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United States v. Hilton

decided: March 30, 1976.

UNITED STATES OF AMERICA
v.
FRANK C. HILTON, APPELLANT



Appeal From The United States District Court For The Western District Of Pennsylvania (D.C. Criminal No. 75-104).

Aldisert, Kalodner and Adams, Circuit Judges.

Author: Kalodner

Opinion OF THE COURT

KALODNER, Circuit Judge.

The defendant Frank C. Hilton appeals from his conviction following a non-jury trial on three counts of an indictment which respectively charged him with (1) extortion in violation of the Hobbs Act;*fn1 (2) willful understatement of his taxable income in his 1972 federal income tax return;*fn2 and (3) knowingly making a false material declaration to a grand jury.*fn3 He was sentenced to a 5-year prison term on the extortion and perjury counts and a 3-year prison term on the income tax count, the sentences to run concurrently.

Hilton does not here contend that the trial evidence was insufficient to sustain the trial court's guilty verdicts on the Hobbs Act, income tax fraud and perjury counts. He urges, however, that some of the evidence adduced at his trial was obtained by the government in violation of his Fourth Amendment rights via an alleged "illegal" search and seizure conducted by federal agents under cover of an alleged "illegal" subpoena duces tecum directed to the Keystone Bank in Lower Burrel, Pennsylvania. He contends that the district court erred in rejecting his Fourth Amendment claims when he presented them in a pre-trial motion to suppress the evidence to which they related. The district court in its Memorandum and Order denying the suppress motion,*fn4 held that the Keystone Bank had not asserted any "claim of violation of rights" with respect to its surrender of its records, and that Hilton "has no standing to complain."

The challenged evidence is in two categories, viz., (1) records maintained by the Keystone Bank as to two loans aggregating $22,800 which it had made to Hilton and his wife, and (2) Keystone Bank records as to the operation of the checking account of one of its depositors named David N. Oppenheim. The bank's own loan records showed that a $18,523.49 balance due on the Hilton loans on July 19, 1972 was repaid on that date with funds emanating from the Oppenheim checking account, and the bank's records as to the Oppenheim checking account established that the latter was the source of the $18,523.49 repayment of the Hilton loans on July 19, 1972.

We are of the opinion, for reasons later developed, that the district court did not err in its holding that the defendant lacks standing with respect to his Fourth Amendment claim.

The specifics of the Hilton claim must be prefaced by the following statement of relevant background facts adduced below:

The Keystone Bank loaned $19,800 to Hilton and his wife on September 5, 1968, and $3,000 to Hilton alone on October 30, 1971.

Hilton was Secretary of Property and Supplies of the Commonwealth of Pennsylvania when the second loan was made. As earlier stated, the Hilton loans were repaid on July 19, 1972 via funds from the Oppenheim checking account in the Keystone Bank.

In the late spring of 1974, newspaper reports that Oppenheim's payment of the Hiltons' loans was a "pay-off" for Hilton's placement of state insurance with Oppenheim, an insurance broker, led to a federal grand jury investigation aimed at ascertaining whether federal criminal laws had been violated.

In July 1974, Keystone Bank records relating to loans made to Hilton and his wife were subpoenaed to the grand jury sitting in Pittsburgh, Pennsylvania. The bank records produced in response to the subpoena disclosed that the Keystone Bank on July 19, 1972 was paid a balance of $18,523.49 then due on the Hilton loans.*fn5

On August 21, 1974, Hilton appeared voluntarily before the grand jury. He testified that he had repaid the $18,523.49 balance due on his loans with $13,800.00 of his wife's savings and $6,000.00 he had received from the sale of real estate.

In September 1974 Keystone's records relating to certain accounts of Hilton and Oppenheim were subpoenaed to the grand jury. The records produced in response to that subpoena disclosed with respect to the Oppenheim account a deposit of $78,608.09 on July 17, 1972 and a check payable to the Keystone Bank for $18,523.49 dated July 18, 1972. The Hilton account records failed to show any disbursement of $18,523.49.*fn6

On October 1, 1974 a third subpoena commanded "any authorized officer" of the Keystone Bank (1) "to testify before the Grand Jury and bring with you" copies of Oppenheim's $78,608.09 deposit slip of July 17, 1972, and his $18,523.49 and $13,063.64 checks dated July 19, [18] 1972; and (2) to produce "forthwith" the specified microfilms for "examination" by "the agents for the Federal Grand Jury who are any authorized Federal Bureau of Investigation agents."

The subpoena, which was captioned "Subpoena to Testify Before Grand Jury," stated that it was issued "on application of the United States of America. . . . Samuel J. Orr, III, U.S. Attorney."

The subpoena was served on the bank on October 3, 1974 by two F.B.I. agents. In response to their demand they were given copies of the bank's microfilm records of the Oppenheim deposit slip and checks, although the subpoena only called for the agent's "examination" of the microfilms.

On October 10, 1974, the F.B.I. agents presented the microfilm copies to the grand jury which later that day returned a perjury indictment against Hilton, at No. 74-302, Criminal. The indictment charged Hilton with falsely testifying in his August 21, 1974 grand jury appearance that he had paid his $18,523.49 debt to the Keystone Bank with his own and his wife's funds.

On November 18, 1974, Hilton moved to dismiss the perjury indictment, and to suppress the evidence obtained by the F.B.I. agents in their service of the October 1, 1974 subpoena.

The motion to dismiss the October 10, 1974 indictment alleged that the United States Attorney's office had abused the grand jury process in securing the Oppenheim records by means of a "forthwith" subpoena, and the F.B.I. agents "used unlawful threats, coercion and duress to secure the subpoenaed documents forthwith."*fn7

The motion to suppress alleged in substance that the October 1, 1974 subpoena was illegal in that it purportedly constituted F.B.I. agents as "agents of the 'Federal Grand Jury,' and that 'i[n] serving said subpoena duces tecum . . . said agents of the Federal Bureau of Investigation used unlawful threats, coercion and duress to secure the subpoenaed documents forthwith.'"

The district court held an evidentiary hearing on Hilton's two motions on December 13, 1974. The substance of the evidence adduced at that hearing may be epitomized as follows:

The October 1, 1974 subpoena was issued by Assistant United States Attorney Orr without authorization by the grand jury which was in session that day and on October 3, 1974 when the subpoena was served; the grand jury, however, was permitted to recess from October 4, 1974 until October 10, 1974 without waiting for the production of the fruits of the subpoena; Orr specified in the subpoena for "forthwith" examination by the F.B.I. agents of the bank's records as to Oppenheim's July 1972 deposit and checks because he felt "there was a danger of the records being destroyed" in light of a "close relationship" between Oppenheim and the bank by virtue of the fact that Oppenheim was vice-president of the Rockwood Insurance Company which was "the primary stockholder in the Keystone Bank;"*fn8 the F.B.I. agents who served the subpoena on a vice-president of the bank, Ronald A. Soloman, requested delivery to them of microfilms of the Oppenheim July 1972 deposit and checks listed in the subpoena; Soloman referred the agents' request to William R. Sutton, another vice-president; Sutton in turn phoned Abraham Fishkin, attorney for the bank, with reference to the agents' request and their expressed refusal to leave without the microfilms; ...


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