Petition for Writ of Certiorari — Stribling v. United States
Supreme Court brief1971
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Text
Opinions Below _______-_______ ERE anon ete ee |
EE Se os snc eee clans
Cees NE on a ee aes
Constitutional Provisions, Statute and bilan. In-
QU Widiaso ics a eB oe
ees G5 Ge SOO se
Reasons for Granting the Writ __________________
Appendix A. Opinions of the Court of Appeals:
1. Majority Opinion by Weick, Circuit Judge __.
2. Dissenting Opinion by Celebrezze, Circuit
GU ennai anes Glee onmeee
Appendix B. Judgment of the Court of Appeals __-
Appendix C. Opinion of the District Court _____ __
Appendix D. Judgment of the District Court ____-
Appendix E. Constitutional Provisions, Statute, and
Regulation Involved ___________- pie
CITATIONS.
Cases.
Cohen v. United States, 405 F.2d 34 (8th Cir. 1968) _ 7
Goodman v. United States, 285 F. Supp. 245 (C.D.
ok SOON) oe ee 7
In the Matter of Bodkin, 165 F. Supp. 25 (E.D.N.Y.
ak ee 7
Reisman v. Caplin, 375 U.S. 440 (1964) ---------- 10
United States v. Dickerson, 413 F.2d 1111 (7th Cir.
| _, SRR pr cocens laren meeeeper once net eye nr sure cc 10
United States v. Guerrina, 112 F. Supp. 126 (E.D. Pa.
BE ovis ee ere athe tia en 7, 8
United States v. Lipshitz, 132 F. Supp. 519 (E.D.N.Y.
1065) 22. 2-2 2s 5 + 7
United States v. Prudden, 424 F.2d 1021 (5th Cir.
197%). ---—------- 7
United States v. Wheeler, 149 F. Supp. 445 (W.D. Pa.
1957) rev’d on other grounds, 256 F.2d 745 (3rd
Cie. 1968) = _.2-~---~--.------——----- 7, 9
White v. United States, 395 F.2d 170 (8th Cir. 1968) 7
Constitution.
Constitution of the United States, Fifth Amendment
aa A i alah a ne ee 3, 46
Statutes.
Internal Revenue Code of 1954, Section 7201, 26
U.S.C. Section 7201 _.----------------------- 3
Internal Revenue Code of 1954, Section 7602, 26
US.C. Section 7602 _---------------- 3, 4, 10, 46
Title 18 U.S.C. Section 3231 ~_------ Se tis at a
Title 28 U.S.C. Section 1254(1) ~------------------ 2
Regulation.
Internal Revenue Service Statement of Organization
and Functions, 65-2 Cum. Bull. Section 1118.6,
at 948 (1965) _---------------------------- 3, 47
aires ree es
In the Supreme Court of the United States
OCTOBER TERM, 1970.
MG siricaiomus
GEORGE Y. STRIBLING,
Petitioner,
v.
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR A WRIT OF CERTIORARI
To the United States Court of Appeals
For the Sixth Circuit.
George Y. Stribling, the petitioner herein, prays that
a writ of certiorari issue to review the judgment of the
United States Court of Appeals for the Sixth Circuit
entered in the above cause on February 10, 1971.
OPINIONS BELOW.
The majority opinion of the United States Court of
Appeals for the Sixth Circuit, and the dissenting opinion
thereto, are reprinted in Appendix A, are reported in
71-1 U.S. Tax Cas. 9210, and are not yet reported in the
Federal Reporter. The judgment of the Sixth Circuit
reversing the United States District Court, filed on Febru-
ary 10, 1971, is reprinted in Appendix B. The oral opinion
of the United States District Court for the Northern
District of Ohio, Eastern Division, given in open court on
April 3, 1970, is printed in Appendix C and is not reported
in any report. The order of the District Court, filed on
April 9, 1970, is reprinted in Appendix D.
2
JURISDICTION.
The judgment of the United States Court of Appeals
for the Sixth Circuit was entered on February 10, 1971.
The Court of Appeals recalled its mandate on March _-,
1971, pending the filing of a petition for a writ of certiorari
and a final determination thereon by this Court. The
jurisdiction of this Court is invoked under 28 U.S.C.
§ 1254(1).
QUESTIONS PRESENTED.
1. Is a taxpayer who without his knowledge has
been under investigation for several months by the In-
ternal Revenue Service for criminal violation of the Inter-
nal Revenue Code, affirmatively misled if he is then
advised by the Internal Revenue Service only that it is
conducting a routine audit to determine the correctness
of his amended tax returns for the years 1959-1961, and
if the Internal Revenue Service during the audit obtains
from him incriminating information and documentary
evidence which is the basis for a criminal prosecution
against the taxpayer for criminal violation of the Internal
Revenue Code involving those same years 1959-1961?
2. If a taxpayer is aifirmatively misled by the Internal
Revenue Service and as a consequence thereof incrimi-
nates himself, do his constitutional rights against self-in-
crimination and iJlegal search and seizure, and also the
concept of justice and fair play; require suppression of the
incriminating evidence obtained from him by the Internal
Revenue Service?
3. If a taxpayer who without his knowledge has been
under investigation for several months by the Internal
Revenue Service for criminal violation of the Internal
Revenue Code, is contacted by the Internal Revenue Serv-
ice to obtain information and documentary evidence from
en ree ae
3
him, does the Internal Revenue Service have a duty to
advise the taxpayer of his constitutional right to remain
silent and that anything he says can be used against him
in a court of law?
4. Can the Internal Revenue Service in a criminal
tax investigation of a taxpayer lawfully utilize the power
of civil summons contained in Title 26 U.S.C. § 7602 to
compel the taxpayer to appear and testify before a
Special Agent?
CONSTITUTIONAL PROVISIONS, STATUTE
AND REGULATION INVOLVED.
The constitutional provisions involved are the self-
incrimination clause and the illegal search and seizure
provision of the due process clause of the fifth amendment
to the United States Constitution. The statute pertaining
to the authority of the Secretary of the Treasury to issue
summons is Internal Revenue Code of 1954, Section 7602,
26 U.S.C. § 7602. The regulation setting forth the func-
tions and duties of the Intelligence Division of the Internal
Revenue Service as being the enforcement of criminal
statutes is Internal Revenue Service, Statement of Organi-
zation and Functions, 65-2 Cum. Bull. Section 1118.6, at
948 (1965). (See Appendix E.)
STATEMENT OF THE CASE.
Petitioner, George Y. Stribling, was indicted in
March, 1966 in the Western District of Washington, South-
ern Division, on three counts of willful attempted evasion
of his individual income tax for the years 1959, 1960 and
1961, in violation of Section 7201 of the Internal Revenue
Code of 1954. On April 21, 1966, on the petitioner’s mo-
tion the case was transferred to the United States District
Court for the Northern District of Ohio, Eastern Division.
mi net ar he Pe at MD Wk
4
Jurisdiction of the District Court was based on Title 18,
U.S.C. Section 3231.
Petitioner filed a motion to suppress evidence, and an
extensive hearing was had on said motion in the District
Court beginning March 20, 1970. The following facts were
elicited at the hearing (as related in the dissenting opinion
herein of Celebrezze, Circuit Judge, United States Court
of Appeals for the Sixth Circuit, Appendix A, pp. 28-29):
“Unknown to Appellee| In February, 1963, the In-
telligence Division of the Internal Revenue Service began
an investigation of the Appellee with a view ‘toward
determining whether or not he should be criminally prose-
cuted for violations of the Internal Revenue Code. Under
compulsion of a summons which was issued pursuant to
26 U.S.C. § 7602 (1964) and which purportedly concerned
an employee of the Appellee, the Internal Revenue Service
sent out a Special Agent to interview the Appellee. That
interview which took place in March, 1963, set off a chain
of investigations [unknown to Appellee] of the Appellee’s
activities in Chicago, Illinois, Seattle, Washington, Cin-
cinnati, Ohio, and Kentucky. By late August, 1963, the
Internal Revenue Service Assistant Regional Commis-
sioner in Cincinnati, whose jurisdiction covers a five state
area including all of Kentucky and Ohio, was sent a report
on the Internal Revenue Service’s widespread investiga-
tion of Appellee’s activities. While this investigation
{unknown to Appellee] was taking place, the Appellee
filed amended returns. |
“In response to the filing of Appellee’s amended re-
turns, the Canton office of the Internal Revenue Service
sought to requisition the Appellee’s tax returns and was
informed that the material requested was in the hands of
a Special Agent of the Intelligence Division for the past
several months. There is no indication in the record that
B)
the Canton office made any further inquiry as to the status
of the Intelligence Division’s investigation into the Appel-
lee’s affairs. Indeed, the Canton office did not even inquire
to its Regional Office in Cincinnati concerning the status
of the Internal Revenue Service’s investigation on the
Appellee. Had the Canton office followed up on this
matter, they would have been made aware of the multi-
state investigation for tax fraud which the Intelligence
Division was pursuing. Instead, the Canton office ordered
Agent Kast to interview the Appellee with respect to his
amended tax returns for the years 1959-62.
