United States v. Gary R. McDaniel

449 F.2d 832
CourtCourt of Appeals for the Eighth Circuit
DecidedJanuary 3, 1972
Docket20722-20724
StatusPublished
Cited by31 cases

This text of 449 F.2d 832 (United States v. Gary R. McDaniel) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth 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. Gary R. McDaniel, 449 F.2d 832 (8th Cir. 1972).

Opinion

GIBSON, Circuit Judge.

This is a consolidated appeal by the defendant, Gary McDaniel, from convictions in two cases of embezzlement, and misappropriation of funds and making false entries in the records of a federally insured bank, in violation of 18 U.S.C. §§ 2, 656, and 1005. At the time of the events in question, McDaniel was President of the First Western State Bank of the City of Minot, North Dakota, whose deposits are insured by the Federal Deposit Insurance Corporation.

The facts of the case are not seriously in dispute. The bank was significantly involved in various political activities in the state of North Dakota, a circumstance in apparent violation of North Dakota and Federal statutes, and considerable manipulation of bank records was done by various employees of the bank under McDaniel’s direction in order to cover up these activities. Most of the transactions involved in these convictions involved this manipulation, although one involving a $27,000 payment on McDaniel’s house was apparently not politically connected. Discovery of these irregularities commenced May 12, 1969, when state bank examiners arrived for a routine examination of the bank. The state examiners were shortly joined by examiners of the FDIC, and this prosecution and conviction followed.

Although the defendant raises numerous points of error, the most significant one is that his conviction was obtained in violation of his privilege against self-incrimination under the Fifth Amendment. The facts surrounding this claim of error are as follows:

Shortly after the discovery of irregularities in the bank’s operation by state and federal examiners, an intensive investigation was undertaken into the possibility of criminal violations. The complaint in one of the cases before us was filed August 7, 1969. McDaniel was subpoenaed to appear before a federal grand jury on September 23, 1969. He did appear and refused to testify, relying on his privilege against self-incrimination. Upon leaving the grand jury room following this refusal, he was taken to the United States Attorney’s office, where he was served with a subpoena to appear before a state grand jury.

McDaniel, on October 15, 1969, appeared before the state grand jury, which was investigating the bank’s operations for violations of North Dakota’s Corrupt Practices Act, 3 N.D.C.C. § 16-20-01 et seq. North Dakota law prevents any person from refusing to testify on the grounds of self-incrimination before a grand jury investigating violations of the Corrupt Practices Act, but provides full immunity from prosecution for matters disclosed. 1 McDaniel testified for many days before the state grand jury.

“No person shall be excused from attending and testifying or producing any books, papers, or other documents before any court upon any investigation, proceeding, or trial for a violation of any of the provisions of section 16-20-08, upon the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate or degrade him. No person shall be prosecuted nor subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he may testify or produce evidence, documentary or otherwise, and no testimony so given or produced shall be used against him upon any criminal investigation or proceeding.”

*835 On November 6, 1969, the United States Attorney for the District of North Dakota wrote to the Assistant State Attorney General conducting the state’s investigation, requesting to see a copy of the state grand jury transcript. The United States Attorney conceded at oral argument before us that he did in fact see the transcript, although he did not concede that McDaniel testified to matters relevant to the instant criminal charges. The state grand jury transcript has not been made a part of this record, and we are not aware of its contents.

On December 8, 1969, the state grand jury returned three indictments against McDaniel, the first one containing fifteen counts of violating the Corrupt Practices Act, the second containing one count of embezzlement of bank funds in excess of $10,000, and the third containing three counts of making false entries in the records of the bank. Federal indictments were returned February 4, 1970, and July 31, 1970.

McDaniel’s defense counsel in the state proceedings was the same as his court-appointed counsel in the federal prosecutions. Motions were made in the state court to suppress the state indictments on the grounds that McDaniel was immune from prosecution under the statute set forth above because of his testimony before the state grand jury. Although the state’s attorney opposed the motion to suppress the indictments and the transcript of the grand jury testimony was not produced in the state proceedings, the state’s attorney did stipulate in the state hearing on the motion to suppress that McDaniel had testified under subpoena and oath before the state grand jury on all matters encompassed in the state indictments. On the basis of this concession, the state trial judge quashed the state indictments.

Prior to trial on the federal charges, McDaniel’s attorney moved to suppress the indictments on the grounds that he had testified under compulsion before the state grand, jury and had been granted immunity from prosecution; he also moved for an order to take testimony and produce evidence in support of the motion to suppress. These motions were denied by the trial court on the grounds that the immunity was granted only as to the state crimes designated in the Corrupt Practices Act (e. g., making campaign contributions), that these crimes bore no relationship to the federal crimes with which he was charged, and that therefore the grant of immunity did not extend to these charges. This ruling was made without an evi-dentiary hearing.

Prior to reaching the merits of this issue, we must deal with the Government’s argument that this claim of error has been waived. The Government contends that a motion to suppress the indictment is not the proper method to raise the issue of a prior grant of immunity, and that it should be raised by a motion to suppress evidence to which the grant of immunity is claimed to attach. McDaniel made no motions to suppress evidence on this ground. We reject the Government’s contention.

In the first place, this contention begs the basic issue raised in this case, namely whether McDaniel is entitled to “transactional” as opposed to “use” immunity as a result of his appearance before the state grand jury — i. e., whether his compelled testimony before the state grand jury precludes federal prosecution for such crimes as his testimony related to, or whether the federal government is merely prohibited from using that testimony, either directly or indirectly, in its own prosecution. If, as he contends, McDaniel is entitled to transactional immunity, a motion to suppress the indictment is clearly the only means of accomplishing that end. The authorities recognize that a motion to quash the indictment is the proper method of raising this issue. 8 Wigmore, Evidence (McNaughton ed. 1961), § 2282, (4) p. 519; Smith v.

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449 F.2d 832, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-gary-r-mcdaniel-ca8-1972.