United States v. Chikata, 24298.

• Decision Date: 26 May 1970
• Docket Number: No. 24298.,24298.
• Citation: 427 F.2d 385
• Parties: UNITED STATES of America, Appellee, v. Jack I. CHIKATA, Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

427 F.2d 385 (1970)

UNITED STATES of America, Appellee, v. Jack I. CHIKATA, Appellant.

No. 24298.

United States Court of Appeals, Ninth Circuit.

May 26, 1970.

Martin J. Durkan (argued), of Durkan & Durkan, Seattle, Wash., for appellant.

J. S. Obernour (argued), Asst. U. S. Atty., Stan Pitkin, U. S. Atty., Western District of Washington, Tacoma, Wash., for appellee.

Before JERTBERG, WRIGHT and KILKENNY, Circuit Judges.

KILKENNY, Circuit Judge:

Appellant, a Seattle druggist, was convicted by a jury of income tax evasion,¹ for the years 1961, '62 and '63. He was sentenced to a year and a day on each count, the sentences to run concurrently, and to pay a fine of $7,500.00 on each of the three counts, to be non-cumulative. He appeals. We affirm.

In January, 1966, a group supervisor of the Internal Revenue Service, when work was low, selected at random from the Seattle telephone directory, ten names of pharmacists. From the income tax returns of this group, he designated three for audit and assigned Robert Anderson, a revenue agent in the supervisory group, to make the audit. One so designated was appellant's 1964 return, which showed a large amount of interest income compared to the reported business income. At this time, there was no thought of possible fraud, although the supervisor's group was commonly known as the fraud group because approximately one-third of its work consisted of cooperating with special agents in criminal investigations.

Anderson, after receiving the returns, called appellant and told him of the assignment and that he wanted to see his books and records on the '64 return. Appellant invited Anderson to his place of business. Upon arrival, Anderson found that appellant had only his 1965-66 records on hand. After an examination of these records, Anderson proceeded with an interview for background and history and made arrangements to return the next day for further information.

The following day, an examination was made of the 1964 bank records. The agent found that in 1964, appellant had deposited $36,000.00 into his checking account, an amount far in excess of his reported gross receipts of $23,000.00. In a hurried analysis of appellant's reported income from retained copies of prior returns to 1959, the agent arrived at a net worth statement amounting to $130,000.00 in assets at the end of 1964, including $17,000.00 in cash that appellant said he had deposited in his checking account in 1965.

During the course of the investigation, the agent found that appellant's cash register could record sales no larger than $9.99 and that appellant recorded sales over $10.00 by ringing the extra amount and writing down the $10.00 on a piece of paper. Sometimes, he told the agent, he forgot to write down the $10.00 sales and that this might occur two or three times daily. Armed with this information, the agent computed an unexplained increase in assets of $46,000.00 for 1959 through 1964, this being an amount that would equal three unreported $10.00 sales for each working day during the period. Based on this information, Anderson offered a referral report, suggesting that there was an indication of fraud. This report was reviewed and assigned to special agent Catlow of the Intelligence Division for preliminary examination. Anderson was assigned as a cooperating agent.

Appellant, in the meantime, had hired attorney Bernard Greene and so advised Anderson. Greene called Anderson and told him that he represented appellant. Although Catlow was informed of these facts, he did not contact Greene because Greene had not filed a power of attorney as required by the Internal Revenue regulations. Instead, accompanied by Anderson, he went to appellant's place of business. He there identified himself and advised appellant that he could have his attorney present, that he need not answer any questions, nor furnish any information. Appellant was told that the initial examination indicated a shortage of reported income. Appellant then called his attorney, who arranged for an appointment the next day at his office. At this meeting, Greene expressed a willingness to cooperate with the agents. Catlow then questioned appellant, covering much of the same areas that Anderson had covered during the initial interviews. Some time later, John Durkan, another attorney, took over the case for the appellant.

