517 F.2d 13 (7th Cir. 1975), 74-1663, Ryan v. C. I. R.

Docket Nº:74-1663.
Citation:517 F.2d 13
Party Name:Raymond J. RYAN and Helen Ryan, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
Case Date:May 23, 1975
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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517 F.2d 13 (7th Cir. 1975)

Raymond J. RYAN and Helen Ryan, Petitioners-Appellants,

v.

COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.

No. 74-1663.

United States Court of Appeals, Seventh Circuit

May 23, 1975

Argued Feb. 26, 1975.

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Raymond G. Larroca, Washington, D. C., George C. Barnett, Evansville, Ind., for petitioners-appellants.

Scott P. Crampton, Asst. Atty. Gen., and Richard M. Roberts, Atty., Tax Div., Dept. of Justice, Washington, D. C., for respondent-appellee.

Before SWYGERT and TONE, Circuit Judges, and PERRY, Senior District Judge. [*]

PERRY, Senior District Judge.

This is an appeal from an order of the United States Tax Court which directed petitioners below, Raymond J. Ryan and Helen Ryan, his wife (hereinafter "the Ryans"), to answer certain interrogatories served by respondent below, the Commissioner of Internal Revenue (hereinafter "the Commissioner").

In 1964 the Commissioner instituted an investigation of the possible tax liabilities of petitioner Raymond J. Ryan (hereinafter "Ryan"). This investigation resulted in three successive indictments against Ryan for conspiracy to defraud the Internal Revenue Service, obstruction of justice, criminal contempt, and violation of the Foreign Direct Investment Act. Ryan was acquitted on the first two indictments (United States v. Ryan, 455 F.2d 728 (9th Cir. 1972); In the Matter of Ryan, Misc. No. 1926, May 4, 1972 (C.D.Cal.)); the third indictment was dismissed by the United States District Court and an appeal noticed by the Government was dropped several months thereafter (United States v. Ryan, D.D.C. No. Cr 2038-72, March 2, 1973, appeal dismissed, United States Court of Appeals, D.C.Cir. No. 73-1354, July 13, 1973). In June of 1969, while the criminal investigation was in progress, the Commissioner filed a jeopardy assessment

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of more than nine million dollars against the Ryans.

The Ryans initiated the proceedings below in September of 1969 by filing a petition in the Tax Court for a redetermination of deficiencies in income taxes, including fraud penalties, asserted by the Commissioner for the taxable years 1958 through 1965. The jeopardy assessment was dissolved after the Ryans filed the aforesaid petition and agreed to the imposition of certain encumbrances on their assets and certain limitations upon their right to travel.

In October of 1971 the Commissioner applied to the Tax Court for an order permitting him to take depositions, upon written interrogatories, of unnamed bank officials in Switzerland, pursuant to the Double Taxation Convention of 1951 entered into between the United States of America and Switzerland. The Ryans objected on the grounds, inter alia, that said Convention did not authorize such depositions and that the rules of the Tax Court then in force did not permit discovery by either party. The Tax Court granted the Commissioner's application, and this Court dismissed the Ryans' appeal for lack of jurisdiction and denied an alternative petition for mandamus. Ryan v. Commissioner of Internal Revenue, Nos. 72-1869 and 72-1870, United States Court of Appeals, 7th Cir., Jan. 5, 1973, and Ryan v. Drennen, No. 72-2006, Jan. 5, 1973, cert. denied, 412 U.S. 939, 93 S.Ct. 2774, 37 L.Ed.2d 398 (1973).

On January 18, 1974 the Commissioner, pursuant to Rule 71 of the new Tax Court Rules of Practice and Procedure, 1 served on the Ryans seven written interrogatories seeking information as to any relationships or dealings by the Ryans with the Commercial Credit Bank of Zurich, Switzerland, or with one Carl W. Hirschmann, a resident of Zurich, between the years 1958 and 1965. The Ryans objected to these interrogatories on the ground, inter alia, that answers to the interrogatories would have a tendency to incriminate them and hence were privileged by the Fifth Amendment. In support of their objection, the Ryans asserted: (1) a massive criminal tax investigation of the Ryans had been conducted for more than 10 years; (2) Ryan had been the subject of successive criminal prosecutions beginning in 1968, the latest of which was concluded only in 1973; (3) each criminal prosecution against Ryan involved alleged foreign transactions; and (4) each of the foreign transactions involved in the prior criminal prosecutions is also involved in the Commissioner's determination of deficiencies now before the Tax Court.

The Commissioner moved the Tax Court to compel answers to the interrogatories and, after a hearing conducted on May 22, 1974, the Tax Court on May 24, 1974 entered an order providing, inter alia, "Petitioners are directed to answer in writing and under oath" the interrogatories propounded by the Commissioner. The Ryans appealed to this Court and subsequently filed in this Court a petition for writ of mandamus, seeking an order directing the Chief Judge of the Tax Court to vacate the order of May 24, 1974. In its response to said petition for mandamus, the Government advised us that after the appeal and mandamus petition were docketed in this Court, the Government sought and obtained from the District Court for the District of Columbia an immunity order under 18 U.S.C. §§ 6002 and 6003. This order directed the Ryans "to give testimony or provide other information and produce documents which they refuse to give or to provide on the basis of their privilege against self-incrimination as to all matters about which they may be interrogated before the United States Tax Court", and granted the Ryans use immunity with respect to testimony or other information compelled to be given or produced under the order (or any information directly or indirectly derived from such

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testimony or other information). An appeal by the Ryans from the use immunity order is pending in the United States Court of Appeals for the District of Columbia Circuit.

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