United States v. Frank W. Cathey

591 F.2d 268, 4 Fed. R. Serv. 8, 1979 U.S. App. LEXIS 16514
CourtCourt of Appeals for the Fifth Circuit
DecidedMarch 2, 1979
Docket77-5753
StatusPublished
Cited by104 cases

This text of 591 F.2d 268 (United States v. Frank W. Cathey) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Frank W. Cathey, 591 F.2d 268, 4 Fed. R. Serv. 8, 1979 U.S. App. LEXIS 16514 (5th Cir. 1979).

Opinions

GODBOLD, Circuit Judge:

Frank Cathey was convicted by a jury on three counts of willful attempt to evade or defeat his federal income tax due for the years 1970, 1971 and 1972, in violation of 26 U.S.C. § 7201. He was sentenced to one year imprisonment on each count, the sentences to run concurrently, and a $5,000 fine on each count. The issues raised by Cathey on appeal can be grouped into three categories: (1) government misconduct before the grand jury; (2) Jencks Act material; and (3) introduction of a 16-year-old military conviction for larceny. We find no merit to the claims under the first two headings but conclude that it was prejudicial error to admit the military conviction into evidence. We reverse and remand.

I. Government misconduct before the grand jury

A. False statements

While testifying before the grand jury, special agent Derry of the IRS made three statements which defendant says were false, known to the government to be false, and material. Under U. S. v. Basurto, 497 F.2d 781 (CA9, 1974), defendant urges that the government had a constitutional obligation to inform court, counsel and grand jury about the statements and that its failure to do so requires dismissal of the indictment.1

In Basurto, the Ninth Circuit held that the Due Process Clause of the Fifth Amendment is violated when a defendant has to stand trial on an indictment which the government knows is based partially on perjured testimony, when the perjured testimony is material, and when jeopardy has not attached. Whenever the prosecutor learns of any perjury committed before the grand jury, he is under a duty to immediately inform the court and opposing counsel — and, if the perjury may be material, also the grand jury — in order that appropriate action may be taken.

Id. at 785-86. A subsequent Ninth Circuit opinion, U. S. v. Bracy, 566 F.2d 649 (CA9, 1977), cert. denied, -U.S. -, 99 S.Ct. 79, 58 L.Ed.2d 109 (1978), has not only cut [272]*272back on the reach of Basurto but has also questioned its continuing validity.2 This court has never decided whether to adopt the constitutional rule laid down in Basurto3 or the modified rule of Bracy.4 Nor do we decide that issue today. A prerequisite to the applicability of the Basurto rule is a finding that the government witness perjured himself. In the case before us the district court, doubtful whether there were any misstatements, concluded that, if there were, there was no evidence that Derry “deliberately attempted to mislead, certainly no evidence of perjury,” a finding that can be reversed only if clearly erroneous. U. S. v. Rhodes, 569 F.2d 384, 389 (CA5, 1978); U. S. v. Bagley, 537 F.2d 162, 166 (CA5, 1976), cert. denied, 429 U.S. 1075, 97 S.Ct. 816, 50 L.Ed.2d 794 (1977). Our review of Derry’s grand jury testimony supports the district court’s conclusion. Absent a finding that perjury was committed, there is no basis for dismissing the indictment. U. S. v. Sullivan, 578 F.2d 121, 124 (CA5, 1978); U. S. v. Guillette, 547 F.2d 743, 753 (CA2), cert. denied, 434 U.S. 839, 98 S.Ct. 132, 54 L.Ed.2d 102 (1977).

