Petition for Writ of Certiorari — Nemetz v. United States

Supreme Court brief1972

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_ JOSEPH A. NEMETZ, eg

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VS. ; .

UNITED STATES OF AMERICA~-— -

PETITION FOR WRIT. OF CERTIORARI. TO i

THE UNITED STATES COURT OF APPEALS

OR THE THIRD CIRCUIT —

ALLEN N. BRUNWASSER, .

Attorney for Petitioner - 5

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903 B Grant Building,

Pittsburgh, Pa. 15219

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PE TITLON FOR “Writ OF CE RTIORARI: ~

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INDEX

eo 3 2 SS 4. eS 8°. © 8 20.08 8 Oe @ 68 3D OC 4 68 4 Oe SO A Se

4 Opinions | Below ......2... Cte eeu aes ROP a er ae:

Jurisdiction Cae Ae RR on eh he eros eae ee \

ae Cosatiniiénal Provisions, Statutes and. Regulations

-Which the Case Involved _ eee Agar ai Ar an

Siaternent of the: eee vee fate at OM AN ‘

bse for Granting. the Writ:

WN Ny — |

Is anew tial mandated when a special agent . -

"of the Internal Revenue Service deliberately ©

violates a pgocedural directive of ‘his agency

by not clearly disclosing his criminal func- .

iion-at the initial contact with the. to-be-

investigated taxpayer within the meaning: of.

U. S..v. Heffner, 1969, 4 Cir.,.420 F/ 2d

809, and cases cited ‘therein ‘and U. S. v.

Leahey, 1 Cir., 1970,.434 F. 2d 7? .

. When special agents of the Internal bi aie

Service confront. a taxpayer for the purpose

‘of obtaining oral admissions plusehis written

records for use in the investigation they are

then conducting into his affairs, is this a

“critical stage” which mandates the right -

to counsel warning within the meaning of

Coleman v., Alabama, 1970, 90 S.-Ct. 1999,

2002, 399.U:S. 1, 7; U.S. v. Wade, 1967,

87 S. Ct. 1926, 1930-1931, 388 U.S. 218,

222-223, and, if so, has defendant waived.

Renee. ee

— i

N-*

“ ;

ao;

this right under. the fact ciréumstances of

* this case when amg in light of Johnson:

v. U. S., 330 US. 10, 12; Amos v. U. S.,

- 1920, 225 U.S. a “315, 317, and Von

Moltke v..Gillies, 1948, 332 U.S. 708, 724?

- Does a confidential relationship exist be-

tween a bank and its-depositor and, if it

does, must 26 U.S.C. 7602 process, be

served before the bank records are made

available for IRS special agent examination

and, if so, does the taxpayer have an abso-

lute.right, to notice that the sunimons has

_ been served plus the opportunity to inter-._

~ vene and participate when the special-agent *

. interviews the witnéss so that he can prevent ..

improper use of the summons and aid in the

- disclosure’ of. helpful: evidence which would

ing of U..£. v. Donaldson, 1971, 400/U.S

prevent his» s prosecution all within the wus

517, 523, - 91S. Ct. 534, 538, 542?

. In'a 26 USS.C. 7201 specific item prosecu-

tion, must Government aid Defendant in

proving deduction allowable under U- S. v.

Sansone, 1965, 85 S. Ct. 1004, 1010, 380

- US. 343, 352, when his eecords have been .

stolen previous to IRS contact and investi-

gation .and does deliberate failure to do this

qualify as a suppression of evidence within,

‘the ‘meaning.of Brady v. Md., 1963, 373 .

U.S. 83.and its’ progeny?. enya a

APPENDIX: 7 '

Opinion and Order of the. District Court ...:...°..

-— =

_ Order of ‘the District Court. Par eee oh a

.\ ‘Opinion of ‘the Court of Appeals ..... ee saree os,

‘ Petition for Rehearing ...... Rn as ac Wieienes |

= Order oes ee

69 —

75 -

. 85

TABLE OF CITATIONS

CASES: : ° <- .

Abel.v. U. S., 362 US. 217 N...... eee.

Amos v. U. S.,.1920, 225 US. 313 (00.05... .3,23,44

Associated Press v. U. S., 1944, 326 US. Po

: Berry v. U, S., 3 Cir., 1970, 4i2 F.2d 189-...%... 50°

- Board of Trade of Chicago - v. Christie Grain id

Stock Co., 1905, 198 US. 236 eee eee 56

Boulden v.,Holman, 1969, 89'S. Ct. 1138, footnote —

1, 394 U.S. 478 ....... LA Wieheree are TAS 33,45 a

Boykin v. Ala., 1969, 395 US. 238, 89 S. Ct. 1709 49, 50

Brady v. Md.,, / 1963, 373 U.S, 83 tote... 45 43, 68, 69

Brex v. Smith, 1929, ‘104 N. J. Equity 386 Leet 55, 56-

Bridges v. Wixon, 1944, 326 US..135 -..,..2...2 7 61

s Brookhart v “Janis, 86 S. Ct. 1245, 384 U.S. 1 49

Bumper Vv. "North Carolina, 1968, 88 S.:Ct. 1788,

391 US. = aE ee ee rr eer ee 41,45

7 Chakejain,v.' Trout, E.D. Pa., scion 295 Fed. Supp.

: OP ais cbcdicec hi es eee eee

| Clewis w. Texas, 1967, 87 S. Ct. 1338, 386 US. ne

707. Rp eee ae

Clzoga v. U. S., 10 Cir., 1967, 380_Fs 2d 305. 50 |

Cohen v. U. S., 8 Cir., 405 F. 2d 34 ............ = ae

Coleman ,v. Alabama, 1970, 90 S. Ct. 1999, 399

) USS. 1, 7. wake See ree ye eye 3,23, 34, 35, 36, 51

- Colonnade Catering Corp. v. U. S., 1970, 90 S. Ct: Bs

FI4, WE BBOIE 2 od oes oie Ae

Columbe-v. Conn... L960, 360 US. 508, voy

\ ae Nee Se en 78, 39, 40,48

Com. ve Stanley, 1969, 251A, 2d O81, a 4.Pa. Sue |

pertor Chott ou. la. e... ae . eee, Sra 50

Davis v. North ¢ ‘yrofina, 1900, 86 Ss. Ct. 176 1, 384

Be FRE oe San ee oe Decanters bee (G re a

Dombrowski v. Pfister, 1904, 580 US. 479, 85 S. Pass

Ot. P9960 a a ccereecy hare tLe ae 62.

Elkins v.ULS., 304 US. 200.0... Sorc ue. - OF

Fraternal Order of 1 agles vo ULS.. 3. Cir. 57 4. 2d .

os te Pee Gras co ves oi Sees

Prag ICTY, Cupp. 1969, 89 § 1420, 4 US. MI - 45°

Garner v. Broderick, 88S, ¢ 1913, 392 US. 273 ee

. ai v. New. Jersey. 1907. 385 US. biel a Dee ns

i SO ares eee eS Loess ws MA

Government of Vi irgin stands v. Bese: 412 PE 2d

RAF er ea hts ous So ee Beas Mile pUN Ps Gal ne : 42

Greenwald v. Wis., “1908, 88 S21. TbS2. 390, Us, .

FE a eee ee ee re See eee 45

Moarst Vv. Black, D.C c i. 87 .. 2d 68 Pe ihe ee : 56, 57

Hatahley v.U. S. 351 US pee sea ee

Higgins v. U.S Be: Cir., 209 P. 22 819. eet 41

Hinchelitf’ v. Clarke, 6 Gir... 19677 371 EF. 2d 097 © 66

Hoffa vo U.S... 87 S. C1 . 408; footnote 7, 385, US. — %

a te Serge eu a aA Ce ay vn

Holland \. UL S., 1954, 348 US. 3 pare oe! 2 oe

+ Jackson v. Béoae, 1963. SUS. 3608 2.5. RCs orig" 48 —

Jenkins v, Delaware, 89'S. Ct. 1677, 395.U.S. 215 45

Johnson v. New Jers sey, 1966, 86 S. Ct. 1772, 384

es LS. 719 ee er er ea ae Cee ee te ee ea We

~ e "iv

“ay

i i ‘

| Johnson v. U. oe 330 US. 10 eee nian 23, 31, ay

Judd v. ULS., D.C. Cir. 1951, 190-8, 2d 649 ..... | 42

Justice Vv. U. , 6 Cir., 1966, 365 f..2d 312, aff a

‘390, U.S "99, B65: CWO 2 ee en

Loyd v. U.S., 5-Cir,, 1955; 226 F.2d 9 eae uaG

MacKenzie v. Robbins, 1965, 5.D. Me., 248 fed, |

Supp. eee eed A a roat es fee eta :

}

| Mancusi: \. DeForte, BS S. Ct. 2120, ie U. S. 364.

Mapp Vv. Ohio, 307 U. 5. 643 eal rnhe gare vie eee

* Martinez v. U. §$., 380.U.S. 260, 85 S: Ct. 953, 333

I. 2d 405, 9 Cirs, PO a ge eae ee

Massiah 'v.-U. S., 1963, 377 U.S..201 ee

Mathis v. U.S., 88 S. Ct. 1503, 391 Se ae

McCarthy ¥ O-S., 1969, 89 5, Ct: 1166, 394 U.S."

459° Bee Fee aes Gregan en ahr Anes Seg IL :

MéeMann v.5.8. C., 1937; 2 Cir., 87 F.2d 377 .

-. Miller v. Pate, 386 U.S.-1, 87 S. Ct 785. z:5 ea,

Miranda Vv. Arizona, 1966, 86 S.Ct. 1602, 384 "US. se

ae es rN eee 34, 35, ‘37, 38, 49, 50,51,

Mooney v Hollahan, 294 U. . 1... ae a?

- Mullins v. U.S.,4 Cir., 1967; 382 F. 2d 258 2... .

Nanty-Glo Boro v. American Surety Co., 1932, 309 |

‘ ot, SER ee Re rae ChB ere are

Napuc v. Hl., 360.U'S. 264 ..2...0..5.. |. me

Orozco v. Texas, 89 S. Ct. 1095, 394 US. 324

Pauli v. Kansas, 272 US. We SPEDE ae

Peterson v. ‘Idaho First aed Bank, -367 P. 2d

; 284, 1962, Idaho-........ feeteee be te ddhs

prem v.U.S.,7 Cir.,'1962, 301 F. 2d 267 .. 1)-

7 megan I

io. Vig KS

~. Reisman v. Caplin, 375 US. 440, 84S. Ct. 508 | 62, 63

Rhoades, Inc. v. United ‘Airlines, ‘Inc., 3 Cir., 1965,

s 340 F. 2d. NE TKG Saedn cba cone eee. — «48

Roviaro v. U. S., 1957, 353 US. 53...<......: ccm

Sansome v. U.S., 85S. Ct. 1004, 380 US. 545 . 67,70

Service v. Dulles, 354 U.S. PEs 0 wrcstveseaeens 61,62

Shotwell Mfg. Co. v. U. S., 371 US. WN 25 44

Silverthorne Lumber Co. et al. v. U. S., 1920, 251

We SE Genes cads OL ental eee: 68

Sims v. Ga., 1967, 87 S. Ct. 639, 385 US.538 .... 48

Singer v. U. S., 85 S. Ct. 783; 380 US. a4 Pr re 67 -

Singer v. U. S., 3 Cir., 1932, 58 F.2d 74........, Pr

Sleek v. J. C. Penney Co., 3 Cir., 196% 324 F. 2d

Gar + 5560663 045 dee ee eee ie

Smith v. Texas, 311 US. 130, 61 S.Ct. 165 | eae ow 63

Smith v. U. S., 1954, 348 U.S. 147 ............. "43

Spano v. U. S., 1958; 360.US. 319°: .........-. 40

Spevack v. Klein, 1967, 385 U.S. 511, 87 S. Ct. 625 44

Sproble v. Cal., 1951, 313 U.S. 181 ....... bones. we

Stevenson v. Boles, 4 Cir., 1964, 331 F. 2d 939, 379

. U.S. 43, 85 S. Ct. “Fees 51

Stone v. Williams, 1 Cir., 1966, 356 F. 2d 934 . 66°:

Swerisen_v. Bosler, 1967, 87 S. Ct. 996, 386 US.

OO ovina aa nes Fa oc ee 45

~ Thomas v. U. S., 386 U.S. 975, 87S. Ct. 1164...2. 38

Tournier v. National Provincial and Union Bank of

Engiand, 1 K.B. 461 (1924) ....... epee Pe 53, 54

U.S. v. Bank of Commerce, 3 Cir., 1969, 405 F. 2d

OE eevasvess weeans Pees eccceesees 58

U.S. v. Blue, 1966, 384 US. 251, 86 S. Ct. 14164, 45, 66

U. S. v. Blumberg, 5 Cir., 1955, 222 F. 2d°1496 . 73

U. S. v. Brown, 85 S. Ct. 1707, 381 U.S. 437 .... 63

U.S. v. Calderon, 1954, 348 U.S.159 .......... 43

U_S. v. Caserta, 3 Cir., 1952, 199 F.2d 905 ...... 73

U.-S. v. Dauphin. Deposit Trust Co., 3 Cir., 1967,

ies 54, 58

U.S. v. Donaldson, 1971, 400 USS. 517, 91S. Ct. |

| re ee '...3, 52, 99, 60, 68

U.S. v. First. National Bank of Fort Smith, W. D.* -?

Ark., 1959, 173 Fed. Supp. 716 ............ 54

U. S. v. 50 samy Bank of Mobile, D.C. oy

67 Fed*Supp. 616 (1946), 160 F. 2d 532 . 54

U. S.-v. Gower, 1967, M.D. _Pa., 271 Fed. mans

gl NRG RE ae Jee Th eae Saas 38, 43

U. S. v. Grant, 2 Cir., 1961, 291 F. 2d 327 ...... 65

U.S. v. Heffner, 1969, 4 Cir., 420 F. 2d 809,

‘ “3, 13, 20, 21

U.S. v. Howard, 1965, 375 F. 2d 673 ...:...... 62

U. S. v. Jackson, 1968, 88 S. Ct. 1209, 390 US. 570 44

U. S. v. faskiewicz, 1970, 433 F:-2d 415 ........ 22, 34

U. S. v. Kingry,-19 A.F.T.R. 2d 762 .-........... . 38

U.S. v. Kordel, 90 S. Ct. 763, 397 US. 1........ 44, 67

‘U.S. v. Leahey, 1 Cir., 1970, 434 F. 2d 7,

3, 13,21, 22. 23

U. S. v. Lefkowitz, 1931, US. 492 wa ...... 57

U. S. v. Marra, E.D.N.Y., 1930, 40 F.2d 271 .... 42

U.S. v. Mothe, E.D. La., 1969, 303 Fed. Supp. 1366 65

U. S. v. Newman, 5 Cir., 1971, 441 F.2d 165 .... 60 -

Vii

U.S. v. Polensky, D.C. Vt., 1969, 300 Fed. Supp.

Nita RE OTT ee io.

U. S. v. Powell, 1964, 85 S. Ct. 248, 379 USS. 48 . 62

U, S. v. Remco, 3 Cir., 1968, 388 F. 2d 783 2.2... 35

U. S. v. Sansone; 1965, 85 S. Ct. 1004, 308 US.

ey pee een a 9 ih Fa 9) 4, 69

U.S: v. Silverstein, 314 F. 2d 789 .... Se a a 88 | 35

U:S. v. Sing, D.C. N.Y., 1957, 149 Fed. Supp. 269° 40

U.S. v. Thompson, 1969, 89 S. Ct. 1322, 394 US. |

ng BEER EERE ECE TET EPC CC EE ‘ 44

U. S..v. Turzynski, N.D. Ill, 1967, 268 Fed. Supp.

WOE pe eeteccwwscssccsneePestasens yiaKee 38

U.S. v. Tutkin, 3*Cir., 1954, 212 F.2d 641 20.0... 74.

U.S. v. Wade, 1967. 87S. Ct. 1926, 388 U.S. 218,

3, 23, 35, 36, 37. 46, 51

U.S. v. Wainwright. DC., 1968, 284 Fed. Supp.

SN ey er ee eee ara pen ping tm ah, Le 38

i. S. v- Wheeler, 3 Cir., 1960, 275 F.2d 94 ...... 48

U. S. ex rel. Accardi v. Shaughnessy, 347 US. 260. > 21

vs rel. Almeida v. Baldi, 3 Cir., 1952, 195 F.

LU. S. v. Erdner. 5 Cir., 1970, 422 F. rh OREN 63,65

V itarelli v. Seaton, 359 is AR. Pere eta ee M 62-

Von Moltke v. Gillies, 1948, 332 U.S. 708 ....3,23,49 ”

Wade v. Yeager, 3 Cir., 1967, 377 F.2d 841 ..... ° 46

Wilson v. Schnettler, 1960, 365 U.S. 381 ........ 62

Wien +. U.%., Ti US. FAR 36 SS 57

Wolf v. Colorado, 338 U.S. 25 ...... Gea AA, At 66

_ Vili : 7 .

Wooley, v. Great ‘Atlantic & Pacific Tea Company,

— 3.Dir., 1960, 281 F.2d 78 ........ ees _ 48

Wright v. Rockefeller, 1965, 376 US. 52 -....... 48

Yellin v. U. S., 374 U.S. 109 20.2... 2 62

Zimmerman v. Wilson, 3 Cir., 81 F.2d 847, 105 F.

"i . SR err rn ty Pinar aie 58

CONSTITUTION: 7

U. S. Constitution; 4th Amendment .:.......... «5,45

-U. S. Constitution, 5th Amendment .......... 5 36, 45.

U. S. Constitution, 6th Amendment pacneaeeseus 6, 45.

* RULEs: |

Criminal Rule ....... PS Pee reer ee er ‘ 11

Sina | ee ea oe ee Ll. 59

U. S. Supreme Court Rule 19-T(b) ......... we

STATUTES: _ . ‘

iS URS. Seo RE ene: eer

a Ee Se ie sR eey Ae aa 47

26 U.S.C. 6851 and 6861 ..........2...... (44

We WR We tac 2,4, 9, 39, 50, 63, 69

26 US.C. 7205 ......0:.... joe akeiaies RN ese

OS URE. THOR oe cess -. 356, 12, 35, 52, 61, 63

“$6 UBL. WB... «260 2.. Peers RS Ge 7,61

URE. TON. orc neccies 61:

28 US.C..1254(1) .........5.. oe nae 2

Be Wee eee GE GEE. cs Kassie 44 >

7 Purdon Statutes 332, 333 ........... F eae ee 55

MIscELLANEOUS: “

7 Am. Jur., Banks, Sec. 196, p. OU es en ea ty

73 Bankers Law Journal 163 ees coats

_ 80 Banking Law Journal 28 (1963) ....... eee Me

25 Columbia Law Review, 152 ...... pete es ere 54

Convictions, SeaTwkés and Seizures in_‘Tax-Cases;~

Norman Redick, 10 Tax Law Review 191. 31

Cones Juris Secondum, Banks and Banking, Sec.

71 (c) (POP setersserevrehsssapesscevossne 54

Federal Tax Reporter; Vol. 6, para. 5709.1148, p.

eee PR ERE ge aI ae pias 3 i OLN 8

IRS News Release No. 8972 Oct. 3, 1967, ‘1971

~ CCH Federal Tax Reporter, Vol. 6, para.

PO nee MIE nok oc ccncvocsecaseon y

John T. Morse, Ir.. “Law of Banks and Banking”,

oth Fd., Vol. 1, Boston, Little, Brown and

Company (1928), Sec. 298(a) 2.02... ~~ °°

14 Journal of Taxation 220 (1901) ....00.00... 57

“Michie, “Banks and Banking” Permanent Edition,

Vol. 3¢b). The Michie Company (1950); Ch.

oe Bee ee res . 54

60 Michigan Law Review 781 iin ti Mak ahead ak aoe 57

New Canons of Professional Ethics, D.R. 7- 103 (b), |

%-109(a) (6). 7. E.C. 7-13 ......... whereas 74

Patton's Digest. American Bankers’ Assn. ........ 52

Random House Dictionary, BREE A ae 20 .

