Fraud Case
Procedures Page4
[74-1 USTC
¶9282]
United States of America
, Plaintiff v. Charles G. Fukushima, Defendant
U. S. District Court, Dist. Hawii,
Criminal No. 73-13,201, 372 FSupp 212, 2/26/74
[Code Sec. 7201]
Tax evasion: Noncustodial warnings: Admissibility of evidence.--The
fact that special agents of the IRS failed to use the word
"criminal" before the words "false and fraudulent"
when they advised a taxpayer of their duty to investigate tax returns
was not sufficient reason to suppress as evidence oral statements and
business records supplied voluntarily by taxpayer to the government. The
failure of the agents to follow the exact procedural wording of IRS News
Releases Nos. 897 and 949 was not a substantial deviation that could be
considered an encroachment on the constitutional rights of the
defendant. Furthermore, even if it felt otherwise, the court would
follow Robson, (CA-9) 73-1 USTC ¶9381, 477 F. 2d 13, in holding
that agents are not required to follow these procedures with regard to
noncustodial warnings.
Harold
M. Fong, United States Attorney, Thomas P. Young, Assistant United
States Attorney, Honolulu, Hawaii, for plaintiff. Arthur B. Reinwald,
Anthony, Hoddick, Reinwald, & O'Connor, Ninth Floor, 333 Queen St.
P. O. Box 3199, Honolulu, Hawaii, for defendant.
Decision On Motion To Suppress
Or To Dismiss Indictment
PENCE,
Chief Judge:
Defendant
is charged under a three-count indictment alleging that he filed false
and fraudulent income tax returns for the years 1966, 1967 and 1968, in
violation of Section 7201, Internal Revenue Code, 26 U. S. C. 7201. The
questions presented by defendant's motion are whether evidence obtained
by means of personal interviews by IRS special agents with the defendant
and examination of his financial records should be suppressed because of
the claimed failure of IRS special agents to undeviatingly follow the
published directives of their agency, and whether the indictment should
be therefore dismissed.
As
defendant in his reply memorandum on his motion to suppress indicates:
"The
sole question raised by the motion is whether the failure of the special
agents to comply with [IRS] News Releases No. 897 and 949 violated
defendant's constitutional rights. . . . The issue is the failure of the
special agents to follow published procedures." 1
Published Procedures
On
October 3, 1967, the IRS issued News Release No. 897, stating in
pertinent part:
In
response to a number of inquiries the Internal Revenue Service today
described its procedures for protecting the Constitutional rights of
persons suspected of criminal tax fraud, during all phases of its
investigations.
. . .
On
initial contact with a taxpayer, IRS Special Agents are instructed to
produce their credentials and state: "As a special agent, I have
the function of investigating the possibility of criminal tax
fraud."
If
the potential criminal aspects of the matter are not resolved by
preliminary inquiries and further investigation becomes necessary, the
Special Agent is required to advise the taxpayer of his Constitutional
rights to remain silent and to retain counsel.
. . .
.
. . [These] procedures insure uniformity in protecting the
Constitutional rights of all persons.
On
November 26, 1968, the IRS issued News Release No. IR-949, stating in
pertinent part:
[This]
new procedure goes beyond most legal requirements that are designed to
advise persons of their rights.
One
function of a Special Agent is to investigate possible criminal
violations of the Internal Revenue laws. 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.
Facts
The
report of Special Agent Bigler concerning the crucial interview with the
defendant, which was conducted by him and Special Agent Taylor, was as
follows:
We
arrived at the Federal Building about 3:30 p. m., FUKUSHIMA was advised
that his tax returns for years 1965, 1966, 1967, and 1968 are under
investigation. TAYLOR and I both showed him our badges and commissions
and I advised him that we were special agents with the Intelligence
Division of the Internal Revenue Service and that as special agents, one
of our duties is to determine whether or not false and fraudulent tax
returns have been filed. I told him the fact that this is one of our
duties and that we are investigating his tax returns does not mean that
he did file false returns; that this will not be known until the
investigation is completed. I told
FUKUSHIMA
that he could not be required to answer any questions or make any
statements which would tend to incriminate him; that he could not be
required to produce any books, or records, which might tend to
incriminate him; and that it was his privilege to have an attorney
present at any time he talked with the agents. I told him that with this
understanding if he would now be willing to answer certain questions and
discuss his tax affairs with us, we would like to do so. He agreed to do
this.
Thereafter,
the defendant made oral statements and supplied the business records,
all of which are here sought to be suppressed.
With
his motion, the defendant filed an affidavit stating that as of June 26,
1973, he was 64 years old, had an eighth grade education, practically
all of his life had worked as a general helper or cook in small
restaurants, and since 1941 had operated one or more restaurants in
Honolulu. He had never had a tax investigation until 1970, when at the
request of IRS agents he turned over to them his records concerning his
1965-68 tax returns. Two years later another IRS agent, Kelly,
interviewed defendant in the IRS office on two occasions. Defendant
states he did not realize that criminal charges were being prepared
until he received a letter in April 1973 stating the charges.
Defendant's
moving papers specifically negate any claim that the information
obtained from the defendant by the special agent was not voluntarily
given, and also negate that there was any "fraud, trickery or
deceit by the special agents."
Applicable Law
Defendant's
motion is basically founded upon the decisions of the Fourth Circuit
Court in U. S. v. Heffner [70-1 USTC ¶9152], 420 F. 2d 809
(1970) and the First Circuit in U. S. v. Leahey [70-2 USTC ¶9636],
434 F. 2d 7 (1970). In Heffner, that court reversed the tax fraud
conviction of an "uneducated and emotionally disturbed man"
because the agent had not warned defendant that the agent was
investigating the possibility of criminal tax fraud, nor did the
agent advise the defendant that he could retain counsel. 420 F. 2d at
811. The court held that:
An
agency of the government must scrupulously observe rules, regulations,
or procedures which it has established. When it fails to do so, its
action cannot stand and courts will strike it down. This doctrine was
announced in
United States
ex rel. Accardi v. Shaughnessy, 347
U. S.
260 . . . (1954). . . .
"It
is of no significance that the procedures or instructions which the IRS
has established are more generous than the Constitution requires. 420 F.
2d at 811-12.
Heffner
well illustrates the axiom: hard cases make bad law. The majority there
was justifiably concerned that the government should have ever
prosecuted Heffner, and as indicated by the fact that they couched their
reversal upon the authority of Accardi, supra; Service v. Dulles,
354 U. S. 363 (1959); and Vitarelli v. Seaton, 359 U. S. 535
(1959), 3 went far out
to uncover some sort of not-too-implausible authority upon which to peg
their ultimate conclusion. The court, speaking more bluntly than the
First Circuit did in Leahey concerning the authority underlying Heffner,
finds the three cases completely inapposite for the same reasons urged
by the government in Leahey. 4
As
summarized by Judge Wyzanski in U. S. v. Bembridge [72-1 USTC ¶9172],
335 F. Supp. 590 (D. Mass. 1971), the Leahey ruling. as a matter
of the "due process" guaranteed by the Fifth Amendment,
precludes the use in evidence, or as a lead to evidence, of records
which a taxpayer surrenders upon demand to a Special Agent of the I. R.
S. who is conducting a criminal tax fraud investigation of the taxpayer,
but who, before demanding the documents, fails to state to the taxpayer
the magic words, "As a special agent, I have the function of
investigating the possibility of criminal tax fraud," which the
October 3, 1967 News Release had directed all Special Agents to use in
such circumstances. 335 F. Supp. 591-92.
Judge Wyzanski continued:
In
view of Judge Coffin's statement at p. 10 of 434 F. 2d that Leahey
stands for "a clear rule excluding admissions secured by an agent
who has not conformed to require procedure," this court does not
believe an inferior court can distinguish this case on the plausible
ground that after hearing the evidence it is satisfied that defendant
had the equivalent of the required warning. The judges of the Court of
Appeals made it explicit that "such an approach would seem to us to
invite uncertainy and litigation." 335 F. Supp. at 592.
As
its verbose opinion indicates, the court in Leahey labored at
length to find an accepted rationale by which it could raise the failure
of a special agent to follow the IRS guidelines to an invidious
constitutional level. Included therein was a clear enlargement of The
Court's "request" in Miranda v. Arizona, 384
U. S.
436 (1966), viz., that law enforcement agencies
develop better
ways of harmonizing the protection of individual rights with the
efficient enforcement of the law [emphasis added] . . .. Were we to say
that Miranda is the ceiling rather than the floor of the rights
of citizens vis-a-vis the government, we would make a mockery of the Miranda
invitation. 434 F. 2d at 10.
The Leahey court's labored
search for any foundation for its opinion is also illustrated by this:
When
an agency "goes public" it does not do so lightly. Its
obligations increase just as do those of a private corporation. Ibid.
And the Leahey court
concluded:
Here,
however, we have the two factors intersecting: (1) a general guideline,
deliberately devised, aiming at accomplishing uniform conduct of
officials which affects the post-offense conduct of citizens involved in
a criminal investigation; and (2) an equally deliberate public
announcement, made in response to inquiries, on which many taxpayers and
their advisors could reasonably and expectably rely. Under these
circumstances we hold that the agency had a duty to conform to its
procedure, that citizens have a right to rely on conformance, and that
the courts must enforce both the right and duty. 434 F. 2d at 11.
It
is not to be wondered at, therefore, that Judge Wyzanski made the
observations quoted above. It is likewise not surprising that when
considering Bembridge on appeal, [72-1 USTC ¶9379] 458 F. 2d
1262 (1 Cir. 1972), the appellate court was compelled to circumscribe
the broad sweep of Leahey, stating: "We are in complete
agreement with [Judge Wyzanski's] . . . view that if Leahey
mandates [recitation by an IRS agent of 'every syllable of a mumbo-jumbo
formula'] . . . we have erred grievously." 458 F. 2d at 1264. The Bembridge
court then proceeded to distinguish Leahey on the basis that in Leahey
the special agent gave "no warning whatsoever at a time when the
1967 press release with its precise formulation in terms of 'criminal
tax fraud' was the latest applicable," ibid, whereas in Bembridge
the agent conformed to the internally required procedure. The court then
indicated a "disinclination to view an agency as irrevocably locked
into the specific verbal formulation of a prior news release. . .
." Ibid. 5
When
the Rhode Island District Court was faced with the IRS procedural
problem in U. S. v. Maciel [73-2 USTC ¶9500], 351 F. Supp. 817
(1972), where the special agent did not warn the taxpayer that anything
he said or the records he volunteered could be used to incriminate him
and that he could not be compelled to incriminate himself by producing
documents, that court concluded:
The
present case does not involve the omission of any "magic
words," but concerns instead, the agent's negligence in failing to
advise the taxpayer of crucial rights. [Emphasis added.] 351 F.
Supp. at 819.
In
U. S. v. Broad [71-2 USTC ¶9509], 324 F. Supp. 800 (S. D. Texas
1971), the court observed that the IRS news release of October 3, 1967
was to insure uniformity in protecting the constitutional rights of all
persons. The court stated:
The
taxpayer was not told of his right to retain counsel and remain silent
until . . . after he had been interrogated by [a Special Agent] . . . on
four previous occasions. The news release does not contemplate that the
agent wait until he had enough information to convict before he informs
the taxpayer of his rights. . . . (Emphasis added.) 324 F. Supp.
at 802.
Judge
Suttle in U. S. v. Luna [70-2 USTC ¶9498], 313 F. Supp. 1294 (W.
D. Texas 1970) incisively dissected the fallacy underlying Heffner
and Leahey:
While
the need to enforce rights granted by the Constitution and laws of the
United States
may outweigh the interests mitigating against the exclusion of otherwise
admissible evidence, the enforcement of an agency policy statement does
not, regardless of how desirable that policy might be. The Constitution
and laws may of necessity dictate preconditions for the admissibility of
evidence in a federal trial; administrative agencies may not. 313 F.
Supp. at 1295.
In Brod, supra, Judge
Singleton summarily disposed of Luna by transmuting the IRS
directive into new constitutional rights for the taxpayer with
this ipse dixit:
The
question is not one of what extent administrative agencies may bind the
courts, but whether the court should exclude evidence so that agencies
will follow the regulations they have formally and purposefully adopted
in the light of the requirements of the Constitution, even though the
regulations adopted go beyond what is mandatory under the Constitution. Unquestionably,
there must be an affirmative answer to the latter question. (Emphasis
added.) 324 F. Supp. at 803.
More "unquestionably",
Judge Singleton's holding would penalize those law enforcement agencies
who publish their instructions to their agents as to their investigative
practices and procedures vis-a-vis those who do not.
Apparently
overlooked by the courts in Heffner and Leahey, and not
squarely recognized by the courts in any of the preceding cases, save Luna,
is the fact that the IRS was concerned only with procedures for
protecting the constitutional rights of persons as outlined by Miranda,
supra.
In
Miranda, The Court, approvingly set forth the internal directives
of the FBI on interrogation practices to be followed by its agents, as
practices for emulation by state and local enforcement agencies. 384
U. S.
at 484-46. The standard FBI warnings, internally ordered before Miranda,
included warnings to suspects of their right to say nothing, right to
counsel, and that any statement might be used against the suspect. When
the issue arose on pre-Miranda motions for suppression, not one
of the cases cited in Miranda, ibid, involving the use of
warnings, demanded that any ritual or magic words be used implementing
the substance thereof. 6
As
pointed out in the Miranda dissent, 7 beginning in
1936 with Brown v. Mississippi, 297 U. S. 278, and continuing up
to Miranda in 1966, in more than 30 full opinions of the Court,
in testing admissibility of confessions by the Due Process Clause,
"the Court never pinned it down to a single meaning but on the
contrary infused it with a number of different values . . .. The outcome
was a continuing re-evaluation on the facts of each case of how much
pressure on the suspect was permissible."
Id.
at 507.
Congress
itself, following the invitation of the Miranda court, in 1968
enacted 18 U. S. C. 3501, setting forth the underlying factors
surrounding the giving of a confession which the trial judge "shall
take into consideration" in deciding upon the admissibility into
evidence of confessions and concluded with the second paragraph of §3501(b):
The
presence or absence of any of the above-mentioned factors to be taken
into consideration by the judge need not be conclusive on the issue of
voluntariness of the confession.
Assuming
arguendo that in the Ninth Circuit anything but short shrift
could be given to the doctrine expounded by the Heffner and Leahey
courts, any court that deigns to expand the constitutional rights
enumerated by Miranda, when the one interrogated by an
investigation law officer is not in custody, upon which
"custody" Miranda as well as Mathis v. U. S.
[68-1 USTC ¶9357], 391 U. S. 1 (1968), are bottomed, should at least
demand that substantial constitutional rights of a taxpayer have
been invaded by the special agent in disregard of the published
objective of the IRS.
This
court certainly cannot elevate the failure of the special agent to use
the magic word "criminal" before the words "false and
fraudulent," when he advised the defendant of one of his duties, to
the level of an invidious invasion of any constitutional right of the
taxpayer.
