United States v. S. Steve Sourapas and Crest Beverage Company
515 F.2d 295
9th Cir.
1975
Check Treatment

*1 plurality agents, ed cannot be Vigi, Vigi relayed which he and which Wharton, maintained. 2F. Criminal Alberts. The fact of Erdman’s told to Law at 1862 ed. conspiracy § had al- participation in the ready and the evidence- been established directly The Rule has been more stated objected merely dealt with a which is in a later edition of the treatise as fol- possibility running was also Erdman lows: independent bookmaking operation. an agreement persons two com- to. jury acquitted Erdman Since particular mit a prose- crime cannot be illegal charges conducting substantive conspiracy cuted as a when the crime membership gambling operations and her is of such a necessarily nature as to was con- conspiracy for which she require participation per- of two compe- was victed established sons for its commission. tent evidence we fail to see how she Anderson, Wharton’s Criminal Law prejudiced by the admission of (1957). at 191 and Procedure § only which dealt with substantive of- adversely determined This issue has been government maintains that fenses. The in Ianelli v. position appellants to the simply the evidence as fur- was offered - States, -, 95 S.Ct. U.S. proof membership in ther of Erdman’s (1975). 43 L.Ed.2d conspiracy it was not of- the his- Supreme Court discusses report fered to establish the truth of the finding and the tory of Wharton’s Rule Vigi. these which “Bob” made to Under ap- intent it not congressional aof circumstances, be admissible as it would prosecutions for violation ply to hearsay rule since exception an to the 1955. § co-conspir- the conversation two between judgment of the district court is ators, Vigi, Erd- Alberts and established affirmed. conspiracy. with the man’s connection we con

The final issue which appeal in the brief of

sider on was stated

appellants as follows: convictions

[Did t]he [defend-

ant-]appellants conspiracy to vio- represent dupli-

late 18 U.S.C. 1955 § violating cation of their convictions for America, STATES UNITED 18 U.S.C. § 1955[?] Plaintiff-Appellant, In order for a conviction to be obtained under 18 1955 it must be shown U.S.C. § engaged five or more persons were Bever and Crest Steve SOURAPAS S. conducting illegal gambling enter- Defendants-Appellees. Company, age prise. prosecution must show that 74-2565. No. persons agreed two or more have or con- spired operate illegal gambling en- Appeals, Court United States terprise involving persons at least five Circuit. Ninth obtain a conviction under 371 of con- § 27, 1975. March It spiracy to violate 1955. is claimed § counts violates that conviction on both As on Denial Corrected Rehearing Rule,” “Wharton’s which has been stated Rehearing En Banc June 1975. as follows: plu- When the idea an offense

rality logically necessary,

conspiracy, the volun- which assumes

tary person to a crime accession of aggravat- such a character that it is *2 Curnow, Atty., comply

