United States v. Richard Feldman and Richard Martenson

761 F.2d 380
CourtCourt of Appeals for the Seventh Circuit
DecidedMay 3, 1985
Docket83-1327, 83-1328, and 84-1264
StatusPublished
Cited by43 cases

This text of 761 F.2d 380 (United States v. Richard Feldman and Richard Martenson) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh 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. Richard Feldman and Richard Martenson, 761 F.2d 380 (7th Cir. 1985).

Opinion

WISDOM, Senior Circuit Judge.

This case presents the question whether a deposition taken in an earlier civil proceeding is admissible in a later criminal prosecution. The defendants were found guilty of several counts of wire fraud from practices in connection with the sale of precious metal futures. The government’s ease relied heavily on the deposition of a former business associate taken without any cross-examination in an earlier civil *382 proceeding. On appeal, the defendants argue that the admission of this deposition violated their right to confront witnesses against them. We agree and accordingly reverse.

I. FACTS AND PROCEEDINGS BELOW

The defendants, Richard Feldman and Richard Martenson, were upper echelon managers in first Guaranty Metals (“FGM”), a Florida corporation engaged primarily in investing in leveraged futures contracts in precious metals. Herbert San-burg, who was later to provide the government with abundant testimony against Martenson and Feldman, was president of FGM, although the testimony at trial shows that Sanburg was less involved in the daily operations of the firm than Feld-man. Sanburg left FGM in August 1979.

During the gyrations of the precious metals market from July 1979 through January 1980, FGM retreated from its prudent policy of fully hedging customer orders; 1 the company also began to have increasingly great “spreads” between the prices at which a customer could buy and sell the same commodity on a given day. FGM’s customers lost money. The company filed for bankruptcy on January 29, 1980. On January 30, 1980, FBI agents searched FGM’s offices under a warrant. The same day, the Commodity Futures Trading Commission (“CFTC”) 2 filed a complaint against FGM alleging that the company defrauded customers by its salesmen’s misrepresentations concerning hedging and prices. CFTC sought to freeze the assets of FGM and to obtain its profits.

As part of this “disgorgement” action, CFTC sought the deposition of the three defendants in its ease: Sanburg, Feldman, and Martenson. Each party received notice of the depositions through counsel. Neither Feldman nor Martenson attended the Sanburg deposition, nor did their attorneys represent them at the deposition. San-burg, however, had agreed with the government the day before his deposition to testify against Feldman and Martenson in return for a promise that Sanburg himself would not be a target of any later legal proceedings. This agreement between San-burg and the government was not disclosed for almost a year, until just a short time before Feldman’s and Martenson’s criminal trial. At the time of Sanburg’s deposition, the government had not returned a criminal indictment against any party in connection with FGM. Sanburg, whom the government knew to be terminally ill, died less than a month after his deposition.

On December 17, 1981, ten months after Sanburg gave his deposition, the U.S. Attorney in Chicago returned an indictment charging Richard Feldman and Richard Martenson with mail fraud in violation of 18 U.S.C. § 1341 (1982), wire fraud, id. § 1343, and fraudulent bullion transactions, 7 U.S.C. §§ 13(b), 23(b) (1982). In an order and memorandum of May 28, 1981, the district court ruled that it would admit the Sanburg deposition if the government could establish that Sanburg and the present defendants were parties in the civil case in which the deposition was taken; that the defendants were represented by counsel at that time; and that the defendants received notice of the deposition and were afforded an opportunity to be present. On November 1, 1981, the district court conducted a hearing on the admissibility of the deposition. The court admitted the deposition on the grounds that the de *383 fendants had an adequate opportunity to appear at the Sanburg deposition, that the defendants knew what Sanburg would say, and that the defendants were represented by counsel and were parties to the civil litigation for which the deposition was taken. The deposition became the centerpiece of the government’s prosecution.

On October 4, 1982, a grand jury returned a superceding indictment. The superseding indictment added a RICO charge, 18 U.S.C. § 1962(c) (1982), and asked for forfeiture, id. § 1963(a)(l)-(2). The district court denied a motion for continuance. Trial began twenty-six days later, on November 1, 1982. The court entered acquittals on the transaction counts, and the jury returned guilty verdicts on all remaining counts. The court imposed a prison sentence of twelve years and a fine of $38,000 on each of the defendants.

Both defendants appeal, arguing that the introduction of the deposition violated their right to cross examination, that their trial date was unacceptably close to the return of the indictment, and that both the prosecutor and the court committed additional reversible errors during the trial.

II. DISCUSSION

A. Use of a Civil Deposition in a Subsequent Criminal Proceeding

Numerous courts have approved the admissibility of a transcript of pre-trial proceedings when the declarant was cross-examined during the prior proceedings. Ohio v. Roberts, 1980, 448 U.S. 56, 100 S.Ct. 2531, 65 L.Ed.2d 597; Phillips v. Wyrick, 8 Cir.1977, 558 F.2d 489, 496, cert. denied, 1978, 434 U.S. 1088, 98 S.Ct. 1283, 55 L.Ed.2d 793; United States ex rel. Gayden v. McGinnis, N.D.Ill.1983, 574 F.Supp. 661. Generally, the opportunity to cross examine the declarant at the prior proceeding is sufficient. “The actual use then made of the opportunity becomes a matter of defense strategy, and deliberate trial tactics do not ordinarily exact constitutional protection.” Phillips, 558 F.2d at 496. Several courts have therefore admitted the transcript of a witness’s testimony from a preliminary hearing even though the witness was subject to a less searching cross-examination than would have been the case at trial. United States ex rel. Haywood v. Wolff, 7 Cir.1981, 658 F.2d 455, 461-62, cert. denied, 1981, 454 U.S. 1088, 102 S.Ct. 649, 70 L.Ed.2d 625.

The government, relying on this line of cases, urges us to affirm the district court’s admission of Sanburg’s deposition. In Phillips, for example, the defendant’s 15-year-old accomplice, Chris Brownfield, testified as a witness for the prosecution during a preliminary hearing before a magistrate. The defendant was represented by counsel at the preliminary hearing, and had the opportunity to cross-examine Brownfield.

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Bluebook (online)
761 F.2d 380, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-richard-feldman-and-richard-martenson-ca7-1985.