Opposition — Larson v. United States

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| Suvreme Court, U. & |

* FILED |

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No. 79-1310 4 ARR Ad 1980

TM, Ty CLERK

In the Supreme Court of the United States

OCTOBER TERM, 1979

RUSSELL L. LARSON, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

WapE H. McCrer, Jr.

Solicitor General

M. CARR FERGUSON

Assistant Attorney General

ROBERT E. LINDSAY

R. BRUCE JOHNSON

Attorneys

Department of Justice

Washington, D.C. 20530

oo

i

In the Supreme Court of the Hnited States

OCTOBER TERM, 1979

No. 79-1310

RUSSELL L. LARSON, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. A-I to

A-18) is reported at 612 F. 2d 1301.

JURISDICTION

The judgment of the court of appeals was entered on

January 4, 1980. A petition for rehearing was denied on

January 28, 1980. The petition for a writ of certiorari was

filed on February 25, 1980. The jurisdiction of this Court

is invoked under 28 U.S.C. 1254(1).

QUESTIONS PRESENTED

|. Whether the district court erred in refusing to

require the government to reveal the identity of a

confidential informant.

(1)

2. Whether the district court correctly found that a civil

audit by the Internal Revenue Service was not a

subterfuge designed to mislead petitioner into cooperating

with the government in a criminal investigation.

3. Whether the district court correctly found that

petitioner failed to present evidence showing that he was

selected for prosecution upon a constitutionally imper-

missible basis.

4. Whether the district court erred in imposing sentence

by considering petitioner's commission of perjury at trial.

5. Whether the district court erred in withholding from

petitioner the sentence recommendation contained in the

presentence report.

STATEMENT

Following a jury trial in the United States District

Court for the District of Minnesota. petitioner was

convicted on three counts of willfully evading income

taxes for the years 1972, 1973, and 1974, in violation of 26

U.S.C. 7201, and on three counts of subscribing to

materially false corporate income tax returns for the same

years, in violation of 26 U.S.C. 7206(1). The district court

sentenced petitioner to concurrent two-year prison terms

on each count. The court of appeals affirmed (Pet. App.

A-I to A-18).

1. Prior to trial, petitioner moved for disclosure of the

identity of a confidential government informant. moved

to dismiss the indictment on grounds of selective.

prosecution, and moved to suppress certain statements

and evidence. The district court denied petitioner’s motion

to disclose the identity of the informant and also declined

to hold an evidentiary hearing on the issue of selective

ee eee —

prosecution. However, the district court granted

petitioner's motion for a hearing on his claim that he had

been deceived into divulging certain evidence by represen-

tations of IRS agents that their investigation of his

activities was wholly civil in nature.

The evidence adduced at the suppression hearing

showed that in February 1975 an unidentified informant

contacted the Intelligence Division of the Internal Revenue

Service concerning a possible income tax evasion scheme

at Polar Chevrolet, Inc. Petitioner was majority

stockholder and president of that company. The In-

telligence Division referred the matter to the Audit

Division pursuant to customary agency procedures (Pet.

App. A-3 to A-5). In September 1975, the case was

assigned to Agent Gary Koosman to perform a civil audit

of the 1972, 1973 and 1974 tax returns of petitioner and

Polar Chevrolet. Koosman’s only contact with the

Intelligence Division during this period was a conversa-

tion with the special agent who had spoken with the

informant concerning the substance of the informant’s tip.

On November 25, 1975, Koosman determined that

petitioner's and Polar’s tax returns were potentially

fraudulent. He then referred the case to the Intelligence

Division for criminal investigation. Petitioner was advised

of the criminal nature of the investigation and of his

Miranda rights on April 22, 1976 (Pet. App. A-5 to A-6).

After the suppression hearing, the district court

suppressed all statements and documents obtained from

petitioner after November 25. 1975 (when Agent

Koosman determined the tax returns were potentially

fraudulent) and before April 22, 1976 (when petitioner

was informed of his Miranda rights) (Pet. App. A-6. A-8).

