Opinion ID: 614361
Heading Depth: 1
Heading Rank: 6

Heading: Documents Prepared in Connection with Litigation

Text: Three documents, prepared in connection with the anticipated litigation in Taxpayers' civil tax case, were revealed through Taxpayers' FOIA requests. They are: a document summarizing an interview of Chandler conducted by two government attorneys in Rome in February 1966; an internal IRS memorandum summarizing the factual and legal background to the suppression motion; and a memorandum from IRS Agent Sterling Powers to OIO concerning the Picture Folder (the Powers Memorandum).
On February 11, 12, and 13, 1966, lead attorney McCarthy and Harlow Huckabee, an IRS attorney, interviewed Chandler in Rome. This interview took place shortly before Chandler's deposition. Only Chandler, McCarthy, and Huckabee were present. Most, though not all, of the information in the document summarizing this interview is consistent with evidence presented during the 1967 suppression hearing. Chandler told the attorneys that because the F.B.I. and the N.B.I. are corresponding agencies . . . there was continuing cooperation and an implied agreement that the F.B.I. and the N.B.I. would help each other as much as possible. Chandler told them that he attempted to have the Philippine officials delay the search and seizure action until a special agent arrived who would have more knowledge of the criminal aspects of the case than Chandler did, which suggested that Chandler instigated the delay of the raid from February 24 to March 3. Chandler stated that during the meetings in his house he paid attention to what was being said, but Philippine officials made the decisions. He stated that Spielman was often confused. The memorandum states, [A]t one point Chandler said that he helped Spielman draw a sketch of locations involved in the search and seizure. He does not know what Spielman did with the sketch, but assumes that Spielman made it available to the N.B.I. This statement casts doubt on Chandler's failure to remember the sketch at the suppression hearing. It is unlikely that Chandler would remember the sketch clearly in February 1966, as the government was preparing for trial, but fail to remember it only a year later during the suppression hearing for that very trial. It does, however, support Chandler's assertion that the sketches simply recorded Spielman's story. It also supports Chandler's statement that he gave the sketch and notes to Spielman, rather than directly to the NBI. Chandler told the attorneys that at the meetings at his home the NBI agents often played selections from their wiretaps of Stonehill. Chandler said that he knew these wiretaps had been going on for a long time. He said that he was not particularly interested in them. He was not aware whether the NBI continued the wiretaps after the raid, but he said he would not be surprised if they had. Chandler said the NBI had been tapping Stonehill long before the IRS became involved in the investigation of Stonehill, and that the IRS had never been involved in wiretapping. Chandler also said why he was interested in ensuring that the NBI would search the Army and Navy Club. He recounted that during one conversation, Spielman had said that a man named Murray Otstott had told Spielman that he had a room at the Army and Navy Club where he kept a safe and files for Stonehill. Chandler was later at the Club and asked about this room. The Club had no room for Otstott, but did have a room for Karl Beck, another Stonehill associate. Chandler remembered this when he went to Lukban's house the night before the raid. Chandler stated that on the night of the raid, when Lukban called him at ten p.m., Lukban told him not only that [w]e hit the jackpot, as Chandler testified, but that we hit the jackpot at the Army and Navy Club. In describing what happened on the night of the raid, Chandler provided more details than he would later provide in his testimony. When he, Ragland, and Reynolds went to the warehouse at Lukban's request to help the hapless NBI agents, in addition to helping to sort the documents, Chandler instructed the agents to seize some mislabeled cigarette paper Spielman had said would be important. Chandler became worried the NBI had missed a back room at the main U.S. Tobacco office. This room was in a sketch that Chandler had helped Spielman prepare. Chandler said that he went to the office and found that the NBI had indeed failed to search this room. Chandler pointed the room out to the NBI agent, but then left and did not know what was found in that room. Finally, Chandler discussed his work arranging for the storage of the seized documents. His friend, Colonel Seriano, who ran the San Miguel Brewery, had a lot of extra space. In part by emphasizing that Chandler was also interested in the matter, a redacted NBI official (likely Lukban) convinced Colonel Seriano to let them use the space.
