Appeal Timeliness

---

[ Back ] [ Next ]

   

7203:  Willful Failure to File Return, Supply Information, or Pay Tax: Appeal, Timeliness

 

[80-2 USTC ¶9761] United States of America , Petitioner-Appellant, v. Roger S. Baskes, Defendant-Appellee

(CA-7), U. S. Court of Appeals, 7th Circuit, No. 79-1774, 640 F2d 48, 10/23/80, Reversing District Court, 79-2 USTC ¶9437

[18 U. S. C. §371]

Crimes: Conspiracy to defraud the U. S.; Evidence: Suppression: Illegal search.--A district court order suppressing evidence in the defendant's trial for conspiracy to defraud the United States and for violation of the Internal Revenue laws was reversed and the case remanded. The present case was indistinguishable from Payner, 80-2 USTC ¶9511, in which the Supreme Court reversed a similar suppression order arising out of the same search and seizure that yielded the evidence sought to be used against the defendant and the Supreme Court's opinion made it clear that the use of evidence acquired as a result of unlawful activity against a defendant whose rights were not violated was not a denial of due process.

Thomas P. Sullivan, United States Attorney, Chicago, Ill. 60604, M. Carr Ferguson, Assistant Attorney General, Department of Justice, Washington, D. C. 20530, for petitioner-appellant. Theodore A. Sinars, 135 S. LaSalle St. , Chicago , Ill. 60603 , Harvey M. Silets, Silets & Martin, Ltd., 10 S. LaSalle St. , Chicago , Ill. 60603 , for defendant-appellee.

Before FAIRCHILD, Chief Judge, CUMMINGS and BAUER, Circuit Judges.

PER CURIAM:

This court entered an order on August 6, 1980, directing the defendant to show cause why the order appealed from should not be summarily reversed and remanded in light of United States v. Payner [80-2 USTC ¶9511], 48 U. S. L. W. 4829 (June 13, 1980). The district court had exercised its supervisory power to suppress evidence tainted by the Government's violation of the Fourth Amendment rights of third parties and set aside the jury's verdict finding the defendant guilty of conspiracy to defraud the United States and of violation of the Internal Revenue laws. During the pendency of this appeal, the Supreme Court, in Payner, reversed a similar suppression order arising out of the identical search and seizure at issue in the present case. The district court had refused to ground its order on the theory that the use against defendant of evidence acquired as a result of the unlawful activity was a denial of due process. Defendant argued in its brief on appeal that the refusal was error, and that the due process theory was an alternative ground for affirmance. In response to our order to show cause, defendant maintains that his due process survives Payner. We disagree.

Although the due process issue was not raised in the petition for certiorari in Payner (presumably because the court of appeals did not decide that question), it had been considered by the district court, which had alternatively grounded its suppression order on that rationale, and was apparently briefed and argued before both the court of appeals and the Supreme Court. The unambiguous language of Justice Powell's majority opinion (48 U. S. L. W. at 4832, n. 9) and the majority's implicit rejection of the dissenters preference (48 U. S. L. W. at 4835, n. 15 (Marshall, J., dissenting)) that the case be remanded to the court of appeals for consideration of the due process issue leave no doubt that a majority of the justices considered the question properly before the Court and decided it adversely to Payner. That being so, the position of the Supreme Court is clear: "even if . . . the unlawful briefcase search was so outrageous as to offend fundamental `canons of decency and fairness,'" . . ., the fact remains that '[t]he limitations of the Due Process Clause . . . come into play only when the Government activity in question violates some protected right of the defendant'" (48 U. S. L. W. at 4832, n. 9) (citations omitted; emphasis in original). We deem oral argument unnecessary. Because the defendant cannot show that his rights were violated by the Government activity, indeed, because the present case is indistinguishable from Payner, the order appealed from is reversed and the case remanded to the district court for further proceedings.

REVERSED AND REMANDED.

 

 

[80-2 USTC ¶9511] United States , Petitioner v. Jack Payner

Supreme Court of the United States, No. 78-1729, 447 US 727, 6/23/80, Reversing CA-6, 79-1 USTC ¶9149

On Writ of Certiorari to the United States Court of Appeals for the Sixth Circuit.