Robert Morris Associates Code of’ Secrecy, p..28 UF 54

The Constitutional Right to Counsel .in Tax’ Investi-

gations, 1965-66, 33 University of Chicago Law ;

SY SOP ne sa avn vrnke ier dnes cen chs 37

76 Yale La® Review, 1 (1966) heed cone ns 37, 38, 44

Petition

IN THE SUPREME COURT OFTHE UNITED STATES

Sr aa

Joseph A. Nemetz, !

Petitioner

vs.

. United States of America

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

THIRD CIRCUIT

_ To the Honorable, the Chief Justice and the Associate

Justices of the Supreme Court of the United States:

Joseph A. Nemetz prays that a writ of certiorari issue

to review the judgment of the United States Court of Ap-

. peste for the Third Circuit in his-case. .

f . . . . . . .

Opinions Below and Jurisdiction

OPINIONS BELOW

The Opiiion of the United States District Court for

the Western District of Pennsylvania is reported at 309

Fed. Supp. 1330 and is printed in the Appendix: at p. 75.

The Opinion of the Court of Appeals is ‘reported: at

BE. 2d and printed ‘in the Appendix at p. 85.

JURISDICTION *

— The Opinion and Order of. the Third Circuit Court

of Appeals was filed November 4, 1971.° An order deny-

ing the petition for rehearing and suggestion for rehearing

by the Court en bane was entered December 3, 1971

(See p. 97). The jurisdiction of this Honorable Court

is invoked under 28 USC 1254(1). The jurisdiction of —

the Bnited States District Court for the Western District

of, Pennsylvania was invoked by the United States of

America under provision of 26 USC 7201.

? | Questions Presented

QUESTIONS PRESENTED FOR REVIEW,

id. Is a new’ trial mandated when a Special Agent

of thet Imternal Revenue Service deliberately violates a

procedural directive of his agency by not clearly disclosing

his criminal function at the initial contact with the to be |

investigated taxpayer within the meaning of U.S. v-

Heffner, 1969,.4 Cir., 420 VF. 2d 809, and cases cited

therein and U.-S. v. Leahey, 1 Cir., 1970, 434 F. 2d 7? °

» 2. When special agents of the Internal Revenue

Service confront a taxpayer for the purpose of obtaining

oral admissions. plus his written records for use in the

investigation they are then conducting into his affairs, is

this a “critical stage” which mandates a right to counsel

warning -within the meaning of Coleman v. Alabama,

1970, 90 S. Ct. 1999, 2002, 399 U.S. 1, 7; U. S. v. Wade.

1967, 87 S.Ct. 1926, 1930-1931, 388 U r 218.:222-223,

‘and, if so, has defendant waived this right under the fact

circumstances of this case when examined in light of

Johnson vy. U. S., 330 U.S. 10, 12; Amos v. U. S.. 1920,

225 U.S. 313, 315, 317 and.Von Moltke v. Gillies, 1948, ©

332 U.S. 708,724? - .

. 3. Does a confidential iaataulie exist between:

a bank and its depositor and, if it does, must 26 USC

7602 process be served before the bank records are.made .

available for I.R.S. special agent examination and, if®so,

does the: taxpayer have’.an absolute right, to notice that

the summons has been served plus the opportunity to

intervene and participate when the Special Agent inter-

views the witness so that he can prevent improper use of

ithe: summons and aid in the disclosure of helpful evidence

which would prevent his prosecution all within the mean-

ing of .U. S.v. Donaldson, 1971; 400 U.S. 517, 325, 530,

‘91.8. Ct. 534, 538, 342?

4 | bbe a AS 4 : . -

Questions Presented my

4. Ina 26 U.S.C. 7201 specific item prosecution,

must government aid defendant -in proving deductions

allowable under U. S. v. Sansone, 1965, 85 S.Ct. 1004,

s 1010, 380 U.S. 343, 352, when his records have been

stolen previous to I.R.S. contact and investigation and

dogs deliberate failure to do this qualify as a.suppression -

of evidence within the meaning of Brady v. Md. 1963,

373 US. 83 and its poopenyt.

Constitutional Provisions and Statutes Involved e

r,. ; <tt> ; > : : ‘ ; : : ‘ aoe

CONSTITUTIONAL PROVISIONS, STATUTES AND

REGULATIONS. bai Ss THE CASE INVOLVED

_ The right of the people to be secure in their persons,

houses, papers, and effects against unréasonable searches

and seizures, shafl not be violated, and no Warrants shall:

issue, but*upon’ probable cause, supported’ by Oath or

“affirmation, and partictilarly describing the place to be .

searched, and the stars in ‘to be seized. (4th

Amendment to the United States Constitution) ©”

No person shall be held to answer for'a capital, or.

otherwise infamous crime, unless on a pregentment or

indictment of a Grand Jury, except in cases arising in the

land or ‘naval forces, or in: the Militia, When ‘in actual

‘service in time of War or.public danger; nor shall any

person. be subject for the same offense 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 de-

. prived of life, liberty, or property, without due process of

law; nor shall private. property be taken for. public use,

without just compensation. (5th Amendment to the

United States Constitution) :

In all criminal prosecutions, the accused shall enjoy

the right to a speedy and public trial, by, an impartial jury —

Of the State and district wherein the: crime shall have

‘been committed, which district shall have been previously

ascertained by law, and to be informed of the’ nature and

cause of the accusation; to be. confronted with the wit-

nesses against him; to have compulsory process for obtain-

+, 6

( ‘onstitutional Provisions and Statutes | nvol ved

ing “Witnesses in his favor, iit to have the Assistance of

Counsel for his defense. (6th Amendment to the oe

States Constitution) \ 4 | if

For -the purpose of, ascertaining the correctness of |

any return, making a return where none has been made,

determining the liability. of any person for any Internal

Revenue tax or litbility at law or in. equity of any trans-.

‘féree or fiduciary of any person in respect of any Internal

Revenue Tax, or callecting-any such Tiability, 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 required

to perform the act; or any officer or emplayee of such -

person, or any person having posséssion, custody, or care

of books-of account containing entries relating to the busi-

ness of the person liable for tax 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 ahd

to produce such books, papers, records, or other data,

and to give’such testimony, under oath, as may be relevant

cr material to suth inquiry; and:

(3). to takesuch testimony of the person concerned,

under ‘oath, as may be relevant to - inquiry. . (26\1 —

7602) | es

aie of summons—A summons issued under Sec:

tion 7602 shall. be served by the Secretary or his delegate,

by an attested copy delivered in hand to the person to

whom it is directed, or left at his last.and usual place of

abode; and the certificate of service: signed by the per-

Constitutional Provisions and Statutes Involved

‘ : <? ; ; )

son serving the summons’ shall. be evidence of the facts

it states on the ‘hearing of an appligation for the enforce-

ment of the summons. When the summons requires the

production of books, papers, tecords, or other data,*it shall

be sufficient g@ such books, papers, records or-other data.

are described with wesc tgs certainty. (26 USC 7603).

In reSponse. to a ‘number. of inquires the .Internal

Revenue Service described its procedures for ‘protecting

the constitutional rights of persons suspected of criminal

tax fraud, during all phases of its investigations.

Investigation. of suispected criminal tax fraud is con-.—

ducted by Special Agents of. the IRS Intelligence Division. “

‘This function differs from the .work of Revenue Agents ’

and Tax Technicians who examine returns to determine

the correct tax liability.

‘Instructions issued to IRS Special ipsa go beyond -

most legal requirements to assure that persons are advised’

of their Constituitipnal rights: ba

On: initial contact with a ea “ARS Special

_ Agents ‘are instructed to produce their credentials and

state: _ ““As a special agent, I have the function of in-

vestigating the possibility of criminal tax fraud.”

If the potential | criminal aspects of the matter are

_not resolved by preliminary inquiries and further investiga-.

_ tion becomes. necessary, the. Special’ Agent is required to

advise the taxpayer of his Constitutional rights to remain

‘ silent and to retain counsel.

If it becomes necessary to take a person into custody,

Special Agents must give a’ comprehensive statement of

rights before, any. interrogation. *This. statement warns

a. ee. i

Constitutional Provisions and Statutes Invol ved

a person in custody that che may remain silent aed that

anything he says may be used against him. He is also

told that he has the right to consult or have present his

own counsel before making a statement or answering

any questions, and that if he cannot afford counsel he

- can have one appointed by the US. Commissioner.

IRS said although many Special Agents had in the

past advised: persons, not in custody, of their perce,

~ to remain silent and retain counsel, the recently’ adopted

procedures insure uniformity in protecting the constitu-

tiorfal rights of all persons.

(IRS News Release No. 897, October 3% 1967, 1971

CCH Federal Tax Reporter, Volume 6, a 3709.

1148. page 64.057.)°

Statement of the Case

STATEMENT OF THE CASE

This case concerns the appeal of Joseph A. Nemetz

(hereinafter called defendant or taxpayer) from his 26

U.S.C. 7201 (willful and knowledgeable filing of fraudu- °

lent income tax return) sentence.

Taxpayer was indicted February 27, 1969, tried from —

January 16, 1970 until February 6, 1970, (Rabe F. Marsh,

Ir.. C. Jand a jury), was convicted Fetipary 6,-1970 on

all counts (1047a)' and sentenced ae the .

same day.

The five count inidictinces charged that (12a-t6a):

(1) In 1962, defendant reported taxable income of

$3,252.67 but actually should have reported taxable in-

come in the amount of $26,984.40. °

(2) In 1963, defendant reported taxable income of

* $2,906.91, but actually should have reported taxable in-

~ come in the amount of $3F.380.43.

(3) kh 1964, defendant reported taxable income

of $337.35, but -aciually should have —- taxable in-

come in the amount of $7,514 47. |

(4) In 1966, “defendant. reported taxable income

of $5.037.94 but actually should have reported’ taxable

income in the amount of $65,295.91.

(5) In 1967, defendant reported taxable inconie

of $4,083.98 but’actyally should have reported taxable —

“income in the amount of $14,774.88.

'**A"" references are to petitioner's. Appemlix print

part of his brief in the Third Cireuit Court of, Appeals-.

10 © us uF ed : ae

“te Statement of the Case

Tie gevernment proceeded on the theory of specific

Mem, . ;

Defendant did. not take the stand but did present

Witnesses In hisadefense. :

— His main attack was directed at the method by which

special agents of the IRS had collected oral. admissions:

and records from him and then used this information to

assemble the evidence which was presented at trial.

Vernon B. -Carpenter (Carpenter) was the special

agent responsible for preparation of the case. :

Defendant and Carpenter first. met when) the latter

interviewed him October 25. 1967 about a $700 check

plus his possible business association (355a, 3384, 419a,

4$25a-43512) with a Braddock numbers man named Plopi.

now deceased.

Because of information supplied by -an) informer

(474a) who was involved with defendant (472a) in a

iransaction involving a Mrs. Cooley (431a-485a), Car-

penter was ‘assigned in March. 1968 (352a, 361a, 435a)

to investigate defendant's tax affairs for the years 1964-

1966 (552a-355a. 545a). for c

Carpenter's first contact with. defendant Was a May

2. 1968 telephone conversation which he detailed (352a-

335a) first to the Court in the unsuccessful (566a-567a)

faekson v. Denno -hearing (348a) and then to the jury

be | :

. “1 told bien that | had beep assigned his 1964,

‘63. and ‘66 income tax returns for investigation,

that | weuld like to, sef an appointment so we can-

et together and discuss the situation with him.. And.

1 told him at ihat time I would like’ to: see his ean-

. -

Statement of the Case i

celled checks and = and record which he may

have available.”

When Special Agents Carpenter and Hildun (353a)

arrived at defendant's place, of business, he already had -

his records available in a cardboard box (357a, 415a).

These government Iecacitadises then identified them-.

selves as special agents, displayed their. credentials and

badges of office (356a) and gave defendant a_ partial.

Miranda warning (353a-355a). * |

“Well, | told Mr. Nemetz that as a special agent

it was my duty to investigate possible. criminal in-

come tax. violations. -1 also informed him that | had

been assigned t& investigate. his income tax liability

for the years "64, °65-and: ’66, and I told him that

under the Constitution of the United ‘States he’ had

the’ right to refuse to answer any questions, furnish

any information or submit any documents which he

felt might tend to incriminate him. 1 also told him

that any information which he did furnish or any

-documents which he did submit could be used against -

him in any criminal action that might be undertaken.

As I was finishing my statement to Mr. Nemetz,

he told me he understood he also had the right to

have an atfarney present during the interview and

I told him that was correct, he did have the right to

_ have an attorney present during the interview. |

. then asked him if he wished to proceed with the in-

terview without an attorfey. He said he did, and

so I asked him questions relative to his financial and

income tax liability.

‘Q. Did you aie him if he understood his

rights? :

Statement ‘of the Case :

hd Ten, 2 ae. He said that he did.” ~ (353a-

355g) (Emphasis supplied.)

Vhen they intefrogated*deferidant under oath (355a-

399a) asked for afd Obtained his records (359, 546a

et seq.) and used this oral and written material to build

the case presented FWainst defendant at trial ($55a-358%,

315a, F17a, 319a, 558a-5O0a, 3O7a, 3OSa, “554a),

generally Question No. 2 for full details and. seca ,

references) .

Defendant attacked use of the testimony because of

Questions Land 2 set forth in this Petition. Specifically,

he stated that the May 2. 1968 intertiew violated an IRS

directive which pence mandatory warning procedure

‘on Carpenter. This issue is taken up in Question No.

(p. 13. infra). - ”

Defendant also stated that both interviews were a

“critival stage” which required full Miranda warning even

though fie ‘was not in custody. This issue is taken up

"in Question No. 2.

“

Defendant ‘also took the position that since the rela-

tionship between him and his bank was confidential that

the Revenue Service had no right to examine the records

without the service -of a 7602 summons subsequent

which he had the right to intervene and participate es-

‘pecially when he asked for this by written communica-

tion. This issue is taken up, in Question No. 3.

_ The trial Judge dismissed taxpayer's objections with-

out oral argument (see Opinion, p. 75,-a panel of: the

Third Circuit affirmed. p. 85. and a petition for a rehear-

ing and suggestion for rehearing before the Court en banc

was denied, -p. 97).

Reasons lor Granting Writ

. rk,

REASONS FOR GRANTING THE WRIT

ee nae ee

tt. Isa new trial enubdieted when a special agent of

the internal Revenue Service deliberately violates a proce-

dural directive of his agency -by net,clearly disclosing his _

criminal function at the initial contact with the to-be- _

investigated taxpayer within the meaning of U. S. v. Heff-

“ner, 1969, 4 Cir., 420 F. 2d°809,.and cases cited therein

and U. S. v. Leahey, 1 Cir., 4970, 434 F.*2d 7?

Defendants May 2, 1969 motion. (4a) to Suppress

which Senior Judge Gourley on July 22, 1969 directed

be decided at trial (see docket entries, 2a), declared:

: “(j) The oral confessions and records of de-

fendant were obtained in violation of regulations of

_ the internal Revenue Service and in violation of its |

. internal directives.” ,

Special Agent Vernon B. Carpenter (Carpenter) dis-

cussed his first contact with defendant both at the re-

quested but decided adverse to defendant (566a-567a)

Jackson vy. Denno hearing (348a) .and with the jury pres-

ent (543a-544a). (Although assigned March 30, 1968

(352a,.361a) his first attempted contact with Nemetz

was by phone call made May 2, 1968 to defendant's

place of business) . .

Defendant was out, but later obeyed “Carpenter ors

direction to call him back (352a, 416a) at whi ch t time

Carpenter recalls (352a- 3534):

“2 Reasons for Granting Writ

“TL told him that Thad been assigned his 1964,

‘OS and. "66 income tax returns for investipation, that

1 would like. to set fin appointment. so we can pet

together and discuss the situation with him. And 1

Told him at thar time 1 would like to see his can

welled cheeks and books dnd records which he may

Wave available.” (AML emphasis supplied.)

Carpenter gives the identical testimony before the

jury (545a)./

‘Defendant agreed to meet at his place of business on -

May 6, 198 at % am. at which time Carpenter and.

Special Agent Hildun arrived (353a). identified them-

selves as Special Agents, showed their badges (356a) and

credentials, gave defendant a partial Miranda warning

(395a-555a) | interrogated: hin’ {3552-359a) “relating to

his financial background and: to his income tax returns

for the vears under Investigation” and then asked for and

took with them “for further? examination” (359a)— the

books ahd records which defendant had ready for them

“ina chkdboard box” when ‘the Special Agents arrived -

(357a, 417a). Carpenter gave the’ identical testimony to

the jury (546a ef seq.).

Carpenter is plerted to a 1968 Internal Revenue

Service warning release (368a) recalls” its’ directions

(309a-570a) and agrees to secure a copy for defense CX-

amination (371a).

He admits (377a-378a) ~that his group supervisor

directed full: Miranda warnings be given “when you are

— ~~... . es - . . - . e . .- .

- The fuH Tegal impacts of this interview. are discssed in the

| 15

Reasons for Granting Writ |

. secking iG from the taxpayer” (378a) ; Although

declaring it to be a sugyestion rather than a directive -

(378), he cath .

“Lt was-our policy if we were going to obtain

books and records from the taxpayer to advise him

that he had the right to refuse lo submit those rec-

ords for examination. ” (377a)-

However, he admits his order foreclose. use of de-

cent. trickery Or misreprésentation of the purpose of the

investigation (406a) and that he did not advise defendant

on May 2, 1968 that he was hot required to meet with or

produce records for him*. agatha or “give him any

warnings at all. . ar

Although he recalls a prior contact with defendant on

the Plopi investigation. (353a, 419a) at which’ time he

identified himse]f as a Special Agent, he admits that de-

fendant was not then advised He was a criminal investi-

gator nor can he-say that defendant then or now knew

this to be the Carpenter function’ (420a).

Exhibit K (501 a-503a) clearly directs:

‘“(a) On initial-contact with the taxpayer, IFRS

| — agents-are instructed to produce their creden- |

26, At that time you dian’f tell him he did have to

give them to you, did you?

A. I did not.” -(417a i

446. He had no Way of Knowing von Ware a criminal

vestigator, did he ?

A. “Well, I don’t know,

Q. But you didn't at-that time tel] hin. you Were assigned

to investigate possible criminal activity on His part. did 3

A. I did not.”’ (419a

“

lo % “vnies

Reasons fer Granting Writ

tials and state: ‘As a special agent, | have the funce-

. tion of investigating the possibility of criminal tax

fraud.’ (1079).

Defendant strenuously suggests that this ‘order, is-

sued October 3, 1967, controls defendant's May 2, 1968

“initial contact” by phone «and urges the Court to reject

Carpenter's claim that only in- person face-to-face con-

tacts are covered (42 la-422a). a

* Defendant argues that the Tollowing testimony | is a

clear showing, that Carpenter used the phone to avoid

his “first contact” ‘obligation especially in light of his ad-

mission that_he would have followed. his October 3, 1967

orde rs if the phone had not been used (423a-424a) .

7 *e

A. .Now, | asked him what would be a con-

‘venient time lor us to get together and discuss the

matter.

‘ oO. You didn't tell him that he didn't have to

discuss it, did you? . | Sl .

A. No, ldid not. ec 8.

Q. And you didn’t tell him sient = aah hold

back things. if they tend te ‘incriminate him, did

you? :

A: No, I did not.

Q.. And you didn’t tell him that he had a right

to have a lawyer there when you were going to come

and see him at the convenient time, did .you?

A. No, I did not.””. (420a-421a) |

“Q.- And also he stated that he would. ae

. available in his warehouse at 307 Corey Avenue;

Braddock, Pennsylvania, at 9 a.m. on May 6, 1968.

ne informed Mr. _Nemetz, that at that time I- would

Snee 17

Reasons for Granting Writ ©

like to jeok at his books and records, cancelled

checks and bank statements pertaining to the years .

7 under ifivestigation. Mr, Nemetz stated he would

‘have the records available. 3 :

A. That’s correct.

Q. Now, you didn’t tell him, in that interview

that he didn’t have to bring the records in, did you? .

A. No, I did not.

Q. Nor that if they tended to incriminate hin

he wouldn’t have-to give them to you?

