Opposition — Teslovich v. United States

Office - Supreme Court US

FILED

APR 20 1984

In the Supreme Court of the United States

OCTOBER TERM, 1983

Nos-83-423+4+and 83-1291

e

A

GEORGE R. TESLOVICH, PETITIONER

Vv.

UNITED STATES OF AMERICA

GEORGE A. SOLOMON, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

Rex E. Lee

Solicitor General

GLENN L. ARCHER, JR.

Assistant Attorney General

ROBERT E. LINDSAY

MICHAEL J. ROACH

Attu ~neys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

QUESTIONS PRESENTED

1, Whether the search warrant in this case was supported

by probable cause.

2. Whether the search warrant’s description of the things

to be seized satisfied the particularity requirement of the

Fourth Amendment.

3. Whether the seizure of certain records belonging to

petitioners’ accountant violated any of petitioners’ rights

under the Fourth Amendment.

4. Whether the alleged failure of the agents executing the

warrant to prepare an adequate inventory of the items

seized required suppression of the evidence.

(I)

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Cases:

Apes ¥. Tema 376 US. FOS isccncuvesvtaces 6

Andresen v. Maryland, 427 U.S. 463 ........... 9

Cady v. Dombrowski, 413 U.S. 433 ........... 11

Illinois vy. Gates, No. 81-430

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Mancusi v. De Forte, 392 U.S. 364 ........ eee 10

Rakas v. Illinois, 439 U.S. 128 ........eeeeees 10

Spinelli v. United States, 393 U.S.410 ......... 6

United States v. Christine, 687 F.2d 749 ........ 9

United States v. Hall, 505 F.2d 961 ........... 11

United States v. Johnson, 690 F.2d 60,

cert. denied, No. 82-5869 (Feb. 22, 1983) ...... 9

Constitution, statutes and rule:

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(111)

Inu the Supreme Court of the Hnited States

OCTOBER TERM, 1983

No. 83-1231

GEORGE R. TESLOVICH, PETITIONER

V.

UNITED STATES OF AMERICA

No. 83-1291

GEORGE A. SOLOMON, PETITIONER

V.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The memorandum opinion of the court of appeals (Pet.

App. 3a-6a)! is reported at 725 F.2d 671. The ora! findings

of fact.and conclusions of law of the district court denying

petitioners’ motion to suppress evidence (Pet. App. 25a-

46a) are unreported.

Pet. App.” refers to the Appendix to the Petition in No. 83-1231.

(1)

2

JURISDICTION

The judgment of the court of appeals was entered on

December 5, 1983 (Pet. App. la-2a). The petition for a writ

of certiorari in No. 83-1231 was filed on January 25, 1984,

and the petition for a writ of certiorari in No. 83-1291 was

filed on January 24, 1984. The jurisdiction of this Court is

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

STATEMENT

The petitioners, George A. Solomon and George R. Tes-

lovich, entered conditional guilty pleas to charges of income

tax evasion, in violation of 26 U.S.C. 7201. Solomon was

sentenced to seven years’ imprisonment and a $30,000 fine.

Teslovich was sentenced to five years’ imprisonment and a

$30,000 fine. The court of appeals affirmed petitioners’

convictions after rejecting their challenge to the district

court's denial of their motion to suppress evidence seized

from the offices of Solomon & Teslovich, Inc. (Pet. App.

4a-6a).?

1. The government's application for the search warrant

at issue in this case was supported by an affidavit dated

December 18, 1979, from Richard R. Geitgey, a Special

Agent of the Federal Bureau of Investigation (Pet. App.

1 la-17a). Geitgey represented that information regarding

Solomon & Teslovich, Inc. had come to his attention while

he was investigating a scheme involving commercial bribery

and fraud on the part of Suncrest Environmental! Resour-

ces, Inc. (SERC) and its owner, Phillip Gaziano. Henrietta

Foster, an employee of SERC and secretary to Gaziano,

admitted to Geitgey that she had taken part in the scheme.

?The court of appeals also affirmed the conviction of petitioners’

co-defendant, George R. Teslovich, Jr. The younger Teslovich, who

received a sentence of three years’ imprisonment with all but 179 days

suspended, a $10,000 fine, and three years’ probation with a require-

ment of community service, has not sought review in this Court.

3

She said that Gaziano had instructed her to prepare and

cash forged checks. Gaziano then used the money to pay off

one Alfred Royster, Jr., an employee at a power plant that

purchased coal from SERC. In return, Royster would

manipulate coal samples so that SERC would be paid more

than its coal was actually worth. /d. at | la-12a.

Geitgey personally interviewed Gaziano, who said he

barely knew Royster. It was established through a travel

agency, however, that Gaziano sent Royster on a trip

abroad paid for with SERC funds. An official at the Hat-

field Power Station confirmed that Royster was in a posi-

tion to manipulate coal samples and had been under suspi-

cion for that type of activity. In monitored conversations,

Gaziano attempted to persuade Foster to refrain from men-

tioning Royster when she appeared before a grand jury. Pet.

