Petition — Peskin v. United States
Supreme Court brief1976
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Supreme Court, U. &
FILED
| APR
AFn 20 1976
Iu the of
Supreme Court of the Buti Stites!
Octoser Term, 1975
BERNARD M. PESKIN,
Petitioner,
vs.
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIROUIT
THOMAS P. SULLIVAN
CAROL R. THIGPEN
Attorneys for Petitioner
Bernard M. Peskin
Of Counsel:
JENNER & BLOCK
One IBM Plaza
UNITED STATES LAW PRINTING CO., CHICAGO, ILLINOIS 60618 (312) $25-6581
TABLE OF CONTENTS
PAGE
IE TIDY 1a ieee casein ssécisenesenianinicahiiimneaiiaanl 1
TIIIIITTIIII ssh cceaniattieleisitlidaciateignesinmapeenameneeiadieiaiaiienainde 2
EERE Rn ae aor a re ee 2
- Constitutional provisions and statutes involved ............ 3
LT ET ON 4
(1) The limitations placed on cross-examination of
I a eeceiuitinns 5
(2) The inconsistent and inherently unfair ruling re-
garding cross-examination of petitioner ............ 7
(3) The trial court’s instructions which put the bur-
den of proof on petitioner 22... eceeeeeeeees 8
(4) The trial court’s coercion of the jury’s verdict 8
(5) The facts which the government contends pro-
vide the jurisdictional support for Travel Act
rn 9
Reasons for granting the wit ....................c.cccsccccscesseeseees 1l
I. The combination of the erroneous evidentiary
rulings and jury instructions, and the coercion
of the verdict, deprived petitioner of fundamen-
Ce CMUERRIEUIE BRITIID cececccccncccsccccececesccececccccnsencess 11
II. The Court of Appeals’ decision on the Travel
Act counts is in conflict with rulings of this
Court and of courts of appeals ~..................2..-.-.- 14
III. Evidence gathered by the Internal Revenue
Service in violation of petitioner’s rights should
I I CI caer eadeaemea nibs nianieuans 17
RR rene eb o oe ae MCRAE RnI me aoaeitia 22
ii
PAGE
IIE Ob - icstcecssscctics daeisleesaseeiaahdeiiniebidtsenrabaaae App. 1
Appendix 2 ................ iansncnapitentidleinalinainnniddinainntiiaisiiaial App. 31
fe SO LC ee ee App. 32
PE ee suomuitandiiiniepniinniensaimeiiniion App. 33
EE © setnricnissicecieninsneniainiinteninntéiicinsitinniencial App. 34
I Ur tenstenccinitioslinnsisnieenedincttimtapbeebiontsdeidididiiinicianiaectiaall App. 49
TABLE OF AUTHORITIES CITED
Cases
Boyd v. United States, 142 U.S. 450 (1892) 00... 12
Campbell v. Illinois, 16 Il. 16 (1854) oe. 12
Chambers v. Mississippi, 410 U.S. 284 (1973) .00000....... 12
Gordon v. United States, 344 U.S. 414 (1953)... 11
Griffin v. United States, 335 U.S. 704 (1940) 200000... 12
Olmstead v. United States, 277 U.S. 488 (1928) 0000000... 22
People v. Crowley, 101 Cal. App. 2d 71, 224 P.2d 748
SUITED. ‘noiasesacelantdcmennseieddelalehceaieneannaseleidicabiieeidaadideiiiai sated. 14
Rewis v. United States, 401 U.S. 808 (1971) ......... 4,15, 26
Santobello v. New York, 404 U.S. 257 (1971) oo... 21
United States v. Altobella, 442 F.2d 310 (7th Cir.1971) 15
United States v. Archer, 486 F.2d 670 (2d Cir. 1973) ..15, 16
United States v. Barash, 365 F.2d 395 (2d Cir. 1966),
E.G, Se GRE FD Geicdiciinnehitt ie . 8
United States v. Beckwith, 510 F.2d 741 (D.C. Cir.
1975), cert. granted, 95 S.Ct. 2627 oun... eceececesseeeees 21
PAGE
United States v. Deardorff, 343 F. Supp. 1047 (S.D.
I a a i 12
United States v. Dickens, 417 F.2d 958 (8th Cir. 1969) 11
United States v. Dickerson, 413 F.2d 1111 (7th Cir.
IIT scsi celica ciinemiteabntpniaadadabnetasntatictacie 20, 21
United States v. Heffner, 420 F.2d 809 (4th Cir. 1969) 20
- United States v. Isaacs, 493 F.2d 1124 (7th Cir. 1974),
I NICE WEREEIN EIU cciccnssinsniderensenssnensnntesnheestutemtnetniniie 15
United States v. Kahn, 472 F.2d 272 (2d Cir. 1973),
UE, GR, GR Wi cette 12
United States v. Leahey, 434 F.2d 7 (1st Cir. 1970) .. 20
United States v. Maze, 414 U.S. 395 (1974) 2. 16
United States v. Ott, 489 F.2d 872 (7th Cir. 1973) ........ 21
United States v. Phillips, 401 F.2d 301 (7th Cir. 1968) ) 12
United States v. Sourapas, 515 F.2d 295 (1975) ............ 20
United States v. Zemater, 501 F.2d 540 (7th Cir. 1974) .. 17
White v. United States, 294 F.2d 952 (9th Cir. 1961) .. 12
Statutes and Rules
Say EUS SUITED. saesidaninieiapsthddeesenenecinteinneiheiseguinnmnniinansiabteidentiinins 4
ee STEED citindinentiinnimmnacnisannncnnesnvennninninai 2, 3, 4, 9, 14, 16
Be IT, MITE - scvinincnisitaiisantianndninemnstemsdselinennatinatnnnitninen +
I MII ic iccicitiraaeidanidaniiniantidinesenitieaintah 2
Ch. 38, §33-1(c), Ill. Rev. Stat. (1967) 2... .ceceececeeeeeee 4
Rule 608(b), Federal Rules of Evidence ........................ 11
Treatise
1 Wigmore on Evidence $110 2.u.....eceeeceemeccecesesesseees 12
In the
Supreme Cowt of the United States
Ocroser Term, 1975
No.
BERNARD M. PESKIN,
Petitioner,
vs.
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Petitioner Bernard M. Peskin, defendant-appellant in
the court below, prays that a writ of certiorari issue to
review the judgment of the United States Court of Ap-
peals for the Seventh Circuit entered in this case.
Opinion Below
The opinion of the Seventh Circuit is reported at 527
F.2d 71 (7th Cir. 1975), and is printed in Appendix 1.
2
Jurisdiction
The opinion and judgment of the Court of Appeals for
the Seventh Circuit were entered on December 10, 1975.
A timely petition for re-hearing was denied on March 8,
1976 and the judgment became final on that date. The
Court’s judgment of December 10, 1975 and its order of
March 8, 1976 are attached hereto as Appendices 2 and 3.
This Court’s order of March 29, 1976 extending the time
for filing a petition for writ of certiorari is attached as
Appendix 4.
The jurisdiction of this Court is invoked under 28 U.S.C.
§ 1254(1).
Questions Presented
1. Does a combination of two erroneous and contradic-
tory evidentiary rulings which virtually foreclosed peti-
tioner from presenting his defense, along with erroneous
jury instructions which unfairly shifted the burden of
proof to petitioner, and a statement by the trial judge to
the jury after they had been deliberating two and one-half
days that they would be allowed only one-half hour more
to deliberate and return a verdict on all counts, deviate
so far from accepted standards of fairness and due pro-
cess of law that this Court should exercise its supervisory
powers and reverse petitioner’s conviction?
2. Can interstate transfers of funds by a co-conspirator
corporation to one of its local subsidiaries which had previ-
ously, through intrastate checks, reimbursed petitioner for
funds advanced »y him allegedly as bribes to public of-
ficials, suffice as the jurisdictional base for charges under
18 U.S.C. $1952, when those checks were not involved in
making alleged unlawful payments to public officials, and
the intercorporate transfers were unknown and immaterial
to petitioner, unimportant to the alleged bribery plan, and
no acts in violation of state law occurred after the inter-
state transfers?
3. Did the IRS deliberately attempt to circumvent the
requirement in the Seventh Circuit, and the IRS’ own
written policy—that a taxpayer who is the subject of an
Intelligence Division investigation be warned of his rights—
by sending a Revenue agent to conduct a ‘‘civil re-audit’’
of petitioner’s tax returns as a subterfuge to lull petitioner
into voluntarily providing information for use in pending
criminal investigations of which petitioner was unaware?
_If so, should the evidence so obtained be suppressed?
Constitutional Provisions and Statutes Involved
The Fifth Amendment to the United States Constitution
provides in part:
‘‘No person shall... be deprived of life, liberty, or
property, without due process of law... .’’
The Sixth Amendment to the United States Constitu-
tion provides in part:
‘*In all criminal prosecutions, the accused shall enjoy
the right to a speedy and public trial, by an impartial
jury ... to be confronted with the witnesses against
BM ccee”™
18 U.S.C. §1952 provides in pertinent part:
‘‘(a) Whoever travels in interstate or foreign
commerce or uses any facility in interstate or foreign
commerce, including the mail, with intent to—
‘*(1) distribute the proceeds of any unlawful
activity; or
‘*(2) commit any crime of violence to further
any unlawful activity; or
‘*(3) otherwise promote, manage, establish,
carry on, or facilitate the promotion, manage-
ment, establishment, or carrying on, of any un-
lawful activity,
4
and thereafter performs or attempts to perform any
of the acts specified in subparagraphs (1), (2), and
(3), shall be fined not more than $10,000 or imprisoned
for not more than five years, or both.’’
Chapter 38, §33-1(c), Ill. Rev. Stat. (1967), provides in
pertinent part:
‘*A person commits bribery when:
**(c) With intent to cause any person to influence
the performance of any act related to the employment
or function of any public officer, public employee or
juror, he promises or tenders to that person any prop-
erty or personal advantage which he is not authorized
by law to accept... .’’
STATEMENT OF THE CASE
Petitioner was convicted by a jury on five counts of
violating the Travel Act (18 U.S.C. § 1952),* one count of
conspiracy to violate the Travel Act (18 U.S.C. § 371),
and one count of making false statements on his partner-
ship tax return (26 U.S.C. § 7206(1)).**
This case involves the payment of money in 1968 by
petitioner to officials of the Village of Hoffman Estates,
illinois in connection with a petition for zoning change
on a parcel of land owned by Kaufman & Broad, Inc.
(‘‘K&B’’), a nationwide developer and home builder. Peti-
tioner acted as K&B’s attorney in the rezoning pro-
ceedings.
* The Travel Act provides (inter alia) that it is a federal crime
for a person to use a facility in interstate commerce with intent to
commit or facilitate the offense of bribery in violation of state law,
and thereafter commit or facilitate the offense of bribery. See Rewis
v. United States, 401 U.S. 808 (1971).
**At the close of the government’s case, the trial court dismissed
four other counts alleging violations of the Travel Act. The jury
found petitioner not guilty of two Travel Act counts and one count
charging income tax evasion.
5
We set forth in parts (1) through (4) below the facts
relating to the trial court’s evidentiary rulings and in-
structions to the jury, which we submit deviated so far
from the standards enunciated by this Court that peti-
tioner’s trial lacked all semblance of the fairness guaran-
teed by the Constitution to defendants in criminal cases.
In Part (5) we summarize the facts relating to the alleged
jurisdictional basis for Travel Act Counts 6 through 9,
_ which we submit are insufficient as a matter of law. The
facts regarding petitioner’s motion to suppress evidence
based upon the deceitful conduct of the Internal Revenue
Service are lengthy and complex; hence we have included
these facts in Appendix 5 to this brief (pp. App. 34 to 48).
(1)
The limitations placed on cross-examination of the village
trustees.
The former Mayor and three former trustees of the Vil-
lage of Hoffman Estates testified, as government wit-
nesses, that in 1968 they received cash in exchange for
their favorable votes on the K&B rezoning. Former
Mayor Roy Jenkins testified that he obtained the cash
from petitioner and distributed it among his three fellow
trustees. Jenkins testified that petitioner instigated the
subject of the bribe and that he (Jenkins) was ‘‘shocked’’
by the suggestion. The trustees attempted to give
the jury the impression that they were tempted and finally
succumbed—that they strayed from the path of rectitude
as a result of the cash tendered by petitioner to Jenkins
and by Jenkins to the others.
Petitioner conceded he paid the cash to Jenkins on
K&B’s behalf, but he contended* that he did so without
* Petitioner did not testify at the trial because of an evidentiary
ruling discussed in part (2) below. Defense counsel made an offer
of proof detailing the testimony petitioner desired and intended to
give. (Tr. 1572-74.)
6
the requisite criminal intent to bribe them; instead he paid
the money in response to Jenkins’ extortionate demands
and Jenkins’ threats that there would be no fair con-
sideration of the merits of K&B’s zoning proposal, which
was doomed to failure unless the trustees were paid.
In an effort to undermine the trustees’ testimony and
to unmask them for what they really were, petitioner
sought to cross-examine them about the fact that, start-
ing long before K&B presented its zoning proposal, the
zoning officials had extorted money and other considera-
tions from many developers through an extended, sophis-
ticated pattern of conduct which was still in progress in
1968: every builder who sought a substantial zoning change
in Hoffman Estates had to pay the trustees for their
favorable votes. The facts supporting this proposed cross-
examination are found in the trustees’ statements to the
government, produced for defense counsel under 18 U.S.C.
§3500.
The trial judge flatly refused to permit cross-ex-
amination about the trustees’ self-admitted program of
extortion. Instead, he allowed defense counsel to ask
each trustee only the single question of whether, be-
fore the K&B incident, he had ever accepted a payment
for his vote; each trustee answered yes, and the matter
rested there.* The trial judge refused to permit the trus-
tees to be asked about the number of times, the amounts,
* The trial judge himself asked Mayor Jenkins whether he had
ever received a “bribe” before. Later, he allowed defense counsel
to rephrase the question using the word “money” instead of the
word “bribe,” and the government stipulated that Jenkins’ answer
to the question would be “yes.” (Tr. 1044.) But the damage cre-
ated in the minds of the jury by the Court’s inference had already
been done.