[18 U. S. C. §1001]

Crimes: Defrauding the government: Filing false tax returns: Evidence: Suppression: Illegal search.--The Supreme Court reversed the acquittal of the taxpayer on charges of defrauding the United States government by filing a tax return falsely denying that he had a foreign bank account. It held that the district court improperly exercised its supervisory powers in suppressing evidence obtained by the Internal Revenue Service from the briefcase of an officer of the foreign bank in which the taxpayer had an account. The Court noted that the taxpayer had no standing under the Fourth Amendment to suppress the evidence because it was seized from a third party and because the taxpayer had no reasonable expectation of privacy with regard to records of the foreign account. It then held that to permit the district court to exclude the evidence under its supervisory powers would be to allow the balance of interests embodied in its Fourth Amendment decisions to be upset at the district court's standardless discretion. Therefore the Fourth Amendment standards were held to control the supervisory power and the evidence was properly admissible.

Syllabus

At respondent's nonjury trial for falsifying a federal income tax return by denying that he maintained a foreign bank account, respondent moved to suppress a loan guarantee agreement in which he pledged the funds in the bank account as security. The District Court found respondent guilty on the basis of all the evidence, but then (1) found that the Government had discovered the guarantee agreement as the result of a flagrantly illegal search of a bank officer's briefcase, (2) suppressed all the Government's evidence except for respondent's tax return and related testimony, and (3) set aside the conviction for failure to demonstrate knowing falsification. The court held, inter alia, that, although the illegal search did not violate respondent's Fourth Amendment rights, the inherent supervisory power of the federal courts required it to exclude evidence tainted by the illegal search. The Court of Appeals affirmed.

Held:

1. Respondent lacks standing under the Fourth Amendment to suppress the documents illegally seized from the bank officer. A defendant's Fourth Amendment rights are violated only when the challenged conduct invaded his legitimate expectation of privacy rather than that of a third party, and respondent possessed no privacy interest in the documents seized in this case. Cf. Rakas v. Illinois , 439 U. S. 128; United States v. Miller [76-1 USTC ¶9380], 425 U. S. 435. Pp. 4-6.

2. The supervisory power of the federal courts does not authorize a court to suppress otherwise admissible evidence on the ground that it was seized unlawfully from a third party not before the court. Under the Fourth Amendment, the interest in deterring illegal searches does not justify the exclusion of tainted evidence at the instance of a party who was not the victim of the challenged practices. And the values assigned to the competing interests of deterring illegal searches and of furnishing the trier of fact with all relevant evidence do not change because a court has elected to analyze the question under the supervisory power instead of the Fourth Amendment. Such power does not extend so far as to confer on the judiciary discretionary power to disregard the considered limitations of the law it is charged with enforcing. Pp. 6-9.

590 F. 2d 206, reversed.

POWELL, J., delivered the opinion of the Court, in which BURGER, C. J., and STEWART, WHITE, REHNQUIST, and STEVENS, JJ., joined. BURGER, C. J., filed a concurring opinion. MARSHALL, J., filed a dissenting opinion, in which BRENNAN and BLACKMUN, JJ., joined.

MR. JUSTICE POWELL delivered the opinion of the Court.

The question is whether the District Court properly suppressed the fruits of an unlawful search that did not invade the respondent's Fourth Amendment rights.

I. Respondent Jack Payner was indicted in September 1976 on a charge of falsifying his 1972 federal income tax return in violation of 18 U. S. C. §1001. ¹ The indictment alleged that respondent denied maintaining a foreign bank account at a time when he knew that he had such an account at the Castle Bank and Trust Company of Nassau , Bahama Islands . The Government's case rested heavily on a loan guarantee agreement dated April 28, 1972, in which respondent pledged the funds in his Castle Bank account as security for a $100,000 loan.

