United States v. Richard v. Caiello, 420 F.2d 471

United States v. Richard v. Caiello

420 F.2d 471

2d Cir.

1970

Check Treatment

*1 Co., presentation Colliery of further Winding and to allow Gulf Brast v. repeat, 1938), tax ease I would so (4th a To evidence.13 Cir. appellees if cannot permitted to the basis that even a in which stipulation, primary damaging the motivation come within a from withdraw test, proper deter- the rule to follow said: court the mining aof bad allowancе business the developed subsequently facts Where 166 whether under debt deduction § particular respect a show, significant To motivation. there is stipulation inadver- matter, that a may appellees the entitled to that end opportunity may signed, party be re- tently the they proof offer prejudice to is no where there lieved the I conceive to come within what 181. opposite party. F.2d at test. correct And further: government collected taxes * * * By right to collect. it had no [relieving the this action stipulation] the from only re- prejudice. It was suffered no quired it had col- the sum

to refund right lected, to collect. it had no America, UNITED STATES of at 182. 94 F.2d Appellee, prеsent if the Likewise in sup- taxpayers ultimately able CAIELLO, Appellant. Richard v. 166, the Gov- port their claim § No. Docket 33175. legal prejudice would suffer no ernment Appeals United States Court required bad debt it to allow the if were Second Circuit. deduction. Argued Oct. 1969. stip- inadequacy appears It Decided Dec. 1969. Edison, here, in Boston like that ulаtion April Certiorari Denied 1970. misapprehension of le- due to a See 90 S.Ct. 1358. taxpayers’ gal proof of the elements Therefore, I remand ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍claim.12 district court for consideration justice require

whether interests of its to re-

the court exercise discretion taxpayers stipulation

lieve the existing have such sions an immediate and state of law induced then * * * haps preju- impact, think that if decisive we law case * * * justiсe. Logan the administration Co. v. results.” Lumber dice judgment Revenue, the reversal of Internal Commissioner directly jjresented should not theories prejudice Employee required appellees would be 13. Of course pursue theory Es- on remand. petition court to the district to submit a pecially stipulated this so since alleging grounds asking for such relief as to the of ter- facts critical element stipulation. relieving them of the employment (and mination of hence Boulger Destructor Co. Camden Morse surance) conclusory, not are stated in Mills, 239 F.2d 382 Fibre evidential, factual terms. taxpayers It is understandable they prevailed below. acted before as may my misapprehension Furthermore, be under- examihation Such parties standable view of uncertain case submitted in low- briefs of the adequacy appears law in been observed er this area. lias court context, stipulation support un- different tax- deduction a somewhat theory payer significant motivation be relieved of the effect dеr the stipulation into under a mistake not before the district court. “entered *2 Shanahan, Atty. James P. U. Asst. S. Sullivan, (James ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍Atty. M. U. S. York, Northern District of New on the

brief), appellee. (Pin- Phillip Pinsky, Syracuse, N. Y. sky, Pinsky, Syracuse, Y., & N. Canter brief), appellant. LUMBARD, Judge, and Before Chief FEINBERG, MEDINA and Circuit Judges.