7
or any other facts relating to the other payments. Peti-
tioner submitted an offer of proof setting forth the estab-
lished pattern of extortions engaged in by the trustees,’
but the jury was never informed of the true facts about
the village officials, petitioner’s accusers and alleged co-
conspirators, and the case went to the jury with the trus-
tees still in the role of fallen angels who had been cor-
rupted by petitioner.
(2)
The inconsistent and inherently unfair ruling regarding
cross-examination of petitioner.
Petitioner wished to take the stand on his own behalf
to deny the testimony of government witnesses and to
give his version of the relevant events.** Petitioner could
not testify, however, because of the coercive effect of an-
other ruling by the trial judge—which was inconsistent
with his restrictive ruling on cross-examination of the
trustees. The judge ruled that if petitioner took the stand
and claimed he was the victim of the trustees’ extortion
(which is the testimony petitioner intended to give), he
could be cross-examined about a totally unrelated alleged
payment of money on behalf of K&B to an employee of
another governmental agency, unrelated to the~Village of
Hoffman Estates, which occurred 21% years after the
* Petitioner also offered to prove in his case-in-chief—through
other former trustees and developers—the rampant program of ex-
tortion perpetrated by the government’s trustee-witnesses during the
mid and late 1960's.
** For example, petitioner wished to deny Jenkins’ testimony that
petitioner first raised the matter of a cash payment. The trial judge
instructed the jury that it was relevant “whether Peskin or Jenkins
first raised the question of money,” but the jury heard only Jenkins’
version of the conversation.
8
payment by petitioner to Hoffman Estates officials. The
trial court’s ruling was that ‘‘intent’’ was the primary
issue in the case, and that somehow one alleged similar
act in May, 1971 could shed light on petitioner’s state
of mind in October, 1968. Rather than incur the prej-
udice which would result from this line of question-
ing, petitioner did not testify and instead made an offer
of proof as to the testimony he wanted to give.
(3)
The trial court’s instructions which put the burden of
proof on petitioner.
Petitioner’s inability to testify was all the more devas-
tating because the trial court’s instructions to the jury
erroneously shifted the burden of proof to petitioner to
negate criminal intent, and to prove that he did not know
the contents of the tax return he signed. These instruc-
tions are set out in the opinion of the Court of Appeals
(App. 22-23, 29).
(4)
The trial court’s coercion of the jury’s verdict.
Despite the trial court’s evidentiary rulings and instruc-
tions, which severely restricted petitioner in his efforts
to present his defense, the jury encountered great diffi-
culty in resolving the issues. The jury deliberated for
two and one-half days (including night sessions until ap-
proximately 10:00 p.m.) without reaching a verdict. Fi-
nally, at 9:30 p.m. on the third day, the trial judge told
counsel he intended to discharge the jury at 10:00 p.m.
if they had not arrived at a verdict. The judge then called
the jury in and learned from the foreman that they had
9
not yet reached a verdict. The trial judge then asked (Tr.
1938) :
‘‘Do you think that if you were allowed to deliber-
ate, let’s say another half hour—and I don’t intend
to keep you in there any longer than that—you might
reach a verdict as to all of the counts in the indict-
ment?’’
The foreman answered ‘‘Yes.’’ The judge asked if the
' foreman believed ‘‘you are close to a verdict on the com-
plete indictment then?’’? The foreman responded ‘‘Pos-
sibly.’’ The trial judge then asked for a show of hands
from jurors who thought ‘‘. . . it would be profitable and
possible to reach a complete agreement on all counts of
the indictment if you deliberated until 10 o’clock?’’ After
the show of hands, the judge said: ‘‘Well, we can do that
then. If you will retire again, we will call you out again
at 10 o’clock.’’
Approximately 30 minutes later, at 10 p.m., the jury an-
nounced its verdict on all counts, including inexplicably in-
consistent verdicts between two inter-related tax counts
(not guilty of Count 15, attempt to evade personal tax;
guilty of Count 16, filing a false partnership return).
(5)
The facts which the government contends provide the
jurisdictional support for Travel Act Counts 6 through 9.
Five of the counts on which petitioner was convicted
are brought under the Travel Act, 18 U.S.C. § 1952,
and a sixth count is conspiracy to violate the Travel
Act. That Act makes it a crime to use ‘‘any facil-
ity in interstate ... commerce . . . with intent to’’ facili-
tate a violation of the Illinois bribery statute, and there-
after to violate the bribery statute. The facts upon which
10
the Court of Appeals upheld these convictions are the
following :
Petitioner paid cash to Mayor Jenkins and Jenkins in
turn distributed the cash among his fellow trustees. Peti-
tioner then sent K&B bills for legal services, which in-
cluded (but did not disclose) the amounts of cash peti-
tioner had paid to Jenkins.
Petitioner’s bills were sent to and paid by intrastate
checks of K&B’s Lilinois subsidiary, located in Illinois.
The subsidiary’s bank account then was replenished by
inter-corporate transfers of funds from the K&B parent
company located in Detroit, Michigan. The interstate
checks did not go to petitioner: petitioner never saw or
even knew of the parent company’s checks. The courts
below held these inter-corporate checks were sufficient to
satisfy the jurisdictional requirements of Travel Act
Counts 6 through 9. As to Count 5, the courts below held
that one interstate airplane journey by an employee of
K&B, from Detroit to Chicago, was sufficient to satisfy the
Travel Act, because one of his purposes was to confer with
petitioner about the Hoffman Estates zoning matter, al-
though the employee came to Chicago almost weekly on a
variety of K&B matters. Count 1 is a charge of conspiracy
to violate the Travel Act.
11
REASONS FOR GRANTING THE WRIT
I.
THE COMBINATION OF THE ERRONEOUS EVIDEN-
TIARY RULINGS AND JURY INSTRUCTIONS, AND
THE COERCION OF THE VERDICT, DEPRIVED PE-
‘TITIONER OF FUNDAMENTAL CONSTITUTIONAL
RIGHTS.
The decision of the Court of Appeals is in conflict with
rulings of this Court, of other Courts of Appeal and of
the Seventh Circuit itself. Petitioner was deprived of a
fair opportunity to face and cross-examine his accusers,
and to testify on his own behalf, in violation of his rights
under the 6th Amendment. The jury instructions improp-
erly shifted the burden of proof to petitioner. And at the
end of the trial, the trial judge put a 30-minute time limit
on the jury to reach a verdict on all counts, thus coercing
the verdict from the jury after two full days and three
nights of deliberation.
The petition for writ of certiorari should be granted in
order to correct the errors and resolve the conflicts
enumerated below, and pursuant to the overall super-
visory powers of this Court.
1. Defense counsel was entitled to cross-examine the
trustees, petitioner’s accusers and alleged co-conspirators,
about their prior and contemporaneous illegal acts of ex-
tortion in order (1) to reflect on their credibility generally,*
*Cf. Gordon v. United States, 344 U.S. 414, 421-23 (1953) ;
United States v. Dickens, 417 F.2d 958, 959-60 (8th Cir. 1969) ;
Rule 608(b), Federal Rules of Evidence.
12
(2) to counter their testimony that they were concerned
only about the merits of K&B’s zoning proposal but were
enticed by petitioner’s cash bribe offer—which Jenkins
said ‘‘shocked’’ him, (3) to show that it was Jenkins, and
not petitioner (as Jenkins claimed), who first raised the
matter of a cash payment,” and (4) to shed light on peti-
tioner’s state of mind and intent at the time he paid the
money to Jenkins.**
2. The government should not have been allowed to
cross-examine petitioner about the unrelated, later alleged
bribe incident, because (1) it was totally irrelevant to the
issues on trial, but extremely prejudicial, (2) it impaired
petitioner’s exercise of his constitutional right to testify
on his own behalf, and (3) even if slightly relevant (which
we deny), the prejudicial effect far outweighed rele-
vance.***
This Court’s decision in Chambers v. Mississippi, 410
U.S. 284 (1973), is controlling here. There, as here, a de-
fendant was subjected to the doubly-prejudicial effect of
improper limitations on cross-examination of government
witnesses and his own direct examination of defense wit-
nesses. This Court said that ‘‘[T]he rights to confront
and cross-examine witnesses and to call witnesses in one’s
own behalf have long been recognized as essential to due
process,’’ and that a ‘‘significant diminution’’ of these
* Cf. Griffin v. United States, 336 U.S. 704, 718 (1940);
Campbell v. Illinois, 16 Ill. 16, 17 (1854); 1 Wigmore on Evidence
§110.
** See United States v. Kahn, 472 F.2d 272, 277-78 (2d Cir.
1973), cert. denied, 411 U.S. 982; United States v. Barash, 365 F.2d
395, 401-02 (2d Cir. 1966), cert. denied, 396 U.S. 832; United States
v. Deardorff, 343 F. Supp. 1047, 1050 (S.D.N.Y. 1971).
*** Sce Boyd v. United States, 142 U.S. 450, 458 (1892) ; United
States v. Phillips, 401 F.2d 301, 306 (7th Cir. 1968); White v.
United States, 294 F.2d 952, 953 (9th Cir. 1961).
J
13
rights ‘‘calls into question the ultimate integrity of the
fact-finding process .. .’’ (410 U.S. at 294-95).
3. The prejudice resulting from these tandem rulings
was heightened by two jury instructions:
(a) As to the Travel Act Counts, the jury was
instructed that in determining whether petitioner
‘‘was a victim of extortion, such as to negate his al-
leged criminal intent, it is relevant, but not control-
ling whether [petitioner] or Jenkins first raised the
question of money.’’ Because of the ruling on cross-
examination of petitioner, he did not take the stand
and thus was unable to deny Jenkins’ testimony that
petitioner ‘‘first raised the question of money.’’
The trial court refused the defense instructions on
this subject, which we have set out in Appendix 6 to
this brief (App. 49).
(b) On the tax counts, the trial judge instructed
the jury that it could infer from petitioner’s signa-
tures on the tax returns that ‘‘he had knowledge of
the contents,’’ and this inference was permissible
‘‘unless and until outweighed by evidence in the case
which leads you to a different or contrary conclu-
sion.’’ Not only does the instruction impermissibly
impose the burden of proof on petitioner, rather than
on the government, but also, as in the instance in
(a) above, the only available contrary evidence of
petitioner’s knowledge was never heard by the jury
because petitioner was kept from the witness stand by
the trial judge’s erroneous ruling concerning cross-
examination.
4. The final blow to the defense came after the jury
had been considering the case for two and one-half days.
At 9:30 p.m. on the third day, the trial judge pressed the
jury to return a verdict on ‘‘all counts of the indictment’’
14
within 30 minutes. The verdict was rendered in almost
precisely the time fixed.*
Perhaps no one of the errors outlined above would be
sufficient to induce this Court to intervene. But the com-
bination and cumulative effect of such serious errors—
including denial of fundamental constitutional rights—
surely calls for this Court to exercise its supervisory
powers. It is, after all, one of the major functions of this
Court to protect defendants in criminal cases from viola-
tions of their constitutional rights, and to supervise the
various Courts of Appeal in the decisions they render in
tederal criminal cases.
Il.
THE COURT OF APPEALS’ DECISION ON THE TRAV-
EL ACT COUNTS IS IN CONFLICT WITH RULINGS
OF THIS COURT AND OF COURTS OF APPEALS.
A.
We have summarized above the slender factual reed
upon which the Court of Appeals upheld the Travel Act
convictions, Counts 1** and 5 through 9. The ruling that
those facts are sufficient to form a jurisdictional basis
under 18 U.S.C. §1952 is contrary to the philosophy ex-
* See People v. Crowley, 101 Cal. App. 2d 71, 224 P.2d 748,
753 (1950).
** The conspiracy count (Count 1) should fall with the Travel Act
counts upon which it rests because without the Travel Act charges,
there is no jurisdictional base to support it. Petitioner should be
granted a new trial on the only remaining count (Count 16) alleg-
ing a material misstatement on his partnership tax return, because
the trial was dominated by the highly prejudicial Travel Act charges
and because of the tax count instruction given by the trial judge,
discussed in 3(b) above.
15
pressed by this Court in Rewis v. United States, 401 U.S.
808 (1971), and to the holdings of the Second Circuit in
United States v. Archer, 486 F.2d 670, 678-686 (2d Cir.
1973) and of the Seventh Circuit itself in United States
v. Altobella, 442 F.2d 310, 316 (7th Cir. 1971) and United
States v. Isaacs, 493 F.2d 1124, 1146-49 (7th Cir. 1974),°
cert, denied, 417 U.S. 976. Those cases demonstrate that a
remote and peripheral use of interstate facilities will not
. trigger application of the Travel Act. The issue in Archer,
Altobella and Isaacs was ‘‘whether the defendants here
have used a facility in interstate or foreign commerce .. .
in a sufficiently meaningful way to subject themselves to
liability under the statute.’’ (486 F.2d at 680.) In each
of the three cases it was held that the use of interstate
commerce was insufficient to support jurisdiction under
the Travel Act.
Both Altobella and Isaacs involved more proximate and
direct use of interstate check facilities than the case at
bar. In Altobella, the extortion victim cashed a check to
obtain cash to pay defendant, and the check traveled inter-
state.** In Jsaacs, the proceeds of the unlawful activity
* The judges who decided the /saacs-Kerner case were from out-
side the Seventh Circuit, sitting by special designation of the Chief
Justice of this Court.
** In Altobella, Mr. Justice Stevens said (442 F.2d at 314-316) :
“To warrant federal intervention we believe the statute requires
a more significant use of a facility of interstate commerce in aid
of the defendants’ unlawful activity than is reflected on this
record.”
* . *
“We do not believe Congress intended to authorize federal in-
tervention in local law enforcement in a marginal case such as
this. We are guided by the Supreme Court’s admonition ‘that
in ascertaining the scope of congressional legislation a due re-
gard for a proper adjustment of the local and national interests
in our federal scheme must always be in the background... .”
16
were distributed by checks which traveled interstate.
Archer involved interstate telephone calls made by an
undercover government agent to the defendant.
