Petition — Truitt v. Lenahan

1 FEB 27 1976

MICHAEL | , R., CLERK

In The

Supreme Court of the United States

OCTOBER TERM, 1975

No 2571281

JERRY A. TRUITT, and JAMES K.

MONTGOMERY, JR..,

Petitioners,

VS.

WILLIAM M. LENAHAN, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Paut P. Lipton

Lipton & Petrie, Lp.

625 North Milwaukee Street

Milwaukee, Wisconsin 53202

Counsel for Petitioners

E. L. Mendenhall, Inc., 926 Cherry St., Kansas City, Mo. 64106, 816-421-3030

ED os cs staan p Ge iedes ease i seeks 064s l

CS a eae hag bb we eeeeeun 2

I BUI gnc cccccckveccccnsvcvaseedess 2

Constitutional and Statutory Provisions Involved .. 3

EN Or sn, coi nenstécaees seaenve eens 4

Reasons for Granting the Writ ................... 6

Argument:

I. The Fifth Amendment Violation .......... 8

Ii. The Fourth Amendment Question ......... 9

Il]. The “Due Process:’ lesue ..........ceeees 13

CN or, Sa te ua ee eecaen aaa ee 15

Appendix:

A. Opinion of the Court of Appeals ........... Al

B. Memorandum Decision of the District Court A7

©. TR Oe BE nw dcdewancncncasscncesss Al0

Citations

CasEs

Bellis v. United States, 417 U.S. 85 (1974) ....... 8

Berger v. New York, 388 U.S. 41 (1967) ......... 9, 10

Camara v. Municipal Court, 387 U.S. 523 (1967) .. 9

Coolidge v. New Hampshire, 403 U.S. 443 (1971) .. 10

Hill v. Philpott, 445 F. 2d 144 (7th Cir. 1971),

i <0 ss sas cb oad canehekeae eas cee 7, 8, 12

Katz v. United States, 389 U.S. 347 (1967) ....... 10

Sgro v. United States, 287 U.S. 206 (1932) ....... 9

Shaffer v. Wilson, No. 75-601 ............... 7, 8,9, 12

Il

Stanford Daily v. Zurcher, 353 F. Supp. 124 (N.D.

OO <a e4cuendddendntth lated ettaxedaue 10

State v. Martelle, 252 A. 2d 316 (Me. 1969) ...... 10

zervy 0. Glia, SEB OB. 1 (IGG .. ww ccc ccc ccccces 9

United States v. Heffner, 420 F. 2d 809 (4th Cir.

SE kG WaGd Ke ae Godden eedd kA Gao eee eecneree 13, 15

United States v. Leahey, 434 F. 2d 7 (lst Cir.

RO Pe ere TT rere Bere.) 13, 15

United States v. Leonard, 524 F. 2d 1076 (2d Cir.

Pn tcidaddeeeaereindaxtkediednene eee 14

United States v. Robson, 477 F. 2d 13 (9th Cir.

RD ee oe ler re a ee on ie een 13

United States v. Williams, 351 F. 2d 475 (6th Cir.

<5 piss uegu ue edits cdaiie buses ane eeakale 10

VonderAhe v. Howland, 508 F. 2d 364 (9th Cir.

Ng ies eee ea ae oe he se ie ae 7, 11, 12

Warden v. Hayden, 387 U.S. 294 (1967) .......... 12

White v. United States, 271 F. 2d 829 (D.C.

i Rr rar ee enna Aaa 9

CONSTITUTIONAL PROVISIONS AND STATUTES

Constitution of the United States—

Fourth Amendment .................... 2,3, 9, 12

Fifth Amendment ................ 2, 3, 7, 8, 10, 12

Federal Rules of Criminal Procedure, Rule 4l(b) ... 3

Internal Revenue Code of 1954, 26 U.S.C. Section

Pe toe geee teed aide ma wade cane 6 deka th oie 10

MISCELLANEOUS

CCH Int. Rev. Manual Service, Section 9311.2,

RAR Ene RCA TMi Cana: 14

Il

1 Cooley, Constitutional Limitations 618 (8th ed.

IR er ae aE Peer See ee eee 9

IR 949, 11/26/68, 1968 CCH Stand. Fed. Tax

Rep. par. 6946 ....... cece cece cece een eeeneee 13

In The

Supreme Court of the United States

OCTOBER TERM, 1975

No.

JERRY A. TRUITT, and JAMES K.

MONTGOMERY, JR.,

Petitioners,

vs.

WILLIAM M. LENAHAN, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

JERRY A. TRUITT and JAMES K. MONT-

GOMERY, JR., your petitioners, pray that a writ of

certiorari issue to review the judgment of the United

States Court of Appeals for the Sixth Circuit in this

case.

OPINIONS BELOW

The opinion of the Court of Appeals has not yet

been reported officially, but is printed in full as Ap-

pendix A to this petition.

The Memorandum Decision of the District Court,

although not officially reported, is printed in full as

Appendix B to this petition.

2

JURISDICTION

The judgment and opinion of the Court of Appeals

for the Sixth Circuit were entered on February 5, 1976.

The jurisdiction of this Court is invoked under 28

U.S.C. § 1254(1).