A one-hundred-page government Memorandum of Fact and Law is dated March 4, 1966. Although it is not entirely clear who wrote this memorandum, it appears to come from the IRS Chief Counsel's office. The memorandum was prepared in anticipation of Taxpayers' motion to suppress, and it contains an analysis of Taxpayers' anticipated arguments. We will refer to it as the IRS Memorandum. The IRS Memorandum begins by discussing wiretapping activities. This section of the memorandum is quite heavily redacted, particularly the names of the individuals who worked on wiretapping in the Philippines. The memorandum describes a meeting with an official, whose name is redacted, who was a CIA employee in the Philippines during this time. From a later memorandum that the government did not redact, it seems clear that this official is CIA agent Joseph McGee. We will therefore refer to this redacted official as McGee. McGee stated that he did furnish[ ] technical advice and assistance to the N.B.I. in various investigative techniques, including telephone taps. In addition, U.S. equipment (including wiretap equipment) was made available to the N.B.I. McGee further stated, however, that he had no knowledge when the N.B.I. taps of Stonehill and his associates may have started. Furthermore, he stated he was never personally involved in tapping the wires of Stonehill or his associates, nor was he involved in giving direct advice or assistance with reference to tapping the wires of Stonehill or his associates. Even when it was pointed out to McGee that Hawley and Chandler had seen some of these wiretaps, McGee said he knew nothing about those transcripts and had never seen them. McGee further discussed someone in the NBI, whose name is redacted, as his main N.B.I. contact. This person's speciality was telephone taps. McGee also said that this person might have been paid money by the CIA, but he was not sure. The same memorandum reports Chandler as stating that he had a number of conversations with Nocon indicating that Nocon was a wiretap expert, suggesting that Nocon could have been McGee's contact. Chandler also stated that Nocon, at some earlier time, may have done some investigative work for a United States military service. However, at various points in the discussion of McGee's contact, Nocon's name is not redacted while the contact's name is, suggesting that McGee's contact may not have been Nocon. In discussing U.S. participation in the raid, the IRS Memorandum primarily focuses on Chandler's February 11-13 statements to McCarthy and Huckabee in Rome, the Diokno-Seigenthaler meeting in Hong Kong, events on the day of the raid, and the storage of documents after the raid. It describes Chandler's memorandum recounting Parson's comment that it was crucial for the United States to get Stonehill out of the Philippines. The IRS Memorandum describes Chandler's memorandum as a particularly sensitive area indicating an underlying interest and, in effect, participation on the part of the State Department. The IRS Memorandum concluded that there was significant participation by U.S. personnel in the raid: It appears that the activities of United States officials in preparation and planning for the raids and on the day of the raids were significant. These include [redacted, presumably McGee]'s activities in connection with the wiretapping; the planning meetings in Chandler's home; Chandler's assistance in drawing a sketch of locations to be raided; Chandler's action the night before the raid in requesting that a warrant be issued for the Army and Navy Club; the fact that on the night of the raid Chandler pointed out to the N.B.I. agent at the United States Tobacco Company warehouse the significance of the rolls of cigarette paper; and the fact that on the night of the raid Chandler pointed out to the N.B.I. agent at the United States Tobacco Company office the significance of the back room. These and other indications of cooperation and participation outlined above are sufficient so that our courts would probably evaluate this matter de novo. [3] One of the last sections of the IRS Memorandum describes post-raid developments in Philippine politics. The election of Ferdinand Marcos as President in 1965 began a wave of anti-American sentiment in the Philippines. This led to the removal of Lukban as NBI Director. The new Secretary of Justice, Jose Yulo, announced that working for the CIA would be considered treason. Yulo described the attempts by U.S. Treasury officers to take depositions of Philippine officials in the Stonehill case as an encroachment on our sovereignty. The anti-American sentiment of the new Marcos regime created serious problems for U.S. officials working on Taxpayers' case. IRS Agent Powers reported that Nocon had been fired along with Lukban, and that Nocon had been one of the best friends we have had in the Philippines over the past four years. As a result of Lukban and Nocon's firing, cooperation from the N.B.I. has been cut off. Lukban and Nocon told Powers that they thought that they were fired as a favor to Stonehill, who had given Marcos money earlier in his political career. The IRS Memorandum concludes that proceeding with the case against Taxpayers would be very difficult when faced with such opposition from the Philippines.
