Further, as of the October 21 hearing, the prosecutor did not believe the government could tie specific invoices from subcontractors to particular payment requests by Martech and therefore could not trace whether particular invoices were paid promptly after Martech received money from the Air Force. ⁽²⁾

The government's confusion over the requirements of the Prompt Payment Act is also reflected in its most recent memorandum, submitted November 4, 1998, in response to the Defendants' Joint Memorandum on the Prompt Payment Act. In that memorandum the government effectively conceded it had misunderstood the law and acknowledged the correctness of the view of the Prompt Payment Act held by this court and the defendants - that the Prompt Payment Act is in essence a prompt pass-through act and thus violations can be proved only by showing that the contractor requested and received money from the government for particular work or materials supplied by a subcontractor, and then did not promptly pay that money to the subcontractors. ⁽³⁾ However, even in the most recent memorandum, the government evidences confusion over some of the requirements of the Prompt Payment Act and, more importantly, over whether particular provisions relate to the certification signed by the defendant. See generally Defendants' Reply Memorandum on the Prompt Payment Act (filed November 6, 1998).

Given the government's obvious confusion about the Prompt Payment Act six months after the indictment and its inability to provide legal support for what it now agrees was the mistaken view of the law that it previously held, it is very likely that the government attorney misinstructed the grand jury. Because the government was unaware of the evidence required to prove a willful violation of the Prompt Payment Act, it is also very likely that the government failed to submit evidence that established a violation and instead proved only a pattern of unrelated, non breaches of contract and allowed grand jurors to indict based on such a pattern.

Argument

THIS COURT SHOULD ORDER DISCLOSURE OF THE GRAND JURY TRANSCRIPT TO THE DEFENSE.

Federal Criminal Rule 6(c)(ii) permits this court to order disclosure of grand jury proceedings upon request by a criminal defendant based on a showing that grounds tiny exist for a motion to dismiss the indictment because of matters occurring before the grand jury. Such a showing has been made in this case.

If the government attorney misinstructed the grand jury, the indictment may be fatally flawed. See. @., United States v. Larrazolo. 869 F.2d 1354, 1359 (9th Cir. 1988). In Larrazolo, the Ninth Circuit recognized that flagrantly misleading instructions that deceive the grand jury in a significant way and infringe on the grand jurors' ability to exercise independent judgment would require dismissal of the indictment under the court's supervisory power. See also Bank of Nova Scotia v. United States. 487 U.S. 250, 256 (1988) (dismissal of indictment is appropriate if prosecutorial error substantially influenced the grand jury's decision to indict).

Without the transcript of the grand jury proceedings, this court cannot determine whether the prosecutors instructions were flagrantly misleading or whether the evidence presented was legally insufficient to support an indictment by a properly instructed grand jury. Without the transcript, the defense cannot evaluate whether grounds exist for moving to dismiss the indictment. However, the recent statements by the prosecutor at the pretrial hearing and in the government's brief on the Prompt Payment Act provide good cause to believe that the indictment may be invalid. This court should order disclosure of the transcript to defense counsel.

4 The defense is aware that any motion to dismiss would be late pursuant to the

pretrial order. However, the basis for requesting the grand jury transcript did not exist earlier in this case. If, as expected, the grand jury transcript establishes grounds for a dismissal motion, the defense would ask for permission to file a late motion.

Conclusion

The defense has shown good cause to believe that grounds may exists for a motion to dismiss the indictment based on matters occurring before the grand jury. This court should order disclosure of the transcript to defense counsel.

Dated this 9th day of November, 1998.

FELDMAN & ORLANSKY

By

Jeffrey M. Feldman

Susan Orlansky

Jeffrey M. Feldman

Susan Orlansky

Feldman & Orlansky

500 -L- Street, Suite 400

Anchorage, Alaska 99501

Telephone: 907-272-3538

Charles E. Cole

Law Office of Charles E. Cole

406 Cushman Street

Fairbanks@, AK 99701

Telephone: 907-452-1124

Attorneys for Defendant

MOTION FOR DISCLOSURE OF GRAND JURY TRANSCRIPT

A. The Defense Has Made A Particularized Showing Of Need To Obtain The Grand Jury Transcript Based On The High Probability Of Significant Prosecutorial Error In Instruction The Grand Jury.

Defendant xxxx has moved for disclosure of the grand jury transcript

in his case based on a particularized showing that it is highly likely that the government prosecutor misinstructed the grand jury on the relevant law and thereby made it impossible for the grand jury to fulfill its function of independently reviewing the evidence to determine whether there was probable cause to believe the defendant committed the crime alleged by the government. The particularized showing of need to obtain the transcript was based on the government attorneys' own words in recent court proceedings and written memoranda, which establish beyond doubt that the government did not understand the Prompt Payment Act at the time of the grand jury. This court itself found the government's theory, as the prosecutors articulated it in court, of 'questionable validity." [Docket No. 72].

To obtain access to the grand jury transcript, the defense need not establish that the grand jury process was so flawed as to require dismissal of the indictment. An order disclosing the transcript is justified "upon a showing that grounds may exist for a motion to dismiss the 'indictment because of matters occurring before the grand jury." Fed. Crim. R. 6(e)(3)(C)(ii) (emphasis added) The defense has made that showing. Because of the prosecutors' misunderstanding of the law, the government almost certainly offered instructions that allowed the grand jury to indict Mr. xxxxxfor knowingly falsely certifying his company's compliance with the Prompt Payment Act without requiring the grand jurors to find the evidence that would be required to prove this claim under accurate instructions concerning the Prompt Payment Act.

