U.S. v. Oliver

• Decision Date: 31 October 1974
• Docket Number: No. 73-1699,73-1699
• Citation: 505 F.2d 301
• Parties: 74-2 USTC P 9787 UNITED STATES of America, Plaintiff-Appellee, v. Roosevelt OLIVER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 301

505 F.2d 301

74-2 USTC P 9787

UNITED STATES of America, Plaintiff-Appellee, v. Roosevelt OLIVER, Defendant-Appellant.

No. 73-1699.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 13, 1974.

Decided Oct. 31, 1974.

Frederick F. Cohn, Chicago, Ill., for defendant-appellant.

William J. Mulligan, U.S. Atty., and Joseph P. Stadtmueller, Asst. U.S. Atty., Milwaukee, Wis., for plaintiff-appellee.

Before HASTINGS, Senior Circuit Judge, and CUMMINGS and STEVENS, Circuit Judges.

STEVENS, Circuit Judge.

Appellant contends that his conviction of tax evasion rests on two separate violations of his Fifth Amendment right not to 'be compelled, in any criminal case, to be a witness against himself.' He argues (1) that he made a compelled disclosure of incriminating information without first receiving warnings required by Miranda ¹ and Dickerson; ² and (2) that under the rationale of Marchetti ³ he could not be compelled to disclose his illegal income on his tax return. Our evaluation of both arguments involves a consideration of the significance of the point at which the adversary character of the criminal prosecution commenced. We find merit in his first contention, but not in his second.

The indictment charged that defendant understated his adjusted gross income for 1970 and 1971. After a trial to the court, he was found not guilty on Count I, but guilty on the second count relating to 1971. His return for that year reported adjusted gross income of $6,030, including his wife's earnings and a loss of approximately $2,000 on a truck rental operation. His return made no reference to any other income and contained no entry or disclosure which might have been interpreted to relate to any illegal earnings.

Predicated on an analysis of defendant's net worth and expenditures during 1971, the government contended that his adjusted gross income was approximately $30,000 or, alternatively, crediting certain disputed testimony, could have been no less than $17,000. ⁴ Among the witnesses for the prosecution were one Samuel Coca, whose testimony suggested that trafficking in narcotics provided the defendant with a probable source of income not reported on his return, and Kermit Duehring, a special agent with the Intelligence Division of the Internal Revenue Service.

Duehring testified that in March or April, 1972, he had been directed to investigate a possible criminal violation of the internal revenue laws by the defendant. After that investigation had been under way for several months, he and another special agent interviewed the defendant in the offices of the Intelligence Division in the Federal Building in Milwaukee. Having learned that defendant was in the building in the vicinity of the grand jury room, the two agents located him and asked him to come to their offices. He acceded to their request. Prior to any questioning, the agents informed defendant of their offices and read him the written statement set out in the margin. ⁵

During the course of the interview, which lasted about 45 minutes, a person who purported to have a message for defendant from his attorney was not permitted to communicate with defendant because, as Duehring testified, she did not possess written authorization from the attorney.

The government's case was predicated, in part, on the assumption that defendant's cash-on-hand on December 31, 1970, amounted to only $200. According to Duehring's testimony, the source of this information was a statement made by Oliver during his interview in the agents' office. Defendant's objections to Duehring's testimony were overruled on the ground that 'the custody or rather the non-custody advice was adequate to meet the Constitutional requirement.' Tr. 301.

I.

The government does not attempt to defend the warnings given by Duehring as adequate if Miranda and Dickerson apply. ⁶ It is suggested that Miranda is inapplicable because defendant was not actually in custody, and that Dickerson should be re-examined in the light of our more recent decision in Sicilia; ⁷ in any event, it is claimed that the admission of Duehring's testimony was harmless error.

We recognize that the warnings specified in the Court's opinion in Miranda are not mandated by the Constitution itself, ⁸ and that our opinion in Dickerson has not been followed in other circuits. ⁹ Nevertheless, we are satisfied that as long as Miranda remains viable as it certainly is today-- its teachings must be applied to a situation such as that presented in Dickerson and in this case.