In
the Ninth Circuit, however, in U. S. v. Robson [73-1 USTC ¶9381],
477 F. 2d 13, 16 (1973), we find that court stating:
This
court has repeatedly refused to extend the Miranda rule beyond
its stated limits. Simon v. United States [70-1 USTC ¶9212], 421
F. 2d 677 (9th Cir. 1970).
Even though that court thereafter
considered the Fifth Amendment due process argument urged by the
defendant, based upon the IRS News Release No. 897, it did so only on an
"assuming arguendo" basis. 8
As
indicated above, this court can and does consider the IRS news releases
to be an attempted administrative expansion of the Miranda-type
warning problem into a non-custodial situation. Therefore, inasmuch as
the Ninth Circuit has held as it did in Robson, where the Fifth
Amendment due process problem was in a narrow sense before them, this
court can only conclude that in the Ninth Circuit, absent deceit or
overreaching, when agents of the Intelligence Division of IRS have
properly identified themselves and disclosed their purpose to
investigate tax returns, they are under no constitutionally mandated
duty to advise the taxpayer of his Fifth Amendment rights or of the
criminal nature of the investigation. That they might properly be
internally disciplined by the IRS for bypassing any of of its own
specified procedures gives no legal comfort or rights to the taxpayer.
Conclusions of Law
To
reiterate, not even under any of the authorities cited by the defendant
can this court conclude that the failure on the part of the special
agent to use the magic word "criminal" in stating the purpose
of his investigation is a "substantial" deviation from the IRS
procedures so as to permit this court to find that a constitutional
right of the defendant has been encroached upon thereby. This court does
not agree with Heffner or Leahey, or the circuit court in Bembridge,
that the IRS publication of investigative procedures raises those
procedures to the stature of constitutional rights under the due process
clause of the Fifth Amendment. Moreover, even if it felt otherwise, this
court believes that it would be constrained by the consistent opinions
of the Ninth Circuit, as indicated by Robson, to hold that the
IRS published procedures did not in the slightest erode or in any manner
circumscribe the viability of the law on IRS non-custodial warnings, as
set forth in Robson.
1
Defendant's Reply Memorandum, p. 2.
2
Ibid.
3
420 F. 2d at 811-12.
4
434 F. 2d at 9.
5
In note 1 of Bembridge, at 1264, counsel for the defendant argued
that the earlier notice language of the IRS news release, "I have a
function", together with reference to fraud has "an alerting
potential" not present in reference to criminal violations. He
cited as proof that when the special agent told his client he "was
looking for tax fraud", he immediately consulted an attorney. Cf.
the statement of Special Agent Bigler, supra.
6
The ritual and "magic words" argument in relation to the FBI
Waiver of Rights Form was raised before and rejected by Judge Huyett in
his well researched and reasoned decision of U. S. v. Young, 355
F. Supp. 103 (E. D. Pa. 1973).
7
Justices Harlan, Stewart, White; Clark saying that the dissenters do
"not go quite far enough." 384
U. S.
at 494.
8
Defendant also maintains that U. S. v. Campanella, -- F. 2d -- (9
Cir., 72-1792, Nov. 1, 1973), sustains his position wherein the Court
said:
Next,
appellant complains that Miranda-type warnings were not given as
required by IRS regulations published in a news release. Those warnings
were designed to be given to taxpayers when they are investigated for
possible tax fraud. Appellant was not a taxpayer but one who prepared
tax returns for others. Here the incriminating information was obtained
from the persons whose returns appellant had fraudulently prepared, and
not from appellant. United States v. Heffner [70-1 USTC ¶9152],
420 F. 2d 809 (4th Cir. 1969), is not in point. Slip op. at 3.
This
precisely correct statement of the intent of the IRS internal procedure
does not in the slightest, however, indicate the legal consequences that
were expected or intended by the IRS to follow from the non-observance
thereof by the IRS agents. As indicated from the quotation above, the
problem presented to this court was not before the appellate court.
[72-2 USTC
¶9601]
United States of America
, Plaintiff-Appellee v. Jay E. Mathews, Defendant-Appellant
(CA-5), U. S. Court of Appeals,
5th Circuit, No. 71-3158, 464 F2d 1268, 8/2/72
[Code Sec. 7201]
Crimes: Tax evasion: Warning of rights.--Taxpayer's conviction of
wilfully attempting to evade income taxes due and owing to the United
States was affirmed. The revenue agent substantially complied with IRS
News Releases Nos. 897 and 949 which prescribe the warnings of
Constitutional rights that are to be given prior to the initial
interview with a taxpayer. Other assignments of error were also without
merit.
Robert
W. Rust, United States Attorney, Miami, Fla., Scott P. Crampton,
Assistant Attorney General, Meyer Rothwacks, Richard B. Burrman,
Department of Justice, Washington, D. C. 20530, for plaintiff-appellee.
Lawrence E. Hoffman,
407 Lincoln Rd.
,
Miami Beach
,
Fla.
, for defendant-appellant.
Before
WISDOM and INGRAHAM, Circuit Judges, and
BOOTLE
, District Judge.
PER
CURIAM:
Mathews
appeals from his conviction for having wilfully attempted to evade
income taxes due and owing to the United States for the calendar years
1964, 1965 and 1966, all in violation of 26 U. S. C. §7201. We affirm.
Defendant
contends that the trial court erred in not granting his motion to
suppress statements made by him to a special agent of the Internal
Revenue Service. As grounds for the motion defendant states that prior
to the interviews during which the statements were made, the agent did
not give complete Miranda warnings as, defendant argues, were
required by IRS News Release No. 897, dated October 3, 1967. That
release, recognizing that it went "far beyond most legal
requirements to assure that persons are advised of their Constitutional
rights," provided in pertinent part that:
"On
initial contract with a taxpayer, IRS Special Agents are instructed to
produce their credentials and state: 'As a special agent, I have the
function of investigating the possibility of criminal tax fraud.'
"If
the potential criminal aspects of the matter are not resolved by
preliminary inquiries and further investigation becomes necessary, the
Special Agent is required to advise the taxpayer of his Constitutional
rights to remain silent and to retain counsel." 1
The
defendant argues that the motion to suppress should have been granted
because an agency of the government must scrupulously observe rules,
regulations, or procedures which it has established and that when it
fails to do so, its action cannot stand and courts will strike it down,
citing: United States v. Heffner [70-1 USTC ¶9152], 420 F. 2d
809 (4th Cir. 1969), and United States v. Leahey [70-2 USTC ¶9636],
434 F. 2d 7 (1 Cir. 1970). It is unnecessary for this court to decide
the question thus posed for we find that the revenue agent substantially
complied with both News Releases, Nos. 897 and 949. Literal compliance
is not required.
Prior
to the initial interview the special agent presented his credentials to
defendant, telling him that he was a special agent with the Intelligence
Division of the Internal Revenue Service and "that we (another
agent was also present) were more or less in the criminal or fraudulent
division of the Internal Revenue Service." The agent further
advised defendant "that anything he said could be used against him;
that he had a right to an attorney; that he had the right to refuse to
answer any question that he felt might incriminate him."
It
is well settled in this circuit that where a potential defendant in a
criminal tax case is not in custody nor otherwise deprived of his
freedom, nor actually compelled or coerced to furnish statements or
documents, special agents are not required to give him the Miranda
warnings of his constitutional rights, United States v. Prudden
[70-1 USTC ¶9336], 424 F. 2d 1021 (5 Cir. 1970); therefore, denfendant
not being in custody or otherwise deprived of his freedom at the time of
the interview, Miranda warnings were not required.
Defendant
also contends that the court below erred in admitting into evidence a
government exhibit containing a summary of computations under the net
worth method of determining taxable income and in failing to grant his
motion to dismiss the indictment on the ground that he had not been
afforded a conference in the Office of the Regional Counsel of the
Internal Revenue Service prior to referral of the case to the Department
of Justice for criminal prosecution. We find no merit in these
contentions.
Affirmed.
1
As stated in appellee's brief:
"It
should be noted that the 1967 news release was superseded by IRS News
Release IR-949, issued November 26, 1968 (not relied upon by defendant),
which laid down even more stringent standards for special agents'
warnings. It required that 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.' The news release notes
that this 'new procedure goes beyond most legal requirements that are
designed to advise persons of their rights.' 1968 CCH Fed. Tax Reporter,
par. 6946; 1968 Prentice-Hall Fed.
Texas
, par. 55,476."
[72-1 USTC
¶9379]
United States of America
, Appellant v. Leslie P. Bembridge, Defendant, Appellee
(CA-1), U. S. Court of Appeals,
1st Circuit, No. 72-1025, 458 F2d 1262, 4/28/72, Rev'g and rem'g
unreported District Court decision
[Code Sec. 7203]
Crimes: Failure to file returns: Evidence: Constitutional warnings:
Agent's function.--IRS Special Agents are not required to follow the
precise verbal formulation of a 1967 news release upon initial contact
with taxpayers. Thus, the district court, in a prosecution for failing
to file returns, erred in suppressing evidence obtained by an agent who,
although he gave extensive warnings, did not state that, as a special
agent, his function was to investigate the possibility of criminal tax
fraud. Leahey, (CA-1) 70-2 USTC ¶9636, 434 F. 2d 7, distinguished.
Joseph
L. Tauro, United States Attorney, Wayne B. Hollingsworth, Assistant
United States Attorney, Boston, Mass., for appellant. James R. McGowan,
Lester H. Salter, Harold C. Arcaro, Jr., Alan L, Swartz, Salter,
McGowan, Arcaro & Swartz, 300 Industrial Bank Bldg., Providence, R.
I., for defendant-appellee.
Before
ALDRICH, Chief Judge, MCENTEE and COFFIN, Circuit Judges.
COFFIN,
Circuit Judge:
An
information was brought against taxpayer appellee, charging him with
failing to file tax returns for calendar years 1965, 1966, and 1967.
Taxpayer moved to suppress certain of his records, oral statements and
evidence derived therefrom on the due process ground that such evidence
was obtained from him by a Special Agent of the Internal Revenue Service
in violation of the warning procedures announced in two IRS news
releases. The district court granted the motion and the government
appeals.
[Facts]
Special
Agent Niro called taxpayer on two occasions in early December, 1968,
identified himself as a Special Agent of the IRS, arranged an
appointment for December 9 and asked taxpayer to bring along personal
corporate books and records for certain years. At taxpayer's request,
the IRS office in
Worcester
was designated as the place for the meeting. No reference was made in
either telephone conversation to the criminal nature of the
investigation. At the appointed time, taxpayer appeared, with a
briefcase of records.
After
calling in another IRS employee to join the meeting, Niro, the court
found, read the following from a card he had prepared:
"I
am a Special Agent with the Intelligence Division of the Internal
Revenue Service. As a Special Agent, one of my functions is to
investigate the possibility of criminal violation of the Internal
Revenue Laws and related offenses.
"You
don't have to say anything, or submit anything that might tend to
incriminate you, and anything you say, or any information that you
submit may be used against you in any proceedings undertaken by the U.
S. Government. Also, you may have an attorney present during any
questioning. Do you understand this?"
After
taxpayer indicated that he understood these rights, a lengthy conference
ensued. At its conclusion, taxpayer left the documents with the Special
Agent and, during the following seven weeks, made three more deliveries
of records to the IRS office. Only after taxpayer's secretary was served
a summons in April, 1969, did he consult an attorney.
The
court found, and we fully agree, that the Special Agent's statement was
in compliance with the most recent Internal Revenue Manual change,
effective on October 21, 1968. It was also in accord with a November 26,
1968, IRS news release which announced changes in the procedure for
advising taxpayers of their rights. The release stated in relevant part:
"One
function of a Special Agent is to investigate possible criminal
violations of Internal Revenue laws. 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."
The
warnings given by the Special Agent did not use a sentence quoted in an
earlier IRS news release, dated October 3, 1967, which was the only
warning required in a first meeting between a Special Agent and a
taxpayer: "On initial contact with a taxpayer, IRS Special Agents
are instructed to produce their credentials and state: 'As a special
agent, I have the function of investigating the possibility of criminal
tax fraud.'"
[Effect of Leahey]
The
district court, while finding that the Special Agent read the card above
quoted, also found that he did not "describe his function," as
provided in the 1968 news release. The court went on to say that the
case fitted squarely within our ruling in United States v. Leahey
[70-2 USTC ¶9636], 434 F. 2d 7 (1st Cir. 1970), which it characterized
as invalidating any taxpayer production of documents unless "the
magic words" of the 1967 news release relating to criminal tax
fraud were first spoken. The court further observed that suppressing the
evidence in this case worked a grave injustice to the proper enforcement
of the tax laws simply because a minor IRS offical, while obeying all
regulations and without invading any constitutional rights, did not
"recite every syllable of a mumbo-jumbo formula." We are in
complete agreement with the court's view that if Leahey mandates
this result, we have erred grievously.
In
Leahey, a Special Agent gave no warning whatsoever at a time when
the 1967 press release with its precise formulation in terms of
"criminal tax fraud" was the latest applicable. The agent had
violated both an internal procedure devised to secure uniformity of
treatment and a deliberate public announcement. We held that the agency
"had a duty to conform to its procedure, that citizens have a right
to rely on conformance, and that the courts must enforce both the right
and the duty." 434 F. 2d at 11. In the instant case the agent
conformed to both the internally required procedure and to the
subsequent most recently published version of it.
Wholly
apart from our disinclination to view an agency as irrevocably locked
into the specific verbal formulation of a prior news release, we fail to
see how the later warning couched in terms of possible criminal
violations of Internal Revenue laws would be any less effective in
putting a taxpayer on his guard than the earlier one directed only at
the possibility of criminal tax fraud. While a taxpayer ought not be
confronted with a civilian Trojan horse bearing criminal investigators,
we suspect that he would be just as concerned in being told that he was
being investigated for one species of tax crime as another. Indeed, a
notice confined to tax fraud might well mislead a sophisticated taxpayer
in the position of the appellee, who was investigated and prosecuted not
for tax "fraud" under 26 U. S. C. §7206 but for wilful
failure to file returns under 26 U. S. C. §7203. 1 We therefore
hold that there was no failure of due process under Leahey and
that the motion to suppress should not have been granted. 2
[Later Release]
We
add that, while we would not have supported Leahey to call for
such an expansionist interpretation in any event, the entire hearing
proceeded on the assumption that there had been only one press release
and one internal manual order. Although the 1968 news release was both
an exhibit attached to the motion to suppress and had been admitted into
evidence by agreement, it was not called to the Special Agent's or to
the court's attention during the hearing. The best the Special Agent
could do when asked the source of the wording on his warning card was to
say that "As I recall, there was another document that superseded
[the earlier manual-reference]." Counsel for taxpayer argued
vigorously that the Special Agent had ignored his own internal manual
directive, had done his own paraphrasing of his function description,
and was giving different treatment to taxpayer than to all others
similarly situated. Not until the very end of the hearing was the
subsequent manual order brought to the court's attention by government
counsel. Even then counsel was unable to inform the court that the
subsequent instructions had been made public, although the 1968 news
release had been in the case from the beginning. While the court
ultimately became acquainted with the later instructions and news
release, the fact that they played almost no part in the testimony and
argument may very well have colored the court's view. That this may have
occurred is attributable to the overzealousness of taxpayer's counsel
and unawareness on the part of the government.
Reversed
and remanded for further proceedings.
1
Counsel for appellee argues that the earlier notice language, "I
have the function", together with the reference to fraud has
"an alerting potential" not present in the "vaguely
woolly" references to "one of my functions" and
"criminal violations . . . and related offenses." Proof of the
pudding, he urges, is the fact that in April, 1969, when at last,
according to taxpayer, the Special Agent told him he was looking for tax
fraud, he immediately consulted a lawyer. A more obvious reason would
seem to us the fact that this conversation arose out of the serving of a
summons on taxpayer's secretary.
