Opinion ID: 402152
Heading Depth: 1
Heading Rank: 3

Heading: Phillips' Remaining Issues.

Text: 95 We now examine Phillips' claim that he is entitled to a new trial because of prejudicial trial error. We discuss only those alleged errors which he asserts affected his convictions under counts three through six. Phillips urges (1) it was reversible error for the trial court to refuse to grant him more than $10,000 plus $1,000 expenses in order to obtain the assistance of a business consultant; (2) counts five and six were misjoined with counts one through four or, in the alternative, that said joinder was prejudicial; (3) he was prejudiced by joinder with defendant Burks; (4) the prosecution illegally obtained and introduced as evidence certain taxpayer return information; (5) several of his statements which the Government possessed were not initially disclosed; (6) the prosecution initially failed to disclose other evidence in violation of the Jencks Act and the Brady rule; (7) the trial judge erred in various evidentiary rulings; and (8) several statements in the prosecutor's closing argument constituted prosecutorial misconduct. 96 We find first that many of these issues involve rulings which fall within the discretion of the trial judge. Second, we note that even if error was committed, this court must evaluate this type of error in the context of the complete evidentiary record supporting the Government's case. We have reviewed the large record, almost 200 volumes of trial transcript, in order to evaluate the prejudicial impact of the trial court's rulings. In this case, Phillips was proven guilty of security fraud in complicity with the other defendants under counts three and four as well as in the separate sale of Progressive Investors' securities under counts five and six by overwhelming evidence. 97 This court still adheres to the practical wisdom offered by a former Chief Judge of the court, Judge Harvey Johnsen, in Homan v. United States, 279 F.2d 767, 771 (8th Cir.), cert. denied, 364 U.S. 866, 81 S.Ct. 110, 5 L.Ed.2d 88 (1960). He observed: 98 Errors of the trial court which may be prejudicial in a close criminal case, in the sense of being capable in such a situation of possibly affecting the result, can well be without any such rational possibility in a strong case, and thus not entitle the defendant to a reversal of his conviction. The reviewing court must, of course, be able to say with fair assurance that the errors complained of could not, with natural operation in the total setting and proceedings had, be regarded as having possessed any influencing effect. 99 In reviewing the record in light of Judge Johnsen's comments, we fail to find prejudice in any of the trial court's rulings such that they could, in the midst of all the evidence against Phillips, reasonably be considered to have wrongfully influenced the jury's verdict. Phillips formed PI and actively engaged in the fraudulent sales of its securities. He also formed PFA and designed the fraudulent schemes which were perpetrated through it. There was little or no evidence refuting the overwhelming evidence of his guilt. 100 We recognize that even overwhelming evidence of guilt does not obviate the state's obligation to afford a defendant a fair trial. On this basis, we briefly discuss Phillips' primary contentions. 101
102 Phillips submitted three proposals from business consulting firms requesting between $145,000 and $45,000 which were rejected by Judge Urbom. The judge authorized Phillips to engage expert assistance at a maximum fee of $10,000 plus $1,000 in expenses. 103 The granting and denial of funds under 18 U.S.C. § 3006A(e) is dependent on factual findings and evaluative judgment and thus must be committed to the discretion of the trial court. Denial or limitation of funds is not grounds for reversal absent a showing of prejudice. United States v. Eagle, 586 F.2d 1193, 1197 (8th Cir. 1978). 104 Phillips argues that he would have obtained a benefit only in his defense under counts three and four. The business consultant would have analyzed PFA and thus would not have assisted in Phillips' defense against the charges of securities fraud in the sale of PI securities contained in counts five and six. 105 Phillips did not demonstrate to the trial court that he could not conduct and present analysis of PFA's business and bank records and obtain testimony concerning standard accounting procedures. He was only prevented from securing the assistance of an expert to evaluate the entire business. We fail to see any abuse of the trial court's discretion. 106
