UNITED STATES of America, Plaintiff-Appellant, v. Albert DICKERSON, Defendant.
No. 17349.
United States Court of Appeals Seventh Circuit.
July 28, 1969.
Rehearing Denied Sept. 5, 1969.
413 F.2d 1111
William A. Barnett, Chicago, Ill., for appellee; William R. Quinlan, Chicago, Ill., of counsel.
Before FAIRCHILD and CUMMINGS, Circuit Judges, and GRANT, District Judge.1
CUMMINGS, Circuit Judge.
In April 1967, defendant was indicted for failure to file income tax returns for 1960, 1961 and 1962 in violation of
Based on an affidavit of defendant and the testimony of Revenue Agent Donald Petrovic at the hearing on the motion to suppress, the district court found that while “auditing” a scavenger company Petrovic found an entry on its books reflecting a large payment to defendant but that the company had filed no related information return. Consequently in July 1964, Petrovic “audited” defendant, who admitted that he had failed to file certain income tax returns. Late that year Petrovic referred the case to his superiors to determine if the case warranted criminal investigation. In January 1965, the case was assigned to Special Agent Cornue, an investigator for the Intelligence Division of the Internal Revenue Service. The jurisdiction of the Intelligence Division is limit
Cornue‘s affidavit in support of the Government‘s motion for reconsideration showed that at the June 24, 1965 interview, defendant said he had engaged a lawyer and had given him “everything he could find that had anything to do with his income tax.” Defendant‘s lawyer was present when defendant was next interviewed by both agents on November 10, 1965.
The Government‘s brief concedes that the indictment resulted from the information gathered at five of the earlier interviews. These are the occasions when, according to his affidavit, defendant answered the agents’ questions and furnished them with documentary and oral information. This affidavit claims that the records surrendered to the agents consisted of personal records of income and expenses, including the names of customers and names of persons to whom commission payments were made.
Relying on Escobedo v. Illinois, 378 U.S. 478, 84 S.Ct. 1758, 12 L.Ed.2d 977 (1964), and Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), the district court held that “at and from the time a criminal investigation is launched against a taxpayer,” IRS Agents are required to inform him of his right to remain silent, that anything he says may be used against him, and that he has a right to counsel. The Escobedo opinion was handed down before the civil or criminal investigations of defendant‘s tax returns had begun, and Miranda was handed down more than a year after the crucial interviews. However, the district court noted that Miranda is applicable to all cases filed (as here) after its promulgation.
Applying the Miranda rationale, the trial court held that the evidence obtained from defendant during the criminal investigation and before his retention of counsel would have to be suppressed, along with any evidence obtained as a result of information gained during that phase of the criminal investigation. 291 F.Supp. 633. The Government appealed under Title VIII of the Omnibus Crime Control Act (
Both parties seek to find support for their positions in the Miranda decision, the Government stressing the physical custody in which the interrogations involved in Miranda and its companion cases took place and defendant laying heavy emphasis on the policies underlying the adoption of the Miranda warnings. We recognize the factual limitations of the precise holding in Miranda. On the other hand, we cannot accept an interpretation of that decision which would restrict the implementation of the Court‘s overriding concern with
Intelligent exercise or waiver of the Fifth Amendment privilege is the heart of the Court‘s concern in Miranda. See 384 U.S. at pp. 475-476, 86 S.Ct. 1602. The Government‘s brief appears to recognize that ignorant compliance with the requests of the authorities can no longer be equated with a valid waiver of constitutional rights.5 We understand the teaching of Miranda to be that one confronted with governmental authority in an adversary situation should be accorded the opportunity to make an in-telligent decision as to the assertion or relinquishment of those constitutional rights designed to protect him under precisely such circumstances. No contention is made that the privilege against self-incrimination does not protect one interrogated in a non-custodial setting, only that one in such circumstances has no need of advice as to his rights, or, indeed, of the pendency of a criminal investigation at all. But custodial interrogation is merely one variety of confrontation, albeit one requiring the most stringent of protections for the criminal suspect. The inquiry does not end with custody or its absence. See Hewitt, “The Constitutional Rights of the Taxpayer in a Fraud Investigation,” 44 Taxes 660, 668 (1966).