Respondent waived his right to jury trial and moved to suppress the guarantee agreement. With the consent of the parties, the United States District Court for the Northern District of Ohio took evidence on the motion at a hearing consolidated with the trial on the merits. The court found respondent guilty as charged on the basis of all the evidence. The court also found, however, that the Government discovered the guarantee agreement by exploiting a flagrantly illegal search that occurred on January 15, 1973. The court therefore suppressed "all evidence introduced in the case by the Government with the exception of Jack Payner's 1972 tax return . . . and the related testimony." United States v. Payner [77-1 USTC ¶9389], 434 F. Supp. 113, 136 (1977). As the tax return alone was insufficient to demonstrate knowing falsification, the District Court set aside respondent's conviction. ²

The events leading up to the 1973 search are not in dispute. In 1965, the Internal Revenue Service launched an investigation into the financial activities of American citizens in the Bahamas . The project, known as "Operation Trade Winds," was headquartered in Jacksonville , Fla. Suspicion focused on the Castle Bank in 1972, when investigators learned that a suspected narcotics trafficker had an account there. Special Agent Richard Jaffe of the Jacksonville office asked Norman Casper, a private investigator and occasional informant, to learn what he could about the Castle Bank and its depositors. To that end, Casper cultivated his friendship with Castle Bank vice-president Michael Wolstencroft. Casper introduced Wolstencroft to Sybol Kennedy, a private investigator and former employee. When Casper discovered that the banker intended to spend a few days in Miami in January of 1973, he devised a scheme to gain access to the bank records he knew Wolstencroft would be carrying in his briefcase. Agent Jaffe approved the basic outline of the plan.

Wolstencroft arrived in Miami on January 15 and went directly to Kennedy's apartment. At about 7:30 p. m., the two left for dinner at a Key Biscayne restaurant. Shortly thereafter, Casper entered the apartment using a key supplied by Kennedy. He removed the briefcase and delivered it to Jaffe. While the agent supervised the copying of approximately 400 documents taken from the briefcase, a "lookout" observed Kennedy and Wolstencroft at dinner. The observer notified Casper when the pair left the restaurant, and the briefcase was replaced. The documents photographed that evening included papers evidencing a close working relationship between the Castle Bank and the Bank of Perrine, Fla. Subpoenas issued to the Bank of Perrine ultimately uncovered the loan guarantee agreement at issue in this case.

The District Court found that the United States , acting through Jaffe, "knowingly and willfully participated in the unlawful seizure of Michael Wolstencroft's briefcase. . . ." 434 F. Supp., at 120. According to that court, "the Government affirmatively counsels its agents that the Fourth Amendment standing limitation permits them to purposefully conduct an unconstitutional search and seizure of one individual in order to obtain evidence against third parties. . . ." Id. , at 132-133. The District Court also found that the documents seized from Wolstencroft provided the leads that ultimately led to the discovery of the critical loan guarantee agreement. Id. , at 123. ³ Although the search did not impinge upon the respondent's Fourth Amendment rights, the District Court believed that the Due Process Clause of the Fifth Amendment and the inherent supervisory power of the federal courts required it to exclude evidence tainted by the Government's "knowing and purposeful bad faith hostility to any person's fundamental constitutional rights." Id. , at 129; see id., at 133, 134-135.

The Court of Appeals for the Sixth Circuit affirmed in a brief order endorsing the District Court's use of its supervisory power. United States v. Payner, 590 F. 2d 206 (1979) (per curiam). The Court of Appeals did not decide the due process question. We granted certiorari, -- U. S. -- (1979), and we now reverse.

II. This Court discussed the doctrine of "standing to invoke the [Fourth Amendment] exclusionary rule" in some detail last Term. Rakas v. Illinois , 439 U. S. 128, 138 (1978). We reaffirmed the established rule that a court may not exclude evidence under the Fourth Amendment unless it finds that an unlawful search or seizure violated the defendant's own constitutional rights. Id. , at 133-140. See, e.g., Brown v. United States, 411 U. S. 223, 229-230 (1973); Alderman v. United States, 394 U. S. 165, 171-172 (1969); Simmons v. United States, 390 U. S. 377, 389 (1968). And the defendant's Fourth Amendment rights are violated only when the challenged conduct invaded his legitimate expectation of privacy rather than that of a third party. Rakas v. Illinois, supra, at 143; id., at 149-152 (POWELL, J., concurring); Combs v. United States, 408 U. S. 224, 227 (1972); Mancusi v. DeForte, 392 U. S. 364, 368 (1968).

