U.S. v. Wuagneux

• Decision Date: 23 August 1982
• Docket Number: No. 80-5763,80-5763
• Citation: 683 F.2d 1343
• Parties: 11 Fed. R. Evid. Serv. 334 UNITED STATES of America, Plaintiff-Appellee, v. George WUAGNEUX, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1343

683 F.2d 1343

11 Fed. R. Evid. Serv. 334

UNITED STATES of America, Plaintiff-Appellee, v. George WUAGNEUX, Defendant-Appellant.

No. 80-5763.

United States Court of Appeals Eleventh Circuit.

Aug. 23, 1982.

Briggs & LaSpada, Anthony J. LaSpada, Tampa, Fla., Sands & Moskowitz, Leonard A. Sands, Jay Moskowitz, Miami, Fla., for defendant-appellant.

William C. Bryson, Robert J. Erickson, Washington, D. C., for plaintiff-appellee.

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

Before INGRAHAM ^*, HATCHETT and ANDERSON, Circuit Judges.

INGRAHAM, Circuit Judge:

George Wuagneux was convicted, after a jury trial in the Southern District of Florida, of operating a business through a pattern of racketeering activity, 18 U.S.C. § 1962(c) (1976) (RICO), embezzlement of funds from an employee welfare benefit plan, 18 U.S.C. § 664 (1976), mail fraud, 18 U.S.C. § 1343 (1976), bank fraud, 18 U.S.C. § 1014 (1976), and filing false income tax returns. 26 U.S.C. § 7206(1) (1976). The indictment contained thirteen counts: two counts and two subsections of the RICO count were dismissed by the court; guilty verdicts were returned on all eleven remaining counts. Appellant raises the following issues on appeal: whether the district court erred in denying his motion to suppress evidence seized in a search of his offices; whether venue was improper as to Count 9, bank fraud; whether hearsay evidence was improperly admitted; and whether the evidence was sufficient as to each count. We affirm.

Because of the variety of issues raised, we will provide only a brief background at the outset and add facts as relevant to the discussion of a particular issue. Appellant was the chief executive officer and controlling shareholder of Sage Corporation, a general construction company headquartered in Hallandale, Florida. During the early and mid-1970's, Sage and its subsidiaries were engaged in the construction of a number of condominium and office building projects in South Florida. Sage's former office administrator testified that before the corporation encountered financial difficulty during the years 1974-75, the corporation had employed several hundred persons exclusive of subcontractors and construction personnel.

Sage Corporation attracted the attention of a Department of Justice Organized Crime Strike Force in the course of its investigations in South Florida. In particular, the investigation of two individuals, Bernard Rubin and Seymour Gopman, revealed connections between these individuals and Sage Corporation that led the Justice Department to believe appellant had engaged in a series of fraudulent and illegal schemes to obtain financial assistance for Sage. The government eventually charged appellant with defrauding two union pension funds, an annuity fund, a real estate investment trust, the Florida Department of Insurance, and a commercial bank; in addition, the government charged that appellant had failed to adequately report various sources of income, both legitimate and illegitimate.

I-MOTION TO SUPPRESS

Appellant contends that the district court erred in denying his motion to suppress evidence obtained through a search of his offices pursuant to a warrant. He asserts five specific grounds of error: consent to a civil IRS audit, which later provided some support for the search warrant, was ineffective because the Revenue Agent conducting the audit did not disclose his affiliation with an IRS Strike Force; the warrant did not contain a sufficiently particular description of items to be seized; the execution of the warrant was overbroad; the district court improperly limited review of the execution of the warrant to those items the government intended to use at trial; and the trial court failed to conduct an adequate hearing into allegations that the affidavit supporting the search warrant contained false statements made with reckless disregard for the truth.

A. Consent to Audit by IRS Revenue Agent ¹

On December 15, 1976, Revenue Agent Chapman went to the offices of Sage Corporation under instructions to conduct a civil audit of its books and records. Chapman met with Sage's comptroller, Jack Shields, and accountant, Joseph Spina. He identified himself as an IRS Revenue Agent, displayed his credentials, and told Shields and Spina that he was there to conduct a tax audit. He did not further reveal that he was assigned to an IRS "strike force group." Shields and Spina, with the consent of appellant, agreed to cooperate with the audit. Chapman was given an office on the premises, and conducted an examination until March 9, 1977, when appellant became upset because Chapman had taken Sage records back to IRS headquarters. Although Chapman made several unsuccessful attempts to resume the audit, his supervisor eventually recommended no further enforcement action (on the basis of the information already gathered).