2
Appellee in his brief has argued that the record does not disclose a
sufficient waiver of his Fourth and Fifth Amendment rights. Wholly apart
from the question of the applicability of such rights to IRS
investigations, cf.
United States
v. Leahey, supra, 434 F. 2d at 8 n. 2, their violation was not put
in issue by the motion to suppress.
[72-1 USTC
¶9148]
United States of America
, Appellee v. Alexander J. Ramantanin, Appellant
(CA-4), U. S. Court of Appeals,
4th Circuit, No. 71-1300, 452 F2d 670, 12/21/71, Aff'g an unreported
District Court decision
[Code Sec. 7201]
Crimes: Tax evasion: Miscellaneous assignments of error: Venue:
Warning of rights: Prior tax returns: Punishment.--Taxpayer's
conviction on three counts of tax evasion was affirmed. Venue was
properly laid in
South Carolina
even though his returns were filed with the
IRS
Service
Center
at
Chamblee
,
Georgia
. Taxpayer's rights were not abridged where he was given a full warning
of his constitutional rights when his case was first the subject matter
of a fraud investigation. At no time was he under arrest or in custody.
Furthermore, taxpayer's returns for years not in issue were properly
received in evidence for the purpose of showing intent and wilfulness.
Finally, the court properly instructed the jury that the question of
punishment was of no concern to the jury.
John
K. Grisso, United States Attorney, Jack L. Marshall, Assistant United
States Attorney, for appellee. James J. Raman, Robert A. Clay, for
appellant.
Before
BOREMAN, Senior Circuit Judge, RUSSELL and FIELD, Circuit Judges.
FIELD,
Circuit Judge:
Alexander
J. Ramantanin appeals from his conviction in the District of South
Carolina on each count of a three count indictment. The indictment
charged the defendant with wilfully and knowingly attempting to evade
income taxes for the years 1963, 1964 and 1965 by filing false and
fraudulent returns with the District Director of Internal Revenue for
South Carolina in violation of 26 U. S. C. §7201. Ramantanin was tried
by a jury which returned a verdict of guilty on all three counts.
During
the years in question Ramantanin was a legal resident of
Spartanburg
,
South Carolina
, where he was primarily engaged in the operation of a restaurant. On
this appeal the defendant initially challenges his conviction upon the
ground that the Government failed to establish that venue was properly
laid in the District of South Carolina. Apparently the basis for the
defendant's contention on this point is the fact that early in the year
1965 the Southeast Service Center at Chamblee, Georgia, a government
record repository, was authorized to receive tax returns of individuals
required to file with the District Director of South Carolina, and later
in 1967 South Carolina tax payers were authorized to file their returns
either at the Center or with the District Director in Columbia, South
Carolina.
We
find no merit in this contention of the defendant. As a resident of
Spartanburg
he was required under Section 6091 of the 1954 Internal Revenue Code to
file his return with the District Director of the Internal Revenue
Service for
South Carolina
. The defendant's original tax returns for the indictment years were
admitted in evidence without objection and show that they were in fact
filed with the District Director at
Columbia
. The defendant's amended returns for the indictment years were also
admitted as exhibits in this case and, while they were filed at the
Center in
Georgia
, each of these returns indicates that the original return had been
filed with the District Director in
Columbia
. In the light of these circumstances it is clear that the District of
South Carolina was the proper venue for the prosecution of the
defendant.
Counsel
for defendant filed a pretrial motion to suppress all oral and
documentary evidence furnished to agents of the Internal Revenue Service
during the course of their investigation of this case, contending that
the failure of the agents to advise him of his constitutional rights
contravened the Fourth, Fifth and Sixth Amendments of the Federal
Constitution. In pressing this contention, the defendant, of course,
relies heavily upon Miranda v. Arizona, 384
U. S.
436 (1966). The District Court held a full hearing relative to the
suppression motion and thereafter, in denying the motion, made
definitive findings of fact and conclusions of law.
A
review of the record persuades us that the action of the District Judge
in denying this motion was eminently sound. The initial interview of the
defendant was conducted at his place of business on July 21, 1966, by
Revenue Agent Richard F. Murphy. The defendant was advised that the
agent desired to examine his income tax records for the subject years
and although the defendant had no formal books or business records, he
submitted his bank statements, cancelled checks and deposit tickets for
inspection. On that occasion the defendant also gave Murphy some general
information relative to his business operations. On February 14, 1967,
B. R. Lee, a special agent of the Intelligence Division, accompanied
Agent Murphy to the defendant's restaurant for a further interview. The
defendant was well aware that Lee was a special agent and was advised
that his case had been referred to the Intelligence Division for
investigation. During this interview the defendant gave the agents
information with respect to his personal and business income as well as
various asset items. The defendant's safety deposit box was inventoried
by the agents on the following day. Subsequent interviews were held at
Ramantanin's restaurant on three occasions in March and April, 1967,
during which various facets of the defendant's business and personal
affairs were disclosed to the agents.
On
April 19, 1967, additional instructions regarding the conduct of
criminal fraud investigations which had been promulgated by the Internal
Revenue Service were received in the office of the District Director in
Columbia
and thereupon were issued to all special agents of the Intelligence
Division of that District. On June 14, 1967, Special Agent Lee again
interviewed the defendant at the office of the Internal Revenue Service
in
Spartanburg
. This was the first interview with the defendant subsequent to the
issuance of the instructions by the District Director relative to
criminal fraud investigations, and on that occasion Lee gave the
defendant the full Miranda warnings.
At
the hearing on the suppression motion counsel for defendant conceded
that on no occasion was the defendant under arrest or in custody, and
further stated that the agents used no threats, coercion or any form of
deception in their dealings with the defendant during the investigation.
Under these circumstances, the conclusion of the District Judge that the
conduct of the agents did not impinge upon the constitutional rights of
the defendant was correct. As stated in United States v. Browney
[70-1 USTC ¶9154], 421 F. 2d 48 (4 Cir. 1970) at 51:
"The
law in this circuit is clear that one is not entitled to notice of a
right to counsel prior to an interview during which he is neither in
custody nor 'deprived of his freedom of action in any significant way'
and where there is no evidence of coercion or intimidation on the part
of the tax agents conducting the interview."
Since,
as we have noted, at the first interview subsequent to the receipt of
the revised fraud instructions of the Internal Revenue Service, Special
Agent Lee appropriately advised the defendant of his constitutional
rights, we are not confronted here with any question of noncompliance
with agency regulations, cf. United States v. Heffner [70-1 USTC
¶9152], 420 F. 2d 809 (4 Cir. 1969).
The
defendant further contends that the trial court erroneously permitted
the Government to put in evidence tax returns filed by him for the three
years prior to those covered by the indictment, claiming that no proper
foundation was laid for the admission of such evidence. A review of the
record indicates beyond question that the defendant had understated his
income on these tax returns for pre-indictment years, and accordingly
they were properly admissible for the purpose of showing his intent and
wilfulness. The District Judge carefully pointed out to the jury the
limited purpose for which this evidence was admitted, and his ruling on
this evidentiary question is supported by the overwhelming authority in
this and other Circuits. Hamman v. United States [65-1 USTC ¶9161],
340 F. 2d 145 (9 Cir. 1965); Morrison v. United States [59-2 USTC
¶9657], 270 F. 2d 1 (4 Cir. 1959).
Finally,
the defendant charges that the trial judge led the jury to believe that
the defendant would receive no commitment in the event he was convicted.
This contention of the defendant is utterly frivolous. Early in his
closing argument, counsel for defendant refered to the efforts of the
Government to send his client to jail. After a second such reference,
the Court interrupted the attorney with the observation that the
question of punishment was no concern of the jury but rested solely with
the judge. This action of the Court was not only proper, but was
required in the light of the improper remarks of defense counsel. See May
v.
United States
, 175 F. 2d 994 (D. C. Cir. 1949).
The
judgment of conviction is affirmed.
[79-1 USTC
¶9206]I. B. Nickell and Edith Nickell, Plaintiffs v.
United States of America
, Defendant
U. S. District Court, So. Dist.,
West Va., Charleston, Civil Action N. 78-2061-CH, 1/25/79
[Code Sec. 7422]
Evidence: Production of records: Civil action: Suppression at prior
criminal tax fraud case.--In a taxpayer's civil suit for refund, the
Commissioner's Motion to Compel Discovery was granted and the taxpayer's
Motion for a Protective Order prohibiting discovery of any documents
previously suppressed in a criminal tax fraud case against the taxpayers
was denied Although the evidence contained in the documents was
suppressed in the criminal case because of the failure to give the
taxpayers Miranda-type warnings, the court found no Fifth
Amendment violation for the failure to give the warnings. Additionally,
the taxpayers presented no evidence that the information sought was
privileged because it was self-incriminating.
Stanley
E. Preiser, Preiser & Wilson, P. O. Box 2506, Charleston, W. Va.
25329, John T. Kay, Jr., Kay, Casto & Chaney, P. O. Box 2031,
Charleston, W. Va. 25327, for plaintiffs. Robert B. King, United States
Attorney, Rebecca A. Betts, Barbara E. Nicastro, Assistant United States
Attorneys, Charleston, W. Va. 25301, Judith H. Johnson, Department of
Justice, Washington, D. C. 20530, for defendant.
Memorandum Opinion and Order
KNAPP,
Chief Judge:
Plaintiffs
(Taxpayers) instituted this action under the provisions of 28 U. S. C.
§1346(a)(1) and 26 U. S. C. §7422 for the recovery of federal income
taxes and interest alleged to have been erroneously and illegally
assessed against and collected from the taxpayers. By way of answer, the
government denied generally the material allegations in the complaint
and set forth as an affirmative defense fraud on the part of the
taxpayers. Incorporated in its answer was a counterclaim by the
government alleging that the taxpayers owe an additional amount to the
government for income taxes not having been paid but which are due.
On
September 20, 1978, pursuant to Rule 34, Federal Rules of Civil
Procedure, the government requested the taxpayers to produce certain
documents, previously returned to the taxpayers by the government,
pursuant to an order of the District Court for the Southern District of
West Virginia, dated August 29, 1973, in the criminal tax fraud case of United
States of America v. I. B. Nickell, Criminal Action No. 73-28-CH. 1
In
the criminal case, the district court suppressed the evidence obtained
from these documents, which were obtained as a result of an interview
between I. B. Nickell and an Internal Revenue agent on February 4, 1970.
At the interview the Internal Revenue agent failed to give Mr. Nickell a
Miranda-type 2 warning as
required by the internal administrative regulations of the Internal
Revenue Service, notwithstanding that the interview was non-custodial in
nature. 3
Thereafter,
the taxpayers timely filed objections to the request for production,
along with a motion for a protective order prohibiting the government
from obtaining by any means of discovery any documents or other
information previously suppressed by the district court in the criminal
case.
On
November 13, 1978, the government filed this motion to compel discovery
of such documents and other information sought by the government. The
respective motions of the parties are now before the Court, along with
the motion of the taxpayers to strike the affirmative defense of fraud
asserted by the government on the grounds that the allegations regarding
fraud do not meet the particularity requirements of Rule 9(b), Federal
Rules of Civil Procedure.
In
granting the suppression motion in the criminal case, the district court
relied on the teachings of United States v. Heffner [70-1 USTC ¶9152],
420 F. 2d 809 (4th Cir. 1970). In Heffner, the Fourth Circuit
Court of Appeals reversed a conviction for income tax fraud, holding
that the district court should have excluded evidence obtained by the
Internal Revenue agents in interviews with the defendant, not in
custody, where defendant was not given Miranda-type warnings required by
the administrative regulations of the Internal Revenue Service. 4 Taxpayers
therefore contend that the failure of the Internal Revenue agent to give
the warnings constituted a Fifth Amendment violation.
The
government insists that Heffner, at least impliedly, has been
overruled by Beckwith v. United States [76-1 USTC ¶9352], 425
U. S.
341 (1976). We cannot agree with that contention. The
Beckwith Court
clearly stated the precise issue with which it dealt, namely,
"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
. . . ." 425
U. S.
at 341-342.
Nevertheless,
Beckwith makes it clear that failure to give a Miranda warning,
or indeed a Miranda-type warning, does not violate the Fifth Amendment
to the Constitution of the
United States
. This being so, we must reject the taxpayers' position that failure to
give warnings, as required by Heffner, amounted to a Fifth
Amendment violation.
Relying
upon Romanelli v. Commissioner [72-1 USTC ¶9708], 466 F. 2d 872
(7th Cir. 1972), taxpayers advance the argument that the evidence
suppressed in the criminal trial must be suppressed, or otherwise not
made available to the government, in the instant civil action.
In
Romanelli, supra, the Seventh Circuit Court of Appeal held that
evidence excluded in a criminal tax case, by reason of its being
obtained in violation of the defendant's Fifth Amendment rights, could
not be used in the civil tax case.
However,
the plaintiffs' reliance on Romanelli is misplaced in this
action. The Court of Appeals found as a matter of fact and as a matter
of law that Romanelli was in custody at the time he was interrogated.
Therefore, the Miranda warning was required to be given. In the instant
case, and as stated, we find that there is no deprivation of taxpayers'
Fifth Amendment rights since the Fifth Amendment does not dictate that
the administrative warnings be given. Beckwith requires such
conclusion, for if the Fifth Amendment does not require Miranda-type
warnings in a non-custodial situation, it logically follows that it is
not a violation thereof when such warnings were not given.
We
think that the government's position regarding the motion to compel is
supported by another Seventh Circuit case, Ryan v. Commissioner
[78-1 USTC ¶9129], 568 F. 2d 531 (7th Cir. 1977). In Ryan the
court affirmed the tax court's ruling that the taxpayers be required to
answer certain interrogatories propounded to them when the answers were
not privileged against self-incrimination. Starting with the proposition
that the Fifth Amendment applies only to criminal cases, the court held
that inasmuch as use immunity had been given the Ryans, there was no
reasonable cause to fear damage from answering the questions.
Likewise,
taxpayers have nothing upon which to predicate their claim that the
information sought is privileged as being self-incriminating. The
information sought was suppressed for purposes relating to the criminal
fraud prosecution, which has come to an end. It does not follow, based
upon the teachings of Ryan and the circumstances of this case,
that such information is required to be suppressed for the purposes
relating to the civil action.
Finally,
we believe that the government has pleaded the defense of fraud with
sufficient particularity, given the nature of the case as a tax refund
action.
Order
Accordingly,
it is ORDERED that:
1.
The government's Motion to Compel Discovery be, and the same is, hereby
granted;
2.
The plaintiff's Motion for a Protective Order be, and the same is,
hereby denied; and
3.
The plaintiffs' Motion to Strike be, and the same is, hereby denied.
The
Clerk is directed to mail certified copies of this order to counsel of
record herein.
1
The criminal case was presided over by Judge K. K. Hall, now a Circuit
Judge of the Fourth Circuit Court of Appeals.
2
Miranda v.
Arizona
, 384
U. S.
436 (1966).
3
At the suppression hearing, the government contended that the required
warning had been given to Mr. Nickell. However, the warning was not
transcribed on the tape recording made of the entire interview. Judge
Hall found that the government had not met its burden of proof of
showing that the warning was given and therefore suppressed the evidence
obtained from the February 4, 1970 interview. Judge Hall did not
find a Fourth Amendment violation and, as the taxpayers correctly point
out, we are bound by Judge Hall's findings and conclusions.
