A federal judge dismissed a multimillion-dollar tax fraud case against a Rockville-based jet leasing company yesterday because of "flagrant and repeated" instances of misconduct by the federal prosecutor and IRS agents, including the altering of documents and false testimony in court.
In an opinion dismissing an indictment against the Omni International Corp., Judge Walter E. Black of the U.S. District Court in Baltimore called the misconduct "outrageous" and "as extreme as any found in the reported decisions reviewed by this court."
Black agreed with Omni's claim that Assistant U.S. Attorney Elizabeth Trimble and two IRS agents altered or manufactured the summaries of key witness interviews to prevent dismissal of the case against Omni. Black also found that Trimble and the two agents subsequently provided "a continuous stream of incorrect, misleading and false testimony" about the documents during a 28-day hearing in his courtroom in 1984.
"The only possible conclusion that the court can reach is that the changes to the documents were made to strengthen the government's position . . . ," Black said in a 64-page opinion. "The government's conduct was patently egregious and cannot be tolerated or condoned. Its manner of proceeding shocks the court's conscience."
Trimble declined to comment on the judge's ruling. Her superior, Maryland U.S. Attorney Breckinridge Willcox, said, "We strongly disagree with the reasoning and conclusions Judge Black has come to.
"This whole matter has been and will be examined by the Office of Professional Responsibility at the Department of Justice," he said. "I am confident that when a review is made of these facts, the matter will be closed with no action taken against Liz."
A spokesman for the IRS said officials there had not had time to examine the opinion and would have no comment on it. The two agents, Donald Temple and Paul Mitchell, could not be reached for comment.
Omni, which sells and leases jets, was charged in March 1984 with conspiring to route millions of dollars in income to a subsidiary in Bermuda to avoid paying U.S. taxes. The indictment alleged that between 1974 and 1980, Omni recorded $16.8 million on the books of its subsidiary, Euro Airfinance. That company reported only $91,574 of that income on its U.S. tax returns, according to the indictment.
Black's opinion was issued in response to a 700-page brief filed a year ago by lawyers for Omni, who contended that Trimble and the agents created or altered 10 memos on witness interviews in an effort to save a weak case they had spent three years preparing.
The documents in question were turned over to Omni lawyers in spring 1984 in preparation for a hearing on Omni's request that the indictment be dismissed. Lawyers for the company had sought dismissal on the grounds that Trimble and the two agents had violated the attorney-client privilege of confidentiality by trying to persuade Joseph P. Bornstein, a former Omni attorney and accountant, and other witnesses to give them information about Omni's tax filing practices.
Omni contended that after a subsequent meeting with Justice Department superiors to discuss possible weaknesses in the case, Trimble directed the agents to create new interview summaries and alter existing ones to make it appear they had been careful not to violate the attorney-client privilege.
Black found that "at least nine of these documents, and probably all 10, were either created or altered by government personnel after the defendants filed their motion for dismissal . . . . "
Black said he was "shocked and dismayed" that the government then gave the witness summaries to defense lawyers "as if they had been prepared contemporaneously with the interviews." During a June hearing on the attorney-client privilege issue, Black said, the agents and Trimble repeatedly gave false testimony about dates on which the documents were prepared, in several instances testifying that interview summaries had been written the previous year when they had been written only weeks before.
An example of an altered document cited by Black was a summary of the IRS agents' interview with Bornstein's secretary, Sandra Poe Wilkins, who was questioned about memos her boss had written to Omni on tax matters.
The agents' original summary of the conversation, written Nov. 22, 1983, said in part, "The contents of those memos were not discussed due to the attorney-client privilege." The altered version was designed, Black wrote, to make the agents appear sensitive to the attorney-client issue. It said, "We told Wilkins that we did not want to discuss the contents of those memos due to the attorney-client privilege."
The government had contended it made those types of minor revisions to the documents to correct errors in style and grammar.