U.S. v. Frazin

• Decision Date: 21 January 1986
• Docket Number: Nos. 84-5080,84-5081,s. 84-5080
• Citation: 780 F.2d 1461
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Alvin FRAZIN, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Ronald Mark MILLER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1461

780 F.2d 1461

UNITED STATES of America, Plaintiff-Appellee, v. Alvin FRAZIN, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Ronald Mark MILLER, Defendant-Appellant.

Nos. 84-5080, 84-5081.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 5, 1984.

Decided Jan. 21, 1986.

Robert E. May, Asst. U.S. Atty., San Diego, Cal., for plaintiff-appellee.

Sheldon Sherman, Pancer & Sherman, Judy Clarke, Federal Defenders of San Diego, Inc., San Diego, Cal., for defendant-appellant.

Appeal from the United States District Court for the Southern District of California.

Before NELSON, BOOCHEVER, and REINHARDT, Circuit Judges.

REINHARDT, Circuit Judge:

Frazin and Miller appeal from their convictions for mail and wire fraud and for aiding and abetting under 18 U.S.C. Secs. 1341 and 1343 (1982). Frazin argues that his bank records and other financial information obtained in violation of state and federal financial privacy laws should have been excluded from evidence under the court's inherent supervisory powers. Miller argues for the suppression of evidence seized from his car parked in his garage. Miller also challenges the district court's failure to give a requested jury instruction. Both appellants contend that the court's ex parte communication with the jury in their absence constituted reversible error. We affirm the convictions.

FACTS

Frazin and Miller engaged in a fraudulent advertising campaign. They placed ads in out-of-state newspapers promising 15% interest on investments in the Western Heritage Financial Trust. Frazin opened approximately 15 bank accounts at different financial institutions in the name of Western Heritage. He was the sole signatory on at least one of the accounts.

Numerous willing out-of-state investors contacted Frazin. Frazin made various misrepresentations to them about the investment scheme. He withdrew for his personal use sizeable amounts of the money wired him by investors.

In its investigation of the case, the FBI was contacted by, and in turn contacted, several banks in which Frazin had opened an account in the name of Western Heritage. The banks provided the FBI with information about those accounts without Frazin's knowledge or consent and without a warrant.

When Miller was arrested at his home in connection with the investment scheme, state law enforcement officers searched his house and garage pursuant to a warrant, seeking financial and other records. Miller's car was parked in the garage. The officers seized a looseleaf notebook in plain view on the car seat.

At trial, Miller requested an instruction that the jurors must find a scheme to defraud substantially as broad as that charged in the indictment, and that they must be unanimous as to the specific acts that they find comprised the scheme. The court gave the first part of the requested instruction, but refused to instruct on unanimity as to specific acts.

The trial lasted over five days. The jury reached no verdict on the first day of deliberations. Before releasing the jury for the evening, Judge Thompson told the jurors that he was leaving town, and that a substitute judge would take the verdict in his absence if one was reached the next day. He further instructed them to "keep your own consciences relative to this case, and that goes before you go in, all the time you're in, and after you're out." After dismissing the jury, Judge Thompson told counsel that if the jury did not reach a verdict the next day, Friday, the substitute judge would instruct the jury to continue deliberations again Monday morning. The next day at 10:30 a.m., the jury sent out a note that read: "We are deadlocked on all counts at present, and it has been indicated ... that neither side is going to change their positions. What do we do?" Because the substitute judge was out of chambers, the court staff contacted Judge Thompson by telephone about the deadlock note. He ordered that an instruction be sent to the jury that read: "Please continue your deliberations in the above entitled case." After receiving the judge's instruction, the jury deliberated for approximately three and one-half hours before returning its verdict. Neither appellants nor their counsel were informed of the judge's communication to the jury until their arrival at court for the reading of the verdict. Upon learning of the communication, appellants moved for a mistrial. Their motion was denied.

I. Suppression of Evidence Under Court's Supervisory Powers

Appellant Frazin seeks to suppress bank records and other information obtained in violation of the Right to Financial Privacy Act of 1978. 12 U.S.C. Secs. 3401-22 (1982 & Supp. II 1984) ("the Act"). Although the Act provides for exclusive civil penalties for its violation, Frazin argues that the district court should have exercised its "inherent supervisory powers ... to dismiss an indictment on the basis of governmental misconduct." United States v. Owen, 580 F.2d 365, 367 (9th Cir.1978) (citations omitted). In evaluating Frazin's claim, we consider first, whether the Act itself authorizes a suppression remedy, and second, if the Act does not authorize such a remedy, whether we may provide one in the exercise of our supervisory powers. We hold against appellant on both issues.