A. No, I did not.

*s OF Why didn’t .you tell him then? Why did

you wait until you were alone in the office?. You

had showed him your badge and told him what your . |

authority was and when he had everything there

available for you, why, Mr. Carpenter, rather than .

tell him on May 2, so he then could have consulted

a lawyer and made ‘an independent decision whether

he was going to cooperate with you or not? What

did you wait for?

ee Well, the conversation there was over the

phone arid we do, this on our first persona] contact

with the taxpayer. | : ,

Q. What you do then, you first. tell ie tax- .

_ payer to bring the records in and then ‘when you are

alone with him and he has them there and you show

him your badge and tell him you investigate crim-

inal trouble and in which he may become involved,

then you say, ‘Listen, you don’t have to let us sée

that if you don’t want to.’ Is that the way you fel-

-lows work? -

Reasons for Granting Writ

A. UL called the taxpayer, made the appoint:

ment, advised him of his rights When Mtalked-to him

In person, that's correct.

‘ ‘ . . ‘. ™«~ °

Q. But why didn’t you advise him) of ‘his

rights before he got his records together for you so

that you knew then it would be hardersto say no?

Why did you: watt antl he had | everything there for

vou, Mr. Carpenter? Kieee : ‘Oe

A. - tw aited until 1 talked ty him. There was

no SS! C42 tad22a) - mY | 3 :

“"Q. Why? : fe

AS Phere was no particul: ir redson. Our in

structions are that ‘on the fiest personal contact we

would advise:the taxpayer of his rights.

Q. Well, wasn't that contact over the phone: ?

NX. Lawasn’t-— 1 told the taxpayer “then that |

had the investigation. : |

‘Q. Let me ask you this: Say he had been

home May 2 and there h@ was, would you have ad-

vised him that he didn't have ‘to get those recone

together or would. vou have given him the .sanfe

story you gave him over qe phone and then when |

you were there ‘alone’ with — and he had the rec-

-ords, give him -his warnings?’ What would you

have done if you saw: him. personally on May 2 in-

stead offover the phone? . |

A. 1 would have advised him of his rights be-

cause then Tw ould have w anted to ask him certain

questions.

.Q. Well, he w ould have had the records then,

would he? :

‘

* ? i J

levee for Grant Writ .

Well, needed oe ietdede. “4 was still

es uestions concerning his financial Condition.

co He would have fad the records then, would .

ee ation’ kncne where he would have had

them, Mr. Brunwasser. 5 ;

him ‘Mr. Nemetz, you don't have to yet those records

together?” Or would you have waited until * he pol

them together’ 2 < :

A. | would have told him he didn’t have. to

submit the records, correct. ;

Q. Well, then, ‘there really is no dilference,

then, between talking to him over the phone or face

“to face as far as giving him the bencfit as far as his

so-called rights are concerned, isn’t. that right?

“A. No, that’s not. right. I did not ask’ him

any questions. over. the phone or attempt to get any

‘{ information from him “except To arrange an appoint.

ment. ie ' (423a- santa) slants as a

Defense counsel “argues to the Court: :

—“T think that was ‘deceptive to call him up on

May 2/7and give him no warning arid tell him to

have books there and then when all the bagks' were

there and they- were alone they show their badges

and say, ‘Now, we would sion to have: the books,

Mr. Nemetz.’

“That tae a Jot more power! to resis t than. f

. over the phone he eon ‘Incidentally, you-don’t hav

p aed, on this eae en ink by agreeing te the ap-

pointment. defendant admitted that records were ay i |

20° *

Reasons for Granting Writ

to give me the bodks if you don’t want to. You can

go sce a lawyer if you want to.’ When he came .

' there on the 6th there might not have been any books

there.” (489a-490a)

The Court responds: .

“I think I disagree with you but-I am going to

think dbout it pver the weekend and maybe you can

give me some authorities.” (490a)

Defendant cites Fraternal Order of Eagfes and the

Johnson case, the exact citations to which were given over .

the phone as instructed (491a).&

However, the Court subsequently holds the warning

proper (479a). Defendant preserved this issue by para- 7

graph 2 of his new trial motion. ee ee ee

(1083a) does not discuss it.

Defendant respoctfally stiggests that meaning of

“first contact” clearly covers the conversation.

The Random House Dicti of the English Lan-

guage defines “initial” (p. 732) as “of of pertaining to the

beginning. the initial step in a process.” In defining -

“contact” (p. 315), it says “to commanicate with” and

_ gives as an example “will contact you by mail or by

Defendant respectfully suggests that Carpenter knew

exactly what he was doing by making the phone call in

ogder “to circumvent his absolute direction to advise de-

fendant that he was not required to cooperate by meeting.

discussing: obtaining: or turning over the records. _ -

This, situation was met head on by the’ 4th ‘Circuit

Court of "Appeal: in U. S. v. —. 1969, 420 F. 2d

tad

: |

ri ; 21

Reasons for Granting Writ j

809, where a conviction of violating 26 US. 7205 - ~.

(false and fraudulent wage withholding Statemgnts) was

re . . . | | f

There, the special agents interviewed defefdant pre ~

, vious to the October 3.1967 directive which is the sub-

: ject of this very case. Subsequently, they had a second s ao.

interview but did not follow the ‘requirements of the - , *

directive. In reversing the conviction even though anew - Fi

trial would probably result in another conviction, the 4th * 7

Circuit declared (420 F. 2d at 81 1):

- “An agency of the government must scrupuous-

ly observe rules, regulations, or procedures which it

has established. When it fails to do so, its action .

cannot stand and courts will strike it down.”

U. S. ex*rel. Accardi i, Shaughnessy, 347 US. 260.

plus two other U. S.Sepreme Court cases and similar

holdifigs in the 4th, 6th, 2nd and District of Columbia

Courts of Appeal are cited as authority (420 F. 2d at

812). . .

| Thedissenting Opinipn of Judge Bryan indicates that

this poiht was not even raised in the oral argument or’ the

brief filed by defendant. U.S. y. Leahey, 1 Cir., 1970,

. 434 F. 2d_7, is in accord with Heffner on the October -

3, 1967 directive (p. 7). f

Defendant respectfully urges the: Supseme Court of

the Unitéd States to grant fertiorari and teverse the con

viction because of Carpenter's failure t6 follow the man-

datory instructions of the agency from which he derives

“his only authority to take any action.” ee

- Defendant argues proper procedure mandates that

Carpenter phone defendant and ask for an appointment

Reasons for Granting Writ

merely, to sce him, Then, he could give the warning re-

quired hy the October 3, 1968 directive and hiseconduct

would have been bevond attack.

The Ist and 4th Circuit ¢ ‘courte of Appeal have ruled

that violatien of this Internal Revenue directive mian-

dates reversal of conviction. Although the matter was no-

ticed by the Third Circutt Court ef “eee in tUUL.S. v.-

laskiewier, 1970,.433 F. 2d 415, fin. 10, it was not ap

fligd because the directive post-dated Py factual situation.

there involved, However petitioner raised the” spetific

isstte in his appeal. ;

The Tlriri C ircuit Court of Appeals, shihoush not spe-

cifically mentioning this attack by petitioner, did reject it

by ruling “the other, points raised by Nemetz hi ve cn

carefully considered, and we find.them lacking’ in: merit”

(Opinion, p. 89), re

- ®

_ Petitioner respectfully suggests that the Third Cir-

«uit Court of Appeals is in conflict with the Ist and 4th

Circuit Courts of Appeal asto whether or not an Internal

Revenue directive niust he obeved. Petitioner also sug-

gests that this ts ‘ground for granting of certigrari under

United Stat es Supreme Court Rule 19- 1(b). é

Léahev. 434 F. 2d at 10. recognizes but disagrees

with Cofen v. U. S.. 8 Cir., 405 F. 2d 34, 39, where that

- ourt of Appeals declared its policy toward a November

6. 1968 IRS directive giving full Miragda rights to’ be -

that it “will be among the factors considered by the Court

in determining whether the nature of an investigation has

“been misrepresenited.” (405 F. 2d at 39). .

Pegitioner respectfully suggests that this conflict be-

tween"the First and the Fourth Circuits and.the. Third and

“

Sars 23

Reasons for Granting Writ.

the Eighth Circuits should now be resolved by approval -

of Leahey’s reasoning (434 F.2d at 11) that when a fed

eral agency sets a policy of uniform action and advises

the public to rely thereon, agents who disobey: should be

“reprimanded by loss of the evidence.

2. When ‘special agents of the Internal Revenue Ser-

vice confront a taxpayer for the purpose of obtaining oral

admissions plus his written records for use in the investi-

gation they are then conducting into his affairs, is this a

“critical stage” which mandates the right to counsel warn-

ing within the meaning of Coleman v. Alabama, 1970,

90 S. Ct. 1999, 2002, 399 U.S. 1, 7; U. S.'v. Wade, 1967,

87 S. Ct. 1926, 1930-1931, 388 U.S. 218, 222-223, and,

if so, has defendant waived this right under the fact cir-

cumstances of this case when examined in light of John-—

son v. U. S., 350 U.S. 10, 12: Ames v. U. S., 1920, 225

U.S. 313, 315, 317, and Vop Molike v. Gillies, 1948, 332

U.S. 708, 724?

—_—_—

‘The trial judge found the conduct of defentlant with

Carpenter ‘and Hildun voluntary and refuséd to suppress

the evidence (478a, 436a, 560a, Opinion, pp. 1084a-

085a) .’ a, :

Before the May 6, 1968 interview, Carpenter had ric

cyidence that defeedtini ‘had =understated income or in-

terest (N.T. 79). When his conversation was completed

(355a .ct seq.) he knew the name of defendant's ac-

countant (355a) and tbe identity of his banks (357a-

358a).

Reasons for Granting W rit 4. | ,. 3

From the Mirst Fede ral S Savings and Lown (First Fed. s

- vral) bank records (3582) he obtained the names of 50

unreported customers (5 15a, 517g. 5194) the unreported

interest (F58a-500a) the Sq Brendan's. $20,000 fea

- (¥67a) plus: the $39,342 (3652, 54a) undeclared Brad.

~dock income and undeclared money (955a)) received

from the six customers whose names ‘appeared in’ the

books which defendant ‘made available G57a) and per:

mitted Carpenter to take with him (358a)" and photo--

graph (3664).

Defendant's tax returns contained no sifentate to

the First Federal accounts.

. Examination of defendant's -records confirmed that

the St. ‘Brendan income was unreported . (384a-385a,

558a). the Cooley item which concérned Carpenter

. (444a). and opened the investigation was not. entered

(457a, 4599, 460a, 474a-475a). income from 56° cus-

tomers was cither, not (554a-355a) or ~ undisclosed |

(5552). $39.342 received from Braddock. (558a) and in-

terest income ‘was not declared (558a-560a) and that the

spiral notebook total for each vear was. almost identical

to the corrgponding Schedule € (552a-554a).

From the oral discussion Carpenter gained admis-

sion that thé. rettirns reflected all income and expenses .

(335a) and* ‘a complete list of his gross receipts’. (356a-

357a) plus the $80,000 grandfather gift (557a-358a}

which proved so damaging at the trial. (See discussion

of this issue’in question 8, infra. )

The personal interview With Accountant Viott helped

build ‘the case and laid the groundwork for this witness’ S.

‘adverse trial testimony (289a-344a).

25 -

Reasons for @ranting Writ

Obviously, if the oral and written admissions were

improperly secured, the case is over (49a. 30a: 1O25a).

In his motion to suppress (4a) and at trial; defend

amt unsuccessfully resisted this evidence hecause

(a) he did not understand his’ Ath, Sth and |

6th Amendment right to refuse cooperation;

(hb) deceit, Ppuile and misrépresentation was

used by Carpenter Jo*secure it; and

hadge and’ display of authotity used by the investi

gating Rovere ent representatives.

What this all Corhes down to is the failure of Car-"

penter fo advise defendant of, his. right to consult counsel

before making a decision to give or refuse ¢ operation at

this critical stage of the proceeding.

- Without the advice of a knowledgeable tax attorney.

cfendant could not and did not understand that his co-

Operation would lead him to the jailhouse doot (ste Feb.

ruary 10, 1970 docket entry, 3a). . ‘ Et

(A) Carpenter misled defendant both in advis{ne

him of his rights and in failing to distlose what -he vas

looking for in. the recards he requested.

WiTre-

Carpenter is not the ustia? revenue agent. His wi

tapping and other improper activities ‘were the subject of!

‘*- a 1965 Senate investigation _(427a, 924a, 903a. 906a.

» ¢ 907a. 91 1a-91 3a. see also 490a) . . Se

The October 3, 1967 Exhibit K, IRS news release

(1079a) , required Carpenter to advise defendant. of his

Reasons far Granting Writ

right to “vetain counsel’) before anything, was said: ¢

done. Ht iG aks, in clear, underst indable and uns phiion.

ous fampuage:

e e® e ye . > :

y ae “On initial contact with the daxpayer, IR:

tials Mid state: ‘As a Special agent, | have the fune

tion of investigating tlre possibility of criminal tax,"

fraud.’ os '

~ “TE the potenttyLeriminal aspects Of the maticr

are not resclved. by preliminary inquirics and fur

Aher “investigation becomes Necessary, — the S| cial

- agent is required to’ advise the taxpayer of his con

Sutution: af rights to rem in silent and to retain ” aaa

hata : < YP ee

“ge al

, Defentlani stiggests that this is exactly what © arpen-

ter Was doing at the May 6, "1968 inteFview (354a-355a)

and that his conduct in-this respect was not,a kindness

“but a mandated duty. The order from his group super-

Visor (377a-378a), the office policy (505a) plus the use

of Exhibits | and } (497a-502) corroborates the practice

in this district. | rt sear ;

Defendant suggests that-Carpenter’s position that the

\lay ©. 1968 interview did fot ‘become a full-blown in-

grat" until. Mav 9, 1968: (504a) wee Mathis —

v. U.S. SB 5. St. 1505, 1504, 391 U.S.:1, 4 (refusal of

court to belteve ‘that visit was routine eo <riminal in-.

“vestigation followed eight days later). ‘ ae

a sugtests Carpenter's statement g ‘It is my duty

<t}gat ssib! intel (ofa SHER, tax violations”’

~ not the same thing and shovld fall under the diseussion.

¢ .* thij - i lad. a

. @

AY é

spechil agents, are instructed fo produce their creden-

a eee = 2

Pans Reasons hE ect Writ

Defendant urges the Gia to: ‘ doclase thre, May 6,

1968 mecting to be subject to the authority of Question

I, supra, suppress the evidence ane grant a new trial.

(BY Carpenter admits he is instruc ted * ‘not to tig

trickery or misrepresentation or déception i 1 obtaining

such gvide nee or in explaining the taxpayer's or the prin.

cipal’s GOMstijutional rightsor-the purpose of the investi-

gation” (406a, 488a,-scc written directions, 1062).

Even assuming ‘that he was “not required to advise

about the right to counsel, he intentionally misled de-

fendant (398a-399a) when he, did not correct his mis-

taken belicf that ant attorney was allowed only ‘during

the interview” (354a-355a) a& distinguished from prior”

to it’ Carpenter recalls his advice to. defendant both at

the fackson v. Denno hearing (394a- 3535a) and in the ac

tual trial (46a). :

“Well, | told Mr. Nemitz that as,a special agent

it was my duty to investigate possible criminal in-

come, tax violations. I *also, informed him that I had

been assigned to investigate his iricome. tax liabilite

for the years ’64, °65 and 766, ner 8 i pim that

.. under the Constitution of the Unitéd “& he had

the righifto refuse to answer any quest ions, furnish

any infdgmation or submit any docume ‘nis which he

felt migh? tend_to incriminate him.’ [alsa told him

that any information which he did furnish or ans

documents which he did submit could be used -

against him’ in any- criminal action that might be

undertaken.

As} Was finishing my statement to Mr, Nemezz:

he told me he understood he afso had thee ri

Reasons for Granting Writ .

i - é ,

have hn-attorney present during. the interview and 1

told him that was correct, he did have the right to |

have an attorney present during the interview. |

hen asked him if he wished to proceed with the

imerview without an attorney. He said he did} and

sol asked him questions relative lo his financial ‘ind

income. rg pe ‘Tiability. 4 ; Fs

Died you ask: him if he understood - his

pote.

* 3 , “ * :

A. Yes, 1 did. $l¢ said that he did.” (353a--

3955a)

Althoygh ¢ Carpenter will not admit what advice ¢ coun:

sel would Shave given’ defendant if, he had the courage.

to tell the, then® present and ready to gO agents oO wait

While he inquired . (383a-584a).-he does’ admit that the

average member of a bar is not qualified to give. advice

in the tan area. (401la). Thus, defendant believes that

government must advise him to consult a tax attorney if

he exercises this privilege at all. , :

ically why he was there and. what he was after was not

fair play. Regardless of the, warning’ he rateived, de-

‘The &. jim Supreme Court speaking i Columbi ve Conte,

1960, 307 US. o0s observed that “2 2: any lawyer worth his salt

Will tell the suspect in no uncertain terms tognake nd statements -

Te police underlany circumstames, te “ee

~The Court’. 38la)- directed this line of * interrogation not’

; :

take place when the jury returns.

“Defendant did net mention having received any warnings

in his almost « nipm poraheous discussjon with’ Vivit (06a-369a )

afid special agent McMahon (537a-542a).

Vel .

«Reasons for Granting Writ. -

fendant would have been put on notice that he .was in-

volved in serious, difficulty if he had béen told:

(1) Preliminary inquiry had been made from Spe-

cial Agent McMahon about the St. Brendan: and Braddock |

jobs and that Carpenter was interested if this income Was

reflected in the books (407a).

(2) That an informer (435:- 466a, 4742- 475a) hed

alerted the Revenue Service to the ‘Cooley deal (480a,

488a, 5358-536a): which triggered the- 1964 to 1966 jin-

vestigation (451a, 457a) and that Carpenter was looking.

- to see if this money was reported in the books (45 1a) for.

the year 1967. (456a) plus the possibility of criminal ~~~

prosecution if it was not there (452a- 453a).

(3) That the 1967 Cooley year was also to be in-

vestigated (457a, 459a-460a, 464a- 466a) or that exam-

_ ‘ination of the records might .result. in opening-1962 and

1963. His explanation that the lack. of the 1967 ‘return

before defendant gave-it to him (459a-460a) caused that

year not to be opened should be rejected when’ he admits

he had this return with him wher he* left defendant - a

(462a- 465a, 466a) . .

Pes That the records plus orak admissions would:

. be-sused ag a. basis for followed-up interviews with the

people plus banks there disclosed (3954, 396a, .403a)..

(D) Carpenter properly ‘admits ‘defendant's failure

to understand the advice he gave him would ‘render it

worthless (389a)... Defendant argues that a reading of

this record clearly demonstrates that Carpenter's instruc- .

tions were insufficient to’ permit defendant to knowingly

and intelligently waive his rights of non-cooperation and

non- disclosure because ; >.

:" See a ae aa

oti : Reasons for Granting Writ: -

(1). He did not déscuss the elements of the crime

. r the government's burden ol prook therein (393a,. “4020

aes: ‘ .

2 He did not distinguish between the elements

er: Max. versus ordin: inv crintinal prosecution and procedure

(6702-6772) and the in: ibthity oft the non tax oriented aut

lorney ta advise in this field (- AOA).

AS) | He did’ not tell him how. difficult il is lo con

Vict Ww ithout records."

(-4) He did- not tell him third parties ak inks |

would be investigated if defend: int disclosed: thym (395

3900) and that this might. lead to. his cri prosecu-

ton (05a), es ‘

oie (5) He ‘did not property advise. of the’ right to

consult, counsel before deciding if he should. Gooperate

~ and what help counsel could: give (383a, 388a-389a) in

mi: iking this decision (354a- 355a, 37 1a-372a, 345a- 546.) .

even though it was policy. 1a do so. (377a) if records were

requested. , ‘i oe ‘

(0) -He did not define what’ he meant ‘by pros

“receipts” (356a-457a, 5351 a). f

criminate’” (391la, 410a-4f la, 705a). Neither Carpenter

former stating that it: me ans “show: guilt” (39 La- 3954)

criminal law.’ | ce Serene

° .

od +

"Defendant was’ not indicted ‘or. tried for: 1965, the year foi

which he gave no rr ‘cords to the gove rnment (402a -

(7) He did not define the meaning of “tend to in-

and that latter (708a) that it shows some vidlation of-the

‘nor Hildun,-in fact, knew the meaningsof this phrase, the’

‘Tend to incriminat e* need nof show wut. -It-must only ,

+ furnish a link “in the chain _ of evidence the g6verfment will

‘

—_—

| s =>. §i

Reasons for Granting Writ .

