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UNITED STATES AMERICA v. ISMAILI (04/09/87)

argued: April 9, 1987.

UNITED STATES OF AMERICA
v.
ISMAILI, LAKBIR MOULAY LAKBIR MOULAY ISMAILI, APPELLANT



On Appeal from the United States District Court for the District of New Jersey, D.C. No. 84-00246-01.

Sloviter, Becker and Garth, Circuit Judges.

Author: Garth

Opinion OF THE COURT

GARTH, Circuit Judge

Lakbir Ismaili appeals from the denial of several pretrial motions that were preserved for appeal at the time he entered a plea of nolo contendere pursuant to a plea agreement. See U.S. v. Zudick, 523 F.2d 848 (3d Cir. 1975). We affirm.

I.

A.

Between November 20, 1979 and December 31, 1980, the government claims that Lakbir Ismaili and the company that he operated, Incoser, allegedly engaged in a "bait and switch" fraud scheme which involved, inter alia, the promotion and sale of customized vans throughout the Middle East. According to the government, Ismaili would approach American manufacturers of customized vans and other vehicles, and claim that he could sell their products overseas through the use of a sales force which he maintained in several countries. He proposed to purchase their vans for resale abroad. The only commitment needed from the sellers, Ismaili indicated, was the money needed to produce "color separations." Color separations are sets of color negatives used to produce magazine quality photographs allowing them to be advertised abroad. Using this approach, Ismaili received payments totaling $43,210.80 from nearly twenty individual van manufacturers.

The government investigated the complaints which it received about Ismaili. The investigation disclosed that Ismaili had placed the color-separation money he had been paid into a Philadelphia bank account, and converted the money to his own personal use; that no color separations were made or brochures published; and that Ismaili never had purchased any vans from the manufacturers for resale. The investigations also revealed that Ismaili arranged visits for his customers at a New Jersey printing plant where he claimed color separations were to be made. In fact, that plant never processed any such color separations for Ismaili.

The government investigation concluded, further, that Ismaili had no sales force to sell Ismaili's vans in the Middle East; and that no advertising campaign for the vans had ever been planned. The government presented its case to a grand jury in January of 1981.

B.

Ismaili's appearances before the first grand jury in 1981, he denied all allegations of fraud. Ismaili asserted that his company, Incoser, was a legitimate enterprise which failed as a consequence of difficulties created by the Iran-Iraq war. He claimed that he had been compelled to use for his personal purposes the funds received from the van manufacturers and Incoser's corporate account. He explained that he did so because the currency laws in Morocco prevented him from obtaining his personal funds that were located in Morocco, and that he therefore used the funds in Incoser's Philadelphia banking account for personal purposes. He claimed that he used his personal funds in Morocco for the purposes of advertising the vans.

It was for this reason, Ismaili claimed, that he decided to have the color separations made in Morocco instead of in New Jersey. He claimed further that his brother Rachid had helped to organize on his behalf, a Middle Eastern sales force; and that he, Ismaili, had arranged with a Moroccan named Ezzarai or Zarai to produce the color separations for Ismaili's sales brochures. In turn, Ismaili contends that Ezzarai engaged the Agadir Color studio to process the color separations.

The grand jury's 1981 investigation ended without the return of an indictment. In 1983, however, the grand jury investigation resumed. In September 1984, the grand jury returned a seventeen-count indictment, charging Ismaili with mail fraud under 18 U.S.C. ยงยง 1341 and 1342.

C.

Following his indictment, Ismaili made three pretrial motions which the district court denied and which are the subject of this appeal.

Ismaili moved to dismiss the indictment on the grounds of abuse of the grand jury process, alleging that the prosecutor failed in his obligation to present to the grand jury an exculpatory telex that Ismaili discovered during the course of requesting Brady material. Pursuant to that motion, he also has claimed that the prosecutor abused the grand jury process in the course of presenting hearsay to it.

Ismaili moved to dismiss the indictment because the government allegedly abused the grand jury process by its prejudicial pre-indictment delay in obtaining the indictment.

