Russo v. United States, 91

• Decision Date: 08 February 1957
• Docket Number: No. 91,Docket 24193.,91
• Citation: 241 F.2d 285
• Parties: James D. RUSSO, Appellant, v. The UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Second Circuit

241 F.2d 285 (1957)

James D. RUSSO, Appellant, v. The UNITED STATES of America, Appellee.

No. 91, Docket 24193.

United States Court of Appeals Second Circuit.

Argued January 7, 1957.

Decided February 8, 1957.

Corcoran, Kostelanetz & Gladstone, New York City (Boris Kostelanetz and Jules Ritholz, New York City, of counsel on the brief), for appellant.

Leonard P. Moore, U. S. Atty., for the Eastern Dist. of New York, Brooklyn, N. Y. (Kenneth C. Sternberg, Floral Park, N. Y., and Zachary Fromberg, Asst. U. S. Attys., Brooklyn, N. Y., of counsel on the brief), for appellee.

Before CLARK, Chief Judge, and LUMBARD, and WATERMAN, Circuit Judges.

LUMBARD, Circuit Judge.

James D. Russo appeals from the District Court's denial of two motions made before indictment: (1) under Rule 41(e), Federal Rules of Criminal Procedure, 18 U.S.C.A., to suppress evidence because it was obtained in violation of the Fourth Amendment to the Constitution and the statutes governing Treasury Department practice; and (2) to take the deposition of his former accountant, Mack, within twenty days after commencement of the action, pursuant to Rule 26(a), Federal Rules of Civil Procedure, 28 U.S.C.A.

Before the district court decision, an indictment was filed against Russo for attempted tax evasion and for assisting in the preparation of fraudulent tax returns of others. Internal Revenue Code of 1939, §§ 145(b), 3793(b) (1), 26 U.S.C.A. §§ 145(b) 3793(b) (1). On the basis of affidavits alone, Judge Rayfiel concluded (1) that the evidence had been voluntarily and legally disclosed; (2) that since an indictment had been filed, the Rules of Criminal Procedure governed and that under Rule 15(a) of those Rules no good ground for the deposition had been shown. Upon consideration of the facts as set out herein, we affirm the results below.

Russo, in addition to his regular employment as an assistant clerk in the office of the Clerk of the County of Richmond, prepared income tax returns and conducted an insurance brokerage business. During June and July 1952, Skolnick, a Special Agent of the Internal Revenue Service¹ conferred with Russo in Staten Island and at Skolnick's office at the Intelligence Service headquarters. Although these meetings were largely in reference to the tax returns of others, apparently Russo's own returns were discussed as well.

In September 1952, Revenue Agent Foley² was assigned to examine Russo's own returns as well as those prepared by Russo for others. In early 1952, Russo retained as counsel one Frank D. Paulo from whom Foley obtained a waiver of the statute of limitations. In May 1953 Foley contacted Paulo in order to examine Russo's books; also in May, Skolnick had an interview with Russo at which Paulo was present. At this interview, Russo agreed to testify under oath and was probably told of his rights against self-incrimination, although at one time he denied this. Mack, an accountant, not authorized to practice before the Treasury Department, was retained by Russo at this time, with respect to the examination being made by Foley. A 22 page transcript of the interview was signed by Russo on July 2, 1953, which included some discussion of Russo's insurance business and Skolnick followed this up by contacting some of Russo's insurance companies in August 1953.

During this time, Foley was still trying to get Russo's records and at last on October 8, 1953 Paulo gave him permission to get Russo's records from Mack. Foley did get the records, and at Mack's request, returned them to Mack on November 23, 1953.

What happened thereafter is not clear. Paulo evidently dropped out of the case by December 1954. Mack was apparently in frequent communication with the Treasury people, and in December 1954 or the spring of 1955 — the affidavits conflict here — a conference involving Skolnick, Russo and Mack was held. This time Russo refused to testify under oath but did answer questions. In February 1956 the motions herein were filed.

The Suppression of Evidence

Russo's first contention is that the disclosures were not voluntary because the Treasury agents deceived him into thinking their examination was not for purposes of a criminal charge, but only for a routine civil audit. This seizure by deception is alleged to be a violation of the Fourth Amendment. We think there is nothing to this contention. Not only was there no evidence of any affirmative act of deception by Skolnick or Foley, but the record shows sufficient awareness by Russo that he was himself under investigation and of course this would include the possibility of criminal sanctions.

Russo argues, however, that the evidence came into the hands of the government by virtue of Mack's improper representation of him before the Treasury as Mack was not enrolled to...