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UNITED STATES v. BAILIN

April 19, 1990

UNITED STATES OF AMERICA, Plaintiff,
v.
ROBERT H. BAILIN, et al., Defendants



The opinion of the court was delivered by: HART

 WILLIAM T. HART, UNITED STATES DISTRICT JUDGE

 This case is the product of an undercover investigation into the trading practices in the Japanese Yen Pit of the Chicago Mercantile Exchange. Defendants Bailin, Baker and Cali each seek to suppress statements made to agents of the Federal Bureau of Investigation ("FBI") and Assistant United States Attorneys ("AUSA") during interviews.

 A question frequently asked by defense lawyers is -- why do suspects make admissions? It might seem that it never would be in the interest of any person being investigated to respond to questions. The answer from psychologists and students of this subject is that suspects make admissions because they are in a state of mind which leads them to believe that cooperation is the best course of action to follow. The fact that statements do not appear to be in the subject's self-interest does not contradict the fact that they were motivated. R. Royal, The Gentle Art of Interviewing and Interrogation, 115 (1981). Interrogation for the purpose of motivating admissions becomes constitutionally objectionable only when the circumstances prevent the person being questioned from making a rational choice between answering or remaining silent. Weidner v. Thieret, 866 F.2d 958, 963 (7th Cir. 1989).

 Defendant Bailin asserts that his statements should be suppressed because they were prompted by the deceitful conduct of the Government agents. Defendant Baker alleges that his statements should be suppressed because they were prompted by "refined coercion." Baker also urges the court to exercise its supervisory powers to suppress his statements because an AUSA allegedly violated DR 7-104(a)(2) of the Illinois Code of Professional Responsibility by giving legal advice to him during their interview. Defendant Cali contends that his statements were given involuntarily. He also urges the court to suppress his statements because of an alleged violation of DR 7-104(a)(2).

 The motions were the subject of a three-day evidentiary hearing. Defendants were granted leave to develop and fully brief all of the issues raised in their motions.

 I. BAILIN'S MOTION TO SUPPRESS

 Bailin has moved to suppress statements he made to Government agents over the course of two interviews. The first was conducted by two FBI agents at Bailin's home. The second took place two days later when Bailin visited the offices of the FBI to discuss his case with an AUSA. At the hearing on the motion, the Government presented four witnesses. Bailin testified in support of his motion.

 1. At approximately 7:00 a.m. on Saturday, January 21, 1989, FBI Agents Maura Kelly and Kevin Rust sought to serve Bailin with a grand jury subpoena at his apartment in the Presidential Towers complex in Chicago.

 2. Bailin was not at home when the agents arrived. They left a copy of the subpoena with his wife. Agent Kelly told Mrs. Bailin that they would like to talk to her husband. Kelly also gave Mrs. Bailin one of her business cards.

 3. Between 5:00 and 6:00 p.m. that evening, Bailin called the number on Agent Kelly's business card and reached Agent Ernest Locker. Bailin told Locker that he wanted to get "to the bottom of the situation," and that he was "anxious to talk to the agents" about the subpoena. Bailin agreed to meet with two agents that evening after Locker told him that it might be possible for the agents to return to discuss the matter.

 4. At approximately 7:00 p.m. that evening, Agents Kelly and Rust returned to Bailin's apartment. Bailin's wife and child were present in the apartment. Bailin invited the agents into his study to talk privately.

 5. At the time of these interviews, Bailin was 36 years old. He was employed as an independent trader in the Yen pit and had traded in the futures markets for approximately thirteen years. Bailin has an undergraduate degree in mathematics and economics from New York University and a Master's degree in finance and accounting from the University of Chicago.

 6. Agent Kelly began the interview by telling Bailin about the nature of the investigation and that undercover Agent Dietrich Volk, who had posed as a Yen pit trader, had tape recorded his conversations and transactions with other traders. Bailin admitted to having occasionally traded with Volk because he was under the impression that Volk was a small, struggling trader like himself who needed help. Bailin then speculated that his trades with Volk were likely to have been captured on tape.

 7. At that point, Bailin stated, "Perhaps I should have an attorney." Agent Kelly told Bailin that the agents could not advise him on the matter and that he would have to make that decision himself.

 8. Bailin continued the interview, explaining to the agents that smaller traders like him had to agree to take losses from a broker if they wanted to keep receiving business. On more than one occasion, Bailin asked the agents why they were picking on him since he was such a "little fish" compared to the other traders in the pit.

 9. Near the end of the interview, Bailin asked the agents about the specific charges that might be brought against him. Agent Kelly informed Bailin he would have to talk to someone from the United States Attorney's Office.

 10. The January 21st interview lasted approximately one and one half hours. The agents conducted the interview in a polite manner. Although Bailin's demeanor was somewhat "excited," he readily answered all of their questions and repeatedly expressed his desire to continue cooperating with the Government.

 11. On the following Monday, January 23, 1989, at approximately 3:00 p.m., Bailin went to the office of the FBI for the purpose of learning from an AUSA the specific charges that might be brought against him. Agents Kelly and Volk met with Bailin and directed him into an empty office.

 12. During the interview, Bailin reaffirmed his desire to cooperate with the Government. He answered more of the agents' questions until a certain point when he asked whether he was doing the right thing by cooperating. Agent Volk told Bailin that he did not have to talk to the agents if he did not want to, but that he could be brought before a grand jury with a grant of immunity.

 13. AUSA Gillogly joined the January 23rd interview after approximately an hour. Gillogly explained to Bailin that his trading activities could result in possible RICO charges and that under RICO, he could be subject to a twenty-year sentence and forfeiture of his ill-gotten assets. This information was conveyed to Bailin in a polite, business-like fashion.

 14. At that point, Bailin informed Gillogly that he would need to talk to an attorney before deciding whether to cooperate further. Gillogly responded by telling Bailin that he ...


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