Willful Failure to File Return, Supply Information, or Pay Tax:
United States of America
v. Fred P. Fiore
S. District Court, West. Dist. Pa., Criminal No. 66-28, 258 FSupp 435,
[1954 Code Sec. 7206(1)]
False statements: Criminal tax investigation: Constitutional rights:
Motion to suppress evidence: Failure to warn of right to counsel.--The
taxpayer's motion to suppress evidence obtained voluntarily from him and
his accountant at two separate interviews by Internal Revenue Service
Agents was denied since Internal Revenue Service Agents conducting a
criminal tax investigation are under no duty to apprise a taxpayer of
his constitutional right to counsel. Furthermore, the taxpayer's right
against self-incrimination was not violated since he asserted no right
at the interview and his declarations to the agents were voluntary.
A. Daley, Assistant
, for gov't. Hubert Teitelbaum, 1122 Frick Bldg., Pittsburgh, Pa.,
Edward P. Zemprelli, 535 Miller Ave., Calirton, Pa., for defendant.
defendant, Fred P. Fiore, was indicted
February 10, 19
66, on four counts, each charging him with willfully and knowingly
making and subscribing to false statements in his income tax returns for
the years 1959, 1960, 1961, and 1962 in violation of §7206(1) of Title
26 U. S. C. A. While the defendant is charged with knowingly and
willfully understating his income from three separate sources, the
indictment stems primarily from investigations which resulted in
allegations by the United States that the defendant during these years
owned certain Gulf Oil stock from which he received substantial
dividends not declared on his returns.
to Suppress Evidence]
the court is defendant's motion to suppress certain evidence obtain by
Internal Revenue agents by interrogation of the defendant on two
occasions and by the taking of notes by one agent on one of these
occasions from certain records placed at the agent's disposal by the
defendant and his accountant. At a hearing, testimony concerning the
circumstances of these disclosures was given by the defendant and by the
two Internal Revenue agents assigned to the case. 1 Initially,
it should be stated that the defendant did not have counsel present at
either of the meetings which will hereafter be described, nor did he
seek the advice of counsel concerning these investigations until after
the meetings had taken place.
defendant rests his motion solely on contentions that the evidence was
obtained in violation of his rights under the Fifth and Sixth
Amendments. The defendant does not expressly assert that the evidence
was obtained by coercion, fraud, misrepresentation or deceit, or other
than "voluntarily". Rather, the defendant urges that deception
was implicit in the failure of Internal Revenue agents to apprise the
defendant when their investigations became in fact an inquiry into
possible criminal conduct, and likewise in their failure to warn the
defendant of his constitutional rights at such time.
specifically, the defendant contends that the test of
"voluntariness" as defined and applied in cases such as United
States v. Burdick [54-2 USTC ¶9475], 214 F. 2d 768 (3d Cir. 1954),
and United States v. Wheeler [59-2 USTC ¶9552], 172 F. Supp. 278
(W. D. Pa. 1959), aff'd [60-1 USTC ¶9306] 275 F. 2d 94 (3d Cir.
1960), can no longer be deemed dispositive of questions of suppression
of evidence in light of recent Supreme Court decisions. In both Burdick
and Wheeler, the defendants argued that admissions made to
Internal Revenue agents in the course of investigations of their income
tax returns should have been suppressed because they were obtained in
violation of the Fifth Amendment. In each case, however, it was held
that the test of admissibility was whether the statement was entirely
voluntary and understandingly given, and that failure to warn a person
that he did not have to testify against himself and that any information
given might be used against him in a criminal proceeding did not make
the admission involuntary. The cases relied upon were Powers v.
United States, 223
303 (1912) and Wilson v. United States, 162
violation of the Sixth Amendment was asserted in either Burdick
or Wheeler; the dates of the cases would suggest why. The
defendant in the present case, however, cites Massiah v. United
States, 377 U. S. 201 (1964); Escobedo v. Illinois, 378 U. S.
478 (1964); and United States ex rel. Russo v. State of New Jersey,
351 F. 2d 429 (3d Cir. 1965), in support of his position that statements
and information obtained when he was without benefit of counsel were in
violation of his rights under the Sixth Amendment. Subsequent to the
hearing and argument on the motion, the Supreme Court decided Miranda
v. Arizona, 384
rests the Sixth Amendment right to counsel squarely upon the Fifth
Amendment right against self-incrimination and additionally establishes
express conditions of warnings concerning constitutional rights and
demonstration of intelligent waiver of such rights while the individual is
in custody at the police station or otherwise deprived of his freedom of
action. In absence of the observance of such conditions, all
statements, whether intended or tending to be inculpatory or
exculpatory, are inadmissible. Miranda v. Arizona, supra, pp.
476-477. The impact of the Miranda decision upon Supreme Court
cases relied upon in the decisions in Burdick and Wheeler
was noted by Justice Harlan in his dissenting opinion (p. 509):
* * [I]n practice and from time to time in principle, the Court has
given ample recognition to society's interest in suspect questioning as
an instrument of law enforcement. * * * Of course the limitations
imposed today were rejected by necessary implication in case after case,
the right to warnings having been explicitly rebuffed in this Court many
years ago. Powers v.
303; Wilson v.
Miranda does not expressly overrule Powers or Wilson,
it is evident that to the extent that Miranda (and Escobedo
and Russo before it) adopts a doctrine which implicitly modifies
the criteria of these earlier opinions, the present status of the
"voluntariness" test adopted by both Burdick and Wheeler
is arguably in question. In short, we are called upon to determine
whether recent Supreme Court cases imposing specific conditions of
limitation upon police interrogations must be deemed equally applicable
to Internal Revenue investigations. If so, a more exact meaning attaches
to the term "voluntary" than heretofore. We conclude, however,
for reasons we shall set forth, that such cases have no application to
income tax investigations in respect to either Sixth or Fifth Amendment
rights. First, we will state the facts from the testimony at the
the period covered by the indictment, the defendant was primarily in the
business of stripping and selling coal and excavating for commercial
buildings. (T., p. 10.) For the years 1958, 1959, and 1960, he filed
returns which were audited. Certain adjustments to his tax liability
were made in each instance, and he was required to pay additional taxes
for each of these years. (T., p. 13.) These audits bear on this motion
only insofar as they tend to establish the defendant's frame of
reference with respect to Internal Revenue audit and investigative
procedures when he was confronted by agents making the investigation
which led to this indictment.
defendant's 1961 return was assigned for audit in the latter part of
1962 to revenue agent George Skoufis, a field auditor (T., p. 40).
Skoufis commenced his audit in early March, 1963. As a revenue agent, he
was primarily concerned with the civil aspects of a tax case, and was
"specifically instructed at the first indication of criminal
aspects to discontinue the examination and notify our Intelligence
Division * * * through channels * * *." (T., p. 41.)
met twice (March 1st and March 15th) with the defendant's accountant,
William McArdle, at the latter's office without the defendant being
present (T., p. 62). On these two occasions, Skoufis examined and made
notes of certain records, mostly cancelled checks and bank statements
(T., p. 42). Skoufis then requested and arranged for a meeting with the
defendant, which took place at the defendant's apartment (T., p. 62) on
March 28th, with Mr. McArdle also present (T., p. 59). He did not at any
time warn or suggest to the defendant or his accountant that the
defendant could have, or should have, counsel present at this meeting.
(T., pp. 47-52.)
defendant vigorously urges that a most significant fact is that prior to
this meeting, Skoufis was in possession of certain information obtained
"from a Federal Agency * * * concerning the possibility of the
possession of Gulf Oil stock" by the defendant in 1961, since he
then knew from examination of the 1961 return that the defendant had
reported no dividends on such stock in that year (T., p. 50). This was
the moment, according to defendant, when a routine audit to determine
civil liability for tax became a criminal investigation.
this meeting Skoufis asked the defendant whether he had any "stocks
not shown in his returns" (T., p. 49), making reference both to
stock in general and to Gulf stock in particular (T., p. 50). Skoufis
testified that he "had no definite information that would have
indicated to me any Criminal elements as of this date which was March
28, I believe, of 1963." (T., p. 52.) But after the meeting he made
an oral report to his superior in which he "specifically said"
that he "had reason to believe" that the defendant "as of
that date owned certain Gulf Oil stock." (T., p. 54.) Subsequently,
Skoufis made further inquiry and discovered that the defendant had
received substantial dividends in 1961 that were not reported on his
1961 return. He immediately referred the case to the Intelligence
Division (T., p. 55).
made an appointment for a second meeting with the defendant (T., p. 56),
which took place on
August 2, 19
63 at accountant McArdle's office (T., p. 66). Present were Skoufis,
McArdle, the defendant, and William McMahon, a special agent with the
Intelligence Division (T., pp. 64, 66). Prior to this meeting, Skoufis
did not tell McArdle that a special agent responsible for criminal
investigations had been assigned to the case, nor that the purpose of
the meeting was for McMahon to interview the defendant concerning
possible criminal aspects of the case (T., pp. 56, 66).
the August 2nd meeting, special agent McMahon first placed the defendant
under oath. He then advised the defendant of his constitutional rights
in that he was not required to answer any questions, make any
statements, or supply any records that he thought would incriminate him
under federal law. The defendant said that he understood. (T., pp. 20,
67.) There was no mention of the defendant's right to counsel. The
defendant testified that he did not invoke the Fifth Amendment at any
time. He acknowledged that he knew that he did not have to say anything
that might incriminate him, and when asked to confirm his denial that he
invoked the Fifth Amendment, he said: "I absolutely did not,
because if I was going to take the Fifth Amendment, I would have taken
it on the whole question and answer." (T., p. 30.) McMahon
testified that the defendant did invoke the privilege. McMahon described
the critical stages of the interview in these words:
two occasions he declined to answer. In the first instance, I asked Mr.
Fiore after having him identify his 1958, 1959, 1960 and 1961 Tax
Returns, I asked him if these returns contained all the income that he
had during these years, and at that point, he declined to answer on the
basis that it would tend to incriminate him. Later in the interview I
asked Mr. Fiore if he had any stock accounts or brokerage accounts. He
again declined to answer on the basis that it would tend to incriminate
him." (T., pp. 67-68.)
McMahon's testimony concerning the conclusion of the interview is
Mr. Fiore later in the interview did answer these questions only at the
conclusion of the interview when I asked Mr. Fiore if he had any
statements that he wished to make in his own behalf. At that point, Mr.
McArdle asked, 'What were the Gulf dividends?' The interview was drawing
to a close, and I asked Mr. Fiore if he wished to make any statements in
his own behalf, and he said that he did not. At that point is when Mr.
McArdle said, 'What were the Gulf dividends that Mr. Fiore was supposed
to have?' I stated that we did not discuss any Gulf dividends during
this interview. It was only then that the area was opened up, and at
that time Mr. Fiore did admit to having the Gulf dividends." (T.,
the defendant ultimately gave the information regarding the Gulf
dividends, he never answered the question of whether all his income was
reported on his 1958 through 1961 returns. (T., pp. 69-71.)
[Change in Investigation]
defendant first contends that when in the course of this investigation,
the investigating agents began to suspect fraud and began to act on the
presumption that criminal conduct was involved, he became entitled to
representation by counsel because at that point the investigation had
"begun to focus on a particular suspect". Escobedo v.
Illinois, supra, p. 490. He contends that the accusatorial stage was
reached either at the moment, or some time after the moment, that
revenue agent Skoufis: (1) knew for a fact that no dividends on Gulf
stock had been declared on the defendant's 1961 return; and (2) was
possessed of information, received from another Federal Agency, that the
defendant owned, and had received substantial dividends on, Gulf stock
sole question, insofar as right to counsel under the Sixth Amendment is
concerned, is whether or not there exists a right to counsel in a
criminal investigation into possible tax fraud, and, if so, when that
right attaches. The defendant's position is that the right exists and
does attach because the nature of the investigation brings it within the
scope of Escobedo.
need not pursue this question through all stages of the investigation,
however. We discuss the Sixth Amendment aspect only in respect to the
interrogation by special agent McMahon on August 2nd, for it is plain
that if the accusatorial stage was not reached when this inquiry became
unquestionably an investigation solely directed to possible criminal
conduct, then, a fortiori, it did not become accusatorial at any
cases dealing with suppression of evidence obtained by Internal Revenue
agents the Kohatsu v. United States [65-2 USTC ¶9715], 351 F. 2d
898 (9th Cir. 1965), and Rickey v. United States [66-1 USTC ¶9395],
360 F. 2d 32 (9th Cir. 1966). In pattern, if not in factual detail, the Kohatsu
case is substantially analogous to the case at bar. A revenue agent
commenced an audit of the defendant's return and met with the defendant
on two occasions and obtained a statement. Based on information the
revenue agent obtained, the investigation was referred to special agents
of the Intelligence Division who held further meetings with the
defendant. The same argument was advanced by the defendant in Kohatsu
, supra, p. 900, namely:
* * * [a] 'routine civil tax investigation' undergoes a fundamental
change when (1) a revenue agent discovers facts indicating substantial
unreported income, and (2) the facts are such that the revenue agent
suspects fraud. It is appellant's position that when these events occur,
the investigation 'has begun to focus on a particular suspect' and that
from that point 'government agents have a duty to inform the taxpayer of
his right to counsel, and that they must not elicit further
incriminating evidence from the taxpayer until he has been informed of
his constitutional rights in specific, understandable terms'."
Ninth Circuit rejected this argument noting, at p. 901:
the instant case the essential question to be determined by the
investigations of the revenue agents was whether in fact any crime had
been committed. The accused had not been indicted or arrested."
Court concluded that the agents were conducting an investigation, that
the accusatorial stage had not been reached, and that there was
"nothing in the Escobedo opinion or its 'philosophy'" (id.,
p. 902) which would impose a duty upon Internal Revenue agents to inform
the taxpayer of the criminal nature of the investigation or his absolute
constitutional right to remain silent under the Fifth Amendment.
defendant argues eloquently that Escobedo should apply to income
tax investigations. There may indeed be aspects to a criminal tax
investigation by special agents of the Intelligence Division that might
be deemed to make it indistinguishable from any other criminal
investigation. But in one respect, it is different. The usual criminal
investigation commences with the independent establishment of the
commission of a crime which projects a ring of evidence large enough to
bring the suspect within its circle. The process of further
"general inquiry into an unsolved crime" 2 gradually
pulls the suspect toward the center of all evidence until investigation
ultimately begins to focus upon him. In a tax investigation, however,
the defendant stands in the center of the inquiry from the beginning, as
the only possible suspect, while, as investigation proceeds, the ring of
evidence expands and builds around him. For this reason, the distinction
between "investigative" and "accusatorial" stages
may not be entirely apposite to criminal tax investigations. The
defendant urges with vehemence that an individual under investigation
for income tax fraud or willful falsification is subjected to compelling
psychological pressures which can be employed to extract incriminating
statements from him, and that he is therefore quite as much in need of
counsel to preserve his constitutional rights as a suspect in custody
who is under interrogation concerning a crime established by independent
true this might be, we are concerned only with whether Escobedo
applies to such investigations, and we conclude that it does not. Any
question left open by Escobedo was closed, we believe, by the
statement of the Court in Miranda v.