App. 12a-13a.

Gaziano told Geitgey that, prior to October 1977, he had

worked as an accountant for Solomon & Teslovich (Pet.

App. 13a). As Geitgey further related in the affidavit (id. at

13a-14a):

7. Henrietta Foster also stated that in November of

1977, when she first became employed for Gaziano asa

secretary-bookkeeper, Gaziano gave to her two manila

packages, which Gaziano told Foster contained records

of Solomon and Teslovich, Inc., business transactions,

which occurred while Gaziano was employed at S and

T. Gaziano explained to Foster that the records were

“hot” and were very incriminating to S and T. Gaziano

went on to explain that if the records got into the

“wrong hands”, the records could cause a “fire”.

8. Henrietta Foster further stated that Gaziano was

very concerned about the FBI's inquiries pertaining to

the operations of SERC and on July 17, 1979, asked

Foster to retrieve the records, which she had been

4

keeping for Gaziano, pertaining to S and T. Foster

explained to Gaziano that the records were at the home

of her son in Oil City, Pa. and that it would take at least

one day to retrieve the records. Gaziano instructed her

to retrieve the records and return them to him for

destruction.

9. I was able to verify the existence of Gaziano’s

“hot” records of S and T when Henrietta Foster volun-

tarily produced the records for the undersigned. In my

presence, the two packages were opened, and docu-

ments pertaining to Sand T and Redstone Hauling Co.

were reflected throughout the two packages. Those

records pertaining to 1976 and 1977 were copied in my

presence and then returned to Ms. Foster who stated

she returned them to Gaziano.

The affidavit went on to explain that Geitgey and Special

Agent Thomas Powers, an accountant, had examined the

records produced by Henrietta Foster. They found nota-

tions on ledger sheets and check stubs indicating that

money was distributed to persons other than the named

payees. Some of the names or initials noted corresponded to

the names or initials of individuals holding responsible

positions in entities with which Solomon & Teslovich did

business, such as United States Steel Corp., the Pennsylva-

nia Department of Transportation, and Laborer’s Union

Local 1308. Pet. App. 14a-16a.

The affidavit further stated (Pet. App. 16a) that:

16. I interviewed Brenda Royster of the Second

National bank of Masontown who is a teller at said

bank and who stated to me that an individual by the

name of Pat Burns who is known to her as an employee

of S and T appears at her teller window and cashes S

and T checks payable to other companies — with

scribbled endorsements — in amounts so large that the

teller often has to get additional cash from the vault.

5

Special Agent Geitgey concluded his affidavit by express-

ing the belief that Solomon & Teslovich, Inc. was engaged

in conduct in violation of 18 U.S.C. 1962(c) (Pet. App. 17a).

Attached to Geitgey’s affidavit was Special Agent Powers’

detailed description of the records produced by Henrietta

Foster (id. at 18a-24a). Also attached were copies of the

records that had been examined (Solomon App. 55a-126a).3

Initially, the affidavit of Special Agent Geitgey was sub-

mitted to a magistrate without the statement of Special

Agent Powers or copies of the Foster documents. The mag-

istrate declined to issue a warrant solely on the basis of the

affidavit. He requested Agent Powers’ summary of the

records and the documents themselves, examined them

overnight, and then issued the warrant (Teslovich App.

251-252).

2. Petitioners moved to suppress the evidence seized pur-

suant to the search warrant and to dismiss the indictment

against them (Pet. App. 26a). After a hearing on the motion

to suppress, the district court concluded that Foster’s

statements to the investigating agents, together with the

copies of apparently incriminating records that she pro-

vided to them and the information Special Agent Geitgey

obtained from other sources corroborating numerous details

shown by the Foster records, established probable cause to

believe that a pattern of commercial bribery existed at

Solomon & Teslovich (id. at 32a-33a). The court further

found that the warrant sufficiently described the documents

to be seized in light of the fact that the affidavit and its

supporting documentation showed the existence of an

extensive scheme to generate cash by fabricating records

maintained in the ordinary course of business, recording the

“Solomon App.” and “Teslovich App.” refer to the Record Append-

ices filed by petitioner Solomon and co-defendant George M. Teslo-

vich, Jr., respectively, in the court below.

6

payment of numerous bribes with cryptic notations on a

wide variety of documents, and concealing the improper

payments by scattering fictitious payments to suppliers

through the accounting records of the business (id. at 36a-

37a). Accordingly, the district court concluded that the

search of the offices of Solomon & Teslovich on December

19, 1979, was lawful, and it denied petitioners’ motion to

suppress the evidence seized in that search (id. at 38a). The

court of appeals affirmed in an unpublished opinion (id. at

4a-6a).

