United States v Sigma

UNITED STATES of America, Plaintiff-Appellee,

SIGMA INTERNATIONAL, INC., d.b.a. Sigma U.S.A., Inc., Charles Sternisha, et al., Defendants-Appellants.

No. 97-2618.

United States Court of Appeals,

Eleventh Circuit.

March 15, 2001.

Appeals from the United States District Court for the Middle District of Florida.(No. 95-00089-CR-T-24C), Susan C. Bucklew, Judge.

PETITIONS FOR REHEARING

(Opinion November 30, 1999, 196 F.3d 1314)

Before TJOFLAT, BIRCH and BRIGHT^*, Circuit Judges.

TJOFLAT, Circuit Judge:

Sigma International, Inc. ("Sigma") is a seafood company that purchases frozen shrimp from overseas companies, including companies in India and China. The companies from which Sigma purchases the shrimp either process and pack the shrimp themselves or contract with another company to process and pack the shrimp. Sigma then imports the frozen shrimp into the United States.¹

The United States Food and Drug Administration ("FDA") is charged with inspecting imported food to determine whether the food meets FDA standards. When food is shipped to the United States, the importing company must provide documents ("import documents") to the FDA that identify the nature of the shipment (i.e., the type of food), the country of origin, and the name of the company that packed the food.² The United States Customs Service ("Customs") assists the FDA by detaining the shipment until the FDA has given the importer a notice that it may proceed, known interchangeably as a "green ticket" or "may proceed notice." The shipment is then released.

After the FDA receives the import documents, it makes a decision, based on the information in the documents, to do one of three things: (1) automatically detain the shipment when it arrives in the United States, (2) conduct a random sampling of the shipment upon arrival, or (3) take no action and issue a "green ticket."

If shipments of certain food products from a particular country fall short of FDA standards on a consistent basis, then the type of food, e.g., shrimp, and the country of origin, e.g., India, are placed together on the FDA's "Import Alert list." When shipments are identified by the import documents as an Import Alert item, e.g., "Indian shrimp," the FDA automatically detains the shipment and places it in a storage facility at the importer's expense. The shipment remains at the storage facility until tests conducted by the importer indicate that the food meets FDA standards.

Some companies that package and process foods on the Import Alert list (such as Indian shrimp) have a history of compliance with FDA standards. These companies are placed on an "exempt" or "A" list,³ and their status as preferred packers relieves the FDA's need to detain the food for testing. In other words, foods on the Import Alert list, if they are processed and packaged by an "A" list company, may enter the United States without being automatically detained.

A product not on the Import Alert list (and therefore not subject to automatic detention) may nonetheless be subjected to random sampling. If the FDA decides to sample a shipment, it collects and tests the sample at its own expense. If the product passes the test, it receives a green ticket and Customs releases the shipment. If the FDA determines that neither automatic detention nor random sampling is warranted for a given shipment, the shipment is given a green ticket and allowed to proceed immediately.

In late 1991, the FDA issued an Import Alert for Indian shrimp. Thus, all shrimp imported from India, except shrimp processed and packed by "A" list companies, was automatically detained for testing upon entering the United States.

Bliss Impex, a processor and packer of Indian shrimp, was on the "A" list until December 16, 1991. Sigma purchased shrimp from Bliss Impex both before and after it was removed from the "A" list. Between December 1991 and January 1992, Sigma purchased the following quantities of shrimp from Bliss Impex to be shipped to Tampa, Florida: 701 cartons, 267 cartons, 450 cartons, and 100 cartons. By the time the shipments of shrimp arrived in the United States, Sigma knew that Customs would automatically detain them because Indian shrimp was on the FDA Import Alert list and Bliss Impex was no longer an "A" list company.⁴

In February 1992, Sigma attempted to avoid automatic detention by directing its customhouse broker in Tampa to return the import documents without presenting them to Customs or the FDA.⁵ Later that month, Sigma provided the customhouse broker with falsified invoices that listed Silver Star—an "A" list company—rather than Bliss Impex, as the packer.⁶

Later in 1992, Sigma purchased and had shipped two more packages of shrimp from Bliss Impex—one of 525 cartons, and one of 393 cartons. These packages were packed and processed by "Coral Sea Foods," an "A" list packer at the time of the purchase. After the shipments left India, Coral Sea Foods was removed from the "A" list. Not wanting to have the shipments detained, Sigma had the invoice documents altered again to indicate that Silver Star had packed the shrimp. When the shipments arrived in the United States, Sigma had its employees strip off the Coral Sea Foods labels on the cartons and replace them with labels that read "packaged for Sigma International."

Pursuant to its discretionary authority, the FDA decided to conduct a random sampling of the 525-carton shipment instead of immediately giving it a green ticket and allowing it to proceed. While an FDA inspector was conducting the random sampling of the shipment at Sigma's plant,⁷ she noticed that 348 of the 350 boxes she inspected had the label torn off. The remaining two boxes were labeled "Coral Sea Food," and the other 348 had a new label, "packaged for Sigma, International."

As a result of the suspicious labeling, the FDA began an investigation of Sigma's practices relating to the importation of Indian shrimp. During its investigation, the FDA searched Sigma's offices and its St. Petersburg plant and observed large quantities of shrimp, which had been imported from China, soaking in a chlorine wash. This discovery heightened the FDA's concern about Sigma's handling of imported shrimp, and the agency broadened its investigation.

In late 1994 and early 1995, several of Sigma's customers began rejecting the frozen shrimp Sigma was sending them, claiming that the shrimp was decomposing.⁸ Rather than dispose of the shrimp, Sigma decided to test everything its customers returned. Sigma sorted the returned shrimp into a 5000 series, representing shrimp that was acceptable to resell in its current condition, and a 6000 series, representing shrimp that appeared to be unacceptable but might be salvageable if washed. To determine whether any of the 6000 series shrimp could be saved, Sigma partially thawed the shrimp and tested it organoleptically for decomposition, by smelling and feeling the shrimp. Then, Sigma "washed" the 6000 series shrimp by soaking it in Sea Fresh, a mixture of water, copper sulfate, chlorine, and lemon juice. If, after the "washing," any of the shrimp passed a new organoleptical test, Sigma renumbered the shrimp in a 7000 series, refroze it, and resold it to other customers. If, after the "washing," the shrimp failed the second organoleptical test, Sigma renumbered the shrimp in a 8000 series and stored it in its plant.

