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U.S. v. JIMENEZ

September 2, 2003

UNITED STATES OF AMERICA VS. JOCELYN JIMENEZ


The opinion of the court was delivered by: Mathew Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

Jocelyn Jimenez provides income tax preparation and accounting services to individuals and small businesses from a storefront office on North Milwaukee Avenue in Chicago. On September 23, 1999, a Magistrate Judge of this Court issued a warrant authorizing a search of Jimenez's office for tax returns and documents relating to their preparation; calendars, appointment books, and other lists of clients and appointments; client files and records; information concerning the preparation of tax returns stored in electronic form; computers and related equipment; and software. The warrant stated that the search and any seizure was to be done "in a manner to minimize the disruption to Ms. Jimenez's business activities" and that to the extent possible, computer information was to be copied on site, any such information removed was to be returned within 3 business days, and copies of any documents seized were to be provided to Jimenez on request. Pursuant to the warrant, on September 29, 1999, agents from the Internal Revenue Service seized documents (mostly client files) and computer equipment, enough to file 57 boxes.

In April 2002, Jimenez was indicted for mail fraud in violation of 18 U.S.C. § 1341, preparation of false tax returns in violation of 26 U.S.C. § 7206(2), and obstructing the administration of the IRS in Page 2 violation of 26 U.S.C. § 7212(a). The indictment alleges a multi-year scheme to defraud the IRS by preparing false income tax returns for at least 23 individuals. Jimenez has moved to suppress the evidence seized pursuant to the search warrant, arguing that the warrant was far broader than the showing of probable cause made in the warrant application, and that the warrant lacked sufficient particularity.

The warrant application included an affidavit from IRS Agent Brian Hoffman, who stated that in December 1997, he received information from IRS Agent Janet Hughes, who reported allegations that Jimenez was inflating her clients' itemized deductions and child care credits. This information included an affidavit from one of Jimenez's clients obtained during an audit of his 1994 tax return. The client asserted that in 1996, Jimenez had prepared his 1995 tax return and amended 1993 and 1994 returns and had included child care credits to which he was not entitled, and other false information, without his knowledge and without asking him for any supporting information.

Hoffman also stated that he had reviewed statistics regarding returns prepared by Jimenez for 1995, 1996, and 1997. For each of those years, he said, more than 90% of the returns had resulted in refunds, which he characterized as "unusually high" based on the IRS's experience. He said he had reviewed 115 particular returns for 1997, and that these included a "pattern of deductions" for unreimbursed employee business expenses, which he characterized as consistent with the allegations against Jimenez concerning inflated deductions. Fifty-three of those returns, Hoffman said, claimed a child care credit.

Hoffman also recounted two meetings between Jimenez and an undercover IRS agent wearing a recording device. He stated that on March 26, 1998, the undercover agent visited Jimenez's office Page 3 after making an appointment to prepare a 1997 tax return. She provided Jimenez with information that ought to have resulted in a tax due of $325, but Jimenez, using her computer, prepared a return reflecting a $1,351 refund. Jimenez accomplished this by including fabricated deductions for medical expenses, charitable contributions, employee business expenses, and child care, totaling $9,475. The undercover agent had given Jimenez no information supporting such deductions and had told Jimenez she had no such information. Jimenez told the agent that she could remove the child care credit from the return if the agent didn't want it, stating, "I'm like a crook, huh?" The agent replied that she did not understand but that Jimenez should do whatever was best. Jimenez said the agent could just give the child care tax credit back if it was disallowed, stating, "What's life without chances. Right? If there's any problems, call me."

The undercover agent returned to Jimenez's office in late March 1999 for the preparation of a 1998 tax return. Jimenez retrieved the agent's client file from a file cabinet and asked if anything had changed since the previous year. The agent replied no. Jimenez asked the agent to go get her (Jimenez) some coffee. When the agent returned, Jimenez had prepared a tax return showing use of the standard deduction rather than the itemized deductions used the previous year, and a false child care credit of $640. When the agent questioned the credit, Jimenez said she was entitled to it because her children were under thirteen years old. In his affidavit, Hoffman stated that this is true only if the taxpayer incurs child care expenses; he noted that the agent had told Jimenez that she took care of her children herself. When the agent asked Jimenez about the name of the child care provider she had listed on the agent's tax return, Jimenez said that it was "just a company I do taxes for." When the agent asked if she would get in trouble for claiming the credit, Jimenez replied, "No. You didn't last Page 4 year."

Hoffman also represented that under the law, paid tax preparers like Jimenez are required to keep copies of prepared tax returns and related documents for three years.

Based on this information, Hoffman asserted that there was probable cause to believe that Jimenez had prepared false tax returns and that information about the returns and the identity of the taxpayers for whom they were prepared was located in her office. The Magistrate Judge issued the warrant on September 23, 1999.

When the IRS agents executed the warrant on September 29, 1999, they seized Jimenez's computer, numerous computer disks, and related equipment; all of her client files; her own income tax returns and work papers for several years; bank records; appointment books; her Rolodex file; a number of lottery tickets; and other documents. Jimenez argues that the warrant effectively authorized, and was used to conduct, an improper general search of her workplace. She also contends that the warrant application did not justify a warrant of that breadth.

The Fourth Amendment's Warrant Clause prohibits the issuance of any warrant except one "particularly describing the place to be searched and the persons or things to be seized." The purpose of the particularity requirement is to prevent general searches. E.g., Maryland v. Garrison, 480 U.S. 79, 84 (1987). "By limiting the authorization to search to the specific areas and things for which there is probable cause to search, the requirement ensures that the search will be carefully tailored to its justifications, and will not take on the character of the wide-ranging exploratory searches the Framers intended to prohibit." Id.

A warrant that broadly authorizes law enforcement officers to seize "evidence of crime" is a Page 5 prohibited general warrant. See, e.g., United States v. Stefonek, 179 F.3d 1030, 1032-33 (7th Cir. 1999). The same may be true of warrants that authorize, without further specification, the seizure of evidence of violation of a broadly-worded statute such as the general conspiracy statute or the general tax evasion statutes.See Rickert v. Sweeney, 813 F.2d 907, 909 (8th Cir. 1987); Voss v. Bergsgaard, 774 F.2d 402, 405 (10th Cir. 1985); United States v. Cardwell, 680 F.2d 75, 77 (9th Cir. 1982). But that is not what this warrant did. Rather, as noted earlier, the warrant listed with particularity, seven categories of documents and things that could be seized.

One of the categories of documents listed in the warrant made reference to 26 U.S.C. § 7206(2), which makes it illegal to assist in preparing a false tax return:

b. Documents relating to the preparation of false and fraudulent income tax returns, Schedules, U.S. Treasury checks which constitute the fruits, instrumentalities and evidence of violation of federal statutes which relate to income tax filing and fraud, including Title 26, United States Code, Section 7206(2), which have been committed and are being committed by Jimenez Financial Services and others unknown to me at this time.
But this description did not leave it to the IRS agents' whim to determine what might be "evidence of violation" of § 7206(2). Rather, it directed them to seize particular types of documents — those relating to the preparation of false tax returns, and checks from the government that might constitute the fruits of a violation of the statute. It was specific enough to enable the agents ...

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