“Agent Kast met with the Appellee and his tax law-
yers several times in November and December, 1963 and
affirmatively represented to the Appellee that his purpose
in conducting those interviews was to determine the cor-
rectness of Appellee’s amended returns for the years 1959-
62. Agent Kast did not express any intention to audit
Appellee’s original returns or to gain facts which might be
used against the Appellee in a criminal prosecution based
on his original returns. While Agent Kast may have
believed his statements to the Appellee were true because
his own superiors did not inform him of the continuing
criminal investigation, there can be no question these
affirmative statements misrepresented the position of the
Internal Revenue Service with regard to the Appellee.
The Appellee testified under cath that he would never
have volunteered the records or information he provided
Agent Kast had he known such information could have
been used against him in a criminal prosecution or had he
known that the Internal. Revenue Service had begun in-
vestigating the possibility of a criminal indictment based
on his original returns several months before the Kast
interviews. Appellee testified he offered the records and
volunteered the information he gave so that the Internal
6
Revenue Service could fairly determine the accuracy of
his amended returns as Agent Kast had indicated to him
was the purpose of his visit.”
Petitioner’s motion to suppress evidence was granted
by the District Court in an oral opinion rendered April 3,
1970. The District Court’s judgment was filed on April
9, 1970.
The Government appealed from the District Court’s
order granting petitioner’s motion to suppress evidence,
and by a 2-1 decision the United States Court of Appeals
for the Sixth Circuit reversed the District Court’s order,
on February 10, 1971.
REASONS FOR GRANTING THE WRIT.
The practical effect of the Court of Appeals’ decision
in this case is to permit the Internal Revenue Service to
obtain incriminating evidence from a taxpayer with re-
spect to whom, unknown to him, it is already conducting
a criminal investigation, under the guise that it is conduct-
ing a routine audit to determine the correctness of his tax
returns. This type of conduct on the part of the Internal
Revenue Service could adversely affect the constitutional
rights of countless taxpayers if permitted to continue
unrestrained by this Court.
In addition to the great importance and interest to
the public which this case has in view of its probable
consequences on other taxpayers besides the petitioner,
the decision should be reviewed by this Court because it
conflicts with decisions of other courts in principle and on
important matters of general law. It is a well established
legal priaciple that the Internal Revenue Service cannot
lawfully mislead a taxpayer into believing that another
person (petitioner's employee), and not him, is being
investigated, or that an exclusively civil investigation is
—————————— =
7
being conducted of the taxpayer’s activities, whereas in
fact an undisclosed criminal investigation of him by the
Internal Revenue Service has already been underway for
quite some time, and thereby obtain incriminating evi-
dence from the taxpayer through such guile. The United
States Court of Appeals for the Eighth Circuit in the
case of Cohen v. United States, 405 F. 2d 34, at 36 (8th
Cir. 1968), stated:
“We * * * reiterate our warning in White v. United
States, 395 F. 2d 170 (8th Cir. 1968), that agents
must not affirmatively mislead a taxpayer into believ-
ing that the investigation is exclusively civil in charac-
ter and will not lead to criminal charges.”
The United States Court of Appeals for the Fifth Cir-
cuit in United States v. Prudden, 424 F. 2d 1021, at 1032
(5th Cir. 1970), stated:
“We explicitly reject the government’s contention that
the agents were free to use fraud, deceit or trickery.
In cases where the IRS agents are obtaining consent
to examine documents, they cannot gain such consent
by affirmatively misrepresenting the nature of the
search.”
Also see United States v. Wheeler, 149 F.Supp. 445, at
450 (W.D.Pa. 1957), rev’d on other grounds, 256 F. 2d 745
(3rd Cir. 1958); United States v. Lipshitz, 132 F.Supp.
519 (E.D.N.Y. 1955); United States v. Guerrina, 112 F.
Supp. 126 (E.D. Pa. 1953); Goodman v. United States,
285 F.Supp. 245 (C.D. Cal. 1968); In the Matter of Bod-
kin, 165 F.Supp. 25 (E.D.N.Y. 1958).
The decision by the Court of Appeals in the instant
case is crearly in conflict with the general principle enun-
ciated in the above cases. The majority of the Court of
Appeals refused to consider that the Internal Revenue
Service as an entity misled the taxpayer in this case (peti-
ee ee ee
8
tioner), and instead only considered whether one partic-
ular agent (Kast) individually and knowingly misled the
petitioner. This is clearly erroncous, as is aptly shown by
the dissenting opinion of Judge Celebrezze (Appendix A,
p. 30):
“The majority concedes that Agent Kast affirmatively
represented to the Appellee that the limited purpose
of his audit and interviews was to determine the cor-
rectness of Appellee’s amended returns. Those state-
ments by Agent Kast served to affirmatively mislead
the Appellee into volunteering information which he
would not otherwise have given. The fact that Agent
Kast was not informed by his immediate superiors at
the Canton Field Office or by his superiors in the
Cleveland District Office or in the Cincinnati Regional
Office that a continuing nationwide criminal investiga-
tion of Appellee had been in pregress for a period of
several months cannot be used as a shield if in fact
his misleading statements deceived the Appellee. The
District Court so found. An agent of a field office of
the Internal Revenue Service must be held answer-
able for information which his immediate superiors
should have discovered and which his district and
regional offices clearly possessed.” (Emphasis added.)
Obviously the majority of the Court of Appeals failed
to consider that the effect on a taxpayer who is misled
and thereby furnishes incriminating evidence to the In-
ternal Revenue Service is still the same regardless of
whether the misleading by the Service was by design or
unintentional. As stated in the case of United States v.
Guerrina, 112 F.Sup. 126, at 129 (E.D.Pa. 1953):
“Whether the arrangement to have Agent Coram make
the appointment with the defendant was by design
to obtain entrance for Special Agent Pearson, or
whether it was done innocently, the effect in so far
as the defendant was concerned was the same. He
9
was deluded into giving consent to the examination
of his papers and records and his action in so doing
cannot be said to be voluntary in so far as making
available his papers for purpose of investigation to
establish fraud for criminal prosecution purposes.”
(Emphasis added.)
Also, the majority of the Court of Appeals failed to
recognize that this case is different from the many cases
where after a civil audit of a taxpayer by the Internal
Revenue Service was underway, a criminal investigation
of the taxpayer is initiated by the Internal Revenue Serv-
ice at some later point in time. In the instant case, the
Internal Revenue Service was conducting a criminal in- ~
vestigation of the taxpayer, unknown to him, and after
that investigation had been in process for several months,
the Internal Revenue Service then advised the taxpayer
that it was conducting a routine audit of his returns. This
highly significant distinction, which the majority of the
Court of Appeals ignored, is referred to in the case of
United States v. Wheeler, 149 F.Supp. 445, 450 (W.D.Pa.
1957), rev’d on other grounds, 256 F.2d 745 (3rd Cir.
1958):
“(T]he law distinguishes between the failure on the
part of a government investigator to disclose the pur-
pose of his investigation at its inception when suspi-
cion of criminal wrongdoing exists and the discovery
of criminal wrongdoing in the course of a routine in-
vestigation. * * *” (Emphasis added.)
As of the present time, this Court has not passed upon
these important questions relating to the rights of tax-
payers to be protected from furnishing incriminating evi-
dence to the Internal Revenue Service through the Serv-
ice’s misleading representation that a routine audit is
being conducted, when in actual fact the Internal Revenue
10
Service is, and has been for quite some time, conducting
a criminal investigation of the taxpayer.
Nor has this Court passed upon the related but differ-
ent question as to whether, in the case of a taxpayer under
criminal investigation by the Internal Revenue Service
who is contacted by the Service to obtain information and
documentary evidence from him, the Internal Revenue
Service has a duty to advise the taxpayer of his constitu-
tional right to remain silent and that anything he says can
be used against him in a court of law. On this point the
decision of the United States Court of Appeals for the
Sixth Circuit in the instant case is in conflict with the prin-
ciple of the decision of the United States Court of Appeals
for the Seventh Circuit in United States v. Dickerson, 413
F.2d 1111 (7th Cir. 1969).
Also, the decision of the Court of Appeals in the
instant case, insofar as it upholds the legality of the In-
ternal Revenue Service using the power of civil summons
under 26 U.S.C. $7602 in a criminal tax investigation to
compel the taxpayer to appear and testify before a Special
Agent, is in conflict with the principle stated by this
Court in Reisman v. Caplin, 375 U.S. 440, at 449 (1964).