In the fall of 1994, Sigma's method of importing frozen shrimp from India and its processing of frozen shrimp from China became the subjects of a grand jury investigation in the Middle District of Florida. In all, three separate grand juries considered the case. The first grand jury was empaneled on May 20, 1992, and two years later, in April 1994, returned an indictment against Yaw-Bin Huang, the president of Sigma (the "Huang indictment"). The Huang indictment, which was filed under seal, charged Huang with the same offenses alleged in the superseding indictment now before us. Huang fled the United States prior to his indictment and has not been apprehended.

With the indictment against Huang lying dormant, the case was presented to a second grand jury, which was empaneled on September 8, 1994, and discharged on September 6, 1995. The second grand jury conducted an extensive investigation into Sigma's affairs; it heard the testimony of scores of witnesses and considered hundreds of documents. The targets of the investigation were, in addition to Huang, the appellants, Sigma, William Walton, and Charles Sternisha, and Jagadeesh Reddy, Robert Fields, and Geogy Kannikal.

By the time it was discharged on September 6, 1995, the second grand jury had spent considerable time entertaining all of the testimony and documentary evidence the Government presented. The second grand jury did not return an indictment (that would supersede the Huang indictment). Instead, on September 6, the second grand jury was discharged. The same day, the third grand jury was empaneled. On September 13, Assistant United States Attorney ("AUSA") Michael Rubinstein introduced the third grand jury to the case and said that he expected it to return an indictment (that would supersede the Huang indictment) the next day.⁹ The grand jury acceded to his request and returned the instant superseding indictment (the "indictment") on September 14.

The indictment contained twelve counts. Counts One through Four involved the Indian shrimp; Counts Five through Twelve involved the Chinese shrimp. Count One charged all of the defendants¹⁰ with conspiring to defraud the FDA and Customs by altering importation documents and conspiring to introduce adulterated shrimp into interstate commerce, in violation of 18 U.S.C. § 371. Counts Two and Three charged the defendants with two instances of knowingly and wilfully introducing imported goods by means of false statements in violation of 18 U.S.C. §§ 542 and 2.¹¹ Count Four charged the defendants with obstructing justice in violation of 18 U.S.C. § 1505 by attempting to obtain false testimony from, among others, the principals of Silver Star Sea Foods and Bliss Impex.¹² Counts Five through Eight charged the defendants with four instances of adulterating Chinese shrimp in violation of 21 U.S.C. §§ 331(k) and 333(a)(2) and 18 U.S.C. § 2.¹³ Counts Nine through Twelve charged the defendants with four instances of introducing adulterated Chinese shrimp into interstate commerce, in violation of 21 U.S.C. §§ 331(a) and 333(a)(2) and 18 U.S.C. § 2.¹⁴

Trial was originally set for April 1, 1996.¹⁵ On December 12, 1995, Sigma moved the district court to examine in camera the transcript of the proceedings before the third grand jury. In its motion and supporting memorandum, Sigma represented "that [a]pproximately three weeks from [the] conclusion [of the Government's investigation, around August 25, 1995,] and the return of the Superseding Indictment [on September 14], the Government switched grand juries abruptly." Sigma further represented that the Government switched grand juries notwithstanding the fact that the earlier (second) grand jury had heard all of the witnesses and examined all of the documentary and physical evidence the FDA and Customs agents had assembled, and that the successor (third) grand jury would have had insufficient time to consider the case. Although Sigma's motion did not accuse the three AUSAs who had signed the indictment of improper conduct, it suggested that something highly inappropriate had occurred, to‑wit: the second grand jury had refused to indict, so the Government let its term expire and had the district court empanel a new (third) grand jury to consider the case.

On January 8, 1996, the Government filed a response to Sigma's December 12 motion. The response consisted, in the main, of Rubinstein's recital of what had transpired before the third grand jury and concluded that "no improprieties occurred."¹⁶ Rubinstein represented to the district court that, during the third grand jury proceeding, he had the case agents summarize the testimony and other evidence that had been presented to the second grand jury. He represented, in addition, that he informed the grand jury that "the full transcripts [of such testimony], and [the] documentary evidence [were] continuously available in the jury room, and [that he] urged the jurors to read such transcripts." Finally, he said that he repeatedly emphasized to the third grand jury that they had a right to summon the witnesses and hear them testify.

The district court referred Sigma's motion to a magistrate judge; she heard the motion on February 15, 1996. At the conclusion of the hearing, she took the motion under advisement. On March 15, 1996, relying on Rubinstein's representations as to the manner in which the case had been presented to the third grand jury (including that Rubinstein had urged the grand jurors to review the transcripts that he had made continuously available to them in the jury room), and without reviewing the transcripts of the grand jury's proceedings, the magistrate judge denied the motion in a written order. She thus did not review the transcripts in camera.

The trial began on August 13, 1996. On September 4, during the Government's case in chief, FDA Agent Robert Siberski, who had testified before the second and third grand juries, took the stand. Pursuant to the Jencks Act, 18 U.S.C. § 3500,¹⁷ Rubinstein gave Sigma transcripts of the exculpatory portions of Siberski's grand jury testimony.¹⁸ On September 5, after reviewing these transcripts, Sigma moved the district court to dismiss the indictment on the ground that improper prosecutorial conduct occurred before the grand jury.¹⁹ Sigma contended that the transcripts demonstrated "exactly the concern that prompted the earlier [motion]" for in camera review: specifically, before the third grand jury, Rubinstein had testified, argued, and wrongfully answered questions from the grand jurors. Sigma requested initially that the court order the disclosure of those portions of Siberski's testimony that had been redacted from the transcripts Rubinstein had turned over.