LUMBARD, Judge: Chief appeals Richard from his V. willfully conviction on three counts of attempting joint income tax lia- evade bility in violation of 26 U.S.C. section 7201. appeal familiar raises the now tion of whether statements records taxpayer investigation by of a rev- special agents enue (IRS) Internal Revenue Service taxpayer received in evidence where the given not has been the so-called Miranda warnings. All оne but circuits question which have considered have repeatedly warnings held that such required.1 panel A divided recently Seventh Circuit held that such warnings given taxpay- “must be to the agent er special agent either the revenue or the inception at the of the first contact with the after the ease Intelligence has been transferred Division [of IRS].” Dickerson, 1116-1117 (7th 1969) (footnotes omitted).2 reject reasoning majority opinion in Dickerson con- and affirm the long authority viction on the line refusing require ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍of cases warn- such ings, the latest of which is United States produced by in United States merits made or cited eases process prior White, Cir. Oct. of audit Division, Intelligence 1969), to referral v. United Cohen though warnings even Thus, n. 37-38 the thrust of tire decision could be by simply expanding scope in Dicker- stated avoided Circuit 2. As the Seventh audit, Intelligence pre-referral “jurisdiction son, since both revenue investiga- and the is limited to criminal Division peruse Intelligence essentially How- 1112-1113. Division 413 F.2d at tions.” essentially holding ever, the same records and make Dickerson agent testify state- about same calculations. revenue mit a prose- White, him in criminal Cir. Oct. counsel, cution, had a or that he many Although appointed. retained considering whether When and other of the cases decided .this Amendment Fifth and Sixth about fact circuits mentioned given during rights inves- should be *3 taxpayers undergoing in- were audit tigations criminal to lead rights at or all of their formed of some appeal prosecution, of most courts investigation, long point a some surrounding the IRS the facts examined 788, g. Squeri, supra, F.2d at see e. 398 ease-by-case to de- on a basis interviews regarded as cru- this factor has not been they presented in- the termine whether Aрpellant com- contends that the cial.3 herently compulsive aspects the warnings present plete absence the Supreme found .to exist .Court distinguishes previous deci- case interrogation process in Mi- of custodial disagree. IRS We The fact that sions. Arizona, 436, 86 384 S.Ct. randa v. U.S. give partial warn- sometimes 694, 974 10 A.L.R.3d 16 L.Ed.2d one or interviews evеn several at (1966), v. United later in Mathis investigation protracted does States, L. 20 warnings of some kind not mean that g., (1968). e. United Ed.2d Rather, proof required. or be are should Squeri, F.2d 789-790 States v. given, warnings that that or some were 1968); v. Mac- Cir. merely given, as none serves evi- were kiewicz, 222-223 bearing question of dence whether Squeri, supra, we stated questioning noncoercive. the at 398 F.2d 790: privilege pro- prior The Fifth Amendment The of our decisions is substance compelling taxpayer hibits aware the that if the that he person subject investigation It to incriminate himself. of a compulsive aspect was the custodial if he is interviewed noncustodial strength interrogation, situations, and not the or Miranda are nоt government’s suspi- required. content once The that rationale is questioning cions at the time the aware that IRS conducted, conducting inquiry im- a serious into which led the court pose liability requirements Miranda with income tax and the investigation questioning. in a to custodial not conduct their inherently presence believe or of manner which is coercive that absence expect compelling pressures, improper rather is not that “[t]o than stage government’s prepared persons to which inves- must be extent tigation Morgan developed, has determines look after Unit- themselves.” requirements ap- (1st whether the Miranda ply any particular present instance In can there tioning. investiga- question no that the IRS tion the conditions de- satisfied both testimony The that at shows scribed above. prior .to the “formal interview” timely with the either IRS Caiello made motion to agents conducting investigation given spe suppress statements and records cifically agents. Judge by warn Caiello he could that re him to several IRS pro hearing questions pretrial fuse answer their Port held a and denied records, anything motion; objections that duce he said could were renewed might pertinent decision, cally anything In our we noted latest said prosecution.” “Special Agent him in a criminal [the admonished taxpayer! required White, supra, he was not addi- pоinted questions tion, no warn- answer or turn over out that the court specifi- personal ings did not state counsel were records but about the telephone. testimony ment trial, Caiello’s over the con- about Kowitt many Hurley’s copies tinued his audit at office with statements over the records made available to him there. evidence introduced records were Thus, Thus, inception Port from the objections. IRS those discharged vestigation, both had not Caiello and his book- found that ,the keeper Hurley showing fully circum- aware that a burden investigation surrounding underway.6 his contacts stances require coercive so The was referred to the warnings. Upon giving review Intelligence Divisiоn Kowitt Au- record, agree this burden we gust 4, 1964, special agent not met. August first met with Caiello on elev- days Up suppression en transcript point, later. *4 had hearing contacted visited was Caiello twice that Caiello after shows .the brief agent meeting twenty by Hurley’s at times revenue office. Wilton more than testi- agent George special by Miсhael fied he that was Kowitt and introduced to Caiello agent together separately.4 Kowitt as gence Wilton, or of Intelli- either .the the state- no doubt that Division and There can be that he Cai- showed by badge ello Caiello and furnished and ments credentials. On cross- government trial, important, examination for the at Wilton stated werе expenditure he assigned method told “I the net worth Caiello: have been unreported investigation establishing your income.5 an conduct of of above, liability.” Thus, perfectly of the Miranda warn- none noted clear to ings specifically subject Caiello that he was the of investigation, investigation and an which fully of what aware Caiello was aspects by had more serious of reason occurring. meet- initial face-to-face The appearance and formal introduction Kowitt, ing the first Caiello and between representative.7 second IRS him, place on took man to contact IRS Caiello’s replete office of record June is also with testi- Hurley. mony re- bookkeeper himself Caiello that none of the took interviews minutes, place only setting after fifteen in a for mained custodial or in- were agreed herently delivering records he had suppression coercive. At the arranged appoint- hearing, bring Caiello when was asked several purpose securing were short of these contacts 4. A number an extension of the period telephone these, were calls Some of limitation for calls. the assessment per- arrange appointments merely explaining pro- additional tax. this Caiello, involved calls cedure interviews. Other him if sonal told questions about Caiello’s he did not a fеw substantive understand the forms he should personal up Hurley. affairs. financial take it with business The forms were meetings eventually phone signed September 21, 1965, were calls on Several obtaining primarily from Caiello devoted and returned to Wilton. levy statutory time to extensions of regard 7. Also relevant in this of income tax. is the fact assesments additional that Caiello admitted on cross examina- technique by IRS is a This suppression hearing tion at that be- increments asset calculate annual fore the IRS contacted him he had al- compare reported in- them to value and ready by been audited tax officials of the three come. In Caiello’s payment Xew York State with convicted, the in- for which he was taxes, of state income and that this in- charged understated that he had dictment vestigation had resulted in an additional grocery sole income from his store —a assessment of between $1400.00 proprietorship in excess total — pay $1500.00 which he had to to the state. $29,000.00. experience That Caiello’s representatives during referred Caiello mind 6. The IRS fectly clear, Hurley at least once for advice for Kowitt testified that at one investigation. early meetings Caiello, The record shows with February 9, 1965, going Kowitt and asked him how on the IRS audit was compared investigation. at his store with Wilton met Caiello the state they how relating show had cheеked Caiello’s an- entire course tions expenditures reported nual representatives of the IRS with contact interview, he net come calculated worth.8 prior to the formal January with counsel attended good requir can reason for see exchanges particu- One set of give Miranda significant: larly they deal a citi whenever with regarding possible any “Q. zen tax liabilities un Now at der your members circumstances where the citizen contact course liberty to under restraint and is Revenue Serv- Federal Internal Every cooperate representatives or not choose. ever ice you deemed to you under ar- citizen know and will be must were аdvise .that obligation hon that he is under an know rest? A. No. ,to estly fully infor furnish correct you “Q. they ever advise Did regarding pay mation his income and to custody? A. No. accordingly the taxes which would be you “Q. they advise Did ever owing government. Every citizen your you either not free to leave also knows false and fraud returns premises or [where their offiсes ulent taxes of evasion of are criminal place] time? took interviews fenses federal laws. So violation *5 No. A. far his duties .the citizen concerned during feeling “Q. your Was it obligations and and his for liabilities you that of these interviews course taxes violation of are same law any A. time? free leave at to regardless partiсular the duties Yes.” assigned may who to investi Moreover, he often that testified Caiello gate returns, liabilities, pos his and representa- away from moved law. sible violations of the criminal grocery in his him interviewed tives who And, course, no there is re where other to on customers store wait straint and the contacts of the agents’ testimony, not con- work. The period and extend over .the Caiello, several tradicted time, ample opportunity for there is long period throughout times as such advice and to seek vestigation they if he mind- Caiello asked persons as he sistance from third producing answering rec- questions or ed desire.9 always ords; ef- replies of the rеcord Our examination im- The most fect that he not mind. Mr. Caiello was leaves doubt that example portant of this occurred any up to under restraint meeting August 17, when de His and formal answers ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍interview. introduced to Wil- Kowitt Wilton Caiello. produce to records were cisions various willing ton if he to sub- asked Caiello Accordingly, voluntary. Port was mit him. re- of his Caiello records to sup denying motion correct plied appoint- that he was and made an press and and records statements August ment with Wilton admitting renewed over them evidence date, returned on with Kow- objections trial. itt, picked up and the records —includ- merits register tapes is a final matter and finan- There cash other 16, 1968, government photo- December attention. On cial which the months in copied six Caiello was trial sentenced and later introduced at example “if he ob- he asked Caiello when Kowitt occurred 8. Another ject signing transcript he said and this statement took verbatim no ob- and had the truth it was answers tions and Caiello’s signed jection it.” and сash on hand in the store interview at an accompanying 6, supra, reading July 22, and 9. See footnote 1964. After Caiello, testified text. answers back denied, Cir.), cert. on each of prison fined $5000.00 my indictment, (1968), and con 21 L.Ed.2d 258 counts 2 there, 226; concurrently. and Unit currence run prison sentences Squeri, suspended 398 F.2d 785 sentence was count toAs probation fоr placed on judgment of convic- years. The three tion states: upon begin from release “Probation condition As a