In summary, it is apparent that the decision of the
Court of Appeals in the instant case is erroneous and de-
parts from accepted and usual principles in several re-
spects, and effectively deprives this petitioner and other
taxpayers of their constitutional rights against self-
incrimination and illegal searches and seizures when con-
fronted by the Internal Revenue Service, and conflicts
head-on with the established concept of justice and fair
play. The District Court’s decision, to the effect that under
the circumstances of this case the petitioner did not know-
ingly waive his constitutional rights and freely and vol-
untarily disclose information, records and documents to
11
the Internal Revenue Service, is correct and should have
been affirmed by the Court of Appeals.
For the foregoing reasons, this petition for writ of
certiorari should be granted.
Respectfully submitted,
Ron TONIDANDEL,
LAWRENCE I. ByRNEs,
PuI.tuip J. CAMPANELLA,
Attorneys for Petitioner.
Of Counsel:
Spretu, Bett, McCurpy & NEWELL.
12
APPENDIX A.
OPINION OF THE COURT OF APPEALS.
No. 20,453.
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT.
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
v.
GEORGE Y. STRIBLING,
Defendant-Appellee.
AppEAL from United States District Court for the
Northern District of Ohio, Eastern Division.
Decided and Filed February 10, 1971.
Before Weick and CELEBREZZE, Circuit Judges, and
O’SuL.Ivan, Senior Circuit Judge.
Werck, Circuit Judge. The Government has appealed
from a suppression order entered by the District Court in a
criminal tax case. The appeal was taken under the author-
ity of 18 U.S.C. § 3731, as amended by Title VIII of the
Omnibus Crime Control Act of 1968.
A three-count indictment was returned against
Stribling in the United States District Court for the West-
ern District of Washington, Southern Division, on March
9, 1966, charging him with evasion of income taxes in the
amount of $35,300.10, for the years 1959, 1960 and 1961.
On April 21, 1966, on his motion, the District Court trans-
ferred the case to the United States District Court for the
13
Northern District of Ohio, Eastern Division, in which
Division Stribling resided.
Stribling filed a motion to suppress evidence, which
motion was granted by the Court. We reverse.
Stribling was engaged in the business of training,
buying and selling horses which he raced and on which
he bet, at various race tracks throughout the country. He
also trained jockeys, entered into contracts with them, and
sold their contracts.
In the latter part of December, 1962, IRS commenced
a full scale investigation of a jockey who rode for Stribling,
for failure to file income tax returns for 1959, 1960 and
1961.' Special Agent Hunter, of Louisville, Kentucky,
who conducted the investigation, interviewed the jockey
and learned that he had been living on Stribling’s farm in
Mechanicstown, Carroll County, Ohio, since late in 1957;
that from the time he started riding for Stribling he turned
over to Stribling almost every dime of his earnings except
for a few living expenses; that these funds were handled
for him by Stribling, who deposited them in a trust fund
which he could withdraw only with Stribling’s consent
until he reached the age of 21 years; and that he was
under contract with Stribling. Hunter was of the opinion
that he (Hunter) could not make a proper investigation
of the jockey without interviewing Stribling.
Hunter sent collateral requests to the Cleveland Field
Office of the Intelligence Division and to other Districts,
requesting information about the jockey. The request to
Cleveland was assigned to Special Agent Auerbach, who
requisitioned all tax returns filed by Stribling in the
Cleveland District. The requisition came back, marked
“No Returns”. Auerbach was interested in Stribling be-
1 The jockey’s na 1e was not made a part of the record, at the
request of the Gove-nment.
14
cause of his close relationship with the jockey. Auerbach
reported to Hunter that he could not locate Stribling’s tax
returns for the years 1960 and 1961, and asked Hunter to
determine where Stribling had filed his returns for those
years.
On March 20, 1963, Hunter went to Stribling’s farm
at Mechanicstown, Ohio, and, in Stribling’s absence, left a
summons requiring him to appear at the office of the Intel-
ligence Division in Canton, Ohio, on April 15, 1963. At-
tached to the summons was a note requesting Stribling
to call Hunter at his earliest convenience. Stribling tele-
phoned Hunter from Providence, Rhode Island, where he
was racing, and an arrangement was made for Hunter
to fly there to meet him on March 28.
At that meeting Hunter told Stribling that he was
requested to answer questions about the jockey, and that
Stribling had a right to refuse to answer any questions
which might tend to incriminate him. He was not advised
that he was under investigation by IRS or that he had a
right to have an attorney. He was interrogated, and signed |
a written statement about the jockey. Stribling was also
asked whether he had filed income tax returns for the
years 1959, 1960 and 1961. His answer was that he had
filed returns for those years in the state of Washington.
Several months after the Hunter interview, Stribling
consulted Stewart O. McHenry and Edgar Jones, attorneys
at law, of the law firm of Amerman, Burt, Shadrach,
McHenry and Jones, of Canton, Ohio. Upon their recom-
mendation, Ronald Graves, an accountant, was employed
to prepare amended income tax returns and a net worth
statement of Stribling. Graves was a former Internal Reve-
nue agent in the Canton Audit Division. The amended
returns and net worth statement were prepared and deli-
vered by Attorneys McHenry and Jones to Agent Beal
15
of the Canton Audit Division, together with a letter of
transmittal.” The returns were assigned for routine audit
to Internal Revenue agent George Kast on October 23,
1963, by Mr. Brownfield, his superior in the Canton Audit
Division.
Counsel for Stribling, in his brief, states the reason
why Stribling consulted counsel and an accountant:
“In the meantime, following up on conversations
he had had beginning in late 1962 and continuing
into the spring of 1963 with a close friend of his in
California whom he had known for many years,
Stribling consulted an Ohio attorney, Stewart
McHenry. Stribling had been under the impression
that winnings from bets or proceeds from the sale
of horses did not have to be reported as long as they
were reinvested in his horse-racing business. It was
in talking to his California friend that it first came to
Stribling’s attention that he may not have been re-
porting income properly on his tax returns. After
Stribling consulted attorney McHenry, it was deter-
mined that an accountant (Graves) would be em-
ployed to inspect Mr. Stribling’s records, reconstruct
his income as best they could, and prepare amended
returns.” (Brief at 7)
In answer to questions propounded by the Court, At-
torney McHenry testified:
“Q Before you get further into the subject matter,
did you have any conference with Mr. Stribling, either
alone or in the presence of other persons, concerning
his answering questions put to him by Mr. Kast or his
right to refuse to answer questions?
2 Attorney McHenry, who testified at the hearing on the mo-
tion to suppress, did not say why he left the returns with the
Audit Division in Canton instead of filing them with the District
Director of Internal Revenue in the Cleveland District, where the
taxpayer resided, as required by Treasury Regulations § 1.6091-2
(1959).
"ed «he clad
16
“A No, your Honor. That was never discussed,
because we took the position that amended returns
should be filed and a forthright, open discussion
should be had regarding anything that related to those
returns. And by ‘we,’ I mean Mr. Jones and myself.
“Q Did you then advise Mr. Stribling to answer
any questions that were put to him?
“A Yes. We encouraged him to answer every-
thing.
“Q And on that general subject—incidentally,
would that have occurred that same day or some
prior date?
“A You mean our advice to answer anything?
“Q Yes. Yes.
“A From the time that Mr. Kast first appeared
upon the scene.
“We likewise had encouraged Mr. Stribling to be
as cooperative and as forthright and draw upon his
memory, do everything he could to help Mr. Bruner
and Mr. Graves reconstruct his income and prepare
his returns” (App. 296)
Mr. McHenry elaborated further in response to ques-
tions asked by Government counsel:
“Maybe the advice that we had given him, the way
to proceed here was—maybe it was bad advice. But
it was the best advice that we knew how to give him.
By ‘we’, Mr. Jones and I, with whom I was in perfect
accord.
‘T thought the best way to do this thing—this is the
country lawyer approach. I thought the best thing to
do was to be as absolutely cooperative and as open and
free with every bit of information and not to withhold
anything from the Department. I took the position
that the Department wanted to be informed and that
they had the right to be informed, and with all due
respect to Mr. Stribling, I thought that was the best
advice that I could give him.” (App. 301)
Agent Kast commenced his audit about November 1.
He contacted Stribling and told him that he (Kast) was
17
assigned to the case and would like to meet with him and
his representatives. Stribling referred Kast to his attorney,
Mr. McHenry.
On November 19, Kast met with Stribling, McHenry
and Graves at Stribling’s farm. Kast testified that he
presented his credentials and that Stribling was “aware”
that he was making an examination of Stribling’s tax re-
turns.> During this interview and during another one
which took place on December 27, 1963, Stribling made
incriminating statements, and he and his representatives
turned over to Kast incriminating documents. Kast did not
advise Stribling of the possibility of criminal prosecution
or of his constitutional rights. Stribling was represented
by counsel at all of the conferences except one, which was
an afternoon continuation of a morning session. It is not
claimed that any incriminating statements were made dur-
ing that afternoon.