QUESTIONS PRESENTED

1. Whether the taxpayers’ privilege against self-

incrimination under the Fifth Amendment may be law-

fully circumvented by the seizure of business books

and records pursuant to a search warrant where the

taxpayer having sole possession and ownership of such

records objects to the forcible seizure.

2. Whether the Fourth Amendment prohibition

against ‘‘unreasonable searches and seizures’’ was vio-

lated by resort to a search warrant where the taxpayers

previously had permitted inspection of the records for

more than a month before asserting their Fifth Amend-

ment privilege, and where there was no showing that

the records were concealed or likely to be destroyed

or secreted.

3. Whether the taxpayers were deprived of due

process of law where the Internal Revenue Service, in

the face of highly incriminating information supplied

by a former employee, assigned a revenue agent to

make a “routine audit’ instead of initiating a criminal

investigation by a special agent, who would have been

required to advise taxpayers of their constitutional

rights.

3

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

1. United States Constitution, Fourth Amendment:

“The right of the people to be secure in their

persons, houses, papers and effects, against un-

reasonable searches and seizures, shall not be vio-

lated; and no Warrants shall issue but upon prob-

able cause, supported by Oath or affirmation, and

particularly describing the place to be searched,

and the persons or things to be seized.”

2. United States Constitution, Fifth Amendment:

“No person . . . shall be compelled in any

criminal case to be a witness against himself, nor

be deprived of life, liberty, or property, without

due process of law; .. .”

3. United States Code, Title 18:

Ҥ 3103a. Additional grounds for issuing

warrant.

In addition to the grounds for issuing a war-

rant in section 3103 of this title, a warrant may

be issued to search for and seize any property that

constitutes evidence of a criminal offense in viola-

tion of the laws of the United States.”

4. Federal Rules of Criminal Procedure, Rule 41(b):

“Property Which May Be Seized With a War-

rant. A warrant may be issued under this rule to

search for and seize any (1) property that con-

stitutes evidence of the commission of a criminal

offense; or (2) contraband, the fruits of a crime,

or things otherwise criminally possessed; or (3)

property designed or intended for use or which is

or has been used as the means of committing a

criminal offense.”

4

STATEMENT OF THE CASE

Shortly before noon on Good Friday, April 12,

1974, six Special Agents of the Internal Revenue Ser-

vice entered the professional offices of petitioner Truitt.

The agents informed Dr. Truitt, a veterinarian, that

they had a search warrant and proceeded to seize his

books and records. (App. 83-85)' The warrant com-

manded the agents to seize all records pertaining to

the income tax liabilities of petitioners for 1971 and

1972 and “‘prior years.’ (App. 16-18)

On September 25, 1972, a former employee of pe-

titioners had telephoned the IRS Intelligence Division.

She conversed for 15 to 30 minutes with a Special

Agent, who thereafter prepared the following memo-

randum: (App. 39-40; 102)

The informant is a former employee of Drs. J. K.

MONTGOMERY and J. A. TRUITT. She stated

that for the past three years, during her period of

employment, Drs. MONTGOMERY and TRUITT

have received fees in cash of $500 to $600 per

week and have not recorded them on the books.

She said that the books were ‘“‘perfectly in order’,

and that you could tell nothing by going over

them. Ms. GREENWOOD said that a check of

the “patient” account cards, which are kept on

1. All references herein are to the Appendix filed in the Court

of Appeals.

The books and records involved were formerly those of a part-

nership conducted by petitioners, but were purchased by Dr. Truitt

from his co-petitioner. along with all other partnership assets. on

March 26, 1973, when the partnership was formally terminated by

written agreement. (App. 116-124) Despite the purchase and the

continued use of the records in Dr. Truitt’s individual practice.

the District Court held that the seized records were not privileged

under the Fifth Amendment. On appeal, the Court of Appeals

did not reach this issue.

5

file, would reveal a great discrepancy between the

recorded fees per the books and the fees per the

account cards. She said that the veterinarians

also kept a cash receipts journal, but that each

fee recorded in it was also recorded on the books.

s. *+

The informant stated that. the former bookkeeper,

NETA McGANA (DURHAM), Kraft Road, Mem-

phis, Tennessee (telephone #332-7575) was also

aware of the doctors’ scheme to evade taxes.

The informant told the Special Agent that she

handled money at the front desk, how®she knew that

petitioners were diverting cash, and precisely how the

diverted funds were kept off the books. (App. 103-104)

The allegations of the informant were evaluated by

another Special Agent, who concluded against an in-

vestigation by the Intelligence Division. This agent

testified by affidavit that the decision whether to in-

vestigate criminally was “basically a subjective one’,

depending in part on “the current workload of the

office.” (App. 40-41)

In September, 1973, petitioners’ 1971 income tax

returns were assigned to a Revenue Agent for examina-

tion. During the following month and for one day in

November, the agent conducted his examination at the

offices of Dr. Truitt. His comparison of the cash re-

ceipts records with payments recorded on ‘‘patient’’ ac-

count cards, which also reflected the treatment given,

disclosed various omissions from income. The Revenue

Agent then requested permission to reproduce all the

account cards at the IRS offices. (App. 48-50)

When the request to copy was refused, the case was

referred to the Intelligence Division. (App. 51) Shortly

thereafter, petitioners’ newly retained attorney advised

6

the IRS that the records would not be made available,

citing his clients’ constitutional rights. (App. 55-56)

The Intelligence Division did not contact the taxpayers.

