United States v. McNally, Crim. No. 70-176.

• Decision Date: 01 February 1972
• Docket Number: Crim. No. 70-176.
• Citation: 338 F. Supp. 341
• Parties: UNITED STATES of America v. Joseph F. X. McNALLY, a/k/a "Pope" McNally.
• Court: U.S. District Court — Eastern District of Pennsylvania

338 F. Supp. 341

UNITED STATES of America v. Joseph F. X. McNALLY, a/k/a "Pope" McNally.

Crim. No. 70-176.

United States District Court, E. D. Pennsylvania.

February 1, 1972.

COPYRIGHT MATERIAL OMITTED

Wm. Hyatt, Trial Atty. Dept. of Justice, Washington, D. C., for plaintiff.

Meyer Bushman, Philadelphia, Pa., for defendant.

MEMORANDUM AND ORDER

TROUTMAN, District Judge.

On April 2, 1970, defendant was indicted on a bill containing seven counts: four counts for failure to file income tax returns in the years 1963 through 1966 in violation of 26 U.S.C. § 7203 and three counts for filing false and fraudulent returns in the years 1963 through 1965 in violation of 26 U.S.C. § 7206(1). The primary basis of this indictment was evidence seized at 3039 Belgrade Street on July 26, 1967, which defendant argues should be suppressed on several grounds. Before the Court are defendant's motions: (1) to quash the search warrants and suppress the evidence seized at 3039 Belgrade Street; (2) to quash the indictment; and (3) for a bill of particulars. Our considerations of these motions has been delayed by the loss of certain information from the Government's file, the reconstruction of which was both essential and time-consuming.

I. Defendant's Motion to Quash the Search Warrants and Suppress the Evidence

Defendant's motion to quash the search warrants and suppress the evidence is based on three separate and distinct grounds: (1) Initially, the defendant contends that the seizure of the evidence was the direct and proximate result of his proper assertion of his Fifth Amendment privilege under Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968) and Grosso v. United States, 390 U.S. 62, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968); (2) Secondly, defendant contends that the search warrants were issued as a means of seizing mere evidence which is testimonial or communicative in nature; (3) Finally, defendant contends that the affidavit, under which the search warrant was issued, did not state sufficient facts to establish probable cause under the standards set by the Supreme Court in Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723 (1964) and Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969). We will treat each contention seriatim.

A.

On May 24, 1967, the intelligence agents of the Internal Revenue Service initiated an investigation of an alleged large scale wagering operation in Philadelphia. The investigation, involving the defendant, among others, was initiated primarily because of information obtained from two undisclosed confidential sources. As a result of the investigation, on July 26, 1967, arrest and search warrants were issued pursuant to the affidavit of IRS Agent, McCauley. A raid was thereafter conducted at 3039 Belgrade Street, Philadelphia, wherein certain gambling paraphernalia was seized and defendant was arrested.

The issuance of the warrants was based upon allegations in the affidavit that defendant was engaged in wagering operations in violation of 26 U.S.C. §§ 4411, 4412 and 7203 and 18 U.S.C. § 371. Thereafter, the Supreme Court decided Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968) and Grosso v. United States, 390 U.S. 62, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968), wherein the Court held that a defendant's assertion of his Fifth Amendment privilege against self-incrimination bars a prosecution for violation of 26 U.S.C. §§ 4411 and 4412 of the federal wagering tax statutes. On the basis of Marchetti and Grosso, the Government dismissed all charges against defendant. As previously stated, defendant has been reindicted for income tax violations under 26 U.S.C. §§ 7203 and 7206(1), based upon the evidence seized at 3039 Belgrade Street.

Defendant argues that the seizure of the evidence was the direct and proximate result of his proper assertion of his Fifth Amendment privilege against self-incrimination and should be suppressed. Defendant, in so arguing, is asking this Court to conclude that Marchetti and Grosso should be retroactively applied to bar the introduction in a prosecution for income tax violations of evidence obtained in a pre-Marchetti-Grosso search based on probable cause to believe a violation of the wagering tax statutes had occurred. We find this contention to be without merit on two grounds.