In contrast, in the case at bar, Mayor Jenkins testified
that petitioner made a cash payment to Jenkins, who dis-
tributed the cash among the other trustees. Thereafter,
petitioner was reimbursed by the K&B Illinois subsidiary,
whose bank account was then replenished hy K&B in
Detroit by use of interstate checks.
Thus, the interstate checks were not used to raise cash
to make payments to the village officials; they were not
made payable to petitioner; they were not sent to peti-
tioner; they were not known to or foreseen by petitioner;
they played no part in any unlawful activity; and they
traveled interstate after the alleged unlawful activity had
been completed, from the K&B parent to its subsidiary,
solely in order to reimburse the subsidiary for funds pre-
viously sent intrastate to petitioner. It did not matter to
petitioner or to the alleged unlawful activity when, how or
even whether the bank account of the K&B subsidiary was
replenished.
There is a direct conflict between the decisions in the
cited cases and the ruling in petitioner’s case, which should
be resolved by this Court. And quite apart from that con-
flict, an important policy question is presented as to how
far this Court will permit lower courts to stretch the boun-
daries of 18 U.S.C. $1952 to encompass what are essentially
local criminal matters involving minimal, peripheral use
of interstate facilities. Compare Rewis v. United States,
401 U.S. 808 (1971); see also United States v. Maze, 414
U.S. 395 (1974).
17
There is another point of conflict between the ruling
below and a prior decision of the Seventh Circuit, which
tenders to this Court an important policy issue of first
impression. The statute requires that the performance of
the alleged ‘‘unlawful activity,’’ must occur after use of
the interstate facilities, which in this case is the violation
of the Illinois bribery statute. The undisputed evidence
* here was that the money was paid to the village officials—
and the unlawful activity was therefore concluded—before
the inter-company checks traveled in interstate commerce.
The ‘‘unlawful activity’’ and the use of interstate facili-
ties ocurred in reverse order, and not in the sequence re-
quired by the Travel Act.
The Seventh Circuit has previously ruled that this se-
quence is jurisdictional, holding that the ‘‘ ‘thereafter’
clause constitutes an express limitation on the coverage of
the statute.’’ United States v. Zemater, 501 F.2d 540, 544
(7th Cir. 1974).* The opinion in the case at bar conflicts
with the holding in Zemater and with the express language
of the statute.
Il.
EVIDENCE GATHERED BY THE INTERNAL REVE-
NUE SERVICE IN VIOLATION OF PETITIONER’S
RIGHTS SHOULD HAVE BEEN SUPPRESSED.
Prior to and following the trial, a hearing was held on
petitioner’s motion to suppress evidence gathered by the
* Mr. Justice Stevens concurred in the Per Curiam opinion in
Zemater.
18
Internal Revenue Service. Petitioner based his motion
on the following facts.*
(1) At the same time that petitioner was under crimi-
nal investigation—by the United States Attorneys’ office
and the grand jury, and by three different sections of the
IRS—a Revenue Agent of the IRS was assigned to and
conducted one of the most extraordinary ‘‘civil’’ re-audits
that two experienced independent accountants testified
they had ever seen, encompassing over 400 hours of the
agent’s time as well as hundreds of hours of time of others
in his office. The assignment was given to Revenue Agent
Melvin Radman by his supervisor, Paul Berwick, a former
Intelligence Division agent (who since his transfer to the
Civil Division had cooperated with Intelligence Division
agents in several investigations), and an Intelligence
Division Special Agent, Anders Flodin, who gave Berwick
petitioner’s first audit file and documents relating to the
K&B-Hoffman Estates alleged bribery matter. A prior
audit of the 1970 partnership return of the law firm of
Deutsch & Peskin and the individual returns of the part-
ners had already been completed by another Revenue
agent (Richard Hein), and the law firm’s accountant had
already agrecd to minor adjustments and signed a docu-
ment listing them a few months earlier.
(2) When Revenue Agent Radman approached peti-
tioner and his accountant about re-opening the audit
(which Radman admitted he did not have proper statu-
tory authority to reopen under 26 U.S.C. § 7605B), he
asked why it was being re-opened. Although Mr. Radman
had been specifically told by his supervisor, and by the
Intelligence Division agent who gave him the assignment,
* The facts are set forth only briefly here, but are stated in de-
tail in Appendix 5 to this brief.
Ae ee en a ee sn
19
to look into the K&B-Hoffman Estates matter, and had
been given checks and invoices relating to the alleged
bribery transaction in Hoffman Estates, he did not men-
tion this to petitioner or his accountant. Rather, Mr. Rad-
man told the law firm’s accountant only that the partners’
capital accounts were in negative figures, which could rep-
resent a taxable event to each partner. Nothing more was
ever said about this alleged reason for re-opening the
- audit, and no adjustments were proposed relating to this
supposed issue.
(3) On the basis of the misrepresentation by Agent
Radman as to his purpose in re-opening the audit, peti-
tioner’s accountant obtained the necessary consents to ex-
tend the statute of limitations, and petitioner furnished
his full cooperation to Mr. Radman in his investigation.
(4) From time to time during Radman’s work on peti-
tioner’s tax returns, Radman advised Flodin about the
results of his investigation.
(5) Although petitioner was under criminal investiga-
tion before Radman’s audit began, and throughout the
entire period of the re-audit (extending more than six
months), petitioner was never told that he was the sub-
ject of a criminal investigation by the IRS Intelligence
Division, by the United States Attorneys’ office, or by the
grand jury, and he was not given Miranda warnings or
told that he did not have to answer any questions asked
by the agent conducting the re-audit of his partnership
tax return.
At the hearing on the motion to suppress, petitioner
contended that the re-audit conducted by Revenue Agent
Radman was a subterfuge, which was not being conducted
for the reason stated by Radman; rather, that the real
purpose of the IRS was to obtain information for use in
20
the criminal investigations then being conducted of peti-
tioner; that even if Revenue Agent Radman was not spe-
cifically aware of or ‘‘in on’’ the subterfuge, he was
chargeable with the knowledge of the activities of the
Intelligence Division, at whose behest he was conducting
the re-audit; that petitioner was entitled to Miranda warn-
ings under United States v. Dickerson, 413 F.2d 1111 (7th
Cir. 1969); and alternatively that he was entitled to relief
because the IRS Intelligence Division had not followed
its own announced policy of informing taxpayers when
they are under criminal investigation.*
The trial court rejected petitioner’s arguments, con-
cluding that at the time of Mr. Radman’s re-audit, the
government investigation by both the United States At-
torney’s office and the Intelligence Division had not fo-
cused on petitioner to the point where Miranda warnings
were required under the holding of the Seventh Circuit in
the Dickerson case. The Court of Appeals agreed with
the government that IRS did not intentionally avoid com-
plianece with Dickerson, and held that ‘‘The evidence does
not support the contention that Radman’s civil audit was
a subterfuge .. .’’ (App. 17-18.)**
* See United States v. Sourapas, 515 F.2d 295, 298, 300, (9th Cir.
1975) ; United States v. Leahey, 434 F.2d 7, 10-11 (1st Cir. 1970) ;
United States v. Heffner, 420 F.2d 809, 811-12 (4th Cir. 1969).
** Since the trial court held that the evidence did not require sup-
pression, the court below did not deal with the question of what
evidence should be suppressed. Petitioner requested that the Court
of Appeals reverse on all counts because, for practical purposes, it
would be impossible to sort out the evidence introduced during the
three-week trial to determine what information may have resulted
from the detailed six-month audit conducted by Radman. Alterna-
tively, petitioner requested that the Court of Appeals reverse the
ruling on the motion to suppress and remand for a hearing on what
evidence should be suppressed.
- DR ee ee ee
we
21
We submit that the Court of Appeals erred in reaching
this couclusion, and that petitioner’s constitutional rights
were violated by admission of the evidence obtained by
Mr. Radman. There is no dispute that an intense crin.i-
nal investigation of petitioner was in progress at the time
Radman came to petitioner’s office. The so-called ‘‘civil
re-audit’’ was a deliberate, planned subterfuge, structured
by the IRS in order to obtain information for use in the
. eriminal investigation without alerting petitioner. The
undisputed facts give the lie to any innocent explauation
of the IRS conduct. Mr. Radman may have been the un-
knowing handmaiden of Berwick and Flodin, but he was
deliberately used by them to gather evidence from peti-
tioner for the criminal investigation, so that Radman’s
lack of participation in the scheme cannot be relied on by
the government to avoid the consequences of its trickery
and deceit.*
The reason for the subterfuge is not difficult to deter-
mine. In 1969, three years before Flodin and Berwick
assigned Radman to the ‘‘civil re-audit,’’ the Seventh Cir-
euit Court of Appeals had ruled in United States v.
Dickerson, 413 F.2d 1111 (7th Cir. 1969), that ‘‘. . . In-
ternal Revenue agents must give Miranda warnings at the
inception of the first contact with the taxpayer after the
ease has been transferred to the Service’s Intelligence
Division.’’ (App. 13-14.)** Berwick and Flodin knew that
* Sce Santobello v. New York, 404 U.S. 257, 262 (1971) ; United
States v. Ott, 489 F.2d 872, 873-74 (7th Cir. 1973).
** The Court of Appeals changed the Dickerson rule in the case
at bar so that the event which triggers the need for warnings is
“ .. the formal opening of the Intelligence Division criminal case.”
Compare United States v. Beckwith, Docket No. 74-1243, opinion
below 510 F.2d 741 (D.C. Cir. 1975), in which a simila issue is
presented to this Court.
22
if Special Agents went to petitioner’s office and gave the
warnings, petitioner would undoubtedly refuse coopera-
tion. The alternative they selected—assigning a Revenue
Agent to check petitioner’s records and talk to him under
the guise of civil re-audit—successfully lulled petitioner
into cooperating. Put this surely was chicanery of the
sort that government should avoid even in its attempts
to ferret out crime. Mr. Justice Brandeis’ famous admoni-
tion is relevant here (Olmstead v. United States, 277 U.S.
438, 485 (1928)):
‘* . . To declare that in the administration of the
criminal law the end justifies the means—to declare
that the Government may commit crimes in order to
secure the conviction of a private criminal—would
bring terrible retribution. Against that pernicious
doctrine this Court should resolutely set its face.’’ A P P K N ID | x
CONCLUSION
For the foregoing reasons, petitioner respectfully prays
that this Court grant a writ of certiorari to review the
judgment of the Court of Appeals for the Seventh Circuit
in this case.
~~
Respectfully submitted,
Tuomas P, SuLuivan
Caro. R. THIGPEN
Attorneys for petitioner
Bernard M. Peskin
Of Counsel:
JENNER & BLock
One IBM Plaza
Chicago, Illinois 60611
(312) 222-9350
April 21, 1976.
I EE
APPENDIX 1
Arcuep January 13, 1975— Decmep Decemser, 10, 1975
Before CuiarK, Associate Justice,* Famcump, Chief
_ Judge, and Sprecner, Circuit Judge.
FarrcuiLp, Chief Judge. Appellant Peskin was indicted
on 14 counts of a 23 count indictment charging conspiracy
to violate the Travel Act 18 U.S.C. §371, substantive
violations of the Travel Act, 18 U.S.C. §1952, and tax
fraud, 26 U.S.C. §$7201, 7206(1). The indictment alleged
that Peskin, representing Kaufman & Broad, Inc. (K & B)
(a home builder of national stature headquartered in
California) had passed money to public officials of the
Village of Hoffman Estates, Illinois in return for ap-
proval of a K & B zoning proposal. Peskin’s coindictees,
K & B, the former Mayor of Hoffman Estates (Roy
Jenkins), and five other village officials (James Sloan,
Howard Noble, Gerard Meyer, Herbert Gibson and Ed-
ward Pinger), pleaded guilty. Peskin was convicted by
a jury on the conspiracy count, five substantive Travel
Act counts, and one count of making a false statement
on an income tax return.
On appeal Peskin contests the sufficiency of the evi-
dence to establish the federal jurisdictional elements of
the Travel Act, the denial of suppression of evidence,
certain evidentiary rulings, and other alleged errors. For
the reasons that follow, we affirm his conviction on all
counts.
* Associate Justice Tom C. Clark (Retired) of the Supreme Court
of the United States is sitting by designation.
App. 2
I. THE PAYOFF
Peskin, an attorney, handled various real estate matters
for K & B. In November, 1967 Peskin advised Edward
Stulberg, a K & B vice-president, that Rossmoor Corpo-
ration was about to sell a large tract of real estate in
Hoffman Estates, Illinois. With a view toward residential
development, K & B negotiated and agreed to purchase
two parcels, one of 320 acres and the other of 90 acres.
The sale was contingent on K & B obtaining satisfactory
rezoning of the property.
Over the summer of 1968, the Village Zoning Board of
Appeals held hearings on the proposed K & B rezoning,
ultimately recommending approval of the plan to the Board
of Trustees. The evidence indicates that during this period
Peskin approached Mayor Jenkins offering money to ob-
tain approval of the rezoning. The evidence also shows
that several village officials demanded $25,000 in return
for approval of the K & B proposal. By late September
K & B was prepared to pay at least $100,000 for zoning
approval.
On October 10, 1968, the Board of Trustees adopted
the Board of Appeals’ recommendation to approve the
K & B plan, but at a meeting the following week the Board
voted against the ordinance effecting the change, giving
a basis for an inference that the village officials were
squeezing K & B for more money. Before the next
‘In 1968 zoning changes in Hoffman Estates were first presented
to the Zoning Board of Appeals. After reviewing the proposals, this
body would recommend an appropriate disposition to the Village
Board of Trustees, whose chairman was the Mayor. The Board of
Trustees would then accept or reject the proposals. If accepted, an
ordinance embodying the change would be adopted by the trustees.
ee eee.
App. 3
Board meeting Jenkins and Peskin met with those trustees
who had opposed the ordinance to persuade them to
change their votes. At a Board meeting October 24, at
which Peskin and Stulberg were present, the Board voted
to reconsider, and the matter was placed on the agenda for
October 30.
Sometime in October, agreement was reached on the
amount of the payoff and manner of payment: K & B
would pay through Peskin $35,000 in cash to be dis-
tributed among Jenkins, Noble, Sloan, Meyer, Gibson and
Pinger at the time the rezoning was accomplished. An
additional $35,000 would later be paid to these officials
2s occupancy permits were issued as construction of the
housing development progressed. There was also talk of
a transfer of a gasoline station site in the new develop-
ment as part of the payoff.
