United States v. Michael and Janet Falley
489 F.2d 33
2d Cir.
1973
Check Treatment

*3 MOORE, Before MULLIGAN and Judges. OAKES, Circuit MOORE, Judge: Circuit Appellants Falley, Michael and Janet together Stolzenberg, with David Marcia Stolzenberg Christon, and Nicholas were charged eight substantive counts with 2(h) violations of Section of the Narcot- Drugs Import Export Act, ic and 21 U. Drug Comprehensive 176a S.C. and § Abuse Prevention and Control Act of seq. 21 U.S.C. 801 et and in a § conspiracy ninth count with to violate govern- said At laws. the close case, trial court ment’s dismissed the Stolzenberg, indictment as Marcia dismissed counts and 6 as to her hus- Stolzenberg, David band and counts 7 and as all defendants. re- guilty turned a verdict of as to the Fal- Stolzenberg leys David on the and con- agree spiracy count but was unable to remaining substantive counts. alleged The indictment named import- others been defendants and into the United States from hashish through April June of 1970 of 1972. mainly its based on the of two informers —Da- vid and Nicholas Christon. Gibbons testified to six substantive Christen alleging conspirators had counts that the smuggled into United States hashish tops from India table brass nameplates. tops, name- No table brass plates any or hashish involved charges produced ever those were government. companies. testified that on Gibbons Christon further testified December, concerning separate occasions, impor- in October and nine hashish two smuggled participated hashish into the Unit- tations he which he had Stolzenberg. appellants None of that ed from Morocco. States gov- produced accomplice witness, Gibbons, ever hashish was second tes- Stolzenberg separate David tified that on ernment. two occasions he $15,000 smuggled Falleys to a each sentenced hashish into York New years imprisonment on a fine and three which he delivered to and Da- Stolzenberg. conspiracy In addition Michael vid count. sepa- Falley adjudged guilty of two was corroborate tes- order to Christon’s refusing contempts of court for rate timony, called air- two passports.

produce his and his wife’s port brokers, Thomas Coscetta days impris- fifteen He sentenced to Through Pepitone. *4 and Vito customs contempt. upon each onment Coscetta, government broker showed separate shipments six name- brass alleged during a The indictment plates Delhi, from India, New to Leo period, beginning approximate- year two Importing Company, Inc., corporation a ending approxi- ly April, in 1970 and operated by Falleys. together mately April, 1972, appellants, their co-defendant David Stolzen- In with order to bolster and corroborate engaged smuggling berg, in some testimony government two Gibbons’ pounds of hashish from loca- thousand troduced into evidence a suitcase con- Spain, taining kilograms India into tions Morocco and five of hashish to- gether quantities resale to distribu- United States with small of heroin pharmaceutical paraphernalia. in the New York area. tors hashish and This government suitcase, belonged that defendants claimed Gibbons, which to had arrang- accomplished primarily 26, 1971, this been seized on December fol- quantities lowing the concealment of inspection a routine customs tops baggage inside table and brass na- Kennedy Airport, hashish Gibbons’ shipped during meplates which were then from which the hashish was discov- Morocco, Spain dummy or India to com- Gibbons, ered. who had been arrested purpose by appel- following up panies discovery, for this set this testified Stolzenberg shipment York. this lants and New of hashish was to be deliv- ranged shipments Stalzenberg only, ered individual to David had and fifty nothing weight Falleys. to one hundred to do with the This at- tempted importation pounds and on a more or less occurred Gibbons was wholly during year peri- monthly two this unrelated to the basis incidents which subject addition, were the In there was also testimo- od. matter indict- conspirators ny ment. had that on occasion the quantities of hashish