Appellant’s Basurto argument fails in a second respect. In the sense that they were about collateral matters, Derry’s alleged misstatements were not material. The statements in question revolve around the agent’s testimony concerning a recorded interview he had conducted with Cathey.5 Derry testified that the defendant’s “only explanation” why his bank accounts “far exceeded his gross income from all known sources” was that he had accumulated a large sum of money from dealing in currency exchange while stationed with the Air Force in Turkey. The transcript of the interview indicates that Cathey presented several explanations for the accumulated money in his bank accounts. Defendant claims that the statement limiting his explanation to currency dealings was material because in a tax fraud case based on net worth computations6 the government must investigate and negate taxpayer explana[273]*273tions for cash on hand at the beginning of the computation period in order to establish a definite opening net worth, see Holland v. U. S., 348 U.S. 121, 132-36, 75 S.Ct. 127, 133-36, 99 L.Ed. 150, 162-65 (1954); U. S. v. Hiett, 581 F.2d 1199, 1201 (CA5, 1978), and revealing that he gave several explanations might have brought to light that the government had not investigated all leads. Assuming that the Holland rule for net worth computation trials is applicable to the government’s presentation of its case to the grand jury, the government’s case against Cathey was computed on the premise that at the beginning of the government’s computation period he had on hand the $55,000 cash hoard he claimed to have. The “one explanation” statement was, therefore, not material to the government’s net worth computations.7

The second statement made by agent Derry that may have been misleading, because it was unresponsive, was in answer to a grand juror’s question concerning the defendant’s prior military conviction.

Juror: Was that for the currency dealings he was convicted?
Witness: He had several things going, currency exchange was part of it.

The government concedes that the defendant was not convicted for currency exchange violations but rather military post-exchange violations. We conclude, however, that the above statement is not material to an element of a § 7201 offense. Cathey argues that this statement combined with the first statement leaves the impression that he created the currency exchange lead for the cash hoard because it is a difficult source to investigate and refute. This is too strained an interpretation of the evidence.

The final statement in question occurred while Derry was testifying about Cathey’s military career. He testified that he asked the defendant whether he was retired from the Air Force and recounted that Cathey said “No”. In fact, Derry had asked the defendant whether he was retired from the Army. A “no” response to the Army question by the defendant was truthful, while a “no” response to the Air Force question was misleading. According to defendant, the grand jury may have inferred that he was trying to lead Derry away from discovery of his court-martial. Assuming that such an inference was drawn by the grand jury, it was not material to an element of the offense. Moreover, because Cathey concedes that the grand jury was entitled to be informed of his court-martial, any increased prejudice caused by the manner of informing the grand jury must be slight and certainly not of constitutional proportions.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

United States v. Martin
District of Columbia, 2025
United States v. Thuong Vo
589 F. App'x 720 (Fifth Circuit, 2014)
United States v. Richard Eugene Young, Jr.
574 F. App'x 896 (Eleventh Circuit, 2014)
United States v. Juan Rene Caro
454 F. App'x 817 (Eleventh Circuit, 2012)
United States v. Seale
600 F.3d 473 (Fifth Circuit, 2010)
United States v. Charles
366 F. App'x 532 (Fifth Circuit, 2010)
United States v. Whitfield
590 F.3d 325 (Fifth Circuit, 2009)
Whiteside v. State
853 N.E.2d 1021 (Indiana Court of Appeals, 2006)
United States v. Lyndon Watler
Eighth Circuit, 2006
United States v. Moore
452 F.3d 382 (Fifth Circuit, 2006)
United States v. Wooten
91 F. App'x 355 (Fifth Circuit, 2004)
United States v. Estes
Fifth Circuit, 2004
Moore v. State
878 So. 2d 328 (Court of Criminal Appeals of Alabama, 2003)
United States v. Johnson
Fifth Circuit, 2003
United States v. Bradford
Fifth Circuit, 2002
United States v. Miles
Fifth Circuit, 2002
United States v. Williams
Fifth Circuit, 2002
United States v. Strouse
Fifth Circuit, 2002
United States v. Tran
Fifth Circuit, 2002

Cite This Page — Counsel Stack

Bluebook (online)
591 F.2d 268, 4 Fed. R. Serv. 8, 1979 U.S. App. LEXIS 16514, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-frank-w-cathey-ca5-1979.