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Timestamp: 2017-04-24 02:00:46
Document Index: 708986229

Matched Legal Cases: ['§ 1341', '§ 2', '§ 201', '§ 2', '§ 14', '§ 3060', '§ 201']

E. WHARTON SHOBER, GEORGE L. GUERRA, JOHN P. DIXON
MEMORANDUM AND ORDER If proven at trial, the allegations in the above captioned indictment will establish the following mail fraud and bribery scheme perpetrated in connection with the financing and construction of an addition to the Hahnemann Medical College and Hospital (Hahnemann) in Philadelphia. To obtain a federal grant for partial funding of the Tower Project, as the proposed addition became known, Hahnemann submitted to the federal government an appropriate application, which was officially pending before Congressman Daniel J. Flood, a member of the House Appropriations Committee and chairman of the subcommittee for Labor Health Education and Welfare, during the spring and summer of 1974, when defendant E. Wharton Shober, president of Hahnemann, gave the Congressman a bribe of ten thousand dollars to influence his decision. (Count Eighteen). Defendant Shober also made and later consummated an agreement with the Congressman's administrative assistant, Stephen B. Elko. In exchange for Elko's use of his position and influence to obtain favorable consideration of Hahnemann's pending application, Shober agreed to use his position and influence as president of Hahnemann to effect selection of two designated firms,
Capital Investment Development Corporation (CIDC) and Environmental Design Center, Inc. (EDCI), as project monitor for the Tower Project. (Count One, PP 24, 28). Defendant George L. Guerra was president of CIDC, a building construction and real estate development company; defendant John P. Dixon was an investor in EDCI, which provided architectural and engineering services. Guerra and Dixon agreed to pay Elko cash kickbacks in exchange for Elko's use of his position and influence to obtain the coveted contract as project monitor. (Count One, P 23). Thereafter, Guerra and Dixon gave Elko a twenty thousand dollar bribe. (Count One, P 29, Count Nineteen). All three defendants then acted alone or in concert to bring these plans to fruition. Defendant Shober directed Hahnemann's attorney, Laurence Corson, to compile data justifying selection of EIDC/CIDC as project monitor to Hahnemann's Board of Trustees, officers and administrators. (Count One, P 25). To create a facade of fairness, impartiality and regularity, Shober further directed Corson to undertake a deceptive and fraudulent bidding procedure for the contract by inviting and receiving bids from Turner Construction Company and Morse/Diesel, Inc., with full knowledge that EIDC/CIDC's selection had been predetermined. (Count One, P 26). Shober also negotiated a termination settlement with Morse/Diesel, Inc., on the existing management services contract. (Count One, P 27). Finally, Shober and Guerra sent various letters through the mail, beginning in the summer of 1974 and continuing through the spring of 1976, to complete their artifice. (Counts One through Seventeen).
The government charges that these schemes violated 18 U.S.C. § 1341 and § 2 (mail fraud and aiding and abetting) and 18 U.S.C. § 201 and § 2 (bribery and aiding and abetting)
and defrauded Hahnemann, the federal government, the Community Services Administration (an anti-poverty agency funded through annual Congressional appropriations), the Hospital Authority of Philadelphia (a corporation which owns, operates and leases hospitals), investors in its gross revenue bonds issued and sold to help finance the Tower Project, Turner Construction Company and Morse/Diesel, Inc., by denying them the right to have their business affairs conducted honestly and impartially and "free from deceit, craft, corruption, fraud, undue influence, conflict of interest and bribery". (Count One, P 22). Defendant Shober filed nineteen pre-trial motions; defendant Dixon five; the government four.
