Constitutional Grounds
6
7203:
Willful Failure to File Return, Supply Information, or Pay Tax:
Evidence: Constitutional Grounds
Part 6
[70-1
USTC ¶9374]
United States of America
, Appellee v. Elton M. Brevik, Appellant
(CA-8),
U. S. Court of Appeals, 8th Circuit, No. 19,726, 422 F2d 449,
3/11/70
, Aff'g unreported District Court opinion
[Code Sec. 7201]
Evasion of taxes: Miranda warnings in non-custodial hearing:
Witnesses' testimony of other crimes: Prejudice: Evidence.--The
taxpayer was convicted of evading income taxes for 1961 and 1962. On
appeal, he pleaded the Government's failure to give him the Miranda
warnings at a pre-trial meeting, and witnesses' remarks implying he was
guilty of other crimes, as grounds for reversal. Held, the Miranda
warnings were unnecessary as the evidence obtained at the meeting was
insignificant and the warnings are not required at non-custodial
hearings, such as the one here. Cohen v. U. S., 69-1 USTC ¶9132,
405 F. 2d 34, followed. Held, none of the remarks made by the
Government's witnesses were sufficiently prejudicial, in light of all
the evidence, to require reversal. The trial court was affirmed.
Rob
ert G. Renner, United States Attorney,
Ralph E. Koenig, Assistant United States Attorney, Minneapolis, Minn.,
for appellee. Richard A. Rohleder, E-903 First National Bank Bldg.,
St. Paul
,
Minn.
, for appellant.
Before
MATTHES, GIBSON and LAY, Circuit Judges.
GIBSON,
Circuit Judge:
Elton
M. Brevik was tried in November, 1968 on two counts of income tax
evasion, one each for 1961 and 1962, before Judge Phillip Neville in the
United States District Court for
Minnesota
. The jury returned verdicts of guilty on both counts and Brevik was
sentenced to three years imprisonment. Motions for judgment n.o.v. and
in the alternative for new trial were denied and the defendant appealed.
Since Brevik does not challenge the sufficiency of the evidence upon
which he was convicted and since proof of his guilt was in fact
substantial we need only discuss those facts germane to the two
questions of law upon which this appeal is based.
Brevik
contends first that his statements to a special agent of the Internal
Revenue Service were obtained in violation of the guidelines laid down
by the United States Supreme Court in Miranda v. Arizona, 384 U.
S. 436 (1966), and should not have been received in evidence, and second
that testimony of several other government witnesses and exhibits
related thereto were irrelevant and prejudicial and improperly admitted
into evidence.
The
first contention arises out of testimony given at trial by government
witness and IRS agent Samuel P. Doonan. Agent Doonan testified to
statements made by the defendant at an interview which occurred on
August 9, 19
65 in the
Minneapolis
office of the IRS. Present at the interview were Special Agent Doonan,
Revenue Agent Earl Williams, and the defendant. Agent Doonan had
previously requested a meeting with Brevik and requested that Brevik
bring his personal business records. It is undisputed that Brevik's
compliance with these requests was voluntary. At the meeting itself
Brevik's freedom of movement, including the right to leave, was not
restricted. Agent Doonan testified that he informed Brevik before
proceeding with the interview that Brevik had a right under the Fifth
Amendment not to furnish any information to him or to talk to him.
However, Agent Doonan did not advise Brevik of his right to counsel.
Before Agent Doonan testified to the substantive events at the August
9th interview Brevik's counsel objected to further testimony regarding
the interview on the ground that under the Miranda decision
Brevik was entitled to be informed of his right to counsel and any
statements made without such advice being given are not admissible in
evidence. This objection was overruled.
Agent
Doonan testified to only two statements made by Brevik at the interview.
The first was that Brevik told him that in compliance with the request
to bring in his records, he (Brevik) had placed them in the glove
compartment of his automobile from which they were stolen while his car
was parked at the airport where he had left it while temporarily out of
town. Agent Doonan testified also that Brevik attempted to explain the
payment of a check in the amount of $2500.00 to his brother-in-law,
James P. Korstad, drawn on the corporate account of Selective Investment
Corporation, as being in exchange for financial advice regarding the
corporate structure of the company. Korstad had previously testified
that the payment was reimbursement of a long standing personal debt.
In
light of the totality of the evidence proving defendant's purposeful tax
evasion, these statements testified to by Agent Doonan taken together
amount to only an insignificant part of the evidence upon which the
defendant was convicted and were used largely to question Brevik's
credibility rather than as substantive proof of his guilt. Furthermore,
the Court's ruling admitting this evidence was correct. We held in Cohen
v. United States [69-1 USTC ¶9132], 405 F. 2d 34 (1968), cert.
denied, 394 U. S. 943 (1969), that where an interview is of a
non-custodial nature, as was concededly the case here, statements
elicited or volunteered at such an interview are not tainted or
inadmissible due to failure to give all of the Miranda warnings,
even where such interview has reached the accusatory stage. Cohen,
supra, like the case before us, was a case involving a non-custodial
interview by IRS agents. Virtually all the circuits have ruled on the
issue of the application of the Miranda warnings to non-custodial
tax investigations and only the 7th Circuit in U. S. v. Dickerson
[69-2 USTC ¶9556], 413 F. 2d 1111 (1969) opposes the rule that Miranda
does not apply to such situations. The case of Mathis v. U. S.
[68-1 USTC ¶9357], 391
U. S.
1, (1968), cited by defendant, is not applicable since it involved a
clearly custodial situation. In light of Cohen, supra, and the
many cases in the other circuits supporting the proposition in Cohen,
we hold that it was not error to admit the testimony of Agent Doonan.
Defendant
next objects to the admission of certain testimony given by four
government witnesses, Frank Kosanda, Raymond F. Kelly, Joe Thompson and
Vernie Lysenzer. The crux of the claim is that certain segments of the
testimony of these witnesses and connected exhibits prejudicially
accused the defendant of prior criminal misconduct in violation of the
general rule observed in Hartman v. U. S. [54-2 USTC ¶9522], 215
F. 2d 386 (8th Cir. 1954) and Kempe v. U. S., 151 F. 2d 680 (8th
Cir. 1945), cert. denied, 331 U. S. 843 (1947), 1 and as a
result such evidence was improperly admitted.
Frank
Kosanda testified that as an attorney in
Grand Forks
,
North Dakota
he had incorporated the Garden State Investment Company. This testimony
is connected with the rest of the case only in the fact that Garden
State Investment Company was one of the companies from which money was
apparently taken by Brevik without reporting it as income. This
testimony may be irrelevant but it is not prejudicial, does not violate
the rule against admission of evidence tending to show that a defendant
has committed other crimes, and in light of all the evidence, its
admission, if error, was surely harmless.
Witnesses
Kelly and Thompson testified over objection that they were
North Dakota
farmers who were solicited by Brevik and who bought stock in Garden
State Investment Company. Lysenzer only testified that Brevik visited
him, at which point, after objection from defense counsel, the trial
court prohibited further evidence of this sort, saying that it was
cumulative and that if it were continued it might become prejudicial in
that it implied that Brevik was involved in dishonest stock
transactions, a crime which was not part of the indictment in the
present case. The trial court observed that the evidence admitted to
that point was not prejudicial.
On
the whole we agree with the trial court that very little of this
testimony was important and none was significantly prejudicial
considered in light of the totality of the evidence. There might be some
question regarding the government's purpose in introducing this
testimony and some difficulty in determining its relevance. However, the
government does suggest one plausible explanation. The government
contends that it was necessary to show that monies taken from corporate
accounts were in fact corporate funds and not personal finances. Thus,
the evidence is probably relevant, and even if irrelevant and
erroneously admitted, is harmless error in light of the overwhelming
evidence of defendant's guilt. As to the allegation that the testimony,
even if relevant, violates the general rule against admission of
evidence which tends to implicate a defendant in other criminal
activity, it is difficult to see how this testimony does so. At most it
appears to raise a bare implication of possible dishonest stock
transactions, and in fact no testimony was received other than the
statements that stock was sold for significant sums of money. Only in
one instance was possible dishonest activity more clearly raised. Joe
Thompson testified that the original check used to purchase stock from
Brevik was in the courthouse in
Grafton
,
North Dakota
as part of the evidence in a lawsuit there. Defense counsel objected to
this testimony and the objection was sustained, the testimony stricken
from the record, and the jury instructed to disregard it. Much more
damaging evidence implicating Brevik in violations of the Minnesota
Securities Act was elicited by Brevik's own counsel in cross examining a
government witness who testified under cross examination that Brevik had
pleaded guilty to such violations.
We
find that most of the evidence complained of had relevance sufficient
for admission and none was significantly prejudicial. Thus, it is our
view that no error was committed, but even assuming, arguendo,
that some error was committed, it was harmless.
Judgment
affirmed.
1
In Hartman v.
U. S.
, supra, at 393, the Court held that "In order for wrongful
acts not included in a charge to be admissible to prove intent they must
be of such a character that as a matter of logic they tend to
demonstrate a criminal intent in the acts within the charge." Kempe
v. U. S., supra, at 687 states the rule as: "The general rule
is that in a criminal prosecution proof which shows or tends to show
that the accused is guilty of the commission of other crimes and
offenses at other times, even though they are of the same nature as the
one charged in the indictment, is incompetent and inadmissible for the
purpose of showing the commission of the particular crime charged. The
accused is to be convicted, if at all, on evidence showing his guilt of
the particular offense charged in the information. It is not competent
to prove that the accused committed other crimes of a like nature for
the purpose of showing that he would be likely to commit the crime
charged in the information."
[69-1
USTC ¶9149]
United States of America
, Plaintiff-Appellee v. Ethel M. Beal, Defendant-Appellant
(CA-6),
U. S. Court of Appeals, 6th Circuit, No. 18474, 404 F2d 58, 11/26/68,
Aff'g unreported District Court decision
[Code Secs. 7201 and 7602(1)]
Tax evasion: Examination of books and witnesses: Accountant:
Voluntary cooperation with IRS agents: Motion to suppress evidence:
Defenses: Constitutionality.--In upholding the taxpayer's conviction
for filing false and fraudulent returns for the taxable years 1959
through 1962, the Court of Appeals held that the District Court did not
err in failing to suppress prior to trial, and by admitting at the
trial, certain evidence obtained from the taxpayer and her accountant.
The taxpayer conceded that the information derived from her accountant
was voluntarily made available to IRS agents; there was no showing that
the taxpayer's books and records, rather than the accountant's, were
surrendered; the taxpayer's returns for the taxable years had not been
subjected to prior audit; the examination of the taxpayer's records was
authorized (Code Sec. 7602(1)); the taxpayer turned over her records
without coercion or promise; and there was no indication that the
taxpayer was ever subjected to in-custody questioning. District Court
affirmed.
[Code Sec. 7201]
Tax evasion: Jury trial: Defenses: Prior contact with juror.--There
was no evidence to support the taxpayer's contention that she was
deprived of a fair trial by undisclosed prior contact of one juror with
her and her hotel.
George
I. Cline, United States Attorney, G. Wix Unthank, Assistant United
States Attorney, Lexington, Ky., for plaintiff-appellee. William H.
Beck, 404 Citizens Union Nat'l Bank Bldg.,
Lexington
,
Ky.
, for defendant-appellant.
Before
EDWARDS and COFFIN, * Circuit
Judges, and CECIL, Senior Circuit Judge.
PER
CURIAM:
Appellant
Beal was indicted for filing false and fraudulent income tax returns in
each of four years--1959, 1960, 1961 and 1962--in violation of 26 U. S.
C. §7201 (1964). The government served notice that it intended to
proceed by net worth proofs to show understatement of income by over
$51,000 and understatement of tax by over $21,000 in the four disputed
years. The case was tried to a jury before the United States District
Court for the Eastern District of Kentucky and appellant was found
guilty on all counts and was thereafter sentenced to probation and a
$2,500 fine on each count.
[Issues
on Appeal]
On
appeal appellant's counsel listed ten separate claims of reversible
error, but at oral argument largely abandoned all except numbers IV, VII
and VIII.
[Prior
Contact with Juror]
As
to appellant's question IV, wherein she asserts that she was deprived of
a fair trial by undisclosed prior contact of one juror with her and her
hotel, we have examined the appellate record and find it devoid of facts
upon which appellant seeks to rely. Clearly, the claim was not advanced
at trial and apparently no record was made pertaining to this issue on
motion for new trial. If this evidence is newly discovered evidence, it
cannot be asserted first at appellate hearing. See FED. R. CRIM. P. 33.
As
to questions VII and VIII, appellant asserts that the District Judge
erred in failing to suppress prior to trial, and by admitting at trial,
certain evidence derived from appellant's accountant and from appellant
herself. Appellant relies generally on the Fourth and Fifth Amendments
in this regard. We have examined the entire record in this regard and
find no constitutional violations or reversible error.
[Information
Obtained from Accountant]
Appellant
appears to concede that information derived from appellant's accountant
was voluntarily made available to the Internal Revenue Service agents.
The record does not show surrender of appellant's own books and records,
as opposed to the accountant's own books and records. Appellant's tax
returns for these disputed years had not been subjected to prior audit. Cf.
Hinchcliff v. Clarke [67-1 USTC ¶9187], 371 F. 2d 697 (6th Cir.
1967).
[IRS
Investigation]
Nor
is any issue presented (or found in the record) which would show such
violations pertaining to information derived from appellant herself. The
examination of appellant's records was authorized by statute. 26 U. S.
C. §7602(1) (1964). The District Judge found (on ample evidence) that
appellant turned over her records without coercion or promise. See Eggleton
v. United States [56-1 USTC ¶9108], 227 F. 2d 493 (6th Cir. 1955), cert.
denied, 352 U. S. 826 (1956); Zap v. United States, 328 U. S.
624 (1946), rehearing denied, 329 U. S. 824, vacated and
remanded on other grounds, 330 U. S. 800 (1947). There is no
indication in this record that appellant was ever subjected to
in-custody questioning. Cf. Miranda v.
Arizona
, 384
U. S.
436 (1966).
We
have also examined the other six issues advanced on this appeal and find
no reversible error.
Affirmed.
*
Hon. Frank M. Coffin,
United States
Court of Appeals for the First Circuit, sitting by designation.
[69-1
USTC ¶9248]Jack C. Ping, Appellant v.
United States of America
, Appellee
(CA-8),
U. S.
Court of Appeals, 8th Circuit, No. 19,339, 407 F2d 157, 2/28/69, Aff'g
unreported District Court decision
[Code Sec. 7206]
Crimes: False and fraudulent statements: Evidence.--Taxpayer's
conviction for willfully filing false returns was upheld. The lower
court did not err in (1) refusing to exclude from evidence an
incriminating statement made by the taxpayer to an IRS agent, and (2)
admitting summaries of the defendant's checking accounts. The taxpayer's
statements were voluntarily given and since he was not in custody it was
unnecessary to give him a Miranda type warning. The inclusion of
the summaries was not error since they were prepared in pencil on
ordinary ledger paper and were not likely to have imparted an impression
of authenticity to the jury. Also, the Court carefully instructed the
jury as to the use of the summaries.
John
A. McClintock, Hansen, Wheatcraft & McClintock, 803 Fleming Bldg.,
Des Moines
,
Iowa
, for appellant. James P. Rielly, United States Attorney, Jerry E.
Williams, Claude H. Freeman, Assistant United States Attorneys, 113 U.
S. Courthouse, Des Moines, Iowa, for appellee.
Before
BLACKMUN, MEHAFFY and HEANEY, Circuit Judges.
HEANEY,
Circuit Judge:
The
defendant was convicted on a two-count indictment for willfully filing
false individual income tax returns for 1962 and 1963 in violation of §7206(1)
of the Internal Revenue Code of 1954. The indictments alleged that the
defendant had understated his gross income by $13,757 in 1962, and
$9,000 in 1963. He received a sentence of imprisonment of one year on
each count--the sentences to run concurrently. Two questions are raised
on this appeal: (1) whether the District Court erred in refusing to
exclude from evidence an incriminating statement obtained from the
defendant by a Special Agent of the Internal Revenue Service; and (2)
whether the District Court erred in admitting summaries of the
defendant's checking accounts for 1962 prepared by the same Special
Agent. We answer both questions in the negative.
A
brief summary of the evidence relating to the alleged understatement of
gross income will be helpful in understanding the defendant's
contentions.
The
evidence established that the defendant reported only $14,987 out of a
gross income of $28,744 in 1962. The unreported income consisted of
$3,750 received as wages from the Hales and Hunter Company and $10,000
received as a commission from Todd & Sargent, Inc., for assisting in
locating financing for the construction of a feed mill. The evidence
also established that the defendant reported $12,224 out of a gross
income of $21,224 in 1963. The unreported income consisted of a $9,000
commission received from Todd & Sargent, Inc.
The
defendant testified that he failed to report the $3,750 because he did
not receive his W-2 form from the Hales and Hunter Company. He claimed
that he failed to report the commissions because they had been used by
him to defray necessary and proper business expenses incurred in
securing the financing.
The
Admissibility of the Defendant's Statement
The
defendant was first advised that his income tax returns were being
investigated in a letter written
May 27, 19
65, by Special Agent Dale T.
Rob
inson.
Rob
inson correctly identified himself, but did not advise the defendant
that the investigation was criminal in nature. On
August 23, 19
65,
Rob
inson interviewed the defendant in
Rob
inson's office. The entire interview was transcribed. At the outset,
Rob
inson informed the defendant that he was not required to answer any
questions or furnish information that might tend to incriminate him.
During the course of the interview, the defendant inquired about his
right of having an attorney present.
Rob
inson informed him that he had such a right and asked him if he desired
to exercise it. The defendant indicated that he did not desire to have
counsel present. The defendant conceded during the interview that he may
have used a portion of the commissions for personal expenses. 1
On
October 25, 19
65, a Group Supervisor in the Intelligence Division called the
defendant, advised him that the Division was considering instituting a
criminal proceeding and invited him to a conference in the
Jackson
,
Mississippi
, office of the Intelligence Division. The Supervisor informed the
defendant that he could bring an attorney and that he could present
evidence or offer explanation with respect ot the alleged violations. On
November 2, 19
65, the defendant his attorney kept the appointment with the Group
Supervisor. The defendant and his counsel were shown a copy of the
August 23rd transcript with the request that they review it, correct
erros, initial any corrections and sign it. After examinaing the
statement for a half hour, the defendant signed it. Before doing so, the
following paragraph was added by the defendant's counsel:
"I
have carefully read the foregoing statement consisting of thirty-seven
(37) pages, including this page, which is a transcript of questions
which were propounded to me and my answers to such questions on
August 23, 19
65, at
Gulfport
,
Mississippi
, relative to my income tax liability. I believe that the interview is
correctly transcribed but I also recognize that many of my answers were
vague and confusing, primarily because of my efforts to answer wothout
full recollection of the facts, and that some of them should be
corrected, explained or clarified. I have initialed each page of the
statement for identification."