”~

: (1) aT is respectfully Sup yiested that defe endant was

overwhelmed by the agents’ show of. authority” and that

the jury should have been. instructed on this issue.

On May 2, 198, -Carpenter asked for defettdant’s

records °(352a-353a). On May 6, 1968, ‘they over

whelmed him with a show of identification and badge

(355a) to obtain oral admissions, waiver of the right to

counsel ples Records - (359ay. “They —touk._his s_testimony

under oath and, used this ailecs f0° convict him (4) 2a-

“3a).. Te, kee ise i

. The air ae of Special Agen Mc Mahon to whom -

defendant turned for atid (5374) was misleading mn light--

of his. failure. to disclose’ Carpenter had * asked him in’

endan’ s and Braddock, (541a).

March about SE

Defendant object&Nto all evidence: before the iad

began (49a- 50a); before @ penter was sworn (351a),

during trial (535a-540a) and after conviction (N.T. Para-/

graphs 12, 38, 51, 52).- He raised the. Miranda and: the

involuntary | admission cases (348a- 649.) : psychological”

coercion and the critical ea of the: proceeding - (F49a)

‘-“cases Cited. Johnson vy. U.'S., the power of = badge case:

10, the trial judge (350a).. aes a L/

The Court, after ruling out Ccross- -¢xaminiation: on the

Cooley, and Plopi matter, advised defendant that the ‘only

Ly mere Be ands

eventualgy produce against Adonai at .$riagh* liofte “te 1a

87. -S.-Cty 408; 414, footnote t, 485: US 298. 30%: “a reasonable.

probability that it might furnish a ital: in’a chain of evidence

-which could Subject the lax paver. Jove Mimiial prosecution, The

information need not be of such Hn port my 10, tajse the -likelih

: * Bae f

of convietic n. Convictions, searches and. Siz sures in Tas. Case

Norman Redlic h.10 — Law Re view 191. 195.

. ioe

=. Pes ih

Reasons for Granting Wait ®

chance’ he had‘ to win on the Yoluntary issue was to en*

courage Carpenter to change his testimony (568a) . Since

this obviously could not be done the instruction prophe-

sied the Court's thinking and forthcoming decision’ on

this vital defense. aust"

1. *

_ Whether defendant's investigation ‘began in h,

1968 (435a) befause an informer ‘(474a) associated —

"With him (472a) in the Cooley matter (431a-485a) or on

October 25, 1967 (473a) when Carpenter was talking 16 -

him (425a-431a) about Kis connection with Plopi, the

Braddock numbers man (429a-430a). was importani in.

impact of the October 3, 1967 Exhibit K

directive ¥i07a). Carpenter's general credibility (432a)

- and whether he was guilty of deceit (495a).

- Since defehdant was directly involved with defend-

-ant‘in the Cooféy matter (472a}- Roviuro y. U. S. (1957),

353 U.S. 53, on which defendant specifically relied (4322-

4335a, 4344, 435, 472a, etc.) would appear to require

this person he identified so defendant could yse him for .

possible attack against the Cooley story.

It is respectfully suggested that the trial judge erred~ -

when‘ he instructed defepdant not to interrogaté Carpenter’

on this issue when the jury returned betause the evidence

"Game Out on cross-examination (473a-479a, 481a-482a,

484a, 566a-567a) eveh though government did not intend

. to make reference to it (474a, 48 1a).

‘The jury was entitled to hear this evidence in ‘order

"+. to understand the entire picture and purpose behind the

May, 1968 Carpenter interviews (481a-482a).

“It ie true that the bounds of proper cross-cxamina-

tion must necessarily lic’ within the sound. discretion of

Reasons for Granting Writ

the ‘trial court” but “. | . crose-¢xamination of a. witness

may embrace any matier germane to the direct examina-

tion qualifying or destroying it or tending to develop facts

which have been improperly suppressed or ignored by the

party who was called as a witness.” Sleck v. J. C. Penney

Co., 3 Cir., 1963, 324 F. 2d 467, 473-474, 475.

It is respectfully suggested that examination of Car- .

penter on the Plopi° and Cooley matters was within the .

~ bounds of propriety and that the Court should not have

barred bringing this to the attention of the jury, so that

the entire picture could be assessed in evaluating what

weight to give Carpenter's téstimon$, especially since he

was the main government witness: _¢ |

. The May 2, 1968 phone call at Which defendant ad-

“mitted he had récords available and the May 6, 1968 face

to face meeting where Carpenter ‘took these- records -and

“tMterrogated defendant under oath about his personal and

.. financial affairs cannot be separated in deciding whether

he talked-plus acted ,volufttarily. Clewis y. Texas, 1967, °

87 S. Ct? 1338, 1339, 386 U.S. 207, 708: Boulden y.

flolman, 1969, 89 S. Ct. 1138. 11539. footnote 1,- 394

U.S. 478, 479.

Fair play would require that no request be made for

the records until the parties are face to face and.defend-* —

‘ant has been given at least the cautions required by the Oc-

* tober 3; 1967 memo (1079a) or, if this Court dig™

full Miranda warning.

‘ By producing Ifis records in the cardboard box. de. .

fendant had already admitted their existence. What good -

was the warning then shat he need not do so?

oF = *

Reasons for Granting Writ

With the agents thete displgying their badges and

credentials of office, it would take. a strong defendant,

indeed, to refuse cooperation {422a).

; Defendant urges this Honorable Court to’rule that he -

- had an absolute constitutional’ right to be warned Otis ©

privilege to consult counsel before he made a decision -to

ygive or to withhold cooperation and that -his cooperation

was secured by deceit plus the power of the “badge which

made a request’ become a command. 3 .

A. - Miranda v, Arizona, 1966, 86 S. Ct. "1602, 1628,

1640, 384 U.S. 436, 475, 498, did-not create new law.”

It merely recognized the factors which courts have af-

ways evaluated in. deciding if a defendant’s actions

voluntary and declared that when a person is significaNitly

deprived of his freedom,,the giving or not giving of the

+ traditional- warnings are no longer clements to be evalu-

ated, but mandated ‘procedure.

| - This is because “in sustody” is held to be a —-

stage” as -a matter of law and soa prophylactic rule 1

- «required. - >

Consultation with coulaci*holaes and during the ‘in-

terrogation must be “clearly” offered (86 S. Ct. at 1628,

. 384 US. at 475). to prevent coercion and, or misreporting

_ Of what he said plus provide his attorney as an at- trial

- witness in gase of dispute. :

- Goleman v. Ala., 1970, 90 S. Ct. 1999, 200 , 399

U.S. 119, declared a not requireg state preliminay -hear-

-————

_| Nemetz* is aware that? al eee of the Third Cireuit held

Miranda; per se. wot apgilicable under certain -civeumstances, in

United. Statys v. Jaskicwicr, 433 F.2d 415% ae °

}

(8A yee

Reasong for G ranting Writ

ing to be such a critical ‘Stage requiring a prophylactic

rule. Wade v. U. S., 1967887 S. Ct. 1926, 1931-1932.

388 U.S. 218, 222-225. declared the bre-identification

lineup to require identical protection.

In ruling that 26 U.S.C. 7602 process would be en-

forced against partnership papers, the Third Circuit Court

.of- Appeals in 1963 observed: aie

, “An appearance before .a special hoent is in the

. Nature of an appearance in a criminal investigation.”

U.S. v: Silverstein, 314 F. 2d 789,.790. | ie

Taking Silverstein and Coleman together. it is re-

spectfully suggested that the appeargnce Fefore Carpenter

was sufficiéntly identical to’ a preliminary hearing to in-

_ Voke- {ull Miranda piotection. Defense counsel’s _re- :

search has not disclosed a controlling Third Circuit case.

The closest discovered*was US. v. Remco, 3 Cir., 1968:

388 F. 2d 783, 785, where the Circuit passed the prob-

‘lem because the confession involved ante-dated the Miran-

da decision.

. Defendant respectfully suggests that close reading of -_

Wade, Coleman and Miranda creates a definite impres- *

sion that the United States Supreme Court is determined

{0 prevent interrogation"whicth concludes with defendant

defenseless and deprived of ariy witness to aid-him in con-

testing tlieNate’s version of what took ‘place plus what

he said or did.- If an attorney can help,-he must be of.’

fered and made available both befere and during the ques-

tioning (90 S. Ct. at 2003, 399 US..at 9). --.

The Coleman Court opined: - :

“It is central to that principle that in addition

$0 counsel’s presence’ at trial. the accused, is guaran-

2 Yoke Reasons for Granting Writ

teed that he need-atot stand alone-against the state

- at any stage of the prosecution, formal or informal,

- in court exout whe ere counsel's absence might dero-

gate from th accused's righf to a fair trial.” (90

. . at 2002'\399 US. at 7.) (Emphasis sup-

.. plied.) Ts

“Ht calls upon us - inn: whether - ae

substantial prejudice to defendant's rights inheres in ~

‘the particular confrantation and ‘the ability of coun

_ Sel to help avoid that prejudice.”

The Court then goes om to shaw what a lawygg can

do“at a -preliminary hearing plus ‘the inability of defend-

ant to be aware of, this available help (90 S. Ct. ait 2003,

399 US. at 9). .

. ‘The Wade @vitr (87 Ss. Ci. at 1931: 388,058 :

224), observed that-most facts are marshalled befor? “a

tind that if the attorney is not present the aceused’s fate

“is sealed and the trial a meré formality. The Courf- is

concerned that the trial not. be “no more than an appeal

from the interrogation” and observes that it is- ¥alueless

“if, for all practical purposes, the conviction is already

.y assured by pre-trial examination” (87 S. Ct. at 1931-

. 1952, 388 U.S. at 226).

- Additionally, the Caurt is concerned that defendant

-may not b& able to take the’ stand without waiving his -

5th amendment privilege against self-incrimination and

“the availability of a lawyer to do this for him is a sub-»

sfeeial required right (87 S. Ct. at 1934,.388 U\S. at

231-232). In. this’ particular case, defendant could not .

take the stand to deny what the agents had said. Defend-

. > ™~

2 :

. (87 S. Ct. at 1937, 388 U.S. at 235). -

. Reasons for Granting Writ

an’ believes ‘that availabilijy of a lawyer to do this for

him would have changed the eventual outcome.

The Wade Court is additionally concerned that with-

out counsel nobody. at the interrogation has any interest

in protecting defendant so that the trial, itself, is merely

a rehash of facts devgloped by the investigatinp officers

~ It is, not necessary that defendant be i jail- for this

critical stage rule to apply. Orozco v. Texas,’

1095, 1097, 394 U.S. 324, 327 (bedroom held su

Massiah v. U. S., 1963377 US. 201, 203 (afte

ment, -improper to permit. informer interrogate de

in cooperation with government agents). Additi

the Internal Revenue Service is subject te Miranda

defendant isin cust6dy on another charge, Mathis v. UNS.;

88S. Ct. 1503, 1504, 391 U.S. 4.- -\ =e, Aa

Many of the Circuit Couris of pte. which havé-

ether or not Miranela applies have | ap-°

proached the issue on the basis of whether defendant is in

custody ‘or ignificantly deprived of his freedoni. ‘Defeng-

ant does nt believe the “critical stage” approach hat

been argued in any of these. authorities (10854) /

Commentffors approve of the full Miraizdg warning

when the s cial agént appears on’ the scene: Payl L.

Lipton, speaking at the 1968 Sixth Circujt Judicibl Con-

ference, 45 F.R.D. 323; The Constitutional Right to Coun-

sel in Tax Investigations, | 3-1966,. 33 “Wniversity of

Ciiicago Jaw Review 134: 96 Yale Law Review 1

(1966). -- - . oe 7

Justice Douglas, dissenting from refusal to grant cer-.

icient) ;

indict-

ndant -

' tiorari in a case concerning interragation by the Internal

dé

38 ;

Reasons for Granting Writ

Lhomas vy. U. 1967, 386 iS. 9F5:;

87 S. Cte 1164, rema ks that the pistienstion is.cOercive,

at a critical time, like a preliminary hearing and that. the

same, cgpmplaints are constantly being filed in the Supreme

Cow”. Se , Ses

Revenue Service in

Cases Which have applied the full Miranda warning

are: U. Sov. Wainwright, D.C., 1968, 284 Fed. Supp. 129

(Miranda applicable when spécigl agent. receives asign-

ment) PUSS: v. Turzynski, N. 1). FH... 1967, 268 Fed. Supp.

S47, 850 (special agent gnust “warn when investigation

shifts from civil to criminal) ; i. . Kingry, 19 A.FLT ZR.

2d °762 (special agent must warn : asians ‘of right to

attorney); U.S; 1 Gower, 1967, M.D. Pa., 271 Fed.

‘Supp. 655, 658 (special agent.must warn of right to coun-

sel ‘befare question and answer session begins).

Justices Douglas and Black speaking in ‘oon

opinion in Columbe v. Conn. 1960, 367U.S. at 640, and

in particular; in footnote 2, observe that the warning to-

be sifent and obtain counsel does not tell defendant. any-

thing- he does:not already know. but is clear .notice that

war has been declared between the investigators and the

defendant-who has formally become the accused. :

Thus, the time when®war is declared should be the’

time when the warning should be given, and it ts respect-

fully suggested that sea is no Jatcr than when. the special

agent appears on the s either in ‘person or by phone.

Th continuous Statements of the special agents that .-

the case is both civil and reli is only a technique to

deprive. Se of his constitutioiral right to the warn-

/ing. This distinction has been c lassified as double. talk.

in N76 bf ale Law Review i

et 39.

“Reasons for Grating Writ . .

When Carpenter states © ‘investigations could turn out

to be.a civil matter or it could turn out ‘to be both’ civil

and criminal but it can never’ furh out to be strictly crim-

inal’ ¢529a), he ‘is sity ating that cvery criminal

case must be civil because a ditiorrassessment. is necup-”

sary to find a violation of 26 U.S.C. 7201, ae

‘Ttis respectfully suggested that the Court knows this |

lo bea fact and that the policy.of winking at what ic”’

obviously a direct violation of .the law should now end

,especiafly since the Revenue: Ser rvice is constanily taking

advantage: 1 a C

B. Defendans urges this. Hosaenbite Court’ to find as

a fact that the of-the- surface. imnocent request by. Carne -

_ penter for books-ef defendant when he was actually look- ~

ing for income: from St. Brendan’s, Braddock and the

Cooley mz itters plus the’ fact that he did not advise de-

‘fendant that the 1967 returns were also the subject of the

investigation is such. “a direct deception that the evidence

must be se#ppressedy . Scare im ay /

Carpenter knew what he’ was after and intentionally?

didnot advisé defendant, .-If defendant’ was aware that:

* ie Cooley, St. Brendan and Braddock income. was the’

.. Subject of the investigation, he certainly would ngt have ,

turned over the books and talked when he ape this

would guarantee his prosecution. Additionally, Was

deceitful for Carpenter to ‘take the books dnd in

- 1967 plus Cooley wher he ‘advised 1964 agree

“the only ye years inyolved. -

Trickery, misteprésentation or: ‘a Vitiate the,

. Search and confession leaving the government . exactly

_ where it was before the imprortiety took Place. each

¢.

“s '

x .

“

“40

Reasons for Granting Wit

v. Conn., 1969, 367 U.S. 568 (officers. investigating mur-

der falsely charge defendant witht breach of the peace so

that they can hold him in custody and avoid advising him

_of his right to silence. and sounsel;: conduct condemned,.

see also footnote 95); Fraternal Order ef Eagles v. U). 8..,

3 Cir.. 57 F. 2d 93 (false representation of identity by —

_ prohibition officers to gain entry; evidence suppressed) ;

U.S. vy. Sing, BC. N.Y. 1957.7 149 Fed. Supp. 269

agents do not disclose investigation of passport fraud;

affirmatively claim another purpose; evidence suppressed

everr though turned over voluntarily) @Reineman vi U.S.,

7 .Cir., 1962, 301 F.2d 267, 269 @revenue agents re--

‘examjne fecords for closed year that has not been -fe- |

opened: defendant not advised it is a reexamination; as-,

sessed de fi iciene V OV err uled)-

To, is obvious that Carpenter was’ looking for a con-

fession and- therefore his conduct “must be examined

with the most-careful scrutiny”, Spano v.-U. S., 1998, 360

US. 315,324. AS erie | ae

It is respectfuHy submitted that Carpenter's phone

conversation with defendant. was a command rather, than

a request especially when given previous to any warning.

He says, “*. . . | would like to set an appointment so we

_can get tcocther and discuss the situation with him, and

I told. him.at.that time that I. would like to ‘see his can,

- celled: checks and books and records which.he may have .

available” (352a-353a). oe, a |

When the records were there, Hildun and’ Carpenter

-arrived, showed their. badges and official credentials and

then gave the warning. which did not advise defendant i

‘that he could talk to a lawyer — he made any deci-

\ = ee, oe

Reasons ad Granting: Writ” 3 ee

sion. With ie agents aa the ae there, it is réspect-

fully suggested that it would take a strong man, indeed,

to call off the investigation and ask. for the right: te call

an attorney for advice (422a)

‘Defendant- would # Be justified in believing: that any

delay would aggravate the agents. and necessarily preju-

dice their decision in. deciding what, to do with his Case..

It is.a pressure whith only a person who has been in- :

vestigated by the IRS can feel.

(1) In holding acquiescence’ to the power of a.

search warrant hot be voluntary, Bumper v. North Caro-—

lina, 1968, 88 S. Ck. 1788,- 1792, 391 U.S. 543, 549.

cites with approval ine foofnotes 13 and 14 the following

cases which appear applicable to the hate situation.

. (a) Johnson. v. U. S., 353. US. 10-. 12 (“J

want ‘to talk to you a ditt] - ae . defendant's ac-

quiescence held coerced). ;

.-- ©, Xb). Amos y. U. S., 1920, 255 US. 313, $15.

é 317 (defendant's. wife. admit men who say they ar’ ,

* “revenue: officers shee come to search the prem-

ises. for violations of the revenue laws”: conviction-:

based upon: goods found reversed for violation ‘of

_ 4th and 5th Amendment rights to non-waived im-

plied coercion) . «. 4

820 (policeman asks defendant if he can talk to him

in his room; defendant approved; when there “I

_asked. him if IT’ could,look around”: conviction. re-

versed and evidence suppressed as coercion).

(d) MacKenzie v. Robbins, 1965, S. D. Me..

* 248 Fed. — 496 (na warrant of arrest or. r search,

ak oe

: previous toentry):. ex

42 pein weed : Ee ne bs

Reasons for Granting Writ

or probable cause; policeman identifies self and says

“TL would like to talk to you"; door opened and po-

ficeman enters without express, invitation: but without

protest; habeas corpus issued to reverse conviction

int sti Me court as coercion’ see cases collected at De

“501). ; . _ :

| (e) - Us S.'y. Marra, ED. N.Y., 1950, 40°F.

2d 27! jorciNaon agents say they are going to in-

spect and. do so without. defendant's. presence; con-

‘viction reversed and evidence suppressed even |

af a

though sufficient. facts. for search warrant posses sed

Wy) ;

(ft). Judd v.U. 8 Sivek Cir. 1osT. 190 F. 2d

649, 651° (cases Eleciae in’ custody defendant

asked whether “he minded us going over to his on

_and taking a Logk: 3 confession held coerced.

Atso relevant: is the decision Te Sate te Polensky.

D.C. Vt.. 1969, 300 Fed. Supp. 976,. 979 . _ (defendant

stopped for traffic violation and in op out of car is

asked for gun which, che-turns’ over; held critical stage,

counsel necessary, and evidence. suppressed: ’ “Certainly a

request to produce evidence that ig central to ‘the prosecu-

tion’s case is a eritical stage of the proceeding against the

accused.’: The presence, of counsel is an‘ effective check ”

on the unknowing relinquishment of 4th- Amendments

‘rights just as. it is an effective check on the’ unknowing

waiver of 5th” Amendment rights.”’) pe

In fact.tin Berne, supra, 412 F. 2d at 1062, the Court

‘indicates that it might have suppressed evidence. if the

This case was recently approved ‘by the Thi@l. Cirenit. in

(aovernment of Virgin Islands x. Berne, 442 F. Pd 1455. 1058.