To resolve certain factual issues raised by three pre-trial motions, defendant Shober moves for the scheduling of an evidentiary hearing. First, defendant claims that a prosecutor's unfettered discretion to decide whether the government should proceed against an accused by indictment (and then arrest) or arrest (and then a subsequent preliminary examination) violates his constitutional guarantees of due process and equal protection. If the latter course is followed, he complains, the defendant receives an array of significant procedural rights not available if the grand jury indicts him. He may personally appear and confront and cross-examine government witnesses; he may present exculpatory evidence and have a lawyer assist him. A magistrate, a court officer with legal training, will determine whether probable cause exists. Without objective standards the government arbitrarily can deny some defendants rights afforded to others in either of two ways. That is, the prosecutor can simply institute the matter by grand jury indictment or he can proceed by arrest and before ten days elapse, when the accused becomes entitled to a preliminary examination, obtain a grand jury indictment. Defendant Shober seeks an evidentiary hearing to establish the fact that neither the Department of Justice nor the United States Attorney's office in this district have established or use any guidelines in making these critical determinations. The government readily concedes that no such guidelines exist and counters that the Fifth Amendment and the Federal Rules of Criminal Procedure obviate the need for any. Since the real dispute is not over the facts concerning the existing standards which govern the initiation of federal felony prosecutions, but rather the appropriate legal conclusions to be drawn therefrom, an evidentiary hearing on this basis would serve no useful purpose and therefore will be denied.
Defendant then moves to dismiss the indictment on the grounds that the prosecutor's unfettered discretion in deciding how the government should proceed against an accused violates his equal protection guarantees under the Fifth Amendment,
which also provides that no person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger . . . An "infamous" crime is one in which the punishment includes confinement at hard labor, United States v. Moreland, 258 U.S. 433, 42 S. Ct. 368, 66 L. Ed. 700 (1922), incarceration in a penitentiary, Mackin v. United States, 117 U.S. 348, 6 S. Ct. 777, 29 L. Ed. 909 (1886), or imprisonment for more than one year, Barkman v. Sanford, 162 F.2d 592 (5th Cir.), cert. denied, 332 U.S. 816, 68 S. Ct. 155, 92 L. Ed. 393 (1947). Codified in Rule 7(a) of the Federal Rules of Criminal Procedure, the constitutionally required procedure is that an offense which may be punished by death shall be prosecuted by indictment. An offense which may be punished by imprisonment for a term exceeding one year or at hard labor shall be prosecuted by indictment, or if indictment is waived, it may be prosecuted by information. Any other offense may be prosecuted by indictment or information. Clearly, in the federal criminal justice system the sole mechanism by which to institute charges against a prospective felony defendant is through the grand jury process,
Branzburg v. Hayes, 408 U.S. 665, 687, 92 S. Ct. 2646, 2659, 33 L. Ed. 2d 626 (1972), Costello v. United States, 350 U.S. 359, 362, 76 S. Ct. 406, 408, 100 L. Ed. 397 (1956). The language of both the Amendment and the rule is mandatory. A federal accused must be indicted by the grand jury, and the prosecutor cannot circumvent this requirement. In a limited number of situations, however, instituting a criminal prosecution by indictment is impracticable. Where a federal agent makes a warrantless arrest or there is a risk that a defendant will abscond or behave violently before a prosecutor can present the case to a grand jury, a complaint and warrant may be filed. Fed.R.Crim.P. 5(a). The government must still present the case to a grand jury for indictment as soon as possible after issuance of the complaint and warrant. See Affidavit of Peter F. Vaira, United States Attorney for the Eastern District of Pennsylvania, PP 2, 3. Thus, in the federal system all prospective felony defendants belong to the same class. They are prosecuted by indictment and are entitled to a grand jury determination that there is probable cause to believe that a crime has been committed and that the accused has probably committed it. The prosecutor has no choices with respect to the manner in which a felony will be prosecuted. The federal system is thus vastly