The foregoing authorities establish, as the District Court recognized, that respondent lacks standing under the Fourth Amendment to suppress the documents illegally seized from Wolstencroft. 434 F. Supp., at 126. The Court of Appeals did not disturb the District Court's conclusion that "Jack Payner possessed no privacy interest in the Castle Bank documents that were seized from Wolstencroft." 434 F. Supp., at 126; see 590 F. 2d, at 207. Nor do we. United States v. Miller [76-1 USTC ¶9380], 425 U. S. 435 (1976), established that a depositor has no expectation of privacy and thus no "protectable Fourth Amendment interest" in copies of checks and deposit slips retained by his bank. Id. , at 437; see id., at 442. Nothing in the record supports a contrary conclusion in this case. ⁴

The District Court and the Court of Appeals believed, however, that a federal court should use its supervisory power to suppress evidence tainted by gross illegalities that did not infringe the defendant's constitutional rights. The United States contends that this approach--as applied in this case--upsets the careful balance of interests embodied in the Fourth Amendment decisions of this Court. In the Government's view, such an extension of the supervisory power would enable federal courts to exercise a standardless discretion in their application of the exclusionary rule to enforce the Fourth Amendment. We agree with the Government.

III. We certainly can understand the District Court's commendable desire to deter deliberate intrusions into the privacy of persons who are unlikely to become defendants in a criminal prosecution. See 434 F. Supp., at 135. No court should condone the unconstitutional and possibly criminal behavior of those who planned and executed this "briefcase caper." ⁵ Indeed, the decisions of this Court are replete with denunciations of willfully lawless activities undertaken in the name of law enforcement. E.g., Jackson v. Denno, 378 U. S. 368, 386 (1964); see Olmstead v. United States, 277 U. S. 438, 485 (1928) (Brandeis, J., dissenting). But our cases also show that these unexceptional principles do not command the exclusion of evidence in every case of illegality. Instead, they must be weighed against the considerable harm that would flow from indiscriminate application of an exclusionary rule.

Thus, the exclusionary rule "has been restricted to those areas where its remedial objectives are most efficaciously served." United States v. Calandra, 414 U. S. 338, 348 (1974). The Court has acknowledged that the suppression of probative but tainted evidence exacts a costly toll upon the ability of courts to ascertain the truth in a criminal case. E.g., Rakas v. Illinois, supra, at 137-138; United States v. Ceccolini, 435 U. S. 268, 275-279 (1978); Stone v. Powell, 428 U. S. 464, 489-491 (1976); see Michigan v. Tucker, 417 U. S. 433, 450-451 (1974). ⁶ Our cases have consistently recognized that unbending application of the exclusionary sanction to enforce ideals of governmental rectitude would impede unacceptably the truth-finding functions of judge and jury. E.g., Stone v. Powell, supra, at 485-489; United States v. Calandra, supra, at 348. After all, it is the defendant, and not the constable, who stands trial.

The same societal interests are at risk when a criminal defendant invokes the supervisory power to suppress evidence seized in violation of a third party's constitutional rights. The supervisory power is applied with some caution even when the defendant asserts a violation of his own rights. ⁷ In United States v. Caceres, 440 U. S. 741, 754-757 (1979), we refused to exclude all evidence tainted by violations of an executive department's rules. And in Elkins v. United States, 364 U. S. 206, 216 (1960), the Court called for a restrained application of the supervisory power.

"[A]ny apparent limitation upon the process of discovering truth in a federal trial ought to be imposed only upon the basis of considerations which outweigh the general need for untrammeled disclosure of competent and relevant evidence in a court of justice." 364 U. S. , at 216.

See also Nardone v. United States, 308 U. S. 338, 340 (1939).