The
defendant does not contend that his statement was obtained by
misrepresentation, fraud or coercion. He argues, rather, that the
statement was not a voluntary one because he was not fully advised of
his rights under the Fifth and Sixth Amendments to the Constitution in
accordance with Miranda v. Arizona, 384 U. S. 436 (1966), and Escobedo
v. Illinois, 378 U. S. 767 (1964).
We
are convinced here, as we were in Cohen v. United States, No.
19181, 8th Cir.
Dec. 18, 19
68, that the defendant's statement was a voluntary one as that term was
understood pre-Escobedo and Miranda; and as the defendant
was not in custody, it was unnecessary for the Special Agent to give
warnings other than those given. Cohen v. United States, supra; Muse
v. United States, No. 19259, 8th Cir.
Dec. 18, 19
68; White v. United States, 395 F. 2d 170 (8th Cir.), cert.
denied, 393 U. S. 844 (1968). In those cases, as here, the defendant
was interrogated in the Special Agent's office. We held in them that
this fact was not sufficient to establish a custodial situation. We are
not persuaded to change that opinion.
The
Admissibility of the Summaries
The
defendant contends that the trial court erred in receiving in evidence
three summaries prepared by
Rob
inson which purported to be an analysis of the defendant's two checking
accounts. The first summary was described as an analysis of the
defendant's checking account in the Farmers and Merchants Savings Bank,
Burlington
,
Iowa
, for 1962, and the second was a similar analysis of the defendant's
account in the Farmers National Bank of
Winfield
,
Iowa
, for the same year. Each summary was prepared from monthly bank
statements and cancelled checks which had been previously received in
evidence. The columns were captioned: statement date; date of check;
amount; deposit; balance; check number; payee; and possible business
use. The third summary was essentially a synopsis of the other two
and included a capition entitled "Possible Business Use." The
summaries purported to show that of $10,300 received by the defendant in
1962, he had expended only $3,300 for possible business purposes and had
expended the balance for personal items.
The
defendant objected to the introduction of the summaries on the grounds
that the cancelled checks and the statements constituted the best
evidence of the defendant's financial transactions, and that it was
error to permit
Rob
inson, a non-expert, to give his opinion as to the use of the funds--an
opinion which was expressed by the inclusion of the "Possible
Business Use" column.
Monthly
bank statements and cancelled checks for 1963 were also received in
evidence but summaries similar to those for 1962 were not offered in
evidence. Thus, we might, in view of concurrent sentences, refuse to
consider the admissibility of the 1962 summaries and sustain the
defendant's conviction on the basis of the 1963 count. Wangrow v.
United States, 399 F. 2d 106 (8th Cir.), cert. denied, 393
U. S.
933 (1968).
We
also note the possibility of sustaining the 1962 count on the basis of
the defendant's failure to report the wage payment of $3,750--a sum
which was not included in the summary. The defendant's only defense for
failing to pay a tax on this sum was that he had not received a W-2 form
from his employer--a defense the jury was free to disbelieve.
We
consider the propriety of receiving the 1962 summaries in evidence out
of an abundance of caution. The evidence as to the two counts was
closely interrelated. The fact that the defendant's failure to report
ran over a period of two years may also have been considered by the jury
in finding that the defendant's acts were willful. Holland v. United
States [54-2 USTC ¶9714], 348
U. S.
121, 139 (1939); Blackwell v. United States [57-1 USTC ¶9644],
244 F. 2d 423, 429 (8th Cir.), cert. denied, 355
U. S.
838 (1957).
If
the column captioned "Possible Business Use" had been excluded
from the summaries, their admissibility would be clear. Lumetta v.
United States [66-2 USTC ¶9492], 362 F. 2d 644, 645 (8th Cir.
1966); Blackwell v.
United States
, supra at 430; Hoyer v. United States [55-1 USTC ¶9518],
223 F. 2d 134, 138 (8th Cir. 1955); Hanson v. United States [51-1
USTC ¶9118], 186 F. 2d 61, 67 (8th Cir. 1950). See, 4 Wigmore, Evidence
§1230 (3d ed. 1940). The use of such conclusionary statements has been
questioned and might better have been omitted here:
"*
* * Whenever possible, * * * charts should be confined in their
preparation to strictly mathematical computations, subject to detailed
explanation upon the trial by the testimony of expert government
witnesses, and they should not be encumbered by such impressive,
conclusionary captions as * * * 'Unreported Net Income * * *', 'Income
Tax Unreported and Unpaid * * *', such as were used on the Government
charts here in dispute.
While
a prosecution witness may testify as to such conclusions from his
mathematical computations, we think the danger in permitting the
unrestricted use of such phrases upon charts results from a jury's
natural tendency to accept such unsworn, conclusionary verbiage as
authentic, primary proof, instead of purely in summarization and
explanation of sworn testimony or authenticated documentary
evidence."
Lloyd
v. United States [55-2 USTC ¶9665], 226 F. 2d 9, 17 (5th Cir.
1955).
See also,
Holland
v.
United States
, supra at 128.
Nevertheless,
a careful review of the record convinces us that its inclusion did not
prejudice the substantial rights of the defendant. Rule 52(a), Fed. R.
Crim. P. The summaries were prepared in pencil on ordinary ledger paper
and were not likely to have imparted an impression of authenticity to
the jury. Also, the court carefully instructed the jury 2 as to the
use of the summaries. In addition, the evidence as to the defendant's
guilt was clear and convincing.
Affirmed.
1
At trial, the defendant denied using any part of the commissions for
personal expenses. He also testified that he had spent nearly $4,000
more in arranging financing that he had received. He produced a record
book which tended to support his testimony.
Both
assertions were in direct conflict with statements given during the
interview. The existence of a written record of expenditures had also
been denied during the interview.
During
the interview, he gave the following answers to questions asked by Agent
Rob
inson:
"Q.
Did you incur any expenses for which you were not reimbursed?
"A.
Oh, no, I don't think so, I think he amply--
"Q.
Would the expenses that you incurred cover also your personal living
expenses?
"A.
Yes, some of them would, yes. I'm sure that's so. However, my wife had
some money and again when you deposited money and so on and so forth and
she had some money, we sold some stock, or she sold a little stock
during that time, she had some cash before we were married, and we
commingled, I'm sorry to say, these funds and it would be awfully hard
to separate 'um.
*
* *
"Q.
And again, did you keep a record of these expenditures?
"A.
I'm afraid not."
2
"Summaries prepared by the special agent have been admitted in
evidence. They are received for the purpose of explaining facts
disclosed by books, records, and other documents which are in evidence
in the case. However, such charts or summaries are not in and of
themselves evidence or proof of any facts. If such charts or summaries
do not correctly reflect facts or figures shown by the evidence in the
case, the jury should disregard them.
"In
other words, such charts or summaries are used only as a matter of
convenience; so if, and to the extent that, you find they are not in
truth summaries of facts or figures shown by the evidence in the case,
you are to disregard them entirely."
[69-1
USTC ¶9133]
Rob
ert M. Muse, Appellant v. United States of America, Appellee
(CA-8),
U. S. Court of Appeals, 8th Circuit, No. 19,259, 405 F2d 40, 12/18/68,
Aff'g unreported District Court opinion
[Code Sec. 7201]
Tax evasion: Tax investigation: Pre-custodial investigation:
Constitutional rights.--The District Court did not err in admitting
oral and written statements made by the taxpayer to a Special Agent who
had warned the taxpayer that he had a right to remain silent, but had
failed to warn him of his right to retain counsel. The taxpayer was not
in custody, the statements were not obtained by misrepresentation, fraud
or coercion, and were voluntarily given. Cohen v. U. S., (CA-8)
69-1 USTC ¶9132.
John
L. Boeger, Morris A. Shenker, James F. Nangle, Jr., 408 Olive St., St.
Louis, Mo., for appellant. John M. Brant, Mitchell Rogovin, Assistant
Attorney General, Lee A. Jackson, Joseph M. Howard, Department of
Justice, Washington, D. C. 20530, Veryl L. Riddle, United States
Attorney, Irvin L. Ruzicka, Assistant United States Attorney, St. Louis,
Mo., for appellee.
Before
VAN OOSTERHOUT, Chief Judge; MEHAFFY and HEANEY, Circuit Judges.
HEANEY,
Circuit Judge:
The
defendant was indicted in three counts for willfully attempting to evade
income taxes by filing false and fraudulent individual income tax
returns for the years 1960, 1961 and 1962 in violation of §7201 of the
Internal Revenue Code of 1954. He was found guilty on all counts and
sentenced.
[Issue]
The
question raised here is whether the District Court erred in refusing to
exclude evidence obtained from the defendant by Internal Revenue Service
Agents. We hold it did not.
[Pre-custodial
Investigation]
A
Revenue Agent of the Internal Revenue Service began an investigation of
the defendant's returns in early 1964. He had been investigating the
returns of the defendant's brother. He met twice with the defendant
before referring the case to the Intelligence Division on
February 24, 19
64. He told the defendant that the purpose of the investigation was to
determine the defendant's correct tax liability.
On
March 2, 19
64, the Revenue Agent and the Special Agent met with the defendant in
the Special Agent's office. The Special Agent introduced himself as
Special Agent and read the following warning:
"Under
the Constitution of the United States you have the right to refuse to
answer questions or make any statement which may tend to incriminate you
under the laws of the United States. Anything you say, any evidence you
produce may be used against you in any proceeding which may hereafter be
undertaken by the United States."
The
defendant replied that he understood. Several additional visits were
made between the March meeting and
October 14, 19
65. Incriminating statements and records were obtained at some of them.
At the latter meeting, the Special Agent asked the defendant to sign a
written statement. The defendant asked "what direction the
investigation was going" and whether he needed a lawyer. The
Special Agent replied that "it looked as if criminal prosecution
would be recommended; that it was for the defendant to decide about
retaining a lawyer and that the Internal Revenue Service Agents would
not advise him one way or the other on the subject."
On
October 28, 19
65, the defendant signed a statement containing oral admissions made by
him during the course of the several meetings. In substance, the
defendant admitted that he knew that each return understated his income
by "several thousand dollars" and that he had filed the
incorrect returns to protect his brother against an examination.
No
statements as to the purpose of the investigation, nor warnings other
than those stated, were given to the defendant at any time during the
investigation.
[No
Right to Warning]
We
are convinced here, as we were in Cohen v. United States, No.
19181, 8th Cir.
Dec. 18, 19
68, [69-1 USTC ¶9132] decided today, that the District Court did not
err in receiving the defendant's oral and written statements in
evidence. The defendant was not in custody and the statements were not
obtained by misrepresentation, fraud or coercion, and were voluntarily
given. The defendant's constitutional rights under the Fifth and Sixth
Amendments were not violated.
Affirmed.
[69-1
USTC ¶9132]Jerry M. Cohen, Appellant v. United States of America,
Appellee
(CA-8),
U. S. Court of Appeals, 8th Circuit, No. 19,181, 405 F2d 34, 12/18/68,
Aff'g unreported District Court opinion
[Code Sec. 7201]
Tax evasion: Tax investigation: Pre-custodial interview:
Constitutional rights.--Internal Revenue Agents, Revenue or Special,
conducting tax investigations are not required to warn taxpayers who are
not in custody of their constitutional right to remain silent or right
to retain counsel. However, disclosures to Internal Revenue Service
Agents, both Revenue or Special, must be entirely voluntary and must not
be induced by coercion, fraud or misrepresentations.
John
M. Bray, 1100 Federal Bar Bldg., 1815 H. St., N. W., Washington, D. C.,
Rob
ert J. Koster, Cook, Murphy, Lance & Mayer, 611 Olive St., Suite
2106, St. Louis, Mo., for appellant. John M. Brant, Richard C. Pugh,
Acting Assistant Attorney General, Lee A. Jackson, Joseph M. Howard,
Department of Justice, Washington, D. C. 20530, Veryl L. Riddle, United
States Attorney, Irvin L. Ruzicka, Assistant United States Attorney, St.
Louis, Mo., for appellee.
Before
MATTHES, MEHAFFY and HEANEY, Circuit Judges.
HEANEY,
Circuit Judge:
The
defendant was indicted in three counts for willful failure to file
individual income tax returns for 1960, 1961 and 1962 in violation of §7203
of the Internal Revenue Code of 1954, and in eight counts for knowingly
filing false employer's quarterly tax returns for 1961 and 1962 in
violation of §7201. He was found guilty on all counts and was
sentenced.
[Issue]
The
question raised here is whether the District Court erred in refusing to
exclude evidence obtained from the defendant by Internal Revenue Service
Agents--evidence which the defendant contends was secured by
misrepresentation and in violation of his constitutional rights under
the Fifth (Miranda) 1 and Sixth (Escobedo)
2 Amendments.
We affirm.
[Pre-Custody
Investigation]
A
Special Agent, 3 assigned to
investigate the defendant's failure to file tax returns, telephoned the
defendant on
August 19, 19
63, and told him he was a Special Agent who investigated irregularities
in taxes. He asked the defendant a few questions and requested an
appointment.
On
September 9, 19
63, the Special Agent went to the defendant's office and told him that
the St. Louis Office of the Internal Revenue Service had no record of
income tax returns filed by the defendant and asked where they had been
filed. The defendant replied that he had filed returns in Detroit in
1959, but had not filed returns after that. This was the first time that
the Special Agent knew that no returns had been filed. The Special Agent
then told the defendant that a Revenue Agent had been assigned to
"examine his income tax liability, if any" and that the
Revenue Agent would make the tax examination, and that he, the Special
Agent, would conduct an audit. The Special Agent also learned, at this
meeting, that the defendant was the sole proprietor of the United
Heating Service.
The
agents visited the defendant's office singly or together on
September 26, 19
63,
June 3, 19
64,
September 9, 19
64,
March 16, 19
65,
August 10, 19
65 and
September 16, 19
65. On most occasions, they obtained records used against the defendant.
It
was at the second visit, on
June 3, 19
64, that the defendant was first advised that he need not answer any
questions which tended to incriminate him. He responded to this warning
by saying that he understood but saw no reason not to answer. The
warning was repeated at an
August 10, 19
65, meeting at the defendant's office. The defendant again answered the
questions put to him by the agents.
On
April 6, 19
66, the taxpayer went to the Internal Revenue Service office for a
formal interview. He did so in response to a letter which told him he
could bring an attorney. He was advised for the first time at this
meeting that the Special Agent was a criminal investigator. He was also
advised for the first time that he had a right to counsel, but was not
told that counsel would be provided for him.
On
the basis of this record, we are convinced that the defendant's records
and statements were not obtained by misrepresentation, fraud or
coercion, as those terms were understood pre-Escobedo and Miranda,
and were voluntarily given in the same sense.
While
there is District Court authority for the view that Internal Revenue
Service Agents have an affirmative duty to inform a taxpayer that he is
the subject of a criminal investigation in circumstances comparable to
those here, 4 the United
States Courts of Appeals have uniformly held to the contrary. 5 We follow
the latter cases but reiterate our warning in White v. United States,
395 F. 2d 170 (8th Cir. 1968), that agents must not affirmatively
mislead a taxpayer into believing that the investigation is exclusively
civil in character and will not lead to criminal charges.
[Miranda
Warning]
We
turn to the question of whether the failure to give a Miranda
warning, or a modified version thereof, made the evidence obtained
inadmissible.
We
indicated by way of dictum in Frohmann v. United States [67-2
USTC ¶9588], 380 F. 2d 832 (8th Cir. 1967), and held in White,
that a special investigator for the Alcohol and Tobacco Tax Division of
the Internal Revenue Service conducting a pre-custody investigation need
not warn a taxpayer of his constitutional rights as enunciated in Escobedo
and Miranda. We did not distinguish in either case between
investigations conducted by the Audit Division, usually civil, and those
conducted by Special or Intelligence Agents, usually criminal. Nor did
we attempt to draw a line between the investigatory or accusatory stage
of such investigations.
We
are now faced with the question of whether we will apply the dictum in Frohmann
and the holding in White to pre-custodial inquiries by Special
Agents of the Internal Revenue Service, including situations in which
the inquiries may have reached the accusatory stage.
District
Courts in the Tenth, Fifth, Third and Seventh Circuits have held that
warnings are required at the point the investigation reaches the
accusatory stage or becomes criminally oriented. They have indicated
that this stage is often reached when a Special Agent is assigned to the
case 6 United
States v. Turzynski [67-2 USTC ¶9489], 268 F. Supp. 847 (N. D. Ill.
1967), is recognized as the leading case for this point of view.
In
Turzynski, as a result of a civil investigation, the taxpayer's
case was turned over to the criminal division of the Internal Revenue
Service. The taxpayer was not informed of this shift of focus and
continued to furnish the Special Agent with records and interviews. The
taxpayer was given no warning of possible criminal prosecution until the
investigation was completed and he was sent a letter inviting him to a
formal conference. The letter informed him that he could bring counsel.
The taxpayer reported without counsel. The agents, however, refused to
continue until the taxpayer retained counsel. The court said:
"*
* * Once a taxpayer becomes the subject of a criminal tax investigation,
as evidenced by the referral of the investigation to the Intelligence
Division or otherwise, our adversary process of criminal justice has
become directed against him as a potential criminal defendant. Any
evidence obtained from him is admissible only if the taxpayer furnished
it after knowingly and voluntarily waiving his constitutional rights and
privileges. * * *
*
* *
"To
hold otherwise would lead to the anomolous conclusion that a person
suspected of bank robbery, sale of narcotics, murder, rape or other
serious crime is entitled to greater protection of his constitutional
rights than a person suspected of violating the internal revenue laws.
For when the silent transition from civil to criminal investigation
takes place in a tax case, the taxpayer being interrogated and asked to
furnish his books and records is just as surely a prime suspect and
candidate for criminal prosecution as the individual under interrogation
as a suspect for other crimes."
Id.
at 850-51.
[Courts of Appeals' Decisions]
The
Courts of Appeals, that have considered the matter since Escobedo,
have held, in a variety of fact situations, that warnings need not be
given in pre-custodial interview. 7 The
reasoning of Judge Lumbard in United States v. Squeri [68-2 USTC
¶9493], 398 F. 2d (2d Cir. 1968), appears to reflect the views (often
unexpressed) of the Circuits that have considered the question:
"*
* * [W]e reject the view, adopted by a few district courts in other
circuits, that IRS agents must give the Miranda warnings, even
though there is no custodial interrogation, if the investigation has
reached the accusatory stage. * * * The Fifth Amendment privilege
prohibits the government from compelling a person to incriminate
himself. It was the compulsive aspect of custodial interrogation, and
not the strength or extent of the government's suspicions at the time
the questioning was conducted, which led the court to impose the Miranda
requirements with regard to custodial questioning. We believe that the
presence or absence of compelling pressures, rather than the stage to
which the government's investigation has developed, determines whether
the Miranda requirements apply to any particular instance of
questioning."