, supra, p. 444:
custodial interrogation we mean questioning initiated by law enforcement
officers after a person has been taken into custody or otherwise
deprived of his freedom of action in any significant way. 4"
is what we meant in Escobedo when we spoke of an investigation
which had focused on an accused."
do we think that the defendant can gain support for his position from Massiah
, supra. Massiah had retained a lawyer and though free on bail was
under indictment when federal agents obtained, via radio transmitter,
the statements which the Court held could not constitutionally be used
as evidence against him in his trial. Massiah differs markedly on
its facts, and the Court leaves no doubt that it was influenced in its
decision by the trickery employed by the government agents. Massiah
v. United States, supra, pp. 206-207. For these reasons, we do not
believe Massiah merits further discussion. 3
there is the clear intendment of the Court in Miranda that the
requirements of a warning of constitutional rights and a demonstration
of voluntary, knowing and intelligent waiver of those rights are to be
confined to situations of "custodial interrogation". The
reiteration of this term throughout the opinion and the prefacing of the
decision with a lengthy recital of police abuses leaves no doubt as to
what situations the Court had in mind in reaching its decision.
find nothing in Miranda to suggest that these same safeguards are
to be construed as mandatory in the type of investigative questioning to
which the defendant here was subjected. Though hardly to be
characterized as pleasant, neither of these meetings resembled a
"custodial interrogation". 4
Agent Skoufis questioned the defendant in defendant's own apartment.
Special agent McMahon questioned him at the office of his accountant.
McMahon warned the defendant of his right to remain silent, and while
Skoufis did not, the absence of a warning, we believe, is no ground for
suppression of any portion of the evidence. As noted earlier in this
opinion, it was well settled under Powers v. United States, supra,
p. 313, and Wilson v. United States, supra, p. 623, that it was
no essential to the admissibility of the defendant's testimony that he
should first have been warned that what he said might be used against
him. Miranda, in our view, supersedes this rule only in the
context of a custodial interrogation.
we hold that in the circumstances of the investigation under
consideration, Miranda has no application in defining rights
under either the Sixth or Fifth Amendment.
Fifth Amendment Violation]
remaining question is whether the defendant, at any stage of this
investigation, asserted his right to remain silent under the Fifth
Amendment and, if so, whether any evidence was obtained in derogation of
that right. We find from defendant's own testimony that he did not
assert any such right and his declarations to the agents were voluntary.
conclusion, we find no grounds under either the Fifth or Sixth Amendment
to warrant suppression of any evidence obtained by these agents. We deem
the holdings of Escobedo, Russo and Miranda inapplicable
to investigations of this kind and find that "voluntariness"
remains the test of admissibility of evidence procured in these
circumstances as held in the cases of United States v. Burdick,
supra, and United States v. Wheeler, supra. The record fully
supports a finding that, under Burdick and Wheeler, the
defendant gave all information voluntarily.
appropriate order will be entered.
The defendant's general counsel also testified concerning events
subsequent to the two interviews, but since he did not attend these
meetings, his testimony added no facts concerning the manner in which
the agents obtained the evidence at issue.
2 Escobedo v. Illinois, supra,
McLeod v. Ohio, 381 U. S. 356 (1965), cited by defendant, is also
inapposite. The defendant in that case was both under indictment and in
custody when he made an oral confession. See: State v. McLeod,
203 N. E. 2d 349 (Ohio 1964).
As characterized by Judge Goodrich in United States v. Frank
[57-1 USTC ¶9675], 245 F. 2d 284, 286 (3d Cir. 1957), "* * * we do
not think any taxpayer considers an audit by a revenue agent to be a
call for purely social purposes."
USTC ¶9304]United States of America, Plaintiff-Appellee v. Kenneth
U. S. Court of Appeals, 9th Circuit, No. 72-2549, 473 F2d 1313, 2/9/73
[Code Sec. 7201]
Criminal penalties: Tax evasion: Agent's warning of rights:
Instructions to jury: Use of net worth method: Miscellaneous errors
asserted.--Conviction for willful evasion of taxes was affirmed. IRS
agents gave the defendant adequate warning of his rights when first
contacted. The instructions to the jury, taken as a whole, covered the
requested defense instructions refused by the trial court. The
government was allowed to prove its case by use of the net worth method
even though the defendant's books were claimed to be complete and
adequate. Miscellaneous errors asserted by the defense were not cause
C. Smith, United States Attorney, Carroll D. Gray, Assistant United
States Attorney, Spokane, Wash., for plaintiff-appellee. Howard A.
Anderson, Gerald A. Rein, Morrison, Huppin, Ewing & Anderson, 521
Parkade Plaza, Spokane, Wash., for defendant-appellant.
KOELSCH and WRIGHT, Circuit Judges, and EAST, * District
Judgment of Conviction on two counts of income tax evasion for the
reporting years of 1965 and 1966, under Title 26 U. S. C. Section 7201,
Defendant-Appellant asserts eleven errors of law. We conclude all eleven
asserted errors are without merit and comment on only these:
investigating Internal Revenue Special Agents failed to give the
Defendant an adequate warning of his rights when he was initially
record reveals a more than adequate warning under U. S. v. Chikata
[70-1 USTC ¶9448], 427 F. 2d 385 (9 Cir. 1970) and the books of account
were voluntarily turned over. Simon v. U. S. [70-1 USTC ¶9212],
421 F. 2d 667 (9 Cir. 1970), cert. denied 90 S. Ct. 1691.
5, 6, 7, 8 and 9
requested instructions were partisan pinpoints of phases of the
Defendant's defense. The record reveals that the substance of the
requested instructions refused by the trial court were adequately
covered by the instructions given, when considered as a whole.
was error to permit the Government to prove its case through the net
worth method because the Defendant maintained a complete and adequate
set of books of account.
record reveals the set looked good at first blush, but, also,
substantiates the truism of these sage words:
also contends that where he himself kept a set of books and records the
District Court erred in permitting use of the net worth method of proof.
This would mean that simply because taxpayer has kept a set of books,
the veracity of which is in question, the Government is estopped from
going beyond those books to prove their falsity or inaccuracy. This is
absurd." U. S. v. DeLucia [59-1 USTC ¶9161], 262 F. 2d 610,
614 (7 Cir. 1958). Defendant's enlargement on bail is revoked, effective
Honorable William G. East, Senior United States District Judge for the
District of Oregon, sitting by designation.
USTC ¶9725]United States of America v. Joseph A. Nemetz, Appellant
U. S. Court of Appeals, 3rd Circuit, No. 18,850, 450 F2d 924,
, Affirming District Court, 70-2 USTC ¶9566
[Code Sec. 7203--Result unchanged by $69 Tax Reform Act]
Crimes: Tax evasion: Fraudulent understatement of income: Assignments
of error: Right to counsel: Miranda warning.--Evidence
voluntarily obtained as a result of interrogating the taxpayer was
admissible. The Government was not required to give a Miranda
warning so long as the taxpayer had knowledge and understanding of his
rights and that any information given by him was voluntary.
[Code Sec. 7602--Result unchanged by '69 Tax Reform Act]
Enforcement of summons: Intervention by taxpayer: Summons proceedings
involving interview of witnesses.--The taxpayer had no right to
intervene in summons proceedings as to interviews of persons served with
A. Daley, Assistant United States Attorney, Pittsburgh, Pa., for
appellee. Allen N. Brunwasser, 903 B Grant Bldg., Pittsburgh, Pa., for
MCLAUGHLIN, GANEY and ADAMS, Circuit Judges.
of the Court
Nemetz was convicted of violating 26 U. S. C. §7201 by wilfully evading
the payment of taxes for the years 1962, 1963, 1964, 1966 and 1967.
Following the denial of his motion for a new trial, 1 Nemetz
appealed setting forth a number of grounds for reversal of his
conviction and the award of a new trial.
evidence of Nemetz's guilt adduced at his jury trial was, according to
the district court, [70-2 USTC ¶9566] overwhelming. Nemetz was a
building contractor engaged primarily in home roof repairs. The
government, by direct evidence, showed that the taxable income Nemetz
should have reported in the years specified in the indictment far
exceeded that which he did report. 2
two substantial contentions advanced by Nemetz concern his right to
counsel during the Internal Revenue Service [IRS] investigation of his
records, and his alleged right to intervene during IRS interviews of
persons served with process pursuant to 26 U. S. C. §7602.
March, 1968, the IRS, acting on information received from an informant,
assigned a special agent, Vernon Carpenter, to examine Nemetz's
financial records. On
May 2, 19
68, the special agent telephoned Nemetz and told him that he was to
investigate Nemetz's 1964, 1965 and 1966 tax returns. The special agent
further stated that he wished to see Nemetz's cancelled checks, books
and records, and arranged a meeting on
May 6, 19
68 for that purpose.
the May 6th meeting, Carpenter's uncontradicted testimony at the Jackson
v. Denno hearing and at trial was:
"Well, I told Mr. Nemetz that as a special agent it was my duty to
investigate possible criminal income tax violations. I also informed him
that I had been assigned to investigate his income tax liability for the
years '64, '65 and '66, and I told him that under the Constitution of
the United States he had the right to refuse to answer any questions,
furnish any information or submit any documents which he felt might tend
to incriminate him. I also told him that any information which he did
furnish or any documents which he did submit could be used against him
in any criminal action that might be undertaken.
I was finishing my statement to Mr. Nemetz, he told me he understood he
also had the right to have an attorney present during the interview and
I told him that was correct, he did have the right to have an attorney
present during the interview. I then asked him if he wished to proceed
with the interview without an attorney. He said he did, and so I asked
him questions relative to his financial and income tax liability.
Did you ask him if he understood his rights?
Yes, I did. He said that he did."
on this and other testimony presented at the Jackson hearing, the
trial judge found that all the actions taken by Nemetz at the May 6th
meeting were voluntary and that all the evidence obtained therefrom was
contends that the right-to-counsel warning given him by Carpenter was
inadequate under the test of Miranda v. Arizona, 384 U. S. 436
(1966). This Court has held, however, that the stringent Miranda
doctrine does not apply to tax fraud investigations. Rather the
traditional voluntariness test is to be utilized: United States v.
Jaskiewicz [70-2 USTC ¶9616], 433 F. 2d 415 (3rd Cir. 1970). The
testimony quoted above illustrates Nemetz's knowledge and understanding
of his rights and that any action he took was voluntary. Under these
circumstances, since Nemetz was completely aware of his right to
counsel, no error was committed in admitting into evidence his books,
records and cancelled checks.
next claims that because he was not permitted to intervene during
interviews conducted by IRS agents with persons whose appearances had
been compelled by service of Section 7602 summonses, all evidence
obtained as a result of these meetings should have been suppressed. That
the taxpayer has no absolute right to intervene in such proceedings is
beyond question. Donaldson v. United States [71-1 USTC ¶9173],
400 U. S. 517 (1971). Further, in a more compelling case than that
presented by Nemetz, the Fifth Circuit held that an order of the
district court granting intervention--although based on its sound
discretion--was nevertheless improper. United States v. Newman
[71-1 USTC ¶9329], 441 F. 2d 165 (5th Cir. 1971). We are unable to
distinguish Nemetz's case from either Donaldson or Newman
and we hold, therefore, under the facts established at trial, that
Nemetz had no right to intervene.
other points raised by Nemetz have been carefully considered, and we
find them lacking in merit. Accordingly, the judgment of conviction will
Chief Judge Marsh's able opinion denying the motion is reported at [70-2
USTC ¶9556] 309 F. Supp. 1336 (W. D. Pa. 1970).
The following table illustrates the large variances between Nemetz's
reported income and the taxable income the government proved should have
Taxable Income Proven Taxable
Per Return Income
1962 .... $3,252.67 $26,860.40
1963 .... 2,906.91 33,377.43
1964 .... 337.35 7,873.47
1966 .... 5,037.94 63,332.91
1967 .... 4,083.98 12,061.03
USTC ¶9649]United States of America, Appellee v. David J. O'Connor,
U. S. Court of Appeals, 1st Circuit, No. 7629, 433 F2d 752,
, Affirming unreported district court
[Code Sec. 7203--Result unchanged by '69 Tax Reform Act]
Crimes: Failure to file return: Evidence: Attorney's testimony:
Circumstantial evidence: Copies of records.--The taxpayer's
conviction for wilful failure to file income tax returns for the years
1962 and 1963 was supported by substantial proof and was sustained.
Where the taxpayer's primary contention at trial was his lack of
wilfulness and that the returns had been filed, it was proper for the
trial court to admit the following evidence: (1) an interview between
the taxpayer and a special agent in which the taxpayer claimed that he
had filed returns for the years; (2) a political flier issued by
taxpayer to his constituents indicating that he had paid his 1962 income
tax; (3) a letter from the taxpayer's accountant stating that he had not
authorized the use of his name in the taxpayer's flier; (4) the
testimony of an attorney, who represented the taxpayer under a power of
attorney, outside the presence of the taxpayer that contradicted the
taxpayer's statements in an IRS meeting; and (5) a statement made by the
taxpayer to IRS officials that his father had been convicted of tax
evasion and, because of what his father had gone through, he certainly
would have filed. As to (4) above, the court indicated that it would
have suppressed the evidence if the taxpayer had told the attorney not
to make the statements or to confine himself to the position adopted by
the taxpayer. The trial court's instructions to the jury were proper.
Finally, the court held that the taxpayer was not entitled to a warning
of his constitutional rights by special agents.
F. Travers, Jr., United States Attorney, Wayne B. Hollingsworth,
Assistant United States Attorney, Boston, Mass., for appellee. Thomas C.
Cameron, Francis J. DiMento, DiMento & Sullivan, 100 State St.,
Boston, Mass., for defendant, appellant.
ALDRICH, Chief Judge, MCENTEE and COFFIN, Circuit Judges.
was convicted of wilful failure to file income tax returns for the years
1962 and 1963, in violation of 26 U. S. C. §7203 (1964).
primary contention at trial was that his alleged violations were not
wilful. But the government's evidence against him on this point was
plentiful. Defendant did not take the stand in his own defense, nor did
he present any witnesses on his own behalf. He insisted to special
agents of the Internal Revenue Service on several occasions that he had
filed his returns. He gave the special agents a carbon copy of a letter
allegedly sent to the Internal Revenue Service indicating that he had
mailed his 1962 return on time. He also gave them a carbon of the
allegedly mailed return. At conferences with Internal Revenue in Boston,
New York, and Washington, defendant clung steadfastly to his story that
he had filed the returns. 1 The
government showed further that defendant, a state representative, had
sent a political flier to his constituents indicating that he had paid
his 1962 income tax. The government showed that he had also claimed by
inference to have filed on time. These showings, along with proof that
he had not filed, made a strong case against him.
was asked by a special agent, "Did you file your Federal Individual
Income Tax Return for 1962?" He replied in the affirmative.
Defendant objected to the admission of this question and his response.
He would have us analogize this colloquy to the one in Flaherty v.
United States, 355 F. 2d 924 (1st Cir. 1966), vacated on other
grounds, Piccioli v. United States [68-1 USTC ¶15,820], 390 U. S.
202 (1968). The question asked the defendant in that case was: "If
you were in the wagering business, would you have registered and
purchased a federal stamp?" Only a lawyer could have realized what
that question meant, for it was so phrased that "the incriminatory
answer was precisely the one that would appear to be exculpatory."
355 F. 2d at 926. Flaherty could not have realized that it was in his
best interest to remain silent. In the instant case, the question was
entirely straightforward; it was not a trick. Defendant could readily
understand that to answer in the negative would be an admission of guilt
and to answer in the affirmative would be a lie. He could very well have
said nothing, as he was under no compulsion to speak. Instead, he lied,
and the jury had a right to consider the lie along with other evidence
as to his state of mind.
also objected to admission of copies of documents he gave to the special
agents. He claims a violation of the best evidence rule because the
documents admitted were not the ones he gave, but only copies thereof.
Under Fed. R. Crim. P. 26 we must apply the common law best evidence
rule. Defendant argues that, where an original document is allegedly
lost, production of the original may be excused only if the trial court
finds that it has become unavailable without the fault of the proponent.
Old Colony Trust Co. v. Shaw, 348 Mass. 212, 219, 202 N. E. 2d
785, 791 (1964), upon which he relies, does not support that
proposition. It holds that if the trial judge finds the originals are
unavailable without the serious fault of the proponent and that
reasonable search was made, copies are admissible. Cf. McDonald v.
