U.S. v. Accardo

• Decision Date: 08 January 1985
• Docket Number: No. 82-5380,82-5380
• Parties: UNITED STATES of America, Plaintiff-Appellant, Cross-Appellee, v. Anthony ACCARDO, et al., Defendants-Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1477

749 F.2d 1477

UNITED STATES of America, Plaintiff-Appellant, Cross-Appellee, v. Anthony ACCARDO, et al., Defendants-Appellees, Cross-Appellants.

No. 82-5380.

United States Court of Appeals, Eleventh Circuit.

Jan. 8, 1985.

Karen L. Atkinson, Asst. U.S. Atty., U.S. Dept. of Justice, Robert J. Erickson, Washington, D.C., for plaintiff-appellant, cross-appellee.

Carl Walsh, Chicago, Ill., for Accardo.

Joseph Beeler, Miami, Fla., for Paul A. DiFranco.

Wm. P. Cagney, III, Miami, Fla., for Angelo Fosco.

Betar & Petit, David K. Schmitt, Sam Betar, Chicago, Ill., for Paul Fosco.

Arnold Kanter, Barry J. Freeman, Kenneth P. Ross, Chicago, Ill., for Pinckard.

Thomas D. Decker, Chicago, Ill., for James Norton.

Steiner & Unterman, New York City, for Louis Ostrer.

E. David Rosen, Rosen & Rosen, Miami, Fla., for Alfred Pilotto.

Barry Fallick, New York City, for Bernard Rubin.

Appeals from the United States District Court for the Southern District of Florida.

Before GODBOLD, Chief Judge, HILL, Circuit Judge, and THORNBERRY ^*, Senior Circuit Judge.

CORRECTED OPINION

JAMES C. HILL, Circuit Judge:

This appeal requires us to consider the good faith exception to the fourth amendment exclusionary rule, recently established by the Supreme Court in United States v. Leon, --- U.S. ----, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984), and Massachusetts v. Sheppard, --- U.S. ----, 104 S.Ct. 3424, 82 L.Ed.2d 737 (1984). In light of these 1984 decisions, we vacate the 1982 district court order, which suppressed evidence seized by officers under a warrant held by the district court to have been insufficiently particular to meet fourth amendment standards, and remand this case to the district court to determine whether those officers acted in good faith.

We briefly summarize the material facts considered by the district court in deciding whether to grant the motion to suppress. Federal agents in Chicago suspected several health care services companies of labor racketeering activities. Their investigation led them to Daniel G. Milano, Jr., a former officer of one of the companies under suspicion, Consultant and Administrators, Inc. (C & A). Milano, whose father was executive vice-president of C & A, told FBI agents that C & A paid labor union officials kickbacks to ensure that all C & A bids for union health services contracts were approved. According to Milano, C & A officials formed two companies, Pinckard and Associates, Inc. (Pinckard), and Fortune Services, to divert revenue from C & A into a kickback fund from which labor leaders were paid. Although Pinckard and Fortune primarily served as conduits for the payoff scheme, the companies also performed the task of verifying eligibility for coverage under the C & A contracts with the unions. Milano fully described the billing procedures used by Pinckard and Fortune, the manner in which illegal payments were made, and the collection of monthly cash contributions from C & A officers for distribution to union officials.

At the conclusion of this investigation, an FBI agent swore out an affidavit in which he recounted Milano's description of the alleged kickback scheme. The affidavit detailed the completeness of the fraud that permeated the business dealings between the companies involved. Based on that affidavit, a federal magistrate in Chicago issued warrants authorizing the search of the administrative offices of C & A and Pinkard. Federal agents conducted such a search and seized several volumes of documents from both companies.

Racketeering charges were then filed in the District Court for the Southern District of Florida against various labor leaders and officers of C & A and Pinckard. ¹ Shortly after they were indicted, defendants ² moved to suppress all materials seized in the C & A and Pinckard searches. The district court conducted a suppression hearing, and, finding the warrant issued by the Chicago magistrate "unconstitutionally general," suppressed the corporate records seized from the offices of C & A and Pinckard. At the hearing, the district court did not consider whether there was a good faith exception to the fourth amendment exclusionary rule, nor whether the FBI agents had acted in good faith. The United States subsequently brought this interlocutory appeal pursuant to 18 U.S.C. Sec. 3731 (1976), challenging the district court's suppression order on the ground that the officers had acted in good faith. ³ We now vacate and remand.