On September 10, Rubinstein filed the Government's response to Sigma's motion. In it, he once again represented that nothing he did or said before the grand jury could be considered inappropriate. Rubinstein said that presenting a case to a grand jury as he did—by summarizing testimony and documentary evidence considered by a previous grand jury—is acceptable. As for informing the grand jurors of his opinions, he argued that a prosecutor may state his or her own opinions as long as the grand jury is aware that the "opinion is based on the evidence, and [that it is] free to evaluate the evidence as it sees fit." Rubinstein argued, alternatively, that, under the Supreme Court's decision in United States v. Mechanik, 475 U.S. 66, 106 S.Ct. 938, 89 L.Ed.2d 50 (1986), the district court should defer ruling on Sigma's motion until the conclusion of Sigma's trial, when the jury returned its verdict, because "[a] verdict of guilty or not guilty will render moot any issues of evidentiary insufficiency or violation of the [Federal Rules of Criminal Procedure]." Rubinstein's alternative argument apparently impressed the court, because it did not address Sigma's motion on the record until long after Sigma's trial had concluded and the defendant's sentencing hearing had been scheduled.²⁰ On September 11, while the court was presumably considering Sigma's motion and the Government's response, Rubinstein informed the court (in the absence of the jury) that he had filed under seal the complete transcript of the proceedings before the third grand jury.

On September 23, Sigma renewed its motion to dismiss the indictment, contending, as before, that Rubinstein had engaged in improper conduct before the grand jury. As evidence of such conduct, Sigma cited to the heavily‑redacted transcript of FDA Agent Rande Matteson's testimony before the third grand jury, which Rubinstein had turned over pursuant to the Jencks Act (because he intended to call Matteson as a prosecution witness).²¹ The transcripts, according to Sigma, revealed that Rubinstein "again appeare[d] to be testifying" as an unsworn witness, and, Sigma suggested, the redacted portions of the Matteson transcript would disclose additional unsworn testimony. If the court was not disposed to dismiss the indictment, Sigma asked that it release the transcripts of the entire grand jury proceedings which Rubinstein had filed under seal.

The Government did not file a response to Sigma's renewed motion and, once again, the court gave no indication as to when it would dispose of the motion.²²

On September 27, the district court clerk, at the court's direction, sent Sigma a list of the dates of empanelment and discharge of the three grand juries that had considered the case. On the basis of this information, Sigma, on September 30, after the Government had rested its case in chief, filed a "Further Update to Motion to Dismiss Concerning Grand Jury Practices." In this pleading, Sigma noted that the second grand jury, which had received the bulk of the evidence in the case, was allowed to expire at the end of a year instead of being "extended the typical six months." Sigma represented that this was "inconsistent with regular practice." Sigma then pointed to the speed with which the third grand jury indicted Sigma and to the partial transcripts which contained "pages of unsworn testimony by the prosecutor and most likely other improper practices," contending that this demonstrated that misconduct had occurred before the grand jury. The Government did not respond to Sigma's pleading, and the court made no ruling.²³

On October 18, 1996, after ten weeks of trial, the jury returned the following verdicts: Sigma and Walton guilty on all twelve counts of the indictment; Sternisha guilty of Counts One and Five through Eight, but not guilty on Counts Nine through Twelve; Fields (who is not an appellant here) guilty on Counts Nine through Twelve, but not guilty on Count One; Jagadeesh Reddy not guilty.

Sigma was sentenced to sixty months' probation along with fines and restitution in excess of $1.4 million. Walton was sentenced to concurrent prison terms of forty‑one months on Counts One and Four, twenty‑four months on Counts Two and Three, and thirty‑six months on Counts Five through Twelve to be followed by twenty‑four months' supervised release. Sternisha was sentenced to twenty‑seven months' imprisonment and two‑years' supervised release.

On April 21, 1997, the district court entered an order denying Sigma's motions to dismiss the indictment. The court based its decision on two alternative grounds. First, agreeing with the Government, the court held that, under United States v. Mechanik, "[a] petit jury's guilty verdict renders harmless any error in the grand jury's charging decision that may flow from violations before the grand jury." Thus, because the petit jury had found the defendants (with the exception of Reddy) guilty, any prosecutorial misconduct that may have occurred was harmless.

The court held alternatively that Rubinstein's conduct did not unfairly prejudice the grand jury's deliberations and therefore did not render the indictment a nullity. Stating that "[t]he prosecutor offered a reasonable explanation" for the dismissal of the second grand jury, the immediate empanelment of the third grand jury, and its return of the indictment after considering the case for two days, the court found nothing suspicious. In particular, there was nothing suspicious about Rubinstein's failure to present the indictment to the second grand jury because "[t]he decision was made not to seek an indictment until after the deposition of an important witness in India, P.P. Makkar." Although the second grand jury's term could have been extended so that it could vote on the indictment after Makkar's deposition was taken, the court found nothing unusual about Rubinstein's decision not to ask for an extension.

The court made short shrift of two of Sigma's claims that Rubinstein's conduct before the third grand jury had undermined its independence—specifically, (1) that Rubinstein, acting as an unsworn witness, had summarized the evidence presented to the second grand jury, and (2) that he had pressured the grand jury to return the indictment (that he was presenting) in less than two days. Addressing the first point, the court found Rubinstein's summary of the evidence insignificant, especially in light of the fact that he had the case agents testify in person and answer any questions the grand jurors may have had. The court disposed of Sigma's second point by noting that Rubinstein told the grand jury that, if they needed more information, he would produce it—the inference being that voting on the indictment could be deferred.

Sigma, Walton, and Sternisha appeal their convictions. They contend that their convictions should be set aside and the indictment dismissed on the ground that prosecutorial misconduct undermined the independence of the grand jury and thus rendered the indictment a nullity. Alternatively, they ask for a new trial based on errors that occurred during their trial.²⁴ Walton and Sternisha also challenge their sentences, contending that the district court misapplied the Sentencing Guidelines. The court did so, they say, by miscalculating the amount of the loss attributable to their conduct; this error, in turn, yielded a higher Guideline sentence range and more severe sentences than a correct loss calculation would have supported.

II.

In briefing their first ground for reversal—whether the district court should have dismissed the indictment—Sigma did not have access to the transcripts of the proceedings before the third grand jury. All that Sigma had were the redacted transcripts that Rubinstein had turned over at trial pursuant to the Jencks Act.²⁵

When we examined the record on appeal we noticed that, contrary to what Rubinstein told the district court during the trial (on September 11, 1996), the Government never did file the complete transcript of the grand jury proceedings. The complete transcript was still in the possession of the United States Attorney's office. We therefore instructed the United States Attorney to file under seal with the clerk of this court all of the transcripts of the proceedings before the third grand jury.

