U.S. v. Jobin

• Citation: 535 F.2d 154
• Decision Date: 20 May 1976
• Docket Number: No. 75-1433,75-1433
• Parties: 76-1 USTC P 9433 UNITED STATES of America, Appellant, v. Claude JOBIN, d/b/a Jobin Associates, Inc., Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 154

535 F.2d 154

76-1 USTC P 9433

UNITED STATES of America, Appellant, v. Claude JOBIN, d/b/a Jobin Associates, Inc., Appellee.

No. 75-1433.

United States Court of Appeals,

First Circuit.

Argued March 5, 1976.

Decided May 20, 1976.

Robert A. Schwartz, Asst. U. S. Atty., Concord, N. H., with whom William J. Deachman, U. S. Atty., Plymouth, N. H., was on brief, for appellant.

David A. Brock, Concord, N. H., by appointment of the Court, with whom Perkins & Brock, Concord, N. H., was on brief, for appellee.

Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges.

COFFIN, Chief Judge.

This is a government appeal, pursuant to 18 U.S.C. § 3731, from an order granting a motion to suppress evidence obtained in violation of Internal Revenue Service guidelines. Relying upon United States v. Leahey, 434 F.2d 7 (1st Cir. 1970), the district court ordered the exclusion of all oral statements and records obtained from the taxpayer defendant as a result of certain specified interviews. We affirm in part, and reverse in part.

In the underlying criminal tax prosecution, defendant-appellee Claude Jobin and Embassy Homes, Inc. were charged with thirteen counts of wilful failure to file a return, supply information, or pay tax, 26 U.S.C. § 7203. During the period covered by the information, Claude Jobin was doing business as Jobin Associates, Inc. ¹ (Associates), engaged in framing homes, a portion of the building construction process. Embassy Homes, Inc. (Embassy) was a New Hampshire corporation owned and operated solely by Jobin and his wife. It served as the prime contractor for some of the projects on which Jobin Associates, Inc. worked. The gravamen of the information filed against Jobin and Embassy was that they had failed to file returns and pay over the taxes withheld from their employees, i. e., federal income tax withheld, and social security taxes.

On April 19, 1973, Special Agent Donald Cote of the IRS left four summonses at the field office of Associates for the production of the records of Associates and Embassy. ² In response to the summonses, Jobin arranged a meeting with Special Agent Cote at the office of the IRS in Manchester, N.H. for May 2, 1973.

Under Internal Revenue Service Guidelines, Special Agents are required to give taxpayers warnings concerning their rights at the outset of an interview. ³ Cote testified at the suppression hearing that he gave Jobin all the required warnings at the meeting on the morning of May 2 (morning meeting) except the statement concerning the assistance of counsel (the attorney warning). The district court found, however, that Agent Cote also omitted that portion of the required warnings as contained in the official NAR Pub. 120 which provides that the Special Agent inform the taxpayer that "one of my functions is to investigate the possibility of criminal violations of the Internal Revenue laws . . ." (the criminal warning). An extended interview then took place during which Jobin turned over various records of his business enterprises.

On the afternoon of May 2, Special Agent Cote visited Jobin at his residence and obtained additional records (the afternoon meeting). Cote testified at the suppression hearing that he repeated the warnings of NAR Pub. 120 at the outset of this meeting. An agent who accompanied Cote to the afternoon meeting corroborated this testimony. The district court, however, found otherwise. There were two subsequent meetings between Cote and Jobin: on June 19 and October 1, 1973. Agent Cote testified, and the district court found, that the proper warnings had been delivered prior to these meetings.

On the basis of its findings of fact, the district court held that Special Agent Cote had not substantially complied with the IRS warning regulations. It suppressed all evidence gathered by the government in the course of the interviews, including both the Embassy corporate records and any evidence procured after Jobin had been fully informed of his rights on June 19, 1973.

The government raises several claims on appeal. First, it challenges the district court's findings that Agent Cote failed to advise Jobin concerning the possible criminal nature of the investigation on the morning of May 2, and that Cote failed to give any warnings on the afternoon of May 2. Second, it contends that the omissions of Agent Cote were not so serious as to compel suppression under United States v. Leahey, supra. Finally, it states that suppression should not extend to either the corporate records nor to the evidence obtained from Jobin after he had been fully warned.