different from the California state criminal justice system, which the California Supreme Court analyzed in Hawkins v. Superior Court of San Francisco, 22 Cal.3d 584, 150 Cal.Rptr. 435, 586 P.2d 916 (1978), the sole precedent for Shober's argument. Hawkins held that an accused is denied the equal protection of the laws guaranteed by the California state constitution when he is prosecuted by indictment and thereby deprived of a preliminary hearing and its concomitant rights. The California constitution provides that "felonies shall be prosecuted as provided by law, either by indictment or, after examination and commitment by a magistrate by information". Art. I, § 14. Thus, the prosecutor does have discretion whether to prosecute felonies by indictment or information and to have probable cause determined by the grand jury or a magistrate. By design the California system creates two different classes of felony defendants
those indicted by a grand jury and those charged by information after a preliminary examination before a magistrate and permits the prosecutor to choose into which class any particular individual will fall. Unlike the federal prosecutor, who must submit all cases for grand jury scrutiny in order to bring felony defendants to trial, the California prosecutor may use the preliminary examination to determine whether the evidence justifies charging the suspect with an offense. Under the dichotomous California system the court justifiably found that a felony defendant charged by information after a preliminary examination received certain "fundamental" rights and benefits that a defendant charged by indictment was denied, and that the California prosecutor had completely unbridled discretion to make a discriminatory classification as to how a particular defendant was charged. Id. at 593, 150 Cal.Rptr. 435, 586 P.2d 916. Defendant Shober seeks to graft the reasoning of the Hawkins majority onto the reality of the federal criminal justice system. The different function of the preliminary examination in the federal system makes this non sequitur obvious. Unlike California, where it plays a significant role in the charging process itself, in the federal system the preliminary examination is a complement to, not a substitute for, the grand jury process. The purpose of the preliminary examination is not to give discovery before trial, United States v. Wilkins, 422 F. Supp. 1371, 1374 (E.D.Pa.), aff'd, 547 F.2d 1164 (3d Cir. 1976), but rather to "justify holding the defendant in custody or on bail during the period of time it takes to bind the defendant over to the district court for trial", Notes of Advisory Committee on Rules Concerning the 1972 Amendment to Fed.R.Crim.P. 5, by providing a reasonably prompt determination of probable cause in cases where a person has been arrested by warrant issued upon a complaint. Gerstein v. Pugh, 420 U.S. 103, 120-23, 95 S. Ct. 854, 866-67, 43 L. Ed. 2d 54 (1975), United States v. Conway, 415 F.2d 158, 161 n. 4 (3d Cir. 1969). See also Fed.R.Crim.P. 5, 5.1 and 18 U.S.C. § 3060. Waiting for a grand jury to indict might require arrested individuals to spend long periods of time in jail on groundless charges . . . Though the preliminary hearing provided for in Rule 5(c) may be a practical tool for discovery by the accused, the only legal justification for its existence is to protect innocent accuseds from languishing in jail on totally baseless accusations. Rule 5(c) requires the government to justify its incarceration by proving in a preliminary hearing before a judicial officer that there is probable cause to believe the accused committed the charged offense. . . . If the grand jury returns a true bill prior to the time a preliminary hearing is held the whole purpose and justification of the preliminary hearing has been satisfied. Spinelli v. United States, 382 F.2d 871, 887 (8th Cir. 1967), rev'd. on other grounds, 393 U.S. 410, 89 S. Ct. 584, 21 L. Ed. 2d 637 (1969) (emphasis added and citations omitted). See also United States v. Carignan, 342 U.S. 36, 72 S. Ct. 97, 96 L. Ed. 48 (1951). The incidental benefits which may derive from a preliminary examination may not be elevated and transformed into fundamental constitutional rights which must be protected in every criminal prosecution. United States v. Farries, 459 F.2d 1057, 1062 (3d Cir. 1972). Defendant also contends that the prosecutor's ability to truncate an arrested but unindicted defendant's right to a preliminary examination by obtaining a grand jury indictment within ten days of the initial appearance also violates an accused's equal protection and due process protections.