Instead, the Special Agent interviewed the informant,

and then sought permission to seize the records with a

search warrant. (App. 37-38) In making this request,

the Special Agent stressed that it would be ‘‘almost im-

possible to prove a substantial understatement . . . with-

out access to the books and records’. He further noted

that the IRS ‘would have a limited amount of time in-

vested in the cases in the event the evidence obtained by

the search was later suppressed.” (App. 92)

When the search warrant was served, Dr. Truitt tele-

phoned his attorney and thereupon advised the agents that

he did not consent to the search. (App. 84-85) Petitioners’

attorney arrived while the search was in progress and

informed the agents that both petitioners objected to

execution of the warrant on the basis of their constitu-

tional rights under the Fourth and Fifth Amendments.

(App. 97)

Petitioners promptly filed a complaint seeking sup-

pression and return of the seized documents, and suppres-

sion of all evidence obtained by the Revenue Agent during

his prior inspection. (App. 2) The District Court directed

return of the original records, but permitted the IRS to

copy and retain microfilm copies pending final determi-

nation of the rights of the parties. (App. 19) Following

denial of the Government's motion to dismiss, the parties

filed cross-motions for summary judgment. (App. 32,

111) The District Court granted the Government's mo-

tion and the Court of Appeals affirmed the order dismissing

the taxpayers’ action with prejudice.

REASONS FOR GRANTING THE WRIT

1. The holding below is in direct conflict with the

decision of the Court of Appeals for the Seventh Circuit

7

in Hill v. Philpott, 445 F. 2d 144 (7th Cir. 1971), cert.

denied. The Fifth Amendment issue is identical to that

involved in Shaffer v. Wilson, No. 75-601, wherein

the Solicitor General urged this Honorable Court to grant

the taxpayers’ petition insofar as it relates to the alieged

self-incrimination question.

2. Unlike Shaffer, or any prior instance in which

the IRS resorted to the drastic search warrant procedure,

the issuance of the warrant in the instant case was

prompted solely and simply by the taxpayers’ assertion

of the Fifth Amendment after permitting inspection of

the records for more than a month. Here, the Service

had no reason to believe that the taxpayers had concealed

records, or that the records would be secreted or destroyed

if a warrant were not issued. Thus, this case presents

the most compelling circumstances for review, and this

petition should be granted even if certiorari is denied in

Shaffer.

3. The decision below conflicts in principle with

numerous decisions of this Court which hold that the

intrusion by search warrant requires a careful prior deter-

mination of ‘‘necessity" and that the ‘‘drastic’’ search

warrant remedy should be used only for the most com-

pelling reasons. In holding that the IRS could seize un-

concealed records (previously made available to the Reve-

aue Agent) the opinion squarely conflicts with the deci-

sion of the Court of Appeals for the Ninth Circuit in

VonderAhe v. Howland, 508 F. 2d 364 (9th Cir. 1974).

4. As the opinion below notes, the IRS frequently

assigns cases for “routine audit’’ notwithstanding the fact

that it has received incriminating evidence irom in-

formants. The IRS thereby circumvents its self-imposed

requirement of giving Miranda warnings and deprives

unwarned criminal suspects of due process of law under

8

the Fifth Amendment. In the interests of insuring equal-

ity of treatment for taxpayers, it is imperative that this

Court establish standards for determining the circum-

stances under which the IRS must initiate an investiga-

tion by the Intelligence Division.

ARGUMENT

I

The Fifth Amendment Violation

Petitioners contend that their rights under the Fifth

Amendment were violated by the seizure of privileged

records. Their contention is squarely supported by the

holding of the Court of Appeals for the Seventh Circuit

in Hill v. Philpott, 445 F. 2d 144 (7th Cir. 1971), cert.

denied. In Shaffer v. Wilson, No. 75-601, the Solicitor

General conceded that the identical holding therein was

in ‘‘direct and acknowledged conflict’’ with the Hill case

and requested that the petition be granted with respect

to the Fifth Amendment question. See also, Bellis v.

United States, 417 U.S. 85, 87-88 (1974), where the

Court held that the Fifth Amendment privilege does

protect ‘‘business records.”’

The Court of Appeals did not reach or decide the

Government's contention below that the records in the

instant case were not privileged. Accordingly, peti-

tioners deem it unnecessary to support their position that

the Government seized personal and private records of

petitioner Truitt, which he was not holding in any repre-

sentative capacity. In view of the Government's ac-

quiescence to certiorari in Shaffer, petitioners have not

set forth their reasons why the holding below is errone-

ous and why this Court should approve of the reasoning

and result in Hill v. Philpott, 445 F. 2d 144 (7th Cir.

1971), cert. denied.

9

In the event that this Court should deny certiorari

in Shaffer, there are compelling grounds, not present in

Shaffer, for granting the petition in this case. These

reasons are set forth below.

II

The Fourth Amendment Question

In the event that this Court should conclude that

privileged records may be seized under a_ warrant,

petitioners contend that the seizure violated the ‘‘rea-

sonableness” requirement set fortn in the first clause

of the Fourth Amendment. That overriding standard

is not satisfied by a mere showing that there was

“probable cause’ to believe that a crime has been

committed. The probable cause requirement for issu-

ance of a search warrant is contained in the second,

and subsidiary, clause of the Amendment.