In the first place, Marchetti and Grosso did not invalidate the wagering tax statutes, nor did they abolish the criminal offenses specified therein, nor do they say an indictment or information will not lie. In a carefully circumscribed holding, the Supreme Court concluded that a defendant may not be convicted of a criminal violation of the wagering tax statutes if he has properly asserted his constitutional privilege against self-incrimination. Prior to the Marchetti-Grosso, decisions, the Supreme Court had twice held that the wagering tax provision of the Internal Revenue Code did not constitute a denial of the Fifth Amendment privilege against selfincrimination. Lewis v. United States, 348 U.S. 419, 75 S.Ct. 415, 99 L.Ed. 475 (1955); United States v. Kahriger, 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754 (1953). Thus, at the time the search warrants in the instant case were issued, they were based on probable cause that a violation of the wagering tax statutes had occurred. At that time, these statutes had twice been held constitutional and have not subsequently been held invalid. Therefore, assuming probable cause was shown, the warrants were clearly valid at the time of their issuance, and it is clearly established that evidence seized pursuant to a valid search warrant may be used against a party on trial for a different offense. United States v. Hanon, 428 F.2d 101, 104 (8th Cir. 1970), (en banc), cert. denied, 402 U.S. 952, 91 S.Ct. 1608, 29 L.Ed.2d 122 (1971). For this reason, we conclude that the evidence seized at 3039 Belgrade Street would be admissible against defendant in a prosecution for income tax violations.

Secondly, although the Supreme Court has not ruled on the precise issue before this Court, it has held that the Marchetti-Grosso doctrine was to be applied retroactively in some cases, United States v. United States Coin & Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971) (forfeiture proceedings brought against one who had been convicted of wagering tax statutes), and prospectively in others, Mackey v. United States, 401 U.S. 667, 91 S.Ct. 1160, 28 L.Ed.2d 404 (1971) (upholding use of wagering tax returns in pre-Marchetti-Grosso prosecutions for income tax evasion.) However, the precise issue presented to this Court has been decided by the Courts of Appeals of the Fourth, Fifth, Sixth and Eighth Circuits, each holding that Marchetti and Grosso have no retroactive application in circumstances similar to those of the instant case. United States v. Scaglione, 446 F. 2d 182 (5th Cir. 1971); United States v. Hanon, 428 F.2d 101 (8th Cir. 1970) (en banc) cert. denied, 402 U.S. 952, 91 S.Ct. 1608, 29 L.Ed.2d 122 (1971); DiPiazza v. United States, 415 F.2d 99 (6th Cir. 1969), cert. denied, 402 U.S. 949, 91 S.Ct. 1606, 29 L.Ed.2d 119 (1971); Kuhn v. United States, 415 U.S. 111 (6th Cir. 1969); Washington v. United States, 402 F.2d 3 (4th Cir. 1968), cert. denied, 402 U.S. 978, 91 S.Ct. 1641, 29 L.Ed.2d 145 (1971). This issue was raised but not decided by the Third Circuit in United States v. Boiardo, 408 F.2d 112, 115 (3rd Cir. 1969). We conclude that Marchetti and Grosso are not to be given retroactive application as to bar the introduction in an income tax evasion case of evidence obtained in a pre-Marchetti-Grosso search based on probable cause to believe a violation of the wagering tax statutes had occurred.

B.

On July 26, 1967, a warrant was issued for the search of the home of defendant's mother at 3039 Belgrade Street, Philadelphia. There the IRS agent seized betting tabs, settlement sheets, bottom sheets and various other gambling paraphernalia. Defendant now argues that these seized documents constitute "mere evidence" which are testimonial or communicative in nature and, therefore, should be suppressed.

In Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746 (1886) and Gouled v. United States, 255 U.S. 298, 41 S.Ct. 261, 65 L.Ed. 647 (1921), the Supreme Court held that private papers, seized as "mere evidence" of a crime could not be used against defendant. The Court, however, reconsidered the "mere evidence" rule in Warden, Md. Penitentiary v. Hayden, 387 U.S. 294, at page 301-302, 87 S.Ct. 1642, at page 1647, 18 L.Ed.2d 782 (1967) and ultimately held:

"Nothing in the language of the Fourth Amendment supports the distinction between `mere evidence' and instrumentalities, fruits of the crime, or contraband. * * * Indeed, the distinction is wholly irrational, since, depending on the circumstances, the same `papers and effects' may be `mere evidence' in one case and `instrumentality' in another."

The Court requires only that a nexus be shown between the item to be seized and criminal behavior — such nexus being automatically provided in the case of fruits, instrumentalities or contraband, 387 U.S. at 307, 87 S.Ct. 1642.

Defendant does not argue that Warden v. Hayden is inapplicable, but contends that the personal papers and documents seized constitute evidence that is testimonial or communicative. The personal papers and documents to which defendant refers are the records of defendant's wagering operations from 1961 through 1967. It is well established that documents recording past gambling transactions and similar paraphernalia constitute instrumentalities of the crime. United States v. Hanon, 428 F.2d 101, 106-107 (8th Cir. 1970) (en banc), cert. denied, 402 U.S. 952, 91 S.Ct. 1608, 29 L.Ed.2d 122 (1971). See also Marron v. United States, 275 U.S. 192, 48 S.Ct. 74, 72 L.Ed. 231 (1927); United States v. Markis, 352 F.2d 860, 864-865 (2d Cir. 1965), remanded on...