After denying Ismaili's motions, the district court on May 29, 1986 accepted Ismaili's nolo contendere plea pursuant to a plea agreement. In the agreement, Ismaili pleaded nolo contendere to one count of mail fraud, but he reserved the right to appeal from the denial of his pretrial motions. On August 12, 1986, the court sentenced Ismaili. In so doing, the court suspended sentence and placed him on probation for five years. Imposing a fine of $1,000 as a special condition, the court ordered Ismaili to repay as restitution the $43,210.80 paid by the victims of Ismaili's scheme, and recommended that Ismaili not be deported. Order of Aug. 4, 1986. Ismaili appealed.

II.

We turn first to the district court's denial of Ismaili's motions to depose witnesses in Morocco, Syria and Saudi Arabia.

A.

The first motion filed by Ismaili, which pertained to the Saudi Arabian witnesses, was supported by a telex exhibit designed to establish that the three witnesses constituted a part of Ismaili's sales force in the Middle East and would therefore refute the government's argument that no marketing or sales structure existed. The telex indicated that the witnesses were unwilling to spend "time or money to come to the U.S.A." App. at 34.

The government argued that these witnesses would not exonerate the defendant, that their testimony was not material, and that there was "no showing of a good faith effort to produce the witnesses in the United States," specifically because the witnesses seemed to be under the impression, "its up to them to pay their own way to the United States." App. at 122.

Ismaili contended that their testimony was material, that these were the marketing managers for the sale of the vans, and that the witnesses were not under the impression that they had to pay expenses.

In denying Ismaili's motion on June 5, 1985, the district court stated:

Having viewed the telex [which pointed to the reluctance of three Saudi Arabian witnesses to come to the United States], and considering the arguments which have been made by counsel, I find an inadequate basis for ordering the depositions under our court rules.

The witnesses should be brought to the United States and a showing should be made which is more convincing as to not only how they would assist in the defense, but that providing for them to come to the United States still is inadequate to get them here.

In both areas, I have concluded that the showing is inadequate. There is a distinct preference for having witnesses in criminal trials present for the jury to view, to assess, themselves confront. The concept of having depositions is an inferior technique for presenting these witnesses to a jury.

If there were a situation in which these witnesses could be shown to be essential to the defense and only available through depositions, the Court might order depositions. Indeed, I have ordered depositions in criminal cases in the past. However, viewing the papers and the arguments which have been made in this particular case, I do not find a basis for ordering depositions in a foreign country, and I would require that witnesses whose testimony is to be considered should be brought to the United States for trial.

App. at 124.

Thereafter, Ismaili changed counsel and on November 15, 1985, again sought depositions of foreign witnesses. Ismaili sought to depose Moroccan and Syrian witnesses and renewed his motion to depose Saudi Arabian witnesses. App. at 48-52. this time, however, Ismaili's motions sought to have the government bear all expenses in connection with the depositions. Trial at that juncture had been set for November 20, 1985.

In support of his second motion to depose witnesses abroad, Ismaili submitted two affidavits of Josiah Thompson, a private investigator retained by his new and present counsel. One affidavit included transcripts of interviews that Thompson conducted with four Syrian witnesses who were allegedly part of Ismaili's Middle Eastern sales team. In the interviews, the witnesses stated that they were familiar with Incoser, but their familiarity stemmed from second-hand or third-hand hearsay. This affidavit, which reported the testimony of all four witnesses, indicated that one Ahmed was about to organize or was organizing the alleged sales team, but that the van-selling venture collapsed because of warring elements in the region. App. at 88-110.

A second affidavit included an account by Thompson of conversations he had with Rachid and Ezzarai in Morocco. These conversations concerned the involvement of Rachid and Ezzarai with Ismaili and their willingness to come to the United States to testify on his behalf. Thompson's affidavit recited that Ezzarai had met Rachid about 1975. Rachid gave Ezzarai film to develop beginning in 1980. Some fifty films were given to Ezzarai by Rachid over a period of two to four months. Because the film required special processing, it was forwarded to Agadir Color in Morocco, a firm which is no longer in business. Thompson also reported two interviews between Ezzarai and the police. During the interviews with the police, Ezzarai disclaimed any knowledge of Incoser, and denied even knowing the name. He also denied knowing Ismaili. According to Thompson, Ezzarai was asked by the police if he would go to the U.S. to testify, and replied, "Yes. If you get me a passport and pay my taxes and feed my children. Then I'll say I've never heard of Incoser." App. at 75.

