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United States v. Laurenti

decided: July 19, 1978.

UNITED STATES OF AMERICA, APPELLANT,
v.
I. MARCO L. LAURENTI, E. GIORGIO L. LAURENTI, LINDAR MANUFACTURING CORP., ROCKHILL CUTLERY, LTD., ROCKWELL CO., APPELLEES.



Government appeals from an order of the United States District Court for the Southern District of New York, Thomas P. Griesa, Judge, dismissing an indictment for preindictment delay by virtue of a customs statute, 19 U.S.C. § 1604.

Before Moore, Oakes and Gurfein, Circuit Judges.

Author: Oakes

The Government appeals, pursuant to 18 U.S.C. § 3731,*fn1 from orders of the United States District Court for the Southern District of New York, Thomas P. Griesa, Judge, dismissing an indictment on the ground of preindictment delay*fn2 and denying a motion for partial reargument.*fn3 The dismissal was not based on the Sixth Amendment, the Fifth Amendment, the Speedy Trial Act, or the Southern District Plan for Prompt Disposition of Criminal Cases. Rather, it was grounded on the district court's interpretation of 19 U.S.C. § 1604,*fn4 a provision of the Tariff Act of 1930. We hold that even if Section 1604 applies to criminal cases, dismissal of an indictment thereunder is improper as without the contemplation of Congress. Accordingly, in this, the first decision ever to rely on Section 1604 as a basis for dismissing an indictment, See note 14 Infra, we reverse in favor of the Government.

The facts of this case require brief discussion. A 71-count indictment was returned on July 15, 1976, after a 16-month investigation involving customs fraud. Count One charged a conspiracy to import goods into the United States by means of false statements, in violation of 18 U.S.C. § 542*fn5 and to make false statements generally, in violation of 18 U.S.C. § 1001.*fn6 Counts 2 through 36 charged substantive violations of 18 U.S.C. § 542, each count referring to a particular invoice or customs entry, and Counts 37 through 71 charged parallel violations of 18 U.S.C. § 1001.

The investigation commenced on March 24, 1975, when a former employee of appellee Lindar Manufacturing Corp. (Lindar) told customs agents that the company was engaged in fraudulent conduct. He furnished the agents documents which revealed that Lindar's principals, appellees I. Marco L. Laurenti and E. Giorgio L. Laurenti, were reporting false purchase prices to customs in connection with their business of importing scissors and other cutlery products purchased from foreign manufacturers.*fn7 Customs agents thereafter obtained search warrants which were executed at the Lindar offices on March 26, 1975.*fn8 The United States Attorney's office became involved in the investigation in late March, 1975. It was lengthy due to numerous discussions with appellees, two stages of grand jury proceedings, extensive evaluation of appellees' seized documents, preindictment litigation commenced by appellees, and additional evidence gathering after the seizure.*fn9 It was not until June 28, 1976, however, that the Customs Service formally referred the case to the United States Attorney for the Southern District of New York, requesting the initiation of prosecution.*fn10 The indictment was finally returned on July 15, 1976.

Appellees moved to dismiss the indictment on October 12, 1976, claiming preindictment delay. They urged that their rights under 19 U.S.C. § 1604 and the Fifth and Sixth Amendments had been violated. Because we agree with the district court that absent Section 1604 the indictment could not have been dismissed,*fn11 the only question presented is the propriety of the dismissal thereunder.

The parties principally direct their arguments to whether Section 1604 applies in criminal proceedings. Neither the language nor the legislative history of the statute provides a clear answer.*fn12 In our view, however, assuming both that the provision extends to criminal cases and that it was violated here matters which we need not decide violation of the statute does not warrant dismissal of an indictment.*fn13

That this is the first instance in which any sanction has been afforded a criminal defendant in over a hundred years of the statute's administration is of itself not without significance.*fn14 But more persuasive, perhaps, is the fact that Section 1604 does not expressly confer any rights upon any defendant, civil or criminal.*fn15 We are guided by the reasoning of former Chief Judge Blumenfeld in United States v. Filiberti, 353 F. Supp. 252 (D.Conn.1973). There, the defendant was indicted, over four years after the substantive offense allegedly occurred, for fraudulently concealing and transferring assets of a bankrupt corporation. Without claiming prejudice from the delay, the defendant moved to dismiss the indictment on the basis of a bankruptcy statute, 18 U.S.C. § 3057.*fn16 Aside from its explicit applicability to criminal cases, the bankruptcy statute is very similar to Section 1604, directing the United States Attorney to present the matter to the grand jury "without delay" while not on its face conferring any procedural rights on a defendant. Based on the absence of remedial language, coupled with the provision's obvious purpose simply to encourage swift resolution of bankruptcy proceedings, Chief Judge Blumenfeld held that it did not authorize dismissal of an indictment for the Government's noncompliance. He stated:

