Opinion
Case No. 12-cr-00480-YGR-1
01-19-2016
UNITED STATES OF AMERICA, Plaintiff, v. BURTON O. BENSON, Defendant.
ORDER ADOPTING IN PART MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION
Re: Dkt. No. 474
INTRODUCTION
The government filed the initial indictment in this action on June 21, 2012. (Dkt. No. 1.) The second superseding indictment accuses defendant Burton Benson of wire fraud, theft from an employee pension benefit plan, and money laundering, among other counts. (Dkt. No. 98.)
On June 4, 2014, the defendant filed a motion for a competency examination and hearing. (Dkt. No. 137.) The critical question presented was whether Benson was competent to assist counsel in preparing his defense by, for instance, recalling his state of mind in connection with the accused conduct. During a court-ordered competency examination, the defendant answered certain questions relating to the indictment posed by the court-appointed examiner, Dr. Abraham Nievod. Dr. Nievod prepared a report which included a summary of the defendant's statements. The report was submitted to the defendant, the government, and the Court.
Although the defendant failed to invoke the Fifth Amendment prior to submitting to his interviews with Dr. Nievod, the Court subsequently held that the statements were compelled and therefore entitled to use and derivative use immunity. United States v. Benson, No. 12-CR-00480, 2015 WL 1064738, at *4 (N.D. Cal. Mar. 11, 2015) ("The government will be ordered to a Kastigar hearing to show, if necessary, that any evidence it introduces at trial is 'wholly independent' of those statements.").
Following a nine-day evidentiary hearing on competency, the Court found that "Benson was likely malingering for purposes of 'secondary gain'—specifically, to avoid trial." United States v. Benson, No. 12-CR-00480-YGR-1, 2015 WL 1869476, at *2 (N.D. Cal. Apr. 22, 2015) (concluding that "the narrative of Benson's purported incompetence was a carefully crafted house of cards, stacked by Benson himself with foresight and precision, but which entirely collapsed during the course of the competency hearing").
On October 1, 2015, shortly before the then-scheduled start of trial, the defendant moved for a Kastigar hearing. (Dkt. No. 404.) The undersigned referred the Kastigar matter to Magistrate Judge Nathanael Cousins for a report and recommendation thereon. (Dkt. No. 405.) The Magistrate Judge held a two-day Kastigar hearing later that month, on October 20 and 21. In connection with the hearing, the government submitted various exhibits and a declaration from its lead investigator Donald Hawkey. At the hearing, Hawkey testified as to purported prior independent sources of evidence relating to each statement made by Benson as reflected in the Nievod report. The Magistrate Judge found that the government failed to meet its Kastigar burden and, on October 25, 2015, submitted a Report and Recommendation calling for dismissal of the indictment. (Dkt. No. 474.)
After reviewing the Report and Recommendation and considering the government's objection thereto (Dkt. No. 497), the Court ADOPTS IN PART the Report and Recommendation. The Court agrees with the Magistrate Judge's recommendation except as to the appropriate remedy. In light of the unusual circumstances at issue—including the fact that Benson apparently orchestrated the competency proceedings for an improper purpose and the absence of any wrongdoing or role by the government in obtaining the statements in question—the Court finds that a lesser remedy is warranted and sufficient to protect the defendant's Fifth Amendment rights. Thus, the Court holds that the government may bring in a new trial team, with appropriate procedural protections in place.
ANALYSIS
As properly noted by the Magistrate Judge, where a defendant is compelled to testify prior to trial, the government bears the burden of establishing by a preponderance of the evidence "that the evidence it proposes to use is derived from a legitimate source wholly independent of the compelled testimony." Kastigar v. United States, 406 U.S. 441, 460 (1972). The applicable legal standard is set forth more fully in the Report and Recommendation. Given the factual peculiarities of this case, a review of Ninth Circuit authority following Kastigar on the issue of non-evidentiary use warrants discussion.
In United States v. Crowson, the Ninth Circuit held that prosecutors had satisfied their burden of showing no evidentiary or non-evidentiary use of a defendant's immunized grand jury testimony. 828 F.2d 1427, 1427, 1430 (9th Cir. 1987) (quoting United States v. McDaniel, 482 F.2d 305, 311 (8th Cir. 1973)) (noting potential non-evidentiary uses by the government could include "'assistance in focusing the investigation, deciding to initiate prosecution, refusing to plea bargain, interpreting evidence, planning cross-examination, and otherwise generally planning trial strategy'"). While in that case, as here, the criminal investigation was "substantially completed" by the time the testimony was received, the testimony there largely involved authentication of documents which themselves served as prior independent sources for the related statements. Id. at 1431.
Five years later, in United States v. Mapelli, the Ninth Circuit reached a different result, finding the trial court had erred in denying a defendant's motion to disqualify prosecutors who had been exposed to her immunized testimony and might have improperly used it to plan trial strategy. 971 F.2d 284, 285 (9th Cir. 1992) (noting that while there is no per se rule requiring withdrawal of a prosecutor who is exposed to immunized testimony, the government "often protects against a claim of indirect use by assigning the case to others not exposed and barring communication between them and the prosecutors who obtained the compelled testimony"). Because the government had offered no evidence, but only argument, that it would not use the testimony to plan trial strategy, its burden under Kastigar was not satisfied. Id. at 288.