Since the district court issued the suppression order in 1982, the Supreme Court has held that there is a good faith exception to the exclusionary rule. In United States v. Leon the Supreme Court considered "whether the Fourth Amendment exclusionary rule should be modified so as not to bar the use in the prosecution's case-in-chief of evidence obtained by officers acting in reasonable reliance on a search warrant issued by a detached and neutral magistrate but ultimately found to be unsupported by probable cause." 104 S.Ct. at 3409. The Court answered that question by taking yet another look at the remedial objectives thought served by the exclusionary rule. Id. at 3413-16. Concluding that the rule remains viable only as a deterrent to police misconduct, the Court held that the costs to the administration of justice of excluding highly probative evidence outweighed any benefits from the rule's deterrent effect where police officers have acted in objectively reasonable reliance on a warrant later found to be defective. Id. at 3419-21. With certain well-defined limitations, ⁴ the rule announced by the Court required suppression "only if the officers were dishonest or reckless in preparing their affidavit or could not have harbored an objectively reasonable belief in the existence of probable cause." Id. at 3423. Then, turning to the facts before it, the Court found the officers' reliance on the magistrate's determination of probable cause to be reasonable; the warrant was supported by much more than a "bare bones" affidavit and was not seriously challenged by any of the defendants. Under those circumstances, the Court discerned no reason for applying the "extreme sanction of exclusion." Id. at 3423.

Massachusetts v. Sheppard presented a situation seemingly analogous to the case before this court. In Sheppard the trial judge suppressed evidence seized during the execution of a warrant that failed to describe with particularity the items to be seized. 104 S.Ct. at 3428. The Supreme Judicial Court of Massachusetts refused to recognize a good faith exception to the exclusionary rule and affirmed. The Supreme Court reversed, emphasizing that the officers had evidenced their good faith by submitting an affidavit to a judge, who then drafted a warrant authorizing the search. Id. at 3429. Any error in failing to meet the particularity requirement of the fourth amendment, the Court held, was committed by the judge, not the police officers. Id. Therefore, the officers' conduct was objectively reasonable and well within the bounds of the rule announced in Leon.

On the facts considered by the district court at the suppression hearing, the pending appeal is within the good faith exception articulated in Leon and Sheppard. The agents here "took every step that could reasonably be expected of them." Id. As in Sheppard, the agents submitted a detailed affidavit to a magistrate in order to secure the search warrants. The affidavit alleged a pervasive fraud that had resulted in the incorporation of a sham business to channel kickback monies to labor officials. In addition, the affidavit was reviewed by several attorneys in the U.S. Attorney's office before it was presented to a magistrate, who found probable cause and issued the warrants. It is not relevant that here, unlike in Sheppard, the magistrate did not make changes in the warrant or expressly assure the agents that the warrant was adequate. Since the agents here did not use, and did not know that they used, an improper form, they had no reason to expect the magistrate to make changes in the warrant or to especially assure them of its adequacy.

Moreover, the warrant's authorization to seize "all corporate records" does not transgress the limitation on the good faith exception described by the Supreme Court as cases involving warrants "so facially deficient--i.e., failing to particularize the place to be searched or the things to be seized--that the executing officers cannot reasonably presume it to be valid." 104 S.Ct. at 3422. Arguably, "all corporate records" is significantly more general than the "any controlled substance" language contained in the Sheppard warrant. 104 S.Ct. at 3427 & n. 2. Even so, this is not dispositive. The question here is not the legal validity of the warrant but the reasonableness of the officers' reliance on it. This is not an instance in which "it is plainly evident that a magistrate or judge had no business issuing a warrant," id. at 3429 n. 7 (quoting Illinois v. Gates, 462 U.S. 213 at ----, 103 S.Ct. 2317 at 2345, 76 L.Ed.2d 527). In addition, the investigating officers were told by a former C & A executive that Pinckard was a sham corporation. Every indication was that C & A officials were extensively involved in the kickback scheme. This type of complex financial fraud, sometimes referred to as the "paper puzzle," has been held to justify a more flexible reading of the fourth amendment particularity requirement. See, e.g., United States v. Wuagneux, 683 F.2d 1343, 1348-50 (11th Cir.1982) (citing cases), cert. denied, --- U.S. ----, 104 S.Ct. 69, 78 L.Ed.2d 83 (1983). ⁵

On the facts considered by the district court in deciding whether to grant the motion to suppress, the good faith of the officers would be established. However, we are mindful that at the time of the suppression hearing Leon and Sheppard had not been decided, and that the district court did not hold an evidentiary hearing on, nor in any way consider, the issue of the officers'...