Since the K & B payment was to appear to be a fee
for Peskin’s services, it would be necessary to increase
the payment from K & B to Peskin sufficiently to cover
Peskin’s liability for income tax thereon.
With a mutually acceptable price established, approval
of the ordinance followed. At the October 30 meeting,
Peskin, with Stulberg in attendance, presented the K & B
position. In response, the local school board and several
residents expressed opposition to the rezoning fearing
that the increase in population resulting from the pro-
posed development would overecrowd the schools. Never-
theless, the proposed ordinance rezoning the 320 acre
parcel was approved. On November 14, the Board adopted
the ordinance rezoning the 90 acre parcel.
Sometime between October 30 and November 30, Peskin
paid Jenkins $35,000 in cash. Jenkins in turn distributed
$5,000 to each of the other officials. Since the officials
App. 4
either declined to run for reelection or were defeated in
elections the following April, the $35,000 balance was
never paid. The transfer of the filling station site was
never accomplished, though included in a Deutsch and
Peskin bill to K & B as part of attorney fees (Jan. 27,
1969), and mentioned by Peskin to a K & B official in
1971.
Payment to Peskin was made by an Illinois subsidiary
of K & B, as follows:
Nov. 14, 1968 $10,000.
Jan. 14, 1969 $25,000.
Feb. 25, 1969 $10,000.
April 10, 1969 $55,000.
On December 24, 1968, Peskin’s partner Deutsch wrote
two checks for $20,000 each to two young lawyers, osten-
sibly as fees. The payees cashed the checks, kept part
for taxes, and returned the balance. Deutsch testified he
did this in order to obtain $25,000 in cash for Peskin,
who said he needed it for the village officials.
Il. THE TRAVEL ACT
A. Count 5
Count 5 of the indietment charged that Peskin and the
other original defendants caused Stulberg to travel from
Detroit to Chicago on or about October 22, 1968 with
intent to promote the unlawful activity of bribery and
thereafter they performed acts to promote the carrying
on of that unlawful activity in Illinois. Peskin asserts that
since Stulberg came to Chicago for reasons in addition to
his interest in the Hoffman Estates zoning, his travel was
incidental to the bribery. However, section 1952 does not
require that a defendant’s travel be solely in pursuit of
criminal activity, United States v. Gooding, 473 F.2d 425,
App. 5
428 (5th Cir. 1973), cert. denied, 412 U.S. 928, and since
Stulberg traveled to participate in the rezoning scheme,
it cannot seriously be contended that his travel was inci-
dental. Stulberg attended the meeting of the village Board
October 24, at which the trustees appeared to change their
direction to a favorable one. This meeting, and Stulberg’s
presence, could well be deemed very significant in bringing
about the unlawful activity of bribery.
Peskin further argues that Count 5 is defective because
Stulberg’s travel cannot be attributed to him and there
is no proof that he caused the travel. Unlike Rewis v.
United States, 401 U.S. 808 (1971), the interstate travel
at issue here was the travel of an essential, knowing and
deliberate participant in the crime. It is well established
that co-conspirators are responsible for the acts of their
cohorts in furtherance of the crime. United States v. Joyce,
499 F.2d 9, 16 (7th Cir. 1974), cert. denied, 43 U.S.L.W.
3206. Therefore, even apart from the probability that
Peskin requested Stulberg’s presence in Chicago in order
to attend the meeting, Peskin is liable for Stulberg’s
travel because it furthered their common purpose. United
States v. Chambers, 382 F.2d 910, 913-14 (6th Cir. 1967).
See United States v. Lee, 448 F.2d 604, 607 (7th Cir.
1971), cert. denied, 404 U.S. 858.
As an adjunct to his causation »;gument, Peskin con-
tends that even though the indictment is couched in causal
language, the failure to cite 18 U.S.C. §2(b) precludes
Peskin’s conviction under section 1952 for what is essen-
tially an aiding and abetting charge. This argument is
clearly without merit, the indictment informed defendant
of the offense charged. It alleged that he, and others, wil-
fully did cause Stulberg to travel. There was nothing
misleading about the charge. Omission of a statutory
App. 6
citation is not fatal ‘‘if the error or omission did not mis-
lead the defendant to his prejudice.’’ Rule 7(c)(3), Fed.
R. Crim. P.
There is no question but that Peskin acted to promote
the intended bribery after the Stulberg travel.
B. Counts 6-9
Counts 6, 7, 8 and 9 charged defendants with using and
causing to be used facilities in interstate commerce with
intent to promote the unlawful activity of bribery. The
facilities were alleged to be various banks and the earrier
system between Chicago and Detroit. In each count it was
alleged that a check drawn upon a K & B account in a
Detroit bank and payable to a K & B Chicago subsidiary
was deposited in its account in Chicago; and that the
check was transmitted from bank to bank until it reached
the drawee bank in Detroit and charged to the K & B
account. In each count it was charged that Peskin and
others thereafter performed acts to promote the carrying
on of the unlawful activity of bribery in Illinois.
The proof showed, as before stated, that Peskin was
paid $100,000 by checks of the subsidiaries on four dates.
These were in payment of billings by Peskin directed to
Stulberg for attorney fees. In fact, the total sum was to
cover the $35,000 Peskin paid the village officials, Peskin’s
income tax liabilities on the sum transferred, and his fee
for services. On the day or the day after each of these
checks to Peskin was drawn, one of the checks in these
four counts was drawn and deposited. There was evidence
that without such deposits, there were insufficient funds
in the subsidiary’s account to cover the checks drawn to
Peskin. Thus it is clear that these K & B checks, and their
interstate transmission in the process of clearing, were
App. 7
essential in transferring to Peskin the funds necessary to
carry out the arrangements between Stulberg and himself.
There is no evidence that Peskin was specifically aware
of these checks. He contends on appeal that the use of
interstate commerce facilities was minimal and incidental
and therefore insufficient under the Travel Act, and, addi-
tionally, that the violation of state law was completed
before such use.
We first treat the argument that the use of interstate
facilities was minimal and incidental.
Although the Travel Act, 18 U.S.C. §1952,? was enacted
to combat organized crime, United States v. Nardello, 393
U.S. 286, 290-91 (1969), its language and scope are not
so limited. United States v. Archer, 486 F.2d 670, 678-80
(2d Cir. 1973); United States v. Phillips, 433 F.2d 1364,
218 U.S.C. §1952 provides in pertinent part:
(a) Whoever travels in interstate or foreign commerce or uses
any facility in interstate or foreign commerce, including the mail,
with intent to—
(1) distribute the proceeds of any unlawful activity; or
(2) commit any crime of violence to further any unlawful
activity ; or
(3) otherwise promote, manage, establish, carry on, or facili-
tate the promotion, management, establishment, or carrying on,
of any unlawful activity,
and thereafter performs or attempts to perform any of the acts spec-
ified in the subparagraph (1), (2), and (3), shall be fined not
more than $10,000 or imprisoned for not more than five years,
or both.
(b) As used in this section “unlawful activity” means (1) any
business enterprise involving gambling, liquor on which the Federal
excise tax has not been paid, narcotics, or prostitution offenses in
violation of the laws of the State in which they are committed or of
the United States, or (2) extortion, bribery, or arson in violation of
the laws of the State in which committed or of the United States.
App. 8
1367 (8th Cir. 1970), cert. denied, 401 U.S. 917; United
States v. Roselli, 432 F.2d 879, 885 (9th Cir. 1970), cert.
denied, 401 U.S. 924. Nevertheless, we are mindful that
Congress did not intend ‘‘a broadranging interpretation of
§1952.’’ Rewis v. United States, 401 U.S. 808, 812 (1971).
Peskin argues that he neither knew of nor solicited the
interstate transfer and that the source of the funds was
immaterial to him as well as to the bribery. Citing United
Siates v. Isaacs, 493 F.2d 1124 (7th Cir. 1974), cert. denied,
417 U.S. 976; United States v. Altobella, 442 F.2d 310
(7th Cir. 1971) ; and United States v. McCormick, 442 F.2d
316 (7th Cir. 1971), he concludes that the use of inter-
state facilities to clear the Detroit checks was ‘‘minimal’’
and ‘‘incidental’’ and thus insufficient to invoke the Travel
Act.
The transmission of funds to Mr. Peskin was essential
to the carrying on of the illegal activity. Although he had
advanced the first payments, others were contemplated,
and no one would expect him to complete the plans if he
were not reimbursed in the first instance. The deposit
and interstate clearance of the Detroit checks were essen-
tial in fact to the payment of Peskin, though he and
perhaps Stulberg were unaware of the details. We do not
consider this use of interstate facilities ‘‘minimal’’ and
‘*incidental’’ as those terms have been used in this context.
The significance of the use of interstate facilities in this
ease differs markedly from that in the cases relied upon.
Altobella held that the clearance of an out-of-state check
used by the victim of an extortion to raise cash with which
to make payment even though followed by the distribution
of the proceeds among the wrongdoers was minimal and
insufficient to invoke federal jurisdiction. In McCormick
an operator of a purely local gambling activity advertised
for salesmen. A few of the newspapers containing the
advertisements were mailed to out-of-state subscribers.
App. 9
This court held ‘‘there was no showing that defendant’s
lottery in any way depended upon or included interstate
operations.’’ McCormick, supra, 442 F.2d at 318. In Isaacs,
three checks were drawn in Illinois on an Illinois bank, to
distribute the proceeds of unlawful activity. They were
deposited in Illinois banks, but cleared through the Federal
Reserve Bank in St. Louis. Noting that checks which would
have cleared through Chicago could just as easily have
been utilized, the court held that the use of interstate
facilities which in fact occurred ‘‘was so minimal, inci-
dental, and fortuitous, and so peripheral to the activities’’
of defe’ ants, that it was error to submit the counts to
the jury. Jsaacs, supra, 493 F.2d at 1146. Rewis v. United
States, 401 U.S. 808 (1971) was a case where customers
erossed a state line to patronize an otherwise local un-
lawful gambling activity of defendants. The Supreme
Court held that, at least in the absence of a finding that
defendants ‘‘actively sought interstate patronage,’’ the
interstate travel of the customers did not provide grounds
for prosecution of defendants under the Travel Act.
Here, as already noted, the clearance of the Detroit
checks was necessary in fact to complete reimbursement
of Peskin for the bribe money he had advanced, and such
reimbursement furthered the contemplated later illegal
activity.
That Peskin was not specifically aware of the interstate
transfer is unimportant. The use of interstate facilities
provides the basis for federal jurisdiction. The statute
does not expressely provide that the defendant must know-
ingly use interstate facilities. United States v. LeFaivre,
507 F.2d 1288, 1297 (4th Cir. 1974), cert. denied, 420 U.S.
1004; United States v. Hanon, 428 F.2d 101, 108 (8th Cir.
App. 10
1970) (en bane), cert. denied, 402 U.S. 952; United States
v. Bash, 258 F.Supp. 807 (N.D. Ind. 1966), aff’d, sub. nom.
United States v. Miller, 379 F.2d 483 (7th Cir. 1967).
Considering the Act’s purpose, it is plain that such
a scienter requirement should not be implied. The statute
was intended to assist local authorities in combating crim-
inal activities that extend beyond the borders of one state.
United States v. Nardello, 393 U.S. 286, 290-92 (1969).
This purpose would be severely undermined if the statute
were read to require that each participant, in order to be
found guilty, must be proved to know in fact that inter-
state facilities were used.
Finally, the interstate scope of the unlawful activity
is clear, and was known to Peskin. K & B carried on activi-
ties in several states. Peskin dealt with Stulberg in Detroit
as well as in Chicago.
We next consider, as to each count, whether there was
a so-called ‘‘thereafter act’’ with respect to the use of
interstate facilities charged in each count.
In United States v. Zemater, 501 F.2d 540, 544 (7th Civ.
1974) we observed that to have violated the Travel Act
a person
... must have ‘used a facility in interstate commerce
to facilitate the carrying on’ of an illegal enterprise
as defined by the statute ‘and thereafter performed
the carrying on’ of the unlawful activity. (Emphasis
in original.)
Peskin contends that since the village officials were paid the
$35,000, apparently by cash advanced by Peskin, before
the Detroit checks were issued in the process of reim-
bursing him, he performed no acts thereafter to promote
the carrying on of the unlawful activity of bribery in
Illinois.
App. 11
The evidence does not make clear the date on which
Peskin delivered the $35,000 cash to Jenkins. Such pay-
ment occurred either within two weeks before or after
the use of interstate facilities charged in Count 6. It is
clear that it occurred before the use of interstate facilities
charged in Counts 7, 8 and 9.
Defendant’s contention must be based on the view that
the unlawful activity of bribery involved in the case termi-
nated with the payment to Jenkins in November and dis-
tribution by him to the other recipients. This view over-
looks the fact that after such payment there remained
outstanding the promise of an additional $35,000 to be
later paid, and of a transfer of real estate to Jenkins.
Although neither of the latter was consummated, they
were intended by the parties and would also have consti-
tuted unlawful activity. Until those intentions were aban-
doned, acts to promote or carry them on, or to facilitate
their promotion or carrying on would be acts fulfilling the
terms of the Travel Act.
Under this latter analysis, Peskin’s acts in collecting
reimbursement for the first-round payment would consti-
tute acts to promote, carry on, facilitate or the like, since
he could scarcely be expected to advance the second-round
payment if not reimbursed for the first. In addition,
Peskin had Deutsch arrange to generate $25,000 in cash
which Peskin said was for the village officials. He may
simply have been replenishing his supply of cash out of
which he had advanced the first payment. Even so, such
replenishment would be preparation for the agreed later
payments. This transaction occurred after the use of inter-
state facilities charged in Count 6, and would be a ‘‘there-
after act’’ supporting that count.
Finally, there was evidence that in May, 1971, Peskin
asked K & B to transfer the real estate promised to
App. 12
Jenkins. The jury could properly have viewed this request
as an attempt to promote and carry on that part of the
contemplated unlawful activity. So viewed, it would sup-
port conviction on counts 6, 7, 8 and 9 since the May, 1971
request occurred after all the uses of interstate facilities
set forth in those counts.
