The opinion of the court was delivered by: FISHER
Julio Vargas, convicted of conspiracy to commit aggravated arson, making payment for the purpose of starting a fire, and reckless endangerment by arson, has filed a petition for a writ of habeas corpus. Although the petition is grounded on three arguments, the parties and the court have focused on the issue of whether the prosecutor's failure to inform the Grand Jury of exculpatory evidence of which he was aware violated the defendant's guarantees of due process under the Fifth and Fourteenth Amendments. After consideration of the papers filed and oral argument, this court concludes that the prosecutor committed error that rose to a level of constitutional magnitude. Accordingly, the petition for a writ of habeas corpus is granted.
After the Hoboken police department and fire marshals investigated a fire that destroyed Julio Vargas' grocery store, a Hudson County Grand Jury returned an indictment naming five men, including Vargas, as defendants. Upon reading the minutes of the Grand Jury proceedings, Vargas' attorney, Mr. Kudisch, filed a motion in limine to dismiss the indictment on the grounds that the prosecutor failed to inform the Grand Jury of exculpatory evidence and that the evidence presented to the Grand Jury was insufficient to sustain the indictment. The Superior Court of New Jersey, Law Division, however, denied defendant's motion, and Vargas was tried before a jury in that court in June 1982. On June 24, 1982, the jury returned verdicts of guilty on the charges mentioned above, and on October 15, 1982, the Superior Court sentenced Vargas to a term of 15 years with 5 years of parole ineligibility. The other four defendants had entered into plea negotiations with the State, and in return for the State's willingness to plea bargain, each of the other four defendants, all of whom received lighter sentences than Vargas, agreed to testify against any defendant who proceeded to trial.
Immediately after the sentencing, Vargas appealed to the Appellate Division of the Superior Court. He raised the same arguments in the Appellate Division as are pressed now in the petition for a writ of habeas corpus. Vargas argued that the prosecutor violated his due process rights by withholding exculpatory evidence from the Grand Jury, that his attorney was not informed until late in the trial that the fire marshal's report revealed that no accelerant was found at the scene of the fire, and that one attorney's representation of two alleged co-conspirators created a patent conflict of interest. In an unpublished per curiam opinion filed February 14, 1984, the Appellate Division rejected these contentions and affirmed the conviction. A petition for certification to the New Jersey Supreme Court raising these same arguments was filed, but it was denied on May 16, 1984. State v. Vargas, 97 N.J. 602, 483 A.2d 140 (1984). Vargas' claims before this court are those that were raised in the state courts. He has therefore exhausted his state remedies and his habeas petition is properly before this court. See Santana v. Fenton, 685 F.2d 71, 73-74 (3d Cir. 1982), cert. denied, 459 U.S. 1115, 103 S. Ct. 750, 74 L. Ed. 2d 968 (1983).
The relevant facts of the alleged crime were set forth succinctly by the Appellate Division in its decision affirming the conviction:
Defendant operated a small supermarket which was substantially insured when destroyed by fire of suspicious origin. The co-conspirator Santos owed a debt to defendant and in order to obtain forgiveness of the debt he was allegedly induced by defendant to solicit the other three co-conspirators to burn the business. When implicated by the co-conspirators Santos confessed to his involvement and outlined the entire scheme inculpating this defendant. After he had given the statement however he refused to sign it stating it was not true and that he only made it in order to obtain his release from police custody and to protect his family. Thereafter Santos once more reversed his position, cooperated with law enforcement officials, and testified against defendant at trial.
State v. Vargas, No. A-638-82T4, slip op. at 2 (App. Div., Superior Court of New Jersey, February 14, 1984). The parties are in agreement that the evidence presented to the Grand Jury supporting the indictment consisted principally of the fact that Vargas' grocery store, which was suffering financially, burned by non-accidental means, and of co-conspirator Santos' statement to the police that he was induced by Vargas to solicit the other co-conspirators to set fire to the grocery store. It is uncontested that immediately after Santos made a statement to the police implicating himself and Vargas, the police told Santos that they were going to type the statement so he could sign it, but Santos refused, insisting that the statement was false and was made only so that he would be released and able to rejoin his family. There is no dispute that Officer O'Neill, who testified before the Grand Jury, and the prosecutor, were aware of Santos' recantation, but the Grand Jury was never informed of this fact.
Contesting Vargas' due process claim, the State has posited two arguments. First, the State has cited a line of cases for the proposition that the prosecutor had no duty to inform the Grand Jury of Santos' recantation. Second, the State has observed that the petit jury, after defense counsel had an opportunity to examine and cross-examine at trial, found Vargas guilty beyond a reasonable doubt. Therefore, the State has asserted that, even if the prosecutor erred, such error was "harmless." These arguments shall be considered seriatim.
It is undisputed, as the State maintains, that the Grand Jury proceeding is not an adversarial hearing to determine guilt or innocence, and an indictment, which is not evidence of guilt, is a finding that probable cause exists that a crime has been committed by the accused, United States v. Romano, 706 F.2d 370, 374 (2d Cir. 1983); United States v. Ciambrone, 601 F.2d 616, 622 (2d Cir. 1979). Respecting the Grand Jury proceedings, the prosecutor may exercise considerable discretion in determining what should be presented to the Grand Jury, and the prosecutor is not obligated "to search for and submit to a grand jury evidence favorable to the defense or negating guilt, when it has not been requested by the Grand Jury." Ciambrone, 601 F.2d at 622; United States v. Litman, 547 F. Supp. 645, 649 (W.D. Pa. 1982).