Defendant points to the absence of any neutral, identifiable criteria to limit the prosecutor's discretion. Again, the Fifth Amendment and Federal Rules of Criminal Procedure circumscribe the prosecutor's actions. He must present the case to the grand jury, and only in extraordinary circumstances, such as where no grand jury is sitting or evidence is not available, does the ten-day period expire and the defendant is afforded a preliminary examination prior to the action of the grand jury. The fact that under occasional circumstances undictated by the prosecutor some defendants receive a preliminary examination does not violate the equal protection guarantees of defendants whom a grand jury indicts. Defendant's motion will be denied. Alternatively, defendant demands a post-indictment preliminary examination to redress the supposed imbalance created by grand jury indictment. Defendant fails to explain what this court, or a magistrate, will determine at this hearing. Certainly probable cause will not be relevant, for the grand jury determination thereof is conclusive, Rodriguez v. Ritchey, 556 F.2d 1185, 1191 (5th Cir. 1977), cert. denied, 434 U.S. 1047, 98 S. Ct. 894, 54 L. Ed. 2d 799 (1978), and discovery per se is beyond its purview. United States v. Conway, supra. Equally unclear is the appropriate basis upon which to grant this hearing. Defendant has no constitutional right to a preliminary examination. United States ex rel. Kassin v. Mulligan, 295 U.S. 396, 400, 55 S. Ct. 781, 782, 79 L. Ed. 1501 (1943), United States v. Walker, 491 F.2d 236, 238 (9th Cir.), cert. denied, 416 U.S. 990, 94 S. Ct. 2399, 40 L. Ed. 2d 768 (1974), Harris v. Estelle, 487 F.2d 1293, 1296 (5th Cir. 1974), United States v. Farries, supra, at 1062, United States v. Coley, 441 F.2d 1299, 1301 (5th Cir.), cert. denied, 404 U.S. 867, 92 S. Ct. 85, 30 L. Ed. 2d 111 (1971), Sciortino v. Zampano, 385 F.2d 132, 134 (2d Cir.), cert. denied, 390 U.S. 906, 88 S. Ct. 820, 19 L. Ed. 2d 872 (1968), United States v. Chase, 372 F.2d 453, 467 (4th Cir.), cert. denied, 387 U.S. 907, 87 S. Ct. 1688, 18 L. Ed. 2d 626 (1967), Braxton v. Peyton, 365 F.2d 563, 565 (4th Cir.), cert. denied, 385 U.S. 939, 87 S. Ct. 306, 17 L. Ed. 2d 218 (1966), United States v. Wilkins, supra, at 1375, United States v. Barone, 311 F. Supp. 496, 498 (W.D.Pa.1970). Nor does denial of a preliminary examination violate due process, United States v. Mulligan, 520 F.2d 1327, 1329 (6th Cir. 1975), Rivera v. Government of the Virgin Islands, 375 F.2d 988, 989 (3d Cir. 1967), United States v. Luxenberg, 374 F.2d 241, 247 (6th Cir. 1967), United States v. Smith, 343 F.2d 847, 850 (6th Cir.), cert. denied, 382 U.S. 824, 86 S. Ct. 55, 15 L. Ed. 2d 69 (1965), Lunsford v. Howard, 316 F. Supp. 1125, 1126 (E.D.Ky.1970), or ipso facto legally prejudice defendant, United States v. English, 501 F.2d 1254, 1258 (7th Cir. 1974), United States v. Milano, 443 F.2d 1022 (10th Cir.), cert. denied, 404 U.S. 943, 92 S. Ct. 294, 30 L. Ed. 2d 258 (1971), United States v. Hinkle, 307 F. Supp. 117 (D.D.C.1969). Cf. Baker v. McCollan, 443 U.S. 137, 99 S. Ct. 2689, 61 L. Ed. 2d 433 (1979) (adversarial hearing not required to determine probable cause). Scheduling of a post-indictment preliminary examination will serve no meaningful purpose, and the motion therefor will be denied. The second of defendant Shober's three pre-trial motions requesting an evidentiary hearing is a motion to dismiss the indictment on the ground, inter alia, that the government selectively and discriminatorily prosecuted the defendant. To substantiate this claim, defendant seeks an evidentiary hearing. Defendant's claim of selective prosecution rests on three distinct arguments. First, the government singled defendant out for prosecution from among hundreds of persons who engage in the traditional practice of tendering financial contributions to political candidates who support positions favorable to the donor's institution. Defendant, the donor, merely intended to create a favorable attitude