It has long been accepted that a search war-

rant should be utilized only ‘for very urgent and

satisfactory reasons.’’ 1 Cooley, Constitutional Limita-

tions 618 (8th ed. 1927). Indeed, this Court has

noted that the ‘proceeding by search warrant is a

drastic’ remedy. Berger v. New York, 388 U.S. 41,

58 (1967). See also, Sgro v. United States, 287 US.

206, 219 (1932).

In Camara v. Municipal Court, 387 U.S. 523,

539 (1967), this Court specifically held, with respect

to the warrant procedure, that ‘‘reasonableness is still

the ultimate standard.’’ See also, Berger v. New York,

388 U.S. 41, 69 (1967) (Justice Stewart, concurring);

Terry v. Ohio, 392 U.S. 1, 19 (1968); White v. United

States, 271 F. 2d 829, 830 (D.C. Cir. 1959).

The Fourth Amendment standard of reasonableness

requires that ‘‘no greater invasion of privacy’ be

10

permitted than is ‘necessary under the circumstances.”’

Berger v. New York, 388 U.S. 41, 57 (1967); Katz

v. United States, 389 U.S. 347, 355 (1967). The

same concern for establishing the necessity for a

search was expressed in Coolidge v. New Hampshire,

403 U.S. 443, 467 (1971). Thus, the decisions of this

Court implicitly hold that a showing of probable cause

that a crime has been committed, and that incrimi-

nating evidence is located on specific premises, is

not under all circumstances determinative of the rea-

sonableness of, or necessity for, the search. See also,

United States v. Williams, 351 F. 2d 475, 477 (6th

Cir. 1965).

In Stanford Daily v. Zurcher, 353 F. Supp. 124,

131 (N.D. Cal. 1972), the court declared that intru-

sions upon privacy ‘should take place only when

‘necessary’."” The court held that there must be a

showing that the destruction of evidence is threatened

before a warrant may be issued, and that a mere

failure to respond to a subpoena duces tecum would

not suffice. (353 F. Supp. at 133) Although the case

involved a threatened search against a third party,

the ruling should be applicable to those suspected of

tax crimes. The Supreme Judicial Court of Maine

has stated that the purpose of a search warrant is

to seize the thing alleged to be in the place to be

searched ‘‘to prevent removal or further concealment.”

State v. Martelle, 252 A. 2d 316, 320 (Me. 1969).

The Internal Revenue Code provides an unobtrusive

method for compelling the production of non-privileged

books and records, namely, issuance of a summons

under Section 7602. It is unthinkable that the mere as-

sertion by a taxpayer of his rights under the Fifth

Amendment can justify the seizure of privileged records.

That, however, is the essence of the holding below,

11

which emphasized the fact that the warrant was ob-

tained ‘‘only after appellants refused to permit the re-

production of certain documents’’. (Slip Op., p. 4) The

Court refused to attach any significance to the fact that

the agent had had access to the records for more than a

month and that he presumably could have continued his

inspection indefinitely.

In a tax investigation, resort to the search warrant

should be sanctioned, if at all, only where there is a

showing that at least some of the needed records are

hidden, concealed, or likely to be destroyed or secreted.

In the instant case, the Government seized books and

records used openly on the premises, all of which had

been made available to the revenue agent. There was

no showing, and no reason to believe, that such records

would be concealed or destroyed, or that they were in

fact hidden. The countless animal ‘‘patient’’ account

cards, which disclosed the unreported income, were vital

to the day-to-day operations of the veterinarians. (App.

98) They served as ‘‘medical’’ records and always re-

flected ‘‘exactly what the doctor had done for the pet.”

(App. 52, 70, 77, 98)

VonderAhe v. Howland, 508 F. 2d 364 (9th Cir.

1974), squarely supports petitioners’ contention. In the

cited case, the Court of Appeals held that ‘probable

cause’’ did not exist for the seizure of anything except

hidden records which had not been made available to a

revenue agent during his audit. The Court upheld the

seizure of secreted ‘‘yellow sheets’ and “green cards’’,

but refused to sanction seizure of “the identical material

which had been delivered to and examined by’ a reve-

nue agent. (508 F. 2d at 369)

It should be readily apparent why there are no

cases, other than VonderAhe, explicitly upholding peti-

12

tioners’ contention that a showing that the records are

concealed, or likely to be destroyed, is a prerequisite to

issuance of the search warrant. Prior to Warden v.

Hayden, 387 U.S. 294 (1967), the only items subject

to search and seizure were contraband, stolen goods,

and instrumentalities of crime. Such articles inevitably

would be hidden or concealed, or be in danger of secre-

tion or destruction. Exigency is implicit in their very

nature, and the search warrant provided the only avail-

able means of obtaining them.

In no prior instance has the IRS ever utilized the

warrant procedure to seize only records previously made

available to a revenue agent. On the contrary, the Ser-

vice has resorted to search warrants only where it feared

destruction or had reliable information that secretive

or secreted records would not be otherwise accessible.