Kast testified that he did not know of the investigation
of Stribling by Special Agents of the Intelligence Division,
which commenced in January, 1963. The Court in his oral
opinion stated: “...I believe [Kast] did not know... .”
On February 20, 1964, Kast referred the case to the Intel-
ligence Division for possible criminal investigation. Kast
did not learn that the Intelligence Division had been in-
vestigating Stribling until Special Agent Auerbach called
him on the telephone on March 4, 1964.
3 Stribling testified that Kast told him that his investigation
was to determine the correctness of his amended returns from
1959 to 1962. The Court credited Stribiing’s testimony in this re-
spect. We think it is clear that without it Stribling also was
“aware” of this fact, as Kast testified, because Stribling knew
that his attorneys had left the amended returns and the net
worth statement with the Canton Audit Division. He could hardly
expect that the Audit Division would accept his amended re-
turns without an investigation into their correctness. In any
event, if Kast made the statement, it was unquestionably irue.
18
The evidentiary hearing conducted by the District
Judge commenced on March 20, 1970, and ended on April
3, 1970. The transcript contains 596 pages; 71 numbered
exhibits, consisting mostly of documents, papers and rec-
ords taken from the files of the Intelligence and Auditing
Divisions, were received in evidence. There is no question
but that the District Judge gave careful and conscientious
consideration to the case. At the conclusion of the evi-
dence the Court dictated into the record and oral opinion
which contained his findings and conclusions:
First, the Court ordered the Hunter interview sup-
pressed. This interview concerned the jockey; the only
portion thereof relating to Stribling was that part when
he disclosed, in response to a question, the fact that he
had filed his income tax returns in the state of Washing-
ton. As to this, the Court in its opinion stated:
“The filing of the amended returns on August 23,
1963 brought about several results. It now supplied
the Internal Revenue Service with information as to
where he had filed his income tax returns in the years
1955 through 1962.
“Hence, whatever leads, if any, that may have
‘flowed from the improper eliciting of the same infor-
mation from George Y. Stribling in the Hunter in-
terview now certainly ceased.” (App. 332)
The Government in its appeal does not question this
action taken by the District Court. Hence, we see no point
in discussing it further, although Stribling in his brief
makes a big issue of it.’
4 Stribling, in his brief, even argues that the Kast audit was
merely a continuation of the investigation by Special Agents
Hunter and Auerbach. This is not true as it was the voluntary
act of Stribling, his lawyer McHenry and his accountant Graves,
in filing the amended returns and net worth statement with the
Canton Audit Division, that brought Kast into the case.
19
Second, the Court ordered suppressed —
“ _ . all admissions made to Agent Kast orally or
in writing by Mr. Stribling or his agents with his
authority and consent and all documentary records
that were produced by the defendant and made avail-
able by him or his agents to Revenue Agent Kast.”
(App. 338)
It is this part of the order which the Government in
its appeal contends is erroneous. It was the theory of the
District Court that the Government should have disclosed
to Stribling the facts that the Intelligence Division was
investigating him, and that a criminal prosecution might
result therefrom; and that Agent Kast, who was making
the audit, misled Stribling and his attorney.
In his oral opinion the Court found:
“On this record, it is found and determined that
both Mr. Stribling and his counsel were misled by
Mr. Kast and were lulled into believing that the dis-
closures being made would be used solely to deter-
mine the correctness of his amended returns. In the
words of White, supra, they were affirmatively misled
into believing that the investigation was exclusively
civil in character and would not lead to criminal
charges.” (App. 337)
In our opinion, this finding is not supported by sub-
stantial evidence and is clearly erroneous. It is contra-
dicted by a subsequent finding that Agent Kast did not
even know of the investigation by the Intelligence Divi-
sion. The “misleading”, so-called, was the alleged state-
ment made by Agent Kast to Stribling, his lawyer and
accountant, of a fact which they already knew, namely,
that he (Kast) had been assigned to make an investiga-
tion of the correctness of the amended returns. Such a
statement, if made, was true.
20
Kast did not misrepresent anything to Stribling, his
lawyer or his accountant, and did nothing to mislead
them. During the interviews conducted by Agent Kast,
the latter could not very well advise Stribling, his attorney
and accountant, that the Intelligence Division was con-
ducting an investigation, because Kast had no knowledge
of that fact. Kast made them no promises. There was
nothing coercive in anything which Kast did or said. The
entire investigation was conducted without rancor or
threats, but rather, in a friendly atmosphere, in the pres-
ence of Stribling’s lawyer and accountant. Agent Kast
cannot be blamed for the decision which Stribling, his
lawyer and accountant voluntarily made in July, 1963, to
make a clean breast of everything, to file amended returns
and a net worth statement, and to co-operate with the Gov-
ernment in determining the correctness of the amended
returns, obviously in the hope that no criminal prosecu-
tion would result. Kast was not assigned to investigate the
amended returns until October 23, 1963, and had never
heard of the case until after the amended returns were
filed.
It is not claimed that anyone connected with the Gov-
ernment had anything to do with the decision made by
Stribling and his representatives to file amended returns
and to make a clean breast of everything.
Nor can the Government be blamed if Stribling neg-
lected to tell his lawyer and accountant about the Hunter
interview. Stribling testified on cross-examination that
he did inform Mr. McHenry as to the Hunter interview:
“Q Now, Mr. Stribling, you testified that Mr.
McHenry did not advise you of your rights.
“Had you informed Mr. McHenry that you had
been interviewed by Mr. Hunter?
“A Yes.
21
“Q And did you have any extensive conversa-
tions with Mr. McHenry as to the nature of your inter-
view by Mr. Hunter?
“A Yes. )
“Q And did you advise Mr. McHenry that Spe-
cial Agent Hunter asked you whether or not you per-
sonally had filed income tax returns?
“A I don’t recall. I don’t recall.
“Q You don’t recall.
‘Do you remember Mr. Hunter asking you
whether or not you had filed?
“A Yes.
“Q Isee. And do you remember your answer to
his question of whether or not you filed income tax
returns?
“A Yes.
“Q And what was that answer?
“A That I had filed my income tax in the State
of Washington.
“Q I see. Do you recall whether or not you ad-
vised Mr. McHenry that you told Mr. Hunter that you
had filed income tax returns in the State of Washing-
ton?
“A I don’t recall that.” (App. 285-286)
McHenry, when questioned as to whether Stribling
advised him of the Hunter interview, testified, “No, I
don’t believe so.”
It does seem to be quite a coincidence that it was not
until after the Hunter interview that Stribling consulted
counsel and decided to file amended returns and a net
worth statement, and to make a clean breast of everything.
We are cognizant of Stribling’s contention that he was
motivated by advice given to him by his California friend
(rather than what took place at the interview with Special
Agent Hunter), to engage an attorney and accountant and
to file amended returns and a net worth statement. In any
event, if Stribling chose not to advise his attorneys and
22
accountant of the Hunter interview, he can fault no one
except himself for that decision.
It is argued on appeal that Agent Kast should have
advised Stribling of his rights under Miranda v. Arizona,
384 U.S. 436 (1966), to remain silent, to furnish no docu-
ments, papers or records, and to have counsel. The fact
is that it was unnecessary to advise Stribling of his right
to counsel because he had already employed counsel and
an accountant, both of whom were present at the inter-
views. Agent Kast was not required to assume that the
attorney and accountant representing Stribling did not
properly advise him of his rights, or that they did not in-
tend to do what they did.
An Internal Revenue Agent assigned to make a rou-
tine audit ought to be cirumspect in interviewing a
taxpayer. The agent should not assume that such a tax-
payer has cheated the Government and offend him by
warning him as to the possibility of criminal prosecution
and advising him as to his constitutional rights.
Reliance on Miranda is misplaced as its guidelines
were limited to in-custody interrogations. This was made
clear in Mathis v. United States, 391 U.S. 1 (1968), which
applied Miranda to an interrogation by a Revenue Agent
of a prisoner in state custody.
Stribling was never in custody and any information
which he or his attorney and accountant divulged to Agent
Kast was wholly voluntary. In the absence of fraud or
misrepresentation, statements obtained by Special Agents
are admissible. Muse v. United States, 405 F.2d 40 (8th
Cir. 1968), cert. denied, 393 U.S. 1117 (1969); Cohen v.
United States, 405 F.2d 34 (8th Cir. 1968), cert. denied,
394 U.S. 943 (1969); White v. United States, 395 F.2d
170 (8th Cir. 1968); cf. United States v. Sclafani, 265
F.2d 408 (2d Cir.), cert. denied, 360 U.S. 918 (1959).