in the mind of the donee (Flood) towards the needs of defendant's institution. Defendant simply exercised his First Amendment right to petition his government for redress of grievances. Defendant's second claim is that he was the victim of extortion rather than a briber and therefore should have been treated as a victim. Alternatively, even as an alleged briber, he should not have been prosecuted since the government's practice is to indict only recipients of bribes, not the bribe giver. Defendant's first claim, that the money given to Congressman Flood was part of a traditional business practice of tendering political contributions to promote a favorable business climate for federal funds which Hahnemann needed, is essentially a challenge to the truth of the allegation that defendant "corruptly" gave the Congressman money to influence his official action on Hahnemann's application for federal funding. Whether defendant paid this money to the Congressman with "corrupt" intent or merely as a "traditional" political gift is a question for the jury to decide at trial. Similarly, defendant's contention that he is not a briber but a victim of extortion also reaches the merits of the charge made in the indictment. This question will also be one for the jury to decide. In essence, both require a determination of defendant's intent, which is a question of fact. Where a pre-trial motion raises questions of fact which are "intertwined with issues involving the merits, a determination of that matter must be deferred until trial". United States v. Greater Syracuse Board of Realtors, Inc., 449 F. Supp. 887, 899 (N.D.N.Y.1978). Defendant's third argument, that his prosecution as a bribe giver is unfairly selective because the government always nabs the bribe recipient, comes closer to a true selective prosecution claim. Defendant is entitled to an evidentiary hearing if he can make an initial showing that there is a "colorable basis" for his selective prosecution claim. United States v. Torquato, 602 F.2d 564 at 570 (3d Cir. 1979), United States v. Cammisano, 546 F.2d 238, 241 (8th Cir. 1976), United States v. Berrios, 501 F.2d 1207, 1211 (2d Cir. 1974), United States v. Berrigan, 482 F.2d 171, 177 (3d Cir. 1973). He must adduce some credible evidence "tending to show the existence of the essential elements of (this) defense" and that the testimony would indeed be probative thereof. United States v. Berrios, 501 F.2d at 1211-12. See also United States v. Torquato, 602 F.2d at 570. That is, defendant must show the existence of facts sufficient "to raise a reasonable doubt about the prosecutor's purpose", United States v. Falk, 479 F.2d 616, 620-21 (9th Cir. 1973), and "to take the question past the frivolous stage". United States v. Oaks, 508 F.2d 1403, 1404 (9th Cir. 1974), cert. denied, 426 U.S. 952, 96 S. Ct. 3177, 49 L. Ed. 2d 1191 (1976). The two elements of selective prosecution, which defendant has the burden of proving, United States v. Malinowski, 472 F.2d 850, 860 (3d Cir. 1973), include an allegation that the selection was deliberately based upon "an unjustifiable standard such as race, religion, or other arbitrary classification", Bordenkircher v. Hayes, 434 U.S. 357, 364, 98 S. Ct. 663, 669, 54 L. Ed. 2d 604 (1978), Oyler v. Boles, 368 U.S. 448, 456, 82 S. Ct. 501, 505, 7 L. Ed. 2d 446, or the exercise of a fundamental right, United States v. Smith, 523 F.2d 771, 782 (5th Cir. 1975), cert. denied, 429 U.S. 817, 97 S. Ct. 59, 50 L. Ed. 2d 76 (1976), United States v. Swanson, 509 F.2d 1205, 1208 (8th Cir. 1975), United States v. Steele, 461 F.2d 1148, 1151 (9th Cir. 1972) and an allegation that others similarly situated have not been prosecuted for the same type of conduct which forms the basis of defendant's prosecution. United States v. Kelly, 556 F.2d 257, 264 (5th Cir. 1977), cert. denied, 434 U.S. 1017, 98 S. Ct. 737, 54 L. Ed. 2d 763 (1978), United States v. Bourque, 541 F.2d 290, 292-93 (1st Cir. 1976), United States v. Scherer, 523 F.2d 371, 377 (7th Cir. 