Opposition Brief — Habig v. United States

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‘In the Supreme Court of the United States

4 OcTosBer TERM, 1972

No. 72-1159

ARNOLD F. HABIG AND JEROME M. SCHROERING,

PETITIONERS

v.

UNITED STATES OF AMERICA

3 : ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

_ STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

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

| is not yet officially reported. The suppression order of the

_ district. court (Pet. App. B) is not reported. The decision

_ of the court of appeals on a prior appeal by the United

' States from a suppression order (Pet. App. C) is reported

© at 413 F. 2d 1108, certiorari denied, 396 U.S. 1014.!

JURISDICTION

» The judgment of the court of appeals (Pet. App. E)

" was entered on January 24, 1973. The petition for a writ

' of certiorari was filed on February 22, 1973. The juris-

_ diction of this Court is invoked under 28 U.S.C. 1254(1).

: ‘In an earlier case involving this prosecution, United States

§ v. Habig, 3% U.S. 222, this Court reversed the judgment of

» the district court dismissing certain counts of the indictment

> as barred by the statute of limitations.

(1)

2

QUESTIONS PRESENTED

1. Whether, in a tax fraud investigation conducted

jointly by a revenue agent and a special agent of the

Internal Revenue Service, corporate officers who are not

in custody or subject to any restraint are entitled to

receive Miranda warnings before being requested to furnish

corporate records relevant to the tax liabilities of the

corporations whose tax returns are being investigated.

2. Whether the prior concession by the government -

that petitioners, as corporate officers, had standing to

raise a motion to suppress evidence obtained in the course

of a search of corporate records estops the government

from contending that the searches were in fact reasonable

and lawful.

‘STATEMENT

1. In 1966, petitioners were indicted in the United States

District Court for the Southern District of Indiana for

attempting to evade taxes of corporations of which they

were officers, in violation of 26 U.S.C. 7201, and for aiding

in the preparation of false corporate tax returns, in violation

of 26 U.S.C. 7206(2). The district court dismissed two

counts of the indictment and, on direct appeal by the

government, this Court reversed. United States v. Habig,

390 U.S. 222.

Petitioners then filed a motion for the suppression and

return of all photocopies of corporate records made by

investigating Internal Revenue Service agents (IR. 13-

14).2 The basis of the motion was that no search warrant,

subpoena, or summons had been served upon either peti-

tioner for such records and that neither petitioner had

been warned by any agent that he was being investigated

for criminal tax violations. The government conceded

“I R.” refers to the appendix filed in the court of appeals

in connection with the first appeal from the district court's

suppression order. “Il R.” refers to the appendix filed in

the court of appeals in the instant proceedings.

3:

that petitioners would be aggrieved Persons if the corporate

records had been illegally seized but denied that the search

and seizure were unlawful (I R. 73, 75). The district court

found that in December 1963 the investigation had been

referred to the Intelligence Division of the Internal Revenue

Service and at that point had become focused on the

possibility of criminal tax violations (I R. 27-30). The court

thereupon suppressed all the corporate records examined

and copied after 1963.

On appeal by the government from the suppression

order, the case was heard and decided by the court

of appeals together with United States v. Dickerson,

413 F. 2d III (C.A. 7) (Pet. App. D), which in-

volved a government appeal from an order of the District

Court for the Northern District of Illinois holding that

Miranda warnings must be given to any individual

taxpayer who is interviewed by revenue agents after

his case has been referred to the Intelligence Division

of the Internal Revenue Service. The government,

without distinguishing between demands on corporate

officers for corporate records and requests to individuals

for personal statements or records, took the position

that a decision by the court of appeals would be

applicable to both cases. The court of appeals,

accepting this view of the cases, affirmed in Dickerson

and remanded the present case for further findings and

an application of the Principle stated in Dickerson,

ie., that Miranda warnings are required to be given

at the outset of non-custodial, pre-arrest interrogations

of suspects in criminal tax investigations.

2. On remand, the district court, after evidentiary

hearings, found that the case had been referred to the

Intelligence Division in February 1964 and that the

criminal investigation by the Intelligence Division

first began on March 27. 1964 (11 R. 12). The court

further found that various records were inspected and

copied after that date and that the consent of petitioner

4

Schroering to the inspection had been obtained without

his being warned of the true nature of the investigation

(11 R. 12-14).

On September 21, 1964, the investigating agents

had met with petitioner Schroering and the corporations’

independent accountant, and the special agent

announced that his role was to determine if any criminal

violation had been committed (11 R. 21). Thereafter,

the agents obtained various other records from the

corporations with petitioners’ consent, but the district

court found that such records would not have been

voluntarily furnished had the corporations and petition-

ers known of the “deceit” practiced prior to September

21, 1964 (II R, 27-28). The district court found that the

leads acquired by the revenue agent prior to the

referral of the case to the Intelligence Division were

not duplicative of records examined thereafter because,

although the revenue agent testified that he had memo-

randa of the invoice numbers, he could not recall from

memory the detailed contents of the records which

he had re-examined during his joint investigation with

the special agent (II R. 28).

The district court concluded that the failure of the

agents to advise petitioners of their constitutional

rights after the case was referred to the Intelligence

Division vitiated petitioners’ further consent to the in-

spection and copying of the corporate records (Il R.

28-30). The district court therefore suppressed all

corporate records and information obtained after

the referral to the Intelligence Division and all state-

ments obtained by interviews with petitioner Schroering.

