United States v. Yerardi

• Court: Court of Appeals for the First Circuit
• Decided: September 22, 1999
• Docket: 99-1063
• Status: Published

Opinion

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit


No. 99-1063



                    UNITED STATES OF AMERICA,



                      Petitioner, Appellee,



                                v.



                       RAFIA FEGHI YERARDI,



                      Respondent, Appellant.


APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



           [Hon. Robert E. Keeton, U.S. District Judge]


Before



                      Selya, Circuit Judge,

                   Cyr, Senior Circuit Judge,

                   and Boudin, Circuit Judge.


Walter B. Prince with whom Peckham, Lobel, Casey, Prince & Tye

LLP was on brief for respondent-appellant.

     Richard L. Hoffman, Assistant United States Attorney, with

whom Donald K. Stern, United States Attorney, was on brief for

petitioner-appellee.


September 21, 1999


BOUDIN, Circuit Judge.  This appeal, which presents

difficult questions concerning the adverse spousal testimony

privilege, arises out of the following facts.  The appellant, Rafia

Feghi, is married to Joseph A. Yerardi, Jr.  In October 1993,

Joseph Yerardi was indicted in the district court on 71 counts,

including money laundering, extortion, witness intimidation,

operating an illegal gambling business, racketeering and criminal

forfeiture.  18 U.S.C.  2, 892, 894, 982, 1503, 1512, 1955-56,

1962-63.  In due course, the forfeiture counts resulted in

ancillary proceedings that are the focus of this appeal.

  Yerardi was released on bail in July 1994, and Feghi

signed a $1.5 million appearance bond to secure his presence.  When

Yerardi was later charged with violating conditions of his release,

the government sought forfeiture of the bond.  Feghi testified at

the forfeiture proceeding in February 1995, invoking certain

testimonial privileges but (says the government) not invoking the

adverse spousal testimony privilege.  The government now relies on

this failure as precluding later assertion of the privilege.

  On May 1, 1995, Yerardi entered into a written plea

agreement with the government.  Pursuant to that agreement, Yerardi

pled guilty to all counts of the indictment and, in accordance with

18 U.S.C.  982, 1963, agreed to forfeit $916,000.  He also

consented to the entry of an asset discovery order, including the

deposition of witnesses and the production of documents and related

materials deemed necessary by the U.S. Attorney to implement the

forfeiture agreement.  At sentencing, however, Yerardi's counsel

maintained Yerardi's earlier position that his only asset was

$5,000 worth of jewelry.  

  The government believes that Feghi now controls or knows

of assets that once belonged to Yerardi but have since been

forfeited to the United States, and that Feghi would not qualify as

a bona fide purchaser for value.  18 U.S.C.  1963(l)(6)(B); 21

U.S.C.  853(n)(6)(B). Further, the government wants to locate

other Yerardi assets, which Feghi may control or know of, that

could be available to the government to make up the value of any

directly forfeited assets that can no longer be found.  18 U.S.C.

 1963(m); 21 U.S.C.  853(p).  Apparently, the government sought

Feghi's informal cooperation but was rebuffed.

  Accordingly, the government served a subpoena duces tecum

on Feghi in October 1995, later enforced in part by the district

court, and it deposed Feghi on March 22, 1996.  Ultimately, in

response to the enforced document requests, Feghi took the position

that she had no such documents, and she declined in deposition to

answer further questions about the requests, as well as direct

questions on a number of different issues concerning Yerardi's

assets, transfers of money between Yerardi and Feghi, actions taken

by Feghi pursuant to the power of attorney that Yerardi had given

to her, and similar matters.  The basis for these refusals was

Feghi's assertion of the adverse spousal testimony privilege.

  In April 1996, the government moved to compel Feghi to

answer its questions.  The magistrate judge allowed the

government's motion to compel on September 26, 1996, primarily on

the ground that the prospect of future criminal prosecution of

Yerardi (e.g., for tax evasion) was too speculative to support the

privilege, and also on the ground that Yerardi had disclaimed any

interest in the assets held by Feghi.  The district court affirmed

the magistrate judge's order on May 5, 1997, when it rejected

Feghi's motion for reconsideration.