Id.
at 790.
[Present IRS Procedure]
On
November 26, 19
68, the Internal Revenue Service announced a revised procedure for
advising a taxpayer of his rights during an investigation conducted by a
Special Agent of the Internal Revenue Service, Intelligence Division.
"*
* * At the initial meeting with a taxpayer, a Special Agent is now
required to identify himself, describe his function, and advise the
taxpayer that anything he says may be used against him. The Special
Agent will also tell the taxpayer that he cannot be compelled to
incriminate himself by answering any questions or producing any
documents, and that he has the right to seek the assistance of an
attorney before responding.
"Previously,
the Special Agent identified himself and described his function at the
first meeting with the taxpayer but was not required to give further
advice unless the taxpayer was in custody or the investigation proceeded
beyond the pre-liminary stage.
"IRS
has made no change in its existing instructions that if it becomes
necessary to interview a person who is in custody, an Agent must give a
comprehensive statement of rights before any interrogation. This
statement warns the person in custody that he may remain silent and that
anything he says may be used against him.
"A
person in custody also must be told that he has the right to consult or
have present his own counsel before making a statement or answering any
questions, and that if he cannot afford counsel he can have one
appointed by the U. S. Commissioner."
IRS
News Release IR-949,
November 26, 19
68.
The
procedures outlined in the instructions are a step forward in tax
admin
istration and will be among the factors considered by this Court in
determining whether the nature of an investigation has been
misrepresented. They fall short, however, of extending to the taxpayer
the protections set forth in Escobedo and Miranda.
The
admin
istration of the new Internal Revenue Service procedure will raise
practical problems. In some instances, the Revenue Agents will have
obtained the evidence necessary to obtain a conviction before referral;
in others, Revenue Agents might be encouraged to expand their inquiries.
Furthermore, a determination as to when the right to warnings attach
should not depend on the title and function of the official
investigator. United States v. Mathis [68-1 USTC ¶9357], 391 U.
S. 1 (1968); United States v. Mackiewicz [68-2 USTC ¶9461], (2d
Cir.
July 10, 19
68), cert. denied, 37 U. S. L. Week 3158 (U. S.
Oct. 28, 19
68); Note, 33 U. Chi. L. Rev. 134, 147-48 (1965).
To
meet these problems, Law Review commentary recommends that warnings be
optional with the Internal Revenue Service depending on whether there is
a desire to preserve the right to use any evidence obtained in a
criminal prosecution. If it had this desire, full warnings would be
required. 8
If
a taxpayer is entitled to be warned of his Fifth and Sixth Amendment
rights in a non-custodial tax investigation, the Law Review
recommendations would be meritorious. While the suggested procedure
would impose additional
admin
istrative tasks, 9 it would be
fair to the taxpayer and susceptible of review. We do not require it,
however, because we do not believe that the taxpayer is so entitled.
[No
Right to Warning]
To
summarize, we hold that the Internal Revenue Service Agents, Revenue or
Special, are not required to warn taxpayers who are not in custody of
their Fifth or Sixth Amendment rights.
We
also reemphasize the views that we expressed in White that
disclosures to Internal Revenue Service Agents, Revenue or Special, must
be entirely voluntary and must not be induced by coercion, fraud or
misrepresentations.
Affirmed.
1 Miranda v. Arizona,
384 U. S. 436 (1966).
2 Escobedo v. Illinois,
378 F. 2d 767 (1964).
3
Revenue Agents undertake routine civil audits in an attempt to ascertain
if, in fact, there has been a deficiency. The Revenue Agent, in the
normal course, is not searching for evidence of fraud. If, however, the
Revenue Agent discovers the possible existence of fraud, the matter is
turned over to his superiors who refer the case to the Intelligence
Division. The Intelligence Division then determines whether a fraud
investigation is warranted. If a decision is made to commence a fraud
investigation, a Special Agent is placed in charge. The Special Agent is
a trained criminal investigator. His duty is to determine whether the
taxpayer has, in fact, committed fraud. Both the Special Agent and
Revenue Agent have virtually unreviewable discretion to dismiss the
criminal aspects of a case while they are in charge. Duke, Prosecutions
for Attempts To Evade Income Tax: A Discordant View of a Procedural
Hybrid, 76 Yale L. J. 1, 34-35 (1966); Hewitt, The Constitutional
Rights of the Taxpayer in a Fraud Investigation, 44 Taxes 660,
661-62 (1966).
4
United States v. Wheeler [57-2 USTC ¶9752], 149 F. Supp. 445,
450 (W. D. Pa. 1957), rev'd on other grounds, [58-2 USTC ¶9626]
256 F. 2d 745 (3d Cir.), cert. denied, 358 U. S. 873 (1953):
"*
* * [T]he law distinguishes between failure on the part of a government
investigator to disclose the purpose of his investigation at its
inception when suspicion of criminal wrongdoing exists and the discovery
of criminal wrongdoing in the course of a routine investigation. * *
*"
The
former constitutes misrepresentation. United States v. Walrich,
129 F. Supp. 528 (S. D. N. Y. 1954). Although fraud was suspected from
the outset the agents told the defendant that it was a routine
examination. The court held that this was a misrepresentation. United
States v. Guerrina [53-1 USTC ¶9369], 112 F. Supp. 126 (E. D. Pa.
1953), modified, [55-1 USTC ¶9143] 126 F. Supp. 609 (E. D. Pa.
1955).
5
United States v. Mackiewicz 68-2 USTC ¶9461, (2d Cir.
July 10, 19
68), cert. denied, 37 U. S. L. Week 3158 (U. S.
Oct. 28, 19
68); United States v. Sclafani [59-1 USTC ¶9357], 265 F. 2d 408,
414 (2d Cir. 1959), cert. denied, 360 U. S. 918 (1960); United
States v. Frank [57-1 USTC ¶9675], 245 F. 2d 284, 286 (3d Cir.
1957), cert. denied, 355 U. S. 819 (1957). See, Hanson v.
United States [51-1 USTC ¶9118], 186 F. 2d 61, 65-66 (8th Cir.
1950).
6
United States v. Wainwright [68-1 USTC ¶9311], 284 F. Supp. 129
(D. Colo. 1968); United States v. Kingry [67-1 USTC ¶9262], (N.
D. Fla.
January 6, 19
67); United States v. Gower [65-2 USTC ¶9752], (M. D. Pa.
August 27, 19
65). See, Andrews, The Right To Counsel In Criminal Tax
Investigations Under Escobedo And Miranda: The "Critical
Stage," 53 Iowa L. Rev. 1074, 1111-1116 (1968); Comment, 53
Iowa L. Rev. 957, 962 (1968).
7
FIRST
CIRCUIT:
Taglianetti v. United States [68-2 USTC ¶9479], (1st Cir.,
July 18, 19
68), petitioner for cert. filed, 37 U. S. L. Week 3081 (U. S.
Aug. 28, 19
68) (No. 446); Spinney v. United States [67-2 USTC ¶9738], 385
F. 2d 908 (1st Cir. 1967), cert. denied, 390 U. S. 921, 19 L. Ed.
2d 981 (1968); Schlinsky v. United States [67-2 USTC ¶9493], 379
F. 2d 735 (1st Cir.), cert. denied, 389 U. S. 920 (1967); Morgan
v. United States [67-1 USTC ¶9449], 377 F. 2d 507 (1st Cir. 1967).
In
each of these cases, the defendant was warned of his right to remain
silent and was told that anything he stated could be used against him.
In none of them was he advised of his right to counsel or to have
counsel appointed for him. The language of the Court in Spinney
indicates, however, that it would not necessarily require that any of
the Miranda warnings be given to a taxpayer being interviewed in
home or an Internal Revenue Service office.
"*
* * [W]here one is legally free, albeit at the risk of unpleasant
consequences, to reject the government's invitation to appear and
participate in an I. R. S. interview, the requirements enumerated in Miranda
do not apply. * * *
`.
. . the background of Miranda demonstrates that it was the
product of the Court's concern with the difficulty of protecting persons
in the custody of the police from coercive interrogation tactics carried
on in secret. * * * Defendant makes no assertion, nor could he, that he
was not free to walk out of the Internal Revenue office at any time. * *
*'" Spinney v. United States, 385 F. 2d at 910.
SECOND
CIRCUIT:
United States v. Marcus [68-2 USTC ¶9599], (2d Cir.
September 20, 19
68); United States v. Dawson [68-2 USTC ¶9527], 400 F. 2d 194
(2d Cir. 1968); United States v. Squeri [68-2 USTC ¶9493], 398
F. 2d 785 (2d Cir. 1968); United States v. Mackiewicz [68-2 USTC
¶9461], (2d Cir.
July 10, 19
68), cert. denied, 37 U. S. L. Week 3158 (U. S.
Oct. 28, 19
68).
In
Mackiewicz and Squeri, the defendant was warned of his
right to remain silent but was not advised of his right to counsel. In Dawson,
the defendant was warned of his right to remain silent and to have
counsel at the first two interviews. At subsequent interviews, no
earnings were given and defendant made damaging admissions. In Marcus,
it is not clear whether or not the defendant was warned of his right to
remain silent, but the defendant was not warned of his right to counsel.
The Court, in all four cases, went beyond the facts of the particular
case and stated that where the defendant was aware he was the subject of
a tax investigation and where the interviews were conducted in
noncustodial situations. Miranda warnings are not required.
FOURTH
CIRCUIT:
United States v. Mancuso [67-2 USTC ¶9487], 378 F. 2d 612 (4th
Cir.), modified [68-1 USTC ¶9166], 387 F. 2d 376 (4th Cir.
1967), cert. denied, 390 U. S. 955 (1968).
The
defendant was accompanied by his attorney and accountant at two Internal
Revenue Service interviews where he made incriminating statements. The
defendant was warned he could refuse to answer the question which could
incriminate him, but was not warned of his right to counsel. The Court,
rather than base its decision on the narrow ground that counsel was, in
fact, present, chose to hold that neither Miranda nor Escobedo
are applicable to a tax investigation where the purpose is to determine
whether or not additional taxes due or a crime has in fact been
committed.
FIFTH
CIRCUIT:
Mathis v. United States [67-1 USTC ¶9408], 376 F. 2d 595 (5th
Cir. 1967), rev'd [68-1 USTC ¶9357], 391 U. S. 1 (1968).
The
defendant was interviewed in connection with a routine audit while he
was confined in the Florida State Penitentiary on an unrelated
conviction. No warnings were given and the Circuit Court affirmed on the
basis that no warnings were required where the agent was conducting a
routine audit even though there was a possibility that fraud would be
uncovered. The Supreme Court reversed and held the interview must be
suppressed as it was the product of an in custody interrogation.
SIXTH
CIRCUIT:
United States v. Maius [67-2 USTC ¶9521], 378 F. 2d 716 (6th
Cir.), cert. denied, 389 U. S. 905 (1967).
The
defendant was warned that he had the right to remain silent but not that
he had grave right to counsel. The Court expressed grave reservations as
to its holding:
"*
* * A citizen summoned before such federal agents has the option to
refuse to answer their questions; but there are few who have the
toughness of fibre and the technical knowledge of their rights, who
would decline to answer questions put to them in these circumstances.
Until we are told by superiod authority that a citizen's constitutional
rights are imperiled by such procedure, we are constrained to hold that
the evidence thereby obtained is admissible in the ensuing criminal
trial."
Id.
at 719.
SEVENTH CIRCUIT:
United States v. Mansfield [67-2 USTC ¶9586], 381 F. 2d 961 (7th
Cir.), cert. denied, 389 U. S. 1015 (1967).
The
defendant was warned at the initial interview that there was a
possibility of criminal prosecution and that he could remain silent and
refuse to produce his records. He was not warned of his right to
counsel. No further warnings were given at subsequent interviews. The
Court held that the tactical decision not to give further warnings did
not render inadmissible records obtained at subsequent interviews.
NINTH
CIRCUIT:
Selinger v. Bigler [67-1 USTC ¶9420], 377 F. 2d 542 (9th Cir.) (Per
Curiam), cert. denied, 389 U. S. 904 (1967); Rickey v. United
States [66-1 USTC ¶9395], 360 F. 2d 32 (9th Cir.), cert. denied,
385 U. S. 835 (1966); Kohatsu v. United States [65-2 USTC ¶9715],
351 F. 2d 898 (9th Cir. 1965), cert. denied, 384 U. S. 1011
(1966).
All
three of these cases arose post-Escobedo but pre-Miranda.
In Kohatsu, the defendant was not warned of his right to retain
or have counsel appointed, but was warned of his right to remain silent
and not to produce any records. The warning, however, was given by a
Special Agent after the defendant has already made incriminating
statements and turned over incriminating records to a Revenue Agent. The
Court held that Escobedo was not applicable as this was an
investigation to determine whether a crime had been committed in fact.
Revenue Agents are not required to inform the taxpayer of the shift to a
criminal investigation where a routine investigation develops evidence
of fraud because it is inherent in the investigation that the agents
will pursue such evidence. The other two cases relied on this reasoning.
8
Duke, supra note 3, at 39, Hewitt, supra note 3, at 697;
Lipton, Constitutional Rights in Criminal Tax Investigation, 53
A. B. A. J. 517, 521 (1967); Note, 33 U. Chi. L. Rev. 134, 1947-48
(1965).
9
"To inject the full Miranda warning at this stage of the
proceedings would merely clutter an already difficult
admin
istrative task." United States v. Mackiewicz, supra. See Kohatsu
v. United States, supra; United States v. Sclafani, supra.
[68-2
USTC ¶9461]United States of America, Plaintiff-Appellee v. Walter P.
Mackiewicz and Florence B. Mackiewicz, Defendants-Appellants
(CA-2),
U. S. Court of Appeals, 2nd Circuit, Docket No. 32145, 401 F2d 219,
7/10/68, Aff'g District Court, 68-1 USTC ¶9186, 274 F. Supp. 805
[1954 Code Sec. 7201]
Tax evasion: Criminal investigation: Voluntary cooperation with
agents: Noncustody case: Constitutional rights.--Where the taxpayers
voluntarily cooperated with IRS agents investigating their tax returns
for the years 1960 through 1963, by answering questions and turning over
for inspection their books and records, and there was no
misrepresentation on the part of the agents to gain their consent, their
constitutional rights were not violated under the Miranda rule.
Jon
O. Newman, United States Attorney, Hartford, Conn., for
plaintiff-appellee. Curtiss K. Thompson, 205 Church St., New Haven,
Conn., for defendants-appellants.
Before
MOORE, HAYS and FEINBERG, Circuit Judges.
MOORE,
Circuit Judge:
Walter
P. Mackiewicz and his wife, Florence Mackiewicz, were convicted before a
jury of income tax evasion on their joint returns for the years 1960,
1961, 1962 and 1963. Int. Rev. Code of 1954, §7201. To establish
unreported taxable income, the Government relied on the net worth and
expenditure method. This is a technique whereby the annual increment in
asset value is compared to the reported income. The Government contends
that there was a discrepancy; that the Mackiewiczes understated their
grocery store revenue in their receipt books by about $400 a week; and
that over the period involved there was unreported income of some
$20,000 a year for a total of approximately $84,000. By way of defense,
Mr. Mackiewicz claimed that the excess arose from a cash hoard, black
marketeering overseas, success with dice on his troop ship coming home,
gambling at casinos and repayment of loans by relations and associates.
The jury apparently rejected these explanations. Both Mr. and Mrs.
Mackiewicz appeal. The appellate issues before us do not concern the
facts as such but the methods used by Internal Revenue Agents to obtain
these facts.
I.
Mr. Mackiewicz owned a small grocery store which he and his wife
managed. The work was divided between them, although there was evidence
that the majority of the entire in the receipt books were made by Mrs.
Mackiewicz.
In
November, 1964, Agent Gardner (of the Audit Division of the Internal
Revenue Service) began an audit of their joint returns. To assist him,
Mr. Mackiewicz retained an accountant, Mr. Minella, and he turned over
his business and personal records to him. These included in the grocery
store account books. Moreover, in December, 1964, he asked his wife for
her personal records, which she normally kept in a desk drawer. These
included savings account books, personal account stubs, personal account
records, and a mutual fund document. She willingly gave these papers to
her husband, for he often asked for them at income tax time. In fact,
Mrs. Mackiewicz never concerned herself with the preparation of their
annual joint return. She left the entire matter in the hands of her
husband and she merely signed whatever tax papers he presented to her.
When she discovered that he had given these personal records to an
accountant for the purpose of assisting Agent Gardner, she said nothing.
In
the course of his investigation, Agent Gardner ascertained that the
Mackiewiczes' deposits exceeded their business income. He therefore
referred the case to Special Agent Harden (of the Intelligence Division
of the Internal Revenue Service).
On
January 12, 19
65, the two agents went to the Mackiewiczes' store in order to interview
Mr. Mackiewicz. They were told that he was at a new building site, so
they drove there hoping to find him. Mr. Mackiewicz was at the site, and
the three arranged to have an interview that very afternoon.
At
1:30, Mr. Mackiewicz invited the agents into his home for the interview.
Agent Harden displayed his badge and advised Mr. Mackiewicz that he was
making an inquiry into certain tax deficiencies on his and Mrs.
Mackiewicz's joint return. He further told Mr. Mackiewicz that he did
not have to answer any questions or produce any documents which might
incriminate him. The agent repeated this, and Mr. Mackiewicz indicated
by an affirmative nod, that he understood. The agent never mentioned
that Mr. Mackiewicz could call an attorney.
Agent
Harden then proceeded to ask Mr. Mackiewicz a series of questions, taken
from a lengthy questionnaire supplied him by the Internal Revenue
Service for use in investigating a taxpayer suspected of fraud. Many of
the questions were designed to enable the agent to fashion a net worth
theory of evasion. Since he was ignorant of this theory, Mr. Mackiewicz
did not understand the potential import of the questions.
Mr.
Mackiewicz answered, in a very responsive and cooperative manner, most
of the questions. Moreover, at the request of the agents, he took them
to the bank and allowed the agents to inventory the materials in the
safe deposit box which he and his wife owned jointly. It included
several bonds, stock certificates and some cash. Mr. Mackiewicz also
instructed Mr. Minella to permit Agent Harden to examine all the family
business and personal records. Mrs. Mackiewicz was not present at the
interview, nor was she aware that her husband was showing their private
papers to the agents.