received smaller accomplice To further corroborate the through courier, David from abroad testimony, witnesses’ Gibbons. put agency into evidence travel records testimony by agent showing and a travel smuggling prove to In order during charged period in the scheme, relied on the conspiracy Stolzenberg and witnesses, accomplice testimony of two spent $20,000 excess of for air courier, Christon, Gibbons, and Spain, fare alone and had traveled to conspiracy was to function whose Judge addition, Morocco and India. level distrib- middle a salesman to act as permitted Weinstein to concerning the testified Christon utors. put Falleys’ into evidence the 1970 and arrangement him- partnership between 1971 federal income tax returns. Stolzenberg self, appellants David and During whereby Judge arrangements course of trial as and to Falleys pro- Weinstein ordered the hashish, arti- in furniture concealed passports gov- dummy pursuant duce their shipped to a facts, would be case, Falley, it subpoena. the trial court was who decided that Michael ernment brought custody passport into court for one reason of both wife’s his credibility own, comply this —to buttress of accom- refused his Judge According plice to the trial these refusals Wein- Gibbons. order. For court, prosecution Falley to show Michael to consec- wanted stein sentenced entirely prison, days in of 15 Gibbons’ was utive sentences figment imagination; im- wanted in addition to the sentence be served way prove, possi- conspiracy posed upon in the most concrete him the count smuggler ble, that Gibbons was indeed he was convicted. which of hashish. It must be no hash-

I. remembered that conspiracy connected ish with the as to by ap The first error stressed Falleys which were convicted was pellants introduction produced. Although ever the suitcase and the under suitcase circumstances contents, admittedly brought and its into During the which it was introduced. country by Gibbons, were relevant examination, course of Gibbons’ direct smuggler support- him a brand attorney prosecuting that a asked credibility theory ed the court’s to this accepted evidence. A suitcase be into outweighed extent, this relevance was inspector brought uniformed might prejudice which have been en- the suitcase to the counsel table. *5 gendered jury, in the minds of the suitcase admitted evidence over was into might easily which related have the objection the defense coun strenuous of Falleys. to the the narcot- hashish Had inspector in front of sel. The customs including ics, para- the suitcase and the jury proceeded the then remove some to phernalia displayed here, been the sub- bags display the to from suitcase and indictment, presence ject of the their prosecution the table. them on counsel’s and introduction into evidence would bags, the After he had removed several proper were not. been —but point stop. him court ordered to thisAt of The thesis that the relevance the “Okay, prosecutor I’ll the remarked: outweighed by prejudi- exhibit was its going If there to be leave it in. strength- impact upon jury the cial Appellant’s I’ll leave in.” many, that it reading of ened an alternative the Appendix identified at 100. Gibbons record. to the as one had tried suitcase which he bring into the on Decem- The certain that United States smuggling conspiracy then from but ber 1971. He came down there was it apparently and the contents of felt to show the stand identified that it had some bags jury quantity hashish. of her- to the to make the the A hashish order hypodermic syringes conspiracy oin more and some and concrete. believable produce any in the the also found suitcase. After It had not been able to Judge actually Falleys imported by ordered identification Weinstein hashish the so, effect, re- the suitcase and contents be it that its went and borrowed out simple purpose the from the the of exhibi- moved courtroom because some for drugs emanating produced from marked and The fact odor it was tion. that peripherally offensive. the trial could be related post proceedings of an ex is more vehemently protested Defense counsel prosecution’s rationalization of the throughout Again presentation. facto description than an of behavior accurate argued again and he the suitcase its motivation. being bearing had presented against pros- argues possi- clients. responded of ecution the relevance for bilities confusion were neutralized given by the evidence would be Un- the court. established. instructions fortunately, prosecution’s prediction is true that when the suitcase was It admitting introduced, In never came true. the suit- trial court admon- first “ jury cally, prosecution ished the . . the de- . introduced docu being testimony agent