After these transcripts were filed, we did not make them available to the appellants and request supplemental briefing. Rather, we proceeded to decide their first ground for reversal on the cold record. Having done so, we concluded that, although Rubinstein's conduct before the third grand jury was "unacceptable" (in that he rushed the grand jury to do something in less than two days that the second grand jury had not done after one year of extensive investigation) such conduct had not undermined the independence of the grand jury. United States v. Sigma Int'l, Inc., 196 F.3d 1314 (11th Cir.1999). Turning to the appellants' claims of trial court error, we found no basis for overturning the jury's verdicts and ordering a new trial. Id. at 1320. We concluded, however, that the court had erred in fashioning the sentences of Walton and Sternisha and we therefore remanded their cases for resentencing.²⁶ Id. at 1324-26.

Following the issuance of our opinion, both sides petitioned for rehearing. The Government contends that the panel opinion improperly prescribes standards of prosecutorial conduct in grand jury proceedings in violation of the Supreme Court's decision in United States v. Williams, 504 U.S. 36, 112 S.Ct. 1735, 118 L.Ed.2d 352 (1992). In addition, the Government characterizes our treatment of Rubinstein as "unfair." Sigma and the other appellants claim that Rubinstein so overbore the grand jury that he "substantially interfered with its charging decision." They assert that we should therefore direct the district court to vacate their convictions and sentences and dismiss the indictment. Given these opposing positions, we directed the clerk to unseal the complete transcripts the United States Attorney had filed and send copies thereof to the parties. We then directed the parties to file supplemental memoranda on three issues, all bearing on the question of whether the district court should have dismissed the indictment.²⁷

Having the benefit of counsel's submissions, we now address the question whether the district court abused its discretion in denying Sigma's motions to dismiss the indictment.²⁸ In doing so, we focus initially on what was before the district court at the time it issued its dispositive order on April 21, 1997.

We review a denial of a motion to dismiss an indictment under the abuse of discretion standard. United States v. Pielago, 135 F.3d 703, 707 (11th Cir.1998). A district court abuses its discretion if, in deciding the issue, it applies the wrong legal standard, Delta Air Lines, Inc. v. ALPA, Int'l, 238 F.3d 1300, 1308 (11th Cir.2001), or makes findings of fact that are clearly erroneous, In re Celotex Corp., 227 F.3d 1336, 1338 (11th Cir.2000).

At the time the district court ruled on Sigma's motions to dismiss the indictment, the court had available to it the redacted transcripts that Rubinstein gave defense counsel as Jencks Act material and the (as we now know) incomplete transcripts that Rubinstein had filed under seal with the court on September 11, 1996. The court also had the benefit of the three briefs filed in support of Sigma's four motions and the Government's responses to Sigma's motion for in camera review and first motion to dismiss the indictment.

In determining whether the district court abused its discretion, we note, as discussed in Part I.D.2, supra, that the court relied on two alternative grounds to deny Sigma's motions to dismiss the indictment. If either ground is sustainable, we must affirm the district court.

The district court first held that the petit jury's verdicts rendered the alleged misconduct before the third grand jury moot under the Supreme Court's decision in United States v. Mechanik, 475 U.S. 66, 106 S.Ct. 938, 89 L.Ed.2d 50 (1986). The Government maintains that Mechanik controls this case and that the district court properly applied it. We disagree.

The Government contends that Mechanik stands for the proposition that any error in the grand jury proceedings, regardless of its effect upon the grand jury's decision to indict, is rendered harmless by a petit jury's subsequent guilty verdict. In Mechanik, two government witnesses testified in tandem before the grand jury in violation of Fed.R.Crim.P. 6(d), which limits who may be present in the grand jury room while the grand jury is in session. The Court held that any such violation was nonetheless rendered harmless when the defendant was found guilty at trial.²⁹ Mechanik, 475 U.S. at 73, 106 S.Ct. at 943. The rule thus set forth in Mechanik—that a guilty verdict renders harmless any error before the grand jury—is based upon the limited role of the grand jury, which is to find whether there is probable cause to believe that the defendant committed a crime. If a petit jury later finds the same defendant guilty of the crime beyond a reasonable doubt, logic dictates that the lesser standard of probable cause has obviously been met. See id.

In a concurrence, Justice O'Connor took issue with the focus of the majority's harmless error analysis. Id. at 73-79, 106 S.Ct. at 943-946 (O'Connor, J., concurring). She argued that the harmless error inquiry should not hinge upon what transpired at trial, but upon whether the error committed before the grand jury substantially influenced its decision to indict. Id. at 76-77, 106 S.Ct. at 944 (O'Connor, J., concurring). If the error may be said to have substantially influenced the grand jury, Justice O'Connor believed that the indictment should be dismissed notwithstanding a guilty verdict at trial. Id. at 78, 106 S.Ct. at 945 (O'Connor, J., concurring).

Two years after Mechanik was decided, the Court, in Bank of Nova Scotia v. United States, 487 U.S. 250, 256, 108 S.Ct. 2369, 2374, 101 L.Ed.2d 228 (1988), adopted Justice O'Connor's reasoning. In determining whether an indictment should be dismissed for Rule 6(d) and (e)³⁰ violations, the Court held that the proper inquiry is whether the error before the grand jury " 'substantially influenced the grand jury's decision to indict' or [whether] there is 'grave doubt' that the decision to indict was free from the substantial influence of such violations."³¹ Id. (quoting Mechanik, 475 U.S. at 78, 106 S.Ct. at 945-46 (O'Connor, J. Concurring)). Thus, Bank of Nova Scotia redirected the harmless error analysis to the grand jury proceedings themselves rather than the outcome of the trial.