II.
Mr. Mackiewicz claims that his constitutional rights were violated under
the Fourth [e.g., United States v. Blalock, 255 F. Supp. 268 (E.
D. Pa. 1966); 67 Colum. L. Rev. 130 (1967)], Fifth [Miranda v.
Arizona, 384 U. S. 436 (1966)], and Sixth [Escobedo v. Illinois,
378 U. S. 478 (1964)] Amendments for at the
January 12, 19
65 interview he was not told of his rights as enunciated in Miranda.
However, we believe that Miranda does not apply in the
circumstances of this case and that Mr. Mackiewicz unequivocally,
specifically and intelligently, United States v. Smith, 308 F. 2d
657, 663 (2 Cir. 1962), cert. denied, 372 U. S. 970 (1963),
consented to answer the questions and to the asserted search and seizure
of the documents.
Mr.
Mackiewicz contends that on January 12th the inquiry as to his tax
deficiencies had shifted from the investigatory to the accusatory
stages, Escobedo v. Illinois, supra, at 492, and that the conduct
of the agents established an atmosphere of custodial interrogation, Miranda
v. Arizona, supra, at 444. Reliance is placed on the following
facts: (1) The civil investigator had referred the case to a Special
Agent. This is done when there are "definite indications of fraud
or criminal potential." Mathis v. United States, 36 LW 4379,
4380, n. 2 (1968) (dissenting opinion); Turzynski v. United States
[67-2 USTC ¶9489], 268 F. Supp. 847 (N. D. Ill. 1967). (2) The agents'
actions established an atmosphere of urgency. Moreover, they displayed
their authority in such a manner as to put Mr. Mackiewicz on the
defensive. He claims that he felt it was not merely an interview, but an
inquisition in which he knew that he was faced by representatives of the
Government who could demand, if necessary, an inspection of his records,
documents, and papers. Int. Rev. Code of 1954, §7602. Mr. Mackiewicz
claims that although not technically under arrest, he felt constrained
to cooperate. (3) The asking of apparently innocuous questions was
"insidious and dishonest," Turzynski v. United States,
supra, at 851, for Mr. Mackiewicz claims that he had no way of
knowing that these questions might later incriminate him. He didn't know
of the net worth theory of proving income, and it is probable that even
if he had, he would have been unable to imagine how the questions and
answers could be used to build the Government's case. Thus, he was
tricked into supplying the Government with the incriminating evidence.
As one experienced tax attorney has said:
"The
agents are understandably circumspect in their questioning of the
taxpayer. Early in their careers, they have learned that it is easier to
catch flies with molasses than with vinegar. They do not wish to
antagonize the taxpayer or alarm him unduly . . . For all these reasons
they are pleasant in their relationship with the taxpayer, they do not
confront him with incriminating evidence, and he is often lulled into a
false sense of security." Avakian. "Rights and Remedies of
Taxpayers Suspected of Fraud," 33 Taxes 878, 879-880 (1955).
We
are aware that in certain circumstances
admin
istrative investigators may infringe upon a private citizen's
constitutional rights. However, in this case, the circumstances were
such that it was unnecessary for the agents to supply Mr. Mackiewicz
with the full-blown Miranda warnings. To some extent, a taxpayer
must watch out for himself. Morgan v. United States [67-1 USTC ¶9449],
377 F. 2d 507, 508 (1 Cir. 1967). This is such a case.
Thousands
of inquiries are made annually by our tax investigators. They must be
carried off with some dispatch and efficiency. To inject the full Miranda
warning at this stage of the proceedings would merely clutter an already
difficult
admin
istrative task. Furthermore, if Miranda warnings were required,
the Service might have to supply financially indigent taxpayers with
attorneys to assist and advise them. Morgan v. United States, supra,
at 507. This obviously wold hinder the efficient collection of our
taxes.
The
prevention of dilatory behavior and
admin
istrative overload is an important interest. In United States v.
Powell [64-2 USTC ¶9858], 379 U. S. 48 (1964), the Supreme Court
held that the Internal Revenue Service does not have to show probable
cause for a subpoena; it based its decision, inter alia, on the
danger of increased dilatory action by taxpayers and the increase in the
admin
istrative load. These considerations are equally valid here.
More
specifically (in response to Mr. Mackiewicz's contentions), we do not
believe that the mere referral of a case to a Special Agent changes the
focus of the case enough to generate the necessity of Miranda
warnings. Although a few cases have argued that this referral is a
decisive step, Turzynski v. United States, supra, the Supreme
Court has indicated that the process is more gradual. In Mathis v.
United States, supra, the Court held that under the circumstances of
that case, the taxpayer was entitled to Miranda warnings as early
as the routine tax investigation by a civil agent. It thus rejected any
formalistic reliance on the official title of the investigator. As the
Court said at 4380: "* * * there [is] always the possibility during
his investigation that his work would end up in a criminal
prosecution." To draw a precise line would discourage the Service
from having any special investigators and it would encourage civil
investigators to expand their inquires. 33 U. Chi. L. Rev. 134,
147-48 (1965). Furthermore, regardless of the official title of the
agent, it would be
admin
istratively impossible for the Service to forewarn a taxpayer every time
its suspicions, based on changing evaluations of the changing evidence,
shifted.
Secondly,
we do not believe that the atmosphere was so charged that it was
tantamount to an actual in-custody investigation. We base our decision,
not on a technical and unrealistic view of the custody requirement, Mathis
v. United States, supra, but on the totality of the circumstances
present at the interview. There was little that was hostile or
inherently coercive here. The taxpayer had the interview in his own
home. Schlinsky v. United States [67-2 USTC ¶9493], 379 F. 2d
735 (1 Cir.), cert. denied, 389 U. S. 920 (1967). He was free to
come and go as he wished. He was free to ask the agents to leave. To
hold this atmosphere coercive would be equivalent to holding all
interviews between an individual and a Government agent coercive. Frohmann
v. United States [67-2 USTC ¶9588], 380 F. 2d 832 (8 Cir.), cert.
denied, 389 U. S. 976 (1967); see generally, Mertens, Federal
Income Taxation §55A.21.
Thirdly,
we do not think that the agents' actions were insidious and dishonest.
Most frequently, an agent is never sure of the theory he is developing
until the facts have been discovered. Therefore, the fact that he has
not explained the thrust of his questions to the taxpayer does not
necessarily bear on his motive and intent. And in this case, there is no
evidence that the agents acted dishonestly.
Thus,
this is a case where Mr. Mackiewicz's claim rests fundamentally on his
own awareness of the possible significance of the questions and answers.
However, the ignorance of a person being interviewed by Government
agents will not always support the conclusion that he must be given Miranda
warnings. Such a rule would be too illusory to form a rational and
practical basis for
admin
istrative action. Where there are no other coercive, extraneous factors,
evidence voluntarily given should not be suppressed. United States v.
Mancuso [67-2 USTC ¶9487], 378 F. 2d 612 (4 Cir. 1967).
Mr.
Mackiewicz argues further that even if the full Miranda warnings
need not be given, the partial warnings actually given in this case were
misleading. He claims that in telling him that he need not answer
questions which might incriminate him, the agents implied that he had to
answer all other questions. This was particularly unfair here, he
argues, if viewed from the perspective of a taxpayer unaware that these
were criminal investigations and that answers to the apparently innocent
questions could later incriminate him. We disagree.
Parenthetically
we note that there was no proof that the agents intended to mislead Mr.
Mackiewicz. Furthermore, the warnings given do not necessarily convey
the implications asserted to him. A reasonable interpretation of the
warning would be exactly what it says. Thus, since the full Miranda
warnings were unnecessary, this partial advice, offered without proof of
a dishonest intent, was not so misleading as to be unfair to the
defendant.
Finally,
we conclude that Mr. Mackiewicz knowingly and intelligently waived
whatever rights he had. He indicated that he understood the warning the
agents gave him. His answers to the questions asked him were responsive
and he cooperated in every way possible. He actively assisted the agents
by giving them the family records in the safe deposit box and in the
hands of the accountant. Under these circumstances, we believe that he
unequivocally and freely consented to the searches and seizures and he
intelligently and knowingly agreed to answer the agents' questions.
III.
Even if we should find that the Service did not violate Mr. Mackiewicz's
constitutional rights (as we have), Mrs. Mackiewicz contends that the
search of the jointly held safe deposit box and the seizure of her
records (which she had given to her husband) infringed on and violated
her Fourth Amendment rights. In essence, she claims that a personal,
direct waiver is necessary and, since she did not explicitly authorize
her husband's consent or the agents' actions, there was no
relinquishment of her rights.
The
Fourth Amendment was originally based on a property concept, 79 Harv. L.
Rev. 1513, 1516 (1966), and therefore many courts, adopting this
premise, have held that a search and a seizure is reasonable if the
party in possession and control of the property consents. Mascolo,
"Inter Spousal Consent to Unreasonable Searches and Seizures,"
40 Conn. Bar Journal, 351, 397 n. 118. However, over the years
the concept has developed into a personal privilege. As Justice Bradley
said in Boyd v. United States, 116 U. S. 616, 630 (1886):
"The
principles laid down in this opinion affect the very essence of
constitutional liberty and security . . . they apply to all invasions on
the part of the government and its employees of the sancity of a man's
home and the privacies of life. It is not the breaking of his doors and
the rummaging of his drawers that constitute the essence of the offense;
but it is the invasion of his indefeasible right of personal security,
personal liberty and private property, where the right has not been
forfeited. . . ."
More
recently, in Storer v. California, 376 U. S. 483 (1963), the
Court held that a hotel clerk could not consent to a search of a
tenant's room. The Court said at 489: "It was a right, therefore,
which only the petitioner could waive by word or deed, either directly
or through an agent." Furthermore, no "strained application of
the law of agency" was to be permitted.
However,
in this case, the circumstances of the joint possession and control, the
particular relationship of the Mackiewiczes in respect to tax matters,
and the nature of the Service's investigation, all establish an agency
relationship sufficient to make Mr. Mackiewicz competent to waive his
wife's privilege, thereby making the search and seizure reasonable as to
her. Saratain v. United States, 303 F. 2d 859 (9 Cir.), cert.
denied, 371 U. S. 894 (1962); United States v. Eldridge, 302
F. 2d 463 (4 Cir. 1962).
First,
Mrs. Mackiewicz had given her personal records to her husband for tax
purposes. He had free access to the safe deposit box for the same
reason. In the past, Mrs. Mackiewicz had never objected when he had used
this privilege to examine the contents of the box or even pass her
papers to another person for the purposes of preparing tax returns. In
fact, in this instance she made no objection when she discovered that
her husband had turned the papers over to the accountant. With this
background, the possession of the papers and access to the box support
the inference that he had the power, not to do with the paper what he
willed, but to act reasonably with them in respect to tax matters.
Second,
Mrs. Mackiewicz had traditionally left the preparation of the tax
returns to her husband. She had nothing to do with them, other than
signing her name. Thus, he was her agent for tax matters. Although one
commentator has suggested that a wife would never make her spouse her
agent to disclose incriminating evidence, 67 Colum. L. Rev. 130,
147 (1967), this is unrealistic. Mr. Mackiewicz was his wife's agent in
this field in January, 1965, for better or worse, no matter where this
agency might lead. It wasn't until long after the interview that Mrs.
Mackiewicz attempted to sever this authority.
Third,
if viewed from the Service's perspective (and in determining
reasonableness this is necessary), the agent were making an
investigation of a joint return. Therefore, from their standpoint, it
was natural to seek the person who in fact completed the form and direct
their questions to him. This Court has in fact gone so far as to hold
that if there is joint criminal activity by a married couple, the less
dominant partner (in a particular matter) can consent to a search of
their property. United States v. Pugliese, 153 F. 2d 497 (2 Cir.
1945). Moreover, since Mr. Mackiewicz could have expected to be as
guilty as his wife of any fraud, there was no reason for the agents to
suspect that he would be cavalier with his wife's property and rights.
This is not a situation where the police convinced an innocent wife to
allow a search of her criminal husband's property. State v. Coolidge,
106 N. H. 186, 208 A. 2d 322 (1965).
IV.
Mrs. Mackiewicz further contends that her common law marital privilege
was violated when Agent Harden testified as to certain financial facts
told to him by her husband at the
January 12, 19
65 interview.
".
. . The admissibility of evidence and the competency of witnesses shall
be governed, except when an act of Congress or these rules otherwise
provide, by the principles of common law as they may be interpreted by
the courts of the United States in the light of reason and
experience." F. R. Crim. P. 26.
At
common law, the husband and wife were disqualified from testifying in a
law suit in which his (or her) spouse was a party. This rule was based
on three distinct principles: (1) the incompetency of the spouse to
testify for the other; (2) the incompetency of the spouse to testify as
to confidential information; and (3) the incompetency of either spouse
to testify against the other.
Principle
(1) was rejected in Funk v. United States, 290 U. S. 371 (1933),
in which the Court recognized that this aspect of the rule was based on
the universally ignored common law rule of disqualifying interested
witnesses. Therefore, the rule was no longer needed.
Principle
(2) is still vital, McCormick, Evidence, §§ 83, 84, but
inapposite in this case. The facts related to the agent were of a
financial nature, referring to the income and assets of the marriage.
They were not confidential, and they were never meant to be
confidential. United States v. Ashby [57-2 USTC ¶9743], 245 F.
2d 684 (5 Cir. 1957).
Thus,
it is only principle (3) which may be applicable. In Hawkins v.
United States, 358 U. S. 74 (1958), the Court held that a wife,
although willing to testify, could not testify against her husband. As
Justice Black said at 77:
"The
basic reason the law has refused to pit wife against husband or husband
against wife in a trial where life and liberty is at stake was a belief
that such a policy was necessary to foster family peace, not only for
the benefit of husband, wife, and children, but for the benefit of the
public as well."
The
question here presents a variation of the Hawkins rule. May a
husband's voluntary out-of-court statements, made when acting as agent
for his wife, be repeated by a third person and used against his wife at
a joint trial in which neither spouse consents to their use? Under these
circumstances, we think so, for (a) since the statements were not
actually testified to by the husband at trial, they did not jeopardize
domestic peace, (b) since Mr. Mackiewicz testified, the danger of
prejudicial hearsay is greatly reduced, and (c) the statements were made
voluntarily when Mr. Mackiewicz was an implied agent for his wife.
This
is not a case where the prosecution called the husband to the stand. If
he had testified under those circumstances, the common law rule would
have been violated. Here, however, we are one stop removed from actual
testimony. Therefore, there is no chance that we might be repulsed by a
spouse actually testifying against his mate, see McCormick, Evidence,
§66. Nor is there a chance that marital frictions will be aggravated,
33 Tul. L. Rev. 884, 890-892 (1959), for there is the convenient
buffer of the third person actually making the remarks. United States
v. Winfree [59-1 USTC ¶9323], 170 F. Supp. 659 (E. D. Pa. 1959);
contra, Peek v. United States, 321 F. 2d 934 (9 Cir. 1963), cert.
denied, 376 U. S. 954 (1964) (dictum); Olender v. United States
[54-1 USTC ¶9254], 210 F. 2d 795 (9 Cir. 1954), cert. denied,
352 U. S. 982 (1957) (dictum).
Mrs.
Mackiewicz further contends that since these are out-of-court
statements, they are hearsay. 8 Wigmore, Evidence, §2232
(McNaughton Rev. 1961). However, the danger of hearsay statements is
that the defendant does not have the opportunity to cross-examine the
declarant. In this case, Mr. Mackiewicz took the stand, and therefore,
if his wife had wanted to, she could have cross-examination him.
Furthermore,
Mr. Mackiewicz had the implied authority of his wife to make the
statements. As has been noted above, he was the implied agent for the
family business in tax matters. Moreover, since they were partners in
the income tax evasion, the statements are admissible under a standard
exception to the hearsay rule. United States v. Pugliese, supra;
People v. Williams, 127 N. E. 2d 505, 6 Ill. App. 2d 325 (1955).
This exception is applicable if there is simply a "likelihood of an
illicit association." United States v. Ragland, 375 F. 2d
471 (2 Cir. 1967). This was established when the Court had reason to
suspect tax fraud on the joint returns.
Finally,
this is not a case where a wife purposefully makes an incriminating
statement against her husband. United States v. Ashby, supra (the
statement was admitted in that case, for by the time of trial the couple
was divorced). Rather, Mr. Mackiewicz, being a potential defendant at
the time he answered the questions, had nothing to gain by revealing
facts which would do harm to his wife.
Affirmed.
[Concurring
Opinion]
FEINBERG,
Circuit Judge (concurrring):
I
join in the majority opinion, but as to Part II thereof, I concur
because the way I read Miranda I do not believe that it applies
to a situation with as few custodial aspects as this one, as my brother
Moore has ably pointed out. However, if this analysis of Miranda
is incorrect, and full warnings are required when an investigation has
been referred to a special agent of the Intelligence Division of the
Internal Revenue Service, I do not agree that this limited extension of Miranda
will necessarily cause serious
admin
istrative difficulties.
[68-2
USTC ¶9493]United States of America, Appellee v. Enrico Squeri,
Appellant
(CA-2),
U. S. Court of Appeals, 2nd Circuit, Docket No. 31959, 398 F2d 785,
7/24/68
[1954 Code Sec 7201]
Tax evasion: Civil tax investigation: Voluntary cooperation with
agents: Noncustody case: Constitutional rights.--Where a taxpayer,
undergoing a routine civil tax investigation (which later develops into
a criminal charge), voluntarily cooperates with the IRS agents by
answering questions and turning over his books and records for
examination, and there is no misrepresentation by the IRS agents to gain
his consent, he is not entitled to be warned by the agents of his
constitutional right to counsel. A warning is only required where the
questioning is conducted in custody or in circumstances which are
similarly inherently compelling. Mathis, (Sup. Ct.) 68-1 USTC ¶9357,
88 S. Ct. 1507, and Mackiewicz, (CA-2) 68-2 USTC ¶9461,
followed.
Rob
ert M. Morgenthau, United States
Attorney, Frederick F. Greenman, Jr., Douglas S. Liebhafsky, Assistant
United States Attorneys, New York, N. Y., for appellee. Harry J.
Halperin, Halperin, Shivitz, Scholer & Steingut, 11 E. 44th St., New
York, N. Y., for appellant.
Before
LUMBARD, Chief Judge, FRIENDLY, Circuit Judge, and CLAIRE, * District
Judge.
