U.S. v. Daly

• Citation: 535 F.2d 434
• Decision Date: 05 May 1976
• Docket Number: No. 75-1837,75-1837
• Parties: UNITED STATES of America, Appellee, v. Anthony V. DALY, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 434

535 F.2d 434

UNITED STATES of America, Appellee, v. Anthony V. DALY, Appellant.

No. 75-1837.

United States Court of Appeals Eighth Circuit.

Submitted March 10, 1976.

Decided May 5, 1976.

Irl B. Baris, St. Louis, Mo., for appellant; Kenneth H. Graeber, St. Louis, Mo., on brief.

Marc Philip Richman, Washington, D. C., for appellee; Donald J. Stohr, U. S. Atty., and John R. Birkby, Sp. Atty., Jerome M. Feit, James A. Rothschild, Attys., Dept. of Justice, Washington, D. C., on brief.

Before LAY, ROSS and STEPHENSON, Circuit Judges.

ROSS, Circuit Judge.

Anthony Daly appeals his conviction on twelve counts of mail fraud and conspiracy to commit mail fraud in violation of 18 U.S.C. §§ 371 and 1341. We affirm.

The government's evidence at trial established that on three separate occasions, the defendant and three other persons ¹ engaged in schemes to defraud insurance companies by submitting false claims for theft losses. The reported thefts were staged by Daly and his confederates. The mail was essential to the schemes since the false claims were processed through the mail. ²

This appeal concerns the admissibility of certain evidence of the insurance fraud schemes produced by court-authorized wiretaps. The wiretaps, which were placed on three telephones subscribed to by the defendant, were used to intercept conversations during two fifteen day intercept periods. The electronic surveillance was authorized to investigate Daly's participation in a racketeering operation which involved credit card fraud.

The government requested the first intercept order on January 26, 1973. The application was supported by a 38 page affidavit of Postal Inspector Calvin Olk. The request was granted and the interception was conducted from January 27, 1973, until February 10, 1973. The authorizing judge, United States District Judge John Regan of the Eastern District of Missouri, required and received two five day reports describing the progress of the wiretaps.

On February 23, 1973, Judge Regan entered an order extending the wire interception for fifteen more days. The government's application in this instance was supported by a 14 page affidavit of Inspector Olk. The surveillance was conducted from February 23, 1973, until March 10, 1973. Pursuant to Judge Regan's order, the government again submitted two five day reports describing the progress of the wiretaps during the interception period.

Daly urges numerous points of error. We discuss these points seriatim.

I. Alternative Means.

Daly first argues that the applications for the wiretap orders failed to show that normal investigative techniques were tried and failed or why they reasonably appeared to be unlikely to succeed if tried or were too dangerous. We find this argument without merit.

18 U.S.C. § 2518 sets forth the procedure for interception of wire and oral communications. Section 2518(1)(c) requires that each application include the following information:

a full and complete statement as to whether or not other investigative procedures have been tried and failed or why they reasonably appear unlikely to succeed if tried or to be too dangerous.

Section 2518(3)(c) provides that the judge may authorize interception of wire or oral communications if, inter alia, he finds the following:

normal investigative procedures have been tried and have failed or reasonably appear to be unlikely to succeed if tried or to be too dangerous.

We recognize that Congress intended these sections to restrict wiretaps to those which are necessary as well as reasonable. But Congress did not require the exhaustion of "specific" or "all possible" investigative techniques before wiretap orders could be issued. United States v. Smith, 519 F.2d 516, 518 (9th Cir. 1975). Congress prohibited wiretapping only when normal investigative techniques are likely to succeed and are not too dangerous. "Merely because a normal investigative technique is theoretically possible it does not follow that it is likely." S.Rep. 90-1097, U.S.Code Cong. and Admin.News, pp. 2112, 2190 (1968). Sections 2518(1)(c) and 2518(3)(c) are only designed to ensure that wiretapping is "not to be routinely employed as the initial step in criminal investigation, United States v. Giordano, 416 U.S. 505, 515, 94 S.Ct. 1820, 1826, 40 L.Ed.2d 341, 353 (1974), and " * * * to assure that wiretapping is not resorted to in situations where traditional investigative techniques would suffice to expose the crime." United States v. Kahn, 415 U.S. 143, 153, 94 S.Ct. 977, 983, 39 L.Ed.2d 225, 236, n.12 (1974). The government's showing must, of course, be tested in a "practical and commonsense fashion." United States v. Kirk, 534 F.2d 1262, at 1274, (8th Cir., filed April 22, 1976); United States v. Brick, 502 F.2d 219, 224 n.14 (8th Cir. 1974), quoting, S.Rep. 90-1097, supra, at p. 2190. And as in other suppression matters, considerable discretion rests with the judge to whom the wiretap application is made. United States v. Smith, supra, 519 F.2d at 518.