107 Phillips argues that counts five and six were misjoined with counts one through four under Fed.R.Crim.P. 8(a) and that the joinder was prejudicial. 108 Phillips urges several factual differences between the allegations in the two sets of counts. We conclude there was enough similarity between these counts to sustain the joinder under rule 8(a). The modus operandi of the two sets of offenses need not be identical for them to be of the same or similar character. 109 Phillips also alleges prejudice resulted from the trial court's refusal to sever these counts during trial. See Fed.R.Crim.P. 14. First, he argues that the complexity of the case and the number of counts-considering the incorporation of original counts three through one hundred and sixty-one into count two-imposed a prejudicial emotional and financial burden on him. However, he fails to suggest a single prejudicial effect of this burden. 110 Phillips also urges that the jury could not separate the evidence pertaining to the various counts. Phillips suggests that evidence admitted only to show his guilt on certain counts spilled over in the minds of the jury and was used against him under other counts. However, as this court stated in United States v. Bowman, 602 F.2d 160, 163 (8th Cir. 1979), when conviction of the offense described in a joined count would be admissible to show an element of the other offense-in this case, fraudulent intent- 'criminal propensity' prejudice is in no way enlarged by joinder. We cannot overturn a refusal to sever simply because evidence against a defendant on one count is stronger than evidence against him on other joined counts. Cf. United States v. Jackson, 549 F.2d 517, 525 (8th Cir.), cert. denied, 430 U.S. 985, 97 S.Ct. 1682, 52 L.Ed.2d 379, 431 U.S. 923, 97 S.Ct. 2195, 53 L.Ed.2d 236, 431 U.S. 968, 97 S.Ct. 2928, 53 L.Ed.2d 1064 (1977). But even if Phillips could show jury confusion, he could not prove that he was prejudiced thereby because the evidence against him on each count was overwhelming. 111
112 Phillips asserts that Judge Urbom erred when he failed to sever defendant Donald Burks because his counsel, Richard Anderson, was the nephew of the Government's principal witness, coconspirator Gibson. Several defendants moved to sever Burks before trial and during the early stages of the trial. Before trial, an evidentiary hearing on the issue was held and Judge Urbom decided not to sever Burks. Burks was eventually severed after an incident in the seventh month of trial which resulted in Anderson being called as a witness. Phillips cites this incident and Anderson's in-chambers testimony that Phillips had threatened various witnesses, including Gibson, and that Phillips' attorney had acted improperly as evidence of Anderson's hostility to Phillips. Phillips argues that Anderson obstructed his examination of Gibson and that Anderson's assumption of the witness role prejudiced his defense. 113 A trial court's decision not to sever defendants under rule 14 is a discretionary ruling and will not be considered reversible error unless defendant demonstrates actual prejudice. Review of the transcript of Phillips' counsel's cross-examination and recross-examination of Gibson reveals that Anderson's objections were primarily based on hearsay grounds. Several of these objections were sustained and the remainder were promptly overruled. Phillips does not reveal how the interjection of these objections prejudiced his defense. 114 Phillips offered no evidence and we find it unlikely that the credibility of his counsel was adversely affected by Anderson's assumption of the witness role. Again, even if any of these events had some negative impact, Phillips was not prejudiced thereby because of the overwhelming evidence of his guilt. 115
116 The Government obtained and utilized certain information from the IRS file on Phillips. Phillips asserts that the prosecution acquired this material in violation of 26 U.S.C. § 6103(i)(1) because it did not obtain authorization from the proper official for its ex parte application to obtain the records. Section 6103(i)(1)(B) provides: 117 The head of any Federal agency described in subparagraph (A) or, in the case of the Department of Justice, the Attorney General, the Deputy Attorney General, or an Assistant Attorney General, may authorize an application to a Federal district court judge for the order referred to in subparagraph (A). 118 In this case, the application was approved by John C. Keeney, a Deputy Assistant Attorney General. At the time he authorized the application, however, Keeney had been designated an Acting Assistant Attorney General pursuant to 28 C.F.R. § 0.132(e). This provision governs Department of Justice offices and states: 119 The head of each organizational unit of the Department is authorized, in case of absence from office or disability, to designate the ranking deputy (or an equivalent official) in the unit who is available to act as head. If there is no deputy available to act, any other official in such unit may be so designated. 120 We agree with Phillips' statement that section 6103 was intended to sharply restrict discretionary access to people's income tax returns and return information. But the facts of this case do not contradict that intent. Section 0.132(e) provides for the designation of an Acting Assistant Attorney General who assumes all the powers of an Assistant Attorney General. This includes the powers conferred through section 6103. The limiting effect of section 6103 is not mitigated because the acting official only assumes the powers of the designated official when the designated official is absent or disabled. We find that the procedures detailed in section 6103 were followed. 121
