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UNITED STATES v. COMMONWEALTH FED. S&L

January 5, 1982

UNITED STATES of America and Margaret M. Box, Special Agent, Internal Revenue Service, Plaintiffs,
v.
COMMONWEALTH FEDERAL SAVINGS AND LOAN, et al., Defendants, Thomas McNulty, Intervenor



The opinion of the court was delivered by: DITTER

ADJUDICATION

In these consolidated proceedings brought pursuant to 26 U.S.C. §§ 7402(b) and 7604(a), the Internal Revenue Service (IRS) seeks enforcement of six summonses to produce certain records which are currently in the possession of the defendants. The records are sought pursuant to an ongoing civil and criminal investigation of the tax liability of the intervenor, Thomas McNulty. After careful consideration of the pleadings, the evidentiary record, and the submissions of the parties, I conclude that the defendants must be ordered to comply with the summonses. This conclusion is based upon the following

 FINDINGS OF FACT

 1. The plaintiff, Margaret M. Box, is a special agent with the Criminal Investigation Division of the IRS and is authorized to issue Internal Revenue summonses under the authority of 26 U.S.C. § 7602. (Complaints PP II; Tr. 11).

 2. Pursuant to this authority, she issued six summonses which form the basis of these proceedings and which were served upon the defendants as follows:

 TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE

 3. At the time each summons was issued, Special Agent Box and Revenue Agent Thomas Hunsberger were conducting a joint criminal and civil investigation of the federal income tax liabilities, if any, of Thomas McNulty for the years 1974 through 1977. (Tr. 11-12). Special Agent Box was in charge of the investigation and Revenue Agent Hunsberger was the cooperating agent whose duties included assisting the special agent as required. (Tr. 12, 15-16).

 4. Pursuant to 26 U.S.C. § 7609(b)(2), McNulty notified each of the banks not to comply thus staying enforcement of the summonses issued to Commonwealth, Frankford, Girard, and Fidelity.

 5. By order dated September 22, 1978, the Honorable Charles R. Weiner, of this Court, granted McNulty's motion for a temporary restraining order and, later, preliminarily enjoined compliance with the union summonses until an order of compliance in enforcement proceedings was entered by a court of competent jurisdiction.

 6. In 1976, a grand jury investigation began in the Eastern District of Pennsylvania. The targets of the grand jury investigation were James O'Neill, Thomas McNulty, and the Apprenticeship Fund. (Tr. 31).

 7. The Department of Justice requested the assistance of IRS personnel in conducting the grand jury investigation. (Sweeney Dep. 4). Pursuant to this request, in late 1976, Revenue Agent Hunsberger and Special Agent James Kamienicki were assigned to assist in the grand jury investigation. (Hunsberger Dep. 5-6; Kamienicki Dep. 6). In 1977, Special Agent Augustine Matson was also assigned. (Matson Dep. 4).

 8. Only O'Neill was the subject of a tax investigation by the IRS in 1976 and 1977 and an open file was maintained as to only his tax liabilities. (Hunsberger Dep. 6-7; Sweeney Dep. 7-8; Kamienicki Dep. 7).

 9. On May 11, 1977, pursuant to the government's motion, the Honorable John P. Fullam entered the following order under Rule 6(e) of the Federal Rules of Criminal Procedure:

 Now, this 11th day of May, 1977, upon consideration of the government's ex parte motion pursuant to Rule 6(e) for authorization to disclose matters appearing before the grand jury, it is hereby ordered that the United States Attorney and Special Attorneys of the United States Department of Justice are authorized to utilize the assistance of special agents and employees of the Internal Revenue Service in this Grand Jury investigation, and may give access to books, records, documents and transcripts of testimony of witnesses subpoenaed before the Grand Jury in this investigation to the said employees of the Internal Revenue Service; the said employees of the Internal Revenue Service shall not be prohibited from utilizing such material in the course of their official duties for criminal and/or civil purposes, provided that the subpoenaed material shall remain at all times under the aegis of the attorneys for the Government.

 (Tr. 32-33). In addition, in July of 1977, the Justice Department obtained a disclosure order under 26 U.S.C. § 6103 authorizing the IRS to turn over McNulty's tax returns to the grand jury. (Matson Dep. 13-15; Hunsberger Dep. 11-12). Pursuant to this order, McNulty's tax returns were turned over to the grand jury. (Kamienicki Dep. 12-14).

 10. O'Neill was indicted at the end of August, 1977. No indictment was sought or returned against McNulty and the IRS made no recommendation that he be ...


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