3. The government appealed this order insofar as it

applied to corporate records, but, in view of the

holding in Dickerson, no appeal was taken from the

order suppressing personal statements made by peti-

tioner Schroering. The court of appeals reversed, hold-

5

ing (1) that the government was not precluded from

contesting the suppression order as to corporate records

by reason of its improvidently broad concession, in the

prior appeal, that the facts of this case were in-

distinguishable from those in Dickerson, and (2) that its

earlier decision in Dickerson did not require that a

corporate officer be given advisory warnings before

being requested to produce corporate records in a

criminal tax investigation of the corporation.

ARGUMENT

1. Petitioners now contend (Pet. 10-15), apparently

for the ‘first time, that the corporate records photo-

copied by the investigating agents were obtained as a

consequence of interviews conducted with petitioners

in their individual capacities and as such should be

suppressed as “fruit of the poisonous tree.” This

contention fails for two separate reasons.

First, the record does not support petitioners’ asser-

tion that leads to corporate documents resulted from

Statements made by petitioners acting in their indivi-

dual capacities. To the contrary, all leads to corporate

records provided by petitioners stemmed from state-

ments made in their capacities as corporate officers

(Pet. App. A, A6). As the court of appeals correctly

held, petitioners, as corporate officers, had no right to

refuse production of corporate records because they

personally might be incriminated by the records.

Wilson v. United States, 221 U.S. 361. Since peti-

tioners had no Fifth Amendment rights to assert in

their capacities as corporate officers, Miranda warnings

were unnecessary even assuming arguendo the cor-

rectness of the Seventh Circuit’s decision in Dickerson.

Therefore the statements made by petitioners as cor-

porate officers, and the information subsequently ob-

tained on the basis of those statements, are properly

6

admissible against them and should not have been

suppressed by the district court.3

Second, the non-custodial, pre-arrest interviews of

petitioners did not have to be accompanied by Miranda

warnings, and any leads provided during such inter-

views would in any event not have been obtained in

violation of petitioners’ rights. The Seventh Circuit's

rule, stated in Dickerson, that such non-custodial inter-

views must be preceded by full warnings has been cor-

rectly rejected in the other circuits. The Miranda rule

applies only where the interviewed Suspect is in physi-

cal custody or subjected to some restraint which cir-

cumscribes his freedom. Petitioners, by contrast, were

never in custody or subjected to restraints.

2. Petitioners also contend (Pet. 15-21) that the

court below erroneously ignored the government’s prior

stipulation that they had standing to raise the motion

As the court below noted (Pet. App. A, A9), the corporations

themselves had no basis for claiming an unreasonable search

and seizure of their records.

“Every other court of appeals that has considered the question

has held that, since the taxpayer is not in custody or deprived

of his freedom in any significant way, the requirements of

Miranda do not apply. Morgan v. United States, 377 F. 2d

507, 508 (C.A. 1); United States v. White, 417 F. 2d 89

(C.A. 2), certiorari denied, 397 US. 912; United States v.

Jaskiewicz, 433 F. 2d 415, 417-420 (C.A. 3); United

States v. Mancuso, 378 F. 2d 612, 619 (C.A. 4), certiorari

denied, 390 U.S. 955; Agoranus v. United States, 409 F. 2d

833, 835 (C.A. 5), certiorari denied, 396 US. 824; United States

v. Miriani, 422 F. 2d 150, 153-154 (C.A. 6), certiorari denied,

399 U.S. 910; Cohen v. United States, 405 F. 2d 34 (C.A. 8),

certiorari denied, 394 U.S. 943; Feichtmeir v. United States,

389 F. 2d 498 (C.A. 9); Hensley v. United States, 406 F.

2d 481 (C.A. 10). The government has consistently opposed

certiorari in such cases, notwithstanding the conflict, on the

ground that since the Internal Revenue Service now provides

full Miranda warnings upon the initiation of the criminal investi-

gation the Seventh Circuit rule is rarely of significance.

7

to suppress, i.e., that they would be aggrieved persons

if the corporate records had been illegally seized.

See pp. 2-3, supra. But this stipulation did not estop the

government from contending, as it did below, that the

corporate records were validly obtained. The stipulation

provided only that if the corporate records had been

illegally seized, petitioners as corporate officers would

have standing to seek suppression of the records. See

Mancusi v. De Forte, 392 U.S. 364. This concession may

have been broader than was necessary, but it did not

prevent the court of appeals from holding that the

records were obtained legally and reversing the district

court’s suppression order on that ground.‘

CONCLUSION

For the reasons stated, the petition for certiorari

should be denied.

Respectfully submitted.

ERWIN N. GRISWOLD,

Solicitor General.

Scott P. CRAMPTON,

Assistant Attorney General.

JOHN P. BuRKE,

ROBERT E. LINDSAY,

Attorneys.

_ APRIL 1973.

‘Petitioners apparently confuse the government’s stipulation

as to standing with its position, at the time of the first

appeal to the court of appeals, that the same principles

would apply to the facts of both this case and Dickerson.

Of course, the government still takes that position and urges

that Dickerson was wrongly decided. See p. 6, supra. However,

the position taken by the government at that time should

not bar it from now distinguishing Dickerson. On this aspect

of this case we rely on the opinion below. See Pet. App. A,

AS.

DOJ 1973 04