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United States

decided: December 16, 1987.

IN RE GRAND JURY WITNESS. UNITED STATES OF AMERICA, APPELLEE,
v.
GRAND JURY WITNESS, APPELLANT



Appeal from an amended order entered on October 1, 1987 in the United States District Court for the Southern District of New York (Walker, J.) holding Rodolfo T. Arambulo in civil contempt pursuant to 28 U.S.C. § 1826(a) for his refusal to appear pursuant to subpoena before a grand jury. Affirmed.

Oakes, Cardamone and Mahoney, Circuit Judges.

Author: Cardamone

CARDAMONE, Circuit Judge :

Rodolfo T. Arambulo appeals from an amended civil contempt order entered against him by the United States District Court for the Southern District of New York (Walker, J.) on October 1, 1987 upon his refusal to appear before a grand jury. Underlying this appeal is the fact that Arambulo has fled the country, but he invokes the court's processes to challenge the adjudication holding him in civil contempt. To fight and to flee at the same time is as difficult to accomplish successfully in law as in life.

BACKGROUND

The grand jury is investigating allegations that various individuals associated with Ferdinand E. Marcos, former President of the Republic of the Philippines, conducted and participated in a racketeering enterprise in violation of 18 U.S.C. § 1962, including embezzling substantial amounts of United States foreign aid to the Philippines, as well as funds of the Philippine government, in order to purchase commercial real estate in New York City. Specifically being investigated are various wire transfers of funds through the California Overseas Bank (Overseas Bank), a commercial bank based in Los Angeles, through the use of fictitious accounts. In that connection, the activities of Roberto Benedicto, Chairman of the Board of Directors, and Arambulo, a high-level officer and also a member of the Board of the Overseas Bank, in the alleged creation of fictitious accounts and transfer of funds are being looked into. Arambulo is a citizen of the Philippines, but until recently was present in the United States as a nonresident alien.

On March 25, 1987 a grand jury subpoena was issued in the Southern District of New York directed to Arambulo, then a resident of Los Angels, and served on his counsel, Wayne Smith, Esq. It required Arambulo to appear in New York and produce certain documents on April 14, 1987. Before the subpoena was served, Assistant United States Attorney Charles G. LaBella, who was responsible for assisting the investigation, discussed with Mr. Smith the timing of Arambulo's appearance and agreed that if Arambulo intended to assert his Fifth Amendment privilege he need not travel from California, but should indicate such intention by letter, which the AUSA agreed to present to the grand jury. During this conversation attorney Smith was also advised that his representation of Roberto Benedicto might present a conflict of interest. Smith asked for time to consider this and other matters raised in connection with Arambulo's appearance. These understandings were confirmed in a letter sent by Mr. LaBella to Mr. Smith with the March 25th subpoena. Shortly thereafter Mr. Smith advised the government that he would no longer represent Arambulo due to the conflict raised by his representation of Benedicto.

Later, Stephen D. Miller, Esq., Arambulo's present counsel, contacted Mr. LaBella by telephone and requested an adjournment without date in order for him to meet with his client to become familiar with the nature of the investigation and to explore his client's potential criminal exposure. The government agreed to the adjournment and scheduled a meeting on May 5, 1987 in New York City. At that meeting the AUSA outlined the charges upon which it believed Arambulo could provide testimony, and discussed the possibility of Arambulo becoming a government witness following a guilty plea to certain charges. Attorney Miller agreed to discuss these matters with his client.

On June 22, 1987 Mr. LaBella telephoned defense counsel and informed him that, based upon recent developments in the investigation, the government would seek an immunity order for Arambulo. Mr. Miller responded that this decision placed his client in a very difficult position because of the individuals against whom he would be forced to testify, and he requested a meeting in New York to discuss alternatives to Arambulo's appearance before the grand jury.

At a New York City meeting on July 15, 1987, Smith proposed certain alternatives to Arambulo's appearance, including that if Arambulo provided evidence against the targets of the investigation the government would promise not to call him either as a witness before the grand jury or at any subsequent trial. After the AUSA rejected this proposal, Miller informed the government for the first time that Arambulo was no longer in the United States. On August 21, Miller advised LaBella that he believed the March 25 grand jury subpoena had been withdrawn by the government.

PROCEEDINGS BELOW

The AUSA promptly advised defense counsel that Arambulo should appear before the grand jury on September 3, 1987 and, when he failed to appear on that date, the government requested and obtained an order from Judge Walker, wired to Miller on September 4, directing Arambulo to appear on September 8, 1987. When Arambulo failed to appear on September 8, Judge Walker signed an order directing Arambulo to show cause why he should not be held in contempt.

A hearing was held on the show cause order on September 23, 1987 with Arambulo -- who was, and apparently remains, outside of the United States -- absent. Attorney Miller argued that because it was clear, based upon the May 5th meeting, "that Arambulo would assert his Fifth Amendment privilege and that the government did not intend to provide him with immunity," the grand jury subpoena had been implicitly withdrawn by the government.

At the conclusion of the hearing, Judge Walker rejected this argument and found that: (1) Arambulo's former counsel Smith had been authorized to accept service and, therefore, the order directing Arambulo to appear before the grand jury had been properly served; (2) Arambulo had not been excused from his obligation to appear before the grand jury, and was still under a continuing duty to appear; and (3) Arambulo willfully failed to appear in violation of the order requiring him to do so. Based upon these findings, the district court ruled that Arambulo lacked just cause for his refusal to appear and accordingly held him in civil contempt pursuant to 28 U.S.C. § 1862(a). The district court imposed a $50,000 fine as "an order . . . for a past transgression" and an additional $5,000 for each day of continued absence. Arambulo and his representatives were also enjoined from disposing of any of his assets within the United States. On September 29, 1987 we stayed enforcement of the monetary provisions of the order and expedited this appeal. The parties stipulated to a partial remand of the order, and ...


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