U.S. v. Feffer, No. 86-2499

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Before WOOD and FLAUM, Circuit Judges, and GRANT; HARLINGTON WOOD, Jr.
• Citation: 831 F.2d 734
• Docket Number: No. 86-2499
• Decision Date: 30 November 1987
• Parties: -5664, 87-2 USTC P 9614 UNITED STATES of America, Plaintiff-Appellee, v. Elton K. FEFFER and Richard R. Alter, Defendants-Appellants.

Page 734

831 F.2d 734 60 A.F.T.R.2d 87-5664, 87-2 USTC P 9614 UNITED STATES of America, Plaintiff-Appellee,
v.
Elton K. FEFFER and Richard R. Alter, Defendants-Appellants. No. 86-2499. United States Court of Appeals,
Seventh Circuit. Argued Jan. 15, 1987.
Decided Sept. 22, 1987.
Rehearing and Rehearing En Banc Denied Nov. 30, 1987.

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Robert E. Meldman, Meldman Case & Weine Division, Muleahy & Wherry, S.C., Milwaukee, Wis., for defendants-appellants.

Barbara B. Berman, Asst. U.S. Atty., Patricia Gorence, U.S. Atty., Milwaukee, Wis., for plaintiff-appellee.

Before WOOD and FLAUM, Circuit Judges, and GRANT, Senior District Judge. ^*

HARLINGTON WOOD, Jr., Circuit Judge.

In her last few months as an employee at Continental Plastics Corporation (Continental), Diane Langron turned over company documents to the Internal Revenue Service (IRS) on four occasions. The documents were later used by the IRS to help convict each of the two owners of Continental, Richard Alter and Elton Feffer, of one count of conspiring to defraud the United States with respect to income taxes, in violation of 18 U.S.C. Sec. 371. Feffer was additionally convicted of two counts of subscribing to a false corporate income tax return, in violation of 26 U.S.C. Sec. 7206(1). Prior to trial, the defendants moved to suppress the documents claiming that they were obtained through an unreasonable search in violation of the fourth amendment. The court denied their motion and they now appeal.

I. BACKGROUND

At the supression hearing, ¹ Diane Langron testified that during most of her nearly seven years at Continental she and her immediate supervisor, Elton Feffer, enjoyed an amicable working relationship. Starting out as an administrative assistant, Langron's responsibilities increased until she was in charge of the company's accounts payable, accounts receivable, and purchasing. Her duties required her to prepare various export documents and bills of lading on foreign shipments, some of which were not being reported on Continental's books. The proceeds of these unreported sales were instead being diverted to Alter and Feffer.

Langron testified that in the fall of 1981 she began to worry about being held responsible for signing false documents on behalf of Continental. She claimed that her fears prompted her to anonymously call the IRS that October. IRS officials immediately confirmed Langron's fears, but it was not until December 1981 that she called the IRS again and revealed her identity. During the second call, she spoke with a special agent from the Criminal Investigation Division and made plans to meet with him within the next few days. On December 17, 1981, Agents Collins and Miller came to Langron's home to discuss

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her concerns. During this meeting, Langron provided the agents with Continental documents and the agents, in turn, told Langron about becoming a numbered informant and about the rewards for which she could apply. Langron testified that she met with the IRS agents several more times between December 1981 and March 1982.

The same month that Langron began furnishing the IRS with Continental documents, her live-in boyfriend and co-worker at Continental, Brian Morgan, was fired. Although Langron claimed to have no ill feelings toward either defendant for firing Morgan, she did admit that there was a breakdown in her relationship with Feffer in the latter part of 1981. A co-worker of Langron's, Debra Adney, testified that Langron told her that she was "fed-up" with Feffer and that Feffer's firing of Morgan was the "last straw." Adney also claimed that Langron unsuccessfully sought her help in obtaining Continental records twice in January 1982. Roxanne Olding, a bartender who worked for Feffer and had been acquainted with Langron for eight to ten years, testified that one evening in February or March of 1982 Langron told her that she "hated" Feffer and wanted to "get even with him." Langron told Olding that Morgan had been treated unfairly. Feffer himself testified that Langron was very upset over Morgan's firing. He said that at one point Langron threatened to go to the IRS and that he, upon the advice of his lawyer, told Langron to do whatever she felt she had to do. When Feffer was first told that Langron had actually gone to the IRS, however, he claimed that he dismissed the story as rumor. Nonetheless, in March 1982, Langron resigned from Continental after being told that her services were no longer needed.

Agent Collins' testimony ² was consistent with Langron's. Collins testified that he had advised Langron at the first meeting that he could not encourage her to take any documents, but that it was IRS policy to accept documents voluntarily provided. Though Langron was never paid a reward for furnishing the IRS with documents, the agents apparently never discouraged her from continuing to do so. According to Collins, he and Langron met six to eight more times after this initial meeting and always at Langron's request. At two of these meetings, Langron provided him with additional company documents and on another occasion she mailed documents to him. Collins testified that he never asked Langron to produce additional documents and that he had no knowledge that she would do so, yet he did admit coming prepared to their second meeting, at Langron's home on December 26, 1981, with a microfilm copier in his car. During the meeting, Langron provided him with Continental's cash reports covering the period from February 1971 to November 1981, in addition to various sales invoices, statements and correspondence relating to three of Continental's accounts.

Collins acknowledged that, after mentioning to Langron that obtaining copies of tax returns from the IRS Kansas City Service Center was a lengthy process, he received copies of Feffer's individual tax returns from Langron in the mail on January 15, 1981. Included with the tax returns were copies of Feffer's checking account stubs and four of his bank deposit slips; copies of envelopes sent to Feffer for rent payments; copies of checks addressed to Continental which Feffer cashed and split with Alter; copies of documents relating to a foreign account; copies of Continental's corporate income tax returns; and a list of the yearly salaries of Alter and Feffer. At their last meeting on March 10, 1982, Langron furnished a copy of a check made out to Continental from Packard Oil Company, two copies of accounts written off by Continental in 1981, and additional copies of invoices, a letter and a check all relating to the foreign account. Collins claimed that the only request he made of Langron during this time was that she prepare a list of all Continental employees' names and their job descriptions. In the meantime, Langron had been made a numbered informant

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in February 1982 so that, for her protection, any communication regarding Langron would refer only to her assigned number. An official criminal investigation was opened on March 10, 1982, the date on which Langron last submitted Continental documents to the IRS.

In an attempt to show that Langron had been working for the IRS when she furnished it with Continental documents, the defendants presented a letter at the suppression hearing that Langron had written to the Wisconsin Department of Labor Job Service Division on April 16, 1982. In the letter, Langron requested a hearing on her unemployment claim and explained that her employer, Feffer, may have been aware of her "undercover work ... for the Department of Treasury" since she was "viewing and requesting to see many records and documents [Continental was].... not presently working on." At Langron's subsequent unemployment hearing in May 1982, she testified that the IRS agents were "coming to her home on a regular basis" and that...