Accordingly we sustain the convictions and sentences
on counts 6, 7, 8 and 9, as well as 5.
We think, moreover, that even without the fact that
further bribery was contemplated, the acts of Peskin in
billing and accepting successive payments constituted acts
facilitating the carrying on of the unlawful activity even
though they occurred after the zoning had been changed
and the bribe had been paid. The promise to reimburse
Peskin was a necessary step in effecting the bribery. We
do not think it strained to say that, even though reim-
bursement occurred after the bribe was received by the
officials, it was part of the unlawful activity for the
purpose of the Travel Act. See United States v. Corallo,
413 F.2d 1306, 1320 (2d Cir. 1969).* On this analysis counts
6, 7, and 8 would be sustained and only the conviction on
Count 9 would be vacated, since defendant was shown to
have accepted reimbursement after each use of the inter-
state facilities other than the use charged in Count 9.
% Section 1952 refers to state law only to identify the unlawful
activity in which the defendant is engaged. United States v. Rizzo,
418 F.2d 71, 74 (7th Cir. 1969), cert. denied, 397 U.S. 967. The
federal crime is the use of the interstate facilities in furtherance of
the unlawful activity, not the violation of state law. United States v.
Karigiannis, 430 F.2d 148, 150 (7th Cir. 1970), cert. denied, 400
U.S. 904. There is therefore no requirement that the state crime
ever be completed. McIntosh v. United States, 385 F.2d 274, 276
(8th Cir. 1967).
(er
App. 13
lil. THE SUPPRESSION MOTION
Prior to trial, Peskin moved to dismiss the indictment
or, in the alternative, to suppress any statement made by
him, evidence obtained from his accountants and evidence
derived from these sources.‘ The theory of the motion was
that from September 1972 on, Peskin was the subject of
a criminal investigation; that this investigation was car-
ried on under the guise of two civil income tax audits;
and that the failure of Internal Revenue agents to inform
him of his rights under Miranda v. Arizona, 384 U.S. 436
(1966) in the course of these audits violated his constitu-
tional rights. After a lengthy hearing, the district court
denied the motion.
Peskin relies on United States v. Dickerson, 413 F.2d
1111 (7th Cir. 1969), asserting that a taxpayer is entitled
to Miranda warnings et his first meeting with Internal
Revenue agents after h. sas become a criminal suspect,
regardless of whether a formal criminal file has been
opened. Dickerson, however, does not stand for such a
sweeping proposition. That case only established the rule
in this circuit that Internal Revenue agents must give
Miranda warnings at the inception of the first contact
*Much of the information examined by Mr. Radman was not
protected by the Fifth Amendment rights of Mr. Peskin. Radman’s
audits were primarily directed at partnership returns and records.
Mr. Peskin’s general assertion that he cooperated and answered ques-
tions suggests a possibility that Radman may have obtained informa-
tion suppressible if United States v. Dickerson, 413 F.2d 1111 (7th
Cir. 1969) applied, but the existence or extent of that information or
of any information ultimately obtained as a result was never ex-
plored because of the court’s ruling now challenged.
App. 14
with the taxpayer after the case has been transferred to
the Service’s Intelligence Division.°
Alternatively, Peskin contends that the warnings should
have been given because the government intentionally de-
layed referral of the case to the Intelligence Division to
avoid the Dickerson holding. This issue was reserved in
Dickerson’s companion case, United States v. Habig, 413
F.2d 1108, 1111 n.4 (7th Cir. 1969), cert. denied, 396 U.S.
1014. Whether we must now reach it requires examination
of the events leading up to the formal opening of the In-
telligence Division tax case against Peskin.
The initial IRS contact with Peskin occurred during
the summer of 1972. Revenue Agent Richard Hein was
assigned to audit the 1970 partnership tax return of the
law firm Deutsch, Peskin and Levy. Hein was neither told
to look for nor did he discover any criminal activity.
At about that time, Assistant United States Attorney
Anton Valukas was involved in a Grand Jury probe of
the United States Department of Housing and Urban
Development and K & B. During the probe Valukas heard
allegations concerning Peskin and bribery in Hoffman
Estates. He wrote the regional IRS director requesting
the tax returns of Earl Deutsch, Paul Levy and Peskin
for the years 1968, 1969, 1970, and 1971. In August and
September the Grand Jury subpoenaed K & B to present
5In many cases, as in the case before us, Special Agents of the
Intelligence Division may examine leads or discuss matters with their
civil counterparts. In this context, referring to what Dickerson
found to be the crucial step as “the transfer of the case to the In-
telligence Division” may be somewhat misleading. It is perhaps
more accurate to refer to the critical event as the formal opening of
the Intelligence Division criminal case.
App. 15
checks written to Peskin or the law firm and other docu-
ments relating to K & B Transactions in Hoffman Estates,
Palatine, and Matteson, Lllinois.
In October, Valukas happened to have lunch with Special
Agent Anders Flodin of the IRS Intelligence Division and
several others. Flodin was involved in an investigation
of the Cook County Assessor’s Office and recognized
Deutsch’s name when Deutsch and Peskin were mentioned
in conversation. In passing, Valukas mentioned that he
had heard that Peskin had received a $100,000 fee for
the K & B Hoffman Estates rezoning and that Peskin
had been conveyed a gasoline station site for transfer to
the village mayor. Since Flodin was interested in Deutsch,
Valukas sent Flodin canceled checks from K & B Homes,
Ine. payable to Deutsch & Peskin and the billing state-
ments for the $100,000 fee.®
Shortly thereafter, Flodin evaluated the information
available to him and decided that it had ‘‘no intelligence
division potential.’’ Believing that there might be a need
for a civil tax adjustment, he turned the material over
to Paul Berwick, Group Manager, Audit Division, and
® During the fall of 1972, Valukas had a conversation with Special
Agent Paul Neuhauser, a Group Manager in the Intelligence Di-
vision, in which Valukas mentioned the $100,000 payment to Deutsch
& Peskin and that he had requested the IRS to disclose the relevant
tax returns. Anticipating that disclosure would be granted, Neu-
hauser gathered the returns for the partnership and the partners
for the years 1968-1972. After scanning the returns and seeing
nothing unusual, Neuhauser asked Valukas if he Would see the
checks and K & B invoices. Valukas told him they were in Flodin’s
possession. Neuhauser then saw Flodin and examined the checks.
Flodin told Neuhauser he was going to refer the information to
Audit Division, and Neuhauser dropped the matter.
App. 16
gave him some background information on Deutsch.
Berwick assigned Revenue Agent Melvin Radman to audit
the 1969, 1970, and 1971 returns of the Deutsch & Peskin
partnership and the returns of the individual partners.
Berwick’s primary concern was that if the partnership
received the gasoline station site, the real estate might
have been inaccurately valued for tax purposes.
In January 1973, Agent Radman commenced the audit.
He explained to the firm’s accountant that the reaudit of
the 1970 return was necessary to examine the firm’s capital
accounts.’ Radman worked on the audit intermittent!y
over the first six months of the year, but nevertheless
spent considerable time on the project. He had no contact
with the U.S. Attorney’s office concerning the audit, but
he had several meetings with Flodin (apparently by
chance) during which the Deutsch & Peskin audit was
mentioned.
On April 3, Special Agent James Swanson of the Intelli-
gence Division was in Assistant U.S. Attorney Valukas’
office on an unrelated matter. Valukas received an anony-
mous telephone call, and Swanson took the phone. The
caller implicated K & B, the Deutsch & Peskin firm, and
the Hoffman Estates officials in a zoning bribery scheme.
*™By so representing the purpose of the audit, Peskin contends,
Radman intentionally misled the taxpayer and obtained evidence by
fraud and deceit. We recognize that “appellate court cases dealing
with fraud in tax situations warn that revenue agents must not af-
firmatively mislead a taxpayer into believing that the investigation
is exclusively civil in nature ard will not lead to criminal conse-
quences... .” United States v. Lehman, 468 F.2d 93, 105 (7th Cir.
1972), cert. denied, 409 U.S. 967. Peskin’s contention, however, is
unpersuasive, since the evidence does not support the view that
Radman was conducting something other than a civil audit.
App. 17
Valukas indicated that this information corroborated other
allegations he had heard. Swanson informed his super-
visor, Group Manager Neuhauser, and set out to confirm
the charges. He first investigated the village officials, and
eases were formally opened against them in June.
In late May or early June, Swanson became aware of
the Radman audit. He visited Radman and received the
Hoffman Estates-K & B rezoning file that Flodin had
given Berwick. This was the first time Radman had met
Swanson. In late June, Swanson was informed that
Stulberg was ahout to make a statement implicating Peskin
and immediately advised Berwick to discontinue contact
with Peskin until Stulberg’s story was verified. Berwick
notified Radman.
In September Earl Deutsch was granted immunity and
agreed to testify concerning the firm checks to attorneys
ostensibly in payment for services, but actually to generate
eash for Peskin. At this point Agent Swanson indicated
there was probable cause to believe that Peskin violated
the tax laws, and the Intelligence Division formally opened
the case. When Swanson confronted Peskin on October 1,
1973, he gave Peskin the Miranda warnings.
Whatever may be the rule when the IRS purposefully
delays referral of a tax case to the Intelligence Division,
the evidence does not support a finding that the govern-
ment intentionally avoided compliance with Dickerson in
this case. See United States v. Esser, 520 F.2d 213, 216
(7th Cir. 1975). In the first place, through the first six
months of 1973, any thought of possible prosecution had
not sufficiently focused on Peskin to necessitate the giving
of Miranda warnings under the rationale of Dickerson.
App. 18
Flodin’s interest was Deutsch, not Peskin, and Berwick’s
interest was in a civil audit of the returns. The fact that
Flodin discarded the Deutsch-Peskin file as being without
intelligence potential runs counter to any notion that ‘‘the
investigative machinery of the government [was] directed
toward the ultimate conviction of a particular individual
and [the] suspect should [have been] advised of his
rights.’’ United States v. Dickerson, supra, 413 F.2d at
1115, citing United States v. Turzynski, 268 F.Supp. 847,
852 (N.D. Ill. 1967). See United States v. McCorkle, 511
F.2d 482, 487-89 (7th Cir. 1975) (en banc).
After the April 3 telephone call in Valukas’ office, Swan-
son set out to corroborate the charges of bribery in
Hoffman Estates, first investigating the trustees, then
turning to Deutsch & Peskin. When Stulberg’s statement
further implicated Peskin, Radman was told to terminate
contact with the taxpayer. It was not until Deutsch’s
September statement revealing the spurious attorney fee
payments that there was a firm basis for a tax fraud case.
The evidence does not support the contention that Rad-
man’s civil audit was a subterfuge in a criminal investiga-
tion conducted by either the Intelligence Division or the
U. S. Attorney’s Office. Radman knew nothing of the
U. S. Attorney’s investigation, and Swanson was not
aware of the civil audit until late May, 1973 at the earliest.
In short, although defendant urges that there must be
more than mere coincidence in the fact that the audit
proceeded as it did after and during various expressions
of interest in rumors of bribery by Mr. Peskin, the record
fully supports the district court’s observation, denying the
motion to suppress:
ee
App. 19
At the time of the Radman audit, the total govern-
ment investigation, both the U.S. and the Intelligence
Division, had not yet focused on Peskin to the ex-
tended |[degree| required to demand the Miranda
warnings, under the rules, and even the more rigid
rules set down in the Dickerson case. | think I must
take note from the evidence | heard that the back-
ground of this case reveals a rather intensive investi-
gative activity of several areas of suspected wivng-
doing, and that the evidence ultimately utilized to
obtain the indictment against Mr. Peskin could almost
be characterized as an accidental by-product of other
investigations. And it does seem that in the course
of the other investigations, as random facts came to
the attention of the U. 8. Attorney, or the Intelligence
Division, and as information was exchanged, that they
more or less, put these random pieces of information
on the shelf, and that is certainly the basis for suspi-
cion. But they were probably not, or at least did not
in the minds of the government seem to be the basis
for a conclusion that they had criminal activity on
the part of an individual defendant such as to justify
an intensified investigation. When that conclusion was
reached, and the case was referred as a fraud case,
it was done at a date subsequent to the Radman in-
vestigation and the information that he had obtained.
IV. EXTORTION DEFENSE
Several claims of error relate to the so-called extortion
defense. Actually the defense so referred to was an effort
to raise a reasonable doubt as to Mr. Peskin’s intent to
influence official conduct.
Under the Travel Act the relevant definition of bribery
for this case is Ill. Rev. Stat., Ch. 38 §33-1(c), providing
that one commits bribery when
App. 20
with intent to cause any person to influence the
performance of any act related to the employment or
function of any public officer, public employee or
juror, he promises or tenders to that person any
property or personal advantage which he is not au-
thorized by law to accept... .
Defendant apparently hoped to prove that the merits
of the K & B plan were so compelling that K & B had
& virtual right to the change in zoning it sought; that the
village officials uniformly exacted money for zoning
changes; and that their demand of money of K & B for
the change it sought constituted extortion such that com-
pliance with the demand either could not be bribery as
a matter of law, or at least a jury might entertain a rea-
sonable doubt of the intent essential to bribery.
Defendant complains of limitations imposed by the dis-
trict court on his proof of the merits of the plan and the
past pattern of demands of the village officials for money,
and of an instruction limiting the defense of extortion to
one that is so overpowering as to negate criminal intent
or wilfulness.
A. Merits of the K & B Proposal
Defendant offered proof that the K & P project com-
pared favorably to similar developments approved by the
village. The comparisons were made with respect to
density per acre, school children per acre, and tax base
per child. These related to some of the bases for opposi-
tion to the project made evident at the zoning board and
trustees’ meetings.