2. The evidence at trial disclosed that, beginning in

1971 and continuing through 1974, petitioner engaged in a

kickback scheme along with Rodger Voge!, an advertising

executive who provided services to Polar Chevrolet. Vogel

submitted two invoices for advertising services rendered

to Polar, one invoice reflecting the actual charge and

another reflecting an inflated charge. The higher invoice

was paid by Polar. Vogel then wrote a check to petitioner

representing the difference between the two invoices.

Petitioner received these amounts as unreported personal

income and reported the false inflated charges as business

expenses on Polar’s ‘corporate tax returns. During this

period, petitioner also diverted to his personal use various

checks made payable to Polar Chevrolet for truck leases,

automotive parts repayments and refunds (Pet. App. A-4,

A-6 to A-7).

The kickback and check diversion scheme resulted,

during taxable years 1972 through 1974, in underreport-

ing of Polar Chevrolet’s corporate income by $57.434

and underreporting of petitioner's personal income by

$44,191 (Pet. App. A-7).

ARGUMENT

1. Petitioner contends (Pet. 30-33) that he was

prejudiced by the government's refusal to disclose the

identity of its confidential informant. However. as both

courts below correctly found (Pet. App. A-9 to A-10). the

identity of the informant was not relevant to petitioner's

defense at trial. Petitioner's interest in learning the

identity of the informant did not outweigh the interest of

the government in preserving the confidentiality of the

informant’s identity. See Roviaro v. United States, 353

U.S. 53, 62 (1957). See also McCray v. Illinois. 386 U.S.

300 (1967).

The informant here involved simply communicated his

belief that a kickback scheme had occurred at Polar

Chevrolet. Petitioner did not claim that the tipster was a

participant in the crime or that he knew facts about the

crime that were unknown to the defense. Under these

circumstances, the identity of the informant need not be

divulged. See, e.g., United States v. Alonzo, 57\ F. 2d

1384, 1387 (Sth Cir.), cert. denied, 439 U.S. 847 (1978);

Simpson v. Kreiger, 565 F. 2d 390, 391-392 (6th Cir.

1977), cert. denied, 435 U.S. 946 (1978); United States v.

Russ, 362 F. 2d 843 (2d Cir.), cert. denied, 385 U.S. 923

(1966).

The crime charged against petitioner was proven by the

testimony of witnesses who were known to petitioner and

who were extensively cross-examined by his counsel at

trial. Under these circumstances, withholding the identity

of the informant could not have prejudiced petitioner, and

the district court did not abuse its discretion in denying

the disclosure motion. !

2. Petitioner also argues (Pet. 26-30) that the civil audit

was a subterfuge and that a criminal investigation was

being conducted by the Internal Revenue Service from the

beginning. On this basis, he contends that he was misled

by the investigating agents and that his statements and the

documents he produced should have been suppressed.

'The cases cited by petitioner do not support his contrary

contention. In United States v. Gocke, 507 F. 2d 820, 826 (8th Cir.

1974), the court recognized that the identity of a mere tipster need not

be divulged. in United States v. Barnes, 486 F. 2d 776 (&th Cir. 1973).

in contrast. the court required disclosure of the identity of an

informant who possessed material information essential to. the

defense.

However, as both courts below specifically found. the

audit in question was a civil audit at least until November

25, 1975, when the investigating agent determined that

there was a possibility of a criminal violation (Pet. App.

A-I1 to A-12).

Tips received from informants are initially evaluated by

the Intelligence Division of the Internal Revenue Service

(Suppression Hearing Tr. 174). Such tips are ordinarily

transmitted to the Audit Division for a civil audit. If the

civil audit discloses evidence of fraud, the case is referred

back to the Intelligence Division and a_ criminal

investigation is commenced (id. at 172-174). This

procedure has been approved repeatedly by the lower

courts. See, e.g., Truitt v. Lenahan, 529 . 2d 230 (6th

Cir.), cert. denied, 427 U.S. 912 (1976): United States vy.