IRS Agent Powers sent a memorandum to lead attorney McCarthy on September 27, 1967, while the original district court decision was on appeal. The district court's order was entered on October 16, 1967, and we heard argument on December 9, 1968. This Powers Memorandum describes Powers's success in obtaining a copy of the full Picture Book, two pages of which had been introduced during the district court suppression hearing. Powers wrote: I have been furnished access to and allowed to reproduce the Picture Book of the buildings of the U.S. Tobacco Company by a confidant within the NBI. This picture folder ... was prepared before the raid to identify the buildings to be raided and, where possible, to show the location of the records to be taken in the raid. Each picture is numbered, 1 through 22. Also, there is a map drawn on very thin paper showing the streets and locations of each building by a number in a circle. I have added to this picture folder a copy of the handwritten notes of Robert L. Chandler which were introduced in court by the defense. These notes very definitely tie into the pictures and map by reference numbers. The pictures and map had holes punched through them and were fastened into the manila covering-folder by an ACCO fastener. The holes in Chandler's notes fit precisely with the holes punched in these pictures and folder. Before gaining access to this picture folder, I talked with Col. Lukban about the existence of a possible picture folder. He was certain that such a folder was prepared, but his recollection of it was very dim. He and Danny Nocon were of the opinion that Chandler's notes were prepared by him for the benefit of Col. Lukban. I have been told by our confidant that the handwritten notes on pictures Nos. 4, 5, 8, 9, 10, 12, 15, 16, and 20 were those of Col. Lukban. I questioned Col. Lukban and Danny Nocon with regard to Page No. 2 of Chandler's notes, which had been written on perforated paper. Col. Lukban stated he never used that type of paper in his office and furnished me with a sheet of a Don't Forget pad, which he always used in his office while Acting Director of the NBI ... I believe I have narrowed to one of four persons who furnished the defense with Chandler's notes and possibly a copy of the picture folder. It is believed that this person or persons are still employed by the NBI. We are hopeful their identity will be determined in the near future. Neither the full Picture Book, nor the information in the Powers Memorandum, was provided to this court or to Taxpayers, even though it was in the government's possession during the pendency of the appeal to us. Much of the information in the Powers Memorandum would not have been particularly important during the suppression hearing. The memorandum reveals that the handwritten notes on the pictures were written by Lukban, not Chandler. Thus, all of Chandler's handwritten instructions were before the district court. Powers's statement that the Picture Book was prepared before the raid to identify the buildings to be raided is not new information, as it was clear that Chandler's notes introduced at the hearing were prepared for the same purpose. The most troubling aspect of the Powers Memorandum is its statement that Lukban and Nocon were of the opinion that Chandler's notes were prepared by him for the benefit of Col. Lukban. Chandler testified at the suppression hearing that he made the notes to help Spielman. This was a key issue during the 1968 appeal. Judge Browning criticized the majority for concluding, with no basis in the record, that the Picture Book had inadvertently fallen into the hands of the NBI. If Lukban and Nocon were correct that Chandler prepared his notes for Lukban, as stated in the Powers Memorandum, it is clear that the NBI did not come into possession of the Picture Book inadvertently. The Powers Memorandum is also troubling in its suggestion of an attempt to discover who provided the two pages of the Picture Book to Taxpayers. Powers's statement that he is attempting to discover who furnished the defense with Chandler's notes, and his hope that the person's identity will be determined in the near future, suggests prior possession of the full Picture Book by the government, as well as a conscious attempt by the government to withhold the Picture Book from Taxpayers.
After our 2002 remand on Taxpayers' fraud-on-the-court claim, many documents (described above) were obtained by Taxpayers through their FOIA requests. While the district court had the case on remand, Stonehill filed a civil suit against Saunders' Estate in Hawaii state court, alleging that by informing against him Saunders had violated his duties of confidentiality and undivided loyalty, and had cost Stonehill millions of dollars. The state court jury concluded that Saunders had breached his duties of confidentiality and undivided loyalty, but awarded no damages. On July 14, 2010, the district court held that the government did not commit fraud on the court. Taxpayers timely appealed.
In general, we review denials of motions to vacate for abuse of discretion. Am. Games, Inc. v. Trade Prods., Inc., 142 F.3d 1164, 1166 (9th Cir.1998); Nat. Union Fire Ins. Co. v. Seafirst Corp., 891 F.2d 762, 765 (9th Cir.1989). Because Taxpayers argue that fraud was committed on this court as well as the district court, Taxpayers could have brought the motion to vacate directly in this court. See Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250 (1944), overruled on other grounds by Standard Oil v. United States, 429 U.S. 17, 97 S.Ct. 31, 50 L.Ed.2d 21 (1976); Leber-Krebs, Inc. v. Capitol Records, 779 F.2d 895, 899 (2d Cir.1985) (appellate court has the power to vacate its own judgment upon discovery that a fraud ha[s] been perpetrated upon it). Given that Taxpayers could have brought their motion in this court, Taxpayers argue that this court should review the district court's decision de novo. We need not decide whether abuse of discretion or de novo review is the proper standard because we conclude that under either standard Taxpayers have failed to carry their burden of proving fraud on the court. For purposes of the standard of review, we treat Taxpayers' Throckmorton claim as a motion to vacate, and we review the district court's decision for abuse of discretion. Am. Games, 142 F.3d at 1166.
Taxpayers argue that the district court's 1967 decision denying Taxpayers' suppression motion should be vacated for two reasons. First, they argue that the judgment should be vacated because the government committed fraud on both the district court and this court in defending against the suppression motion. Second, they argue that the government's use of William Saunders, Taxpayers' sometime attorney, as an informant is an independent basis for vacating the district court's 1967 decision under United States v. Throckmorton . We evaluate these arguments in turn.
Taxpayers' primary argument is that the judgment against them should be vacated because the government committed fraud on the court during the 1967 suppression hearing and during the subsequent appeal. We first discuss the legal standard for fraud on the court and then analyze Taxpayers' specific claims of fraud on the court.