United States, 89 F. 2d 128, 136 (8th Cir.), cert. denied,
301 U. S. 697 (1937); see generally McCormick, Law of Evidence §201
(1954). That being the rule, Sylvania Electric Products, Inc. v.
Flanagan, 352 F. 2d 1005, 1008 (1st Cir. 1965), the copies were
stated above, the court admitted into evidence, over defendant's
objection of irrelevance, a political flier which demonstrated to
defendant's constituents that his 1962 federal income tax had been paid
in full. It also showed that his state tax returns for 1962 and 1963
were on file by
August 9, 19
64. We think that this evidence was relevant to prove defendant's state
of mind when he failed to file his tax returns. United States v.
Taylor [62-2 USTC ¶9590], 305 F. 2d 183 (4th Cir.), cert.
denied, 371 U. S. 894 (1962), supports this holding. Taylor
involved a jury conviction for filing a false income tax return. The
defendant admitted at trial that he had been audited by state tax
agents. He then admitted that he had paid additional state income taxes
after the audit. The latter admission was objected to. Defendant also
objected to questions asked about filing returns reporting the social
security and withholding taxes of his secretary. In holding the
questions to be proper, the court said:
is well established that evidence of collateral facts, circumstances and
other acts of a defendant of a character kindred to that for which he is
on trial, whether occurring prior or subsequent to the alleged offense,
may be admitted with proper explanation to the jury as to the limits
within which it may be included and for what purposes. (Citations
omitted). The information elicited from the defendant over objection
might well bear upon his attitude toward the reporting and payment of
taxes generally and thus may have been helpful to the jury in
ascertaining his intent in preparing and filing his 1955 tax
F. 2d at 185-86. Accord, United States v. Magnus [66-2 USTC ¶9660],
365 F. 2d 1007, 1011 (2d Cir. 1966), cert. denied, 386 U. S. 909
(1967); Morrison v. United States [59-2 USTC ¶9657], 270 F. 2d 1
(4th Cir.), cert. denied, 361 U. S. 894 (1959); Emmich v.
United States [1924 CCH ¶3481], 298 F. 5 (6th Cir.), cert.
denied, 266 U. S. 608 (1924).
case of United States v. Long [58-2 USTC ¶9621], 257 F. 2d 340
(3d Cir. 1958), held that the failure to file could not be used to help
prove intentional misrepresentation on a later return. The Long
court relied on Spies v. United States [43-1 USTC ¶9243], 317 U.
S. 492 (1943). But Spies only rejected the "contention that
a willful failure to file a return, together with a willful failure to
pay the tax may, without more, constitute an attempt to defeat or
evade a tax. . . ." 317 U. S. at 494-495. (Emphasis added). It did
not say that a jury could not consider that failure. In fact, the
Supreme Court said that the jury could consider the failures to file and
to pay the tax along with other acts to find criminal tax
evasion. 317 U. S. at 500. To the extent that Long is contra to
our holding here, we prefer to follow Taylor and Magnus,
supra. We think the same reasoning applies to the evidence of
defendant's past history of delinquent payments. 2
also objected to testimony by his accountant, Katz, relating to a
conversation with the defendant about the flier. He also objected to
receipt into evidence of a letter written by Katz about the flier in
which the accountant's name prominently appeared. The evidence in
question stated that Katz had not authorized the use of his name in the
flier and that defendant knew of Katz's objections. We think that both
the testimony and the letter were relevant once the flier was in
evidence. The government was entitled to show that the accountant did
not stand behind the flier, or else the jury could have inferred that
defendant's statements in the flier followed good accounting procedures
and that the accountant stood behind defendant in the presentation of
the return to his constituents.
defendant objected to an admission made by his attorney which was
allowed into evidence. The attorney was acting under a power of attorney
from defendant, which had been sent to the Internal Revenue Service. At
a meeting with Internal Revenue, held in Washington, the defendant
repeated his assertion that he had filed the tax returns in question.
Shortly thereafter, he left the meeting but his attorney remained in the
conference. The attorney then told the Internal Revenue officials that
defendant had lied to them when he told them that his accountant, Katz,
had mailed the returns to him for signing and filing. According to the
attorney, defendant said this to protect Katz because "Katz was a
C. P. A. and had a license." The attorney's story obviously
contradicted defendant's statements. Defendant's attorney had "in
all matters pertaining to any Federal Taxes for the calendar years ended
1962 and 1963 . . . full power and authority to do and perform all and
every act or thing whatsoever required and necessary." The power of
attorney was in evidence. We think this point is controlled by United
States v. Dolleris [69-1 USTC ¶9289], 408 F. 2d 918 (6th Cir.), cert.
denied, 395 U. S. 943 (1969). In Dolleris, a prosecution for
tax evasion, the attorney representing the defendant under a similar
power of attorney made certain admissions when his client was not
present. The court held that these admissions were properly received in
evidence against the defendant. Cf. Hayes v. United States [69-1
USTC ¶9204], 407 F. 2d 189 (5th Cir.), cert. denied, 395 U. S.
972 (1969); Harris v. United States [66-1 USTC ¶9251], 356 F. 2d
582 (5th Cir. 1966); see also American Fur Co. v. United States,
27 U. S. 358 (1829); United States v. Gooding, 25 U. S. 460
(1827). We might rule otherwise had defendant told his attorney not to
make the statements or to confine himself to the position adopted by
defendant. That would have been a case where the attorney exceeded the
scope of his actual authority. But in the instant case no such defense
was raised. The attorney may well have thought that an explanation for
the motive for his client's misconduct would constitute, over all, a net
gain in the eyes of the Service, which already appeared to believe that
the misconduct had occurred. It was clearly within the power and duty of
the attorney to do what he could, in his own best judgment, to dispel
the suspicions of the Internal Revenue Service and avoid indictment. 3
objection, a government witness was permitted to relate one of
defendant's statements made at the New York conference with Internal
Revenue officials that his father had been convicted of tax evasion and,
because he had seen what his father had gone through, he certainly would
have filed. Defendant argues that there was inherent prejudice in the
admission of this testimony since its only effect was to lead the jury
to a "like-father, like-son" conclusion. The statement may
have had some such tendency; however, the admission was entirely
relevant to the questions of knowledge and intent. Defendant, having
offered his explanation himself, cannot object to its use.
contends that the trial court, in instructing the jury, withdrew from
its consideration the issue of his duty to file. After carefully reading
the charge in its entirety, we are convinced that this allegation is
without merit. The court stated several times that the three elements of
the crime had to be proved. Twice, in mentioning the requirement that
the prosecution must prove that defendant had to make a return, the
judge said, "I think there is no dispute about that at
all." (Emphasis added). However, on each occasion, the court quite
clearly said, "Those three elements must be proved beyond a
reasonable doubt before you would be warranted in returning a verdict of
guilty." Defendant relies on DeCecco v. United States [65-1
USTC ¶15,640], 338 F. 2d 797 (1st Cir. 1964). There, the trial court
disregarded a requested instruction that the mere fact that the
government's evidence on one element was uncontradicted did not require
the jury to accept it. Instead, the court removed that element from jury
consideration. It said that only the second element need be proved
because there was no dispute over the first. In the instant case, the
district court never intimated that only two elements need be proved.
Nor was it clear in DeCecco, as it is here, that the instructions
reiterated the fact that there were three elements for decision by the
objected to the trial court's instruction on "reasonable
doubt." We have examined the charge in its entirety and find no
merit in this objection.
also complains that the district court erred in allowing special agents
to testify about statements he made to them before he was advised of his
constitutional rights. We have considered this question several times,
most recently in United States v. Mitchell [70-2 USTC ¶9637],
No. 7614 (1st Cir., Oct. 7, 1970). Suffice it to say that the warnings
referred to were not required here.
all respects, we believe that the defendant had a fair trial and was
July 29, 19
64, the 1963 return was filed and on
August 13, 19
64, the 1962 return was filed. These late filings, of course, do not
prevent the prosecution for wilful failure to file.
Defendant does not urge that the court failed to instruct the jury as to
the effect of the evidence and did not request any such instructions,
Fed. R. Crim. P. 30, relying instead on his arguments of irrelevancy.
Pickert v. Hair, 146 Mass. 1, 15 N. E. 79 (1888), cited by
defendant, does say that an attorney's conversation relating to a fact
in controversy, but not to an agreement relating to the management and
trial of a suit, or an admission intended to influence procedure, was
inadmissible. But even the Massachusetts court later recognized, Loomis
v. New York, N. H. & H. R. Co., 159 Mass. 39, 34 N. E. 82
(1893), that an attorney retained to present and collect a claim may
make admissions while acting within that authority. See generally
Wigmore, Evidence, §1063 (1940).
USTC ¶9448]United States of America, Appellee v. Jack I. Chikata,
U. S. Court of Appeals, 9th Circuit, No. 24,298, 427 F2d 385,
, Affirming an unreported District Court decision
[Code Secs. 7201, 7203 and 7602]
Crimes: Tax evasion: Conviction: Miscellaneous assignment of
errors.--Taxpayer's conviction for income tax evasion was upheld.
Charges that the lower Court erred (1) in admitting into evidence facts
obtained by the IRS from meeting with the taxpayer wherein he was not
given a Miranda type warning, (2) in refusing to give the
taxpayer a fair trial, (3) in refusing to strike all exhibits and
testimony offered in violation of the court's order, (4) in instructing
the jury to consider only the net worth of the taxpayer, (5) in
overruling the taxpayer's motion to dismiss on the grounds that Code
Sec. 7201 under which he was indicted was unconstitutionally indefinite,
(6) in failing to exclude exhibits acquired by the special agent by use
istrative summons, and (7) in ordering the taxpayer to stipulate as to
the authenticity of certain government exhibits, were without merit.
Pitkin, United States Attorney, J. S. Obernour, Assistant United States
Attorney, Tacoma, Wash., for appellee. Martin J. Durkan, Durkan &
Durkan, Olympic Nat'l Bldg., Seattle, Wash., for appellant.
JERTBERG, WRIGHT and KILKENNY, Circuit Judges.
a Seattle druggist, was convicted by a jury of income tax evasion, 1 for the
years 1961, 62 and 63. He was sentenced to a year and a day on each
court, the sentences to run concurrently, and to pay a fine of $7,500.00
on each of the three counts, to be noncumulative. He appeals. We affirm.
January, 1966, a group supervisor of the Internal Revenue Service, when
work was low, selected at random from the Seattle telephone directory,
ten names of pharmacists. From the income tax returns of this group, he
designated three for audit and assigned
ert Anderson, a revenue agent in the supervisory group, to make the
audit. One so designated was appellant's 1964 return, which showed a
large amount of interest income compared to the reported business
income. At this time, there was no thought of possible fraud, although
the supervisor's group was commonly known as the fraud group because
approximately one-third of its work consisted of cooperating with
special agents in criminal investigations.
after receiving thereturns, called appellant and told him of the
assignment and that he wanted to see his books and records on the '67
return. Appellant invited Anderson to his place of business. Upon
arrival, Anderson found that appellant had only his 1965-66 records on
hand. After an examination of these records, Anderson proceeded with an
interview for background and history and made arrangements to return the
next day for further information.
following day, an examination was made of the 1964 bank records. The
agent found that in 1964, appellant had deposited $36,000.00 into his
checking account, an amount far in excess of his reported gross receipts
of $23,000.00. In a hurried analysis of appellant's reported income from
retained copies of prior returns to 1959, the agent arrived at a net
worth statement amounting to $130,000.00 in assets at the end of 1964,
including $17,000.00 in cash that appellant said he had deposited in his
checking account in 1965.
the court of the investigation, the agent found that appellant's cash
register could record sales no larger than $9.99 and that appellant
recorded sales over $10.00 by ringing the extra amount and writing down
the $10.00 on a piece of paper. Sometimes, he told the agent, he forgot
to write down the $10.00 sales and that this might occur two or three
times daily. Armed with this information, the agent computed an
unexplained increase in assets of $46,000.00 for 1959 through 1964, this
being an amount that would equal three unreported $10.00 sales for each
working day during the period. Based on this information, Anderson
offered a referral report, suggesting that there was an indication of
fraud. This report was reviewed and assigned to special agent Catlow of
the Intelligence Division for preliminary examination. Anderson was
assigned as a cooperating agent.
in the meantime, had hired attorney Bernard Greene and so advised
Anderson. Greene called Anderson and told him that he represented
appellant. Although Catlow was informed of these facts, he did not
contact Greene because Greene had not filed a power of attorney as
required by the Internal Revenue regulations. Instead, accompanied by
Anderson, he went to appellant's place of business. He there identified
himself and advised appellant that he could have his attorney present,
that he need not answer any question, nor furnish any information.
Appellant was told that the initial examination indicated a shortage of
reported income. Appellant then called his attorney, who arranged for an
appointment the next day at his office. At this meeting, Greene
expressed a willingness to cooperate with the agents. Catlow then
questioned appellant, covering much of the same areas that Anderson had
covered during the initial interviews. Some time later, John Durkan,
another attorney, took over the case for the appellant.
charges that the lower court erred in the following particulars: (1) in
admitting in evidence any facts directly elicited from the appellant by
the government agents or indirectly by leads furnished by appellant; (2)
in refusing to give appellant a fair trial; (3) in refusing to strike
all exhibits and testimony offered in violation of the court's order;
(4) in instructing the jury to consider only the net worth of appellant;
(5) in overruling appellant's motion to dismiss on the ground that the
statute under which he was indicted was unconstitutionally indefinite;
(6) in failing to exclude exhibits acquired by the special agent by use
istrative summons; and (7) in ordering the appellant to stipulate as to
the authenticity of certain government exhibits.
argues that all evidence acquired by Anderson and Catlow during the
course of their interviews with appellant and any evidence acquired as a
result of leads obtained from appellant, during those meetings, was
inadmissible because at no time was appellant given the necessary Miranda
type warning. We note that appellant was in his own place ob business on
the occasion of the conversations with the government agents. He was not
in custody, nor at the time was he, in any way, deprived of his freedom.
In these circumstances, we are controlled by a number of our own
authorities, which have refused to enlarge the Miranda rule
beyond its stated limits. Spahr v. United States [69-1 USTC ¶9315],
409 F. 2d 1303, 1304-1305 (9th Cir. 1969), cert. denied 396 U. S.
840; Simon v. United States, 421 F. 2d 667 (9th Cir. 1970). In Simon,
we declined to follow United States v. Dickerson [69-2 USTC ¶9556],
413 F. 2d 1111 (7th Cir. 1969), the principal case on which appellant
relies. In Mathis v. United States [68-1 USTC ¶9357], 391 U. S.
1 (1968), on which appellant also leans, the taxpayer was in custody
in a state prison on another charge at the time he was questioned by
Internal Revenue Agents. The Court, in Mathis, again limited Miranda
to a person in custody or otherwise deprived of his freedom in some
significant way. We resolve this issue against appellant. Additionally,
we hold there was no coercive conduct on the part of the Internal
here charges that he was deprived of a fair trial because he was
harassed by the Internal Revenue Agents and by the trial court. With a
few exceptions, the complaints are those of the attorney, rather than
appellant, and are concerned with what occurred during pre-trial
hearings, rather than during the trial. Of course, what occurred in the
pretrial hearings can have no bearing on the fairness of the trial
unless some relationship is shown. Our examination of the record reveals
no such connection and appellant points to none. Additionally, our
examination of the record leads us to the conclusion that the trial
court's actions in the pretrial hearings were fully justified. The
alleged harassment by the Internal Revenue Service, during the pretrial
period, is completely irrelevant.
the trial, the court asked appellent's counsel not to "be so
aggressive", told appellant's counsel that a certain question was
propounded in "an improper way" and on one occasion, in
commenting on counsel's repetitious interrogation, commented, "It
is just ridiculous." Read in context with the relevant questions,
we find nothing objectionable in the court's comments. In his closing
argument to the jury, counsel for appellant referred to his client, who
was born in Japan, as a sick old man who was imprisoned by the United
States in a World War II concentration camp. He had emphasized this
internment throughout the trial. Responding to this argument, the United
States Attorney called attention to the fact that the concentration
camps were established as a result of the sinking of American
battleships in Pearl Harbor. Neither argument had anything to do with
the merits of the case. While we do not condone this type of argument by
a prosecuting attorney, we have no doubt that the prosecutor's response
was prompted by the argument of appellant's own counsel. In these
circumstances, we do not feel that the prosecutor's conduct should be
treated as reversible error.
Three and Seven
contentions are related and should be considered together.
under the authority of Rule 17.1, FRCrimP, the trial court, after a
lengthy pre-trial conference, ordered appellant's counsel to examine
government proposed exhibits 1 through 41 and appear some seven days
later and then given reasons why he and his client should not stipulated
to the authenticity of such exhibits, reserving all objections to
relevancy and materiality. During the course of the conference,
appellant's attorney took the position that the exhibits were
inadmissible on various grounds, but did not challenge their identity or
authenticity. Repeatedly, the court explained to appellant's counsel
that the stipulation as to identity and authenticity of the documents
would in no way prejudice future objections to admissibility on any
other ground. Appellant's counsel finally said that he did not care to
stipulate, under any circumstances, being of the belief that he should
not, in any way, help the government meet is burden of proof. After this
statement by counsel, the court explained that Rule 17.1 required a
certain amount of cooperation by a defendant in a criminal case and the
court had power to require counsel to study the documents in order to
determine whether he had a valid reason for doubting their authenticity.
The transcript of the hearing makes it patently clear that appellant's
counsel was given every opportunity to study the documents, as well as
the list of the proposed witnesses who would authenticate the exhibits,
if called for that purpose. The hearing was held on
February 3, 19
69. Appellant and his counsel were ordered to return on February 10th
and state their reasons for not agreeing to the authenticity of the
proposed exhibits. Instead of returning on February 10th and stating
reasons for not agreeing to the exhibits, the appellant and his attorney
signed the stipulation, which had been prepared by the government. This
instrument was filed with the Clerk on February 7th.
and his attorney now contend they were intimidated into signing the
stipulation. We do not agree. Although the court was forceful, and, to
an extent, even demanding in his efforts to "promote a fair and
expeditious trial" under the provisions of Rule 17.1, we hold that
the record does not support a finding that he exercised his persuasion
beyond permissible limits. The record makes it perfectly clear that
appellant and his attorney were given the opportunity and, for that
matter, were instructed to return on February 10th and then state any
and all objections they might have to signing the stipulation. Then, and
only then, the record makes clear, would the judge decide what future
action, if any, might be appropriate.
the trial, the court received in evidence exhibits in addition to those
mentioned in the stipulation. Appellant, in urging error, calls
attention to the court order requiring the government, in advance of
trial, to disclose all of its exhibits and the names of its witnesses.
record of the pre-trial conference makes it quite apparent that the main
purpose of stipulating to the authenticity of exhibits 1 through 41 was
to avoid calling over 20 witnesses to identify the documents. Nothing
said in the conference indicates that these would be the only exhibits
offered by the government. The judge who was responsible for the
disclosure order, in ruling on this contention, found it completely
without merit. 2 So do we,
Far in advance of the trial, the appellant and his attorney were made
aware of the fact that the government was going to use the "net
worth method of proof" and that the material supplied to appellant
prior to trial would be illustrated and amplified during the course of
the trial. The additional exhibits and testimony to which appellant
objects are in connection with those subjects.
appellant argues that the court erred in instructing the jury to
consider only the net worth of the appellant and not of his wife. In
this connection, the court carefully instructed the jury that in the
state of Washington a wife had a vested property right in the community
property and in the income of the community equal to that of her
husband. Beyond doubt, the prosecution was premised on the net worth of
the appellant, rather than that of his wife. There is no claim that the
separate property of the wife in any way contributed to the net worth of
appellant as shown by the record. This contention is patently
challenges the constitutionality of 26 U. S. C. §7201, the statute
under which he was convicted. He says the statute is too vague. It does
not, he argues, set up standards which are ascertainable and
understandable by men of ordinary intelligence. Appellant cites no
specific authority for his position. Insofar as we can determine, the
only cases considering the subject have held the statute constitutional.
United States v. Schipani [66-2 USTC ¶9512], 362 F. 2d 825 (2d
Cir. 1966), cert. denied 385 U. S. 934; United States v. Conti
[66-1 USTC ¶15,694], 361 F. 2d 153 (2d Cir. 1966), vacated on other
grounds 390 U. S. 204; and United States v. Keig [64-2 USTC
¶9563], 334 F. 2d 823 (7th Cir. 1964). We have carefully examined those
cases and believe they are judicially sound.
on United States v. Powell [64-2 USTC ¶9858], 379 U. S. 48
(1964) and Wild v. United States [66-2 USTC ¶9500], 362 F. 2d
206 (9th Cir. 1966), appellant suggests that the lower court committed
error in failing to exclude all exhibits acquired by the special agent,
by use of an
istrative summons under the provisions of 26 U. S. C. §7602 (1964).
as well as Powell, pointedly recognizes that where the objective
of the investigation is to obtain information which may be utilized in
determining whether there is civil liability for a tax or a tax
penalty, the obtaining of documents under the summons is legitimate,
notwithstanding the fact that the information might, in the future, be
also used in a criminal prosecution. Beyond all legitimate argument, the
investigation in this case was conducted for a legitimate purpose.
Recent cases sustaining this view are Howfield, Inc. v. United States
[69-1 USTC ¶9298], 409 F. 2d 694, 697 (9th Cir. 1969); United States
v. Ahmanson [69-2 USTC ¶9572], 415 F. 2d 785, 787 (9th Cir. 1969); United
States, et al. v. M. P. Ruggeiro [70-1 USTC ¶9381], -- F. 2d --,
Nos. 24519-24524 (9th Cir., April 28, 1970).
26 U. S. C. §7201.
"Moreover, in this particular case far beyond anything in my
experience in dealing with literally hundreds of tax evasion cases,
there has been an extraordinary disclosure made to the defendant and his
counsel of the evidence to be offered by the government. Never before
have I ever required so sweeping disclosure as has been voluntarily
offered by the government in this case." (T. R. Vol. IV, p. 355).
USTC ¶9212]William Simon, Appellant v. United States of America,
U. S. Court of Appeals, 9th Circuit, No. 24,758, 421 F2d 667,
, Affirming unreported District Court
[Code Secs. 7201 and 7206]
Crimes: Fraud: Right to counsel: Self-Incrimination.--It was not
error to admit in evidence incriminating statements made by the taxpayer
to a special agent where the agent informed the taxpayer of his
identity, the taxpayer was not held in custody and the agent informed
the taxpayer that he had the right to remain silent. Similarly, the
court refused to support the taxpayer's claim of unreasonable search and
ert L. Dunn, Bancroft, Avery & McAllister, 10th Floor, TWA Bldg.,
240 Stockton St., San Francisco, Calif., George W. Mead, Pub. Service
Bldg., Portland, Ore., Bernard Shevach, Executive Bldg., Portland, Ore.,
for appellant. Sidney I. Lezak, United States Attorney, Portland, Ore.,
Jack C. Wong., Charles H. Turner, Assistant United States Attorneys,
Portland, Ore., for appellee.
KOELSCH, BROWNING, and DUNIWAY, Circuit Judges.
Simon was convicted of income tax frauds. (26 U. S. C. 7201 and
7206(1)). On this appeal he urges that this Fourth, Fifth and Sixth
Amendment rights were violated because he was not given the Miranda
warnings by the government's investigating agent. Specifically he
assigns as error the admission of evidence consisting of incriminating
statements made by him to Walter J. Sanders, Jr., a Special Agent of the
Intelligence Division of the Internal Revenue Service, and of
information gained by the Agent from an inspection of Simon's business
conclude that Miranda is inapplicable to this case and that Simon
freely consented to the asserted search.
court has repeatedly rejected vigorous appeals to extend the Miranda
rule "beyond its stated limits." Spahr v. United States
[69-1 USTC ¶9315], 409 F. 2d 1303, 1305 (9th Cir. 1969). Absent custody
in the conventional sense, we have declined to fault a government agent
and reverse a conviction for failure to give a Miranda type
warning unless the facts clearly demonstrated that the appellant was
"deprived of his freedom by the authorities in any significant
circumstances in this case hardly disclose an "in custody
investigation." The initial meeting between Sanders and Simon was
held in the latter's private office at one of his stores. Simon was at
liberty to come and go as he pleased or to ask Sanders to leave. Nor did
Simon's conduct at the meeting, or thereafter, suggest that he was, or
believed that he was, under any compulsion to divulge information. Quite
the contrary. Upon being told at the outset that Sanders was a criminal
investigator for the Internal Revenue Service and, being affirmatively
advised of his right to remain silent, Simon declared that he had
"nothing to hide" and expressed a willingness to answer any
questions concerning his business and tax returns.
places considerable reliance upon United States v. Dickerson
[69-2 USTC ¶9556], 413 F. 2d 1111 (7th Cir. 1969), a recent decision of
the Seventh Circuit rendered by a divided panel. He says that the facts
in that case are indistinguishable from those in the case at bar.
However, there the Special Agent, unlike his counterpart in the case
before us, did not explain his function to the appellant nor give him
any warnings whatever. The failure was held to constitute conclusive
proof of coercion. We decline to give the failure such weight, even if
it were evident in this case. As well said by the Second Circuit in
commenting upon and declining to follow Dickerson:
fact that IRS agents sometimes give a partial warning at one or even
several interviews during a protracted investigation does not mean that
warnings of some kind are or should be required. Rather, proof that some
warnings were given, or that none were given, merely serves as evidence
bearing on the question of whether the questioning was
States v. Caiello [70-1 USTC ¶9153], 420 F. 2d 471 (#33175), (2d
Dec. 31, 19
claim of unreasonable search and seizure is similarly unsupported.
Sanders could hardly be said to have gained access to Simon's records by
trickery or deceit (Spahr v. United States, supra). Not only did
he state why he wanted to see them, but he additionally accompanied his
request with the statement that Simon need not comply.
judgment is affirmed.
USTC ¶9153]United States of America, Appellee v. Richard V. Caiello,
U. S. Court of Appeals, 2nd Circuit, Docket No. 33175, 420 F2d 471,
12/31/69, Aff'g unreported District Court decision
[Code Sec. 7201]
Crimes: Tax evasion: Criminal investigation: Noncustody case:
Constitutional rights: Motion to suppress evidence.--The taxpayer
was not entitled to suppress evidence (statements and records) given by
him to several IRS agents on the ground that his constitutional rights
had been violated due to the agents failure to give him Miranda
type warnings. None of the interviews with the taxpayer took place in a
custodial setting or were inherently coercive. If a taxpayer is aware
that he is the subject of a tax investigation, and if he is interviewed
in noncustodial situations, Miranda warnings are not required. A
condition imposed on the taxpayer's probation by the District Court that
he pay all income taxes, penalties, and interest due did not foreclose
any of his rights to a full determination of his civil tax liability.
M. Sullivan, United States Attorney, James P. Shanahan, Assistant United
States Attorney, for appellee. Phillip Pinsky Pinsky, Canter &
Pinsky, 345 S. Warren, Syracuse, N. Y., for appellant.
LUMBARD, Chief Judge, MEDINA and FEINBERG, Circuit Judges.
V. Caiello appeals from his conviction on three counts of willfully
attempting to evade joint income tax liability in the years 1960, 1961,
and 1962 in violation of 26 U. S. C. section 7201. The appeal raises the
now familiar question of whether statements and records of a taxpayer
under investigation by revenue agents and special agents of the Internal
Revenue Service (IRS) may be received in evidence when the taxpayer has
not been given the so-called Miranda warnings. All but one of the
circuits which have considered this question have repeatedly held that
such warnings are not required. 1 A divided
panel of the Seventh Circuit recently held that such warnings "must
be given to the taxpayer by either the revenue agent or the special
agent at the inception of the first contact with the taxpayer after the
case has been transferred to the Intelligence Division [of the
IRS]." United States v. Dickerson [69-2 USTC ¶9556], 413 F.
2d 1111, 1116-7 (7th Cir. 1969) (footnotes omitted). 2 We reject
the reasoning of the majority opinion in Dickerson and affirm the
conviction on the authority of our long line of cases refusing to
require such warnings, the latest of which is United States v. White
[69-2 USTC ¶9675], 417 F. 2d 89, slip op. 89 (2d Cir. Oct. 10, 1969).
considering whether warnings about Fifth and Sixth Amendment rights
should be given during tax investigations which may lead to criminal
prosecution, most courts of appeal have examined the facts surrounding
the IRS interviews on a case-by-case basis to determine whether they
presented the inherently compulsive aspects which the Supreme Court
found to exist in the process of custodial interrogation in Miranda
v. Arizona, 384 U. S. 436 (1966), and later in Mathis v. United
States [68-1 USTC ¶9357], 391 U. S. 1 (1968). See e.g., United
States v. Squeri [68-2 USTC ¶9493], 398 F. 2d 785, 789-90 (2d Cir.
1968); United States v. Mackiewicz [68-2 USTC ¶9461], 401 F. 2d
219, 222-3 (2d Cir. 1968). As we stated in Squeri, supra, at 790:
Fifth Amendment privilege prohibits the government from compelling
a person to incriminate himself. It was the compulsive aspect of
custodial interrogation, and not the strength or content of the
government's suspicions at the time the questioning was conducted, which
led the Court to impose the Miranda requirements with regard to
custodial questioning. We believe that the presence or absence of
compelling pressures, rather than the stage to which the government's
investigation has developed, determines whether the Miranda
requirements apply to any particular instance of questioning.
testimony shows that at no time prior to the "formal
interview" with the taxpayer did either of the IRS agents
conducting the investigation specifically warn Caiello that he could
refuse to answer their questions or produce records, that anything he
said could be used against him in a criminal prosecution, or that he had
a right to counsel, retained or appointed. Although many of the cases
decided in this and other circuits have mentioned the fact that
taxpayers undergoing audit were informed of some or all of their rights
at some point during a long investigation, see e.g. Squeri, supra
at 788, this factor has not been regarded as crucial. 3 Appellant
contends that the complete absence of warnings in the present case
distinguishes our previous decisions. We disagree. The fact that IRS
agents sometimes give a partial warning at one or even several
interviews during a protracted investigation does not mean that warnings
of some kind are or should be required. Rather, proof that some warnings
were given, or that none were given, merely serves as evidence bearing
on the question of whether the questioning was noncoercive.
substance of our prior decisions is that if the taxpayer is aware that
he is the subject of a tax investigation and if he is interviewed in
noncustodial situations, Miranda warnings are not required. The
rationale is that once the taxpayer is aware that agents of the IRS are
conducting a serious inquiry into his income tax liability and the
agents do not conduct their investigation in a manner which is
inherently coercive it is not improper to expect that "[t]o some
extent persons must be prepared to look after themselves." Morgan
v. United States [67-1 USTC ¶9449], 377 F. 2d 507, 508 (1st Cir.
1967). In the present case, there can be no question that the IRS
investigation satisfied both the conditions described above.
to Suppress Evidence]
made a timely motion to suppress statements and records given by him to
several IRS agents. Judge Port held a pretrial hearing and denied the
motion; the objections were renewed at trial, and testimony about
Caiello's statements and copies of many of his records were introduced
in evidence over those objections. Thus, Judge Port found that Caiello
had not discharged his burden of showing that the circumstances
surrounding his contacts with the IRS were so coercive as to require the
giving of warnings. Upon review of the record, we agree that this burden
was not met.
transcript of the suppression hearing shows that Caiello was contacted
more than twenty times by revenue agent George Kowitt and special agent
Michael Wilton, either together or separately. 4 There can be
no doubt that the statements and records furnished by Caiello were
important, for the government used the net worth and expenditure method
of establishing unreported income. 5 As noted
above, none of the Miranda warnings was specifically given.
was fully aware of what was occurring. The initial face-to-face meeting
between Caiello and Kowitt, the first IRS man to contact him, took place
June 3, 19
64, in the office of Caiello's bookkeeper Hurley. Caiello himself
remained for only fifteen minutes, after delivering some records he had
agreed to bring when Kowitt arranged the appointment over the telephone.
Kowitt continued his audit at Hurley's office with the records made
available to him there. Thus, from the inception of the IRS
investigation, both Caiello and his bookkeeper Hurley were fully aware
that a tax investigation was underway. 6
investigation was referred to the Intelligence Division by Kowitt on
August 4, 19
64, and special agent Wilton first met with Caiello on August 17, eleven
days later. Up to this point, Kowitt had visited Caiello twice after the
brief meeting at Hurley's office. Wilton testified that he was
introduced to Caiello by Kowitt as a special agent of the Intelligence
Division and that he showed Caiello his badge and credentials. On
cross-examination at trial, Wilton stated that he told Caiello: "I
have been assigned to conduct an investigation of your tax
liability." Thus, it was perfectly clear to Caiello that he was the
subject of a tax investigation, and an investigation which had more
serious aspects by reason of the appearance and formal introduction of a
second IRS representative. 7
record is also replete with testimony that none of the interviews took
place in a custodial setting or were inherently coercive. At the
suppression hearing, Caiello was asked several questions relating to the
entire course of his contact with representatives of the IRS prior to
the formal interview, which he attended with counsel on
January 21, 19
66. One set of exchanges is particularly significant:
Now at any time during the course of your contact with members of the
Federal Internal Revenue Service did any of the representatives ever
advise you that you were under arrest? A. No.
Did they ever advise you were in custody? A. No.
Did they ever advise you that you were not free to leave either your
premises or their offices [where the interviews took place] at any time?
Was it your feeling during the course of these interviews that you were
free to leave at any time? A. Yes."
Caiello testified that he often moved away from the IRS representatives
who interviewed him in his grocery store to wait on customers or do
other work. The agents' testimony, not contradicted by Caiello, was that
several times throughout the long period of investigation they asked
Caiello if he minded answering questions or producing records; his
replies were always to the effect that he did not mind. The most
important example of this occurred during the meeting of
August 17, 19
64, when Kowitt introduced Wilton to Caiello. Wilton asked Caiello if he
was willing to submit any of his records to him. Caiello replied that he
was and made an appointment with Wilton for
August 19, 19
64. Wilton returned on that date, with Kowitt, and picked up the
records--including cash register tapes and other financial records which
the government photocopied and later introduced at trial to show how
they had checked Caiello's annual expenditures against reported income
and calculated net worth. 8
[Warnings Not Required]
can see no good reason for requiring government agents to give Miranda
warnings whenever they deal with a citizen regarding possible tax
liabilities under circumstances where the citizen is not under restraint
and is at liberty to cooperate or not as he may choose. Every citizen
must know and will be deemed to know that he is under an obligation
honestly and fully to furnish correct information regarding his income
and to pay the taxes which accordingly would be owing to the government.
Every citizen also knows that false returns and fraudulent evasion of
taxes are criminal offenses in violation of federal laws. So far as the
citizen is concerned his duties and obligations and his liabilities for
taxes for violation of law are the same regardless of the duties of the
particular agents who may be assigned to investigate his returns, tax
liabilities, and possible violations of the criminal law. And, of
course, where there is no restraint and the contacts of the taxpayer and
the agents extend over some period of time, there is ample opportunity
for the taxpayer to seek such advice and assistance from third persons
as he may desire. 9
examination of the record leaves no doubt that Mr. Caiello was not under
any restraint at any time up to the formal interview. His answers and
decisions to produce various records were voluntary. Accordingly, Judge
Port was correct in denying the motion to suppress the statements and
records and in admitting them in evidence over renewed objections at
is a final matter which merits our attention. On
December 16, 19
68, Caiello was sentenced to six months in prison and fined $5000.00 on
each of counts 2 and 3 of the indictment, the prison sentences to run
concurrently. As to count 4, sentence was suspended and Caiello was
placed on probation for three years. The judgment of conviction states:
to begin upon release from confinement. As a special condition of
probation, the defendant is ordered to pay all taxes, penalties and
interest on his income taxes for the years, 1961, 1962 and 1963 within
ninety days after the amounts are finally fixed."
construe the second sentence quoted above broadly to mean that probation
will begin upon release from confinement and that the condition imposed
therein is a condition upon the continuation of probation while Caiello
is proceeding with an adjudication of his civil tax liability, the
duration of such condition of course not to exceed three years.
Moreover, as we read the sentence, the time period in the second quoted
sentence for the payment of taxes, penalties, and interest does not
begin to run until Caiello has exhausted all judicial as well as
istrative procedures in connection with determining the amount of tax
due. Cf. White, supra, at --, slip op. at 97-8. Undoubtedly the
district court did not mean to foreclose any of the defendant's rights
to a determination of his civil tax liability. See United States v.
Taylor [62-2 USTC ¶9590], 305 F. 2d 183, 187 (4th Cir.), cert.
denied 371 U. S. 894 (1962), rehearing denied, 371 U. S. 943
(1962); United States v. Stoehr [52-1 USTC ¶9299], 196 F. 2d 276
(3rd Cir.), cert. denied 344 U. S. 826 (1952).
conviction is affirmed.
See cases cited in United States v. White [69-2 USTC ¶9675], 417
F. 2d 89, --, slip op. 89, at 92 (2d Cir.
Oct. 10, 19
69), and in Cohen v. United States [69-1 USTC ¶9132], 405 F. 2d
34, 37-8 n. 7 (8th Cir. 1968).
As the Seventh Circuit stated in Dickerson, the
"jurisdiction of the Intelligence Division is limited to criminal
investigations." 413 F. 2d at 1112-3. However, the Dickerson
holding would permit a revenue agent to testify about statements made or
records produced by the taxpayer during the process of audit prior to
referral to the Intelligence Division, even though no warnings were
given. Thus, the thrust of the decision could be avoided by simply
expanding the scope of the pre-referral audit, since both revenue agents
and the special agents of the Intelligence Division peruse essentially
the same records and make essentially the same calculations.
In our latest pertinent decision, we noted that the "Special Agent
admonished [the taxpayer] that he was not required to answer any
questions or turn over any personal records but did not state
specifically that anything he said might be used against him in a
criminal prosecution." White, supra, at --, slip op. at 91.
In addition, the court pointed out that no warnings about the right to
counsel were given.
A number of these contacts were short telephone calls Some of these
calls were merely to arrange appointments for personal interviews. Other
calls involved a few substantive questions about Caiello's business or
personal financial affairs. Several phone calls and meetings were
devoted primarily to obtaining from Caiello extensions of the statutory
time to levy additional assessments of income tax.
This is a technique by which IRS agents calculated annual increments in
asset value and compare them to reported income. In Caiello's case, for
the three years for which he was convicted, the indictment charged that
he had understated the income from his grocery store--a sole
proprietorship--by a total in excess of $29,000.00
The IRS representatives referred Caiello to Hurley for advice at least
once during the investigation. The record shows that on
February 9, 19
65, agents Kowitt and Wilton met Caiello at his store for the purpose of
securing an extension of the period of limitation for the assessment of
additional tax. In explaining this procedure to Caiello, Wilton told him
that if he did not understand the forms he should take it up with
Hurley. The forms were eventually signed on
September 21, 19
65, and returned to Wilton.
Also relevant in this regard is the fact that Caiello admitted on cross
examination at the suppression hearing that before the IRS contacted him
he had already been audited by tax officials of New York State with
regard to payment of state income taxes, and that this investigation had
resulted in an additional assessment of between $1400.00 and $1500.00
which he had to pay to the state. That this experience was in Caiello's
mind during the IRS investigation is perfectly clear, for Kowitt
testified that at one of his early meetings with Caiello, Caiello asked
him how the IRS audit was going compared with the state investigation.
Another example occurred when Kowitt took a verbatim transcript of his
questions and Caiello's answers with regard to cash on hand during the
years under investigation at an interview in the store on
July 22, 19
64. After reading the answers back to Caiello, Kowitt testified that he
asked Caiello "if he would object to signing this statement and he
said that it was the truth and he had no objection and signed it.
See footnote 6, supra, and accompanying text.
Circuit Judge (concurring):
concur on the authority of United States v. White, slip op. 89
Oct. 10, 19
69), petition for cert. filed, 38 U. S. L. W. 3212 (U. S.
Dec. 1, 19
69); United States v. Mackiewicz [68-2 USTC ¶9461], 401 F. 2d
219 (2d Cir.), cert. denied, 393 U. S. 923 (1968), and my concurrence
there, 401 F. 2d 226; and United States v. Squeri [68-2 USTC ¶9493],
398 F. 2d 785 (2d Cir. 1968).
USTC ¶9675]United States of America, Plaintiff-Appellee v. Francis D.
White and Gertrude W. White, Defendants-Appellants
U. S. Court of Appeals, 2nd Circuit, Docket Nos. 33446-7, 417 F2d 89,
[Code Sec. 7201]
Crimes: Tax evasion: Criminal investigation: Voluntary cooperation
with agents: Noncustody case: Constitutional rights: Admissibility of
evidence.--Taxpayer was not entitled to suppress evidence against
him based on the violation of his constitutional rights under the Miranda
rule where he voluntarily cooperated with IRS agents and was interviewed
at his office, with his accountant present, and at the accountant's
office. Other evidence from which it could be inferred that he had
unreported income was properly admitted.
[Code Secs. 7201 and 7206]
Crimes: Tax evasion: False and fraudulent returns: Pyramiding of
penalties.--Taxpayer's conviction for tax evasion and for signing
false returns was upheld. However, since the false returns were steps in
the consummation of the greater offense--attempt to defeat or evade
tax--additional fines under Sec. 7206 were vacated.
B. Buhrman, Johnnie M. Walters, Assistant Attorney General, Joseph M.
Howard, Department of Justice, Washington, D. C. 20530, for
plaintiff-appellee. J. F. Henry DeLange, Charles K. Rice, Albert R.
Mugel, 720 Liberty Bank Bldg., Buffalo, N. Y., for
MOORE, HAYS and ANDERSON, Circuit Judges.
The primary point urged by appellants upon this appeal relates to the
voluntariness with which they produced, during the investigation of
their affairs by a Special Agent of the Internal Revenue Service
Intelligence Division, the great bulk of the evidence used against them
at trial. During the investigative sessions at which the incriminating
evidence came out, appellants were not told that a possibility then
existed of criminal prosecution for tax evasion. The Special Agent
admonished Francis White (referred to as "Francis") 1 that he was
not required to answer any questions or turn over any personal records,
but did not state specifically that anything he said might be used
against him in a criminal prosecution. He was not advised of his right
to counsel, nor was he advised that counsel would be furnished in the
event he qualified as an indigent. Thus appellant argues that he was not
given the full Miranda warnings at the point when investigation
of his affairs became essentially accusatory, see Escobedo v. State
of Illinois, 378 U. S. 478 (1964), and that his Fourth and Fifth
Amendment rights were therefore abridged by the admission of evidence
garnered through the investigative interviews.
case presented by appellants does not differ in any essential from the
situation confronting this Court in United States v. Mackiewicz
[68-2 USTC ¶9461], 401 F. 2d 219 (2d Cir. 1968) and in United States
v. Squeri [68-2 USTC ¶9493], 398 F. 2d 785 (2d Cir. 1968). In Mackiewicz
we held that questioning by a Special Agent under circumstances almost
identical to these here presented did not create an atmosphere
sufficiently coercive to generate the necessity for the full range of
warnings contemplated by the Miranda decision for essentially
"custodial" interrogations. Francis was interviewed by the
Special Agent at his own place of business in the presence of his
accountant, and was interviewed once more in the office of his
accountant, who was again present throughout the interview. Under these
circumstances, Francis's confrontations with the Service's Intelligence
Division was not inherently coercive, and he and his wife were not
entitled to suppress evidence against them garnered from that
confrontation on the basis of Miranda. In accord with this view
are decisions in seven other Circuits: Morgan v. United States
[67-1 USTC ¶9449], 377 F. 2d 507 (1st Cir. 1967); United States v.
Mancuso [67-2 USTC ¶9487], 378 F. 2d 612 (4th Cir. 1967); Agoranos
v. United States [69-1 USTC ¶9316], 409 F. 2d 833 (5th Cir. 1969); United
States v. Maius [67-2 USTC ¶9521], 378 F. 2d 716 (6th Cir. 1967); Cohen
v. United States [69-1 USTC ¶9132], 405 F. 2d 34 (8th Cir. 1969); Feichtmeir
v. United States [68-1 USTC ¶9217], 389 F. 2d 498 (9th Cir. 1968);
and Hensley v. United States [69-1 USTC ¶9146], 406 F. 2d 481
(10th Cir. 1969). Contra, United States v. Dickerson [69-2 USTC
¶9556], 413 F. 2d 1111, 38 U. S. L. W. 2133 (7th Cir.,
July 28, 19
from the Miranda-based decisions, appellant asserts the novel
proposition that the government's right to introduce evidence obtained
from Francis is even more narrowly circumscribed by the requirements for
voluntariness of "confessions" under 18 U. S. C. §3501. That
section lists five factors which a Judge should consider in his
determination of voluntariness before submission of the evidence to the
jury. From this appellant argues that disclosures and evidence
sufficiently voluntary to be admissible under Miranda
nevertheless may be involuntary as a matter of law under the Omnibus
Crime Control and Safe Streets Act of 1968.
contention does not require extended discussion. It is sufficient to
note that neither the language of §3501 nor its legislative history
indicate that Congress intended to expand the protection of potential
criminal defendants beyond the scope of protection established by the Miranda
line of cases.
Special Agent Martin, whose investigation in 1962 formed the basis of
the prosecution against the Whites in this case, testified at trial
concerning his investigation. Martin also had testified for the
Government before the grand jury in 1965 but no record of his grand jury
testimony was kept. However, minutes were kept and a record made of the
testimony of all defense witnesses at the grand jury hearing.
argues, on authority of our decision in United States v. Youngblood,
379 F. 2d 365 (2d Cir. 1967), that a defendant in a criminal case is
entitled to a transcript of all testimony against him given before the
grand jury. We noted in Youngblood that transcripts of testimony
at grand jury hearings in this Circuit are now regularly kept and filed
away, but that this "may not always have been the practice, and
where it has not been we do not imply that a defendant is entitled as of
right to minutes that do not exist." 379 F. 2d at 370, fn. 4.
this failure occurred subsequent to our decision in Youngblood,
supra, very possibly a different question would have been presented.
However, Youngblood was given prospective application only, and
the indictment against the Whites was returned two years prior to that
decision. Minutes of Agent Martin's testimony were not made at the grand
jury hearing in 1965. Since they did not exist at the date of decision
in Youngblood, his trial testimony cannot now be held improperly
admitted on that basis.
The Government adduced evidence at trial showing that Francis maintained
a separate personal bank account in a neighboring town in which he
deposited large amounts of currency from unidentified sources. The
evidence was offered to show the wilfulness of his conduct in seeking to
conceal his financial activities or mislead others who had an interest
in his financial affairs. Spies v. United States [43-1 USTC ¶9243],
317 U. S. 492, 499 (1943). White's accountant, who prepared his tax
returns, was unaware of the separate account and the large cash
deposits. Appellant contends that this evidence was prejudicial and
improperly admitted, suggesting that the jury may have erroneously
inferred that these cash deposits represented still other unreported
income, unrelated to the specific items upon which the evasion
indictments were based.
cases involving income tax evasion, evidence purporting to show the
wilfulness of misconduct through extensive dealings in cash is properly
admissible. E.g., Gariepy v. United States [51-1 USTC ¶9318],
189 F. 2d 459, 463 (6th Cir. 1951); Schuermann v. United States
[49-1 USTC ¶9281], 174 F. 2d 397, 398 (8th Cir. 1949). The Government's
proof showed that a large number of checks were cashed by the Whites
throughout the period covered by the indictment instead of being
deposited to the proper business accounts. Cash deposits in the separate
bank account thus had a substantial tendency to prove their intent in
converting unreported income received in check form into cash. The value
of this evidence as proof of a material element in the case overcame
whatever prejudice might have operated against appellants through
improper inferences made by the jury on the evidence, and the evidence
was therefore properly admitted.
Several items charged in the indictment as unreported income were in the
form of checks from a corporation controlled by Francis. The Government
introduced evidence that those payments were entered on the paying
corporation's books as expense items. This evidence was offered for the
purpose of showing that the payments were not repayments of loans or
other items which would not represent reportable income to the Whites.
Appellants argue that this evidence was improperly admitted because it
may have raised the inference of misdealing by the corporations, which
was not charged in the indictment. However, as was the case with the
cash deposits, any prejudicial inference was overbalanced by the
positive value of the evidence in showing a material element of the
case, i.e., the income nature of the Whites' receipts, and its admission
was not reversible error.
The indictment brought by the Government against the Whites charged each
defendant with (a) four counts (for the years 1958, 1959, 1960, 1961) of
wilful attempts to evade or defeat income taxation under 26 U. S. C. §7201,
and (b) four separate counts (for the same years) under 26 U. S. C. §7206(1)
for making and subscribing documents which contain "a written
declaration that it is made under the penalties of perjury, and which he
[the taxpayer] does not believe to be true and correct as to every
material matter." The documents were signed joint tax returns for
the four years of the indictment period. The prosecutions under §7201
were based on understatements of income and overstatements of expenses
in the four-year series of filed returns, together with proof of overt
acts by both defendants tending to show the wilfulness of their
affirmative efforts to evade the tax.
jury returned a verdict of guilty on all eight counts against each
defendant. Each was subsequently sentenced to the maximum fine of
$10,000 for each violation of §7201, totaling $40,000. Each was
additionally sentenced to the maximum fine of $5,000 for each violation
of §7206(1), which provides a felony penalty for perjured returns
whether or not a wilful attempt to evade or defeat payment of taxes is
shown. Total fines under this section were $20,000 for each defendant.
We affirm the convictions on all counts, but the additional fines for
violation of §7206(1) must be vacated. United States v. Lodwick
[69-2 USTC ¶9586], 410 F. 2d 1202, 23 AFTR 2d 69-1760 (8th Cir.,
May 22, 19
69); Gaunt v. United States [50-2 USTC ¶9412], 184 F. 2d 284,
290 (1st Cir. 1950), cert. denied 340 U. S. 917, rehearing denied
340 U. S. 939 (1951). Under the circumstances of this case, the perjured
returns were "incidental step[s] in the consummation of the
completed offense of attempted defeat or evasion of tax," Gaunt,
supra at 290, and as such each offense constituted a "crime
within a crime" under the lesser included offense doctrine. Id.
Both offenses charged were properly submitted simultaneously to the
jury, but the cumulative fines, insofar as they exceeded the maximum
possible fine under the greater offense charged in §7201, constituted
an unauthorized pyramiding of penalties.
7206(1), although it charges an offense separate and distinct in itself,
is only one part in a comprehensive statutory scheme to prohibit and
punish fraud occurring in the assessment and collection of taxes by the
government. Section 7201 is the inclusive section, prohibiting all
attempts to evade or defeat any tax in any manner, and such an
attempt is punishable as a felony. There follows a series of sections
prohibiting specific methods of fraud in the collection and payment of
taxes, all of which are separately punishable standing alone. Among
these are §§ 7203, 7206 and 7207, all directed against the taxpayer.
Other sections are directed at persons involved in the process of tax
collection. Section 7203 prohibits the failure to file a return, supply
information or pay a tax. Section 7207 prohibits the filing of
fraudulent returns, statements or other documents required by the
Service. Both these sections have been held by the Supreme Court to
constitute, under appropriate circumstances, lesser offenses included
within the prohibition of §7201. Sansone v. United States [65-1
USTC ¶9307], 380 U. S. 343 (1965). Section 7206(1) provides penalties
for signing, under oath, false returns or statements made in the process
of tax collection. The offense charged is perjury, the operative element
is the signature under oath, and the felony penalties reflect the
seriousness of this method of committing fraud. Thus the perjury
offenses charged under §7206 may separately form the basis for an
indictment; but where proof of wilfully attempted evasion under §7201
also proves, as an incident to the wilful evasion, the preparing and
subscribing of a fraudulent return, the specific form of fraudulent
conduct merges into the inclusive fraud charged under §7201. To
cumulate penalties beyond the maximum authorized by §7201 is,
therefore, improper under these circumstances, and the $20,000 in
additional fines assessed against each appellant on the §7206(1) counts
must be vacated.
The sentencing court suspended the additional sanction of imprisonment
against the Whites, placing them both on probation for five years.
Continuation of probation was expressly conditioned, however, upon their
payment, within 30 days, of all existing tax liabilities together with
full interest and all penalties, including the fraud penalties.
imposing these conditions, the trial court referred to information it
had received from the Internal Revenue Service assessing appellants'
civil liability for the four years covered by the indictment. However,
that figure represented only a computation by the Service, and the
Government concedes that the appellants here are entitled to litigate
that civil liability before payment. It is further conceded that the
conditions imposed on appellants' probation would hamper the
determination by legal process of the civil liability. For these
reasons, the conditions attached to probation must be removed. United
States v. Taylor [62-2 USTC ¶9590], 305 F. 2d 183 (4th Cir.) cert.
denied 371 U. S. 894, rehearing denied 371 U. S. 943 (1962); United
States v. Stoehr [52-1 USTC ¶9299], 196 F. 2d 276 (3d Cir.) cert.
denied 344 U. S. 826 (1952).
judgment of the District Court is modified by striking therefrom the
$40,000 in fines applicable to the convictions under 26 U. S. C. §7206(1),
and is remanded for removal of the conditions to probation; in all other
respects, the judgment is affirmed.
Both Francis and Gertrude White were convicted on the evidence produced
in Agent Martin's investigation. The books, records and statements which
appellants sought to suppress, however, were turned over to the
investigator as a result of, and during, interviews with Francis alone.
Mrs. White does not claim any failure of consent or any right to
suppress evidence against her based on failure of consent, since their
joint returns, for which they are both liable, formed the basis of the
USTC ¶9374]United States of America, Appellee v. Elton M. Brevik,
U. S. Court of Appeals, 8th Circuit, No. 19,726, 422 F2d 449,
, Aff'g unreported District Court opinion
[Code Sec. 7201]
Evasion of taxes: Miranda warnings in non-custodial hearing:
Witnesses' testimony of other crimes: Prejudice: Evidence.--The
taxpayer was convicted of evading income taxes for 1961 and 1962. On
appeal, he pleaded the Government's failure to give him the Miranda
warnings at a pre-trial meeting, and witnesses' remarks implying he was
guilty of other crimes, as grounds for reversal. Held, the Miranda
warnings were unnecessary as the evidence obtained at the meeting was
insignificant and the warnings are not required at non-custodial
hearings, such as the one here. Cohen v. U. S., 69-1 USTC ¶9132,
405 F. 2d 34, followed. Held, none of the remarks made by the
Government's witnesses were sufficiently prejudicial, in light of all
the evidence, to require reversal. The trial court was affirmed.
ert G. Renner, United States Attorney,
Ralph E. Koenig, Assistant United States Attorney, Minneapolis, Minn.,
for appellee. Richard A. Rohleder, E-903 First National Bank Bldg., St.
Paul, Minn., for appellant.
MATTHES, GIBSON and LAY, Circuit Judges.
M. Brevik was tried in November, 1968 on two counts of income tax
evasion, one each for 1961 and 1962, before Judge Phillip Neville in the
United States District Court for Minnesota. The jury returned verdicts
of guilty on both counts and Brevik was sentenced to three years
imprisonment. Motions for judgment n.o.v. and in the alternative for new
trial were denied and the defendant appealed. Since Brevik does not
challenge the sufficiency of the evidence upon which he was convicted
and since proof of his guilt was in fact substantial we need only
discuss those facts germane to the two questions of law upon which this
appeal is based.
contends first that his statements to a special agent of the Internal
Revenue Service were obtained in violation of the guidelines laid down
by the United States Supreme Court in Miranda v. Arizona, 384 U.
S. 436 (1966), and should not have been received in evidence, and second
that testimony of several other government witnesses and exhibits
related thereto were irrelevant and prejudicial and improperly admitted
first contention arises out of testimony given at trial by government
witness and IRS agent Samuel P. Doonan. Agent Doonan testified to
statements made by the defendant at an interview which occurred on
August 9, 19
65 in the Minneapolis office of the IRS. Present at the interview were
Special Agent Doonan, Revenue Agent Earl Williams, and the defendant.
Agent Doonan had previously requested a meeting with Brevik and
requested that Brevik bring his personal business records. It is
undisputed that Brevik's compliance with these requests was voluntary.
At the meeting itself Brevik's freedom of movement, including the right
to leave, was not restricted. Agent Doonan testified that he informed
Brevik before proceeding with the interview that Brevik had a right
under the Fifth Amendment not to furnish any information to him or to
talk to him. However, Agent Doonan did not advise Brevik of his right to
counsel. Before Agent Doonan testified to the substantive events at the
August 9th interview Brevik's counsel objected to further testimony
regarding the interview on the ground that under the Miranda
decision Brevik was entitled to be informed of his right to counsel and
any statements made without such advice being given are not admissible
in evidence. This objection was overruled.
Doonan testified to only two statements made by Brevik at the interview.
The first was that Brevik told him that in compliance with the request
to bring in his records, he (Brevik) had placed them in the glove
compartment of his automobile from which they were stolen while his car
was parked at the airport where he had left it while temporarily out of
town. Agent Doonan testified also that Brevik attempted to explain the
payment of a check in the amount of $2500.00 to his brother-in-law,
James P. Korstad, drawn on the corporate account of Selective Investment
Corporation, as being in exchange for financial advice regarding the
corporate structure of the company. Korstad had previously testified
that the payment was reimbursement of a long standing personal debt.
light of the totality of the evidence proving defendant's purposeful tax
evasion, these statements testified to by Agent Doonan taken together
amount to only an insignificant part of the evidence upon which the
defendant was convicted and were used largely to question Brevik's
credibility rather than as substantive proof of his guilt. Furthermore,
the Court's ruling admitting this evidence was correct. We held in Cohen
v. United States [69-1 USTC ¶9132], 405 F. 2d 34 (1968), cert.
denied, 394 U. S. 943 (1969), that where an interview is of a
non-custodial nature, as was concededly the case here, statements
elicited or volunteered at such an interview are not tainted or
inadmissible due to failure to give all of the Miranda warnings,
even where such interview has reached the accusatory stage. Cohen,
supra, like the case before us, was a case involving a non-custodial
interview by IRS agents. Virtually all the circuits have ruled on the
issue of the application of the Miranda warnings to non-custodial
tax investigations and only the 7th Circuit in U. S. v. Dickerson
[69-2 USTC ¶9556], 413 F. 2d 1111 (1969) opposes the rule that Miranda
does not apply to such situations. The case of Mathis v. U. S.
[68-1 USTC ¶9357], 391 U. S. 1, (1968), cited by defendant, is not
applicable since it involved a clearly custodial situation. In light of Cohen,
supra, and the many cases in the other circuits supporting the
proposition in Cohen, we hold that it was not error to admit the
testimony of Agent Doonan.
next objects to the admission of certain testimony given by four
government witnesses, Frank Kosanda, Raymond F. Kelly, Joe Thompson and
Vernie Lysenzer. The crux of the claim is that certain segments of the
testimony of these witnesses and connected exhibits prejudicially
accused the defendant of prior criminal misconduct in violation of the
general rule observed in Hartman v. U. S. [54-2 USTC ¶9522], 215
F. 2d 386 (8th Cir. 1954) and Kempe v. U. S., 151 F. 2d 680 (8th
Cir. 1945), cert. denied, 331 U. S. 843 (1947), 1 and as a
result such evidence was improperly admitted.
Kosanda testified that as an attorney in Grand Forks, North Dakota he
had incorporated the Garden State Investment Company. This testimony is
connected with the rest of the case only in the fact that Garden State
Investment Company was one of the companies from which money was
apparently taken by Brevik without reporting it as income. This
testimony may be irrelevant but it is not prejudicial, does not violate
the rule against admission of evidence tending to show that a defendant
has committed other crimes, and in light of all the evidence, its
admission, if error, was surely harmless.
Kelly and Thompson testified over objection that they were North Dakota
farmers who were solicited by Brevik and who bought stock in Garden
State Investment Company. Lysenzer only testified that Brevik visited
him, at which point, after objection from defense counsel, the trial
court prohibited further evidence of this sort, saying that it was
cumulative and that if it were continued it might become prejudicial in
that it implied that Brevik was involved in dishonest stock
transactions, a crime which was not part of the indictment in the
present case. The trial court observed that the evidence admitted to
that point was not prejudicial.
the whole we agree with the trial court that very little of this
testimony was important and none was significantly prejudicial
considered in light of the totality of the evidence. There might be some
question regarding the government's purpose in introducing this
testimony and some difficulty in determining its relevance. However, the
government does suggest one plausible explanation. The government
contends that it was necessary to show that monies taken from corporate
accounts were in fact corporate funds and not personal finances. Thus,
the evidence is probably relevant, and even if irrelevant and
erroneously admitted, is harmless error in light of the overwhelming
evidence of defendant's guilt. As to the allegation that the testimony,
even if relevant, violates the general rule against admission of
evidence which tends to implicate a defendant in other criminal
activity, it is difficult to see how this testimony does so. At most it
appears to raise a bare implication of possible dishonest stock
transactions, and in fact no testimony was received other than the
statements that stock was sold for significant sums of money. Only in
one instance was possible dishonest activity more clearly raised. Joe
Thompson testified that the original check used to purchase stock from
Brevik was in the courthouse in Grafton, North Dakota as part of the
evidence in a lawsuit there. Defense counsel objected to this testimony
and the objection was sustained, the testimony stricken from the record,
and the jury instructed to disregard it. Much more damaging evidence
implicating Brevik in violations of the Minnesota Securities Act was
elicited by Brevik's own counsel in cross examining a government witness
who testified under cross examination that Brevik had pleaded guilty to
find that most of the evidence complained of had relevance sufficient
for admission and none was significantly prejudicial. Thus, it is our
view that no error was committed, but even assuming, arguendo,
that some error was committed, it was harmless.
In Hartman v. U. S., supra, at 393, the Court held that "In
order for wrongful acts not included in a charge to be admissible to
prove intent they must be of such a character that as a matter of logic
they tend to demonstrate a criminal intent in the acts within the
charge." Kempe v. U. S., supra, at 687 states the rule as:
"The general rule is that in a criminal prosecution proof which
shows or tends to show that the accused is guilty of the commission of
other crimes and offenses at other times, even though they are of the
same nature as the one charged in the indictment, is incompetent and
inadmissible for the purpose of showing the commission of the particular
crime charged. The accused is to be convicted, if at all, on evidence
showing his guilt of the particular offense charged in the information.
It is not competent to prove that the accused committed other crimes of
a like nature for the purpose of showing that he would be likely to
commit the crime charged in the information."
USTC ¶9149]United States of America, Plaintiff-Appellee v. Ethel M.
U. S. Court of Appeals, 6th Circuit, No. 18474, 404 F2d 58, 11/26/68,
Aff'g unreported District Court decision
[Code Secs. 7201 and 7602(1)]
Tax evasion: Examination of books and witnesses: Accountant:
Voluntary cooperation with IRS agents: Motion to suppress evidence:
Defenses: Constitutionality.--In upholding the taxpayer's conviction
for filing false and fraudulent returns for the taxable years 1959
through 1962, the Court of Appeals held that the District Court did not
err in failing to suppress prior to trial, and by admitting at the
trial, certain evidence obtained from the taxpayer and her accountant.
The taxpayer conceded that the information derived from her accountant
was voluntarily made available to IRS agents; there was no showing that
the taxpayer's books and records, rather than the accountant's, were
surrendered; the taxpayer's returns for the taxable years had not been
subjected to prior audit; the examination of the taxpayer's records was
authorized (Code Sec. 7602(1)); the taxpayer turned over her records
without coercion or promise; and there was no indication that the
taxpayer was ever subjected to in-custody questioning. District Court
[Code Sec. 7201]
Tax evasion: Jury trial: Defenses: Prior contact with juror.--There
was no evidence to support the taxpayer's contention that she was
deprived of a fair trial by undisclosed prior contact of one juror with
her and her hotel.
I. Cline, United States Attorney, G. Wix Unthank, Assistant United
States Attorney, Lexington, Ky., for plaintiff-appellee. William H.
Beck, 404 Citizens Union Nat'l Bank Bldg., Lexington, Ky., for
EDWARDS and COFFIN, * Circuit
Judges, and CECIL, Senior Circuit Judge.
Beal was indicted for filing false and fraudulent income tax returns in
each of four years--1959, 1960, 1961 and 1962--in violation of 26 U. S.
C. §7201 (1964). The government served notice that it intended to
proceed by net worth proofs to show understatement of income by over
$51,000 and understatement of tax by over $21,000 in the four disputed
years. The case was tried to a jury before the United States District
Court for the Eastern District of Kentucky and appellant was found
guilty on all counts and was thereafter sentenced to probation and a
$2,500 fine on each count.
appeal appellant's counsel listed ten separate claims of reversible
error, but at oral argument largely abandoned all except numbers IV, VII
Contact with Juror]
to appellant's question IV, wherein she asserts that she was deprived of
a fair trial by undisclosed prior contact of one juror with her and her
hotel, we have examined the appellate record and find it devoid of facts
upon which appellant seeks to rely. Clearly, the claim was not advanced
at trial and apparently no record was made pertaining to this issue on
motion for new trial. If this evidence is newly discovered evidence, it
cannot be asserted first at appellate hearing. See FED. R. CRIM. P. 33.
to questions VII and VIII, appellant asserts that the District Judge
erred in failing to suppress prior to trial, and by admitting at trial,
certain evidence derived from appellant's accountant and from appellant
herself. Appellant relies generally on the Fourth and Fifth Amendments
in this regard. We have examined the entire record in this regard and
find no constitutional violations or reversible error.
Obtained from Accountant]
appears to concede that information derived from appellant's accountant
was voluntarily made available to the Internal Revenue Service agents.
The record does not show surrender of appellant's own books and records,
as opposed to the accountant's own books and records. Appellant's tax
returns for these disputed years had not been subjected to prior audit. Cf.
Hinchcliff v. Clarke [67-1 USTC ¶9187], 371 F. 2d 697 (6th Cir.
is any issue presented (or found in the record) which would show such
violations pertaining to information derived from appellant herself. The
examination of appellant's records was authorized by statute. 26 U. S.
C. §7602(1) (1964). The District Judge found (on ample evidence) that
appellant turned over her records without coercion or promise. See Eggleton
v. United States [56-1 USTC ¶9108], 227 F. 2d 493 (6th Cir. 1955), cert.
denied, 352 U. S. 826 (1956); Zap v. United States, 328 U. S.
624 (1946), rehearing denied, 329 U. S. 824, vacated and
remanded on other grounds, 330 U. S. 800 (1947). There is no
indication in this record that appellant was ever subjected to
in-custody questioning. Cf. Miranda v. Arizona, 384 U. S. 436
have also examined the other six issues advanced on this appeal and find
no reversible error.
Hon. Frank M. Coffin, United States Court of Appeals for the First
Circuit, sitting by designation.
ert M. Muse, Appellant v. United States of America, Appellee
U. S. Court of Appeals, 8th Circuit, No. 19,259, 405 F2d 40, 12/18/68,
Aff'g unreported District Court opinion
[Code Sec. 7201]
Tax evasion: Tax investigation: Pre-custodial investigation:
Constitutional rights.--The District Court did not err in admitting
oral and written statements made by the taxpayer to a Special Agent who
had warned the taxpayer that he had a right to remain silent, but had
failed to warn him of his right to retain counsel. The taxpayer was not
in custody, the statements were not obtained by misrepresentation, fraud
or coercion, and were voluntarily given. Cohen v. U. S., (CA-8)
69-1 USTC ¶9132.
L. Boeger, Morris A. Shenker, James F. Nangle, Jr., 408 Olive St., St.
Louis, Mo., for appellant. John M. Brant, Mitchell Rogovin, Assistant
Attorney General, Lee A. Jackson, Joseph M. Howard, Department of
Justice, Washington, D. C. 20530, Veryl L. Riddle, United States
Attorney, Irvin L. Ruzicka, Assistant United States Attorney, St. Louis,
Mo., for appellee.
VAN OOSTERHOUT, Chief Judge; MEHAFFY and HEANEY, Circuit Judges.
defendant was indicted in three counts for willfully attempting to evade
income taxes by filing false and fraudulent individual income tax
returns for the years 1960, 1961 and 1962 in violation of §7201 of the
Internal Revenue Code of 1954. He was found guilty on all counts and
question raised here is whether the District Court erred in refusing to
exclude evidence obtained from the defendant by Internal Revenue Service
Agents. We hold it did not.
Revenue Agent of the Internal Revenue Service began an investigation of
the defendant's returns in early 1964. He had been investigating the
returns of the defendant's brother. He met twice with the defendant
before referring the case to the Intelligence Division on
February 24, 19
64. He told the defendant that the purpose of the investigation was to
determine the defendant's correct tax liability.
March 2, 19
64, the Revenue Agent and the Special Agent met with the defendant in
the Special Agent's office. The Special Agent introduced himself as
Special Agent and read the following warning:
the Constitution of the United States you have the right to refuse to
answer questions or make any statement which may tend to incriminate you
under the laws of the United States. Anything you say, any evidence you
produce may be used against you in any proceeding which may hereafter be
undertaken by the United States."
defendant replied that he understood. Several additional visits were
made between the March meeting and
October 14, 19
65. Incriminating statements and records were obtained at some of them.
At the latter meeting, the Special Agent asked the defendant to sign a
written statement. The defendant asked "what direction the
investigation was going" and whether he needed a lawyer. The
Special Agent replied that "it looked as if criminal prosecution
would be recommended; that it was for the defendant to decide about
retaining a lawyer and that the Internal Revenue Service Agents would
not advise him one way or the other on the subject."
October 28, 19
65, the defendant signed a statement containing oral admissions made by
him during the course of the several meetings. In substance, the
defendant admitted that he knew that each return understated his income
by "several thousand dollars" and that he had filed the
incorrect returns to protect his brother against an examination.
statements as to the purpose of the investigation, nor warnings other
than those stated, were given to the defendant at any time during the
Right to Warning]
are convinced here, as we were in Cohen v. United States, No.
19181, 8th Cir.
Dec. 18, 19
68, [69-1 USTC ¶9132] decided today, that the District Court did not
err in receiving the defendant's oral and written statements in
evidence. The defendant was not in custody and the statements were not
obtained by misrepresentation, fraud or coercion, and were voluntarily
given. The defendant's constitutional rights under the Fifth and Sixth
Amendments were not violated.
USTC ¶9295]Taglianetti v. United States
Court of the United States, No. 446, 394 US 316, 89 SCt 1099, 3/24/69,
Aff'g CA-1, 68-2 USTC ¶9479, 398 F. 2d 558
On Petition for Writ of Certiorari to the United States Court of Appeals
for the First Circuit.
[Code Sec. 7201]
Criminal prosecutions: Tax evasion: Electronic surveillance:
Government records: Constitutional safeguards.--The taxpayer's
conviction for tax evasion was upheld. The taxpayer was not entitled to
examine additional surveillance records obtained by the government by
electronic means where the District Court had examined all the records in
camera in order to determine if the government had correctly
identified the taxpayer and had turned over to him each conversation in
which he had participated. The in camera examination was an
adequate safeguard of the taxpayer's Fourth Amendment rights.
J., concurs in the result.
La Fazia, 111 Westminster St., 533 Industrial Bank Bldg., Providence, R.
I., for petitioner. Erwin N. Griswold, Solicitor General, Mitchell
Rogovin, Assistant Attorney General, Richard B. Buhrman, Department of
Justice, Washington, D. C. 20530, for U. S.
petition for certiorari is granted and the judgment of the Court of
Appeals is affirmed. 1 Following a
jury trial in the District Court, petitioner was convicted on three
counts of wilfully attempting to evade his income tax for the years
1956, 1957, and 1958. Following a remand to the District Court, the
Court of Appeals affirmed the convictions. In the District Court on
remand, the Government purported to turn over to petitioner all of his
own conversations which had been overheard by means of unlawful
electronic surveillance. 2 Petitioner
argues that he was entitled to examine additional surveillance records
because neither the Government nor the District Court was able to
determine with certainty which conversations petitioner had been a party
to. In fact, the District Court examined all the records in camera
to ascertain if the Government had correctly identified petitioner's
voice and had turned over to petitioner each conversation in which he
in Alderman v. United States, Ivanov v. United States, or Butenko v.
United States, -- U. S. --, requires an adversary proceeding and
full disclosure for resolution of every issue raised by an electronic
surveillance. On the contrary, an adversary proceeding and disclosure
were required in those cases not for lack of confidence in the integrity
of government counsel or the trial judge, but only because the in
camera procedures at issue there would have been an inadequate means
to safeguard a defendant's Fourth Amendment rights. Here the defendant
was entitled to see a transcript of his own conversations and nothing
else. He had no right to rummage in government files. The trial court
was asked only to identify those instances of surveillance which
petitioner had standing to challenge under the Fourth Amendment
exclusionary rule and to double-check the accuracy of the Government's
voice identifications. Under the circumstances presented here, we cannot
hold that "the task is too complex, and the margin for error too
great, to rely wholly on the in camera judgment of the trial
JUSTICE BLACK concurs in the result.
JUSTICE MARSHALL took no part in the consideration or disposition of
Although this petition for certiorari was not filed within the 30 days
allowed by the Court's Rule 22(2), the time limitation is not
jurisdictional, Heflin v. United States, 358 U. S. 415, 418, n. 7
(1959), and does not bar our exercise of discretion to consider this
Petitioner sought disclosure only of his own conversations and
apparently lacks standing as to any others. "We do not understand
appellant to argue that he has a right to inspect logs or memos of
conversations in which he was not a participant. Indeed, that point he
wisely conceded before the district court." 398 F. 2d, 558, 571.
USTC ¶9132]Jerry M. Cohen, Appellant v. United States of America,
U. S. Court of Appeals, 8th Circuit, No. 19,181, 405 F2d 34, 12/18/68,
Aff'g unreported District Court opinion
[Code Sec. 7201]
Tax evasion: Tax investigation: Pre-custodial interview:
Constitutional rights.--Internal Revenue Agents, Revenue or Special,
conducting tax investigations are not required to warn taxpayers who are
not in custody of their constitutional right to remain silent or right
to retain counsel. However, disclosures to Internal Revenue Service
Agents, both Revenue or Special, must be entirely voluntary and must not
be induced by coercion, fraud or misrepresentations.
M. Bray, 1100 Federal Bar Bldg., 1815 H. St., N. W., Washington, D. C.,
ert J. Koster, Cook, Murphy, Lance & Mayer, 611 Olive St., Suite
2106, St. Louis, Mo., for appellant. John M. Brant, Richard C. Pugh,
Acting Assistant Attorney General, Lee A. Jackson, Joseph M. Howard,
Department of Justice, Washington, D. C. 20530, Veryl L. Riddle, United
States Attorney, Irvin L. Ruzicka, Assistant United States Attorney, St.
Louis, Mo., for appellee.
MATTHES, MEHAFFY and HEANEY, Circuit Judges.
defendant was indicted in three counts for willful failure to file
individual income tax returns for 1960, 1961 and 1962 in violation of §7203
of the Internal Revenue Code of 1954, and in eight counts for knowingly
filing false employer's quarterly tax returns for 1961 and 1962 in
violation of §7201. He was found guilty on all counts and was
question raised here is whether the District Court erred in refusing to
exclude evidence obtained from the defendant by Internal Revenue Service
Agents--evidence which the defendant contends was secured by
misrepresentation and in violation of his constitutional rights under
the Fifth (Miranda) 1 and Sixth (Escobedo)
Special Agent, 3 assigned to
investigate the defendant's failure to file tax returns, telephoned the
August 19, 19
63, and told him he was a Special Agent who investigated irregularities
in taxes. He asked the defendant a few questions and requested an
September 9, 19
63, the Special Agent went to the defendant's office and told him that
the St. Louis Office of the Internal Revenue Service had no record of
income tax returns filed by the defendant and asked where they had been
filed. The defendant replied that he had filed returns in Detroit in
1959, but had not filed returns after that. This was the first time that
the Special Agent knew that no returns had been filed. The Special Agent
then told the defendant that a Revenue Agent had been assigned to
"examine his income tax liability, if any" and that the
Revenue Agent would make the tax examination, and that he, the Special
Agent, would conduct an audit. The Special Agent also learned, at this
meeting, that the defendant was the sole proprietor of the United
agents visited the defendant's office singly or together on
September 26, 19
June 3, 19
September 9, 19
March 16, 19
August 10, 19
September 16, 19
65. On most occasions, they obtained records used against the defendant.
was at the second visit, on
June 3, 19
64, that the defendant was first advised that he need not answer any
questions which tended to incriminate him. He responded to this warning
by saying that he understood but saw no reason not to answer. The
warning was repeated at an
August 10, 19
65, meeting at the defendant's office. The defendant again answered the
questions put to him by the agents.
April 6, 19
66, the taxpayer went to the Internal Revenue Service office for a
formal interview. He did so in response to a letter which told him he
could bring an attorney. He was advised for the first time at this
meeting that the Special Agent was a criminal investigator. He was also
advised for the first time that he had a right to counsel, but was not
told that counsel would be provided for him.
the basis of this record, we are convinced that the defendant's records
and statements were not obtained by misrepresentation, fraud or
coercion, as those terms were understood pre-Escobedo and Miranda,
and were voluntarily given in the same sense.
there is District Court authority for the view that Internal Revenue
Service Agents have an affirmative duty to inform a taxpayer that he is
the subject of a criminal investigation in circumstances comparable to
those here, 4 the United
States Courts of Appeals have uniformly held to the contrary. 5 We follow
the latter cases but reiterate our warning in White v. United States,
395 F. 2d 170 (8th Cir. 1968), that agents must not affirmatively
mislead a taxpayer into believing that the investigation is exclusively
civil in character and will not lead to criminal charges.
turn to the question of whether the failure to give a Miranda
warning, or a modified version thereof, made the evidence obtained
indicated by way of dictum in Frohmann v. United States [67-2
USTC ¶9588], 380 F. 2d 832 (8th Cir. 1967), and held in White,
that a special investigator for the Alcohol and Tobacco Tax Division of
the Internal Revenue Service conducting a pre-custody investigation need
not warn a taxpayer of his constitutional rights as enunciated in Escobedo
and Miranda. We did not distinguish in either case between
investigations conducted by the Audit Division, usually civil, and those
conducted by Special or Intelligence Agents, usually criminal. Nor did
we attempt to draw a line between the investigatory or accusatory stage
of such investigations.
are now faced with the question of whether we will apply the dictum in Frohmann
and the holding in White to pre-custodial inquiries by Special
Agents of the Internal Revenue Service, including situations in which
the inquiries may have reached the accusatory stage.
