434 F.Supp. 113 (N.D.Ohio 1977), CR76-305, United States v. Payner

Docket Nº:CR76-305.
Citation:434 F.Supp. 113
Party Name:UNITED STATES of America, Plaintiff, v. Jack PAYNER, Defendant.
Case Date:April 28, 1977
Court:United States District Courts, 6th Circuit, Northern District of Ohio

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434 F.Supp. 113 (N.D.Ohio 1977)

UNITED STATES of America, Plaintiff,


Jack PAYNER, Defendant.

No. CR76-305.

United States District Court, N.D. Ohio, Eastern Division.

April 28, 1977

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Bernard S. Bailor, Dora A. Sahuruni, John F. Hyland, Sp. Attys., Washington, D. C., for plaintiff.

Bennet Kleinman, Bernard Stuplinski, Cleveland, Ohio, for defendant.


MANOS, District Judge.

On September 14, 1976 the defendant Jack Payner was indicted for knowingly and willfully making a false statement in a matter within the jurisdiction of an agency of the United States in violation of 18 U.S.C. s 1001. Specifically, the Government charged Payner with falsely stating on his 1972 Federal Income Tax Return that he did not have a foreign bank account when in fact he had an account of over

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$100,000 in the Castle Bank of the Bahamas. 1

On January 6, 1977, the defendant filed a motion to suppress all evidence obtained by the Government from allegedly illegal searches conducted by government agents during January of 1973. In response the Government argued that the evidence it intended to introduce against Payner was neither the direct product, nor the fruit of the allegedly unconstitutional searches, but was evidence obtained from sources independent of the searches in issue. Also, the Government argued that even if the evidence against Payner was obtained from information arising out of the January, 1973 searches, the evidence should not be suppressed because Jack Payner has no standing to raise the issue of the constitutionality of the searches. On March 14, 1977, by agreement of the parties, the Court proceeded to try the defendant on the merits of the indictment together with the motion to suppress. 2 This opinion deals only with the issues raised by the motion to suppress.



A. The seizures of January, 1973.

In 1965 the Internal Revenue Service initiated Operation Trade Winds for the purpose of gathering information about the financial activities of American citizens in the Bahamas. 3 Special Agent Richard Jaffe of the Jacksonville, Florida Office of the Internal Revenue Service (IRS) supervised the investigation. 4 IRS agents gathered information pertinent to Operation Trade Winds by making numerous trips to the Bahamas and by the use of over 30 informants. 5

In June, 1972 the IRS suspected that the Castle Bank and Trust Company of the Bahamas functioned as an illegal tax haven for American taxpayers. 6 The IRS' suspicion was based on information about an alleged California narcotics dealer, Allan Palmer, who deposited a check in his bank account originally drawn on the Castle Bank of the Bahamas. Further investigation revealed that the Castle Bank had an account with the Bank of Perrine in Florida, and that Palmer had $25,000 in a Castle Bank account which he opened through the assistance of the Bank of Perrine. 7 In August, 1972 representatives of the IRS districts in San Francisco, Chicago, Miami, and Pittsburgh met in Jacksonville, Florida to discuss the involvement of the Castle Bank with respect to narcotic trafficking investigations pending in each district. 8

In late October, 1972, Special Agent Jaffe met with one of his informants, Norman Casper, and asked him to obtain the names and addresses of the individuals holding accounts with the Castle Bank. 9 In the first week of November of 1972 Casper decided to secure the requested information 10 and in late November of 1972, as part of the scheme to get the names of the Castle Bank depositors, Casper introduced Sybol Kennedy to Michael Wolstencroft. 11 Wolstencroft was then an

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acquaintance of Casper's 12 and Vice-President and Trust Officer of Castle Bank. Sybol Kennedy was a private detective employed by Casper. 13 At the time Casper introduced Wolstencroft to Sybol Kennedy, Casper knew that Wolstencroft frequently traveled to the United States carrying a briefcase containing documents concerning the operation of the Castle Bank. 14 In early January, 1973 Casper learned that Wolstencroft planned a business trip to the United States on January 15, 1973, and would have records of the Castle Bank in his possession during the trip. 15