4
The Fourth Circuit based its ruling in Heffner on the doctrine
established in United States, ex rel. Accardi v. Shaughnessy, 437
U. S. 260 (1954). See also, United States v. Leahey [70-2 USTC ¶9636],
434 F. 2d 7, (1st Cir. 1970); United States v. Toussaint [78-1
USTC ¶9793], 456 F. Supp. 1069 (S. D. Tex. 1978).
[70-1 USTC
¶9152]
United States of America
, Appellee v. Clark Eugene Heffner, Appellant
(CA-4), U. S. Court of Appeals,
4th Circuit, No. 13,114, 420 F2d 809, 12/30/69
[Code Sec. 7205]
Crimes: Fraud case procedures: Criminal tax investigation:
Pre-custodial interview: Statement of rights: Right to warning:
Constitutionality: Right to counsel.--In a preliminary investigation
the taxpayer must be warned that the function of Special Agents of the
Intelligence Division is to investigate the possibility of a criminal
prosecution for tax fraud and that the taxpayer could retain counsel to
assist him in the interview. Instructions to Special Agents reported in
an IRS News Release (informing them of these requirements) must be
scrupulously observed and when an agent fails to do so, his action
cannot stand and the Court will strike it down.
Stephen
H. Sachs, United States Attorney, Barnet D. Skolnick, Clarence E. Goetz,
Assistant United States Attorneys, Baltimore, Md., for appellee. Thomas
Ward,
1223 Linden Ave.
,
Baltimore
,
Md.
, for appellant.
Before
BRYAN
, WINTER and CRAVEN, Circuit Judges.
WINTER,
Circuit Judge:
Defendant
was convicted of two counts of wilfully furnishing to his employer, in
Baltimore, Maryland, false and fraudulent statements of federal income
tax withholding exemptions, contrary to 26 U. S. C. A. §7205. He was
convicted on each count, and sentenced to consecutive one-year terms of
imprisonment, with eligibility for release at any time the Board of
Parole might determine, pursuant to 18 U. S. C. A. §4208(a)(2).
Defendant
assails his convictions, inter alia, upon the ground that they
were obtained in part by the use of statements which had been obtained
from him without compliance with Miranda v. Arizona, 384 U. S.
436 (1966). Cf. Dickerson v. United States [69-2 USTC ¶9556],
413 F. 2d 1111 (7 Cir. 1969). We need not decide that issue, however,
for we perceive a narrower ground which requires reversal.
[Facts]
There
is no dispute about the events which led to defendant's convictions.
Sometime during the late 1950's the ownership of certain business and
residential property shifted from the defendant to other persons.
Defendant believed that the transfer was unlawful and that he was the
rightful owner. This uneducated and emotionally disturbed man was
sincerely convinced that the loss of his properties was the result of a
conspiracy between a former business associate and various state and
local officials.
For
several years defendant attempted to secure the help of the state and
federal governments in regaining his property. When these efforts proved
unavailing, he determined to use the novel device of refusing to pay
federal income taxes as a means of prodding the government into taking
some action with respect to his grievance. His decision was implemented
by his claiming a ridiculously large number of exemptions on the
Withholding Exemption Certificate (Form W-4) which he was required to
file with his employer. Thus, although entitled to only two exemptions,
defendant claimed eleven in 1965 and twenty in 1966. In order to insure
that the significance of this action was not missed, he wrote to the
Internal Revenue Service (IRS) to notify them of his action and the
reason for it.
[Preliminary Investigation]
Although
his previous attempts to communicate with the government had gone
without reply, this action evoked a response from IRS. Sometime in early
1967, Special Agents of the Intelligence Division of the IRS made a
preliminary investigation, which disclosed that defendant was not
entitled to the number of exemptions which he had claimed. The agents
then arranged for an interview with defendant at a local IRS office.
Defendant appeared voluntarily, without counsel, on February 19, 1967.
He was advised by the agents that he was not required to furnish any
information which might tend to incriminate him, and that anything he
said could be used against him. Defendant, however, was not warned that
the function of Special Agents of the Intelligence Division was to
investigate the possibility of a criminal prosecution for tax fraud. Nor
was he advised that he could retain counsel to assist him in the
interview. There followed a question-and-answer interview which was
recorded and subsequently transcribed. In this interview defendant
seriously incriminated himself.
[Second Interview]
There
followed a delay of over nine months. Then, on November 30, 1967,
defendant was again invited to the IRS local office. Again, however, he
was neither warned of the purpose of the investigation nor advised that
he could retain counsel. Upon request, he signed a transcribed version
of the interview of the previous February.
Over
timely objection, the Special Agent's testimony concerning defendant's
incriminating statements in the February interview was admitted at
trial. We hold that this was reversible error.
[IRS News Release]
On
October 3, 1967, the IRS issued instructions to all Special Agents of
the Intelligence Division. These instructions were reported in "IRS
News Release No. 897, Oct. 3, 1967," reprinted in 7 CCH 1967 Stand.
Fed. Tax Rep. §6832:
"In
response to a number of inquiries, the Internal Revenue Service today
described its procedure for protecting the Constitutional rights of
persons suspected of criminal tax fraud, during all phases of its
investigations.
"Investigation
of suspected criminal tax fraud is conducted by Special Agents of the
IRS Intelligence Division. This function differs from the work of
Revenue Agents and Tax Technicians who examine returns to determine the
correct tax liability.
"Instructions
issued to IRS Special Agents go beyond most legal requirements to assure
that persons are advised of their Constitutional rights.
"On
initial contact with a taxpayer, IRS Special Agents are instructed
to produce their credentials and state: 'As a special agent, I have
the function of investigating the possibility of criminal tax fraud.'
"If
the potential criminal aspects of the matter are not resolved by
preliminary inquiries and further investigation becomes necessary, the
Special Agent is required to advise the taxpayer of his
Constitutional rights to remain silent and to retain counsel.
* * *
"IRS
said although many Special Agents had in their past advised persons,
not in custody, of their privilege to remain silent and retain
counsel, the recently adopted procedures insure uniformity in
protecting the Constitutional rights of all persons." (italics
supplied.)
Thus, voluntarily, IRS took upon
itself the obligation to give taxpayers, before interrogation, notice
that they were suspected of criminal tax fraud and the further
obligation to give the full Miranda warnings before seeking
incriminating statements.
[Agent's Failure to Comply]
The
November 30 interview with defendant occurred almost two months after
these instructions had been announced. Yet in two particulars the
Special Agent failed to comply with them. First, he never warned the
defendant that "[a]s a special agent, I have the function of
investigating the possibility of criminal tax fraud." Second, the
defendant was never advised that he could "retain counsel."
[Effect of Agency's Rules]
An
agency of the government must scrupulously observe rules, regulations,
or procedures which it has established. When it fails to do so, its
action cannot stand and courts will strike it down. This doctrine was
announced in
United States
ex rel. Accardi v. Shaughnessy, 347
U. S.
260 (1954). There, the Supreme Court vacated a deportation order of the
Board of Immigration because the procedure leading to the order did not
conform to the relevant regulations. The failure of the Board and of the
Department of Justice to follow their own established procedures was
held a violation of due process. The Accardi doctrine was
subsequently applied by the Supreme Court in Service v. Dulles,
354
U. S.
363 (1959), and Vitarelli v. Seaton, 359
U. S.
535 (1959), to vacate the discharges of government employees. See also Yellin
v. United States, 374
U. S.
109 (1963). And the Accardi doctrine has been utilized by the
courts of appeal. E.g., United States ex rel. Brooks v. Clifford,
409 F. 2d 700, 706 (4 Cir.), rehearing denied, 412 F. 2d 1137 (4 Cir.
1969); Hammond v. Lenfest, 398 F. 2d 705, 715 (2 Cir.), vacated
on rehearing on other grounds, 398 F. 2d 718 (2 Cir. 1968); Pacific
Molasses Co. v. FTC, 356 F. 2d 386, 389-90 (5 Cir. 1966); Sangamon
Valley Television Corp. v. United States, 269 F. 2d 221, 224-25 (D.
C. Cir. 1959).
It
is of no significance that the procedures or instructions which the IRS
has established are more generous than the Constitution requires. In Service
v. Dulles, supra, the Supreme Court vitiated the discharge of a
foreign service officer because of the State Department's failure to
follow its own procedures. The Court concluded that it made no
difference that the State Department had no statutory or constitutional
obligation to establish the procedure in question:
While
it is of course true that * * * the Secretary was not obligated to
impose upon himself these more rigorous substantive and procedural
standards, * * * having done so he could not, so long as the Regulations
remained unchanged, proceed without regard to them.
354
U. S.
at 388.
See also Vitarelli v. Seaton, supra.
[No Necessity for Formal Label]
Nor
does it matter that these IRS instructions to Special Agents were not
promulgated in something formally labeled a "Regulation" or
adopted with strict regard to the Administrative Procedure Act, the Accardi
doctrine has a broader sweep. The Supreme Court in Vitarelli v.
Seaton, supra, applied it to a Department of the Interior
"Order." The Second Circuit has applied it to the Army's
"Weekly Bulletin 42," §4(c) (Oct. 20, 1967). Smith v.
Resor, 406 F. 2d 141, 143-144 & n. 2, 146 (2 Cir. 1969). The
District of Columbia Circuit has applied the doctrine to a FCC
"rule" which had not been formally promulgated but which the
court found had been established by the FCC's "usual practice"
of including the rule in its orders. Sangamon Valley Television Corp.
v. United States, 269 F. 2d 221, 224-25 & nn. 8 & 9 (D. C.
Cir. 1959). See also McKay v. Wahlenmaier, 226 F. 2d 35, 43 (D.
D. Cir. 1955) (alternative holding). The same court has also applied the
doctrine to FCC "Standards." American Broadcasting Co.,
Inc. v. FCC, 179 F. 2d 437, 442-43 (D. C. Cir. 1949). Finally, in United
States ex rel. Brooks v. Clifford, 409 F. 2d at 706, this court
applied the doctrine to a Department of Defense "Directive."
These
cases are consistent with the doctrine's purpose to prevent the
arbitrariness which is inherently characteristic of an agency's
violation of its own procedures. As the Second Circuit said in Hammond
v. Lenfest, 398 F. 2d at 715, cited with approval in United
States ex rel. Brooks v. Clifford, 409 F. 2d at 706, departures from
an agency's procedures "cannot be reconciled with the fundamental
principle that ours is a government of laws, not men." The
arbitrary character of such a departure is in no way ameliorated by the
fact that the ignored procedure was enunciated as an instruction in a
"News Release." The document purports to establish certain
procedures which Special Agents are "required" to follow.
Undoubtedly, a failure to comply is a rare event within the Intelligence
Division--a fact which highlights the apparently inadvertent failure to
give the required warnings here. Furthermore, a reversal here would not
only have the salutary effect of encouraging IRS agents to observe their
own procedures, L. Jaffe, Judicial Control of Administrative Action
369 (1965), cited with approval in Smith v. Resor, 406 F. 2d at
146, but would assist the IRS in fulfilling its own important stated
purpose in requiring that the warnings be given. For the announcement of
the instructions was coupled with the justification that they would
insure "uniformity in protecting the Constitutional rights
of all persons."
The
Accardi doctrine furthermore requires reversal irrespective of
whether a new trial will produce the same verdict. * In both Yellin
v. United States, 374
U. S.
at 121, and Accardi itself, 347
U. S.
at 268, the Supreme Court vacated government actions and remanded for
new determinations consistent with the established procedures even
though the Court doubted that these procedures would lead to a different
result. Even though it was unlikely that the appellant would prevail on
remand, the Court held that he "should at least have the chance
given him by the regulations." Yellin v.
United States
, 374
U. S.
at 121.
[November 30th Violation Was
Sufficient]
It
matters not that part of the interrogation which produced defendant's
admissions occurred in February before the IRS instructions were
promulgated. As the IRS News Release stated, the purpose of the
instruction was to "insure uniformity" in protecting all
persons from unknowledgeable relinquishment of their rights. The
obligation to fulfill this purpose by giving the Miranda warnings
arose on November 30 when defendant was asked to sign the written
transcript--and thus to create indisputable proof--of his previous
damaging admissions. If given the warnings, perhaps defendant would have
decided to sign without the advice of counsel. An equal possibility is
that defendant, alerted to the prosecutorial purpose of the interview,
would have requested counsel. In either event the uniformity which the
IRS sought would have been achieved.
Finally,
it also matters not that at trial the government offered testimony which
dealt solely with the February 19 interview without formal introduction
of the signed statement into evidence. A copy of the statement was in
the agent's hands during the entirety of his testimony. The trial judge
referred to it as a "statement" and indicated in the jury's
presence that it had been signed. Although the agent did not read the
admissions verbatim from the statement on direct examination, he did
read whole paragraphs verbatim from the statement on preliminary matters
before recounting the defendant's incriminating untterances.
Furthermore, the Assistant United States Attorney three times referred
to the defendant's "statement" in his closing argument to the
jury. Probably, from these incidents of the trial, the jury knew that
there existed a signed, written confession.
If
the jury had any doubt of this, it was allayed by cross-examination, for
defense counsel brought out that the statement had been signed on
November 30 and had the agent read the entire statement to the jury.
This, however, constituted no waiver of defendant's rights; nor did it
render the error harmless. Given the fact that the government had
utilized the statement to incriminate the defendant, defense counsel had
no choice but to pursue the strategy which he adopted. He attempted to
press the defense that defendant was justified in claiming an excessive
number of exemptions by his sincere belief that he had been the victim
of injustice. Since the statement contained many things not brought out
by the government on direct examination which supported this
justification, defense counsel was impelled to bring them out on
cross-examination. Under the circumstances of this case, the conclusion
is inescapable that counsel had no other viable choice. Thus, even with
defendant's acquiescence, he cannot be said voluntarily to have
waived a known right; nor is he chargeable with any responsibility for
adding prejudice to defendant's case.
REVERSED and REMANDED.
The
mandate shall issue forthwith. Judge Bryan reserves the right to join in
this opinion, or to file a separate statement of his own views at a
later date.
*
We need not assume that the United States Attorney will elect to try
defendant again. Defendant began service of sentence on August 26, 1968.
Since he was ultimately sentenced under 18
U. S.
C. A. §4208(a)(2), we may infer that the district judge contemplated
that defendant should probably be released before having served
one-third of his total sentences of two years. Considerably more than
that period will have been served by the date of this decision. In view
of the time served, the mental and emotional condition of defendant, and
his apparent purpose to protect what seemed to him injustice rather than
actually to succeed in obtaining exemptions to which he was not
entitled, this would appear to be an appropriate case in which to
dismiss the indictment.
[79-2 USTC
¶9697]
United States of America
, Appellee v. Wilfred G. Meier, Appellant
(CA-8), U. S. Court of Appeals,
8th Circuit, No. 79-1469, 607 F2d 215, 10/17/79, Affirming an unreported
District Court decision
[U. S. Constitution, Amendment V, and Code Sec. 7203]
Crimes: Willful failure to file return: Suppression of evidence:
Constitutional rights: Miranda warnings: Sufficiency of
evidence.--A taxpayer's criminal conviction for failure to file tax
returns for three years was affirmed. The District Court did not err in
admitting evidence obtained by IRS agents in an interview with the
taxpayer. This interview was voluntary and special coercive
circumstances did not exist that would have prompted the necessity of Miranda
warnings, informing the taxpayer of his Fifth Amendment rights and right
to counsel. Beckwith, 76-1 USTC ¶9352, 425
U. S.
341, followed. It was not error for the District Court to find that the
IRS had not violated its regulations in referring the matter of the
taxpayer's returns for criminal proceedings. Moreover, the evidence
presented was sufficient to sustain the taxpayer's conviction.