We conclude that the supervisory power does not authorize a federal court to suppress otherwise admissible evidence on the ground that it was seized unlawfully from a third party not before the court. Our Fourth Amendment decisions have established beyond any doubt that the interest in deterring illegal searches does not justify the exclusion of tainted evidence at the instance of a party who was not the victim of the challenged practices. Rakas v. Illinois, supra, at 137; Alderman v. United States , supra, at 174-175. ⁸ The values assigned to the competing interests do not change because a court has elected to analyze the question under the supervisory power instead of the Fourth Amendment. In either case, the need to deter the underlying conduct and the detrimental impact of excluding the evidence remain precisely the same.

The District Court erred, therefore, when it concluded that "society's interest in deterring [bad faith] conduct by exclusion outweigh[s] society's interest in furnishing the trier of fact with all relevant evidence." 434 F. Supp., at 135. This reasoning, which the Court of Appeals affirmed, amounts to a substitution of individual judgment for the controlling decisions of this Court. ⁹ Were we to accept this use of the supervisory power, we would confer on the judiciary discretionary power to disregard the considered limitations of the law it is charged with enforcing. We hold that the supervisory power does not extend so far.

The judgment of the Court of Appeals is

Reversed.

¹ 18 U. S. C. §1001 provides in relevant part: "Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully . . . make any false, fictitious or fraudulent statements or representations, . . . shall be fined not more than $10,000 or imprisoned not more than five years, or both."

² The unusual sequence of rulings was a byproduct of the consolidated hearing conducted by the District Court. The court initially failed to enter judgment on the merits. At the close of the evidence, it simply granted respondent's motion to suppress. After the Court of Appeals for the Sixth Circuit dismissed the government's appeal for want of jurisdiction, the District Court vacated the order granting the motion to suppress and entered a verdict of guilty. The court then reinstated its suppression order and set aside the verdict. Respondent does not challenge these procedures.

³ The United States argued in the District Court and the Court of Appeals that the guarantee agreement was discovered through an independent investigation untainted by the briefcase search. The Government also denied that its agents willfully encouraged Casper 's illegal behavior. For purposes of this opinion, we need not question the District Court's contrary findings on either point.

⁴ We are not persuaded by respondent's suggestion that the Bahamian law of bank secrecy creates an expectation of privacy not present in United States v. Miller, 425 U. S. 435 (1976). At the outset, it is not clear that secret information regarding this respondent's account played any role in the investigation that led to the discovery of the critical loan guarantee agreement. See p. 3, supra. Even if the causal link were established, however, respondent's claim lacks merit. He cites a provision, Ch. 96.9 of the Statute Law of the Bahama Islands (1909), that is no longer in effect. Bank secrecy is now safeguarded by §19 of the Banks Act, I Bah. Rev. Stat. ch. 96 (1965), as amended, 1965 Bah. Acts No. 65, which provides in relevant part:

"Except for the purpose of the performance of his duties or the exercise of his functions under this Act or when lawfully required to do so by any court of competent jurisdiction within the Colony or under the provisions of any law of the Colony, no person shall disclose any information relating to . . . the affairs of . . . any customer of a [bank] licensee which he has acquired in the performance of his duties or the exercise of his functions under this Act."

See also the Banks and Trust Companies Regulation Act, 1965 Bah. Acts No. 64, §10, as amended, 1968 Bah. Acts No. 33, 1969 Bah. Acts No. 20, 1971 Bah. Acts No. 15. The statute is hardly a blanket guarantee of privacy. Its application is limited; it is hedged with exceptions; and we have been directed to no authority construing its terms. Moreover, American depositors know that their own country requires them to report relationships with foreign financial institutions. 31 U. S. C. §1121; 31 CFR §103.24. See generally California Bankers Assn. v. Shultz, 416 U. S. 21, 59-63, 71-76 (1974). We conclude that respondent lacked a reasonable expectation of privacy in the Castle Bank records that documented his account.