Although Bank of Nova Scotia did not explicitly overrule Mechanik, we query what, if anything, remains of the Mechanik rule.³² We need not answer the question, however, for we believe that Bank of Nova Scotia clearly controls the instant case. We therefore hold that when a defendant raises a constitutional objection to an indictment prior to the conclusion of trial, the rule set forth in Bank of Nova Scotia is the applicable law.³³ Under those circumstances, the court should review the grand jury proceedings to determine whether the alleged constitutional error "substantially influenced the decision to indict," or at least casts "grave doubt" upon the independence of the grand jury's decision, regardless of a subsequent guilty verdict.³⁴ Id.

The district court's April 21, 1997 order denying Sigma's motions to dismiss the indictment relied first upon Mechanik. The court held that, under Mechanik, "[a] petit jury's guilty verdict renders harmless any error in the grand jury's charging decision that may flow from violations before the grand jury." Thus, the court held that the guilty verdicts returned against the defendants made any inquiry into the grand jury proceedings unnecessary. Notably, the district court did not discuss, or even cite, Bank of Nova Scotia.³⁵

The court's reliance on Mechanik was an erroneous application of the law, and, as such, constituted an abuse of discretion. Bank of Nova Scotia eviscerated Mechanik 's central holding, and clearly stated that a guilty verdict is no longer sufficient to validate the underlying indictment. Rather, it is incumbent upon the court to examine the grand jury proceedings themselves and determine whether the alleged violations substantially influenced the grand jury's decision to indict. We cannot, therefore, affirm the district court on the ground that it properly applied Mechanik. We must still affirm the district court's decision, however, if the alternative ground upon which the decision relies is valid.

The district court's alternative reason for denying Sigma's motions to dismiss the indictment was that, based on the record before the district court, Rubinstein's conduct did not warrant dismissal. In making this ruling, the court was misled to assume that it had the complete transcript of the grand jury proceedings before it. During an exchange outside the presence of the jury on September 11, 1996, Rubinstein told the court that he had filed

the total grand jury transcripts for that particular session of the [third] grand jury. That was the two‑day session that resulted in the indictment and the third grand jury that considered the matter. I did not file those in open court [they were filed under seal] because they are [Federal Rule of Criminal Procedure] 6(e) materials and very little of them are Jencks [Act statements], I believe.

(emphasis added). A few moments later, the court sought to clarify what Rubinstein had filed by asking, "Mr. Rubinstein, it's my understanding that what you have filed with the court is a complete copy of the grand jury's, the indicting grand jury—or the grand jury transcript, the indicting grand jury; is that right or not?" (emphasis added). Rubinstein's response was "You're right to have that understanding." (emphasis added). In fact, Rubinstein had not filed all of the transcripts of the proceedings before the third grand jury. Instead, he had filed three excerpts from those transcripts: the first half of the first day's session on September 13 and two excerpts from the testimony of Agent Siberski on September 14.³⁶

The deficiencies in the record the district court had before it when issuing its order are fatal to the court's findings.³⁷ As a result of Rubinstein's misleading statements to the court, the court could not make an informed ruling. For instance, the court found that while Rubinstein did not present the indictment to the second grand jury during its entire twelve‑month term—but waited, instead, to present it to the third grand jury (based solely on the evidence presented to the second grand jury)—his actions were not "suspicious." Rather, the court found that Rubinstein's statement—that he did not want to "seek an indictment [from the second grand jury] until after the deposition of an important witness in India, P.P. Makkar"—was a "reasonable explanation."

Had the court been able to examine the complete transcript of proceedings before the third grand jury, which Rubinstein had in fact not filed with the court, it would have learned that the third grand jury indicted Sigma without the aid of Makkar's deposition, and that the indictment was rendered less than two weeks after the second grand jury was discharged.³⁸ Further, the remainder of the transcripts (which were never presented to the district court) evince numerous instances of improper and overreaching conduct, discussed infra Parts III.B and C.

The inadequacy of the record before the district court renders its alternative holding a nullity. We cannot sustain the court's determination based on a fatally deficient record. Therefore, whether the instant indictment should be dismissed remains an open question.

Having determined that the district court's denial of Sigma's motions to dismiss the indictment cannot be sustained, we confront the question whether to remand the case so that the district court can reconsider Sigma's motions after reviewing the whole transcript or to decide the validity of the indictment ourselves based on the record. To answer this question, we consider what a court may examine to determine whether the grand jury's decision to indict was substantially influenced by improper evidence. If the district court, on remand, would look only to the same cold record that we currently have before us, we may determine the validity of the indictment without remanding.

Rule 6(e)(1) of the Federal Rules of Criminal Procedure requires "[a]ll proceedings, except when the grand jury is deliberating or voting, [to] be recorded stenographically or by an electronic recording device." A court will certainly rely on these transcripts in determining whether the grand jury was overborne. By providing the court with an exact account of what transpired in the grand jury room, the transcripts give the court circumstantial evidence as to whether the grand jury acted as an independent body.

The transcripts do not, of course, provide direct evidence of what the jurors were thinking. The most direct way to determine that would be to hold a hearing and question each juror. Such an evidentiary hearing would be inappropriate, however, because the district court lacks the power to summon the grand jurors and inquire as to their reasons for returning the indictment.³⁹ See John Roe, Inc. v. United States (In re: Grand Jury Proceedings), 142 F.3d 1416, 1426 (11th Cir.1998).

Consequently, the only evidence on which a court can rely in determining the validity of the indictment is the cold record of the grand jury proceedings. The district court would use the same cold record that is currently before us. We will therefore proceed to determine whether the record yields inferences that demonstrate that the grand jury was not acting independently when it returned the instant indictment. We begin by discussing our authority to review grand jury proceedings; next, we examine what occurred before the third grand jury; and finally, we consider the appropriate inferences to be drawn from the transcripts.

III.