  Feghi continued to refuse to testify and invited the

district court to hold her in contempt so that she could test its

privilege ruling on appeal.  After a hearing on December 21, 1998,

the district court held Feghi in contempt for refusing to answer,

and it imposed prospectively civil penalties on Feghi, rising after

two weeks to $1,000 per day, to compel obedience.  Thereafter, on

April 30, 1999, this court stayed the district court's contempt

order pending Feghi's appeal.  Although we thought it a close

question whether Feghi was likely to prevail, accumulating fines

(unless stayed) appeared likely to force Feghi to answer

immediately and thereby deprive her of an effective appeal.

  Although contempt rulings are sometimes said to be

reviewable for "abuse of discretion," the standard depends upon the

precise issue or issues presented: abstract issues of law are

reviewed de novo and determinations of raw fact are tested under

the clearly erroneous standard.  Ocean Spray Cranberries, Inc. v.

PepsiCo, Inc., 160 F.3d 58, 61 n.1 (1st Cir. 1998).  Whether a

future criminal prosecution of Yerardi based on Feghi's testimony

is "speculative" is the kind of "mixed" question on which the

district court's assessment is often, although not always, given

weight.  See In re Extradition of Howard, 996 F.2d 1320, 1328 (1st

Cir. 1993).

  In federal criminal cases, issues of privilege are

resolved by judge-made rules based on common law principles, except

where the Constitution or other federal enactments resolve the

issue.  Fed. R. Evid. 501.  As revamped by the Supreme Court in

Trammel v. United States, 445 U.S. 40 (1980), the privilege against

adverse spousal testimony gives the witness-spouse a privilege not

to testify against the defendant-spouse in criminal or related

proceedings, subject to certain exceptions and to waiver.  See 

Larkin, Federal Practice: Federal Testimonial Privileges  4.02

(1999).  The privilege is a companion to, but distinct from, the

privilege protecting confidential communications between husband

and wife.  See id.  4.03.

  At the threshold, the government urges that the privilege

has been waived because Yerardi in his plea agreement consented

both to the forfeiture and to full discovery by the government of

all information needed to implement the forfeiture.  The plea

agreement might be read as an implicit waiver of the privilege by

Yerardi.  However, the Supreme Court made clear in Trammel that the

privilege against adverse spousal testimony belongs not to the

defendant-spouse, here Yerardi, but rather to the witness-spouse,

here Feghi.  See Trammel, 445 U.S. at 53.  Yerardi as the

defendant-spouse thus had no privilege to waive and, far more

importantly, he had no authority to waive Feghi's privilege to

refuse to testify adversely to him.

  Because the privilege is rooted in a dual desire to

protect marital harmony and to avoid the unseemliness of compelling

one spouse to testify against the other in a criminal proceeding,

id. at 44-45, 52-53 & n.12, the privilege is limited to testimony

that is adverse to the legal interests of the defendant-spouse, 8

Wigmore, Evidence  2234, at 231 (McNaughton rev. 1961).  Pointing

again to Yerardi's plea agreement, the government contends that

testimony cannot be adverse where the defendant-spouse has

consented to it.  It is hard to see how a future criminal

prosecution of Yerardi--the extent of the threat is discussed below

--would not be "adverse" to his legal interests.  

  In a separate but related objection, the government

claims that Feghi herself waived the privilege by earlier

testifying at Yerardi's bail forfeiture hearing.  There, Feghi

answered certain questions regarding her joint purchase and sale of

property with Yerardi, her receipt of money from Yerardi, and her

bank deposits and transfers.  The government concedes that Feghi

did not at any point expressly waive the privilege, which certainly

she could do; but it asserts that by answering questions in the

same general area without asserting the privilege, she has engaged

in conduct tantamount to waiver of the privilege.

  The concept of waiver by conduct exists, but often

amounts simply to a determination that the privilege holder's

conduct makes it unfair to allow subsequent assertion of the 

privilege.  See Developments in the Law--Privileged Communications,

98 Harv. L. Rev. 1450, 1629-31 (1985).  Probably the most common

example is a privilege holder's effort to answer some questions in

a subject area (usually those that serve the privilege holder's

interests) but not others (those that harm the privilege holder's

interest).  Id. at 1633-35.  Such a pick-and-choose approach may

seem unfair in general or because it distorts the evidence that is

presented to the factfinder.