LUMBARD,
Chief Judge:
This
appeal by Enrico Squeri from a judgment of conviction, after a non-jury
trial before Judge Murphy in the Southern District in August 1967, on
four counts of wilfully attempting to evade income taxes of over
$100,000 extending over four tax years, presents the sole question
whether the court below erred in denying appellant's motion to suppress
certain records which he had delivered to the Internal Revenue Service
during an audit of his returns. Appellant moved before trial to suppress
the records, contending that they were obtained in violation of his
constitutional rights because the IRS agents had misrepresented the
nature and purpose of the investigation and because the agents had not
informed him of his right to counsel. After a lengthy pre-trial hearing
before Judge Cooper, the motion was denied, the court finding that there
had been no misrepresentation by the IRS agents and that the
requirements of Miranda v. Arizona, 384 U. S. 436 (1966), were
not applicable to this case. Objection to this evidence was renewed at
trial and overruled by Judge Murphy. We agree with the ruling of the
district court and affirm the judgment of conviction and sentence of two
years, suspended, with probation for one year, and a fine of $40,000.
The
circumstances relating to the production of the records are somewhat
unusual; the audit of appellant's returns was originally undertaken in
connection with an investigation which was directed not at the
appellant, but at the possible criminal activities of another person
wholly unrelated to the tax evasion involved in the present prosecution.
In
1962 the IRS commenced an investigation of Peter J. Riordan, a former
Internal Revenue Agent, suspected of improper dealings with various
taxpayers, including the preparation of tax returns. A group of agents,
consisting of both Internal Revenue Agents and Special Agents, was
assigned to investigate some 50 to 75 taxpayers thought to have dealt
with Riordan, including Squeri who owned and ran a restaurant which
Riordan was known to frequent. According to the government, the Internal
Revenue Agents were to conduct regular audits of the taxpayers' returns
for the years 1959 to 1961; the Special Agents were to determine if
Riordan had prepared any of the returns and, if so, whether he was
responsible for any false entries which the audits might reveal.
In
April 1963 two Special Agents visited Squeri to obtain a waiver of the
civil statute of limitations on the 1959 returns, which was about to
expire. Squeri consulted Hugo Poltronieri, the accountant who prepared
his tax returns, who informed Squeri that Special Agents were usually
called in criminal cases. Poltronieri advised Squeri to get a lawyer if
he was involved in any trouble. Squeri said he had nothing to hide and
apparently did not consult a lawyer at that time. He then signed and
returned the waiver.
On
October 8, 19
63, the IRS wrote Squeri requesting him to come for an interview and to
bring any records used in preparing his returns, including any savings
bank books. On October 16 Squeri, accompanied by Poltronieri, arrived at
the IRS office at 50 Church Street, where he was met by Internal Revenue
Agent Frank Rojek and Special Agent
Rob
ert G. Ganley. Ganley explained to Squeri that he was investigating
Riordan and that he wanted to question Squeri as to his relationship
with Riordan. Ganley warned Squeri that he had a right not to answer any
question or to make any statement which would tend to incriminate him;
he added that Rojek would later conduct an audit of Squeri's books and
records.
Ganley
then questioned Squeri about Riordan. Squeri's answers revealed that he
had never had any connection with Riordan with regard to any tax
matters, and Squeri then signed an affidavit to this effect. During
Ganley's questioning, Rojek asked Squeri if he had brought the documents
requested in the letter. Squeri then handed over 13 savings passbooks,
which Poltronieri had not known of when preparing the returns and which
were subsequently found to reflect income not included in the returns.
At the end of the meeting Rojek told Squeri that he wanted to continue
the audit, to which Squeri consented.
As
a result of Ganley's questioning, Squeri was cleared of any improper
connection with Riordan and was dropped from the Riordan investigation.
However, Rojek proceeded with the audit. On October 30, Rojek went to
Squeri's home to examine his records for 1959-1961. Squeri showed Rojek
the records and said that they were at his disposal. Rojek returned the
following day and on three further occasions--November 14 and
December 13, 19
63; and
April 15, 19
64. Squeri permitted Rojek to examine the records and himself produced
some further records, including those for the additional year 1962,
requested by Rojek. In June 1964, Rojek concluded that there was an
indication of fraud, and Special Agent Howard English was then assigned
to determine if criminal charges were warranted. With Squeri's
knowledge, Poltronieri turned over to English certain of the records for
1959 to 1962 which Rojek had previously examined. Subsequently,
Poltronieri turned over at Rojek's request other records, for the years
1955-1958; these records do not relate to the present criminal case,
which involves only the years 1959-1962.
In
October 1964 English decided that there was enough evidence to give
serious consideration to prosecution, and a letter was sent to Squeri
informing him of this and proposing a conference on the subject. At this
point, apparently, Squeri retained a lawyer. The conference with Squeri
and his counsel, Mr. Halperin, was held on
December 1, 19
64, and in February 1965 the IRS recommended prosecution.
Upon
this evidence the district court rejected Squeri's claim that the IRS
had obtained the records by resort to deceit and misrepresentation. The
court found that, while criminal proceedings were contemplated from the
outset with respect to Riordan, the audit of Squeri's returns was
routine and civil; that the IRS had put Squeri on notice as to the
nature and scope of its inquiry; that Squeri had comprehended every
phase of the matter; and that he had cooperated with the IRS and had
voluntarily turned over the records, with full knowledge of the purposes
of the investigation. The court stated that while the routine audit of
defendant's returns eventually revealed information which formed the
basis upon which the indictment rested, when that time arrived no
impermissible advantage was practiced, directly or indirectly, by the
IRS upon the defendant. These findings are amply supported by the
record.
Squeri
was admittedly advised that his returns were being audited and that the
IRS was investigating Riordan's activities. This gave Squeri full and
accurate information as to the extent of the IRS inquiry. The failure to
advise Squeri of possible criminal proceedings against himself was not
misleading, since the district court found, on sufficient evidence, that
no such proceedings against Squeri were contemplated at that time.
Furthermore,
even if the IRS had contemplated criminal proceedings against Squeri,
there would be no merit to the claim of deception; the information that
a taxpayer's returns are under audit gives sufficient notice of the
possibility of criminal prosecution regardless of whether the agents
contemplate civil or criminal action when they speak to him. E.g.,
United States v. Sclafani [59-1 USTC ¶9357], 265 F. 2d 408, 414-15
(2d Cir.), cert. denied, 360 U. S. 918 (1959); Russo v. United
States [57-1 USTC ¶9395], 241 F. 2d 285 (2d Cir. 1957). Moreover,
Squeri was warned of his right not to incriminate himself, and there is
no force to his contention that this warning could have been taken as
applying only to the questions asked by Ganley and not those asked by
Rojek.
Appellant
also argues that his constitutional rights were violated when he was not
informed of his right to counsel at the first meeting with Rojek and
Ganley on
October 16, 19
63.
In
Miranda v. Arizona, 384 U. S. 436 (1966), the Supreme Court held
that a suspect must be warned of certain rights, including his right to
counsel, before being subjected to custodial interrogation. This
requirement was imposed because of the compelling atmosphere inherent in
the process of in custody questioning, which the court discussed at
length, 384 U. S. at 445-58; the court reasoned that "adequate
protective devices such as explicit warnings" were necessary
"to dispel the compulsion inherent in custodial surroundings,"
and thereby ensure compliance with the Fifth Amendment prohibition
against compelling a person to incriminate himself. 384 U. S. at 458,
467.
The
Supreme Court recently held that the Miranda warnings were
required where the defendant had been questioned by IRS agents, as part
of a routine tax inquiry, while he was in state custody on an unrelated
charge. Mathis v. United States [68-1 USTC ¶9357], 36 U. S. L.
Week 4379 (May 6, 1968). The court's opinion makes clear, as did the
opinion in Miranda, that it is the custodial surroundings in
which the questioning was conducted which creates the necessity for the
warnings.
This
rationale is relevant only where the questioning is conducted in custody
or in circumstances which are similarly inherently compelling; it does
not apply to questioning under other circumstances in which there are no
inherently compulsive pressures to be overcome.
In
the present case, Squeri's presence at the October 16 interview in the
Internal Revenue office was entirely voluntary; he was not in custody
and his freedom of action was not in any way impaired. Furthermore, the
entire interview was conducted in the presence of Poltronieri, who at
Squeri's request had accompanied him to the meeting. These circumstances
present none of the inherently compulsive aspects which the Supreme
Court found to exist in the process of custodial interrogation, and
therefore the reasoning of Miranda and Mathis does not
apply to the present case. United States v. Mackiewicz, 2d Cir.,
slip op. p. 3055 [68-2 USTC ¶9461],
July 10, 19
68.
We
do not believe that the requirement of a warning of right to counsel,
necessary to prevent compulsion where the person questioned is in
custody or otherwise deprived of his freedom of action in any
significant way, extends to all other instances of government
questioning. As we pointed out in United States v. Mackiewicz, supra,
application of the full Miranda requirements to noncustodial questioning
conducted during the initial stages of a tax inquiry, or other routine
government inquiry, would impede an already difficult
admin
istrative task and seriously hinder the efficiency with which that task
is carried out. In Morgan v. United States [67-1 USTC ¶9449],
377 F. 2d 507 (1st Cir. 1967), rejecting the contention that IRS agents
at a routine interview were required to warn the taxpayer of the right
to counsel, Chief Judge Aldrich pointed out how impossible customary
government operations might become if Miranda warnings were to be
required in such situations, stating:
"There
must be reasonable limits to the solicitude required of the government.
Defendant would have it appear that it would have been a simple matter
to have informed him that he was entitled to counsel. This, however, is
no easy solution to what, if the defendant is correct, is a very far
reaching question. If the government were obliged to inform a defendant
that he was entitled to counsel, presumably it would equally be obliged
to supply one if he was financially disabled.
"In
a Miranda situation there may be thought to be a very real need for
counsel. But to say that a government agency must be prepared to
suggest, and perhaps supply, counsel at every turn that it asks
questions of someone, in addition to advising that there is no need to
answer and warning of the possibility of self incrimination, we think
goes far beyond any principle of fundamental fairness, and would be an
uncalled-for departure. To some extent persons must be prepared to look
after themselves." 377 F. 2d at 508.
The
view that the Miranda requirements do not apply to noncustodial
questioning by IRS agents has been adopted by every Court of Appeals
which has passed on this question and by a majority of the District
Courts which have done so. United States v. Mackiewicz, supra; Morgan
v. United States, supra; Schlinsky v. United States [67-2 USTC ¶9493],
379 F. 2d 735 (1st Cir.), cert. denied, 389 U. S. 920 (1967); Spinney
v. United States [67-2 USTC ¶9738], 385 F. 2d 908 (1st Cir. 1967),
cert. denied, 390 U. S. 921 (1968); United States v. Maius [67-2
USTC ¶9521], 378 F. 2d 716 (6th Cir.), cert. denied, 389 U. S.
905 (1967); Selinger v. Bigler [67-1 USTC ¶9420], 377 F. 2d 542
(9th Cir.), cert. denied, 389 U. S. 904 (1967); Kohatsu v. United
States [65-2 USTC ¶9715], 351 F. 2d 898 (9th Cir. 1965), cert.
denied, 384 U. S. 1011 (1966); Rickey v. United States [66-1 USTC
¶9395], 360 F. 2d 32 (9th Cir.), cert. denied, 385 U. S. 835 (1966); United
States v. Gleason [67-1 USTC ¶9297], 265 F. Supp. 880 (S. D. N. Y.
1967); United States v. Bachman [67-1 USTC ¶9310], 267 F. Supp.
593 (W. D. Pa. 1966); United States v. Kubik, 266 F. Supp. 501
(S. D. Iowa 1967); United States v. Jaskiewicz [68-1 USTC ¶9316],
278 F. Supp. 525, 534 (E. D. Pa. 1968); and see cases cited in Frohmann
v. United States [67-2 USTC ¶9588], 380 F. 2d 832, 836 (8th Cir.
1967).
Thus
we reject the view, adopted by a few district courts in other circuits,
that IRS agents must give the Miranda warnings, even though there
is no custodial interrogation, if the investigation has reached the
accusatory stage. United States v. Turzynski [67-2 USTC ¶9489],
268 F. Supp. 847 (N. D. Ill. 1967); United States v. Kingry, 19
Am. Fed. Tax R. 2d 762 (N. D. Fla. 1967); United States v.
Schoenburg, 19 Am. Fed. Tax R. 2d 348 (D. Ariz. 1966); United
States v. Wainwright, 67-CR-74, D. Colo.,
March 11, 19
68. The Fifth Amendment privilege prohibits the government from compelling
a person to incriminate himself. It was the compulsive aspect of
custodial interrogation, and not the strength or extent of the
government's suspicions at the time the questioning was conducted, which
led the court to impose the Miranda requirements with regard to
custodial questioning. We believe that the presence or absence of
compelling pressures, rather than the stage to which the government's
investigation has developed, determines whether the Miranda
requirements apply to any particular instance of questioning. 1
In
any event, even under the view that the Miranda warnings must be
given when the investigation reaches the accusatory stage, Squeri has
not shown that he was entitled to such warnings at the October 16
meeting. At that time no criminal proceedings were contemplated with
respect to Squeri, and the investigation had not reached the accusatory
stage with respect to him. While the investigation did contemplate
criminal proceedings with regard to Riordan's activities, this was
"accusatory" as to Riordan, not as to Squeri. The district
court found, on sufficient evidence, that the audit was routine and
civil, and the books and records produced prior to July 1964 were in
response to routine audit requests. True the audit eventually revealed,
as any audit might, that the taxpayer's income had been understated.
However, the only records relevant to this prosecution which were turned
over after the IRS had tentatively concluded in July 1964 that Squeri
had engaged in criminal understatement of income were records which
Squeri had previously produced for examination by Rojek.
Affirmed.
*
Of the District of Connecticut, sitting by designation.
1
In Miranda, the court explained its prior decision is Escobedo
v. Illinois, 378 U. S. 478 (1964), as resting on the basis of the
compelling atmosphere of the in-custody interrogation and on the
importance of presence of counsel as a means of overcoming that inherent
compulsiveness. 384 U. S. at 442, 465-66. The court explained that
custodial interrogation "is what we meant in Escobedo, when we
spoke of an investigation which had focused on an accused." 384 U.
S. at 444, n. 4. That the determinative factor is whether the
interrogation was custodial, rather than the degree of the government's
suspicions is clearly shown by Mathis v. United States, 36 U. S.
L. Week 4379,
May 6, 19
68, where the court held that the IRS agents were required to give Miranda
warnings to a defendant who was in state custody on an unrelated charge
at the time of the interview, even though the interview was merely the
initial stage of a routine inquiry by civil agents.
[67-2
USTC ¶9738]W. Aborn Spinney, Defendant, Appellant v. United States of
America, Appellee
(CA-1),
U. S. Court of Appeals, 1st Circuit, No. 6910, 385 F2d 908, 11/16/67,
Affirming District Court decision, 67-1 USTC ¶9193, 264 F. Supp. 774
[1954 Code Sec. 7201]
Tax evasion: Evidence: Right to counsel: Privilege against
self-incrimination: Willfulness: Jury instructions.--The lower court
properly denied the taxpayer's motion to suppress statements and records
obtained from the taxpayer by Internal Revenue Service agents where the
taxpayer was not in custody and voluntarily appeared and answered
questions. There was no trickery or fraud on the part of the IRS.
Further, there was sufficient evidence presented at the trial from which
the jury could reasonably infer that the taxpayer knowingly and
willfully understated his gross income and overstated his deductions in
an attempt to evade his income tax liability. Nor was the court's
failure to give instructions in reference to deductible expenditures not
reflected on the taxpayer's return erroneous where the deductions would
have had no substantial effect on his taxable income.
John
F. Kehoe, Daniel B. Bickford, Ely, Bartlett, Brown & Proctor, 225
Franklin St., Boston, Mass., for appellant. Paul F. Markham, United
States Attorney, John M. Callahan, Assistant United States Attorney,
Boston, Mass., for appellee.
Before
ALDRICH, Chief Judge, MCENTEE and COFFIN, Circuit Judges.
MCENTEE,
Circuit Judge:
Defendant,
Dr. Spinney, a practicing dentist, appeals his conviction by a jury on a
two count indictment charging him with income tax evasion 1 for the
years 1958 and 1959. 2 He admits
that he understated his taxable income for the years in question but
contends that the government's proof of willfullness was not sufficient
to sustain a conviction. He also contends that prior to and during trial
his constitutional rights were violated. We shall consider this latter
contention first.
For
several years prior to indictment the Internal Revenue Service (I. R.
S.) investigated defendant's income tax liability for the years in
question, interviewed him at home as early as December 1960 and in March
1964 wrote a letter inviting him to appear for a formal interview. 3 In response
to this letter defendant went to the I. R. S. office in Boston on
April 1, 19
64, and was interviewed. A stenographic transcript was made, the
relevant portions of which are as follows:
"1.
Mr. Reale: Doctor Spinney, you recently received a letter inviting you
to come here today, if you so chose, for a Formal Interview. Is that
right?
Dr.
Spinney: Yes.
2.
Q. Doctor Spinney, the purpose of this interview, if there is to be one,
is to afford you the opportunity to offer any explanations, or submit
any evidence you might choose to submit. You should understand if you do
make any statements, or submit any evidence, these statements must be
made under oath, and you should be cognizant of your constitutional
guarantee against self-incrimination. Is that perfectly clear to you,
Doctor?
A.
I think so.
3.
Q. Are you aware of your rights under the Fifth Amendment, that you
cannot be compelled to testify against yourself?
A.
No, but that doesn't interest me. I don't know why it should. Go ahead.
If you should bring up a problem I will let you know. As far as I'm
concerned, I am ready to listen and see what happens.
4.
Q. Doctor, the subject matter is your Income Tax Liability for the years
1958 and 1959. Now do you wish to be heard?
A.
Do I wish to be what?
5.
Q. Do you wish to be heard, or to make an explanation with regard to
your 1958 and 1959 Income Tax Returns, and the liability that was shown
thereon as you filed them?
A.
Yes. Certainly.
6.
Q. Do you want to stand and be sworn? Doctor Spinney, do you solemnly
swear that your testimony here today will be the truth, the whole truth
and nothing but the truth, so help you God?
A.
Yes."
Prior
to trial defendant moved to suppress the transcript of the interview and
the evidence obtained by the I. R. S. as a result of it. 4 This motion
was denied. United States v. Spinney [67-1 USTC ¶9193], 264 F.
Supp. 774 (D. Mass. 1966). At the trial the transcript of the interview
was admitted in evidence. On appeal, defendant contends that the trial
court erred in denying his motion to suppress and that the admission in
evidence of the transcript as well as the fruits of the April 1
interrogation violated his Fifth Amendment rights. Specifically he
complains that in neither the letter nor the interview was he given the
required warnings enunciated in Miranda v. Arizona, 384 U. S. 436
(1966), that he had a right to remain silent at the proposed interview
and also that anything he said could be used as evidence against him.