In Hill, certain patient records were kept separately

and were to be thrown into the incinerator if any tax

man visited the office. In VonderAhe, a separate record

of income from emergency patients was removed from

the doctor’s office and taken home prior to a scheduled

IRS audit. Equally significant, the record in Shaffer

discloses that two employees swore that the doctor

would never give his ‘“‘cheat book’’ to the IRS and that

he would destroy or hide all records not essential to

daily operations.

It is manifest that the warrant issued by the Mag-

istrate was obtained without the showing of necessity

or ‘‘probable cause’’ required by the Fourth Amend-

ment. Accordingly, the search and seizure did not meet

the constitutional mandate of reasonableness, and the

warrant must be invalidated. The mere assertion of a

Fifth Amendment claim cannot supply the “necessity”

required by the Fourth Amendment.

13

III

The ‘“‘Due Process”’ Issue

The opinion below merely states that the IRS had

“received a ‘tip’ from a former employee’’ asserting that

petitioners had concealed income. Regrettably, the

Court refrained from detailing the highly incriminating

information that had been given to the IRS by the

employee. The informant carefully explained the basis

for her allegations and gave the name of another em-

ployee who allegedly would corroborate her contentions.

The instant case bears no resemblance to United States

v. Robson, 477 F. 2d 13 (9th Cir. 1973), where the ex-

amination was assigned to a Revenue Agent because the

“information given by the informant was vague on

several key points’’. (477 F. 2d at 14)

If, as petitioners contend, the incriminating allega-

tions made by their former employee had been investi-

gated at the outset by the Intelligence Division, a

Special Agent would have been obliged to advise the

taxpayers of their constitutional rights, including their

right to refuse inspection of books and records. (IR 949,

11/26/68, 1968 CCH Stand. Fed. Tax Rep. par. 6946)

The courts have held that the self-imposed warning

requirements of IR 949 must be scrupulously observed

and that failure to do so violates the due process

clause of the Fifth Amendment. United States v.

Heffner, 420 F. 2d 809 (4th Cir. 1969) (voiding a

conviction); United States v. Leahey, 434 F. 2d 7 (lst

Cir. 1970) (affirming a suppression order). These cases

will be meaningless if the courts countenance assign-

ment of cases to the Audit Division for ‘routine’

audits where the circumstances plainly dictate that an

immediate criminal investigation should be _ initiated.

14

In the instant case, the Special Agent gave no

plausible explanation for concluding that the information

supplied by the informant had no criminal potential.

Instead, his affidavit merely recited that communica-

tions from employees frequently are motivated by ill

feelings and are found to have no substance. (App. 40)

He conceded, moreover, that the evaluation of informa-

tion items is not based solely on the ‘‘apparent crim-

inal potential of the item’’, but that the decision de-

pends in part on the ‘current workload of the office.”

(App. 41)

Section 9311.2 of the Internal Revenue Manual,

entitled ‘“‘Evaluation of Information Items,"’ provides

that all allegations of tax evasion “‘will be evaluated by

the Chief, Intelligence Division or his delegate, without

regard to available manpower, solely on the basis of

possible development of a successful prosecution.’ (Em-

phasis added) Items having criminal potential are to be

retained by the Intelligence Division for investigation.

(CCH Int. Rev. Manual Service, p. 28,127)

Petitioners submit that an informant’s allegations

should be evaluated in a reasonable and prudent man-

ner by the IRS. Here, the Revenue Agent was per-

mitted to verify and document highly incriminating

allegations made by a reliable informant. A _ surrepti-

tious criminal investigation was conducted under the

guise of a “routine audit’.

Unlike U. S. v. Leonard, 524 F. 2d 1076 (2d Cir.

1975), cited by the Court below, this case does not in-

volve a possibly ‘“‘unintentional or excusable’’ violation,

and it is inconceivable that the IRS ‘“‘mistakerly’’ be-

lieved that the investigation had “not yet become one

‘of suspected criminal tax fraud’ "’. (524 F. 2d at 1089)

On the contrary, the only permissible inference is that

15

the IRS deliberately assigned a Revenue Agent to con-

duct what it most certainly knew to be a criminal in-

vestigation.

On the uncontroverted facts, the Wistrict Court

should have concluded that the information supplied

by the informant did have ‘criminal potential’’ and

that retention for investigation by the Intelligence

Division was required. Because the IRS failed to ob-

serve its “housekeeping’’ requirements, the taxpayers

did not receive the warnings to which they were entitled

under the published rulings. Accordingly, they were

deprived of due process of law to the same extent as

the taxpayers in Heffner and Leahey, and through a

procedure which is far more reprehensible.

CONCLUSION

For the foregoing reasons, a writ of certiorari

should issue to review the judgment and opinion of

the Sixth Circuit Court of Appeals.

Respectfully submitted,

Pau. P. Lipton

Lirron & Petrie, Lrop.

625 North Milwaukee Street

Milwaukee, Wisconsin 53202

Counsel for Petitioners

February, 1976.

Al

APPENDIX

APPENDIX A

No. 75-1694

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Jerry A. Truitt and James K. Montcomery, JR.,

Plaintiffs-Appellants,

v.