23
All Circuits, except the Seventh’, have held Miranda
inapplicable to tax investigations conducted either by a
Special Agent or by an Agent employed in the Aud‘ting
Division where the taxpayer is not in custody.
The cases are collected in our recent opinion in
United States v. Miriani, 422 F.2d 150, 153-154 (6th Cir.
1970), cert. denied, 399 U.S. 910 (1970), and in opinions
of the Third and Fifth Circuits, in United States v. Jaskie-
wicz, __ F.2d __ (3rd Cir., No. 18,387, decided Sept.
28, 1970), and in United States v. Prudden, 424 F.2d 1021
(5th Cir. 1970). See also United States v. Maius, 378
F.2d 716, 718-719 (6th Cir.), cert. denied, 389 U.S. 905
(1967); Biggs v. United States, 246 F.2d 40 (6th Cir.
1957), cert. denied, 355 U.S. 922 (1958).
In Miriani we said:
“The defendant was never in custody when being
interrogated by the agents of the Internal Revenue
Service. Where a person is not under arrest or under
duress in the legal sense of the term, it is not neces-
sary to the admission of his statements in evi-
dence that he be warned of his constitutional rights
by the agents interviewing him .. . [Citing authority]
And this is true even when the examination for the
purpose of determining civil tax liability takes on
criminal aspects.” [Citing authority] 422 F.2d at
153, 154.
As was well stated in Jasxiewicz, supra:
“There was no affirmative duty on the part of the
Government to disclose to appellant the extent and
nature of its investigation. Hoffa v. United States,
385 U.S. 293, 303 (1966); Lewis v. United States, 385
U.S. 206, 209 (1966).”
5 United States v. Dickerson, 413 F.2d 1111 (7th Cir. 1969).
The Court limited its decision prospectively only to admissions
made and documents turned over after the date of the opinion.
24
In United States v. Sclafani, 265 F.2d 408 (2d Cir.
1959), the panel which was comprised of Circuit Judges
Medina, Lumbard and Burger’, held: ;
“The Fourth Amendment does not require more
than this, that when his consent is sought the tax-
payer be apprised of the government’s concern with
the accuracy of his reports, and therefore of such
hazards as may be incident to a voluntary disclosure.
We hold that Sclafani was so apprised by the warn-
ing inherent in the request when Agent Sonkin identi-
fied himself and disclosed his purpose to audit certain
returns of the corporation.” Id. at 415.
In Prudden, supra, the Court said:
“Prudden points to the failure of Special Agent
Cohen to tell him that his function was to investigate
for criminal fraud. All Cohen was required to do by
the then existing Internal Revenue Service Require-
ments was to tell Prudden that he was a Special
Agent and show Prudden his credentials. This he did.
He in no way concealed his true identity. He could
not have affirmatively misled Prudden as to the
function of the Intelligence Division or as to the
duties of a special agent, since neither of these sub-
jects were ever discussed. Silence can only be
equated with frav ~ where there is a legal or moral
duty to speak or . here an inquiry left unanswered
would be intentionally misleading. None of these
factors were present here.” 424 F.2d at 1032.
In United States v. Squeri, 398 F.2d 785, 788 (2d Cir.
1968), the Court said:
“.. [T]he information that a taxpayer’s returns
are under audit gives notice of the possibility of
criminal prosecution regardless of whether the agents
contemplate civil or criminal action when they speak
to him.”
6 Sitting by designation.
25
See also Spahr v. United States, 409 F.2d 1303, 1306
(9th Cir.), cert denied, 396 U.S. 840 (1969).
On the face of each income tax return filed by Strib-
ling in Washington, in which he did not report all of his
income, was the warning:
“Under penalties of perjury, I declare that I have
examined this return, including accompanying sched-
ules and statements, and to the best of my knowledge
and belief it is true, correct and complete.”
The District Court, in its opinion, stated:
“Defendant relied principally to support this
branch of their motion on United States v. Lipshitz,
132 Federal Supplement 519, Eastern District of New
York, 1955; U.S. v. Wheeler, 149 Federal Supplement
445, although this case was reversed on other grounds
by the Third Circuit; and United States v. Guerrina,
112 Federal Supplement 127, Eastern District of
Pennsylvania, 1953.” (App. 336)
The same authorities were relied on by Stribling here.
The trouble with these authorities is: Lipshitz was over-
ruled by the Court of Appeals of the Second Circuit in
Sclafani, 265 F.2d 408, cert. denied 360 U.S. 918 (1959).’
Guerrina was later revised on application for rehearing,
126 F.Supp. 609, 610, 611 (1955). Wheeler, 256 F.2d 745
(3d Cir. 1958), not only reversed the decision of the Dis-
trict Court, but vacated the suppression order.
Thus the contentions of Stribling were not supported
by authority. They are in conflict with decisions of this
Court in Miriani, Maius and Biggs.”
7 We think the Court actually overruled the decision of the
District Court reported in 132 F.Supp. 519, which ordered sup-
pression, rather than 117 F.Supp. 466, which merely granted a
hearing on the motion to suppress.
8 The dissenting opinion likewise does not comport with the
rule in these cases. It would place a duty on the part of the Gov-
(Continued on following page)
26
Stribling and his attorney McHenry testified that if
they had known of the investigation conducted by the
Special Agents, they would not have furnished any in-
formation to Agent Kast. These self-serving statements,
made long after the investigations had been completed,
do not militate against the rule that the Government owed
them no duty to inform them of the nature and extent of
its investigation.
The fact that an investigation was conducted by
Special Agents does not mean that it is limited to a crimi-
nal tax investigation. One reason for the investigation
may be for the purpose of determining tax liability. Not
all investigations by Special Agents result in criminal
prosecutions.
Recently we upheld the validity of summons issued
by Special Agents under 26 U.S.C. § 7602 for the dual
purpose of determining tax liability and investigation of
possible tax fraud. United States v. Held, __ F.2d __
(6th Cir. No. 20,672, decided December 17, 1970); United
States v. Artman, __ F.2d __ (6th Cir. Nos. 20,357,
20,358, decided Dec. 17, 1970).
The order of suppression is vacated in the respects
stated in the opinion.
CELEBREZZE, Circuit Judge, Dissenting. I would
affirm the District Court’s order suppressing all informa-
tion gleaned by the United States as a result of its inter-
views between Agent Kast and the Appellee.
It is well established that agents of the Internal
Revenue Service may not use fraud, trickery or deceit to
obtain consent to examine documents or conduct a search.
(Continued from following page)
ernment to advise a taxpayer of an investigation by Special
Agents and the nature and extent thereof. It equates failure to
so advise with fraud, misrepresentation and trickery.
27
Such actions would vitiate the voluntary character of any
evidence gained through such tactics. Gouled v. United
States, 255 U.S. 298, 304-305 (1921). This rule has been
affirmed in recent cases by the United States Courts of
Appeals from the Second, Fifth, Eighth and Ninth Circuits.
See, United States v. Sclafani, 265 F.2d 408, 414 (2d Cir.)
cert. den. 360 U.S. 918 (1959); United States v. Prudden,
424 F.2d 1021, 1032-33 (5th Cir. 1970); Cohen v. United
States, 405 F.2d 34, 40 (8th Cir. 1968) cert. den. 89 S.Ct.
1274 (1969); Spahr v. United States, 409 F.2d 1303, 1306
(9th Cir.) cert. den. 396 U.S. 840 (1969). This Court has
also acknowledged the validity of the rule laid down in
Gouled that incriminating evidence is not admissible if
obtained under a promise of immunity or through fraud
or misrepresentation on the part of the Government.
We held:
“It is settled law that the privilege against self-
incrimination does not preclude the admission into
evidence of documents voluntarily given to a revenue
agent in a civil tax investigation without promise of
immunity and in the absence of fraud or misrep-
resentation, even though the taxpayer did not antici-
pate the criminal prosecution. [Cites omitted]
“Whether the books were voluntarily surren-
dered by the Appellant or were obtained under a
promise of immunity or through fraud or misrep-
resentation on the part of the Government is a ques-
tion of fact.” 246 F.2d at 44.
I believe that based upon the facts of this case, there
is clear and convincing evidence to support the District
Court’s factual finding that the Appellee “and his counsel
were misled by Mr. Kast and were lulled into believing
that the disclosures being made would be used solely to
determine the correctness of [| Appellee’s] . . . amended
returns.” (Appendix at 337).
;
|
j
/
28
In February, 1963, the Intelligence Division of the
Internal Revenue Service began an investigation of the
Appellee with a view toward determining whether or not
he should be criminally prosecuted for violations of the
Internal Revenue Code. Under compulsion of a summons
which was issued pursuant to 26 U.S.C. § 7602 (1964)
and which purportedly concerned an employee of the
Appellee, the Internal Revenue Service sent out a Special
Agent to interview the Appellee. That interview which
took place in March, 1963, set off a chain of investigations
of the Appellee’s activities in Chicago, Illinois, Seattle,
Washington, Cincinnati, Ohio, and Kentucky. By late
August, 1963 the Internal Revenue Service Assistant
Regional Commissioner in Cincinnati, whose jurisdiction
covers a five state area including all of Kentucky and
Ohio, was sent a report on the Internal Revenue Service’s
widespread investigation of Appellee’s activities. While
this investigation was taking place, the Appellee filed
amended returns.