Courts have inherent equity power to vacate judgments obtained by fraud. Chambers v. NASCO, Inc., 501 U.S. 32, 44, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991); In re Levander, 180 F.3d 1114, 1118-19 (9th Cir.1999). Rule 60(b), which governs relief from a judgment or order, provides no time limit on courts' power to set aside judgments based on a finding of fraud on the court. 11 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2870 (2d ed.1987). We exercise the power to vacate judgments for fraud on the court with restraint and discretion, Chambers, 501 U.S. at 44, 111 S.Ct. 2123, and only when the fraud is established by clear and convincing evidence, England v. Doyle, 281 F.2d 304, 310 (9th Cir.1960). Out of deference to the deep-rooted policy in favor of the repose of judgments entered during past terms, courts of equity have been cautious in exercising their power over such judgments. United States v. Throckmorton, 98 U.S. 61. But where the occasion has demanded, where enforcement of the judgment is manifestly unconscionable, Pickford v. Talbott, 225 U.S. 651, 657 [32 S.Ct. 687, 56 L.Ed. 1240 (1917)], they have wielded the power without hesitation. Hazel-Atlas Glass Co., 322 U.S. at 244-45, 64 S.Ct. 997. We have struggled to define the conduct that constitutes fraud on the court. Because the power to vacate for fraud on the court is so great, and so free from procedural limitations, 11 Wright & Miller § 2870, we have held that not all fraud is fraud on the court, Levander, 180 F.3d at 1119. The line between mere fraud and fraud on the court has been difficult to draw. [M]ost attempts to state it seem to us to be merely compilations of words that do not clarify. Toscano v. Comm'r, 441 F.2d 930, 933 (9th Cir.1971). Perhaps the principal contribution of all [the] attempts to define `fraud on the court' and to distinguish it from mere `fraud' is as a reminder that there is a distinction. 11 Wright & Miller § 2870. In determining whether fraud constitutes fraud on the court, the relevant inquiry is not whether fraudulent conduct prejudiced the opposing party, but whether it `harm[ed]' the integrity of the judicial process. Alexander v. Robertson, 882 F.2d 421, 424 (9th Cir.1989). Fraud on the court involves far more than an injury to a single litigant. Hazel-Atlas, 322 U.S. at 246, 64 S.Ct. 997. [T]he inquiry as to whether a judgment should be set aside for fraud upon the court under Rule 60(b) focuses not so much in terms of whether the alleged fraud prejudiced the opposing party but more in terms of whether the alleged fraud harms the integrity of the judicial process.... In re Intermagnetics America, Inc., 926 F.2d 912, 917 (9th Cir.1991). A fraud connected with the presentation of a case to a court is not necessarily a fraud on the court. 11 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2870 (2d ed.1987). Fraud on the court should, we believe, embrace only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. In re Intermagnetics America, Inc., 926 F.2d 912, 916 (9th Cir.1991) (quoting 7 J. Moore & J. Lucas, Moore's Federal Practice ¶ 60.33, at 515 (2d ed.1978)). Mere nondisclosure of evidence is typically not enough to constitute fraud on the court, and perjury by a party or witness, by itself, is not normally fraud on the court. Levander, 180 F.3d at 1119. Some courts and commentators have suggested that perjury should not usually constitute fraud on the court unless an attorney or other officer of the court was a party to it. 11 Wright & Miller § 2870. Most fraud on the court cases involve a scheme by one party to hide a key fact from the court and the opposing party. For example, in Levander a corporate officer testified in a deposition that the corporation had not sold its assets, and a bankruptcy court subsequently entered a judgment against only the corporation. Levander, 180 F.3d at 1116-17. It turned out that the corporation had in fact transferred all of its assets to a related partnership. Id. We held that the false testimony constituted fraud on the court, and the bankruptcy court was allowed to amend its order to include the partnership as an additional party to the judgment. Id. at 1122-23. A similar example is Pumphrey, in which Melvin Sparks was killed when he dropped a handgun made by K.W. Thompson Tool Company (Thompson). The gun fired, shooting him through the heart. Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128, 1130 (9th Cir.1995). The plaintiffs, Sparks's widow and children, alleged that the gun's safety devices had been engaged at the time of the accident but had failed to work. Id. At trial, Thompson introduced a video showing tests in which a gun had been dropped from various heights with the safety devices activated. Id. The gun never fired in the video, and Thompson represented that it was not aware of any safety tests in which the gun did fire. Id. After judgment had been entered in favor of Thompson, however, plaintiffs learned that in some tests the gun had fired, and that the Thompson officials had known this at the time of their earlier representations to the contrary. Id. at 1131-32. The district court vacated the original judgment for fraud on the court, and we affirmed. Id. at 1134. In order to show fraud on the court, Taxpayers must demonstrate, by clear and convincing evidence, an effort by the government to prevent the judicial process from functioning in the usual manner. They must show more than perjury or nondisclosure of evidence, unless that perjury or nondisclosure was so fundamental that it undermined the workings of the adversary process itself.
