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UNITED STATES v. AMERICAN INVESTORS OF PITTSBURGH

September 30, 1987

United States of America
v.
American Investors Of Pittsburgh, Inc. et.al.



The opinion of the court was delivered by: MENCER

 The defendants have moved to suppress confessions made during the execution of a search warrant alleging violations of their fifth amendment rights. At issue is whether the defendants were in custody when the government agents interrogated them.

 The concept of custody for purposes of the Miranda doctrines has eluded precise definition. Courts examine the amalgam of factors present in a particular interrogation and make a judgment based on the sum of those factors. The facts, therefore, are particularly important in determining custody, and this court will state its factual findings in some detail. United States v. Mesa, 638 F.2d 582 (3d Cir. 1980).

 Findings of Fact

 In September, 1982, Special Agents of the Internal Revenue Service began investigating the activities of American Investors of Pittsburgh, Inc. The agents consulted with the United States Attorney's office and decided to conduct a raid on American Investors' office. The team of I.R.S. agents met ten to twelve times and planned every detail of the raid. Based on the advice of an Assistant United States Attorney, the agents decided not to administer the Miranda warnings before interrogating American Investors employees.

 On May 13, 1983 at 2:45 p.m., thirty-seven Internal Revenue Service Agents and Securities and Exchange personnel entered American Investor's office. Special Agent Tate, supervisor of the raid, held his badge and a search warrant above his head and announced in a loud voice that he was taking control of the premises in order to execute a search warrant. He instructed the employees to stop working and place their hands on their desks. Meanwhile, the other agents positioned themselves so that one agent was standing by each employee. The agents were wearing guns under their jackets which were visible to some of the employees at times. The agents then placed defendants Krzywicki and Mendicino against the wall and frisked them.

 Over the next ten hours, the agents searched the office and interrogated the employees. Agents searched the briefcase of the only customer present and allowed him to leave. The agents removed the employees to various locations for individual questioning. Some were taken to private offices with the door closed, and others were taken up to the seventeenth floor to a United States Postal Inspector's office. At both locations, the employees were isolated; the only persons present for the interrogation were the employee and two or three agents. One agent asked the questions while another agent sometimes stood in front of the door with his arms crossed.

 The defendants each testified that they did not feel free to leave. Agent Tate testified that he announced that everyone was free to leave when he first entered. Agent Tate made this announcement during the initial commotion of the raid, however, and the majority of the defendants did not hear or understand him (in fact, some defendants testified that they initially thought the raid was a robbery). With the possible exception of the general announcement during the initial commotion of the raid, the agents never told the employees prior to interrogation that they were free to leave, never informed them that the questioning was voluntary, and never read them the Miranda warnings.

 During the interval between the initial entry and the individual interrogations, the agents greatly restricted the movements of the employees. An agent closely monitored each employee, preventing him from using his computer or making telephone calls. If an employee needed to use the bathroom, he or she had to obtain permission and an agent accompanied him or her to the bathroom door. If an employee asked an agent what was happening, the agents were often non-responsive. At approximately 3:00 p.m., defendant Mendicino told an agent that he had an 8:00 p.m. meeting, and the agent suggested that he cancel the meeting. All of the defendants felt compelled to answer the questions, and none left before being interrogated.

 Legal Analysis

 In Miranda v. Arizona, 384 U.S. 436, 16 L. Ed. 2d 694, 86 S. Ct. 1602 (1966), the Court concluded that government agents must make proscribed warnings to those in custody or those who have been "deprived of [their] freedom of action in any significant way." Id. at 444. Since 1966, the courts have explored extensively the precise circumstances in which the Miranda warnings are required. This judicial exploration has been so thorough that an American Law Reports annotation, 31 ALR3d 565 § 18[b], lists seventeen cases directly addressing the issue of custody in interrogations conducted by Internal Revenue Service agents at the defendant's place of business.

 The courts examining this narrow issue inevitably reduce their examination to a determination of whether the defendant had a reasonable belief that his freedom of action had been restricted in a significant way. This determination is factual, and is closely related to the actions of the IRS agents in conducting the interrogations.

  Among the cases addressing the issue of custody in interrogations conducted at the defendant's place of business by Internal Revenue Service agents, two contain facts particularly similar to those surrounding the instant interrogations. In United States v. Lackey, 413 F.2d 655 (7th Cir. 1969), two IRS agents visited Lackey at his place of business. They asked him if he would be willing to answer some questions at a different location. Lackey agreed and appeared as requested at an office at the post office. The office was a small room with no windows and only a long table and some chairs. The session was tape recorded and Lackey was placed under oath. The agents told him that he had the right to refuse to answer questions. The door was closed and the only persons present were Lackey and the two agents.

 The circuit court affirmed the district court's finding that the defendant was in custody. The court based its findings on the physical surroundings, "starkly, formally interrogatory," on the fact that the defendant was not told that he was free to leave or that attendance was purely voluntary, and on the nature of the ...


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