U.S. v. Jones

• Decision Date: 29 March 1983
• Docket Number: Nos. 81-2129,82-1389,s. 81-2129
• Parties: 83-1 USTC P 9265, 12 Fed. R. Evid. Serv. 1736 UNITED STATES of America, Plaintiff-Appellee, v. Robert C. JONES and Dona Jones, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 473

703 F.2d 473

83-1 USTC P 9265, 12 Fed. R. Evid. Serv. 1736

UNITED STATES of America, Plaintiff-Appellee, v. Robert C. JONES and Dona Jones, Defendants-Appellants.

Nos. 81-2129, 82-1389.

United States Court of Appeals Tenth Circuit.

March 29, 1983.

Robert W. Brown (Thomas M. Bradshaw, also of Hoskins, King, McGannon, Hahn & Hurwitz, Kansas City, Missouri; and Edward M. Boddington, Jr. of Boddington & Brown, Kansas City, Kansas, with him on briefs) for defendants-appellants.

Murray S. Horwitz (Glenn L. Archer, Jr., Asst. Atty. Gen., Michael L. Paup and William A. Whitledge, and Jim J. Marquez, U.S. Atty., with him on briefs) Tax Div., Dept. of Justice, Washington, D.C., for plaintiff-appellee.

Before SETH, Chief Judge, and DOYLE and LOGAN, Circuit Judges.

LOGAN, Circuit Judge.

Robert C. Jones and Dona Jones, husband and wife, appeal district court orders holding each of them in contempt of court for refusing to answer questions concerning their assets and financial affairs at separate judgment debtor examinations. The Joneses had asserted their Fifth Amendment privilege against compulsory self-incrimination in refusing to answer the questions. The district court's contempt rulings were based on its conclusion that the Joneses did "not have reasonable cause to apprehend danger from a direct answer to the questions asked." The only issue on appeal is whether the district court's conclusion was proper.

In June 1977 the United States obtained judgment against the Joneses for income tax deficiencies for the years 1963 through 1969. By 1981 the government had collected only a small part of the money. It therefore asked Robert Jones to appear at a hearing in aid of execution before a magistrate pursuant to the rules of the Kansas district court and Fed.R.Civ.P. 69. At the hearing, Jones answered certain questions, but refused to answer almost all questions concerning the sources and amounts of his income and the nature and location of his assets ¹ on the ground that the answers might incriminate him. On the recommendation of the magistrate, the district court held Jones in contempt for his refusal to answer. Later that year a similar hearing was conducted to interrogate Dona Jones. She refused to answer similar questions on the ground that the answers might incriminate her. On the recommendation of the magistrate, the district court held Dona Jones in contempt. Both Robert and Dona Jones appeal the contempt citations. Because the appeals are interrelated and present substantially similar questions we have consolidated them.

I

Robert Jones claims that revealing the nature and location of his assets could provide incriminating evidence of two separate crimes. The first is making a false statement to a federal agent, a violation of 18 U.S.C. Sec. 1001. Approximately two weeks before the judgment debtor examination, Jones was interviewed by the Internal Revenue Service (IRS) about his ability to pay the underlying judgment. While he was not explicit at trial or on appeal, he evidently contends that truthful answers to the questions at issue could conflict with statements he made in that interview and thus expose him to prosecution under Sec. 1001. We do not agree. The IRS agent who conducted the interview, Robert B. Bates, filed an affidavit stating that Jones had "refused to provide any information to me about the nature or locations of his assets and has to this date never provided me with any such information." Jones did not dispute the accuracy of this affidavit at the hearing and does not do so here. The only arguments presented by his attorney were that no record of the interview had been made and that Jones' attorney had at one time represented another person who was contradicted in court by prior statements made to IRS officials.

These arguments are not relevant. The lack of a record of the interview is unimportant when neither side disputes that nothing was said. Since Jones gave no answers during the interview, answers given during the judgment debtor hearing could not contradict interview answers and hence could not form a basis for establishing a violation of 18 U.S.C. Sec. 1001. The court correctly decided that Jones had no reasonable basis to fear that answering the questions would tend to provide evidence of a violation of Sec. 1001. ²

II

Robert Jones next contends that answering the questions could tend to incriminate him for the crime of attempted tax evasion under I.R.C. Sec. 7201. We believe a reasonable basis for Jones' fear of criminal prosecution exists. Hence, the magistrate erred in recommending that Jones be held in contempt and the district court abused its discretion in issuing the contempt order.

