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UNITED STATES v. UNION NATL. BANK

February 22, 1974

United States of America and William J. Burgess, Revenue Agent, Internal Revenue Service
v.
Union National Bank


Snyder, District Judge.


The opinion of the court was delivered by: SNYDER

SNYDER, District Judge.

 This case is before the Court on a Petition to Enforce an Internal Revenue Summons filed January 2, 1974 and a Motion for Leave to Intervene filed by the taxpayers.

 The Summons previously served on the Union National Bank (Bank) on October 25, 1973, required it to produce certain records of Robert P. and Patricia Bengel. *fn1" This proceeding is pursuant to Sections 7402(b) and 7604(a) of the Internal Revenue Service of 1954 (26 U.S.C. §§ 7402(b) and 7604(a)). *fn2" The Respondent Bank filed a Response alleging that the Summons was overly broad and unenforceable for that reason. On January 18, 1974, one of the taxpayers, Robert P. Bengel, named in the Summons, filed a pleading with the Court seeking a continuance of the hearing so that he could file a Petition to Intervene and a Brief in support of his Petition. The hearing was postponed and the Petitioner Bengel filed his Motion to Intervene along with a Cross-Complaint. In his Petition, Bengel alleged that the Revenue Agent was attempting to use the "Court to aid him in an investigation to determine and establish criminal fines, penalties and forfeitures in violation of the Constitution of the United States." In his Cross-Complaint the Petitioner alleges that there is a privileged contractual relationship between himself and the Bank and that the records were being sought to establish criminal liability in violation of his rights under the First, Fourth, Fifth, Sixth and Ninth Amendments to the United States Constitution.

 The Petitioner sought not only the right to intervene but also the following:

 1. That the Internal Revenue Service takes nothing by its pretended application for relief.

 2. That Internal Revenue Service be restrained permanently from the operation, execution and enforcement of 26 U.S. Code Section 7602.

 3. That the Internal Revenue Service be restrained permanently from the operation, execution and enforcement of 26 U.S. Code Section 7402(a) & (b).

 4. That the Respondent Union National Bank be restrained from giving the Internal Revenue Service any information concerning Intervener's private accounts, records and other papers.

 5. That the Court restrain itself permanently, and that the Court restrain and enjoin the Internal Revenue Service from the operation, execution and enforcement of 28 U.S. Code Section 2201 in its "exception with respect to Federal Taxes -" as being repugnant to the Constitution of the United States.

 6. That a Three Judge Court be convened to hear and determine the above entitled action.

 7. That 26 U.S. Code Section 7402(a) and (b) and 7602 be declared unconstitutional and void.

 8. That the provision "except with respect to Federal Taxes" in 28 U.S. Code 2201 be declared unconstitutional and void.

 On February 1, 1974, this Court heard testimony on the Motion for Leave to Intervene filed by Mr. Bengel. At the hearing, William J. Burgess, the investigating tax officer, testified that a general audit was being conducted on the returns of Robert P. and Patricia Bengel; that the Bank records were necessary to properly investigate the tax return of the taxpayers; and that only the Intelligence Division of the Internal Revenue Service is concerned with investigating possible criminal prosecutions and that at no time has the Intelligence Division been involved in this case nor has any recommendation of any kind been made as to the possibility of any criminal prosecution against the Bengels.

 Mr. Bengel is not an attorney but he had the help of a Jerome Daly, a lawyer disbarred in another District, who was not permitted to sit at the counsel table during the hearing. Mr. Bengel did not take the witness stand but did present two letters to the Court from the Internal Revenue Service to him purportedly in support of his allegation concerning threats by the Internal Revenue Service to prosecute him criminally.

 The first was a letter under date of April 13, 1972 addressed to Mr. Robert P. Bengel from Nathaniel J. Patterson, Acting Chief, Collection and Taxpayer Service Division of the Internal Revenue Service, ...


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