Thompson's affidavit also reported an interview with Rachid Ismaili, Ismaili's brother. Rachid stated, as reported by Thompson, that he had discussed with his brother [Ismaili] a project of making color separations in either Morocco or Egypt and he [Rachid] was to find someone who could make them, and if necessary to develop negatives sent from the U.S. He was also to begin organizing a sales force. The interview continued with Rachid stating that he had given Ezzarai 60,000 dirham from money Rachid was holding for his brother; in addition, Ezzarai was to get two cars as collateral. The cars, however, were seized by Customs authorities and were never retrieved. The project, Rachid claimed, terminated because of the outbreak of the Iran-Iraq war. App. at 73-79.

Thompson also interviewed a U.S. vice-counsel, Julia R. Stanley. Thompson's affidavit reports that although he was not permitted to see a cable which had been sent from the U.S. Embassy in Rabat, he was told by Stanley that it reportedly contained information about Ezzarai and his business, including an interview with someone who claimed that he was Ezzarai and who stated that he had been approached in 1979 by Incoser to do some work; that several cars had been left as collateral for the work, but that they had been seized by customs; that he had sent a bill to Incoser but had received no reply. Stanley apparently also stated that Ezzarai experienced difficulty in getting a passport and that passports are routinely denied to Moroccan subjects, but that she had sent a diplomatic note to the foreign ministry in order to get him a passport. She also reported that Ezzarai owed some back taxes. App. at 73-110.

For reasons which do not appear of record, the November 20, 1985 trial date was evidently continued, and on February 25, 1986, at the request of Ismaili's counsel, another hearing was held at which the district court received testimony from investigator Thompson. App. at 131, 140, 199.

With respect to the Syrian witnesses. Thompson testified that they were "absolutely unavailable" because they were unwilling to come to the United States, due to anti-American prejudice in Syria. App. at 215. Thompson said that "Anyone who has anything to do with the American embassy or with Americans generally in the Arabic world are viewed with suspicion and it's something people are enormously reluctant to do [come to the States] at this point in time." App. at 213. "Many of them are subject to the Syrian draft, and for that reason would require special governmental permission to go out of the country. I suspect whatever the reasons they actually gave me on the tape, underneath that is this very heavy prejudice against having anything to do with the United States." App. at 215-216.

With respect to the Moroccan witnesses, Thompson stated that Rachid ( Ismaili's brother) was "certainly willing to come" to the United States, but "held a passport which had lapsed," and learned that it was often difficult for Moroccan citizens to get passports. App. at 204-205. Thompson testified that Ezzarai, who is related to Ismaili, did not yet have a passport and was a reluctant witness. Thompson said that Ezzarai had taken the position that "I will come if you get me a passport; if you pay me back taxes; and if you pay for my wife and children to live." According to Thompson, "He's very reluctant and became ever more reluctant to have anything to do with this." App. at 211.

In an Order issued without opinion on February 28, 1986, the district court denied the deposition motions by stating, "the defendant's motion to depose witnesses outside the United States and to require the Government to bear the expenses of the depositions be and it is hereby denied." App. at 6 (docket entry). Shortly thereafter, Ismaili placed nolo contendere pursuant to a plea agreement, as set forth earlier in this opinion.

B.

Prior to 1975, Rule 15(a) of the Federal Rules of Criminal Procedure explicitly required that depositions could be taken in a criminal case upon a showing "that a prospective witness may be unable to attend or prevented from attending a trial or hearing, that his testimony is material and that it is necessary to take his deposition in order to prevent a failure of justice." The cases which interpreted the former Rule 15(a) required that the depositional testimony at a minimum, be material, and that the witness who was to be deposed, had to be unavailable for live testimony at trial. See, e.g., United States v. Whiting, 308 F.2d 537 (2d Cir.), cert. den., 372 U.S. 909, 83 S. Ct. 722, 9 L. Ed. 2d 718 (1962); United States v. Singleton, 460 F.2d 1148 (2d Cir. 1972). The burden of proof rested with the party seeking to conduct the deposition to demonstrate both unavailability and materiality. See U.S. v. Rosenstein, 474 F.2d 705 (2d Cir. 1973).