  In all events, the government's claim that Feghi waived

her privilege by her earlier testimony cannot be resolved, as the

government assumes, simply by asking whether Feghi testified

previously about certain property or bank transactions relating to

her husband.  The privilege applies only to adverse testimony, and

conceivably some (or all) of the questions answered in the bail

hearing may not have been adverse to Yerardi.  It would require a

fairly detailed comparison of the prior answers given and the more

recent questions that Feghi refused to answer to determine whether

Feghi's prior answers precluded privilege claims now.  The

government has not provided any such analysis.

  In another set of threshold arguments, the government

says that as a matter of law the adverse spousal testimony

privilege should not be invokable in criminal forfeiture

proceedings.  It argues that this proceeding to achieve the

forfeiture is itself "more civil than criminal," affecting only a

property interest.  The government adds that the legislative

history of the RICO statute, see H.R. Rep. No. 98-1030, at 195

(1984), reprinted in 1984 U.S.C.C.A.N. 3182, 3378, underscores the

need to make forfeiture proceedings effective against efforts by

organized crime figures to confide assets to family members.

  The privilege is almost always invoked only in criminal

proceedings in which one spouse is called to testify against the

other, and understandably so since criminal jeopardy is the threat

with which the privilege is concerned.  And some formulations of

the privilege, and dicta in some of the cases, assume that the

privilege could never be asserted in a civil case.  Interestingly,

it is hard to find a square holding to this effect, and one can

think of cases that would test that assumption (say, a government

civil fraud case where a criminal prosecution might plausibly

follow).  Cf. Ryan v. Commissioner of Internal Revenue, 568 F.2d

531, 543-44 (7th Cir. 1977) (reserving issue in civil tax

proceeding and finding it inapplicable where immunity granted).

  We need not pursue the issue because, even if the

privilege can only be asserted "in" a criminal proceeding, the

proceeding in which Feghi is here sought to be questioned is

ancillary to a criminal case and seeks to recover a penalty under

criminal forfeiture provisions.  See 18 U.S.C.  982, 1963.  There

are civil forfeiture remedies, see id.  984, 1964, but the

government did not invoke them against Yerardi.  Since this case is

an adjunct to a criminal proceeding and the questioning (as we

shall see) raises an appreciable risk of contributing to future

criminal prosecution of Yerardi, it is hard to see why we should

strain to re-label the matter as "civil."

  The government cites us to a few cases in which courts

have treated criminal forfeitures as "civil" for limited purposes,

see United States v. Lavin, 942 F.2d 177, 181-82 (3d Cir. 1991)

(allowing the longer civil period to appeal from a forfeiture

order), or at least as separable from the main criminal action, see

United States v. Hurley, 63 F.3d 1, 23-24 (1st Cir. 1995) (filing

of appeal from criminal conviction did not prevent later forfeiture

order).  But the issue in each case was different than that posed

here and, in each case, there was a colorable policy reason for the

distinction drawn.  No such reason is proffered in this case.

  Surely Congress wanted RICO forfeitures to be effective,

but there is no indication that allowing the privilege to Feghi or

other spouses will compromise this aim.  If Feghi's testimony is

essential to recovering forfeited property, which it may be, the

government (as we shall explain) need only file an affidavit

providing the same protection normally afforded when testimony is

compelled from a witness who claims the privilege against self-

incrimination.  As for the legislative history, the government

points to nothing to suggest that Congress intended to suspend or

pare back existing privileges.

  This brings us to the district court's holding that the

threat Feghi's testimony posed to Yerardi was too speculative to

support her assertion of the privilege here.  The district court

added:  "Questions that may arise if the government at some time in

the future attempts to use Ms. Feghi's testimony as a basis for an

attempt to impose further civil or criminal penalties on her

husband are more properly presented to the court when they have

become less speculative than they now are."  On appeal, Feghi says

that her concerns were not too speculative.

  The district court assumed, and we agree, that the

privilege could not be justified merely because Feghi's testimony

might help the government recover former or present assets of

Yerardi subject to criminal forfeiture.  Yerardi had already

disclaimed any interest in property, apart from his $5,000 in

jewelry.  Further, even if he had not, we are doubtful that the

rationale of the privilege would be offended by making Feghi assist

the government in locating those of Yerardi's assets subject to

forfeiture if this were the only adverse consequence said to flow

from the testimony.