There is no dispute over the facts relating to the government's collection of Frazin's financial information and records. The only issue on appeal is whether the district court was correct as a matter of law in refusing to suppress the improperly obtained evidence. We review the question de novo. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc), cert. denied, --- U.S. ----, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984).

The Right to Financial Privacy Act of 1978 prohibits financial institutions from providing the government with information concerning their customers' financial records, unless either the customer authorizes the disclosure of such information or the government obtains a valid subpoena or warrant. 12 U.S.C. Sec. 3402. ¹ Congress passed the Act in part as a response to United States v. Miller, 425 U.S. 435, 96 S.Ct. 1619, 48 L.Ed.2d 71 (1976). See H.R.Rep. No. 1383, 95th Cong., 2d Sess. 34 (1978) ["H.R. Rep. No. 1383"], reprinted in 1978 U.S.Code Cong. & Ad.News 9273, 9306; Electronic Funds Transfer and Financial Privacy: Hearings on S. 2096, S. 2293, and S. 1460 Before the Subcomm. on Financial Institutions of the Senate Comm. on Banking, Housing, and Urban Affairs, 95th Cong., 2d Sess. 154 (1978) (statement of Senator Mathias) ["Senate Hearings "]. In United States v. Miller, the Supreme Court affirmed a denial of a motion to suppress bank records obtained by an allegedly defective subpoena, on the ground that a bank customer has no constitutionally-protected privacy interest in such records. Miller, 425 U.S. at 440, 96 S.Ct. at 1622-23. The Act "fill[s] the void in ... Federal law [left by Miller ] regarding statutory protection against unrestricted access to third-party records." Senate Hearings at 154; see also The Safe Banking Act of 1977: Hearings on H.R. 9086 before the Subcomm. on Financial Institutions Supervision, Regulation & Insurance of the House Comm. on Banking, Finance & Urban Affairs, 95th Cong., 1st Sess. 1600 (1977) (statement of Representative Rolph) (the Act reverses Miller by recognizing a claim of confidentiality for bank customer records) ["House Hearings"].

Both Congress and the Executive regarded the Act as a compromise between a bank customer's right of financial privacy and the need of law enforcement agencies to obtain financial records pursuant to legitimate investigations. See H.R.Rep. No. 1383 at 34, reprinted in 1978 U.S.Code Cong. & Ad.News 9273, 9306; Donovan v. National Bank, 696 F.2d 678, 683 (9th Cir.1983). Earlier versions of the Act did not provide for penalties, but instead required the Justice Department to give a bank customer 18 days advance notice of a government subpoena, within which period the customer could move to quash the subpoena. The Justice Department opposed the advance notice provision on the ground that it would impede the Department's investigative functions. See Letter from Attorney General Griffin Bell to Representative Fernand J. St. Germain (Sept. 20, 1977) (discussing Justice Department response to H.R. 9086) in House Hearings at 1527-28; House Hearings at 1531-32 (statement of Deputy Assistant Attorney General Baker). Deputy Assistant Attorney General Baker recommended civil penalties as an "accommodation" between privacy and law enforcement interests. House Hearings at 1550 (statement of Mr. Baker).

In the final version of the Act, Congress reduced the notice requirement to 10 days, 12 U.S.C. Sec. 3405, and provided for civil penalties against the government and financial institutions for obtaining or disclosing a customer's financial information without the requisite authorization, 12 U.S.C. Sec. 3417. ² The remedies are exclusive: "The remedies and sanctions described in this chapter shall be the only authorized judicial remedies and sanctions for violations of this chapter." Id. Sec. 3417(d).

Although Congress did not explicitly address the availability of a suppression remedy during its consideration of the Act, we find that remedy to be excluded under section 3417(d). Congress deliberately balanced the right of privacy and the needs of law enforcement when it established the protections and the penalties of the Act. See H.R.Rep. No. 1383 at 34, reprinted in 1978 U.S.Code Cong. & Ad.News 9273, 9306; House Hearings at 1531 (statement of Mr. Baker). To imply a suppression remedy under the Act would alter that balance. Moreover, Miller affirmed the denial of a suppression motion. Miller, 425 U.S. at 437, 96 S.Ct. at 1621. The Act responded to both the substantive and the procedural aspects of Miller, by providing not only a right to financial privacy, but remedies for the violation of that right...