A trial judge has discretion to keep a trial within rea-
sonable bounds by excluding evidence of marginal rele-
vance, United States v. Conrad, 448 F.2d 271, 274-75 (9th
Cir. 1971). The testimony as to statements at the meetings
et lt
—
App. 21
showed favorable expressions as well as opposition. Coun-
sel was able to elicit favorable figures during cross-exam-
ination of Stulberg. A zoning change is a decision of a
discretionary or legislative type, and the evidence in the
record made it very improbable that further evidence
would have conclusively shown that the plan was in the
community’s best interests as of the date of the zoning
hearings. Without intimating any conclusion that the
evidence would be relevant if it could have so shown, we
do conclude that in any event there was no abuse of dis-
cretion in excluding additional evidence on the plan’s
merits. United States v. Gorman, 393 F.2d 209, 212 (7th
Cir. 1968), cert. denied, 393 U.S. 832.
B. Prior Similar Payments Received by
Hoffman Estates Officials
The district court permitted defendant to ask each vil-
lage official who testified whether he had ‘‘ever received
money which came from other builders for [his] vote on
zoning matters.’’ Each one said he had.* We intimate
no conclusion as to whether defendant was entitled to this
question and answer.
The court rejected, however, an offer to prove by these
and other witnesses that there had been a pervasive and
systematic pattern of payments for zoning in Hoffman
8 Although the phrasing differed, this was the sense of the questions
put to Meyer, Sloan, and Noble. Mayor Jenkins was asked whether
he had ever received a bribe in his capacity as a village official. The
government later stipulated that if Jenkins was asked a question
similar to the questions posed to the trustees, he would respond, as
they did, affirmatively.
App. 22
Estates, the court noting, among other reasons, that there
was no showing this pattern was known to Peskin.
Permission to the defense to proceed with the offer of
proof would have prolonged the trial, and would have
introduced the details of a substantial number of unre-
lated transactions. At best for defendant, the probative
value of these payments in other instances is open to
question. As the Second Circuit recently observed: ‘‘Al-
most every bribery case involves at least some coercion
by the public official; the instances of honest men being
corrupted by ‘dirty money,’ if not nonexistent, are at least
exceedingly rare.’’ United States v. Kahn, 472 F.2d 272,
278 (2d Cir. 1973), cert. denied, 411 U.S. 982. Accordingly,
evidence that the officials previously, or on this occasion,
demanded money carries little weight in a case such as
this.
In view of these considerations and our review of the
record, we conclude there was no abuse of discretion in
the rejection of the offer of proof.
C. Instruction as to Extortion Defense
The district court instructed the jury on the relation-
ship of an official demand for money and the intent re-
quired for conviction of bribery, as follows:
If you find that the public officials named in the
indictment communicated a threat to the defendant
that unless paid they would take action as public
officials against Kaufman and Broad’s zoning pro-
posal, you may consider this in determining whether
the defendant intended to commit bribery.
- - - - and further - - - -
App. 23
In determining whether the defendant was a victim
of extortion, such as to negate his alleged criminal
intent to bribe, it is relevant, but not controlling,
whether Peskin or Jenkins first raised the question
of money. Unless the extortion is so overpowering as
to negate the criminal intent of wilfullness, it is not
a total defense to bribery charges. (We have italicized
the portion of the instruction particularly objected
to.)
There appears to be no Illinois authority to support a
proposition that any particular degree of pressure by an
official demanding money in return for the performance
of an official act is a defense to a charge of bribery in
Illinois. This being true, it seems to us that at least in
a case like the instant one where a discretionary or legis-
lative decision on zoning has been requested, the with-
holding of such action until a money demand is met could
not negate the intent (to influence the performance of an
official act) required by the Illinois bribery statute. Thus
the challenged portion of the instruction is not reversible
error. Its language was taken almost verbatim from the
observation of the court in United States v. Kahn, supra,
472 F.2d at 278.
V. EVIDENCE OF A SUBSEQUENT BRIBE
Prior to resting his case, Peskin’s attorney requested
a ruling on whether the government would be able to cross-
examine Peskin, if he took the stand, about the alleged
payment of money to a public official in return for favor-
able treatment of a K & B development two years after
the Hoffman Estates transaction. The district court ruled
that the evidence was relevant and that the government
could inquire into the incident. Rather than risk exposure
of this evidence, Peskin decided not to testify. He argues
App. 24
that the district court’s ruling was wrong as a matter of
law and under the facts of this case denied him a fair trial.
Evidence of other crimes and misconduct is relevant if
it bears upon intent, knowledge, or absence of mistake
or accident. United States v. Jones, 438 F.2d 461, 465 (7th
Cir. 1971) ; United States v. Marine, 413 F.2d 214, 216-17
(7th Cir. 1969), cert. denied, 396 U.S. 1001. See Fed. R.
Evid. 404(b), Act of January 2, 1975, Pub. L. No. 93-595.
Evidence of the subsequent payoff was admissible on that
theory absent a showing of overriding prejudice or re-
moteness. United States v. Barash, 412 F.2d 26, 30-31 (2d
Cir. 1969), cert. denied, 396 U.S. 832. We think that it was
not an abuse of discretion to rule that this incident was a
proper subject for cross examination. Cf. United States
v. Kahn, supra, 472 F.2d at 282.
VI. HAYTER AND FAUBIAN TESTIMONY
Peskin also asserts that the testimony of Virginia
Hayter and Royal Faubian was irrelevant and prejudicial.
Hayter, as president of the local school board, attended
the Trustees’ meeting at which the K & B rezoning was
debated and approved on October 30, 1968. Hayter testi-
fied to a conversation she had with Peskin during the
meeting: he asked, ‘‘what will it take to make you hap-
py?’’; and when she turned away indignantly, he stated,
‘‘this is going through.’’ This testimony can be taken to
mean that Peskin was opening the subject of a payment
to her for withdrawal of opposition and that he knew be-
fore the vote was taken that the rezoning’s passage was a
foregone conclusion. So construed, it was damaging, but
that does not make it inadmissible. Though the remarks
—
App. 25
were somewhat ambiguous, they were relevant evidence
for the jury to weigh and consider.
Faubian, a former officer of K & B, testified concerning
a meeting he had with Peskin in 1971. During the mecting
Peskin cautioned Faubian that he may be shocked by what
he was to hear but to keep it confidential. Peskin then
related that considerable funds had been paid to officials
of Hoffman Estates for favorable zoning and that the
gasoline station site, which was apparently part of the
deal, had not been transferred to the village mayor. We
fail to see how it can be argued that this damaging ad-
mission is irrelevant and reject Peskin’s claim on this
point as meritless.
Vil. MISCELLANEOUS
A. Coerced Verdict
After the jury had deliberated two and one-half days,
the trial judge informed counsel that he intended to dis-
miss the jury if it had not reached a verdict by 10:00 P.M.
At about 9:30 P.M. he indicated to counsel that he intended
to ask the jurors if they had reached a verdict or, if they
had not, whether they could within the next few minutes.
The jury was then brought into court, and the following
exchange occurred:
THE COURT: ... My first question is—and I
gather that we all know the answer to this—have
you yet reached a verdict as to all the counts in the
indictment?
FOREMAN BROWN: No.
THE COURT: You have not. All right.
App. 26
Do you think that if you were allowed to deliberate,
let’s say, another half hour—and I don’t intend to
keep you in there any longer than that—you might
reach a verdict as to all of the counts in the indict-
ment?
FOREMAN BROWN: Yes.
THE COURT: You believe that you are close to
a verdict on the complete indictment then?
FOREMAN BROWN: Possibly.
THE COURT: Now let me ask all the members
of the Jury, by a show of hands, to tell me, do you
think it would be profitable and possible to reach a
complete agreement on all counts of the indictment
if you deliberated until 10:00 o’clock? How many
would think it would be worthwhile to do that? Show
of hands?
Well, we will do that then. If you will retire again,
we will call you out again at 10:00 o’clock.
Peskin argues that the judge’s statements were coer-
cive, coercing the jurors to hurry their decision and deny-
ing him his right to a carefully considered verdict. De-
fense counsel did not object when the statements were
made, and given a timely objection the judge could have
readily cured any perceived prejudice. Therefore, unless
the statements can be said to be ‘‘plain errors or defects
affecting substantial rights,’’ Peskin has waived his com-
plaint. Fed.R.Crim.P. 52(b).
Communications between judge and jury must be han-
dled with particular care, and statements suggesting that
the jury reach a quick verdict at the expense of a thought-
ful verdict are to be deplored. The jury here had twice
been given general instructions on presumptions and bur-
dens and toid, in accordance with United States v. Silvern,
App. 27
484 I'.2d 879 (7th Cir. 1973) (en banc), that they should
not surrender honest opinions as to the weight of the evi-
dence ‘‘for the mere purpose of returning a verdict.’’
The judge’s statements, moreover, were ambiguous. He
did not say that a verdict must be reached by 10:00. Al-
though we know from his statement to counsel that he
planned to discharge the jury if it failed to reach a verdict
by 10:00, the jurors may have reasonably interpreted his
. statement that he would send them to their hotel rooms
in preparation for another day’s deliberations.
Failure of counsel to object, aside from its effect as
waiver, is probably evidence that interpretation of the
remarks as coercive would be a strained rather than a
natural interpretation. Considering these factors as well
as the length of the jury’s deliberations, we do not believe
that the judge’s comments ‘‘could have persuaded a juror
entertaining a conscientious conviction that the defen-
dant’s guilt had not been proved to surrender it as a mat-
ter of expediency.’’ Smith v. United States, 188 F.2d 969,
972 (9th Cir. 1951); Glazerman v. United States, 421 F.2d
547, 554 (10th Cir. 1970), cert. denied, 398 U.S. 928.
B. SELECTIVE ENFORCEMENT
Relying on United States v. Falk, 479 F.2d 616 (7th Cir.
1973) (en bane), Peskin next argues that he was the vic-
tim of selective enforcement of the laws and that the dis-
trict court erred in refusing to grant a hearing on this
claim. Peskin, a former member of the Illinois General
Assembly, charges that he was prosecuted because he was
politically prominent and newsworthy; that others who
participated in the bribery were not prosecuted; and that
the usual practice of the United States Attorney’s Office
~
"*® enn.
App. 28
was to prosecute the officials who received payoffs, not go-
betweens like Peskin.
A selective prosecution defense invokes the equal pro-
tection component of the Fifth Amendment’s due process
clause. Fundamental to the defense is proof that the deci-
sion to prosecute was based on impermissible considera-
tions such as race, religion, or the desire to penalize the
exercise of constitutional rights. United States v. Swanson,
509 F.2d 1205, 1208 (8th Cir. 1975); United States v.
Berrios, 501 F.2d 1207 (2d Cir. 1974). In Falk we held
that a defendant is entitled to a hearing on this issue when
he ‘‘alleges intentional purposeful discrimination and pre-
sents facts sufficient to raise a reasonable doubt about
the prosecutor’s purpose ... .’’ 479 F.2d at 620-21. In the
absence of such a showing the weighty presumption of the
legality of the prosecution remains unshaken. Mere ‘‘con-
scious exercise of some selectivity in enforcement is not
in itself a federal constitutional violation.’’ Oyler v. Boles,
368 U.38. 448, 456 (1962).
Unlike Falk where there were facts alleged which color-
ably showed that the prosecution was undertaken with
the motive to suppress dissent against the war in Vietnam,
Peskin has not alleged a prima facie entitlement to a
hearing. Assuming that the decision to indict Peskin and
press for trial was based in part on consideration of his
political prominence, this is not an impermissible basis
for selection. It makes good sense to prosecute those who
will receive the media’s attention. Publication of the pro-
ceedings may enhance the deterrent effect of the prose-
cution and maintain public faith in the precept that pub-
lic officials are not above the law.
App. 29
C. Tax Count Instruction
Peskin was charged in separate counts with income tax
evasion and making a false statement on the 1968 partner-
ship return. He was only convicted on the false statement
count. In his reply brief he argues error in the following
instruction:
A defendant’s knowledge of the contents of the tax
return may be inferred from the facts and circum-
stances of the case, and the signature at the bottom
of the tax return is prima facie evidence that the
signer knew the contents thereof, which is to say,
that unless and until outweighed by evidence in the
case which leads you to a different or contrary con-
clusion, you may find from the defendant’s signature
at the bottom of his respective return that he had
knowledge of the contents of that return.
This instruction was given on the element of willfulness
on the tax evasion count. He was acquitted on this count,
but willfulness is also an element of the false statement
count.
The phrasing may be subject to criticism since it sug-
gests that evidence must be introduced to outweigh the
inference of knowledge permissible from the signature.
The instructions on the false statement count, however,
indicated that carelessness or inadvertence was a defense.
Reasonable doubt instructions were also given. Taking the
instructions as a whole we find no likelihood that the jury
felt compelled to infer knowledge from the signature, and
no reversible error. See also United States v. Bass, 425
F.2d 161, 163 (7th Cir. 1970); United States v. Harper,
458 F.2d 891, 894 (7th Cir. 1971), cert. denied, 406 U.S. 930.
App. 30
D. Sentencing Disparity
Lastly, Peskin contends that the disparity between his
sentence and the sentences received by those who pleaded
guilty indicated that he was penalized for exercising his
right to a jury trial. Peskin received three years in prison
on each count, the sentences to run concurrently. Other
participants in the bribery transaction received sentences
ranging from six months to two years.
A sentence which reflects punishment for a defendant’s
availing himself of his right to trial will be set aside,
United States v. Wiley, 278 F.2d 500 (7th Cir. 1960), but
a disparity between a sentence imposed on a defendant
who pleads guilty and on another who is convicted after
trial is not, standing alone, enough to establish that the
latter has been punished for exercising a constitutional
right. United States v. Wilson, 506 F.2d 1252, 1259-60 (7th
Cir. 1974).
The trial judge commented at the time of sentencing
on factors which he felt spelled out greater culpability for
Mr. Peskin than his codefendants. We have no reason to
find an abuse of discretion.
The judgment appealed from is affirmed.
A true Copy:
Teste:
EEE EEE EE EEE EEE EE EEE EEE REELED EERE
Clerk of the United States Court of
Appeals for the Seventh Circuit
App. 31
APPENDIX 2
December 10, 1975
Before
Hon. Tom C. Clark, Associate Justice*
Hon. Thonias E. Fairchild, Chief Judge
Hon. Robert A. Sprecher, Circuit Judge
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
No. 74-1450 vs.
BERNARD M. PESKIN,
Defendant-Appellant.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division
No. 73 CR 765
Bernard M: Decker, Judge.