In this Circuit, the district courts recently considering the question have uniformly held that some form of warnings must be given by IRS agents once an investigation has shifted to one criminal in nature, despite the absence of physical custody.6 The Government has drawn to our attention numerous cases in this and other Courts of Appeals which are said to establish that Miranda has no application to criminal tax investigations. Our examination of those and other cases decided after Miranda reveals that in almost every instance some warnings were in fact given,7 an attorney was present
A line of cases originating between the Escobedo and Miranda decisions, notably Kohatsu v. United States, 351 F.2d 898 (9th Cir. 1965), reasons that because the IRS agents cannot determine whether a crime has in fact been committed until their investigation is complete, the adversary process has not sufficiently “focused” on the suspect as to require that warnings be given. But as Judge Will observed in his persuasive opinion in United States v. Turzynski, 268 F.Supp. 847, 852-853 (N.D.Ill.1967):
“This distinction between a criminal tax investigation where the taxpayer is suspected of a tax fraud not yet fully identified and a criminal investigation where a known violation of the law is attempted to be linked to a particular suspect is logically irrelevant for purposes of determining when the adversary process has begun, i.e., when the investigative machinery of the government is directed toward the ultimate conviction of a particular individual, and when, therefore, a suspect should be advised of his rights. What matter if the culprit be known before the crime or the crime before the culprit. In either case the investigator is attempting to develop evidence for the purpose of criminal prosecution and conviction.”
Nor can the Kohatsu rationale, once accepted, be limited to investigations in the tax area. Such a rationale would apply to most white collar crimes and any other crimes where the identity of the suspected lawbreaker is not in issue. This category might include unauthorized practice of law, attempted bribery, impersonation of a federal officer, refusal to report for induction, violations of Section 5 of the Securities Act, the Landrum-Griffin Act, and the Sherman Act, among others. No principled distinction has been suggested which would carve out such exceptions to the policies expressed in Miranda.
Such a distinction cannot survive the Supreme Court‘s decision in Mathis v. United States, 391 U.S. 1, 88 S.Ct. 1503, 20 L.Ed.2d 381 (1968), where the Government sought to escape the application of Miranda to an interrogation of a taxpayer incarcerated for an unrelated offense because the questions were asked as a part of a routine tax investigation where criminal proceedings might never be brought. Noting that “tax investigations frequently lead to criminal prosecutions,” just as the one here did, (391 U.S. at p. 6, 88 S.Ct. at p. 1506), the Court rejected any such distinction as “too minor and shadowy” to warrant a departure from Miranda.
The Government argues that the absence of custodial detention and other indicia of criminal prosecution in the tax fraud investigation negatives any possibility of coercion or overbearing of
“It would seem to us that the average citizen, faced with repeated questioning by two government agents is in an ominous situation to say the least. The Government suggests that the defendant was in no way physically restrained, but we doubt that he really felt free to walk out on the investigators from the Internal Revenue Service. In the absence of sufficient warnings and the assistance of counsel, there are innumerable factors which act on the taxpayer‘s mind compelling him to ‘co-operate’ with the federal authorities.”
Only the rare taxpayer would be likely to know that he could refuse to produce his records to IRS agents. Nor would he be likely to make any distinction between revenue agents and special agents without some explanation as to the different functions of these two offices. As noted in Lipton, “Constitutional Rights in Criminal Tax Investigations,” 45 F.R.D. 323, 336 (1968), the pressures on the uninformed taxpayer to cooperate with the agents are considerable:
“First, there is always the fear of incurring a civil tax liability that hopefully might be avoided by cooperation. Also, a taxpayer may conclude that lack of cooperation will result in unwanted publicity about a tax liability. The average citizen, moreover, believes that the government prosecutes only the recalcitrant, uncooperative individual who is unwilling to pay what he owes. Who would believe the ironic truth that the cooperative taxpayer fares much worse than the individual who relies upon his constitutional rights!” (Emphasis supplied.)
Incriminating statements elicited in reliance upon the taxpayer‘s misapprehension as to the nature of the inquiry, his obligation to respond, and the possible consequences of doing so must be regarded as equally violative of constitutional protections as a custodial confession extracted without proper warnings. Cf. Gouled v. United States, 255 U.S. 298, 305-306, 41 S.Ct. 261, 65 L.Ed. 647 (1921); United States v. Guerrina, 112 F.Supp. 126 (E.D.Pa.1953), modified, 126 F.Supp. 609 (E.D.Pa.1955); Comment, “Constitutional Rights of the Taxpayer in a Tax Fraud Investigation,” 42 Tul.L.Rev. 862, 864-865 (1968).
Under such circumstances it is imperative that the taxpayer be advised that he is the subject of a criminal investigation and that he need not answer questions put to him by the agents. “For those unaware of the privilege, the warning is needed simply to make them aware of it—the threshold requirement for an intelligent decision as to its exercise.” Miranda v. Arizona, 384 U.S. 436, 468, 86 S.Ct. 1602, 1624, 16 L.Ed.2d 694. The rationale behind the warning as to the consequences of waiving the right to remain silent, as expressed in Miranda, is particularly apt to the present situation, for “this warning may serve to make the individual more acutely aware that he is faced with a phase of the adversary system—that he is not in the presence of persons acting solely in his interest.” 384 U.S. at p. 469, 86 S.Ct. at p. 1625. As in Miranda, we deem advice as to the right to have counsel present a valuable adjunct to the protections of the Fifth Amendment prescribed above.
