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04/15/87 In Re January 1986 Grand Jury No. 217 (the People of the

April 15, 1987

IN RE JANUARY 1986 GRAND JURY NO. 217 (THE PEOPLE OF THE


APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

State of Illinois, Plaintiff-Appellee, v.

Jack Bernstein et al., Defendants-Appellants)

508 N.E.2d 277, 155 Ill. App. 3d 445, 108 Ill. Dec. 116 1987.IL.500

Appeal from the Circuit Court of Cook County; the Hon. James M. Bailey, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE McNAMARA delivered the opinion of the court. RIZZI and WHITE, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCNAMARA

This is an appeal from an order of the circuit court of Cook County granting the State's motion for a rule to show cause which holds appellants in contempt and imposes a fine of $50 for each day they fail to produce documents sought by a grand jury subpoena duces tecum. The trial court stayed the order pending appeal. On appeal, appellants challenge the subpoena and production of the documents based upon their fifth amendment privilege against self-incrimination. Appellants claim the immunity granted them pursuant to the Illinois immunity provision is insufficient to protect their fifth amendment rights. They also maintain that the grand jury subpoena violates the fourth amendment prohibition against unreasonable search and seizure and the fourteenth amendment due process clause.

The State began a grand jury investigation of appellants Jack and Wanda Bernstein personally and d/b/a Milwaukee Products for the alleged failure to pay the proper amount of retailer occupation taxes and income taxes for the years 1982 through 1984. The grand jury issued a subpoena duces tecum to the Bernsteins seeking the following documents: (1) any retained copies of State and Federal tax returns including schedules and attachments; (2) all cancelled checks; (3) all bank statements; (4) all inventory records; (5) all sales and purchase invoices; (6) all other records pertaining to any and all sales and purchases of goods by or from the business known as Milwaukee Products for years 1982, 1983, and 1984; and (7) all written materials provided by the Bernsteins to their accountant for the preparation of their tax returns for those three years.

The Bernsteins appeared before the grand jury and refused to answer questions or produce the requested documents asserting their fifth amendment privilege against self-incrimination. As a result of the Bernsteins' refusal to produce the documents, the court granted the State's request for immunity for both Bernsteins under the Illinois immunity provision. (Ill. Rev. Stat. 1985, ch. 38, par. 106 et seq.) The immunity order granted the Bernsteins "production immunity" for admitting that the records and documents which are not required to be kept by statute or regulation (1) exist, (2) are the ones sought in the subpoena, and (3) are in the Bernsteins' custody. The immunity order also specified that no immunity was being granted with respect to any crimes which the contents of the documents might reveal were committed, nor was any immunity granted with respect to the production of any records or documents required to be kept by law.

After granting immunity to the Bernsteins, the State continued to assert that it could prosecute the Bernsteins for sales tax fraud and income tax fraud for 1982 through 1984. The Bernsteins continued to assert their fifth amendment privilege claiming that their privilege was not adequately protected by the court's grant of immunity. As a result, the State sought a rule to show cause why the Bernsteins should not be held in contempt of court. After a hearing, the trial court issued the rule to show cause and fined the Bernsteins.

The State has divided the documents they seek into two types, those documents required to be kept by law and those documents or records voluntarily kept by the Bernsteins. The State only sought immunity for the records which were voluntarily kept and argues that all records which are required to be kept by law are exempt from the fifth amendment by virtue of the "required records doctrine."

We will first address the Bernsteins' challenge to the immunity granted to them for the production of the voluntarily kept records. The voluntary records referred to by the State are the retained copies of the Bernsteins' Federal and State income tax returns, including all schedules and attachments for the years 1982 through 1984, all written materials provided by the Bernsteins to their accountant for the preparation of their returns in those years, and all voluntarily kept records pertaining to purchases and sales by Milwaukee Products. We note that our holding in In re October 1985 Grand Jury No. 746 (1987), 154 Ill. App. 3d 288, compels production by the Bernsteins' accountant of the Bernsteins' tax returns and materials provided to the accountant. This previous ruling obviates the need, for purposes of this case, to compel production of these records from the Bernsteins. We will, however, continue our Discussion of the protection to be afforded voluntarily kept records pertaining to purchases and sales. In addition, we find that the Bernsteins' cancelled checks and bank statements properly fall into the category of voluntarily kept records. The State mischaracterized these records in the trial court as required to be kept pursuant to regulation. Because they are not required to be kept by law, the order granting immunity extends to the production of the Bernsteins' cancelled checks and bank statements.

The fifth amendment privilege against self-incrimination is applicable to State court proceedings. And, article I, section 10, of the Illinois Constitution creates a privilege identical to the fifth amendment. Illinois courts will follow the decisions of the United States Supreme Court on identical State and Federal constitutional provisions. People v. Jackson (1961), 22 Ill. 2d 382, 176 N.E.2d 803, cert. denied (1962), 368 U.S. 985, 7 L. Ed. 2d 523, 82 S. Ct. 600.

In United States v. Doe (1984), 465 U.S. 605, 79 L. Ed. 2d 552, 104 S. Ct. 1237, the Supreme Court analyzed the scope of the fifth amendment protection to be afforded to documents and records which are voluntarily kept or prepared. The court stated, " 'he Fifth Amendment would not be violated by the fact alone that the papers on their face might incriminate the taxpayer, for the privilege protects a person only against being incriminated by his own compelled testimonial communications.' " (United States v. Doe (1984), 465 U.S. 605, 611, 79 L. Ed. 2d 552, 559, 104 S. Ct. 1237, 1241, quoting Fisher v. United States (1976), 425 U.S. 391, 409-10, 48 L. Ed. 2d 39, 55-56, 96 S. Ct. 1569, 1580-81.) The Doe court concluded that the contents of the voluntarily kept documents were not privileged absent a showing that the owner prepared the documents involuntarily or that the subpoena would force him to restate, repeat, or affirm the truth of their contents. 465 U.S. 605, 612, 79 L. Ed. 2d 552, 559-60, 104 S. Ct. 1237, 1242.

The Bernsteins do not contend that the requested documents were kept under any compulsion. Rather, the documents, if in existence, were voluntarily maintained in the ordinary course of running their business. Therefore, no compulsion is present and the contents of the ...


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