Effective December 1975, Rule 15(a) was amended. As amended, a motion to take a deposition in a criminal case may be granted "whenever due to exceptional circumstances of the case it is in the interest of justice that the testimony of a prospective witness of a party be taken and preserved for use at trial."*fn1

The 1975 amendment to Rule 15(a) not only carries forward the interpretations given by the cases to the earlier rule, but it also reflects other features, all but one of which, are relevant to the issues in this case. First, as matter of historical significance only, the amendment authorized the government to take depositions. Under the earlier rule, the taking of depositions was limited to defendants. This change is not relevant to the present proceeding, however, because here it is only the defendant Ismaili who has applied to take depositions of his prospective witnesses.

Second, the amendment continues to distinguish between the favored use of depositions in a civil context, and their disfavored use in the criminal context. For instance, although the term "deposition" in a civil context ordinarily connotes the taking of testimony for discovery purposes, that connotation is misleading with respect to the practice under Rule 15(a). See U.S. v. Cutler, 806 F.2d 933, 935 (9th Cir. 1986). Rule 15(a) depositions are restricted to prospective witnesses of a party. The rule does not authorize taking the depositions of a witness of an adverse party, as is the case in civil practice.

Third, criminal depositions must be authorized by order of court and are only to be taken to preserve the testimony for use at trial. See the Note of the Advisory Committee to Rule 15. The 1975 amendment emphasizes the use of discretion by the district court in determining whether "exceptional circumstances" exist to authorize the taking and preservation of testimony by deposition. Thus our review of the district court's action centers on whether the district court properly exercised its discretion. See U.S. v. Johnpoll, 739 F.2d 702, 708 (2d Cir.), cert. den., 469 U.S. 1075, 83 L. Ed. 2d 511, 105 S. Ct. 571 (1984) (the decision to grant or deny a motion to take a deposition rests within the sound discretion of the trial court . . . and will not be disturbed absent a clear abuse of that discretion"). The burden of proof in a Rule 15(a) motion continues to rest with the movant to demonstrate the necessity for preserving prospective witness' testimony by a deposition, see U.S. v. Adcock, 558 F.2d 397, 406 (8th Cir.), cert. den., 434 U.S. 921, 54 L. Ed. 2d 277, 98 S. Ct. 395 (1977).

Notwithstanding the 1975 amendment of Rule 15(a), it nevertheless has been established that when the district court exercises its discretion in ruling on a Rule 15(a) motion, considerations of materiality (of the testimony) and unavailability (of the witnesses) remain critical. See United States v. Johnson, 752 F.2d 206, 209 (6th Cir. 1985) (unavailability still an important factor in determining whether exceptional circumstances exist); United States v. Bello, 532 F.2d 422, 423 (5th Cir. 1976) (testimony of foreign business associates not considered material so that "exceptional circumstances" or "interests of justice" did not compel a finding that the district court abused its discretion in denying depositions under Rule 15(a); see also United States v. Sun Myung Moon, 93 F.R.D. 558 (S.D.N.Y.) cert. den., 466 U.S. 971, 104 S. Ct. 2344, 80 L. Ed. 2d 818 (1982) (motion granted by district court upon determination of unavailability and materiality).

Thus, although witness availability and the immateriality of proposed testimony to be obtained through depositions are not rigid or automatic grounds for the denial of a 15(a) motions as they once were, it is nonetheless evident that the post-amendment case law defining "exceptional circumstances" and "interests of justice" still focuses on those considerations. Hence, it is difficult to conceive of a district court abusing its discretion by denying a Rule 15(a) motion where the movant has not established both the materiality of the testimony and the unavailability of the witness.

C.

Ismaili suggests that pursuant to Rule 15 he has demonstrated "exceptional circumstances" which, as we have noted, must encompass both factors ...


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