Soa

* aoe : , 45°

~ a Reasons for Granting Vi rit _ —_

police did not have sufficient facts-to sustidin “a convic-

tion and were attempting to obtain them ‘by. the alleged

claim of consentual search. In the present ° case, ‘Car- .

~penter had no evidence whatsoever to get the case going _

before he obtained -the ‘oral admission plus, the records

. (N.T. 79). ; oie eats

- (2) The compulsigh: and pressure can be mental as

Well: as physical. H is respectfully suggested that not only

the power. of the badge but the pressures ‘of maintaining

respectability and not being disgraced’ in--the community

plus the’ hope that the revenue agents will only assess civil

damages, and not bring. criminal charges is sufficient coer- °

cion to catise the average person, never in trouble before,

to cooperate and thus play into the hands of the revenue

agents who kriow..the rules. e

. Cases disaussing psychological coercion are Brady y,

U: s 1970,90°S. Ct. 1463; 1470, 399 U.S. 742, -750:

U.S. v. Gower, 1967, M:D. Pa., 271 Fed. _ Supp. 635. 660:

Davis v. North Carolina, 1966, 86 S. Ct. 1761, 384 U. .

ne Martinez v. U. S. , 380°U.S. 260,85 S. Ct. 953. (333

*. 2d 405, 407, 9 Cir.; 1964, where. FBI wanted to talk. to

ys remanded for mere facts on the- issue of corisent

or coerced): Smith y. U.-S., 1954, 348: U.S; 147°--15

(police peessure and resulting “strain and confusion” may

vitiaté confession, but not-on facts in the case) ; LS:

Calderon, 1954; 348 US. 159, 164 (Court recognizes

anxiety of taxpayer to Cooperate and avoid ; crimina!

prosecution, U. S: v: Blue, 1966, 384 U.S. £91, BO p. Ct,

1416. (issue of ° pressure to waive privilege- against self- |

_incrimination. ‘to avoid civil jeopardy assessment appeal

which is pending in tax court held tobe an issue for trial

when coerced evidence is offered) ; Shotwell Mie. Co...

e 5 , a ° e

44° | :

: Reasons for Granting: Writ

U. S., 371 US. 341, 347-348 (confession must be free

-and voluntary; see Justice Black's concurring: Opinion ‘at

p: 384 and footnotes 24 and 25 collecting psychological . ’

pressure authorities); 7 Yale Law Review 1, 34 (pressure

to waive privilege against self-incrimination — to avoid

civil assessment where IRS keeps investigation civil until

ready, to criminally prosecute discussed).

If defendant refused to display his books, Carpenter

make jeopardy assessment. To oyergetic this ex parte ac-

would have been justified by 28 U spe and 6861 to

tion, defendant would be required to waive’ the Fifth

~ Amendment.

This type of pressure has been condemned in oiher °

cases and should be similarly.treatéd here: U. S$.» Kor-

del, 90 S. Ct. 763, 770, 397 US. 1, 13 (evidence coerced

under threat of civil forfeiture cannot be ‘used in criminal

prosecutions) ; Garner v. Broderick, 88 S.Ct. 1913. 1916.

392 US. 273, 278 (testimony given under compulsion of

losing job suppressed); Garrity v. New Jersey, 1967, 385.

U.S. 493, 496, 87 S. Ct. 616. 618 (choice between privi-

"lege against self-incrimiriation and waiver or loss of job

held unconstitutional;- subtle mental pressures con-

~-demned); Spevaek v. Klein, 1967, 385 U.S. 511; 87 S.

Ct. 625 (attorney disbarred when he raises 5th amend-

ment privilege as ade to production of records: re-

versed); U. S. v. Jackson, 1968, 88 S. Ct. 1209, 1216, -

390 US. 570, 582 (kidnapping act encourages plea to

‘ avoid risk of death at jury trial; needless chill on exercise

of basic constitutional rights itself unconstitutional) :

U. S. v. Thompson, 1969, 89 S. Ct. 1322, 1329, 394 US..

618, 631 (welfare one year residence réquirement chills

right to travel into state; patently unconstitutional); 6. ~.

; 49

_ Reasons for Granting Writ’

Columbia’ Law Review 1490, 1502 (threats by adminis-.-

~ trative agency to obtain compliance with illegal demand

is bill-of attainder).. - me Se egunhes

~ (3) The method ‘of obtaining ‘defendant's coopera-

tion must be evaluated in deciding whether or not the

conduct was voluntary. Jenkins v. Delaware, 89 S. Ct.

1677, 1681, 395. US.. 213, 221; Johnson .v. Néw Jersey,

1966, 86 S. Ct. 1772, 1780, 384 U.S. 719, 731; Davis vy.

North Carolina, 1966, 86 S. Ct. 1761, 1764, 384 U.S.

737, 740; Greenwald.y. Wis., 1968, 88 S. Ct. 1152, 1154,

390 "CS. 519, 521 (lack of or inadequate warning goes

| involuntariness) Boulden v. Holman, 1969, 89 S. Ci.

1138, 1139-1140, 394 U.S. 478, 480: Frazier v. Cupp.

1969, 89 S. Ct. 1420, 1425, 394 U.S. 731, /39: Clewis

_v. Texas, 1967, 87 S. Ct. 1338, 1340, 386 US. 707, 709; |

Lloyd v. U. S., 5 Cir., 1955, 226 F. 2d 9, 15; Swenson v. .”

_ Bosler, 1967, 87 S. Ct. 996, 997, 386 US. 258. 260

(court has duty tO appoint attorney: without defendant's

request when right tg attorney absolute). |

Defendant urges the Cotirt to find as a fact that the

conduct of special agent Carpenter,’even under the pre-

Miranda tests deprived him of his constitutional rights

guaranteed under the- 4th, 5th and @th_ Amendments to

the Constitution of the United States.

C. * Regardless of the findings. of the trial judge, the

Court of Appeals can determine the voluntary vs. involun-

tary issue after an independent study of the record.

Boulden’ v. Holman, 1969, 89 S. Ct. 1138. 1140, 394

U.S. 478, 480; Clewisv. Texas, 1967. 87 S. Ct. 1338, -

1339, 386 U.S. 707,'708. The burden of proof is on the

government, Bumper v. North Carolina, 1968. 88 S.. Ct,

1788, 1792, 391 US. 543, 548-549. :

Reasons for Granting Writ.

D. Even though: the trial judge belieyes the conduct 7

Was yoluntary, he has no right to direct a verdict requir

ing the jury make the identical findings even if the testi-

mony is uncontradicted.

(1) Phe burden to convince the jury remains

on government after a Jackson v. Denno hearing has

been decided adversely to: defendant, Wade vp. Yea--

ger, 3 Cir., 1967, 377 F.2d 841,844.” ae

+ (2) 18 USC 3501 deals with admissibility -of

confessions and sets forth guidelines for the Court to

lollow. Substction (b)

sidered in deciding the issue:

“The trial judge in determining the issue of vol-

untaringss shall take into consideration all the cir-

cumstances surrounding the giving of the confession, |

including (1) the time clapsing between arrest and

arraignment of the defendant making the confession,

if it was made after arrest and before arraignment,

(2) whether such defendant knew: the nature of the

offense with which he was charged or of which he

Was suspected at the time of making “the confession,

(3) whether or not such’ defendant was advised

or knew that he was not required to make any staté-

ment and that any statement could be used against

him, (4) whether or. not such defendant: had been

. advised prior to questioning of his rights to the. assis-

tance of counsel; and (5) whether or not such de-

fendant was without the assistance of counsel when -

questioned and when giving such confession.”

The Act further declares: :

“The presence or absence of any of the above- -

mentioned factors to be taken into consideration by

_ details what should be con-__

“e

ARs . ome.) 5, . 47

~ Reasons for canentng: Writ

the- judge need not be conchive on the issue of vol-

untariness of the confession. e

“if the trial judge determines that the confes-

‘sion was voluntarily made it shall be admitted in evi-

dence and the trial judge shall permit the jury to hear °

relevant evidence on the issue of Voluntariness and

will instruct the jury to give such weight to the con-

fession ds ee feels it deserves-amderall the cir-

cumstances.’

Not only did Judge Marsh not give this instruction

but it is respectfully submitted | that he should have been

required to advise the jury concerning the standards of”

18 USC 3501(b) so that they: could make an intelligent

decision. °

In his charge of the warmameny ¢ issue, the aon merely

says (1025a): |

“If you find any statements made to the agents

on May 6, 1968, were not voluntarily made, then you.

* would disregard everything which the agents said that |

the defendant told ther and you would disregard

the bo. “s «..d records the defendant gave to them and

you would disregard all the facts which the agents

uncovered as a result of that interview and from ex-

amining the defendant’s notebooks and other rec-

ords.”

Défertdant had previously objected to. Exhibit 167,-

which is the summary of all the government. evidence, .

‘and moved to strike it (716a, 732a-733a).

However, both the jury and the Court of Appeals can

draw their own. inferences from the facts. Jackson .v.

48 . 2 : ms :

Reasons for Granting Writ

Denno, 1963, 378 US. 368, 377. (coercion ‘issue for jury - |

if reasonable men could differ as to-inferences to be drawn :

from undisputed facts); Columbe+v. Conn., 1960, 367

U.S . 568, 603-605 (issue ‘of credibility for lowed\gourt in-

ferenives as to mental state of defendant which is the" re

tual subject of appeal can be decided by appeal court) ;

Sims v. Ga., 1967, 87 S: Ct. 6397 643,385 U.S. 538, 543

~ (defendant's s testimony of abuse at unsuccessful suppres-

sion hearing undenied, but partially . contradicted at trial;

- remanded for Jackson v.’Denno hearing on. voluntary-i -in-

voluntary issue; thus credibility of ragga defense

testimony still for trier of fact); U. S. v. Wheeler, 3 Cir.

1960, 275 F. 24 (Marsh, J.; in- tah court; both: gov-

—ernment and defendant admit voluntary cooperation and

pew deceit, coercion or false representation, held nothing

for jury as a matter of law); '* Wright v. Rockefeller,

1963,.376 U.S. 52, 57 (trier of facts must be permitted

choice of conflicting inferences) ; Rhoades, Inc. v. United :

Airlines, Inc., 3 Cir., 1965, 340 F. 2d 481, 485 (oral tes-°

timony can be rejected even if undenied); Wooley’ v.

Great Atlantic & Pacific Tea Company, 3 Cir:, 1960, 281 | ~

F. 2d 78, 80 (Judge Marsh) and Nanty-Glo Boro v. Amer-

ican Surety Co:, 1932, 309 Pa. 236, 238, affirmed for the

‘proposition that binding instructions cannot be’ given on

undenied oral testimony, the credibility of which must go

to the j jury. . he

E. Defendant did not —— and . intelligently

waive his right to counsel plus the other Ba was detailed

above. ,

* This is probably ie case on which Chief Judge Marsh re-

lied in directing that nothing was opened for jury consideration

_ on the-voluntary issue (566a-568a).

“f/f

Me gt ‘ cy a 7 49.

Reasons for Granting Writ +.

Although the investigating agent can preliminarily de-

cide if, constitutional rights have beerr waived, the final.

determination is still for the court. (Miranda, supra, 86 S.

Ct. at 1634, footnote 55; 384 US. at 486.) The state has

a “heavy burden” to show a knowing and intelligent waiv-

‘er of any constitutional. right (86 S. Ct. ‘at 1628, 384 US.

at 475). The Court ‘will-not presume ‘a waiver from a si-

lent record. Boykin v. Ala., 1969, 395. U.S. 238, 242,89

S} Ct..1709, 1712. Sal my A el OLN

a ae

The doctrine of Waiver has been concisely discussed :

in. Von Moltke v. Gillies, 1948, 332 US. 708, 724 as fol- _

lows: - a | ae ie ae

“To be valid, such waiver must be made with an

apprehension of -the nature of the charges, the statu-:-

tory offenses included within th&m, the range of al-

lowable punishments thereunder, possible defenses to

, the charges: and the circumstances. engaged in-thereof

and all other facts essential-to a broad understanding - -

of the whole matter.” - :

. “The signing of a standard written waiver of coun:

sel” is insufficient (332 U.S. at 728).

-,. “The question of a waiver of a federally guar-

anteed constitutional right is, of. course, a federal

question controlled by federal law. There is a pre-

sumption against a waiver of constitutional rights;

_...and for a waiver to be effective, it must be clear-

-ly established that there was ‘an intentional relin-

_quishment or abandonment of a known right or priv-

ilege.””’ Brookhart y. Janis, 86 S. Ct. 1245, 1247,

384 U.S.1,4. | i.

50° Teas

Reasons for Granting Writ —

_ It. is respectfully suggested that defendant could not

have intelligently and knowingly waived his constitutional

rights because by turning over the books and giving. the

oral confession he guaranteed that he would be convicted,

es as he was, ina Federal Court. : ‘

In discussing Criminal Rule 11 as applicable to. a

guilty plea on 26 USC 7201 _prosetution the Supreme

-Court (McCarthy v. U. S., 1969, 89 S. Ct. 1166, 4171,

’ 1173; 394 U.S. 459,466, 470-471), declared that defend-

ant must understand .the elements of the crime and the

relation to law and fact to ;: event the. plea from- being a

mere ritual. It is respectfully suggested that. the rule 11

in court protection should be: applied to out- of-court con-

duct which is actually a plea.

Other authorities on the issue wichbinns v. U. a

-Cir., 1970, 412 F. 2d 189 (defendant pleads guilty, not

told of effect on his parole, reversed) ; Clzoga v. U. S., 10

Cir., 1967, 380 F. 2d 305 ‘(jury must be told sfailure to

understand is an element in deciding -voluntary-involun-

tary. issue, but instfuction unnecessary as voluntary issue

not raised at trial)’; Boykin'y. Ala., 89 S. Ct. 1709, 1712,

395 U.S. 238, 242-243 (theory of Rule 11 applied to state

guilty plea; record must show lack of coercion, ignorance

or failure to understand law in relation to fact); Miranda

v. Arizona, 86 S. Ct. 1602, 1628, 1640, 84 US. .436,

475, 498; Com. v. Stanley, 1969, 251 A. 2d 681, 682, 214

Pa. Superior Ct. 118 (complex: charge and requires in-

-telligent waiver of counset who, could explain nature of

crime, statutory’offenses included, range of punishment,

possible defenses and other essential facts necessary to

understand. -:.

roe ‘ _ 51

Reasons for Granting Writ ;

*F. The jury must be instructed on this ever without ;

request. Stevenson v. Boles, 4 Cir., 1964, 33NF. 2d 939, -

affirmed ‘per curiam, 379 U.S. 43, 85 S. Ct. 174; Sproble

v. Cal., 1951, 313 U.S. 181, 189 (non-representation by

counsel is factor tending to involuntariness; oral. confes-

sion should be Cautiously receiyed; jury must be advised

concerning these elements) ; ‘Mullins y. U. S., 4 Cir., 1967,

. 382 F. 2d 258, 262 (jury must be advised concerning the

_ issue even without request). Oe ete

‘In conclusion, defendant urges the Court to find that

.On this record the confession was involuntary, defendant |

was tricked and coerced into making it, that he did not ©

intelligently waivé his rights and, everi if everything previ- a

ously is decided against him, the- jury ‘was not properly \

advised concerning the method by which they should de- |

termine the voluntary or involuntary issue and for these’ .

- reasons the conviction should be reversed. -

The panel of’ the Thigd Circuit--Court of Appeals ”

neglected to’ observe that defendant was not relying upon ©

_ Miranda v. Arizona, 384+US. 438, 86 8. Ct. 1602, but .

arguing that’ the first interview was a “Critical stage” of

the proceedings as interpreted by: Coleman and Wade.

(See Petition for. Reargument, p. 90.) or

Petitioner respectfully suggests that the Internal Rev-

enue Service and involved taxpayers should be ‘illuminated

'_ concerning exactly what warnings are necessary and when

they must be given before a special agent looking forward ..

to indicting taxpayer. begins his crucial interview subse-_

quent to which the trial is only a ceremény. ,

Petitioner respectfully suggests that ini a case where

only.loss of revenue is involved, he should receive treat-

ment at least equal to that given murderers, cutthroats and

_ perpetrators of other serious felonies. - _

.Reasons for Gyoming Writ.

* * Does: a confideniial eclatiailite ¢ exist between au

bank and its depositor ‘and, if it does,’ must 26 U.S.C.

1602 process be served before the bank records are ‘made

available for IRS ‘special agent examination and, if so,

-. does the taxpayer. have an absolute righé, to notice - that

the summons has been served plus the opportunity to in-—

teryene and participate | when the special agent interviews.

* the witness so that he. can prevent improper use of the

summons and aid in ihe disclosure of helpful evidence -

which would prevent his progecution all within the mean-

‘ing of U.S. v. Donaldson,. 197t, 400 US. 517, 525, 530,

91S. Ct. 534, 538, 542? eos

This issue is raised in’ Paragraph 2(c)- of Defend-

—ant's Motion To Suppress plus his at trial objection (93a).

It was — for appeal by his new trial motion in

Paragraphs 1, 2 and 60. It was not discussed in the low:

er Court opinion. 3

A. - The Cevetaniets> -produced six bank officers.

Five, who were asked, declared the relationship between

the defendant and his. bank to be confidential and most ~

stated that this ‘is a rule acknowledgedyin: ‘the entire bank-

ing industry: Micenko (198a); Axon (214a); Markland .

(245a): ; Berger (261a); Lansinger. (268a).

B. These bank officer-witnesses only restated what

courts and commentators have overwhelmingly’ declared.

Thé relationship between a. bank and its depbsitors 1 is con-

fidential.

| “Patton's Digest” prepared for, copes by and

used as the Bible of the American Bankers” Association,

- t hare <a ee ae Se 53

Reasons for Granting Writ

_ declares that the relationship between-bank and customer

‘is secret.

“A bank ‘is ‘sinks an-implicd: obligation to keep

sceret the records of its depositors: . . - .” tAugust,

A Supplement,,p. 5, Sec. 19.)

“A depositor is entitled to have the state of his ©

accouni kept. secret... .”" (p, 4)

“A bank should: as a ‘general policy, conceal

~Fnformation. received concerning its customers as

~ confidential, which .it should not- disclose thee

~ without clear justification” (Sec. 19(1), p. 619).

A bibliography beginning at page 627 collects nu-

nicrous authorities classifying the relationship as ‘“‘confi-

dential”, “verging on the professional”.

In toda v., National Provincial and Unien Bank

of England, 1 K.B. 461 (1924) } a bank which disclosed to

the ‘employer of its depositor that he was. receiving money.

from a bookmaker causing him to lose his job’ was held

subject to damages. The planes! judicial Court i in engiaed

said: :

“It is an implied term of the contract between

a. sees and his customer that the banker will* not

_ divulge to third persons, without the consent of. the

5 customer express or implied, either the state of the

_customer’s. account, or any. of his transactions with

the bank, or any information relating to the customer

acquired through the keeping of his accounts, Fpcge

80 Banking Law Journal 28; published: for the guid-

ance of the banking fraternity, comments ‘on scarcity of

material’ because of traditional care of ‘bankers, most of

— are, by = agreement, subject to the 'Robert

a | ‘ oe 3 : @.

“ap : a.

54 | ——

Reasons for Granting Writ

Morris Associzites Code of Secrecy (p. 28) and refers to

Tournier, supra, indicating that it will probably be fol-

lowed in-the Urtited States as a general apanianane (pp.

29, 32).

Petérson v. Idaho First National Bank, “$67 P. 2d *.

- 284, 1962, Idaho, collects authorities, all of which: hold

‘the relationship to be secret. There, defendant bank dis-

"closed to: depositor’s employer that depositor-employce

Was passing N sank checks and was declared —

in damages.

73 Bankers Law Journal 163, 164 (1956). affirms

the confidential relationship as does 25 Columbia | aw Re-

View 152,°154, 157, 158, indicating that Tournier will

probably be followed here.

Also. declaring the relationship secret are Corpus Ju-

ris Secondym, Banks and Banking. $71 ¢c); John T. Morse.