The central issue, indeed almost the only issue, during the 1967 suppression hearing was the extent of U.S. involvement in the NBI raid on Taxpayers' businesses. Taxpayers sought to prove that the U.S. involvement was so great that the silver platter doctrine did not apply, with the result that the seized documents should have been suppressed. See Brulay v. United States, 383 F.2d 345, 347-48 (9th Cir. 1967). Taxpayers contend that the government committed fraud on the court in misrepresenting the extent of U.S. involvement. We discuss Taxpayers' arguments in decreasing order of persuasiveness.
Taxpayers' strongest arguments concern the government's failure to disclose the full Picture Book and the information it obtained through the Powers Memorandum. As we discuss above, after the district court's 1967 decision but before oral argument on appeal, IRS Agent Powers sent a memorandum from Manila to McCarthy, the government's lead attorney at trial and on appeal. Powers told McCarthy that he had a copy of the full Picture Book, and that it had been prepared before the raid to identify the buildings to be raided and, where possible, to show the location of the records to be taken in the raid. Powers clarified that Chandler's notes, which Taxpayers had introduced at the district court, very definitely tie into the pictures and map by reference numbers. Powers also reported that Lukban and Nocon told him that Chandler's notes were prepared by him for the benefit of Col. Lukban. Despite receiving the Powers Memorandum before oral argument, McCarthy never informed Taxpayers, or us, that the government had a copy of the full Picture Book. Nor did he inform Taxpayers that he now knew, based on the Powers Memorandum, that both Lukban and Nocon were of the opinion that Chandler had written his notes in the Picture Book for the benefit of Col. Lukban. In describing the two parts of the Picture Book then in the record (i.e. the parts introduced by Taxpayers before the district court), McCarthy had filed an appellate brief describing Chandler's testimony that he did not give these or like papers to anyone other than the informer Spielman, and that he did not remember giving the exhibits to Colonel Lukban, the NBI, or Secretary Diokno. McCarthy wrote in the brief that [t]here is absolutely no evidence in the record that these two exhibits were ever in the possession of the NBI other than the hearsay suggestion made by counsel for the appellants in his examination. Finally, McCarthy wrote, By no stretch of the imagination can these two exhibits be characterized as instructions or directions by Mr. Chandler to the NBI or to anyone else. In light of the Powers Memorandum and the complete Picture Book that we now know were in the government's possession, we conclude that McCarthy was not entirely forthright in his representations to this court. He accurately described Chandler's testimony before the district court, and accurately described the state of the record in that court. McCarthy's statement that Chandler had not given the notes directly to Lukban was supported by what Chandler had told McCarthy in Rome. But McCarthy's statement that there was absolutely no evidence in the record that these two exhibits were ever in the possession of the NBI, when he had recently received a memorandum stating that those very exhibits were prepared before the raid to identify the buildings to be raided and ... to show the location of the records to be taken, and his statement that the exhibits cannot be characterized as instructions or directions by Mr. Chandler to the NBI, were not forthright. They concealed, rather than revealed, the true state of affairs known to the government. Nevertheless, we conclude that McCarthy's failure to produce the full Picture Book, as well as his misleading statements, had limited effect on the district court's decision. First, neither the full Picture Book, nor the information contained in the Powers Memorandum, would have significantly changed the information available to the district court. The portion of the Picture Book not before the district court consisted of the photographs to which Chandler's notes correspond and the instructions written on those photographs. Although Taxpayers rely heavily on the instructions written directly on the photographs, the Powers Memorandum states that those instructions were written by Lukban, not Chandler. Second, all of McCarthy's representations to which Taxpayers take exception are contained in the section of the government's brief responding to Taxpayers' argument that the parts of the Picture Book introduced in the 1967 suppression hearing are instructions by Mr. Chandler to the NBI as to how to conduct the raids. The government responded to this argument by writing: Mr. Chandler freely admitted that most of the handwriting on these two exhibits was his, but that some of the handwriting ... appeared to be that of others and that the diagram part was not his because he had never been to the buildings drawn thereon. He stated that he did not remember drafting these specific exhibits but that he did make such notes and drawings when interviewing the informer Spielman and he drafted such things at Spielman's request for the purpose of reducing Spielman's story to paper. Mr. Chandler stated that the language in these two exhibits was Spielman's language and that all the information on these exhibits came from the informer Spielman and that he never had been to or made any personal investigation of the described premises himself. Further, Mr. Chandler explained that he did not give these or like papers to anyone other than the informer Spielman and that he did not remember giving the exhibits to Colonel Lukban, the NBI, or Secretary Diokno.... There is absolutely no evidence in the record that these two exhibits were ever in the possession of the NBI other than the hearsay suggestion made by counsel for the appellants in his examination. By no stretch of the imagination can these two exhibits be characterized as instructions or directions by Mr. Chandler to the NBI or to anyone else. The only logical explanation for [the exhibit] is that it contains responses or answers from a person being interviewed. Taxpayers are correct that the Powers Memorandum makes clear, contrary to the last sentence of the first quoted paragraph, that the Picture Book exhibits were in the possession of the NBI. The Powers Memorandum also suggests that Chandler wrote his notes intending that they be given to the NBI. Taxpayers are also correct that the question of whether Chandler's notes were intentionally provided