  After all, as Trammel explained, the main concerns of the

privilege are the threat to marital harmony and the arguable

unseemliness of requiring one spouse to assist in the criminal

conviction or incarceration of the other spouse.  Feghi could

readily be called by the plaintiff in a civil damage action to

establish that Yerardi's negligence had caused a traffic accident

in which the plaintiff was injured, and Feghi could not ordinarily

assert the privilege in such a case even though her testimony might

lead to a large damage award against Yerardi.  See generally

Larkin, supra,  4.02[3], at 4-9.  We see no reason why recovery of

forfeited assets should be treated differently.

  However, Feghi's purported fear is not confined to

Yerardi's loss of property; she also asserted in the district

court, and argues forcefully in this court, that various of the

questions posed by the government could lead to subsequent criminal

prosecution of Yerardi for tax evasion or related crimes.  This is

not on its face a farfetched concern:  if Yerardi has been

concealing assets, one might also suppose that he has not been

reporting to the Internal Revenue Service income derived from those

assets and might be subject to tax evasion charges.  26 U.S.C. 

7201.  Other offenses based on such concealment can also be

imagined.

  The government says that Feghi is not really concerned

about such a prosecution, arguing that she did not take up the

government's earlier offer to negotiate some form of immunity.  At

oral argument, the government tendered a letter in which it offered

to give Feghi, in exchange for her complete and truthful testimony,

a written assurance that it would not use her compelled testimony

directly in any future criminal prosecution of her husband.  The

letter explicitly refused to promise Feghi that her testimony would

not be used indirectly, i.e., to generate other evidence that could

be used in such a prosecution.

  We think the government's immunity proposal underscores

the fact that a further criminal prosecution of Yerardi is a

realistic possibility, and that Feghi's answers could contribute to

that prosecution.  If this were not so, it is hard to see why the

government's letter would explicitly reserve to it the right to use

Feghi's testimony indirectly, i.e., through "fruits" evidence

derived from it, in a future prosecution.  Whatever weight might

generally be accorded to the district court's finding, we cannot

agree that the threat of an adverse affect on Yerardi's legal

interests is so clearly "speculative" as to defeat the privilege.

  It is a different question whether protection against

indirect use is required.  We arguably assumed so in In re

Snoonian, 502 F.2d 110 (1st Cir. 1974); there, we held that the

adverse spousal testimony privilege was overcome where the

government filed an affidavit promising that it would not use

either directly or indirectly the compelled grand jury testimony of

one spouse in subsequent criminal proceedings against the other

spouse.  See id. at 112-13.  Other courts have adopted the same

approach.  See In re Grand Jury, 111 F.3d 1083 (3d Cir. 1997); In

re Grand Jury Subpoena (Ford v. United States), 756 F.2d 249 (2d

Cir. 1985).  We think it is fair to insist upon such an affidavit

in the present case.

  The government says that, without the reservation

permitting indirect use, a burden would rest upon it to show--in

any future prosecution of Yerardi--that other evidence it might

offer against him apart from Feghi's direct testimony was not

derived from that testimony.  However, this is a burden that the

prosecution customarily carries, whenever it compels privileged

testimony through a grant of use immunity, by showing that it has

an independent source for the "other evidence."  See, e.g., United

States v. Serrano, 870 F.2d 1 (1st Cir. 1989).  Only in peculiar

circumstances has it proved to be an insuperable burden.  See

United States v. North, 920 F.2d 940 (D.C. Cir. 1990).  It is worth

adding that the government controls the scope of its questioning,

which can be tailored to limit the tainting of future evidence.

  Thus far, we have treated the questions that the

government seeks to compel Feghi to answer as if they were all of

a piece.  Customarily, issues of privilege are resolved on a

question-by-question basis, as the privilege may be justified as to

some questions but not as to others.  In re Lochiatto, 497 F.2d

803, 805 n.3 (1st Cir. 1974).  However, the government has not

argued that all of its questions are benign, and most addressed to

the concealment of assets are not likely to be.  Thus, we cannot

avoid the issues posed by this appeal.

