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United States v. Hughes

United States District Court, M.D. Pennsylvania

June 7, 2018

UNITED STATES OF AMERICA
v.
AL T. HUGHES, Defendant

          MEMORANDUM

          JAMES M. MUNLEY UNITED STATES DISTRICT COURT

         Before the court for disposition is Defendant Al T. Hughes' motion for a Kastigar hearing and to dismiss the indictment or to suppress evidence derived in violation of his Fifth Amendment rights. The motion has been fully briefed and is ripe for disposition.[1]

         Background

         Defendant Hughes is a funeral home director with an interest in four funeral homes. (Doc. 33, Superseding Indictment ¶ 3). The government alleges that defendant diverted hundreds of customer checks to his own personal benefit even though they had been intended for funeral home services. (Id. ¶ 4). According to the government, he diverted approximately $1.25 million in this manner and did not include the money as personal income when he filed his tax returns. (Id. ¶ 6). The grand jury indicted the defendant on January 17, 2017 and charged him with evasion of taxes in violation of 26 U.S.C. § 7201. The indictment alleges the filing of false and fraudulent tax returns in May 2012, November 2012, September 2013, October 2014 and October 2015. (Doc. 1, Indictment).

         On January 30, 2018, the grand jury issued a superseding indictment charging the defendant with five additional counts. Counts six through ten allege the crime of “subscribing to a false tax return” in violation of 26 U.S.C. § 7206(1). (Doc. 33). These charges relate to the same tax returns involved in the original indictment.[2]

         Prior to the events giving rise to the instant criminal charges, Defendant Hughes testified in a 2011 trial concerning corruption in Lackawanna County government. He testified as to being a means of transmission of cash between a third party involved in business with the county and Lackawanna County Commissioner Robert Cordaro.

         Before he testified, defendant and the government entered into a “cooperation and testimony” or “immunity” agreement. This agreement provided that if defendant provided information on alleged official corruption in Lackawanna County, then the government would not use the information to prosecute the defendant. Defendant testified on June 8, 2011. Subsequently, in 2017, the government filed tax evasion charges against defendant based on the tax years of 2010-2015.

         Discussion

         Defendant moves for dismissal of the charges against him on the basis that the charges violate the immunity agreement from the Cordaro case. He also moves for a Kastigar hearing and the suppression of evidence derived in violation of his immunity from prosecution. The government's position is that the motion to dismiss should be denied and that request for a Kastigar hearing be denied. The government has two arguments: 1) Kastigar hearings do not apply to the type of immunity that the defendant was granted and 2) Factually, it is impossible for the government to have used statements made by the defendant improperly. After a careful review, we agree with the government with regard to both arguments, and we will discuss them in turn.

         1. Kastigar hearing

         As noted above, this case involves immunity from prosecution. Immunity issues generally arise when the government seeks to have a witness testify in court or before a grand jury and that witness refuses to testify based upon the Fifth Amendment right against self-incrimination. The government may compel testimony in such circumstances by granting immunity to the witness under 18 U.S.C. § 6002. See Kastigar v. United States, 406 U.S. 441 (1972). This type of immunity is known as formal or statutory immunity .

         If the witness is later prosecuted by the government and claims that the prosecution is based on his immunized testimony, then he may request a Kastigar hearing. At a Kastigar hearing the government must prove that its case is based solely on evidence other than the statements the defendant was compelled to make and the “fruits” of those statements. Kastigar, 406 U.S. at 460.

         Statutory or formal immunity is not the only type of immunity. See, e.g., United States v. Skalsky, 857 F.2d 172, 175-76 (3d Cir. 1988) (explaining different types of immunity). The government may also provide immunity through an agreement between the prosecution and a witness. Id.; United States v. Plummer, 941 F.2d 799, 802 (9th Cir. 1991). This type of immunity is called “informal immunity”. Id.

         Here, defendant seeks a Kastigar hearing. To establish the necessity of holding a Kastigar hearing, the defendant must demonstrate that he testified under a statutory grant of immunity and that his testimony concerned ...


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