Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

United States v. Oliver

UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT


decided: October 31, 1974.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
ROOSEVELT OLIVER, DEFENDANT-APPELLANT

Appeal from the United States District Court for the Eastern District of Wisconsin - No. 73 CR 54 Myron L. Gordon, Judge.

Hastings, Senior Circuit Judge, and Cummings and Stevens, Circuit Judges.

Author: Stevens

STEVENS, Circuit Judge.

Appellant contends that his conviction of tax evasion rests on two separate violations of his Fifth Amendment right not to "be compelled, in any criminal case, to be a witness against himself." He argues (1) that he made a compelled disclosure of incriminating information without first receiving warnings required by Miranda*fn1 and Dickerson ;*fn2 and (2) that under the rationale of Marchetti*fn3 he could not be compelled to disclose his illegal income on his tax return. Our evaluation of both arguments involves a consideration of the significance of the point at which the adversary character of the criminal prosecution commenced. We find merit in his first contention, but not in his second.

The indictment charged that defendant understated his adjusted gross income for 1970 and 1971. After a trial to the court, he was found not guilty on Count I, but guilty on the second count relating to 1971. His return for that year reported adjusted gross income of $6,030, including his wife's earnings and a loss of approximately $2,000 on a truck rental operation. His return made no reference to any other income and contained no entry or disclosure which might have been interpreted to relate to any illegal earnings.

Predicated on an analysis of defendant's net worth and expenditures during 1971, the government contended that his adjusted gross income was approximately $30,000 or, alternatively, crediting certain disputed testimony, could have been no less than $17,000.*fn4 Among the witnesses for the prosecution were one Samuel Coca, whose testimony suggested that trafficking in narcotics provided the defendant with a probable source of income not reported on his return, and Kermit Duehring, a special agent with the Intelligence Division of the Internal Revenue Service.

Duehring testified that in March or April, 1972, he had been directed to investigate a possible criminal violation of the internal revenue laws by the defendant. After that investigation had been under way for several months, he and another special agent interviewed the defendant in the offices of the Intelligence Division in the Federal Building in Milwaukee. Having learned that defendant was in the building in the vicinity of the grand jury room, the two agents located him and asked him to come to their offices. He acceded to their request. Prior to any questioning, the agents informed defendant of their offices and read him the written statement set out in the margin.*fn5

During the course of the interview, which lasted about 45 minutes, a person who purported to have a message for defendant from his attorney was not permitted to communicate with defendant because, as Duehring testified, she did not possess written authorization from the attorney.

The government's case was predicated, in part, on the assumption that defendant's cash-on-hand on December 31, 1970, amounted to only $200. According to Duehring's testimony, the source of this information was a statement made by Oliver during his interview in the agents' office. Defendant's objections to Duehring's testimony were overruled on the ground that "the custody or rather the non-custody advice was adequate to meet the Constitutional requirement." Tr. 301.

I.

The government does not attempt to defend the warnings given by Duehring as adequate if Miranda and Dickerson apply.*fn6 It is suggested that Miranda is inapplicable because defendant was not actually in custody, and that Dickerson should be re-examined in the light of our more recent decision in Sicilia ;*fn7 in any event, it is claimed that the admission of Duehring's testimony was harmless error.

We recognize that the warnings specified in the Court's opinion in Miranda are not mandated by the Constitution itself,*fn8 and that our opinion in Dickerson has not been followed in other circuits.*fn9 Nevertheless, we are satisfied that as long as Miranda remains viable -- as it certainly is today -- its teachings must be applied to a situation such as that presented in Dickerson and in this case.

