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UNITED STATES v. NORTH SIDE DEPOSIT BANK

October 6, 1980

UNITED STATES of America and Allen Rawls, Special Agent of the Internal Revenue Service, Plaintiff,
v.
NORTH SIDE DEPOSIT BANK, Defendant, v. Howard A. HULL, a/k/a H. Arthur Hull, Intervenor



The opinion of the court was delivered by: TITELBAUM

MEMORANDUM OPINION

This case presents a challenge to the enforcement of an Internal Revenue Service summons directed to a third party record keeper, defendant North Side Deposit Bank. Defendant-intervenor Howard Hull has asked the Court to stay enforcement of the summons and permit further discovery to elicit the information permitted under U. S. v. LaSalle National Bank, 437 U.S. 298, 98 S. Ct. 2357, 57 L. Ed. 2d 221 (1978) and U. S. v. Genser, 595 F.2d 146 (3rd Cir. 1979) (Genser II ). Relying on the testimony presented at the August 14, 1980 Show Cause hearing and the guidelines for summons enforcement outlined in LaSalle, supra, Genser II, supra, U. S. v. Genser, 602 F.2d 69 (3rd Cir. 1979) (per curiam) (Genser III ), and U. S. v. McCarthy, 514 F.2d 368 (1975), this Court finds enforcement of the summons is appropriate and further discovery is unnecessary.

 On January 29, 1980, the IRS issued a summons (Form 2039) in the matter of the tax liability of defendant-intervenor Howard A. Hull, directing defendant North Side Deposit Bank to appear before Special Agent Allen Rawls with records relating to Mr. Hull's financial transactions for the years 1974-79. When North Side Deposit Bank failed to comply, the office of the United States Attorney for the Western District of Pennsylvania filed a Complaint to Enforce Internal Revenue Summons, supported by Agent Rawls' affidavit. On June 17, 1980, this Court issued an Order to Show Cause why the Bank should not be compelled to obey the summons. At that time Hull intervened, filing a Response to the Petition to Enforce Summons, a Motion for Depositions and Discovery, or alternatively an Evidentiary Hearing or In Camera Inspection, and a Motion to Quash Summonses Directed to Third Parties. On August 14, 1980, this Court held a hearing at which time Agent Rawls testified in support of the Complaint to Enforce Summons. Through cross examination, Hull attempted to elicit testimony to support his challenges to the enforcement of the summons: these challenges are the subject of the present opinion. *fn1"

 A brief review of the case law on this subject will serve to put this case in perspective. The leading case on guidelines for enforcement of such summons is U. S. v. LaSalle, supra. LaSalle requires that

 
1) the summons is issued prior to referral to the Justice Department for criminal prosecution,
 
2) the summons is issued in "good faith" as defined by U. S. v. Powell, 379 U.S. 48, 85 S. Ct. 248, 13 L. Ed. 2d 112:
 
a) the investigation is for a legitimate purpose,
 
b) the material sought is relevant to the legitimate purpose,
 
c) the IRS doesn't already have the information, and
 
d) the proper administrative steps have been followed.
 
3) the IRS has not abandoned pursuit of civil tax determination collection.

 Hull's challenges are two fold: the abandonment of civil tax determination and the absence of "good faith" on the part of the IRS.

 Primarily he opposes the summons on the ground that it was issued solely for purposes of a criminal investigation and is therefore unenforceable under LaSalle, supra. To support this view, he offers the testimony of Agent Rawls that Rawls is assigned to the Criminal Investigation Division of the IRS, that Intervenor Hull was the subject of a criminal investigation, and that documents in the case were marked with a special Control Code indicating the criminal nature of the investigation. Considered by itself, this allegation is insufficient-

 
... several cases have held that the mere fact that a special agent has entered into an investigation or that the investigation is being conducted by the investigative branch of the IRS is insufficient to demonstrate ...

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