⁵ "The security of persons and property remains a fundamental value which law enforcement officers must respect. Nor should those who flout the rules escape unscathed." Alderman v. United States , 394 U. S. 165, 175 (1969). We note that in 1976 Congress investigated the improprieties revealed in this record. See Oversight Hearings into the Operations of the IRS before a Subcommittee of the House Committee on Government Operations (Operation Tradewinds, Project Haven, and Narcotics Traffickers Tax Program), 94th Cong., 1st Sess. As a result, the Commissioner of Internal Revenue "called off" Operation Trade Winds. Tr. of Oral Arg. 35. The Commissioner also adopted guidelines that require agents to instruct informants on the requirements of the law and to report known illegalities to a supervisory officer, who is in turn directed to notify appropriate state authorities. IRS Manual Supp. 9-21, §§ 9373.3(3), 9373.4 (Dec. 27, 1977). Although these measures appear on their face to be less positive than one might expect from an agency charged with upholding the law, they do indicate disapproval of the practices found to have been implemented in this case. We cannot assume that similar lawless conduct, if brought to the attention of responsible officials, would not be dealt with appropriately. To require in addition the suppression of highly probative evidence in a trial against a third party would penalize society unnecessarily.

⁶ See also Kaufman v. United States, 394 U. S. 217, 237-238 (1969) (Black, J. dissenting); Oaks, Studying the Exclusionary Rule in Search and Seizure, 37 U. Chi. L. Rev. 665, 736-746, 755-756 (1970).

⁷ Federal courts may use their supervisory power in some circumstances to exclude evidence taken from the defendant by "willful disobedience of law." McNabb v. United States, 318 U. S. 332, 345 (1943); see Elkins v. United States, 364 U. S. 206, 223 (1966); Rea v. United States, 350 U. S. 214, 216-217 (1956); cf Hampton v. United States, 425 U. S. 484, 495 (POWELL, J., concurring in the judgment). This Court has never held, however, that the supervisory power authorizes supression of evidence obtained from third parties in violation of Constitution, statute or rule. The supervisory power merely permits federal courts to supervise "the admin istration of criminal justice" among the parties before the bar. McNabb v. United States, supra, at 340.

⁸ "The deterrent values of preventing the incrimination of those whose rights the police have violated have been considered sufficient to justify the suppression of probative evidence even though the case against the defendant is weakened or destroyed. We adhere to that judgment. But we are not convinced that the additional benefits of extending the exclusionary rule to other defendants would justify further encroachment upon the public interest in prosecuting those accused of crime and having them acquitted or convicted on the basis of all the evidence which exposes the truth." Alderman v. United States , supra, at 174-175. See also Stone v. Powell, 428 U. S. 464, 488-489 (1976); United States v. Calandra, 414 U. S. 338, 348 (1974).

The dissent, post, at 8, urges that the balance of interests under the supervisory power differs from that considered in Alderman and like cases, because the supervisory power focuses upon the "need to protect the integrity of the federal courts." Although the District Court in this case relied upon a deterrent rationale, we agree that the supervisory power serves the "two-fold" purpose of deterring illegality and protecting judicial integrity. See post, at 7. As the dissent recognizes, however, the Fourth Amendment exclusionary rule serves precisely the some purposes. Ibid., citing, inter alia, Dunaway v. New York , 442 U. S. 200, 218 (1979), and Mapp v. Ohio , 367 U. S. 643, 659-660 (1961). Thus, the Fourth Amendment exclusionary rule, like the supervisory power, is applied in part "to protect the integrity of the court rather than to vindicate the constitutional rights of the defendant. . . ." Post, at 10; see generally Stone v. Powell, 428 U. S. 465, 486 (1976); United States v. Calandra, supra, at 486.

In this case, where the illegal conduct did not violate the respondent's rights, the interest in preserving judicial integrity and in deterring such conduct is outweighed by the societal interest in presenting probative evidence to the trier of fact. See supra; see also, e.g., Stone v. Powell, supra, at 485-486. None of the cases cited by the dissent, post, at 7-9, supports a contrary view, since none of those cases involved criminal defendants who were not themselves the victims of the challenged practices. Thus, our decision today does not limit the traditional scope of the supervisory power in any way; nor does it render that power "superfluous.&qu