The application of Miranda does not turn on such a simple axis as whether or not the suspect is in custody when he is being questioned. As the Court repeatedly indicated, the prescribed warnings are required if the defendant is in custody "or otherwise deprived of his freedom of action in any significant way."*fn10 The fact of custody is emphasized in the opinion as having the practical consequence of compelling the accused to make disclosures.*fn11 But the test also differentiates between the questioning of a mere witness and the interrogation of an accused for the purpose of securing his conviction; the test serves the purpose "of determining when the adversary process has begun, i.e., when the investigative machinery of the government is directed toward the ultimate conviction of a particular individual and when, therefore, a suspect should be advised of his rights."*fn12

Since the constitutional protection is expressly applicable to testimony in the criminal case itself, for the purpose of determining when warnings are required, the Miranda analysis treats the adversary proceeding as though it commences when a prospective defendant is taken into custody or otherwise significantly restrained. After that point is reached, it is not unreasonable to treat any compelled disclosure as protected by the Fifth Amendment unless, of course, the constitutional protection has been waived. Adequate warnings, or the advice of counsel, are essential if such a waiver is to be effective.

The requirement of warnings set forth in Dickerson rests on the same underlying rationale. While the commencement of adversary proceedings against Dickerson had not been marked by taking him into custody, the I.R.S., by assigning the matter to the Intelligence Division, had commenced the preparation of its criminal case. When the agents questioned him about his tax return, without clearly explaining their mission, the dual criminal-civil nature of an I.R.S. interrogation created three key misapprehensions for the taxpayer.

"Incriminating statements elicited in reliance upon the taxpayer's misapprehension as to the nature of the inquiry, his obligation to respond, and the possible consequences of doing so must be regarded as equally violative of constitutional protections as a custodial confession extracted without proper warnings." 413 F.2d at 1116 (emphasis added).

The practical effect of these misapprehensions during questioning of a taxpayer was to "compel" him to provide information that could be used to obtain his conviction in a criminal tax fraud proceeding, in much the same way that placing a suspect under physical restraint leads to psychological compulsion.*fn13 Thus, the misapprehensions are tantamount to the deprivation of the suspect's "freedom of action in any significant way," repeatedly referred to in Miranda.

In this case it is plain that the purpose of the agents' interrogation of the defendant was to develop evidence which would secure his conviction of a crime. The criminal investigation of Oliver had commenced several months before he was questioned, and there was no ambiguity about the agents' mission. No doubt, as Duehring testified, Oliver was free to leave at any time, and therefore not strictly in custody. But since the agents were in a position to intercept a message from his attorney, and actually did so, it is appropriate, for the purpose of applying the Miranda test, to characterize the situation as one in which defendant's liberty was significantly restrained.

As we emphasized in Dickerson, one purpose of the Miranda warnings is to make sure that the defendant does not misapprehend the nature of his obligation to respond to the revenue agents' inquiries. In this case, the warnings did not include advice that Oliver could remain silent or that he could have a lawyer present during the interview. Under these circumstances we believe Miranda requires us to treat his disclosures as though they were compelled during the course of an adversary proceeding, and therefore inadmissible at his criminal trial.

In United States v. Sicilia, 475 F.2d 308 (7th Cir. 1973), we refused to extend Dickerson to require F.B.I. agents to give Miranda warnings in connection with a request to the defendant for permission to search his company's premises for a stolen fork lift truck. In that opinion we emphasized the absence of the potential ambiguity in an F.B.I. inquiry as opposed to an investigation by special agents of the Internal Revenue Service as an adequate basis for distinguishing Dickerson. We might also have pointed out that until after the lift truck was actually discovered on the premises, the investigation had not progressed to the point at which the agents were prepared to make an accusation against Sicilia; when the matter did reach that point, they gave him complete Miranda warnings.*fn14 Neither the holding in Sicilia nor the language in that opinion would justify a refusal to apply Dickerson in this case.

The incriminating evidence obtained from defendant's interrogation was inadmissible. That information was utilized by the government in computing Oliver's understatement of taxable income by the net worth method.*fn15 Specifically, the government's calculation of Oliver's cash-on-hand at the beginning of the tax year relied heavily on the admissions.*fn16 In view of the importance of establishing the taxpayer's opening net worth with "reasonable certainty," see Holland v. United States, 348 U.S. 121, 132, 99 L. Ed. 150, 75 S. Ct. 127, we must reject the argument that the error was harmless.*fn17

II.