122 Eight months prior to trial, Phillips moved for production of all relevant statements made by him which the Government possessed. The Government represented that it had disclosed all such statements. However, during the sixth month of trial, the Government disclosed a statement by Phillips taken by an IRS agent. The prosecution then assured defense counsel that no other such statements existed. One month later, the prosecution produced tape recordings of telephone conversations between IRS agents and Phillips and others. Phillips then moved for a mistrial. The motion was denied. 123 Phillips does not allege that the Government withheld these statements in bad faith nor does he indicate if or how the Government used these statements or how he was prejudiced by their delayed disclosure. Failure to comply with Fed.R.Crim.P. 16(a)(1)(A) or a pretrial disclosure agreement is not grounds for reversal unless it prejudiced the substantial rights of the defendant. United States v. Glaze, 643 F.2d 549, 552 (8th Cir. 1981) (rule 16); United States v. Krohn, 558 F.2d 390, 394 (8th Cir.), cert. denied, 434 U.S. 868, 98 S.Ct. 207, 54 L.Ed.2d 145 (1977) (failure to disclose names of witnesses as agreed in omnibus hearing). Absent even an allegation of prejudice, the delayed disclosure of Phillips' statements is not ground for reversal. 124
125 Phillips argues the Government's belated disclosure of a telephone conversation involving Gibson and an affidavit sworn to by Gibson which was taken by an IRS special agent violated the Jencks Act, 18 U.S.C. § 3500, and the rule articulated in Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963) and United States v. Agurs, 427 U.S. 97, 96 S.Ct. 2392, 49 L.Ed.2d 342 (1976). The Government's belated disclosure of this evidence is grounds for reversal only if earlier disclosure might have enabled a defendant to create a reasonable doubt that did not otherwise exist. Keating v. Missouri, 643 F.2d 1315, 1319 (8th Cir. 1981) (under Brady and Agurs line); Scurr v. Niccum, 620 F.2d 186, 189 (8th Cir. 1980) (same); United States v. Glaze, 643 F.2d 549, 552 (8th Cir. 1981) (under Jencks Act); Kane v. United States, 431 F.2d 172, 175 (8th Cir. 1970) (same). 126 Neither of the statements at issue were wholly withheld from Phillips, only delayed disclosure is involved. Phillips was given an opportunity to utilize both statements to impeach Gibson's testimony. Neither statement was extraordinarily damaging as impeachment. Even without using these statements, Gibson's testimony was seriously impeached. Cf. Keating v. Missouri, 643 F.2d 1315, 1319 (8th Cir. 1981) (adequate impeachment despite nondisclosure of bargain which induced testimony). During cross-examination and when he was recalled as a witness, Gibson was repeatedly impeached using prior inconsistent statements; the existence of the immunity agreement which secured his cooperation with the government; the criminal tax investigation of him and recommendations of prosecution; his dislike of Phillips; his false testimony before the SEC; his nolo contendere plea to a charge in Arkansas; and several prior bad acts. In addition, Phillips introduced a large quantity of extrinsic evidence tending to impair Gibson's credibility. We conclude that belated disclosure of these statements did not prejudice Phillips' defense. 127
128 The trial judge's rulings on admission of evidence and scope of cross- examination were well within his scope of discretion. Similarly, the court's ruling on the allegation of prosecutorial misconduct was proper. Even if these rulings constituted an abuse of discretion, the evidence of Phillips' guilt on counts three through six was so overwhelming that no prejudice could have resulted therefrom. 129 Conclusion. 130 We affirm the convictions of Phillips under counts three, four, five, and six. Since we vacate his convictions on counts one and two, we deem it proper that Phillips be resentenced as to each of the counts for which we have affirmed his conviction. 131 The convictions of Bledsoe and Cloninger on counts three and four are vacated since we find they were misjoined with the separate counts five and six relating to Phillips only. These counts, as against Bledsoe and Cloninger, are remanded to the district court for a new trial. The convictions of all of the defendants on counts one and two are ordered vacated and dismissed. 132 The cause is remanded for further proceedings before the trial court in accord with this court's direction. 133