Garcia-Perez v. United States
| Decision Date | 16 September 1980 |
| Docket Number | No. Civ. 78-29.,Civ. 78-29. |
| Citation | 579 F. Supp. 325 |
| Parties | Antonio GARCIA-PEREZ, Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — District of New Jersey |
Zuckerman, Aronson & Horn by Carl B. Levy, Newark, N.J., for plaintiff.
Robert Del Tufo, U.S. Atty., by Eric Chase, Asst. U.S. Atty., Newark, N.J., and M. Carr Ferguson, Asst. Atty. Gen., Tax Div., Dept. of Justice, by D. Patrick Mullarkey, Chief, Civil Trial Section Northern Region, and Stephen Lyons, Sp. Atty., Washington, D.C., for defendant.
This is a civil suit to recover a refund of taxes assessed and collected as a tax on wagering, 26 U.S.C. § 4401, et seq., and to cancel the remainder of the tax as assessed but not collected. The United States counterclaimed for judgment on the balance of the tax assessed but not collected.
The matter came before the court on motions to compel discovery and for sanctions for failure to provide discovery. The eventual disposition was an order imposing sanctions against plaintiff by dismissing his complaint, and entering judgment for the United States on the counterclaim. Plaintiff appealed.
While the appeal was pending, the United States applied for an order remanding the case to the district court for the conduct of a hearing of the kind described in Matter of Grand Jury (Markowitz), 603 F.2d 469 (3rd Cir.1979), and the motion was granted. Further proceedings were conducted at the trial level.
The period involved is from June 1, 1971 to September 30, 1971, or four months. Although the best evidence, namely certified copies of State court documents, are not in the record, it is said in briefs that a search and arrest were made August 12, 1971 by the Union City Police Department. The search was pursuant to a warrant for premises at 410 Palisade Ave., Union City, N.J. The search produced various records for a lottery operation and plaintiff was arrested. At some later date, an indictment was returned charging violation of some applicable New Jersey law on illegal numbers or lottery operations. At some later date, it is said that a State court granted a motion to suppress the evidence obtained on the State search, and eventually the indictment was dismissed. None of the papers in this connection have been made part of the record here, and these facts are temporarily assumed for present purposes.
On September 30, 1971, another search was conducted of the same premises, this time by federal officers on a federal warrant. An indictment followed in this court, Crim. No. 296-72. Since that file is part of the official records of this court, it has been called for out of storage and inspected by the court.
The indictment was filed April 26, 1972, and named the plaintiff, his wife Maria Elena, and 26 other persons as defendants. The indictment was in three counts. Count 1 charged a conspiracy under 18 U.S.C. § 371 to violate 18 U.S.C. §§ 1952 and 1955 (). Count 2 charged substantive violation of § 1952 and § 2. Count 3 charged substantive violation of § 1955 and § 2.
On June 9, 1972, Michael A. Querques, Esq. of 521 Central Avenue, Orange, New Jersey, filed a notice of appearance for both plaintiff and his wife. No later substitution of attorney or appearance by a different attorney appears on the docket or in the file.
On October 4, 1974 orders for dismissal were signed, one for each defendant, on application for leave signed by the U.S. Attorney. All of them recited, as the reason, that "electronic surveillance which comprises a substantial portion of the proof in this case is unlawful under the doctrine stated in U.S. v. Giordano" and that permission to dismiss the indictment was granted by the Department of Justice on August 27, 1974.
After entry of the dismissals, nothing further appears in the file except an order, consented to by James M. Deichert, Esq., Special Attorney, Department of Justice. The order recites that it was on the application of plaintiff for the return of one Model EL-81 Sharp calculator with adapter, owned by him, which had been seized by agents of the FBI acting under a search warrant (copy of which was attached) on September 30, 1971 at 410 Palisade Avenue, Apt. 8-A, Union City, N.J. It recites that the indictment was dismissed October 4, 1971. It then reads that: "Since no grounds exist for the continued possession by the Plaintiff sic of the property of the Defendant", the "property above mentioned" (i.e., calculator) was ordered returned forthwith to the defendant (plaintiff here). The consent order bears the backer of Herbert L. Zuckerman, P.A., 60 Park Place, Newark, New Jersey. There is no formal motion of record, no minute entry of any hearing. As noted above, no substitution appears replacing Mr. Querques with Mr. Zuckerman.