It is not surprising that such a provision has found its way into the bankruptcy statutes, where the concern for speedy administration of bankruptcy estates is particularly strong. Wrenched from its context, the above-quoted segment of the statute appears to be a severe restriction on the well-recognized discretion accorded prosecutors regarding the initiation of criminal proceedings. However, the words immediately following make any such reading of the statute untenable, for the United States Attorney may decide "upon inquiry and examination . . . that the ends of public justice do not require investigation or prosecution, in which case he shall report the facts to the Attorney General for his direction." 18 U.S.C. § 3057(b). The presence of this language further supports the view that § 3057 was intended primarily as an administrative measure a congressional directive to the district offices of the United States Attorneys to become more active in the prosecution of bankruptcy fraud cases.

353 F. Supp. at 253 (footnote omitted). *fn17 Quite clearly, concern for the speedy administration of the customs laws also underlies Section 1604. The federal treasury used to depend very heavily on customs revenues, and it was to the advantage of the public, not of fraud defendants, that the statute was directed. See note 12 Supra ; Cf. Cort v. Ash, 422 U.S. 66, 78, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975) (one factor in determining whether cause of action is implicit in unexpress statute is whether statute was enacted especially for plaintiff's benefit). Moreover, it is difficult to interpret the clauses imposing a duty on the United States Attorney "immediately to inquire into the facts of cases reported to him by collectors," and "forthwith to cause the proper proceedings to be commenced and prosecuted, without delay" as having been intended by Congress to restrict the prosecutor's discretion to the extent of imposing the severe sanction of dismissal of a indictment. For the following clause which permits him not to proceed when he believes that "the ends of public justice do not require" implies that Congress's purpose was not to alter the prosecutor's usual broad discretion in initiating criminal proceedings. Additionally, if the United States Attorney decides not to prosecute, he must report the facts to the Secretary of the Treasury who is under no obligation to act with speed. See United States v. Thirty-Seven Photographs, 402 U.S. 363, 369 n. 2, 91 S. Ct. 1400, 28 L. Ed. 2d 822 (1971). These latter clauses convince us that, as in the case of Judge Blumenfeld's bankruptcy statute, Section 1604 was intended primarily "as an administrative measure a congressional directive to the . . . United States Attorneys to become more active in the prosecution of (customs) fraud cases."*fn18 353 F. Supp. at 253. Were the statute more than this, that is, were it a speedy indictment and trial act for criminal customs cases, one would suppose that Congress would have set some specific deadlines, as it did in the Speedy Trial Act itself. 18 U.S.C. § 3161-74. Here there are simply generalities "immediately" to inquire, "forthwith" to commence prosecution, to prosecute "without delay." See note 4 Supra.

Policy considerations of high moment also impel us to conclude that Section 1604 does not authorize dismissal of an indictment. The construction urged by appellees could encourage investigation of customs cases with undue haste, a circumstance as disadvantageous to defendants as to the Government itself. See, e. g., United States v. Lovasco, 431 U.S. 783, 793, 97 S. Ct. 2044, 52 L. Ed. 2d 752 (1977) (rejecting contention that due process requires immediate prosecution as soon as sufficient evidence to obtain a conviction exists because such pressure might cause unwarranted prosecutions); United States v. DeMasi, 445 F.2d 251, 255 (2d Cir.) (rejecting constitutional attack on preindictment delay because "careful investigation, even at the price of delay, is to be cherished, inasmuch as "time-consuming investigation prior to an arrest minimizes the likelihood of accusing innocent parties and may facilitate the exposure of additional guilty persons' " (citation omitted)), Cert. denied, 404 U.S. 882, 92 S. Ct. 211, 30 L. Ed. 2d 164 (1971). Additionally, United States Attorneys, beset as they are with the Speedy Trial Act's time constraints, would be required to place extraordinary priority on customs cases over all other criminal cases governed solely by Sixth and Fifth Amendment precepts. We cannot ignore recent Supreme Court pronouncements on the limited protection against preindictment delay afforded by the Fifth and Sixth Amendments. Necessitating prejudice to the defense*fn19 as a prerequisite to invoking due process guarantees, See note 11 Supra, and recognizing that statutes of limitations provide the primary protection against preindictment delay, See note 17 Supra, the Court has cautiously considered and disapproved of the effects likely to flow from a more protective approach. We are hesitant to interpret an ambiguous statute, with an uncertain and rather confused legislative and codification history, in a manner that could undermine this careful balance of policies.

The dismissal of the indictment having been improper, we reverse the judgment below.

Judgment reversed and cause ...


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