This cause came on to be heard on the transcript of the
record from the United States District Court for the
Northern District of Illinois, Eastern Division, and was
argued by counsel.
On consideration whereof, it is ordered and adjudged
by this court that the judgment of the said District Court
in this cause appealed from be, and the same is hereby,
Affirmed, in accordance with the opinion of this Court
filed this date.
* Associate Justice Tom C. Clark (Retired) of the Supreme Court
of the United States is sitting by designation.
App. 32
APPENDIX 3
March 8, 1976.
Before
Hon. Tom C. Clark, Associate Justice*
Hon. Thomas E. Fairchild, Chief Judge
Hon. Robert A. Sprecher, Circuit Judge
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
No. 74-1450 vs.
BERNARD M. PESKIN,
Defendant-Appellant.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division
(CV 4758)
On consideration of the petition for rehearing and sug-
gestion that it be reheard en banc filed in the above-en-
titled cause, no judge in active service having requested a
vote thereon, nor any judge having voted to grant the
suggestion, and all of the members of the panel having
voted to deny a rehearing,
It Is Ordered that the petition for a rehearing in the
above-entitled cause be, and the same is hereby, Denied.
Note: Judge Philip W. Tone did not participate in the
consideration of the suggestion of rehearing en
banc.
* Associate Justice Tom C. Clark of the Supreme Court of the
United States (Retired) is sitting by designation.
App. 33
APPENDIX 4
SUPREME COURT OF THE UNITED STATES
No. A-855
BERNARD M. PESKIN,
Petitioner
V.
UNITED STATES
ORDER EXTENDING TIME TO FILE
PETITION FOR WRIT OF CERTIORARI
Upon Consiweration of the application of counsel for
petitioner, i
Ir Is Orverep that the time for filing of petition for writ
of certiorari in the above-entitled cause be, and the same is
hereby, extended to and including April 21, 1976.
/8S/ John Paul Stevens
Associate Justice of the Supreme
Court of the United States
Dated this 29th
day of March, 1976
App. 34
APPENDIX 5
THE EVIDENCE ADDUCED ON THE MOTION TO
SUPPRESS EVIDENCE
The hearing on the motion to suppress evidence was
based on Peskin’s pre-trial petition and supplemental pe-
tition which alleged in substance that he was audited by the
Internal Revenue Service at a time when criminal investi-
gations were being conducted of him and his law firm
(Deutsch, Peskin & Levy) by the United States Attorney
and the IRS Intelligence Division; that Peskin voluntarily
supplied a great volume of information to Internal Reve-
nue Agent Melvin Radman because he was unaware of the
pending criminal investigation; that he was not warned by
Radman that he was the target of investigations, nor other-
wise admonished about his rights, contrary to United States
v. Dickerson, 413 F.2d 1111 (7th Cir. 1969) ; and that he was
affirmatively misled by Agent Radman into believing that
only a civil audit was involved, whereas the real purpose
of the audit was to obtain evidence for use against Peskin
in the pending criminal investigations. (R. 90-91; 101.)
The First Audit By Agent Hein
In the summer of 1972, Internal Revenue Agent Richard
Hein was assigned to audit the 1970 partnership return
of the law firm of Deutsch, Peskin and Levy. Agent Hein
was a trainee at that time, so he had an experienced agent
supervising him who reviewed the audit when he finished
it about September, 1972. Hein prepared a written report
directing several minor adjustments on the law firm’s
business expenses. Hein discussed these adjustments with
App. 35
the law firm’s public accountant, Joseph Adelman, who
agreed to the changes and signed the document listing
them. (Hein, Tr. 6-12; Adelman, Tr. 439-40; DX 1.)*
The Investigation By The United States Attorney
On September 7, 1972, about the time Hein was conclud-
ing his audit, Assistant United States Attorney Anton R.
Valukas sent a letter to the Director of the Internal Reve-
nue Service Center in Kansas City asking him to send, as
quickly as possible, any intelligence information gathered
on Peskin. Valukas stated in the letter that Peskin was un-
der investigation and that the Grand Jury was in the
process of hearing testimony relating to the investigation.
(Valukas, Tr. 418-19; DX 11.)
On August 23 and September 8, 1972, Valukas had
grand jury subpoenas served on K&B in order to check
on allegations concerning Peskin’s involvement in bribery
of public officials in Hoffman Estates. (Valukas, Tr. 645.)
The subpoenas call for Deutsch & Peskin bills to K&B
for services relating to Hoffman Estates zoning, letters
from Peskin to K&B, and checks from K&B to Peskin
in payment of the Hoffman Estates bills (DX 9-9D, 47-
47C).
Meeting Of Valukas And Internal Revenue Service
Special Agent And Subsequent Events
Sometime in September or early October, 1972, Valukas
had lunch with Anders Flodin, a Special Agent in the In-
* The transcript referred to in the sections relating to the Motion
to Suppress is a separate set of six volumes. The Court Reporter
numbered the pages of the transcript relating to the hearing on the
Motion consecutively, with the part held after the trial continuing
in consecutive order. The Court Reporter started numbering the
pages over again at the beginning of the trial.
App. 36
telligence Division of the Internal Revenue Service. (Flo-
din, Tr. 52; Valukas, Tr. 421-22.) At this meeting, Valukas
told Flodin about an allegation that Peskin had received
a $100,000 fee from K&B for zoning work in Hoffman
Estates; that he had seen the billing statement, which ap-
peared to him to be very short for such a substantial sum;
and that there was an allegation that a gas station site had
been conveyed to Peskin by K&B for transfer to the Mayor
of Hoffman Estates. (Flodin, Tr. 51-52; Valukas, Tr. 422-
423.) Valukas had received this information either from
Royal Faubian, an officer of K&B, or Thomas Foran,
K&B’s lawyer. (Valukas, Tr. 420.)
Agent Flodin was familiar with the name Peskin because
he had a file containing the 1968 and 1969 partnership tax
returns of the Deutsch & Peskin law firm, which Flodin had
requested in November, 1971. (Flodin, Tr. 41-42, 44.)
Subsequent to this meeting, Valukas gave Flodin a
variety of documents relating to the bribery allegation
concerning Peskin. (Flodin, Tr. 63-71; Valukas, Tr. 424-
426.) Among these were numerous pages of checks, in-
voices and correspondence relating to services performed
by Deutsch & Peskin for K&B, including documents specifi-
eally relating to the 1968-69 Hoffman Estates zoning mat-
ter which formed the basis for the indictment and which
the government introduced at the trial. (DX 8, 9, to 9D.)
On October 5 and October 26, 1972, Royal Faubian, for-
mer President of the Illinois division of K&B, was in-
terviewed by FBI agents and he signed a statement im-
plieating Peskin in a bribery scheme in the Village of
Hoffman Estates. (DX 10, 10-A.) Sometime before the
end of 1972, Valukas sent copies of statements from these
interviews to Flodin. (Flodin, Tr. 71.)
—.
App. 37
Special Agent Flodin’s Investigation
Meanwhile, Special Agent Flodin had begun an inves-
tigation based upon the information which Valukas had
related to him at their luncheon meeting. Flodin had the
Deutsch & Peskin partnership tax returns for 1968 and
1969, and he filled out the Internal Revenue form request-
ing the firm’s 1970 and 1971 returns. (Flodin, Tr. 74-75;
DX 7,7A.) The form was returned indicating that Revenue
Agent Hein was auditing the 1970 partnership return, and
had the file copy of the return. (Flodin, Tr. 76.)
On October 27, 1972, Flodin went from his office at 17 N.
Dearborn to Hein’s office at 64th and Halsted, Chicago,
to talk with him about Hein’s audit. (Flodin, Tr. 39, 50;
Hein, Tr. 18.) Hein testified that Flodin asked him if he
recalled seeing a $100,000 fee from a builder, he thought
K&B, on the partnership’s books. Flodin told Hein he did
not think the law firm had reported the fee. (Hein, Tr. 19.)
Flodin took the 1970 partnership return, Hein’s audit
report, and other papers back with him to his office. (Flo-
din, Tr. 50.) Flodin claimed that he looked over the docu-
ments and decided that they had no intelligence potential.
He said that his full investigation of whether the law firm
had reported the $100,000 fee consisted of looking at the
1969 law firm partnership return (which he had before he
went to see Hein) and seeing that there were reported fees
in excess of $200,000. (Flodin, Tr. 113-114.)
Instead of sending the documents back to Hein’s divi-
sion at that point, Flodin went to see Paul Berwick, a
former Special Agent with the Intelligence Division who
was then in the Civil Division. Berwick’s men had pre-
viously worked with Flodin and other Intelligence Agents
as cooperating agents in criminal investigations. (Flodin,
App. 38
Tr. 85-86.) Flodin turned over the documents to Berwick
at that meeting. (Flodin, Tr. 97.) During the meeting with
Flodin, Berwick called in Agent Melvin Radman, an experi-
enced member of Berwick’s group, and told Radman to do
an audit on the 1969, 1970 and 1971 returns of both the
Deutsch & Peskin partnership and the individual partners.
(Flodin, Tr. 80-81; Berwick, Tr. 316-18; Radman, Tr. 160-
61, 174.) Radman was shown checks from K&B to Deutsch
& Peskin, and billings relating to the $100,000 fee and the
gas station site which the government had been informed
Peskin transferred to the Mayor. (Radman, Tr. 161, 163.)
Berwick then arranged to have the case transferred to
his group, and on November 7, 1972, at his supervisor’s
request, Agent Hein signed the transfer form (Berwick,
Tr. 309: Hein, Tr. 25; DX 2.) Hein testified that his super-
visor ‘‘probably just told me that the Intelligence Division
wanted the return.’”’ (Tr. 25.) The supervisor, Mr. Siliger,
could recall nothing of the incident. (Tr. 300-04.)
In addition to gathering documents and talking with
Hein and Berwick about Peskin, Flodin had Special Agent
Michael Sarton of the Intelligence Division check on the
title to the gas station site. Sarton conducted a title search
which was inconclusive. (Flodin, Tr. 117: Sarton, Tr. 355-
358; DX 51.)
Special Agent Neuhauser’s Investigation
Meanwhile, another group within the Intelligence Divi-
sion of the Internal Revenue Service had become involved
in the investigation stemming from the Peskin bribery
allegations. In September or October, 1972, Assistant
United States Attorney Valukas had a telephone conversa-
tion with Special Agent Paul Neuhauser, a Group Manager
in the Intelligence Division. Valukas told Neuhauser he
= a
App. 39
had learned that $100,000 in checks had been issued by K&B
to the law firm of Deutsch & Peskin, and that he was
writing IRS for approval to secure the relevant tax re-
turns. (Valukas, Tr. 538-539.)
After this conversation, Neuhauser attempted to pro-
cure the tax returns. He instructed Special Agent Sher-
bula, of his group, to request the returns of Deutsch, Peskin
& Levy, both partnership and individual, for the years
1968 through 1972. In the process of requesting the re-
turns, they discovered that Peskin’s personal 1968 and
1969 returns were charged out to another group in the In-
telligence Division, namely, Agent Popovit’s group.* Neu-
hauser assembled the tax returns, read them over in rela-
tion to the knowledge he had about the $100,000 fee, and
put them in a file. (Neuhauser, Tr. 541, 547-49.)
Neuhauser then called Valukas and said he would like
to see the checks and invoices Valukas had mentioned.
Valukas told Neuhauser he had given them to Special
Agent Flodin. Neuhauser went to see Flodin and looked
at the checks and invoices. Neuhauser asked Flodin what
he planned to do with these and Flodin replied that he was
going to give them to the Audit Division. (Neuhauser, Tr.
550-52.)
Neuhauser testified that he gave the tax returns he had
accumulated to Special Agent Sherbula to file. When this
file was produced at the suppression hearing, Neuhauser
read the caption which had been written on the file folder
*It was stipulated that Agent Popovits had no recollection of
seeing Peskin’s 1968 and 1969 returns and that Agent Starr, who
was in Popovits’ group, made a request in November of 1970 for
several hundred tax returns of public officials in Cook County, in-
cluding Peskin’s, for a reason unrelated to this case. (Tr. 605.)
App. 40
by Sherbula—‘‘Deutsch & Peskin—not contacted by LD.
Currently being audited. Attorneys for K&B.’’ (Neu-
hauser, Tr. 570; Sherbula, Tr. 621; DX 102.)
Radman’s Audit
After his meeting with Flodin and Berwick, Agent Rad-
man began work on his audit assignment in November or
December, 1972. (Radman, Tr. 173.) He called the law
firm of Deutsch & Peskin and spoke with Ear] Deutsch,
telling him that he had been assigned to audit the partner-
ship and individual returns for 1969, 1970 and 1971.
Deutsch told Radman that the 1970 return had already
been audited and Radman replied that there were some
matters that needed further examination. (Radman, Tr.
174.)
On January 4, 1973, Radman met with the law firm’s ae-
countant, Joseph Adelman. (Radman, Tr. 173.) Adelman
also pointed out to Radman that the 1970 return had been
audited and asked why it was necessary that an additional
audit be conducted. Radman recalled telling Adelman that
the partners’ capital accounts were in negative figures,
which could represent a taxable event to each of the part-
ners concerned, and that he wanted to look into this mat-
ter, ‘‘along with other items that might have a ramification
with respect to that consideration.’’ (Radman, Tr. 200-
01.) Radman said nothing to Adelman about the $100,000
fee or the gas station site which Flodin and Berwick had
discussed with Radman, or about the invoices and checks
relating to these items which had been given to Radman.
(Radman, Tr. 167.)
Adelman testified that he told Radman he had signed
an agreement resulting from Hein’s audit just a few
months earlier, that he thought Hein had done well in his
a ——
es
App. 41
audit, and that he was disturbed at being put through all
that work again. (Adelman, ‘:'r. 440-41.) Radman told
Adelman he needed consents to extend the statute of limi-
tations on the tax returns and Adelman obtained them
for him. (Adelman, Tr. 441.)