fendants are not accused of hav- ments a travel ing anything shipment. appellants spent do effect had trying Ap- $20,000 years. We are not that case at all.” on air travel in two Appendix Likewise, pellants’ establishing at 100. addition to the inference later, large money short one de- time when that such sums were ob limiting attorneys illegally, ap fense asked tained the documentation of pellants’ expenses supported struction for defendant Marcia Stolzen- travel berg prosecution’s appellants neither suit- the effect that claim that had any arranged drug case nor concern- transactions in numerous December, smuggling ports part, at- call. For the most how tempt any' ever, prosecution’s substantive relation as the summation in being any dicates, crime which she was was interested tried, granted hypothesis establishing the instruction was that these expenditures pos-v fol- the court instructed the in the substantial were made lowing “Yes, by ill-gotten gains.1 of this has words: none sible any bearing on the Stol- case of Marcia laid foundation zenberg.” Appendix Appellants’ at 103. prosecution for the introduction these give same However, when asked to expenditures presentation consisted of a limiting instruction counsel for the appellants’ 1970 and tax 1971 income Falleys already (something returns. These tax returns were offered general way), done in a the court early negate trial the existence prejudice confu- refused. Whatever legitimate any source of income or engendered by presentation sion was justify expenditures. wealth to these may exac- the suitcase have been well Basically, argue the in unexplained erbated fluctuation tax come returns constituted an insuffi of the trial court’s attitude. cient foundation for the introduction of They given expenditures. Even if the trial court had travel claim that *6 limiting instruction, however, requested the admission the should of returns have highly questionable by preceded laying ad- it is whether the in turn been the of another, First, have mission the suitcase would then two-fold of foundation. argue they government proper. the circumstances been Under the that had the not, duty prove appellants verbal the court could with a mere to the that did not instruction, sensation created undo the the funds used obtain for travel a le large though by quanti- gal, (e. the introduction of this g., non-taxable manner illegal drugs ty loan). they of into the courtroom. Second, bank claim that unfairly enlisted, prejudice, the was also under an obli gation undoubtedly pre-con the have continued to color to establish defendants’ proceedings prejudice. spiracy to defendants’ net worth. Appellants’ argument first can easily disposed H. Supreme be of. The govern trial, the At the outset of the Court has held that in most cases “ it intended to ment made it clear that . . . is the Government not re- togeth appellants,

