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United States v. Hsia

January 31, 2001

UNITED STATES OF AMERICA,
v.
MARIA HSIA, DEFENDANT.



The opinion of the court was delivered by: Paul L. Friedman United States District Judge

OPINION AND ORDER

By order of December 18, 2000, the Court referred defendant Maria Hsia's motion for a Kastigar hearing to Magistrate Judge John Facciola pursuant to 28 U.S.C. § 636(b) and Rule 57.19(a)(1) of the Local Criminal Rules of this Court. Magistrate Judge Facciola was directed to conduct a Kastigar hearing and to submit findings of fact and recommendations to this Court. The magistrate judge conducted the hearing over two days, on January 10 and 11, 2001. He heard the testimony of Campaign Financing Task Force attorneys John M. McEnany and Eric L. Yaffe, the prosecutors responsible for this case; Robert Conrad, the Chief of the Campaign Financing Task Force; and Daniel O'Brien, the Assistant United States Attorney in Los Angeles, California responsible for a related investigation in which Ms. Hsia was subpoenaed to testify before a grand jury. The proceedings before Magistrate Judge Facciola were tape-recorded, transcribed, and now have been reviewed by this Court.

On January 15, 2001, Magistrate Judge Facciola issued his Report and Recommendation setting forth his 32 findings of fact, his analysis under Kastigar v. United States, 406 U.S. 441 (1972), his conclusion that there was a Kastigar violation and his recommendation that, as a remedy, the government be precluded from making one particular sentencing argument, an argument for an upward departure under Application Note 11 to Section 2F1.1 of the Sentencing Guidelines, that he found was based on a non-evidentiary use of Ms. Hsia's immunized grand jury testimony.

The government and the defendant each filed objections to Magistrate Judge Facciola's Report and Recommendation. The government argued both that the procedures it followed were fully sufficient to satisfy Kastigar and that, in any event, legal reasoning and argument can never be suppressed under Kastigar. Defendant argued that Magistrate Judge Facciola did not go far enough, maintaining that all sentencing arguments propounded by the government and all prosecutors involved in this case have been tainted by the Kastigar violation. The Court heard argument on the parties' objections on January 22, 2001. Because it appeared at the hearing that the disputes about the facts found by the magistrate judge had been narrowed, the Court asked the parties to submit revised and supplemental objections which they now have done.

I. FINDINGS OF FACT

The Federal Magistrates Act of 1968, 28 U.S.C. §§ 631 et seq., permits a district court judge to designate a magistrate judge to conduct an evidentiary hearing in certain criminal matters and to submit proposed findings of fact and recommendations. See 28 U.S.C. § 636(b)(1)(B). Upon consideration of the magistrate judge's findings and recommendations and after considering objections filed by the parties, the district court judge "shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made . . . [and] may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate." 28 U.S.C. § 636(b)(1). Our Local Criminal Rules have a parallel provision providing that the district court judge shall make "a de novo determination of those portions of a magistrate judge's findings and recommendations to which objection is made . . . ." LCrR 57.19(c). Applying these standards, the Court will accept all of Magistrate Judge Facciola's findings of fact as to which there is no objection and will review de novo only those findings as to which either side has objected.

The government did not object to any of the magistrate judge's findings of fact. Following the hearing before this Court on January 22, 2001, Ms. Hsia in her supplemental filing reiterated that she did not object to Findings 1-4, 6-7, 9, 13-15, 18-21, 23 and 30-32. In addition, she withdrew her earlier requests for clarification as to Findings 5, 8, 10, 12, 22, 24, 25 and 26. This Court therefore accepts and adopts those Findings made by Magistrate Judge Facciola in their entirety. It turns now to the contested findings.

Finding 11: Ms. Hsia requests that Finding 11 be modified to indicate that Mr. Conrad supervised both the investigation in this case and Mr. O'Brien's investigation in Los Angeles. The portion of the transcript cited by Ms. Hsia supports such a finding of fact. The Court concludes that there is no need to modify Finding 11, however, because as the government points out, Finding 2 indicates that Mr. Conrad supervised the investigation and trial in this case, and Finding 4 indicates that Mr. Conrad was also in charge of supervising the California Task Force investigation and that he supervised both the investigation of Ms. Hsia and the campaign financing investigation in a "hands on" fashion.

