Benson v. People

• Decision Date: 24 June 1985
• Docket Number: Nos. 83SA134,83SA124,s. 83SA134
• Citation: 703 P.2d 1274
• Parties: Kristen BENSON, Harold W. Lowrie and International Entertainment Consultants, Inc., a Colorado corporation, Petitioners-Appellants, v. The PEOPLE of the State of Colorado, Respondent-Appellee. Harold W. LOWRIE, Petitioner-Appellant, v. The PEOPLE of the State of Colorado, Respondent-Appellee.
• Court: Colorado Supreme Court

Page 1274

703 P.2d 1274

Kristen BENSON, Harold W. Lowrie and International

Entertainment Consultants, Inc., a Colorado

corporation, Petitioners-Appellants, v. The PEOPLE of the State of Colorado, Respondent-Appellee.

Harold W. LOWRIE, Petitioner-Appellant, v. The PEOPLE of the State of Colorado, Respondent-Appellee.

Nos. 83SA134, 83SA124.

Supreme Court of Colorado,

En Banc.

June 24, 1985.

Rehearing Denied in 83SA124 Aug. 19, 1985.

Hartley, Obernesser & Olson, Dennis W. Hartley, Colorado Springs, for petitioners-appellants.

Nolan L. Brown, Dist. Atty., Michael B. Tully, Chief Deputy Dist. Atty., Jeffrey Jorgenson, Golden, for respondent-appellee.

ERICKSON, Chief Justice.

In this consolidated appeal, Harold Lowrie and Kristen Benson challenge separate orders of the Jefferson County District Court that denied their respective motions to quash civil investigative demands. The district court found that the demands complied with the requirements of section 18-17-107(2), 8 C.R.S. (1984 Supp.), of the Colorado Organized Crime Control Act ¹ and did not violate the appellants' constitutional rights. We reverse the district court's order in Benson v. People, 83SA134, and affirm the district court's order in Lowrie v. People, 83SA124.

I.

On December 13, 1982, the Jefferson County District Attorney's Office, acting pursuant to the Colorado Organized Crime Control Act, served a civil investigative demand on the First National Bank of Westminster. The demand directed the bank to produce for examination:

[A]ny and all bank records, including but not limited to monthly statements, financial statements, cancelled checks, money drafts and transfers regarding a business account, # 0137322, Chroma Corporation, from inception to closing. Chroma Corporation dba Aloha Beach and World of Massage, and/or Harold W. Lowrie's personal account.

On the same day, the district attorney's office served a second investigative demand on Kristen Benson, the secretary of Management Security Services Incorporated (MSSI). The demand directed MSSI to produce for the district attorney's inspection:

[A]ny and all records, documents and papers pertaining to Management Security Services, Inc., including but not limited to bank accounts, accounts receivable, accounts payable, management agreements or contracts and corporate minutes. Any and all records, documents and papers in the possession or control of Management Security Services, Inc., pertaining to any and all business managed by [MSSI], including ... bank accounts, accounts payable, accounts receivable, management agreements or contracts, profit and loss statements and corporate minutes.

Lowrie and Benson thereafter filed separate motions to quash the demands pursuant to section 18-17-107(8), ² asserting that the demands did not comply with various statutory requirements. The appellants also alleged that the demands violated their rights under the first, fourth, fifth and fourteenth amendments to the United States Constitution and article II, sections 7 and 25 of the Colorado Constitution. The district court denied both motions to quash in separate proceedings.

II.

The appellants assert that the demands in this case do not state the "nature of the conduct" constituting the alleged racketeering violation as required by section 18-17-107(2)(a). ³ The civil investigative demands served on the bank and MSSI both contained the following advisement:

You are hereby advised that the Office of the District Attorney, First Judicial District is conducting an investigation into the activities of Harold W. Lowrie with regard to his knowingly receiving profits derived from a pattern of racketeering activity and using or investing a part of the proceeds derived from the investment or use thereof in the acquisition of a title, right, interest or equity in real property or the establishment or operation of an enterprise, as well as knowingly acquiring or maintaining an interest and control of an enterprise or real property by a pattern of racketeering activity and conspiring with others to violate the provisions of the Colorado Organized Crime Control Act, contrary to 1973 C.R.S. § 18-17-104, (1)(a), (2), (4), and involving possible criminal violations as defined in 1973 C.R.S. § 18-17-103, Racketeering Activity, specifically subsections (5)(b)(II) Theft, 1973 C.R.S. 18-4-401; (5)(b)(XIII) Fraud Upon Department of Revenue, 1973 C.R.S. 19-21-118; and (5)(b)(XV) Offense Relating to Taxation, 1973 C.R.S. 39-22-621; and First Degree Forgery, 1973 C.R.S. 18-5-102.