Wituiam M. Lenawan, Epwarp A. Keene and Four

UNIDENTIFIED AGENTS, SpeciaAL AGENTS, INTERNAL ReEv-

ENUE Service; Oscar Piunket, Jr., RevENUE AGENT,

INTERNAL Revenue Service; James A. O'Hara, District

Director, INTERNAL ReveNvuE Service; Tuomas F. TuR.ey,

Jr., Unirep States Atrorney For THe Western Dits-

TRICT OF TENNESSEE; AND THE UNITED States oF AMERICA,

Defendants-Appellees.

AppeaL from the United States District Court for the

Western District of Tennessee, Western Division.

Decided and Filed February 5, 1976.

Before: Puiups, Chief Judge, and Peck and Live y,

Circuit Judges.

A2

Peck, Circuit Judge. Plaintiffs-appellants, formerly

partners in practicing veterinary medicine, filed the

instant complaint seeking primarily to suppress the use

of documents certain defendants-appellees, Internal Rev-

enue Service special agents, seized in a search, pursuant

to a warrant, on April 12, 1974, of appellants’ offices.

Appellants also prayed for money damages. The dis-

trict court rejected appellants’ constitutional claims

and, on cross-motions for summary judgment, dismissed

appellants’ complaint with prejudice.

Briefly, the record reflects that on September 25,

1972, the IRS Intelligence Division received a ‘“‘tip”

from a former employee of appellants claiming that

appellants had concealed income. An Intelligence Di-

vision special agent thereafter transmitted the informa-

tion ‘“‘to the Audit Division for whatever action they

deemed appropriate” because “‘there was not sufficient

information . . . to warrant an investigation by the

Intelligence Division.""' From September, 1973, to

November, 1973, an Audit Division revenue agent

investigated the claimed failure to report income and

discovered, from an inspection of appellants’ books, an

apparent substantial understatement of income. When

appellants refused to permit the revenue agent to re-

produce certain documents for a fuller inspection, the

agent on November 12, 1973, referred the investigation

to the Intelligence Division, which received the referral

1. Intelligence Division special agents investigate possible

criminal violations of the Internal Revenue Code. Audit Divi-

sion revenue agents “conduct .. . field audits of tax returns

. . requiring the application of audit techniques and the review

of books, records and other information to determine the correct

tax liability.” Joint Appendix 45, 47-48. See IRS News Re-

lease No. 897 (Oct. 3, 1967). quoted in United States v. Trnka,

385 F Supp. 628, 632 n. 3 (D.N.D. 1974), and in United States

v. Poiter, 385 F. Supp. 681, 682 (D. Nev. 1974).

- = eemene ead Go

A3

produce those documents,’ United States v. Beck, 511

in February, 1974. The Intelligence Division after

interviewing the original informant, obtained the search

warrant on April 11, 1974.

On appeal, appellants claim that seizing the docu-

ments violated their Fifth Amendment privilege against

self-incrimination. Assuming that such privilege would

otherwise preclude appellants from being compelled to

F.2d 997, 1002-03 (6th Cir.), cert. denied, 96 S.Ct.

63 (1975), United States v. Gargotto, 476 F.2d 1009,

1013-14 (6th Cir. 1973), cert. denied, 95 S.Ct. 1990

(1975), and United States v. Blank, 459 F.2d 383, 385

(6th Cir. 1972), rev’g 330 F. Supp. 783 (N.D. Ohio

1971), cert. denied, 409 U.S. 887 (1972), establish that

“[ajdmitting properly seized ‘personal papers’ cannot

violate the Fifth Amendment privilege against self-

incrimination."’ Accord, e.g., Shaffer v. Wilson, 523

F.2d 175, 177-79 (10th Cir. 1975), petition for cert.

filed, 44 U.S.L.W. 3249 (Oct. 21, 1975) (No. 75-601);

United States v. Murray, 492 F.2d 178, 191 (9th Cir.

1973); United States v. Scharfman, 448 F.2d 1352,

1355 (2d Cir. 1971), cert. denied, 405 U.S. 919 (1972).

Moreover, Blank explicitly and Beck implicitly rejected

Hill v. Philpott, 445 F.2d 144 (7th Cir.), cert. denied,

404 U.S. 991 (1971), the case which appellants cite as

“squarely support[ing]” their claim.

2. Because we hold that ‘“‘[ajdmitting properly seized ‘per-

sonal papers’ cannot violate the Fifth Amendment privilege against

self-incrimination,” we can assume that such privilege would

otherwise protect appeilants from compelled production of those

documents. Consequently, it is unnecessary to adjudicate appel-

lees’ claim that neither Montgomery, having previously sold his

interest in the partnership to Truitt, nor Truitt can assert the

privilege even against compelled production of the documents,

those documents purportedly being essentially partnership business

documents.

A4

We also reject appellants’ attack on the search and

seizure. Rather than challenging the warrant as being

an “overly broad’’ general warrant, see United States

v. Scherer, 523 F.2d 371, 376 (7th Cir. 1975), Vonder-

Ahe v. Howland, 508 F.2d 364, 368-70 (9th Cir. 1974),

or challenging appellees’ assertion of ‘‘probable cause’”’

that documents used in income tax evasion were lo-

cated at appellants’ offices, appellants challenge the

permissibility of the seizure of the documents where

appellees ‘‘had no reason to believe that any records

would be destroyed or secreted.’’ Despite an extensive

search, we have found no authority to overturn the

district court’s view that ‘‘[t]here simply is no require-

ment, so far as probable cause is concerned, that the

book and records sought were likely to be hidden or

destroyed."" Even were we to accept certain Vonder-

Ahe dicta, the fact remains that appellees requested,

and obtained, the search warrant only after appellants

refused to permit the reproduction of certain documents.