In response to the filing of Appellee’s amended re-
turns, the Canton office of the Internal Revenue Service
sought to requisition the Appellee’s tax returns and was
informed that the material requested was in the hands of
a Special Agent of the Intelligence Division for the past
several months. There is no indication in the record that
the Canton office made any further inquiry as to the status
of the Intelligence Division’s investigation into the Ap-
pellee’s affairs. Indeed, the Canton office did not even in-
quire to its Regional Office in Cincinnati concerning the
status of the Internal Revenue Service’s investigation on
the Appellee. Had the Canton office followed up on this
matter, they would have been made aware of the multi-
state investigation for tax fraud which the Intelligence Di-
vision was pursuing. Instead, the Canton office ordered
29
Agent Kast to interview the Appellee with respect to his
amended tax returns for the years 1959-62.
Agent Kast met with the Appellee and his tax law-
yers several times in November and December, 1963 and
affirmatively represented to the Appellee that his purpose
in conducting those interviews was to determine the cor-
rectness of Appellee’s amended returns for the years 1959-
62. Agent Kast did not express any intention to audit Ap-
pellee’s original returns or to gain facts which might be
used against the Appellee in a criminal prosecution based
on his original returns. While Agent Kast may have be-
lieved his statements to the Appellee were true because
his own superiors did not inform him of the continuing
criminal investigation, there can be no question these
affirmative statements misrepresented the position of the
Internal Revenue Service with regard to the Appellee.
The Appellee testified under oath that he would never
have volunteered the records or information he provided —
Agent Kast had he known such information could have
been used against him in a criminal prosecution or had he
known that the Internal Revenue Service had begun
investigating the possibility of a criminal indictment based
on his original returns several months before the Kast
interviews. Appellee testified he offered the records and
volunteered the information he gave so that the Internal
Revenue Service could fairly determine the accuracy of
his amended returns as Agent Kast had indicated to him
was the purpose of his visit.
I believe the record in this case provides “clear and
convincing” evidence to support the District Court’s find-
ing that the Appellee and his counsel were affirmatively
misied and deceived into believing that the Internal Reve-
nue Service’s purpose in seeking information was in the
pursuit of an exclusively civil investigation which would
ae dcetaali
30
not lead to criminal charges. The majority concedes that
Agent Kast affirmatively represented to the Appellee that
the limited purpose of his audit and interviews was to
determine the correctness of Appellee’s amended returns.
Those statements by Agent Kast served to affirmatively
mislead the Appellee into volunteering information which
he would not otherwise have given. The fact that Agent
Kast was not informed by his immediate superiors at the
Canton Field Office or by his superiors in the Cleveland
District Office or in the Cincinnati Regional Office that a
continuing nationwide criminal investigation of Appellee
had been in progress for a period of several months can-
not be used as a shield if in fact his misleading statements
deceived the Appellee. The District Court so found. An
agent of a field office of the Internal Revenue Service
must be held answerable for information which his im-
mediate superiors should have discovered and which his
district and regional offices clearly possessed. The District
Court’s order suppressing all evidence gleaned by the
Internal Revenue Service from the Kast interviews should
be affirmed.
31
APPENDIX B.
JUDGMENT OF THE COURT OF APPEALS.
(Filed February 10, 1971.)
No. 20,453
UNITED STATES COURT OF APPEALS
FOR THE SIATH CIRCUIT.
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
vs.
GEORGE Y. STRIBLING,
Defendant-Appellee.
BeroreE: Werck and CELEBREZZE, Circuit Judges and
O’SuLtivan, Senior Circuit Judge.
JUDGMENT.
AppEAL from the United States District Court for the
Northern District of Ohio
Tu1s CausE came on to be heard on the record from
the United States District Court for the Northern District
of Ohio and was argued by counsel.
On CONSIDERATION WHEREOF, It is now here ordered
and adjudged by this Court that the judgment of the said
District Court in this cause be and the same is hereby
vacated.
No costs awarded. Rule 39(b).
Entered by order of the Court.
Cart W. Reuss,
Clerk.
32
APPENDIX C.
OPINION OF THE DISTRICT COURT.
Criminal Action No. CR 66-149.
IN THE DISTRICT COURT OF THE UNITED STATES
For THE NorRTHERN DISTRICT OF OHIO
EASTERN DIVISION.
UNITED STATES OF AMERICA,
Plaintiff,
vs.
GEORGE Y. STRIBLING,
Defendant.
OPINION OF HONORABLE WILLIAM K. THOMAS
AT 3:25 P.M., FRIDAY, APRIL 3, 1970.
The Court: Gentlemen, I proceed to consider and
rule upon the motion to suppress in its several branches
as it has been presented here by Defendant George Young
Stribling.
I first consider the motion to suppress Exhibit 3, the
Hunter interview. I deal with this phase of the motion
in terms of the validity and the legality of the summons
that was issued by Agent Hunter as a delegate of the Sec-
retary under Section 26 U.S.C. 7602.
It will be assumed that to the extent that Mr. Stribling
was being questioned concerning his financial relations
with Mr. X, the summons was validly issued. At least for
present purposes, its validity to that extent will be pre-
sumed. Thus, presumably, the statement might have been
used to refresh Mr. Stribling’s memory had he been called
as a witness in connection with any prosecution of Mr. X.
But that, of course, is not the question that I have
33
before me. The question here is: What about the use
of this statement against this defendant in this criminal
prosecution?
As a result of a collateral request from A. N. Hunter,
a Special Agent of the Louisville District of IRS, Intel-
ligence Division, a Special Agent of the Cleveland District,
namely, Sol Auerbach, had gathered records concerning
Mr. X’s activities as a jockey at race tracks in this country.
He submitted a partial reply dated February 25, which,
together with its attachments, related to the activities of
jockey X during the years 1959, 1960, and 1961.
The report ended with the statement “It is requested
that Mr. Stribling be questioned as to whether he filed
income tax returns for the years 1957 through 1961. He
has owned the farm at Mechanicstown, Ohio since 1955.”
Just before that, in a reference to the 1961 American
Racing Manual, Mr. Auerbach stated “This book also lists
George Stribling’s record as follows:
“First: 20.
“Second: 14.
“Third: 16.
“Earnings: $25,395.”
These excerpts from the February 25 reply must be
read together with an excerpt from the earlier reply in
January when he stated that a search of the records of
the Cleveland District indicated that Mr. Stribling did not
file income tax returns for 1960 and 1961.
Thus, at the time of the A. N. Hunter interview of
George Stribling on March 28, 1963, he was clearly, and
I do so find, under suspicion of possible violation through
failure to file returns.
Hence, when Special Agent Hunter questioned him
as to whether he had filed returns, he was employing the
compulsory appearance of Mr. Stribling before him to
34
seek evidence to possibly incriminate Mr. Stribling in con-
nection with a possible prosecution against him for viola-
tion of the income tax laws.
It is said that the sole purpose of a tax investigation
by use of a summons under Section 7602 is to obtain
evidence for use in a civil prosecution and that if the sole
purpose is to obtain evidence for use in a criminal prosecu-
tion, the purpose is not legitimate and enforcement of an
IRS summons should be denied.
That is a paraphrase and not a quote. But it comes
from Wild vs. United States, Ninth Circuit, 1966, 362 Fed-
eral 2d 206.
It is true that a later case of that circuit, Howfield,
Inc. vs. United States, Court of Appeals, California, 1969,
409 Federal 2d 694, seems to hold that a summons may
be used even where the purpose is allegedly to uncover
crime when no criminal case is actually pending against
the taxpayer. A criminal case there is equated with a
criminal prosecution following an indictment.
Nevertheless, as I understand the law of the Sixth
Circuit as expressed in Hinchcliff vs. Clarke, C.A. 6, 1967,
317 Federal 2d 697, I understand that case to say that no
information secured through a summons issued to an in-
dividual may be employed against him in a criminal
prosecution.
‘It is true that Stribling could have refused to obey
the summons and this would have put Special Agent
Hunter to the necessity of seeking enforcement under 26
U.S.C. 7604. Yet Stribling’s failure to use this means did
not waive his right now to move to suppress any portion
of that interview that now the Government seeks to use
against him in this criminal prosecution. A present motion
to suppress all or part of the Hunter interview is compar-
able to a motion to suppress evidence obiained pursuant
35
to an inadequate or defective search warrant or its sup-
porting affidavit.