Ir.. “Law of Banks and Banking” 6th Edition, Volume 1.

Boston, Little, Brown and Company (1928) in §298(a):

Michie. “Banks ‘@nd Banking” Permanent Edition, Volume

3(b). The Michié Company, Law Publishers, Charlottes-

ville, Virginia-( 1950), Chapter 9, $308, p. 186.

U. S. v. First National Bank of Mobile; D.C. Ala..

67 Fed. Supp. 616 (1946). modified ‘on other grounds,

160 F. 2d 532, declare8 it to be “a fiduciary relation-

ship” (67 Eed. Supp. at 624).

U. S. v. First National Bank of Fort Smith, W.D.

Ark., 1959, 173 Fed. Supp. 716, 724" agrees, but indi-

cates that a Court Order justifies release of information.

—_— —

™ This case was cited with approv. Yin 8, Dauphin De-

sit Trust Ce .3 Cir., 1967, 385 F. 2d 129.

3 55

Reasons for Granting Writ

Brex v. Smith, 1929, 104 NJ. Equity, 386, 388, en-

joined the public prosecutor from examining police per-

sonal bank. accounts duc to lack of authority and remarked

. that the relationship: was secret but subject to Court Or-

der.

7 Am. fur... Banks, §196, p. 150, affirms. the secret

relationship between bank and customer. In addition, 12

USC 484 concerning “limitation ‘on Visitorial powers”, in

regard to national banks states:

“No bank shall be subject to any visitorial pow-

‘s ers other than such as aragnuthorized by law, or vest-

ed in the Courts of Justice, or such as shall be or shall.

have been exercised or, directed by Congress. or by

cither House or ‘by any Committee of Congress or of

cither House duly authorized.”

If the Congress st information to be freely

given, it would not have passed this Stajute.

_ Similarly, Pennsylvania) ‘in 7- Purdon Statutes 332,

requires banking institutions make disclosure to the De-

par'ment of Public Assistance, etc. If they were free to

divulge the information, it would be unnecessary to° pass

legislation and enforce it by §333 declaring fefusal a mis-

demeanor. . ; .

‘ Few authorities exist. The rea is that banks do

not voluntarily disclose, and. further, to fewndes ae

brought because the depositor rarely ‘discovers the t reach

of faith. However, no decision disclaiming the secret re-

"lationship: has been found. The Court can take judicial

notice of the general depositor understanding that his

bank will protect him. ‘

penne for Granting Writ

In’ other fields involving confidential eclationships,

the Courts have enforced secrecy. i:

Board of Trade of —— v. Christie Grain and

Stock Co., 1905, 198 US. 236, 250, restrained defendants

trom divuleing prain price statistics collected by plaintiff

and sent by wire to confidential recipients who apreed not

to disclose the information. “The Court, after calling the

Information “a trade secret” declared:

“The plaintiff does not lose its rights by com:

municating the results to persons, even if many, in

confidential relations to itself, under a contract, not.

‘toemake it public, and strangers to the trust will be

restrained from getting at the knowledge by inducing

a breach of trust and using knowledge obtained by

such a breach.” :

Associated Press vo U. S., 1944, 526 U.S. 1, 15, foot-

note 14. apprayed the above quotation soe

McMann v. S.E.C., 1937, 2 Cir. 87 F. 2d 377, te-

fused tO enjoin plaintiff's broker whose data was accumu-

lated, not fron/ffhe customer, but from. statistics openly

reported on the Exchange, from divulging them to the

S-E.C. lawfully investigating plaintiff's speculations there-

on. because the information was public eta i (pp.

377 8-379). A 3

7a ,

The Court distinguished Brex. v. Smith and Hearst

. Black. D.C. Cir:, 87 F. 2d 68, because here the investi-

gation Was authorized. After intimating that the records

might’ be property, the Court held the relationship be-

tweet? broker and client confidential..It further stated

that the broker could be compelled to assert the privilege

of the customer (87 F.2d at 399).

ba ah a

Reasons for € sranting Writ

In Hearst, supra, an illegal conspiracy between the

* Federal Trade Commission and a Senate investipatiny:

committee attempting. to obtain copics ‘of telegrams sent

by plaintiff through Western Union, which refused ty

~make them ayailable- to the Committee, was condemned

hy the Court, which advised that business information, in

cluding a letter transferred by mail or other means of com

munication, remains the property of the sender since re

cipient obtains it, not for publication, but only for the'spe-

cific’ purpose for which it: was transmitted.

As defendant's records could not have been exam.

ined against his will while in his possession, U.S. v. Lef

kowit=, 1931, 285 U.S. 452, 466, the information should

not lose this protection because the necessity of business

places it in the hands of a bank. Wilson v. U.S. 221 US

372, 380, 382. :

- ©: 80 Banking Law Journal 28 (1963), a reprint of

60 Michigan Law Review 781. and 14 Journal of Tax:

tion 220 (1961) indicate that banks usually coopera’

Without service of surmmons and release information over

the phone to Internal Revenue Agents. If this has oc-

curred here, the evidence should be suppressed. Na gov-

ernment witness disclosed how Carpenter first gained ac-.

cess to their records.

Neither bank witnesses: (92a-277a), the prosecutor

(107a), Carpenter (35a, et seq.), or Hildun (698a e:

seq.) testified. under oath that 7602 process had beech

served. In fact, all bank witnesses disclaimed any know!.

edge of 7602 process being received. John G. Micenko of

First Federal (195a-196a, 198a): Robert. J. Axon for

Swissvale Mellon Bank (213a-214a); Dorothy W. How-

58 ?

Reasons for Granting Writ’

ells for Wilkinsburg Savings and Loan (2398); Thor

mond *Mackland for MeKeesport WPNB (2454); Prank

N. Burger. [rs for V/PNB-Braddock (261a): Richard £.-

Lansinger for McKeesport National Bank (2084-2692).

ah A motion to strike theNMicenko testimony (2 16a -

217a) was denied-42449a)-as- Was the objection to admis

sion of bank records (132a) as to Micenko (207a-2 16a),

as to Axon (2244), as to Lhewells (24a), as to MarklanI

(250a). as to. Burger and (2624) as to Lansinger.

The Third Circuit Court of Appeals has recognized

the chity of privacy owed by a-bank-to its depositors plus:

the obligation of the, bank to resist the summons until it

is enforced by the Court. US. rt Juuphin Deposit Trust

Co., 3 Cir, 1967, 385 FL 2d 129: U.S. ov. Bank of Com.

Merce, ¥ Cir. 1969, 403 F.2d 931, 9352 (deposits conced-

edly exclusive property of bank: confidential relationship

recognized’ but held to fall before 7602 enforcement pro-

cceding) : Zimmerman v. Wilson, 3 Cir.. 81 F. 2d 847. as.

modified. 105 F. 2d 583. 8 (case declares broker and

bank gecords privileged: cquby restrains broker: second

case declares broker tecords not privileged but does not

overrule bank privilege decision) -

Since the relationship between the banks and de-

‘fendant is confidential and since nothing appears of record

to indicate that a 7602 process was served, defendant

urges that the bank evidence be suppressed. °

. The trial judge believes (102a) that defendant's

May 7. 1968 letter to Carpenter (101a-105a) requested

‘the right to be preseat when all witnesses were -inter-

viewed so that he could explain set-offs against what ap-

m . 59

‘Reasons Jor Granting Writ

peared to be inegme plus prevent criminal use of 7602 :

Process (952-964): - Sf

91S. Ct. 534, after his bricf had been set in type. He

didznot have sufficient Hime available to correct this ques

tion and still make the March 11, 1971 court ordered fil.

ing deadline.

Appellant became aware of US: ». Pond dson, 1971, -

Nemetz respectfully suppests that Donaldson merely

holds that a “balancing” of “opposing equities” resulted’

ina decision that FRCP 24 (a) (2) dogs, not “always”

mandate taxpayer intervention at the district court level.

-When the IRS requests 26 USC 7402(b) and 7604 (a) en-

forcement of a 7602 summons served on his former em-

ployer when (1) no privilege or confidential relationship

existed (Nemetz claims -his ‘relationship with ihe bank« -

to be such; see question No. 3) and (2) taxpayer had noi.

yet been indicted -for criminal violations which could bh:

supported by the requested evidence. Dondldson did no

decide (1) taxpayer could not be present at an’ ERS Hear-

ing when a third Party was interrogated: (sec opinjon of -

Justice Douglas, p. 546,-F.N. 2) (2) the import if Nem-

elz question Na. 6 and its issues were raised (3) that Jus-

tice and Bank of Commerce. were overruled bevond the

absolute right they gave all taxpayers to intervene. “sim.

ply because. it is his tax liability which is the subject of

the summons,” (4) that taxpayers cannot object to the

evidence at trial (p. 342) and (5) the import of 2 request

-to be present when knowledgeable third parties are inier-

viewed.

In fact, Donaldson recognizes the right to intervene

when the relationship ‘between taxpayer and summoned

Reasons for Granting Writ

_ party is claimed to be confidential or priviledged ° (pp.

338, 542) as Nemetz asserts it to be in his question No. 3.

- However, the panel of the Third Circuit Court of’

Appeals did not adjudicate this issue. (See opinion, p.

89), Resa s s a

After discussing the right to intervene and in rely-

ing upon Donaldson v. U. S.,-1971, 400 U.S. 517. the

panel neglected to observe the argument of Questions Nos.

3 and 5 which urged an absolute right to intervene when

a confidential relationship existed between the party be-

“ing examined, in this case defendant's banks, and the tax-

payer. / . Sane. ess

Defendant .respectfully suggests that the -panel’s reli-

ance on U.S. v, Newman, 5 Cir., 1971, 441 -F. 2d 165, is

misplaced as taxpayer there expressly disclaimed privi-

lege (441 F. 2d at 170) and did not rely ‘upon it in. his

- grounds tequesting intervention ‘(441 F. 2d at 168). In

fact, Newman expressly held that privilege could be raised

at trial (441 F. 2d at 174) and this‘is exactly what Nem-

etz did without suctess at his own trial.

That U. S.’ v. Donaldson, 1971, 91 S. Ct. 534, 400

U.S. 517, on which the panel relies, in. overruling de-

fendant’s request. to intervene specifically allows interven-

tion when a confidential relationship is involved (91 S.

. Ct. at 534 and 542, 400 U.S. at 523 and 530). |

"Since the greatest’ source of income tax ‘evasion and -

civil assessment information is ‘obtained from taxpayers’

banks, it is respectfully suggested that the Internal Rev-

enue Service and practitioners in this jurisdiction should

be advised whether or not a bank can be examined with-

——- for Granting Writ

out previous service of 26 U. S.C. 7602 process and the

right of the taxpayer to be notified and/or intervene.

dt is respectfully suggested that these two issues are -

of exceptional importance in adjudicating the right of tax-

payers and the Internal Revenue: Service so-that the deci-.

sion of this court should be published for pecence of

everyone concerned.

Justice v. U. S., 6 Cir.; 1966, 365,F. 2d 312, 314,

affirmed, 390 U.S. 199, 88 S. Ct. 901 (taxpayer permit-

ted to interevene when, 7602 sérved on his bank which .

might. not adequately protect him and thus foreclose his

*. appeal from adverse judgment).

Sinée the government invoked the procedure of 26 |

USC 7602-7605, it is required. to. follow the mandatory

provisions of the Code itself. 26 USC 7602(2) and (3)

require that the testimony be taken ‘‘under oath” and

_ process served as clearly required by 26 USC 7603 no-

less than 10 days previous to the examination which must

be conducted in a prescribed manner ( §7605).

An informal type of investigation, as probably took

place in this case, subjects defendant to obvious abuses.

A witness under oath will not be as prone to Jie or |

stretch a point because of hostility or other personal rea-

sons as when no punishment : was involved. : Bridges vy.

Wixon, 1944, 326 U.S. 135, 153, clearly directs that when

regulations require eens be taken under oath it must

be taken under oath or lost. , i eS

When the government ‘tien a certain procedure, it

must follow through even though other methods were

_ available before that ‘time. Service v. Dulles, 354 US.

2 . . Y : ’ . *

, Reasons for Granting Writ

WIV I88 (Sceretary can fire summarily; passes regulation

to.instire due process, Must follow it); Yellin v. U: S., 374

US. 109, 114 (House Un American Committee docs not

comply with its own rules: conviction for, contempt re:

versed especially when defendant had no way of knowing

until trial that the conditions had ‘not been followed) ;

Viturelli v. Seaton, 359 U.S2555, 939-540: (petitioner can

be discharged without cause, attempt fo discharge*him for

cause disallowed, when insulficient evidence to prove it).

Uf the. government lacks authority in the’ Revenue .

Code, no regulation or procedure can expand its power.

Colonnade Catering Corp. .v. U. S:, 1970, 90 & Cl. 774,

. 397 US. 72,-77.. 7

At the enforcement proceeding, the government has

the burden gf proving. that the investigation. is. properly

essa and the evidence will be ag used. U.S.

_ Howard, 1965; 375 F. 2d 673, 679; U. , Powell,

1964. 85S. Ct. 248, 255, 379 U.S. 48,58. )

However, since there is a presumption of regularity

in what: the Revenue agent does, Wilson v. Schnettler,

1960, 365 U.S. 381, 383 (caurt will not assume arrest

without ‘probable cause if no allegations to the contrary) ;

prosecutors will obey the Federal Constitution) how will

the taxpayer protect against improper: collection or use

of evidence if he is not present at the -scene to observe

what is happening. ‘Reisman v. Caplin, 375 US. 440,

445, 84S. Ct. 508, 511.

‘Unless this: Honorable Court grants the right to no-

tice, especially upon las t, Reisman and Donaldson

* Dombrowski v. Pfister: 1964, 380°U.S. 479, 484, 85S

“Ct. A116. 1119-14120 (it is assumed that the state courts and

* Reasons for Granting Writ

have given a right without a remedy. Smith vy, Texas, 311

U.S. at 130, 61S. Ct. at 165. °

“Rights declared in words might be lost_iy reality’, °°

_ Miranda ¥.-Arizona, 1966, 86 S- Ct: 1602, 1612, 384.

U.S. 436, 443; U.S. v: Brown, 85 S. Ct. 1707, 17227 381

U.S: 437, 462 (courts must enforce rights and privileges ~;

_ or they are worthless) . ; Poe

- Defendant mentioned at trial (i06a) that Carpenters’

had no authority unless the Revenue Code specifically.

awarded it to him. — sa,

He respectfully suggests that. Carpenter was using

7602 process to prepare for this very trial and that the .

Court should reject his Statement to the contrary.

Reisman condemns collection of criminal evidence by

civil 7602 process (84 S. Ct. at 913, 375 US. at 449).

- However, the investigation will not be stopped un-

‘less the Special Agent admits he is using it “solely”. for

criminal purposes, U: S. y. ‘Erdner, 3 Cir., 1970, 422 F.

2d 835, 836. |

_ So, he never admits it and, by this device, is allowed

to continue assembling evidence which is Offered in a_

criminal 7201 prosecution. ;

‘What Carpenter. means when he Says the investiga-

‘tion is both civil and criminal clearly appears from his

trial testimony. He means no criminal case éan succeed

without added civil assessment so that: civil responsibility

must be accumulated in order to make out a criminal case.

He declares, “. . . but it can never turn out to be Strictly-

criminal.” “That is. because there has to be additional

64 .

_ Reasons for Granting Writ

civil diability in. order to be a case.” “Well, we investi

gate possible criminal investigations at, the same time de-

termining whether or not returns ate Mug and correct.”

(80a) ™ ‘Investigations could turn out-to be a civil, matter

or it could turn out to be both civil and criminal but it can

never turn out to be strictly crimurtal.” 6 29a)

It is apps rent that right frome the beginning he had

determined to prosecute defendant for 7201 violation. He

disclosed this clearly to Father Berg ‘as that witness testi

» tied, without contradiction, at the trial:

“He told me about this Mr. Nemetz’s defection

: in his payment of income tax and there would be a

trial later on 3

“L believe he said that, yes, there would be a

trial later.on.” (62a) : |

-?° "He merely.told me that Mr. Nemetz had been

—would be up for trial.” (69a) cs

When Carpenter eXamiricd the microfilm ‘at.. First.

Federal during the manths of May, June and July, 1968

(315a), he discovered 50 witnesses whose names did not

appear in defendant's books. After examining the micro-

_ film “which shov ed that Mr. Nemetz was cashing checks

and putting the money in his pocket . * rather than iny

the books (515a), Carpenter knew that he was on the

right track. e

posits at First Federal.and then saw all the cash that

he was not disclosing on the microfilm, you were.

G- - pretty well convinced at that time that you had a

pretty good criminal. case, -isn’t that so?’

A. That's correct.”” (515a)

od .

: | 65

‘Reasons for Granting: Writ

This certainly would contradict hid statement that it

Waly cod until October, 1968 that he -knew the case,was

criminal (sce ilso 510a-515a).

Defendant moves (98a) to dismiss the prosceution

Hot founded gn propér procedi&e, and urges a hearing to

' develop. the frets which. might justify this relief. Defend.

ant respectfully suggests to 4he Court of Appeals that it

should: no longer honor the self serving statement of the —

special agents that the investigation is not solely .criminal

copecially when we take into a¢count the sole criminat

function of the special agent. The Court is-asked to take

judicial knowledge that after the conviction it will bé the

Revenue Agent who goes after the assessment and that

the Special Agent will drop out of ihe picture. (See news

. release.of October 3, 1968, 10794) -

Even though the Special Agent will not be ordered»

the. evidence ‘still is subject to objection when Offered at

trial. It thus appears from the reported cases that de-

‘fendant has two shots, the first to stop the collection of

the evidence and the sécond to bar its use at the trial it-

self. . : a .

U.S. v. Erdner, 3 Cir., 1970, 422 F. 2d 835, 836

‘(although 7602 summons will not be enforced when used

_ “solely” for criminal purposes, request to foreclose use_at

\ criminal trial held premature); U. S. y. Mothe; E.D. La.,

1969, 303 Fed. Supp. 1366, 1370 (although 7602 process

immune from attack at: investigation ‘stage due to joint.

civil and criminal use, evidence can be challenged at

trial); U.S. v. Grant, 2 Cir., 1961, 291 F. 2d 327. 328

(taxpayer turns over records without government 7602: .

/ea

OO “be§ °

| Reasons fag, Granting Writ

reliance, search amd cocreqon can be, more a tely

raise at trial): U.S. y Biie, JMO, ISAS. 251, 29

(UMpropesr 2 | of evudenee necessary to defend civil joop

indy assessm@nt in tax court ean be raised at trial if intro

duced): _— Yr Prout, FAY Pal 1969, 295) ed.

Supp 9 OL Cbank not cnjomed): Gailure to pive Miran

da warnings can be raised at seal): Mincheliff vo Clarke.

evidence net to be used for criminal prosceution: court

entetves summons but bars future criminal use)

In fact, in following Cole, supra, » Mone vo Williams,

1 Cir, PO, Vo FL ME ON, “35. reserved to taxpayer

his right to object to the evidence when and if it: was of

tered At trial. ;

‘Carpenter knew he was on The right track at the be

pinning amd never found anvthing after examining the

Virst Federal! recofds which changed his mind (ood. on

is respecttully suggested that the Court Should find as a

tact that he was on the-criminal trail from the beginning

am? that the 702 summons evidence accumulated cannot

SS used in this trial:-

After the S Supreme Court Observed in Wolf. 5 vr. Colo-

Tayo. . 558 US. 25, that state agents were violating the

Fedetal Constitution, it became Necessary tO stop it by

Morr v. Ofxo, 307 US. 045. and its ‘progeny.

__ itis apparent thay the special agents will go as far

2s they are allowed in collecting criminal evidence with

ovess. The Court.is respectfully urged to recognize

odlem once and for all and bar use of 7602 collect-

ed evidence.in a esjriiral inal.

/ ee

- ~ 67

Reasons for Granting wee

Hatalley vy US. sot us. 17%. a that sf correct

procedure a tot followed together with retired yotices

the entire meticr is a nullity. Abel vy US. 4620 4. 27.

226; 200, condemn. collecting criminal ¢ vide meebo acial

process. “Elkins vo 0 S., $64 US. 206, 223, obves -. iat

_hevermment agent. mut “obey the law «« a and .