to the NBI was discussed both in the district court opinion and in our original opinion. See Stonehill I, 274 F.Supp. at 422 (noting that Chandler's notes came into possession of the [NBI]); Stonehill II, 405 F.2d at 741 (noting that Chandler's notes inadvertently fell into the hands of the NBI); id. at 753 (Browning, J., dissenting) (The majority finds that [Chandler's notes] `inadvertently fell into the hands of the NBI'...; the district court found only that these documents `thereafter came into the possession of' the NBI.). The primary focus of the government's argument in its brief, however, and the focus of our majority opinion in 1968, was not on whether Chandler intended that the notes be transmitted to the NBI. Rather, the focus was on whether the notes were instructions from Chandler, or were simply Spielman's information as recorded by Chandler. In recounting the facts, the majority concluded, incorrectly, that Chandler's notes inadvertently fell into the hands of the NBI. The majority wrote, further: When the United States agents made Spielman's information available to the Philippine authorities, they were not requesting any action whatsoever. Stonehill II, 405 F.2d at 746. But the primary focus in both courts was on whether Chandler was conveying Spielman's information or was conveying his own instructions. Nothing in either the full Picture Book or the Powers Memorandum suggests that Chandler was conveying his own information and instructions. Indeed, Chandler's statements to McCarthy and Huckabee in Rome suggest that he was conveying Spielman's information and instructions, as he testified at the suppression hearing.
The documents uncovered by Taxpayers through their FOIA requests demonstrate that Hawley lied in his deposition about his knowledge of the raid. In his deposition, Hawley testified that no one told him that the raid would be postponed to March 3 from its originally scheduled date of February 24. He also testified that he was not informed in advance that the raid would be carried out on March 3, and that he found out that the raid had been carried out only when he read about it in the paper the next morning. He concocted a story about how he was sure that he had not known about the rescheduling to March 3 because of a party he had hosted on March 4. The documents uncovered through FOIA show that Hawley sent a memorandum to Hoover on February 23 informing him that the raid had been postponed. He sent another memorandum to Hoover on March 2 informing him that the raid had been rescheduled for March 3. However, perjury by a witness does not necessarily constitute fraud on the court. Levander, 180 F.3d at 1119. Even under the facts revealed by the FOIA documents, Hawley's involvement in the raid was much less substantial than Chandler's. Hawley's role was largely that of an interested observer, relaying information to Washington. It was Chandler's much more active participation in the lead-up to the raid, and in the raid itself, that posed the largest problem for the government in defending against the motion to suppress. Hawley's lie concerning what he knew, and when he knew it, likely did not affect the outcome of the case.
Taxpayers claim that Lukban and Nocon were working for the CIA, and that their activity in connection with the raid should therefore be considered the activity of U.S. agents. Taxpayers argue that the United States committed fraud on the court by intentionally concealing Lukban and Nocon's ties to the CIA. There is evidence in the documents recently obtained by Taxpayers that Nocon worked with the CIA, especially in connection with wiretapping activities. However, there is little evidence that Lukban worked with the CIA. In attempting to show Nocon and Lukban's CIA ties, Taxpayers rely primarily on CIA redactions in the documents released through FOIA. In documents in which the CIA redacted names and information for national security reasons, based on a stated desire to prevent the identification of individual human sources, and not to reveal[ ] a CIA intelligence relationship with a foreign intelligence service, it appears that Lukban and Nocon's names were redacted. There is some direct evidence to suggest that Nocon worked on wiretapping with CIA agent Joseph McGee. The IRS Memorandum recounted McGee's involvement in training and aiding the NBI with wiretapping activities. McGee also told the IRS that his primary NBI contact, whose name is consistently redacted, was a specialist in telephone taps. McGee mentioned that this person may have been paid money by the CIA. Taxpayers point out that in his February interview in Rome, Chandler told McCarthy and Huckabee that Nocon had told him that he was a wiretap expert. Taxpayers also point to Chandler's statement to McCarthy and Huckabee that Nocon seemed to be a very good friend of [redacted]. In fact, on a number of occasions when Nocon visited Chandler's house to play the tape recordings [of Stonehill from the NBI wiretaps], Nocon would comment that he had either just come from or was going to [redacted]'s house. This raised the question in Chandler's mind as to the extent that [redacted] may have been involved in advising or assisting Nocon in connection with wiretaps of Stonehill and Brooks. However, Chandler does not have any actual knowledge as to what extent, if any, [redacted] was involved in such wiretaps. Taxpayers assert that the redacted name is McGee's. If this is true, it indicates that McGee was helping Nocon with the NBI wiretaps of Taxpayers. For two reasons, we conclude that there is not clear and convincing evidence Nocon and Lukban were CIA agents such that their action should be attributed to the United States. First, Taxpayers' evidence is too conjectural to satisfy the clear and convincing standard. Second, even assuming the redactions are as Taxpayers contend, these documents at most prove that Nocon, and perhaps Lukban, had some relationship with the CIA regarding wiretap training. However, the fact that Lukban and Nocon at some point worked with the CIA does not make everything they did the action of the U.S. government for purposes of a suppression motion. None of the evidence Taxpayers highlight suggests that McGee or any other member of the CIA was directing Lukban and Nocon in their investigation and raid. In fact, there is evidence in the record indicating that McGee was not directly involved in the Stonehill wiretaps. The IRS Memorandum reported that McGee stated that he did not know when the wiretaps of Stonehill began, and that he was not involved in giving advice or assistance for such wiretapping.