David P. U. S. had failed to Asst. with Diego, (argued), plaintiff- publicized by press for IR —897 Cal. San release on appellant. October as amended IR—949 press release on Novem Marinos, Diego, (ar- James S. San Cal. ber 1968.2 ap The Government has defendants-appellees. gued), pealed pursuant from such order *3 3731. U.S.C. § OPINION grounds The three urged by the de- CHAMBERS, Judge, Chief Before support fendants in their motion to OOSTERHOUT,* Judge, Circuit VAN suppress are: EAST,** Judge. District and )The 1. by records were obtained fraud, OOSTERHOUT, Judge: trick and deceit. VAN Circuit by the 2. was returned The indictment November 10 examination vio- Beverage Crest Com lated the re-audit jury against provisions IRC. grand Sourapas, (Crest) and S. Steve pany 3. The November examination was in Crest, both with charging president of regulations. violation of IRS and sub tax evasion attempted income returns. The tax court filed scribing to income opin- false memorandum ion findings or detailed by defendants fact but Motion both his 1974, expressed views are 25, suppress to in statements June incor- filed porated de Agent Saetta in the The Special record. by prosecuting obtained attorney, closing evidence, defendants’ before his from examination rived Novem period from made the during following inquiry: “But I do 14, and for the have two other to November witnesses that I would ber call, like I property seized.1 Such but I think shortcut return * * * sustained that motion, hearing, was if I can a determine if the after 2, 1974, September Court’s concern anything on trial court by the than special press release ground that and upon proce- solely * Oosterhout, Martin D. Van Honorable The func- describe his quired himself, identify Eighth sitting Judge, anything Circuit, Senior Circuit advise tion, and that taxpayer designation. against he be may Spe- used him. says Agent will that he cial also tell taxpayer ** East, William G. Senior Dis- Honorable himself cannot be to incriminate compelled Judge, Oregon, designation. sitting trict answering producing or any questions right documents, and that he has the 3, 1974, filed on 1. A motion April prior an before seek the assistance attorney of taxpay- of an examination fruits suppress responding. revenue on September ers’ records by Agent identified Previously, Special' and 5, 1974, June denied on 5, 1969, was and and his function at described himself ruling said was denied on to reconsider motion meeting but was not first with the taxpayer rulings of such 1974. The validity July give further unless advice required on this appeal. not before us investigation was in or the custody covering IR-949, Novem- release stage. press 2. beyond the proceeded preliminary reads: ber change existing has made no in its Change if it becomes Washington, necessary instructions D. proce- C. — rights is in who advising person custody, interview their taxpayers dure give Agent must statement during comprehensive aby conducted Spe- interrogation. rights This Intelligence Agent before Division the IRS cial in custody statement warns the person the Internal Reve- today by were announced anything he remain and that he silent may Service. nue goes be him. used may most le- beyond says The new procedure in designed also be told that custody A must gal person to advise that are requirements right rights. or have present to consult he their persons making Agent counsel before a statement is to in- his own of a Special One function answering if he vestigate of In- or and any questions, violations criminal possible meeting he can have one ap- afford cannot counsel laws. the initial ternal Revenue At Agent re- U. S. Commissioner. pointed by now a Special with a taxpayer, on October gation was authorized up by were set dure which IRS.” was as- Agent Saetta Special 1969. “No; responded, my The court concern, that’s investiga- criminal make the signed to your and if other witnesses on Sourapas. Saetta and of Crest tions just reiterate that way, would president Sourapas, 10 met November necessary.” they’re not Crest, in Crest’s owner of principal and During argument the course of the to exam- permission and obtained office following colloquy place took between agent introduced Crest ine prosecutor court: presented agent and special aas himself you, “THE COURT: tell Mr. Let me advised his credentials Curnow, the only third is the one I’m was to special function of interested in. of internal violations alleged investigate MR. right, your CURNOW: All laws, did apparently but Honor, trying get my and I’m there to he was specifically advise *4 straightened record out because I have investigation. There criminal make a feeling may happen. as to what warning precise the dispute as to some it, then, I take the Court would the examination of given. that was Our finding make a that there was no did not that Saetta satisfies us record fraud and deceit as is set forth in comply with the substantially point first in the defense— the to. referred regulations heretofore IRS my THE COURT: That is inclina- separately effect will discuss We tion at this time. validity non-compliance upon such Sourapas MR. to order as suppression CURNOW: And I would also may it that the take Court also find and Crest. pro- there was no violation of reaudit the situa We shall first consider cedures. Sourapas. trial respect tion with to THE my COURT: That’s inclina- suppressing the evi as a basis for court tion, very but I’m troubled upon relied v. Leah dence States problem. third 1970) ey, (1st 434 7 and United Cir. Heffner, 420 F.2d 809 States 1969). an indi point out that Said cases Honor, MR. hope CURNOW: Your I protection vidual fifth amendment that the Court’s remarks are addressed They ac self-incrimination. specifically ruling to the they knowledge warning required by that the comply failed to regulation. with the regulations where the individual the IRS Oh, THE surely, COURT: absolute- custody goes beyond is not taken into ” ly, absolutely, way, no other . . Arizona, requirements of Miranda v. 1602, 16 86 S.Ct. L.Ed.2d findings on 384 U.S. The Court’s (1966), sup but hold that the motion are 694 2 of 1 and grounds regulations under the and are bound its own evidence by substantial ported Thus, The rea disposi- presented in such cases. facts erroneous. clearly not soning just supports cases cited Special Agent of the Saet- is whether tive issue upon the substantially comply with trial court’s determination to ta failed so, us, information procedures and if record before publicized IRS Sourapas’ personal records suppressed was obtained from whether sup Sourapas questions and to should be as to or answers wrongfully obtained of Saetta’s failure to pressed by reason as to Crest. regulations. good For comply with agents who made Other result, contrary see Unit exposition of a Sourapas’ and September examination Fukushima, F.Supp. ed States v. footnote to in referred Crest’s (D.Hawaii which was report an information filed expressed doubt wheth- Intelligence The trial court Angeles by the Los received any personal reflected investi- er the record preliminary criminal A Division. interpretation regula of the Sourapas were seized or ex- records of which require agent would suppression ordered the and amined but corporation advise a right that it has a papers evidence that or return not to incriminate itself require would testified might have been seized. Saetta to state an erroneous view of strictly confined his examination was the law. believe We that a reasonable that he no and made corporate records interpretation regulation of the is that it Sourapas’ personal applies only taxpayers to individual and records. corporations. suppress the motion to Neither specifically describe order nor the and not Individual may have been personal records records were involved in Leahey At the criminal wrongfully examined. supra. Consequently, Heffner, such offers trial, event the Government support to the cases lend state records or personal papers, It would be the issue that ments, Sourapas can raise interpret unreasonable to wrongfully obtained such evidence pertain corpo to the examination of seized, poisoned or the fruit or tree, clearly light rate records in estab appropriate relief. can obtain corporation that a or officer lished law stated, sup hereinafter reasons For right thereof has no constitutional respect with pression order records which withhold sup the extent is modified *5 Habig, In v. incriminate. United States corporate cover records pression shall 1973), 474 F.2d 57 Cir. Miranda modified, suppression the order and as so by special warnings given were not the affirmed. Sourapas is as to agent who obtained an officer’s consent firmly established that a cor is It corporate to examine the records. The protec has no fifth amendment poration recognized corporation court the and that against self-incrimination protection had fourth amendment offi corporation, corporate the neither against unlawful search and seizure un prevent person can the any other cer or appropriate der circumstances. The for examination of relevant production that no fifth amendment court held v. United records. Bellis corporate by obtaining the rights were violated of 2179, States, 85, 40 94 417 U.S. S.Ct. corporate the to examine ficer’s consent (1974); v. 678 United States L.Ed.2d warnings. absent Miranda records 1248, 694, 698, White, 64 322 S.Ct. U.S. held: court (1944). 1542 88 L.Ed. “In the case before us there was no nothing specific find We corporate records nor oth theft stating that the self-incrimi- regulations prop trespass corporate er form of on regulations ap- are portion nation erty. The fact that criminal investi Appellants sug- plicable corporations. started was concealed gation has been “taxpayer” use of the word gest that the period from the defendants for during the course of the times several involuntary time did not make the oth requires a construction regulations voluntary Sehroering erwise consent self-incrimination fifth amendment the inspection of the records. corporation. given to a warning be Sehroering was aware Lawrence’s 2, supra, of footnote paragraph second identity agent, as an Internal Revenue goes beyond procedure “The new reads: no Sehroering had constitutional that are de- legal requirements most production privilege refuse the rights.” persons of their signed to advise when Lawrence so corporate records paragraph the is In the third provided the re requested, records at “he” and “him” and as described to tax matters quested were relevant throughout places duty It investigation. was his under pronoun is used to describe personal regard make the records available taxpayer. 300 Agent personal Saetta from the records whether had