Smyer ve US BSS. OL. 785, FO1, SOULS. 24, 37, state

fivel the United States attorney i. a corvant of the law See

cases collected in U.S. vy Kordell, O97 US. at 12°

As can be seen from a discussion in the wext gC"

Hon, defendant claims. that what appear. te be mecome

was in fact offset by corresponding expenses. Every wit

ness, as shown by Exhibit A, defendant’ brief tevtified

that labor, material and supplie. came out of the pros.

_ amount paid to defendant. Carpenter knew th. but did

nol present any evidence concerning: it, le raicaad tnis ju he,

defendant. :

The government was put 6n inane diate notice (23a.

661a) that defendani relicd on Sansome yt S45 S$

(1. 1004, 1010, 380 U.S. 343, 352, und fu. er took the

position that under Holland y. 1. S_, 1954, 34% US 121

government was under some duty to investigate the amount

amount woald not be credited. as intome by the jury. *

Additionally, since the records were lost and re. evi

dence was presented that this was no: so di fendanc Wes

helpless. In order to put in any defense, he would beve

~ been required to waive his 5th Amendmen: He nor tc

take the stand. ° aes :

" The factual det f this fre

neXt quest jon.

O8 . a ‘ a *

- * Reasotts for Granting Writ

It he had been permitted to intervene in the proceed

ing before the Special Agents, he would have been able

la cross-examine the witnesses and disclose as a matter of

record to the government that everything Was not income. .

Additionally, in regard-to the bank accounts. he would

have been able to show that the almost $500,000 deposit

ed was a churning of the sanie money over and over.

“The government would then have been under an ob

ligation to present this te the jury, Brady v. Md., 1963,

373, US. 83. and the entire prosecution might not have

taken. place and the conviction might not have followed.

If evidence has been improperly accumulated under

Exhibit -B-7002 process, it. should be suppressed “even

though the sovernment night have collected it if it had

given the hotice to intervene and proceeded: properly as

required by the Code. Mancusi v. DeForte. 88 S. Ct.

“120, 2125; footnote 12, 392 U.S. 364, 372: Silverthorne

lumtber Co. et al. v. UL S.. 1920; 251 US. 385, 392. *

It is respectfully sttbmitted that the evidence should

be suppressed and a new trial awarded. -

Defendant preserved their issues in new tye motion

paragraphs 1, 2, 10. 39. dt was not covered in the lower

court opinion. “nS

_ The adjudicating panel of the Thitd Circuit did not

meet this issue head-on (p. 87). Petitioner respectful-

tial relationship is involved (91 S. Ct. at 538, 542, 400

U.S. at 523. 330). (See Petition.for Reargumenit, p. 90.)

Petitioner tespectfully. suggests that, the impact of

internal Revenue Service ‘investigations touches the life “3

atc ; 69

Reasons for Granting Writ

_ of every employed—and incorie-receiving resident~of the

United States .and that this Honorable Court should ‘set

guidclings plus instruct those concerned cxactly what can

and cannot be done in these increasing-in- ‘number- and-

intensity investigations.

4. In-a 26 US.C. 7261 specific item prosecution,

must Goyernment aid Defendant in proving deduction al-

lowable under U. S. v. Sansone, 1965, 85_S. Ct. 1004,

1010; 380 U.S. 343, 352, when his records have been

stolen previous to IRS contact and investigation and does

deliberate failure to do this qualify as# suppression of evi-

dence within the meaning of Brady v. Md., 1963, 373

“U.S. 83 and its progeny’ ? |

Petitioner’s desire to participate in the 26 U.S.C.

7602 interview was not founded on idle curiosity bit on

a specific.desire to explain away what would at first ap-

pear to be evidence of tax- “reporting dereliction.

The issues raised here were preserved at trial and in

new trial motion paragraphs 9, 27, 30, 35, 36, 37, 46, 47,

50, 53, 56 and 65. -*

A. Defendant’s claim (356a- 357a, 710a) that his

records plus $9,000 worth of copper had been stolen

and/or burned stands undenied and uninvestigated by

* Government (580a, 711a), but corroborated by Defend-

ant’s wife (848a), his accountant (338a- 3394), his wirt-

ness, DeLucente (884a) plus police reports (Exhibits O

- and N, 745a, 750a).

70 ae

Reasons for Granting Writ

-B. Every witness (except a few whom defendant

forgot to ask) produced by prosecution admitted ¢70a-

85a) the money paid to defendant incligled labor and ma-

terial (see Defendant's Brief Exhibff)- which the trial

Court recognized as deductible. itefa -(1017a. 1015a,

10282, 1029}. :

C.. Government was alerted when. the trial began

(23a) and while Carpentér was on the stand. sagas

defendant relied on-Sansone vy. U. S.. 1965, 85S. Ct. 1004.

1010, 380 ULS. 343, 352- (undeclared expenses can be set

off by undeclared income fo avoid 7201 conviction) .

DD. Since his request to participate when the wit-

Nessgs were interviewed before trial by Carpenter had

been denied, defendant lost the opportunity at that time

to disclose through them and by his own evidence that

what he had received was gress, not net, income.

= “™~

If present, he could have shown the extent ond value

of the labor and material Ite was required to deliver under

h®& contract plus -presented the evidence disclosed -at trial?

Carpenter would then have been required to include these.

explanations in his report.

His superiors, when confronted with this entire pic-

ture, might not have approved the recommendation for

prosecution. 3,

(1) Defendant's purticipation at the First Federal

and other banks would have disclosed that the many de-

posits totaling $48,477.12. (639a, 648a, 277a, 279a.

.289a) were only a churning of the same money (160a-

186a, 16la, 162a, 163a, 171a, 178a. 191a-192a, 228a, |

256a-259a, 275a). plus that he had not deducted interest —

Reasons for Granting Writ

expense which would cancel much ef the undeclared in- ‘

terest income (26a, 39a, 41a).

’

The use of the funds fron the joint loans made to

“defendant and Joseph Yesko (186a-188a, accounts Nes

3995, 3000; 361.1) and the defendant-guaranieed loans to

_ McCauley (1&8a-191a, accounts Nos. 3617, 3825, 3867)

could have been explained as could the source of funds

for repayment. 4 a ea

* (2) WViott’s trial téstimeny that defendant did not

claim his allowable ¢ ash deductions (310a; 313a- 318a)

plus his non-deducted joint enterprises with others Cx- =

pense (310a) could have been developed.

(3) Cian’: prejudicial. technique of directing ~

- _ the bank witnesses bring in onl¥ what helped government

(2134, 216a, 127a, 271a-272a). but withhold what ad-

vantaged defendant: (157a-1584,,149a, 1464, 171a, 1692.

‘172a, 211a, 216a, 228#229a, 253a, 2714) could have

been exposed (government in trial objection ‘to defens: €

attempt to correct this, ™49a- 150a, 228a, was sustained,

15la, 1584, 235a, 661a, 662a, 664a- 665a, 42a- 432).

_ (4) -Carpenter’s failure to offset allowable expense

(P & LE, 681a, 9292; Braddock, 85a, 594a, 608a: St.

Brendan’s, 67a, 69a, 625a-626a: 50 customer witnesses.

619a, 630a) could have been corrected.

(5) His omission to check out the $80. 000 grand-_

_ father. story (592a- 393a, 596a-597a) could have been

exposed.

(6) In addition, Carpenter made no attempt’to in-

terrogate defendant (614a, 633a-634a) who did not re-

frse cooperation (59%a-600a, 633a-634a) .. es, de-

d..

Reasons for Granting Writ

fendant might have tefused to talk himself, he could have

cross-examined witnesses and produced evide nee through

Witnesses of his own.

(7) Alsa, Carpenter did not ask endorsees of vari-

ous checks on whietr defendant. was, payee whether the

money was a busingss deduction. (See, for example, O88a,

O89a, Woke Recess

(8) Carpenter's half-hearted attempt to discover

and credit payments made to supplicés (668a-669a) was

exposed when these witnesses were produced. at trial by

defendant to contradict what they allegedly told the spe-

clal agent (contrast: 6682-6708 with 7652. 756a). The

suppliers, Who appeared as defense witnesses, supported

his claim. that all materials were purchased by cash ‘but

all except one (945a) could give no definite figure due to

lack of records (756a; 765a, 959).

"ie

fair for Carpenter to-add undeclared income tq gross with-

out giving deductions iscovered by him similar treatment

for the vears 1964, 1966. and W967 (650a, 651a, 656a,

~675a-676a,-682a, 685a, wv adding them to deduc-

tions clainied.

F. Defendant's detdéffed and factually supported at-

tempt to prove by his admitted expert (807a, 822a) loss |

on Braddock (828a, 857a, 860a. 871a, 883a)- and small”

profit on St. Brendan's (883a) should have been credited”

as a complete defense (779a, 780a, 806a, 895a) in light

_of Carpenter's s admission that competition kept the Brad-_

dock profit low (6784). | .

7 Instead, the Court’ (1030a- 1031a)° both undermined,

the evidence: by aaseniying it as a mere opinion despite

e Aa -

EF. Defendant. respectfully suggests that it was un-

:. 73

Reasons for Granting Writ

objection (10420) and blocked: defendant in his attempt

lo support these deductions by national trade averages

which figures could have been supplied by subpoenaed

local IRS Director Long (900a-925a) .

G. Introduction of the bank records whi ch dis-

closed $481,477.12) deposits was an upnecess, Vv préju-

dice. Hf they were used to show only undeclared interest

as poverhbment claims (2864) the material could’ have

been presented in a form limited to this alone:

However, the Court prevented defense attempt to

show it was not income (178a, 18la, 193a, 277a-279a,

289a) permitted the government to use it for evidence of

regular and periodic deposits to corroborate the specific

items (2862-289a), allowed: the prosecutor to argue this’

in his closing address (994a- 996a) and bac ked him up in

the charec (1027a). 7 re

Defendant argues the short instruction (1017a) to

consider the deposits on the interest issuc alone and the .

assurance given in open. court that- ‘error would be cor-

rected by the award of a new trial (643a, 6444-645.

6474, 649) did not erase what was otherwise said on the

subject. U.S. v. Blumberp, 5 Cir., 1955, 222 F. 2d 1496,

1499 ($30, 000 wedding held prejudicial even though in-

‘gme declared); Singer v. U. S., 3. Cir., 1932, 58 F. 2d

: Pas (partnership income heard by jury. strick: en: held

_ubcorrectable by charge); U. S. v. Caserta, 3 Cir., 1952.

199 F. 2d 905, 908 (partnership income not attributed

to defendant introduced and. stricken: conviction . re

versed) . ae

_ Carpenter did not hesitate to‘admit his duty to pre-

~ sent evidence helpful to defendant (584a. 388a-589a.

74 |

Et % Reasons for Granting Writ :

631a- éi2a. 6 624a). However, the Court is urged to find

this duty unfulfilled during the investigation stage, at the

empty ceremony~- explanation opportunity (623a, 603a,

SOK». 09a, see Exhibit L, 1080a) and at the: trial itself.

Mooney vy. ‘Hollahan. 294 U.S. 103: Pauli v. Kansas, 272

U.S. 213; Napue v. IIL., 360 US. 264; Miller v. Pate, 386

U.S. 1, 87-S. Ct. 785; U.S. v. Rutkin, 3 Cir., 1954, 212°

‘F. 2d 641; U. S. ex rel. Almeida i. Baldi, 3 Cir 1952,

195 F. 2d 815; New Canons of Professional E thics, D.R.:

7-103(b): 7-109 (a) (b), 7 E.C. 7-13. 7 <

Wherefore, petitioner respectfully suggests:

(1) That the United States. Supreme Court grant

a writ of certiorari in this case; and :

(2) That it reverse the judgment of the United

States District Court for the Western District of Pennsyl-

vania and the United States Court of Appeals for the-

Third Circuit. , ?

Respecifully sfbmitted. é

~AELEN N. BRUNWASSER

a ee * . “+ ° Attorney for Petitioner

~ Opinion of the District’ Court

6, al

. Pf o

Pai .

APPENDIX

Pak . e s

-IN THE DISTRICT COURT OF THE wcccad

STATES

“FOR THE WESTERN DISTRICT OF PE NNSYL VANIAT

No. 69-55

United States of America

: YSs

baa Joseph A.M.

“i OPINION AND ORDER |

« _

Marsh, District Judge. :

The. defendant, — A.-Nemetz, was convicted of

five. counts of wilfully attempting to evade or defeat his

: ‘income tax for.the years 1962, 1963, 1964, 1966 and

1967. Title 26 U.S.C., §7201.. The evidence of his guilt

was overwhelming. He has moved ‘for a new trial assign-

ing 66 reasons. The motion will be denied. :

7 “The great majority of the reasons assigned were the : °

subject of\motions and objections made by the defendant

at trial. Most of them were argued at length by defend-

ant’s counsel; duly considered, and adverse rulings made.

706 ; P es

: 3 Opinion of the District C ourt

Phese re asons have been’ t ronsidercd and it is the Odin

ion of the court that hone of theme would: merit asnew *

trial Excessive delay would chaste were albof the 66 rea

sons 10 be reeensidered after the record has been tran

seribed only to teatfirn: the rulings which the cours Now

believes were correct, This is uot te say that seme error

did not creep into the trial, but that which did. we think

Was harmless especially in’ vie woof ie ae gts ‘larecly

undisputed evidence of guilt. Rule 32. Bede R- 8 Crime DP.

Indeed, it appedred to the court at ue = defendant

based his defense on a lively expeckition, with) some insti

sation from astute counsel, thi i the court would. s; lv same

‘thing or make a ruling that would produce aomistrial

ultimately a new trial, '

> The defend: ant requested ad was eranted to ack-

son Vv, Denne” hearings in the absence of, the jury lo fest

the Voluntariness of his disclosures to ) special aeents of

the Internal Revenue Service at an interview at his offiec

won May & 1968. The ‘defendant's counsel interrogated the

spectal agents at length, Their testimony showed that the.’

dy ‘tendant, S disclastives were voluntary aid certain of his

records Were freely turned over to them. The defendant

did not take the Witness stand to repudiate ont. word of.

the agents testimony or to testify fo any nvoluniariness,

csereion, inducement, trickery, guile. or | misrepresenta-

tion, Accordingly, the court refused to suppress the’ tes-

timony of the’ Special agents, * i

*In the first. triak: the defendant suceeded in securing a

mistrial When the esurt made statements. in the presenge of the

the defendant claimed, and the*court believed, were

cee : omen

Ee ee siden winter

WeaMaily prequdielal.

P . = ‘ cece

- The defendant's lengthy eross-examination of Special Ag vent

i PMNONe ” .*

Jackson v. Denno’ "hearing was -replete with

' ices

fs . Upon resuming the trial fefore the juty, no evi-.

dence whatsoever was adduced] that what defendant dis-

closed to the special apents at:the interview ons May 6th

was confession or that anything“he said or did was in-

voluntary. Special Agent Carpenter testified that defend:

ant told them that-his grandfather had given him approx-

imately $80,000 in 1949 which he had kept in-a. brown

paper bay until 1963 when he began to deposit theernoncy

in trust accounts for his four. children. Examination of

the deposits in. fourcaf the trust accoynts (I:xs. 147, 149,

151, 153) reveals that they were cqual and in driblets

from November, “1961, to May, 196%, when they were

closed out. The prosecution was within bounds to argue

‘that this bizarre recital was incredible. Reason No. 41

is without merit. Both agents testified be ‘fore the jury

that after Gorcudan! was given what was substantially a

Miranda warning * he freely turned ‘over sorne records.

and his 1967 tax return; he did not admait’ to them, that

Satake “al issues Which did no inany way itupugn the voluntar.

ine dada the interyiew.

The following ‘case : hold that a Mirada+wa: Hing dives not

soextend to a iNT Interna Revenue Service inguiry

United States vo Jeniigan. 41 F.4d 471 (oth Clr 196% ; Cohen

v. United States.” 405 Peed 34 (8th Cir. 1964). United States

¥, Squari, 398 FL 2d 785, (2d Cir. 11968; Spinney ‘v. United

States, 385 I. 2d 908 (st Cir. 1967): United States v. “Mains. se

378 F.2d 716 (6th Cir. 1967) » Morgan’ v. United States. 377° F-.

+ tf

2d S67 (Ist Cir, 1967); Rickey v. United States, 360 FS 2d 9th.

ir, 1966) ; Kohatsu v, United States, 351-F. 2d 898 9th Cir

1965 7° United’ States v, Charamella,’ 204 F, Supp. 290° D. Del

1968); Unithd’ States vy. W hite, 293 Fe Supp. 692 (E.D, Pa 196s

baited States. v. Basil,.268. FL Supp. 1015 °S_D.: Fla “ya ri

United States: vy Bachman, 267 F.Supp. 593 W.D. Pa. 196¢

United States v. Fiore, 258 F, Supp. 435 iW.BD. Pa 1966

”

‘ .

. «

78 *

Opinion of the District Court

he had understated his taxes or, had underreported his in.

come for ary taxable year. Notwithstanding, the defend

ant contends that “the confession was not voluntary” and

it Was error to refuse to suppress it, (Reason No.2) The

Jary was toll to disregard the deféndant’s disclosures if,

they were found to be involuntary.‘ *

; Fedlowing the interview," investigation ‘by the agents

revegled a. pattern of substantial underreporting of in-

come for all the indictment years. 1 was also shown that

following the request on May 2. 1968 by the agents for an

imerview. the defendant withdrew nearly $100 from

his several savings aecounts on May 3rd and Tth, J968.

_ +* Constantly throughout the trial the defendant cgn-

tended that the court should have required “the govern-

ment [to] supply a complete examination and furnish

explanations of materials and supplics plus labor and jhe

__ teasonable costs thercof..all of which placed hare —

of doing this on defendant.” (Reason No. 9.) If the first”.

Place, the prosecution, after inquiry by defendant, stated’

explictly in writing that its method of proof of taxeva-

sion was, the “specific items” method. * If the “burden”

Was cast upon, the defendant to prove the cost of his ma- ;

terials, supplies and labor. he -failed to milequatcly meet

it.e Altheugh there was evidence that several persons

helped the defendant in his roofing and construction busi-

‘ * Ness, not one of then was called to establish his fitethod —

= °C, Williams v. United States, 1 F 2d 6a ID +O jr,

1951. whereift it was held. ahwent evidener of inveluntarifiess:

t. Wak unnecmary f spiayit that question-to-the jury

"See brief of the United States in’ respene to motions filed

igfendan®. page 4. item E. and Judge. fiourlet ‘« Onder

mdulv @ 196" atyp.4

ae 79

Opinion of the District Court

or rate of compensating them. His tax returns indicated

that he subcontracted his contracts, but not one subcon-

* tractor was called in defense to-substantiate a sharing of

the proceeds in excess of that.stated in the returns as the

cost of suMoatracting, Since he paid for his supplies in

cash only the defendant and his workman had the per

‘sonal knowledge to estimate the materials and sup. jies

which went into cach job —but none of his workmen wes. °

called. The defendant's cash invoices were’ allegedly -

’ stolen or destroyed by fire. <

It was held in United States v. Stayback, ‘N2 F. 2d

313 (3d Cir. 1954). and in United States v. Shavin, 320

F.2d 308 (7h Cir. 1963), that in» spavific items case,

the government docs not’ have the burdert of establishing |

°° the defendant’ ‘ operating costs. In Staphask it was stat-

‘

ed (p. 317):

“If is well settled that once the pover:ment es-

‘ tablishes unreported income of the defendant and al-

~ lows deduetions claimed by him in his tax return .

sand other, that it te calculate without his assis-

tance, the burden is on the defendant to prove that

he had other allowable deductions which were not

shown in his return: United States, v. Smith, 3 Cir.,

1953, 206 F. 2d 905; United States v: Link; 3 Cir..

