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September 14, 1966

United States of America
Fred P. Fiore

Marsh, District Judge.

The opinion of the court was delivered by: MARSH

MARSH, District Judge:

The defendant, Fred P. Fiore, was indicted February 10, 1966, on four counts, each charging him with willfully and knowingly making and subscribing to false statements in his income tax returns for the years 1959, 1960, 1961, and 1962 in violation of § 7206(1) of Title 26 U.S.C.A. While the defendant is charged with knowingly and willfully understating his income from three separate sources, the indictment stems primarily from investigations which resulted in allegations by the United States that the defendant during these years owned certain Gulf Oil stock from which he received substantial dividends not declared on his returns.

 Before the court is defendant's motion to suppress certain evidence obtained by Internal Revenue agents by interrogation of the defendant on two occasions and by the taking of notes by one agent on one of these occasions from certain records placed at the agent's disposal by the defendant and his accountant. At a hearing, testimony concerning the circumstances of these disclosures was given by the defendant and by the two Internal Revenue agents assigned to the case. *fn1" Initially, it should be stated that the defendant did not have counsel present at either of the meetings which will hereafter be described, nor did he seek the advice of counsel concerning these investigations until after the meetings had taken place.

 The defendant rests his motion solely on contentions that the evidence was obtained in violation of his rights under the Fifth and Sixth Amendments. The defendant does not expressly assert that the evidence was obtained by coercion, fraud, misrepresentation or deceit, or other than "voluntarily". Rather, the defendant urges that deception was implicit in the failure of Internal Revenue agents to apprise the defendant when their investigations became in fact an inquiry into possible criminal conduct, and likewise in their failure to warn the defendant of his constitutional rights at such time.

 More specifically, the defendant contends that the test of "voluntariness" as defined and applied in cases such as United States v. Burdick, 214 F.2d 768 (3d Cir. 1954), and United States v. Wheeler, 172 F. Supp. 278 (W.D. Pa. 1959), aff'd 275 F.2d 94 (3d Cir. 1960), can no longer be deemed dispositive of questions of suppression of evidence in light of recent Supreme Court decisions. In both Burdick and Wheeler, the defendants argued that admissions made to Internal Revenue agents in the course of investigations of their income tax returns should have been suppressed because they were obtained in violation of the Fifth Amendment. In each case, however, it was held that the test of admissibility was whether the statement was entirely voluntary and understandingly given, and that failure to warn a person that he did not have to testify against himself and that any information given might be used against him in a criminal proceeding did not make the admission involuntary. The cases relied upon were Powers v. United States, 223 U.S. 303, 56 L. Ed. 448, 32 S. Ct. 281 (1912) and Wilson v. United States, 162 U.S. 613, 40 L. Ed. 1090, 16 S. Ct. 895 (1896).

 No violation of the Sixth Amendment was asserted in either Burdick or Wheeler ; the dates of the cases would suggest why. The defendant in the present case, however, cites Massiah v. United States, 377 U.S. 201, 12 L. Ed. 2d 246, 84 S. Ct. 1199 (1964); Escobedo v. Illinois, 378 U.S. 478, 12 L. Ed. 2d 977, 84 S. Ct. 1758 (1964); and United States ex rel. Russo v. State of New Jersey, 351 F.2d 429 (3d Cir. 1965), in support of his position that statements and information obtained when he was without benefit of counsel were in violation of his rights under the Sixth Amendment. Subsequent to the hearing and argument on the motion, the Supreme Court decided Miranda v. Arizona, 384 U.S. 436, 16 L. Ed. 2d 694, 86 S. Ct. 1602 (1966).

