On Appeal From the United States District Court for the District of New Jersey - Camden, Criminal Action No. 85-00121-01.
Becker and Scirica, Circuit Judges, and Farnan, District Judge.*fn*
The appellant, Robert Skalsky, was convicted in the United States District Court for the District of New Jersey on charges of willfully and knowingly attempting to evade and defeat the payment of income taxes for the years 1978, 1979, and 1984. Skalsky maintains on appeal that his conviction should be set aside pursuant to an immunity agreement entered into by him and the government. The district court determined that Skalsky had entered into a nonprosecution agreement and he materially breached the agreement and, therefore, was subject to prosecution. Because we agree with the district court's legal interpretation of the agreement and because we find the court's finding that Skalsky breached that agreement is not clearly erroneous, United States v. Delerme, 457 F.2d 156, 160 (3d Cir. 1972), the judgment of conviction will be affirmed.
The series of events culminating in this appeal can be summarized as follows. The Internal Revenue Service, in November, 1979, initiated an investigation of Emmanuel Gambino to determine if Gambino had violated federal tax laws by failing to file tax returns or by understating his taxable income. In 1980, Skalsky was subpoenaed to appear before the Gambino Grand Jury. On April 15, 1980, Skalsky went to the Federal Courthouse in Camden, New Jersey, accompanied by his attorney, Michael K. Simon, who is also Skalsky's son-in-law. Simon had no previous experience as a criminal lawyer. Skalsky informed United States Special Attorney George E. Wilson that he intended to invoke the Fifth Amendment if called to testify before the grand jury. The government, after informing Skalsky that he was not a target of the Gambino investigation, entered into a written agreement with Skalsky in order to obtain his testimony before the grand jury and overcome his assertion of his right against self-incrimination. Simon participated in the drafting of this agreement, which promised, inter alia, that, subject to certain conditions concerning Skalsy's cooperation, "the United States will not prosecute Mr. Skalsky for potential charges based upon information supplied to this office by him. Such immunity specifically includes charges related to his activities in dealing with Emmanuel Gambino." At Simon's suggestion, the agreement also included the following provision: "It is also understood that on Constitutional grounds, any testimony given pursuant to this agreement is tainted for use by any other prosecuting office."'*fn1
Pursuant to the executed letter agreement, Skalsky was questioned by I.R.S. Agents Paul Gould and Donald Pisker concerning various business ventures with Gambino, including an attempt by Skalsky and Gambino to buy the Shelbourne Hotel in Atlantic City, New Jersey. There is some dispute as to exactly what Skalsky told the I.R.S. agents regarding the Shelbourne deal; however, under either party's account, it is clear that Skalsky did not tell the agents that he and Gambino received $250,000 as settlement proceeds from a lawsuit involving their option to buy the hotel.
After completion of the I.R.S. questioning, Skalsky was questioned before the Gambino Grand Jury by Wilson. The record indicates that Wilson directed one open-ended question concerning the Shelbourne Hotel to Skalsky and that Skalsky again failed to mention the $250,000 settlement.
Subsequent to Skalsky's testifying, the government learned of the settlement proceeds and notified Skalsky in July of 1981 that he had breached the letter agreement by failing to give "complete, truthful and accurate" information to the I.R.S. agents and to the Gambino Grand Jury. In April, 1985, Skalsky was indicted on three counts of income tax evasion.*fn2
Prior to trial in the district court, Skalsky moved to dismiss the indictment on the ground that the criminal prosecution was in violation of the immunity agreement he had with the government. The district court found that, contrary to Skalsky's contentions, the agreement did not grant him use and derivative use immunity, but instead extended to Skalsky the more limited protection of an agreement not to prosecute, conditioned on Skalsky's promise to give "complete, truthful and accurate information." United States v. Skalsky, 616 F. Supp. 676, 680 (D.N.J. 1985). Additionally, the district court opined that Skalsky "willingly and with the advice and consent and participation of counsel entered into a contract. . . which, if breached, would expose him to prosecution. . . . " Id.
The district court then held an evidentiary hearing to determine if Skalsky had materially breached his agreement with the government. Id. at 682. After presentation of witnesses and exhibits, the court found by clear and convincing evidence that Skalsky and Gambino had received $250,000 in settlement of their lawsuit involving the Shelbourne Hotel option. United States v. Skalsky, 621 F. Supp. 528, 531 (D.N.J. 1985). The court also found that Skalsky's failure to inform the government of the $250,000 settlement constituted a material breach of his agreement with the government. Id. In the district court's view, the agreement not to prosecute required Skalsky to give complete answers, not narrowly or evasively framed answers. Id. at 531-32. Based on these findings the district court denied Skalsky's motion to dismiss the indictment. Id. at 533. Skalsky was subsequently convicted of willfully and knowingly attempting to evade and defeat income tax payment for 1978, 1979, and 1984.
Appellant Skalsky contends that the district court's rulings were clearly erroneous. He argues in the first instance that "the clear language utilized by the government in drafting the agreement . . . compels the conclusion that the agreement was . . . a full grant of use and derivative use immunity coextensive to a formal grant of immunity pursuant to 18 U.S.C. § 6001-6003." Appellant's Opening ...