Miranda
involved a custodial interrogation. To be sure, the Court said in that
case that custodial interrogation means "questioning initiated by
law enforcement officers after a person has been taken into custody or
otherwise deprived of his freedom of action in any significant
way." Miranda, supra at 444 (emphasis supplied). Clearly,
however, this defendant was not deprived of his freedom of action at
all. He was not compelled to appear at the interview or answer
questions. He did both voluntarily. In this circuit we have recently
held that whatever the limits of Miranda, it does not extend to a
factual situation such as is presented here. Morgan v. United States
[67-1 ¶9449], 377 F. 2d 507 (1st Cir. 1967). Although in Morgan
defendant complained that he was not warned of his right to counsel, our
holding in that case is not based on such a narrow factual distinction. Morgan
stands for the proposition that where one is legally free, albeit at the
risk of unpleasant consequences, to reject the government's invitation
to appear and participate in an I. R. S. interview, the requirements
enumerated in Miranda do not apply. We think the observations we
made at 508 in Morgan apply with equal force here.
".
. . the background of Mianda demonstrates that it was the product
of the Court's concern with the difficulty of protecting persons in the
custody of the police from coercive interrogation tactics carried on in
secret. See Developments in the Law--Confessions, 79 Harv. L. Rev. 935,
954-1022 (1966). That, of course, is not this case. Defendant makes no
assertion, nor could he, that he was not free to walk out of the
Internal Revenue office at any time. Nor is there any suggestion of
trickery or reaud.
"There
must be reasonable limits to the solicitude required of the government.
. . ."
Therefore,
we find no merit in this contention. 5
Nor
are we impressed by defendant's claim that there was not sufficient
evidence of willfullness to withstand his motion for judgment of
acquittal. It is uncontested that there was an understatement of gross
receipts. As above stated, it is only the question of willfullness that
defendant contests. In support of this contention he cites his
cooperation with the I. R. S. investigation to show his lack of
intention to defraud. Even if true, this can hardly be considered proof
of his innocence. Otherwise, anyone accused of this crime could assure
his acquittal by cooperating with the investigating authorities
regardless of what the investigation might uncover.
"Wilfulness
is, of course, a question of fact. But direct proof thereof is not
essential. It may be inferred from acts and circumstances, and the
inference may be drawn from a combination of acts and circumstances,
although each separate act and circumstance standing alone is
inconclusive." Gaunt v. United States [50-2 USTC ¶9412],
184 F. 2d 284, 290 (1st Cir. 1950), cert. denied, 340 U. S. 917
(1951). The real question here is whether there is sufficient evidence
from which the jury could reasonably infer defendant's willfullness. We
think that there is. There is evidence that defendant understated his
gross receipts on his 1958 tax return by $11,248 and on his 1959 return
by $3,173.38. 6 His
accountant, one Lewis, testified that he obtained the figures on Dr.
Spinney's gross receipts for the two years in question from monthly
totals furnished by Dr. Spinney himself. 7 Lewis
further stated that he merely added these monthly totals but did not
check their accuracy from the daily sheets. There sheets which were
examined by the I. R. S. support the understatements of gross receipts
as defendant subsequently admitted. The jury was entitled to consider
the unlikelihood of a man who had shown a keen interest in knowing
whether his practice was increasing being unaware of his gross income
during these years.
In
addition, it was shown that defendant substantially overstated his
deductions for dentures, dental supplies and other professional
expenses. 8 There is
evidence that he paid these bills himself, that he did this by check and
that the only information the accountant had on these expenses was what
he obtained from the defendant. 9
Defendant's
entertainment deductions of $722 taken in 1958 and $825 in 1959,
although relatively small, are nevertheless of particular significance
on the issue of intent. I. R. S. agent Rosenberg testified that when he
asked Dr. Spinney if he could explain and substantiate these deductions,
he replied "No. Everyone else takes them. So can I." In this
connection defendant's accountant testified that in discussing
entertainment expenses for the years in question, he told defendant that
certain of these expenses were deductible but warned that they would
have to be substantiated in case of inquiry.
From
all of the above stated evidence, we think the jury could reasonably
infer that this defendant knowingly and willfully understated his gross
receipts and overstated his deductions in an attempt to evade his income
tax liability for the years 1958 and 1959. 10
Affirmed.
1
26 U. S. C. §7201. Attempt to evade or defeat tax
"Any
person who willfully attempts in any manner to evade or defeat any tax
imposed by this title or the payment thereof shall, in addition to other
penalties provided by law, be guilty of a felony and, upon conviction
thereof, shall be fined not more than $10,000, or imprisoned not more
than 5 years, or both, together with the costs of prosecution."
2
Both counts charged the defendant with willfully and knowingly
attempting to evade and defeat a large part of his and his wife's income
liability by filing false and fraudulent joint tax returns for the years
in question. Count 1 charges that the reported taxable income of the
defendant and his wife for 1958 was $1,443.82 and their reported tax
liability $430.51, whereas the correct taxable income was $16,923.09 and
the tax $4,375.60. Count 2 alleges that their reported taxable income
for 1959 was $1,412.54 and their reported tax liability $462.51, whereas
the correct taxable income for that year was $10,160.24, with a tax
liability of $2,421.66.
3
The IRS letter to the defendant, dated
March 10, 19
64, reads as follows:
"Dr.
W. Aborn Spinney 277 Woburn Street, Reading, Massachusetts
Dear Sir:
Investigation
by the Intelligence Division of your personal income tax liability for
the years 1958 and 1959 is nearing completion.
Consideration
is being given to a possible recommendation criminal proceedings be
instituted against you.
Before
a decision is made, you are invited to appear, with counsel, if you so
desire, or with any other person having knowledge of the facts for a
formal interview to be held at 10:00 A. M. on
March 19, 19
64 in Room 947, 55 Tremont Street, Boston, Massachusetts.
Richard
T. Reale, Group Supervisor, will conduct the interview, at which time
you may present facts or evidence you wish to have considered.
You
are requested to inform this office promptly whether it is your
intention to appear for the proposed interview. It is important your
reply or any inquiry be addressed to the District Director of Internal
Revenue, Attention: Acting Chief, Intelligence Division, Post Office Box
202, Boston, Massachusetts 02101.
Very
truly yours,
HAROLD L. SMITH
Acting Chief, Intelligence Division"
4
This included: All records and copies of records obtained from the
defendant including, but not limited to:
a.
Daily sheets and copies of daily sheets relating to the defendant's
dental practice;
b.
Check books and copies of check books dealing with the defendant's bank
accounts at the Middlesex County National Bank, Winchester National Bank
and the Meredith Trust Company;
c.
Invoices obtained from the defendant relating to expenses;
d.
Any other records obtained from the defendant or his agents without
informing the defendant of his Constitutional rights and more
particularly, his right not to incriminate himself.
5
Defendant in his brief relies on the recent case of United States v.
Kingry [67-1 USTC ¶9262], 19 Am. Fed. Tax R. 2d 762 (N. D. Fla.
1967). We call attention to the fact that in Morgan at 508 we
expressly declined to follow that case. See also, United States v.
Maius [67-2 USTC ¶9521], 378 F. 2d 716 (6th Cir. 1967), cert.
denied 10/17/67.
6
Reported gross Actual gross
1958 .... $29,326.00 $40,574.00
1959 .... 32,838.00 36,011.38
7
He said that Dr. Spinney placed the daily sheets showing payments by
patients in monthly groupings with the total for the month written on a
piece of white paper placed on the top of each stack.
8
Claimed expenses Actual expenses
1958 .... $6,829.96 $3,076.39
1959 .... 7,486.92 3,513.41
9
Lewis testified that Dr. Spinney sat at a table reading figures from his
check stubs and informed Lewis of the purpose of the checks, all of
which information Lewis wrote down.
10
Defendant also raises the point that the trial judge erred in refusing
to give three requested instructions with reference to deductible
expenditures not reflected on his returns. The only such item involved
is fees allegedly paid to his accountant. The accountant testified that
he received nothing for preparing the 1958 and 1959 returns and Dr.
Spinney's own records do not reflect any such payment, but he claims
payments to his accountant of $150 a year during these years. Even if
true, a deduction of such a small amount would have no substantial
effect on defendant's taxable income and could not affect the outcome of
the case. Therefore he was not entitled to such an instruction. United
States v. Bender [55-1 USTC ¶9142], 218 F.2d 869 (7th Cir.), cert.
denied, 349 U. S. 920 (1955); cf. Small v. United States
[58-2 USTC ¶9553], 255 F. 2d 604 (1st Cir. 1958).
[75-1
USTC ¶9194]United States of America v. Alvin A. Beckwith, Jr., a/k/a
Alvin A. Beckwith, Appellant
(CA-DC),
U. S. Court of Appeals, Dist. Col. Circuit, No. 74-1592, 510 F2d 741,
1/22/75
, Aff'g unreported District Court decision
[Code Sec. 7201]
Crimes: Evidence: Admissibility: Constitutional grounds: Statements
in interview with agents: Given voluntarily or under compulsion.--
The District Court properly denied motions to suppress from evidence all
statements made during the course of an interview conducted by agents of
the Intelligence Division of the IRS in the home of a friend of the
defendant. The interview did not involve custodial circumstances such as
those present in Miranda v. Arizona, S. Ct., 384 U. S. 436.
Further, the entire interview was free from coercion and the statements
were given voluntarily. Conviction for evasion of federal income taxes
was affirmed.
Earl
J. Silbert, United States Attorney, John A. Terry, Barry W. Levine,
Raymond J. Coughlan, Jr., Assistant United States Attorneys, Washington,
D. C., for appellee. John G. Gill, Jr., for appellant.
Before
BAZELON, Chief Judge, TAMM and ROBB, Circuit Judges.
[Opinion]
BAZELON,
Chief Judge:
Agents
of the Intelligence Division of the Internal Revenue Service visited
appellant Alvin Beckwith at the home of a friend on August 2, 1972. On
the basis of information obtained in that visit and of other information
Beckwith was indicted and subsequently convicted on March 21, 1974, of
one count of attempting to evade or defeat federal income taxation. 1 On October
4, 1973, previous to this conviction, Beckwith moved to suppress all the
statements made during the course of the interview conducted at his
friend's home in August, 1972, charging that the interview violated his
rights guaranteed by the Fifth Amendment to the Constitution. In
particular, he alleged that since the Intelligence Division had singled
him out for prosecution on the basis of his alleged gambling activities
prior to the interview, the interview was in its nature coercive and
tended to compel him to incriminate himself. The District Court rejected
this argument and Beckwith now appeals from his conviction, arguing that
the District Court was mistaken in this respect. We affirm.
[Miranda
Application?]
Beckwith's
argument is based upon Miranda v. Arizona, 384 U. S. 436 (1966)
as that case was applied to criminal tax investigations in Mathis v.
United States [68-1 USTC ¶9357], 391 U. S. 1 (1968). However, those
cases involved police interrogation in so-called "custodial"
circumstances. Their reasoning is based in crucial part on this fact 2 and cases
following upon those seminal decisions have limited their principle to
such "custodial" circumstances. 3 Beckwith
does not and could not reasonably assert that his interrogation was in
custodial circumstances. While the meaning of "custodial"
circumstances can include interrogation at a private home, 4 it does not
always. Rather the test is whether the suspect "has been taken into
custody or otherwise deprived of his freedom in any significant
way." 5 Here
Beckwith was neither arrested nor detained against his will. He was not
subject to formal interrogation before a grand jury. The record reflects
no use of any police interrogation techniques or any sort of
brow-beating. He was free to leave at any time and in fact was out of
the agents' presence more that once. Indeed, one of Beckwith's
complaints is that the meeting was so friendly that he was deceived into
believing that he was not incriminating himself.
The
major trust of Beckwith's argument is that the principle of Miranda
and Mathis should be extended to cover interrogation in
non-custodial circumstances after a police investigation has focused on
the suspect. We are not impressed with this argument in the abstract nor
as applied to the particular facts of Beckwith's interrogation. His
interview had none of the indicia of coercion that motivated the Miranda
scrutiny of investigative methods and thus it cannot be seriously argued
that Beckwith was "compelled" to answer any questions.
Furthermore, the agents did give Beckwith a modified Miranda
warning which while not in full compliance with Miranda does give
the suspect some notice that his statements might be used against him. 6 The extent
to which such a warning must be given is not implicated in this case.
Beckwith's argument apparently confuses the requisites of compulsion
which bring to bear Fifth Amendment interests with the requisites of a waiver
of Fifth Amendment rights once those rights attach. 7 The fact
that a statement might be made in such a manner as to raise doubts that
it constitutes a voluntary and intelligent waiver of the right to
counsel and the right to remain silent does not necessarily mean that it
was coerced or compelled within the intendment of the Self-Incrimination
clause. Therein lies Beckwith's error. In Miranda and Mathis
the Court found that custodial interrogations were inherently coercive
and statements made therein necessarily compelled. Once having made that
judgment, it followed inexorably that only a complete waiver of the
Fifth Amendment and Sixth Amendment rights during interrogation would
cleanse such statements from the taint of compulsion. But Beckwith's
statements need not be found to be a waiver since no right had attached
which he was in a position to waive. 8
[Were
Statements Voluntary?]
It
follows from the preceding discussion that the proper inquiry is not
whether Beckwith waived anything but whether his statements to the
agents were voluntary. We find that they are. There is no claim that
Beckwith's mental condition or education were so limited that he was
particularly susceptible to interrogation. Furthermore, a modified
warning was given, no unusual interrogation techniques were employed and
the agents did not, contrary to Beckwith's claim, mislead him as to
their purpose in interrogating him. The entire interview was free of
coercion 9 and it
follow that the District Court properly refused to suppress Beckwith's
statements. Beckwith's conviction is, therefore, Affirmed.
1
See 26 U. S. C. §7201 (1970). Beckwith was indicated for two counts,
sent to trial on the first and after conviction the second count was
dropped.
2
See 384 U. S. at 444-50.
3
See Orozco v. Texas, 394 U. S. 324 (1969); Hoffa v. United
States, 385 U. S. 293, 304 (1966); United States v. Scully,
415 F. 2d 680 (2d Cir. (1969); cf. Michigan v. Tucker, 417 U. S.
433 (1974). See also the reasoning of United States v. Stamp, 458
F. 2d 759 (D. C. Cir. 1971), cert. denied, 406 U. S. 975 (1972); United
States v.
Rob
inson, 439 F. 2d 553 (D. C. Cir. 1970); United States v. Wong,
No. 74-1636 (9th Cir. Sept. 23, 1974) (coercion in grand jury
interrogation). This has been repeatedly emphasized in tax investigation
cases. See, e.g., United States v.
Rob
son, 477 F. 2d 13 (9th Cir. 1973); United States v. Engle,
458 F. 2d 1017 (8th Cir.), cert. denied, 409 U. S. 875 (192); United
States v. Jaskiewicz [70-2 USTC ¶9616], 433 F. 2d 415 (3d Cir.
1970), cert. denied, 400 U. S. 1021 (1971); United States v.
Squeri [68-2 USTC ¶9493], 398 F. 2d 785 (2d Cir. 1968).
4
Orozco v. Texas, 394 U. S. 324 (1969).
5 Miranda v. Arizona,
384 U. S. 436, 477 (1966).
6
The following warning was given:
Under
the Fifth Amendment to the Constitution of the United States, I cannot
compel you to answer any questions or to submit any information if such
answers or information might tend to incriminate you in any way. I also
advise you that anything which you say and any information which you
submit may be used against you in any criminal proceeding which may be
undertaken. I advise you further that you may, if you wish, seek the
assistance of an attorney before responding.
7
Cf. Michigan v. Tucker, 417 U. S. 433, 444 (1974).
8
Cf. United States v. Stamp, 458 F. 2d 759, 780-81 (D. C. Cir.
1971), cert. denied, 406 U. S. 975 (1972). The only case
supporting Beckwith's argument is United States v. Dickerson
[69-2 USTC ¶9556], 413 F. 2d 1111 (7th Cir. 1969). That case might be
distinguished since no warnings whatsoever were given and the court
might well have been simply too broad in its remedial assertion that the
full panoply of Miranda rights attached in a noncustodial
interrogation. In any event, we are not impressed with the assertion
that Beckwith's interrogation was coercive within the intendment of Miranda
whatever may have been the factual situation in Dickerson.
9
See Frazier v. Cupp, 394 U. S. 731 (1969); United States v.
Stamp, 458 F. 2d 759 (D. C. Cir. 1971), cert. denied, 406 U.
S. 975 (1972); United States v.
Rob
inson, 439 F. 2d 553 (D. C. Cir. 1970); United States v.
Jackiewicz [70-2 USTC ¶9616], 433 F. 2d 415 (3d Cir. 1970) and
authorities cited.
[76-1
USTC ¶9352]Alvin A. Beckwith, Jr., Petitioner v. United States
U.
S. Supreme Court, No. 74-1243, 425 US 341, 96 SCt 1612, 4/21/76,
Affirming CA-D. C., 75-1 USTC ¶9194, 510 F2d 741
On Writ of Certiorari to the United States Court of Appeals for the
District of Columbia Circuit.
[U. S. Constitution, Amendment V, and Code Sec. 7201]
Criminal tax fraud: Motion to suppress evidence: Constitutional
rights: IRS procedure: Miranda warnings.--An IRS special
agent who was investigating suspected criminal tax fraud need not have
given Miranda warnings (of the rights to remain silent and to be
assisted by counsel) to a taxpayer who was not in custody when the
interview occurred. The rule of Miranda v. Arizona, Sup. Ct., 384
U. S. 436, as applied to criminal tax investigations in
Rob
ert T. Mathis, Sr., Sup. Ct. 68-1 USTC ¶9357, 391 U. S. 1, was
inapplicable in the instant case because "custodial" or other
"inherently coercive" circumstances were absent. In holding
that the statements made by the taxpayer during the interview had been
properly admitted into evidence against him, and affirming the Court of
Appeals' sustaining of the conviction, CA-DC, 75-1 USTC ¶9194, 510 F.
2d 741, the Supreme Court (one Justice dissenting) rejected contrary
reasoning in a similar case, Albert M. Dickerson, CA-7, 69-2 USTC
¶9556, 413 F.2d 1111.
John
G. Gill, Jr., 17 West Jefferson St., Rockville, Md., for petitioner.
Scott P. Crampton, Assistant Attorney General, Department of Justice,
Washington, D. C. 20530, for respondent.