The privilege against self-incrimination protects the person claiming it from being compelled to give "answers that would in themselves support a conviction" or that "would furnish a link in the chain of evidence needed to prosecute the claimant" for a crime. Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951). The privilege extends to questions propounded in a civil action, whether the claimant is a party or a witness. Maness v. Myers, 419 U.S. 449, 464, 95 S.Ct. 584, 594, 42 L.Ed.2d 574 (1975); Kastigar v. United States, 406 U.S. 441, 444-45, 92 S.Ct. 1653, 1656, 32 L.Ed.2d 212 (1972). The individual asserting the privilege is not "required to prove the hazard [of incrimination] in the sense in which a claim is usually required to be established in court," Hoffman 41 U.S. at 486, 71 S.Ct. at 818; rather the privilege may validly be asserted whenever "the witness has reasonable cause to apprehend danger from a direct answer." Id. That a witness actually fears incrimination from answering questions is not enough. The fear must be reasonable in light of the witness' specific circumstances, the content of the questions, and the setting in which the questions are asked. Id.; accord Zicarelli v. New Jersey State Commission of Investigation, 406 U.S. 472, 480, 92 S.Ct. 1670, 1676, 32 L.Ed.2d 234 (1972); Malloy v. Hogan, 378 U.S. 1, 11-14, 84 S.Ct. 1489, 1495-97, 12 L.Ed.2d 653 (1964). The trial court is to evaluate the incriminatory potential of questions asked. Hoffman, 341 U.S. at 487, 71 S.Ct. at 818. The claim of privilege cannot be sustained if the fear of self-incrimination rests on "remote and speculative possibilities"; the privilege protects only against "real dangers." Zicarelli, 406 U.S. at 478, 92 S.Ct. at 1675.

Jones and two law partners previously had been investigated for tax fraud for the years 1958 through 1969. That investigation culminated in the conviction of one of the partners for conspiracy to commit tax fraud. Jones and the other partner were given use immunity in exchange for their testimony in the case and were not prosecuted. However, the IRS obtained the civil judgment against the Joneses that underlies this action as a result of that investigation. On August 3, 1981, the government filed another civil complaint against the Joneses, seeking a judgment for tax deficiencies and assessments for the tax years 1973 through 1979. The Joneses' counsel characterizes these proceedings--the criminal investigation, the prior civil action, the judgment debtor hearing, and the August 1981 civil action--as "ten years of investigation." The judgment debtor hearing at issue in this case was to aid collection of the judgment concerning tax years 1963 through 1969. Nevertheless, because the IRS was pursuing a civil action against Jones for tax deficiencies and assessments for 1973 through 1979, Jones had ample reason to believe that the IRS was particularly interested in his financial transactions. The IRS' institutional focus was turned to his tax affairs for 1973 through 1979 at least. Cf. Hoffman, 341 U.S. at 489, 71 S.Ct. at 819 (various officials and government bodies had focused attention on Hoffman's underworld activities, officially and in the press). The initiation of tax deficiency litigation against Jones indicates that the IRS believes that he did not properly report his income. If the income was improperly reported, questions concerning the nature and location of Jones' assets are potentially incriminating. See Mackey v. United States, 401 U.S. 667, 669, 91 S.Ct. 1160, 1161-62, 28 L.Ed.2d 404 (1971); United States v. Pierce, 561 F.2d 735, 743-44 (9th Cir.1977) (Hufstedler, J., dissenting), cert. denied, 435 U.S. 923, 98 S.Ct. 1486, 55 L.Ed.2d 516 (1978).

This case is close factually to FDIC v. Sovereign State Capital, Inc., 557 F.2d 683 (9th Cir.1977), which also involved assertion of the Fifth Amendment privilege in the context of a judgment debtor hearing. In that case the FDIC had obtained a judgment against C. Arnholt Smith in connection with a bank collapse resulting from the crumbling of Smith's financial empire. Smith had pleaded nolo contendere to various federal conspiracy and fraud charges arising from the collapse. At the time the FDIC requested a Rule 69 judgment debtor hearing in aid of collecting its judgment, Smith was under indictment on state tax and fraud charges. The FDIC sought answers to various questions concerning Smith's financial dealings. When Smith refused to answer twenty specific questions, asserting his Fifth Amendment privilege, the district court held him in contempt. The Ninth Circuit reversed, holding that Smith's answers could form links in a chain of evidence leading to conviction of the pending tax and fraud charges or future charges against him. Among the questions the court held Smith could validly refuse to answer were: "Do you own in your own name or jointly any type of bank account?"; "Do you own any insurance policies?"; and "Do you have an accountant?" Id. at 686.

If Robert Jones were under criminal investigation or indictment, the reasonableness of his fear that the information sought from his testimony might be used against him would be readily apparent. We think his fear is...