United States v. Pasha

• Decision Date: 17 June 1964
• Docket Number: No. 14188.,14188.
• Citation: 332 F.2d 193
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Andrew PASHA, Peter Grafner, and Arthur Monaco, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

332 F.2d 193 (1964)

UNITED STATES of America, Plaintiff-Appellee, v. Andrew PASHA, Peter Grafner, and Arthur Monaco, Defendants-Appellants.

No. 14188.

United States Court of Appeals Seventh Circuit.

May 22, 1964.

Rehearing Denied June 17, 1964.

Anna R. Lavin, Edward J. Calihan, Jr., Chicago, Ill., for appellants.

Edward V. Hanrahan, U. S. Atty., David P. Schippers, Asst. U. S. Atty., Chicago, Ill., David F. Long, Regional Counsel, Chicago, Ill., John Peter Lulinski, John Powers Crowley, James J. Casey, Asst. U. S. Attys., of counsel, for appellee.

Before HASTINGS, Chief Judge, and SCHNACKENBERG and SWYGERT, Circuit Judges.

SWYGERT, Circuit Judge.

Defendants Andrew Pasha, Peter Grafner, and Arthur Monaco were convicted by a jury on a two-count indictment, charging violations of section 7203 of the Internal Revenue Code of 1954.¹ Defendants received prison sentences and were fined. They appeal from the judgments of conviction.

The Sufficiency of the Indictment.

Both counts of the indictment charged that defendants were engaged in the business of accepting wagers from April 25, 1960 to April 27, 1960, and that they received wagers on their own behalf and on behalf of other persons engaged in the business. Count one charged defendants willfully failed to pay the special occupational tax on wagering for the taxable period ending June 30, 1960, as required by section 7203. Count two charged that defendants willfully failed to register with the Chicago district director of Internal Revenue and to file Internal Revenue Form 11-C, as required by law and regulations, in violation of section 7203.

Defendants contend that count one is insufficient because the names of the persons engaged in accepting wagers on whose behalf defendants acted were not named in the indictment.

Section 4401(c) of the Internal Revenue Code of 1954 requires the payment of a tax by one who is engaged in the business of accepting wagers. Section 4411 imposes a similar tax upon those who receive wagers for others whose business is the acceptance of wagers. Thus, an occupational tax is payable by one engaged in the wagering business whether he operates the business or acts as the agent for someone who does conduct the business. Here, defendants were charged both as principals and agents. There was no necessity to recite in the indictment the identity of the principals on whose behalf defendants were acting as agents because the gravamen of the offense is the engaging in the business of accepting wagers either as principal or agent.

Defendants contend that count two of the indictment failed to charge an offense defined by statute. They point out that the count charges a failure to register in accordance with section 4412(a) of the Internal Revenue Code of 1954 and also a failure to make a return on Form 11-C. They assert that the return is not required by statute. Defendants argue that the failure to file Form 11-C is not proscribed by section 7203 even though that section includes the failure to make a return "required by law or regulations."

Section 4412(a) provides that each person required to pay the occupational tax under sections 4401 and 4411 must register with the Internal Revenue Service. Section 4412(c) provides: "In accordance with regulations prescribed by the Secretary, he or his delegate may require from time to time such supplemental information from any person required to register under this section as may be needful to the enforcement of this chapter." Pursuant to section 4412(c), the Secretary of the Treasury promulgated regulation § 44.4412-1(a) which reads in part: "Every person required to pay the special tax imposed by section 4411 shall register and file a return on Form 11-C. For provisions relating to the general requirement for filing a return, see § 44.6011(a)-1."²

Even though the requirement for registering and filing a return on Form 11-C originates in a regulation, it is given statutory sanction not only by section 4412(c) but also by section 6011(a) of the Internal Revenue Code of 1954. That section reads in part:

"When required by regulations prescribed by the Secretary or his delegate any person made liable for any tax imposed by this title * * * shall make a return * * * according to the forms and regulations prescribed by the Secretary or his delegate."

It is thus apparent that count two charges a statutory offense.

The Validity of the Search Warrants.