Robert
D. Kingsland, United States Attorney, Mark A. Helfers, Assistant United
States Attorney, St. Louis, Mo. 63101, for appellee. James F. Booth, 226
South Meramec,
Clayton
,
Mo.
63105
, for appellant.
Before
LAY, HEANEY and HENLEY, Circuit Judges.
PER
CURIAM:
Wilfred
G. Meier appeals from his conviction on three counts of willfully and
knowingly failing to file income tax returns for the tax years 1972,
1973 and 1974 in violation of 26 U. S. C. §7203. The case was tried
before the district court on a stipulation of fact.
On
appeal Meier urges (1) that the district court erred in refusing to
suppress certain statements and evidence, and (2) that the evidence is
insufficient to support his conviction.
In
1977 Postal Inspector Calvin J. Olk informed Jerome Ponder, the Group
Inspector of the Internal Revenue Service Examination Division that a
postal investigation of Meier had disclosed evidence that Meier as
insurance agent for the MFA Insurance Company (MFA), had stolen
approximately $30,000 in insurance premiums belonging to MFA. Ponder was
advised of the possibility that Meier had omitted income from his
individual tax return. Ponder assigned Agent Frank Somogyi to
investigate.
Agent
Somogyi discovered by virtue of a computer search at the
Kansas City
Service
Center
that there were no records of any returns filed by Meier for the years
prior to 1975. Somogyi then sent a letter to Meier requesting an
interview and copies of Meier's returns for 1972, 1973, 1974 and 1976.
Meier
and Agent Somogyi first met on August 26, 1977, in Meier's office. At
this meeting Meier was told that the
Kansas City
Service
Center
had no record of any tax returns filed by him before 1975. Meier
submitted copies of his tax returns for the years in question to Agent
Somogyi asserting that they had been filed in
Kansas City
, and agreed to obtain microfilm copies of his cancelled checks for the
estimated tax payments and deficiencies.
The
second meeting between Meier and Agent Somogyi occurred on September 13,
1977, at Meier's office. Between the first meeting and the second, Agent
Somogyi's only investigation of this matter was to verify Meier's
correct name and social security number to be sure the computer search
had been correctly performed. At the second meeting Meier gave Agent
Somogyi his bank statements and told him he had been unable to obtain
copies of his cancelled checks. Thereafter Agent Somogyi suspended his
investigation and referred the matter to the Criminal Enforcement
Division.
On
January 10, 1978, Agent Somogyi and Special Agent David Kretchmar met
with Meier at Meier's office. Agent Kretchmar identified himself,
advised Meier of his rights to remain silent and to consult an attorney,
and told him that whatever he said could be used against him in a
criminal prosecution. Agent Kretchmar also informed him that the purpose
of the investigation was to investigate possible criminal tax
violations. Meier responded that he understood his rights and that he
wanted to cooperate. At the end of the interview Meier signed a sworn
affidavit.
Meier's
pretrial motions to suppress evidence obtained from him by the agents
were denied by the district court after two hearings.
Meier
argues that the evidence and statements obtained by the agents in their
interviews with him should have been suppressed because he was not
advised of any of his rights at the first two meetings, and because he
was not properly advised of his right to counsel and privilege against
self-incrimination at the third meeting. His contention that he was
entitled to Miranda warnings at the outset of the investigation
because the investigation was criminal in nature, had focused upon him,
and was inherently coercive, is refuted by Beckwith v. United States,
425 U. S. 341 (1976). In Beckwith, the Supreme Court held that
absent special circumstances, statements made to a revenue agent in a
noncustodial interview in a criminal tax investigation are admissible
even though the taxpayer was not given Miranda warnings. Beckwith
[76-1 USTC ¶9352], 425
U. S.
347-48; United States v. Vannelli [79-1 USTC ¶9257], 595 F. 2d
402, 406 (8th Cir. 1979).
Because
Meier also alleges special coercive circumstances existed, we have
examined the record to determine if Meier's cooperation was voluntary.
See Beckwith, 425
U. S.
at 348. Specifically, Meier contends that Agent Somogyi concealed from
him the purpose of the investigation. The only evidence in the record
bearing on this issue is Agent Somogyi's testimony at the May 7th
suppression hearing. He testified that just after the commencement of
the first interview Meier suggested the IRS investigation had been
prompted by the postal investigation. Agent Somogyi did not respond to
this statement. While a misrepresentation as to the nature of an
investigation can be strong evidence of coercion, see United States
v. Mapp [77-2 USTC ¶9607], 561 F. 2d 685, 689 (7th Cir. 1977),
Agent Somogyi's silence can only be considered fraudulent if there is
clear and convincing evidence that it was intentionally misleading. See United
States v. Tweel [77-1 USTC ¶9330], 550 F. 2d 297, 299 (5th Cir.
1977). The burden of proof is upon the movant.
Id.
We find that Meier has failed to present any clear and convincing
evidence that Somogyi's silence was intended to mislead him.
Finally,
Meier argues the agency violated its internal regulations in not
referring the matter to the criminal division at an earlier date. He
contends the investigation became criminal in nature long before Agent
Somogyi made the referral. The district court judge made the following
finding:
Agent Somogyi
had a suspicion that defendant had not filed his tax returns, but his
investigation and the interviews with the defendant on August 26th of
1977 and September 13th of 1977, and the obtaining of informational
documents from the defendant were reasonable steps necessary to verify
these suspicions, and upon discovering an indication of fraud, . . .
Agent Somogyi did then suspend his activities and investigation . . .
and referred the case for criminal investigation.
This finding is not clearly
erroneous. Even if the agency regulations were violated, the violation
was not deliberate or prejudicial, and Meier's constitutional rights
were not affected. Moreover, Meier does not contend that he relied upon
the regulation or that its violation affected his conduct. We conclude,
therefore, that the evidence was properly received. See United States
v. Caceres [79-1 USTC ¶9294], 99
S. Ct.
1465 (1979).
The
overall evidence was sufficient to sustain the conviction.
THE
JUDGMENT IS AFFIRMED.
[79-1 USTC
¶9294]
United States
, Petitioner v. Alfredo L. Caceres
Supreme Court of the United
States, No. 76-1309, 440 US 741, 99 SCt 1465, 4/2/79, Reversing CA-9,
77-1 USTC ¶9226, 545 F. 2d 1182
On Writ of Certiorari to the United States Court of Appeals for the
Ninth Circuit.
[18 U. S. C. §201(b)]
Crimes: IRS agents: Bribery of: Evidence: Exclusion: Administrative
guidelines: Violation: Effect.--A conviction of bribing an IRS agent
was upheld. Tape recordings of two meetings at which the bribery
occurred need not have been excluded from evidence merely because they
were obtained in violation of IRS regulations. Those regulations were
not mandated by the Constitution or by federal law. The defendant's
constitutional rights were not violated. Judicial enforcement of the
regulations was not made necessary by the Administrative Procedure Act.
No rigid exclusionary rule should be applied to require exclusion of all
evidence obtained in violation of regulations concerning electronic
eavesdropping, nor was this an individual case that merited application
of such a rule.
Two
Justices dissented.
Wade
H McCree, Jr., Solicitor General, Philip B. Heymann, Assistant Attorney
General, Kenneth S. Geller, Assistant to the Solicitor General, Jerome
M. Feit, Department of Justice, Washington, D. C. 20530, for petitioner.
James J. Brosnahan, Linda E. Shostak, H. Preston Moore, Jr., Morrison
& Foerster, One Market Plaza, San Francisco, Calif. 94105, for
respondent.
MR.
JUSTICE STEVENS delivered the opinion of the Court:
The
question we granted certiorari to decide is whether evidence obtained in
violation of Internal Revenue Service (IRS) regulations may be admitted
at the criminal trial of a taxpayer accused of bribing an IRS agent.
Unbeknownst
to respondent, three of his face-to-face conversations with IRS Agent
Yee were monitored by means of a radio transmitter concealed on Yee's
person. Respondent moved to suppress tape recordings of the three
conversations on the ground that the authorizations required by IRS
regulations had not been secured. The District Court granted the motion.
The Court of Appeals for the Ninth Circuit reversed as to the third
tape; it concluded that adequate authorization had been obtained. 1
As to the first two tapes, however, the Court of Appeals agreed with the
District Court both that the IRS regulations had not been followed and
that exclusion of the recordings was therefore required. It is the
latter conclusion that is at issue here.
Syllabus
Regulations
in the Internal Revenue Service Manual prohibit "consensual
electronic surveillance" between taxpayers and IRS agents unless
certain specified prior authorization is obtained. With respect to the
monitoring of face-to-face (nontelephone) conversations, the Director of
the Internal Security Division or the Assistant Commissioner
(Inspections) of the IRS may authorize the recording of such
conversations in emergency situations, but if there is at least 48 hours
in which to obtain approval, a signed request must also be submitted to
the Attorney General or a designated Assistant Attorney General. In
connection with the audit of the income tax returns of respondent and
his wife, an IRS agent met with respondent on, among other dates,
January 31 and February 6, 1975. Emergency approval for the use of
electronic equipment at both meetings was obtained, pending a request to
the Justice Department for authority to monitor conversations with
respondent for a 30-day period, but such authority was never obtained
for the January 31st and February 6th meetings. At these meetings
respondent paid or offered bribes to the agent for a favorable
resolution of the audit. The agent at both meetings wore a concealed
radio transmitter which allowed other agents to monitor and record the
conversations. Subsequently, respondent was prosecuted for bribing the
IRS agent. At this trial he moved to suppress tape recordings of the
conversations on the ground that the authorizations required by the IRS
regulations had not been secured. The District Court granted the motion,
and the Court of Appeals affirmed. Both courts held that the meetings
had not been monitored in accordance with the IRS regulations,
concluding that neither meeting fell within the emergency provision of
the regulations because the exigencies were the product of
"government-related schedling problems." Held: The tape
recordings, and the testimony of the agents who monitored the meetings
in question, were not required to be excluded from evidence because of
the conceded violation of the IRS regulations. Pp. 7-15.
(a)
While a court has a duty to enforce an agency regulation when compliance
with the regulation is mandated by the Constitution or federal law, here
the agency was not required either by the Constitution, Lopez v.
United States, 373 U. S. 427; United States v. White, 401 U.
S. 745, or by statute, Bridges v. Wixon, 326 U. S. 135,
distinguished, to adopt any particular procedures or rules before
engaging in consensual monitoring and recording. Pp. 7-9.
(b)
None of respondent's constitutional rights was violated either by the
actual recording or by the agency's violation of its own regulations.
That respondent's conversations were monitored without Justice
Department approval, whereas conversations of others similarly situated
would, assuming the IRS generally follows its own regulations, be
recorded only with such approval, does not amount to a denial of equal
protection. Nor does the IRS officials' construction of the situation as
an emergency, even if erroneous, raise any constitutional questions. And
this is not a case in which the Due Process Clause is implicated, since
respondent cannot reasonably contend that he relied on the regulations
or that their breach had any effect on his conduct. Finally, the
Administrative Procedure Act provides no grounds for judicial
enforcement of the violated regulations, since the remedy sought is not
invalidation of the agency action but rather judicial enforcement of the
regulations by means of the exclusionary rule. Pp. 9-13.
(c)
This Court declines to adopt any rigid exclusionary rule, such as is
urged by respondent, whereby all evidence obtained in violation of
regulations concerning electronic eavesdropping would be excluded. Nor
can this Court accept respondent's further argument that even without a
rigid rule of exclusion, his is a case in which evidence secured in
violation of agency regulations should be excluded under a more limited,
individualized approach, since, to the contrary, this case exemplifies
those situations in which evidence would not be excluded under a
case-by-case approach, it appearing that the agency action, though later
found to violate the regulations, nonetheless reflected a reasonable,
good-faith attempt to comply in a situation in which monitoring was
appropriate and would have received Justice Department approval if the
request had been received more promptly. Pp. 13-15.
[77-1
USTC ¶9226] 545 F. 2d 1182, reversed.
STEVENS,
J., delivered the opinion of the Court, in which BURGER, C. J., and
STEWART, WHITE, BLACKMUN, POWELL, and REHNQUIST, JJ., joined. MARSHALL,
J., filed a dissenting opinion, in which BRENNAN, J., joined.
The
Government argues that exclusion of probative evidence in a criminal
trial is an inappropriate sanction for violation of an Executive
Department's regulations. In this case, moreover, it argues that
suppression is especially inappropriate because the violation of the
regulation was neither deliberate nor prejudicial, and did not affect
any constitutional or statutory rights. We agree that suppression should
not have been ordered in this case, and therefore reverse the judgment
of the Court of Appeals.
I.
Neither the Constitution nor any Act of Congress requires that official
approval be secured before conversations are overheard or recorded by
Government agents with the consent of one of the conversants. 2
Such "consensual electronic surveillance" between taxpayers
and IRS agents is, however, prohibited by Internal Revenue Service
regulations unless appropriate prior authorization is obtained. 3
The
Internal Revenue Service Manual sets forth in detail the procedures to
be followed in obtaining such approvals. 4
For all types of requests the regulations require an explanation of the
reasons for the proposal, the type of equipment to be used, the names of
the persons involved, and the duration of the proposed monitoring.
Approval
by as many as three different levels of authority may be required,
depending on the kind of surveillance that is contemplated and the
circumstances of the request. Telephone conversations may be monitored
with the approval of an Assistant Regional Inspector of the Internal
Security Division. Such advance approval may be requested and given
verbally, although the authorization must subsequently be confirmed in
writing. The monitoring of non-telephone conversations requires approval
at the national as well as the regional level. In emergency situations,
the Director, or Acting Director, Internal Security Division, or the
Assistant Commissioner (Inspections) may authorize the recording. If
there is at least 48 hours in which to obtain approval, a signed request
must also be submitted to the Attorney General of the
United States
, or a designated Assistant Attorney General, by the Director or Acting
Director of the Internal Security Division.
II.
On March 14, 1974, Agent Yee met with respondent and his wife in
connection with an audit of their 1971 income tax returns. After Mrs.
Caceres left the meeting, respondent offered Yee a "personal
settlement" of $500 in exchange for a favorable resolution of the
audit. When he returned to the IRS office, Yee reported the offer to his
superiors and prepared an affidavit describing it. 5
The
record reflects no further discussion of the offer until January of
1975. It does indicate, however, that one telephone conversation between
Yee and respondent, on March 21, 1974, was recorded with authorization, 6
and that authority was also obtained to monitor face-to-face
conversations with respondent from time to time during the period
between March and September 1974. 7
Yee continued to work on the audit of respondent's records throughout
this period, but his meetings, until January 1975, were with Mrs.
Caceres and the
Caceres
' accountant. 8
On
January 27, 1975, Yee had a meeting with respondent that was not
recorded. According to Yee's affidavit, 9
the meeting proceeded in two stages. First, he discussed his
calculations with respondent, Mrs. Caceres, and their accountant. When
respondent and his wife asked for an additional week to check their
records, Yee told them it would be necessary to sign an extension
because the statute of limitations would otherwise expire soon.
Respondent stated that he would have to consult his attorney before
signing any extension, and would call Yee with his decision later that
day.
Yee
then left the office to return to his car. He was followed by
respondent, who revived the subject of a "personal
settlement." This time, respondent indicated that he had $500 that
he would give Yee immediately, with an additional $500 to be paid when
the matter was finally settled. Yee refused the offer, but at
respondent's insistence, eventually stated that he might consider it.