If the Fifth Amendment's promise that "[n]o person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury," U.S. Const. amend. V, means anything, it means that a criminal indictment must actually issue from a grand jury, and not some other source. The fundamental concept underlying the Fifth Amendment guarantee is that in order for an indictment to be recognized as actually issuing from a grand jury, it must be the product of an investigative deliberation that is independent of both the prosecuting attorney and the court. See United States v. Williams, 504 U.S. 36, 49, 112 S.Ct. 1735, 1743, 118 L.Ed.2d 352 (1992) ("Recognizing [the] tradition of independence [of the grand jury], we have said that the Fifth Amendment's constitutional guarantee presupposes an investigative body acting independently of either prosecuting attorney or judge.") (emphasis in original) (internal quotation marks and citations omitted); United States v. Dionisio, 410 U.S. 1, 18, 93 S.Ct. 764, 773, 35 L.Ed.2d 67 (1973) (finding that a grand jury "must be free to pursue its investigations unhindered by external influence"); Wood v. Georgia, 370 U.S. 375, 390, 82 S.Ct. 1364, 1373, 8 L.Ed.2d 569 (1962) (recognizing "[t]he necessity to society of an independent and informed grand jury"); John Roe, Inc. v. United States (In re: Grand Jury Proceedings), 142 F.3d 1416, 1425 (11th Cir.1998) (explaining that although a grand jury relies on the judiciary when it seeks subpoenas or contempt sanctions, it "performs its investigative and deliberative functions independently"). Without a guarantee of independence, the indictment would not be the genuine issue of a grand jury within the meaning of the Constitution.

It is clear, for example, that if a prosecutor simply drew up an "indictment," had a grand jury foreperson sign it, and then used it to charge the defendant with a criminal offense, we would dismiss the "indictment" out of hand as violative of the Fifth Amendment. This is because the "indictment" would in no sense be the product of a constitutionally required grand jury proceeding. So, too, would we dismiss an indictment that was issued by a "kangaroo grand jury"—one whose deliberations were so overborne by a prosecutor or judge that the indictment was, in effect, the prosecutor's or judge's handiwork, and not the result of a considered judgment by an independently functioning grand jury. See United States v. McKenzie, 678 F.2d 629, 631 (5th Cir.1982) (holding that an indictment may be dismissed "when prosecutorial misconduct amounts to overbearing the will of the grand jury so that the indictment is, in effect, that of the prosecutor rather than the grand jury"); see also Stirone v. United States, 361 U.S. 212, 218, 80 S.Ct. 270, 273, 4 L.Ed.2d 252 (1960) ("the very purpose of the requirement that a man be indicted by a grand jury is to limit his jeopardy to offenses charged by a group of his fellow citizens acting independently of either prosecuting attorney or judge.").⁴⁰

Subsequent Supreme Court cases have reaffirmed the importance of the Fifth Amendment's Grand Jury Clause, implying that courts have the authority to dismiss an indictment that is the product of a grand jury process so flawed that the grand jury's independence has been infringed. In Bank of Nova Scotia v. United States, 487 U.S. 250, 108 S.Ct. 2369, 101 L.Ed.2d 228 (1988), the Supreme Court held that even though a district court must find that an error in the grand jury proceedings actually prejudiced the defendant in order to dismiss the indictment, "[i]n the case[ ] before us we do not inquire whether the grand jury's independence was infringed. Such an infringement may result in grave doubt as to a violation's effect on the grand jury's decision to indict, but we did not grant certiorari to review this conclusion." Id. at 259, 108 S.Ct. at 2375-76. Williams lends further support, despite holding that a district court's supervisory power could not be invoked to compel a prosecutor to disclose exculpatory evidence to a grand jury. In Williams, the Court acknowledged that the defendant did "not contend that the Fifth Amendment itself oblige[d] the prosecutor to disclose substantial exculpatory evidence in his possession," Williams, 504 U.S. at 45, 112 S.Ct. at 1741, implying that the court had the authority to act if the Grand Jury Clause had been violated.⁴¹

Although numerous constitutional protections afforded criminal defendants have no application in the grand jury context, see Williams, 504 U.S. at 49-50, 112 S.Ct. at 1743-44 (collecting cases); but see, e.g., Vasquez v. Hillery, 474 U.S. 254, 263-64, 106 S.Ct. 617, 623-24, 88 L.Ed.2d 598 (1986) (holding that racial discrimination in the selection of grand jurors, in violation of the Fourteenth Amendment's Equal Protection Clause, compelled dismissal of the indictment), the Supreme Court has never retreated from the fundamental proposition that "the Fifth Amendment's constitutional guarantee presupposes an investigative body acting independently of either prosecuting attorney or judge," Williams, 504 U.S. at 49, 112 S.Ct. at 1743 (emphasis in original) (internal quotation marks and citations omitted).

The Fifth Amendment requires that an indictment issue from an independent grand jury. Where a grand jury proceeding is so corrupted by the conduct of a prosecutor or judge that it "substantially influenced the grand jury's decision to indict, or if there is grave doubt that the decision to indict was free from ... substantial influence," Bank of Nova Scotia, 487 U.S. at 256, 108 S.Ct. at 2374 (internal quotation marks and citations omitted), courts should not hesitate to remedy the violation because the indictment is not, in reality, "of a Grand Jury," U.S. Const. amend. V.

To determine whether the prosecutor's conduct so overbore the will of the grand jury that the appellants were denied their Fifth Amendment grand jury right, we now examine the complete transcripts of the third grand jury proceedings.⁴² In examining the transcripts, we are mindful that the ultimate issue is not the propriety of Rubinstein's conduct, but whether that conduct, under the circumstances, abrogated the independence of the grand jury.

As noted above, the third grand jury was empaneled on September 6, 1995, a Wednesday, the same day the second grand jury was discharged. Rubinstein took this case to the third grand jury on Wednesday, September 13. He introduced himself to the grand jury as follows:

My name is Mike Rubinstein and I'm an Assistant U.S. Attorney, and I'm here to present to you this morning some evidence and some legal explanation about a case which we'll be asking you to vote on and consider tomorrow.

Following this introduction, Rubinstein handed a copy of the (superseding) indictment, consisting of twenty‑one pages and twelve counts, to each member of the grand jury and said,

you'll notice it's called a superseding indictment. And what that means is that there was another indictment related to this case that's already been returned by a different Grand Jury. And one of the people [Huang] who is on this list of defendants is already under indictment, and this case is basically an expansion of the indictment against that one individual.

So the case already has a number and it's already been assigned to a judge. The 24(c) indicates it's Judge Bucklew. So this case is already a live case, but what we're doing is we're greatly expanding it and we're adding a whole lot to the original indictment and I'll explain that.

Then, before he reviewed the indictment with the grand jury, Rubinstein explained how the case came to him.