  If on remand the government provides an unconditional

Snoonian affidavit, that would eliminate the privilege across the

board for any questions hereafter put to Fehgi.  If instead the

government declines to provide an affidavit, it remains free to re-

notice Feghi's deposition and insist on her assertion of the

privilege on a question-by-question basis.  However, this assumes

that the government has questions to ask Feghi, the answers to

which could not plausibly threaten the legal interests of Yerardi

in a future criminal prosecution relating to any concealed assets.

Whether the government has such questions is unclear.

  Some formulations of the adverse spousal testimony

privilege state or imply not only that the proceedings in which the

testimony is compelled must be criminal, but that the adverse

effects on the other spouse must be felt in the same proceeding. 

See 8 Wigmore, supra,  2234, at 231.  Here, the proceeding is

criminal, Yerardi is a party, but the only likely adverse effect--

apart from the irrelevant loss of property--is future prosecution

of Yerardi for tax evasion or like crimes in another case.  Since

the effect is to be felt in a different proceeding, the government

contends that for this reason as well the spousal privilege should

not be allowed.

  Certainly, the line could be drawn in this fashion.  Yet,

Snoonian itself holds that a spouse can assert the privilege in a

grand jury proceeding to which no private person is "a party" even

though the adverse effect on the other spouse would occur in what

is formally a different proceeding, namely, the later prosecution

of that spouse.  See In re Snoonian, 502 F.2d at 112.  It may be

generalization enough to say that the relationship between two

proceedings, which itself bears on the probability of an adverse

effect, is likely to be a matter of degree, and that a case-by-case

resolution will have to do for the present.

  Here, we think that the connection between the

government's criminal forfeiture proceeding directed against

Yerardi and the possible prosecution of him (e.g., for tax evasion)

relating to concealment of the same assets is close enough that the

privilege may fairly be asserted in the forfeiture proceeding to

guard against the use of Feghi's testimony to convict Yerardi

thereafter.  Like most privileges that obstruct evidence, the

privilege against adverse spousal testimony is construed strictly,

Trammel, 445 U.S. at 50; but Trammel deliberately preserved the

privilege, and it retains enough force to be respected in the

present case where, as we have noted, the government can remove it

in a one-sentence affidavit.

  Finally, a word should be said about the district court's

statement, already quoted, that another reason for compelling Feghi

to answer now is that a trial court would retain the power later to

exclude her testimony if offered in a new prosecution of Yerardi. 

See also United States v. George, 444 F.2d 310, 314 (6th Cir. 1971)

(similar suggestion).  The same course (i.e., deferral) could also

be taken as to "fruits" evidence.  The government, which needless

to say prefers an outright rejection of the privilege claim, has

not stressed this possibility; and it is not clear whether the

district court viewed it as an alternative ground for denying the

privilege or simply as a pertinent consideration.

  Such a reservation might at first seem a satisfactory way

of resolving hard privilege issues that turn on predicted future

impact, but it is a solution with some weaknesses.  In general, a

privilege once established is overcome only where co-extensive

protection (e.g., immunity) is assured at the time the answer is

compelled.  Maness v. Meyers, 419 U.S. 449, 473 (1975) (White, J.,

concurring in the result).  Further, the core concerns of the

privilege with which we deal here--marital harmony and seemliness--

would not be fully satisfied by compelling potentially adverse

testimony now and promising merely to consider later exclusion of

it or its fruits in a future trial of the other spouse.  

  The government, as just noted, has not pressed on us the

district court's suggestion that a final ruling on the privilege

issue might be deferred.  While postponement might occasionally

serve the prosecutor's interests, in other cases the prosecutor is

far better off with a definitive ruling at the outset, thereby

avoiding (or at least lessening) the risk of conferring unintended

immunity.  See generally Garrity v. New Jersey, 385 U.S. 493, 500

(1967); Ellis v. United States, 416 F.2d 791 (D.C. Cir. 1969). 

Whether deferral might ever be a sound solution we leave for

another occasion.     

  Accordingly, we vacate the present order of contempt and

remand the case to the district court so that the government may

furnish the necessary affidavit, if it is so minded.  If it does

so, then the adverse spousal privilege should be deemed overcome

and further delay on this ground by Feghi need not be tolerated. 

Failing that, the government is still entitled to depose Feghi, but

she is entitled to invoke the adverse spousal testimony privilege

on a question-by-question basis and subject to district court

scrutiny under standards set forth above.

  It is so ordered.