Our conclusion is that Miranda warnings must be given to the taxpayer by either the revenue agent10 or the
In recognition of the fact that this holding represents a departure from the present state of the law,13 and a new implementation of the Miranda policy, and in accordance with the criteria set forth in Stovall v. Denno, 388 U.S. 293, 297, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967), we have determined that this decision should be given a prospective application. In Johnson v. New Jersey, 384 U.S. 719, 86 S.Ct. 1772, 16 L.Ed.2d 882 (1966), Miranda was applied only to cases in which the trial began after the date of the Miranda decision. However, as the Court noted in a more recent case involving a special aspect of the retroactivity of Miranda, the approach of the Court to prospective decision-making has undergone some modification since Johnson was decided. See Jenkins v. Delaware, 395 U.S. 213, 89 S.Ct. 1677, 23 L.Ed.2d 253 (June 2, 1969). In conformity with the more recent practice as developed in Stovall, supra, and Desist v. United States, 394 U.S. 244, 89 S.Ct. 1048, 22 L.Ed.2d 248 (1969), we have determined to apply our holding to interrogations taking place after the date of this decision. See Schaefer, “The Control of ‘Sunbursts‘: Techniques of Prospective Overruling,” 42 N.Y.U.L. Rev. 631, 646 (1967); Fairchild, “Limitation of New Judge-Made Law to Prospective Effect Only: ‘Prospective Overruling’ or Sunbursting,” 51 Marq.L.Rev. 255, 265 (1968). The defendant in the companion Habig case, which was argued together with the instant case, will also be entitled to the benefit of today‘s holding. However, it is not our intent to disturb previously ordered suppressions of evidence anticipating our holding today. See Desist v. United States, 394 U.S. 244,
Affirmed.
FAIRCHILD, Circuit Judge (dissenting).
The Miranda1 equation is that official questioning of one who is in custody or deprived of his freedom of action in any significant way equals compulsion to answer unless the Miranda warnings or other effective means are used to insure absence of compulsion. Underlying its pronouncement were years of judicial experience with the frustrations of case by case decision as to the voluntariness of statements given by persons in police custody (most often state or local). Mathis2 and Orozco3 decide that the equation is valid in the particular situations considered, but do not suggest that compulsion to answer is to be presumed in situations where the person is not in custody or deprived of freedom of action.
It is compulsion to answer which offends against the fifth amendment provision that no person shall be compelled in any criminal case to be a witness against himself. Miranda decided that one in custody or deprived of freedom of action and questioned by an officer is subjected to such pressure to answer that the warnings are required in every instance.
This court is now deciding, essentially, that the official character of the revenue agent makes compulsion to answer his questions so probable that the warnings are required to prevent it. Yet the court distinguishes between the revenue agent before IRS has internally decided to consider prosecution and the revenue agent or special agent after such decision.
If a violation of the fifth amendment is really involved, I assume there are types of state agents as well as other types of federal agents who will be reached by this decision.
I think that candor on the part of a special agent who is seeking incriminating evidence is good governmental policy, and, as noted in Judge Cummings’ able opinion, the IRS has decided as a matter of policy that warnings should be given. It may well lie within federal judicial power to decide to exclude evidence obtained without such candor. But I do not believe the fifth amendment requires it.
According to one of the supplemental affidavits filed by the Government (see note 3 supra), all the records covered by this suppression order were examined by Lawrence prior to his referral of the case to the Intelligence Division, and no leads from that material were obtained by him between the referral and the aforesaid September 1964 meeting. If the Internal Revenue Service obtained all this evidence and the leads prior to the first contact with the defendants after the February 19, 1964, reference to the Intelligence Division or if any evidence obtained illegally thereafter was merely duplicative, the suppression order may not stand. Since the above facts were presented by the Government by way of affidavits in support of a motion for rehearing which was denied by the district judge despite his apprehension about a possible miscarriage of justice, a determination of the precise order of events is impossible on the present state of the record. Therefore, without implying any criticism of the district court‘s disposition of the Government‘s rehearing motion, we have determined that the interests of justice require a remand for a further hearing in order to develop the facts necessary to the application of the standards subsequently announced in Dickerson.4
The order is vacated and the case is remanded for further proceedings not inconsistent with this opinion.
FAIRCHILD, Circuit Judge (concurring in part, dissenting in part).
I agree that the suppression order should be vacated, but disagree with the direction to apply the Dickerson standards.