See VonderAhe, supra, 508 F.2d at 366, 369. But

see United States v. Ciaccio, 356 F. Supp. 1373 (D.

Md. 1972).

Finally, appellants claim that certain appellees,

Audit Division revenue agents, deprived them of due

process by failing to advise them of their constitutional

rights in the earlier, civil investigation of appellants’

tax liability. Appellants assert no direct violation of

the IRS policy, as embodied in IRS News Release Nos.

897 (Oct. 3, 1967), 949 (Nov. 26, 1968), of requiring

special agents to advise those being investigated of their

constitutional rights. See United States v. Sourapas,

515 F.2d 295 (9th Cir. 1975); United States v. Leahey,

434 F.2d 7 (lst Cir. 1970); United States v. Heffner,

420 F.2d 809 (4th Cir. 1969). But see United States

v. Potter, 385 F. Supp. 681 (D. Nev. 1974); United

A5

States v. Fukushima, 373 F. Supp. 212 (D. Hawaii

1974). Moreover, the record reflects that the special

agents, upon being referred the investigation, complied

with the news releases. Joint Appendix 83-84, 95.

Similarly, appellants neither assert a violation of

Miranda v. Arizona, 384 U.S. 436 (1966), nor could there

be a Miranda violation because there is no evidence

or claim that appellants were ever in “‘custody.”” E.g.,

United States v. Allen, 522 F.2d 1229, 1233 (6th Cir.

1975), cert. denied, 44 U.S.L.W. 3416 «Tan. 19, 1976):

United States v. Carter, 462 F.2d 1252, 1256 (6th Cir.),

cert. denied, 409 U.S. 984, 93 S.Ct. 324, 34 L.Ed.2d

248 (1972). Accord, e.g., United States v. Robson,

477 F.2d 13, 16 (9th Cir. 1973); Cohen v. United States,

405 F.2d 34, 36-39 (8th Cir. 1968); United States v.

Trnka, 385 F. Supp. 628, 629-30 (D.N.D. 1974).

Rather appellants claim that the Intelligence Division

special agent, rather than transmitting the ‘‘tip’’ to

the Audit Division for its revenue agents’ investigation,

should have retained the ‘tip’ for special agents’ in-

vestigation. Had the ‘tip’ been retained, appellants

argue that they would, and should, have received the

warnings embodied in News Releases 897 and 949.

The record, however discloses no violation of appellants’

due process rights in the assignment of the investiga-

tion to the Audit Division. See United States v.

Leonard, 524 F.2d 1076, 1088-1090 (2d Cir. 1975);

United States v. McCorkle, 511 F.2d 482, 487-489 (7th

Cir. 1975) (en banc); Robson, supra, 477 F.2d at 16-17:

Trnka, supra. The record reflects that Intelligence Di-

vision special agents receive telephone ‘“‘tips’’ (Joint

Appendix 36, 40), which are often, as here, uncondi-

tionally’ transmitted to the Audit Division (Joint Ap-

3. The uncontroverted affidavits of the Audit Division revenue

agents and Intelligence Division special agents establish that after

the transmittal to the Audit Division and prior to the referral

A6

pendix 40-41), see Leonard, supra, 524 F.2d at 1088-89,

Robson, supra, 477 F.2d at 14-18, and ‘‘occasionally”’

later referred to the Intelligence Division if the Audit

Division revenue agents uncover ‘‘indications of criminal

tax fraud’’ (Joint Appendix 41) or “the possible ex-

istence of fraud,’’ Cohen, supra, 405 F.2d at 35 n. 3

(8th Cir. 1968); Trnka, supra, 385 F. Supp. at 630 n. 2.

Affirmed.

(Footnote Continued)

to the Intelligence Division on November 12, 1973, no Intelligence

Division employee ‘‘attempti[ed] to direct or control the audit ac-

tivities of the Audit Division in any way. Joint Appendix

38, 41, 58, 61-62, 86. Rather the Audit Division ‘audits were

completely controlled by the [Audit Division revenue] agents as-

signed . . . until they were referred to, and accepted by, the

Intelligence Division." Joint Appendix 43. Accord, Joint Ap-

pendix 48-49. The “unconditional’’ nature of the transmittal has

sometimes been mentioned in finding no impropriety in assign-

ing the investigation to the Audit Division revenue agents.

United States v. Robson, 477 F.2d 13, 17 (9th Cir. 1973).

A7

APPENDIX B

IN THE UNITED STATES DISTRICT COURT FOR

THE WESTERN .DISTRICT OF TENNESSEE

WESTERN DIVISION

Civil Action No. 74-240

Jerry A. Truirt and James K. Montcomery, JrR.,

Plaintiffs,

V.

WituiAM M. LENAHAN, ET AL.,

Defendants.