The application of Miranda does not turn on such a simple axis as whether or not the suspect is in custody when he is being questioned. As the Court repeatedly indicated, the prescribed warnings are required if the defendant is in custody 'or otherwise deprived of his freedom of action in any significant way.' ¹⁰ The fact of custody is emphasized in the opinion as having the practical consequence of compelling the accused to make disclosures. ¹¹ But the test also differentiates between the questioning of a mere witness and the interrogation of an accused for the purpose of securing his conviction; the test serves the purpose 'of determining when the adversary process has begun, i.e., when the investigative machinery of the government is directed toward the ultimate conviction of a particular individual and when, therefore, a suspect should be advised of his rights.' ¹²

Since the constitutional protection is expressly applicable to testimony in the criminal case itself, for the purpose of determining when warnings are required, the Miranda analysis treats the adversary proceeding as though it commences when a prospective defendant is taken into custody or otherwise significantly restrained. After that point is reached, it is not unreasonable to treat any conpelled disclosure as protected by the Fifth Amendment unless, of course, the constitutional protection has been waived. Adequate warnings, or the advise of counsel, are essential if such a waiver is to be effective.

The requirement of warnings set forth in Dickerson rests on the same underlying rationale. While the commencement of adversary proceedings against Dickerson had not been marked by taking him into custody, the I.R.S., by assigning the matter to the Intelligence Division, had commenced the preparation of its criminal case. When the agents questioned him about his tax return, without clearly explaining their mission, the dual criminal-civil nature of an I.R.S. interrogation created three key misapprehensions for the taxpayer.

'Incriminating statements elicited in reliance upon the taxpayer's misapprehension as to the nature of the inquiry, his obligation to respond, and the possible consequences of doing so must be regarded as equally violative of constitutional protections as a custodial confession extracted without proper warnings.' 413 F.2d at 1116.

The practical effect of these misapprehensions during questioning of a taxpayer was to 'compel' him to provide information that could be used to obtain his conviction in a criminal tax fraud proceeding, in much the same way that placing a suspect under physical restraint leads to psychological compulsion. ¹³ Thus, the misapprehensions are tantamount to the deprivation of the suspect's 'freedom of action in any significant way,' repeatedly referred to in Miranda.

In this case it is plain that the purpose of the agents' interrogation of the defendant was to develop evidence which would secure his conviction of a crime. The criminal investigation of Oliver had commenced several months before he was questioned, and there was no ambiguity about the agents' mission. No doubt, as Duehring testified, Oliver was free to leave at any time, and therefore not strictly in custody. But since the agents were in a position to intercept a message from his attorney, and actually did so, it is appropriate, for the purpose of applying the Miranda test, to characterize the situation as one in which defendant's liberty was significantly restrained.

As we emphasized in Dickerson, one purpose of the Miranda warnings is to make sure that the defendant does not misapprehend the nature of his obligation to respond to the revenue agents' inquiries. In this case, the warnings did not include advice that Oliver could remain silent or that he could have a lawyer present during the interview. Under these circumstances we believe Miranda requires us to treat his disclosures as though they were compelled during the course of an adversary proceeding, and therefore inadmissible at his criminal trial.

In United States v. Sicilia, 475 F.2d 308 (7th Cir. 1973), we refused to extend Dickerson to require F.B.I. agents to give Miranda warnings in connection with a request to the defendant for permission to search his company's premises for a stolen fork lift truck. In that opinion we emphasized the absence of the potential ambiguity in an F.B.I. inquiry as opposed to an investigation by special agents of the Internal Revenue Service as an adequate basis for distinguishing Dickerson. We might also have pointed out that until after the lift truck was actually discovered on the premises, the investigation had not progressed to the point at which the agents were prepared to make an accusation against Sicilia; when the matter did reach that point, they gave him complete Miranda warnings. ¹⁴ Neither the holding in Sicilia nor the language in that opinion would justify a refusal to apply Dickerson in this case.

The incriminating evidence obtained from defendant's interrogation was inadmissible. That information was utilized by the government in computing Oliver's understatement of taxable income by the net worth method. ¹⁵ Specifically, the government's calculation of Oliver's cash-on-hand at the beginning of the tax year relied heavily on the admissions. ¹⁶ In view of the importance of establishing the taxpayer's opening net worth with 'reasonable certainty,' see Holland v....