CONTENTIONS

Appellant charges that the lower court erred in the following particulars: (1) in admitting in evidence any facts directly elicited from the appellant by the government agents or indirectly by leads furnished by appellant; (2) in refusing to give appellant a fair trial; (3) in refusing to strike all exhibits and testimony offered in violation of the court's order; (4) in instructing the jury to consider only the net worth of appellant; (5) in overruling appellant's motion to dismiss on the ground that the statute under which he was indicted was unconstitutionally indefinite; (6) in failing to exclude exhibits acquired by the special agent by use of an administrative summons; and (7) in ordering the appellant to stipulate as to the authenticity of certain government exhibits.

CONTENTION ONE

Appellant argues that all evidence acquired by Anderson and Catlow during the course of their interviews with appellant and any evidence acquired as a result of leads obtained from appellant, during those meetings, was inadmissible because at no time was appellant given the necessary Miranda type warning. We note that appellant was in his own place of business on the occasion of the conversations with the government agents. He was not in custody, nor at the time was he, in any way, deprived of his freedom. In these circumstances, we are controlled by a number of our own authorities, which have refused to enlarge the Miranda rule beyond its stated limits. Spahr v. United States, 409 F.2d 1303, 1304-1305 (9th Cir. 1969), cert. denied 396 U.S. 840, 90 S.Ct. 102, 24 L.Ed.2d 91; Simon v. United States, 421 F.2d 667 (9th Cir. 1970). In Simon, we declined to follow United States v. Dickerson, 413 F.2d 1111 (7th Cir. 1969), the principal case on which appellant relies. In Mathis v. United States, 391 U.S. 1, 88 S.Ct. 1503, 20 L. Ed.2d 381 (1968), on which appellant also leans, the taxpayer was in custody in a state prison on another charge at the time he was questioned by Internal Revenue Agents. The Court, in Mathis, again limited Miranda to a person in custody or otherwise deprived of his freedom in some significant way. We resolve this issue against appellant. Additionally, we hold there was no coercive conduct on the part of the Internal Revenue Agents.

CONTENTION TWO

Appellant here charges that he was deprived of a fair trial because he was harassed by the Internal Revenue Agents and by the trial court. With a few exceptions, the complaints are those of the attorney, rather than appellant, and are concerned with what occurred during pretrial hearings, rather than during the trial. Of course, what occurred in the pretrial hearings can have no bearing on the fairness of the trial unless some relationship is shown. Our examination of the record reveals no such connection and appellant points to none. Additionally, our examination of the record leads us to the conclusion that the trial court's actions in the pretrial hearings were fully justified. The alleged harassment by the Internal Revenue Service, during the pretrial period, is completely irrelevant.

During the trial, the court asked appellant's counsel not to "be so aggressive", told appellant's counsel that a certain question was propounded in "an improper way" and on one occasion, in commenting on counsel's repetitious interrogation, commented, "It is just ridiculous." Read in context with the relevant questions, we find nothing objectionable in the court's comments. In his closing argument to the jury, counsel for appellant referred to his client, who was born in Japan, as a sick old man who was imprisoned by the United States in a World War II concentration camp. He had emphasized this internment throughout the trial. Responding to this argument, the United States Attorney called attention to the fact that the concentration camps were established as a result of the sinking of American battleships in Pearl Harbor. Neither argument had anything to do with the merits of the case. While we do not condone this type of argument by a prosecuting attorney, we have no doubt that the prosecutor's response was prompted by the argument of appellant's own counsel. In these circumstances, we do not feel that the prosecutor's conduct should be treated as reversible error.

CONTENTIONS THREE AND SEVEN

These contentions are related and should be considered together.

Acting under the authority of Rule 17.1, F.R.Crim.P., the trial court, after a lengthy pre-trial conference, ordered appellant's counsel to examine government proposed exhibits 1 through 41 and appear some seven days later and then give reasons why he and his client should not stipulate to the authenticity of such exhibits, reserving all objections to relevancy and materiality. During the course of the conference, appellant's attorney took the position that the exhibits were inadmissible on various grounds, but did not challenge their...