confinement. ordered to

probation, defendant .the taxes, interest penalties

pay all years, taxes income on his ninety 1963 within America, UNITED STATES finally days amounts after Appellee, fixed." quoted sentence the second We construe Mary PUCKETT, Appellant. Ellen probation broadly mean that abоve America, UNITED STATES of begin upon confine release will Appellee, ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍imposed condition ment and upon continua condition therein is a GEARHART, Appellant. Allen John pro probation while Caiello tion of Nos. adjudication civil ceeding with an condi liability, of such the duration Appeals United States Court of years. three to exсeed course not tion of Fourth Circuit. *6 sentence, Moreover, read the as we Argued 6, Jan. quoted sentence period in the second 9, Decided Jan. taxes, penalties, and payment of for the begin run until does not interest judicial as well all has exhausted procedures in connec administrative determining of tax the amount tion with supra, White, Undoubt at 94. due. Cf. mean edly court district rights to any of defendant’s foreclose liability. civil tax a determination Taylor, 305 v. See United States 183, Cir.), 371 U.S. cert. denied 187 (1962), 126 L.Ed.2d 9 83 S.Ct. 943, 83

rehearing denied, S.Ct. U.S. 371 (1962); States United 9 L.Ed.2d 277 Stoehr, 33 A.L.R.2d Cir.), Unit (3rd Stoehr cert. denied L. 344 U.S. (1952).

Ed. 643 is affirmed. conviction (concur-

FEINBERG, Circuit Collias, Norfolk, Dean Peter ring) Va. : (Court-appointed counsel), appel- authority of United on I concur lants. White, Cir. Oct. filed, Mason, Williams T. 10, 1969), petition Jr., Asst. S. for cert. U. Atty. (Brian 1969); Gettings, Atty., (U.S. P. U. S. Dec. L.W. appellee. Mackiewicz, brief), States v.