that cause." The question in respect of which the witness claimed the privilege was both improper and innocuous; it asked him to testify whether a certain paper writing (registration statement of the Frederick Industrial Loan Company) which was shown to him, contained certain statements. However, the colloquy thereafter between the examiner, the defendant's attorney, and the attorney for the Commission shows that the parties understood that the claim of the privilege against self-incrimination included at least any examination with reference to the Frederick Industrial Loan Company. For example, the attorney for the defendant stated that, "The witness may incriminate himself in that cause," obviously meaning the Frederick Industrial Loan Company case. The examiner stated that his "ruling" was that, "the Frederick case is germane to the issues here, and we are going right ahead and proceed on it." The attorney for the Commission stated, "The objection on the ground of incrimination was only with reference to Frederick," whereupon the attorney for the defendant stated that he was renewing and urging his "objection both as to Frederick and Annapolis." (Tr. pp. 2027, 2028, and 2029.)
Immediately after this colloquy and after the examiner had stated that he would "proceed" with the Frederick case, questions were asked which elicited an admission by defendant that he filed a consent to the use of his name in the filing of a registration statement by the Frederick Industrial Loan Company, which stated that defendant was retained by that company to conduct semiannual audits, the audits to consist of complete examination of all books, records, and accounts and certification thereof, and that it was his signature on the paper.
Looking at the whole record, I cannot escape the conclusion that there is sufficient therein to have apprised the examiner that defendant claimed his privilege at least as to questions relating to the Frederick Industrial Loan Company, and enough in the context to have enabled him to determine intelligently that there was a reasonable likelihood of incrimination if he permitted the examination to continue. Mason v. United States, 244 U.S. 362, 37 S. Ct. 621, 61 L. Ed. 1198; United States v. Skinner, D.C., 218 F. 870; United States v. Goodner, D.C., 35 F.Supp. 286.
Accordingly, I find that defendant claimed "his privilege against self-incrimination" at least as to questions relating to the Frederick Industrial Loan Company as required by the above-mentioned statute as a basis for immunity.
As to the second point raised by the issues, namely whether the defendant was compelled to testify after having claimed the privilege against self-incrimination, I refer to the subpoena, the abovementioned statute which provides that no person shall be excused from testifying on the ground that his testimony may tend to incriminate him, the claim of privilege above referred to, the examiner's statement thereafter made that he was "going right ahead and proceed on it," and the fact that questions were subsequently propounded and answers given in relation to the Frederick Industrial Loan Company.
In respect of the issue that the claim was subsequently withdrawn, the attorney for the defendant stated that he withdrew his objection, apparently to requiring the witness to answer at all, and then stated that, "The witness will answer." Of course he was obliged to direct the witness to answer, in view of the provisions of the statute requiring him to answer, in return for which he obtained, under the statute, immunity from prosecution for or on account of any transaction, matter, or thing concerning which he was compelled to testify after having claimed his privilege against self-incrimination.
There was some colloquy between the attorney for the defendant and the examiner in which the attorney referred to the Murdock case (apparently United States v. Murdock, 284 U.S. 141, 52 S. Ct. 63, 64, 76 L. Ed. 210, 82 A.L.R. 1376) and said, ambiguously, "That is moot," and the examiner stated, ambiguously, "You have withdrawn it." Also there was a self-serving declaration by the examiner as to what the record would show as to his intentions, had "the claim been urged" (Tr. pp. 2030, 2031). I cannot spell out of this colloquy a withdrawal by defendant of the claim of privilege against self-incrimination. In addition, it should be noted that these statements occurred after defendant had given incriminating testimony.
The issue that the claim of privilege related to matters which were not of an incriminatory nature, must likewise be decided against the United States. The indictment alleges in each count, directly or by incorporation, that defendants, including this defendant, devised a scheme to defraud, and that it was part of this scheme that defendants would cause certain corporations, including the Frederick Industrial Loan Company, to be described as the Southeastern System; that defendants would cause this defendant to become the auditor of this System; that defendants would cause to be organized the Frederick Industrial Loan Company; that the persons to be defrauded would be falsely informed that defendant was an independent Certified Public Accountant.The defendant was required to give testimony on certain of these points, which are alleged to be a part of the scheme to defraud. It would therefore appear that he is now being prosecuted for and on account of a transaction, matter, or thing concerning which, in a substantial way,
he was compelled to testify after having claimed his privilege against self-incrimination. Defendant's identity and relationship to these matters, alleged to be a part of the fraudulent scheme, are of primary importance in the proof of his criminality.
The United States places reliance on United States v. Murdock, supra. That case, in my judgment, is inapplicable, because the witness therein "had in mind 'the violation of a State law and not the violation of a Federal law,'" which, under the ruling of that case, is insufficient to justify a refusal to answer, whereas in the case at bar there is no room for doubt that the defendant had in mind and feared prosecution under a Federal statute, namely the Securities Act of 1933, and that the inquiries were being made to discover evidence of its violation.
The foregoing views are further borne out by the whole tenor of the proceedings. Defendant was subpoenaed as a witness for the Commission in an administrative proceeding before it, and, without warning of any kind, found himself confronted by an inquisition determined to wring from him evidence on which to base a prosecution against him. He was first lulled into believing he was a government witness, and after 50 pages of testimony, suddenly became suspicious or aware that he was a prospective defendant. Any inartificiality or inexactitude in making the claim of privilege should be viewed in the light of these circumstances; and the record might well be construed to support the view that all subsequent questions of a similar character were embraced within the claim
unless the defendant is to be held to a rigid formalism.Defendant's testimony after the claim of privilege, covering approximately 300 pages, relates to transactions, matters, and things covered by the indictment. It was the examiner's duty, when defendant claimed this privilege, to determine from the character of the questions asked and the circumstances of the inquiry, whether there was a likelihood that the answers might be incriminating, and if there was such likelihood, it was his duty to determine whether he wished to exchange immunity for testimony. If he did not wish so to do, he should have stopped further inquiry. He elected to take the other course.
No question is raised as to the propriety of the plea under the authority of United States v. Murdock, supra, and it is doubtful whether such question properly could be raised, as the case at bar, unlike the Murdock case, is not yet at issue, the plea of not guilty having been withdrawn by leave of Court. Nor is any question raised by the parties as to a trial of the issues by the Court.
For the foregoing reasons, the Plea in Bar will be sustained, and judgment will be entered accordingly.