Applying these principles to the facts of this case, we find that Judge Regan properly concluded that electronic surveillance was justified. ³ The affidavit of Postal Inspector Olk, offered in support of the application for the first wiretap order, indicates that normal investigative techniques had been extensively used by the government before the wiretap authorization was sought. These techniques included questioning of several coconspirators, consent recording to a limited extent, physical surveillance, examination of telephone toll records and use of at least one undercover agent. An extensive racketeering operation involving use of credit cards was uncovered by this investigation.

Before the initial wiretap order was sought, however, the investigation had failed to uncover critical information in the following areas: 1) the identities of persons from whom Daly received the stolen credit cards; 2) the extent to which Daly's operation involved other service stations in the St. Louis area; 3) the identities of persons to whom Daly sold the credit cards; and 4) the extent to which Daly's operation had infiltrated businesses other than service stations. Undercover investigation produced only limited information. Daly's operation was conducted in a covert manner and the undercover agent was told nothing more than was necessary to perform his limited role in the service station operations. Furthermore, the postal authorities knew, from an examination of the telephone toll records, that Daly used his personal and business telephones extensively in conducting the operation. Thus traditional surveillance techniques were inadequate.

Two weeks after the original fifteen day wiretap was terminated, the government requested, and received, an extension order permitting interception for fifteen more days. The affidavit submitted in support of the extension order stated that although some understanding had been obtained of Daly's role in the racketeering operation, the identities of most of his confederates had not been discovered. This failure was described by Inspector Olk in the following terms:

The lack of success in establishing the identities of those persons who are associated with Anthony V. Daly in the scheme to defraud is due in large part to the surreptitious way in which Anthony V. Daly and his associates use the telephones. Last names are seldom mentioned; credit cards are referred to as "plastic" or "things"; conversations are seldom lengthy. The manner in which the telephones are utilized demonstrates a familiarity on the part of Anthony V. Daly and his associates with one another's voices, to the extent that complete name identification is unnecessary, and with terminology describing credit cards, the use of which terminology to a lay ear has no independent significance.

This case is, we feel, a classic instance where electronic eavesdropping was reasonable and necessary. Daly's reliance on telephones, his distrust of confederates, and his use of specialized jargon, rendered normal investigative techniques impractical. The broad scope and complexity of the operation compounded the investigative dilemma. Judge Regan properly concluded that alternative investigative means were inadequate. ⁴

II. Interceptions Authorized.

Defendant next argues that Judge Regan's wiretap authorization was used for a purpose mail fraud not authorized by 18 U.S.C. § 2516. We find that wiretapping may be used to investigate mail fraud under certain circumstances present in this case.

Section 2516, as amended in 1970, includes within the list of specific offenses for which interception of wire communications is permitted, the activities penalized by 18 U.S.C. § 1963. H.Rep. 91-1549, U.S.Code Cong. and Admin.News, pp. 4007, 4036 (1970). Section 1963 penalizes any pattern of racketeering activity affecting interstate commerce proscribed by 18 U.S.C. § 1962. Section 1961(1)(B), which defines the activities subject to the racketeering provisions, specifically refers to the mail fraud statute, 18 U.S.C. § 1341.

Thus, Judge Regan's order permitted interceptions specifically authorized by section 2516 interceptions of conversations relating to mail fraud racketeering activities violative of 18 U.S.C. §§ 1961 et seq. Significantly, Daly pleaded guilty to participating in a pattern of racketeering under section 1962(c) as a result of the wiretap. Daly was involved in (indeed in charge of) a comprehensive scheme, covering at least three states, to defraud several major oil companies in violation of sections 1962 and 1963. The bogus billings of the oil companies were conducted through the mail. The identities of many of his confederates were unknown to the government and could not be ascertained by normal investigative techniques. The defendant's activities were, therefore, precisely the type of covert activities for which Congress permitted wiretapping.

That the insurance fraud operation was...