The government's evidence indicated that the probable source of defendant's unreported income was the sale of narcotics. Relying on Marchetti v. United States, 390 U.S. 39, 19 L. Ed. 2d 889, 88 S. Ct. 697, appellant contends that his conviction must be reversed because the Fifth Amendment protects him from any compelled disclosure of his illegal activities. We have no doubt, however, that the rationale of the Marchetti decision is inapplicable to the requirement that all taxpayers, including those engaged in illegal ventures, report their incomes in full.

In Marchetti, the failure to pay a federal wagering occupation tax or to register as one engaged in the business of accepting wagers was excused on Fifth Amendment grounds. The Court noted that the statute was applicable only to a select group of persons engaged in a kind of activity which was unlawful in most states and that the statute required the Internal Revenue Service to provide local prosecuting officers with the names of persons who paid the tax. As Mr. Justice Brennan pointedly observed in his concurring opinion in Grosso v. United States, such requirements unambiguously evidenced a dominant congressional purpose to develop evidence for the purpose of criminal prosecution and conviction. He stated:

"The cases before us present a statutory system condemned by Albertson [v. SACB, 382 U.S. 70, 86 S. Ct. 194, 15 L. Ed. 2d 165]. The wagering excise tax, the occupational tax, and the registration requirement are only parts of an interrelated statutory system for taxing illegal wagers. Whatever else Congress may have meant to achieve, an obvious purpose of this statutory system clearly was to coerce evidence from persons engaged in illegal activities for use in their prosecution. See United States v. Kahriger, 345 U.S. 22, 37, 97 L. Ed. 754, 73 S. Ct. 510 (Frankfurter, J., dissenting)." 390 U.S. 62, 74, 88 S. Ct. 709, 19 L. Ed. 2d 906 (emphasis added).

The enactment of special legislation designed to procure incriminating disclosures from a select group of persons engaged in criminal conduct was tantamount to an accusation commencing criminal proceedings against them. The statutory demand to register as a gambler was comparable to the inquisitor's demand that a suspect in custody admit his guilt.*fn18 The admission, once made, would almost inevitably become a part of the record of a criminal proceeding against a person who had already been accused when he confessed. Just as the Miranda decision may be read as having enlarged the adversary proceeding to commence when the accused is first taken into custody, Marchetti and comparable cases*fn19 have, for Fifth Amendment purposes, treated special statutes designed to secure incriminating information from inherently suspect classes of persons as the commencement of criminal proceedings against those from whom incriminating information is demanded.*fn20 Under this analysis, we must test the applicability of the Fifth Amendment to a self-reporting statute at the time that disclosure is compelled.

The statute which defendant Oliver is accused of violating is applicable to the public at large, and its demands for information are neutral in the sense that they apply evenly to the few who have illegal earnings and the many who do not. The self-reporting requirements of the Internal Revenue Code are justified by acceptable reasons of policy, entirely unrelated to any purpose to obtain incriminating evidence against an accused person or group.*fn21 Therefore, even though the disclosure of defendant's illegal income was compelled by statute, and even though we assume that such disclosure might well have been incriminating, the Marchetti holding does not justify the conclusion that the Fifth Amendment excuses defendant's obligation to report his entire income.*fn22

That amendment does not purport to forbid every compelled disclosure which contains incriminating information. In terms it applies only to testimony in "any criminal case." That concept has been interpreted to encompass testimony before a grand jury, testimony in certain civil proceedings, responses to custodial interrogation, and statutory demands for information from selected groups of persons engaged in inherently suspect activities. With one exception, however,*fn23 we find no precedent for enlarging the concept further to include the preparation and filing of the customary income tax return. Accordingly, without considering every hypothetical case in which a demand for information on a tax return might be challenged,*fn24 we have no hesitation in holding that the Fifth Amendment has no application to the statutory requirement that every citizen must report his entire income even if a taxpayer is thereby compelled to disclose an incriminating fact.*fn25

III.

For the reasons stated in Part I, the judgment must be reversed and the case remanded for a new trial. In view of Judge Gordon's familiarity with the complexities of this net worth prosecution, and in view of the fact that the case was tried to the court, and therefore it may not be necessary to repeat testimony already received,*fn26 Circuit Rule 23 shall not apply.*fn27

Reversed and remanded

Disposition

Reversed and remanded.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.