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IN RE GRAND JURY EMPANELED FEBRUARY 5

May 24, 2000

IN THE MATTER OF THE GRAND JURY EMPANELED FEBRUARY 5, 1999.


The opinion of the court was delivered by: Politan, District Judge.

This matter comes before the Court on The Star-Ledger's motion to quash a grand jury subpoena issued by the United States Attorney's Office which requests the production of an audio tape (or audio tapes) containing an interview conducted by Star-Ledger reporters. The Court heard oral argument on October 7, 1999.*fn1 For the reasons set forth below, The Star-Ledger's motion to quash the grand jury subpoena is DENIED.

BACKGROUND

This case arises out of the United States Attorney's Office issuing a subpoena to The Star-Ledger newspaper in which it requests audio tapes of an interview for use in a federal grand jury proceeding. The Star-Ledger is a widely distributed newspaper which serves New Jersey and is based in Newark, New Jersey. On July 18, 1997, The Star-Ledger published an article titled "`Buyers' Got Cash In Realty Scheme" (hereinafter "the article"). The article contained statements made by Gary Grieser ("Grieser") during a two-hour interview with The Star-Ledger. In the article, Grieser described a massive and complicated real estate fraud scheme in which he was a participant whereby properties would be purchased at low prices and then immediately resold at much higher prices (known as "land flipping"). Grieser detailed how he, as president of Capital Assets, paid "straw" buyers $4,000 or more per transaction to lend their names and credit histories to the flip transactions. In order to accomplish the resales and mortgage commitments, real estate appraisers inflated the values of the subject properties. False documents were used to support loan applications, and false leases used to indicate that the properties would produce income.

A grand jury was empaneled to investigate the scheme, and, as a result, five real estate appraisers were indicted in August of 1998.*fn2 These five appraisers pled guilty to conspiracy charges pursuant to a plea agreement. In addition, a sales representative of Walsh Securities, a mortgage lender on a large number of the flipped properties, pled guilty to conspiracy to commit wire fraud and wire fraud. On June 11, 1999, Gary Grieser was indicted on charges of mail, wire, and bank fraud, obstruction of justice, and the use of a false social security number in acquiring various properties. Grieser's indictment concerned a smaller number of properties involved in the land-flip scheme which Grieser purchased for himself using false information.

In early November 1998, the United States Attorney's Office notified the Star-Ledger that it sought production of an audio tape recording of the Grieser interview. The Star-Ledger, without admitting that an audio tape of the interview even existed, denied the request. The government then issued a grand jury subpoena to The Star-Ledger in which it requested an edited version of the taped interview containing only the statements reported in the article.*fn3 The subpoena requested the following:

1. An audio tape containing and/or reflecting an interview conducted of Gary Grieser on or about July 17, 1997, the substance of which was published in The Star-Ledger on or about July 18, 1997 in a story reported by M. Drewniak, W. Quinn, and B. Swayze; provided, however, that respondent need only produce (a) a copy of the original audio tape, (b) which copy has been redacted to contain only the statements attributed to Grieser in the published story (together with the predicate questions from the reporter(s)).
2 A records custodian or other witness able to authenticate the redacted audio tape produced pursuant to the preceding paragraph.

At oral argument and in its brief, the government represented that it is in need of the audio tape only for the continuing grand jury investigation into the broader land-flipping conspiracy, and not for the Grieser prosecution.*fn4 The Star-Ledger contends that it is protected by the media's qualified privilege to refuse to divulge sources or news-gathering techniques.

DISCUSSION

In rare cases, a conflict arises between the First Amendment and the criminal prosecutorial process. This tension has been described as a balance between the "freedom of the press and the obligation of all citizens to give relevant testimony with respect to criminal conduct." Branzburg v. Hayes, 408 U.S. 665, 710, 92 S.Ct. 2646, 33 L.Ed.2d 626 (1972). This is such a case.

The Star-Ledger argues that the indictment must be quashed because the First Amendment bestows upon it either an absolute or qualified privilege to refuse to disclose its investigative and news gathering methods and techniques. The government counters that the qualified privilege in this case must yield to the broad investigatory powers of the grand jury proceeding.

The First Amendment provides that "Congress shall make no law . . . abridging the freedom of speech, or of the press." It is grounded on "a profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open. . . ." New York Times Co. v. Sullivan, 376 U.S. 254, 270, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964). It has been said that the First Amendment "was fashioned to assure unfettered interchange of ideas for the bringing about of political and social changes desired by the people." Id. (quoting Roth v. United States, 354 U.S. 476, 484, 77 S.Ct. 1304, 1 L.Ed.2d 1498 (1957)). Indeed, it is the press that serves as a vehicle to disseminate information to the public so that the unfettered interchange of ideas may occur.

The importance of the grand jury proceeding is similarly established. Guaranteed by the Fifth Amendment, the grand jury has the dual function of determining whether probable cause exists to believe that a crime has been committed and of protecting citizens against groundless criminal prosecutions.*fn5 See Branzburg, 408 U.S. at 686-87, 92 S.Ct. 2646. Borrowed from the English, the grand jury proceeding is rooted in the tradition and history of Anglo-American law. See Hannah v. Larche, 363 U.S. 420, 489-90, 80 S.Ct. 1502, 4 L.Ed.2d 1307 (1960) (Frankfurter, J., concurring). Because the grand jury's mission is to explore the ...


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