In
subsequent conversations initiated by Agent Yee, all of which were
monitored, 10
respondent indicated that he was not prepared for another meeting with
Yee. Finally, in a conversation on January 30 at 5:15 p.m., respondent
agreed to a meeting the following day at 2 p.m. At 8:15 a.m. on the
31st, the Regional Inspector in
San Francisco
telephoned the Director of Internal Security in
Washington
and obtained emergency approval for the use of electronic equipment to
monitor the meeting that afternoon. On the same day, a written request
for authority to monitor face-to-face conversations for a period of 30
days was initiated and, in due course, forwarded to
Washington
for submission to the Department of Justice.
At
the meeting on the 31st, respondent gave Yee $500 and promised to give
him an additional $500 when he received a notice from IRS showing his
deficiency at an amount upon which he and Yee had agreed. As in all his
future meetings with respondent, Yee wore a concealed radio transmitter
which allowed other agents to monitor and record their conversation.
Yee
next called respondent on February 5 and arranged a meeting for the next
day to review the audit agreement. Because the Department of Justice had
not yet acted on, or perhaps even received, the request for a 30-day
authorization, the regional director again requested and obtained
emergency approval to monitor the meeting with respondent. At the
February 6 meeting respondent renewed his promise to pay an additional
$500 in connection with the 1971 return, and also offered Yee another
$2,000 for help in settling his 1973 and 1974 returns.
On
February 11, a Deputy Assistant Attorney General approved the request
for authority to monitor Yee's conversations with respondent for 30
days. The approval was received in time to cover a meeting held that day
at which Yee was paid the additional $500. Because the 3-day period did
not commence until February 11, however, no approval from the Department
of Justice was ever obtained for the earlier monitorings of January 31st
and February 6th.
The
District Court and the Court of Appeals both held that the two earlier
meetings had not been monitored in accordance with IRS regulations,
since Justice Department approval had not been secured. The courts
recognized that such approval is not required, by the terms of the
regulations, in "emergency situations" when less than 48 hours
is available to secure authorization. They recognized, too, that in each
instance, less than 48 hours did exist between the time the IRS
initiated its request for monitoring approval and the time of the
scheduled meeting with Yee. But the courts concluded that neither
meeting fell within the emergency provision of the regulations because
the exigencies were the product of "government-created scheduling
problems." 11
The
Government does not challenge that conclusion. We are therefore
presented with the question whether the tape recordings, and the
testimony of the agents who monitored the January 31st and February 6th
Conversations, should be excluded because of the violation of the IRS
regulations.
III.
A court's duty to enforce an agency regulation is most evident when
compliance with the regulation is mandated by the Constitution or
federal law. In Bridges v. Wixon, 326 U. S. 135, 152-153, for
example, this Court held invalid a deportation ordered on the basis of
statements which did not comply with the Immigration Service's rules
requiring signatures and oaths, finding that the rules were designed
"to afford [the alien] due process of law" by providing
"safeguards against essentially unfair procedures." 12
In
this case, however, unlike Bridges v. Wixon, the agency was not
required by the Constitution or by statute to adopt any particular
procedures or rules before engaging in consensual monitoring and
recording. While Title III of the Omnibus Crime Control and Safe Streets
Act of 1968, 18 U. S. C. §2510 et seq., regulates electronic
surveillance conducted without the consent of either party to a
conversation, federal statutes impose no restrictions on recording a
conversation with the consent of one of the conversants.
Nor
does the Constitution protect the privacy of individuals in respondent's
position. In Lopez v. United States, 373
U. S.
427, 439, we held that the Fourth Amendment provided no protection to an
individual against the recording of his statements by the IRS agent to
whom he was speaking. In doing so, we repudiated any suggestion that the
defendant had a "constitutional right to rely on possible flaws in
the agent's memory, or to challenge the agent's credibility without
being beset by corroborating evidence that is not susceptible of
impeachment," concluding instead that "the risk that the
petitioner took in offering a bribe to [the IRS agent] fairly included
the risk that the offer would be accurately reported in court, whether
by faultless memory or mechanical recording." The same analysis was
applied in United States v. White, 401
U. S.
745, to consensual monitoring and recording by means of a transmitter
concealed on an informant's person, even though the defendant did not
know that he was speaking with a government agent:
"Concededly
a police agent who conceals his police connections may write down for
official use his conversations with a defendant and testify concerning
them, without a warrant authorizing his encounters with the defendant
and without otherwise violating the latter's Fourth Amendment rights. Hoffa
v.
United States
, 385
U. S.
, at 300-303. For constitutional purposes, no different result is
required if the agent instead of immediately reporting and transcribing
his conversations with defendant, either (1) simultaneously records them
with electronic equipment which he is carrying on his person, Lopez
v. United States, supra; (2) or carries radio equipment which
simultaneously transmits the conversations either to recording equipment
located elsewhere or to other agents monitoring the transmitting
frequency. On Lee v.
United States
, supra. If the conduct and revelations of an agent operating
without electronic equipment do not invade the defendant's
constitutionality [sic] justifiable expectations of privacy, neither
does a simultaneous recording of the same conversations made by the
agent or by others from transmissions received from the agent to whom
the defendant is talking and whose trustworthiness the defendant
necessarily risks."
United States
v. White, Opinion of WHITE, J., 401
U. S.
745, 751. 13
Our
decisions in Lopez and White demonstrate that the IRS was
not required by the Constitution to adopt these regulations. 14
It is equally clear that the violations of agency regulations disclosed
by this record do not raise any constitutional questions.
It
is true, of course, that respondent's conversations were monitored
without the approval of the Department of Justice, whereas the
conversations of others in a similar position would, assuming the IRS
generally follows its regulations, be recorded only with the Justice
Department approval. But this difference does not even arguably amount
to a denial of equal protection. No claim is, or reasonably could be,
made that if the IRS had more promptly addressed this request to the
Department of Justice, it would have been denied. As a result, any
inconsistency of which respondent might complain is purely one of form,
with no discernible effect in this case on the action taken by the
agency and its treatment of respondent.
Moreover,
the failure to secure Justice Department authorization, while conceded
here to be a violation of the IRS regulations, was attributable to the
fact that the IRS officials responsible for administration of the
relevant regulations, both in
San Francisco
and
Washington
, construed the situation as an emergency within the meaning of those
regulations. Their construction of their own regulations, even if
erroneous, was not obvious so. That kind of error by an executive agency
in interpreting its own regulations surely does not raise any
constitutional questions.
Nor
is this a case in which the Due Process Clause is implicated because an
individual has reasonably relied on agency regulations promulgated for
his guidance or benefit and has suffered substantially because of their
violation by the agency. 15
Respondent cannot reasonably contend that he relied on the regulation,
or that its breach had any effect on his conduct. He did not know that
his conversations with Yee were being recorded without proper authority.
He was, of course, prejudiced in the sense that he would be better off
if all monitoring had been postponed until after the Deputy Assistant
Attorney General's approval was obtained on February 11, 1975, but
precisely the same prejudice would have ensued if the approval had been
issued more promptly. For the record makes it perfectly clear that a
delay in processing the request, rather than any doubt about its
propriety or sufficiency, was the sole reason why advance authorization
was not obtained before February 11.
Finally,
the Administrative Procedure Act 16
provides no grounds for judicial enforcement of the regulation violated
in this case. The APA authorizes judicial review and invalidation of
agency action that is arbitrary, capricious, an abuse of discretion or
not in accordance with law, as well as action taken "without
observance of procedure required by law." 17
Agency violations of their own regulations, whether or not also in
violation of the Constitution, may well be inconsistent with the
standards of agency action which the APA directs the courts to enforce. 18
Indeed, some of our most important decisions holding agencies bound by
their regulations have been in cases originally brought under the APA. 19
But
this is not an APA case, and the remedy sought is not invalidation of
the agency action. Rather, we are dealing with a criminal prosecution in
which respondent seeks judicial enforcement of the agency regulations by
means of the exclusionary rule. That rule has primarily rested on the
judgment that the importance of deterring police conduct that may invade
the constitutional rights of individuals throughout the community
outweighs the importance of securing the conviction of the specific
defendant on trial. 20
In view of our conclusion that none of respondent's constitutional
rights has been violated here, either by the actual recording or by the
agency violation of its own regulations, our precedents enforcing the
exclusionary rule to deter constitutional violations provide no support
for the rule's application in this case. 21
IV.
Respondent argues that the regulations concerning electronic
eavesdropping, even though not required by the Constitution or by
statute, are of such importance in safeguarding the privacy of the
citizenry that a rigid exclusionary rule should be applied to all
evidence obtained in violation of any of their provisions. We do not
doubt the importance of these rules. Nevertheless, without pausing to
evaluate the Government's challenge to our power to do so, 22
we decline to adopt any rigid rule requiring federal courts to exclude
any evidence obtained as a result of a violation of these rules.
Regulations
governing the conduct of criminal investigations are generally
considered desirable, and may well provide more valuable protection to
the public at large than the deterrence flowing from the occasional
exclusion of items of evidence in criminal trials. 23
Although we do not suggest that a suppression order in this case would
cause the Internal Revenue Service to abandon or modify its electronic
surveillance regulations, we cannot ignore the possibility that a rigid
application of an exclusionary rule to every regulatory violation could
have a serious deterrent impact on the formulation of additional
standards to govern prosecutorial and police procedures. 24
Here, the Executive itself has provided for internal sanctions in cases
of knowing violations of the electronic surveillance regulations. 25
To go beyond that, and require exclusion in every case, would take away
from the Executive Department the primary responsibility for fashioning
the appropriate remedy for the violation of its regulations. But since
the content, and indeed the existence, of the regulations would remain
within the Executive's sole authority, the result might well be fewer
and less protective regulations. In the long run, it is far better to
have rules like those contained in the IRS Manual, and to tolerate
occasional erroneous administration of the kind displayed by this
record, than either to have no rules except those mandated by statute,
or to have them framed in a mere precatory form.
Nor
can we accept respondent's further argument that even without a rigid
rule of exclusion, his is a case in which evidence secured in violation
of the agency regulation should be excluded on the basis of a more
limited, individualized approach. Quite the contrary, this case
exemplifies those situations in which evidence would not be
excluded if a case-by-case approach were applied. The two conversations
at issue here were recorded with the approval of the IRS officials in
San Francisco
and
Washington
. In an emergency situation, which the agents thought was present, this
approval would have been sufficient. The agency action, while later
found to be in violation of the regulations, nonetheless reflected a
reasonable, good-faith attempt to comply in a situation in which no one
questions that monitoring was appropriate and would have certainly
received Justice Department authorization, had the request been received
more promptly. In these circumstances, there is simply no reason why a
court should exercise whatever discretion it may have to exclude
evidence obtained in violation of the regulations.
The
judgment of the Court of Appeals is
Reversed.
1
United States
v.
Caceres
[77-1 USTC ¶9226], 545 F. 2d 1182 (1976). The District Court
suppressed evidence relating to the third conversation as well on the
ground that the approval of a Deputy Assistant Attorney General
was not sufficient to comply with the regulations. The Court of Appeals
disagreed, concluding that the Attorney General's authority to approve
such monitoring could be delegated not only to Assistant Attorneys
General, as provided specifically in the regulation, but also to their
deputies. That conclusion is not at issue here.
2
See United States v. White, 401
U. S.
745, 752 (plurality opinion); Lopez v. United States, 373
U. S.
427; 18
U. S.
C. §2511(2)(c); pp. 3-4, infra.
3
The IRS regulations were drafted to conform to the requirements of the
Attorney General's October 16, 1972 "Memorandum to the Heads of
Executive Departments and Agencies." The memorandum mandates
Justice Department approval for all consensual monitoring of
non-telephone conversations by federal departments and agencies. The
only exceptions are if less than 48 hours is available to secure
approval or if exigent circumstances preclude requests for advance
authorization from the Justice Department; in such cases, monitoring may
be instituted under the authorization of the head of the department or
agency, or other officials designated by him.
4
Paragraph 652.22 of the Internal Revenue Service Manual (in effect
January 1975) provides in pertinent part:
"(1)
The monitoring of non-telephone conversations with the consent of one
party requires the advance authorization of the Attorney General or any
designated Assistant Attorney General. Requests for such authority may
be signed by the Director, Internal Security Division, or, in his/her
absence, the Acting Director. This authority cannot be redelegated.
These same officials may authorize temporary emergency monitoring when
exigent circumstances preclude requesting the authorization of the
Attorney General in advance. If the Director, Internal Security
Division, cannot be reached, the Assistant Commissioner (Inspection) may
grant emergency approval. This authority cannot be redelegated.
"(2)
Written approval of the Attorney General must be requested 48 hours
prior to the use of mechanical, electronic or other devices to overhear,
transmit or record a non-telephone private conversation with the
permission of one party to the conversation. . . . Any requests being
telefaxed into the National Office should be submitted four days prior
to the anticipated equipment use.
"(3)
[A request] must be signed and submitted by the Regional Inspector or
Chief, Investigations Branch, to the Director, Internal Security
Division. Such requests will contain [reason for such proposed use; type
of equipment to be used; names of persons involved; proposed location of
equipment; duration of proposed use (limited to 30 days from proposed
beginning date); and manner or method of installation] . . ..
.
. .
"(6)
When emergency situations occur, the Director, or Acting Director,
Internal Security Division, or the Assistant Commissioner (Inspection)
will be contacted to grant emergency approval to monitor. This emergency
approval authority cannot be redelegated. . . . Emergency authorizations
pursuant to this exception will not be given where the requesting
official has in excess of 48 hours to obtain written advance approval
from the Attorney General.
"(7)
If, at the time the emergency approval request is submitted, it is
desired that approval for use of electronic equipment be given for an
extended period, this should be indicated on the [appropriate form]. The
Director, in addition to reporting his authorization for emergency use
to the Attorney General, will also request approval for the Use of
Electronic Equipment for the duration of that period specified by the
requestor."
5
App. 20, 23-24, 46.
6
App. 25-27, 46.
7
Requests for authorization to use electronic equipment to monitor
nontelephone conversations are made on a form (No. 5177) that requires
disclosure of the dates of previous authorizations. The form dated
January 31, 1975, App. 63, is termed an extension, and reports prior
authorizations dated 3-25-74, 4-24-74, 5-24-74, 6-27-74, 7-23-74, and
8-29-74. Under the regulations, a single authorization may cover a
period of up to 30 days; the intervals between the dates of prior
authorizations in this case are consistent with successive 30-day
authorizations, although this has not been established by any evidence
called to our attention.
8
Yee had one follow-up conversation with respondent later in March, which
was not monitored. From that point until January 1975, he had no further
contract with respondent. Pet. App. 16a (opinion and order of the
District Court in United States v. Caceres); App. 21-22.
9
App. 65-67.
10
In the District Court, respondent moved to suppress evidence relating to
these telephone conversations on the grounds that the monitoring had not
been properly authorized. The District Court rejected that challenge,
concluding that the applicable IRS regulations had been followed with
respect to these conversations. Pet. App. 16a-17a. That ruling is not at
issue here.
11
United States v.
Caceres
, supra, 545 F. 2d, at 1187. See also Pet. App. 20a (opinion of the
District Court) ("the only 'emergency' was created wholly by the
IRS").
12
See also Bilokumsky v. Tod, 263
U. S.
149, 155 (Court assumed that "one under investigation with a view
to deportation is legally entitled to insist upon the observance of
rules promulgated by the Secretary pursuant to law.").