Finding 16: Ms. Hsia requests that Finding 16 be amended to include the following: "Mr. Conrad testified that he did not recall Mr. McEnany asking for help with Ms. Hsia's Sentencing before he contacted Mr. Yaffe to appear as a special attorney on behalf of the Department of Justice for this case. Mr. McEnany also stated that he was not advised that Mr. Conrad was considering bringing Mr. Yaffe back to assist with this case until after Mr. Conrad spoke with Mr. Yaffe about returning." Because the government acknowledges that these statements are substantially accurate, the Court will modify Finding 16 to include these facts.

Finding 17: Ms. Hsia requests that Finding 17 be amended to indicate that Mr. Conrad testified that he believed it to be a fair proposition to state that similarly situated defendants shall be treated the same by the Department of Justice. Upon review of the transcript, the Court agrees with the government that the requested finding is a misleading or at least incomplete characterization of the testimony concerning the Task Force's position on sentencing in different cases. While at one point Mr. Conrad did agree "[a]s a general proposition" with defense counsel's assertion that similarly situated defendants should be treated similarly, Transcript of January 11, 2001, Hearing ("1/11/01 Tr.") at 90, his overall testimony was much more nuanced than defendant suggests and does not in context support her proposed factual finding. See id. at 82-104. The Court therefore rejects this request as not supported by the evidence and will not modify the magistrate judge's Finding 17.

Finding 27: The defendant requests that Finding 27 be modified to indicate that (1) the first meeting with Probation was in May 2000, and (2) at this meeting they discussed the matching funds issue and the "kingpin" adjustment in addition to Application Note 11. The Court will modify Finding 27 to indicate that the first meeting with Probation took place in May 2000. With respect to Ms. Hsia's second request, the Court will modify Finding 27 by adding the following sentence at the end of Finding 27: "The matching funds issue and the so-called 'kingpin' adjustment issue also were discussed at the May 2000 meeting with Probation."

Findings 28 and 29: Ms. Hsia requests that Findings 28 and 29 be modified to indicate that Mr. McEnany and Mr. Conrad discussed not only the proper measure of loss under Application Note 11, as found by Magistrate Judge Facciola, but also that Mr. Conrad discussed everything that was contained in the government's Sentencing Memorandum with Mr. McEnany and/or Mr. Yaffe. She maintains that Mr. Conrad testified that he suggested some of the language to be used in the government's Sentencing Memorandum without limiting his suggestions to Application Note 11 issues. The government resists these requests for modification, maintaining that Magistrate Judge Facciola's characterization of the testimony is more accurate.

The Court has now reviewed the relevant portions of the transcript and finds that Mr. McEnany would have taken the very same positions ultimately taken in sentencing except for the Application Note 11 argument if he had never spoken to Mr. Conrad. Transcript of January 10, 2001, Hearing at 106-08. Furthermore, while Mr. Conrad did discuss "everything that was contained in [the] sentencing memorandum" with Mr. McEnany and Mr. Yaffe, he testified without contradiction that the "most substantive discussions" he had with them related to Application Note 11 and that he expressed the opinion that "the most appropriate measure of loss was an analogy to the fraud tables in a dollar to dollar fashion." 1/11/01 Tr. at 25-27. Furthermore, Mr. Conrad reviewed the government's Sentencing Memorandum but did not write it, edit it or add to it. Id. at 30. Findings 28 and 29 are amended by adding these additional findings to those facts found by the magistrate judge.

Proposed Finding 33: The defendant proposes an additional finding of fact, proposed Finding 33, which attempts to set forth a revised chronology of events beginning with Ms. Hsia's appearance before the grand jury in Los Angeles and including her various meetings with the Probation Office. The government objects to some portions of Ms Hsia's proposal, arguing that the transcript does not support some of it and that other portions are either incomplete or already dealt with in the Findings of the magistrate ...


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