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IN RE GRAND JURY PROCEEDINGS

August 22, 1980

In re GRAND JURY PROCEEDINGS


The opinion of the court was delivered by: POLLAK

Asserting errors of law and fact, the Government seeks reconsideration of my order of April 25, 1980, denying the Government's motion to enforce a grand jury subpoena. The Government has presented no newly persuasive arguments in support of its motion and I continue to adhere to the views stated in my lengthy bench opinion of April 25, 1980. I will, therefore, in an order to be filed today, deny the Government's motion for reconsideration. Having, from the bench, addressed the Government's arguments in some detail, I would not ordinarily file a written opinion. But because the Government, in its motion papers, appears deeply perplexed by my reasoning, and because the issues involved may be of some general interest, I have concluded that it might be helpful to restate my views. In addition-although it does not bear directly on my denial of the Government's motion to enforce the subpoena-I will restate my reason for denying the cross-motion to quash the grand jury investigation.

 I.

 On September 10, 1979, the Clerk of the Court issued a subpoena directing William Rosenthal to furnish samples of his handwriting to the grand jury. The Government moved to enforce the grand jury subpoena on November 8, 1979. The motion was accompanied by an affidavit stating that the purpose of the request was to enable the grand jury to determine whether Rosenthal made endorsements on certain checks, including some drawn on accounts in the name of Pasco Tobacco. Rosenthal responded by asking that the motion to enforce be denied, and, further, that the grand jury investigating his conduct "be quashed and terminated." After oral argument on December 27, 1979, an evidentiary hearing was held on January 30 and February 5. The following is a brief account of the facts adduced at that hearing and upon which Rosenthal founds his argument:

 On March 6 and March 29, 1979, William Rosenthal, the president of Pasco Tobacco Co., Inc., testified at the first meeting of creditors in the bankruptcy proceeding captioned In re Pasco Tobacco Co., Inc. Shortly before the March 6 meeting was adjourned, Martin Kilstein, Esq., attorney for the trustee in bankruptcy, put certain questions to Rosenthal. Rosenthal's attorney interrupted, indicating that because it appeared that the questions posed might elicit answers leading to a criminal charge, he wished to instruct his client of his Fifth Amendment right to refuse to answer. The meeting then adjourned.

 The first meeting of creditors resumed on March 20, 1979. At that point Kilstein took up the inquiry which he had begun on March 6. Once again, Rosenthal's attorney raised the Fifth Amendment concerns. At that point, the bankruptcy judge made a ruling. Apparently relying on the immunity provision contained in 11 U.S.C. ยง 25(a)(10), *fn1" the bankruptcy judge directed Rosenthal to answer:

 
I rule that the witness must answer the question, because the testimony that he gives in this examination cannot be used against him in any proceeding, in any other criminal proceeding.
 
What is more, if there is such a criminal proceeding, the notes of testimony of this hearing will be impounded so that no one will be permitted to see it.
 
One further admonition: None of the counsel in this case may give information concerning the testimony of this witness to any criminal investigatory authority.
 
All right.

 Thus assured of immunity, *fn2" Rosenthal was interrogated at some length by Kilstein and he responded at length to Kilstein's questions. At the conclusion of the testimony, the bankruptcy judge directed the following:

 
THE COURT: All right.
 
It seems to me that I have a duty in this case which I will discharge by imposing on counsel for the Trustee the responsibility of reporting this case if that has not yet been done to the United States Attorney.
 
I am not, of course, passing on whether the transactions to which the witness has testified actually took place in the way that they did take place, but it seems to me that the Trustee owes a duty as fiduciary to make a report to the United States Attorney of ...

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