ARGUMENT

The court of appeals correctly decided the issues pre-

sented. Its unpublished decision does not conflict with any

decision of this Court or any other court of appeals, and

further review is not warranted.

1. Both petitioners contend (83-1231 Pet. 5-11; 83-1291

Pet. 16-27) that the warrant to search the offices of

Solomon & Teslovich was not supported by probable

cause. Both petitioners assert that, since Foster was not an

employee of Solomon & Teslovich, but rather claimed to

have learned about its affairs, including the alleged bribery

scheme, while she was an employee of SERC, an independ-

ent company, the affidavit failed to demonstrate that she

had an adequate basis of knowledge for her statements that

the sealed records that had been given to her by her super-

visor, Phillip Gaziano, were “very incriminating” to

Solomon & Teslovich (83-1231 Pet. 7-9; 83-1291 Pet.

20-22).

In Illinois v. Gates, No. 81-430 (June 8, 1983), slip op.

15-24, this Court rejected the so-called “two-pronged test,”

derived from its prior decisions in Aguilar v. Texas, 378

U.S. 108 (1964), and Spinelli v. United States, 393 U.S. 410

(1969), for determining whether an informant’s report,

7

together with any corroboration derived from the govern-

ment’s independent investigative efforts, is sufficient to

establish probable cause for the issuance of a search war-

rant. Instead, the Court held that the existence of probable

cause must be judged by the “totality of the circumstances”

surrounding the informant’s report and the investigation

made by the government agents. Gates, slip op. 23.

Applying the “totality of the circumstances” test estab-

lished in Gates, the court of appeals correctly concluded

that there was probable cause to believe that the records of

Solomon & Teslovich contained evidence of crimes, includ-

ing commercial bribery and racketeering violative of 18

U.S.C. 1962(c). Henrietta Foster was employed by Phillip

Gaziano, who, in turn, had been an accountant at Solomon

& Teslovich and had married the daughter of one of its

principal owners (Pet. App. 13a). While employed by Gazi-

ano, Foster was given two envelopes allegedly containing

very incriminating information concerning Solomon & Tes-

lovich and asked to conceal the envelopes by removing

them from the premises of her employer (Teslovich App.

35-39). When Gaziano gave Foster the envelopes, he told

her that “they were hot, and that if they fell into the wrong

hands, they could cause a fire” (id. at 37). Foster turned over

copies of the records in the envelopes to the government (id.

at 40, 52-55).

The FBI's analysis of the Foster records, including

accountant’s workpapers, showed that the proceeds of

numerous checks drawn on the corporate checking account

of Solomon & Teslovich were being distributed to persons

other than the payees (Pet. App. 14a-16a, 18a-24a). Agent

Geitgey stated in his affidavit that he was able to establish

that the names associated with these payments were not the

names of employees who worked at the firms to which the

checks were made payable (id. at 16a). In addition to peti-

tioners Solomon and Teslovich, the payees shown in the

8

Foster records included supervisory employees of unions,

businesses, and government agencies with which Solomon

& Teslovich, Inc. dealt in the course of its business (id. at

15a-16a). Geitgey further established that a person identi-

fied as an employee of Solomon & Teslovich frequently

cashed checks payable to other companies — with scribbled

endorsements — in amounts so large that the teller had to

get additional cash from the vault (id. at 16a).

The magistrate thus was presented with a pattern of

unusual transactions apparently designed to generate large

amounts of cash and to make numerous cash disbursements

to persons who were responsible for monitoring the per-

formance of various types of contractual obligations by

Solomon & Teslovich. It is difficult to imagine any reason

why an honest businessman would conduct his business in

this way, but such practices easily could be used to induce

the employees of customers, labor unions, and government

agencies to approve substandard work, inferior products,

or noncompliance with the terms of labor contracts. In

addition, the use of fictitious checks to suppliers and forged

endorsements suggests that petitioners, as the principal

officers and owners of Solomon & Teslovich, were trying to

disguise the payments as legitimate tax deductible business

expenses and to conceal the payments. These substantial

indications of wrongdoing more than satisfy this Court’s

practical, common sense criteria for establishing probable

cause under a “totality of the circumstances” analysis. See

Gates, slip op. 15-17, 28-30.

2. Petitioner Solomon argues (83-1291 Pet. 28-36) that

the search warrant in this case was overbroad and consti-

tuted a general warrant in violation of the Fourth Amend-

ment. As the court of appeals pointed out, however, the

degree of particularity required in a warrant “depends on

the nature of the suspected criminal activity, the nature of

the items to be seized, and the difficulty of specifying

9

volumes of records covering an extended period” (Pet. App.