The findings of the district court after a hearing on a pre-trial motion to suppress are binding on appeal unless they are clearly erroneous. United States v. Cepulonis, 530 F.2d 238, 244 (1st Cir. 1976); 3 C. Wright, Federal Practice & Procedure § 678. As noted above, Agent Cote testified that he had given the criminal warning at the outset of the morning meeting. The defendant and the other agent who was present at this interview did not testify. Ordinarily, uncontradicted testimony which is not inherently improbable or questionable should control the decision of the trial court. Dudley v. United States, 428 F.2d 1196, 1202 (9th Cir. 1970). Here, although Agent Cote's testimony was not directly contradicted, there was sufficient evidence to support the district court's contrary finding. The interview on the morning of May 2 was tape recorded and the transcript of the recording does not contain the contested warning. ⁴ Second, Agent Cote admitted on cross-examination that he was testifying essentially as to his habit of reading the warnings before an interview, and not from any specific recollection of his actions on May 2. The finding of the district court that Agent Cote failed to give the criminal warning is not clearly erroneous.

The other contested factual finding presents a more difficult question on appeal. Not only did Agent Cote testify that he gave the required NAR Pub. 120 warnings at the outset of the afternoon meeting, but the Special Agent who accompanied him also testified in corroboration. Unlike that of Agent Cote, the second agent's testimony was unimpeached on cross-examination. On the contrary, he was able to accurately remember the content of all the NAR Pub. 120 warnings and stated that he was testifying from his recollection. We recognize that the credibility of witnesses is peculiarly within the competence of the trial court. United States v. Montos, 421 F.2d 215, 219 n. 1 (5th Cir. 1970), cert. denied, 397 U.S. 1022, 90 S.Ct. 1262, 25 L.Ed.2d 532 (1970). Here, however, we are firmly convinced that a mistake has been made, see United States v. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541, 92 L.Ed. 746, 765 (1948); Welch & Corr Construction Corp. v. Wheeler, 470 F.2d 140, 141 (1st Cir. 1972), due in part to the peculiar history of this finding of fact. ⁵ We conclude that the district court must have overlooked the testimony of the second witness to the afternoon meeting when drafting this finding, and hold that the finding that there were no warnings given before the afternoon meeting must be vacated as clearly erroneous.

The vacation of this finding of fact, while helpful to the government, does not dispose of this appeal. Three issues remain: whether the omission of the criminal and attorney warnings at the morning meeting of May 2 requires suppression of the evidence gathered at that meeting; if so, whether the "fruit of the poisonous tree" doctrine is applicable to suppress evidence gathered after adequate warnings had been given, and whether corporate records should be suppressed.

In this court's initial decision in this area, United States v. Leahey, supra, we found that, as a matter of due process, suppression of evidence was an appropriate sanction to insure IRS compliance with its announced policy of warning individuals investigated by Special Agents. Our two subsequent decisions, United States v. Bembridge, 458 F.2d 1262 (1st Cir. 1972), and United States v. Morse, 491 F.2d 149 (1st Cir. 1974), held that only a breach of the "substance and spirit" of the IRS regulations, and not their literal form, would warrant exclusion. United States v. Morse,supra at 156. The district court found that the omission of the two warnings, together, constituted a significantly substantive violation of the purposes underlying the IRS warning regulations, and merited the sanction of exclusion. We agree.

As noted in Leahey, supra, 434 F.2d at 8, the IRS promulgated the instant regulation as a response to the Court's request in Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), for "increasingly effective ways of protecting the rights of the individual while promoting efficient enforcement of our criminal laws." 384 U.S. at 467, 86 S.Ct. at 1624, 16 L.Ed.2d at 720. As such, the warnings were "designed to protect the rights and immunities of potential criminal defendants", Morse, supra, 491 F.2d at 156, from being inadvertently and unknowingly waived. The district court found that the warning concerning the right to consult with an attorney was an important protection: "(A) criminal tax matter is one in which the services of an attorney at an early stage are most important. The intricate maze that comprises our tax law cannot be navigated without skilled counsel, and, even then, the footing is oft-times slippery." Just as importantly, the omission of the criminal warning may seriously affect the taxpayer's decision whether to waive his Fifth Amendment rights. Many tax violations have both criminal and civil consequences. Logically, a taxpayer might waive the privilege to remain silent during a civil investigation for fear the invocation of the privilege would provoke a criminal investigation. By omitting the two warnings, Special Agent Cote failed to convey to Jobin the substance and spirit of the NAR Pub. 120 warnings. Exclusion of the...