We hold that the above advisement satisfies the requirements of section 18-17-107(2)(a).

We reject the appellants' contention that a civil investigative demand must set forth with specificity the precise nature of the conduct under investigation. Such a requirement is overly restrictive and inconsistent with the purposes of the Act. ⁴ A civil investigative demand enables the district attorney or attorney general to determine whether a racketeering violation has occurred and if civil or criminal proceedings should be commenced. The government is not in a position during this stage of the investigation to state the exact facts that may support a violation until it has been able to review the documents necessary for that determination. To insist upon specificity at this stage of the investigation would defeat the purpose of the civil investigative demand. See Petition of Gold Bond Stamp Co., 221 F.Supp. 391, 397 (D.Minn.1963), aff'd, 325 F.2d 1018 (8th Cir.1964) . ⁵ See also Mobil Oil Corp. v. Killian, 30 Conn.Sup. 87, 301 A.2d 562 (1973).

We hold that a demand complies with the requirements of section 18-17-107(2)(a) if it adequately notifies the recipient of the pending investigation and states the "general nature" of the conduct being investigated. In our view, the demands served on the bank and MSSI meet this standard and comply with the requirements of section 18-17-107(2)(a).

III.

The appellants also contend that the civil investigative demand statute violates their rights to be free from unreasonable searches and seizures as guaranteed by the fourth amendment of the United States Constitution and article II, section 7 of the Colorado Constitution. Section 18-17-107(1) provides:

Whenever the attorney general or the district attorney has reason to believe that any person or enterprise may be in possession, custody, or control of any documentary materials relevant to a racketeering investigation, he may, prior to the institution of a civil or criminal proceeding thereon, issue in writing, and cause to be served upon such person, a civil investigative demand requiring such person to produce such material for examination.

The appellants claim that the statute is constitutionally deficient since it does not require the district attorney to establish probable cause prior to an examination of bank records. We find the appellants' argument unpersuasive.

Although the appellants do have a reasonable expectation of privacy in their bank records and the other documents requested, Charnes v. DiGiacomo, 200 Colo. 94, 612 P.2d 1117 (1980), government access to these materials is limited only in that the appropriate legal process must be used to obtain them. Id. at 100, 612 P.2d at 1121. We held in Charnes that an administrative subpoena of bank records is reasonable without probable cause if (1) the investigation is for a lawfully authorized purpose; (2) the information sought is relevant to the inquiry; and (3) the subpoena is sufficiently specific to obtain documents which are adequate but not excessive for the inquiry. Id. at 101, 612 P.2d at 1122 (relying on Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 208-09, 66 S.Ct. 494, 505-506, 90 L.Ed. 614 (1946)). See also People ex rel. MacFarlane v. American Banco Corp., 194 Colo. 32, 570 P.2d 825 (1977).

In addition to the above protections, the Act itself contains specific provisions that safeguard against unreasonable searches and seizures. Section 18-17-107(3)(a) states that the civil investigative demand shall not "[c]ontain any requirement which would be held to be unreasonable if contained in a subpoena duces tecum issued by a court in aid of a grand jury investigation of such alleged racketeering violation." We held in Pignatiello v. District Court, 659 P.2d 683, 685 (Colo.1983), that the standards for a reasonable grand jury subpoena are "substantially similar" to the standards for administrative subpoenas. The court must determine (1) whether the subpoena commanded the production of documents for a lawfully authorized purpose; (2) whether the information is relevant to the investigation undertaken by the grand jury; and (3) whether the request is sufficiently specific and spans a reasonable period of time.

A.

The demand served on the First National Bank of Westminster satisfies the above standards. The district attorney served the demand on the bank pursuant to an investigation of alleged racketeering activities of Harold Lowrie. Section 18-17-107(1) gives the district attorney express authority to issue a civil investigative demand when there is "reason to believe" that a person possesses documents that are relevant to a racketeering investigation. Lowrie has not shown that the demand was served on the bank for harassment purposes or for reasons other than those expressly authorized by the statute. See, e.g., People v. Corr, 682 P.2d 20 (Colo.), cert. denied, 469 U.S. 855, 105 S.Ct. 181, 83 L.Ed.2d 115 (1984); Gher v. District Court, 183 Colo. 316, 516 P.2d 643 (1973). We therefore conclude that the demand satisfies the first requirement that it be for a "lawfully authorized purpose."

Although the demand served on the First National Bank of Westminster does not establish any connection between Chroma Corporation and the investigation in question, an affidavit filed by the district attorney and sealed by the court cures this defect. The relevancy requirement is met if the...