Syllabus
Statements
made by petitioner taxpayer to Internal Revenue Agents during the course
of a noncustodial interview in a criminal tax investigation held
admissible against him in the ensuing criminal tax fraud prosecution
even though he was not given warnings required by Miranda v. Arizona,
384 U. S. 436. Although the "focus" of the investigation may
have been on petitioner when he ws interviewed, in the sense that his
tax liability was under scrutiny, that is not the equivalent of
"focus" for Miranda purposes, which involves
"questioning initiated by law enforcement officers after a
person has been taken into custody or otherwise deprived of his freedom
of action in any significant way." Id., at 444 (emphasis
supplied). Pp. 4-7.
--
U. S. App. D. C. --, 510 F. 2d 741 [75-1 USTC ¶9194], affirmed.
BURGER,
C. J., delivered the opinion of the Court, in which STEWART, WHITE,
BLACKMUN, POWELL, and REHNQUIST, JJ., joined. MARSHALL, J., filed and
opinion concurring in the judgment. BRENNAN, J., filed a dissenting
opinion. STEVENS, J., took no part in the consideration or decision of
the case.
MR.
CHIEF JUSTICE BURGER delivered the opinion of the Court.
The
important issue presented in this case is whether a special agent of the
Internal Revenue Service, investigating potential criminal income tax
violations, must, in an interview with a taxpayer, not in custody, give
the warnings called for by this Court's decision in Miranda v.
Arizona, 384 U. S. 436 (1966). We granted certiorari to resolve the
conflict between the holding of the Court of Appeals in this case, which
is consistent with the weight of authority on the issue, 1 and the
position adopted by the United States Court of Appeals for the seventh
Circuit. 2
The
District Court conducted a thorough inquiry into the facts surrounding
the interview of petitioner before ruling on his motion to suppress the
statements at issue. After a considerable amount of investigation, two
special agents of the Intelligence Division of the Internal Revenue
Service met with petitioner in a private home where petitioner
occasionally stayed. The senior agent testified that they went to see
petitioner at this private residence at 8 a. m. in order to spare
petitioner the possible embarrassment of being interviewed at his place
of employment which opened at 10 a. m. Upon their arrival, they
identified themselves to the person answering the door and asked to
speak to petitioner. The agents were invited into the house and, when
petitioner entered the room where they were waiting, they introduced
themselves and, according to the testimony of the senior agent, Beckwith
then excused himself for a period in excess of five minutes, to finish
dressing. 3 Petitioner
then sat down at the dining room table with the agents; they presented
their credentials and stated that were attached to the Intelligence
Division and that one of their functions was to investigate the
possibility of criminal tax fraud. They then informed petitioner that
they were assigned to investigate his federal income tax liability for
the years 1966 through 1971. The senior agent then read to petitioner
from a printed card the following:
"As
a special agent, one of my functions is to investigate the possibility
of criminal violations of the Internal Revenue laws, and related
offenses.
"Under
the Fifth Amendment to the Constitution of the United States, I cannot
compel you to answer any questions or to submit any information if such
answers or information might tend to incriminate you in any way. I also
advise you that anything which you say and any information which you
submit may be used against you in any criminal proceeding which may be
undertaken. I advise you further that you may, if you wish, seek the
assistance of an attorney before responding."
Petitioner
acknowledged that he understood his rights. The agents then interviewed
him until about 11 o'clock. The agents described the conversation as
"friendly" and "relaxed." The petitioner noted that
the agents did not "press" him on any question he could not or
chose not to answer.
Prior
to the conclusion of the interview, the senior agent requested that
petitioner permit the agents to inspect certain records. Petitioner
indicated that they were at his place of employment. The agents asked if
they could meet him there later. Traveling separately from petitioner
the agents met petitioner approximately 45 minutes later and the senior
agent advised the petitioner that he was not required to furnish any
books or records; petitioner, however, supplied the books to the agents.
Prior
to trial, petitioner moved to suppress all statements he made to the
agents or evidence derived from those statements on the ground that
petitioner had not been given the warnings mandated by Miranda.
The District Court ruled that he was entitled to such warnings
"when the court finds as a fact that there were custodial
circumstances." The District Judge went on to find that "on
this record . . . there is no evidence whatsoever of any such
situation." The Court of Appeals affirmed and judgment of
conviction. -- U. S. App. D. C. --, 510 F. 2d 741 (1975). It noted that
the reasoning of Miranda was based "in crucial part" on
whether the suspect "has been taken into custody or otherwise
deprived of his freedom in any significant way.'" Id., at
742, citing Miranda, supra, at 477; and agreed with the District
Court that "Beckwith was neither arrested nor detained against his
will." Ibid. We agree with the analysis of the Court of
Appeals 4 and,
therefore, affirm its judgment.
Petitioner
contends that the "entire starting point" for the criminal
prosecution brought against him secured from his own statements and
disclosures during the interview with the Internal Revenue Agents from
the Intelligence Division. He correctly points out that cases are
assigned to the Intelligence Division only when there is some indication
of criminal fraud and that, especially since tax offenses rarely result
in pretrial custody, the taxpayer is clearly the "focus" of a
criminal investigation when a matter is assigned to the Intelligence
Division. Given the complexity of the tax structure and the confusion on
the part of taxpayers between the civil and criminal function of the
Internal Revenue Service, such a confrontation, argues petitioner,
places the taxpayer under "psychological restraints" which are
the functional, and, therefore, the legal equivalent of custody. In
short we agree with Chief Judge Bazelon speaking for a unanimous Court
of Appeals, that:
"[t]he
major thrust of Beckwith's argument is that the principle of Miranda
and Mathis 5 should be
extended to cover interrogation in non-custodial circumstances after a
police investigation has focused on the suspect." Ibid.
[Footnote added.]
With
the Court of Appeals, we "are not impressed with this argument in
the abstract nor as applied to the particular facts of Beckwith's
interrogation." Ibid. It goes far beyond the reasons for
that holding and such an extension of the Miranda requirements
would cut this Court's holding in that case completely loose from its
own explicitly stated rationale. The narrow issue before the Court in Miranda
was presented very precisely in the opening paragraph of that
opinion--"the admissibility of statements obtained from an
individual who is subjected to custodial police
interrogation." 348 U. S., at 439. 6 (Emphasis
supplied.) The Court concluded that compulsion "is inherent in
custodial surroundings," 7 id.,
at 458, and, consequently, that special safeguards were required in the
case of "incommunicado interrogation of individuals in a
police-dominated atmosphere, resulting in self-incrimination statements
without full warnings of constitutional rights." Id., at
445. In subsequent decisions, the Court specifically stressed that it
was the custodial nature of the interrogation which triggered the
necessity for adherence in the specific requirements of its Miranda
holding. Orozco v. Texas, 394 U. S. 324 (1969); Mathis v.
United States [68-1 USTC ¶9357], 391 U. S. 1 (1968). See generally Schneckloth
v. Bustamonte, 412 U. S. 218, 247 (1973).
Petitioner's
argument that he was placed in the functional and, therefore, legal
equivalent of the Miranda situation asks us now to ignore
completely that Miranda was grounded squarely in the Court's
explicit and detailed assessment of the peculiar "nature and
setting of . . . in-custody interrogation," 386 U. S., at 455. That
courts of appeals have so read Miranda is suggested by Chief
Judge Lumbard in United States v. Caiello [70-1 USTC ¶9153], 420
F. 2d 471, 473 (CA2 1969):
"It
was the compulsive aspect of custodial interrogation, and not the
strength or content of the government's suspicions at the time the
questioning was conducted, which led the court to impose the Miranda
requirement with regard to custodial questioning."
Mathis
v. United States, supra, directly supports this conclusion in
holding that the Miranda requirements are applicable to
interviews with Internal Revenue agents concerning tax liability, when
the subject is in custody; the Court thus squarely grounded its
holding on the custodial aspects of the situation, not the subject
matter of the interview. 8
An
interview with government agents in a situation such as the one shown by
this record simply does not present the elements which the Miranda
Court found so inherently coercive as to require its holding. Although
the "focus" of an investigation may indeed have been no
Beckwith at the time of the interview in the sense that it was his tax
liability which was under scrutiny, he hardly found himself in the
custodial situation described by the Miranda Court as the basis
for its holding. Miranda specifically defined "focus,"
for its purposes, as "questioning initiated by law enforcement
officers after a person has been taken into custody or otherwise
deprived of his action in any significant way." 384 U. S., at 444.
(Emphasis supplied.) It may well be true, as petitioner contends, that
the "starting point" for the criminal prosecution was the
information obtained from petitioner and the records exhibited by him.
But this amounts to no more than saying that a tax return signed by a
taxpayer can be the "starting point" for a prosecution.
We
recognize, of course, that noncustodial interrogation might possibly in
some situations, by virtue of some special circumstances, be
characterized as one where "the behavior of . . . law enforcement
officials was such as to overbear petitioner's will to resist and bring
about confessions not freely self-determined. . . ." Rogers v.
Richmond, 365 U. S. 534, 544 (1961). When such a claim is raised, it
is the duty of an appellate court, including this Court, "to
examine the entire record and make an independent determination of the
ultimate issue of voluntariness." Davis v. North Carolina,
384 U. S. 737, 741-742 (1966). Proof that some kind of warnings were
given or that none were given would be relevant evidence only on the
issue of whether the questioning was in fact coercive. Frazier v.
Cupp, 394 U. S. 731, 739 (1969); Davis v. North Carolina, supra,
at 740-741 (1966). In the present case, however, as Chief Judge Bazelon
noted, "[t]he entire interview was free of coercion," 510 F.
2d, at 743 (footnote omitted).
Accordingly,
the judgment of the Court of Appeals is
Affirmed.
Mr.
Justice STEVENS took no part in the consideration or decision of this
case.
1
See, e.g., Taglianetti v. United States [68-2 USTC ¶9479], 398
F. 2d 588, 566 (CA1), aff'd on another ground, [69-1 USTC ¶9295] 394 U.
S. 316; United States v. Mackiewicz [68-2 USTC ¶9461], 401 F. 2d
219, 221-222 (CA2), cert. denied, 393 U. S. 923; United States v.
Jaskiewicz [70-2 USTC ¶9616], 433 F. 2d 415, 417-420 (CA3), cert.
denied, 400 U. S. 1021; United States v. Browney [70-1 USTC ¶9154],
421 F. 2d 48, 51-52 (CA4); United States v. Prudden [70-1 USTC ¶9336],
424 F. 2d 1021, 1027-1031 (CA5), cert. denied, 400 U. S. 831; United
States v. Stribling [71-1 USTC ¶9210], 437 F. 2d 765, 771 (CA6),
cert. denied, 402 U. S. 973; United States v. MacLeod [71-1 USTC
¶9174], 436 F. 2d 947, 950 (CA8), cert. denied, 402 U. S. 907; United
States v.
Rob
son [73-1 USTC ¶9381], 477 F. 2d 13, 16 (CA9); Hensley v. United
States [69-1 USTC ¶9146], 406 F. 2d 481, 484 (CA10); but cf. United
States v. Lockyer [71-2 USTC ¶9641], 448 F. 2d 417, 422 (CA10).
2
United States v. Dickerson [69-2 USTC ¶9556], 413 F. 2d 1111
(CA7 1969).
3
Petitioner claimed at the suppression hearing that he was fully dressed
when he first met the agents. The District Court did not explicitly
resolve this conflict in testimony.
4
On petition for writ of certiorari to this Court, Beckwith does not
challenge the further holding of the Court of Appeals that, the Miranda
question aside, the "entire interview was free of coercion,"
510 F. 2d 743 (footnote omitted).
5
Mathis v. United States [68-1 USTC ¶9357], 391 U. S. 1 (1968).
6
The Court also stated: "The constitutional issue we decide . . . is
the admissibility of statements obtained from a defendant while in
custody or otherwise deprived of his freedom of action in any
significant way." 384 U. S., at 445. The Court specifically defined
"custodial interrogation" to mean "questioning initiated
by law enforcement officers after a person has been taken into custody
or otherwise deprived of his freedom of action in any significant
way." Id., at 444. (Footnote omitted.)
7
The Court gave great weight to contemporaneous police manuals and
concluded that custodial interrogation was "psychologically . . .
oriented" id., at 448, and that the principal psychological
factor contributing to successful interrogation was isolating the
suspent in unfamiliar surroundings "for no purpose other than to
subjugate the individual to the will of his examiner." Id.,
at 457.
8
Four Members of the Court joined Justice Black; the dissenters regarded Mathis
as an extension of Miranda largely because the custody and the
interrogation were in no way related and that a prisoner interrogated in
prison was not in unfamiliar surroundings.
Dissenting
Opinion
Mr.
Justice BRENNAN, dissenting.
I
respectfully dissent. In my view the District Court should have granted
petitioner's motion to suppress all statements made by him to the agents
because the agents did not give petitioner the warnings mandated by Miranda
v. Arizona, 384 U. S. 436 (1966). The Court affirms the conviction
on the ground that "although the 'focus' of an investigation may
indeed have been on Beckwith at the time of the interview in the sense
that it was his tax liability which was under scrutiny, he hardly found
himself in the custodial situation described by the Miranda
court as the basis for its holding." Ante, at 6-7 (emphasis
supplied). But the fact that Beckwith had not been taken into formal
"custody" is not determinative of the question whether the
agents were required to give him the Miranda warnings. I agree
with the Court of Appeals for the Seventh Circuit that the warnings are
also mandated when the taxpayer is, as here, interrogated by
Intelligence Division agents of the Internal Revenue Service in
surroundings where, as in the case of the subject in
"custody," the practical compulsion to respond to questions
about his tax returns is comparable to the psychological pressures
described in Miranda. United States v. Dickerson [69-2 USTC ¶9556],
413 F. 2d 1111 (1969); United States v. Oliver [74-2 USTC ¶9787],
505 F. 2d 301 (1974). Interrogation under conditions that have the
practical consequence of compelling the taxpayer to make disclosures,
and interrogation in "custody" having the same consequence,
are in my view peas from the same pod. Oliver states the analysis
with which I agree and required suppression of Beckwith's statements:
"The
application of Miranda does not turn on such a simple axis as
whether or not the suspect is in custody when he is being questioned. As
the Court repeatedly indicated, the prescribed warnings are required if
the defendant is in custody 'or otherwise deprived of his freedom of
action in any significant way.' The fact of custody is emphasized in the
[Miranda] opinion as having the practical consequence of
compelling the accused to make disclosures. But the test also
differentiates between the questioning of a mere witness and the
interrogation of an accused for the purpose of securing his conviction;
the test serves the purpose 'of determining when the adversary process
has begun, i. e., when the investigative machinery of the
government is directed toward the ultimate conviction of a particular
individual and when, therefore, a suspect should be advised of his
rights."
"Since
the constitutional protection is expressly applicable to testimony in
the criminal case itself, for the purpose of determining when warnings
are required, the Miranda analysis treats the adversary
proceeding as though it commences when a prospective defendant is taken
into custody or otherwise significantly restrained. After that point is
reached, it is not unreasonable to treat any compelled disclosure as
protected by the Fifth Amendment unless, of course, the constitutional
protection has been waived. Adequate warnings, or the advice of counsel,
are essential if such a waiver is to be effective.
"The
requirement of warnings set forth in Dickerson rests on the same
underlying rationale. While the commencement of adversary proceedings
against Dickerson had not been marked by taking him into custody, the I.
R. S., by assigning the matter to the Intelligence Division, had
commenced the preparation of its criminal case. When the agents
questioned him about his tax return, without clearly explaining their
mission, the dual criminalcivil nature of an I. R. S. interrogation
created three key misapprehensions for the taxpayer.
`Incriminating
statements elicited in reliance upon the taxpayer's misapprehension as
to the nature of the inquiry, his obligation to respond, and the
possible consequences of doing so must be regarded as equally
violative of constitutional protections as a custodial confession
extracted without proper warnings.' 413 F. 2d, at 1116 (emphasis added).
"The
practical effect of these misapprehensions during questioning of a
taxpayer was to 'compel' him to provide information that could be used
to obtain his conviction in a criminal tax fraud proceeding, in much the
same way that placing a suspect under physical restraint leads to
psychological compulsion. Thus, the misapprehensions are tantamount to
the deprivation of the suspect's 'freedom of action in any significant
way,' repeatedly referred to in Miranda." 505 F. 2d, at
304-305. (Footnote omitted.)
I
would reverse the judgment of conviction and remand to the District
Court for a new trial.
Concurring
Opinion
Mr.
Justice MARSHALL, concurring in the judgment.
While
the Internal Revenue Service agents in this case did not give petitioner
the full warnings prescribed in Miranda v. Arizona, 384 U. S. 436
(1966), they did give him the following warning before questioning him:
"As
a special agent, one of my functions is to investigate the possibility
of criminal violations of the Internal Revenue laws, and related
offenses.
"Under
the Fifth Amendment to the Constitution of the United States, I cannot
compel you to answer any questions or to submit any information if such
answers or information might tend to incriminate you in any way. I also
advise you that anything which you say and any information which you
submit may be used against you in any criminal proceeding which may be
undertaken. I advise you further that you may, if you wish, seek the
assistance of an attorney before responding."
Under
the circumstances of this case, in which petitioner was not under arrest
and the interview took place in a private home where petitioner
occasionally stayed, the warning recited above satisfied the
requirements of the Fifth Amendment. If this warning had not been given,
however, I would not join the judgment of the Court.
[54-2
USTC ¶9715]Daniel Smith, Petitioner v. United States of America
In
the Supreme Court of the United States, No. 52. October Term, 1954, 348
US 147, 75 SCt 194, December 6, 1954
On Writ of Certiorari to the United States Court of Appeals for the
First Circuit.
[1939 Code Sec. 145(a)--similar to 1954 Sec. 7201]
Willful evasion of taxes: Net worth method: Taxpayer's statement of
net worth: Admissibility as evidence.--Based on the government's
theory of increases in net worth, the taxpayer was convicted by a jury
for willfully evading income taxes. Involved in the prosecution was a
statement of net worth submitted by the taxpayer, along with a check for
the amount of tax he thought was due and owing, to government agents
during the period of investigation. Taxpayer contended that his net
worth statement should not have been submitted in evidence because it
was procured pursuant to an understanding that the case would be closed
and the taxpayer granted immunity. This contention was supported by
testimony of the taxpayer's accountant but denied by the Government
agent involved. The court ruled that the trial judge's refusal to
suppress the statement and his submission of the issue to the jury with
the instruction that they were to reject the statement, and all evidence
obtained through it, if "trickery, fraud or deceit" were
practiced on taxpayer or his accountant was proper. It also held that
since the trial judge had held a hearing on the admissibility of the
statement in passing on a pretrial motion to suppress evidence, his
refusal to hold, during the course of the trial, a hearing outside the
presence of the jury to determine preliminarily the statement's
admissibility, did not deprive taxpayer of any substantial right.