[T]he case was ... finally [assigned] to me, and I called quite a number of witnesses before the [second] Grand Jury and we did a lot of investigation. We got a lot of documents and records.

A Grand Jury before you had heard this case for a long time, a lot of witnesses, a lot of discussion. They went out of existence last month [actually, last week, the day the third grand jury was empaneled ]. Okay. They went out of existence before they could consider this indictment. They've never seen the document [i.e., the superseding indictment] that you have. They were very unhappy about that because they had spent a lot of work on it. However, it just worked out that way for reasons that they had nothing to do with. (emphasis added).

Later in the first day of proceedings, Rubinstein added:

The problem that [the second grand jury ] had was that [it] wanted to vote on it. They wanted to be in a position to hear the evidence and decide, just as you're being asked to do, since they'd heard it for months. They'd heard these witnesses and they were interested in it and they were following it very avidly. And then I came to them and I said, I'm sorry, you're not going to get a chance to vote on this case because of an administrative situation in my office with the travel budget basically. So until we resolve that, I don't have time. And they all said, oh, I'm so sorry, good‑bye, and now I'm presenting it to a new Grand Jury. That's what I said. That's what I meant to convey to you. (emphasis added).

Rubinstein then explained the "administrative situation" that had delayed the second grand jury's consideration of the case.

Essentially what occurred was we presented this case to a committee in my office who votes on whether or not the indictment should proceed. You see at the end of this document[, the superseding indictment,] that you have there's a signature by [AUSA] Robert Monk—and by the way, don't be influenced by the signatures. They don't mean anything except internally to us—but he is my supervisor.

And then he and others said, well, there's some administrative budgetary considerations that had to do with the budget in our office, nothing to do with the case, and we think that the U.S. Attorney himself should consider this because we have no—there's a lot of money that has to be spent on this case and before I approve this, I want to make sure that all the money is approved to spend because I don't want to get into something and then have to—you know, what are we going to do? I mean, we've already charged people with a bunch of crimes. What are you going to say, sorry, we don't want to spend the money? So the U.S. Attorney had to consider it first, and he said, yes, go ahead, do what you need to do.

Well, in the time it took to do that, that Grand Jury went out of existence. So because of that little bureaucratic holdup, they never got to vote. (emphasis added).

Rubinstein later added:

And just for your information the bureaucratic problem that held up the last Grand Jury ... was the expense of going to India to take [Makkar's] deposition. My supervisor wanted to make sure that the U.S. Attorney would be willing to underwrite the expense ....⁴³

Having explained to the jurors how he became involved with the case and how the case came to be before them, Rubinstein described how he wanted to proceed over the next two days.

So what I would like to do—and it may not be possible, and I don't want you to feel like you have any—that you're rushed in any way. But I am rushing you, but I'm really not in the sense that if you don't like it or if you feel that you need to know more, just tell me so.

[T]he plan is—my plan, and it's not necessarily your plan—is to try to summarize basically everything that has gone on so far in two whole days, basically, and explain to you in these two whole days what the previous people[, i.e., the members of the first and second grand juries] have considered, the evidence that they've heard, have people available to answer your questions, and then ask you if you are ready to vote on this indictment.

And by the time—by the end—by tomorrow afternoon, hopefully you'll be familiar enough with this indictment .... [and] if you feel that you're ready to vote, I'm going to ask you to vote on it tomorrow. If you don't feel ready, you tell me. Okay?

....

So I want to start out by sort of making an opening statement about the facts of the case, who these people are, what the general evidence is, sort of like an opening statement in a trial, and then I'll let you ask me any questions that you want.

....

I'll sort of screen [your] questions so that we don't get glitches in the record, because essentially what happens is that many of the witnesses who testify here—let's assume that you indict these people. Let's assume that there's a trial. Okay. Let's assume that one of those witnesses that testifies here ends up testifying at the trial about the same things that he told you. Before the trial, I have to turn over a transcript of what he said to the defense attorneys. They read it over and they look for mistakes, inconsistencies, ways to prove he's lying or he didn't remember or whatever. Very often it's just, you know, you'll ask some question—like you might ask, well, have these people ever done anything like this before, and he'll say something. And then they'll get the transcript and then they'll say, well, obviously the Grand Jury was prejudiced by—because the witness said that these are major criminals. And that isn't true, but I'm just saying that's an example of how an innocent question can get turned into something that messes up the case.

So that's why I want to screen the questions .... (emphasis added).

Rubinstein did not "screen" the questions asked by members of the second grand jury. His explanation for doing so with the third grand jury was:

You might notice ... ladies and gentlemen, in th[e second] Grand Jury the Grand Jurors are asking the questions directly. We had finished—I had finished my questions and the Grand Jurors were asking questions and, as a result, the witness was talking for a long time and it went on for [a] long time, which is fine. But the reason that I wanted to use a different system basically was that it did take so much time. And if you do want to ask questions directly, if you think that's important, just let me know and we'll change that. I want to rush you, but I don't want to rush you unfairly if you feel that—you know, that I'm going too fast. (emphasis added).

After taking care of preliminary matters—how he got involved with the case, how the case got to this grand jury, how he would present the evidence, and how the jurors were to ask questions—Rubinstein spoke for the first three‑quarters of the day on September 13. First, he explained Sigma's business enterprise,⁴⁴ the company's organizational structure, how the individual defendants named in the indictment functioned within that structure, and how the FDA's and Custom's regulatory systems worked. Then, Rubinstein had the jurors read the indictment that he had prepared (which the grand jury returned the next afternoon). He went through the indictment allegation by allegation, count by count, identifying those who were to be indicted and, with respect to the conspiracy count in particular, explaining the roles they played in Sigma's scheme to violate the food and drug importation laws.

Turning to the conspiracy charge, Count One, Rubinstein told the jurors that he was going to give them a "law school type lecture" on conspiracy.

This happens to be difficult—this is a fancy conspiracy.... So if you understand this conspiracy, you can understand any conspiracy. And I will explain the law of conspiracy to you so that you will understand it and, if you don't, you can ask me questions until you're blue in the face and I'll answer them, okay, because you need to understand the law of conspiracy.