The IRS "strike force" group was organized within the audit division to handle complex and specialized examinations, and was wholly independent of the Department of Justice Organized Crime Strike Force. In fact, IRS subsequently changed the name of the group to "Special Enforcement Group." Although the IRS strike force frequently conducted tax examinations of suspected organized crime figures, a relatively small percentage of the group's cases were referred to the Department of Justice Strike Force, or resulted in any criminal proceedings.

The reason the Sage audit was initiated was never definitively determined in the proceedings below. Allen Pasternak, the head of the strike force audit group, testified that the audit was probably instigated for one of three reasons: substantial newspaper coverage of Sage Corporation (of an unspecified nature); ongoing tax collection problems with Sage; or ongoing strike force investigation of various transactions involving Teamster loans, an area Sage was also involved in. Notwithstanding this confusion, the overwhelming weight of credible testimony supports the district court's findings that the audit was not initiated at the request or suggestion of the Department of Justice, ² and that it was an examination for civil purposes from its inception through March 1977.

Apparently, the tax fraud counts in appellant's indictment were not a product of Chapman's audit. For purposes of the motion to suppress, however, appellant argues the audit was relevant because it enabled Chapman to provide the Department of Justice with sufficient information about Sage's records to establish probable cause for a search. Appellant argues that the consent to audit given by appellant and his representatives was ineffective, citing United States v. Tweel, 550 F.2d 297, 299 (5th Cir. 1977), because of Chapman's failure to advise of his affiliation with the IRS strike force. Shield and Spina testified that had this further information been disclosed, they would have insisted that the IRS proceed by summons, and advised appellant to seek legal counsel.

While "a consent search is unreasonable under the Fourth Amendment if the consent was induced by the deceit, trickery or misrepresentation of the Internal Revenue Agent," United States v. Tweel, 550 F.2d 297, 299 (5th Cir. 1977) (citing cases), the circumstances of this case do not indicate any deceit, trickery or misrepresentation. A party alleging ineffective consent on this ground must show affirmative acts by the agent that materially misrepresent the nature of the inquiry, and the showing must be by clear and convincing evidence. United States v. Dawson, 486 F.2d 1326, 1329 (5th Cir. 1973); United States v. Prudden, 424 F.2d 1021, 1032-33 (5th Cir.), cert. denied, 400 U.S. 831, 91 S.Ct. 62, 27 L.Ed.2d 62 (1970). See also United States v. Goss, 650 F.2d 1336, 1348-49 (5th Cir. 1981). Appellant concedes that no affirmative misrepresentation was made in this case, but insists that Chapman's silence with respect to his group affiliation was improper. Prudden suggests that silence could vitiate consent "where there is a legal or moral duty to speak or where an inquiry left unanswered would be intentionally misleading." 424 F.2d at 1032. There was no "inquiry left unanswered" here, nor an inquiry answered deceitfully. Cf. Tweel, supra. There was also no duty to speak. Although Special Agents have been instructed, ostensibly because of Fourth, Fifth and Sixth Amendment concerns, to provide Miranda -like warnings in certain confrontations with taxpayers, see United States v. Dawson, 486 F.2d 1326, 1329 n.3 (5th Cir. 1973), apparently no analogous requirements have been applied to Revenue Agents. Chapman's disclosure that he was from the IRS and intended to conduct a tax audit was adequate for Fourth Amendment purposes:

The Fourth Amendment does not require more than this, that when his consent is sought the taxpayer be apprised of the government's concern with the accuracy of his reports, and therefore of such hazards as may be incident to a voluntary disclosure. We hold that (the taxpayer) was so apprised by the warning inherent in the request when (the Revenue Agent) identified himself and disclosed his purpose to audit certain returns of the corporation.

United States v. Sclafani, 265 F.2d 408, 415 (2d Cir.), cert. denied, 360 U.S. 918, 79 S.Ct. 1436, 3 L.Ed.2d 1534 (1959); see also Prudden, supra, 424 F.2d at 1032 (identity fully disclosed); United States v. Bailey, 447 F.2d 735, 738 (5th Cir. 1971). It is established, at the least, that revenue agents need not expressly advise taxpayers that a routine civil audit may lead to criminal proceedings if discrepancies are uncovered, as all taxpayers, especially businessmen, are presumed to be aware of this possibility. United States v. Ponder, 444 F.2d 816, 819-20 (5th Cir. 1971), cert. denied, 405 U.S. 918, 92 S.Ct. 944, 30 L.Ed.2d 788 (1972); Prudden, supra, 424 F.2d at 1035. With that in mind, we fail to see how the additional disclosure or nondisclosure...