produce negate every quired possible evidence that to source of co-defendant, income, er Stol peculiarly with their David non-taxable a matter money zenberg, spent knowledge of vast sums within the of the defendant.” during conspiracy pendency of States, 121, the the Holland v. United Speeifi stand convicted. which 99 L.Ed. 150 prosecutor summary $7,000 made the 1. In . liis the fare alone . . . On a sala- ry following argument: salary $3,000 and a together. begins man A mesh It all to years Appellants’ space the less than two Brief at 26. who in of approximately $20,000 spent air- on has establishing op- opening a foundation his limitation gov- worth, e., principle net is that net i. total value of of eration this beginning “disregard explana- taxpayer’s assets may not ernment laid, reasonably period properly question. sus- When of the defendant tions of being There is the number ceptible Id. this foundation reduces of checked.” legitimate possible hypotheses that can record to indicate no evidence explan- explain disparity be- appellants such be to offered adduced that government. his income and tween defendant’s ations to expenditure. could Since the defendant Appellants’ claim is second longer argue that he maintained prosecution, requires before law lifestyle general wealth, the out of his illegal attempt imply of may an source expenditures possibility that were expendi- by producing proof of income unreported made is thus with funds inconsistent tures prominent. made more reported on defend- of sources revenue return, analogy income to establish tax There is an between ant’s obvious pre-conspiracy “net worth.” fraud be- defendant’s these tax eases the case Appellants conclusion fore at- this us where the has come high drawing analogy tempted the case at an between introduce evidence group living may as the known bar and a cases from which inference criminally fraud” cases. “net worth tax drawn that obtained funds being Ap- used the defendants. “prohibition” era “net Since pellants claim that the same restrictions theory” employed has worth been ought ap- apply type case as Treasury Department persons to convict cases; ply to the net worth Capone of tax v. United fraud. See supply a must foundation (7th States, 1931); F.2d 609 Cir. ex- the introduction travel States, (7th v. 54 F.2d Guzik penditures by showing 1931). theory gov Cir. Under could their travels financed ernment would show that a defendant’s general from their wealth. reported could not sources income living. possibly support authority his standard There is some which supports appellants’ position. then free in to draw the Haas See ference such defendant had earned v. United F.2d 63-64 However, reported (8th 1965). more than on his more he had income Cir. guilty widely accepted tax forms and was therefore view seems to be proof living potent theory tax fraud. far This was a defendant *7 establishing weapon provided by in dis taxable income above the means great probative from undisclosed sources when all closed is value other income of theory involving efforts In fact this en a crime the failed. a where joyed great gain. Furthermore, such the success that United motive is financial Supeme open Court led to the States was remark establishment of a defendant’s necessary permit “The worth is that: net method . net worth not volley has evolved the final the admission such evidence. Lack of proof prior impecunity first shot in is the Government’s battle for a matter of revenue, weight ordinary and its use in and not a the matter admissibili ty. greatly Goldenstein, income-bracket cases increases United States v. 456 (8th 1972); the chances F.2d for error.” v. Unit Holland Cir. United States, 126-27, (9th 121, Mirenda, ed S. 348 U.S. States v. 443 F.2d 1351 127, 131, Cir.), Verdugo-Medina denied, Ct. 99 L.Ed. 150 In cert. v. held, Supreme States, 966, Holland the Court inter United 404 U.S. 92 S.Ct. alia, (1971); that before the could 30 L.Ed.2d United present comparison Crisp, (7th a v. F.2d the States Cir. reported denied, defendant’s income his lay cert. 91 S.Ct. expenditures, (1971); non-deductible it must 29 L.Ed.2d 116 United (10th testimony Brewer, accomplice roboration” 427 F.2d v. States government. by 1970). adduced Further- the Cir. more, appellants importa- assert that the treat- distinction between the This only tion documents could have been dis- general net worth tax fraud ment the a covered as result of a tainted lead ob- cases, like the one at cases and those illegal tained an search of the Fal- bar, only where a crime of financial leys’ home.2 Since consider gain involved, fact is results from the testimony the Coscetta and documents gen- former, the urge poisonous “fruit of the tree” erally for its exclusive- relies conviction those have been documents should ly inference to be drawn from disagree. excluded at trial. We Indeed, the entire financial evidence. opin- support There is originally evidence theory developed was as a last investiga- judge ion of the trial resort, where other ad- evidence was tion of the customs caused brokers was typical In a missible. case where legally information gain obtained. In involved, of financial crime how- fact, suggests the evidence the in- ever, presented by pros- the evidence vestigation began illegal before sei- ecution will limited a demon- not be Falley addition, zures home. In discrepancy. stration of financial Un- Agent Connolly was asked whether ordinary circumstances, der such broker search had been aided standing sei- showing, alone, does not even Falleys’ book, zure of the address and he prima Therefore, make out a facie ease. responded although it difficulty had not.3 the same of refuta- types tion is inherent both of cases investigating agents suspected danger there is no in this case that being imported the narcotics were completely failure refutation would be importations from India. Such is, conclusive on the merits. There logically handled customs brokers then, no need to surround introduc- port entry. at the It would have been tion of this financial evidence with the gov- question of time before the safeguards exceptional found in the net ernment a so-called saturation worth tax fraud admission of cases. The vestigation, otherwise, or would have proof proper. importa- discovered the broker and the