It is concluded and determined with reference to this
branch of the matter that to the extent that the interview
is sought to be used against this defendant in a criminal
prosecution, the interview is the product of an illegal use
of the power of summons under 7602. It cannot serve to
compel him to testify against himself.
Yet even if the summons were properly issued to
George Y. Stribling, the question would arise whether an
adequate warning against self-incrimination was given
to him.
The warning that was given to him was expressly
prefaced by the statement-—I believe this is a correct
quote—“‘You have been requested to come to this offiice
to answer questions and furnish data concerning the Fed-
eral income tax liability of Mr. X for the years 1959, 1960,
and 1961, irclusive.”
Moreover, Mr. Stribling testified without contradic-
tion that before the taped interview began, he quotes
Mr. Hunter as saying, in the exact words of Mr. Stribling’s
testimony, “This investigation does not concern me.”
Thus, certainly, he was led to believe that no ques-
tions would be asked of him that related to his own tax
liability and necessarily to his own possible incrimination
by reason of any tax liability.
Hence, the warning that follows, taken in the context
that I have just described, is not deemed to be broad
enough to cause the voluntary answering that followed
to waive his right against self-incrimination in any crimi-
nal proceeding thereafter brought by the United States to
prosecute him for violation of the income tax laws.
Accordingly, I determine that Exhibit 3, the Hunter
interview, may not be used by the Government either as
36
an admission against interest, a voluntary statement or
confession, or in any cross-examination of the defendant
should he testify at this trial.
Going on to another branch of this motion. In de-
fendant’s motion to suppress, it is stated in part—and I
am quoting from page 6 of the original brief—“The form
and nature of the misrepresentation which began with the
initial interview of George Y. Stribling on March 28, 1963
changed after August 22, 1963, when the defendant took
it upon himself to file amended tax returns for the years
1955 through 1962. From the date the amended returns
were filed, the Internal Revenue Service represented to
the defendant, George Y. Stribling, and to the defendant’s
attorney, Stewart McHenry, and to defendant’s account-
ant, Ronald Graves, that the investigation was pertinent
to ascertaining the correctness of the amended returns
filed by the defendant. However, in fact, the investiga-
tion was merely a coutinuation of the original criminal
investigation which was instituted sometime prior to
March 20, 1963.”
And on the next page, page 7, this portion of the
brief concludes with this statement: “The defendant,
George Y. Stribling, was intentionally misled by the mis-
representation and guile of the Internal Revenue Service
from the time of the initial interview with Special Agent
Hunter which took place on March 20, 1963.”
The filing of the amended returns on August 23, 1963
brought about several results. It now supplied the Internal
Revenue Service with information as to where he had
filed his income tax returns in the years 1955 through
1962.
Hence, whatever leads, if any, that may have flowed
from the improper eliciting of the same information from
37
George Y. Stribling in the Hunter interview now certainly
ceased.
Secondly, the filing of the net worth report disclosed
the names of banks at which the defendant maintained
accounts for designated years and reported the deposits
in these accounts. Other financial data in summary form
is given in this net worth report.
Certainly, this information therein enumerated pro-
vides the Government with leads that it may legitimately
use in pursuing that information and any documentation
of that information.
The filing of the amended returns also precipitated an
extensive audit of the taxpayer’s financial affairs for the
years at least as early as 1959, and probably earlier than
that, through 1962.
The taxpayer, on July 1, 1963, first met with counsel
in Canton, and apparently they were then engaged to deal
with his tax problems. At counsel’s suggestion, Canton
CPA’s were also engaged. The taxpayer, with the advice
of his attorneys and, presumably, his accountants, deter-
mined to and did prepare a report of taxable income
computed under the net worth method for the years 1955
through 1962. This is the document that was filed with
his amended returns.
On October 23, Mr. John Brownfield, the Group
Supervisor of the Audit Division, Canton, Ohio, the Cleve-
land District of IRS, assigned the auditing of the defend-
ant’s amended returns to Revenue Agent Kast.
On November 5, Mr. Kast calle? Mr. Stewart
McHenry, one of the attorneys representing Mr. Stribling.
Mr. McHenry then, after several calls to Mr. Stribling
and to Mr. Graves, set up the first joint conference for
November 19, 1963. This conference took place at the
38
Stribling farm in Carroll County, Ohio, on that date,
November 19, 1963. At least in the morning, those present
included Mr. McHenry, Mr. Stribling, Mr. Graves, and
Revenue Agent Kast.
The evidence also shows that a later conference oc-
curred on December 27, 1963 attended by the same
persons. :
There were other telephone conferences, but these,
I believe, are the only person-to-person conferences in
the year 1963 involving these named parties.
At certain of these conferences, canceled checks, bank
deposit records, and other original financial records of the
defendant were disclosed and made available to Agent
Kast. Copies of these were obtained by him and, as far
as I know, remain in the possession of the Internal Reve-
nue Service.
Also, Mr. Stribling, Accountant Graves, and perhaps
his lawyers answered whatever questions were asked by
Agent Kast.
For example, on the 19th, Mr. Stribling stated, as
appears in Agent Kast’s memorandum of that conference,
as follows. Mr. Kast has put Mr. Stribling’s words in
quotes.
“Winning from bets and selling of horses not
reported because mc ney was reinvested in property.”
-- At another point in this same memorandum, the
amounts of his bet winnings at the tracks on certain days
and for certain periods are listed.
And then following that, again in quotes, appears
“Bet money at race track. Nowhere else.”
Mr. Stribling took the stand and was asked a scries
of questions, and I want to refer to some of them.
“Question: When, to the best of your memory,
were you interviewed by IRS agent Kast?
39
“Answer: In the fall of 1963.
“Question: Now, at that time, were you informed
by Agent Kast or any other person that you were
being investigated by IRS for possible criminal prose-
cution?
“Ans-ver: No.
“Question: Were you informed by Agent Kast or
anyone else at that time that anything you said or any
records you furnished could be used in a criminal
prosecution of George Stribling?
“Answer: No.
“Question: Were you informed at that time by
Agent Kast or anyone else that you had a constitu-
tional right to remain silent and to refuse to answer
any questions and to refuse to produce any documents
which might tend to incriminate you?
“Answer: No.
“Question: Did Agent Kast inform you, Mr.
Stribling, of the nature of his investigation?
“Answer: Yes.
“Question: What did Agent Kast say regarding his
investigation of you?
“Answer: He said it was to determine the correct-
ness of my amended returns for the years of 1959
through 1962.”
This testimony attributed to Agent Kast is not con-
tradicted in any of the testimony that Agent Kast gave
when he appeared here in Court. Moreover, Agent Kast
was not recalled to the stand to refute the affirmative re-
presentations that I have just quoted.
In addition, as I have indicated—and it is apparently
not in dispute—Agent Kast gave no warnings, no admoni-
tions of any kind.
This absence of warnings and the absence of con-
tradiction io Mr. Stribling certainly tends to corroborate
the truth, and I do find that, in fact, Agent Kast did make
the statement that is attributed to him by Mr. Stribling.
40
The testimony of Attorney McHenry does not touch
on the point of what Mr. Kast may have said. But the
whole content and character corroborates Mr. Stribling’s
statement.
Thus, Mr. McHenry, among other things in his testi-
mony, was asked:
“Question: Was there any discussion between you, ’
Mr. Jones, and Mr. Stribling that in any way related
to the possibility of any criminal prosecution thai
might flow or could be connected with what you were
doing with him? Was this discussed in any way?
“Answer: Well, first of all, your Honor, we knew
of no criminal investigation at that time, and it wasn’t
until a later time when we—someone from the Intel-
ligence Section came in question until we thought of
that.”
And then later on
“Question: Well, let us go back to the 19th of
November. I was inquiring whether there was any
_ discussion that you had with Mr. Stribling—
“Answer: Yes, sir.
“Question: —prior to meeting with Mr. Kast as
it related to either the manner of questioning, the
permission to question, any restriction on question-
ing, and so on.
“Answer: None whatsoever, your Honor. In fact,
we thought—Mr. Jones and I thought that the best
thing to do here was to be as open and forthright and
as cooperative as could be.”
To me, hearing that testimony and reading it again
as it was actually given corroborates in my mind that
Mr. McHenry believed that this was a civil proceeding
only and it had no criminal overtones and it would not
involve his client in any criminal prosecution if he made
a complete revelation of his documentary evidence as well
41
as admissions that he might make to any questions put
to him by Mr. Kast.
Mr. Stribling was further asked these questions.
“Question: Now, did you answer questiuns, Mr.
Stribling, and give information and authorize the
production of your records, checks, and other docu-.
ments to this Agent Kast?
“Answer: Yes.
“Question: Would you have done so if you had
known or been informed that the information you
gave could be used in a criminal prosecution of George
Stribling?
“Answer: No.