MEMORANDUM DECISION

(Filed May 6, 1975)

Brown, Chief Judge: In this action for suppression

and return of all evidence obtained by IRS agents

(both evidence seized pursuant to a search warrant and

evidence ubtained by Revenue Agents in a ‘routine

audii"’) defendants move for summary judgment and

piaintiffs move for partial summary judgment. This

action arises out of the seizure of certain documents

and records by Special Agents of the Internal Revenue

Service on April 12, 1974, pursuant to a search war-

rant issued by a United States Magistrate for the

Western District of Tennessee.

In their briefs plaintiffs presented three basic argu-

ments: (1) that the documents seized by defendants

were privileged papers within the Fifth Amendment;

(2) that the seizure of the records in question was il-

legal since the search warrant was issued without prob-

A8

able cause; and (3) that plaintiffs were not adequately

told of their rights in what was essentially from its

inception a criminal investigation, thus violating certain

IRS regulations. Defendants, all employees of the

United States government, urged four grounds for sum-

mary judgment: (1) the doctrine of sovereign im-

munity bars a recovery; (2) plaintiffs have no Fifth

Amendment right against self-incrimination with respect

to partnership records; (3) official immunity bars a

recovery against these defendants; and (4) plaintiff

Montgomery lacks standing because he has no posses-

sory interest in the materials this action seeks to sup-

press (Truitt having purchased Montgomery's interest

in their partnership). Both sides submitted affidavits

in support of their motions for summary judgment

and a hearing was held.

At the hearing counsel for defendants contended

primarily that plaintiffs were adequately advised of their

rights. Defendants contended that information of pos-

sible criminal tax evasion given by citizens to the IRS

Intelligence Division, as occurred here, is frequently re-

ferred to the Audit Division, as was done here, unless

there is more support for the belief that actual crim-

inal evasion is involved. A warning must be given,

defendants contend, only when the investigation has

become in fact a criminal investigation.

Counsel for plaintiffs stated that “. . . this case

can and should be decided either in favor of the plain-

tiffs or in favor of the defendants on the search war-

rant issue, which is really the heart of this case; not

that we concede that there is no merit in our claim of

surreptitious search and suppression of evidence ob-

tained by [Revenue Agent] Plunket.”' Plaintiffs’ pre-

1. Transcript at 36. Also see Transcript at 49 and 51.

Ao Ne NTS COIS tt Cee Ne ot

AQ

sentation thus centered around the proposition that

the seizure of the records in question was illegal since

the search warrant was not issued with probable cause.

Plaintiffs contend that probable cause to seize records

can exist only when they are ‘hidden, concealed, or in

danger of being destroyed.”

When the court questioned the appropriateness of

summary judgment in this case, counsel for both sides

joined in urging the court to dispose of this cause on

their motions. Counsel for the plaintiffs stated “. . . I

want to concur with my colleague, Mr. Moody [defense

counsel], that it is an appropriate case for summary

judgment, particularly as to the search warrant is-

sue... . '* Plaintiffs’ counsel indicated that there

was only ‘‘one minor’’’ area of possible factual dispute.

Thus, plaintiffs pointed out, there might be a dispute

concerning the exact conduct of the defendant IRS

agents when they decided to refer the case to the Audit

Division and when they failed to inform plaintiffs that

they were being audited because information had been

received by the Intelligence Division that the plaintiffs

were involved in possible criminal tax evasion. Defen-

dants do not dispute that plaintiffs were not informed

of the reason for the audit.‘ Nor is there any question

that the audit was initiated because of information sub-

mitted to the Intelligence Division. Reviewing the

affidavits before the court and considering the argu-

ments of counsel, it is apparent that there is no genuine

_ issue as to any material fact. Therefore, this is an

appropriate case for summary judgment.

2. Transcript at 35. Also see Transcript at 36, 48 and 52.

3. Transcript at 35. Also see Transcript at 50-51.

4. Transcript at 7 and 8.

Al0

This court finds that the records seized by the IRS

are not privileged documents within the Fifth Amend-

ment. (See Bellis v. United States, 417 U.S. 85

(1974)). Furthermore, defendants’ actions informing,

or failing to inform, plaintiffs of their rights did not

violate Internal Revenue regulations or rights arising

from those regulations. Plaintiffs’ contention that prob-

able cause to issue a search warrant did not exist be-

cause the records seized were not hidden, concealed,

or in danger of being destroyed is likewise without

merit. While the requirements of probable cause may

be difficult to define in some respects, it cannot be

confined to those situations suggested by the plaintiffs.

There simply is no requirement, so far as_ probable

cause is concerned, that the books and records sought

were likely to be hidden or likely to be destroyed. The

court has reviewed the sworn material presented to

the Magistrate, and it is the conclusion of this court

that probable cause existed for the issuance of the

search warrant.

The Clerk will enter a final judgment dismissing

this cause with prejudice.

ENTER this 6th day of May, 1975.

APPENDIX C

IN THE UNITED STATES DISTRICT COURT FOR

THE WESTERN DISTRICT OF TENNESSEE

WESTERN DIVISION

(Caption Omitted}

NOTICE OF APPEAL

(Filed May 13, 1975)

Notice is hereby given that the above plaintiffs,

Jerry A. Truitt and James K. Montgomery. hereby

ee nk Or ry Ce ee

a

All

appeal to the United States Court of Appeals for the

Sixth Circuit from the Memorandum Decision and the

Final Judgment entered in this action on the 6th day

of May, 1975.

Dated May 13, 1975.