Prior to defendants' arrest, an Internal Revenue agent executed an affidavit which resulted in a search of premises located at 5129 West Diversey Avenue and 3157 North Leclaire Avenue, Chicago. The agent stated in his affidavit, "There is now being concealed certain property, namely * * * betting slips, betting pads, records of bets, tickets, scratch sheets, telephones, * * * calculating machines, and diverse other * * * apparatus, * * * and records, relating to the business of accepting wagers." The agent further stated that he made and supervised an investigation of these premises and had maintained a surveillance for some period prior to the search; that agents under his supervision observed the three defendants enter and leave an apartment at the Leclaire Avenue address daily, at regular hours, and that they saw defendants on several occasions at the Diversey Avenue address, a building which had lettering on its front window, Goodman Design & Engineering Co. The affidavit listed numerous telephone calls originating from two numbers assigned to the Leclaire Avenue address to Miami, Florida, New Orleans, Louisiana, and other out-of-state places. The agent stated he had been informed that the Miami and New Orleans numbers were registered to or used by known gamblers.

We have no difficulty in concluding that the affidavit stated grounds sufficient for the issuance of valid search warrants. United States v. Clancy, 276 F.2d 617 (7th Cir.1960), rev'd on other grounds, 365 U.S. 312, 81 S.Ct. 645, 5 L.Ed.2d 574 (1961); Merritt v. United States, 249 F.2d 19 (6th Cir.1957).

During the search at the Leclaire Avenue address defendant Monaco appeared. A key taken from him was admitted into evidence. It is not clear from the record whether Monaco gave the key in response to an agent's request or if it was taken from him. Whether or not the key was voluntarily produced is immaterial. The evidence was legally obtained by the federal agents. United States v. Rabinowitz, 339 U.S. 56, 70 S. Ct. 430, 94 L.Ed. 653 (1950); Clay v. United States, 246 F.2d 298 (5th Cir.), cert. denied, 355 U.S. 863, 78 S.Ct. 96, 2 L.Ed.2d 69 (1957).

Defendants contend that special agents of the Intelligence Division of the Internal Revenue Service were not authorized to execute the search warrants. They argue that section 7608(b) of the Internal Revenue Code of 1954 (enacted October 23, 1962) giving investigators of the Intelligence Division authority to execute search warrants postdated the instant search of April 27, 1960. It is clear, however, that section 7608(b) was solely a clarification statute and that Internal Revenue agents had implied authority under section 7803(a) to make arrests and to execute search warrants.³ United States v. Murphy, 290 F.2d 573 (3d Cir.1961); United States v. Joseph, 174 F.Supp. 539 (E.D.Pa.1959), aff'd, 278 F.2d 504 (3d Cir.), cert. denied, 364 U.S. 823, 81 S.Ct. 59, 5 L.Ed.2d 52 (1960).

Admissibility of Telephone Conversations.

Defendants assert that the district judge erred in admitting testimony of two agents concerning telephone conversations with unidentified persons who telephoned the apartment at the Leclaire Avenue address during the search of the premises.

The evidence shows that the agents were assigned to answer calls made to the three telephones located on the premises. On some occasions in response to the caller's request to place a bet the agents answered, "Yes," and hung up. In several instances, however, one of the agents, in response to the caller's question, "Who is this?", gave the name of one or the other of the defendants as the person speaking, and the caller then placed a bet or asked for racing information. One caller said, "I hear there's a general raid all over the country." These telephone conversations were admitted into evidence over defendants' objections.

Defendants contend that the conversations were hearsay; however, the statements of the unidentified callers were offered only as circumstantial evidence of the type of operation that was being conducted on the premises. Such evidence is competent. Reynolds v. United States, 225 F.2d 123 (5th Cir.1955).

Defendants also contend that the testimony relating to the conversations was inadmissible because the actions of the agents in answering the telephones violated section 605 of the Communications Act of 1934, 47 U.S.C. § 605,⁴ as well as the fourth and fifth amendments to the Constitution.

Olmstead v. United States, 277 U.S. 438, 48 S.Ct. 564, 72 L.Ed. 944 (1928), is dispositive of the constitutional claims. That case held that telephone conversations intercepted by police officers were not protected by the fourth and fifth amendments.⁵

The question remains whether section 605 of the Communications Act was violated thereby rendering the testimony concerning the conversations inadmissible under the exclusionary doctrine developed in Nardone v. United States, 302 U.S. 379, 58 S.Ct. 275, 82 L.Ed. 314 (1937), and expanded in Nardone v. United States, 308 U.S. 338, 60 S.Ct. 266, 84 L.Ed. 307 (1939).

Billeci v. United States, 87 U.S.App. D.C. 274, 184 F.2d 394, 24 A.L.R.2d 881 (1950) is authority for the proposition that section 605 is not violated when police officers in answering a telephone do not actively impersonate the intended recipient but merely listen to what the caller has to say. That case held that the action of a United States marshal in picking up a telephone when it rang and listening to the caller, during the search of an alleged gambling...