As discussed above, Taxpayers submitted a 1970 affidavit from Damaso Nocon as part of their 1971 renewed motion to suppress. Nocon's affidavit suggested that the United States had been much more involved in the raid than any U.S. official had admitted. The district court found Nocon's affidavit and his later testimony not credible. Stonehill III, 420 F.Supp. at 52. Taxpayers contend that in his attempt to impeach Nocon, McCarthy made false statements to the district court. First, Taxpayers argue that McCarthy misrepresented the facts when he sought to discredit Nocon's claim that his principal function with the NBI was to maintain liaison with foreign governments and police agencies, including their local representatives. In the government's brief to the district court in response to Taxpayers' renewed motion to suppress in 1976, McCarthy represented that Nocon's assignments did not include liaison with foreign governments and police agencies. McCarthy relied on Lukban's affidavit, in which Lukban had written that Nocon had no official duties or an official position which called for him to maintain liaison with foreign governments and police agencies. Taxpayers argue that the documents they uncovered through FOIA demonstrate that Nocon's assignments did include liaison with foreign governments. A 1966 memorandum from the IRS representative in Manila (Chandler's successor) to OIO stated that Nocon was well known to me and every U.S. law enforcement agency in the Philippines, and described him as perhaps the best informed person in the Philippines as far as the Stonehill case and any other matters of interest to us are concerned. Further, a February 16, 1962, memorandum to the U.S. Embassy in Tokyo from someone named Stevenson, copying Chandler, had informed the Tokyo Embassy that it would soon be contacted by Nocon, and that the [s]uccess of Nocon mission [is] extremely important to Treasury. Please extend all possible cooperation. Taxpayers exaggerate the breadth of McCarthy's statement. At issue on the renewed motion to suppress was Nocon's statement in his affidavit that his principal function was to liaise with foreign governments. It was in response to this claim that Lukban wrote that Nocon had no official duties or an official position which called for him to maintain liaison with foreign governments and police agencies. It was obvious from Hawley and Chandler's testimony that they had significant interaction with Nocon. Lukban's statement in his affidavit, and McCarthy's repetition of that statement in the government's brief, were simply countering the argument that Nocon's principal function was to maintain liaisons with foreign governments. Taxpayers misrepresent the contents of the February 16 memorandum about the Nocon mission, suggesting that it states that Nocon had been sent to Tokyo by the CIA. On the contrary, a memorandum from Hawley to Hoover, also sent on February 16, makes clear that Nocon was sent to Tokyo by Lukban. After the fire that destroyed the plant and warehouse of Philippine Tobacco, Brooks left for Japan and his whereabouts were unknown. Hawley wrote, Lukban believes must take early action and has dispatched Agent Damaso Nocon to Japan on... Brooks investigation and requests cooperation with Legat Tokyo. It is not surprising that the United States was willing to extend cooperation to the NBI, especially given that the IRS was already considering a tax case against Stonehill and Brooks based on Spielman's information. However, it is clear that Nocon was acting for Lukban, rather than the CIA. Second, Taxpayers argue that McCarthy misrepresented Nocon's duties regarding wiretapping. Lukban wrote in his affidavit that Mr. Nocon never made a telephone tap for the NBI as he says in his affidavit, although he may well have made some typewritten transcripts from records. In one of the government's briefs, McCarthy quoted Lukban's testimony that Nocon never tappedhe typed. Taxpayers note that Chandler reported to McCarthy and Huckabee, during his interview in Rome, that he thought Nocon was a wiretap expert. The IRS Memorandum presumes that Nocon was tapping the wires of Stonehill and his associates and making the information available to Chandler, Hawley, et al. It is also possible, inferring from certain redactions, that McGee said Nocon's specialty was telephone tap[s]. The documents now available suggest that Lukban was lying when he said that Nocon had never made a telephone tap. However, even if this is so, none of McCarthy's representations in the government's brief constitutes fraud on the court. McCarthy was not compelled to believe Nocon and to disbelieve Lukban. Further, McCarthy never represented that Nocon had never placed a wiretap. Lukban's statement that Nocon never made a telephone tap for the NBI was not reproduced in the government's brief. Lukban's testimony that Nocon never tappedhe typed was included in the government's brief as part of a three-page block quote from Lukban's testimony and was never specifically singled out. This testimony was not used to rebut Taxpayers' argument that Nocon at times made telephone taps, but rather to rebut Taxpayers' much more specific argument that Hawley instructed Nocon to conduct wiretaps of Stonehill in 1960. There is nothing to suggest that the government incorrectly accused Nocon of lying when he wrote that Hawley instructed him to make taps.