1953, 20. F. 2d 592; United States v. Hornstein, 7

Cir., 1943, 176 F.2d 217. The government is not

‘required to prove the negative. i.e. that the “defend-

‘amt did not have any other deductions. Gariopy -v.

meant eee, 6 Cir., 1951, 189 F.2d 459. -

“*The figures of cost of goods sold. as they

were useG in preparing his tax returns. were at lea: i

Cipla of the | istrict & ourt

admissions by the. dcfondane which the government

could utilize in making a prima facie case. The de-

fendant was chargeable with them until he offered

credible evidence t to show that the figures were in

errér, and that his costs were greater. * * * The de-

fendant herein was under an obligation to keep cor-

. rect books and rec ‘cords; he did not «do so. * Having

adopged that course he cannot now sit back and in-

~_ sist that the government prove a complete debit and -

credit account.’

Of course, the burden of proof rested on the prosecu-

‘tion, and the jury was so ifsiructed.” But the prostertion

does not have the burden of going forward with the evi-

ence to negate unreported deductions. United States v.

Precarid, 356 F.2d 614 (- 2d Cir, 19667. ee

No requirenient exists to compel the Internal Rev-

enue Service to investigate the defendant's case, though

in a net worth Case, agents are required to follow up

reasonably efpfanatigns by the taxpayer inconsistent‘ with

- guilt... Holland v. United States, 348 U.S. 121 (1954).

This rule does not apply ina specific items cause, especial-

ly where,-as here, no explanations were advanced by the’

taxpayer to the Internal Revenue Service relating to un-

reported expenses. for materials, supplies, labor and un- .

reported’ payments to subcontractors. Not until ‘the trial

did the defehdant contend, largely by- way of cross-exam;

ination, that he had understated the costs of materiats,

supplies and labor." He never advised the Internal Rev-

enue Service of his alleged unréported expenses and dis-.

“It is te be noted. that defend int wes civen ceredit for

itional expences in cach indiethhent year (Ex, 167

* eee foe ee gt

Gpinion of the District Court . iy

bursements. Cf. United States v. Precario, supra. The

only testimony he introduced on this point was in attempt-

ing to establish certain business expenses, “No one would

doubt that the jury was not hound to-believe the underly-

ing facts upon which he says those deductions are based.”

United States v. Smith, 206 F. 2d 905, S10 (3d Cir.

1953). oe -

Not only did’ the government explicitly state that it

would rely on the specific items method to prove the de-

fendant’s guilt, but summaries (Ex. 167) contained only

the amounts the .defyndant was paid by the persons who

hired him plus items of interest he received during the in-

dictment ygars. No one suggested that the deposits in the

trust accounts in the First Federal ‘Savings & Loan Asso-

ciation of Homestead were to be computed as unreport-—

ed income. The ‘trust accounts and his other savings and

loan accounts were introduced solely to show the specific

items of interest he received during the indictment years,

Another matter which the defendant raised. through:

eut the trial and in his motion was that. certain checks,

introduced as exhibits to corroborate the testimony of gov-

ernment witnesses that they had paid the defendant: vari-

‘ous amounts of money for work he had: done, were in-~

admissible absent proof that the- endorsements on the

checks, purporttng to be the defendant's signatures, were

actually signed by the defendant. Each witness testified

_that the ‘defendant had been paid for~ work contracted

and performed, “and each signed the check as payor or

identified the signature of the payor. Apparently, the de-

fendant would have the government negate a forgery of

the check- -endorsements in his name. The issue, with re-

spect to the checks, was not whether'the defendant en-

“ < , a

” Opinion of the District Court

- dorsed the checks. byicrather, whether the defendant re- _-

ceived certain payments for work dene to whichAhe pay-

ors testified and affirmatively produced their. cancelled

checks as corroborative evidence of payment. In the cir-

cumstances there was no error in admitting the checks

inta evidence. Moreover, if proof were needed that the

defendant's endorsements on the checks were authentic, it

could be found in abundance. Many of the 58 witnesses .

testified that they not only paid. the defendant by check

but that he signed contracts for the work and. receipts

when he was paid.’ Many such contracts and receipts

——were admitted ,into evidence along with the cancelled

~ Checks, and the Aefendant does not complain of their ad-

missibility intSevidence. .These documents and the sav-

ings and loan signature cards and ledger sheets introduced

into evidence bear undisputed signatures of the defend-

ant, and the most cursory examination of them will re-

‘ veal their unmistakable similarity to the endorsements

on the checks. ! 7 ;

The. defendant assigns as error the instructions on

reasonable doubt (Reason No. 61). He contends that the

court improperly used the standard “of the highest im-/

portance” in defining reasonable doubt. In United States

v. Ward Baking Company., 224 F, Supp. 66, 76 (E.D. Pa.

1963), it appears that Judge Van Dusen in that case and

a number of other cases, in his instructions on reasonable

doubt used the words “in matters of highest importance’”’.

_ ‘In United States v. Senior, 274 F. 2d 613, 617 (7th Cir.

1960), the words “to pause or hesitate before acting in a

grave transaction ‘of your own life” Were used and ap-

proved. Similar words have been used by other district

courts, United States v. Interstate Engineering Corpora-

Order

tion, 288 F. hee 402 (D. N.H. 1967); Scurry v: United

States, 347 F. 2d 468 (O.C. Cir. 1965); United States v.

Schneiderman, 106 F. Supp. 906 (S.D. Cal. 1952); United

States v. Foster, 9 F.R.D. 367 (S.D. N.Y. 1949). There

is no merit in reason No. 61.

_ An appropriate t will be entered.

ORDER OF COYRT

And Now, to-wit, this 25yh day of February, 1970,

after due consideration, It Is Prdered. Adjudged and De-

creed that the defendant’s Motion for New Trial be and

the same hereby is denied.

(signed) Rabe F. Marsh ;

. United States District Judge

- 84 ‘ i >.

® sat | Order of the District Court

IN THE DISTRICT COURT OF THE UNLTED STATES

FOR THE WESTERN DISTRICT OF PENNSYLVANIA -

| ,

\ Criminal No. 69-55

, United States of AmeNiga ae

™ Vs.

‘Joseph A. Nemetz ~

ae Se

ORDER OF COURT

And Now, to-wit, this 25th day. of February, 1970,

upon due consideration of defendant's “Motio& for Jirdg-

ment of Acquittal and Arrest of Judgment”, It Is -Or-

_ dered, Adjudged and Decreed that said motion be and

the same hereby is denied. 4,

(signed) Rabe F. Marsh ie

+ United States District. Judge

> ;

A ‘ - , . al

| ie ee Sete Sek 85)

Opinion of the Court of Appeals |

UNITED STATES COURT OF APPEALS

. Kor the Third Circuit

No..18,850 —

Unitedhatatesof America _

_ Joseph A. Nemetz, Appellant

Apptal From the United States District Court

For the Western District of Pennsylvania

Argued October 5, 1971 |

Before McLaughlin, Gancy and Adams,

Circuit Judges

" OPINION OF-THE COURT) |

(Filed November 4, 1971) oe <i

¢ Per Curiam:

Joseph Nemetz was copvicted of violating 26U.SC.”

$7201 by wilfully evading! the payment of taxes for the

years 1962, 1963, 1964, 1966. and. 1967. Following the

denial of his motion for a new trial,’ Nemetz appealed

“*

‘Chief Judge Marsh's able opinion denying the motion’ is re-

ported at 309 F. Supp. 1336, (W_D. Pa. 1970 ..

SO : :

Opinion of the Court of A ppeals

setting forth a number of grounds for reversal of his con-

_ Vietion and the award of anew trial. 3

The evidence of Nemetz's- guilt. adduced at his jury.

trial Was, according to the district court, overwhelming.

~ Nemetz Was a building contractor ehgaged primarily in

home roof repairs. The government, by direct evidence. - -

showed 4d the taxable income Nemétz should have re-

ported in the years specified in the indictment far exceed-

ed that which he did report.?) = ~

The two substantial contentions advanced by Nem-

et7 concern his right to counsel during the Internal Rev-

enue Service’ [IRS] investigation of -his records. and his

alleged right to intervene during IRS interviews of per-

sons served with process pursuant to 26 U.S.C. $7602.

In March, 1968, the IRS, acting on information re-

ceived from an informant. assigned a special agent, Ver-

non Carpenter, to examine Nemetz’s-financial records. On

May 2. 1968, the special agent telephoned Nemetz and

* told him he was‘ to investigate Nemetz’s 1964, 1965 and

| 1966 tax returns. The -special ‘agent further stéted that

he wished to see Nemetz's cancelled checks, bg Oks and °

“The following table illustrates the. laree Variances between

Nemetz’s reported. income and the taxable income fhe government

proved should have been reported. | .

ai -

Taxable Income Proven Taxable

(ras Per Return. ineome

fr. 1962 $3252.67. $26,960.40 *

1963 7 2.906.9T. . ' _.+38,377.43

1°64 ae $37.35 = + TST3AT

10685 Ave "5,037.94 - 63,332.91

“1967 £083.98 1.061.083

| Sal ee 87

Opinion of the Court af Appeals '

‘recotds, i d arranged a meeting on May 6, 1968 for that

purpose.

Concerning. the May 6th meeting, Carpenter’s uncan-—

tradictéd testimony at the Jackson v. Denno hearing and:

at trial was:

AL “Well, F told Mr. peeerert that asa mpecial

agent it was my duty to investigate possible criminal

income tax violations. 1 also informed him that I

had been assigned to investigate his,incomi tax liabil-

ity for the years "64, ’65 and "66, and I told him that _.

‘ under the Constitution of the-United Stateshe had

the right to refuse to answer any questions, furnish -

, any information or submit any documents whiclt-he

~_ felt might tend to incriminate him. I also told him

that any information which he did furnish or any doc- -

uments which he did submit could be used againsi

him in any criminal action that might. be undertaken. _

| As I was finishing my statement to Mr..Nem- -

vtz, he told me he tinderstood he also had the right

to have an- attorney present during the interview

» and I told’-him that was correct, he did have the

right to have an. attorney present during the inter-

. view. I thenjasked him if he wished to -proceed with

the interview without an attorney. He said he did,-—

_and so I asked him questions relative to his financial -

“and income tax liability.

Q. Did you ask him if he understood’ his

rights?

‘A. Yes, 1 Bid. He add that he did.”

Based’ on this and other testimony. presénted at the

'Jackson\hearing, ‘the trial judgé found that all the ,actions

taken by Nemetz at the May 6th me eting were voluntary

Opinion of the Court of Appeals *

and that all the evidence obtained therefrom was adimis-

sible. . ° : =

Nenyetz contends’ that. the right-to-counsel warning

given him by Carpenter was inadequate under the test of

Miranda v. Arizona, 384. U.S? 436 (1966). This Court

has -held, however, that the stringent’ Miranda.‘doctrine

does not dpply to tax fraud investigations. Rather the tra-

ditional voluntariness. test is to be cutilized: United States

v. Jaskiewicz, 433 F.2d 415 (3rd Cir. 1970). The testi-

mony quoted above illustrates Nemetz’s. knowledge and

understanding of his rights and that any action he took

was voluntary. “Under these circumstances, since Nemetz

was completely aware of his right to counsel, no error was.

committed inadmitting inio’ evidené& bis books, -records -

and canceHéd checks. ee |

E emetz. next claims that because he was not permit-

ted to intervene during interviews conducted by IRS

agents. with persons whose appearances had been com-

pelled by service of Section 7602 summonses, all evidence

‘obtained as a result of these meetings: should have ‘been

suppressed. , That the taxpayer has no absolute right to

intervene in-such proceedings is beyond question. Don-

aldson v. United States, 400 U.S. 517 (1971). Further,

-»«1N a more compelling case than that presented by Nemetz,

“the Fifth Circuit held that an order of ‘the district. court

granting Ntervention—although. based’ ‘on its sound dis-

cretion—was nevertheless improper: United States v.

Newman, 441 F. 2d 165 (5th Cir. 1971). We.are unable -

to distinguish Nemetz’s case from éither Donaldson or

Newman and we. hold, therefore, under the: facts estab-

lished at-trial; that Nemetz had no right to: intervene.

‘ .

Opinion of the C ourt of A ppeals ;

The other points raised by Nemetz ‘hoe been care-

- , fully considered, and we find them lacking in merit. Ac- -

cordingly, the. judgment of conviction will be affirmed.

A True Copy:

Teste: , | |

Clerk. of the United Stdtes

Court af Appeals for the

. Vhird Circuit, . 2

oe)

; Petition for Rehearing =

—_

PETITION FOR. REHEARING ‘AS \aaieenin BY

FEDERAL. RULE OF APPELLATE PROCEDURE 40

“AND SUGGESTION POR RETEARING' RY COERT

EN BANC AS PROVIDED BY FEDERAL RUPE Ol

APPELLATE PROCEDURE ~.

; i

‘ 7 : ; ° : "

* To. the : Hentai egy ‘hie! Judge uted his Axowtite

Judkyers of the f ited Sunes C ourt of Apr ‘als lor the

Fhird C ahs

Joseph A. Nemew respectfully requests rehearing onl

rehearing by the Court en bane for ony or all of the fol-

low! Ing. Masons:

!. On November 4. 4197], dcfondasit's five count

_comwiction and sentence for w alitut evasion of iagome te

prohibited by 2% U.S.C: 7204 ‘was affirmed by Circuit

ludges Gerald McLaughlin, d. Cullen Ganey aod Artin M.

- Adams.

- That thé opinion decuatlle one:

A.- Does Miranda vw,

Arizona, 384 US. 436,

.e ~ « apply to an interview by an Infernal Revenue Special. * *

‘ Agent?

. Bo Does iedecdins have a right to intervene

oe .

- in a 26. US. CFR proceeding? Tm

3. “That on page 4 of the “opinion, the panied dle-

~ clared that the other istues raised in the brief of de fend-

ant were * ‘lacking ix in merit”.

aS dnl Petition for pepmnering

_ 4. That Cieceit “Judge Francis i. _VanDusen on

February 8, 1971, after persorial ctamination of the type-

written transcript, permiticd defendant to file a 73 page

bricf ather than the 50 page bricl permitted by Federal

Rule. of Appellate * Procedure 28(p). Additionally, on

March 31, 1971, Cireuit Judge William H. Hastie pgr-

mitted defendant to file a 74. page bricf, instead of the

requisite -pages permitted by said Role 28(g).

5. That Tor this reason, it is respectfully subenitied

that these Circuit- Judges believed\ that, the pine issues

“raised by defendant were Meritoriows and deseqved con-

sideration by this Honorable Court. :

a 6. Defendant respectfully suggests that the: panel

which adjudicated: his case overlooked or misapprehended

the issucs involved in the following particulars:

A. "After discussing the right to. intervene and

in relying upon Donatdson-v. U. S.., 1971. 400 US.

517, the panel neglected to observe the argument of

Questions Nos. 3 and 5 whith urged an’ absolute

right to intervene ‘when a confidential relatienship

existed between the party being cxamined, in’ this -

case defendant's hanks. and the taxpayer.

B. Defendant respectfully suggests that the |

- panel's reliance on U. S. v. Newman, 5 Cir., 1971,

441-F. 2d 165, is misplaced as taxpayer there ex-

* pressly disclaimed privilege (441 F. 2d at 170) and

did noy rely upor it in his grounds requesting Inter-

vention (441 F. 2d at 168).* In fact. Newman ex-

~ pressly’ held that privilege could be raised at trial

- (441 F. 2d at 174) and this’ is exactly what Nemetz

did without success at his own trial.

Petition for Rehearing

C. The panel neglected to observe that idieed.

ant was not relying upon Miranda hut upon U.S. vy:

Hefner, 4 Cir., 1969, 420 F 2d 80 ag case was

specifically acknowledged in U. S. Jaskiewicz,

1970, 433 F, 2d.415, but. not applied by footnote 10

betause it post- «dated the factual situation involved

before Circuit judges Ruiggero }. Aldisert, John J.

Gibbons and Winter, specially sitting, which Circuit

Judge had participated j in the adjudication in He ner.

D.° That the opinion of the panel overlooked

the fact that it was not the May 6, 1968 interview

which defendant. challenged but the phone interview ~~’

‘and direction which took place on May 2, 1968 and

the failure .of the. special agent to comply with the

Internal Revenue Service directions gn:that date.

This issue is taken up in the first question beginning

on page 8 of defendant's brief. |

E. The panel neglected to observe that defend- -

ant was not relying upen Miranda but arguing ‘that —

the first intgeview is a “critical stage” ef the proceed-. ~

. Ing as interpeeted by Coleman. fe ‘Alabama, 1970, 90 *

S. Ct. 1999, 2002, 399 U.S. 1, 7:.U. S. v. Wade,

1967, 87S. Cte 1926, 1930- oi. 388 U.S. 218; 222-

223, and U. S: vy. suversiein, 5 Cir., 1963, 314 F. 2d

789, 790.- ° “. we

hy i: ‘That the i issue-af defendant's ‘right to intervene is

discussed in Questions Nos. 3 and 5 of his brief fifed in-

.this Court. These setae specifically raise the follow.

ing issues:

A. “‘Does.a confidential relationship exist ‘ee

“Ww een a bank and its depositor, and if it does, must

Petition for Rehearing. .

26 U.S.C. 7602 process be served before the mk

records are made available for 1.R.S. special agent’, ~

examination?” (Question No. 3.) ’

B. “If 7602 process is,served and if the Ex-

hibit B letter is authorized, does the taxpayer have

an absolute, right, upon previous request, to rotice:

that the summons has been served and/or the letter -

mailed plus the opportunity to intervene and partici-

- pate when the special agent interv iews the witness so

that he can prevent improper use of thé summons or

letter and the disclosure of helpful evidence which

would prevent his prosecution?” (Question No, 5.)

8. That the records: in this ‘case , shows that without

examination af the banks, the other évidence would not

have .been available. to Ahe government and, therefore, °

these issues are vital to defendant’s resistance to his

prone. -conviction and sentencing.

-9.- That U. S. v. Donaldson, 1971, 91 S. “Ct. 534,

400 U.S. 517, on which-the panel relies, in overriling de-

fendant’s request to intervene specifically allows interven-

tion when a ‘confidential relationship is involved (91 S.

Ct. at 534 and 542, 400 USS. at 523 and 530). -

. 16.. That defendant respectfully . suggests ‘that the

entire matter should be -heard by the Court en banc be-

" cause? os . .

,- A. Jaskiewicz,. supra, in’ footnote 10, recog:

nizes the existence of Hefner but the panel does not.

It is respectfully suggested that uniformity of- deci-

sions in this Circuit requires that practitioners in this

‘jurisdiction and the Internal Revenue: Service bé ad-

vised’ whether or not directives of a government _

‘ agency can be flaunted with impunity.

. ee

. . ”™

4 | a at bey .

. Petition for Rehvaring

B.. Since the greatest source of income tax—

evasion and civil enregry information is, obtained

from taxpayers’ banks, cespettlully, ‘suggested,

“that thy Internal ey Servite and: practitioners

in this jurisdiction should he advissd whether or not

_a bank can be’ examined without previous service of.

26 U'S.C. 7602 process and the right of tlie rn

‘ to. he: notified and or intervene.

C. It is reipecitelty suggested, that ‘these: two

issues are of exceptional importance in adjudicating

the right of taxpayers and the Internal Revenue Ser-

Vice so that the decision of this Circuit, joined in by

the entire Court. should be published. for guidance of

everyone concerned, ;

- % th. That it is respectftily sunpinted that if Circuit

Judges’ Franeis L. VanDusen and W ifliam Hi. Hastie be-

lieved that the issties raised in this appeal were sufficiently

* important.to permit the filing of a 74 page brief, the en-

tire Court Q bane of this Circuit ecard “aie as a mat-

ter of uniformity, whether the pane S correct. in ad-

judicating that the issues weye-without merit or whether

the Circuit Judges who permitted the extended brief be

filed were correct. “ee

t2. That the issues raised in the appeal and _ al-

lowed ‘to be printed in the 74 ‘page brief by Circirit Judges °

_Francis L: VanDusen and. William H. Hastie are:

1. Is a new trial mandated when a special agent of

the Internal Revenue Service -deliberately violates a pro-

cedural ‘directive of his.agency by not clearly disclosing

his criminal function at the ‘initial contact with the to be .

- .*

. . .

Petition for Rehearing

investigated taxpayer within the meaning of -U: S. v. Hef-

ner, 4 Cir., 1969, 420 F. 2d 809, and cases cited therein?y, te

2. When special agents of the Internal Revenue Ser-

vice confront a taxpayer for the purpose of obtaining oral -

adm

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