The opinion of the court was delivered by: SHAPIRO
Defendants Breslin, Chucas, Mayo, and Mersky were indicted by a federal grand jury on February 21, 1995; the 56 count indictment charges defendants with conspiracy (Count I), wire fraud (Counts 2-35), and money laundering (Counts 36-56). The grand jury that handed down the indictment was the fourth grand jury that heard evidence in the matter; however, the matter was not transferred from a prior grand jury.
The indictment charges that the four defendants held themselves out as agents for Turnbull and Sons, Ltd. ("Turnbull") a company based in Philadelphia which allegedly provided assistance to people seeking loans by arranging for letters of credit that could be used as collateral. The indictment further charges that Turnbull threw sufficient conditions and deadlines into the application process so that the alleged victims were unable to close any of the deals, and all of them forfeited the substantial advance fees paid to Turnbull.
Defendants Breslin and Mersky moved to dismiss the indictment.
Breslin moved to dismiss the indictment because the prosecutor failed to keep an alleged promise that Breslin could testify before the grand jury. Breslin's motion also alleged that the prosecutor had engaged in prosecutorial misconduct. Mersky's motion alleged that the money laundering counts were not supported by any evidence presented to the grand jury. A trial, expected to last approximately six weeks, was scheduled to begin February 26, 1996. Then, on December 12, 1995, the same grand jury, after hearing some additional testimony, presented a superseding indictment adding Defendant Siomkin.
A district court may not invoke its supervisory powers to dismiss an otherwise valid indictment based on the reliability or competence of the evidence presented to the grand jury. United States v. Williams, 504 U.S. 36, 54, 118 L. Ed. 2d 352, 112 S. Ct. 1735 (1992); United States v. Costello, 350 U.S. 359, 364, 100 L. Ed. 397, 76 S. Ct. 406 (1956). Defendants urge the court to view this indictment not as based on insufficient evidence, but on no evidence at all supporting certain counts of the indictment. However, as the Williams court explained, "[a] complaint about the quality or adequacy of the evidence can always be recast as a complaint that the prosecutor's presentation was 'incomplete' or 'misleading'". 504 U.S. at 54. Therefore, the court declines to consider the alleged absence of grand jury evidence to support individual counts of the superseding indictment.
A district court does have the power to dismiss an indictment based on prosecutorial misconduct. This power is limited; in the absence of fundamental errors, a category thus far limited to racial and gender discrimination in the selection of grand jurors, see Vasquez v. Hillery, 474 U.S. 254, 88 L. Ed. 2d 598, 106 S. Ct. 617 (1986); Ballard v. United States 329 U.S. 187, 91 L. Ed. 181, 67 S. Ct. 261 (1946), a harmless-error inquiry applies to claims of prosecutorial misconduct before a grand jury. There must be a showing of actual prejudice to the defendants. Bank of Nova Scotia v. United States, 487 U.S. 250, 255-56, 101 L. Ed. 2d 228, 108 S. Ct. 2369 (1988). There is "prejudice" only "'if it is established that the violation substantially influenced the grand jury's decision to indict' or if there is 'grave doubt' that the decision to indict was free from the substantial influence of such violations." Id. (citing United States v. Mechanik, 475 U.S. 66, 78, 89 L. Ed. 2d 50, 106 S. Ct. 938 (1986).
II. Prosecutorial Misconduct Before the Grand Jury
Defendants' motions pertain to the indictment filed on February 21, 1995; a superseding indictment was handed down on December 12, 1995. Because the December 12th indictment was returned by the same grand jury that returned the February indictment, the court will review the prosecutor's conduct before the grand jury that presented both the February indictment and the superseding indictment.
A. Defendant Breslin's Motion
As to the use of hearsay, it is clear that an indictment may be based on hearsay testimony alone, unless the grand jury is mislead by concealment that it is hearsay and the grand jury would not have indicted the defendant if they had heard eyewitness testimony. United States v. Ismaili, 828 F.2d 153, 164 (3d Cir. 1987), cert. denied, 485 U.S. 935, 99 L. Ed. 2d 271, 108 S. Ct. 1110 (1988); ...