[1939 Code Sec. 145(a)--similar to 1954 Sec. 7201]
Willful evasion of taxes: Extrajudicial statements: Corroboration by
independent evidence.--Taxpayer contended that his net worth
statement, as it related to his opening net worth for the period of
prosecution, was not corroborated, or was insufficiently corroborated,
by independent evidence. The court ruled that the requirement of
corroboration was applicable to the crime of tax evasion and that the
statement of opening net worth must be corroborated as well as mere
admissions, at least where the admission is made after the fact to an
official charged with investigating the possibility of wrongdoing, and
the statement embraces an element vital to the government's case. In
this case, the government did provide the necessary corroboration by
introducing substantial evidence, apart from the taxpayer's admissions,
tending to show that taxpayer willfully understated his taxable income.
Testimony of a government official and agent, corroborated by the
taxpayer's tax returns, revealed taxpayer's comparatively poor financial
history prior to the prosecution period and therefore corroborated the
opening net worth. Independent evidence also showed that taxpayer made
substantial expenditures, savings and investments far in excess of
reported income during the prosecution period, thereby corroborating the
net worth statement by tending to show that the taxpayer was
understating his income. Therefore, taxpayer's conviction was affirmed.
Richard
Maguire, W. Arthur Garrity, Jr., 31 Milk Street, Boston, Mass., Paul G.
Counihan, Maguire, Roche, Garrity & Maloney, of counsel, for
petitioner. Simon E. Sobeloff, Solicitor General, H. Brian Holland,
Assistant Attorney General, Marvin E. Frankel, Ellis N. Slack, Joseph F.
Goetten, Dudley J. Godfrey, Jr., Special Assistants to the Attorney
General, for respondent.
CLARK,
Justice:
This
is the third of the net worth cases and the first dealing with the
Government's use of extrajudicial statements made by the accused.
Petitioner and his wife were jointly tried on five counts charging them
with willful attempts to evade and defeat their income taxes for the
years 1946 through 1950. A motion for acquittal was granted as to the
wife on all five counts, and as to petitioner on the fifth count (for
the year 1950). The jury found petitioner guilty on the first four
counts, and the conviction was affirmed by the Court of Appeals, 210
Fed. (2d) 496 [54-1 USTC ¶9259]. We granted certiorari in order to pass
on the issues raised by the prosecution's use of defendant's
extrajudicial statements. 347 U. S. 1010.
[Net
Worth Theory]
The
Government's theory was that the increases in the net worth of
petitioner and his wife exceeded their reported income for each of the
prosecution years, and that these increments represented taxable income.
The evidence tended to show that petitioner and his wife were persons of
moderate means prior to 1945, and that toward the end of that year
petitioner acquired a racing-news service. In the four succeeding years,
the prosecution years here in issue, petitioner and his wife acquired a
large amount of visible wealth in the form of bank accounts, real
estate, securities, and other assets. The evidence, taken as a whole,
tended to prove that petitioner and his wife had understated their
income for the four-year period by over $190,000.
[Taxpayer's
Net Worth Statement]
The
issues in this case stem from a statement signed by the petitioner and
delivered to the Government agents along with a check, the latter
supposedly representing the amount of tax he thought due and owing. 1 The
statement, a five-page document, included tables on petitioner's
securities, prior tax returns, living expenses, and a listing of
petitioner's assets for each of the years 1945 through 1949, showing
changes in his net worth over the prosecution period. While each of the
pages was headed by the names of petitioner and his wife, the statement
was signed only by the petitioner. His signature appeared after a clause
describing the listing of assets as "my true net worth for the
period covered herein."
Admissibility
of the Statement
Petitioner
contends that his net worth statement should not have been admitted in
evidence because it was procured pursuant to an understanding between
petitioner and a Government agent that the case would be closed and the
petitioner granted immunity. See Wan v. United States, 266 U. S.
1, 14; Bram v. United States, 168 U. S. 532, 542-543; Wilson
v. United States, 162 U. S. 613, 622-623; Sparf and Hansen v.
United States, 156 U. S. 51, 55. Petitioner's accountant, who
carried on negotiations with this Government agent, testified that the
agent had promised to close the case if the net worth statement and a
check to cover the tax deficiency were forthcoming, and that he, the
accountant, would never have submitted the statement had he not believed
that the case would be closed on this basis. The Government agent
testified that he was aware of no such understanding and that he had
made no promises to close the case. After a pretrial hearing on
petitioner's motion to suppress evidence, the trial judge refused to
suppress the net worth statement. During the course of the trial, he
refused to hold a hearing outside the presence of the jury to determine
preliminarily the statement's admissibility. He submitted the issue to
the jury with the instruction that they were to reject the statement,
and all evidence obtained through it, if "trickery, fraud or
deceit" were practiced on petitioner or his accountant.
The
issue of fraud or deceit on the part of the Government agent was
properly submitted to the jury, and the jury, in arriving at its general
verdict, could have found from the conflicting evidence that no
fraudulent inducement had been offered petitioner or his accountant.
Petitioner cannot complain that he was denied a voir dire, cf. United
States v. Carignan, 342 U. S. 36, since the trial judge had already
held a hearing on this issue in passing on the pretrial motion to
suppress evidence. Moreover, the only evidence offered by petitioner in
seeking this hearing during the trial was the testimony of petitioner's
accountant, evidence which had been heard in the pretrial hearing and
was narrated again to judge and jury after the voir dire had been
denied. Under these circumstances, it cannot be said that the refusal to
hold a preliminary hearing deprived petitioner of any substantial right.
Corroboration
of Petitioner's Statement
Petitioner's
second major objection is that his net worth statement, as it related to
his opening net worth, was not corroborated--or was insufficiently
corroborated--by independent evidence. Petitioner's statement listed his
opening net worth as follows:
Bank account .... $ 1,079.60
Residence ....... 12,000.00
Automobile ...... 2,000.00
Total assets .... $15,079.60
The Government agents credited petitioner with a higher opening net
worth:
Cash in banks ............. $ 8,058.58
Drug store partnership .... 5,618.39
Real estate ............... 18,600.00
Furniture ................. 2,000.00
Automobile ................ 2,000.00
Total ..................... $36,276.97
In determining these opening net worth figures, the Government agents
relied in part on figures furnished by petitioner in his net worth
statement and in other of his extrajudicial admissions--for the autos,
the furniture, and one parcel of real estate. Any variation in these
figures would not materially affect the result. 2 But
petitioner further complains that the Government did not corroborate the
negative implications of his net worth statement, that he did not have
at the end of 1945 any substantial assets--for example, cash on
hand--which were not reflected in his or the Government's net worth
computation. The question presented, therefore, is whether there is
sufficient independent evidence to corroborate petitioner's
extrajudicial admission that he did not have sufficient assets at the
starting point to account for the increases in net worth attributed to
him in the prosecution years.
The
general rule that an accused may not be convicted on his own
uncorroborated confession has previously been recognized by this Court, Warszower
v. United States, 312 U. S. 342; Isaacs v. United States, 159
U. S. 487; cf. Miles v. United States, 103 U. S. 304, 311-312,
and has been consistently applied in the lower federal courts and in the
overwhelming majority of state courts, 127 A. L. R. 1130; 7 Wigmore,
Evidence, §§ 2070-2072. Its purpose is to prevent "errors in
convictions based upon untrue confessions alone," Warszower v.
United States, supra, at 347; its foundation lies in a long history
of judicial experience with confessions and in the realization that
sound law enforcement requires police investigations which extend beyond
the words of the accused. Confessions may be unreliable because they are
coerced or induced, and although separate doctrines exclude involuntary
confessions from consideration by the jury, Bram v. United States,
supra; Wilson v. United States, supra, further caution is warranted
because the accused may be unable to establish the involuntary nature of
his statements. Moreover, though a statement may not be
"involuntary" within the meaning of this exclusionary rule,
still its reliability may be suspect if it is extracted from one who is
under the pressure of a police investigation--whose words may reflect
the strain and confusion attending his predicament rather than a clear
reflection of his past. Finally, the experience of the courts, the
police and the medical profession recounts a number of false confessions
voluntarily made, Note, 28 Ind. L. J. 374. These are the considerations
which justify a restriction on the power of the jury to convict, for
this experience with confessions is not shared by the average juror.
Nevertheless, because this rule does infringe on the province of the
primary finder of facts, its application should be scrutinized lest the
restrictions it imposes surpass the dangers which gave rise to them.
[Corroboration
Applies to Tax Evasion]
The
first issue is whether the requirement of corroboration may properly be
applied to the crime of tax evasion. The corroboration rule, at its
inception, served an extremely limited function. In order to convict of
serious crimes of violence, then capital offenses, independent proof was
required that someone had indeed inflicted the violence, the
so-called corpus delicti. Once the existence of the crime was
established, however, the guilt of the accused could be based on his own
otherwise uncorroborated confession. But in a crime such as tax evasion
there is no tangible injury which can be isolated as a corpus
delicti. As to this crime, it cannot be shown that the crime has
been committed without identifying the accused. Thus we are faced with
the choice either of applying the corroboration rule to this offense and
according the accused even greater protection than the rule affords to a
defendant in a homicide prosecution, Evans v. United States, 122
Fed. (2d) 461; Murray v. United States, 288 Fed. 1008, or of
finding the rule wholly inapplicable because of the nature of the
offense, stripping the accused of this guarantee altogether. We choose
to apply the rule, with its broader guarantee, to crimes in which there
is no tangible corpus delicti, where the corroborative evidence
must implicate the accused in order to show that a crime has been
committed. See, e.g., Tobor v. United States, 152 Fed. (2d) 254; United
States v. Kertess, 139 Fed. (2d) 923; Ercoli v. United States,
131 Fed. (2d) 354; Pines v. United States, 123 Fed. (2d) 825; Forte
v. United States, 94 Fed. (2d) 236; Tingle v. United States,
38 Fed. (2d) 573; Wynkoop v. United States, 22 Fed. (2d) 799; Daeche
v. United States, 250 Fed. 566.
[Statement
of Opening Net Worth Must Be Corroborated]
The
next problem presented is whether the statement here involved--the
opening net worth--must be corroborated. Although this statement was
part of a document which may have admitted an understatement of taxable
income, one of the elements of the crime of tax evasion, still it is
clear that the statement is not a confession admitting to all the
elements of the offense. There is some uncertainty in the lower court
opinions as to whether the corroboration requirement applies to mere
admissions, see United States v. Kertess, supra, at 929; Ercoli
v. United States, supra, at 356. But see Warszower v. United
States, supra, at 347. We hold the rule applicable to such
statements, at least where, as in this case, the admission is made after
the fact to an official charged with investigating the possibility of
wrongdoing, and the statement embraces an element vital to the
Government's case. 3 Cf. Gulotta
v. United States, 113 Fed. (2d) 683, assimilating admissions to
confessions but failing to distinguish between admissions before and
after the fact as required by the Warszower case. Accord, Duncan
v. United States, 68 Fed. (2d) 136; Gordnier v. United States,
261 Fed. 910.
The
negative implications of petitioner's opening net worth admission formed
the cornerstone of the Government's theory of guilt. Without proof that
assets on hand at the beginning of the prosecution period did not
account for the alleged net worth increases, the Government could not
succeed. Holland v. United States, ante, p. --. An admission
which assumes this importance in the presentation of the prosecution's
case should not go uncorroborated, and this is true whether we consider
the statement an admission of one of the formal "elements" of
the crime or of a fact subsidiary to the proof of these
"elements." It is the practical relation of the statement to
the Government's case which is crucial, not its theoretical relation to
the definition of the offense.
Although
we are unable to hold on this record that petitioner's statement was
inadmissible, the evidence is sufficient to cast doubt on the accuracy
of his admissions. The unreliability of the statement is illustrated by
the great variance between its net worth calculation and the
Government's computation, although petitioner's consistent erring in his
own favor made it not unreasonable for the Government to hold him to his
word where it was to the Government's advantage. On the whole, the
statement is one which should be carefully scrutinized in the light of
the available independent evidence.
[Amount
of Corroboration Necessary]
There
has been considerable debate concerning the quantium of corroboration
necessary to substantiate the existence of the crime charged. It is
agreed that the corroborative evidence does not have to prove the
offense beyond a reasonable doubt, or even by a preponderance, as long
as there is substantial independent evidence that the offense has been
committed, and the evidence as a whole proves beyond a reasonable doubt
that defendant is guilty. Gregg v. United States, 113 Fed. (2d)
687; Jordan v. United States, 60 Fed. (2d) 4; Forte v. United
States, supra; Daeche v. United States, supra. But cf. United
States v. Fenwick, 177 Fed. (2d) 488 [49-2 USTC ¶9448]. In addition
to differing views on the substantiality of specific independent
evidence, the debate has centered largely about two questions: (1)
whether corroboration is necessary for all elements of the offense
established by admissions alone, compare Ercoli v. United States,
supra, and Pines v. United States, supra, with Wynkoop v.
United States, supra, and Pearlman v. United States, 10 Fed.
(2d) 460, and (2) whether it is sufficient if the corroboration merely
fortifies the truth of the confession, without independently
establishing the crime charged, compare Pearlman v. United States,
supra, and Daeche v. United States, supra, with Pines v.
United States, supra, and Forte v. United States, supra. We
answer both in the affirmative. All elements of the offense must be
established by independent evidence or corroborated admissions, but one
available mode of corroboration is for the independent evidence to
bolster the confession itself and thereby prove the offense
"through" the statements of the accused. Cf. Parker v.
State, 228 Ind. 1, 88 N. E. (2d) 556.
[Proof
to Establish Opening Net Worth]
Under
the above standard the Government may provide the necessary
corroboration by introducing substantial evidence, apart from
petitioner's admissions, tending to show that petitioner willfully
understated his taxable income. This may be accomplished by
substantiating the opening net worth directly, since that figure, taken
together with the remainder of the net worth computation, amply
establishes a consistent understatement by petitioner of his taxable
income; and from this the jury could infer willfulness. Two significant
items of evidence tend to show that petitioner owned no assets at the
starting point in excess of those attributed to him in the Government's
statement. First, a Government official testified that petitioner had
filed no income tax returns in the years 1936 through 1939, nontaxable
returns for 1940 and 1942, a nonassessable return for 1943, a refundable
return for 1944, and a taxable return for 1941. Second, the testimony of
a Government agent, touching upon the economic activities of the
petitioner in the years immediately preceding the prosecution period,
disclosed that prior to 1941 petitioner had been employed as a manager
of a racing news service; that from 1941 to 1945 he worked in a package
store for $40 a week; and that for a short time during this latter
period his wife worked as a hairdresser. The agent's testimony, however,
was based solely on the extrajudicial statements of the petitioner, and
under the standard we have adopted these admissions must be corroborated
by substantial independent evidence. 4 The tax
returns adequately corroborate petitioner's statements as to his
financial history, and we hold that the two together corroborate the
opening net worth. The jury could find from this evidence that
petitioner's resources prior to the prosecution years were such that he
could not have amassed a greater store of wealth than the amount
credited to him in the Government's net worth statement. This proof is
buttressed somewhat by independent evidence that petitioner had bought a
modest home in 1943 for $9,600, paying less than one-third in cash and
the balance in installments, and by the fact that petitioner's wife, who
held the bulk of the family's assets in her name, was a housewife
through almost all of the preprosecution years with no significant
independent sources of income.
[Proof
of Conduct During Period of Prosecution]
But
substantiating the opening net worth is just one method of corroborating
these extrajudicial statements. Petitioner's admissions may also be
corroborated by an entirely different line of proof--by independent
evidence concerning petitioner's conduct during the prosecution period,
which tends to establish the crime of tax evasion without resort to the
net worth computations. The Government's evidence showed that coincident
with petitioner's opening of the racing-news service, in which he kept
no records, petitioner and his wife opened 9 new bank accounts, making
their over-all total 14 accounts in 12 banks; that the money in these
accounts, which amounted to only $8,000 at the beginning of the
prosecution period, varied between $42,000 and $80,000 during the
prosecution years; that brokerage accounts, opened by petitioner and his
wife in 1947 and 1948 respectively, were worth $9,000 in 1947 and over
$41,000 in 1948 and 1949; that petitioner and his wife made new
investments in realty during the prosecution period, about $2,000 in
1946, over $14,000 in 1948, and $35,000 in 1949; that other substantial
expenditures were made during the prosecution years, $3,750 in U. S.
Savings Bonds in 1946, a total investment of $4,768 in new cars in 1947
and 1948, and a $37,000 annuity payment and $3,750 mink coat in 1949.
During these same years petitioner's declared income exceeded his living
expenses by less than $3,000. These substantial expenditures, savings
and investments might not, of themselves, suffice to support a
conviction of tax evasion without evidence of a starting point
indicating a lack of funds from which these payments might have come.
But this conduct does corroborate the net worth statement by tending
to show that the petitioner was understating his income during the
prosecution years. We cannot say that there is so little relation
between expenditures and income that the Government's proof of
expenditures far in excess of reported income, coupled with proof of a
business producing unrecorded amounts of income, fails to corroborate
the charge that petitioner's earnings during the prosecution years
exceeded his declared income.
[Conclusion]
We
hold that under either of these two lines of proof sufficient
corroboration was shown to permit the case to go to jury. The
circumstances leading up to petitioner's statement, and the failure of
the facts shown therein to mesh with the other evidence adduced by the
Government, imposed on the trial judge and the reviewing courts a duty
of careful scrutiny. Nevertheless, the independent evidence was strong
enough, we believe, to overcome these indicia of unreliability, and we
accordingly affirm.
1
Although there had previously been discussion of a civil fraud penalty,
this check was apparently meant to cover only the tax liability proper.
2
The Government also relied on petitioner's admissions in establishing
his living expenses during the prosecution years. But these do not bear
on opening net worth and are therefore not fairly within the question
presented. Moreover, the variation possible in these figures is too
slight to affect the result in any significant respect.
3
Admissions given under special circumstances, providing grounds for a
strong inference of reliability, may not have to be corroborated. Cf. Miles
v. United States, supra; State v. Saltzman, 241 Iowa 1373, 44 N. W.
(2d) 24.
4
They were made to officials after the offense had been committed. It may
be questioned, though, whether these admissions were as basic to the
Government's case as the statements concerning opening net worth, and
whether they should therefore be exempted from the requirement of
corroboration. But where a fact is sufficiently important that the
Government adduces extrajudicial statements of the accused bearing on
its existence, and then relies on its existence to sustain the
defendant's conviction, there is need for corroboration. Cf. United
States v. Kertess, supra, at 930.