As part of his lecture, Rubinstein gave the jurors an example of a conspiracy. The example was practically identical to the conspiracy charged in count one.

Let's say that the United States has an elaborate system for making sure that decomposed or contaminated or otherwise adulterated food doesn't enter the United States, doesn't get sold to people there if it entered into interstate commerce. And let's say that the United States government through the Customs agency and the FDA have this system that we just described trying to stop certain foods from coming into the United States doing automatic detention on some, doing surveillance samples on some; sets up this system, okay.

And let's assume that some company that wants to save money or save—or avoid problems or whatever else buys shrimp cheaply and sell it high and make more money that way, or for whatever reason decides that the system that the United States has set up is very burdensome, expensive, cumbersome, and they would like to figure out a way to get around the system.

And let's say that they agree together and they figure out some way that they'll get their product in and it will not go through automatic detention even though maybe it otherwise should go through automatic detention, and that way they can save money and whatever. Okay? And they figure out how to do that. They plan to do that. They agree that that should be done. And then they—in this case, [i.e., the instant case] we allege that they actually carry it out.

....

The indictment is the story of the case so that you or anybody else who wants to understand what they did ideally would be able to read this document and understand—make some sense out of what they did.

As he walked through the indictment, Rubinstein paused on several occasions to tell the jurors what the evidence would show, for example:

Now, in summary, what the evidence will show is that Sigma and these individual defendants, or some of them, conspired to substitute the invoices for two specific shipments—actually more than two, but two that we get into detail on—two specific shipments of frozen shrimp from India.

Regarding Count Four of the indictment, the obstruction of justice charge, Rubinstein said that the defendants knew they were being criminally investigated in April 1994, yet tried to obstruct justice by sending fraudulent faxes to (1) make it look like Sigma really had a contract with Silver Star to pack shrimp and (2) convince someone in India to tell Customs that Sigma had a contract with Silver Star.

And then the overt acts [alleged in the indictment], I'll go into those because they're relatively brief. It says that first on March 26, '93, Kannikal, who was in India, told Huang and Walton in a fax—and we'll show you—we have faxes with—these faxes were seized in the search—that he had received a telephone call from a Customs agent and that he was—and whenever we have it like this, this is exactly what the fax said—"Really worried because of this. What ever it is I [will] act according to your instructions. In fact I still don't know what is real problem [sic] with this case."

....

So we know that Kannikal did, in fact, follow the instructions, met with the Silver Star guy, spent hours with him, tried to persuade him, but he wouldn't bite.

....

... In fact, Bliss Impex did submit a false written statement and it was found in the search of Sigma's premises and we have the false statement from Bliss Impex.

Paragraph ten on page twelve of the indictment alleged that on or about July 21, 1992, Kannikal sent a fax to Walton which read: "Bliss entered into a contract with Coral now all future packing will be in the name of Coral. Silver cancelled contract with Bliss since Silver going to start their production." In response to a juror's question about the significance of that paragraph, Rubinstein said:

The significance of that is that that tells you that on that date, okay, on that date, you know that Andy Walton knows—what does Andy Walton know that his agent just told him?

He told him, one, that Bliss had canceled—Bliss entered into contract with Coral now. All future packing will be in Coral. Silver canceled contract with Bliss.

You now know that Andy Walton knows that as of that date. Okay? Just keep that in your mind when you hear the rest of the evidence and the significance of it will emerge. Okay? Because that tells you what Andy Walton knew and when he knew it. So if Andy Walton does or says anything after the 21st of July of 1992, you can ask yourself in your own mind: Was he telling the truth or was he not? Okay? (emphasis added).

After Siberski explained that the date of a particularly important fax (July 24, 1992) coincided with the date Inspector Harvey visited Sigma to take pictures of the shrimp being washed in chlorine, Rubinstein spelled out what the grand jurors should assume and the inferences they should draw from Siberski's testimony:

Remember the agent's earlier testimony was that Norm Harvey went out there and he came back again at another time and he said bring the cartons out. He went out there and he saw the 525 cartons with the labels ripped off. He went back to his office to look at the paperwork. He saw the typewriting on a slant and darker. He called Customs. He told Customs there's a problem with that, take a look at it. Then he went back out again and he said: Pull those cartons back out, I want to take another look at them. That was the 525 cartons. And he looked at the cartons and he saw that the labels had been ripped off and he took photographs.

On that same date, after they see the inspector taking pictures of the labels, Andy Walton gets nervous. So he knows that this other shipment's coming because he's got the paperwork, and he's already taken care of the paperwork. The paperwork is okay. It looks good. But he knows that he got in trouble before on the stupid labels. So he gets back to Kannikal and he says: I know you did the paperwork, but what about the labels on the cartons? I need to know that right away.

....

... They know that [the FDA inspector's,] seen it because they've seen him taking pictures of the labels. And that's what that fax is about. And that date is a very important date because it's the same day as the pictures were taken.

....

Now, the paragraph—the long paragraph above it is very interesting, because what that paragraph is is Andy Walton telling Goegy [sic] Kannikal this is the story, okay, this is the situation: We originally contracted to buy from United Marine.

He's saying at first: I want you to contact Bliss and Silver Star pertaining to the two shipments....

....

So in other words, Goegy [sic] is telling Jag Reddy up there at Sigma Cochin—he's telling him that Makkar, who is the managing director of Silver Star, who was supposed to sign this letter, he's not comfortable with this and he's going to IMPEDA, the India Commerce Authority, and saying either IMPEDA will send me a letter or Customs will send me a letter requesting that I send this letter that you want me to sign. If they don't—if I don't get okay from Indian authorities and I don't get the okay from U.S. Customs, I'm not sending any letter like that.

And here Goegy [sic] Kannikal is telling Reddy this is the status, so I'll keep you posted of progress. So far haven't gotten a letter.

....

So they're aware—Kannikal is aware in India that Agent Siberski in Tampa is trying to get the shipment details from Makkar, that he's talking to Makkar.

....

We don't want to speculate about their income and taxes and expenses because, you know, without knowing every expenses that they had, we'd never be able to prove that. We can assume—I think you could fairly assume that nobody would go through the trouble of doing all this if they didn't think they would make enough money to make it worthwhile to do this. But how much money, who knows?

....

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