 Miranda rests the Sixth Amendment right to counsel squarely upon the Fifth Amendment right against self-incrimination and additionally establishes express conditions of warnings concerning constitutional rights and demonstration of intelligent waiver of such rights while the individual is in custody at the police station or otherwise deprived of his freedom of action. In absence of the observance of such conditions, all statements, whether intended or tending to be inculpatory or exculpatory, are inadmissible. Miranda v. Arizona, supra, pp. 476-477. The impact of the Miranda decision upon Supreme Court cases relied upon in the decisions in Burdick and Wheeler was noted by Justice Harlan in his dissenting opinion (p. 509):

"* * * [In] practice and from time to time in principle, the Court has given ample recognition to society's interest in suspect questioning as an instrument of law enforcement. * * * Of course the limitations imposed today were rejected by necessary implication in case after case, the right to warnings having been explicitly rebuffed in this Court many years ago. Powers v. United States, 223 U.S. 303, 56 L. Ed. 448, 32 S. Ct. 281; Wilson v. United States, 162 U.S. 613, 40 L. Ed. 1090, 16 S. Ct. 895."

 While Miranda does not expressly overrule Powers or Wilson, it is evident that to the extent that Miranda (and Escobedo and Russo before it) adopts a doctrine which implicitly modifies the criteria of these earlier opinions, the present status of the "voluntariness" test adopted by both Burdick and Wheeler is arguably in question. In short, we are called upon to determine whether recent Supreme Court cases imposing specific conditions of limitation upon police interrogations must be deemed equally applicable to Internal Revenue investigations. If so, a more exact meaning attaches to the term "voluntary" than heretofore. We conclude, however, for reasons we shall set forth, that such cases have no application to income tax investigations in respect to either Sixth or Fifth Amendment rights. First, we will state the facts from the testimony at the hearing.

 In the period covered by the indictment, the defendant was primarily in the business of stripping and selling coal and excavating for commercial buildings. (T., p. 10.) For the years 1958, 1959, and 1960, he filed returns which were audited. Certain adjustments to his tax liability were made in each instance, and he was required to pay additional taxes for each of these years. (T., p. 13.) These audits bear on this motion only insofar as they tend to establish the defendant's frame of reference with respect to Internal Revenue audit and investigative procedures when he was confronted by agents making the investigation which led to this indictment.

 The defendant's 1961 return was assigned for audit in the latter part of 1962 to revenue agent George Skoufis, a field auditor (T., p. 40). Skoufis commenced his audit in early March, 1963. As a revenue agent, he was primarily concerned with the civil aspects of a tax case, and was "specifically instructed at the first indication of criminal aspects to discontinue the examination and notify our Intelligence Division * * * through channels * * *." (T., p. 41.)

 Skoufis met twice (March 1st and March 15th) with the defendant's accountant, William McArdle, at the latter's office without the defendant being present (T., p. 62). On these two occasions, Skoufis examined and made notes of certain records, mostly cancelled checks and bank statements (T., p. 42). Skoufis then requested and arranged for a meeting with the defendant, which took place at the defendant's apartment (T., p. 62) on March 28th, with Mr. McArdle also present (T., p. 59). He did not at any time warn or suggest to the defendant or his accountant that the defendant could have, or should have, counsel present at this meeting. (T., pp. 47-52.)

 The defendant vigorously urges that a most significant fact is that prior to this meeting, Skoufis was in possession of certain information obtained "from a Federal Agency * * * concerning the possibility of the possession of Gulf Oil stock" by the defendant in 1961, since he then knew from examination of the 1961 return that the defendant had reported no dividends on such stock in that year (T., p. 50). This was the moment, according to defendant, when a routine audit to determine civil liability for tax became a criminal investigation.

 At this meeting Skoufis asked the defendant whether he had any "stocks not shown in his returns" (T., p. 49), making reference both to stock in general and to Gulf stock in particular (T., p. 50). Skoufis testified that he "had no definite information that would have indicated to me any Criminal elements as of this date which was March 28, I believe, of 1963." (T., p. 52.) But after the meeting he made an oral report to his superior in which he "specifically said" that he "had reason to believe" that the defendant "as of that date owned certain Gulf Oil stock." (T., p. 54.) Subsequently, Skoufis made further inquiry and discovered that the ...

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