In addition, the prosecutor's discretion in this regard is generally circumscribed only if it appears that the prosecutor "knowingly" used perjurious testimony to secure the indictment, or substantial evidence negating guilt was not presented to the Grand Jury. See Romano, 706 F.2d at 374; United States v. Purvis, 544 F. Supp. 68, 72 (S.D.N.Y. 1982). The State thus concludes from these cases that Officer O'Neill's testimony before the Grand Jury was truthful, the prosecutor did not refuse willfully to disclose material information sought by the Grand Jury, and that the thrust of Vargas' claim, that the prosecutor has a duty to search for and present to the Grand Jury any and all evidence favorable to the accused, is unsupported by law.
The material fallacy in the State's argument is that no searching for exculpatory evidence was required in the instant case. The fact that Santos recanted his statement was readily apparent to the prosecutor, as he and Officer O'Neill had this information in their possession. Although Officer O'Neill's testimony before the Grand Jury respecting Santos' confession was true, given Santos' immediate recantation, of which the Grand Jury was not informed, the evidence presented to the Grand Jury constituted merely a half-truth. By failing to furnish the exculpatory evidence of which he was aware, the prosecutor presented a case to the Grand Jury that was incomplete and misleading.
This court acknowledges that there are cases holding that the prosecutor does not have a duty to present any exculpatory evidence to the Grand Jury. United States v. Sears, Roebuck & Co., Inc., 719 F.2d 1386, 1390-91, 1394 (9th Cir. 1983), cert. denied, 465 U.S. 1079, 104 S. Ct. 1441, 79 L. Ed. 2d 762 (1984); United States v. Al Mudarris, 695 F.2d 1182, 1185 (9th Cir. 1983); United States v. Cederquist, 641 F.2d 1347, 1353 n.3 (9th Cir. 1981). Other courts tend to the view that although an indictment may be dismissed if the prosecutor fails to present exculpatory evidence to the Grand Jury, at least if the circumstances are egregious, an accused's liberties are adequately safeguarded by the petit jury. If the petit jury finds the accused guilty beyond a reasonable doubt and convicts, then the accused cannot claim prejudice by virtue of an impropriety at the Grand Jury stage, and a court should not overturn the conviction. See Ciambrone, 601 F.2d at 625; United States v. Polizzi, 500 F.2d 856, 888 (9th Cir. 1974), cert. denied, 419 U.S. 1120, 95 S. Ct. 802, 42 L. Ed. 2d 820 (1975). See also United States v. Kennedy, 564 F.2d 1329, 1338 (9th Cir. 1977), cert. denied, 435 U.S. 944, 98 S. Ct. 1526, 55 L. Ed. 2d 541 (1978). Moreover, there is a line of authority holding that a prosecutor does have a duty to present exculpatory evidence of which he is aware to the Grand Jury. Ciambrone, 601 F.2d at 623; Litman, 547 F. Supp. at 649; United States v. Gold, 470 F. Supp. 1336, 1353 (N.D. Ill. 1979); United States v. Phillips Petroleum Co., 435 F. Supp. 610, 619-22 (N.D. Okla. 1977). These cases emphasize that while the Grand Jury proceeding is not a mini-trial to determine guilt or innocence where the accused is given an opportunity as of right to present his case, a prosecutor who withholds exculpatory evidence destroys the existence of an independent and informed jury. Without information material to its determination, the Grand Jury cannot protect citizens from malicious prosecution, and the interests of justice are not served. See Ciambrone, 601 F.2d at 623, and at 628-29 (Friendly, J. dissenting); Gold, 470 F. Supp. at 1353; Phillips Petroleum Co., 435 F. Supp. at 618-21. In fact, the Third Circuit, in addition to the Second and Ninth Circuits, has stated that an indictment may be dismissed "in the exercise of the [court's] supervisory power . . . to correct flagrant or persistent abuse, despite absence of prejudice to the defendant . . . ." United States v. Serubo, 604 F.2d 807, 817 (3d Cir. 1979). Accord United States v. Hogan, 712 F.2d 757, 761 (2d Cir. 1983); United States v. Fields, 592 F.2d 638, 647 (2d Cir. 1978), cert. denied, 442 U.S. 917, 99 S. Ct. 2838, 61 L. Ed. 2d 284 (1979); Cederquist, 641 F.2d at 1352-53.
In order to prevail on the merits of his petition, Vargas must demonstrate that
at the time the Government presented its case to the grand jury, the prosecutor was aware of the existence of exculpatory evidence which could reasonably lead the grand jury not to indict and that he deliberately failed to include it or, at a minimum, to notify the grand jury of its existence.
Litman, 547 F. Supp. at 650. At the time the prosecutor presented his case against Vargas to the Grand Jury, Santos' confession was a principal piece of evidence. Had the Grand Jury been informed of Santos' recantation, the Grand Jury, in this court's view, reasonably could have given little or no weight to the confession in which Vargas was implicated, and concluded that there was no probable cause to charge Vargas. The State has responded by pointing to the fact that even if the prosecutor misled the Grand Jury by failing to present exculpatory evidence, any error must be "harmless" in light of the petit jury's finding that Vargas was guilty beyond a reasonable doubt. At the trial, Santos, who by that time had pleaded guilty, testified against Vargas. In addition, Officer O'Neill also testified that Santos recanted his original statement implicating himself and Vargas. Therefore, ...