Thereafter, in United States v. Montoya, the Ninth Circuit observed that "this circuit has not specifically decided whether non-evidentiary use comes within the prohibition of the [federal witness use immunity] statute," but went on to "assume that some non-evidentiary uses could come within the ban of the statute." 45 F.3d 1286, 1296 (9th Cir. 1995). There, in light of its burden, a prosecutor sought permission to indict a defendant who had been granted immunity. Id. at 1290. To that end, he prepared a report based on the immunized testimony that did not reflect the specific testimony at issue but merely the general observation that the prosecutor believed the testimony was false, and requested permission to commence prosecution based on prior evidence. Id. at 1297. The Ninth Circuit held that the prosecutor's "involvement in requesting permission to prosecute was too remote from the criminal proceeding against [the defendant] to constitute non-evidentiary use of the immunized testimony against him." Id. A new prosecutor was assigned to the case, who submitted a declaration contending she had not been exposed to any of the immunized statements. Id. at 1298. The government's "exhaustive, detailed, [and] nonconclusory" declarations regarding their precautions and non-use of the statements were "uncontradicted" and did not require the court to "rely on the Government's good faith." Id. They were, therefore, sufficient to satisfy its Kastigar burden. Id.
Finally, in a Sixth Amendment case, the Ninth Circuit analogized to the Kastigar standard, stating that under that standard the government must "present evidence, and must show by a preponderance of that evidence, that 'all of the evidence it proposes to use,' and all of its trial strategy, were 'derived from legitimate independent sources.'" United States v. Danielson, 325 F.3d 1054, 1072 (9th Cir. 2003) (emphasis supplied).
Here, the government attempted to satisfy its burden of showing it would make no evidentiary or non-evidentiary use of the immunized statements through a singular strategy. Namely, the government attempted to prove that each of Benson's statements to Dr. Nievod were essentially inconsequential because the government had substantially identical prior sources.
This approach was likely selected because the government took no steps short of using a taint team, such as those recommended in the U.S. Attorneys' Manual. The Court notes that even those measures may have been insufficient, and a taint team warranted, in light of the circumstances. The Court recognizes, however, that "there is no per se rule requiring the withdrawal of a prosecutor or other government official who may have been exposed to immunized testimony." Crowson, 828 F.2d at 1430. The analysis of whether sufficient measures have been taken is case specific.
The Court has reviewed the specific statements at issue in the Nievod report alongside the evidence proffered by the government in order to establish a prior, substantially identical source as to each. The Court finds it is a close question as to whether certain statements are in fact materially distinct from preexisting evidence. Nevertheless, as to certain other statements—several of which go to the defendant's state of mind in connection with conduct which potentially falls within the scope of the indictment—the government has utterly failed to identify a substantially identical prior source, as detailed in the Report and Recommendation. The government also failed to take any of the precautions recommended in the case law or the U.S. Attorneys' Manual.
The two additional declarations, which largely contain conclusory assertions of non-use, and the minimal supplemental documentary evidence put forth by the government subsequent to the issuance of the Report and Recommendation do not call for a contrary result.
Notably, the indictment charges Benson with certain specific intent crimes—e.g., mail and wire fraud—placing his state of mind squarely at issue. See Mapelli, 971 F.2d at 287 ("Like many tax evasion cases, the issue in this case was not what was done, but rather the state of mind with which it was done.").
Other than by attempting to demonstrate prior independent sources of evidence as to each statement at issue, the government contends this case is distinguishable on the facts from those put forth by the defendant because: (1) Benson was not ordered to reveal his trial strategy; (2) Dr. Nievod was focused on Benson's state of mind at the time of the competency proceeding; and (3) Dr. Nievod's report is unreliable, among other less persuasive arguments. As to the first, Benson was ordered to submit to a competency evaluation, during which his ability to recollect his mental state at the time of the accused conduct was placed at issue and tested. As to the second, while true that the focus was on present abilities, the goal was to determine whether Benson could retrieve memories regarding his state of mind at the time of the accused conduct. The Court disagrees with the government's current argument that he did not. Finally, the fact that Dr. Nievod's report is not highly reliable and does not contain verbatim quotations for statements at issue does not relieve the government of its Kastigar burden. While the problems with Dr. Nievod's report are detailed in this Court's competency order, no suggestion has been made that Benson did not in fact make the statements set forth in that report. Neither the evidence submitted to the Magistrate Judge nor any additional proffer shows an independent source for those statements. While circumstantial evidence may exist which might have bolstered the government's submission it was never proffered.
The Court does not address all of the government's arguments as none would change the result. --------
Given the current state of Ninth Circuit law, the Court declines the government's suggestion that it should carve out an exception to the Kastigar burden in light of the unique circumstances presented here. The government effectively conceded that if its Kastigar burden extends to non-evidentiary uses of the immunized statements, it has failed to satisfy the burden. The Court finds that binding precedent does indeed cover non-evidentiary uses, including adjustments to trial strategy in light of knowledge of such statements. Accordingly, trial cannot proceed with the current trial team. However, as the Constitution's protection is not intended to allow for a defendant to manipulate the issue of competency to serve as both sword and shield, dismissal is not warranted.
CONCLUSION
The Report and Recommendation is ADOPTED IN PART. The Court DECLINES TO ADOPT the proposed remedy of dismissal. The Report and Recommendation is otherwise correct, well-reasoned, and thorough, and is thus fully adopted except as to remedy. The government shall replace its trial team in order to proceed. Failure to do so shall result in dismissal.
As a result of the foregoing, the trial date set for February 2, 2016 is VACATED. By no later than Tuesday, January 26, 2016, the government shall file a notice of either: (1) the protocol it will enact relating to the new trial team to meet its Kastigar burden; or (2) its declination to proceed under such a requirement, which shall result in dismissal of the indictment. The defendant shall file any objections to a proffered protocol by no later than Friday, January 29, 2016. The Court SETS a status conference with the parties on February 2, 2016 at 9:30 a.m. and, if appropriate, shall set a new trial date at that time.
IT IS SO ORDERED. Dated: January 19, 2016
/s/ _________
YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE