United States of America and Donald Jackson, Special Agent v. Charles H. Stuckey, and Morry Weinstein, Intervenor-Appellant

claimed to have filed tax returns for 1975 SKOPIL, Before MERRILL and Circuit agent and 1976 but the revenue found no WYATT,* Judges, Judge. District record those returns. assigned The to Thom- SKOPIL, Judge: Circuit Utaski, special agent, who issued all but one of the summonses issue in this INTRODUCTION appeal. A special agent, second Donald Jackson, later took over the investigation appeals Weinstein a district court’s order and issued the other summons. The sum- enforcing administrative tax is- summonses monses directed to various individuals pursuant sued to 26 U.S.C. 7602. Wein- § requested and banks and Weinstein’s finan- stein prove failed in district court his cial records. that contention the summonses were issued in prosecution. bad faith aid of criminal right provided Weinstein his exercised appeal On argues he that he failed because by requesting U.S.C. § the district court improperly parties denied his re- provide third summoned not infor- * York, Wyatt, sitting by designation. Honorable Inzer B. Senior United States District of the Southern District of New ment’s Petition for Enforcement Sum- commenced dis- This action was

mation. granted”. petition filed a when Jackson mons[es] trict court Weinstein was the summonses. enforce objected to the termination Weinstein in the en- to intervene granted permission requested that he be proceedings forcement action. proof. to make an offer of allowed request. granted court affirmative de- raised several He to enforcement. opposition fenses proof Weinstein In his offer of contended argued IRS issued the that the certain that he have demonstrated could its aid the DEA in him and to harass “extraordinary aberrations usual IRS investigation. He sub- procedure” non-tax from which the administrative support argu- reasonably mitted declarations inferred insti- court have could argued filed declarations ments. tutional bad faith. agents support of goal and officers in he should have been of five to achieve that persons The district court concluded to who submitted question enforcement. allowed sufficiently question raised serious to two other IRS that Weinstein declarations and evidentiary knowledge investiga- hear- of the questions employees to warrant an with ing. hearing was to “be limited to an tion. The persons who have of- examination of the summonses, court, enforcing The in support of the peti- in

fered affidavits [sic] that it considered all the declarations stated its The stated based on tion.” court testimony well submitted as hearing, it would de- at that observations agents. The court concluded that the sum- inquiry would be con- termine if further good in faith since the monses were issued Weinstein would be and whether ducted gather acting was not to information IRS discovery. Weinstein’s re- allowed limited Department for the of Justice. quest pre-hearing discovery denied. stay A to enforcement of the or- motion was held as scheduled. hearing The was denied the district court. This der sup- to witnesses were available Weinstein’s however, court, stayed the enforcement The district port his affirmative defenses. jurisdiction is pending appeal. predi- Our by allowing hearing testi- court limited cated on 28 U.S.C. § agents. summoning mony from the two full Weinstein was allowed to conduct cross- DISCUSSION interrupted examination of Jackson but was to proceeding enforce an IRS completing cross-examination of The before proceeding. adversary summons is an Unit point Utaski. The district court at (9th Asay, ed v. 614 F.2d 661 States stated: 1980). is chal taxpayer Cir. The entitled to hearing cut off at this going “I am to lenge any appropriate on particular juncture. purpose Church, ground. v. United States Freedom evidence, if hearing sift out the is to (1st 1979). F.2d 319 Cir. The tax 613 improper is of harassment or any, there however, heavy payer, burden carries purpose can be substantiated to convincing deny court to en the district and to dilatory avoid matters must, fact, taxpayer forcement. purpose see whether or not the evi provide a minimal amount of able govern- were to assist the summons[es] just him evi to entitle or her dence people have had both the ment. And we v. dentiary hearing. g., United States E. that have issued the sum- on the stand (9th 1980). Cir. Popkin, 623 F.2d 108 no bad on I find faith their mons[es] part, any purpose appeal nor to assist to determine We are asked this And, pre-hear- in denying trial court erred case. if the limiting scope govern- ing discovery and in orders the thereby the court

1373 proceeding. evidentiary We must also case that the summonses were is review the district court’s decision en- sued in faith. See v. bad United States Bank, force the summonses. LaSalle National 437 U.S. n.21, 2368, n.21, 98 57 L.Ed.2d one balancing task is competing Our (1978) 221 (noting the discussion several govern interests.1 On one hand legal circuit factual courts issues summary proceedings ment’s interest de proceedings involved but signed expedite tax collection. On the declining resolve the standard review taxpayer’s right protec other hand is the question). recently This has adopted circuit improper use of Internal the clearly erroneous standard for review of powers. Revenue Service’s summons We deny district court’s decision to enforce are aided in our task abundance of ment of an summons. United States v. recently appellate decided cases2 and Goldman, (9th 637 F.2d Cir. several excellent district court opinions.3 Asay, See also United v. States 614 F.2d 1980); (9th Cir. v. I. of Review Standard Coopers (10th Lybrand, & 550 F.2d 615 Cir. The district court has discretion Cortese, Cf. United States v. to limit ary authority scope of an evi (3d F.2d (rejecting Cir. the clearly dentiary hearing deny discovery and to in a review). erroneous and adopting a de novo g., summons enforcement E. proceeding. We will not disturb trial court’s decision v. United States National Bank of South to enforce the in this case un Dakota, 365, (8th 1980). 622 F.2d 367 Cir. finding good less the clearly of faith was The Federal Rules of Civil apply Procedure applied erroneous if the district court proceedings 81(a)(3) to such and rule allows legal reaching incorrect standard in its deci flexibility, for particularly proceed such in LaSalle, 319, n.21, sion. supra, 437 U.S. ings which to be summary are intended n.21; 2368, 98 S.Ct. at United v. States nature. United States v. Church of Scien Zack, 1366, (9th 1975). F.2d 521 1369 Cir. California, 818, tology (9th of 520 F.2d 821 1975). Cir. review of Our the district Pre-Hearing II. Discovery procedural rulings court’s is limited de may his have failed in burden termining if the court abused its discretion. proof court because the district denied guided

We less clearly request are as to our for pre-hearing discovery. We review the district court’s recognize anomaly conclusion in of placing a burden Bank, Note, 1. See The Institutional Bad Faith Defense (3d tional 1979); 607 61 United F.2d Cir. Summons, Serubo, Enforcement of IRS (3d 1979); 80 Co- States v. 604 F.2d 807 Cir. Note, Discovery (1980) (Genser III), lumbia L.R. 621 United States v. Genser 602 F.2d the IRS Summons Enforcement Proceedings: denied, (3d Cir.), 928, cert. 69 444 U.S. 100 Taxes, Less Certain than Death and 31 U.Fla.R. 269, (1979); 62 United States S.Ct. 185 L.Ed.2d (1979). 321 Bank, (2d v. Chase Manhattan F.2d 321 598 (Genser II), 1979); United States v. Genser Cir. g., Harris, E. United States v. 628 F.2d 875 (3d 1979); United States v. 595 146 F.2d Cir. Sherman, (5th 1980); United States v. Cir. 627 Bank, 1979); (2d Chemical 593 F.2d 451 Cir. (9th Pop- 1980); United States v. F.2d 189 Cir. Noall, (2d United States v. 123 587 F.2d Cir. kin, (9th 1980); 623 F.2d 108 United States Cir. denied, 1978), 923, 99 cert. 441 U.S. Dakota, v. National Bank South 622 F.2d 365 (1979); v. United States Marine 60 396 L.Ed.2d (8th 1980); United States v. Southern Cir. York, (2d Midland Bank of New F.2d 585 36 Tanks, Inc., 1980); (10th Unit 619 F.2d 54 Cir. 1978). Cir. Omohundro, (10th ed States v. 619 F.2d 51 Cir. Cortese, 1980); United States v. 614 F.2d 914 Dahlstrum, g., 3. E. v. F.Supp. United States 493 Asay, (3d 1980); United v. States Cir. 614 F.2d Ryan, (C.D.Cal.1980); United States v. 966 485 (9th 1980); United States Freedom v. 655 Cir. (S.D.N.Y.1980); F.Supp. 1285 United States v. Church, (1st 1979); United 613 316 Cir. F.2d Ladd, (N.D.Tex.1979). F.Supp. Co., 471 1150 Equitable (4th States v. Trust 611 492 F.2d 1979); United v. States Garden State Na- Cir. 1374 (10th 1980); 619 Cir. taxpayer deny- and then F.2d 54 United States proof upon the Bank, (2d 598 F.2d 321 very be the infor- v. Chase Manhattan

ing access to what 1979); Cir. v. Marine Midland that burden. United States needed to meet See mation York, (2d Serubo, Bank New 585 F.2d 36 Cir. 604 F.2d 812 United States v. 1979). has adopted This circuit latter (3d we determine that Cir. Should Scientology, supra. procedure. Church discovery improperly denied in this discovery generally is man- Pre-hearing not case, would be proper remedy to remand suffi- taxpayer’s allegations dated. If are evidentiary hearing at for and an cient, hearing is con- evidentiary a limited present fruits of which Weinstein could warranted if Discovery ducted. then discovery. the sum- trial court is not convinced Scientology, we held that In Church purpose. proper monses were issued great district has discretion to court Salter, 432 F.2d See also United States v. deny discovery. See also United restrict or (1st Cir. and United States v. Tanks, Inc., v. 619 F.2d 54 Southern States (3d 514 F.2d 368 Cir. McCarthy, Ladd, 1980); (10th Cir. and United States v. Therefore the district court did abuse (N.D.Tex.1979). F.Supp. Dis denying request its discretion Weinstein’s covery summary proceed in a discovery. for prehearing than ing exception is the rather the rule. supra, at Scientology, Church of Evidentiary III. Hearing The Supreme Court LaSalle did not Weinstein was able to make a suffi taxpayer’s right discovery. address the showing persuade cient the district court Nevertheless, Circuit the Third has inter evidentiary hearing. conduct a limited suggest guidelines preted LaSalle to purpose evidentiary hearing is to Serubo, discovery. g.,E. United States v. improper sift out those rare cases where an (3d 1979); 604 F.2d 812-13 Cir. purpose can be substantiated to determine II), (Genser v. Genser F.2d taxpayer permitted if the should be dis (3d 1979), appeal, 152 Cir. later 602 F.2d 69 Sherman, covery. United States v. 627 denied, (3d Cir.), 928, cert. 444 U.S. 100 189, (9th 1980). F.2d 192 Cir. 269, (1979). 62 L.Ed.2d 185 At a mini S.Ct. mum, entitled taxpayer the to discover government The bears an initial bur investigating agents, the identities of the the showing evidentiary hearing den of at investigation began, date the the the dates prop that issued for a issued, of all summonses nature of g., purpose. er civil E. United States v. investigating contacts between 48, Powell, 57-58, 248, 379 U.S. 85 S.Ct. agents Department and the of Justice. 254-255, (1964); 13 L.Ed.2d 112 United II, supra Further discovery, Genser at 152. Bank, States v. Garden State National 607 carefully purpose tailored to meet the of 61, (3d F.2d 71 Cir. In this case the inquiry, permitted at be the court’s prima was able to make that discretion. Id. showing. facie The shifted burden then to offer rebut taxpayer proof to routinely Some courts allow limit government’s case. We must determine pre-hearing discovery ed enforcement taxpayer prove. what must proceedings. g., E. United States v. Garden Bank, (3d 607 F.2d National 61 Cir. circuit addressed this issue in State This II, 1979); supra Scientology, Genser at 152. v. of 520 Other States Church F.2d case, discovery (9th 1975). In courts allow if the 818 Cir. that we deter- limited taxpayer can taxpayer prelimi improperly make a substantial mined that a had been showing evidentiary nary wrongdoing. hearing. of abuse or E. denied an case Tanks, Inc., v. was trial court ordered g., United States Southern remanded

1375 evidentiary hearing posture to institutional of to conduct “limited the Service instead inquiry further into the determine whether of the motivation of individual agents. by way of purposes Service’s Second, the must meet the standards scope Id. at 825. The of warranted”. [was] good of faith enunciated United States v. hearing was left the discretion of the 48, Powell, 57-58, 379 85 U.S. S.Ct. although court it was district conceived 254-255, (1964). 112 13 L.Ed.2d LaSalle at include least cross-examination of the specified that the IRS violates Powell summoning agents. if good faith it is standard shown that Zack, In United v. 521 1366 IRS information-gathering States F.2d became “an (9th 1975), agency Cir. this circuit decided that a for other departments, including the Department taxpayer seeking defeat enforcement ...” 437 Justice. U.S. must show that summonses were not 2368. See also United States Atlanta, any legitimate purpose. issued rec v. First We National Bank 628 F.2d burden, ognized practical (5th mat Cir. ter, quite hard to sustain. Id. sought to show an “extraordi- improper pur Even co-existence of nary set of facts and circumstances” that

pose prevent would not the would demonstrate that the IRS institution- if of a legitimate summons the existence ally did not have a valid civil tax collection purpose was taxpayer.4 not rebutted purpose and that acting the IRS was as an gathering agency information for the De- Since our decisions Church of partment argues of Justice. Weinstein Zack, Scientology Supreme Court he was opportunity denied meet his decided United v. LaSalle National proof by judge’s prema- burden of the trial Bank, 98 S.Ct. U.S. ture termination evidentiary hearing. (1978). L.Ed.2d 221 LaSalle two reaffirmed important limitations on the enforceability transcript review of the Our [¶] First, summonses. summonses evidentiary us hearing satisfies must issued before the IRS recommends trial evidentiary court’s decision limit the Department of Justice that crimi hearing was not an .abuse discretion. Second, nal prosecution be undertaken. ample There testimony from the two prior recommendation, to such a the IRS summonsing agents procedures that the fol- “at all times use must the summons author lowed in the investigation were not unusual ity good-faith pursuit the congression determining and were directed toward ally purposes authorized 7602.” La § good Weinstein’s tax liabilities. faith Salle, 437 U.S. at 98 S.Ct. at 2368. the irrebuttably of was IRS demonstrated prerequisite requires

This second by Agent the testimony Utaski’s that he found First, to maintain two standards. “the filing Ser- no record of the of Weinstein’s 1975 vice must in an Although abandon institutional and 1976 tax returns. there was [not] pursuit sense ... the of civil tax determi- some the communication between DEA, nation or collection.” 437 given U.S. at 98 the the information the DEA S.Ct. at 2368. This pursuant standard focuses on the was proper to a court order. Both general purpose solely 4. The civil improper existence of for was summons purpose, issued for the tax as a does end a whole not it will not be “even the enforced in judicial inquiry. (Gen- overwhelming purpose v. States Genser face of an investigation the civil for II), (3d ser 595 F.2d 146 If such a Cir. as a whole.” Id. at 150. Cf. Unit- finding Omohundro, dispositive, taxpayer (10th were the would ed v. 619 F.2d 51 Cir. impossible 1980) (evidence disproving face the burden of what that summonses issued LaSalle, already postulated by proper purpose has been the was sufficient to warrant congruency liability. though of criminal and civil Gen- enforcement even IRS admitted that the II, supra may, context). may ser at A 150-51. district court if information in be used a criminal chooses, any it examine each summons. If one the of misapply did not instruct court did directives that DEA agents testified Although Supreme Court in LaSalle. gather or infor- them to issue was to the examination of hearing limited if was able mation. Even agents, judge the trial summonsing de- it would not be purpose, improper show an termined that the IRS issued summons- had “be- that the IRS to conclude enough purpose. pursuit legitimate The es of information-gathering agency for come an summonses was not decision to enforce the LaSalle, of Justice.” Department ... clearly erroneous. 98 S.Ct. supra 437 U.S. The district court is af- judgment in- argues that the trial court firmed. motivation of the correctly viewed the good agents as determinative of the faith MERRILL, Judge, concurring: disagree. We There is no indica- Circuit

the IRS. examined tion that the trial court Judge Skopil’s opinion, I concur in reaching its agents motivation agree taxpayer has not met his burden was sufficient evidence conclusion.5 There faith showing such a likelihood of bad agents trial testimony in the part of IRS as would warrant the IRS had followed conclude that court to granting discovery hearing. and further an insti- procedures, and that the IRS as its where, here, prelimi- I would add that pursuing civil tax col- properly was tution nary investigation suggested that the tax- lection. pro- payer, engaged to be in income known

ducing for two professional activity, had returns, years Summonses failed to file income tax IV. Enforcement IRS, view of its func- under rational if there We must now determine tion, obligated inquire further basis for the trial court’s exists a sufficient liability. recognition taxpayer’s by A were issued conclusion that the summonses agents obliga- institutional revenue review is limited proper purpose. for a Our good hardly tion could be other than determining if the trial court’s decision Here, Agent he faith. Utaski testified that v. clearly erroneous. United States had checked with the Fresno Center Service Goldman, (9th Cir. 637 F.2d 664 taxpayer of the IRS to ascertain whether had filed returns for 1975and and had the trial deci We hold that court’s told that was no record of such been there was not sion to enforce the summonses Further, Agent he filing. had been told evi There was sufficient clearly erroneous. had no Gibson San Rafael Gibson finding that a valid civil support dence to record of returns for 1975 and 1976 purpose for the issuance of sum existed having taxpayer. This been filed mons. hearsay filing, as to the fact of but it is competent good-faith evidence of Utaski’s that no returns been filed for belief CONCLUSION years.1 those its district court did not abuse discre- limiting As faith of denying good to the institutional IRS, taxpayer note scope evidentiary hearing. trial I would that when relevant, however, agents’ 1. I do not be draw the same conclusion as does 5. The motive Judge Wyatt possession alleged. g., in his of is E. dissent when harassment 914, 921, Cortese, (3d copies sup- n.11 of tax returns for 1975 and States v. 614 F.2d attorney alleged plied by taxpayer’s purportedly and in this Harassment was Cir. satisfied, however, dispelled all with the filed in San Rafael should have We are case. normally multiple questions explanation arise from government’s sum and doubts that place, taxpayer’s I in the a failure to file. In first issued to correct defects monses were or original do not find in the record evidence summonses. original re- concession that investigation trafficking drugs, under for in would remand with grant instructions to with prospect guilt appropriate discovery appellant, of carries it the to to af- IRS, appellant ford prospect unreported opportunity of an present income. to adequate adversary own evidence purposes, hearing, for its has as much interest and to determine on a complete more question taxpayer’s drug in the of record connec- whether the summonses DEA, should be has enforced. tions as and as much occasion to to check his It wish financial records. Not of action the Court be taxpayer cannot said that once a is under procedurally below wrong; that action also investigation DEA, by pursuit violated principles substantive law re- suggests information IRS bad faith.2 péatedly Supreme declared Court. suggest Nor does it bad to me for faith 1. willingness to its indicate to share its infor- Since the is record before us deficient DEA, with or respond mation to to a court indicated, possible it is not to recite the sharing disclosure order. Such informa- complete facts with confidence. on Based under circumstances that exist here have, what we including offers proof, perfectly is proper does constitute representations briefs, counsel gatherer an information DEA for rath- transcript September 21, 1979, of the hear- er for statutory provision than itself. The ing Court, before the District the chronolog- compelling sharing disclosure such when development ical appears to have been as ordered a court makes clear. follows: Appellant ap- Weinstein is attorney, WYATT, District (dissenting): parently specializing in He tax matters. agree I not able am with the decision practiced lived in and Mill law in Valley, to affirm the order of enforcement of the County, town in Marin California. I respectfully IRS summonses. therefore far as appears, So Weinstein filed his own procedure dissent from that decision. tax regularly through returns year my followed in the District Court was in 1973. opinion wrong contrary the con timely Weinstein did not file tax returns guidance trolling v. United States Scientology, etc., Church 520 F.2d 818 (9th 1975); procedural Cir. errors of the early Sometime “in 1977” he received District particularly the refusal to mail “delinquency notices” from the Fresno Court — permit appellant present Weinstein to evi Service Center of IRS dence — denied appellant elementary due 84; (T and 1976 returns “T” references are process and violated his constitutional pages transcript the September rights. procedural As a result errors 21, 1979, hearing). him, According to below no factual record was made sufficient “shortly ... thereafter in March of 1977” either enable the District Court or this he was called the telephone by Agent Court to determine whether the summonses Norton Gibson of the Rafael San District should or not. I Accordingly, (T enforced missing Office about the same returns order appealed would reverse the from and It seems natural that IRS should deal years States, up turns for those ever had turned in IRS Donaldson v. United 400 U.S. Further, (1971), files. that there it should event be noted L.Ed.2d580 where the IRS requested Department no claim that these returns were has Justice filed after proceed criminally until demand for them had been in a tax matter. Where the suspicions, made and the understandably failure crime, which to file criminal however, is for nontax created, already arisen. precludes authority I find no investigations proceeding contempo- two applies 2. A different rule such as Unit- cases raneously, sharing proscribes of the infor- Bank, ed States v. LaSalle National 437 U.S. pursuant to mation a court order. disclosure (1978), 57 L.Ed.2d 221 vidual returns shall be made to Secre Rafael of- through its San with Weinstein district where tary in the internal revenue Valley in Marin was in Mill fice. Weinstein Rafael, legal residence or at Marin has his also in the individual to San County, close center, Secretary by regu miles as the are a few the service towns County. Both appear It does not designate. Francisco. lations north San designate that indi regulations where the (T 85), he ex- According to years relevant for the vidual returns he had been that Agent Gibson plained (hand- returns filed, some except that returns because filing the prevented from “with carried) to be filed were directed but litigation” in “massive he was involved supervi administrative assigned the person the re- “tentatively computed” he had area, . . . or local office zone sion of no question and that years sults for revenue district” the internal within due; explana- accepted this tax was Gibson 1.6091-2(d)(1); (emphasis supplied). C.F.R. returns when the tion and told him that event, to fault a tax it is difficult In filed, with him they should be filed requested where files his returns payer who (Gibson). Agent Revenue the Internal or directed letter from copy is a of a In the record assigned had been whom his matter showing that Agent Gibson Weinstein to itself. within IRS 29, 1977, Weinstein, did April date of under original of his tax Agent send to Gibson 1974; how the 1974 return

return for DEA officers Weinstein was arrested appear. not 1, 1978, sent does others were August and four Their involve- on the same date. arrested a letter from copy In the record is a pounds with 500 is said to have been ment showing that Agent Weinstein to Gibson Where, time, what and in of hashish. 14, 1977, Weinstein, did under date of June arrested, they were does what order originals of his Agent send to Gibson (Brief, p. tells us appear. According for 1975 and 1976. tax returns 2): Enforcement Administration Drug “The payable. the returns no tax was (DEA) making the arrests seized agents returns and 1976 After the $12,690 savings account currency Rafael, Agent in San were sent to Gibson ex- receipts deposits passbooks and nothing more about them heard accounts relating all cess of $80,000, Gibson, anybody or from else Agent from According ap- taxpayer.” owned IRS, reasonably have assumed and could Brief, 11), p. currency pellant (Reply with and they duly had been filed from not taken from him but seized was received IRS. arrested; Martinez, those Mar- another of nothing unusual or There seems to be with Weinstein and tinez was not arrested filing his irregular in Weinstein Weinstein; and it was was not known to Rafael local and 1976 returns in the San which currency seized from Martinez Agent of that office of It Gibson IRS. by the as evidence suppressed was later him those re- telephoned office who about (Orrick, J.) as seized in viola- Court District they be filed with turns and who asked Martinez. rights of constitutional him in Rafael. San records deposit the bank At least some of of Wein- were seized an automobile serving There was an IRS Center Service Brief, p. (Reply but his counsel tells us stein internal revenue dis- Northern California the time that explained that he tricts; the Fresno Service Center. this was for clients were trust accounts bank records 170 miles southeast San Fresno is some depos- the sources of the explained also Francisco, Ma- and farther than that from drugs were seized from Wein- (26 it No funds. The Internal Revenue Code County. rin 6091(b)(1)(A))provides that indi- stein. U.S.C. § years of the one

DEA notified IRS arrests immedi- covered the IRS investi- gation. ately coopera- and must asked for have at least as far as Weinstein was

tion IRS papers From submitted to Court on a seem concerned. It would that DEA went a stay appeal, motion for pending this we help to IRS order to secure from IRS in 1,1978 August learn on day that of his —the drug criminal prosecution of Weinstein drug arrest charges on the also —Weinstein ready willing the others. was and IRS and agents deposit told the IRS a bank give help Agent such and Revenue Cara- $5,000 check; of a retainer and that on once; assigned mucci was he two August and 1978—three days later —DEA agents agents served a other IRS interviewed on summons on that bank Weinstein copy described retainer day check. of his arrest. suggest This would that IRS In the interview the day on of his arrest telling drug prosecution outset criminal (August 1978), Weinstein told the IRS team in DEA and the United States Attor- agents that he had filed returns late for the ney’s everything office was learning IRS 1976; 1974,1975 years and that he had filed from and about While it Weinstein. is de- those Agent returns with Revenue Gibson $5,000 nied for DEA that the check infor- request at San Rafael by Agent Gibson IRS, mation came from other circumstances to whom the been assigned; case had that and, cast on the event, doubt denial in any 1977; working he was on his return for that exploration further by the Court below of in securing there were difficulties necessary the clearly facts was called for. return; partnership papers for this that and 8,1978, August On Agent Revenue Cara- tax was no shown as due on the and a report mucci made asking the Wein- 1976 returns as with Agent filed Gibson. stein matter be referred Criminal Investigation There is papers confusion the us Division of before IRS. excuse for this seems to have to the been no year as extent to which the record 1974was filing of returns by Weinstein for investigation involved in the IRS of Wein- 1974, 1975 and 1976 could be found at the nothing stein. The District Court did Fresno Center it might Service and that be up clear this confusion. It is at least a an instance of a willful failure to file. No explanation plausible that the anx- IRS was effort seems to have been made help ious to extend its to the non-tax crimi- inquire Agent Gibson he had what done prosecution nal of Weinstein on with the returns said to have been filed charges; easy that an excuse for an IRS Indeed, with him. no time date has awas claim of failure produced any statement, declaration, by Weinstein to file income tax returns for Agent affidavit from and Gibson Weinstein 1976; 1974, 1975, only cursory was not allowed to his testimony obtain superficial attempt verify made to below. Weinstein’s statement that he had filed August On grand jury re- Agent those returns with Gibson at San drug charges turned an indictment on Gibson; by Agent as Rafael directed against Weinstein and four others arrested investiga- that initiation of an IRS criminal on charges. the same The file number is could be based on asserted false state- CR-78-372-WHO and the indictment was ments that he had filed assigned Orrick. Assistant United soon, and 1976returns. When very Attorney charge Mueller inwas appear, original will the 1974 return was prosecution. located in the confirming IRS records—thus August On pleaded the truth of what Weinstein had said—the guilty indictment. year dropped 1974 had to an excuse and attention focused In early October 1978—in event be- however, beginning, In the 1974was fore Investigation October 4—the Criminal and, investigation “failure to file” criminal considering whether to IRS was Division of seem, it 1974 incredible as included of the Weinstein matter the referral accept returns, amongst the failure to file Agent assigned to the Utaski Special and (T 54, 57, investigated assignment was dat- which was to be written it. His formal 76, 80). 18,1979, he work- but had been ed October long

ing assignment before that on the the drug prose- in The assistance IRS date. cution, day drug on the ar- begun rests, increased. Utaski Investigation Divi- then continued and the Criminal Within drug prosecution tele- IRS, through with followed the Special Agent Utaski his sion of Mueller, phone with dis- accept decided to contact established supervisors quickly cussing pending file” him the then indict- begin to a “failure to with and referral ment, future. also investigation (T 55). its and its Utaski The basis for status returns exchanged Agent with Wallace commencing investigation an seems information such (as him of DEA talked with well very sketchy. and Mueller) with about the informants in to Accordingly Agent Utaski’s direct tes- Utaski, drug prosecution. According to begin deciding whether to timony, Mueller “wanted the results our [IRS] Weinstein, investigation of he “ex- investigation, (T what we had our files” research” and “could amined the microfilm 65). appear proper In to it to order make filing Mr. Weinstein find no record of in- investigation to turn over the tax results years tax returns for come team, drug prosecution Utaski advised 53). (T by He was not and 1977” asked Mueller how to secure a “disclosure order” government about the 1974return and said possible in terms of they after had “talked cross-examination, nothing about it. From disclosure of to the United IRS information however, it that the 1974 return appeared, 60). (T Attorney’s Office” The “dis- beginning readily was in the located: “It quoted closure order” to which the testimo- we it. requested was filed and located I ny provided apparently refers is for as (T original we return and received it” payer to “return or tax return information” Thus, although 1974 return was estab- 6103(i). Application 26 such § U.S.C. having Agent filed with Gib- lished as been been made an order is said have first Rafael, through proper it moved son at San (presumably by the United States Attor- readily channels in and was found. IRS (T ney’s office) 1978 sometime November affairs, the 1974return With state of in the Rafael filed San office out, adequate It might turn after actually Agent hands being in the Uta- below, hearing in the Court that there is an ski, be supposed it would that IRS would explanation for all this. With the mistaken begun immediately have an intensive in- far, procedure expla- followed thus no such its quiry of San Rafael office and files nation is in record and conduct of happened to see what about the 1975 and designed, have primarily IRS seems to been returns, exactly way filed in the same 1976 least, purposes serve Weinstein) (according to as the 1974return. prosecution. However, inquiry no such was then made Agent required any apparently procedure, nor is there before us denial As began that he his criminal Gibson received 1975 1976 Utaski IRS, inquiry telephoning returns. Instead of an within October him that Investigation telling Criminal Division—with- and “there no record basis, (T 55). Although out than returns” Utaski unspecified filing other “mi- (T research,” he believing “coopera- crofilm that Wein- denied secui’ed Weinstein, pat- explanation filing stein’s for his tion” from the denial seems ently testimony. own was false—launched a false Utaski’s returns appointment objected to meet Weinstein Weinstein made because he had not 17), (apparently be on October Utaski been a party suppression motions (T agreed 55), “certain bring records” question, and the evidence that had about his of the 1975 filing told Utaski been did suppressed pertain to him. (T 55); he returns undertook He urged the to sever his bring copies of his 1975and 1976 returns to case proceed and to to trial or to dismiss meeting. prejudice charges with against him. in 1978 his re- Weinstein filed November 6,1978, On November the indictment was original (apparently) turn for 1977 the and taken off the trial calendar. 67); (T how reached the hands Utaski government did, The then on November filing the was made—whether in San Rafa- 14, 1978, the as against dismiss indictment appear. or not Utaski el otherwise—does (Munn), Weinstein and another defendant (T 67) testified that as to the 1975and 1976 undoubtedly 48(a). under Fed.R.Crim.P. As say they not that were returns he could not Judge (quoted Orrick has stated it in Reply filed, only he could find no record of that p. 4); for Appellant, Brief having appears their been filed. It now to govern- On November the the 1975 be conceded that and 1976 returns ment, court, upon leave of dismissed filed, exactly in Weinstein were fact as prejudice without the indictment as to investigation by The IRS was not claimed. Munn, Weinstein Gordon sought justified by Special Agents to be the and B. another the directly Court below as based on reasonable defendant who not affected file; was a they that there failure to by suppression belief the order. if they trying

said determine It seems to an accepted fact that the as were correct. returns filed government as dismissed to Weinstein be- October Sometime before James government cause the did have suffi- attorney, Maclnnis became or one of the cient against Special Agent evidence him. (T 81, 83) attorneys, and for Weinstein noti November, 1978, Utaski testified that meeting fied Utaski with Wein that Assistant Attorney United States Mueller place stein for October could not take him against told that the dismissal Wein- (T 83). time that government “just stein because enough didn’t have evidence to take to a 30, 1978, Judge On October Orrick filed (T 59). jury right now” granting order by motion one more Weinstein) (not including defendants government prosecute did not in fact suppress currency possi- as evidence the any appeal the suppression of evi- bly government other intended to items the by dence order made Orrick. What use trial. happened drug indictment The trial of other de- against District Court as the three defend- set fendants on the indictment was for No- ants other than Weinstein and Munn cannot 6, (Reply We are vember 1978. told Brief be established from the record before us. 7) Appellant, p. this was latest appears It that counsel for Weinstein told for commencement of under the date trial the Court that the United Attorney States (18 Speedy Trial Act U.S.C. § had asked for a “disclosure order” in Janu- ary, 1979, he “after had dismissed the re- pre-trial There was an indictment confer- maining drug (T 5). defendants in the case” 2, govern- on 1978. The ence November Reply Appellant (p. Brief for states ment asked for a continuance of trial in that the “disclosure order” was obtained suppression order. As appeal order (memoran- Attorney “only after he explained by Judge Orrick later (em- had dismissed the entire opinion quoted Reply Ap- dum Brief for indictment” p. 4): pellant, phasis supplied). suggests This strongly Jackson, Agent testimony Special November time between at some 11,1979, IRS, made available February January Office, Attorney’s drug against the United States indictment dismissed re- defendants, original presuma- among things, other remaining three Weinstein, 48(a) photocopies of leave of turn “filed Mr. bly under Fed.R.Crim.P. . . . 1976 tax returns government’s brief does Court. While original by Mr. Maclnnis and the drug indictment is still furnished not state that (T Mr. defendant, return it does state 1977 tax filed pending as to recognition that against explicit other de- This is an (p. 3): “Indictments or their any question of summonses appeal and the before remained fendants [from arose, knew that suppression was not the IRS Judge Orrick’s order] just all his tax returns suggests This that as to some Weinstein filed mooted.” he the federal indictment he said had. defendants event, whatever the pending. In still indictment, of the United States status which are the The seven IRS Attorney’s to use continued IRS Office subject appeal this were issued between of supply deficiencies in its attempt an 15, 1978, January December and 1979. against Weinstein. criminal case and the seventh by Six were issued Utaski 11, 1979, parte an ex order January On Jackson, by Special Agent, at the another the District Court by was made and filed summonses are request of Utaski. Such authorizing (not Orrick) by Judge IRS by authorized 26 U.S.C. 7602. § Attorney the to the United States disclose November, 1978, since At all times in and investigation. Apparent- results of the IRS course, and, the summonses were when (which properly made ly the order could be issued, and Jackson knew that both Utaski describing . . “quite explicit . parte) ex was Attorney’s was the United States Office investigation, how the materials for, for, to apply or intended applying develop very would which would be [IRS] authorizing order IRS turn over (T drug prosecution ...” important in the Attorney the results of the United States investigation pending for use non- IRS 25,1979, Maclnnis, Mr. coun- January On investigation prosecution. tax criminal Weinstein, with Utaski and sel met October, 1978, agents issuing Since Special Reynolds (another Agent). Presum- possession summonses had had in their ably present also but the Weinstein original of the 1974 return as filed in show, way or record not one the other. does Weinstein; November, by San Rafael since meeting, gave this to the IRS As Maclnnis 1978, they possession had in their had Special Agents copies of the 1975 and 1976 him; original of the 1977 return filed which tax had been returns Weinstein 25, 1979, January they since at least and Rafael, Agent San filed with IRS Gibson possession copies had in their request of Gibson. him in 1975and returns filed San time, At this decided to trans- about IRS Three the summonses involved Rafael. and to fer Utaski to Cincinnati substitute January appeal were issued after on this in the Weinstein matter. Jackson for him showing, it is 1979. In face of not possible accept for me to conclusion that February Special Agent On faith of the IRS was good demonstrated Jackson turned over to Assistant United (without because testified simply Utaski everything Mueller IRS Attorney being for Weinstein allowed ade- counsel already had on which had not cross-examination) quate that he could find given prosecutors. been to the The materi- worksheets, filing by Weinstein reports in- no record of the daily al included terviews, 1976. If he could not According to the returns for 1975 and and like. record, it was pending find such a not because of continuing case and/or in- vestigation omission Weinstein but was because intervenor Wein- stein. ...” Agent of errors of Gibson and others in

IRS. 17,1979, On July and counsel for Wein- stein opposition filed declarations in

Notices of the issuance of the summonses petition. given to Weinstein. 26 U.S.C. 7609(aXl). § August 7,1979, On order was filed requiring Conti that cause be shown Each summons refers twice to the fact September why the summonses Investigation it is from the “Criminal should enforced. accurate, Division.” While this is the rea- emphasis son for its use and is not made to 31,1979, August government On filed appear. five support declarations in of the enforce- petition. ment These were from DEA gave person notices to the Wallace, Agent Special Agents IRS Utaski they to the banks summoned that should Jackson, Caramucci, Agent not comply with the summonses. This he Attorney Assistant United States Mueller. 7609(b)(2). entitled to do. 26 U.S.C. § government The failure of the to submit They comply. did not anything Agent Gibson at San Rafael highly significant when it is considered April On government’s explanation of the Special Agent peti- Jackson filed a verified is that Weinstein had tion in the District Court to commence a failed to file tax returns. Even on this proceeding to enforce the summonses de- appeal, government persists the in this ex- scribed above. 26 7402(b), U.S.C. planation (Brief, 9, pp. 12), §§ which has been 7604(b). proceeding The assigned thoroughly discredited and has long been Judge Conti. To what extent the ago by abandoned Special Agents the of Attorney’s actually who are participated making investiga- States Office IRS the in the tion. decision to commence the pro-

ceeding cannot be determined from the in- 7,1979, While September hearing was adequate record made in the District Court. ordered to respondents afford and interve- nor Weinstein an opportunity to contest 21, 1979, On June an order was filed summons, enforcement of the IRS it seems granting application by Weinstein to September 6, 1979, that on Weinstein filed proceeding. intervene in the He had a stat- separate application a for an evidentiary utory right to intervene. 26 U.S.C. hearing on the issues and for an “order 7609(bXl). § allowing pre-hearing (Docket discovery” 26, 1979, On June Weinstein filed an an- Entries Nos. 31 and swer containing defenses which asserted part bad faith on the issuing of IRS in continuing Before the chronological with summonses and which asked for “limited development events, of proper a under- discovery” and “an evidentiary hearing ... standing of appeal may be advanced if process under due of law in order to meet chronology interrupted is to notice basic proof upon burden of his ... defenses principles substantive governing enforce- ... enforcement of the . .. summons” of ment IRS summonses and to notice the (emphasis supplied). principal The defense procedures which should be followed in de- by asserted Weinstein was that the sum- termining whether to enforce them. Sub- by monses were issued “for the improp- IRS principles stantive will first be considered. purpose er collecting of information and by evidence civil process IRS administrative governing principles applicable here by Department for use of Justice in a is that an summons IRS will not be en- [the] 1384 arm, prosecuting deny enforcement sought material for the where “the is

forced recommendation obtaining evidence for summonses after a purpose of IRS improper ” “prophylactic” prosecution.... prosecution by Reis- IRS is a criminal use 449, 440, just out. protect public- policy 84 set Caplin, 375 U.S. S.Ct. man v. (1964). explanation in United 11 L.Ed.2d 459 This was the Bank, 298, 437 v. La National U.S. Salle in- prosecution If criminal criminal 312-313, 221 98 57 L.Ed.2d S.Ct. arm the vestigation by prosecuting (1978): already pending, is then Nothing legislative 7602 his- or its § secure informa- use of IRS tory suggests Congress intended prosecu- purpose criminal for the authority Justice summons to broaden the inis bad faith even if a tion or litigation Department’s right of criminal present. If purpose is also there civil tax infringe or to role of prosecution or investi- pending no criminal jury principal tool of criminal grand gation arm of prosecuting .. The likelihood dis- accusation. . government, then IRS summonses be or the role of covery would broadened enforced, though solely pur- even for the if grand jury infringed is substantial pose investigating whether criminal con- post-referral use of the summons authori- provided duct has occurred IRS has permitted.... ty were Effective use prosecution to the already recommended liability information to determine civil Department follows from of Justice. This Supreme inevitably would result in criminal dis- Court the statement covery. prophylactic restraint on the principle quoted above from Reisman v. “applicable effectively of the summons safe- Caplin was the situation of a use most, or, charge, guards policy interests while en- pending criminal two cooper- purposes.” couraging interagency investigation solely maximum States, Donaldson v. United ation. U.S. (1971). 91 S.Ct. L.Ed.2d Thus, civil presence purpose of a tax opinion (400 it In the same was also stated “good does not show faith” 545): U.S. at so enforcement an IRS warrant of under an § We hold that 7602 internal (a) if there is al- administrative summons may in revenue summons be issued aid of charge ready pending a criminal or a crimi- investigation if it is issued in [a criminal] investigation by arm of prosecuting nal the good to a prior faith and recommendation (b) already government the IRS has the prosecution. for criminal prosecution recommended of a tax related carefully by As charge. explained criminal just principles The reason for the summa- Supreme in at the Court La Salle 437 U.S. explained by Supreme

rized has been the 311-13, 98 at S.Ct. 2365: opinion Court in its recent on the most course, subject. upon charge pending, recognize, If a is We of that even criminal Depart- use recommendation to the Justice an IRS summons secure information ment, prosecution the civil and criminal elements do improperly aid of the would scope separate completely. discovery provided by extend the not The Govern- its the ment does not sacrifice interest Federal Rules Criminal Procedure. just pros- If prosecuting making unpaid arm is an investi- taxes because criminal conduct, then, gation begins. Logically, the IRS possible into criminal to use ecution authority use summons under an summons to secure information in could its about the investigation improperly aid of the uncover information would § trespass fraud liability by regardless on the tax created traditional functions of But grand jury. charge where criminal of the status of the criminal case. And no forbidding prophylactic is a pending any investigation by is nor criminal rule such safeguard policy intended to ... inter- not make proper does “information-gather- ing” in the future which ests. would otherwise be “improper purpose.” for an investigation by La Salle dealt with also right has a to an adver- of a tax related before offense sary hearing present where he evi- charge pending was and before crimi- dence to show that summonses were investigation by prosecuting nal arm of issued an “improper purpose,” for as to government. “policy The interests” are recognized which it is that Weinstein has stronger at far in the case bar and the proof. Supreme burden The Court situation here far for clearer denial of has declared that in a summons enforce- enforcement of the IRS summonses because proceeding rights ment a taxpayer, (a) charge a criminal and a criminal investi- Weinstein, “protected” such as must be gation by prosecuting arm of the hearing, “an adversary if requested” must government Attorney’s —the (400 be “made available” at U.S. pending already Office—were before the at issued; (b) summonses here the crimi- hearing with which Scientology charge nal dealt with an opinion not, however, was concerned was (narcotics) directly offense related to “adversary hearing” to which Weinstein taxes; (c) prosecuting it arm of was entitled on the “improper issue of pur- brought which in the IRS. pose” raised hearing answer. The ordered Scientology simply a “limit- evidentiary hearing ed to determine wheth- inquiry er further into the pur- Service’s Where, here, taxpayer has asked poses way discovery warranted” [was] discovery for and has also asked for an (520 825; emphasis F.2d in original). evidentiary hearing, procedure to be discovery approved procedure respect followed in in the sum- for Scientology summons pro- enforcement mons proceeding has been ceedings was that discovery should be the pointed out this Court in United States exception; conelusory averments of etc., v. Church of Scientology, 520 F.2d 818 improper purpose are not sufficient (1975). grant of discovery; that some evidence right ahas to contest the IRS should opponent be introduced ground summonses on the that “the materi enforcement; that this be should done at a sought” al is an “improper purpose” limited evidentiary hearing where it would (375 U.S. S.Ct. at It would appropriate opponent for the to cross-ex- “improper purpose” be an if—as seems to agent summons; issuing amine the be beyond dispute proposes to make if, after the hearing, ap- —IRS limited it the information available the United peared to the Court that a ques- substantial States Attorney’s Office. This was made existed validity the IRS crystal clear in Supreme purpose, La Salle when the discovery granted. should be 317, While not (437 expressly Court declared U.S. at 98 articulated in this S.Ct. at opinion, that, Court’s it seems evident 2368): good-faith "... will standard discovery granted not, whether be or an permit to the IRS become an informa adversary hearing must still be afforded at tion-gathering agency depart for other opponent given which the is opportunity ments, including Justice, the Department present to “improp- evidence of claimed regardless of status of criminal cases.” purpose” er in the issuance of the summons- course, Of say it is no answer to that there es. January here, was order” dated a.“disclosure 7. 1979, 6103(i); under 26 § U.S.C. such necessarily an order relates “return in (Brief We are told for Appellant, p. already formation” in the files of IRS and that on the return of the order to show 1386 opinion (emphasis in Scientology the discussion September

cause on specific This is confirmed original). was and counsel District Court between opinion page Judge Conti’s cite in the summonses not about hearing September 21 Scientology. The to be fol- “procedure was about but hearing to deter- be the “limited” was to proceeding. in the enforcement lowed” granted should be mine whether he was insisted that for Weinstein Counsel “adversary hearing” to be the and was not hearing, evidentiary complete “a entitled at was entitled and to which Weinstein (Brief discovery” following completion “challenge the right which he had a 6). Appellant, p. for ground” in- any appropriate summons on Sep- on procedural conference After issued “for summons was cluding that the Judge 7,1979, day, on the same tember obtaining evidence purpose of improper memorandum order with filed an Conti (375 prosecution” U.S. for use in a criminal the District This indicated that opinion. 513). precedents, the relevant had studied Judge Conti in his If the intention Scientology, understood their including as indicated in September opinion opinion His accepted them. principles, and changed be- radically opinion, that intention Salle) good that “the faith (citing states La 21,1979. September September 7 and tween to exer- permit does not standard purpose authority” cise its summons use in a non-tax gather

“to evidence for hearing September There was a against” currently pending case p. m. The tran- beginning at 1:30 the “affidavits” He had read Weinstein. pres- were time script suggests that there He re- (declarations) parties. filed be- Judge, possibly District sures on the requirement “that an adver- ferred to the been at a luncheon recess may cause it have hearing enforceability sary into very At the be- busy of a District Court. must, requested, made if IRS summons stating appearances to the ginning, while Scientology and He referred to available.” Weinstein asked for Reporter, counsel for for Weinstein stated that the “affidavits” get unpacked.” The Court “a moment to “sufficiently questions serious raised “Well, unpack much.” replied: don’t too he a “further hearing” merit a fixed “I am not (T. later stated: Court p. September 1979 at 1:30 hearing” for protracted hearing.” going big, to have a (the of some time turn out to be coun- (T. m. still later addressed The Court “Well, I opinion stated: “The let’s move on. significance). The sel to Weinstein: (T. spend day all on this.” to an examination of don’t want to hearing will be limited 42-43). offered affidavits persons who have The Court will support petition. event, for Weinstein told In counsel of its then on the basis observa- determine (T. 3-7) necessary if Wein- Court inquiry into the tions whether further Ser- stein, any discovery, prepared without warranted.” It will be purposes vice’s hearing on the merits go with a forward partial quotation is a recognized that this should be as to whether the summonses from, of, page 825 of the paraphrase and a not; would con- that Weinstein enforced opinion dealing with what that Scientology papers on the cede that the pre-dis- as “a opinion there referred to enforcement; prima facie case made evi- hearing.” It seems covery evidentiary prepared present was to and that Weinstein Septem- intended the dent that Conti and that of the five testimony his own evi- hearing pre-discovery (four be “a government agents ber 21 to for the declarants evidentiary Attorney) the “limited dentiary hearing,” United States and the Assistant proof improp- in- of an hearing whether further his burden of to determine to sustain issuance of the summons- by way purpose in the quiry purposes into the er Service’s page es. described on discovery is warranted” (T. investigation pur- Court announced that the nal prosecution by

pose hearing find of the was “to out about Attorney the United States pre- would not enforceability summons to by vent the enforcement Courts of an obtain of the summons.” The only IRS summons. Such belief can permit Court to to declined Weinstein by ignoring held the plain statement evidence, present except in any the cross- Supreme Court in La Salle: “The Govern- agent, examination of “the who issued ment does sacrifice its interest un- 7; 8), (T. mistakenly summons” also see T. paid just prosecu- taxes because a criminal (who identified by Court Jackson then, tion begins. Logically, the IRS could fact one of the seven issued summons- authority use its summons under 7602 to § involved). es The Court directed the uncover information about the liability tax government stand, put to on Jackson by regardless created a fraud of the status stating when the examination of that of the criminal case. But the rule forbid- ended, agent was if the Court a sub- ding is a prophylactic such intended to safe- motives, question stantial about the IRS guard .. policy (437 . interests” U.S. at adjournment there would be of the hear- 311-12, 2365; 98 S.Ct. at emphasis sup- ing allowed, and limited would be plied). but questions that if such “no existed” then By hearing the time of the on September “the is at an matter end” “there is no pretense all dropped had been by any hearing” (T. 8). reason for further IRS that issuance the summonses Thus, government if the could satisfy way was related in some to a failure (or Court testimony agent Weinstein to file Special tax returns. agents) summonses, issued the who those Jackson, Agent the lead-off witness summonses would be enforced giv- without government, that all conceded of the tax ing any opportunity present Weinstein to returns were filed Weinstein and at- any improper evidence to show an purpose tempted to justify the (T. issuance of the summonses wholly ground different IRS now —that Scientology While the cited prece- Court verify wanted to the correctness of the re- dent, reading shows that in- Scientology admittedly turns filed. He described thing. tended no such purpose as follows: vain, In pointed counsel for Weinstein out ... to accuracy determine the those that Jackson- came late scene and (T. 14); returns Utaski, followed that the evidence should returns, To determine if the as filed be taken chronologically, Weinstein, 14-15; (T. Mr. are correct. evidence, present should be allowed to emphasis supplied). that he like to with would start his own After direct and testimony, that Caramucci and DEA cross-examination of Agent Jackson, next, permitted was Wallace come should that Wein- Special Agent call stein Utaski. After his direct begin- wanted show how from the examination, ning counsel for drug prosecution using case Weinstein was permitted to cross-examine for several min- improper gathering IRS for of information (T. interrupted (T. utes. Then the 8-10). say Court The Court stated that it was not 86): . going way “. . We are I “the far afield. part” interested in or in “what any want to know if happened but there bad faith or if solely to Mr. Weinstein” any there is interested “the nexus between the two. I motivation the IRS.” mistakenly believed, The District Court as haven’t found so far.” This obser- last believes, the majority here now if vation seems to be particularly unfair since purpose permit there was civil tax the Court had for the refused summons, (T. 7, issuance sepa- present any 8), limiting of an IRS then a evidence purpose rate pending of IRS to aid a crimi- him to the cross-examination rela- that, government) contradiction the to be first agent IRS directed minor

tively to “disclosure order” order secure cutting off government and by the called (not Judge Conti from the District Court meaningful refusing any cross-exami- and Orrick), Assistant United Judge nor the agent. the chief IRS nation of Dis- Attorney represented had States to be al- for Weinstein asked Counsel the “that it was essential to Court trict cross-examination of finish his to lowed to Department Justice United States (T. 86). The refused This was Utaski. civil tax informa- have access to all this proceeding the stopped then Court gathered [by that were to tion so-called announced its further ado decision without express pur- for the on Mr. Weinstein IRS] (T. 86): continuing investiga- using it in a pose hearing off the going to cut I am against present or case Mr. Wein- a purpose particular juncture. this (T. Judge cut though Even Conti stein” evidence, if hearing is sift out the the to facts, any development of the adequate off improper any, or is of harassment there showing that the United this itself a to that be substantiated purpose can using was Attorney’s office States discovery and to dilatory matters avoid wrongly permitted to broaden the of the purpose or not the see whether of Criminal Proce- under the Federal Rules government, were to assist the summons indictment and pending dure to a people the on the we have had both wrongly invading the traditional function the and I that have issued stand summons investiga- grand jury a as to a criminal nor part, on their find no bad faith tion. government in to purpose assist 9. thereby, the court orders drug case and protested had all times Weinstein petition for enforce- government’s prejudice of indict- dismissal without granted. of summons is ment A dismiss- ment as to him. motion for precipitous- If was called so any decision argued Judge to prejudice al be with deny

ly, a enforcement of it was decision Orrick October beyond it appeared since summonses 4,1979, the On IRS commenced October IRS, dispute whatever its interest proceeding to second enforce more liability, tax was also civil Weinstein’s through 1979 in issued June for gathering information the United matter. As this second Attorney. Certainly there was not effort, procedure the same shutting justification off slightest for first. second been followed as cross-examination, denying Weinstein Judge proceeding assigned was also Con- evidence, present any and ab- right ti. halting hearing. ruptly 10, 1979, appeal On a notice of October Judge Conti filed September On September from the was filed for Weinstein enforcing the seven summonses an order enforcing order the summonses. opinion no but there There was involved. time was a motion to At the same there finding acting the IRS “was not was a Judge stay pending appeal. for a Conti agency for the information-gathering as an 30,1979, Judge Conti denied On October finding is Department of Justice.” This stay pending appeal. motion for a was, contrary to such evidence there panel of a motion On November denied, been after Weinstein had JJ.) (Choy Kennedy, this Court C. present discovery, right but evidence. stay granted a motion information-gather- As an indication pending appeal. ing relationship IRS and Unit- between in the District Court Attorney, counsel to Weinstein Weinstein moved ed States proceed- (without stay the second enforcement Conti out pointed Judge ing. lodged Conti took this motion shall be under with the Court for such 30, 1979, on advisement November and so panel consideration as the which hears the appears has far as no decision been filed. case on its appropriate.” merits deems (Reply Appellant, We are told Brief for p. 1980, 8, 5) January on that indictment It is difficult to have confidence in the was returned a California state court presentation govern- of this matter the against Weinstein (including and others the and impression ment difficult to avoid an other defendants indicted in the Court be- the that true state affairs was never 16, August the drug low on on same revealed. charges as made in the federal indictment. Agent There is no mention Gibson in (if Why dropped the federal indictment was government’s nor, appeal the brief this been) it has and what the connection is course, any explanation for the failure between the federal and state indictments anything him. submit We know that appear. logical assumption does not Agent duly Gibson received at San Rafael prosecutors the federal worked with return; original easily the 1974 the prosecutors the state and made available to 1978 by obtained October Utaski. We the gathered the latter information for the know the and 1976 original re- prosecution by federal the IRS. turns were filed Rafael at San in the same January Judge Orrick On denied way as the 1974 return. What did Gibson motion Weinstein that dismissal with they do them? Where are now? Is of the federal indictment as him be with there in fact having no record of their prejudice; he his announced decision in not, why been filed? If not? The evasions open January court. On a memo government procedure of the and fol- opinion randum and order were filed by in the prevented lowed District Court these Orrick, Judge embodying explaining questions from being answered. According Reply decision. to the Brief for explanation by There is no govern- Appellant (p. 5), opinion ment for its dismissal the indictment acknowledges substantiality ... Weinstein, against nor effort to contra- due-process speedy trial issues testimony Special Agent dict sworn presented rejects government’s ... that, according Utaski to the Assistant non-justiciability, spe- contentions of ... Attorney charge cifically penden- refers and defers prosecution, required dismissal was because cy appeal case being this enough there was against evidence where evidence of institutional bad Yet, (T. 59). faith vis-a-vis the drug-case the IRS and makes bold to tell Court in its brief: prosecutor adjudicated, must be and holds Here, the Internal Revenue Service was that on record before him he finds no dealing apparent drug with an deal- grounds upon which to exercise his discre- had, er/attorney allegedly, who failed to order government’s without- file income tax returns for several prejudice years dismissal of the indictment con- and lied to investigating agent. the first with-prejudice verted dismissal. (p.6) Appellant moved in supple- this Court to Drug .. . the Enforcement Administra- ment record appeal by adding on this tion . .. apprehended taxpayer transcript 11,1980, January hear- pounds with more than 500 of hashish ing Judge before adding Orrick and (p. 8) .... opinion 18, January order of 1980 of Judge Orrick. The When Agent motion denied Revenue Caramucci deter- February Sneed order filed mined taxpayer, apparent it provided dealer, but was that “the items had made false statements to him (T. 7, 8). agents) issued the summonses tax returns who to file income failed

and had al- he had asked Counsel for Weinstein years for the first, evidence had indi- potential present a lowed to referred (in- proposed he to call 9) cated the witnesses (p. case. fraud himself), cluding and the order making and false returns to file Failure (T. 3-7). to call them proposed which he agents recognized are to statements denied The District Court fraud, 12) (p. tax badges of evidence, limiting his right to coun- present justifi- to seem be no Not does there (or the agent to sel cross-examination emphasis offenses for the cation govern- to be called agents) directed government’s brief Weinstein but when ment, denying adequate cross- and later filed, long been established—de- it had important the more examination of in the Court— spite District the restrictions (T. 7, agents government two called tax had in fact filed his that Weinstein 8, 86). early (T. 8): below ruled The Court his statements to the IRS returns and that going THE I am to have the COURT: agents agents, The IRS at were true. testify agent the summons that issued below, conceded. hearing had so inadequate if him. And I am satis- listen to government in con- The conduct that, then there reason fied is no after present to tending that Weinstein declined hearing. for any further ques- District Court is also evidence in the Having early denied Weinstein thus tionable. evidence, it right to can scarce- present any (p. represents in its brief government the Court below would ly supposed 4): question Weinstein a address to counsel for Court became satisfied When the District were whether other witnesses available. any was not elicit taxpayer able to his from the support evidence to claims 11. agents, taxpayer any he had it asked if procedure followed below as to dis- de- present. to Counsel other evidence contrary to that covery specified any .... present clined to evidence contrary to the District Scientology and 7): again (p. 7, September filed Court’s own order discretion, view, terminating evidentiary my It was an abuse Before deny appellant. The cir- hearing, any the District Court asked the tax- unusual, least, say he further payer’s counsel if cumstances suggested necessity present. strongly declined to and evidence to Counsel present thorough exploration. other evidence .... law, As a substantive the Dis- transcript Sep-

It that the matter of is true hearing denying ap- trict error in question shows a Court committed tember (T. “challenge 86): you pellant the sum- right the District Court “Have ground” got proceed?” “appropriate so we mons” that the another witness can on the sought improper pur- for the immediately “material was question, From this what it, obtaining for use in a preceded way pose there is no evidence and followed ” (375 .... question prosecution was ad- U.S. determine to whom quite year ago, Not hearing the context of the dressed. In commencement, however, repeti- in what been its latest ques- seems to have from its principle, tion of the Su- govern- been addressed to the established must have person counsel, in the appellant’s Reply (p. preme Brief Court declared ment “is entitled to chal- position case. The District Court of Weinstein insists was the of the summons in an lenge issuance beginning had in the directed that in federal (or prior court agent adversary proceeding call as witnesses the enforcement, assert appropriate afford appellant adequate adversary defenses.” United Euge, States v. 444 U.S. hearing, and to determine on a more com- 100 S.Ct. 63 L.Ed.2d 141 plete record whether the summonses should (February 20, 1980). be enforced.

To order enforcement of the summonses arbitrary

after an denial of elementary due it,

process, as I grave see was a mistake.

It seems especially justify unfair to en- ground

forcement on the that Weinstein

failed to meet proof his burden of when he

was denied in the District right Court his

present evidence.

I would reverse the appealed order

and would remand with instructions to

grant appropriate discovery to appellant, to

Case Details

Case Name: United States of America and Donald Jackson, Special Agent v. Charles H. Stuckey, and Morry Weinstein, Intervenor-Appellant

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Jun 1, 1981

Citation: 646 F.2d 1369

Docket Number: 79-4691

Court Abbreviation: 9th Cir.