The copy of the search warrant attached to the order includes the return. It discloses that the inventory of property taken pursuant to the warrant was:
Maria E. Garcia signed a certification that these items were taken on a search at the location indicated on 9/30/71 at 5:45 PM by FBI agents and were the only items taken. Agents Calvin C. Clegg and Robert J. Vonterich witnessed her certification.
The case file in Crim. No. 296-72 discloses no hearing or any order declaring that the search warrant was in any way defective, or suppressing the evidence seized. Several defendants, other than plaintiff and his wife, had filed omnibus motions which included claims of standing to apply for the suppression of evidence and claiming standing to do so, but no entry disclosing that any hearing had been held, and no order of any kind on the subject appears of record before the orders of dismissal.
U.S. v. Giordano, 416 U.S. 505, 94 S.Ct. 1820, 40 L.Ed.2d 341 (1974), of course, was the decision ruling that court orders for electronic surveillance under 18 U.S.C. § 2518 procedures were invalid when the authorization to apply, specified by 18 U.S.C. § 2516, had been given not by the Attorney General or by an Assistant Attorney General specially designated by him, but by another official in the Department.
This review of the criminal file discloses that the recitals in briefs or at argument, to the effect that the federal search was ruled to be illegal and the evidence obtained suppressed, are simply not the case. There was no such ruling. The only order was the order to return the calculator, and that on the ground that the indictment had been dismissed and the United States had no need for it. No application was made for the return of the $11,596. in cash or for the other items obtained on the search, or for their suppression as evidence.
The $11,596. is the amount set out in the Claim for Refund on which the present suit is based.
This suit, and the position of the United States, arise out of the ruling in U.S. v. Janis, 428 U.S. 433, 96 S.Ct. 3021, 49 L.Ed.2d 1046 (1976), to the effect that the judicially created exclusionary rule should not be extended to bar use as evidence in a civil proceeding by or against the United States that which was seized by state law enforcement officers, acting in good faith but nonetheless unconstitutionally.
In Janis, a state search under warrant was conducted, and gambling records and money were seized. With the information so provided, IRS made an estimate of gambling activity by ascertaining the average daily gross proceeds over the 5-day period dealt with by the seized records, and applying it to the period of 77 days surveillance. The tax, then 10% of the gross wagers (since reduced to 2%) was assessed, and IRS levied on the cash seized by State authorities on the search in partial satisfaction.
Janis was later charged with violation of local gambling laws. He responded with a motion to quash the search warrant and suppress the evidence seized. Relying on Spinelli v. U.S., 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969), decided after the warrant had issued but before the motion, the State court ruled that the warrant affidavit had not adequately shown underlying circumstances to support an independent finding of reliability of the information supplied by informants. The motion was granted and all evidence seized ordered returned except the cash levied on by IRS.
Janis then filed a claim for refund, and when it was not honored, began suit in the U.S. District Court. The United States answered, and counterclaimed for the unpaid balance of the assessment. On a concession that the United States had relied on information from State officials obtained on the search, as the basis for the assessment, Janis moved to suppress use of that evidence, and to quash the assessment. Looking to Spinelli and to Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723 (1964), the trial court granted the motion, ordered refund of the cash levied on, and cancelled the assessment. The Court of Appeals for the Ninth Circuit affirmed. The Supreme Court reversed.
At the outset, the court noted that if the State evidence could not be used, because there would then be (on the record there), a "naked" assessment without any foundation to support it, the usual burden of proof rule in tax cases would not apply, citing Helvering v. Taylor, 293 U.S. 507, 55 S.Ct. 287, 79 L.Ed. 623 (1935). The court assumed, without deciding, that this consequence would follow, in order to reach the primary issue.
It reviewed the "silver platter" doctrine of Weeks...
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