4a-Sa). See Andresen v. Maryland, 427 U.S. 463, 481 n.10

(1976); United States v. Christine, 687 F.2d 749, 760 (3d

Cir. 1982). As this Court stated in Andresen, 427 U.S. at 481

n.10, the “complexity of an illegal scheme may noi be used

as a shield to avoid detection” by making it practically

impossible to satisfy the Fourth Amendment requirement

of particularity in the description of the records to be seized.

The search warrant in this case adequately described the

things to be seized. In addition to the limitations in the

warrant itself with respect to the dates covered and the types

of documents sought (see Pet. App. 7a-8a), the warrant

referred to the supporting affidavit, which in turn contained

a detailed description of the method by which petitioners

were carrying out their alleged commercial bribery scheme,

together with examples of the types of notations on the

books and records of Solomon & Teslovich that were used

to conceal the nature of the payments being made and to

disguise them as legitimate business expenses (Pet. App.

7a-17a).4 A warrant may contain a clause authorizing the

seizure of things other than those expressly described, pro-

vided that it is clear from the context that the additional

authority relates to evidence of the crime for which the

issuing magistrate found probable cause to authorize a

search. Andresen v. Maryland, 427 U.S. at 480-482; United

States v. Johnson, 690 F.2d 60, 64 (3d Cir. 1982), cert.

denied, No. 82-5869 (Feb. 22, 1983). The court of appeals

‘Petitioner Solomon contends that none of the agents participating in

the search received a copy of the affidavit (82-1291 Pet. 32). This is

simply wrong. Agent Geitgey testified that, on the day before the search,

he briefed the agents who were to participate in it, and that at that

briefing he distributed copies of the warrant, the affidavit, and eight

specimen pages from the Foster records (Teslovich App. 311-312). In

addition, three or four complete copies of the Foster records were

available for the agents to examine at the briefing (ibid.).

10

correctly concluded that, in light of the detailed statements

in the affidavit, the description in the warrant of the things

to be seized was sufficiently specific (Pet. App. 4a-Sa).

Further review of this essentially fact-bound issue is not

warranted.

3. Petitioner Teslovich argues (83-1231 Pet. 11-16) that

the seizure of the workpapers of Frank Lucas, the accoun-

tant who prepared the federal tax returns of Solomon &

Teslovich, exceeded the scope of the warrant. But petitioner

Teslovich concedes (83-1231 Pet. 11-12) that the work-

papers seized from the office maintained by Lucas on the

premises of Solomon & Teslovich were not the property of

petitioners and that only Lucas had access to them. Since

petitioner Teslovich does not, and could not, assert any

legitimate expectation of privacy with respect to Lucas’

papers, the court of appeals correctly held (Pet. App. Sa)

that his Fourth Amendment rights were not violated by the

seizure of these records. See Rakas v. Illinois, 439 U.S. 128,

132-149 (1978).5

4. Finally, petitioner Teslovich contends (83-1231 Pet.

16-18) that the agents failed to prepare an adequate inven-

tory of the items taken in the search. Even if true,® petitioner

‘Mancusi v. DeForte, 392 U.S. 364, 368-369 (1968), cited by peti-

tioner Teslovich (83-1231 Pet. 16), is not to the contrary, since in that

case it was stipulated that DeForte, the defendant who sought to

suppress the evidence seized in a warrantless search of his office, was the

custodian of the records seized in the search, even though the office

belonged to his employer and the records were official, not personal

records. Whatever aid Mancusi might give Lucas if he were moving for

suppression, it gives none to petitioner Teslovich.

*The only defect shown in the record is that the inventory was

prepared by an agent other than the applicant for the warrant (see

83-1231 Pet. 16). But the agent who prepared the inventory was one of

the two agents who had supervisory responsibility for the search. Thus,

it is difficult to see how anyone was prejudiced. As for the specificity of

the inventory, the volume of documents seized clearly made it impossi-

ble to list each and every one separately.

cites no authority, and we know of none, for the proposition

that a violation of the inventory requirement of Fed. R.

Crim. P. 41(d) is grounds for the suppression of evidence.

The seizure of evidence pursuant to a valid warrant is not

converted into a violation of the Fourth Amendment by the

failure of the officers responsible for the seizure to comply

with the “essentially ministerial” requirements of Fed. R.

Crim. P. 41(d). United States v. Hall, 505 F.2d 961, 963 (3d

Cir. 1974). See also Cady v. Dombrowski, 413 U.S. 433,

449 (1973). And even if the Fourth Amendment were vio-

lated by the failure to prepare the inventory properly, we

fail to see how any evidence introduced at trial could be said

to be a fruit of such an infraction.

CONCLUSION

The petitions for a writ of certiorari should be denied.

Respectfully submitted.

Rex E. Lee

Solicitor General

GLENN L. ARCHER, JR.

Assistant Attorney General

RosBerT E. LINDSAY

MICHAEL J. ROACH

Attorneys

APRIL 1984

DOJ-1984-04