United States v. Chrisley

Decision Date30 August 2021
Docket NumberCRIMINAL 1:19-CR-297-ELR-JSA
PartiesUNITED STATES OF AMERICA, v. TODD CHRISLEY and JULIE CHRISLEY, Defendants.
CourtU.S. District Court — Northern District of Georgia

REPORT AND RECOMMENATION ON MOTIONS TO SUPPRESS EVIDENCE FROM WARRANTLESS SEARCH

JUSTIN S. ANAND, UNITED STATES MAGISTRATE JUDGE.

In March 2017, the Georgia Department of Revenue (“DOR”) forced its way into a locked storage facility leased by the Chrisley Defendants (hereinafter Defendants'”[1]) without a warrant. The DOR seized and searched through financial records, and then later disclosed the contents of those records to the IRS and FBI. The Court easily finds, and the Government concedes, that these actions by the DOR violated the Defendants' Fourth Amendment rights. Defendants thus move to suppress the incriminating materials found therein. See Motions [36][41].

Although the Government concedes that the DOR violated the Defendants' Fourth Amendment rights, the Government contends that suppression should be denied. The Government argues that the state civil investigators that it contends were primarily in charge of the operation would not have been deterred by the prospect of evidence being suppressed in this separate federal criminal case, and that the purposes behind the exclusionary rule would not be served here.

After a two-day evidentiary hearing, the Court finds, importantly that the federal personnel handling the instant case did not participate in any violations themselves. Nevertheless, the remaining facts strongly support application of the exclusionary rule. Whatever the immediate purposes of the search, the prospect of a potential future criminal case was at least clearly foreseeable and within the interests of the relevant DOR officials, which included DOR's most senior criminal investigative agents. Indeed, as the facts established in the hearing showed, the line between criminal and civil within the DOR was substantially blurred in this case. The Court thus finds that the prospect of suppression of evidence would have deterred the officers involved in the search from violating Defendants' rights, or at least would deter reasonable officers in the future. The exclusionary rule should apply, and the Court RECOMMENDS that the Motions be GRANTED.

I. FACTS

The instant motions relate to a search of a warehouse at a business referred to as Printers and Parts, located in Duluth, Georgia, at which the Defendants were leasing secured space to store personal items as of March 2017 (the “Warehouse”).[2]

The tax investigations by Georgia's DOR began in approximately 2014. Josh Waites, then the Director of DOR's Office of Special Investigations (“OSI”), learned that the Defendants, who were “Reality TV” celebrities, may have failed to report income. He asked fellow DOR employee Katie Vancil to investigate. Tr. [92] (“Tr. I”) at 81-82. OSI is the criminal investigative unit within the DOR, whereas Vancil worked under the Compliance Division, which conducts civil tax assessment, delinquency and collection functions. Tr. I at 74-76. Vancil has always worked in a civil function at the DOR, whereas Waites was the chief criminal law enforcement officer in charge of investigating violations of Georgia's criminal laws against tax evasion and related offenses. Waites has since been terminated by DOR for unrelated misconduct.

Vancil's initial computer checks determined that Defendants were indeed delinquent in their taxes, but Vancil otherwise suspended any further inquiry because the pending bankruptcy case impacted DOR's ability to recover. Id. at 83.

Waites kept tabs on the matter, however, and in 2016 instructed Vancil to recommence her inquiry upon the termination of the bankruptcy case. Id. at 84. Vancil proceeded to engage in tasks such as subpoenaing bank records, gathering information from the bankruptcy trustee, and analyzing Defendants' financial situation. Tr. I at 84-87. Through these efforts, Vancil determined that Defendants were delinquent to the state to the tune of over $1 million. Tr. I at 158.

Although Vancil's role within DOR was solely on the civil tax collection side, Waites and another OSI criminal investigator, LaShawn Wright, asked Vancil for periodic updates. Tr. I at 130-131. Waites also participated in the Compliance Division's meetings about this investigation, including in December 2016 and February 15, 2017. Id. at 85-87, 93-5. Indeed, Vancil believed that Waites was taking an unusual interest in this case and at one point she complained to one of her supervisors. Id. at Tr. 122-123. Vancil even felt like she was being used as a “puppet” by Waites. Id. at 143. It was also apparently known within DOR, despite the case purportedly being a civil matter, that Waites had a photograph of Defendant Todd Chrisley on a dartboard in his (Waites's) office. See Id. at 201

