Unpublished Disposition, 859 F.2d 154 (9th Cir. 1988)

MEMORANDUM^** 

Appellants timely filed this interlocutory appeal from the district court's denial of their motion to dismiss a 23-count mail fraud and conspiracy indictment on grounds of prosecutorial misconduct before the grand jury.

* In August of 1983, San Diego Police Detective Kathleen Thaxton began an investigation into a real estate investment fraud scheme in which appellants Frank Consoli, Rudy Decker Lang, Alan L. Williams, Edward Wingender, and others were allegedly involved. Later that year, Thaxton prepared a 55-page affidavit to obtain a search warrant that was executed at the residences and business premises of appellants on October 18, 1983.

In her affidavit, Thaxton asserted that she had consulted an Advisory Title Officer named Linda Slavik, at Transamerica Title in San Diego. Thaxton had sought Slavik's advice regarding a series of approximately thirty transactions recorded between July 1981 and August 1983 on a single piece of property, located on San Elijo in Rancho Santa Fe, California. This so-called "San Elijo property" had been transferred back and forth multiple times within a small group of parties that included appellants and corporate entities controlled by appellants. Thaxton further stated in her affidavit that "it was [Slavik's] expert opinion that the primary result [of the series of transactions] was to artificially inflate the value of the property, over-and-above what would ordinarily occur under normal market conditions." Artificially escalated property values were allegedly used by appellants to mislead investors who made loans that were secured by third and fourth trusts deeds to the property.

Between June 15, 1984 and July 14, 1985, Thaxton testified seven times before a federal grand jury empanelled to investigate the allegedly fraudulent investment scheme. In the course of her grand jury testimony, Thaxton identified Slavik as one of several sources for her assertions that the multiple San Elijo transactions were designed to artificially escalate the value of the property.

On February 28, 1985, the grand jury returned a 23-count indictment against appellants, charging them with mail fraud, conspiracy to commit mail fraud, and aiding and abetting in violation of 18 U.S.C. §§ 371 and 1341.

The single statement that formed the basis for appellants' motion to dismiss their indictment was made by Linda Slavik in a deposition taken on December 17, 1987, in a related civil fraud action, Avant v. Bogart, No. 85-1785-K-1, that was filed against appellants and is currently pending before the District Court for the Southern District of California. At one point in her deposition testimony, Slavik appeared to contradict representations Thaxton had made before the grand jury regarding the title officer's "expert opinion" by simply answering "No" to the question: "Did you tell Ms. Thaxton that it was your expert opinion that the primary result of the transactions involving the San Elijo property ... was to artificially inflate the value of the property?" Government attorneys were not present at the Slavik deposition.

II

Asserting Thaxton's and Slavik's apparently conflicting statements as the basis for a claim that Assistant United States Attorney John Heisner had misled the grand jury by allowing Thaxton to report false hearsay from Slavik, appellants moved on April 18, 1988, to dismiss their indictment because of prosecutorial misconduct. Both Thaxton and Slavik testified regarding their statements at an evidentiary hearing on appellants' motion, held before Judge Rudi Brewster on May 24, 1988.

Slavik testified that, back in 1983, she had discussed with Thaxton the concept of artificial escalation of property values by means of multiple recorded transactions. She did not, however, recall the specific content of their discussions. Slavik explained that in her 1987 deposition testimony, she did not mean to deny telling Thaxton that a series of transfers between the same parties could artificially escalate the value of a piece of property; she merely rejected the deposing attorney's characterization of statements she had made to Thaxton as her "expert opinion" that the multiple transactions among appellants had in fact artificially inflated the value of the San Elijo property.

At the close of the testimony, Judge Brewster found that "the difference between what Ms. Thaxton understood Ms. Slavik to say and what Ms. Slavik now remembers saying is very, very close," and that "at the very least, Ms. Slavik told Ms. Thaxton that these conveyances back and forth between the same persons could have an effect of escalating the property value." Transcript of Motion Hearing, May 24, 1988 at 209-11. Accordingly, he denied appellants' motion.

III

We have jurisdiction to review before trial claims that prosecutorial misconduct has undermined the integrity of the grand jury process. United States v. Fritz, No. 87-1102, Slip Op. 9203 (9th Cir. July 27, 1988); United States v. Dederich, 825 F.2d 1317, 1320-21 (9th Cir. 1987); United States v. Benjamin, 812 F.2d 548 (9th Cir. 1987).¹ 

The district court's factual findings, including those regarding the credibility of witnesses, are subject to review under the "clearly erroneous" standard. United States v. Clawson, 831 F.2d 909, 914 (9th Cir. 1987). As to the proper standard of review for the district court's denial of appellant's motion to dismiss their indictment on grounds of prosecutorial misconduct before the grand jury, our cases are divided. United States v. Gonzalez, 800 F.2d 895, 899 (9th Cir. 1986) (standard is abuse of discretion); United States v. De Rosa, 783 F.2d 1401, 1404 (9th Cir.), cert. denied, 477 U.S. 908 (1986) (standard is de novo). We need not decide between the Gonzalez and De Rosa standards because under either standard the judgment of the district court must be affirmed.

Defendants who challenge an indictment on the basis of prosecutorial misconduct must demonstrate that the prosecutor engaged in flagrant misconduct that deceived the grand jury or that significantly impaired its ability to exercise independent judgment. United States v. Busher, 817 F.2d 1409, 1411 (9th Cir. 1987). If the prosecutor procured or knowingly presented perjured testimony on material matters before the grand jury, dismissal of the indictment would possibly be warranted. United States v. Benny, 786 F.2d 1410, 1420 (9th Cir. 1986), cert. denied, --- U.S. ----, 107 S. Ct. 668 (1987); United States v. Claiborne, 765 F.2d 784, 791 (9th Cir. 1985), cert. denied, 475 U.S. 1120 (1986). Mere inaccuracy of statements offered to a grand jury, however, without more evidence that the prosecutor knew the evidence to be false or misleading or that the government caused an agent to testify falsely, is not sufficient to require dismissal of an indictment. Bank of Nova Scotia v. United States, 56 U.S.L.W. 4714, 4717 (U.S., June 27, 1988).

Appellants have pursued a convoluted evidentiary course in an attempt to establish their claims of prosecutorial misconduct and grand jury abuse.²  Essentially, however, they rely on a single statement, made by Linda Slavik several years after the grand jury proceedings, as proof that the prosecutor presented false testimony before the grand jury.

After a thorough evidentiary hearing, the district court found that there was no meaningful inconsistency between Thaxton's affidavit and grand jury statements, on the one hand, and Slavik's recollection of opinions she rendered to Thaxton back in 1983, on the other. There were, in short, no material misrepresentations made to the grand jury that could be attributed to the prosecutor, and no other indications of prosecutorial misconduct. These findings are not clearly erroneous.

Even if Thaxton, in her grand jury testimony, mistakenly characterized information she received from Slavik as an "expert opinion" regarding the San Elijo transactions, such an error simply does not amount to flagrant deception or overreaching of a grand jury by the prosecutor who proffered Thaxton's testimony. United States v. Fritz, Slip Op. 9203, 9211 (9th Cir. 1988); Cf. United States v. Samango, 607 F.2d 877, 882 (9th Cir. 1979). The district court's judgment denying appellants' motion to dismiss the indictment must be affirmed.

AFFIRMED.