274 F.Supp. 420 (S.D.Cal. 1967), 65-127, United States v. Stonehill
|Citation:||274 F.Supp. 420|
|Party Name:||UNITED STATES of America, Plaintiff, v. Harry S. STONEHILL, Robert P. Brooks, Hierra Ranch, Inc., Contracts Discount, Inc., John E. Fort, Julius Baer & Co., Title Insurance and Trust Company, SamSteinberg, Murray M. Otstott, Herminiz Otstott, and Joe Steinberg, Defendants.|
|Case Date:||October 16, 1967|
|Court:||United States District Courts, 9th Circuit, Southern District of California|
William M. Byrne, Jr., U.S. Atty., Loyal E. Keir, Asst. U.S. Atty., Chief, Tax Div., Los Angeles, Cal., for plaintiff.
Bertram H. Ross, Los Angeles, Cal., for defendants Stonehill and Brooks.
ORDER DENYING MOTION TO SUPPRESS
WESTOVER, District Judge.
Defendants Harry S. Stonehill and Robert P. Brooks, in quest of fame and fortune after the war, went to the Philippines. So eminently successful were they in ascending the ladder of finance that they brought themselves and their activities to the attention of the Philippine authorities and to the attention of the United States Internal Revenue Service.
In 1960 the tax return of defendant Stonehill for the year 1958 was sent for audit to Mr. Robert Chandler, the United States Internal Revenue Service representative in the Philippines. Because of lack of personnel in his office, Mr. Chandler notified Washington that it was not possible to audit the return and requested assignment of agents to conduct the audit.
Harry S. Stonehill and Robert P. Brooks owned, were officers of, or controlled many companies and corporations. Among the corporations they owned or controlled was United States Tobacco Corporation which allegedly had obtained monopoly of tobacco sales in the Philippine Islands. Menhart Speilman was a trusted employee of the United States Tobacco Corporation but was discharged from his employment by Stonehill and Brooks. His discharge was effected in such manner that Speilman left his employment with a spirit of vengeance and, prior to his departure, had copied and photographed certain documents and records of the United States Tobacco Corporation which he felt disclosed wrongdoing on the part of defendants' corporation.
Mr. Speilman went to Agent Robert Hawley of the United States Federal Bureau of Investigation who was assigned to the American Embassy in Manila; Speilman displayed the copies of records and documents he had obtained from the files of United States Tobacco Corporation and related to Agent Hawley alleged unlawful activities of the corporation and of Stonehill and Brooks.
In evaluating the copies of documents and records together with Mr. Speilman's story so presented to him, Agent Hawley concluded that if the United States Government had any interest in defendants' activities, such interest would arise out of violation of United States tax laws; consequently, Agent Hawley took Mr. Speilman to Robert Chandler of the Internal Revenue Service.
Mr. Chandler looked at the documents and records so presented to him, heard Mr. Speilman's story, and came to the conclusion that the information might be of interest to the Philippine authorities; hence, Mr. Speilman was referred to the Philippine National Bureau of Investigation, and an appointment was arranged for him to be interviewed by Colonel Lukban who was in charge of the Philippine National Bureau of Investigation.
For some time before Colonel Lukban's interview with Mr. Speilman, the Philippine National Bureau of Investigation had been engaged in gathering evidence concerning the activities of Stonehill and Brooks, which evidence was for use in deportation proceedings against them to remove them from the Philippine Islands as undesirable aliens. (Stonehill and Brooks were later deported.)
During the deportation investigation, Colonel Lukban determined that a raid should be made upon premises occupied by Stonehill and Brooks and the various corporations which they owned, controlled, or of which they were officers. 1 Colonel
Lukban mentioned the contemplated raid to Robert Chandler, and Robert Chandler negated any procedure which included raiding. Nevertheless, the Philippine National Bureau of Investigation consummated raid plans, and meetings were held to determine the modus operandi of conducting the raid. As Colonel Lukban and Robert Chandler were friends, some of the meetings were held in the home of Robert Chandler.
At one of the various meetings of members of the Philippine National Bureau of Investigation (at which Robert Chandler was also present) the premises to be raided were mentioned, and Robert Chandler inquired whether the Army and Navy Building was included on the list of premises; and when informed that the Army and Navy Building was not on the list, he suggested that the building be included. When the raid was conducted the Army and Navy Building was among the premises searched.
Sometime during the investigation of defendants Stonehill and Brooks by the Philippine National Bureau of Investigation a diagram of the premises occupied by the Evening News and the United States Tobacco Corporation was drawn by Robert Chandler (Exhibit J in evidence), together with a memorandum relative to the Goodrich...
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