13
Mr. Justice White further stated:
"Nor
should we be too ready to erect constitutional barriers to relevant and
probative evidence which is also accurate and reliable. An electronic
recording will many times produce a more reliable rendition of what a
defendant has said than will the unaided memory of a police agent. It
may also be that with the recording in existence it is less likely that
the informant will change his mind, less chance that threat or injury
will suppress unfavorable evidence and less chance that
cross-examination will confound the testimony. Considerations like these
obviously do not favor the defendant, but we are not prepared to hold
that a defendant who has no constitutional right to exclude the
informer's unaided testimony nevertheless has a Fourth Amendment
privilege against a more accurate version of the events in
question."
Id.
, at 753.
14
It does not necessarily follow, however, as a matter of either logic or
law, that the agency had no duty to obey them. "Where the rights of
individuals are affected, it is incumbent upon agencies to follow their
own procedures. This is so even where the internal procedures are
possibly more rigorous than otherwise would be required." Morton
v. Ruiz, 415
U. S.
199, 235. See, e.g., United States ex rel. Accardi v. Shaughnessy,
347 U. S. 260 (holding habeas corpus relief proper where government
regulations "with the force and effect of law" governing the
procedure to be followed in processing and passing upon an alien's
application for suspension of deportation were not followed); Service
v. Dulles, 354 U. S. 363 (invalidating Secretary of State's
dismissal of an employee where regulations requiring approval of the
Deputy Undersecretary and consultation of full record were not
satisfied); Vitarelli v. Seaton, 359 U. S. 535 (invalidating
dismissal of Interior Department employee where regulations governing
hearing procedures for national security dismissals were not followed).
See also Yellin v. United States, 374
U. S.
109 (reversing contempt conviction where congressional committee had not
complied with its rules requiring it to consider a witness' request to
be heard in executive session).
15
In Raley v. Ohio, 360 U. S. 423, 437-438, we held that due
process precluded the conviction of individual for refusing to answer
questions asked by a state investigating commission which itself had
erroneously provided assurances, express or implied, that the defendants
had a privilege under state law to refuse to answer. And in Cox v.
Louisiana, 379
U. S.
559, the Court held that an individual could not be punished for
demonstrating "near" a courthouse where the highest police
officials of the city had advised the demonstrators that they could meet
where they did without violating the statutory prescription against
demonstrations "near" the courthouse. Cf. Arizona Grocery
Co. v. Atchison, T. & S. F. Ry., 284 U. S. 370 (holding invalid
ICC retroactive application of new rate); CBS v. United States,
316 U. S. 407, 422 (agency regulations on which individuals are
"entitled to rely" bind agency and are therefore ripe for
judicial review). The underlying rationale of the foregoing cases is
plainly inapplicable here.
16
The Act was originally passed in 1946, 60 Stat. 237, and is currently
codified at 5
U. S.
C. §551 et seq. and §701 et seq. (1976).
17
5 U. S. C. §706 (1976).
18
Cf. Board of Curators of University of Missouri v. Horowitz, --
U. S.
--, -- n. 8; Vitarelli v. Seaton, supra, at 547 (Frankfurter, J.,
concurring and dissenting) ("This judicially evolved rule of
administrative law is now firmly established and, if I may add, rightly
so. He that takes the procedural sword shall perish with that
sword.").
Even
as a matter of administrative law, however, it seems clear that agencies
are not required, at the risk of invalidation of their action, to follow
all of their rules, even those properly classified as
"internal." In American Farm Line v. Black Ball Freight
Service, 397
U. S.
532, 538, for example, ICC rules requiring certain information to be
included in applications had not been followed. This Court rejected the
argument that the agency action was therefore invalid, concluding that
the Commission was "entitled to a measure of discretion in
administering its own procedural rules in such a manner as it deems
necessary to resolve quickly and correctly urgent transportation
problems."
19
See Service v. Dulles, supra, App. 40; Vitarelli v. Seaton,
supra, App. 7. The complaints in both of these cases invoked 5
U. S.
C. §1009, the then-applicable APA judicial review provision.
20
See Linkletter v.
Walker
, 381
U. S.
618, 633, 636-637; Mapp v.
Ohio
, 367
U. S.
643, 656; Elkins v.
United States
, 364
U. S.
206, 217.
21
Since no statute was violated by the recording of respondent's
conversations, this Court's decision in Miller v. United States,
357
U. S.
301, is likewise inapplicable.
22
The Government argues that Rule 402 of the Federal Rules of Evidence and
18 U. S. C. §3501 prohibited the Court of Appeals from exercising
whatever supervisory power it might otherwise have to suppress evidence
of respondent's statements to Yee. Brief of Petitioner, at 42.
23
See Amsterdam, Perspective on the Fourth Amendment, 58 Minn. L. Rev.
349, 416-428 (1974); McGowan, Rule-Making and the Police, 70 Mich. L.
Rev. 659 (1972).
24
See F. Cooper, Administrative Agencies and the Courts 289-290 (1951)
("too rigid an application of the doctrine prohibiting disregard of
procedural rules would encourage the tendency of some agencies to
proceed almost without rules. The doctrine should not be pressed so far
as to induce agencies to adopt the protective device of promulgating
procedural rules so vague in nature as to make it impossible to show a
violation of the rules.").
25
See IRS Manual ¶652.1(3) (in effect Jan. 1975) ("Any employee who
knowingly violates or in any way knowingly countenances violation of
this policy will be subject to disciplinary action and may be removed
from the Service.").
Dissenting
Opinion
MR.
JUSTICE MARSHALL, with whom MR. JUSTICE BRENNAN joins, dissenting:
The
Court today holds that evidence obtained in patent violation of agency
procedures is admissible in a criminal prosecution. In so ruling, the
majority determines both that the Internal Revenue Service's failure to
comply with its own mandatory regulations implicates no due process
interest, and that the exclusionary rule is an inappropriate sanction
for such noncompliance. Because I can subscribe to neither proposition,
and because the Court's decision must inevitably erode respect for law
among those charged with its administration, I respectfully dissent.
I.
In a long line of cases beginning with Bridges v. Wixon, 326 U.
S. 135, 152-153 (1945), this Court has held that "one under
investigation is legally entitled to insist upon the observance of
rules" promulgated by an executive or legislative body for his
protection. See United States v. Nixon, 418 U. S. 683, 695-696
(1974); Morton v. Ruiz, 415 U. S. 199, 235 (1974); Yellin v.
United States, 374 U. S. 109 (1963); Vitarelli v. Seaton, 359
U. S. 535 (1959); Service v. Dulles, 354 U. S. 363 (1957); United
States ex rel. Accardi v. Shaughnessy, 347 U. S. 260 (1954).
Underlying these decisions is a judgment, central to our concept of due
process, that government officials no less than private citizens are
bound by rules of law. 1
Where individual interests are implicated, the Due Process Clause
requires that an executive agency adhere to the standards by which it
professes its action to be judged. See Vitarelli v. Seaton, supra,
at 547 (Frankfurter, J., concurring in part and dissenting in part).
Despite
these well-established precedents and the IRS's conceded failure to
abide by mandatory investigative regulations, the Court finds no due
process violation on the facts of this case. In reaching its conclusion,
the majority relies on the absence of constitutional or statutory
underpinnings for the regulations and on respondent's inability to
establish prejudice from their circumvention. This approach draws
support neither from our prior holdings nor from the principles on which
the Due Process Clause is founded.
This
Court has consistently demanded governmental compliance with regulations
designed to safeguard individual interests even when the rules were not
mandated by the constitution or federal statute. In Accardi v.
Shaughnessy, supra, the Court granted a writ of habeas corpus where
the Attorney General had disregarded applicable procedures for the Board
of Immigration Appeals' suspension of deportation orders. Although the
Attorney General had final power to deport the petitioner and had no
statutory or constitutional obligation to provide for intermediate
action by the Board, this Court held that while suspension procedures
were in effect, "the Attorney General denies himself the right to
sidestep the Board or dictate its decision." 347
U. S.
, at 267. On similar reasoning, the Court in Service v. Dulles,
354
U. S.
363, vacated a foreign service officer's national security discharge.
While acknowledging that the Secretary of State was not obligated to
adopt "rigorous substantive and procedural safeguards," the
Court nonetheless held that "having done so, he could not, so long
as the regulations remained unchanged, proceed without regard to
them."
Id.
, at 388. Similarly, in Vitarelli v. Seaton, 359
U. S.
535, we demanded adherence to Department of Interior employee discharge
procedures that were "generous beyond the requirements that bind
[the] agency."
Id.
, at 547 (Frankfurter, J., concurring in part and dissenting in
part). And most recently, in Morton v. Ruiz, 415
U. S.
199, we declined to permit the Bureau of Indian Affairs to depart from
internal rules for establishing assistance eligibility requirements
although the procedures were "more rigorous than otherwise would be
required."
Id.
, at 235. See also United States v. Nixon, 418
U. S.
683; Yellin v. United States, 374
U. S.
109; Bridges v. Wixon, 326
U. S.
135. 2
Thus, where internal regulations do not merely facilitate internal
agency housekeeping, cf. American Farm Nine v. Black Ball Freight
Service, 397 U. S. 532, 538 (1970), 3
but rather afford significant procedural protections, we have insisted
on compliance.
That
the IRS regulations at issue here extend such protections is beyond
dispute. As this Court recognized in Berger v.
New York
, 388
U. S.
41, 63 (1967), "[f]ew threats to liberty exist which are greater
than that posed by eavesdropping devices." An agency's self-imposed
constraints on the use of these devices, no less than limitations
mandated by statute or by the Fourth Amendment, operate to preserve a
"measure of privacy and a sense of personal security" for
individuals potentially subject to surveillance. See United States v.
White, 401
U. S.
745, 790 (1971) (Harlan, J., dissenting).
Moreover,
the history of the IRS authorization requirements clearly establishes
that they were intended to protect privacy interests. The regulations
were an outgrowth of investigations in 1965 and 1966 by a Subcommittee
of the Senate Judiciary Committee concerning surveillance techniques of
federal agencies. Testimony at Subcommittee hearings revealed that IRS
agents had made extensive unauthorized use of a wide variety of
eavesdropping techniques. Hearings on S. Res. 39 before the Subcommittee
on Administrative Practice and Procedure of the Senate Committee on the
Judiciary, 89th Cong., 1st and 2d Sess., 1206-1208, 1762-1763,
1774-1777, 1828-1830, 1923-1935, 1999-2003 (1965-1966) (hereinafter S.
Res. 39 Hearings). 4
Among the agency practices that the Subcommittee found offensive was the
monitoring of certain conversations between taxpayers and IRS agents
wired for sound. See, e.g., id., at 2017, 2078. Of more general
concern was the agency's total failure to detect or disapprove
violations of its own internal rules. Evidence before the Subcommittee
indicated that supervisory personnel had condoned the use of illegal
wiretaps, see id., 1517, 1546-1548, while upper level officials
had remained ignorant of widespread departures from prescribed policies.
See id., 1118, 1124-1128, 2005.
In
response to that congressional investigation, the IRS convened a special
Board of Inquiry to review agency surveillance practices and to
recommend new procedures. Both the scope of the new regulations and the
IRS Commissioner's representations to the Senate Subcommittee
demonstrate that the agency was concerned not only with preventing
"violation[s] of a person's constitutional or statutory
rights," but also with "carefully control[ling]" certain
investigatory techniques which, "although legal, nevertheless tend
to be offensive to the public conscience."
Id.
, at 1122 (testimony of Commissioner Cohen). The Commissioner
further assured the Subcommittee that detailed regulations adopted by
the agency in 1967 would guarantee such control.
Id.
, at 1122-1126; Stand. Fed. Tax Rep. (CCH) ¶6711 at 71,756.
Those regulations, recodified without substantial modification, are the
basis of the instant proceedings. Compare Internal Revenue Service
Manual ¶652.22 (Jan. 1975), with Internal Revenue Service Manual
Supplement, Wiretapping and Electronic Eavesdropping, No. 93G-70 (July
10, 1976).
Against
this historical backdrop, it is inarguable that these IRS regulations
affect substantial individual interests. Indeed the Court does not
suggest otherwise. Rather, it places weight on respondent's failure to
establish prejudice from agency illegality. Because
Caceres
cannot demonstrate that he "reasonably relied" on the
regulations, ante, at 11, or that the failure to obtain proper
authorization had "any discernible effect" on the IRS's
decision to monitor his conversations with Agent Yee, ante, at
10, the Court concludes that the agency's action implicates no due
process interest. Such an approach is fundamentally misconceived. By
assessing respondent's claim in terms of prejudice, the Court disregards
not only its prior holdings, but also the principles of governmental
regularity on which they rest.
To
make subjective reliance controlling in due process analysis deflects
inquiry from the relevant constitutional issue, the legitimacy of
government conduct. If an individual is entitled only to the process
that he subjectively believes is due, an agency could disregard its
investigative rules with impunity provided it did so with consistency.
For no person could "reasonably rely," ante, at 11, on
rules that were generally ignored. And to the extent that the majority
views reliance as critical in an investigative context, it effectively
reduces mandatory regulations to hortatory policies. Presumably the only
persons with occasion to discover breaches of investigative rules will
be those facing criminal prosecution. Such individuals will rarely, if
ever, be able to establish that they planned their conduct with internal
agency regulations in view. 5
Moreover,
the Court's focus on subjective reliance is inconsistent with our prior
decisions enforcing due process guarantees. In Bridges v. Wixon,
326
U. S.
135, we vacated a deportation order because the Immigration and
Naturalization Service had failed to observe regulations requiring that
witness statements be sworn and made under oath, even though the
petitioner's statements were not involved and he had not invoked the
regulations at his deportation hearing. So too, in Yellin v. United
States, 374 U. S. 109, this Court overturned the defendant's
contempt conviction for refusal to testify before Congress where the
House Committee on Un-American Activities had ignored rules requiring it
to consider formally the injuries to a witness' reputation that might
attend public hearings. Yet as the dissent in Yellin pointed out,
the defendant had predicated his refusal to testify on First Amendment
grounds, not on the public nature of the proceedings, and had in
"no way indicated that an executive session would have made any
difference in his willingness to answer questions." 374
U. S.
, at 141 (WHITE, J., dissenting).
Nor
has this Court required, as it does today, that procedural irregularity
affect the outcome of the governmental action at issue. For example,
there was no suggestion in Yellin that, had the Committee
formally considered the injury to the defendant's reputation, it would
have convened an executive session. Indeed, the Committee Chairman had
testified that this was precisely the kind of case where a public
hearing was appropriate. 374
U. S.
, at 117-118, n. 6. Nonetheless, the Court, even as it expressed doubt
that procedural compliance would have made a difference, insisted that
the defendant was entitled to no less.
Id.
, at 121. 6
Similarly,
the petitioner in Vitarelli v. Seaton, 359
U. S.
535, was in no meaningful sense prejudiced by the Department of
Interior's departure from regulations governing employee discharges for
national security reasons. After the petitioner filed suit, he received
a revised notice of dismissal which complied with all applicable
regulations. Despite the petitioner's inability to demonstrate that
adherence to agency regulations would have affected the decision to
discharge him, this Court ordered reinstatement.
Implicit
in these decisions, 7
and in the Due Process Clause itself, is the premise that regulations
bind with equal force whether or not they are outcome-determinative. As
its very terms make manifest, the Due Process Clause is first and
foremost a guarantor of process. It embodies a commitment to
procedural regularity independent of result. To focus on the conduct of
individual defendants rather than on that of the Government necessarily
qualifies this commitment. If prejudice becomes critical in measuring
due process obligations, individual officials may simply dispense with
whatever procedures are unlikely to prove dispositive in a given case.