Leonard, 524 F. 2d 1076 (2d Cir. 1975). cert. denied. 425

U.S. 958 (1976); United States v. Davis, 424 k. 2d 1241

(Sth Cir.), cert. denied, 400 U.S. 821 (1970): United States

v. McCorkle, S11 F. 2d 482, 487-489 (7th Cir.). cert.

denied, 423 U.S. 826 (1975); United States v. Robson, 477

F. 2d 13 (9th Cir. 1973).

Petitioner has cited nothing in the record that supports

his assertion that the civil investigation was conducted in

bad faith or was a subterfuge. The uncontroverted

testimony of Agent Koosman revealed that he was not

acting under the direction of the Intelligence Division, but

rather was performing a standard audit under the

supervision of the Audit Division (Suppression Hearing

Tr. 82, 86-88, 109, 137, 182). As soon as Agent Koosman’s

investigation led him to suspect fraud. the case was turned

over to the Intelligence Division (id. at 74-75, 97. 121). At

—_— ”

his first interview with the special agent from the

Intelligence Division, petitioner was warned of the

criminal aspect of the investigation and was notified of his

Miranda rights (Suppression Hearing Tr. 22-23).

3. Petitioner also contends (Pet. 33-35) that the

indictment should have been dismissed because the

prosecution was discriminatory and was instituted only to

ge ‘erate publicity. This contention was properly rejected

by both courts below.

Considerable discretion is vested in the government in

deciding which cases to prosecute, and that discretion will

be reviewed only on a prima facie showing that the

prosecution is invidious or discriminatory. Ov/er v. Boles,

368 U.S. 448, 456 (1962), Bordenkircher vy. Haves, 434

U.S. 357, 364 (1978). Petitioner was required to show (1)

that he had been singled out for prosecution when other

similarly situated violators had not been prosecuted and

(2) that this selection was based on impermissible

considerations such as race or religion. See Ov/er v. Boles,

supra, United States v. Berrios, 501 F. 2d 1207, 1211 (2d

Cir. 1974); United States v. Ojala, 544 F. 2d 940, 943 (8th

Cir. 1976); United States v. Swanson, 509 #. 2d 1205,

1209 (8th Cir. 1975).

Petitioner was allowed to make an offer of proof on

this question (Tr. 681-708), but he failed to make the

requisite showing. No evidence was presented suggesting

that other persons similarly situated were not prosecuted.

Moreover, petitioner made no showing that this prosecu-

tion was instituted for publicity purposes. (We note that

even if such a showing had been made, publicity and its

deterrent value are not impermissible considerations in

initiating a prosecution. See United States y. Oaks. 527 CONCLUSION

F. 2d 937, 939-940 (9th Cir. 1975), cert. denied. 426 U.S. The petition for a writ of certiorari should be denied.

952 (1976); United States v. Gillings, 568 F. 2d 1307, 1309 mpi eae

(9th Cir.), cert. denied, 436 U.S. 919 (1978): United oe eee

States v. Catlett, 584 k. 2d 864, 868 (&th Cir. 1978).) WapbdE H. McCrer, JR.

Under these circumstances, there was no need for a fur- Solicitor General

ther hearing on the issue of discriminatory prosecution. M. Carr FERGUSON

4. Petitioner claims finally that the sentencing Assistant Attorney General

procedure followed by the district court was improper. RoBerT E. LINDSAY —

First, he asserts (Pet. 22-25) that the trial judge acted R. BRUCE JOHNSON

improperly in taking into account his belief that petitioner Attorneys

perjured himself at trial. However, this consideration was

approved by the Court in United States v. Grayson, 438

U.S. 41 (1978). Contrary to petitioner’s contention, he

was not sentenced to jail for perjury. The trial judge

simply took into account the veracity of his testimony as

one factor relevant to his prospects for rehabilitation. See

United States v. Grayson, supra, 438 U.S. at 55.

APRIL 1980

Second, petitioner asserts (Pet. 25-26) that his sentence a ecciaal

was invalid because he was not permitted to inspect the

presentence recommendation of the United States

Probation Service. However, Fed. R. Crim. P. 32(cX3)(A)

provides that “[b]efore imposing sentence the court shall

upon request permit the defendant * * * to read the

report of the presentence investigation exclusive of any

recommendation as to sentence ***.” Here, the

presentence report itself was disclosed to petitioner. He

was thus free to contest any factual matter considered by

the trial judge in sentencing. Only the recommendation as

to sentence was withheld (Sentencing Hearing Tr. 2-4).

The trial judge’s refusal to disclose that recommendation

was consistent with the express terms of Rule 32(c) 3A).