tion Even documents. if the address III. book had shortened or facilitated the in- vestigation, supply it did fruit suffi- suitcase, In addition ciently poisonous to be fatal. income tax and the returns travel docu Wong Sun v. 371 U. already discussed, ments 471, 487-488, 407, 417, S. 9 L. upon of, relied (1963), Supreme Ed.2d 441 Court importation various documents obtained stated that: from, Coscetta, Falleys’ Thomas cus toms broker. Those exhibits established We need not hold that all evidence is Falleys imported poisonous brass “fruit of the simply tree” nameplates during from India the course because would not have come to *8 alleged Although conspiracy. light illegal but for the actions of the shipments by, police. those Rather, had been examined apt question the more through passed inspectors “whether, granting such a case is appellants argue incident, without that primary illegali- establishment of the provided “powerful ty, these exhibits cor- to which evidence instant Appellants you 2. claim that documents were 3. Q. Did obtain the name Trans-Air Freight any piece paper obtained Mr. from Coscetta and that his from taken government Falleys’ day name was obtained from the home the of the ar- an address con- book which the rest? illegally Falley No, cedes was seized from the A. I did not. Appellants’ Appendix home. at 71.

41 been, tained information would have objection been come at has is made itself, illegality and of normal or sufficient by exploitation of that investiga- trigger type sufficiently distin- means instead investigation tion, primary then the has not been guishable purged of the to be indirect, Guilt, Maguire, tainted and no taint derivative Evidence taint.” any produced attaches to of the evidence investigation. Second, law Cole, F.2d United States v. investigative attention on the focuses denied, (2d Cir.), cert. 409 U.S. findings If evidence themselves. (1972), the de L.Ed.2d investigation produced was sim- suggested government’s fendant investiga- ply output the normal of that illegal eavesdropping had been tion, investigative findings then the investigation triggered it the saturation directly. have not been tainted tax fraud scheme which uncovered the from which because it the source IV. learned first Finally, appellant Falley Michael sup The trial court refused to scheme. contempt claims his findings investigation. conviction press of the should rightfully be vacated because he Friendly, /., Appeals, af Court of privilege asserted his Fifth holding Amendment firmed, pro- the interviews against by refusing self-incrimination ground separate independent vided a passport turn over his own investigation and that of for the and that these against his wife for use evidence things were, considered, him. terviews all persuaded by argument We are not investigation, efficient of the cause stat- and we contempt therefore affirm the at 173: conviction. candidly Farber While admitted that personal expense deductions [the Fifth Amendment can illegally obtained “must protect information] be invoked to books or docu played part” some in his deci- ments under certain circumstances. sion, is clear both that he Simply stated, privilege can in sought never have obtained —a protect voked to —or one’s own books which investigation saturation possession are one’s own and which ground and that alone he would have self-incriminatory. are guaranty sought it —and fact obtained it —on apply does not tripartite without legal- Benton’s unity information alone ownership, possession [the and self- ly obtained information]. Conduct incrimination. legal not a cause of an event if the Appellant’s claim fails because event would have occurred withóut it. ownership present. element of is not Prosser, (1971 ed.). Torts 41 at 239 § applicable regulations Under the federal Although passports has are the-property declared to be proving by the burden of preponder government.4 Just inas Davis v. ance of evidence, United States v. Schipani, (2d 414 F.2d 1969), Cir. (1946), 90 L.Ed. 1453 where the the evidence has not Supreme been tainted Court held that no Fifth indirectly either directly, or inquiry guarantees an Amendment interfered with must first be made government’s as to the cause of gasoline seizure of ra investigation. investigation If the tion tickets as a because matter of statu instigated was in fact tory information publicly declaration that was independently discovered owned, guarantees Fifth Amendment illegal intrusion illegally and if the ob- not relevant to this ease.5

4. 22 § C.F.R. 51.9 might reads pointed as follows: 5. parenthetically It be out passport A shall appellant at all times successfully remain the even if could maintain property position of the United States and shall passports private be the are docu- upon returned to ments, Government demand. he would still have to face the fact