In the week preceding January 15, 1973 Casper and Special Agent Jaffe discussed a covert plan to intercept copies of the documents that Wolstencroft planned to bring into the United States. On Tuesday, January 9, 1973 Casper told Jaffe that he could get the documents from Wolstencroft but that he needed Jaffe to supply photographic services, 16 and on Thursday, January 11, 1973 Casper outlined to Jaffe his plan to get the documents from Wolstencroft. 17 Casper specifically told Jaffe that he planned to enter an apartment from which he expected to remove Wolstencroft's briefcase. 18 Jaffe told Casper that he would have to clear such an operation with his superior, Troy Register, Jr., Chief of the IRS Intelligence Division in Jacksonville. 19 After obtaining authorization from Register, Jaffe told Casper to proceed with the operation. On Friday, January 12 Casper phoned Jaffe and asked if the IRS could refer him to a locksmith who could be "trusted," 20 which Jaffe did. 21

On January 15, 1973 Wolstencroft arrived in the United States and went to Sybol Kennedy's apartment. What occurred at her apartment, if anything, was not brought out at trial. 22 However, at 7:30 p. m. Sybol Kennedy and Wolstencroft left Kennedy's apartment to go to a restaurant on Key Biscayne, whereupon Casper entered the apartment with a key given him by Kennedy, and removed Wolstencroft's briefcase without permission. 23 Casper took the briefcase to a locksmith who had been recommended by the IRS, and who had previously refused to enter the apartment

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with him. Casper met the locksmith in a parking lot five blocks from Kennedy's apartment and instructed him to make a key for the briefcase. 24 Casper then took the briefcase to an IRS agent's private residence, selected by Jaffe as the rendezvous point, and opened it in Jaffe's presence. Over 400 documents were taken out of the briefcase and photographed. 25

Jaffe, Casper, and an IRS photography expert used two cameras to photograph the documents, a "normal" camera and a microfilm camera. 26 The microfilm camera was used because it was faster 27 than a normal camera, and Agent Jaffe knew that the briefcase had to be returned to Sybol Kennedy's apartment before she and Wolstencroft got back from dinner. 28 To get the briefcase back timely Casper had Kennedy and Wolstencroft watched during their dinner. When Kennedy and Wolstencroft completed their dinner, 29 Casper's lookout 30 phoned him at the residence which the IRS used to photograph the documents. After all documents were copied, Casper closed the briefcase, accidentally broke off the key in the lock, 31 and returned the documents to Kennedy's apartment at approximately 9:00 p. m.

Within the next two weeks Jaffe again met with Casper and told him that additional information concerning Castle Bank's customers was needed. 32 Casper obtained the requested additional information by sending Sybol Kennedy to the Bahamas to visit Wolstencroft. While there she stole a rolodex file from his office as Casper directed her to do. 33 The stolen rolodex file was then turned over to Jaffe, who expressed no concern over the methods used to obtain it. 34

Casper was paid $8,000 in cash by the IRS for obtaining the information relating to Castle Bank. 35 Sybol Kennedy was paid approximately $1,000 by Casper from funds he received from the IRS for her part in obtaining the briefcase and the rolodex. 36

This Court finds that the United States, through its agents, Richard Jaffe, and others, knowingly and willfully participated in the unlawful seizure of Michael Wolstencroft's briefcase, 37 and encouraged its informant, Norman Casper, to arrange the theft

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of a rolodex from the offices of Castle Bank. 38 The Court does not accept the Government's argument that Casper was an independent contractor who acted alone, without the knowledge and concurrence of Jaffe. 39 Jaffe knew that Casper had hired Kennedy to date Wolstencroft, knew that Wolstencroft's briefcase would be taken without permission, furnished the name of a locksmith who could be "trusted," knew that the locksmith was hired to break into the briefcase, and knew that he and another IRS agent had to copy the documents in a hurry in order to get the briefcase back to the apartment before Wolstencroft's return.

That the proposed activity was unusual and that Jaffe knew it was unusual was demonstrated by his clearing the scheme with his superior. 40 The Court concludes that the United States was an active participant in the admittedly criminal conduct in which Casper engaged in order to procure

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the Castle Bank's documents in January of 1973.

B. The Payner Investigation.

In late 1971 and continuing through the early part of 1972 the Internal Revenue Service investigated the financial dealings of an alleged narcotics trafficker, Allen Palmer. 41 Through their investigation of Palmer they discovered a connection between the Bank of Perrine, located in Perrine, Florida, and the Castle Bank and Trust Co. 42

On January 15, 1973 documents indicating that Jack Payner held a bank account with Castle Bank and Trust Co. were taken from Michael Wolstencroft's briefcase and duplicated by the Government. 43 These same documents also indicated that the Perrine Bank was linked to the Castle Bank. 44 Within the next two weeks a rolodex was taken from the offices of the Castle Bank. The rolodex contained the name and address of Jack Payner. 45 On February 22, 1973 the Internal Revenue Service sent a letter to Jack Payner advising him...

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