Radman admitted that he was familiar with §7605B
of the Internal Revenue Code which states that only one
inspection of a taxpayer’s books of account shall be made
for each taxable year unless the taxpayer requests other-
wise or unless the Secretary or his delegate, after investi-
gation, notifies the taxpayer in writing that an additional
inspection is necessary. (Radman, Tr. 202-03.) Radman
said that, to his knowledge, neither the law firm nor the
individuals had received such notification. (Radman, Tr.
203.)
Because the law firm’s offices were being remodeled, the
records from Deutsch & Peskin were brought to Adelman’s
office and Radman worked there. (Adelman, Tr. 441-42.)
Adelman, a certified public accountant for over 30 years
who had worked with IRS agents on hundreds of audits ©
of his clients’ tax returns (Adelman, Tr. 438-39), testified
that Radman spent much more time than should have been
necessary for the type of audit Radman said he was con-
ducting. Adelman said that ordinarily he would spend an
average of two to five days with an agent on that type of
audit. (Adelman, Tr. 443-44.) Radman’s time records
showed that he spent at least 400 hours on this audit
through June, 1973. (DX 48.) In addition, Janie Griggs,
an IRS employee, testified that she spent two months
working full time with Radman on this matter and that
some others in the office also worked on it for him.
(Griggs, Tr. 403, 406, 410-12.)
App. 42
David Jacobson, a certified public accountant with Adel-
man for about 25 years (Jacobson, Tr. 466), who did most
of the accounting work for the Deutsch & Peskin firm
(Adelman, Tr. 442), testified that Radman submitted
voluminous written questions to him and made an inde-
pendent recap of all transactions, charges and credits for
the entire period, which, in his years of experience, Jacob-
son had never seen an Internal Revenue agent do be-
fore. (Jacobson, Tr. 476, 478-79.) Jacobson testified that
Radman requested and was given access to the firm’s
general ledger, all docket shects, billings and accounts
receivable, which included matters going back a number
of years, including the years specified in the indictment.
(Jacobson, Tr. 486-88); see also D. Aff. to Mot. to Sup.
at 2, R. 90.)
Eventually it became such a problem to have Racman
working in the accountants’ office that Adelman asked him
to finish the audit back at the law firm’s office. However,
because the law firm was remodeling and there was no
room for him there, Radman took the firm’s books and
records to his own office and worked on them there.
(Adelman, Tr. 448.)
Agent Radman’s Contacts With Special Agent Flodin
Between November and February, during the time that
Radman was conducting his audit, he had several conver-
sations with Special Agent Flodin about the audit. (Flodin,
Tr. 88-89.) Though described as ‘‘chance meetings,’’ Flo-
din testified that he was not working on any other matters
with Radman and the only subject they discussed was
the Deutsch & Peskin audit. (Flodin, Tr. 89-90.) Flodin
said that at one meeting, Radman told him that the $100,000
fee had been reported, that at another meeting Radman
App. 43
asked Flodin whether he recognized the names of some
people to whom the law firm had paid fees (Radman
showed Flodin a list of names), and at some of the meet-
ings Radman showed him documents. (Flodin, Tr. 92,
94,95.) Radman admitted he had conversations with Flodin
about the audit, but denied showing him a list of names or
fees or any other documents. (Radman, Tr. 223.)
Progress of the United States Attorney’s Investigation
Meanwhile, prior to the end of January, 1973, Mr. Valu-
kas had learned that another K&B employee, Maurice
Sanderman, was claiming that Peskin was involved in a
pay-off in Hoffman Estates. (Valukas, Tr. 648; DX 110
at 2.) At that point, Valukas had information from at least
three sources (Valukas, Tr. 650) concerning Peskin’s al-
leged involvement in the Hoffman Estates payment to vil-
lage officials. These were the statements of Royal Faubian
to the FBI in October, 1972 (DX 10, 10a), the documents
subpoenaed from K&B in August and September, 1972
(Valukas, Tr. 645),.and the statements from Sanderman
by the erd of January, 1973. (DX 110.)
On February 15, 1973, Valukas subpoenaed Stulberg
before the Grand Jury. Stulberg took the Fifth Amend-
ment. The only subject Valukas asked Stulberg about re-
lated to the allegations concerning Peskin’s involvement in
bribery in Hoffman Estates. (Valukas, Tr. 649.)
Special Agent Flodin testified that he received a tele-
phone call from Valukas in February, 1973, or possibly
later, in which Valukas asked Flodin what had happened
to the documents he gave Flodin concerning Peskin. Flo-
din testified that he told Valukas he thought the matter was
under audit; Valukas asked Flodin to check on the status.
(Flodin, Tr. 101.) Flodin then called Radman who told
App. 44
Flodin the audit was in abeyance then because of another
matter of greater priority; Flodin then called Valukas
back and advised him of this. (Flodin, Tr. 101.)
Valukas denied calling Flodin to ask for the materials
he gave Flodin, but he did recall a conversation in February
or March, 1973, with some Special Agent who told Valukas
the matter was under audit. (Valukas, Tr. 428.) Valukas
said he might or might not have learned at that time that
Peskin individually was under audit, but he was aware that
the partnership was under audit and that Peskin was a
partner of the firm. (Valukas, Tr. 435.)
Special Agent Swanson’s Investigation
On April 3, 1973, IRS Special Agent James Swanson
was in Assistant U.S. Attorney Valukas’ office; Swanson
took a telephone call from an anonymous caller. (Swan-
son, Tr. 368; DX 52.) The caller corroborated the infor-
mation which Valukas had already received from the three
other sources concerning Peskin’s alleged involvement in
payments to Hoffman Estates officials. Valukas told Swan-
son he had previously received similar information from
other sources. (Swanson, Tr. 375.)
Swanson reported this telephone call to his supervisor,
Paul Neuhauser. (Neuhauser, Tr. 576.) Neuhauser is the
Intelligence Division Group Manager whom Valukas, in
September or October, 1972, had told about the $100,000
fee from K&B to Peskin’s law firm and who had assembled
the Peskin tax returns. (Neuhauser, Tr. 539.)
After the April 3, 1973 anonymous call, Neuhauser told
Swanson about his previous conversation with Valukas
concerning the $100,000 payment by K&B to Deutsch and
Peskin, and he assigned Swanson to investigate the mat-
ter. (Neuhauser, Tr. 576-77.) Upon requesting Peskin’s
App. 45
1970 and 1971 returns, Neuhauser said he was informed,
in April, 1973, that Radman was auditing them. (Neu-
hauser, Tr. 553; Berwick, Tr. 327.)
Swanson conducted the investigation concerning Peskin
under Neuhauser’s supervision and direction, and Swan-
son kept Neuhauser advised. (Neuhauser, Tr. 579.) In
April, 1973, Swanson mentioned to Neuhauser that the
alleged bribe payments were funneled by Stulberg through
a law firm or through Peskin to the trustees and village
president, and that the amount involved was $50,000 to
$70,000, plus a piece of property. (Neuhauser, Tr. 580.)
In April or early May, 1973, Swanson reported to Neu-
hauser that K&B’s zoning request had been voted down
and then two weeks later approved, and that he had identi-
fied some of the trustees who changed their votes. (Neu-
hauser, Tr. 581.)
Although Valukas and Neuhauser had specific knowledge
of the Radman audit at least by April, 1973, (Neuhauser,
Tr. 553; Berwick, Tr. 327; Valukas, Tr. 428), Swanson
stated that he did not learn of it until May or early June,
at which time he was told either by Valukas or Flodin.
(Swanson, Tr. 377-78.) On June 5, 1973, Swanson went
to Radman, probably presented his credentials (Swan-
son, Tr. 381), and asked him for the file concerning the
Hoffman Estates-K&B rezoning, which had been given
to Radman by Berwick and Flodin in November, 1972.
(Radman, Tr. 230, 232.) Radman testified that he had
never seen Swanson before and did not remember whether
he looked at his identification, but when Swanson asked
for the Peskin file, ‘‘I said, sure, so I went and I gave it
to him.’’ (Radman, Tr. 230.)
App. 46
Also in June, 1973, Neuhauser testified that some of the
cases were formally opened on the Trustees in Hoffman
Estates (Neuhauser, Tr. 560), and Swanson spoke with
Stulberg. (Swanson, Tr. 416.)
On June 28, 1973, Radman found a note on his desk from
Berwick, his supervisor, dated June 27, telling him not to
contact Peskin or Deutsch until he heard from Berwick.
(Radman, Tr. 236.) After that, Radman continued to
work on the matter, but did not go to the law firm. (Rad-
man, Tr. 242.)
Radman testified that he was asked to conduct a review
of the 1968 partnership and individual returns from ma-
terials given him by Swanson. (Radman, Tr. 246.) Rad-
man said he was asked to write up a joint report of 1968
and 1969, which he submitted in October, 1973. (Radman,
Tr. 248.) There were some changes relating to the 1968
returns, which Radman had not been asked to audit, but
no changes at all for 1969. (Radman, Tr. 213-14.) Also,
Radman said that he did not file any report concerning
the 1970 and 1971 returns which he audited because, de-
spite his extraordinarily lengthy and detailed audit, he
found no basis for changes.*
According to Swanson, on September 22, 1973, at a meet-
ing at the office of the United States Attorney, an agree-
ment was made with Earl Deutsch, Peskin’s former part-
ner who received immunity for his testimony (DX 115,
116), which gave the government the basis for opening a
tax case against Peskin; or, to put it more precisely, in
the words of Assistant United States Attorney Fahner who
phrased the question which Swanson answered in the
* During the trial Peskin received the bill for the changes made
by Hein in the original audit. (Tr. 346.)
App. 47
affirmative, they now could ‘‘make the tax case in prosecu-
torial terms.’’ (Swanson, Tr. 414-15.)
Three days later, on September 25, 1973, the Internal
Revenue Service made it official—it formally opened a file
on Bernard Peskin. (Swanson, Tr. 414.) It is on this
final act that the government has based its claim that it
complied with Dickerson.
On October 1, 1973, Defendant Peskin was interviewed
by Special Agents Swanson and Langell and, for the first
time, was advised of his constitutional rights under Miran-
da v. Arizona, 384 U.S. 436 (1966), and United States v.
Dickerson, 413 F.2d 1111 (7th Cir. 1969). (D. Mot. to Sup.
at 4, Aff. at 2-3, R. 90.)
The Trial Court’s Ruling
Owing to the absence of one of the witnesses, the evi-
dence on the motion to suppress was not completed until
after the trial was finished. By then, the trial judge was
fully advised that the investigations of Peskin which were
being conducted late in 1972—before Radman started his
audit—by the grand jury, the United States Attorney and
two groups of IRS Special Agents, involved the very
same charges which formed the basis for the indictment.
At the close of the evidence prior to trial, the trial court
denied Peskin’s motion to suppress, stating that the Dicker-
son case created a rebuttable presumption that the date of
the transfer of a case to the Intelligence Division was the
point at which the case became criminal. The court con-
cluded that at the time of the Radman audit, the govern-
ment investigation by both the United States Attorney’s
office and the Intelligence Division had not focused on
Peskin to the point where Miranda warnings were required.
However, the trial judge noted that the evidence revealed
‘‘a rather intensive investigative activity of several areas
App. 48
of suspected wrongdoing, and that the evidence ultimately
utilized to obtain the indictment against Mr. Peskin could
almost be characterized as an accidental by-product of
other investigations.’’ (Tr. 528-29.) This was before the
additional two days of hearings held after the trial, when
the trial judge learned for the first time about Special
Agent Neuhauser’s involvement.
At the conclusion of the later hearings, after the trial
was over, the trial judge indicated he agreed with the
government’s position that the eliciting of information
from a taxpayer’s records in a civil audit was permissible
without Miranda warnings if the IRS agent proceeded in
the good faith belief that no criminal investigation was
underway. The court rejected the defense position that
the agent was chargeable with the knowledge of any other
Intelligence Division activity relating to the defendant.
(Tr. 660.)
Ruling Of The Court Of Appeals
The Court of Appeals held that the evidence did not
support the contention that Radman’s civil audit was a
subterfuge in a criminal investigation conducted by either
the Intelligence Division or the United States Attorney’s
office. The Court concluded that petitioner was not en-
titled to Miranda warnings under the Dickerson case, and
added :
‘‘Referring to what Dickerson found to be the crucial
step as ‘the transfer of the case to the Intelligence
Division’ may be somewhat misleading. It is perhaps
more accurate to refer to the critical event as the
formal opening of the Intelligence Division criminal
case.’’
App. 49
APPENDIX 6
DEFENSE INSTRUCTIONS RELATING TO
EXTORTION WHICH WERE REFUSED
BY THE TRIAL COURT
Defendant’s Instruction 28:
‘If you find that the defendant gave money to Hoff-
man I'states public officials solely in order to obtain
a fair hearing for Kaufman & Broad on a petition for
zoning change, you should consider this on the ques-
tion of whether defendant intended to influence the
performance of the acts of the village officials.’’
Defendant’s Instruction 32:
‘*Evidence has been introduced that defendant Bern-
ard Peskin reported to Mr. Stulberg and Mr. Deutsch
that village officials of Hoffman Estates demanded
that they be paid money as a condition to their ap-
proving Kaufman & Broad’s petition for change in
zoning, and threatened that they would reject Kauf-
man & Broad’s petition if their demands for money
were not met.
‘*If you believe that Mr. Peskin formed no purpose of
offering any money or thing of value to the Hoffman
Estates public officials, and acted only because he be-
lieved that the officials intended to carry out their
threat unless their demands were satisfied, then the
essential element of intent is not present, and you
should find the Defendant not guilty of Counts 3
through 9 of the indictment.’’
Defendant’s Instruction 33:
‘‘Under Illinois law, a person commits the crime of
intimidation when, with intent to cause another to per-
form or to omit the performance of any act, he com-
municates to another a threat to perform without law-
ful authority any one of the following acts:
App. 50
‘(6) Take action as a public official against any
one or any thing, or withhold official action, or
cause such action or withholding .. .’ ch. 38, §12-6,
Ill. Rev. Stat. (1973).
‘*Tf you find that the public officials named in the in-
dictment intimidated defendant by communicating a
threat to him to take or withhold official action against
the defendant’s client, Kaufman & Broad, Ince., then
you should consider this as bearing on the intent of
the defendant to commit bribery.’’
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.