Courts in the Tenth, Fifth, Third and Seventh Circuits have held that
warnings are required at the point the investigation reaches the
accusatory stage or becomes criminally oriented. They have indicated
that this stage is often reached when a Special Agent is assigned to the
case 6 United
States v. Turzynski [67-2 USTC ¶9489], 268 F. Supp. 847 (N. D. Ill.
1967), is recognized as the leading case for this point of view.
Turzynski, as a result of a civil investigation, the taxpayer's
case was turned over to the criminal division of the Internal Revenue
Service. The taxpayer was not informed of this shift of focus and
continued to furnish the Special Agent with records and interviews. The
taxpayer was given no warning of possible criminal prosecution until the
investigation was completed and he was sent a letter inviting him to a
formal conference. The letter informed him that he could bring counsel.
The taxpayer reported without counsel. The agents, however, refused to
continue until the taxpayer retained counsel. The court said:
* * Once a taxpayer becomes the subject of a criminal tax investigation,
as evidenced by the referral of the investigation to the Intelligence
Division or otherwise, our adversary process of criminal justice has
become directed against him as a potential criminal defendant. Any
evidence obtained from him is admissible only if the taxpayer furnished
it after knowingly and voluntarily waiving his constitutional rights and
privileges. * * *
hold otherwise would lead to the anomolous conclusion that a person
suspected of bank robbery, sale of narcotics, murder, rape or other
serious crime is entitled to greater protection of his constitutional
rights than a person suspected of violating the internal revenue laws.
For when the silent transition from civil to criminal investigation
takes place in a tax case, the taxpayer being interrogated and asked to
furnish his books and records is just as surely a prime suspect and
candidate for criminal prosecution as the individual under interrogation
as a suspect for other crimes."
[Courts of Appeals' Decisions]
Courts of Appeals, that have considered the matter since Escobedo,
have held, in a variety of fact situations, that warnings need not be
given in pre-custodial interview. 7 The
reasoning of Judge Lumbard in United States v. Squeri [68-2 USTC
¶9493], 398 F. 2d (2d Cir. 1968), appears to reflect the views (often
unexpressed) of the Circuits that have considered the question:
* * [W]e reject the view, adopted by a few district courts in other
circuits, that IRS agents must give the Miranda warnings, even
though there is no custodial interrogation, if the investigation has
reached the accusatory stage. * * * The Fifth Amendment privilege
prohibits the government from compelling a person to incriminate
himself. It was the compulsive aspect of custodial interrogation, and
not the strength or extent of the government's suspicions at the time
the questioning was conducted, which led the court to impose the Miranda
requirements with regard to custodial questioning. We believe that the
presence or absence of compelling pressures, rather than the stage to
which the government's investigation has developed, determines whether
the Miranda requirements apply to any particular instance of
[Present IRS Procedure]
November 26, 19
68, the Internal Revenue Service announced a revised procedure for
advising a taxpayer of his rights during an investigation conducted by a
Special Agent of the Internal Revenue Service, Intelligence Division.
* * At the initial meeting with a taxpayer, a Special Agent is now
required to identify himself, describe his function, and advise the
taxpayer that anything he says may be used against him. The Special
Agent will also tell the taxpayer that he cannot be compelled to
incriminate himself by answering any questions or producing any
documents, and that he has the right to seek the assistance of an
attorney before responding.
the Special Agent identified himself and described his function at the
first meeting with the taxpayer but was not required to give further
advice unless the taxpayer was in custody or the investigation proceeded
beyond the pre-liminary stage.
has made no change in its existing instructions that if it becomes
necessary to interview a person who is in custody, an Agent must give a
comprehensive statement of rights before any interrogation. This
statement warns the person in custody that he may remain silent and that
anything he says may be used against him.
person in custody also must be told that he has the right to consult or
have present his own counsel before making a statement or answering any
questions, and that if he cannot afford counsel he can have one
appointed by the U. S. Commissioner."
News Release IR-949,
November 26, 19
procedures outlined in the instructions are a step forward in tax
istration and will be among the factors considered by this Court in
determining whether the nature of an investigation has been
misrepresented. They fall short, however, of extending to the taxpayer
the protections set forth in Escobedo and Miranda.
istration of the new Internal Revenue Service procedure will raise
practical problems. In some instances, the Revenue Agents will have
obtained the evidence necessary to obtain a conviction before referral;
in others, Revenue Agents might be encouraged to expand their inquiries.
Furthermore, a determination as to when the right to warnings attach
should not depend on the title and function of the official
investigator. United States v. Mathis [68-1 USTC ¶9357], 391 U.
S. 1 (1968); United States v. Mackiewicz [68-2 USTC ¶9461], (2d
July 10, 19
68), cert. denied, 37 U. S. L. Week 3158 (U. S.
Oct. 28, 19
68); Note, 33 U. Chi. L. Rev. 134, 147-48 (1965).
meet these problems, Law Review commentary recommends that warnings be
optional with the Internal Revenue Service depending on whether there is
a desire to preserve the right to use any evidence obtained in a
criminal prosecution. If it had this desire, full warnings would be
a taxpayer is entitled to be warned of his Fifth and Sixth Amendment
rights in a non-custodial tax investigation, the Law Review
recommendations would be meritorious. While the suggested procedure
would impose additional
istrative tasks, 9 it would be
fair to the taxpayer and susceptible of review. We do not require it,
however, because we do not believe that the taxpayer is so entitled.
Right to Warning]
summarize, we hold that the Internal Revenue Service Agents, Revenue or
Special, are not required to warn taxpayers who are not in custody of
their Fifth or Sixth Amendment rights.
also reemphasize the views that we expressed in White that
disclosures to Internal Revenue Service Agents, Revenue or Special, must
be entirely voluntary and must not be induced by coercion, fraud or
1 Miranda v. Arizona,
384 U. S. 436 (1966).
2 Escobedo v. Illinois,
378 F. 2d 767 (1964).
Revenue Agents undertake routine civil audits in an attempt to ascertain
if, in fact, there has been a deficiency. The Revenue Agent, in the
normal course, is not searching for evidence of fraud. If, however, the
Revenue Agent discovers the possible existence of fraud, the matter is
turned over to his superiors who refer the case to the Intelligence
Division. The Intelligence Division then determines whether a fraud
investigation is warranted. If a decision is made to commence a fraud
investigation, a Special Agent is placed in charge. The Special Agent is
a trained criminal investigator. His duty is to determine whether the
taxpayer has, in fact, committed fraud. Both the Special Agent and
Revenue Agent have virtually unreviewable discretion to dismiss the
criminal aspects of a case while they are in charge. Duke, Prosecutions
for Attempts To Evade Income Tax: A Discordant View of a Procedural
Hybrid, 76 Yale L. J. 1, 34-35 (1966); Hewitt, The Constitutional
Rights of the Taxpayer in a Fraud Investigation, 44 Taxes 660,
United States v. Wheeler [57-2 USTC ¶9752], 149 F. Supp. 445,
450 (W. D. Pa. 1957), rev'd on other grounds, [58-2 USTC ¶9626]
256 F. 2d 745 (3d Cir.), cert. denied, 358 U. S. 873 (1953):
* * [T]he law distinguishes between failure on the part of a government
investigator to disclose the purpose of his investigation at its
inception when suspicion of criminal wrongdoing exists and the discovery
of criminal wrongdoing in the course of a routine investigation. * *
former constitutes misrepresentation. United States v. Walrich,
129 F. Supp. 528 (S. D. N. Y. 1954). Although fraud was suspected from
the outset the agents told the defendant that it was a routine
examination. The court held that this was a misrepresentation. United
States v. Guerrina [53-1 USTC ¶9369], 112 F. Supp. 126 (E. D. Pa.
1953), modified, [55-1 USTC ¶9143] 126 F. Supp. 609 (E. D. Pa.
United States v. Mackiewicz 68-2 USTC ¶9461, (2d Cir.
July 10, 19
68), cert. denied, 37 U. S. L. Week 3158 (U. S.
Oct. 28, 19
68); United States v. Sclafani [59-1 USTC ¶9357], 265 F. 2d 408,
414 (2d Cir. 1959), cert. denied, 360 U. S. 918 (1960); United
States v. Frank [57-1 USTC ¶9675], 245 F. 2d 284, 286 (3d Cir.
1957), cert. denied, 355 U. S. 819 (1957). See, Hanson v.
United States [51-1 USTC ¶9118], 186 F. 2d 61, 65-66 (8th Cir.
United States v. Wainwright [68-1 USTC ¶9311], 284 F. Supp. 129
(D. Colo. 1968); United States v. Kingry [67-1 USTC ¶9262], (N.
January 6, 19
67); United States v. Gower [65-2 USTC ¶9752], (M. D. Pa.
August 27, 19
65). See, Andrews, The Right To Counsel In Criminal Tax
Investigations Under Escobedo And Miranda: The "Critical
Stage," 53 Iowa L. Rev. 1074, 1111-1116 (1968); Comment, 53
Iowa L. Rev. 957, 962 (1968).
Taglianetti v. United States [68-2 USTC ¶9479], (1st Cir.,
July 18, 19
68), petitioner for cert. filed, 37 U. S. L. Week 3081 (U. S.
Aug. 28, 19
68) (No. 446); Spinney v. United States [67-2 USTC ¶9738], 385
F. 2d 908 (1st Cir. 1967), cert. denied, 390 U. S. 921, 19 L. Ed.
2d 981 (1968); Schlinsky v. United States [67-2 USTC ¶9493], 379
F. 2d 735 (1st Cir.), cert. denied, 389 U. S. 920 (1967); Morgan
v. United States [67-1 USTC ¶9449], 377 F. 2d 507 (1st Cir. 1967).
each of these cases, the defendant was warned of his right to remain
silent and was told that anything he stated could be used against him.
In none of them was he advised of his right to counsel or to have
counsel appointed for him. The language of the Court in Spinney
indicates, however, that it would not necessarily require that any of
the Miranda warnings be given to a taxpayer being interviewed in
home or an Internal Revenue Service office.
* * [W]here one is legally free, albeit at the risk of unpleasant
consequences, to reject the government's invitation to appear and
participate in an I. R. S. interview, the requirements enumerated in Miranda
do not apply. * * *
. . the background of Miranda demonstrates that it was the
product of the Court's concern with the difficulty of protecting persons
in the custody of the police from coercive interrogation tactics carried
on in secret. * * * Defendant makes no assertion, nor could he, that he
was not free to walk out of the Internal Revenue office at any time. * *
*'" Spinney v. United States, 385 F. 2d at 910.
United States v. Marcus [68-2 USTC ¶9599], (2d Cir.
September 20, 19
68); United States v. Dawson [68-2 USTC ¶9527], 400 F. 2d 194
(2d Cir. 1968); United States v. Squeri [68-2 USTC ¶9493], 398
F. 2d 785 (2d Cir. 1968); United States v. Mackiewicz [68-2 USTC
¶9461], (2d Cir.
July 10, 19
68), cert. denied, 37 U. S. L. Week 3158 (U. S.
Oct. 28, 19
Mackiewicz and Squeri, the defendant was warned of his
right to remain silent but was not advised of his right to counsel. In Dawson,
the defendant was warned of his right to remain silent and to have
counsel at the first two interviews. At subsequent interviews, no
earnings were given and defendant made damaging admissions. In Marcus,
it is not clear whether or not the defendant was warned of his right to
remain silent, but the defendant was not warned of his right to counsel.
The Court, in all four cases, went beyond the facts of the particular
case and stated that where the defendant was aware he was the subject of
a tax investigation and where the interviews were conducted in
noncustodial situations. Miranda warnings are not required.
United States v. Mancuso [67-2 USTC ¶9487], 378 F. 2d 612 (4th
Cir.), modified [68-1 USTC ¶9166], 387 F. 2d 376 (4th Cir.
1967), cert. denied, 390 U. S. 955 (1968).
defendant was accompanied by his attorney and accountant at two Internal
Revenue Service interviews where he made incriminating statements. The
defendant was warned he could refuse to answer the question which could
incriminate him, but was not warned of his right to counsel. The Court,
rather than base its decision on the narrow ground that counsel was, in
fact, present, chose to hold that neither Miranda nor Escobedo
are applicable to a tax investigation where the purpose is to determine
whether or not additional taxes due or a crime has in fact been
Mathis v. United States [67-1 USTC ¶9408], 376 F. 2d 595 (5th
Cir. 1967), rev'd [68-1 USTC ¶9357], 391 U. S. 1 (1968).
defendant was interviewed in connection with a routine audit while he
was confined in the Florida State Penitentiary on an unrelated
conviction. No warnings were given and the Circuit Court affirmed on the
basis that no warnings were required where the agent was conducting a
routine audit even though there was a possibility that fraud would be
uncovered. The Supreme Court reversed and held the interview must be
suppressed as it was the product of an in custody interrogation.
United States v. Maius [67-2 USTC ¶9521], 378 F. 2d 716 (6th
Cir.), cert. denied, 389 U. S. 905 (1967).
defendant was warned that he had the right to remain silent but not that
he had grave right to counsel. The Court expressed grave reservations as
to its holding:
* * A citizen summoned before such federal agents has the option to
refuse to answer their questions; but there are few who have the
toughness of fibre and the technical knowledge of their rights, who
would decline to answer questions put to them in these circumstances.
Until we are told by superiod authority that a citizen's constitutional
rights are imperiled by such procedure, we are constrained to hold that
the evidence thereby obtained is admissible in the ensuing criminal
United States v. Mansfield [67-2 USTC ¶9586], 381 F. 2d 961 (7th
Cir.), cert. denied, 389 U. S. 1015 (1967).
defendant was warned at the initial interview that there was a
possibility of criminal prosecution and that he could remain silent and
refuse to produce his records. He was not warned of his right to
counsel. No further warnings were given at subsequent interviews. The
Court held that the tactical decision not to give further warnings did
not render inadmissible records obtained at subsequent interviews.
Selinger v. Bigler [67-1 USTC ¶9420], 377 F. 2d 542 (9th Cir.) (Per
Curiam), cert. denied, 389 U. S. 904 (1967); Rickey v. United
States [66-1 USTC ¶9395], 360 F. 2d 32 (9th Cir.), cert. denied,
385 U. S. 835 (1966); Kohatsu v. United States [65-2 USTC ¶9715],
351 F. 2d 898 (9th Cir. 1965), cert. denied, 384 U. S. 1011
three of these cases arose post-Escobedo but pre-Miranda.
In Kohatsu, the defendant was not warned of his right to retain
or have counsel appointed, but was warned of his right to remain silent
and not to produce any records. The warning, however, was given by a
Special Agent after the defendant has already made incriminating
statements and turned over incriminating records to a Revenue Agent. The
Court held that Escobedo was not applicable as this was an
investigation to determine whether a crime had been committed in fact.
Revenue Agents are not required to inform the taxpayer of the shift to a
criminal investigation where a routine investigation develops evidence
of fraud because it is inherent in the investigation that the agents
will pursue such evidence. The other two cases relied on this reasoning.
Duke, supra note 3, at 39, Hewitt, supra note 3, at 697;
Lipton, Constitutional Rights in Criminal Tax Investigation, 53
A. B. A. J. 517, 521 (1967); Note, 33 U. Chi. L. Rev. 134, 1947-48
"To inject the full Miranda warning at this stage of the
proceedings would merely clutter an already difficult
istrative task." United States v. Mackiewicz, supra. See Kohatsu
v. United States, supra; United States v. Sclafani, supra.