 the Philadelphia Strike Force of the Justice Department asked the SEC to turn over the Delphi investigation file. In June the SEC complied.
On June 13, 1975, the Justice Department designated Mr. Taylor as its Special Attorney authorized to conduct the grand jury proceedings at issue here. After this appointment, Mr. Taylor remained in the SEC's employ and on its payroll, receiving no additional compensation from the Justice Department. He continued to act as an SEC attorney in matters relating to this case, and on at least one occasion acted as an "officer" of the SEC. On that occasion he took testimony of a witness for the SEC investigation, then immediately afterward examined that witness on the same subject before the grand jury for its investigation.
In all of his appearances before the grand jury, Mr. Taylor disclosed to witnesses and to the jury that he was both a special attorney with the Justice Department and an attorney employed by the SEC. When he took testimony for the SEC outside the grand jury room, he introduced himself solely as a staff attorney of the SEC.
On two occasions of which defendants here complain,*fn1 Mr. Taylor appeared before the grand jury with at least some of the trappings of a witness. On August 15, 1977, after being first duly sworn, Mr. Taylor made what the stenographer's transcript characterizes as a "Statement" to the jury: a monologue purporting to summarize various aspects of the investigation of Uni-Shield and to outline the proposed indictment. On September 6, 1977, again after being duly sworn, Mr. Taylor delivered what the stenographer's transcript characterizes as "Testimony," wherein another Strike Force attorney questioned him on the witness stand and he responded. On this occasion Mr. Taylor presented an account of how he had determined or confirmed the dates of the overt acts listed in the indictment.
On at least one occasion after his August 15 appearance on the witness stand, Taylor, introducing himself as "special attorney with the United States Department of Justice and also an attorney with the United States Securities & Exchange Commission," examined a witness before the grand jury. He also assisted in drafting the indictment with the Justice Department attorneys from the Philadelphia Strike Force. Further, he was present in the grand jury room when one J. Douglas McCullough, then a Strike Force attorney, recommended return of the indictment to the grand jury; Mr. Taylor did not himself make the recommendation to the grand jury.
The grand jury returned indictments against both appellants. It charged Mr. Birdman with conspiracy, mail fraud, securities fraud, securities price manipulation and failure to file required securities reports; Mr. Richman was charged with conspiracy. A subsequent indictment charged Mr. Richman with mail fraud, securities fraud and securities manipulation.
After learning of Mr. Taylor's participation in the grand jury proceedings, defense counsel moved for disclosure of all testimony before the grand jury and for dismissal of the indictment. The district court ordered the Government to turn over to defendants all statements or testimony by Mr. Taylor and other SEC employees appearing before the grand jury. After hearings and after considering the statements and testimony by SEC employees, the district court denied the request for full disclosure of all grand jury testimony and denied the motions to dismiss the indictments.
B. Facts relating to promise of deferred prosecution
Claiming that the Government did not in good faith carry out its promises to him, defendant Richman moved for suppression of evidence allegedly produced in reliance on those promises and for dismissal of his indictments.
At the hearing on these motions, Mr. Richman testified that he and his attorney had met with Mr. McCullough to discuss cooperation. According to Mr. Richman's testimony at that meeting, "Mr. McCullough explained that he would Consider deferred prosecution,*fn2 but in order for deferred prosecution to be granted, that the quality of the information and the quantity of the information given by me would be taken into account."*fn3 In reliance on this promise of consideration for deferred indictment, Mr. Richman asserted, he proceeded to provide certain information to the Government.
Mr. McCullough testified that he did in fact consider recommending deferred prosecution to his superiors, but decided against it. He stated that he took into account several factors, some of which came to his attention after the initial meeting with Mr. Richman: for example, the number of victims of the alleged offenses, and Mr. Richman's untruthfulness at certain times during the investigation.
Mr. McCullough also testified that he had considered deferred prosecution in the past, at the request of other prospective defendants, but had never ended up recommending it. The attorney in charge of the Philadelphia Strike Force also informed the court that to his knowledge the office had never in the past recommended deferred prosecution, but that he was asked to consider the possibility of deferred prosecution for Mr. Richman.
The district court made the following finding, based on this testimony:
"The Court has heard the testimony of Mr. McCullough; has considered the factors which he said he took into consideration. And the Court believes, and so finds, that Mr. McCullough did in fact, in good faith, consider all of the relevant factors known to him in making his decision against recommending deferred prosecution.
"There is no evidence that anyone on behalf of the Government ever misled Mr. Richman to believe that he had a probability of being placed on deferred prosecution. And it is clear from the evidence that any cooperation which he gave in regard to deferred prosecution was only with the hope that the possibility of deferred prosecution would be realized."*fn4
Accordingly, the court denied Mr. Richman's motions.
II. APPELLATE JURISDICTION
The district court denied defendant Richman's individual motions at a hearing on May 10, 1978.*fn5 After hearings on May 10 and May 23, the court denied the joint motions discussed under heading I.A. above on May 23.*fn6 On that date, both defendants switched their pleas to Nolo contendere, conditional upon appeal of the denials of their motions. The district court thereupon conditionally sentenced Mr. Birdman to a year's imprisonment, three years' probation, and a ...