1975), cert. denied, 424 U.S. 911, 96 S. Ct. 1108, 47 L. Ed. 2d 315 (1976), United States v. Swanson, 509 F.2d at 1208-09, United States v. Steele, 461 F.2d at 1150-52, United States v. Berrios, 501 F.2d at 1211. See, for example, United States v. Oaks, supra (defendant's public protest against federal tax policy), United States v. Falk, supra (defendant's participation in a draft counseling organization opposing the war in Vietnam), United States v. Steele, supra (defendant's public protest against census laws), United States v. Crowthers, 456 F.2d 1074 (4th Cir. 1972) (defendant's participation in a "mass for peace"), United States v. Cammisano, 413 F. Supp. 886 (W.D.Mo.), rev'd on other grounds, 546 F.2d 238 (8th Cir. 1976) (defendant's Italian ancestry). To establish the first element of this defense, defendant points to his gift to the Congressman as an exercise of his First Amendment right to petition the government for redress of grievances and relies on Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 139, 81 S. Ct. 523, 530, 5 L. Ed. 2d 464 (1961), in which the court declared that (t)he right of the people to inform their representatives in government of their desires with respect to the passage or enforcement of laws cannot properly be made to depend upon their intent in doing so. It is neither unusual nor illegal for people to seek action on laws in the hope that they may bring about an advantage to themselves and a disadvantage to their competitors. (emphasis added) Applying this reasoning to the instant situation commands a wholly different result. Shober does not suggest that the gift was intended to spur the Congressman's interest in a particular piece of legislation. Instead he candidly admits that the gift was to promote a favorable "business" or political climate at a time when a private request for federal funding was pending before the Congressman. Whether the gift was a bribe will be for the jury to determine, but an expression of private interest in the passage or enforcement of public laws it was not. It is, therefore, extremely doubtful whether defendant has met even the threshold requirement, an allegation of prosecutorial selectivity based on the exercise of a fundamental right. &nbsp;In support of the second requirement, defendant cites one indictment, United States v. Winner, No. 79-119 (E.D.Pa. filed May 8, 1979), an extortion case brought as part of a continuing investigation in which the government prosecuted the bribe recipient and not the bribe giver. In rebuttal the government offers two recent prosecutions instituted by the United States Attorney's office in this district and indicting both the bribe giver and recipient. Six individuals and two corporations were included in an indictment in United States v. Barszowski, No. 78-281 (E.D.Pa. filed September 21, 1978), which charged that officers and employees of corporations doing contracting and sub-contracting work for the Pennsylvania Department of Transportation (Penndot) were systematically paying bribes to a key Penndot official in the Philadelphia district office. Both the Penndot official who received the bribes and the persons who gave the bribes were indicted. In United States v. Miller, No. 78-244 (E.D.Pa. filed July 27, 1978) and United States v. Fontaine, No. 78-54 (E.D.Pa. filed March 2, 1978) defendants were operators of gambling activities in Chester, Pennsylvania. They were indicted for racketeering in connection with their systematic giving of bribes to the mayor, who was charged in a separate indictment, United States v. Nacrelli, No. 78-165 (E.D.Pa. filed May 18, 1978). Noting that the federal bribery statute under which defendant has been prosecuted prohibits both the giving and receiving of bribes, 18 U.S.C. § 201(b) through (h), United States v. Anderson, 165 U.S. App. D.C. 390, 509 F.2d 312 (D.C. Cir. 1974), cert. denied, 420 U.S. 991, 95 S. Ct. 1427, 43 L. Ed. 2d 672 (1975), United States v. Jacobs, 431 F.2d 754 (2d Cir. 1970), cert. denied sub nom. Spieler v. ...