Contrary to the government's assertions in its opposition memorandum, Mr. Tisdale's motion is not based on a claim that the evidence before the grand jury was insufficient to support the indictment, even though, based on the evidence produced during discovery, the defense surmises that the evidence before the grand jury was not sufficient. This motion for disclosure, and the motion for dismissal that could be brought following disclosure of the transcript, are premised on prosecutorial misconduct in instructing the grand jury. The current case is similar to a robbery charge where the defense learns that the prosecutor likely failed to instruct the grand jury that a threat of force is required to support the charge or a murder case where the prosecutor likely failed to instruct the grand jury that a death is required. The evidence before the grand jury may or may not be sufficient to support a charge under proper instructions, but without proper instructions it is clear that the grand jurors could not meaningfully evaluate the evidence. An indictment returned under a misapprehension about the legal requirements for indicting does not satisfy the constitutional requirement for having citizens independently evaluate the evidence to determine whether the defendant should stand trial for a felony. ⁽⁴⁾

Although the government opposes the motion for disclosure of the transcript, it notably does not defend its instructions to the grand jury concerning the Prompt Payment Act. Instead, the government says, in effect, that an error with respect to the Prompt Payment Act would not matter, because Mr. xxxx "was not indicted for violating the Prompt Payment Act. Whatever instructions may have been given on the Prompt Payment Act go merely to the weight of the evidence on the grand jury's determination of whether or not xxxxxviolated 118 U.S.C. § 1001. Opposition to Motion for Disclosure of Grand Jury Transcript at 7.

The government's position has no merit. This court, by ordering special briefing on the requirements of the Prompt Payment Act, correctly recognized the critical importance of accurate jury instructions on the Prompt Payment Act. Accurate instructions were no less important for the grand jurors than they will be for the trial jury. For the grand jury to determine whether there was probable cause to believe Mr. xxxxxmade a false statements alleged by the government, the grand jurors required accurate instructions on what a company must do to comply with the Prompt Payment Act. Without an accurate understanding of the Prompt Payment Act, grand jurors could not meaningfully evaluate the evidence to determine whether Mr. Tisdale's certification was willfully false.

In this case, the motion to examine the grand jury transcript cannot be dismissed as a mere "fishing expedition." The prosecutors' oral and written remarks to the court establish without doubt that the government has labored under serious misunderstandings of the Prompt Payment Act. Its opposition memorandum concedes this. Opp. at 7. ⁽⁵⁾ The nature of the documentary evidence presented to the grand jury confirms this. ⁽⁶⁾ The certainty that the government attorneys did not understand the law distinguishes the current case from every case

6. For example, the exhibits that the government furnished to the grand jury concerning Pay Request No. 11 include bins from subcontractors that were not presented to Martech until after October 1, 1993, although Pay Request No. I 1 covered only the period September 1 through September 30. The government's exhibits concerning both Pay Requests Nos. 11 and 12 include invoices that Martech apparently never included in any pay request to the Air Force, as well as invoices over which there were bona fide disputes. This evidence was irrelevant and prejudicial. By itself, such evidence might not require dismissal of the indictment, but, absent accurate instructions on the requirements of the Prompt Payment Act, the misleading evidence becomes very important; grand jurors easily could have considered some or all of these invoices as evidence of a knowingly false certification about "prompt payment," although it is now clear that such invoices do not establish that the certification was false with to payments required by the Prompt Payment Act.

7. The Ninth Circuit quoted a famous line by Justice Brandeis that is completely applicable to the current case: 'The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding.' Olmstead v. United States, 277 U.S. 438, 479 (1928) (Brandeis, J., dissenting), quoted in United States v. Samango, 607 F.2d at 882 n.9.

8. Numerous other Ninth Circuit cases have permitted disclosure of the grand jury transcripts, even though the district or appellate court ultimately determined that prosecutorial errors did not require dismissal of the indictment. See, United States v. Spillone, 879 F.2d 514, 522-23 (9th Cir. 1989), cert, denied, 498 U.S. 878 (1990); United States v. Al-Mudarris, 695 F.2d 1182, 1185 (9th Cir.), cert, @med, 461 U.S. 932 (1983); United States v. Cedarquist, 641 F.2d 1347, 1352-53 (9th Cir. 1981); United States v. Stone, 633 F.2d 1272, 1274 (9th Cir. 1979).

9. The court may restrict further disclosure of the grand jury transcript, and the defense would, of course, comply with any such restrictions. See Fed. Crim. R. 6(e)(3)(C) ('If the court orders disclosure of matters occurring before the grand jury, the disclosure shall 'be made in such manner, at such time, and under such conditions as the court may direct.").

10. For example, if the government gave erroneously broad instructions on the Prompt Payment Act but only offered testimony that showed a violation of the Prompt Payment Act as narrowly and correctly construed, then any error would be harmless, whereas the combination of overly broad instructions and overly broad evidence could prove that the prosecutor misled the grand jurors as to what would be a legal basis for returning a true bill.

11. The government suggests that any disclosure should be only to the court in camera (Opp. at 10 n. 1), but neither Ninth Circuit nor Supreme Court cases support this position. Each of the cases cited, supra, at 5-6 & n.5, involved disclosure of the grand jury transcript to the defense, so that, consistent with the adversary system, the defense could bring a motion and the court could decide it. In Dennis v. United States, 384 U.S. 855, 874 (1966), the Supreme Court directed disclosure of the grand jury transcript to the defense, specifically rejecting the alternative of disclosing the transcript to the district court.