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UNITED STATES v. TURZYNSKI

June 2, 1967

UNITED STATES OF AMERICA, PLAINTIFF,
v.
STANLEY TURZYNSKI, DEFENDANT.



The opinion of the court was delivered by: Will, District Judge.

MEMORANDUM OPINION

Defendant is presently under indictment on two counts of willfully attempting to evade his income tax obligations to the United States in violation of 26 U.S.C. § 7201. The indictment charges that defendant knowingly made false statements of his taxable income on his returns for the years 1959 and 1960.

By the instant motion, defendant asks this court to suppress as evidence all documents and all statements, oral or written, which he gave to agents of the Internal Revenue Service subsequent to the initiation of the criminal investigation which resulted in the present indictment. He argues that once the United States launched an investigation designed to develop evidence against him for potential criminal prosecution, it was incumbent on the investigating agents to warn him of his constitutional rights. Admittedly no such warning was ever given. He contends, therefore, that any evidence which he supplied to the government solely during the criminal investigation or information derived therefrom should be suppressed.

We agree. After a necessarily lengthy narration of the facts of this case, we will discuss the legal bases for our conclusions and attempt to delineate those materials which are suppressed.

The United States Internal Revenue Service conducts both civil investigations to determine whether deficiencies should be assessed against taxpayers and criminal investigations to develop evidence for potential criminal prosecution. In practice, civil investigations are conducted by a different division at the IRS than that which conducts criminal investigations. Civil investigations are conducted by Internal Revenue Agents. As soon as an Internal Revenue Agent has reason to believe that the taxpayer under investigation has committed a criminal violation, he must refer the case for criminal investigation. If his superiors in the civil department agree with his conclusions, the case is referred to the Intelligence Division of the Internal Revenue Service whose jurisdiction is limited to criminal investigations. The investigators of the Intelligence Division are known as Special Agents.

In 1959, Internal Revenue Agent Arnold contacted defendant, a physician who came to the United States from Europe after World War II, and examined his records and tax returns for the years 1957 and 1958. Arnold's investigation uncovered modest deficiencies which the defendant promptly paid. This was defendant's first contact with the IRS.

In 1962, the defendant again became the subject of a civil tax investigation. This investigation was conducted at defendant's medical center by Internal Revenue Agent Pang. At Pang's request, defendant gave him access to all defendant's records, including the retained copies of his tax returns for the years 1959, 1960 and 1961. Pang summarized much of his findings from these records on work sheets which are presently included in the government's exhibits. He advised defendant that he was proposing certain deficiencies for the years in question.

Pang was subsequently transferred and, prior to his departure, he informed defendant that another agent would take his place. Pang's replacement was Internal Revenue Agent McDermott. At this point the case was still a civil investigation.

McDermott continued the investigation at defendant's office, conducting his first interview with the defendant on May 14, 1963. Based on information supplied by the defendant during this and two subsequent interviews and on an independent investigation of banks and savings institutions where defendant has accounts, McDermott concluded that the case should be submitted to the Intelligence Division for criminal investigation. He prepared a fraud referral which was approved by his superiors and the case turned over to the Intelligence Division.

The first meeting between the defendant and agents of the Internal Revenue Service after the case had become a criminal investigation occurred on August 29, 1963. Internal Revenue Agent McDermott and Special Agent Archambault interviewed the defendant at his office. Archambault states that he introduced himself as a Special Agent of the Intelligence Division. The defendant has testified that he does not recall how Archambault identified himself but that he was unaware of any distinction between an Internal Revenue Agent and a Special Agent. At no time during this interview or any subsequent meetings with the two agents was defendant apprised that the agents were now engaged in a criminal investigation. Nor was he advised of his constitutional rights, including his right to counsel, his privilege against self-incrimination, and his right to refuse access to his records absent a search warrant or subpoena. During this interview and at subsequent interviews throughout the criminal investigation, defendant answered all questions asked by the agents and permitted them full access to his records even to the extent of allowing them to remove records to the IRS offices for inspection and copying and also permitting them to microfilm records at his office.

Although he had a number of conferences with the two agents during the period, defendant was not informed of the criminal nature of the investigation from 1963 until April 1965, when he received a letter from the Chief of the Intelligence Division stating that criminal prosecution was being contemplated. The letter advised him that if he desired, he might appear at the IRS offices for a formal interview to explain his returns in the light of evidence of his failure to report substantial income in 1959 and 1960, and that he was entitled to be represented by counsel at the interview.

The formal interview was conducted on April 29, 1965 at the IRS downtown office by Group Supervisor Yelm of the Intelligence Division. Again, defendant was not apprised of his right to counsel or his privilege against self-incrimination. Mr. Yelm, however, refused to discuss the case until a lawyer retained by the defendant arrived. After the lawyer arrived, defendant proceeded to make various statements to Mr. Yelm, some of which were of a possibly incriminating nature.

The narrow legal issue here presented is whether and to what extent the Internal Revenue Service is required to advise a taxpayer of his constitutional rights when an investigation of his returns shifts without his knowledge from a civil investigation for possible deficiencies to a criminal investigation of possible tax law violations, when his assistance is no longer being sought to ascertain his proper debt to the government but to aid the government to convict him of a crime. We hold that once a taxpayer becomes the subject of a criminal tax investigation, as evidenced by the referral of the investigation to the Intelligence Division or otherwise, our adversary process of criminal justice has become directed against him as a potential criminal defendant. Any evidence obtained from him is admissible only if the taxpayer furnished it after knowingly and voluntarily waiving his constitutional rights and privileges. Escobedo v. State of Illinois, 378 U.S. 478, 84 S.Ct. 1758, 12 L.Ed.2d 977 (1964); Miranda v. State of Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966).

To hold otherwise would lead to the anomolous conclusion that a person suspected of bank robbery, sale of narcotics, murder, rape or other serious crime is entitled to greater protection of his constitutional rights than a person suspected of violating the internal revenue laws. For when the silent transition from civil to criminal investigation takes place in a tax case, the taxpayer being interrogated and asked to furnish his books and records is just as surely a ...


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