“Question: Would you have done so if you had
known that the IRS had started investigating you
early in 1963?
“Answer: No.
“Question: Were you advised, Mr. Stribling, by
your attorney prior to the time that you were inter-
viewed by Agent Kast or at the time of the interview
that you were already being investigated early in
1963 by IRS?
“Answer: No.”
Defendant relied principally to support this branch
of their motion on United States vs. Lipshitz, 132 Federal
Supplement 519, Eastern District of New York, 1955;
U.S. vs. Wheeler, 149 Federal Supplement 445, although
this case was reversed on other grounds by the Third Cir-
cuit; and United States vs. Guerrina, 112 Federal Supple-
ment 127, Eastern District of Pennsylvania, 1953.
The principle of these cases can be summed up in a
quotation from Cohen vs. United States, an Eighth Circuit
decision of 1968, 405 Federal 2d 34 at 36, where the Court
of Appeals for the Eighth Circuit, though it refused to
follow the Turzynski line of cases, went on to say this, and
I am quoting from page 36:
42
“While there is District Court authority for the
view that Internal Revenue Service agents have an
affirmative duty to inform a taxpayer that he is the
subject of a criminal investigation in circumstances
comparable to those here, the United States Courts
of Appeals have uniformly held to the contrary. We
follow the latter cases, but reiterate our warning in
White v. United States, 395 Federal 2d 170, Eighth
Circuit, 1968, that agents must not affirmatively mis-
lead a taxpayer into believing that the investigation
is exclusively civil in character and will not lead to
criminal charges.”
On this record, it is found and determined that both
Mr. Stribling and his counsel were misled by Mr. Kast
and were lulled into believing that the disclosures being
made would be used solely to determine the correctness
of his amended returns. In the words of White supra,
they were affirmatively misled into believing that the in-
vestigation was exclusively civil in character and would
not lead to criminal charges.
How else can one explain how an honorable, compe-
tent lawyer—true enough not a criminal or tax lawyer
necessarily, but an experienced lawyer—would advise his
client to throw open completely all of his records and to
provide information knowing that that very same informa-
tion might later be used against him and cause him to be
convicted in a criminal prosecution?
Now, it is nonetheless misleading because Mr. Kast
may not have known and I believe did not know as
Vaughn Chase, Group Supervisor, Intelligence, stated on
March 23, 1964 in accepting Mr. Kast’s referral “Knowl-
edge of Mr. Stribling having failed to report all his income
first came to this unit’s attention in January, 1963 when
Special Agent Auerbach was working a collateral request
of the Louisville District on the tax liability of John F. X,
a jockey sponsored by Stribling.”
43
On the contrary. The preliminary investigation of Mr.
Stribling carried on by Mr. Auerbach from January to
August 29, 1963 and thereafter by the Washington District
Intelligence Division sharpens the misleading edge of the
affirmative statement of Mr. Kast that the purpose of the
audit and the disclosures was to determine the correctness
of the amended returns.
The preliminary investigative report of Agent Auer-
bach shows in one of the concluding sentences “The
analyses previously introduced indicate acquisitions of
equipment and horses and acquisitions and bank accounts
far greater than the adjusted gross income shown on the
tax returns.”
This continuing investigation by the criminal investi-
gators of IRS heightens the misleading character of Mr.
Kast’s statements that I have previously referred to.
Accordingly, the second branch of the motion is
granted to suppress and to exclude from trial all admis-
sions made to Agent Kast orally or in writing by Mr.
Stribling or his agents with his authority and consent
and all documentary records that were produced by the
defendant and made available by him or his agents to
Revenue Agent Kast.
I will withhold any orders as to any proscription of
the fruits or products of the foregoing evidence that I am
suppressing. However, if necessary, I will be able to con-
sider such question in connection with the exercise by the
Government of the burden that it must now assume to
show that its proposed trial evidence is free from taint
of the evidence I have heretofore suppressed.
Of course, it is clear that if the Government can
show that its evidence was gained or can be gained from
independent sources or independent leads, then to the
extent that that can be shown, the Government meets
44
the burden and that evidence certainly may be received
in support of its prosecution against this defendant.
That, gentlemen, completes the ruling, and I will be
glad to meet with counsel informally here or otherwise to
discuss our next step in this case. :
Mr. Bauer: Your Honor, for the record, represent-
ing the Government, I would like to say that the Govern-
ment’s next step will be to analyze the ruling made by the
Court today and then to consider its next step.
I would suspect that perhaps an analysis will be made
in Washington and they may want to consider appealing
this particular order. I can’t say.
I will say it appears at this point that the Government
was not prepared at this time to go forward with trial.
The Court: Well, on what basis? We can cer-
tainly allow a certain period of continuance without an
indefinite continuance in view of the fact that we over-
ruled the motion based on a ground of speedy trial, if you
recall, and ordered the case set for trial.
Now, I would assume that within a very short period
of time, you will be prepared to indicate.
Mr. Bauer: Oh, we would be, your Honor.
The Court: I am going to ask that you do that by
next Tuesday or Wednesday.
Mr. Batter: We can do that by next Tuesday or
Wednesday, your Honor.
The Court: All right. Suppose we meet here again
in court’on Wednesday morning?
Mr. Bauer: Fine, your Honor.
The Court: At 9:30.
Mr. Bauer: Thank you very much.
The Court: And at that time, you can indicate
what your plans are.
Close court, please.
(Court was adjourned.)
45
APPENDIX D.
JUDGMENT OF THE DISTRICT COURT.
(Filed April 9, 1970.)
Criminal Action Number CR66-149.
UNITED STATES DISTRICT COURT
NorTHERN District or OHIO
EASTERN DivisIon
UNITED STATES OF AMERICA,
Plaintiff,
Vs.
GEORGE Y. STRIBLING,
Defendant.
ORDER.
This matter came on for hearing on March 20, 1970,
upon the eve of trial, on defendant’s motion to suppress,
Upon the testimony, exhibits, arguments and the
entire record,
It Is OrvERED that the motion of the defendant to
suppress is hereby granted pursuant to and as limited by
the oral opinion given in open court on April 3, 1970.
/s/ Witt1am K. Tuomas,
U.S.D.C. Judge.
46
APPENDIX E.
CONSTITUTIONAL PROVISIONS, STATUTE AND
REGULATION INVOLVED.
Fifth Amendment to the United States Constitution:
No person shall be held to answer for a capital, or
otherwise infamous crime, unless on a presentment or
indictment of a Grand Jury, except in cases arising in the
land or naval forces, or in the Militia, when in actual serv-
ice in time of War or public danger; nor shall any person
be subject for the same offence to be twice put in jeopardy
of life or limb; nor shall be compelled in any criminal case
to be a witness against himself, nor be deprived of life,
liberty, or property, without due process of law; nor shall
private property be taken for public use, without just
compensation.
Internal Revenue Code of 1954, Section 7602, 26 U.S.C.
§ 7602.
For the purpose of ascertaining the correctness of any
return, making a return where none has been made, de-
termining the liability of any person for any internal
revenue tax or the liability at law or in equity of any
transferee or fiduciary of any person in respect of any
internal revenue tax, or collecting any such liability, the
Secretary or his delegate is authorized—
(1) To examine any books, papers, records, or
other data which may be relevant or material to such
inquiry;
(2) To summon the person liable for tax or re-
quired to perform the act, or any officer or employee
of such person, or any person having possession,
custody, or care of books of account containing entries
relating to the business of the person liable for tax
47
or required to perform the act, or any other person
the Secretary or his delegate may deem proper, to
appear before the Secretary or his delegate at a time
and place named in the summons and to produce such
books, papers, records, or other data, and to give
such testimony, under oath, as may be relevant or
material to such inquiry; and
(3) To take such testimony of the person con-
cerned, under. oath, as may be relevant or material
to such inquiry.
Internal Revenue Service, Statement of Organization and
Functions, 65-2 Cum. Bull. Section 1118.6, at 948
(1965).
The Intelligence Division enforces the criminal stat-
utes applicable to income, estate, gift, employment, and
excise tax laws (except those relating to alcohol, tobacco,
narcotics, and certain firearms), by developing informa-
tion concerning alleged criminal violations thereof, evalu-
ating allegations and indications, of such violations to
determine investigations to be undertaken, investigating
suspected criminal violations of such laws, recommending
prosecution when warranted, and measuring effectiveness
of the investigation and prosecution processes. The Divi-
sion assists other Intelligence offices in special inquiries,
drives, and compliance programs and in the normal en-
forcement programs, including those combating organized
wagering, racketeering, and other illegal activity, by pro-
viding investigative resources upon regional or National
Office request. It also assists U.S. attorneys and Regional
Counsel in the processing of Intelligence cases, including
the preparation for and trial of cases.
ED A etn al ent i Sd im witb en's incon
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.