U.S. v. Eng

Decision Date15 June 1993
Docket NumberD,No. 1151,1151
Parties-5486, 93-2 USTC P 50,402 UNITED STATES of America, Appellee, v. Shu Yan ENG, also known as Ah Shu; Cho-Kuen Wong; King Albeo Kong; Foo Wing Yam; Sue Sang Ong; Hon Keung Ng, Defendants, Shu Yan ENG, also known as Ah Shu, Defendant-Appellant. ocket 91-1683.
CourtU.S. Court of Appeals — Second Circuit

Margaret E. Alverson, New York City, for defendant-appellant.

Patricia A. Pileggi, Asst. U.S. Atty., New York City (Mary Jo White, U.S. Atty., E.D. of N.Y., New York City, of counsel), for appellee.

Before: MINER and McLAUGHLIN, Circuit Judges, and MARTIN, District Judge. *

MINER, Circuit Judge:

Defendant-appellant Shu Yan Eng appeals from a judgment of conviction entered in the United States District Court for the Eastern District of New York (Glasser, J.). Eng was convicted, after a jury trial, of tax evasion for the years 1986 through 1988, in violation of 26 U.S.C. § 7201. The district court sentenced Eng to a term of imprisonment of forty-eight months but granted bail pending appeal. The conviction followed the district court's denial of Eng's motion to suppress certain records obtained by the government in an unlawful search and other evidence claimed by Eng to have been derived from materials discovered in that unlawful search. The district court based its denial of Eng's motion on the "inevitable discovery" doctrine, an exception to the exclusionary rule. See Nix v. Williams, 467 U.S. 431, 104 S.Ct. 2501, 81 L.Ed.2d 377 (1984).

In an opinion filed on July 28, 1992, we vacated the judgment of conviction and remanded the case to the district court "for particularized findings as to the manner in which, if at all, each piece of evidence challenged by Eng, and said by the government to be admissible under the inevitable discovery exception, would have been inevitably discovered." United States v. Eng, 971 F.2d 854, 856 (2d Cir.1992). We retained jurisdiction of the appeal pending the completion of the district court's findings. Id. at 864. The detailed findings required by our remand After considering the district court's factual determinations and reviewing its legal conclusion of inevitable discovery, we accept the particularized findings of the district court and reinstate and affirm the judgment of conviction heretofore entered in the district court.

                were provided to us in a seventy-five page "Memorandum and Order" dated March 31, 1993.   See United States v. Eng, 819 F.Supp. 1198, 1208 (E.D.N.Y.1993)
                
BACKGROUND

Because the background facts of this case are provided in detail in our prior opinion, United States v. Eng, 971 F.2d 854 (2d Cir.1992) ("Eng I "), we will assume familiarity with them and present a truncated version of the events. In February of 1989, the Drug Enforcement Administration ("DEA") and the Internal Revenue Service ("IRS") began an investigation of Eng for suspected narcotics and money laundering violations based on information provided by confidential informants, who indicated that Eng imported narcotics from the Far East and laundered money through various businesses. As is customary in such matters, the IRS expanded its investigation to include the subject of tax evasion. Commencing in September of 1989, IRS Agent Thomas Interdonato conducted the tax evasion aspect of the investigation.

Using the "expenditures method" of proof, Interdonato began a thorough investigation of Eng's assets, sources of money and cash receipts and expenditures. Prior to the unlawful search of Eng's safe, which produced various incriminating documents and revealed useful information, Interdonato had uncovered information about Eng's personal bank accounts and about the following properties in which Eng had an interest: 134 Gauldy Avenue, 141 Division Street, and 26 Bowery. Interdonato also had information regarding Eng's interest in a business known as the Chinese Moon Palace Restaurant.

On October 18, 1989, Eng was arrested in connection with an indictment charging him with administering a continuing criminal enterprise, money laundering and other narcotics violations. Eng, however, was not charged with tax evasion at that time. On the day of Eng's arrest, authorities seized the 26 Bowery building, the location of the Chinese Moon Palace Restaurant and the French Ice Cream Parlor. Eng's personal safe in the French Ice Cream Parlor unlawfully was searched without a warrant. The materials seized from the safe included: cancelled checks from various bank accounts; customer records of money orders; documents revealing the unit number of a condominium located at 141 Division Street; a checkbook of a corporation called World Express International, Inc.; documents revealing that Sol Leitner and Frieda Grant were the previous owners of 26 Bowery Corp.; and documents evidencing ownership of property and a boat in Florida.