Vancil and several other employees and supervisors from the civil enforcement side of DOR's operations attended the February 2017 meeting, including Staci Guest, an attorney who oversaw the Compliance and Audit Divisions. Waites also attended. Among the topics discussed at the meeting was whether OSI would formally open a criminal investigation into the Defendants. Despite the clear and obvious interest from OSI and Waites, Guest answered that question in the negative, stating that the inquiry “would remain a civil collection case” and would not be a criminal case, at least at that time. Id. at 95-96, 233. However, apparently unknown to at least Guest, Waites and another OSI officer opened a criminal investigative file anyway in the days immediately after the meeting. Id. at 140; Gov't Exs. 200, 226.

During this time, Waites and other OSI criminal investigators exerted substantial direction over the purportedly civil tax collection investigation. A few days after Guest declared that the matter would remain a civil one, Waites participated in a witness interview in which he fed Vancil questions to ask the witness. Id. at 153-155. Shortly thereafter, Waites also caused Vancil to request information about Defendants' finances from the U.S. Treasury Department's Financial Crimes Enforcement Network (“FinCen”). Id. at 140-142[3]. Waites provided the FinCen form to Vancil and instructed her as to how to fill it out, because she had never used this tool and was unfamiliar with it. Id. (Which is not surprising, since Vancil was a civil officer involved in collecting debts, and the FinCen database is accessible only to [a] law enforcement agency investigating terrorist activity or money laundering, ” 31 C.F.R. 1010.520(b)).

At Waites's direction, and despite Guest's declaration that this case was solely a civil matter, Vancil stated on the form that the request was for purposes of a “tax evasion” investigation. Id. But as noted above, even this arguably false representation would not have been sufficient to obtain information from FinCen, because the information in this highly confidential database is only available for investigations of “terrorist activity or money laundering.” Thus, apparently unbeknownst to Vancil, another OSI agent subsequently altered the form to say that DOR was also investigating the Defendants for “money laundering.” Id. at 142; Gov't Ex. 226. All of this occurred in the days after Guest declared that the Chrisley investigation was solely a civil tax collection matter.

Ultimately, Vancil's and Waites's joint witness interviews revealed that the Defendants stored materials at unknown storage facilities, which Defendants were planning on liquidating. Id. at 154-155. Vancil immediately began discussing the matter with Waites via text message. Id. at 154-157; Def. Ex. 18. At one point, Vancil discussed steps to try to identify the location of the facility, and Waites responded, “Awesome, Me and some agents can go look!!” Def. Ex. 18.

To begin the process of being able to seize and levy on any such materials, if they could be found, Vancil prepared civil levies and jeopardy assessments, Def. Ex. 24-25, which Waites personally took the initiative to drive to Tennessee to serve on Defendants. Id.; Def. Ex. 21. Vancil explained that it was unusual for a DOR OSI agent to serve such paperwork. Id. at 159-160. Nevertheless, Vancil throughout this time seemed to readily accept and even reach out for the support of Waites and OSI. In text messages apparently discussing the service of this paperwork or related matters, Vancil texted Waites to say, “Don't leave the building without talking to me. We are hatching a plan, ” to which Waites responded, “I hope the plan includes me being in Nashville [where the Chrisley Defendants resided] at 9:00 am cause I'm meeting a sergeant there at 9:00.” Def. Ex. 18. When Waites reported to Vancil on the day of the incident in Nashville that they only used “2 unmarked cars” to confront and serve the Chrisleys, Vancil responded, “no lights? Disappointing.” Def. Ex. 18.

Shortly thereafter, through a review of bank records, Vancil identified the Warehouse as a location potentially housing the material referred to by the witness. Tr. I at 96 103-105, 207-208. She and other Compliance Division employees went to the facility on March 27, 2017 with their levy, and Vancil reported the address to Waites via text. Id.; Def. Ex. 18. Waites stated that he dispatched another OSI agent. Def. Ex. 18 (“Brian is on the way”). At the outset, two OSI officers, not initially including Waites, were present, ostensibly for “security.” Id. at 105-106, 172-173. Upon learning of the volume of materials potentially present at the storage facility, however, Waites also arrived. Id. at 104-107. Waites with his police lights flashing, but then told fellow DOR officers to lie, by “tell[ing] people he had not been...

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