Taxpayers argue that McCarthy lied in describing the extent of American officials' access to the seized documents. In his 1967 affidavit in the district court, McCarthy stated that this Government has never been able to examine all of the records in the possession of the Philippine Government and select those it wished to copy; rather this Government copied those records which the Philippine Government selected and chose to allow to be copied. McCarthy later represented to the court, I believe there is some limitation on[Government access to seized documents]. Our people had to ask for specific documents. They did not just have free access to every room. They would say, `We believe there are such and such records on such and such a company from what we have seen. Can you find that.' McCarthy's statements were not inconsistent with the evidence. As we previously discussed, the FOIA memoranda that discuss the extent of U.S. access to documents are somewhat inconsistent. On the one hand, Hawley reported to Hoover that Lukban was providing copies of all documents found, Powers reported splendid cooperation from the NBI in accessing documents, and Chandler later reported that, after he had helped the NBI acquire space for the documents, the documents were fully available. On the other hand, Ragland's memorandum from October 1962 stated that the U.S. agents had never actually had unlimited access to the records.
Taxpayers contend that in his 1967 brief in the district court McCarthy lied about Chandler's activities on the day of the raid. McCarthy wrote that after being called to Lukban's office on the night of the raid, and then following the hapless NBI agent to help sort documents, Chandler followed this Agent from the warehouse to the [U.S. Tobacco] main office and there had given some advice to the NBI agent. Taxpayers note that McCarthy's suggestion that Chandler was merely following the agent is incorrect, as Chandler chose to go to the main office on his own initiative. However, to the extent that McCarthy may have been suggesting that Chandler was merely following the agent, he was more likely making a mistake rather than a willful misrepresentation. Chandler's clear testimony during the suppression hearing had been that he had gone to the U.S. Tobacco main office on his own initiative.
Taxpayers contend that the FOIA documents concerning the Diokno-Seigenthaler meeting show that the United States responded to the meeting by assigning IRS Agent Powers to Manila. It is true that the memorandum assigning Sterling Powers to Manila was written on February 13, 1962, only two days after the Diokno-Seigenthaler meeting at which Diokno requested U.S. coordination. However, according to the February 12, 1962, foreign service memorandum concerning this meeting, Diokno requested from Seigenthaler only that he send two tobacco experts and that he coordinate U.S. raids in New York with his raids. Taxpayers do not contest the fact that neither of these requests was fulfilled. There is nothing to suggest that Diokno requested that more IRS agents be sent to Manila. Furthermore, Chandler had been requesting additional agents to work on Taxpayers' case for some time. The decision to send additional IRS agents to Manila was most likely a recognition that, in light of Spielman's information, the time had come to honor Chandler's longstanding request for help on the Stonehill investigation. Further, as we discussed above, the foreign service memorandum describing the Diokno-Seigenthaler meeting was in any event summarized with all key details and submitted to the district court as part of the 1967 suppression hearing, thereby putting all of the basic facts about the meeting before that court.
Taking into consideration all of Taxpayers' contentions, we conclude that the government did not commit fraud on the court. First, in nearly all fraud-on-the-court cases, the misrepresentations went to the central issue in the case. For example, in Levander and Pumphrey we vacated for fraud on the court when the litigants intentionally misrepresented facts that were critical to the outcome of the case, showing the appropriate deference to the deep rooted policy in favor of the repose of judgments. Hazel-Atlas Glass Co., 322 U.S. at 244-45, 64 S.Ct. 997. In this case, the government's misrepresentations were relatively few and were largely tangential to the fundamental question of U.S. participation. Even the full Picture Book and Powers Memorandum do not significantly change the story as presented to the district court. The similarity between the summary in the internal IRS Memorandum of the evidence supporting suppression of the seized documents and the summary of such evidence in Judge Browning's 1968 dissent best demonstrates the nature of the new evidence Taxpayers have uncovered. The IRS wrote: It appears that the activities of United States officials in preparation and planning for the raids and on the day of the raids were significant. These include [redacted, presumably McGee]'s activities in connection with the wiretapping; the planning meetings in Chandler's home; Chandler's assistance in drawing a sketch of locations to be raided; Chandler's action the night before the raid in requesting that a warrant be issued for the Army and Navy Club; the fact that on the night of the raid Chandler pointed out to the N.B.I. agent at the United States Tobacco Company warehouse the significance of the rolls of cigarette paper; and the fact that on the night of the raid Chandler pointed out to the N.B.I. agent at the United States Tobacco Company office the significance of the back room.