Thus, the majority's analysis invites the very kind of capricious and
unfettered decisionmaking that the Due Process Clause in general and
these regulations in particular were designed to prevent.
Any
fair application of our prior holdings mandates a different result. When
the Government engages to protect individual interests, it may not
constitutionally abrogate that commitment at its own convenience. I
would hold the IRS to its surveillance authorization procedures
regardless of whether a litigant can establish prejudice from their
circumvention.
II.
Having found a due process violation, I would require that the fruits of
that illegality be suppressed in respondent's criminal prosecution. Mapp
v.
Ohio
, 367
U. S.
643 (1961). Accordingly, under my analysis, it would be unnecessary to
consider the scope of our supervisory powers, discussed in Part IV of
the Court's opinion. Because, however, the Court addresses that issue, I
must register may profound disagreement with both its reasoning and
ultimate conclusion.
In
determining that the exclusionary rule is an unwarranted sanction for
the agency misconduct here, the Court attaches great significance to the
agents' ostensible "good faith" in construing their own
regulations to permit "emergency" surveillance of respondent
in January and February 1975. Ante, at 15. The record does not
admit of such a charitable characterization. IRS Agent Yee alleged that
respondent first attempted to bribe him in March 1974. The IRS recorded
a conversation between
Caceres
and Yee that same month. No further contact with
Caceres
concerning the bribe occurred until January 1975, and no reasons have
been offered for Agent Yee's failure to initiate surveillance during
that 10-month hiatus. Nor does the record reflect any justification for
the agency's failure to obtain approval for monitoring between the
January 27 and January 31 meetings, to schedule meetings so as to permit
timely authorization requests, or to process the January 31
authorization request expeditiously. In positing that the agents had a
colorable basis for believing that the January 31 and February 6
meetings constituted "emergency situation[s]," see ante,
at 15, the Court simply ignores the findings below that Agent Yee had
absolute control over the scheduling of those conversations, and that
any exigency was solely of the Government's own making. 8
This is plainly not an instance in which law enforcement officers have
failed to grasp the nuances of constitutional doctrine in an area where
the Court itself is sharply divided. Cf. Bivens v. Six Unknown Named
Agents, 403
U. S.
388, 417 (1971) (BURGER, C. J., dissenting); Stone v. Powell, 428
U. S.
465, 538-540 (1976) (WHITE, J., dissenting). Rather, the record
demonstrates a breach of unambiguous and unquestionably applicable
procedures.
Moreover,
even assuming the good faith which the agency has failed to demonstrate,
that consideration should not figure in our present analysis.
Restricting application of the exclusionary rule to instances of bad
faith would invite law enforcement officials to gamble that courts would
grant absolution for all but the most egregious conduct. Since judges do
not lightly cast aspersions on the motives of government officials, the
suppression doctrine would be relegated to those rare circumstances
where a litigant can prove insolent or calculated indifference to agency
regulations. As we have noted in the context of Fourth Amendment
violations, "[i]f subjective good faith alone were the test, the
people would be 'secure . . .' only in the discretion of the
police." Beck v.
Ohio
, 379
U. S.
89, 97 (1964). Just as intent has not been determinative in Fourth
Amendment cases, see, e.g., Mincey v. Arizona, -- U. S. --
(1978); United States v. Brignoni-Ponce, 422 U. S. 873 (1975); Almeida-Sanchez
v. United States, 413 U. S. 266 (1973), it should not be material
here.
The
Court next suggests that suppression is unnecessary in this case because
"the Executive itself has provided for internal sanctions in cases
of knowing violations of the electronic surveillance regulations." Ante,
at 14 (footnote omitted). Significantly, however, the Court does not
assert that the sanctions which exist in theory are effectively employed
in practice. While "[s]elf-scrutiny is a lofty ideal," Wolf
v.
Colorado
, 338
U. S.
25, 42 (1949) (Murphy, J., dissenting), nothing in the record before us
indicates why IRS disciplinary procedures should enjoy the Court's
special confidence. Quite the contrary, the circumstances surrounding
the conception and continued operation of IRS authorization requirements
illustrate a persistent indifference toward enforcement. 9
And abdication by the courts is unlikely to increase the agency's
vigilance in disciplining or even discovering violations. To remove a
defendant's incentive for exposing evasions or disingenuous
constructions of applicable rules will inevitably diminish the agency's
interest in self-monitoring. 10
Finally,
the Court declines to order suppression because "a rigid
application of an exclusionary rule to every regulatory violation could
have a serious deterrent impact on the formulation of additional
standards to govern prosecutorial and police procedures." Ante,
at 14. No support is offered for that speculation. In fact, all
available evidence is to the contrary. Since 1967, the IRS has retained
regulations requiring agents to give Miranda warnings in
non-custodial settings despite circuit court decisions suppressing
statements taken in violation of those rules. United States v.
Sourapas [75-1 USTC ¶9379], 515 F. 2d 295, 298 (CA 9 1975); United
States v. Leahey [70-2 USTC ¶9636], 434 F. 2d 7 (CA 1 1970); United
States v. Heffner [70-1 USTC ¶9152], 420 F. 2d 809 (CA 4 1969).
Significantly, the Court points to no instance in which an agency has
withdrawn the procedural protections made meaningful by decisions such
as Bridges v. Wixon, 326 U. S. 135, Accardi v. Shaugnessy,
347 U. S. 260, Service v. Dulles, 354 U. S. 363, and Vitarelli
v. Seaton, 359 U. S. 535.
Even
if the majority's concern about inhibiting agency self-regulation were
more solidly grounded, it could not justify the result in this case.
Under today's decision, regulations largely unenforced by the IRS will
be unenforceable by the courts. 11
I cannot share the Court's apparent conviction that much would be lost
if the agency were to withdraw such rules in protest against judicial
enforcement. Presumably Congress, which has been repeatedly dissuaded by
the IRS from legislating in the area, 12
would then step into the breach. In the event of congressional action,
this Court could not so cavalierly tolerate unauthorized electronic
surveillance. See
United States
v. Miller, 357
U. S.
301 (1958). 13
Particularly where, as here, agency regulations were designed to stand
in the place of legislative action, we should not hesitate to give them
similar force and effect.
In
my judgment, the Court has utterly failed to demonstrate why the
exclusionary rule is inappropriate under the circumstances presented
here. Equally disturbing is the majority's refusal even to acknowledge
countervailing considerations. Quite apart from specific deterrence,
there ae significant values served by a rule that excludes evidence
secured by lawless enforcement of the law. Denying an agency the fruits
of noncompliance gives credibility to the due process and privacy
interests implicated by its conduct. 14
Also, and perhaps more significantly, exclusion reaffirms the
judiciary's commitment to those values. Preservation of judicial
integrity demands that unlawful intrusions on privacy should "find
no sanction in the judgment of the courts." Weeks v.
United States
, 232
U. S.
383, 392 (1914). See Elkins v.
United States
, 364
U. S.
206, 222-223 (1960). Today's holding necessarily confers upon the
judiciary a "taint of partnership in official lawlessness." United
States v. Calandra, 414
U. S.
338, 357 (1974) (BRENNAN, J., dissenting). I decline to participate in
that venture.
I
would affirm the judgment of the court below.
1
Although not always expressly predicated on the Due Process Clause,
these decisions are explicable in no other terms. The complaints in only
two of the cases, Vitarelli v. Seaton, 359
U. S.
535 (1959), and Service v. Dulles, 354
U. S.
363 (1957), invoked the Administrative Procedure Act, see ante,
at 12 n. 19. In neither of these cases was the Act even mentioned in the
Court's opinions. Rather, Vitarelli followed Service, see
359 U. S., at 539-540, which in turn had relied on United States ex
rel. Accardi v. Shaughnessy, 347 U. S. 260 (1954). See 354
U. S.
, at 373, 386-387. Both Accardi and its predecessor, Bridges
v. Wixon, 326
U. S.
135 (1945), were habeas corpus cases. And Yellin v. United States,
374
U. S.
109 (1963), which involved criminal contempt sanctions, followed Accardi.
Thus, it is clear that this line of precedent cannot be dismissed as
federal administrative law. Cf. Board of Curators v. Horowitz, --
U. S.
-- n. 8 (1978) (dictum). To the contrary, these decisions have been
uniformly, and I believe properly, interpreted as resting on due process
foundations. See United States v. Sourapas [75-1 USTC ¶9379],
515 F. 2d 295, 298 (CA9 1975); Konn v. Laird, 460 F. 2d 1319 (CA7
1972); Antonuk v. United States, 445 F. 2d 592, 595 (CA6 1971); Hollingsworth
v. Balcom, 441 F. 2d 419, 421 (CA6 1971); United States v. Leahey
[70-1 USTC ¶9636], 434 F. 2d 7, 9 (CA-1 1979); United States v.
Lloyd, 431 F. 2d 160, 171 (CA9 1970); Government of Canal Zone v.
Brooks, 427 F. 2d 346, 347 (CA-5 1970); United States v. Heffner
[70-1 USTC ¶9152], 420 F. 2d 809, 811-812 (CA4 1969); cf. Shatten v.
United States, 419 F. 2d 187, 191 (CA6 1969). See generally Berger,
Do Regulations Really Bind Regulators, 68 Nw. U. Law Rev. 137 (1967).
2
At issue in Bridges, 326
U. S.
135, were regulations requiring that witness statements be made under
oath and signed in order to be admissible in deportation hearings. As
the Court correctly points out, ante, at 7, those rules were
designed as safeguards "against essentially unfair
procedures." 326
U. S.
, at 153. However, there is no basis in precedent or in the language of Bridges
itself for the majority's further intimation that the Due Process Clause
"mandated" such protective regulations. Ante, at 7.
3
American Farm Lines v. Black Ball Freight Service, 397
U. S.
532 (1970), involved rules promulgated to assist an agency in compiling
information for internal decisionmaking. As the
American Farm Court
noted in distinguishing Vitarelli v. Seaton, 359
U. S.
535, these rules were not "intended primarily to confer important
procedural benefits upon individuals in the face of otherwise unfettered
discretion. . . ." 397
U. S.
, at 538-539.
4
As summarized by Senator Morse: "The record reveals that illegal
wiretapping by the Internal Revenue Service is not an occasional action
of an overzealous agent but is the logical and reasonable consequence of
a well-defined program. . . ." Hearings on S. Res. 928 before the
Subcommittee on Administrative Practice and Procedure of the Senate
Committee on the Judiciary, 90th Cong., 1st Sess., 29 (1967)
(hereinafter S. 928 Hearings).
5
Just as we do not expect defendants in Fourth Amendment cases to
demonstrate that but for the warrant requirement they would have acted
otherwise, we should not demand that those in respondent's position
establish that they predicated their action on the existence of internal
regulations. In both contexts, the rationale for mandating government
compliance with procedural safeguards is the same: to prevent law
enforcement officials from exercising unchecked discretion where
substantial privacy interests are involved. And in neither case is a
requirement of subjective reliance consistent with that objective.
6
The Yellin Court, 374
U. S.
, at 121, was equally dubious that agency adherence to its regulations
would have affected the Attorney General's ultimate decision to deport
in Accardi v. Shaughnessy. 347
U. S.
, at 267.
7
In part, these decisions also reflect a prudent reluctance to speculate
how another branch of government would have acted under different
circumstances. Because the Court has so little apparent difficulty in
hypothesizing that compliance would not have mattered in this case, see ante,
at 11, 15, it has adopted an approach that may well prove problematic in
the next. Not all circumstances affecting agency decisions will so
readily lend themselves to counterfactual analysis.
8
See United States v.
Caceres
[77-1 USTC ¶9226], 545 F. 2d 1182, 1187 (CA-9 1976). For example,
when Agent Yee proposed a meeting for the following day,
Caceres
responded, "I'll arrange my schedule to your convenience."
App. 15.
9
With respect to IRS officials' enthusiasm for self-discipline before and
during the Senate investigation, Senator Long stated, "generally
speaking, they have found wrongdoing only when the Subcommittee has
pointed directly and explicitly to it." S. Res. 39 Hearings, 1118.
Since
that investigation, the agency's performance has remained less than
exemplary. In 1974, an internal audit of electronic surveillance within
the IRS Intelligence Division revealed that 18 agents had engaged in 35
to 40 "instances" of improper monitoring within the previous
year, with an "instance" defined to include as many as 15
different phone calls. Oversight Hearings into the Operations of the IRS
before a Subcommittee of the Committee on Government Operations, 94th
Cong., 1st Sess., 426-431, 450 (1975) (hereinafter Oversight Hearings).
None of these employees were dismissed or demoted. In only one case did
violations even actuate suspension. There, an employee who monitored his
home telephone for "personal reasons completely unrelated to his
official duties" was suspended for five days.
Id.
, at 451; Reply Brief for
United States
17, and n. 9. Four other employees received written reprimands. Eight
received oral admonitions, three of which were confirmed in writing and
none of which became part of the agents' personnel folders. Oversight
Hearings, at 451, 453. The Service took no action in five cases.
Id.
, at 451.
Such
nominal sanctions hardly justify the Court's faith in agency
self-restraint, particularly given the Government's failure to identify
a single instance of internal disciplinary action by the IRS since 1974.
See Reply Brief for the
United States
16-17.
10
Professor Amsterdam, whom the majority cites for the proposition that
regulations governing investigatory conduct "may provide more
valuable protection to the public at large than the deterrence flowing
from the occasional exclusion of evidence," ante, at 13, and
n. 23, submits in the same article that federal review of compliance
with such regulations through the exclusionary rule "remains
essential."
Amsterdam
, Perspectives on the Fourth Amendment, 58
Minn.
L. Rev. 349, 429 (1974). As he maintains, the suppression doctrine
provides the "necessary occasions" for review of
administrative problems and circumventions, and affords the "only
available incentive" for law enforcement officials to make internal
rules clear and incorporate them in personnel training. Ibid.
11
See n. 9, supra. Significantly, the Court does not suggest APA
litigation as a plausible alternative means of enforcing investigative
regulations. Unless a criminal prosecution is initiated, an individual
is unlikely to discover that he was subject to unauthorized
surveillance. And it strains credulity to suppose that an individual
under criminal indictment would assume the expense, not to mention the
risks of antagonizing government officials, that would attend APA
proceedings. Cf. Amsterdam, The Supreme Court and the Rights of Suspects
in Criminal Cases, 45 N. Y. U. L. Rev. 785, 787 (1970).
12
See S. Res. 39 Hearings 1122-1124, 1144 (testimony of Commissioner
Cohen); Oversight Hearings 401 (testimony of Commissioner Alexander); id.,
at 448 (testimony of Assistant Commissioner for Compliance Wolfe).
13
In Miller, 357 U. S. 301 (1958), the Court suppressed evidence
obtained after District of Columbia police forcibly entered an apartment
without announcing their authority and purpose as required by a federal
statute made applicable in the District by a D. C. Circuit Court rule.
14
See Oaks, Studying the Exclusionary Rule in Search and Seizure, 37 U.
Chicago L. Rev. 665, 756 (1970) (by demonstrating that society attaches
serious consequences to unlawful infringement of privacy interests,
"the exclusionary rule invokes and magnifies the moral and
educative force of the law. Over the long term, this may integrate some
fourth amendment ideals into the value system or norms of behavior of
law enforcement agencies.")