Outlier Foreign Account Conviction Affirmed; Making a Witness Unavailable to the Defense (10/27/13)

I previously reported on the conviction and sentencing of Artistotle "Rick" R. Matsa for a melange of offenses, including an FBAR violation.  See Outlier Conviction for FBAR and Many Other Tax-Related Crimes (Federal Tax Crimes Blog 4/21/12), here; and Outlier Foreign Account Case Sentencing (Federal Tax Crimes Blog 11/3/12), here.  Matsa's conviction has been affirmed on appeal.  United States v. Matsa, 2013 U.S. App. LEXIS 21930 (6th Cir. 2013), here.  The Court opens the nonprecedential opinion as follows:

I. Background 

Matsa was a licensed real-estate broker and lawyer in Ohio. He routinely reported losses or minimal income from his businesses, such that from 1985 to 2006 he paid a total of $107 in federal income tax. His legal troubles began when Chrissoula Matsa, his wife at the time with whom he was undergoing divorce proceedings, tipped off law enforcement to his shady dealings. A subsequent investigation by the federal grand jury revealed a number of dubious practices, including the use of phony trusts to mask personal assets, the failure to report rental income, and the transfer of property (though not actual control) to friends and relatives. During the investigation, Matsa failed to comply fully with the government's subpoena of his records. Based on this conduct, the grand jury indicted Matsa for one count of corrupt interference with administration of the internal revenue laws, 26 U.S.C. § 7212(a); fifteen counts of assisting preparation of false tax returns, 26 U.S.C. § 7206(2); one count of failing to report a foreign bank account, 31 U.S.C. §§ 5314, 5322(b); one count of conspiracy to obstruct justice, 18 U.S.C. § 371; two counts of witness tampering, 18 U.S.C. § 1512(b); one count of making a false statement, 18 U.S.C. § 1001; and one count of obstruction of justice, 18 U.S.C. § 1503(a). The grand jury also indicted Matsa's mother for conspiracy to obstruct justice and tried them together. A jury found Matsa guilty on all counts after a five-week trial, and the court sentenced him to a term of 85 months' imprisonment. This appeal followed.

The Court then rejects his various arguments.  None of them appear to offer anything new or exceptional for readers of this blog so I just outline the arguments rejected and let readers go to the opinion for further review:

II. Removal of Counsel
III. Prosecutorial Misconduct
A. Pretrial Conduct
1. Witness intimidation
2. Obstruction of access to a witness.
3. Threats toward defense counsel.
4. Attorney-client privilege
B. Conduct at Trial
1. Commentary and facial expressions
2. Questioning of Ross Gillespie
C. Cumulative Effect

I will comment briefly on the witness intimidation argument.  The Court describes the argument and its rejection as follows (bold-face is supplied to emphasize a point discussed after the quote):

1. Witness intimidation. Matsa claims the prosecutor acted improperly by accusing several witnesses of lying in their testimony to the grand jury. For example, in questioning one witness before the grand jury, the prosecutor said, "Now you lied to us within ten minutes today." Matsa also alleges that, during the grand jury proceedings, the prosecutor told another witness in the hallway that he planned to "throw swords" and that the witness might not wish to fall on a sword for Matsa. 

Though Matsa claims these actions deprived him of due process by forcing witnesses to conform their testimony to the prosecutor's will, the facts alleged do not state a due process violation. An individual has no constitutional right to present witnesses at a grand jury proceeding, see Williams, 504 U.S. at 51-52, and Matsa did not renew his objection at trial.  Rather, Matsa's claim must be analyzed under the standard established in Bank of Nova Scotia v. United States, 487 U.S. 250 (1988). Under this standard, an indictment should be dismissed for prosecutorial misconduct before the grand jury only "'if it is established that the violation substantially influenced the grand jury's decision to indict,' or if there is 'grave doubt' that the decision to indict was free from the substantial influence of such violations." Id. at 256 (quoting United States v. Mechanik, 475 U.S. 66, 78 (1986)). 

Assuming that the prosecutor's comments were indeed improper, the district court did not abuse its discretion by finding a lack of prejudice. As the parties agree, the comments at issue were made before a predecessor grand jury—not the grand jury that ultimately returned the indictment. Therefore, any violation did not "substantially influence[] the grand jury to indict." Bank of Nova Scotia, 487 U.S. at 256.  n4
   n4 Though it has no bearing on whether the district court's pretrial ruling was correct, several of the witnesses in question testified for the government at Matsa's trial and admitted they lied to the grand jury. Matsa suggests that the witnesses' change of heart might have stemmed from coercion in the grand jury proceedings. However, Matsa did not claim below that the government deprived him of trial witnesses, and the issue on appeal is limited to whether the district court erred by refusing to dismiss the indictment in its pretrial ruling. Matsa did submit a motion for new trial in which he incorporated his pretrial misconduct motion and claimed cumulative prejudicial effect. This argument is addressed in Part III.C below.

This genre of intimidation can occur both within the grand jury room and outside the grand jury as alleged above.  Most commonly it might appear in a proffer session where a key witness -- probably better characterized as a subject or target but called witness now because he is not prosecuted -- is intimidated by the prosecutors. The intimidation can influence the witness to cooperate with the prosecutors, perhaps shaping testimony accordingly, in the prosecutors' juggernaut against the major target of the investigation.  Even if such affirmative cooperation is not achieved  by the intimidation, then a passive form of cooperation is achieved -- the witness is unavailable to the defense for fear of possible prosecution in retaliation.  The prosecutors do not have to give immunity to a witness the defense needs or perceives it needs.  I am not saying this form of intimidation happens often, but criminal defense attorneys know that happens enough to be a matter of concern.  And, it can even be an unintended consequence of trying to shake down the witness for affirmative use of his testimony.