less of or statements during a civil a criminal shifted from em November examination is affirmed ex- might whether himself be phasis or he cept it is modified to States, exclude the v. incriminated. Wilson United States, records supra; see Curcio v. United su question Crest. of whether Sclafani, evi- pra; 265 States dence offered at the criminal trial (2d denied, is the Cir.), cert. F.2d 415 poisoned fruit of the flowing tree from 3 360 79 L.Ed.2d U.S. S.Ct. Sourapas’ examination (1959). individual The same is true with 1534 left records is determination respect Habig. It irrelevant is trial court when and if such summons, evidence is subpoena, or search war presented. production rant was used. If refused, agents records had been judgment suppressing corpo- could have obtained them summons rate records of Crest and informa- 7602, 7604. The under 26 §§ U.S.C. tion obtained therefrom is reversed. agents did not resort fact Modified and Sourapas. affirmed as'to mitigate this measure does not Reversed as to Crest. production consensual States, v. United Greene ORDER ON PETITION FOR (2d Cir., 1961).” F.2d REHEARING at 62. F.2d PER CURIAM: agree holding We with such and deter- the trial court erred in sup- mine that The motion of government to cor- pressing opinion rect herein as 515 reported information obtained therefrom. 295, (9th 1975), granted. In Moreover, the earlier examination Agent” term “Revenue the revenue to in referred foot- “Special Agent” used. We think a well indepen- note constitute generically within term “Revenue subsequent subpoena source for a dent to Agent.” But it should now be under- *6 produce corporate See Agent,” stood that “Revenue as it ap- Iowa, Standard Oil Co. State of pears “Special means 1176-77 Agent.” government feels this Both individual taxpay- important. ers are entitled to fair treatment petition appellees for a Internal Revenue Service. Since there rehearing in banc is first treated as a implications are of self-incrimination rehearing by panel. for a As petition present where such, petition panel. denied involved, order is a harsh weapon supervi- to use in the exercise of Secondly, petition of the appellees sory authority. In situa- rehearing for a is treated as a suggestion here, presented in event rehearing for a in banc. has fact violated self- imposed regulations, agency’s own panel has advised the court in banc disciplinary procedures should be suffi- (Circuit Judge participating) Wallace not corporations protect cient which come panel’s judge vote. No circuit investigation. under requested rehearing in banc. There- judgment fore, suppressing suggestion rehearing for a en evi- dence might have been bane is denied. obtained