42 98, indeed when there were his investi Because we believe that the exhibition gation was, as the Government

of suitcase and its contents before brief concedes, cryptically jury into rather and their introduction evi- “short 1 According highly prejudicial circuited.” Brief at 16. to dence must had a Falleys’ upon despite Coscetta, the trial of effect broker, “virtually cautionary court’s statements would be impossible” specific charge, documents reverse and remand locate we telephone Falleys. result of new as as a call. More trial

over, he said that customs brokers’ files by document, number of (concurring Judge OAKES, in Circuit consignee, of name so that find dissenting part, part): actually produce the documents he did agree I, II I with and IV of the Parts specific for the Government after a re not, however, opinion, majority but quest, handling 1,000 he did as about ap two books of Part III. The address per month, transactions he had to search pellants illegally seized were 24,000 separate individually. some items by the on eve of lost Government very At the least what I think we should must, therefore, “strictly trial. We talking be about is whether there was a scrutinize” Government’s claim —on probability reasonable Govern proof, of which it has the burden Falleys’ would ment have uncovered the (2d Schipani, States v. 414 F.2d 1262 shipments through its customs house 1969), 922, cert. 397 denied, Cir. U.S. 90 telephone just per calls, not a remote or (1970) 902, 25 L.Ed.2d 102 haps hypothetical —that possibility independent there was an source the would occur. See Par United States v. discovery appellants’ of customs broker. outian, (2d 486, 1962). 299 F.2d 489 Cir. Huss, 38, See F.2d United States v. 482 Cole, (2d United States v. 463 F.2d 163 (destruction (2d 1973) tapes Cir. of Cir.), denied, cert. illegal wiretaps appel from foreclosed (1972), 34 L.Ed.2d is not pursuing taint). from lant issue contrary; specifi indeed there the court majority opinion and the Government cally undermining said that it was not rely Agent Connolly’s on Customs testi rule, the Paroutiun which it stated was mony only “cursorily” that he examined not whether illegally books, seized address have, events, the normal course eventually that he would have obtained by independ- discovered the evidence Falleys’ the name of the customs broker legal sources, ent whether but fact anyway by some sort of “saturation” in they actually discovery did make the vestigation. explained This he legal independent from sources. contacting telephone individual cus F.2d 174. Here under Paroutian brokers toms to determine whether my standards, and Cole view is that there relating had documents to a or a Michael was taint. Falley, Janet David or Stolzen Marcia berg company “Barter, or a acceptance by named majority Un fact, Connolly limited.” But in thin presented had con thread of evidence by telephone tacted what he said “independent were Government to show an brokers, “less than ten” of the discovery whom appellants’ basis” for passport only meaning, viz., he does not “own” his wife’s obtaining one position therefore is to withhold it some other information “saturation” vestigation longer necessary. the court. was no That See Fuller v. United 31 F.2d 747 information could come from one of two (2d Cir.), denied, sources, however, cert. U.S. S. now lost address Ct. slip paper L.Ed. books or as the result of a airway which was written an bill number and just 1. illegally It difficult tell what the Govern which was also seized and indeed appears suppressed by ment means There term. the trial court. *10 adoption verges of a broker permit the Government that would rule hearing on the prevail in a “taint” showing hypothetical inde of a mere

pendent information ob source for the illegal an search tained as fruits Only day, Jus the other Mr. or seizure. signifi is a “it stated that tice White question whether the

cant constitutional exception in ‘independent source’ Wong fruits,

admissibility Sun [v. U.S., at . . . 371 States] encompasses 407],

487-488 [83 an, actual inde hypothetical as well v.

pendent Fitzpatrick New source.”

York, L. U.S. (1973) dissenting J., (White,

Ed.2d 338 Douglas, cert., joined denial of doing pointed

J.). out that so he also Paroutian, supra, Circuit in the Second discovery” rejected the “inevitable police proper in the effect that rule—to any

vestigation re would in event have obtaining the informa sulted panel ma to me that

tion. It seems overruling Parou jority is in effect here

tian sub silentio. dissent,

Accordingly, respectfully I remand on

and would reverse and

ground also. Matter of

In the DCA DEVELOPMENT al., et Debtors. CORPORATION

Petition FRANCHI CONSTRUCTION INC., Appellant. CO., Petitioner,

No. 73-1262. Appeals,

United States Court

First Circuit.

Argued Nov. 1973. 27, 1973.

Decided Dec.