After the unlawful search, Interdonato continued his investigation of Eng by issuing subpoenas to banks and other involved entities and by performing title searches of some of Eng's properties. In April of 1990, a superseding indictment, which included three tax evasion counts with respect to the 1986, 1987 and 1988 tax years, was returned. Much of the evidence the government intended to offer at trial to prove the tax violations, Eng argued, either was obtained from the unlawful search or was derived from information that was discovered as a result of the unlawful search. Eng made a motion to suppress the evidence, and the district court denied the motion. Relying on Nix v. Williams, the district court concluded that the inevitable discovery doctrine applied and admitted all of the challenged evidence. After a jury trial, Eng was convicted only of the tax evasion charges.

In Eng I, we were concerned that there was a possibility that the government's tax evasion investigation was not sufficiently active or developed prior to the illegal search to support the government's claim of inevitable discovery and that the evidence was tainted because the investigation was triggered or catalyzed by the unlawfully obtained information. Moreover, we concluded that, even if the district court determined that the investigation had been active and ongoing, the district court would still be required to analyze and explain in detail how

                each piece of evidence inevitably would have been discovered absent the illegal search of Eng's safe.   After setting forth our concerns as they related to specific assets, we vacated Eng's judgment of conviction and remanded the case to the district court for particularized findings supporting the district court's conclusion that the challenged evidence inevitably would have been discovered.   As this panel retained jurisdiction of the appeal pending completion of the district court's findings, we now consider those findings
                
DISCUSSION
A. Inevitable Discovery Doctrine

The inevitable discovery doctrine is an exception to the exclusionary rule and allows unlawfully obtained evidence to be admitted at trial if the government can "establish by a preponderance of the evidence that the information ultimately or inevitably would have been discovered by lawful means." Nix, 467 U.S. at 444, 104 S.Ct. at 2509. "For inevitable discovery to be demonstrable, it must be the case that the evidence would have been acquired lawfully through an independent source absent the government misconduct." Eng I, 971 F.2d at 859; see Murray v. United States, 487 U.S. 533, 539, 108 S.Ct. 2529, 2534, 101 L.Ed.2d 472 (1988); see also Nix, 467 U.S. at 448, 104 S.Ct. at 2511. "The exception requires the district court to determine, viewing affairs as they existed at the instant before the unlawful search, what would have happened had the unlawful search never occurred." Eng I, 971 F.2d at 861 (emphasis in original). "[P]roof of inevitable discovery 'involves no speculative elements but focuses on demonstrated historical facts capable of ready verification or impeachment and does not require a departure from the usual burden of proof at suppression hearings.' " Id. at 859 (emphasis in Eng I ) (quoting Nix, 467 U.S. at 444 n. 5, 104 S.Ct. at 2509 n. 5).

We review the district court's factual findings under a clearly erroneous standard. See United States v. Mast, 735 F.2d 745, 749 (2d Cir.1984); see also United States v. Six Hundred Thirty-Nine Thousand Five Hundred and Fifty-Eight Dollars ($639,558) in U.S. Currency, 955 F.2d 712, 721 (D.C.Cir.1992).

B. The District Court's Findings
1. Active and Ongoing Tax Investigation

The district court found that, at the time of the unlawful search, the government was involved in an ongoing investigation of Eng's narcotics violations, which necessarily and customarily included an investigation of his finances in relation to the proceeds of the narcotics trade. Such an inquiry would typically, and did in fact, lead to an investigation of Eng's tax returns. The district court found: "That the indictment was thereafter superseded to include tax counts did not negate the ongoing nature of the investigation in October of 1989." United States v. Eng, 819 F.Supp. 1198, 1211 (E.D.N.Y.1993) ("Eng II "). We agree.

To support this finding, the district court referred to Agent Interdonato's testimony and documents admitted at the suppression hearing that related to the status of the tax evasion investigation at the time of Eng's arrest in October of 1989. The district court relied particularly on: Interdonato's testimony that he commenced the investigation in the summer of 1989 and discovered from public records that Eng had purchased a building at 26 Bowery on behalf of a corporation of which he was president; information from the title search of 26 Bowery; the request for Eng's personal and corporate tax returns; the preparation of various subpoenas; and the fact that other agents on the DEA Southeast Asian Task Force were reporting information about Eng's...

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